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2019 Proxy Statement10 | 9Extra Space Storage |
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
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| JULIE VANDER PLOEG AGE: 51 DIRECTOR
COMMITTEES: Audit and Nominating and Governance | | | |
Experience: Julia Vander Ploeg is Senior Vice President and Global Head of Digital for Hyatt Hotels Corporation, a position she has held since 2018. Ms. Vander Ploeg oversees the corporate technology organizations for Hyatt Hotels, including digital marketing, e-commerce, technology, and cyber security. Ms. Vander Ploeg has experience developing digital product teams that incorporate security best practices as part of their work, in addition to overseeing cyber security operations globally. Ms. Vander Ploeg also served as Vice President of Digital and Business Transformation for Volvo Car Group from 2017 through 2018, and as U.S. Vice President of Digital for McDonald’s Corporation from 2014 through 2017. In addition, she has served in various senior management roles at Ticketmaster Entertainment, Tribune Company, The Mills Corporation, United Airlines and the Ford Motor Company. Ms. Vander Ploeg received an M.B.A from Northwestern University and a Bachelor of Arts degree in Marketing from Michigan State University. Ms. Vander Ploeg has been a member of our board since November 2020. Qualifications: Ms. Vander Ploeg was selected to serve as a member of our board based on her experience with digital marketing, e-commerce, technology, and cyber security. | | |
Overview
The board of directors believes that the purpose of good corporate governance is to ensure that the board of directors is independent from management, adequately oversees management, and ensures that the interests of management and the board of directors align with the interests of our stockholders in order to maximize stockholder value in a manner consistent with all applicable legal requirements. Consequently, we have adopted corporate governance guidelines, which are available at www.extraspace.com under Company Info—Investor Relations—Corporate Governance.
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NAME | AGE | TITLE | 2018
2020 Director | 2019
2021 Nominee | Independent | Audit Committee
| CNG
Compensation Committee | Nominating & Governance Committee |
Kenneth M. Woolley | 72 | Chairman | X | X | | | | |
Joseph D. Margolis | 58 | Director and CEO | X | X | | | | |
Roger B. Porter (1) | 72 | Lead Independent Director | X | X | X | X | C | X |
Joseph J. Bonner | 63 | Director Nominee | | X | X | X | | X | X |
Ashley Dreier | 46Gary L. Crittenden | Director | X | X | X | X | | C |
Ashley Dreier (2) | Director | X | | X | X | | X |
Spencer F. Kirk | 57Director | X | X | X | | | |
Dennis J. Letham | Director | X | X | X | C | X | |
Dennis J. Letham (2)
| 67Diane Olmstead | Director | X | X | X | X | X | |
Diane Olmstead | 66Julia Vander Ploeg (2) | Director | X | X | X | X | | X |
The board will determine the committee assignments for Mr. Bonner at the next board meeting.C Committee Chair
(1) CNG Committee Chairman.Lead Independent Director
(2) Audit Committee Chairman.Ms. Dreier resigned from the board on November 11, 2020 and Ms. Vander Ploeg joined the board of directors on November 11, 2020.
Director Independence
We require that a majority of the board of directors, and all members of the Audit Committee, the Compensation Committee and CNGthe Nominating and Governance Committee, be independent in accordance with the New York Stock Exchange (“NYSE”) rules. In order to determine whether a director is independent, the board of directors affirmatively determines that there is no direct or indirect material relationship between the Company and the director. If all eightnine of the nominated directors in 20192021 are elected, the board of directors has determined that a majoritymore than 2/3 of the directors will be independent (five(seven of eightnine directors). The board reached this determination after considering all relevant facts and circumstances, responses to director questionnaires and considering transactions and relationships, if any, between us, our affiliates, our executive officers and their affiliates, and each of the director and applicable affiliates. The board also determined that all members of the Audit Committee, the Compensation Committee and CNGthe Nominating and Governance Committee are independent in accordance with NYSE and Securities and Exchange Commission (SEC)("SEC") rules.
Nomination of Directors
Nominees for director are selected by the CNGNominating and Governance Committee. The board of directors has developed criteria that are designed to describe the qualities and characteristics desirable for the board of directors as a whole. The CNGNominating and Governance Committee considers diversity of gender, race, age, experience, perspective and skills as important factors in choosing qualified candidates. The CNGNominating and Governance Committee's goal in the nominating process is to achieve an appropriate balance of knowledge and experience among the directors. In evaluating potential candidates to nominate to our board, the CNGNominating and Governance Committee seeks diverse candidates who will best serve the Company and whose expertise align with our long-term strategy to maximize stockholder value. The criteria and the effectiveness of our nomination policies are reviewed annually by the CNGNominating and Governance Committee and the board of directors. In general, they require that each director or nominee:
• is committed to enhancing long-term stockholder value and possesses a high level of personal and professional ethics;
• has sound business judgment and integrity;
• has financial literacy or other business or professional experience relevant to understanding our business;
• has experience with businesses and other organizations of comparable size;
• has the ability to think and act independently; and
• has demonstrated the capacity to work constructively with others.
On March 18, 2019, the board of directors voted to increase the size of the board from seven directors to eight directors. Upon a recommendation from the CNG Committee, the board of directors voted to nominate Joseph J. Bonner as a nominee to the board.
The CNGNominating and Governance Committee will consider nominees recommended by stockholders. Stockholder recommendations of directors must be made in writing and include the candidate's written consent to be nominated and sufficient background information on the candidate to enable
the committee to assess his or her qualifications. Stockholder recommendations should be addressed to our Corporate Secretary at the following address:
Extra Space Storage Inc.
Attn: Corporate Secretary
2795 East Cottonwood Parkway, Suite 300
Salt Lake City, Utah 84121
Recommendations received from stockholders will be considered and processed subject to the same criteria as candidates nominated by the CNGNominating and Governance Committee, as discussed above.
Communications with the Board and its Committees
Any stockholder or other interested party may communicate with the board of directors, the independent board members, the Chairman, any of the committees of the board of directors, or one or more of its individual members, by directing correspondence to any such individual or group of individuals in care of the Corporate Secretary, Extra Space Storage Inc., 2795 East Cottonwood Parkway, Suite 300, Salt Lake City, Utah 84121 or by referring to the “Stockholder Communication Policy” at www.extraspace.com under Company Info—Investor Relations—Corporate Governance.
The Nominating and Governance Committee evaluates our Directors in light of the current needs of the Board and the Company. In addition, during the course of the year, the Nominating and Governance Committee discusses Board succession and reviews potential director candidates. The Nominating and Governance Committee has in the past retained third parties to assist in identifying potential nominees. The Nominating and Governance Committee has retained a third-party search firm to assist in identifying and reviewing potential director candidates.
Our annual evaluation process involves assessments at the Board, Board committees, and director levels under the direction of the Nominating and Governance Committee Chair and the Lead Independent Director. In addition, the Nominating and Governance Committee takes into consideration its ongoing evaluation of potential new director candidates when recommending a slate of nominees for election to the Board at each annual meeting of shareholders.
Prohibition Against Classified Board
Our Corporate Governance Guidelines prohibit a classified board as well as staggered terms. We require each director to be elected annually, except for board actions to fill vacancies arising between stockholder elections.
Code of Business Conduct and Ethics
Our Code of Business Conduct and Ethics (the “Code”) outlines the principles of conduct and ethics to be followed by our employees, officers and directors, including our principal executive officer, principal financial officer and principal accounting officer. The purpose of the Code is to:
• promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
• avoid conflicts of interest, including disclosure to an appropriate person or committee of any material transaction or relationship that reasonably could be expected to give rise to such a conflict;
• promote full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by the Company;
• comply with applicable governmental laws, rules and regulations;
• promote prompt internal reporting to an appropriate person or committee of violations of the Code;
• promote accountability for adherence to the Code;
• provide guidance to employees, officers and directors to help them recognize and deal with ethical issues; and
• provide mechanisms to report unethical conduct and help foster our longstanding culture of honesty and accountability.
A copy of the Code has been provided to, and signed by, each of our directors, officers and employees. A copy of the Code is available on our website at www.extraspace.com under Company Info—Investor Relations-CorporateRelations—Corporate Governance.
Proxy Access and Bylaw Amendments
In February 2018, our board of directors amended ourOur bylaws to implementpermit proxy access. A stockholder or a group of up to 20 stockholders, owning at least 3% of our shares for three years, may submit nominees for up to 20% of the board, or one "nominee", whichever is greater, for inclusion in our proxy materials, subject to complying with the requirements contained in our bylaws. In addition, the board amended our bylaws to allow stockholders the right to amend the bylaws by the affirmative vote of a majority of the votes entitled to be cast on the matter.
Stockholder Engagement
We encourage open communication and strong working relationships among the members of our board. Our directors have access to, and regularly meet with, senior management and other employees. We actively seek input from our stockholders through our stockholder engagement programs. In addition, stockholders may also contact members of our board or management through our website or by regular mail. We host quarterly earnings conference calls to which all stockholders have access. During the past threefour years we have adopted a number of significant governance changes as a result of outreach to our stockholders for their views. During each of the last three years, we have met or been in contact with a majority of our stockholders. Based on that outreach, we believe the combination of actions we have taken present an overall governance structure responsive to their views.
Retirement Age or Term Limits
Rather than imposing arbitrary limits on service, the CNGNominating and Governance Committee regularly reviews each director’s continued role on the board and the need for periodic board refreshment. Over the past five years,Five of our nine directors have joined the board has nominated and stockholders have electedin the last five new directors, including replacing three directors who had served since the Company's IPO.years.
Pledging Limitations & Hedging Prohibitions
The CNG CommitteeCompany has adopted a policy that limits pledging transactions by our directors and senior executives. Such pledges are only allowed with respect to shares held in excess of stock ownership requirements and only after obtaining the written permission of the CNGCompensation Committee. The CNGCompensation Committee believes that allowing pledges in excess of the stock ownership requirements is unlikely to result in adverse effects to stockholders. The CNGCompensation Committee also recognizes that by allowing such pledging arrangements, directors and senior executives are able to pursue their respective business interests without the need to sell Company shares to raise additional capital.
The Company has adopted a policy that applies to our directors and senior executives that prohibits all hedging and similar monetization transactions. Claw-backs to Recoup Compensation
We have a Compensation Recovery Policy (claw-back policy) that covers all executive officers. If any executive officers are involved in fraudulent, willful or negligent misconduct that results in the Company being required to prepare an accounting restatement due to its material non-compliance with any financial reporting requirement, then the CNGCompensation Committee may require the executive officers to forfeit that portion of the unvested or unpaid incentive compensation (annual cash bonus and long-term equity incentive compensation) and/or recover that portion of the after-tax portion of any incentive compensation paid to such officers preceding the publication of the restated financial statement that the CNGCompensation Committee determines was in excess of the amount that such officers would have received had such compensation been calculated based on the financial results reported in the restated financial statements.
The CNGCompensation Committee may take into account any factors it deems reasonable in determining whether to seek recoupment of previously paid incentive compensation and how much incentive compensation to recoup from individual officers (which need not be the same amount or proportion for every officer), including any conclusion by the CNGCompensation Committee that an officer engaged in wrongdoing. The amount and form of the compensation to be recouped will be determined by the CNGCompensation Committee in its discretion, and recoupment of compensation paid as annual cash bonuses or long term incentives may be made, in the CNGCompensation Committee’s discretion, through cancellation of vested or unvested restricted stock awards and/or cash payment. The CNGCompensation Committee intends to update the claw-back policy as necessary in the event that the SEC requires any such updates.
Social Responsibility
Our greatest asset is our people. We believe in training and retaining talented diverse employees and having management at all levels engage with our employees, our customers, our board and other stakeholders. At Extra Space, we believe that ifas we take care of our employees, they will take care of our customers and our facilities. We do so by focusing on employee engagement, inclusion, wellness and safety.
We believe that our efforts have paid off. In 2018, we2020, Glassdoor ranked us number 7390 out of over 700,000one million companies on Glassdoor, in additionas a best place to being chosen as onework. Over 80% of Utah Business Magazine's Best Companies to Work For. Our applicant pool for job openings has increased 13.8% in a tight labor market, while our turnover has remained flat year over year. Our employees gave us an 85%a favorable score on our most recent annual employee engagement survey.
We offer an education assistance program through Western Governors University that allows our employees a path to an undergraduate degree in Business or Information Technology through scholarships and other assistance. We currently have over 100 employees enrolled in this program. We expect these numbers to increase and look forward to helping our employees to a better tomorrow by allowing them to pursue higher education through an online university while continuing their employment with the Company.
In 2020, we adapted many of our training programs to allow for more remote training in light of COVID-19. Our average full-time store employee completed 8.2 hours of training in 2020, that we believe will allow them to further develop personal skills. In 2021, we are on track to increase our training by 50% for our store employees. In addition, we have significantly expanded our development programs for employees at our corporate office.
We believe that promoting the health and well-being of our employees through their own personal wellness plans leads to an increase in employee productivity, improves morale, creates a positive and healthy work environment and reduces healthcare costs.
We offer competitive health benefits and encourage our employees to participate in employee health and wellness programs. Over 70% of our employees who are enrolled in our health plan participate in these programs. We offer individualized counseling to our employees to assist them with their journey towards better health. We also offer other health oriented benefits such as smoking cessation programs and a fitness program that allows for reimbursements to employees for expenses incurred relating to fit-friendly activities, sports or exercise equipment. During the pandemic, we closed our doors to in-person customers until we could install personal protective equipment for our employees. We understood that such a dramatic move would impact our revenues, but felt that as a company it was more important to ensure the safety of our employees. We moved quickly to put the necessary equipment in place, and reopened with a safer and more sanitized environment.
We have always valued diversity and inclusion. This year we launched ainclusion as is summarized in our Diversity and Inclusion CommitteeCommitment Statement which can be found at https://ir.extraspace.com/sustainability. During 2020, our diversity and inclusion efforts included implicit bias and allyship training for all employees, creation of subcommittees as a result of direct feedback from our employees focused on how to ensureexpand our efforts to include social involvement, employee resource groups and further education. Additional initiatives included video roundtables with our CEO on racism and with the Diversity and Inclusion Committee. We will continue to implement and pursue diversity and inclusion initiatives that our culture respects and celebrates the unique attributes and characteristics of each employee. This allowsallow us to attract and retain top talent,
improve employee engagement, increase innovation and customer insight and enhance the quality of our decision making, all of which ultimately leads to increased shareholderstockholder value. In addition,We are proud of the fact that we have accepted the ElevateHER corporate challenge, which aims at assisting organizations to elevate the stature of women's leadership within their organizations.were named as a Best Employer for Diversity for 2020 by Forbes Magazine.
We sponsored over 300 volunteer hours by our employees, benefiting both local and national nonprofit organizations. Included among these organizations are local schools, Cystic Fibrosis Foundation,The Good Samaritan Program, The Ronald McDonald House, Utah Animal Adoption Center, Principal Pantry for Kids, Utah Food Bank and The American Red Cross and the Salvation Army.Cross. By allowing our employees to give back to the community in a format of their choice, we believe that we increase our employees' engagement while doing good within our community.
In November, we made available four hours of paid time off for our store employees to be able to take the time to vote in the general election.
Environmental Sustainability
Focusing on environmental sustainability is not only the right, thing to do, it is the smart thing to do.smart. Our goal is to be the provider of choice for energy efficient and sustainable self-storage facilities nationwide. Our board plays an active role in the oversight of the Company’s sustainability practices, recognizing that sustainability and energy efficiency are central to Extra Space’s business strategy. Our efforts in promoting sustainability and energy efficiency are backed by a record of action. Across our portfolio we focus on the following:
•Improving energy efficiency through lighting retrofits. Since we started this initiative, retrofits have been completed at 351 stores. AllAt December 31, 2020, 95% of our REIT owned stores have been upgraded to LED or T-8 lighting systems, with LED fixtures used on all projects since 2017. These lighting retrofit initiatives result in an estimated savings of nineover 10 million kWhkilowatt-hours annually.
•Installing solar panels. We installed solar at 80111 of our stores in 2018, bringing the total to 3592020, resulting in 50% of our REIT owned stores withutilizing solar panelpower systems. We have generated 95 GWh149 gigawatt-hours through on-site solar panels since we initiated our solar initiative in 2010. ThisIn 2020, our clean energy production offsets the Greenhouse Gas emissions from approximately 14,000 passenger vehicles being drivencould power over 4,600 homes for onean entire year according to U.S. Environmental Protection Agency Metrics.
•Decreasing heating and air-conditioning expenses by controlling temperatures and updating to more energy efficient systems.
•Reducing water consumption with efficient plumbing devices and irrigationsirrigation systems.
Clean-up of three contaminated urban brownfield sites acquired from outside parties in 2018.
•Reducing the totalnon-recyclable waste disposed of at our facilities. In 2018, we reduced total wastefacilities by 5%, while our total store count increased by 11%3.1% in 2020 (like-for-like pool).
•Diverting waste to recycling centers rather than landfills. 12%Over 13% of total 20182020 waste was diverted to a recycling center.
•Recycled 1,335 computers and 180 cellular phones
•Using recycled materials in the products we sell in our stores. Our boxes are certified by the Sustainable Forestry Initiative (SFI), demonstrating that they have been produced by responsible sources.
In 2018,2020, we participated forreceived NAREIT's Leader in the Light award, the first timeself-storage REIT recognized in the award's history. We also participated in the GRESB Real Estate Assessment.Assessment, and increased our score over 2019 levels. We received the highest real estate assessment score of any North American company in the storage sector. In 2019, wesector, and received an "A" public disclosure score compared to the Global Average score of "C." We have joined GRESB as a full member, and will continue to participate in the GRESB Real Estate Assessment annually. We will continue to participate in other industry related surveys focused on sustainability reporting. We will also pursue opportunities for green building certifications for our portfolio, initially focused on states where incentives are offered for such certifications. Today, we have LEED Gold Certification at 16 of our stores.
For additional information on our environmental initiatives, visit our sustainability web page at: http://ir.extraspace.com/sustainability.
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2019 Proxy Statement16 | 13Extra Space Storage |
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
Leadership Structure
Independent directors and management have different perspectives and roles in strategy development and execution. Our independent directors bring experience, oversight and expertise from outside the Company and across various industries and disciplines, including manufacturing, real estate, technology, financial services, academia and government. Our Chairman CEO and our former CEO bring extensive company-specific experience and expertise to their roles.
Our board of directors has separated the positions of chairman of the board and chief executive officer.CEO. Mr. Woolley serves as our Chairman, and Mr. Margolis serves as our CEO and director. Our board of directors has determined that this leadership structure is appropriate at this time as it allows the CEO to focus on our day-to-day business, while allowing the Chairmanchairman of the board of directors to lead the board in its fundamental role of providing advice to and independent oversight of management.
The board has a governance structure that includes regular meetings of the independent directors in executive session and with our internal auditors, external auditors and other consultants. Our lead independent director helps to facilitate and strengthen the role of the independent directors. The specific responsibilities of the lead independent director are currently as follows:
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Executive Sessions/ Committee Meetings | - Presides at all meetings of the board at which the chairmanChairman is not present, including executive sessions of the independent directors (generally held at every regular board meeting) - Attends meetings of the various board committees regularly |
Meetings of Independent Directors | - Calls meetings of the independent directors and sets the agenda |
Liaison with Chairman and CEO | - Serves as liaison between the independent directors, the chairmanChairman and the CEO - Meets regularly between board meetings with the chairmanChairman and CEO |
Board Processes and Information | - Helps ensure the quality, quantity, appropriateness and timeliness of information provided to the board and meeting agendas - Ensures feedback is properly communicated to the board and chairmanChairman |
Retention of Outside Advisors and Consultants | - Has authority to retainRetains outside advisors and consultants who report directly to the board |
Communications with Stockholders | - Responds to stockholderand communicates with stockholders on inquiries when appropriate, following consultation with the chairmanChairman and CEO - Communicates with stockholders when appropriate, following consultation with the chairman and CEO
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Risk Oversight
The board of directors believes that an important part of its responsibility is to oversee and coordinate with management to assess the major risks that we face and to reviewresponsible for overseeing our options for monitoring and controlling these risks. At board meetings, management discusses with the board of directors matters of particular importance or concern, including any significant areas of risk meriting board attention. The board considers cybersecurity an important risk and receives regular updates on cyber risks specificCompany-wide approach to the Company. identification, assessment and management of major risks. Oversight for certain specific risks falls under the responsibilities of our Board committees.
•The Audit Committee has specific responsibility for discussingfocuses on financial and reviewingother risks, including legal, reputational and cybersecurity related risks. The Audit Committee receives a quarterly update on our policies with respect to risk assessment and risk management including setting guidelines and policies to govern the process by which risk assessment and risk management is undertaken. The Audit Committee takesplays an active role in this process and communicatesensuring that the results torisk management plan is effective in mitigating the full board of directors. major risks we face.
•The CNGCompensation Committee overseesfocuses on risks relatingrelated to our compensation policies and practices, as well as CEO and executive officer succession, and provides reportsprogram, including evaluating appropriate compensation incentives relating to the full boardcompensation of directors.our executives and employees. The CNGCompensation Committee reviews our compensation programs and policies from a legal and human resources perspective.perspective and regularly considers whether our compensation policies and practices encourage unnecessary or excessive risk taking. Based on thisthe Compensation Committee's regular assessment, we concludedbelieve that weour compensation policies and practices do not have any compensation programs or practicespresent risks that wouldare reasonably be likely to have a material adverse effect on the Company.
•The Nominating and Governance Committee focuses on risks associated with succession planning, corporate governance, board effectiveness and Environmental, Social and Governance matters.
The committees regularly advise the full board of their oversight activities. The risks identified in our Company.risk management plan are discussed with the board to ensure that all known material risks are properly identified, assessed and managed. On an annual basis, we provide an update to the board on our key risks, risk assessment and risk management, including soliciting feedback from each director to ensure that we have properly identified, assessed and managed all known material risks. At most regularly scheduled board meetings, the board reviews key matters relating to the our finances, liquidity, operations and investment activity. In addition, the board receives quarterly presentations from senior information technology personnel to discuss recent trends in cyber risks and our strategy to defend its business systems and information against cyber attacks. Additionally, all directors have access to members of management if a director wishes to follow up on items discussed outside of the board or committee meeting.
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
Attendance at Meetings of the Board and its Committees
The board of directors holds at least four regularly scheduled meetings per year and additional special meetings as necessary. Each director is expected to attend all regularly scheduled and special meetings, unless unusual circumstances make attendance impractical. The board of directors may also take action from time to time by written or electronic consent. For the year ended December 31, 2018,2020, our board and its committees maintained strong oversight over our management and business in holding a total of sixseven meetings on financial and operational results, corporate strategy, governance, compensation and other topics. Each director attended at least 75% of the meetings of the board of directors and of any committees on which he or she served during this period.
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
Committees of the Board of Directors
TheAt the start of 2020, the board of directors hashad two standing committees: the Audit Committee and the Compensation, Nominating and Governance ("CNG") Committee. The Board of Directors voted to split the CNG Committee.Committee into two committees, the Compensation Committee and the Nominating and Governance Committee, effective as of July 1, 2020. The committees on which each director serves are listed above in “Information about the Board of Directors and its Committees—Nominees for Directors.”
AUDIT COMMITTEE
The Audit Committee has direct responsibility for the appointment, compensation, retention and oversight of the independent auditors for the Company, and sole authority to establish pre-approval policies and procedures for audit and non-audit engagements with the independent auditors. The Audit Committee also oversees the operation of a comprehensive system of internal controls designed to ensure the integrity of the financial statements and reports and compliance with laws, regulations and corporate policies of the Company. Additionally, the Audit Committee oversees the independent auditor’s qualifications, performance and independence; monitors communications with the independent auditor; and monitors the performance of the internal audit function at the Company. A copy of the Audit Committee’s charter is available at the Company’s website www.extraspace.com under Company Info—Investor Relations-CorporateRelations—Corporate Governance. In accordance with the rules of the NYSE, the board of directors has determined that each of the current members of the Audit Committee is independent as defined by the Audit Committee’s charter and Section 303A of the NYSE Listing Standards.
As set forth in the Audit Committee’s charter, management of the Company is responsible for the preparation, presentation and integrity of our financial statements. Management is also responsible for maintaining appropriate accounting and financial reporting principles and policies, and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The internal auditors are responsible for independently assessing the principles, policies, internal controls and procedures surrounding the financial statements as well as monitoring management’s follow-up to any internal audit reports. The external auditors are responsible for planning and carrying out a proper audit of our annual financial statements, reviews of our quarterly financial statements prior to the filing of each Quarterly Report on Form 10-Q, and annually auditing the effectiveness of our internal controls over financial reporting and other procedures. The members of the Audit Committee are not full-time employees of the Company and are not performing the functions of auditors or accountants. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards.
Each of Ms. Olmstead and Messrs. Letham and PorterCrittenden has been designated as an “audit committee financial expert” as defined in the SEC’s Regulation S-K, Item 407(d)(5).
REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the board of directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company, as well as the Company’s compliance with corporate policies and legal and regulatory requirements, including the Sarbanes-Oxley Act of 2002. During fiscal year 2018,2020, the Audit Committee met 1210 times, and discussed with the CEO, Chief Financial Officer (“CFO”), Principal Accounting Officer, internal auditors and independent registered public accounting firm (external auditors), the SEC filings that contained financial information, prior to their public release. The Audit Committee’s meetings include executive sessions with the Company’s external and internal auditors, in each case without the presence of the Company’s management.
In discharging its oversight responsibility, the Audit Committee received from the external auditors a formal written statement describing all relationships between the external auditors and the Company that might bear on the external auditors’ independence and discussed with the external auditors their independence and any relationships that may impact their objectivity and independence. The Audit Committee also discussed with management, internal auditors and external auditors the quality and adequacy of the Company’s internal controls and the internal audit function’s organization and responsibilities. The Audit Committee reviewed both with the external and internal auditors their audit plans, audit scope and identification of audit risks. After careful consideration of the best interests of our stockholders, the Audit Committee has chosen Ernst & Young LLP as our independent public accountants for fiscal year 2021.
In carrying out its responsibilities, the Audit Committee, among other things:
• monitors preparation of quarterly and annual financial reports by the Company’s management;
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
• supervises the relationship between the Company and its external auditors, including: having direct responsibility for their appointment, compensation and retention; reviewing the scope of their audit services; approving audit and non-audit services; and confirming the independence of the external auditors;
• oversees management’s implementation and maintenance of effective systems of internal and disclosure controls, including review of the Company’s policies relating to legal and regulatory compliance, ethics and conflicts of interests and review of the Company’s internal auditing program; and
• reviews, approves and/or ratifies related-party transactions for which such approval is required under applicable law, including SEC and NYSE rules.
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
During fiscal year 2018,2020, management advised the Audit Committee that each set of financial statements reviewed and discussed by management with the committee had been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, management reviewed significant accounting and disclosure issues with the Audit Committee. These reviews included discussion with the external auditors of matters required to be discussed pursuant to AS 1301(Communications with Audit Committees), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) including the quality of the Company’s accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee also discussed with Ernst & Young LLP matters relating to its independence, including a review of audit and non-audit fees and the written disclosures and letter from Ernst & Young LLP to the Audit Committee pursuant to Rule 3526 of the PCAOB (Communication with Audit Committees Concerning Independence).
In addition, the Audit Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and external disclosure control structure. As part of this process, the Audit Committee met privately with the Company’s Director of Internal Audit and continued to monitor the scope and adequacy of the Company’s internal auditing program, reviewing internal audit department staffing levels and steps taken to implement recommended improvements in internal procedures and controls. The Audit Committee conducted a performance self-evaluation for review with the board of directors that included a comparison of the performance of the Audit Committee with the requirements of its charter.
Taking all of these reviews and discussions into account, the Audit Committee members listed below recommended to the board of directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018,2020, for filing with the SEC.
Submitted by the Audit Committee,
Dennis J. Letham, Chairman
Ashley DreierGary L. Crittenden
Diane Olmstead
Roger B. PorterJulia Vander Ploeg
COMPENSATION NOMINATING AND GOVERNANCE COMMITTEE
The CNGCompensation Committee operates under a written charter adopted by the board of directors, a copy of which is posted on the Company’s website at www.extraspace.com under Company Info—Investor Relations—Corporate Governance. The CNGCompensation Committee assesses the adequacy of its charter annually. The charter, which reflects the standards set forth in the SEC and NYSE rules and regulations, identifies the CNG Committee’s primary duties and responsibilities as follows:
set corporate governance principles;
maintain a code of ethics;
monitor the Company’s compliance with corporate governance requirements of federal and state law and the rules and regulations of the NYSE;
review and determine the desirable balance and diversity of experience, qualifications and expertise among members of the board of directors;
review possible candidates for membership on the board of directors (including recommendations proposed by stockholders) and recommend a slate of nominees for election as directors at the Company’s annual meeting of stockholders;
review the function and composition of the committees of the board of directors and recommend membership on such committees; and
oversee the board of directors’ evaluation of itself and its committees.
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
The CNGCompensation Committee’s primary responsibilities with respect to compensation are to:
• examine periodically the philosophy and structure of the Company’s compensation programs;
• oversee and act on behalf of the board of directors with respect to the benefit and compensation plans of the Company;
• establish the Company’s total compensation philosophy, and ensure that the compensation programs of the Company reflect that philosophy;
• evaluate the CEO's performance in light of clearly established goals and objectives and establish the compensation of the CEO;
• review and approve the CEO’s compensation recommendations with respect to other executives;
• monitor awards under the Company’s equity compensation plans; and
• report to the board of directors in its meetings and executive sessions.
The CNG Committee regularly reviews communications from stockholders and responds directly or through the Chief Legal Officer. In performing its duties, the CNGCompensation Committee has the authority to take such action as it deems appropriate to implement the purposes of the CNGCompensation Committee. The CNGCompensation Committee may retain legal, accounting or other consultants, and meet in separate executive sessions with the Company’s management and employees and its compensation consultant.
LEADERSHIP STRUCTURE, MEETINGS AND COMMITTEES OF THE BOARD
The CNGCompensation Committee has retained Mercer as its independent compensation consultant to advise the CNGCompensation Committee in connection with matters pertaining to director and executive compensation, including advising as to market levels and practices, plan design and implementation, comparable company data, consulting best practices and governance principles. Mercer also provides other services to the Company. Fees paid to Mercer during 20182020 for director and executive compensation consulting services totaled $46,127.$12,870. Fees paid to Mercer for healthcare administration services in 20182020 totaled $39,000.$17,000. The CNGCompensation Committee has determined, and Mercer has affirmed, that Mercer’s work does not present any conflicts of interest and that Mercer is independent. In reaching these conclusions, the CNGCompensation Committee considered the factors set forth in Exchange Act Rule 10C-1 and NYSE listing standards. During 20182020, the Compensation Committee held two meetings, in addition to the three meetings held during the first half of 2020 when the Nominating and Governance Committee and the Compensation Committee were combined into the CNG Committee held five meetings.Committee.
COMPENSATION NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All members of the CNGCompensation Committee are independent under NYSE listing standards. During 2018,2020, none of the executive officers of the Company served on the board of directors or compensation committee of any entity whose officers served either on the board of directors of the Company or on the CNGCompensation Committee of the board of directors. No member of the CNGCompensation Committee has ever been an officer or employee of the Company or any of its subsidiaries. No interlocking relationships existed during the year ended December 31, 2020, between any member of the Board or the Compensation Committee and an executive officer of the Company.
NOMINATING AND GOVERNANCE COMMITTEE
The Nominating and Governance Committee operates under a written charter adopted by the board of directors, a copy of which is posted on the Company’s website at www.extraspace.com under Company Info—Investor Relations—Corporate Governance. The Nominating and Governance Committee assesses the adequacy of its charter annually. The charter, which reflects the standards set forth in the SEC and NYSE rules and regulations, identifies the Nominating and Governance Committee’s primary duties and responsibilities as follows:
• identify potential board members and recommend to the Board a slate of nominees for election to the Board and recommend directors to serve on the committees of the Board;
• develop and recommend to the Board corporate governance guidelines applicable to the Company, including a code of ethics and monitor Company's compliance with such guidelines;
• engage in succession planning for the CEO;
• oversee the board of directors’ annual evaluation of itself and its committees; and
•monitor and oversee management's efforts and activities on sustainability initiatives, including environmental, social and governance matters.
The Nominating and Governance Committee reviews communications from stockholders and responds directly or through the Chief Legal Officer. In performing its duties, the Compensation and Governance Committee has the authority to take such action as it deems appropriate to implement the purposes of the Nominating and Governance Committee. The Nominating and Governance Committee may retain legal, accounting or other consultants, and meet in separate executive sessions with the Company’s management and employees and its compensation consultant.
During 2020, the Nominating and Governance Committee held two meetings, in addition to the three meetings held during the first half of 2020 when the Nominating and Governance Committee and the Compensation Committee were combined.
POLICY REGARDING BOARD ATTENDANCE AT STOCKHOLDERS MEETINGS
We encourage attendance at stockholders meetings by members of the board of directors and senior executives so that stockholders will have the opportunity to meet our directors and senior executives. All of our then-current board members attended the 20182020 Annual Meeting of Stockholders.
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2019 Proxy Statement20 | 17Extra Space Storage |
All non-employee directors other thanreceive compensation for their service. The Board determines the chairman,form and amount of compensation for non-management directors after consideration of the recommendation of the Compensation Committee. The Board has approved the mix of cash and equity compensation described below.
Retainers are paid quarterly in cash and are prorated when a director joins the Board. Below are the annual retainers that non-employee directors were entitled to receive an annualduring 2020 for Board service:
| | | | | |
Compensation | Amount |
Chairman | $ | 300,000 | |
Directors | $ | 65,000 | |
Lead Independent Director, supplemental | $ | 10,000 | |
Audit Committee Chair, supplemental | $ | 20,000 | |
Compensation Committee Chair, supplemental (1) | $ | 10,000 | |
Nominating & Governance Committee, Chair, supplemental (1) | $ | 10,000 | |
Non-Chair Committee Member, supplemental | $ | 7,500 | |
(1) The board retainer fee of $65,000directors voted to be paidsplit the CNG Committee into two committees effective July 1, 2021. These figures include the mid-year change in cash. the committee structure.
In addition, all non-employee directors receive an award on the date of each annual meeting of shares of common stock equivalent in value to $120,000 (to the nearest share), with the number of shares determined by the closing price of our common stock on the date of the annual meeting. The chairmanCommencing in 2020, these shares vest on the first anniversary of the board receives an annual retainerdate of $300,000. The lead independent director receives an annual retainer fee of $10,000. Directors who serve asgrant, subject to a director’s continued service through the chair of the Audit Committee and CNG Committee receive an annual committee retainer fee of $20,000. Directors who serve on the Audit Committee and CNG Committee receive an annual committee retainer fee of $7,500.vesting date. We do not pay any meeting fees to our directors. The following table presents the compensation paid to our non-employee directors in 2018:2020:
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Name | Fees earned or paid in cash | Stock awards (1) | | Total |
Kenneth M. Woolley | $ | 300,000 | | $ | 120,000 | | | $ | 420,000 | |
Roger B. Porter | 97,500 | | 120,000 | | | 217,500 | |
Joseph J. Bonner | 76,250 | | 120,000 | | | 196,250 | |
Gary Crittenden (2) | 69,135 | | 120,000 | | | 189,135 | |
Ashley Dreier (3) | 65,163 | | 60,000 | | | 125,163 | |
Spencer F. Kirk | 65,000 | | 120,000 | | | 185,000 | |
Dennis Letham | 92,500 | | 120,000 | | | 212,500 | |
Diane Olmstead | 80,000 | | 120,000 | | | 200,000 | |
Julia Vander Ploeg (4) | 11,087 | | 60,000 | | | 71,087 | |
Total | $ | 856,635 | | $ | 960,000 | | | $ | 1,816,635 | |
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Name | Fees earned or paid in cash | Stock awards(1) | Other(5) | Total |
Ashley Dreier (2) | $ | 44,018 |
| $ | 120,000 |
| $ | — |
| $ | 164,018 |
|
Spencer F. Kirk | 65,000 |
| 120,000 |
| — |
| 185,000 |
|
Dennis J. Letham (3) | 83,839 |
| 120,000 |
| — |
| 203,839 |
|
Diane Olmstead | 80,000 |
| 120,000 |
| — |
| 200,000 |
|
Roger B. Porter | 102,500 |
| 120,000 |
| — |
| 222,500 |
|
K. Fred Skousen (4) | 36,339 |
| — |
| — |
| 36,339 |
|
Kenneth M. Woolley (5) | 225,000 |
| 120,000 |
| 107,115 |
| 452,115 |
|
Total | $ | 636,696 |
| $ | 720,000 |
| $ | 107,115 |
| $ | 1,463,811 |
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(1) Each non-employee director received 1,426 shares of common stock on May 22, 2020 which cliff vest after one year. Dollar amounts represent grant date fair value of such grants as determined in accordance with Accounting Standards Codification 718, "Stock Compensation" ("ASC 718") using the assumptions to value such awards reported in the notes to the Company’s financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021. Adjustments are made to prorate any stock awards as directors join or leave the board of directors. | |
(1) | Each non-employee director received 1,281 shares of vested common stock on May 23, 2018. Dollar amounts represent grant date fair value of such grants as determined in accordance with Accounting Standards Codification 718, "Stock Compensation" ("ASC 718") using the assumptions to value such awards reported in the notes to our financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 26, 2019. None of our non-employee directors held any unvested stock awards as of December 31, 2018. |
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(2) | Ms. Dreier joined the board of directors on May 23, 2018. The cash fees paid are a pro-rated amount for her service starting May 23, 2018 through the end of the year. |
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(3) | Mr. Letham became Audit Committee chair on May 23, 2018. The cash fees paid are a pro-rated amount for his service as Audit Committee chair for the period from May 23, 2018 through December 31, 2018. |
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(4) | Mr. Skousen served on the board of directors through May 23, 2018. The cash fees paid are a pro-rated amount for his service from January 1, 2018 through May 23, 2018. |
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(5) | Mr. Woolley was Executive Chairman of the board through May 23, 2018 and therefore was not paid the first quarterly payment of $75,000. |
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(6) | Other compensation includes amounts paid to Mr. Woolley in his capacity as Executive Chairman prior to his transition from an executive to a non-employee director on May 23, 2018, and includes the base salary payable to Mr. Woolley during that time. |
(2) Mr. Crittenden joined the board of directors on February 12, 2020. The cash fees paid are a pro-rated amount for his service starting February 12, 2020.
(3) Ms. Dreier resigned from the board of directors on November 11, 2020. The cash fees paid and stock awards granted were pro-rated for her service through November 11, 2020.
(4) Ms. Vander Ploeg joined the board of directors on November 11, 2020. The cash fees paid and stock awards granted were a pro-rated amount for her service starting November 11, 2020.
During 2018,2020, Mr. Margolis served as a director and was also our CEO. As an employee, he did not receive any additional compensation for his services as a director. In accordance with SEC rules, we have not included Mr. Margolis in the table above.
Stock Ownership Guidelines for Directors
We have stock ownership guidelines that require each of our non-employee directors, within five years after appointment to the board, to hold shares of our common stock, restricted stock or stock options (whether or not vested) with a value equal to the sum of five times the annual cash portion of the board retainer. These stock ownership guidelines align our directors’ interests with those of our stockholders by ensuring non-employee directors hold equity in the Company. Each non-employee director has met these guidelines as of December 31, 2018.
2020 or has additional time within which to come into compliance in accordance with the guidelines.
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182021 Proxy Statement | Extra Space Storage21 |
Information for Joseph D. Margolis is contained previously under the heading “Information about the Board of Directors and its Committees—Nominees for Directors.” Information with regard to our other named executive officers is presented below. All of our executive officers are elected as officers at the annual organizational meeting of the board of directors held following each annual meeting of stockholders.
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SCOTT STUBBS
AGE: 5153
TITLE:
Executive Vice President and Chief Financial Officer | Scott Stubbs has served as our Chief Financial Officer since December, 2011. He served as the Company’s Senior Vice President Finance and Accounting since our inception, and the Corporate Controller of our predecessor beginning in December 2000. Prior to joining our predecessor, Mr. Stubbs served as Chief Financial Officer of the Lyon Company from June 2000 through December 2000. From 1995 through 2000, he served as the U.S. Controller of Critchley Inc. and from November 1992 through June 1995, he worked at Neilson, Ellgren, Durkin & Co. as a consultant. Mr. Stubbs is a licensed CPA and holds a B.S. and a Masters in Accountancy from Brigham Young University. |
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ZACH DICKENS AGE: 46 TITLE: Executive Vice President and Chief Investment Officer | Zach Dickens has served as our Chief Investment Officer since December 2020. Mr. Stubbs currently servesDickens has been with Extra Space Storage since 2002, and he has served in various roles in the real estate department, including most recently as Senior Vice President of Investments. Mr. Dickens has been instrumental in the Company's acquisitions, structuring transactions with joint venture partners and growing the company’s bridge lending program. Prior to joining Extra Space Storage, Mr. Dickens oversaw a technical support team at eBay. Mr. Dickens has a Master of International Management from Thunderbird School of Global Management, has an M.B.A from Arizona State University and a bachelors in Russian Language from the University of Utah. |
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MATTHEW HERRINGTON AGE: 40 TITLE: Executive Vice President and Chief Operating Officer | Matt Herrington has served as our Chief Operating Officer since June 2020. Mr. Herrington has been a member of the boardCompany’s senior management team for over a decade, most recently serving as the Senior Vice President of directorsOperations from 2015-2020, responsible for Company's operations in the western United States including approximately 900 locations. Mr. Herrington has been with the Company since 2007 in various roles including Divisional Vice President of Operations and audit committee chairmanSenior District Manager, Operations. Mr. Herrington holds a Master's of ZAGG Inc.Science in Management from Baker University and a Bachelor's in Business Administration from the University of Nebraska - Kearney. |
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GWYN G. MCNEAL AGE: 5052 TITLE: Executive Vice President and Chief Legal Officer | Gwyn G. McNeal has served as Chief Legal Officer since July 2013. Ms. McNeal has been with the Company since 2005. Prior to her current role she was the Vice President and Associate General Counsel of the Company, providing legal support to the Company’s operations team along with overseeing litigation, employment law matters and intellectual property. Ms. McNeal began her career practicing law with Latham & Watkins LLP, San Diego from 1992 to 2000. She then served as General Counsel for 3form, Inc. from 2000 to 2003. Prior to joining the Company, Ms. McNeal represented the Company as external counsel with Nelson Christensen & Helsten. Ms. McNeal holds a B.A. from Brigham Young University and a J.D. from the University of Southern California. |
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JAMES L. OVERTURFSAMRAT SONDHI
AGE: 5246 TITLE: Executive Vice President and Chief Marketing Officer | James L. Overturf has served as Chief Marketing Officer since May 2014. Previously, he held senior leadership positions with the Company in marketing and investor relations from August 2004 to May 2014 under various titles including Senior Vice President of Marketing and Senior Vice President of Investor Relations. Mr. Overturf also served as Vice President of Marketing for our predecessor from February 1999 to August 2004. Prior to joining our predecessor, he was Director of Marketing at 3Com Megahertz Corporation from November 1997 to February 1999. From May 1994 to August 1997, he served as Marketing Manager at Fidelity Trust Company, a subsidiary of Fidelity Investments. Mr. Overturf holds a B.S. in marketing from Montana State University.
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SAMRAT SONDHI
AGE: 44
TITLE:
Executive Vice President and Chief Operations Officer
| Samrat Sondhi has served as Chief Operations Officer since January 2014 and a member of the Company’s senior management team since 2008 and has been with the Company since 2003. He has served in various roles including Divisional Vice President, covering core markets across the United States, and Senior Vice President Revenue Management, playing a key role in the evolution of pricing strategy and execution for the self-storage industry. Prior to joining the Company, Mr. Sondhi served as the Vice President Revenue Management for Storage USA for two years. Prior to joining Storage USA, Mr. Sondhi worked as a consultant with Deloitte Consulting from 2001 to 2002. Mr. Sondhi holds an M.B.A. degree from Carnegie Mellon University and a B.S. in electronics from Pune University, India. |
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2019 Proxy StatementNOAH SPRINGER AGE: 42 TITLE: Executive Vice President and Chief Strategy and Partnership Officer | 19Noah Springer has served as our Chief Strategy and Partnership Officer since December of 2020. Mr. Springer has been with the company since 2006, and has served in various roles in acquisitions, third-party management and asset management, most recently as Senior Vice President of Third-party and Asset Management. Mr. Springer helped create Management Plus, Extra Space Storage’s third-party management platform, and continues to lead that business, as well as the Company's asset management, construction and joint venture platforms. Prior to joining Extra Space, Mr. Springer worked for a number of years in banking. He has a B.A. in Finance and an MBA from the University of Utah. |
Compensation Discussion and Analysis
GENERAL PHILOSOPHY
The CNGCompensation Committee is made up of threefour independent directors, who determine our executive compensation policies in order to align management’s incentives with the long-term interests of stockholders and to be competitive with comparable employers. Accordingly, we have structured the executiveour compensation program aroundreflects the following guiding principles and objectives:key features to ensure management's incentives are appropriately aligned with our shareholders:
•Pay for performance;
•A high percentage of executive total annual target compensation in the form of equity, including 67% of long-term incentive awards include performance-based stock units which are "at risk" and subject to three-year performance periods to assess long-term performance.
•A market-based approach for evaluating and reviewing executive pay;
•Caps on annual and long-term incentives;
•No employment agreements for executive officers;
•Claw-back policy on compensation;
Stock•No excessive perquisites;
•No tax gross ups; and
•Robust stock ownership requirements for executives; and
50% of long-term incentive awards include performance-based units subject to three-year performance periods to assess long-term performance.executives.
SETTING EXECUTIVE COMPENSATION
Based on our philosophy underlying executive compensation policies, we place significant emphasis on annual and long-term performance-based incentive compensation. In addition to base salaries for our executives, annual cash incentives and long-term equity based incentive awards are designed to reward our executives based on the achievement of predetermined company and individual goals. We also consider historical compensation levels as well as other industry conditions and the overall effectiveness of our compensation program.
In order to ensure the fulfillment of our compensation philosophy and to assist in establishing the Company’s aggregate level of compensation, the CNGCompensation Committee engages a nationally recognized compensation consulting firm, Mercer, which reports directly to the CNGCompensation Committee.
Working with Mercer for the purpose of evaluating and setting 20182020 compensation for our NEOs, the CNGCompensation Committee developed a list of 16 comparable REITs that are similar to the Company in total enterprise value, relative size, number of employees numberand inclusion of properties, and total revenue.all direct competitors. The CNGCompensation Committee also took into consideration such elements as joint venture properties and unconsolidated revenues. The companies used in the comparator group, which wasis unchanged from 2017,since 2019, are:
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• American Campus Communities
• Apartment Investment and Management Company • AvalonBay Communities, Inc. • Camden Property TrustBoston Properties, Inc. • CubeSmart |
• DukeDigital Realty CorporationTrust | • Equity Lifestyle Properties, Inc. • Equity Residential
• Essex Property Trust, Inc. • Liberty Property Trust • Life Storage, Inc.
• National Storage Affiliates Trust
• Mid America Apartment Communities Inc. | • Public Storage • Regency Centers Corporation
• Taubman Centers, Inc.Realty Income Corporation • UDR, Inc.
• WeingartenVornado Realty InvestorsTrust |
The group includes threeour four direct competitors: Public Storage, Life Storage, Inc., CubeSmart and CubeSmart.National Storage Affiliates Trust. The remaining companies represent publicly traded REITs with market capitalizationstotal enterprise values comparable to the Company and that generally recruit individuals to fill senior management positions who are similar in skills and background of those recruited by us.
Although we maintain the peer group for executive compensation purposes, the peer group compensation data is limited to publicly available information and therefore does not necessarily provide comparisons for all officers by position as is offered by more comprehensive survey data. In light of this, for purposes of determining 2018 compensation, Mercer provided the CNG Committee with general real estate industry data from the 2017 Mercer US Executive Remuneration Suite, the 2017 National Real Estate Investment TrustsThe Compensation Survey and the 2017 Willis Towers Watson Data Services: General Industry Top Management Compensation Survey, which included compensation data for both public and private companies primarily within the real estate industries throughout the country for companies with a revenue range from $500 million to $2.2 billion or for companies with a market cap of less than $10 billion. With respect to the survey data presented to the CNG Committee, the identities of the individual companies included in the
surveys were not provided to the CNG Committee, and the CNG Committee did not refer to individual compensation information for such companies.
The CNG Committee uses the median (50th percentile) of our comparator group as the beginning reference point and as an indicator of competitive market trends. In addition, the CNGCompensation Committee considers analysis prepared by Mercer that includes general real estate and industry data. The CNGCompensation Committee does not rely on a strict formulaic framework, but instead believes in combining a quantitative and a qualitative assessment against pre-established goals in order to allow the committee the ability to
strike the appropriate balance between short-term objectives and long term strategies while properly emphasizing objective results when assessing management's performance.
The CNGCompensation Committee does not have a pre-established policy for the allocation of compensation between cash, non-cash compensation and long-term incentive compensation. None of the executive officers are present during CNGCompensation Committee deliberations or decisions regarding such executive’s compensation.
The following describes each element of our executive compensation program, along with a discussion of the decisions made by the CNGCompensation Committee with respect to that aspect of compensation for 2018.2020.
ELEMENTS OF EXECUTIVE OFFICER COMPENSATION AND BENEFITS FOR 20182020
In 2018,2020, named executive officers’ total compensation was comprised of the following elements designed to complement each other:
•base salary;
•annual incentive bonus;
•long-term incentives through restricted stock and performance-based stock unit awards; and
•other benefits.
BASE SALARY
Base salary is a critical element of executive compensation as it provides executives with assured monthly cash compensation. In determining base salaries, the CNGCompensation Committee based its evaluation on a variety of factors, including:
•the executive’s qualifications, experience and past performance;
•the nature and responsibility of the position; and
•the salaries paid to the position within the comparator peer group and other information about similarly-situated executives in the comparable company data.
Effective January 1, 2018,No salary increases were given to any of the CNG Committee tookNEOs for 2020. In making the following actions with respect to thedecision on base salaries, for the NEOs:
Ms. McNeal received a salary increase from $350,000 to $375,000;
Mr. Overturf received a salary increase from $385,000 to $400,000;
Mr. Sondhi received a salary increase from $350,000 to $400,000; and
no salary increase was given to the other NEOs for 2018.
In making each of the salary decisions described above, the CNGCompensation Committee reviewed changes in job responsibility and title, historical salary levels, performance and contributions made to the Company, the impact on total compensation, competitive conditions and the relationship of compensation to that of other of the Company’s officers and determined the compensation awarded was appropriate to reward performance, ensure retention and maintain appropriate compensation differentials among the Company’s officers.
ANNUAL INCENTIVE BONUS
We pay annual incentives to drive the achievement of key business results and to recognize individuals based on their contributions to those results. The CNGCompensation Committee believes that this feature of compensation motivates executive officers to strive to attain our annual goals with 50% of these performance-based goals are tied to the financial operating performance of the Company and 50% are tied to the senior executive’s achievement of specific management goals, outlined below.
The financial performance goals set for 20182020 were based on the Company’s achievement of a specific target (the “FFO Target”) related to the Company’s Core FFO.funds from operations ("FFO"). The FFO Target is defined and approved annually by the board of directors. The portion of bonus based on the FFO Target could incrementally increase or decrease based on meeting, exceeding, or failing to meet the FFO Target. The FFO Target is based on the Company’s Core FFO, with additional adjustments agreed to by the board of directors in order to consistently review the performance of management as it relates to Core FFO. Core FFO provides relevant and meaningful information about our performance and is the primary measure that we use to assess our operating performance. For 2018,2020, Core FFO was defined as FFO excluding revenues and expenses not core to our operations and non-cash interest. For annual bonus determination purposes for 2018,2020, Core FFO was also adjusted to remove the impact of depreciation above or below a budgeted amount based on the Company’s
projections. FFO and Core FFO are non-GAAP measures and a reconciliation of those measures to GAAP net income attributable to common stockholders is attached to this proxy statement as Appendix A.
The FFO Target established for 20182020 was $4.65$5.08 of Core FFO per share. For annual bonus determination purposes for 2018,2020, Core FFO was $4.66$5.27 per share, resulting in the payment of 101%132% of the portion of the bonus related to the achievement of the FFO Target pursuant to the annual incentive plan. The annual incentive plan provides that the financial performance portion of executive officers’ bonuses may be reduced or increased based upon the percent of FFO Target earned, with a maximum bonus payout of 150% in the event that the FFO Target is greater than 105% and a minimum payout of 0%50% in the event that the FFO Target is less than 95% of the FFO Target. Notwithstanding the foregoing, the CNGCompensation Committee may, in its sole discretion, exclude or adjust significant non-budgeted or non-controllable amounts, gains, or losses from actual financial results in order to properly measure the Company’s performance. In addition, the CNGCompensation Committee may adjust the Company’s overall FFO targets and gradations used to determine percentage of FFO target to appropriately implement the intent of the annual incentive plan. The CNGCompensation Committee did not make any such additional exclusions or adjustments for 20182020 bonus determination purposes.
The managementsenior executives corporate goals for 2020 included the following corporate goals along with each officer's individual goals. The corporate goals established for 20182020 for our named executive officers are summarized as follows:
maximize core property performance by increasing Core FFO, same store revenue, net operating income, tenant insurance penetration
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2020 Goals | 2020 Achieved |
•Core FFO of $5.08 or higher | •Core FFO of $5.27 |
•Same Store NOI growth of 0.5% or higher | •Same Store NOI growth of (0.7%) |
•Do not exceed Corporate G&A budget | •Under budget |
•Close $500 million of acquisitions (gross) and $200 million of bridge loans (gross) | •Invested $339.3 million (gross) in acquisitions, closed $220.4 million bridge loans closed (gross) and placed $453 million in other storage-related investments |
•Expand third party management platform to 730 stores | •Expanded third party management platform to 724 stores |
In addition to the corporate goals listed above, the executive officers each have additional qualitative goals relating to operational efficiencies, technology, sustainability, growth and controlling expense growth;
maintain an efficient and agile financial and balance sheet strategy; and
grow the portfolio through acquisitions and additional third-party management business.
The CNG Committee did not set quantifiable objectives for the foregoing management goals and assigned no specific weighting to these management goals. The CEOother company improvements. Mr. Margolis presented to the CNGCompensation Committee his assessment of the achievement of the corporate goals listed above and the specific qualitative goals of each NEO’s performance (other than his own) in achievingof our executive officers. The compensation committee reviewed the management2020 goals and recommendedachievements and weighed these against the outstanding Core FFO achieved for the year against the backdrop of the challenges of the pandemic. Upon discussion and review, the Compensation Committee approved an achievement level in the range of 90-100% of that portion of the bonus related to the CNG Committee thatcorporate goals outlined above and the individual qualitative goals for each of the Chief Financial Officer, Chief Marketing Officer, Chief OperatingOperations Officer and Chief Legal Officer be paid between 90-95% ofOfficer. In addition, the portion of the bonus related to these goals. After theirCompensation Committee conducted its own evaluation of Mr. Margolis’s performance relative to the above managementcorporate goals and his individual qualitative goals and the CNGCompensation Committee determined to approve an achievement level of 90%98% for Mr. Margolis for the portion of the bonus related to the achievement of the managementsuch goals.
The annual bonuses paid to the named executive officers for 20182020 are reflected in the “Summary Executive Compensation Table” below.
LONG-TERM INCENTIVES FOR 20182020
The Long-Term Incentive Program allows for grants of restricted stock and performance-based stock awards.units ("PSU(s)"). The goals of the Company’s equity awards are to: (1) align the interests of each executive officer with those of our stockholders by providing each individual with a significant incentive to manage the Company from the perspective of a stockholder with an equity stake in the business, and (2) encourage long-term retention of key employees by virtue of vesting conditions imposed on typical equity awards. Employees must remain employed by the Company for a fixed period of time in order for the equity awards to vest fully. VestingUnless otherwise determined by the Compensation Committee, vesting ceases upon termination of employment and unvested grants of restricted stock and performance-based unitsPSUs are canceled upon termination of employment. During the vesting period, restricted stock awards and performance-based unitsPSUs may not be sold, transferred or pledged.
TheLONG-TERM INCENTIVES GRANTED IN 2020
For 2020, the NEOs of the Company receive 50%received 33% of their long-term incentive awards in the form of restricted stock grants. Grants of restricted stock vest over a four-year period at the rate of 25% per year. The restricted stock grants may be voted and receive the payment of non-forfeitable dividends.
The remaining 50%67% of the long-term incentive awards to the NEOs come in the form of performance-based unitsPSUs that vest after a three-year performance period. For the awards granted in 2018,2020, the three-year performance period will end on December 31, 2020.2022. These awards have two financial performance components, each weighted 50%, that are measured at the end of a three-year performance period. At the end of the performance period and to the extent performance goals are achieved, the performance-based unitsPSUs will then be converted into common shares and paid out after the end of the performance period. In addition, the award recipient will receive a cash payment equivalent to the dividends that would have been paid on such stock during the performance period on the vesting date.
The first financialperformance component of the performance-based unitsPSUs measures our total stockholder return (measured by reference to the change in our share price plus dividends) as compared to the total stockholder return of a peer group consisting of all REITs tracked within the MSCI US REIT Index. If the Company achieves a total stockholder return at the 50th percentile of its peer group, then the performance-based unitsPSUs will be paid out at 100% of the target units related to the total stockholder return metric. The second financialperformance component of the performance-based unitsPSUs measures the Company’s average annual growth in Core FFO, per share. The CNGCompensation Committee has set a three-year Core FFO target which, if achieved, will result in a payout of 100% of the target units related to the FFO metric. With respect to both measurements, the NEOs have the ability to be paid out at a range of 0% to 200% of the target units depending on the Company’s performance with respect to both metrics. Performance above and below targeted levels will be determined by linear interpolation. Subject to the accelerated vesting described below, the NEOs must generally remain employed through the last day of the performance period in order to be eligible to vest in the performance-based stock units.
Grants of restricted shares and performance-based unitsPSUs are discussed and reviewed at regularly scheduled meetings of the CNGCompensation Committee. By taking such actions at regularly scheduled meetings, the CNGCompensation Committee seeks to avoid any possible appearance that the grant timing was manipulated to affect the value of the awards. We do not have any program, plan or practice to coordinate any equity awards with the release by us of material non-public information or any other investor relations activities.
The CNGCompensation Committee awarded both restricted stock grants and performance-based unitsPSUs to all of the named executive officers in 2018,2020, which awards are shown in the “Grants of Plan-Based Awards” table below. The values of the restricted stock grants and performance- basedperformance-based units were determined by the CNGCompensation Committee based on the recommendation of the CEO taking into consideration the total executive compensation at the comparator group of companies.
The equity awards granted to the named executive officers are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Tables—Severance and Change in Control Arrangements with Named Executive Officers.”
FINAL RESULTS OF THE 2018 PERFORMANCE BASED UNITS
In February 2018, the Company issued PSUs to our NEOs, which allowed each NEO to earn from 0% to 200% of the target number of awards based on two performance components, each weighted at 50%, measured at the end of the three-year performance period that ended December 31, 2020. The first performance component of the 2018 PSUs was our total stockholder return (measured by reference to the change in our share price plus dividends) as compared to the total stockholder return of a peer group consisting of all REITs tracked within the MSCI US REIT Index. If we achieved a total stockholder return at the 50th percentile of our peer group, then the PSUs would pay out at 100% of the target units related to the total stockholder return metric. The second performance component of the 2018 performance based units measured the Company’s Core FFO per share. The Compensation Committee set a Core FFO target of $5.09 per share, which, if achieved for the year ended December 31, 2020, would have resulted in a payout of 100% of the target units related to the Core FFO metric.
In February 2021, the Compensation Committee determined our performance relative to the performance metrics for the 2018 PSUs and approved the vesting of such awards at 169% of target. The following tables show the performance metrics and ultimate 169% achievement for the 2018 PSUs at the completion of the three-year performance period from January 1, 2018 through December 31, 2020 and the resulting stock awards.
| | | | | | | | | | | | | | | | | | | | | | | |
| 2018 Performance Level | |
Performance Metric (1) | Weighting | Threshold (0%) | Target (100%) | Maximum (200%) | Performance Result | % of Achievement | Weighted % of Achievement |
TSR Ranking Relative to MSCI US REIT Index for Performance Period | 50% | Below 25th percentile | 50th Percentile | At or above 75th percentile | 86th percentile | 200% | 100% |
Core FFO for 2020 | 50% | At or below $4.58 | $5.09 | At or above $5.60 | $5.28 | 137% | 69% |
TOTAL % of TARGET ACHIEVED: | 169% |
(1) Achievement between levels is determined by linear interpolation.
The following table sets forth the number of 2018 PSUs that vested for each NEO resulting from the 169% achievement level as shown above.
| | | | | | | | |
| Target Number of Performance Based Stock Units | Resulting Number of Performance Based Stock Units (1) |
Joseph D. Margolis | 14,560 | 24,534 |
Scott Stubbs | 5,124 | 8,634 |
Matthew Herrington (2) | — | — |
Gwyn G. McNeal | 2,890 | 4,870 |
James Overturf | 3,082 | 5,194 |
Samrat Sondhi | 3,082 | 5,194 |
(1) In addition, each NEO received a cash payment equivalent to the dividends that would have been paid on such resulting number of 2018 performance-based units during the performance period on the settlement date of such awards in February 2021 as follows: Mr. Margolis, $258,077; Mr. Stubbs, $90,809; Mr. Herrington $0; Ms. McNeal, $51,211; Mr. Overturf, $54,630; and Mr. Sondhi, $54,630.
(2) Mr. Herrington was promoted to Chief Operating Officer on June 1, 2020 and did not receive an award of 2018 PSUs.
OTHER COMPENSATION ELEMENTS
We provide benefits and perquisites to our named executive officers and other employees, such as medical and life insurance, 401(k) plan, and severance pursuant to the terms of the Company’s change in control plan.
•Medical Insurance. The Company makes available to each NEO and their spouses and children such health, dental and vision insurance coverage on the same basis as the Company may from time to time make available to its other corporate employees. A portion of the insurance coverage is paid by the Company.
•Life Insurance. The Company provides each named executive officer such life insurance on the same basis as the Company may from time to time make available to its other corporate employees.
•Retirement Benefits. Our executive officers are eligible to participate in our 401(k) defined contribution plan on the same basis as other eligible employees. The Company currently matches 100% of the first three percent of an employee’s cash compensation contributed by each employee, and 50% of the next two percent of an employee’s cash compensation contributed.
A description of the severance arrangements we maintain with our named executive officers can be found under “Severance and Change in Control Arrangements with Named Executive Officers.” below. We also limit the perquisites that we make available to our executive officers, particularly in light of the potential for abuse associated with such perquisites. Accordingly, our executives are entitled to few benefits that are not otherwise available to all of our employees.
POLICY REGARDING TAX DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to the company’s named executive officers. The CNGCompensation Committee’s general policy is to maintain flexibility in compensating named executive officers in a manner designed to promote varying corporate goals. In addition, we believe that we qualify as a REIT under the Code and generally are not subject to federal income taxes, provided that we distribute to our stockholders at least 90% of our taxable income each year. As a result, we do not expect that the payment of compensation that does not satisfy the requirements of Section 162(m) of the Code will have a material adverse federal income tax consequence to us. Accordingly, the CNGCompensation Committee has not adopted a policy that all compensation must be deductible.
STOCK OWNERSHIP GUIDELINES FOR EXECUTIVE AND SENIOR OFFICERS
We have stock ownership guidelines which require each of our executive and senior officers, within five years after appointment as an officer, to hold shares of our common stock, restricted stock or stock options (whether or not vested). These stock ownership guidelines align our officers’ interests with those of our stockholders, ensuring executive and senior officers hold a significant amount of equity in the Company. Each executive and senior officer has met the following guidelines as of December 31, 2018:
2020, or has additional time within which to come into compliance in accordance with the guidelines.
| | | | | | | | |
Position | Base Salary Multiple | Time to Attain |
CEO | 5x | 5 years |
Executive Vice President | 3x | 5 years |
Senior Vice President | 1x | 5 years |
IMPACT OF ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION
At the Company’s 20182020 Annual Meeting of Stockholders, an advisory vote was held to approve executive compensation, thereby affording stockholders the opportunity to cast a vote on the compensation programs for our named executive officers. Of the 126,068,982129,493,308 total shares outstanding, 86%93% voted on this matter, excluding abstentions and broker non-votes. The result of these votes indicated 97%95% approval of the compensation paid to our named executive officers. The CNGCompensation Committee believes that the results of this vote affirm stockholder support of the Company’s approach to executive compensation, and the CNGCompensation Committee did not change its general approach to executive compensation after receiving these voting results. The CNGCompensation Committee will continue to consider the outcome of advisory stockholder votes regarding executive compensation when making future compensation decisions for our named executive officers.
Compensation Nominating and Governance Committee Report
The CNGCompensation Committee has reviewed and discussed the Compensation Discussion and Analysis with the Company’s management and, based on our review and discussions, the committee recommended to the board of directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and in this proxy statement.
Submitted by the CNGCompensation Committee
Roger B. Porter, Chairman
Joseph J. Bonner
Dennis J. Letham
Diane Olmstead
Executive Compensation Tables
SUMMARY EXECUTIVE COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | |
Name and principal position | Year | Salary | | Non-equity incentive plan compensation (1) | Stock awards (2) | Option awards (2) | All other compensation (4) | Total |
Joseph D. Margolis | 2020 | $ | 850,000 | | | $ | 1,319,625 | | $ | 4,216,825 | | $ | — | | $ | 395,762 | | $ | 6,782,212 | |
Chief Executive Officer | 2019 | 850,000 | | | 1,057,188 | | 3,965,507 | | — | | 412,280 | | 6,284,975 | |
| 2018 | 750,000 | | | 895,313 | | 2,581,747 | | — | | 203,266 | | 4,430,326 | |
| | | | | | | |
|
Scott Stubbs | 2020 | $ | 475,000 | | | $ | 527,250 | | $ | 1,178,223 | | $ | — | | $ | 150,903 | | $ | 2,331,376 | |
Chief Financial Officer | 2019 | 475,000 | | | 482,125 | | 1,108,076 | | — | | 142,997 | | 2,208,198 | |
| 2018 | 475,000 | | | 453,625 | | 908,461 | | — | | 72,390 | | 1,909,476 | |
| | | | | | | |
|
Matthew Herrington | 2020 | $ | 299,700 | | | $ | 227,255 | | $ | 198,084 | | $ | — | | $ | 170,878 | | $ | 895,917 | |
Chief Operations Officer (3) | | | | | | | | |
| | | | | | | | |
Gwyn G. McNeal | 2020 | $ | 400,000 | | | $ | 417,600 | | $ | 771,806 | | $ | — | | $ | 96,773 | | $ | 1,686,179 | |
Chief Legal Officer | 2019 | 400,000 | | | 360,000 | | 725,638 | | — | | 83,366 | | 1,569,004 | |
| 2018 | 375,000 | | | 330,750 | | 512,306 | | — | | 48,311 | | 1,266,367 | |
| | | | | | | | |
James Overturf | 2020 | $ | 236,539 | | | $ | 216,173 | | $ | 2,169,681 | | $ | — | | $ | 86,195 | | $ | 2,708,588 | |
Former Chief Marketing Officer (3) | 2019 | 410,000 | | | 367,155 | | 850,041 | | — | | 73,085 | | 1,700,281 | |
| 2018 | 400,000 | | | 352,800 | | 546,531 | | — | | 32,402 | | 1,331,733 | |
| | | | | | | | |
Samrat Sondhi | 2020 | $ | 410,000 | | | $ | 447,925 | | $ | 903,967 | | $ | — | | $ | 102,239 | | $ | 1,864,131 | |
Chief Marketing Officer (3) | 2019 | 410,000 | | | 359,775 | | 850,041 | | — | | 86,483 | | 1,706,299 | |
| 2018 | 400,000 | | | 352,800 | | 546,531 | | — | | 48,187 | | 1,347,518 | |
| | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | |
Name and principal position | Year | Salary | Non-equity incentive plan compensation (1) | Stock awards (2) | Option awards (2) | All other compensation (3) | Total |
Joseph D. Margolis | 2018 | $ | 750,000 |
| $ | 895,313 |
| $ | 2,581,747 |
| $ | — |
| $ | 203,266 |
| $ | 4,430,326 |
|
Chief Executive Officer | 2017 | 750,000 |
| 1,050,000 |
| 2,407,523 |
| — |
| 213,373 |
| 4,420,896 |
|
| 2016 | 500,000 |
| 555,000 |
| 680,181 |
| 121,822 |
| 210,201 |
| 2,067,204 |
|
| | | | | | |
|
|
Scott Stubbs | 2018 | 475,000 |
| 453,625 |
| 908,461 |
| — |
| 72,390 |
| 1,909,476 |
|
Chief Financial Officer | 2017 | 475,000 |
| 478,800 |
| 762,482 |
| — |
| 75,154 |
| 1,791,436 |
|
| 2016 | 475,000 |
| 468,113 |
| 605,800 |
| 108,523 |
| 82,895 |
| 1,740,331 |
|
| | | | | | |
|
|
Gwyn G. McNeal | 2018 | 375,000 |
| 330,750 |
| 512,306 |
| — |
| 48,311 |
| 1,266,367 |
|
Chief Legal Officer | 2017 | 350,000 |
| 292,688 |
| 374,552 |
| — |
| 46,328 |
| 1,063,568 |
|
| | | | | | | |
James L. Overturf | 2018 | 400,000 |
| 352,800 |
| 546,531 |
| — |
| 32,402 |
| 1,331,733 |
|
Chief Marketing Officer | 2017 | 385,000 |
| 321,956 |
| 412,008 |
| — |
| 33,021 |
| 1,151,985 |
|
| 2016 | 385,000 |
| 316,181 |
| 327,622 |
| 58,678 |
| 42,542 |
| 1,130,023 |
|
| | | | | | | |
Samrat Sondhi | 2018 | 400,000 |
| 352,800 |
| 546,531 |
| — |
| 48,187 |
| 1,347,518 |
|
Chief Operations Officer | 2017 | 350,000 |
| 291,375 |
| 374,552 |
| — |
| 46,676 |
| 1,062,603 |
|
(1) Represents amounts earned related to the Company’s annual incentive bonus program. | |
(1) | Represents amounts earned related to the Company’s annual incentive bonus program. |
| |
(2) | Dollar amounts represent the grant date fair value of the stock, PSU and option awards granted during the year computed in accordance with ASC 718, using the assumptions to value such awards reported in the notes to the Company’s financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. |
(2) Dollar amounts represent the grant date fair value of the stock and performance-based stock units ("PSU(s)") granted during the year computed in accordance with ASC 718, using the assumptions to value such awards reported in the notes to the Company’s financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC.
The grant date fair value of the restricted stock awards granted in 20182020 to the named executive officers was as follows: Mr. Margolis, $1,181,317;$1,273,689; Mr. Stubbs, $415,680;$355,884; Mr. Herrington, $198,084; Ms. McNeal, $234,413;$233,068; Mr. Overturf, $250,073;$273,110; and Mr. Sondhi, $250,073.$273,110.
With respect to the performance-based unitsPSUs granted during 2018,2020, the performance objectives applicable to those awards relate to two financial performance components, each weighted 50%, that are measured at the end of a three-year performance period ending December 31, 2020.2022. With respect to both measurements,
the NEOs have the ability to be paid out at a range of 0% to 200% of the target units depending on the Company’s performance with respect to both metrics. In addition, the award recipient will receive a cash payment equivalent to the dividends that would have been paid on such stock during the performance period on the vesting date of the PSUs.
The grant date fair value of the portion of these performance-based units that are tied to our total stockholder return (which is a market-based condition) was calculated, in accordance with ASC 718, using a Monte Carlo simulation which considered the likelihood of achieving the vesting conditions. Our model estimates the fair value of the awards based on our data and that of the MSCI US REIT Index. Based on the performance objectives and these capital markets assumptions, these performance-based unitsPSUs were valued at $111.24$146.60 per share, which value was applied to the target units eligible to be earned with respect to this objective for the 20182020 grants. The grant date fair value under ASC 718 of the portion of these performance-based unitsPSUs granted as reflected in this column, was as follows: Mr. Margolis, $809,772;$1,667,428; Mr. Stubbs, $284,941;$465,895; Ms. McNeal, $160,686;$305,221; Mr. Overturf, $171,421;$357,411; and Mr. Sondhi, $171,421.$357,411.
The grant date fair value of the portion of these performance-based stock units that are tied to Core FFO objectives was calculated, in accordance with ASC 718, based on the closing stock price on the grant date and the probable outcome of the Core FFO performance objectives as of the grant date (which was determined to be at “target” levels). As a result, the grant date fair value of these performance-based units was $81.14$112.16 per share, which value was applied to the “target” number of units eligible to be earned with respect to this objective for the 20182020 grants. The grant date fair value under ASC 718 of the portion of the performance-based unitsPSUs granted in 20182020 that are tied to Core FFO performance, as reflected in this column, was as follows: Mr. Margolis, $590,659;$1,275,708; Mr. Stubbs, $207,840;$356,444; Ms. McNeal, $117,207;$233,517; Mr. Overturf, $125,037;$273,446; and Mr. Sondhi, $125,037.$273,446 . The grant date fair value under ASC 718 of these performance-based unitsPSUs assuming the highest level of performance achievement, is as follows: Mr. Margolis, $1,181,317;$2,551,416; Mr. Stubbs, $415,680;$712,888; Ms. McNeal, $234,414;$467,034; Mr. Overturf, $250,074;$546,892; and Mr. Sondhi, $250,074.$546,892.
Mr. Overturf retired effective June 30, 2020 (See note 3 below). His stock awards were modified at the time of his retirement to allow for continued vesting of his stock awards subsequent to his retirement date. The Company recognized an additional $1,265,686 of expense related to this modification, which is included above.
| | | | | |
(3)2021 Proxy Statement | All other compensation includes:29 |
(3) On March 13, 2020, the Company announced the retirement of Mr. Overturf effective June 30, 2020. The Company also announced that Mr. Sondhi was promoted to Chief Marketing Officer, effective June 1, 2020, with no salary change. Mr. Matthew Herrington, current Senior Vice President Operations was promoted to Chief Operations Officer effective June 1, 2020.
(4) All other compensation includes:
| | | | | | | | | | | | | | | | | |
Name | Year | Other benefits (a) | Relocation Costs (b) | Dividends on restricted stock and dividend equivalent payouts on vested PSUs (c) | Total other compensation |
Joseph D. Margolis | 2020 | $ | 21,668 | $ | — | $ | 374,094 | $ | 395,762 |
Scott Stubbs | 2020 | 25,268 | — | 125,635 | 150,903 |
Matthew Herrington | 2020 | 24,591 | 129,376 | 16,911 | 170,878 |
Gwyn G. McNeal | 2020 | 24,307 | — | 72,466 | 96,773 |
James Overturf | 2020 | 7,362 | — | 78,833 | 86,195 |
Samrat Sondhi | 2020 | 23,618 | — | 78,621 | 102,239 |
a) Includes defined contribution plans, group life insurance premiums and other medical insurance which are generally available to all salaried employees and do not discriminate in scope, terms, or operation in favor of executive officers.
b) Represents relocation costs paid to Mr. Herrington, including tax gross ups in the amount of $37,907 to cover applicable taxes.
c) Includes dividends on restricted stock paid in 2020 and dividend equivalent payouts paid in cash on 2018 PSUs that vested based on performance for the performance period ended December 31, 2020, which cash dividend equivalent payouts occurred in February 2021, as follows : Mr. Margolis, $116,017 and $258,077, respectively; Mr. Stubbs, $34,826 and $90,809, respectively; Mr. Herrington, $16,911 and $0, respectively; Ms. McNeal, $21,254 and $51,211, respectively; Mr. Overturf, $24,203 and $54,630, respectively; and Mr. Sondhi, $23,990 and $54,630, respectively.
|
| | | | | | | | | | | | | | | | |
Name | Year | Defined contribution plans | Group term life insurance premiums | Other medical insurance | Dividends on restricted stock | Total other compensation |
Joseph D. Margolis | 2018 | $ | 7,400 |
| $ | 468 |
| $ | 12,845 |
| $ | 182,553 |
| $ | 203,266 |
|
Scott Stubbs | 2018 | 10,571 |
| 468 |
| 12,933 |
| 48,418 |
| 72,390 |
|
Gwyn G. McNeal | 2018 | 10,110 |
| 468 |
| 12,845 |
| 24,888 |
| 48,311 |
|
James L. Overturf | 2018 | 4,933 |
| 468 |
| — |
| 27,001 |
| 32,402 |
|
Samrat Sondhi | 2018 | 9,250 |
| 468 |
| 12,933 |
| 25,536 |
| 48,187 |
|
GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated future payouts under non-equity incentive plan awards | | Estimated future payouts under equity incentive plan awards | All other stock awards: number of shares of stock or units (3) | Grant date fair value of stock awards (4) |
Name | Grant date | Threshold | Target (1) | Maximum (1) | | Threshold | Target (2) | Maximum (2) |
Joseph D. Margolis | | | | | | | | | | |
Annual Incentive | — | | $ | — | | $ | 1,147,500 | | $ | 1,434,375 | | | | | | — | $ | — | |
Stock awards | 2/12/2020 | | | | | | | | 11,356 | 1,273,689 | |
PSU awards | 2/12/2020 | | | | | — | | 22,748 | 45,496 | — | 2,943,136 | |
Scott Stubbs | | | | | | | | | | |
Annual Incentive | — | | $ | — | | $ | 475,000 | | $ | 593,750 | | | | | | — | $ | — | |
Stock awards | 2/12/2020 | | | | | | | | 3,173 | 355,884 | |
PSU awards | 2/12/2020 | | | | | — | | 6,356 | 12,712 | — | 822,339 | |
Matthew Herrington | | | | | | | | | | |
Annual Incentive | — | | $ | — | | $ | 197,979 | | $ | 247,475 | | | | | | — | $ | — | |
Stock awards | 2/12/2020 | | | | | | | | 2,074 | 198,084 | |
PSU awards (5) | 2/12/2020 | | | | | — | | — | — | — | — | |
Gwyn G. McNeal | | | | | | | | | | |
Annual Incentive | — | | $ | — | | $ | 360,000 | | $ | 450,000 | | | | | | — | $ | — | |
Stock awards | 2/12/2020 | | | | | | | | 2,078 | 233,068 | |
PSU awards | 2/12/2020 | | | | | — | | 4,164 | 8,328 | — | 538,738 | |
James Overturf | | | | | | | | | | |
Annual Incentive | — | | $ | — | | $ | 194,750 | | $ | 243,438 | | | | | | — | $ | — | |
Stock awards | 2/12/2020 | | | | | | | | 2,435 | 273,110 | |
PSU awards | 2/12/2020 | | | | | — | | 4,876 | 9,752 | — | 630,857 | |
Samrat Sondhi | | | | | | | | | | |
Annual Incentive | — | | $ | — | | $ | 389,500 | | $ | 486,875 | | | | | | — | $ | — | |
Stock awards | 2/12/2020 | | | | | | | | 2,435 | 273,110 | |
PSU awards | 2/12/2020 | | | | | — | | 4,876 | 9,752 | — | 630,857 | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Estimated future payouts under non-equity incentive plan awards | | Estimated future payouts under equity incentive plan awards | All other stock awards: number of shares of stock or units (3) | Grant date fair value of stock awards (4) |
Name | Grant date | Threshold | Target (1) | Maximum (1) | | Threshold | Target (2) | Maximum (2) |
Joseph D. Margolis | | | | | | | | | | |
Annual Incentive | | $ | — |
| $ | 937,500 |
| $ | 1,171,875 |
| | | | | — | — |
Stock awards | 2/14/2018 | | | | | | | | 14,559 |
| $ | 1,181,317 |
|
PSU awards | 2/14/2018 | | | | | — |
| 14,559 |
| 29,118 |
| — |
| 1,400,430 |
|
Scott Stubbs | | | | | | | | | | |
Annual Incentive | | $ | — |
| $ | 475,000 |
| $ | 593,750 |
| | | | | — |
| — |
|
Stock awards | 2/14/2018 | | | | | | | | 5,123 |
| $ | 415,680 |
|
PSU awards | 2/14/2018 | | | | | — |
| 5,123 |
| 10,246 |
| — |
| 492,781 |
|
Gwyn G. McNeal | | | | | | | | | | |
Annual Incentive | | $ | — |
| $ | 337,500 |
| $ | 421,875 |
| | | | | — |
| — |
|
Stock awards | 2/14/2018 | | | | | | | | 2,889 |
| $ | 234,413 |
|
PSU awards | 2/14/2018 | | | | | — |
| 2,889 |
| 5,778 |
| — |
| 277,893 |
|
James L. Overturf | | | | | | | | | | |
Annual Incentive | | $ | — |
| $ | 360,000 |
| $ | 450,000 |
| | | | | — |
| — |
|
Stock awards | 2/14/2018 | | | | | | | | 3,082 |
| $ | 250,073 |
|
PSU awards | 2/14/2018 | | | | | — |
| 3,082 |
| 6,164 |
| — |
| 296,458 |
|
Samrat Sondhi | | | | | | | | | | |
Annual Incentive | | $ | — |
| $ | 360,000 |
| $ | 450,000 |
| | | | | — |
| — |
|
Stock awards | 2/14/2018 | | | | | | | | 3,082 |
| $ | 250,073 |
|
PSU awards | 2/14/2018 | | | | | — |
| 3,082 |
| 6,164 |
| — |
| 296,458 |
|
| |
(1) | (1) Amounts relate to the annual incentive bonus as described in the “Annual Incentive Bonus” section above. |
| |
(2) | Represents performance-based units granted during 2018 related to the 2018 total compensation package for the named executive officers. The performance objectives applicable to these awards relate to two financial performance components, each weighted 50%, that are measured at the end of a three-year performance period ending December 31, 2020. At the end of the performance period and to the extent performance goals are achieved, the performance-based units awards will then be converted into common shares and paid out after the end of the performance period. In addition, the award recipient will receive a cash payment equivalent to the dividends that would have been paid on such stock during the performance period on the vesting date. The first financial component of the performance-based units measures our total stockholder return (measured by reference to the change in our share price plus dividends) as compared to the total stockholder return of a peer group consisting of all REITs tracked within the MSCI US REIT Index. If the Company achieves a total stockholder return at the 50th percentile of its peer group, then the performance-based units will be paid out at 100% of the target units related to the total stockholder return metric. The second financial component of the performance-based units measures the Company’s average annual growth in Core FFO, per share. The CNG Committee has set a three-year Core FFO target which, if achieved, will result in a payout of 100% of the target units related to the FFO metric. With respect to both measurements, the NEOs have the ability to be paid out at a range of 0% to 200% of the target units depending on the Company’s performance with respect to both metrics. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.” |
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(3) | Grants of restricted stock awards under the 2015 Incentive Award Plan related to the 2018 total compensation package for the named executive officers. The shares have dividend and voting rights and vest ratably over four years following the grant date. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.” |
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(4) | Dollar amounts represent the grant date fair value of the stock awards granted during the year computed in accordance with ASC 718, using the assumptions to value such awards reported in the notes to the Company’s financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. |
The grant date fair value of the portion of these performance-based units that are tied to our total stockholder return (which is a market-based condition) was calculated using a Monte Carlo simulation which considered the likelihood of achieving the vesting conditions. Our model estimates the fair value of the awards based on our data and that of the MSCI US REIT Index. Based on the performance objectives and these capital markets assumptions, these performance-based units were valued at $111.24 per share, which value was applied to the target units eligible to be earned with respect to this objective for the 2018 grants. The grant date fair value under ASC 718 of the portion of the performance-based units granted in 2018 that are tied to our total stockholder return (representing 50% of the total number of performance-based units granted in 2018) wasannual incentive bonus as follows: Mr. Margolis, $809,772; Mr. Stubbs, $284,941; Ms. McNeal, $160,686; Mr. Overturf, $171,421; and Mr. Sondhi, $171,421.
The grant date fair value of the portion of these performance-based units that are tied to Core FFO objectives was calculated, in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date and the probable outcome of the Core FFO performance objectives as of the grant date (which was determined to be at target levels). As a result, the grant date fair value under ASC 718 of these performance-based units was $81.14 per share, which value was applied to the target number of units eligible to be earned with respect to this objective for the 2018 grants and is discloseddescribed in the table“Annual Incentive Bonus” section above. The grant date fair value under ASC 718 of the portion of the performance-based units
(2) Represents PSUs granted in 2018 that are tied to Core FFO performance (representing 50% of the total number of performance-based units granted in 2018) as reflected in this column, was as follows: Mr. Margolis, $590,659; Mr. Stubbs, $207,840; Ms. McNeal, $117,207; Mr. Overturf, $125,037; and Mr. Sondhi, $125,037. The grant date fair value of the performance-based units under ASC 718 granted in 2018 that are tied to Core FFO performance, assuming the highest level of performance achievement, is as follows: Mr. Margolis, $1,181,317; Mr. Stubbs, $415,680; Ms. McNeal, $234,414; Mr. Overturf, $250,074; and Mr. Sondhi, $250,074.
See footnote (2) to the “Summary Executive Compensation Table” above for more details regarding the grant date fair values of the 2018 equity awards.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END |
| | | | | | | | | | | | | | | |
| Option awards | | Stock awards |
Name | Number of shares underlying unexercised options exercisable | Number of shares underlying unexercised options unexercisable (1) | Option exercise price | Option expiration date | | Number of unearned shares, units or other rights that have not vested (2) | Market value of unearned shares, units or other rights that have not vested (3) | Equity incentive plan awards; Number of unearned shares, units or other rights that have not vested (4) | Equity incentive plan awards; Market or payout value of unearned shares, units or other rights that have not vested (3) |
Joseph D. Margolis | 37,500 | 12,500 | $ | 73.52 |
| 8/1/2025 | | 46,346 | $ | 4,193,386 |
| 29,857 | $ | 2,701,461 |
|
| 3,000 | 3,000 | 85.99 |
| 2/22/2026 | | | | | |
Scott Stubbs | 9,250 | — | $ | 6.22 |
| 2/17/2019 | | 14,410 | $ | 1,303,817 |
| 9,968 | $ | 901,905 |
|
| 15,600 | — | 11.59 |
| 2/16/2020 | | | | | |
| 8,000 | — | 19.60 |
| 2/8/2021 | | | | | |
| 9,200 | — | 26.87 |
| 2/16/2022 | | | | | |
| 8,085 | — | 38.40 |
| 2/20/2023 | | | | | |
| 7,100 | — | 47.50 |
| 2/19/2024 | | | | | |
| 4,620 | 1,540 | 65.45 |
| 2/18/2025 | | | | | |
| 2,673 | 2,672 | 85.99 |
| 2/22/2026 | | | | | |
Gwyn G. McNeal | 2,175 | 725 | $ | 65.45 |
| 2/18/2025 | | 7,407 | $ | 670,185 |
| 5,269 | $ | 476,739 |
|
| 1,313 | 1,312 | 85.99 |
| 2/22/2026 | | | | | |
James L. Overturf | 2,125 | — | $ | 26.87 |
| 2/16/2022 | | 8,036 | $ | 727,097 |
| 5,700 | $ | 515,736 |
|
| 2,275 | — | 38.40 |
| 2/20/2023 | | | | | |
| 2,250 | — | 47.50 |
| 2/19/2024 | | | | | |
| 2,355 | 785 | 65.45 |
| 2/18/2025 | | | | | |
| 1,446 | 1,444 | 85.99 |
| 2/22/2026 | | | | | |
Samrat Sondhi | 4,480 | — | $ | 11.59 |
| 2/16/2020 | | 7,600 | $ | 687,648 |
| 5,462 | $ | 494,202 |
|
| 6,400 | — | 19.60 |
| 2/8/2021 | | | | | |
| 3,744 | — | 28.79 |
| 4/1/2022 | | | | | |
| 2,700 | — | 47.50 |
| 2/19/2024 | | | | | |
| 2,175 | 725 | 65.45 |
| 2/18/2025 | | | | | |
| 1,313 | 1,312 | 85.99 |
| 2/22/2026 | | | | | |
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(1) | Stock options vest ratably over four years from the date of grant, which is 10 years prior to the expiration date. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.” |
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(2) | Represents restricted stock awards granted to the named executive officers. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.” |
Mr. Margolis' 46,346 shares vest as follows: 16,360 shares that vest on August 1, 2019, 3,954 shares vest ratably over the remaining two years on February 22, 2019 and 2020; 11,473 shares vest ratably over the remaining three years on February 15, 2019,during 2020 and 2021; and 14,559 shares vest ratably over the remaining four years on the anniversary of the date of grant of February 14, 2018.
Mr. Stubbs' 14,410 shares vest as follows: 2,132 shares vest on February 18, 2019; 3,522 shares vest ratably over the remaining two years on February 22, 2019 and 2020; 3,633 shares vest ratably over the remaining three years on February 15, 2019, 2020 and 2021; and 5,123 shares vest ratably over four years on the anniversary date of grant of February 14, 2018.
Ms. McNeal's 7,407 shares vest as follows: 1,003 shares vest February 18, 2019; 1,730 shares vest ratably over the remaining two years on February 22, 2019 and 2020; 1,785 shares vest ratably over the remaining three years on February 15, 2019, 2020 and 2021; and 2,889 shares vest ratably over four years on the anniversary date of grant of February 14, 2018.
Mr. Overturf's 8,036 shares vest as follows: 1,087 shares vest on February 18, 2019; 1,904 shares vest ratably over the remaining two years on February 22, 2019 and 2020; 1,963 shares that vest ratably over the remaining three years on February 15, 2019, 2020 and 2021; and 3,082 shares that vest ratably over four years on the anniversary of the date of grant of February 14, 2018.
Mr. Sondhi's 7,600 shares vest as follows: 1,003 shares vest on February 18, 2019; 1,730 shares vest ratably over the remaining two years on February 22, 2019 and 2020; 1,785 shares vest ratably over the remaining three years on February 15, 2019, 2020 and 2021; and 3,082 shares vest ratably over four years on the anniversary date of grant of February 14, 2018.
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(3) | Market value at year-end is based on the closing trading price of our stock on December 31, 2018, which was $90.48. |
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(4) | Represents the performance-based units granted to the NEOs on February 14, 2018 and March 14, 2017 that vest after a three-year performance period ending December 31, 2020 and December 31, 2019, respectively, as follows: Mr. Margolis, 14,559 units granted in 2018, and 15,298 units granted in 2017; Mr. Stubbs, 5,123 units granted in 2018, and 4,845 units granted in 2017; Ms. McNeal, 3,082 units granted in 2018, and 2,380 units granted in 2017; Mr. Overturf, 3,082 units granted in 2018, and 2,618 units granted in 2017; and Mr. Sondhi, 2,889 units granted in 2018, and 2,380 units granted in 2017. The maximum payout of the performance-based units would be double the units awarded at grant date. The performance-based units are included in the table above at target levels. These awards have two financial performance components, each weighted 50%, that are measured at the end of a three-year period. At the end of the performance period and to the extent performance goals are achieved, the performance-based units awards will then be converted into common shares and paid out after the end of the performance period. In addition, the award recipient will receive a cash payment equivalent to the dividends that would have been paid on such stock during the performance period on the vesting date. |
The first financial component of the performance-based units measures our total stockholder return (measured by reference to the change in our share price plus dividends) as compared to the total stockholder return of a peer group consisting of all REITs tracked within the MSCI US REIT Index. If the Company achieves a total stockholder return at the 50th percentile of its peer group, then the performance-based units will be paid out at 100% of the target units related to the 2020 total stockholder return metric. The second financial componentcompensation package for the named executive officers found in the "Summary Executive Compensation Table" above. For a description of the performance-based units measures the Company’s average annual growth in Core FFO, per share. The CNG Committee has set a three-year Core FFO target which, if achieved, will result in a payout of 100% of the target units relatedvesting terms applicable to the FFO metric. With respect to both measurements, the NEOs have the ability to be paid out at a range of 0% to 200% of the target units depending on the Company’s performance with respect to both metrics.
such awards, please see "Executive Compensation - Compensation Discussion and Analysis - Long Term Incentives for 2020" above. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.”
(3) Grants of restricted stock awards under the 2015 Incentive Award Plan related to the 2020 total compensation package for the named executive officers. The shares have dividend and voting rights and vest ratably over four years following the grant date. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.”
(4) Dollar amounts represent the grant date fair value of the stock awards granted during the year computed in accordance with ASC 718, using the assumptions to value such awards reported in the notes to the Company’s financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC.
See footnote (2) to the “Summary Executive Compensation Table” above for more details regarding the grant date fair values of the 2020 equity awards.
(5) Mr. Herrington was promoted to Chief Operating Officer on June 1, 2020 and did not receive a 2020 PSU award.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option awards | | Stock awards |
Name | Number of shares underlying unexercised options exercisable | Number of shares underlying unexercised options unexercisable | Option exercise price | Option expiration date | | Number of unearned shares, units or other rights that have not vested (1) | Market value of unearned shares, units or other rights that have not vested (2) | Equity incentive plan awards; Number of unearned shares, units or other rights that have not vested (3) | Equity incentive plan awards; Market or payout value of unearned shares, units or other rights that have not vested (2) |
| | | | | | | | | |
Joseph D. Margolis | 50,000 | — | $ | 73.52 | | 8/1/2025 | | 32,227 | $ | 3,733,820 | | 48,836 | $ | 5,658,139 | |
| 6,000 | — | 85.99 | | 2/22/2026 | | | | | |
| | | | | | | | | |
Scott Stubbs | — | — | — | | — | | | 9,674 | 1,120,830 | | 13,646 | 1,581,026 | |
| | | | | | | | | |
Matt Herrington | — | — | — | | — | | | 4,133 | 478,849 | | — | — | |
| | | | | | | | | |
Gwyn G. McNeal | — | — | — | | — | | | 5,904 | 684,037 | | 8,938 | 1,035,557 | |
| | | | | | | | | |
James Overturf | 722 | — | 85.99 | | 2/22/2026 | | 6,723 | 778,927 | | 10,468 | 1,212,822 | |
| | | | | | | | | |
Samrat Sondhi | 2,700 | — | 47.50 | | 2/19/2024 | | 6,664 | 772,091 | | 10,468 | 1,212,822 | |
| 2,900 | — | 65.45 | | 2/18/2025 | | | | | |
| 2,625 | — | 85.99 | | 2/22/2026 | | | | | |
| | | | | | | | | |
(1) Represents restricted stock awards granted to the named executive officers. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.”
Mr. Margolis' 32,227 shares vest as follows: 3,824 shares that vest on February 15, 2021; 7,279 shares vest ratably over the remaining two years on February 14, 2021 and 2022; 9,768 shares vest ratably over the remaining three years on March 5, 2021, 2022 and 2023; and 11,356 shares vest ratably over the remaining four years on the anniversary of the date of grant of February 12, 2020.
Mr. Stubbs' 9,674 shares vest as follows: 1,211 shares vest on February 15, 2021; 2,561 shares vest ratably over the remaining two years on February 14, 2021 and 2022; 2,729 shares vest ratably over the remaining three years on March 5, 2021, 2022 and 2023; and 3,173 shares vest ratably over four years on the anniversary date of grant of February 12, 2020.
Mr. Herrington's 4,133 shares vest as follows 395 shares vest on April 1, 2021, 701 shares vest ratably over the remaining two years on April 1, 2021 and 2022, 963 shares vest ratably over the remaining three years on April 1, 2021, 2022, and 2023, 1,425 shares vest ratably over four years on the anniversary date of grant of April 1, 2020, and 649 shares vest ratably over four years on the anniversary date of grant of June 1, 2020.
Ms. McNeal's 5,904 shares vest as follows: 595 shares vest February 15, 2021; 1,444 shares vest ratably over the remaining two years on February 14, 2021 and 2022; 1,787 shares vest ratably over the remaining three years on March 5, 2021, 2022 and 2023; and 2,078 shares vest ratably over four years on the anniversary date of grant of February 12, 2020.
Mr. Overturf's 6,723 shares vest as follows: 654 shares vest on February 15, 2021; 1,540 shares vest ratably over the remaining two years on February 14, 2021 and 2022; 2,094 shares that vest ratably over the remaining three years on March 5, 2021, 2022 and 2023; and 2,435 shares that vest ratably over four years on the anniversary of the date of grant of February 12, 2020.
Mr. Sondhi's 6,664 shares vest as follows: 595 shares vest on February 15, 2021; 1,540 shares vest ratably over the remaining two years on February 14, 2021 and 2022; 2,094 shares vest ratably over the remaining three years on March 5, 2021, 2022 and 2023; and 2,435 shares vest ratably over four years on the anniversary date of grant of February 12, 2020.
(2) Market value at year-end is based on the closing trading price of our stock on December 31, 2020, which was $115.86.
(3) Represents the PSUs granted to the NEOs on February 12, 2020 and March 5, 2019 that vest after a three-year performance period ending December 31, 2022 and December 31, 2021 respectively, as follows: Mr. Margolis, 22,748 units granted in 2020 and 26,088 units granted in 2019; Mr. Stubbs, 6,356 units granted in 2020 and 7,290 units granted in 2019; Ms. McNeal, 4,164 units granted in 2020 and 4,774 units granted in 2019; Mr Overturf, 4,876 units granted in 2020 and 5,592 units granted in 2019; and Mr. Sondhi, 4,876 units granted in 2020 and 5,592 units granted in 2019. Mr. Herrington was promoted June 1, 2020 and was not granted any PSUs in 2020 or 2019. The maximum payout of the PSUs would be double the units awarded at grant date. The PSUs are included in the table above at target levels. The NEOs have the ability to be paid out at a range of 0% to 200% of the target units depending on the Company’s performance with respect to the performance metrics applicable to these awards. In addition, the award recipient will receive a cash payment equivalent to the dividends that would have been paid on such stock during the performance period on the vesting date of the PSUs.
For a description of the vesting terms applicable to such awards, please see “Executive Compensation — Compensation Discussion and Analysis -- Long-Term Incentives for 2020” above. The awards are eligible for accelerated vesting under certain circumstances as described below under “Executive Compensation Tables -- Severance and Change in Control Arrangements with Named Executive Officers.”
OPTIONS EXERCISED, AND STOCK VESTED AND 2018 PSUs
| | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
Name | Number of shares acquired on exercise | Value realized on exercise | | Number of shares acquired on vesting (1) | Value realized on vesting |
Joseph D. Margolis | — | $ | — | | 37,231 | $ | 4,312,581 |
Scott Stubbs | 26,690 | 1,382,499 | | 13,797 | 1,592,381 |
Matthew Herrington | — | — | | 2,332 | 234,448 |
Gwyn G. McNeal | 5,525 | 162,313 | | 7,648 | 883,088 |
James L. Overturf | — | — | | 8,269 | 954,302 |
Samrat Sondhi | — | — | | 8,123 | 937,991 |
|
| | | | | | | | | |
| Option Awards | | Stock Awards |
Name | Number of shares acquired on exercise | Value realized on exercise | | Number of shares acquired on vesting | Value realized on vesting |
Joseph D. Margolis | — | $ | — |
| | 22,163 | $ | 1,998,030 |
|
Scott Stubbs | 18,500 | 1,656,925 |
| | 7,530 | 623,269 |
|
Gwyn G. McNeal | 1,700 | 155,255 |
| | 3,051 | 252,906 |
|
James L. Overturf | 4,100 | 383,604 |
| | 3,845 | 318,387 |
|
Samrat Sondhi | 8,000 | 731,509 |
| | 3,389 | 280,689 |
|
(1) Includes the 2018 performance-based stock units granted on February 14, 2018 that were settled in February 2021 based on performance during the three-year performance period that ended December 31, 2020, and corresponding dividend equivalent payouts paid in cash on such 2018-2020 PSUs, which cash dividend equivalent payouts occurred in February 2021, as follows: Mr. Margolis, 24,534 shares and $258,077, respectively; Mr. Stubbs, 8,634 shares and $90,809, respectively; Mr. Herrington, 0 shares and $0, respectively; Ms. McNeal, 4,870 shares and $51,211, respectively; Mr. Overturf, 5,194 shares and $54,630, respectively; and Mr. Sondhi, 5,194 shares and $54,630, respectively.SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The named executive officers do not have employment agreements with the Company; however, they would receive severance payments upon termination of employment by reason of termination without cause or resignation for good reason within 12 months following a change in control of the Company as defined in the Company’s Executive Change in Control Plan as follows:
• two years of annual base salary plus two times the greater of the prior year’s bonus or average of the three previous annual bonuses, payable in a lump sum;
• annual salary and other benefits earned and accrued prior to the termination of employment;
• lump sum payment equal to the cost of continuing health benefits for two years;
• outplacement services for six months; and
• full vesting of equity incentive compensation and any non-qualified pension or deferred compensation benefits.
In addition, the performance-based units granted in 2018PSUs will vest on an accelerated basis under certain circumstances. Specifically, in the event of a change in control of the Company prior to the end of the three-year performance period, such number of performance-based unitsPSUs will vest on the date of the change in control as is equal to the greater of (1) the target number of units or (2) such number of units as would vest based on actual performance relative to the performance goals for the portion of the performance period ending on the date of the change in control, provided, that in determining performance relative to the Core FFO performance objective for the performance period, the Company’s Core FFO for the shortened performance period will be measured against prorated Core FFO objectives. In the event of a named executive officer’s termination due to death or disability prior to the end of the three-year performance period, a prorated portion of the target number of units will vest on the date of termination based on the portion of the three-year performance period that has elapsed prior to the date of termination.
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| | | | |
20192021 Proxy Statement | 2933 |
The table below presents the amounts that would have been received by or paid on behalf of our named executive officers for the following events as of December 31, 2018:2020:
| | | | | | | | | | | |
Name and Type of Payment or Benefit | Change in Control | Involuntary Termination Following a Change in Control | Death or Disability (4) |
Joseph D. Margolis | | | |
Cash Payment | $ | — | | $ | 4,339,250 | | $ | — | |
Value of Acceleration of Time-Based Equity Awards (1) | — | | 3,733,820 | | 3,733,820 | |
Value of Acceleration of Performance-Based Equity Awards (2) | 5,658,139 | | 5,658,139 | | 4,580,486 | |
Benefits (3) | — | | 98,781 | | — | |
Scott Stubbs | | | |
Cash Payment | — | | 2,004,500 | | — | |
Value of Acceleration of Time-Based Equity Awards (1) | — | | 1,120,830 | | 1,120,830 | |
Value of Acceleration of Performance-Based Equity Awards (2) | 1,581,026 | | 1,581,026 | | 1,402,215 | |
Benefits (3) | — | | 93,728 | | — | |
Matt Herrington | | | |
Cash Payment | — | | 1,104,510 | | — | |
Value of Acceleration of Time-Based Equity Awards (1) | — | | 478,849 | | 478,849 | |
Value of Acceleration of Performance-Based Equity Awards (2) | — | | — | | — | |
Benefits (3) | — | | 71,375 | | — | |
Gwyn G. McNeal | | | |
Cash Payment | — | | 1,635,200 | | — | |
Value of Acceleration of Time-Based Equity Awards (1) | — | | 684,037 | | 684,037 | |
Value of Acceleration of Performance-Based Equity Awards (2) | 1,035,557 | | 1,035,557 | | 864,393 | |
Benefits (3) | — | | 80,651 | | — | |
James Overturf (5) | | | |
Cash Payment | — | | — | | — | |
Value of Acceleration of Time-Based Equity Awards (1) | — | | 778,927 | | 778,927 | |
Value of Acceleration of Performance-Based Equity Awards (2) | 1,212,822 | | 1,212,822 | | — | |
Benefits (3) | — | | — | | — | |
Samrat Sondhi | | | |
Cash Payment | — | | 1,715,850 | | — | |
Value of Acceleration of Time-Based Equity Awards (1) | — | | 772,091 | | 772,091 | |
Value of Acceleration of Performance-Based Equity Awards (2) | 1,212,822 | | 1,212,822 | | 977,318 | |
Benefits (3) | — | | 82,997 | | — | |
(1) Represents the value of the acceleration of the unvested options and restricted stock awards using the closing stock price of $115.86 on December 31, 2020.
(2) Represents the value of the acceleration of the unvested PSUs assuming payout at target using the closing stock price of $115.86 on December 31, 2020 which number was prorated for purposes of the column related to a termination by reason of death or disability to give effect to the portion of the three year performance period that had elapsed prior to the assumed date of termination (one-third in the case of the PSUs granted in 2020 and two-thirds in the case of the PSUs granted in 2019. These values do not include the 2018 PSUs due to the fact that the measurement date for those awards occurred on December 31, 2020 and only continued employment through December 31, 2020 is required in order for an NEO to be eligible to vest in such awards).
(3) Represents the amount of accrued vacation at December 31, 2020 and the value of health benefits to be paid on behalf of the executive for the two years after termination, however, does not include the amount of any tax gross-up on such amounts as described in the plan. Excludes the value of outplacement benefits, which cannot be quantified at this time.
(4) Options and shares of restricted stock fully vest upon death. Vesting due to disability is determined on a case by case basis by the Compensation Committee.
(5) Mr. Overturf retired in June 2020. His stock-based award agreements were modified to allow his stock awards to continue to vest as originally scheduled. The acceleration of these awards are included in the table above, but no amounts for cash payments or benefits are included as he would not have been entitled to any such benefits.
|
| | | | | | | | | |
Name and Type of Payment or Benefit | Change in Control | Involuntary Termination Following a Change in Control | Death or Disability(4) |
Joseph D. Margolis | | | |
Cash Payment | $ | — |
| $ | 3,290,626 |
| $ | — |
|
Value of Acceleration of Time-Based Equity Awards (1) | — |
| 4,418,856 |
| 4,418,856 |
|
Value of Acceleration of Performance-Based Equity Incentive Plan Awards (2) | 2,701,461 |
| 2,701,461 |
| 1,361,875 |
|
Benefits (3) | — |
| 58,374 |
| — |
|
Scott Stubbs | | | |
Cash Payment | $ | — |
| $ | 1,883,692 |
| $ | — |
|
Value of Acceleration of Time-Based Equity Awards (1) | — |
| 1,354,360 |
| 1,354,360 |
|
Value of Acceleration of Performance-Based Equity Incentive Plan Awards (2) | 901,905 |
| 901,905 |
| 446,760 |
|
Benefits (3) | — |
| 86,208 |
| — |
|
Gwyn G. McNeal | | | |
Cash Payment | $ | — |
| $ | 1,411,500 |
| $ | — |
|
Value of Acceleration of Time-Based Equity Awards (1) | — |
| 694,223 |
| 694,223 |
|
Value of Acceleration of Performance-Based Equity Incentive Plan Awards (2) | 494,202 |
| 494,202 |
| 236,515 |
|
Benefits (3) | — |
| 74,477 |
| — |
|
James L. Overturf | | | |
Cash Payment | $ | — |
| $ | 1,505,600 |
| $ | — |
|
Value of Acceleration of Time-Based Equity Awards (1) | — |
| 753,229 |
| 753,229 |
|
Value of Acceleration of Performance-Based Equity Incentive Plan Awards (2) | 515,736 |
| 515,736 |
| 250,871 |
|
Benefits (3) | — |
| 71,881 |
| — |
|
Samrat Sondhi | | | |
Cash Payment | $ | — |
| $ | 1,505,600 |
| $ | — |
|
Value of Acceleration of Time-Based Equity Awards (1) | — |
| 711,686 |
| 711,686 |
|
Value of Acceleration of Performance-Based Equity Incentive Plan Awards (2) | 476,739 |
| 476,739 |
| 230,694 |
|
Benefits (3) | — |
| 68,804 |
| — |
|
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(1) | Represents the value of the acceleration of the unvested options and restricted stock awards using the closing stock price of $90.48 on December 31, 2018. |
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(2) | Represents the value of the acceleration of the unvested PSUs assuming payout at target using the closing stock price of $90.48 on December 31, 2018 which number was prorated for purposes of the column related to a termination by reason of death or disability to give effect to the portion of the three year performance period that had elapsed prior to the assumed date of termination (one-third in the case of the PSUs granted in 2018, two-thirds in the case of the PSUs granted in 2017). |
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(3) | Represents the amount of accrued vacation at December 31, 2018 and the value of health benefits to be paid on behalf of the executive for the two years after termination, however, does not include the amount of any tax gross-up on such amounts as described in the plan. Excludes the value of outplacement benefits, which cannot be quantified at this time. |
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(4) | Options and shares of restricted stock fully vest upon death. Vesting due to disability is determined on a case by case basis by the CNG Committee. |
EQUITY COMPENSATION PLAN INFORMATION
The following table presents certain equity compensation plan information as of December 31, 2018:2020:
| | Plan Category | Number of shares to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) | | Plan Category | Number of shares to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) | |
Equity compensation plans approved by security holders | 181,439 |
| (1) | $ | 51.51 |
| (1) | 1,587,625 |
| (2) | Equity compensation plans approved by security holders | 71,594 | (1) | $ | 74.54 | (1) | 1,239,557 | (2) |
Equity compensation plans not approved by security holders | — |
| | — |
| | — |
| | Equity compensation plans not approved by security holders | — | | — | | — | |
Total | 181,439 |
| | $ | 51.51 |
| | 1,587,625 |
| | Total | 71,594 | | $ | 74.54 | | 1,239,557 | |
| |
(1) | Represents shares issuable pursuant to and weighted-average exercise price of outstanding options under our 2015 Incentive Award Plan and 2004 Long-Term Incentive Compensation Plan (“2004 Plan”). |
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(2) | Represents shares issuable pursuant to future awards under our 2015 Incentive Award Plan. Shares available may increase by previously issued options or awards under the 2004 Plan that are cancelled and/or forfeited. |
(1) Represents shares issuable pursuant to and weighted-average exercise price of outstanding options under our 2015 Incentive Award Plan and 2004 Long-Term Incentive Compensation Plan (“2004 Plan”).
(2) Represents shares issuable pursuant to future awards under our 2015 Incentive Award Plan. Shares available may increase by previously issued options or awards under the 2004 Plan that are cancelled and/or forfeited.
CEO PAY RATIO
We believe executive pay must be internally consistent and equitable to motivate our employees to create stockholder value. We are committed to internal pay equity, and the CNGCompensation Committee monitors the relationship between the pay of our executive officers and the pay of our non-managerial employees. The Compensation Committee reviewed a comparison of CEO pay (base salary and incentive pay) to the pay of all our employees in 2018.2020. Our CEO to median employee pay ratio set forth below is a reasonable estimate calculated as required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and in accordance with Item 402(u) of Regulation S-K.
We identified the median employee by examining the 20182020 total cash compensation for all individuals, excluding our CEO, who were employed by us on December 31, 2018,2020, the last day of our payroll year. In determining our median employee, we included all employees, whether employed on a full-time, part-time, or seasonal basis.
We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees who were not employed by us for all of 2018.2020. We believe the use of total cash compensation for all employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees. Approximately 8% of our employees receive annual equity awards.
For 2018:2020:
•the median of the annual total compensation of all employees of our Company (other than our CEO) was $35,614;$43,595; and
•the annual total compensation of our CEO, as reported in the Summary Executive Compensation Table included elsewhere in this proxy statement, was $4,430,326.$6,782,212
Based on this information, for 2018,2020, our CEO to median employee pay ratio was 124156 to 1.
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20192021 Proxy Statement | 3135 |
SECURITY OWNERSHIP OF
DIRECTORS AND OFFICERS
The following table presents the beneficial ownership of our common stock, as of the close of business on March 25, 201929, 2021 of:
• each of our directors and nominees for director;
• each named executive officer noted above; and
• our directors and named executive officers as a group.
The address for each named person is c/o Extra Space Storage Inc., 2795 East Cottonwood Parkway, Suite 300, Salt Lake City, UT 84121. We are not aware of any pledge of our common stock that could result in a change in control of our Company.
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Name | Options (1) | RSA (2) | Number of Shares Beneficially Owned (3) | Percent of Class (4) |
Directors | | | | |
Kenneth M. Woolley (5) | | 1,426 | 409,164 | * |
Joseph D. Margolis (6) | | 29,548 | 154,692 | * |
Roger B. Porter (7) | | 1,426 | 228,982 | * |
Joseph J. Bonner | | 1,426 | 2,556 | * |
Gary Crittenden | | 1,426 | 1,426 | * |
Spencer F. Kirk (8) | | 1,426 | 1,794,976 | 1.34% |
Dennis Letham | | 1,426 | 8,243 | * |
Diane Olmstead | | 1,426 | 7,652 | * |
Julia Vander Ploeg | | 509 | 509 | * |
| | | | |
Non-Director Named Executive Officers | | | | |
Scott Stubbs | | 8,518 | 148,626 | * |
Matthew Herrington | | 4,965 | 6,119 | * |
Gwyn G. McNeal | | 5,462 | 28,550 | * |
James L. Overturf | | 3,992 | 55,447 | * |
Samrat Sondhi | 8,225 | 6,324 | 87,785 | * |
All directors and executive officers as a group (14 persons) | | | 2,934,727 | 2.20% |
Less than 1.0% | | | | |
* Less than 1.0%
(1) Consists of options to acquire shares of common stock that can be exercised within 60 days of March 29, 2021.
(2) Consists of restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant for executives and a one-year period beginning on the date of grant for members of the board of directors.
(3) Beneficial ownership of shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power, or of which a person has the right to acquire ownership within 60 days after March 29, 2021. This includes any unvested restricted stock awards as reported under column header "RSA" and any stock options as reported under column header "Options" in the table above.
(4) For each person included in the table, percent of class is calculated by dividing the number of shares of our common stock beneficially owned by that person by the sum of (a) 133,687,662 shares of our common stock outstanding as of March 29, 2021 plus (b) the number of options to acquire common stock beneficially owned by such person that can be exercised within 60 days of March 29, 2021.
(5) Amounts also include 350,000 shares that were pledged as collateral on one loan. As of March 29, 2021, approximately $20 million was outstanding on the loan.
(6) Includes 2,200 shares of common stock which are held by the Joseph Daniel Margolis Revocable Trust and 100,000 shares held by Cove Hollow Lane I, LLC, which is beneficially owned by The Margolis Family Delaware Trust I. Mr. Margolis may be deemed to have or share beneficial ownership of shares held by such entities.
(7) Includes 100,000 shares of common stock which are held by Roger Blaine Porter 2012 Trust, an entity in which Mr. Porter has shared voting and investment power and beneficial ownership.
(8) Includes 1,434,366 shares of common stock which are held by Krispen Family Holdings, L.C., an entity in which Mr. Kirk has shared voting and investment power. Mr. Kirk has no pecuniary interest in 50.5% of such shares and disclaims beneficial ownership. Includes 161,215 shares of common stock which are held by The Kirk 101 Trust. Mr. Kirk has no pecuniary interest in any of these shares and disclaims beneficial ownership. Includes 17,500 shares of common stock held by the Spenco Irrevocable Trust. Mr. Kirk may be deemed to have or share beneficial ownership of shares held by such entity.
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Name | Number of Shares Beneficially Owned | Percent of Class (9) |
Directors | | |
Kenneth M. Woolley (1) | 808,323 | * |
Joseph D. Margolis (2) | 179,141 | * |
Roger B. Porter (3) | 226,426 | * |
Ashley Dreier | 1,281 | * |
Spencer F. Kirk (4) | 2,577,923 | 2.02% |
Dennis Letham | 5,687 | * |
Diane Olmstead | 5,096 | * |
Joseph J. Bonner | — | * |
Non-Director Named Executive Officers | | |
Scott Stubbs (5) | 187,566 | * |
Gwyn G. McNeal (6) | 27,005 | * |
James L. Overturf (7) | 77,714 | * |
Samrat Sondhi (8) | 94,592 | * |
All directors and NEOs as a group (12 persons) | 4,190,754 | 3.29% |
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(1) | Amounts include 2,942 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in the table include options to acquire 5,381 shares of common stock that can be exercised within 60 days of March 25, 2019. Amounts also include 800,000 shares that were pledged as collateral on one loan. As of March 25, 2019, approximately $25 million was outstanding on the loan. |
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(2) | Amounts include 49,928 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in table also include the options to acquire 42,000 shares of common stock that can be exercised within 60 days of March 25, 2019. |
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(3) | Includes 100,000 shares of common stock which are held by Roger Blaine Porter 2012 Trust, an entity in which Mr. Porter has shared voting and investment power and beneficial ownership. |
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(4) | Includes 1,852,276 shares of common stock which are held by Krispen Family Holdings, L.C., an entity in which Mr. Kirk has shared voting and investment power. Mr. Kirk has no pecuniary interest in 50.5% of such shares and disclaims beneficial ownership. Includes 123,215 shares of common stock which are held by The Kirk 101 Trust. Mr. Kirk has no pecuniary interest in any of these shares and disclaims beneficial ownership. Amounts include 12,291 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in the table include options to acquire 99,903 shares of common stock that can be exercised within 60 days of March 25, 2019. |
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(5) | Amounts include 11,664 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in the table also include the options to acquire 42,554 shares of common stock that can be exercised within 60 days of March 25, 2019. |
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(6) | Amounts include 6,604 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in the table also include options to acquire 4,869 shares of common stock that can be exercised within 60 days of March 25, 2019. |
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(7) | Amounts include 7,363 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in the table also include options to acquire 6,785 shares of common stock that can be exercised within 60 days of March 25, 2019. |
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(8) | Amounts include 7,158 restricted shares of our common stock that are subject to restrictions on transfers and forfeiture provisions. The forfeiture and transfer restrictions lapse over a four-year period beginning on the date of grant. Amounts shown in the table also include options to acquire 22,193 shares of common stock that can be exercised within 60 days of March 25, 2019. |
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(9) | For each person included in the table, percent of class is calculated by dividing the number of shares of our common stock beneficially owned by that person by the sum of (a) 127,352,408 shares of our common stock outstanding as of March 25, 2019 plus (b) the number of options to acquire common stock beneficially owned by such person that can be exercised within 60 days of March 25, 2019. |
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
Section 16(a) Beneficial Ownership Reporting Compliance
Under federal securities laws, our directors, executive officers and holders of 10% or more of our common stock are required to report, within specified monthly and annual due dates, their initial ownership in the Company’s common stock and all subsequent acquisitions, dispositions or other transfers of beneficial interests therein, if and to the extent reportable events occur which require reporting by such due dates. Based solely on representations and information provided to us by the persons required to make such filings, we believe that all filing requirements were met in 2018.
MATTERS THAT MAY BE BROUGHT
BEFORE THE ANNUAL MEETING
Item 1. Election of Directors
NOMINEES
In accordance with the provisions of our charter and bylaws, each member of the board of directors is elected at the annual meeting. Each member of the board of directors elected will serve for a term expiring at the annual meeting of stockholders in 2020,2022, and until his or her successor has been duly elected and qualifies, or until his or her resignation or removal. Kenneth M. Woolley, Joseph D. Margolis, Roger B. Porter, Joseph J. Bonner, Ashley Dreier,Gary L. Crittenden, Spencer F. Kirk, Dennis J. Letham, and Diane Olmstead and Julia Vander Ploeg are the nominees for election to the board of directors.
We have not received notice of any additional candidates to be nominated for election as directors at the 20192021 Annual Meeting of Stockholders and the deadline for notice of additional candidates has passed. Consequently, the election of directors will be an uncontested election and the provisions of our bylaws providing for majority voting in uncontested elections will apply. Under majority voting, to be elected as a director, a nominee must receive votes “FOR” his or her election constituting a majority of the total votes cast for and against such nominee at the annual meeting at which a quorum is present. If a nominee who currently is serving as a director does not receive sufficient “FOR” votes to be re-elected, he or she must submit his or her resignation to the board of directors. Our CNGNominating and Governance Committee will consider such tendered resignation and recommend to the board whether to accept it. The board of directors will decide whether to accept any such resignation within 90 days after certification of the election results and will publicly disclose its decision. If the resignation is not accepted, the director will continue to serve until the director’s successor is duly elected and qualifies or until the director’s earlier resignation or removal.
Each of the nominees has consented to serve if elected. If, before the annual meeting, any of them becomes unable to serve, or chooses not to serve, the board of directors may nominate a substitute. If that happens, the persons named as proxies on the proxy card will vote for the substitute.
Biographical information about each of the nominees is found at the beginning of this proxy statement. See “Information about the Board of Directors and its Committees—Nominees for Directors.”
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| Recommendation of the Board of Directors Our board of directors recommends that you vote FOR the election of Kenneth M. Woolley, Joseph D. Margolis, Roger B. Porter, Joseph J. Bonner, Ashley Dreier,Gary L. Crittenden, Spencer F. Kirk, Dennis J. Letham, and Diane Olmstead and Julia Vander Ploeg as directors for the term expiring at the 20202022 Annual Meeting of Stockholders, and until their respective successors are duly elected and qualify. | |
Item 2. Ratification of the Engagement of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for 20192021
Our Audit Committee has appointed the firm of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2019.2021. Ernst & Young LLP has acted as the Company’s independent registered public accounting firm since April 2005, and our management considers the firm to be well qualified.
We have been advised by Ernst & Young LLP that it is a registered public accounting firm with the PCAOB and complies with the auditing, quality control and independence standards and rules of the PCAOB and the SEC.
Our charter and bylaws do not require that stockholders ratify the appointment of the independent registered public accounting firm. We are submitting the appointment for ratification because the board of directors believes it is a matter of good corporate practice. If our stockholders do not ratify the appointment, the Audit Committee will reconsider whether to retain Ernst & Young LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of 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 interest of the Company.
A representative of Ernst & Young LLP is expected to be present at the annual meeting with the opportunity to make a statement if the representative desires to do so, and is expected to be available to respond to appropriate questions.
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342021 Proxy Statement | Extra Space Storage37 |
The following table presents the aggregate fees for professional audit services rendered for the integrated audits of our annual financial statements for the years ended December 31, 20182020 and 2017,2019, for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q for those fiscal years and for the testing of our internal control over financial reporting pursuant to Section 404(a) of the Sarbanes-Oxley Act of 2002, and fees billed for other services rendered during those periods.
AUDIT COMMITTEE PRE-APPROVAL OF SERVICES BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In accordance with its charter and applicable rules and regulations adopted by the SEC, our Audit Committee reviews and pre-approves any engagement of the independent registered public accounting firm to provide audit, review or attest services or non-audit services and the fees for any such services. The Audit Committee annually considers and, if appropriate, approves the provision of audit services by the independent registered public accounting firm. In addition, the Audit Committee periodically considers and, if appropriate, approves the provision of any additional audit and non-audit services by our independent registered public accounting firm that are neither pre-approved by the Audit Committee on an annual basis nor prohibited by applicable rules and regulations of the SEC. The Audit Committee has delegated to the chairman of the Audit Committee, Mr. Letham, the authority to pre-approve, on a case-by-case basis, any such additional audit and non-audit services to be performed by our independent registered public accounting firm. Mr. Letham reports any decision to pre-approve such services to the Audit Committee at its next regular meeting. All of the fees described in the table above were pre-approved by the Audit Committee.
We request stockholder approval, on an advisory basis, of the compensation paid to our named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis and the accompanying compensation tables and related material disclosed in this proxy statement).
As described in the Compensation Discussion and Analysis of this proxy statement, our executive compensation program is designed to reinforce a results-oriented culture with executive pay that reflects Company and individual performance against business objectives and high ethical standards, with an emphasis on variable performance-based compensation. Our compensation program is designed to attract, retain and motivate key executives and align their interests with that of our stockholders. As such, we believe that our executive compensation program and the corresponding executive compensation detailed in the compensation tables and related narrative of this proxy statement are strongly aligned with the long-term interests of our stockholders.
As an advisory vote, this proposal is not binding upon the Company. However, our CNGCompensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by stockholders in their vote on this proposal, and will carefully consider the outcome of the vote when making future compensation decisions for named executive officers.