| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Grant of New Equity-Based Awards
On March 1, 2022, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of Phillips Edison & Company, Inc. (the “Company”) approved the grant of performance-vesting Class C Units (“Class C Units”) of Phillips Edison Grocery Center Operating Partnership I, L.P. (the “Partnership”) and time-vesting Class B Units of the Partnership (“Class B Units”) (collectively, the “awards”) to Jeffrey Edison (Chief Executive Officer), Devin Murphy (President), Robert Myers (Chief Operating Officer), John Caulfield (Chief Financial Officer), and Tanya Brady (General Counsel), under the Company’s 2020 Omnibus Incentive Plan. The following is a brief description of the material terms and conditions of the awards.
Class C Units
General. Pursuant to the Class C Unit awards, each executive is eligible to earn a number of Class C Units ranging from 0 to 100% of the total number of Class C Units granted, based on the Company’s total shareholder return (“TSR”), measured relative to the total shareholder returns of the companies that comprise the Nareit Shopping Center Index as of the grant date during the three year performance period commencing on January 1, 2022 and ending on December 31, 2024 (the “Performance Period”), subject to the executive’s continued service with the Company.
Vesting. Based on the Company’s level of relative TSR performance, the Class C Unit awards will satisfy the performance-vesting condition with respect to the percentage of Class C Units subject to such award set forth below (subject to linear interpolation between levels):
| | | | |
| | | Relative TSR Vesting
Percentage | |
Below “Threshold” | | | 0 | % |
“Threshold” | | | 25 | % |
“Target” | | | 50 | % |
“Above Target” | | | 75 | % |
“Maximum” | | | 100 | % |
With respect to the Class C Unit awards granted to Messrs. Edison, Myers and Caulfield and Ms. Brady, 50% of the Class C Units that satisfy the performance-vesting condition shall be deemed vested on the last day of the Performance Period and the remaining 50% of the Class C Units that satisfy the performance-vesting condition shall vest on the first anniversary of the last day of the Performance Period, subject to the executive’s continued service with the Company. With respect to the Class C Unit award granted to Mr. Murphy, 100% of the Class C Units that satisfy the performance-vesting condition shall be deemed vested on the last day of the Performance Period.
Notwithstanding the foregoing, if the Company’s TSR during the Performance Period is negative, any portion of the Class C Units in excess of target performance will remain outstanding but will not vest upon completion of the Performance Period (the “Contingent Class C Units”). The Contingent Class C Units shall only vest if, following the last day of the Performance Period and on or prior to the fifth anniversary of the last day of the Performance Period (the “Expiration Date”), the Company’s TSR, measured from the first day of the Performance Period through the last day of any calendar quarter ending on or prior to the Expiration Date, is positive.
The treatment of the Class C Unit awards in the event of a termination of the executive’s employment is set forth in the applicable award agreement.
Change in Control. In the event that a change in control of the Company occurs prior to the completion of the Performance Period, relative TSR performance will be measured as of the date of the change in control. With respect to the Class C Unit awards granted to Messrs. Edison, Myers and Caulfield and to Ms. Brady, earned Class C Units will then be converted into time-based Class C Units that will vest and be paid based on continued service through the relevant vesting date, subject to certain accelerated vesting as set forth in the applicable award agreement. With respect to Mr. Murphy’s award, the earned Class C Units shall be deemed vested on the date of the change in control.
