EXHIBIT 10.21
HIGHWOODS PROPERTIES, INC.
1999 SHAREHOLDER VALUE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The name of the plan is the Highwoods Properties, Inc. 1999 Shareholder
Value Plan (the "Plan"). The purpose of the Plan is to further align the
interests of the officers of Highwoods Properties, Inc. (the "Company") and its
Subsidiaries upon whose judgement, initiative and efforts the Company largely
depends for the successful conduct of its business with those of the Company and
its shareholders. The Plan provides that those officers selected by the
Committee shall be allowed to participate in a long term incentive plan which
rewards them only upon the Company's achieving shareholder returns at or above
that of the Company's peers, thereby stimulating their efforts on the Company's
behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"ACT" means the Securities Exchange Act of 1934, as amended.
"AGREEMENT" shall mean the written agreement, substantially in the form
of Exhibit B attached hereto, evidencing an Award hereunder between the Company
and the recipient of such Award.
"AWARD" or "AWARDS" means a grant of an SVP Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means and shall be limited to a vote of the Board resolving
that the participant should be dismissed as a result of (i) any material breach
by the participant of any agreement to which the participant and the Company are
parties, (ii) any act (other than retirement) or omission to act by the
participant which may have a material and adverse effect on the business of the
Company or any Subsidiary or on the participant's ability to perform services
for the Company or any Subsidiary, including, without limitation, the commission
of any crime (other than ordinary traffic violations), or (iii) any material
misconduct or neglect of duties by the participant in connection with the
business or affairs of the Company or any Subsidiary.
"CHANGE OF CONTROL" is defined in Section 10.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"COMMITTEE" means the Board or any Committee of the Board referred to
in Section 2.
"DISABILITY" means disability as set forth in Section 22(e)(3) of the
Code.
"EFFECTIVE DATE" means January 1, 1999.
1
"FAIR MARKET VALUE" means the last reported sale price at which a share
of common stock in a given company is traded on any given date or, if no such
shares are traded on such date, on the next most recent date on which such
shares were traded, as reflected on the New York Stock Exchange or, if
applicable, any other national stock exchange on which such shares are traded.
"NON-EMPLOYEE DIRECTOR" means a director who is qualified as such under
Rule 16b-3(b)(3) promulgated under the Act or any successor definition under the
Act.
"PEER GROUP" shall mean that list of companies as determined from time
to time by the Committee and as listed on Exhibit C attached hereto. The
component members of the Peer Group may be changed from time to time in the
reasonable discretion of the Committee.
"PERFORMANCE MEASURES" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met during the
applicable Plan Period as a condition to the holder's receipt of an SVP Award.
Such criteria and objectives shall include the attainment by a Share of a
specified Shareholder Return (including dividends). The Committee may, in its
reasonable discretion, amend or adjust the Performance Measures or other terms
and conditions of an outstanding award in recognition of unusual or nonrecurring
events affecting the Company or its financial statements or changes in law or
accounting principles. If the Committee consists solely of "outside directors"
(within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder) and the Committee desires that compensation payable
pursuant to any award subject to Performance Measures shall be "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code, the Performance Measures (i) shall be established by the Committee no
later than the end of the first quarter of the Plan Period, as applicable (or
such other time permitted pursuant to Treasury Regulations promulgated under
Section 162(m) of the Code or otherwise permitted by the Internal Revenue
Service) and (ii) shall satisfy all other applicable requirements imposed under
Treasury Regulations promulgated under Section 162(m) of the Code, including the
requirement that such Performance Measures be stated in terms of an objective
formula or standard.
"PLAN PERIOD" shall mean any period designated by the Committee for
which the Performance Measures shall be calculated, but generally, shall refer
to the three (3) year period beginning on each January 1.
"SHARE" or "SHARES" means one or more, respectively, of the Company's
shares of common stock, par value $.01 per share, subject to adjustments
pursuant to Section 3.
2
"SHAREHOLDER RETURN" shall mean as to the common stock of any
applicable company the percentage determined by dividing (x) the fair Market
Value of a share of such stock at the end of the Plan Period plus all dividends
or distributions paid with respect to such share during the Plan Period and
assuming reinvestment in such shares of all such dividends or distributions,
adjusted to give effect to Section 3 of the Plan, by (y) the Fair Market Value
of a share of stock of the applicable company on its last trading day
immediately preceding the first day of the Plan Period.
"SHAREHOLDER VALUE PLAN AWARD" OR "SVP AWARD" shall mean a right stated
as a grant of SVP Units to receive cash or other consideration as provided
hereby, contingent upon the attainment of specified Shareholder Returns of the
Company as compared to Shareholder Returns of the Peer Group within the Plan
Period.
"SUBSIDIARY" means Highwoods Realty Limited Partnership and any
corporation or other entity (other than the Company) in any unbroken chain of
corporations or other entities, beginning with the Company, if each of the
corporations or entities (other than the last corporation or entity in the
unbroken chain) owns stock or other interests possessing 50% or more of the
economic interest or the total combined voting power of all classes of stock or
other interests in one of the other corporations or entities in the chain.
"SVP UNIT(S)" means the units described in this Plan and in an
Agreement and designated as being granted pursuant to an SVP Award.
SECTION 2. ADMINISTRATION OF PLAN: COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
AND DETERMINE AWARDS
(a) COMMITTEE. The Plan shall be administered by the Executive
Compensation Committee of the Board, or any other committee of not less than two
Non-Employee Directors performing similar functions, as appointed by the Board
from time to time. Only Non-Employee Directors may vote with respect to
transactions involving an Award.
(b) POWERS OF COMMITTEE. The Committee shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select participants to whom Awards may be granted from
time to time;
(ii) to determine the time or times of a grant of an Award;
(iii) to determine and modify the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of
any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(iv) to accelerate the vesting of all or any portion of any
Award;
(v) to extend the period in which an Award may be settled;
3
(vi) to determine whether, to what extent, and under what
circumstances amounts payable with respect to an Award shall be
deferred, whether automatically or at the election of the participant,
and whether and to what extent the Company shall pay or credit amounts
constituting dividends or deemed dividends on such deferrals; and
(vii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Awards (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the administration
of the Plan.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants
SECTION 3. MERGERS; SUBSTITUTIONS
STOCK DIVIDENDS, MERGERS, ETC. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or similar dividend affecting either the Company or a company
included in the Peer Group, the terms of the Plan shall be appropriately
adjusted by the Committee. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers of the
Company and its Subsidiaries who are responsible for or contribute to the
management, growth, or profitability of the Company and its Subsidiaries and
whom are selected from time to time by the Committee, in its sole discretion.
SECTION 5. SHAREHOLDER VALUE PLAN AWARDS
(a) SHAREHOLDER VALUE PLAN AWARDS. The Committee may, in its
discretion, grant SVP Awards to such eligible persons as may be selected by the
Committee.
(b) TERMS OF SVP AWARDS. SVP Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall in its
discretion deem advisable:
(i) GRANT OF SVP AWARDS. An SVP Award may be granted by the
Committee. The Plan Period and Performance Measure of an SVP Award also
shall be as designated by the Committee.
4
(ii) VESTING AND FORFEITURE. The Agreement relating to an SVP
Award shall provide, in the manner determined by the Committee in its
discretion and subject to the provisions of this Plan, for the vesting
of such award if specified Performance Measure(s) are satisfied or met
during the specified Plan Period, and for the forfeiture of such award
if specified Performance Measure(s) are not satisfied or met during the
specified Plan Period.
(iii) VALUATION OF SVP AWARDS.
(a) At the date of grant of an SVP Award, each SVP
Unit shall have a stated value of $1,000.
(b) The settlement value of an SVP Unit (the "Value")
shall be based upon the relative percentage of Shareholder
Return for a Share compared to the Shareholder Return of the
shares in the Peer Group. The Value shall be determined as
follows:
If the Company's Shareholder Return for the
Plan Period divided by the Shareholder Return of the
Peer Group (such result being termed the "Index
Ratio") as of the measurement date equals or exceeds
1.00, then the Value of an SVP Unit will be equal to
$1,000 times the sum of .5 plus .025 for each
percentage point that the Index Ratio (expressed in
percentage points) exceeds 100. In no event, however,
shall the Value of an SVP exceed $3,000. If the Index
Ratio is less than 1.00, then an SVP Unit shall have
a Value equal to $0.
An example of the computation of the Value of an SVP
Unit is attached at Exhibit A.
(iv) SETTLEMENT OF VESTED SVP AWARDS. Except as provided at
paragraph 5(c)(i) below for certain terminations of employment
requiring a cash settlement, vested SVP Awards shall be settled, at the
election of the participant, in (x) cash, (y) Shares at 90% of the
20-day trailing average as of the end of the applicable Plan Period, or
(z) a reduction in the exercise price of any stock option granted to
the participant and unexercised as of the Settlement Date. The
Settlement Date shall be established by the Company so long as such
Settlement Date occurs no later than ninety (90) days following the
expiration of the applicable Plan Period. The participant's election
allowed under this paragraph as to method of settlement shall be the
last such election filed no later than one (1) year prior to the end of
the Plan Period. Except to the extent otherwise provided in the
Agreement relating to an SVP Award, in the event of a Change of Control
the Plan Period shall expire and the Performance Measure shall be
computed through such date and the applicable SVP Award shall forthwith
be settled on the first business day immediately following such Change
of Control.
(c) TERMINATION OF EMPLOYMENT OR SERVICE.
5
(i) DISABILITY, DEATH AND INVOLUNTARY TERMINATION WITHOUT
CAUSE. Except to the extent otherwise set forth in
the Agreement relating to an SVP Award, if the
employment of a participant is terminated by reason
of Disability, death or involuntary termination by
the Company without Cause, the Plan Period with
respect to any SVP Award held by such participant
shall terminate, the Performance Measure shall be
computed through such date, the Value shall be
determined and pro rated to reflect the portion of
the Plan Period completed prior to the date of
termination of employment and the applicable SVP
Award shall be settled in cash as soon as practicable
following the termination but not later then the
tenth day thereafter.
(ii) OTHER TERMINATION. Except to the extent otherwise set
forth in the Agreement relating to an SVP Award, if
the participant's employment with the Company
terminates for any reason other than Disability,
death, or involuntary termination by the Company
without Cause, then the Plan Period for such SVP
Award shall be deemed to end on the date of such
termination, no Performance Measure shall be
recognized or deemed attained, satisfied or met, and
the holder's SVP Award shall be forfeited to and
canceled by the Company.
SECTION 6. TAX WITHHOLDING
PAYMENT BY PARTICIPANT. Each participant shall, not later than the
date as of which the Value of an Award or amounts received hereunder first
becomes includable in the gross income of the participant for federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of any federal, state, or local taxes of any kind required by
law to be withheld with respect to such income.
SECTION 7. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purposes approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 8. AMENDMENTS AND TERMINATION
6
The Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law without the consent of any participant. No
amendment, however, may impair the rights of a holder of an outstanding Award
without the consent of such holder.
SECTION 9. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised
and any payments of consideration not received by a participant, a participant
shall have no rights greater than those of a general creditor of the Company
unless the Committee shall otherwise expressly determine in connection with any
Award or Awards. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the Company's obligations to
deliver Shares or make payments with respect to Awards hereunder, provided that
the existence of such trusts or other arrangements is consistent with the
provisions of the foregoing sentence.
SECTION 10. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section
10:
(a) The Plan Period for SVP Awards will expire, the Performance
Measures will be computed through the date of such Change of Control, the Value
shall be determined and pro rated to reflect the portion of the Plan Period
completed prior to the date of the Change of Control and the applicable SVP
Award shall be settled on the date of such Change in Control.
(b) "CHANGE OF CONTROL" shall mean the occurrence of any one of the
following events:
(i) any "PERSON," as such term is used in Section 13(d) and
14(d) of the Act (other than the Company, any of its Subsidiaries, any
trustee, fiduciary or other person or entity holding securities under
any employee benefit plan of the Company or any of its Subsidiaries),
together with all "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 under the Act) of such person, shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing
40% or more of either (A) the combined voting power of the Company's
then outstanding securities having the right to vote in an election of
the Company's Board of Directors ("Voting Securities") or (B) the then
outstanding Shares (in either such case other than as a result of
acquisition of securities directly from the Company); or
(ii) persons who, as of May 1, 1999, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of
the Company subsequent to May 1, 1999 whose election or nomination for
election was approved by a vote of at least a majority of the Incumbent
Directors shall, for purposes of this Plan, be considered an Incumbent
Director; or
7
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 50% of the
voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by an
party as a single plan) of all or substantially all of the assets of
the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of Shares or other voting securities outstanding, increases (x) the
proportionate number of Shares beneficially owned by any person to 40% or more
of the Shares then outstanding or (y) the proportionate voting power represented
by the voting securities beneficially owned by any person to 40% or more of the
combined voting power of all then outstanding voting securities; PROVIDED,
HOWEVER, that if any person referred to in clause (x) or (y) of this sentence
shall thereafter become the beneficial owner of any additional Shares or other
voting securities (other than pursuant to a stock split, stock dividend, or
similar transaction), then a "Change of Control" shall be deemed to have
occurred for purposes of the foregoing clause (i).
SECTION 11. EFFECTIVE DATE OF PLAN
This Plan became effective on January 1, 1999.
SECTION 12. GOVERNING LAW
This Plan shall be governed by North Carolina law except to the extent such law
is preempted by federal law.
8
SHAREHOLDER VALUE PLAN
DETERMINATION OF SETTLEMENT VALUE - EXAMPLE
EXHIBIT A
1) FAIR MARKET VALUE AT 1/1/99:
HIGHWOODS $ 25.00
PEER GROUP (TOTAL) $1,200.00
2) DIVIDENDS PER SHARE DURING PLAN PERIOD:
HIGHWOODS $ 8.00
PEER GROUP (TOTAL) $ 234.00
3) FAIR MARKET VALUE AT END OF PLAN PERIOD:
HIGHWOODS $ 43.00
PEER GROUP $1,920.00
4) SHAREHOLDER RETURN:
HIGHWOODS:
DIVIDENDS $ 8.00
RETURN ON DIVIDENDS* .75
FMV-ENDING 43.00
---------
51.75
(divided by) = 2.07
FMV- BEGINNING 25.00
PEER GROUP:
DIVIDENDS $ 243.00
RETURN ON DIVIDENDS* 18.05
FMV- ENDING 1,920.00
--------
2,181.05
(divided by) = 1.82
FMV- BEGINNING 1,200.00
5) INDEX RATIO:
HIGHWOODS SHAREHOLDER RETURN 2.07
(divided by) = 1.14
PEER GROUP SHAREHOLDER RETURN 1.82
9
6) VALUE OF AN SVP UNIT:
SINCE THE INDEX RATIO EXCEEDS 1.00, THE VALUE OF AN SVP
UNIT IS EQUAL TO $1,000, THE STATED VALUE OF A UNIT, TIMES THE SUM OF .5 + (.025
TIMES THE INDEX RATIO IN PERCENTAGE POINTS LESS 100), OR
STATED VALUE OF AN SVP UNIT $1,000
.5 + (.025) (114-100) = .850
--------
VALUE $ 850
=======
10
EXHIBIT C
PEER GROUP
11