UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

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STORE Capital Corporation

 

(Name of Registrant as Specified In Its Charter)

      

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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April 18, 2019

Dear Fellow Stockholder:

You are invited to attend the 2019 Annual Meeting of Stockholders of STORE Capital Corporation. The meeting will be held on Thursday, May 30, 2019, at 9:00 a.m., Arizona time. The Annual Meeting will be a completely “virtual meeting” of stockholders. You will be able to attend the Annual Meeting as well as vote and submit your questions during the live webcast of the meeting by visiting www.virtualstockholdermeeting.com/STOR2019 and entering the 16-digit control number included in your notice of Internet availability of the proxy materials, on your proxy card or in the instructions that accompanied your proxy materials.

The attached proxy statement, with the accompanying notice of the meeting, describes the matters expected to be acted upon at the meeting. We urge you to review these materials carefully and to take part in the business of our company by voting on the matters described in the accompanying proxy statement. We hope that you will be able to attend the meeting during which our directors and senior leadership team will be available to answer questions.

Your vote is important. Whether you plan to attend the meeting or not, please return a completed proxy card as promptly as possible or authorize your proxy on the Internet or by calling the toll-free telephone number included in the proxy materials provided to you. The attached proxy statement contains instructions regarding all three methods of authorizing your proxy. If you attend the meeting virtually through the Internet, you may continue to have your shares of common stock voted as instructed in a previously delivered proxy or you may electronically revoke your proxy and vote your shares of common stock online during the meeting. We look forward to your participation.

Sincerely,

 

 

Christopher H. Volk

President and Chief Executive Officer

This proxy statement is dated April 18, 2019, and is first being made available to stockholders on or about

April 18, 2019.

8377 East Hartford Drive, Suite 100

Scottsdale, Arizona 85255

(480) 256-1100

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 30, 2019

 

Date and Time:		Thursday, May 30, 2019, at 9:00 a.m., Arizona time.
Place:		The Annual Meeting will be a completely virtual meeting of stockholders, which means that you will be able to attend the Annual Meeting, vote and submit your questions during the live webcast of the Annual Meeting by visiting www.virtualstockholdermeeting.com/STOR2019 and entering the 16-digit control number included in your notice of Internet availability of the proxy materials, on your proxy card or in the instructions that accompanied your proxy materials.
Items of Business:		At the Annual Meeting, holders of our common stock will be asked to consider and vote upon the following proposals, all of which are discussed in greater detail in the accompanying proxy statement:   1. To elect the nine director nominees named in the accompanying proxy statement to the Company’s Board of Directors to serve until the 2020 Annual Meeting of Stockholders and until their successors are duly elected and qualified;   2. To approve an amendment to the Company’s bylaws to allow stockholders to amend the bylaws by a majority vote of the outstanding shares entitled to be cast on the matter pursuant to a proposal submitted by an eligible stockholder;   3. To approve, on an advisory basis, the compensation of the Company’s named executive officers;   4. To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019; and   5. To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.
Record Date:		Only stockholders of record at the close of business on April 1, 2019, the record date for the Annual Meeting (the “ Record Date ”), will be entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.
Delivery of Proxy Materials:		Beginning on April 18, 2019, we began mailing a Notice of Internet Availability of Proxy Materials to our stockholders (the “ Notice ”) rather than a full paper set of the proxy materials. The Notice contains instructions on how to access our proxy materials over the Internet, as well as instructions on how stockholders may obtain a paper copy of our proxy materials. You may also request a paper copy of our proposed amendment to our bylaws attached as Annex A to the accompanying proxy statement by calling our Secretary at (480) 256-1100.
Internet Availability of Proxy Materials:		Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May  30, 2019 . The Notice of Annual Meeting, Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2018 (which constitutes our annual report to stockholders) are available at http://ir.storecapital.com .
Voting:		To make it easier for you to vote, Internet and telephone voting are available. The instructions on the Notice or, if you received a paper copy of the proxy materials, the proxy card describe how to use these convenient services.

 

		BY ORDER OF THE BOARD OF DIRECTORS
Phoenix, Arizona     April 18, 2019		/s/ MICHAEL T. BENNETT Michael T. Bennett Executive Vice President—General Counsel, Chief Compliance Officer and Secretary

TABLE OF CONTENTS

 

PROXY SUMMARY			1
CORPORATE RESPONSIBILITY			2
BUSINESS HIGHLIGHTS			5
GOVERNANCE			7
PROPOSAL NO. 1 – ELECTION OF DIRECTORS			7
BOARD AND COMMITTEE GOVERNANCE			16
ADDITIONAL CORPORATE GOVERNANCE FEATURES			21
DIRECTOR COMPENSATION			24
DIRECTOR INDEPENDENCE AND RELATED PARTY TRANSACTIONS			26
PROPOSAL NO. 2 – APPROVAL OF AN AMENDMENT TO THE COMPANY’S BYLAWS			28
EXECUTIVE COMPENSATION			32
PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS			32
EXECUTIVE OFFICERS			33
COMPENSATION DISCUSSION AND ANALYSIS			34
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION			53
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			53
COMPENSATION TABLES			54
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL			58
OTHER COMPENSATION MATTERS			62
AUDIT MATTERS			63
REPORT OF THE AUDIT COMMITTEE			63
PROPOSAL NO. 4 – RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			66
OWNERSHIP OF OUR STOCK			68
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			68
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			70
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND VOTING INFORMATION			71
STOCKHOLDER PROPOSALS FOR 2020 ANNUAL MEETING			79
OTHER MATTERS			79
ADDITIONAL INFORMATION			79
Annex A			A-1

 

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is proud to support many local charities through financial and employee-driven volunteerism, including the Juvenile Diabetes Research Foundation, Arizona Helping Hands, the Society of St. Vincent de Paul and others.   •    Diversity . We have long acted to foster a diverse and vibrant workplace. Since the founding of the company in 2011, and at prior companies founded by our senior leadership team, we have believed that we must have the best talent, including individuals who possess a broad range of experiences, backgrounds and skills that enable us to anticipate and meet the needs of our business and those of our customers. Over time, we have hired, developed and retained a diverse workforce that is a key component in our success. Currently, women hold seven of the ten most senior positions in our management structure; as a company, we have a deep bench of men and women who are collectively capable of professionally operating the business and fulfilling our vision.   •    Internship Program . STORE is committed to developing talented individuals through our college internship program by providing career learning opportunities in several areas of our business. College internships with STORE contribute to our community and enhance the career prospects of our talented participants.   •    Employee-Directed Engagement Initiatives . For our employees, we are committed to creating a diverse and vibrant workplace that respects individuality, helps every person realize his or her full potential, and includes persons with a broad range of experiences, backgrounds and skills that enable us to anticipate and meet the needs of our business and those of our customers. We work to educate, empower and engage our employees to cultivate our future leadership, making a positive difference for STORE and for our community. STORE’s employee-run “engagement” committees develop and influence new employee onboarding, personal growth and professional development programs, company social and team-building events, and health and wellness programs.		experience designed to help them prepare for college and their careers. Exposing youth to the leadership and entrepreneurship possibilities that are open to them through their continued education, the program seeks to motivate young students to fulfill their potential. Through the generosity of Mr. Fleischer, and with corporate support provided by STORE and others, the program, including housing, meals and materials, is offered for free to all accepted students.   •    Tenant Employment and Economic Impact . For our customers, we seek to provide real estate financing solutions, backed by superior service, that help our customers grow and more efficiently manage their businesses. We target customers in the middle market, a sector with more than 200,000 businesses with annual revenues between $10 million and $1 billion. Real estate financing alternatives for middle market companies are limited. STORE’s solutions enable our customers to build and grow sustainable businesses, positively impacting their investors, employees and local economies nationwide.   •    Helping Our Customers Succeed . In 2017, we founded the Inside Track Forum, an annual, two-day event that we host in concert with other sponsors and Arizona State University to thank our customers for their business. The event, which includes topical and relevant speakers and panelists, was conceived to impart actionable ideas from industry experts and offer an opportunity to share business practices that can make a positive competitive difference for our customers.   •    STORE University . In concert with the Inside Track Forum, we created STORE University, an educational video series developed by our Chief Executive Officer, Christopher H. Volk. The video series currently includes ten lessons covering an array of business topics designed to collectively inspire business value creation. An additional seminar is planned for release in 2019. Altogether, the series has garnered thousands of views, with a reach well beyond STORE’s customer base.

 

 

 

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2018 BUSINESS HIGHLIGHTS

The following provides summary highlights regarding our 2018 performance:

 

 

 

•    We completed record new acquisition volume . During the year ended December 31, 2018, we invested approximately $1.6 billion in 418 property locations at a weighted average initial real estate capitalization rate of 7.9% on the properties we acquired.   •    We strengthened and diversified our portfolio . As of December 31, 2018, our total gross investment in real estate had reached approximately $7.6 billion, representing 2,255 property locations operated by 434 customers across 49 states. Our top ten customers collectively accounted for only 18.1% of our annualized base rent and interest, with our largest customer accounting for only 2.7%.   •    We increased our liquidity under our credit facility . In February 2018, we expanded our unsecured revolving credit facility from $500 million to $600 million and increased the accordion feature from $300 million to $800 million for a total maximum borrowing capacity of $1.4 billion.   •    We completed our first public debt offering . In March 2018, we completed our first public debt offering, issuing $350 million in aggregate principal amount of unsecured, investment-grade rated 4.50% Senior Notes, due in March 2028.		•    We issued AAA notes under our STORE Master Funding debt program . In October 2018, we marked the inaugural issuance of AAA rated net-lease mortgage notes under our STORE Master Funding debt program; we issued a total of $592 million of net-lease mortgage notes, of which $378 million are rated AAA with the remainder rated A+. The weighted average coupon rate of the AAA rated notes is 4.16% and the weighted average coupon rate of the A+ rated notes is 4.66%   •    We continued to access the equity capital markets . During 2018, we raised aggregate net proceeds of $741.7 million from sales of common stock under our “at the market”, or ATM, equity offering program.   •    We increased our dividend . For the year ended December 31, 2018, we declared dividends totaling $1.28 per share of common stock to our stockholders. In the third quarter of 2018, we raised our quarterly dividend 6.5% from our previous quarterly dividend amount.   •    We grew our unencumbered assets . We concluded 2018 with more than $4.6 billion in unencumbered assets.

 

 

 

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GOVERNANCE

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

 

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What am I voting on?

Stockholders are being asked to elect nine director nominees for a one-year term.

 

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Voting recommendation:

“ FOR ” the election of each director nominee. The Board and the Nominating and Corporate Governance Committee believe that the nine director nominees each possess the necessary qualifications, attributes, skills and experiences to provide quality advice and counsel to the Company’s management and effectively oversee the business and the long-term interests of our stockholders.

 

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Vote Required:

The affirmative vote of a plurality of all the votes cast at the Annual Meeting is required for the election of directors. This means that the nine director nominees receiving the greatest number of votes will be elected. Stockholders of the Company are not permitted to cumulate their votes for the election of directors. Broker non-votes or withhold votes will have no effect on the results of the election of directors. Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted for the election of each of the director nominees identified below.

 

Role of the Board

The stockholders of the Company elect the Board to oversee their interests in the long-term health and overall success of the Company’s business. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the stockholders. The Board plays a critical role in the strategic planning process and regularly discusses strategy throughout the year. The Board selects and oversees the members of our senior management team, who are charged by the Board with conducting the day-to-day business of the Company.

Board Composition and Refreshment

Our Board and its Nominating and Corporate Governance Committee seek nominees to serve on the Board who have diverse skills, professional experience and backgrounds, and effectively represent the long-term interests of our stockholders. The Board and its Nominating and Corporate Governance Committee also understand the importance of Board refreshment, and strive to maintain an appropriate balance of tenure, turnover, diversity and skills on the Board. The Board believes that new perspectives and ideas are critical to a forward-looking and strategic Board as is the ability to benefit from the valuable experience and familiarity that longer-serving directors offer. Of our nine director nominees, four have joined the Board since the beginning of 2016 and Mr. Shourie, who previously served on the Board from 2011 to 2016, was reappointed to the Board in February 2019.

Board Evaluation Process

The Board believes that a robust and constructive evaluation process is an essential component of good corporate governance and Board effectiveness. The Board, acting through the Nominating and Corporate Governance Committee, conducts a self-evaluation at least annually to determine whether it and its committees are functioning effectively, including as to whether the combination and mixture of skills, experience and

 

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judgment that directors bring to the Board provide the Board with the necessary tools to perform its oversight function effectively. Each of the Audit, Compensation and Nominating and Corporate Governance Committees also conducts a self-evaluation at least annually and reports the results to the Board, acting through the Nominating and Corporate Governance Committee.

Once the evaluation process is complete, the results are discussed by the full Board and each applicable committee and changes in practices or procedures may be considered and implemented as appropriate. The Nominating and Corporate Governance Committee may periodically review the format of the evaluation process to ensure that the matters being evaluated remain relevant and that useful feedback on the operation of the Board and its committees is received.

Director Nominee Selection Process and Considerations

Management-Recommended Director Candidates . The Nominating and Corporate Governance Committee is responsible for recommending to the Board a slate of nominees for election at each annual meeting. Nominees may be suggested by directors, members of management or stockholders (as discussed below). In evaluating candidates to serve on the Board, the Nominating and Corporate Governance Committee’s objective is to select individuals with holistically diverse skills and experience that can assist the Company and the Board in achieving their objectives. The Committee considers:

 

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individual qualifications, including relevant career experience, strength of character, maturity of judgment, experience in, and familiarity with, the Company’s business and industry; and

 

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all other factors it considers appropriate, which may include:

 

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age;

 

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diversity of background;

 

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existing commitments to other businesses;

 

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potential conflicts of interest;

 

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legal considerations;

 

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corporate governance background (including experience as a board member or officer of another publicly held company);

 

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financial and accounting background;

 

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executive compensation background; and

 

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the size, composition and combined expertise of the existing Board.

Though neither the Board nor the Nominating and Corporate Governance Committee has a formal policy concerning diversity, the Board values diversity on the Board, believes diversity should be considered in the director identification and nominating process, and seeks to compose a Board that is holistically diverse, with a range of views, backgrounds, leadership and business experience, and that includes racial, ethnic and gender diversity. The Committee also considers the extent to which the candidate would fill a present need on the Board. In selecting director nominees, the Board seeks to monitor the mix of specific experiences, qualifications and skills of its members in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. Presently, our nine-person board has four diverse members, including two women.

Once a prospective nominee has been identified, the Nominating and Corporate Governance Committee will make an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination will be based on the information provided to the Committee with the recommendation of the

 

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prospective candidate, as well as the Committee’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others.

Stockholder-Recommended Director Candidates . A stockholder who desires to recommend a prospective nominee for the Board should notify Michael T. Bennett, Executive Vice President—General Counsel, Chief Compliance Officer and Secretary of the Company, at 8377 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255. As set forth in the Company’s Corporate Governance Guidelines, the deadline for submission of stockholder recommendations is 120 calendar days prior to the first anniversary of the date the Company’s proxy statement was released to stockholders in connection with the previous year’s annual meeting. Recommendations by stockholders that are made in accordance with these procedures will receive the same consideration by the Nominating and Corporate Governance Committee as other suggested nominees.

Stockholder-Nominated Director Candidates . Pursuant to the Company’s bylaws, stockholders are permitted to nominate directors in accordance with the Company’s advance notice provision contained in Article II, Section 11 of the bylaws. Article II, Section 11(a) provides that nominations of individuals for election to the Board may be made at an annual meeting of stockholders by any stockholder of the Company who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in Section 11(a) and at the time of the annual meeting and who is entitled to vote at the meeting in the election of each individual so nominated. For any nomination to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the Company and satisfied the other requirements set forth in Article II, Section 11 of the Company’s bylaws. To be timely, a stockholder’s notice must be delivered to the principal executive offices of the Company (8377 East Hartford Drive, Suite 100, Scottsdale, AZ 85255) not less than 120 days nor more than 150 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting of stockholders; provided, however, if an annual meeting of stockholders is called for a date that is not within 30 days before or after the anniversary date of the preceding year’s annual meeting, then, in order to be timely, a stockholder’s notice must be received by the Company no earlier than the 150th day prior to the date of such annual meeting and no later than the later of (a) the 120th day prior to the date of such annual meeting, as originally convened, or (b) the tenth day following the day on which public announcement of the date of such meeting is first made. The stockholder notice must comply with the information requirements set forth in the Company’s bylaws.

Proxy Access Rights

On February 13, 2019, the Company amended its bylaws to adopt a proxy access provision to permit a stockholder, or group of no more than 20 stockholders, meeting specified eligibility requirements, to include director nominees in the Company’s proxy materials for annual meetings of stockholders. In order to be eligible to utilize these proxy access provisions, a stockholder, or group of stockholders, must, among other requirements:

 

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have owned shares of common stock equal to at least 3% of the outstanding shares of the Company’s common stock continuously for at least the prior three years;

 

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represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control of the Company and that such stockholder or group does not presently have such intent; and

 

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provide a notice requesting the inclusion of director nominees in the Company’s proxy materials and provide other required information to the Company not earlier than 150 days nor later than 120 days prior to the first anniversary of the date of mailing of the notice for the prior year’s annual meeting of stockholders (with adjustments if the date for the upcoming annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the prior year’s annual meeting).

Additionally, all director nominees submitted through these provisions must be independent and meet specified additional criteria, and stockholders will not be entitled to utilize this proxy access right at an annual

 

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meeting if the Company receives notice through the advanced notice bylaw provisions that a stockholder intends to nominate a director at such meeting. The maximum number of director nominees that may be submitted pursuant to these provisions may not exceed the greater of two directors or 20% of the number of directors then serving on the Board (rounding down to the closest whole number). The foregoing proxy access right is subject to additional eligibility, procedural and disclosure requirements set forth in the Company’s bylaws.

Annual Elections of Directors

Directors are elected each year at the annual meeting of stockholders to hold office until the next annual meeting and until their successors are elected and qualified. Because term limits may cause the loss of experience and expertise important to the optimal operation of the Board, we currently do not impose limits on the number of terms a director may serve. The Nominating and Corporate Governance Committee, however, does evaluate the qualifications and performance of each incumbent director before recommending the nomination of that director for an additional term.

Policy on Directors Who Fail to Achieve a Majority Vote

Our Corporate Governance Guidelines provide that, in an election of directors where the number of nominees does not exceed the number of directors to be elected, each director must receive the majority of the votes cast with respect to that director (without regard to withhold votes or broker non-votes). If a director does not receive a majority vote, the director will promptly, and in any event within ten (10) days from the date of the certification of the election results, tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the resignation taking into account the recommendation of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that it considers appropriate and relevant, including, but not limited to:

 

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the stated reasons, if any, why stockholders withheld their votes;

 

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possible alternatives for curing the underlying cause of the withheld votes;

 

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the director’s tenure, qualifications, and past and expected future contributions to the Company; and

 

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the overall composition of the Board, and whether accepting the tendered resignation would cause the Company to fail to meet any applicable rule or regulation, including under NYSE listing requirements and federal securities laws.

When deciding the action to take, the Board may accept or reject the resignation offer or, upon the recommendation of the Nominating and Corporate Governance Committee, decide to pursue alternative actions such as (i) allowing the director to remain on the Board but not be re-nominated to the Board at the end of the current term, (ii) deferring acceptance of the resignation until a replacement director with certain necessary qualifications held by the subject director (for example, audit committee financial expertise) can be identified and elected to the Board, or (iii) deferring acceptance of the resignation if the director can cure the underlying cause of the withheld votes within a specified period of time (for example, if the withheld votes were due to another board directorship, by resigning from that other board). If the Board accepts a director’s resignation offer, then the Board, in its sole discretion, may fill any resulting vacancy or may decrease the size of the Board, in each case pursuant to the applicable provisions of the Company’s bylaws as then in effect. If the Board rejects a director’s resignation offer, then such director will continue to serve through the remainder of his or her term and until his or her successor is duly elected, or his or her earlier resignation or removal.

The director who tenders his or her resignation will not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board with respect to his or her

 

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resignation; provided, that (a) if a majority of the members of the Nominating and Corporate Governance Committee did not receive the vote of at least “the majority of the votes cast,” then the independent directors of the Board (including any who received the vote of at least “the majority of the votes cast” in such election) shall appoint a committee amongst themselves to consider the resignation offers and recommend to the Board whether to accept them, and (b) if three or fewer independent directors received at least “the majority of the votes cast” in the same election, then all independent directors may participate in any discussions or actions with respect to accepting or declining the resignation offers (except that no such director will vote to accept or decline his or her own resignation offer).

The Board must take action on the resignation within 90 days of the certification of the election results and will publicly disclose its decision and its rationale promptly thereafter.

In addition, pursuant to our Corporate Governance Guidelines, a director who experiences a significant change in his or her principal current employer or principal employment, including any director who is currently an officer or employee of the Company, or other similarly significant change in professional occupation or association, is asked to consider whether his or her resignation is appropriate. The Board will then determine the action, if any, to be taken with respect to any offer to resign.

2019 Director Nominees

The number of directors that serve on the Board is currently set at nine and may be fixed from time to time by the Board in the manner provided in the Company’s charter and bylaws. Upon the unanimous recommendation of the Nominating and Corporate Governance Committee, the Board has unanimously nominated the following candidates for election as directors at the Annual Meeting:

 

•   Joseph M. Donovan		•   Einar A. Seadler
•   Mary Fedewa		•   Rajath Shourie
•   Morton H. Fleischer		•   Quentin P. Smith, Jr.
•   William F. Hipp		•   Christopher H. Volk
•   Catherine D. Rice

If any of the foregoing nominees should be unable or unwilling to stand for election at the time of the Annual Meeting, proxies will be voted for a replacement nominee designated by the Board or, in the event no such designation is made, proxies will be voted for a lesser number of nominees. At this time, the Board knows of no reason why the nominees listed above may not be able to serve as a director if elected.

Each of the nine director nominees currently serves as a director of the Company and, other than Mr. Shourie, was elected at the 2018 Annual Meeting of Stockholders. Mr. Shourie, who previously served as a director of the Company from its founding in 2011 until 2016, was recommended by our executive officers and reappointed by the Board in February 2019. If elected, each director will hold office until the 2020 Annual Meeting of Stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

The Board and the Nominating and Corporate Governance Committee believe that the combination of the various qualifications, attributes, skills and experiences of the director nominees has contributed and will continue to contribute to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.

 

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Set forth below is biographical information for each director nominee named above. The following information also describes the specific experience, qualifications, attributes and skills that qualify each person to serve on the Company’s Board.

 

Joseph M. Donovan
		Mr. Donovan has served as a director since 2014. Mr. Donovan is currently the non-executive Chairman of the Board and Chairman of the Audit Committee of Fly Leasing Limited, a Dublin, Ireland based commercial aircraft leasing company (NYSE:FLY), which he joined in 2007 prior to its initial public offering. Mr. Donovan also served, from 2009 to 2015, as a director of Institutional Financial Markets Inc. (AMEX:IFMI), a New York City based broker dealer and asset management company. Mr. Donovan has been involved in investment banking since 1983 and has worked at CS First Boston/The First Boston Corporation, Smith Barney Inc., Prudential Securities and Credit Suisse Securities (USA) LLC. Mr. Donovan was formerly a licensed certified public accountant. Mr. Donovan holds a B.B.A. degree in Accountancy from the University of Notre Dame and an M.B.A. with a concentration in Finance from the Wharton School, University of Pennsylvania.   Specific Qualifications, Attributes, Skills and Experience:   •    Service as a member of public company boards of directors •    Extensive investment banking and capital markets experience •    Expertise in accounting and finance		Director Since:		2011
				Age:		64
				Committees:		Audit Investment
				Other Public Company Boards:		Fly Leasing Limited (NYSE:FLY)
				Independent:		Yes

 

Mary Fedewa
		Ms. Fedewa was one of the Company’s founders in May 2011 and has served as the Company’s Chief Operating Officer since October 2017. She was appointed to serve as a director in August 2016. From the Company’s organization until October 2017 she served as the Company’s Executive Vice President—Acquisitions, Assistant Secretary and Assistant Treasurer. Ms. Fedewa has over 20 years of experience in a broad range of financial services. Prior to co-founding the Company, Ms. Fedewa spent several years investing as principal in single-tenant commercial real estate for private real estate companies. From 2004 to 2007, Ms. Fedewa was a Managing Director of Acquisitions at Spirit Finance Corporation (now Spirit Realty Capital, Inc. (NYSE: SRC)) (“ Spirit ”), a real estate investment trust (“ REIT ”), originating net-lease transactions in a variety of industries across the United States. Prior to Spirit, Ms. Fedewa held numerous positions within GE Capital, concluding as a Senior Vice President of GE Franchise Finance, which was the successor company to Franchise Finance Corporation of America (“ FFCA ”), a Scottsdale, Arizona-based REIT acquired by GE Capital in 2001. Throughout her GE Capital tenure, Ms. Fedewa held leadership positions within Mortgage Insurance, Private Label Financing and Commercial Finance. While at GE, Ms. Fedewa was awarded a Six Sigma Black Belt and also served as a GE Quality Leader. Ms. Fedewa attended North Carolina State University, where she graduated summa cum laude with a B.A. degree in Business Management with a concentration in Finance. Ms. Fedewa was recommended for appointment to the Board by our Chief Executive Officer.   Specific Qualifications, Attributes, Skills and Experience:   •    Familiarity with the Company’s history and operations •    Extensive experience acquiring and selling net-lease real estate •    Management service at three public companies		Director Since:		2016
				Age:		53
				Committees:		None
				Other Public Company Boards:		None
				Independent:		No

 

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Morton H. Fleischer
		Mr. Fleischer has served as the non-executive Chairman of the Board since STORE’s organization in May 2011. Prior to his role as Chairman, Mr. Fleischer co-founded Spirit and served as Chairman from its inception in 2003 to February 2010, including the three years that Spirit was publicly traded on the NYSE, 2004 to 2007. Prior to Spirit, Mr. Fleischer founded numerous real estate limited partnerships in the 1980s that were predecessors to FFCA, a REIT that he formed and took public on the NYSE in 1994. Mr. Fleischer served as FFCA’s Chairman of the board of directors and Chief Executive Officer until FFCA was acquired by GE Capital in 2001. FFCA was the nation’s largest publicly traded net-lease REIT and owned or financed over 5,000 single-tenant properties at the time of its sale to GE Capital in 2001. As a result of over 35 years of experience in the real estate and net-lease industries and the invaluable guidance, support and wisdom Mr. Fleischer provided to the Company in the early years of its formation, our executive team considers him an honorary founder of STORE Capital.   Specific Qualifications, Attributes, Skills and Experience:   •    Familiarity with the Company’s history and operations •    Extensive real estate and capital markets experience •    Service as a chief executive officer of two public companies			Director Since:			2011
					Age:			82
					Committees:			Compensation Nominating and Corporate Governance Executive Investment
					Other Public Company Boards:			None
					Independent:			Yes

 

William F. Hipp
		Mr. Hipp has served as a director since 2016. Mr. Hipp spent over 35 years in commercial banking, where he developed extensive experience with REITs, real estate capital markets and corporate finance. From 2004 until his retirement in 2015, Mr. Hipp was employed by KeyBank in various senior level roles, most recently as head of the Institutional Capital Group (ICG) for KeyBank’s real estate business, which he founded upon joining the bank and ran until his retirement. ICG’s mission is to identify real estate related borrowers, particularly public and private REITs and real estate opportunity funds with effective debt ratings ranging from high yield to mid investment grade, that have a significant need for bank debt and M&A advisory services, and for access to the syndicated loan market, the public equity markets, and the commercial mortgage backed securities and agency debt markets (Fannie Mae/Freddie Mac). Through the ICG platform, KeyBank provided debt and equity capital and advisory services to real estate related borrowers; and Mr. Hipp, in his capacity as head of ICG, was responsible for formulating and implementing strategy and for client selection and initial credit and risk decisions. Prior to his employment with KeyBank, Mr. Hipp spent 20 years with BankBoston, as head of its real estate group, and FleetBoston (following the merger of BankBoston and Fleet Financial Group) as co-head of real estate. Mr. Hipp holds a B.A. degree in Economics from Emory University and an M.B.A. with a concentration in Finance and Accounting from Tulane University.   Specific Qualifications, Attributes, Skills and Experience:   •    Experience identifying, underwriting and evaluating real estate investments •    Familiarity with the Company’s history and operations •    Expertise in accounting and finance			Director Since:			2016
					Age:			64
					Committees:			Audit Investment
					Other Public Company Boards:			None
					Independent:			Yes

 

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Catherine D. Rice
		Ms. Rice has served as a director since October 2017. Ms. Rice has over 30 years of experience in the real estate capital and investment markets and in the management and operation of public and private real estate companies. She currently serves as the lead independent director of Colony Credit Real Estate, Inc. (NYSE: CLNC), one of the largest commercial real estate credit REITs. From 2013 to 2016, Ms. Rice was Chief Financial Officer and then Senior Managing Director of W.P. Carey (NYSE: WPC), one of the largest global net lease REITs, where she completed a comprehensive reorganization of the finance, accounting and IT functions and the build-out of the investor relations and capital markets areas. She was responsible for financial strategy, all public capital-raising initiatives, and a company-wide strategic evaluation. She was a member of the operating and investment committees. From 2010 to 2013, Ms. Rice was a partner at Parmenter Realty Partners, a private real estate investment firm focused on distressed and value-add properties in the Southern regions of the U.S. Her responsibilities included both capital raising and investing for the firm’s fourth fund. From 2002 to 2009, Ms. Rice was the Chief Financial Officer of iStar Financial (NYSE: STAR), a publicly traded finance company focused on the commercial real estate industry, where she was responsible for financial strategy and capital-raising initiatives, financial reporting and investor relations. Ms. Rice spent the first 16 years of her career as a professional in the real estate investment banking groups of Merrill Lynch, Lehman Brothers and Banc of America Securities. During her career as an investment banker, she was involved in numerous capital-raising and strategic advisory transactions, including REIT IPOs, public and private debt and equity offerings, mergers and acquisitions, leveraged buyouts, and asset and corporate acquisitions and dispositions. Ms. Rice received a B.A. degree from the University of Colorado and an M.B.A. from Columbia University.   Specific Qualifications, Attributes, Skills and Experience:   •    Extensive real estate and capital markets experience •    Service as a chief financial officer of a public company •    Experience investing in and managing commercial real estate projects			Director Since:			2017
					Age:			59
					Committees:			Audit
					Other Public Company Boards:			Colony Northstar Credit Real Estate (NYSE: CLNC)
					Independent:			Yes

 

Einar A. Seadler
		Mr. Seadler has served as a director since February 18, 2016. Mr. Seadler is the founder and President of EAS Advisors LLC, a management consulting firm specializing in advisory services to senior executives who seek to develop and execute enduring growth, operational improvement and human capital strategies. Prior to starting EAS Advisors in 2016, Mr. Seadler was a managing director of Accenture Strategy, an operating unit of Accenture PLC (NYSE: ACN), which he joined in 2008. His responsibilities included advising senior executives of Fortune 500 companies on increasing stockholder value, primarily in the consumer goods and services, retail, fast food dining, industrial, infrastructure and government sectors. Prior to Accenture, Mr. Seadler served as a leader in McKinsey & Company’s Operations Strategy Practice. He has also served in senior executive roles in retail and business services companies, with responsibilities that spanned sales, marketing, operations, real estate, supply chain, technology and finance. Mr. Seadler began his career as a United States Army infantry officer serving in various command and staff assignments, including as an associate professor at the United States Military Academy at West Point. Mr. Seadler is a graduate of the United States Military Academy at West Point and received a Master of Science degree from Cornell University.   Specific Qualifications, Attributes, Skills and Experience:   •    Experience in business and operational strategy across multiple industry sectors •    Advisor to senior executives on increasing stockholder value across industry sectors relevant to the Company •    Top leadership and operational experience as a senior executive			Director Since:			2016
					Age:			62
					Committees:			Compensation
					Other Public Company Boards:			None
					Independent:			Yes

 

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Rajath Shourie
		Mr. Shourie is a Managing Director and co-portfolio manager within Oaktree’s Distressed Debt group. He contributes to the analysis, portfolio construction and management of the Distressed Opportunities and Value Opportunities strategies. Since joining Oaktree in 2002, Mr. Shourie has spent his time investing in distressed debt. He has invested in the airline/aircraft industry for a number of years and led the firm’s investments in financial institutions during the global financial crisis. Mr. Shourie has worked with a number of Oaktree’s portfolio companies, and previously served on the board of directors of the Company (from 2011 to 2016) and of Taylor Morrison Homes Corporation (NYSE: TMHC). He has been active on a number of creditors’ committees, including the steering committee in the restructuring of CIT Group. Prior to joining Oaktree, he was an associate in the Principal Investment area at Goldman, Sachs & Co., and a management consultant at McKinsey & Co. Mr. Shourie earned a B.A. in economics from Harvard University, where he was elected to Phi Beta Kappa. He then went on to receive an M.B.A. from Harvard Business School, where he was a Baker Scholar.   Specific Qualifications, Attributes, Skills and Experience:   •    Prior service as a member of public company boards of directors •    Experience in business and operational strategy across multiple industry sectors •    Extensive investment banking and capital markets experience			Director Since:			2019
					Age:			45
					Committees:			Nominating and Corporate Governance Investment
					Other Public Company Boards:			None
					Independent:			Yes

 

Quentin P. Smith, Jr.
		Mr. Smith has served as a director since 2014. Mr. Smith is the founder and President of Cadre Business Advisors LLC, a management consulting firm that specializes in strategic planning, business performance improvement, capital formation and turnaround management. Prior to starting Cadre, Mr. Smith was Partner in Charge of Arthur Andersen’s Desert Southwest business consulting practice with responsibility for business development and client engagement management for Arizona and New Mexico. Mr. Smith has business development, growth and operational profit and loss experience across a wide variety of industries. Mr. Smith also has over eight years of diversified corporate management experience. He currently serves on the board, and chairs the compensation committee, of Banner Health and previously served as its Chairman. From January 2015 through March 2017, Mr. Smith served as a member of the board of directors of Patriot National, Inc. (NYSE:PN), a provider of comprehensive full-service outsourcing solutions within the workers’ compensation insurance marketplace, chaired its compensation committee and served on its audit committee. He has served on the boards of the Arizona Public Service Company and Arizona MultiBank, as well as on the boards of Employee Solutions, Inc., Rodel, Inc. and iCrossing, Inc. until those companies were sold or acquired. Mr. Smith holds a B.S. degree in Industrial Management and Computer Science from Purdue University and an M.B.A. degree from Pepperdine University.   Specific Qualifications, Attributes, Skills and Experience:   •    Prior service as a member of public company boards of directors •    Management consulting, corporate management and operational experience •    Experience on public company compensation and audit committees			Director Since:			2014
					Age:			67
					Committees:			Compensation Nominating and Corporate Governance Executive
					Other Public Company Boards:			None
					Independent:			Yes

 

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Christopher H. Volk
		Mr. Volk was one of the Company’s founders in May 2011 and has served as the Company’s President and Chief Executive Officer and as a director since its organization. With more than 30 years of experience in structuring, managing and financing commercial real estate companies, Mr. Volk led the largest ever real estate limited partnership roll-up transaction of its time in 1994 in the formation of FFCA; oversaw the issuance of FFCA’s unsecured debt rating in 1995, which was the first unsecured debt rating ever issued to a net-lease REIT; and, in 2005 while CEO of Spirit, led the creation of the first commercial real estate master trust debt conduit in the United States designed to finance net-lease assets. Prior to forming the Company, Mr. Volk co-founded Spirit and served as its President and Chief Executive Officer and as a member of its board from August 2003 to February 2010. Prior to co-founding Spirit in 2003, Mr. Volk served for over 16 years in numerous capacities with FFCA, including President and Chief Operating Officer and a member of FFCA’s board of directors. Mr. Volk continued as Chief Operating Officer of GE Capital Franchise Finance, the new name given to the business following the FFCA acquisition, until December 2002. In addition to his service on the Board and as the Company’s President and Chief Executive Officer, Mr. Volk currently serves as Chairman of the board, and as a member of the compensation, investment and finance committees, of Banner Health. He received a B.A. degree from Washington and Lee University and an M.B.A. degree from Georgia State University.   Specific Qualifications, Attributes, Skills and Experience:   •    Familiarity with the Company’s history and operations •    Extensive real estate and capital markets experience •    Senior executive at three public companies			Director Since:			2011
					Age:			62
					Committees:			Executive
					Other Public Company Boards:			None
					Independent:			No

Board Recommendation

The Board recommends that you vote “ FOR ” the election of each of the director nominees named above.

BOARD AND COMMITTEE GOVERNANCE

We believe that effective corporate governance is critical to our ability to create long-term value for our stockholders. Accordingly, the Company has structured its corporate governance to align the Company’s interests with those of its stockholders, including but not limited to the following:

 

•

the majority of our Board members are independent and each of our committees (other than the Executive Committee) is composed entirely of independent directors;

 

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we value board refreshment and five of our nine director nominees have joined the Board since the beginning of 2016 (including Mr. Shourie, who was reappointed in 2019);

 

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we do not have a staggered Board and each director is subject to election annually;

 

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we have adopted proxy access on market terms, which permits eligible stockholders to submit director nominees for up to 20% of the Board for inclusion in our Proxy Statement if the eligible stockholder(s) and the nominee(s) meet the requirements in our bylaws;

 

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the Company has opted out of the Maryland business combination and control share acquisition statutes (takeover defense protections), and, in the future, will not opt in without stockholder approval;

 

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the Company does not maintain a stockholder rights plan, nor will it adopt a stockholder rights plan in the future without (a) the approval of our stockholders or (b) seeking

 

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ratification from stockholders within 12 months of adoption of the plan if the Board determines, in the exercise of its duties under applicable law, that it is in the Company’s best interest to adopt a stockholder rights plan without the delay of seeking prior stockholder approval; and

 

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we value transparency and are a leader in providing detailed disclosures about our business to our stockholders.

Director Attendance at Annual Meetings

Although we do not have a formal policy regarding attendance by members of the Board at annual meetings of stockholders, we expect that our directors will participate in our meetings, absent a valid reason for not doing so. All of our current directors then serving on the Board attended the 2018 Annual Meeting of Stockholders.

Board Leadership Structure

The Board has no fixed policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer. The Board retains the discretion to determine, at any time, whether to combine or separate the positions as it deems to be in the best interests of the Company and its stockholders. In making leadership structure determinations, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders. Currently, the Board believes that separating the positions of Chief Executive Officer and Chairman is the best structure for the Company because it improves the ability of the Board to exercise its oversight role by having an independent director who is not an officer or member of management to serve in the role of Chairman.

Board Executive Sessions

The non-management members of the Board meet in executive session without management present at the conclusion of each regular Board meeting. Mr. Fleischer, the Chairman of our Board, acts as the presiding director at all of these executive sessions.

Board Role in Risk Oversight

The Board oversees the proper safeguarding of the assets of the Company, the maintenance of appropriate financial and other internal controls and the Company’s compliance with applicable laws and regulations and proper governance. Inherent in these responsibilities is the Board’s understanding and oversight of a company-wide approach to risk management that is carried out by our senior leadership team. The Board determines the appropriate risk for us generally, assesses the specific risks faced by us and reviews the steps taken by our senior leadership team to manage those risks. The Board’s committees assist in discharging the Board’s risk oversight role by performing the subject matter responsibilities outlined below. The Board retains full oversight responsibility for all subject matters not assigned to a committee. In fulfilling its risk management responsibilities, the Board recognizes that it is neither possible nor prudent to eliminate all risk and that purposeful and appropriate risk taking is essential for the Company to be competitive in its industry and to achieve the Company’s long-term strategic objectives. In performing its oversight responsibilities, the Board and its committees review policies and guidelines that senior management uses to manage the Company’s exposure to material categories of risk. As these issues sometimes overlap, committees address certain issues at the full Board level.

 

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In addition, the Board oversees the Company’s cyber risk management program. In order to respond to the threat of security breaches and cyber-attacks, we have developed a program that is designed to protect and preserve the confidentiality, integrity and continued availability of all information owned by, or in the care of, the Company. This program also includes a cyber-incident response plan. The Audit Committee, which is tasked with oversight of certain risk issues, receives periodic reports, and regularly briefs the full Board, on these matters, and the full Board also receives periodic briefings on cybersecurity threats in order to enhance our directors’ literacy on cybersecurity issues.

 

Committee		Risk Oversight Focus Areas
Audit Committee		•   Oversees risks related to the Company’s financial statements, the financial reporting process and accounting and legal matters, including related party transactions and other conflicts of interest situations. Also oversees the internal audit function.   •   Periodically receives reports on and discusses governance of the Company’s risk management processes and reviews significant risks and exposures, including those related to information technology and cybersecurity, identified by management, the internal auditors or the independent registered public accounting firm (whether financial, operational or otherwise), and management’s actions to address them.
Compensation Committee		•   Evaluates the risks and rewards associated with the Company’s compensation philosophy and programs.   •   Reviews and approves compensation programs with features that incentivize performance through individual and corporate goals while discouraging risky behaviors.
Nominating and Corporate Governance Committee		•   Oversees the Company’s governance practices, including its Code of Business Conduct and Ethics and its Corporate Governance Guidelines, director selection and nomination processes and Board and committee evaluations.   •   Oversees the Company’s position and activities in furtherance of its corporate responsibility, including the Company’s efforts in the areas of environmental stewardship, social responsibility and ethical business practices.
Investment Committee		•   Oversees the Company’s real estate investments and has final approval authority over any investment transaction that would (i) result in any single credit being greater than 1.0% of the Company’s total assets as of the previous quarter end but less than 2.0%; (ii) increase the Company’s existing exposure to a single credit previously approved by the Investment Committee under the immediately preceding clause (i) by 25% or more in any subsequent year; or (iii) cause the Company’s overall investment mix to exceed 17.5% for industrial and agriculture or 20% for retail.

In establishing the Board’s current leadership structure, risk oversight was one factor among many considered by the Board, and the Board believes that the current leadership structure is conducive to and appropriate for its risk oversight function. The Board regularly reviews its leadership structure and evaluates whether it, and the Board as a whole, is functioning effectively. If, in the future, the Board believes that a change in its leadership structure is required to, or potentially could, improve the Board’s risk oversight function, it may make any change it deems appropriate.

Committees and Meetings of the Board

During the year ended December 31, 2018, the Board met seven times. None of our current directors attended fewer than 75% of the aggregate of the total number of Board meetings and the total number of

 

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meetings held by all committees on which he or she served that were held during the year ended December 31, 2018 and that were held while such person was a director of the Company or a member of such committee. The Board has five standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Investment Committee and the Executive Committee. The charters of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are available on our investor relations website at http://ir.storecapital.com . The Board may establish other committees as it deems necessary or appropriate from time to time.

 

Audit Committee   Meetings Held in 2018:    Five
Members		Independence (1)		Primary Responsibilities of the Committee
Joseph M. Donovan (Chair) (2)   William F. Hipp (2)   Catherine D. Rice (2)		Ö   Ö   Ö		•   reviewing our financial statements, including any significant financial items or changes in accounting policies, with our senior management and independent registered public accounting firm;   •   reviewing our financial risk and control procedures, compliance programs and significant tax, legal and regulatory matters;   •   selecting and determining the compensation of our independent registered public accounting firm;   •   establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters; and   •   reviewing and overseeing our independent registered public accounting firm.

 

(1)	Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements, and meets the independence requirements of the NYSE, the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the Company’s Corporate Governance Guidelines.

 

(2)	The Board has determined that Messrs. Donovan and Hipp and Ms. Rice each qualify as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K.

 

Compensation Committee   Meetings Held in 2018:    Five
Members		Independence (1)		Primary Responsibilities of the Committee
Quentin P. Smith, Jr. (Chair)   Morton H. Fleischer   Mark N. Sklar (2)   Catherine D. Rice (2)		Ö   Ö   Ö   Ö		•   approving goals (both individual and corporate) and objectives relevant to the compensation of our key executives; evaluating the performance of these executives in light of those goals and objectives; and determining the compensation of these executives based on that evaluation;   •   reviewing and approving director compensation;   •   reviewing and approving overall compensation programs;   •   administering our incentive compensation and equity-based plans; and   •   as necessary, engaging an independent compensation consultant to assist with the structure of our director and executive compensation programs.

 

(1)	Each member of the Compensation Committee meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines and qualifies as a “non-employee director” under SEC Rule 16b-3.

 

(2)	Ms. Rice was appointed to serve on the Compensation Committee, effective July 30, 2018, replacing Mr. Sklar. Mr. Sklar resigned from the Board, effective August 9, 2018.

 

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Nominating and Corporate Governance Committee   Meetings Held in 2018:    Five
Members		Independence (1)		Primary Responsibilities of the Committee
Morton H. Fleischer (Chair)   Einar A. Seadler   Quentin P. Smith, Jr.		Ö   Ö   Ö		•   identifying individuals qualified to become members of the Board and recommending director nominees and members of the Board for committee assignment;   •   developing and recommending to our Board corporate governance guidelines; and   •   overseeing the evaluation of our Board and its committees.

 

 

(1)	Each member of the Nominating and Corporate Governance Committee meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines.

 

Investment Committee   Meetings Held in 2018:    Four
Members		Independence		Primary Responsibilities of the Committee
Morton H. Fleischer (Chair)   Joseph M. Donovan   William F. Hipp   Mark N. Sklar (1)		Ö   Ö   Ö   Ö		•   reviewing property acquisitions for tenant relationships that would result in any single credit being greater than 1.0% of the Company’s total assets as of the previous quarter end but less than 2% of total assets as of the previous quarter end, and evaluating these acquisitions in accordance with the Company’s investment guidelines; and   •   approving or declining proposed property acquisitions based on its assessment of the overall quality of the transaction and whether it believes the transaction is in the best interests of the Company and its stockholders.

 

 

(1)	Mr. Sklar resigned from the Board and from his position on the Investment Committee, effective August 9, 2018.

 

Executive Committee   Meetings Held in 2018:    Two
Members		Independence		Primary Responsibilities of the Committee
Morton H. Fleischer (Chair)   Christopher H. Volk   Quentin P. Smith, Jr.		Ö   c   Ö		•   acting on behalf of the Board during intervals between regularly scheduled meetings of the Board; and   •   exercising all powers of the Board, except as otherwise provided by law and the Company’s bylaws and consistent with the authority which has been delegated to the Executive Committee by the Board.

Changes in Committee Composition

In connection with the appointment of Mr. Shourie to the Board, effective February 13, 2019, the Nominating and Corporate Governance Committee recommended, and the Board approved, the appointment of Mr. Shourie to serve on the Nominating and Corporate Governance Committee, replacing Mr. Seadler, and the appointment of Mr. Seadler to serve on the Compensation Committee, replacing Ms. Rice. The Board also appointed Mr. Shourie to serve on the Investment Committee, filling a vacancy created with the resignation of Mr. Sklar from the Board, effective August 9, 2018.

 

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Communication with the Board

The Board has adopted a process by which stockholders and other interested parties who desire to contact our Board, a particular Board committee, a particular group of directors (e.g., our independent directors), or individual members of the Board, including our Chairman (the presiding director), may do so electronically by email at CorporateSecretary@storecapital.com, or by mail addressed to the named individual, the committee, the group, or the Board as a whole c/o Michael T. Bennett, Executive Vice President—General Counsel, Chief Compliance Officer and Secretary, at STORE Capital Corporation, 8377 East Hartford Drive, Suite 100, Scottsdale, AZ 85255. In general, any communication delivered to the Company for forwarding to the Board, a Board committee, a particular group of directors or specified Board members will be forwarded in accordance with the stockholder’s instruction, except that we reserve the right not to forward any abusive, threatening or otherwise inappropriate materials.

ADDITIONAL CORPORATE GOVERNANCE FEATURES

Stockholder Engagement

Over the years, we have developed our stockholder engagement program as a means to provide continuous and meaningful interaction with our stockholders. The Company engages with its stockholders through a multi-pronged program pursuant to which we seek input, address questions and concerns, and provide perspective on Company policies and practices to our stockholders throughout the entire year. In developing the Company’s approach to stockholder engagement, our principal goal is to develop strong relationships with our key stockholders that will allow us to understand those issues that are most meaningful to them, thereby giving us insight into stockholder support of any initiatives and strategies that we propose to implement in furtherance of our long-term growth, improved governance or other matters. We recognize that stockholders are the owners of the Company and we use every component of the engagement effort to provide stockholders with detailed disclosures about our business and our thoughts on relevant issues, including the rationale for our corporate strategy.

The five components of our stockholder engagement program are:

 

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Direct Engagement . Each year, we seek to engage with our significant stockholders on matters related to corporate governance or other matters that they may wish to discuss. These engagements consist of focused, one-on-one meetings (in person or via teleconference) between stockholders and our management that are designed to give our institutional stockholders an opportunity to better understand our company so that they may speak directly with management regarding any concerns they have, as well as fulfill their own fiduciary duties to their own investors. To make these meetings most productive for our investors’ governance teams, we set meeting times well in advance and provide advance materials covering the primary topics of discussion, thus ensuring that stockholder participants will have the opportunity and information to prepare and engage in meaningful dialogue. This season, we engaged directly on corporate governance and related matters with institutional investors, including our six largest stockholders, who collectively held more than 47.0% of our stock as of December 31, 2018.

 

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Biennial Investor Day . We host an Investor Day every other year. At the event, our senior executives and acquisition team members provide market commentary, as well as investment and portfolio management case-studies and other informative insights. We design our Investor Days to provide stockholders a view of our long-term outlook and strategy. The event draws institutional equity and fixed income investors, as well as analysts who generally publish their observations. As necessary, highlights of the presentations are also filed with the Securities and Exchange Commission (the “ SEC ”) in a Form 8-K and made available to all stockholders.

 

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Virtual Stockholder Meeting . We conduct our annual meeting as a “virtual meeting,” allowing our stockholders to join remotely from anywhere with an Internet connection or access to a telephone. Our virtual meeting platform empowers stockholders to submit questions to our Board and management team, who are then able to thoughtfully review and respond to those questions in an organized manner. We remain very sensitive to concerns regarding virtual meetings generally from investor advisory groups and other stockholder rights advocates, who have suggested that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed this virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the online format allows stockholders to communicate with us in advance of, and during, the meeting so they can ask questions of our Board or management. During the live question-and-answer session of the meeting, we answer questions as they come in and address those asked in advance, as time permits. We have committed to publishing and answering each question received following the meeting. Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting is made publicly available on the company’s investor relations site. We have continued to receive positive support from larger holders of our shares who have indicated the virtual format is beneficial and appropriate in the context of our broader direct outreach program and given our geographic location, which is far removed from the offices of our principal investors.

Virtual stockholder meetings also offer other benefits. We avoid the time, effort and elevated expenses of organizing physical meetings which historically have been attended by only a few stockholders; our stockholders who wish to attend our annual meeting do not need to incur travel and other costs to do so; and we reduce the environmental impact our annual meetings have by cutting transport and related carbon emissions, paper materials, and other negative impacts necessarily a part of a physical meeting. Our virtual meeting platform also allows us to better track attendance and more easily verify the identity of our stockholders. We believe these factors allow us to conduct our annual meetings in a manner that is more meaningful to us and our stockholders.

 

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Annual Letter to Stockholders . On an annual basis, our Chief Executive Officer, Christopher H. Volk, publishes a letter to stockholders. In this letter, Mr. Volk provides insights into our financial performance, the foundational elements of our business, the long-term strategies that we follow and the value that we provide to our customers. The annual letter is announced via press release in concert with the filing with the SEC of the Company’s Annual Report on Form 10-K and is available on our investor relations website.

 

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Quarterly Investor Presentation . Each quarter, together with the filing of our earnings release, we prepare and file a comprehensive investor presentation that provides detailed information regarding our corporate strategy, financial results, investment portfolio statistics and other key metrics regarding our business. We update this presentation each quarter, file it with the SEC and make it available on our investor relations website.

We supplement these efforts throughout the year through post-earnings communications, participation at industry and investor conferences and general availability to respond to investor inquiries. We believe this multi-pronged approach to stockholder engagement allows us to maintain meaningful interaction with a broad audience including large institutional investors, smaller to mid-size institutions, pension funds, advisory firms and individual investors.

At the Annual Meeting we are proposing to amend the Company’s bylaws to allow stockholders to amend the bylaws by a majority vote of the outstanding shares entitled to be cast on the matter pursuant to a proposal submitted by an eligible stockholder. Prior to the Board’s determination to make this proposal,

 

22

management, with the encouragement of the Nominating and Corporate Governance Committee, directly discussed this proposal with institutional investors, including our six largest stockholders, who collectively held more than 47.0% of our stock as of December 31, 2018. See the section titled “Governance—Proposal No. 2 – Approval of an Amendment to the Company’s Bylaws” for a discussion of this proposal and stockholder reaction.

Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies

The Board considers it inappropriate for any director, officer or employee to enter into speculative transactions in the Company’s securities, as well as transactions that, while allowing the holder to own the Company’s securities without the full risks and rewards of ownership, potentially separate the holder’s interests from those of other stockholders. Therefore, the Company’s Corporate Governance Guidelines prohibit the purchase or sale of puts, calls, options or other derivative securities based on the Company’s securities by directors, officers or employees. They also prohibit hedging or monetization transactions, such as forward sale contracts, in which the stockholder continues to own the underlying security without all the risks or rewards of ownership. Under the terms of the Company’s insider trading policy, our directors and executive officers are, in addition, prohibited from engaging in short sales of our common stock, from purchasing securities on margin or, except with the prior written consent of the Chief Compliance Officer, pledging securities as collateral for a loan or other arrangement.

Stock Ownership Guidelines Applicable to Executive Officers and Outside Directors

We believe that stock ownership by our executive officers and outside directors helps to align their interests with the interests of our stockholders. As such, in February 2016, we adopted a stock ownership policy applicable to our executive officers and outside directors under which they are expected to maintain beneficial ownership of shares of our common stock with a value equal to the following:

 

Position		Minimum Equity Ownership Requirement
Chief Executive Officer		6x annual base salary
Chief Operating Officer/Executive Vice President		3x annual base salary
Outside Director		5x annual cash fees

Calculation of required ownership levels. The required stock ownership levels are based on the annual base salary or annual cash fees payable to an executive officer or outside director, as applicable, as of the date such person becomes subject to the stock ownership guidelines and the average closing sale price of the Company’s common stock for the 60 trading days following such date. The requirement is determined on an individual basis, first in dollars as a multiple of the person’s annual base salary or annual cash fees, as applicable, and then by converting such amount to a fixed number of shares. Once established, a person’s requirement will not change due to changes in his or her base salary or annual cash director fees or fluctuations in the Company’s stock price and will only change in connection with a change to a different executive position.

Eligible equity . Each person may count toward his or her ownership requirement shares owned directly, including restricted stock and shares deliverable upon settlement of restricted stock units the performance period for which has been completed (but not restricted stock units still subject to the achievement of performance goals), and shares owned indirectly, if the person has an economic interest in the shares. Stock options and outstanding performance-based awards do not count toward the requirement.

Satisfying the requirement . Each person subject to the policy has five years to satisfy his or her applicable ownership requirement after becoming subject to the policy or following a change in the person’s requirement. If a person does not satisfy the specified ownership levels when the applicable transition period ends, the stock ownership policy does not require the person to purchase shares in the open market but does

 

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require that person to retain 100% of any shares then held and any shares subsequently acquired pursuant to any equity grants (after the payment of any applicable exercise costs and taxes) until the minimum ownership requirement is satisfied.

Corporate Governance Guidelines and Code of Business Conduct and Ethics

The Board has adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics that apply to all of our directors, officers and employees. The current versions of these corporate governance documents are available free of charge on the Company’s investor relations website at http://ir.storecapital.com and in print to any stockholder who requests copies by contacting Michael T. Bennett, Executive Vice President—General Counsel, Chief Compliance Officer and Secretary of the Company, at 8377 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255. The Company will promptly disclose to our stockholders, if required by applicable law or NYSE rules and regulations, any amendments to, or waivers from, provisions of the Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website, www.storecapital.com , rather than by filing a Form 8-K.

Diverse Board and Management Team

We seek to provide a work environment that attracts, develops and retains top talent by affording our employees an engaging work experience that allows for career development and opportunities for meaningful civic involvement. Since the founding of the Company in 2011, and at the prior companies founded by our management team, we have believed that we must have the best talent, including individuals who possess a diverse range of experiences, backgrounds and skills that enable us to anticipate and meet the needs of our business and those of our customers. Over time, we have hired, developed and retained a diverse workforce that is a key component in the Company’s success and an important part of the Company’s culture.

Our ability to attract, develop and retain diverse talent is reflected at both the Board and management levels.  Our nine-person Board reflects our emphasis on inclusion and diversity. In addition, our management structure includes ten positions at the level of senior vice president and above, of which seven are currently held by women, including Mary Fedewa, our Chief Operating Officer and a Board member since 2016, and Catherine Long, our Executive Vice President—Chief Financial Officer and Treasurer.

DIRECTOR COMPENSATION

2018 Director Compensation

In 2018, Mr. Fleischer, as the non-executive Chairman of the Board of the Company, received cash fees of $200,000 and a grant of restricted stock having a value of $200,000 at grant that vests over four years. For 2018, our other non-employee directors each received cash fees of $60,000 and a grant of restricted stock having a value of $95,000 at grant that vests at the end of their one-year term. The restricted stock grant to Mr. Fleischer is made in February of each year, while the grants to the other non-employee directors are made on the date of the annual meeting each year.

In 2018, Messrs. Donovan and Smith also received additional cash fees of $17,500 and $10,000 for their service as the chairs of our Audit Committee and Compensation Committee, respectively. Mr. Fleischer does not receive additional fees to serve as the chair of the Nominating and Corporate Governance Committee. If, in the future, a non-employee director other than Mr. Fleischer were to serve as chair of the Nominating and Corporate Governance Committee, that person would receive additional cash fees pursuant to the director compensation program as then in effect. All cash fees are paid in quarterly installments over the calendar year.

 

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The following table shows the compensation paid to the non-employee directors who served on our Board during 2018:

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($) (1)(2)				Total ($)
Joseph M. Donovan			77,500				95,006				172,506
Morton H. Fleischer			200,000				200,004				400,004
William F. Hipp			60,000				95,006				155,006
Catherine D. Rice			60,000				95,006				155,006
Einar A. Seadler			60,000				95,006				155,006
Quentin P. Smith, Jr.			70,000				95,006				165,006
Mark N. Sklar (3)			51,667				95,006				146,673

 

(1)

All stock award amounts in this column reflect the aggregate grant date fair value of restricted stock calculated in accordance with FASB ASC Topic 718. For each director other than Mr. Fleischer, the number of shares of restricted stock granted was determined by dividing the grant date value of the award, $95,006, by $26.80 (the closing price of our common stock on May 31, 2018, the date of the grant).

For Mr. Fleischer, the number of shares of restricted stock granted was determined by dividing the grant date value of the award, $200,004, by $23.63 (the closing price of our common stock on February 15, 2018, the date of the grant).

 

(2)

At December 31, 2018, our independent directors had the following aggregate numbers of unvested stock awards outstanding:

 

Name		Unvested Stock Awards
Joseph M. Donovan			3,545
Morton H. Fleischer			8,464
William F. Hipp			3,545
Catherine D. Rice			3,545
Einar A. Seadler			3,545
Quentin P. Smith, Jr.			3,545
Mark N. Sklar (3)			—

 

(3)

Mr. Sklar resigned from the Board, effective August 9, 2018. In connection with his resignation, and in light of the circumstances thereof, the Compensation Committee elected to vest his 2018 restricted stock grant.

 

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Changes to Director Compensation for 2019

The Compensation Committee reviews the compensation of our non-employee directors periodically and recommends changes to the Board when it deems appropriate. In 2018, the Compensation Committee engaged Korn Ferry Hay Group, Inc. (“ Korn Ferry ”) to review the existing director compensation program as the program had last been evaluated in 2016. Korn Ferry provided the Compensation Committee with market data and made recommendations with respect to compensation mix and levels. Our Board, based on the recommendation of the Compensation Committee following consultation with Korn Ferry, modified the non-employee director compensation program, effective January 1, 2019, as follows:

 

Compensation Element		Director Compensation Program
		Position		2018		2019
Annual Cash Fees :		Non-Executive Chairman:   Other Non-Employee Directors:		$200,000   $60,000		No change   $65,000
Annual Equity Grant :		Non-Executive Chairman:   Other Non-Employee Directors:		$200,000 in restricted stock that vests over four years   $95,000 in restricted stock that vests at the end of their one-year term		No change   $100,000 in restricted stock that vests at the end of their one-year term
Board and Committee Meeting Fees :		All Non-Employee Directors:		None		None
Committee Chair Fee :		Audit:   Compensation:   Nominating and Corporate Governance:		$17,500   $10,000   N/A		$20,000   $15,000   $12,500 (if other than Mr. Fleischer)

DIRECTOR INDEPENDENCE AND RELATED PARTY TRANSACTIONS

Independence Determinations

Under the corporate governance listing standards of the NYSE and the Company’s Corporate Governance Guidelines, the Board must consist of a majority of independent directors. In making independence determinations, the Board observes NYSE and SEC criteria and considers all relevant facts and circumstances. Under NYSE corporate governance listing standards, to be considered independent:

 

•

the director must not have a disqualifying relationship, as defined in the NYSE standards; and

 

•

the Board must affirmatively determine that the director otherwise has no material relationship with the Company directly, or as an officer, stockholder or partner of an organization that has a relationship with the Company.

The Board, through its Nominating and Corporate Governance Committee, annually reviews all relevant business relationships any director and director nominee may have with the Company. As a result of its annual review, the Board has determined that none of the following director nominees has a material relationship with the Company and, as a result, such director nominees are independent: Joseph M. Donovan, Morton H. Fleischer, William F. Hipp, Catherine D. Rice, Einar A. Seadler, Rajath Shourie and Quentin P. Smith, Jr.

Christopher H. Volk, who serves as the Company’s President and Chief Executive Officer, and Mary Fedewa, who serves as the Company’s Chief Operating Officer, are executive officers of the Company and therefore are not independent directors.

 

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All of the directors who serve as members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee are independent as required by the NYSE corporate governance rules. Under these rules, our Audit Committee members also satisfy the separate SEC independence requirement and our Compensation Committee members also satisfy the additional NYSE independence requirement.

Certain Relationships and Related Party Transactions

Our Board has adopted a written statement of policy regarding transactions with related parties, which we refer to as our “related person policy.” Our related person policy requires that a “related person” (as defined in paragraph (a) of Item 404 of Regulation S-K under the Securities Act of 1933, as amended) must promptly disclose to our Chief Compliance Officer any transaction in which the amount involved exceeds $1,000 and in which any related person had or will have a direct or indirect material interest and all material facts with respect thereto. Following a determination of whether the proposed transaction is material to the Company (with any transaction in which the amount involved exceeds $50,000 being deemed material for purposes of the related person policy), the Chief Compliance Officer will report the transaction to the Audit Committee for its approval. No related party transaction will be executed without the approval or ratification of the Audit Committee. It is our policy that directors interested in a related party transaction will recuse themselves from any vote on a related party transaction in which they have an interest. The Audit Committee will consider all relevant facts and circumstances when deliberating such transactions, including whether such transactions are in, or not inconsistent with, the best interests of the Company and its stockholders.

The following is a summary of related party transactions since January 1, 2018. The related party transactions listed below were all approved by the Audit Committee and/or the Board.

 

•

Julie N. Bennett, who is our Senior Vice President—Tax Director, is the spouse of Michael T. Bennett, who is Executive Vice President—General Counsel, Chief Compliance Officer and Secretary of the Company. For 2018, STORE paid Mrs. Bennett total compensation of $514,007, comprised of salary, bonus, the value of restricted stock granted during 2018, and STORE contributions to the STORE 401(k) plan.

 

•

We are a party to indemnification agreements with our directors and certain members of management. These agreements require us to indemnify these individuals to the fullest extent permitted under Maryland law and our charter against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under securities laws may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC, such indemnification is against public policy and is therefore unenforceable. There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

 

•

Following a competitive bidding process conducted in the fall of 2018, we selected Berkshire Hathaway Specialty Insurance Company (“ BHSIC ”) to provide our primary layer of directors & officers liability insurance. For the policy period of December 31, 2018 through December 31, 2019, we paid a premium of $176,560 for such policy. As of December 31, 2018, National Indemnity Company, a subsidiary of Berkshire Hathaway Inc. and the parent company of BHSIC, held approximately 8.4% of our outstanding common stock.

 

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EXECUTIVE COMPENSATION

PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

 

•

What am I voting on?

Stockholders are being asked to approve, on an advisory basis, the compensation of the named executive officers as disclosed in this Proxy Statement.

 

•

Voting recommendation:

“FOR” the advisory vote to approve the compensation of our named executive officers. The Compensation Committee takes very seriously its role in the governance of the Company’s compensation programs and will take into account the outcome of the advisory vote when considering future executive compensation decisions.

 

•

Vote Required:

The affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve this non-binding advisory resolution. Broker non-votes or abstentions will have no effect on the results of this proposal.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “ Dodd-Frank Act ”) and Rule 14a-21 under the Exchange Act, the Company requests that our stockholders cast an annual non-binding, advisory vote to approve the compensation of the Company’s named executive officers identified in the section titled “Compensation Discussion and Analysis” set forth below in this Proxy Statement. This proposal, commonly known as the “say-on-pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our stockholders to vote “ FOR ” the following resolution at the Annual Meeting:

“ RESOLVED , that the Company’s stockholders hereby approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.”

Details concerning how we implement our compensation philosophy and structure our plans to meet the objectives of our compensation program are provided in the section titled “Compensation Discussion and Analysis” set forth below in this Proxy Statement. In particular, we discuss how we design performance-based compensation programs and set compensation targets and other objectives to maintain a close correlation between executive pay and Company performance.

This vote is merely advisory and will not be binding upon the Company, the Board or the Compensation Committee, nor will it create or imply any change in the duties of the Company, the Board or the Compensation Committee. The Compensation Committee will, however, take into account the outcome of the vote when considering future executive compensation decisions. The Board values constructive dialogue on executive compensation and other significant governance topics with the Company’s stockholders and encourages all stockholders to vote their shares on this important matter.

 

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Board Recommendation

The Board recommends that you vote “FOR” the resolution to approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in this Proxy Statement.

EXECUTIVE OFFICERS

Set forth below is biographical information with respect to each of our executive officers as of the date of this Proxy Statement, except Mr. Volk, the Company’s President and Chief Executive Officer, and Ms. Fedewa, the Company’s Chief Operating Officer. Mr. Volk and Ms. Fedewa also serve as directors of the Company and their respective biographical information is available above in the section titled “Governance—Proposal No. 1 – Election of Directors—Information Regarding the Board of Directors.”

 

Michael T. Bennett
		Mr. Bennett was one of the Company’s founders in May 2011 and served as the Company’s Executive Vice President-Operations, Chief Compliance Officer and Corporate Secretary from its organization until late 2013, when he was named Executive Vice President-General Counsel, Chief Compliance Officer, Corporate Secretary and Assistant Treasurer. Mr. Bennett has over 35 years of legal, transactional and operational experience in the real estate and finance industries. Prior to co-founding the Company, Mr. Bennett was Senior Vice President-Operations, Chief Compliance Officer and Corporate Secretary at Spirit from early 2005 to February 2010, where he was involved in structuring, negotiating and closing all of its real estate and debt related transactions. From 1991 to 2000, Mr. Bennett served as Vice President and General Counsel of Farmer Mac (NYSE:AGM), a government sponsored enterprise providing financing to America’s agricultural industry. Mr. Bennett’s legal career included several years in private law practice concentrating on complex mortgage and other asset-based structured finance transactions. He received a B.A. degree summa cum laude in Government and Foreign Affairs from Hampden-Sydney College (where he was elected to Phi Beta Kappa) and a J.D. degree from the University of Virginia Law School. In 2017, Mr. Bennett was named Arizona Corporate Counsel of the Year in the Public Company (medium) category. He is a member of the bars of the District of Columbia, the State of New York and the Commonwealth of Virginia.			Officer Since:   Age:				2011   61
Catherine Long
		Ms. Long was one of the Company’s founders in May 2011 and has served as its Executive Vice President-Chief Financial Officer, Treasurer and Assistant Secretary since its organization. Ms. Long has over 30 years of accounting, operating and financial management expertise. Prior to co-founding the Company, Ms. Long was CFO, Senior Vice President and Treasurer of Spirit from its inception in August 2003 to February 2010. Prior to Spirit, Ms. Long served in various capacities with FFCA and its successor, GE Capital Franchise Finance. Ms. Long was also FFCA’s Principal Accounting Officer and actively participated in FFCA’s real estate limited partnership rollup, as well as numerous securitization transactions and business combinations. Prior to her employment with FFCA, Ms. Long was a senior manager specializing in the real estate industry with the international public accounting firm of Arthur Andersen in Phoenix, Arizona. She was named CFO of the Year in 2008 by the Arizona chapter of Financial Executives International. She received a B.S. degree in accounting with high honors from Southern Illinois University and has been a certified public accountant since 1980.			Officer Since:   Age:				2011   62

 

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COMPENSATION DISCUSSION AND ANALYSIS

In this section, we describe the material components of our executive compensation program for our named executive officers (the “ Named Executive Officers ” or “ NEOs ”), whose compensation is set forth in the 2018 Summary Compensation Table and other compensation tables contained in this Proxy Statement. We also provide an overview of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why the Compensation Committee of our Board arrived at the specific compensation decisions involving the NEOs for 2018.

For 2018, our NEOs were:

 

•

Christopher H. Volk , our President and Chief Executive Officer;

 

•

Mary Fedewa , our Chief Operating Officer;

 

•

Catherine Long , our Executive Vice President—Chief Financial Officer and Treasurer;

 

•

Michael T. Bennett , our Executive Vice President—General Counsel, Chief Compliance Officer and Secretary; and

 

•

Christopher K. Burbach , our former Executive Vice President—Underwriting.

Mr. Burbach, who served as an executive officer throughout 2018, resigned from the Company, effective February 28, 2019.

Executive Summary

Business Highlights

Our Business . We are an internally managed net-lease real estate investment trust, or REIT, that is the leader in the acquisition, investment and management of  S ingle  T enant  O perational  R eal  E state, which is our target market and the inspiration for our name. We are one of the largest and fastest-growing net-lease REITs and own a well-diversified portfolio that consists of investments in 2,255 property locations across 49 states as of December 31, 2018. Our customers operate across a wide variety of industries within the service, retail and manufacturing sectors of the U.S. economy, with restaurants, early childhood education centers, furniture stores, health clubs and movie theaters representing the top industries in our portfolio

2018 Performance Highlights . 2018 was a successful year for STORE, as we posted new records in all key performance metrics in 2018, including real estate investment activity, AFFO (as defined and discussed herein) and AFFO per share. We also delivered our fourth consecutive year of double-digit returns to our stockholders, in part due to our fourth dividend increase in as many years. During the year, we acquired 418 properties for a total of $1.63 billion at sector-leading average investment yields of 7.9%, further diversifying our tenant base to 434 customers across the United States. From a capital markets perspective, we strengthened our financing flexibility and reduced our cost of capital with the successful completion of our inaugural public unsecured note offering, together with the first-ever AAA rated real estate master funding debt issuance.

 

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The decisions made by the Compensation Committee and the Board on the compensation of our NEOs are reflective of the Company’s successes during the year, which include:

 

•    We completed record new acquisition volume . During the year ended December 31, 2018, we invested approximately $1.6 billion in 418 property locations at a weighted average initial real estate capitalization rate of 7.9% on the properties we acquired.   •    We strengthened and diversified our portfolio . As of December 31, 2018, our total gross investment in real estate had reached approximately $7.6 billion, representing 2,255 property locations operated by 434 customers across 49 states. Our top ten customers collectively accounted for only 18.1% of our annualized base rent and interest, with our largest customer accounting for only 2.7%.   •    We increased our liquidity under our credit facility . In February 2018, we expanded our unsecured revolving credit facility from $500 million to $600 million and increased the accordion feature from $300 million to $800 million for a total maximum borrowing capacity of $1.4 billion.   •    We completed our first public debt offering . In March 2018 we completed our first public debt offering, issuing $350 million in aggregate principal amount of unsecured, investment-grade rated 4.50% Senior Notes, due in March 2028.		•    We issued AAA notes under our STORE Master Funding debt program . In October 2018, we marked the inaugural issuance of AAA rated net-lease mortgage notes under our STORE Master Funding debt program; we issued a total of $592 million of net-lease mortgage notes, of which $378 million are rated AAA with the remainder rated A+. The weighted average coupon rate of the AAA rated notes is 4.16% and the weighted average coupon rate of the A+ rated notes is 4.66%   •    We continued to access the equity capital markets . During 2018, we raised aggregate net proceeds of $741.7 million from sales of common stock under our “at the market”, or ATM, equity offering program.   •    We increased our dividend . For the year ended December 31, 2018, we declared dividends totaling $1.28 per share of common stock to our stockholders. In the third quarter of 2018, we raised our quarterly dividend 6.5% from our previous quarterly dividend amount.   •    We grew our unencumbered assets . We concluded 2018 with more than $4.6 billion in unencumbered assets.

Executive Compensation Highlights

The Compensation Committee has instituted a number of changes to our executive compensation program over the last several years to align with evolving competitive and governance practices and strengthen the link to performance and rigor of our program. For 2018, these changes included:

 

•    New Peer Group . We developed a new peer group for 2018 that includes both net-lease REITs and other REITs that have experienced significant asset growth and/or growth in per share funds from operations (FFO) in recent years, many of which also have relatively small employee populations.   •    Increase in Target Annual Compensation . We made modifications to each NEO’s target annual compensation and increased the maximum award that NEOs may receive under performance-based RSUs for superior performance, in each case in order to facilitate retention going forward and to		•    New Absolute Long-Term Incentive Metric . We now require that 50% of our NEOs’ performance-based RSUs be earned based on AFFO per share growth, which the Compensation Committee believes is among the most important measures of operational performance.   •    Cap on Relative Long-Term Incentive Metric . While retaining the compounded annual TSR metric for performance-based RSUs granted in 2018 that we had used in 2017, we incorporated a cap so that the maximum award payout is

 

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provide meaningful incentive plan targets that reward the executive management team for continuing superior performance for the Company’s stockholders.   •    Eliminated the Service Requirement . We believe that performance-based RSUs should be earned based on achievement of the designated performance metrics during the performance period. Accordingly, we eliminated the requirement that NEOs must remain employed for an additional year following the end of the three-year performance period in order to vest in 50% of the award earned at the end of the performance period.		limited to the target award if the Company’s absolute compounded annual TSR is negative, regardless of how the Company performs on a relative basis.   •    Adjustment to Short-Term Incentive Metric . We adjusted the short-term incentive plan to reduce the weighting of AFFO per share given the inclusion of AFFO per share growth as a metric in the 2018 performance-based RSU grants.

Response to Advisory Vote on Executive Compensation

At each of our last three annual stockholder meetings, at least 94.4% of the votes cast on the non-binding advisory vote on the compensation of our Named Executive Officers were voted in support of our executive compensation program. Consistent with our strong commitment to engagement, communication and transparency, our Compensation Committee regularly reviews our executive compensation program to ensure alignment between the interests of our senior executives and stockholders. Based on this review, which is informed by interaction with its compensation consultant and changing market practices, the Compensation Committee has made several modifications to the compensation program for our NEOs over the last two years. The changes that we implemented for 2018 are discussed above. During 2018, the Company’s NEOs once again delivered sustained, superior performance for our stockholders, Accordingly, for 2019, the Compensation Committee has made additional adjustments to ensure that the Company continues to provide market-competitive compensation and incentives to retain the Company’s high-performing NEOs and reward the team for continued success. See the section titled “Executive Compensation—Compensation Discussion and Analysis—Changes to Compensation Program Beginning in 2019.”

Compensation Philosophy and Objectives

We believe the most effective compensation program is one that promotes our ability to attract and retain highly qualified and motivated individuals who are aligned with the interests of our stockholders. Our Compensation Committee seeks to develop a well-balanced program that contains a competitive annual base salary but that is weighted towards variable at-risk pay elements through the use of our short-term cash incentive and long-term equity-based compensation. We foster a culture where our NEOs must contribute to the achievement of measurable financial performance metrics of the Company in order to increase their cash compensation and also must deliver meaningful returns to our stockholders in order to earn a significant portion of their equity compensation. Each element of our compensation program is discussed in more detail below.

 

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To further these objectives, we adhere to the following compensation and corporate governance practices:

 

What We Do:
		We Pay for Performance: A substantial portion of our compensation is not guaranteed but rather is linked to the achievement of key financial metrics that are disclosed to our stockholders.
		We Balance Short-Term and Long-Term Incentives: Our incentive programs provide a balance of annual and longer-term incentives, including a variety of performance metrics that measure both absolute and relative performance.
		We Can Claw Back Compensation: Our independent directors have the ability to recoup incentive compensation from an NEO if the Company’s financial results are restated or materially misstated due in whole or in part to intentional fraud or misconduct by the NEO.
		We Retain an Independent Compensation Consultant: Our Compensation Committee engages an independent consultant to provide guidance on a variety of compensation matters.
		We Seek Alignment with Our Stockholders: We require both our Named Executive Officers and our directors to maintain a meaningful ownership stake at levels specified in our stock ownership policy, and 69% or more of our NEOs’ total direct compensation is performance-based.

What We Don’t Do:
		No Automatic Salary Increases or Guaranteed Bonuses: We do not guarantee annual salary increases or bonuses and none of the employment agreements with our NEOs contain such provisions.
		No Guaranteed Incentives: We do not provide multi-year guaranteed incentive awards for our NEOs.
		No Payment of Dividends or Dividend Equivalents on Unvested Performance-Based Restricted Stock Units: Performance-based restricted stock units do not receive dividends or dividend equivalents until the shares are vested.
		No Excessive Perquisites: Our NEOs are provided with limited perquisites and benefits.
		No Hedging or Pledging: We have policies that prohibit our officers and directors from hedging, effecting short sales, or pledging our stock.
		No Tax Gross-Ups: We do not provide tax gross-ups on any severance, change-in-control or other payments.
		No Change of Control Acceleration: We do not provide “single-trigger” accelerated vesting of equity-based awards upon a change in control.
		No Excessive Severance: Our executive officers cannot receive severance payments and benefits exceeding 2.99 times salary and cash bonus without stockholder approval.

 

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How We Determine Compensation

Role of the Compensation Committee . The Compensation Committee, operating pursuant to authority delegated to it by the Board, oversees the design, development and implementation of our executive compensation program. The Compensation Committee also administers our compensation plans and awards for the Company’s directors and Named Executive Officers and is primarily responsible for reviewing and approving our compensation policies and the compensation paid to our Named Executive Officers. The Compensation Committee’s responsibilities are set forth in its written charter and are more fully described in this Proxy Statement under the heading “Governance—Board and Committee Governance—Committees and Meetings of the Board.”

Role of Management. Certain of our Named Executive Officers, principally our President and Chief Executive Officer and our Chief Financial Officer, work closely with the Compensation Committee and its consultant to analyze relevant peer data and to provide input into the compensation program design. Management assists the Compensation Committee’s consultant in its survey of executive compensation by providing historical compensation information. Management makes recommendations of the program design for the Named Executive Officers for consideration by the Compensation Committee.

Role of Compensation Consultant. In 2018, the Compensation Committee engaged Korn Ferry as its independent compensation consultant to assist the Compensation Committee with the structure of our executive compensation program. Korn Ferry provided the Compensation Committee with market data and made recommendations regarding the compensation mix and levels with respect to the 2018 executive compensation program described herein. The Compensation Committee conducts independence assessments of its consultants and has determined that no conflict of interest exists that would require disclosure under SEC rules. Korn Ferry does not provide services to the Company in any other capacity.

Competitive Market Analysis. In developing our 2016 executive compensation program, the Compensation Committee, with the assistance of our prior compensation consultant and management, gathered and reviewed the compensation practices, salary levels and target incentive levels of a group of other publicly traded REITs comparable to the Company in terms of asset focus, structure, size (total capitalizations that are generally within 0.5x to 2.0x the Company’s total capitalization) and/or growth trajectories (the “ 2016 Peer Group ”). For purposes of developing our 2017 executive compensation program, our prior compensation consultant recommended, and the Compensation Committee approved, utilizing the same 2016 Peer Group. The 2016 Peer Group utilized for 2016 and 2017 consisted of the following companies:

 

VEREIT, Inc.*		Omega Healthcare Investors, Inc.*
National Retail Properties, Inc.*		Spirit Realty Capital, Inc.*
EPR Properties*		Medical Properties Trust, Inc.
Gramercy Property Trust Inc.*		Apple Hospitality REIT, Inc.
iStar Inc.		LaSalle Hotel Properties
Lexington Realty Trust*		Sunstone Hotel Investors, Inc.
National Health Investors*		STAG Industrial, Inc.*

 

*	Denotes a net-lease oriented company.

In reviewing potential compensation and incentive plan modifications to implement in 2018, the Compensation Committee, with the advice and input of Korn Ferry, began by evaluating the Company’s existing peer group, as described above. The Company has experienced rapid growth in assets and Adjusted Funds From Operations (“ AFFO ”) per share in the past several years and its growth profile varies from that of many of the Company’s net-lease REIT competitors. Rapid growth within an organization that has a small number of employees presents operational challenges that other organizations, including many of the Company’s net-lease REIT competitors, do not experience. For this reason, the Compensation Committee opted to develop a new peer

 

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group for 2018 that includes both net-lease REITs and other REITs that have experienced significant asset growth and/or growth in per share funds from operations (“ FFO ”) in recent years, many of which also have relatively small employee populations.

In assessing potential peers to include in the updated group, the Compensation Committee and Korn Ferry focused primarily on peer companies’ asset size (seeking a peer group with respect to which the Company’s asset size is close to median), revenue, growth in assets and FFO per share (as a proxy for AFFO per share growth) and number of employees (with an emphasis on including REITs that have less than 250 employees). Based on these factors, Korn Ferry recommended, and the Compensation Committee approved, the following peer group (the “ 2018 Peer Group ”) to review compensation levels for our NEOs and to evaluate market approaches to incentive design:

 

Acadia Realty Trust		Omega Healthcare Investors, Inc.* †
National Retail Properties, Inc.* †		Digital Realty Trust
EPR Properties* †		Medical Properties Trust, Inc. †
Gramercy Property Trust Inc.* †		Education Realty Trust, Inc.
Physicians Realty Trust		American Homes 4 Rent
CyrusOne, Inc.		Douglas Emmett, Inc.
National Health Investors* †		STAG Industrial, Inc.* †
Gaming and Leisure Properties, Inc.		QTS Realty Trust, Inc.
W.P. Carey Inc.*

 

*	Denotes a net-lease oriented company

†	Included in prior peer group.

The Compensation Committee reviews each compensation element and aggregate total direct compensation (the sum of base salary, short-term cash incentives and long-term equity incentives) for each of our Named Executive Officers compared to similarly situated employees of companies in the 2018 Peer Group, but does not target compensation to a specific percentile of the market data. In determining actual pay levels, the Compensation Committee considers peer group data as well as other factors that, in its collective judgment, it believes to be relevant, including the executive’s experience and performance, internal pay equity among the Company’s senior management team based on the executive’s respective scope of responsibilities and specific skills, the executive’s ability to impact business results, and other business events or conditions.

In the discussion below, we reference AFFO, which is a non-GAAP measure. FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Management believes that AFFO provides more useful information to investors and analysts because it modifies FFO to exclude certain additional non-cash revenues and expenses such as straight-line rents, including construction period rent deferrals, and the amortization of deferred financing costs, stock-based compensation and lease-related intangibles as such items may cause short-term fluctuations in net income but have no impact on long-term operating performance. We believe that these costs are not an ongoing cost of the portfolio in place at the end of each reporting period and, for these reasons, the portion expensed is added back when computing AFFO. As a result, we believe AFFO to be a more meaningful measurement of ongoing performance that allows for greater performance comparability. Therefore, we disclose both FFO and AFFO and reconcile them to the most appropriate GAAP performance metric, which is net income, and we use AFFO as a component of both our short-term and long-incentive programs. Our FFO and AFFO may not be comparable to similarly titled measures employed by other companies. For a discussion of the manner in which we compute AFFO and to view a table setting forth a reconciliation of our FFO and AFFO to our net income (as determined in accordance with U.S. generally accepted accounting principles), please see Item 7, “Management’s Discussion and Analysis of

 

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Financial Condition and Results of Operations—Non-GAAP Measures,” on page 53 of our Annual Report filed with the SEC on February 22, 2019.

Elements of 2018 Compensation

The Named Executive Officers’ 2018 compensation was set forth in an annual written compensation plan as approved by the Compensation Committee. For 2018, the compensation of our Named Executive Officers consisted of three principal components:

 

•

Base salary;

 

•

Short-term incentives (annual cash bonus program); and

 

•

Long-term incentives (equity-based compensation program).

The following chart presents the overall target mix of compensation elements for the CEO and all other NEOs as a group for 2018:

 

Name		Base Salary %				Target Bonus %				Target LTI %
Christopher Volk			17%				25%				58%
Mary Fedewa			21%				26%				53%
Catherine Long			24%				24%				52%
Michael Bennett			31%				27%				42%
Christopher Burbach (1)			31%				27%				42%

 

(1)	Mr. Burbach resigned from his position as Executive Vice President—Underwriting of the Company, effective February 28, 2019.

Set forth below is a discussion of each of the principal components of 2018 compensation for our NEOs.

Base Salary. Base salary represents a stable means of cash compensation to our Named Executive Officers. Our goal in setting base salary amounts is to provide competitive compensation that reflects the contributions and skill levels of each executive. As shown above, however, consistent with our philosophy of tying pay to performance, our executives receive a relatively small percentage of their overall target compensation in the form of base salary. We generally implement any base pay increases on a calendar year basis, while reserving the ability to make mid-year increases to reflect a promotion, increased responsibilities or other factors.

Short-Term Incentives. Payment opportunities for cash awards under the annual cash bonus program administered pursuant to our STORE Capital Corporation 2015 Omnibus Equity Incentive Plan (the “ 2015 Incentive Plan ”) are expressed as a percentage of base salary and reflect each individual’s contributions to the Company and the market level of compensation for such position. We have designed our annual cash bonus program to motivate the Company’s executive officers to achieve performance goals established by the Compensation Committee that reinforce our annual business plan, to assist the Company in attracting and retaining qualified executives and to promote the alignment of the Named Executive Officers’ interests with those of the Company’s stockholders.

In administering the annual cash bonus program, the Compensation Committee may make adjustments to the performance goals in recognition of unusual or non-recurring events affecting the Company’s corporate performance metrics or to reflect modifications made to our annual business plan. For example, in August 2017, the Company announced updated AFFO per share guidance that reflected the impact of the June 2017 stock sale to a subsidiary of Berkshire Hathaway. The Berkshire Hathaway investment meaningfully accelerated the timing of the Company’s planned equity issuances for 2017, reducing expected AFFO per share for the year by

 

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approximately $0.043 per share. Given this unique opportunity, the determination of the Board to consummate the Berkshire Hathaway investment and the meaningful value that the relationship with Berkshire Hathaway provided to the Company and its stockholders, the Compensation Committee exercised its authority to make adjustments to the performance goals in recognition of unusual or non-recurring events affecting the Company or to reflect modifications made to its annual business plan and, accordingly, adjusted the original AFFO per share performance goal for the 2017 annual cash bonus program by a like amount. No such adjustments were made for 2018.

For 2018, the Compensation Committee approved the following threshold, target and maximum cash bonus award opportunities, expressed as a percentage of base salary, which the executives are eligible to receive under the annual cash bonus program. Straight line interpolation is used to determine awards for results in between performance levels:

 

		Payout Opportunities (as a percentage of base salary)
Name		Threshold				Target				Maximum
Christopher Volk			75%				150%				300%
Mary Fedewa			60%				120%				240%
Catherine Long			50%				100%				200%
Michael Bennett			45%				85%				170%
Christopher Burbach			45%				85%				170%

As illustrated in the chart below, all of the Named Executive Officers were eligible to earn annual cash bonuses based 75% on the Company’s achievement of identified corporate performance metrics (as described in more detail below) and 25% on each individual officer’s achievement of personal goals specifically developed for each Named Executive Officer and approved by the Compensation Committee. The Compensation Committee weights corporate metrics more heavily than individual performance metrics because such metrics represent the primary drivers of the Company’s financial performance and thus serve to better align our NEOs with our stockholders.

2018 Annual Incentive Program Design

 

 

 

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Corporate Performance . As stated above, the Compensation Committee based 75% of the 2018 annual cash bonus opportunity on corporate performance metrics. For 2018, the Compensation Committee identified the following three primary quantitative measures (and assigned the associated weightings out of the 75% total) to evaluate corporate performance:

 

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AFFO per share is defined as AFFO divided by the number of shares used to calculate our earnings per share and is used because it is considered a meaningful measure of a REIT’s operating performance and an indicator of its continued ability to pay dividends. For 2018, the AFFO per share metric represented 40% of the weighting of the corporate performance metrics and 30% of the total bonus opportunity. AFFO per share is the most weighted corporate performance metric because it is reflective of portfolio performance and accretive annual investment activity. AFFO per share growth enables our dividend growth and, over the long term, has the highest impact upon our share price.

 

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Debt to EBITDA is defined as net debt divided by EBITDA calculated on a run rate basis and is used because this measure encourages management to focus on growth in operating results while maintaining appropriate levels of debt. For 2018, the debt to EBITDA metric represented 33.33% of the weighting of the corporate performance metrics and 25% of the total bonus opportunity. The inclusion of leverage as a corporate performance metric reflects the importance to STORE of borrowing efficiency as a component of our cost of capital, promoting AFFO per share growth, but within preferred leverage ranges.

 

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Origination Volume is defined as the aggregate of the gross purchase prices of property paid to sellers or the face amount of notes receivable originated and is used because income generated from new investment volume impacts not only current period results but also contributes to income in future years. For 2018, the origination volume metric represented 26.67% of the weighting of the corporate performance metric and 20% of the total bonus opportunity. The inclusion of Origination Volume as a corporate performance metric reflects its importance to current and future AFFO per share growth and also to the importance of investment diversity and balance sheet size to mitigate long-term risk.

 

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The illustrations below set forth the 2018 corporate performance goal levels, as well as actual results for each performance metric. To the extent actual performance falls between two performance goal levels, linear interpolation is applied:

 

AFFO per share (1)				Origination Volume (2)

 

Debt to EBITDA (3)

 

(1)

AFFO is a non-GAAP measure. For a discussion of the manner in which we compute AFFO and to view a table setting forth a reconciliation of our AFFO to our net income (as determined in accordance with U.S. generally accepted accounting principles), please see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures,” on page 53 of our Annual Report filed with the SEC on February 22, 2019. AFFO per share is calculated by dividing AFFO by our weighted-average common shares outstanding on a fully diluted basis.

 

(2)	Represents our annual investment volume excluding non-cash items and investments meant to be temporary in nature.

 

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(3)

Represents outstanding net debt divided by adjusted EBITDA calculated on a run-rate basis, as an average of the four quarterly periods. Adjusted EBITDA is a non-GAAP measure, which we calculate by adding back to our net income amounts in respect of interest, depreciation and amortization and interest expense, and adjusting for the impact of gain or loss on sale or impairment of real estate investments.

Individual Performance . The Compensation Committee based the remaining 25% of the 2018 annual cash bonus opportunity on individual goals specifically developed for each Named Executive Officer that were designed to enhance the efficiency of each NEO’s department and the processes he or she oversees in ways that are meaningful to the Company’s competitive market position and the implementation of long-term strategic initiatives. In the case of the NEOs other than our CEO, the individual performance goals generally included the completion or implementation of identified projects, improvements and/or processes supplementary to each of their primary executive management roles within the Company. In 2018, these goals included the following:

 

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For Ms. Fedewa: closing cycle and lease administration enhancements and information technology redesign.

 

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For Ms. Long: accounting process enhancements, future accounting standards implementation and accounting systems and information technology redesign.

 

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For Mr. Bennett: insurance and legal cost efficiencies and information technology redesign.

 

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For Mr. Burbach: human resources and departmental organizational, training and information technology initiatives.

Mr. Volk, our CEO, achieves his individual performance goal only to the extent the other executive officers achieve their individual goals.

The Compensation Committee determines the achievement of these personal goals in its discretion and, in doing so, it does not rank the individual goals in order of importance, nor does it assign individual values for each goal with respect to the overall bonus opportunity.

2018 Payouts . For 2018, each Named Executive Officer successfully completed his or her individual goals. Accordingly, each earned a cash bonus based on the weighted achievement of the corporate performance metrics and the successful completion of individual goals. The following table shows the actual payouts for each NEO under the annual cash bonus program for 2018:

 

NEO		Actual Payout				% of Maximum   Bonus Opportunity
Christopher Volk		$	2,400,000				100	%
Mary Fedewa			1,344,000				100	%
Catherine Long			920,000				100	%
Michael Bennett			637,500				100	%
Christopher Burbach			637,500				100	%

Long-Term Incentives. Pursuant to our 2015 Incentive Plan, the Compensation Committee makes awards of restricted shares of the Company’s common stock and other awards and performance-based grants to officers, directors and key employees of the Company, including our Named Executive Officers. We expect to make equity grants to our NEOs as part of our annual compensation program to align their long-term interests with those of our stockholders and to maintain the competitiveness of our total compensation package. It is the Compensation Committee’s policy to review and approve all annual equity compensation awards to directors, officers and all other eligible key employees at its first regularly scheduled meeting of each year, which typically occurs in the first quarter of each year.

 

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During 2018, as in prior years, we granted time-based restricted stock and performance-based restricted stock units (“ RSUs ”) to our Named Executive Officers. The Compensation Committee believes restricted stock and performance-based RSUs are a more meaningful tool for compensating our Named Executive Officers as compared to other equity-based awards such as stock options because a significant component of returns on the common stock of REITs generally takes the form of dividends as opposed to being limited solely to price appreciation. While the Company has never issued stock options or other forms of equity compensation to its employees, the Compensation Committee intends to monitor equity compensation trends in the REIT industry and may use other forms of equity compensation, including stock options, in the future to achieve our desired compensation objectives. The Compensation Committee believes that the equity awards granted in 2018 appropriately align the long-term interests of our Named Executive Officers with those of our stockholders.

During 2018, the Compensation Committee approved the target equity grants shown in the table below, expressed as a percentage of base salary, to the NEOs, of which:

 

(i)

75% were granted in the form of performance-based RSUs that are eligible for vesting at the end of a three-year performance period ending December 31, 2020, with 50% of the RSUs vesting based on achieving specified compounded annual growth rates during the performance period of the Company’s AFFO per share (a primary measure of cash flow for REITs and one that is often used as an operating performance benchmark), and 50% of the RSUs vesting based on the compounded total stockholder return over the performance period of the Company relative to the MSCI US REIT Index (the “ MSCI Index ”) (the MSCI Index includes roughly 99% of US REITs and, therefore, the total shareholder return of the MSCI Index represents the strongest comparison in terms of alternative investment opportunities to the Company as well as general industry performance). If earned, shares of common stock representing 100% of the earned amount of RSUs will vest on December 31, 2020 and will be settled following the completion of our audited financial statements for the fiscal year then ended. For purposes of this calculation, the compounded annual growth rate of the Company’s AFFO per share is expressed as a percentage (rounded to the nearest tenth of a percent) of the Company’s AFFO per weighted average basic common share during the performance period (as reported in the Company’s earnings release for the year ending December 31, 2020) (“ Compounded AFFO Per Share Growth ”). In addition, total stockholder return is calculated as the compounded annual growth rate, expressed as a percentage (rounded to the nearest tenth of a percent), in the value per share of common stock during the performance period due to the appreciation in the price per share of common stock and dividends paid to a stockholder of record with respect to one share of common stock during the performance period, assuming dividends are reinvested on the ex-dividend date (“ Compounded Annual TSR ”). For purposes of this calculation, the beginning and ending share price of our common stock are based on a 20-day trailing average closing stock price and the beginning and ending index values are based on a 20-day trailing average closing value. To the extent actual performance falls between two performance goal levels, linear interpolation is applied.

 

(ii)

25% were granted in the form of time-based restricted stock that vests in annual increments over a four-year period assuming continued employment of the NEO.

 

NEO		2018 Target Value of Equity Grant (as a percentage of base salary)
Christopher Volk			350	%
Mary Fedewa			250	%
Catherine Long			215	%
Michael Bennett			135	%
Christopher Burbach			135	%

The actual number of shares of time-based restricted stock and RSUs awarded to each NEO was determined by dividing the applicable grant amount (in dollars) by the average closing market price of our

 

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common stock on the NYSE for the 20-day trading period ending December 29, 2017. The table below reflects the number of shares of time-based restricted stock and RSUs (at target) granted to each of our NEOs in 2018 as part of our 2018 executive compensation program, as well as the target value of those awards:

 

Name		# of Restricted Shares				# of Performance-Based RSUs (at Target)				Target Value of Restricted Shares and RSUs
Christopher Volk			27,139				81,417			$	2,800,000
Mary Fedewa			13,570				40,709			$	1,400,000
Catherine Long			9,586				28,758			$	989,000
Michael Bennett			4,907				14,721			$	506,250
Christopher Burbach			4,907				14,721			$	506,250

As with other elements of compensation, the Compensation Committee based individual equity-based incentive awards on each individual’s contributions to STORE and the market level of compensation for the officer’s position without benchmarking against a specific percentile. Holders of time-based restricted stock are entitled to dividends when paid by the Company and performance-based RSUs accrue a dividend equivalent that is paid in cash when and, solely to the extent, the underlying RSUs vest.

The following table illustrates the performance measurement period and vesting period, as applicable, of our 2018 long-term equity incentive award grants:

 

Absolute Compounded AFFO Per Share Growth Component. With respect to the 50% of the performance-based RSUs that may be earned and become vested based on the absolute Compounded AFFO Per Share Growth of the Company over the performance period, the actual number of performance-based RSUs that may be earned and become vested will be between 0% and 300% of the target number, depending on our level of

 

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achievement of Compounded AFFO Per Share Growth over the performance period. The specific targets and corresponding award levels are contained in the table below:

 

Performance Level		Absolute Compounded AFFO Per Share Growth		RSUs Earned as     a Percentage of Target
Threshold		3.0%			33.33%
Target		4.5%			100.00%
Maximum		6.5% or greater			300.00%

As shown in the table above, threshold, target and maximum performance result in the Named Executive Officers earning 33.33%, 100% or 300% of the target number of performance-based RSUs associated with each performance level, with linear interpolation between specified levels. No performance-based RSUs under the Compounded AFFO Per Share Growth component are earned for performance below the threshold level, and payout is capped at 300.00% of the target number even if performance exceeds the maximum level.

Relative Compounded Annual TSR Component . With respect to the 50% of the performance-based RSUs that may be earned and become vested based on the achievement of the Compounded Annual TSR of the Company relative to the MSCI Index, the actual number of performance-based RSUs that may be earned and become vested will be between 0% and 300% of the target number depending on our level of achievement of Compounded Annual TSR relative to the Compounded Annual TSR of the MSCI Index over the performance period (the “ MSCI Index Return ”). The MSCI Index is a free float-adjusted market capitalization index that is comprised of approximately 150 equity REITs. The specific requirements and corresponding award levels are contained in the table below.

 

Performance Level		Company Compounded Annual TSR Relative to MSCI Index Return		RSUs Earned as   a Percentage of Target
Threshold		Company TSR must be at least the MSCI Index Return less 3.0%			33.33%
Target		Company TSR must be at least the MSCI Index Return plus 0.5%			100.00%
Maximum		Company TSR must be at least the MSCI Index Return plus 5.0%			300.00%

As shown in the table above, threshold, target and maximum performance result in the Named Executive Officers earning 33.33%, 100% or 300% of the target number of performance-based RSUs associated with each performance level, with linear interpolation between specified levels. No performance-based RSUs under the relative Compounded Annual TSR component are earned for performance below the threshold level, and payout is capped at 300% of the target number even if performance exceeds the maximum level. In addition, in designing this component, the Compensation Committee incorporated an additional cap that limits the maximum award payout to the target award level if the Company’s absolute Compounded Annual TSR is negative, regardless of how the Company performs on a relative basis against the MSCI Index Return.

Results of 2016 Performance-Based RSU Grants

In 2016, our Named Executive Officers received awards of performance-based RSUs (the “ 2016 Performance RSUs ”) that covered a three-year performance period ended December 31, 2018, with 50% of the RSUs earned based on the achievement of an absolute Compounded Annual TSR of the Company, with the maximum award level being achieved if the Company achieved a Compounded Annual TSR over the performance period of at least 10.0%, and 50% of the RSUs earned based on the Compounded Annual TSR of the Company relative to the Compounded Annual TSR of a custom REIT peer group described in our proxy materials for the 2017 annual meeting of stockholders (the “ 2016 Index Return ”), with the maximum award level being achieved if the Company’s Compounded Annual TSR was at least 125% of the 2016 Index Return. If earned, shares of common stock representing 50% of the earned amount of the 2016 Performance RSUs would vest on December 31, 2018 and 50% would vest on December 31, 2019, subject to the NEO’s continued

 

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employment through such date. The specific requirements and corresponding award levels for the 2016 Performance RSUs are contained in the tables below:

Absolute Compounded Annual TSR Component (50%)

 

Performance Level		Company Absolute Compounded Annual TSR		RSUs Earned as   a Percentage of Target
Threshold		8.0%			33.33%
Target		9.0%			100.00%
Maximum		10.0%			233.33%

Relative Compounded Annual TSR Component (50%)

 

Performance Level		Company Compounded Annual TSR Relative to 2016 Index Return		RSUs Earned as     a Percentage of   Target
Threshold		Company Compounded Annual TSR must be at least 85% of 2016 Index Return			33.33%
Target		Company Compounded Annual TSR must be at least 105% of the 2016 Index Return			100.00%
Maximum		Company Compounded Annual TSR must be at least 125% of the 2016 Index Return			233.33%

At December 31, 2018, the Company’s Compounded Annual TSR over the performance period was 13.6%. Accordingly, the Company achieved the absolute Compounded Annual TSR component of the 2016 Performance RSUs at the maximum level. In addition, the Company’s Compounded Annual TSR over the performance period of 13.6% represented 109.7% of the 2016 Index Return of 12.4%. Accordingly, the Company achieved the relative Compounded Annual TSR component of the 2016 Performance RSUs at a level between the target and maximum levels. As a result, the actual 2016 Performance RSUs earned as of the end of the performance period as a percentage of target was 181.8%, of which 50% vested on December 31, 2018, and 50% will vest on December 31, 2019, subject to each NEO’s continued employment through such date. With respect to each NEO, the number of shares earned at the conclusion of the performance period, the number of shares vested at the conclusion of the performance period, and the number of shares subject to vesting upon continued employment through December 31, 2019 in connection with the 2016 Performance RSUs are set forth in the table below:

Name		# of Shares Earned at End of Performance Period				# of Shares Vested at End of Performance Period				# of Shares Subject to Continued Service-Based Vesting
Christopher Volk			117,199				58,599				58,600
Mary Fedewa			52,905				26,452				26,453
Catherine Long			44,234				22,117				22,117
Michael Bennett			24,982				12,491				12,491
Christopher Burbach (1)			24,982				12,491				12,491

 

(1)	Mr. Burbach resigned from his position as Executive Vice President—Underwriting of the Company, effective February 28, 2019. Consequently, the shares subject to continued service-based vesting were forfeited.

Status of Outstanding 2017 and 2018 Performance-Based RSU Grants at Year End

2017 Performance RSUs . In 2017, our Named Executive Officers received awards of performance-based RSUs (the “ 2017 Performance RSUs ”) that cover a three-year performance period ending December 31,

 

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2019, with 50% of the RSUs vesting based on the achievement of an absolute Compounded Annual TSR of the Company, with the maximum award level being achieved if the Company’s absolute Compounded Annual TSR is at least 12% over the performance period, and 50% of the RSUs vesting based on the Compounded Annual TSR of the Company relative to the MSCI Index Return over the performance period (the “ 2017 Index Return ”), with the maximum award level being achieved if the Company’s Compounded Annual TSR is at least 125% of the 2017 Index Return. If earned, shares of common stock representing 50% of the earned amount of the 2017 Performance RSUs would vest on December 31, 2019 and 50% would vest on December 31, 2020, subject to the NEO’s continued employment through such date. The specific requirements and corresponding award levels for the 2017 Performance RSUs are contained in the tables below:

Absolute Compounded Annual TSR Component (50%)

 

Performance Level		Company Absolute Compounded TSR		RSUs Earned as   a Percentage of   Target
Threshold		4.0%			33.33%
Target		8.0%			100.00%
Maximum		12.0%			233.33%

Relative Compounded Annual TSR Component (50%)

 

Performance Level		Company Compounded Annual TSR Relative to 2017 Index Return		RSUs Earned as     a Percentage of   Target
Threshold		Company Compounded Annual TSR must be at least 85% of the 2017 Index Return			33.33%
Target		Company Compounded Annual TSR must be at least 105% of the 2017 Index Return			100.00%
Maximum		Company Compounded Annual TSR must be at least 125% of the 2017 Index Return			233.33%

If the performance period had ended on December 31, 2018, the actual 2017 Performance RSUs earned as a percentage of target would have been 233.33%, representing a maximum outcome with respect to both the absolute Compounded Annual TSR component and the relative Compounded Annual TSR component.

2018 Performance RSUs . The Company’s grants of performance-based RSUs made prior to 2018 are earned based on the Company’s achievement of absolute and/or relative TSR metrics. As described above, for the performance-based RSUs granted in 2018 (the “ 2018 Performance RSUs ”), the Company continued to utilize a relative TSR metric but replaced the absolute TSR metric with a metric based on the compounded annual growth rate during the three-year performance period of the Company’s AFFO per share. Compounded AFFO Per Share Growth is a performance condition that is designed to be calculated, and as to which achievement can only be determined, at the end of the performance period. Accordingly, the Company is unable to calculate the level of achievement of the 2018 Performance RSUs on an interim basis.

401(k) Plan

We have established a 401(k) retirement savings plan for our employees who satisfy certain eligibility requirements. Our NEOs are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue Code of 1986, as amended (the “ Code ”), allows eligible employees to defer a portion of their compensation within prescribed limits, generally on a pre- or post-tax basis, through contributions to the 401(k) plan. Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee contributions, and these matching contributions are fully vested as of the date on which the contribution is made. We believe that providing a vehicle for retirement savings though our

 

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401(k) plan, and making fully vested matching contributions, adds to the overall desirability of our executive compensation package and provides further incentives to our employees, including our NEOs, in accordance with our compensation policies.

Severance and Change in Control Arrangements

Our NEOs are eligible for severance payments and benefits in the event of an involuntary termination of employment without “cause” or for “good reason,” as well as certain benefits in connection with a change in control of the Company. Our NEOs are also eligible for “double trigger” severance payments and benefits in the event of an involuntary termination of employment without “cause” or a termination of employment with “good reason” in connection with a change in control of the Company. Our equity awards are also designed to be “double trigger,” so long as such awards are allowed to continue in effect following any change in control transaction on substantially equivalent terms and conditions to those applicable prior to such transaction.

For detailed information on the estimated potential payments and benefits payable to the NEOs in the event of their termination of employment, including following a change in control of the Company, see the section titled “Potential Payments Upon Termination or Change in Control.”

Perquisites and Other Personal Benefits

We do not provide our NEOs with perquisites or other personal benefits, except for a long-term disability policy, reimbursement for the costs of an annual physical and reimbursement for the monthly dues at a fitness or country club. These items are provided because we believe that they serve a necessary business purpose and represent an immaterial element of our executive compensation program. The value of these perquisites is reported in the Summary Compensation Table.

We do not provide tax reimbursements or any other tax payments, including excise tax “gross-ups,” to any of our executive officers.

Other Compensation Policies

Clawback Policy . Under the clawback policy applicable to our NEOs, if, in the opinion of the independent directors of the Board, the Company’s financial results are restated or materially misstated due in whole or in part to intentional fraud or misconduct by one or more of the NEOs, the independent directors have the discretion to use their best efforts to remedy the fraud or misconduct and prevent its recurrence. The Company’s independent directors may, based upon the facts and circumstances surrounding the restatement, direct that the Company recover all or a portion of any bonus or incentive compensation paid, or cancel the stock-based awards granted under the 2015 Incentive Plan, to an NEO. In addition, the independent directors may also seek to recoup any gains realized with respect to equity-based awards, including with regard to performance-based RSU awards, regardless of when issued. The remedies that may be sought by the independent directors are subject to a number of conditions, including, that: (i) the bonus or incentive compensation to be recouped was calculated based upon the financial results that were restated, (ii) the executive officers in question engaged in the intentional misconduct and (iii) the bonus or incentive compensation calculated under the restated financial results is less than the amount actually paid or awarded.

Process for Approving Long-Term Incentive Awards . The Compensation Committee approves long-term incentive awards (including restricted stock grants and performance-based RSUs) on an annual basis. As appropriate during the year, the Compensation Committee may approve long-term incentive awards to newly hired or promoted executives. The number of restricted stock awards and performance-based RSUs awarded to an individual is determined by a formula that divides the compensation value of the overall award by the average closing market price of our common stock on the NYSE for the final 20-day trading period of the prior calendar year, with 75% of the award then being granted as a performance-based RSU and 25% of the award being granted as a time-based restricted stock grant.

 

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Tax and Accounting Considerations

Prior to January 1, 2018, Section 162(m) of the Code (“ Section 162(m) ”) generally placed a limit of $1.0 million on the amount of compensation that we may deduct in any calendar year with respect to our Chief Executive Officer and each of our three most highly paid executive officers (excluding our Chief Financial Officer). However, an exception to the $1.0 million limitation was provided for commission-based and performance-based compensation meeting certain requirements. Pursuant to the Tax Cuts and Jobs Act of 2017, which was signed into law on December 22, 2017 (the “ Tax Act ”), for taxable years beginning after December 31, 2017, the remuneration of a publicly-traded corporation’s chief financial officer is also subject to the deduction limit. In addition, subject to certain transition rules (which apply to remuneration provided pursuant to written binding contracts which were in effect on November 2, 2017 and which are not subsequently modified in any material respect), for taxable years beginning after December 31, 2017, the exemptions from the deduction limit for commission-based and performance-based compensation are no longer available. Consequently, for fiscal years beginning after December 31, 2017, all remuneration in excess of $1.0 million paid to a specified executive (other than compensation derived from stock awards granted prior to November 2, 2017) generally will not be deductible.

Our Compensation Committee reserves the discretion, in its judgment, to approve compensation payments that may not be deductible as a result of the deduction limit of Section 162(m) when it believes that such payments are appropriate to attract and retain executive talent and are in the best interests of the Company and our stockholders. The Compensation Committee periodically reviews the estimated accounting and tax impacts of material elements of our executive compensation program. These factors are considered along with other factors in making awards as to whether the program is consistent with our compensation objectives in the exercise of the business judgment of the members of the Compensation Committee.

Compensation Risk Assessment

The Company and the Compensation Committee consider many factors in making compensation decisions for our Named Executive Officers. One factor is the risk associated with our compensation programs. During the first quarter of fiscal year 2019, the Compensation Committee conducted its annual risk assessment of our compensation policies and practices covering all employees. After a review and assessment of potential risks, the Compensation Committee concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company for the following reasons, among others:

 

•

the Compensation Committee engages an independent, external compensation consultant to assist with developing the executive compensation program;

 

•

the Compensation Committee maintains the right, in its sole discretion, to modify the compensation policies and practices at any time;

 

•

the Compensation Committee has elected to use time-based restricted stock and performance-based RSUs that provide our NEOs with a significant interest in the Company’s long-term performance;

 

•

short-term cash incentive awards are based on metrics related to Company financial and operational goals;

 

•

our stock ownership policy requires our NEOs and directors to own meaningful levels of our stock; and

 

•

pursuant to agreements with each of the NEOs, the Company may recover all or a portion of any bonus or incentive compensation paid, or cancel stock-based awards granted, to the NEO if the Company’s financial results are restated or materially misstated due in whole or in part to intentional fraud or misconduct by one or more of the Company’s NEOs.

 

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Changes to Compensation Program Beginning in 2019

In 2017, the Compensation Committee retained Korn Ferry to help the committee evaluate potential enhancements to NEO compensation and incentive plan designs to implement in 2018 with additional incremental changes to occur in 2019. The Company’s NEOs have delivered sustained, superior performance for our stockholders, as reflected in the absolute TSR chart below, and the Compensation Committee desired to ensure that the Company continues to provide market-competitive compensation and incentives to retain the Company’s high-performing NEOs and reward the team for continued success.

 

 

 

Comparison of the Company’s absolute TSR for the one-year and three-year periods ending on the last

trading day of 2017 relative to the absolute TSR for the MSCI US REIT Index and S&P 400 REIT Index

After updating its evaluation of compensation practices among the Company’s peer group (as discussed above), and considering the Company’s high-performing executive team, the Compensation Committee reviewed modifications to each NEO’s target annual compensation designed to facilitate retention going forward and to provide meaningful incentive plan targets that reward the executive management team for continuing superior performance for the Company’s stockholders. With those goals in mind, the Compensation Committee approved the following changes for NEO compensation in 2019:

 

Name		Base Salary								Target Bonus (% of Base Salary)								Target LTI (% of Base Salary)
		2018				2019				2018				2019				2018				2019
Christopher Volk		$	800,000			$	800,000				150	%			150	%			350	%			400	%
Mary Fedewa		$	560,000			$	600,000				120	%			130	%			250	%			325	%
Catherine Long		$	460,000			$	480,000				100	%			100	%			215	%			250	%
Michael Bennett		$	375,000			$	400,000				85	%			85	%			135	%			150	%

In addition to the approved NEO compensation modifications, the Compensation Committee also updated the Company’s incentive plan design for the performance-based RSU awards granted in 2018. Working with Korn Ferry, the Compensation Committee determined to modify the relative TSR component of the performance-based RSU awards which, for the 2018 performance-based RSU awards, is based on the Company’s level of achievement of Compounded Annual TSR over the performance period relative to the Compounded Annual TSR of the MSCI Index over the performance period. For 2019, the relative TSR component will be determined based on the ranking of the Company’s TSR over the performance period as compared to the TSR of the other component companies included within the MSCI Index over the performance period. The

 

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Compensation Committee made this change because it believed that a performance metric based on the Company’s percentile ranking relative to other companies in the MSCI Index will avoid potential distortions caused by the results of just a few index participants swaying the weighted MSCI Index. In modifying this component, the Compensation Committee retained a cap so that the maximum award payout is limited to the target award if the Company’s absolute TSR is negative, regardless of how the Company performs on a relative basis.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee has reviewed the disclosures in the section titled “Compensation Discussion and Analysis” contained in this Proxy Statement and has discussed such disclosures with the management of the Company. Based on such review and discussion, the Compensation Committee recommended to the Board that the “Compensation Discussion and Analysis” be included in the Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Compensation Committee

Quentin P. Smith, Jr., Chair

Morton H. Fleischer

Einar A. Seadler

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the year ended December 31, 2018, each of Messrs. Quentin P. Smith, Jr., Morton H. Fleischer, Mark N. Sklar (until July 30, 2018) and Ms. Catherine D. Rice (on and after July 30, 2018) served as a member of our Compensation Committee. None of the members of our Compensation Committee has ever been an officer or employee of the Company. None of our executive officers has served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.

 

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COMPENSATION TABLES

Summary Compensation Table

The following table sets forth for each of the NEOs the compensation amounts paid or earned for the fiscal years ended December 31, 2018, 2017 and 2016.

 

Name and Principal Position		Year				Salary ($)				Bonus ($)				Stock Awards ($) (1)(2)				Non-Equity Incentive Plan Compensation ($ )(3)				All Other Compensation ($) (4)				Total ($)
Christopher Volk			2018				800,000				—				3,024,786				2,400,000				30,751				6,255,537
President and Chief			2017				747,000				—				3,200,512				1,924,373				29,726				5,901,611
Executive Officer			2016				725,000				—				3,009,537				1,272,375				30,738				5,037,650
Mary Fedewa			2018				560,000				—				1,512,405				1,344,000				31,335				3,447,740
Chief Operating Officer			2017				471,083				—				859,483				984,992				27,835				2,343,393
			2016				450,000				—				1,358,529				675,000				27,335				2,510,864
Catherine Long			2018				460,000				—				1,068,399				920,000				24,148				2,472,547
Executive Vice President—			2017				443,000				—				740,129				771,893				23,888				1,978,910
Chief Financial Officer and Treasurer			2016				430,000				—				1,135,892				537,500				23,652				2,127,044
Michael Bennett			2018				375,000				—				546,900				637,500				31,091				1,590,491
Executive Vice President—			2017				350,000				—				406,070				518,371				30,555				1,304,996
General Counsel, Chief Compliance Officer and Secretary			2016				340,000				—				641,534				425,000				30,575				1,437,109
Christopher Burbach (5)			2018				375,000				—				546,900				637,500				24,149				1,583,549
Former Executive Vice President—			2017				350,000				—				406,070				518,371				23,674				1,298,115
Underwriting			2016				340,000				—				641,534				371,875				23,449				1,376,858

 

(1)

The amounts included in this column reflect the aggregate grant date fair value of both restricted stock and RSUs calculated in accordance with FASB ASC Topic 718. The fair value reflects the expected future cash flows of dividends and therefore dividends on unvested shares are not separately disclosed. The amounts in this column for each fiscal year exclude the effect of any estimated forfeitures of such awards. The basis for the calculation of these amounts is included in Note 7 to our audited consolidated financial statements for fiscal year 2018, which is included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

(2)

The RSUs granted in 2018 to our NEOs include a performance condition based on the Company’s Compounded AFFO Per Share Growth. In accordance with FASB ASC Topic 718, the amounts in this column for 2018 reflect the aggregate grant date fair value of the RSUs assuming the expected level of performance conditions will be achieved.

The aggregate grant date fair value of the 2018 restricted stock grants and of the RSUs (i) assuming that the expected level of performance conditions will be achieved, and (ii) assuming that the highest level of performance conditions will be achieved are as follows:

 

Name		Value of Restricted Stock at Grant Date ($)				Value of RSU Grants at Grant Date
						Expected Level of Performance Conditions Achieved ($)				Maximum Level of Performance Conditions Achieved ($)
Christopher Volk			641,295				2,383,491				4,307,384
Mary Fedewa			320,659				1,191,746				2,153,692
Catherine Long			226,517				841,882				1,521,418
Michael Bennett			115,952				430,948				778,797
Christopher Burbach (5)			115,952				430,948				778,797

 

(3)

The amounts included in this column represent the annual cash incentive amounts awarded under our 2015 Incentive Plan, earned in the year indicated and paid in the following year. The cash incentive amounts awarded to our NEOs for 2018 under the 2015 Incentive Plan are described in more detail in the section titled “Compensation Discussion and Analysis” under the heading “Elements of 2018 Compensation—Short-Term Incentives.”

 

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