NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

March 16, 2021

To our shareholders:

On behalf of the Board of Trustees, I invite you to attend the 2021 Annual Meeting of Shareholders (Annual Meeting) of Public Storage at 1:00 p.m. Pacific Time on April 26, 2021, to be held virtually on an online platform accessible here: www.virtualshareholdermeeting.com/PSA2021.

Due to the COVID-19 pandemic, the Annual Meeting will be held in a virtual format only to provide a safe experience for our shareholders and employees. To attend, vote, and submit questions during the Annual Meeting, please visit www.virtualshareholdermeeting.com/PSA2021 and enter the control number included in your Notice of Internet Availability of Proxy Materials, voting instruction form, or proxy card. Online access to the webcast will open approximately fifteen (15) minutes prior to the start of the Annual Meeting. Attendance at the Annual Meeting is subject to capacity limits set by the virtual meeting platform provider.

 

Items of Business

 

1.

To elect fourteen Trustees to our Board of Trustees;

 

2.

To vote on an advisory resolution to approve the compensation of our named executive officers;

 

3.

To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021;

 

4.

To approve our 2021 Equity and Performance-Based Incentive Compensation Plan (2021 Stock Plan);

 

5.

To approve an amendment to our Declaration of Trust to eliminate cumulative voting; and

 

6.

To transact such other business as may properly come before the Annual Meeting and any postponements or adjournments thereof.

 

Record Date

Close of business on February 23, 2021.

 

Proxy Materials

The Notice of Meeting, Proxy Statement, and Annual Report on Form 10-K are available free of charge at http://materials.proxyvote.com/74460D

Sincerely,

 

 

Nathaniel A. Vitan

Senior Vice President,

Chief Legal Officer and Corporate Secretary

Important Notice Regarding Availability of Proxy Materials for the 2021 Annual Meeting: This Proxy Statement and our 2020 Annual Report on Form 10-K are available at the Investor Relations section of our website, publicstorage.com.

Table of Contents

 

PROXY STATEMENT SUMMARY			1
Proxy Summary And Business, Compensation, And Governance Highlights			2
2020 Business Highlights			4
2020 Compensation Highlights			5
Sustainability Framework			6
PROPOSAL 1: ELECTION OF TRUSTEES			14
Executive Summary			15
Board Composition Highlights			16
Board Evaluations And Nominations			16
Board Qualifications			17
Board Refreshment			17
Board Focus On Diversity			17
Nominee Qualifications			19
Trustee Nominees Skills Summary			20
Vote Required and Recommendation			28
Corporate Governance			29
Board Engagement And Oversight			29
Governance Structure			29
Proxy Access			29
Political And Charitable Contributions			29
Board Leadership Structure			30
Board’s Role In Risk Oversight			30
Board Orientation And Education			32
Trustee Independence			32
Communications With The Board			33
Trustee Attendance			33
Board Committees			33
Compensation Of Trustees			35
Trustee And Executive Officer Stock Ownership Guidelines			36
2020 Trustee Compensation			37
PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION			39
Executive Summary			40
Vote Required and Recommendation			40
Our Named Executive Officers			41
Compensation Discussion and Analysis (CD&A)			42
We Delivered Strong Performance Despite Unprecedented Challenges From The COVID-19 Pandemic			42
Our Compensation Philosophy And Practices Align Executive Pay With Performance And Creation Of Long-Term Value			45
Various Compensation Elements Incentivize And Reward Performance			46
Our Compensation Process Is Disciplined, Balanced, And Responsive To Our Shareholders			47

 

Public Storage  |  2021 Proxy Statement  |  i

Table of Contents

 

The Compensation Committee Designed Our Original 2020 NEO Compensation Framework To Be Consistent With Our Pay-For-Performance Philosophy			50
Changes In 2020 Company Strategy And Outlook Due To The COVID-19 Pandemic			53
Successful Execution Of Revised Strategic And Operational Priorities			55
Compensation Committee’s Approach To 2020 Incentive Compensation Program			55
2020 Incentive Compensation Awards			56
2021 Compensation Outlook And Enhancements			57
2022 Compensation Outlook			59
Tax Deductibility Of Executive Compensation – Section 162(m)			59
Compensation Committee Report			60
Executive Compensation Tables			61
Potential Payments Upon Termination Or Change In Control			65
Additional Information About Trustees, Executive Officers, And Management			69
PROPOSAL 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			72
Executive Summary			73
Audit Committee Report			75
Vote Required and Recommendation			75
PROPOSAL 4: APPROVAL OF PUBLIC STORAGE 2021 EQUITY AND PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN			76
2021 Plan: Key Facts			77
Shareholder Approval			77
Protection Of Shareholder Interests And Alignment With Compensation Principles			77
Importance Of The 2021 Plan			77
Historical Burn Rate And Potential Dilution			78
Effectiveness Of 2021 Plan			78
Equity Compensation Plan Information			79
Summary Of The Material Terms Of The 2021 Plan			79
Purpose			80
Types Of Awards			80
Eligibility			81
Term			81
Administration			81
Shares Subject To The 2021 Plan; Other Limitations Of Awards			81
Amendment			82
Change Of Control			82
Mandatory Repayment And Clawback			83
Performance-Based Compensation			83

 

ii  |  Public Storage  |  2021 Proxy Statement

Table of Contents

 

Other Terms Of Awards			84
New Awards			84
Summary Of U.S. Federal Income Tax Consequences			85
Vote Required and Recommendation			86
PROPOSAL 5: APPROVAL OF AMENDMENT TO DECLARATION OF TRUST TO ELIMINATE CUMULATIVE VOTING			87
Executive Summary			88
Reasons For Amendment			89
Vote Required And Recommendation			90
GENERAL INFORMATION ABOUT THE MEETING			91
Purpose Of Proxy Solicitation			91
Important Notice Regarding Delivery Of Security Holder Documents			91
Availability Of Proxy Statement And Annual Report			91
Date, Time And Place Of The Annual Meeting			91
Who Can Vote			91
Quorum For The Annual Meeting			91
How Votes Are Counted			92
Trustee Nominees Who Do Not Receive A Majority Of The Votes Cast			92
How Proxies Will Be Voted			92
How To Cast A Vote			93
How to Vote As A Participant In The Company’s 401(K) Plan			93
Changing Your Vote			93
Cost Of This Proxy Solicitation			94
Contacting Our Transfer Agent			94
Consideration Of Candidates For Trustee			94
Deadlines For Receipt Of Shareholder Proposals			95
Householding			96
Virtual Meeting Matters			96
Accessing The Meeting			96
Casting Your Vote			96
Live, Online Q&A			96
Technical Assistance			97
Your Vote Is Important			97
APPENDIX A – 2021 EQUITY AND PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN			98
APPENDIX B – NON-GAAP MEASURES			117

 

Public Storage  |  2021 Proxy Statement  |  iii

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this proxy statement and does not contain all the information that you should consider. You should read the entire proxy statement carefully before voting. We intend to mail proxy materials to our shareholders on or about March 16, 2021.

ANNUAL MEETING OF SHAREHOLDERS

 

Meeting Logistics
Meeting Date:		Monday, April 26, 2021
Time:		1:00 p.m. Pacific Time
Place:		The Annual Meeting will be held virtually at www.virtualshareholdermeeting.com/PSA2021.
Record Date:		February 23, 2021
Voting:		Public Storage shareholders as of the record date are entitled to vote on the matters presented at the meeting. Each share of Common Stock of the Company is entitled to one vote for each trustee nominee and one vote on each of the other matters presented.

VOTING MATTERS

 

Proposal Number		Item		Board Recommendation		Vote Required		Page Reference
1		Election of Trustees		FOR each nominee		Majority of votes cast		14
2		Advisory Vote to Approve Compensation of Named Executive Officers (NEOs)		FOR		Non-binding vote		39
3		Ratify Appointment of Ernst & Young LLP (EY) as our Independent Registered Public Accounting Firm		FOR		Majority of votes cast		72
4		Approval of 2021 Equity and Performance-Based Incentive Compensation Plan		FOR		Majority of votes cast		76
5		Approval of Amendment to Declaration of Trust to Eliminate Cumulative Voting		FOR		Majority of outstanding shares		87

 

Public Storage  |  2021 Proxy Statement  |  1

Proxy Summary and Business, Compensation, and Governance Highlights

 

2020 Highlights

The COVID-19 pandemic has been one of the most formidable challenges our Company has ever faced, and it has shown that our sustainable operations, focus on long-term value creation, and financial fortitude are essential to our Company’s ability to withstand disruptions and crises. Our long-term strategy, engaged and agile employees, and fortress balance sheet allowed us to continue safely serving our customers and position the Company for continued growth in one of the most difficult operating environments in the Company’s history.

We are proud of the way the Public Storage team rallied together during the crisis. The transformation of our industry-leading operations as we navigated the pandemic has resulted in a safer and more efficient experience for our customers and employees. Our leadership team also delivered against our long-term strategic priorities by advancing the technological transformation of our Company, accelerating organic and external growth, and further strengthening and optimizing our balance sheet. And, most importantly, we were focused on protecting the safety and wellbeing of our employees, including through our PS Cares Emergency Fund, as they continued to serve our customers and communities while navigating through the pandemic.

RESPONSE TO COVID-19

Serving our Customers

As an essential business, our properties remained open and operational throughout the pandemic with enhanced protocols focused on the health and safety of our employees and service and assistance to our customers.

 

Contactless Service		Temporary Financial Accommodations
•  Deployed eRental® to all properties. This contactless online leasing platform allows customers to rent online and move in without needing to interact with a property manager   •  Enhanced full online payment capabilities through texting and maintained customer service support   •  Added payment drop boxes to properties		•  Halted rent increases for existing customers during the immediate onset of the pandemic in the U.S.   •  Halted delinquent tenant lien sales when appropriate   •  Provided rent and fee relief to help customers affected by the pandemic

Protecting and Supporting our Employees

Our commitment to our employees was paramount in our approach to navigating the COVID-19 pandemic. We quickly adjusted our operating procedures to keep our employees safe and established a PS Cares Emergency Fund of over $10 million to support our employees with enhanced benefits focused on our employees and their families, which has allowed us to continue to serve our customers safely.

The PS Cares Emergency Fund included:

 

✓

Additional incentive pay

 

✓

Childcare assistance

 

✓

Extended paid time off

 

✓

COVID-19 testing coverage

 

✓

Mental wellness support

 

2  |  Public Storage  |  2021 Proxy Statement

Proxy Summary and Business, Compensation, and Governance Highlights

 

Additional safety protocols and employee support we deployed included:

 

Field Operations		Corporate Operations
•  One customer at a time in sales office   •  Mandatory face coverings and gloves   •  Acrylic shields and other protective equipment   •  Additional cleaning protocols   •  Regular safety training   •  “Thank you” incentive pay		•  Work-from-home implemented utilizing new operating and call center technology platforms   •  Optional return to office policy for corporate employees under strict safety protocols   •  Call center employees operate in new virtual call center environment   •  Employees will retain work-from-home capabilities that may be used in the event of future pandemics or other emergencies

Our Focus on Value Preservation and Long-Term Value Creation

The COVID-19 pandemic directly affected the Company’s business and operations in 2020. Importantly, the Company faced unprecedented operational challenges due to, among other causes, the pandemic’s adverse economic effects and government restrictions on commercial activity, which had a material negative effect on demand.

In response, under the leadership of our senior management team, the Company took significant steps to expand its strategic and operational priorities to include a focus on value preservation in the short-term—including employee safety and engagement and customer acquisition, retention, and issue resolution. At the same time, our senior leadership team advanced initiatives to build long-term capabilities and value for our shareholders, including accelerating the Company’s digital transformation, opportunistically taking advantage of organic and external growth opportunities, and optimizing our balance sheet. These efforts allowed the Company to take advantage of a rebound in customer demand and increased growth opportunities through acquisitions in the second half of 2020 and put the Company in a good position as we head into 2021 and beyond.

 

Public Storage  |  2021 Proxy Statement  |  3

Proxy Summary and Business, Compensation, and Governance Highlights

 

2020 BUSINESS HIGHLIGHTS

Despite the severe disruption and the difficult challenges we faced due to the COVID-19 pandemic, the Company was able to deliver strong performance across several key metrics, execute on its operational objectives, and advance its long-term strategy.

Under the leadership of our Chief Executive Officer (CEO), Joseph D. Russell, Jr., and the Company’s senior management team, we achieved 2020 GAAP net income of $1.36 billion and the following business performance highlights, which align with our priorities of preserving value, optimizing business performance, and creating long-term value:

 

 

Record Revenues of $2.9 billion 6.2 million sq. ft. added through acquisitions, developments, and redevelopments eRental(R) online lease rolled out at 100% of our over 2,500 properties Highest Gross Operating Margin among self-storage REITs Record Net Operating Income(1) of $2 billion $1+ billion Est. market value of properties added Highest Revenue per Available Square Foot among self-storage REITs Highest Return on Assets among self-storage REITs(2)

 

(1)	Net operating income (NOI) is a non-GAAP measure. Refer to pages 31 and F-30 of our Form 10-K filed on February 24, 2021 for information regarding NOI, including a reconciliation to GAAP net income.

(2)	Return on assets is determined by taking the ratio of NOI over the average of total assets for the period, as presented on our Balance Sheet.

 

4  |  Public Storage  |  2021 Proxy Statement

Proxy Summary and Business, Compensation, and Governance Highlights

 

2020 COMPENSATION HIGHLIGHTS

The Company succeeded during these extraordinarily difficult times due in large part to the stewardship and leadership of our senior management team, who protected the safety and wellbeing of our employees, steered the Company through the challenges posed by the COVID-19 pandemic, adopted and executed successful strategies to drive strong performance and increase shareholder value, and advanced the Company’s transformation to create long-term growth despite the unprecedented headwinds facing the Company.

Starting in March 2020, the Board and senior management met regularly to discuss the Company’s strategy for mitigating the impact of the pandemic, protecting the well-being of the Company’s employees and customers, and enhancing the Company’s long-term capabilities. The Company and the Board recognized that the pandemic and the Company’s responsive measures to support its customers, employees, and long-term shareholder value would disrupt business operations and adversely affect 2020 results. Accordingly, the 2020 financial performance metrics and targets that the Compensation Committee had established prior to the onset of the pandemic’s economic effects in the U.S. were no longer appropriate indicators of our management team and the Company’s performance or aligned with the Company’s compensation philosophy.

Beginning in June 2020, the Compensation Committee commenced a comprehensive process to review the Company’s 2020 incentive compensation program in light of these concerns. After regular and ongoing discussions amongst the Compensation Committee, the Board, and management—which included defining revised strategic and operational priorities—the Compensation Committee determined appropriate 2020 incentive-based awards considering, among other factors, the actions taken by our senior management team to mitigate the effects of the pandemic and drive long-term operational capabilities and financial performance.

The following is a summary of the Compensation Committee’s decisions with respect to the key components of the 2020 compensation program for our NEOs:

 

•

Base Salaries. The Compensation Committee did not change base salaries for 2020, except for Natalia N. Johnson, whose base salary increased in August 2020 in connection with Ms. Johnson’s promotion to Chief Administrative Officer.

 

•

2020 Annual Cash Incentives. In recognition of the Company’s strong results and our senior management team’s extraordinary performance in a very difficult operating environment, the Compensation Committee awarded our NEOs their 2020 annual cash incentive at 90% of target.

 

•

2020 Performance-Based RSUs. In determining awards of performance-based RSUs for 2020, the Compensation Committee considered the strong performance of the Company across several operational and financial metrics in light of the COVID-19 pandemic. Due to the exemplary execution by our NEOs of strategic and operational priorities (defined in consultation with the Compensation Committee and the Board), the Compensation Committee granted RSUs at 90% of target to the NEOs for the 2020 performance-based RSU award program.

 

•

Multiyear Performance-Based Options. In early 2020, the Compensation Committee also approved a multiyear performance-based option program based on growth in NAV per share and growth in Total Shareholder Value over a three-year performance period. The Compensation Committee did not make any changes to the program as applied to the 2020-2022 performance period.

The Compensation Committee believes that the foregoing 2020 compensation decisions strike the appropriate balance—consistent with our compensation philosophy—between rewarding management

 

Public Storage  |  2021 Proxy Statement  |  5

Proxy Summary and Business, Compensation, and Governance Highlights

 

for their exemplary performance under difficult circumstances, incentivizing our leaders to continue creating long-term value, and attracting and retaining exceptional executives in a competitive labor market. Moreover, the Compensation Committee continued to enhance the Company’s compensation programs with the 2021 incentive performance compensation plan, as described in more detail on page 57.

SUSTAINABILITY FRAMEWORK

Overview and Alignment with Company Strategy

We recognize our responsibility as a global citizen to operate in a responsible and sustainable manner that is aligned with the Company’s long-term strategy and promotes the best interests of our Company and its stakeholders. For nearly 50 years, the Company’s corporate strategy has centered on one core philosophy: create value by operating our properties and the Company for the long term. Through this strategy, we have achieved:

 

•

a geographically diversified property portfolio with low environmental impact;

 

•

a high-integrity corporate culture, fortress balance sheet, and unparalleled brand and operating platform that produce strong free cash flow with sustained growth; and

 

•

significant value creation for our stakeholders, while managing risk.

In an effort to be transparent and to communicate better with our stakeholders regarding the Company’s ongoing sustainability strategies and commitments, the Company issued its first annual Sustainability Report in July 2020, which is accessible on our website at publicstorage.com. Looking forward, we will continue to keep sustainable value creation at the forefront of our strategy and communicate our efforts to mitigate environmental, social, economic, political, data security, reputational, and other risks.

Our Strategic Focus on Long-Term Value Creation

We operate our business for the long haul, and our strategy focuses on the Company’s resilience and performance in the decades to come. The COVID-19 pandemic highlighted the benefits of our long-term strategic focus and sustainable operating model, which were key to the successes the Company achieved in 2020 and set us apart from other companies within and outside the real estate industry.

 

6  |  Public Storage  |  2021 Proxy Statement

Proxy Summary and Business, Compensation, and Governance Highlights

 

Certain aspects of our strategy promote long-term value creation and are not intended to maximize short-term financial performance, especially in light of the COVID-19 pandemic and measures the Company took to ensure the long-term viability of the business, even at the expense of short-term financial results. We believe shareholders should consider the following strategy elements and considerations:

 

Strategy Element		Long-Term Considerations		Short-Term Considerations
Low Leverage   Financial stability and   flexibility over full   economic cycles		Odds of financial distress are minimized, and we are poised for external growth when valuations are most attractive (e.g., down cycles).		Leverage impact on earnings growth is less negative during economic down cycles, but also less positive during upcycles.
Use of Preferred Equity   Perpetual capital with   attractive attributes		Equity capital that can be refinanced at no extra cost in falling interest rate environments and need not be repaid in rising interest rate environments. For example, we refinanced $4.3 billion of preferred equity over the past five years at par value. Refinancing comparable 30-year unsecured bonds would have entailed additional, make-whole costs of approximately $1.6 billion.		Interest paid on preferred equity tends to be higher than unsecured bonds, providing a relative drag on earnings.
Development Platform   Largest national self-   storage development   platform and only in-house   platform amongst self-   storage REITs		Our development platform is a significant competitive advantage and source of long-term value creation. We develop new properties at costs significantly below the values at which existing occupied properties and newly developed properties trade in the marketplace. Since 2013, we have invested $1.2 billion into new property development. We estimate the market value of these properties to be approximately $2.2 billion, equating to $1 billion of value creation that does not show up in our earnings.		Our development program is expensive, creating approximately $65 million of cumulative dilution since 2013.
Same-Store Definition   Allows true “apples-to-   apples” financial   performance reporting		We define our same-store pool to reflect long-term stabilized revenue, expense, and net operating income growth within our portfolio. We believe shareholders and analysts should do the same.		Our self-storage REIT competitors have different definitions that include unstabilized properties in their same-store pools and a significant portion of their property operating expenses in G&A rather than cost of operations. This may enhance reported performance under metrics frequently used by investors and analysts, including same-store NOI growth, operating margin, and company net asset value (NAV).
No Guidance   Aligning management   focus with long-term   value creation		We do not provide earnings guidance as we believe this would detract from management’s long-term focus and decision-making.		We provide robust discussion of important components of our business in our regular reports to shareholders on our Form 10-Qs and Form 10-K. The Company also announced its inaugural Investor Day to be held on May 3, 2021, to provide our stakeholders with a business update, including a discussion of our long-term strategy, growth initiatives, capital allocation priorities, and focus on sustainability and diversity.

 

Public Storage  |  2021 Proxy Statement  |  7

Proxy Summary and Business, Compensation, and Governance Highlights

 

Oversight and Leadership

Our Sustainability Committee, comprising our CEO and other senior executives, directs, supports, and reports on the Company’s ongoing commitment to environmental, health and safety, social responsibility, governance, and other related matters. The Sustainability Committee Charter is available on our website at publicstorage.com.

In addition, the Board and the Nominating, Governance, and Sustainability Committee (NGS Committee) oversees management’s efforts and activities on sustainability initiatives. This ensures a focused and appropriate level of oversight by the Board and demonstrates the Board’s commitment to ensuring the Company’s progress across our sustainability initiatives.

Environmental

Public Storage considers potential environmental impacts—both positive and negative—into our decision-making across the business. The following initiatives reflect the Company’s commitment to responsible environmental stewardship:

 

•

LOW ENVIRONMENTAL IMPACT I Our property portfolio has an inherently light footprint that we further reduce through environmentally friendly capital initiatives.

 

•

LOW OBSOLESCENCE I Properties have retained functional and physical usefulness over many decades. In fact, many customers favor our single-story, drive-up properties built in the 1970s and 1980s due to their central locations and accessibility. This contrasts with other real estate types that require frequent reinvestment (i.e., capital expenditures) to stay current with consumer preference, remain competitive with newer competition, offset heavier wear-and-tear by users, and maintain structural operating efficiency.

 

•

HIGH STRUCTURAL RESILIENCE I We build and operate our properties to withstand the test of time, including general aging and acute and chronic risks from rising water levels, changing temperatures, and natural disasters.

 

8  |  Public Storage  |  2021 Proxy Statement

Proxy Summary and Business, Compensation, and Governance Highlights

 

We are pleased to present the following highlights from our environmental stewardship efforts in 2020:

 

 

Benchmarking " Our GRESB Real Estate Assessment score is in the top tier among self-storage REITs, and our GRESB Public Disclosure score is well above peer average "We scored well above North American and self-storage REIT scores in our inaugural Carbon Disclosure Project (CDP) survey We issued our inaugural Annual Sustainability Report in 2020 Solar power systems added to 11 properties, with more on the way Water efficient landscaping added to 62 properties LED lighting conversions completed at 264 properties Recycling Use of packaging materials from 100% recycled paper resulted in saving 37,424 trees, over 15 million gallons of water, and 8.8 million kilowatt hours of power | preventing 2,201 tons of CO2 emissions | diverting 7,265 cubic yards of waste from landfills

We will continue to utilize our unique competitive advantages in furthering our environmental stewardship. Moreover, we are committed to improving our climate initiatives and long-term sustainability strategies, including:

 

•

Expediting our understanding of the Paris Climate Agreement and how we can align our strategies and operations with its goal of achieving net-zero emissions globally by mid-century;

 

•

Evaluating the feasibility of instituting short, medium, and/or long-term greenhouse gas emissions reduction targets or other climate-focus targets to encourage or increase adoption of renewable energy or energy efficiency measures; and

 

•

Updating our stakeholders on our ongoing efforts through our Sustainability Report.

In analyzing our potential risk impacts, we will identify and act upon opportunities, including initiatives that make sense from both sustainability and economic return on invested capital perspectives.

 

Public Storage  |  2021 Proxy Statement  |  9

Proxy Summary and Business, Compensation, and Governance Highlights

 

Social

Underpinning our long-term successes is a commitment to stakeholders—including employees, customers, communities, investors, and suppliers. We actively engage with stakeholders and incorporate their views into our decision-making. In a world that is increasingly interconnected with faster information dissemination, rapid innovation, quicker decisions, and rising risk, stakeholder focus is a critical strategy element for Public Storage.

We engage with our stakeholders in numerous ways:

 

EMPLOYEES
•  Direct engagement (group and individual)   •  Dedicated Learning and Development team   •  Development and upward mobility focus   •  New hire training programs and job aids   •  Ongoing training and job aids   •  Sustainability training (88% of employees in 2020)   •  Active succession planning at all levels		•  Satisfaction surveys (100% of employees in 2020)   •  Monthly employee newsletter   •  Wellness programs, including mental wellness support   •  Monthly safety training at all properties   •  Annual safety training at company headquarters   •  24-hour anonymous compliance hotline
CUSTOMERS		COMMUNITIES
•  Direct engagement at properties   •  Direct engagement in customer service functions   •  Satisfaction surveys (92% of customers in 2020)   •  Environmental clause in lease agreement   •  Environmental best practice postings at properties		•  Employee volunteering   •  Cleanliness and safety surrounding properties   •  Industry trade group memberships   •  Conference and event participation
INVESTORS		SUPPLIERS AND VENDORS
•  Public disclosures   •  Quarterly earnings calls   •  Direct engagement with management team   •  Direct engagement with lead independent trustee, including outreach to beneficial owners of more than 60% of outstanding common shares   •  Conference and event participation   •  Dedicated investor relations team		•  Direct engagement   •  Enterprise Risk Management (ERM) and compliance programs addressing anti-boycott, anti-bribery, export restriction, and trade sanction issue   •  Supplier code of conduct agreement focused on:   o  Prohibiting corrupt or unfair business practices   o  Antitrust and fair competition agreements   o  Employment law agreements, including involuntary, anti-discriminatory, and child labor

 

10  |  Public Storage  |  2021 Proxy Statement

Proxy Summary and Business, Compensation, and Governance Highlights

 

Diversity and Inclusion

Public Storage hires based on personality, skills, and experience without regard to age, gender, race, ethnicity, religion, sexual orientation, or other protected characteristic. We are proud to have a diverse and inclusive workforce that reflects the diversity of customers we serve. Our workforce is:

 

 

69% Female 39% Female Managers 52% People of Color Age Distributed Baby Boomer = 10% Gen X = 35% Millennial =40% Gen Z = 15%

We maintain policies regarding diversity, equal opportunity, pay-for-performance, discrimination, harassment, and labor (e.g., child, forced, and compulsory). We celebrate inclusion and value the diversity each employee and customer brings. We believe everyone has the right to be treated fairly, with dignity and respect. We stand with our employees, customers, and communities in the fight against racism and injustice.

Governance

Public Storage’s commitment to the highest ethical standards is the foundation of a governance structure that provides oversight and accountability, promotes fairness and compliance, and proactively manages risk. Governance is critical to our operational, financial, and reputational resilience.

Our Board oversees senior management to ensure the long-term interests of the Company and our stakeholders are best served. Our trustees take a proactive, focused approach to their oversight responsibilities. Our corporate governance is structured to foster principled actions, informed and effective decision making, and appropriate monitoring of performance, risk, and compliance. Trustee decisions are governed by the Corporate Governance Guidelines and Trustees’ Code of Ethics, in addition to individual committee charters.

Key aspects of our governance include:

 

Company-Wide		Board Structure and Composition
•  Strong accountability and oversight   •  Pay-for-performance   •  Focus on legal and regulatory compliance   •  ERM program		•  Declassified (annual elections)   •  Majority independent trustees   •  Lead independent trustee   •  Separate Chairman and CEO positions   •  Mandatory trustee retirement at age 75   •  Ongoing Board refreshment   •  All Audit Committee members are financial experts

 

Public Storage  |  2021 Proxy Statement  |  11

Proxy Summary and Business, Compensation, and Governance Highlights

 

Shareholder Rights		Additional Practices
•  No poison pill   •  Right to call special meetings   •  Proxy access   •  Majority shareholder vote to amend bylaws and approve M&A transactions   •  Majority vote requirements for trustee elections		•  Stock ownership guidelines   •  Clawback policy covering all compensation   •  Anti-hedging policy   •  No employment or severance agreements   •  Double-trigger equity vesting upon change of control   •  Political and charitable contributions policy

Code of Conduct

Employees, executive management, and trustees must adhere and annually attest to our Code of Conduct, which includes policies and standards around personal, professional, and marketplace integrity; anonymous reporting of concerns; and protecting company assets, records, and information. The Code of Conduct also covers the Foreign Corrupt Practices Act, antitrust and competition laws, anti-boycott laws, export control laws, insider trading laws, and equal opportunity, diversity, and anti-harassment standards. Executive management and trustees must also adhere to additional Codes of Conduct and Governance Guidelines. In 2020, 100% of employees, executive management, and trustees attested to the Code of Conduct.

Ongoing Board Refreshment

Our Board has continued to advance board refreshment initiatives, appointing six independent trustees since the 2020 Annual Meeting: Kristy Pipes, Shankh Mitra, David Neithercut, Paul Williams, Michelle Millstone-Shroff, and Rebecca Owen.¹ In addition, our Board has named Mr. Neithercut as the new Lead Independent Trustee of the Board.

Our Commitment

We are committed to a forward-looking and integrated approach to sustainability across our organization. Our integrated approach to sustainability is based on the following framework:

 

ENVIRONMENTAL		SOCIAL		GOVERNANCE
OPERATIONS
•  Low environmental impact at property and corporate levels   •  Initiatives with diverse and interrelated environmental, social, governance, and economic benefits   •  Low property obsolescence		•  Focus on people including employees, customers, communities, and investors   •  Corporate culture built on integrity, accountability, entrepreneurship, employee development, and diversity   •  Cultural alignment with corporate strategy		•  Comprehensive ERM framework   •  Robust risk management practices including oversight, succession planning, legal, and regulatory compliance   •  Pay-for-performance for all employees

 

1	Mses. Millstone-Shroff and Owen were appointed in collaboration with Elliott Investment Management, L.P. and its affiliates.

 

12  |  Public Storage  |  2021 Proxy Statement

Proxy Summary and Business, Compensation, and Governance Highlights

 

CAPITAL ALLOCATION
•  Low capital expenditures needed to maintain properties   •  Efficient-system initiatives to reduce energy and water use, carbon emission, and waste production   •  Redevelopment and adaptive reuse of older, less-efficient properties		•  Address underserved consumer storage needs   •  Help mitigate high costs of housing   •  Serve essential-business customers including health professionals, charities, and tradespeople   •  Promote job creation and upward mobility		•  Risk reduction via portfolio geographic diversity, cloud-based operating systems, cyber security, and data privacy initiatives   •  Time and capital allocation towards sustainability analysis and reporting
BALANCE SHEET
Low leverage, high permanent capital balance sheet that supports adaptation to the evolving risk environment, provides stability for our employees and customers, and enables execution of Public Storage’s long-term corporate strategy

We strive to reduce the Company’s environmental footprint further, while bolstering our resilience in the face of environmental, economic, political, data security, reputational, and other risks. We will continually strengthen our unique competitive advantages in order to manage risk, create and act upon opportunity, and generate sustained long-term value for our stakeholders. Please refer to our Sustainability Report on our website at publicstorage.com for additional information regarding our sustainability program, efforts, and commitment to our stakeholders.

 

Public Storage  |  2021 Proxy Statement  |  13

Proposal 1: Election of Trustees

 

 

Proposal 1:

Election of Trustees

 

 

 

				Our Board has nominated fourteen trustees, who, if elected by shareholders at our Annual Meeting, have agreed to serve until next year’s annual meeting of shareholders.
				RECOMMENDATION:   Vote FOR each nominee

 

14  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

PROPOSAL 1

ELECTION OF TRUSTEES

 

 

EXECUTIVE SUMMARY

Our Board has nominated fourteen trustees for election at this year’s Annual Meeting to hold office until the next annual meeting of shareholders. Of the fourteen trustee nominees, seven independent trustees have been appointed since July 2019, including five newly appointed as of the beginning of 2021:

 

•

Tariq M. Shaukat was appointed effective July 30, 2019;

 

•

Kristy M. Pipes was appointed effective October 26, 2020;

 

•

David J. Neithercut, Shankh S. Mitra, and Paul S. Williams were appointed effective January 1, 2021; and

 

•

Michelle Millstone-Shroff and Rebecca Owen were appointed effective January 5, 2021.

Each of the fourteen nominees has agreed to be named in this proxy statement and to serve on the Board if elected. We expect all nominees to attend the Annual Meeting.

If any of our nominees becomes unavailable to stand for election, the proxies named on the proxy card intend to vote your Common Stock for the election of any substitute nominee proposed by the Board.

We believe that each nominee has the skills, experience, and personal qualities the Board seeks and that the combination of these nominees creates an effective, well-functioning Board that serves the best interests of Public Storage and our shareholders.

The Board is responsible for overseeing management and providing sound governance on behalf of our shareholders. The Board and each of its committees have an active role in overseeing management of the Company’s risks, a responsibility that the Board believes is one of its most important areas of oversight.

The Board carries out its responsibilities through (1) the effective collaboration of our highly capable and experienced trustees; (2) a well-crafted Board structure, which includes separate individuals holding the positions of the Chief Executive Officer, the Chairman of the Board, and the Lead Independent Trustee; (3) a strong committee structure that enables trustees to provide the appropriate level of focused oversight and subject-matter expertise; and (4) adherence to our Corporate Governance Guidelines and Trustees’ Code of Ethics.

 

Public Storage  |  2021 Proxy Statement  |  15

Proposal 1: Election of Trustees

 

BOARD COMPOSITION HIGHLIGHTS

Trustee diversity is important because having a variety of points of view improves the quality of dialogue, contributes to a more effective decision-making process, and enhances overall culture in the boardroom. Our trustees represent a diversity of professional experience, race, ethnicity, gender, age, and cultural background, including:

 

Gender and Racial Diversity		Age Diversity
Racially Diverse Non-Racially Diverse Men Women 5 4 9 10		40s 50s 60s 70s 3 2 8 1
Independence		Tenure
Independent Trustees Non-Independent Trustees 4 10		0-1 Years -5 Years 5 Years+ 5 5 4

BOARD EVALUATIONS AND NOMINATIONS

In our annual Board evaluation and nomination process, the Nominating, Governance, and Sustainability (NGS) Committee evaluates our trustees in light of the current needs of the Board and the Company. In addition, during the course of the year, the NGS Committee discusses Board succession and reviews potential trustee candidates. The NGS Committee has in the past retained third parties to assist in identifying potential nominees.

Our annual evaluation process involves assessments at the Board, Board committee, and individual trustee levels under the direction of the NGS Committee Chair and the Chairman of the Board. This process assists the Board in determining the appropriate nominees for election based on current Company and Board needs. In addition, the NGS Committee takes into consideration its ongoing evaluation of potential new trustee candidates when recommending a slate of nominees for election to the Board at each annual meeting of shareholders.

 

16  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

BOARD QUALIFICATIONS

The NGS Committee has developed a matrix of skills to assess the qualifications of trustee candidates, including:

 

•

diversity enhancing qualities—age, remaining time until mandatory retirement age, gender, and diverse background, including coming from underrepresented communities;

 

•

core trustee attributes—independence, high integrity and ethical standards, public company service, risk management experience, understanding or experience with complex public companies or like organizations, and ability to work collegially and collaboratively with other trustees and management; and

 

•

additional skills such as financial literacy, industry experience, operational management experience, capital markets/banking expertise, corporate governance, real estate, technology, marketing, tax, senior executive experience, and other expertise that may be important to the Company’s strategic objectives.

The NGS Committee considers all these relevant attributes of each Board candidate, including professional skills, experience and knowledge, and gender, race, ethnicity, nationality, and background, with the goal of putting forth a diverse slate of candidates with a combination of skills, experience, and personal qualities that will best serve the Board and its committees, our Company, and our shareholders.

BOARD REFRESHMENT

Our Board and the NGS Committee regularly consider the long-term make up of our Board and how the members of our Board change over time. Our Board and the NGS Committee also understand the importance of Board refreshment and aim to strike a balance between the knowledge that comes from longer-term service on the Board with the new experience, ideas, and energy that can come from adding trustees to the Board.

In December 2020, our Board appointed three new independent trustees to the Board, and in connection with our entry into a cooperation agreement with Elliott Investment Management L.P., Elliott Associates, L.P. and Elliott International, L.P. (the Cooperation Agreement), our Board appointed an additional two independent trustees to the Board who were initially identified and recommended by affiliates of Elliott but were otherwise unaffiliated with Elliott. These five trustees have been nominated by our Board for election at the Annual Meeting to the Board at the 2021 Annual Meeting.

Assuming the election of this year’s proposed trustee nominees, we believe we will have a good balance between tenured trustees with significant experience with the Company and new trustees with fresh perspectives, constituting a strong, independent Board that will be well-positioned to navigate the current challenging business environment and accelerate the Company’s growth and accomplishment of key corporate objectives for the benefit of all of our stakeholders.

BOARD FOCUS ON DIVERSITY

Board succession and ensuring an appropriate balance of experience and diversity are key focus areas for the NGS Committee and the Board. Our Board reflects diverse perspectives, including a complementary mix of skills, experience, and backgrounds, that we believe are paramount to our ability to represent the interests of all stakeholders. Our Board recognizes the importance of diversity and supports management’s efforts to enhance all aspects of diversity throughout the Company.

 

Public Storage  |  2021 Proxy Statement  |  17

Proposal 1: Election of Trustees

 

Our trustees, over 71% of whom are independent, have a broad range of experience in varying fields, including finance, real estate, financial reporting, banking, international affairs, governance, marketing, retail, operations, legal, and technology. A majority of our trustees hold or have held directorships at other U.S. public companies. Five of our trustees, in addition to our Chairman and our CEO, have served as chief executive officers, and all have demonstrated superb leadership and analytical skills gained from deep experience in management, finance, and corporate governance.

Five of our trustees are females and four trustees are racially diverse and self-identify as being from an underrepresented community. Additionally, our Chairman and our CEO have provided meaningful in-person opportunities for the Board to interact with key members of management beyond our executive officers on a quarterly basis. Half of our current executive officers are diverse (including our Chief Legal Officer and our Chief Administrative Officer). Similarly, 52% of our over 5,700 employees are people of color and 69% of our employees are female.

 

18  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

NOMINEE QUALIFICATIONS

The Board has nominated fourteen trustees, eight of whom are incumbents elected at our 2020 annual meeting of shareholders, and six of whom were appointed to the Board at the end of 2020 and beginning of 2021, to serve until our 2021 Annual Meeting. Pursuant to the terms of a cooperation agreement between the Company and Elliott Investment Management L.P. and its affiliates, the Company appointed Ms. Millstone-Shroff and Ms. Owen to the Board in January 2021 and agreed to nominate them for election at the Annual Meeting.

We recommend that you vote FOR each nominee.

 

Nominee		Age		Principal Professional Background		Trustee   Since		Committee Membership
Ronald L. Havner, Jr.		63		Chairman of the Board; Retired Chief Executive Officer of Public Storage		2002
Tamara Hughes Gustavson		59		Real Estate Investor; Philanthropist		2008
Leslie S. Heisz   (Independent Trustee)		60		Retired Managing Director of Lazard Frères		2017		NGS and Long-Term Planning
Michelle Millstone-Shroff   (Independent Trustee)		45		Former Chief Customer Experience Officer of Bed Bath & Beyond		2021		Compensation and Long-Term Planning
Shankh S. Mitra   (Independent Trustee)		40		Chief Executive Officer and Chief Investment Officer of Welltower, Inc.		2021		Compensation and Long-Term Planning
David J. Neithercut   (Lead Independent Trustee)		65		Retired President and Chief Executive Officer of Equity Residential		2021		NGS and Long-Term Planning
Rebecca Owen   (Independent Trustee)		59		Retired President of CEI Realty, Inc.; Former Chief Legal Officer of Clark Enterprises, Inc.		2021		Audit and Long-Term Planning
Kristy M. Pipes   (Independent Trustee)		61		Retired Managing Director and Chief Financial Officer of Deloitte Consulting		2020		Audit (Chair) and NGS
Avedick B. Poladian   (Independent Trustee)		69		Retired Executive Vice President and Chief Operating Officer of Lowe Enterprises, Inc. (Lowe Enterprises)		2010		Audit and Compensation (Chair)
John Reyes		60		Retired Chief Financial Officer of Public Storage		2019
Joseph D. Russell, Jr.		61		President and CEO of Public Storage; Former Chief Executive Officer of PS Business Parks, Inc.		2019
Tariq M. Shaukat   (Independent Trustee)		48		President, Bumble		2019		Audit
Ronald P. Spogli   (Independent Trustee)		72		Co-Founder of Freeman Spogli & Co.; Former Ambassador to the Italian Republic and the Republic of San Marino		2010		NGS (Chair) and Compensation
Paul S. Williams   (Independent Trustee)		61		Retired Partner as Major, Lindsey & Africa; President of the National Association of Corporate Directors (NACD) Chicago Chapter		2021		Compensation and NGS

 

Public Storage  |  2021 Proxy Statement  |  19

Proposal 1: Election of Trustees

 

TRUSTEE NOMINEES SKILLS SUMMARY

The Board believes that our trustee nominees provide Public Storage with the combined skills, experience, and personal qualities needed for an effective and engaged Board.

 

Chief Executive Officer or Executive Experience

●

●

●

●

●

●

●

●

●

●

●

●

Public Board Experience

●

●

●

●

●

●

●

●

●

●

●

●

Relevant Industry Experience

●

●

●

●

●

●

●

●

●

Financial or Tax Expertise

●

●

●

●

●

●

●

●

●

●

Corporate Governance Experience

●

●

●

●

●

●

●

●

M&A and Capital Allocation/Capital Markets Experience

●

●

●

●

●

●

●

●

●

●

●

●

Succession Planning/Management Development Experience

●

●

●

●

●

●

●

●

●

●

●

International Executive or Global Company Board Experience

●

●

●

●

●

Technology and Data Analytics Experience

●

●

●

Brand Marketing or Consumer Facing/Retail Experience

●

●

●

●

Gender Diversity

●

●

●

●

●

Racial Diversity (including self-identification as being from an underrepresented community

●

●

●

●

Major Shareholder

●

 

20  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

Age: 63   Trustee since: 2002   Trustee Qualification Highlights:   Extensive leadership experience and Company and industry knowledge; financial and M&A expertise		Ronald L. Havner, Jr. Chairman   Mr. Havner joined the Board in November 2002 and has served as Chairman since August 2011. Mr. Havner served as Chief Executive Officer of Public Storage from November 2002 until his retirement on January 1, 2019. Mr. Havner joined Public Storage in 1986 and held a variety of senior management positions prior to becoming Chief Executive Officer.   Mr. Havner has served as Chairman of the Board of Public Storage’s affiliate, PS Business Parks, Inc. (NYSE: PSB) since March 1998, and as Chairman of the Board of another Public Storage affiliate, Shurgard Self Storage SA (EURONEXT: SHUR) since completion of its initial public offering in October 2018. Mr. Havner also serves as a director of AvalonBay Communities, Inc. (NYSE: AVB) and served as director of California Resources Corp. (NYSE: CRC) from December 2014 to May 2018. Mr. Havner was the 2014 Chairman of the Board of Governors of the National Association of Real Estate Investment Trusts, Inc. (NAREIT).   Mr. Havner’s qualifications for the Board include his extensive leadership experience and Company and industry knowledge. Having served as Chief Executive Officer for 17 years, Mr. Havner provides an invaluable perspective in Board discussions about the historic operations and strategic direction of the Company.
Age: 59   Trustee since: 2008   Trustee Qualification Highlights:   Previous experience at the Company; ongoing investment; charitable board experience		Tamara Hughes Gustavson Real Estate Investor; Philanthropist   Ms. Gustavson joined the Board in November 2008. She was previously employed by Public Storage from 1983 to 2003, serving most recently as Senior Vice President, Administration. During the past seven years, Ms. Gustavson has supervised her personal business investments and engaged in charitable activities. Ms. Gustavson currently serves as chairperson for the Board of Trustees of American Homes 4 Rent (NYSE: AMH) and also serves on the Board of Trustees of the William Lawrence and Blanche Hughes Foundation and the Board of Trustees of the University of Southern California. Ms. Gustavson is our largest single shareholder and a member of the Hughes family (the Hughes Family), which collectively owns approximately 13.05% of the Company’s Common Stock. She is the daughter of B. Wayne Hughes, Chairman Emeritus and the Company’s Co-Founder.   Ms. Gustavson’s qualifications for election to the Board include her previous managerial experience at Public Storage and her ongoing investment and charitable board experience. In addition, as the largest individual shareholder of the Company, Ms. Gustavson provides the Board with a shareholder’s perspective in Board discussions about the operations and strategic direction of the Company.

 

Public Storage  |  2021 Proxy Statement  |  21

Proposal 1: Election of Trustees

 

Age: 60   Trustee since: 2017   Committees:   NGS and Long-Term Planning   Trustee Qualification Highlights:   Business expertise across a number of industries; financial expertise; public company board experience		Leslie S. Heisz Retired Managing Director of Lazard Frères   Ms. Heisz joined the Board in February 2017. Ms. Heisz is an experienced investment banking and finance executive. Ms. Heisz joined Lazard Frères, a financial advisory and asset management firm and independent investment bank, in 2003 as a senior advisor and served as a managing director from 2004 through April 2010, providing strategic financial advisory services for clients in a variety of industries. Ms. Heisz was previously a managing director of Dresdner Kleinwort Wasserstein and its predecessor for six years, specializing in mergers and acquisitions, as well as leveraged finance, and leading the Gaming and Leisure Group and the Los Angeles office.   Ms. Heisz has been a member of the Board of Directors of Kaiser Permanente since January 2015 and Edwards Lifesciences (NYSE: EW) since July 2016. Ms. Heisz also joined the board of a Capital Group/American Funds mutual fund cluster (CGPCS, EMGF, IVE, and GIF) in January 2019. She previously served on the Boards of Directors of Ingram Micro Inc. (NYSE: IM), Towers Watson (NASDAQ: WLTW), HCC Insurance Holdings, Inc. (HCC), and International Game Technology (NYSE: IGT).   Ms. Heisz’s qualifications for election to the Board include her financial expertise and diverse business experiences across a number of industries, including deep finance and strategic advisory skills. She has also had extensive corporate governance experience serving on many public company boards.
Age: 45   Trustee since: 2021   Committees:   Compensation and Long-Term Planning   Trustee Qualification Highlights:   Extensive retail and operations experience		Michelle (Meka) Millstone-Shroff Former Chief Customer Experience Officer, Bed Bath & Beyond   Ms. Millstone-Shroff joined the Board in January 2021. Ms. Millstone-Shroff previously served as the Chief Customer Experience Officer of Bed Bath & Beyond Inc. (NASDAQ: BBBY), a chain of domestic merchandise retail stores, and as the President & Chief Operating Officer of buybuy BABY, a subsidiary of Bed Bath & Beyond and a retailer of items for infants and toddlers. She also served as the Chief Operating Officer of buybuy BABY. Prior to Bed Bath & Beyond, Ms. Millstone-Shroff worked at McKinsey & Company, with a focus on retail- and consumer-oriented companies.   Ms. Millstone-Shroff has served on the boards of directors of Neiman Marcus Group Inc. (NYSE: NMG.A) since September 2020, Nanit, a private technology company, since December 2019, and Party City Holdco Inc. (NYSE: PRTY) since February 2019.   Ms. Millstone-Shroff’s qualifications for the Board include her significant retail and operations experience and her experience as a strategic operating advisor.

 

22  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

Age: 40   Trustee since: 2021   Committees:   Compensation and Long-Term Planning   Trustee Qualification Highlights:   Extensive experience in the real estate industry; financial and capital allocation expertise		Shankh S. Mitra Chief Executive Officer and Chief Investment Officer, Welltower Inc.   Mr. Mitra joined the Board in January 2021. Mr. Mitra has served as the Chief Executive Officer and Chief Investment Officer of Welltower Inc. (NASDAQ: WELL), a publicly traded real estate investment trust that invests in seniors housing operators, post-acute providers, and health systems since August 2018. Previously, Mr. Mitra served as Welltower’s Senior Vice President—Investments from January 2018 to August 2018. Mr. Mitra served as Welltower’s Senior Vice President—Finance & Investments from January 2016 to January 2018. From July 2013 to December 2015, Mr. Mitra served as Portfolio Manager, Real Estate Securities at Millennium Management. Mr. Mitra served as Senior Analyst at Citadel Investment Group from April 2012 to June 2013 and Fidelity Investments from June 2009 to March 2012.   Mr. Mitra has served as a director of Welltower Inc. since October 2020.   Mr. Mitra’s qualifications for election to the Board include his extensive experience in the real estate industry and his financial acumen and expertise in capital allocation.
Age: 65   Trustee since: 2021   Committees:   NGS and Long-Term Planning   Trustee Qualification Highlights:   Extensive experience in REITs; financial and leadership expertise		David J. Neithercut Retired President and Chief Executive Officer, Equity Residential   Mr. Neithercut joined the Board in January 2021. He served as the Chief Executive Officer of Equity Residential (NYSE: EQR), a publicly traded real estate investment trust that invests in apartments, from January 2006 until retirement in December 2018 and as President from May 2005 to September 2018. Previously, Mr. Neithercut served as Executive Vice President—Corporate Strategy from January 2004 to May 2005, and Executive Vice President and Chief Financial Officer from February 1995 to August 2004.   Mr. Neithercut has served on the Board of Trustees of Equity Residential since 2006 and is a member of the Board of Trustees of Americold Realty Trust (NYSE:COLD). Mr. Neithercut was formerly a director of General Growth Properties, Inc., (NYSE:GGP and now a part of Brookfield Realty Partners).   Mr. Neithercut’s qualifications for election to the Board include his deep experience in the REIT space, financial expertise, and his long and successful track record in executive leadership positions.

 

Public Storage  |  2021 Proxy Statement  |  23

Proposal 1: Election of Trustees

 

Age: 59   Trustee since: 2021   Committees:   Audit and Long-Term Planning   Trustee Qualification Highlights:   Extensive real estate experience; legal and governance and public company board experience		Rebecca Owen Retired President of CEI Reality, Inc.; Former Chief Legal Officer of Clark Enterprises, Inc.   Ms. Owen joined the Board in January 2021. Ms. Owen has served as the Chairman and founder of Battery Reef, LLC, a commercial real estate investment and management company, since January 2019. From 1995 until January 2019, she served in various roles at Clark Enterprises, Inc., a private investment firm, and its affiliated companies, including Senior Vice President of Clark Enterprises, Inc. from 1995 to 2019, President of CEI Realty, Inc., the real estate investment arm of Clark Enterprises, Inc. from 2015 to 2019, and Chief Legal Officer of Clark Enterprises, Inc. from 1995 to 2017.   Ms. Owen has served on the board of directors of Carr Properties, a private real estate investment trust, since 2013, and on the Real Estate Investment Advisory Committee of ASB Capital Management, LLC, an institutional real estate investment firm, since January 2017. Previously, Ms. Owen served on the boards of directors of WillScot Corp. (NASDAQ: WSC) from April 2019 to June 2020 and Jernigan Capital, Inc. (NYSE: JCAP) from December 2018 to November 2020.   Ms. Owen’s qualifications for the Board include her significant experience as both an executive and director in the real estate industry.
Age: 61   Trustee since: 2020   Committees:   Audit (Chair) and NGS   Trustee Qualification Highlights:   Extensive leadership and financial expertise and other public company board experience		Kristy M. Pipes Former Managing Director and Chief Financial Officer of Deloitte Consulting   Ms. Pipes joined the Board in October 2020. Ms. Pipes previously served as Managing Director and Chief Financial Officer of Deloitte Consulting, a management consultancy firm with operations in the United States, India, Germany, and Mexico, where she managed the finance function. Ms. Pipes held various leadership positions, including serving on the firm’s Management Committee and Consulting Operations Committee.   Prior to joining Deloitte in 1999, Ms. Pipes was Vice President and Manager, Finance Division, at Transamerica Life Companies and Senior Vice President and Chief of Staff for the President and Chief Executive Officer (among other senior management positions) at First Interstate Bank of California. Ms. Pipes also serves as a director of PS Business Parks, Inc. (NYSE: PSB) and ExlService Holdings, Inc. (NASDAQ:EXLS).   Ms. Pipes’s qualifications for election to the Board include her extensive financial analysis and operational expertise. Ms. Pipes also brings deep management and leadership experience to the Board, having held several senior leadership positions during her career.

 

24  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

Age: 69   Trustee since: 2010   Committees:   Compensation (Chair)and Audit   Trustee Qualification Highlights:   Accounting and financial expertise and other public company board experience; extensive knowledge of the real estate industry		Avedick B. Poladian Retired EVP and COO of Lowe Enterprises   Mr. Poladian joined the Board in February 2010. From 2007 to the end of 2016, Mr. Poladian held the positions of Executive Vice President and Chief Operating Officer for Lowe Enterprises, a diversified national real estate company that he joined in 2003. Mr. Poladian was with Arthur Andersen from 1974 to 2002 as Managing Partner, Pacific Southwest.   He serves as a director of two publicly traded funds managed by Western Asset Management Funds, a director of Occidental Petroleum Corporation (NYSE: OXY), and a director of California Resources Corp. (NYSE: CRC). Mr. Poladian is also a member of the Board of Councilors of the USC Sol Price School of Public Policy, the Board of Advisors of the Ronald Reagan UCLA Medical Center, and the YMCA of Metropolitan LA.   Mr. Poladian qualifies as one of the Company’s Audit Committee financial experts and provides the Board expert perspective in financial management and analysis. Mr. Poladian has extensive knowledge of the real estate industry and key business issues by virtue of his service in a senior management position at one of the world’s largest accounting firms and his experience as Chief Operating Officer and Chief Financial Officer of a diversified real estate company. Through his experience with other public companies, Mr. Poladian brings valuable insight into our business and corporate governance.
Age: 60   Trustee since: 2019   Trustee Qualification Highlights:   Leadership and experience at the Company as former CFO; accounting and financial expertise		John Reyes Retired Senior Vice President and Chief Financial Officer of Public Storage   Mr. Reyes joined the Board in January 2019. Mr. Reyes served as Senior Vice President and Chief Financial Officer of Public Storage from 1996 until his retirement effective January 1, 2019. Mr. Reyes joined Public Storage in 1990 and served in various positions until his promotion to Chief Financial Officer in 1996. From 1983 to 1990, Mr. Reyes was employed by EY. Mr. Reyes is a Certified Public Accountant.   In considering the nomination of Mr. Reyes for election to the Board, the Board considered Mr. Reyes’s extensive accounting and financial expertise, his experience in having served as the Company’s Senior Vice President and Chief Financial Officer from 1996 to January 1, 2019, as well as Mr. Reyes’s tenure with the Company of almost 30 years. As our former Chief Financial Officer, he is able to provide unique insights into our Company’s financial reporting, controls, and risk management, as well as capital management processes and assessments. Mr. Reyes provides invaluable perspective in Board discussions about the historic operations and strategic direction of the Company.

 

Public Storage  |  2021 Proxy Statement  |  25

Proposal 1: Election of Trustees

 

Age: 61   Trustee since: 2019   Committees:   Long-Term Planning (Chair)   Trustee Qualification Highlights:   Extensive leadership experience; extensive Company and industry knowledge		Joseph D. Russell, Jr. President and CEO of Public Storage   Mr. Russell joined the Board in January 2019. Mr. Russell has been President of Public Storage since July 2016 and has served as its Chief Executive Officer since January 1, 2019. Previously, Mr. Russell was President and Chief Executive Officer of PS Business Parks, Inc. (NYSE: PSB), an affiliate of the Company that acquires, develops, and operates commercial properties, from August 2002 until July 2016. Mr. Russell has served on the Board of Directors of PS Business Parks since August 2003. Mr. Russell also serves on the Board of Governors of NAREIT. Before joining PS Business Parks, Mr. Russell was employed by Spieker Properties, Inc. (Spieker) an owner and operator of office and industrial properties in Northern California, and its predecessor, for more than ten years. Mr. Russell served as an officer of Spieker when it became a publicly traded REIT in 1993.   Mr. Russell’s qualifications for election to the Board include his leadership experience and Company and industry knowledge, including his more than 20-year involvement with publicly traded REITs and extensive experience with office and industrial real estate. Mr. Russell provides management’s perspective in Board discussions about the operations and strategic direction of the Company.
Age: 48   Trustee since: 2019   Committees: Audit   Trustee Qualification Highlights:   Extensive experience in marketing, consumer-facing issues, and technology; leadership experience		Tariq M. Shaukat President, Bumble   Mr. Shaukat joined the Board in July 2019. He has been President of Bumble Inc. since July 2020. Prior to that, he was President of Google Cloud at Google LLC, where he oversaw operating and customer-based initiatives to accelerate growth across all lines of business, including analytics and machine learning. Prior to joining Google LLC in 2016, Mr. Shaukat was Executive Vice President and Chief Commercial Officer at Caesars Entertainment Corporation, after initially joining the company in 2012 as Executive Vice President and Chief Marketing Officer. His responsibilities included oversight of revenue management, marketing, information technology, and analytics across all business lines. Prior to Caesars Entertainment Corporation, Mr. Shaukat was Partner at McKinsey & Company and held leadership positions at various technology-based companies.   Mr. Shaukat’s qualifications for election to the Board include his extensive digital, marketing, and data analytics experience. In addition, Mr. Shaukat brings his proven leadership and unique perspective to the Board.

 

26  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

Age: 72   Trustee since: 2010   Committees:   NGS (Chair) and Compensation   Trustee Qualification Highlights:   Broad-ranging investment banking and executive experience; experience in government and international relations		Ronald P. Spogli Co-Founder of Freeman Spogli & Co. Former Ambassador to the Italian Republic and the Republic of San Marino   Mr. Spogli joined the Board in February 2010. Mr. Spogli co-founded Freeman Spogli & Co. (Freeman Spogli), a private investment firm dedicated to middle-market companies positioned for growth, in 1983. Freeman Spogli has invested over $5 billion of private equity capital in 65 companies over 37 years and currently manages four individual funds total $5 billion in committed capital. He served as the United States Ambassador to the Italian Republic and the Republic of San Marino from August 2005 until February 2009.   Mr. Spogli also serves as the Vice Chair of The J. Paul Getty Trust and on the boards of trustees of the W. M. Keck Foundation, the Center for American Studies in Rome, Italy, and White Bridge Investments, an Italian investment company.   Mr. Spogli’s qualifications for election to the Board include his broad-ranging board and executive responsibilities for a variety of companies engaged in consumer businesses in which the firm of Freeman Spogli has investments. In addition, Mr. Spogli’s experience in government and international relations provides helpful insight in the European countries where Public Storage has investments.
Age: 61   Trustee since: 2021   Committees:   Compensation and NGS   Trustee Qualification Highlights:   Extensive experience in corporate governance; public company board experience		Paul S. Williams Retired Partner, Major, Lindsey & Africa President, National Association of Corporate Directors (NACD), Chicago Chapter   Mr. Williams joined the Board in January 2021. Mr. Williams served as a Partner and Managing Director of Major, Lindsey & Africa, LLC, an executive recruiting firm, from 2005 to 2018. He also served as Director of Global Diversity Search, assisting legal organizations in enhancing their diversity. Mr. Williams is the President of the Chicago Chapter of the National Association of Corporate Directors (NACD).   From 2001 through 2005, Mr. Williams served as Executive Vice President, Chief Legal Officer & Corporate Secretary of Cardinal Health, Inc. (CAH), a provider of products and services to healthcare providers and manufacturers. Mr. Williams has served as a director of Compass Minerals (NYSE: CMP), a producer of salt, plant nutrients, and magnesium chloride for distribution primarily in North America, since June 2009. Mr. Williams also joined the Board of Directors of Romeo Power, Inc. (NYSE: RMO), an energy technology company, in December 2020, and Air Transport Services Group (NASDAQ: ATSG), a provider of aircraft leasing and air cargo transportation and related services, in January 2021.   Mr. Williams served as a director of Essendant, Inc. (NASDAQ: ESND), a publicly traded national wholesale distributor of business products, from 2014 through 2019 and served as a director of Bob Evans Farms, Inc. (NASDAQ: BOBE), a publicly traded owner and operator of restaurants, from 2007 through 2017. He also served as Lead Independent Director of State Auto Financial Corporation (NASDAQ: STFC), a publicly traded property and casualty insurance company, on whose board he served from 2003 to 2015. Since early 2020, Mr. Williams has served on the board of directors of a large cluster of funds in the American Funds mutual fund family (part of the privately-held Capital Group).   Mr. Williams’s qualifications for the Board include his extensive legal, regulatory, and corporate governance experience. In addition, Mr. Williams brings substantial executive management leadership experience and a strong background in human resources and talent development, including with respect to diversity and inclusion.

 

Public Storage  |  2021 Proxy Statement  |  27

Proposal 1: Election of Trustees

 

VOTE REQUIRED AND RECOMMENDATION

For the election of trustees, trustee nominees receiving an affirmative vote of a majority of the votes cast at the Annual Meeting will be elected. For purposes of the vote on this proposal, abstentions and broker non-votes will not affect the vote.

The Board recommends voting FOR all trustee nominees.

 

28  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

CORPORATE GOVERNANCE

BOARD ENGAGEMENT AND OVERSIGHT

Our Board has been a critical resource for senior management and has provided invaluable insight and oversight as senior management assessed and responded to the economic effects and disruption caused by the COVID-19 pandemic. The Board and our senior leadership team engaged regularly and collaborated closely to ensure the Company met its commitments to all stakeholders, including our employees, customers, and our shareholders.

Throughout 2020, our Board and committees not only maintained their regular schedule of quarterly meetings, but also began regular and frequent meetings with management regarding COVID-19, including its impact on employees, operations, financial performance, and legal and regulatory matters. The Board provided valuable oversight, review, and counsel related that helped management respond quickly and appropriately to the unexpected challenges resulting from the COVID-19 pandemic.

While the COVID-19 pandemic has required our senior management team and the Board’s immediate attention, one of the Board’s highest priorities continues to be guiding the development and execution of the Company’s long-term strategy. The Board remains focused on working with management to develop strategies to accelerate growth and create long-term value for our shareholders.

GOVERNANCE STRUCTURE

Our Board oversees the CEO and other senior management to ensure that the long-term interests of the Company and our shareholders are best served. We expect our trustees to take a proactive, focused approach to executing their oversight responsibilities.

Our governance structure is designed to foster principled actions, informed and effective decision-making, and appropriate monitoring of performance, risk, and compliance. Our key governance documents, including our Corporate Governance Guidelines and Trustee’s Code of Ethics, Code of Conduct, Code of Ethics for Senior Financial Officers, and our committee charters, are available at the Investor Relations section of our website, publicstorage.com, or by writing to Public Storage, 701 Western Avenue, Glendale, California 91201, Attention: Corporate Secretary. We will disclose any substantive amendments to or waivers of any of our ethics policies and standards on our website and in accordance with Securities and Exchange Commission (SEC) and New York Stock Exchange (NYSE) requirements.

PROXY ACCESS

Our Bylaws provide for proxy access, thereby giving our shareholders an even greater voice in trustee elections. A shareholder, or a group of up to 20 shareholders, owning at least 3% of the Company’s outstanding Common Stock continuously for at least 3 years may include in our proxy materials trustee nominees constituting up to the greater of two trustees or 20% of the number of trustees on the Board, provided that the shareholder and the nominees satisfy the eligibility requirements in our Amended and Restated Bylaws (Bylaws). There are no qualifying shareholder nominations for inclusion in our proxy statement.

POLITICAL AND CHARITABLE CONTRIBUTIONS

In February 2020, our Board and the NGS Committee approved amendments to the NGS Committee Charter to include oversight responsibilities with respect to the Company’s political and charitable contributions and other public policy matters. In order to facilitate accountability and informed decision-making with respect to the Company’s political contributions, the Governance Committee has adopted

 

Public Storage  |  2021 Proxy Statement  |  29

Proposal 1: Election of Trustees

 

certain Political and Charitable Contributions Guidelines that apply to contributions or expenditures of corporate funds to various political entities, charitable organizations, and certain causes. Contributions subject to the Guidelines must be approved by a management committee, and/or the NGS Committee. All contributions are required to be reported quarterly to the NGS Committee.

BOARD LEADERSHIP STRUCTURE

One of the Board’s key responsibilities is to determine the optimal leadership structure to provide effective oversight of management. As a result, the Board does not have a policy as to whether the roles of Chairman and CEO should be separated or combined. The Board believes that Public Storage shareholders are best served when the Board has flexibility to consider the relevant facts and circumstances to ensure that the Board leadership structure best reflects the needs of the Company at that time.

Prior to January 1, 2019, when Ronald L. Havner, Jr., retired as CEO, the roles of Chairman and CEO were combined and held by Mr. Havner. Upon his retirement, the Board determined that Mr. Havner would remain Chairman of the Board, and the roles of Chairman and CEO have been separately held by Mr. Havner and Mr. Russell, respectively, since January 1, 2019.

Our Board established the position of Lead Independent Trustee in 2011 to provide for an independent leadership role on the Board when the roles of Chairman and CEO are combined. Notwithstanding that the Chairman and CEO roles were separated on January 1, 2019, we maintain the Lead Independent Trustee role as a matter of good corporate governance and to bolster the independence of the Board.

We describe more fully the role of the Lead Independent Trustee in our Corporate Governance Guidelines. Among other things, the Lead Independent Trustee presides at all executive sessions of the independent trustees. Our Lead Independent Trustee is David Neithercut, who was appointed in January 2021.

BOARD’S ROLE IN RISK OVERSIGHT

Our Board is responsible for overseeing our Company-wide approach to the identification, assessment, and management of key risks facing the Company. The Board recognizes its responsibility for overseeing the assessment and management of risks that may threaten successful execution of our long-term strategies.

Accordingly, in 2020, senior management, under the oversight and direction of the Board, enhanced the processes by which the Board oversees the identification and management of risks. The foundational work we completed in 2020 has better equipped both the senior management team and our Board to tackle the risks associated with the COVID-19 pandemic and other key risks affecting the Company’s ability to execute on its short- and long-term strategies and goals.

The enhanced processes include a comprehensive ERM framework focused on:

 

•

evaluating the risks facing the Company and aligning the Company’s efforts to mitigate those risks with its strategy and risk appetite;

 

•

communicating and improving the Company’s understanding of its key risks and responsive actions; and

 

•

providing the Board with a measurable way to exercise its oversight responsibilities over the Company’s risk assessment and risk management efforts.

 

30  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

Critical components of our risk oversight framework include regular assessments among risk owners to identify and assess key risks facing the Company. Our executive team calibrates risk owner assessments across each of our key risk categories and leads efforts to identify mitigation controls to reduce the Company’s exposure to risks.

Oversight for certain specific risks falls under the responsibilities of our Board committees. The committees regularly advise the full Board of their oversight activities.

The Audit Committee focuses on financial and other risks, including reputational and legal risks, affecting the Company. The Audit Committee also discusses the Company’s policies with respect to risk assessment and risk management.

 

•

Oversight of Financial Risks. The Audit Committee, which comprises entirely independent trustees and financial experts, is responsible for assisting the Board in fulfilling its oversight of the effectiveness of the accounting and financial reporting processes of the Company and audits of its financial statements, including the integrity of the Company’s financial statements; the Company’s compliance with legal and regulatory requirements; the independent registered public accountants’ qualifications, independence, and performance; and the scope and results of internal audits, the Company’s internal controls over financial reporting, and the performance of the Company’s internal audit function.

 

•

Oversight of Information Security Risks. The Audit Committee also oversees cybersecurity and other information technology risks affecting the Company. Management reports quarterly to the Audit Committee regarding information security. Three members of our Board have information security experience from their principal occupation, and we consider each member of our Audit Committee to possess information security experience by way of their oversight responsibilities over this area.

We identify and address information security risks by employing a defense-in-depth methodology that provides multiple, redundant defensive measures in case a security control fails or a vulnerability is exploited. We leverage internal resources, along with strategic external partnerships, to mitigate cybersecurity threats to the Company. We deploy both commercially available solutions and proprietary systems to manage threats to our information technology environment actively. We employ a robust information security and training program for our employees, including mandatory computer-based training, regular internal communications, and ongoing end-user testing to measure the effectiveness of our information security program. We are externally audited and certified by top information security standards, specifically for PCI DSS, to ensure we comply with this rigorous standard. We regularly engage appropriate external resources regarding emerging threats in order to navigate the diverse cybersecurity landscape.

We have experienced no material information security breaches in the last three years. As such, we have not spent any material amount of capital on addressing information security breaches in the last three years, nor have we incurred any material expenses from penalties and settlements related to a material breach during this same time.

We believe we are adequately insured against losses related to a potential information security breach, and do not carry any cybersecurity insurance.

The Compensation Committee focuses on risks related to our compensation program, including evaluating appropriate compensation incentives relating to the compensation of our executives and employees.

 

•

Oversight of Compensation Risks. The Compensation Committee annually considers a report from management on its review of potential risks related to compensation policies and practices

 

Public Storage  |  2021 Proxy Statement  |  31

Proposal 1: Election of Trustees

 

applicable to all employees. Most recently, in February 2021, the Compensation Committee considered the Company’s Annual Report on Form 10-K and also considered and discussed with management its conclusion that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on our Company.

In connection with preparing the report for the Compensation Committee’s consideration, members of our senior management team, including our CEO and Chief Administrative Officer, reviewed the target metrics for all of our employee incentive compensation plans. At the completion of the review, management and the Compensation Committee concluded that our incentive compensation plans did not create undue risks for the Company.

The Nominating, Governance, and Sustainability (NGS) Committee focuses on risks associated with succession planning, corporate governance, Board effectiveness, public policy matters, including political and charitable contributions, and Environmental, Social and Governance (ESG) matters.

Our Board and Board committees regularly receive presentations from management on risks to the business. Additionally, all trustees have access to members of management if a trustee wishes to follow up on items discussed outside of the Board or committee meeting.

BOARD ORIENTATION AND EDUCATION

Each new trustee participates in an orientation program and receives materials and briefings concerning our business, industry, management, and corporate governance policies and practices. We provide continuing education for all trustees through board materials and presentations, discussions with management, and the opportunity to attend external board education programs. In addition, all Board members have access to resources of the National Association of Corporate Directors through a Company membership.

TRUSTEE INDEPENDENCE

We require that a majority of the Board be independent in accordance with NYSE rules. To determine whether a trustee is independent, the Board must affirmatively determine that there is no direct or indirect material relationship between the Company and the trustee.

 

•

A Majority of the Board is Independent. The Board has determined that all of our trustee nominees are independent except for Ronald L. Havner, Jr., Joseph D. Russell, Jr., John Reyes, and Tamara Hughes Gustavson. The Board reached this determination after considering all relevant facts and circumstances, responses to trustee questionnaires, and transactions and relationships, if any, between us, our affiliates, our executive officers, and their affiliates, and each trustee and their affiliates.

 

•

Audit, NGS, and Compensation Committees are 100% Independent. The Audit, NGS, and Compensation Committees are composed exclusively of independent trustees. The Board determined that all members of the Audit Committee satisfied the heightened independence requirements for audit committee members, and all of the members of the Compensation Committee satisfied the heightened independence requirements for compensation committee members, in each case, in accordance with NYSE and SEC rules.

 

•

Compensation Committee Interlocks and Insider Participation. No member of the Compensation Committee (i) was, during the year ended December 31, 2020, or had previously been, an officer or employee of the Company or (ii) had any material interest in a transaction with the Company or a business relationship with, or any indebtedness, to the Company. No interlocking relationships existed during the year ended December 31, 2020, between any member of the Board or the Compensation Committee and an executive officer of the Company.

 

32  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

COMMUNICATIONS WITH THE BOARD

Shareholders and interested parties can communicate with any of the trustees, individually or as a group, by writing to them in care of Corporate Secretary, Public Storage, 701 Western Avenue, Glendale, California 91201. We will forward each communication intended for the Board and received by the Corporate Secretary related to the operation of the Company and not otherwise commercial in nature to the specified party following its clearance through normal security procedures.

TRUSTEE ATTENDANCE

The Board held 18 meetings in 2020, including telephonic meetings. We do not have a policy regarding trustee attendance at the annual meeting of shareholders, but expect trustees to attend. Nine of our twelve trustees serving on the Board at that time attended the 2020 annual meeting. Each trustee attended over 75% of the aggregate number of Board meetings and Committee meetings for the Committees on which they served, if any.

BOARD COMMITTEES

The three standing committees of the Board are Audit, Governance, and Compensation. The Board has determined that each member of the Audit, Governance, and Compensation Committees is independent in accordance with NYSE rules.

Each committee has a charter that generally states the purpose of the committee and outlines the committee’s structure and responsibilities. The committees review the adequacy of their charter annually. The following lists the number of meetings held by each committee in 2020:

 

Committee		Number of   Meetings in 2020
Audit			4
Compensation			6
Nominating, Governance, and     Sustainability (NGS)			15

The current membership information for our Board committees is as follows:

 

Audit Committee

Members: Kristy M. Pipes (Chair), Rebecca Owen, Avedick B. Poladian, and Tariq M. Shaukat

 

•

Oversees the financial accounting and reporting processes of the Company

 

•

Oversees our ERM framework and, specifically, financial, technology, and other risks relating to the Company, including steps management has taken to monitor and control financial and cybersecurity risk exposure

 

•

Monitors: (i) the integrity of our financial statements; (ii) our compliance with legal regulatory requirements); (iii) our public accounting firm’s qualifications and independence; and (iv) the performance of our internal audit function and public accountants

 

•

Responsible for the appointment, compensation, and oversight of our independent registered public accounting firm

 

•

All four members of our Audit Committee qualify as financial experts and meet the SEC and NYSE’s heightened independence requirements for audit committee members

 

Public Storage  |  2021 Proxy Statement  |  33

Proposal 1: Election of Trustees

 

Compensation Committee

Members: Avedick B. Poladian (Chair), Shankh S. Mitra, Michelle Millstone-Shroff, Ronald P. Spogli, and Paul S. Williams

 

•

Evaluates, either as a committee or together with other independent trustees, our CEO’s performance and sets the CEO’s compensation level based on this evaluation, including incentive and equity-based compensation plans

 

•

Sets the amount and form of compensation for the executive officers who report to the CEO

 

•

Administers the Company’s equity and incentive compensation plans

 

•

Reviews and discusses with management the Compensation Discussion and Analysis (CD&A) to be included in the proxy statement and to recommend to the Board inclusion of the CD&A in the Company’s Annual Report on Form 10-K and annual proxy statement

 

•

Provides a description of the processes and procedures for the consideration and determination of executive compensation for inclusion in the Company’s annual proxy statement

 

•

Produces the Compensation Committee Report for inclusion in the Company’s annual proxy statement.

 

•

Reviews management’s annual assessment of potential risks related to compensation policies and practices applicable to all employees

 

•

Oversees the advisory shareholder votes on the Company’s executive compensation programs and policies and the frequency of such votes, and evaluates the Compensation Committee’s performance annually

 

Nominating, Governance, and Sustainability (NGS) Committee

Members: Ronald P. Spogli (Chair), Leslie S. Heisz, David J. Neithercut, Kristy M. Pipes, and Paul S. Williams

 

•

Assists the Board in identifying individuals qualified to become Board members, recommending nominees to the Board to fill vacancies and new appointments, and ensuring that the Board reflects diversity of experience, skills, background, gender, race, and/or ethnicity

 

•

Prior to each annual meeting of shareholders, recommends to the Board a slate of nominees for election as trustees

 

•

Reviews and makes recommendations to the Board on Board organization and succession

 

•

Assists the Board in evaluating the performance of the Board and its committees

 

•

Conducts preliminary review of trustee independence

 

•

Reviews and makes recommendations for committee appointments to the Board

 

•

Assesses and makes recommendations to the Board on corporate governance matters

 

•

Develops and assesses the adequacy of the Corporate Governance Guidelines on an ongoing basis and recommends any changes to the Board

 

•

Periodically evaluates trustee compensation and recommends to the Board any changes in trustee compensation

 

34  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

•

Oversees trustee orientation

 

•

Oversees sustainability initiatives, including ESG matters, and related risks

 

•

Oversees political and charitable contributions and other public policy matters

In addition to our standing committees described above, in January 2021, following substantive engagement with the Company’s shareholders, including funds advised by Elliott Investment Management, L.P., the Company established an advisory Long-Term Planning (LTP) Committee. The LTP Committee is focused on the Company’s long-term planning, strategy, growth, capital allocation priorities, and capital structure management. The LTP Committee comprises the following trustees: Joseph D. Russell, Jr. (Chair), Leslie S. Heisz, Michelle Millstone-Shroff, Shankh S. Mitra, David J. Neithercut, and Rebecca Owen.

COMPENSATION OF TRUSTEES

Members of the Board who are not also Public Storage employees (non-management trustees) receive compensation for their service. The Board determines the form and amount of compensation for non-management trustees after consideration of the recommendation of either the Compensation Committee or the Governance Committee. The Board has approved the mix of cash and equity compensation described below.

Cash Retainers. Retainers are paid quarterly in cash and are prorated when a trustee joins the Board (or in the case of the Lead Independent Trustee, when an appointment is made) other than at the beginning of a calendar year. Below are the annual retainers that non-management trustees were entitled to receive during 2020 for Board service:

 

Compensation		Amount
Board member		$	120,000
Lead Independent Trustee supplemental retainer		$	20,000
Audit Committee Chair’s supplemental retainer		$	10,000
Other standing Committee Chairs’ supplemental retainer		$	5,000
Committee Member		$	7,500

Trustee Deferral Program. Pursuant to the Non-Management Trustee Compensation and Deferral Program (the Trustee Deferral Program), non-management trustees may elect to receive all or a portion of their cash retainers either in cash, in shares of unrestricted Common Stock under the 2016 Plan, or in fully-vested deferred stock units under the 2016 Plan.

Non-management trustees must make the election in writing in advance of the calendar year to which the election relates (or, when a non-management trustee joins the Board, within 30 days of joining the Board). If chosen, the shares of unrestricted stock and/or the deferred stock units will be granted to the non-management trustee at the end of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the closing price for the Common Stock on the NYSE on such date. If a non-management trustee chooses to receive fully-vested deferred stock units, the trustee’s election must also indicate (1) when the units will be settled, such as the trustee’s separation from service (including retirement), a specified future date, or January 1 of the year following a chosen anniversary of the grant date, and (2) whether the units will be settled in a lump sum or in annual installments (not to exceed 10 years). Notwithstanding a trustee’s election, the

 

Public Storage  |  2021 Proxy Statement  |  35

Proposal 1: Election of Trustees

 

deferred stock units will be settled in a lump sum upon the trustee’s earlier death or disability or upon an earlier change of control of Public Storage. In any event, the deferred stock units will be settled in shares of Common Stock.

Equity Awards. Each new non-management trustee, upon initial election by the Board or the shareholders to serve as a trustee, is granted a non-qualified stock option to purchase 15,000 shares of Common Stock at an exercise price equal to the closing price for the Common Stock on the NYSE on such date, which vests in three equal annual installments based on continued service.

Annually, each non-management trustee receives a non-qualified stock option to acquire 5,000 shares of Common Stock, which vests in three equal annual installments based on continued service. The annual grants are made immediately following the annual meeting of shareholders at an exercise price equal to the closing price for the Common Stock on the NYSE on such date.

Upon the retirement of a non-management trustee, the vesting of any equity awards granted to the trustee for his/her service on the Board and not otherwise deferred will accelerate effective on his/her retirement date from the Board. Additional terms and conditions may be set forth in the award agreement governing the non-management trustee’s equity awards. Unless otherwise defined in an award agreement, retirement is defined as either a retirement from the Board (i) in accordance with the Company’s mandatory retirement policy or (ii) at a time when the non-management trustee (x) is at least age 55, (y) has provided Services (as defined in the 2016 Plan) for a minimum of 10 years to the Company, PS Business Parks, their subsidiaries or affiliates, and (z) the sum of his or her age and years of Service is at least 80.

In addition, upon the retirement of a non-management trustee, the trustee may exercise his/her vested options during the one-year period following his/her retirement date from the Board, or, if shorter, the period from his/her retirement date from the Board until the expiration of the original term of the options. If not exercised within such period, the vested options will automatically terminate at the end of such period.

Upon the retirement of a non-management trustee, any deferred stock units received under the Trustee Program will be delivered as elected in the trustee’s election form under the Trustee Program.

Unvested equity awards (RSUs and options) held by non-management trustees who are former Public Storage executives will continue to vest under the terms of the Company’s equity incentive plan for so long as the trustee continues to provide service to the Company. Those awards will not qualify for accelerated vesting as described above upon the retirement of the non-management trustee.

TRUSTEE AND EXECUTIVE OFFICER STOCK OWNERSHIP GUIDELINES

Pursuant to the Board’s stock ownership guidelines, we expect each trustee to beneficially own Common Stock equal in market value to three times the amount of the annual retainer for board member service. We expect each executive officer to beneficially own Common Stock equal in market value to five times, in the case of the CEO, and three times, in the case of all other executive officers, his or her base salary.

Each executive officer and non-management trustee shall attain his or her ownership within five years from the date of hire, election, or promotion or, in the event the target is not attained by such date or maintained after such date, shall retain shares of the Common Stock equal in value to 50% of the net after-tax shares received upon any stock option exercise until the applicable ownership target is achieved.

 

36  |  Public Storage  |  2021 Proxy Statement

Proposal 1: Election of Trustees

 

Only shares of Common Stock owned by the non-management trustee or executive officer, the fair market value (as measured by the closing price on the NYSE, less the exercise price) of vested, in-the-money stock options held by the non-management trustee or executive officer, vested deferred stock units held by the non-management trustee, shares of Common Stock owned jointly by him/her and his/her spouse, and shares owned by his/her spouse or beneficially for his/her children or in a 401(k) plan are counted for determining compliance with these guidelines. We do not count unvested time-based RSUs, unvested stock options, or vested, out-of-the-money stock options for determining compliance with these guidelines. Refer to Share Ownership of Trustees and Management on page 67 of this proxy statement for information on beneficial ownership of shares of Common Stock by trustees and management.

The NGS Committee administers these stock ownership guidelines and may modify their terms and grant hardship exceptions in its discretion. As of the date of this proxy statement, all of our non-management trustees who have served for five years or more exceeded his/her stock ownership requirement.

2020 TRUSTEE COMPENSATION

The following table presents the compensation provided by the Company to our trustees for the fiscal year ended December 31, 2020:

 

Trustee		Fees earned or paid in cash					Option Awards(1), (2)					Total
Ronald L. Havner, Jr.			$	120,000	(3)			$	77,100				$	197,100
Tamara Hughes Gustavson			$	120,000				$	77,100				$	197,100
Uri P. Harkham			$	127,500	(4)			$	77,100				$	204,600
Leslie S. Heisz			$	135,000				$	77,100				$	212,100
B. Wayne Hughes, Jr.			$	120,000				$	77,100				$	222,100
Kristy M. Pipes			$	23,375				$	457,950	(10)			$	481,325
Avedick B. Poladian			$	145,000				$	77,100				$	222,100
Gary E. Pruitt			$	155,000				$	77,100				$	232,100
John Reyes			$	120,000	(5)			$	77,100				$	197,100
Joseph D. Russell, Jr.(6)				-					-					-
Tariq M. Shaukat			$	127,500	(7)			$	77,100				$	204,600
Ronald P. Spogli			$	140,000	(8)			$	77,100				$	217,100
Daniel C. Staton			$	140,000	(9)			$	77,100				$	217,100

(1)

Reflects the fair value of the grant on April 21, 2020, of stock options to acquire 5,000 shares of Common Stock, except for Kristy M. Pipes and Joseph D. Russell, Jr. Ms. Pipes received an initial trustee grant of 15,000 options on October 26, 2020. Mr. Russell did not receive any option award grants for 2020. For a more detailed discussion of the assumptions used in the calculation of these amounts, refer to Note 10 to the Company’s audited financial statements for the fiscal year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K.

(2)

As of December 31, 2020, each non-management trustee on such date had the following number of options outstanding: Tamara Hughes Gustavson: 40,000, of which 29,999 are fully vested and exercisable; Uri P. Harkham: 43,500, of which 43,500 are fully vested and exercisable; Ronald Havner, Jr.: 610,000, of which 481,666 are fully vested and exercisable; Leslie S. Heisz: 35,000 of which 24,999 are fully vested and exercisable; B. Wayne Hughes, Jr.: 50,000, of which 50,000 are fully vested and exercisable; Kristy M. Pipes: 15,000,

 

Public Storage  |  2021 Proxy Statement  |  37

Proposal 1: Election of Trustees

 

none of which are fully vested and exercisable; Avedick B. Poladian: 50,000, of which 39,999 are fully vested and exercisable; Gary E. Pruitt: 50,000, of which 39,999 are fully vested and exercisable; John Reyes: 530,000, of which 441,666 are fully vested and exercisable; Tariq M. Shaukat: 20,000, of which 5,000 are fully vested and exercisable; Ronald P. Spogli: 45,000, of which 34,999 are fully vested and exercisable; and Daniel C. Staton: 46,667, of which 46,667 are fully vested and exercisable. Pursuant to our Non-Employee Trustee Compensation Policy, all unvested options vested at retirement for Messrs. Harkham, Pruitt, Staton, and Hughes, Jr. Retired trustees have until the earlier of the original expiration date of the options or one year from the date of retirement to exercise their options.

(3)

Pursuant to the Company’s Trustee Deferral Program, Mr. Havner elected to receive his 2020 Board fees in deferred stock units. Each deferred stock unit represents the right to receive one share of the Company’s Common Stock. Mr. Havner received a total of 574 deferred stock units for 2020. The amount of deferred stock units granted represents the quotient of the dollar amount of the cash retainers earned for each quarter divided by the Company’s closing stock price on the grant date, rounded up to the nearest deferred stock unit. The deferred stock units will be settled in shares of unrestricted common stock (i) in a lump sum upon Mr. Havner’s separation from service as a trustee or (ii) in a lump sum upon Mr. Havner’s earlier death or disability or upon a change of control of the Company.

(4)

Pursuant to the Company’s Trustee Deferral Program, Mr. Harkham elected to receive his 2020 Board fees in unrestricted Common Stock. Mr. Harkham received a total of 611 shares of unrestricted Common Stock for 2020. The number of shares of unrestricted Common Stock granted represents the quotient of the dollar amount of the cash retainers Mr. Harkham as earned for the quarter divided by the Company’s closing stock price on the grant date, rounded up to the nearest share.

(5)

Pursuant to the Company’s Trustee Deferral Program, Mr. Reyes elected to receive his 2020 Board fees in deferred stock units. Each deferred stock unit represents the right to receive one share of the Company’s Common Stock. Mr. Reyes received a total of 574 deferred stock units for 2020. The amount of deferred stock units granted represents the quotient of the dollar amount of the cash retainers earned for each quarter divided by the Company’s closing stock price on the grant date, rounded up to the nearest deferred stock unit. The deferred stock units will be settled in shares of unrestricted common stock (i) in annual installments over 10 years beginning on January 1 following Mr. Reyes’s separation from services as a trustee or (ii) in a lump sum upon Mr. Reyes’s earlier death or disability or upon a change of control of the Company.

(6)	Joseph D. Russell, Jr., did not receive any compensation for his service as a trustee in 2020.

(7)

Pursuant to the Company’s Trustee Deferral Program, Mr. Shaukat elected to receive his 2020 Board fees in deferred stock units. Each deferred stock unit represents the right to receive one share of the Company’s Common Stock. Mr. Shaukat received a total of 611 deferred stock units for 2020. The amount of deferred stock units granted represents the quotient of the dollar amount of the cash retainers earned for each quarter divided by the Company’s closing stock price on the grant date, rounded up to the nearest deferred stock unit. The deferred stock units will be settled in shares of unrestricted common stock (i) in a lump sum upon Mr. Shaukat’s separation from service as a trustee or (ii) in a lump sum upon Mr. Shaukat’s earlier death or disability or upon a change of control of the Company.

(8)

Pursuant to the Company’s Trustee Deferral Program, Mr. Spogli elected to receive his 2020 Board fees in deferred stock units. Each deferred stock unit represents the right to receive one share of the Company’s Common Stock. Mr. Spogli received a total of 670 deferred stock units for 2020. The amount of deferred stock units granted represents the quotient of the dollar amount of the cash retainers earned for each quarter divided by the Company’s closing stock price on the grant date, rounded up to the nearest deferred stock unit. The deferred stock units will be settled in shares of unrestricted common stock (i) in a lump sum on January 1 of the calendar year following Mr. Spogli’s separation from service as a trustee or (ii) in a lump sum upon Mr. Spogli’s earlier death or disability or upon a change of control of the Company.

(9)

Pursuant to the Company’s Trustee Deferral Program, Mr. Staton elected to receive his 2020 Board fees in deferred stock units. Each deferred stock unit represents the right to receive one share of the Company’s Common Stock. Mr. Staton received a total of 670 deferred stock units for 2020. The amount of deferred stock units granted represents the quotient of the dollar amount of the cash retainers earned for each quarter divided by the Company’s closing stock price on the grant date, rounded up to the nearest deferred stock unit. The deferred stock units will be settled in shares of unrestricted common stock (i) in a lump sum upon Mr. Staton’s separation from service as a trustee or (ii) in a lump sum upon Mr. Staton’s earlier death or disability or upon a change of control of the Company. Upon Mr. Staton’s retirement at December 31, 2020, all deferred stock units were settled in shares of unrestricted common stock.

(10)	Kristy M. Pipes received 15,000 stock options upon her appointment to the Board on October 26, 2020, which will vest over three years.

 

38  |  Public Storage  |  2021 Proxy Statement

Proposal 2: Approve Executive Compensation

 

 

Proposal 2:

Advisory Vote to Approve

Executive Compensation

 

 

 

		Approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers (NEOs) as discussed and disclosed in the CD&A, the compensation tables, and any related material contained in this proxy statement.
		RECOMMENDATION:   Vote FOR the approval, on an advisory basis, of the compensation of the Company’s NEOs

 

Public Storage  |  2021 Proxy Statement  |  39

Proposal 2: Approve Executive Compensation

 

PROPOSAL 2

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

 

EXECUTIVE SUMMARY

We provide our shareholders the opportunity to vote on the compensation program for our NEOs through a nonbinding annual advisory vote (known as the “Say-on-Pay” proposal).

We believe our compensation program for NEOs helped Public Storage deliver strong performance in 2020, despite an unprecedented and challenging operating environment due to the COVID-19 pandemic. Our Compensation Committee’s determinations regarding 2020 incentive compensation were grounded in a principled, thoughtful, and comprehensive assessment our management team’s leadership during this crisis and their successful execution of strategic and operational priorities.

Accordingly, we are asking our shareholders to indicate their support for the compensation of our NEOs as disclosed in this proxy statement by voting “FOR” the following resolution:

“RESOLVED, that the shareholders of Public Storage approve, on an advisory basis, the compensation paid to Public Storage’s Named Executive Officers, as disclosed in this proxy statement for the Annual Meeting pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables.”

Although the Say-on-Pay vote is advisory and nonbinding, the Compensation Committee values the opinions of our shareholders and will continue to consider the outcome of the vote when making future compensation decisions.

VOTE REQUIRED AND RECOMMENDATION

The affirmative vote of a majority of the votes cast is necessary for the approval, on an advisory basis, of the compensation of our NEOs. For purposes of the vote on this proposal, abstentions and broker non-votes will not affect the vote.

The Board recommends a vote FOR approval

of our executive compensation

as described in this proxy statement.

 

40  |  Public Storage  |  2021 Proxy Statement

Proposal 2: Approve Executive Compensation

 

OUR NAMED EXECUTIVE OFFICERS

The following executive officers were NEOs in 2020:

 

•

Joseph D. Russell, Jr.—Please see Mr. Russell’s biography on page 26 in the section entitled Proposal 1: Election of Trustees in this proxy statement.

 

•

H. Thomas Boyle—Mr. Boyle has served as our Chief Financial Officer (CFO) since January 1, 2019. Previously, Mr. Boyle was Vice President and Chief Financial Officer, Operations, of the Company since joining the Company in November 2016. Prior to joining the Company, Mr. Boyle served in roles of increasing responsibilities with Morgan Stanley since 2005, from analyst to his last role as Executive Director, Equity and Debt Capital Markets.

 

•

Natalia N. Johnson—Ms. Johnson has served as our Chief Administrative Officer since August 2020. Previously, Ms. Johnson was Senior Vice President, Chief Human Resources Officer from April 25, 2018 and prior to that was the Senior Vice President of Human Resources, a position she held since joining the Company in July 2016. Prior to joining Public Storage, Ms. Johnson held a variety of senior management positions at Bank of America, including Chief Operating Officer for Mortgage Technology and Human Resources Executive for the Mortgage Business, and worked for Coca-Cola Andina and San Cristóbal Insurance.

 

•

Nathaniel A. Vitan—Mr. Vitan has served as Senior Vice President, Chief Legal Officer and Corporate Secretary since April 2019 and previously served as Vice President and Chief Counsel—Litigation & Operations since joining the Company in June 2016. Prior to joining Public Storage, he was Assistant General Counsel for Altria Client Services LLC from 2008 to 2016 and was a Trial and Appellate Practice attorney at Latham & Watkins LLP.

 

Public Storage  |  2021 Proxy Statement  |  41

Proposal 2: Approve Executive Compensation

 

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

This CD&A provides a detailed description of our executive compensation philosophy and program and the factors we believe shareholders should consider in evaluating our Say-on-Pay proposal.

WE DELIVERED STRONG PERFORMANCE DESPITE UNPRECEDENTED CHALLENGES FROM THE COVID-19 PANDEMIC

Despite an unprecedented and challenging operating environment caused by the COVID-19 pandemic, we delivered strong 2020 operating performance and further positioned the Company for long-term value creation.

In addition to the cyclical headwinds facing the self-storage industry, including high levels of new property development, slowing demand drivers, and strengthening expense pressures from rising property taxes, wages, and customer acquisition costs, the Company faced significant restrictions caused by COVID-19 that severely impacted our business and operations—particularly in the first half of 2020.

Despite these significant challenges, the Company delivered strong performance in 2020, including:

 

 

 

(1)	NOI, free cash flow, and Core FFO are all non-GAAP measures. Refer to pages 31 and F-30 of our Form 10-K filed on February 24, 2021 for information regarding NOI, including a reconciliation to GAAP net income. Refer to Appendix B for information regarding free cash flow and Core FFO.

Record Revenues of $2.9 billion Record NOI of $2 billion Highest Gross operating margin among self-storage REITs 12.6% 1-Year TSR Top 34% of S&P 500 REITs 23.4% 3-Year TSR Top Half of S&P 500 REITs 6.2 MM sf added through acquisitions, developments, and redevelopments $1+ billion Est. market value of properties added $9.78 Free Cash Flow per Share $10.61 Core FFO per Share Highest Return on Assets among self-storage REITs

 

42  |  Public Storage  |  2021 Proxy Statement

Proposal 2: Approve Executive Compensation

 

The Company achieved the highest rental revenue per square foot among the self-storage REITs and outperformed its self-storage REIT competitors on NOI margins, demonstrating our outperformance on operating profitability:

 

 

Rental Revenue Per Available Square Feet* 2020 $16.40 $15.94 $15.82 $13.17 Public Storage CubeSmart Extra Space Life Storage Operating Margin* 2020 NOI Per Available Square Foot* 2020 75.9% 71.3% 70.1% 66.8% $12.86 $12.28 $11.66 $8.90 Public Storage Extra Space CubeSmart Life Storage Public Storage Extra Space CubeSmart Life Storage

 

*	Same-store metrics per company disclosures. Public Storage calculations add back supervisory payroll, centralized management and share based compensation expenses to NOI in order to be consistent with competitor reporting methods. CubeSmart figures include tenant insurance income.

Our strategy of acquiring and developing high-quality properties in desirable markets, our scale, brand, and superior operating platform, and our disciplined approach to capital allocation have resulted in superior performance—even in a challenging operating environment and even as our REIT competitors enhance their reported “same store” NOI performance by including unstabilized properties in their same-store pools and a significant portion of their property operating expenses in G&A expense rather than in costs of operations.

In addition, our portfolio growth over the past two years has eclipsed the growth of our self-storage REIT competitors combined:

 

 

Portfolio Growth Square Feet Added (millions) in the Past Two Years Public Storage Extra Space CubeSmart Life Storage 13 1.5 4.7 2.5

 

Public Storage  |  2021 Proxy Statement  |  43

Proposal 2: Approve Executive Compensation

 

These strategic and operational strengths resulted in the following total shareholder returns over the one-year and three-year periods:

 

PSA Total Shareholder Returns
One Year (ended December 31, 2020)		Three Years (ended December 31, 2020)
12.56%		7.25% (annualized)
•  10th Best Performer out of 29 (Top 34% of S&P 500 REITs)   •  70th Percentile Ranking vs. S&P 500 REITs   •  18th Best Performer in the MSCI US REIT Index out of 137   •  88th Percentile Ranking vs. MSCI US REIT Index Constituents		•  13th Best Performer out of 29 (Top Half of S&P 500 REITs)   •  59th Percentile Ranking vs. S&P 500 REITs   •  45th Best Performer in the MSCI US REIT Index out of 133   •  66th Percentile Ranking vs. MSCI US REIT Index Constituents

Successful Execution of our Long-Term Strategy for Value Creation

In addition to focusing on short-term value preservation and maintaining key short-term financial performance during the COVID-19 pandemic, our leadership team successfully executed against several strategic initiatives for creating long-term value in 2020, including the following:

 

 

Growing our Scale   and   Creating Long-Term Value		•  Acquired 62 properties, adding 5.1 million square feet to our portfolio at a total cost of $796.1 million—the highest acquisition volume since 2013   •  Delivered 15 developed and redeveloped properties at a total cost of $139 million—adding 1.1 million square feet to our portfolio—through the only in-house development program among self-storage REITs   •  Maintained development pipeline for future growth of approximately $565 million   •  Signed contracts adding 37 properties to our third-party management business
Driving Superior   Operating Performance		•  Achieved average occupancy rate of 94.5% and $17.34 in rent per occupied square foot across our same-store portfolio   •  Attained lowest G&A as a percentage of revenues among self-storage REITs (1.9% for PSA versus 7.2% public competitor average)
Improving our Brand,   our Product,   and the   Customer Experience		•  Refreshed 33 properties in 3 markets through Property of Tomorrow, a comprehensive rebranding program through which we update older properties with elements of our new “Generation Five” developments   •  Deployed online, contactless eRental® leasing platform at all properties   •  Installed centralized access control and monitoring systems for gates, doors, and elevators across our portfolio   •  Released the Public Storage App, providing customers with convenient phone-based gate access, bill payment, and account management capabilities, with a 4.7 star rating on the Apple App Store   •  Achieved average of 4.8 out of 5.0 stars in Google Reviews

 

44  |  Public Storage  |  2021 Proxy Statement

Proposal 2: Approve Executive Compensation

 

Developing and   Protecting the   Wellbeing   of Our People		•  Established PS Cares Emergency Fund with enhanced employee benefits during the COVID-19 pandemic, in addition to comprehensive benefit programs   •  Completed 367,000 training events, over 68 hours per employee, to optimize internal skills development and advancement   •  Over 54,000 recognition instances as part of our employee recognition program   •  Our property personnel engagement scores improved from 4.0 to 4.2 (5 point scale)   •  Achieved diverse workforce comprising approximately 69% females and 52% people of color
Optimizing our   “Fortress”   Balance Sheet		•  Maintained “fortress” balance sheet—one of the strongest in the REIT industry—with low leverage and emphasis on retained cash flow to fund growth opportunities   •  Issued €500 million of 12-year Euro-denominated unsecured bonds in 2020 and $500 million of 5-year dollar-denominated unsecured bonds in early 2021, both at 0.875% rates   •  One of only two U.S. REITs to achieve Moody’s A2 and S&P A credit ratings

OUR COMPENSATION PHILOSOPHY AND PRACTICES ALIGN EXECUTIVE PAY WITH PERFORMANCE AND CREATION OF LONG-TERM VALUE

Both during and after the COVID-19 pandemic, the Board and the Compensation Committee believe that it is critical to Public Storage’s long-term success to:

 

•

attract and retain exceptional executives in a competitive labor market;

 

•

create the proper incentives that encourage executive share ownership and align executive compensation with Company performance and the creation of long-term value;

 

•

motivate our executives to achieve the Company’s performance goals by putting a substantial portion of each executive’s compensation “at risk” and by tying a significant portion of executive compensation to the Company’s achievement of pre-established performance criteria; and

 

•

provide a total compensation package that is competitive and appropriate to each executive’s experience, responsibilities, and performance.

 

Public Storage  |  2021 Proxy Statement  |  45

The following key features of our compensation program reflect our philosophy:

 

What We Do				What We Don’t Do
☑   Substantial portion of our NEOs’ compensation is “at risk”     ☑   High percentage of executive compensation in equity   ☑   Long equity vesting periods promote retention and align pay with long-term value creation   ☑   Robust stock ownership guidelines   ☑   Strong clawback provisions   ☑   Double-trigger for accelerated vesting of equity upon a change in control				☒   No employment, “golden parachute,” or severance agreements with our NEOs   ☒   No guaranteed bonus arrangements with our NEOs except for new hires   ☒   No excessive perquisites   ☒   No repricing of stock options   ☒   No tax gross ups   ☒   No supplemental retirement plans   ☒   No hedging against price fluctuations in the Company’s securities

VARIOUS COMPENSATION ELEMENTS INCENTIVIZE AND REWARD PERFORMANCE

Our executive compensation design is simple, effective, and links pay to performance and the creation of long-term value. We pay our NEOs a mix of cash and equity, the majority of which is “at risk” and tied to achieving performance objectives set by the Compensation Committee in light of the Company’s long-term strategy and the current business environment. We promote responsible growth and risk management and align the interests of our executives with the interests of our shareholders by using performance-based equity awards that are subject to long, above-market vesting periods as the predominant form of compensation. The main elements of our executive compensation program are as follows:

 

Compensation Type				Pay Element		Primary Objectives
Fixed   Pay		Cash Compensation		Base Salary		•  As the only fixed element of compensation, provides stable income and compensation for day-to-day responsibilities   •  Helps attract and retain exceptional talent
At-Risk   Pay				Annual Performance-Based Bonus		•  Aligns compensation with business strategy   •  Motivates and rewards achievement of annual financial, operational, and individual goals
		Equity Compensation		Performance-Based RSUs   Multi-Year Performance-Based Stock Options		•  Drive sustainable performance through achievement of predetermined financial and other goals   •  Align the interest of executives with those of shareholders   •  Help retain executive talent through extended vesting schedule (5 years)

2020 At-Risk Compensation for All NEOs. We believe that paying a significantly larger percentage of total compensation to our NEOs in performance-based cash and equity incentive awards advances our pay-for-performance compensation philosophy. The following charts depict for Mr. Russell, our CEO, and for all of our NEOs together, the split between (i) compensation tied to the achievement of performance goals, consisting of RSUs and annual cash incentive awards and (ii) compensation not tied to performance goals, consisting of base salary. The amounts below include RSUs and annual cash incentive awards that would have been paid assuming target achievement for 2020 and exclude

 

46  |  Public Storage  |  2021 Proxy Statement

Proposal 2: Approve Executive Compensation

 

one-time promotion-related RSU awards for Ms. Johnson of 2,000 RSUs. The amounts below also do not include the value of the multi-year performance based options which are subject to a three-year performance period and have not yet been earned.

 

2020 CEO Compensation

62.26% RSUs 18.87% Salary 81.13% At Risk 18.87% Bonus

 

2020 NEO Compensation

61% RSUs 19.5% Salary 80.5% At Risk 19.5% Bonus

OUR COMPENSATION PROCESS IS DISCIPLINED, BALANCED, AND RESPONSIVE TO OUR SHAREHOLDERS

The Compensation Committee determines our compensation philosophy and makes all final compensation decisions for our CEO and other NEOs. It has the authority to select, retain, and terminate advisors and other experts (including compensation consultants) as it deems appropriate. The Compensation Committee’s charter provides that the Compensation Committee may delegate its authority to members of the Compensation Committee, but to date, it has not done so. Our performance review process includes the following features:

 

1		The Board annually reviews the Company’s strategy and business plans

 

2		Company and individual performance goals consistent with the Company’s strategy and business plans are established and discussed with the Board and the Compensation Committee

 

3		The Compensation Committee periodically reviews the Company and our NEOs’ performance, consulting with the Board and our CEO as appropriate (and as detailed below)

 

4		At year end, the Compensation Committee solicits the views of the Board on the performance of all our NEOs. In addition, our CEO shares his assessment of the other NEOs’ performance against their goals and his recommendation on compensation for the Compensation Committee’s consideration

 

Public Storage  |  2021 Proxy Statement  |  47

Proposal 2: Approve Executive Compensation

 

The factors the Compensation Committee considers in making all final compensation decisions for our NEOs include:

Company Performance, Strategic Execution, and Individual Performance. The Compensation Committee considers the Company’s annual and long-term financial performance in light of operating conditions; management’s execution against the Company’s strategic plan and their goals, with a focus on management’s contributions to long-term value creation; and established priorities and goals.

Board and Management Views. The Compensation Committee solicits the views of the Board on performance of all NEOs, particularly for Mr. Russell.

The Compensation Committee also solicits Mr. Russell’s views on (1) compensation of the other NEOs and (2) Company-wide compensation matters. The Compensation Committee, at its discretion, may also solicit the views of other members of the management team, including our Chief Administrative Officer. Mr. Russell does not vote on items before the Compensation Committee and is not present during the Compensation Committee’s discussion and determination of his compensation. The Compensation Committee sets the CEO’s base salary, bonus, and equity compensation using its independent judgment and analysis.

Appropriate Pay Mix and Use of Deferred Compensation Subject to Lengthy Vesting Periods. The Compensation Committee considers what mix of cash and equity compensation attracts and retains exceptional talent and properly incentivizes management to focus on the creation of long-term value without excessive risk-taking. In this regard, the Compensation Committee believes that emphasizing the use of equity compensation (primarily in the form of RSUs and options) with long vesting periods—longer than any of our peer companies—is a highly effective way of incentivizing our executives to remain with the Company and focus on long-term value creation. Through the use of long vesting periods, we link our NEOs’ realized compensation to our long-term stock performance.

Shareholder Engagement and Feedback. We believe in maintaining an ongoing dialogue with our shareholders and seek their feedback on a wide range of issues, including our compensation practices. We currently submit an advisory vote to approve NEO compensation—i.e., a Say-on-Pay vote—to our shareholders annually.

At the 2020 annual meeting of shareholders, our shareholders approved all trustee nominees, our Say-on-Pay proposal, and the appointment of our independent registered public accounting firm.

 

48  |  Public Storage  |  2021 Proxy Statement

Proposal 2: Approve Executive Compensation

 

The Compensation Committee will also consider the feedback it received, and additional feedback it receives through the Company’s ongoing shareholder engagement efforts, in future decisions on executive compensation matters. The Compensation Committee responded to shareholder feedback in 2019 and adjusted our compensation program. These changes were well-received, as evidenced by our Say-on-Pay proposal receiving 92.6% support in 2020.

Say-on-Pay History

 

 

98.0% 94.5% 93.2% 69.1% 92.6% 2016 2017 2018 2019 2020 Previous Compensation Programs Compensation Committee redesigned the senior management compensation program based on feedback received from shareholder outreach efforts Following strong shareholder support, the Compensation Committee made minor adjustments to further enhance the design of the compensation program

Compensation Surveys and Other Market Data. Each component of compensation we pay to our NEOs—salary, cash bonuses, and equity—is based on the Compensation Committee’s assessment of each individual’s job scope and responsibilities and consideration of market compensation. In balancing these and other considerations, including the feedback of our shareholders, the Compensation Committee uses comparison data from various companies to guide in its review and determination of the various components of our executive compensation plans, including total target compensation and the appropriate mix of cash and equity compensation. The Compensation Committee uses market compensation information to:

 

•

understand how other public companies design executive compensation plans to align executive pay with long-term value creation; and

 

•

assist the Company in offering competitive compensation levels to attract and retain exceptional executives in the diverse industry sectors within which we compete for executive talent.

Market data is part of the diverse toolkit the Compensation Committee uses to set fair and competitive compensation levels that help drive the creation of long-term value while mitigating undue risk-taking and attracting and retaining top talent.

 

Public Storage  |  2021 Proxy Statement  |  49