(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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1.
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To elect ten directors to serve on the Board of Directors until the 2021 annual meeting of stockholders and until their successors are duly elected and qualify.
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2.
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To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2020.
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3.
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To approve, in a non-binding advisory vote, our named executive officer compensation for 2019.
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4.
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To approve amendments to the Douglas Emmett Inc. 2016 Omnibus Stock Incentive Plan.
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5.
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To transact such other business as may properly come before our Annual Meeting or any adjournments thereof.
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By Order of the Board of Directors,
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||
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/s/ Jordan L. Kaplan
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/s/ Melinda D. Mehringer
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Jordan L. Kaplan
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Melinda D. Mehringer
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President and Chief Executive Officer
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Secretary
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PROXY STATEMENT
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TABLE OF CONTENTS
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PAGE
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1.
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To elect ten directors to serve on the Board of Directors until the 2021 annual meeting of stockholders and until their successors are duly elected and qualify.
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2.
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To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2020.
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3.
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To approve, in a non-binding advisory vote, our named executive officer compensation for 2019.
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4.
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To approve amendments to the Douglas Emmett Inc. 2016 Omnibus Stock Incentive Plan.
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5.
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To transact such other business as may properly come before our Annual Meeting.
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•
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If you hold your shares in your name as of the close of business on the record date for the Annual Meeting, or have received a Proxy Card, please click “Registration for Registered Holders” and enter your name, phone number, Control Number (contained on your Proxy Card) and email address.
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•
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If you hold your shares through a bank, broker or other nominee, please click “Registration for Beneficial Holders” and enter your name and email, and click submit. You will also need to upload or e-mail to VirtualMeeting@viewproxy.com a copy of a legal proxy from your bank, broker or other nominee, or a copy of your Proxy Card, voter instruction form or your brokerage statement. If you hold your shares through a bank, broker or other nominee, and you wish to vote in person at the Annual Meeting, you must submit a copy of your legal proxy from your bank, broker or other nominee. If you have not obtained a legal proxy from your bank, broker or other nominee and do not wish to vote in person at the Annual Meeting, you must still register to attend Annual Meeting.
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Common stock(1)
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Name and Address of Owner(2)
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Number of Shares
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Percent of Class(1)
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Jordan L. Kaplan(3)
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10,960,436
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6.0%
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Kenneth M. Panzer(4)
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8,518,484
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4.7%
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Christopher H. Anderson
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5,732,392
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3.2%
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Dan A. Emmett (5)
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5,391,032
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3.0%
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Leslie E. Bider
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229,683
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*
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Kevin A. Crummy
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185,647
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*
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Thomas E. O'Hern
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95,311
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*
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William E. Simon, Jr.
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82,315
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*
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Dr. David T. Feinberg
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45,455
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*
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Virginia A. McFerran
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18,195
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*
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Peter D. Seymour
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—
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*
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Johnese M. Spisso
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—
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*
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The Vanguard Group, Inc.(6)
100 Vanguard Blvd., Malvern, PA 19355
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24,747,884
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14.1%
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BlackRock, Inc.(7)
55 East 52nd Street, New York, NY 10055
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20,038,124
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11.4%
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All officers, directors and nominees as a group (12 persons)
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31,258,950
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15.9%
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1.
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Pursuant to Item 403 of Regulation S-K, the number of shares listed for each individual reflects their beneficial ownership except as otherwise noted. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of shares that such person or group has the right to acquire within 60 days after the Record Date. The beneficial ownership in the table includes the following share equivalents:
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2.
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Mr. Emmett is the Chairman of our Board, Mr. Kaplan is our President and Chief Executive Officer ("CEO") and a Director, Mr. Panzer is our Chief Operating Officer ("COO") and a Director, Mr. Crummy is our Chief Investment Officer ("CIO"), and Mr. Seymour is our Chief Financial Officer ("CFO"). Messrs. Anderson, Bider, O'Hern, Simon and Feinberg and Mses. McFerran and Spisso are independent members of our Board.
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3.
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Mr. Kaplan disclaims beneficial ownership of 758,981 shares of common stock owned by The Martha and Irv Kaplan Family Foundation, a California tax-exempt charitable organization. Mr. Kaplan is the sole director of the foundation, with sole voting and dispositive power over the common stock held by the foundation.
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4.
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Mr. Panzer disclaims beneficial ownership of 770,711 shares of common stock owned by The Panzer Family Foundation, a California tax-exempt charitable organization. Mr. Panzer is the sole director of the foundation, with sole voting and dispositive power over the common stock held by the foundation.
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5.
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Mr. Emmett disclaims beneficial ownership of (i) 788,672 shares of common stock owned by the Emmett Foundation, a California tax-exempt charitable organization, of which Mr. Emmett is the president with voting and dispositive power, and (ii) 66,000 shares of common stock owned by certain trusts for Mr. Emmett's children of which Mr. Emmett is a trustee, with voting and dispositive power. Mr. Emmett also disclaims beneficial ownership of the following share equivalents: 770,126 OP Units owned by trusts for Mr. Emmett's spouse and children of which Mr. Emmett is a trustee.
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6.
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Based solely on information disclosed in the Schedule 13G/A filed with the Securities and Exchange Commission ("SEC") on February 11, 2020 by The Vanguard Group (“Vanguard”), which reported that Vanguard had the (i) sole power to vote 258,904 shares, (ii) shared power to vote 190,557 shares, (iii) sole dispositive power with respect to 24,494,170 shares and (iv) shared dispositive power with respect to 253,714 shares.
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7.
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Based solely on information disclosed in the Schedule 13G/A filed with the SEC on February 4, 2020 by BlackRock, Inc., which reported that it had sole voting power with respect to 19,269,362 shares and sole dispositive power with respect to all of the beneficially owned shares disclosed.
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Name
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Age
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Title
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Audit Committee
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Compensation Committee
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Nominating & Corporate Governance Committee
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Dan A. Emmett
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80
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Chairman of our Board of Directors
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Jordan L. Kaplan
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58
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Director, CEO and President
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Kenneth M. Panzer
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59
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Director and COO
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Christopher H. Anderson
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77
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Director
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Member
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Leslie E. Bider
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69
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Director
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Member
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Chair
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Dr. David T. Feinberg
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58
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Director
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Member
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Virginia A. McFerran
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56
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Director
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Chair
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Thomas E. O'Hern
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64
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Director
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Chair
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William E. Simon, Jr.
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68
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Director
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Member
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Member
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Johnese M. Spisso
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59
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Director
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Member
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•
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Strong Internal Growth. In 2019, we grew our Funds From Operations ("FFO")(1) by 6.3%, our Adjusted Funds from Operations ("AFFO")(2) by 18.0%, and our same property cash net operating income ("Same Property Cash NOI")(3) by 7.5%, and increased our dividend for 2020 by 8%. We signed 804 office leases and achieved straight-line rent roll-up of 27.6% and cash rent roll-up of 10.1%. Our FFO per share growth has significantly outpaced that of our Office Peer Group(4) in the 13 years since our IPO:
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Excellent General & Administrative (G&A) Expenses and Leasing Cost Control. In 2019, our G&A expenses were only 4.1% of our revenues, significantly less than the average of 8.9% for our Office Peer Group. Our leasing costs (recurring capital expenditures, tenant improvements and leasing expenses) were only 8.3% of our revenues, versus the average of 14.0% for our Office Peer Group. We also provide very limited perquisites for our executive officers (described below in Compensation Discussion and Analysis), which contributes to our low general and administrative expenses.
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Excellent Long-Term Total Shareholder Return (TSR). We continue to have excellent long-term TSR, outperforming the median of our Benchmark Group1 in all periods, ranking 2nd overall out of the 13 companies since our Initial Public Offering (IPO), and in the top five for the one-year, three-year and five-year periods.
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Strong Link Between Pay and Performance. Performance-based pay represents a substantial majority of the compensation of our named executive officers. At the beginning of each year, our Compensation Committee approves written Operating and Financial Goals, as well as a target for our FFO, which we then disclose in our proxy statement. At the end of each year, our Compensation Committee determines our named executive officers' compensation based on the achievement of those goals, our financial results (in the form of FFO) as well as our acquisitions, dispositions and development and redevelopment activities during the year and (when appropriate and disclosed) other factors. In 2019, only 11% of our CEO and COO’s compensation, and only 34% of the compensation of our other named executive officers, was guaranteed, with the remainder determined based on performance during the year in the discretion of our Compensation Committee at the end of the year.
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•
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Responsiveness to Our Stockholders. We engage with our stockholders every year to solicit feedback on our named executive officer compensation structure. Since our last meeting, we have reached out to the holders of approximately 85% of our stock, and spoke directly to the holders of approximately 65% of our stock, including 12 of our top 15 holders. The Chair of our Compensation Committee personally led engagement meetings with stockholders who own more than 46% of our common stock, including 8 of our 10 largest holders. As a result of our engagement, we have made several changes this year to our Compensation Committee's process for setting named executive officer compensation (for more information see “Executive Compensation,” including the Compensation Discussion and Analysis section).
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•
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Incentive Compensation Paid in Restricted Equity. We believe that our named executive officer compensation program should align incentive compensation opportunities with the interests of our stockholders. In 2019, our CEO and COO received 100% (and our other named executive officers received 93%) of their incentive-based compensation in the form of restricted LTIP Units. This directly ties the compensation for our named executive officers to the interests of our stockholders.
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•
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Substantial Transfer Restrictions Align Compensation with Long-Term Stockholder Value. In order to tie the interest of our executive team with the interests of our stockholders, we require that our executive officers hold their equity grants for many years:
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◦
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Transfer is restricted for a minimum of four years, and up to seven years, after grant.
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◦
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Transfer is also restricted unless our future stock price exceeds 102% of the price on the grant date; if the hurdle is not reached within 10 years, the grant is forfeited.
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Significant Long-Term Equity Ownership Creates a Strong Tie to Our Stockholders. On March 30, 2020 our executive officers (including our named executive officers) and directors held approximately 17% of our outstanding share equivalents (common stock, OP Units and LTIP Units), with a market value of $1.0 billion based on the closing price of our stock on March 30, 2020. All of our executive officers and directors are in compliance with our share ownership and retention policy (see “Corporate Governance-Equity Ownership Guidelines”).
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Replenishment of Available Shares. The Plan Amendment increases the maximum number of shares of our common stock for issuance under our 2016 Plan by 9,500,000 shares, which would bring the total number of shares of our common stock available for future awards under the Amended Plan to 11,330,440 shares (subject to adjustment as set forth in the Amended Plan). The Amended Plan will continue to count full value awards as two shares, so that this will allow us to grant approximately 5.7 million LTIPs.
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•
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Confirmation of Best Practices. The Plan Amendment makes explicit that:
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◦
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Shareholder approval is required for any exchange of “underwater” stock option or stock appreciation right awards for cash or other awards; and
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◦
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The full number of shares subject to stock appreciation rights are counted against the 2016 Plan’s share reserve.
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•
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Adjustments for Recent Rule Changes. In response to rule changes since the adoption of the 2016 Plan:
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◦
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The performance-based award provisions in the 2016 Plan would be adjusted to reflect the recent elimination of the “performance-based compensation” exception to Section 162(m) of the Internal Revenue Code of 1986 (the “Code”), while retaining certain governance best practices; and
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◦
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The withholding provisions of the 2016 Plan would be adjusted to permit grantees to use shares of the Company’s common stock (including part of the grant involved) to satisfy tax withholding up to the highest marginal tax rate rather than the lowest tax rate.
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•
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Recruitment and Retention. The Plan Amendment will enable us to continue to attract, retain, motivate and reward our key officers, employees, consultants and directors consistent with market practice. The Plan Amendment will also enable us to continue our broad-based equity program for all employees, at all levels of the Company. We believe this approach has been very successful: in 2019, 470 out of our approximately 700 total employees were granted equity. The Company has found that retention for employees who received equity as part of their annual bonus is almost 30% higher than for employees who received cash-only bonuses.
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Alignment with Stockholder Interests and Pay-for-Performance. Equity and equity-linked awards serve to align the interests of our key officers, employees, consultants and directors with those of our Company and its stockholders, focus our key officers, employees, consultants and directors on driving stockholder value creation, and further link pay with performance.
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•
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Competitive Advantage. We view equity and equity-linked awards as a crucial component of our compensation program, which enable us to remain competitive within our industry in attracting and retaining key talent, as equity-based compensation for executives is customary among public companies.
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Reasonable Share Reserve. When approved in 2016, our 2016 Plan authorized up to 8.4 million shares of our common stock for all awards. Over the past four years, we have granted approximately 3.3 million LTIP Units under the 2016 Plan (we have not made any other type of awards). However, because full value awards like LTIP Units count as two shares under the 2016 Plan, these grants reduced the available shares by 6.7 million share equivalents. As a result, without the Plan Amendment, we have less than 1 million LTIP Units available for future grants. Under the Amended Plan, we will have approximately 11.3 million shares of our common stock available for future equity grants, which translates into up to a maximum of approximately 5.7 million LTIP Units. We believe this is a reasonable share reserve that will enable us to attract, retain, motivate and reward our key officers, employees, consultants and directors.
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•
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No Liberal Share Recycling. The Amended Plan does not contain liberal share recycling provisions, either for “full value” awards, options, or stock appreciation rights.
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•
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Three-Year Average Burn-Rate. During the last three years, we granted awards covering an average per year of approximately 0.5% of our outstanding common share equivalents.
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•
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Estimated Plan Duration. Based on the dollar value of the issuances during the last three years and the current stock price, there would be enough shares under the Amended Plan to last approximately four annual performance cycles.
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•
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CEO's Proportion of Performance-Conditioned Awards. All of the equity awards received by our CEO during the last three years were awarded based on achievement of goals disclosed in our proxy statements.
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•
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No Repricing or Cash Buyout of Underwater Options. The Amended Plan does not permit the repricing, cash buyout, replacement or re-granting through cancellation, modification or exchange of underwater options without stockholder approval.
|
•
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No “Undermarket” Options or Stock Appreciation Rights. Options and stock appreciation rights must be granted with an exercise price that is not less than 100% of the fair market value of the shares of common stock underling the award on the date of grant.
|
•
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Appropriate Share Counting. “Full value” awards (such as restricted stock and deferred stock awards) are counted against the Amended Plan maximum share limit as two shares (rather than one), while options and stock appreciation rights are counted as one share. The full number of shares underlying each award are counted against the Amended Plan maximum share limit, including any shares applied to the purchase of shares and/or payment of taxes and the full number of shares underlying stock appreciation rights (rather than net shares issued).
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•
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Individual Limits. No more than 2,000,000 shares underlying options and no more than 1,000,000 shares under “full value” awards may be granted to any one participant in any calendar year. No more than $500,000 in value of awards may be provided to any non-employee director in any calendar year.
|
•
|
Clawback of Awards. The Company will seek repayment or recovery, as appropriate, of any award paid to an executive officer of the Company (or to his or her spouse or beneficiary) to the extent overpaid as a result of financial results that must be restated and where the executive officer engaged in fraud or intentional misconduct related thereto.
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•
|
Not Evergreen. Our Amended Plan is not “evergreen;” awards may not be made under it after 2026.
|
•
|
Limited Transferability. Our Amended Plan generally prohibits the transfer of awards, and only allows the participant to exercise an award during his or her lifetime, although our Compensation Committee may allow certain transfers to family members or estate planning vehicles of which family members are the only partners or beneficiaries.
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•
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No Increase to Shares Reserved for Issuance without Stockholder Approval. The Amended Plan prohibits any material amendments to the Amended Plan that increase the total number of shares of common stock that may be reserved for issuance thereunder without stockholder approval.
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•
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Shares of common stock underlying any awards that are forfeited, canceled or otherwise terminated (other than by exercise) are added back to the shares of common stock available for issuance under the Amended Plan on the same basis (either two-for-one or one-for-one) as such shares were charged against the maximum share limit upon grant.
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•
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Shares tendered or held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding are not available for future issuance under the Amended Plan.
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•
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Shares of common stock and stock equivalents repurchased with any cash proceeds from option exercises are not added back to the shares available for grant under the Amended Plan.
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•
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Upon exercise of stock appreciation rights, the gross number of shares exercised are deducted from the total number of shares remaining available for issuance under the Amended Plan.
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2019 Named Executive Officers and Current Positions
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Number of LTIP Units(1)
|
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Dollar Value(2)
|
|||
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|
|||
Dan A. Emmett, Chairman of the Board
|
|
—
|
|
|
$
|
—
|
|
Jordan L. Kaplan, President and CEO
|
|
—
|
|
|
—
|
|
|
Kenneth M. Panzer, COO
|
|
—
|
|
|
—
|
|
|
Kevin A. Crummy, CIO
|
|
—
|
|
|
—
|
|
|
Peter D. Seymour, CFO
|
|
—
|
|
|
—
|
|
|
All current executive officers as a group
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|||
Current non-executive officer directors
|
|
|
|
|
|||
Christopher H. Anderson
|
|
—
|
|
|
$
|
220,000
|
|
Leslie E. Bider
|
|
—
|
|
|
235,000
|
|
|
Dr. David T. Feinberg
|
|
—
|
|
|
220,000
|
|
|
Virginia A. McFerran
|
|
—
|
|
|
235,000
|
|
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Thomas E. O’Hern
|
|
—
|
|
|
242,500
|
|
|
William E. Simon, Jr.
|
|
—
|
|
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220,000
|
|
|
Johnese. M. Spisso
|
|
—
|
|
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220,000
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|
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Current non-executive officer directors as a group
|
|
—
|
|
|
$
|
1,592,500
|
|
|
|
|
|
|
|||
Non-executive officer employees as a group
|
|
—
|
|
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$
|
—
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|
|
|
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|
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2019 Named Executive Officers and Current Positions
|
|
Number of LTIP Units
|
|
|
|
|
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Dan A. Emmett, Chairman of the Board
|
|
12,513
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Jordan L. Kaplan, President and CEO
|
|
1,093,118
|
|
Kenneth M. Panzer, COO
|
|
1,093,118
|
|
Kevin A. Crummy, CIO
|
|
205,136
|
|
Peter D. Seymour, CFO
|
|
95,766
|
|
All current executive officers as a group
|
|
2,499,651
|
|
|
|
|
|
Current non-executive officer directors
|
|
|
|
Nominees for election as director
|
|
|
|
Christopher H. Anderson
|
|
20,005
|
|
Leslie E. Bider
|
|
21,507
|
|
Dr. David T. Feinberg
|
|
26,074
|
|
Virginia A. McFerran
|
|
20,463
|
|
Thomas E. O’Hern
|
|
22,258
|
|
William E. Simon, Jr.
|
|
21,164
|
|
Johnese. M. Spisso
|
|
6,698
|
|
Associates of any such directors, executive officers or nominees
|
|
—
|
|
Other persons who received or are to receive 5% of such LTIP Units
|
|
—
|
|
|
|
|
|
All non-executive officer employees as a group
|
|
138,169
|
|
|
|
|
Title
|
|
Share Equivalents
|
|
Multiple of Salary/Retainer
|
|
|
|
|
|
CEO
|
|
200,000
|
|
4x
|
Other executive officers
|
|
50,000
|
|
3x
|
Directors
|
|
10,000
|
|
3x
|
Name
|
|
Age(1)
|
|
Title
|
|
|
|
|
|
Dan A. Emmett(2)
|
|
80
|
|
Chairman of the Board of Directors
|
Jordan L. Kaplan(2)
|
|
58
|
|
President and CEO
|
Kenneth M. Panzer(2)
|
|
59
|
|
COO
|
Kevin A. Crummy(3)
|
|
54
|
|
CIO
|
Peter D. Seymour(4)
|
|
51
|
|
CFO
|
(1)
|
Age as of the Record Date.
|
(2)
|
Biographical information regarding Messrs. Emmett, Kaplan and Panzer is set forth above under “Election of Directors (Proposal 1) - Information Concerning Current Directors and Nominees”.
|
(3)
|
Kevin A. Crummy. Kevin A. Crummy is our CIO. Prior to joining us in 2014, Mr. Crummy spent 20 years at Eastdil Secured, a real estate investment banking company which provided brokerage services to us. Mr. Crummy was a Managing Director responsible for sales and recapitalizations in Los Angeles, Hawaii and other major West Coast markets, and also led the Eastdil Secured team that sourced Asian based capital for real estate transactions in the United States and Europe. Mr. Crummy holds a Bachelor of Business Administration and a Master of Science in Real Estate and Urban Land Economics from the University of Wisconsin School of Business.
|
(4)
|
Peter D. Seymour. Peter D. Seymour was appointed CFO on February 28, 2019. Prior to joining us in 2017 as our Chief Strategic Officer, Mr. Seymour spent 20 years at The Walt Disney Company, where he had served as Executive Vice President and CFO of the Disney-ABC Television Group. Mr. Seymour holds a Bachelor of Arts degree from Stanford University and an M.B.A. from Stanford Graduate School of Business.
|
•
|
Dan A. Emmett - Chairman of the Board
|
•
|
Jordan L. Kaplan - President and CEO
|
•
|
Kenneth M. Panzer - COO
|
•
|
Kevin A. Crummy - CIO
|
•
|
Peter D. Seymour - CFO
|
•
|
Mona Gisler - Former CFO
|
Compensation Element
|
Primary Objective
|
Key Feature
|
Base Salary
|
To provide a regular source of income at market comparable rates so executives can focus on day-to-day responsibilities.
To recognize ongoing performance of job responsibilities.
|
Competitive pay, taking into account job scope, position, knowledge, tenure, skills and experience.
Salaries for our CEO & COO have not increased since 2008.
|
Long-Term Incentives
|
To emphasize long-term performance objectives, recognizing that our capital investments in acquisitions and development take multiple years to reach full stabilized performance.
To encourage creation of long-term stock value and further align the interest of our executives with stockholder interests.
To retain key executives through the performance and vesting periods.
|
For 2019, 89% of our CEO and COO's total compensation was paid in long-term restricted equity based on their performance during the year as well as total shareholder return across both short and long term periods.
100% of the equity grants are "at risk" and subject to a future stock performance hurdle.
100% of the equity grants are restricted from transfer for a minimum of four and up to seven years after grant.
|
Perquisites
|
To use minimal perquisites to help executives focus on company responsibilities.
|
Our perquisites are lower than the average for our benchmark group, consisting only of car allowances and minor use of executive assistants for personal matters.
|
•
|
We Pay for Performance: We believe in compensating our named executive officers based on their performance (“pay for performance”). We tie our management's compensation directly and substantially to both our assessment of their performance in the year of grant, as well as to the future performance of our stock. Thus, approximately 89% of our CEO's and COO's total annual compensation in 2019, and approximately 60% of our other named executive officers' compensation in 2019, was in the form of contingent restricted equity, the amount of which was based on our Compensation Committee's evaluation of their performance during 2019. The restricted equity grants are subject to a future stock performance hurdle, and are restricted from transfer for a minimum of four and up to seven years after grant. In this year's proxy, we have added transparency to the methodology used by the Committee in determining 2019 performance and associated compensation.
|
•
|
We Reward Long Term Value Creation: We manage our business with a focus on long-term value creation. Our acquisitions and development projects typically take many years to complete and stabilize. For example, we started working on entitlements for our Landmark II apartment development in Brentwood in 2012, started construction in 2018, and currently expect to start renting delivered units in 2022. Building and maintaining our unique operating platform also depends on long-term investments. We believe that our named executive officers' compensation should align incentive compensation opportunities with the Company's corporate strategies, business objectives and the creation of long-term value for our stockholders without encouraging unnecessary or excessive risk-taking. Accordingly, we look at performance not only for the latest year and on a year-over-year basis, but also with a view to managing compensation to appropriately compensate, incentivize and retain our executives for long term achievements.
|
•
|
We Avoid Mechanical Formulas: Our strategy of creating long-term value for investors differs from that of many of our competitors in the office REIT segment and informs our approach to assessing performance. We do not rely on a strict formulaic framework for measuring performance against our annual goals to determine compensation in a particular year. Rather than relying on a purely quantitative "actual versus short-term target" framework," our Compensation Committee combines a balanced quantitative and qualitative assessment against pre-established short and longer-term goals because this approach allows it to:
|
◦
|
Evaluate management’s performance annually while taking into account long-term value creation;
|
◦
|
Avoid situations where management focuses on the selected metrics to the detriment of real performance or where a mechanical formula produces anomalous results;
|
◦
|
Take into account management's success in addressing business conditions and unforeseen developments during the year that impact actual performance against the original goals;
|
◦
|
Factor in its analysis of the level of risk incurred against the actual and potential benefits gained; and
|
◦
|
Properly emphasize quantitative results while also considering qualitative factors.
|
•
|
We Pay Almost all Compensation in Restricted Equity: We pay most of our executives' compensation in the form of long-term restricted equity (LTIP) awards (100% of 2019 incentive compensation for our CEO and COO - representing 89% of their total annual compensation, and 93% for our other named executive officers - representing 60% of their total annual compensation). All of the equity grants we made in 2019 were performance based, with the amount granted reflecting our Compensation Committee's evaluation of the grantee's performance during 2019. Our Compensation Committee believes that equity should generally be granted at the end of the performance period after evaluating actual performance rather than at the beginning of the measurement period where a failure to perform might require forfeiture. In addition, even though these annual equity grants are compensation for the year that has just ended, as described below all of the equity grants are subject to further future performance hurdles, vesting periods, and significant restrictions on transfer designed to align executives' incentives with shareholder focus on long-term value creation.
|
•
|
We Provide Competitive Compensation: We believe we must design our pay to enable us to attract and retain talented and experienced executives. To do this, we “benchmark” our CEO and COO's compensation by regularly reviewing industry trends and level of compensation of our competitors, including our Benchmark Group, and use this information to assist us in determining the appropriate amounts, types and mix of compensation for our CEO and COO while taking into account our unique management strategy and the skill set required to implement that strategy. Throughout this Proxy Statement, we refer to this practice as “benchmarking.”
|
•
|
We Discourage Excessive Risk: We seek to structure compensation to discourage excessive risk-taking and to encourage ethical and social responsibility. The inclusion of benchmarking and multiple goals, and exclusion of a mechanical formula, reduces the possibility that a formula produces uncapped excessive compensation, and allows our Compensation Committee to factor into its compensation decisions its analysis of the risks taken to achieve the results. By awarding restricted equity (LTIP Units), rather than options or outperformance plans, we reduce the potential that outsized rewards and limited downside will induce excessive risk taking.
|
•
|
We Follow Compensation Best Practices: We strive to implement best practice compensation and governance-related policies to encourage ethical and social responsibility:
|
◦
|
Clawback Policy. We have a “clawback” policy under which we can recoup incentive compensation paid on the basis of financial results that are subsequently restated.
|
◦
|
Pledges Restricted. We discourage pledges of our securities by our management, allowing them only if our Audit Committee determines on a case-by-case basis that the loan can be repaid without resort to the pledged securities.
|
◦
|
Hedging Prohibited. We do not permit hedging of our securities by our management.
|
◦
|
Equity Contingent on Continued Employment. All of our equity grants vest over three or more years.
|
◦
|
Significant Holding Requirements for Equity Grants. We restrict our executive officers from transferring their equity awards for a minimum of four years, and up to seven years, after grant.
|
◦
|
Robust Stock Ownership Guidelines. As of March 30, 2020, our directors and executive officers owned approximately 17% of our outstanding share equivalents (common stock, OP Units and LTIP Units), with a market value of $1.0 billion.
|
◦
|
No Single Triggers on Change of Control. We do not have any single trigger change of control provisions.
|
◦
|
No Evergreen Contracts. None of our executives has an evergreen employment contract.
|
◦
|
No Tax Gross Ups. None of our executives has any tax gross-ups with respect to payments made in connection with a change of control.
|
◦
|
No Guaranteed Incentives or Salary Increases. The vast majority of total compensation (89% in 2019) is variable pay (i.e., not guaranteed) and salaries comprise a small portion of our CEO's and other named executive officers' total compensation opportunity.
|
◦
|
Low Perquisites. We minimize perquisites and other benefits, with the amounts for our CEO and other named executive officers' well below the average of our Benchmark Group.
|
◦
|
Independent Compensation Consultant. Our Compensation Committee retains an independent compensation consultant to assist it in its analysis. See "Role of Compensation Consultants" further below,
|
◦
|
No Stock Option Repricing. We do not allow repricing of stock options.
|
Factor
|
Description
|
Weight
|
Achievement of Operating Goals
|
Our Compensation Committee evaluated whether our management achieved the specific operating and financial goals set by our Compensation Committee at the beginning of 2019.
|
25%
|
Achievement of FFO Target
|
Our Compensation Committee evaluated whether our management achieved the quantitative FFO(1) target set by our Compensation Committee at the beginning of 2019. We use FFO as a performance yardstick because many of our investors use it to compare our operating performance with that of other Real Estate Investment Trusts ("REITs"). In evaluating management's performance, our Compensation Committee looked at the “quality” of our FFO as well as its absolute amount, recognizing that increases in leasing fundamentals, for example, may (or may not) reflect better management performance than increases that are solely attributable to acquisitions.
|
25%
|
External Business Activities
|
Our Compensation Committee evaluated our external business activities during the year, which included the effectiveness and financial results of acquisitions, financings and development and redevelopment activities. Our Compensation Committee did not set any numeric targets for these activities at the beginning of the year, since the best course of action necessarily depends on market developments, including the availability and pricing of opportunities, during the year. Our Compensation Committee believes it is equally important that we avoid bad acquisitions as it is that we make good acquisitions.
|
25%
|
TSR and other factors
|
Our Compensation Committee also reviewed our TSR, which includes share price appreciation and dividends, on an absolute basis and relative to the TSR of a benchmark group of public REITs, described below (our “Benchmark Group”). Our Compensation Committee also considered whether to take into account any additional factors beyond those identified at the beginning of the year.
|
25%
|
Alexandria Real Estate Equities, Inc.
|
Apartment Investment and Management Co.
|
Boston Properties, Inc.
|
Columbia Property Trust, Inc.
|
Digital Realty Trust, Inc.
|
Empire State Realty Trust, Inc.
|
Hudson Pacific Properties, Inc.
|
Kilroy Realty Corporation
|
Paramount Group, Inc.
|
Piedmont Office Realty Trust, Inc.
|
SL Green Realty Corp.
|
UDR, Inc.
|
Vornado Realty Trust
|
|
|
•
|
Institute additional upgraded information technology systems.
|
Achieved
|
During 2019, we upgraded and migrated to the cloud our construction accounting solution, consolidated our new residential acquisition onto our standardized operating platform, rolled out new internal management dashboards, and initiated an overall upgrade of user workstations.
|
•
|
Reduce energy consumption per square foot across our office portfolio.
|
Achieved
|
In 2019, we reduced electrical consumption per square foot another 2%, despite an increase in occupancy. We have reduced electrical consumption per square foot by over 22% since 2009.
|
•
|
Maintain high levels of tenant satisfaction as measured by our annual tenant surveys.
|
Achieved
|
In 2019 we maintained a 4.2 out of a possible 5.0 tenant satisfaction score based on responses from about 1,750 office tenants and 1,400 residential tenants.
|
•
|
Limit our G&A expenses to a percentage of revenue in the lower half of comparable REITs.
|
Achieved
|
For the year ended December 31, 2019, our general and administrative expense remained in the lower half of comparable REITs as a percentage of revenue. We limited our G&A to 4.1% of revenue, about half of the 8.9% average for our Office Peer Group.
|
•
|
Achieve a leased rate in our office portfolio that exceeds the Class A office average in our submarkets.
|
Achieved
|
The leased rate of our office portfolio as of December 31, 2019 exceeded the average for Class A office buildings in our submarkets (based on external estimates) by more than 200 basis points, despite the fact that we represent an average of more than 39% of those markets.
|
•
|
Increase rents in our office portfolio.
|
Achieved
|
During the year ended December 31, 2019, we increased in-place rent per square foot for the entire office portfolio by 4%. Rent roll up for the year was 28% on a straight line basis and 10% on a cash basis.
|
•
|
Increase rents in our multi-family portfolio.
|
Achieved
|
During the year ended December 31, 2019, we increased in-place rent per unit in our residential portfolio by almost 1%.
|
•
|
Complete Phase II of our Moanalua Apartment development.
|
Achieved
|
We completed Phase II of our Moanalua Apartment development in early 2019. We completed leasing the entire development by mid-October, ahead of year-end target.
|
•
|
Make substantial progress on construction of The Landmark apartment high-rise in Brentwood.
|
Achieved
|
As of year-end we have achieved all critical milestones, including completing the foundation work for the tower and commencing vertical construction.
|
•
|
Make significant progress on the conversion of Hawaii office to a multi-family property.
|
Achieved
|
We commenced on site construction of our Hawaii conversion after successfully vacating four full floors of tenants, relocating many to our other properties. We completed demolition on those floors in early October and construction of units is on track for initial delivery in 2020.
|
•
|
Complete the office property repositioning projects commenced in 2018 and start construction on the next group of office repositioning projects.
|
Achieved
|
We achieved substantial completion on all projects commenced in 2018. We are well under way on the planning, entitlement and pre-construction activity on the next group of office repositioning projects.
|
Our Compensation Committee rated our management's achievement for Operating and Financial Goals as Outperform.
|
Our Compensation Committee rated our management's achievement for FFO as Outperform.
|
•
|
Strategic Balance Sheet Activities. During 2019, we refinanced approximately $2 billion of debt:
|
◦
|
We eliminated all our debt-maturities prior to 2023 and all of our floating rate debt
|
◦
|
We added almost 5 years to the weighted average life of the debt we refinanced
|
◦
|
We lowered the current interest rate on the refinanced debt by nearly 35 basis points to 2.63%
|
◦
|
We expanded our pool of unencumbered properties to 41% of our office portfolio
|
◦
|
We lowered our share of net debt to pro forma enterprise value to 29%
|
•
|
Property Acquisitions. Through one of our JVs, we successfully acquired a $365 million, 350 unit multi-family property with 50,000 square feet of retail space in Westwood. Even in hindsight, we do not believe we should have purchased any of the other properties sold in our submarkets during 2019 or disposed of any of our properties.
|
•
|
Fund Restructuring. We acquired all of the minority interests in one of our Funds and established a new JV with one large institutional investor.
|
Our Compensation Committee rated our management's achievement for External Business Activities as Outperform.
|
•
|
TSR. Our Compensation Committee reviewed the analysis of its compensation consultant, which reported on its assessment of both the factors outlined above, as well as an analysis of our TSR, which includes share price appreciation and dividends. FTI's report compared our TSR to the TSR of our Benchmark Group for the period ended October 31, 2019 (the Compensation Committee met on November 18, 2019). FTI subsequently updated that information as of December 31, 2019:
|
•
|
One other factor discussed by the Compensation Committee was the tremendous success of the equity program developed for retention over the last decade by the CEO and COO for the benefit of the all employees. Retention for employees in the equity program was 88% for 2019 as compared to 68% for employees that receive a cash only bonus. For 2019, our Compensation Committee granted equity to 470 employees out of our approximately 700 total employees (67%).
|
•
|
The Compensation Committee noted that Mr. Kaplan's and Mr. Panzer’s compensation had not been increased since 2017.
|
•
|
There were no extraordinary events during 2019 that require deviation from our Compensation Committee’s normal criteria.
|
Our Compensation Committee rated our management's achievement for TSR and Other Factors as Outperform.
|
•
|
Compensation: Each of Messrs. Kaplan and Panzer is entitled to receive a salary of not less than $1,000,000, and Mr. Crummy is entitled to receive a salary commensurate with past practices. Messrs. Kaplan, Panzer and Crummy are also entitled to receive an annual bonus based on their individual performance and our overall performance during the year, as evaluated by our Compensation Committee in consultation with that officer. Following a change of control, the total of each officer's salary and bonus may not be less than the total salary and bonus paid with respect to the calendar year ending before the change in control.
|
•
|
Perquisites and Other Benefits: Messrs. Kaplan and Panzer are entitled to the use of an automobile and family health insurance, and to use their executive assistants for personal use to an extent reasonably consistent with past practices. Mr. Crummy is entitled to a car allowance. Messrs. Kaplan and Panzer are entitled to 25 days of paid time off per year, and Mr. Crummy is entitled to paid time off commensurate with past practices. Otherwise, the agreements do not provide our executive officers with perquisites that differ from those of our other employees.
|
•
|
Term: The term of each employment agreement ends December 31, 2023, subject to earlier termination with or without cause (30-days' prior notice is required where the termination is by us without cause or by the officer for good reason).
|
•
|
Severance Payments: If we terminate an officer's employment without cause, or if the officer terminates his employment for good reason, they will receive severance equal to (a) compensation equal to three times (two times for Mr. Crummy) the average of their total compensation over the last three calendar years ending prior to the termination date, including (i) their salary and (ii) their annual bonus (excluding long-term or one-time equity grants and the value of LTIP Units will be the face value of the award on the date of grant), and (b) continued coverage under our medical and dental plans for the officer and their eligible dependents (who were enrolled in our medical plan at the time of the officer's termination) for a three-year period (two-year period for Mr. Crummy) following their termination. See “Potential Payments Upon Termination or Change of Control” below.
|
•
|
Other Termination Payments: Upon an officer's death or disability, they will continue to receive medical and dental benefits for themselves (in the case of disability only) and their eligible dependents (who were enrolled in our medical plan at the time of the officer's termination) for a period of twelve months plus vesting of any unvested equity grants through the end of the year of termination in lieu of any severance or annual bonus.
|
•
|
Non-competition: Each of these employment agreements also contains a non-competition provision that applies during the term of the agreement, and under which the officer covenants that they will not: (i) for their own account engage in any business that invests in or deals with large and mid-size office buildings and multifamily properties in Los Angeles County and Hawaii (larger than 50,000 square feet for office properties and 50 units for apartment buildings); (ii) enter the employment of, or render any consulting or any other services to, any such entities that so compete, directly or indirectly, with any business carried on by us or any of our subsidiaries; or (iii) become interested in any such competing entity in any capacity, including, without limitation, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; provided, however, that the officer may own, directly or indirectly, solely as a passive investment, 5% or less of any class of securities of any entity traded on any national securities exchange and any assets acquired in compliance with the requirements of the aforementioned non-competition provisions.
|
|
Summary Compensation Table (per SEC rules, multi-year equity grants are included in the year of grant)
|
|
||||||||||||||||||||||
|
Name & Principal Position
|
|
Year
|
|
Salary(1)
|
|
Bonus
|
|
Stock
Awards(2)
|
|
All Other
Compensation(3)
|
|
Total
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Dan A. Emmett
|
|
2019
|
|
$
|
125,000
|
|
|
$
|
—
|
|
|
$
|
87,504
|
|
|
$
|
41,106
|
|
|
$
|
253,610
|
|
|
|
Chairman of the Board
|
|
2018
|
|
$
|
125,000
|
|
|
$
|
—
|
|
|
$
|
87,528
|
|
|
$
|
40,471
|
|
|
$
|
252,999
|
|
|
|
|
|
2017
|
|
$
|
125,000
|
|
|
$
|
—
|
|
|
$
|
87,517
|
|
|
$
|
39,674
|
|
|
$
|
252,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Jordan L. Kaplan
|
|
2019
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
8,400,012
|
|
|
$
|
34,592
|
|
|
$
|
9,434,604
|
|
|
|
President and CEO
|
|
2018
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
7,700,901
|
|
|
$
|
37,413
|
|
|
$
|
8,738,314
|
|
|
|
|
|
2017
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
7,699,225
|
|
|
$
|
32,490
|
|
|
$
|
8,731,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Kenneth M. Panzer
|
|
2019
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
8,400,012
|
|
|
$
|
27,549
|
|
|
$
|
9,427,561
|
|
|
|
COO
|
|
2018
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
7,700,901
|
|
|
$
|
25,154
|
|
|
$
|
8,726,055
|
|
|
|
|
|
2017
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
7,699,225
|
|
|
$
|
24,332
|
|
|
$
|
8,723,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Kevin A. Crummy(4)
|
|
2019
|
|
$
|
600,000
|
|
|
$
|
190,000
|
|
|
$
|
1,897,026
|
|
|
$
|
13,000
|
|
|
$
|
2,700,026
|
|
|
|
CIO
|
|
2018
|
|
$
|
600,000
|
|
|
$
|
—
|
|
|
$
|
1,330,165
|
|
|
$
|
13,000
|
|
|
$
|
1,943,165
|
|
|
|
|
|
2017
|
|
$
|
600,000
|
|
|
$
|
380,000
|
|
|
$
|
1,063,890
|
|
|
$
|
13,000
|
|
|
$
|
2,056,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Peter D. Seymour(5)
|
|
2019
|
|
$
|
450,000
|
|
|
$
|
—
|
|
|
$
|
735,012
|
|
|
$
|
13,000
|
|
|
$
|
1,198,012
|
|
|
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Mona M. Gisler(5)
|
|
2019
|
|
$
|
360,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,000
|
|
|
$
|
363,500
|
|
|
|
Former CFO
|
|
2018
|
|
$
|
350,000
|
|
|
$
|
23,500
|
|
|
$
|
240,832
|
|
|
$
|
3,000
|
|
|
$
|
617,332
|
|
|
|
|
|
2017
|
|
$
|
350,000
|
|
|
$
|
70,000
|
|
|
$
|
195,999
|
|
|
$
|
3,000
|
|
|
$
|
618,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the salary payable with respect to the year it was earned.
|
(2)
|
Represents the grant date fair value of restricted equity grants, calculated in accordance with ASC 718, not the face value, under the assumptions set forth in Note 13 to our audited financial statements included in our 2019 Annual Report on Form 10-K. We restricted our executives from selling or transferring their LTIP Unit Awards in 2019 for between four and seven years after grant. All of our LTIP Unit grants in 2019 were performance based, reflecting our Compensation Committee's evaluation of the respective officers' performance during 2019. As disclosed above, our Compensation Committee believes that the equity should generally be granted at the end of the performance period after evaluating performance rather than at the beginning of the performance period subject to potential forfeiture for non-performance.
|
(3)
|
The amounts include auto allowances (in lieu of mileage reimbursements), matching contributions under our 401(k) Plan and the estimated incremental cost of personal use of an administrative assistant. For details, see “Employment Agreements”. Messrs. Kaplan and Panzer received an auto allowance of $24,592 and $24,549 during 2019, respectively, $27,413 and $22,154 during 2018, respectively, and $22,490 and $21,332 during 2017, respectively. We do not provide tax gross-ups on perquisites.
|
(4)
|
Mr. Crummy's bonus represents the discretionary cash portion of his variable incentive compensation, the amount of which is determined in the discretion of the Compensation Committee after review of his performance during the year.
|
(5)
|
Mr. Seymour replaced Ms. Gisler as our CFO on February 28, 2019.
|
Name
|
|
Approval Date(1)
|
|
Grant Date(1)
|
|
Number of LTIP Units Awarded(1)
|
|
Grant Date
Fair Value of
LTIP Unit Award(1)(2)
|
||
|
|
|
|
|
|
|
|
|
||
Dan A. Emmett
|
|
November 18, 2019
|
|
December 27, 2019
|
|
2,854
|
|
$
|
87,504
|
|
Jordan L. Kaplan
|
|
November 18, 2019
|
|
December 27, 2019
|
|
273,973
|
|
$
|
8,400,012
|
|
Kenneth M. Panzer
|
|
November 18, 2019
|
|
December 27, 2019
|
|
273,973
|
|
$
|
8,400,012
|
|
Kevin A. Crummy
|
|
November 18, 2019
|
|
December 27, 2019
|
|
61,873
|
|
$
|
1,897,026
|
|
Peter D. Seymour
|
|
November 18, 2019
|
|
December 27, 2019
|
|
23,973
|
|
$
|
735,012
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Consistent with our annual practice, our Compensation Committee approved the dollar value of the grants on November 18, 2019, stipulating that they be granted on December 27, 2019, with the number of LTIP units to be based on the closing price of our common stock on the date of grant ($43.80 at December 27, 2019). Our Compensation Committee follows this process because we inform our employees of the grants in their annual performance reviews, which are scheduled to occur between the approval date and the grant date.
|
(2)
|
The amounts reflect the grant date fair value of the award calculated in accordance with ASC 718, under the assumptions set forth in Note 13 to our audited financial statements included in our 2019 Annual Report on Form 10-K.
|
Name
|
Number of Unvested LTIP Units(1)
|
|
Market Value of Unvested LTIP Units(2)
|
||
|
|
|
|
||
Dan A. Emmett
|
4,580
|
|
$
|
201,062
|
|
Jordan L. Kaplan
|
240,727
|
|
$
|
10,567,915
|
|
Kenneth M. Panzer
|
240,727
|
|
$
|
10,567,915
|
|
Kevin A. Crummy
|
78,033
|
|
$
|
3,425,649
|
|
Peter D. Seymour
|
45,040
|
|
$
|
1,977,256
|
|
Mona M. Gisler
|
12,311
|
|
$
|
540,453
|
|
|
|
|
|
(1)
|
Unvested LTIP Units vest as follows:
|
Name
|
December 31,
|
|
||
2020
|
2021
|
2022
|
Total
|
|
|
|
|
|
|
Dan A. Emmett
|
2,313
|
1,554
|
713
|
4,580
|
Jordan L. Kaplan
|
119,841
|
75,224
|
45,662
|
240,727
|
Kenneth M. Panzer
|
119,841
|
75,224
|
45,662
|
240,727
|
Kevin A. Crummy
|
39,054
|
24,596
|
14,383
|
78,033
|
Peter D. Seymour
|
20,758
|
19,488
|
4,794
|
45,040
|
Mona M. Gisler
|
10,336
|
1,975
|
—
|
12,311
|
|
|
|
|
|
(2)
|
Based on the closing price of our common stock of $43.90 on December 31, 2019 at the rate of one share of our Common Stock for each unvested LTIP Unit.
|
|
Number of LTIP Units Vested
|
|
Value Realized on Vesting(1)
|
||
|
|
|
|
||
Dan A. Emmett
|
3,129
|
|
$
|
137,363
|
|
Jordan L. Kaplan
|
253,803
|
|
$
|
11,141,952
|
|
Kenneth M. Panzer
|
253,803
|
|
$
|
11,141,952
|
|
Kevin A. Crummy
|
50,682
|
|
$
|
2,224,940
|
|
Peter D. Seymour
|
25,555
|
|
$
|
1,121,865
|
|
Mona M. Gisler
|
12,160
|
|
$
|
533,824
|
|
|
|
|
|
(1)
|
Based on the closing price for our common stock on the date of vesting of the LTIP Unit, at the rate of one share of our Common Stock for each LTIP Unit.
|
•
|
any unpaid salary from the date of the last payroll to the date of termination;
|
•
|
reimbursement for any properly incurred unreimbursed business expenses; and
|
•
|
accrued paid time off through the date of termination.
|
•
|
any existing rights to indemnification for prior acts through the date of termination; and
|
•
|
LTIP Units awarded pursuant to our 2016 Plan and our 2006 Plan to the extent provided in that plan and the grant or award.
|
Name(1)
|
LTIP Unit Awards(2)
|
||
|
|
||
Christopher H. Anderson
|
$
|
182,887
|
|
Leslie E. Bider
|
$
|
195,376
|
|
Dr. David T. Feinberg
|
$
|
182,887
|
|
Virginia A. McFerran
|
$
|
199,468
|
|
Thomas E. O'Hern
|
$
|
201,602
|
|
William E. Simon, Jr.
|
$
|
182,887
|
|
Johnese M. Spisso(3)
|
$
|
242,500
|
|
|
|
(1)
|
Our directors who are also our employees are not entitled to receive additional compensation for their services as directors, and thus Messrs. Emmett, Kaplan and Panzer are not included in this table. The compensation received by Messrs. Emmett, Kaplan and Panzer as our employees is shown in the "Summary Compensation Tables".
|
(2)
|
The amounts represent the grant date fair value, not the face value, of awards made in 2019. The fair value is calculated in accordance with ASC 718, based on the assumptions disclosed in Note 13 to our audited financial statements included in our 2019 Annual Report on Form 10-K. These awards were granted on December 27, 2019 for 2020 services. As of December 31, 2019, our non-employee directors did not hold any unvested stock options or unvested stock awards other than as set forth in the table.
|
(3)
|
Ms. Spisso joined our board on September 1, 2019, and her LTIP Unit Awards shown above include the grant for her 2020 service as well as a prorated LTIP grant with a grant date fair value of $59,613 for her services for the period from September 1, 2019 to December 31, 2019.
|
Plan Category
|
|
Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights
(In thousands)
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of shares of common stock remaining available for future issuance under stock-based compensation plans (excluding shares reflected in column (a))
(In thousands)
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Stock-based compensation plans approved by stockholders
|
(1)
|
1,723
|
(2)
|
N/A
|
(3)
|
1,828
|
(4)
|
(1)
|
For more information regarding our plans, please see "Principal Compensation Agreements and Plans".
|
(2)
|
Consists of 0.8 million vested and 0.9 million unvested LTIP Units.
|
(3)
|
We have no outstanding options. There are no exercise prices for LTIP Units.
|
(4)
|
“Full value” awards (such as LTIP Unit Awards, Deferred Stock Awards, and Restricted Stock Awards) count against our 2016 Plan overall limits as two shares, while options and stock appreciation rights (“SARs”) are counted as one share. See "Principal Compensation Agreements and Plans".
|
|
Fees
|
2019
|
|
2018
|
|
||||
|
|
|
|
|
|
||||
|
Audit Fees(1)
|
$
|
1,295,000
|
|
|
$
|
1,220,030
|
|
|
|
Audit Related Fees(2)
|
7,000
|
|
|
2,000
|
|
|
||
|
Tax Fees(3)
|
883,000
|
|
|
880,198
|
|
|
||
|
Total
|
$
|
2,185,000
|
|
|
$
|
2,102,228
|
|
|
|
|
|
|
|
|
(1)
|
Fees for the integrated audit and quarterly reviews of Douglas Emmett, Inc., including the issuance of consents and comfort letters in connection with the issuance of common stock, and audit fees for our funds and joint ventures of $221,000 and $221,181 for 2019 and 2018, respectively.
|
(2)
|
Fees for 2019 and 2018 include $7,000 and $2,000 for access to an accounting research database.
|
(3)
|
Fees for tax compliance and planning services for Douglas Emmett, Inc., including our joint ventures and funds.
|
2.
|
Increase in Number of Shares Authorized. The maximum number of shares of Stock reserved and available for issuance under Section 3(a) of the Plan shall be increased by 9,500,000 shares, which would bring the total number of shares of Stock available for future grant under the Plan as of April 17, 2020 to 11,330,440 (subject to adjustment as set forth in the Plan).
|
4.
|
No Repricings without Stockholder Approval. The following shall be added as clause (iii) to Section 2(c) of the Plan:
|
5.
|
Stock Issuable. The fourth sentence following the table in Section 3(a) of the Plan is hereby deleted and replaced with the following:
|
6.
|
Individual Annual Maximums. The words “, but only to the extent that such adjustment will not affect the status of any Award intended to qualify as performance-based compensation under Section 162(m) of the Code” shall be deleted in the first and second sentences of Section 3(b) of the Plan.
|
7.
|
Performance-based Awards. Section 11 of the Plan is hereby deleted and replaced with the following:
|
9.
|
Amendment and Termination. Section 16 of the Plan is hereby deleted and replaced with the following:
|
10.
|
Plan Remains in Effect. Except as set forth herein, the terms of the Plan shall not be affected by this Amendment. Capitalized terms not otherwise defined in this Amendment are as defined in the Plan.
|
(a)
|
If the Stock is at the time listed or admitted to trading on any national stock exchange, including the Nasdaq Stock Market or the Nasdaq Capital Market, then the Fair Market Value shall be the closing selling price per share of the Stock on the date of determination on the stock exchange determined by the Committee to be the primary market for the Stock, as such price is officially quoted in the composite tape transactions on such exchange. If there is no reported sale of the Stock on such exchange on the date of determination, then the Fair Market Value shall be the closing price on the exchange on the last preceding date for which such quotation exists;
|
(b)
|
If the Stock is at the time neither listed nor admitted to trading on any national stock exchange, but is traded over-the-counter (including on the Over-the-Counter Bulletin Board), then the Fair Market Value shall be the mean between the last reported bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which such Stock is quoted or, if Stock is not quoted on any such system, by the "Pink Sheets" published by the National Quotation Bureau, or through any successor system. If there is no reported bid or asked price for the Stock on the date of determination, then the Fair Market Value shall be the mean between the last reported bid and asked prices on the last preceding date for which such bid and asked prices exist; and
|
(c)
|
If the Stock is at the time neither listed nor admitted to trading on any stock exchange, or over-the-counter or the Pink Sheets, then the Fair Market Value shall be an amount determined by the Committee in good faith on such basis and taking into account such factors as the Committee shall deem appropriate and, to the extent applicable, in a manner consistent with the requirements of Section 409A of the Code.
|
SECTION 2.
|
ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
|
Type of Award
|
Multiplier
|
Deferred Stock Award, Restricted Stock Award or Other Stock-Based Award that delivers the full value of the underlying Shares
|
2.0
|
Stock Option, Stock Appreciation Right or Other Stock-Based Award that delivers the value of the underlying Shares in excess of 100% of the Company’s stock price (e.g. Stock Options with an exercise price of at least 100% of such price) on the date of grant.
|
1.0
|
SECTION 14.
|
ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED COMPENSATION UNDER SECTION 409A.
|