UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number
1-11690
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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Ohio
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34-1723097
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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3300 Enterprise Parkway, Beachwood, Ohio 44122
(Address of Principal Executive Offices Zip Code)
(216) 755-5500
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange on
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Title of Each Class
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Which Registered
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Common Shares, $0.10 par value per share
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New York Stock Exchange
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Depositary Shares Representing Class G Cumulative Redeemable Preferred Shares
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New York Stock Exchange
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Depositary Shares Representing Class H Cumulative Redeemable Preferred Shares
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New York Stock Exchange
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Depositary Shares Representing Class I Cumulative Redeemable Preferred Shares
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes
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No
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes
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No
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The aggregate market value of the voting stock held by non-affiliates of the registrant at
June 30, 2008 was $4.0 billion.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrants classes of common stock,
as of the latest practicable date.
129,285,114 common shares outstanding as of February 13, 2009
TABLE OF CONTENTS
EXPLANATORY NOTE
Developers Diversified Realty Corporation, an Ohio corporation (the
Company
), is filing this
Amendment No. 1 on Form 10-K/A (this
Amendment
) to its Annual Report on Form 10-K for the fiscal
year ended December 31, 2008, which was originally filed on February 27, 2009 (the
Original
Filing
), to incorporate information previously omitted from Part III, Items 10, 11, 12, 13 and 14,
and to amend and restate the Exhibit Index.
Other than as set forth herein, this Amendment does not affect any other parts of or exhibits
to the Original Filing, and those unaffected parts or exhibits are not included in this Amendment.
This Amendment continues to speak as of the date of the Original Filing and the Company has not
updated the disclosure contained herein to reflect events that have occurred since the filing of
the Original Filing. Accordingly, this Amendment should be read in conjunction with the Companys
other filings made with the Securities and Exchange Commission subsequent to the filing of the
Original Filing, including amendments to those filings, if any.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
DIRECTOR INFORMATION
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Period
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of Service
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Name and Age
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Principal Occupation
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as Director
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Dean S. Adler
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Chief Executive Officer, Lubert-Adler Partners, L.P. (real estate
investments)
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5/97-Present
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Terrance R. Ahern
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Co-Founder and Principal, The Townsend Group (institutional real
estate consulting)
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5/00-Present
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Robert H. Gidel
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Managing Member, Liberty Partners, LP (real estate investments)
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5/00-Present
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Victor B. MacFarlane
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Managing Principal, Chairman and Chief Executive Officer, MacFarlane
Partners (real estate investments)
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5/02-Present
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Craig Macnab
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Chief Executive Officer, National Retail Properties (real estate
investment trust)
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3/03-Present
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Scott D. Roulston
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Chief Executive Officer, Fairport Asset Management (investment advisor)
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5/04-Present
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Barry A. Sholem
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Partner, MDS Capital, L.P. (venture capital company)
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5/98-Present
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William B. Summers, Jr.
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Retired
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5/04-Present
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Scott A. Wolstein
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Our Chairman of the Board of Directors and Chief Executive Officer
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11/92-Present
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Dean S. Adler
is currently the Chief Executive Officer of Lubert-Adler Partners, L.P., or
Lubert-Adler, a private equity real estate investment company which he co-founded in 1997.
Lubert-Adler currently manages over $4 billion in equity and $15 billion in assets in five real
estate funds. It recently commenced a new $2.5 billion fund. Lubert-Adler is a key member of
Independence Capital Partners, a family of investment funds totaling over $10 billion in equity.
Mr. Adler is an attorney and a certified public accountant. Mr. Adler currently serves on several
boards of directors, including Bed Bath & Beyond, Inc., Chrysler Financial Board of Managers, LNR
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Property Corporation and Electronics Boutique, Inc., as well as several advisory boards. Mr.
Adler also serves on several community and philanthropic boards.
Terrance R. Ahern
is a Founder and Principal of The Townsend Group, an institutional real
asset advisory firm formed in 1986. Townsend consults or advises domestic and offshore public and
private pension plans, endowments and foundations, sovereign wealth funds and multi-manager funds.
Mr. Ahern is a past member of the Board of Directors of the Pension Real Estate Association, or
PREA, and the Board of Governors of the National Association of Real Estate Investment Trusts, or
NAREIT. Prior to founding The Townsend Group, Mr. Ahern was engaged in the private practice of
law.
Robert H. Gidel
has been the Managing Member of Liberty Partners, LP, a partnership that makes
investments in both private and publicly traded real estate and finance focused operating
companies, since 1998. Mr. Gidel was President of Ginn Development Company, LLC, one of the
largest privately held developers of resort communities and private clubs in the Southeast, from
July 2007 until April 2009. Mr. Gidel was Chairman of the Board of Directors of LNR Property
Holdings, a private multi-asset real estate company, from 2005 until 2007. Until January 2007, he
was a member of the Board of Directors and lead director of Global Signal Inc., a REIT, of which he
was lead director, chairman of the governance committee and a member of the compensation committee.
He has been a trustee of Fortress Registered Investment Trust and a director of Fortress
Investment Fund II, LLC since 1999, both of which are registered investment companies. From 1998
until 2005, Mr. Gidel was the independent member of the investment committee of the Lone Star Funds
I, II, III, IV and V. Mr. Gidel was also a member of the Board of Directors of U.S. Restaurant
Properties, Inc. until 2005 and a member of the Board of Directors of American Industrial
Properties REIT until 2001.
Victor B. MacFarlane
is Managing Principal, Chairman and Chief Executive Officer of MacFarlane
Partners, which he founded in 1987 to provide real estate investment management services to
institutional investors. Mr. MacFarlane has 29 years of real estate experience. He serves on the
Board of Directors of the Robert Toigo Foundation, the Real Estate Executive Council, the
Initiative for a Competitive Inner City, Stanford Hospital & Clinics and The Dignity Fund. He also
serves on the policy advisory board of the Fisher Center for Real Estate at the University of
California, Berkeley. He is a member and trustee of the Urban Land Institute; a member and former
director of PREA; and a member of the International Council of Shopping Centers, the Chief
Executives Organization and the World Presidents Organization.
Craig Macnab
has served as the Chief Executive Officer and a Director of National Retail
Properties, a publicly traded REIT, since February 2004 and as Chairman of the Board since February
2008. Mr. Macnab was the Chief Executive Officer, President and a Director of JDN Realty
Corporation, or JDN, from 2000 to 2003, when we acquired JDN. Mr. Macnab is a director of Eclipsys
Corporation, a provider of clinical and financial software to the healthcare industry.
Scott D. Roulston
has been the Chief Executive Officer of Fairport Asset Management, a
registered investment advisor providing investment management and wealth management services and an
affiliate of Wealth Trust LLC, since December 2007. From 2004 to 2007, he was Managing Partner and
Director of Fairport Asset Management, LLC, and from 2001 to 2004, he was the firms Chief
Executive Officer. From 1990 until 2001, Mr. Roulston was the President and Chief Executive
Officer of Roulston & Company, until it merged with The Hickory Group in 2001 to form Fairport
Asset Management, LLC.
Barry A. Sholem
became a partner of MSD Capital, L.P., an investment fund, and head of its
real estate fund in July 2004. From 1995 until August 2000, Mr. Sholem was the Chairman of
Donaldson, Lufkin & Jenrette, Inc. Real Estate Capital Partners, a $2 billion real estate fund that
invested in a broad range of real estate-related assets, which he formed in January 1995, and, from
August 2000 to November 2003, he was a Managing Director of Credit Suisse First Boston. Mr. Sholem
is currently active in the Urban Land Institute (RCMF Council), the International Council of
Shopping Centers, the University of California, Berkeley Real Estate Advisory Board and the
Business Roundtable.
William B. Summers, Jr.
was the Non-Executive Chairman of McDonald Investments Inc., an
investment banking, brokerage and investment advisory firm, from 2000 until retiring in 2006. From
1994 until 1998, Mr. Summers was the President and Chief Executive Officer of McDonald Investments
Inc., and from 1998 until 2000,
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Mr. Summers was the Chairman and Chief Executive Officer of McDonald Investments Inc. Mr.
Summers is also currently a director of Greatbatch, Inc. and RPM International, Inc.
Scott A. Wolstein
has served as our Chief Executive Officer and a Director since our
organization in 1992. Mr. Wolstein has been the Chairman of our Board of Directors since May 1997.
Prior to our organization, Mr. Wolstein was a principal and executive officer of Developers
Diversified Group, our predecessor. He graduated
cum laude
from both the Wharton School at the
University of Pennsylvania and the University of Michigan Law School. Following law school, Mr.
Wolstein was associated with the law firm of Thompson Hine & Flory. Mr. Wolstein is currently a
member of the Board of Governors and Executive Committee of NAREIT; Board of Directors of the Real
Estate Roundtable; Board of Trustees of Hathaway Brown School; Board of Trustees for Case Western
Reserve University; Board of Directors of University Hospitals Health Systems; the Board of
Trustees of the United Way; Board Member of the Greater Cleveland Partnership; Board Member of the
Cleveland Development Advisors; and member of the Executive Committee and Board of Trustees of the
Zell-Lurie Wharton Real Estate Center. He is also a current member of the Urban Land Institute,
PREA, and the World Presidents Organization. He has served as past Chairman of the State of
Israel Bonds Ohio Chapter; a past Trustee of the International Council of Shopping Centers;
President of the Board of Trustees of the United Cerebral Palsy Association of Greater Cleveland;
Board of Directors and Executive Committee Member of the Cleveland Chapter of the Red Cross; Board
Member of the Cleveland Chapter of the Anti Defamation League; and a member of the Board of the
Great Lakes Theater Festival, The Park Synagogue and the Convention and Visitors Bureau of Greater
Cleveland. Mr. Wolstein is a four-time recipient of the Realty Stock Reviews Outstanding CEO
Award. In 2007, he received the Malden Mills Corporate Kindness Award.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Securities Exchange Act of 1934 requires our directors and executive officers,
and owners of more than 10% of a registered class of our equity securities, to file with the
Securities and Exchange Commission, or SEC, and the New York Stock Exchange, or NYSE, initial
reports of ownership and reports of changes in ownership of our common shares and other equity
securities. Executive officers, directors and owners of more than 10% of our common shares are
required by SEC regulations to furnish us with copies of all forms they file pursuant to Section
16(a).
To our knowledge, based solely on our review of the copies of such reports furnished to us and
written representations that no other reports were required, during the fiscal year ended December
31, 2008, all officers, directors, and greater than 10% beneficial owners filed the
required reports on a timely basis with the following exceptions: (i) Barry Sholem filed a late
Form 4 that covered one late transaction; (ii) William B. Summers, Jr. filed a late Form 4 that
covered one late transaction; (iii) Robert H. Gidel filed a late
Form 4 that covered one late
transaction; (iv) Scott A. Wolstein filed a late Form 4
that covered one late
transaction; (v) Christa A. Vesy filed a late Form 4 that covered one late transaction; (vi)
Terrance R. Ahern filed four late Form 4s that covered a total of 20 late transactions; and (vii)
John S. Kokinchak filed a late Form 3 that covered six holdings.
CERTAIN CORPORATE GOVERNANCE INFORMATION
The Companys Board of Directors has adopted the following corporate governance documents:
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Corporate Governance Guidelines that guide the Board of Directors in
the performance of its responsibilities to serve the best interests of
the Company and its shareholders;
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Written charters of the Audit Committee, Executive Compensation
Committee and Nominating and Corporate Governance Committee;
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Code of Ethics for Senior Financial Officers that applies to the chief
executive officer, chief financial officer, chief accounting officer,
controllers, treasurer and chief internal auditor, if any, of the
Company; and
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Code of Business Conduct and Ethics that governs the actions and
working relationships of the Companys employees, officers and
directors with current and potential customers, consumers, fellow
employees, competitors, government and self-regulatory agencies,
investors, the public, the media and anyone else with whom the Company
has or may have contact.
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Copies of the Companys corporate governance documents are available on the Companys website,
www.ddr.com, under Investor Relations Corporate Governance and will be provided, free of
charge, to any shareholder who requests a copy by calling Thomas
Morabito, Senior Director of Investor Relations, at (216) 755-5500, or by writing to Developers Diversified Realty
Corporation, Investor Relations at 3300 Enterprise Parkway, Beachwood, Ohio 44122.
Codes of Ethics
Code of Ethics for Senior Financial Officers.
We have a Code of Ethics for Senior Financial
Officers that applies to the chief executive officer, chief operating officer, chief financial
officer, chief accounting officer and other designated senior financial officers, which we
collectively refer to as our senior financial officers. This code requires our senior financial
officers to act with honesty and integrity; to endeavor to provide information that is full, fair,
accurate, timely and understandable in all reports and documents that we file with, or submit to,
the SEC and other public filings or communications we make; to endeavor to comply faithfully with
all laws, rules and regulations of federal, state and local governments and all applicable private
or public regulatory agencies as well as all applicable professional codes of conduct; to not
knowingly or recklessly misrepresent material facts or allow their independent judgment to be
compromised; to not use for personal advantage confidential information acquired in the course of
their employment; to proactively promote ethical behavior among peers and subordinates in the
workplace; and to promptly report any violation or suspected violation of this code in accordance
with the our Reporting and Non-Retaliation Policy and, if appropriate, directly to the Audit
Committee. Only the Audit Committee or the Board of Directors, including a majority of the
independent directors, may waive any provision of this code with respect to a senior financial
officer. Any such waiver or any amendment to this code will be promptly disclosed on our website
as required by applicable rule or regulation. This code is posted on our website, www.ddr.com,
under Investor Relations and is available in print to any shareholder who requests it.
Code of Business Conduct and Ethics.
We also have a Code of Business Conduct and Ethics that
addresses our commitment to honesty, integrity and the ethical behavior of our employees, officers
and directors. This code governs the actions and working relationships of our employees, officers
and directors with current and potential tenants, fellow employees, competitors, vendors,
government and self-regulatory agencies, investors, the public, the media, and anyone else with
whom we have or may have contact. Only the Board of Directors or the Nominating and Corporate
Governance Committee may waive any provision of this code with respect to an executive officer or
director. Any such waiver or any amendment to this code will be promptly disclosed on our website
as required by applicable rule or regulation. The Corporate Compliance Officer may waive any
provision of this code with respect to all other employees. This code is posted on our website,
www.ddr.com, under Investor Relations and is available in print to any shareholder who requests
it.
Board Committees
During 2008, the following committees of the Board of Directors existed: a Dividend
Declaration Committee, an Executive Compensation Committee, a Nominating and Corporate Governance
Committee, a Pricing Committee and an Audit Committee. The Board of Directors has approved the
written charters of the Audit Committee, the Executive Compensation Committee and the Nominating
and Corporate Governance Committee, which are posted on our website at www.ddr.com, under Investor
Relations and are available in print to any shareholder who requests them. Each of the Audit
Committee, Executive Compensation Committee and Nominating and Corporate Governance Committee
conducts a self-evaluation and review of its charter annually.
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The following table indicates the members of each committee:
Committee Membership (* Indicates Chair)
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Audit Committee
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Dividend Declaration Committee
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Scott D. Roulston*
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Scott A. Wolstein*
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Craig Macnab
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Dean S. Adler
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William B. Summers
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Craig Macnab
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Executive Compensation Committee
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Nominating and Corporate Governance Committee
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Terrance R. Ahern *
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Craig Macnab*
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Victor B. MacFarlane
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Terrance R. Ahern
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Barry A. Sholem
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Robert H. Gidel
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William B. Summers
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Victor B. MacFarlane
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Pricing Committee
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Controlled Equity Program Pricing Committee
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Scott A. Wolstein*
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Scott A. Wolstein
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Scott D. Roulston
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William B. Summers
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Audit Committee
The Audit Committee assists the Board of Directors in overseeing the integrity of our
financial statements, compliance with legal and regulatory requirements, our independent registered
public accounting firms qualifications and independence, and the performance of our internal audit
function and independent registered public accounting firm, and prepares the Audit Committee Report
included in our annual proxy statement. All of the members of the Audit Committee are independent
as independence is currently defined in the rules and regulations of the SEC, and the NYSE listing
standards in accordance with our Corporate Governance Guidelines. The Board of Directors has
determined that each member of the Audit Committee is a financial expert within the meaning of
Item 407 of Regulation S-K under the federal securities laws. The Audit Committee held eight
meetings in 2008.
Certain other information required by this Item 10 is incorporated by reference to the
information under the heading Executive Officers in Part I, Item 4 of the Original Filing.
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Summary
In
this section of this report, we discuss in detail our executive compensation
program that applied to our senior executive officers for 2008. This discussion includes a
description of the principles underlying our executive compensation policies and our most important
executive compensation decisions, and provides our analysis of these policies and decisions. This
discussion and analysis also gives perspective to the data we present in the compensation tables
and related footnotes below, as well as the narratives that accompany the compensation tables.
For 2008, our senior executive officers were Mr. Scott Wolstein, our Chairman and Chief
Executive Officer, Mr. Daniel Hurwitz, our President and Chief Operating Officer, Mr. William
Schafer, our Executive Vice President and Chief Financial Officer, Mr. David Oakes, our Senior
Executive Vice President of Finance and Chief Investment Officer, and Mr. Timothy Bruce, our
Executive Vice President of Development. Messrs. Hurwitz, Oakes and Bruce were our three
most-highly paid executive officers who were serving as executive officers at
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December 31, 2008 other than our Chief Executive Officer and Chief Financial Officer. We
refer to these five officers as our named executive officers throughout our executive compensation
discussion.
We are a self-administered and self-managed real estate investment trust in the business of
acquiring, developing, redeveloping, owning, leasing and managing shopping centers. The retail
market in the United States weakened in 2008, which has presented challenges to our company. As
discussed in greater detail below, due to economic conditions, we did not meet our corporate
performance targets established for 2008 for performance-based elements of our executive
compensation program. As a result, for 2008, the annual incentive compensation payouts that our
named executive officers received were based on their individual performances during the year in
helping us react to the challenging economic conditions. Payouts of annual incentive compensation
took the form of both cash payments and equity awards for each of our named executive officers.
Changes in base salary in early 2008 for our President reflected our termination of perquisites for
a company automobile lease and tax planning services. Changes in base salary amounts during late
2008 for our Chief Executive Officer and President were made in connection with the terms of
revised employment agreements we entered into with them in October 2008. Our other named executive
officers received only modest merit increases to their base salaries during 2008, except for Mr.
Bruce, who additionally received a market adjustment to his base salary during 2008. In terms of
long-term compensation, we eliminated our 2007 Supplemental Equity Program at the end of 2008
because it no longer supplied motivation or retention value. We also restructured the manner in
which we provide personal aircraft use for our Chief Executive Officer during 2008.
The following discussion should be read together with the information we present in the
compensation tables, the footnotes and narratives to those tables and the related disclosures
appearing elsewhere in this report.
Compensation Philosophy and Objectives
The Executive Compensation Committee of our Board of Directors, which we refer to as the
Committee, is responsible for establishing and administering our executive compensation program.
The Committee believes that we must focus on attracting, retaining and motivating superior
executive officer talent. To achieve this goal, we compensate our executive officers at a level
generally comparable to (or, in some cases, that exceeds) the compensation paid to similarly
situated executive officers serving at comparable companies, as adjusted to reflect individual and
corporate performance and results. The Committee also believes the compensation packages we
provide to our executive officers, including the named executive officers, should include
performance-based compensation components. This result is based on our belief that our executives
who are most able to affect our performance and results should have a significant portion of their
potential total compensation at risk, or in other words dependent upon our and their performance.
As a result, an important part of our compensation strategy is to pay for performance, which to
us means paying performance-based compensation to reward the achievement of financial and strategic
goals that we established to enable us to achieve our business objectives and enhance shareholder
value.
The Committee also believes that as long as each of our executive officers has a significant
equity stake in our company, the compensation interests of our executive officers will be aligned
with the investment interests of our shareholders. If our executive officers share in the common
share gains and losses experienced by our shareholders, we believe that our executive officers will
be even more motivated than they already are to work to enhance shareholder value for both
themselves and our other shareholders. Our Board of Directors, which we refer to as the Board,
shares this interest alignment view and has reinforced this alignment by adopting stock ownership
guidelines for our executive officers. We discuss these stock ownership guidelines, as well as the
impact of recent economic events on our named executive officers compliance with the guidelines,
in further detail below.
As a result of the Committees pay for performance philosophy, a significant percentage of
each executive officers total compensation consists of incentive opportunities. For 2008, the
primary elements of our executive compensation packages were base salaries, annual
performance-based compensation payable in the form of cash and equity awards and long-term equity
incentives. For our executive officers other than Mr. Wolstein and Mr. Hurwitz, the Committee has
no policy for the annual mix between cash and non-cash or short-term and long-term incentive
compensation paid to our executive officers. The employment agreements for Messrs. Wolstein and
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Hurwitz provide that their annual performance-based bonuses will be paid equally in cash and
equity awards. Generally, as our officers remain employed with us over time, their total
compensation includes an increasing percentage of incentive and equity-based compensation, which
results in our most senior executive officers having total pay packages that are significantly
dependent on long-term share appreciation.
Over the past few years, the Committee has been focused on a goal of simplifying and
strengthening our executive compensation program. The Committee has worked to eliminate certain perquisites and split-dollar life insurance
arrangements, emphasize incentive compensation elements, restructure
the compensation arrangements for our top two executive officers and provide more analysis and
explanation in our discussion of executive compensation matters. In this way, the Committee
believes that it has also made our executive compensation program more transparent and
understandable for our shareholders.
Compensation Consultant
For 2008, the Committee again retained Gressle & McGinley LLC as its compensation consultant.
Gressle & McGinley assisted the Committee in its process of reviewing the peer group of companies
used to benchmark market pay practices, reviewing the compensation programs of members of the peer
group and making recommendations and providing advice with respect to the compensation of our
executive officers and the overall effectiveness of our executive compensation program. As part of
our major benchmarking activity for the year, Gressle & McGinley also provided the Committee with
detailed comparative compensation data for the most senior executive officers within the AUM sample
(as described further below) during the Committees renegotiation of the employment and change in
control agreements for Messrs. Wolstein and Hurwitz, as described in further detail below.
Peer Group
In 2008, the Committee, with advice from Gressle & McGinley, re-examined its peer group used
for 2007 compensation decisions and determined that basing compensation decisions on comparisons
with the 2007 peer group was no longer appropriate because measuring peer companies based on market
capitalization similarities does not properly capture the size and scope of our business and the
responsibilities of our executives. As a result, the 2007 peer group was determined to no longer
remain appropriate for benchmarking purposes. In mid-2008, the Committee, with advice from Gressle
& McGinley, established the following peer group of companies for benchmarking total compensation
for 2008:
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AMB Property Corporation
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Host Hotels & Resorts, Inc.
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Apartment Investment & Management Co.
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Kimco Realty Corporation
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Avalonbay Communities, Inc.
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Macerich
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Boston Properties
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Public Storage, Inc.
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Brookfield Properties
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Regency Centers
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Equity Residential
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SL Green Realty Corp.
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General Growth Properties, Inc.
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Vornado Realty Trust
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HCP, Inc.
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In determining the companies to be included in our new peer group, the Committee considered
our strategy of pursuing joint venture arrangements to acquire and manage properties. The
execution of this strategy has resulted in a significant expansion of our assets under management
to approximately $21 billion, measured on a book value basis. As a result, the Committee concluded
that it would be appropriate to establish a peer group of companies with comparable real estate
assets under management (AUM), which we refer to as the AUM sample or peer group. In constructing
the AUM sample, we selected the 15 real estate companies with assets under management ranging
between $10 and $40 billion. The Committee believes that the AUM sample represents the group of
companies that most closely resembles the nature and complexity of our operations and competes
directly with us for management talent. The AUM sample was the primary point of comparison for
compensation decisions by the Committee for Messrs. Wolstein and Hurwitz during the latter half of
2008, as further described below.
-8-
Compensation Setting Process
The compensation and benefits payable to our executive officers are established by or under
the supervision of the Committee. In general, the Committee is ultimately responsible for
reviewing and approving the compensation for our named executive officers. Compensation decisions
for the named executive officers are made either directly by the Committee or indirectly by Messrs.
Wolstein and Hurwitz, who report such decisions to the Committee and ensure that the other named
executive officers compensation packages are competitive within our industry. As part of its
duties, the Committee, among other things, establishes company financial performance metrics and
targets used for annual performance-based bonuses, conducts an in-depth review of and approves
compensation arrangements for Messrs. Wolstein and Hurwitz and reviews market pay practices when
negotiating new employment or other executive agreements. Messrs. Wolstein and Hurwitz generally
review and approve, for the other named executive officers, other performance metrics used for
annual performance-based bonuses, our incentive compensation plans, base salary and incentive
compensation decisions and grants and awards under our equity-based compensation plans. Messrs.
Wolstein and Hurwitzs decisions are then communicated to the Committee.
The executive compensation setting process generally begins in December with Gressle &
McGinleys annual review of our financial results, performance against strategic objectives and our
total shareholder returns, on both an absolute basis and relative to our selected peer group of
companies for the prior year. Following deliberation by the Committee and consideration of Gressle
& McGinleys report, the Committee Chairman typically meets with Messrs. Wolstein and Hurwitz in
January to discuss the Committees conclusions and the company financial performance metrics used
to determine performance-based awards for the immediately preceding fiscal year.
When discussing performance metrics, the Committee Chairman and Messrs. Wolstein and Hurwitz
determine whether the relative achievement of the prior years performance metrics actually
facilitated the achievement of our business objectives for the year and whether the performance
metrics should be modified or replaced for the current fiscal year. Messrs. Wolstein and Hurwitz
then make decisions regarding each element of compensation for our other executive officers,
including the other named executive officers, based on their review of each executive officers
individual performance and guidance they receive from the Committee and Gressle & McGinley
concerning overall compensation levels and individual performance. Messrs. Wolstein and Hurwitz
generally meet with our Senior Vice President of Human Resources to discuss all elements of our
executive officers compensation packages and to formulate their decisions. These decisions are
considered and verified by an internal management committee, including Messrs. Hurwitz and Oakes
prior to being communicated to the Committee. As explained in further detail below, the
evaluations and decisions made by Messrs. Wolstein and Hurwitz are the key factor in terms of
determining the compensation to be paid to the other named executive officers.
After additional discussion and deliberation by the Committee in February, the Committee, in
consultation with Gressle & McGinley, then determines the level and form of payment of the
incentive awards for the preceding year for Messrs. Wolstein and Hurwitz by evaluating our
financial performance, shareholder returns and Messrs. Wolstein and Hurwitzs performance in
achieving the strategic goals and objectives established for the prior year.
Benchmarking
As further described below, our major benchmarking activity for the year was the Committees
use of the AUM sample as the primary point of comparison when developing new compensation packages
and employment agreements for Messrs. Wolstein and Hurwitz. The AUM sample was specifically used
to identify new ranges of annual performance bonus opportunities for Messrs. Wolstein and Hurwitz
that also account for equity incentives paid by peer companies. The Committee benchmarked against
the AUM sample because the Committee determined that these companies use strategies similar to
those used by us with respect to operations, development and financing (specifically, using
alternative sources of capital such as joint ventures). The Committee viewed the AUM sample as a
more challenging group against which to benchmark compensation for Messrs. Wolstein and Hurwitz and
against which to determine relative total shareholder return metric results, as further described
below. In this way, the Committee believes it has strengthened pay-for-performance aspects of its
incentive awards for Messrs. Wolstein and Hurwitz by utilizing the
-9-
AUM sample. Messrs. Wolstein and Hurwitz also referred to market compensation data and
surveys when reviewing the compensation of the other named executive officers during 2008.
Summary of Elements of 2008 Executive Compensation Program
The following table summarizes the elements of our executive compensation program for 2008:
|
|
|
|
|
Element
|
|
Characteristics
|
|
Purpose
|
|
|
|
|
|
Base Salary
|
|
Fixed
annual cash
component based on
comparative market
analysis,
contractual
commitments and
subject to annual
merit or cost of
living adjustments
|
|
Provides base level of cash
compensation for annual services to
recognize individual performance; and
helps retain and motivate executive talent
|
|
|
|
|
|
Annual
Performance-Based
Compensation
|
|
Annual
performance-based
opportunity
delivered in the
form of cash and
equity for our
named executive
officers
Payouts
earned based on
annual company
performance
targets, business
unit performance
(in the case of
Messrs. Schafer,
Oakes and Bruce),
and individual
performance or
discretionary
evaluation of
individual
performance
|
|
Motivates executives; rewards
executives for achieving annual
individual and company performance; helps
retain executives; aligns executives
compensation interests with shareholders
investment interests and encourages a
significant equity stake in the company
|
|
|
|
|
|
Long-Term Equity
Incentives
|
|
|
|
|
Outperformance Awards
|
|
Special
long-term,
performance-based
equity opportunity
Common
shares earned based
on achievement of
performance targets
over a five-year
measurement period
|
|
Motivates executives; rewards
executives for achieving long-term
company performance; and helps retain
executives
|
|
|
|
|
|
Supplemental Equity
Program Awards
|
|
Special
long-term,
performance-based
equity opportunity
Common
shares earned based
on achievement of
superior
share-price
performance over a
specified period of
time
|
|
Motivates executives; rewards
executives for achieving long-term
share-price performance; helps retain
executives; and aligns executives
compensation interests with shareholders
investment interests
Program terminated at end of 2008
due to loss of motivational and retention
value
|
|
|
|
|
|
Retirement Benefits
|
|
Standard
tax-qualified
defined
contribution
(401(k)) plan
subject to
limitations on
compensation under
the Internal
Revenue Code and
cash and equity
deferred
compensation plan
that provides
tax-efficient
vehicles to
accumulate
retirement savings
|
|
Helps attract and retain
executives
|
|
|
|
|
|
Health and Other
Welfare Benefits
|
|
Broad-based
employee benefits
program, including
health, life,
disability and
other insurance and
customary fringe
benefits providing
for basic life and
health needs
|
|
Helps attract and retain
executives
|
|
|
|
|
|
Perquisites
|
|
Personal
aircraft use,
country club fees
and expense
reimbursement
provided to certain
executives
|
|
Helps attract and retain
executives
|
Analysis of 2008 Executive Compensation Program
Annual Compensation
Base Salaries.
We pay base salaries to our named executive officers to provide them with a
base level of income for services rendered by them each year. For 2008, the named executive
officers were parties to employment agreements with us that provided for minimum base salary
amounts. Base salaries for 2008 for the named executive officers were determined considering these
contractual commitments and comparisons to base salaries paid to executives in comparable positions
at other real estate companies.
-10-
Base salaries for Messrs. Wolstein and Hurwitz at the beginning of 2008 were $1,000,000 and
$544,000, respectively. In early 2008, the Committee chose to increase Mr. Hurwitzs base salary
to $648,466 by March 1 to account for discontinuance of perquisites previously provided to Mr.
Hurwitz consisting of a company automobile lease and tax planning services. In connection with the
Committees use of the AUM sample for compensation decisions for Messrs. Wolstein and Hurwitz
during 2008, Gressle & McGinley conducted a comprehensive review beginning in mid-2008 of the total
compensation packages for Messrs. Wolstein and Hurwitz by focusing primarily on the top two
executives at AUM sample companies. Gressle & McGinley also undertook a comprehensive
re-evaluation of the mix of compensation elements paid to Messrs. Wolstein and Hurwitz with a goal
of streamlining their compensation packages. As further described below, in connection with our
negotiation of revised employment agreements with Messrs. Wolstein and Hurwitz, the Committee
adjusted total compensation packages for Messrs. Wolstein and Hurwitz, resulting in new salaries
for Mr. Wolstein and Mr. Hurwitz as of October 15, 2008 of $800,000 and $616,000, respectively,
based on the Gressle & McGinley review.
For 2008, a merit pool was created to provide merit increases in base salary for the other
named executive officers of approximately 4% over their 2007 base salaries. In addition to his
merit increase, Mr. Bruce also received an extra market adjustment of approximately 10% to bring
his base salary more in line with market data for comparable positions based on market compensation
data and survey information. None of the other named executive officers received a market increase
for 2008. At the end of 2008, the base salaries for our named executive officers other than
Messrs. Wolstein and Hurwitz were: Mr. Schafer, $305,000; Mr. Oakes, $364,000; and Mr. Bruce,
$355,000. Upon his promotion to Senior Executive Vice President effective January 1, 2009, Mr.
Oakes received a promotional increase of approximately 7% over his 2008 base salary. For more
information on salaries earned by our named executive officers for 2006, 2007 and 2008, please
refer to the 2008 Summary Compensation Table.
Annual Performance-Based Compensation in General.
We pay annual incentive compensation to our
named executive officers to attract and motivate them and reward them for helping us to achieve
annual financial objectives and company and individual goals that drive shareholder value. All
executive officers, including the named executive officers, are eligible to receive annual
performance-based compensation in the form of cash payments and equity awards. For Messrs.
Wolstein and Hurwitz, their annual performance-based compensation is paid equally in cash and
equity awards under the terms of their revised employment agreements. We refer to this entire
amount as their annual performance bonus. Each of our other named executive officers receives the
full amount of his annual performance-based compensation in the form of a cash bonus payment, which
we refer to as the annual performance bonus, and an additional equity award the value of which is
based directly on the amount of the annual performance bonus. As further described below, Messrs.
Wolstein and Hurwitz do not receive an additional equity award under the terms of their revised
employment agreements. Because the annual performance bonuses are based upon performance
throughout the entire year and year-end personnel evaluations, and, in some cases, are determined
in the light of our final year-end financial statements, the annual performance bonuses and equity
awards are not actually paid until our financial statements are completed in the year following the
measurement period.
Annual Performance Bonuses for Messrs. Wolstein and Hurwitz.
We establish annual performance
bonus opportunities for Messrs. Wolstein and Hurwitz each year based on the terms of their
employment agreements, which opportunities reflect their respective levels of responsibility and
salary and total compensation amounts paid by the members of the peer group. Annual performance
bonuses are paid to Messrs. Wolstein and Hurwitz in the form of cash and equity payments and are
earned based on company performance and individual performance during the fiscal year.
As further discussed below, in October 2008, we entered into revised employment and change in
control agreements with Messrs. Wolstein and Hurwitz to, in part, document applicable modifications
to their respective compensation structures that had been made over recent years that were not
reflected in the prior versions of those agreements. In addition, in prior years, Messrs. Wolstein
and Hurwitzs long-term annual incentive awards used performance metrics similar to those taken
into account for their annual performance bonuses. In 2008, the Committee decided to simplify
Messrs. Wolstein and Hurwitzs compensation packages by establishing a single annual performance
bonus opportunity payable equally in cash and equity and eliminating Messrs. Wolstein and Hurwitzs
long-term annual incentive opportunity. As a result, the annual performance bonus opportunities
established for Messrs. Wolstein and Hurwitz are intended to account for the equity incentives paid
by peer
-11-
companies. In making this decision, the Committee relied on Gressle & McGinleys review of
the compensation programs for the chief executive officer and second ranking officer at companies
within the AUM sample. In addition to benchmarking actual compensation paid in 2007 and prior
years (which reflects actual peer company performance), Gressle & McGinley evaluated the annual
incentive award opportunities (annual bonus and annual long-term awards) for a subsample of
companies that published the awards available at threshold, target and/or maximum levels of
performance. In each case, these award levels were evaluated as a percent of the executives
annual salary. The Committee then established annual performance bonus opportunities (both at a
threshold and maximum level as a percentage of base salary) for Messrs. Wolstein and Hurwitz at the
median levels of the subsample of companies reporting this information about their compensation
programs.
The revised employment agreements provide that Messrs. Wolstein and Hurwitz are entitled to
annual performance-based bonuses equal to a percentage of their base salaries as determined by the
Committee. Half of each annual performance bonus for Messrs. Wolstein and Hurwitz will be paid in
cash, with the remaining portion of each annual performance bonus paid in the form of equity
awards. Any equity awarded is valued based on the fair market value of our common shares on the
date of grant using the same methodology and valuation assumptions that we use for financial
statement reporting purposes. The revised employment agreements provide that the Committee will
from time to time establish the performance factors and criteria relevant for determination of such
annual performance bonuses and will timely communicate the applicable performance metrics and
targets to Messrs. Wolstein and Hurwitz. For 2008, the annual performance bonuses for Messrs.
Wolstein and Hurwitz were based on achievement measured for the following three performance
metrics, which were selected by the Committee and communicated to Messrs. Wolstein and Hurwitz:
|
|
|
Funds From Operations, or FFO, per common share;
|
|
|
|
|
relative total shareholder return; and
|
|
|
|
|
a qualitative assessment of Messrs. Wolsteins and Hurwitzs individual
contributions and achievements.
|
The quantitative corporate performance metrics listed in the first two bullet points above
were selected by the Committee because they are recognized industry standards, easily quantifiable,
incentivize the achievement of short-term company goals that support our long-term success, and, in
the case of relative total shareholder return, require superior performance compared to the AUM
sample of peer companies. The Committee also believes that individual performance is an important
consideration in determining payouts of annual performance bonuses because Messrs. Wolstein and
Hurwitz are responsible for leading the execution of our overall operating performance and
strategic initiatives. For 2008, the Committee weighed each of FFO per common share and the
qualitative assessment at 40%, and relative total shareholder return at 20%, in terms of
determining achievement of the annual performance bonuses for Messrs. Wolstein and Hurwitz. A
lower weight was assigned to relative total shareholder return because it was the primary
performance metric in the 2007 Supplemental Equity Program.
As in past years, for 2008, the specific quantitative performance targets relating to FFO per
common share was established by the Committee on a basis consistent with our budgeting and planning
process for 2008. For 2008, the structure for the annual performance bonus opportunities and
performance against the established metrics for Messrs. Wolstein and Hurwitz was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Bonus
|
|
Metric
|
|
Threshold
|
|
Mid-Point
|
|
Maximum
|
|
Actual
|
|
40
|
%
|
|
FFO Per Common Share (diluted) (1)
|
|
$
|
3.90
|
|
|
$
|
3.975
|
|
|
$
|
4.05
|
|
|
$
|
1.52
|
|
|
20
|
%
|
|
Relative Total Shareholder Return (2)
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
40
|
%
|
|
Qualitative Assessment (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
FFO is generally defined and calculated by us as net income, adjusted to exclude:
|
|
|
|
preferred share dividends;
|
|
|
|
|
gains from disposition of depreciable real estate property, except for those sold
through our merchant building program, which are presented net of taxes;
|
-12-
|
|
|
extraordinary items; and
|
|
|
|
|
certain non-cash items.
|
|
|
|
|
|
|
A calculation of FFO for 2008 is included under Item 7
of the Original Filing. FFO
per common share equals FFO divided by average diluted shares outstanding.
|
|
(2)
|
|
Relative total shareholder return is total shareholder return on an investment in our common
shares compared to total shareholder return on an investment in the common shares of each
company in the annual performance bonus peer group. Total shareholder return is calculated
for us and each member of the annual performance bonus peer group by assuming a one-year
hypothetical investment in the common shares of the respective entity. The value of the
investment at the end of the one-year period, based on market value of the common shares and
assuming the reinvestment of dividends, is compared to the value at the beginning of the
period and expressed as a percentage return on the original investment. Based on the results,
we are ranked in either the first, second, third or fourth quartile of the AUM sample of peer
companies.
|
|
(3)
|
|
The qualitative criteria used to conduct the qualitative assessment relating to the annual
performance bonuses for Messrs. Wolstein and Hurwitz were both established and evaluated by
the Committee. The criteria included goals and strategic initiatives related to specific
departments and business units, investment funds, corporate partnerships, human resources and
corporate financial management. These criteria are qualitative in nature and, as a result,
the Committee did not establish measurable performance targets for the qualitative assessment
metric.
|
The annual performance bonus opportunity with respect to 2008 that was available for each of
Messrs. Wolstein and Hurwitz, as well as the actual annual performance bonus awarded based on
actual performance during the year (expressed as a percentage of year-end base salary), is set
forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
Daniel B. Hurwitz
|
Metric
|
|
Threshold
|
|
Mid-Point
|
|
Maximum
|
|
Actual
|
|
Threshold
|
|
Mid-Point
|
|
Maximum
|
|
Actual
|
FFO Per Common Share
|
|
|
140
|
%
|
|
|
230
|
%
|
|
|
320
|
%
|
|
|
0
|
%
|
|
|
120
|
%
|
|
|
180
|
%
|
|
|
240
|
%
|
|
|
0
|
%
|
Relative Total
Shareholder
|
|
|
70
|
%
|
|
|
115
|
%
|
|
|
160
|
%
|
|
|
0
|
%
|
|
|
60
|
%
|
|
|
90
|
%
|
|
|
120
|
%
|
|
|
0
|
%
|
Return Qualitative
Metric
|
|
|
140
|
%
|
|
|
230
|
%
|
|
|
320
|
%
|
|
|
230
|
%
|
|
|
120
|
%
|
|
|
180
|
%
|
|
|
240
|
%
|
|
|
240
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
350
|
%
|
|
|
575
|
%
|
|
|
800
|
%
|
|
|
230
|
%
|
|
|
300
|
%
|
|
|
450
|
%
|
|
|
600
|
%
|
|
|
240
|
%
|
For our quantifiable performance metrics, because our actual performance was below the
threshold performance targets established by the Committee, no amount was earned for those
performance metrics for 2008. The degree to which each of Messrs. Wolstein and Hurwitz earned his
annual performance bonus depended on his year-end qualitative assessment. The Committee determined
that, based on its subjective assessment of performance by Messrs. Wolstein and Hurwitz during
2008, Mr. Wolstein achieved his mid-point qualitative metric and Mr. Hurwitz achieved his maximum
qualitative metric for 2008. Mr. Hurwitzs achievement of his maximum qualitative metric was
specifically based on the Committees determination that his individual performance for 2008
exceeded the Committees initial expectations as to the role he would serve with the company when
he was promoted in 2007. The Committee chose to pay the equity portion of the annual performance
bonus to each of Messrs. Wolstein and Hurwitz in unrestricted shares. The
following table sets forth the cash paid and the number of unrestricted shares granted to Messrs.
Wolstein and Hurwitz in January 2009 for their annual performance bonuses earned for 2008:
|
|
|
|
|
|
|
|
|
Form of Payment
|
|
Value for Wolstein
|
|
Value for Hurwitz
|
Cash
|
|
$
|
920,000
|
|
|
$
|
739,200
|
|
Unrestricted Shares (1)
|
|
$
|
920,000
|
|
|
$
|
739,200
|
|
|
|
|
(1)
|
|
Based on the closing price per share of our common shares as of January 12, 2009 of $6.02,
Messrs. Wolstein and Hurwitz received 152,823 and 122,790 unrestricted shares, respectively.
|
Annual Performance Bonuses for Messrs. Schafer, Oakes and Bruce.
We establish annual
performance bonus opportunities for Messrs. Schafer, Oakes and Bruce each year in accordance with
the executives respective levels of responsibility and in consideration of their base salary
amounts at the end of the fiscal year. Annual performance bonuses are paid in the form of lump-sum
cash payments and are earned based on company
-13-
performance, business unit performance and individual performance during the fiscal year. If
an annual performance bonus is earned, each of Messrs. Schafer, Oakes and Bruce also receives an
equity award (which we have referred to in prior years as a long-term equity award) the value of
which is based directly on the amount of his annual performance bonus, as further described below.
In recent years, the annual performance bonuses for Messrs. Schafer, Oakes and Bruce were
based on the subjective evaluations conducted by Messrs. Wolstein and Hurwitz of the executive
officers performance specifically related to their areas of control and their individual
contributions and efforts toward our strategic and tactical objectives. For 2008, however, the
annual performance bonuses for Messrs. Schafer, Oakes and Bruce were based on their achievement
measured against the following three equally-weighted performance metrics:
|
|
|
Company financial metric of FFO per common share (defined and calculated in the same
manner as described above for Messrs. Wolstein and Hurwitz);
|
|
|
|
|
Business unit performance objectives, including, for example:
|
|
|
|
For Mr. Schafer, raising sufficient capital to address debt maturities,
continuously monitoring operating results and re-forecasting timely, accelerated
monthly closings;
|
|
|
|
|
For Mr. Oakes, selling assets to generate merchant build gains, selling
non-core assets and improving buy-side and sell-side relationships; and
|
|
|
|
|
For Mr. Bruce, improving accuracy and pricing on pro formas and
delivering development and redevelopment/expansion projects within pro forma and on
schedule; and
|
|
|
|
Individual performance objectives, including a qualitative assessment of Messrs.
Schafers, Oakes and Bruces individual contributions and achievements on behalf of
the company.
|
For 2008, we used the same specific quantitative performance targets relating to FFO per
common share for Messrs. Schafer, Oakes and Bruce that were established by the Committee for
Messrs. Wolstein and Hurwitz as follows: Threshold, $3.90; Target, $3.975; and Maximum, $4.05.
Actual FFO per common share results for 2008 were $1.52.
The annual performance bonus opportunity with respect to 2008 that was available for each of
Messrs. Schafer, Oakes and Bruce, as well as the actual annual performance bonus awarded based on
actual performance during the year (expressed as a percentage of year-end base salary), is set
forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
William H. Schafer
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
40
|
%
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
125
|
%
|
|
|
100
|
%
|
Timothy J. Bruce
|
|
|
20
|
%
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
37.8
|
%
|
The degree to which each of Messrs. Schafer, Oakes and Bruce earned his annual performance
bonus depended on his year-end qualitative assessment and the extent to which the quantitative
performance target was met. For our quantifiable performance metric, because our actual
performance was below the threshold performance target established by the Committee, no amount was
earned for that performance metric for 2008. However, based on Messrs. Wolstein and Hurwitzs
subjective assessment that Messrs. Schafer, Oakes and Bruce exceeded expectations during 2008
regarding their business unit performance objectives and individual performance objectives, Mr.
Schafer earned his target annual performance bonus, Mr. Oakes earned between his target and maximum
annual performance bonus and Mr. Bruce earned just below his target annual performance bonus. As a
result, Messrs. Schafer, Oakes and Bruce received the following payouts in January 2009 for their
annual performance bonuses for 2008, respectively: Mr. Schafer, $122,000; Mr. Oakes, $364,000; and
Mr. Bruce, $134,190.
Annual Equity Awards for Messrs. Schafer, Oakes and Bruce.
Our shareholder-approved,
equity-based award plans give the Committee the latitude to make annual awards of stock-based
incentives, which we refer to as
-14-
annual equity awards, to promote strong performance and the achievement of corporate goals, to
foster the growth of shareholder value and enable executive officers to participate in our
long-term growth and profitability. These annual equity incentives reinforce the Committees
long-term goal of increasing shareholder value by providing the proper nexus between the
compensation interests of our executive officers and the investment interests of our shareholders.
In recent years, all of our executive officers, including the named executive officers, have been
eligible to receive annual equity awards pursuant to one or more equity-award plans, which were
approved by our shareholders. In connection with entering into revised employment agreements with
Messrs. Wolstein and Hurwitz in October 2008, we increased their annual performance bonus
opportunities, which increase took into account that they will not receive separate annual equity
awards. Our other named executive officers, however, will continue to receive separate annual
equity awards in connection with their annual performance bonuses, as further described below.
Messrs. Schafer, Oakes and Bruce are eligible to receive annual equity awards based solely on
their annual performance bonus results, subject to discretionary adjustment based on individual
performance. The Committee does not consider the amount or value of prior annual equity awards
when granting new annual equity awards because prior annual equity award payouts relate to prior
performance. Because annual equity awards are based on annual performance bonus results, the
awards are generally not made until our financial statements are finalized. For 2008, however, the
Committee chose to make awards in January 2009 once the annual performance bonus results for
Messrs. Schafer, Oakes and Bruce were determined.
The annual equity incentive opportunity that was available for each of Messrs. Schafer, Oakes
and Bruce based on performance during 2008 was established as a percentage of his base salary at
the end of the year plus his annual performance bonus earned with respect to such year, as set
forth opposite his name below (expressed as a percentage of such sum):
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
Target
|
|
Maximum
|
William H. Schafer
|
|
|
12.5
|
%
|
|
|
25
|
%
|
|
|
50
|
%
|
David J. Oakes
|
|
|
50
|
%
|
|
|
75
|
%
|
|
|
100
|
%
|
Timothy J. Bruce
|
|
|
12.5
|
%
|
|
|
25
|
%
|
|
|
50
|
%
|
There are no specific quantitative or qualitative performance metrics that have been
established in order to determine the annual equity awards for Messrs. Schafer, Oakes and Bruce
other than achievement of the annual performance bonuses. Instead, each officer receives an annual
equity award with a value equal to the same proportion of his maximum annual equity award
opportunity as the proportion his actual annual performance bonus represents of his maximum annual
performance bonus opportunity, subject to discretionary adjustment based on individual performance.
To further clarify, in determining actual annual equity awards for Messrs. Schafer, Oakes and
Bruce for 2008, we first determined each officers earned annual performance bonus as a percentage
of his maximum annual performance bonus opportunity (for example, Mr. Schafer earned an annual
performance bonus for 2008 that was 50% of his maximum annual performance bonus opportunity (which
was 80%)). We then applied that same percentage to the officers maximum annual equity award
opportunity identified in the table above to determine the officers percentage achievement of his
annual equity award (for example, 50% of Mr. Schafers maximum annual equity award opportunity
(which was 50%) resulted in actual annual equity award achievement of 25%). The achieved
percentage was then applied to the sum of the officers base salary at the end of 2008 plus his
annual performance bonus earned for 2008 (for example, 25% of Mr. Schafers year-end base salary
($305,000) plus 2008 annual performance bonus ($122,000) resulted in an annual equity award value
of $106,750). There was no discretionary adjustment made to awards for Messrs. Schafer and Bruce
for 2008, but Mr. Oakes annual equity award was increased by 7.50% based on his individual
performance for 2008. This adjustment was based on Messrs. Wolstein and Hurwitzs subjective
assessment that Mr. Oakes exceeded expectations during 2008 regarding his business unit performance
objectives and individual performance objectives described above. Based on the calculations
described in this paragraph, Messrs. Schafer, Oakes and Bruce earned annual equity awards for 2008
as follows:
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|
|
|
|
|
|
|
|
|
|
|
Actual Annual Equity Award
|
|
|
|
|
(% of base salary plus
|
|
|
Named Executive Officer
|
|
annual performance bonus)
|
|
Actual Annual Equity Award ($)
|
William H. Schafer
|
|
|
25
|
%
|
|
$
|
106,754
|
|
David J. Oakes
|
|
|
87.5
|
%
|
|
$
|
637,029
|
|
Timothy J. Bruce
|
|
|
23.6
|
%
|
|
$
|
115,582
|
|
Consistent with our compensation philosophy of aligning the compensation interests of our
executive officers with the investment interests of our shareholders and ensuring that each of
Messrs. Schafer, Oakes and Bruce has a significant equity stake in the company, 75% of the value of
each annual equity incentive award payable with respect to 2008 was awarded in the form of
restricted shares vesting, beginning on the date of grant, in equal annual installments over four
years and 25% of the value was awarded in the form of stock options vesting in three equal annual
installments. Annual equity awards were paid in restricted shares and stock options because these
forms of equity are a reasonable means by which to encourage share ownership and align executive
interests with shareholder interests. The following table sets forth the number of restricted
shares and stock options granted to each of Messrs. Schafer, Oakes and Bruce in January 2009 based
on his annual equity incentive award:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of Award
|
|
Exercise Price
|
|
Schafer
|
|
Oakes
|
|
Bruce
|
Stock Options
|
|
$
|
6.02
|
|
|
|
40,437
|
|
|
|
241,290
|
|
|
|
43,779
|
|
Restricted Shares
|
|
|
|
|
|
|
13,300
|
|
|
|
79,365
|
|
|
|
14,400
|
|
No restricted shares or stock options were granted to the named executive officers with respect to
employment during 2008 other than the annual equity awards described
above.
Restricted Shares Used To Settle Annual Equity Awards.
We believe that restricted shares
provide significant incentives for our executive officers because they directly align the
compensation interests of our executive officers with the investment interests of our shareholders.
Our restricted share awards vest annually in 20% increments with the first increment vesting on
the date of the award. The holder of restricted shares has the right to receive dividends and to
vote with respect to all restricted shares immediately upon their grant.
Stock Options Used To Settle Annual Equity Awards.
We also believe that stock options are a
valuable motivating tool and provide a long-term incentive to the executive officers because our
executive officers will realize gain on their stock options only if our shareholders also recognize
gain on their holdings of our shares. Our stock option awards vest at a rate of 33-1/3% per year
over the first three years of the ten-year option term. Prior to the exercise of an option, the
holder has no rights as a shareholder with respect to the shares subject to such option, including
voting rights and the right to receive dividends. Options are granted with an exercise price equal
to the closing price of our common shares on the date of grant. We have never repriced any stock
options or issued options with reload provisions. The number of options granted was determined
by dividing the value of the annual equity incentive award earned by the value of an option based
on the Black Scholes valuation model.
Long-Term Equity Incentive Compensation
Outperformance Awards.
In prior years, we awarded performance units as a retention award for
our executive officers. In 2006, based on its regular evaluation of our compensation programs, the
Committee discontinued its practice of awarding performance units in favor of granting new
equity-based performance awards to eleven of our executive officers, including Messrs. Wolstein,
Schafer, Hurwitz and Bruce. We refer to these awards as outperformance awards and to the equity
plan under which the outperformance awards were made as the 2005 Outperformance Award Plan. The
Committee believed both that the outperformance awards were superior to the performance unit awards
because, among other reasons, a higher level of company performance is required to trigger payouts
under the outperformance awards and that outperformance awards should be made available to a
broader group of executives because superior company performance requires a team of superior
performers.
Based on the recommendations of our prior compensation consultant and Mr. Wolstein, the
Committee chose to use three performance metrics to determine whether an outperformance award
should be granted:
|
|
|
FFO per common share growth;
|
-16-
|
|
|
annualized total shareholder return; and
|
|
|
|
|
our annualized total shareholder return compared to the annualized total shareholder
return of the companies in a specified peer group, which we refer to as comparative
annualized total shareholder return (we refer to both of these annualized total
shareholder return metrics together as the shareholder return metrics).
|
For purposes of the outperformance awards, annualized total shareholder return is the return on an
investment in our common shares during the applicable measurement period, assuming the reinvestment
of dividends. All quantitative metrics were measured over a three-year period ending December 31,
2007 for Messrs. Wolstein and Hurwitz, and payouts were made to Messrs. Wolstein and Hurwitz in
early 2008 to reflect their achievement of their applicable performance targets, as reported in our
Compensation Discussion and Analysis in our 2008 proxy statement. All quantitative metrics are
being measured over a five-year period ending on December 31, 2009 for Messrs. Schafer and Bruce
and the other executive officers who were granted outperformance awards (Mr. Oakes was not yet our
employee when the outperformance awards were made). The peer group established in 2007 for
comparative annualized total shareholder return continues to include the following companies:
|
|
|
CBL & Associates Properties, Inc.
Federal Realty Investment Trust
General Growth Properties, Inc.
Glimcher Realty Trust
Kimco Realty Corporation
|
|
Macerich
Pennsylvania Real Estate Investment Trust
Taubman Centers, Inc.
Regency Centers Corporation
Simon Property Group, Inc.
Weingarten Realty Investors
|
The quantitative metrics for the outperformance awards granted to Messrs. Schafer and Bruce
are as follows:
|
|
|
Outperformance Awards Quantitative Metrics
|
|
Target
|
FFO Per Common Share Growth
|
|
8.0% per year
|
Annualized Total Shareholder Return
|
|
17.0% per year
|
Comparative Annualized Total Shareholder Return
|
|
Annualized total
shareholder return equal
to or greater than the
annualized total
shareholder return of not
less than 75% of the
companies in the
applicable peer group
during the applicable
measurement period
|
The Committee will determine whether the applicable performance targets have been achieved
once our 2009 year-end financial statements are available in early 2010. Any outperformance award
earned by Messrs. Schafer and Bruce will vest on March 1, 2010. In all cases, the outperformance
awards relating to the FFO per common share growth metric are expressed as a fixed dollar amount,
and the outperformance awards relating to the shareholder return metrics are expressed as a number
of our common shares, subject to a cap on the value of the common shares that can actually be
received. The Committee currently intends to pay all earned outperformance awards in the form of
our common shares, but the Committee has the right to pay the awards in cash. The Committee also
retains the flexibility so that if a specific quantitative metric is not achieved in full during
the relevant measurement period, but any or all of the quantitative metrics have been substantially
achieved during the same period, the Committee may still grant to the participants an award equal
to 25% of the total award that would have been earned had all quantitative metrics been achieved in
full.
-17-
The remaining outperformance award opportunity available for Messrs. Schafer and Bruce based
on the earlier grant, expressed in dollars with respect to the FFO per common share growth metric
and in our common shares with respect to the other quantifiable metrics, is set forth opposite his
name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO Metric
|
|
Shareholder Return
|
|
Total Award
|
Named Executive Officer
|
|
Opportunity
|
|
Metrics Opportunity
|
|
Opportunity
|
William H. Schafer
|
|
$
|
417,000
|
|
|
12,850 shares with
|
|
$
|
1,445,000
|
|
|
|
|
|
|
|
a maximum value of
|
|
|
|
|
|
|
|
|
|
|
$
|
1,028,000
|
|
|
|
|
|
Timothy J. Bruce
|
|
$
|
500,000
|
|
|
15,400 shares with
|
|
$
|
1,732,000
|
|
|
|
|
|
|
|
a maximum value of
|
|
|
|
|
|
|
|
|
|
|
$
|
1,232,000
|
|
|
|
|
|
2007 Supplemental Equity Program.
The 2007 Supplemental Equity Program was adopted and
implemented to address two areas that the Committee, after consultation with Gressle & McGinley,
deemed inadequate in the 2005 Outperformance Award Plan. First, the 2005 Outperformance Award Plan
did not provide significant enough incentives for higher levels of performance, which we believe is
essential to be competitive with the compensation paid by private equity firms and other real
estate investment trusts to retain the best executive talent. Second, if our share price were to
rise significantly and then decline during the measurement period of the 2005 Outperformance Award
Plan, it would be possible that an executive would initially be likely to qualify for a payout
under the 2005 Outperformance Award Plan, but then later become ineligible for any payout under the
2005 Outperformance Award Plan without regard to performance by the executive. Furthermore, as we
have grown, the number of our executives has increased correspondingly. The Committee, Messrs.
Wolstein and Hurwitz, and Gressle & McGinley all believed it was important to incentivize each of
our key executives to create shareholder value. Thus, 43 executives, including the named executive
officers, were initially chosen to participate in the 2007 Supplemental Equity Program.
The 2007 Supplemental Equity Program provided for the grant of awards to designated
participants, which awards were to be earned based on the satisfaction of certain company-based
performance goals over a specified period of time. Under the 2007 Supplemental Equity Program, our
named executive officers had the opportunity to receive, in the form of common shares, a percentage
of an award pool created based on our absolute and relative total shareholder return (measured
against entities in the North American Real Estate Investment Trust index) during a series of
measurement periods extending into 2012 (or until a change in control of the company). In this
way, the 2007 Supplemental Equity Program was designed to incentivize participating executives to
help us achieve superior financial and share-price performance over a number of years. As part of
the Committees ongoing review of our executive compensation program, and based on the
recommendation of Gressle & McGinley, on December 31, 2008, the Committee authorized and approved
the termination of the 2007 Supplemental Equity Program. The Committee decided to terminate the
2007 Supplemental Equity Program because it determined that the program no longer provides any
motivational or retention value, and therefore would not help achieve the two goals for which it
was created. No shares have been or will be issued under the 2007 Supplemental Equity Program.
Impact of April 2009 Special Meeting of Shareholders.
On February 23, 2009, we entered into a
stock purchase agreement with Mr. Alexander Otto, which we refer to as the Otto Stock Purchase
Agreement, to issue and sell 30,000,000 common shares, which we refer to as the Purchased Shares,
and warrants to purchase 10,000,000 common shares to Mr. Otto and certain members of his family,
whom we collectively refer to as the Investors. Pursuant to the terms of the Otto Stock Purchase
Agreement, we are also required to issue common shares to the Investors representing any dividends
that we declare after the date of the Otto Stock Purchase Agreement and prior to the purchase of the Purchased Shares
to which the Investors would have been entitled had the Purchased Shares been outstanding on the
record dates for any such dividends. On April 9, 2009, our shareholders approved the transaction
contemplated by the Otto Stock Purchase Agreement. Shareholder approval of the Otto transaction
was deemed a potential change in control under our equity-based award plans and the related
equity award agreements. As a result, all outstanding unvested stock options became fully
exercisable, all restrictions on unvested restricted shares lapsed, and all outperformance awards
became vested (which means that each outperformance award holders right to receive a payment if
the performance criteria are met is no longer subject to forfeiture upon a termination of the
holders employment). The outperformance awards will still be earned depending on our performance
against the targets
-18-
established under the outperformance awards for the performance period (which generally ends
on December 31, 2009).
Other Benefits
Perquisites.
Pursuant to their employment agreements, the named executive officers receive
certain additional benefits. The Committee believes that these benefits are reasonable and
consistent with its overall compensation program to better enable us to attract and retain superior
executive talent.
Mr. Wolstein, for purposes of security and efficiency, has the right to use for personal
purposes any airplane that we lease or in which we own an interest, but only after giving first
priority to our business needs. For 2008, Mr. Wolstein was originally permitted to use up to 100
flight hours for personal use. As further described below, however, in connection with our
negotiation of a revised employment agreement with Mr. Wolstein in October 2008, we changed the
manner in which we provide this perquisite to Mr. Wolstein. For the first 9.5 months of 2008, Mr.
Wolstein was permitted to use up to approximately 80 hours of personal flight time (the pro rated
amount of the 100 flight hours). For the first 9.5 months of 2008, Mr. Wolstein used approximately
78 flight hours, and we were obligated to pay Mr. Wolstein approximately $8,800 for the unused
flight hours, representing the annual average cost per flight hour multiplied by his unused flight
hours for that portion of the year. Mr. Wolstein, however, agreed to waive our obligation to pay
this amount.
Beginning in mid-October 2008, however, for each hour of personal flight time that Mr.
Wolstein uses, he will reimburse us based on applicable Standard Industry Fare Level rules in
accordance with Internal Revenue Code and Department of the Treasury regulations. In addition, Mr.
Wolstein will reimburse us to the extent that the full cost of Mr. Wolsteins personal use of
company aircraft during any year, but offset by Mr. Wolsteins reimbursements to us, exceeds
$300,000. As a result, Mr. Wolstein is receiving from us a perquisite of personal use of company
aircraft each year in an amount up to $300,000. Mr. Wolstein will reimburse us for personal use of
company aircraft, however, only to the extent permitted under applicable Federal Aviation
Administration rules and regulations.
Under their employment agreements, Messrs. Hurwitz, Schafer and Oakes are entitled to the
payment by us of regular membership fees, assessments, and dues for a local country club. In
addition, the employment agreements for each of our executive officers provide for participation in
health, life, disability and other insurance plans, sick leave, reasonable vacation time and other
customary fringe benefits.
Retirement Benefits.
We have established a 401(k) plan for our employees pursuant to which we
make semi-monthly, matching contributions equal to 50% of each participants contribution, up to 6%
of the sum of his or her base salary plus annual performance bonus, not to exceed the sum of 3% of
the participants base salary plus annual performance bonus.
Deferred Compensation Plan.
Our executive officers, including the named executive officers,
are entitled to participate in our elective deferred compensation plan and our equity deferred
compensation plan. Pursuant to the elective deferred compensation plan, executive officers can
defer up to 100% of their base salaries and annual performance bonuses, less applicable taxes and
authorized benefits deductions. The elective deferred compensation plan is a non-qualified plan
and is an unsecured, general obligation of the company. We provide a matching contribution to any
participant in a given year who has contributed the maximum permitted under our 401(k) plan. This
matching contribution is equal to the difference between (1) 3% of the sum of the executives base
salary and annual performance bonus deferred under the 401(k) plan and the elective deferred
compensation plan, combined, and (2) the actual employer matching contribution provided under the
401(k) plan. Earnings on a participants deferred account are based on the results of the
investment measurement options available in the plan that are selected by the participant.
Settlement is generally made in cash at a date determined by the participant at the time a deferral
election is made. All of the named executive officers elected to defer a portion of their 2008
total annual cash compensation pursuant to the elective deferred compensation plan. Messrs.
Wolstein, Hurwitz, Schafer and Bruce each elected to have certain deferrals of compensation
distributed to him during 2008 or 2009 in accordance with either the hardship rules (in the case of
Mr. Wolstein) or the transition rules under Section 409A of the Internal Revenue Code. For
information on the value of annual cash compensation deferred by the named executive officers
-19-
in 2008, please refer to the 2008 Summary Compensation Table and to the 2008 Nonqualified
Deferred Compensation Table below.
Equity Deferred Compensation Plan.
Pursuant to the equity deferred compensation plan, our
executive officers, including the named executive officers, have the right to defer the receipt of
restricted shares earned under any equity compensation plan and, for compensation earned prior to
December 31, 2004, the gain otherwise recognizable upon the exercise of stock options. The value
of participants deferrals is converted into units, based on the market value of our common shares
at the time of the deferral, so that each unit is equivalent in value to one common share. We have
established and funded a rabbi trust, which holds our common shares, to satisfy our payment
obligations under this plan. Common shares equal to the number of units credited to the
participants accounts under the plans are placed in the rabbi trust. In the event of our
insolvency, the assets of the rabbi trust are available to general creditors. Settlement of
units is generally made in our common shares at a date determined by the participant at the time a
deferral election is made. In 2008, Messrs. Hurwitz, Oakes and Bruce deferred receipt of 69,625,
7,438 and 3,055 restricted shares, respectively. Messrs. Wolstein, Schafer and Bruce each elected
to have certain deferrals distributed to him during 2008 or 2009 in accordance with either the
hardship rules (in the case of Mr. Wolstein) or the transition rules under Section 409A of the
Internal Revenue Code.
As described above, on February 23, 2009, we entered into the Otto Stock Purchase Agreement
with Mr. Alexander Otto to issue and sell the Purchased Shares and warrants to purchase 10,000,000
common shares to the Investors. If the Investors collectively become
the beneficial owners of 20% or more of our
outstanding common shares, a change in control will be deemed to have occurred under our equity
deferred compensation plan in which some of our executive officers and directors participate.
Under both our Equity Deferred Compensation Plan (Effective January 1, 2003), which we refer to as
the original equity deferred compensation plan, and our 2005 Equity Deferred Compensation Plan
(January 1, 2009 Restatement), which we refer to as the new equity deferred compensation plan, in
the event of a change in control, all unvested deferred stock units held for each participant would
become vested and no longer subject to forfeiture upon a termination of employment. Vested
deferred stock units under the original equity deferred compensation plan would be distributed to
participants on a one-for-one basis in the form of our common shares at the time of the change in
control. Vested deferred stock units under the new equity deferred compensation plan would not be
distributed to participants until the end of the deferral period selected by each participant.
Employment Agreements
We have entered into employment agreements with several executive officers, including each of
the named executive officers. Prior to 2008, Messrs. Wolstein and Hurwitz had last entered into
employment agreements with us in 2001 and 1999, respectively. During the past several years, we
have adopted various policies and programs relating to executive compensation. Many of those
policies and programs have since been modified, and we have continued to implement additional
compensation policies and programs. In early 2008, we determined that the employment agreements
with Messrs. Wolstein and Hurwitz should be reviewed because of the number of executive
compensation changes we had implemented since 1999. We determined that it would be in our best
interests to enter into new employment agreements with Messrs. Wolstein and Hurwitz to document all
applicable modifications to their respective compensation structures, which were last set forth in
their existing employment agreements, and to bring the agreements into compliance with Section 409A
of the Internal Revenue Code. Following a period of negotiations, and with the approval of both
the Board and the Committee, and under the advisement of an independent compensation consulting
company for each of Messrs. Wolstein and Hurwitz, on the one hand, and us, on the other hand
(namely Gressle & McGinley for us), on October 15, 2008, we entered into new employment agreements
with Messrs. Wolstein and Hurwitz. For more information about our employment agreements with
Messrs. Wolstein and Hurwitz, please see the narrative to the 2008 Grants of Plan-Based Awards
Table below.
The employment agreements for the other executive officers, including Messrs. Schafer, Oakes
and Bruce, were last amended in December 2008 to bring such agreements into compliance with Section
409A of the Internal Revenue Code, but no material changes were made to their agreements at that
time. Additional information concerning the terms of the employment agreements and the amounts
payable pursuant to the employment agreements for Messrs. Schafer, Oakes and Bruce is also provided
in the narrative to the 2008 Grants of Plan-Based Awards Table below.
-20-
Change in Control Agreements
We have entered into a change in control agreement with each of several executive officers,
including each of the named executive officers. The change in control agreements are designed to
promote stability and continuity of senior management. Under these agreements, certain benefits
are payable by us if a Triggering Event occurs within two years (or three years for Mr. Wolstein)
after a Change in Control. In general, the Committee believes that the use of change in control
agreements is appropriate because such agreements help insure a continuity of management during a
threatened takeover and help insure that management remains focused on completing a transaction
that is likely to maximize shareholder value. Payments would only be triggered if a change in
control occurs and the officer is terminated or effectively terminated, or if actions are taken
that materially and adversely impact the executive officers position with us or his or her
compensation. The Committee believes that the payment of change in control compensation would be
appropriate because the executive officer may have forgone other opportunities at the time of the
change in control, and it may be difficult for an executive officer to find a comparable position
within a reasonable period of time.
The change in control agreements for Messrs. Wolstein and Hurwitz were last amended in October
2008 in connection with the changes made to their employment agreements, including amendments to
bring such agreements into compliance with Section 409A of the Internal Revenue Code. The change
in control agreements for the other executive officers, including the other named executive
officers, were last amended in December 2008 to bring such agreements into compliance with Section
409A of the Internal Revenue Code, but no material changes were made to those agreements at that
time.
As described above, if the Investors collectively become the beneficial owners of 20% or more of our
outstanding common shares in connection with the Otto transaction, a change in control will be
deemed to have occurred under the change in control agreements. In satisfaction of a condition to
the completion of the transaction with the Investors, however, we have entered into waiver
agreements with our officers with change in control agreements by which the officers agreed that
the acquisition by the Investors of beneficial ownership of 20% or more of our outstanding common
shares does not constitute a change in control under the terms of the change in control agreements.
Additional information concerning the terms of the change in control agreements and the amounts
payable pursuant to the change in control agreements for the named executive officers upon the
occurrence of a Triggering Event and a Change in Control are contained under the Potential
Payments Upon Termination or Change in Control subsection below.
Stock Ownership Guidelines
Under the stock ownership guidelines established by the Board, each executive officer,
including the named executive officers, must own common shares or common share equivalents with an
aggregate market value of no less than the sum of the officers annual salary and annual
performance bonus for the immediately preceding year no later than the fourth anniversary of the
March 15th on which the officer received his or her first grant of common share equivalents, and on
each anniversary date thereafter. The Board established this particular level of stock ownership
for our executive officers because it is reasonable evidence of our continuing commitment to have
the interests of our executive officers aligned with the investment interests of our shareholders.
During the initial four-year phase-in period, each executive officer is expected to acquire 20% of
the amount of required common shares or common share equivalents during each year in order to
satisfy the stock ownership guidelines in a timely manner. Unvested restricted shares and shares
deferred into our equity deferred compensation plan, but not unvested options, will count as common
share equivalents toward satisfying the stock ownership guidelines.
Due to the recent economic downturn in the United States, which has negatively impacted our
stock price, as well as certain margin calls experienced by some of our executive officers, most of
our executive officers who met their stock ownership guidelines as of March 15, 2008 did not meet
such guidelines as of March 15, 2009. Due to these extraordinary economic conditions and events,
the Board has granted a waiver of the stock ownership guidelines for 2009 for all our directors and
officers who are subject to Section 16 of the Securities Exchange Act of 1934, including our named executive officers.
The Board plans on re-evaluating the stock ownership guidelines in 2009 to determine if any
modifications in the guidelines are appropriate.
-21-
Tax and Accounting Implications
Impact of
Section 162(m)
of the Internal Revenue Code of 1986
We have made an election to qualify as a real estate investment trust under the Internal
Revenue Code, and as such generally will not be subject to federal income tax. Thus, the deduction
limit for compensation paid to our Chief Executive Officer and the three other most highly
compensated executive officers of a public company contained in Section 162(m) of the Internal
Revenue Code is not material to the design and structure of our executive compensation program.
Compensation Committee Report
The Executive Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and
discussions, the Executive Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 and the Proxy Statement for the 2009 Annual Meeting of Shareholders
for filing with the Securities and Exchange Commission.
Executive Compensation Committee
Terrance R. Ahern, Chairman
Victor B. MacFarlane
Barry A. Sholem
William B. Summers, Jr.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serve or have served on the board of directors or compensation
committee of any entity that has one or more executive officers serving as a member of our Board of
Directors or Executive Compensation Committee.
-22-
Executive Compensation
2008 Summary Compensation Table
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Non-
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
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|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
All Other
|
|
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)(1)
|
|
(d)
|
|
(e)(2)
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(f)(3)
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(g)(1)(4)
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(i)
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|
(j)
|
Scott A. Wolstein
|
|
|
2008
|
|
|
$
|
957,583
|
(5)
|
|
|
|
|
|
$
|
1,708,628
|
|
|
$
|
552,091
|
|
|
$
|
920,000
|
|
|
$
|
486,351
|
(6)
|
|
$
|
4,624,653
|
|
Chairman and Chief
|
|
|
2007
|
|
|
$
|
880,449
|
|
|
$
|
700,000
|
|
|
$
|
2,528,826
|
|
|
$
|
628,812
|
|
|
$
|
1,000,000
|
|
|
$
|
1,414,314
|
|
|
$
|
7,152,401
|
|
Executive Officer
|
|
|
2006
|
|
|
$
|
641,667
|
|
|
|
|
|
|
$
|
2,440,858
|
|
|
$
|
691,277
|
|
|
$
|
1,614,380
|
|
|
$
|
752,295
|
|
|
$
|
6,140,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
2008
|
|
|
$
|
302,878
|
|
|
|
|
|
|
$
|
272,634
|
|
|
$
|
45,024
|
|
|
$
|
122,000
|
|
|
$
|
52,928
|
(7)
|
|
$
|
795,464
|
|
Executive Vice President
|
|
|
2007
|
|
|
$
|
290,395
|
|
|
|
|
|
|
$
|
266,014
|
|
|
$
|
46,277
|
|
|
$
|
175,361
|
|
|
$
|
28,704
|
|
|
$
|
806,751
|
|
and Chief Financial
|
|
|
2006
|
|
|
$
|
266,667
|
|
|
|
|
|
|
$
|
249,756
|
|
|
$
|
51,113
|
|
|
$
|
140,514
|
|
|
$
|
40,146
|
|
|
$
|
748,196
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel B. Hurwitz
|
|
|
2008
|
|
|
$
|
632,247
|
(8)
|
|
|
|
|
|
$
|
690,833
|
|
|
$
|
261,386
|
|
|
$
|
739,200
|
|
|
$
|
55,168
|
(9)
|
|
$
|
2,378,834
|
|
President and Chief
|
|
|
2007
|
|
|
$
|
507,131
|
|
|
$
|
627,300
|
|
|
$
|
1,034,972
|
|
|
$
|
235,727
|
|
|
$
|
476,000
|
|
|
$
|
53,400
|
|
|
$
|
2,934,530
|
|
Operating Officer
|
|
|
2006
|
|
|
$
|
425,171
|
|
|
|
|
|
|
$
|
972,633
|
|
|
$
|
235,904
|
|
|
$
|
505,900
|
|
|
$
|
62,710
|
|
|
$
|
2,202,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
2008
|
|
|
$
|
361,667
|
|
|
|
|
|
|
$
|
425,638
|
|
|
$
|
452,188
|
|
|
$
|
364,000
|
|
|
$
|
49,970
|
(10)
|
|
$
|
1,653,463
|
|
Senior Executive Vice
|
|
|
2007
|
|
|
$
|
247,917
|
|
|
|
|
|
|
$
|
215,333
|
|
|
$
|
234,832
|
|
|
$
|
350,000
|
|
|
$
|
41,428
|
|
|
$
|
1,089,510
|
|
President of Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
2008
|
|
|
$
|
347,784
|
|
|
|
|
|
|
$
|
301,460
|
|
|
$
|
41,886
|
|
|
$
|
134,190
|
|
|
$
|
37,104
|
(11)
|
|
$
|
862,424
|
|
Executive Vice President
|
|
|
2007
|
|
|
$
|
309,706
|
|
|
|
|
|
|
$
|
277,130
|
|
|
$
|
55,426
|
|
|
$
|
187,022
|
|
|
$
|
12,771
|
|
|
$
|
842,055
|
|
of Development
|
|
|
2006
|
|
|
$
|
288,042
|
|
|
|
|
|
|
$
|
261,844
|
|
|
$
|
73,844
|
|
|
$
|
116,000
|
|
|
$
|
14,125
|
|
|
$
|
753,855
|
|
|
|
|
(1)
|
|
The amounts reported in columns (c) and (g) for 2008 include amounts deferred into our 401(k)
plan (a qualified plan) and our elective deferred compensation plan (nonqualified plan) by
Messrs. Wolstein, Schafer, Hurwitz, Oakes and Bruce for the year ended December 31, 2008 as
follows: Mr. Wolstein, $110,281; Mr. Schafer, $47,394; Mr. Hurwitz, $42,700; Mr. Oakes,
$50,500 and Mr. Bruce, $73,981. Under our elective deferred compensation plan, deferred
amounts are payable to the named executive officer at a date specified by the named executive
officer at the time of his deferral election in accordance with the provisions of the plans.
|
|
(2)
|
|
The amounts reported in column (e) reflect the dollar amounts recognized for financial
statement reporting purposes in accordance with FAS 123(R), excluding the effect of certain
forfeiture assumptions, for stock awards granted in and prior to such year. Assumptions used
in the calculation of these amounts are included in Footnote 18 to the financial statements
included in the Original Filing.
|
|
(3)
|
|
The amounts reported in column (f) reflect the dollar amounts recognized for financial
statement reporting purposes in accordance with FAS 123(R), excluding the effect of certain
forfeiture assumptions, for option awards granted in and prior to such year. Assumptions used
in the calculation of these amounts are included in Footnote 18 to the financial statements
included in the Original Filing.
|
|
(4)
|
|
The amounts reported in column (g) reflect cash amounts earned by such executives as annual
performance bonuses.
|
|
(5)
|
|
The amount reported reflects annual base salary rates for Mr. Wolstein of $1,000,000 for
January 2008 through October 15, 2008 and $800,000 for October 15, 2008 through December 2008.
|
|
(6)
|
|
The amount reported as All Other Compensation for Mr. Wolstein includes matching
contributions to the deferred compensation plan and 401(k) plan of $30,650. The amount shown
in column (i) for Mr. Wolstein also includes $450,342, which is attributable to Mr. Wolsteins
personal use of company aircraft as further described above under Compensation Discussion and
Analysis. None of the other amounts in column (i), if not a perquisite or personal benefit,
exceeds $10,000 or, if a perquisite or personal benefit, exceeds the greater of $25,000 or 10%
of the total amount of perquisites and personal benefits for Mr. Wolstein.
|
|
(7)
|
|
The amount reported as All Other Compensation for Mr. Schafer includes: matching
contributions to the deferred compensation plan and 401(k) plan of $13,708; amounts paid for a
long-term disability policy; amounts paid for life insurance coverage; and amounts paid for
business and country club memberships. None of the amounts in column (i), if not a perquisite
or personal benefit, exceeds $10,000 or, if a perquisite or personal benefit, exceeds the
greater of $25,000 or 10% of the total amount of perquisites and personal benefits for Mr.
Schafer.
|
-23-
|
|
|
(8)
|
|
The amount reported reflects annual base salary rates for Mr. Hurwitz of $544,000 for January
2008, $592,466 for February 2008, $648,466 for March 2008 through October 15, 2008 and
$616,000 for October 15, 2008 through December 2008.
|
|
(9)
|
|
The amount reported as All Other Compensation for Mr. Hurwitz includes: matching
contributions to the deferred compensation plan and 401(k) plan of $20,500; amounts paid for a
long-term disability policy; amounts paid for life insurance coverage; and amounts paid for
business and country club memberships. None of the other amounts in column (i), if not a
perquisite or personal benefit, exceeds $10,000 or, if a perquisite or personal benefit,
exceeds the greater of $25,000 or 10% of the total amount of perquisites and personal benefits
for such officer.
|
|
(10)
|
|
The amount reported as All Other Compensation for Mr. Oakes includes: matching
contributions to the deferred compensation plan and 401(k) plan of $21,350; and amounts paid
for business and country club memberships. None of the other amounts in column (i), if not a
perquisite or personal benefit, exceeds $10,000 or, if a perquisite or personal benefit,
exceeds the greater of $25,000 or 10% of the total amount of perquisites and personal benefits
for such officer.
|
|
(11)
|
|
The amount reported as All Other Compensation for Mr. Bruce includes: matching
contributions to the deferred compensation plan and 401(k) plan of $16,044. None of the
amounts in column (i), if not a perquisite or personal benefit, exceeds $10,000 or, if a
perquisite or personal benefit, exceeds the greater of $25,000 or 10% of the total amount of
perquisites and personal benefits for such officer.
|
2008 Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Grant
|
|
Estimated Possible Payouts Under Non-Equity
|
|
Estimated Possible Payouts Under Equity
|
|
and Option
|
Name
|
|
Date
|
|
Incentive Plan Awards(1)(2)
|
|
Incentive Plan Awards(3)(4)
|
|
Awards(5)
|
|
|
|
|
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(l)
|
Scott A. Wolstein
|
|
|
|
|
|
$
|
280,000
|
|
|
|
|
|
|
$
|
3,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
280,000
|
|
|
|
|
|
|
$
|
3,200,000
|
|
|
$
|
3,200,000
|
|
William H. Schafer
|
|
|
|
|
|
$
|
20,334
|
|
|
$
|
122,000
|
|
|
$
|
244,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,667
|
|
|
$
|
106,750
|
|
|
$
|
274,500
|
|
|
$
|
274,500
|
|
Daniel B. Hurwitz
|
|
|
|
|
|
$
|
184,800
|
|
|
|
|
|
|
$
|
1,848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
184,800
|
|
|
|
|
|
|
$
|
1,848,000
|
|
|
$
|
1,848,000
|
|
David J. Oakes
|
|
|
|
|
|
$
|
60,679
|
|
|
$
|
273,000
|
|
|
$
|
455,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
212,339
|
|
|
$
|
477,750
|
|
|
$
|
819,000
|
|
|
$
|
819,000
|
|
Timothy J. Bruce
|
|
|
|
|
|
$
|
23,667
|
|
|
$
|
142,000
|
|
|
$
|
284,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,333
|
|
|
$
|
124,250
|
|
|
$
|
319,500
|
|
|
$
|
319,500
|
|
|
|
|
(1)
|
|
Amounts for Messrs. Wolstein and Hurwitz reflect the cash portion of annual performance bonus
opportunities established for 2008 under their employment agreements at the threshold and
maximum levels. The amounts shown in column (c) represent the minimum amount payable in cash
(35% and 30% of base salary, respectively) for minimum performance (threshold achievement of
the relative total shareholder return performance metric). The amounts shown in column (e)
represent the maximum amount payable in cash (400% and 300% of base salary, respectively) for
maximum performance (maximum achievement of the FFO per common share, relative total
shareholder return and qualitative performance metrics), for 2008 under their employment
agreements. The amounts actually earned by Messrs. Wolstein and Hurwitz are included in the
Non-Equity Incentive Plan Compensation column (column (g)) of the 2008 Summary Compensation
Table above. See Compensation Discussion and Analysis Analysis of 2008 Executive
Compensation Program Annual Compensation above for additional information about the annual
performance bonuses.
|
|
(2)
|
|
Amounts for Messrs. Schafer, Oakes and Bruce reflect the cash portion of annual performance
bonus opportunities established for 2008 under our annual cash incentive plan at the
threshold, target and maximum levels. The amounts shown in column (c) represent the minimum
amount payable in cash (6-2/3% of base salary for Messrs. Schafer and Bruce, and 16-2/3% of
base salary for Mr. Oakes) for minimum performance under the performance metrics. The amounts
shown in column (d) represent the target amount payable in cash (40% of base salary for
Messrs. Schafer and Bruce, and 75% of base salary for Mr. Oakes) for target performance under
the performance metrics. The amounts shown in column (e) represent the maximum amount payable
in cash (80% of base salary for Messrs. Schafer and Bruce, and 125% of base salary for Mr.
Oakes) for maximum performance under the performance metrics for 2008. The amounts actually
earned by Messrs. Schafer, Oakes and Bruce are included in the Non-Equity Incentive Plan
Compensation column (column (g)) of the 2008 Summary Compensation Table above. See
Compensation Discussion and Analysis Analysis of 2008 Executive Compensation Program Annual Compensation above for additional information about
the annual performance bonuses.
|
-24-
|
|
|
(3)
|
|
Amounts for Messrs. Wolstein and Hurwitz reflect the equity portion of annual performance
bonus award opportunities established for 2008 under their employment agreements at the
threshold and maximum levels. The amounts shown in column (f) represent the minimum amount
payable in equity (35% and 30% of base salary, respectively) for minimum performance
(threshold achievement of the relative total shareholder return performance metric). The
amounts shown in column (h) represent the maximum amount payable in equity (400% and 300% of
base salary, respectively) for maximum performance (maximum achievement of the FFO per common
share, relative total shareholder return and qualitative performance metrics), for 2008 under
their employment agreements. See Compensation Discussion and Analysis Analysis of 2008
Executive Compensation Program Annual Compensation above for additional information about
the annual performance bonuses.
|
|
(4)
|
|
Amounts for Messrs. Schafer, Oakes and Bruce reflect the annual equity award opportunities
established for 2008 under our annual equity award program at the threshold, target and
maximum levels. The amounts shown in column (f) represent the minimum amount payable in
equity (12.5% of base salary plus minimum annual performance bonus for Messrs. Schafer and
Bruce, and 50% of base salary plus minimum annual performance bonus for Mr. Oakes). The
amounts shown in column (g) represent the target amount payable in equity (25% of base salary
plus target annual performance bonus for Messrs. Schafer and Bruce, and 75% of base salary
plus target annual performance bonus for Mr. Oakes). The amounts shown in column (h)
represent the maximum amount payable in equity (50% of base salary plus maximum annual
performance bonus for Messrs. Schafer and Bruce, and 100% of base salary plus maximum annual
performance bonus for Mr. Oakes). See Compensation Discussion and Analysis Analysis of
2008 Executive Compensation Program Annual Compensation above for additional information
about the annual equity awards.
|
|
(5)
|
|
Amounts estimated assuming payouts at maximum levels in the form of equity awards as further
described above under Compensation Discussion and Analysis Analysis of 2008 Executive
Compensation Program Annual Compensation.
|
Employment Agreements
We have entered into separate employment agreements with each of the named executive officers.
Our employment agreements with Messrs. Wolstein and Hurwitz were last amended and restated in
October 2008, as described above.
The term of each employment agreement with Messrs. Wolstein and Hurwitz initially runs through
December 31, 2009, but the term is subject to a evergreen provision that provides for an
automatic extension of the remaining term for an additional year at the end of each calendar year,
subject to the parties termination rights or the earlier termination of the executive. The
employment agreements provide for minimum base salaries, subject to increases approved by the
Board, of $800,000 for Mr. Wolstein and $616,000 for Mr. Hurwitz. The executives are entitled to
participate in our broad-based retirement and other benefit plans, including our 401(k) plan and
our deferred compensation program, and are also entitled to receive life, medical, dental and other
insurance coverage and benefits similar to that provided to our other executive officers. We will
also provide disability insurance coverage (or self-insure such coverage) for Mr. Wolstein during
the employment term of at least $46,500 per month through age 65, and for Mr. Hurwitz during the
employment term of at least $25,000 per month through age 65. The executives are also entitled to
the limited perquisites and other benefits as described above.
Under the employment agreements, Messrs. Wolstein and Hurwitz are entitled to annual
performance bonuses and long-term equity incentives as described above. Each employment agreement
may be terminated under a variety of circumstances, including the executives death. We may
terminate each employment agreement for cause if the executive engages in certain specified
conduct, if the executive is disabled for a specified period of time or at any other time without
cause by giving the executive 90 days prior written notice. Each executive may also terminate his
employment agreement for good reason in certain specified circumstances or at any other time
without good reason by giving us 90 days prior written notice.
Messrs. Wolstein and Hurwitz are entitled under the employment agreements to certain
additional payments and benefits in the event of certain termination circumstances. If either Mr.
Wolstein or Mr. Hurwitz is terminated by us without cause or the executive terminates his
employment for good reason, he is entitled to receive: (1) accrued but unpaid base salary and his
prior years annual bonus to the extent not paid; (2) for Mr. Wolstein, a lump sum amount equal to
the greater of (A) $5 million or (B) the sum of his base salary plus his prior years annual
performance bonus, and for Mr. Hurwitz, a lump sum amount equal to the greater of (X) $3
million or (Y) the sum of his base salary plus his prior years annual performance bonus; (3) one
year of continued health and welfare
-25-
benefits for the executive and his family; and (4) immediate accelerated vesting of the
executives non-performance-based equity awards (specifically excluding awards made under any
outperformance award plans and supplemental equity award plans). If an executive dies during the
term of the employment agreement, his estate or beneficiaries are entitled to receive his accrued
but unpaid base salary and his prior years annual performance bonus to the extent not paid, and
his family is entitled to receive one year of continued health and welfare benefits. Additionally,
Mr. Hurwitzs estate or beneficiaries are entitled to receive a lump sum amount equal to $2.5
million either from us or as a life insurance payment. If an executive is terminated due to
disability, he is entitled to receive: (1) his accrued but unpaid based salary and his prior years
annual performance bonus to the extent not paid; (2) a lump sum amount equal to two times his base
salary; (3) a pro rata portion of his annual performance bonus for the year in which his
termination occurs; and (4) one year of continued health and welfare benefits for the executive and
his family. Certain of these termination payments and benefits are subject to the executives
execution of a general release of claims against us or our waiver of such release.
The employment agreements provide that, to the extent that any of the payments to be made
under the employment agreements or the change in control agreements discussed below constitutes an
excess parachute payment under certain tax laws, rules and regulations, we will pay to the
executive such additional cash amounts as are necessary to put him in the same after-tax position
as he would have been in had such payments (excluding any units or awards granted or vested
pursuant to any performance unit agreement with us or any equity awards granted under any of our
outperformance award plans or supplemental equity plans, if applicable) not given rise to any
applicable excise tax, penalties or interest. Each executive is also entitled to a similar
gross-up payment regarding any excise tax, penalties or interest to which he is subject under
Section 409A of the Internal Revenue Code. The employment agreements also contain a two-year
confidentiality covenant regarding our proprietary information, a two-year non-solicitation
covenant and other provisions generally designed to ensure compliance with Section 409A of the
Internal Revenue Code. Mr. Hurwitz is also subject to a one-year noncompetition covenant that
covers the four largest real estate investment trusts (excluding us) based on market capitalization
that focus primarily on neighborhood and community shopping centers (subject to a one percent
public equity ownership exception).
Additionally, Mr. Wolsteins employment agreement provides that:
|
|
|
Mr. Wolstein is entitled to the personal airplane use perquisite described above in
the Compensation Discussion and Analysis;
|
|
|
|
|
Any transition by Mr. Wolstein to service as a non-executive Chairman of the Board
will not have an impact on the vesting and exercise provisions of any prior or
subsequent equity awards made by us; and
|
|
|
|
|
If Mr. Wolstein is terminated other than by us for cause or by reason of his death,
he will be entitled to continued use of office space, office support and secretarial
services at our expense until the earliest of his death, the date he begins other
employment, or the third anniversary of his termination date.
|
Our employment agreements with Messrs. Schafer, Oakes and Bruce were last amended in December
2008 to bring such agreements into compliance with Section 409A of the Internal Revenue Code, but
no material changes were made to their agreements at that time. Each of the employment agreements
with Messrs. Schafer, Oakes and Bruce contains an evergreen provision that provides for an
automatic extension of the agreement for an additional year at the end of each fiscal year, subject
to the parties termination rights. The agreements can be terminated by us by giving 90 days
prior written notice prior at any time. The agreements provide for minimum base salaries as
disclosed in the Compensation Discussion and Analysis above, subject to increases approved by the
Committee. Messrs. Schafer and Oakes are entitled to the payment by us of regular membership fees,
assessments, and dues for a local country club. In addition, the employment agreements for each of
our named executive officers provide for participation in health, life, disability and other
insurance plans, sick leave, reasonable vacation time and other customary fringe benefits.
Attributed costs of these benefits for the named executive officers for 2008 are included in the
2008 Summary Compensation Table above.
Pursuant to their employment agreements, each of Messrs. Schafer, Oakes and Bruce is entitled
to annual performance bonuses equal to a percentage of his base salary as approved by the
Committee. See the Compensation Discussion and Analysis under
Annual Compensation for a discussion of the methods used
-26-
to determine these annual performance bonuses and each named executive officers threshold, target
and maximum annual performance bonus opportunity. If the named executive officers employment is
terminated by us without cause, or by the named executive officer for good reason, he is entitled
to receive a payment equal to his annual salary plus a pro rata portion (through the date of
termination) of the annual performance bonus he would have earned based on actual results for the
applicable year and continued life, disability and medical insurance for a period of one year
following such termination.
In the cases of Messrs. Schafer, Oakes and Bruce, the agreements also provide that to the
extent that any of the payments to be made under the employment agreements or the change in control
agreements discussed below (together with all other payments of cash or property, whether pursuant
to the agreements or otherwise, but excluding any units or awards granted or vested pursuant to his
Outperformance Long-Term Incentive Plan Agreement or Performance Unit Agreement with us)
constitutes excess parachute payments under certain tax laws, we will pay to the executive
officer such additional amounts as are necessary to cause him to receive the same after-tax
compensation that he would have received but for the application of such tax laws.
Outstanding Equity Awards at 2008 Fiscal Year-End Table
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
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|
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|
|
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|
|
|
|
Incentive
|
|
Plan Awards:
|
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|
|
|
|
|
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Market or
|
|
|
|
|
|
|
Number of
|
|
Securities
|
|
Number
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Payout Value
|
|
|
|
|
|
|
Securities
|
|
Underlying
|
|
of Securities
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Market Value of
|
|
Unearned
|
|
of Unearned
|
|
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Units of
|
|
Shares or
|
|
Shares, Units
|
|
Shares, Units
|
|
|
|
|
|
|
Unexercised
|
|
Options (#)
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock That
|
|
Units That
|
|
or Other Rights
|
|
or Other Rights
|
|
|
|
|
|
|
Options (#)
|
|
Unexercisable
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have Not
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
(1)
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Not Vested
|
|
Vested ($)
|
(a)
|
|
(b1)
|
|
(b2)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)(2)
|
|
(h)(3)
|
|
(i)(4)
|
|
(j)(3)
|
Scott A. Wolstein
|
|
|
2/24/2004
|
|
|
|
55,243
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
90,668
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
44,256
|
|
|
|
22,128
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
19,256
|
|
|
|
38,514
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
161,724
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271,019
|
|
|
$
|
1,322,573
|
|
|
|
|
|
|
|
|
|
|
William H. Schafer
|
|
|
2/25/2003
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2004
|
|
|
|
15,036
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
12,669
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
3,934
|
|
|
|
1,967
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
1,573
|
|
|
|
3,146
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
13,011
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,592
|
|
|
$
|
27,289
|
|
|
|
12,850
|
|
|
$
|
62,708
|
|
|
Daniel B. Hurwitz
|
|
|
2/24/2004
|
|
|
|
17,342
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
48,789
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
17,779
|
|
|
|
8,890
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
7,603
|
|
|
|
15,206
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
88,785
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,290
|
|
|
$
|
596,775
|
|
|
|
|
|
|
|
|
|
|
David J. Oakes
|
|
|
4/16/2007
|
|
|
|
33,333
|
|
|
|
66,667
|
|
|
|
|
|
|
$
|
64.60
|
|
|
|
4/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
45,438
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,752
|
|
|
$
|
145,190
|
|
|
|
|
|
|
|
|
|
|
Timothy J. Bruce
|
|
|
9/09/2002
|
|
|
|
61,896
|
|
|
|
|
|
|
|
|
|
|
$
|
22.89
|
|
|
|
9/09/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2003
|
|
|
|
2,080
|
|
|
|
|
|
|
|
|
|
|
$
|
23.00
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2004
|
|
|
|
10,672
|
|
|
|
|
|
|
|
|
|
|
$
|
36.32
|
|
|
|
2/24/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2005
|
|
|
|
13,395
|
|
|
|
|
|
|
|
|
|
|
$
|
41.37
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2006
|
|
|
|
5,254
|
|
|
|
2,627
|
|
|
|
|
|
|
$
|
50.81
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2007
|
|
|
|
902
|
|
|
|
1,804
|
|
|
|
|
|
|
$
|
66.75
|
|
|
|
2/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2008
|
|
|
|
|
|
|
|
13,875
|
|
|
|
|
|
|
$
|
37.69
|
|
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,620
|
|
|
$
|
27,426
|
|
|
|
15,400
|
|
|
$
|
75,152
|
|
-27-
|
|
|
(1)
|
|
Each grant of options vests at a rate of 33-1/3% per year over the first three years of the
ten-year option term. The following table sets forth the vesting dates of the options held by
the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Wolstein
|
|
Schafer
|
|
Hurwitz
|
|
Oakes
|
|
Bruce
|
2/21/2009
|
|
|
53,908
|
|
|
|
4,337
|
|
|
|
29,595
|
|
|
|
15,146
|
|
|
|
4,625
|
|
2/23/2009
|
|
|
41,385
|
|
|
|
3,540
|
|
|
|
16,493
|
|
|
|
|
|
|
|
3,529
|
|
4/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
|
|
|
|
|
2/21/2010
|
|
|
53,908
|
|
|
|
4,337
|
|
|
|
29,595
|
|
|
|
15,146
|
|
|
|
4,625
|
|
2/23/2010
|
|
|
19,257
|
|
|
|
1,573
|
|
|
|
7,603
|
|
|
|
|
|
|
|
902
|
|
4/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
|
|
2/21/2011
|
|
|
53,908
|
|
|
|
4,337
|
|
|
|
29,595
|
|
|
|
15,146
|
|
|
|
4,625
|
|
|
|
|
(2)
|
|
Each grant of restricted shares vests at a rate of 20% per year over a period of four years
beginning on the date of grant (except for Mr. Oakes April 16, 2007 grant, which vests at a
rate of 20% per year over a period of five years beginning on the first anniversary of the
date of grant). The following table sets forth the vesting dates of the restricted shares
held by the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Wolstein
|
|
Schafer
|
|
Hurwitz
|
|
Oakes
|
|
Bruce
|
1/01/2009
|
|
|
68,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
2/21/2009
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
2/23/2009
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
2/24/2009
|
|
|
7,318
|
|
|
|
682
|
|
|
|
2,625
|
|
|
|
|
|
|
|
721
|
|
4/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
1/01/2010
|
|
|
68,000
|
|
|
|
|
|
|
|
22,666
|
|
|
|
|
|
|
|
|
|
2/21/2010
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
2/23/2010
|
|
|
10,061
|
|
|
|
860
|
|
|
|
4,009
|
|
|
|
|
|
|
|
845
|
|
4/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
1/01/2011
|
|
|
34,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
2/21/2011
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
2/23/2011
|
|
|
4,871
|
|
|
|
398
|
|
|
|
1,924
|
|
|
|
|
|
|
|
229
|
|
4/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
1/01/2012
|
|
|
34,000
|
|
|
|
|
|
|
|
22,667
|
|
|
|
|
|
|
|
|
|
2/21/2012
|
|
|
8,677
|
|
|
|
698
|
|
|
|
4,764
|
|
|
|
2,438
|
|
|
|
745
|
|
4/16/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
(3)
|
|
These amounts were calculated based upon the closing price of our common shares on December
31, 2008 of $4.88.
|
|
(4)
|
|
Reflects shares available to the named executive officer if the shareholder return metrics
are met with respect to the 2005 Outperformance Award Plan. The 2005 Outperformance Award
Plan is more fully described in the Compensation Discussion and Analysis above.
|
The information in the Outstanding Equity Awards at 2008 Fiscal Year-End Table above is
provided as of December 31, 2008. As further described above in Compensation Discussion and
Analysis, on April 9, 2009, our shareholders approved the Otto transaction. As a result, all
outstanding unvested stock options became fully exercisable, all restrictions on unvested
restricted shares lapsed, and all outperformance awards became vested (which means that each
outperformance award holders right to receive a payment if the performance criteria are met is no
longer subject to forfeiture upon a termination of the holders employment). The outperformance
awards will still be earned depending on our performance against the targets established under the
outperformance awards for the performance period (which generally ends on December 31, 2009).
-28-
2008 Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards(1)
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on
|
|
Value Realized on
|
Name
|
|
Exercise (#)
|
|
Exercise ($)
|
|
Vesting (#)
|
|
Vesting ($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)(2)
|
Scott A. Wolstein
|
|
|
|
|
|
|
|
|
|
|
174,311
|
|
|
$
|
6,706,838
|
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
|
2,961
|
|
|
$
|
114,565
|
|
Daniel B. Hurwitz
|
|
|
|
|
|
|
|
|
|
|
72,517
|
|
|
$
|
2,790,007
|
|
David J. Oakes
|
|
|
|
|
|
|
|
|
|
|
7,438
|
|
|
$
|
299,238
|
|
Timothy J. Bruce
|
|
|
|
|
|
|
|
|
|
|
3,055
|
|
|
$
|
118,169
|
|
|
|
|
(1)
|
|
Reflects shares received in the first quarter of 2008 pursuant to the equity incentive awards
for the 2004-2008 grants to such named executive officer.
|
|
(2)
|
|
Computed as the number of shares acquired on vesting using the market price as of the date of
vesting. For Messrs. Wolstein and Hurwitz, 68,000 and 22,666 shares vested on January 1,
2008, at $38.29 and 71,919 and 35,960 shares vested on March 1, 2008 at $38.56. The remaining
shares acquired on vesting occurred in February 2008 at prices ranging from $37.69 to $39.00
and for Mr. Oakes in April 2008 at $41.47.
|
2008 Nonqualified Deferred Compensation Table(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings
|
|
Withdrawals/
|
|
Balance
|
|
|
Last FY
|
|
Last FY
|
|
in Last FY
|
|
Distributions
|
|
at Last FYE
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)(2)
|
|
(c)(3)
|
|
(d)(4)
|
|
(e)
|
|
(f)(5)(6)
|
Elective Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
$
|
89,781
|
|
|
|
|
|
|
$
|
(3,045,291
|
)
|
|
$
|
(7,808,705
|
)
|
|
$
|
285,808
|
|
William H. Schafer
|
|
$
|
28,694
|
|
|
$
|
6,808
|
|
|
$
|
(88,206
|
)
|
|
|
|
|
|
$
|
144,828
|
|
Daniel B. Hurwitz
|
|
$
|
27,200
|
|
|
$
|
13,600
|
|
|
$
|
(113,109
|
)
|
|
$
|
(169,532
|
)
|
|
$
|
171,107
|
|
David J. Oakes
|
|
$
|
35,000
|
|
|
$
|
15,070
|
|
|
$
|
722
|
|
|
|
|
|
|
$
|
50,792
|
|
Timothy J. Bruce
|
|
$
|
53,481
|
|
|
$
|
9,144
|
|
|
$
|
7,467
|
|
|
|
|
|
|
$
|
226,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Deferred Compensation Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Wolstein
|
|
|
|
|
|
|
|
|
|
$
|
(11,225,023
|
)
|
|
$
|
(11,921,244
|
)
|
|
|
|
|
William H. Schafer
|
|
|
|
|
|
|
|
|
|
$
|
(116,334
|
)
|
|
|
|
|
|
$
|
16,992
|
|
Daniel B. Hurwitz
|
|
$
|
2,678,806
|
|
|
|
|
|
|
$
|
(4,608,143
|
)
|
|
|
|
|
|
$
|
671,205
|
|
David J. Oakes
|
|
$
|
299,238
|
|
|
|
|
|
|
$
|
(262,941
|
)
|
|
|
|
|
|
$
|
36,297
|
|
Timothy J. Bruce
|
|
$
|
118,169
|
|
|
|
|
|
|
$
|
(345,550
|
)
|
|
|
|
|
|
$
|
50,298
|
|
|
|
|
(1)
|
|
Our nonqualified deferred compensation plans, which include the elective deferred
compensation plan and the equity deferred compensation plan, are described more fully in the
Compensation Discussion and Analysis under Other Benefits above. For information about the
impact of the Otto transaction described above on our equity deferred compensation plan, see
the Compensation Discussion and Analysis above under Other Benefits.
|
|
(2)
|
|
In accordance with the transition rules under Section 409A of the Code, Messrs. Wolstein and
Hurwitz each elected to have his deferrals to the elective deferred compensation plan for
2005, 2006 and 2007 distributed to him in 2008, and Mr. Wolstein elected to have certain
restricted shares deferred to the equity deferred compensation plans during 2007 distributed
to him in 2008. The amounts reported for our named executive officers in this column are
reported under the Salary column of the 2008 Summary Compensation Table above.
|
|
(3)
|
|
The amounts reported for our named executive officers in this column are fully reported as
part of the other compensation for each named executive officer in the All Other
Compensation column of the 2008 Summary Compensation Table.
|
-29-
|
|
|
(4)
|
|
None of the amounts reported for our named executive officers in this column are reported in
the 2008 Summary Compensation Table.
|
|
(5)
|
|
The amounts reported for our named executive officers in this column have been previously
reported as deferred compensation in our 2006 or 2007 Summary Compensation Tables included in
prior years proxy statements, except for Mr. Oakes, for whom none of these amounts have been
previously reported.
|
|
(6)
|
|
The amounts reported in this column for the equity deferred compensation plan do not include
the following amounts for deferred restricted shares that were unvested at December 31, 2008: Mr.
Wolstein, $1,322,573; Mr. Hurwitz, $236,768; Mr. Oakes, $145,190; and Mr. Bruce, $27,426. These
deferrals, which are included as unvested restricted shares in the Outstanding Equity Awards at
2008 Fiscal Year-End Table above, are expected to vest in connection with the Otto transaction as
described above under Compensation Discussion and Analysis Analysis of 2008 Executive
Compensation Program Other Benefits.
|
Potential Payments Upon Termination or Change in Control
We have entered into certain agreements and we maintain certain plans that will require us to
provide compensation and other benefits to the named executive officers in the event of a
termination of employment or a change in control of the company. The amount of compensation
payable to each named executive officer in each situation is listed in the tables below. Based on
a hypothetical termination or change in control occurring on December 31, 2008, the following
tables describe the potential payments upon such termination or change in control for each named
executive officer:
Scott A. Wolstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
Involuntary Not For
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
Executive Benefits and
|
|
Other Voluntary
|
|
Cause or Good
|
|
For Cause
|
|
Reason Termination
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
Reason Termination
|
|
Termination
|
|
(Change in Control)
|
|
Disability
|
|
Death
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
5,000,000
|
|
|
$
|
0
|
|
|
$
|
5,000,000
|
|
|
$
|
2,520,000
|
|
|
$
|
0
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated
Restricted Shares(2)
|
|
$
|
0
|
(3)
|
|
$
|
1,322,573
|
|
|
$
|
0
|
|
|
$
|
1,322,573
|
|
|
$
|
1,322,573
|
|
|
$
|
1,322,573
|
|
Unvested and Accelerated
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health,
Welfare and Outplacement
Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
135,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance
Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,327,800
|
(5)
|
|
$
|
0
|
|
280G Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post Termination Office and
Secretarial Services(4)
|
|
$
|
420,000
|
|
|
$
|
420,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
420,000
|
|
|
$
|
0
|
|
|
|
|
TOTAL:
|
|
$
|
420,000
|
|
|
$
|
6,762,573
|
|
|
$
|
0
|
|
|
$
|
6,457,573
|
|
|
$
|
7,610,373
|
|
|
$
|
1,742,573
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of Mr. Wolsteins employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Includes 204,000 restricted shares granted pursuant to the conversion of performance unit
awards.
|
|
(3)
|
|
Pursuant to the plans under which restricted shares were awarded, the Committee may, in its
discretion, accelerate the vesting of unvested restricted shares in the event of Mr.
Wolsteins retirement.
|
|
(4)
|
|
Estimated present value of benefits calculated assuming a 6.5% discount rate and an assumed
rate of cost increase of 6.5%.
|
|
(5)
|
|
The estimated payments for long-term disability utilize a present value calculation that
takes into account (i) the executives age and total payments over the benefit term assuming
that the disability occurs on December 31, 2008, and (ii) a discount rate based on the rate
for the Treasury security with a similar term. In general, benefits are available until age
65.
|
|
(6)
|
|
While Mr. Wolsteins change in control agreement provides for a gross-up payment with respect
to excess parachute payments under Section 280G, based on the assumed hypothetical change in
control, the gross-up payment would not have been triggered because no excess parachute
payments would have been made.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or forfeited at year-end pursuant
to our vacation policy.
|
-30-
William H. Schafer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or
|
|
Involuntary Not For
|
|
|
|
|
|
Involuntary or Good
|
|
|
|
|
Executive Benefits
and
|
|
Other Voluntary
|
|
Cause or Good
|
|
For Cause
|
|
Reason Termination
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
Reason Termination
|
|
Termination
|
|
(Change in Control)
|
|
Disability
|
|
Death
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
427,000
|
|
|
$
|
0
|
|
|
$
|
732,000
|
|
|
$
|
427,000
|
|
|
$
|
427,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated
Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,289
|
|
|
$
|
27,289
|
|
|
$
|
27,289
|
|
Unvested and Accelerated
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health,
Welfare and Outplacement Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
85,750
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,470,391
|
(5)
|
|
$
|
0
|
|
280G Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
447,000
|
|
|
$
|
0
|
|
|
$
|
845,039
|
|
|
$
|
3,944,680
|
|
|
$
|
874,289
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of Mr. Schafers employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Pursuant to the plans under which restricted shares were awarded, the Committee may, in its
discretion, accelerate the vesting of unvested restricted shares in the event of Mr. Schafers
retirement.
|
|
(3)
|
|
Amounts calculated pursuant to the terms of Mr. Schafers outperformance long-term incentive
agreement. For the hypothetical change in control on December 31, 2008 and the hypothetical
without cause, death or disability termination on December 31, 2008 scenarios, it was assumed
that none of the metrics would have been achieved during the applicable measurement period.
|
|
(4)
|
|
Estimated present value of benefits calculated assuming a 6.5% discount rate and an assumed
rate of cost increase of 6.5%.
|
|
(5)
|
|
The estimated payments for long-term disability utilize a present value calculation that
takes into account (i) the executives age and total payments over the benefit term assuming
that the disability occurs on December 31, 2008, and (ii) a discount rate based on the rate
for the Treasury security with a similar term. In general, benefits are available until age
65.
|
|
(6)
|
|
While Mr. Schafers change in control agreement provides for gross-up protection with respect
to excess parachute payments under Section 280G, based on the assumed hypothetical
termination, the gross-up payment would not be triggered because no excess parachute payments
would be made.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or forfeited at year-end pursuant
to our vacation policy.
|
-31-
Daniel B. Hurwitz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary or
|
|
|
|
|
|
|
Retirement
|
|
Not For
|
|
|
|
|
|
Good Reason
|
|
|
|
|
|
|
or Other
|
|
Cause or
|
|
|
|
|
|
Termination
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
Good Reason
|
|
For Cause
|
|
(Change in
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
Termination
|
|
Termination
|
|
Control)
|
|
Disability
|
|
Death
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
3,000,000
|
|
|
$
|
0
|
|
|
$
|
3,000,000
|
|
|
$
|
1,971,200
|
|
|
$
|
2,500,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated
Restricted Shares(2)
|
|
$
|
0
|
(3)
|
|
$
|
596,775
|
|
|
$
|
0
|
|
|
$
|
596,775
|
|
|
$
|
596,775
|
|
|
$
|
596,775
|
|
Unvested and Accelerated
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health,
Welfare and Outplacement
Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
110,000
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,647,961
|
(5)
|
|
$
|
0
|
|
280G Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
3,616,775
|
|
|
$
|
0
|
|
|
$
|
3,706,775
|
|
|
$
|
7,235,936
|
|
|
$
|
3,516,775
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of Mr. Hurwitzs employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Includes 90,667 restricted shares granted pursuant to the conversion of performance unit
awards.
|
|
(3)
|
|
Pursuant to the plans under which restricted shares were awarded, the Committee may, in its
discretion, accelerate the vesting of unvested restricted shares in the event of Mr. Hurwitzs
retirement.
|
|
(4)
|
|
Estimated present value of benefits calculated assuming a 6.5% discount rate and an assumed
rate of cost increase of 6.5%.
|
|
(5)
|
|
The estimated payments for long-term disability utilize a present value calculation that
takes into account (i) the executives age and total payments over the benefit term assuming
that the disability occurs on December 31, 2008, and (ii) a discount rate based on the rate
for the Treasury security with a similar term. In general, benefits are available until age
65.
|
|
(6)
|
|
While Mr. Hurwitzs employment agreement provides for gross-up protection with respect to
excess parachute payments under Section 280G, based on the assumed hypothetical termination,
the gross-up payment would not be triggered because no excess parachute payments would be
made.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or forfeited at year-end pursuant
to our vacation policy.
|
-32-
David J. Oakes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary or
|
|
|
|
|
|
|
Retirement
|
|
Not For
|
|
|
|
|
|
Good Reason
|
|
|
|
|
|
|
or Other
|
|
Cause or
|
|
|
|
|
|
Termination
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
Good Reason
|
|
For Cause
|
|
(Change in
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
Termination
|
|
Termination
|
|
Control)
|
|
Disability
|
|
Death
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
728,000
|
|
|
$
|
0
|
|
|
$
|
1,638,000
|
|
|
$
|
728,000
|
|
|
$
|
728,000
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated
Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
145,190
|
|
|
$
|
145,190
|
|
|
$
|
145,190
|
|
Unvested and Accelerated
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health,
Welfare and Outplacement
Benefits(3)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
94,600
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,719,166
|
(4)
|
|
$
|
0
|
|
280G Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
784,549
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(5)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
748,000
|
|
|
$
|
0
|
|
|
$
|
2,662,339
|
|
|
$
|
3,612,356
|
|
|
$
|
1,293,190
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of Mr. Oakes employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Pursuant to the plans under which restricted shares were awarded, the Committee may, in its
discretion, accelerate the vesting of unvested restricted shares in the event of Mr. Oakes
retirement.
|
|
(3)
|
|
Estimated present value of benefits calculated assuming a 6.5% discount rate and an assumed
rate of cost increase of 6.5%.
|
|
(4)
|
|
The estimated payments for long-term disability utilize a present value calculation that
takes into account (i) the executives age and total payments over the benefit term assuming
that the disability occurs on December 31, 2008, and (ii) a discount rate based on the rate
for the Treasury security with a similar term. In general, benefits are available until age
65.
|
|
(5)
|
|
Assumes all vacation was either used during the fiscal year or forfeited at year-end pursuant
to our vacation policy.
|
-33-
Timothy J. Bruce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Involuntary or
|
|
|
|
|
|
|
Retirement
|
|
Not For
|
|
|
|
|
|
Good Reason
|
|
|
|
|
|
|
or Other
|
|
Cause or
|
|
|
|
|
|
Termination
|
|
|
|
|
Executive Benefits and
|
|
Voluntary
|
|
Good Reason
|
|
For Cause
|
|
(Change in
|
|
|
|
|
Payments Upon Termination
|
|
Termination
|
|
Termination
|
|
Termination
|
|
Control)
|
|
Disability
|
|
Death
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance(1)
|
|
$
|
0
|
|
|
$
|
489,190
|
|
|
$
|
0
|
|
|
$
|
836,380
|
|
|
$
|
489,190
|
|
|
$
|
489,190
|
|
Long-term Incentives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and Accelerated
Restricted Shares
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,426
|
|
|
$
|
27,426
|
|
|
$
|
27,426
|
|
Unvested and Accelerated
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Outperformance Units(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-Termination Health,
Welfare and Outplacement
Benefits(4)
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
$
|
0
|
|
|
$
|
93,250
|
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
Life Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
Disability Insurance Proceeds
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,512,231
|
(5)
|
|
$
|
0
|
|
280G Gross-Up(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Accrued Vacation(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
TOTAL:
|
|
$
|
0
|
|
|
$
|
509,190
|
|
|
$
|
0
|
|
|
$
|
957,056
|
|
|
$
|
2,048,847
|
|
|
$
|
936,616
|
|
|
|
|
(1)
|
|
Amounts calculated pursuant to the terms of Mr. Bruces employment agreement or change in
control agreement, as applicable.
|
|
(2)
|
|
Pursuant to the plans under which restricted shares were awarded, the Committee may, in its
discretion, accelerate the vesting of unvested restricted shares in the event of Mr. Bruces
retirement.
|
|
(3)
|
|
Amounts calculated pursuant to the terms of Mr. Bruces outperformance long-term incentive
agreement. For the hypothetical change in control on December 31, 2008 and the hypothetical
without cause, death or disability termination on December 31, 2008 scenarios, it was assumed
that none of the metrics would have been achieved during the applicable measurement period.
|
|
(4)
|
|
Estimated present value of benefits calculated assuming a 6.5% discount rate and an assumed
rate of cost increase of 6.5%.
|
|
(5)
|
|
The estimated payments for long-term disability utilize a present value calculation that
takes into account (i) the executives age and total payments over the benefit term assuming
that the disability occurs on December 31, 2008, and (ii) a discount rate based on the rate
for the Treasury security with a similar term. In general, benefits are available until age
65.
|
|
(6)
|
|
While Mr. Bruces employment agreement provides for gross-up protection with respect to
excess parachute payments under Section 280G, based on the assumed hypothetical termination,
the gross-up payment would not be triggered because no excess parachute payments were made.
|
|
(7)
|
|
Assumes all vacation was either used during the fiscal year or forfeited at year-end pursuant
to our vacation policy.
|
The change in control agreements for Messrs. Wolstein and Hurwitz were last amended in October
2008 in connection with the changes made to their employment agreements. Under the revised change
in control agreements, the following payments and benefits are payable by us to Messrs. Wolstein
and Hurwitz if a Triggering Event occurs: (1) accrued but unpaid base salary and his prior years
annual performance bonus to the extent not paid; (2) for Mr. Wolstein, a lump sum amount equal to
the greater of (A) $5 million or (B) the sum of his base salary plus his prior years annual
performance bonus, and for Mr. Hurwitz, a lump sum amount equal to the greater of (X) $3 million or
(Y) the sum of his base salary plus his prior years annual performance bonus; (3) three years of
continued health and welfare benefits for him and his family; (4) immediate accelerated vesting of
his non-performance-based equity awards (specifically excluding awards made under any
outperformance award plans and supplemental equity award plans); and (5) outplacement services at
an aggregate cost of up to $75,000 for Mr. Wolstein and up to $50,000 for Mr. Hurwitz for no more
than two years after the year in which the Triggering Event occurs. Additionally, we will be
deemed to have waived any requirement for a general release of claims against us. Each change in
control agreement for Messrs. Wolstein and Hurwitz will be terminated if the executive ceases to be
a Board-elected officer, appointed officer or our key employee prior to a change in control.
-34-
The terms Change in Control and Triggering Event are defined in the change in control
agreements. Change in Control generally means certain events including Board or shareholder
approval of a merger or consolidation in which we are not the surviving entity, a sale of
substantially all of our assets, or a liquidation or dissolution of the Company, certain
significant changes in the ownership of our outstanding securities or in the composition of the
Board, or the establishment of a record date in connection with shareholder approval of certain
proposed mergers or consolidations in which we are not the surviving or continuing entity, sales of
all or substantially all of our assets or a dissolution of us. For Mr. Wolstein, a Triggering
Event means certain situations specified in the change in control agreement in which, within three
years after a change in control, Mr. Wolstein is terminated or terminates his employment as a
result of certain material and adverse impacts on his position with us or compensation. For Mr.
Hurwitz, a Triggering Event means certain situations specified in the change in control agreement
in which, within two years after a change in control, Mr. Hurwitz is terminated or terminates his
employment as a result of certain material and adverse impacts on his position with us or
compensation.
The change in control agreements for the other executive officers, including Messrs. Schafer,
Oakes and Bruce, were last amended in December 2008 to bring such agreements into compliance with
Section 409A of the Internal Revenue Code, but no material changes were made to those agreements at
that time. Under the change in control agreements, for Messrs. Schafer, Oakes and Bruce, benefits
are payable by us if a Triggering Event occurs within two years after a Change in Control.
Payments are only triggered if a change in control occurs and the officer is terminated or
effectively terminated, or actions are taken that materially and adversely impact the officers
position with us or his compensation. A Triggering Event occurs if within two years after a
change in control:
|
|
|
we terminate the employment of the named executive officer, other than in the case
of a Termination For Cause (as defined in the applicable change in control
agreement);
|
|
|
|
|
we reduce the named executive officers title, responsibilities, power or authority
in comparison with his title, responsibilities, power or authority at the time of the
change in control;
|
|
|
|
|
we assign the named executive officer duties that are inconsistent with the duties
assigned to the named executive officer on the date on which the change in control
occurred and which duties we persist in assigning to the named executive officer
despite the prior written objection of that officer;
|
|
|
|
|
we (1) reduce the named executive officers base salary, his annual
performance-based cash bonus percentages of salary, his group health, life, disability
or other insurance programs (including any such benefits provided to the named
executive officers family), his pension, retirement or profit-sharing benefits or any
benefits provided by our equity-based award plans or any substitute therefore, (2)
exclude him from any plan, program or arrangement in which our other executive officers
are included, (3) establish criteria and factors to be achieved for the payment of
annual performance bonus compensation that are substantially different than the
criteria and factors established for our other similar executive officers, or (4) fail
to pay the named executive officer any annual performance bonus compensation to which
the named executive officer is entitled through the achievement of the criteria and
factors established for the payment of such bonus; or
|
|
|
|
|
we require the named executive officer to be based at or generally work from any
location more than 50 miles from the geographical center of Cleveland, Ohio.
|
A Change in Control occurs if:
|
|
|
any person or group of persons, acting alone or together with any of its affiliates
or associates, acquires a legal or beneficial ownership interest, or voting rights, in
20% or more of the outstanding common shares;
|
|
|
|
|
at any time during a period of two years, individuals who were our directors at the
beginning of the period no longer constitute a majority of the members of the Board
unless the election, or the nomination for election by our shareholders, of each
director who was not a director at the beginning of the period is approved by at least
a majority of the directors who are in office at the time of the election or nomination
and were directors at the beginning of the period;
|
-35-
|
|
|
a record date is established for determining our shareholders entitled to vote upon
(1) a merger or consolidation with another real estate investment trust, partnership,
corporation or other entity in which we are not the surviving or continuing entity or
in which all or a substantial part of the outstanding shares are to be converted into
or exchanged for cash, securities, or other property, (2) a sale or other disposition
of all or substantially all of our assets, or (3) the dissolution of the company; or
|
|
|
|
|
the Board or our shareholders approve a consolidation or merger in which we are not
the surviving corporation, the sale of substantially all of our assets, or the
liquidation or dissolution of the company.
|
Within five business days after the occurrence of a Triggering Event, we must pay the named
executive officer an amount equal to the sum of two times the then-effective annual salary and the
annual performance bonus at the maximum level payable to the officer. In addition, we agreed to
provide continued insurance benefits that are comparable to or better than those provided to the
named executive officer at the time of the Change in Control until the earlier of two years from
the date of the Triggering Event and the date the named executive officer becomes eligible to
receive comparable or better benefits from a new employer and outplacement services for a period of
up to one year.
Each change in control agreement provides that to the extent that any of the payments to be
made to the named executive officer (together with all other payments of cash or property, whether
pursuant to the agreement or otherwise, other than pursuant to a performance unit plan or an
outperformance award) constitutes excess parachute payments under certain tax laws, we will pay
the named executive officer such additional amounts as are necessary to cause him to receive the
same after-tax compensation that he would have but for the application of such tax laws. For
information about the impact of the Otto transaction described above on our change in control
agreements, see the Compensation Discussion and Analysis above under Change in Control
Agreements.
Compensation of Directors
2008 Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
Stock Awards
|
|
Total
|
(a)
|
|
(b)($)(1)
|
|
(c)($)(2)
|
|
(h)($)
|
Dean Adler
|
|
$
|
100,000
|
|
|
|
|
|
|
$
|
100,000
|
|
Terrance R. Ahern
|
|
$
|
155,000
|
|
|
|
|
|
|
$
|
155,000
|
|
Robert H. Gidel
|
|
|
|
|
|
$
|
100,055
|
|
|
$
|
100,055
|
|
Victor B. MacFarlane
|
|
$
|
100,000
|
|
|
|
|
|
|
$
|
100,000
|
|
Craig Macnab
|
|
$
|
115,000
|
|
|
|
|
|
|
$
|
115,000
|
|
Scott D. Roulston
|
|
$
|
120,000
|
|
|
|
|
|
|
$
|
120,000
|
|
Barry A. Sholem
|
|
|
|
|
|
$
|
100,055
|
|
|
$
|
100,055
|
|
William B. Summers, Jr.
|
|
$
|
50,000
|
|
|
$
|
50,049
|
|
|
$
|
100,049
|
|
|
|
|
(1)
|
|
All or a portion of the fees listed for Messrs. Adler, Ahern, MacFarlane, Macnab and Roulston
were deferred into the Directors Deferred Compensation Plan.
|
|
(2)
|
|
The amounts reported in column (c) reflect the dollar amounts recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2008 in accordance with
FAS 123(R) for stock awards granted in such year. The non-employee directors had option
awards outstanding as of December 31, 2008 for the following number of shares: Mr. Ahern,
15,000; Mr. MacFarlane, 10,000 and Mr. Sholem, 6,000. None of the non-employee directors had
unvested stock awards outstanding as of December 31, 2008. The grant date fair value of the
stock awards issued to each non-employee director in fiscal year 2008 is reflected in this
column.
|
Our non-employee directors receive an annual fee of $100,000, and they must either receive not
less than 50% of such fee in the form of common shares or defer not less than 50% of such fee
pursuant to our directors deferred compensation plan. Pursuant to our directors deferred
compensation plan, deferred fees are converted into units that are the equivalent of common shares,
although the units do not have voting rights. Fees are paid to directors in quarterly
installments. The number of common shares (or common share equivalents under the directors
deferred compensation plan) to be issued quarterly is determined by converting one-fourth of the
value of
-36-
the directors annual fees that such director elected to receive in the form of common shares
(or deferred under the directors deferred compensation plan) into common shares (or common share
equivalents under the directors deferred compensation plan) based on the fair market value of the
common shares on the business day preceding the date of the issuance.
Persons who chair the Audit Committee, the Executive Compensation Committee and the Nominating
and Corporate Governance Committee are entitled to receive additional compensation of $20,000,
$20,000 and $15,000, respectively, as a fee for services rendered as chair of these committees.
The lead director is entitled to receive additional compensation of $35,000, as a fee for services
rendered as lead director. Directors receiving this additional compensation must either receive
not less than 50% of such fee in the form of common shares or defer not less than 50% of such fee
pursuant to our directors deferred compensation plan. Fees are paid to the Committee Chairman and
lead director in quarterly installments, and the number of common shares (or common share
equivalents) received is determined in the same manner as the annual fee. Each non-employee
director is also reimbursed for expenses incurred in attending meetings because we view meeting
attendance as integrally and directly related to the performance of the non-employee directors
duties.
Directors Deferred Compensation Plan.
Non-employee directors have the right to defer all or
a portion of the cash portion of their fees pursuant to our directors deferred compensation plan.
Our directors deferred compensation plan is an unsecured, general obligation of the company.
Participants contributions are converted to units, based on the market value of the common shares,
so that each unit is the economic equivalent of one common share without voting rights. Settlement
of units is made in cash at a date determined by the participant at the time a deferral election is
made. We have established a rabbi trust, which holds our common shares, to satisfy our payment
obligations under the plans. Common shares equal to the number of units credited to participants
accounts under the plans are contributed to the rabbi trust. In the event of our insolvency, the
assets of the rabbi trust are available to general creditors. Messrs. Adler, Ahern, MacFarlane,
Macnab and Roulston elected to defer certain of their 2008 fees pursuant to our directors deferred
compensation plan. During their terms as directors, Messrs. Adler, Ahern, MacFarlane, Macnab and
Roulston have deferred compensation represented by the following number of units:
|
|
|
|
|
|
|
|
|
|
|
Number of Units under
|
|
Value of Units as
|
|
|
the Directors Deferred
|
|
of the Year Ended
|
|
|
Compensation Plan as of
|
|
December 31, 2008
|
Name
|
|
December 31, 2008
|
|
($)
|
Dean S. Adler
|
|
|
24,212
|
|
|
$
|
118,156
|
|
Terrance R. Ahern
|
|
|
26,207
|
|
|
$
|
127,890
|
|
Victor B. MacFarlane
|
|
|
16,278
|
|
|
$
|
79,435
|
|
Craig Macnab
|
|
|
15,679
|
|
|
$
|
76,514
|
|
Scott D. Roulston
|
|
|
8,102
|
|
|
$
|
39,537
|
|
Equity Deferred Compensation Plan.
Prior to 2006, directors received a portion of their fees
in restricted shares and a portion of their fees in cash. Directors had the right to defer the
vesting of the restricted shares pursuant to the equity deferred compensation plan. In addition,
for compensation earned prior to December 31, 2004, directors had the right to defer the gain
otherwise recognizable upon the exercise of options in accordance with the terms of the equity
deferred compensation plan. During their terms as directors, Messrs. Adler, Ahern, MacFarlane and
Macnab have deferred compensation into the equity deferred compensation plans represented by the
following number of units:
-37-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Units as
|
|
|
Number of Units under
|
|
of the Year Ended
|
|
|
the Equity Deferred
|
|
December 31, 2008
|
Name
|
|
Compensation Plan
|
|
($)
|
Dean S. Adler
|
|
|
1,029
|
|
|
$
|
5,022
|
|
Terrance R. Ahern
|
|
|
1,362
|
|
|
$
|
6,647
|
|
Victor B. MacFarlane
|
|
|
1,029
|
|
|
$
|
5,022
|
|
Craig Macnab
|
|
|
695
|
|
|
$
|
3,392
|
|
As
described above, if the Investors collectively become the beneficial
owners of 20% or more of our
outstanding common shares in connection with the Otto transaction, a change in control will be
deemed to have occurred under our equity deferred compensation plan in which some of our directors
participate. Under the original equity deferred compensation plan and the new equity deferred
compensation plan, in the event of a change in control, all unvested deferred stock units held for
each participant would become vested and no longer subject to forfeiture upon a termination of
employment. Vested deferred stock units under the original equity deferred compensation plan would
be distributed to participants on a one-for-one basis in the form of our common shares at the time
of the change in control. Vested deferred stock units under the new equity deferred compensation
plan would not be distributed to participants until the end of the deferral period selected by each
participant.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth the number of securities issued and outstanding under the
existing plans, as of December 31, 2008, as well as the weighted-average exercise price of
outstanding options.
EQUITY COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
to Be Issued upon
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
securities reflected in
|
|
Plan category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation
plans approved by
security holders
(1)
|
|
|
2,185,708
|
(2)
|
|
$
|
42.32
|
|
|
|
3,883,908
|
|
Equity compensation
plans not approved
by security holders
(3)
|
|
|
31,666
|
|
|
$
|
17.70
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,217,374
|
|
|
$
|
41.97
|
|
|
|
3,883,908
|
|
|
|
|
(1)
|
|
Includes information related to the Companys 1992 Employees Share
Option Plan, 1996 Equity-Based Award Plan, Amended and
Restated 1998 Equity-Based Award
Plan, 2002 Equity-Based Award Plan, 2004 Equity-Based Award Plan and
2008 Equity-Based Award Plan.
|
|
(2)
|
|
Does not include 590,489 restricted shares, as these shares
have been reflected in the Companys total shares outstanding. Does
not include 103,700 shares reserved for issuance under outperformance
unit agreements.
|
|
(3)
|
|
Represents options issued to directors of the Company. The options
granted to the directors were at the fair market value at the date of
grant and are fully vested.
|
-38-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our
common shares as of April 20, 2009, except as otherwise disclosed in the notes below, by (i) each
person who is known by us to own beneficially more than 5% of our outstanding common shares based
on a review of filings with the SEC, (ii) our directors, (iii) our named executive officers and
(iv) our executive officers and directors as a group. Except as otherwise described in the
following notes, the following beneficial owners have sole voting power and sole investment power
with respect to all common shares set forth opposite their respective names.
|
|
|
|
|
|
|
|
|
|
|
Number of Common Shares
|
|
Percentage
|
|
|
Beneficially Owned
|
|
Ownership
|
FMR LLC
82 Devonshire Street
Boston, Massachusetts 02109
|
|
|
18,041,848
|
(1)
|
|
|
13.9
|
%
|
The Vanguard Group Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
|
|
|
11,062,629
|
(2)
|
|
|
8.6
|
%
|
Capital Growth Management Limited Partnership
One International Place
Boston, MA 02110
|
|
|
10,200,000
|
(3)
|
|
|
7.9
|
%
|
Barclays Global Investors, NA
45 Fremont Street
San Francisco, California 94105
|
|
|
9,622,118
|
(4)
|
|
|
7.4
|
%
|
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
|
|
|
6,834,573
|
(5)
|
|
|
5.3
|
%
|
Scott A. Wolstein
|
|
|
1,123,594
|
(6)
|
|
|
*
|
|
Timothy J. Bruce
|
|
|
205,865
|
(7)(8)
|
|
|
*
|
|
Daniel B. Hurwitz
|
|
|
382,270
|
(7)(9)
|
|
|
*
|
|
David J. Oakes
|
|
|
472,534
|
(7)(10)
|
|
|
*
|
|
William H. Schafer
|
|
|
135,182
|
(11)
|
|
|
*
|
|
Dean S. Adler
|
|
|
2,386
|
(7)(12)
|
|
|
*
|
|
Terrance R. Ahern
|
|
|
692,053
|
(7)(12)(13)
|
|
|
*
|
|
Robert H. Gidel
|
|
|
46,188
|
(15)
|
|
|
*
|
|
Victor B. MacFarlane
|
|
|
13,279
|
(7)(12)(14)(17)
|
|
|
*
|
|
Craig Macnab
|
|
|
85,252
|
(7)(12)(16)
|
|
|
*
|
|
Scott D. Roulston
|
|
|
8,280
|
(12)(17)
|
|
|
*
|
|
Barry A. Sholem
|
|
|
48,579
|
(18)
|
|
|
*
|
|
William B. Summers, Jr.
|
|
|
13,111
|
|
|
|
*
|
|
All Current Executive Officers and Directors
as a Group (19 persons)
|
|
|
3,812,997
|
(19)
|
|
|
2.9
|
%
|
|
|
|
*
|
|
Less than 1%
|
|
(1)
|
|
Information for common shares owned as of December 31, 2008, is based on a report on Schedule
13G/A filed with the SEC on February 17, 2009 by FMR LLC, a parent holding company, and Edward
C. Johnson 3d, an individual. The report indicated that members of Mr. Johnsons family may
be deemed to form a controlling group with respect to FMR LLC under the Investment Company Act
of 1940. According to the information provided in the report, Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR LLC and an investment adviser registered under the
Investment
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-39-
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Advisers Act of 1940, is the beneficial owner of 16,183,167 shares. FMR LLC and Mr. Johnson
each have sole dispositive power with respect to these 16,183,167 shares. Also according to
the report, Pyramis Global Advisors, LLC, an indirect wholly-owned subsidiary of FMR LLC and an
investment adviser registered under the Investment Advisers Act of 1940, is the beneficial
owner of 140,845 shares. FMR LLC and Mr. Johnson each have sole dispositive power with respect
to and sole voting power over these shares. The report indicates that Pyramis Global Advisors
Trust Company, an indirect-wholly owned subsidiary of FMR LLC and a bank as defined in Section
3(a)(6) of the Exchange Act, is the beneficial owner of 959,236 shares. FMR LLC and Mr.
Johnson each have sole dispositive power with respect to and sole voting power over these
shares. According to the information provided in the report, FIL Limited, a qualified
institution under section 240.13d-1(b)(1) pursuant to the SEC No-Action letter dated October 5,
2000, is the beneficial owner of 758,600 shares. Partnerships controlled by Mr. Johnsons
family, or trusts for their benefit, own shares of FIL voting stock with the right to cast
approximately 47% of the total votes that may be cast. FMR LLC and FIL are separate and
independent corporate entities and their Boards of Directors are generally composed of
different individuals. FMR LLC and FIL disclaimed beneficial ownership in the report
indicating that they believe that they are not acting as a group for purposes of Section
13(d) under the Exchange Act and that they are not otherwise required to attribute to each
other the beneficial ownership of securities beneficially owned by the other corporation
within the meaning of Rule 13d-3 under the Exchange Act. FMR LLC reported that the filing was
on a voluntary basis as if all of the shares were beneficially owned by FMR LLC and FIL on a
joint basis. They reported that FIL has sole dispositive power over 758,600 shares and has
sole power to vote 747,900 shares and no power to vote or direct the voting of 10,700 shares.
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(2)
|
|
Information for common shares owned as of December 31, 2008, is based on a report on Schedule
13G filed with the SEC on February 13, 2009 by The Vanguard Group Inc., an investment adviser
registered under the Investment Advisers Act of 1940. According to the information provided
in the report, The Vanguard Group Inc. has sole voting power over 135,901 common shares and
sole dispositive power with respect to 10,926,728 common shares. Pursuant to the instructions
of Item 7 of Schedule 13G, Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The
Vanguard Group, Inc., is the beneficial owner and directs the voting of 135,901 shares as a
result of its serving as investment manager of collective trust accounts.
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(3)
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Information for common shares owned as of December 31, 2008, is based on Schedule 13G filed
with the SEC on February 10, 2009 by Capital Growth Management Limited Partnership, an
investment advisor registered under section 203 of the Investment Advisors Act of 1940.
According to the information provided in the report, Capital Growth Management Limited
Partnership has sole voting power over 10,200,000 shares and shared dispositive power of
10,200,000 shares. Capital Growth Management Limited Partnership disclaims any beneficial
interest in the shares and views that the client accounts it manages are not acting as a
group for purposes of Section 13(d) under the Exchange Act and it and such clients are not
otherwise required to attribute to each other the beneficial ownership of securities
beneficially owned under Rule 13d-3 of the Exchange Act. Therefore, Capital Growth
Management Limited Partnership is of the view that the shares held in such accounts should not
be aggregated for purposes of Section 13(d) and that the filing of the Schedule 13G is on a
voluntary basis as if all the shares are beneficially owned by Capital Growth Management
Limited Partnership.
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(4)
|
|
Information for common shares owned as of December 31, 2008, is based on a report on Schedule
13G filed with the SEC on February 5, 2009 by Barclays Global Investors, NA, a bank as defined
in Section 3(a)(6) of the Exchange Act, Barclays Global Fund Advisors, an investment adviser
registered under the Investment Advisers Act of 1940, Barclays Global Investors Ltd., a bank
as defined in Section 3(a)(6) of the Exchange Act, and Barclays Global Investor Canada
Limited, an investment adviser registered under the Investment Advisers Act of 1940, and
Barclays Global Investors Japan Limited, an investment adviser registered under the Investment
Advisers Act of 1940. According to the information provided in the report, Barclays Global
Investors, NA. has sole voting power over 3,604,636 common shares and sole dispositive power
with respect to 4,366,883 common shares; Barclays Global Fund Advisors has sole voting power
over 4,041,389 common shares and sole dispositive power with respect to 4,048,892 common
shares; Barclays Global Investors, Ltd. has sole voting power over 620,225 common shares and
sole dispositive power with respect to 700,275 common shares; Barclays Global Investors Japan
Limited has sole voting power over 434,655 common shares and sole dispositive power with
respect to 434,655 common shares; and Barclays Global Investor Canada Limited power has sole
voting power over 71,413 common shares and sole dispositive power with respect to 71,413
common shares. Also according to the Schedule 13G, the shares reported are held by such
entities in trust accounts for the economic benefit of the beneficiaries of those accounts.
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(5)
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Information for common shares owned as of December 31, 2008, is based on Schedule 13G filed
with the SEC on February 13, 2009 by State Street Bank and Trust Company, a bank as defined in
Section 3(a)(6) of the Exchange Act. According to the information provided in the report,
State Street Bank and Trust Company has sole voting power over 6,834,573 common shares and
shared dispositive power with respect to 6,834,573 common shares.
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(6)
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Includes 431,789 common shares subject to options currently exercisable or exercisable within
60 days. This number also includes 691,805 common shares pledged as security by Mr. Wolstein.
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(7)
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Does not include 129,475, 1,029, 1,362, 695, 30,749 and 2,311 stock units credited to the
accounts of Messrs. Hurwitz, Adler, Ahern, Macnab, Oakes and Bruce, respectively, when such
individuals elected to defer the vesting of restricted common shares pursuant to our equity
deferred compensation plan. The stock units represent the right to receive common shares at
the end of the deferral period, but do not confer current dispositive or voting control of any
common shares.
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-40-
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(8)
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Includes 156,284 common shares subject to options currently exercisable or exercisable within
60 days.
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(9)
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Includes 204,394 common shares subject to options currently exercisable or exercisable within
60 days.
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(10)
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Includes 386,728 common shares subject to options currently exercisable or exercisable within
60 days.
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(11)
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Includes 96,273 common shares subject to options currently exercisable or exercisable within
60 days. This number also includes 24,917 common shares pledged as security by Mr. Schafer.
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(12)
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Does not include 31,479, 37,472, 23,545, 15,679 and 8,102 units credited to the accounts of
Messrs. Adler, Ahern, MacFarlane, Macnab and Roulston pursuant to our directors deferred
compensation plan. Each unit is the economic equivalent of one common share, but does not
confer current dispositive or voting control of any common shares.
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(13)
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Includes 15,000 common shares subject to options currently exercisable or exercisable within
60 days.
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(14)
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Includes 10,000 common shares subject to options currently exercisable or exercisable within
60 days.
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(15)
|
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Includes 6,515 common shares owned by a partnership in which Mr. Gidel and his wife each have
a one-half interest.
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(16)
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Includes 77,589 common shares as to which Mr. Macnab shares voting and dispositive power with
his wife. This number also includes 79,724 common shares pledged as security by Mr. Macnab.
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(17)
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Includes 3,209 common shares held in an individual retirement account.
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(18)
|
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Includes 6,000 common shares subject to options currently exercisable or exercisable within
60 days.
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(19)
|
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Includes 408,453 common shares subject to options currently exercisable or exercisable within
60 days owned by executive officers not named in the table and 31,736 common shares pledged as
security by executive officers not named in the table, in addition to the information set
forth in the footnotes above regarding each individual directors and executive officers
holdings. Does not include 7,761 stock units credited to the accounts of other executive
officers not named in the table.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
DIRECTOR INDEPENDENCE
The Board of Directors has affirmatively determined that all of its directors, except for
Messrs. Adler and Wolstein, are independent directors within the meaning of the listing standards
of the NYSE. Our Corporate Governance Guidelines provide that the Board of Directors will be
comprised of a majority of independent directors and that only those directors who meet the listing
standards of the NYSE will be considered independent. The Board of Directors reviews annually the
relationships that each director has with us (either directly or as a partner, shareholder or
officer of an organization that has a relationship with us), and only those directors whom the
Board affirmatively determines have no material relationship with us (either directly or as a
partner, shareholder or officer of an organization that has a relationship with us) will be
considered independent. No transactions, relationships or arrangements occurred in 2008 that were
considered by the Board of Directors in making its determination of each directors independence.
The NYSE listing standards provide that a Director is not independent if:
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the Director is, or has been within the last three years, one of our
employees, or an immediate family member is, or has been within the
last three years, one of our executive officers;
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the Director has received, or has an immediate family member who has
received, during any 12-month period within the last three years, more
than $120,000 in direct compensation from us, other than Director and
committee fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in any way
on continued service);
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(1) the Director or an immediate family member is a current partner of
a firm that is our internal or external auditor; (2) the Director is a
current employee of such firm; (3) the Director has an immediate
family member who is a current employee of such firm and personally
works on our audit; or (4) the Director or an immediate family member
was within the last three years (but is no longer) a partner or
employee of such firm and personally worked on our audit within that
time;
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-41-
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the Director or an immediate family member is, or has been within the
last three years, employed as an executive officer of another company
where any of our present executive officers at the same time serves or
served on that companys compensation committee; or
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the Director is a current employee, or an immediate family member is a
current executive officer, of a company that has made payments to, or
received payments from, us for property or services in an amount
which, in any of the last three fiscal years, exceeds the greater of
$1 million, or 2% of such other companys consolidated gross revenues.
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CERTAIN TRANSACTIONS
Purchase of Membership Interest, Lease of Corporate Headquarters and Rental of Conference
Facilities
In July 2008, we purchased a 25.2525% membership interest in RO & SW Realty LLC, a Delaware
limited liability company, or ROSW, from Wolstein Business Enterprises, L.P., or WBE, a limited
partnership established for the benefit of the children of Scott A. Wolstein, our CEO, and a 50%
membership interest in Central Park Solon LLC, an Ohio limited liability company, or Central Park,
from Mr. Wolstein, for $10.0 million. The acquired interests in both ROSW and Central Park are
referred to herein as the Membership Interests. ROSW is a real estate company that owns 11
properties, which we refer to as the Properties. Central Park is a real estate company that owns
the development rights relating to a large-scale mixed use project in Solon, Ohio, which we refer
to as the Project. We had identified a number of development projects located near the Properties
as well as several value-add opportunities relating to the Properties, including the Project. In
October 2008, we assumed Mr. Wolsteins obligation under a promissory note that funded the
pre-development expenses of the Project. Mr. Wolstein and his 50% partner, who also holds the
remaining membership interest in each of Central Park and ROSW, were jointly and severally liable
for the obligations under the promissory note, and they agreed to indemnify each other for 50% of
such obligations. The balance of the promissory note was $2.5 million at the effective date of
assumption in July 2008, of which we are responsible for 50%.
Our purchase of the Membership Interests, including the assumption of the promissory note
obligations, were approved by a special committee of our disinterested directors who were appointed
and authorized by the Nominating and Corporate Governance Committee of our Board of Directors to
review and approve the terms of the acquisition and assumption.
We lease space at our former corporate headquarters in Moreland Hills, Ohio, which is owned by
Mrs. Bert Wolstein, the mother of Mr. Wolstein. General and administrative rental expense
associated with this office space aggregated $0.6 million in 2008. The lease expires on December
31, 2009.
In 2008, we paid The Bertram Inn and Conference Center approximately $0.2 million for the use
of its conference facilities. The Bertram Inn and Conference Center is owned by the trust of Bert
Wolstein, deceased founder of the Company and Mr. Wolsteins father.
Review, Approval or Ratification of Transactions with Related Persons
We have a written policy regarding the review and approval of related party transactions. A
proposed transaction between us and certain parties enumerated in the policy must be submitted to
the Executive Vice President-Corporate Transactions and Governance. The policy applies to our
directors, nominees for directors, officers and employees; subsidiaries and joint venture partners;
significant shareholders (generally holding as a beneficial owner 5% or more of our voting
securities) or of our subsidiaries or joint venture partners; family members (such as spouse,
parent, stepparent, children, stepchildren, sibling, mother or father-in-law, son or
daughter-in-law or sister or brother-in-law of such person or anyone residing in such persons
home) and close friends of directors, nominees for directors, officers, employees or significant
shareholders; entities in which a director, nominee for director, officer or employee (or a family
member or close friend of such person) has a significant interest or holds an employment,
management or board position; provided, however, ownership of less than 1% of a publicly-traded
entity will not be deemed a significant interest; trusts for the benefit of employees, such
-42-
as profit-sharing, deferred compensation or retirement fund trusts, that are managed by or
under the trusteeship of management; or any other party who directly or indirectly controls, is
controlled by or under common control with us (or its subsidiaries) (control means the power to
direct or cause the direction of the management and policies of an entity through ownership,
contract or otherwise). The relationship of the parties and the terms of the proposed transaction
are reviewed by the Boards Nominating and Corporate Governance Committee to determine if the
proposed transaction would constitute a related party transaction. If the committee determines
that the proposed transaction would be a related party transaction, it will make a recommendation
to the Board of Directors. All related party transactions, whether or not those transactions must
be disclosed under federal securities laws, are approved by the Board pursuant to the policy and
reviewed annually with the Audit Committee.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
PricewaterhouseCoopers LLP served as our independent registered public accounting firm in
2008. The following table presents fees for services rendered by PricewaterhouseCoopers LLP for
the years ended December 31, 2008 and 2007.
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2008
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2007
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Audit fees(1)
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$
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1,606,469
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$
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1,644,319
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Audit-related fees(2)
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$
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1,218,654
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$
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930,499
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Tax fees(3)
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$
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631,028
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$
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429,824
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All other fees(4)
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$
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1,616
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$
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52,878
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Total
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$
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3,457,767
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$
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3,057,520
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(1)
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Audit fees consisted principally of fees for the audit of our financial statements, as well
as audit-related tax services, registration statement related services and acquisition audits
performed pursuant to SEC filing requirements. Of these amounts, the registration-related
services were $74,032 and $173,121 for 2008 and 2007, respectively. In addition, of the audit
fees paid in 2008, $195,399 was for services related to additional auditing services provided
to us in 2007 but not billed by PricewaterhouseCoopers LLP until 2008. Similarly, of the
audit fees paid in 2007, $151,266 was for services related to additional auditing services
provided to us in 2006 but not billed by PricewaterhouseCoopers LLP until 2007.
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(2)
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Audit-related fees consisted of fees billed for assurance and related services by
PricewaterhouseCoopers LLP that are reasonably related to the performance of the audit or
review of our financial statements and are not reported under Audit Fees. Such audit-related
fees consisted solely of fees for separate entity and joint venture audits and reviews. Of
the aggregate amount of audit-related fees paid in 2008, $619,432 was for audit-related
services provided to us in 2007 but not billed by PricewaterhouseCoopers LLP until 2008. Of
the aggregate amount of audit-related fees paid in 2007, $388,233 was for audit-related
services provided to us in 2006 but not billed by PricewaterhouseCoopers LLP until 2007.
Several of our joint venture agreements require the engagement of an independent registered
public accounting firm to perform audit-related services because the joint venture investments
have separate financial statement reporting requirements.
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(3)
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Tax fees consisted of fees billed for professional services rendered by
PricewaterhouseCoopers LLP for tax compliance and tax consulting services, $507,468 and
$293,786 of which consisted of tax compliance services for 2008 and 2007, respectively. Such
tax compliance fees consisted solely of fees for separate entity and joint venture tax
reviews.
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(4)
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All other fees consisted of fees billed for other products and services provided by
PricewaterhouseCoopers LLP. The fees billed in 2008 relate primarily to software licensing
for accounting and professional standards and the fees paid in 2007 relate primarily to due
diligence procedures performed on our behalf in connection with certain of our transactions.
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Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors.
The Audit Committee has not established a policy for the pre-approval of
audit and permissible non-audit services. However, the Audit Committee pre-approves, on an
individual basis, all audit and permissible non-audit services provided by the independent
registered public accounting firm. These services may include audit services, audit-related
services, tax services and other services. None of the services rendered by PricewaterhouseCoopers
LLP under the categories Audit-related fees, Tax fees and All other fees described above were
approved by the Audit Committee after services were rendered pursuant to the de minimis exception
established by SEC regulations.
Auditor Independence.
The Audit Committee believes that the non-audit services provided by
PricewaterhouseCoopers LLP are compatible with maintaining PricewaterhouseCoopers LLPs
independence.
-43-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
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By:
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/s/ William H. Schafer
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William H. Schafer
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Executive Vice President and Chief Financial Officer
(Duly Authorized Representative)
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Dated:
April 29, 2009
-44-
EXHIBIT INDEX
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Exhibit No.
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Under Reg.
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Form 10-K
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Filed Herewith or
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S-K
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Exhibit
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Incorporated Herein by
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Item 601
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No.
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Description
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Reference
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1
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1.1
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Sales Agency Financing Agreement,
dated December 3, 2008, by and
between the Company and BNY Mellon
Capital Markets, LLC
|
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Current Report on
Form 8-K (Filed with
the SEC on December
3, 2008)
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2
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2.1
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Agreement and Plan of Merger, dated
October 20, 2006, by and among the
Company, Inland Retail Real Estate
Trust, Inc. and DDR IRR Acquisition
LLC
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Current Report on
Form 8-K (Filed
October 23, 2006)
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2
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2.2
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Purchase and Sale Agreement, dated
July 9, 2008, by and between the
Company and Wolstein Business
Enterprises, L.P.
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Current Report on
Form 8-K (Filed with
the SEC on July 15,
2008)
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3
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3.1
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|
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Second Amended and Restated Articles
of Incorporation of the Company
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Form S-3ASR
Registration
Statement No.
333-152083 (Filed
with the SEC on July
2, 2008)
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3
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3.2
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Amended and Restated Code of
Regulations of the Company
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Quarterly Report on
Form 10-Q (Filed with
the SEC on August 9,
2007)
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4
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4.1
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Specimen Certificate for Common Shares
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Form S-3 Registration
No. 33-78778 (Filed
with the SEC on May
10, 1994)
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4
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4.2
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Specimen Certificate for 8.0% Class G
Cumulative Redeemable Preferred
Shares
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Form 8-A Registration
Statement (Filed with
the SEC on March 25,
2003)
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4
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4.3
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Specimen Certificate for Depositary
Shares Relating to 8.0% Class G
Cumulative Redeemable Preferred
Shares
|
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Form 8-A Registration
Statement (Filed with
the SEC on March 25,
2003)
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4
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4.4
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Specimen Certificate for 7 3/8% Class
H Cumulative Redeemable Preferred
Shares
|
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Form 8-A Registration
Statement (Filed with
the SEC on July 17,
2003)
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4
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4.5
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Specimen Certificate for Depositary
Shares Relating to 7 3/8% Class H
Cumulative Redeemable Preferred
Shares
|
|
Form 8-A Registration
Statement (Filed with
the SEC on July 17,
2003)
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4
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4.6
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Specimen Certificate for 7.50% Class
I Cumulative Redeemable Preferred
Shares
|
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Form 8-A Registration
Statement (Filed with
the SEC on May 4,
2004)
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4
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4.7
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Specimen Certificate for Depositary
Shares Relating to 7.50% Class I
Cumulative Redeemable Preferred
Shares
|
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Form 8-A Registration
Statement (Filed with
the SEC on May 4,
2004)
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4
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4.8
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Indenture, dated May 1, 1994, by and
between the Company and Chemical
Bank, as Trustee
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Form S-3 Registration
No. 333-108361 (Filed
with the SEC on
August 29, 2003)
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4
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4.9
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Indenture, dated May 1, 1994, by and
between the Company and National City
Bank, as Trustee (NCB Indenture)
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Form S-3 Registration
No. 333-108361 (Filed
with the SEC on
August 29, 2003)
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4
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4.10
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First Supplement to NCB Indenture
|
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Form S-3 Registration
No. 333-108361 (Filed
with the SEC on
August 29, 2003)
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-45-
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Exhibit No.
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Under Reg.
|
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Form 10-K
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Filed Herewith or
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S-K
|
|
Exhibit
|
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Incorporated Herein by
|
Item 601
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No.
|
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Description
|
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Reference
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4
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4.11
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|
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Second Supplement to NCB Indenture
|
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Form S-3 Registration
No. 333-108361 (Filed
with the SEC on
August 29, 2003)
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4
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4.12
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|
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Third Supplement to NCB Indenture
|
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Form S-4 Registration
No. 333-117034 (Filed
with the SEC on June
30, 2004)
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4
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4.13
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Fourth Supplement to NCB Indenture
|
|
Form S-4 Registration
No. 333-117034 (Filed
with the SEC on June
30, 2004)
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4
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4.14
|
|
|
Fifth Supplement to NCB Indenture
|
|
Annual Report on Form
10-K (Filed with the
SEC on February 21,
2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.15
|
|
|
Sixth Supplement to NCB Indenture
|
|
Annual Report on Form
10-K (Filed with the
SEC on February 21,
2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.16
|
|
|
Seventh Supplement to NCB Indenture
|
|
Current Report on
Form 8-K (Filed with
the SEC on September
1, 2006)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.17
|
|
|
Eight Supplement to NCB Indenture
|
|
Current Report on
Form 8-K (Filed with
the SEC on March 16,
2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.18
|
|
|
Form of Fixed Rate Senior Medium-Term
Note
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 30,
2000; File No.
001-11690)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.19
|
|
|
Form of Floating Rate Senior Medium-Term Note
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 30,
2000; File No.
001-11690)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.20
|
|
|
Form of Fixed Rate Subordinated
Medium-Term Note
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 30,
2000; File No.
001-11690)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.21
|
|
|
Form of Floating Rate Subordinated
Medium-Term Note
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 30,
2000; File No.
001-11690)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.22
|
|
|
Form of 3.875% Note due 2009
|
|
Current Report on
Form 8-K (Filed with
the SEC on January
22, 2004)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.23
|
|
|
Form of 5.25% Note due 2011
|
|
Form S-4 Registration
No. 333-117034 (Filed
with the SEC on June
30, 2004)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.24
|
|
|
Form of 3.00% Convertible Senior Note
due 2012
|
|
Current Report on
Form 8-K (Filed with
the SEC on March 16,
2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.25
|
|
|
Form of 3.50% Convertible Senior Note
due 2011
|
|
Current Report on
Form 8-K (Filed with
the SEC on September
1, 2006)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.26
|
|
|
Seventh Amended and Restated Credit
Agreement, dated June 29, 2006, by
and among the Company and JPMorgan
Securities, Inc. and Banc of America
Securities LLC, and other lenders
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on July 6,
2006)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.27
|
|
|
First Amendment to the Seventh
Amended and Restated Revolving Credit
Agreement, dated March 30, 2007, by
and among the Company and JPMorgan
Chase Bank, N.A. and other lenders
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on February
26, 2007)
|
-46-
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
|
|
|
|
Under Reg.
|
|
Form 10-K
|
|
|
|
Filed Herewith or
|
S-K
|
|
Exhibit
|
|
|
|
Incorporated Herein by
|
Item 601
|
|
No.
|
|
Description
|
|
Reference
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.28
|
|
|
Second Amendment to the Seventh
Amended and Restated Revolving Credit
Agreement, dated December 7, 2007, by
and among the Company and JPMorgan
Chase Bank, N.A. and other lenders
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on December
12, 2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.29
|
|
|
Third Amendment to the Seventh
Amended and Restated Revolving Credit
Agreement, dated December 26, 2007,
by and among the Company and JPMorgan
Chase Bank, N.A. and other lenders
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on December
28, 2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.30
|
|
|
First Amended and Restated Secured
Term Loan Agreement, dated June 29,
2006, by and among the Company and
Keybanc Capital Markets and Banc of
America Securities, LLC and other
lenders named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on July 6,
2006)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.31
|
|
|
Second Amendment to the First Amended
and Restated Secured Term Loan
Agreement, dated March 30, 2007, by
and among the Company, Keybanc
Capital Markets and Banc of America
Securities, LLC and other lenders
named therein
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on May 10,
2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.32
|
|
|
Third Amendment to the First Amended
and Restated Secured Term Loan
Agreement, dated December 10, 2007,
by and among the Company, Keybanc
Capital Markets and Banc of America
Securities, LLC and other lenders
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on December
12, 2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.33
|
|
|
Form of Indemnification Agreement
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 15,
2004)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.34
|
|
|
Registration Rights Agreement, dated
March 3, 2007, by and among the
Company and the Initial Purchasers
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on March 16,
2007)
|
|
|
|
|
|
|
|
|
|
4
|
|
|
4.35
|
|
|
Registration Rights Agreement, dated
August 28, 2006, by and among the
Company and the Initial Purchasers
named therein
|
|
Current Report on
Form 8-K (Filed with
the SEC on September
1, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.1
|
|
|
Stock Option Plan*
|
|
Form S-8 Registration
No. 33-74562 (Filed
with the SEC on
January 28, 1994)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.2
|
|
|
Amended and Restated Directors
Deferred Compensation Plan*
|
|
Form S-8 Registration
No. 333-147270 (Filed
with the SEC on
November 9, 2007)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.3
|
|
|
Elective Deferred Compensation Plan
(Amended and Restated as of January
1, 2004)*
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 15,
2004)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.4
|
|
|
Developers Diversified Realty
Corporation Equity Deferred
Compensation Plan*
|
|
Form S-3 Registration
No. 333-108361 (Filed
with the SEC on
August 29, 2003)
|
-47-
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
|
|
|
|
Under Reg.
|
|
Form 10-K
|
|
|
|
Filed Herewith or
|
S-K
|
|
Exhibit
|
|
|
|
Incorporated Herein by
|
Item 601
|
|
No.
|
|
Description
|
|
Reference
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.5
|
|
|
Developers Diversified Realty
Corporation Equity Deferred
Compensation Plan, restated as of
January 1, 2009*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.6
|
|
|
Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 15,
2004)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.7
|
|
|
Amended and Restated 1998 Developers
Diversified Realty Corporation
Equity-Based Award Plan*
|
|
Form S-8 Registration
No. 333-76537 (Filed
with the SEC on April
19, 1999)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.8
|
|
|
2002 Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on August 14,
2002)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.9
|
|
|
2004 Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Form S-8 Registration
No. 333-117069 (Filed
with the SEC on July
1, 2004)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.10
|
|
|
2008 Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Current Report on
Form 8-K (Filed with
the SEC on May 15,
2008)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.11
|
|
|
Form of Restricted Share Agreement
under the 1996/1998/2002/2004
Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 16,
2005)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.12
|
|
|
Form of Restricted Share Agreement
for Executive Officers under the 2004
Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.13
|
|
|
Form of Incentive Stock Option Grant
Agreement for Executive Officers
under the 2004 Developers Diversified
Realty Corporation Equity-Based Award
Plan*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.14
|
|
|
Form of Incentive Stock Option Grant
Agreement for Executive Officers
(with accelerated vesting upon
retirement) under the 2004 Developers
Diversified Realty Corporation
Equity-Based Award Plan*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.15
|
|
|
Form of Non-Qualified Stock Option
Grant Agreement for Executive
Officers under the 2004 Developers
Diversified Realty Corporation
Equity-Based Award Plan*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.16
|
|
|
Form of Non-Qualified Stock Option
Grant Agreement for Executive
Officers (with accelerated vesting
upon retirement) under the 2004
Developers Diversified Realty
Corporation Equity-Based Award Plan*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.17
|
|
|
Form of Directors Restricted Shares
Agreement, dated January 1, 2000*
|
|
Form S-11
Registration No.
333-76278 (Filed with
SEC on January 4,
2002; see Exhibit
10(ff) therein)
|
-48-
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
|
|
|
|
Under Reg.
|
|
Form 10-K
|
|
|
|
Filed Herewith or
|
S-K
|
|
Exhibit
|
|
|
|
Incorporated Herein by
|
Item 601
|
|
No.
|
|
Description
|
|
Reference
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.18
|
|
|
Performance Units Agreement, dated
March 1, 2000, by and between the
Company and Scott A. Wolstein*
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 8, 2002)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.19
|
|
|
Performance Units Agreement, dated
January 2, 2002, by and between the
Company and Scott A. Wolstein*
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 8, 2002)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.20
|
|
|
Performance Units Agreement, dated
January 2, 2002, between the Company
and David M. Jacobstein*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on May 15,
2002)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.21
|
|
|
Performance Units Agreement, dated
January 2, 2002, by and between the
Company and Daniel B. Hurwitz*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on May 15,
2002)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.22
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and Joan
U. Allgood*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.23
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and
Richard E. Brown*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.24
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and
Timothy J. Bruce*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.25
|
|
|
Employment Agreement, dated October
15, 2008, by and between the Company
and Daniel B. Hurwitz*
|
|
Current Report on
Form 8-K (Filed with
the SEC on October
21, 2008)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.26
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and David
M. Jacobstein*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.27
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and David
J. Oakes*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.28
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and
William H. Schafer*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.29
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and Robin
R. Walker-Gibbons*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.30
|
|
|
Employment Agreement, dated October
15, 2008, by and between the Company
and Scott A. Wolstein*
|
|
Current Report on
Form 8-K (Filed with
the SEC on October
21, 2008)
|
-49-
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
|
|
|
|
Under Reg.
|
|
Form 10-K
|
|
|
|
Filed Herewith or
|
S-K
|
|
Exhibit
|
|
|
|
Incorporated Herein by
|
Item 601
|
|
No.
|
|
Description
|
|
Reference
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.31
|
|
|
Amended and Restated Employment
Agreement, dated December 29, 2008,
by and between the Company and John
S. Kokinchak*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.32
|
|
|
Employment Agreement, dated December
29, 2008, by and between the Company
and Paul Freddo*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.33
|
|
|
Change in Control Agreement, dated
October 15, 2008, by and between the
Company and Scott A. Wolstein*
|
|
Current Report on
Form 8-K (Filed with
the SEC on October
21, 2008)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.34
|
|
|
Change in Control Agreement, dated
October 15, 2008, by and between the
Company and Daniel B. Hurwitz*
|
|
Current Report on
Form 8-K (Filed with
the SEC on October
21, 2008)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.35
|
|
|
Amended and Restated Change in
Control Agreement, dated December 29,
2008, by and between the Company and
David M. Jacobstein*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.36
|
|
|
Form of Change in Control Agreement,
entered into with certain officers of
the Company*
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.37
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated August 18,
2006, by and between the Company and
Scott A. Wolstein*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.38
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated August 18,
2006, by and between the Company and
Daniel B. Hurwitz*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.39
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated February 23,
2006, by and between the Company and
Joan U. Allgood*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.40
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated February 23,
2006, by and between the Company and
Richard E. Brown*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.41
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated February 23,
2006, by and between the Company and
Timothy J. Bruce*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.42
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated February 23,
2006, by and between the Company and
William H. Schafer*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.43
|
|
|
Outperformance Long-Term Incentive
Plan Agreement, dated February 23,
2006, by and between the Company and
Robin R. Walker-Gibbons*
|
|
Quarterly Report on
Form 10-Q (Filed with
the SEC on November
9, 2006)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.44
|
|
|
Form of Medium-Term Note Distribution
Agreement
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 30,
2000; File No.
001-11690)
|
-50-
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
|
|
|
|
Under Reg.
|
|
Form 10-K
|
|
|
|
Filed Herewith or
|
S-K
|
|
Exhibit
|
|
|
|
Incorporated Herein by
|
Item 601
|
|
No.
|
|
Description
|
|
Reference
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.45
|
|
|
Program Agreement for Retail Value
Investment Program, dated February
11, 1998, by and among Retail Value
Management, Ltd., the Company and The
Prudential Insurance Company of
America
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 15,
2004)
|
|
|
|
|
|
|
|
|
|
10
|
|
|
10.46
|
|
|
Developers Diversified Realty
Corporation 2005 Directors Deferred
Compensation Plan*
|
|
Form S-8 Registration
No. 333-147270 (Filed
with the SEC on
November 9, 2007)
|
|
|
|
|
|
|
|
|
|
14
|
|
|
14.1
|
|
|
Developers Diversified Realty
Corporation Code of Ethics for Senior
Financial Officers
|
|
Annual Report on Form
10-K (Filed with the
SEC on March 15,
2004)
|
|
|
|
|
|
|
|
|
|
21
|
|
|
21.1
|
|
|
List of Subsidiaries
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
23
|
|
|
23.1
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
23
|
|
|
23.2
|
|
|
Consent of PricewaterhouseCoopers LLP
(TRT DDR Venture I General
Partnership)
|
|
Annual Report on Form
10-K (Filed with the
SEC on February 29,
2008)
|
|
|
|
|
|
|
|
|
|
23
|
|
|
23.3
|
|
|
Consent of PricewaterhouseCoopers LLP
(DDRTC Core Retail Fund, LLC)
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
23
|
|
|
23.4
|
|
|
Consent of PricewaterhouseCoopers
(Macquarie DDR Trust)
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
31
|
|
|
31.1
|
|
|
Certification of principal executive
officer pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934
|
|
Filed herewith
|
|
|
|
|
|
|
|
|
|
31
|
|
|
31.2
|
|
|
Certification of principal financial
officer pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934
|
|
Filed herewith
|
|
|
|
|
|
|
|
|
|
32
|
|
|
32.1
|
|
|
Certification of chief executive
officer pursuant to Rule 13a-14(b) of
the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
32
|
|
|
32.2
|
|
|
Certification of chief financial
officer pursuant to Rule 13a-14(b) of
the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
99
|
|
|
99.1
|
|
|
TRT DDR Venture I General Partnership
Consolidated Financial Statements
|
|
Annual Report on Form
10-K (Filed with the
SEC on February 29,
2008)
|
|
|
|
|
|
|
|
|
|
99
|
|
|
99.2
|
|
|
DDRTC Core Retail Fund, LLC
Consolidated Financial Statements
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
|
|
|
|
|
|
99
|
|
|
99.3
|
|
|
Macquarie DDR Trust Consolidated
Financial Statements
|
|
Original Annual
Report on Form 10-K
(Filed with the SEC
on February 27, 2009)
|
|
|
|
*
|
|
Management contracts and compensatory plans or arrangements required
to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
|
-51-
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