DDR Corp. (NYSE:DDR) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item5.02.
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Employment Agreements
On December1, 2016, DDR Corp. (DDR)
entered into separate employment agreements (each, an
Employment Agreement) with each of
Thomas F. August and Christa A. Vesy (each, the
Executive), to which (1)Mr.August will
continue to serve as President and Chief Executive Officer
(CEO) of DDR, and (2)Ms.Vesy will
continue to serve as Executive Vice President and Chief
Accounting Officer (and, until DDR hires a permanent Chief
Financial Officer, as interim Chief Financial Officer) of DDR.
The term of the Employment Agreement for Mr.August will end on
July7, 2019, and the term of the Employment Agreement for Ms.Vesy
will end on December31, 2018 (in each case, the
Expiration Date).
The material terms of the Employment Agreements are summarized
below:
Base Salary
|
Annual base salary rate of not less than $750,000 per year for Mr.August and not less than $340,000 per year for Ms.Vesy; |
Annual Incentive Compensation
|
For Mr.August, eligibility to receive an annual cash incentive targeted at 133.3% of base salary, with a payout at 66.7% or 200% of base salary in the event threshold performance or maximum performance, respectively, is achieved, with the actual payout determined based on the factors and criteria established by the Executive Compensation Committee (the Committee) of DDRs Board of Directors (the Board) after consultation with Mr.August. For 2016 and 2019, Mr.Augusts cash incentive will be pro-rated based on the number of days Mr.August is employed during such calendar year. For the 2016 annual incentive only, Mr.Augusts cash incentive payout will be no less than $484,932, assuming generally that he remains in continuous employment with DDR through the end of 2016, subject to increase in the Committees discretion based on the applicable performance criteria for 2016 (i.e., financial goals, strategic objectives, and individual performance, each weighted equally); |
|
For Ms.Vesy, eligibility to receive an annual cash incentive targeted at 40% of base salary, with a payout at 20% or 80% of base salary in the event threshold performance or maximum performance, respectively, is achieved, with the actual payout determined based on the factors and criteria established by DDR; |
Special Cash Bonus
|
For Ms.Vesy only, eligibility to receive a one-time, special cash bonus opportunity equal in value to Ms.Vesys target annual cash bonus opportunity as in effect on March1, 2017, which bonus will, in general, become vested on January1, 2018, subject to Ms.Vesys continued employment with DDR through such date; |
Equity Awards
|
For Mr.August, eligibility to receive equity awards while the Employment Agreement is in effect as follows, subject to the terms and conditions of DDRs 2012 Equity and Incentive Compensation Plan (or its successor(s)) (the Equity Plan) and the applicable award agreements, and in certain instances subject to the further approval of the Committee: |
|
A one-time grant of 107,100 service-based restricted share units (RSUs). In general, and subject to Mr.Augusts continued employment with DDR, 14,875 of such RSUs will vest after the end of the grant date, and the remaining 92,225 RSUs will vest in 31 equal monthly installments beginning on January1, 2017 and ending on July1, 2019; and |
|
As soon as practicable after the effective date of the Employment Agreement, and then again on each of July8, 2017 and July8, 2018, a grant of performance-based RSUs (or substantially similar award) with a grant date target value equal to no less than $3,000,000, the payout of which will vary based on relative total shareholder return performance measured over a performance period beginning on July8 of the year in which the grant is made and ending in each case on July7, 2019, with the ultimate payout ranging from a threshold level of 50% of target to a maximum level of 200% of target (subject to reduction by 1/3 in the event that DDRs absolute total shareholder return during the applicable performance period is negative); |
|
For Ms.Vesy, eligibility to receive equity awards while the Employment Agreement is in effect as follows, subject to the terms and conditions of the Equity Plan and the applicable award agreements, and in certain instances subject to the further approval of the Committee: |
|
A one-time grant of 9,051 service-based RSUs. In general, and subject to Ms.Vesys continued employment with DDR, 1/3 of such RSUs will vest on December1, 2017, December1, 2018 and December1, 2019; and |
|
For each calendar year during the term of the Employment Agreement (beginning with 2016), Ms.Vesy will be eligible to receive equity awards as approved by the Committee based on threshold, target and maximum award opportunities of 12.5%, 25% and 50%, respectively, of Ms.Vesys annual base salary plus annual cash incentive award; |
Other Benefits/Obligations
|
For both Executives, eligibility to participate in any other employee benefit plans or programs (in the case of Ms.Vesy, including equity plans or programs and retirement plans) that are generally available to senior executive officers of DDR, as well as certain other benefit plans that are generally available to DDRs senior executives, including deferred compensation plans or similar programs and certain health and welfare benefits, subject to the terms of the applicable plans; |
|
For Mr.August, a commuting allowance at the rate of at least $96,000 per year (pro-rated for partial years) to assist with the costs associated with Mr.August commuting between his residence and the Beachwood, Ohio area; |
|
For Mr.August, DDR agrees to nominate him to the Board on an annual basis during the term of the Employment Agreement; |
|
For Mr.August, reimbursement by DDR for Mr.Augusts reasonable attorneys fees and other reasonable expenses incurred in connection with the negotiation of the Employment Agreement, up to a maximum of $25,000; |
|
Each Executive will also be subject to customary non-competition, non-solicitation and confidentiality (and, for Mr.August, mutual non-disparagement) requirements during and for specified periods after the term of the Executives employment; and |
|
For both Executives, the Employment Agreements also include customary indemnification provisions, and provide for the reimbursement of certain fees and expenses, including legal fees and expenses incurred in relation to enforcement of the Employment Agreements. |
Severance Compensation
Each Employment Agreement provides that if the Executives
employment with the Company is terminated prior to the Expiration
Date by DDR without cause (as defined in the applicable
Employment Agreement), by the Executive for good reason (also as
defined in the applicable Employment Agreement), or, solely with
respect to Ms.Vesy, as a result of death or disability, DDR will
pay the Executive, or the Executives personal representative or
dependents, as appropriate (in addition to certain accrued
compensation and benefits):
| For Mr.August: |
|
a lump sum amount equal to up to two times (the Multiplier) the sum of his then-current base salary plus an amount equal to his target annual bonus for the year of termination (which Multiplier will decrease monthly from two to zero on a linear basis beginning on July7, 2017 and ending on the Expiration Date), subject to the execution by Mr.August of a customary release of claims in favor of DDR; |
|
a lump sum amount equal in value to the annual bonus that he would have earned for the year of termination, pro-rated based on his period of service during such year, and calculated on the basis of actual performance of the applicable performance objectives for the entire performance period; and |
|
a lump sum in cash equal to 6 months of monthly COBRA premiums for health, dental and vision benefits (if COBRA coverage is elected) and the employer portion of the premium for other insurance provided by DDR. |
| For Ms.Vesy: |
|
a lump sum amount equal to 1.5 times (or, in the event of termination due to death or disability, one times) the sum of her then-current base salary plus an amount equal to the value of her target annual bonus for the year of termination, subject to the execution by the Executive of a customary release of claims in favor of DDR; |
|
a lump sum amount equal in value to her target annual bonus for the year of termination, pro-rated based on her period of service during such year; |
|
a lump sum in cash equal to 18 months on a termination without cause or for good reason and 12 months on a termination due to death or disability of monthly COBRA premiums for health, dental and vision benefits (if COBRA coverage is elected) and the employer portion of the premium for other insurance provided by DDR (or in the event of death, a substantially similar benefit to her beneficiaries); and |
|
if the termination is a result of her termination without cause or termination for good reason, DDR will provide outplacement services and support, as reasonably selected by DDR, for one year following termination, provided that Ms. Vesy first uses such outplacement services and support within 90 days following termination. |
For Mr.August, if the termination is a result of death or
disability, DDR will pay Mr.August or his personal representative
or eligible dependents, as appropriate (in addition to certain
accrued compensation and benefits), a lump sum amount equal in
value to Mr.Augusts target annual bonus for the year of
termination, pro-rated based on his period of service during such
year.
Severance Compensation following a Change in
Control
Each Employment Agreement also provides that, in the event of
certain triggering events (which include a termination by DDR
without cause or a termination by the Executive following certain
employment or compensation changes) occurring within two years
after a change in control, DDR will pay (in addition to certain
accrued compensation and benefits): (1)for Mr.August, a lump sum
amount equal to up to two times the sum of his then-current base
salary plus an amount equal to his target annual bonus for the
year of termination (which Multiplier will decrease monthly from
two to zero on a linear basis beginning on July7, 2017 and ending
on the Expiration Date); (2)for Ms.Vesy, a lump sum amount equal
to 2.5 times the sum of her base salary as of the termination
date plus an amount equal in value to her target annual bonus for
the year of termination; (3)a lump sum in cash to the Executive
equal to 6 months in the case of Mr.August, and 18 months in the
case of Ms.Vesy, of monthly COBRA premiums for health, dental and
vision benefits (if COBRA coverage is elected) and the employer
portion of the premium for other insurance provided by DDR; and
(4)a lump sum amount equal in value to the Executives target
annual bonus for the year of termination, pro-rated based on the
Executives period of service during such year. In addition, for
Ms.Vesy only, DDR will provide outplacement services and support,
as reasonably selected by DDR, for one year following
termination, provided that Ms.Vesy first uses such outplacement
services and support within 90 days following termination.
About DDR Corp. (NYSE:DDR)
DDR Corp. is a self-administered and self-managed real estate investment trust (REIT). The Company operates through two segments: shopping centers and loan investments. The Company is in the business of acquiring, owning, developing, redeveloping, expanding, leasing and managing shopping centers. In addition, it engages in the origination and acquisition of loans and debt securities, which are generally collateralized directly or indirectly by shopping centers. It owns and manages approximately 110 million total square feet of gross leasable area (GLA). The properties include discounters, warehouse clubs, dollar stores and specialty grocers as additional anchors or tenants. It leases approximately 10 million square feet, including over 510 new leases and approximately 810 renewals for over 1,330 leases. The Company’s portfolio consists of over 350 shopping centers and over 1,000 acres of undeveloped land. The shopping centers are located in over 40 states, as well as Puerto Rico. DDR Corp. (NYSE:DDR) Recent Trading Information
DDR Corp. (NYSE:DDR) closed its last trading session up +0.14 at 15.23 with 3,109,217 shares trading hands.