VORNADO REALTY TRUST (NYSE:VNO) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The disclosure set forth below under Item 5.03 is hereby incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. (Item 5.03 applies to Vornado Realty L.P. only)
On January12, 2018, the Compensation Committee of the Board of Trustees of Vornado Realty Trust (the “Company”) approved the issuance of appreciation-only long-term incentive plan units, or “AO LTIP Units”, to the Company’s 2010 Omnibus Share Plan to certain officers and employees of the Company and its subsidiaries. In connection with the approval of AO LTIP Units, the Company, in its capacity as sole general partner of Vornado Realty L.P. (the “Operating Partnership”), amended the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership (the “Partnership Agreement”) in order to establish the terms of the new class of partnership interests known as AO LTIP Units.
AO LTIP Units are a class of partnership interests in the Operating Partnership that are intended to qualify as “profits interests” for federal income tax purposes and generally only allow the recipient to realize value to the extent the fair market value of a Company common share exceeds the threshold level set at the time the AO LTIP Units are granted, subject to any vesting conditions applicable to the award. The threshold level is provided in the award agreement, and generally is intended to be equal to 50% of the then fair market value of a Company common share on the date of grant. The value of vested AO LTIP Units is realized through conversion of the AO LTIP Units into ClassA limited partnership units of the Operating Partnership (which we refer to as “ClassA Units”). The number of ClassA Units into which vested AO LTIP Units may be converted is determined based on the quotient of (i)the excess of the conversion value on the conversion date over the threshold value designated at the time the AO LTIP Unit was granted, divided by (ii)the conversion value on the conversion date. The “conversion value” is the value of a Company common share on the conversion date multiplied by the Conversion Factor as defined in the Partnership Agreement, which is currently one. AO LTIP Units, once vested, have a finite term during which they may be converted into ClassA Units, not in excess of ten years from the grant date of the AO LTIP Units.
Each holder will generally receive special income allocations in respect of an AO LTIP Unit equal to 10% (or such other percentage specified in the applicable award agreement) of the income allocated in respect of a ClassA Unit. Upon conversion of AO LTIP Units to ClassA Units, holders will be entitled to receive in respect of each such AO LTIP Unit, on a per unit basis, a special distribution equal to 10% (or such other percentage specified in the applicable award agreement) of the distributions received by a holder of an equivalent number of ClassA Units during the period from the grant date of the AO LTIP Units through the date of conversion.