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Shareholders vote disapproval of Simon's $120M bonus

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Shareholders of Simon Property Group Inc. sent a resounding message to the company that they don't approve of a $120 million retention award given to CEO David Simon.

In an advisory vote, the incentive award was opposed by a whopping 73 percent of Simon shares voted at last Thursday's annual meeting. The results were disclosed Monday in a public filing.

Simon Property included the bonus in a long-term employment agreement given to its CEO in July.

Earlier this month, a corporate governance advisory firm recommended that shareholders vote against the plan, arguing that it “lacks performance conditions” and creates the potential for “pay-for-failure” since it requires only that Simon remain at the company, not that he continue performing at a high level.

According to the agreement, Simon, 50, would remain as CEO of the world's largest real estate company through 2019 to collect the entire $120 million in special stock awards. He would be entitled to collect the payout in thirds starting in 2017. The agreement also calls for Simon to earn a minimum of $1.25 million per year, a targeted cash bonus of double his salary, and annual stock awards worth at least $12 million.

That adds up to $30.8 million per year, a sum that's about three times the median pay for “similarly situated peers,” Institutional Shareholder Services Inc. wrote in a 20-page report issued May 1. ISS said the board makes a “strong case” that Simon's service is vital to the company's future, but concerns remain.

Simon defended the plan in a filing before the shareholder vote, saying that during David Simon’s tenure, total stockholder returns for the past 10 years were 597 percent compared with 58 percent for the S&P 500.

“SPG’s returns during David Simon’s tenure have led our industry and been among the best in corporate America, and our board firmly believes it was and is critical to retain Mr. Simon as the company’s CEO through a long term, equity-based retention agreement that further aligns his interests with our stockholders," Simon Property said Monday in a prepared statement. "We value our stockholders’ input and our Compensation Committee will take their views into consideration as it reviews compensation plans for our management team.”

Shares of Simon were up nearly 2 percent on Monday, to $147.08 each, in afternoon trading.
 

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  • ridiculous...
    ...DS is just ONE more ricj kid taking advantage of his daddy's billions to make millions, maybe he's a bit smarter than say Donald Trump or his kids (ok a LOT smarter) but that doesn't mean this silver-spoon-fed son of a Simon 'deserves' $137 MILLION for running his billionaire daddy's business...srsly does ANYONE think he could (or would) go someplace else and make MORE money than at daddy's business? this is just one more case of the rich being XTRA greedy while screwing everyone else!
  • Paid his dues
    Bear mind that DS is just not another lazy, rich kid. He attended Columbia grad school and was in investment banking for 4 or 5 years before joining his dad's company. An annual grant of stock options at market price would be the correct pay-for-performance program then no one could argue with it.
    • he doesn't need it
      This comes from an executive who gave his wife a Bentley as a wedding present. He is heir to billions of dollars. He should be working for a dollar a year and stock options only. Seems like a conflict of interest, time to bring in a non-relative as CEO. Haven't met him, but have heard his arrogance is legendary.
    • No so fast
      It's hard to defend billionaires, but David Simon has created a tremendous amount of value for shareholders since joining the company. He is widely regarded as one of the best CEOs in America. The company is growing and making good strategic decisions. And Indy is fortunate to have SPG HQ'd here. Now, does that merit $120 million (about 15 mil over 8 years or so)? Maybe. But this family and David have truly built a business. Should Zuckerberg be worth $20 bil? Who knows. Hopefully David will be supportive of Hoosier charities like his family has.
    • Too bad
      Too bad that my last name is not Simon. I got the first name right........
    • pay for performance
      I don't have a problem with the amount if tied to performance. The problem is that he won't be able to replicate the performance of the past 5-10 years. Not because he is a bad executive, but because the company already had an amazing growth, and it has a favorable valuation (in my opinion). It's all about the future performance, and if he is not able to outperform the competition in the next 5-10 years (and I don't think he will) then why pay him more than his peers. If I was an investor, I would not care for the Company's statement about his past performance. You paid him for his past performance. Unless his name is Warren Buffet, I don't care about his or anyone else's past performance.
    • Where's the logic?
      I agree with CK...Do you really need to try that hard to retain the guy when his name is on the building? His staying on benefits not only the shareholders, but also his family and personal holdings so it would behoove him to stay on regardless of any outrageous compensation. I dare say the COO Sokolov is actually the brains behind the operation anyway. This company goes cheap on its regular employees and nickle and dimes them, but opens the vault for Mr. Simon. I understand you need to pay the guy, but give him a decent amount relatively speaking and the guy is going to stay...period. I'm glad to hear this got voted down.
    • Interesting
      Riding on the coat tails of the family name and expects to get by with this move. Should ask a lot of people within the company and the lives that were wrecked during the economic turn down in 2008. I agree with the Board
    • No I do not find your point interesting
      Let's see he is now Chairman of the Board for France's largest real estate company which who knows SPG may eventually acquire the balance of the shares. SPG growth is more internationally driven at this point(i . e. Brazil) and SPG should expand it's NYC Office footprint since it is now on the S&P.

      If David was like other CEO's he would just have had the NYC APT paid for by the company. He is frugal, he is smart and he is a step ahead always in the RE MARKET.
    • Interesting
      Anyone find it interesting that David & his wife paid 25 Million CASH for a penthouse on Park Ave in New York just this past October. They (David & fam) are moving there full time come June. David will keep his home here to appease his board I'm sure. Dont feel to sorry for him.
      • Step Mom
        Step Mom took his inheritance (or at least tied it up in courts for the forseeable future), so he has to get his money somewhere. Poor fellow doesn't even own a sports franchise to blackmail the city with. What a guy to do?
      • Himself to blame????
        To "Simon Says": actually the Simons, both David and Herb are big Romney donors... google it....
      • Generous
        I am not sure what donating to the democratic party has to due with anything. It should be noted the Mel and Herb donated to many charities including some of the finest medical facilities in the country. I assume David is in the wealth accumulation mode.
      • Enough
        The same 73% should vote to replace the directors on the compensation committee to send a more clear message.
      • I agree
        I agree with the voters that Mr. Simon should be held accountable to perform. If he's nothing but a figurehead I'm sure they could find someone less expensive than he appears to be for that. Afterall if the company goes belly up he doesn't have nearly at much at risk at the day to day worker for the company. Another example of executives being overpaid for what they do or contribute to the pie.
      • Why would he leave?
        This is almost a joke. He really needs incentive to stay on at a company that has his name? Where is he going to go? By 2019 I am sure he will be semi-retired.
      • Correction
        That's supposed to read something to the affect "The Simons have been blind and generous donors and fundraisers..."
      • Himself to Blame?
        The Simons have been blind and donors generous fundraisers for federal and state Democratic candidates for decades. David Simon can thank his President for dividing the country along economic lines in pursuit of Obama's Socialist agenda. Mr. Simon is a victim of his and his families blind and generous support for Obama and the policies and divisive tactics of Obama himself.

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        1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

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