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Simon Property directors sued over CEO’s pay

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Simon Property Group Inc. directors improperly increased CEO David Simon’s compensation last year without seeking shareholder approval, an investor said in a lawsuit.

The board of the largest U.S. shopping-mall owner wrongfully authorized a compensation package for Simon that provided a $1.25 million annual salary, a cash bonus of double his salary, and $120 million in special stock awards as an incentive to stay with the company through 2019, a Louisiana pension fund claimed in the suit, filed Wednesday in Delaware Chancery Court.

The $120 million retention award “is not tied to the company’s performance and instead guarantees enormous payments to Simon simply if he stays employed by the company” for seven more years, the fund alleged.

Simon, based in Indianapolis, raised its dividend and increased its full-year forecast for funds from operations last month, citing increased demand for space from retailers at regional malls and outlet centers. Earlier this year, Simon bought a 29-percent stake in European shopping-center operator Klepierre SA and formed a venture with Rio de Janeiro-based BR Malls Participacoes SA to develop outlet centers in Brazil.

Les Morris, a spokesman for Simon Property Group, said by e-mail that the suit is “meritless.”

"We believe this is a meritless lawsuit, and while we vigorously defend ourselves against these claims, we will focus on continuing to deliver outstanding performance to our shareholders, building on our 42-percent total shareholder return since July 2011. and the company will defend itself against its claims," he said.

The suit comes more than two months after Simon officials disclosed that 73 percent of the Simon shares voted at the company’s annual meeting opposed the granting of the retention award to the company’s chief executive.

Simon officials sought to defend the CEO’s compensation plan prior to the so-called “say-on-pay” vote, noting that total stockholder returns for the past 10 years were 597 percent compared with 58 percent for the S&P 500.

Simon had been one of the company’s top executives during that period. Simon, son of the company’s co-founder, has been CEO since 1995 and chairman since 2007.

The Louisiana Municipal Police Employees Retirement System, a Simon shareholder, accused the company’s directors of exceeding their authority by amending the company’s stock- incentive plan, created in 1998, without seeking shareholders’ approval.

The plan allowed the board to change its terms unilaterally unless shareholder approval was “required by law, regulation of listing requirement,” the pension fund said.

Since changes to executives’ performance goals under the plan implicate tax laws, the board was required to have investors vote of them, the pension fund said.

The investors filed a so-called derivative suit against Simon’s board, which would return any recovery from insurance covering the company’s officers and directors to the company’s coffers.

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  • what?
    For those of you that agree of the pay raise... Shame on you. Why is it important that he needs 120m to stay? Who is this guy and what has he done to deserve this while others suffer? 120m would help a lot of people but Simon thinks 1 man deserves it. Unbelievable... I would say to this guy if you want to keep your job ok but there is no 120m raise my company can't afford to pay you this while the American public suffers if you feel you need more money to do the same job you been doing then may i suggest that you move onto elsewhere my companies money is to important to be offering this pay raise to you. But what Im gonna do with this extra 120m that you think you deserve is give it to my labor employees who work harh day after day so they can survive.
  • Salary Comparison
    Here ya go - appropriate compensation. $120M is thru 2019 plus $1.25 per. In sports terms that would be an annual salary of approximately $16M per. That is less than Peyton Manning ($18M) or A Rod ($27M) is being paid per year! How many jobs depend on Peyton's guidance of the offense or HRs A Rod hits? How many jobs are provided by Simon Properties? Well, about 5,500 in the US alone and that of course doesn't include all of the construction and maintenance jobs needed to build and operate nor the economic impact of the retailer and restaurant jobs. What is the use of hating someone that has had such a positive impact solely because he makes alot of money. Stop complaining and blaming successful people for your failures, pick yourself up by the bootstraps and go make your own money.
  • oh sure...
    ...and you obviosly have no clue what 'appropriate compensation' is for any CEO, to pay this greedy Simon $120 MILLION for 1 YEAR of 'work' is the most ridiculous and over-the-top crony capitalist BS...just one more reason why the 1% is so hated by the 99% in this country!
  • Uninformed
    Yes really. You obviously have no knowledge of the history of Simon properties or what any of them have accomplished. You only see the name and assume. Additionally, you seem to have no concept of the real estate market. My suggestion would be for you to follow the old Twain adage about removing all doubt.
    • Really?
      It is not hard work that got David to where he is...his DADDY gave him the job.
    • Performance
      People need to look at corporate performance. Has the company done well, especially in rough economic times? Is the company poised to continue excellent performance? I would say emphatically yes! I wish I was in a position to invest in Simon stock. Stop hating hard earned success and wealth and go accomplish something worthwhile.
      • $120M to stick around?
        Who do they think he is? An all-pro Quarterback?! Get your priorities in check, people! ;-)
      • That's Peanuts Compared to Angela Braley
        When the CEO of a health insurance company in the same town makes almost $10 million a year, $1.25 million in salary for David Simon is chump change. I don't know what kind of stock rewards Braly gets, but I'll bet there are some.
      • CEOs: no loyalty, no dedication?
        Let's hope the shareholders prevail. Loyalty and dedication are qualities totally lacking in CEO-level executives. They aren't royalty and if their primary goal is self-enrichment, perhaps they should be allowed to leave and be replaced by someone else. You want more money? Uh no, you get enough. A deal breaker? Then just go. Bye.
      • Those Pesky Stockholders
        I am guessing that a few stockholders are up in arms over the sweet deal given to Mr. Simon. The Compensation Committee may need to regroup, or plan for a nasty legal battle. In the end, the lawyers always win.

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