UPDATE: Simon Property wins dismissal of CEO pay suit

Back to TopCommentsE-mailPrintBookmark and Share

Simon Property Group Inc., the biggest U.S. shopping-mall owner, won’t have to face a lawsuit claiming it improperly barred investors from voting on an executive-pay plan that yielded a $120 million stock award to CEO David Simon.

Delaware Chancery Court Judge Travis Laster in Wilmington on Thursday backed the company’s arguments that a shareholder suit by a Louisiana pension fund should be thrown out because Simon officials agreed to change the compensation plan it targeted.

Simon, based in Indianapolis, faced criticism last year over its CEO’s compensation package. More than 70 percent of the Simon shares voted at the company’s 2012 annual meeting opposed the retention award. To address those complaints, directors changed the pay plan in April to cut the number of shares eligible to vest if Simon, 52, leaves before 2015.

The ruling comes as the U.S. Securities and Exchange Commission continues to weigh a proposal to require corporations to disclose how much more their chief executives earn than rank- and-file employees. The pay-ratio disclosures are mandated by a provision in the U.S. Dodd-Frank Act.

Les Morris, a company spokesman, didn’t immediately return a call for comment on Laster’s ruling Thursday.

Rising pay at Simon

Simon investors filed suit in Delaware after the shareholders’ vote on the CEO’s stock grants. In the past, company officials have defended Simon’s compensation by noting total stockholder returns for the past 10 years were 597 percent compared with 58 percent for the S&P 500. Simon was one of the company’s top executives during that period. He has been CEO since 1995 and chairman since 2007.

Simon’s compensation for 2013 was about $16.2 million, including salary, bonus, and stock awards, according to the company’s proxy filing, released Thursday. His compensation was $13.2 million in 2012 and $10.5 million in 2011.

Simon President and Chief Operating Officer Richard Sokolov saw total compensation rise to nearly $8 million in 2013, from $6.2 million in 2012. General Counsel James Barkley made $6.3 million, up from $5 million.

Chief Financial Officer Stephen Sterrett was paid $6.2 million, up from nearly $5 million. David J. Contis, president of Simon Malls, saw compensation rise to $3.1 million, up from $2.2 million.

David Simon is the son of Melvin Simon, who formed the company with brothers Herbert and Fred in 1960, the same year it opened its first shopping center in Bloomington, Indiana. The landlord went public in 1993.

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

Stuart Grant, a lawyer for the pension fund, didn’t immediately respond to a call seeking comment on the ruling.


The company’s lawyers told Laster last month that the mall owner’s board approved changes to the plan designed to ensure executives got stock awards based solely on their performance and could only receive as much as $600,000 worth of shares in any one grant.

The pension fund argued the original pay plan granted Simon stock awards for simply staying on as the company’s top executive rather than achieving results for shareholders, according to court filings.

Simon officials argued the recent changes to the executive- compensation plan made the Louisiana pension fund’s suit moot.

“We think it’s completely resolved,” Lewis R. Clayton, a lawyer for the directors, told Laster at a March 25 hearing. “The plaintiffs have won.”

Laster allowed David Shepherd, an individual Simon investor, to proceed with his claims the company made misleading disclosures about its changes to the executive-pay plan.

Shepherd contends Simon officials mischaracterized the changes that allowed David Simon to get the disputed stock grants as “non substantive” in proxy materials, according to court filings. The company also claimed the changes limited such grants when they in fact increased the number of shares executives could get in annual awards, Shepherd’s lawyers argued.


  • Are We Jealous?
    It sounds to me like the previous 3 commenters are just amazed at how much money the Simons make. Their company has been around more than 50 years and is clearly leading their industry. Why is that? Because of David Simon. Sure, he had a leg up most of us don't, but he has done an exemplary job of advancing the ball for the Family company. Sounds like the judge agreed. Maybe, just maybe, if you start a company with your own money and efforts, your grandchildren can fight it out with investors in the future. But I doubt it will happen if you do nothing but complain. Get a life!
  • No matter how you cut it
    No matter how you cut it, Simon's paycheck came out of our pockets. What a waste.
  • Shocking
    WE THE TAXPAYERS give them mega bucks of our dollars and .....Sign me "ashamed to be a hoosier"
  • Unbelievable
    This is the same family that is on city welfare for hundreds of millions. Unbelievable. How much money do you need, Simons? Does your appetite have no end?

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............