IBJNews

Simon shareholders OK CEO’s controversial pay package

Scott Olson
May 14, 2013
Keywords
Back to TopCommentsE-mailPrintBookmark and Share

Shareholders of Simon Property Group Inc. approved CEO David Simon’s modified compensation package at the Indianapolis-based company’s annual meeting Tuesday morning.

The still-lucrative agreement leaves in place the element that has created the largest controversy—a $120 million stock retention bonus Simon will receive if he stays through July 2019.

Shares voting in favor of the pay package totaled more than 147.6 million compared with about 113.5 million voting against the proposal.
    
In a prepared statement, Simon Property Group defended its CEO’s compensation.

“Under David Simon’s leadership, Simon Property Group has delivered industry-leading earnings and dividend growth and total shareholder return,” the company said. “Our shareholders are pleased with the outstanding performance of their investment, and we look forward to our ongoing interactions with current and potential investors.”

Company directors unveiled Simon’s new contract terms in 2011, and in a non-binding vote at the 2012 meeting, investors representing a whopping 73 percent of shares voted against his compensation package.

Simon's annual proxy statement revealed that the resounding “no” vote last year prompted the board to launch a sweeping shareholder-outreach program, which included 21 in-person or phone meetings with 16 big investors. Eighteen of the meetings were attended by compensation committee Chairman Reuben Leibowitz; the other three were attended by compensation committee member Allan Hubbard.

Among the changes that the board and David Simon agreed to after receiving shareholder input:

— They  reduced the amount of the retention bonus that Simon, 51, could collect if he were terminated before the contract expired without cause or for good reason. If Simon stays through July 2019, he still receives the full award, which is in the form of 1 million shares of stock. The award was worth $120 million on the date of grant, but the actual value will depend on the share price at the time he collects it. Because Simon shares have risen to $163 a share, the current value is $163 million.

— Reduced the amount Simon could earn annually in performance-based awards from $12 million to a figure that is tied to what other Simon executives could receive. Under the formula, the potential 2012 payout for Simon was $11.5 million. In the proxy, the board reiterated that David Simon had earned a lucrative pay package because the company performed well under his leadership, and he frequently appears on lists of best CEOS.

The proxy shows Simon’s total compensation in 2012 was $17.2 million.

A group that advises large shareholders on corporate governance issues praised Simon’s outreach effort, even though it did not result in a revamping of David Simon’s compensation.

“I think the company was very … pressured to address these issues,” Victoria Nguyen, an analyst at Glass Lewis & Co., told The Wall Street Journal. "They definitely made a move to engage with shareholders, which we think is encouraging and shareholders should recognize that as a valiant effort."

The outreach effort won’t put the matter to rest, however. The company continues to battle a lawsuit filed by two pension funds in August. They charge Simon’s pay package is “outlandish on its face” because it doesn't stipulate that the company achieve any performance benchmarks for Simon to get the $120 million.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
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
ADVERTISEMENT

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 had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

ADVERTISEMENT