UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
I. Adoption of the 2020 WPG Executive Bonus Plan
On February 25, 2020 (the “Adoption Date”), the Compensation Committee (the “Committee”) of the Board of Directors of Washington Prime Group Inc. (the “Company,” “Registrant” or “WPG”) approved the terms and conditions for the 2020 WPG Executive Bonus Plan (the “Plan”) for the Company’s senior management team, including its “named executive officers” (as defined by Item 402(a)(3) of Regulation S-K) (each a “Named Executive Officer”). The Plan establishes the targets for bonus payments to such officers specifically named in the Plan (together with the Named Executive Officers, the “Officers” or “Participants”) for performance achieved during fiscal year 2020. Under the Plan, each Participant has a bonus target opportunity that is a percentage of such Participant’s base salary earnings paid during 2020 from which the bonus payment under the Plan will be determined. The bonus targets for each Named Executive Officer eligible to participate in the Plan are as follows:
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Named Executive Officer |
Bonus Target |
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Chief Executive Officer and Director |
150% of paid salary |
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Executive Vice President and Chief Financial Officer |
125% of paid salary |
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Executive Vice President, General Counsel and Corporate Secretary |
150% of paid salary |
The Plan has three components based on the achievement of certain results related to: (a) measurable Funds From Operations (“FFO”) weighted at 75%, (“FFO Component”), (b) individual objectives of Participants (“Individual Objectives”) weighted at 12.5% (“Individual Component”) and (c) strategic objectives of the Company (collectively, “Strategic Objectives”) also weighted at 12.5% (“Strategic Component”). The Committee specifically approved the Individual Objectives for each Named Executive Officer and the Company’s Strategic Objectives for fiscal year 2020. The Committee approves, in its discretion, each Participant’s bonus based on the Committee’s assessment of the achievement of the performance goals further described below.
The threshold and target performance levels for the FFO Component, Individual Component and Strategic Component is 25% (threshold) and 100% (target), respectively, of a Plan Participant’s bonus payout opportunity for the FFO Component, Individual Component and Strategic Component. The Plan includes a maximum performance level for the Individual Component and Strategic Component of up to 150% of a Plan Participant’s bonus payout opportunity for those two components, respectively. With respect to the Individual Component and the Strategic Component, bonus percentage payouts for results achieved between performance levels will be interpolated accordingly, but not for the FFO Component. There is no maximum level of performance under the Plan for the FFO Component.
With respect to determining per share FFO performance, the Committee retains full discretion to accept or reject the exclusion (whether positive or negative) of the following items from the calculation of the Company’s year-end FFO per share: (1) merger and/or transaction costs, (2) the financial impact of acquisitions, ventures, dispositions, or similar transactions, (3) non-cash asset write downs or impairments, and (4) the financial impact of charges and expenditures associated with the early extinguishment of debt and the discontinuation of certain transactions or pre-development and development projects. Additionally, the Committee shall also retain full discretion to make any other adjustments they believe are appropriate in approving the portion of the bonus award for the FFO Component. Additionally, the Plan contains certain items that may be excluded from the calculation of FFO, whether positive or negative.
With respect to the Individual Component, Individual Objectives are specific, measurable and limited to no more than five objectives per Participant and are to be beyond the normal day-to-day responsibilities of Participants. The Committee can re-evaluate Individual Objectives during the fiscal year should business circumstances change beyond the control of the Company or Participant. With respect to the Strategic Component, each Named Executive Officer shall have the same corporate objectives. The achievement levels for each of the FFO, Individual and Strategic Components were approved by the Committee. To receive a bonus under the Plan, the Participant must be considered by the Company to be full-time and actively employed on both the date the bonus payment is approved by the Committee and the date that the Committee designates for the bonus to be paid.
II. Adoption of the 2020 Long Term Incentive Compensation Program
On the Adoption Date, the Committee approved the terms and conditions for the 2020 long-term incentive compensation awards (the “LTIP Program”) for the Officers and other executive personnel of the Company selected by the Committee. The LTIP Program establishes the percentage targets and specific terms for long-term incentive compensation awards issued under the 2019 Washington Prime Group, L.P. Stock Incentive Plan, as amended (the “2019 Plan”). The LTIP Program provides Officers with the opportunity to ultimately receive WPG common shares based on: (a) the vesting of time-based restricted stock units (“RSUs”) and (b) the earnout of performance-based performance stock units (“PSUs”) based on the Company’s relative total shareholder return (“TSR”).
The number of RSUs shall be determined by dividing an amount (i.e., either a percentage of salary or actual dollar amount) by the closing price of a share of the Company’s common stock on the Adoption Date. The RSUs shall be subject to the terms and conditions of the 2019 Plan and the applicable RSU award agreement. The issued RSUs shall vest in one-third tranches on each of the first, second and third anniversaries of the Adoption Date, subject to the Officer’s continued employment with the Company through each vesting date. During the period prior to vesting, dividend equivalents will be paid in cash with respect to the RSUs granted. RSUs represent a contingent right to receive one WPG common share for each awarded RSU. Vested RSUs shall convert to WPG common shares on a one-for-one basis.
On the Adoption Date, the target number of PSUs awarded shall be determined by dividing an amount (i.e., either a percentage of salary or actual dollar amount) by the closing price of a share of the Company’s common stock on the Adoption Date (“Equity Award Target”). Subject to the terms and conditions of the applicable award agreement and 2019 Plan, actual PSUs earned may range from 0% to 150% of the Equity Award Target, based on the achievement of the Company’s TSR compared to the Company’s pre-determined retail REIT peer group over a three-year performance period that commences on the Adoption Date and ends on February 25, 2023. During this three-year performance period prior to the vesting and settlement of earned PSUs, if any, dividend equivalents will be paid by the issuance of WPG common shares and will accrue with respect to the number of PSUs that actually vest at the end of the applicable performance period corresponding to the amount of any dividends paid by the Company to the Company’s common shareholders for the applicable dividend payment dates. Such dividend equivalents for earned PSUs, if any, will be released at the time the earned PSUs are settled.
The RSUs and PSUs awarded on the Adoption Date under the LTIP Program to each Named Executive Officer was as follows:
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Named Executive Officer |
RSUs |
PSUs |
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Chief Executive Officer and Director |
622,407 |
622,407 |
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Executive Vice President and Chief Financial Officer |
124,481 |
124,481 |
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Executive Vice President, General Counsel and Corporate Secretary |
103,734 |
103,734 |
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: March 2, 2020 |
WASHINGTON PRIME GROUP INC. |
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By: /s/ Robert P. Demchak |
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Name: Robert P. Demchak |
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Title: Executive Vice President, General Counsel and Corporate Secretary |
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