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 2019 WPG Executive Bonus Plan
On February 20, 2019 (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 2019 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 2019. Under the Plan, each Participant has a bonus target opportunity that is a percentage of such Participant’s base salary paid during 2019 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:
Chief Executive Officer and Director
150% of paid salary
Executive Vice President and Chief Financial Officer
125% of paid salary
Executive Vice President, General Counsel and Corporate Secretary
150% of paid salary
Executive Vice President, Development
100% 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 2019. 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 are 25% (threshold) up to 100% (target), respectively. With respect to the Individual Component and the Strategic Component, bonus percentage payouts for results achieved between performance levels will be interpolated accordingly. There is no maximum level of performance under the Plan.
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. In addition, 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 2019 Long Term Incentive Compensation Program
On the Adoption Date, the Committee approved the terms and conditions for the 2019 long-term incentive compensation awards (the “LTIP Program”) for the Officers. The LTIP Program establishes the percentage targets and specific terms for long-term incentive compensation awards issued under the 2014 Washington Prime Group, L.P. Stock Incentive Plan, as amended (the “2014 Plan”). The LTIP Program provides Officers with the opportunity to ultimately receive WPG common shares based on: (i) the vesting of time-based restricted stock units (“RSUs”) and (ii) the earnout of performance-based performance stock units (“PSUs”) based on the Company’s total shareholder return (“TSR”).