Form DEF 14A Vereit, Inc.

Other definitive proxy statements

Published: 2019-03-21 17:08:41
Submitted: 2019-03-21
Period Ending In: 2018-12-31
vereitproxystatement2019.htm DEF 14A




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
x
Filed by a Party other than the Registrant
o

Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-12

VEREIT, INC.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
o
Fee paid previously with preliminary materials.
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:




vereita01.jpg
VEREIT, INC.
2325 E. Camelback Road, 9th Floor
Phoenix, Arizona 85016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on
Wednesday, May 1, 2019
March 21, 2019
To the Stockholders of VEREIT, Inc.:
I am pleased to invite you to the
2019
Annual Meeting of Stockholders (“Annual Meeting”) of VEREIT, Inc., a Maryland corporation (the “Company,” “we,” or “our”). The Annual Meeting will be held on
Wednesday, May 1, 2019
at the Company’s principal executive offices at
2325 E. Camelback Road, Ground Floor, Phoenix, Arizona 85016
, commencing at
8:30 A.M. (local time)
. At the Annual Meeting, you will be asked to: (i) elect the eight director nominees described in the enclosed proxy statement to the Board of Directors to serve for a one-year term until the next Annual Meeting of Stockholders in 2020 and until their successors are duly elected and qualify; (ii) ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2019
; (iii) approve by non-binding advisory resolution the compensation of the Company’s named executive officers; and (iv) consider and act on such other matters as may properly come before the Annual Meeting and any adjournment thereof.
Our Board of Directors has fixed the close of business on
March 8, 2019
as the record date for the Annual Meeting. Only record holders of shares of our common stock, par value $0.01 per share, at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.
We make proxy materials available to our stockholders on the Internet. You can access proxy materials at
www.proxyvote.com
. You also may authorize your proxy via the Internet or by telephone by following the instructions on that website. In order to authorize your proxy via the Internet or by telephone, you must have the stockholder identification number that appears on the materials sent to you. If you received a Notice of Availability of Proxy Materials, you also may request a paper or an e-mail copy of our proxy materials and a paper proxy card by following the instructions included therein.
Your vote is important.
By Order of the Board of Directors, 
lgoldbergsignature2018a01.jpg
Lauren Goldberg,
Executive Vice President, General Counsel and Secretary
Important Notice Regarding the Availability of Proxy Materials for
the Stockholder Meeting to be Held on
May 1, 2019
.

This proxy statement and our
2018
Annual Report to Stockholders
are available at
www.proxyvote.com
 

Whether or not you plan to attend the Annual Meeting, please carefully read the proxy statement and other proxy materials and complete a proxy for your shares as soon as possible. You may authorize your proxy via the Internet or by telephone by following the instructions on the website indicated in the materials you received in the mail. If you received a Notice of Availability of Proxy Materials, you may also request a paper or an e-mail copy of our proxy materials and a paper proxy card at any time. If you attend the Annual Meeting, you may vote in person if you wish, even if you previously have submitted your proxy. However, please note that if your shares are held of record by a bank, broker or other nominee and you wish to vote in person at the Annual Meeting, you must obtain a “legal proxy” issued in your name from such bank, broker or other nominee.





VEREIT, INC.
TABLE OF CONTENTS
PROXY STATEMENT
INFORMATION ABOUT THE MEETING AND VOTING
PROPOSAL 1: ELECTION OF DIRECTORS
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
CORPORATE RESPONSIBILITY
EXECUTIVE OFFICERS
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AUDIT COMMITTEE REPORT
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION COMMITTEE REPORT
COMPENSATION TABLES
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
COMPENSATION OF THE BOARD OF DIRECTORS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
PROPOSAL 3: NON-BINDING ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
STOCK OWNERSHIP BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN STOCKHOLDERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OTHER MATTERS PRESENTED FOR ACTION AT THE 2019 ANNUAL MEETING
ATTENDANCE AT THE 2019 ANNUAL MEETING
STOCKHOLDER PROPOSALS FOR THE 2020 ANNUAL MEETING















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2325 E. Camelback Road, 9th Floor
Phoenix, Arizona 85016
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Important Dates
How to Vote
March 8, 2019
 
The record date for the Annual Meeting is March 8, 2019. Only holders of shares of the Company’s common stock, par value $0.01 per share, at the close of business on March 8, 2019 are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.
May 1, 2019
The Annual Meeting will be held on May 1, 2019 at our principal executive offices at 2325 E. Camelback Road, Ground Floor, Phoenix, Arizona 85016, commencing at 8:30 A.M. (local time).

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Proposals
         
 At the Annual Meeting, you will be asked to:
1. Elect the eight director nominees described in this proxy statement for a one-year term to serve until the next annual meeting of stockholders in 2020 and until their successors are duly elected and qualify;
2. Ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019;
3. Approve by a non-binding advisory resolution the compensation of the Company’s named executive officers as described in this proxy statement; and
4. Consider and act on such matters as may properly come before the Annual Meeting and any adjournment thereof. The Board of Directors does not know of any matters that may be considered at the Annual Meeting other than the matters set forth above.
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Questions
If you have questions regarding voting by proxy or authorizing a proxy by telephone or via the Internet to vote your shares
 
that are not answered below, please contact us at (877) 405-2653.

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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” (I) THE ELECTION OF THE DIRECTOR NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS IN
2020
AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFY, (II) THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2019
AND (III) THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DESCRIBED HEREIN.
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PROXY STATEMENT
The proxy, together with this proxy statement and our
2018
Annual Report, is solicited by and on behalf of the board of directors (the “Board of Directors” or the “Board”) of VEREIT, Inc., a Maryland corporation (the “Company”), for use at the
2019
Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournment or postponement thereof. References in this proxy statement to “we,” “us,” “our” or like terms refer to the Company, and references in this proxy statement to “you” refer to the stockholders of the Company. This proxy statement and our
2018
Annual Report have either been mailed to you or been made available to you on the Internet. Mailing to our stockholders commenced on or about
March 21, 2019
.
CORPORATE HIGHLIGHTS
VEREIT, Inc. is a full-service real estate operating company that owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. The Company has total real estate investments of
$15.6 billion
consisting of
approximately 4,000
properties and
95.0
million square feet. The Company’s business model provides equity capital to creditworthy corporations in return for long-term leases on their properties.
The Company is a publicly traded Maryland corporation listed on the New York Stock Exchange. The mailing address of our principal executive offices is
2325 E. Camelback Road, 9th Floor, Phoenix, Arizona 85016
.

INFORMATION ABOUT THE MEETING AND VOTING
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials?
As permitted by rules adopted by the U.S. Securities and Exchange Commission (“SEC”), we are making this proxy statement and our
2018
Annual Report available to our stockholders electronically via the Internet. On or about
March 21, 2019
, we began mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this proxy statement and our
2018
Annual Report online, as well as instructions on how to vote. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. Instead, the Notice instructs you on how to access and review all of the important information contained in this proxy statement and our
2018
Annual Report. The Notice also instructs you on how you may vote via the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice. Our
2018
Annual Report is not part of the proxy solicitation material.
Can I access the Notice, Proxy Statement and the
2018
Annual Report on the Internet?
 
Yes, these materials are available on our website and can be accessed at
www.proxyvote.com
.
The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC.
Who can vote at the Annual Meeting?
The record date for the Annual Meeting is
March 8, 2019
. Only holders of shares of our common stock, par value $0.01 per share, at the close of business on
March 8, 2019
are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. As of the record date,
968,262,799
shares of our common stock were issued and outstanding and entitled to vote at the Annual Meeting.
How many votes do I have?
Each share of common stock has one vote on each matter considered at the Annual Meeting or any adjournment or postponement thereof. The proxy card shows the number of shares of common stock you are entitled to vote.
How may I vote?
If you are a “registered owner” or “record holder” (
i.e.
, you hold your shares in your own name as a holder of record with our transfer agent, Computershare Trust Company, N.A.) and you attend the Annual Meeting, you may vote in person at the Annual Meeting. If you are a “beneficial owner” because your bank, broker or similar organization is the holder of your shares (
i.e.
, your shares are held in “street name”) and you wish to vote in person at the Annual Meeting, you will need to obtain a “legal proxy” from the bank, broker or other record holder. If you attend the Annual Meeting and you submit your vote in person, any previous

2




votes that you submitted by mail or authorized via the Internet or by telephone will be superseded by the vote that you cast at the Annual Meeting. Further instructions for in-person voting can be obtained by calling us at
(877) 405-2653
.
Stockholders may submit their votes by mail (if they have received a hard copy set of documents) by completing, signing, dating and returning their proxy in the envelope enclosed with the mailing. Stockholders also have the following two options for authorizing a proxy to vote their shares:
via the Internet at
www.proxyvote.com
; or
by telephone to
Broadridge Financial Solutions, Inc.
For those who hold shares in their own name, by calling
(800) 690-6903
and for shares held in “street name,” by calling
(800) 454-8683
.

For those stockholders with Internet access, we encourage you to authorize a proxy to vote your shares via the Internet, a convenient means of authorizing a proxy that also provides cost savings to us. In addition, when you authorize a proxy to vote your shares via the Internet or by telephone prior to the date of the Annual Meeting, your proxy authorization is recorded immediately and there is no risk that postal delays will cause your vote by proxy to arrive late and, therefore, not be counted. For further instructions on authorizing a proxy to vote your shares, see the proxy card.
If your shares are held in “street name,” you should instruct your bank, broker or other record holder how to vote your shares by following the voting instructions provided by such organization. If you do not give instructions to your bank, broker or record holder, such organization will be entitled to vote your shares on routine items, but will not be permitted to do so on non-routine items. Your bank, broker or record holder will have discretion to vote on Proposal 2 (ratification of auditors) without any instructions from you, but such organization will not have the ability to vote your uninstructed shares on Proposal 1 (election of directors) or Proposal 3 (vote to approve by non-binding advisory resolution the named executive officer compensation) on a discretionary basis. Accordingly, if you hold your shares in “street name” and you do not instruct your bank, broker or other record holder how to vote on these proposals, such organization cannot vote these shares and will report them as “broker non-votes,” meaning that no votes will be cast on your behalf for Proposals 1 and 3.
How will proxies be voted?
Shares represented by valid proxies will be voted at the Annual Meeting in accordance with the directions given. If you are a registered stockholder and submit a properly executed proxy but do not indicate any voting instructions, the shares will be voted “FOR” the (i) election of the director nominees named in this proxy statement, (ii) ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2019
and (iii) non-binding advisory resolution approving the compensation of the Company’s named executive officers as described herein.
We are not currently aware of any other matters to be presented at the Annual Meeting other than those described in this proxy statement. If any other matters not described in this proxy statement are properly presented at the Annual Meeting, any proxies received by us will be voted at the discretion of the proxy holders.
How can I change my vote or revoke a proxy?
You have the unconditional right to revoke your proxy at any time prior to the voting thereof by (i) submitting a later-dated proxy via the Internet, by telephone or by mail to:
Broadridge Financial Solutions, Inc.
,
51 Mercedes Way, Edgewood, New York 11717
, or (ii) by attending the Annual Meeting and voting in person. No written revocation of your proxy shall be effective, however, unless and until it is received at or prior to the Annual Meeting.
What vote is required to approve each item?
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present is required for the election of each director nominee. For purposes of the election of directors, a majority of the votes cast means that the number of votes cast “for” a nominee for election as a director exceeds the number of votes cast “against” that nominee.
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present is required for ratifying the appointment of Deloitte as the Company’s independent auditor for the fiscal year ending
December 31, 2019
.
The affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present is required to approve by non-binding advisory resolution the compensation of our named executive officers as described herein.
Abstentions and broker non-votes, if any, will have no effect on the outcome of these matters. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and does not have

3




or chooses not to exercise discretionary authority to vote the shares. None of the proposals, if approved, entitle stockholders to appraisal rights under Maryland law or the Company’s charter.
What constitutes a “quorum”?
The presence at the Annual Meeting, in-person or represented by proxy, of the holders of a majority of the shares of common stock outstanding on the record date, or
484,131,401
shares, will constitute a quorum. Abstentions and broker non-votes will be counted as present for the purpose of determining whether there is a quorum.
What happens if a quorum is not present at the Annual Meeting?
If a quorum is not present at the scheduled time of the Annual Meeting, the chairman of the meeting may adjourn the meeting to another place, date or time until a quorum is present. The place, date and time of the adjourned meeting will be announced when the adjournment is taken, and no other notice will be given unless the adjournment is to a date more than 120 days after the original record date or if, after the adjournment, a new record date is fixed for the adjourned meeting.
Will you incur expenses in soliciting proxies?
We are soliciting the proxy on behalf of the Board of Directors, and we will pay all costs of preparing, assembling and mailing the proxy materials. We have retained
Broadridge Financial Solutions, Inc.
, to aid in the mailing of proxy materials and tabulation and recording of votes. In addition, our directors, officers and other employees, without additional compensation, may participate in the solicitation of proxies.
We will request banks, brokers and other record holders to forward copies of the proxy materials to people on whose behalf they hold shares of common stock and to request authority for the exercise of proxies by the record holders on behalf of those people. In compliance with the regulations of the SEC, we will reimburse such banks, brokers and other record holders for reasonable expenses incurred by them in forwarding proxy materials to the beneficial owners of shares of our common stock.
What does it mean if I receive more than one proxy card?
Some of your shares may be registered differently or held in a different account. You should authorize a proxy to vote the shares in each of your accounts via the Internet or by telephone or by mail. If you mail proxy cards, please sign, date and return each proxy card to guarantee that all of your shares are voted. If you hold your shares in registered form and wish to combine your stockholder accounts in the future, you should call us at
(877) 405-2653
. Combining accounts reduces excess printing and mailing costs, resulting in cost savings that benefit you as a stockholder.
What if I receive only one set of proxy materials although there are multiple stockholders at my address?
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering to that address a single proxy statement to those stockholders. This process is referred to as “householding.” The rules benefit both you and us. It reduces the volume of duplicate information received at your household and helps reduce expenses.
Some brokers household proxy materials, delivering a single proxy statement (including notice of annual meeting) and annual report to multiple stockholders sharing an address unless contrary instructions have been received from one or more of the affected stockholders. Although the proxy materials may be householded, each account in a household will receive its own Notice and proxy card to vote. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If a single copy of the proxy statement (including notice of annual meeting) and annual report was delivered to your household and you wish to receive a separate copy of such materials, please notify us and we will promptly provide you with such copy. Additionally, if, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement (including notice of annual meeting) and annual report, or if you are receiving multiple copies of the proxy statement (including notice of annual meeting) and annual report and wish to receive only one copy, please notify your broker if your shares are held in a brokerage account, or notify us if you hold registered shares. You may notify us by calling us at
(877) 405-2653
or by mailing a request to us at
2325 E. Camelback Road, 9th Floor, Phoenix, Arizona 85016
, Attention: Investor Relations.


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PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is responsible for monitoring and supervising the performance of our executive management team. Directors are elected annually by our stockholders, and there is no limit on the number of times a director may be elected to office. Each director serves until the next annual meeting of stockholders and until his or her successor is duly elected and qualifies or until his or her earlier death, resignation or removal. The Company’s charter provides that the number of directors shall not be less than the minimum number required by the Maryland General Corporation Law nor more than fifteen; provided, however, that the number of directors may be changed from time to time by resolution adopted by the affirmative vote of a majority of the Board. The number of directors on the Board is currently fixed at eight.
Any director who fails to be elected by a majority vote shall offer his or her resignation to the Board, subject to acceptance. The Nominating and Corporate Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether other action should be taken. The Board of Directors will then act on our Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results. If the resignation is not accepted, the director will continue to serve until the next annual meeting and until the director’s successor is duly elected and qualifies. The director who offers his or her resignation will not participate in the Board’s decision regarding whether to accept or reject such director’s resignation.
The Board of Directors, at the recommendation of the Nominating and Corporate Governance Committee, proposes that the eight nominees listed below, all of whom are currently serving on our Board, be elected to serve as directors until the
2020
annual meeting of stockholders and until his or her successor is duly elected and qualifies. If a nominee becomes unavailable to serve as a director for any reason, the shares represented by any proxy will be voted for any substitute nominee, if any, who may be designated by the Board to replace that nominee. At this time, the Board of Directors does not know of any reason why any nominee would not be able to serve as a director.
The election of each director nominee requires the affirmative vote of a majority of the votes cast at the Annual Meeting at which a quorum is present. For purposes of the election of directors, a majority of the votes cast means that the number of votes cast “for” a nominee for election as a director exceeds the number of votes cast “against” that nominee.
Director Nominees and Business Experience
The matrix below represents some of the key skills that our Board has identified as particularly valuable to the effective oversight of the Company and the execution of our strategy. This matrix highlights the depth and breadth of skills of our current directors.
 
Rufrano
Frater
Henry
Hogan Preusse
Lieb
Ordan
Pinover
Richardson
Age
69
63
70
50
59
60
71
55
Gender
Male
Male
Male
Female
Male
Male
Male
Female
Director Since
2015
2015
2015
2017
2017
2015
2015
2015
Independent
 
ü
ü
ü
ü
ü
ü
ü
REIT / Real Estate
ü
ü
ü
ü
ü
ü
ü
 
Business Leadership
ü
ü
ü
ü
ü
ü
ü
ü
Public Company Executive
ü
 
ü
 
ü
ü
 
 
Public Company Director
ü
ü
ü
ü
ü
ü
 
ü
Capital Markets
ü
ü
ü
ü
ü
ü
ü
ü
Accounting / Finance
ü
ü
ü
ü
ü
ü
 
ü
Legal
 
 
 
 
 
 
ü
 
Risk Oversight
ü
ü
ü
ü
 
ü
 
 
Real Estate Securities Investment
ü
 
 
ü
 
 
ü
 
Set forth below are the names, ages, biographical information and positions each of the nominees holds with the Company as of the date of this proxy statement.


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Glenn J. Rufrano
glennrufrano2019.jpg
 
Age:
69
 
CEO and Director Since:
April 2015
 
Positions:
Chief Executive Officer and Director
 
Committee(s):
None
 
Biography:
 
 
Prior to joining the Company, Mr. Rufrano served as Chairman and Chief Executive Officer of O’Connor Capital Partners, a privately-owned, independent real estate investment, development and management firm specializing in retail and multifamily residential properties that he co-founded, from November 2013 through March 2015. He also served as a director for Ventas, Inc., a publicly traded healthcare real estate investment trust (“REIT”) from June 2010 to May 2018 and Columbia Property Trust, Inc., a publicly traded commercial real estate REIT, from January 2015 until March 2015. Previously, Mr. Rufrano was President and Chief Executive Officer of Cushman & Wakefield, Inc., a private, global commercial property and real estate services company, and a member of its Board of Directors from March 2010 to June 2013. From January 2008 through February 2010, he served as Chief Executive Officer of Centro Properties Group, an Australian-based shopping center company, and from April 2007 through January 2008, Mr. Rufrano served as Chief Executive Officer of Centro Properties Group U.S. From 2000 until its acquisition by Centro Properties Group in April 2007, he served as Chief Executive Officer and director of New Plan Excel Realty Trust, Inc., a commercial retail REIT formerly listed on the New York Stock Exchange. He presently serves on the Board of New York University’s Real Estate Institute and the National Association of Real Estate Investment Trusts (“Nareit”) Advisory Board of Governors. From June 2015 to December 2018, Mr. Rufrano served on the Boards of Directors of the following non-listed REITs: Cole Credit Property Trust V, Inc. (“CCPT V”), CIM Income NAV, Inc. (formerly known as Cole Real Estate Income Strategy (Daily NAV), Inc.) (“INAV”), Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”), Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”) and Cole Credit Property Trust IV, Inc. (only from June 2016 until February 2018) (“CCPT IV” and collectively with CCPT V, INAV, CCIT II and CCIT III, the “Cole REITs”).  Mr. Rufrano had served on the Boards of Directors of the Cole REITs prior to the sale of the Company’s investment management business, Cole Capital, to an affiliate of CIM Group, LLC in February 2018, as the Cole REITs were sponsored and externally managed by the Company and his board service comprised part of his duties as Chief Executive Officer of the Company. As part of transition services provided by the Company following the closing of the transaction, Mr. Rufrano agreed to remain as a director of certain of the Cole REITs for a transition period.
 

 
 
Education:
 
 
 
Mr. Rufrano received a Bachelor’s Degree in Business Administration from Rutgers University and a Master of Science degree in Management and Real Estate from Florida International University.

 
 
Skills and Qualifications:
 
 
We believe Mr. Rufrano’s extensive experience in the real estate industry, his tenure on various REIT boards and his wide-ranging leadership experience make him well qualified to serve on our Board of Directors.

6




Hugh R. Frater
hughfrater2019.jpg
 
Age:
63
 
Director Since:
April 2015
 
Positions:
Non-Executive Chairman of the Board of Directors (Independent Director)
 
Committee(s):
None
 
Biography:
 
 
In October 2018, Mr. Frater was appointed as interim Chief Executive Officer of the 
Federal National Mortgage Association (“Fannie Mae”).
 From April 2014 until his retirement in December 2015, Mr. Frater served as Chairman of Berkadia Commercial Mortgage LLC (“Berkadia”), an industry-leading commercial real estate company that is owned 50% by Berkshire Hathaway Inc. and 50% by Leucadia National Corporation, which provides comprehensive capital solutions and investment sales advisory and research services for multifamily and commercial properties. Mr. Frater formerly served as Berkadia’s Chief Executive Officer from August 2010 until April 2014. From November 2007 until June 2010, Mr. Frater was the Chief Operating Officer at Good Energies, Inc. and from February 2004 until May 2007, Mr. Frater was Executive Vice President at PNC Financial Services, where he led the real estate division. From August 1988 until February 2004, he was a Founding Partner and Managing Director of BlackRock, Inc., the largest global investment manager, where he also led the real estate practice. Mr. Frater has served on the Board of Directors of
Fannie Mae 
since January 2016, including having served on its risk and audit committees until his appointment as interim Chief Executive Officer of Fannie Mae in October 2018. Mr. Frater has also served as a director of ABR Reinsurance Capital Holdings, Ltd., a private reinsurer, since August 2015, and of Hippo Insurance, a private home insurance company since July 2018. He has also served on the Real Estate Advisory Board at the Columbia University Graduate School of Business since 2004 and on its Board of Overseers since 2015. Mr. Frater has also previously served on the Board’s Audit Committee and Nominating and Corporate Governance Committee from April 2015 to September 2015.

 
 
Education:
 
 
 
Mr. Frater received a Bachelor’s Degree from Dartmouth College and received a Master of Business Administration from the Columbia University Graduate School of Business.

 
 
Skills and Qualifications:
 
 
We believe that Mr. Frater’s long-standing real estate and policy and government relations experience, in addition to his finance and business operations background, make him well qualified to serve on our Board of Directors.


David B. Henry
davidhenry2019.jpg
 
Age:
70
 
Director Since:
September 2015
 
Positions:
Independent Director
 
Committee(s):
Nominating and Corporate Governance Committee (Chair)
 
 
Audit Committee
 
Biography:
 
 
Mr. Henry served as Chief Executive Officer of Kimco Realty Corporation (“Kimco”), a publicly traded REIT, from December 2009 to January 2016 and Vice Chairman of Kimco from May 2001 to January 2016. Before joining Kimco in April 2001, Mr. Henry served in various capacities at GE Capital Real Estate (“GE”) from 1978 to 2001, including as GE’s Senior Vice President and Chief Investment Officer from 1998 to 2001. Mr. Henry also served as Chairman of GE’s Investment Committee and as a member of its Credit Committee. Prior to joining GE, Mr. Henry served as Vice President for Republic Mortgage Investors, a mortgage REIT, from 1973 to 1978. Mr. Henry has served on the Board of Directors of Fairfield County Bank, a private Connecticut mutual savings bank, since July 2010 and on the Board of Directors of Starwood Real Estate Income Trust, Inc., a non-listed REIT, since January 2018. Mr. Henry is a former trustee of the International Council of Shopping Centers (“ICSC”) and served as its Chairman from 2011 to 2012. Mr. Henry served as the Vice-Chairman of the Board of Governors of Nareit, ending his term on December 31, 2015, and serves on the real estate advisory boards of New York University, Baruch College and Alto Real Estate Funds. Mr. Henry is also the co-founder of Peaceable Street Capital, an equity lender for income producing commercial real estate properties.

 
 
Education:
 
 
 
Mr. Henry received a Bachelor of Science degree in Business Administration from Bucknell University and a Master of Business Administration from the University of Miami.

 
 
Current Public Company Directorships:
 
 
Mr. Henry has served on the Board of Directors of HCP, Inc., a publicly traded REIT, since January 2004, on the Board of Directors of Columbia Property Trust, Inc., a publicly traded REIT that owns and operates commercial office properties, since January 2016, and on the Board of Directors of Tanger Factory Outlet Centers, Inc., a publicly traded real estate company that owns the chain Tanger Outlets, since January 2016.

7




 
 
Skills and Qualifications:
 
 
We believe that Mr. Henry’s extensive REIT experience, leadership skills, public company experience and knowledge of the real estate business make him well qualified to serve on our Board of Directors.

Mary Hogan Preusse
maryhoganpreusse2019.jpg
 
Age:
50
 
Director Since:
February 2017
 
Positions:
Independent Director
 
Committee(s):
Compensation Committee
 
 
Nominating and Corporate Governance Committee
 
Biography:
 
 
Ms. Hogan Preusse is the former Managing Director and Co-Head of Americas Real Estate for APG Asset Management US (“APG”), the manager of pension assets on behalf of Dutch citizens, and had served in various capacities at APG from 2000 through her retirement in May 2017. As the Managing Director and Co-Head of Americas Real Estate for APG, she was responsible for managing the firm’s public real estate investments in North and South America, which encompassed over $13 billion in assets. She also served as a member of APG’s Executive Board from 2008 through 2017. At APG, she also served as Senior Portfolio Analyst and Portfolio Manager, US Real Estate from 2000 through 2004, and as Senior Portfolio Manager, North American Real Estate from 2004 through 2008. Prior to joining APG in 2000, Ms. Hogan Preusse spent eight years as a sell side analyst covering the REIT sector, and she began her career at Merrill Lynch & Co. as an investment banking analyst. She serves on Nareit’s Investor Advisory Council and is a member of the Real Estate Advisory Board for the Carey Business School at Johns Hopkins University.

 
 
Education:
 
 
 
Ms. Hogan Preusse graduated from Bowdoin College in Brunswick, Maine with a degree in Mathematics in 1990 and is a member of Bowdoin’s Board of Trustees.

 
 
Current Public Company Directorships:
 
 
Ms. Hogan Preusse has served as an independent director of Kimco since February 2017, as an independent director of Digital Realty Trust, Inc., a publicly traded REIT specializing in technical real estate since May 2017, and as an independent director of Host Hotels & Resorts, Inc., a publicly traded REIT since June 2017.
 
 
Skills and Qualifications:
 
 
We believe that Ms. Hogan Preusse’s real estate, investment management and financial services experience make her well qualified to serve on our Board of Directors.


Richard J. Lieb
richardlieb2019.jpg
 
Age:
59
 
Director Since:
February 2017
 
Positions:
Independent Director
 
Committee(s):
Audit Committee (Chair)
 
 
Compensation Committee
 
Biography:
 
 
Mr. Lieb serves, as of January 1, 2019, as a Senior Advisor of Greenhill & Co., LLC (“Greenhill”), a publicly traded independent investment banking firm which he joined in 2005, and prior to that he served as Managing Director and Chairman of Real Estate at Greenhill. He served as Greenhill’s Chief Financial Officer from 2008 to 2012 and also served as a member of the firm’s Management Committee from 2008 to 2015. Mr. Lieb has also served during his tenure at Greenhill as head of the firm’s Restructuring business and as head of North American Corporate Advisory. Prior to joining Greenhill in 2005, Mr. Lieb spent more than 20 years with Goldman Sachs & Co., where he headed that firm’s Real Estate Investment Banking Department from 2000 to 2005. Overall, Mr. Lieb has more than 30 years of experience focusing on advisory opportunities in the real estate industry. Mr. Lieb is licensed with FINRA and holds Series 7, Series 63 and Series 24 licenses. Mr. Lieb is an active member of the American Jewish Committee (AJC) and served as a member of Wesleyan University’s Career Advisory Counsel from 2007 through 2012.

 
 
Education:
 
 
 
Mr. Lieb received a Bachelor of Arts degree from Wesleyan University and a Master of Business Administration degree from Harvard Business School.

 
 
Current Public Company Directorships:

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Mr. Lieb has served on the Board of Directors of CBL & Associates Properties, Inc., a publicly traded REIT focused on middle market regional malls, since February 2016 and on the Board of Directors of AvalonBay Communities, a publicly traded REIT focused on apartment communities, since September 2016.
 
 
Skills and Qualifications:
 
 
We believe that Mr. Lieb’s extensive real estate experience and finance and accounting background make him well qualified to serve on our Board of Directors.

Mark S. Ordan
markordan2019.jpg
 
Age:
60
 
Director Since:
June 2015
 
Positions:
Independent Director
 
Committee(s):
Audit Committee
 
 
Compensation Committee
 
Biography:
 
 
Mr. Ordan served as the Chief Executive Officer and director of Quality Care Properties, Inc., a spin-off of HCP, Inc., and a publicly traded healthcare services provider, from October 31, 2016 until July 2018.  Mr. Ordan was the Executive Chairman of Washington Prime Group, Inc. a publicly traded REIT, from January 2015 until January 2016, when he transitioned to Non-Executive Chairman of the Board through June 2016, and served as a director from May 2014 until May 2017. From January 2013 to November 2013, Mr. Ordan served as the Chief Executive Officer and director of Sunrise Senior Living, LLC, the successor to the management business of Sunrise Senior Living, Inc. (“Sunrise”), a publicly traded operator of approximately 300 senior living communities located in the United States, Canada and the United Kingdom prior to its sale in January 2013 to Health Care REIT, Inc. Mr. Ordan served as Sunrise’s Chief Executive Officer from November 2008 to January 2013, and as a director from July 2008 to January 2013. He served as the Chief Executive Officer and President of The Mills Corporation, a publicly traded developer, owner and manager of a diversified portfolio of regional shopping malls and retail entertainment centers, from October 2006 to May 2007, as its Chief Operating Officer from February 2006 to October 2006 and as a director from December 2006 until May 2007. Prior to that, he served as President and Chief Executive Officer of Balducci’s LLC, a gourmet food store chain. He also founded and served as Chairman, President and Chief Executive Officer of Fresh Fields Markets, Inc., an organic foods supermarket chain, eventually leading the merger of the company with Whole Foods Markets, Inc. Mr. Ordan also was in the equities division of the investment banking firm of Goldman Sachs & Co. Mr. Ordan served as a director of Harris Teeter Supermarkets, Inc., a publicly traded supermarket chain, from February 2013 until January 2014, when it was acquired by The Kroger Company. Mr. Ordan served on the board of Forest City Realty Trust, Inc., a publicly traded real estate company that owns, develops, manages and acquires commercial and residential real estate, from April 2018 until its acquisition by a real estate fund of Brookfield Asset Management Inc. in December 2018. Since October 2018, Mr. Ordan has served on the board of directors of Elli Finance (UK) plc, the parent holding company of Four Seasons Health Care, a private home care operator. Mr. Ordan currently serves on the boards of the following nonprofit organizations: the U.S. Chamber of Commerce and the Chesapeake Bay Foundation. Mr. Ordan also previously served as a member of the Board’s Nominating and Corporate Governance Committee from June 2015 to September 2015.

 
 
Education:
 
 
 
Mr. Ordan received a Bachelor of Arts in Philosophy from Vassar College and a Master in Business Administration from Harvard Business School.
 
 
Current Public Company Directorships:
 
 
Mr. Ordan has served as a director of Federal Realty Investment Trust, a publicly traded REIT specializing in retail and mixed-use properties, since February 2019, having previously served on the board from 1996 to 2006 and served as its Chairman for the last five years of this term.  
 
 
Skills and Qualifications:
 
 
We believe that Mr. Ordan’s extensive experience in the REIT industry, his knowledge of real estate and his long-standing leadership and public company experience make him well qualified to serve on our Board of Directors.



9




Eugene A. Pinover
eugenepinover2019.jpg
 
Age:
71
 
Director Since:
September 2015
 
Positions:
Independent Director
 
Committee(s):
Audit Committee
 
 
Nominating and Corporate Governance Committee
 
Biography:
 
 
Mr. Pinover has been a partner with DLA Piper in New York City since May 2016 and is co-chair of its New York Real Estate practice. He also serves on the firm’s global real estate steering committee. Previously, Mr. Pinover was Of Counsel and Co-Chair of the Real Estate Department of Willkie Farr & Gallagher LLP (“Willkie”) and practiced law with Willkie from May 1992 until April 2016. Prior to joining Willkie, Mr. Pinover practiced law at Kaye Scholer LLP from 1973 to 1992. Mr. Pinover is a member of the American College of Real Estate Lawyers, the Association of the Bar of the City of New York, the American Bar Association, the Association of Foreign Investors in Real Estate and ICSC. Mr. Pinover is the President of the Board of Directors of Steep Rock Association, a land trust in Connecticut, and has served on its Board of Directors since June 2008. Mr. Pinover also has served as a member of the Board of Directors of New Alternatives for Children, a New York-based social service organization, since September 2006.

 
 
Education:
 
 
 
Mr. Pinover received his Bachelor of Arts from Dartmouth College and his Juris Doctor from the New York University School of Law and graduated both cum laude.

 
 
Skills and Qualifications:
 
 
We believe that Mr. Pinover’s extensive real estate experience and legal background make him well qualified to serve on our Board of Directors.


Julie G. Richardson
julierichardson2019.jpg
 
Age:
55
 
Director Since:
April 2015
 
Positions:
Independent Director
 
Committee(s):
Compensation Committee (Chair)
 
 
Nominating and Corporate Governance Committee
 
Biography:
 
 
From November 2012 to October 2014, Ms. Richardson was a senior advisor to Providence Equity Partners LLC (“Providence Equity”), a global asset management firm with over $40.0 billion in assets under management. From April 2003 to November 2012, she was a Partner and Managing Director at Providence Equity, and oversaw the firm’s New York office. While at Providence Equity, Ms. Richardson’s responsibilities included leading the initiation and execution of deals, and optimizing operating results and strategic positioning of portfolio companies throughout Providence Equity’s ownership period. Prior to Providence Equity, Ms. Richardson served as Global Head of JP Morgan’s Telecom, Media and Technology Group, and was previously a Managing Director in Merrill Lynch & Co.’s investment banking group. Ms. Richardson previously served on the Board of Directors of Arconic, Inc., a publicly traded manufacturer in the aerospace and automobile industries, from November 2016 to February 2018.

 
 
Education:
 
 
 
Ms. Richardson received a Bachelor of Business Administration from the University of Wisconsin-Madison. 
 
 
Current Public Company Directorships:
 
 
Ms. Richardson has served on the Board of Directors of The Hartford Financial Services Group, Inc., a publicly traded insurance and financial services company, since January 2014, and on the Board of Directors of UBS Group AG, a publicly traded financial services company, since May 2017. She has also served on the Board of Directors of Yext, Inc., a technology company, since May 2015.
 
 
Skills and Qualifications:
 
 
We believe that Ms. Richardson’s capital markets, investment management and financial services experience, in addition to her experience on other public company boards, make her well qualified to serve on our Board of Directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” EACH OF MESSRS. RUFRANO, FRATER, HENRY, LIEB, ORDAN AND PINOVER AND MSES. HOGAN PREUSSE AND RICHARDSON TO SERVE ON THE BOARD OF DIRECTORS UNTIL THE
2020
ANNUAL STOCKHOLDERS MEETING AND UNTIL A SUCCESSOR FOR EACH IS DULY ELECTED AND QUALIFIES.

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INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
Leadership Structure of the Board of Directors
Our Board has the authority to select the leadership structure it considers appropriate. In making leadership structure determinations, the Board considers many factors, including the specific needs of our business and what is in the best interests of our stockholders. In recognition of the time commitments and activities required to function effectively as both the Chief Executive Officer and Chairman of the Board, we have separated the roles, with Mr. Rufrano serving as our Chief Executive Officer and Mr. Frater serving as our Non-Executive Chairman. The Board believes that the current separation of the roles of Chief Executive Officer and Chairman allows Mr. Rufrano to focus his time and energy on operating and managing the Company while leveraging the experience and perspectives of Mr. Frater in helping to set the strategic direction of the Company. The Board has determined that our current Board leadership structure is the most appropriate at this time, given the specific characteristics and circumstances of the Company.
Board Oversight of Risk Management
The Board has an active role in overseeing the management of risks applicable to the Company. A portion of this responsibility has been delegated by the Board to the committees of the Board with respect to the assessment of the Company’s risks and risk management in their respective areas of oversight.
In particular, the Board administers its risk oversight function through (i) the review and discussion of regular periodic reports by the Company’s management to the Board of Directors and its committees on topics relating to the risks that we face, including, among others, market conditions, significant existing and potential legal claims, cyber security matters, tenant concentrations and creditworthiness, leasing activity and expirations, the Company’s insurance programs, compliance with debt covenants, management of debt maturities and access to the debt and equity capital markets, (ii) the required approval by the Board of Directors (or a committee thereof) of significant transactions and other decisions, including, among others, significant acquisitions and dispositions of properties, certain borrowings and the appointment and retention of certain senior executives, (iii) the direct oversight of specific areas of our business by the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee and (iv) regular periodic reports from our auditors, our independent compensation consultant and other outside consultants regarding various areas of potential risk, including, among others, those relating to our qualification as a REIT for tax purposes, and our internal controls and financial reporting. The Board of Directors also relies on management to bring significant matters affecting the Company to its attention, and it has tasked the Audit Committee with monitoring the Company’s overall risk profile.
Pursuant to its charter, the Audit Committee is responsible for discussing with management the Company’s significant financial risk exposures and the actions management has taken to limit, monitor and control such exposures. The Audit Committee is also responsible for discussing with management the Company’s risk assessment and risk management policies. In addition, we have adopted policies and procedures with respect to complaints related to accounting, internal accounting control or auditing matters, which enables anonymous and confidential submission of complaints that the Audit Committee would then discuss with management.
Board Meetings
During the fiscal year ended
December 31, 2018
, the Board of Directors held
15
meetings (including meetings held in person and by conference call). The Board of Directors regularly held executive sessions of the independent directors, over which Mr. Frater, as the Non-Executive Chairman of the Board, served as the presiding director. The number of meetings for each Board committee is set forth below under the heading “Board Committees.” During the year ended
December 31, 2018
, each of our directors attended at least 75% of the total number of meetings of the Board and of the committees on which he or she served. Each of our directors attended the
2018
stockholders’ annual meeting. Pursuant to our Corporate Governance Guidelines, all directors should attend our
2019
Annual Meeting.
Board Governance Documents
The Board maintains charters for each of its standing committees (the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee). In addition, the Board has adopted a written set of Corporate Governance Guidelines as well as a Code of Business Conduct and Ethics that applies to all of the officers, employees, consultants and directors of the Company and its subsidiaries. The Company intends to satisfy the disclosure requirement regarding any amendment to or waiver of a provision of the Code of Business Conduct and Ethics for the Company’s principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, by posting such information on the Company’s website. To view the charters of the Board’s standing committees as well as the Corporate Governance Guidelines and the Code

11




of Business Conduct and Ethics, please visit our website at www.vereit.com. Each of these documents is also available, free of charge, in print to any stockholder who sends a written request to VEREIT, Inc.,
2325 E. Camelback Road, 9th Floor, Phoenix, Arizona 85016
, Attention: Lauren Goldberg.
Independent Directors
Under the listing standards of the New York Stock Exchange (the “NYSE”), at least a majority of the Company’s directors, and all of the members of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, must be independent. As part of the qualification for director independence, in addition to other specified criteria, the NYSE listing standards require our Board of Directors to affirmatively determine that the director has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. Our Board of Directors has affirmatively determined that seven directors - Hugh R. Frater, David B. Henry, Mary Hogan Preusse, Richard J. Lieb, Mark S. Ordan, Eugene A. Pinover and Julie G. Richardson - have no relationship with us that would interfere with such person’s ability to exercise independent judgment as a member of our board, and that they otherwise qualify as “independent” under the NYSE’s listing standards.
Board Committees
The Board of Directors has three standing committees, with each committee described below. The members of each committee are also listed below. The committees consist solely of independent directors.
AUDIT COMMITTEE
 
 
 
 
 
 
Responsibilities Include:
Members:
 
v
Oversee the Company’s accounting and financial reporting process, auditing and internal control activities, including the integrity of our financial statements;
Richard J. Lieb, Chair*
 
v
Monitor the Company’s compliance with legal and regulatory requirements and the Company’s overall risk profile;
David B. Henry*
 
v
Oversee the performance of the Company’s independent and internal auditors, as applicable;
Mark S. Ordan
 
v
Responsible for engaging our independent registered public accounting firm;
Eugene A. Pinover
 
v
Review with the independent registered public accounting firm the plans and results of the audit engagement;
 
 
v
Approve professional services provided by the independent registered public accounting firm, including the range of audit and non-audit fees;
Independent: All
 
v
Review and monitor the independent auditor’s qualifications and independence; and
Meetings in 2018: 4
 
v
Review the adequacy of our internal accounting controls.
 
 
 
 
*Audit Committee Financial Expert as defined by the SEC
 
 
 
 
The Board has determined that each of the members of the Audit Committee is “financially literate” and has accounting or related financial management expertise, as such qualifications are defined under the listing standards of the NYSE.
The Audit Committee’s report on our financial statements for the fiscal year ended
December 31, 2018
is discussed below under the heading “Audit Committee Report.”

COMPENSATION COMMITTEE
 
 
 
 
 
Responsibilities Include:
Members:
 
v
Approve and evaluate all compensation plans, policies and programs as they affect the Company’s executive officers;
Julie G. Richardson, Chair
 
v
Review and oversee management’s annual process for evaluating the performance of our executive officers and review and approve on an annual basis the remuneration of our executive officers;

12




Mary Hogan Preusse
 
v
Oversee our equity incentive plans, including, without limitation, the issuance of stock options, restricted shares of capital stock, restricted stock units, dividend equivalent rights and other equity-based awards;
Richard J. Lieb
 
v
Assist the Board of Directors and the Non-Executive Chairman in overseeing the development of executive succession plans; and
Mark S. Ordan
 
v
Determine from time to time and make recommendations to the Board regarding the remuneration for our non-executive directors.
 
 
 
 
Independent: All
 
 
 
Meetings in 2018:4
 
 
 
 
 
 
 

The Board has determined that each member of the Compensation Committee is an independent director under the listing standards of the NYSE. Pursuant to the NYSE listing standards, in determining the independence of the directors serving on the Compensation Committee, our Board of Directors considered all factors specifically relevant to determining whether a director has a relationship to us which is material to that director’s ability to be independent from our management in connection with the duties of a Compensation Committee member, including, but not limited to, such director’s source of compensation and whether such director is affiliated with us, one of our subsidiaries, or an affiliate of one of our subsidiaries. In addition, all of the members of our Compensation Committee are “non-employee directors” within the meaning of the rules of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
In carrying out its responsibilities, our Compensation Committee may delegate any or all of its responsibilities to a subcommittee to the extent consistent with the Company’s charter, Bylaws and any other applicable laws, rules and regulations. On February 22, 2016, consistent with an amendment made to the Compensation Committee’s charter, the Compensation Committee authorized the Chief Executive Officer to grant future discretionary equity-based awards under the Company’s Equity Plan (the “Equity Plan”) without the approval of the Compensation Committee in an amount not to exceed $100,000 per award (and not to exceed total awards in a calendar year of $2.0 million) to employees who are not subject to the reporting requirements under Section 16 of the Exchange Act.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
 
 
 
Responsibilities Include:
Members:
 
v
Establish, implement and periodically review (and if appropriate, recommend to the Board changes) our corporate governance policies and procedures;
David B. Henry, Chair
 
v
Provide counsel to the Board of Directors with respect to the organization, function and composition of the Board of Directors and its committees;
Mary Hogan Preusse
 
v
Oversee the annual evaluation of the Board of Directors and its committees;
Eugene A. Pinover
 
v
Identify and recommend to the Board of Directors potential director candidates for nomination; and
Julie G. Richardson
 
v
Oversee and approve related person transactions in accordance with our Related Person Transaction Approval Policy.
 
 
 
 
Independent: All
 
 
 
Meetings in 2018: 3
 
 
 

Board Evaluation Process.
The Nominating and Corporate Governance Committee oversees an annual assessment by the Board and each of its standing committees to assess their effectiveness. Mr. Henry, as Chair of the Nominating and Corporate Governance Committee, interviewed each director individually and had an open discussion about the effectiveness of the Board, its committees and any matters that such director felt should be raised for the Board’s consideration. The areas addressed in the evaluation included but were not limited to, Board and committee structure and composition, meetings and processes, interaction with management and materials and resources. Following these discussions, Mr. Henry reported back to each committee and the

13




Board the results of the evaluation, and the Board discussed the comments provided and any corresponding potential future action in response to the comments.

Director Nominations.
Identifying and recommending director candidates for election to our Board is a primary responsibility of our Nominating and Corporate Governance Committee. The Company is in the unique position of having replaced its entire Board of Directors beginning in 2015. In connection with this wholesale reconstitution of the Board, the Company focused on assembling a group of directors with extensive experience in key areas for the Company’s strategic needs including, but not limited to, real estate, accounting and finance, capital markets, legal, and public company experience both as executives and directors. In identifying potential future director candidates, our Nominating and Corporate Governance Committee will continue to seek to achieve an effective, well-rounded, appropriately experienced and diverse Board.

In determining appropriate candidates to nominate to the Board of Directors and in considering stockholder nominees, our Nominating and Corporate Governance Committee may consider such criteria as it deems appropriate, which may include, without limitation, a nominee’s:
personal and professional integrity, ethics and values;
experience in corporate management, such as serving as an officer or former officer of a publicly-held company, and a general understanding of finance and other elements relevant to the success of a publicly traded company in today’s business environment;
experience in the Company’s industry;
experience as a board member of another publicly-held company;
academic expertise in an area of the Company’s operations;
whether the appointment of the candidate would increase the diversity of background, skills and experience of the Board as a whole;
practical and mature business judgment, including the ability to make independent analytical inquiries;
the nature of and time involved in a director’s service on other boards and/or committees and whether a candidate’s service obligations to other boards complies with the Board’s then outstanding policy on service on boards of other public companies; and
with respect to any person already serving as a director, the director’s past attendance at meetings and participation in and contribution to the activities of the Board and any committees on which he or she has served.

In addition, the Nominating and Corporate Governance Committee has identified certain key skills that the Board should possess overall and which are set forth in “Proposal 1 - Election of Directors” above.

Our Nominating and Corporate Governance Committee evaluates each nominee in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.

With respect to the consideration of director nominees nominated by stockholders, our Nominating and Corporate Governance Committee will consider such candidates provided that the stockholder submitting a nomination has complied with procedures set forth in the Company’s Bylaws. See “Stockholder Proposals for the
2020
Annual Meeting” for additional information regarding stockholder nominations of director candidates.

Communications with the Board of Directors

Stockholders and all interested parties may communicate with the Board of Directors or any individual director regarding any matter that is within the responsibilities of the Board. Stockholders and interested parties should send their communications to the Board of Directors, or an individual director, c/o VEREIT, Inc.,
2325 E. Camelback Road, 9th Floor, Phoenix, Arizona 85016
, Attention: Lauren Goldberg, Executive Vice President, General Counsel and Secretary. Ms. Goldberg will deliver all appropriate communications to the Board of Directors or the individual director no later than the next regularly scheduled meeting of the Board of Directors. If the Board of Directors modifies this process, the revised process will be posted on the Company’s website.

14




CORPORATE RESPONSIBILITY
 
The Company has a strong corporate commitment to recognize and serve our primary constituencies: our tenants, stakeholders and employees. This model permeates into every part of our business, including company culture, environmental initiatives and our community involvement. Set forth below are highlights of our commitment:
Environmental
 
 
Environmental Practices and Impact -
LEED green building certification at the Company’s corporate headquarters certifies that the building is highly efficient and a cost-saving green building.
ENVIRONMENTAL RESPONSIBILITY
Our corporate headquarters have been certified as a platinum LEED green building by the U.S. Green Building Council.
leeda02.jpg
Trip Reduction Program
 - We participate in the Phoenix Valley Metro’s Clean Air Campaign Trip Reduction Program to encourage alternative modes of transportation for employees.
Tenant and Portfolio Environmental Practices
 - We work with tenants to promote environmental responsibility and energy efficient facilities, including facilitating the application by our tenants to receive Energy Star property ratings or LEED green building certifications.
Climate Preparedness
 - We manage the impact of natural disasters, including flooding and severe storms, by monitoring vulnerabilities and responding as necessary.
COMMITMENT TO SUSTAINABLE TRANSPORTATION
 
In 2018, we received the Outstanding Travel Reduction Award from the Phoenix Department of Transportation.
cleanaira02.jpg
Social
Diverse Hiring Practices -
The Company has a commitment to equal employment opportunities and does not discriminate against any person based on race, color, religion, sex, national origin, age, disability, sexual orientation or gender preference.
Community Involvement
 - Since 2015, our employees have contributed more than 500 service hours to local nonprofit organizations and have made substantial financial contributions.

MARKET LEADER
For the second consecutive year, we were selected as one of Arizona’s Most Admired Companies in 2018.
mac.jpg
Employee Wellness and Satisfaction
 - The Company encourages employee wellness in every aspect of life, including physical fitness, mental well-being and social connectedness.
Industry Growth
 - We participate in local university partnerships and manage an internship program to support the development of future real estate professionals.
EMPLOYEE SATISFACTION
Based on an employee-feedback survey, we were selected as one of Phoenix Business Journal’s 2018 Best Places to Work.
bptwround.jpg
Recognition -
The Company has been selected as one of Arizona’s Most Admired Companies in 2017 and 2018. We were also selected as one of Arizona’s 2018 Best Places to Work.
 
Governance
Oversight and Commitment
 - Our Board of Directors has an active role in overseeing the management of risks applicable to our business and
is committed to strong corporate governance. Our governance framework is designed to promote the long-term interests of our stockholders.
COMMUNITY ENGAGEMENT
The VEREIT Values program was created to connect employees with charitable organizations in the community. Through this program,
employees have provided financial support as well as more than 500 service hours to nonprofit organizations since 2015.
 
vereitvaluesround.jpg
Ethics and Integrity
 - We are a dynamic organization, where the highest level of professionalism is at the core of all our interactions. We have adopted a robust Code of Business Conduct and Ethics which is publicly available on our website.




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EXECUTIVE OFFICERS
The following table sets forth the names and ages of each of the executive officers as of the date of this proxy statement and the position and office that each currently holds with the Company. Subject to certain rights set forth in their respective employment agreements, our executive officers serve at the pleasure of the Board of Directors.
Name
 
Age
 
Positions
Glenn J. Rufrano
 
69
 
Chief Executive Officer and Director*
Michael J. Bartolotta
 
61
 
Executive Vice President and Chief Financial Officer
Lauren Goldberg
 
51
 
Executive Vice President, General Counsel and Secretary
Paul H. McDowell
 
58
 
Executive Vice President and Chief Operating Officer
Thomas W. Roberts
 
60
 
Executive Vice President and Chief Investment Officer

* See biographical summary under “Proposal 1: Election of Directors.”
mikebartolotta2019.jpg
Michael J. Bartolotta
 has served as the Company’s Executive Vice President and Chief Financial Officer since October 2015. Mr. Bartolotta previously served as Executive Vice President and Chief Financial Officer of Cushman & Wakefield Inc. (“Cushman”), a global leader in commercial real estate services, from February 2012 until September 2015. Mr. Bartolotta also served on Cushman’s Board of Directors and served as Chairman of the Audit Committee from March 2007 until he assumed his position as Executive Vice President and Chief Financial Officer of Cushman in February 2012. Before becoming Cushman’s Chief Financial Officer, Mr. Bartolotta served as Vice President and Chief Financial Officer for EXOR, Inc., the U.S. arm of EXOR S.p.A. from 1991 to February 2012. Mr. Bartolotta received a Bachelor of Science degree in Accounting from New York University and is a Certified Public Accountant in New York.
 
 
laurengoldberg2019.jpg
Lauren Goldberg
 has served as the Company’s Executive Vice President, General Counsel and Secretary since May 2015, overseeing the Company’s legal and regulatory affairs, compliance and risk management. Prior to joining the Company, Ms. Goldberg served as Executive Vice President, General Counsel and Chief Compliance Officer for global cosmetics company, Revlon, Inc. from March 2011 through December 2013. Ms. Goldberg served as Senior Vice President - Law for MacAndrews & Forbes Inc. from November 2009 until February 2011, and as an Assistant United States Attorney for the United States Attorney’s Office in the Southern District of New York, from October 2000 until October 2009. Prior to her service in the U.S. Attorney’s Office, Ms. Goldberg worked as an associate at Stillman & Friedman, P.C. and at Fried, Frank, Harris, Shriver & Jacobson LLP. Ms. Goldberg also has prior accounting experience as an associate at Coopers & Lybrand. She received her Juris Doctor from Columbia Law School and her undergraduate degree in accounting from the Wharton School, University of Pennsylvania.
 
 
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Paul H. McDowell
has served as the Company’s Executive Vice President and Chief Operating Officer since October 2015. He previously served as the Company’s Co-Head, Real Estate from January 2015 to September 2015 and the Company’s President, Office and Industrial Group from November 2013 until December 2014. Prior to joining the Company, Mr. McDowell was a founder of CapLease Inc. (“CapLease”), a publicly traded net-lease REIT, where he served as Chief Executive Officer from 2001 to 2014 and as Senior Vice President, General Counsel and Secretary from 1994 until 2001. Mr. McDowell served on the CapLease Board of Directors from 2003 to 2014 and was elected Chairman of the Board in December 2007. He served on the Board of Directors of CapLease’s predecessor from 2001 until 2004. From 1991 until 1994, Mr. McDowell was corporate counsel for Sumitomo Corporation of America, the principal U.S. subsidiary of one of the world’s largest integrated trading companies. From 1987 to 1990, Mr. McDowell was an associate in the corporate department at the Boston law firm of Nutter, McClennen & Fish LLP. He received his Juris Doctor with honors from Boston University School of Law in 1987, and received a Bachelor of Arts from Tulane University in 1982.
 
 

16




tomroberts2019.jpg
Thomas W. Roberts
 has served as the Company’s Executive Vice President and Chief Investment Officer since October 2015. Previously he served as the Company’s Executive Vice President, Real Estate from the Company’s acquisition of Cole Real Estate Investments, Inc., a publicly traded Maryland corporation (“Cole”), until October 2015. He also served as the Chief Executive Officer and President and director of CCPT IV from December 2014 to February 2018. During his tenure at Cole and the Company, which began in 2009, he was responsible for the acquisition and disposition of over $30 billion of office, industrial and retail properties. Mr. Roberts is a 30-year veteran of the real estate industry. Prior to joining Cole, Mr. Roberts served as President and Chief Executive Officer of Opus West Corporation (“Opus”), a Phoenix-based real estate developer, from March 1993 until May 2009. During his career at Opus, he was responsible for the design, construction and development of more than 50 million square feet of commercial real estate valued in excess of $8 billion. In July 2009, Opus filed for Chapter 11 bankruptcy protection. From 1986 until 1990, Mr. Roberts worked as Vice President, Real Estate Development for the Koll Company. Mr. Roberts received a Bachelor of Science degree in Finance with a specialization in real estate from Arizona State University.






17




PROPOSAL 2 
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed Deloitte as our independent registered public accounting firm for the fiscal year ending
December 31, 2019
. Deloitte was first appointed as our independent registered public accounting firm effective June 1, 2015, to audit the financial statements of the Company and VEREIT Operating Partnership, L.P. (the “Operating Partnership”) for the fiscal year ending December 31, 2015. Stockholder ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Board is submitting the appointment of Deloitte to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain Deloitte in the future. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company.
Fees
Aggregate fees for professional services rendered by Deloitte for the years ended
December 31, 2017
and
December 31, 2018
, were as follows (in thousands):
 
2017
 
2018
Type of Service
 
 
 
Audit Fees
(1)
$
2,933

 
$
2,875

Audit-Related Fees
(2)
214

 
27

Tax Fees

 

All Other Fees
(3)
16

 
69

Total
$
3,163

 
$
2,971

__________________________

(1)
Includes fees for professional services rendered for the audits of the Company’s and the Operating Partnership’s annual consolidated financial statements, the reviews of the Company’s and the Operating Partnership’s quarterly consolidated financial statements and other services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements, including comfort and other procedures associated with registration statements and consents.
(2)
Includes fees for consulting services related to the evaluation or implementation of accounting and reporting standards.
(3)
Includes consulting service fees related to the evaluation of information technology needs, research software fees and educational seminar fees.

Pre-Approval Policies and Procedures
To help ensure the independence of the independent auditor, the Audit Committee’s charter requires that the Audit Committee pre-approve all audit and non-audit services to be performed by its independent auditor prior to the engagement of such independent auditor by the Company or its subsidiaries. The Audit Committee has pre-approved all services provided to us by Deloitte.
A representative of Deloitte is expected to attend the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to ratify the appointment of Deloitte as our independent registered public accounting firm.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2019
.

18




AUDIT COMMITTEE REPORT*
Management is responsible for the Company’s accounting and financial reporting processes, including its internal control over financial reporting, and for preparing the Company’s consolidated financial statements. Deloitte, the Company’s independent auditor, is responsible for performing an audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and for expressing an opinion as to whether the Company’s consolidated financial statements are fairly presented in all material respects in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In this context, the responsibility of the Audit Committee is to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s consolidated financial statements.
In the performance of its oversight function, the Audit Committee reviewed and discussed with management and Deloitte the Company’s audited consolidated financial statements as of and for the year ended
December 31, 2018
. Management and Deloitte represented to the Audit Committee that the Company’s audited consolidated financial statements as of and for the year ended
December 31, 2018
were prepared in accordance with GAAP. The Audit Committee also discussed with Deloitte the matters required to be discussed by Auditing Standard No. 1301, as amended (“AS No. 1301”), as adopted by the PCAOB. AS No. 1301 sets forth requirements pertaining to the independent auditor’s communications with the Audit Committee regarding the conduct of the audit.
The Audit Committee received the written disclosures and a letter from Deloitte required by the applicable requirements of the PCAOB regarding Deloitte's communications with the Audit Committee concerning independence, and has discussed with Deloitte its independence.
Based on the Audit Committee’s review and the discussions described above, and subject to the limitations on its role and responsibilities described above and in the Audit Committee charter, the Audit Committee recommended to the Board of Directors that the audited financial statements as of and for the year ended
December 31, 2018
be included in the Annual Report on Form 10-K of the Company for the year ended
December 31, 2018
for filing with the SEC.
Submitted by the Audit Committee
Richard J. Lieb (Chair)
David B. Henry
Mark S. Ordan
Eugene A. Pinover
________________________

*
The information contained in the Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference in such filing.

19




COMPENSATION DISCUSSION AND ANALYSIS
Introduction
In this Compensation Discussion and Analysis, we describe our compensation practices, programs and decisions for executive officers who served as our named executive officers (“NEOs”) during the fiscal year ended
December 31, 2018
.
For
2018
, our NEOs were as follows:
Glenn J. Rufrano
, Chief Executive Officer
Michael J. Bartolotta
, Executive Vice President and Chief Financial Officer
Lauren Goldberg
, Executive Vice President, General Counsel and Secretary
Paul H. McDowell
, Executive Vice President and Chief Operating Officer
Thomas W. Roberts
, Executive Vice President and Chief Investment Officer

Our
2018
Fiscal Year Highlights
Our Business
. We are a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. We own and actively manage a diversified portfolio of
approximately 4,000
retail, restaurant, office and industrial real estate properties with an aggregate of
95.0
million square feet, of which
98.8%
was leased as of
December 31, 2018
, with a weighted-average remaining lease term of
8.9
years.

Summary of
2018
Financial and Operational Results
. Since announcing our business plan in August 2015, we have continued to successfully implement our goals, including the culling and rebalancing of our portfolio and significant reduction of debt levels. In
2018
, we continued to make significant progress on our business strategies as illustrated by the following highlights:
vereitstampblue.jpg
The Company had a net loss of $0.16 per share and achieved adjusted funds from operations (“AFFO”) per diluted share of $0.72, which was at the high end of the Company’s updated earnings guidance of $0.71 to $0.72 per share.
(1)
   
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Continued to reposition the Company’s portfolio through strategic acquisitions and dispositions to enhance diversification. In line with the Company’s goals, generally maintained the percentage of retail properties, increased the percentage of industrial properties and decreased the percentage of office properties and restaurants. At year end, the Company’s portfolio was comprised of approximately 42.0% retail, 21.2% restaurants, 17.5% industrial and 19.3% office properties.
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Acquired 52 properties including one land parcel for build-to-suit development for an aggregate purchase price of $502.7 million, which exceeded the Company’s updated 2018 acquisition target of $300.0 million to $500.0 million.
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Continued efforts to optimize our real estate portfolio by focusing on holding core assets and disposed of 150 properties (including one property owned by an unconsolidated joint venture) with the Company’s share of the aggregate sales price of $521.4 million, which was above the Company’s 2018 disposition target range of $300.0 million to $500.0 million, and $46.0 million of legacy mortgage related investments.
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Reduced the Company’s exposure to Red Lobster® to approximately 5.5% at the end of 2018 from 6.5% at the end of 2017.
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Maintained occupancy level at 98.8% at the end of 2018.
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Closed a new $2.9 billion unsecured credit facility on better terms than the previous maturing $2.3 billion revolving credit facility and, as of December 31, 2018, had approximately $1.7 billion of capacity available under the revolving credit facility.
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Continued to successfully access debt markets and further stagger our debt maturity profile to 4.2 years with the issuance of $550.0 million of 4.625% senior notes due 2025 and repayment of $597.5 million principal outstanding related to the 2018 convertible notes.
vereitstampblue.jpg
Simplified the Company’s business model with the closing of the sale of its investment management business (“Cole Capital”) in February 2018 for approximately $120.0 million in cash paid at closing and up to an additional $80.0 million in fees under a six-year services agreement (the “Services Agreement”) based on Cole Capital’s future revenues.

20




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Achieved progress towards resolving outstanding government investigations and civil litigations and settled claims of shareholders who held shares of common stock and swaps referencing the Company’s common stock representing approximately 33.5% of the Company’s outstanding shares of common stock held at the end of the period covered by the various pending shareholder actions for approximately $233.2 million.
__________________________
(1)
See the “Non-GAAP Measures” section beginning on page
44
of the Company’s Annual Report on Form 10-K, filed with the SEC on
February 21, 2019
for additional information about AFFO.

We believe our accomplishments in
2018
provide a strong platform for future value creation, despite the Company’s share price in
2018
having performed below the Company’s net-lease REIT peers, which we believe was due at least in part to the Company’s legacy issues.
Summary of
2018
Compensation Results
. Our compensation results for
2018
directly reflect these performance results. Specifically:
Achieved AFFO at target.
Each of the NEOs earned above their target annual incentive bonus opportunity based on the Company’s achievement of AFFO and their individual contributions to the operational and strategic achievements outlined above and their individual performance.
The target awards for the 2016 performance-based restricted stock units vested at
38.77%
with the remainder of the target award being canceled. The performance-based restricted stock unit awards granted in 2017 and 2018 for performance periods that end December 31, 2019 and 2020, respectively, are outstanding. Vesting criteria for each of these awards is tied to our total stockholder return (“TSR”) as compared to a market index and our net-lease REIT peers (as discussed further below).
Although the Company’s achievements have positioned us for long-term success, we believe these achievements were not reflected in the Company’s share price which performed below the Company’s net-lease REIT peers. To foster retention and provide additional opportunity tied to the Company’s share price, the Compensation Committee decided to include a stock option award in the NEO compensation program in
2018
.

See “Elements of Compensation - Annual Incentive Bonus” and “- Long-Term Equity Incentive Awards” below for additional detail on the compensation elements and results for
2018
.

Pay for Performance Alignment.
Based on these results, we believe that we have a strong pay for performance alignment.  When viewed over the last three years, the total pay actually realized by our Chief Executive Officer (which includes cash compensation paid and the vesting of time-based and performance-based restricted stock unit awards) as compared to the target pay opportunity in each year is as follows:
compensationceo.jpg
(1)
Long-term incentives are comprised of time-based and performance based restricted stock unit awards and stock option awards. Realized long-term incentive amounts include: (i) the realized value of all time-based restricted stock units that vested during the applicable year calculated based on the per share closing market price of the Company’s common stock on the vesting date, (ii) the realized value of all performance-based restricted stock units that vested for the performance period ending in each year presented, which is calculated based on the per share closing market price of the Company’s common stock on the vesting date, and (iii) dividend equivalents accrued, at the Company’s applicable quarterly dividend rate of $0.1375, on all vested time-based and performance-based restricted stock units.

(2)
Realized annual bonus represents annual bonus earned for the applicable year but paid in the first quarter of the subsequent calendar year. 

21





(3)
Amounts for target pay include (i) base salary, (ii) target annual bonus, (iii) target long-term incentive awards which include time-based and performance-based restricted stock units and stock options, each valued as of the grant date, and (iv) dividend equivalent rights for time-based and performance-based restricted stock unit awards, assuming that the awards will vest in accordance with each award agreement and that the performance-based restricted stock units will vest at target levels.

Executive Compensation Practices
The Company developed and maintains the comprehensive compensation and governance framework below that we believe is aligned with “best-in-class” market practices and standards.
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Use an objective framework as a basis for determining annual incentives
- The Company’s results relating to AFFO are the primary basis for the funding of the aggregate bonus pool. The pool is allocated into individual annual incentive awards based on the Company’s performance with respect to certain financial metrics (30%), key business metrics (30%), and the achievement of individual objectives and metrics (both qualitative and quantitative) established for each executive officer (40%). Individual awards are then determined at the discretion of the Compensation Committee.
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Tie pay to performance
- In addition to an objective framework to determine annual incentive plan awards, a significant portion of our long-term incentive awards for executive officers is tied to our TSR performance relative to a market index and our net-lease peers.
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Engage an independent compensation consultant firm
 - The Compensation Committee engages Semler Brossy Consulting Group (“Semler Brossy”), an independent compensation advisor, to provide independent, third-party advice on executive compensation.
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Executive compensation designed to be competitive with our peer group
- The Compensation Committee, with the advice of Semler Brossy, uses peer group and survey data to ensure that our pay is competitive with comparable companies based on asset size, revenue and enterprise value.

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Offer limited perquisites
 - We provide modest perquisites to our executives, including our Chief Executive Officer and our other executive officers.

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Maintain robust stock ownership requirements for our executive officers and non-employee directors
- We have stock ownership guidelines of 6x base salary for the Chief Executive Officer, 3x base salary for the Chief Financial Officer, 2x base salary for other executive officers and 5x the annual cash retainer for non-employee directors, which are required to be achieved within a specified time period.

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Double trigger vesting upon change in control
- All equity awards are subject to “double trigger” vesting requiring a qualified termination of employment following a change in control before vesting is accelerated for executive officers.

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Provide reasonable severance benefits
 - Severance benefits, including following a change in control, have been reviewed against peer groups and are reasonable compared to market. We intend to continue to reference reasonable market practice for any future employment agreements or other arrangements.
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Prohibit pledging and hedging of our securities
 - We have adopted a policy applicable to our directors, officers, any other individuals subject to the reporting requirements under Section 16 of the Exchange Act and any other designated employees (and any of their respective beneficially-owned entities), which prohibits:
pledging the Company’s securities for any purpose not approved by the Board of Directors or the Compensation Committee; and
engaging in short sales with respect to our securities, purchasing our securities on margin or otherwise hedging our securities, including through options or derivative transactions.

checkcircle.jpg
Prohibit repricing of stock options
 - We have adopted a policy prohibiting the Board of Directors or the Compensation Committee from reducing the aggregate exercise, base or purchase price of any award granted under an equity incentive plan of the Company without the approval of the Company’s stockholders.

checkcirclebluea01.jpg
Adopted a clawback policy
 - We have adopted a clawback policy providing for the potential recoupment of officer compensation in the event the Company is required to prepare a financial restatement due to the material non-compliance of the Company with any financial reporting requirement. For additional information, see “Clawback Policy” below.
checkcircle.jpg
No gross ups of “golden parachute” excise taxes upon a change in control
 - The employment agreements for our executive officers do not provide for mandated tax gross ups in the event of a change in control.

22




Compensation Philosophy, Consultants and Peer Group

Philosophy
. We believe that the quality, skills and dedication of our NEOs are critical factors that affect the long-term value of the Company. We therefore design our executive compensation program to attract and retain high quality executive officers and set compensation at levels that are comparable to those of other companies that operate in our industry or that compete for the same talent pool. In setting compensation, the Compensation Committee seeks to design an executive compensation program that strikes a balance between short-term and long-term objectives and contains a mix of individual, business and corporate goals. In developing an executive compensation program, the Compensation Committee also seeks to reward strong corporate performance but with defined parameters to avoid excessive risk, and reward individual and team performance. Our compensation philosophy seeks to link a significant portion of each executive officer’s total compensation to Company results that will create stockholder value in both the short and long term.
Compensation
Consultant.
To assist with the design of our executive compensation program as well as setting compensation levels, the Compensation Committee has engaged Semler Brossy, an executive compensation consulting firm, as its compensation consultant to provide independent, third-party advice on executive compensation. The Compensation Committee assessed the independence of Semler Brossy pursuant to the rules prescribed by the SEC and the NYSE and determined that no conflict of interest existed that would prevent Semler Brossy from serving as an independent consultant to the Compensation Committee.
Competitive Benchmarking
. The Compensation Committee, with the assistance of Semler Brossy, conducts an annual review of pay levels and practices for our NEOs relative to a customized peer group of similar REITs as well as survey data published by Nareit which assists with the benchmarking for executive positions that are not reported in public peer proxies with sufficient frequency to develop meaningful competitive benchmarks. This review provides valuable information to the Compensation Committee in formulating its decisions about NEO compensation as it monitors pay practices across the Company’s peers and industry.
The public company peer group was developed in consultation with Semler Brossy based on an an annual assessment of REITs with similar asset mix (retail, office and net-lease markets) and comparable size in terms of assets and total enterprise value to the Company. The Compensation Committee annually evaluates the peer group with the assistance of Semler Brossy and, in
2018
, as part of this evaluation, removed from the compensation peer group Duke Realty Corporation and replaced it with Paramount Group, Inc. due to Paramount Group, Inc.’s financial size and business being more closely aligned with the Company. The Compensation Committee approved the following “Compensation Peer Group” for purposes of assessing competitive pay practices:
Boston Properties, Inc.
 
Paramount Group, Inc.
 
The Macerich Company
Brixmor Property Group, Inc.
 
Prologis, Inc.
 
Ventas, Inc.
DDR Corporation
(1)
 
Realty Income Corporation
 
Vornado Realty Trust
GGP Inc.
(2)
 
Simon Property Group, Inc.
 
Welltower Inc.
HCP, Inc.
 
SL Green Realty Corp.
 
W.P. Carey, Inc.
Kimco Realty Corporation
 
Spirit Realty Capital, Inc.
 
 
__________________________
(1)
Effective October 12, 2018, DDR Corporation changed its name to SITE Centers Corp.
(2)
Effective August 28, 2018, following its acquisition by Brookfield Property Partners L.P., now known as Brookfield Property REIT Inc.

The Compensation Committee reviewed the compensation levels for each NEO position relative to the Compensation Peer Group or survey data for each component of pay: annual base salary, annual incentive bonus awards and long-term equity incentive awards (which included time-based and performance-based restricted stock unit awards and stock options) and used such data as a guide in its determination of total target direct compensation and target total cash for total NEO compensation as compared to total NEO long-term incentive awards. The Compensation Committee considered each NEO’s level and job performance, his or her duties and responsibilities at the Company compared to the duties and responsibilities of executive officers in similar positions at the Compensation Peer Group companies and in the survey data, other circumstances unique to the Company, and evaluated whether the compensation elements and levels provided to our NEOs were generally appropriate relative to their responsibilities at the Company and compensation elements and levels provided to their counterparts in the Compensation Peer Group or within survey data. The Compensation Committee considers both objective and subjective criteria to evaluate Company and individual performance, which allows it to exercise discretion and not rely solely on rigid formulas and quantitative analyses. Accordingly, the Compensation Committee does not formulaically tie compensation decisions to any particular range or percentile level of total compensation paid to executives at the Compensation Peer Group companies or survey data.

23




Stockholder Say-on-Pay Vote
 
We provide our stockholders with the opportunity to vote annually on a say-on-pay proposal. At our
2018
annual meeting of stockholders held on May 3,
2018
, approximately
92%
of the votes cast by stockholders on the advisory vote on executive compensation (the “say-on-pay proposal”) were in favor of the compensation of our NEOs. The Compensation Committee believes this favorable vote reflects the approval by our stockholders of the significant changes to our compensation and governance practices implemented since 2015, and affirms our stockholders’ support of our current approach to executive compensation.

Elements of Compensation
Our NEOs’ compensation currently consists of three components, with the majority of NEO compensation in the form of variable pay to emphasize our commitment to pay for performance: base salary, an annual incentive bonus award (paid in cash) and long-term equity incentive awards, which include time-based and performance-based restricted stock unit awards and stock options. In
2018
, the Compensation Committee added stock options as a form of long-term equity incentive awards in light of the Company’s belief that its achievements, while positioning it for long-term success, were not reflected in the Company’s share price and to foster retention and provide additional opportunity tied to the Company’s share price.
Base Salary
The base salary payable to each NEO provides a fixed component of compensation that reflects the executive’s position and responsibilities and is based on market analysis. In February
2018
, the Compensation Committee approved the below annual base salary amounts for each of the NEOs. As noted below, the NEOs’ base salaries remained the same in
2018
as compared to
2017
.
Name
 
2018 Base Salary
 
2017 Base Salary
Glenn J. Rufrano
 
$1,000,000
 
$1,000,000
Michael J. Bartolotta
 
$500,000
 
$500,000
Lauren Goldberg
 
$500,000
 
$500,000
Paul H. McDowell
 
$500,000
 
$500,000
Thomas W. Roberts
 
$500,000
 
$500,000
Annual Incentive Bonus
The Company pays a discretionary annual incentive bonus in cash to reward executives for achieving or surpassing performance goals which are, in part, related to our key financial and operational objectives for the year and for execution of specific strategies of the Company. Annual bonuses are generally paid in March for the prior year’s performance. Each NEO has a target annual incentive bonus opportunity defined as a percentage of base salary, with the actual annual bonus determined based on a combination of discretionary financial and non-financial metrics as described in more detail below. None of the NEOs had a guaranteed minimum bonus. The maximum payout for any NEO may not exceed 150% of such officer’s target annual incentive bonus opportunity.
The Company’s aggregate bonus pool is funded based primarily upon the Company’s AFFO per share results. The Compensation Committee, with the advice of Semler Brossy, allocates the
2018
annual incentive bonus pool into individual annual incentive awards based on pre-established Company financial metrics (30%), key business metrics (30%), as well as an assessment of each NEO’s individual performance based on certain individual (qualitative and quantitative) discretionary objectives and metrics (40%). Individual awards are then determined at the discretion of the Compensation Committee.
Financial metrics generally consist of financial goals for the Company as a whole, whereas key business metrics may be targeted operational or strategic metrics related to a NEO’s area of responsibility. Individual discretionary metrics are generally additional qualitative goals and objectives for each NEO. Although the Compensation Committee considers the achievement of certain financial, key business and individual discretionary metrics for each NEO and the associated weightings, these weightings are discretionary and only provide general guidelines. As part of the Compensation Committee’s assessment, each NEO undergoes a review of his or her performance during the year, which includes Mr. Rufrano’s review of each executive’s performance (other than his own performance). Based upon the executive’s performance and evaluation rating, his or her bonus can decrease or increase up to the maximum payout of 150% of his or her target annual incentive bonus opportunity. Actual assessment and payout determinations are at the discretion of the Compensation Committee with input from the Chief Executive Officer for all executives other than himself. The assessment also takes into consideration each NEO’s adherence to our Core Values, which include being: Respectful, Ethical, Dedicated, Collaborative, and Hard Working. See below for additional information about items considered by the Compensation Committee as part of the individual assessments for each NEO.

24




To inform the Compensation Committee’s discretion in determining actual
2018
annual incentive bonus payouts, the Compensation Committee used the following objectives as guidelines:
AFFO Per Share Objective
. The Compensation Committee uses a formula tied to an AFFO per share objective for the year as the starting point for funding the bonus pool and for the individual bonus determinations. AFFO creates an initial funding level for the bonuses, although the Compensation Committee may pay more or less than this amount for each executive based on the additional performance factors as outlined below in its discretion up to a maximum payment of 150% of each executive’s target annual incentive bonus opportunity.
Consistent with the Company’s stated guidance, AFFO per share was expected to decrease in
2018
as compared to
2017
. The Company had a disposition target for
2018
of
$300.0 million to $500.0 million
, and its total dispositions for the year exceeded this amount, of which our share was
$521.4 million
for
2018
, which because they were dilutive, lowered the expected AFFO per share for
2018
as a result of having fewer assets generating AFFO. As a result, the Compensation Committee included a minimum property disposition hurdle for AFFO performance above the target level to ensure that outperformance on AFFO was not achieved by disposing of fewer properties, which would adversely affect the Company’s stated objective of repositioning its portfolio. In light of this, the Compensation Committee established objective criteria applicable to AFFO as follows:
If the Company achieved AFFO per diluted share of $0.70 to $0.72, this goal would be achieved at 100%.
If the Company achieved AFFO per diluted share above $0.73 and dispositions of at least $500.0 million, the achievement of this goal would increase by 10% for each one cent improvement in AFFO per diluted share above $0.73, up to a maximum potential achievement of 150%.
If the Company achieved AFFO per diluted share below $0.70, the achievement of this goal would decrease by 10% for each one cent decline in AFFO per diluted share between $0.70 and $0.65 (at which point, this goal would be achieved at 50%), assuming no material impact from any unplanned refinancing.
If the Company achieved AFFO per diluted share below $0.65, achievement would be determined by the Compensation Committee in its discretion.
In
2018
, the Company achieved AFFO per diluted share of
$0.72
and therefore this goal was considered achieved at 100% of target. This performance level provided the initial starting point for the bonus pool funding and the Compensation Committee’s discretionary determination of each executive’s individual bonus, which is based on a consideration of the additional performance factors discussed below.
Financial Metrics (30% weighting).
The Compensation Committee considered the following Company financial metrics for
2018
in determining each of the NEO’s actual annual bonus: (i) the Company achieved AFFO of
$0.72
per share, which was at the top-end of the Company’s earnings guidance; (ii) Normalized EBITDA was
$1.04 billion
; and (iii) the Company achieved Net Debt to Normalized EBITDA of
5.91x
, which was an improvement over the Company’s objective of 6.0x.
Each of the above metrics are non-GAAP measures used by management to measure the financial performance of the Company. Additional information about each metric is provided in the “Non-GAAP Measures” section beginning on page
44
of the Company’s Annual Report on Form 10-K, filed with the SEC on
February 21, 2019
or Exhibit 99.2 furnished with the Company’s Current Report on Form 8-K, filed with the SEC on
February 21, 2019
.

Key Business Metrics (30% weighting)
. The various business metrics considered included, but were not limited to:

certain operational metrics, such as property diversification, tenant occupancy rates (which the Company targeted to be approximately 98.0%) and same store contract rental revenue (targeted at approximately 0.3% to 1.0%);

dispositions (targeted at
$300.0 million to $500.0 million
) and acquisitions (originally targeted at $500.0 million to $800.0 million and subsequently revised to
$300.0 million to $500.0 million
) with additional opportunity if actual dispositions or acquisitions exceeded the targeted range;

management of the Company’s debt maturities and development of financing plans for certain of the Company’s debt; and

continue progress in resolving the Company’s outstanding government investigations and other litigations.

Each individual NEO’s ability to manage operational expenses within his or her departmental budget was also considered.

25





Individual Performance (40% weighting)
. The Compensation Committee also considers the individual successes and goals of each NEO, which among other things, included succession planning for each executive’s department, and seeks input from Mr. Rufrano as to each other NEO’s performance during the year. Although Mr. Rufrano provides the Compensation Committee his assessment of each other executive’s performance and achievements, the ultimate payout is determined by the Compensation Committee.
2018
Actual Annual Incentive Bonus Payouts.
Based on an evaluation of the performance and contribution of each of the NEOs, the Compensation Committee approved an annual bonus for each of Messrs. Rufrano, Bartolotta, McDowell and Roberts and Ms. Goldberg.
The following table shows the target annual incentive bonus percentages for
2018
for each of our NEOs and the actual award earned. For each of the NEOs, the target annual bonus is a percentage of the executive’s base salary. The actual annual incentive bonus that each NEO received for
2018
is determined by the Compensation Committee and was paid in cash in March
2019
. There are no established threshold opportunities for any of the NEOs. The target and maximum annual bonus opportunities for the NEOs are set forth below as well as the actual annual bonus amounts (which are also reported in “Summary Compensation Table - Bonus Compensation” below).

Name
 
Target Opportunity
(as a % of Base Salary)
 
Target Opportunity
($)
 
Maximum Opportunity
($)
 
Actual Annual Bonus
($)
Glenn J. Rufrano
 
150%
 
$1,500,000
 
$2,250,000
 
$1,615,000
Michael J. Bartolotta
 
125%
 
$625,000
 
$937,500
 
$740,000
Lauren Goldberg
 
100%
 
$500,000
 
$750,000
 
$615,000
Paul H. McDowell
 
110%
 
$550,000
 
$825,000
 
$665,000
Thomas W. Roberts
 
115%
 
$575,000
 
$862,500
 
$690,000
The Compensation Committee in its discretion considered the Company’s and each NEO’s performance in
2018
in determining actual payouts under the annual incentive bonus program. Due to the strong relative ratings of the executives listed above, operational performance in
2018
and each executive’s contributions to our results, the Compensation Committee increased the bonus payouts for each of our executives above the guideline level established by our AFFO performance and, as a result, each of our executives achieved a higher payout level than that of the overall bonus pool. More specifically, the Compensation Committee considered the following as part of the individual performance assessments for each executive:
Mr. Rufrano
Simplified the Company’s business model with the completion of the sale of Cole Capital and managed the post-sale transition, including effectively managing the transfer of approximately 138 employees to the purchaser of Cole Capital.
Achieved targeted dispositions, including reducing the Company’s exposure to Red Lobster® to approximately
5.5% at the end of 2018 from 6.5% at the end of 2017
.
Completed acquisitions of
$502.7 million
, which exceeded the Company’s targeted guidance.
Continued to expand the Company’s investor base.
Oversaw execution of $2.9 billion unsecured credit facility to replace the previous maturing $2.3 billion revolving credit facility.
Continued to foster a culture of compliance and transparency.
Achieved progress in resolving ongoing litigation by reaching settlements with shareholders who held shares of common stock and swaps referencing the Company’s common stock representing approximately 33.5% of the Company’s outstanding shares of common stock held at the end of the period covered by the various pending shareholder actions for approximately $233.2 million.
Mr. Bartolotta
Managed the volume, timing and funding of acquisitions and dispositions to maintain targeted Net Debt to EBITDA of approximately
6.0x
.
Successfully negotiated a $2.9 billion unsecured credit facility to replace the previous maturing $2.3 billion revolving credit facility.

26




Successfully completed a $550.0 million offering of 4.625% senior notes due 2025 further staggering the Company’s debt maturity profile and increasing the Company’s weighted average debt term to
4.2 years
.
Simplified the Company’s business model with the sale of Cole Capital, playing a key role in managing the post-sale transition.
Achieved unencumbered assets ratio of
75.1%
and a fixed charge coverage ratio of
2.90x
.
Successfully managed capital expenditures as well as operating expenses for the Company, including its information technology, accounting and finance departments.
Continued to foster a culture of compliance and transparency.
Ms. Goldberg
Successfully completed a $550.0 million offering of 4.625% senior notes due 2025 further staggering the Company’s debt maturity profile and increasing the Company’s weighted average debt term to
4.2 years
.
Successfully negotiated a $2.9 billion unsecured credit facility to replace the previous maturing $2.3 billion revolving credit facility.
Simplified the Company’s business model with the sale of Cole Capital, playing a key role in managing the timely closing of the transaction.
Achieved progress in resolving the Company’s outstanding government investigations and other litigations, including reaching settlements with shareholders who held shares of common stock and swaps referencing the Company’s common stock representing approximately 33.5% of the Company’s outstanding shares of common stock held at the end of the period covered by the various pending shareholder actions for approximately $233.2 million.
Supervised and oversaw key corporate initiatives, including managing the Company’s annual stockholder meeting.
Successfully managed operating expenses for the legal, compliance and risk management departments.
Managed the Company’s litigation and related costs.
Continued to foster a culture of compliance and transparency.
Mr. McDowell
Played a key role in managing the post-sale transition of Cole Capital.
Maintain targeted tenant occupancy rates of approximately
98.8%
for each quarter during the year.
Improved real property diversification between retail, restaurant, industrial and office properties.
Achievements with respect to tenants with an investment grade rating and made significant efforts towards maintaining the Company’s weighted average lease term and reduction of flat leases.
Successfully managed capital expenditures as well as operating expenses for the Company, including its real estate operations departments.
Successfully managed key operational initiatives, including initiatives with the Company’s dispositions group.
Continued to foster a culture of compliance and transparency.

Mr. Roberts
Played a key role in managing the post-sale transition of Cole Capital.
Achieved targeted dispositions, including reducing the Company’s exposure to Red Lobster® to approximately
5.5% at the end of 2018 from 6.5% at the end of 2017
, thereby managing market and credit concentration risk.
Successfully managed the timing and funding of acquisitions and dispositions, including disposing of
150
properties (including one property owned by an unconsolidated joint venture) with the Company’s share of the aggregate sales price of
$521.4 million
, which exceeded the Company’s targeted disposition range of
$300.0 million to $500.0 million
and acquisitions of
$502.7 million
,which was above the Company’s targeted acquisition range of
$300.0 million to $500.0 million
.
Managed the volume, timing and funding of acquisitions and dispositions to maintain targeted Net Debt to EBITDA of approximately
6.0x
.
Successfully managed key operational initiatives, including initiatives with the Company’s dispositions group.
Successfully managed internal acquisition and disposition expenses.
Achievements with respect to tenants with an investment grade rating and efforts towards maintaining the Company’s weighted average lease term, as well as property diversification generally, within the Company’s targeted ranges.
Continued to foster a culture of compliance and transparency.

27





Long-Term Equity Incentive Awards
The objectives of the Company’s long-term incentive compensation program are to:
Reward achievement over a multi-year period;
Align the interests of executives with those of stockholders by focusing executives on the stockholder return performance of the Company; and
Provide a retention mechanism through multi-year vesting.
The long-term equity incentive opportunity for the
2018
executive compensation program consisted of restricted stock unit awards and an award of stock options. For Mr. Rufrano, the mix of annual restricted stock unit awards in
2018
was two-thirds performance based and one-third time based and for all other NEOs, the mix of annual restricted stock unit awards in
2018
was one-half performance based and one-half time based. The stock options awarded to NEOs in
2018
have time-based vesting criteria that vest in full after three years with a ten year term. For each of the NEOs, the amount of their individual long-term equity incentive awards was determined by the Compensation Committee.
Both the time-based and performance-based restricted stock units include a right to receive dividend equivalents with respect to the shares subject to the award, which are subject to the same vesting conditions as the underlying shares. The stock options do not include rights to receive dividend equivalents.
Equity awards granted to the NEOs under the Equity Plan in
2018
are included under “Compensation Tables-Grants of Plan Based Awards” and are described further below.
Time-Based Restricted Stock Units.
The restricted stock units that are subject to time-based vesting vest generally in equal installments on each of the first three anniversaries of February 23,
2018
.
Performance-Based Restricted Stock Units
. The restricted stock units that are subject to performance-based vesting will vest only if we achieve certain performance conditions over a three-year performance period of
January 1, 2018 to December 31, 2020
, subject to review and approval by the Compensation Committee. The target award of the performance-based restricted stock units granted to NEOs is eligible to vest in an amount ranging from 0% to 160% of target, as follows:
(i) 50% of the target award will vest based on the Company’s TSR relative to the TSR of the FTSE Nareit All Equity REITs Index, a market capitalization-weighted index of U.S. equity REITs (the “Nareit Equity Market Index”), during the performance period, and
(ii) 50% of the target award will vest based on the Company’s TSR relative to the stockholder return of the Performance Peer Group (set forth below) during the performance period, subject to each executive’s continued service through the end of the performance period.
Use of these weightings allows the Compensation Committee to consider the Company’s performance against the broader industry by reviewing its performance against the Nareit Equity Market Index as well as to consider the Company’s performance against a more focused net-lease Performance Peer Group that is more closely aligned to the Company’s business. For purposes of the peer group weighting, the Company selected REITs that are in the triple net lease business for inclusion in the “Performance Peer Group” consisting of:
Agree Realty Corp.
 
Realty Income Corporation
 
STORE Capital Corporation
Lexington Realty Trust
 
Spirit Realty Capital, Inc.
 
W.P. Carey, Inc.
National Retail Properties, Inc.
 
 
 
 
Under the awards, TSR is calculated as the stock price appreciation from the beginning to the end of the period, plus dividends and distributions made or declared during the period (assuming such dividends or distributions are reinvested in common stock), expressed as a percentage return. If performance falls between the points specified below, the percentage of restricted stock units that will vest will be determined using linear interpolation between such points.

28




Nareit Equity Market Index (50% Weighting)
Company TSR Percentile
 
Vesting Percentage
(as a percentage of Target Award)
>
 
65
th
 Percentile
 
160%
60
th
 Percentile
 
130%
55
th
 Percentile
 
100%
45
th
 Percentile
 
75%
>
 35
th
 Percentile
 
50%
< 35
th
 Percentile
 
0%

Performance Peer Group (50% Weighting)

Company TSR vs. Performance Peer Group 55
th
Percentile
(Percentage Point Difference)
 
Vesting Percentage
(as a percentage of Target Award)
>
 + 6% points
 
160%
+ 3% points
 
130%
0% points (performance = 55
th
 percentile)
 
100%
-2.5% points
 
75%
>
 -5% points
 
50%
< -5% points
 
0%

Stock Option Awards.
In evaluating compensation for
2018
, the Compensation Committee reviewed the NEO’s accomplishments and believed their efforts had positioned the Company for long-term success, but recognized that these achievements were not reflected in the Company’s share price which performed below the Company’s net-lease REIT peers. To foster retention and provide additional opportunity tied to the Company’s share price and long-term success, the Compensation Committee included an award of stock options in the long-term equity incentive awards. The stock options have a grant date fair value of $300,000 and an exercise price of $6.84, which was the closing price of the Company’s common stock on the day prior to the date of grant per the terms of the Company’s Equity Plan, and vest in full on February 21, 2021, subject to the executive’s continued service.
2016
Performance-Based Restricted Stock Units
. As previously disclosed in the Company’s proxy statement filed with the SEC on
March 21, 2017
, in
2016
, the Compensation Committee awarded performance-based restricted stock units which had a three-year performance period of
January 1, 2016 to December 31, 2018
. The
2016
performance-based restricted stock units were eligible to vest in an amount ranging from
0% to 160%
of the target award based on the Company’s TSR achievement as compared to the Nareit Equity Market Index (weighted 50%) and the Performance Peer Group (weighted 50%). The Performance Peer Group for the
2016
performance-based restricted stock units was the same as the
2018
performance-based restricted stock units. Following the completion of the performance period, the Compensation Committee determined that based on meeting the vesting criteria,
38.77%
of the target award of the
2016
performance-based restricted stock units would vest and the remainder of the target award was canceled.
Executive Equity Ownership Guidelines
In order to further foster the strong ownership culture among our senior executive management team and ensure the continued direct alignment of management and stockholder interests, we have adopted executive equity ownership guidelines requiring that our executive officers maintain a minimum ownership level of equity in the Company. The equity ownership requirements for our executives are as follows:
Chief Executive Officer
 
6 times annual base salary
Chief Financial Officer
 
3 times annual base salary
All Other Executive Officers
 
2 times annual base salary
Executive officers have five years from the date of becoming an executive officer to satisfy the ownership requirement. To the extent an officer has not achieved compliance with these guidelines, he or she is required to hold
70%
of any vested equity awards (exclusive of any shares withheld to satisfy tax withholding obligations). As of
December 31, 2018
, all of the officers subject to the equity ownership guidelines satisfied the ownership requirements.

29




We have also adopted equity ownership guidelines for our Board of Directors. See “Compensation of the Board of Directors — Director Stock Ownership Guidelines.”
Employment Agreements
The Company has entered into an employment agreement with each of our NEOs. These agreements provide for a minimum base salary, an initial target annual incentive bonus opportunity, as well as long-term equity incentive awards that will be determined on the same basis as equity awards made generally to other senior executives of the Company. In February 2018, the Compensation Committee approved an amendment to Mr. Rufrano’s employment agreement to extend the term of his employment agreement for an additional three-years. See “Compensation Tables — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” for additional information about the employment agreements.
In addition, the employment agreements provide for reasonable severance benefits upon involuntary termination of employment or termination by the executive for Good Reason as defined in the agreement (including for Mr. Rufrano upon termination within a Change in Control Period, as defined in his employment agreement). The Compensation Committee believes that such reasonable severance policies serve the interests of the stockholders as they reduce the risk and uncertainty for our executives, enabling them to focus on their duties without the distraction of worrying about their own employment status during times of transition. In February 2018, upon the review and assessment by Semler Brossy, the Compensation Committee approved amendments to the employment agreements for each of Ms. Goldberg and Messrs. Bartolotta, McDowell and Roberts to provide for certain payments upon qualifying terminations in connection with a Change in Control in order to align these executives’ employment agreements with market practices. See “Payments Upon Termination or Change in Control” for additional information about these reasonable severance benefits.
Clawback Policy
On February 22, 2017, the Board of Directors, upon a recommendation from the Compensation Committee, adopted a clawback policy in advance of the SEC adopting final rules and regulations related thereto, as the Board determined that it was in the best interests of the Company and its stockholders to adopt such a policy providing for the recoupment of officer compensation in the event the Company is required to prepare a financial restatement due to the material non-compliance of the Company with any financial reporting requirement. In such an event, the Compensation Committee, after taking into account any factors it deems reasonable, may require any of the Company’s officers subject to the reporting requirements of Section 16 of Exchange Act to repay or forfeit to the Company that part of his or her incentive compensation received by the officer during the three-year period preceding the publication of the restated financial statements that was in excess of the amount the officer would have received based on the results reported in the restated financial statements.

Analysis of Risk Associated with Our Executive Compensation Program
Our Compensation Committee has discussed the concept of risk as it relates to our executive compensation program, including with its independent advisor Semler Brossy, and the Compensation Committee does not believe our executive compensation program encourages excessive or inappropriate risk taking for the reasons stated below.
We structure our pay to consist of both fixed and variable compensation. The fixed portion (base salary) of compensation is designed to provide a base level of income regardless of our financial or share price performance. The variable portions of compensation (annual incentive bonus and long-term equity incentive awards) are designed to encourage and reward both short and long-term corporate performance. For short-term performance, the annual incentive bonus is awarded based on assessments of performance during the prior year which include a balance of financial and non-financial objectives. In addition, payouts under the annual incentive bonus are capped for all officers. For long-term performance, restricted stock unit awards, which comprise a mix of time-based and performance-based awards, and stock options limit incentives for risk taking. Time-based restricted stock unit awards vest over three years and performance-based equity awards vest based on the Company’s TSR over a three-year period as compared to two different independent peer sets and are subject to a maximum vesting percentage if the performance criteria are met. In
2018
, the Compensation Committee awarded stock options, which awards were similarly structured to limit incentives for risk taking as the awards are not exercisable for three years.
As noted above, the Company has also adopted good governance practices which mitigate against undue risk taking including benchmarking executive compensation, robust stock ownership guidelines, prohibition against pledging and hedging Company securities and adoption of a clawback policy.
Overall, our executive compensation program is structured to achieve its objectives by (i) providing incentives to our NEOs to manage the Company for the creation of long-term stockholder value, (ii) avoiding the type of disproportionately large short-term incentives that could encourage our NEOs to take risks that may not be in the Company’s long-term interests, (iii) requiring

30




our NEOs to maintain a significant investment in the Company and (iv) evaluating annually an array of performance criteria in determining executive compensation rather than focusing on a single metric.
Deductibility of Executive Compensation
The Compensation Committee’s policy is to consider the tax treatment of compensation paid to our executive officers while simultaneously seeking to provide our executives with appropriate rewards for their performance. The SEC requires that we comment upon our policy with respect to Section 162(m) of the Code, which limits the deductibility compensation of more than $1.0 million paid to any “covered employee” unless certain exceptions are met, primarily relating to “performance-based compensation.” Although certain qualifying “performance-based compensation” was previously exempt from this deduction limit, the Tax Cuts and Jobs Act of 2017 made certain changes to Section 162(m) of the Code. Pursuant to such changes, “performance-based compensation” is no longer exempt under Section 162(m) of the Code effective for tax years beginning after January 1, 2017, subject to a transition rule for written binding contracts which were in effect on November 2, 2017 and which were not modified in any material respect on or after such date. 

We believe that, because we intend to maintain our qualification as a REIT under the Code and pay distributions sufficient to minimize federal income taxes, the payment of compensation that does not satisfy the requirements of Section 162(m) will generally not affect our net income. In addition, substantially all of the services rendered by our executive officers are performed on behalf of the Operating Partnership, of which we are the sole general partner (or its subsidiaries, including one or more of our taxable REIT subsidiaries). The Internal Revenue Service has issued a series of private letter rulings which indicate that compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner is not subject to the limitation under Section 162(m) to the extent such compensation is attributable to services rendered to the REIT’s operating partnership. We have not obtained a ruling on this issue, but have no reason to believe that the same conclusion would not apply to us. To the extent, however, that compensation paid to our executive officers becomes subject to and does not qualify for deduction under Section 162(m), a larger portion of stockholder distributions may be subject to federal income taxation as dividend income rather than return of capital. We do not believe that Section 162(m) will materially affect the taxability of stockholder distributions, although no assurance can be given in this regard due to the variety of factors that affect the tax position of each stockholder. For these reasons, the Compensation Committee’s compensation policy and practices are not directly guided by considerations relating to Section 162(m) of the Code.

COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee
Julie G. Richardson (Chair)
Mary Hogan Preusse
Richard J. Lieb
Mark S. Ordan



31




COMPENSATION TABLES
Summary Compensation Table
The following table summarizes the total compensation paid to or earned by our NEOs for the years ended
2018
,
2017
and 2016.
Name and Principal Position
 
Year
 
Salary
($)
 
Bonus
($)
(1)
 
Stock Awards
(2)
($)
 
Option Awards ($)
(3)
 
All Other Compensation
(4)
($)
 
Total Compensation
($)
Glenn J. Rufrano
Chief Executive Officer
 
2018
 
1,000,000

 
1,615,000

 
4,851,634

 
300,000

 
314,179

 
8,080,813
 
2017
 
1,000,000

 
2,000,000

 
5,022,474

 

 
181,518

 
8,203,992
 
2016
 
1,000,000

 
1,500,000

 
5,651,730

 

 
70,329

 
8,222,059
Michael J. Bartolotta
Executive Vice President (“EVP”), Chief Financial Officer
 
2018
 
500,000

 
740,000

 
1,075,521

 
300,000

 
59,259

 
2,674,780
 
2017
 
500,000

 
835,000

 
1,103,712

 

 
51,671

 
2,490,383
 
2016
 
500,000

 
725,000

 
860,828

 

 
19,769

 
2,105,597
Lauren Goldberg
EVP, General Counsel and Secretary
 
2018
 
500,000

 
615,000

 
977,745

 
300,000

 
50,481

 
2,443,226
 
2017
 
495,833

 
660,000

 
1,003,375

 

 
31,302

 
2,190,510
 
2016
 
470,833

 
525,000

 
813,005

 

 
16,329

 
1,825,167
Paul H. McDowell
EVP, Chief Operating Officer
 
2018
 
500,000

 
665,000

 
1,002,188

 
300,000

 
46,205

 
2,513,393
 
2017
 
500,000

 
705,000

 
1,028,459

 

 
38,696

 
2,272,155
 
2016
 
499,518

 
550,000

 
836,909

 

 
69,008

 
1,955,435
Thomas W. Roberts
EVP, Chief Investment Officer
 
2018
 
500,000

 
690,000

 
1,319,958

 
300,000

 
76,289

 
2,886,247
 
2017
 
500,000

 
800,000

 
1,354,547

 

 
88,321

 
2,742,868
 
2016
 
500,000

 
600,000

 
1,147,766

 

 
101,122

 
2,348,888
__________________________
(1)
Represents performance-based annual incentive cash bonus that was earned during the specified year and paid in the following year. See “Compensation Discussion and Analysis-Elements of Compensation-Annual Incentive Bonus” for a discussion of each NEO’s actual cash bonus relative to his or her target bonus for
2018
.

(2)
Reflects the grant date fair value of stock awards computed in accordance with ASC Topic 718, without regard to forfeitures. For further information on how we account for stock-based compensation and the assumptions used, see “Note 17 - Equity-based Compensation” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018
filed with the SEC on
February 21, 2019
. These amounts reflect the Company’s accounting expense for these awards and do not correspond to the actual values, if any, that will be realized by the executives. The underlying grants are presented in further detail in the “Grants of Plan-Based Awards” table below. The maximum payouts under the
2018
performance-based portion of the equity awards for each of the NEOs, based upon the grant date fair value of stock awards computed in accordance with ASC Topic 718, without regard to forfeitures, would be as follows: Mr. Rufrano -
$5.1 million
, Mr. Bartolotta -
$0.8 million
, Ms. Goldberg -
$0.8 million
, Mr. McDowell -
$0.8 million
and Mr. Roberts -
$1.0 million
.

With respect to the
2016
performance-based restricted stock units awarded by the Compensation Committee in
2016
, which represented two-thirds of Mr. Rufrano’s
2016
long-term equity incentive award and one-half of the award for the other NEOs, and are included for fiscal year
2016
, the awards had a three-year performance period of
January 1, 2016 to December 31, 2018
. Following the completion of the performance period, the Compensation Committee determined that based on meeting certain of the vesting criteria,
38.77%
of the
2016
performance-based restricted stock units would vest and the remainder would not and were canceled. For additional information about these awards, see the “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Equity Incentive Awards” herein.

(3)
Reflects the grant date fair value of option awards computed in accordance with ASC Topic 718, without regard to forfeitures. For further information on how we account for stock-based compensation and assumptions used, see “Note 17 - Equity-based Compensation” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018
filed with the SEC on
February 21, 2019
. These amounts reflect the Company’s accounting expense for these awards and do not correspond to the actual values, if any, that will be realized by the executives.  The underlying awards are presented in further detail in the “Grants of Plan-Based Awards” table below.

(4)
The table below shows the components of “All Other Compensation” for
2018
, which includes dividends or dividend equivalents paid on stock awards, 401(k) matching contributions and other taxable fringe benefits.

32




Name
 
Dividends/Dividend Equivalents Paid on Stock Awards
($)
 
 
401(k) Match($)
 
Other($)
±
 
Total($)
Glenn J. Rufrano
 
300,329

 
 
6,750

 
7,100

 
314,179

Michael J. Bartolotta
 
48,280

 
 
6,750

 
4,229

 
59,259

Lauren Goldberg
 
41,394

 
 
6,750

 
2,337

 
50,481

Paul H. McDowell
 
36,260

 
 
6,750

 
3,195

 
46,205

Thomas W. Roberts
 
65,710

 
 
6,750

 
3,829

 
76,289

__________________________
±
Includes amounts related to Company-paid long-term disability and group term life insurance.

Grants of Plan-Based Awards
The following table sets forth information with respect to the awards granted to NEOs during the fiscal year ended
December 31, 2018
.
Name
 
Grant Date
 
Approval Date
 
Estimated Future Payouts
under Equity Incentive Plan
Awards
(1)
 
All Other Stock Awards: Number of Shares of Stock or Units (#)
(2)
 
All Other Option Awards: Number of Securities Underlying Options (#)
(3)
 
Exercise or Base Price of Option Awards ($/Sh)
(4)
 
Grant Date Fair Value of Stock and Option Awards
($)
(5)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
Glenn J. Rufrano
 
02/21/2018
 
02/21/2018
 
123,640

 
494,560

 
791,296

 

 

 

 
3,184,966

 
02/21/2018
 
02/21/2018
 

 

 

 
247,280

 

 

 
1,666,667

 
 
02/21/2018
 
02/21/2018
 

 

 

 

 
394,737

 
6.84

 
300,000

Michael J. Bartolotta
 
02/21/2018
 
02/20/2018
 
20,401

 
81,602

 
130,563

 

 

 

 
525,517

 
02/21/2018
 
02/20/2018
 

 

 

 
81,603

 

 

 
550,004

 
 
02/21/2018
 
02/20/2018
 

 

 

 

 
394,737

 
6.84

 
300,000

Lauren Goldberg
 
02/21/2018
 
02/20/2018
 
18,546

 
74,184

 
118,694

 

 

 

 
477,745

 
02/21/2018
 
02/20/2018
 

 

 

 
74,184

 

 

 
500,000

 
 
02/21/2018
 
02/20/2018
 

 

 

 

 
394,737

 
6.84

 
300,000

Paul H. McDowell
 
02/21/2018
 
02/20/2018
 
19,010

 
76,038

 
121,661

 

 

 

 
489,685

 
02/21/2018
 
02/20/2018
 

 

 

 
76,039

 

 

 
512,503

 
 
02/21/2018
 
02/20/2018
 

 

 

 

 
394,737

 
6.84

 
300,000

Thomas W. Roberts
 
02/21/2018
 
02/20/2018
 
25,037

 
100,148

 
160,237

 

 

 

 
644,953

 
02/21/2018
 
02/20/2018
 

 

 

 
100,149

 

 

 
675,004

 
 
02/21/2018
 
02/20/2018
 

 

 

 

 
394,737

 
6.84

 
300,000

__________________________
(1)
Represents performance-based restricted stock units granted under the Equity Plan during
2018
. These restricted stock units vest based on the achievement of certain performance conditions, which are based on the Company’s TSR relative to its peers and the Nareit Equity Market Index over a three-year period from
January 1, 2018 to December 31, 2020
. These amounts exclude dividend equivalent rights which are eligible to vest upon the conclusion of the applicable performance period. The target and maximum amounts correspond to the number of restricted stock units that would be earned in the event that specified performance goals are achieved. For more information on performance-based restricted stock units, see “Compensation Discussion and Analysis-Elements of Compensation-Long-Term Equity Incentive Award.”
(2)
Represents time-based restricted stock units granted under the Equity Plan during
2018
. These restricted stock units vest in equal installments on each of the first three anniversaries of
February 23, 2018
. For more information on time-based restricted stock units, see “Compensation Discussion and Analysis-Elements of Compensation-Long-Term Equity Incentive Award.” 
(3)
Represents stock option awards granted under the Equity Plan during
2018
. These stock options have an exercise price of $6.84 and vest in full on February 21, 2021, subject to the executive’s continued service.

33




(4)
Pursuant to the Equity Plan, the exercise price for the stock option awards is the closing sales price of the Company’s common stock on the New York Stock Exchange as of the preceding trading date before the grant date of the awards.
(5)
The grant date fair value of each award was computed in accordance with ASC Topic 718, without regard to forfeitures. These amounts reflect the Company’s accounting expense for these awards and do not correspond to the actual values, if any, that will be realized by the NEOs.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Below is a summary of the employment agreements with our NEOs.
Glenn J. Rufrano
Pursuant to an employment agreement with the Company, originally effective as of April 1, 2015 and amended on February 21, 2018 to extend the term for an additional three-years, Mr. Rufrano receives an annual base salary of not less than $1,000,000 and is eligible to receive an initial target annual cash bonus equal to 150% of his base salary. Commencing in 2016, Mr. Rufrano’s base salary is reviewed at least annually to determine if his base salary should be increased in the discretion of the Compensation Committee. Under his amended employment agreement, Mr. Rufrano is eligible to receive an annual long-term incentive equity award with respect to shares of common stock or other securities for each calendar year during the term of his employment which shall be subject to such terms and conditions, including the type of award and vesting conditions, as may be determined by the Compensation Committee.
Mr. Rufrano is subject to non-compete and non-solicitation for a period of two years after his termination of employment (or for a period of one year thereafter, in the event that the Company does not renew Mr. Rufrano’s employment term other than during a Change in Control Period (as defined in his employment agreement)).
Michael J. Bartolotta
Pursuant to an employment agreement with the Company, effective as of October 5, 2015, Mr. Bartolotta is entitled to a minimum annual base salary of $500,000 and is eligible to receive an initial target annual cash bonus equal to 125% of his base salary. Mr. Bartolotta is also eligible to receive annual long-term incentive equity awards for each calendar year of employment, as may be determined by the Compensation Committee in consultation with the Chief Executive Officer and will be determined on the same basis as equity awards made generally to other senior executives of the Company.
Mr. Bartolotta is subject to twelve months of non-compete and non-solicitation following the termination of his employment.
Lauren Goldberg
Pursuant to an employment agreement with the Company, effective as of May 26, 2015, as amended on February 23, 2016, Ms. Goldberg is entitled to receive a minimum annual base salary of $450,000 and is eligible to receive an initial target annual bonus equal to 100% of her base salary. She is also eligible to receive annual long-term equity awards for each calendar year of employment, as may be determined by the Compensation Committee in consultation with the Chief Executive Officer and will be determined on the same basis as equity awards made generally to other senior executives of the Company.
Ms. Goldberg is subject to twelve months of non-compete and non-solicitation following the termination of her employment.
Paul H. McDowell
Effective as of February 23, 2016, Mr. McDowell and the Company entered into an amended and restated employment agreement which superseded and replaced in all respects the prior employment agreement with the Company, effective as of January 8, 2014. Pursuant to the employment agreement, Mr. McDowell is entitled to receive a minimum annual base salary of $500,000 and is eligible to receive an initial target annual bonus equal to 100% of his base salary, which was increased by the Compensation Committee to 110% of his base salary in February 2017 to better align his total cash compensation with the external market. He is eligible to receive annual long-term equity awards for each calendar year of employment, as may be determined by the Compensation Committee in consultation with the Chief Executive Officer and will be determined on the same basis as equity awards made generally to other senior executives of the Company.
Mr. McDowell is subject to twelve months of non-compete and non-solicitation following the termination of his employment.
Thomas W. Roberts
Effective as of February 23, 2016, Mr. Roberts and the Company entered into an amended and restated employment agreement which superseded and replaced in all respects his prior employment agreement with the Company, effective as of April 1, 2015. Pursuant to his employment agreement, Mr. Roberts is entitled to receive a minimum annual base salary of $500,000 and is eligible

34




to receive an initial target annual bonus of up to 100% of his base salary, which was increased by the Compensation Committee to 115% of his base salary in February 2017 to better align his total cash compensation with the external market. Mr. Roberts is also eligible to receive annual long-term incentive equity awards for each calendar year of employment, as may be determined by the Compensation Committee in consultation with the Chief Executive Officer and will be determined on the same basis as equity awards made generally to other senior executives of the Company.
Mr. Roberts is subject to twelve months of non-compete and non-solicitation following the termination of his employment.
Outstanding Equity Awards at Fiscal Year End
The following table provides a summary of outstanding stock option awards, unvested restricted shares of common stock and/or restricted stock units issued to NEOs as of
December 31, 2018
. The market value of restricted stock and restricted stock unit awards is based on the closing price of the Company’s common stock on
December 31, 2018
, the last business day of the
2018
fiscal year, which was
$7.15
.
 
 
Option Awards
 
Stock Awards
Name
 
Number of Securities Underlying Unexercised Options (#) Exercisable
 
Number of Securities Underlying Unexercised Options (#) Unexercisable
(1)
 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
 
Option Exercise Price ($)
 
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested (#)
(2)
 
Market Value of Shares or Units of Stock That Have Not Vested ($)
 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
(3)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Glenn J. Rufrano
 

 
394,737

 

 
6.84

 
02/21/2028
 
457,484

 
3,271,011

 
869,092

 
6,214,008

Michael J. Bartolotta
 

 
394,737

 

 
6.84

 
02/21/2028
 
142,007

 
1,015,350

 
143,400

 
1,025,310

Lauren Goldberg
 

 
394,737

 

 
6.84

 
02/21/2028
 
129,776

 
927,898

 
130,364

 
932,103

Paul H. McDowell
 

 
394,737

 

 
6.84

 
02/21/2028
 
133,101

 
951,672

 
133,622

 
955,397

Thomas W. Roberts
 

 
394,737

 

 
6.84

 
02/21/2028
 
188,006

 
1,344,243

 
175,990

 
1,258,329

__________________________
(1)
Represents stock option awards granted on February 21, 2018, and which vest in full on February 21, 2021, subject to the executive’s continued service.
(2)
The following table presents by grant date the number of shares of time-based restricted stock and restricted stock units outstanding, including the applicable vesting conditions, as of
December 31, 2018
. Awards will generally vest in equal installments on the anniversary of the date of grant over the applicable vesting period as noted below.
Name
 
Grant Date
 
Type of Award
 
Number of Time-Based Shares or Restricted Stock Units That Have Not Vested (#)
 
Ratable Vesting on the Anniversary of the Grant Date for the Following Years
Glenn J. Rufrano
 
February 21, 2018
 
Restricted Stock Units
 
247,280

 
Three†
 
 
February 22, 2017
 
Restricted Stock Units
 
124,844

 
Three
 
 
February 23, 2016
 
Restricted Stock Units
 
85,360

 
Three
Michael J. Bartolotta
 
February 21, 2018
 
Restricted Stock Units
 
81,603

 
Three†
 
 
February 22, 2017
 
Restricted Stock Units
 
41,198

 
Three†
 
 
February 23, 2016
 
Restricted Stock Units
 
19,206

 
Three
Lauren Goldberg
 
February 21, 2018
 
Restricted Stock Units
 
74,184

 
Three†
 
 
February 22, 2017
 
Restricted Stock Units
 
37,453

 
Three†
 
 
February 23, 2016
 
Restricted Stock Units
 
18,139

 
Three
Paul H. McDowell
 
February 21, 2018
 
Restricted Stock Units
 
76,039

 
Three†
 
 
February 22, 2017
 
Restricted Stock Units
 
38,390

 
Three†
 
 
February 23, 2016
 
Restricted Stock Units
 
18,672

 
Three
Thomas W. Roberts
 
February 21, 2018
 
Restricted Stock Units
 
100,149

 
Three†

35




Name
 
Grant Date
 
Type of Award
 
Number of Time-Based Shares or Restricted Stock Units That Have Not Vested (#)
 
Ratable Vesting on the Anniversary of the Grant Date for the Following Years
 
 
February 23, 2017
 
Restricted Stock Units
 
50,562

 
Three†
 
 
February 23, 2016
 
Restricted Stock Units
 
25,608

 
Three
 
 
February 14, 2014
 
Restricted Stock
 
11,687

 
Five
__________________________
†Such restricted stock units vest in three equal installments on the first, second and third anniversaries of February 23, 2017 and 2018, as applicable.


(3)
Represents restricted stock units that will vest subject to the achievement of certain performance conditions at target levels for awards granted in
2018
and
2017
. The performance conditions are based on the Company’s TSR relative to its peers and the Nareit Equity Market Index. The performance period for awards granted in
2018
is
January 1, 2018 to December 31, 2020
and for awards granted in
2017
is
January 1, 2017 to December 31, 2019
. The amounts do not include performance-based restricted stock unit awards granted in
2016
(performance period was
January 1, 2016 to December 31, 2018
) for which the performance criteria was partially satisfied as of
December 31, 2018
and which were settled in accordance with the terms of the award agreement. On January 17, 2019, the Compensation Committee determined that the awards would vest at
38.77%
of the target award based upon the partial achievement of the vesting criteria. For additional information about the performance-based restricted stock unit awards granted in 2016, see the “Option Exercises and Stock Vested” table below.

Option Exercises and Stock Vested
The following table provides a summary of the option exercises (if any) and restricted shares of common stock and restricted stock units issued to NEOs, which vested during the fiscal year ended
December 31, 2018
.
 
 
Option Awards
(1)
 
Stock Awards
Name
 
Number of Shares Acquired on Exercise (#)
 
Value Realized on Exercise (#)
 
Number of
Shares Acquired
on Vesting (#)
(2)
 
Value Realized
on Vesting ($)
(3)
Glenn J. Rufrano
 

 

 
460,134

 
3,347,069

Michael J. Bartolotta
 

 

 
71,735

 
514,201

Lauren Goldberg
 

 

 
65,330

 
469,531

Paul H. McDowell
 

 

 
62,999

 
452,762

Thomas W. Roberts
 

 

 
103,739

 
741,343

__________________________
(1)
No options were eligible to be exercised during the fiscal year ended
December 31, 2018
.
(2)
The amounts include the portion of the performance-based restricted stock unit awards granted in 2016 (performance period was
January 1, 2016 to December 31, 2018
) for which the performance criteria was partially satisfied as of
December 31, 2018
and which were settled in accordance with the terms of the award agreement. On January 17, 2019, the Compensation Committee determined that the awards would vest at
38.77%
of the target award based upon the partial achievement of the vesting criteria.
(3)
Value realized on vesting is calculated based on the per share closing market price of the Company’s common stock on the vesting date, which ranged from $6.89 to $7.74 per share.


PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Employment Agreements
Below is a summary of the employment agreements with our NEOs and the potential payments to each NEO upon his or her termination, including in connection with a change in control.
Glenn J. Rufrano
Mr. Rufrano is party to an employment agreement with the Company which became effective on April 1, 2015, and was amended on February 21, 2018. For purposes of the “Termination Scenario Table” below, we have presented Mr. Rufrano’s termination scenarios as set forth in his employment agreement that was in effect as of
December 31, 2018
.
Death or Disability
. If Mr. Rufrano’s employment is terminated due to his death or at the election of the Company due to his Disability (as defined in his employment agreement), Mr. Rufrano will be entitled to “Accrued Benefits” comprised of (i) any

36




earned and accrued but unpaid base salary through the termination date, (ii) reimbursement for any unreimbursed business expenses incurred through the termination date, (iii) all other applicable payments or benefits to which Mr. Rufrano is entitled under the terms of any applicable compensation arrangement, benefit plan or program and (iv) vesting of his then-outstanding unvested equity awards in accordance with the terms of the applicable award agreements. Mr. Rufrano will also be entitled to any accrued but unpaid annual cash bonus for the year prior to the year of termination, if applicable.
Termination by the Company without Cause or Resignation for Good Reason (other than during a Change in Control Period
). If Mr. Rufrano’s employment is terminated other than during the period (“Change in Control Period”) beginning 120 days prior to, and ending 24 months following, a Change in Control (as defined in the respective employment agreement) by the Company without Cause (as defined in his employment agreement) or if Mr. Rufrano resigns for Good Reason (as defined in his employment agreement), Mr. Rufrano will be entitled to (i) Accrued Benefits, (ii) any earned and accrued but unpaid annual cash bonus for the year prior to the year of termination, (iii) an amount equal to two times the sum of his then-effective annual base salary and target annual cash bonus for the year of termination (provided that for purposes of calculating this amount, the target annual cash bonus shall not be less than 150% of Mr. Rufrano’s annual rate of base salary amount), (iv) vesting of his then-outstanding unvested equity awards in accordance with the terms of the applicable award agreements and (v) continued group medical coverage until the earlier of 18 months following the termination date or such time as Mr. Rufrano obtains new employment that offers group medical coverage.
Termination by the Company without Cause or Resignation for Good Reason (during a Change in Control Period)
. If Mr. Rufrano’s employment is terminated during a Change in Control Period by the Company without Cause or due to the non-renewal of the employment agreement by the Company or if Mr. Rufrano resigns for Good Reason, Rufrano will be entitled to (i) Accrued Benefits, (ii) any earned and accrued but unpaid annual cash bonus for the year prior to the year of termination, (iii) an amount equal to three times the sum of his then-effective annual base salary and target annual cash bonus for the year of termination (provided that for purposes of calculating this amount, the target annual cash bonus shall not be less than 150% of Mr. Rufrano’s annual rate of base salary amount) and (iv) vesting of his then-outstanding unvested equity awards in accordance with the terms of the applicable award agreements.
Termination by the Company for Cause, Resignation without Good Reason or Non-Renewal by Mr. Rufrano
. If Mr. Rufrano’s employment is terminated by the Company for Cause, by Mr. Rufrano without Good Reason or upon the non-renewal of the employment term by Mr. Rufrano, the Company will pay Mr. Rufrano only Accrued Benefits and Mr. Rufrano will forfeit all unvested equity awards.
Termination by Non-Renewal by the Company
. If Mr. Rufrano’s employment is terminated upon the non-renewal of the employment agreement by the Company (other than during a Change in Control Period), Mr. Rufrano will be entitled to (i) Accrued Benefits, (ii) any earned and accrued but unpaid annual cash bonus for the year prior to the year of termination and (iii) an amount equal to the sum of his annual base salary and target annual cash bonus.
In order to receive the payments under his employment agreement (excluding any Accrued Benefits Mr. Rufrano may be entitled to receive), Mr. Rufrano must execute and not revoke a general release and waiver agreement which includes a confirmation of his confidentiality, non-competition and non-solicitation obligations of his employment agreement.
Michael J. Bartolotta
Mr. Bartolotta is party to an employment agreement with the Company which became effective on October 5, 2015, and was amended on February 21, 2018. For purposes of the “Termination Scenario Table” below, we have presented Mr. Bartolotta’s termination scenarios as set forth in his employment agreement that was in effect as of
December 31, 2018
.
Death or Disability
. If Mr. Bartolotta’s employment is terminated due to his death or Disability (as defined in his employment agreement), then Mr. Bartolotta will be entitled to “Accrued Benefits” comprised of (i) any unpaid base salary through the termination date, (ii) reimbursement for any unreimbursed business expenses incurred through the termination date and (iii) all other payments or benefits to which Mr. Bartolotta is entitled under the terms of any applicable compensation arrangement or benefit plan or program. Mr. Bartolotta will also be entitled to any accrued but unpaid annual bonus for the year prior to the year of termination, if applicable, and any outstanding equity awards granted to Mr. Bartolotta prior to the third anniversary of the effective date of his employment agreement will vest on a pro rata basis calculated by dividing the number of whole months elapsed from the issuance of the award until the termination date by the number of whole months in the applicable vesting period for time-based awards or the performance measurement period of a performance-based award (with performance criteria assumed to be achieved at target levels). Any outstanding equity awards granted to Mr. Bartolotta after the third anniversary of the effective date of his employment agreement will vest in accordance with the terms of the applicable award agreements.

37




Termination by the Company without Cause or by Mr. Bartolotta for Good Reason (other than during a Change in Control Period
). If Mr. Bartolotta’s employment is terminated by the Company other than during a Change in Control Period without Cause (as defined in his employment agreement) or by Mr. Bartolotta for Good Reason (as defined in his employment agreement), then Mr. Bartolotta will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to the sum of his annual base salary and target bonus for the year of termination and (iv) continued medical coverage, at the same cost to Mr. Bartolotta as if he were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Mr. Bartolotta obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Mr. Bartolotta prior to the third anniversary of the effective date of his employment agreement will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Mr. Bartolotta after the third anniversary of the effective date of his employment agreement will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Mr. Bartolotta for Good Reason (during a Change in Control Period
). If Mr. Bartolotta’s employment is terminated by the Company during a Change in Control Period without Cause or by Mr. Bartolotta for Good Reason, then Mr. Bartolotta will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to two times the sum of his annual base salary and target bonus as in effect on the date of his termination and (iv) continued medical coverage, at the same cost to Mr. Bartolotta as if he were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Mr. Bartolotta obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Mr. Bartolotta prior to the third anniversary of the effective date of his employment agreement will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Mr. Bartolotta after the third anniversary of the effective date of his employment agreement will vest in accordance with the terms of the applicable award agreements.
In order to receive the payments under his employment agreement (excluding any Accrued Benefits Mr. Bartolotta may be entitled to receive), Mr. Bartolotta must execute and not revoke a general release and waiver agreement which includes a confirmation of his confidentiality, non-competition and non-solicitation obligations of his employment agreement.
Termination by the Company for Cause or Resignation without Good Reason
. If Mr. Bartolotta’s employment is terminated by the Company for Cause or Mr. Bartolotta voluntarily resigns without good reason, then Mr. Bartolotta will be entitled only to Accrued Benefits and he will forfeit all unvested equity awards.
Lauren Goldberg
Ms. Goldberg is party to an employment agreement with the Company which became effective on May 26, 2015, as amended on February 23, 2016 and on February 21, 2018. For purposes of the “Termination Scenario Table” below, we have presented Ms. Goldberg’s termination scenarios as set forth in her employment agreement that was in effect as of
December 31, 2018
.
Death or Disability
. If Ms. Goldberg’s employment is terminated due to her death or Disability (as defined in her employment agreement), then Ms. Goldberg will be entitled to “Accrued Benefits” comprised of (i) any unpaid base salary through the termination date, (ii) reimbursement for any unreimbursed business expenses incurred through the termination date and (iii) all other payments or benefits to which Ms. Goldberg is entitled under the terms of any applicable compensation arrangement or benefit plan or program. Ms. Goldberg will also be entitled to any accrued but unpaid annual bonus for the year prior to the year of termination, if applicable, and any outstanding equity awards granted to Ms. Goldberg prior to the third anniversary of the effective date of her employment agreement will vest on a pro rata basis calculated by dividing the number of whole months elapsed from the issuance of the award until the termination date by the number of whole months in the applicable vesting period for time-based awards or the performance measurement period of a performance-based award (with performance criteria assumed to be achieved at target levels). Any outstanding equity awards granted to Ms. Goldberg after the third anniversary of the effective date of her employment agreement will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Ms. Goldberg for Good Reason (other than during a Change in Control Period)
. If Ms. Goldberg’s employment is terminated by the Company other than during a Change in Control Period without Cause (as defined in her employment agreement) or by Ms. Goldberg for Good Reason (as defined in her employment agreement), then Ms. Goldberg will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to the sum of her annual base salary and target bonus for the year of termination and (iv) continued medical coverage, at the same cost to Ms. Goldberg as if she were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Ms. Goldberg obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Ms. Goldberg

38




prior to the third anniversary of the effective date of her employment agreement will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Ms. Goldberg after the third anniversary of the effective date of her employment agreement will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Ms. Goldberg for Good Reason (during a Change in Control Period
). If Ms. Goldberg’s employment is terminated by the Company during a Change in Control Period without Cause or by Ms. Goldberg for Good Reason, then Ms. Goldberg will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to two times the sum of her annual base salary and target bonus as in effect on the date of her termination and (iv) continued medical coverage, at the same cost to Ms. Goldberg as if she were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Ms. Goldberg obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Ms. Goldberg prior to the third anniversary of the effective date of her employment agreement will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Ms. Goldberg after the third anniversary of the effective date of her employment agreement will vest in accordance with the terms of the applicable award agreements.
In order to receive the payments under her employment agreement (excluding any Accrued Benefits Ms. Goldberg may be entitled to receive), Ms. Goldberg must execute and not revoke a general release and waiver agreement which includes a confirmation of her confidentiality, non-competition and non-solicitation obligations of her employment agreement.
Termination by the Company for Cause or Resignation without Good Reason
. If Ms. Goldberg’s employment is terminated by the Company for Cause or Ms. Goldberg voluntarily resigns without good reason, then Ms. Goldberg will be entitled only to Accrued Benefits and she will forfeit all unvested equity awards.
Paul H. McDowell
Mr. McDowell is party to an employment agreement with the Company which became effective on February 23, 2016, and was amended on February 21, 2018. For purposes of the “Termination Scenario Table” below, we have presented Mr. McDowell’s termination scenarios as set forth in his employment agreement that was in effect as of
December 31, 2018
.
Death or Disability
. If Mr. McDowell’s employment is terminated due to his death or Disability (as defined in his employment agreement), then Mr. McDowell will be entitled to “Accrued Benefits” comprised of (i) any unpaid base salary through the termination date, (ii) reimbursement for any unreimbursed business expenses incurred through the termination date and (iii) all other payments or benefits to which Mr. McDowell is entitled under the terms of any applicable compensation arrangement or benefit plan or program. Mr. McDowell will also be entitled to any accrued but unpaid annual bonus for the year prior to the year of termination, if applicable, and any outstanding equity awards granted to Mr. McDowell on or after the effective date of his employment agreement, but prior to April 1, 2018, will vest on a pro rata basis calculated by dividing the number of whole months elapsed from the issuance of the award until the termination date by the number of whole months in the applicable vesting period for time-based awards or the performance measurement period of a performance-based award (with performance criteria assumed to be achieved at target levels). Any outstanding equity awards granted to Mr. McDowell after April 1, 2018 will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Mr. McDowell for Good Reason (other than during a Change in Control Period
). If Mr. McDowell’s employment is terminated by the Company other than during a Change in Control Period without Cause (as defined in his employment agreement) or by Mr. McDowell for Good Reason (as defined in his employment agreement), then Mr. McDowell will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to the sum of his annual base salary and target bonus for the year of termination and (iv) continued medical coverage, at the same cost to Mr. McDowell as if he were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Mr. McDowell obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Mr. McDowell on or after the effective date of his employment agreement, but prior to April 1, 2018, will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Mr. McDowell after April 1, 2018 will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Mr. McDowell for Good Reason (during a Change in Control Period
). If Mr. McDowell’s employment is terminated by the Company during a Change in Control Period without Cause or by Mr. McDowell for Good Reason, then Mr. McDowell will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for

39




the year prior to the year of termination, (iii) an amount equal to two times the sum of his annual base salary and target bonus as in effect on the date of his termination and (iv) continued medical coverage, at the same cost to Mr. McDowell as if he were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Mr. McDowell obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Mr. McDowell on or after the effective date of his employment agreement, but prior to April 1, 2018, will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Mr. McDowell after April 1, 2018 will vest in accordance with the terms of the applicable award agreements.
In order to receive the payments under his employment agreement (excluding any Accrued Benefits Mr. McDowell may be entitled to receive), Mr. McDowell must execute and not revoke a general release and waiver agreement which includes a confirmation of his confidentiality, non-competition and non-solicitation obligations of his employment agreement.
Termination by the Company for Cause or Resignation without Good Reason
. If Mr. McDowell’s employment is terminated by the Company for Cause or Mr. McDowell voluntarily resigns without good reason, then Mr. McDowell will be entitled only to Accrued Benefits and he will forfeit all unvested equity awards.
Thomas W. Roberts
Mr. Roberts is party to an employment agreement with the Company which became effective on February 23, 2016, and was amended on February 21, 2018. For purposes of the “Termination Scenario Table” below, we have presented Mr. Roberts’ termination scenarios as set forth in his employment agreement that was in effect as of
December 31, 2018
.
Death or Disability
. If Mr. Roberts’ employment is terminated due to his death or Disability (as defined in his employment agreement), then Mr. Roberts will be entitled to “Accrued Benefits” comprised of (i) any unpaid base salary through the termination date, (ii) reimbursement for any unreimbursed business expenses incurred through the termination date and (iii) all other payments or benefits to which Mr. Roberts is entitled under the terms of any applicable compensation arrangement or benefit plan or program. Mr. Roberts will also be entitled to any accrued but unpaid annual bonus for the year prior to the year of termination, if applicable, and any outstanding equity awards granted to Mr. Roberts on or after the effective date of his employment agreement, but prior to April 1, 2018, will vest on a pro rata basis calculated by dividing the number of whole months elapsed from the issuance of the award until the termination date by the number of whole months in the applicable vesting period for time-based awards or the performance measurement period of a performance-based award (with performance criteria assumed to be achieved at target levels). Any outstanding equity awards granted to Mr. Roberts after April 1, 2018 will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Mr. Roberts for Good Reason (other than during a Change in Control Period
). If Mr. Roberts’ employment is terminated by the Company other than during a Change in Control Period without Cause (as defined in his employment agreement) or by Mr. Roberts for Good Reason (as defined in his employment agreement), then Mr. Roberts will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to the sum of his annual base salary and target bonus for the year of termination and (iv) continued medical coverage, at the same cost to Mr. Roberts as if he were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Mr. Roberts obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Mr. Roberts on or after the effective date of his employment agreement, but prior to April 1, 2018, will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Mr. Roberts after April 1, 2018 will vest in accordance with the terms of the applicable award agreements.
Termination by the Company without Cause or by Mr. Roberts for Good Reason (during a Change in Control Period
). If Mr. Roberts’ employment is terminated by the Company during a Change in Control Period without Cause or by Mr. Roberts for Good Reason, then Mr. Roberts will be entitled to (i) the Accrued Benefits, (ii) any accrued but unpaid annual bonus for the year prior to the year of termination, (iii) an amount equal to two times the sum of his annual base salary and target bonus as in effect on the date of his termination and (iv) continued medical coverage, at the same cost to Mr. Roberts as if he were an active employee, until the earliest of: (x) one year following the date of the termination; (y) such time as Mr. Roberts obtains new employment that offers group medical coverage or (z) the end of the COBRA continuation period. In addition, all outstanding equity awards granted to Mr. Roberts on or after the effective date of his employment agreement, but prior to April 1, 2018, will vest in full for unvested time-based equity awards and will vest at target levels for unvested performance-based equity awards (assuming the performance criteria had been achieved at target levels for such period). Any outstanding equity awards granted to Mr. Roberts after April 1, 2018 will vest in accordance with the terms of the applicable award agreements.

40




In order to receive the payments under his employment agreement (excluding any Accrued Benefits Mr. Roberts may be entitled to receive), Mr. Roberts must execute and not revoke a general release and waiver agreement which includes a confirmation of his confidentiality, non-competition and non-solicitation obligations of his employment agreement.
Termination by the Company for Cause or Resignation without Good Reason
. If Mr. Roberts’ employment is terminated by the Company for Cause or Mr. Roberts voluntarily resigns without good reason, then Mr. Roberts will be entitled only to Accrued Benefits and he will forfeit all unvested equity awards.
Termination Scenario Table
The table below provides certain estimates of the payments and benefits that would be provided to our NEOs in the event that a qualifying termination of employment or a change in control occurred, assuming that the triggering event took place on
December 31, 2018
. The value of vested equity is based on the closing price of the Company’s common stock on
December 31, 2018
, the last business day of the
2018
fiscal year, which was
$7.15
.
Name and Termination Scenario
 
Accrued Bonus ($)
(1)
 
Severance ($)
 
Equity Awards
($)
(2)
 
Accrued Benefits
($)
(3)
 
Total Payout ($)
Glenn J. Rufrano
 
 
 
 
 
 
 
 
 
 
Death or Disability
 
1,615,000

 

 
4,737,393

 
76,923

 
6,429,316

Without Cause or Resignation for Good Reason (no Change in Control)
 
1,615,000

 
5,000,000

 
10,705,557

 
99,506

 
17,420,063

Without Cause or Resignation for Good Reason (Change in Control)
 
1,615,000

 
7,500,000

 
10,705,557

 
76,923

 
19,897,480

For Cause or Voluntary Resignation
 

 

 

 
76,923

 
76,923

Non-Renewal by the Company
 
1,615,000

 
2,500,000

 

 
76,923

 
4,191,923

Michael J. Bartolotta
 
 
 
 
 
 
 
 
 
 
Death or Disability
 
740,000

 

 
1,005,686

 
38,462

 
1,784,148

Without Cause or Resignation for Good Reason (no Change in Control)
 
740,000

 
1,125,000

 
2,397,769

 
49,747

 
4,312,516

Without Cause or Resignation for Good Reason (Change in Control)
 
740,000

 
2,250,000

 
2,397,769

 
49,747

 
5,437,516

For Cause or Voluntary Resignation
 

 

 

 
38,462

 
38,462

Lauren Goldberg
 
 
 
 
 
 
 
 
 
 
Death or Disability
 
615,000

 

 
922,332

 
38,462

 
1,575,794

Without Cause or Resignation for Good Reason (no Change in Control)
 
615,000

 
1,000,000

 
2,196,898

 
43,674

 
3,855,572

Without Cause or Resignation for Good Reason (Change in Control)
 
615,000

 
2,000,000

 
2,196,898

 
43,674

 
4,855,572

For Cause or Voluntary Resignation
 

 

 

 
38,462

 
38,462

Paul H. McDowell
 
 
 
 
 
 
 
 
 

Death or Disability
 
665,000

 

 
945,123

 
32,692

 
1,642,815

Without Cause or Resignation for Good Reason (no Change in Control)
 
665,000

 
1,050,000

 
2,249,462

 
41,810

 
4,006,272

Without Cause or Resignation for Good Reason (Change in Control)
 
665,000

 
2,100,000

 
2,249,462

 
41,810

 
5,056,272

For Cause or Voluntary Resignation
 

 

 

 
32,692

 
32,692

Thomas W. Roberts
 
 
 
 
 
 
 
 
 
 
Death or Disability
 
690,000

 

 
1,243,073

 
30,127

 
1,963,200

Without Cause or Resignation for Good Reason (no Change in Control)
 
690,000

 
1,075,000

 
2,934,444

 
39,495

 
4,738,939

Without Cause or Resignation for Good Reason (Change in Control)
 
690,000

 
2,150,000

 
2,934,444

 
39,495

 
5,813,939

For Cause or Voluntary Resignation
 

 

 

 
30,127

 
30,127

Change in Control
(4)
 

 

 
85,169

 

 
85,169

__________________________
(1)
Includes the executives’ actual
2018
annual incentive bonus.
(2)
Includes the value of accelerating equity awards and dividend equivalents on restricted stock units. For Mr. Roberts, also includes dividends on awards of restricted stock. The amounts do not include performance-based restricted stock unit awards granted in 2016 (performance period was
January 1, 2016 to December 31, 2018
) because there would not be an acceleration of the awards as a result of a termination on
December 31, 2018
as the performance criteria

41




would have been satisfied and would be settled in accordance with its terms. On January 17, 2019, the Compensation Committee determined that the awards would vest at
38.77%
of the target award due to the vesting criteria being partially satisfied. For additional information about the performance-based restricted stock unit awards granted in 2016, see the “Option Exercises and Stock Vested” table above.
(3)
Reflects accrued vacation and/or medical coverage for the executive and his or her spouse and then-covered dependents.
(4)
A legacy equity award agreement contained a change in control provision that provided for the automatic vesting of all outstanding and unvested equity awards upon a Change of Control (as defined in the Company’s Equity Plan). This legacy award fully vested on February 14, 2019.

Pay Ratio Disclosure
Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the Company’s median employee annual total compensation to the annual total compensation of the Company’s principal executive officer, Mr. Rufrano, our Chief Executive Officer.
For fiscal year
2018
, Mr. Rufrano had total compensation as reflected in the Summary Compensation Table above. We estimate that the
2018
annual compensation for the Company’s median employee (calculated excluding Mr. Rufrano) was $96,430. As a result, for
2018
, Mr. Rufrano’s compensation was approximately 84 times that of the annual compensation for the median employee. As of
December 31, 2018
, we had 182
employees, including 178
full-time employees and four part-time employees. This represents a reduction in our employee headcount of 151 employees, from 333 employees, including 331 full-time employees and two part-time employees as of
December 31, 2017
. As previously discussed, we transferred 138 employees to the purchaser of our investment management business, Cole Capital, in 2018, and due to this decrease in employee headcount have recalculated our median employee as of
December 31, 2018
. In determining the median employee, we utilized employees’ compensation as reported on their Form W-2s for the year ended
December 31, 2018
.
Under the SEC’s rules and guidance, there are numerous ways to determine the compensation of a company’s median employee, including the elements of pay and benefits used, assumptions made and the use of statistical sampling. Further, each company has unique employee populations and compensation programs. As such our pay ratio may not be comparable to the pay ratio reported by other companies.


COMPENSATION OF THE BOARD OF DIRECTORS
Director Compensation
In January 2015, the Compensation Committee completed a review of the compensation arrangements for the Board of Directors as part of the overall review of the Company’s compensation practices and policies and to support director recruitment. The Compensation Committee engaged Semler Brossy to conduct this study of market practices based on the peer group approved for reviewing executive pay. Semler Brossy recommended a number of changes to make the compensation for directors consistent with best practices among the Company’s peers and the Compensation Committee recommended these changes to the Board of Directors which were approved by the Board and remained in effect until May 2018 as follows:
$60,000 annual cash retainer;
meeting fees of $2,000 per in-person meeting and $1,500 per telephonic meeting for each meeting of the Board and of an established committee of the Board;
$110,000 annual equity retainer in the form of deferred stock units;
an annual cash retainer of $150,000 for the non-Executive Chairman of the Board;
an annual cash retainer of $20,000 for the chair of the Audit Committee;
an annual cash retainer of $15,000 for the chair of the Compensation Committee; and
an annual cash retainer of $10,000 for the chair of the Nominating and Corporate Governance Committee.

In May 2018, the Compensation Committee engaged Semler Brossy to conduct an updated competitive assessment of the compensation program for the Board of Directors as compared to the peer group approved for reviewing executive pay. Following this review, with the recommendation of Semler Brossy, the Compensation Committee recommended the following changes to the compensation for directors, which were approved by the Board on May 3, 2018:

$70,000 annual cash retainer;
$125,000 annual equity retainer in the form of deferred stock units;
elimination of meeting fees and the adoption of an excess meeting fee policy which provides a fee of $1,500 per meeting of the Board or of a Board committee in excess of ten meetings in a calendar year for the Board or the respective committee;
reduction of the non-Executive Chairman of the Board annual cash retainer to $100,000;

42




an annual cash retainer of $30,000 for the chair of the Audit Committee and an annual cash retainer of $15,000 for each other member of the Audit Committee;
an annual cash retainer of $25,000 for the chair of the Compensation Committee and an annual cash retainer of $10,000 for each other member of the Compensation Committee; and
an annual cash retainer of $15,000 for the chair of the Nominating and Corporate Governance Committee and an annual cash retainer of $6,000 for each other member of the Nominating and Corporate Governance Committee.

Cash compensation for the Board of Directors is paid to the independent directors quarterly in arrears and the new cash compensation program went into effect commencing with the quarter ending September 30, 2018. The new annual equity retainer for
2018
was granted to each independent director on May 3,
2018
, in connection with the Company’s annual meeting of stockholders. Similar to the prior annual equity retainer, it will be made in subsequent years in connection with each regularly scheduled annual meeting of stockholders and if an independent director is elected to the Board between annual meetings of stockholders, a pro-rata annual equity retainer will be made at such independent director’s election measured from the effective date of the election to the one-year anniversary of the previous year’s annual meeting of stockholders.

The annual equity retainer for independent directors consists of deferred stock units. The deferred stock units, which vest upon issuance, will be settled three years from the date of grant or, if a director ends his or her tenure for any reason prior thereto, at the end of his or her tenure. The deferred stock units entitle the holder to dividend equivalent payments consistent with the dividends paid on the Company’s common stock.

Independent directors may elect to participate in the Independent Directors’ Deferred Compensation Program (“Deferred Compensation Program”) whereby they receive deferred stock units in lieu of cash compensation, including any annual cash retainer for serving as Non-Executive Chairman or as chair or member of any of the Board committees and excess meeting fees, and the annual equity retainer. If a director makes this election, he or she receives a quarterly issuance of deferred stock units equal to his or her aggregate deferred retainers and meeting fees for the prior calendar quarter divided by the closing price of the Company’s common stock on the NYSE on the last business day of a quarter. If an independent director elects to defer his or her annual equity retainer, such director will receive deferred stock units that vest upon issuance but will settle at the earlier of the end of the director’s tenure, death or a change in control. The deferred stock units are granted under the Equity Plan. The deferred stock units entitle the holder to receive on the last dividend payment date in the year, deferred stock units in an amount equal to the dividends paid on the Company’s common stock for such year.
Director Compensation Table for
2018
The following table sets forth the information regarding the compensation of our directors who served during the fiscal year ended
December 31, 2018
:
Name
 
Fees Earned or
Paid in Cash
($)
(1)
 
Stock Awards
($)
(2)
 
 
All Other
Compensation
($)
(3)
 
Total
Compensation
($)
Glenn J. Rufrano
(4)
 

 

 
 

 

Hugh R. Frater
 
206,000

 
125,000

 
 
23,174

 
354,174

David B. Henry
 
108,500

 
125,000

 
 
25,229

 
258,729

Mary Hogan Preusse
 
99,500

 
125,000

 
 
16,223

 
240,723

Richard J. Lieb
 
122,000

 
125,000

 
 
16,223

 
263,223

Mark S. Ordan
 
103,500

 
125,000

 
 
28,338

 
256,838

Eugene A. Pinover
 
100,500

 
125,000

 
 
41,919

 
267,419

Julie G. Richardson
 
113,000

 
125,000

 
 
42,903

 
280,903

__________________________
(1)
For a description of the annual non-employee director retainer fees and related payments, please see “Compensation of the Board of Directors—Director Compensation.” Messrs. Pinover and Ordan and Ms. Richardson each elected to participate in the Deferred Compensation Program in
2018
, and amounts in this column include amounts for cash compensation which were deferred.
(2)
Amounts in this column include only amounts for the annual equity retainer and reflect the grant date fair value of stock awards computed in accordance with ASC Topic 718, without regard to forfeitures. For further information on how we account for stock-based compensation and the assumptions used, see “Note 17 - Equity-based Compensation” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018
filed with the SEC on
February 21, 2019
. These amounts reflect the Company’s accounting expense for these awards and do not correspond to the actual amounts, if any, that will be recognized by the directors. Mr. Pinover and Ms. Richardson each elected to defer their annual equity retainer pursuant to their election to participate in the Deferred Compensation Program in
2018
.
(3)
Reflects dividend equivalents on deferred stock units. In the case of Messrs. Pinover and Ordan and Ms. Richardson, also reflects the value of deferred stock units granted in lieu of dividend equivalents pursuant to their election to participate in the Deferred Compensation Program in
2018
.
(4)
Mr. Rufrano did not receive any fees for serving as a director in
2018
.

43






Director Stock Ownership Guidelines

In 2015, our Board adopted guidelines encouraging each director to hold shares of the Company’s common stock. Each non-employee director of the Company is required to own common stock of the Company with a fair market value of at least five times the cash portion of his or her annual retainer. Each non-employee director has a phase-in period of five years from the date of his or her election to the Board to achieve the required minimum share ownership level. As of
December 31, 2018
, all of the non-employee directors either met the requirements or were within the permitted period to satisfy the ownership requirements.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The table below presents the members of the Compensation Committee and their respective service terms. None of these persons had, at any time, served as an officer or employee of the Company and, during
2018
, none of these persons had any relationships with the Company requiring disclosure under applicable rules and regulations of the SEC.
Name
 
Dates
Julie G. Richardson (Independent Director)
(1)
 
April 1, 2015 - Present
Mary Hogan Preusse (Independent Director)
 
April 5, 2017 - Present
Richard J. Lieb (Independent Director)
 
April 5, 2017 - Present
Mark S. Ordan (Independent Director)
 
September 29, 2015 - Present
__________________________
(1)
Ms. Richardson has served as the Chair of the Compensation Committee since September 29, 2015.


44




PROPOSAL 3 
NON-BINDING, ADVISORY RESOLUTION ON NAMED EXECUTIVE OFFICER COMPENSATION
Pursuant to Section 14A of the Exchange Act, the Company is providing its stockholders with the opportunity to vote on a non-binding advisory resolution approving the named executive officers’ compensation described herein. This proposal, known as a “say on pay” proposal, gives the Company’s stockholders the opportunity to express their views on named executive officer’s compensation.
The Board believes that the information provided in the Compensation Discussion and Analysis demonstrates that our executive compensation program was designed appropriately and is working to ensure that management’s interests are aligned with our stockholders’ interests to support long-term value creation. In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve, on a non-binding, advisory basis, the following resolution at the Annual Meeting:
“RESOLVED
, that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including in the Compensation Discussion and Analysis, the compensation tables and related narrative discussion, is hereby approved.”
While the say-on-pay vote is advisory and will be non-binding, the Compensation Committee does value the opinions of our stockholders and intends to take the results of the vote on this proposal into account in its future decisions regarding the compensation of our named executive officers. Unless the Board modifies its policy on the frequency of future say-on-pay advisory votes, the next say-on-pay advisory vote will be held at the
2020
annual meeting of stockholders, and the next advisory vote on the frequency of holding a say-on-pay vote will occur no later than the 2020 annual meeting of stockholders.
We are asking our stockholders to indicate their support for our named executive officers’ compensation as described in this proxy statement. This non-binding advisory vote is not limited to any specific item of compensation, but rather addresses the overall compensation of our named executive officers and our philosophy, policies and practices relating to their compensation as described in this proxy statement pursuant to Item 402 of Regulation S-K.
The affirmative vote of a majority of the votes cast at the Annual Meeting for the adoption of this resolution is required to approve the compensation of the named executive officers as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS RESOLUTION.

45




STOCK OWNERSHIP BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of the Company’s common stock as of
March 8, 2019
, in each case including shares of common stock which such persons have a right to acquire within 60 days, by:
each person known by the Company to be the beneficial owner of more than 5% of its outstanding shares of its common stock based solely upon the amounts and percentages contained in the public filings of such persons;
each of the Company’s executive officers and directors; and
all of the Company’s executive officers and directors as a group.
 
 
Percentage of Common Stock
Name of Beneficial Owner
 
Shares Owned
(1)
 
Percentage
(2)
The Vanguard Group
(3)
 
173,767,811