DEF 14A of SmartStop Self Storage REIT, Inc.
Filed Apr 11, 2024 · FY20230001193125-24-092849
Board of Directors
Board of Directors We operate under the direction of our board of directors. Our board of directors is responsible for the management and control of our affairs. Our board of directors consists of H. Michael Schwartz, our Founder, Chief Executive Officer and Chairman of our board of directors, Paula Mathews, and three independent directors, Harold “Skip” Perry (our lead independent director), Timothy S. Morris, and David J. Mueller, each of whom has been nominated by our board of directors for re-election to serve until our 2025 annual meeting of stockholders and until his or her successor is elected and qualifies. For more detailed information on our directors, see the “Executive Officers and Directors” section below. Our board of directors has formed the following three committees: the Audit Committee, the Nominating and Corporate Governance Committee, and the Compensation Committee.
Philosophy and Objectives of Our Executive Compensation Program
| • | Retain and hire top-caliber executives: Executives will have market competitive compensation that will allow us to both hire and retain high-caliber individuals. |
Philosophy and Objectives of Our Executive Compensation Program
| • | Reward growth and profitability: Executives will be rewarded for achieving both short- and long-term results, particularly focused on sustained growth and profitability that culminates in longer-term value creation for our stockholders. |
WHAT WE DO
| | Balanced Compensation. We balance overall compensation by linking portions of pay to both annual performance goals as well as multi- year performance goals. |
WHAT WE DO
| | Forward-Looking Long-Term Incentive Compensation Structure. We have implemented a long-term incentive compensation structure that includes forward-looking performance over a multi-year performance period. |
WHAT WE DO
| | Executive Severance Policy. In light of market best practices, we adopted an Executive Severance and Change of Control Plan (as opposed to employment agreements) covering our executives which is overseen by our Compensation Committee. |
WHAT WE DO
| | Independent Compensation Consultant. Our Compensation Committee retained Ferguson Partners Consulting (“FPC”), a nationally recognized compensation consulting firm, to review and provide recommendations regarding our executive compensation program. |
WHAT WE DON’T DO
| | No Minimum Bonuses or Uncapped Bonus Payouts. We do not pay guaranteed minimum bonuses, nor do we have uncapped bonus payouts. |
Compensation Methodology and Process
Compensation Methodology and Process Independent Review and Approval of Executive Compensation Our Compensation Committee is responsible for reviewing and approving corporate goals and objectives related to compensation for our NEOs. The Compensation Committee does not delegate any substantive responsibility related to the compensation of our NEOs and exercises its independent judgment when approving executive compensation. No member of the Compensation Committee is a former or current officer of us or any of our subsidiaries, and all members are independent under current NYSE listing standards. Our Compensation Committee annually reviews compensation to ensure its alignment with our business strategy, performance, and the interests of our employees and stockholders. In addition, the Compensation Committee reviews market practices for all elements of executive compensation and approves necessary adjustments to remain competitive. Our Compensation Committee takes into account the aggregate amount and mix of all components of compensation when considering compensation decisions affecting the CEO and the other NEOs. The Compensation Committee considers whether any components of executive compensation might lead to excessive risk taking by management and whether features of the executive compensation program appropriately mitigate risks. The Role of the Compensation Committee’s Consultant Our Compensation Committee has sole authority under its committee charter to retain advisors and consultants as it deems appropriate. The Compensation Committee has retained FPC, which specializes in the REIT industry, as its compensation consultant. FPC attends meetings of the Compensation Committee, reviews compensation data with the committee, and participates in general discussions regarding executive compensation issues. Management works with FPC, at the Compensation Committee’s direction, to develop materials and analysis essential to the committee’s compensation evaluations and determination. FPC regularly participates in executive sessions with the Compensation Committee (without any of our personnel or executives present) to discuss compensation matters. Role of the Chief Executive Officer Each year our Chief Executive Officer meets with the Compensation Committee to discuss specific recommendations regarding the base salary, short-term incentive compensation and long-term incentive compensation of each of our NEOs (other than the Chief Executive Officer) and provides further insight into and details of each executive officer’s performance. The other NEOs are not present during these discussions. The Compensation Committee believes it is valuable to consider the recommendations of the Chief Executive Officer with respect to these matters because, given his knowledge of our operations and the day-to-day responsibilities of such NEOs, he is in a unique position to provide the Compensation Committee with added perspective into the most appropriate measures and goals in light of our business at a given point in time. However, the Compensation Committee has the discretion to accept, reject, or modify these recommendations and makes all final determinations on issues within the scope of its authority, including with respect to executive officer compensation. The Chief Executive Officer does not provide his recommendations to the Compensation Committee regarding his own compensation. Use of Peer Group To ensure that our executive compensation programs are reasonable and competitive in the marketplace, we compare our compensation programs to the compensation programs of two distinct sets of peers. We examine pay practices across a peer set of public REITs that are (i) similarly sized to us and operate across a range of property types (Size-Based Peer Group) as well as (ii) a smaller peer set of direct competitors focused in the self storage industry of which there are only four (Direct Competitor Peer Group).
Compensation Methodology and Process
| PEER GROUP | DESCRIPTION | PURPOSE | | Size-Based Peer Group (13 companies) | Represents public real estate investment trusts of similar size in terms of total capitalization that also have active operations. | To periodically reference and compare our overall compensation practices and amounts against a broader mix of companies to ensure that our compensation practices are reasonable in light of the size of the organization. |
Compensation Methodology and Process
| PEER GROUP | DESCRIPTION | PURPOSE | | Direct Competitor Peer Group (4 companies) | Represents public real estate investment trusts within the self storage sector with operations that most nearly approximate our business. | To understand how each NEO’s total compensation compares with the total compensation for reasonably similar positions at our most direct competitors in the self storage industry and to assess and calculate performance for certain relative metrics. |
Compensation Methodology and Process
| * Source: S&P Global. Note that we utilized Sila Realty Trust, Inc. in our size-based peer group, though as Sila is a non-traded REIT, they have been excluded from the table above. Additionally, as American Healthcare REIT, Inc. had its initial public offering on February 7, 2024, AHR’s total capitalization figure above reflects Q3 2023 estimated total capitalization per S&P Global. |
Compensation Methodology and Process
| * Note that Life Storage, Inc. was part of the competitor-based peer group that was used for setting compensation in 2023; however, Life Storage was acquired and we have not included them in the table above. |
Compensation Methodology and Process
Our Compensation Committee evaluates the median levels of the size-based peer group for compensation as an initial point of reference for setting pay and thereafter considers various qualitative factors for each NEO, such as years of experience, tenure, and historical performance, in arriving at a competitive pay package. Actual compensation paid may fluctuate above or below the median of the peer group based on our performance and the achievement of the goals established by the Compensation Committee for the NEO. The Compensation Committee reviews the peer group annually and make changes as warranted and deemed appropriate by the Compensation Committee. Alignment of Pay Our executive compensation program provides significant alignment between pay and performance by linking a meaningful portion of total target compensation to the achievement of financial, operational and strategic goals through our short-term incentive program, as well as rigorous relative portfolio goals through our long-term incentive program. Approximately 88% of the total target compensation delivered to our CEO and 61% delivered to our other NEOs is at risk. The following charts present the allocation of 2023 total target compensation among different components for our Chief Executive Officer and the weighted average of each component for our other NEOs as a group.
Overview of Compensation
Annual Cash Incentive Awards The goal of our variable cash incentive program (the “Short-Term Incentive Program”) is to motivate executive officers to achieve strong performance across various financial, operating and strategic goals with the ultimate objective of contributing to longer-term stockholder value based on our annual performance. The Short-Term Incentive Program includes an objective portion that comprises the majority of the overall program and is based on three performance-based metrics with pre-defined hurdles. For purposes of the 2023 Short-Term Incentive Program, same-store NOI, a measure of Funds From Operations as adjusted, per share, and G&A Expense were included as quantitative metrics. While it is important for the majority of the NEO’s annual cash compensation to be determined objectively, we also believe that it is important to have a degree of flexibility and assess performance against goals that may not be precise or quantifiable in nature. Therefore, a relatively smaller portion of the Short-Term Incentive Program is subjectively assessed based on various strategic and individual goals. We provide a range of performance outcomes across each metric. In fiscal year 2023, the performance-based metrics had the potential to be paid at 50%, 100% and 150% of target for the threshold, target and maximum criteria for each metric, which was the same as fiscal years 2022 and 2021. For strategic and individual goals, the threshold, target, and maximum levels were set at 75%, 100%, and 125% of target, respectively, for each of fiscal years 2023, 2022 and 2021. To the extent that the level of actual achievement for strategic and individual goals as well as performance goals falls between the established Threshold, Target and Maximum levels, calculation of the amount of the award is interpolated on a straight-line basis.
Overview of Compensation
| 2023 | 2023 | | Short-Term Incentive Program CEO and Executive Chairman | Short-Term Incentive Program Other NEOs | | | |
Individual Goals
| NAME | TARGET ($) | ACTUAL CASH BONUS ($) | % OF TARGET | | H. Michael Schwartz | 675,000 | 303,750 | 45% | | James R. Barry | 210,000 | 115,500 | 55% | | Joe Robinson | 200,000 | 110,000 | 55% | | Wayne Johnson | 190,000 | 104,500 | 55% | | Michael O. Terjung | 135,000 | 87,750 | 65% |
Individual Goals
Long-Term Stock Based Compensation We adopted our long-term incentive program (the “Long-Term Incentive Program”) with the goal of both retaining and motivating our executive officers over a longer-term period. We provide equity incentive awards in order to foster ownership and alignment with stockholders, which is intended to motivate our executive officers to enhance the long-term value of the Company. At the election of each individual executive, such equity awards may come in the form of either long-term incentive plan units (“LTIP Units”) of SmartStop OP, L.P., our operating partnership (our “Operating Partnership”) or restricted stock awards consisting of shares of our common stock (“RSAs”). Although the Compensation Committee does not target a specific mix of equity versus cash compensation when setting awards each year, it does strive to deliver a relatively large portion of the executive officer’s overall compensation in the form of equity. Key highlights of the Long-Term Incentive Program are as follows:
Individual Goals
| • | For fiscal year 2022 and prior years, awards under the Long-Term Incentive Program were granted with 75% of such award being time-based and 25% being performance-based. Subsequent to fiscal year end 2022, our Compensation Committee approved changes to the Long-Term Incentive Program such that awards were granted with two-thirds of such award being time-based and one-third being performance-based. |
Individual Goals
| | TIME- BASED AWARDS (67%) ($) | 2023-2025 PERFORMANCE-BASED AWARDS (33%) | | | | TOTAL LTIP AWARD AT TARGET ($) | | NAME | | Last Place ($) | 5th Place (Threshold) ($) | 3rd Place (Target) ($) | 1st Place (Maximum) ($) | | | H. Michael Schwartz | 2,546,000 | 0 | 313,500 | 1,254,000 | 2,508,000 | 3,800,000 | | James R. Barry | 294,800 | 0 | 36,300 | 145,200 | 290,400 | 440,000 | | Joe Robinson | 284,750 | 0 | 35,063 | 140,250 | 280,500 | 425,000 | | Wayne Johnson | 207,700 | 0 | 25,575 | 102,300 | 204,600 | 310,000 | | Michael O. Terjung | 134,000 | 0 | 16,500 | 66,000 | 132,000 | 200,000 |
Individual Goals
These approved grant levels were updated subsequent to fiscal year end by the Compensation Committee for fiscal year 2024. However, this Compensation Discussion and Analysis section focuses on the compensation in place during fiscal year 2023. NEOs can elect to receive their Long-Term Incentive Program awards as restricted stock or LTIP Units. During 2023, all NEOs elected to receive all of their awards in LTIP Units. The metric approved for the 2023-2025 performance period was a relative 3-year average same-store revenue growth when ranked against a peer group, as follows:
Individual Goals
| METRIC | 0% PAYOUT | 25% PAYOUT (THRESHOLD) | 65% PAYOUT | 100% PAYOUT (TARGET) | 150% PAYOUT | 200% PAYOUT (MAXIMUM) | | Relative 3-Year Average Same-Store Revenue Growth vs. Peer Group | Last Place | 5th Place | 4th Place | 3rd Place | 2nd Place | 1st Place |
Individual Goals
The peers by which we are to be compared against for the 2023-2025 period are: CubeSmart, Extra Space Storage Inc., Life Storage, Inc., National Storage Affiliates Trust, and Public Storage. In order to be counted in the ranking calculation above, a company must be publicly traded for the entire performance period. In the event that one or more of the peer group companies ceases to exist as a separate company or fails to report same store revenues during the performance period, our Compensation Committee may adjust the ranking tiers and/or measure the average annual same store revenue growth for such companies for a period shorter than the performance period in its sole discretion. During the performance period from January 1, 2021 through December 31, 2023, the Company’s relative 3-year average same-store revenue growth ranked 1st place in the corresponding peer group for that period. The following table summarizes the actual number of performance-based LTIP Units that vested on March 1, 2024 as a result of performance during the performance period from January 1, 2021 through December 31, 2023.
Individual Goals
| NAME | LTIP Units | | H. Michael Schwartz | 99,462.40 | | James R. Barry | 8,064.50 | | Joe Robinson | 8,602.20 | | Wayne Johnson | 13,440.90 | | Michael O. Terjung | 8,064.50 |
Severance Benefits
Severance Benefits In order to achieve our compensation objective of attracting, retaining and motivating qualified executives, we believe that we need to provide the NEOs with severance protection. Furthermore, we seek to utilize best practices in developing appropriate protection. As such, in connection with the Self Administration Transaction in June 2019, we adopted an Executive Severance and Change of Control Plan (the “Severance Plan”), rather than using individual employment agreements. Pursuant to the plan, each NEO is entitled to certain severance benefits based on the nature of their termination. See “—Executive Compensation—Severance Plan and Potential Payments Upon Termination or a Change of Control” below for complete details of severance benefits payable to the NEOs upon termination or change of control.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus(1) | Non-Equity Incentive Plan Compensation | Stock Awards(2) | All Other Compensation(3) | Total | | H. Michael Schwartz, | 2023 | $625,000 | $— | $303,750 | $3,800,000 | $13,997 | $4,742,747 | | Chief Executive Officer | 2022 | $625,000 | $— | $961,875 | $1,900,000 | $12,997 | $3,499,872 | | | 2021 | $625,000 | $— | $961,875 | $1,850,000 | $17,395 | $3,454,270 | | James R. Barry, | 2023 | $350,000 | $— | $115,500 | $440,000 | $26,010 | $931,510 | | Chief Financial Officer | 2022 | $300,000 | $— | $210,000 | $200,000 | $32,317 | $742,317 | | | 2021 | $275,000 | $25,000 | $175,000 | $150,000 | $25,684 | $650,684 | | Joe Robinson, | 2023 | $375,000 | $— | $110,000 | $425,000 | $31,482 | $941,482 | | Chief Operations Officer | 2022 | $375,000 | $— | $245,000 | $200,000 | $42,426 | $862,426 | | | 2021 | $350,000 | $25,000 | $210,000 | $160,000 | $33,038 | $778,038 | | Wayne Johnson, | 2023 | $315,000 | $— | $104,500 | $310,000 | $27,919 | $757,419 | | President and Chief Investment Officer | 2022 | $290,000 | $— | $210,000 | $275,000 | $34,021 | $809,021 | | | 2021 | $250,000 | $— | $196,000 | $250,000 | $32,961 | $728,961 | | Michael Terjung | 2023 | $290,000 | $— | $87,750 | $200,000 | $31,417 | $609,167 | | Chief Accounting Officer | 2022 | $275,000 | $— | $161,000 | $175,000 | $42,385 | $653,385 | | | 2021 | $250,000 | $25,000 | $140,000 | $150,000 | $31,758 | $596,758 |
Summary Compensation Table
| (1) Amounts shown in the “Bonus” column for 2021 reflect special non-plan bonuses that were awarded to certain individuals in recognition of their significant contributions to certain strategic projects undertaken by the Company in 2021. Annual bonuses are payable pursuant to our incentive plan and are included in the “Non-Equity Incentive Plan Compensation” column above. |
Summary Compensation Table
| (2) Represents the aggregate grant date fair value of each share of restricted stock and each LTIP Unit computed in accordance with FASB ASC Topic 718. The grant date fair values of performance-based awards included in this table were calculated based on the outcome of performance measured at target levels since that was the probable outcome at the time of grant. Assuming achievement of the maximum performance level, the grant date fair value for awards granted in 2023 would have been $5,054,000, $585,200, $565,250, $412,300, and $266,000 for Messrs. Schwartz, Barry, Robinson, Johnson, and Terjung, respectively. For purposes of this table, the market value per restricted share and LTIP Unit was assumed to be $15.21 (the estimated net asset value per share of our Class A common stock calculated as of September 30, 2022). |
Summary Compensation Table
| (3) The table below sets forth the components of the “All Other Compensation” column for 2023: |
Summary Compensation Table
| Name | Incremental Cost of Medical Insurance Premiums | 401(k) Company Match | Life/AD&D/ Short Term Disability Insurance Premiums | Total | | H. Michael Schwartz | $— | $13,200 | $797 | $13,997 | | James R. Barry | $12,014 | $13,200 | $797 | $26,010 | | Joe Robinson | $17,420 | $13,200 | $862 | $31,482 | | Wayne Johnson | $12,014 | $13,200 | $2,705 | $27,919 | | Michael Terjung | $17,420 | $13,200 | $797 | $31,417 |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information with respect to plan-based awards granted to the NEOs in 2023.
Grants of Plan-Based Awards
| | | Estimated future payouts under non- equity incentive plan awards(1) | | | Estimated future payouts under equity incentive plan awards(2) | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Share Awards: Number of Shares/ Units(3) | Grant Date Fair Value(4) | | H. Michael Schwartz | | | | | | | | | | | Annual Cash Incentive Bonus | | $388,125 | $675,000 | $961,875 | | | | | | | Time-Based Equity | 2/24/2023 | | | | | | | 191,429 | $2,546,000 | | Performance-Based Equity | 2/24/2023 | | | | 23,572 | 94,286 | 188,572 | | $1,254,000 | | James R. Barry | | | | | | | | | | | Annual Cash Incentive Bonus | | $126,000 | $210,000 | $294,000 | | | | | | | Time-Based Equity | 2/24/2023 | | | | | | | 22,166 | $294,800 | | Performance-Based Equity | 2/24/2023 | | | | 2,729 | 10,918 | 21,835 | | $145,200 | | Joe Robinson | | | | | | | | | | | Annual Cash Incentive Bonus | | $120,000 | $200,000 | $280,000 | | | | | | | Time-Based Equity | 2/24/2023 | | | | | | | 21,410 | $284,750 | | Performance-Based Equity | 2/24/2023 | | | | 2,636 | 10,546 | 21,091 | | $140,250 | | Wayne Johnson | | | | | | | | | | | Annual Cash Incentive Bonus | | $114,000 | $190,000 | $266,000 | | | | | | | Time-Based Equity | 2/24/2023 | | | | | | | 15,617 | $207,700 | | Performance-Based Equity | 2/24/2023 | | | | 1,923 | 7,692 | 15,384 | | $102,300 | | Michael Terjung | | | | | | | | | | | Annual Cash Incentive Bonus | | $81,000 | $135,000 | $189,000 | | | | | | | Time-Based Equity | 2/24/2023 | | | | | | | 10,076 | $134,000 | | Performance-Based Equity | 2/24/2023 | | | | 1,241 | 4,963 | 9,925 | | $66,000 |
Grants of Plan-Based Awards
| (1) Represents annual incentive awards at the threshold, target and maximum amounts. See the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above for additional discussion regarding bonuses based on 2023 performance. |
Grants of Plan-Based Awards
| (2) Represents performance-based awards, consisting of either restricted stock or LTIP Units, awarded in 2023 to our NEOs. Indicated threshold, target and maximum amounts correspond to the number of restricted shares or LTIP Units, as applicable, that would be earned in the event that specified threshold, target and maximum performance levels, respectively, were achieved. In the event that our performance does not meet the threshold requirements for a performance measure, no payment will be made on the quantitative portion of the award based on that performance measure. Performance-based awards vest following the conclusion of a three-year performance period, based on our performance ranked amongst a peer group of companies, conducted using a performance measure of average annual same-store revenue growth, analyzed over the performance period. |
Grants of Plan-Based Awards
| (3) Represents time-based awards, consisting of LTIP Units, awarded in 2023 to our NEOs. Time-based awards vest ratably over four years with the first tranche vesting on December 31st of the year of grant, subject to the recipient’s continued employment or service through the applicable vesting date. |
Grants of Plan-Based Awards
| (4) Calculated in accordance with FASB ASC Topic 718. The grant date fair values of performance-based awards were calculated based on the probable outcome of performance measured at target levels at the time of the grant. |
Narrative Explanation of Certain Aspects of Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative Explanation of Certain Aspects of Summary Compensation Table and Grants of Plan-Based Awards Table Our executive compensation program consists of the following elements: (1) base salaries, (2) a Short-Term Incentive Program, pursuant to which executive officers are entitled to a performance-based cash bonus, and (3) a Long-Term Incentive Program, pursuant to which executive officers are entitled to equity awards, which will be both time-based and performance-based. Amounts shown in the “Stock Awards” column of the Summary Compensation Table and awards disclosed in the Grants of Plan-Based Awards table may consist of RSAs or LTIP Units, depending on the executive’s election. Recipients of time-based RSAs granted prior to 2020 are entitled to distributions paid on the underlying shares of restricted stock but only as and when the restricted shares to which the dividends or other distributions are attributable become vested. Dividends or distributions made prior to such date will be held by us and transferred to the recipient on the date that the restricted shares become vested. Recipients of time-based RSAs granted in or subsequent to 2020 are entitled to distributions paid on the underlying shares of restricted stock effective as of the effective date of the award. Recipients of performance-based RSAs will accrue distributions during the performance period, and such distributions will only be payable on the date that any such shares of restricted stock vest, based upon the performance level attained. Recipients of time-based LTIP Units are entitled to distributions and allocations of profits and losses effective as of the effective date of the award. Recipients of performance-based LTIP Units will be entitled to receive distributions and allocations of profits and losses with respect to the performance-based LTIP Units as of the effective date of January 1 of the year of grant, in an amount equal to 10% of the distributions and allocations available on the maximum amount of LTIP Units that may be issued under an award, until the Distribution Participation Date (as defined in the operating partnership agreement). The remaining 90% of distributions will accrue and will be payable on the Distribution Participation Date based upon the performance level attained and number of performance-based LTIP Units that vest. Following the Distribution Participation Date, recipients will be entitled to receive the full amount of distributions and allocations of profits and losses with respect to the vested performance-based LTIP Units. LTIP Units are designed to qualify as “profits interests” in our operating partnership for federal income tax purposes, and as a result, initially they will not be treated as economically equivalent in value to a common unit, and the issuance of LTIP Units will not be a taxable event to our operating partnership or the recipient. If and when certain events occur pursuant to applicable tax regulations and in accordance with the operating partnership agreement, LTIP Units may become equivalent to common units of our operating partnership on a one-for-one basis.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding outstanding RSAs and LTIP Units held by each of our NEOs as of December 31, 2023. The applicable vesting provisions are described in the footnote following the table. For a description of the acceleration of vesting provisions applicable to the RSAs and LTIP Units held by our NEOs, please see the subsection titled “Severance Plan and Potential Payments Upon Termination or a Change of Control” below.
Outstanding Equity Awards at Fiscal Year-End
| | Stock Awards | | | | | | Name | Grant Date | Number of Shares or Units of Stock that Have Not Vested | Market Value of Shares or Units of Stock that Have Not Vested(4) | Number of Unearned Shares, Units or Other Rights that Have Not Vested | Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested(4) | | H. Michael Schwartz | 4/16/2021 | 37,298(1) | $568,800 | 99,462(5) | $1,516,801 | | | 2/2/2022 | 54,059(2) | $824,403 | 36,039(6) | $549,602 | | | 2/24/2023 | 143,572(3) | $2,189,469 | 94,286(7) | $1,437,862 | | James R. Barry | 4/16/2021 | 3,024(1) | $46,119 | 8,065(5) | $122,984 | | | 2/2/2022 | 5,690(2) | $86,779 | 3,794(6) | $57,853 | | | 2/24/2023 | 16,625(3) | $253,524 | 10,918(7) | $166,492 | | Joe Robinson | 4/16/2021 | 3,226(1) | $49,194 | 8,602(5) | $131,183 | | | 2/2/2022 | 5,690(2) | $86,779 | 3,794(6) | $57,853 | | | 2/24/2023 | 16,058(3) | $244,877 | 10,546(7) | $160,819 | | Wayne Johnson | 4/16/2021 | 5,040(1) | $76,865 | 13,441(5) | $204,973 | | | 2/2/2022 | 7,824(2) | $119,321 | 5,216(6) | $79,548 | | | 2/24/2023 | 11,713(3) | $178,619 | 7,692(7) | $117,303 | | Michael Terjung | 4/16/2021 | 3,024(1) | $46,119 | 8,065(5) | $122,984 | | | 2/2/2022 | 4,979(2) | $75,932 | 3,319(6) | $50,621 | | | 2/24/2023 | 7,557(3) | $115,244 | 4,963(7) | $75,678 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Represents LTIP Units which vest ratably over a period of four years, with the first vesting occurring on December 31, 2021. |
Outstanding Equity Awards at Fiscal Year-End
| (2) Represents LTIP Units which vest ratably over a period of four years, with the first vesting occurring on December 31, 2022. |
Outstanding Equity Awards at Fiscal Year-End
| (3) Represents LTIP Units which vest ratably over a period of four years, with the first vesting occurring on December 31, 2023. |
Outstanding Equity Awards at Fiscal Year-End
| (4) There is no public market for our shares. Amount is calculated as the net asset value of a share of our common stock at the end of the last completed fiscal year (calculated as of September 30, 2023) multiplied by the number of shares of stock or LTIP Units, as applicable. |
Outstanding Equity Awards at Fiscal Year-End
| (5) Represents unearned performance-based LTIP Units as of December 31, 2023, based on actual performance as of December 31, 2023, i.e., maximum, as such Awards subsequently vested at the maximum level on March 1, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (6) Represents unearned performance-based LTIP Units as of December 31, 2023, based on expected estimated current performance as of December 31, 2023, i.e., target. Awards shown will vest no later than March 31, 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (7) Represents unearned performance-based LTIP Units as of December 31, 2023, based on expected estimated current performance as of December 31, 2023, i.e., target. Awards shown will vest no later than March 31, 2026. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table summarizes vesting of stock applicable to our NEOs during the year ended December 31, 2023 (none of the NEOs held any options during 2023):
Option Exercises and Stock Vested
| | Stock Based Awards | | | Name | Number of Shares or LTIP Units Acquired on Vesting | Value Realized on Vesting(1) | | H. Michael Schwartz | 236,041 | $3,599,627 | | James R. Barry | 20,931 | $319,202 | | Joe Robinson | 21,125 | $322,162 | | Wayne Johnson | 37,628 | $573,826 | | Michael Terjung | 17,941 | $273,604 |
Option Exercises and Stock Vested
| (1) Amount is calculated based on the net asset value of a share (calculated as of September 30, 2023) of our common stock multiplied by the number of shares of stock/LTIP Units that vested. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
Severance Plan and Potential Payments Upon Termination or a Change of Control On June 28, 2019, the Compensation Committee adopted and approved our Executive Severance and Change of Control Plan and designated certain of our executives, including our NEOs, as participants (each, a “Participant” and together, the “Participants”) in our Executive Severance and Change of Control Plan. Assuming a termination of employment occurred on December 31, 2023 and a price per share of our common stock on the date of termination of $15.25 (the estimated net asset value per share of our Class A common stock as of the end of the last completed fiscal year, calculated as of September 30, 2023), the amount of compensation that would have been payable to each NEO in each situation is listed in the table below. The amounts shown in the table below are for illustrative purposes only. Actual amounts that would be paid on any termination of employment can only be determined at the time of any actual separation from us.
Severance Plan and Potential Payments Upon Termination or a Change of Control
| | Estimated Potential Payments Upon Termination | | | | | | | Name and Termination Scenario | Severance Payment(1) | Healthcare Continuation Coverage(2) | Equity Awards Subject to Vesting(3) | Other Compensation(4) | Excise Tax Gross Up(9) | Total(10) | | H. Michael Schwartz | | | | | | | | • Without Cause or for Good Reason | $2,989,896 | $— | $4,262,168(5) | $72,115 | $— | $7,324,179 | | • Change of control | $4,484,844 | $— | $6,134,015(6) | $72,115 | $4,878,701 | $15,569,675 | | • Death or disability(7) | $675,000 | $— | $6,134,015 | $272,115(8) | $— | $7,081,130 | | • Cause or Resignation | $— | $— | $— | $72,115 | $— | $72,115 | | James Barry | | | | | | | | • Without Cause or for Good Reason | $526,158 | $25,500 | $407,128(5) | $38,113 | $— | $996,899 | | • Change of control | $1,052,317 | $50,999 | $619,534(6) | $38,113 | $794,860 | $2,555,822 | | • Death or disability(7) | $210,000 | $— | $619,534 | $38,113 | $— | $867,647 | | • Cause or Resignation | $— | $— | $— | $38,113 | $— | $38,113 | | Joe Robinson | | | | | | | | • Without Cause or for Good Reason | $595,325 | $36,258 | $414,470(5) | $35,436 | $— | $1,081,489 | | • Change of control | $1,190,650 | $72,516 | $621,111(6) | $35,436 | $— | $1,919,713 | | • Death of disability(7) | $200,000 | $— | $621,111 | $35,436 | $— | $856,547 | | • Cause or Resignation | $— | $— | $— | $35,436 | $— | $35,436 |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| | Estimated Potential Payments Upon Termination | | | | | | | Name and Termination Scenario | Severance Payment(1) | Healthcare Continuation Coverage(2) | Equity Awards Subject to Vesting(3) | Other Compensation(4) | Excise Tax Gross Up(9) | Total(10) | | Wayne Johnson | | | | | | | | • Without Cause or for Good Reason | $732,969 | $38,249 | $518,482(5) | $36,346 | $— | $1,326,046 | | • Change of control | $977,292 | $50,999 | $697,222(6) | $36,346 | $489,716 | $2,251,576 | | • Death or disability(7) | $190,000 | $— | $697,222 | $36,346 | $— | $923,568 | | • Cause or Resignation | $— | $— | $— | $36,346 | $— | $36,346 | | Michael Terjung | | | | | | | | • Without Cause or for Good Reason | $648,000 | $54,387 | $319,777(5) | $31,224 | $— | $1,053,389 | | • Change of control | $864,000 | $72,516 | $434,573(6) | $31,224 | $610,581 | $2,012,894 | | • Death or disability(7) | $135,000 | $— | $434,573 | $31,224 | $— | $600,797 | | • Cause or Resignation | $— | $— | $— | $31,224 | $— | $31,224 |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (1) The Severance Payment will be due in the event that the NEO’s employment is terminated (i) by the NEO for Good Reason or (ii) by us or any of our subsidiaries without Cause. The Severance Payment is based upon a multiple of the sum of such NEO’s (i) highest annual salary within the prior two years and (ii) the average annual cash performance bonus earned for the prior three years. The multiple is equal to 2.0x for the Chief Executive Officer, 1.5x for the Chief Investment Officer and Chief Accounting Officer and 1.0x for all other executive officers. Such Severance Payments are paid in equal installments over an annual period equal to the multiple (i.e., 2 years, 1.5 years, 1 year). If a NEO is terminated without Cause or resigns for Good Reason and this occurs during the 12-month period following a Change of Control, then the multiple increases to 3.0x for the Chief Executive Officer and 2.0x for all other executive officers, and such Severance Payment is paid in a lump sum. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (2) Represents the cost of medical insurance coverage for each NEO at the same annual level as in effect immediately preceding December 31, 2023 for a period of time equal to the applicable multiple set forth in footnote 1, above. Such amounts are paid in equal installments over an annual period equal to the respective severance multiple (i.e., two years, 1.5 years, one year). A lesser amount may be due if the NEO becomes eligible to receive healthcare coverage from a subsequent employer. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (3) For purposes of this table, the market value per restricted share and LTIP Unit is assumed to be $15.25 (the estimated net asset value per share of our Class A common stock as of the end of the last completed fiscal year, calculated as of September 30, 2023). Such amounts include accrued and unpaid distributions due upon vesting. For performance-based awards such amounts were determined assuming targeted (100%) performance was achieved for the 2022 and 2023 grants and at maximum (200%) for the 2021 grant. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (4) Consists of accrued and unused paid time off, pursuant to the definition of “Accrued Obligations” contained in our Executive Severance and Change of Control Plan. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (5) With respect to the treatment of equity awards upon termination not involving a Change of Control: (i) any unvested time-based equity awards that would have otherwise vested over the 12-month period following the date of termination will immediately vest; and (ii) any unvested performance-based equity awards that remain outstanding on the date of termination shall remain outstanding and eligible to be earned following the completion of the performance period based on achievement of performance goals, vesting pro rata if such award becomes earned based on days employed during the performance period. For such performance -based awards, the table above assumes that performance-based awards for 2023 and 2022, performance goals were achieved at target, and all 2021 performance goals were achieved at maximum. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (6) With respect to the treatment of equity awards in the case of termination following a Change of Control: (i) all unvested time-based equity awards vest and become exercisable immediately prior to the Change of Control; and (ii) any performance-based awards that were assumed in connection with the Change of Control and remain unvested on a termination date that occurs within 12 months following the Change of |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| Control shall (a) to the extent only subject to time-based vesting as of the termination date, immediately vest on the termination date, or (b) to the extent subject to performance-based vesting as of the termination date, remain outstanding and eligible to be earned following completion of the performance period based on achievement of performance goals, and to the extent earned (if at all) shall vest on a pro rata basis based on days employed during the performance period through the termination date. The table above assumes that performance-based awards for 2023 and 2022, performance goals were achieved at target, and all 2021 performance goals were achieved at maximum. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (7) In the event of a termination due to death or disability, such NEO is entitled to: (i) a pro rata portion of his annual cash performance bonus, as determined by the Compensation Committee based on actual performance for the performance period and number of days employed during such period, (ii) the immediate vesting of all unvested time-based equity awards, and (iii) any unvested performance awards that remain outstanding on the date of termination shall remain outstanding and eligible to be earned following the completion of the performance period based on achievement of performance goals, vesting pro rata if such award becomes earned based on days employed during the performance period. The amounts herein make the following assumptions: (i) the performance components of the cash bonuses were achieved at target for 2023, (ii) the performance goals for the performance-based equity awards for 2023 and 2022 were achieved at target, and (iii) the performance goals for the performance-based equity awards for 2021 were achieved at maximum. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (8) Includes $200,000 in proceeds from a life insurance policy purchased by us, which benefits are payable to Mr. Schwartz’s beneficiary upon his death. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (9) Under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, a 20% excise tax is imposed upon certain individuals who receive payments in connection with a “change in control” if the payments received by them equal or exceed an amount generally approximating 3x their average annual compensation. The excise tax may be imposed on all such payments generally exceeding 1x an individual’s average annual compensation. The Executive Severance and Change of Control Plan provides that for certain “change in control” events, the participant will be entitled to an associated tax “gross-up” payment to cover the cost of this excise tax and related income taxes. The table above assumes that such a “change in control” event occurred. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| (10) A NEO will not be entitled to receive any of these payments or benefits, other than the Accrued Obligations, unless the NEO has entered into a general release in favor of us and our affiliates, and the NEO will be entitled to receive such payments or benefits only so long as such NEO has not materially breached any of the provisions of the general release or the non-competition, non-solicitation, non-disclosure, non-disparagement and other similar restrictive covenants set forth in the NEO’s letter agreement entered into pursuant to the Executive Severance and Change of Control Plan, which contains various obligations by the NEO to us such as (a) a confidentiality covenant that extends indefinitely, (b) a non-compete provision while the executive is employed by us, (c) certain employee, investor and customer non-solicitation covenants that extend during the executive’s employment and for a period of time after separation (18 months for CEO, or President, 12 months for Chief Investment Officer or Chief Accounting Officer, or 9 months for all other NEOs), and (d) a non-disparagement provision. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
The terms “Cause,” “Good Reason,” and “Change of Control” have the following definitions as set forth in our Executive Severance and Change of Control Plan:
Severance Plan and Potential Payments Upon Termination or a Change of Control
| • | “Cause” is generally defined to mean: (i) willful fraud or material dishonesty in the performance of the executive’s duties; (ii) deliberate or intentional failure by the executive to substantially perform his duties (other than due to incapacity) after a written notice is delivered describing such failures; (iii) willful misconduct by the executive that is materially detrimental to our or our affiliates’ reputation, goodwill or business operations; (iv) willful disclosure of our confidential information or trade secrets; (v) a breach of any restrictive covenants contained within the Participant’s letter agreement entered into pursuant to our Executive Severance and Change of Control Plan, which contains various obligations by the executive to us such as (a) a confidentiality covenant that extends indefinitely, (b) a non-compete provision while the executive |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| is employed by us, (c) certain employee, investor and customer non-solicitation covenants that extend during the executives employment and for a period of time after separation (18 months for CEO or President, 12 months for Chief Investment Officer or Chief Accounting Officer, or nine months for all other NEOs), and (d) a non-disparagement provision; or (vi) the conviction of, or a plea of no contest to a charge of, a felony or crime of moral turpitude. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| • | “Good Reason” is generally defined to mean, without the Participant’s consent: (i) a material diminution of base salary, target bonus, target annual equity compensation opportunity, or other annual incentive opportunity; (ii) a material reduction in authority, title, duties or responsibilities; (iii) relocation of principal place of employment greater than thirty (30) miles; or (iv) failure of any successor to us following a Change of Control to assume our Executive Severance and Change of Control Plan and its obligations. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| • | “Change of Control” is generally defined to mean: (i) any person acquiring our securities representing at least 50% of the voting power; (ii) certain mergers (unless our stockholders continue to own at least 50% of the combined voting power of the resulting entity at the time of the merger); (iii) a change in the majority of our Board during any 12-month period that is not approved by a majority of directors; (iv) a sale of all or substantially all of our assets; or (v) adoption of a plan of liquidation. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
Our Executive Severance and Change of Control Plan provides the following payments upon the occurrence of a Change of Control:
Severance Plan and Potential Payments Upon Termination or a Change of Control
| • | All unvested time-based equity awards vest and become exercisable immediately prior to the Change of Control; and |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| • | All unvested performance-based equity awards that are not continued or assumed by the successor entity in connection with the Change of Control vest and become exercisable immediately prior to the Change of Control based on actual achievement of the applicable performance goals through the date of the Change of Control, as determined in the sole discretion of the Compensation Committee. |
Severance Plan and Potential Payments Upon Termination or a Change of Control
| Name | Time-Based Equity Awards | Performance-Based Equity Awards | Dividends | Total | | H. Michael Schwartz | $3,582,672 | $2,362,489 | $188,854 | $6,134,015 | | James Barry | $386,422 | $217,050 | $16,062 | $619,534 | | Wayne Johnson | $374,806 | $297,106 | $25,311 | $697,223 | | Joe Robinson | $380,850 | $223,358 | $16,904 | $621,111 | | Michael Terjung | $237,295 | $181,957 | $15,320 | $434,573 |
Severance Plan and Potential Payments Upon Termination or a Change of Control
The above table assumes a change of control as of December 31, 2023 and a price per share of our common stock of $15.25 (the estimated net asset value per share of our Class A common stock as of the end of the last completed fiscal year, calculated as of September 30, 2023). This table also assumes that (i) no performance-based awards were continued or assumed by the successor entity in connection with the Change of Control, and (ii) all applicable performance goals were achieved at target. Included in the table above are the accrued distributions due based on the assumed achievement of the performance-based equity awards, as applicable.
Pay Versus Performance
Pay Versus Performance
Compensation Actually Paid
Compensation Actually Paid The table below sets forth information concerning the “compensation actually paid,” as determined under SEC rules, to our principal executive officer (including separate disclosure for our principal executive officer in 2021, in accordance with SEC rules) and to our other NEOs (our “Non-PEO NEOs”) (on an average basis) compared to certain measures of company performance for the fisca l ye ars e nd ed Dece m ber 2023, 2022, and 2021 (“PVP Table”):
Compensation Actually Paid
| | Summary Compensation Table Total for Current CEO | Summary Compensation Table Total for Prior CEO | Compensation Actually Paid to Current CEO (3) | Compensation Actually Paid to Prior CEO (3) | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs (2)(3) | Value of Initial Fixed $100 Investment Based On: | | Company Net Income (Loss) (6) | Company Same-Store NOI Growth (7) | | Year | | | | | | | Company Total Shareholder Return (4) | Peer Group Total Shareholder Return (4)(5) | | | | 2023 | $4,742,747 | N/A | $6,123,195 | N/A | $809,895 | $943,120 | $166.54 | $118.09 | $11,646,760 | 3.1% | | 2022 | $3,499,872 | N/A | $3,797,556 | N/A | $766,787 | $797,477 | $160.22 | $106.05 | $21,669,452 | 16.5% | | 2021 (1) | $3,454,270 | $536,443 | $5,390,178 | $831,624 | $688,610 | $884,798 | $152.68 | $141.30 | $(19,564,718) | 24.5% |
Compensation Actually Paid
| (1) For the fiscal year ended December 31, 2021, Michael S. McClure (our “Prior CEO”) was our principal executive officer until April 15, 2021, at which time H. Michael Schwartz (our “Current CEO”) became our principal executive officer. |
Compensation Actually Paid
| (2) For the fiscal years ended December 31, 2023, 2022 and 2021, our Non-PEO NEOs consisted of: James Barry, Joe Robinson, Wayne Johnson, and Michael Terjung. |
Compensation Actually Paid
| (3) See tables below for the calculation of Compensation Actually Paid for each year presented. |
Compensation Actually Paid
| (4) Total Shareholder Return and Peer Group Total Shareholder Return assume $100 invested on December 31, 2020, including reinvestment of dividends. |
Compensation Actually Paid
| (5) The Peer Group referenced for Peer Group Total Shareholder Return consists of the FTSE Nareit All Equity Index. |
Compensation Actually Paid
| (6) Net Income (Loss) represents the net income or loss generated in each calendar year for the Company and all of its consolidated subsidiaries, calculated in accordance with GAAP. |
Compensation Actually Paid
| (7) We have identified Same-Store NOI Growth as our most important financial measure used by us to link compensation paid to our NEOs to company performance. Same-Store NOI is a non-GAAP measure. See Appendix A for a reconciliation to the most directly comparable GAAP financial measure. |
Compensation Actually Paid
Calculation of Compensation Actually Paid:
Compensation Actually Paid
| | 2023 | | | | | Current CEO | Prior CEO | Average for Non-PEO NEOs | | Summary Compensation Table Total | $4,742,747 | N/A | $809,895 | | Deduction for amounts reported in “Stock Awards” column of the Summary Compensation Table | $3,800,000 | N/A | $343,750 | | Increase for fair value of awards granted during year presented that remain unvested as of year end presented | $3,409,691 | N/A | $308,451 | | Increase for fair value of awards granted during year presented that vested during the year presented | $686,034 | N/A | $62,061 | | Increase for change in fair value from prior year-end presented to year-end presented of awards granted prior to year presented that were outstanding and unvested as of year-end presented | $809,195 | N/A | $79,121 | | Increase for change in fair value from prior year-end presented to vesting date of awards granted prior to year presented that vested during year presented | $30,184 | N/A | $3,358 | | Deduction of fair value of awards granted prior to year presented that were forfeited during year presented | $— | N/A | $— | | Increase based upon incremental fair value of awards modified during year presented | $— | N/A | $— | | Increase based on dividends or other earnings paid during year presented, prior to vesting date of award | $245,346 | N/A | $23,985 | | Compensation Actually Paid | $6,123,195 | N/A | $943,120 | | | 2022 | | | | | Current CEO | Prior CEO | Average for Non-PEO NEOs | | Summary Compensation Table Total | $3,499,872 | N/A | $766,787 | | Deduction for amounts reported in “Stock Awards” column of the Summary Compensation Table | $1,900,000 | N/A | $212,500 | | Increase for fair value of awards granted during year presented that remain unvested as of year end presented | $1,557,805 | N/A | $174,228 | | Increase for fair value of awards granted during year presented that vested during the year presented | $359,494 | N/A | $40,207 | | Increase for change in fair value from prior year-end presented to year-end presented of awards granted prior to year presented that were outstanding and unvested as of year-end presented | $29,782 | N/A | $3,049 | | Increase for change in fair value from prior year-end presented to vesting date of awards granted prior to year presented that vested during year presented | $20,469 | N/A | $2,027 | | Deduction of fair value of awards granted prior to year presented that were forfeited during year presented | $— | N/A | $— | | Increase based upon incremental fair value of awards modified during year presented | $— | N/A | $— | | Increase based on dividends or other earnings paid during year presented, prior to vesting date of award | $230,134 | N/A | $23,679 | | Compensation Actually Paid | $3,797,556 | N/A | $797,477 |
Compensation Actually Paid
| | 2021 | | | | | Current CEO | Prior CEO | Average for Non-PEO NEOs | | Summary Compensation Table Total | $3,454,270 | $536,443 | $688,610 | | Deduction for amounts reported in “Stock Awards” column of the Summary Compensation Table | $1,850,000 | $— | $177,500 | | Increase for fair value of awards granted during year presented that remain unvested as of year end presented | $2,291,862 | $— | $219,895 | | Increase for fair value of awards granted during year presented that vested during the year presented | $528,891 | $— | $50,745 | | Increase for change in fair value from prior year-end presented to year-end presented of awards granted prior to year presented that were outstanding and unvested as of year-end presented | $676,181 | $314,251 | $72,481 | | Increase for change in fair value from prior year-end presented to vesting date of awards granted prior to year presented that vested during year presented | $107,776 | $56,044 | $12,394 | | Deduction of fair value of awards granted prior to year presented that were forfeited during year presented | $— | $119,179 | $— | | Increase based upon incremental fair value of awards modified during year presented | $— | $— | $— | | Increase based on dividends or other earnings paid during year presented, prior to vesting date of award | $181,198 | $44,065 | $18,173 | | Compensation Actually Paid | $5,390,178 | $831,624 | $884,798 |
Relationship between Compensation Actually Paid and Company Performance Metrics
Relationship between Compensation Actually Paid and Company Performance Metrics When determining the compensation of our executives, we consider certain financial and non-financial metrics. The following is an unranked list of the most important financial and non-financial measures we used to link “compensation actually paid” to our NEOs for the fiscal year ended December 31, 2023 to company performance:
Relationship between Compensation Actually Paid and Company Performance Metrics
| • | Same-store NOI growth |
Relationship between Compensation Actually Paid and Company Performance Metrics
| • | FFO, as adjusted per share |
Relationship between Compensation Actually Paid and Company Performance Metrics
| • | Same-store revenue growth |
Relationship between Compensation Actually Paid and Company Performance Metrics
| • | G&A expense |
Relationship between Compensation Actually Paid and Company Performance Metrics
As reflected in the PVP Table above, the difference between the Compensation Actually Paid and the corresponding summary compensation number for each of our Current CEO and our Non-PEO NEOs for the year ended December 31, 2021 was largely influenced by the 45% increase in the net asset value of our common stock during such year. Compensation Actually Paid to our Current CEO decreased year-over-year from 2021 to 2022 due in part to a smaller percentage increase in the net asset value of our common stock during such time period. The graphs below illustrate, for each of the years presented in the PVP table above, the relationship between (i) (A) Compensation Actually Paid to our Current CEO and our Prior CEO and (B) Compensation Actually Paid to our Non-PEO NEOs and (ii) (W) our cumulative total shareholder return (“TSR”), (X) the cumulative TSR of the FTSE Nareit All Equity Index (the “Peer Group”), (Y) our net income, and (Z) our Same-Store NOI Growth, which we consider to be the most important financial performance measure we use for purposes of determining NEO compensation. Same-Store NOI Growth was chosen as the most important financial metric due to its representative nature of overall portfolio performance and its impact to overall portfolio valuation.
CEO Pay Ratio
CEO Pay Ratio Pursuant to SEC rules, we are disclosing the ratio of the annual total compensation of our Chief Executive Officer, which as of December 31, 2023 was H. Michael Schwartz, to the annual total compensation of our median employee. To identify our median employee, we examined annual total compensation consisting of all cash compensation, including bonuses for all of our employees for 2023. We did not make any assumptions, adjustments (including cost of living adjustments), or estimates with respect to such total compensation, and we did not annualize the compensation for any full-time employees who were not employed by us for all of 2023. The 2023 annual total compensation for our median employee as determined based on SEC rules was $38,232. The 2023 annual total compensation for our Chief Executive Officer as determined based on SEC rules was $4,742,747. Based on this information, the ratio of our Chief Executive Officer’s annual total compensation to our median employee’s annual total compensation for fiscal year 2023 is 124 to 1.
Director Compensation for the Year Ended December 31, 2023
Director Compensation for the Year Ended December 31, 2023 Summary The following table provides a summary of the compensation earned by or paid to our directors for the year ended December 31, 2023:
Director Compensation for the Year Ended December 31, 2023
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation | All Other Compensation(2) | Total | | H. Michael Schwartz | $— | $— | $— | $— | $— | $245 | $245 | | Paula M. Mathews | $62,500(3) | $80,000 | $— | $— | $— | $393 | $142,893 | | Timothy S. Morris | $95,000(3) | $80,000 | $— | $— | $— | $982 | $175,982 | | David J. Mueller | $97,500(3) | $80,000 | $— | $— | $— | $393 | $177,893 | | Harold “Skip” Perry | $105,000(3) | $80,000 | $— | $— | $— | $245 | $185,245 |
Director Compensation for the Year Ended December 31, 2023
| (1) This column represents the full grant date fair value in accordance with FASB ASC Topic 718. |
Director Compensation for the Year Ended December 31, 2023
| (2) Represents payment of life insurance premiums covering each of the members of our Board for the benefit of such director’s beneficiaries. |
Director Compensation for the Year Ended December 31, 2023
| (3) Amount includes total fees earned or paid during the year ended December 31, 2023. |
Director Compensation for the Year Ended December 31, 2023
Terms of Director Compensation Each of our non-employee directors receive compensation for their service in the form of both cash and equity, as described below. Membership on our committees is comprised solely of independent directors.
Director Compensation for the Year Ended December 31, 2023
| Role | Amount | | Director Cash Retainer | $62,500 | | Lead Independent Director (supplemental) | $10,000 | | Audit Committee Chair (supplemental) | $20,000 | | Nominating and Corporate Governance Committee Chair (supplemental) | $15,000 | | Compensation Committee Chair (supplemental) | $15,000 | | Audit Committee Non-Chair (supplemental) | $10,000 | | Nominating and Corporate Governance Committee Non-Chair (supplemental) | $7,500 | | Compensation Committee Non-Chair (supplemental) | $7,500 | | Potential Additional Per Meeting Fees* | $1,500 |
Director Compensation for the Year Ended December 31, 2023
| * In the event that the board of directors or any committee thereof meets more than 10 times per year, a per meeting fee of $1,500 will be paid for each meeting thereafter. |
Director Compensation for the Year Ended December 31, 2023
Upon re-election for membership on our board of directors, our non-employee directors receive an annual equity award with a market value of $80,000, which vests one year from the date of the director’s re-election. 2022 Long-Term Incentive Plan Awards to Independent Directors In March 2022, following the recommendation of the Compensation Committee, our board of directors approved the Equity Incentive Plan, which was approved by our stockholders at our 2022 annual meeting of stockholders. The Equity Incentive Plan became effective when it was approved by our stockholders, and it replaced our prior incentive plan, known as the Employee and Director Long-Term Incentive Plan (the “Prior Plan”). From and after the effective date of the Equity Incentive Plan, no further awards have been or will be made under the Prior Plan. The purpose of the Equity Incentive Plan is to encourage and enable our and our subsidiaries’ eligible employees, directors, consultants, and other key persons, upon whose judgment, initiative, and efforts we largely depend for the successful conduct of our business, to acquire a proprietary interest in us. Pursuant to the Equity Incentive Plan, we may issue stock options, stock appreciation rights, restricted stock unit awards, restricted stock awards, restricted stock unit awards, unrestricted stock awards, dividend equivalent rights, LTIP Units, other equity-based awards, and cash-based awards. The total number of shares of our Class A common stock and our Class T common stock, in the aggregate, authorized and reserved for issuance under the Equity Incentive Plan is equal to 10,000,000 shares. As of December 31, 2023, there were approximately 9,367,118 million shares available for issuance under the Equity Incentive Plan. The term of the Equity Incentive Plan is 10 years. In the event of a consolidation or merger in which we are not the surviving corporation, or a sale of all or substantially all of our assets, in which outstanding shares of our stock are exchanged for securities, cash, or other property of an unrelated corporation or business entity, or in the event of our liquidation, the board of directors of any corporation assuming our obligations, may, in its discretion, take any one or more of the following actions as to outstanding awards under the Equity Incentive Plan: (i) provide that the awards may be assumed or substituted or (ii) upon written notice to participants, provide that all awards will terminate upon consummation of such a transaction. In the event that awards are not assumed or substituted, except as otherwise provided by the Compensation Committee in the award agreement or other agreement between the holder of an award and us, upon the effective time of such transaction, all awards will become vested and exercisable and vested awards, other than stock options, shall be fully settled in cash or in kind at such appropriate consideration as determined by the Compensation Committee in its sole discretion after taking into account the consideration payable per share pursuant to such transaction, or the “merger price,” and all stock options shall be fully settled in cash or in kind in an amount equal to the difference between the merger price and the exercise price of the options; provided that each participant may be permitted to exercise all outstanding options within a specified period determined by the Compensation Committee prior to such. In the event the board of directors or the Compensation Committee determines that any distribution, recapitalization, stock split, reorganization, merger, liquidation, dissolution or sale, transfer, exchange or other disposition of all or substantially all of our assets, or other similar corporate transaction or event, affects our stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Equity Incentive Plan or with respect to an award, then our board of directors or Compensation Committee shall, in such manner as it may deem equitable, adjust the number and kind of shares or the exercise price with respect to any award. As of December 31, 2023, (i) Mr. Mueller has received a total of 40,539 shares of restricted stock or LTIP Units, of which 34,523 shares or LTIP Units have vested, and (ii) Mr. Morris has received a total of 38,463 shares of restricted stock of which 32,868 shares have vested, and (iii) Mr. Perry has received a total of 38,884 shares of restricted stock of which 32,868 shares have vested and (iv) Ms. Mathews has received a total of 29,539 shares of restricted stock or LTIP Units, of which 23,523 shares or LTIP Units have vested. Director Life Insurance Policies We purchased life insurance policies covering each of the members of our board of directors for the benefit of such director’s beneficiaries. For the year ended December 31, 2023, we paid total premiums of $2,258 on such life insurance policies. Of this amount, $245 was attributed to the policy covering H. Michael Schwartz, $393 was attributed to the policy covering Paula M. Mathews, $982 was attributed to the policy covering Timothy S. Morris, $393 was attributed to the policy covering David J. Mueller, and $245 was attributed to the policy covering Harold “Skip” Perry.
PROPOSAL 1. ELECTION OF DIRECTORS
PROPOSAL 1. ELECTION OF DIRECTORS At the annual meeting, you and the other stockholders will vote on the election of all five members of our board of directors. Each person elected will serve as a director until our 2025 annual meeting of stockholders and until his or her successor is elected and qualifies. Our board of directors has nominated the following people for re-election as directors:
PROPOSAL 1. ELECTION OF DIRECTORS
| • | H. Michael Schwartz |
PROPOSAL 1. ELECTION OF DIRECTORS
| • | Paula Mathews |
PROPOSAL 1. ELECTION OF DIRECTORS
| • | Timothy S. Morris |
PROPOSAL 1. ELECTION OF DIRECTORS
| • | David J. Mueller |
PROPOSAL 1. ELECTION OF DIRECTORS
| • | Harold “Skip” Perry |
PROPOSAL 1. ELECTION OF DIRECTORS
Each of the nominees is a current member of our board of directors. Detailed information on each nominee is provided on pages 40-44. If any nominee becomes unable or unwilling to stand for re-election, our board of directors may designate a substitute. If a substitute is designated, proxies voting on the original nominee will be cast for the substituted nominee.