DEF 14A of Piedmont Realty Trust, Inc.
Filed Mar 14, 2024 · FY20230001999371-24-003535
Table of Contents
| 2023 Executive Compensation Tables | 64 | | Summary Compensation Table | 64 | | Grants of Plan Based Awards | 66 | | Outstanding Equity Awards at Fiscal Year End | 68 | | Stock Vested | 70 | | Potential Payments Upon Termination or Change of Control | 70 | | Compensation Committee Report | 72 | | Director Compensation | 73 | | Equity Compensation Plan Information | 74 | | CEO Pay Ratio | 75 | | Pay Versus Performance | 76 | | Compensation Policies and Practices as they Relate to Risk Management | 79 | | Certain Relationships and Related Transactions | 80 | | Stock Ownership | 81 | | Audit Committee Report | 83 | | Stockholder Proposals | 84 | | Householding | 84 | | Attending the Annual Meeting | 85 | | Other Matters | 86 | | Questions and Answers | 87 | | APPENDIX A: Amendment to Second Amended and Restate Omnibus Incentive Plan | 92 | | APPENDIX B: Amended Omnibus Incentive Plan | 96 | | APPENDIX C: Reconciliation of Non-GAAP Measures | 116 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The board of directors is asking you to elect the seven nominees listed below for terms that expire at the 2025 annual meeting of stockholders or until their successors are duly elected and qualified. Each director nominee will be elected if he or she receives a majority of the votes cast at the 2024 annual meeting (i.e. more votes cast “FOR” than cast “AGAINST”).
ELECTION OF DIRECTORS
| | Primary Role | Age | Director Since | Independent | Committee | | Kelly H. Barrett | Former SVP - Home Services, The Home Depot | 59 | 2016 | | Audit*, Nominating & Governance | | Glenn G. Cohen | EVP, Chief Financial Officer, Kimco Realty Corp. | 60 | 2020 | | Compensation*, Audit, Capital | | Venkatesh S. Durvasula | Chief Executive Officer and Member of the Board of Directors of Africa Data Centres | 57 | 2022 | | Capital | | Mary M. Hager | Senior Advisor and Member of the Board of Directors of Greystar | 64 | 2022 | | Nominating & Governance | | Barbara B. Lang | Managing Principal and Chief Executive Officer, Lang Strategies, LLC | 80 | 2015 | | Compensation, Nominating & Governance* | | C. Brent Smith | President and Chief Executive Officer, Piedmont Office Realty Trust, Inc. | 48 | 2019 | | | | Dale H. Taysom | Former Global Chief Operating Officer, Prudential Real Estate Investors | 75 | 2015 | | Vice-Chair of Board of Directors, Audit, Capital |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our current nine member board of directors is comprised of eight independent members and our Chief Executive Officer. Frank C. McDowell and Jeffrey L. Swope, who currently serve on our board, are each approaching their 15-year term limit and will retire from our board at the Annual Meeting. Effective with Mr. McDowell and Mr. Swope’s retirement, the size of the board will be reduced to seven members. At the Annual Meeting, you will vote on the election of seven directors. Each nominee elected will serve as a director until the next annual meeting of stockholders and until his or her successor is duly elected and qualified, or until his or her death, resignation or removal from office. Each of the following nominees has served as a director since our 2023 annual meeting of stockholders. Each nominee has been nominated for re-election at the Annual Meeting by our board of directors in accordance with our established nomination procedures discussed in this proxy statement. Your board of directors unanimously recommends a vote “FOR” all seven nominees listed for election as directors.
ELECTION OF DIRECTORS
| | | | | Kelly H. Barrett Director* Director Since 2016 Age: 59 |
ELECTION OF DIRECTORS
Former SVP-Home Services, among other roles, for The Home Depot (NYSE:HD) for sixteen years. While at Home Depot, Ms. Barrett served in various roles including Senior Vice President — Home Services, Vice President Corporate Controller, Senior Vice President of Enterprise Program Management, and Vice President of Internal Audit and Corporate Compliance. Prior to her employment by The Home Depot, Ms. Barrett was employed by Cousins Properties Incorporated for eleven years in various financial roles, ultimately including that of Chief Financial Officer. During that time, she was very active in the National Association of Real Estate Investment Trusts (NAREIT) as an Accounting Committee Co-Chairperson and member of the Best Financial Practices Council as well as the Real Estate Group of Atlanta. She has been a licensed CPA in Georgia for over thirty years, is certified as a director by the National Association of Corporate Directors (NACD), and holds a Certificate in Cybersecurity oversight from the NACD. In addition, Ms. Barrett currently serves as a director, Audit Committee Chair, and member of the Compensation Committee of The Aaron’s Company, Inc. (NYSE:AAN); director and member of both the Audit and Compensation Committees of Americold Realty Trust (NYSE:COLD); and director and member of the Compensation Committee and Information Technology Committee of EVERTEC, Inc (NYSE: EVTC). Her leadership positions in the Atlanta community include currently serving on the NACD Atlanta Chapter Board, Board of the Metro Atlanta YMCA, where she was formerly Chair of the Board, a member of the Georgia Tech Foundation Board of Trustees and the Advisory Board of Scheller College of Business at Georgia Tech where she was formerly the Chair of the Board. She has previously served on the Board of the Girl Scouts of Greater Atlanta, Partnership Against Domestic Violence and the Atlanta Rotary Club. Ms. Barrett brings over 30 years of leadership and financial management expertise to the board. As a former member of NAREIT’s Accounting Committee and Best Financial Practices Council and former chief financial officer of an office REIT, she is well qualified to provide oversight and guidance for Piedmont and serve as Chair of the Audit Committee and an audit committee financial expert.
ELECTION OF DIRECTORS
| | | | | Glenn G. Cohen Director* Director Since 2020 Age: 60 |
ELECTION OF DIRECTORS
Executive Vice President, Chief Financial Officer of Kimco Realty Corp. (NYSE:KIM), North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers and a growing portfolio of mixed-use assets. Additionally, Mr. Cohen is a member of the Cybersecurity committee and oversees the technology group, including the Cybersecurity team, at Kimco. Prior to his appointment as Kimco’s Chief Financial Officer in 2010, Mr. Cohen served in various other positions at Kimco including Treasurer from 1997 - 2024, as well as Director of Accounting and Taxation, since joining them in 1995. From 2016 to 2018, Mr. Cohen served as a director and member of the Audit Committee of Quality Care Properties, Inc. (formerly NYSE: QCP). He is a CPA and member of NAREIT and the International Council of Shopping Centers (ICSC). Mr. Cohen brings approximately 25 years of leadership and financial management experience to the board. As a Chief Financial Officer, Mr. Cohen is responsible for Kimco’s financial and capital strategy and oversees the accounting, financial reporting and planning, tax, treasury and capital market activities for another large, publicly traded REIT, making him well qualified to provide oversight and guidance for Piedmont and to serve as member and financial expert of the Audit Committee, and member of the Capital Committee. In addition to his long history in the REIT industry, his knowledge of typical public company compensation programs and first-hand knowledge of the importance of fair and effective compensation plans for both management and stockholders makes him well qualified to serve as Chair of the Compensation Committee.
ELECTION OF DIRECTORS
| | | | | Venkatesh S. Durvasula Director* Director Since 2022 Age: 57 |
ELECTION OF DIRECTORS
Chief Executive Officer (“CEO”) and member of the board of directors of Africa Data Centres, a London-based, Cassava Technology company responsible for the executive leadership of a $1.5 billion data center and renewable energy business on the continent of Africa. Prior to joining Africa Data Centres, from 2012-2020, Durvasula served in various leadership roles ultimately culminating in CEO and President of CyrusOne (previously NASDAQ: CONE), an approximately $12 billion data center REIT recently acquired by funds managed by global investment firm KKR and infrastructure investor Global Infrastructure Partners. While at Cyrus One, Durvasula grew the business into the third-largest data center REIT and successfully pivoted the company’s growth strategy to hyper-scale deployment in the United States and the European Union. He also oversaw the implementation of cyber-threat, cyber-detection, and cyber-security tools. Mr. Durvasula is also a member of the board of directors of Elea Digital, an operator of Brazilian data centers. Mr. Durvasula brings approximately 30 years of leadership, management, marketing, and operational experience with both public and private, domestic and international, technology companies. He has been responsible for sales, marketing, and strategy for various data centers, interconnection providers, complex enterprises, making him well qualified to serve as a member of the Capital Committee, provide oversight and guidance regarding Piedmont’s capital allocation decisions, as well as cyber risk management expertise.
ELECTION OF DIRECTORS
| | | | | Mary M. Hager Director* Director Since 2022 Age: 64 |
ELECTION OF DIRECTORS
Senior Advisor at global real estate investment management firm, Greystar. Ms. Hager co-leads the Greystar-Thackeray business as well as Greystar’s commercial real estate businesses and serves on the Greystar Global Investment Committee, Greystar Executive Committee, and Greystar Board of Directors. Prior to joining Greystar in 2021, Ms. Hager was the Co-CEO and co-founder of Thackeray Partners, a diversified private real estate company based in Dallas, TX. Since its inception in 2005, Thackeray Partners sponsored five private equity funds where Ms. Hager was responsible for overall strategy, partner communications, deal sourcing, asset management, and fund administration. Prior to founding Thackeray Partners, Ms. Hager was with Trammell Crow Company and other Crow-affiliated entities for sixteen years working in a variety of roles. Ms. Hager is a member of the Urban Land Institute, where she currently serves on the Board and is former Chair of the Investment Committee for the ULI Foundation. She is also a past Americas Global Governing Trustee and a past Chair of a national small-scale development product council. She brings to the board over 30 years of experience in virtually all aspects of managing and leading a real estate portfolio as well as a wealth of industry contacts, particularly in one of our largest markets, making her well qualified to serve as a member of our Nominating and Corporate Governance Committee.
ELECTION OF DIRECTORS
| | | | | Barbara B. Lang Director* Director Since 2015 Age: 80 |
ELECTION OF DIRECTORS
Managing Principal & Chief Executive Officer of Lang Strategies, LLC, a business consulting firm, located in Washington, D.C. Ms. Lang served as president and Chief Executive Officer of the D.C. Chamber of Commerce from 2002 to 2014 and prior to joining the Chamber was the Vice President of Corporate Services and Chief Procurement Officer for Fannie Mae. Ms. Lang also had a long career with IBM where she served in several management positions in finance, administration and product forecasting. She has received numerous awards and accolades throughout her career, including being twice named one of Washingtonian Magazine’s 150 Most Powerful People in the Washington, D.C. region, Business Leader of the Year by the District of Columbia Building Industry Association and a Lifetime Legacy Award from Washington Business Journal. Ms. Lang also served on the board of Cardinal Financial Corporation (NASDAQ: CFNL) from 2014 to 2017 and currently serves on the board of the Sibley Hospital Foundation, Chair of Conservation Nation and as a board member of Pyxera Global. Ms. Lang is the author of Madame President: Leadership Lessons from the Top of the Ladder, a book on leadership skills, particularly focused upon the challenges of race and gender facing African-Americans and women in corporate and governmental America. Ms. Lang brings to the board a broad personal network of corporate and governmental contacts in one of the Company’s key operating markets. In addition, she has extensive senior management expertise with both private corporations and governmental agencies. Ms. Lang’s diverse business, financial, and governance expertise, as well as her life experience breaking leadership “glass ceilings” for women and minorities, make her highly qualified to serve as Chair of the Nominating and Corporate Governance Committee, which also oversees the Company’s ESG Activities, and a member of the Compensation Committee. The Company’s most recent annual ESG report is available on the Company’s website, www.piedmontreit.com.
ELECTION OF DIRECTORS
| | | | | C. Brent Smith President, Chief Executive Officer, & Director Director Since 2019 Age: 48 |
ELECTION OF DIRECTORS
President and Chief Executive Officer since July of 2019. For four years prior to his promotion to Chief Executive Officer, Mr. Smith served as our Chief Investment Officer. In addition, until February of 2019, Mr. Smith served as EVP of Piedmont’s Northeast Region where he was responsible for all leasing, asset management, acquisition, disposition and development activity for the Company’s over three million square foot Boston and New York/New Jersey portfolio. Prior to joining Piedmont in 2012, Mr. Smith served as an Executive Director with Morgan Stanley in the Real Estate Investment Banking division advising a wide range of public and private real estate clients. He brings approximately 20 years of entity and asset level real estate transaction experience across both North America and Asia. Mr. Smith brings this approximately 20 years of experience plus a detailed working knowledge of each of Piedmont’s operating markets, experience in handling some of Piedmont’s largest and most complex tenants and properties, as well as negotiating complex purchase and sale agreements and mergers and acquisitions transactions, in addition to working relationships with each of Piedmont’s equity analysts. Furthermore, his extensive network of private and public pension equity investors and top-tier investment bankers is invaluable to the Company.
ELECTION OF DIRECTORS
| | | | | Dale H. Taysom Vice-Chair of the Board* Director Since 2015; Vice-Chairman since 2017 Age: 74 |
ELECTION OF DIRECTORS
Former Global Chief Operating Officer for Prudential Real Estate Investors (“PREI”). Prior to his retirement in 2013, during his 36-year career with PREI, Mr. Taysom held various positions including Head of United States Transactions and Global Head of Transactions, among others, prior to completing his tenure as Global Chief Operating Officer (“COO”). He was a member of PREI’s domestic and international investment committees and a member of the Global Management Committee and is a former member of ULI, the National Multi-Housing Council, and the National Association of Real Estate Investment Managers (“NAREIM”). Mr. Taysom brings many years of experience dealing with almost every facet of owning and operating commercial real estate. He is familiar with many of the markets in which our properties are located and has an extensive personal network of contacts throughout the real estate industry. In addition to his financial and budgetary responsibilities as COO of PREI, Mr. Taysom also participated with the management committee in formulating the strategic vision of the company including the review, approval, and responsibility for financial performance. This financial and operational experience makes him well suited to serve as a member of the Audit and Capital Committees.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
Selection of Directors
Selection of Directors The board of directors is responsible for selecting its own nominees and recommending them for election by the stockholders. The board delegates the screening process necessary to identify qualified candidates to the Nominating and Corporate Governance Committee, in consultation with the Chief Executive Officer. The Nominating and Corporate Governance Committee annually reviews director suitability and the continuing composition of the board of directors and recommends director nominees who are voted on by the full board of directors. All director nominees then stand for election by the stockholders annually. In recommending director nominees to the board of directors, the Nominating and Corporate Governance Committee solicits candidate recommendations from its own members, other directors, outside legal counsel, the investment banking community, and members of our management. The Nominating and Corporate Governance Committee may engage the services of a search firm to assist in identifying potential director nominees and will also consider recommendations for director candidates made by stockholders and other interested persons. Candidates for director must meet the established director criteria discussed below. In addition, under our Bylaws, stockholders may directly nominate candidates for election as directors. In order for a stockholder to make a nomination, the stockholder must satisfy the procedural requirements for such nomination as provided in Article II, Section 12 of our Bylaws. Any stockholder may request a copy of our Bylaws free of charge by writing to our Secretary at our corporate address. In evaluating candidates for director, the Nominating and Corporate Governance Committee will consider each candidate without regard to the source of the recommendation and weigh those factors that the Nominating and Corporate Governance Committee determines are relevant, including the factors set forth below under “Board Membership Criteria.”
2023 Performance Highlights
| • | Our total shareholder return (“TSR”), as well as the TSR for our peer companies, declined sharply for the three year performance period ended December 31, 2023, reflecting a 44% loss. |
2023 Compensation Highlights
| • | 2023 STIC - Payouts under the STIC were calculated in accordance with the formula and performance goals established by the board and based on this formula, we achieved approximately 104% of our STIC target, with our CEO’s individual STIC award representing 100% of his established target. |
2023 Compensation Highlights
| • | 2021-2023 Performance Shares - Our TSR for the three-year performance period ended December 31, 2023 was a 44% loss and ranked in the bottom quartile compared to our peers. Consequently, no shares were paid out related to the Performance Share Component of our LTIC Plan. |
Consideration of “Say on Pay” Voting Results and Key Compensation Highlights
| • | 65% of our Chief Executive Officer’s 2023 pay opportunity was in the form of long-term equity based compensation; |
Consideration of “Say on Pay” Voting Results and Key Compensation Highlights
| • | 60% of our NEO’s target from our LTIC Plan is delivered in the form of performance shares, which are earned based on our multi-year TSR relative to our peers; |
Consideration of “Say on Pay” Voting Results and Key Compensation Highlights
| • | Our short-term and long-term incentive program contain caps on payouts; |
Consideration of “Say on Pay” Voting Results and Key Compensation Highlights
| • | Our Performance Share Program includes an absolute TSR modifier which reduces above target payouts in the event of negative absolute TSR; |
Consideration of “Say on Pay” Voting Results and Key Compensation Highlights
| • | The quantitative metrics of our STIC Plan are tied to operational, financial, or market performance measures derived from our annual business plan, and our Compensation Committee reserves the right to decrease payouts in their discretion; |
Consideration of “Say on Pay” Voting Results and Key Compensation Highlights
| • | Our executive officers are required to hold any shares received pursuant to our 2007 Omnibus Incentive Plan for a minimum of one year after vesting; |
Compensation Philosophy and Objectives
| • | to motivate our executives to manage our business to meet and appropriately balance our short and long-term objectives. |
Compensation Committee Responsibilities
| • | analyzing peer company compensation awards; |
Compensation Committee Responsibilities
| • | evaluating the CEO’s compensation (including annual base salary level, annual cash bonus, long-term incentive compensation awards, perquisites and any special or supplemental benefits) based on such evaluations. |
Compensation Committee Responsibilities
| • | analyzing peer company compensation awards; |
Role of the Compensation Consultant
Role of the Compensation Consultant To assist in establishing our 2023 compensation plans and analyzing competitive executive compensation levels for 2023, the Compensation Committee utilized the services of Ferguson Partners Consulting L.P. (“FPC”), a nationally recognized compensation consulting firm. FPC was not engaged by management to perform any work other than routine personnel searches and the Compensation Committee considered FPC to be independent regarding services performed on its behalf during 2023. During 2023, FPC provided advice and recommendations regarding our short and long term incentive compensation plans for our employees, including our NEOs. In addition, FPC provided our Compensation Committee input on our director compensation program, competitive market compensation data and recommendations for target pay levels for each component of our 2023 executive compensation program. The FPC compensation consultant periodically attended Compensation Committee meetings as requested by the Compensation Committee and consulted with our Compensation Committee Chair, our Senior Vice President of Human Resources, our CEO, and our CFO as directed by the Compensation Committee on compensation-related issues.
Compensation Consultant Independence Assessment
Compensation Consultant Independence Assessment During 2023, the Company requested and received information from FPC addressing its independence and potential conflicts of interest, including the following factors: (1) other services provided to us by the consultant; (2) fees paid by us as a percentage of the consulting firm’s total revenue; (3) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and a member of the Compensation Committee; (5) any company stock owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between our executive officers and the consulting firm or the individual consultants involved in the engagement. Based on an assessment of these factors, including information gathered from directors and executive officers addressing business or personal relationships with the consulting firm or the individual consultants, the Compensation Committee concluded that FPC is independent and that the work of FPC did not raise any conflict of interest.
Market Reference and Benchmark Compensation Data
Market Reference and Benchmark Compensation Data In October 2023, FPC provided our Compensation Committee with a competitive market analysis of our NEOs’ pay levels relative to the practices of a peer group of 13 public REITs. The peer group utilized for 2023 was consistent with the peer group utilized for 2022 and includes companies that either primarily invest in office properties or select other REITs that may invest in other asset classes but are similar in terms of size and scope of operations. The following table provides the names and estimated financial information for each peer company at the time the Compensation Committee reviewed the market data in October 2023:
Market Reference and Benchmark Compensation Data
| Company | Implied Equity Market Capitalization ($B) | Total Capitalization ($B) | Sector | | Acadia Realty Trust | 1.4 | 3.6 | Retail REIT | | American Assets Trust, Inc. | 1.5 | 3.2 | Diversified REIT | | Brandywine Realty Trust | .8 | 2.9 | Office REIT | | COPT Defense Properties (fka Corporate Office Properties Trust) | 5.2 | 3.0 | Office REIT | | Cousins Properties Incorporated | 3.1 | 5.6 | Office REIT | | Easterly Government Properties, Inc. | 1.2 | 2.4 | Office REIT | | Elme Communities | 2 | 1.7 | Residential REIT | | Empire State Realty Trust, Inc. | 2.2 | 4.5 | Office REIT | | Highwoods Properties | 2.9 | 5.5 | Office REIT | | JBG SMITH Properties | 1.7 | 4.3 | Diversified REIT | | LXP Indsutrial Trust | 2.6 | 4.3 | Industrial REIT | | Paramount Group, Inc. | 1.1 | 5.5 | Office REIT | | Tanger Factory Outlet Centers, Inc. | 2.5 | 4.0 | Retail REIT | | Median | 1.7 | 4.0 | | | Piedmont Office Realty Trust | .7 | 2.7 | Office REIT |
Market Reference and Benchmark Compensation Data
We apply our compensation policies to all of our NEOs on the same basis, with differences in compensation opportunities between each of our executive officers reflecting each of the officers’ roles, responsibilities and personal performance within our Company, as well as market pay practices. In October 2023, FPC provided our Compensation Committee with an analysis of our NEO’s 2023 target pay opportunity relative to the compensation paid to executives employed by the peer group above in comparable positions. The analysis utilized the most recently filed proxy for each company in the peer group and FPC’s proprietary compensation database. The pay opportunities of our CEO, CFO, and COO were benchmarked to the peer group based on positional match as disclosed in 2023 proxy statements. Both proxy data and supplemental peer group data for applicable benchmark peers based on FPC’s proprietary compensation database were utilized for Mr. Kollme and Mr. Wiberg’s pay analysis. Benchmark results were generally as follows:
Total 2023 Benchmark Compensation(1)
Total 2023 Benchmark Compensation(1)
Total 2023 Benchmark Compensation(1)
| | | 25th Percentile ($M) | 50th Percentile ($M) | 75th Percentile ($M) | Average ($M) | | President & Chief Executive Officer | Proxy Data of Peer Group | 4.5 | 5.5 | 7.4 | 5.8 | | EVP, & Chief Financial & Administrative Officer | Proxy Data of Peer Group | 1.8 | 2.1 | 2.7 | 2.5 | | EVP - Investments and Strategy | Proxy and Supplemental Data of Peer Group | 0.9 | 1.3 | 1.5 | 1.2 | | EVP - Chief Operating Officer | Proxy Data of Peer Group | 1.7 | 1.9 | 2.0 | 1.9 | | EVP, Northeast Region & Head of Development | Proxy and Supplemental Data of Peer Group | 0.6 | 0.7 | 0.8 | 0.7 |
Total 2023 Benchmark Compensation(1)
| (1) Total 2023 Benchmark Compensation includes most recently reported base salary, target annual cash incentive, target long-term equity incentives (if target is not reported, market or notional value of equity award on grant date) for peer companies. |
Total 2023 Benchmark Compensation(1)
Additional results of the benchmark peer data included the following key findings:
Total 2023 Benchmark Compensation(1)
| • | On an absolute dollar basis, Piedmont is slightly below the 25th percentile of the Peer Group. |
Total 2023 Benchmark Compensation(1)
| • | Our CEO’s target pay opportunity is approximately 7% below the median of the peer group. |
Total 2023 Benchmark Compensation(1)
Piedmont’s relative pay positioning for the other NEOs is generally consistent with prior year, with NEOs ranging from the 20th to 40th percentile of the peer group. In addition to considering market reference data set forth above in making decisions about our NEOs’ compensation opportunities and actual compensation to be paid, the Compensation Committee considers other factors such as each executive officer’s experience, scope of responsibilities, performance and prospects; internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities; and individual performance of each NEO during their tenure with Piedmont.
Base Salary
| • | market data provided by the compensation consultant; |
Base Salary
In February of 2023, after considering the recommendations made by FPC, as well as the CEO’s feedback regarding individual performance on all NEOs other than himself, our Compensation Committee awarded salary increases to each of our NEOs ranging from 1-3% with the exception of Mr. Smith and Mr. Wells. Mr. Smith’s and Mr. Well’s salaries were increased approximately 8% and 7%, respectively, to bring their total pay more in line with the median of the reference peer group (see Market Reference and Benchmark Compensation Data above).
Short-Term Cash Incentive Compensation Plan
Short-Term Cash Incentive Compensation Plan We provide an annual STIC Plan for our NEOs that sets forth target cash incentive payments as a percentage of each NEO’s base salary as follows:
Short-Term Cash Incentive Compensation Plan
| | Annual Short-Term Cash Incentive Compensation as a % | | | | | | of Base Salary | | | Name and Position | Threshold | Target | Maximum | | C. Brent Smith President & Chief Executive Officer | 75% | 150% | 225% | | Robert E. Bowers EVP - Chief Financial & Administrative Officers | 50% | 100% | 150% | | Christopher A. Kollme EVP - Investments & Strategy | 50% | 100% | 150% | | George M. Wells Chief Operating Officer | 50% | 100% | 150% | | Robert K. Wiberg Northeast Region and Head of Development | 35% | 70% | 105% |
Short-Term Cash Incentive Compensation Plan
The actual amounts earned under the STIC Plan may be greater or less than the NEO’s respective target based on actual performance against the performance goals established by the Compensation Committee at the beginning of each year, as well as assessment of each NEO’s personal contributions and performance for the year. The following table sets forth the relative weighting of each of the performance goals established by the Compensation Committee for the 2023 STIC Plan:
Components of NEO 2023 Short Term Incentive Plan
Components of NEO 2023 Short Term Incentive Plan All of the performance measures established by the Compensation Committee for 2023 were based on specific corporate metrics measured on a quantitative basis, with the exception of the Strategic Priorities (including ESG) measure which the Compensation Committee considered on a qualitative basis. Those qualitative considerations included, but were not limited to, the CEO’s assessment of each NEO’s performance other than his own, as well as the board’s assessment of certain overall corporate goals, such as relative ESG performance as compared to our peers. The performance goals that the Compensation Committee established for each of the quantitative metrics were derived from critical components of our annual business plan and were considered achievable, but not without above average performance. 2023 target and actual performance for each of the STIC performance goals were as follows:
Components of NEO 2023 Short Term Incentive Plan
| Performance Measure | Threshold Performance Goal | Target Performance Goal | Maximum Performance Goal | Actual Performance | % Over (Under) Performance vs. Target Goal | | Core FFO per share relative to budget | $1.71 | $1.80 | $1.89 | $1.74 | (3.3) | | Net Debt to Core EBITDA relative to budget (in x) | 7.0 | 6.4 | 5.8 | 6.4 | -- | | Increase in Same Store Net Operating Income (cash) | -0.8% | 1.2% | 3.2% | 2.2% | 1.0 | | Leasing Volume (in thousands of square feet) | | | | | | | New SF Leasing | 525 | 700 | 875 | 820 | 17.1 | | Renewal SF Leasing | 675 | 900 | 1,125 | 1,407 | 56.3 | | Strategic Priorities (including ESG) | | Qualitative | | Target | |
Components of NEO 2023 Short Term Incentive Plan
Core FFO performance is a non-GAAP financial measure that is considered important because our ability to meet consensus estimates of Core FFO is a key factor for equity analysts and when present or potential stockholders make investment decisions about our securities. See the definition of Core FFO and the reconciliation of GAAP net income applicable to common stock to Core FFO in Appendix C. During 2023, the Compensation Committee decreased the target performance goal for this metric by $0.04/share to partially reflect the negative impact of increased interest expense as a result of the earlier than planned refinancing of some of our outstanding bonds that were scheduled to mature in 2024. Net Debt to Core EBITDA is important because maintaining the appropriate capital structure, including the magnitude of total debt relative to our earnings, is critical to the overall financial strength of the Company. Additionally, as a REIT, we are required to pay out 90% of our taxable income each year in the form of dividends to our stockholders. Therefore, we must constantly manage credit ratios and proactively seek new sources of capital for our Company which requires careful management of the magnitude, timing, and cost of our borrowings. Every 1% variance in performance increases or decreases the targeted award by 10%, based on relative weighting. Same Store NOI is important as a supplemental comparative performance measure, which measures income generated from the same group of properties from one period to the next. The measure is an area of focus for equity analysts and our current and prospective investors. Every 1% variance in performance in this measure increases or decreases the targeted award by 2.5%, based on relative weighting. See Appendix C for the calculation of Net Debt to Core EBITDA and for the reconciliation of Net income/(loss) applicable to Piedmont to Same Store NOI. Leasing Volumes are important as managing lease renewals, leasing up vacant space, and keeping our portfolio as fully leased as possible directly impacts our cash flow, financial results, and long-term growth of our funds from operations and value of our equity securities. Targets are tied to our annual business plan. Every 1% variance in performance increases or decreases the targeted award by 2%, based on relative weighting. Strategic Priorities, including ESG, are considered important as they allow the Compensation Committee to appropriately reward aspects of the management team’s or individual’s performance that may not be captured by purely quantitative metrics. For 2023, our Compensation Committee and the board of directors considered the management team’s ESG accomplishments, including the Company’s ISS ESG scores relative to its peer group, earning ENERGY STAR® Partner of the Year for the third consecutive year, and significantly improving its GRESB scores, as well as the Company’s progress on various diversity and inclusion initiatives. Further, the Compensation Committee and the board of directors considered the strong leasing results achieved and management’s successful balance sheet management, including addressing near-term debt maturities. As a result of these considerations, our Compensation Committee and the board of directors determined to assess the achievement of the strategic priorities component within our NEO’s STIC Plan at target level. Based on the above performance metrics in the aggregate, the STIC payout pool was approximately 104% of target for the year, with individual awards subject to further adjustment based on individual performance and other considerations as described below. Actual awards are calculated based on performance against the above metrics with performance below threshold for an individual component resulting in no payout for that particular component and out performance for each component being capped at 150%. In February 2024, after (i) reviewing the results of the quantitative performance measures as set forth in the table above; (ii) considering the CEO’s assessment of each of the other NEO’s performance; and (iii) assessing the CEO’s performance, the Compensation Committee determined actual awards for the 2023 performance period for each individual NEO as follows:
Components of NEO 2023 Short Term Incentive Plan
| Name | 2023 Target Annual Incentive ($) | 2023 Actual Annual Incentive ($) | 2023 Actual Annual Incentive as a % of Target | | Mr. Smith | 1,050,000 | 1,050,000 | 100% | | Mr. Bowers | 465,000 | 465,000 | 100% | | Mr. Kollme | 373,750 | 340,000 | 91% | | Mr. Wells | 400,000 | 425,000 | 106% | | Mr. Wiberg | 252,000 | 230,000 | 91% |
Long-Term Incentive Compensation Plan
Long-Term Incentive Compensation Plan The objective of our LTIC Plan is to attract and retain qualified personnel by offering an equity-based program that is competitive with our peer companies and that is designed to encourage each of our NEOs to balance long-term company performance with short-term company goals and to foster employee retention. Historically, our NEOs’ LTIC opportunity was divided equally between a multi-year Performance Share Program and Annual Deferred Stock Units granted in arrears (e.g. in early 2023 for the 2022 service period). Beginning in 2023, the Compensation Committee decided to conform the Annual Deferred Stock Unit component of our LTIC plan to prevailing market practice by decreasing the percentage of our NEOs’ LTIC opportunity allocated to annual deferred stock units to 40%, and granting discretionary, time-based awards at the beginning of each calendar year with no immediate vesting. As such, in accordance with SEC rules, the deferred stock units awarded in early 2023 for both the 2022 (in arrears) and 2023 (prospective) service periods are included in the 2023 Summary Compensation Table below. Beginning in 2024, all awards of Annual Deferred Stock Units will be granted prospectively and included in the Summary Compensation Table in the same year.
Components of NEO 2023 Long Term Incentive Plan
Components of NEO 2023 Long Term Incentive Plan Each of our NEO’s LTIC opportunity is established by the Compensation Committee based on recommendations from our compensation consultant and our CEO for each NEO, other than himself, regarding comparability with awards to officers of our peer group of office REITs as well as taking into consideration each officer’s salary and experience level. A summary of each of our NEO’s LTIC opportunity for the year ended December 31, 2023 is as follows:
Components of NEO 2023 Long Term Incentive Plan
| Name | 2023 Target - Performance Share Program(1) ($) | 2023 Deferred Stock Unit Award(2) ($) | Total 2023 LTIC Opportunity ($) | | Mr. Smith | 1,920,000 | 1,280,000 | 3,200,000 | | Mr. Bowers | 558,000 | 372,000 | 930,000 | | Mr. Kollme | 225,000 | 150,000 | 375,000 | | Mr. Wells | 300,000 | 200,000 | 500,000 | | Mr. Wiberg | 210,000 | 140,000 | 350,000 |
Components of NEO 2023 Long Term Incentive Plan
(1) As further described below, actual Performance Share Program awards may range from 0%-200% of target based on Piedmont’s relative TSR performance for the three-year performance period ended December, 31, 2025. (2) Shares granted vest over four years beginning on the anniversary of the grant date. To date, LTIC awards have only been granted in the form of performance shares or deferred stock units pursuant to the 2007 Omnibus Incentive Plan approved by our stockholders. The Compensation Committee has determined that, as a REIT, the grant of such awards is appropriate because our high dividend distribution requirements lead to a significant portion of our total stockholder return being delivered through our dividends. Although our 2007 Omnibus Incentive Plan permits the issuance of other types of equity awards, including stock options, we have never issued stock options to any of our employees, including our NEOs, and anticipate that any future equity awards granted will continue to be similar in form to our previous awards. Further, our Compensation Committee has prohibited the cash buyout of underwater options, should any options ever be issued. Finally, we have applied a minimum one-year holding period after vesting for our equity-based awards and each of our executive officers, including our NEOs, is subject to a stock ownership requirement (see Stock Ownership Guidelines below). We feel that appropriately designed equity-based awards, particularly those with future vesting provisions, promote a performance-focused culture and align our employees’ interests with those of our stockholders, thereby motivating their efforts on our behalf and strengthening their desire to remain with us for an extended period of time.
Performance Share Program
Performance Share Program The purpose of the Performance Share Program is to motivate and reward long term performance. Participants are provided with the opportunity to earn shares of Piedmont stock based on our TSR performance relative to a broad, pre-determined peer group over a three-year performance period. Performance cycles overlap, with a new three-year performance cycle beginning each year. The TSR Percentile Rank for each active plan will continue to change throughout the respective performance period. After the end of each three-year performance period, any earned awards will be paid by the Company based upon actual relative performance against the board-determined peer group. The peer group for each of our active Performance Share Programs was established at the beginning of the Performance Period and included the following companies:
Performance Share Program
| 2023-25 and 2022-24 | 2021-2023 | Reason for Change | | Brandywine Realty Trust | | -- | | City Office REIT, Inc. | Columbia Property Trust | Acquired | | Corporate Office Properties Trust | | -- | | Cousins Properties Incorporated | | -- | | Douglas Emmett, Inc. | | -- | | Empire State Realty Trust, Inc. | | -- | | -- | Equity Commonwealth | Limited office properties | | Franklin Street Properties Corp. | | -- | | Highwoods Properties, Inc. | | -- | | Hudson Pacific Properties, Inc. | | -- | | JBG SMITH Properties | | -- | | Kilroy Realty Corporation | | -- | | Orion Office REIT Inc. | Veris Residential (FKA Mack-Cali Realty Corporation) | Transitioned to multi-family | | Paramount Group, Inc. | | -- | | Vornado Realty Trust | Elme Communities (fka Washington Real Estate Investment Trust) | Transitioned to multi-family |
Performance Share Program
The peer group used for the Performance Share Program includes many of the same companies that our compensation consultant uses for market reference and benchmarking purposes (See “Market Reference and Benchmark Compensation Data” above); however, peers chosen for the Performance Share Program are typically chosen based on the asset class and geography of their portfolio, whereas peers chosen by our compensation consultant for market reference and benchmarking purposes are typically chosen because they fit a desired size or cost of living profile so as not to unfairly skew the market compensation data used for comparison purposes. Participants in the Performance Share Program have a defined target award expressed as a number of shares which is calculated at the beginning of each performance period by dividing each participant’s targeted value (see table above) by the closing price of Piedmont’s stock on the grant date. The target number of shares established for each participant may be earned if Piedmont’s TSR is at the median of the peer group, up to 200% of target may be earned if Piedmont’s TSR is at or above the 75th percentile of the peer group, and 50% of target may be earned if Piedmont’s TSR is at the 25th percentile of the peer group. No shares are earned if Piedmont’s TSR is below the 25th percentile. If our return is between the 25th and 75th percentile, the payout will generally be determined by linear interpolation; however, any shares that would have been earned above target levels are subject to a reduction of up to 30% in the event of negative absolute TSR performance. The following table sets forth the status of each active Performance Share Program as of December 31, 2023:
Performance Share Program
| | TSR Percentile Rank as of December 31, 2023 | Actual or Estimated Payout Percentages of Target Based on Percentile Rank as of December 31, 2023 | | 2021 - 23 Performance Share Program | 14th | 0% (Actual) | | 2022 - 24 Performance Share Program | 27th | 53% (Estimated) | | 2023 - 25 Performance Share Program | 20th | 0% (Estimated) |
Performance Share Program
The range of shares that could be earned by each NEO for the 2023 – 25 performance period is set forth in the Grants of Plan Based Awards table below.
Annual Deferred Stock Unit Opportunity
Annual Deferred Stock Unit Opportunity The purpose of the Annual Deferred Stock Unit opportunity is to reward annual performance and encourage employee retention. As mentioned above, each of our NEO’s LTIC opportunity is established by the Compensation Committee based on recommendations from our compensation consultant and our CEO. After considering these recommendations, as well as our CEO’s evaluation of the performance of each NEO other than himself, on February 13, 2023, the Compensation Committee determined the number of deferred stock units to be granted to each of our NEOs pursuant to the 2022 Annual Deferred Stock Unit opportunity. For the awards granted, 25% vested immediately, while the remaining 75% vests in 25% increments over the next three years on the anniversary of the date of grant. Any dividend equivalent rights are paid out upon vesting of the underlying shares. Further, as mentioned above, to affect the transition from awarding Annual Deferred Stock Units in arrears to awarding deferred stock units prospectively at the beginning of the service period, on February 23, 2023, the Compensation Committee made an additional award of deferred stock units to each NEO with such awards vesting over a four-year period, beginning on the anniversary of the date of grant. Any dividend equivalent rights are paid out upon vesting of the underlying shares. See “Grants of Plan Based Awards for 2023” table below for information on the number of deferred stock units granted to each of the NEOs pursuant to each of these awards during 2023.
Employment Agreements with Our Named Executive Officers
Employment Agreements with Our Named Executive Officers
Employment Agreements
Employment Agreements We are currently party to employment agreements with all our NEOs that work at our corporate headquarters and that have company-wide decision making authority including Messrs. Smith, Bowers, Kollme, and Wells. Mr. Bowers’ agreement was originally entered into in 2007. Messrs. Smith and Kollme’s agreements were entered into during 2019, and Mr. Wells’ agreement was entered into during 2022. Each of these agreements renews annually unless either party gives 90 days written notice prior to the end of the renewal term or his employment otherwise terminates in accordance with the terms of the agreement. Significant terms include executive claw back provisions and severance in the event of certain circumstances as further described below.
Severance
Severance Messrs. Smith, Bowers, Kollme, and Wells’ employment agreements entitle them to receive severance payments under certain circumstances if their employment is terminated. These circumstances and payments are described below under “Potential Payments Upon Termination or Change of Control.” Our Compensation Committee believes that these severance payments were an important factor in attracting these individuals to join our Company and/or are an important factor in their retention. The agreements with these individuals do not provide for tax “gross ups” in the event such payments are made.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name & Principle Position | Year | Salary ($) | Stock Awards ($)(1)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | C. Brent Smith President & Chief Executive Officer | 2023 | 700,000 | 5,377,972(3) | 1,050,000 | 22,748(6) | 7,150,720 | | | 2022 | 650,000 | 2,478,040(4) | 877,500 | 20,748 | 4,026,288 | | | 2021 | 600,000 | 2,040,930(5) | 900,000 | 19,748 | 3,560,678 | | Robert E. Bowers Executive Vice President & Chief Financial & Administrator Officer | 2023 | 465,000 | 1,638,875(3) | 465,000 | 30,173(6) | 2,599,048 | | | 2022 | 455,000 | 1,032,936(4) | 440,000 | 27,173 | 1,955,109 | | | 2021 | 450,000 | 1,141,165(5) | 510,000 | 26,248 | 2,127,413 | | Christopher A. Kollme Executive Vice President - Investments & Strategy | 2023 | 373,750 | 633,889(3) | 340,000 | 30,250(6) | 1,377,889 | | | 2022 | 363,750 | 366,748(4) | 340,000 | 27,250 | 1,097,748 | | | 2021 | 358,750 | 441,301(5) | 360,000 | 21,415 | 1,181,466 | | George M. Wells Executive Vice President & Chief Operating Officer | 2023 | 400,000 | 821,867(3) | 425,000 | 30,250(6) | 1,677,117 | | | 2022 | 375,000 | 432,712(4) | 365,000 | 27,250 | 1,199,962 | | | 2021 | 360,000 | 458,189(5) | 425,000 | 26,250 | 1,269,439 | | Robert K. Wiberg Executive Vice President - Northwest & Head of Development | 2023 | 360,000 | 576,811(3) | 230,000 | 30,174(6) | 1,196,985 | | | 2022 | 355,000 | 371,752(4) | 230,000 | 27,174 | 983,926 | | | 2021 | 348,500 | 424,306(5) | 270,000 | 26,250 | 1,069,056 |
Summary Compensation Table
(1) In accordance with SEC rules, the stock award column includes the estimated aggregate grant date fair value of the Performance Share Component of our LTIC program at target level, even though there is no guarantee that any amounts will ultimately be earned by and paid to the executive. See “Stock Vested” table below for the value of actual stock awards that vested during the year ended December 31, 2023. (2) As further described under Long-Term Incentive Compensation Plan above, beginning in 2023, the Compensation Committee decided to conform the Annual Deferred Stock Unit component of our LTIC Plan to prevailing market practice by decreasing the percentage of our NEOs’ LTIC opportunity allocated to Annual Deferred Stock Units and granting discretionary, time-based awards at the beginning of each calendar year with no immediate vesting. As such, in accordance with SEC rules, the deferred stock units awarded in early 2023 for both the 2022 (in arrears) and 2023 (prospective) service periods are included in the 2023 Summary Compensation Table above; however, beginning in 2024, such awards will be granted and included in the Summary Compensation Table in the same year. (3) Represents the aggregate grant date fair value of potential awards under the 2023-25 Performance Share Program at target levels and deferred stock awards granted in 2023 under our LTIC program. Values are estimated as the total expense associated with each grant to be recognized for financial statement reporting purposes over the respective service period associated with each grant calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Share-Based Payments (“ASC Topic 718”). Pursuant to SEC rules the values are not reduced by an estimate for the probability of forfeiture. The aggregate grant date fair values of the annual deferred stock awards granted in 2023 were based on the closing price of our common stock on the February 13, 2023 and February 23, 2023 grant dates of $10.55 per share and $9.47 per share, respectively. The aggregate grant date fair value of the 2023 Performance Share Program was based on an estimated fair value per share as of the February 23, 2023, grant date of $12.37 per share utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements. The potential value of the 2023-25 Performance Share Program award at the grant date assuming the highest level of performance conditions were achieved would have been (in 000’s): Smith — $5,016; Bowers — $1,458; Kollme — $588, Wells — $784, and Wiberg — $549. (4) Represents the aggregate grant date fair value of potential awards under the 2022-24 Performance Share Program at target levels and the deferred stock awards granted in 2022 for 2021 performance, both under our LTIC program. Values are estimated as the total expense associated with each grant to be recognized for financial statement reporting purposes over the respective service period associated with each grant calculated in accordance with ASC Topic 718. Pursuant to SEC rules the values are not reduced by an estimate for the probability of forfeiture. The aggregate grant date fair value of the 2021 annual deferred stock award granted in 2022 was based on the closing price of our common stock on the February 10, 2022 grant date of $16.85 per share. The aggregate grant date fair value of the 2022 Performance Share Program was based on an estimated fair value per share as of the February 17, 2022 grant date of $17.77 per share utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements. The potential value of the 2022-24 Performance Share Program award at the grant date assuming the highest level of performance conditions were achieved would have been (in 000’s): Smith — $2,856; Bowers — $966; Kollme — $364, Wells — $415, and Wiberg — $364. (5) Represents the aggregate grant date fair value of potential awards under the 2021-23 Performance Share Program at target levels and the deferred stock awards granted in 2021 for 2020 performance, both under our LTIC program. Values are estimated as the total expense associated with each grant to be recognized for financial statement reporting purposes over the respective service period associated with each grant calculated in accordance with ASC Topic 718. Pursuant to SEC rules the values are not reduced by an estimate for the probability of forfeiture. The aggregate grant date fair value of the 2020 annual deferred stock award granted in 2021 was based on the closing price of our common stock on the February 17, 2021 grant date of $17.15 per share. The aggregate grant date fair value of the 2021 Performance Share Program was based on an estimated fair value per share as of the February 18, 2021 grant date of $23.04 per share utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements. The potential value of the 2021-23 Performance Share Program award at the grant date assuming the highest level of performance conditions were achieved would have been (in 000’s): Smith — $2,482; Bowers — $1,282; Kollme -$483, Wells — $496, and Wiberg — $483.
Summary Compensation Table
| (6) All other compensation for 2023 was comprised of the following: |
Summary Compensation Table
| Name | Matching Contributions to 401(k)* ($) | Premium for Company Paid Life Insurance* ($) | Total Other Compensation ($) | | C. Brent Smith | 22,500 | 248 | 22,748 | | Robert E. Bowers | 30,000 | 173 | 30,173 | | Christopher A. Kollme | 30,000 | 250 | 30,250 | | George M. Wells | 30,000 | 250 | 30,250 | | Robert K. Wiberg | 30,000 | 174 | 30,174 |
Summary Compensation Table
*Paid pursuant to the same benefit plans offered to all our employees.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The table below sets forth: (1) the threshold, target, and maximum of our 2023 STIC Plan and Performance Share Component of our 2023-25 LTIC Plan, and (2) the actual shares that were granted in 2023 pursuant to the Deferred Stock Component of our LTIC Plan.
Grants of Plan-Based Awards
| | Grant Date | Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Potential Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards | Grant Date Fair Value of Stock Awards | | | | Threshold | Target | Maximum | Threshold (Number of Shares) | Target (Number of Shares) | Maximum (Number of Shares) | Number of Shares of Stock | | | C. Brent Smith | | | | | | | | | | | 2023 STIC Plan | | $525,000 | $1,050,000 | $1,575,000 | | | | | | | 2023 LTIC Plan - 2023-25 Performance Share Component Deferred Stock Component | February 23, 2023 | | | | | | | | | | | | | | | 101,373 | 202,746 | 405,492 | | $2,507,968(5) | | | | | | | | | | 135,164(3) | $1,280,003 | | 2022 LTIC Plan - Deferred Stock Component | February 13, 2023 | | | | | | | 150,711(4) | $1,590,001(5) | | Robert E. Bowers | | | | | | | | | | | 2023 STIC Plan | | $232,500 | $465,000 | $697,500 | | | | | | | 2023 LTIC Plan - 2023-25 Performance Share Component Share Component Deferred Stock Component | February 23, 2023 | | | | | | | | | | | | | | | 29,462 | 58,923 | 117,846 | | $728,878(5) | | | | | | | | | | 39,282(3) | $372,001 | | 2022 LTIC Plan - Deferred Stock Component | February 13, 2023 | | | | | | | 50,995(4) | $537,997 | | Christopher A. Kollme | | | | | | | | | | | 2023 STIC Plan | | $186,875 | $373,750 | $560,625 | | | | | | | 2023 LTIC Plan - 2023-25 Performance Share Component Share Component Deferred Stock Component | February 23, 2023 | | | | | | | | | | | | | | | 11,880 | 23,759 | 47,518 | | $293,899(5) | | | | | | | | | | 15,839(3) | $149,995 | | 2022 LTIC Plan - Deferred Stock Component | February 13, 2023 | | | | | | | 18,009(4) | $189,995 |
Grants of Plan-Based Awards
| | Grant Date | Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Potential Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards | Grant Date Fair Value of Stock Awards | | | | Threshold | Target | Maximum | Threshold (Number of Shares) | Target (Number of Shares) | Maximum (Number of Shares) | Number of Shares of Stock | | | George M. Wells | | | | | | | | | | | 2023 STIC Plan | | $200,000 | $400,000 | $600,000 | | | | | | | 2023 LTIC Plan - 2023-25 Performance Share Component Share Component Deferred Stock Component | February 23, 2023 | | | | | | | | | | | | | | | 15,840 | 31,679 | 63,358 | | $391,869(5) | | | | | | | | | | 21,119(3) | $199,997 | | 2022 LTIC Plan - Deferred Stock Component | February 13, 2023 | | | | | | | 21,801(4) | $230,001 | | Christopher A. Kollme | | | | | | | | | | | 2023 STIC Plan | | $126,000 | $252,000 | $378,000 | | | | | | | 2023 LTIC Plan - 2023-25 Performance Share Component Share Component Deferred Stock Component | February 23, 2023 | | | | | | | | | | | | | | | 11,088 | 22,175 | 44,350 | | $274,305(5) | | | | | | | | | | 14,784(3) | $140,004 | | 2022 LTIC Plan - Deferred Stock Component | February 13, 2023 | | | | | | | 15,403(4) | $162,502 |
Grants of Plan-Based Awards
(1) Represents cash payout opportunity for 2023 under the STIC Plan. The amounts actually earned for 2023 are included in the non-equity incentive plan compensation column of the Summary Compensation Table. (2) Represents the potential number of shares associated with the payout opportunity under the 2023-25 Performance Share Component of the 2023 LTIC Plan. Any amounts earned will be granted in the form of common stock in 2026. (3) Represents shares awarded in 2023 pursuant to the Deferred Stock Component of the 2023 LTIC Plan. Shares vest over a four-year period, beginning on the anniversary of the date of grant. (4) Represents shares awarded in 2023 pursuant to the Deferred Stock Component of the 2022 LTIC Plan. 25% of the shares vested immediately, while the remaining 75% vests in 25% increments over the next three years on the grant anniversary date. (5) Based on an estimated fair value per share as of the grant date calculated utilizing a Monte Carlo valuation model that models the plan’s potential payoff depending on Piedmont’s and its peer group’s future stock price movements.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table provides information regarding unvested time-based stock awards and equity incentive plan awards held by our NEOs that had not been earned or vested as of December 31, 2023. All market values were determined by multiplying the number of shares of stock that have not vested or the number of unearned unvested shares by the closing price of our common stock on December 31, 2023 of $7.11 per share and adding the value of any unvested dividend equivalent rights as of December 31, 2023. All equity incentive programs were established pursuant to the 2007 Omnibus Incentive Plan and no options to purchase shares of our common stock have ever been awarded or granted to our NEOs.
Outstanding Equity Awards at Fiscal Year End
| | Deferred Stock Component | | Performance Share Component | | | | Number of Shares of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards Number of Shares of Stock That Have Not Vested (#) | Equity Incentive Plan Awards Market Value or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | | C. Brent Smith | | | | | | May 3, 2019 (Special One-Time CEO Award)(6) (10) | 9,505 | 101,894 | | | | February 18, 2021 plan award(1) | | | -- | -- | | February 17, 2021 award(2)(7) | 11,661 | 110,313 | | | | February 17, 2022 plan award(4)(8) | | | 42,592 | 367,142 | | February 10, 2022 award(2)(8) | 31,157 | 268,573 | | | | February 13, 2023 award(2)(9) | 113,033 | 879,397 | | | | February 23, 2023 plan award(5) | | | -- | -- | | February 23, 2023 award(3)(9) | 135,164 | 1,051,576 | | | | Total | 300,520 | 2,411,753 | | | | Robert E. Bowers | | | | | | February 18, 2021 plan award(1) | | | -- | -- | | February 17, 2021 award(2)(7) | 7,288 | 68,944 | | | | February 17, 2022 plan award(4)(8) | | | 14,404 | 124,161 | | February 10, 2022 award(2)(8) | 16,320 | 140,678 | | | | February 13, 2023 award(2)(9) | 38,246 | 297,554 | | | | February 23, 2023 plan award(5) | | | -- | -- | | February 23, 2023 award(3)(9) | 39,282 | 305,614 | | | | Total | 101,136 | 812,790 | | | | Christopher A. Kollme | | | | | | February 18, 2021 plan award(1) | | | -- | -- | | February 17, 2021 award(2)(7) | 2,915 | 27,516 | | | | February 17, 2022 plan award(4)(8) | | | 5,421 | 46,728 | | February 10, 2022 award(2)(8) | 5,489 | 47,315 | | | | February 13, 2023 award(2)(9) | 13,506 | 105,077 | | | | February 23, 2023 plan award(5) | | | -- | -- | | February 23, 2023 award(3)(9) | 15,839 | 123,277 | | | | Total | 37,749 | 303,195 | | |
Outstanding Equity Awards at Fiscal Year End
| | Deferred Stock Component | | Performance Share Component | | | | Number of Shares of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards Number of Shares of Stock That Have Not Vested (#) | Equity Incentive Plan Awards Market Value or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | | George M. Wells | | | | | | February 18, 2021 plan award(1) | | | -- | -- | | February 17, 2021 award(2)(7) | 3,061 | 28,957 | | | | February 17, 2022 plan award(4)(8) | | | 6,195 | 53,402 | | February 10, 2022 award(2)(8) | 6,676 | 57,547 | | | | February 13, 2023 award(2)(9) | 16,350 | 127,203 | | | | February 23, 2023 plan award(5) | | | -- | -- | | February 23, 2023 award(3)(9) | 21,119 | 164,306 | | | | Total | 47,206 | 378,013 | | | | Robert K. Wiberg | | | | | | February 18, 2021 plan award(1) | | | -- | -- | | February 17, 2021 award(2)(7) | 2,667 | 25,230 | | | | February 17, 2022 plan award(4)(8) | | | 5,421 | 46,728 | | February 10, 2022 award(2)(8) | 5,638 | 48,600 | | | | February 13, 2023 award(2)(9) | 11,552 | 89,875 | | | | February 23, 2023 plan award(5) | | | -- | -- | | February 23, 2023 award(3)(9) | 14,784 | 115,020 | | | | Total | 34,641 | 278,723 | | |
Outstanding Equity Awards at Fiscal Year End
(1) Estimated based on Piedmont’s actual relative TSR performance for the three-year performance period ended December 31, 2023. Final awards will be determined by the board during 2024 and any shares actually awarded to NEOs will vest immediately upon issuance. (2) Awards vest in 25% increments with 25% vesting immediately upon grant and additional 25% increments vesting on the following three anniversary dates of the grant. (3) Awards vest ratably over four years beginning on the anniversary of the date of grant. (4) Estimated based on Piedmont’s actual-to-date relative TSR performance for the three-year performance period ended December 31, 2024 as of December 31, 2023. Actual awards to be paid to NEOs will be determined during 2025 based on Piedmont’s actual relative TSR performance for the three-year period ended December 31, 2024 and any shares awarded will vest immediately upon issuance. (5) Estimated based on Piedmont’s actual-to-date relative TSR performance for the three-year performance period ended December 31, 2025 as of December 31, 2023. Actual awards to be paid to NEOs will be determined during 2026 based on Piedmont’s actual relative TSR performance for the three-year period ended December 31, 2025 and any shares awarded will vest immediately upon issuance. (6) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $3.61 per share of dividend equivalent rights that vest upon vesting of the underlying shares. (7) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $2.35 per share of dividend equivalent rights that vest upon vesting of the underlying shares. (8) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $1.51 per share of dividend equivalent rights that vest upon vesting of the underlying shares. (9) Market value of unearned shares is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus $.67 per share of dividend equivalent rights that vest upon vesting of the underlying shares. (10) Awards vest ratably over 5 years beginning July 1, 2020.
Stock Vested
Stock Vested The following table provides information regarding the actual number of shares vested for each of our NEOs during the year ended December 31, 2023. No options to purchase shares of our common stock have ever been awarded or granted to our NEOs.
Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | C. Brent Smith | 112,073 | 1,290,148 | | Robert E. Bowers | 51,596 | 609,836 | | Christopher A. Kollme | 18,854 | 223,304 | | George M. Wells | 19,578 | 229,449 | | Robert K. Wiberg | 18,028 | 214,351 |
Stock Vested
(1) Value realized on vesting is calculated based on the number of shares vesting on each vesting date during 2023 multiplied by the closing price of our common stock on the respective vesting date and adding the value of any dividend equivalent rights paid out in conjunction with the vesting.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control Messrs. Smith, Bowers, Kollme, and Wells are subject to employment agreements with us (see Employment Agreements with our NEOs above) that provide for a cash payment in the event of: (i) their termination without Cause, as defined in their respective employment agreements; (ii) their resignation for Good Reason, as defined in their respective employment agreements; or (iii) in the case of their death or disability. The cash payment is comprised of the following: (i) a pro-rated annual bonus for the year of termination based on the number of service months worked in the year divided by 12; (ii) the executive’s annual salary and average bonus (based on bonuses paid over the last three years) times two for Smith and Bowers or times one for Kollme and Wells; and (iii) two (one for Kollme and Wells) years of continuing medical benefits (one year in the case of death or disability for all). As Mr. Bowers agreement was entered into in 2007, Mr. Bowers is entitled to the cash payment in the event he resigns in connection with a Change of Control. Mr. Wiberg has attained the minimum retirement age, as defined under our LTIC Plan; therefore, he would be entitled to the value of any unvested deferred stock unit awards and a pro-rata portion of his outstanding Performance Share Program awards under any of the scenarios set forth in the table below. In addition, he would be entitled to severance in the event of his involuntary termination based on his position and tenure according to the same schedule that is applicable to all of our employees. In addition, all of the participants in our Performance Share Program (including our NEOs) are entitled to receive a pro-rata share of any unvested Performance Share Program awards (see Elements of 2023 Executive Compensation -Long-term Incentive Compensation above) in the event of their termination without Cause, resignation for Good Reason, or retirement at age 62, and all of our employees’ (including our NEOs’) unvested Deferred Stock Unit Awards vest in the event of a change of control of the Company or upon the employees’ retirement (defined as minimum age 62), death, or disability. Further, all of our salaried employees (including our NEOs) would receive the following types of payments upon termination of employment:
Potential Payments Upon Termination or Change of Control
| • | any earned but unpaid annual salary, vacation or annual bonus for the year prior to termination; |
Potential Payments Upon Termination or Change of Control
| • | any un-reimbursed expenses; |
Potential Payments Upon Termination or Change of Control
| • | distribution of balances under our 401(k) plan; |
Potential Payments Upon Termination or Change of Control
| • | life insurance proceeds in the event of death; and |
Potential Payments Upon Termination or Change of Control
| • | disability insurance payouts in the event of disability. |
Potential Payments Upon Termination or Change of Control
The following table quantifies the potential cash or estimated equivalent cash value of amounts that would be payable to each of our NEOs under the various termination scenarios described above, assuming the event occurred on December 31, 2023:
Potential Payments Upon Termination or Change of Control
| Name | Termination Without Cause ($) | Resignation Without Good Reason(6) ($) | Termination Without Cause in the Event of Change-in- Control(6) ($) | Resignation in the Event of Change-in- Control(6) ($) | Retirement/ Resignation for Good Reason ($) | Death or Disability ($) | | C. Brent Smith | 5,993,752(1) | -- | 5,993,752(1) | -- | 5,993,752(1) | 5,967,633(1) | | Robert E. Bowers | 2,821,136(2) | 895,565(2) | 2,821,136(2) | 2,821,136(2) | 2,821,136(2) | 2,795,017(2) | | Christopher A. Kollme | 1,080,883(3) | -- | 1,080,883(3) | -- | 1,080,883(3) | 1,080,883(3) | | George M. Wells | 1,244,734(4) | -- | 1,244,734(4) | -- | 1,244,734(4) | 1,244,734(4) | | Robert K. Wiberg | 489,875(5) | 309,875(5) | 489,875(5) | 309,875(5) | 309,875(5) | 309,875(5) |
Potential Payments Upon Termination or Change of Control
(1) Includes $2,656,514 representing the value of unvested equity awards that would vest upon each triggering event. (2) Includes $895,565 representing the value of unvested equity awards that would vest upon each triggering event. (3) Includes $334,347 representing the value of unvested equity awards that would vest upon each triggering event. (4) Includes $413,615 representing the value of unvested equity awards that would vest upon each triggering event. (5) Includes $309,875 representing the value of unvested equity awards that would vest upon each triggering event. (6) Employees who have attained the minimum retirement age of 62 are entitled to their unvested Deferred Stock Unit Awards and a pro-rata portion of their outstanding Performance Share Program awards in the event of their retirement/ resignation. The estimated value of all unvested equity awards in the above table is based on our closing stock price as of December 31, 2023 of $7.11 per share, plus applicable dividend equivalent rights that would vest upon the vesting of the underlying shares. Further, the estimated value of all unvested performance share awards in the above table is based on the Company’s relative TSR performance for each performance period as of December 31, 2023. None of our employment or other compensatory agreements provide for tax “gross ups” in the event that any of the above payments are made.
2023 Director Compensation Paid
2023 Director Compensation Paid The following table sets forth information regarding the compensation that we paid to any person that served as one of our non-employee directors during the year ended December 31, 2023. Mr. Smith did not receive any additional compensation for his service as director.
2023 Director Compensation Paid
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | All Other Compensation | Total ($) | | Kelly H. Barrett | 102,500 | 100,000 | -- | 202,500 | | Glenn G. Cohen | 105,000 | 100,000 | -- | 205,000 | | Venkatesh S. Durvasula | 80,000 | 100,000 | -- | 180,000 | | Mary M. Hager | 80,000 | 100,000 | -- | 180,000 | | Barbara B. Lang | 95,000 | 100,000 | -- | 195,000 | | Frank C. McDowell | 130,000 | 100,000 | -- | 230,000 | | Jeffrey L. Swope | 92,500 | 100,000 | -- | 192,500 | | Dale H. Taysom | 87,500 | 100,000 | -- | 187,500 |
2023 Director Compensation Paid
(1) Amount represents the grant date fair value for financial statement reporting purposes in accordance with ASC Topic 718 and is based on the closing price of our common stock on May 10, 2023, the date of grant, of $6.57 per share. Shares granted vest on the earlier of the 2024 Annual Meeting of Stockholders or the one year anniversary of the date of grant.
PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO(3) ($) | Compensation Table Total for Non-PEO NEOs ($) | Actually Paid to Non-PEO NEOs(4) ($) | Total Shareholder Return (“TSR”) ($) | Peer Group Total Shareholder Return(2) ($) | Net Income (Loss) ($) in 000s | Core FFO(1) per Share ($) | | 2023 | 7,150,720 | 4,506,668 | 1,712,760 | 1,199,819 | 46.31 | 56.58 | (48,377) | 1.74 | | 2022 | 4,026,288 | 495,657 | 1,309,186 | 412,585 | 54.99 | 51.20 | 146,830 | 2.00 | | 2021 | 3,560,678 | 4,888,145 | 1,411,844 | 1,731,388 | 90.20 | 86.09 | (1,167) | 1.97 | | 2020 | 3,193,723 | 1,839,353 | 1,269,442 | 883,164 | 76.75 | 71.83 | 232,685 | 1.89 |