UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant   ☒

Filed by a Party other than the Registrant   ☐

Check the appropriate box:

☐

Preliminary Proxy Statement

​

☐

Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))

​

☒

Definitive Proxy Statement

​

☐

Definitive Additional Materials

​

☐

Soliciting Material Pursuant to §240.14a-12

​

Simon Property Group, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒

No fee required.

​

☐

Fee paid previously with preliminary materials.

​

☐

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

​

 

Dear Fellow Shareholders,

Please join me and the Board of Directors at our 2023 Annual Meeting of Shareholders on May 4, 2023, at 8:30 a.m. Eastern Daylight Time at our headquarters in Indianapolis, Indiana. The business to be conducted at the meeting is explained in the attached Notice of Annual Meeting and Proxy Statement.

We are pleased to furnish proxy materials to our shareholders over the Internet. We believe that this e-proxy process expedites shareholders’ receipt of proxy materials, while also lowering the costs and reducing the environmental impact of our 2023 Annual Meeting.

I am pleased with our 2022 results and how we have positioned Simon Property Group for future prosperity. We believe we have proven on many fronts that we can handle adversity and bumps in the road. This is our 30th year as a public company, and over the last 30 years our portfolio has grown significantly, our scale and quality have dramatically increased, and we augmented our real estate with an additional platform that includes opportunistic investments in leading companies and brands involved in retail operations, intellectual property assets and licensing, e-commerce marketplaces and recently, asset and investment management businesses. I am proud of the growth, financial performance and operating successes of the last 30 years.

I would like to thank our employees for their tireless hard work and dedication and you, our shareholders, for your continued interest and support of our Company.

Whether or not you plan to attend the 2023 Annual Meeting in person, please read the Proxy Statement and vote your shares. Instructions for voting by mail, Internet and telephone are included in your Notice of Internet Availability of Proxy Materials or proxy card (if you receive your materials by mail). We hope that after you have reviewed the Proxy Statement you will vote in accordance with the Board’s recommendations. Our 2022 Annual Report to Shareholders accompanies, but is not part of, or incorporated into, the Proxy Statement.

Sincerely,

David Simon
Chairman of the Board, Chief Executive Officer and President
March 23, 2023

 

 

SIMON PROPERTY GROUP, INC.

NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS

Dear Fellow Shareholders:

On or about March 24, 2023, a Notice of Internet Availability of Proxy Materials and Notice of Annual Meeting of Shareholders (the “Notice”) is first being mailed to our shareholders of record as of March 15, 2023 (the “Record Date”) and our proxy materials are first being posted on the website www.proxyvote.com. As more fully described in the Notice, all shareholders may choose to access our proxy materials on the website referred to in the Notice or may request a printed set of our proxy materials. Shareholders as of the Record Date are invited to attend the 2023 Annual Meeting, but if you are not able to attend, please vote in advance of the meeting by using one of the methods which are described in both this Proxy Statement and the Notice. Please be aware that our 2022 Annual Report to Shareholders accompanies, but is not a part of, or incorporated into, this Proxy Statement.

By Order of the Board of Directors,

Steven E. Fivel
General Counsel and Secretary
March 23, 2023

 

 

TABLE OF CONTENTS

 

 

 

 

This Proxy Statement and accompanying proxy card are being made available to shareholders on or about March 24, 2023, in connection with the solicitation by the Board of Directors (the “Board”) of Simon Property Group, Inc. (“Simon Property Group”, “Simon”, “SPG”, “we”, “us”, “our” or the “Company”) of proxies to be voted at the 2023 Annual Meeting of Shareholders (the “2023 Annual Meeting”) to be held at the corporate headquarters of the Company located at 225 W. Washington Street, Indianapolis, Indiana 46204 on May 4, 2023, at 8:30 a.m. Eastern Daylight Time. As required by rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), the Company is making this Proxy Statement and its 2022 Annual Report to Shareholders (which includes our Form 10-K for the fiscal year ended December 31, 2022) (the “Annual Report”) available to shareholders electronically via the Internet. In addition, SPG is using the SEC’s “Notice and Access” rules to provide shareholders with more options for receipt of these materials. Accordingly, on March 24, 2023, the Company will begin mailing the Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders which will contain instructions on how to access this Proxy Statement and the Annual Report via the Internet, how to vote online, by QR code, or by telephone, and how to receive paper copies of the documents and a proxy card.

PLEASE VOTE

It is very important that you vote to play a part in the future of Simon. New York Stock Exchange (“NYSE”) rules provide that if your shares are held through a broker, bank, or other nominee, they cannot vote on your behalf on non-discretionary matters without your instruction.

You may vote using any of the following methods:

•

In advance:

​

◦

Internet: Go to www.proxyvote.com until 11:59 p.m. EDT on May 3, 2023

​

◦

Telephone: Call 1-800-690-6903 until 11:59 p.m. EDT on May 3, 2023

​

◦

Mail: Complete, sign, and return your proxy or voting instruction card

​

​

•

In person during the meeting: Vote in person by ballot at the 2023 Annual Meeting

​

SIGN UP FOR FUTURE ELECTRONIC DELIVERY TO SUPPORT SUSTAINABILITY

The Company will make a $1.00 charitable contribution to the Simon Youth Foundation (www.syf.org) on behalf of each shareholder who signs up for electronic delivery of our proxy materials. To sign up for electronic delivery, please visit www.proxyvote.com with your proxy card, which contains your control number, in-hand, and follow the instructions to indicate that you agree to receive or access proxy materials electronically in future years. The Simon Youth Foundation is a national 501(c)(3) nonprofit committed to helping students graduate by partnering with public school districts to help curb the dropout epidemic and awarding scholarships to students.

 

 

PROXY SUMMARY

This proxy summary highlights information which may be contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.

Proposals Which Require Your Vote

 

 

Summary of 2022 Financial Performance

This summary provides highlights of select Company financial and performance information. For more complete information regarding the Company’s 2022 performance, you should review the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023, and Current Report on Form 8-K furnished to the SEC on February 6, 2023.

2022 was a very successful and productive year for Simon Property Group. Consolidated revenues increased more than 3% to $5.29 billion and consolidated net income was $2.45 billion. We generated funds from operations (“FFO”) of  $4.48 billion or $11.95 per share. We executed over 14 million square feet of leases, completed 14 redevelopment and densification projects and opened a new Premium Outlet in Japan. We continue to strengthen our portfolio through our innovative and disciplined investment activities that will allow us to continue to deliver long-term cash flow growth. Please see “Where Do I Find Reconciliation of Non-GAAP Terms to GAAP Terms?” in the section of this Proxy Statement titled “Frequently Asked Questions and Answers” on page 88.

 

 

In calendar year 2022, we declared common stock cash dividends of  $6.90 per share, a nearly 18% increase over the amount in 2021. In 2022, we returned $2.8 billion to shareholders in cash dividends and share repurchases.

In 2022, consolidated revenue was $5.29 billion, up from $5.12 billion in 2021.

 

 

In 2022, our beneficial interest of Combined Net Operating Income (“NOI”) increased to $6.06 billion from $5.99 billion in 2021.

Corporate Governance Highlights

Simon’s Board is committed to good corporate governance that promotes the long-term interests of shareholders, including oversight of management’s identification, assessment, and mitigation of enterprise risks to which the Company is susceptible.

We believe that our Board membership is both balanced and diverse in experience, qualifications, skills, professional background, perspectives, and expertise and that the range of tenures of our directors creates a synergy between institutional knowledge and new perspectives.

 

 

CORPORATE GOVERNANCE

Board Leadership

Lead Independent Director Duties And Responsibilities

Under our Governance Principles, the Lead Independent Director is empowered to:

•

preside at all meetings of the Board at which the Chairman of the Board (“Chairman”) is not present, including executive sessions of the independent directors;

​

•

serve as a liaison between the Chairman and the independent directors, including by facilitating communication and sharing of views between the independent directors and the Chairman;

​

•

approve materials sent to the Board and advise on such information;

​

•

approve meeting agendas for the Board and coordinate with the Chairman with respect to developing such agendas;

​

•

approve meeting schedules for the Board to assure there is sufficient time for discussion of all agenda items and coordinate with the Chairman with respect to developing such schedules;

​

•

call meetings of the independent directors;

​

•

if requested by major shareholders, ensure that he or she is available for consultation and direct communication; and

​

•

retain outside advisors and consultants to report directly to the Board on Board-wide matters.

​

 

 

The Board Believes that its Members Should:

•

exhibit high standards of independent judgment and integrity;

​

•

have diverse experiences and backgrounds, including racial and gender diversity;

​

•

have a strong record of achievements;

​

•

have an understanding of our business and the competitive environment in which we operate; and

​

•

be committed to enhancing shareholder value on a long-term basis and have sufficient time to carry out their duties.

​

In addition, the Board has determined that the Board, as a whole, should strive to have the right mix of characteristics and skills necessary to effectively perform its oversight responsibilities. The Board believes that the professional skills and experiences set forth in the matrix below are important, and when carrying out its board refreshment strategy looks for independent director candidates who have skills and experience that complement those of the existing directors.

Director Characteristics, Skills and Experience Matrix(1)(2)

​

(1)

Karen N. Horn, Ph.D and J. Albert Smith, Jr. will be retiring from the Board of Directors, effective May 4, 2023.

​

(2)

Randall J. Lewis was appointed to the Board of Directors on March 20, 2023.

​

 

 

Policies on Corporate Governance

Good corporate governance is important to ensure that the Company is managed for the long-term benefit of its shareholders and to enhance the creation of long-term shareholder value. Each year, the Governance and Nominating Committee reviews our Governance Principles, which are available at governanceprinciples.simon.com, and recommends to the Board any suggested modifications. Also, the Audit Committee obtains reports from management and the leader of the Company’s Audit Services function confirming that the Company and its subsidiaries are operating in conformity with the Company’s Code of Business Conduct and Ethics, which can be found at codeofconduct.simon.com, and advises the Board with respect to the Company’s policies and procedures regarding compliance with the Company’s Code of Business Conduct and Ethics. In addition, each of the Board’s standing committees reviews its written charter on an annual basis to consider whether any changes are required. These charters are located on our website at committeecomposition.simon.com. In addition to clicking on the preceding links, the current version of each of these documents is available by visiting www.simon.com and navigating to “Governance” by clicking on “Investors,” or by requesting a printed copy without charge upon written request to our Secretary at 225 West Washington Street, Indianapolis, Indiana 46204.

We will also either disclose on Form 8-K and/or post on our Internet website any substantive amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to any of our directors or executive officers.

Director Independence

The Board has adopted standards to assist it in making determinations of director independence. These standards incorporate, and are consistent with, the definition of  “independent” contained in the NYSE Listed Company Manual and other applicable laws, rules and regulations in effect from time to time regarding director independence. These standards are included in our Governance Principles, which are available at governanceprinciples.simon.com. The Board has affirmatively determined that each person nominated by the Board for election as a director by the holders of voting shares of the Company’s common stock and listed in this Proxy Statement meets these standards and is independent.

Ten of our director nominees are independent under the requirements of the NYSE. All of the members of the Audit Committee, Governance and Nominating Committee, and Compensation and Human Capital Committee are independent directors under the listing requirements and rules of the NYSE and other applicable laws, rules, and regulations.

Mr. David Simon, Mr. Richard S. Sokolov and Mr. Herbert Simon, our Class B directors, are our employees and are not independent directors.

The Board’s Role in Oversight of Risk Management

While risk management is primarily the responsibility of our management, the Board provides overall risk oversight focusing on the most significant risks we face. The Board has delegated to the Audit Committee primary oversight of the Company’s Enterprise Risk Management Program and the Audit Committee provides regular reports to the full Board on it. In February 2021, the Audit Committee amended its Charter to expressly include as part of its responsibilities its oversight of the Company’s Enterprise Risk Management Program and of cybersecurity.

Our Company-wide Enterprise Risk Management Program identifies and assesses the major risks we face and includes the development of strategies for controlling, mitigating, and monitoring those risks. As part

 

 

of this process, every year in the fourth quarter, on behalf of the Audit Committee, the Company’s internal Audit Services function reviews and assesses the Company’s Enterprise Risk Management Program, including how risks are identified, managed, measured, monitored and reported. The identified risks and risk mitigation strategies are validated with management and presented to the Audit Committee and the Company’s independent auditors for their review during the first quarter of the following year. These risks and the Company’s mitigation efforts are monitored throughout the year.

Our Audit Services leadership is responsible for supervising the Enterprise Risk Management Program described above, and in that role reports directly to the Audit Committee. Other members of senior management who have responsibility for designing and implementing various aspects of our risk management process also regularly meet with the Audit Committee. The Audit Committee also discusses our identified financial and operational risks with our CEO and Chief Financial Officer and receives reports from other members of senior management with regard to our identified risks. In addition, as part of its oversight of risk management, the Audit Committee reviews the Company’s cybersecurity and other information security risks, controls and procedures, including those related to data privacy and network security, and any specific cybersecurity issues that could affect the adequacy of the Company’s internal controls.

The Compensation and Human Capital Committee is responsible for overseeing risks relating to our compensation policies and practices. Specifically, the Compensation and Human Capital Committee oversees the design of incentive compensation arrangements for our executive officers to implement our pay-for-performance philosophy without encouraging or rewarding excessive risk-taking by our executive officers.

Our management regularly conducts additional reviews of risks, as needed, or as requested by the Board or Audit Committee.

Majority Vote Standard for Election of Directors in Uncontested Elections

Our Amended and Restated By-Laws (the “By-Laws”) provide for a majority of votes cast standard for the election of directors in an uncontested election. The majority of votes cast standard for purposes of the election of director nominees means that in order for a director to be elected, the number of votes cast FOR a director’s election must exceed the number of votes cast AGAINST that director’s election. Any incumbent director who, in an uncontested election, receives a greater number of AGAINST votes than FOR votes must promptly tender his or her resignation to the Board, subject to its acceptance. The Governance and Nominating Committee will promptly consider the tendered resignation and recommend to the Board whether to accept or reject it or take a different action. Both the Governance and Nominating Committee and the Board may consider any factors they deem appropriate and relevant to their actions. The Board will act on the tendered resignation, taking into account the Governance and Nominating Committee’s recommendation. The affected director cannot participate in any part of the process. We will publicly disclose the Board’s decision by a press release, a filing with the SEC or other broadly disseminated means of communication within 90 days after the shareholders’ vote has been certified.

In a contested election (in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the votes cast by the holders of shares entitled to vote on the election of directors, provided a quorum is present.

Nominations for Directors

The Governance and Nominating Committee will consider director nominees recommended by shareholders. A shareholder who wishes to recommend a director candidate in this manner should send

 

 

such recommendation to our Secretary at 225 West Washington Street, Indianapolis, Indiana 46204, who will forward it to the Governance and Nominating Committee. Any such recommendation shall include a description of the candidate’s qualifications for Board service, the candidate’s written consent to be considered for nomination and to serve if nominated and elected, the addresses and telephone numbers for contacting the shareholder and the candidate for more information and the other information required by Section 1.10 of our By-Laws. A shareholder who wishes to nominate an individual as a director candidate at an annual meeting of shareholders, rather than either recommend the individual to the Governance and Nominating Committee as a nominee or utilize the proxy access process described below and set forth in Section 1.11 of our By-Laws, shall comply with the advance notice requirements for shareholder nominations set forth in Section 1.10 of our By-Laws.

Our Governance Principles provide that all candidates for election as members of the Board should possess high personal and professional ethics, integrity and values and be committed to representing the long-term interests of our shareholders and otherwise fulfilling the responsibilities of directors as described in our Governance Principles. In 2016, we amended our Governance Principles to clearly reflect and communicate the Board’s long-standing diversity goals, including, without limitation, the pursuit of racial and gender diversity, taking into account the skills and other attributes the Board believes are required for any new director. Our Governance Principles further provide that if our directors simultaneously serve on more than four boards of public companies, including our Board, then the Board or Governance and Nominating Committee must determine that serving on more than four public company boards does not impair the ability of the director to serve as an effective member of our Board. Currently, only two of our independent directors serve on more than one other public company board. We believe that each of our independent directors is able to devote the necessary time to meet their Board commitments to the Company. In recommending candidates to the Board for election as directors, the Governance and Nominating Committee will consider the foregoing minimum qualifications as well as each candidate’s credentials, keeping in mind our desire, as stated in our Governance Principles, to have a Board representing diverse experiences and backgrounds, as well as expertise in or knowledge of specific areas that are relevant to our business activities, including those set forth in our Director Skills and Experience Matrix on page 7. Although we do not have term limits or a mandatory retirement age for our directors, we do believe that periodic board refreshment is beneficial. Consistent with this belief, in the last five years we have appointed three new directors, each of whom self identify as ethnically diverse and two of whom are female directors. Two of our longest serving directors have announced that they will be retiring from the Board effective May 4, 2023. Evidencing our commitment to thoughtful refreshment, we will continue to evaluate additional candidates with applicable qualifications and diverse experiences and backgrounds, all in furtherance of our Governance Principals.

Communications with the Board

The Board has implemented a process by which our shareholders and other interested parties may communicate with one or more members of our Board, its committees, the Lead Independent Director, or the independent directors as a group. Interested parties can send any such communication to Simon Property Group, Inc., Board of Directors, c/o Secretary, 225 West Washington Street, Indianapolis, Indiana 46204. The Board has instructed our Secretary to promptly forward all such communications to the specified addressees thereof.

Shareholder Engagement and Outreach

The Company welcomes communication from its shareholders and has routinely made certain of its senior executives and independent directors available when shareholders have requested meetings to discuss a

 

 

variety of topics. The Company continued to engage with shareholders representing over 50% of the shares outstanding and entitled to vote at the 2023 Annual Meeting, in 2022 and early 2023 concerning, among other things, executive compensation and sustainability. In addition, our executive officers and certain independent members of our Board continually listened to and considered the input received from shareholders (in face-to-face discussions, conference calls, and/or written communication).

Transactions with Related Persons

On an annual basis, each director and executive officer is obligated to complete a director and officer questionnaire, which requires disclosure of any transactions with us in which the director or executive officer, or any member of his or her immediate family, has or will have an interest. Pursuant to our Code of Business Conduct and Ethics at codeofconduct.simon.com, which is also available in the Governance section of our website at investors.simon.com, the Audit Committee must review and approve all related person transactions in which any executive officer, director, director nominee or more than 5% shareholder of the Company, or any of their immediate family members, had, has or will have a direct or indirect material interest. Pursuant to the charter of the Audit Committee, which is available in the Governance section of our website at investors.simon.com, the Audit Committee may not approve a related person transaction unless (1) it is in, or not inconsistent with, our best interests and (2) where applicable, the terms of such transaction are at least as favorable to us as could be obtained from an unrelated third party. Our Restated Certificate of Incorporation requires that at least a majority of our directors be neither our employees nor members or affiliates of members of the Simon family. Our Restated Certificate of Incorporation further requires that transactions involving the Company, individually or in our capacity as general partner of our subsidiary, Simon Property Group, L.P. (the “Operating Partnership”), and any entity in which any of the Simons has an interest must, in addition to any other vote that may be required, be approved in advance by a majority of such independent directors. We currently have twelve independent directors serving on the Board.

Our General Counsel is charged with reviewing any conflict of interest involving any other employee.

Transactions with the Simons

Shopping Center Management and MSA Operations

Since 1993, we have managed two shopping centers owned by entities in which Mr. David Simon and Mr. Herbert Simon have ownership interests, for which we received a fee of  $3,782,693 in 2022 pursuant to management agreements that provide for our receipt of a management fee and reimbursement of our direct and indirect costs.

We provide office space and support services to Melvin Simon & Associates, Inc. (“MSA”), a related party, for which we received a fee of  $850,000 in 2022. MSA is owned 30.94% by trusts for the benefit of Mr. Herbert Simon, 3.04% by a trust for the benefit of Mr. David Simon, and by certain other shareholders. Please see footnote 4 to the Principal Shareholders Table on page 35 of this Proxy Statement for additional information on MSA.

Aircraft Reimbursement and Payments

DS Aviation, LLC (“DS Aviation”), an entity which is beneficially owned by Mr. David Simon, owns an aircraft (the “DS Aircraft”) which was used in 2022, in part, by the Company, for business purposes, pursuant to a lease agreement. The total amount payable in 2022 to DS Aviation was $3,489,441 under the lease.

 

 

In addition, Simon Hangar, LLC (“Hangar”), an entity which is beneficially owned by Mr. Herbert Simon, received $54,000 relating to the Company’s business use of the DS Aircraft, pursuant to a management services agreement. The Company also reimbursed DS Aviation $71,770 for the temporary use of Mr. Herbert Simon’s aircraft for business purposes.

The foregoing amounts charged to or reimbursed by the Company are less than the total actual cost per hour of operating the aircraft and are substantially less than the cost of chartering equivalent aircraft from unrelated third parties, based on a 2022 review and study of third-party market providers of such services and a review of actual costs incurred.

HS Arrow, LLC, (“HS Arrow”), an entity beneficially owned by Mr. Herbert Simon, owns an aircraft (the “HS Aircraft”) which was used, in part, for Company related business in 2022. The Company reimbursed Mr. Herbert Simon a fixed annual amount of  $250,000 for the Company’s business use of the HS Aircraft in 2022 pursuant to a reimbursement agreement. Such reimbursement includes all costs, fees, charges and expenses incurred by HS Arrow with respect to the Company’s use of the aircraft by Mr. Herbert Simon.

These agreements were unanimously approved by the Board of Directors upon recommendation of the Company’s General Counsel and the Audit Committee of the Board of Directors.

Terms of Employment of Mr. Eli Simon

Mr. Eli Simon is Senior Vice President of Corporate Investments and the son of Mr. David Simon. In 2022, the Company paid Mr. Eli Simon a base salary of  $450,000 and a bonus of  $500,000 under the Company’s Annual Incentive Compensation Plan. In March 2022, the Company also awarded Mr. Eli Simon participation in the 2022 Corporate Incentive Compensation Plan (“ICP”), which has a maximum opportunity of  $500,000. Additionally, he was awarded an opportunity to participate in the 2022-2024 performance-based LTIP. Mr. Eli Simon’s participation in the program has a maximum opportunity of 7,210 LTIP units and 2,403 RSUs. In February 2022, he also received an OPI Incentive in the amount of $1,500,000. See page 52 of this Proxy Statement for a description of the OPI Incentives.

The foregoing employment arrangements have been reviewed and approved by the Compensation Committee and the independent directors of the Board of Directors.

 

 

Meetings and Committees of the Board

Meetings and Attendance

Our business, property and affairs are managed under the direction of our Board. Members of our Board are kept informed of our business through discussions with our Chairman and CEO, other executive officers, and our Lead Independent Director, by reviewing materials provided to them concerning the business, by visiting our offices and properties, and by participating in meetings of the Board and its committees. Directors are also expected to use reasonable efforts to attend the annual meeting of shareholders.

•

All of our directors attended the 2022 annual meeting. During 2022, the Board met five times, including four in-person meetings and one video conference meeting.

​

•

All of our directors participated in more than 75% of the aggregate number of meetings of the Board and the committees on which they served in 2022.

​

During 2022, the independent directors met in executive session without management present in connection with each regularly scheduled Board meeting, in person for four meetings and once by video conference. The Lead Independent Director presided over all of these meetings.

The Board’s Lead Independent Director is appointed by the independent members of the Board, and the responsibilities of the Lead Independent Director are discussed in “Board Leadership” in the “Corporate Governance” section of this Proxy Statement on page 6.

 

 

Committee Function and Membership

​

(1)

Will be retiring from the Board of Directors effective May 4, 2023.

​

 

 

​

(1)

Will be retiring from the Board of Directors effective May 4, 2023.

​

 

 

​

(1)

Will be retiring from the Board of Directors effective May 4, 2023.

​

 

 

Director Compensation

Compensation of Independent Directors

The Board believes that competitive compensation arrangements are necessary to attract and retain qualified independent directors. On February 12, 2018, after conducting an extensive review, including analyzing the compensation practices of leading companies of similar size to the Company, under supervision of the Governance and Nominating Committee, and upon recommendation of the Compensation and Human Capital Committee’s independent compensation consultant, Semler Brossy, the Board approved changes to the compensation arrangements for independent directors of the Company. These were the first changes made to the overall compensation program for the Board’s independent directors since 2015.

The Company continues to compensate its independent directors through the use of annual retainers. After the independent directors are elected, the Company awards each independent director an annual cash retainer of  $110,000, paid quarterly, and makes a restricted stock award with a grant date value of $175,000 that vests on the first anniversary of the grant date. In addition to the annual cash and restricted stock retainers for service as a director described above, each independent director receives additional annual retainers based on his or her role(s) as a committee chairperson, a committee member or Lead Independent Director. The chairperson of the Audit Committee and the chairperson of the Compensation and Human Capital Committee each are paid an annual retainer of  $35,000. The chairperson of the Governance and Nominating Committee is paid an annual retainer of  $25,000. Each member of the Audit Committee and Compensation and Human Capital Committee is paid a $15,000 annual retainer. Each member of the Governance and Nominating Committee is paid a $10,000 annual retainer. The annual retainer for the Lead Independent Director is $50,000. These committee chairpersons, committee member and Lead Independent Director retainers are paid 50% in cash and 50% in restricted stock.

The Operating Partnership’s 2019 Stock Incentive Plan (the “2019 Plan”) provides that the aggregate grant date fair market value of equity awards that may be granted during any fiscal year to an independent director shall not exceed $750,000.

Director Stock Ownership Guidelines

We have a stringent stock retention policy that further aligns our directors’ financial interests with those of our shareholders. The Company believes that it is advisable for its independent directors to retain a fixed dollar amount of Company common stock as opposed to a fixed number of common shares. The stock ownership guidelines for each of the Company’s independent directors require that each independent director own $850,000 worth of common stock of the Company (or the equivalent amount of limited partnership units of the Operating Partnership) by no later than six years after the date he or she is elected to the Board. Stock options and unvested shares of restricted stock do not count toward this requirement. The ownership guidelines also require independent directors to hold shares acquired upon the vesting of restricted stock awards received as compensation for their service on the Board and its Committees, together with all dividends paid on such awards which are required to be utilized to purchase additional shares of the Company’s common stock, in the director account of the Company’s deferred compensation plan until the director retires, dies or becomes disabled, or otherwise no longer serves as a director. The Company’s deferred compensation plan is described in “Other Elements of Compensation” in the “Compensation Discussion and Analysis” section of this Proxy Statement on page 54.

Any director who is prohibited by law or by applicable regulation of his or her employer from having an ownership interest in our securities will be exempt from this requirement until the restriction is lifted, at

 

 

which time he or she will have the following six-year period to comply with the ownership guidelines. The Board may grant exceptions on a case by case basis.

As of March 15, 2023, all independent directors of the Board have met or, within the applicable period, are expected to meet, these stock ownership guidelines.

Additionally, directors are subject to limitations on trading our securities, including prohibitions on hedging our securities, under our Insider Trading Policy.

2022 Independent Director Compensation

The following table sets forth information regarding the compensation we paid to our independent directors for 2022:

​

(1)

As of December 31, 2022, the independent directors owned shares of restricted stock subject to vesting requirements in the following amounts: Glyn F. Aeppel—1,447; Larry C. Glasscock—1,708; Karen N. Horn, Ph.D.—1,507; Allan Hubbard—1,507; Reuben S. Leibowitz—1,608; Gary M. Rodkin—1,447; Peggy Fang Roe—1,447; Stefan M. Selig—1,528; Daniel C. Smith, Ph.D.—1,467; J. Albert Smith, Jr.—1,608; and Marta R. Stewart—1,467.

​

Mr. David Simon, Mr. Richard S. Sokolov and Mr. Herbert Simon, who were also directors during 2022, are not included in this table because they are not independent directors and did not receive any compensation for their service as directors. In 2022, Mr. Herbert Simon received $100,000 in employment compensation for his service as our Chairman Emeritus. The compensation paid to Mr. David Simon as an executive officer of the Company is shown in the 2022 Summary Compensation Table on page 58 of this Proxy Statement.

(2)

Represents the ASC 718 grant date fair value of the restricted stock awarded to the directors, determined based on the closing price of our common stock as reported by the NYSE on the date of grant. Restricted stock granted to directors must be held in the director deferred compensation account, and dividends on the restricted shares must be reinvested in additional shares of common stock which also must be held in the director deferred compensation account. One of our directors elected to defer his cash compensation in 2022.

​

(3)

Will be retiring from the Board of Directors effective May 4, 2023.

​

 

 

PROPOSAL 1: ELECTION OF DIRECTORS

The Board currently consists of fifteen members, two of whom will be retiring effective May 4, 2023. Based on the recommendation of the Governance and Nominating Committee, the Board has nominated the following ten persons listed as “Nominees for Director to be Elected by Holders of Voting Shares.” All of the nominees are current directors.

We expect each nominee for election as a director named in this Proxy Statement will be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees.

The names, principal occupations and certain other information about the nominees for director, as well as key experiences, qualifications, attributes and skills that led the Governance and Nominating Committee to conclude that such person is currently qualified to serve as a director, are set forth on the following pages.

Nominees for Director to be Elected by Holders of Voting Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nominees for Director to be Elected by the Voting Trustees Who Vote the Class B Common Stock

The voting trustees who vote our Class B common stock, and who have the right to elect four directors, have nominated the three persons listed below as “Nominees for Director to be Elected by the Voting Trustees Who Vote the Class B Common Stock.” All of the nominees are currently Class B directors. The voting trustees who vote the Class B common stock have agreed to elect Richard S. Sokolov to the Board. The voting trustees have an agreement requiring that each of them vote for each other as Class B director nominees.

 

 

 

 

 

 

Ownership of Equity Securities of the Company

DIRECTORS AND EXECUTIVE OFFICERS

As of March 15, 2023, the existing directors and executive officers identified below:

•

Owned beneficially the indicated number and percentage of common shares and Class B common stock, treated as a single class; and

​

•

Owned beneficially the indicated number and percentage of units which are exchangeable for common shares on a one-for-one basis or cash, as determined by the Company. The number of units includes earned and fully vested performance-based LTIP units which are convertible at the option of the holder into units on a one-for-one basis.

​

Unless otherwise indicated in the footnotes to the table, shares or units are owned directly and the indicated person has sole voting and investment power.

​

*

Less than one percent

​

(1)

Includes the following common shares that may be issued upon exchange of units (including vested LTIP units) held by the following persons on March 15, 2023: David Simon, Herbert Simon and other members of the MSA group (as defined in the footnote 4 of the Principal Shareholders table on page 35)—​26,777,277; Richard S. Sokolov—493,984; John Rulli—210,409; Steven E. Fivel—85,507; Brian J. McDade—5,011; Adam J. Reuille—1,882; and all directors and executive officers as a group—27,576,892. Units are exchangeable either for common shares on a one-for-one basis or for cash as determined by the Company.

​

 

 

(2)

Includes the following restricted shares which are subject to vesting requirements: Glyn F. Aeppel—1,447; Larry C. Glasscock—1,708; Karen N. Horn, Ph.D.—1,507; Allan Hubbard—1,507; Reuben S. Leibowitz—​1,608; Gary M. Rodkin—1,447; Peggy Fang Roe—1,447; Stefan M. Selig—1,528; Daniel C. Smith, Ph.D.—1,467; J. Albert Smith, Jr.—1,608; Marta R. Stewart—1,467; Brian J. McDade—1,408; and Adam J. Reuille—2,600; and all directors and executive officers as a group—32,729. Includes shares acquired through the reinvestment of dividends on common shares held in the Director Deferred Compensation Plan.

​

(3)

As of December 31, 2022, the following restricted shares were held by the independent directors: Glyn F. Aeppel—9,847; Larry C. Glasscock—15,998; Karen N. Horn, Ph.D.—21,539; Allan Hubbard—15,882; Reuben S. Leibowitz—20,609; Gary M. Rodkin—10,530; Peggy Fang Roe—1,909; Stefan M. Selig—​9,145; Daniel C. Smith, Ph.D.—15,624; J. Albert Smith, Jr.—25,795; and Marta R. Stewart—8,552. These amounts do not include shares acquired from the reinvestment of dividends which are required to be reinvested in additional shares of common stock which also must be held in the Director Deferred Compensation Plan and do not include any other shares owned by the independent directors.

​

(4)

As of March 15, 2023, there were 326,731,666 shares of common stock and 8,000 shares of Class B common stock outstanding. Upon the occurrence of certain events, shares of Class B common stock convert automatically into common shares (on a one-for-one basis). These percentages assume the exchange of units for common shares only by the applicable beneficial owner.

​

(5)

As of March 15, 2023, the Operating Partnership had 374,020,182 units outstanding, of which we owned, directly or indirectly, 326,739,666 or 87.4%. These percentages assume that no units held by limited partners are exchanged for common shares. The number of units shown does not include any unvested LTIP units and any unvested restricted stock units (“RSUs”) awarded under a long-term incentive performance program as described in the Compensation Discussion and Analysis section of this Proxy Statement that begins on page 38, because the unvested LTIP units are subject to performance and/or time-based vesting requirements and the unvested RSUs are subject to time-based vesting requirements.

​

(6)

Includes common shares, shares of Class B common stock and units beneficially owned by the MSA group. See Principal Shareholders Table on page 35.

​

(7)

Includes 2,500 shares of common stock held by Mr. Leibowitz’s wife. Does not include 7,500 shares of common stock held by charitable foundations of which Mr. Leibowitz is an officer or trustee and 1,400 shares of common stock held by various trusts of which Mr. Leibowitz’s wife is the trustee. Mr. Leibowitz disclaims beneficial ownership of these shares.

​

(8)

Includes common shares, shares of Class B common stock and units beneficially owned by the MSA group. See Principal Shareholders Table on page 35.

​

(9)

Includes 383 shares of common stock held by Mr. Fivel’s wife.

​

(10)

Does not include 4,172,426 units beneficially owned by or for the benefit of Simon family members as to which members of the MSA group do not have voting or dispositive power.

​

(11)

Will be retiring from the Board of Directors effective May 4, 2023.

​

(12)

Randall J. Lewis was appointed to the Board of Directors on March 20, 2023.

​

Principal Shareholders

The following table sets forth certain information concerning each person (including any group) known to us to beneficially own more than five percent (5%) of any class of our voting securities as of March 15, 2023. Unless otherwise indicated in the footnotes, shares are owned directly and the indicated person has sole voting and investment power.

 

 

​

(1)

Voting shares include shares of common stock and Class B common stock. Upon the occurrence of certain events, Class B common stock converts automatically into shares of our common stock (on a one-for-one basis). The amounts in the table also include shares of common stock that may be issued upon the exchange of units of limited partnership interest, or units, of the Operating Partnership that are exchangeable either for shares of common stock (on a one-for-one basis) or for cash, as determined by the Company.

​

(2)

Based solely on information provided by The Vanguard Group in a Schedule 13G/A filed with the SEC on February 9, 2023. The Vanguard Group has the sole power to vote 0 shares of common stock and dispose of 46,673,855 shares of common stock and shared power to vote 760,012 shares of common stock and dispose of 1,643,060 shares of common stock.

​

(3)

Based solely on information provided by BlackRock, Inc. in a Schedule 13G/A filed with the SEC on January 23, 2023. BlackRock, Inc. has the sole power to vote 31,670,637 shares of common stock and the sole power to dispose of 35,015,087 shares of common stock.

​

(4)

Based on information provided by the MSA Group, consisting of MSA, Mr. David Simon, Mr. Herbert Simon, two voting trusts and other entities and trusts controlled by or for the benefit of MSA, Mr. David Simon or Mr. Herbert Simon, as the case may be, including in a Schedule 13G/A filed with the SEC on February 14, 2023: MSA has sole power to vote and dispose of 11,634,169 shares of common stock and shared power to vote and dispose of 889,747 shares of common stock; Mr. Herbert Simon, a director, has sole power to vote and dispose of 5,615,001 shares of common stock and shared power to vote and dispose of 898,120 shares of common stock; Mr. David Simon, an executive officer and director has sole power to vote 10,610,808 shares of common stock, the sole power to dispose of 3,692,541 shares of common stock, shared power to vote 959,344 shares of common stock and shared power to dispose of 7,877,611 shares of common stock. A total of 890,120 shares of common stock included in the amount reported for the MSA Group and 8,000 shares of Class B common stock are subject to the two voting trusts as to which Mr. David Simon and Mr. Herbert Simon are the voting trustees. MSA is owned 30.94% by trusts for the benefit of Mr. Herbert Simon, 3.04% by a trust for the benefit of Mr. David Simon, and by certain other shareholders.

​

(5)

Includes 2,080,941 shares of common stock currently outstanding; 26,777,277 shares of common stock issuable upon exchange of units; and 8,000 shares of Class B common stock. Does not include 4,172,426 units that are held by or for the benefit of Simon family members as to which MSA, Mr. David Simon or Mr. Herbert Simon do not have voting or dispositive power.

​

(6)

Assumes the exchange of units by the subject holder only.

​

(7)

Based solely on information provided by State Street Corporation in a Schedule 13G/A filed with the SEC on February 10, 2023. State Street Corporation has shared power to vote 17,295,452 shares of common stock and shared power to dispose of 22,988,204 shares of common stock.

​

(8)

Based solely on information provided by Cohen & Steers, Inc., Cohen & Steers Capital Management, Inc., Cohen & Steers UK Limited, Cohen & Steers Asia Limited, and Cohen & Steers Ireland Limited in a Schedule 13G/A filed with the SEC on February 14, 2023. Cohen & Steers, Inc. has the sole power to vote 16,332,696 shares of common stock and the sole power to dispose of 21,717,288 shares of common stock; Cohen & Steers Capital Management, Inc. has the sole power to vote 16,282,091 shares of common stock and the sole power to dispose of 21,585,798 shares of common stock; Cohen & Steers UK Limited has the sole power to vote 33,963 shares of common stock and the sole power to dispose of 114,848 shares of common stock; Cohen & Steers Asia Limited has the sole power to vote and dispose of 0 shares of common stock; and Cohen & Steers Ireland Limited has the sole power to vote and dispose of 16,642 shares of common stock.

​

 

 

PROPOSAL 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE

OFFICERS

Our executive compensation program is designed to attract, retain, motivate and incentivize our officers and employees to enhance long-term value to our key stakeholders. We believe our emphasis on pay-for-performance and on corporate governance creates alignment between the interests of our named executive officers (“NEOs”) and the interests of all of the Company’s stakeholders, including its shareholders.

We are asking for shareholder approval, on an advisory or non-binding basis, of the compensation of our NEOs, as disclosed in this Proxy Statement pursuant to Section 14A of the Exchange Act, commonly known as a “Say-on-Pay” vote. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the compensation policies and practices described in this Proxy Statement.

We will evaluate whether any actions are necessary to address significant concerns as a result of this advisory vote. We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote at our 2024 annual meeting of shareholders. Assuming Proposal 4: “Advisory Vote on the Frequency of Executive Compensation Advisory Votes” is approved for one (1) year, as recommended, we expect to hold future advisory votes on executive compensation on an annual basis.

For the reasons discussed above and in this Proxy Statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation Tables,” the Board intends to introduce the following resolution at the 2023 Annual Meeting:

“RESOLVED, that the compensation of the Named Executive Officers of the Company, as disclosed in this Proxy Statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation Tables,” including the compensation tables and their accompanying narrative discussion, is approved.”

 

 

COMPENSATION AND HUMAN CAPITAL

COMMITTEE REPORT

The Committee reviewed and discussed with management the Compensation Discussion and Analysis section included in this Proxy Statement. Based on its review and these discussions with management, the Committee recommended to the Board that it be incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and included in the Proxy Statement for the 2023 Annual Meeting.

All references to the “Committee” in this Report are to the Compensation and Human Capital Committee.

The Compensation and Human Capital Committee:

Reuben S. Leibowitz, Chairman
Allan Hubbard
Stefan M. Selig
Daniel C. Smith, Ph.D.
J. Albert Smith, Jr.

March 23, 2023

The Compensation and Human Capital Committee Report does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate our SEC filings by reference, in whole or in part, notwithstanding anything to the contrary set forth in those filings.

 

 

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

Please see our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023, for a full description of our Company’s performance in 2022. In addition, certain elements of our performance are outlined in the following:

•

Our beneficial interest of Domestic Property NOI was $5.0 billion, an increase of 4.8% compared to 2021.

​

•

Our beneficial interest of Portfolio NOI, which includes NOI from international properties at constant currency, was $5.3 billion, an increase of 5.7% compared to 2021.

​

•

We generated $4.5 billion in FFO.

​

•

We signed over 4,100 leases for more than 14 million square feet.

​

•

Reported retailer sales reached another record at year end for all platforms, with U.S. Malls and Premium Outlets® combined at $753 per square foot, an increase of 5.6% over prior year-end.

​

•

Occupancy was 94.9% as of December 31, 2022, compared to 93.4% at prior year-end, an increase of 150 basis points.

​

•

Base minimum rent per square foot was $55.13 as of December 31, 2022, compared to $53.91 at prior year-end, an increase of 2.3%.

​

•

We completed $3.5 billion in financing activities.

​

•

We returned $2.8 billion to shareholders in cash dividends and share repurchases.

​

•

Our other platform investments (“Other Platform Investments”) contributed to our earnings, in the face of a challenging environment. In addition, we increased our ownership of ABG as a result of the sale to ABG of all of our interests in the Eddie Bauer licensing venture for additional interests in ABG and recorded a $159.0 million non-cash gain.

​

•

We invested approximately $1 billion, including new and redevelopment projects that we expect to be accretive and expanded the Company’s Other Platform Investments into the investment management business with our partnership with Jamestown.

​

•

We opened our tenth Premium Outlet in Japan and completed fourteen redevelopment and densification projects in 2022, including the opening of the transformation of Phipps Plaza.

​

•

Taubman Realty Group (“TRG”), of which we own 80%, posted strong financial results with reported retailer sales of  $1,095 per square foot, an increase of 11% from the prior year.

​

•

The Company was awarded the 2022 NAREIT Leader in the Light Award for demonstrating outstanding sustainability practices.

​

 

 

Objectives of our Executive Compensation Program

Our executive compensation program is designed to accomplish the following objectives:

•

Retain a group of highly-experienced executives who have worked together as a team for a long period of time and who make major contributions to our success.

​

•

Attract other highly-qualified executives to strengthen the team and facilitate succession planning.

​

•

Motivate executives to contribute to the achievement of corporate and business unit goals as well as individual goals.

​

•

Emphasize equity-based incentives with long-term performance measurement periods and vesting conditions.

​

•

Align interests of executives with shareholders by linking payouts to performance measures that are designed to promote the creation of long-term shareholder value.

​

The Committee designs compensation programs which are intended to create alignment between pay and performance. The continued evolution of our business requires us to look at a pool of talent beyond real estate, but also to retain our talented employees who have opportunities in those same industries. As a result, we have invested time and resources over the past year to refine our peer group methodology, and consequently, the composition of our peer group. While we do not strictly adhere to a specified peer group in making compensation decisions, in order to achieve our objective of attracting, retaining and motivating employees, we reevaluated the components of our peer group. We expanded the size of the peer group and introduced financial services companies as well as retailers. In addition, we removed certain REITs and real estate service providers, specifically, those that do not represent our scope, scale and breadth of operations. Consistent with our pay-for-performance philosophy, the core components of our compensation require significant long-term shareholder value creation to earn maximum levels of compensation.

 

 

Our Executive Compensation Program

 

 

Executive Compensation Approach and Process

Alignment of Pay with Performance

The Committee has designed our executive compensation program for our NEOs to align compensation with financial, strategic and shareholder returns. A significant portion of the compensation of our CEO and other NEOs is performance-based in the form of variable pay (annual and long-term incentives), which emphasizes our commitment to rewarding only excellent performance, not poor performance. Our compensation decisions in 2022 reflected this approach. The percentage of compensation that was at risk in 2022 for our CEO and the average for our other NEOs was 96.48% and 90.00%, respectively1.

1

Annual cash bonus amount includes bonuses earned with respect to performance paid under our Annual Cash Incentive Compensation program. Amounts also include cash awards paid in 2022 in recognition of extraordinary efforts which contributed to successful investments in Other Platform Investments by the Company. See “Summary Compensation Table” on page 58.

​

 

 

What We Pay and Why: Principal Elements of Compensation

To accomplish our compensation objectives, we designed our executive compensation program with four major elements: Base Salary; Annual Cash Incentive Compensation; our LTI Program; and Other Platform Investment Incentives.

 

 

Strong Governance Practices Utilized in Determining Executive Compensation

Role of the Independent Compensation Consultant

The Committee engages Semler Brossy annually as its independent consultant. Semler Brossy reports directly to the Committee and performs no other work for the Company unless directed by the Committee. The Committee has analyzed whether the work of Semler Brossy, as a compensation consultant, has raised any conflict of interest, taking into consideration the following factors: the provision of other services to the Company by Semler Brossy; the amount of fees from the Company paid to Semler Brossy as a percentage of the firm’s total revenue; Semler Brossy’s policies and procedures that are designed to prevent conflicts of interest; any business or personal relationship of Semler Brossy or the individual compensation advisors employed by the firm with an executive officer of the Company; any business or personal relationship of the individual compensation advisors with any member of the Committee; and any stock of the Company owned by Semler Brossy or the individual compensation advisors employed by the firm.

The Committee has determined, based on its analysis of the above factors, that the work of Semler Brossy and the individual compensation advisors employed by Semler Brossy as compensation consultants to the Company has not created any conflict of interest.

Role of Management in Compensation Decisions

Our CEO provides recommendations to the Committee on the compensation of each of the other NEOs. The CEO develops recommendations using peer group data, assessments of individual performance and achievement of the Company’s strategic and tactical plans, the state of the business environment, and input from our human resources department on various factors (e.g., compensation history, tenure, responsibilities, market data for competitive positions and retention concerns). The Committee considers our CEO’s recommendations together with the input of our independent compensation consultant; however, all final compensation decisions affecting NEOs’ pay are made by the Committee itself. Additionally, all aspects of the CEO’s compensation and resulting compensation decisions are determined by the Committee.

 

 

Company Peer Group and Compensation Assessment

The Committee uses a peer group as a source of data for assessing and determining pay levels for our NEOs. While the Committee has not formulaically derived target compensation from these other companies, the peer group has provided the Committee with certain insights used for understanding various industry-specific compensation structures and trends, as well as reactions to industry-specific issues, monitoring current compensation practices and analyzing individual company practices. It is intended to serve as a reference in the compensation process but is not intended to directly inform specific compensation decisions due to our size, scope of operations and diverse operating environments. The peer group is reviewed annually to ensure it continues to remain appropriate in terms of company size and business focus.

2022 Peer Group

In 2022, the Company removed Redfin Corporation and The Howard Hughes Corp. and added Opendoor Technologies Inc. and Zillow Group, Inc. to its peer group. The changes were driven by year-over-year changes in market capitalization and Zillow Group’s and Opendoor Technologies’ recent entry into the real estate industry, following a recent business transformation and IPO, respectively. Taking the facts and analysis described above into account, the Committee, in consultation with Semler Brossy, determined that the Company’s 2022 peer group would continue to include sixteen-companies reflecting the six largest Retail REIT companies by market cap, six largest Non-Retail REIT companies by market cap, and the four largest companies from the broader real estate industry by market cap.

2023 Peer Group

After working together with Semler Brossy for several months, in February 2023, the Committee approved utilization of a new methodology to create the Company’s 2023 peer group.

We have evolved from a traditional Mall REIT. This is evidenced by the growth in our worldwide operations and our expansion into Other Platform Investments, such as asset management (e.g., Jamestown), equity investments in retail operations (e.g., SPARC and JCPenney), equity investments in intellectual property, branding and licensing (e.g., Authentic Brands Group (“ABG”)) and e-commerce (e.g., RGG). Therefore, it is increasingly evident that there is no directly comparable REIT or other peer in the market.

 

 

In connection with undertaking this project, the Committee followed a framework that reflects both the Company’s historic focus on REITs and the broader real estate industry along with an expanded focus that includes financial services companies and retailers to best reflect the Company’s business expansion beyond its core retail real estate functions. The Committee believed this to be important in light of the critical interest of the Company in retaining employee talent that could find attractive employment opportunities beyond retail real estate, including in financial services and retail operations. Through this process the Committee carried out a multi-step selection process that included an initial quantitative screen (e.g., market value, total assets, and revenue) and a follow-up qualitative screen to identify companies that best reflect the same talent, business, and operational environment as the Company. We believe that the 2023 peer group is better aligned with Company’s business criteria, is large enough to deliver consistent data outcomes over time and will provide us with better insight in making informed compensation decisions.

This new 2023 peer group includes ten REITs and real estate service companies that were part of our 2022 peer group and also includes eleven new companies, consisting of four retailers, three financial services companies, one real estate services company, one payment processing company, one internet and direct marketing retail company, and one retail REIT.

Our NEOs are assessed on the performance of our entire portfolio, including core real estate operations, as well the performance of our Other Platform Investments. Selecting peers without considering the breadth and scope of our operations and thereby comparing the compensation of our NEOs to that of executives at other companies that do not make such strategic investments would disregard a large portion of our NEOs’ expertise and responsibilities. Such responsibilities include, but are not limited to, leasing, development, acquisition, disposition and maintenance of real estate, capital sourcing, financial, legal, and tax planning, structuring and in some cases, operation of Other Platform Investments.

The experience and skills that our NEOs require given our breadth and scope of operations, illustrates that they are eligible for other employment opportunities in other industries, such as financial services, retailers, asset managers and equity investors. Recognizing this, and while not formulaically adhering to peer group comparisons, the broadened peer group assists the Committee in effectively gauging and identifying relevant comparisons in the current compensation environment, in recognition of the fact that a peer group comprised solely of REITs does not sufficiently represent the nature of our business and the talent pool which we need to retain as well as target for recruiting.

The Committee also evaluated the appropriateness of this new 2023 peer group by considering the methodology used by Institutional Shareholder Services, or “ISS.” ISS has regularly excluded Mall REITs and Retail REITs and instead has included certain Hotel and Resort REITs, Health Care REITs and Office REITs as members of the Company’s peer group.

 

 

Below is the Company’s 2023 peer group, created using the new methodology previously described. The peer group reflects six different categories of companies: (i) Retail REITs; (ii) Retail companies; (iii) Financial Services companies; (iv) Real Estate services companies; (v) Specialized REITs; and (vi) an Industrial REIT.

Specific changes from the 2022 peer group include the removal of six companies (Brixmor Property Group Inc., Digital Realty Trust, Inc., National Retail Properties, Inc., Opendoor Technologies, Inc., Public Storage and Zillow Group, Inc.) and the addition of eleven companies (The Carlyle Group, Cushman & Wakefield, eBay, The GAP, Global Payments, Macy’s, Northern Trust, State Street, Tanger Factory Outlet Centers, Inc., Tapestry, and TJX Companies).

 

 

2022 Say-on-Pay Vote

At our 2022 Annual Meeting, the percentage of shares voting that approved our advisory “Say-on-Pay” vote was approximately 93.5%. The Committee believes that this support level demonstrates a strong alignment among our shareholders, the Company’s performance, and our executive compensation program. Accordingly, the Committee did not make any changes to the Company’s executive compensation program in response to the 2022 “Say-on-Pay” vote.

 

 

Elements of Executive Compensation in 2022

At the Committee’s meetings in 2022, the Committee made decisions impacting the type and amount of compensation paid to our NEOs as reported in the 2022 Summary Compensation Table. These decisions related to: Base Salaries, Annual Cash Incentive Compensation, OPI Incentives and LTI Program awards, in a mix of LTIP units, ICP awards and RSUs.

In making these determinations, the Committee has taken into consideration the limited increases to base salaries of the NEOs over the previous five years as well as the actual compensation paid to the NEOs based on rigorous minimum performance thresholds to receive payout under our LTIP Programs, resulting in only approximately 26.3% of the awarded LTIP units being earned from 2018 through 2022, as further described under the section titled “Previous LTIP Results.”

In addition to rigorous performance standards, the Committee, in consultation with Semler Brossy, has recognized that core compensation of the NEOs has been lower than the competitive band of median pay of the 2022 peer group. The Committee also recognized that the structure of the LTIP Programs and rigorous performance thresholds resulted in a reduced amount of equity awards being earned.

The Committee has judiciously stewarded the amount of equity awards granted compared to the amount of equity reserved under the 2019 Plan. This is illustrated by the fact that, as of December 31, 2022, the Company has 87.43% of the shares reserved under the 2019 Plan remaining available for awards.

The Committee recognized the need to meet its long-standing objectives of attracting, retaining and motivating executives through a framework that aligns with shareholders’ interests, taking into consideration the Company’s additional scope, scale and complexity, including significant investments in other platforms and ventures. Given these objectives, the Committee approved, and recommended that the independent directors of the Board of Directors approve, the OPI Incentive awards made to certain employees and officers, including the NEOs, more particularly described on page 52, under “Other Platform Investment Incentives.”

2022 Base Salaries

The Committee periodically reviews and adjusts base salaries for the NEOs to reflect market conditions, changes in responsibilities, and merit increases. During 2022, we maintained Mr. David Simon’s base salary at the same level it has been since 2011 and no other NEO, other than Mr. McDade, received an increase in base salary. Mr. McDade’s base salary was adjusted in recognition of his strong performance as our Chief Financial Officer, including his supervision of the Company’s information technology function.

David Simon’s base salary has been unchanged since 2011.​

In 2022, only one NEO received a base salary increase.​

 

 

2022 Annual Cash Incentive Compensation

The Committee rewards executive officers with Annual Cash Incentive Compensation for achieving the Company’s financial and operating plan considering an assessment of each NEO’s contributions to those achievements. Payouts under our Annual Cash Incentive Compensation program are the result of both the Company and the individuals reaching established performance targets. The Committee follows a two-step process to determine amounts payable under the Annual Cash Incentive Compensation program each year:

1.

The Annual Cash Incentive Compensation program is only funded if the Company achieves certain threshold FFO results during the year. If threshold FFO is not achieved, no payments are made. Once threshold FFO is achieved, the Annual Cash Incentive Compensation program may be additionally funded if the Company achieves certain target and maximum FFO results during the given year. At its meeting in March 2022, the Committee established a threshold FFO level of  $11.30 per share, a target FFO level of  $11.50 per share, and a maximum FFO level of  $11.70 per share. At its meeting in early March 2023, the Committee reviewed the Company’s 2022 reported FFO per share of  $11.95 and its 2022 comparable FFO per share of  $11.87 used for purposes of measuring performance under our Annual Cash Incentive Compensation program, which reflected the following adjustments: a $0.16 per share adjustment for unrealized losses in fair value of publicly traded equity instruments and an adjustment of  $0.24 per share for net, after tax gains on disposal, exchange or revaluation of equity interests. Because both the Company’s reported FFO per share and comparable FFO per share exceeded not only the threshold FFO performance level, but also the target and maximum FFO performance levels that the Committee had established in March 2022, the Committee approved an overall funding amount of  $13.5 million for annual bonuses and moved to the second step in the process; evaluating each NEO’s performance, as described below. See “Where Do I Find Reconciliation of Non-GAAP Terms to GAAP Terms?” in the “Frequently Asked Questions and Answers” section of the Proxy Statement on page 88.

​

2.

Once the Annual Cash Incentive Compensation program is funded, bonuses are paid in the Committee’s discretion based on individual performance with respect to the applicable individual’s specific goals established at the beginning of each year, as assessed by the Committee and by the CEO for the other NEOs. The assessment delivers a total score for each individual. Each individual’s total score then determines the portion of that NEO’s Annual Cash Incentive Compensation that has been earned. The resulting payout to the NEOs represented only 46.11% of the overall pool available for awards.

​

 

 

A summary of the NEOs’ 2022 goals and performance along with their 2022 Annual Cash Incentive Compensation payments may be found in the table below. We pay Annual Cash Incentive Compensation to NEOs in the first calendar quarter of the following year, so the Committee has sufficient time to assess our financial performance and the executives’ contributions for the preceding year.

 

 

Previous LTIP Results

The Committee has historically established rigorous performance metrics in order for our NEOs to earn awards granted as part of our LTIP programs. The rigor of these metrics is reflected in the number of units actually earned under prior LTIP Programs. For example, under the first tranche of the 2018-2020 LTIP Program, with a two-year performance period of January 1, 2018 through December 31, 2019, 32.5% of the maximum number of LTIP units available were earned. Under the second tranche of our 2018-2020 LTIP Program, which had a performance period of January 1, 2018 through December 31, 2020, no LTIP units were earned. In addition, under the 2019-2021 LTIP Program, which had a performance period of January 1, 2019 through December 31, 2021, only 38% of the maximum number of LTIP units available were earned. These performance periods coincided with the onset and substantial effects of COVID-19 and associated effects of governmental and societal responses, which resulted in significant changes to the Company’s business. In March 2020, the Company closed its domestic portfolio of properties due to restrictive governmental orders, resulting in approximately 13,500 lost shopping days, or 20% of the shopping days in our domestic portfolio in that year. In addition, the Company faced extended challenges associated with tenant bankruptcies, renegotiating with tenants and tenants failing to pay rent, which resulted in not only suppressed performance under the 2018-2020 and 2019-2021 LTIP Programs, but also lasting burdens and new responsibilities on our officers and employees.

We did not grant performance-based LTIP units to our NEOs in 2020 due to extreme market uncertainty and volatility along with government-mandated restrictions and closures making it extremely difficult to set meaningful long-term performance goals. In late December 2020, the Committee established a LTI Program for 2020, structured as awards of RSUs, that vested ratably over a 3-year period based upon service to the Company, and structured as such to retain and motivate executives who contribute to the operating success of the Company.

 

 

Other Platform Investment Incentives

At a meeting of the Board of Directors of the Company, with only independent directors present, held on February 10, 2022, cash payments (the “OPI Incentives”), in recognition of the extraordinary efforts of certain officers and employees of the Company since our initial investment, including the NEOs, which contributed to the Company’s successful investment in ABG, were unanimously approved and allocated to individual award participants by all independent directors in attendance, following the unanimous recommendation of the Committee at a meeting held on February 3, 2022.

The OPI Incentives were made to twenty-three officers and employees, including our NEOs in the following amounts: David Simon—$24,250,000; Steven E. Fivel—$6,000,000; Brian J. McDade—$3,000,000; John Rulli—$1,500,000; and Adam J. Reuille—$1,250,000. The Company previously disclosed these awards to Messrs. Simon, Fivel, McDade and Rulli in a filing on Form 8-K on February 15, 2022.

The OPI Incentives were determined taking into account a series of transactions involving ABG that generated $244.1 million in gross gains for the Company. Specifically, in July 2021, the Company contributed to ABG all of its interests in the Forever 21 and Brooks Brothers licensing ventures, in exchange for additional units in ABG. As a result of this transaction, the Company recognized a non-cash net gain of $159.8 million. Subsequently, in late December 2021, as part of a recapitalization of ABG, the Company sold 750,000 units in ABG for $87.34 per unit, resulting in cash proceeds of approximately $65.5 million, and a net gain of  $18.8 million. Immediately after giving effect to the recapitalization, the Company retained 10,703,766 units in ABG.

The Committee believes that the OPI Incentives are consistent with the objectives of our Executive Compensation Program because they were specifically designed to reward individuals, who the Company sought to retain, for exceptional performance achievements, which are aligned with shareholders’ interests in creating long-term value through the Company’s Other Platform Investments, such as Forever 21, Brooks Brothers and ABG. Further, the OPI Incentives were awarded to encourage similar efforts in the future and accordingly, the Board of Directors upon the recommendation of the Committee approved the 2023 Other Platform Investment Incentive Program please see page 56.

2022 LTI Program

The Committee worked, with advice and assistance from Semler Brossy, to create an LTI Program for 2022 specifically designed to take into account current business conditions and market factors.

In order for the executive compensation program to be effective in attracting, retaining and motivating talent while aligning interests of executives with shareholders, it is necessary for the Company’s NEO compensation to be competitive with that of other real estate companies and also with other large public and private enterprises with which the Company competes for executive talent. In order to achieve this, the Committee considered whether the LTI Program incentives were reasonably obtainable and aligned with the challenge of retaining and motivating the Company’s NEOs.

The Committee reaffirmed its philosophy that a significant proportion of the total compensation for our NEOs should be performance-based and at risk.

The 2022 LTI Program was made up of the following components (i) (A) performance-based awards of LTIP units which are earned based on the achievement of performance goals, including FFO, with an Absolute TSR modifier (60%) and strategic performance objectives based on Company objective performance measures (15%) and (B) time-based awards of RSUs (25%) (the “2022-2024 LTIP Program”) and (ii) performance-based awards that may be earned and settled in restricted stock based on the achievement

 

 

of FFO and EBITDA performance goals, measured over a one-year performance period (the “2022 Corporate ICP”). Performance-based long-term equity, in the form of LTIP units, was a fundamental element of the 2022 LTI Program and the performance targets established as part of the program are rigorous and require strong long-term financial and operational performance. The FFO performance metric is subject to a modifier based on the Company’s Absolute TSR during the performance period, rather than Absolute TSR being a separate performance metric. The Strategic Objective Performance Criteria require strong long-term financial and operational performance.

The Committee added our NEOs, excluding David Simon, to the 2022 Corporate ICP as a new component of the 2022 LTI Program to further align the incentive compensation of such individuals with the objective performance of the Company based on FFO and EBTIDA performance metrics. The 2022 Corporate ICP is an equity incentive compensation program with a one-year performance period in which thirty-four senior employees participated in 2022. Awards under the 2022 Corporate ICP were earned based on two performance metrics, an FFO component (weighted 70%) and an EBITDA component (weighted 30%), in each case for calendar year 2022. Each participant was awarded an opportunity expressed as a dollar amount. The dollar amount earned based on the above performance metrics is converted into a number of shares of restricted stock with an equivalent value. The number of shares of restricted stock is determined by dividing the dollar amount earned by the average closing price of the Company’s common stock on the ten consecutive trading days immediately preceding, but not including April 1, 2023. One third of the shares vest on each of April 1, 2024, 2025, and 2026. David Simon did not participate in the 2022 Corporate ICP.

See “Executive Compensation Tables—Grants of Plan-Based Awards in 2022” on page 60 for details of individual awards granted to our NEOs under our LTI Program during 2022.

 

 

Other Elements of Compensation

Retirement and Health and Welfare Benefits. We have never had a traditional defined benefit pension plan. We maintain a 401(k)-retirement plan in which all salaried employees can participate on the same terms. During 2022, our basic contribution to the 401(k)-retirement plan was equal to 1.0% of the participant’s base salary and Annual Cash Incentive Compensation which vests 20% after the completion of two years and an additional 20% after each additional year of service until fully vested after six years. We match 100% of the first 3% of the participant’s contribution and 50% of the next 2% of the participant’s contribution. Our matching contributions are vested when made. Our basic and matching contributions are subject to applicable IRS limits and regulations and internal guidelines. The Company’s internal limit on Company contributions for any participant in 2022 was $15,250. The contributions we made to the 401(k) accounts of the NEOs are shown in the “All Other Compensation” column of the 2022 Summary Compensation Table in the “Executive Compensation Tables” section of this Proxy Statement on page 59. NEOs also participate in health and welfare benefit plans on the same terms as other salaried employees.

No Gross Up for Excess Parachute Payments. Our CEO and the other NEOs do not currently have employment agreements. There are no arrangements requiring us to gross up compensation to cover taxes owed by the NEOs, including excise taxes payable by the NEOs in connection with a change in control.

Deferred Compensation Plan. We maintain a nonqualified deferred compensation plan that has permitted senior executives, key employees and non-employee directors to defer all or part of their compensation, including awards under the 2019 Plan. There is an account for the executives and employees and a separate account for the non-employee directors. Although we have the discretion to contribute a matching amount or make additional incentive contributions, we have never done either. As a result, the amounts disclosed in the “Nonqualified Deferred Compensation In 2022” table in the “Executive Compensation Tables” section of this Proxy Statement on page 63 consist entirely of compensation earned by, but not yet paid to, the NEOs and any earnings on such deferred compensation. A participant’s deferrals are fully vested, except for any restricted stock or RSU awards that still have vesting requirements. Upon death or disability of the participant, our insolvency, or a change in control affecting us, a participant becomes 100% vested in his or her account.

No Stock Option Grants. The Committee has not granted any stock options to executives or other employees since 2001.