Document:

cbl-ex1027_6.htm

Exhibit 10.2.7

 

CBL & ASSOCIATES PROPERTIES, INC.

NAMED EXECUTIVE OFFICER

 

(Fiscal Year 2020)

 

ANNUAL INCENTIVE COMPENSATION PLAN (AIP)

 

OVERVIEW

 

This Annual Incentive Compensation Plan (“AIP”) is a cash incentive compensation plan adopted and established by the Compensation Committee of the Board of Directors of CBL & Associates Properties, Inc. (the “Company”).  This plan is designed and authorized for execution on an annual basis.  The policies, objectives, purposes and guidelines of this plan are as defined by the Compensation Committee of the Company’s Board of Directors, as designated by the Board from time to time (the “Compensation Committee”).  All awards and bonus payments described herein are entirely variable and at the sole discretion of the Compensation Committee may be evaluated, modified or revoked at any time.

 

All awards and bonus payments hereunder are not considered standard payment for services and are not guaranteed.  All compensation payable under this AIP will be paid to plan participants in their capacity as employees of CBL & Associates Management, Inc. (the “Management Company”), a wholly owned subsidiary of the Company.

 

ADMINISTRATION AND ELIGIBILITY

 

This AIP shall be effective as of the date of its approval by the Compensation Committee of the Company’s Board of Directors (the “Effective Date”).  The AIP shall be administered by the Compensation Committee of the Board as such is presently constituted on the Effective Date and as it shall be constituted after the Effective Date throughout the term of this AIP.  The Compensation Committee shall have sole authority, subject to the terms hereof, to set the terms pursuant to which any discretionary cash incentive compensation is to be paid to any participant under this AIP and to otherwise supervise the administration of this AIP, to interpret the terms and provisions hereof and to otherwise adopt, alter and repeal such administrative rules, guidelines and practices governing the AIP as the Compensation Committee shall, from time to time, deem advisable.

 

Participation in this AIP is limited to those individuals who are or have been included in the group of “named executive officers” of the Company for the applicable annual performance period, as determined pursuant to Item 402 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any applicable successor provision.  Each such individual is hereinafter referred to as a “Named Executive Officer”.  

 

OBJECTIVES AND PURPOSE

 

The objective of this AIP is to incentivize the Company’s Named Executive Officers to produce a high level of operational performance that results in the creation of increased value for the Company’s shareholders.  

 

The purposes of this AIP are to reward the Company’s Named Executive Officers:

 

	
 
	
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for achieving and exceeding specified levels of Company performance with respect to quantitative metrics selected by the Compensation Committee that it believes are important drivers in the creation of shareholder value; and

 

	
 
	
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for individual performance in relation to qualitative criteria established by the Compensation Committee for each such Named Executive Officer.

 

AWARD CRITERIA

 

	
 
	
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Awards under this AIP are dependent upon accomplishment of the Company’s goals and objectives and the individual goals and objectives specified by the Compensation Committee.  Payments will be based on performance criteria established for each fiscal year beginning January 1 and ending December 31.

 

	
 
	
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Management may develop recommendations for consideration by the Compensation Committee as to the criteria to be utilized in determining awards to each Named Executive Officer, but the Compensation Committee shall have the sole and final authority to decide all such matters. 

 

	
 
	
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Overall AIP payments (aggregate) made under this plan require approval of the Compensation Committee.

 

All compensation paid or payable pursuant to awards made under this AIP for any annual performance period shall be subject to the terms of the executive compensation Clawback Policy established by the Company’s Board of Directors by resolution dated March 24, 2015, as such policy may be hereafter modified or amended. 

 

PLAN DESIGN

 

Specific AIP award criteria will be established each year for each Named Executive Officer based on goals relating to overall Company performance and individual performance, as follows:

 

	
 
	
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The Compensation Committee will set forth annually a target cash bonus award level (the “Target Cash Bonus Award”) for each Named Executive Officer under the AIP.  

 

	
 
	
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Target Cash Bonus Awards shall consist of two parts as set forth below:  Quantitative Bonus Awards and Qualitative Bonus Awards.

 

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“Quantitative Bonus Awards” - the Quantitative Bonus Award component of any Target Cash Bonus Award that may be earned by each Named Executive Officer will be determined based on 60% of the Target Cash Bonus Award for each Named Executive Officer other than the Chief Executive Officer (“CEO”) (70% in the case of the CEO), to be determined by the Company’s performance relative to specified objective criteria established by the Compensation Committee as set forth herein.  The actual Quantitative Bonus Award earned by a Named Executive Officer may range from 0% to 150% of target based on actual performance.

 

	
 
	
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“Qualitative Bonus Awards” - the Qualitative Bonus Award component of any Target Cash Bonus Award to be earned by each Named Executive Officer will be determined based on 40% of the Target Cash Bonus Award for each Named Executive Officer other than the CEO (30% in the case of the CEO), to be determined based on the Compensation Committee’s subjective evaluation of such Named Executive Officer’s performance relative to specified individual criteria established by the Compensation Committee for each such Named Executive Officer as set forth herein.

 

2020 Target Cash Bonus Award Levels

 

The Target Cash Bonus Awards set by the Compensation Committee for each of the Company’s Named Executive Officers based on performance during calendar year 2020 are as follows:

 

				
	
 

Named Executive Officer
	
Total
2020 Target Cash 
Bonus Award
	
 

2020 Quantitative Bonus Target
	
 

2020 Qualitative Bonus Target

	
Stephen D. Lebovitz, Chief Executive Officer
	
$965,081
	
$675,557
	
$289,524

	
Charles B. Lebovitz, Executive 
Chairman of the Board
	
$423,282
	
$253,969
	
$169,313

	
Michael I. Lebovitz, President 
	
$321,694
	
$193,016
	
$128,678

	
Farzana Khaleel, Executive Vice President, Chief Financial Officer and Treasurer
	
$321,694
	
$193,016
	
$128,678

	
Jeffery V. Curry, Chief Legal Officer
	
$209,475
	
$125,685
	
$83,790

 

Determination of 2020 Quantitative Bonus Award Pursuant to Objective Performance Criteria

 

The following two objective performance metrics will be utilized in determining any payout with respect to the Quantitative Bonus Award portion of the Target Cash Bonus Award for each Named Executive Officer, weighted equally such that each will determine 50% of the Quantitative Bonus Award: 

 

	
 
	
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Funds From Operations (“FFO”), as adjusted, per diluted share, as reported in the Company’s periodic reports (Forms 10-K and 10-Q) filed with the SEC pursuant to the requirements of the Exchange Act (the “Periodic Reports”); and 

 

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Growth in Same-Center Net Operating Income (“SC NOI Growth”), as reported in the Company’s Periodic Reports.

 

The Compensation Committee shall have the option, pursuant to its administrative authority over the AIP as set forth herein, to adjust each metric as appropriate to take into account significant unbudgeted transactions and unforeseen events such as acquisitions, dispositions, joint ventures, equity or debt issuances and other capital markets activities, for purposes of determining the portion of any Quantitative Bonus Award payment based on these metrics.

 

In conjunction with the establishment of the Quantitative Bonus Award criteria for 2020 under this AIP, the Compensation Committee will establish, and communicate in writing to each Named Executive Officer, specific, quantitative targets designated as the “Threshold,” “Target” and “Maximum” levels with respect to each of FFO and SC NOI Growth for purposes of determining the Named Executive Officers’ Quantitative Bonus Award payments, as described below.

 

The Quantitative Bonus Award payment to be made to a Named Executive Officer with respect to each applicable metric will depend on the Company’s achievement of at least the Threshold level of performance established by the Compensation Committee with respect to that metric.  There will be no Quantitative Bonus Award payable to such Named Executive Officer for that metric in the event the Company achieves less than the Threshold level for the applicable annual performance period.  The Company’s achievement of the Threshold level for a designated metric will result in a payout of 50% of the proportion of the Quantitative Bonus Award allocated to that metric; the achievement of the Target level for a designated metric will result in a payout of 100% of the proportion of the Quantitative Bonus Award allocated to that metric; and the achievement of the Maximum level for a designated metric will result in a payout of 150% of the proportion of the Quantitative Bonus Award allocated to that metric.  If the calculated percentage is between Threshold and Maximum for an annual performance period, then the earned percentage will be prorated.  The achievement of these levels and allocated payments are illustrated by the following table: 

 

 

				
	
Quantitative Metric
	
Weighting
	
Range
	
Resulting Cash Payout

	

FFO per diluted share, as adjusted
	

50%
	
Threshold
	
50%

	
Target
	
100%

	
Maximum
	
150%

	

SC NOI Growth
	

50%
	
Threshold
	
50%

	
Target
	
100%

	
Maximum
	
150%

 

 

 

Determination of 2020 Qualitative Bonus Award Pursuant to Subjective Performance Criteria

 

The Qualitative Bonus Award portion of each Named Executive Officer’s Target Cash Bonus will be based on the Compensation Committee’s subjective evaluation of the Named Executive 

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Officer’s performance relative to the following individual criteria established for 2020 for each Named Executive Officer, which the Compensation Committee has determined are also important elements of each Named Executive Officer’s contribution to the creation of overall shareholder value:

 

 

		
	
Named
Executive Officer
	
2020 Individual Performance Objectives

	
Stephen D. Lebovitz
	
(1)  refining, enhancing and executing the Company’s strategic and business plans

(2)  effective communications and interactions with the investment community

(3)  regular communication and interaction with the Board

(4)  maintain and enhance key retailer, financial and other relationships

(5)  effective corporate and executive team communication, motivation and management

	
Charles B. Lebovitz
	
(1)  effective board management

(2)  maintain and enhance key retailer and other relationships

(3)  broad involvement and stewardship of the Company’s strategic    objectives and business performance

(4) support the CEO in developing and executing the Company's strategic and business plans

	
Michael I. Lebovitz
	
 (1) supervision of redevelopment projects with a special focus on minimizing capital investment as well as achieving approved pro forma returns and scheduled openings 

(2) manage and enhance anchor/department store and joint venture partner relationships 

(3) effective oversight of the Company’s IT and HR divisions including the implementation of technology and organizational initiatives 

(4) greater involvement and closer working relationship with the leasing, marketing and management divisions of the Company

(5) support the CEO in developing and executing the Company's strategic and business plans

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Named
Executive Officer
	
2020 Individual Performance Objectives

	
Farzana Khaleel
	
(1) successful execution of the Company’s balance sheet strategy (as presented in the quarterly liquidity plans) including successfully managing future debt maturities and maintaining/improving key credit metrics and effective interactions with rating agencies, banks and other financial entities

(2) effective management and oversight of the financial services and accounting divisions

(3) maintain and improve key financial and joint venture partner relationships

(4) effective interactions with the investment community through earnings calls, presentations and investor conferences/meetings

(5) support the CEO in developing and executing the Company's strategic and business plans

	
Jeffery V. Curry
	
(1) oversight and pursuit of a favorable resolution of litigation that

      the Company is facing

(2) effective management and oversight of the legal department and managing spend on outside counsel

(3) continued involvement in Board material preparation and Board support as necessary

(4) coordination with and support for other members of the senior executive team

(5) support the CEO in developing and executing the Company's strategic and business plans

 

 

AIP BONUS PAYMENTS

 

	
 
	
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The amount of a Named Executive Officer’s Target Cash Bonus Award (consisting of the Quantitative Bonus Awards portion and Qualitative Bonus Awards portion and after the determination of the amount of each such portion) that is to be paid to a Named Executive Officer hereunder is referred to as the “AIP Bonus Payment”.

 

	
 
	
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All AIP Bonus Payments will be made in the year following the completion of the annual performance period to which the AIP Bonus Payment relates.  The actual payment to each Named Executive Officer will be made as soon as practical after final certification of the underlying performance results and approval of such payment by the Compensation Committee; provided, however, that in no event will any such payment be made later than March 15 of such year.

 

	
 
	
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To be eligible to receive an AIP Bonus Payment, a Named Executive Officer must have been actively employed by the Management Company during the annual performance period with respect to which the payment relates. 

 

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Any Named Executive Officer whose employment is terminated prior to the conclusion of the annual performance period with respect to which an applicable AIP Bonus Payment relates will not receive an AIP Bonus Payment, except as stipulated below:

 

	
 
	
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In the event of such Named Executive Officer’s death or disability (defined as the complete and permanent disability of the Named Executive Officer as defined by the Company’s health insurance plans or as otherwise defined by the Company from time to time) prior to the end of the annual performance period, an otherwise eligible Named Executive Officer shall receive an AIP Bonus Payment in the amount of such Named Executive Officer’s full Target Cash Bonus Award, as determined by the Compensation Committee, provided a Target Cash Bonus Award was approved for such Named Executive Officer for the applicable annual performance period.

 

	
 
	
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In the event of the termination of such Named Executive Officer’s employment, other than voluntarily or for Cause (as defined in the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan as currently stated and as may amended in the future (the “Stock Incentive Plan”)), following a Change of Control (as defined in the Stock Incentive Plan) prior to end of the annual performance period, an otherwise eligible Named Executive Officer shall receive an AIP Bonus Payment in the amount of such Named Executive Officer’s full Target Cash Bonus Award, as determined by the Compensation Committee, provided a Target Cash Bonus Award was approved for such Named Executive Officer for the applicable annual performance period.

 

	
 
	
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A Named Executive Officer, who becomes such pursuant to applicable SEC rules after the beginning of an applicable annual incentive period, may be considered for a pro-rated participation in this plan in the discretion of the Compensation Committee.

 

	
 
	
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AIP Bonus Payments will be paid-out on a one-time basis as a lump-sum, in cash, as such are considered compensation and reportable income for all tax reporting purposes.

 

	
 
	
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AIP Bonus Payments are included in total annual earnings and may be taken into account under the Company’s other benefit programs in accordance with their terms.

 

This AIP can be modified or terminated at any time by the Compensation Committee of the Company's Board of Directors; provided, however, that the Compensation Committee may not modify or terminate the AIP or any award under the AIP in such manner so as to impair the rights of any Named Executive Officer under an award that has been granted without the Named Executive Officer's consent, except for an amendment made to cause the award to qualify for the exemption provided by Rule 16b-3 promulgated under the Exchange Act.  Neither participation in the AIP at any time nor the grant of an award under the AIP at any time shall be deemed to guarantee or infer the right to participate in the AIP (whether at the same level or at any other level) or to receive the grant of an award under the AIP at any future time.  Furthermore, neither the AIP nor participation hereunder shall be deemed to establish any contract of employment or to guarantee continued employment with the Company for any amount of time.

7Exhibit

Exhibit 4(j)

Description of the Company’s Common Stock
Registered Pursuant to Section 12
of the Securities Exchange Act of 1934

The following description of the Company’s capital stock is intended as a summary only. This description is based upon, and is qualified by reference to, the Company’s Amended and Restated Certificate of Incorporation (“certificate of incorporation”) and By-laws, each as filed with the Company’s Annual Report on Form 10-K, and the applicable provisions of Delaware corporation law.

General 

As of January 31, 2020, the authorized capital stock of Illinois Tool Works Inc. (“ITW”) consists of 700,000,000 shares of common stock, par value $0.01 per share, and 300,000 shares of preferred stock, no par value. As of January 31, 2020, there were 318,864,237 shares of common stock issued and outstanding. No preferred stock is issued and outstanding. 

Common Stock 

Holders of common stock are entitled to one vote for each share held of record, in person or by proxy, at all meetings of the stockholders and on all propositions presented to such meetings (other than the election of any directors who may be elected by vote of the preferred stock voting as a class). The common stock does not entitle holders to cumulative voting rights in the election of directors. Holders of common stock do not have preemptive rights.

All outstanding shares of common stock are fully paid and nonassessable. Dividends may be paid on the common stock when and if declared by the Board of Directors out of funds legally available therefor. Upon liquidation, dissolution, or winding up of the affairs of ITW, its assets remaining, after provision for payment of creditors and holders of any preferred stock, are distributable pro rata among holders of its common stock. 

The common stock is listed and traded on the NYSE under the symbol “ITW.” The transfer agent and registrar of the common stock is Broadridge Corporate Issuer Solutions, Inc., Philadelphia, PA. 

Preferred Stock 

ITW’s preferred stock is issuable in series. The preferred stock is senior to the common stock, both as to payment of dividends and distribution of assets. The designation, preferences and rights of each series may be established by the Board of Directors, including voting rights, dividends, redemption features, payments on liquidation and sinking fund provisions, if any. The preferred stock may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital or to finance acquisitions. The preferred stock also could be issued to persons friendly to current management with terms that could render more difficult or discourage attempts to gain control of ITW by means of a merger, tender offer, proxy contest or otherwise and thereby protect the continuity of current management. The preferred stock also could be used to dilute the stock ownership of persons seeking to obtain control of ITW.

Special Charter and By-law Provisions 

ITW’s Amended and Restated Certificate of Incorporation and By-laws, as amended and restated, contain provisions that could render more difficult a merger, tender offer, proxy contest or attempt to gain control of the Board of Directors. The Amended and Restated Certificate of Incorporation prohibits stockholder action by written consent. The Amended and Restated Certificate of Incorporation and By-laws permit only the Board of Directors to fill vacancies on the Board of Directors, whether created by an increase in the number of directors or otherwise, and permit special meetings of stockholders to be called only by the chairman, the president or a majority of the Board of Directors, or, subject to procedural requirements set forth in the By‐laws, by stockholders that own at least 20% 

of the Company’s outstanding common stock. The By-laws provide advance notice procedures for stockholders seeking to bring business before an annual meeting of stockholders or to nominate candidates for election as directors at any meeting of stockholders. Under the By-laws, up to 20 stockholders owning at least 3% of the Company’s outstanding common stock for at least 3 years may include nominations in the Company’s proxy materials for up to the greater of 25% of the Board of Directors or 2 directors, provided the stockholder(s) and nominee(s) satisfy the requirements specified in the By-laws. The By-laws also specify certain requirements regarding the form and content of a stockholder’s notice.

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