Urban Edge Properties
07/02/2024 | Press release | Distributed by Public on 07/02/2024 15:15
Management Change/Compensation Form 8 K
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 28, 2024, the Company entered into a new employment agreement (the "Employment Agreement") with Jeffrey S. Olson, the Company's Chairman of the Board and Chief Executive Officer. The Employment Agreement supersedes the employment agreement, dated August 6, 2019, between Mr. Olson and the Company, as amended (the "Prior Employment Agreement"), which had an initial term that was scheduled to expire or automatically renew on September 1, 2024. The initial term for the Employment Agreement extends until September 1, 2027 with automatic one-year renewals thereafter unless either party provides the other party at least 90 days' prior notice of nonrenewal.
Mr. Olson's current annual target compensation is unchanged as a result of entering into the Employment Agreement, and no one-time or other compensation is being awarded in consideration of the execution of the Employment Agreement. The Employment Agreement provides that Mr. Olson will be entitled to an annual base salary of not less than $1,100,000 and eligible to earn an annual bonus with a target amount of not less than 110% of his annual base salary, payable in cash. The Compensation Committee of the Company's Board of Trustees (the "Compensation Committee") will have the discretion to establish the structure and performance targets for Mr. Olson's annual bonus and determine the amount earned each year. Mr. Olson also will be entitled to receive an annual grant of LTIP Units in the Operating Partnership ("LTIP Units") for each year under the Company's long-term incentive compensation plans, beginning with 2025, with a fair value at the grant date of not less than $4,450,000, of which (x) 50% will be time-based LTIP Units subject to annual vesting (ratably on each of the first four anniversaries of the grant date) based solely on continued employment with the Company and (y) 50% will be performance LTIP Units subject to a three-year measurement period, 50% of which shall vest on the third anniversary of the grant date, 25% of which shall vest on the fourth anniversary of the grant date and 25% of which shall vest on the fifth anniversary of the grant date, in each case, based on such criteria as may be determined by the Compensation Committee in its sole discretion.
The Employment Agreement generally provides Mr. Olson with the same level of termination payments and benefits as existed under the Prior Employment Agreement.
If Mr. Olson's employment is terminated by the Company without cause or by Mr. Olson for good reason (in each case, as defined in the Employment Agreement), subject to Mr. Olson's execution of a release, Mr. Olson will be entitled to (1) a lump sum payment of the Severance Amount, (2) a Pro Rata Bonus paid at the time bonuses are otherwise paid, (3) the Medical Benefits, and (4) vesting of all outstanding unvested equity awards that are subject to vesting based solely on continued employment. For these purposes:
•The "Severance Amount" equals two times the sum of Mr. Olson's base salary and target annual bonus, unless the termination is within three months prior to, in connection with or within two years following a change in control of the Company (a "Qualifying CIC Termination"), in which case it equals three times the sum of Mr. Olson's base salary and target annual bonus.
•The "Pro Rata Bonus" equals (i) on a Qualifying CIC Termination, the greater of Mr. Olson's target annual bonus or the annual bonus earned in the year of a termination based on actual performance with respect to the Company's performance goals and deeming any individual performance goals to be achieved at the target level, or (ii) if such termination is not a Qualifying CIC Termination, the annual bonus earned in the year of termination based on actual performance with respect to the Company's performance goals and deeming any individual performance goals to be achieved at the target level, in each case, prorated based on the portion of the year that had elapsed through the date of termination.
•The "Medical Benefits" require the Company to provide Mr. Olson medical insurance coverage substantially identical to that provided to other senior executives for three years following termination, in each case subject to applicable law.
"Cause" generally means Mr. Olson's (1) conviction of, or plea of guilty or nolo contendere to, a felony; (2) willful and continued failure to use reasonable best efforts to substantially perform his duties (other than such failure resulting from Mr. Olson's incapacity due to physical or mental illness or after Mr. Olson's notice of termination for good reason) that Mr. Olson fails to remedy to the reasonable satisfaction of the Company within 30 days after the Company's written notice of such failure; or (3) willful misconduct that is or may reasonably be expected to have a material adverse effect on the reputation or interests of the Company.
Mr. Olson may terminate his employment for "good reason" within 90 days after he has actual knowledge of the occurrence, without his written consent, of one of the following events that has not been cured within 30 days after Mr. Olson's written notice of such event (provided that such notice is given to the Company within 30 days after Mr. Olson becomes aware of the event): (1) a material reduction in base salary, aggregate annual cash compensation opportunity or the aggregate level of employee benefits; (2) a material diminution in Mr. Olson's position, authority, duties or responsibilities; (3) a relocation of Mr. Olson's location of employment to a location outside of Manhattan or more than 30 miles outside of Paramus, New Jersey; or (4) the Company's material breach of any provision of the Employment Agreement, including (a) Mr. Olson not holding the title of Chairman and Chief Executive Officer, (b) delivery by the Company of a notice of non-renewal of the Employment Agreement, (c) a failure of a successor to the Company to assume the Employment Agreement, (d) failure of the Company to appoint or elect Mr. Olson to the Board of Trustees or removal of Mr. Olson from the Board of Trustees and (e) a material change in Mr. Olson's reporting relationship inconsistent with the terms of the Employment Agreement.
If Mr. Olson's employment is terminated due to death or disability, and, in the case of termination of employment due to disability, subject to Mr. Olson's execution of a release, Mr. Olson will be entitled to vesting of the unvested portion of the option award granted on February 17, 2015 and it will remain exercisable for one year following termination (or, if earlier, for the remainder of the term).
The Employment Agreement provides that Mr. Olson will be subject to non-competition and non-solicitation of employees covenants through the one-year anniversary of the date Mr. Olson's employment terminates for any reason.
In the event that payments or benefits owed to Mr. Olson constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and would be subject to the excise tax imposed by Section 4999 of the Code, such payments or benefits will be reduced to an amount that does not result in the imposition of such excise tax, but only if such reduction results in Mr. Olson receiving a higher net-after-tax amount than he would have absent such reduction.
The foregoing summary is qualified in its entirety by reference to the Employment Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.