Item 5.02. Departure of Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
Anne Olson Promotion
On March 23, 2023, the Board of Trustees (the "Board") of Centerspace, a North
Dakota real estate investment trust (the "Company"), approved the appointment of
Anne Olson to serve as President and Chief Executive Officer of the Company,
effective March 31, 2023. Prior to her appointment, Ms. Olson served as the
Company's Executive Vice President, Chief Operating Officer, General Counsel and
Secretary. Following her appointment, Ms. Olson will continue to serve as
Secretary of the Company and will resign her positions as General Counsel and
Chief Operating Officer. The Board also approved Ms. Olson's appointment to
serve as a Trustee on the Company's Board, effective as of March 31, 2023.
Before her appointment, Ms. Olson, age 46, served as Executive Vice President,
General Counsel and Secretary of the Company since April 30, 2017, and also as
Chief Operating Officer since June 25, 2018. From 2011 to April, 2017, Ms. Olson
was in the private practice of law, most recently as a partner with the law firm
of Dorsey & Whitney LLP, in its Real Estate Practice Group, where she focused on
real estate development and investments for REITs, private equity funds, and
national developers and owners. Prior to 2011, she served as Director of
Investment Operations and in-house counsel for Welsh Companies, LLC and its
affiliates, providing leadership in the growth of its asset portfolio and
development of a successful capital markets strategy. Ms. Olson began her legal
career practicing real estate law at Dorsey & Whitney LLP. Ms. Olson is a member
of the National Multi Housing Council Innovation Committee, and a Board Member
for CareTrust REIT (NYSE: CTRE). She holds a Bachelor's degree in English from
Drake University and earned her J.D. with highest honors from Drake University
Law School.
There is no arrangement or understanding between Ms. Olson and any other person
pursuant to which she was selected as an officer of the Company, and there are
no related person transactions involving Ms. Olson that are reportable under
Item 404(a) of Regulation S-K. There are no family relationships between any
director or executive officer of the Company and Ms. Olson.
In connection with her appointment, the Board approved on March 23, 2023 and the
Company entered into an executive employment agreement with Ms. Olson to be
effective March 31, 2023 (the "Employment Agreement"). The Employment Agreement
provides for at-will employment as President and Chief Executive Officer to
begin on March 31, 2023. As part of her compensation package, Ms. Olson will
receive or be eligible for (as applicable) (i) an annual base salary of
$450,000, (ii) a Short-Term Incentive Plan target of 100% of base salary, (iii)
a Long-Term Incentive Plan target of 200% of base salary, and (iv) a one-time
stock award of $300,000, with a grant date of March 31, 2023, which will vest in
full on the third anniversary of the grant date. The Board also approved the
award to Ms. Olson of a cash retention bonus worth $100,000, which she is
eligible to collect on March 31, 2023. Ms. Olson also will be eligible to
participate in the Company's employee benefits, including health insurance.
The above description of the Employment Agreement is a summary only and is
qualified in its entirety by reference to the full text of the Employment
Agreement, substantially attached as Exhibit 10.1 to this Current Report on Form
8-K and is incorporated herein by reference.
Bhairav Patel
In order to ensure a smooth transition within the executive management team, on
March 23, the Board approved the award to Bhairav Patel, the Company's Executive
Vice President and Chief Financial Officer, of a $150,000 stock award, with a
grant date of March 31, 2023. One-third of the awarded shares vest on the second
anniversary of the grant date, and the remaining two-thirds vest on the third
anniversary of the grant date. The Board also approved the award to Mr. Patel of
a cash retention bonus worth $100,000, which he is eligible to collect on March
31, 2023.
Change in Control Agreements
On March 23, the Company entered into Change in Control Severance Agreements to
be effective March 31, 2023 (the "Change in Control Agreements") with each of
Anne Olson and Bhairav Patel. The Change in Control Agreements replaced the
prior change in control agreements applicable to Ms. Olson and Mr. Patel. Under
each Change in Control Agreement, Ms. Olson and Mr. Patel will receive severance
payments and benefits if a change in control occurs and her or his employment
with the Company and its affiliates is terminated "without cause" by the Company
or terminated by
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the officer for "good reason," as such terms are defined in the Change in
Control Agreements. Such payments and receipt of benefits are also contingent on
the officer: (i) signing a release and waiver of all claims against the Company;
and (ii) complying with certain covenants during employment and after
termination, including: a non-compete provision for six months; a
non-recruitment, or non-solicitation, provision; and a confidentiality
agreement.
Under the Change in Control Agreements, severance benefits include: (i) a
lump-sum severance payment equal to 3x for Ms. Olson and 2x for Mr. Patel the
sum of base salary and the target annual cash bonus; (ii) outstanding non-vested
share awards that vest based on continued employment vest immediately; and (iii)
outstanding non-vested, performance-based share awards that vest based on
performance goals vest immediately as though the target performance was achieved
as of the change in control date.
The officers are also entitled to a lump-sum payment in the amount that such
officer and her or his "qualified beneficiaries" (as defined in Code Section
4980B) would pay for continued medical, dental and vision coverage under the
Company's health plans and reimbursement of certain health insurance coverage
for up to 18 months and benefits under other Company plans and programs per the
terms of such plans and programs. Neither officer would receive any payment in
the event of a termination without good reason by the officer or a termination
for cause by the Company.
The above description of the Change in Control Agreements is a summary only and
is qualified in its entirety by reference to the full text of the form of Change
in Control Agreement, which is attached as Exhibit 10.2 to this Current Report
on Form 8-K and is incorporated herein by reference.
Mark O. Decker, Jr. Departure
On March 23, 2023, the Company and Mark. O. Decker, Jr. reached a mutual
agreement for Mr. Decker to separate from his position of President and Chief
Executive Officer of the Company, effective March 31, 2023. Mr. Decker will not
stand for re-election to the Board at the Company's next annual meeting of the
shareholders, which is expected to be held on May 16, 2023.
In connection with Mr. Decker's separation, the Company entered into a
Separation and General Release Agreement (the "Separation Agreement") with Mr.
Decker. The Separation Agreement provides that Mr. Decker will receive, among
other benefits, (i) a lump-sum total gross amount of $2,101,200, which
represents the sum of two times Mr. Decker's current base salary, plus two times
Mr. Decker's current target Short-Term Incentive Plan annual bonus, plus Mr.
Decker's pro-rated 2023 target annual Short-Term Incentive Plan bonus through
March 31, 2023; (ii) a gross lump-sum amount of $39,360, representing 24 months
of Mr. Decker's monthly premium for the cost of benefit continuation for health
benefits; and (iii) outplacement assistance of up to $10,000. In addition, Mr.
Decker's unvested time-based and performance-based equity awards will vest
according to the schedule set forth the Separation Agreement, and all
unexercised stock options granted to Mr. Decker during his employment will
become exercisable as of March 31, 2023 and will remain exercisable for a period
of three months. Under the Separation Agreement, Mr. Decker agreed to a waiver
and general release of all claims he has against the Company and certain related
persons and entities. Mr. Decker also agreed to other customary covenants,
including non-disclosure and non-interference covenants.
The above description of the Separation Agreement is a summary only and is
qualified in its entirety by reference to the full text of the Separation
Agreement, which is attached as Exhibit 10.3 to this Current Report on Form 8-K
and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On March 23, 2023, the Company issued a press release announcing Ms. Olson's
appointment. Pursuant to Item 7.01 of Form 8-K, a copy of the press release is
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 7.01 and Item 9.01, including Exhibit 99.1, shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, or otherwise subject to the liability of such section, nor shall it be
deemed incorporated by reference in any filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any
general incorporation language in such filing, unless expressly incorporated by
specific reference in such filing.
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ITEM 9.01 Financial Statements and Exhibits
(d)Exhibits
Exhibit
Number Description
10.1 Employment Agreement, effective March 31, 2023, by and between the Company
and Anne Olson
10.2 Form of Change in Control Severance Agreement
10.3 Separation Agreement, effective as of March 31, 2023, by and between the
Company and Mark Decker, Jr.
99.1 Press Release dated March 23 , 2023
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL Document.
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