Item 5.02Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 4, 2022, the Compensation Committee of the Board of Directors of
Digital Realty Trust, Inc. (the "Company") granted each of our named executive
officers (the "executives") an award of performance-based Class D profits
interest units ("Class D Units") of Digital Realty Trust, L.P. (the "Operating
Partnership"), as set forth below (collectively, the "awards"). The awards were
granted under the Digital Realty Trust, Inc., Digital Services, Inc. and Digital
Realty Trust, L.P. 2014 Incentive Award Plan, as amended (the "Plan"). The
material terms and conditions of the awards are described below.
General. Pursuant to the awards, each executive is eligible to vest in a number
of Class D Units ranging from 0% to 100% of the total "base" Class D Units
granted, based on the attainment of specified performance metrics relating to
core funds from operation ("Core FFO") during the three-year period commencing
on January 1, 2022 and ending on December 31, 2024 or, if earlier, ending on the
date on which a change in control (as defined in the Plan) occurs (the
"Performance Period"), subject to the executive's continued service. Class D
Units are subject to the applicable terms and conditions of the Nineteenth
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (as amended, the "Partnership Agreement").
The number of "base" Class D Units granted to the named executive officers are
set forth in the following table:
Number of
Class D Units
Name and Principal Position Subject to Award
A. William Stein 52,666
Chief Executive Officer
Andrew P. Power 21,588
President & Chief Financial Officer
Gregory S. Wright 17,990
Chief Investment Officer
Erich J. Sanchack 9,910
Chief Operating Officer
Christopher Sharp 8,618
Chief Technology Officer
Performance Vesting. In the event that the Company achieves Core FFO per share
during the Performance Period at the "threshold," "target" or "high" level as
specified in the applicable award agreement, the "base" Class D Units will
become performance-vested with respect to a percentage of such units, as
follows:
Performance Vesting
Percentage*
Below "Threshold Level" 0%
"Threshold Level" 25%
"Target Level" 50%
"High Level" 100%
*If performance falls between the levels specified above, the performance
vesting percentage will be determined using straight-line linear interpolation
between such levels.
With respect to each award of Class D Units, an additional number of Class D
Units subject to the award (the "distribution equivalent units") having a value
equal to the dividends that would have been paid during the Performance Period
on the shares of common stock corresponding to the base units that become
performance-vested (less any actual distributions made with respect to such
units) will vest in full as of the completion of the Performance Period. For
purposes of calculating the number of distribution equivalent units, the
dividend amount will be adjusted (plus or minus) to reflect the gain or loss on
such amount had the dividends been reinvested in common stock of the Company on
the applicable payment date.
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Following the completion of the Performance Period, the Plan administrator will
determine the number of Class D Units (and corresponding distribution equivalent
units) that have become performance-vested. Upon the completion of the
Performance Period, any performance-vested Class D Units will become fully
vested and cease to be subject to forfeiture with respect to 50% of such units
on February 27, 2025 and with respect to the remaining 50% of such units on
February 27, 2026, subject to the executive's continued service through the
applicable vesting date.
Change in Control. In the event of a change in control of the Company, all
then-outstanding performance-vested Class D Units (if any), including any Class
D Units that become performance-vested in connection with the change in control,
will become fully vested and cease to be subject to forfeiture as of the date of
the change in control, subject to the executive's continued service until at
least immediately prior to the change in control.
Certain Terminations of Service. Except as otherwise described below, any Class
D Units that have not fully vested as of the date on which an executive's
service terminates for any reason will be cancelled and forfeited by the
executive.
If an executive's service terminates due to disability (or, with respect to each
executive who is not a party to an Executive Severance Agreement with the
Company, due to such executive's death) prior to the completion of the
Performance Period, the award will remain outstanding and eligible to become
performance-vested in accordance with the performance vesting schedule described
above, and any Class D Units that become performance-vested as of the completion
of the Performance Period will be fully vested at such time. Any Class D Units
that do not become fully vested will be cancelled and forfeited upon the
completion of the Performance Period.
For each executive who is a party to an Executive Severance Agreement with the
Company, if such executive's service terminates due to his death prior to the
completion of the Performance Period, then (i) if such termination occurs on or
prior to the second anniversary of the grant date, the award will become fully
vested with respect to the number of Class D Units that would have become
performance-vested as of the completion of the Performance Period at the
"target" level and (ii) if such termination occurs after the second anniversary
of the grant date, the award will remain outstanding and eligible to become
performance-vested in accordance with the performance vesting schedule described
above, and any Class D Units that become performance-vested as of the completion
of the Performance Period will be fully vested at such time. Any Class D Units
that do not become fully vested will be cancelled and forfeited upon the
completion of the Performance Period.
If an executive's service is terminated by the Company or an affiliate thereof
other than for "cause" or by the executive for "good reason" (or, with respect
to each executive who is not a party to an Executive Severance Agreement with
the Company, due to such executive's "retirement") (each such term as defined in
the applicable award agreement), in any case, prior to the completion of the
Performance Period, the award will remain outstanding and eligible to become
performance-vested in accordance with the performance vesting schedule described
above, and the number of Class D Units that vest in full upon the completion of
the Performance Period will be determined on a pro rata basis, based on the
number of days that the executive was employed during the Performance Period.
Any Class D Units that do not become fully vested will be cancelled and
forfeited upon the completion of the Performance Period.
For each executive who is a party to an Executive Severance Agreement with the
Company, in the event of such executive's "retirement" prior to the completion
of the Performance Period, if the Company either (A) fails to offer the
executive a "consulting agreement" (as defined in the applicable award
agreement) immediately following the executive's retirement, or (B) enters into
a consulting agreement with the executive and then terminates the consulting
agreement and the consulting relationship established thereby without "cause"
(as defined in the consulting agreement), the award will remain outstanding and
eligible to become performance-vested in accordance with the performance vesting
schedule described above, and any Class D Units that become performance-vested
as of the completion of the Performance Period will be fully vested at such
time. Any Class D Units that do not become fully vested will be cancelled and
forfeited upon the completion of the Performance Period.
If, after the completion of the Performance Period, an executive's service is
terminated due to the executive's death or disability, by the Company or an
affiliate thereof other than for cause, by the executive for good reason or due
to the executive's retirement, in any case, any outstanding performance-vested
Class D Units will vest in full upon such termination.
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The foregoing description of the awards is qualified in its entirety by the full
text of the award agreements, the forms of which will be filed as exhibits to
the Company's and the Operating Partnership's combined Quarterly Report on Form
10-Q for the quarter ending March 31, 2022.
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