Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Approval of Revisions to Director Compensation Policy
OnJanuary 11, 2021 , the Board of Directors (the "Board") ofInnovative Industrial Properties, Inc. (the "Company") amended the Company's director compensation policy as follows, with such changes retroactive toJanuary 1, 2021 : each non-employee director receives an annual retainer of$75,000 in cash (except in the case ofGary Kreitzer , the Company's Vice Chairman, who receives an annual retainer of$150,000 in cash) and an annual retainer of$160,000 payable in restricted shares of common stock under the Company's 2016 Omnibus Incentive Plan (the "Incentive Plan") (except in the case ofMr. Kreitzer , who receives an annual retainer of$200,000 payable in restricted shares of common stock under the Incentive Plan), which vest in their entirety one year from the date of grant. The audit committee chair continues to receive an additional annual retainer of$10,000 in cash and any other committee chair continues to receive an additional annual retainer of$5,000 in cash. All non-employee directors continue to be reimbursed for their costs and expenses in attending the Company's Board meetings. The Company also will grant$160,000 in restricted shares of common stock under the Incentive Plan to each non-employee director who is initially elected or appointed to the Board on the date of such initial election or appointment, which vest in their entirety one year from the date of grant. Any member of the Company's Board who is also an employee of the Company continues to not receive additional compensation for serving as a director.
Approval of Form of Performance Share Unit Award Agreement
OnJanuary 11, 2021 , the Compensation Committee (the "Compensation Committee") of the Board adopted a form of Performance Share Unit Award Agreement (the "PSU Agreement") under the Company's Incentive Plan. The PSU Agreement provides for the issuance of target performance share units ("PSUs"). The ultimate value of the PSUs depends on the Company's total stockholder return ("TSR") over a period commencingJanuary 11, 2021 and ending onDecember 31, 2023 (the "Performance Period"). At the end of the Performance Period, the PSUs vest and are settled in shares of common stock (the "Award Shares") at a rate depending on the Company's TSR over the Performance Period as compared to two different comparator groups, as certified by the Compensation Committee: i) 25 real estate companies; and ii) the companies in the FTSE NAREIT All Equity REIT Index. A recipient of PSUs may receive as few as zero Award Shares or as many as 150% of the number of target PSUs in Award Shares, plus deemed dividends (as described below). The chart below sets forth the vesting schedule as a percentage of the target PSUs that applies at the end of the Performance Period. However, the number of Award Shares that may be earned at vesting of the PSUs will be reduced as necessary so the total value at the vesting date does not exceed 800% of the grant date PSU price. In addition, if the Company's absolute TSR during the Performance Period is negative, the payout of Award Shares will be capped at the target number of PSUs, notwithstanding the Company's outperformance of the
comparator groups. PSU Payout The Company's TSR Ranking within the Two Comparator (as a % of Groups Target) At or above 80th percentile TSR 150%
Determined by
linear
Between the 80th percentile TSR and 55th percentile TSR interpolation(1) At the 55th percentile TSR 100% Determined by linear
Between the 25th percentile TSR and 55th percentile TSR interpolation(2)
At or below the 25th percentile TSR 0%
(1) Determined by linear interpolation between the comparator group's 80th and
55th percentile TSRs.
(2) Determined by linear interpolation between the comparator group's 25th and
55th percentile TSRs. No dividends are paid to the recipient during the Performance Period. At the end of the Performance Period, if the Company's TSR is such that the recipient earns Award Shares, the recipient will receive additional shares of common stock relating to dividends deemed to have been paid and reinvested on the Award Shares. The recipient of the Award Shares may not sell, transfer or otherwise dispose of the Award Shares for a one-year period following the vesting date of the Award Shares. The terms of the PSU Agreement supersede any conflicting terms of any severance agreement or plan applicable to the recipient, including each executive officer's Change of Control and Severance Agreement with the Company andIIP Operating Partnership, LP , the Company's operating partnership subsidiary (the "Operating Partnership"). The PSU Agreement provides that upon the recipient's (a) death; (b) "disability"; (c) termination of employment or service by the Company without "cause" or by the recipient for "good reason"; or (d) "qualifying retirement" (each a "Qualifying Event") prior to a change of control of the Company, the PSUs will continue to vest, except that if the PSUs were granted less than twelve months prior to the date of the Qualifying Event, then the potential payout of Award Shares is prorated based on the number of months that the recipient was employed or provided service to the Company since the date of grant through the date of the Qualifying Event, divided by twelve months. After a change of control, the PSUs (as adjusted as a result of the change of control) continue to vest in full regardless of the date of grant, upon the occurrence of a Qualifying Event.
For any other termination of employment or service to the Company by the recipient other than a Qualifying Event, any unvested PSUs are forfeited in their entirety.
Executive Compensation Decisions
OnJanuary 11, 2021 , the Compensation Committee adjusted the annual base salaries of the Company's executive officers for 2021, determined the executive officers' year-end 2020 cash bonuses and granted executive officers awards of restricted stock units ("RSUs"), restricted shares of common stock and PSUs pursuant to the PSU Agreement. These salaries, bonuses and grants of restricted stock, RSUs and PSUs are summarized in the following table: 2020 Year- Target 2021 Base End Cash RSU Restricted PSU Name and Position Salary(1) Bonus Awards(2) Stock Awards(3) AwardsAlan Gold Executive Chairman$ 1,023,750 $ 853,125 12,612 - 31,857 Paul Smithers President and Chief Executive Officer 840,000 420,000 6,654 - 21,238 Catherine Hastings Chief Financial Officer and Treasurer 308,500 246,750 2,607 - 8,496 Brian Wolfe Vice President, General Counsel and Secretary 295,000 241,500 - 2,553 7,080
(1) Adjustments to the executive officers' base salaries are effective as of
(2) The RSUs vest ratably on each of
1, 2024 for Messrs. Gold and Smithers and
she continues to be an employee of the Company or a non-employee member of
the Board on each such date. The RSUs were issued to Messrs. Gold and
Smithers and
("RSU Agreement") under the Company's Incentive Plan.
(3) The restricted stock award vests ratably on each of
1, 2023 and
an employee of the Company or a non-employee member of the Board on each such
date. The restricted stock awards were issued to
Restricted Stock Award Agreement ("Restricted Stock Award Agreement") under
the Company's Incentive Plan.
Copies of the Director Compensation Policy, RSU Agreement, Restricted Stock Award Agreement and PSU Agreement are filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by reference. The foregoing descriptions of the Director Compensation Policy, RSU Agreement, Restricted Stock Award Agreement and PSU Agreement are qualified in their entirety by reference to the full texts of the Director Compensation Policy, RSU Agreement, Restricted Stock Award Agreement and PSU Agreement.
Item 7.01 Regulation FD Disclosure.
As previously disclosed on the Company's Current Report on Form 8-K filed with theU.S. Securities and Exchange Commission onNovember 6, 2020 , the Company and theOperating Partnership entered into separate equity distribution agreements with sales agents, pursuant to which the Company may offer and sell from time to time through the sales agents, up to$500,000,000 shares of its common stock (the "ATM Program"). As ofJanuary 15, 2021 , the Company sold a total of 1,762,500 shares of common stock under the ATM Program, generating approximately$263.0 million in net proceeds, which includes the payment of approximately$5.4 million to one sales agent as commission for such sales. As ofJanuary 15, 2021 , the Company had approximately$231.7 million of common stock available for future issuance under the ATM Program, and the number of shares of the Company's common stock outstanding was 23,926,317.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Description of Exhibit 10.1*+ Director Compensation Policy 10.2+ Form of Restricted Stock Unit Award Agreement.(1) 10.3+ Form of Restricted Stock Award Agreement for Officers.(2) 10.4*+ Form of Performance Share Unit Award Agreement. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Filed herewith.
+ Indicates management contract or compensatory plan.
(1) Incorporated by reference to Exhibit 10.1 to
(2) Incorporated by reference to Exhibit 10.2 to
filed with the
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