Item 1.01. Entry into a Material Definitive Agreement.
On
The Eleventh Amendment amends Exhibit H of the Partnership Agreement to set forth the terms of new classes of LTIP Units designated as Performance Units. Matters addressed in the amendment include, among other things, provisions related to allocations, distributions, transfers, conversion to LTIP Units, voting and certain tax matters with respect to the Performance Units.
The description of the Eleventh Amendment set forth herein is qualified in its entirety by reference to the full text of the Eleventh Amendment, which is filed as Exhibit 10.1 to this report and is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with
Under the terms of the Letter Agreement,
The Consulting Agreement will commence on
A copy of the Letter Agreement, which includes the related release agreement and the Consulting Agreement as exhibits thereto, is attached hereto as Exhibit 10.2, and is incorporated herein by reference. The foregoing summary of the material terms of the Letter Agreement (including the related release agreement) and the Consulting Agreement does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.2.
LTI Program. In considering the adverse effects of the COVID-19 pandemic on the
Company's performance and our management's strong leadership in addressing the
adverse effects of the pandemic, on
Our named executive officers, along with other senior officers, are participants in the LTI Program. As discussed in our Proxy Statement for the 2020 Annual Meeting of Shareholders, the LTI Program included four performance metrics (the LTI Program does not include awards based only on continuous service), one of which was based on the Company's funds from operations as adjusted
("FFO as Adjusted") for the period from
The Committee recognized that the performance targets for the 1-Year FFO as Adjusted Metric were established prior to the beginning of the COVID-19 pandemic and, accordingly, at a time when the adverse impact of the pandemic on the Company's business, and in particular the adverse impact of the pandemic on the Company's 2020 FFO as Adjusted, was unforeseeable. The Committee also recognized that the adverse impact of the pandemic was not unique to the Company and that the pandemic adversely impacted the Company's industry in general. The Committee also considered the strong leadership of the named executive officers and other participants in the LTI Program during the pandemic, as demonstrated by their efforts to institute new procedures and policies to address the economic and regulatory changes arising from the COVID-19 pandemic. The Committee believed that the Company's 2020 performance relative to 1-Year FFO as Adjusted Metric was not fully reflective of management's efforts, particularly considering that the Company's performance during the first quarter of 2020 was on track to meet or exceed the target established for the 1-Year FFO as Adjusted Metric prior to the beginning of the year.
Accordingly, the Committee modified the LTI Program to remove the 1-Year FFO as Adjusted Metric for the 2020 fiscal year, and to replace such metric with a new metric based on the Company's growth in FFO as Adjusted over a two-year period versus the growth in FFO as Adjusted for our apartment peers, defined as a group consisting of Apartment Investment Management Company, AvalonBay Communities, Inc., Camden Property Trust, Equity Residential, Essex Property Trust, Inc. and Mid-America Apartment Communities (the "2-Year FFO as Adjusted Metric"). The performance period for the 2-Year FFO as Adjusted Metric will be the 2020 and 2021 calendar years. One-half of the portion of the LTI Program awards based on the 2-Year FFO as Adjusted Metric will vest, if at all, when the Committee determines actual performance for the 2-Year FFO as Adjusted Metric in January or February of 2022 and one-half will vest, if at all, one year thereafter. The threshold, target and maximum performance levels for the 2-Year FFO as Adjusted Metric are as follows:
Relative 2-Year FFO as Adjusted Growth Rate Percentage Earned Below -600bps to Weighted Average Growth Rate 0% -600bps to Weighted Average Growth Rate 50% Weighted Average Growth Rate 100%
+600bps to Weighted Average Growth Rate 200%
The Committee has not previously modified metrics or performance levels for the LTI Program during the applicable performance period, but is doing so in response to the unique environment created by the COVID-19 pandemic.
The Committee believes that this modification to the LTI Program recognizes the hard work, commitment and achievements of the participants in the LTI Program during an extremely challenging time, while simultaneously maintaining the rigor of the LTI Program with respect to providing meaningful incentives to participants, aligning their interests with the interests of our shareholders, and furthering our retention objectives.
Item 7.01 Regulation FD Disclosure.
The press release announcing
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description
10.1 Eleventh Amendment to the Amended and Restated Agreement of Limited Partnership ofUnited Dominion Realty, L.P. , dated as ofDecember 16, 2020 . 10.2 Letter Agreement, between the Company andMr. Davis (including the related release agreement and Consulting Agreement as exhibits thereto), datedDecember 16, 2020 . 99.1 Press Release . 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
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