UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934 (Amendment
No. )
Filed by
the Registrant R
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to
§240.14a-12
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COGDELL
SPENCER INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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of Filing Fee (Check the appropriate box):
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No
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
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Aggregate
number of securities to which the transaction applies:
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Per
unit price or other underlying value of the transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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Proposed
maximum aggregate value of the transaction:
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paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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COGDELL
SPENCER INC.
4401
Barclay Downs Drive, Suite 300
Charlotte,
NC 28209-4670
March 25,
2009
Dear
Stockholder:
We
cordially invite you to attend the 2009 Annual Meeting of stockholders of
Cogdell Spencer Inc. The meeting will be held on Tuesday, May 5, 2009, at
9:00 a.m., local time, at the Company headquarters located at 4401 Barclay
Downs Drive, Suite 300, Charlotte, North Carolina 28209. The matters expected to
be acted upon at the meeting are described in detail in the accompanying Proxy
Statement. We encourage you to read these materials carefully and to take part
in the affairs of our Company by voting on matters described in the Proxy
Statement.
I
am pleased to inform you that we are taking advantage of the Securities and
Exchange Commission’s new rules that allow us to furnish our Proxy Statement and
related proxy materials to our stockholders over the Internet. We believe the
new rules will expedite stockholders’ receipt of proxy materials, lower our
costs of delivery and reduce the environmental impact of our Annual Meeting. The
“About the Meeting” section of the Proxy Statement contains instructions on how
you can receive a paper copy of the Proxy Statement and Annual
Report.
Your
vote is very important. Whether or not you plan to attend the meeting, please
submit your proxy as promptly as possible. If you attend the meeting, you may
continue to have your shares of common stock voted as instructed in the proxy or
you may withdraw your proxy at the meeting and vote your shares of common stock
in person. We look forward to seeing you at the meeting.
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Sincerely,
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FRANK
C. SPENCER
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President
and Chief Executive Officer
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 5, 2009
NOTICE
IS HEREBY GIVEN that the 2009 Annual Meeting of Stockholders (the “Annual
Meeting”) of Cogdell Spencer Inc., a Maryland corporation, will be held at
Company headquarters located at 4401 Barclay Downs Drive, Suite 300, Charlotte,
North Carolina 28209 on Tuesday, May 5, 2009 at 9:00 a.m., local time, for
the following purposes as further described in the accompanying Proxy
Statement:
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1. To
elect nine members to the board of directors, each to serve until the 2010
annual meeting of stockholders and until his successor is duly elected and
qualifies. The nominees to the board of directors are the following: James
W. Cogdell, Frank C. Spencer, John R. Georgius, Richard B. Jennings,
Christopher E. Lee, Richard C. Neugent, Randolph D. Smoak, M.D.,
David J. Lubar and Scott A. Ransom;
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2. To
consider and vote upon ratification of the appointment of
Deloitte & Touche LLP as our independent registered public
accounting firm for the year ending December 31, 2009;
and
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3. To
transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements
thereof.
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Our
board of directors has fixed the close of business on Friday, March 6, 2009 as
the Record Date for determination of stockholders entitled to receive notice of
and to vote at the Annual Meeting, or any adjournments or postponements of the
Annual Meeting. Only holders of record of our common stock at the close of
business on that day will be entitled to vote at the Annual Meeting, or any
adjournments or postponements of the Annual Meeting.
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By
Order of the Board of Directors
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CHARLES
M. HANDY
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Corporate
Secretary
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WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, TO ENSURE YOUR REPRESENTATION
AT THE ANNUAL MEETING, PLEASE PROMPTLY VOTE BY INTERNET, OR BY
MARKING, SIGNING, DATING AND RETURNING YOUR PROXY CARD AS PROMPTLY AS
POSSIBLE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. IF YOU
ATTEND THE MEETING, YOU MAY CONTINUE TO HAVE YOUR SHARES OF COMMON STOCK
VOTED AS INSTRUCTED IN THE PROXY OR YOU MAY WITHDRAW YOUR PROXY AT THE
MEETING AND VOTE YOUR SHARES OF COMMON STOCK IN
PERSON.
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3
TABLE
OF CONTENTS
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Page
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General
Information
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About
the Meeting
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5
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Items
to Be Voted On by Stockholders
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7
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Information
About the Board and Its Committees
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10
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Executive
Officers and Other Officers
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12
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Report
of the Audit Committee
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12
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Corporate
Governance Matters
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13
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Executive
Compensation
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14
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Security
Ownership of Certain Beneficial Owners and Management
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29
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Certain
Relationships and Related Transactions
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31
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Other
Matters
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31
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4
COGDELL
SPENCER INC.
4401
Barclay Downs Drive, Suite 300
Charlotte,
NC 28209-4670
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held May 5, 2009
GENERAL
INFORMATION
We
are sending this Proxy Statement and, if you requested a printed version of
these materials, the accompanying proxy card in connection with the solicitation
of proxies by the board of directors (the “Board”) of Cogdell Spencer Inc. (the
“Company”), a Maryland corporation, for use at our 2009 Annual Meeting of
Stockholders (the “Annual Meeting”), and at any adjournments or postponements
thereof, to be held at Company headquarters located at 4401 Barclay Downs Drive,
Suite 300, Charlotte, North Carolina 28209 on Tuesday, May 5, 2009 at
9:00 a.m., local time. The purposes of the Annual Meeting are:
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(1) To
elect nine members to the Board, each to serve until the 2010 annual
meeting of stockholders and until his successor is duly elected and
qualifies, the nominees to the Board being James W. Cogdell, Frank C.
Spencer, John R. Georgius, Richard B. Jennings, Christopher E. Lee,
Richard C. Neugent, Randolph D. Smoak, M.D., David J. Lubar and Scott
A. Ransom;
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(2) To
consider and vote upon ratification of the appointment of
Deloitte & Touche LLP as our independent registered public
accounting firm for the year ending December 31, 2009;
and
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(3) To
transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements
thereof.
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This
proxy statement is accompanied by a copy of our Annual Report to Stockholders
for the fiscal year ended December 31, 2008.
ABOUT
THE MEETING
Record
Date
The
Board has fixed the close of business on Friday, March 6, 2009 as the Record
Date (the “Record Date”) for determination of stockholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof. Each share of our common stock, $0.01 par value per share (“Common
Stock”), is entitled to one vote for each matter to be voted upon. As of the
Record Date, there were 17,711,839 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting.
Quorum;
Voting
The
presence, in person or by proxy, of the stockholders entitled to cast a majority
of all the votes entitled to be cast at the Annual Meeting shall constitute a
quorum for the transaction of business at the Annual Meeting. If a quorum is not
present or represented at the Annual Meeting, the Chairman of the Annual Meeting
shall have the power to adjourn the Annual Meeting to a date not more than
120 days after the original Record Date without notice other than
announcement at the Annual Meeting, until a quorum is present or represented. At
any such adjourned Annual Meeting at which a quorum is present or represented,
any business may be transacted that might have been transacted at the Annual
Meeting as originally noticed.
Each
stockholder is entitled to one vote for each share of Common Stock registered in
the stockholder’s name on the Record Date. A plurality of all of the votes cast
at the Annual Meeting at which a quorum is present shall be sufficient to elect
a director. A majority of the votes cast at the Annual Meeting at which a quorum
is present is required for the ratification of our independent registered public
accounting firm.
If
you properly execute a proxy in the accompanying form, and if we receive it
prior to voting at the Annual Meeting, the shares that the proxy represents will
be voted in the manner specified on the proxy. With respect to the proposals to
elect directors (Proposal 1) and to consider and vote upon the ratification
of our independent registered accounting firm (Proposal 2), if no
specification is made, abstentions and “broker non-votes” will not be counted as
votes cast and will have no effect on the result of the vote. If the bank,
broker or nominee holding shares for a beneficial owner does not receive
instructions from a beneficial owner on a non-discretionary or non-routine
matter it will not vote on that proposal because that holder does not have
discretionary voting power for that particular item and has not received
instructions from the beneficial owner. This is referred to as a “broker
non-vote.” Abstentions and “broker non-votes” will be treated as shares that are
present and entitled to vote for purposes of determining the presence of quorum,
but will not be counted in the number of votes cast on a matter. Proposals 1 and
2 involve matters that we believe are routine.
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Shares
Held in Street Name
Under
New York Stock Exchange (the “NYSE”) rules, if your shares are held in “street
name,” you will receive instructions from your nominee, which you must follow in
order to have your shares of Common Stock voted.
Revocation
of Proxies
If
you cast a vote by proxy, you may revoke it at any time before it is voted
by:
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giving
written notice to our Secretary at our address,
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expressly
revoking the proxy, by signing and forwarding to us a proxy dated
later or by voting again on the Internet, or
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by
attending the Annual Meeting and personally voting the Common Stock owned
of record by you as of the Record
Date.
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Solicitation
This
solicitation is being made on behalf of the Board. We will bear the entire cost
of soliciting proxies for the Annual Meeting. In addition, further solicitation
of proxies may be made by mail, by certain of our directors, executive officers
and employees may solicit the return of proxies by telephone, facsimile,
personal interview or otherwise without being paid additional compensation.
Continental Stock Transfer & Trust Company, our transfer agent and
registrar, will assist in the distribution of proxy materials and tabulation of
votes. We will also reimburse brokerage firms and other persons representing the
beneficial owners of our shares for their reasonable expenses in forwarding
proxy solicitation material to the beneficial owners in accordance with the
proxy solicitation rules and regulations of the Securities and Exchange
Commission (the “SEC”) and the NYSE.
Delivery
of Materials
In
accordance with new rules adopted by the SEC, instead of mailing a printed copy
of our proxy materials to our stockholders, we have elected to furnish proxy
materials, including this Proxy Statement and our 2008 Annual Report to
Stockholders, by providing access to these documents on the Internet.
Accordingly on March 25, 2009, we sent a Notice of Internet Availability of
Proxy Materials (the “Notice”) to our holders of record and beneficial owners.
The Notice provided instructions for accessing our proxy materials on the
Internet and instructions on how to receive printed copies of the
proxy materials without charge by mail or electronically by email. Please follow
the instructions included in the Notice.
The
Notice provides you with instructions regarding how to (1) view our proxy
materials for the Annual Meeting on the Internet; (2) vote your shares
after you have viewed our proxy materials; (3) request a printed copy of
the proxy materials; and (4) instruct us to send our future proxy materials
to you. We believe
the delivery options that we have chosen this year will allow us to provide our
stockholders with the proxy materials they need, while lowering the cost of the
delivery of the materials and reducing the environmental impact of printing and
mailing printed copies. If you choose to receive our future proxy materials by
email, you will receive an email next year with instructions containing a link
to view those proxy materials and a link to the proxy voting site. Your election
to receive proxy materials by email will remain in effect until you terminate
it.
Householding
The
rules of the SEC allow us to deliver a single copy of a Notice or set of proxy
materials to any address shared by two or more stockholders. This delivery
method is referred to as “householding” and can result in significant cost
savings. To take advantage of this opportunity, we have delivered only one
Notice or one proxy statement and annual report to multiple stockholders who
share an address, unless we received contrary instructions from the impacted
stockholders prior to the mailing date. We agree to deliver promptly, upon
written or oral request, a separate copy of the Notice or proxy materials, as
requested, to any stockholder at the shared address to which a single copy of
those documents was delivered. If you prefer to receive separate copies of the
Notice or proxy materials, please follow the instructions for requesting copies
included in the Notice.
6
ITEMS TO
BE VOTED ON BY STOCKHOLDERS
ITEM 1 —
ELECTION OF
DIRECTORS
In
accordance with the provisions of our charter and Bylaws, each member of the
Board is elected at the Annual Meeting. Each member of the Board elected will
serve for a term expiring at the 2010 annual meeting of stockholders and until
his successor has been elected and qualifies, or until his earlier resignation
or removal. James W. Cogdell, Frank C. Spencer, John R. Georgius, Richard B.
Jennings, Christopher E. Lee, Richard C. Neugent, Randolph D. Smoak, M.D.,
David J. Lubar and Scott A. Ransom are the Board’s nominees for
election.
Proxies
that are properly executed and returned will be voted at the Annual Meeting, and
any adjournments or postponements thereof, in accordance with the directions on
such proxies. If no directions are specified, such proxies will be voted “FOR”
the election of the nine persons specified as nominees for directors, each of
whom will serve until the 2010 annual meeting of stockholders. We have no reason
to believe that any of the nominees will be unable or unwilling to serve if
elected. However, should any director nominee named herein become unable or
unwilling to serve if elected, it is intended that the proxies will be voted for
the election, in his stead, of such other person as the Board may nominate,
unless the Board reduces the size of the membership of the Board prior to the
Annual Meeting to eliminate the position of any such nominee.
In
connection with the merger with Marshall Erdman & Associates, Inc.
(“Erdman”) in March 2008, one of the former Erdman shareholders, Lubar Capital
LLC (“Lubar”), received the right to nominate one individual for election to the
Board. Accordingly, the Board increased the size of the membership of the
Board and elected Mr. Lubar as a director on March 10, 2008. Lubar will
continue to retain its right to nominate one individual for so long as Lubar and
its affiliates continue to maintain at least 75% of their aggregate initial
ownership measured in number of equity securities of the Company and its
affiliates.
The
Board has affirmatively determined that Messrs. Georgius, Lee, Lubar,
Jennings, Neugent and Dr. Smoak are independent within the standards
prescribed by the NYSE. The Board has also affirmatively determined that no
material relationships exist between us and any of the independent directors
that would interfere with their judgment in carrying out their responsibilities
as a director.
In
making its determination that each of our directors (other than Messrs. Cogdell,
Spencer and Ransom) is independent, the Board considered Mr. Lubar’s positions
as (A) a member of the board of directors and indirect equity owner of two
limited liability companies (the “Lubar Entities”) each managed by its own board
of directors that had contracted with the Company’s Erdman subsidiary prior to
the Company acquiring Erdman, (B) a member of the board of trustees of
Northwestern Mutual Life Insurance Company (“Northwestern”), the parent company
of the Company’s joint venture partner in its real property acquisition joint
venture, and (C) a member of the board of directors of Marshall & Isley
Corporation (“M&I”), the parent company of the one of the lenders under the
Company’s revolving credit facility and term loan.
The
Board affirmatively determined that, with respect to the Lubar Entities, because
(1) of the nature of Mr. Lubar’s relationship with these entities (he is an
indirect owner but not involved in their management, as he resigned from all
management positions with the Lubar Entities on November 17, 2008) , (2) the
contracts between the Erdman subsidiary and the Lubar Entities were executed
prior to the Company’s acquisition of Erdman and the date Mr. Lubar joined our
Board and (3) the contract with one of these entities was substantially
completed in mid-September 2008 and the other contract was substantially
completed in mid-February 2009, these relationships do not compromise Mr.
Lubar’s independence.
The
Board further determined that Mr. Lubar’s position as one member of the
21-person board of trustees of Northwestern does not impair Mr. Lubar’s
independence because the capital commitment of the Company’s joint venture
partner to the property acquisition joint venture is not material to
Northwestern.
In
addition, the Board determined that Mr. Lubar’s position on the Board of M&I
similarly does not affect his independence because (x) M&I’s participation
in the Company’s revolving credit facility and term loan is not material to
M&I and (y) Mr. Lubar was not yet on our Board at the time the Company or
Erdman entered into these loans.
Nominees
for Directors
The
following table sets forth the name, age and the position(s) with us, if any,
currently held by each person nominated as a director:
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Name
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Age
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Title
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James
W. Cogdell
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67
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Chairman
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Frank
C. Spencer
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48
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Chief
Executive Officer, President and Director
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John
R. Georgius(1)(2)
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64
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Director
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Richard
B. Jennings(1)(2)
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65
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Director
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Christopher
E. Lee(2)(3)
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60
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Director
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David
J. Lubar(1)(3)
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54
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Director
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Richard
C. Neugent(1)(3)
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65
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Director
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Scott
A. Ransom
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Director,
President of Erdman
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Randolph
D. Smoak, M.D.(2)(3)
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Director
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(1)
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Member
of Audit Committee
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(2)
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Member
of Compensation Committee
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(3)
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Member
of Nominating and Corporate Governance
Committee
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Following
are biographical summaries for our nominees for election as
directors:
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James
W. Cogdell, Chairman of the Board. From 1972 until 2005
Mr. Cogdell served as the Chairman and Chief Executive Officer of
Cogdell Spencer Advisors, Inc. and has served as Chairman of our Board
since our inception in 2005. Mr. Cogdell was named Entrepreneur of
the Year by the Charlotte Chamber of Commerce for the large companies
category in 2002. He was an eight-year chairman of the Citizens Capital
Budget Advisory Committee for Mecklenburg County, North Carolina.
Mr. Cogdell has been recognized with the Outstanding Layman Award for
2004 by the North Carolina Division of Soil and Water Conservation. He is
an activist on civic and cultural development organizations ranging from
public schools and child advocacy, to conservation, scouting and the arts.
Mr. Cogdell is a member of the United States Eventing Association and
the U.S. Equestrian Federation. Mr. Cogdell has developed more
than 70 healthcare real estate properties valued at over $400 million
during his career.
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Frank
C. Spencer, Chief Executive Officer, President and Director.
Mr. Spencer, our Chief Executive Officer and President, has served as
one of our directors since our inception in 2005. Since 1998,
Mr. Spencer has served as President of Cogdell Spencer Advisors, Inc.
and prior to that in other executive capacities with Cogdell Spencer
Advisors, Inc. since joining us in 1996. Prior to his employment with
Cogdell Spencer Advisors, Inc. Mr. Spencer was Executive Director of
The Children’s Services Network, a non-profit organization, from 1993 to
1996. He began his real estate career with the Crosland Group, where he
was Corporate Vice President responsible for portfolio management,
marketing and advisory services. Mr. Spencer was named to the 40 under 40 list for top
young business executives by the Charlotte Business Journal
in 2000. He has had works published in Urban Land Magazine and
the Institutional
Real Estate
Letter on Real Estate Finance. Mr. Spencer has been an
instructor at the Healthcare Financial Management Association’s state,
regional and national meetings, a member of the University of North
Carolina at Charlotte Real Estate Program Board of Advisors, an instructor
at Montreat College and a full member of the Urban Land Institute and is
Chairman of the board of directors of The Mountain Retreat Association
(Montreat). Mr. Spencer was instrumental in the establishment of
McCreesh Place, a permanent residence for 64 formerly homeless men in
Mecklenburg County, North Carolina, led a mission group for Habitat for
Humanity to Malawi, Africa and has served as Vice Chairman of the
Transitional Families Program for the Charlotte Mecklenburg Housing
Authority. Mr. Spencer received a B.A. with honors in German from the
University of North Carolina where he was a Morehead Scholar and received
an M.B.A. from Harvard Business School with high distinction and was
designated as a Baker Scholar.
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John
R. Georgius, Director. Mr. Georgius has served as one of our
directors since our inception in 2005. He is an advisory member of the CEO
Council of Council Ventures, LP, a technology-focused venture capital fund
in which he is a founding investor. From 1975 to December 1999,
Mr. Georgius served in various executive positions at First Union
Corporation including President and Chief Operating Officer, Vice
Chairman, President of First Union National Bank and Senior Vice President
and head of the trust division. Over his 37-year banking career,
Mr. Georgius directed or otherwise participated in more than 140
acquisitions in the financial services arena. Mr. Georgius has served
as a director of First Union Corporation, First Union National Bank, VISA
USA, and VISA International. He currently serves as a director for
Alex-Lee Corporation, has been a member of its audit and compensation
committees. Mr. Georgius received a B.B.A. in accounting and
corporate finance from Georgia State University and is a graduate of the
American Bankers Association National Graduate Trust School at
Northwestern University.
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Richard
B. Jennings, Director. Mr. Jennings has served as one of our
directors since our inception in 2005. He is President of Realty Capital
International LLC, a real estate investment banking firm he founded in
1991. From 1990 to 1991, Mr. Jennings served as Senior Vice President
of Landauer Real Estate Counselors, and from 1986 to 1989
Mr. Jennings served as Managing Director of Real Estate Finance at
Drexel Burnham Lambert Incorporated. From 1969 to 1986, Mr. Jennings
oversaw the REIT investment banking business at Goldman, Sachs &
Co. During his tenure at Goldman, Sachs & Co., Mr. Jennings
founded and managed the Mortgage Finance Group from 1979 to 1986.
Mr. Jennings also serves as a member of the board of directors of
National Retail Properties, Inc. and is Lead Director of Alexandria Real
Estate Equities, Inc. He is a licensed New York real estate broker.
Mr. Jennings received a B.A. in economics, Phi Beta Kappa and Magna
Cum Laude, from Yale University, and received an M.B.A. from Harvard
Business
School.
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Christopher
E. Lee, Director. Mr. Lee has served as one of our directors
since our inception in 2005. He is President and Chief Executive Officer
of CEL & Associates, Inc., one of the nation’s leading real
estate advisory firms. For the past 28 years, Mr. Lee has
provided a variety of strategic, compensation, organizational and
performance improvement and benchmarking services to hundreds of real
estate firms nationwide. Mr. Lee is a frequent speaker at national
real estate conferences, a regular contributor to various real estate
publications and is the editor of the national real estate newsletter,
Strategic Advantage.
Prior to his consulting career, Mr. Lee worked for the
Marriott and Boise Cascade corporations. Mr. Lee serves on the
Advisory Board for the Real Estate School at San Diego State
University. Mr. Lee received a B.A. from San Diego State
University, an M.S. degree from San Jose State University, and a
Ph.D. in organizational development from Alliant International
University.
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Richard
C. Neugent, Director. Mr. Neugent has served as one of our
directors since our inception in 2005. He is President of RCN Healthcare
Consulting Inc., a firm that he formed in 2003 which develops business for
a national healthcare consulting practice in strategic and operational
improvement services for hospitals, health systems and academic medical
centers in the southeastern United States. Mr. Neugent has been
involved in the healthcare industry for over 40 years. He was
President and Chief Executive Officer of Bon Secours-St. Francis Health
System in Greenville, South Carolina from 1981 to 2003. Prior to that
time, he was Chief Operating Officer of Rapides Regional Medical Center in
Alexandria, Louisiana. Mr. Neugent also served as a Captain in the
Medical Service Corps of the U.S. Air Force where he oversaw the
construction of hospitals and dispensaries. Mr. Neugent constructed
the first women’s hospital in the state of South Carolina.
Mr. Neugent was named the 2001 Greenville Magazine’s Nelson
Mullins Business
Person of the Year. In 2003, Mr. Neugent was presented with
the Order of
the Palmetto, the
state of South Carolina’s highest civilian award. Mr. Neugent has
served on the advisory boards of Clemson University, The University Center
in Greenville and First Union National Bank. In addition, he has served on
the board of the United Way and has held leadership positions in several
United Way annual campaigns. He also served on the Greenville Chamber of
Commerce board. Mr. Neugent consults with the Christian Blind Mission
International, USA located in Greenville, South Carolina. Mr. Neugent
received a B.S. from Alabama College and received an M.S. from The
University of Alabama in hospital administration.
|
|
|
Randolph
D. Smoak, M.D., Director. Dr. Smoak has served as one of
our directors since our inception in 2005. He is a clinical professor of
surgery and is a former President of the American Medical Association
(AMA), having served from 2000 to 2001. Dr. Smoak also served as a
member of the Board of Trustees with the AMA from 1992 through 2002. Since
his retirement, he has served on various boards including The Hollins
Cancer Center Advisory Board, The Tobacco Free Kids Board, The Orangeburg
Calhoun Technical College Foundation Board and The Greenville Family
Partnership Board. He was the lead spokesperson for the AMA’s anti-smoking
campaign, representing the Department of Health and Human Services
Interagency Committee on Smoking and Health. Dr. Smoak was a member
of Orangeburg Surgical Associates from 1967 through 2001. Dr. Smoak
served as President and Chairman of South Carolina Medical Association as
well as president of the South Carolina Division of the American Cancer
Society. He is a founding member of the South Carolina Oncology Society,
completed two terms as Governor from South Carolina to the American
College of Surgeons, and served as Chairman of the Board of Directors of
the World Medical Association. Dr. Smoak received a B.S. from The
University of South Carolina and received an M.D. from The Medical
University of South Carolina.
|
|
|
David
J. Lubar, Director. Mr. Lubar has served as one of our directors
since 2008. Mr. Lubar is president of Lubar & Co., a family
office and private investment firm founded in 1977 whose investment
activities include acquisitions of middle market operating companies as
well as growth financings for emerging businesses. Over the past
30 years, Lubar & Co. has successfully invested in and built
growing companies in a wide range of industries and various stages of
development, including financial services, food production and processing,
industrial products manufacturing, transportation and logistics,
design-build construction services, energy services, contract drilling,
gas transmission, drilling products and services, real estate development
and others. Mr. Lubar serves on the Boards of Directors of
Northwestern Mutual Life Insurance Company, Marshall & Ilsley
Corporation (NYSE: MI), the Milwaukee Brewers baseball team, as well as
many private companies. Mr. Lubar is also on the Boards of several
not-for-profit organizations, including University of Wisconsin-Milwaukee
Foundation, University School of Milwaukee, Greater Milwaukee Foundation,
Froedtert & Community Health System, Milwaukee Jewish Federation,
Metropolitan Milwaukee Association of Commerce, and United Way of Greater
Milwaukee. Previously, Mr. Lubar spent five years with Norwest Bank
N.A. in Minneapolis in the commercial and correspondent banking
departments. Mr. Lubar received a Bachelor of Arts degree from
Bowdoin College and an M.B.A. from the University of Minnesota. He resides
in Milwaukee, Wisconsin with his wife and three
children.
|
|
|
Scott
A. Ransom, Director. Mr. Ransom has served as one of our
directors since 2008. He is President and Chief Executive Officer of
Erdman Company, an innovative national leader in healthcare facility
solutions, offering comprehensive services from advanced planning and
building to real estate developing and financing. Prior to joining
ME&A, Mr. Ransom spent 9 years with PricewaterhouseCoopers
providing financial consulting services to large privately and publicly
held companies. Marshall Erdman, the founder of the company, recruited
Ransom from PricewaterhouseCoopers in 1994. Mr. Ransom began at
Marshall Erdman as Director of Finance; in 1998, he was named Chief
Financial Officer; and in 2001, he was named President. In 2004,
Mr. Ransom was appointed Chief Executive Officer and a member of the
Board of Directors. He then led Marshall Erdman’s transition from a
family-owned business to a management and investor-owned business.
Mr. Ransom has been instrumental in devising and implementing a
strategic plan to achieve long-term sustainable growth, while continuing
to provide customers with the highest levels of quality and service, and
creating an energized working environment. He serves on the Board of
Directors of MSI General, a design-build firm in Milwaukee, Wisconsin, and
on the Advisory Board for the University of Wisconsin-Madison James A.
Graaskamp Center for Real Estate. Mr. Ransom was past Vice Chair of
the United Way Campaign of Dane County and past Co-Chair of the American
Heart Association annual fundraiser. Mr. Ransom graduated summa cum
laude with a bachelor of business in accounting from the University of
Wisconsin-Oshkosh. In 2006, he was awarded the University of Oshkosh
Distinguished Alumni Award, the University’s highest honor for
professional and community
contributions.
|
9
Recommendation
Regarding the Election of Directors
The Board recommends that you vote
“FOR” the election of the nine named nominees.
ITEM 2 — RATIFICATION OF
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The
Audit Committee of the Board has appointed Deloitte & Touche LLP as our
independent registered public accounting firm for the year ending
December 31, 2009, subject to ratification of this appointment by
our stockholders. We have been advised by Deloitte & Touche LLP
that it is a registered public accounting firm with the Public Company
Accounting Oversight Board (the “PCAOB”) and complies with the auditing, quality
control and independence standards and rules of the PCAOB and the SEC. We expect
that representatives of Deloitte & Touche LLP will be present at the
Annual Meeting to make a statement if they desire to do so. They will also be
available to answer appropriate questions from stockholders. Our charter and
Bylaws do not require that stockholders ratify the appointment of the
independent registered public accounting firm. We are submitting the appointment
for ratification because the Board believes it is a matter of good corporate
practice.
Recommendation
Regarding Ratification of the Appointment of Deloitte & Touche
LLP
The
Board recommends that you vote “FOR” ratification of this
appointment.
INFORMATION
ABOUT THE BOARD AND ITS COMMITTEES
Board
Meetings
The
Board intends to hold at least four regularly scheduled meetings per year and
additional special meetings as necessary. Each director is expected to attend
scheduled and special meetings, unless unusual circumstances make attendance
impractical. The Board may also take action from time to time by written
consent. The Board met nine times during 2008. Each of our directors attended at
least 75% of the meetings of our Board and 75% of the meetings of the committees
of our Board on which the director served. We expect each of our directors to
attend the Annual Meeting in person unless unusual circumstances make attendance
impractical. In 2008 all of our directors attended our annual meeting of
stockholders.
Executive
Sessions of Non-Management Directors
It
is the policy of the Board that the non-management members of the Board meet
separately without management (including management directors) at least twice
per year during regularly scheduled Board meetings in order to discuss such
matters as the non-management directors consider appropriate. The lead
non-management director will assume the responsibility of chairing the meetings
of non-management directors and shall bear such further responsibilities which
the non-management directors as a whole or the Board might designate from time
to time. Our lead non-management director is Richard C. Neugent. Our independent
auditors, finance staff, legal counsel, other employees and other outside
advisers may be invited to attend these meetings.
Board
Committees
The
Board has three standing committees: an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee. Each of these
committees has at least three directors and is composed exclusively of
independent directors, by reference to the rules, regulations and listing
standards of the NYSE, the national exchange on which our Common Stock is
traded.
Committee
Charters
The
Audit Committee, Compensation Committee and Nominating and Corporate Governance
Committee charters meet the standards that have been established by the NYSE.
Copies of these charters are available on our website at www.cogdellspencer.com or
will be provided to any stockholder upon request.
Audit
Committee
The Audit Committee assists our Board in overseeing the integrity of our
Company’s financial statements, our compliance with legal and regulatory
requirements including the Sarbanes-Oxley Act of 2002, the qualifications and
independence of the independent auditor and the performance of the internal
audit function and independent auditor. The Audit Committee prepares the report
that the rules of the SEC require to be included in the annual proxy statement
and provides an open avenue of communication among the independent auditor, the
internal auditor, our management and our Board. John R.
Georgius chairs the Audit Committee and serves as our Audit Committee financial
expert, as that term is defined by the SEC, and Richard B. Jennings, David J.
Lubar and Richard C. Neugent serve as members of this committee. Mr. Lubar and
Mr. Jennings became members of the Audit Committee in March 2008 and November
2008, respectively, and Dr. Smoak ceased to be a member in February 2009. The
Audit Committee met six times in 2008.
10
Compensation
Committee
The Compensation Committee determines how the Chief Executive Officer and the
Chairman of the Board should be compensated, sets policies and reviews
management decisions regarding compensation of our senior executives, reviews
and approves written employment agreements of our Company and our
subsidiaries, administers and makes recommendations to our Board regarding stock
incentive plans, reviews and discusses with our management the Compensation
Discussion & Analysis to be included in our proxy statement and
produces an annual report on executive compensation for inclusion in our proxy
statement. The Compensation Committee may delegate all or a portion of its
duties and responsibilities to a subcommittee of the Compensation Committee,
provided that a charter is adopted for such subcommittee. Executive officers
play a role in determining or recommending the amount or form of executive
officer and director compensation. Prior to establishing our general
compensation philosophy, the Compensation Committee consults with our Chairman
of the Board and Chief Executive Officer. Our Chairman of the Board and Chief
Executive Officer provide recommendations to the Compensation Committee with
regard to the compensation of our executive officers and with regard to our
other highly paid employees and the executive officers and employees of our
subsidiaries. Christopher E. Lee chairs the Compensation Committee and John R.
Georgius, Richard B. Jennings and Randolph D. Smoak, M.D. serve as members
of this committee. Mr. Jennings became a member of the Compensation Committee in
November 2008. The Compensation Committee met four times in 2008.
Nominating and
Corporate Governance Committee
The Nominating and Corporate Governance Committee develops and recommends to our
Board a set of corporate governance guidelines, identifies individuals qualified
to fill vacancies or newly created positions on our Board, recommends to our
Board the persons it should nominate for election as directors at the annual
meeting of our stockholders and recommends directors to serve on all committees
of our Board. Richard C. Neugent chairs the Nominating and Corporate
Governance Committee and Christopher E. Lee, David J. Lubar and Randolph D.
Smoak, M.D. serve as members of this committee. In March 2008, Mr. Lubar became
a member of the Nominating and Corporate Governance Committee and Dr. Smoak
ceased to be a member but subsequently rejoined the committee in February 2009.
The Nominating and Corporate Governance Committee met three times in
2008.
The
Nominating and Corporate Governance Committee will consider recommendations made
by stockholders. Under our current Bylaws, and as SEC rules permit, stockholders
must follow certain procedures to nominate a person for election as a director
at an annual or special meeting, or to introduce an item of business at an
annual meeting. A stockholder must notify our Secretary in writing of the
director nominee or the other business. For annual meetings the notice must
include the required information (as set forth below, “Other Matters —
Stockholder Proposals and Nominations for the Board”) and be delivered to our
Secretary at our principal executive offices not earlier than the 150th day
and not later than 5:00 p.m., Eastern time, on the 120th day prior to
the first anniversary of the date of mailing of the notice for the preceding
year’s annual meeting.
If
the date of the Annual Meeting is advanced or delayed by more than 30 days
from the first anniversary of the date of the preceding year’s annual meeting,
notice by the stockholder must be delivered as described above not earlier than
the 150th day prior to the date of mailing of the notice for such annual
meeting and not later than 5:00 p.m., Eastern time, on the later of the
120th day prior to the date of such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made. The public announcement of an adjournment or postponement of an
annual meeting does not change or create a new opportunity for notice as
described above.
Director
Compensation
Each
non-employee member of our Board is entitled to receive annual compensation for
his services as a director as follows effective January 1, 2009: $25,000
per year, $1,500 per meeting attended, $750 per teleconference. Committee
meetings, attended either in person or telephonically, are $750 per instance.
The chairperson of the Audit Committee is entitled to receive an additional
$15,000 annually and the chairperson of the Compensation Committee is entitled
to receive an additional $12,000 annually in compensation. The chairperson of
the Nominating and Corporate Governance Committee is entitled to receive an
additional $5,000 annually in compensation. Such amounts shall be paid in
cash.
The
following table sets forth compensation information for each of our non-employee
directors for the fiscal year ended December 31, 2008:
Director
Compensation
|
Name
|
Fees
Earned
or
Paid in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Comp.
|
Total
|
|||||||||||||||
|
John
R. Georgius
|
$ | 52,250 | $ | 47,025 | $ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ | 99,275 | ||||||||
|
Richard
B. Jennings
|
$ | 36,250 | $ | 47,025 | $ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ | 83,275 | ||||||||
|
Christopher
E. Lee
|
$ | 47,000 | $ | 47,025 | $ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ | 94,025 | ||||||||
|
David
J. Lubar
|
$ | 35,557 | $ | — | $ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ | 35,557 | ||||||||
|
Richard
C. Neugent
|
$ | 46,500 | $ | 47,025 | $ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ | 93,525 | ||||||||
|
Randolph
D. Smoak
|
$ | 43,000 | $ | 47,025 | $ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ | 90,025 | ||||||||
11
Effective
February 26, 2009, each non-employee member of our board of directors was
granted restricted shares of our common stock or long term incentive plan units
in the Operating Partnership (“LTIP units”) as follows: Messrs. Georgius,
Lee, Lubar and Neugent were each granted 6,569 LTIP units, and
Messrs. Jennings and Smoak were each granted 6,569 restricted shares of our
common stock.
EXECUTIVE
OFFICERS AND OTHER OFFICERS
Key
Executive Officers
Information
for James W. Cogdell, Frank C. Spencer and Scott A. Ransom is contained above
under the heading “Item 1 — Election of Directors.” Information with
respect to some of our other key executive officers is set forth below. All of
our executive officers are appointed as executive officers at the meeting of the
Board held at the time of each annual meeting of stockholders.
Charles
M. Handy, age 47, Chief Financial Officer, Senior Vice President and
Secretary.
Mr. Handy has served as our Chief Financial Officer, Senior Vice President
and Secretary since our inception in 2005. Prior to that, Mr. Handy had
served as the Chief Financial Officer, Treasurer and Corporate Secretary for
Cogdell Spencer Advisors, Inc. since 1997. Formerly, Mr. Handy was
Corporate Controller for Faison & Associates, Inc., a commercial real
estate management and development firm headquartered in Charlotte, North
Carolina, and began his career at Ernst & Young. Mr. Handy has
more than 21 years of experience in commercial real estate, accounting,
finance and operations. Mr. Handy is a member of the American Institute of
Certified Public Accountants and the North Carolina Association of Certified
Public Accountants. He has also acted as the Compliance Officer for Cogdell
Spencer Advisors, Inc.’s licensing and regulation process. Mr. Handy is a
licensed real estate broker in North Carolina. Mr. Handy received a
B.S.B.A. in accounting and real estate from Appalachian State University and
received an M.B.A. from Wake Forest University.
REPORT
OF THE AUDIT COMMITTEE
The
Audit Committee (the “Audit Committee”) of the Board of Directors (the “Board”)
of Cogdell Spencer Inc., a Maryland corporation (the “Company”), assists the
Board in fulfilling its responsibility for oversight of the quality and
integrity of the Company’s accounting, auditing and financial reporting
practices, and the Company’s compliance with laws, regulations and corporate
policies, and the independent registered public accounting firm’s
qualifications, performance and independence. Consistent with this oversight
responsibility, the Audit Committee has reviewed and discussed with management
the audited financial statements for the fiscal year ended December 31,
2008 and their assessment of internal control over financial reporting as of
December 31, 2008. Deloitte & Touche LLP, our independent
registered public accountants, issued its unqualified report on our financial
statements.
The
Audit Committee also has discussed and reviewed with Deloitte & Touche
LLP the matters required to be discussed in accordance with Statement on
Auditing Standards No. 61, Communication with Audit
Committees, as amended. The Audit Committee also has received the written
disclosures and the letter from Deloitte & Touche LLP required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as amended, and has conducted a discussion with
Deloitte & Touche LLP relative to its independence. The Audit Committee
has considered whether Deloitte & Touche LLP’s provision of non-audit
services is compatible with its independence.
As
set forth in the charter of the Audit Committee, our management is responsible
for the preparation, presentation and integrity of our financial statements.
Management is also responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal controls and procedures
that provide for compliance with accounting standards and applicable laws and
regulations. Our independent registered public accounting firm is responsible
for planning and carrying out a proper audit of our annual financial statements,
and reviews of our quarterly financial statements prior to the filing of each
Quarterly Report on Form 10-Q. The members of the Audit Committee are not
our full-time employees and are not performing the functions of auditors or
accountants. All members of the Audit Committee have been affirmatively
determined by the Board to be independent within the standards prescribed by the
New York Stock Exchange and the applicable rules promulgated by the Securities
and Exchange Commission (the “SEC”). The Board also has determined that the
Audit Committee has at least one “audit committee financial expert,” as defined
in Item 401(h) of SEC Regulation S-K, such expert being
Mr. Georgius, and that he is “independent,” as that term is used in
Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of
1934, as amended (the “Exchange Act”).
Members of the Audit Committee rely without independent verification on the
information provided to them and on the representations made by management and
the independent registered public accounting firm. Accordingly, the Audit
Committee’s oversight does not provide an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or appropriate internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee’s considerations and discussions referred to
above do not assure that the audit of the Company’s consolidated financial
statements has been carried out in accordance with the auditing standards of the
Public Company Accounting Oversight Board (United States), that the consolidated
financial statements are presented in accordance with accounting principles
generally accepted in the United States of America, that Deloitte & Touche
LLP is in fact “independent” or the effectiveness of the Company’s internal
controls.
Based
on these reviews and discussions, the Audit Committee recommended to the Board
that our audited financial statements for the fiscal year ended
December 31, 2008 be included in our Annual Report on Form 10-K for
filing with the SEC.
Respectfully
submitted by the members of the Audit Committee:
|
John
R. Georgius, Chairman
|
|
|
Richard
B. Jennings
|
|
|
David
J. Lubar
|
|
|
Richard
C. Neugent
|
|
|
Randolph
D. Smoak, M.D.
|
12
CORPORATE
GOVERNANCE MATTERS
Corporate
Governance Guidelines
Our
Board, in its role of overseeing the conduct of our business, is guided by our
Corporate Governance Guidelines. Our Corporate Governance Guidelines reflect the
NYSE listing standards. Among other things, our Corporate Governance Guidelines
contain categorical standards for determining director independence in
accordance with the NYSE listing standards. A copy of our Corporate Governance
Guidelines is available in print to any shareholder who requests it and also
available on our website at www.cogdellspencer.com.
Director
Independence
The
Guidelines provide that a majority of our directors serving on our Board must be
independent as required by the listing standards of the NYSE and the applicable
rules promulgated by the SEC. Our Board has affirmatively determined, based upon
its review of all relevant facts and circumstances, that each of the following
directors has no material relationship with us (either directly or as a partner,
shareholder or officer of an organization that has a relationship with us) and
is independent under the listing standards of the NYSE and the applicable rules
promulgated by the SEC: Messrs. Georgius, Lee, Lubar, Jennings, Neugent and
Dr. Smoak. The Board has determined that each of Mr. Cogdell, the
Chairman of the Board, Mr. Spencer, our President and Chief Executive
Officer and Mr. Ransom, President and Chief Operating Officer of our Erdman
subsidiary, are not independent directors because each is a named executive
officer.
Criteria
for Board Membership
Nominees
for the Board should be committed to enhancing long-term stockholder value and
must possess a high level of personal and professional ethics, sound business
judgment and integrity. The Board’s policy is to encourage selection of
directors who will contribute to the Company’s overall corporate goals:
responsibility to its stockholders, understanding of the medical office
industry, leadership, effective execution, high customer satisfaction and a
superior employee working environment. The Nominating and Corporate Governance
Committee may from time to time review the appropriate skills and
characteristics required of Board members, including such factors as business
experience, diversity and personal skills in finance, marketing, financial
reporting and other areas that are expected to contribute to an effective Board.
In evaluating potential candidates for the Board, the Nominating and Corporate
Governance Committee considers these factors in the light of the specific needs
of the Board at that time. Board members are expected to prepare for, attend and
participate in meetings of the Board and committees on which they serve, and are
strongly encouraged to attend the Company’s annual meetings of stockholders.
Each member of the Board is expected to ensure that other existing and planned
future commitments do not materially interfere with the member’s service as a
director. These other commitments will be considered by the Nominating and
Corporate Governance Committee and the Board when reviewing Board candidates and
in connection with the Board’s annual evaluation process.
Whistleblowing
and Whistleblower Protection Policy
The
Audit Committee has established procedures for: (1) the receipt, retention
and treatment of complaints received by us regarding accounting, internal
accounting controls or auditing matters, and (2) the confidential and
anonymous submission by our employees of concerns regarding questionable
accounting or auditing matters. If you wish to contact the Audit Committee to
report complaints or concerns relating to our financial reporting, you may do so
by (i) calling the Compliance Hotline at 1-800-595-5573, (ii) emailing
our Compliance Email Box at whistleblower@cogdellspencer.com, or
(iii) delivering the report via regular mail, which may be mailed
anonymously, to c/o Audit Committee, Cogdell Spencer Inc., 4401 Barclay
Downs Drive, Suite 300, Charlotte, NC 28209. A copy of the policy is
available on our website at www.cogdellspencer.com.
Code
of Business Conduct and Ethics
Our
Code of Business Conduct and Ethics (the “Code of Ethics”) documents the
principles of conduct and ethics to be followed by our employees, executive
officers and directors, including our principal executive officer, financial
officer and accounting officer. The purpose of the Code of Ethics is to promote
honest and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional relationships; promote
avoidance of conflicts of interest, including disclosure to an appropriate
person or committee of any material transaction or relationship that reasonably
could be expected to give rise to such a conflict; promote full, fair, accurate,
timely and understandable disclosure in reports and documents that we file with,
or submit to, the SEC and in other public communications we make; promote
compliance with applicable governmental laws, rules and regulations; promote the
prompt internal reporting to an appropriate person or committee of violations of
the Code of Ethics; promote accountability for adherence to the Code of Ethics;
provide guidance to employees, executive officers and directors to help them
recognize and deal with ethical issues; provide mechanisms to report unethical
conduct; and help foster our longstanding culture of honesty and accountability.
A copy of the Code of Ethics has been provided to, and signed by, each of
our directors, executive officers and employees. A copy of the Code of Ethics is
available on our website at www.cogdellspencer.com and
can be provided to any stockholder upon request.
13
Disclosure
Committee
We
maintain a Disclosure Committee consisting of members of our executive
management and senior staff. The Disclosure Committee meets at least quarterly.
The purpose of the Disclosure Committee is to bring together executive
management and employees involved in the preparation of our financial statements
so that the group can discuss any issues or matters of which the members are
aware that should be considered for disclosure in our public SEC
filings.
Communications
with Stockholders
We
provide the opportunity for stockholders and interested parties to communicate
with the members of the Board. They may communicate with the independent Board
members, non-management directors or the Chairperson of any of the Board’s
committees by email or regular mail. All communications should be sent to:
stockholdercommunications@cogdellspencer.com, or to the attention of the
Independent Directors, the Audit Committee Chairman, the Compensation Committee
Chairman or the Nominating and Corporate Governance Committee Chairman at 4401
Barclay Downs Drive, Suite 300, Charlotte, NC 28209. The means of
communication with members of the Board is available on our website under
“Communications Policy” at www.cogdellspencer.com.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
This
section of the proxy statement discusses the principles underlying our executive
compensation policies and decisions and the most important factors relevant to
an analysis of these policies and decisions. It provides qualitative information
regarding the manner and context in which compensation is awarded to, and earned
by, our executive officers and places in perspective the data presented in the
tables and narrative that follow.
Compensation
Philosophy and Objectives
The
Compensation Committee, in consultation with our Board and Chief Executive
Officer, sets our compensation philosophy.
The
basic philosophy underlying our executive compensation policies, plans, and
programs is that executive and stockholder financial interests should be aligned
as closely as possible, and that compensation should be based on delivering pay
commensurate with performance. Accordingly, the executive compensation program
for our Chairman and Chief Executive Officer and our other executive officers
has been structured to achieve the following objectives:
|
●
|
Provide
compensation that attracts, retains, and motivates key executive officers
to lead our company effectively and continue our short and long-term
profitability and growth;
|
|
|
●
|
Link
executive compensation and our financial and operating performance, by
setting executive compensation based on the attainment of certain
objective and subjective company and department performance
goals; and
|
|
|
●
|
Align
the interests of our executive officers and stockholders by implementing
and maintaining compensation programs that provide for the acquisition and
retention of significant equity interests in us by executive
officers.
|
Based
on these objectives, the executive compensation program has been designed to
assist us in attracting, motivating and retaining executive officers to help us
achieve our performance goals. The program is structured to provide our
executive officers with a combination of base salaries, annual cash incentive
awards, long-term incentive awards and stock ownership
opportunities.
We
have entered into written employment agreements with each of our named executive
officers and certain other key employees. Some aspects of the compensation paid
for our executive officers are affected by the terms of the applicable
employment agreement. For example, if a base salary is decreased during the term
of an employment agreement, the employee may terminate the agreement for good
reason and would be entitled to certain severance benefits. Descriptions of
these agreements are set forth under the heading “Agreements with Executive
Officers.”
14
Setting
Executive Compensation
The
Compensation Committee is comprised of four independent directors,
Messrs. Lee (Chairman), Georgius and Jennings and Dr. Smoak. The
Compensation Committee exercises independent discretion in respect of executive
compensation matters and administers our 2005 long-term stock incentive plan.
The Compensation Committee operates under a written charter adopted by the
Board, a copy of which is available on our website at www.cogdellspencer.com.
The
Compensation Committee determines the total compensation and the allocation of
such compensation among base salary, annual bonus amounts and other long-term
incentive compensation as well as the allocation of such items among cash and
equity compensation for our Chairman and our Chief Executive Officer. With
respect to the compensation of our other executive officers, the Compensation
Committee solicits recommendations from our Chief Executive Officer regarding
compensation and reviews his recommendations. We do not have a pre-established
policy for the allocation between either cash and non-cash compensation or
annual and long-term incentive compensation. The ultimate determination on total
compensation and the elements that comprise that total compensation is made
solely by the Compensation Committee.
The
Compensation Committee meets regularly during the year (four meetings in 2008)
and has periodic conference calls, as needed, to evaluate executive
performance against the goals and objectives set at the beginning of the year,
to monitor market conditions in light of these goals and objectives and to
review the compensation practices. The Compensation Committee makes regular
reports to the Board.
What
the Executive Compensation Plan is Designed to Reward
The
Compensation Committee has designed the executive compensation plan to achieve
three primary objectives:
|
●
|
Attracting, Motivation and
Retaining Key Executives. We have
been successful in creating an experienced and highly effective team with
long tenure and a deep commitment to us.
|
|
|
●
|
Linking Compensation to
Performance. The Compensation Committee generally rewards the
achievement of specific annual, long-term and strategic goals of both our
Company and each individual executive officer. The Compensation Committee
measures performance of each executive officer, by considering
(1) our Company performance and (2) the performance of each executive
officer’s department and/or area of responsibility against financial
measures established at the beginning of the year, and (3) a
subjective evaluation of each executive officer. The Compensation
Committee evaluates the performance of our Chairman of the Board and Chief
Executive Officer.
|
|
|
●
|
Aligning the Interest of our
Executive Officers with our Stockholders. Long-term
incentive compensation is designed to provide incentives for each
executive officer to successfully implement our long-term strategic goals
and to retain such executive officer. We have designed our annual and
long-term incentive programs to award performance-based equity to allow
our executive officers to grow their ownership in our company and create a
further alignment with our
stockholders.
|
Role
of the Compensation Consultant
Our
executive compensation is designed to be competitive with those of executive
officers of other equity REITs and private real estate companies, while also
taking into account the executive officers’ performance. The compensation
amounts paid by other equity REITs and private real estate companies were
determined based upon the review of independent third party sources on executive
compensation in the real estate industry, including the CEL & Associates
Inc. National Real Estate Compensation and Benefits Survey5, the NAREIT
Compensation Survey and a Compensation Benchmarking Analysis prepared for the
Company by our compensation consultant, FPL Associates, L.P.
(“FPL”).
5 It
should be noted that Christopher Lee, a member of the Company’s Board and
chairman of the Compensation Committee, is the President of CEL &
Associates, Inc. No fees or other consideration were paid to Mr. Lee
or CEL & Associates, Inc. in connection with the Compensation Committee’s
review of the CEL & Associates, Inc. published report.
15
The
FPL Compensation Benchmarking Analysis included a competitive benchmarking
analysis for our named executive officers in the specific compensation
components of base salary, total annual cash compensation (base salary plus
incentive), long-term incentive award value, and total remuneration (total
annual cash compensation plus long-term incentive award value). Each
compensation component was analyzed on the basis of 25th percentile, median,
average, and 75th percentile. Cogdell Spencer’s executive compensation was then
compared to the peer group as a percentage of market median and market
average.
A
key issue in conducting a competitive benchmarking analysis is the
identification of the appropriate market definition, or comparative peer
group(s). Comparative peer groups form the barometer for evaluating and
establishing pay levels, incentive opportunities, long-term incentive grants,
performance measures and expectations. The FPL Compensation Benchmarking
Analysis determined the peer group based on the following factors: asset focus,
geographic location, company size, talent/recruitment, investment dollars and
growth objectives or performance. The peer groups identified compete with the
Company for talent, investment dollars and/or business.
In
examining a representative view of the public REIT marketplace, FPL utilized two
peer groups of public real estate companies as the foundation for benchmarking
the Company’s executives. The peer groups were asset-based (seven public REITs
that focus on the healthcare sector), including Cousins Properties, Healthcare
Realty Trust, Investors Real Estate Trust, LTC Properties, Medical Properties
Trust, Omega Healthcare Investors and Washington Real Estate Investment Trust;
and size –based (ten public REITs and one public real estate operating company
that focus on a variety of asset classes and are similar in size to the Company
in terms of total capitalization), including Acadia Realty Trust, American Land
Lease, AmREIT, and Associated Estates Realty Corporation and others. The peer
groups were rated according to metrics including total shareholder return (share
price appreciation plus dividends) and funds from operations (“FFO”) per share
growth (year over year growth in FFO on a per share basis).
Measuring
2008 Performance
Our
compensation philosophy measures our performance as a whole and the performance
of each department. Our Compensation Committee has prepared performance targets
for our Chief Executive Officer. Our Chief Executive Officer has prepared
performance targets for each of our executive officers, other than the Chairman
and Chief Executive Officer, and these performance targets have been approved
and adopted by the Compensation Committee. These targets measure performance
through the achievement of specific, objective, financial goals by us and the
department of each executive officer as well as through a subjective evaluation
of each executive officer. Our Chairman of the Board, Mr. Cogdell, does not
participate in this aspect of our incentive compensation plan. Mr. Cogdell was
the Company’s largest stockholder as of December 31, 2008 and in light of his
significant ownership interest in the Company, the Compensation Committee
believes that his long-term interests are currently aligned with those of the
Company’s stockholders.
The
Compensation Committee has established three strategic goals for use in
executive achievement incentive compensation formulas. For 2008, the goals were
expressed is three separately evaluated categories: (1) Gross Revenue; (2)
earnings before interest, taxes, depreciation and amortization (“EBITDA”); and
(3) funds from operations modified (“FFOM”). The corporate-level performance
targets set by the Compensation Committee and our Chief Executive Officer for
2008 for Messrs. Spencer and Handy are set forth in the table
below.
Corporate-Level
Performance Targets / Achievement Percentage
|
FFOM
per share
|
Gross
Revenue
|
EBITDA
|
||||
|
(Dollars
in millions)
|
(Dollars
in millions)
|
|||||
|
$1.19
/ 50%
|
$365
/ 50%
|
$61
/ 50%
|
||||
|
$1.20
/ 60%
|
$367
/ 60%
|
$62
/ 60%
|
||||
|
$1.21
/ 70%
|
$369
/ 70%
|
$63
/ 70%
|
||||
|
$1.22
/ 80%
|
$371
/ 80%
|
$64
/ 80%
|
||||
|
$1.23
/ 90%
|
$373
/ 90%
|
$65
/ 90%
|
||||
|
$1.24
/ 100%
|
$375
/ 100%
|
$66
/ 100%
|
||||
|
$1.25
– 1.27 / 115%
|
$377
-381 / 115%
|
$67-69
/ 115%
|
||||
|
$1.28-1.30
/ 130%
|
$382
- 386 / 130%
|
$70-72
/ 130%
|
||||
16
In
2008, without taking into account any achievement bonus earned by Messrs.
Spencer and Handy, the Company achieved FFOM per share of $1.25 (or 115%
achievement percentage), gross revenues of $335,740,000 (or 0% achievement
percentage) and EBITDA of $60,110,000 (or 0% achievement
percentage).
Mr.
Spencer’s annual achievement bonus for 2008 did not contain discretionary
elements and was based entirely on the three corporate-level performance targets
outlined above. Mr. Spencer’s annual achievement bonus was determined as
follows: (1) 60% attributable to FFOM per share achievement percentage, (2) 20%
attributable to Gross Revenue achievement percentage and (3) 20% attributable to
EBITDA achievement percentage. In 2008, Mr. Spencer was eligible for an annual
achievement bonus of $500,000 based on 100% achievement by the Company of the
corporate-level performance targets described above; he was awarded $345,000
based on the Company’s performance in 2008. Targets were not achieved related to
Gross Revenue and EBITA thresholds; therefore the full amount of Mr. Spencer’s
annual achievement bonus was attributable to achieving the FFOM
target.
Mr.
Spencer was also eligible for an incentive bonus of $250,000 in 2008 based on
100% achievement of the FFOM growth criteria set forth below:
|
FFOM
Growth
Over
Established
Prior
Year Target
|
% Goal
Achievement
Towards
Incentive
Bonus
|
|
|
<8.0%
|
0
|
|
|
8.0%
– 8.9%
|
60%
or $150,000
|
|
|
9.0%
– 9.9%
|
80%
or $200,000
|
|
|
10.0%
& above
|
100%
or $250,000
|
In
2008, the minimum FFOM per share that the Company needed to achieve in order for
Mr. Spencer to receive any incentive bonus was $1.20, and Mr. Spencer was
eligible to receive 60% (or $150,000) based on FFOM per share of $1.20 to
1.2099, 80% (or $200,000) based on FFOM per share of $1.21 to $1.2199 and 100%
(or $250,000) based on FFOM per share of $1.22 or greater. In 2008, the
Company’s FFOM per share was $1.22 and Mr. Spencer was awarded an incentive
bonus of $250,000 based on 100% achievement of the targeted level. Mr. Spencer’s
incentive compensation in 2008 was paid entirely in LTIP units, based on the
closing price of the Company’s common stock on the final business day of 2008,
or December 31, 2008 (or $9.36 per share), resulting in a grant of 63,568 LTIP
units.
Mr.
Handy’s annual achievement bonus for 2008 was based the following criteria: (1)
70% on the three corporate-level performance targets outlined in the table
above, (2) 10% based on certain departmental goals described below and (3) 20%
based on subjective evaluation by the Chief Executive Officer. Mr. Handy was
eligible to receive $247,000 in cash and $150,000 in LTIP units based on 100%
achievement of the criteria described above for 2008. In 2008, Mr. Handy
received an annual achievement bonus of $188,843 in cash and $114,450 in LTIP
units (11,891 LTIP units). The corporate-level performance component of Mr.
Handy’s achievement bonus was determined as follows: (1) 60% attributable to
FFOM per share achievement percentage, (2) 20% attributable to Gross Revenue
achievement percentage and 20% attributable to EBITDA achievement percentage.
Based on the Company’s achievement of these corporate-level performance targets
in 2008, Mr. Handy received 69% of his maximum eligible annual achievement
bonus, or $191,993 ($119,036 in cash and $72,957 in LTIP units). Targets were
not achieved relating to Gross Revenue and EBITDA thresholds; therefore the full
amount of Mr. Handy's annual achievement bonus relating to corporate-level
performance targets was attributable to achieving the FFOM target. The
departmental goal component of Mr. Handy’s achievement bonus was based on
corporate G&A. In 2008, 10% of the target bonus that Mr. Handy was eligible
to receive was based on the Company limiting corporate G&A to $9,967,000. In
2008, corporate G&A was $10,074,000 and therefore Mr. Handy received 80% of
his bonus attributable to his departmental goals, or $31,800 ($19,716 in cash
and $12,084 in LTIP units). The criteria on which the Chief Executive Officer
based the subjective evaluation component of Mr. Handy’s annual achievement
bonus included Mr. Handy’s leadership within his department, the quality of
advice and support he provided to the Chief Executive Officer and the Board of
Directors, his performance on special projects and his core competencies in
departmental management. Based on these criteria, Mr. Handy was awarded the full
portion of his bonus attributable to the subjective evaluation of the Chief
Executive Officer, or $79,500.
Mr.
Handy was also eligible to receive LTIP unit grants in 2008 based on the amount
of development projects completed by the Company in 2008. Mr. Handy was eligible
to receive LTIP units in 2008 in an amount equal to 0.15% of the asset value of
each new completed and owned development project. LTIP units totaling $24,300
based on a price of $15.72 per unit were granted to Mr. Handy related to the
completion of Alamance Regional Mebane Outpatient Center during 2008. The LTIP
units vested 50% at the certificate of occupancy and the remaining 50% will vest
upon rent stabilization.
17
Mr. Ransom was eligible to receive LTIP unit grants in 2008 under the Company’s
equity incentive plan in amounts equal to (1) 16% of the amount by which
Erdman’s actual EBITDA, excluding income relating to development projects
financed by the Company or one of its affiliated companies (or development
fees), exceeded $29.3 million in 2008, and (2) 0.5% of the asset value of each
new completed and owned development project, respectively. No LTIP
unit grants were granted to Mr. Ransom under this program in
2008.
Mr.
Ransom was also eligible for certain performance related bonuses in 2008 under
an incentive bonus plan of Erdman that was adopted by the Erdman board of
directors and in place prior to the time of the Company’s acquisition of Erdman
in March 2008 and the Company’s equity incentive plan. Under Erdman’s incentive
bonus plan, Mr. Ransom received $160,695 for 2008.
Special
MEA Transaction Award
In
recognition of the role played by Messrs. Cogdell, Spencer and Handy in guiding
the Company through the acquisition of Erdman in March 2008, the Compensation
Committee recommended, and the Board of Directors approved, a special LTIP unit
award to each of Messrs. Cogdell, Spencer and Handy of $375,000 of LTIP units,
$1,000,000 of LTIP units and $650,000 of LTIP units, respectively, in March
2008. The number of LTIP units initially awarded to each of Messrs Cogdell,
Spencer and Handy was 23,511 LTIP units, 62,296 LTIP units and 39,185 LTIP
units, respectively, and was calculated using $15.95 per LTIP unit, which was
the price per share paid in connection with the Company’s private offering in
January 2008. Heidi M. Wilson was also awarded $150,000 of LTIP units, 20% of
which vested on March 31, 2008 and the remaining 80% were forfeited under the
terms of Ms. Wilson's severance agreement.
Of
the total number of LTIP units awarded to Messrs. Cogdell, Spencer and Handy,
20% vested on the effective date of issuance, March 31, 2008. The remaining 80%
will vest in variable incremental installments determined each year as follows:
the amount, if any, that the FFOM targets for such year (as set forth in the
table below) are exceeded, multiplied by the number of shares of the Company
outstanding as of the grant date minus the Company’s pro forma compensation
charge (as determined under GAAP) which would result from the issuance of such
LTIP units. Any portion of the award that is not vested as of December 31, 2015
shall be forfeited. Messrs Cogdell, Spencer and Handy vested in 532 LTIP
units, 1,419 LTIP units and 887 LTIP units, respectively, based on exceeding the
established 2008 FFOM target per share of $1.22. The price per LTIP unit used in
determining these awards was $15.95 per LTIP unit, which as the price per share
paid in connection with the Company’s private offering in January
2008.
On
May 28, 2008, the Company and Heidi M. Wilson agreed to terminate her employment
as Executive Vice President of the Company. Ms. Wilson did not receive any
incentive compensation in 2008 and forfeited her unvested equity awards upon the
termination of her employment.
Elements
of our Executive Compensation Program and Why We Chose Each Element
Our
executive compensation plan has been structured to provide short and long-term
incentives that promote continuing improvements in our financial results and
returns to our stockholders. The elements of our executive compensation are
primarily comprised of three elements designed to complement each other: annual
base salaries; annual incentive bonuses; and long-term incentives. We review the
various components of compensation as related but distinct. The Compensation
Committee designs total compensation packages that it believes will best create
retention incentives, link compensation to performance and align the interests
of our executive officers and our stockholders.
|
●
|
Annual Base Salaries.
Annual base salaries are paid for ongoing performance throughout the year.
In the case of each of our named executive officers, annual base salaries
are paid in accordance with the employment agreement between us and such
executive officers.
|
|
|
On
May 28, 2008, Mr. Cogdell, the Chairman of the Board elected to forego his
Annual Salary (as such term is defined in his employment agreement, dated
October 21, 2005, between the Company, Cogdell Spencer LP and Mr. Cogdell)
(the “Foregone Salary”) as of the partial fiscal year beginning April 1,
2008 through December 31, 2008, and continuing for each of the Company’s
fiscal years during which Mr. Cogdell is employed by the Company. In lieu
of receiving his Annual Salary, the Compensation Committee determined that
to further align Mr. Cogdell’s interests with those of the Company’s
stockholders, Mr. Cogdell shall be awarded LTIP units under the Company’s
2005 equity incentive plan, as follows: (1) for the period from April 1,
2008 through December 31, 2008 (the “2008 Period”), Mr. Cogdell shall be
awarded a number of LTIP units equal to (A) the Foregone Salary for the
2008 Period divided by (B) the closing price of the Company’s common stock
on the New York Stock Exchange on May 28, 2008, which totaled 18,579 LTIP
units for that period, and (2) for each of the Company’s fiscal years
beginning on January 1, 2009 during which Mr. Cogdell is employed by the
Company on a full time basis, Mr. Cogdell shall be awarded a number of
LTIP units equal to (A) the Foregone Salary for such fiscal year divided
by (B) the closing price of the Company’s common stock on the New York
Stock Exchange on December 31 of such fiscal year (or, to the extent that
December 31 is not a trading day, the immediately preceding trading day).
Mr. Cogdell elected in December 2008 to accept his Annual Salary again in
2009.
|
18
|
Any
LTIP units awarded to Mr. Cogdell in respect of each of the Company’s
fiscal years beginning on January 1, 2009 shall vest ratably on the first
day of each fiscal quarter. Any LTIP units that remain unvested upon the
termination of Mr. Cogdell’s employment with the Company shall be
forfeited. Mr. Cogdell has elected to return to cash compensation in
2009.
|
||
|
Together
with our Board and Chief Executive Officer, the Compensation
Committee’s annual review of an executive officer includes a review of the
performance of such executive officer’s department and our overall
performance. Increases to the annual salary are based on recommendations
of the Chief Executive Officer and are subject to approval by the
Compensation Committee based on the Chief Executive Officer’s review of
salaries of comparable executive officers in comparable companies. The
Compensation Committee’s annual review of our Chairman of the Board and
Chief Executive Officer includes a review of our overall performance.
Pursuant to the employment agreements that we entered into with our named
executive officers and certain other key employees, annual salary for
these individuals cannot be decreased beyond the amount set forth in the
executive officer’s employment agreement. We provide this element of
compensation to compensate executive officers for services rendered during
the fiscal year. The Company has
enacted a salary adjustment freeze for fiscal year 2009 for all employees,
including executive officers.
|
||
|
●
|
Annual Incentive Bonus.
We have provided and expect to continue to provide for the payment of
equity and cash incentive bonuses based on our performance in relation to
both predetermined objectives and subjective individual executive
performance. Our Chairman of the Board does not participate in the annual
incentive bonus. Our Compensation Committee determines the annual
incentive bonus for our Chief Executive Officer based on certain
predetermined performance targets, our Chief Executive Officer and our
Compensation Committee determine the annual incentive bonus for our other
executive officers based on certain pre determined performance targets.
See “Measuring 2008 Performance.” We provide this element of compensation
because we believe that it promotes loyalty, hard-work and focus, honesty
and vision.
|
|
| ● | Long-Term Incentives. Pursuant to our 2005 long-term stock incentive plan, we have provided and expect to continue to provide long-term incentives through grants of stock options, restricted stock, LTIP units, stock appreciation rights, phantom shares, dividend equivalent rights and other equity-based awards, the exact numbers of which vary, depending on the position and salary of the executive officer. These equity based awards will be designed to link executive compensation to our long-term Common Stock performance. |
The
Compensation Committee has the full authority to administer and interpret our
2005 long-term stock incentive plan, to authorize the granting of awards, to
determine the eligibility of employees, directors, executive officers, advisors,
consultants and other personnel, our subsidiaries, our affiliates and other
persons expected to provide significant services to us or our subsidiaries to
receive an award, to determine the number of shares of Common Stock to be
covered by each award (subject to the individual participant limitations
provided in the 2005 long-term stock incentive plan), to determine the terms,
provisions and conditions of each award (which may not be inconsistent with the
terms of our 2005 long-term stock incentive plan), to prescribe the form of
instruments evidencing awards and to take any other actions and make all
determinations that it deems necessary or appropriate in connection with our
2005 long-term stock incentive plan or the administration or interpretation
thereof. In connection with this authority, the Compensation Committee may
establish performance goals that must be met in order for awards to be granted
or to vest, or for the restrictions on any such awards to lapse. For more
information on our 2005 long-term stock incentive plan, we refer you to our
Registration Statement on Form S-11 filed by us on October 26,
2005.
Perquisites
and Other Personal Benefits
In
order to attract and retain highly qualified individuals for key positions, we
occasionally provide our executive officers with perquisites and other personal
benefits that are consistent with our compensation philosophy. For more
information regarding perquisites and other personal benefits, we refer you to
the “All Other Compensation” table set forth under “Executive
Compensation.”
How Each Element and Our Decisions
Regarding Each Element Fit Into Our Overall Compensation Objectives and Affect
Decisions Regarding Other Elements
Our
compensation program seeks to reward our executive officers for their superior
performance and Company performance, while closely aligning the interests of our
executive officers with the interests of our stockholders. In making
compensation decisions, the Compensation Committee considers various measures of
company and industry performance, including a combination of FFOM, gross revenue
and EBITDA. Consistent with this approach, the Compensation Committee pays our
executive officers annual base salaries in order to provide them with a minimum
compensation level that is intended to reflect such executive officer’s value
and historical contributions to our success in light of salary norms of our
competitors. The Compensation Committee may elect to pay our executive officers
annual incentives to reward our executive officers for achievement of financial
and other performance of our company and of such executive officer’s department,
with a component of performance based on a subjective evaluation. The
Compensation Committee may elect to pay our executive officers long-term
incentives to act as a retention tool and to provide continued and additional
incentives to maximize our stock price and thereby more closely align the
economic interests of our executive officers with those of our stockholders.
Through the elements of our compensation program, the Compensation Committee
seeks to maintain a competitive total compensation package for each executive
officer, while being sensitive to our fiscal year budget, annual accounting
costs and the impact of share dilution in making such compensation
payments.
19
Other
Matters
Tax
and Accounting Treatment. The Compensation Committee reviews and
considers the deductibility of executive compensation under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the “Code”).
Section 162(m) limits the deductibility on our tax return of compensation
over $1 million to any of our named executive officers unless, in general,
the compensation is paid pursuant to a plan which is performance-related,
non-discretionary and has been approved by our stockholders. The Compensation
Committee’s policy with respect to Section 162(m) is to make every
reasonable effort to ensure that compensation is deductible to the extent
permitted while simultaneously providing our executive officers with appropriate
compensation for their performance. The Compensation Committee may make
compensation payments that are not fully deductible if in its judgment such
payments are necessary to achieve the objectives of our compensation
program.
We
account for stock-based payments through our equity incentive plans, including
our 2005 long-term stock incentive plan and performance bonus plan, in
accordance with the requirements of Statement of Financial Accounting Standards
No. 123-R.
Other
Policies
Although
we do not have any policy in place regarding minimum ownership requirements for
either our executive officers or directors, our named executive officers all
have significant stakes in us. We do not have any policy in place regarding the
ability of our executive officers or directors to engage in hedging activities
with respect to our Common Stock. In addition, we do not have nonqualified
deferred compensation plans.
Compensation
Committee Report
The
executive compensation philosophy, policies, plans, and programs of Cogdell
Spencer Inc., a Maryland corporation (the “Company”), are under the supervision
of the Compensation Committee (the “Compensation Committee”) of the Board of
Directors (the “Board”) of the Company, which is composed of the non-management
directors named below, each of whom has been determined by the Board to be
independent under the applicable rules of the Securities and Exchange Commission
and the New York Stock Exchange listing standards.
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis section of the Company’s proxy statement as required by Item 402(b)
of Regulation S-K with management. Based on the review and discussions, the
Compensation Committee recommended to the Board, that the Compensation
Discussion and Analysis be included in the proxy statement for the Company’s
2009 annual meeting of stockholders and incorporated by reference in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2008.
Respectfully
submitted by the members of the Compensation Committee:
|
Christopher
E. Lee, Chairman
|
Richard
B Jennings
|
|
|
John
R. Georgius
|
Randolph
D. Smoak, M.D.
|
20
Compensation
Committee Interlocks and Insider Participation
There
are no Compensation Committee interlocks and none of our employees participate
on the Compensation Committee.
Executive
Compensation
The
following table sets forth the annual base salary and other compensation paid or
earned in 2008, 2007 and 2006 to our Chairman, Chief Executive Officer and
President, Chief Financial Officer and the President and CEO, of Erdman Company,
acquired in March 2008. Ms. Wilson’s employment with the Company ended on May
28, 2008. These executive officers are referred to herein collectively as the
“named executive officers.”
|
Summary
Compensation Table
|
|||||||||||||||||||||||||||
|
Name
and Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards(1)
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Changes
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation(2)
|
Total
|
||||||||||||||||||
|
James
W. Cogdell
|
2008
|
$
|
444,388
|
(5)
|
$
|
—
|
$
|
83,485
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
24,338
|
$
|
552,211
|
|||||||||
|
Chairman
|
2007
|
$
|
442,080
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
22,525
|
$
|
464,605
|
||||||||||
|
2006
|
$
|
442,080
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
21,782
|
$
|
463,862
|
|||||||||||
|
Frank
C. Spencer
|
2008
|
$
|
490,426
|
$
|
595,000
|
(6)
|
$
|
222,633
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
29,447
|
$
|
1,337,507
|
|||||||||
|
Chief
Executive Officer
|
2007
|
$
|
442,080
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
25,932
|
$
|
468,012
|
||||||||||
|
and
President
|
2006
|
$
|
442,080
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
24,557
|
$
|
466,637
|
||||||||||
|
Charles
M. Handy
|
2008
|
$
|
276,857
|
$
|
303,293
|
(7)
|
$
|
163,448
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
31,192
|
$
|
774,791
|
|||||||||
|
Chief
Financial Officer,
|
2007
|
$
|
234,840
|
$
|
109,797
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
27,719
|
$
|
372,356
|
||||||||||
|
Senior
Vice President
|
2006
|
$
|
234,840
|
$
|
92,762
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
26,579
|
$
|
354,181
|
||||||||||
|
and
Secretary
|
|||||||||||||||||||||||||||
|
Heidi
M. Wilson(3)
|
2008
|
$
|
84,431
|
$
|
—
|
$
|
30,000
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
402,148
|
$
|
516,579
|
||||||||||
|
Executive
Vice President
|
2007
|
$
|
147,500
|
$
|
94,800
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
6,385
|
$
|
248,685
|
||||||||||
|
Scott
A. Ransom(4)
|
2008
|
$
|
260,417
|
$
|
160,695
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
52,008
|
$
|
473,120
|
||||||||||
|
President
and CEO,
|
|||||||||||||||||||||||||||
|
Erdman
Company
|
|||||||||||||||||||||||||||
|
(1)
|
The
Board awarded approximately $2,500,000 of LTIP units in recognition
of the role played by certain employees in the acquisition of Erdman. The
awards were as follows: Mr. Spencer, $1,000,000; Mr. Cogdell, $375,000;
Mr. Handy, $650,000; and Ms. Wilson, $150,000. The aggregate number of
LTIP units awarded was 156,739, which was calculated using $15.95 per LTIP
unit, the price per share paid in connection with the Company’s private
offering in January 2008. Of the total number of LTIP units granted, 20%
vested on March 31, 2008 (the effective date of issuance) and the
remaining 80% will vest if and when the Company achieves certain
performance standards as provided in the awards. Effective December 31,
2008, additional LTIP units vested as the result of achieving certain
performance standards as provided in the awards. The additional vesting
was as follows using $15.95 per LTIP unit: Mr. Cogdell, $8,485 (532 LTIP
units); Mr. Spencer, $22,633 (1,419 LTIP units); Mr. Handy, $14,148 (887
LTIP units). Under Ms. Wilson’s severance agreement she forfeited the
remaining 80% of her unvested LTIP units.
|
|
(2)
|
All
other compensation includes employer 401(k) match, health insurance
premiums, term life insurance premiums, disability insurance premiums,
personal use of company-owned vehicles, club dues and severance, as
applicable. For more information on these amounts, see “All Other
Compensation” below.
|
|
(3)
|
Heidi
M. Wilson’s employment with the company ended on May 28, 2008 and “All Other
Compensation” includes severance paid in 2008 of
$400,000.
|
|
(4)
|
Reflects
Mr. Ransom’s compensation from March 10, 2008, the date of closing the
Company’s acquisition of Erdman, through December 31,
2008.
|
|
(5)
|
Mr.
Cogdell elected to forego annual salary from April 1, 2008 through
December 31, 2008, and in lieu of salary, was awarded LTIP units equal to
foregone salary divided by the closing price of the Company’s common stock
on May 28, 2008. One third of these units vested on May 28, 2008, July 1,
2008 and October 1, 2008, respectively.
|
|
(6)
|
Mr.
Spencer’s bonus is paid entirely in LTIP units, based on the closing stock
price on the final day of business for the year, or December 31, 2008
($9.36/share), resulting in an LTIP grant of 63,568
units.
|
|
(7)
|
In
2008, Mr. Handy earned a cash bonus of $188,843 and LTIP units of
$144,450, resulting in a total achievement incentive of
$303,293.
|
21
The
following table sets forth the components of the “All Other Compensation” column
found in the previous table.
|
Name
|
Year
|
Employer
401(k)
Match
and
Profit
Sharing
Contribution
|
Health,
Life
and
Disability
Insurance
Premiums
|
Long
Term
Disability
Insurance
Premiums
|
Short
Term
Disability
Insurance
Premiums
|
Car
Allowance
|
Personal
Use
of
Company
Vehicle
|
Club
Dues
|
Severance
|
Total
|
||||||||||||||||||||
|
James
W. Cogdell(1)
|
2008
|
$
|
5,731
|
$
|
5,852
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
12,756
|
$
|
—
|
$
|
—
|
$
|
24,338
|
|||||||||||
|
2007
|
$
|
9,000
|
$
|
3,853
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
9,672
|
$
|
—
|
$
|
—
|
$
|
22,525
|
||||||||||||
|
2006
|
$
|
8,800
|
$
|
3,593
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
9,389
|
$
|
—
|
$
|
—
|
$
|
21,782
|
||||||||||||
|
Frank
C. Spencer(1)
|
2008
|
$
|
9,200
|
$
|
8,889
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
11,358
|
$
|
—
|
$
|
—
|
$
|
29,447
|
|||||||||||
|
2007
|
$
|
9,000
|
$
|
7,814
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
9,118
|
$
|
—
|
$
|
—
|
$
|
25,932
|
||||||||||||
|
2006
|
$
|
8,800
|
$
|
7,257
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
8,500
|
$
|
—
|
$
|
—
|
$
|
24,557
|
||||||||||||
|
Charles
M. Handy
|
2008
|
$
|
9,200
|
$
|
8,889
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
13,103
|
$
|
—
|
$
|
—
|
$
|
31,192
|
|||||||||||
|
2007
|
$
|
9,000
|
$
|
7,814
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
10,905
|
$
|
—
|
$
|
—
|
$
|
27,719
|
||||||||||||
|
2006
|
$
|
8,800
|
$
|
7,257
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
10,522
|
$
|
—
|
$
|
—
|
$
|
26,579
|
||||||||||||
|
Heidi
M. Wilson (2)
|
2008
|
$
|
—
|
$
|
348
|
$
|
—
|
$
|
—
|
$
|
1,800
|
$
|
—
|
$
|
—
|
$
|
400,000
|
$
|
402,148
|
|||||||||||
|
2007
|
$
|
—
|
$
|
1,071
|
$
|
—
|
$
|
—
|
$
|
5,314
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
6,385
|
||||||||||||
|
Scott
A. Ransom(1)(3)
|
2008
|
$
|
28,542
|
$
|
9,828
|
$
|
—
|
$
|
—
|
$
|
6,000
|
$
|
—
|
$
|
7,638
|
$
|
—
|
$
|
52,008
|
|||||||||||
|
(1)
|
The
named executive officers received no additional compensation for serving
as a director.
|
|
(2)
|
Heidi
M. Wilson’s employment with the company began on April 5, 2007 and ended
on May 28, 2008. All other compensation includes $400,000 in
severance.
|
|
(3)
|
Reflects
all other compensation for Mr. Ransom from March 10, 2008 through December
31, 2008.
|
Grants
of Plan-Based Awards for 2008
|
|
|
|
|
All
|
|
|
|
|
|||||||||||||||||||
|
|
|
Other
|
All
other
|
|
|
|
|||||||||||||||||||||
|
Stock
|
Option
|
|
|
|
|||||||||||||||||||||||
|
Awards:
|
Awards:
|
|
|
|
|||||||||||||||||||||||
|
Number
|
Number
|
Exercise
|
|
|
|||||||||||||||||||||||
|
Estimated
Future Payouts Under Non-
|
Estimated
Future Payouts Under
|
of
|
of
|
or
Base
|
Closing
|
Grant
Date
|
|||||||||||||||||||||
|
Equity
Incentive Plan Awards
|
Equity
Incentive Plan Awards
|
Shares
|
Securities
|
Price
of
|
Market
|
Fair
Value
|
|||||||||||||||||||||
|
|
|
|
|
|
|
of
Stock
|
Underlying
|
Option
|
Price
on
|
of
Stock
|
|||||||||||||||||
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
or
Units
|
Options
|
Awards
|
Date
of
|
and
Option
|
|||||||||||||||||
|
Name
|
Grant
Date
|
($)
|
($)
|
($)
|
(#)
|
(#)
|
(#)
|
(#)
|
(#)
|
($/Sh)
|
Grant
|
Awards
|
|||||||||||||||
|
James
W. Cogdell
|
3/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
4,702
|
—
|
—
|
—
|
$
|
75,000
|
|||||||||||||
|
12/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
532
|
—
|
—
|
—
|
$
|
8,485
|
||||||||||||||
|
Frank
C. Spencer
|
3/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
12,539
|
—
|
—
|
—
|
$
|
200,000
|
|||||||||||||
|
12/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
1,419
|
—
|
—
|
—
|
$
|
22,633
|
||||||||||||||
|
Charles
M. Handy
|
3/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
7,837
|
—
|
—
|
—
|
$
|
125,000
|
|||||||||||||
|
3/31/2008
|
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
1,546
|
—
|
—
|
—
|
$
|
24,300
|
||||||||||||||
|
12/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
887
|
—
|
—
|
—
|
$
|
14,148
|
||||||||||||||
|
Heidi
M. Wilson
|
3/31/2008
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
1,881
|
—
|
—
|
—
|
$
|
30,000
|
|||||||||||||
|
(1)
|
The
Board awarded approximately $2,500,000 of LTIP units in recognition
of the role played by certain employees in the acquisition of Erdman. The
awards were as follows: Mr. Spencer, $1,000,000; Mr. Cogdell, $375,000;
Mr. Handy, $650,000; and Ms. Wilson, $150,000. The aggregate number of
LTIP units awarded was 156,739, which was calculated using $15.95 per LTIP
unit, the price per share paid in connection with the Company’s private
offering in January 2008. Of the total number of LTIP units granted, 20%
vested on March 31, 2008 (the effective date of issuance) and the
remaining 80% will vest if and when the Company achieves certain
performance standards as provided in the awards. Effective December 31,
2008, additional LTIP units vested as the result of achieving certain
performance standards as provided in the awards. The additional vesting
was as follows using $15.95 per LTIP unit: Mr. Cogdell, $8,485 (532 LTIP
units); Mr. Spencer, $22,633 (1,419 LTIP units); Mr. Handy, $14,148 (887
LTIP units). Under Ms. Wilson’s severance agreement she forfeited the
remaining 80% of her unvested LTIP units.
|
|
(2)
|
Mr.
Handy was awarded $24,300 of LTIP units in connection with the completion
of the Alamance Regional Mebane Outpatient Center. The award was based on
the project’s asset value and was calculated using $5.72 per LTIP unit,
the Company’s common stock price on March 31, 2008, the date the
certificate of completion was received for the
project.
|
22
Outstanding
Equity Awards at Fiscal Year-End for 2008
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#) (1)
|
Market
Value
of
Shares
or
Units
or
Stock
That
Have
Not
Vested
($)
(1)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units,
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Shares,
Units,
or
Other Rights
That
Have Not
Vested
($)
|
|||||||||||
|
James
W. Cogdell
|
—
|
—
|
—
|
—
|
—
|
18,722
|
$
|
291,515
|
—
|
—
|
||||||||||
|
Frank
C. Spencer
|
—
|
—
|
—
|
—
|
—
|
48,738
|
$
|
777,367
|
—
|
—
|
||||||||||
|
Charles
M. Handy
|
—
|
—
|
—
|
—
|
—
|
30,461
|
$
|
485,852
|
—
|
—
|
||||||||||
| (1) |
The
amounts shown represent unvested amounts related to LTIP units granted in
recognition of the role played in the acquisition of Erdman. The number of
LTIP units awarded was calculated using $15.95 per LTIP unit, the price
per share paid in connection with the Company’s private offering in
January 2008. Of the total number of LTIP units granted, 20% vested on
March 31, 2008 (the effective date of the issuance) and the remaining 80%
will vest if and when the Company achieves certain performance standards
as provided in the awards as described in “Executive Compensation-Special
MEA Transaction Award.” The amounts shown represent unvested amounts
remaining after the vesting of LTIP units related to the achievement of
2008 performance
standards.
|
Our
executive officers did not receive any grants of option awards or unvested stock
awards during 2008. In addition, we did not grant stock options, stock
appreciation rights or similar instruments.
Section 16(a) Beneficial Ownership
Reporting Compliance
Under federal securities laws, our directors, executive officers and holders of
10% or more of our Common Stock are required to report, within specified monthly
and annual due dates, their initial ownership in our Common Stock and all
subsequent acquisitions, dispositions or other transfers of beneficial interests
therein, if and to the extent reportable events occur which require reporting by
such due dates. Based solely upon a review of the copies of the forms furnished
to us, we believe that the following persons made late filings for the 2008
fiscal year as follows: James W. Cogdell filed a timely Form 5 to report one
late Form 4 transaction, Richard B. Jennings filed a late Form 4 to report one
transaction, Charles M. Handy filed a timely Form 5 to report one late Form 4
transaction, Richard C. Neugent filed a late Form 4 to report one transaction,
Scott A. Ransom filed a late Form 3 to report one transaction and his status as
an insider, and Randolph D. Smoak, M.D. filed a late Form 4 to report one
transaction.
Agreements
with Executive Officers
We
entered into written employment agreements with our named executive officers
employed at the time of our initial public offering that became effective upon
the closing of our initial public offering, pursuant to which Messrs. Cogdell,
Spencer and Handy are expected to agree to serve, respectively, as our Chairman,
Chief Executive Officer and President, and Chief Financial Officer, Senior Vice
President and Secretary. Upon the acquisition of Erdman on March 10,
2008, we entered into a written employment agreement with Mr.
Ransom pursuant to which he agreed to serve as our President &
Chief Executive Officer of Erdman Company. The employment agreements require the
executive officers to devote substantially all of their business time and effort
to our affairs.
The
employment agreements with Messrs. Cogdell, Spencer and Ransom are each for a
five-year term and Mr. Handy’s is for a three-year term; provided, however, that
the terms will be automatically extended for successive one-year periods unless,
not later than three months prior to the termination of the existing term,
either party provides written notice to the other party of its intent not to
further extend the term. Mr. Handy’s agreement was renegotiated in 2008 for an
additional three year term and new terms were included by the Compensation
Committee as outlined below. The employment agreements provide for an annual
base salary to each of Messrs. Cogdell, Spencer, Handy, and Ransom respectively,
and for bonus and other incentive eligibility (as determined by the Compensation
Committee of the Board) and participation in employee benefit plans and
programs. We also make available to each of Messrs. Cogdell, Spencer and Handy
use of a Company car. We provide a vehicle allowance to Mr.
Ransom.
23
The
compensation otherwise payable to Messrs. Cogdell and Spencer shall be subject
to reduction as follows:
In
the event that during the term of their employment agreements or any extension
thereof, the average annual combined net operating income for East Jefferson
Medical Office Building and East Jefferson Medical Specialty Building for any of
the years ended December 31, 2007, 2008, 2009 and 2010 declines by more than 15%
from their combined estimated 2006 net operating income, which is estimated to
be $2.15 million, an amount equal to such additional decline (up to the next 15%
of such shortfall) (which is referred to in the employment agreements as the
“captured shortfall amount”) shall off-set the compensation otherwise payable to
each such executive officer in the next calendar year following such measurement
period by an amount equal to 50% of such captured shortfall amount.
Upon
the termination of an executive officer’s employment either by us for “cause” or
by the executive officer without “good reason” during the term of his/her
employment agreement, such executive officer will be entitled to receive his
annual base salary and other benefits accrued through the date of termination of
the executive officer’s employment.
The
term “cause” as used in the employment agreements is generally defined to
mean:
|
(i)
conviction of, or formal admission to, a felony (Mr. Handy’s 2008
agreement includes conviction of, or formal admission to, a misdemeanor
the circumstances of which are to the material detriment to the Company’s
reputation whether or not in the performance of the Executive’s duties
hereunder, or a felony);
|
|
|
(ii)
engagement in the performance of the executive officer’s duties, or
otherwise to our material and demonstrable detriment, in willful
misconduct, willful or gross neglect, fraud, misappropriation or
embezzlement;
|
|
|
(iii)
repeated failure to adhere to the directions of our Board, or to adhere to
our policies and practices;
|
|
|
(iv)
willful and continued failure to substantially perform the executive’s
duties properly assigned to him (other than any such failure resulting
from his disability) after demand for substantial performance is delivered
by us specifically identifying the manner in which we believe the
executive officer has not substantially performed such
duties;
|
|
|
(v)
breach of any of the provisions of the covenants of the executive
officer’s employment agreement; or
|
|
|
(vi)
breach in any material respect of the terms and provisions of the
executive officer’s employment agreement and failure to cure such breach
within 90 days following written notice from us specifying such
breach.
|
The
term “good reason” as used in the employment agreements is generally defined to
mean:
|
(i)
the material reduction of the executive officer’s authority, duties and
responsibilities, the failure to continue the executive officer’s
appointment in his given position, or the assignment to the executive
officer of duties materially inconsistent with the executive officer’s
position or positions with us;
|
|
|
(ii)
a reduction in annual salary of the executive officer;
|
|
|
(iii)
the relocation of the executive officer’s office to more than 50 miles
from Charlotte, North Carolina (or in the case of Mr. Ransom, more than 50
miles from Madison, Wisconsin);
|
|
|
(iv)
our material and willful breach of the executive officer’s employment
agreement; or, in the case of Messrs. Cogdell and Spencer
only,
|
|
|
(v)
a decision by us, over the reasonable objection of the executive officer
acting in good faith, materially to change our business plan so as to
effect a fundamental change to our primary business purpose. This clause
was stricken from the agreement negotiated with Mr. Handy in
2008.
|
Upon
the termination of an executive officer’s employment either by us without
“cause” or by the executive officer for “good reason,” or, in the case of
Messrs. Cogdell and Spencer, any non-renewal of the executive officer’s
employment agreement by us, the executive officer will be entitled under his
employment agreement to the following severance payments and
benefits:
|
●
|
annual
base salary, bonus and other benefits accrued through the date of
termination;
|
|
|
●
|
a
lump-sum cash payment equal to 1.99 multiplied by the sum of (1) the
executive officer’s then-current annual base salary and (2) the greater of
(A) the average bonus paid to the executive officer over the previous two
years and (B) the maximum bonus payable to the executive officer for the
fiscal year in which the termination occurs;
|
|
|
●
|
for
three years after termination of employment, continuing coverage under the
group health plans the executive officer would have received under his
employment agreement, as would have applied in the absence of such
termination; and
|
|
|
●
|
full
vesting of all outstanding equity-based awards held by the executive
officer.
|
24
Upon
a change of control (as defined in the employment agreements), while the
executive officer is employed, all outstanding unvested equity-based awards
(including stock options and restricted stock) shall fully vest and become
immediately exercisable, as applicable. In addition if, after a change of
control, the executive officer terminates his employment with us within one year
of the change in control, such termination shall be deemed a termination by the
executive officer for good reason. The term “change of control” as used in the
employment agreements is generally defined to mean:
|
(i)
any transaction by which any person or group becomes the beneficial owner,
either directly or indirectly, of our securities representing 50% or more
of either (A) the combined voting power of our then outstanding securities
or (B) the then outstanding shares of our Common Stock;
or
|
|
|
(ii)
any consolidation or merger where our stockholders, immediately prior to
the consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own, directly or indirectly, shares
representing in the aggregate 50% or more of the combined voting power of
the securities of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any);
or
|
|
|
(iii)
there shall occur (A) any sale, lease, exchange or other transfer of all
or substantially all of our assets, or (B) the approval by our
stockholders of any plan or proposal for our liquidation or dissolution;
or
|
|
|
(iv)
the members of our Board, at the beginning of any consecutive
24-calendar-month period cease for any reason other than due to death to
constitute at least a majority of the members of the
Board.
|
With
respect to Mr. Handy, in the event of any notice of non-renewal of the
employment agreement by us, the executive officer will be entitled under his
employment agreement to the same payments and benefits as if terminated other
than for cause, except that the executive officer’s lump-sum cash payment will
equal the sum of (1) the executive officer’s then-current annual base salary;
and (2) the greater of (A) the average bonus paid to the executive officer over
the previous two years, and (B) the maximum bonus payable to the executive
officer for the fiscal year in which the termination occurs.
Upon
the termination of the executive officer’s employment due to the death or
disability (generally meaning a condition rendering the executive officer unable
to perform substantially and continually the duties assigned to him) of the
executive officer, the executive officer (or his estate) will be entitled under
his employment agreement to his annual base salary, bonus and other benefits
accrued through the date of termination and full vesting of all outstanding
equity-based awards held by the executive officer.
In
the event that any amount payable to an executive officer is determined to be an
“excess parachute payment” under Section 280G of the Code, we have also agreed
to make a gross-up payment to the executive officer equal to the excise tax
imposed on the executive under Section 4999 of the Code. The amount of gross-up
payment (which is also treated as an excess parachute payment) shall be equal to
the sum of the excise taxes payable by the executive officer by reason of
receiving the parachute payments plus the amount necessary to put the executive
officer in the same after-tax position as if no excise taxes had been imposed on
the executive officer (taking into account any and all applicable federal, state
and local excise, income or other taxes at the highest applicable rates). The
excise taxes shall be payable by the executive officer and we must withhold the
excise tax as if the payment constituted wages to the executive officer. In
addition, we are not entitled to an income tax deduction related to any excess
parachute payments or related gross-up payments.
We
have also agreed to provide Mr. Cogdell’s personal accountant with an office at
our headquarters building provided that Mr. Cogdell shall reimburse us for the
use of such office space and for any and all benefits that we provide to this
person. During 2008, no such services were provided.
Upon
termination of the executive officer’s employment, if we elect to subject the
executive officer to the non-competition, confidentiality and non-solicitation
provisions described below, the executive officer will be entitled to a cash
payment equal to the sum of (1) the executive officer’s then-current annual base
salary and (2) the greater of (A) the average bonus paid to the executive
officer over the previous two years and (B) the maximum bonus payable to the
executive officer for the fiscal year in which the termination occurs. Pursuant
to the terms of the non-competition provisions, the executive officer is
prohibited for a one-year period following termination from, directly or
indirectly, whether as an owner, partner, shareholder, principal, agent,
employee, consultant or in any other relationship or capacity, engaging in any
element of our business or otherwise competing with us or our affiliates,
rendering any services to any person, corporation, partnership or other entity
engaged in competition with us or our affiliates, or providing financial
assistance to or otherwise obtaining an ownership interest in a competitor of
ours or of our affiliates within a restricted territory encompassing several
states in the Southeast.
The
executive officer is required to keep secret and retain in strictest confidence,
and not use for his benefit or the benefit of others, except in connection with
our business and affairs and those of our affiliates, all confidential matters
relating to our business and the business of any of our affiliates and to us and
any of our affiliates, learned by the executive officer directly or indirectly
from us or any of our affiliates, and is not to disclose such confidential
information to anyone outside of our company except with our express written
consent and except for confidential information which is at the time of receipt,
or thereafter becomes, publicly known through no wrongful act of the executive
officer, or is received from a third party not under an obligation to keep such
information confidential and without breach of the executive officer’s
employment agreement.
25
Finally,
the executive officer is prohibited from, directly or indirectly, knowingly
soliciting or encouraging to leave the employment or other service, or the
employment or service of any of our affiliates, any employee or independent
contractor thereof or hiring any employee or independent contractor who has left
our employment or other service or the employment or service of any of our
affiliates within the one-year period which follows the termination of such
employee’s or independent contractor’s employment or other service with us and
our affiliates.
The
following chart sets forth the cost that we would have incurred if one of the
named executive officers ceased working for us as of December 31, 2008 under the
terms of our employment agreements:
Cost
of Termination Under Employment Agreements
|
Type
of Termination / Name (1)
|
Cash
Severance
(2)
|
Continued
Medical
and
Dental
Benefits
(4)
|
Accelerated
Vesting
of
Unvested
Equity
Compensation
(5)
|
Excise
Tax
Gross-Up
(6)
|
Total
Cost of
Termination
|
|||||||||||
|
Termination
For Cause / Resignation without Good Reason
|
||||||||||||||||
|
James
W. Cogdell
|
$
|
—
|
$
|
—
|
100%
forfeited
|
n/a
|
$
|
—
|
||||||||
|
Frank
C. Spencer
|
$
|
—
|
$
|
—
|
100%
forfeited
|
n/a
|
$
|
—
|
||||||||
|
Charles
M. Handy
|
$
|
—
|
$
|
—
|
100%
forfeited
|
n/a
|
$
|
—
|
||||||||
|
Scott
A. Ransom
|
$
|
—
|
$
|
—
|
100%
forfeited
|
n/a
|
$
|
—
|
||||||||
|
Termination
Without Cause / Resignation with Good Reason (without a change of
control)
|
||||||||||||||||
|
James
W. Cogdell
|
$
|
1,763,270
|
$
|
36,854
|
$
|
300,000
|
n/a
|
$
|
2,100,124
|
|||||||
|
Frank
C. Spencer
|
$
|
3,708,874
|
$
|
36,854
|
$
|
800,000
|
n/a
|
$
|
4,545,728
|
|||||||
|
Charles
M. Handy
|
$
|
2,016,327
|
$
|
36,854
|
$
|
500,000
|
n/a
|
$
|
2,553,181
|
|||||||
|
Scott
A. Ransom
|
$
|
1,883,700
|
$
|
36,854
|
$
|
—
|
n/a
|
$
|
1,920,554
|
|||||||
|
Change
of Control
|
||||||||||||||||
|
James
W. Cogdell
|
$
|
1,763,270
|
(3)
|
$
|
36,854
|
$
|
300,000
|
$
|
668,092
|
$
|
2,768,216
|
|||||
|
Frank
C. Spencer
|
$
|
3,708,874
|
$
|
36,854
|
$
|
800,000
|
$
|
1,701,358
|
$
|
6,247,086
|
||||||
|
Charles
M. Handy
|
$
|
2,016,327
|
$
|
36,854
|
$
|
500,000
|
$
|
968,128
|
$
|
3,521,309
|
||||||
|
Scott
A. Ransom
|
$
|
1,883,700
|
$
|
36,854
|
$
|
—
|
$
|
—
|
$
|
1,920,554
|
||||||
|
Non-renewal
of Employment Agreement
|
||||||||||||||||
|
James
W. Cogdell
|
$
|
1,763,270
|
$
|
36,854
|
$
|
300,000
|
n/a
|
$
|
2,100,124
|
|||||||
|
Frank
C. Spencer
|
$
|
3,708,874
|
$
|
36,854
|
$
|
800,000
|
n/a
|
$
|
4,545,728
|
|||||||
|
Charles
M. Handy
|
$
|
674,357
|
$
|
36,854
|
$
|
500,000
|
n/a
|
$
|
1,211,211
|
|||||||
|
Scott
A. Ransom
|
$
|
—
|
$
|
—
|
$
|
—
|
n/a
|
$
|
—
|
|||||||
|
Death
or Disability
|
||||||||||||||||
|
James
W. Cogdell
|
$
|
—
|
$
|
—
|
$
|
300,000
|
n/a
|
$
|
300,000
|
|||||||
|
Frank
C. Spencer
|
$
|
—
|
$
|
—
|
$
|
800,000
|
n/a
|
$
|
800,000
|
|||||||
|
Charles
M. Handy
|
$
|
—
|
$
|
—
|
$
|
500,000
|
n/a
|
$
|
500,000
|
|||||||
|
Scott
A. Ransom
|
$
|
—
|
$
|
—
|
$
|
—
|
n/a
|
$
|
—
|
|||||||
Note:
Assumes
the Company’s election to subject the executive officer to the non-competition,
confidentiality and non-solicitation provisions provided for in the employment
agreements.
26
|
(1)
|
In
analyzing the “golden parachute” tax rules (assuming that such rules are
potentially applicable here), we have taken the position for purposes of
completing the table that, in connection with the post-termination
non-competition covenants in the employment agreements with each of the
persons set forth in the table, excess parachute payments should be
reduced by an amount equal to one times certain annual compensation, which
is the amount payable by us to the executive if we determine to enforce
such covenants.
|
|
(2)
|
The
maximum bonus payable to Messrs. Spencer and Handy includes Long Term
Incentive Plan equity grants of $750,000 and $150,000, respectively. All
other amounts reflect cash.
|
|
(3)
|
The
amount includes the payment on behalf of Mr. Cogdell for office and
secretarial services pursuant to the terms of our employment agreement
with Mr. Cogdell.
|
|
(4)
|
The
cost of the medical and dental insurance is based on the cost paid by us
for health insurance for a family with dependent children. The actual
amount will vary based on the cost of health insurance at the time of
termination, whether the individual is single or married and whether the
individual has dependent children.
|
|
(5)
|
The
Board awarded approximately $2,500,000 of LTIP units in recognition of the
role played by certain employees in the acquisition of Erdman. The awards
were as follows: Mr. Spencer, $1,000,000; Mr. Cogdell, $375,000; Mr.
Handy, $650,000; and Ms. Wilson, $150,000. The aggregate number of LTIP
units awarded was 156,739, which was calculated using $15.95 per LTIP
unit, the price per share paid in connection with the Company’s private
offering in January 2008. Of the total number of LTIP units granted, 20%
vested on March 31, 2008 (the effective date of issuance) and the
remaining 80% will vest if and when the Company achieves certain
performance standards as provided in the awards. Effective December 31,
2008, additional LTIP units vested as the result of achieving certain
performance standards as provided in the awards. The additional vesting
was as follows using $15.95 per LTIP unit: Mr. Cogdell, $8,485 (532 LTIP
units); Mr. Spencer, $22,633 (1,419 LTIP units); Mr. Handy, $14,148 (887
LTIP units). Under Ms. Wilson’s severance agreement she forfeited the
remaining 80% of her unvested LTIP units.
|
|
(6)
|
Under
the employment agreements for all the named executive officers, if any
payments constitute “excess parachute payments” under Section 280G of the
Code such that the executive officer incurs an excise tax under Section
4999 of the Code, we will provide an “excise tax gross-up” payment in an
amount such that the executive officer would receive the same amount of
severance had the excise tax not applied. The cost of the excise tax
gross-up is an estimate based on a number of assumptions including:
(i) the Company is subject to a change of control on December 31,
2008, (ii) all of the named executive officers are terminated on December
31, 2008 without cause following that change of control, and (iii) all the
named executive officers receive cash incentive compensation for 2008
using the target percentage for each executive officer. Gross-up payments
are being included for informational purposes only. We have not yet
confirmed whether gross-up payments would be required in the event of a
termination of any or all of the persons set forth in the table. There may
be both factual and legal bases for concluding that underlying “golden
parachute” taxes, and therefore gross-up payments, should not be
payable.
|
On
May 28, 2008, the Company and Heidi M. Wilson agreed to terminate her employment
as Executive Vice President of the Company. The Company and Ms. Wilson entered
into a separation and release agreement pursuant to which Ms. Wilson received a
severance payment of $400,000.
Indemnification
Agreements
We
have entered into indemnification agreements with each of our executive officers
and directors. These indemnification agreements provide that:
|
●
|
If
a director or executive officer is a party or is threatened to be made a
party to any proceeding, other than a proceeding by or in our right, by
reason of the director’s or executive officer’s status as a director,
executive officer or employee of our company, we must indemnify such
director or executive officer for all expenses and liabilities actually
and reasonably incurred by him or her, or on his or her behalf, unless it
has been established that:
|
||
|
●
|
the
act or omission of the director or executive officer was material to the
matter giving rise to the proceeding and was committed in bad faith or was
the result of active and deliberate dishonesty;
|
||
|
●
|
the
director or executive officer actually received an improper personal
benefit in money, property or other services; or
|
||
|
●
|
with
respect to any criminal action or proceeding, the director or executive
officer had reasonable cause to believe that his or her conduct was
unlawful.
|
||
|
●
|
If
a director or executive officer is a party or is threatened to be made a
party to any proceeding by or in our right to procure a judgment in our
favor by reason of the director’s or executive officer’s status as a
director, executive officer or employee of the company, we must indemnify
the director or executive officer for all expenses and liabilities
actually and reasonably incurred by him or her, or on his or her behalf,
unless it has been established that:
|
||
|
●
|
the
act or omission of the director or executive officer was material to the
matter giving rise to the proceeding and was committed in bad faith or was
the result of active and deliberate dishonesty; or
|
||
|
●
|
the
director or executive officer actually received an improper personal
benefit in money, property or other services; provided, however, that
we will have no obligation to indemnify the director or executive officer
for any expenses and liabilities actually and reasonably incurred by him
or her, or on his or her behalf, if it has been adjudged that such
director or executive officer is liable to us with respect to such
proceeding.
|
||
27
|
●
|
Upon
application of one of our directors or executive officers to a court of
appropriate jurisdiction, the court may order indemnification of such
director or executive officer if:
|
||
|
●
|
the
court determines that the director or executive officer is entitled to
indemnification under the applicable section of the Maryland General
Corporate Law (the “MGCL”), in which case the director or executive
officer shall be entitled to recover from us the expenses of securing
indemnification; or
|
||
|
●
|
the
court determines that the director or executive officer is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director or executive officer has met
the standards of conduct set forth in the applicable section of the MGCL
or has been adjudged liable for receipt of an improper personal benefit
under the applicable section of the MGCL; provided, however, that any
indemnification obligations to the director or executive officer will be
limited to the expenses actually and reasonably incurred by him or her, or
on his or her behalf, in connection with any proceeding by or in our right
or in which the executive officer or director shall have been adjudged
liable for receipt of an improper personal benefit under the applicable
section of the MGCL.
|
||
|
●
|
Without
limiting any other provisions of the indemnification agreements, if a
director or executive officer is a party or is threatened to be made a
party to any proceeding by reason of the director’s or executive officer’s
status as our director, executive officer or employee, and the director or
executive officer is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such proceeding, we
must indemnify the director or executive officer for all expenses actually
and reasonably incurred by him or her, or on his or her behalf, in
connection with each successfully resolved claim, issue or matter,
including any claim, issue or matter in such a proceeding that is
terminated by dismissal, with or without prejudice.
|
||
|
●
|
We
must pay all indemnifiable expenses in advance of the final disposition of
any proceeding if the director or executive officer furnishes us with a
written affirmation of the director’s or executive officer’s good faith
belief that the standard of conduct necessary for indemnification by us
has been met and a written undertaking to reimburse us if a court of
competent jurisdiction determines that the director or executive officer
is not entitled to indemnification.
|
||
Accounting
Fees and Services
The
following table presents aggregate fees billed to us for the fiscal years ended
December 31, 2008 and 2007 by our principal accounting firm,
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu,
and their respective affiliates (collectively, “Deloitte &
Touche”).
Accounting
Fees and Services
|
Type
of Fees
|
2008
|
2007
|
|||||||
|
Audit
Fees
|
|
||||||||
|
Audit of our annual financial
statements and internal control over financial reporting and the
review of the financial
statements included in our Quarterly Reports on
Forms 10-Q
|
$ | 807,736 | $ | 564,549 | |||||
|
Comfort letters, consents and
assistance with documents filed with the SEC
|
170,584 | 128,231 | |||||||
|
Audit of MEA Holdings, LLC
Financials
|
189,361 | — | |||||||
|
Accounting consultation for
MEA Holdings, LLC
|
66,178 | — | |||||||
|
Subtotal
|
1,233,859 | 692,780 | |||||||
|
Audit-Related
Fees
|
— | — | |||||||
|
Tax Fees
|
|||||||||
|
Tax
compliance
|
31,544 | 336,378 | |||||||
|
Tax consultation and tax
planning advice in connection with acquisitions, entity
structuring
and REIT
compliance
|
14,666 | 231,796 | |||||||
|
Tax compliance for MEA
Holdings, LLC
|
39,311 | — | |||||||
|
Tax consulting for MEA
Holdings, LLC
|
36,042 | — | |||||||
|
Subtotal
|
121,563 | 568,174 | |||||||
|
All other
fees
|
— | — | |||||||
|
Total
|
$ | 1,355,422 | $ | 1,260,954 | |||||
28
Audit
Committee Pre-Approval of Services by the Independent Auditor
In
accordance with its charter and applicable rules and regulations adopted by the
SEC, the Audit Committee reviews and pre-approves any engagement of our
independent registered public accounting firm to provide audit, review, or
attest services or non-audit services and the fees for any such services. The
Audit Committee annually considers and, if appropriate, approves the provision
of audit services by the independent registered public accounting firm. In
addition, the Audit Committee periodically considers and, if applicable,
approves the provision of any additional audit and non-audit services by our
independent registered public accounting firm that are neither encompassed by
the Audit Committee’s annual pre-approval nor prohibited by applicable rules and
regulations of the SEC. The Audit Committee has delegated to the Chairman of the
Audit Committee, Mr. Georgius, the authority to pre-approve, on a
case-by-case basis, any such additional audit and non-audit services to be
performed by our independent registered public accounting firm.
Mr. Georgius reports any decision to pre-approve such services to the Audit
Committee at its next regular meeting. For 2008, the audit committee
pre-approved 100% of the series for which fees were
incurred.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the beneficial ownership of our Common Stock, as of
March 17, 2009, for: (1) each person known to us to be the beneficial
owner of more than 5% of our outstanding Common Stock, (2) each of our
directors and nominees for director, (3) each of our named executive
officers who is not a director and (4) our directors, nominees for director
and executive officers as a group. Except as otherwise described in the notes
below, the following beneficial owners have sole voting power and sole
investment power with respect to all shares of Common Stock set forth opposite
their respective names. In accordance with SEC rules, each listed person’s
beneficial ownership includes:
|
●
|
all
shares the investor actually owns beneficially or of
record;
|
|
|
●
|
all
shares over which the investor has or shares voting or dispositive control
(such as in the capacity as a general partner of an investment
fund); and
|
|
|
●
|
all
shares the investor has the right to acquire within 60 days (such as
upon exercise of options that are currently vested or which are scheduled
to vest within 60 days).
|
Unless
otherwise indicated, all shares are owned directly and the indicated person has
sole voting and investment power. Except as indicated below, the business
address of the stockholders listed below is the address of our principal
executive office, 4401 Barclay Downs Drive, Suite 300, Charlotte, NC
28209-4670.
Beneficial
Owner
|
Name
of Beneficial Owner
|
Number
of
Shares
and
Units
Beneficially
Owned (1)
|
Percent
of
All
Shares (2)
|
Percent
of
All
Shares
and
Units(3)
|
|||||||||
|
Davis
Advisers (4)
|
2,523,034
|
14.24
|
%
|
9.28
|
%
|
|||||||
|
Deutsche
Bank AG (5)
|
2,191,476
|
12.37
|
%
|
8.06
|
%
|
|||||||
|
Baird
Capital Partners (6)
|
1,776,222
|
10.03
|
%
|
6.53
|
%
|
|||||||
|
U.S.
Bancorp (7)
|
904,434
|
5.11
|
%
|
3.33
|
%
|
|||||||
|
Directors
|
||||||||||||
|
James
W. Cogdell (8)
|
2,291,591
|
12.94
|
%
|
8.43
|
%
|
|||||||
|
Frank
C. Spencer
(9)(10)
|
597,452
|
3.37
|
%
|
2.20
|
%
|
|||||||
|
John
R. Georgius (11)
|
58,704
|
*
|
|
*
|
|
|||||||
|
Richard
B. Jennings (12)
|
25,394
|
*
|
|
*
|
|
|||||||
|
Christopher
E. Lee
(13)
|
14,204
|
*
|
|
*
|
|
|||||||
|
David
J. Lubar
(14)
|
1,790,643
|
10.11
|
%
|
6.59
|
%
|
|||||||
|
Richard
C. Neugent (15)
|
18,789
|
*
|
|
*
|
|
|||||||
|
Scott
A. Ransom (16)
|
267,606
|
1.51
|
%
|
*
|
|
|||||||
|
Randolph
D. Smoak (17)
|
18,551
|
*
|
|
*
|
|
|||||||
|
Nondirector
Named Executive Officers
|
||||||||||||
|
Charles
M. Handy (18)
|
134,026
|
*
|
|
*
|
|
|||||||
|
Directors
and Executive Officers as a Group (10 persons)
|
5,216,960
|
29.45
|
%
|
19.19
|
%
|
|||||||
* Less than 1%
29
|
(1)
|
Beneficial
ownership is determined in accordance with Rule 13d-3 of the Exchange
Act. A person is deemed to be the beneficial owner of any shares of Common
Stock if that person has or shares voting power or investment power with
respect to those shares, or has the right to acquire beneficial ownership
at any time within 60 days of the date of the table. As used herein,
“voting power” is the power to vote or direct the voting of shares and
“investment power” is the power to dispose or direct the disposition of
shares.
|
|
(2)
|
Assumes
a total of 17,711,839 shares of our Common Stock are outstanding. In
addition, amounts listed for each individual assume that all units,
including vested LTIP units, beneficially owned by such individual are
exchanged for shares of our Common Stock, and amounts for all directors
and officers as a group assume all vested LTIP units held by them are
exchanged for shares of our Common Stock, but none of the units held by
other persons are exchanged for shares of our Common
Stock.
|
|
(3)
|
Assumes
a total of 27,187,761 shares of our Common Stock and units in our
operating partnership (“OP units”), including vested and unvested LTIP
units, are outstanding as of March 6, 2009, which is comprised of
17,711,839 shares of Common Stock, 9,248,195 OP units which may be
exchanged for cash or, at our option, shares of our Common Stock, 108,266
vested LTIP units and 119,461 unvested LTIP units.
|
|
(4)
|
Information
is based on a Schedule 13G filed with the SEC by Davis Selected
Advisers, L.P. Davis Selected Advisers, L.P. has sole voting power of
1,486,384 of these shares and sole dispositive power over all of these
shares. The address for Davis Selected Advisers, L.P. is 2949 East Elvira
Road, Suite 101, Tucson, Arizona 85706.
|
|
(5)
|
Information
is based on a Schedule 13G filed with the SEC by Deutsche Bank AG.
Deutsche Bank AG has sole voting power over 485,900 of these shares and
sole dispositive power over 2,191,476 of these shares. RREEF America,
L.L.C., a subsidiary of Deutsche Bank AG and the acquirer of the shares,
has sole voting power over 446,250 of these shares and has sole
dispositive power over 2,151,826 of these shares. Deutsche Investment
Management Americas, a subsidiary of Deutsche Bank AG, has sole voting
power over 39,650 of these shares and has sole dispositive power over
39,650 of these shares. The address for Deutsche Bank AG is
Theodor-Heuss-Allee 70, 60468 Frankfurt am Main, Federal Republic of
Germany.
|
|
(6)
|
This
amount is comprised entirely of OP units. Baird Capital Partner’s address
is 777 East Wisconsin Avenue, Milwaukee, WI 53201.
|
|
(7)
|
Information
is based on a Schedule 13G filed with the SEC by U.S. Bancorp. U.S.
Bancorp has sole voting power over 904,434 of these shares, sole
dispositive power over 897,694 of these shares and shared dispositive
power of 5,740 of these shares. FAF Advisors, Inc., a subsidiary of U.S.
Bancorp and acquirer of the shares, has sole voting power over 903,434 of
these shares, sole dispositive power over 897,694 of these shares and
shared dispositive power over 5,740 of these shares. The address for U.S.
Bancorp is 800 Nicollet Mall, Minneapolis, MN
55402-7020.
|
|
(8)
|
James
W. Cogdell is the Chairman of our Board. This amount includes
1,348,203 shares of Common Stock, 918,918 OP units, 6,193 fully
vested LTIP units and 18,277 unvested LTIP units. Mr. Cogdell has
pledged approximately 1,342,000 shares of his Common Stock in
connection with a personal line of credit.
|
|
(9)
|
Frank
C. Spencer is our Chief Executive Officer. This amount includes
237,328 shares of Common Stock, 247,817 OP units, 63,569 fully vested
LTIP units and 48,738 unvested LTIP units.
|
|
(10)
|
Frank
C. Spencer is co-trustee of James W. Cogdell’s estate and would thus
assume voting power of the shares of Mr. Cogdell’s estate in the
event of Mr. Cogdell’s death.
|
|
(11)
|
This
amount includes 2,500 restricted shares of our Common stock, 3,135 OP
units and 6,569 fully vested LTIP units.
|
|
(12)
|
This
amount includes 12,204 restricted shares of our Common
stock.
|
|
(13)
|
This
amount includes 2,500 restricted shares of our Common stock, 3,135 OP
units and 6,569 fully vested LTIP units.
|
|
(14)
|
David
J. Lubar owns these OP units indirectly through Lubar Capital L.L.C.
Mr. Lubar is the President and a Director of Lubar & Co.
which is the manager of Lubar Capital L.L.C. and holds a pecuniary
interest therein. Mr. Lubar disclaims beneficial ownership of the
securities except to the extent of his pecuniary interest therein. This
amount includes 6,569 fully vested LTIP
units.
|
|
(15)
|
This
amount includes 5,635 restricted shares of our Common stock and 6,569
fully vested LTIP units.
|
|
(16)
|
Scott
A. Ransom is the President of Erdman. This amount is all OP
units.
|
|
(17)
|
This
amount includes 8,982 OP units and 9,069 restricted shares of our Common
stock.
|
|
(18)
|
Charles
M. Handy is our Chief Financial Officer, Senior Vice President and
Secretary. This amount includes 1,600 shares of Common Stock, 89,737
OP units, 12,228 fully vested LTIP units and 30,461 unvested LTIP
units.
|
30
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In
2005, our Board formally adopted a written policy with respect to transactions
involving “related parties.” Pursuant to this policy, all related party
transactions (generally, transactions involving amounts exceeding $120,000 in
which a related party (directors and executive officers or their immediate
family members, or stockholders owning 5% or more of our outstanding stock)
shall be subject to approval or ratification:
Pursuant
to Maryland law, a contract or other transactions between us and a director or
between us and any other corporation or other entity in which any of our
directors is a director or has a material financial interest is not void or
voidable solely on the grounds of such common directorship or interest, the
presence of such director at the meeting at which the contract or transaction is
authorized, approved or ratified or the counting of the director’s vote in favor
thereof, provided that:
|
●
|
the
material facts relating to the common directorship or interest and as to
the transaction must be disclosed to our Board or a committee of our
Board, and our Board or committee must authorize, approve or ratify the
transaction or contract by the affirmative vote of a majority of
disinterested directors, even if the disinterested directors constitute
less than a quorum;
|
|
|
●
|
the
material facts relating to the common directorship or interest and as to
the transaction must be disclosed to our stockholders entitled to vote
thereon, and the transaction must be authorized, approved or ratified by a
majority of the votes cast by our stockholders entitled to vote (other
than the votes of shares owned of record or beneficially by the interested
director); or
|
|
|
●
|
the
transaction or contract is fair and reasonable to us at the time it is
authorized, ratified or approved.
|
Our
policy requires that all contracts and transactions between us and any related
parties must be approved by the affirmative vote of a majority of our
disinterested directors. Where appropriate, in the judgment of our disinterested
directors, our Board may obtain a fairness opinion or engage independent counsel
to represent the interests of non-affiliated stockholders, although our Board
will have no obligation to do so.
OTHER
MATTERS
Stockholder
Proposals and Nominations for the Board
Under
SEC rules, proposals from our eligible stockholders for presentation for action
at the 2010 annual meeting of stockholders must be received by us no later than
November 25, 2009 in order to be considered for inclusion in the proxy statement
and proxy card for that annual meeting. Any such proposals, as well as any
questions relating thereto, should be directed to our Secretary at our principal
executive offices.
Under
our current Bylaws, and as SEC rules permit, stockholders must follow certain
procedures to nominate a person for election as a director at an annual or
special meeting, or to introduce an item of business at an annual meeting. A
stockholder must notify our Secretary in writing of the director nominee or the
other business. For annual meetings the notice must include the required
information and be delivered to our Secretary at our principal executive offices
not earlier than the 150th day and not later than 5:00 p.m., Eastern
Time, on the 120th day prior to the first anniversary of the date of
mailing of the notice for the preceding year’s annual meeting.
If
the date of the annual meeting is advanced or delayed by more than 30 days
from the first anniversary of the date of the preceding year’s annual meeting,
notice by the stockholder must be delivered as described above not earlier than
the 150th day prior to the date of mailing of the notice for such annual
meeting and not later than 5:00 p.m., Eastern Time, on the later of the
120th day prior to the date of such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. The public announcement of an adjournment or postponement of an
annual meeting shall not commence a new time period for the giving of
stockholder’s notice as described above.
The
stockholder’s notice shall set forth the following, as applicable:
|
(1) as
to each individual whom the stockholder proposes to nominate for election
or reelection as a director, (a) the name, age, business address and
residence address of such individual, (b) the class, series and
number of any of our shares of stock that are beneficially owned by such
individual, (c) the date such shares were acquired and the investment
intent of such acquisition, and (d) all other information relating to
such individual that is required to be disclosed in solicitations of
proxies for election of directors in an election contest (even if an
election contest is not involved), or is otherwise required, in each case
pursuant to Regulation 14A (or any successor provision) under the
Exchange Act and the rules thereunder (including such individual’s written
consent to being named in the proxy statement as a nominee and to serving
as a director if
elected);
|
31
|
(2) as
to any other business that the stockholder proposes to bring before the
meeting, a description of such business, the reasons for proposing such
business at the meeting and any material interest in such business of such
stockholder and any Stockholder Associated Person (as defined below)
individually or in the aggregate, (including any anticipated benefit to
the stockholder and the Stockholder Associated Person
therefrom);
|
|
|
(3) as
to the stockholder giving the notice and any Stockholder Associated
Person, the class, series and number of all of our shares of stock which
are owned by such stockholder and by such Stockholder Associated Person,
if any, and the nominee holder for, and number of, shares owned
beneficially but not of record by such stockholder and by any such
Stockholder Associated Person;
|
|
|
(4) as
to the stockholder giving the notice and any Stockholder Associated Person
covered by clauses (2) or (3) above, the name and address of
such stockholder, as they appear on our stock ledger and current name and
address, if different, and of such Stockholder Associated
Person; and
|
|
|
(5) to
the extent known by the stockholder giving the notice, the name and
address of any other stockholder supporting the nominee for election or
reelection as a director or the proposal of other business on the date of
such stockholder’s notice.
|
“Stockholder
Associated Person” of any stockholder means (1) any person controlling,
directly or indirectly, or acting in concert with, such stockholder,
(2) any beneficial owner of our shares of stock owned of record or
beneficially by such stockholder and (3) any person controlling, controlled
by or under common control with such Stockholder Associated Person.
The
Board and our management know of no other matters or business to be presented
for consideration at the Annual Meeting. If, however, any other matters properly
come before the Annual Meeting or any adjournments or postponements thereof, it
is the intention of the persons named in the enclosed proxy to vote such proxy
in accordance with their discretion on any such matters. The persons named in
the enclosed proxy may also, if they deem it advisable, vote such proxy to
adjourn the Annual Meeting from time to time. In addition, if a quorum is not
present or represented at the Annual Meeting, the Chairman of the Annual Meeting
shall have the power to adjourn the Annual Meeting to a date not more than
120 days after the original Record Date without notice other than
announcement at the Annual Meeting, until a quorum is present or
represented.
|
FRANK
C. SPENCER
|
|
|
Chief
Executive Officer
|
32
Cogdell Spencer Inc.
VOTE BY INTERNET OR
MAIL
QUICK EASY IMMEDIATE
As a stockholder of Cogdell Spencer
Inc., you have the option of voting your shares electronically through the
Internet,
eliminating the need to return the proxy
card. Your electronic vote authorizes the named proxies to vote your shares
in the same manner as if you marked,
signed, dated and returned the proxy card. Votes submitted electronically over
the Internet must be received by 7:00 p.m., Eastern Time, on May 4,
2009.
Vote Your Proxy on the
Internet:
Vote Your Proxy by
mail:
Go to
www.cstproxy.com/cogdellspencer/2009
Have your proxy card available when you
access the above website. Follow the prompts to
vote your shares.
Mark, sign, and date your proxy
card, then detach it, and return it in
the postage-paid envelope
provided.
OR
PLEASE DO NOT RETURN THE PROXY CARD IF
YOU ARE VOTING
ELECTRONICALLY
FOLD AND DETACH HERE AND READ THE
REVERSE SIDE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” ALL NOMINEES FOR DIRECTOR.
Please mark your votes like
this X
1. The election of nine members to the
Board of Directors, each to serve until the 2010 Annual Meeting of Stockholders and until his successor
is duly elected and qualifies:
PLEASE MARK YOUR VOTE IN BLUE INK AS
SHOWN HERE
THE BOARD RECOMMENDS A VOTE “FOR” THE
RATIFICATION OF INDEPENDENT ACCOUNTANTS.
NOMINEES:
01. James W. Cogdell,
Chairman
02. Frank C. Spencer
03. John R. Georgius
04. Richard B.
Jennings
05. Christopher E.
Lee
06. David J. Lubar
07. Richard C.
Neugent
08. Scott A. Ransom
09. Randolph D. Smoak,
M.D.
INSTRUCTION: To withhold authority to
vote for any individual nominee(s), mark “FOR ALL
NOMINEES EXCEPT” and fill in the box
next to each nominee you wish to withhold.
FOR ALL NOMINEES WITHHOLD AUTHORITY FOR
ALL NOMINEES FOR ALL NOMINEES EXCEPT (See instructions
below)
FOR AGAINST ABSTAIN
2. Ratification of the appointment of
Deloitte & Touche LLP as the independent registered public
accounting firm of Cogdell Spencer Inc. for the
year ending December 31, 2009.
To change the address on your account,
please check the box at right, cross out and make change on the left. Please
note that changes to the registered name(s) on the account may not be submitted
via this method.
COMPANY ID:
PROXY NUMBER:
ACCOUNT NUMBER:
Please mark, date, sign and mail your
proxy card in the envelope provided as soon as possible.
Signature____________________________________________
Signature ___________________________________Date__________________, 2009
Note: Please sign exactly as your name
or names appear on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name by authorized
person.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting of Stockholders to be
held May 5, 2009
This proxy statement and our 2008 Annual
Report to Stockholders are available at
http://www.cstproxy.com/cogdellspencer/2009
FOLD AND DETACH HERE AND READ THE
REVERSE SIDE
PROXY
COGDELL SPENCER INC.
4401 Barclay Downs Drive, Suite
300
Charlotte, NC 28209-4670
ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON MAY 5, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned stockholder of Cogdell
Spencer Inc., a Maryland corporation (the "Company"), hereby
appoints Frank C. Spencer and Charles M. Handy as
proxies for the undersigned, each with full power of substitution, to attend
the Annual Meeting of Stockholders of the
Company to be held at Company headquarters located at 4401 Barclay Downs
Drive, Suite 300, Charlotte, NC 28209, on
Tuesday, May 5, 2009, 9:00 a.m., local time, or any adjournments or
postponements thereof, to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at such meeting
and otherwise to represent the undersigned at the meeting
with all powers possessed by the undersigned if personally present at the
meeting.
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders, the Proxy Statement
with respect thereto and our Annual Report
for the year ending December 31, 2008 (the terms of each of which are
incorporated by reference herein) and revokes any
proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the
undersigned will be cast as instructed on the reverse side. If this Proxy is executed
but no instruction is given, the votes entitled to be cast
by the undersigned will be cast "FOR" each of the nominees for director and
"FOR" proposal 2. Additionally, the
votes entitled to be cast by the undersigned will be cast in the discretion of
the Proxy holder on any other matter that may properly come
before the meeting or any adjournments or postponements
thereof.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.