INNOVATIVE INDUSTRIAL PROPERTIES, INC. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Approval of Form of 2022 Performance Share Unit Award Agreement
OnJanuary 11, 2022 , the Compensation Committee (the "Compensation Committee") of the Board of Directors (the "Board") ofInnovative Industrial Properties, Inc. (the "Company") adopted a form of 2022 Performance Share Unit Award Agreement (the "2022 PSU Agreement") under the Company's 2016 Omnibus Incentive Plan (the "Incentive Plan"). The 2022 PSU Agreement provides for the issuance of target performance share units ("PSUs"). The ultimate value of the PSUs depends on the Company's total stockholder return ("TSR") over a period commencingJanuary 11, 2022 and ending onDecember 31, 2024 (the "Performance Period"). At the end of the Performance Period, the PSUs vest and are settled in shares of common stock (the "Award Shares") at a rate depending on the Company's TSR over the Performance Period as compared to two different comparator groups, as certified by the Compensation Committee: i) 26 real estate companies; and ii) the companies in the FTSE NAREIT All Equity REIT Index. A recipient of PSUs may receive as few as zero Award Shares or as many as 150% of the number of target PSUs in Award Shares, plus deemed dividends (as described below). The chart below sets forth the vesting schedule as a percentage of the target PSUs that applies at the end of the Performance Period. However, the number of Award Shares that may be earned at vesting of the PSUs will be reduced as necessary so the total value at the vesting date does not exceed 800% of the grant date PSU price. In addition, if the Company's absolute TSR during the Performance Period is negative, the payout of Award Shares will be capped at the target number of PSUs, notwithstanding the Company's outperformance of the comparator groups. The Company's TSR Ranking within the PSU Payout Two Comparator Groups (as a % of Target) At or above 80th percentile TSR 150%
Between the 80th percentile TSR and
55th percentile TSR Determined by linear interpolation(1)
At the 55th percentile TSR 100%
Between the 25th percentile TSR and
55th percentile TSR Determined by linear interpolation(2)
At or below the 25th percentile TSR 0%
(1) Determined by linear interpolation between the comparator group's 80th and
55th percentile TSRs.
(2) Determined by linear interpolation between the comparator group's 25th and
55th percentile TSRs.
No dividends are paid to the recipient during the Performance Period. At the end
of the Performance Period, if the Company's TSR is such that the recipient earns
Award Shares, the recipient will receive additional shares of common stock
relating to dividends deemed to have been paid and reinvested on the Award
Shares. The recipient of the Award Shares may not sell, transfer or otherwise
dispose of the Award Shares for a one-year period following the vesting date of
the Award Shares.
The terms of the 2022 PSU Agreement supersede any conflicting terms of any
severance agreement or plan applicable to the recipient, including each
executive officer's Change of Control and Severance Agreement with the Company
and
The 2022 PSU Agreement provides that upon the recipient's (a) death; (b) "disability"; (c) termination of employment or service by the Company without "cause" or by the recipient for "good reason"; or (d) "qualifying retirement" (each a "Qualifying Event") prior to a change of control of the Company, the PSUs will continue to vest, except that if the PSUs were granted less than twelve months prior to the date of the Qualifying Event, then the potential payout of Award Shares is prorated based on the number of months that the recipient was employed or provided service to the Company since the date of grant through the date of the Qualifying Event, divided by twelve months. After a change of control, the PSUs (as adjusted as a result of the change of control) continue to vest in full regardless of the date of grant, upon the occurrence of a Qualifying Event.
For any other termination of employment or service to the Company by the recipient other than a Qualifying Event, any unvested PSUs are forfeited in their entirety.
Executive Compensation Decisions
OnJanuary 11, 2022 , the Compensation Committee adjusted the annual base salaries of the Company's executive officers for 2022, determined the executive officers' year-end 2021 cash bonuses and granted executive officers awards of restricted stock units ("RSUs"), restricted shares of common stock and PSUs pursuant to the 2022 PSU Agreement. These salaries, bonuses and grants of restricted stock, RSUs and PSUs are summarized in the following table: Restricted Target 2022 Base 2021 Year-End RSU Stock PSU Name and Position Salary(1) Cash Bonus Awards(2) Awards(3) AwardsAlan Gold Executive Chairman$ 1,126,000 $ 1,535,625 16,218 - 46,188 Paul Smithers President and Chief Executive Officer 924,000 840,000 - 11,583 30,792 Catherine Hastings Chief Financial Officer and Treasurer 400,000 308,500 4,635 - 12,317 Brian Wolfe Vice President, General Counsel and Secretary 350,000 295,000 - 4,170 10,264
(1) Adjustments to the executive officers' base salaries are effective as of
(2) The RSUs vest ratably on each of
1, 2025 for
be an employee of the Company or a non-employee member of the Board on each
such date. The RSUs were issued to
Restricted Stock Unit Award Agreement ("RSU Agreement") under the Company's
Incentive Plan.
(3) The restricted stock award vests ratably on each of
1, 2024 and
continues to be an employee of the Company or a non-employee member of the
Board on each such date. The restricted stock awards were issued to Messrs.
Smithers and Wolfe pursuant to a Restricted Stock Award Agreement
("Restricted Stock Award Agreement") under the Company's Incentive Plan.
Copies of the RSU Agreement, Restricted Stock Award Agreement and 2022 PSU Agreement are filed as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference. The foregoing descriptions of the RSU Agreement, Restricted Stock Award Agreement and 2022 PSU Agreement are qualified in their entirety by reference to the full texts of the RSU Agreement, Restricted Stock Award Agreement and 2022 PSU Agreement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Description of Exhibit 10.1+ Form of Restricted Stock Unit Award Agreement.(1) 10.2+ Form of Restricted Stock Award Agreement for Officers.(2) 10.3*+ Form of 2022 Performance Share Unit Award Agreement.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Filed herewith. + Indicates management contract or compensatory plan.
(1) Incorporated by reference to Exhibit 10.1 to
(2) Incorporated by reference to Exhibit 10.2 to
filed with the
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