Posted: February 9th, 2018
In April 2017, Douglas Emmett submitted its “Proxy” (14A) filing to the U.S. Securities and Exchange Commission (SEC), announcing its annual shareholders meeting.
For publicly traded companies such as Douglas Emmett (NYSE: DEI), Proxy statements address issues that will be brought up for vote during the shareholders meeting, including the election of company directors. The statement must also disclose “executives’ and directors’ compensation, including salaries, bonuses, equity awards and any deferred compensation.”
Executive Compensation Disclosure
On page 28 of the Proxy filing, Douglas Emmett provides a chart showing how much executives were paid over the last three years, including in 2016.
Summary Compensation Table (per SEC rules, multi-year equity grants are included in the year of grant)
|Name & Principal Position||Year||Salary||Bonus||LTIP Unit Awards||All Other Compensation||Total|
|Jordan L. Kaplan, President and CEO||2016||$1,000,000||$ —||$6,876,415||$40,454||$7,916,869|
|Jordan L. Kaplan, President and CEO||2015||$1,000,000||$ —||$6,501,342||$40,115||$7,541,457|
|Jordan L. Kaplan, President and CEO||2014||$1,000,000||$ —||$5,362,082||$40,411||$6,402,493|
|Kenneth M. Panzer, COO||2016||$1,000,000||$ —||$6,876,415||$31,643||$7,908,058|
|Kenneth M. Panzer, COO||2015||$1,000,000||$ —||$6,501,342||$32,174||$7,533,516|
|Kenneth M. Panzer, COO||2014||$1,000,000||$ —||$5,362,082||$32,040||$6,394,122|
Douglas Emmett CEO Jordan Kaplan’s and COO Kenneth Panzer’s pay jumped by roughly 24% between 2014 and 2016.
Putting Douglas Emmett Exec Pay in Context
The website “Executive Paywatch” compares what corporate CEOs earn versus the average rank-and-file worker. At Douglas Emmett, CEO Jordan Kaplan’s $7.9 million compensation total in 2016 is 210 times the “average rank-and-file worker’s pay.”
To look at it another way, a Douglas Emmett Maintenance Engineer making $27 per hour ($56,160 per year) would have to work more than 140 years to earn what Kaplan and Panzer are compensated in one year.
A Douglas Emmett Utility Engineer making $15 per hour ($31,200 per year) would have to work more than 250 years to earn what Kaplan and Panzer make in one year. In fact, Kaplan and Panzer were compensated more for 10 hours of work ($38,000) than a Utility Engineer makes in an entire year.
Douglas Emmett Executive “Golden Parachutes”
Kaplan and Panzer both, according to the Proxy statement, have provisions in their contracts wherein they will receive lucrative severance packages – or “golden parachutes.” Below is the full clause:
If we terminate Messrs. Kaplan, Panzer or Crummy's employment without cause, or if the officer terminates his employment for good reason, he will receive severance equal to (a) compensation equal to three times the average of his total compensation over the last three full calendar years ending prior to the termination date (two times for Mr. Crummy), including (i) his salary, (ii) his annual bonus and (iii) the value of any other awards under our plans (the value of LTIP Units will be the face value of the award on the date of grant) (except that in the case of long term grants, where it will be based on the amount that vested in the year - this provision does not apply to Messrs. Kaplan or Panzer, who did not receive any long term grants), and (b) continued coverage under our medical and dental plans for the officer and his eligible dependents for a three-year period (two-year period for Mr. Crummy) following his termination.
For Kaplan and Panzer, that works out to “severance payments” of nearly $22 million, plus the immediate vesting of stock options that “would result in additional value of $9,783,712.” In short, if they are fired from Douglas Emmett without cause they will get $30 million-plus golden parachutes.