Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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(e)
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Compensatory Arrangements of Certain Officers
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Kilroy Realty Corporation (the Company) and Kilroy Realty, L.P. (the Operating Partnership) are parties to an
Employment Agreement, dated January 1, 2007, as amended and restated as of January 1, 2012, with John B. Kilroy, Jr., the Chairman of the Board of Directors (the Board), Chief Executive Officer and President of the Company and
the Operating Partnership (the Current Employment Agreement). The Current Employment Agreement would have expired by its existing terms on December 31, 2018. On December 27, 2018, the Executive Compensation Committee of the
Companys Board (the Committee) approved, and the Company and the Operating Partnership entered into, an amended and restated Employment Agreement with Mr. Kilroy (the Amended Employment Agreement). Except as noted
below, the Amended Employment Agreement continues Mr. Kilroys employment on terms substantially similar to those of the Current Employment Agreement, with a new term scheduled to continue through December 31, 2023.
Mr. Kilroy has been the Companys Chief Executive Officer and President, and a director of the Company, since its incorporation in
September 1996. Prior to that, Mr. Kilroy led the Companys private predecessor, Kilroy Industries, becoming its President in 1981 and its Chief Executive Officer in 1991. Mr. Kilroy has been involved in all aspects of commercial real
estate acquisition, entitlement, development, construction, leasing, financing and dispositions since 1967.
Mr. Kilroy has led the
Companys recent transformation from a Southern California-centric REIT with an enterprise value on January 1, 2010 of approximately $2.6 billion based on the closing price of the Companys common stock on that date and a
portfolio of stabilized office and industrial properties at that time of approximately 12.4 million square feet (with all of those properties in Southern California), to the approximate $9.3 billion enterprise value that the Company had on
December 27, 2018 based on the closing price of the Companys common stock on that date. As of September 30, 2018, the Companys stabilized portfolio totaled approximately 13.9 million square feet of office space located in
the coastal regions of Greater Los Angeles County, Orange County, San Diego County, the San Francisco Bay Area and the Greater Seattle Areas and 200 residential units located in the Hollywood submarket of Los Angeles. In addition, as of such date,
the Company had three projects under construction totaling approximately 1.0 million square feet of office space, 608 residential units and 120,000 square feet of retail space as well as two projects in the tenant improvement phase totaling
approximately 1.2 million square feet of office and production, distribution and repair space.
The Companys commitment and
leadership position in sustainability has been recognized by various industry groups across the world. In September 2018, the Company was recognized by GRESB both as North American leader across all asset classes and global world leader among all
publicly traded real estate companies. Other sustainability accolades include NAREITs Leader in the Light award for the past five years, the EPAs highest honor of Sustained Excellence and winner of ENERGY STAR Partner of the Year for the
past five years. The Company is listed in the Dow Jones Sustainability World Index.
The Companys total stockholder return (assuming
dividend reinvestment) over this period of transition, from January 1, 2010 through December 27, 2018, was 165%, far exceeding the total stockholder return (assuming dividend reinvestment) of 74% for the SNL US REIT Office Index for the
same period of time.
The Companys Board believes that it is in the best interests of the Company and its stockholders for
Mr. Kilroy to continue to serve as the Companys Chief Executive Officer and President.
Mr. Kilroys base salary
level and target annual cash incentive award opportunity under the Amended Employment Agreement remain the same as his current annual base salary of $1,225,000 and target annual cash incentive award opportunity of $3,000,000. Mr. Kilroys
target annual stock incentive award opportunity under the Amended Employment Agreement was increased to $6,000,000, in line with the grant date fair values of his recent annual equity awards from the Company. The Committee may increase these salary
and incentive levels from time to time, and actual incentive payment values may vary based on performance.