8-KLeadership ChangesRegulation FDExhibits & Filings

AVALONBAY COMMUNITIES INC 8-K Report, Executive Changes (Dec 10, 2020)

Filed December 10, 2020For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) announced a significant leadership transition plan via an 8-K filing on December 10, 2020. Benjamin W. Schall is set to join the company as President and a member of the Board of Directors, effective on or before February 1, 2021. This appointment is a precursor to a broader succession plan, as current Chairman and CEO Timothy J. Naughton intends to retire as CEO at the end of 2021. Upon Mr. Naughton's retirement, Mr. Schall will assume the CEO role, while Mr. Naughton will transition to an Executive Chairman position, the specifics of which are yet to be defined. The filing also details Mr. Schall's employment agreement, outlining his compensation package and the terms of his transition. This includes a substantial sign-on bonus and equity awards to compensate for forfeited compensation from his previous role at Seritage Growth Properties. The agreement also specifies provisions for termination, relocation, and non-compete clauses, providing clarity on the conditions and potential payouts associated with his new role and future transition.

Key Highlights

  • 1Benjamin W. Schall appointed as President and Board member, effective February 1, 2021.
  • 2Timothy J. Naughton plans to retire as CEO at the end of 2021, with Mr. Schall to succeed him.
  • 3Mr. Naughton will remain on the Board as Executive Chairman after his CEO retirement.
  • 4Mr. Schall's initial annual target compensation is $7.5 million, including base salary, cash bonus, and equity awards.
  • 5Significant sign-on awards totaling $6 million in cash and restricted stock are provided to Mr. Schall.
  • 6Employment agreement includes provisions for relocation, severance packages, and non-compete clauses.
  • 7Mr. Schall brings extensive REIT experience, previously serving as CEO and President of Seritage Growth Properties.

Frequently Asked Questions

This 8-K filing announces a planned leadership transition at AvalonBay Communities, Inc., introducing Benjamin W. Schall as the new President and outlining the succession plan for the CEO position currently held by Timothy J. Naughton.

Mr. Schall's agreement includes an initial annual target compensation of $7.5 million, comprising salary, bonus, and equity. It also provides a $1.5 million cash payment and a $4.5 million restricted stock grant as a sign-on award to compensate for prior employment forfeitures. The agreement details provisions for relocation, severance in various termination scenarios, and non-compete obligations.

Timothy J. Naughton intends to retire as CEO at the end of 2021. At that time, Benjamin W. Schall will be appointed as the new CEO. Mr. Naughton will continue his involvement with the company as Executive Chairman.

Mr. Schall, 45, is an experienced real estate executive. Prior to joining AvalonBay, he served as CEO and President of Seritage Growth Properties, a retail and mixed-use REIT. His previous roles include COO of Rouse Properties, Inc., and Senior Vice President at Vornado Realty Trust.