8-KLeadership ChangesExhibits & Filings

DIGITAL REALTY TRUST, INC. 8-K Report, Executive Changes (Nov 16, 2015)

Filed November 16, 2015For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) has filed an 8-K to disclose an amended and restated employment agreement with its Chief Investment Officer, Scott E. Peterson, effective November 10, 2015. This agreement supersedes his previous employment terms and outlines compensation, bonus structure, and extensive severance provisions. The primary focus for investors is the clarity provided on Mr. Peterson's continued role, his compensation package which includes a base salary of $525,171 with potential increases, and performance-based bonuses with target and maximum potential at 100% and 150% of base salary, respectively. The agreement also details significant severance benefits in cases of termination without cause or by Mr. Peterson for good reason, including a "change in control" scenario. These provisions aim to ensure stability and retention for a key executive, providing financial security that can influence decision-making during critical corporate events. Investors should note the detailed conditions for severance, including the requirement for a general release of claims and adherence to restrictive covenants, as well as the potential for accelerated vesting of equity awards.

Key Highlights

  • 1Amended and restated employment agreement entered into with Chief Investment Officer, Scott E. Peterson.
  • 2Mr. Peterson's current annual base salary is $525,171, subject to discretionary increases.
  • 3Eligible for annual cash performance bonus with target and maximum at 100% and 150% of base salary, respectively.
  • 4Employment term is initially three years, with automatic one-year extensions unless not renewed.
  • 5Significant severance provisions apply upon termination without 'cause' or by Mr. Peterson for 'good reason', including lump-sum payments and continued benefits.
  • 6Enhanced severance package (two times base salary and target bonus) in the event of termination within one year following a 'change in control'.
  • 7Accelerated vesting of outstanding equity awards is provided under specific termination scenarios, particularly in relation to a change in control.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce and detail the amended and restated employment agreement between Digital Realty Trust, Inc. and its Chief Investment Officer, Scott E. Peterson. This includes updates to his compensation, bonus potential, and severance benefits.

Mr. Peterson's compensation includes a base salary of $525,171, which can be increased at the Compensation Committee's discretion. He is also eligible for an annual cash performance bonus, with a target of 100% of his base salary and a maximum of 150%.

In such events, Mr. Peterson is entitled to a severance payment equal to 50% of his base salary plus target annual bonus, payable within 60 days. Additional payments, including a greater amount of base salary, target bonus, and potential 'stub year' and 'prior year' bonuses, may be paid on the six-month anniversary or upon a change in control. He also receives continued health insurance, outplacement services, and accelerated vesting of equity awards.

If Mr. Peterson's employment is terminated without cause or for good reason on or within one year after a 'change in control', he is entitled to significantly enhanced severance. This includes a lump-sum payment equal to two times the sum of his then-current annual base salary and target annual bonus, plus the 'stub year' and 'prior year' bonuses. Accelerated vesting of equity awards and continued benefits also apply.