8-KLeadership ChangesOther Events

DIGITAL REALTY TRUST, INC. 8-K Report, Executive Changes (Nov 28, 2018)

Filed November 28, 2018For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) filed an 8-K on November 27, 2018, detailing changes to its executive and director compensation programs, effective for bonuses and fees earned in 2019 and onward. The core of these changes involves offering eligible employees and directors the option to receive a portion of their cash bonuses and retainers/fees in the form of company equity (profits interest units or restricted stock units). This move is designed to align executive and director interests more closely with those of shareholders by increasing their direct stake in the company's performance and long-term value creation. For executives, the election allows for conversion of cash bonuses into fully-vested PIUs or common stock at a 100% value, or into unvested PIUs or RSUs at a 125% value, with a two-year vesting schedule. For directors, elected amounts can be converted into fully-vested PIUs at a 100% value. These equity awards are subject to accelerated vesting upon a change in control or certain qualifying terminations. This compensation strategy aims to enhance retention and incentivize sustained growth and shareholder returns.

Key Highlights

  • 1New compensation program allows eligible employees and officers to elect to receive annual bonuses in equity (PIUs or common stock) instead of cash.
  • 2Equity options for executives include fully-vested awards (100% value) or unvested awards (125% value with a two-year vesting schedule).
  • 3Directors can elect to receive cash retainers and fees in the form of fully-vested PIUs at a 100% value.
  • 4Equity awards are granted based on the company's closing share price on the date of grant.
  • 5Unvested equity awards are subject to accelerated vesting in cases of a change in control or certain qualifying terminations of employment.
  • 6Elections for compensation changes must be made in the year preceding the compensation period.
  • 7The program is designed to align executive and director interests with those of shareholders.

Frequently Asked Questions

The primary change is the introduction of a program allowing eligible employees, including named executive officers, and directors to elect to receive a portion of their cash bonuses, retainers, and fees in the form of company equity (profits interest units or common stock) instead of cash.

For executives electing to receive unvested equity (PIUs or RSUs), the grant value is 125% of the cash bonus amount. For executives electing fully-vested equity (PIUs or common stock) and for directors electing PIUs, the grant value is 100% of the cash compensation amount.

Yes, unvested equity awards for executives have a two-year vesting schedule, with 50% vesting on each of the first two anniversaries of the grant date, contingent on continued service. Both executive and director equity awards may be subject to accelerated vesting upon a change in control of the company or certain qualifying terminations of employment.

Participants must make their elections by a specified date in the year preceding the year in which their annual bonus or cash retainers/fees would otherwise be paid. For instance, elections made in 2018 would apply to compensation earned in 2019.