8-KLeadership ChangesExhibits & Filings

Extra Space Storage Inc. 8-K Report, Executive Changes (Sep 4, 2008)

Filed September 4, 2008For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) filed an 8-K on September 4, 2008, to report on the approval and execution of amended and restated employment agreements with its top four executive officers: Kenneth M. Woolley (CEO), Kent W. Christensen (CFO), Karl Haas (COO), and Charles L. Allen (Chief Legal Officer). These new agreements replace previous ones and standardize terms across the executive team. The key focus of these agreements is to provide enhanced severance and change-in-control protections. The agreements establish a three-year initial term with automatic annual renewals, and outline severance packages involving two times base salary and bonus for termination without cause or for good reason. They also include provisions for continued health benefits, full vesting of equity and retirement plans, and restrictive covenants. These updated agreements aim to provide executive stability and retention, particularly important given the economic climate of late 2008.

Key Highlights

  • 1Amended and restated employment agreements executed for CEO, CFO, COO, and Chief Legal Officer.
  • 2Agreements have a three-year initial term with automatic annual renewals.
  • 3Severance package includes two times base salary and bonus for termination without cause or for 'good reason'.
  • 4Provisions for outplacement services, COBRA continuation coverage, and full vesting of equity and retirement benefits upon termination without cause or for good reason.
  • 5Enhanced benefits in the event of a change in control, including a pro rata bonus and the option for executives to terminate for 'good reason' within six months post-change of control.
  • 6Tax gross-up provisions are included for excess parachute payments, with a caveat for minor reductions to avoid excise tax.
  • 7Executives have agreed to restrictive covenants including non-solicitation of employees, non-competition, and confidentiality.

Frequently Asked Questions

The main purpose is to provide updated and standardized employment terms, including enhanced severance packages and change-in-control protections for the company's top four executive officers. This aims to ensure executive retention and provide financial security in certain termination scenarios or during a company acquisition.

If terminated without cause or if they resign for 'good reason,' executives are entitled to severance equal to two times their base salary and bonus (based on prior year or average of the prior three years). This also includes six months of outplacement services, two years of COBRA health benefit cost coverage, and full vesting of all equity compensation and retirement plans.

The agreements have an initial term of three years. After the initial term, they will automatically renew annually unless either the company or the executive provides notice of non-renewal.

‘Good reason’ includes significant negative changes to the executive's role or responsibilities, a material reduction in salary, a requirement to relocate more than 100 miles from Salt Lake City, or a willful and material breach of the employment agreement by the company, provided the company has an opportunity to cure such issues.