8-KLeadership ChangesExhibits & Filings

Extra Space Storage Inc. 8-K Report, Executive Changes (Aug 31, 2010)

Filed August 31, 2010For Securities:EXR

Summary

This 8-K filing from Extra Space Storage Inc. (EXR) on August 31, 2010, primarily announces the adoption of the Extra Space Storage Inc. Executive Change in Control Plan (Executive CIC Plan) on August 25, 2010. This plan outlines severance benefits for executive officers in the event of termination without cause or resignation for good reason. The plan provides significant benefits, including a lump sum cash payment equivalent to two times the executive's base salary and bonus, continued health benefits under COBRA for two years, outplacement services, and full vesting of equity and deferred compensation. These provisions are intended to provide security to key executives and align their interests with those of shareholders, particularly in scenarios that could lead to a change in control.

Key Highlights

  • 1Adoption of the Extra Space Storage Inc. Executive Change in Control Plan (Executive CIC Plan).
  • 2Plan applies to all executive officers of Extra Space Storage Inc., Extra Space Storage L.P., and Extra Space Management, Inc.
  • 3Severance benefits are triggered by termination without "cause" or resignation for "good reason".
  • 4Key severance components include a lump sum cash payment (2x base salary + bonus), 2 years of COBRA health benefit continuation, and outplacement services.
  • 5Full vesting of all equity compensation and pension/deferred compensation plans is guaranteed upon eligible termination.
  • 6Severance payments are subject to the execution of a general release of claims.
  • 7The plan includes restrictive covenants on employees, such as non-solicitation, non-competition, and confidentiality.
  • 8Definitions for "cause" for termination and "good reason" for resignation are clearly outlined, providing specific circumstances for plan activation.

Frequently Asked Questions

The primary purpose of the Executive CIC Plan is to provide financial security and severance benefits to key executive officers in the event their employment is terminated without "cause" or if they resign for "good reason." This is often implemented to retain executives and align their interests with shareholders, especially during periods of potential corporate transition.

Eligible executives can receive a lump sum payment equal to twice their base salary plus bonus, up to two years of COBRA health benefit continuation, six months of outplacement services, and full vesting of all equity compensation and deferred compensation. They may also receive a pro rata bonus for the year of termination.

'Cause' is defined broadly and includes actions such as felony conviction, dishonest or unethical conduct, willful misconduct or gross neglect, repeated failure to follow directives or company policies, willful failure to perform duties, and breach of non-compete, non-solicitation, or confidentiality agreements.

'Good reason' for resignation, after notice and opportunity to cure, includes a material reduction in the executive's authority, duties, or responsibilities; a material reduction in salary; or a required relocation of more than 100 miles from Salt Lake City, Utah.