01—Abstract
Summary
Summary of the 10-K/A filed March 10, 2011. Cited figures are marked; the original filing is the authoritative source.
This filing is Amendment No. 1 to the Form 10-K of AMB Property Corporation and AMB Property, L.P. for fiscal 2010, not a full 10-K from Prologis.
AMB was the filer, and its pending merger with ProLogis is referenced throughout. The amendment adds only Part III (Items 10-14: directors, executive officers, executive compensation, beneficial ownership, related transactions, and accountant fees). It contains no financial statements, so the document offers no new financial results or balance sheet data.
It does describe the governance structure, pay practices, and the 2010 operating achievements used to set bonuses. Governance appears sound. Eight of nine directors are independent under NYSE standards, three directors are designated audit committee financial experts, and the board has no related-party transactions to report.
Compensation is pay-for-performance, with no employment contracts and no repricing of underwater options. The 2010 bonus pool was funded at 122.4% of target, which the board justified by occupancy of 93.7%, a record 37.7 million square feet leased, and a record $780 milliona in private capital raised. However, the long-term incentive program paid below target, because three-year total stockholder return of -14.39% trailed the peer group's -10.93% by 346 basis points.
CEO Hamid Moghadam's total compensation was $4.96 millionb under the CD&A methodology and $6.51 million under the SEC Summary Compensation Table, which reflects different valuation conventions. For investors, the key items are the pending ProLogis merger, which would trigger change-in-control payments and accelerate equity awards (with executives' waivers effective only upon completion), and the significant insider ownership concentrated in the CEO and his rabbi trust holdings. PricewaterhouseCoopers fees totaled $4.12 million in 2010, of which about $1.35 million was tax-related work and no audit-related fees were disclosed.
02—Key points
Key Highlights
- Filing type: This is a 10-K/A (Amendment No. 1) for AMB Property Corporation and AMB Property, L.P., filed March 10, 2011, solely to add Part III Items 10-14. It contains no financial statements.
- Board composition: Nine directors, all up for re-election in 2011; eight of nine are independent under NYSE standards. Three audit committee financial experts (Losh, Skelton, Webb) serve on the Audit Committee.
- Pay-for-performance outcome: The 2010 bonus pool was funded at 122.4% of target, but the three-year TSR of -14.39% trailed the peer group's -10.93%, so long-term incentive awards were set below target before a discretionary upward adjustment.
- CEO compensation: Hamid Moghadam received $4.96 million in total remuneration under the CD&A method ($6.51 million in the Summary Compensation Table), with most of his annual bonus taken in equity.
- Merger-related terms: Change-in-control agreements provide double-trigger cash severance (2x salary and bonus) and single-trigger equity acceleration. Executives' partial waivers take effect only when the ProLogis merger closes.
- Insider and ownership profile: Directors and named executive officers as a group beneficially own about 5.0% of common stock and units. Vanguard (9.0%) and BlackRock (8.6%) are the largest institutional holders.
- Auditor fees: PricewaterhouseCoopers fees totaled $4.12 million in 2010, up from $3.95 million in 2009, with tax fees of $1.35 million and no separately reported audit-related fees.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2010filed March 10, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Operating Expenses | $1.45B$1.07B | +35.6% |
| Operating Income | -$613.52M-$44.56M | −1276.9% |
| Interest Expense | $461.17M$372.77M | +23.7% |
| Net Income | -$1.27B$22.77M | −5679.0% |
| EPS (Basic) | $-5.90$-0.01 | −58900.0% |
| EPS (Diluted) | $-5.90$-0.01 | −58900.0% |
| Shares Outstanding (Basic) | 219.51M179.97M | +22.0% |
| Shares Outstanding (Diluted) | 219.51M179.97M | +22.0% |
05—Questions
Frequently Asked Questions
Does this filing contain new financial results for AMB Property Corporation?
No. The amendment only adds Part III governance and compensation disclosures. Financial results must be taken from the original 10-K for fiscal 2010, which this amendment does not restate.
Why did executives' compensation rise or fall relative to performance in 2010?
Annual bonuses were funded above target, reflecting strong operating results such as 93.7% core occupancy and record leasing. Long-term equity awards were set below target because three-year total stockholder return lagged the peer group by 346 basis points, though the committee adjusted some awards upward for industrial REIT outperformance.
What happens to executive pay if the ProLogis merger closes?
Under the amended change-in-control agreements, a termination without cause or for good reason within two years of a change in control triggers a lump-sum payment of twice base salary and average bonus, plus benefits and COBRA reimbursement. Unvested equity vests immediately upon a change in control. Partial waivers signed in connection with the merger become effective only upon its completion. The filing estimates Moghadam's potential change-in-control value at about $17.7 million, including a $2.6 million excise tax gross-up.
Are there any related-party transactions or governance concerns?
The company reported no reportable related-party transactions for 2010. The board found eight of nine directors independent. Director Tom Burke was not classified as independent because of his prior role as co-founder and former employee, which the board considered and did not find to affect his independence. The company has no loans outstanding to executives and has made none since its 1997 IPO.
How concentrated is insider ownership?
Ownership is concentrated in CEO Hamid Moghadam, who beneficially owns about 3.5% of common stock and units (including 2.2 million options exercisable within 60 days). Directors and executive officers as a group own about 5.0%. The largest outside holders are Vanguard Group (9.0%) and BlackRock (8.6%).
06—Continue