8-KMaterial AgreementsExhibits & Filings

SIMON PROPERTY GROUP INC. 8-K Report, Material Agreement (Oct 5, 2006)

Filed October 5, 2006For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) filed an 8-K on October 4, 2006, reporting material amendments to its 1998 Stock Incentive Plan. These changes, approved by the Compensation Committee on September 29, 2006, primarily adjust the terms for stock options, restricted stock, and performance units granted to employees and executives. Key modifications include ensuring stock options are granted at fair market value, establishing minimum vesting periods for restricted stock and performance units (one year for performance-based, three years for tenure-based), and restricting accelerated vesting to specific events like death, disability, retirement, or change in control. The amendments also mandate shareholder approval for material changes to eligibility requirements or increases in the total number of securities issuable under the plan, and ensure compliance with IRS Code Section 409A for nonqualified deferred compensation. These changes aim to enhance governance and alignment with shareholder interests.

Key Highlights

  • 1SPG amended its 1998 Stock Incentive Plan, with changes effective September 29, 2006.
  • 2Stock options will now be granted at a price not less than the fair market value of the stock on the grant date.
  • 3Minimum vesting periods are introduced for equity awards: one year for performance-based and three years for tenure-based awards.
  • 4Accelerated vesting of awards is now limited to specific qualifying events: death, disability, retirement, or change in control.
  • 5Shareholder approval is required for material modifications to eligibility requirements or any significant increase in the total number of shares available under the plan.
  • 6The plan amendments ensure compliance with IRS Code Section 409A regarding nonqualified deferred compensation.
  • 7The amended plan will expire by its terms on September 24, 2008.

Frequently Asked Questions

The main purpose of the amendments is to strengthen the plan's governance, align executive compensation more closely with shareholder interests, and ensure compliance with current regulations, including IRS Code Section 409A.

Stock options granted under the amended plan will have an exercise price that is at least equal to the fair market value of SPG's stock on the date the option is granted. This prevents the granting of 'in-the-money' options.

The amendments establish minimum vesting periods: a one-year vesting period for 'performance-based' awards and a three-year vesting period for 'tenure-based' awards. Awards outside these parameters are capped at 5% of the total authorized shares.

The plan now restricts accelerated vesting to specific events, including the recipient's death, disability, retirement, or a change in control of the company. This provides a clearer framework for early vesting.