8-KMaterial AgreementsExhibits & Filings

SIMON PROPERTY GROUP INC. 8-K Report, Material Agreement (May 9, 2008)

Filed May 9, 2008For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) filed an 8-K on May 9, 2008, primarily detailing two material agreements affecting its operating partnership and stock incentive plan. The company executed an Eighth Amended and Restated Agreement of Limited Partnership for its subsidiary, Simon Property Group, L.P. This restatement incorporates structural changes from acquisitions and internal reorganizations since 1999. A key update is the authorization for the general partner to issue long-term incentive plan units (LTIP units) within the Operating Partnership, which are performance-based and tied to specific metrics, offering a new form of equity-based compensation. Furthermore, SPG's stockholders approved amendments to the 1998 Stock Incentive Plan. These amendments extend the plan's term to December 31, 2013, modify definitions, remove reload options, and crucially, broaden the scope of performance units to include equity interests in the Operating Partnership that can be exchanged for SPG's common stock. These changes indicate a focus on aligning management incentives with long-term company and operating partnership performance.

Key Highlights

  • 1Simon Property Group, Inc. amended and restated the Limited Partnership Agreement for its operating partnership (Simon Property Group, L.P.) as of May 8, 2008.
  • 2The Restated Partnership Agreement incorporates structural changes resulting from acquisitions and internal reorganizations since 1999.
  • 3New provisions allow the issuance of Long-Term Incentive Plan units (LTIP units) within the Operating Partnership.
  • 4LTIP units are described as 'profits interest' with forfeiture risk tied to performance measures over periods longer than one year.
  • 5Holders of LTIP units will receive distributions at one-tenth the rate of partnership units until the performance period expires.
  • 6The total number of LTIP units issuable is capped by the number of the Company's common shares reserved for issuance under stockholder-approved plans.
  • 7Stockholders approved amendments to the 1998 Stock Incentive Plan, extending its term to December 31, 2013.

Frequently Asked Questions

This restated agreement updates the structure of Simon Property Group's operating partnership to reflect changes since 1999, including acquisitions and reorganizations. A key change is the introduction of LTIP units, a new form of equity incentive for management tied to performance.

LTIP units are a type of 'profits interest' in the Operating Partnership. They are subject to forfeiture if performance targets are not met. Holders receive reduced distributions until the performance period ends, after which they may convert into common stock of Simon Property Group, Inc., subject to performance.

The amendments extend the plan's life, modify the definition of fair market value, remove reload options, and importantly, expand performance unit awards to include equity in the Operating Partnership exchangeable for SPG common stock. This aims to further align executive incentives with long-term performance of both the company and its operating partnership.

While this 8-K does not include financial statements, the introduction of LTIP units and amendments to the incentive plan will likely impact future share-based compensation expenses and earnings per share calculations as these awards vest and are potentially exercised or settled.