DIGITALBRIDGE
2023 PROXY STATEMENT | 1
PROXY
SUMMARY
Proposals
and Board Recommendations
| Proposal |
Board
Recommendation |
For
More Information |
| 1 |
To
elect 9 directors nominated by our Board of Directors to serve until the 2024 Annual Meeting of Stockholders and until his or her successor
is duly elected and qualified |
 |
FOR
each of the nominees listed on the enclosed proxy
card |
Page
9 |
| 2 |
To
approve, on a non-binding, advisory basis, named executive officer compensation |
|
FOR |
Page
33 |
| 3 |
To
recommend, on a non-binding, advisory basis, the frequency of the advisory vote on named executive officer compensation |
|
ONE
YEAR |
Page
71 |
| 4 |
To
consider and vote upon an amendment to our articles of amendment and restatement, as amended and supplemented (“Charter”),
to decrease the number of authorized shares of common stock |
|
FOR |
Page
72 |
| 5 |
To
ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December
31, 2023 |
|
FOR |
Page
74 |
How
to Cast Your Vote
We
have provided you with three different methods for you to vote your proxy. Please see the enclosed proxy card or voting instruction form
for additional details regarding each voting method.
| By
Internet |
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By
Telephone |
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By
Mail |
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| Vote
24/7 |
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Dial
toll-free to vote 24/7 |
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Cast
your ballot, sign your proxy |
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card
and send by pre-paid mail |
2022
Year in Review
Despite
a dynamic macro environment, DigitalBridge delivered solid growth in revenue and earnings in 2022, maintaining its position as the partner
of choice to top management teams and institutional investors allocating capital to the durable digital infrastructure asset class. Today,
with over $65 billion in assets under management (“AUM”), DigitalBridge has established itself as a preeminent investor in
a sector benefiting from strong secular tailwinds.
Established
the Asset Management Platform as Our Strategic Growth Driver
|
■ |
Oriented DBRG around a scalable,
asset-light business model that represents an alternative approach to invest in the digital infrastructure ecosystem. |
|
■ |
Executed a series of transactions
to reinforce this roadmap including (i) the repurchase and consolidation of 100% ownership of our investment management business and (ii)
the acquisition of AMP Capital’s |
2
| DIGITALBRIDGE
2023 PROXY STATEMENT
PROXY
SUMMARY
infrastructure
equity business (now rebranded InfraBridge) to add a mid-market capability to our franchise and enhance earnings.
|
■ |
Initiated the first stage of a planned deconsolidation of the
Operating segment with the DataBank recapitalization process, generating $425 million in proceeds to the Company, reflecting a 2.0x multiple
of invested capital since our initial investment in DataBank in December 2019, and aligning the Company’s balance sheet more closely
with the asset management business model. |
Scaled
AUM with New Capital Formation That Exceeded Targets
| ■ |
Cumulative organic
fundraising of $8.5 billion, including $4.8 billion in new third party fee earning equity under management (“FEEUM”), which
exceeded the midpoint of the FEEUM guidance by 26%. |
| ■ |
Grew FEEUM to $27.8
billion as of the last reported earnings release date, up 52% since the end of 2021, with contributions from new core and credit strategies,
co-invest, and the AMP (InfraBridge) acquisition. |
| ■ |
Successful launch
of new core and credit strategies and AMP (InfraBridge) acquisition advanced “Full Stack” profile, positioning DBRG as the
leading investor across the sector. |
Executed
Accretive Capital Allocation While Maintaining Strong Liquidity
| ■ |
Four accretive transactions
allocated over $900 million in cash to M&A and capital structure optimization, which we expect to drive an increase in annual run-rate
earnings of $85 million, an increase in earnings per share of $0.49/share. |
| ■ |
Despite significant
capital deployment, DigitalBridge prioritized and maintained strong liquidity, which stood at $680 million as of the last reported earnings
release date. |
| ■ |
Management continued
to de-lever the business, reducing both investment level and corporate debt on a pro-rata basis from $1.4 billion to $1.1 billion, a reduction
of over 20%. |
| ■ |
Established a “low
but grow” dividend ($0.01/quarter) for the first time since the transition to DigitalBridge. |
Strong
Portfolio-Level Performance Drove Great Outcomes
|
■ |
Despite rising rates and an inflationary environment, DigitalBridge
generated successful realizations from Wildstone (DBP I) and Vantage Towers (DBP II), and the DataBank recapitalization, which generated
$32.6 million of carried interest on a cumulative basis for DBRG shareholders. All three transactions were executed well in excess of
their carrying values. |
Stockholder
Engagement
Our
Board of Directors (“Board”) believes in listening to and communicating with stockholders. We believe stockholder insight
and recommendations should be an integral part of Board discussions on many matters. The input we receive from stockholders as part of
our regular engagement efforts impacts our compensation and corporate governance policies in a meaningful way. The Board, senior management
and our investor relations team maintain a robust dialogue with investors to gain their perspectives on current issues and address any
questions or concerns.
Following
outreach with stockholders representing more than 50% of our outstanding shares during 2021, the Company implemented meaningful changes
to the Company’s executive compensation program and enhanced transparency around certain compensation matters in the Company’s
proxy statement. In subsequent stockholder outreach campaigns in 2021 and 2022, we received positive feedback regarding the implementation
and continuation of these changes. Neither our Chief Executive Officer, nor any other named executive officer, participated in any of
these meetings with stockholders, and all of the feedback received was shared with the full Board of Directors.
DIGITALBRIDGE
2023 PROXY STATEMENT | 3
PROXY
SUMMARY
We
strongly consider the responses we receive from stockholders in implementing our executive compensation program and have maintained the
improvements we previously adopted. We look forward to continuing the dialogue with another stockholder outreach campaign led by Jon Fosheim,
the Chair of our Compensation Committee, in 2023.
For
further information, see “Executive Compensation Highlights” below.
Commitment
to Environmental, Social & Governmental (ESG) Initiatives
Overview—ESG
at DigitalBridge
The
Board of Directors at DigitalBridge provides ultimate oversight of our environmental, social and governance (“ESG”) program.
Our Nominating and Corporate Governance Committee is responsible for implementing and monitoring our ESG program. As we continue to expand
our business, this oversight is critical to ensuring that our implementation of ESG goals and policies progresses as planned and our strategy
evolves appropriately. During 2022, we made significant progress in implementing our ESG strategy, progressing on related goals and continuing
to build organizational capacity to effect change. The core components of our program include:
Governance:
Implementation of our ESG strategy and initiatives is led by our ESG Committee, which reports to the Board on a quarterly basis. The ESG
Committee is comprised of 10 diverse professionals, including members of senior management, that work across the Company’s activities.
The ESG Committee is responsible for setting the strategic plan for ESG initiatives across the Company and works with portfolio companies
to assist them in developing and implementing their ESG plans. For purposes of our ESG program, we define a portfolio company as any company
in which one of the Company’s private funds (i) owns a majority stake, (ii) has invested at least $100 million and (iii) has been
held for at least two years.
Responsible
Investment Policy: ESG Integration, including management of climate-related risks and opportunities, is guided by our Responsible
Investment Policy. DigitalBridge is a proud signatory of the Principles for Responsible Investment (“PRI”) because we recognize
the value of supporting a nonprofit organization that advances responsible investment globally, shares best practices across the industry,
and provides an assessment and peer benchmarking of our performance.
Due
Diligence Procedures: We have integrated ESG analyses into the due diligence of our digital equity fund investments and our
ESG analysis is presented to the relevant fund Investment Committee for each portfolio company that we invest in.
Asset
Management: We have developed an ESG reporting framework for DigitalBridge portfolio companies, identifying nine ESG-related
expectations as well as a set of ESG key performance indicators (“KPIs”) that we expect to be measured and reported quarterly
to the portfolio company board as well as to DigitalBridge’s ESG team. We typically hold calls with portfolio company ESG leadership
every two months and have built a central repository of key documents and tools that all of our portfolio companies can access and leverage
to further develop their ESG programs.
Transparency:
The Company issues an annual ESG Report, which is available on our website, to provide transparent communication around our ESG efforts.
We published our 2021 ESG report in June 2022 detailing measurable progress at both the Company and our portfolio companies. Our 2022
ESG Report will be released this spring. The information that is found on or accessible through our website is not
4
| DIGITALBRIDGE
2023 PROXY STATEMENT
PROXY
SUMMARY
incorporated
into, and does not form a part of, this proxy statement or any other report or document that we file with or furnish to the Securities
and Exchange Commission (“SEC”).
DEI:
Under our Diversity, Equity and Inclusion (“DEI”) initiative, which consists of four pillars (mentorships, internships, recruitment
and careers and compensation), we will continue to ensure we have a workplace where people from all backgrounds can thrive. To accomplish
the company’s DEI goals, the ESG Committee collaborates with the DEI Committee, investment professionals, functional senior leaders
and portfolio company management. The DEI Committee is comprised of 15 cross-functional members, including members of senior management,
and reports to the CEO as its executive sponsor.
Board
Training: We invest in developing the Board’s understanding of ESG matters. We provided ESG updates regarding our progress
as well as pertinent ESG trends in the financial sector to our Board members during 2022. Briefings also covered climate-related risks
and opportunities, including the nexus of climate change and digital infrastructure as well as the science and evolving certification
schemes associated with achieving net zero greenhouse gas emissions.
Our
Approach to ESG Integration
ESG
PRIORITIES
We
have developed a thorough approach to addressing ESG matters across the investment life cycle and have identified the following as the
most material items that we consider during due diligence and actively monitor during asset management.
|
1. |
Climate Change: Energy Efficiency,
Greenhouse Gas (“GHG”) Emissions, and Physical Climate Risks |
|
2. |
Data Privacy, Data Security, and
Associated Human Rights |
|
3. |
Diversity, Equity, and Inclusion |
|
4. |
Ethics: Foreign Corrupt Practices
Act, Anti-Bribery, and Anti-Corruption |
|
5. |
Employee Wellbeing: Workplace Health
and Safety |
These
matters were selected according to two criteria: those that have the greatest effect on our business and those that are the most important
to our stakeholders. Our materiality assessment was informed by relevant leading global reporting frameworks including the Sustainability
Accounting Standards Board, Principles for Responsible Investment and the Task Force on Climate-Related Financial Disclosures.
ESG
EXPECTATIONS FOR PORTFOLIO COMPANIES
DigitalBridge
sets high ESG expectations, shares best practices and equips each portfolio company with tools and resources to help them accelerate their
ESG initiatives. We have identified the following foundational practices, which we believe provide the groundwork for a portfolio company
to improve and report on its ESG performance over time:
|
■ |
ESG Policy and Responsibility: Each portfolio company
is asked to develop an ESG policy tailored to its business and assign ESG management to specific individual(s) at the company. Larger
companies may also have an ESG Committee or working group. |
|
■ |
Net Zero: Each portfolio company
is expected to complete its GHG footprint each year and have a Net Zero strategy roadmap approved by its board of directors. |
|
■ |
ESG Board Reporting: Each
portfolio company’s quarterly board report is expected to include an ESG section. |
|
■ |
ESG Responsibility (Whistleblower
Hotline): Each portfolio company is expected to have a hotline for all stakeholders to report concerns, and call logs should be made
available to its board. |
DIGITALBRIDGE
2023 PROXY STATEMENT | 5
PROXY
SUMMARY
|
■ |
Training: Each portfolio company
is expected have regular trainings that reach all employees on topics including employee safety, diversity and inclusion, unconscious
bias, climate change, discrimination, harassment and anti-bribery/Foreign Corrupt Practices Act (“FCPA”). |
|
■ |
Human Resources Audit: Each portfolio
company is expected to conduct human resources compliance reviews and/or audits with outside resources to ensure compliance with all relevant
regulations. |
|
■ |
Diversity and Inclusion: Each
portfolio company is expected to have a diversity and inclusion program with policies and procedures to ensure a diverse and inclusive
work environment. |
|
■ |
ESG Event Reporting: Each portfolio
company is expected to have a process in place to ensure that material ESG events (such as sexual harassment, serious workplace accidents,
FCPA violations, cyberattacks or similar large network outages, employment violations, product recalls, furloughs, regulatory investigations,
or lawsuits) are reported at the board level within 48 hours. |
|
■ |
Corporate Citizenship: Each portfolio
company is asked to have a formal corporate citizenship/philanthropic program that has executive-level sponsorship and oversight. |
NET
ZERO 2030
One
of our highest priorities at DigitalBridge remains reaching net zero GHG emissions. We measure this goal using the definition of net zero
provided by the Science Based Targets Initiative (“SBTi”). We believe that our net zero goal is important to our business
given our global strategic relationships with hyperscale data center providers, large mobile network operators and other customers with
aggressive decarbonization commitments. We continue to target the Company reaching net zero by 2030.
In
2022 and early 2023, we revised our net zero goal for portfolio companies to adapt to changes in the definition of net zero set by SBTi,
including a change that limits the ability to use offsets for Scope 1 and 3 GHG emissions. Our revised expectation for portfolio companies
is to complete an annual GHG footprint and to develop an emissions reduction plan to decrease their Scope 1 and Scope 2 GHG emissions
to zero by no later than 2030 (or for investments made in 2028, and thereafter—within two years from date of investment). Additionally,
we aim to ensure that before 2030 at least 30% of our portfolio companies have an SBTi (or standard of equivalent quality) approved and
achievable net zero target of 2040 or earlier.
We
plan to continue supporting portfolio companies in GHG emissions measurement, renewable energy procurement, emission reduction strategies
and roadmaps and will strive to ensure that portfolio companies are prioritizing resource efficiency, renewable power purchasing and value
chain engagement before balancing unavoidable emissions with high integrity carbon removals.
By
following best practices and consulting with industry experts, we believe that we have developed goals that are comprehensive, credible,
clear and achievable:
|
1. |
Comprehensive: We consider Scope 1,
2 and all significant Scope 3 GHG emissions at DigitalBridge. |
|
2. |
Credible: Our goal for DigitalBridge
aligns with the current SBTi definition of net zero. |
|
3. |
Clear: We utilize the Task Force on
Climate-Related Financial Disclosures framework to measure and report on progress in our annual ESG report. |
|
4. |
Achievable: We believe that the goals
we set for the Company and our portfolio companies are achievable using the framework described above. |
6
| DIGITALBRIDGE
2023 PROXY STATEMENT
PROXY SUMMARY
| 2022
Progress |
|
| Governance |
■ Enhanced
portfolio company ESG data collection systems and disclosures to meet rising regulatory and investor expectations |
| |
■ Provided
detailed, expanded quarterly ESG reporting and updates to the Nominating and Corporate Governance Committee and the full Board |
| |
■ Increased
our support and resources available to portfolio companies on ESG issues |
| Climate
Change |
■ Updated
our Net Zero strategy to align with the changing requirements of SBTi |
| |
■ Advised
our portfolio companies on adjusting their climate roadmaps in light of changed SBTi requirements and continued supporting their work
in advancing their climate strategies |
| |
■ Reported
our climate-related risk management approach informed by guidance from the Task Force on Climate-Related Financial Disclosure for the
second year |
| Diversity,
Equity and Inclusion |
■ Adopted
and communicated a DEI Policy identifying four focus areas and ten supporting commitments, with input from our employees and broader stakeholders |
| |
■ Joined
the Institutional Limited Partners Association Diversity in Action initiative |
| |
■ Our
Chief Executive Officer signed the CEO Action for Diversity and Inclusion Pledge |
| |
■ 90%
of our Summer Internship Program participants were from groups historically underrepresented in finance |
| |
■ 45%
of new full-time employees hired in 2022 were female |
| Transparency |
■ Issued
our second ESG Report that contains disclosures based on the Sustainability Standards Board (SASB) Standards for Real Estate and Telecommunication
Services |
| |
■ More
than one third of DigitalBridge portfolio companies have now published ESG reports or websites |
| Human
Capital |
■ Expanded
the Summer Internship Program to 23 interns across six offices working in seven business units |
| |
■ Launched
our Inaugural Analyst Program with four analysts—all sourced from our Summer Internship Program |
| |
■ Created
a Careers and Compensation panel to attract and retain talent, including those from groups historically underrepresented in finance |
| |
■ Increased
guidance in our talent management software and learning solution |
| |
■ Launched
our first Employee Resource Group, a book club focused on fostering a better understanding of diversity, equity and inclusion |
DIGITALBRIDGE
2023 PROXY STATEMENT | 7
PROXY
SUMMARY
Corporate
Governance Highlights
| ✓ |
No classified
board(1) |
|
✓ |
Opted out of
MUTA(1) |
| ✓ |
Majority voting
standard for election of directors |
|
✓ |
Favorable stockholder
rights(2) |
| ✓ |
Anti-hedging/pledging
policy |
|
✓ |
Stock
ownership guidelines for directors and officers |
|
(1) |
Stockholder approval required for
DBRG board to adopt a classified board structure and other anti-takeover provisions. |
|
(2) |
DBRG stockholders have the ability to call special stockholders
meetings, remove and replace directors, amend bylaws and approve increases in the number of shares authorized for issuance. |
8
| DIGITALBRIDGE
2023 PROXY STATEMENT
NON-BINDING,
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Pursuant
to Section 14A(a)(1) of the Exchange Act, we are providing stockholders with the opportunity to approve the following non-binding, advisory
resolution:
“RESOLVED,
that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the Item
402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
We
are asking our stockholders to indicate their support for the resolution approving our named executive officers’ compensation as
described in this Proxy Statement. This advisory vote is commonly referred to as “say-on-pay.” This vote is not limited to
any specific item of compensation but rather addresses the overall compensation of our named executive officers and our philosophy, policies
and practices relating to their compensation as described in this Proxy Statement in accordance with the SEC’s compensation disclosure
rules. Please see “Compensation Discussion and Analysis” in this Proxy Statement for additional details about our executive
compensation programs, including information about the compensation of our named executive officers for 2022.
The
resolution approving the compensation of our named executive officers is advisory and, therefore, will not have any binding legal effect
on the Company, our Board or the Compensation Committee. Our Board and the Compensation Committee value the opinions of our stockholders
and intend to take the results of the vote on this proposal into account in future decisions regarding the compensation of our named executive
officers.
 |
Our
Board of Directors Recommends a Vote “FOR” Approval, on a Non-binding, Advisory
Basis, of Named Executive Officer Compensation. |
DIGITALBRIDGE
2023 PROXY STATEMENT | 33
COMPENSATION
COMMITTEE
REPORT
The Compensation Committee of our
Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion
and Analysis be included in this Proxy Statement.
Respectfully
submitted by the Compensation Committee:
34 | DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION
AND ANALYSIS
This Compensation Discussion & Analysis
section discusses the compensation of our named executive officers (NEOs) as follows:
| Name |
Position |
| Marc C. Ganzi |
Chief Executive
Officer |
| Benjamin J. Jenkins |
President and Chief Investment
Officer |
| Jacky Wu |
Executive Vice President,
Chief Financial Officer and Treasurer |
| Ronald M. Sanders |
Executive Vice President,
Chief Legal Officer and Secretary |
| Liam Stewart |
Chief Operating Officer |
Executive
Compensation Program
Executive Leadership
In early 2019, our Board of Directors
determined to transform the strategy of the Company from one focused on multiple real estate asset classes to one focused exclusively
on the digital infrastructure sector, which is experiencing strong secular growth. To execute on this transformative shift, in July 2019,
the Company acquired Digital Bridge Holdings, a leading investor in digital infrastructure, with the agreement that Digital Bridge Holding’s
CEO, Mr. Ganzi, would within a two-year period become CEO of the Company. The business plan envisioned that the Company would rotate its
assets to become a pure play digital infrastructure company and commence an orderly disposition of its legacy assets and liabilities.
Mr. Ganzi was appointed as CEO
in July 2020 and led the Company through the pivot envisioned in July 2019. Highlights from Mr. Ganzi’s tenure include completing
the Company’s rotation to 100% digital profile ahead of schedule, effectively rotating over $80 billion in AUM, and generating net
proceeds of over $1.2 billion in the disposition of the Company’s legacy assets; expanding the Company’s asset management
platform through successful fundraising for the Company’s flagship DBP II fund, which raised $8.3 billion in 2021 and the launch
of new core, credit, and venture strategies; executing two strategic acquisitions which consolidated the Company’s ownership of
its asset management platform and contributed to significant increases in expected earnings. These activities have increased FEEUM to
over $27 billion (from $7 billion in July 2020) and AUM to over $65 billion (from $21 billion in July 2020) as of the date of this proxy
statement. See “Proxy Summary—2022 Year in Review” for additional highlights from 2022.
DIGITALBRIDGE
2023 PROXY STATEMENT | 35
COMPENSATION DISCUSSION AND ANALYSIS
Our Structured Pay Model
With Marc C. Ganzi’s appointment
as our company’s CEO in July 2020, our Compensation Committee engaged in a robust assessment of CEO pay models used among peers
across the alternative asset management industry, which included consideration of feedback from stockholder engagement and recommendations
from Semler Brossy, our independent compensation consultant. Following its assessment, our Compensation Committee adopted a structured
pay model for 2021, which was primarily driven by formulaic-based determinations of rigorous financial and non-financial goals, and included
the following improvements:
|
(1) |
increased the weighting of corporate financial metrics in the Company’s annual incentive plan from 60%
to 75%, and decreased the weighting attributable to pre-established individual goals, objectives and performance targets from 40% to 25% |
|
(2) |
established that 50% of all long-term incentive equity compensation, regardless of whether paid by the Company or Company-managed vehicles,
will be performance-based |
|
(3) |
increased the rigor of the performance hurdles in our total stockholder return (TSR) performance-based equity
awards by increasing the minimum payout threshold from the 10th percentile to the 25th percentile, increasing the threshold for target
payout from the 50th percentile to the 55th percentile, and capping payouts at target when absolute TSR is negative |
This structured pay model, described
further herein, was used to determine compensation for 2022 performance for our NEOs. Our Compensation Committee reviewed our compensation
program with Semler Brossy again in 2023 and believes that our compensation program, which maintains the structured pay model with the
improvements described above, best aligns the incentives of our NEOs with the interests of our stockholders.
Stockholder Engagement
We believe in maintaining an ongoing
dialogue with our stockholders and seek their feedback on a wide range of issues, including compensation practices. At our 2022 Annual
Meeting of Stockholders, our stockholders voted on the say-on-pay advisory proposal to approve the compensation paid to our NEOs. Of the
votes cast, more than 85% were in favor of the say-on-pay proposal at our 2022 Annual Meeting of Stockholders. During 2022, in a stockholder
outreach campaign led by Jon Fosheim, the Chair of our Compensation Committee, we met with institutional investors representing approximately
14% of our outstanding stock to solicit feedback and better understand their individual concerns on our overall executive compensation
program. Neither our CEO nor any other NEO participated in any of these meetings with investors.
As previously noted, we strongly
considered the responses we received from stockholders in implementing our executive compensation program. Our Compensation Committee
deeply values the continued interest of and feedback from our shareholders on our executive compensation program and is committed to maintaining
an active dialogue with them to ensure their perspectives are thoughtfully taken into account. We anticipate another stockholder outreach
campaign, led by Mr. Fosheim in 2023 to continue this dialogue.
36 | DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
Pay
for Performance Philosophy and Program Objectives
OUR
PHILOSOPHY
The
primary goal of our executive compensation program is to align the interests of our executive officers with those of our stockholders
in a way that allows us to attract and retain the best executive talent.
| 1 |
 |
|
|
2 |
|
|
|
3 |
|
| Attract
and Retain Industry Talent |
|
|
Variable
Pay Structure Linked to
Financial Objectives |
|
|
Performance
and Compensation Benchmarking |
| ■ |
Implements
elements consistent with compensation programs of our peers, including base salaries, cash bonuses, equity awards and incentive fee allocations
in our managed funds and investment vehicles, in order for us to remain competitive in the market for attracting and retaining executive
talent
|
|
|
■ |
Focuses
on creating variable pay structures, emphasizing long-term compensation directly related to our stock price, relative TSR and other strategic
and financial objectives
|
|
|
■ |
Benchmarks
our performance and compensation against our peers with consideration of company market capitalization and complexity as indicated by
revenues, range of businesses and other factors to set target levels of compensation and determine the value and level of award opportunities
|
OUR
APPROACH
Our
executive compensation program consists of salary and certain variable pay components, including annual cash bonus, long-term incentive
equity awards, and incentive fee allocations in our managed funds and investment vehicles. Our executive compensation program is designed
to strengthen the link between pay and performance.
| 1 |
 |
|
|
2 |
|
|
|
3 |
|
|
|
4 |
 |
| Annual
Cash Bonus Approach |
|
|
Equity
and Cash Weighting |
|
|
Long-Term
Incentive |
|
|
Incentive
Fee Allocations |
| ■ |
Utilizes
a formulaic approach to determining annual cash bonus awards to executive officers involving objective corporate financial metrics (75%)
and subjective elements (25%) relating to personal performance targets, as opposed to a fully discretionary approach |
|
|
■ |
Sets
incentive targets more heavily weighted towards equity over cash compensation |
|
|
■ |
Grants
at least 50% of long-term incentive equity compensation in the form of performance-based awards based on relative TSR |
|
|
■ |
We
allocate a portion of incentive fees to management, which may result in payments to them, from time to time, upon the achievement of minimum
return hurdles on investments made by our managed funds and investment vehicles. See “Incentive Fee Allocations.” |
DIGITALBRIDGE
2023 PROXY STATEMENT | 37
COMPENSATION
DISCUSSION AND ANALYSIS
COMPENSATION
PRACTICES
We
believe that our executive compensation programs provide appropriate performance-based incentives to attract and retain leadership talent
in the highly competitive market in which we operate, to align management and stockholder interests and to continue to drive our long-term
track record of superior returns to stockholders. The following are key features of our executive compensation programs:
| |
|
What
We Do |
|
|
| |
✔ |
Pay
for performance. The vast majority of total compensation,
including payments from incentive fee allocations, is tied to performance (i.e., there are minimum incentive targets, but not guaranteed
minimum payments) and salaries comprise a relatively small portion of each executive’s overall compensation opportunity.
|
|
|
| |
✔ |
Long-term
alignment with stockholders. Our equity incentive
awards are subject to time-based, multi-year vesting schedules to enhance executive officer retention. |
|
|
| |
✔ |
Relative
TSR Performance Alignment. We align the interest
of our executive officers with our long-term investors by designing our equity compensation program to provide for future multi-year,
performance-based equity awards based on relative total stockholder return performance with target set at 55th percentile.
|
|
|
| |
✔ |
Absolute
TSR Performance Cap. Beginning in 2020, payouts
of performance-based equity awards are capped at target when absolute TSR is negative. |
|
|
| |
✔ |
Emphasis
on Performance-Based Awards. 50% of all long-term
incentive awards granted to executive officers are performance-based (regardless of the source of such award).
|
|
|
| |
✔ |
Clawback
Policy. We impose a clawback policy with respect
to incentive payments. |
|
|
| |
✔ |
Stock
Ownership Guidelines. We follow robust stock ownership
guidelines for our executives and directors. |
|
|
| |
✔ |
Peer
Benchmarking. We consider and benchmark peer companies
in establishing executive compensation. |
|
|
| |
✔ |
Independent
Compensation Consultant. An independent compensation
consultant is retained by the Compensation Committee. |
|
|
| |
|
What
We Don’t Do |
|
| |
x |
No
Tax Gross Ups. We do not provide tax gross-ups
on compensation payments made in connection with a change of control. |
|
| |
x |
No
Guaranteed Bonuses. We do not provide guaranteed
bonuses. |
|
| |
x |
No
Single Trigger Cash Severance. We do not provide
for single trigger cash severance in connection with a change of control. |
|
| |
x |
No
Dividends on Unearned Performance-Based Awards. We
will not pay dividends or distributions on unearned equity awards subject to performance-based vesting. |
|
| |
x |
No Hedging or Pledging. We
do not allow hedging or pledging of Company securities.
|
|
WE
PAY FOR PERFORMANCE
Variable
pay, consisting of long-term incentive equity awards, annual cash bonus and, if any, incentive fee allocations, constitutes the vast majority
of our executive compensation. This weighting towards variable pay allows the Compensation Committee to reward strong performance and
penalize poor performance in both our business operations and our stock price. Our variable pay components contain structural elements
from alternative asset managers in recognition that the incentives of our executives need to be aligned with stockholders as well as our
private fund investors.
38
| DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
To
build even stronger pay for-performance alignment with our stockholders, 50% of long-term incentive equity awards granted by the Company
are “at-risk” performance-based stock awards, the ultimate value of which depends on the Company’s total stockholder
return relative to peer companies based on future performance.
The
following charts present the ratio of the components of total direct compensation (salary, annual cash bonus and equity awards) and incentive
fee payments in 2022 for our Chief Executive Officer individually, and the weighted average of each component for our other current NEOs
as a group:
Extraordinary
Incentive Fees Paid in 2022
In
2022, several transactions resulted in the Company receiving its first payments of carried interest realized on digital infrastructure
investments, the most important of which was the first stage of the DataBank recapitalization. The DataBank recapitalization transactions
involved the sale of a portion of the Company’s ownership interest in DataBank, which decreased the Company’s interest from
20% as of December 2021 to 11% as of December 2022 and generated $425 million in net proceeds to the Company (including the Company’s
share of carried interest, net of allocation to employees), reflecting a 2.0x multiple of invested capital since the Company’s initial
investment in DataBank in December 2019. In addition to providing an an excellent return on the Company’s investment and substantial
liquidity to the Company, the DataBank transactions advanced the Company’s goals to deconsolidate DataBank, simplify its business
model and financial reporting and align the Company’s balance sheet more closely with the asset management business model. Approximately
79% of the incentive fees paid to our NEOs in 2022 were from carried interest realized in connection with the successful DataBank recapitalization
in the second half of 2022.
In
aggregate, the Company received $32.6 million (net of allocation to employees and to Wafra) of carried interest in 2022, $20.1 million
of which was attributable to the partial DataBank recapitalization described above. The remaining $12.5 million was attributable to sales
of investments by DBP I and DBP II, which represented significant milestones as the first exit transactions from our flagship funds and
resulted in profits for and the return of capital to our fund investors. We believe that these successful outcomes support the Company’s
strategy, have enhanced our ability to raise new funds and new capital and provided other tangible benefits to the Company.
The
incentive fee payments reported in this proxy statement were made pursuant to contractual arrangements with our NEOs determined by incentive
fee allocations made in prior periods. See “Incentive Fee Allocations” below for a discussion of incentive fee allocations
to our NEOs. While payments on incentive fee allocations are not predictable, we anticipate that such payments may continue to be a significant
element of executive compensation over the long term as our managed funds mature and we exit other investments that generate profits for
the Company and our investors. We believe creating strong alignment between our executives and our private fund investors through incentive
fee allocations to our
DIGITALBRIDGE
2023 PROXY STATEMENT | 39
COMPENSATION
DISCUSSION AND ANALYSIS
NEOs
and key employees is important to the continued growth of our investment management business and serves to benefit our stockholders.
The
incentive fee payments to our NEOs in 2022 in connection with the transactions described above were reviewed by the Compensation Committee
and factored into its 2022 compensation decisions. See “2022 Total Recurring Direction Compensation (NEOs)” for a review of
decreases to total direct compensation to our NEOs and “Pay Versus Performance—Compensation Actually Paid and Cumulative TSR”
for a review of the decrease in ‘compensation actually paid’ to our NEOs from 2021 to 2022.
Process
for Determining Compensation
During
the first quarter of each fiscal year, the Compensation Committee determines base salaries, target annual cash bonuses and long-term incentive
equity awards and adopts an annual incentive plan, which establishes a formulaic approach to determining the amount of target cash bonuses
to be paid, for executive officers. The Compensation Committee engages Semler Brossy, a nationally recognized independent consulting firm,
to review and provide independent analysis and recommendations to the Compensation Committee regarding compensation to our NEOs, our annual
incentive plan our peer group, and other compensation matters based on their experience and relevant market data.
During
the 2022 evaluation period, to establish a framework for executive compensation for 2022, the Compensation Committee and Semler Brossy
discussed each of the elements of our compensation plan, including cash bonus, long-term incentive equity awards and incentive fee allocations,
carefully evaluated details of equity compensation plans within the Company’s peer group and reviewed other relevant company published
survey data. Semler Brossy met with members of the Compensation Committee and management in separate meetings and calls regarding these
matters. In addition, the Compensation Committee considered the Company’s performance and relative stockholder return, the amount
of compensation payable, including annual incentive awards, to similarly situated officers within our peer group and prior stockholder
votes on executive compensation, among other factors, prior to adopting the 2022 Annual Incentive Plan.
The
2022 Annual Incentive Plan combines both objective and subjective measures for evaluating cash bonus compensation of our NEOs. In early
2023, the Compensation Committee made annual cash bonus determinations for our NEOs under the 2022 Annual Incentive Plan as further described
herein.
PEER
BENCHMARKING
Based
on recommendations from Semler Brossy, we effectuated a re-balance of our peer group in 2022 to reflect the completion of our digital
transformation as well as our company’s size in terms of revenue, assets, market capitalization and enterprise value.
Our
peer group for 2022 consisted of the following companies:
| |
American
Tower
Apollo Global Management
Ares Management
Blackstone Group
Carlyle Group |
|
|
|
Crown Castle International
CyrusOne
Digital Realty Trust
Equinix
Iron Mountain |
|
|
|
KKR & Co
SBA Communications Switch
Uniti Group |
Based
on recommendations from Semler Brossy, we added Blue Owl Capital, Cohen & Steers, Federated Hermes, Hamilton Lane, StepStone Group
and TPG and removed American Tower, Crown Castle International, CyrusOne, Equinix, Digital Realty Trust, Iron Mountain, SBA Communications,
Switch and Uniti Group for 2023. These changes effectuate a re-balance of our peer group to reflect our focus on investment management
and intent to deconsolidate our digital operating assets.
40
| DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
Our
peer group for 2023 consists of the following companies:
| |
Apollo
Global Management
Ares
Management
Blackstone
Group
Blue
Owl Capital |
|
|
|
Carlyle
Group
Cohen
& Steers
Federated
Hermes
Hamilton
Lane |
|
|
|
KKR
& Co
StepStone
Group
TPG
|
2022
Compensation Decisions
Based
upon its review of our corporate performance, as described above, and the individual performance of each NEO as discussed in this Compensation
Discussion and Analysis, the Compensation Committee approved the compensation amounts outlined in the table below. This table provides
a comprehensive summary of each NEO’s total recurring direct compensation for the 2022 performance year. This perspective may be
useful in reviewing key incentive compensation decisions, as this is how the Compensation Committee considers performance and pay, with
incentive compensation generally reflective of prior year’s performance. It should be noted that the table below is not intended
to be a substitute for the Summary Compensation Table presented in “Compensation Tables and Related Narrative,” as certain
amounts in the table below are different than the amounts in the Summary Compensation Table. The most significant differences are that
this table (i) reflects long-term incentive equity awards granted in March 2023 for the 2022 performance year, while the Summary Compensation
Table provides the value of the equity awards for the year in which they were granted and (ii) excludes non-recurring compensation items
included in the All Other Compensation column of the Summary Compensation Table.
2022
TOTAL RECURRING DIRECT COMPENSATION (NEOs)
| Executive |
Salary
($) |
Annual
Cash
Bonus
($) |
Long-Term
Incentive Equity
Awards(1)
($) |
Total
Direct
Compensation
($)(2) |
%
Change
from
2021 to
2022(3) |
| Marc
C. Ganzi |
1,200,000 |
1,697,189 |
2,545,783 |
5,442,972 |
(59.1)% |
| Benjamin
J. Jenkins |
700,000 |
492,888 |
1,600,000 |
2,792,888 |
n/a |
| Jacky
Wu |
650,000 |
900,000 |
2,000,000 |
3,550,000 |
7.4% |
| Ronald
M. Sanders |
475,000 |
1,003,380 |
1,688,000 |
3,166,379 |
(22.3)% |
| Liam
Stewart |
600,000 |
538,657 |
1,600,000 |
2,738,657 |
n/a |
| Total |
3,625,000 |
4,632,113 |
9,433,782 |
17,690,896 |
n/a |
| (1) |
Represents the dollar amount of 2022
grants approved by the Compensation Committee in 2023. |
| (2) |
Excludes incentive fee allocation
payments. See “Incentive Fee Allocations” for a discussion of incentive fee allocations and the variable nature of incentive
fee payments. |
| (3) |
Mr. Jenkins and Mr. Stewart became
executive officers of the Company in March 2022. |
Elements
of Compensation
The
key elements of our executive compensation program are as follows:
ANNUAL
BASE
SALARY |
|
ANNUAL CASH
BONUS |
|
LONG-TERM
INCENTIVE EQUITY
AWARDS |
|
INCENTIVE FEE
ALLOCATIONS |
|
OTHER BENEFITS |
DIGITALBRIDGE
2023 PROXY STATEMENT | 41
COMPENSATION
DISCUSSION AND ANALYSIS
ANNUAL
BASE SALARY
Base
salaries are designed to compensate our executive officers at a fixed level of compensation that is market competitive and commensurate
with each executive’s skills, experience and contributions. In determining base salaries, our Compensation Committee considers a
number of factors, including, among other factors, each executive officer’s role and responsibilities, qualifications and experience,
past performance, unique skills, future potential with our Company, compensation paid for similar positions within our peer group (including
other comparable companies, as applicable) and internal pay equity.
The
table below sets forth the base salaries of our NEOs for the 2021 and 2022 years:
| |
|
Base
Salary |
|
Percentage |
| Named
Executive Officer |
|
2021
($) |
|
2022
($) |
|
Change
(from
2021 to
2022) |
| Marc
C. Ganzi |
|
1,200,000 |
|
1,200,000 |
|
0% |
| Benjamin
J. Jenkins |
|
n/a |
|
700,000 |
|
n/a |
| Jacky
Wu |
|
600,000 |
|
650,000 |
|
8% |
| Ronald
M. Sanders |
|
475,000 |
|
475,000 |
|
0% |
| Liam
Stewart |
|
n/a |
|
600,000 |
|
n/a |
ANNUAL
CASH BONUS
The
annual bonus payment is designed to incentivize our executive officers at a variable level of compensation based on performance of both
our Company and each individual. The Compensation Committee considers corporate goals, objectives and performance in determining the annual
bonus payment under our Annual Incentive Plan.
The
table below sets forth the base salaries of our NEOs for the 2021 and 2022 years:
| |
|
Annual
Cash Bonus |
|
|
| Named
Executive Officer |
|
2021
($) |
|
2022
($) |
|
Change
(from
2021 to
2022) |
| Marc
C. Ganzi |
|
4,844,052 |
|
1,697,189 |
|
(65.0)% |
| Benjamin
J. Jenkins |
|
n/a |
|
492,888 |
|
n/a |
| Jacky
Wu |
|
1,206,889 |
|
900,000 |
|
(25.4)% |
| Ronald
M. Sanders |
|
1,910,908 |
|
1,003,380 |
|
(47.5)% |
| Liam
Stewart |
|
n/a |
|
538,657 |
|
n/a |
2022
ANNUAL INCENTIVE PLAN OVERVIEW
In
March 2022, the Compensation Committee established the 2022 Annual Incentive Plan and approved target cash bonuses for our then-current
NEOs. The 2022 Annual Incentive Plan provided a 75% weighting across five corporate financial metrics:
■ Digital
FEEUM Capital Raise (25%)
■ Digital
IM Revenues (20%)
■ Digital
Operating Revenues (5%)
■ Digital
IM Fee Related Earnings (“FRE”) (20%)
■ Digital
Operating Adjusted EBITDA (5%)
42
| DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
In
addition, the 2022 Annual Incentive Plan provided a 25% weighting to individual goals and objectives (based on pre-established individual
performance targets applicable to the responsibilities of the relevant executive officer). For 2022, the objective financial metric performance
hurdles that our NEOs were required to achieve were established in connection with the Company’s budgeted operations for 2022. The
Compensation Committee believes that the corporate financial metric targets established in the 2022 Annual Incentive Plan were robust
and rigorous targets at the time they were established.
For
2022, the individual goals component of the 2022 Annual Incentive Plan was based on specific, measurable goals and objectives, which varied
by individual. These individual goals and objectives related to the following five areas of business focus for the Company during 2022:
(1) rotating AUM, (2) growing the investment management business, (3) developing our ESG program, (4) increasing net asset value and stock
price and (5) enhancing the efficiency of our operations. For each of these areas of focus, the Compensation Committee considered the
specific achievements of the targets and goals that were established, as set forth in the following table:
| |
|
2022
Management Priorities |
Results |
| 1 |
ROTATING
AUM |
■ Close
the Wellness Infrastructure Sale in the first quarter of 2022 |
■ Closed
in the first quarter of 2022 for net equity value of $316 million ($161 million in cash and $155 million 5-year seller’s note) |
| ■ Wind
down BRSP shares over the next 12-18 months |
■ 34.9
million shares were sold for net proceeds of $201 million in February 2023 |
| 2 |
GROWING
INVESTMENT MANAGEMENT |
■ Restructure
Wafra Investment |
■ Closed
transaction with Wafra in May 2022 to acquire stake in IM business |
|
■ Establish
operations for Credit, SAF and Ventures
■ Raise
$5.0 billion of FEEUM in 2022 |
■ Credit
and SAF each held first closes; continued to expand seed portfolio for Ventures with leading Series C round for ConnectBase
■ $4.8
billion raised |
|
|
| 3 |
DEVELOPING
OUR ESG PROGRAM |
■ Continue
to lead on ESG and DEI; increase all ESG & DEI metrics |
■ Continued
adoption of DBRG’s ESG program at portfolio companies; improvements across the board |
| 4 |
INCREASING
NET ASSET VALUE AND STOCK PRICE |
■ Increase
DBRG share price
■ Exceed
2022 Guidance |
■ Risk-off
environment created headwinds; we remain optimistic for 2023
■ Organic
FRE miss; however, significant nominal beat inclusive of Wafra & AMP transactions |
|
|
| 5 |
ENHANCING
THE EFFICIENCY OF OUR OPERATIONS |
■ Achieve
positive recurring corporate cash flows |
■ Run-rate
recurring cash flows expected to become positive following the AMP transaction closing and beginning of SAF/Credit fees |
DIGITALBRIDGE
2023 PROXY STATEMENT | 43
COMPENSATION
DISCUSSION AND ANALYSIS
Based
on achievement levels of the performance goals and related payout percentages described below, we paid the following amounts to our NEOs
as annual cash bonuses for 2022 based on the following overall payout percentage of the target opportunity for each of our NEOs:
| Name |
Payout
Percentage of Target |
2022
Annual Cash Bonus
($) |
| Marc
C. Ganzi |
118% |
|
1,697,189 |
|
| Benjamin
J. Jenkins |
70% |
|
492,888 |
|
| Jacky
Wu(1) |
100% |
|
900,000 |
|
| Ronald
M. Sanders |
70% |
|
1,003,380 |
|
| Liam
Stewart |
70% |
|
538,657 |
|
| (1) |
Per Mr. Wu’s amended and restated
employment agreement, the Company is required to pay his 2022 incentive compensation at minimum of target. |
In
March 2023, the Compensation Committee determined the performance and payout levels that were achieved for our annual cash bonuses for
2022 based on available financial results for the corporate financial metrics component and based on the individual goals and objectives
component described below. The following summarizes the performance and payout decisions made by the Compensation Committee for each of
the performance goals established in the 2022 Annual Incentive Plan:
| |
|
|
|
|
|
|
|
|
Other
NEO Payout |
|
CEO
Payout |
| |
Minimum |
|
Target |
|
Maximum |
|
Actual |
|
Percentage
of |
|
Percentage
of |
| Performance
Goal |
|
|
($
in million) |
|
|
|
Target(1) |
|
Target(1) |
| Digital
FEEUM Capital Raise |
3,535.0 |
|
4,535.0 |
|
5,535.0 |
|
4,825.6 |
|
129% |
|
230% |
| Digital
IM Revenues |
175.5 |
|
195.0 |
|
214.5 |
|
176.1 |
|
3% |
|
5% |
| Digital
Operating Revenues |
41.5 |
|
46.1 |
|
50.7 |
|
47.4 |
|
127% |
|
225% |
| Digital
IM FRE |
108.0 |
|
120.0 |
|
132.0 |
|
96.3 |
|
0% |
|
0% |
| Digital
Operating Adjusted EBITDA |
21.2 |
|
23.6 |
|
26.0 |
|
24.1 |
|
123% |
|
214% |
| Individual
Goals & Objectives |
Varies
by individual (0-200%)(2) |
|
|
100% |
|
150% |
| (1) |
Payout range under the 2022 Annual
Incentive Plan was established at 0-425% for our Chief Executive Officer and 0-200% for each of our other NEOs, with linear interpolation
for performance between the minimum and maximum ranges set forth above. |
| (2) |
The Compensation Committee determined
that the payout percentage for the individual goals & objectives component was 100% for each of our NEOs other than our Chief Executive
Officer. |
LONG-TERM
INCENTIVE EQUITY AWARDS
The
Compensation Committee approved the following long-term incentive equity award grants to our NEOs for 2022. The actual number of shares
or restricted stock units, as applicable, granted pursuant to each type of award was based on the dollar amount of the award divided by
the closing price of our Class A common stock on the third trading day following the release of the Company’s earnings for the year
ended December 31, 2021.
| |
|
|
|
|
|
|
|
|
|
| |
DBRG
Time- |
|
DBRG
Performance- |
|
DBRG
Total Long-
Term
Incentive |
|
%
of DBRG Total Long-Term
Incentive
Equity Award |
| Name |
Based Award
($) |
|
Based Award
($) |
|
Equity Award
($) |
|
Time-
Based |
|
Performance-
Based |
| Marc
C. Ganzi |
3,633,048 |
|
3,633,048 |
|
7,266,096 |
|
50% |
|
50% |
| Benjamin
J. Jenkins(1) |
450,000 |
|
— |
|
450,000 |
|
100% |
|
— |
| Jacky
Wu |
750,000 |
|
750,000 |
|
1,500,000 |
|
50% |
|
50% |
| Ronald
M. Sanders |
844,000 |
|
844,000 |
|
1,688,000 |
|
50% |
|
50% |
| Liam
Stewart(1) |
1,200,000 |
|
— |
|
1,200,000 |
|
100% |
|
— |
44
| DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
| (1) |
Messrs. Jenkins and Stewart became
NEOs following amendments to their employment agreements on March 28, 2022, which was after the date we issued awards for 2022 performance.
We do not issue performance-based restricted stock units to employees other than our NEOs, so at the time of grants, Messrs.
Jenkins and Stewart received only time-based restricted Class A common stock. |
The
DBRG time-based award for 2022 performance was issued in shares of our restricted Class A common stock and vests annually over a three-year
period, subject to continued employment. The DBRG performance-based award for 2022 performance was issued in restricted stock units and
has a three-year performance period (March 15, 2022 to March 14, 2025) with payout opportunity ranging from zero to 200% of the target
value, depending on the relative total stockholder return performance of our company as compared to our peer group for 2022.
Recipients
of the 2022 DBRG performance-based award will not be entitled to receive dividends or dividend equivalents before performance-based vesting
has occurred.
As
part of the meaningful changes to our 2020 executive compensation program, the Compensation Committee increased the rigor of the performance
payout thresholds of relative TSR performance-based awards by raising the bar for minimum and target payouts to the 25th percentile and
55th percentile, respectively, for performance periods beginning after 2021. For the 2022 DBRG performance-based award, these increased
bars were continued, and the following table provides the scale which will be used to determine the payout percentage (if any) upon completion
of the three-year performance cycle for such awards:
| Relative
TSR Percentile for the Performance Cycle |
|
%
of Target Restricted Stock Units Vested |
| Less
than 25th percentile |
|
0% |
|
| At
or greater than 25th percentile, but less than 30th percentile |
|
50% |
|
| At
or greater than 30th percentile, but less than 40th percentile |
|
60% |
|
| At
or greater than 40th percentile, but less than 50th percentile |
|
80% |
|
| At
or greater than 50th percentile, but less than 55th percentile |
|
90% |
|
| At
or greater than 55th percentile, but less than 60th percentile |
|
100% |
|
| At
or greater than 60th percentile, but less than 70th percentile |
|
120% |
|
| At
or greater than 70th percentile, but less than 80th percentile |
|
140% |
|
| At
or greater than 80th percentile, but less than 90th percentile |
|
160% |
|
| At
or greater than 90th percentile, but less than 100th percentile |
|
180% |
|
| At
100th percentile |
|
200% |
|
Further,
the Compensation Committee determined that for performance-based awards beginning in 2020, payouts will be capped at 100% of target when
absolute TSR is negative.
2020
PSU awards
The
performance-based award for 2020 was issued in restricted stock units and had a three-year performance period (March 15, 2020 to March
14, 2023) with payout opportunity ranging from zero to 200% of the target value, depending on the relative TSR of the Company as compared
to the Company’s peer group for 2020. Based on our TSR during the performance period relative to the peer group, our percentile
rank was 31st and, as a result, our NEOs for 2020 earned 60% of the 2020 performance-based award, which amount was settled in shares of
our Class A common stock as follows: Mr. Ganzi—7,333; Mr. Sanders—33,333; Ms. Kim 4,139.
DIGITALBRIDGE
2023 PROXY STATEMENT | 45
COMPENSATION
DISCUSSION AND ANALYSIS
INCENTIVE
FEE ALLOCATIONS
The
Company may earn incentive fees from its managed private funds and investment companies. Incentive fees are determined based on the performance
of the investment vehicles subject to the achievement of minimum return hurdles in accordance with the terms set out in the respective
governing agreements. As these hurdles are negotiated with third-party investors who have an interest to set hurdles as high as possible,
we believe the hurdles established are rigorous. In general, hurdle rates for incentive fee allocations are met when our third-party investors
receive 7-9% annualized returns, after which we are entitled to receive 10-20% of profits. A portion of the incentive fees earned by the
Company (generally 60-65%) is allocated to senior management, investment professionals and certain other employees of the Company. The
incentive fee allocations awarded to our employees, including our executive officers, are generally subject to vesting over a three to
four year period. Because the amount payable pursuant to the incentive fees is directly tied to the applicable vehicle’s performance,
we believe that incentive fee allocations promote a strong alignment of interests between the investors in those funds and our NEOs, and
in turn, benefits our stockholders. In addition, most alternative asset managers, including several of our peers, use incentive fee allocations
as a significant means of compensating and motivating their executives and investment professionals, and we believe that we must do the
same in order to attract and retain the top talent. Further, incentive fee allocations are paid by our third-party investors and, as a
result, such incentive fee allocations paid to our management team do not impact our general and administrative expense on a net basis.
As
we cannot predict the timing and amount of future payments in respect of incentive fee allocations, we do not solely use incentive fee
allocations to compensate our executives and instead have maintained a traditional corporate compensation structure (i.e., base salary,
annual cash bonus and long-term incentives). However, as the Company’s digital investment management business continues to grow,
it is expected that incentive fee allocations from the digital investment management business may become a more significant portion of
executive compensation. Our Compensation Committee continues to evaluate the structure and elements of our executive compensation program,
including but not limited to the potential increase in incentive fee allocation payments over time.
Individual
incentive fee allocations to our executive officers are approved by the Compensation Committee and based on recommendations made by management.
The investment fee allocation is subject to certain time-based vesting conditions, which we believe fosters employment retention.
Amounts
paid to our NEOs in respect of incentive fee allocations are disclosed in the “All Other Compensation” column in the Summary
Compensation Table. A portion of incentive fee allocations payable is generally not distributed to the recipient and is instead held in
escrow in order to enhance the recipient’s ability to satisfy any future clawback obligation, however, the amount reflected in the
Summary Compensation Table is inclusive of the amounts held in escrow. We exclude accrued but unvested incentive allocation payments from
the periods disclosed in the Summary Compensation Table in recognition that such amounts remain subject to forfeiture and are therefore
not reflective of compensation paid or earned by the NEOs during such periods.
OTHER
BENEFITS
The
Company provides a comprehensive benefits program to executives, including our NEOs, which mirrors the program offered to our other employees.
These benefits include, among other things, a 401(k) plan with matching contributions from the Company equal to 100% of the first 5% of
employee contributions and health and welfare benefits. Our NEOs participate on the same terms as other employees under these plans. The
Company may also provide, from time to time, certain perquisites to our NEOs, including pursuant to the terms of their employment agreements
(see “Employment Agreements” below). Refer to “Compensation Tables and Related Narrative—Summary Compensation
Table” below for additional information.
46
| DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation
Risk Management
The
Compensation Committee oversees all of our executive compensation policies and practices. In structuring our executive compensation program,
the Compensation Committee is focused on enhancing the alignment of interest between our executive management and our stockholders. We
believe that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on us, including
as a result of our clawback policy and stock ownership guidelines discussed below.
CLAWBACK
POLICY
In
August 2021, our Compensation Committee amended our clawback policy by expanding the scope of conduct by our employees which may result
in clawbacks by the Company. With respect to compensation for our executive officers on or after January 10, 2017, the Compensation Committee
may require the repayment or forfeiture of incentive payments to an executive officer on the basis of our performance in the event that
(i) there may be a restatement of our financial statements filed with the SEC and a lower payment would have been made to the executive
officer based upon the restated financial results, or (ii) it may be subsequently determined that the achievement of a performance goal
(other than financial results covered in (i)) was not met or was only met at a level that would have resulted in a lower payment to the
executive officer and such executive officer knowingly provided inaccurate information that caused the incorrect determination and was
terminated for cause. Pursuant to this clawback policy, our Board may require the repayment or forfeiture of the amount by which any of
the individual executive officer’s incentive payments received during the three-year period preceding either the publication of
the restated financial statements or the determination that achievement was not met (or only met at a lower level), respectively, exceeded
the lower payment that would have been made based on the restated financial statements or such determination. In addition, the clawback
policy provides that if the Board determines that an employee of the Company has engaged in conduct detrimental to the Company on or after
August 4, 2021, whether or not in the scope of his or her employment with the Company, that does cause, or is reasonably likely to cause,
significant reputational harm to the Company, the Compensation Committee may, in its discretion, (i) recover all or part of any equity-based
incentive compensation made to such employee during the three year period prior to such determination, (ii) recover all or part of any
distributions made to such employee during the three year period prior to such determination in respect of carried interest allocations,
or (iii) revoke any carried interest allocations made to such employee during the three year period prior to such determination. The Compensation
Committee expects to amend the clawback policy to comply with new NYSE rules that will be effective in the third quarter of 2023.
STOCK
OWNERSHIP GUIDELINES
Our
Compensation Committee adopted minimum equity ownership guidelines for our executive officers. Pursuant to these guidelines, such executive
officers are expected to own an aggregate number of shares of common stock, restricted stock units of DigitalBridge or common membership
units in our Operating Company (“OP Units”) or long-term incentive units in our Operating Company (“LTIP Units”),
whether vested or not, with an aggregate market value as follows:
| Title |
Guideline |
| Chief
Executive Officer and President |
●●●●●● |
A
multiple of 6X base salary in effect from time-to-time |
| Chief
Financial Officer |
●●●● |
A
multiple of 4X base salary in effect from time-to-time |
| Other
Executive Officers |
●●● |
A
multiple of 3X base salary in effect from time-to-time |
For
purposes of determining compliance with these guidelines, equity that remains subject to performance-based vesting conditions (i.e., vesting
based on the satisfaction of criteria other than, or in addition to, continued employment) is not counted. Ownership includes shares or
units owned: (a) by such person directly or indirectly through a broker or other nominee holder; (b) by such person’s immediate
family members sharing such person’s household; (c) by trusts for the benefit of such person or such person’s
DIGITALBRIDGE
2023 PROXY STATEMENT | 47
COMPENSATION
DISCUSSION AND ANALYSIS
immediate
family members; (d) by entities controlled by such person and/or such person’s spouse and of which a majority of the equity interests
are owned by such person or such person’s immediate family members; or (e) in such person’s 401(k) plan, individual retirement
account or employee stock purchase or deferred compensation plan.
Compliance
with these guidelines is measured as of the end of each fiscal year and, for any executive officer who did not hold such position as of
the date these guidelines were adopted, compliance will first be measured as of the end of the fifth full fiscal year following the year
in which such officer was initially appointed to such position. All of our NEOs were in compliance with the policy as of the December
31, 2022, or are on track to be by the first applicable measurement date.
Compensation
Tables and Related Narrative
Summary
Compensation Table
The
following table shows the compensation for each of our NEOs in accordance with Item 402(c) of Regulation S-K. In 2022, the successful
DataBank recapitalization and two other transactions resulted in carried interest payments to the Company and certain NEOs, which are
included in ‘All Other Compensation.’ For a discussion of these transactions and the associated benefits to the Company, see
“Extraordinary Incentive Fees Paid in 2022” above. For an overview of the decrease in compensation actually paid to our NEOs
from 2021 to 2022, see “Pay Versus Performance—Compensation Actually Paid and Cumulative TSR.”
| Name |
|
Year |
|
|
Salary
($) |
|
|
Bonus
($)
|
|
|
Stock
Awards(1)
($) |
|
|
Non-Equity
Incentive Plan Compensation ($) |
|
|
All
Other Compensation ($) |
|
|
Total
Compensation ($) |
|
| Marc C. Ganzi |
|
2022 |
|
|
|
1,200,000 |
|
|
|
— |
|
|
|
7,246,051 |
|
|
|
1,697,189 |
|
|
|
28,178,268 |
(2) |
|
|
38,321,508 |
|
| Chief
Executive Officer and President |
|
2021 |
|
|
|
1,200,000 |
|
|
|
— |
|
|
|
10,922,100 |
|
|
|
4,844,052 |
|
|
|
5,492,882 |
(3) |
|
|
22,459,034 |
|
| |
2020 |
|
|
|
1,060,000 |
|
|
|
3,125,000 |
|
|
|
176,489 |
|
|
|
— |
|
|
|
454,290 |
(4) |
|
|
4,815,779 |
|
|
Benjamin
J. Jenkins
President
and Chief Investment
Officer |
|
2022 |
|
|
|
700,000 |
|
|
|
— |
|
|
|
424,552 |
|
|
|
492,888 |
|
|
|
18,253,513 |
(2) |
|
|
19,870,954 |
|
| Jacky Wu |
|
2022 |
|
|
|
650,000 |
|
|
|
266,000 |
|
|
|
1,545,578 |
(5) |
|
|
634,000 |
|
|
|
567,361 |
(2) |
|
|
3,662,939 |
(5) |
| Executive
Vice President, Financial Officer and Treasurer |
|
2021 |
|
|
|
600,000 |
|
|
|
— |
|
|
|
4,190,479 |
|
|
|
1,206,889 |
|
|
|
254,095 |
(3) |
|
|
6,251,463 |
|
| |
2020 |
|
|
|
369,039 |
(6) |
|
|
585,000 |
|
|
|
858,883 |
|
|
|
— |
|
|
|
12,641 |
(4) |
|
|
1,825,563 |
|
| Ronald M. Sanders |
|
2022 |
|
|
|
475,000 |
|
|
|
— |
|
|
|
1,746,474 |
(5) |
|
|
1,003,380 |
|
|
|
536,626 |
(2) |
|
|
3,761,480 |
(5) |
Executive
Vice President,
General Counsel and Secretary |
|
2021 |
|
|
|
475,000 |
|
|
|
— |
|
|
|
1,966,564 |
|
|
|
1,910,908 |
|
|
|
26,677 |
(3) |
|
|
4,379,149 |
|
| |
2020 |
|
|
|
450,000 |
|
|
|
1,350,000 |
|
|
|
802,221 |
|
|
|
— |
|
|
|
917,649 |
(4) |
|
|
3,519,870 |
|
|
Liam
Stewart
Chief
Operating Officer |
|
2022 |
|
|
|
600,000 |
|
|
|
— |
|
|
|
1,132,136 |
|
|
|
538,657 |
|
|
|
1,019,946 |
(2) |
|
|
3,290,739 |
|
| (1) |
Represents the grant date fair value,
computed in accordance with FASB ASC Topic 718, of awards that were granted to our NEOs. The awards in this column include grants of (i)
restricted shares of Class A common stock, which vest in three annual installments following the date of grant, subject generally to the
executive’s continued employment with us or any of our subsidiaries through the applicable vesting dates; and (ii) restricted stock
units which remain subject to the achievement of cumulative performance goals for a three-year period following the grant date (see “Compensation
Discussion and Analysis-Elements of Compensation—Long-Term Incentive Equity Awards” for a discussion regarding the performance
goals for these awards) and are generally subject to time-based conditions that vest ratably over the three-year period. The fair value
of the restricted shares of our Class A common stock was determined based on our stock price on the grant date. A discussion of the assumptions
used in calculating the grant date fair value of the restricted stock units is set forth in Note 15 of the consolidated financial statements
in the |
48 | DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2022. As required by SEC rules, the amounts shown in the Summary Compensation
Table for the restricted stock units that are subject to performance conditions are based upon the probable outcome on the grant date,
which is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant
date under FASB ASC Topic 718, excluding the effect of estimated forfeitures.
If
we assumed achievement of the highest level of the performance goals and vesting for the restricted stock units would be achieved at the
grant date, the value of the awards at the grant date would have been as follows:
(A)
For 2020: Marc C. Ganzi—$160,356 and Ronald M. Sanders—$728,888.
(B)
For 2021: Marc C. Ganzi—$11,483,984; Jacky Wu—$523,677; and Ronald M. Sanders—$2,067,733.
(C)
For 2022: Marc C. Ganzi—$7,636,916; Jacky Wu—$1,576,548; and Ronald M. Sanders—$1,774,149.
See
“Compensation Discussion and Analysis-Elements of Compensation—Long-Term Incentive Awards.”
| (2) |
Represents (i) $20,233,254, $13,201,020,
$230,539, $402,697 and $554,806 paid to Messrs. Ganzi, Jenkins, Wu, Sanders and Stewart, respectively, in respect of incentive fee allocations
(see “Extraordinary Incentive Fees Paid in 2022” above), (ii) $712,251 in reimbursements to Mr. Ganzi for private air travel,
(iii) $5,480,739, $3,865,808, $63,670, $33,957 and $106,116 received by Messrs. Ganzi, Jenkins, Wu, Sanders and Stewart, respectively,
pursuant to the allocation of 50% of the contingent consideration received from Wafra as additional bonus compensation to management to
be paid on behalf of certain employees to fund a portion of their share of capital contributions to the DigitalBridge funds, as approved
by the Compensation Committee, (iv) $1,707,721, $1,174,058, $213,465 and $213,465 paid to Messrs. Ganzi, Jenkins, Wu and Stewart, respectively,
in respect of the MIP, (v) $103,057 and $36,388 in relocation expenses paid to Mr. Wu and Mr. Stewart, respectively, (vi) $2,576, $217,
$1,576, $34,070 and $775 in cash dividends on unvested stock paid to Messrs. Ganzi, Jenkins, Wu, Sanders and Stewart, respectively, and
(vii) matching contributions in connection with the Company’s 401(k) plan, the standard Company-paid portion of premiums toward
the cost of health coverage under our group health insurance plan and premiums toward the cost of our standard life insurance coverage.
See “Certain Relationships and Related Transactions—MIP” for a discussion of the MIP, which was terminated by the Board
on March 27, 2023. Amounts with respect to incentive fee allocations (which could be used to fund potential future clawback obligations
if any were to arise) and the MIP include amounts retained and allocated for distribution to the respective NEO, but not yet distributed
to the NEO as of December 31, 2022. |
| (3) |
Represents (i) for Mr. Ganzi, $1,114,839
in respect of incentive fee allocations, $937,992 in connection with services provided to a DBH portfolio company during 2020, $1,532,933
received pursuant to the allocation of 50% of the contingent consideration received from Wafra as additional bonus compensation to management
to be paid on behalf of certain employees to fund a portion of their share of capital contributions to the DigitalBridge funds, as approved
by the Compensation Committee, and $491,379 in reimbursements for private air travel, (ii) $1,390,000 and $173,750 paid to Messrs. Ganzi
and Wu, respectively, in respect of the MIP, (iii) $68,353 in relocation expenses paid to Mr. Wu, and (iv) matching contributions in connection
with the Company’s 401(k) plan, the standard Company-paid portion of premiums toward the cost of health coverage under our group
health insurance plan, premiums toward the cost of our standard life insurance coverage. See “Certain Relationships and Related
Transactions—MIP” for a discussion of the MIP, which was terminated by the Board on March 27, 2023. Amounts with respect to
incentive fee allocations (which could be used to fund potential future clawback obligations if any were to arise) and the MIP include
amounts retained and allocated for distribution to the respective NEO, but not yet distributed to the NEO as of December 31, 2022. |
| (4) |
Represents (i) $885,009 paid to Mr. Sanders
in respect of incentive fee allocations, (ii) for Mr. Ganzi, $430,448 in connection with services provided to a DBH portfolio company
during 2019, and (iii) matching contributions in connection with the Company’s 401(k) plan, the standard Company-paid portion of
premiums toward the cost of health coverage under our group health insurance plan and premiums toward the cost of our standard life insurance
coverage. Amounts with respect to incentive fee allocations (which could be used to fund potential future clawback obligations if any
were to arise) include amounts retained and allocated for distribution to the respective NEO, but not yet distributed to the NEO as of
December 31, 2022. |
| (5) |
Includes incremental value resulting
from the modification of certain equity awards outstanding as of December 9, 2022, in the case of Mr. Sanders, and September 27, 2022,
in the case of Mr. Wu, in connection with amendments to their respective employment agreements. See “Employment Agreements”
below. |
| (6) |
Represents the pro rata portion of
Mr. Wu’s annual base salary based on the commencement of his employment with the Company on March 23, 2020.
|
DIGITALBRIDGE
2023 PROXY STATEMENT | 49
COMPENSATION
DISCUSSION AND ANALYSIS
2022
Grants of Plan-Based Awards Table
The
following table provides information about awards granted in 2022 to each of our NEOs. There were no option awards in 2022.
| |
|
|
Estimated Possible Payouts
Under
Non-Equity Incentive
Plan Awards |
|
Estimated Possible Payouts
Under
Equity Incentive
Plan Awards |
All Other Stock
Awards: Number
of Shares of
Stock or Units(3)
(#)
|
Grant
Date
Fair Value
($) |
| Name |
Approval
Date |
Grant
Date |
Threshold
($) |
Target(1)
($) |
Maximum
($) |
|
Threshold
(#) |
Target(2)
(#) |
Maximum(2)
(#) |
| Marc
C. Ganzi |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
— |
— |
— |
125,278 |
3,427,606 |
| |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
62,639 |
125,278 |
250,556 |
— |
3,818,473 |
| |
3/25/2022
|
3/25/2022 |
— |
1,440,000 |
6,120,000 |
|
— |
— |
— |
— |
— |
| Benjamin
J. |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
— |
— |
— |
15,517 |
424,545 |
| Jenkins |
3/25/2022
|
3/25/2022 |
— |
700,000 |
1,400,000 |
|
— |
— |
— |
— |
— |
| Jacky
Wu |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
— |
— |
— |
25,862 |
707,584 |
| |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
12,931 |
25,862 |
51,724 |
— |
788,274 |
| |
3/25/2022
|
3/25/2022 |
— |
900,000 |
1,800,000 |
|
— |
— |
— |
— |
— |
| Ronald
M. |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
— |
— |
— |
29,104 |
796,285 |
| Sanders |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
14,552 |
29,104 |
58,208 |
— |
887,090 |
| |
3/25/2022
|
3/25/2022 |
— |
1,425,000 |
2,850,000 |
|
— |
— |
— |
— |
— |
| Liam
Stewart |
2/15/2022
|
3/15/2022 |
— |
— |
— |
|
— |
— |
— |
41,379 |
1,132,129 |
| |
3/25/2022
|
3/25/2022 |
— |
765,000 |
1,530,000 |
|
— |
— |
— |
— |
— |
| (1) |
Represents the target cash bonuses approved
by the Compensation Committee on March 25, 2022 under the 2022 Annual Incentive Plan for our NEOs. For information about the cash bonus
amounts actually earned by each of our NEOs, please refer to the “Non-Equity Incentive Plan Compensation” column of the Summary
Compensation Table above. Amounts are considered earned in fiscal year 2022, although they were not paid until 2023. For additional information
about the 2022 Annual Incentive Plan, see “Compensation Discussion and Analysis-Elements of Compensation-Annual Cash Bonus.” |
|
(2) |
Represents awards of restricted stock
units, which are subject to vesting based on the achievement of performance goals for the three-year period ending March 15, 2025 and,
other than for Messrs. Wu and Sanders as a result of their employment agreements with the Company, are generally subject to continued
employment through such date. Dividends (if any) are accrued with respect to these equity awards, and are paid only if and when the restricted
stock units are earned. For additional information about the 2022 performance-based awards, see “Compensation Discussion and Analysis-Elements
of Compensation-Long-Term Incentive Equity Awards.” Other than with respect to Messrs. Jenkins and Stewart, represents 50% of the
long-term equity incentive award for 2022 granted by the Company to our NEOs. |
|
(3) |
Represents awards of restricted shares
of our Class A common stock, which are subject to time-based vesting in three equal installments beginning on March 15, 2022 and, other
than for Messrs. Wu and Sanders as a result of their employment agreements with the Company, are generally subject to continued employment.
Dividends (if any) are paid currently with respect to these equity awards prior to vesting, including all dividends with a record date
on or after March 15, 2022. Other than with respect to Messrs. Jenkins and Stewart, represents 50% of the long-term equity incentive award
for 2022 granted by the Company to our NEOs. |
50 | DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
Discussion
of Summary Compensation and Grants of Plan-Based Awards Tables
The
terms of the awards set forth in the 2022 Grants of Plan-Based Awards Table relating to the manner in which these awards are treated in
connection with a termination of employment or change of control are described below in “Compensation Tables and Related Narrative-Potential
Payments on Termination or Change of Control.”
Outstanding
Equity Awards at Fiscal Year End 2022
The
following table sets forth certain information with respect to outstanding equity awards as of December 31, 2022 with respect to our NEOs.
No option awards were outstanding as of December 31, 2022.
| Name |
Stock
Awards |
Number
of Shares or
Units of Stock that
Have Not Vested(1)
(#) |
Market
Value of Shares or
Units of Stock that Have
Not Vested(2)
($) |
Equity
Incentive Plan
Awards: Number of
Unearned Shares, Units
or Other Rights that
Have Not Vested(3)
(#) |
Equity
Incentive Plan Awards:
Market or Payout Value of
Unearned Shares, Units or
Other Rights that Have Not
Vested(2)
($) |
| Marc
C. Ganzi |
257,636 |
2,818,538 |
2,829,926 |
30,959,390 |
| Benjamin
J. Jenkins |
21,675 |
237,125 |
470,492 |
5,147,182 |
| Jacky
Wu |
156,520 |
1,712,329 |
34,637 |
378,929 |
| Ronald
M. Sanders |
70,721 |
773,688 |
119,307 |
1,305,219 |
| Liam
Stewart |
77,489 |
847,730 |
4,952 |
54,175 |
| (1) |
Includes the following restricted
shares of Class A common stock with respect to such NEO: |
| Name |
Vesting
Date: |
Total |
|
March
15,
2025 |
August
9,
2024 |
March
15,
2024 |
September
14,
2023 |
August
9,
2023 |
March
23,
2023 |
March
15,
2023 |
| Marc
C. Ganzi |
41,760 |
— |
105,901 |
— |
— |
— |
109,975 |
257,636 |
| Benjamin
J. Jenkins |
5,173 |
— |
8,251 |
— |
— |
— |
8,251 |
21,675 |
| Jacky
Wu |
8,621 |
29,509 |
11,546 |
— |
29,509 |
65,790 |
11,545 |
156,520 |
| Ronald
M. Sanders |
9,702 |
— |
21,250 |
— |
— |
— |
39,769 |
70,721 |
| Liam
Stewart |
13,793 |
— |
15,444 |
32,809 |
— |
— |
15,443 |
77,489 |
| (2) |
The value of the awards reflected in the table is based on a price
per share or unit of $10.94, which was the closing price of our common stock as of December 30, 2022. |
| (3) |
Except as described in the Footnotes
to the following table, includes the following restricted stock units (representing a target amount) that are subject to vesting based
on the achievement of performance goals over a three-year period and generally subject to continued employment through such date, with
respect to such NEO. See “Compensation Discussion and Analysis-Elements of Compensation-Long-Term Incentive Equity Awards”
for a description of the performance-based awards. |
| Name |
Performance
End Date |
Total |
| March
14, 2025 |
July
25, 2024 |
March
14, 2024 |
March
15, 2023 |
| Marc
C. Ganzi |
125,278 |
2,500,000(A) |
192,426 |
12,222 |
2,829,926 |
| Benjamin
J. Jenkins |
— |
— |
9,237 |
— |
9,237 |
| Jacky
Wu |
25,862 |
— |
8,775 |
— |
34,637 |
| Ronald
M. Sanders |
29,104 |
— |
34,647 |
55,556 |
119,307 |
| Liam
Stewart |
— |
— |
4,952 |
— |
4,952 |
|
(A) |
Reflects a sign-on performance-based equity award, granted to Mr. Ganzi in connection with the commencement of
his employment with the Company and designation as our CEO-elect in July 2019, in the amount of 2,500,000 LTIP Units. The LTIP Units will
vest if the closing price of the Company’s Class A common stock is at |
DIGITALBRIDGE
2023 PROXY STATEMENT | 51
COMPENSATION
DISCUSSION AND ANALYSIS
or
above $40.00 during regular trading on the New York Stock Exchange over any 90 consecutive trading days during the five-year performance
period ending on July 25, 2024.
Option
Exercises and Stock Vested in 2022
The
following table sets forth certain information with respect to stock awards vesting during the year ended December 31, 2022 with respect
to our NEOs.
| |
Restricted
Stock Awards |
Performance-Based
Equity Awards |
| Name |
Number
of
Shares
Acquired
on Vesting
(#) |
Value
Realized
on Vesting
($)(1) |
Number
of
Shares
Acquired
on Vesting
(#) |
Value
Realized
on Vesting
($)(1) |
| Marc
C. Ganzi |
68,216 |
1,866,390 |
— |
— |
| Benjamin
J. Jenkins |
3,079 |
84,241 |
— |
— |
| Jacky
Wu |
98,223 |
2,522,943 |
— |
— |
| Ronald
M. Sanders |
38,492 |
1,053,141 |
15,165 |
429,473 |
| Liam
Stewart |
1,651 |
45,171 |
— |
— |
| (1) |
Based on the closing price of our
Class A common stock on the NYSE on the date of vesting. |
Potential
Payments on Termination or Change of Control
TERMINATION/CHANGE
OF CONTROL COMPENSATION TABLE
The
following table shows the potential payments to our NEOs upon a termination of employment without cause or for good reason, upon a change
of control of DigitalBridge and upon the death or disability of the executive officer based on agreements and plans in effect as of December
31, 2022.
The
types of events constituting cause, good reason, disability and a change of control differed in some respects among the different arrangements
providing for benefits to the NEOs; however, for consistency in presentation, our executive compensation arrangements have been grouped
together based on these concepts without regard for any such differences. Our NEOs were not entitled to any payments if they were terminated
for cause or resigned without good reason. In preparing the tables below, we assumed the applicable event (i.e., termination, change of
control or death or disability) occurred on December 31, 2022. Market values of equity awards were determined by multiplying the applicable
number of shares or units by $10.94, the per share closing price of our Class A common stock as of December 31, 2022.
| Name |
|
Payments/Benefits |
|
Termination
Without Cause or for Good Reason
($) |
|
Change
of Control Without Termination
($) |
|
Change
of Control
With Termination
($) |
|
Death
or
Disability
($) |
| Marc
C. Ganzi |
|
Severance
Payment |
|
|
9,443,454 |
(1) |
|
|
— |
|
|
|
9,443,454 |
(1) |
|
|
1,440,000 |
(2) |
| |
|
Equity
Award Acceleration(3) |
|
|
2,818,538 |
|
|
|
2,818,538 |
|
|
|
2,818,538 |
|
|
|
2,818,538 |
|
| Benjamin
J. Jenkins |
|
Severance
Payment |
|
|
3,244,821 |
(1) |
|
|
— |
|
|
|
3,244,821 |
(1) |
|
|
700,000 |
(2) |
| |
|
Equity
Award Acceleration(3) |
|
|
237,125 |
|
|
|
— |
|
|
|
237,125 |
|
|
|
237,125 |
|
| Jacky
Wu |
|
Severance
Payment |
|
|
9,550,000 |
(4) |
|
|
— |
|
|
|
9,550,000 |
(4) |
|
|
3,540,217 |
(5) |
| |
|
Equity
Award Acceleration(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,712,329 |
|
| Ronald
M. Sanders |
|
Severance
Payment |
|
|
8,403,273 |
(6) |
|
|
— |
|
|
|
8,403,273 |
(6) |
|
|
3,757,796 |
(7) |
| |
|
Equity
Award Acceleration(3) |
|
|
773,688 |
|
|
|
— |
|
|
|
773,688 |
|
|
|
773,688 |
|
| Liam
Stewart |
|
Severance
Payment |
|
|
3,578,454 |
(1) |
|
|
— |
|
|
|
3,578,454 |
(1) |
|
|
765,000 |
(2) |
| |
|
Equity
Award Acceleration(3) |
|
|
847,730 |
|
|
|
— |
|
|
|
847,730 |
|
|
|
847,730 |
|
52 | DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
|
(1) |
Pursuant to the employment agreements discussed under “Employment
Agreements,” represents (i) a lump sum cash payment equal to two times (or, for Mr. Ganzi, three times) the sum of the executive’s
average base salary and the target bonus in effect, (ii) lump sum payment of any unpaid bonus for 2021, if any, (iii) the lump sum pro-rata
target bonus for the effective period of employment for the year ended December 31, 2022, assuming the bonus was not paid in calendar
year 2022, (iv) continued medical, dental and vision benefits at active employee rates for 24 months and (v) the continuation of certain
benefits for 24 months following termination, but excludes any perquisites and other personal benefits or property, if any, with an aggregate
value less than $10,000. For Mr. Ganzi, also includes the continued use of his office and the services of a personal assistant, in each
case, commensurate with those provided prior to the date of termination, for 18 months following termination. |
|
(2) |
Pursuant to the employment agreements discussed under “Employment
Agreements,” represents (i) any unpaid bonus for 2021, if any, and (ii) the pro-rata target bonus for the effective period of employment
for the year ended December 31, 2022, assuming the bonus was not paid in calendar year 2022, in either case, which is payable in lump
sum by the Company upon termination of the NEO’s employment by us due to their death or disability. For purposes of the employment
agreements, “disability” is defined as physical or mental incapacity that substantially prevents the NEO from performing their
duties and that has continued for at least 180 consecutive days. |
|
(3) |
Pursuant to the employment agreements discussed under “Employment
Agreements,” represents the value of all equity awards of the Company that would fully vest upon termination of the NEO’s
employment by us without cause, by the NEO with good reason or upon death or disability. Amount excludes (i) the value of performance-based
restricted stock units, which are subject to performance-based conditions over a three-year period ending March 14, 2023, March 14, 2024
and March 14, 2025, and (ii) for Mr. Ganzi, excludes the value of performance-based LTIP Units, subject to performance based conditions
over a five-year period ending July 25, 2024, all as set forth in Footnote 3 to the “Outstanding Equity Awards at Fiscal Year End
2022” table above. Following the conclusion of the performance period of the performance-based restricted stock units, the NEO would
be entitled to the number of units (with a potential payout percentage between 0 and 200% for the units subject to the performance period
ending March 14, 2023, March 14, 2024 and March 14, 2025 that would have been earned had the NEO been an employee of the Company at such
time. Following the conclusion of the performance period of the performance-based LTIP Units, Mr. Ganzi would be entitled to the number
of LTIP Units (with a potential payout percentage of 0% or 100%) that would have been earned had Mr. Ganzi been an employee of the Company
at such time. In addition, amounts exclude carried interests, which are subject to achievement of minimum return hurdles in accordance
with the terms set out in the respective governing agreements for the Company’s managed private funds and other investment vehicles. |
|
(4) |
Mr. Wu’s amended and restated employment agreement does
not provide for payments upon termination of employment for good reason. Represents the “CFO Expiration Date Items” with certain
modifications that would apply if the Board moved the CFO Expiration Date to December 31, 2022, as described under Employment Agreements—Employment
Agreements with Other Named Executive Officers—Jacky Wu.” |
|
(5) |
Represents a lump sum payment equal to $1,540,217 (determined
pursuant to the provisions in Mr. Wu’s amended and restated employment agreement, as described under “Employment Agreements—Employment
Agreements with Other Named Executive Officers—Jacky Wu”) and issuance of the 2022 Target LTIP Award. |
|
(6) |
Mr. Sanders’ amended and restated employment agreement does
not provide for payments upon termination of employment for good reason. Represents the “CLO Expiration Date Items” with certain
modifications that would apply if the Board moved the CLO Expiration Date to December 31, 2022, as described under Employment Agreements—Employment
Agreements with Other Named Executive Officers—Ronald M. Sanders.” |
|
(7) |
Represents a lump sum payment equal to $644,796 (determined pursuant
to the provisions in Mr. Sanders’ amended and restated employment agreement, as described under “Employment Agreements—Employment
Agreements with Other Named Executive Officers—Ronald M. Sanders”) and issuance of the 2022 Target LTIP Award. |
The
tables above do not include payments and benefits to the extent we generally provide them on a non-discriminatory basis to salaried employees
upon termination of employment, including: (i) life insurance upon death in the amount of two times the employee’s annual salary
but not exceeding a total of $750,000; and (ii) disability benefits. As a result of provisions in each of our NEOs’ employment agreements,
in the event that any payment or benefit to be paid or provided to such an executive set forth above would have been subject to the excise
tax under Section 4999 of the Code, the payments and benefits to such executive would have been reduced to the extent necessary to avoid
the imposition of such excise tax, but only if such reduction would result in a greater after-tax benefit to the executive. The amounts
set forth in the table above have not been adjusted to reflect any such reduction that might be applicable.
DIGITALBRIDGE
2023 PROXY STATEMENT | 53
COMPENSATION
DISCUSSION AND ANALYSIS
Employment
Agreements
The
Company has employment agreements with Messrs. Ganzi, Jenkins, Wu, Sanders and Stewart which set forth the terms and conditions of their
roles with, and their oversight and management of the day-to-day business operations, of the Company. The employment agreements of Messrs.
Jenkins and Stewart were amended and restated on March 28, 2022, in connection with their appointments as President and Chief Investment
Officer of the Company and Chief Operating Officer, of the Company respectively. In addition, the Company amended and restated the employment
agreement of Mr. Wu on September 27, 2022 and Mr. Sanders on December 9, 2022. Below is a summary of the terms of these employment agreements.
EMPLOYMENT
AGREEMENT WITH MARC C. GANZI
Mr.
Ganzi’s employment agreement sets forth the terms and conditions of Mr. Ganzi’s service as our Chief Executive Officer. The
agreement became effective on July 25, 2019 and has an initial term of five years following such date, subject to automatic renewals of
additional successive one-year periods unless either party provides at least 180 days’ advance notice of non-renewal. The agreement
provides that Mr. Ganzi will devote his full business time (other than vacation time, holidays, sick days and periods of disability) and
attention to the performance of his duties to the Company, but will be permitted to engage in certain other outside activities, so long
as those duties and activities do not unreasonably interfere with the performance of his duties to the Company under the agreement.
In
addition, the agreement provides that Mr. Ganzi’s principal place of business during the term of the agreement will be in Boca Raton,
Florida; however, if Mr. Ganzi is required to engage in travel during the term of the agreement that results in him having to perform
a significant portion of his duties at a location other than Boca Raton, Florida, and Mr. Ganzi determines to relocate his principal place
of residence to a city in proximity to that other location, then the Company will pay for all reasonable relocation and return expenses
that he incurs on a basis which is grossed up for taxes, with such payments subject to the approval of the Board, not to be unreasonably
withheld.
The
agreement further provides that Mr. Ganzi will receive an annual base salary of not less than $1,060,000 and will be eligible to receive
an annual cash bonus with a target amount of no less than $1,200,000, which will be based on achievement of specified performance measures
as set forth in the agreement or as otherwise mutually agreed by Mr. Ganzi and the Board. In addition, Mr. Ganzi will also be eligible
to receive annual grants of equity and equity-based awards with a target value initially set at $1,800,000, subject to annual review by
the Board (or a committee thereof). In addition, at least 50% of such grants made by the Company will vest based on time-based vesting
conditions in no more than three equal annual installments and up to 50% will vest subject to both time-based and performance-based vesting
conditions over a vesting period no longer than three years. The portion of any such annual grant subject, in part, to performance-based
vesting conditions will be structured to provide an additional opportunity to earn up to 200% of the target amount of such award in the
event the performance thresholds established by the Board (or committee thereof) are met. The employment agreement also provides that,
for the 2021 performance year, Mr. Ganzi’s annual gross compensation (i.e., base salary, cash bonus and equity and equity-based
awards) shall be no less than $2,500,000. In addition, Mr. Ganzi will receive allocations in respect of carried interests in respect of
funds managed by the Company as follows: (1) for any carried interest allocated during the term of Mr. Ganzi’s employment with respect
to a successor fund to Digital Colony Partners or other fund related to digital infrastructure (the “DBP Funds”), Mr. Ganzi
will be allocated 15% of the carried interest earned from such funds, and (2) for any carried interest allocated during the term of Mr.
Ganzi’s employment as the Company’s Chief Executive Officer with respect to any fund or similar vehicle managed by the Company
(other than the DBP Funds, the Company’s fifth distressed credit fund and any product that has completed raising capital prior to
July 1, 2020), Mr. Ganzi will be allocated 10% of the carried interest earned from such funds. A product will be considered to have completed
raising capital even if, after July 1, 2020, such product raises capital for follow-on investments.
54 | DIGITALBRIDGE
2023 PROXY STATEMENT
COMPENSATION
DISCUSSION AND ANALYSIS
Mr.
Ganzi will also be eligible to participate in our benefit plans made available to our senior executive officers from time to time and
to receive reimbursement for certain dues and other business expenses, each as described in the employment agreement.
The
employment agreement provides that, if Mr. Ganzi’s employment is terminated by the Company without “cause” (as defined
in the employment agreement and including non-renewal of the agreement by the Company) or by Mr. Ganzi for “good reason” (as
defined in the employment agreement and described below), and Mr. Ganzi executes, and does not revoke, a general release of claims, he
will be eligible to receive (i) a lump sum cash payment equal to three times the sum of his base salary and average annual bonus with
respect to the three prior calendar years (or, if any such termination of employment occurs prior to Mr. Ganzi receiving his annual bonus
in respect of calendar year 2022, then his target annual bonus that is then in effect), (ii) a lump sum cash payment equal to the annual
bonus payable in respect of the year prior to the year of termination, if unpaid as of the date of termination, (iii) a pro-rated target
bonus for the year of termination, (iv) continued medical, dental and vision benefits at active employee rates for 24 months following
termination, (v) the continuation of certain benefits for 24 months following termination, and (vi) full vesting of all equity and equity-based
awards of the Company, carried interests and other like compensation that he holds, to the extent unvested immediately prior to the date
of termination. In addition, for 18 months following the date of such termination, Mr. Ganzi will receive continued use of his office
and the services of a personal assistant, in each case, commensurate with those provided prior to the date of termination.
The
employment agreement also provides that if Mr. Ganzi provides notice to the Company of his intention not to renew the agreement upon the
scheduled expiration of the initial term or any renewal term, then he will receive (i) a lump sum cash payment equal to the annual bonus
payable in respect of the year prior to the year of termination, if unpaid as of the date of termination and (ii) a pro-rated target bonus
for the year of termination.
In
addition, the employment agreement provides for full vesting of all of Mr. Ganzi’s equity and equity-based awards of the Company
(other than as specified in the terms of the Sign-On Award (as defined below)), carried interests and other like compensation that he
holds, to the extent unvested upon a change in control (as such term is defined in the Company’s 2014 Omnibus Stock Incentive Plan).
For
purposes of the employment agreement, “good reason” means, in summary, (i) a material diminution in Mr. Ganzi’s duties,
authority or responsibilities or a diminution in his title (including (A) modifying Mr. Ganzi’s title and (B) after July 1, 2020,
failing to nominate or maintain Mr. Ganzi as a member of the Board) or causing Mr. Ganzi to no longer report to the Board, (ii) a reduction
in Mr. Ganzi’s base salary, target annual cash bonus or target annual equity incentive grant as set forth in the employment agreement,
(iii) a 25-mile relocation of Mr. Ganzi’s principal place of business from Boca Raton, Florida or, if Mr. Ganzi agrees in writing
to establish another location as his principal place of business, such other location, or (iv) a material breach of the agreement by the
Company (including, without limitation, failure to timely pay or award Mr. Ganzi’s base salary, target annual cash bonus or target
annual equity incentive grant) or any other material agreement between Mr. Ganzi and the Company.
In
the event of termination due to death or disability, Mr. Ganzi will receive (i) a lump sum cash payment equal to the annual bonus payable
in respect of the year prior to the year of termination, if unpaid as of the date of termination, (ii) a pro-rated target bonus for the
year of termination, (iii) full vesting of all equity-based awards of the company (other than as specified in the terms of the Sign-On
Award), carried interests and other like compensation that such executive holds, to the extent unvested upon such termination.