Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective May 19, 2022, the Board of Directors of UDR, Inc. (the "Company") appointed Joseph D. Fisher, the Company’s Senior Vice President – Chief Financial Officer, as President and Chief Financial Officer.
Mr. Fisher, age 42, joined the Company in January 2017 as Senior Vice President — Chief Financial Officer. Mr. Fisher previously served as Co-Head of the Americas and Co-Lead Portfolio Manager at Deutsche Asset and Wealth Management since 2007. Prior to serving in those positions, he was Associate, Structured Debt Investments from April 2005 to June 2007, and Portfolio Analyst, Portfolio Management Group from May 2004 to June 2006. From June 2003 to May 2004, Mr. Fisher was an Asset Management Analyst at Principal Real Estate Investors. No family relationship exists between Mr. Fisher and any of the Company’s directors or executive officers. Other than as described below, the Company has not entered into any new compensation arrangements with Mr. Fisher in connection with his appointment. Mr. Fisher is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
On May 19, 2022, the Compensation and Management Development Committee (the “Committee”) of the Board of Directors of the Company in connection with the promotion described above approved a performance-based supplemental equity award (the “Award”) for Mr. Fisher, which has a grant date of May 19, 2022 and which will be earned only upon the achievement of absolute common stock price hurdles over a five-year measurement period commencing May 19, 2023 and ending May 18, 2028.
Background
In approving the Award, the Committee recognized the potential for continued strong growth in the value of the Company’s shares of common stock. The Committee believes that it is important to retain the services of Mr. Fisher and to create appropriate incentives for Mr. Fisher to continue to grow the value of the Company over the long term as well as to recognize Mr. Fisher’s promotion and his outstanding performance with the Company.
Aligned with Shareholders
The Award that has been approved by the Committee is aligned with the interests of the Company’s stockholders. The principal objective of the award is to link Mr. Fisher’s long-term compensation opportunity with significant long-term stockholder value creation. The Award requires significant stock price appreciation in order for Mr. Fisher to earn some or all of the Award, consistent with the Company’s overall pay-for-performance approach to executive compensation. In addition, the Award will only have value if the stock price hurdles described below are satisfied and the Award is earned and to the extent the price of the Company’s common stock on the date of conversion exceeds the price of the Company’s common stock as of the date of grant of $46.28 per share.
The Award is structured to motivate extraordinary long-term performance, is entirely at risk, and correlates directly with the creation of long-term value for the Company’s stockholders. As a result, the Committee believes that the Award is directly aligned with the interests of the Company’s stockholders. The Committee also believes that, because the maximum number of shares available under the Award, assuming it vests in full and is converted into common stock of the Company, represents less than 0.1% of the shares outstanding as of the date of grant, the dilutive effect on the Company’s stockholders is reasonable given the increase in stockholder value that would be represented by achievement of the stock price hurdles. If all of the common stock price hurdles were achieved during the performance period and Mr. Fisher would earn the entire Award, the Company will have created approximately $13.4 billion in stockholder value, while the total value of the Award would be approximately 0.1% of that overall increase in stockholder value.