DEF: Safehold Inc. Seeks Shareholder Approval for Key Proposals

Safehold Inc. announces its 2026 Annual Meeting proposals, including director elections, auditor ratification, and a significant increase in its long-term incentive plan shares, alongside executive compensation details.

Summary

• Shareholders will vote on the election of five directors, ratification of Deloitte & Touche LLP as the independent auditor, approval of an amendment to the 2009 Long Term Incentive Plan (LTIP), and an advisory vote on named executive officer compensation at the May 14, 2026 Annual Meeting.
• The proposed amendment to the 2009 LTIP seeks to increase the number of shares available for issuance by 3,000,000, which represents less than 4.2% dilution of current outstanding shares and is expected to cover awards for approximately 3 years.
• The company's three-year average burn rate for equity awards (2023-2025) was 0.63%, which is below the institutional shareholder advisory firm's industry benchmark of 1.05%.
• Executive compensation for 2025 included base salaries of $600,000 for Jay Sugarman (CEO), $500,000 for Michael Trachtenberg (President), and $450,000 for Brett Asnas (CFO).
• The 2025 Annual Incentive Plan (AIP) for NEOs was 75% based on a Strategic Framework Success Rate scorecard and 25% on qualitative assessment, resulting in a $1.455 million stock award for Mr. Sugarman (voluntarily reduced from $1.92 million) and a $1.74 million award for Mr. Asnas ($672,000 cash, $1,068,000 equity).
• Michael Trachtenberg received significant sign-on equity awards in 2025, including 93,076 time-based RSUs (valued at $1,250,000), 60,000 performance-based RSUs for affordable housing (valued at $807,000), 700,000 performance-based RSUs tied to stock price hurdles (valued at $4,209,400), and 50,000 Caret Units (valued at $4,312,000).
• The CEO pay ratio for 2025 was 10 to 1, comparing Mr. Sugarman's total compensation of $2,627,089 to the median employee's $274,561.
• The company reported net income of $114.5 million in 2025, an increase from $105.8 million in 2024, but a decrease from $135.4 million in 2022.
• Company Total Shareholder Return (TSR) based on a $100 investment on December 31, 2020, was $22.00 by December 31, 2025, significantly underperforming the MSCI US REIT Index which was $138.00 over the same period.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with a cautious sentiment. While operational metrics like G&A and credit rating improved, and governance is strong, the significant underperformance in Total Shareholder Return and missed strategic targets like CARET raise concerns about value creation for shareholders.

Positives

• Achieved the target of reducing greenhouse gas (GHG) emissions by 20% by 2025 relative to the 2019 baseline.
• Received an S&P credit rating upgrade to A-, indicating improved creditworthiness.
• The CEO, Jay Sugarman, voluntarily reduced his 2025 Annual Incentive Plan (AIP) award to $1.455 million (from $1.92 million) and opted to receive it entirely in stock, demonstrating alignment with shareholder interests and a commitment to high-performing employees.
• The company's three-year average equity award burn rate of 0.63% is well below the institutional shareholder advisory firm's industry benchmark of 1.05%, indicating responsible share usage.
• Robust corporate governance practices are in place, including a combined CEO/Chairman role balanced by a lead independent director and independent board committees, annual board evaluations, and strict director independence standards.
• All named executive officers and non-employee directors are currently in compliance with rigorous stock ownership guidelines.
• The company has a clawback policy for incentive compensation in cases of fraud, willful misconduct, or financial restatements, and prohibits hedging or pledging of company securities by executives and directors.
• Core General and Administrative (G&A) expenses were $34.3 million in 2025, below the target of $36.6 million, indicating effective cost management.
• Employment engagement score was 75.69%, exceeding the target of 75%.

Negatives

• The 'CARET Raised' performance metric for the 2025 Annual Incentive Plan resulted in 'No Sale' against a target of $40 million, indicating a significant miss in this strategic area.
• Company Total Shareholder Return (TSR) has shown a declining trend since 2021, with the value of a $100 investment from December 31, 2020, falling from $111.00 in 2021 to $22.00 in 2025, significantly underperforming the MSCI US REIT Index.
• Ground Lease Ecosystem Investments for 2025 were $405 million, falling short of the target of $500 million.
• The company's ability to attract and retain top talent may be adversely affected if the proposed amendment to the 2009 Long Term Incentive Plan is not approved, potentially forcing reliance on cash alternatives and reducing cash available for investment.

Risks

• Operational, IT, cybersecurity, ESG compliance, financial, legal, regulatory, strategic, and reputational risks are continuously identified, priced, managed, and monitored.
• Cybersecurity risks are addressed through a program based on NIST CSF 2.0, including risk assessments, employee training, incident response plans, simulated phishing tests, and ransomware attacks.
• If the proposed amendment to the 2009 Long Term Incentive Plan is not approved, the company's capacity to make future equity awards will be impacted, potentially constraining its ability to attract, reward, and retain valuable employees and increasing reliance on cash-based compensation, which would reduce cash available for investment.
• The company's business model involves long investment horizons, which inherently carries risks related to market fluctuations and economic conditions over extended periods.

Future Outlook

The company expects the proposed increase in the 2009 Long Term Incentive Plan share reserve to provide sufficient shares for awards for approximately three years, assuming current granting practices and historical usage continue. Future circumstances, share price, hiring activity, and award forfeitures may influence this duration. Without the amendment, the company anticipates adverse effects on recruitment and retention, potentially leading to increased reliance on cash compensation and reduced capital for investment. The company continues its digital transformation and multi-year cybersecurity and IT program, focusing on modernizing its technology platform to support future growth.

Management Comments

• Our compensation programs are designed to foster a strong pay-for-performance culture by ensuring we balance emphasis on near-term and long-term performance.
• We strive to provide our employees with meaningful reward opportunities while maintaining alignment with stockholder interests and business imperatives.
• The proposed increased share reserve under the 2009 LTIP is expected to provide us with enough shares for awards for approximately 3 years, assuming we continue to grant awards consistent with our current practices and historical usage.
• If our stockholders do not approve this proposal, our capacity to make future awards under the 2009 LTIP will be impacted and we may be forced to rely on cash alternatives to provide competitive compensation, constraining our ability to attract, reward and retain valuable employees and increasing the proportion of cash-based incentive awards.
• Mr. Sugarman had overall responsibility for the Company's operations, guiding key business functions to meet operating framework objectives and originating ground lease investments in a challenging market environment.
• Mr. Asnas played a key role in securing an S&P credit rating upgrade to A-, advancing capital markets initiatives including the origination of a new term loan, driving efficiencies and reductions in the Company's general and administrative costs, and providing strategic leadership across investor relations, treasury, finance, and ESG functions.

Industry Context

StockSavvy.ai notes that Safehold Inc.'s focus on growing the modern ground lease industry positions it within a niche but expanding segment of the real estate market. The company's emphasis on ESG practices, including achieving GHG reduction targets and integrating climate risk considerations, aligns with broader industry trends towards sustainable investing and corporate responsibility in real estate. The declining Company Total Shareholder Return compared to the MSCI US REIT Index suggests that while the company is making internal operational improvements and governance enhancements, its market performance has lagged the broader REIT sector, potentially reflecting specific challenges in its ground lease investment strategy or broader market sentiment towards its unique business model. The significant equity awards for new President Michael Trachtenberg, particularly those tied to affordable housing and stock price hurdles, indicate a strategic push into new growth areas and a strong incentive to drive shareholder value in a competitive real estate investment landscape.

Comparison to Industry Standards

• The company's three-year average equity award burn rate of 0.63% is notably below the institutional shareholder advisory firm's industry benchmark of 1.05%, indicating a more conservative approach to equity dilution compared to many peers in the real estate investment trust (REIT) sector.
• The Company Total Shareholder Return (TSR) of $22.00 for an initial $100 investment from December 31, 2020, significantly underperformed the MSCI US REIT Index's TSR of $138.00 over the same period. This suggests that Safehold Inc.'s stock performance has lagged the broader REIT market, which includes diversified real estate companies like Simon Property Group (SPG) and MFA Financial, Inc. (MFA), where some of Safehold's directors also serve.
• The S&P credit rating upgrade to Afor Safehold Inc. is a positive indicator of financial health and stability, potentially placing it favorably among peers in terms of access to capital and borrowing costs, though specific peer comparisons for credit ratings are not provided in the filing.
• The CEO pay ratio of 10 to 1 for 2025 is relatively low compared to the average CEO-to-worker pay ratio across S&P 500 companies, which often ranges from 200:1 to 300:1, suggesting a more equitable compensation structure within Safehold Inc. than many large public companies.

Management Changes

Corporate Governance

Related Party Transactions

• The Company owns a 53.2% noncontrolling equity interest in the Leasehold Loan Fund, which provides loans to ground lessees, including those from Old SAFE and the Company. As of December 31, 2025, the fund had funded $19.9 million of a $30.0 million commitment (reduced from $130.0 million), $44.5 million of a $55.5 million commitment (reduced from $105.0 million), and $20.4 million of a $31.5 million commitment.
• The Company owns a 53.2% noncontrolling equity interest in the Ground Lease Plus Fund, which originates and acquires ground leases for pre-development projects. In January 2024, the Company acquired a Ground Lease from this fund for $38.3 million, which iStar had previously sold to the fund in December 2021.
• In May 2023, the Company entered into a joint venture, the Ground Lease Fund, with an affiliate of SFTY Venture LLC (an existing shareholder), committing $275 million for a 55% controlling interest. On August 30, 2024, the Company acquired its partner's outstanding commitment for existing Ground Leases in the joint venture for $48.3 million.
• Ian Selig, an employee, is the brother of director Stefan Selig, and received approximately $320,000 in total compensation in 2025.
• Affiliates of MSD Partners, L.P. (a significant shareholder) have a stockholders agreement providing top-up rights for new common stock issuances, standstill restrictions, and the right to designate a Board observer. A registration rights agreement obligates the Company to file a shelf registration statement for their shares.
• The Company completed a Spin-Off of legacy assets to Star Holdings (SpinCo) on March 31, 2023, governed by a Separation and Distribution Agreement, which included the Company contributing at least $50.0 million in cash to SpinCo.
• SpinCo is externally managed by Safehold Management Services Inc., a Company subsidiary, under a management agreement. SpinCo paid $12.5 million in management fees in 2025. The agreement includes a termination fee of $55.0 million (minus management fees paid) if terminated without cause before March 31, 2027.
• The Company is the lender and administrative agent for a $115.0 million senior secured term loan facility (with an additional $25.0 million incremental commitment) to SpinCo, bearing interest at 8.00% (up to 10.00%) and maturing on March 31, 2028.
• A Governance Agreement between the Company and SpinCo imposes standstill restrictions on SpinCo and its affiliates and requires SpinCo to vote its Company common stock in line with Board recommendations.
• SFTY Venture LLC (an affiliate of GIC Real Estate Private Limited, a significant shareholder) has the right to purchase additional shares of the Company's common stock (up to 10% of future issuances) and co-invest in real estate opportunities. The Company is also obligated to file a shelf registration statement for SFTY Venture LLC's shares.

Stakeholder Impact

• **Shareholders:** Will vote on key governance matters, including director elections, auditor ratification, and a significant increase in the equity incentive plan, which could impact future dilution and executive alignment. The declining Total Shareholder Return (TSR) compared to the industry benchmark indicates a negative impact on shareholder value in recent years. The CEO's voluntary reduction of his AIP award and taking it in stock could be seen positively as aligning with shareholder interests.
• **Employees:** The proposed amendment to the Long Term Incentive Plan is crucial for attracting, motivating, and retaining key employees through equity awards. Without it, the company may struggle to offer competitive compensation, potentially impacting morale and talent retention. The company's focus on inclusion, talent development, and employee engagement programs aims to positively impact the workforce.
• **Customers (Ground Lessees):** The Leasehold Loan Fund provides financing to ground lessees, which can facilitate their recapitalization and construction projects, indicating continued support for the customer base.
• **Management:** Executive compensation is tied to performance goals, incentivizing management to achieve strategic objectives. The new President, Michael Trachtenberg, has significant equity awards tied to company performance, aligning his interests with long-term success. The Executive Change in Control Severance Plan provides financial security for executives during potential transitions.
• **Creditors:** The S&P credit rating upgrade to Aimproves the company's credit profile, potentially leading to more favorable borrowing terms and lower cost of capital, which benefits creditors by reducing risk.
• **Regulatory Authorities:** The company's adherence to SEC filing requirements, NYSE listing standards, and robust corporate governance practices, including a Disclosure Committee and cybersecurity program based on NIST CSF 2.0, demonstrates commitment to regulatory compliance.

Next Steps

• Hold the 2026 Annual Meeting of Stockholders on May 14, 2026, to vote on director elections, auditor ratification, LTIP amendment, and executive compensation.
• Continue to implement the multi-year phased cybersecurity and information technology program, focusing on modernizing the overall technology platform.
• The Board and Compensation Committee will review and consider the results of the non-binding Say-on-Pay advisory vote when making future decisions regarding the executive compensation program.
• If the proposed amendment to the 2009 LTIP is approved, the amendments will become effective as of the date of stockholder approval, allowing for the issuance of additional equity awards.
• The company will continue its year-round stockholder engagement process to discuss strategy, performance, executive compensation, and governance topics.

Key Dates

Recommendation

The filing presents a mixed bag of information. On one hand, strong corporate governance, a credit rating upgrade, and effective cost management (Core G&A) are positive indicators. The CEO's decision to take his bonus in stock and reduce it voluntarily also signals alignment. However, the significant underperformance in Total Shareholder Return compared to the REIT index and missed strategic targets like 'CARET Raised' are concerning. The proposed LTIP share increase, while necessary for talent retention, introduces further dilution. Given the operational strengths balanced against the lagging shareholder returns and strategic misses, a 'hold' recommendation is appropriate. Investors should monitor the company's ability to execute on its strategic framework, particularly in areas like Ground Lease Ecosystem Investments and CARET, and observe if the new President's equity incentives translate into improved shareholder value.

Keywords

SEC filing, Proxy Statement, Corporate Governance, Executive Compensation, Long Term Incentive Plan, Equity Awards, Shareholder Meeting, REIT, Real Estate, Ground Lease, Cybersecurity, ESG, Financial Performance, Deloitte & Touche LLP, Say-on-Pay, Stock Ownership Guidelines, Clawback Policy, Related Party Transactions