DEFA14A: Simon Property Group Defends Proposals Amidst ISS Opposition Ahead of 2025 Annual Meeting

Simon Property Group urges shareholders to vote for all proposals at the upcoming annual meeting, despite opposition from Institutional Shareholder Services (ISS) regarding say-on-pay, certain Governance and Nominating Committee members, and a proposal to redomesticate to Indiana.

Summary

• Simon Property Group is addressing concerns raised by Institutional Shareholder Services (ISS) regarding several proposals to be voted on at the 2025 Annual Meeting of Shareholders.
• ISS is recommending against the Say-on-Pay proposal, certain members of the Governance and Nominating Committee, and the proposal to redomesticate the company to Indiana.
• The company highlights that Glass Lewis, another proxy advisory service, recommends voting for all the proposals.
• Simon Property Group defends its compensation practices, particularly the Amended and Restated Other Platform Investment Incentive Program (A&R OPI Program), stating it's performance-based and designed to reward value creation.
• The company argues that ISS's criticism of the OPI award size is flawed, as it's directly tied to the significant gain from the monetization of its ABG investment, which generated $1.5 billion in cash proceeds.
• Regarding the Governance and Nominating Committee, Simon Property Group defends its multi-class voting structure, which has been in place since its IPO in 1993, and states that it does not negatively impact common shareholders.
• The company also addresses ISS's concerns about the redomestication proposal, highlighting potential cost savings and alignment with shareholder interests.
• Simon Property Group urges shareholders to vote FOR all proposals, emphasizing the Board's commitment to long-term shareholder value.

Sentiment

Score: 6

Explanation: The document conveys a defensive tone as the company addresses criticisms from ISS. While highlighting positives, the need to actively counter negative recommendations suggests underlying concerns about shareholder support.

Positives

• The A&R OPI Program is performance-based, rewarding employees for creating value without additional overhead.
• The company highlights that Glass Lewis recommends voting for all proposals.
• The company defends its multi-class voting structure, stating that it does not negatively impact common shareholders.
• The company highlights potential cost savings and alignment with shareholder interests with the redomestication proposal.
• The company has generated a ~4,000% total return to shareholders since its 1993 IPO.

Negatives

• ISS is recommending against the Say-on-Pay proposal, certain members of the Governance and Nominating Committee, and the proposal to redomesticate the company to Indiana.
• ISS argues that an OPI award made pursuant to the A&R OPI Program is too high.
• ISS inaccurately asserts that the Company's capital structure denies public shareholders the ability to cast a vote for the chairman/CEO.
• ISS fails to appropriately acknowledge the extent of the potential cost savings that could be achieved with a redomestication in Indiana.

Risks

• Negative recommendations from proxy advisory firms like ISS could influence shareholder votes.
• Potential for increased litigation expenses in Delaware due to its legal framework and case-law.
• The company faces the risk of not achieving the desired outcome on the proposals at the Annual Meeting.

Future Outlook

The company hopes that the letter provides additional, helpful information and context to the matters to be voted on and illustrates the thoughtful attention paid to our shared interest in creating and enhancing long-term shareholder value and strongly urge you to vote FOR all proposals at the Annual Meeting.

Management Comments

• David Simon, Chaiman of the Board, Chief Executive Officer and President: 'We hope that this letter provides additional, helpful information and context to the matters to be voted on and illustrates the thoughtful attention paid to our shared interest in creating and enhancing long-term shareholder value and strongly urge you to vote FOR all proposals at the Annual Meeting.'
• Larry C. Glasscock, Lead Independent Director: [No specific comments provided in the document].
• Glyn F. Aeppel, Chair, Governance & Nominating Committee: [No specific comments provided in the document].
• Reuben S. Liebowitz, Chair, Compensation & Human Capital Committee: [No specific comments provided in the document].

Industry Context

The document highlights the debate between companies and proxy advisory firms like ISS, particularly regarding executive compensation and corporate governance structures. It also mentions that over 70% of all REITs are not incorporated in the State of Delaware, with most REITs incorporated in Maryland.

Comparison to Industry Standards

• The document mentions that Glass Lewis appropriately acknowledges the context in its recommendation FOR that there is satisfactory alignment between pay and performance.
• The document mentions that the Council of Institutional Investors (CII) does not list the Company as maintaining a multi-class structure.
• The document mentions that more than 70% of all REITS are not incorporated in the State of Delaware. Most REITs are incorporated in Maryland.

Stakeholder Impact

• Shareholders are directly impacted by the proposals and the recommendations of proxy advisory firms.
• Employees could be affected by changes to the compensation structure or the company's overall strategy.
• The local government in Indiana could benefit from the company's redomestication to the state.

Next Steps

• Shareholders will vote on the proposals at the Annual Meeting on May 14, 2025.
• The company will await the results of the shareholder vote to determine the outcome of the proposals.

Key Dates

Keywords

proxy statement, ISS, shareholders, governance, redomestication, say-on-pay, compensation, Simon Property Group, OPI Program, Class B shares