Form 4: SL Green Executive Awarded Performance-Based Equity, Forfeits Unvested Units

Andrew S. Levine, Chief Legal Officer & GC of SL Green Realty Corp, received Long-Term Incentive Plan (LTIP) units and forfeited some previously granted units based on performance metrics.

Summary

• Andrew S. Levine, Chief Legal Officer & GC of SL Green Realty Corp, received multiple grants of Long-Term Incentive Plan (LTIP) units on January 29, 2025.
• These LTIP units are subject to vesting schedules and performance-based hurdles.
• Some of the LTIP units are time-based, vesting over three years, while others are performance-based, tied to operational metrics and total shareholder return (TSR).
• A total of 26,564 LTIP units were granted as an annual time-based equity award, vesting in equal installments on January 1, 2026, 2027, and 2028.
• An additional 10,789 LTIP units were granted based on the achievement of operational performance metrics for the year ended December 31, 2024, and will vest in equal installments on December 31, 2026 and 2027.
• 4,235 LTIP units were granted based on the company's total stockholder return relative to a group of New York City-centric publicly traded real estate investment trusts, vesting 50% on December 31, 2024 and the remaining 50% on December 31, 2025.
• Another 4,235 LTIP units were granted based on the company's total stockholder return relative to the Dow Jones US Real Estate Office Index, vesting 50% on December 31, 2024 and the remaining 50% on December 31, 2025.
• 14,900 LTIP units were granted with vesting conditions not fully detailed in the document.
• Levine also forfeited 434 LTIP units originally issued in January 2022 due to not meeting additional performance-based vesting hurdles related to total shareholder return.
• The number of LTIP units earned based on operational performance metrics for 2024 may be adjusted up or down by up to 12.5% based on the company's total shareholder return through December 31, 2026.

Sentiment

Score: 7

Explanation: The document reflects standard executive compensation practices with a mix of positive (new grants) and negative (forfeiture) elements. The performance-based nature of the awards is generally viewed positively by investors.

Positives

• The granting of LTIP units aligns executive compensation with the company's performance and shareholder value.
• The vesting schedules encourage long-term commitment from the executive.
• The performance-based hurdles incentivize the executive to achieve operational and financial targets.

Negatives

• The forfeiture of 434 LTIP units indicates that some performance targets were not met.
• The potential adjustment of up to 12.5% on the 10,789 LTIP units based on TSR introduces uncertainty.

Risks

• The value of the LTIP units is dependent on the company's stock price and overall performance.
• The vesting of the LTIP units is subject to continued employment, creating a risk of forfeiture if the executive leaves the company.
• The performance-based hurdles introduce uncertainty and may not be fully achieved.

Future Outlook

The document outlines future vesting dates for the LTIP units, contingent on continued employment and, in some cases, the company's total shareholder return.

Industry Context

The use of LTIP units is a common practice in the real estate industry to align executive compensation with long-term performance and shareholder value. The performance metrics used, such as operational performance and total shareholder return, are also standard in the industry.

Comparison to Industry Standards

• Many publicly traded REITs use LTIP units as part of their executive compensation packages.
• The vesting schedules and performance metrics used by SL Green are similar to those used by other large REITs such as Boston Properties (BXP) and Vornado Realty Trust (VNO).
• The use of total shareholder return as a performance metric is a common practice to align executive compensation with shareholder interests.
• The forfeiture of LTIP units for not meeting performance targets is also a standard practice in the industry.

Stakeholder Impact

• Shareholders may view the performance-based compensation positively as it aligns executive interests with shareholder value.
• Employees may see the LTIP units as a positive incentive for performance.
• The forfeiture of some LTIP units may be viewed negatively by some stakeholders.

Next Steps

• The executive will continue to work towards meeting the vesting conditions for the LTIP units.
• The company will monitor its total shareholder return to determine the final number of LTIP units earned based on performance metrics.

Key Dates

Keywords

LTIP Units, Equity Compensation, Performance-Based Vesting, Total Shareholder Return, Executive Compensation, SL Green Realty Corp, Real Estate Investment Trust