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Simon CEO's bonus reversal still triggers investor suit

October 24, 2014

Simon Property Group Inc. can’t seem to win.

Seeking to avoid investor litigation, the biggest U.S. owner of shopping malls earlier this year eliminated a $120 million stock award to Chief Executive Officer David Simon in favor of a performance-based bonus.

Now the company and its directors have been sued anyway. The Delaware County Employees’ Retirement Fund claims the original award was nixed “only to avoid personal liability” and Simon may end up getting more than $150 million under the new plan.

“The amended award failed to establish meaningful performance metrics and instead reflects the compensation committee’s decision to bury the bar in terms of performance goals for Simon,” the fund said in a complaint unsealed Thursday in Delaware Chancery Court in Wilmington. The fund seeks the change rescinded.

“This lawsuit is yet another attempt by the same plaintiffs’ lawyers to challenge the performance-based changes to Mr. Simon’s retention agreement supported by 97 percent of our shareholders,” Les Morris, a Simon Property spokesman, said in an email.

Simon, based in Indianapolis, has faced criticism over its CEO compensation with more than 70 percent of shares voting in 2012 to reject Simon’s initial pay package. To address the complaints, the directors changed the pay plan to cut the number of shares eligible to vest if Simon leaves this year.

In April, Judge Travis Laster ruled that the company won’t have to face a 2012 shareholder lawsuit brought by a Louisiana fund over the plan because Simon officials had agreed to change it. Directors changed course because they were faced with “an imminent adverse decision” from the court, the Delaware fund said in its complaint.

Simon is the son of Melvin Simon, who helped form the company in 1960, the same year it opened its first shopping center in Bloomington. The landlord went public in 1993.

Simon’s compensation for 2013 was about $16 million, including salary, bonus and stock awards, according to the company’s proxy filing in April.

“Mr. Simon is widely recognized as the leading CEO in the industry, and the company has delivered outstanding performance and outsized shareholder returns during his tenure,” Morris said in the email.

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