UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Gaming and Leisure Properties, Inc.
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Notice of Annual Meeting of Shareholders of Gaming and Leisure Properties, Inc.
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The 2019 Annual Meeting of Shareholders of Gaming and Leisure Properties, Inc. (the Company or GLPI) will be held:
June 13, 2019
10:00 a.m. Eastern Time
At the offices of Ballard Spahr LLP
1735 Market Street, 48th Floor
Philadelphia, Pennsylvania 19103
The items of business are:
1. | To elect Peter M. Carlino, David A. Handler, Joseph W. Marshall, III, James B. Perry, Barry F. Schwartz, Earl C. Shanks and E. Scott Urdang as directors to hold office until the 2020 Annual Meeting of Shareholders and until their respective successors have been duly elected and qualified. |
2. | To ratify the appointment of Deloitte & Touche LLP as the Companys independent registered public accounting firm for the current fiscal year. |
3. | To approve, on a non-binding advisory basis, the Companys executive compensation. |
4. | To consider a shareholder proposal requesting a report on Board diversity, if properly presented at the Annual Meeting. |
5. | To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
Shareholders of record of the Companys common stock (Nasdaq: GLPI) as of the close of business on April 5, 2019 are entitled to vote at the meeting and any postponements or adjournments of the meeting.
By order of the Board of Directors,
Peter M. Carlino
Chairman of the Board of Directors
845 Berkshire Blvd., Suite 200
Wyomissing, Pennsylvania 19610
April 30, 2019
Your Vote is Important
Please vote as promptly as possible by using the Internet or telephone or by signing, dating and returning the Proxy Card mailed to those who receive paper copies of this Proxy Statement. This Notice of Annual Meeting and accompanying Proxy Statement are first being made available to our shareholders on or about April 30, 2019.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on June 13, 2019: The Notice of Annual Meeting, Proxy Statement, and Annual Report to Shareholders for the year ended December 31, 2018 are available at www.proxydocs.com/glpi.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 1 |
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider and you should read the entire Proxy Statement before voting. For more complete information regarding the Companys 2018 performance, please review the Companys Annual Report to Shareholders for the year ended December 31, 2018.
ANNUAL MEETING OF SHAREHOLDERS
Time and Date |
Record Date | |
10:00 a.m. Eastern Time June 13, 2019 |
April 5, 2019 | |
Place Ballard Spahr LLP 1735 Market Street, 48th Floor Philadelphia, PA 19103 |
Number of Common Shares Eligible to Vote at the Meeting as of the Record Date: 215,009,728 | |
VOTING MATTERS
Matter |
Board Recommendation | Page Reference (for more detail) | |||||
Election of Directors |
FOR each director nominee | 10 | |||||
Ratification of Appointment of Deloitte & Touche LLP |
FOR | 52 | |||||
Non-Binding Advisory Vote to Approve Executive Compensation |
FOR | 53 | |||||
Shareholder Proposal Requesting a Report on Board Diversity |
NO RECOMMENDATION | 54 |
BOARD NOMINEES
The following table provides summary information about the director nominees.
Director Since
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Committee Memberships* |
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Name, Age |
Principal Occupation | AC | NG | C | Other Public Company Boards | |||||||||
Peter M. Carlino, 72 |
2013 | Chairman, Chief Executive Officer and President of Gaming and Leisure Properties, Inc. | Penn National Gaming, Inc. | |||||||||||
David A. Handler, 54 |
2013 | Partner, Centerview Partners |
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Penn National Gaming, Inc. | |||||||||
Joseph W. Marshall, III, 65 |
2013 | Vice Chairman of Stevens & Lee, PC, and Vice Chairman of Griffin Holdings, LLC |
(F) |
SIGA Technologies, Inc. | ||||||||||
James B. Perry, 69 |
2017 | Retired. Former Chairman and Chief Executive Officer of Isle of Capri Casinos, Inc. |
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Barry F. Schwartz, 69 |
2017 | Vice Chairman of MacAndrews & Forbes Inc. |
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Revlon, Inc. Scientific Games Corporation | ||||||||||
Earl C. Shanks, 62 |
2017 | Retired. Former Chief Financial Officer of Essendant, Inc. |
(F) |
Verint Systems Inc. | ||||||||||
E. Scott Urdang, 69 |
2013 | Retired. Former Founder, Chairman, and Chief Executive Officer of Center Square Capital Management, Inc. |
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2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 3 |
2018 PERFORMANCE HIGHLIGHTS
Top Performance
Consistent Results
GLPI has produced consistent increases in dividends and adjusted funds from operations (AFFO) since its spin-off from Penn National Gaming, Inc. (Penn) in 2013.
(1) | December 31, 2014 excludes one-time dividends of $11.84 and $0.40 per share paid to shareholders on February 18, 2014 and December 19, 2014, respectively. |
(2) | AFFO and AFFO per share are non-GAAP financial measures. AFFO per share is calculated using the Companys outstanding number of shares on a fully diluted basis. AFFO is FFO as defined by the National Association of Real Estate Investment Trusts (net income, excluding gains or losses from sales of property and real estate depreciation), excluding stock based compensation expense, debt issuance costs amortization, other depreciation, amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs and goodwill impairment charges, reduced by maintenance capital expenditures. For a complete discussion of our financial performance in 2018 and additional information on non-GAAP financial measures presented in this Proxy Statement, please see our Annual Report on Form 10-K for the year ended December 31, 2018, a copy of which is included in the Annual Report to Shareholders made available to shareholders in connection with this Proxy Statement. |
4 | | | Gaming & Leisure Properties Inc. |
Impressive Acquisition Growth
We have acquired 26 new properties since our spin-off from Penn, primarily with companies entering into sale/leaseback transactions for the first time and with a majority of properties protected in unitary master leases. In comparison, VICI Properties Inc. has acquired five properties since its formation, including two from its predecessor, and MGM Growth Properties LLC has acquired five properties with three properties originating from its predecessor.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 5 |
EXECUTIVE COMPENSATION
Gaming REITs Unique Position
On November 1, 2013, we emerged as a publicly traded company through a tax-free spin-off from Penn. We were the first triple-net REIT focused entirely on the ownership and leasing of gaming properties, establishing a new category of gaming REITs. This innovative approach ignited a wave of conversions that included some of the largest gaming companies in the industry MGM Resorts International, Caesars Entertainment Corporation and Pinnacle Entertainment, Inc. Today, there are three publicly traded gaming REITs. GLPI differs from more traditional REITs in several key aspects:
Long-Term, Stable Master Leases |
Our master leases are unitary, long-term leases (up to 35 years), primarily with established, profitable gaming operators as our tenants. These leases do not provide our tenants the ability to freely select specific locations on renewals or remove properties during the lease term. The result is dependable cash flow, stable dividends and fully-occupied properties.
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Significant Regulatory Oversight |
As a gaming REIT, we are subject to the jurisdiction and licensing of gaming regulatory agencies in several states. This has two significant impacts on our business: (1) the licensing of our officers, directors and entities is an onerous and intrusive process; and (2) our acquisitions require investigation, review and approval by gaming regulators, which can take up to a year in some instances.
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Complex Transactions |
Gaming companies are typically held in corporate structures that require separation of assets into OpCo/PropCo structures in a manner that minimizes tax leakage and maximizes value. To do so in a manner accretive to shareholders, detailed analysis, understanding and the ability to solve complex accounting, tax and legal issues is required, as is a thorough understanding of the underlying gaming business to avoid overpaying for assets that may under-perform in the long-term and adversely impact rent.
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Tenants Lack Alternative Locations |
The strict gaming regulatory structure makes it difficult in most states, and impossible in others, for our tenants to relocate to a different location. In states where gaming regulators would permit the relocation of an existing gaming facility, the construction of new gaming facilities and in many cases, horse racing facilities is a capital intensive and time-consuming process. More importantly, at lease termination, tenants are required to sell operating assets to a licensed operator entering into a new long-term lease for the facilities rather than simply moving assets to another location.
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Limited Development Opportunities |
Many states limit the number of casino licenses. As a result, our ability to develop new properties is very limited.
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Operation of Gaming Facilities |
We operate two gaming facilities located in Baton Rouge, Louisiana and Perryville, Maryland with over 600 employees. Our gaming operations are subject to significant regulatory oversight.
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Success in this segment of the REIT industry requires gaming experience as well as the ability to solve complex accounting, legal and tax issues. The Compensation Committee has determined that compensating our executive management using a REIT Global Industry Classification Standard (GICS) code is not appropriate given our operations and the talent required to support the complex and unique nature of our business. The Compensation Committee designed the executive compensation program to attract and retain executive talent with the necessary experience in, and understanding of, gaming assets while recognizing that performance metrics should reflect the Companys operation as a triple-net REIT.
The Compensation Committee implemented a two-pronged approach:
(1) | offer base salaries competitive with the Companys gaming peers to attract and retain the unique skill sets necessary to appropriately value properties with revenues primarily derived from gaming operations; and |
(2) | offer performance-based compensation designed to appropriately motivate our executives to drive shareholder value in the competitive REIT market. |
By focusing on the Companys gaming peers in establishing base salary and the Companys REIT peers in structuring performance incentives, we believe our compensation program is successful in attracting and retaining high-performing talent with the experience and skills necessary for acquiring assets in accretive transactions and driving shareholder value.
6 | | | Gaming & Leisure Properties Inc. |
2018 Named Executive Officer Compensation
In 2018, the total potential compensation opportunity of our Chief Executive Officer (CEO) and other named executive officers (NEOs) consisted of the following:
* | Excludes William J. Clifford, who retired from the Company on May 4, 2018. |
The base salary of our CEO is competitive with the Companys gaming peers and has not been increased since 2012, which is the same salary he received as the Chief Executive Officer of Penn. Mr. Carlinos base salary was not increased in 2019 and it is the Compensation Committees intention to continue with the policy of not increasing Mr. Carlinos base salary for the foreseeable future.
(1) | Base salary for the Companys gaming peers is for 2017 based on public disclosures in 2018. Our CEOs base salary has not changed since 2012. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 7 |
RESPONSIVE TO SHAREHOLDER FEEDBACK
Our Board of Directors values the opinions of our shareholders. We have a strong track-record of responding to shareholder feedback. Since 2015, our Board of Directors and its committees have taken shareholder concerns seriously and responded promptly.
Shareholder Feedback |
Our Response
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2018
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Plurality Voting Standard |
Implemented majority voting with a resignation policy
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2017
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Single Trigger Change-of-Control |
Amended our 2013 Long Term Incentive Compensation Plan to provide for double trigger acceleration of awards in the event of a change-of-control
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Potential to Earn Maximum Awards with Negative TSR |
Performance-Based Restricted Stock Awards granted after January 1, 2018 are capped at target in the event of negative TSR for the performance period | |
Target Vesting at 40% TSR |
Revised our performance-based restricted stock award program to provide for target vesting at the 50% TSR level with minimum vesting at 25%, maximum vesting at 75% and linear vesting
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No Stock Ownership Guidelines |
Implemented stock ownership guidelines for NEOs and non-employee directors
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Limited Role of Lead Independent Director |
Expanded the role of the Lead Independent Director
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2016/2015
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Performance Goals Not Focused on Triple-Net REITs
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Performance-Based Restricted Stock Awards granted after January 1, 2017 bifurcated, with 50% measured against US MSCI REIT Index and 50% against triple-net REITs
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Peer Group Lacks Triple-Net REIT Peers
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Revised our peer group in 2017 to include a focus on triple-net REIT peers and gaming peers
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Classified Board Structure
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Proposed declassification of our Board of Directors in 2016
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8 | | | Gaming & Leisure Properties Inc. |
Proxy Statement
FOR 2019 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 13, 2019
This Proxy Statement is furnished to you in connection with the solicitation of proxies for the Annual Meeting of Shareholders of Gaming and Leisure Properties, Inc. (GLPI, the Company, we, us and our) to be held on June 13, 2019 (the Annual Meeting), and any postponements or adjournments of the meeting.
The Annual Meeting will be held at the offices of Ballard Spahr LLP, 1735 Market Street, 48th Floor, Philadelphia, Pennsylvania 19103 at 10:00 a.m. Eastern Time.
On or about April 30, 2019, we will mail to each of our shareholders (other than those who previously requested electronic delivery or to whom we are mailing a paper copy) a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review the proxy materials via the Internet and how to submit a proxy electronically using the Internet.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 9 |
Proposal 1 Election of Directors
At our Annual Meeting, shareholders will elect seven (7) directors to hold office until our 2020 Annual Meeting of Shareholders. The nominees were recommended and approved for nomination by our Nominating and Corporate Governance Committee. The directors will serve until their successors have been duly elected and qualified or until such directors earlier resignation or removal. Proxies cannot be voted for a greater number of persons than the number of nominees named. If you sign and return the accompanying proxy, your shares will be voted for the election of the nominees recommended by our Board of Directors, unless you mark the proxy in such a manner as to withhold authority to vote. If any of the nominees for any reason are unable to serve or will not serve, the proxies may be voted for such substitute nominees as the proxy holder may determine. We are not aware of any reason that the nominees will be unable to serve as a director.
Peter M. Carlino, David A. Handler, Joseph W. Marshall, III, James B. Perry, Earl C. Shanks, Barry F. Schwartz and E. Scott Urdang are being nominated for election to our Board of Directors to serve for a term through the 2020 Annual Meeting of Shareholders. We did not pay a fee to any third party to identify or evaluate any potential nominees. However, we are working with Spencer Stuart to identify potential Board nominees with a focus on gender diversity.
Required Vote
At the 2018 Annual Meeting of Shareholders, shareholders approved amendments to the Companys Articles of Incorporation to implement a majority voting standard with a resignation policy. Under a majority voting standard, once a quorum has been established, in an uncontested director election, a candidate must receive the affirmative vote of a majority of the votes cast with respect to the election of that candidate. The resignation policy set forth in our Corporate Governance Guidelines requires any director nominee who fails to receive the requisite majority vote to promptly, following certification of the shareholder vote, tender his or her resignation from the Board and all committees upon which he or she serves. Our Board will then assess the appropriateness of such nominee continuing to serve as a director and decide whether to accept or reject the resignation, or whether other action should be taken. The policy further provides that any director who tenders his or her resignation shall not participate in the Board action regarding whether to accept the resignation offer. Our Board will act upon the tendered resignation and publicly disclose its decision and rationale within ninety (90) days following certification of the shareholder vote.
In a contested director election, a plurality voting standard will continue to apply. Under the plurality voting standard, each of the nominees receiving the highest number of affirmative votes of the shares entitled to be voted for him or her will be elected.
The election of directors at the Annual Meeting is uncontested and the majority voting standard will determine the directors that will serve until the 2020 Annual Meeting of Shareholders and until his or her successor is duly elected and qualified. Votes withheld shall have no legal effect. Brokers are not permitted to vote your shares for the election of directors absent instruction from you. Therefore, we urge you to give voting instructions to your broker on the proposal so that your votes may be counted on this important matter.
Our Directors
Our directors serve subject to the requirements of our charter and bylaws, including the requirement that directors not be unsuitable persons. In certain jurisdictions, our directors, either by statute or discretion of the applicable gaming or racing regulatory authority, are required to obtain licenses. Licenses typically require a determination that the applicant qualifies or is suitable to serve as a director and hold such a license. If one of our directors were to be determined to be an unsuitable person within the meaning of our charter, he or she would be subject to removal for cause by affirmative vote of the remaining members of our Board of Directors or by shareholders with an affirmative vote of 75% of the votes cast at a shareholders meeting.
There are no family relationships among any of our directors or executive officers.
10 | | | Gaming & Leisure Properties Inc. |
Nominees for Election to the Board of Directors for a One-Year Term Expiring at the 2020 Annual Meeting
The following biographical information is furnished as to the nominees for election as a director and each of the continuing directors.
Peter M. Carlino
AGE: 72
DIRECTOR SINCE: 2013
OTHER CURRENT PUBLIC BOARDS: Penn National Gaming, Inc. |
Peter M. Carlino has been the Chairman of our Board of Directors and our CEO and President since our inception in February 2013. Mr. Carlino has served as the Chairman of the Board of Directors of Penn since April 1994 and served as Chief Executive Officer of Penn from 1994 until October 2013. Since 1976, Mr. Carlino has served in an executive capacity for Carlino Capital Management Corp. and is currently the Chairman of the Board and Chief Executive Officer. Carlino Capital Management Corp. is a holding company that owns and operates various Carlino family businesses, and Mr. Carlino has been continuously active in its strategic planning and monitoring the operations. Mr. Carlino has served as the Chairman of Penns Board of Directors since 1994 and as Chief Executive Officer for Penn, and now the Company, collectively for over twenty (20) years.
Mr. Carlino brings to our Board of Directors extensive management experience, critical knowledge of our properties and a general knowledge and understanding of the gaming industry, real estate assets and real estate development. Moreover, as one of the largest beneficial owners of our common stock, his interests are significantly aligned with our efforts to enhance long-term shareholder value. Our Board of Directors supports and approves Mr. Carlinos nomination and continued service on our Board of Directors because his knowledge and experience are an invaluable asset to us. | |||||
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David A. Handler
AGE: 54
DIRECTOR SINCE: 2013
OTHER CURRENT PUBLIC BOARDS: Penn National Gaming, Inc. |
David A. Handler has served as a member of our Board of Directors since October 2013. Mr. Handler has also served as a director of Penn since 1994. In August 2008, Mr. Handler joined Centerview Partners, an independent financial advisory and private equity firm, as a Partner. From April 2006 to August 2008, he was a Managing Director at UBS Investment Bank. Prior to becoming a Managing Director at UBS Investment Bank, he was a Senior Managing Director at Bear Stearns & Co., Inc.
Mr. Handler brings to our Board of Directors experience in investment banking and capital markets that has included a focus on mergers and acquisitions and other significant transactions. The Board of Directors supports and approves Mr. Handlers nomination and continued service on our Board of Directors because his experience is an invaluable asset to us, particularly in connection with evaluating potential acquisition and financing opportunities. | |||||
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Joseph W. Marshall, III
AGE: 65
DIRECTOR SINCE: 2013
OTHER CURRENT PUBLIC BOARDS: SIGA Technologies, Inc. |
Joseph W. Marshall, III has served as a member of our Board of Directors since October 2013. Mr. Marshall has also served as the Vice Chairman of the law firm Stevens & Lee, PC and Vice Chairman of Griffin Holdings, LLC since February 2010. Mr. Marshall has served on the Board of Directors of SIGA Technologies, Inc. (Nasdaq) since 2009 and has served on a number of other boards in the past, including the Cancer Treatment Centers of America-Eastern Regional Medical Center and First Bank of Delaware. From 2001 to 2008, Mr. Marshall served as the Chairman and CEO of Temple University Health System, one of the largest health care organizations in Pennsylvania. Mr. Marshall served as director of Health Partners, a provider-owned Medicaid/Medicare Health Maintenance Organization operating in Greater Philadelphia, from 2003 to 2008. Mr. Marshall also previously served on the Pennsylvania Gaming Control Board, Pennsylvania Ethics Commission and the Medicaid Commission created by Congress and established by the Honorable Michael O. Leavitt, Secretary of the U.S. Department of Health & Human Services. In addition, Mr. Marshall is a member of the Board of Trustees of Temple University.
The Board of Directors supports and approves Mr. Marshalls nomination and continued service on our Board of Directors because of his extensive experience and knowledge of gaming regulation and his significant experience as a director and an executive in both the private and public sectors. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 11 |
James B. Perry
AGE: 69
DIRECTOR SINCE: 2017
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James B. Perry was appointed to our Board of Directors in March 2017. Mr. Perry served on the Board of Directors of Isle of Capri Casinos, Inc. (Isle) from 2007 to 2014 and was named Chairman of the Board of Directors and Executive Chairman of the Board of Directors of Isle in 2009 and 2011, respectively. From March 2008 to April 2011, he served as Isles Chief Executive Officer. Prior to being named Chairman of Isle, Mr. Perry was Executive Vice Chairman from March 2008 to August 2009 and Vice Chairman from July 2007 to March 2008. Mr. Perry served as a Class III Director on the board of Trump Entertainment Resorts, Inc. from May 2005 until July 2007. From July 2005 to July 2007, Mr. Perry served as Chief Executive Officer and President of Trump Entertainment Resorts, Inc., which filed for Chapter 11 bankruptcy in February 2009. Mr. Perry was President of Argosy Gaming Company from April 1997 through July 2002 and Chief Executive Officer of Argosy Gaming Company from April 1997 through May 2003. Mr. Perry also served as a member of the Board of Directors of Argosy Gaming Company from 2000 to July 2005.
The Board of Directors supports and approves Mr. Perrys nomination and continued service on our Board of Directors because he brings more than thirty (30) years of gaming industry experience to the Board of Directors. He also has extensive experience in executive management, corporate governance and strategic planning. | |||||
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Barry F. Schwartz
AGE: 69
DIRECTOR SINCE: 2017
OTHER CURRENT PUBLIC BOARDS: Revlon, Inc. Scientific Games Corporation |
Barry F. Schwartz was appointed to our Board of Directors in May 2017. Mr. Schwartz has been Vice Chairman of MacAndrews & Forbes Incorporated and various affiliates since December 2015. Mr. Schwartz was Executive Vice Chairman of MacAndrews & Forbes Incorporated and various affiliates from October 2007 to December 2016. Prior to that, Mr. Schwartz was Executive Vice President and General Counsel of MacAndrews & Forbes Incorporated and various affiliates since 1993 and Senior Vice President of MacAndrews & Forbes Incorporated and various affiliates from 1989 to 1993. Mr. Schwartz is a director of Revlon, Inc., Revlon Consumer Products Corporation and Scientific Games Corporation. During the past five years, Mr. Schwartz also served as a director of Harland Clarke Holdings Corp. and M & F Worldwide Corp. Mr. Schwartz is a Trustee Emeritus and a former Chairman of the Board of Trustees at Kenyon College and formerly a member of the Georgetown University Law Center Board of Visitors. He also serves as the Vice Chairman of the Board of Trustees at the City University of New York (CUNY) and a trustee of the NYU Langone Medical Center, Jazz at Lincoln Center and the Perelman Performing Arts Center at The World Trade Center.
The Board of Directors supports and approves Mr. Schwartzs nomination and continued service on our Board of Directors because of his extensive experience in the areas of mergers and acquisitions, legal and compliance through his service as a senior executive in a large, diversified holding company. Additionally, in connection with his role at MacAndrews & Forbes, Mr. Schwartz serves as a director of several public and private portfolio companies, which offers valuable alternative perspectives. | |||||
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Earl C. Shanks
AGE: 62
DIRECTOR SINCE: 2017
OTHER CURRENT PUBLIC BOARDS: Verint Systems Inc. |
Earl C. Shanks was appointed to our Board of Directors in March 2017. Mr. Shanks served as Chief Financial Officer of Essendant Inc., a leading supplier of workplace essentials, from November 2015 through May 2017. Previously, Mr. Shanks served as the Chief Financial Officer at Convergys Corporation from 2003 until 2012. Prior to that, Mr. Shanks held various financial leadership roles with NCR Corporation, ultimately serving as the Chief Financial Officer, where he oversaw treasury, finance, real estate and tax. Additionally, Mr. Shanks has served as a director of Verint Systems Inc. since July 2012.
The Board of Directors supports and approves Mr. Shanks nomination and continued service on our Board of Directors because of his financial expertise and significant public company experience as both a Chief Financial Officer and director. |
12 | | | Gaming & Leisure Properties Inc. |
E. Scott Urdang
AGE: 69
DIRECTOR SINCE: 2013
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E. Scott Urdang has served as a member of our Board of Directors since October 2013. Mr. Urdang, who retired in 2012, was the founder, Chief Executive Officer and Chairman of Urdang Capital Management (now Center Square Capital Management, Inc.). Center Square Capital Management is an investment management company that manages and participates in public, private, global, and US-only real estate investment strategies. Mr. Urdang founded the company in 1987, and at the time of his retirement, it had in excess of $5 billion under management. From 1984 to 1987, Mr. Urdang was a Partner at Laventhol and Horwath, a national consulting and accounting firm, where he served as regional partner in charge of real estate consulting with national responsibility for its pension consulting practice. Mr. Urdang also has experience as a Vice-President of Finance of a large regional development company that was involved in residential subdivisions, office buildings, apartments and shopping centers. Mr. Urdang has twenty (20) years of experience teaching both undergraduate and graduate courses in economics, corporate finance, and real estate finance and investment analysis at the Wharton School of the University of Pennsylvania.
The Board of Directors supports and approves Mr. Urdangs nomination and continued service on our Board of Directors because of his extensive experience, comprehensive, knowledge, and strong record of success in the real estate industry as an investor, developer, entrepreneur, and professor. |
The Board of Directors Recommends a Vote for the Election of the Nominated Directors.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 13 |
2018 Committee Membership
NAME |
AUDIT AND COMPLIANCE |
COMPENSATION | NOMINATING AND GOVERNANCE | |||
Peter M. Carlino |
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David A. Handler |
Chair | ● | ||||
Joseph W. Marshall, III |
Chair | ● | ||||
E. Scott Urdang |
● | Chair | ||||
Earl C. Shanks |
● | |||||
James B. Perry |
● | |||||
Barry F. Schwartz |
● | |||||
Number of Committee Meetings Held in 2018 |
8 | 6 | 1 |
14 | | | Gaming & Leisure Properties Inc. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 15 |
2018 Director Compensation
The Company paid director compensation in 2018 to each non-employee director as shown in the table below.
Schedule of Director Compensation for 2018 | ||
Annual Cash Retainer |
$100,000
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Annual Restricted Stock Award |
Restricted Stock valued at $175,000
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Committee Chair Retainer |
$30,000 for the Audit and Compliance Committee
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$20,000 for the Compensation Committee
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$17,500 for the Nominating and Corporate Governance Committee
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Committee Member Retainer |
$15,000 for the Audit and Compliance Committee | |
$10,000 for the Compensation Committee | ||
$8,750 for the Nominating and Corporate Governance Committee |
The following table sets forth information on the compensation of all our non-employee directors for 2018:
2018 Compensation |
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Name | Fees Earned or Paid in Cash ($)(1) |
Stock Awards (#)(2) |
Stock Awards ($)(2) |
Total ($) |
Unvested Stock Awards (#)(3) |
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David A. Handler |
130,625 | 4,730 | 175,010 | 305,635 | 10,338 | |||||||||||||||
Joseph W. Marshall, III |
137,292 | 4,730 | 175,010 | 312,302 | 10,338 | |||||||||||||||
E. Scott Urdang |
127,500 | 4,730 | 175,010 | 302,510 | 10,338 | |||||||||||||||
Earl C. Shanks |
112,500 | 4,730 | 175,010 | 287,510 | 8,494 | |||||||||||||||
James B. Perry |
108,333 | 4,730 | 175,010 | 283,343 | 8,197 | |||||||||||||||
Barry F. Schwartz |
112,500 | 4,730 | 175,010 | 287,510 | 7,932 |
(1) | Cash fees include annual board retainer and, where applicable, committee retainers. |
(2) | The amounts listed above are calculated based on the closing price on the day prior to grant date and vest annually over a three-year period. |
(3) | Represents unvested restricted stock awards outstanding as of December 31, 2018 for grants made in 2018 and in prior years. |
16 | | | Gaming & Leisure Properties Inc. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 17 |
18 | | | Gaming & Leisure Properties Inc. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 19 |
20 | | | Gaming & Leisure Properties Inc. |
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee is responsible for the Companys executive compensation program. For purposes of the following Compensation Discussion and Analysis (CD&A), the terms Committee or we or our refer to the Compensation Committee of the Board.
The following CD&A describes our compensation philosophy, objectives and policies and how these are reflected in the compensation program for our NEOs. Our NEOs for 2018 were:
Name |
Title | |
Peter M. Carlino | Chairman, Chief Executive Officer and President | |
Steven T. Snyder | Senior Vice President, Corporate Development and Interim Chief Financial Officer* | |
Brandon J. Moore | Senior Vice President, General Counsel and Secretary | |
Desiree A. Burke | Senior Vice President and Chief Accounting Officer | |
William J. Clifford | Former Senior Vice President, Chief Financial Officer and Treasurer, who retired from the Company on May 4, 2018 |
* | Steven T. Snyder was appointed Chief Financial Officer on March 11, 2019. |
Executive Compensation Reference Guide
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28 | ||||
28 | ||||
29 | ||||
31 | ||||
35 | ||||
36 | ||||
36 | ||||
37 | ||||
38 | ||||
39 | ||||
40 | ||||
41 | ||||
42 | ||||
43 | ||||
44 | ||||
45 |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 21 |
2018 Performance Highlights
GLPIs disciplined approach to acquisitions and careful capital management led to increased shareholder value and continued strong financial performance in 2018.
∎ | Completed $1.5 billion of value creating investments, further strengthening the Companys position as the leading owner of regional gaming real estate |
∎ | Added two new tenants and eight new properties (including two mortgaged properties) that increased annual real estate revenue by $155 million |
∎ | Continued to produce one of the triple-net REIT sectors most stable cash flow streams through growing the Companys geographically diversified portfolio of regional gaming assets |
∎ | Amended the Companys credit facility to, among other things, increase revolving capacity and extend the maturity to 2023 |
∎ | Issued $2.1 billion in new unsecured notes with proceeds used to extinguish certain amounts under the Companys credit facility, tender for and redeem the Companys outstanding unsecured notes due in 2018 and finance announced transactions |
∎ | Achieved investment grade debt ratings from S&P Global Ratings and Fitch Ratings |
22 | | | Gaming & Leisure Properties Inc. |
(1) | December 31, 2014 excludes one-time dividends of $11.84 and $0.40 per share paid to our shareholders on February 18, 2014 and December 19, 2014, respectively. |
(2) | AFFO and AFFO per share are non-GAAP financial measures. AFFO per share is calculated using the Companys outstanding number of shares on a fully diluted basis. AFFO is FFO as defined by the National Association of Real Estate Investment Trusts (net income, excluding gains or losses from sales of property and real estate depreciation) excluding stock based compensation expense, debt issuance costs amortization, other depreciation, amortization of land rights, straight-line rent adjustments, direct financing lease adjustments, losses on debt extinguishment, retirement costs and goodwill impairment charges reduced by maintenance capital expenditures. For a complete discussion of our financial performance in 2018 and additional information on non-GAAP financial measures presented in this Proxy Statement, please see our Annual Report on Form 10-K for the year ended December 31, 2018, a copy of which is included in the Annual Report to Shareholders made available to shareholders in connection with this Proxy Statement. |
2018 Acquisitions
The Company added eight new properties to its portfolio, including two mortgaged properties, with the simultaneous closing of two significant transactions that resulted in the addition of two new tenants Eldorado Resorts, Inc. (Eldorado) and Boyd Gaming Corporation (Boyd) and the merger of one tenant into another Pinnacle Entertainment, Inc. (Pinnacle) merged into Penn. For Eldorado and Boyd, these transactions represented their first master lease relationship with a REIT. GLPI has grown from twenty-one (21) properties at the time of its spin-off from Penn in 2013, to forty-six (46) properties located in sixteen (16) states through arms-length transactions with many of the industrys largest regional gaming operators, without any reliance on call options or other rights associated with its predecessor.
2018 Property Acquisitions | ||||
Property |
Tenant | Interest | ||
Belle of Baton Rouge |
Eldorado | Owned | ||
Belterra Park Gaming |
Boyd | Mortgage | ||
Lumiere Place Casino & Hotels |
Eldorado | Mortgage | ||
Plainridge Park Casino |
Penn | Owned | ||
Tropicana Casino & Resort Atlantic City |
Eldorado | Owned | ||
Tropicana Evansville |
Eldorado | Owned | ||
Tropicana Casino Greenville |
Eldorado | Owned | ||
Tropicana Laughlin Hotel & Casino |
Eldorado | Owned |
These acquisitions added to the Companys high quality, geographically-diversified portfolio of gaming properties as well as the stable and predictable cash flow generated from its long-term, triple-net master leases.
Our Approach to Establishing the Compensation Program
GLPI emerged in November of 2013 as a publicly traded company through a tax-free spin-off from Penn. At the time, GLPI was the first triple-net REIT focused entirely on the ownership and leasing of gaming properties, establishing a new category of gaming REITs that now consists of three publicly-traded companies. The management of the Company requires a specialized
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 23 |
skill set with specific knowledge of both the gaming and real estate industries. Due to the unique nature of our business among REITs, there is a disconnect between the comparable companies with whom the Companys stock trades REITs and the comparable companies with whom we compete for talent and assets gaming companies. Consequently, the Committee determined that compensating management using only a REIT Global Industry Classification Standard (GICS) code is one-sided and ineffective given the nature of GLPIs operations and the talent required to support the complex and unique nature of our business. The Committees objective is to design the executive compensation program to attract and retain executive talent with the necessary experience in, and understanding of, gaming assets while recognizing that performance metrics should reflect the Companys operation as a triple-net REIT.
For 2018, the Committee began with a review of the 2017 compensation program, and to a lesser extent prior years, with a view toward identifying any areas that could be improved. Next, the Committee considered our most direct competitors, MGM Growth Properties LLC (created by MGM Resorts International (MGM)) and VICI Properties Inc. (emerged from the Caesars Entertainment Corporation bankruptcy). Unfortunately, neither of these competitors provide a meaningful comparison for analyzing executive compensation. MGM Growth Properties LLC is majority owned and controlled by MGM and, while it competes with the Company for assets, it is primarily accountable to one shareholder MGM and therefore its executive compensation structure does not provide a good comparison. VICI Properties Inc. is a relatively new company and the executive compensation information publicly available in its first year of reporting was limited.
Lacking a sufficient number of direct competitors, the Committee took a broader and more holistic view of the Companys business. In doing so, we determined that the Companys competitors consist of two distinct groups of companies: the companies with whom it competes for talent and assets gaming operators and the companies with whom it competes for investors gaming REITs and triple-net REITs. Together with FTI, the Committee structured the 2018 executive compensation program with this peer set in mind (see page 30 for a list of the Companys peers).
In structuring the Companys executive compensation program, the Committee considered the performance of the Company over the past five years, the complicated structuring and tax issues encountered in acquiring gaming assets, shareholder feedback, industry and general market trends in compensation practices, as well as the advice and recommendations of FTI.
The Challenge Aligning Our Compensation Program with Our Unique Business Model
We are focused on attracting and retaining executives with the knowledge and experience to grow shareholder value in our unique structure and operating environment and to lead the Company in an increasingly competitive business. With this as our goal, the Committee carefully designed the Companys compensation program, with the assistance of FTI, to attract and retain the talent necessary to drive growth in a REIT structure through the acquisition of gaming assets.
Focusing first on the need to retain executives with experience in, and understanding of, gaming assets and casino operations, the Committee has aligned the current NEOs base pay with their peers in the gaming industry. The base compensation of our CEO is competitive among our gaming peers:
(1) | Base salary for the Companys gaming peers is for 2017 based on public disclosures in 2018 and our CEOs base salary is for 2018. Mr. Carlinos base salary has not been increased since 2012 and remains unchanged in 2019. |
24 | | | Gaming & Leisure Properties Inc. |
However, recognizing that the Companys stock performance is strongly correlated with REITs, the Committee established performance goals for our 2018 cash bonus program and performance-based restricted stock awards designed to drive shareholder value, including:
∎ | a cash bonus program primarily tied to the stability and growth of AFFO, dividends and acquisition goals; and |
∎ | performance-based restricted stock awards tied to the Companys performance measured against the broad US MSCI REIT index generally and triple-net REITs specifically. |
These two components of at risk compensation represent a significant portion of managements total compensation opportunity:
* | Excludes William J. Clifford, who retired from the Company on May 4, 2018. |
By focusing on the Companys gaming peers in establishing base salary and the Companys REIT peers in establishing performance goals, we believe the compensation program is successful in attracting and retaining a talented management team with significant gaming experience that is capable of driving shareholder value as a REIT.
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Executive Compensation Highlights
Highlights of our overall 2018 executive compensation program are outlined below, with details discussed more fully throughout the CD&A:
Meaningful Shareholder Outreach |
✓ Our shareholder outreach efforts have resulted in numerous changes to our compensation program in response to concerns, including:
∎ Amending the equity plan to provide for double trigger vesting acceleration upon change-of-control
∎ Capping performance-based stock awards if TSR is negative for the performance period
∎ Substituting linear vesting for vesting tranches and setting target payout at the 50th percentile for performance-based stock awards
∎ Adding stock ownership guidelines for NEOs and non-employee directors | |
Use of Formulaic Incentive Compensation |
✓ 90% of annual performance cash bonus payments are tied to the achievement of pre-determined quantitative performance goals, including AFFO, dividends and acquisitions | |
✓ 80% of the value of stock awards granted for equity compensation continue to be at-risk and are contingent upon the Company achieving rigorous total shareholder return hurdles over a three-year performance period | ||
Pay for Performance |
✓ Rigorous performance goals for cash bonus require exceptional results for maximum payment | |
✓ 90% of cash bonus and 80% of total equity awards are tied to performance goals | ||
✓ Maximum payout for performance-based equity awards requires top quartile performance over a three-year period | ||
Robust Governance Practices |
✓ Cash bonus subject to maximum cap based on percentage of base salary | |
✓ Share ownership guidelines for executive officers and non-employee directors | ||
✓ Clawback policy to recover incentive compensation under certain circumstances | ||
✓ Anti-hedging policy that prohibits trading in puts, calls, options or other derivative instruments derived from the value of the Companys stock |
Executive Pay vs. Company Performance
Following the spin-off from Penn in 2013, the Companys NEOs transitioned to the Company at the same base pay in effect at the time of the spin-off. The Committee recognized at the time that while base salaries were in line with gaming company peers, they were elevated compared to triple-net REIT peers. Notably, the Companys CEO has not received an increase in pay since 2012 and his total realizable pay has remained relatively flat over the last three years despite a significant increase in AFFO.
26 | | | Gaming & Leisure Properties Inc. |
Performance-based equity awards are tied to multi-year performance goals in order to tie incentive compensation to long-term results. The performance goals established by the Committee require exceptional results to achieve maximum payout. The following table shows the status of the performance awards granted in each of 2014 through 2018.
Program |
Performance Period |
Performance Metric | Actual Performance | Status as of 12/31/18 | ||||
2018 Performance Awards |
January 2018 - December 2020 |
Relative TSR vs. MSCI US REIT Index and Select Triple-Net Lease REITs |
Matures 12/31/2020 | MSCI portion tracking to earn at least 100% of the target award and triple-net portion tracking below threshold | ||||
2017 Performance Awards |
January 2017 - December 2019 |
Relative TSR vs. MSCI US REIT Index and Select Triple-Net Lease REITs |
Matures 12/31/2019 | Both portions tracking to earn at least 100% of the target award | ||||
2016 Performance Awards |
January 2016 - December 2018 |
Relative TSR vs. MSCI US REIT Index |
Above 80th Percentile | 200% of the target award was earned | ||||
2015 Performance Awards |
January 2015 - December 2017 |
Relative TSR vs. MSCI US REIT Index |
Above 80th Percentile | 200% of the target award was earned | ||||
2014 Performance Awards |
January 2014 - December 2016 |
Relative TSR vs. MSCI US REIT Index |
Below 25th Percentile | 0% of the target award was earned |
Shareholder Outreach
The Companys shareholder base has changed dramatically since its spin-off from Penn in 2013 when shareholders were predominately gaming investors. Today, the Companys largest shareholders are REIT and index-oriented institutional investors. With the change in the composition of the Companys shareholders, the concerns of shareholders have changed and the Company has listened and responded.
The Company presents a shareholder advisory vote on executive compensation on an annual basis. At the Companys 2018 Annual Meeting of Shareholders, 93% of the voted shares approved such advisory vote.
The Company engages in periodic discussions with its shareholders throughout the year and during last two years it has made meaningful changes to its corporate governance structure and compensation programs as a result.
The Companys 2018 shareholder outreach efforts are summarized below:
∎ | Spring 2018 In connection with the distribution of the proxy materials for the 2018 Annual Meeting of Shareholders, the Company reached out to its top 20 shareholders to discuss questions and concerns related to specific proposals presented in the Companys proxy materials. Members of management and directors were offered as participants. |
∎ | Fall 2018 The Company broadened its outreach efforts to include not only the top 20 shareholders, but also significant shareholders that either withheld votes or voted against the recommendations of the Board. The Board believes that it is important to understand the reasons why shareholders choose not to support certain of the Boards recommendations and to discuss the Companys governance structure and initiatives that shareholders would like the Board to consider in the upcoming year. Members of management and directors were offered as participants. |
∎ | General 2018 Our CEO and Interim Chief Financial Officer participated in both REIT and gaming investor conferences and meetings throughout 2018. |
In 2019, the Company expanded its executive management team with the addition of Matthew Demchyk. Mr. Demchyk brings fifteen years of successful capital allocation experience in the REIT sector and will be primarily focused on enhancing the Companys shareholder outreach efforts.
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Compensation Philosophy and Objectives
Objectives of Compensation Program
The overall objective of the Companys executive compensation program is to compensate members of management in a manner that most effectively incentivizes them to maximize shareholder value without taking undue financial risks. At the same time, the executive compensation program is intended to enable the Company to attract and retain the executive talent needed to grow and further its strategic initiatives. This cannot be understated. The acquisition of real property assets by a REIT from a taxable corporation presents unique and complex tax, accounting, legal and structural issues. Unfortunately, gaming assets are generally owned by corporations and a failure of the Companys management team to identify latent tax, accounting and legal issues can result in a transaction that appears to be accretive on the surface, but results in a reduction of AFFO and dividend distributions when the full impact is realized. It is imperative that the Companys management team have the experience and skills necessary to recognize and solve these problems. With these goals in mind, the Companys compensation objectives are to:
∎ | offer a competitive and balanced compensation program to compensate executives for the unique experience required of our management team, taking into consideration the total compensation opportunity offered by other REITs and gaming companies; |
∎ | utilize a mix of fixed and performance-based compensation designed to closely align the interests of management with those of the Companys shareholders; and |
∎ | attract and retain the best possible management team for the Company to increase shareholder value and maintain the Companys credibility in, and access to, the capital markets. |
Compensation Philosophy
To support the Companys compensation program objectives, we have adopted and annually review and confirm a compensation philosophy that serves as the guide for all executive compensation decisions. Our compensation philosophy is as follows:
The Company intends to maintain an executive compensation program that will help it attract and retain the executive talent needed to grow and further the strategic interests of the business. To this end, the Company provides a compensation and benefits program designed to be sufficiently attractive to provide talented executives with good reason to remain with the Company and continue in their efforts to improve shareholder value. The Companys program is designed to motivate and reward executives to achieve and exceed targeted results. Pay received by the executives will be commensurate with the performance of the Company and their own individual contributions.
We believe that it is in the long-term best interests of the Company to provide a significant portion of each executives compensation in the form of equity incentive awards. However, we also believe that it is important to provide base salaries that do not motivate or encourage executives to take excessive risks to ensure future financial security, particularly in light of the complex tax, accounting and legal issues inherent in the Companys transactions. To balance these goals, we believe that the appropriate compensation program includes (a) fixed and performance-based cash and (b) service and performance-based equity incentive awards. We focused on the appropriate balance of each of these components in developing our 2018 executive compensation program.
The Committee, in consultation with our independent compensation consultant and management team, continually evaluates and considers compensation practices identified as best practices by various market constituents. We incorporated into our compensation program the practices we believe will most effectively support the Companys continuing efforts to create shareholder value, including:
∎ | no agreements or arrangements containing tax gross-ups or other similar tax indemnification provisions; |
∎ | compensation largely based on multiple performance metrics, including dividends, adjusted funds from operations and relative total shareholder return; |
∎ | compensation that includes a combination of variable and fixed incentive opportunities; |
∎ | double trigger acceleration of incentive awards in the event of a change-of-control; and |
∎ | established maximum bonus opportunities. |
We will continue to evaluate and consider input from our shareholders and emerging best practices to ensure that our compensation program contains the features necessary to properly align the interests of our executives with the interests of our shareholders without encouraging undue risk.
28 | | | Gaming & Leisure Properties Inc. |
We have also taken steps to protect shareholder interests and promote shareholder value in both the design and administration of the Companys equity compensation program. Under the terms of the Companys 2013 Long Term Incentive Compensation Plan (as amended, the Plan), awards to employees are administered by the Committee and will generally include vesting schedules designed to encourage employees to focus on the long-term success of the Company by requiring employees to remain with the Company for a number of years before all of their awards may be settled. Further, the Plan neither permits the exercise price of outstanding stock options or stock appreciation rights to be reduced nor permits the grant of discounted stock options or stock appreciation rights.
Annual Review and Approval Process
Role of the Committee
We annually review and approve the executive compensation packages for our CEO and each of the other executive officers as well as confirm and approve performance-based awards earned for the most recently completed year. In establishing compensation packages, we consider numerous factors and data, including:
∎ | the experience necessary to identify and solve the significant tax, accounting, legal and structural complexities inherent in the types of transactions conducted by the Company; |
∎ | compensation packages of gaming peers with whom the Company competes for talent and assets; |
∎ | the dividend payout for the previous fiscal year and projected dividends for the current year; |
∎ | the ability to enter into definitive acquisition agreements for properties that will be accretive to the Companys AFFO and dividend; |
∎ | the Companys performance relative to its REIT peers; |
∎ | the performance of the Companys properties in Perryville, Maryland and Baton Rouge, Louisiana; |
∎ | the individual performance of the executives and their total compensation relative to similarly situated gaming executives; |
∎ | a breakdown of the various components of each executive officers compensation package; |
∎ | compensation structure and performance goals of our REIT peers; |
∎ | perquisites and other benefits, if any, offered to each executive; and |
∎ | the performance of previous equity incentive awards. |
The Committee reviews this information with its compensation consultant and certain members of the executive management team to revise or confirm the compensation packages for each executive officer. One of our goals is to ensure that base salaries and total compensation packages are appropriate to attract and retain executives with the gaming and real estate experience necessary to create long-term shareholder value. We will also alter performance measures and/or the mix of cash and long-term equity incentive awards as necessary to ensure that management incentives continue to be aligned with shareholders.
Role of Management
The Companys CEO and Chief Financial Officer (CFO) work closely with the Committee to analyze relevant peer data and to determine the appropriate base salary, cash bonus and incentive award levels for each member of the executive management team. However, while the Committee values the judgment and input from the CEO and CFO, and considers their recommendations, the Committee ultimately retains sole discretion to approve the compensation packages for each member of the executive management team.
Role of Compensation Consultant
We retained FTI to advise us on compensation-related matters. We selected FTI because of its experience in assisting other REITs in determining the optimal type and balance of cash and incentive award components in a manner intended to align the interests of management and shareholders while being competitive. In addition to other tasks, FTI worked with management and the Committee to develop a peer group for use in structuring the Companys executive compensation program. FTI and the Company review the peer group annually to ensure that it provides an accurate representation of the Companys structure and operations. A description of the process and rationale utilized for selecting our 2018 peer group is described below.
The Committee has determined that no conflict of interest exists between FTI and the Company (including the Companys Board of Directors and the Companys management) pursuant to Item 407(e)(3)(iv) of SEC Regulation S-K. Neither FTI nor any affiliate provided additional services to the Company or its affiliates in excess of $120,000 during 2018.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 29 |
FTI reviews the current compensation of each executive officer on several levels, including consideration of (a) cash versus equity-based incentive awards; (b) fixed versus variable compensation, (c) service-based vesting versus performance-based vesting and (d) short-term awards versus long term incentive awards. In addition, FTI provides the Committee with information regarding the compensation levels of executive officers in our selected peer group, as well as, current compensation best practices and trends in the REIT and gaming industries. Based on all of the available information and discussions with the CEO and CFO, FTI provides its recommendation to the Committee as to the appropriate compensation of each executive officer or confirms for the Committee that the suggested compensation packages are reasonable.
Peer Group
In selecting and reviewing the Companys peer group, FTI and the Committee utilize a set of criteria that they believe captures the key areas of the Companys business and the experience necessary for its executives. FTI and the Committee review the peer group at the end of each year to ensure that it reflects the realities of the environment in which the Company generates its revenue and competes for talent and assets. The criteria are as follows:
∎ | gaming companies comparable to the Company in terms of its asset portfolio and the knowledge and skills necessary by the executive team to effectively evaluate opportunities and to manage the Companys operating properties; |
∎ | gaming companies with whom the Company competes for talent; |
∎ | triple-net REITs with revenues primarily derived from triple-net leases; and |
∎ | companies with implied equity market capitalization ranging from 0.5x to 2.5x that of the Company. |
Applying these criteria, FTI recommended, and the Committee approved, the following peer group for 2018:
Triple-Net REITs | Gaming Companies | |
Alexandria Real Estate Equities, Inc. |
Boyd Gaming Corporation | |
EPR Properties |
Caesars Entertainment Corporation | |
Gramercy Property Trust Inc. |
MGM Resorts International | |
MGM Growth Properties LLC |
Penn National Gaming, Inc. | |
National Retail Properties, Inc. |
Pinnacle Entertainment, Inc. | |
Omega Healthcare Investors, Inc. |
Wynn Resorts, Limited | |
Realty Income Corporation |
||
Spirit Realty Capital, Inc. |
||
STORE Capital Corporation |
||
Uniti Group, Inc. |
||
VEREIT, Inc. |
The majority of these peer companies share some, but not all, aspects of the Companys business model given the unique nature of its business, which includes management of casino operations. While each peer company is not entirely comparable to GLPI, we believe on a blended basis our current peer group provides the most accurate representation of the Companys operations and is appropriate particularly given that:
∎ | the peer group is over-weighted toward triple-net REITs (represents more than two-thirds of the peer group); and |
∎ | our implied equity market capitalization and total enterprise value equates to the approximate median of the peer group. |
For 2019, FTI recommended, and the Committee approved, removing Gramercy Property Trust Inc. and Pinnacle Entertainment Inc. and adding VICI Properties Inc. Gramercy Property Trust Inc. and Pinnacle Entertainment Inc. were acquired in 2018 and are no longer separate publicly traded companies.
Risk Assessment
In establishing and reviewing our executive compensation program, we consider, among other things, whether the program properly motivates executives to focus on the creation of shareholder value without encouraging unnecessary or excessive risk taking. To this end, the Committee carefully reviews the principal components of executive compensation. Base salaries are reviewed annually and are fixed in amount. Annual incentive pay is focused on achievement of certain specific overall financial performance goals and is determined using multiple criteria with established maximum payouts. The other major component of
30 | | | Gaming & Leisure Properties Inc. |
our executive officers compensation is long term incentives provided through the award of restricted stock, which we believe is important to help further align executives interests with those of our shareholders. We believe that these cash and incentive awards, especially when combined with the stock ownership requirements and compensation clawback policy, described in this Proxy Statement under the heading Other Compensation Policies, appropriately balance risk, payment for performance and align executive compensation with the interests of shareholders without encouraging unnecessary or excessive risk taking.
Elements of Compensation
The 2018 compensation program was weighted towards performance-based compensation utilizing several different performance metrics. The mix of cash versus equity-based incentive awards, fixed versus variable compensation, and service-based vesting versus performance-based vesting of equity incentive awards is designed to ensure that management is, and remains, appropriately incentivized across a number of different business and economic environments. In addition, our program includes both internal performance measures as well as external performance metrics to ensure that our executives are focused on the Companys goals as well as its position in the market. The following is a summary of the key elements (a more detailed description of each element is provided below):
Component |
Description | Objective | Strategic Rationale | |||
Base Salary |
Fixed cash compensation |
Provide competitive fixed compensation considering the job responsibilities, individual performance, skills and experience
|
Designed to attract and retain executives with the experience to implement the Companys growth strategy | |||
Annual Performance Cash Awards |
Cash compensation with 90% tied to achievement of pre-determined quantitative performance goals and 10% tied to qualitative performance |
Provide incentives for executives to enter into accretive transactions that result in growing dividend distributions and AFFO |
Motivates the achievement of short-term corporate objectives that are aligned with our annual budget and business plan; aligns executive and shareholder interests | |||
Long-Term Fixed Equity Awards |
Annual equity awards with time-based vesting equally over a three-year period
|
Supplement fixed compensation with long-term compensation to enhance retention and encourage long-term growth
|
Aligns executive and shareholder interests and rewards long-term stock performance | |||
Long-Term Performance-Based Equity Awards |
Annual equity award with three-year cliff vesting based on total shareholder return measured against the US MSCI Index and, for awards granted after January 1, 2017, triple-net REIT peers
|
Provide a significant portion of total potential compensation tied to long-term stock performance |
Aligns executive and shareholder interests and rewards long-term stock performance with no payout for under-performance |
In 2018, the total potential compensation opportunity of the Companys NEOs consisted of approximately 77% of performance-based and/or at risk compensation and approximately 23% of fixed compensation (of which approximately 12% was base salary and 11% service-based restricted stock awards).
Base Salary
The base salaries of our executives are designed to compensate them for services rendered during the fiscal year and, consistent with our pay for performance philosophy, executives receive a significant portion of their overall targeted compensation in a form other than a fixed base salary. Although the Company does not generally benchmark against any particular percentile of base salaries of comparable executives within the Companys peer group, we set salaries that are competitive in the gaming industry so that the Company can attract and retain high-performing executives with experience in the gaming industry. In addition, we recognize that it is critical that executives have the experience necessary to identify and resolve the complex tax, accounting and legal issues inherent in the type of transactions engaged in by the Company. Base salaries are then further adjusted for certain qualitative factors, including: specific position duties and responsibilities; tenure with the Company; individual contributions; value to the Company; and the overall reasonableness of an executives compensation.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 31 |
Set forth below are the 2018 base salaries for each of the NEOs.
Executive |
2018 Salary |
Change | ||||
Chairman, Chief Executive Officer and President |
$ |
1,808,468 |
|
No Change Since 2012 | ||
Senior Vice President, Corporate Development and Interim Chief Financial Officer |
$ | 569,841 |
9.6% change in 2018 with Interim CFO position | |||
Senior Vice President, General Counsel and Secretary |
$ |
425,000 |
|
No Change Since 2015 | ||
Senior Vice President and Chief Accounting Officer |
$ |
400,000 |
|
No Change Since 2015 | ||
Former Senior Vice President, Chief Financial Officer and Treasurer |
$ |
1,166,990 |
|
No Change Since 2012 |
Annual Performance Cash Awards
For 2018, the Committee continued the performance-based annual cash incentive bonus program designed to motivate the executive officers and other members of the management team to achieve certain Company growth objectives that we believe were most likely to increase shareholder value. The program was based on the achievement of a number of specific performance criteria focused on the Companys annual strategic goals and business plan. For 2018, the annual cash bonus for each NEO was comprised of four components:
Performance Metric |
Weighting | Rationale for Inclusion | ||||
AFFO Growth |
|
40 |
% |
Motivates management to responsibly deploy capital and focus on profitability | ||
Dividend Growth |
|
20 |
% |
Encourages management to focus on the payout to shareholders | ||
Acquisition Growth |
|
30 |
% |
Motivates management to grow the Companys asset portfolio through accretive acquisitions | ||
Subjective/Individual |
|
10 |
% |
Recognition of individual success |
With respect to the AFFO and dividend components, a cash bonus could have been earned at three different achievement levels: Threshold; Target; and Maximum. The acquisition goal was measured on a scale of 0-100% with annual target being the maximum and zero being the minimum. The achievement levels established by the Committee for 2018 are set forth below.
Component |
Threshold | Target | Maximum | |||
AFFO Growth |
Annual AFFO per share of $3.10
|
Annual AFFO per share of $3.13
|
Annual AFFO per share of $3.20
| |||
Dividend Growth |
No Payout Below Target |
Fourth quarter dividend per share of $0.63
|
Fourth quarter dividend per share of $0.65
| |||
Acquisition Growth |
Payout determined based on the percentage of maximum target achieved
|
Annual effect on AFFO per share $0.13
|
In 2018, the Company achieved annual AFFO of $3.48 per share (annualized for the impact of the transaction to acquire certain real property assets from Tropicana Entertainment Inc. (the Tropicana Transaction) and the transactions related to the Penn/Pinnacle merger that closed during the fourth quarter of 2018) and paid $0.68 per share in fourth quarter dividends. The NEOs were also awarded the maximum discretionary bonus primarily as a result of successfully (i) closing the Tropicana Transaction and entry into a new master lease and mortgage loan with Eldorado, (ii) closing the transactions related to the merger of Pinnacle into Penn that resulted in the acquisition of Plainridge Park Casino and the entry into a new master lease and mortgage loan with Boyd and (iii) obtaining financing for the transactions at attractive rates and in a manner that extended the Companys debt maturities. The Tropicana Transaction and the transactions in connection from the Penn/Pinnacle merger also resulted in maximum bonus payment earned for the acquisition growth component. As a result, the cash bonus paid to the NEOs for 2018 was 100% of the maximum.
32 | | | Gaming & Leisure Properties Inc. |
We set the ranges of bonuses payable pursuant to the cash bonus measure for each NEO as a percentage of annual base salary, as set forth below. In order to help manage total potential compensation payouts, annual cash bonus opportunities are capped at a maximum bonus level, regardless of the extent to which performance exceeds targeted levels.
Executive
|
Threshold
|
Target
|
Maximum
|
|||||||||
Chairman, Chief Executive Officer and President |
50 | % | 100 | % | 200 | % | ||||||
Senior Vice President, Chief Financial Officer and Treasurer* |
50 | % | 100 | % | 200 | % | ||||||
Senior Vice President, Corporate Development |
50 | % | 100 | % | 200 | % | ||||||
Senior Vice President, General Counsel and Secretary |
25 | % | 50 | % | 100 | % | ||||||
Senior Vice President and Chief Accounting Officer |
25 | % | 50 | % | 100 | % |
* | William J. Clifford retired from his position of Senior Vice President, Chief Financial Officer and Treasurer effective May 4, 2018. |
The following table indicates the actual amount paid to each NEO as a percentage of annual base salary for 2018 for the annual performance cash awards described above:
Executive
|
Actual Bonus Percent of
|
Actual Payment ($)
|
||||||
Chairman, Chief Executive Officer and President |
|
200 |
% |
|
3,616,934 |
| ||
Senior Vice President, Corporate Development and Interim Chief Financial Officer |
|
200 |
% |
|
1,139,682 |
| ||
Senior Vice President, General Counsel and Secretary |
|
100 |
% |
|
425,000 |
| ||
Senior Vice President and Chief Accounting Officer |
|
100 |
% |
|
400,000 |
|
* | William J. Clifford retired from his position of Senior Vice President, Chief Financial Officer and Treasurer effective May 4, 2018 and did not receive a bonus for 2018. |
Long-Term Performance-Based Equity Awards
While the annual cash bonus program was designed to incentivize the Companys management team to achieve specific near-term internal Company growth goals, the long-term performance equity award program was designed to focus management on the Companys long-term performance in relation to the broader REIT indices. We believe that a high degree of equity compensation motivates executives to increase the long-term value of the Company by aligning a significant portion of their total compensation with the interests of the Companys shareholders. We also believe that equity compensation is a critical tool in attracting and retaining executives with the type of entrepreneurial spirit that we believe is integral to the Companys success.
The Committee believes that the long-term performance-based equity award program has been effective in focusing management on the Companys long-term performance in relation to its peer group and provides an effective balance against the short-term Company growth goals reflected in the cash bonus program. Awards have three-year cliff vesting with the amount of restricted shares vested at the end of the three-year period determined based on the Companys performance during such period measured against its peers. More specifically, for awards issued after January 1, 2017, the percentage of shares vesting at the end of the measurement period are based on the Companys three-year total shareholder return ranking among the three-year return of the companies included in the MSCI US REIT index and in the triple-net REIT group set forth below, in equal amounts.
The triple-net measurement group includes publicly traded REITs deriving at least 75% of revenues from triple-net leases:
Triple-Net REITs(1) | ||
Agree Realty Corporation
|
Omega Healthcare Investors
| |
Alexandria Real Estate Equities
|
One Liberty Properties
| |
EPR Properties
|
Realty Income Corporation
| |
Four Corners Property Trust
|
Seritage Growth Properties
| |
Getty Realty
|
Select Income REIT
| |
Gladstone Commercial Corporation
|
Spirit Realty Capital
| |
Global Net Lease
|
STAG Industrial Group
| |
Lexington Realty Trust
|
STORE Capital Corporation
| |
LTC Properties
|
Uniti Group, Inc.
| |
MGM Growth Properties
|
W. P. Carey Inc.
| |
National Retail Properties
|
VEREIT
|
(1) | Gramercy Property Trust and Select Income REIT were acquired in 2018 and subsequently removed from the 2018 measurement group. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 33 |
The vesting schedule provides for target vesting at the 50th percentile, threshold at the 25th percentile and maximum at the 75th percentile, with linear vesting in between achievement levels. Vesting is capped at target if TSR for the measurement period is negative over the three-year performance period.
The performance hurdles and levels of opportunity for performance-based restricted stock awards granted in 2018 are set forth below.
Level
|
Relative TSR Hurdles (%)
|
Payout
|
||||
Below Threshold
|
< 25th percentile
|
|
0
|
%
| ||
Threshold
|
25th percentile
|
|
50
|
%
| ||
Target
|
50th percentile
|
|
100
|
%
| ||
Maximum
|
75th percentile
|
|
200
|
%
|
The following table sets forth the target number of performance-based awards granted to each NEO in 2018.
Executive
|
Target Performance- Based Equity Awards
|
|||
Chairman, Chief Executive Officer and President
|
|
110,000
|
| |
Senior Vice President, Corporate Development and Interim Chief Financial Officer
|
|
35,000
|
| |
Senior Vice President, General Counsel and Secretary
|
|
25,000
|
| |
Senior Vice President and Chief Accounting Officer
|
|
25,000
|
| |
Former Senior Vice President, Chief Financial Officer and Treasurer*
|
|
55,000
|
|
* | William J. Clifford retired from his position of Senior Vice President, Chief Financial Officer and Treasurer effective May 4, 2018 and all outstanding awards were relinquished. |
The performance awards granted in January 2016 were earned as of December 31, 2018 above the 80th percentile as a result of the Companys relative TSR ranking compared to the MSCI US REIT index for the measurement period.
We believe that this long-term performance-based equity incentive program complements the annual cash incentive program by providing the appropriate balance between performance-based cash and performance-based equity awards.
Long-Term Service-Based Equity Awards
In addition to the long-term performance-based equity awards, we established a service-based retention equity award program for 2018. A significant amount of each NEOs compensation is tied to performance and we recognize that there is also a need for an additional retention component of our compensation structure. Therefore, we believe that service-based awards serve as a critical retention tool, recognizing that while the vesting of such awards is unrelated to performance, the value is directly correlated with the Companys share price. Awards vest at a rate of 33.33% per year and are generally subject to continued employment.
The number of shares of restricted stock awarded to each NEO for 2018 was as follows:
Executive
|
Number of Shares
|
|||
Chairman, Chief Executive Officer and President
|
|
55,000
|
| |
Senior Vice President, Corporate Development and Interim Chief Financial Officer
|
|
17,500
|
| |
Senior Vice President, General Counsel and Secretary
|
|
12,500
|
| |
Senior Vice President and Chief Accounting Officer
|
|
12,500
|
| |
Former Senior Vice President, Chief Financial Officer and Treasurer
|
|
27,500
|
|
* | William J. Clifford retired from his position of Senior Vice President, Chief Financial Officer and Treasurer effective May 4, 2018 and all outstanding awards were relinquished. |
34 | | | Gaming & Leisure Properties Inc. |
Overview of Compensation Program for 2019
In establishing the compensation program for 2019, the Committee began with a review of compensation earned by executives in 2018 measured against the Companys achievements in 2018. We believe that the compensation program for the Companys NEOs in 2018 continued to provide the right balance between performance-based and fixed compensation to properly align the interests of management with shareholders without encouraging undue financial risks. Consequently, for 2019, the Committee decided to continue the overall compensation program with only the following modifications, which do not include any changes for our CEO:
Compensation Component |
Change | Reason | ||
Base Salary |
Senior Vice President and Chief Financial Officer was increased 9.6%
No increases for other NEOs
|
Salary was increased to reflect increased responsibilities as the Companys principal financial officer | ||
Cash Bonus Program |
The performance metric for acquisition growth utilized in previous years was removed and allocated evenly among AFFO Growth*, Dividend Growth and Discretionary
Bonus targets for the Senior Vice President, General Counsel & Secretary and the Senior Vice President and Chief Accounting Officer were increased to Threshold at 37.5%, Target at 75% and Maximum at 150%
No changes for other NEOs
|
(1) Aligns with the Companys current business plan and strategic priorities
(2) Simplified AFFO performance into one aggregate measure
Bonus opportunities were adjusted to better align the named executives with their peers | ||
Performance-Based Equity Awards |
Target award for the Senior Vice President and Chief Financial Officer was increased by 5,000 shares (with no change in the vesting criteria)
|
Award was increased to reflect increased responsibilities as the Companys principal financial officer | ||
Service-Based Equity Awards |
Awards were increased by 2,500 shares for each the (1) Senior Vice President and Chief Financial Officer; (2) Senior Vice President, General Counsel & Secretary; and (3) Senior Vice President and Chief Accounting Officer (with no change in the vesting criteria)
|
Award amounts were increased to better align the named executives with their peers and in light of each individuals strong performance |
* | With respect to the AFFO Growth component, the Committee retained the discretion to recognize all or a portion of the AFFO accretion not recognized in 2018 that is the result of the Tropicana transaction and the transactions closed in connection with the Penn/Pinnacle merger if it determines such recognition is warranted at the end of 2019. Under no circumstances will bonus payments for 2019 exceed the maximum payment levels. |
Deferred Compensation
The Company does not maintain any defined benefit pension programs for its executives. The Company maintains an elective non-qualified deferred compensation plan for executives. Pursuant to the plan, the Companys contributions under the plan are equal to 50% of the participants deferral for the first 10% of the salary and/or bonus deferred, subject to a maximum annual Company contribution equal to 5% of the participants salary and/or bonus. All amounts credited to an executives account are notionally invested, as directed by the executive, in commonly available mutual funds, and the Company does not guarantee any minimum returns. The plan is unfunded and benefits are paid from the Companys general assets. However, the Company currently contributes funds into a grantor trust on a monthly basis in respect of these deferred compensation obligations. The Company generally sets aside separately the amounts deferred by the executives and the matching contributions thereon and, to protect against excess liabilities, invests such amounts in the mutual funds notionally selected by each executive. The deferred compensation program is described in more detail under the heading 2018 Nonqualified Deferred Compensation of this Proxy Statement.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 35 |
Benefits and Perquisites
We believe that executives should be offered customary benefits and perquisites that are reasonable relative to the benefits provided to all employees, are consistent with competitive practices among the Companys peer group and, in certain circumstances, may address a particular reasonable issue or concern of an executive. The standard benefits offered to all of the Companys employees include medical, dental and vision insurance, group life insurance, short and long-term disability and a 401(k) with certain contributions matched by the Company (50% of employee contributions, subject to applicable contribution limits). Consistent with the objectives described above, the Company also provides certain executive officers with additional supplemental benefits and perquisites, including in limited instances, use of the Companys private aircraft where individual circumstances merit. The description and value of such supplemental benefits and perquisites in 2018 can be found on the All Other Compensation Table of this Proxy Statement.
None of the NEOs has an employment agreement with the Company.
Other Compensation-Related Policies
Stock Ownership Guidelines
The Compensation Committee believes that it is important for executive officers and non-employee directors to have a financial stake in the Company such that their interests are more closely aligned with those of the Companys shareholders. Accordingly, the Committee has established stock ownership guidelines for our NEOs and non-employee directors. Each executive and non-employee director is expected to acquire, and continue to hold during the term of his or her employment, equity with a value equal to the multiple of his or her annual base salary/cash retainer as indicated below. These guidelines must be satisfied within five years of the date of adoption of these guidelines, or the fifth anniversary of the executive officers or non-employee directors appointment, whichever is later.
Title |
Multiple | |
Non-Employee Directors |
5x Annual Cash Retainer | |
Chairman, Chief Executive Officer and President |
5x Base Salary | |
Senior Vice President, Chief Financial Officer |
3x Base Salary | |
Senior Vice President and Chief Accounting Officer |
2x Base Salary | |
Senior Vice President, General Counsel and Secretary |
2x Base Salary |
As of April 5, 2019, all of the NEOs and non-employee directors were in compliance with the ownership guidelines set forth above.
Hedging and Pledging Policy. We believe that equity ownership fosters an atmosphere where directors and officers think like owners and are motivated to increase the long-term value of the Company by aligning their interests with those of the Companys shareholders. Accordingly, we have adopted policies generally restricting each of the Companys directors and executive officers from engaging in hedging transactions or pledging Company shares.
Compensation Clawback Policy. The Company has a commitment to ensure that its executive officers adhere to the highest professional and personal standards. Accordingly, the Companys policy is that misconduct by any executive officer that leads to a restatement of the Companys financial results could subject executive officers to disgorge prior compensation to the extent such compensation would not have been earned based on the restated financial statements. In light of the highly regulated nature of the Companys business, the Committee would likely pursue such remedy, among others, where appropriate based on the facts and circumstances surrounding the restatement and existing laws.
Statutory and Regulatory Considerations. In designing the Companys compensatory programs, we consider the various tax, accounting and disclosure rules associated with various forms of compensation. We also review and consider the deductibility of executive compensation under Section 162(m) (Section 162(m)) of the Internal Revenue Code of 1986, as amended (the Code). The Tax Cuts and Jobs Act, enacted in December 2017, amended certain aspects of Section 162(m) specifically affecting the exclusion of performance-based compensation from the $1 million limit or deductions for executive compensation in future years. For 2018, we considered the implications and exemptions to such limitation. We seek to preserve the Companys tax deductions for executive compensation to the extent consistent with the Companys executive compensation objectives. However, we may also from time to time consider and grant compensation that may not be tax deductible if we believe such compensation is warranted to achieve the Companys objectives.
36 | | | Gaming & Leisure Properties Inc. |
We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on our review and discussion with management, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and, by reference, in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
Compensation Committee |
David A. Handler, Chair James B. Perry E. Scott Urdang |
The foregoing report of the Compensation Committee does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 37 |
The following table sets forth information concerning the compensation earned during the fiscal years ended December 31, 2018, 2017 and 2016 by the Companys NEOs:
Name and Principal Position |
Year |
Salary ($) |
Stock Awards Time-Based ($)(1) |
Stock Awards ($)(2) |
Non-Equity Incentive Plan Compensation ($)(3) |
All Other Compensation ($)(4) |
Total ($) | |||||||||||||||||||||
Peter M. Carlino Chairman, Chief Executive Officer and President
|
|
2018 |
|
|
1,808,468 |
|
|
2,035,000 |
|
|
4,540,800 |
|
|
3,616,934 |
|
|
447,035 |
|
|
12,448,237 |
| |||||||
2017 | 1,808,468 | 1,684,100 | 3,947,900 | 3,194,958 | 416,764 | 11,052,190 | ||||||||||||||||||||||
|
2016
|
|
|
1,808,468
|
|
|
1,529,000
|
|
|
3,788,400
|
|
|
2,531,854
|
|
|
2,353,353
|
|
|
12,011,075
|
| ||||||||
William J. Clifford(5) Former Senior Vice President, Chief Financial Officer and Treasurer
|
|
2018 |
|
|
866,266 |
|
|
1,017,500 |
|
|
2,270,400 |
|
|
|
|
|
4,365,715 |
|
|
8,519,881 |
| |||||||
2017 | 1,166,990 | 842,050 | 1,973,950 | 2,061,682 | 157,630 | 6,202,302 | ||||||||||||||||||||||
|
2016
|
|
|
1,166,990
|
|
|
764,500
|
|
|
1,894,200
|
|
|
1,633,786
|
|
|
594,436
|
|
|
6,053,912
|
| ||||||||
Steven T. Snyder Senior Vice President, Corporate Development and Interim Chief Financial Officer
|
|
2018 |
|
|
537,149 |
|
|
647,500 |
|
|
1,444,800 |
|
|
1,139,682 |
|
|
85,070 |
|
|
3,854,201 |
| |||||||
2017 | 519,841 | 535,850 | 1,256,150 | 918,386 | 74,036 | 3,304,263 | ||||||||||||||||||||||
|
2016
|
|
|
519,841
|
|
|
486,500
|
|
|
1,205,400
|
|
|
727,777
|
|
|
628,628
|
|
|
3,568,146
|
| ||||||||
Brandon J. Moore Senior Vice President, General Counsel and Secretary
|
|
2018 |
|
|
425,000 |
|
|
462,500 |
|
|
1,032,000 |
|
|
425,000 |
|
|
36,135 |
|
|
2,380,635 |
| |||||||
2017 | 425,000 | 382,750 | 897,250 | 375,417 | 23,462 | 2,103,879 | ||||||||||||||||||||||
|
2016
|
|
|
425,000
|
|
|
347,500
|
|
|
861,000
|
|
|
297,500
|
|
|
29,812
|
|
|
1,960,812
|
| ||||||||
Desiree A. Burke Senior Vice President and Chief Accounting Officer
|
|
2018 |
|
|
400,000 |
|
|
462,500 |
|
|
1,032,000 |
|
|
400,000 |
|
|
43,167 |
|
|
2,337,667 |
| |||||||
2017 | 400,000 | 382,750 | 897,250 | 353,333 | 39,400 | 2,072,733 | ||||||||||||||||||||||
|
2016
|
|
|
400,000
|
|
|
347,500
|
|
|
861,000
|
|
|
280,000
|
|
|
153,167
|
|
|
2,041,667
|
|
(1) | The amounts reflect the full grant date fair value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation Stock Compensation (ASC 718). The assumptions used in calculating these amounts are described in footnote 3 to the Companys Annual Report on Form 10-K for the year ended December 31, 2018. Included in stock awards reported each year are restricted stock awards granted each year, relating to the Companys long-term fixed equity award grant. For more information on the Companys long-term fixed equity awards, see the Overview of 2018 Compensation section of the Compensation Discussion and Analysis included in this Proxy Statement. |
(2) | The amounts reflect the full grant date fair value calculated in accordance with ASC 718. The assumptions used in calculating these amounts are described in footnote 3 to the Companys Annual Report on Form 10-K for the year ended December 31, 2018. Included in stock awards reported each year are performance-based restricted stock awards granted each year, relating to the Companys long-term performance-based equity award grant. For more information on the Companys long-term performance-based equity awards, see the Overview of 2018 Compensation section of the Compensation Discussion and Analysis included in this Proxy Statement. The following table discloses the aggregate grant date fair value of the award, assuming maximum level of achievement, but does not estimate dividends: |
Year |
Peter M. Carlino | William J. Clifford | Steven T. Snyder | Brandon J. Moore | Desiree A. Burke | |||||||||||||||
2018 |
$ |
8,140,000 |
|
$ |
4,070,000 |
|
$ |
2,590,000 |
|
$ |
1,850,000 |
|
$ |
1,850,000 |
| |||||
2017 |
$ |
6,736,400 |
|
$ |
3,368,200 |
|
$ |
2,143,400 |
|
$ |
1,531,000 |
|
$ |
1,531,000 |
| |||||
2016 |
$ |
6,116,000 |
|
$ |
3,058,000 |
|
$ |
1,946,000 |
|
$ |
1,390,000 |
|
$ |
1,390,000 |
|
(3) | The amounts reported each year reflect annual performance cash awards earned for each period and paid in the subsequent period. For more information on the Companys annual performance cash awards, see the Compensation Discussion and Analysis included in this Proxy Statement. |
(4) | See All Other Compensation Table included in this Proxy Statement for more information. |
(5) | Mr. Clifford retired from the company on May 4, 2018 and was employed by the Company as a Senior Advisor until August 31, 2018. In accordance with Mr. Cliffords retirement agreement any outstanding equity awards were forfeited. |
38 | | | Gaming & Leisure Properties Inc. |
The following table describes each component of the All Other Compensation column of the Summary Compensation Table:
|
|
Company
|
Company
|
Company
|
Company
|
Perquisites |
||||||||||||||||||||||||||||||
Name
|
Year
|
Personal
|
Personal
|
Other
|
Total ($)
|
|||||||||||||||||||||||||||||||
Peter M. Carlino |
2018 | 250,171 | 5,500 | | | 7,424 | 179,928 | 4,012 | 447,035 | |||||||||||||||||||||||||||
2017 | 217,016 | 5,400 | | | 3,692 | 186,966 | 3,690 | 416,764 | ||||||||||||||||||||||||||||
|
2016
|
|
|
254,411
|
|
|
5,300
|
|
|
1,894,119
|
|
|
|
|
|
4,439
|
|
|
190,854
|
|
|
4,230
|
|
|
2,353,353
|
| ||||||||||
William J. Clifford |
2018 | 146,397 | 5,500 | | | | | 4,213,818 | 4,365,715 | |||||||||||||||||||||||||||
2017 | 140,039 | 5,400 | | | 7,214 | 4,977 | 157,630 | |||||||||||||||||||||||||||||
|
2016
|
|
|
164,221
|
|
|
5,300
|
|
|
403,077
|
|
|
|
|
|
|
|
|
21,838
|
|
|
|
|
|
594,436
|
| ||||||||||
Steven T. Snyder |
2018 | 73,315 | 5,500 | | 6,255 | | | | 85,070 | |||||||||||||||||||||||||||
2017 | 62,381 | 5,400 | | 6,255 | | | | 74,036 | ||||||||||||||||||||||||||||
|
2016
|
|
|
73,242
|
|
|
5,300
|
|
|
543,831
|
|
|
6,255
|
|
|
|
|
|
|
|
|
|
|
|
628,628
|
| ||||||||||
Brandon J. Moore |
2018 | 30,635 | 5,500 | | | | | | 36,135 | |||||||||||||||||||||||||||
2017 | 18,062 | 5,400 | | | | | | 23,462 | ||||||||||||||||||||||||||||
|
2016
|
|
|
17,210
|
|
|
5,300
|
|
|
7,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,812
|
| ||||||||||
Desiree A. Burke |
2018 | 37,667 | 5,500 | | | | | | 43,167 | |||||||||||||||||||||||||||
2017 | 34,000 | 5,400 | | | | | | 39,400 | ||||||||||||||||||||||||||||
|
2016
|
|
|
36,857
|
|
|
5,300
|
|
|
111,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,167
|
|
(1) | This column reports the Companys matching contributions under the Companys Deferred Compensation Plan. |
(2) | This column reports the Companys contributions to the NEOs 401(k) savings accounts. |
(3) | In connection with the Spin-Off transaction, this column reports dividends paid to the NEOs on vested stock options converted from Penn stock options as of the time of the Spin-Off. The final dividend payment was made on September 23, 2016. |
(4) | This column reports life insurance policy premiums paid by the Company on behalf of Mr. Snyder. |
(5) | The amount allocated for personal use of a company vehicle is calculated based upon the lease value of the vehicle and an estimate of personal usage provided by the executive. |
(6) | The amount allocated for personal aircraft usage is calculated based on the incremental cost to the Company for fuel, landing fees and other variable costs of operating the airplane. Since the Companys aircrafts are used for business travel, the Company does not include fixed costs that do not change based on usage, such as pilots salaries, depreciation of the purchase cost of the aircraft and the cost of general maintenance. |
(7) | This column reports the Companys payment of Country Club Memberships for Mr. Carlino and companys payment of $3,418 in commuting costs for Mr. Clifford prior to his retirement along with a payment of $4,210,400 in accordance with his retirement agreement. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 39 |
2018 Grants of Plan-Based Awards
The following table sets forth certain information regarding grants of plan-based awards to the NEOs in 2018:
Estimated future
payouts
|
All Other Stock Awards
|
|||||||||||||||||||||||||||||||
Name |
Grant Date |
Grant Board Approval Date |
Threshold (#)(2) |
Target (#)(2) |
Maximum (#)(2) |
Number of Securities Underlying Stock (#)(3) |
Grant Date Fair Value of Stock ($)(4) |
|||||||||||||||||||||||||
Peter M. Carlino |
||||||||||||||||||||||||||||||||
Long-Term Fixed Equity Awards |
1/2/2018 | 12/18/2017 | 55,000 | 2,035,000 | ||||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards MSCI US REIT Index |
1/2/2018 | 12/18/2017 | 0 | 55,000 | 110,000 | 2,315,500 | ||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards Triple-Net REIT Group
|
|
1/2/2018 |
|
|
12/18/2017 |
|
|
0 |
|
|
55,000 |
|
|
110,000 |
|
|
2,225,300 |
| ||||||||||||||
William J. Clifford(1) |
||||||||||||||||||||||||||||||||
Long-Term Fixed Equity Awards |
1/2/2018 | 12/18/2017 | 27,500 | 1,017,500 | ||||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards MSCI US REIT Index |
1/2/2018 | 12/18/2017 | 0 | 27,500 | 55,000 | 1,157,750 | ||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards Triple-Net REIT Group
|
|
1/2/2018 |
|
|
12/18/2017 |
|
|
0 |
|
|
27,500 |
|
|
55,000 |
|
|
1,112,650 |
| ||||||||||||||
Steven T. Snyder |
||||||||||||||||||||||||||||||||
Long-Term Fixed Equity Awards |
1/2/2018 | 12/18/2017 | 17,500 | 647,500 | ||||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards MSCI US REIT Index |
1/2/2018 | 12/18/2017 | 0 | 17,500 | 35,000 | 736,750 | ||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards Triple-Net REIT Group
|
|
1/2/2018 |
|
|
12/18/2017 |
|
|
0 |
|
|
17,500 |
|
|
35,000 |
|
|
708,050 |
| ||||||||||||||
Brandon J. Moore |
||||||||||||||||||||||||||||||||
Long-Term Fixed Equity Awards |
1/2/2018 | 12/18/2017 | 12,500 | 462,500 | ||||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards MSCI US REIT Index |
1/2/2018 | 12/18/2017 | 0 | 12,500 | 25,000 | 526,250 | ||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards Triple-Net REIT Group
|
|
1/2/2018 |
|
|
12/18/2017 |
|
|
0 |
|
|
12,500 |
|
|
25,000 |
|
|
505,750 |
| ||||||||||||||
Desiree A. Burke |
||||||||||||||||||||||||||||||||
Long-Term Fixed Equity Awards |
1/2/2018 | 12/18/2017 | 12,500 | 462,500 | ||||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards MSCI US REIT Index |
1/2/2018 | 12/18/2017 | 0 | 12,500 | 25,000 | 526,250 | ||||||||||||||||||||||||||
Long-Term Performance Based Equity Awards Triple-Net REIT Group
|
|
1/2/2018 |
|
|
12/18/2017 |
|
|
0 |
|
|
12,500 |
|
|
25,000 |
|
|
505,750 |
|
(1) | In accordance with Mr. Cliffords retirement agreement all 2018 grants were canceled. |
(2) | Awards represent performance-based restricted stock with cliff vesting at the end of the performance period beginning on January 2, 2018 and ending on December 31, 2020. The amount of restricted shares vested at the end of the performance period can range from zero to a maximum of 200% of target, depending on the level of achievement of the performance goals measured against the return of the companies included in the MSCI US REIT Index or in the triple-net REIT group set forth by the Company over the measurement period. In the event of a change-of-control, awards vest immediately at target level or, if greater, the actual level of achievement as of the date of the change-of-control. For more information on the Companys performance-based equity awards, see the Overview of 2018 Compensation section of the Compensation Discussion and Analysis included in this Proxy Statement. |
(3) | Awards represent restricted stock awards granted to the NEOs as part of their annual compensation. All grants have vesting over three years, 33.33% on the first anniversary of the date of grant and 33.33% on each succeeding anniversary. In the event of a change-of-control, awards vest immediately. |
(4) | Represents the full grant date fair value of awards under ASC 718. Generally, the full grant date fair value is the amount the Company would expense in its financial statements over the awards vesting period. The Company utilized a third party valuation firm to measure the fair value of the performance-based restricted stock awards at grant date using the Monte Carlo model. Additional information regarding the calculation of the grant date fair value is included in footnote 3 to the Companys audited financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2018. |
40 | | | Gaming & Leisure Properties Inc. |
Outstanding 2018 Equity Awards at Fiscal Year-End
The following table sets forth information concerning equity awards outstanding as of December 31, 2018 and which have been reported in the appropriate period in the Summary Compensation Table when granted:
Stock Awards
|
Performance Awards
|
|||||||||||||||||||||||||||
Name(1) |
Stock Award Grant Date |
Number of Shares or Units Held that Have Not Vested (#)(4) |
Market Held that Vested |
Number of Unearned Shares or Units Held that Have Not Vested (#)(6) |
Market Have Not |
|||||||||||||||||||||||
Peter M. Carlino |
1/4/2016 | 18,333 | 592,339 | |||||||||||||||||||||||||
1/4/2016 | (2) | 220,000 | 8,734,000 | |||||||||||||||||||||||||
1/3/2017 | 36,666 | 1,184,678 | ||||||||||||||||||||||||||
1/3/2017 | (2) | 110,000 | 4,111,800 | |||||||||||||||||||||||||
1/3/2017 | (3) | 110,000 | 4,111,800 | |||||||||||||||||||||||||
1/2/2018 | 55,000 | 1,777,050 | ||||||||||||||||||||||||||
1/2/2018 | (2) | 110,000 | 3,836,800 | |||||||||||||||||||||||||
|
1/2/2018
|
(3)
|
|
27,500
|
|
|
959,200
|
|
||||||||||||||||||||
Steven T. Snyder |
1/4/2016 | 5,833 | 188,464 | |||||||||||||||||||||||||
1/4/2016 | (2) | 70,000 | 2,779,000 | |||||||||||||||||||||||||
1/3/2017 | 11,666 | 376,928 | ||||||||||||||||||||||||||
1/3/2017 | (2) | 35,000 | 1,308,300 | |||||||||||||||||||||||||
1/3/2017 | (3) | 35,000 | 1,308,300 | |||||||||||||||||||||||||
1/2/2018 | 17,500 | 565,425 | ||||||||||||||||||||||||||
1/2/2018 | (2) | 35,000 | 1,220,800 | |||||||||||||||||||||||||
|
1/2/2018
|
(3)
|
|
8,750
|
|
|
305,201
|
|
||||||||||||||||||||
Brandon J. Moore |
1/4/2016 | 4,166 | 134,603 | |||||||||||||||||||||||||
1/4/2016 | (2) | 50,000 | 1,985,000 | |||||||||||||||||||||||||
1/3/2017 | 8,333 | 269,239 | ||||||||||||||||||||||||||
1/3/2017 | (2) | 25,000 | 934,500 | |||||||||||||||||||||||||
1/3/2017 | (3) | 25,000 | 934,500 | |||||||||||||||||||||||||
1/2/2018 | 12,500 | 403,875 | ||||||||||||||||||||||||||
1/2/2018 | (2) | 25,000 | 872,000 | |||||||||||||||||||||||||
|
1/2/2018
|
(3)
|
|
6,250
|
|
|
218,001
|
|
||||||||||||||||||||
Desiree A. Burke |
1/4/2016 | 4,166 | 134,603 | |||||||||||||||||||||||||
1/4/2016 | (2) | 50,000 | 1,985,000 | |||||||||||||||||||||||||
1/3/2017 | 8,333 | 269,239 | ||||||||||||||||||||||||||
1/3/2017 | (2) | 25,000 | 934,500 | |||||||||||||||||||||||||
1/3/2017 | (3) | 25,000 | 934,500 | |||||||||||||||||||||||||
1/2/2018 | 12,500 | 403,875 | ||||||||||||||||||||||||||
1/2/2018 | (2) | 25,000 | 872,000 | |||||||||||||||||||||||||
|
1/2/2018
|
(3)
|
|
6,250
|
|
|
218,001
|
|
(1) | As of December 31, 2018, Mr. Clifford did not have any outstanding awards. |
(2) | Performance-based equity awards based on the Companys performance ranking among the US MSCI REIT Index. |
(3) | Performance-based equity awards based on the Companys performance ranking among the triple-net REIT peers. |
(4) | Represents restricted stock awards with forfeiture provisions that lapse 33.33% on each of the first, second, and third anniversary of the date of grant. In the event of a change-of-control, the forfeiture restrictions on restricted stock lapse immediately. |
(5) | Calculated based on the Companys common stock closing price of $32.31 on December 31, 2018, which was the last trading day of 2018. |
(6) | The amount of restricted stock to actually vest at the end of the performance period can range from zero to the maximum as described in the long-term performance-based equity awards section of the Overview of 2018 Compensation section of the Compensation Discussion and Analysis included in this Proxy Statement. The forfeiture provisions on the performance-based restricted stock awards granted lapse at the end of their three-year measurement period. In the event of a change-of-control, awards vest immediately at target level or, if greater, the actual level of achievement as of the date of the change-of-control, annualized for the entire performance period. As of December 31, 2018, all grants are disclosed at maximum except the triple-net REIT award on January 2, 2018, which is at threshold. |
(7) | Calculated based on the Companys common stock closing price of $32.31 on December 31, 2018, which was the last trading day of 2018 plus dividends paid during the applicable performance period as of December 31, 2018. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 41 |
2018 Option Exercises and Stock Vested
The following table sets forth information concerning options exercised and restricted stock awards vested during fiscal 2018:
Option Awards(1) | Stock Awards | |||||||||||||||||||
Name |
Number of Shares Acquired on Exercise (#)
|
Value Realized on Exercise ($)(2)
|
Number of Shares Acquired on Vesting (#)(3)
|
Value Realized on Vesting ($)(3)
|
||||||||||||||||
Peter M. Carlino |
252,369 | 5,177,350 | 316,974 | 11,594,769 | ||||||||||||||||
William J. Clifford |
150,000 | 3,259,196 | 158,487 | 5,797,384 | ||||||||||||||||
Steven T. Snyder |
50,000 | 990,600 | 100,856 | 3,689,268 | ||||||||||||||||
Brandon J. Moore |
| | 59,299 | 2,168,940 | ||||||||||||||||
Desiree A. Burke |
| | 72,040 | 2,635,191 |
(1) | All options exercised are Penn options granted prior to the spin-off, there are no remaining options outstanding. |
(2) | Value realized reflects the difference between the per-share closing price of the Companys common stock on the date of exercise and the options exercise price for options, not the grant date fair value disclosed elsewhere in this Proxy Statement. |
(3) | Includes performance share dividends, which are paid at vesting in Company common stock. The value realized for vested shares is the closing price of the Companys common stock on the day prior to vesting for awards, not the grant date fair value disclosed elsewhere in this Proxy Statement. |
42 | | | Gaming & Leisure Properties Inc. |
Potential Payments Upon Termination or Change-of-Control
The NEOs are entitled to accelerated vesting of equity-based incentive awards under the Plan upon a change-of-control and, under certain circumstances, in the event of termination. The information below describes and quantifies compensation that would become payable and that which is accelerated assuming that such termination was effective December 31, 2018. The Plan was amended in 2018 to provide for double trigger acceleration of awards in the event of a change of control for all awards granted after April 1, 2018.
Executive Payments |
Termination without Cause by Company ($)(3) |
Termination Upon Death ($)(4) |
Termination upon Disability ($)(4) |
Change-of- Control ($)(5) |
Change-of- Control Termination without Cause ($)(5) |
Retirement ($) |
||||||||||||||||||
Peter M. Carlino |
||||||||||||||||||||||||
Cash Severance Benefit(1) |
2,712,702 | 2,712,702 | 2,712,702 | | 2,712,702 | | ||||||||||||||||||
Restricted Shares(2) |
| 3,554,067 | 3,554,067 | 3,554,067 | 3,554,067 | | ||||||||||||||||||
Performance-Based Restricted Shares(6) |
14,380,312 | 18,477,285 | 18,477,285 | 20,395,685 | 20,395,685 | | ||||||||||||||||||
Total |
$ | 17,093,014 | $ | 24,744,054 | $ | 24,744,054 | $ | 23,949,752 | $ | 26,662,454 | $ | | ||||||||||||
William J. Clifford |
||||||||||||||||||||||||
Cash Severance Benefit(1) |
| | | | | 8,538,752 | ||||||||||||||||||
Total |
$ | | $ | | $ | | $ | | $ | | $ | 8,538,752 | ||||||||||||
Steven T. Snyder |
||||||||||||||||||||||||
Cash Severance Benefit(1) |
854,762 | 854,762 | 854,762 | | 854,762 | | ||||||||||||||||||
Restricted Shares(2) |
| 1,130,817 | 1,130,817 | 1,130,817 | 1,130,817 | | ||||||||||||||||||
Performance-Based Restricted Shares(6) |
4,575,555 | 5,879,136 | 5,879,136 | 6,489,537 | 6,489,537 | | ||||||||||||||||||
Total |
$ | 5,430,317 | $ | 7,864,715 | $ | 7,864,715 | $ | 7,620,354 | $ | 8,475,116 | $ | | ||||||||||||
Brandon J. Moore |
||||||||||||||||||||||||
Cash Severance Benefit(1) |
433,173 | 433,173 | 433,173 | | 433,173 | | ||||||||||||||||||
Restricted Shares(2) |
| 807,717 | 807,717 | 807,717 | 807,717 | | ||||||||||||||||||
Performance-Based Restricted Shares(6) |
3,268,254 | 4,199,384 | 4,199,384 | 4,635,384 | 4,635,384 | | ||||||||||||||||||
Total |
$ | 3,701,427 | $ | 5,440,274 | $ | 5,440,274 | $ | 5,443,101 | $ | 5,876,274 | $ | | ||||||||||||
Desiree A. Burke |
||||||||||||||||||||||||
Cash Severance Benefit(1) |
600,000 | 600,000 | 600,000 | | 600,000 | | ||||||||||||||||||
Restricted Shares(2) |
| 807,717 | 807,717 | 807,717 | 807,717 | | ||||||||||||||||||
Performance-Based Restricted Shares(6) |
3,268,254 | 4,199,384 | 4,199,384 | 4,635,384 | 4,635,384 | | ||||||||||||||||||
Total |
$ | 3,868,254 | $ | 5,607,101 | $ | 5,607,101 | $ | 5,443,101 | $ | 6,043,101 | $ | | ||||||||||||
(1) | Basis for cash severance benefit is 2018 salary and assumes its an eligible termination as defined under the Companys Executive Change of Control and Severance Plan. The amount reported for Mr. Clifford is the total due as of December 31, 2018 in accordance with his retirement agreement. Payments to Mr. Clifford are subject to his continuing compliance with certain restrictive covenants included in his retirement agreement through February 2020. |
(2) | Restricted stock award values were computed based on the Companys common stock closing price of $32.31, on December 31, 2018, which was the last trading day of 2018. Restrictions on awards will immediately lapse in the event of termination as a result of death, disability or change-of-control. |
(3) | Performance-based restricted stock values, in the event of termination without cause by the Company, were computed based on the Companys total shareholder return as compared to the MSCI US REIT Index and in the triple-net REIT group achieved as of December 31, 2018, shown on the table below, and then multiplied by a fraction, the numerator of which equals the number of days during |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 43 |
such Performance Period that such Award Holder was actively employed by the Company, and the denominator of which equals the total days in the applicable Performance Period if terminated at December 31, 2018. |
Grant |
Performance
at December 31, 2018 |
|||
2016 US MSCI REIT Index |
100 | % | ||
2017 US MSCI REIT Index |
100 | % | ||
2017 Triple-NET REIT peers |
75 | % | ||
2018 US MSCI REIT Index |
66.4 | % | ||
2018 Triple-NET REIT peers |
| % |
(4) | Performance-based restricted stock values, in the event of termination as a result of death or disability, were computed based on the Companys total shareholder return as compared to the MSCI US REIT Index and in the triple-net REIT group achieved as of December 31, 2018, shown on the table below above in footnote 3. The award determined at the end of the applicable Performance Period is as if such Award Holder were still employed at the time of the applicable Performance Period. |
(5) | Performance-based restricted stock values, in the event of change-of-control, were computed based on the Companys total shareholder return as compared to the MSCI US REIT Index and in the triple-net REIT group achieved as of December 31, 2018, which was maximum for awards granted except the triple-net REIT award on January 2, 2018, which is at target, as performance shall be deemed to have been achieved at target level or, if greater, the actual level of achievement as of the date of the change-of-control. |
(6) | All performance-based restricted stock values were computed based on the Companys common stock closing price of $32.31 on December 31, 2018, which was the last trading day of 2018, plus applicable dividends. |
2018 Nonqualified Deferred Compensation
The following table sets forth information concerning nonqualified deferred compensation of the NEOs:
Name
|
Amount Previously Reported ($)
|
Executive Contributions in Last Fiscal Year ($)(1)
|
Company Contributions in Last Fiscal Year ($)(2)
|
Aggregate Earnings in Last Fiscal Year ($)(3)
|
Aggregate Withdrawals/ Distributions ($)
|
Aggregate Balance at Last Fiscal Year End ($)
|
||||||||||||||||||
Peter M. Carlino
|
|
13,438,221
|
|
|
500,343
|
|
|
250,171
|
|
|
(885,079
|
)
|
|
(5,879
|
)
|
|
13,297,777
|
| ||||||
William J. Clifford
|
|
3,886,041
|
|
|
292,795
|
|
|
146,397
|
|
|
(351,781
|
)
|
|
(3,704
|
)
|
|
3,969,748
|
| ||||||
Steven T. Snyder
|
|
2,111,080
|
|
|
146,631
|
|
|
73,315
|
|
|
(209,274
|
)
|
|
(144,096
|
)
|
|
1,977,656
|
| ||||||
Brandon J. Moore
|
|
143,896
|
|
|
61,271
|
|
|
30,635
|
|
|
(20,514
|
)
|
|
(672
|
)
|
|
214,616
|
| ||||||
Desiree A. Burke
|
|
404,716
|
|
|
75,333
|
|
|
37,667
|
|
|
(32,292
|
)
|
|
(885
|
)
|
|
484,539
|
|
(1) | For each NEO, the executives contribution is included in the NEOs salary and/or non-equity executive compensation for 2018, as reported in the Summary Compensation Table. |
(2) | For each NEO, the Companys contribution is included in the NEOs other compensation for 2018, as reported in the Summary Compensation Table. |
(3) | Amounts reflect the change in account value during 2018. No amounts are reported in the Summary Compensation Table because earnings were not above market or preferential. |
Deferred Compensation Plan
Pursuant to the Companys Deferred Compensation Plan, as amended, most management and certain other highly compensated employees selected by the Committee may elect to defer, on a pre-tax basis, a percentage of his or her salary and/or bonus. The minimum amount deferrable is $3,000 and the maximum is 90% of his or her base annual salary and/or bonus. Generally, deferral elections must be made before the beginning of the year in which compensation will be earned. The Companys contributions under the plan are equal to 50% of the participants deferral for the first 10% of the salary and/or bonus deferred, subject to a maximum annual Company contribution equal to 5% of the participants salary and/or bonus. With the approval of the Board of Directors, the Company is also permitted to make discretionary contributions. Participants are always 100% vested in their own contributions, but Company contributions vest 20% per year of service with the Company. Therefore, employees with five or more years of service are fully vested in Company contributions under the plan. However, for employees with less than five years of service, all Company contributions become immediately and fully vested upon death, retirement (on or after age 65) or a change-of-control of the Company, as defined in the Deferred Compensation Plan. The Committee may accelerate vesting of the Companys contributions if a participant terminates his or her employment because of disability. The Committee may also accelerate vesting in the event of an involuntary termination of employment pursuant to the same section of the plan.
44 | | | Gaming & Leisure Properties Inc. |
Subject to the exceptions discussed below, participants in the Deferred Compensation Plan, or their beneficiaries, receive distributions upon retirement, death or termination. Participants can elect to receive distributions following retirement or death in the form of a lump sum payment or payment in five or ten annual installments. Distributions following retirement can be deferred for at least five years.
For purposes of the Deferred Compensation Plan, termination of employment as a result of a disability will be considered retirement. Distributions following termination of employment other than as a result of retirement or death will be in the form of a lump sum payment. Participants can also elect to receive a scheduled distribution with respect to an annual deferral amount, which is payable in a lump sum at the beginning of a designated subsequent calendar year, subject to certain limitations. In the event of an unforeseeable financial emergency and with the approval of the Committee, a participant can suspend deferrals or receive a partial and/or full payout under the plan. Certain specified employees have a six-month delay imposed upon distributions pursuant to a separation from service, as required by the final Code section 409A regulations. In the event of a change-of-control, the Company will accelerate installment payments that are in pay status by paying the account balance in lump sum and will distribute the account balances of all active participants in a lump sum; provided, however, that no distributions (or accelerations of installments) will occur unless the transaction qualifies as a change-of-control event under Code section 409A.
Participants in the Deferred Compensation Plan may notionally invest deferred amounts, including Company contributions, in mutual funds selected by the Committee. Participants may change their investment elections at any time.
In 2018, the compensation of Mr. Carlino, our Chairman, CEO and President, was approximately 418 times the median pay of our employees resulting in a 418:1 pay ratio. Our operations include our corporate office as well as our subsidiaries operating casinos in Perryville, Maryland and Baton Rouge, Louisiana.
We identified our median employee by examining 2018 total compensation for all employees, excluding Mr. Carlino, who were employed by the Company as of December 31, 2018, the last day of our payroll year. We included all of our employees in this process, whether employed on a full-time or part-time basis. We did not make any assumptions or estimates with respect to total compensation. We defined total compensation as the aggregate of base salary (plus overtime, as applicable), cash bonus, and long-term incentive compensation awards.
After identifying the median employee based on total compensation, we calculated total compensation in 2018 for such employee using the same methodology we use for our NEOs as set forth below in the Summary Compensation Table for 2018.
Peter M. Carlino | Median Employee | |||||||
Total compensation |
$ | 12,448,237 | $ | 29,805 | ||||
Pay Ratio |
418:1 |
We believe that the ratio of the CEO compensation to that of the median employee is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
The Companys primary business is that of a triple-net REIT. If we exclude our two operating casinos in Perryville, Maryland and Baton Rouge, Louisiana, the change in median pay of our employees results in a 77:1 pay ratio.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 45 |
Audit and Compliance Committee Report
The Audit and Compliance Committee of the Board of Directors assists the Board of Directors in performing its oversight responsibilities for our financial reporting process and audit process as more fully described in the Companys Audit and Compliance Committee Charter. Management has the primary responsibility for the financial statements and the reporting process. Our independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) and to issue a report thereon.
In the performance of its oversight function, the Audit and Compliance Committee reviewed and discussed our audited financial statements for the fiscal year ended December 31, 2018 with management and with our independent registered public accounting firm. In addition, the Audit and Compliance Committee discussed with our independent registered public accounting firm the matters required to be discussed by the PCAOB Accounting Standard No. 1301, Communications with Audit Committees, which includes, among other items, matters related to the conduct of the audit of our financial statements. The Audit and Compliance Committee has also received and reviewed the written disclosures and the letter from our independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the accounting firms communications with the Audit and Compliance Committee concerning independence and has discussed with our independent registered public accounting firm that firms independence and considered whether the non-audit services provided by the independent registered public accounting firm are compatible with maintaining its independence.
Based on the review and discussions with management and our independent registered public accounting firm described above, the Audit and Compliance Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC.
Audit and Compliance Committee
Joseph W. Marshall, III, Chair
Barry F. Schwartz
Earl C. Shanks
The foregoing report of the Audit and Compliance Committee does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.
46 | | | Gaming & Leisure Properties Inc. |
Beneficial Owners and Management
The following table contains information about the beneficial ownership of our common stock as of April 5, 2019 by:
∎ | each person, or group of persons, who beneficially owns more than 5% of our capital stock; |
∎ | each executive officer named in the summary compensation table; |
∎ | each of our directors; and |
∎ | all directors and executive officers as a group. |
Beneficial ownership and percentage ownership are determined in accordance with the rules and regulations of the SEC and include voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to restrictions, options or warrants held by that person that are currently exercisable or exercisable within sixty (60) days of April 5, 2019 are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table or pursuant to applicable community property laws, each shareholder named in the table has sole voting and investment power with respect to the shares set forth opposite such shareholders name. Our calculation of the percentage of beneficial ownership is based on 215,009,728 shares of common stock outstanding on April 5, 2019.
Unless otherwise indicated in the footnotes, the address of each of the beneficial owners named below is: c/o Gaming and Leisure Properties, Inc., 845 Berkshire Blvd., Suite 200, Wyomissing, Pennsylvania 19610.
GLPI Common Stock |
||||||||||||
Name and Address of Beneficial Owner
|
Shares
|
%
|
||||||||||
Peter M. Carlino(1)(2)
|
|
11,160,132
|
|
|
5.190%
|
|
||||||
David A. Handler(3)
|
|
332,863
|
|
|
*
|
|
||||||
Joseph W. Marshall, III(4)
|
|
36,793
|
|
|
*
|
|
||||||
James B. Perry(5)
|
|
15,348
|
|
|
*
|
|
||||||
Earl C. Shanks(6)
|
|
47,354
|
|
|
*
|
|
||||||
Barry F. Schwartz(7)
|
|
24,951
|
|
|||||||||
E. Scott Urdang(8)
|
|
91,335
|
|
|
*
|
|
||||||
Steven T. Snyder(9)
|
|
439,031
|
|
|
*
|
|
||||||
Desiree Burke(10)
|
|
79,087
|
|
|
*
|
|
||||||
Brandon J. Moore(11)
|
|
114,445
|
|
|
*
|
|
||||||
William J. Clifford(12)
|
|
351,068
|
|
|||||||||
All executive officers and directors as a group (12 persons)
|
|
13,015,417
|
|
|
6.053%
|
|
||||||
5% Shareholders Not Listed Above
|
||||||||||||
The Vanguard Group Inc.(13)
|
|
30,710,880
|
|
|
14.283%
|
|
||||||
BlackRock, Inc.(14)
|
|
15,296,694
|
|
|
7.114%
|
|
* | Less than 1% |
48 | | | Gaming & Leisure Properties Inc. |
Notes to Security Ownership of Principal Shareholders and Management Table
(1) | The number of shares in the table includes: (a) 6,556,778 shares owned by the Carlino Family Trust and the Residuary Trust, each described in footnote 2 below, as to which Peter M. Carlino has sole voting power for the election directors and certain other matters and shared investment power and shared voting power with respect to certain matters; (b) 4,493,355 shares jointly-owned with his wife Marshia W. Carlino; and (c) 109,999 shares of restricted stock under which Mr. Carlino has voting rights but his disposition rights are currently restricted. |
(2) | 6,120,077 shares of our common stock are owned by an irrevocable trust, which we refer to as the Carlino Family Trust, among Peter D. Carlino (who passed away in November 2013), his eight children and the former spouse of one of his children, as settlors, and certain trustees, as to which Peter M. Carlino has sole voting power for the election of directors and certain other matters. 436,701 shares are owned by a residuary trust (the Residuary Trust) for the benefit of Peter D. Carlino and his children. Peter M. Carlino, David E. Carlino and Richard J. Carlino have shared investment power and shared voting power with respect to certain matters for the Carlino Family Trust and for the Residuary Trust. The Carlino Family Trust has pledged an aggregate of 1,195,741 shares as security for loans to the trust and for the benefit of trust beneficiaries. |
(3) | Includes 12,108 shares of restricted stock under which Mr. Handler has voting rights but his disposition rights are currently restricted. |
(4) | Includes 12,341 shares of restricted stock under which Mr. Marshall has voting rights but his disposition rights are currently restricted. |
(5) | Includes 8,948 shares of restricted stock under which Mr. Perry has voting rights but his disposition rights are currently restricted. |
(6) | Includes 11,767 shares of restricted stock under which Mr. Shanks has voting rights but his disposition rights are currently restricted. |
(7) | Includes 10,417 shares of restricted stock under which Mr. Schwartz has voting rights but his disposition rights are currently restricted. |
(8) | Includes 12,080 shares of restricted stock under which Mr. Urdang has voting rights but his disposition rights are currently restricted. |
(9) | Includes 37,499 shares of restricted stock under which Mr. Snyder has voting rights but his disposition rights are currently restricted. Mr. Snyder has pledged an aggregate of 383,208 shares as security for loans. |
(10) | Includes 27,499 shares of restricted stock under which Ms. Burke has voting rights but her disposition rights are currently restricted. |
(11) | Includes 27,499 shares of restricted stock under which Mr. Moore has voting rights but his disposition rights are currently restricted. |
(12) | Mr. Clifford retired from the position of Chief Financial Officer effective May 4, 2018. The information reflected in this table for Mr. Clifford is as of February 20, 2018, which is the most recent date as of which ownership information for Mr. Clifford is available to the Company. |
(13) | According to its Schedule 13G/A filed with the SEC on February 11, 2019, consists of shares beneficially owned as of December 31, 2018 by The Vanguard Group Inc. or its subsidiaries, Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard Specialized Funds Vanguard REIT Index Fund reported on a Schedule 13G/A filed on February 1, 2019, that it has the sole power to vote 9,648,945 shares of the our common stock beneficially held by The Vanguard Group, Inc. Vanguard Specialized Funds Vanguard REIT Index Fund is an investment firm located at 100 Vanguard Blvd., Malvern, PA 19355. |
(14) | According to its Schedule 13G filed with the SEC on February 4, 2019, consists of shares beneficially owned as of December 31, 2018 by BlackRock, Inc. and its affiliates. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 49 |
Equity Compensation Plan Information
Equity Compensation Plan Information Table
(a) |
(b) |
(c) |
||||||||||||||||||
December 31, 2018 Plan Category |
Number of securities options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants |
Number
of remaining under equity compensation reflected in (a)) |
|||||||||||||||||
Equity compensation plans approved by shareholders |
26,799 | 22.09 | 2,556,815 |
50 | | | Gaming & Leisure Properties Inc. |
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Exchange Act requires the Companys officers and directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership of our common stock and any other equity securities of the Company with the SEC. Such officers, directors and shareholders are required by SEC regulations to furnish us with copies of all such reports that they file. Based solely on a review of copies of reports filed with the SEC and of written representations by officers, directors, and greater than 10% shareholders, we believe that during 2018 all officers, directors, and greater than 10% shareholders subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 51 |
Proposal 2 Ratification of Independent
Registered Public Accounting Firm
A description of aggregate fees for professional services performed in relation to fiscal 2018 and fiscal 2017 is as follows:
Fiscal 2018
|
Fiscal 2017
|
|||||||
Audit Fees Deloitte & Touche LLP(1)
|
$
|
1,141,500
|
|
$
|
863,600
|
| ||
Audit Fees Predecessor Auditor(1)(2)
|
|
94,000
|
|
|
33,500
|
| ||
Audit-Related Fees(3)
|
|
31,500
|
|
|
30,500
|
| ||
Tax Fees
|
|
|
|
|
|
| ||
Total Fees
|
$
|
1,267,000
|
|
$
|
927,600
|
|
(1) | Audit fees include fees associated with the annual audit, reviews of the Companys quarterly reports on Form 10-Q, annual audits required by law for certain jurisdictions, comfort letters, consents and other audit and attestation services related to statutory or regulatory filings. Fees in 2018 included additional out of scope fees for acquisitions along with related debt financing, ASC 842 lease accounting implementation and goodwill impairment analysis. |
(2) | Audit fees for the predecessor auditor are consent fees for both 2018 and 2017. |
(3) | The fees disclosed under this category consist of fees for an employee benefit plan audit. |
Our Board of Directors recommends that you vote FOR ratification of the selection of Deloitte & Touche LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2019.
52 | | | Gaming & Leisure Properties Inc. |
Proposal 3 Non-Binding Advisory Vote to
Approve the Companys Executive Compensation
The Board of Directors unanimously recommends a vote FOR the approval of the compensation of the named executive officers as disclosed in this Proxy Statement.
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 53 |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 55 |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 57 |
What vote is required to approve each proposal at the Annual Meeting?
Proposal
|
Vote Required
|
Broker Discretionary Voting Allowed
| ||||
Proposal No. 1
|
Election of Directors
|
Majority of Votes Cast
|
No
| |||
Proposal No. 2 |
Ratification of Appointment of Independent Registered Public Accounting Firm | Majority of Votes Cast | Yes | |||
Proposal No. 3
|
Non-Binding Advisory Vote to Approve Executive Compensation
|
Majority of Votes Cast
|
No
| |||
Proposal No. 4
|
Shareholder Proposal Requesting a Report on Board Diversity
|
Majority of Votes Cast
|
No
|
58 | | | Gaming & Leisure Properties Inc. |
2019 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 59 |
GAMING & LEISURE PROPERTIES, INC.
845 Berkshire Boulevard, Suite 200, Wyomissing, PA 19610
(610) 401-2900
www.glpropinc.com
ANNUAL MEETING OF GAMING AND LEISURE PROPERTIES, INC. Annual Meeting of Gaming and Leisure Properties, Inc. Date: June 13, 2019 to be held on Thursday, June 13, 2019 Time: 10:00 A.M. (Eastern Time) for Holders as of April 5, 2019 Place: Ballard Spahr LLP 1735 Market Street, 48th Floor, Philadelphia, PA 19103 This proxy is being solicited on behalf of the Board of Directors Please make your marks like this: Use dark black pencil or pen only Board of Directors Recommends a Vote FOR Proposals 1, 2, and 3. VOTE BY: INTERNET TELEPHONE Call provided Go To www.proxypush.com/GLPI 866-286-3501 1: Election of Director Nominees Recommend Directors Use any touch-tone telephone. Cast your vote online. OR For Against Abstain Have your Proxy Card/Voting Instruction Form ready. View Meeting Documents. 01 Peter M. Carlino 02 David A. Handler For Follow the simple recorded instructions. 03 Joseph W. Marshall, III For envelope MAIL 04 James B. Perry For the OR Mark, sign and date your Proxy Card/Voting Instruction Form. in Detach your Proxy Card/Voting Instruction Form. 05 Barry F. Schwartz For Return your Proxy Card/Voting Instruction Form in the 06 Earl C. Shanks For portion postage-paid envelope provided. 07 E. Scott Urdang For this The undersigned hereby appoints Joseph W. Marshall, III and David A. Handler, and each or either of them, as the For Against Abstain true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and just each of them, to vote all the shares of capital stock of Gaming and Leisure Properties, Inc. which the undersigned 2: To ratify the appointment of Deloitte & Touche For is entitled to vote at said meeting and any on postponement adjournment thereof upon the matters specified and upon such other public LLP as accounting the Companys firm independent for the current registered fiscal matters as may be properly brought before the meeting or any on postponement adjournment thereof, conferring authority upon such return true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and may adjournment or postponement thereof year. For Against Abstainand and revoking any proxy heretofore given. 3: To approve, on a non-binding advisory basis, For THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS the Companys executive compensation. GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES IN PROPOSAL 1, For Against Abstain FOR PROPOSALS 2 and 3 ABSTAIN ON FOR PROPOSAL 4. 4: To consider a shareholder proposal requesting a report on Board diversify. For perforation All votes must be received by 5:00 P.M., Eastern Time, June 12, 2019. at PRO