RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

December 14, 2016 08:30 ET

RioCan Real Estate Investment Trust Announces Results of Its Review of the Trust's Executive Compensation Practices

TORONTO, ONTARIO--(Marketwired - Dec. 14, 2016) - RioCan Real Estate Investment Trust (TSX:REI.UN) ("RioCan" or the "Trust") is pleased to provide a summary of the changes to its compensation practices in the context of the comments received from the Trust's recent consultations with unitholders that were conducted as part of the Trust's commitment to continually review and enhance its compensation and governance practices.

Background

The Board of Trustees (the "Board") believes that it is important to maintain an ongoing process of engagement with unitholders and regularly reviews RioCan's compensation practices to ensure that they remain effective and aligned with the interests of unitholders. Sharon Sallows, Chair of RioCan's Human Resources and Compensation Committee ("HRCC"), together with Charles Winograd, Chair of RioCan's Nominating and Governance Committee, engaged with a number of the Trust's largest unitholders as well as proxy/governance advisory firms prior to and following RioCan's 2016 Annual Meeting of Unitholders. Although RioCan's non-binding advisory Say-On-Pay vote was approved at the 2016 annual meeting by more than two thirds of votes cast, the approval fell slightly short of the 70% threshold which obliged the Board to formalize the consultation process that it engages in regularly with unitholders. The Board engaged the services of Willis Towers Watson to assist it in the review of the Trust's executive compensation practices.

Summary of Unitholder Feedback

Based on the Board's research of current trends in best practices for executive compensation and the feedback received during its consultations with unitholders, there were a number of recurring themes that were presented. These included the use of non-Canadian domiciled peers as part of a comparator group, the use of management defined non-GAAP measures for performance benchmarking, the use of options as a form of compensation, reliance on a single performance indicator in the Trust's short term incentive plan, and other legacy contract issues in RioCan's CEO's employment agreement.

The Board understands the importance of considering our unitholders' concerns and to continually review the approach to compensation in the context of those concerns. The Board is committed to setting challenging goals for the executive management team to ensure that executive compensation is appropriately aligned and varies with the performance of the Trust.

2017 Changes to Compensation

As a result of its recent consultations and ongoing review of compensation matters, the Board has approved certain changes to the Trust's executive compensation program for the fiscal 2017 year, which will be outlined in further detail in the Trust's 2017 Management Information Circular. These changes, which are designed to be responsive to the concerns the matters raised in the consultations with unitholders and will further align RioCan's executive compensation practices with the interests of our unitholders, include:

  • The Trust's CEO, Ed Sonshine, has voluntarily agreed, without consideration for doing so, to amend his employment contract to remove the legacy modified single trigger change in control provision and replace it with a double trigger provision consistent with current best practices;
  • An updated comparator group for compensation benchmarking. As a reflection of the changes in the Trust's business activities, including the recent completion of the sale of its U.S. portfolio earlier this year and the resulting focus of RioCan's business entirely in Canada, RioCan will no longer include peers that are not domiciled in Canada as part of its comparator group;
  • RioCan's short-term incentive plan will be enhanced by replacing Operating Funds From Operations with Funds From Operations as defined by RealPac as a key performance measure, together with the inclusion of other strategic and operational measures, to further align compensation practices with the strength of RioCan's operational and financial performance;
  • The performance metrics for the Trust's Performance Equity Unit plan are intended to be modified to rely solely on RioCan's relative performance of total unitholder returns in determining compensation; and
  • Enhanced design elements to be included in RioCan's long-term incentive plan to reduce the frequency of option grants, with no option grants currently anticipated for 2017, and replacing that portion of the overall long-term incentive compensation with grants of restricted equity units.

The complete details of the changes that we anticipate will be made to RioCan's compensation program, together with the objectives, philosophy and principles that the Board has used in its approach to executive compensation decisions, will be provided in the Trust's "Compensation Discussion and Analysis" section of the 2017 Management Information Circular.

About RioCan

RioCan is Canada's largest real estate investment trust with a total enterprise value of approximately $15 billion as at September 30, 2016. RioCan owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 301 Canadian retail and mixed use properties, including 15 properties under development, containing an aggregate net leasable area of 47 million square feet. For further information, please refer to RioCan's website at www.riocan.com.

Forward-Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian securities laws. This information includes, but is not limited to, statements concerning RioCan's objectives, and its strategies to achieve those objectives, relating to executive compensation and corporate governance matters, including statements with respect to RioCan's plans and intentions, and similar statements concerning anticipated future events or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as "may", "will", "would", "expect", "intend", "anticipate", "believe", "should", "plan", "continue", or similar expressions suggesting future outcomes or events. Such forward-looking information reflects RioCan's current beliefs and is based on information currently available. All forward-looking information in this News Release is qualified by these cautionary statements.

Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan's current assumptions, which are subject to risks and uncertainties, including the implementation of such proposed changes, changes in compensation practices and ongoing developments in the areas of executive compensation, and changes in tax or securities laws or rules and regulations of applicable stock exchanges, which could cause actual events to differ from the forward- looking information contained in this News Release.

Although the forward-looking information contained in this News Release is based upon what the Board believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. The forward-looking information contained in this News Release is made as of the date of this News Release, and should not be relied upon as representing RioCan's views as of any date subsequent to the date of this News Release.

Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Contact Information

  • RioCan Real Estate Investment Trust
    Sharon Sallows
    Chair of the Human Resources and Compensation Committee
    1-800-465-2733
    www.riocan.com