AMERICAN ASSETS TRUST, INC.
10-Ks and 10-Qs
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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
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
American Assets Trust, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
April 5, 2024
Dear Fellow Stockholder:
On behalf of the Board of Directors of American Assets Trust, Inc., a Maryland corporation, I cordially invite you to attend our Annual Meeting of Stockholders on Monday, June 3, 2024, at Torrey Point, 3420 Carmel Mountain Road, Suite 100, San Diego, California 92121 at
8:00 a.m. (PDT).
The notice of meeting and Proxy Statement that follow describe the business we will consider at the meeting. We sincerely hope you will be able to attend the meeting. However, whether or not you are personally present, your vote is very important. We are pleased to offer multiple options for voting your shares. You may authorize a proxy to vote by telephone, via the Internet, by mail or in person as described beginning on page 3 of the Proxy Statement.
Thank you for your continued support of American Assets Trust, Inc.
Sincerely yours,
Ernest S. Rady
Chairman of the Board of Directors and Chief Executive Officer
American Assets Trust, Inc.
3420 Carmel Mountain Road, Suite 100
San Diego, California 92121
(858) 350-2600
NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS
Please join us for the 2024 Annual Meeting of Stockholders of American Assets Trust, Inc., a Maryland corporation. The meeting will be held at 8:00 a.m. (PDT), on Monday, June 3, 2024, at Torrey Point, 3420 Carmel Mountain Road, Suite 100, San Diego, California 92121.
At the 2024 Annual Meeting of Stockholders, our stockholders will consider and vote on the following matters:
(1)
The election of five directors, each to serve until the next annual meeting of our stockholders and until his or her successor is duly elected and qualifies;
(2)
The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024;
(3)
An advisory vote on our executive compensation, as described in the accompanying Proxy Statement;
(4)
An advisory vote on the frequency of future advisory votes on executive compensation; and
(5)
Any other business properly introduced at the Annual Meeting or any adjournment or postponement of the Annual Meeting.
The Proxy Statement more fully describes these proposals.
You must own shares of American Assets Trust,
Inc. common stock at the close of business on March 28, 2024, the record date for the 2024 Annual Meeting of Stockholders, to attend and vote at the Annual Meeting and at any adjournments or postponements of the Annual Meeting. If you plan to attend, please bring a picture I.D. and, if your shares are held in “street name” (i.e., through a broker, bank or other nominee), a copy of a brokerage statement reflecting your stock ownership as of the close of business on March 28, 2024.
We are pleased to take advantage of the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their stockholders over the Internet. We believe that this e-proxy process will expedite stockholders’ receipt of proxy materials, lower the costs and reduce the environmental impact of our annual meeting. We will send a full set of proxy materials or a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) on or about April 5, 2024, and provide access to our proxy materials over the Internet, beginning on April 5, 2024, for the holders of record and beneficial owners of our common stock as of the close of business on the record date. The Notice of Internet Availability instructs you on how to access and review the Proxy Statement and our Annual Report. The Notice of Internet Availability also instructs you on how you may submit your proxy over the Internet.
YOUR PROXY IS IMPORTANT TO US.
Whether or not you plan to attend the Annual Meeting, please authorize your proxy as soon as possible to ensure that your shares will be represented at the Annual Meeting.
By Order of the Board of Directors,
Adam Wyll
President and Chief Operating Officer
San Diego, California
April 5, 2024
This Proxy Statement and accompanying proxy card are available beginning April 5, 2024 in connection with the solicitation of proxies by the Board of Directors of American Assets Trust, Inc., for use at the 2024 Annual Meeting of Stockholders, which we may refer to alternatively as the “Annual Meeting.” We may refer to ourselves in this Proxy Statement alternatively as the “Company,” “we,” “us” or “our” and we may refer to our Board of Directors as the “Board.” A copy of our Annual Report to Stockholders for the 2023 fiscal year, including financial statements, is being sent simultaneously with this Proxy Statement to each stockholder.
Important Notice Regarding Availability of Proxy Materials For the Stockholder Meeting to be Held on June 3, 2024. The Notice of Annual Meeting of
Stockholders, the Proxy Statement and our 2023 Annual Report are available at https://materials.proxyvote.com/024013.
TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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INFORMATION ABOUT THE BOARD
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Proposal No. 1 Nominees for Election to the Board
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Director Compensation
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Board Structure, Leadership, Risk Management and Succession Planning
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Executive Sessions of Non-Management Directors
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Board Meetings
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Board Committees
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Audit Committee Report
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CORPORATE GOVERNANCE
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Code of Business Conduct and Ethics
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Role of the Board in Risk Oversight
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Compensation Committee Interlocks and Insider Participation
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Communications with the Board
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Nomination Process for Director Candidates and Consideration of Board Diversity
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Audit Committee Financial Experts
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Audit Committee Pre-Approval Policy
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Principal Accounting Fees and Services
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Board Attendance at Annual Meeting of Stockholders
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ENVIRONMENTAL SUSTAINABILITY, SOCIAL RESPONSIBILITY, GOVERNANCE AND HUMAN CAPITAL
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OTHER COMPANY PROPOSALS
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Proposal No. 2 Ratification of Independent Registered Public Accounting Firm
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Proposal No. 3 Advisory Vote on Executive Compensation
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Proposal No. 4 Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation
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EXECUTIVE OFFICERS
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
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Compensation Committee Report
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Compensation Discussion and Analysis
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STOCK OWNERSHIP
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Principal Stockholders
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RELATED-PARTY AND OTHER TRANSACTIONS INVOLVING OUR OFFICERS AND DIRECTORS
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REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS
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INCORPORATION BY REFERENCE
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DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS
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STOCKHOLDER PROPOSALS
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ANNUAL REPORT
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OTHER MATTERS
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i
| PROXY STATEMENT | ||
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Why am I receiving these materials?
Our Board is making these materials available to you over the Internet or by delivering paper copies to you by mail in connection with American Assets Trust, Inc.'s Annual Meeting of Stockholders. As a stockholder, you are invited to attend the Annual Meeting and are entitled and requested to vote on the items of business described in this Proxy Statement. This Proxy Statement includes information that we are required to provide under Securities and Exchange Commission, or SEC, rules and is designed to assist you in voting your shares.
Where and when is the Annual Meeting?
The Annual Meeting will be held at 8:00 a.m. (PDT) on Monday, June 3, 2024 at Torrey Point, 3420 Carmel Mountain Road, Suite 100, San Diego, California 92121.
What is the purpose of the Annual Meeting of Stockholders?
At the Annual Meeting, stockholders will vote upon matters described in the Notice of Annual Meeting and this Proxy Statement, including the election of directors, the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm, an advisory resolution to approve our executive compensation for the fiscal year ended December 31, 2023 and an advisory determination of the frequency of future advisory votes on executive compensation. In addition, once the business of the Annual Meeting is concluded, members of management will respond to questions raised by stockholders, if any, as time permits.
Who can attend the Annual Meeting?
All of our stockholders as of the close of business on March 28, 2024, the record date for the Annual Meeting, or individuals holding their duly appointed proxies, may attend the Annual Meeting. You should be prepared to present photo identification for admittance. Authorizing a proxy in response to this solicitation will not affect a stockholder's right to attend the Annual Meeting and to vote in person. Please note that if you hold your common stock in “street name” (that is, through a broker, bank or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of March 28, 2024, to gain admittance to the Annual Meeting.
What am I voting on?
At the Annual Meeting, you may consider and vote on:
a.
the election of five directors;
b.
the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024;
c.
an advisory vote on our executive compensation;
d.
an advisory vote on the frequency of future advisory votes on executive compensation; and
e.
any other business properly introduced at the Annual Meeting.
What are the Board's recommendations?
The Board recommends a vote:
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for
the election of each nominee named in this Proxy Statement (see Proposal No. 1);
•
for
ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024 (see Proposal No. 2);
•
for
the approval of our executive compensation (see Proposal No. 3); and
•
for
"ONE year" as the frequency of holding future advisory votes on executive compensation (see Proposal No. 4).
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board.
Who may vote?
You may vote if you owned shares of our common stock at the close of business on March 28, 2024, which is the record date for the Annual Meeting. You are entitled to cast one vote in the election of directors for as many individuals as there are directors to be elected at the Annual Meeting and to cast one vote on each other matter presented at the Annual Meeting for each share of common stock you owned as of the record date. As of March 28, 2024, we had 60,894,491 shares of common stock outstanding.
Who counts the votes?
An individual authorized by our bylaws will tabulate the votes and will act as the inspector of the election.
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Is my vote confidential?
Yes, your proxy card, ballot, and voting records will not be disclosed to us unless applicable law requires disclosure, you request disclosure, or your vote is cast in a contested election (which is not applicable in 2024). If you write comments on your proxy card, your comments will be provided to us, but how you voted will remain confidential.
What is a quorum for the Annual Meeting?
The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting will constitute a quorum at the Annual Meeting. No business may be conducted at the Annual Meeting if a quorum is not present.
If a quorum is not present at the Annual Meeting, the chairperson of the meeting may adjourn the Annual Meeting to another date, time or place, not later than 120 days after the original record date of March 28, 2024 without notice other than announcement at the meeting. We may also postpone the Annual Meeting to a date that is not later than 120 days after the original record date or cancel the Annual Meeting by making a public announcement of the postponement or cancellation before the time scheduled for the Annual Meeting.
What vote is required to approve an item of business at the Annual Meeting?
To be elected as a director (Proposal No. 1), a nominee must receive a plurality of all the votes cast in the election of directors. Votes “For”, “Against” and “Abstain” will affect the outcome.
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm (Proposal No. 2) and adopt the advisory vote on executive compensation (Proposal No. 3), the affirmative vote of a majority of the votes cast on the proposal is required. Only votes “For” and “Against” will affect the outcome.
The advisory proposal to determine the frequency of holding future votes on executive compensation (Proposal No. 4) allows our stockholders to select from the following alternatives (as required under SEC rules): one year, two years, three years or abstain. The affirmative vote of a majority of the votes cast is required to approve one of the selections under this advisory proposal. If none of the frequency alternatives receives a majority of the votes cast, the alternative that receives the highest number of votes will be deemed the frequency selected by stockholders. Abstentions or broker non-votes on this proposal will not affect the outcome on the advisory vote on the proposal.
If you are a stockholder of record as of the record date for the Annual Meeting and you authorize a proxy (whether by Internet, telephone or mail) without specifying a choice on any given matter to be considered at this Annual Meeting, the proxy holders will vote your shares according to the Board's recommendation on that matter.
If you are a stockholder of record as of the record date for the Annual Meeting and you fail to authorize a proxy or vote in person, assuming that a quorum is present at the Annual Meeting, it will have no effect on the result of the vote on any of the matters to be considered at the Annual Meeting.
If you hold your shares through a broker, bank or other nominee, under the rules of the New York Stock Exchange, or NYSE, your broker or other nominee may not vote with respect to certain proposals unless you have provided voting instructions with respect to that proposal. A “broker non-vote” results when a broker, bank or other nominee properly executes and returns a proxy but indicates that the nominee is not voting with respect to a particular matter because the nominee has not received voting instructions from the beneficial owner. A broker non-vote is not considered a vote cast on a proposal; however, stockholders delivering a properly-executed broker non-vote will be counted as present for purposes of determining whether a quorum is present.
If you hold your shares in a brokerage account, then, under NYSE rules and Maryland law:
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With respect to Proposal No. 1 (Election of Directors), your broker, bank or other nominee is not entitled to vote your shares on this matter if no instructions are received from you. Broker non-votes will have no effect on the election of directors.
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With respect to Proposal No. 2 (Ratification of Independent Registered Public Accounting Firm), your broker, bank or other nominee is entitled to vote your shares on this matter if no instructions are received from you.
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With respect to Proposal No. 3 (Advisory Vote on Executive Compensation), your broker, bank or other nominee is not entitled to vote your shares on this matter if no instructions are received from you. Broker non-votes will have no effect on the result of the vote on Proposal No. 3.
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•
With respect to Proposal No. 4 (Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation), your broker, bank or other nominee is not entitled to vote your shares on this matter if no instructions are received from you. Broker non-votes will have no effect on the result of the vote on Proposal No. 4.
Because an abstention is not a vote cast, if you instruct your proxy or broker to “abstain” on any matter, it will have no effect on the vote on any of the matters to be considered at the Annual Meeting. However, you will still be counted as present for purposes of determining whether a quorum is present.
How do I vote?
If you plan to attend the Annual Meeting and wish to vote in person, we will give you a ballot at the Annual Meeting. However, if your common stock is held in the name of your broker, bank or other nominee, and you want to vote in person, you will need to obtain a legal proxy from the institution that holds your common stock.
If your common stock is held in your name, there are three ways for you to authorize a proxy:
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If you received a paper copy of the proxy materials by mail, sign and mail the proxy card in the enclosed return envelope;
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Call 1-800-690-6903; or
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Log on to the Internet at https://materials.proxyvote.com/024013 and follow the instructions at that site. The website address for authorizing a proxy by Internet is also provided on your Notice of Internet Availability.
Telephone and Internet proxy authorizations will close at 11:59 p.m. (EDT) on June 2, 2024. Unless you indicate otherwise on your proxy card, the persons named as your proxies will vote your shares of common stock: FOR all of the nominees for director named in this Proxy Statement; FOR the ratification of Ernst & Young LLP as our independent registered public accounting firm; FOR the advisory resolution to approve our executive compensation; and for future advisory votes on executive compensation every “ONE YEAR”.
If your common stock is held in the name of your broker, bank or other nominee, you should receive separate instructions from the holder of your common stock describing how to provide voting instructions.
Even if you plan to attend the Annual Meeting, we recommend that you authorize a proxy in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.
Can I revoke my proxy?
Yes, if your common stock is held in your name, you can revoke your proxy by:
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Filing written notice of revocation before or at our Annual Meeting with our Secretary, at the address shown on the front of this Proxy Statement;
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Signing a proxy bearing a later date; or
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Voting in person at the Annual Meeting.
Attendance at the Annual Meeting will not, by itself, revoke a properly-executed proxy. If your common stock is held in the name of your broker, bank or other nominee, please follow the voting instructions provided by the holder of your common stock regarding how to revoke your proxy.
What happens if additional matters are presented at the Annual Meeting?
Other than the four proposals described in this Proxy Statement, we are not aware of any business that may properly be brought before the Annual Meeting. If any other matters are properly introduced for a vote at the Annual Meeting and if you properly authorize a proxy, the persons named as proxy holders will vote in their discretion on any such additional matters. As of the date of this Proxy Statement, our Board is not aware of any other individual who may properly be nominated for election as a director at the Annual Meeting or of any nominee who is unable or unwilling to serve as director. If any nominee named in this Proxy Statement is unwilling or unable to serve as a director, our Board may nominate another individual for election as a director at the Annual Meeting, and the persons named as proxy holders will vote for the election of any substitute nominee.
Who pays for this proxy solicitation?
We will bear the expense of preparing, printing and mailing this Proxy Statement and the proxies we solicit. Proxies may be solicited by mail, telephone, personal contact and electronic means and may also be solicited by directors and officers in person, by the Internet, by telephone or by facsimile transmission, without additional remuneration.
We will also request brokerage firms, banks, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares of our common stock as of the record date and will reimburse them for the cost of forwarding the proxy
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materials in accordance with customary practice. Your cooperation in promptly voting your shares and submitting your proxy by the Internet or telephone, or by completing and returning the enclosed proxy card (if you received your proxy materials in the mail), will help to avoid additional expense.
Where can I find corporate governance materials?
Our Corporate Governance Guidelines and Code of Business Conduct and Ethics and the charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are published on the Governance page of the Investors section on our website at
www.americanassetstrust.com
.
(We are not including the other information contained on, or available through, our website as a part of, or incorporating such information by reference into, this Proxy Statement).
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INFORMATION ABOUT THE BOARD
PROPOSAL NO. 1
NOMINEES FOR ELECTION TO THE BOARD
At the Annual Meeting, our stockholders will elect five directors to serve until our next annual meeting of stockholders and until their respective successors are elected and qualify.
The Board seeks independent directors who represent a diverse mix of backgrounds and experiences that will enhance the quality of the Board's deliberations and decisions. In nominating candidates, the Board considers a diversified membership in the broadest sense, including persons diverse in experience, gender and race/ethnicity. The Board does not discriminate on the basis of race/ethnicity, color, national origin, sex, gender identity or expression, religion, disability, sexual orientation, pregnancy, medical condition or other characteristic protected by law.
Our director nominees, which include two females, one of whom is from an underrepresented community, were nominated by the Board based on the recommendation of the Nominating and Corporate Governance Committee, or Governance Committee. They were selected on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, their ability to make independent, analytical inquiries, financial literacy, mature judgment, professional competence, high performance standards, familiarity with our business and industry, diversity of thought and an ability to work collegially.
We are committed to diversity and recognize the benefits of having a diverse Board. We view increasing diversity at the Board level as essential to promoting the inclusion of different ideas and perspectives, maintaining our competitive advantage and supporting the attainment of our strategic objectives.
We also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. All nominees are presently directors of American Assets Trust, Inc. and each of the nominees has consented, if elected as a director, to serve until his or her term expires.
Your proxy holder will cast your votes for each of the Board's nominees, unless you instruct otherwise. If a nominee is unable to serve as a director, your proxy holder will vote for any substitute nominee proposed by the Board.
Recommendation of the Board of Directors:
The Board of Directors unanimously recommends that the stockholders vote “FOR” the five nominees listed below.
| Name | Age | Position | ||||||||||||
| Ernest S. Rady | 86 | Chairman of the Board of Directors and Chief Executive Officer | ||||||||||||
| Thomas S. Olinger † | 57 | Director, Chairperson of our Audit Committee and Member of our Compensation Committee | ||||||||||||
| Joy L. Schaefer † | 64 | Director, Chairperson of our Governance Committee, Member of our Audit Committee and Member of our Compensation Committee | ||||||||||||
| Dr. Robert S. Sullivan † | 80 | Director, Chairperson of our Compensation Committee and Member of our Governance Committee | ||||||||||||
| Nina A. Tran † | 55 | Director, Member of our Audit Committee and Member of our Governance Committee | ||||||||||||
| † Independent within the meaning of the NYSE listing standards. This determination was made after considering all relevant facts and circumstances, reviewing director questionnaires and considering transactions and relationships, if any, between us, our affiliates, our executive officers and their affiliates, and each of the directors, members of each of the director's immediate families and the directors' affiliates. | ||||||||||||||
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Ernest S. Rady
. Mr. Rady has served as Chairman of our Board since the completion of our initial public offering in January 2011 and as our Chief Executive Officer since September 2015. Mr. Rady previously served as our President from September 2015 until July 2021. Mr. Rady has over 56 years of experience in real estate management and development, having founded American Assets, Inc., or AAI, in 1967 and is currently serving as its president and chairman of its Board of directors. In 1971, Mr. Rady also founded Insurance Company of the West and Westcorp, a financial services holding company. From 1973 until 2006, Mr. Rady served as chairman and chief executive officer of Westcorp. Mr. Rady served as chairman of Western Financial Bank from 1982 until 2006 and chief executive officer of Western Financial from 1994 until 1996 and from 1998 until 2006. Mr. Rady also served as a director of WFS Financial Inc., an automobile finance company, from 1988 until 2006 and as chairman from 1995 until 2006. From 2006 until 2007, Mr. Rady served as chairman of dealer finance business and California banking business for Wachovia Corporation, and also served as a director from 2006 until 2008. Mr. Rady currently serves as chairman of the Board of directors of Insurance Company of the West, and chairman of the Dean's Advisory Council of the Rady School of Management at the University of California, San Diego. Mr. Rady received his degrees in commerce and law, and an Honorary Degree of Doctor of Laws, from the University of Manitoba. Our Board determined that Mr. Rady should serve as a director based on his wealth of experience in the commercial real estate and financial services industries.
Thomas S. Olinger
. Mr. Olinger has served as a member of our Board since the completion of our initial public offering in January 2011. From May 2012 until April 2022, Mr. Olinger served as chief financial officer of Prologis, Inc., a global operator and developer of logistics real estate. From June 2011 to May 2012, Mr. Olinger served as chief integration officer of Prologis, Inc. From 2007 to June 2011, Mr. Olinger served as chief financial officer of AMB Property Corporation, a global operator and developer of logistics real estate, which was merged with and into Prologis, Inc. in June 2011. From 2002 until 2007, Mr. Olinger served as vice president and corporate controller of Oracle Corporation, a computer hardware and software company. Mr. Olinger began his professional career in 1988 with Arthur Andersen LLP as an auditor and Mr. Olinger became a partner in 1999, during which time Mr. Olinger served various REITs. Since January 2023, Mr. Olinger has served on the Board of directors of Equinix, Inc., a publicly traded global data center and colocation provider for enterprise network and cloud computing. Mr. Olinger received his Bachelor of Science degree in finance from Indiana University. Our Board determined that Mr. Olinger should serve as a director based on his wealth of experience in the real estate industry, as well as his financial background. Mr. Olinger is the Chairperson of our Audit Committee and is a member of our Compensation Committee.
Joy L. Schaefer
. Ms. Schaefer has served as a member of our Board since our 2019 Annual Meeting. Since 2005, Ms. Schaefer has served as president of Golden Eagle Advisors, LLC, a consulting firm focused on organizational development and growth through strategic, operational and financial improvements. From 2005 until August 2018, Ms. Schaefer served as an operating partner of Snow Phipps Group, LLC, a private equity firm, where she was a business and operations advisor to real estate specialty finance companies. From 2002 until 2005, Ms. Schaefer served as president of JL Schaefer Consulting, a strategic, financial and operational consulting practice, advising privately held and family-owned businesses. In 2002, Ms. Schaefer served as president and chief operating officer of Ameriquest Mortgage, a privately held mortgage banking company. From 1990 until 2002, Ms. Schaefer served in various senior management positions within the Westcorp family of companies, including as president and chief operating officer of Westcorp, Inc., a publicly traded financial services holding company; vice chairman, chief executive officer, president and chief operating officer of WFS Financial, Inc., a publicly traded national automobile finance company; and chief operating officer, senior executive vice president, chief financial officer and treasurer of Western Financial Bank, Inc. Earlier in her career, Ms. Schaefer was an audit manager for Ernst & Young. Since January 2020, Ms. Schaefer has served on the Board of directors of Velocity Financial, Inc., a publicly traded company that originates and manages investor real estate loans. Ms. Schaefer received her Bachelor of Science degree from the Illinois Wesleyan University, where she majored in accounting. Ms. Schaefer was licensed as a Certified Public Accountant in California, Illinois and Oklahoma. Our Board determined that Ms. Schaefer should serve as a director based on her extensive financial background and experience as an executive officer of multiple publicly traded financial services companies. Ms. Schaefer is the Chairperson of our Governance Committee and is a member of our Audit Committee and Compensation Committee.
Dr. Robert S. Sullivan
. Dr. Sullivan has served as a member of our Board since the completion of our initial public offering in January 2011. From 2003 until his retirement in 2020, Dr. Sullivan was the founding dean of the Rady School of Management at University of California, San Diego. From 1997 until 2002, Dr. Sullivan was dean of Kenan-Flagler Business School at the University of North Carolina, Chapel Hill. From 1976 until 1997, Dr. Sullivan served in a variety of senior positions at the University of Texas and Carnegie Mellon University. From 2004 until 2017, Dr. Sullivan served on the Board of directors of Cubic Corporation. From 1991 until 2006, Dr. Sullivan served as a director of Stewart and Stevenson Services, Inc. Dr. Sullivan received his Doctor of Philosophy degree from Pennsylvania State University. Dr. Sullivan received his Master of Business Administration degree from Cornell University and his Bachelor of Arts degree in mathematics from Boston College. Our Board determined that Dr. Sullivan should serve as a director based on his leadership expertise and extensive experience as a director of public and private companies. Dr. Sullivan is the Chairperson of our Compensation Committee and is a member of our Governance Committee.
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Nina A. Tran.
Ms. Tran has served as a member of our Board since our 2021 Annual Meeting. From March 2021 until December 2022, Ms. Tran served as the chief financial officer for Pacaso, a real estate technology company focused on second home co-ownership. From 2016 to 2021, Ms. Tran was the chief financial officer at Veritas Investments, Inc., an owner and manager of mixed-use real estate properties. From 2013 to 2016, Ms. Tran served as the chief financial officer of Starwood Waypoint Residential Trust, a leading publicly-traded REIT that owns and operates single-family rental homes. Prior to joining Starwood Waypoint, Ms. Tran spent 18 years at Prologis, Inc. (formerly AMB Property Corp.), the largest publicly-traded global industrial REIT. Ms. Tran served as senior vice president and chief accounting officer, and most recently as chief global process officer, where she helped lead the merger integration between AMB and Prologis. Prior to joining Prologis, Ms. Tran was a senior associate with PricewaterhouseCoopers. Since 2016, Ms. Tran has served on the Board of directors of Apartment Income REIT, or AIR (formerly AIMCO) and is currently the chairwoman of AIR's audit committee. Ms. Tran serves on the advisory Board of the Asian Pacific Fund. Ms. Tran also serves on the Board of directors for Catalyst Income Fund. Ms. Tran brings particular expertise to the Board in the areas of accounting, financial controls and business processes. Ms. Tran is a member of our Audit Committee and our Governance Committee.
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Board Qualifications
We are committed to maintaining a Board that that possesses a range of experience, skills and backgrounds that make it well-suited to address the various challenges the Board may face. We have deep experience on our Board covering all components of our business model. Along with the fundamental characteristics necessary for all directors, such as wisdom, good judgment, integrity and high ethical standards, below are skills and qualifications of our Board identified in our Board evaluation process as important to support our current business strategy. These characteristics, coupled with diversity of thought and background, are critical to strong oversight and long-term results. The absence of a “•” for a particular skill does not mean the director in question is unable to contribute to the decision-making process in that area.
Race/ethnicity and gender demographics of the Board are also included below.
| Ernest Rady | Thomas S. Olinger | Joy L. Schaefer | Dr. Robert S. Sullivan | Nina A. Tran | |||||||||||||
| Knowledge, Skills and Experience | |||||||||||||||||
|
Executive Leadership Experience
1
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l | l | l | l | l | ||||||||||||
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Public Company Board Experience
2
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l | l | l | l | l | ||||||||||||
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Real Estate Experience
3
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l | l | l | l | l | ||||||||||||
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Financial Expertise
4
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l | l | l | l | l | ||||||||||||
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Business Operations
5
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l | l | l | l | l | ||||||||||||
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Strategic Planning
6
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l | l | l | l | l | ||||||||||||
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Risk Management
7
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l | l | l | l | l | ||||||||||||
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Capital Markets/Investments Expertise
8
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l | l | l | l | l | ||||||||||||
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ESG Experience
9
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l | l | l | l | l | ||||||||||||
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Investor Relations
10
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l | l | l | l | |||||||||||||
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REIT Tax
11
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l | l | |||||||||||||||
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Advanced Degree/Professional Accreditation
12
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l | l | l | l | l | ||||||||||||
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Cybersecurity and Technology Experience
13
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l | l | |||||||||||||||
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Human Capital Management
14
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l | l | l | l | l | ||||||||||||
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Academia/Education
15
|
l | ||||||||||||||||
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Legal Expertise/Education
16
|
l | ||||||||||||||||
| Demographics | |||||||||||||||||
| Race/Ethnicity | |||||||||||||||||
| Asian/Asian American/West Asian/Middle Eastern | l | ||||||||||||||||
| White/Caucasian | l | l | l | l | |||||||||||||
| Gender | |||||||||||||||||
| Male | l | l | l | ||||||||||||||
| Female | l | l | |||||||||||||||
(1) experience in leadership role as CEO, President or other key executive position of another company and/or institution;
(2) experience as Board member of another public company;
(3) experience in real estate industry, including experience with acquisitions, sales, financings and operation of commercial real estate;
(4) financial or accounting experience and an understanding of financial reporting, internal controls and compliance requirements for public companies;
(5) experience in day-to-day operation of a corporate enterprise or institution;
(6) experience in developing, implementing and assessing a company's operating plan and business strategy to attain a company's goals;
(7) experience in identifying, managing and mitigating enterprise risks, including strategic, regulatory, operational and financial risks;
(8) relevant investment, deal structuring and capital markets expertise;
(9) experience in management and oversight of environmental, social responsibility and corporate governance issues;
(10) direct engagement with investment community;
(11) in-depth understanding of tax laws impacting REITs;
(12) earned a postgraduate degree (e.g., doctorate, master's degree, etc.) or other professional accreditation (e.g., Certified Public Accountant);
(13) experience with technology and cybersecurity issues;
(14) experience in attracting, leading, managing developing, and retaining an organization’s employees;
(15) experience as an educator or administrator (e.g., dean) in a relevant field or school;
(16) legal education or experience practicing law as an attorney
8
Additionally, please note that the average tenure of our Board members is 10 years, the average age of the members of our Board is 68 years old, 40% of our Board members are female, all of our Board members (except our CEO) are independent and two members of our Board joined us in the last 6 years.
DIRECTOR COMPENSATION
|
Name
(1)
|
Fee Earned
in Cash ($)
(2)
|
Stock Awards ($)
(3)
|
Total Compensation ($) | |||||||||||||||||
| Thomas S. Olinger | 67,000 | 50,007 | 117,007 | |||||||||||||||||
| Dr. Robert S. Sullivan | 58,000 | 50,007 | 108,007 | |||||||||||||||||
| Joy L. Schaefer | 63,000 | 50,007 | 113,007 | |||||||||||||||||
| Nina A. Tran | 52,000 | 50,007 | 102,007 | |||||||||||||||||
______________________
(1) Mr. Rady, our Chairman of the Board and Chief Executive Officer, is not included in this table as he is our employee and does not receive compensation for his services as a director. All compensation paid to Mr. Rady for the services he provides to us is reflected in the Summary Compensation Table.
(2) Reflects retainer and meeting fees earned in 2023. Amounts do not include reimbursable costs (i.e., airfare, hotel, car rental, etc.) incurred by directors in connection with their services as directors.
(3) Amounts reflect the full grant-date fair value of restricted stock awards granted in 2023 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the director. We provide information regarding the assumptions used to calculate the value of all restricted stock awards made to directors in Note 10 to the consolidated financial statements contained in our Annual Report on Form 10-K. As of December 31, 2023, each non-employee director held 2,587 shares of restricted stock that had not vested.
Narrative Disclosure to Director Compensation Table
Non-Employee Director Compensation Program
The compensation program for our non-employee directors is intended to fairly compensate our directors for the time and effort necessary to serve on our Board. Non-employee members of our Board receive a combination of cash and equity-based compensation. We reimburse each of our directors for his or her travel expenses incurred in connection with his or her attendance at full Board and committee meetings.
Cash Compensation
. Pursuant to this program, each non-employee director will receive an annual base retainer for his or her services of $40,000, payable in cash in quarterly installments in conjunction with quarterly meetings of the Board. In addition, each non-employee director who serves as the Chairperson of the Audit, Compensation or Governance Committees will receive an additional annual cash retainer of $15,000, $10,000 or $10,000, respectively. Directors also receive additional cash consideration equal to $1,500 for each Board meeting that they attend in person or by telephone, and $1,000 for each committee meeting that they attend in person or by telephone. Non-employee directors are permitted to elect to receive these cash amounts in the form of fully vested shares of our common stock.
Equity Compensation
. Each of our non-employee directors is eligible to receive automatic grants of restricted stock under our Amended and Restated 2011 Equity Incentive Award Plan, or Amended Equity Plan. On the date of each annual meeting of stockholders, each non-employee director who continues to serve on our Board following such annual meeting will be granted an award of restricted stock with a value equal to $50,000, based on the closing price of our common stock on the date of such grant. These awards of restricted stock will vest, subject to the director's continued service, upon the earlier of (i) the one-year anniversary of the date of grant or (ii) the date of the next annual meeting of our stockholders, if such non-employee director continues his or her service on the Board until the next annual meeting of our stockholders, but not thereafter (i.e., if such non-employee director is not re-elected or otherwise determines not to stand for re-election). All awards of restricted stock granted to each non-employee director will vest in full upon a change in control (as defined in the Amended Equity Plan).
Stock Ownership Guidelines for Non-Employee Directors.
We maintain stock ownership guidelines for our non-employee directors pursuant to which such non-employee directors are required to maintain a level of ownership of equity in the Company equal to five times their annual base retainer, subject to certain limited exceptions. Any newly appointed or elected non-employee director will be required to meet this requirement within five years of being appointed. All of our non-employee directors are currently in compliance with our stock ownership guidelines.
9
BOARD STRUCTURE, LEADERSHIP, RISK MANAGEMENT AND SUCCESSION PLANNING
We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:
•
our Board is not staggered, with each of our directors subject to re-election annually;
•
of the five persons who currently serve on our Board, and of the five persons that have been nominated to serve on our Board, our Board has determined that four, or 80%, of such directors satisfy the listing standards for independence of the NYSE and Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act;
•
at least three of our current and nominated directors qualify as an “audit committee financial expert” as defined by the SEC;
•
we have opted out of the control share acquisition statute in the Maryland General Corporation Law, or MGCL, and the business combination provisions of the MGCL;
•
we do not have a stockholder rights plan, or “poison pill”;
•
we prohibit executives and directors from hedging our securities;
•
we maintain stock ownership guidelines pursuant to which our named executive officers are required to hold a number of shares of our common stock having a market value equal to or greater than a multiple of each executive’s base salary, subject to certain limited exceptions; currently all of our named executive officers are in compliance with our stock ownership guidelines;
•
we have an annual “say-on-pay” vote;
•
we have implemented a compensation recovery policy as required by Rule 10D-1 of the Exchange Act, and the listing standards of the NYSE;
•
we are committed to Board diversity;
•
we have active Board oversight of strategy, risk management, and environmental, social and governance (“ESG”) initiatives;
•
we have active shareholder engagement;
•
we have audit committee oversight of our information and cybersecurity risks, including our risk assessment, detection, protection and mitigation systems; and
•
we have annual Board, Board committee and Board member assessment process.
Additionally, we have not given our stockholders the right to amend our Bylaws because our Board continues to believe that it is not prudent at this time to give stockholders a one-way ratchet to make binding amendments to our Bylaws. In our Board's view, it would essentially be irreversible and there has been no data supporting a correlation or link between stockholders' ability to amend bylaws and economic performance of a company. We will continue to consider this matter and engage with our stockholders, as appropriate. However, to date, none of our stockholders have initiated substantive dialogue on this matter with us.
Our directors stay informed about our business by attending meetings of our Board and its committees and through supplemental reports and communications. Our independent directors meet regularly in executive sessions without the presence of our corporate officers or non-independent directors.
Our Board is currently chaired by Mr. Rady, our Chairman and Chief Executive Officer. Our Board believes that Mr. Rady's service as our Chairman is in the best interests of our Company and our stockholders because Mr. Rady possesses detailed and in-depth knowledge of the issues, opportunities and challenges we face, and because he is the person best positioned to develop agendas that ensure that our Board's time and attention is focused on the most critical matters. Our Board believes that Mr. Rady's role as Chairman enables decisive leadership, ensures clear accountability and enhances our ability to communicate our message and strategy clearly and consistently to stockholders, employees and tenants.
10
Succession Planning
. Our Board has implemented an emergency succession plan in case of the sudden or unanticipated resignation, termination, death or temporary or permanent disability of Mr. Rady, or otherwise in case Mr. Rady is unable to perform his duties as Chairman and Chief Executive Officer. This plan is reviewed at least annually by our Board with input from the Governance Committee and currently includes Dr. Sullivan as emergency interim Chairman and Robert F. Barton and Adam Wyll as emergency interim executive committee members. Biographical information with respect to Messrs. Barton and Wyll can be found on page 27 below.
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
Our non-management, independent directors meet without management present each time the full Board convenes for a regularly scheduled meeting. If the Board convenes for a special meeting, the non-management, independent directors will meet in executive session if circumstances warrant. One non-management, independent director will preside as chair over each executive session of the Board that is held without management present; and such non-management, independent director will preside at all meetings of the Board at which our Chairman is not present.
The position of independent chair of the executive sessions of the Board is rotated quarterly among each of the non-management, independent directors in last-name alphabetical order. The current presiding non-management, independent director and additional information on the Board's executive sessions as described in our Corporate Governance Guidelines can be found at the Governance page of the Investors section on our website at
www.americanassetstrust.com
. (Our website address provided above and elsewhere in this Proxy Statement is not intended to function as a hyperlink, and the information on our website is not and should not be considered, part of this Proxy Statement and is not incorporated by reference herein.)
The Board welcomes communications from stockholders. For information on how to communicate with our independent directors, please refer to the information set forth under the heading “Communications with the Board.”
BOARD MEETINGS AND ATTENDANCE
The Board held four regularly scheduled meetings in 2023 to, among other things, review significant developments, analyze and evaluate acquisition, development and financing opportunities, discuss the ongoing impact of the economy, interest rates, inflation and geopolitics on our operations, engage in strategic planning and act on matters requiring Board approval. Each incumbent director attended 100% of the Board meetings and the meetings of committees on which he or she served in 2023.
11
BOARD COMMITTEES
Our Board has established three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The principal functions of each committee are briefly described below. We comply with the listing requirements and other rules and regulations of the NYSE, as amended or modified from time to time, with respect to each of these committees and each of these committees is comprised exclusively of independent directors. Additionally, our Board may from time to time establish other committees to facilitate the management of our Company.
Below is the makeup of our Board committees:
| Name | Audit Committee | Compensation Committee | Governance Committee | |||||||||||||||||
| Ernest Rady* | ||||||||||||||||||||
| Thomas S. Olinger | Chairperson | ☑ | ||||||||||||||||||
| Joy L. Schaefer | ☑ | ☑ | Chairperson | |||||||||||||||||
| Dr. Robert S. Sullivan | Chairperson | ☑ | ||||||||||||||||||
| Nina A. Tran | ☑ | ☑ | ||||||||||||||||||
______________________
* : Chief Executive Officer and Chairman of our Board
☑
: Committee Member
Audit Committee
Our Audit Committee consists of three of our independent directors. We have determined that the Chairperson of our Audit Committee and each other member of our Audit Committee qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and NYSE corporate governance listing standards. Our Board has determined that each of the Audit Committee members is “financially literate” as that term is defined by the NYSE corporate governance listing standards. We have adopted an Audit Committee charter, which details the principal functions of the Audit Committee, including oversight related to:
•
our accounting and financial reporting processes;
•
the integrity of our consolidated financial statements and financial reporting process;
•
our systems of disclosure controls and procedures and internal control over financial reporting;
•
monitoring and oversight of our information and cybersecurity risks, including reviewing and approving our information and cybersecurity policies, procedures and resources, and reviewing our information and cybersecurity risk assessment, detection, protection and mitigation systems;
•
our compliance with financial, legal and regulatory requirements;
•
the evaluation of the qualifications, independence and performance of our independent registered public accounting firm;
•
the performance of our internal audit function; and
•
our overall risk profile.
The Audit Committee is also responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, including all audit and non-audit services, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The Audit Committee also approves the Audit Committee report required by SEC regulations to be included in our annual Proxy Statement. Mr. Olinger is the Chairperson of the Audit Committee as well as an “audit committee financial expert”, and Ms. Schaefer and Ms. Tran are members of the Audit Committee and are both “audit committee financial experts”.
During 2023, the Audit Committee met a total of five times.
12
Compensation Committee
Our Compensation Committee consists of three of our independent directors. We adopted a Compensation Committee charter, which details the principal functions of the Compensation Committee, including:
•
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer's compensation, evaluating our Chief Executive Officer's performance in light of such goals and objectives and determining and approving the remuneration of our Chief Executive Officer based on such evaluation;
•
reviewing and approving the compensation of our named executive officers;
•
reviewing our executive compensation policies and plans;
•
implementing and administering our incentive compensation equity-based remuneration plans;
•
assisting management in complying with our proxy statement and annual report disclosure requirements;
•
administering our compensation recovery policy;
•
producing a report on executive compensation to be included in our annual proxy statement; and
•
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The Compensation Committee may delegate its responsibilities to a subcommittee of the Compensation Committee, provided that such responsibilities do not pertain to matters involving executive compensation. Dr. Sullivan is Chairperson of the Compensation Committee and Mr. Olinger and Ms. Schaefer are members of the Compensation Committee. During 2023, the Compensation Committee met one time.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee, or Governance Committee, consists of three of our independent directors. We adopted a Nominating and Corporate Governance Committee charter, which details the principal functions of the Governance Committee, including:
•
identifying and recommending to the full Board qualified candidates for election as directors and recommending nominees for election as directors at the annual meeting of stockholders;
•
developing and recommending to the Board corporate governance guidelines and principles and implementing and monitoring such guidelines and principles;
•
reviewing and making recommendations on matters involving the general operation of the Board, including Board size and composition and committee composition and structure;
•
recommending to the Board nominees for each committee of the Board;
•
facilitating the annual assessment of the Board's performance as a whole and of the individual directors, as required by applicable law, regulations and the NYSE corporate governance listing standards; and
•
overseeing the Board's evaluation of the performance of management.
Ms. Schaefer is the current Chairperson of the Governance Committee and Dr. Sullivan and Ms. Tran are members of the Governance Committee. During 2023, our Governance Committee met one time.
13
AUDIT COMMITTEE REPORT
The information contained in this Report of the Audit Committee shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act (except to the extent that we specifically incorporate this information by reference).
Although the Audit Committee of the Board of Directors (the “Audit Committee”) oversees the financial reporting process of American Assets Trust, Inc., a Maryland corporation (the “Company”), on behalf of the Board of Directors (the “Board” ) of the Company, consistent with the Audit Committee's written charter, management has the primary responsibility for preparation of the Company's consolidated financial statements in accordance with generally accepted accounting principles and the reporting process, including disclosure controls and procedures and the system of internal control over financial reporting. The Company's independent registered public accounting firm is responsible for auditing the annual financial statements prepared by management.
The Audit Committee has reviewed and discussed with management and the Company's independent registered public accounting firm, Ernst & Young LLP, the Company's December 31, 2023 audited financial statements. Prior to the commencement of the audit, the Audit Committee discussed with the Company's management and independent registered public accounting firm the overall scope and plans for the audit. Subsequent to the audit and each of the quarterly reviews, the Audit Committee discussed with the independent registered public accounting firm, with and without management present, the results of their examinations or reviews, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of specific judgments and the clarity of disclosures in the consolidated financial statements.
In addition, the Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence. The Audit Committee discussed with the independent registered public accounting firm its independence from the Company and considered the compatibility of non-audit services with its independence.
Based upon the reviews and discussions referred to in the foregoing paragraphs, the Audit Committee recommended to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Thomas S. Olinger, Chairperson
Joy L. Schaefer
Nina A. Tran
14
CORPORATE GOVERNANCE
Our Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide effective oversight of management. Our Board understands that no single approach to Board leadership is universally accepted and that the appropriate leadership structure may differ depending on the size, industry, operations, history and culture of a company.
Our Board currently believes that our existing leadership structure, under which (i) our Chief Executive Officer serves as Chairman of the Board and (ii) the presiding non-management, independent director assumes specific responsibilities on behalf of the independent directors, is effective, provides the appropriate balance of authority between those who oversee the Company and those who manage it on a day-to-day basis, and achieves the optimal governance model for us and for our stockholders. Mr. Rady’s knowledge of the issues, opportunities and risks facing us, our business and our industry renders him best positioned among our directors to fulfill the Chairman’s responsibility to focus the time and attention of our Board on the most critical matters.
Our Governance Committee regularly reviews our corporate governance posture in light of evolving trends in governance and stockholder rights, and makes recommendations to our Board.
Our directors stay informed about our business by attending meetings of our Board and its committees and through supplemental reports and communications. Our independent directors meet regularly in executive sessions without the presence of our executive officers or non-independent directors.
CODE OF BUSINESS CONDUCT AND ETHICS
Our Board established a Code of Business Conduct and Ethics that applies to our officers, directors and employees. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:
•
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
•
full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;
•
compliance with applicable governmental laws, rules and regulations;
•
prompt internal reporting of violations of the code to appropriate persons identified in the code; and
•
accountability for adherence to the Code of Business Conduct and Ethics.
Any waiver of the Code of Business Conduct and Ethics for our executive officers or directors must be approved by a majority of our independent directors, and any such waiver shall be promptly disclosed as required by law or NYSE regulations.
The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee charters, along with the Code of Business Conduct and Ethics and Corporate Governance Guidelines, are available at the Governance page of the Investors section on our website at
www.americanassetstrust.com
. In addition, these documents are also available in print to any stockholder who requests a copy from Investor Relations at American Assets
Trust, Inc., Torrey Point, 3420 Carmel Mountain Road, Suite 100, San Diego, CA 92121, or by email at info@americanass
ets.com. In accordance with the Corporate Governance Guidelines, the Governance Committee oversees an annual assessment by the Board of the Board's performance. The Governance Committee is responsible for establishing the evaluation criteria and implementing the process for such evaluation, as well as considering other corporate governance principles that may, from time to time, merit consideration by the Board. (Our website address provided above and elsewhere in this Proxy Statement is not intended to function as a hyperlink, and the information on our website or other referenced materials is not, and should not be considered, part of this Proxy Statement and is not incorporated by reference herein.)
ROLE OF THE BOARD IN RISK OVERSIGHT
One of the key functions of our Board is informed oversight of our risk management process. Our Board administers this oversight function directly, with support from its three standing committees, the Audit Committee, the Governance Committee and the Compensation Committee, each of which addresses risks specific to its respective areas of oversight.
15
In particular, our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. Our Audit Committee also monitors and oversees our information and cybersecurity risks, including reviewing and approving any information and cybersecurity policies, procedures and resources, and reviewing our information and cybersecurity risk assessment, detection, protection and mitigation systems; and the Audit Committee monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function.
Our Governance Committee monitors the effectiveness of our Corporate Governance Guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct.
Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
Additionally, our Board, through our ESG Committee (as described on page 20 below) oversees (i) the physical and transition risks of our properties associated with climate change relating to environmental and climate action and resilience trends and issues, (ii) our progress in achieving our sustainability goals and initiatives and (iii) regulatory compliance matters that may impact our sustainability objectives.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since January 2023, there has been no insider participation or compensation committee interlocks of the Compensation Committee. At all times since January 2023, the Compensation Committee has been comprised solely of independent, non-employee directors.
COMMUNICATIONS WITH THE BOARD
Stockholders and other interested parties may write to the entire Board or any of its members at American Assets Trust, Inc.,
c/o Adam Wyll, President and Chief Oper
ating Officer, Torrey Point, 3420 Carmel Mountain Road, Suite 100, San Diego, CA 92121. Stockholders and other interested parties also may e-mail the Chairman, the entire Board or any of its members c/o awyll@americanassets.com, or otherwise e-ma
il all of our independent directors c/o independentdirectors@americanassets.com. The Board may not be able to respond to all stockholder inquiries directly. Therefore, the Board has developed a process to assist it with managing inquiries.
Our General Counsel will perform a legal review to ensure that communications forwarded to the Chairman, the Board or any of its members preserve the integrity of the process. While the Board oversees management, it does not participate in day-to-day management functions or business operations, and is not normally in the best position to respond to inquiries with respect to those matters. For example, items that are unrelated to the duties and responsibilities of the Board such as spam, junk mail and mass mailings, ordinary course disputes over fees or services, personal employee complaints, business inquiries, new product or service suggestions, resumes and other forms of job inquiries, surveys, business solicitations or advertisements will not be forwarded to the Chairman, our Board or any of its members. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be forwarded to the Chairman, our Board or any of its members and will not be retained. Such material may be forwarded to local or federal law enforcement authorities.
Any communication that is relevant to the conduct of our business and is not forwarded will be retained for one year and made available to the Chairman and any other independent director on request. The independent directors grant our General Counsel discretion to decide what correspondence will be shared with our management and specifically instruct that any personal employee complaints be forwarded to our Human Resources Department. If a response on behalf of the Board is appropriate, we gather any information and documentation necessary for answering the inquiry and provide the information and documentation as well as a proposed response to the appropriate directors. We also may attempt to communicate with the stockholder for any necessary clarification. Our General Counsel (or a designee thereof) reviews and approves responses on behalf of the Board in consultation with the applicable director, as appropriate.
Certain circumstances may require that the Board depart from the procedures described above, such as the receipt of threatening letters or e-mails or voluminous inquiries with respect to the same subject matter. Nevertheless, the Board considers stockholder questions and comments important, and endeavors to respond promptly and appropriately.
16
NOMINATION PROCESS FOR DIRECTOR CANDIDATES
AND CONSIDERATION OF BOARD DIVERSITY
Nomination Process for Director Candidates
The Governance Committee is, among other things, responsible for identifying and evaluating potential candidates and recommending candidates to the Board for nomination. The Governance Committee is governed by a written charter, a copy of which is available at the Governance page of the Investors section of our website at
www.americanassetstrust.com
. (Our website address provided above and elsewhere in this Proxy Statement is not intended to function as a hyperlink, and the information on our website is not, and should not be considered part of this Proxy Statement and is not incorporated by reference herein.)
The Governance Committee regularly reviews the composition of the Board and whether the addition of directors with particular experiences, skills or characteristics would make the Board more effective. When a need arises to fill a vacancy, or it is determined that a director possessing particular experiences, skills, or characteristics would make the Board more effective, the Governance Committee initiates a search. As a part of the search process, the Governance Committee may consult with other directors and members of senior management, and may hire a search firm to assist in identifying and evaluating potential candidates.
When considering a candidate, the Governance Committee reviews the candidate's experiences, skills and characteristics. The Governance Committee also considers whether a potential candidate would otherwise qualify for membership on the Board, and whether the potential candidate would likely satisfy the independence requirements of the NYSE as described below.
The Governance Committee has not set minimum qualifications for Board nominees. Candidates are selected on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, their ability to make independent, analytical inquiries, financial literacy, mature judgment, high performance standards, familiarity with our business and industry and an ability to work collegially. We also consider how other factors, including gender, underrepresented community affiliation, various and relevant career experience and technical skills, and having a Board that is, as a whole, diverse, may contribute to the efficacy of the Board and its oversight. Where appropriate and legally permitted, we will conduct a criminal and background check on the candidate. In addition, at least a majority of the Board must be independent as determined by the Board under the guidelines of the NYSE listing standards, and at least one member of the Board should have the qualifications and skills necessary to be considered an “audit committee financial expert” under Section 407 of the Sarbanes-Oxley Act of 2002, as defined by the rules of the SEC.
All potential candidates are interviewed by the Chairman of the Board and Chairperson of our Governance Committee, and, to the extent practicable, the other members of the Governance Committee, and may be interviewed by other directors and members of senior management as desired and as schedules permit. In addition, our General Counsel conducts a review of the director questionnaire submitted by the candidate and, as appropriate, a background and reference check is conducted. The Governance Committee then meets to consider and approve the final candidates, and either makes its recommendation to the Board to fill a vacancy, or add an additional member, or recommends a slate of candidates to the Board for nomination for election to the Board. The selection process for candidates is intended to be flexible, and the Governance Committee, in the exercise of its discretion, may deviate from the selection process when particular circumstances warrant a different approach.
Stockholders may recommend candidates to our Board. Recommendations received from stockholders will be considered and processed and are subject to the same criteria as are candidates nominated by the Governance Committee. The stockholder must submit a detailed resume of the candidate and an explanation of the reasons why the stockholder believes the candidate is qualified for service on our Board and how the candidate satisfies the Board's criteria. The stockholder must also provide such other information about the candidate as is set forth in our Bylaws and as would be required by the SEC rules to be included in a proxy statement. In addition, the stockholder must include the consent of the candidate and describe any arrangements or undertakings between the stockholder and the can
didate regarding the nomination. The stockholder must submit proof of stockholdings in American Assets Trust, Inc. All communications are to be directed to the Chairperson of the Governance Committee, c/o American Assets Trust, Inc., Torrey Point, 3420 Carmel Mountain Road, Suite 100, San Diego, CA 92121, Attention: General Counsel. For any annual meeting, recomm
endations received after 120 days prior to the anniversary of the date of the proxy statement for the prior year's annual meeting will likely not be considered timely for consideration by the Governance Committee for that annual meeting.
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Board Diversity
We are committed to diversity and recognize the benefits of having a diverse Board. We view increasing diversity at the Board level as essential to promoting the inclusion of different ideas and perspectives, maintaining our competitive advantage and supporting the attainment of our strategic objectives. We believe that a truly diverse Board will include and make good use of differences in the skills, regional and industry experience, background, race, ethnicity, gender, cultural and other diverse distinctions between directors. These differences are considered in determining the optimum composition of our Board. All Board appointments are based on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective. The Governance Committee regularly reviews and assesses Board composition on behalf of the Board and recommends the appointment of new directors.
Several years ago, the Governance Committee resolved to strengthen its commitment to diversity by seeking to identify qualified female candidates for appointment. Since then, two independent female directors have been added to our Board. Additionally, we are striving to achieve further inclusion of underrepresented communities on the Board. We currently have one director who identifies as a member of an traditionally underrepresented community. We will continue to consider whether our Board reflects an appropriate mix of backgrounds and experiences by annually reviewing and assessing the size, composition and operation of the Board, and annually considering the recommendation of candidates for appointment or nomination to the Board based upon an assessment of the independence, skills, qualifications and experience of potential candidates. The Board will routinely assess whether the Board is composed of appropriately qualified members with a broad range of expertise relevant to our business.
AUDIT COMMITTEE FINANCIAL EXPERTS
Our Board has determined that Mr. Olinger, Ms. Schaefer and Ms. Tran qualify as “audit committee financial experts,” as this term has been defined by the SEC in Item 407(d)(5)(ii) of Regulation S-K. Mr. Olinger, Ms. Schaefer and Ms. Tran were each determined by our Board to be “financially literate” in accordance with SEC rules, including based on their prior experience. Our Board determined that Mr. Olinger, Ms. Schaefer and Ms. Tran acquired the required attributes for designation as “audit committee financial experts” based on the relevant experience discussed below, which forms of experience are not listed in any order of importance and were not assigned any relative weights or values by our Board in making such determinations.
From May 2012 until April 2022, Mr. Olinger serve
d as the chief financial officer of Prologis, Inc., a global leader in logistics real estate with an equity market capitalization of o
ver $120 billi
on as of January 1, 2024. Mr. Olinger was previously a corporate controller for Oracle Corporation and an audit partner at A
rthur Andersen LLP; he holds a Bachelor of Science degree in finance; and he has extensive experience with real estate investment trusts, accounting and capital markets, as described in his biography above.
Ms. Schaefer has served in multiple senior executive roles in the financial services industry, including as an operating partner of a private equity firm where she was a business and operations advisor to real estate specialty finance companies; as president and chief operating officer of Ameriquest Mortgage; and in various executive management positions, as president, vice chairman, chief executive officer and/or chief operating officer of both a publicly traded financial services holding company and publicly traded national automobile finance company, as well as chief financial officer and treasurer of Western Financial Bank, Inc. Ms. Schaefer was previously an audit manager for Ernst & Young LLP, and was a licensed Certified Public Accountant in California, Illinois and Oklahoma, as described in her biography above.
From March 2021 until December 2022, Ms. Tran served as the chief financial officer for Pacaso, a real estate technology company focused on second home co-ownership. Ms. Tran was previously the chief financial officer of Veritas Investments, Inc., an owner and manager of mixed-use real estate properties, the chief financial officer of Starwood Waypoint Residential Trust, a leading publicly-traded REIT and was a senior associate with PricewaterhouseCoopers, as described in her biography above.
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AUDIT COMMITTEE PRE-APPROVAL POLICY
The Audit Committee's policy is to pre-approve all significant audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Ernst & Young LLP's fees for the fiscal years ended December 31, 2023 and 2022 were as follows:
| Fiscal Year Ended December 31 | |||||||||||
| 2023 | 2022 | ||||||||||
| Audit Fees | $ | 1,043,000 | $ | 960,000 | |||||||
| Audit-Related Fees | — | 30,000 | |||||||||
| Tax Fees | 179,550 | 199,950 | |||||||||
| Total Fees | $ | 1,222,550 | $ | 1,189,950 | |||||||
A description of the types of services provided in each category is as follows:
Audit Fees —
Includes audit of our annual financial statements; review of our quarterly reports on Form 10-Q; issuance of consents, issuance of comfort letters as part of underwriters' due diligence and review of draft responses to SEC comment letters.
Audit-Related Fees —
Includes access to accounting research database and financial due diligence in connection with acquisitions.
Tax Fees —
Includes tax preparation services and various domestic tax planning and advice.
All of the services performed by Ernst & Young LLP for us during 2023 and 2022 were either expressly pre-approved by the Audit Committee or were pre-approved in accordance with the Audit Committee Pre-Approval Policy. The Audit Committee was provided with regular updates as to the nature of such services and fees paid for such services.
BOARD ATTENDANCE AT ANNUAL MEETING OF STOCKHOLDERS
While the Board understands that there may be situations that prevent a director from attending an annual meeting of stockholders, the Board encourages all directors to attend our annual meetings of stockholders. Mr. Rady, Ms. Schaefer and Dr. Sullivan attended our 2023 Annual Meeting of Stockholders.
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ENVIRONMENTAL SUSTAINABILITY, SOCIAL RESPONSIBILITY,
GOVERNANCE AND HUMAN CAPITAL
For our full annual 2022 Sustainability Report, please refer to our website: https://www.americanassetstrust.com/sustainability, which, for the avoidance of doubt, is not hereby incorporated by reference.
We continue to work on our environmental sustainability, social responsibility and corporate governance, or ESG, initiatives, with the assistance of our Environmental Sustainability, Social Responsibility and Governance Committee (the “ESG Committee”), as outlined in our Corporate Sustainability Policy and briefly described below. Our ultimate ESG vision is to reduce the impact of climate change, for the communities in which our properties reside to thrive, and for our team members to have a diverse and inclusive work culture, physical and mental well-being, and ample opportunity to develop professionally within our organization. This entails a range of ESG considerations and efforts, certain of which are not viewed as financially material, and as such are not prioritized above material matters in our decision-making. We understand that ESG efforts are important to certain stakeholders. As such, we undertake a broader range of efforts, as well as disclose on a broader range of matters, than are necessarily material to our operational and financial performance.
The ESG Committee is composed of team members from across our organization, including members of our executive management team, and is responsible for creating a road-map to reach our annual ESG objectives; identifying and reviewing ESG-related risks, financial impacts, opportunities, solutions, and short- and long-term impacts of our ESG projects with respect to our ESG initiatives; initiating and overseeing ESG projects; and reporting to the Board and our executive management team the progress of our ESG projects with respect to our ESG vision. Climate and other ESG-related risks are also considered in our enterprise risk management framework and are overseen generally by our Board. For more information on the Board’s oversight of such risks, please refer to the section of this Proxy Statement titled “Role of the Board in Risk Oversight.”
As discussed above, this Proxy Statement contains forward-looking statements as well as information that is not necessarily “material” under the federal securities laws for SEC reporting purposes, but that is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. Much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change, as well as the risks identified in the Risk Factors of our Form 10-K and quarterly reports on Form 10-Q. For example, our disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control.
Our Board has general oversight of our ESG initiatives, projects, progress, and risk management, receiving updates from management and the ESG Committee on ESG matters quarterly.
Meaningful Impact
We continue to focus our resources in a manner that will make a meaningful impact. To better align our efforts with the priorities of our stakeholders, in 2022 we conducted our first “stakeholder assessment” by surveying over 5,000 individuals from a variety of stakeholder groups on a broad range of ESG topics. Among the respondents’ top priorities are ethical and responsible business conduct and policies, maintaining and protecting data security, utilizing renewable energy and pay equity.
Environmental Sustainability
We are dedicated to protecting and preserving Earth’s natural resources, and we seek tenants and vendors who are aligned with us in this regard. We understand the global effects of climate change and support efforts to slow its pace. Throughout our portfolio, we have implemented, where feasible, the latest advances in green technology and emission-reduction methods aimed to reduce pollution and consumption, in alignment with best practices and industry accepted guidelines and regulation.
Social Responsibility and Governance
When our team members and the people in our communities thrive, so do we. Through partnerships with nonprofit organizations, charitable and financial contributions, in-kind donations, and volunteer efforts, we strive to make a positive impact on the people and businesses within our communities.
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Human Capital
We believe our greatest resource is our team members. We are an equal opportunity employer who strives to provide equal opportunity and fair treatment to individuals on the basis of merit, including not making employment (such as hiring, compensation, promotion, and firing) decisions on the basis of any legally protected characteristic. This expectation is reflected in our Code of Business Conduct and Ethics Policy, and we also take steps to promote the elimination of bias regardless of context as well. We are dedicated to fostering a culture of diversity, inclusion and wellness, and professional development, and recognize this culture allows our team members, and our organization as a whole, to flourish. We maintain an open-door policy and encourage our team members to share their opinions in open dialogues with our human resources department and senior management. We provide all team members a wide range of professional development experiences and opportunities, both formal and informal. The Company continues to make efforts to provide a positive work environment for all team members.
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We see the value of a diverse work force to our organization and our team members. The following provides a snapshot of our workforce diversity as of December 31, 2023
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