TERRENO REALTY CORP
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2054
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Filed by a Party other than the Registrant o
Check the appropriate box:
| o Preliminary Proxy Statement | ||
| o Confidential, for Use of the Commission Only (as permitted by Rule 14a- 6(e)(2)) | ||
| þ Definitive Proxy Statement | ||
| o Definitive Additional Materials | ||
| o Soliciting Material Pursuant to §240.14a-12 |
Terreno Realty Corporation
(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):
| þ No fee required | ||
| o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: |
| o Fee paid previously with preliminary materials | ||
| o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) (set forth the amount on which the filing fee is calculated and state how it was determined |
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing Party: | ||
| (4) | Date Filed: |
Table of Contents
16 Maiden Lane, Fifth Floor
San Francisco, California 94108
(415) 655-4580
San Francisco, California 94108
(415) 655-4580
March 11, 2011
Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders of Terreno Realty Corporation. This meeting will be
held on Wednesday, May 18, 2011, at 8:00 a.m., local
time, at our corporate headquarters, 16 Maiden Lane, Fifth
Floor, San Francisco, California 94108.
The attached proxy statement, accompanied by the notice of
meeting, describes the matters expected to be acted upon at the
meeting. We urge you to review these materials carefully and to
use this opportunity to take part in the affairs of Terreno
Realty Corporation by voting on the matters described in this
proxy statement. We hope that you will be able to attend the
meeting. Following the formal portion of the meeting, our
directors and management team will be available to answer
appropriate questions.
Your vote is important. Whether or not you plan to attend the
meeting, please complete the enclosed proxy card and return it
as promptly as possible or authorize a proxy to vote your shares
by calling the toll-free telephone number or via the Internet.
The enclosed proxy card contains instructions regarding all
three methods of voting. If you attend the meeting, you may
continue to have your shares voted as you have previously
instructed or you may withdraw your proxy at the meeting and
vote your shares in person
We have also enclosed a copy of our 2010 Annual Report. Thank
you for your interest in Terreno Realty Corporation.
Sincerely,
 W. Blake Baird Chairman and Chief Executive Officer |
 Michael A. Coke President and Chief Financial Officer |
Table of Contents
TERRENO
REALTY CORPORATION
16 Maiden Lane, Fifth Floor
San Francisco, California 94108
16 Maiden Lane, Fifth Floor
San Francisco, California 94108
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To be Held on May 18, 2011
To be Held on May 18, 2011
To Our Stockholders:
Notice is hereby given that the 2011 annual meeting of the
stockholders of Terreno Realty Corporation, a Maryland
corporation, will be held on Wednesday, May 18, 2011 at
8:00 a.m., local time, at 16 Maiden Lane, Fifth Floor,
San Francisco, California 94108. At the meeting,
stockholders will consider and vote on the following matters:
1. The election of six directors, each to serve until the
next annual meeting of stockholders and until his successor has
been duly elected and qualifies;
2. A resolution to approve, on a non-binding, advisory
basis, the compensation of certain executives, as more fully
described in the accompanying proxy statement;
3. The determination, on a non-binding, advisory basis, of
the frequency of future non-binding, advisory votes on executive
compensation;
4. The ratification of the appointment of
Deloitte & Touche LLP as our independent registered
certified public accounting firm for the 2011 fiscal
year; and
5. Such other business as may properly come before the
annual meeting, including any adjournments or postponements of
the meeting.
If you were a stockholder of record as of the close of business
on February 28, 2011, you can vote in person or by proxy at
the meeting. If you do not plan to attend the meeting and vote
in person, please authorize a proxy to vote your shares in one
of the following ways:
| • | Use the toll-free telephone number shown on your proxy card on or before 8:00 p.m., pacific time, on May 17, 2011 (this call is toll-free if made in the United States or Canada); | |
| • | Go to the website address shown on your proxy card on or before 8:00 p.m., pacific time, on May 17, 2011 and authorize a proxy via the Internet; or | |
| • | Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope so that it is received by 8:00 p.m., pacific time, on May 17, 2011. |
Stockholders who authorize a proxy over the Internet, who
authorize a proxy by telephone or who return proxy cards by mail
prior to the meeting may nonetheless attend the meeting, revoke
their proxies and vote their shares in person.
By Order of our Board of Directors
/s/ W.
Blake Baird
Chairman and Chief Executive Officer and
Secretary
San Francisco, California
March 11, 2011
TABLE OF
CONTENTS
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Table of Contents
TERRENO
REALTY CORPORATION
16 Maiden Lane, Fifth Floor
San Francisco, California 94108
(415) 655-4580
16 Maiden Lane, Fifth Floor
San Francisco, California 94108
(415) 655-4580
PROXY
STATEMENT
2011 ANNUAL MEETING OF STOCKHOLDERS
2011 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS
AND ANSWERS
| Q: | Why did you send me this proxy statement? | |
| A: | We sent you this proxy statement and the enclosed proxy card because our board of directors is soliciting proxies to be voted at our annual meeting. The annual meeting will be held at 16 Maiden Lane, Fifth Floor, San Francisco, California 94108 on Wednesday, May 18, 2011, at 8:00 a.m., local time. This proxy statement summarizes the information you need to know to vote by proxy or in person at the annual meeting. You do not need to attend the annual meeting in person in order to vote. | |
| Q: | When was the proxy statement mailed? | |
| A: | The proxy statement, the enclosed proxy card and the 2010 annual report are being mailed to stockholders beginning on or about March 11, 2011. | |
| Q: | Who is entitled to vote? | |
| A: | All stockholders of record as of the close of business on February 28, 2011, the record date, are entitled to receive notice of the annual meeting and to cast one vote for each share of common stock they held of record at the close of business on the record date. | |
| Q: | What is the quorum for the meeting? | |
| A: | Stockholders entitled to cast a majority of all votes entitled to be cast, as of the close of business on the record date, will constitute a quorum for the transaction of business at the annual meeting. No business may be conducted at the meeting if a quorum is not present. Broker non-votes (defined below) and abstentions will be counted as present in determining whether or not there is a quorum. As of the close of business on the record date, 9,292,169 shares of common stock were issued and outstanding. | |
| If stockholders entitled to cast a majority of all votes entitled to be cast are not present, in person or by proxy, at the annual meeting, the chairman 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 February 28, 2011. Notice need not be given of the new date, time or place if announced at the meeting before an adjournment is taken. | ||
| Q: | How many votes do I have without attending the annual meeting? | |
| A: | You are entitled to cast one vote for each share of our common stock you owned of record on the record date on each item submitted to you for consideration. | |
| Q: | How do I vote without attending the annual meeting? | |
| A: | Whether or not you plan to attend the annual meeting, we urge you authorize your proxy to vote by completing, dating, signing and promptly returning the proxy card in the self-addressed stamped envelope provided. You may also authorize your proxy to vote your shares by the Internet or telephone as described in your proxy card. Authorizing your proxy by the Internet, mailing a proxy card or telephone will not limit your right to attend the annual meeting and vote your shares in person. Your proxy (one of the individuals named in your proxy card) will vote your shares per your instructions. |
Table of Contents
| Q: | How do I vote my shares that are held by my broker, bank or other nominee? | |
| A: | If you have shares held through a broker, bank or other nominee, you should instruct your broker, bank or other nominee to vote your shares by following the instructions that the broker, bank or other nominee provides to you. Most brokers, banks or other nominees allow you to provide voting instructions by the Internet, mail or telephone. | |
| Q: | What am I voting on? | |
| A: | You are being asked to consider and vote on the following proposals: | |
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• a proposal to elect six directors, each to serve
until the next annual meeting of stockholders and until his
successor has been duly elected and qualifies;
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• a proposal to adopt a resolution to approve, on a
non-binding, advisory basis, certain executive compensation as
more fully described in this proxy statement;
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• a proposal to determine, on a non-binding, advisory
basis, of the frequency of future non-binding, advisory votes on
executive compensation;
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• a proposal to ratify the appointment of
Deloitte & Touche LLP as our independent registered
certified public accounting firm for the 2011 fiscal year.
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| In addition, your proxies will have the authority to vote in their discretion as to any other business as may properly come before the annual meeting, including any adjournments or postponements thereof. | ||
| Q: | What vote is required to approve the proposals assuming that a quorum is present at the annual meeting? |
The following table sets forth the voting requirements with
respect to each of the proposals:
|
Proposal 1
|
Election of Directors | Each director must be elected by a majority of the votes cast. Accordingly, in an uncontested election, a nominee is elected if he or she receives more “FOR” votes than the total number of “AGAINST” and “WITHHELD” votes. Please see the section entitled “Vote Required — Majority Vote Standard for Election of Directors” for a more detailed description of the majority voting standard in our bylaws. | ||
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Proposal 2
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Non-binding, advisory approval of executive compensation | To be adopted by stockholders, this resolution must receive the affirmative “FOR” vote of a majority of votes cast on this proposal at the annual meeting. | ||
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Proposal 3
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Non-binding, advisory determination of the frequency of future non-binding, advisory votes on executive compensation | To be approved by stockholders, a particular frequency alternative must receive the affirmative “FOR” vote of a majority of votes cast on this proposal at the annual meeting. Because there are three alternatives, it is possible that none of the three choices will receive a majority of the votes cast. Please see the section entitled “Proposal 3-Non-Binding, Advisory Determination of the Frequency of Future Non-Binding, Advisory Votes on Executive Compensation — Vote Required; Effect of Vote” for more information. | ||
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Proposal 4
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Ratification of the Appointment of Independent Registered Certified Public Accounting Firm | To be approved by stockholders, this proposal must receive the affirmative “FOR” vote of a majority of votes cast on this proposal at the annual meeting. |
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For each of the proposals, abstentions and broker non-votes are
not counted as votes cast and will have no effect on the result
of the vote. Instructions to “withhold” authority to
vote for any nominee will have the effect of a vote against the
election of that nominee.
| Q: | Will there be any other items of business on the agenda? | |
| A: | Our board of directors does not know of any other matters that may be properly brought before the annual meeting nor does it foresee or have reason to believe that proxy holders will have to vote for substitute or alternate nominees for election to our board of directors. In the event that any other matter should properly come before the annual meeting or any nominee is not available for election, the persons named in the enclosed proxy will have discretionary authority to vote all proxies with respect to such matters in accordance with their discretion. | |
| Q: | What happens if I submit my proxy without providing voting instructions on all proposals? | |
| A: | If you are a stockholder of record and properly submit your proxy via the Internet, mail or telephone, your proxy will be voted at the annual meeting in accordance with your directions. If you sign and return a proxy card without giving specific voting instructions, then the Company-designated proxy holders will vote your shares in the manner recommended by our board of directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting. | |
| If you are a beneficial owner of shares and your broker, bank or nominee does not receive instructions from you about how your shares are to be voted, one of two things can happen, depending on the type of proposal. Pursuant to New York Stock Exchange, or NYSE, rules, brokers, banks and nominees have discretionary power to vote your shares with respect to “routine” matters such as the ratification of the appointment of our independent registered certified public accounting firm, but they do not have discretionary power to vote your shares on “non-routine” matters. Pursuant to recent changes in NYSE rules, the election of directors, the non-binding, advisory approval of executive compensation and the non-binding, advisory determination on the frequency of future non-binding, advisory votes on executive compensation are considered non-routine matters. A broker, bank or nominee may not vote your shares with respect to non-routine matters if you have not provided instructions. This is called a “broker non-vote.” We strongly encourage you to submit your proxy and exercise your right to vote as a stockholder. | ||
| Q: | Who has paid for this proxy solicitation? | |
| A: | We have paid the entire expense of preparing, printing and mailing this proxy statement and any additional materials furnished to stockholders. | |
| Q: | May stockholders ask questions at the annual meeting? | |
| A: | Yes. There will be time allotted at the end of the meeting when our representatives will answer appropriate questions from the floor. | |
| Q: | How do I submit a proposal or nominate a candidate for election as a director at the 2012 annual meeting of stockholders? | |
| A: | Our bylaws currently provide that in order for a stockholder to nominate a candidate for election as a director at an annual meeting of stockholders or propose business for consideration at such meeting, written notice accompanied by the information and other materials specified in our bylaws generally must be delivered to our corporate secretary not later than the close of business on the 120th day, and not earlier than the 150th day, prior to the first anniversary of the date of the notice for the preceding year’s annual meeting. Accordingly, a stockholder nomination or proposal intended to be considered at the 2012 annual meeting of stockholders, but not included in our proxy statement, generally must be received by our corporate secretary after October 12, 2011 and prior to 5:00 p.m., Eastern Time, on November 12, 2011. If the 2012 annual meeting of stockholders is scheduled to take place before April 18, 2012 or after June 17, 2012, then notice must be delivered no earlier than the 150th day prior to the 2012 annual meeting of stockholders and not later than the close of business on the later of the 120th day prior to the 2012 annual meeting of stockholders or the tenth day following the day on |
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| which public announcement of the date of the 2012 annual meeting of stockholders is first made by the Company. If the number of directors to be elected at the 2012 annual meeting of stockholders is increased, and there is no public announcement of such increase before November 2, 2011, then notice of nominees for any new positions created by such increase must be delivered not later than 5:00 p.m., Eastern Time, on the later of November 12, 2011 and the tenth day after the day on which public announcement of such increase is first made by the Company. Proposals or nominations and the other materials required by our bylaws should be mailed to the attention of our corporate secretary at 16 Maiden Lane, Fifth Floor, San Francisco, CA 94108. A copy of the bylaws may be obtained from our corporate secretary by written request to the same address. |
The date by which we must receive stockholder proposals for
inclusion in the proxy materials relating to the 2012 annual
meeting of stockholders, or for presentation at such meeting, is
November 12, 2011. Stockholder proposals to be included in
our proxy materials relating to the 2012 annual meeting of
stockholders must comply with all of the applicable requirements
set forth in the rules and regulations of the Securities and
Exchange Commission, or SEC, including
Rule 14a-8.
Our board of directors will review any stockholder proposals
that are timely submitted and will determine whether such
proposals meet the criteria for inclusion in the proxy
solicitation materials or for consideration at the 2012 annual
meeting.
| Q: | Can I change my vote after I have voted? | |
| A: | Yes. Proxies properly submitted by the Internet, mail or telephone do not preclude a stockholder from voting in person at the meeting. A stockholder may revoke a proxy at any time prior to its exercise by filing with our corporate secretary a duly executed revocation of proxy, by properly submitting, either by Internet, mail or telephone, a proxy to our corporate secretary bearing a later date or by appearing at the meeting and voting in person. Attendance at the meeting will not by itself constitute revocation of a proxy. If you have shares held through a broker, bank or other nominee and you instructed your broker, bank or other nominee to vote your shares by following the instructions that the broker, bank or other nominee provided to you, you may change your voting instructions by submitting new voting instructions to your broker, bank or nominee. | |
| Q: | Can I find additional information on the Company’s website? | |
| A: | Yes. Our website is located at http://www.terreno.com. Although the information contained on our website is not part of this proxy statement and is not incorporated by reference in this proxy statement, you can view additional information on the website, such as our corporate governance guidelines, our code of business conduct and ethics, charters of our board committees and reports that we file with the SEC. |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 18,
2011:
Our proxy statement and 2010 annual report, including our annual
report on
Form 10-K
for the fiscal year ended December 31, 2010, are available
at www.edocumentview.com/TRNO.
CORPORATE
GOVERNANCE AND RELATED MATTERS
Our business is managed under the direction of our board of
directors. Our board of directors establishes our overall
corporate policies, reviews the performance of our senior
management in executing our business strategy and managing our
day-to-day
operations and acts as an advisor to our senior management. Our
board’s mission is to further the long-term interests of
our stockholders. Members of our board of directors are kept
informed of our business through discussions with our
management, primarily at meetings of our board of directors and
its committees, and through reports and analyses presented to
them. Significant communications between our directors and
senior management occur apart from such meetings. Our board of
directors and each of its committees — audit,
compensation and nominating and corporate governance —
also have the authority to retain, at our expense, outside
counsel, consultants or other advisors in the performance of
their duties.
Charters for the audit, compensation and nominating and
corporate governance committees, our corporate governance
guidelines and our code of business conduct and ethics may be
viewed on our website at
http://www.terreno.com
under the “Investors & Media” tab under
the subheading “Corporate Information” and under the
heading entitled “Governance Documents”. These
documents are also available without charge to
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stockholders who request them by contacting Terreno Realty
Corporation — Investor Relations, at 16 Maiden Lane,
Fifth Floor, San Francisco, California 94108.
Independent
Directors
Under the corporate governance standards of the NYSE, at least a
majority of our directors and all of the members of the audit
committee, compensation committee and nominating and corporate
governance committee must meet the test of
“independence” as defined by the NYSE. The NYSE
standards provide that to qualify as an “independent”
director, in addition to satisfying certain bright-line
criteria, our board of directors must affirmatively determine
that a director has no material relationship with us (either
directly or as a partner, shareholder or officer of an
organization that has a relationship with us). In addition, our
corporate governance guidelines provide that at least annually,
our board of directors will evaluate all relationships between
the Company and each director in light of relevant facts and
circumstances for the purposes of determining whether a material
relationship exists that might signal a potential conflict of
interest or that might cause the director to cease to meet the
applicable independence requirements or interfere with such
director’s ability to satisfy his or her duties as a
director. Our board of directors has determined that each of
Messrs. Carlson, Merlone, Pasquale and Polk is an
“independent” director under the corporate governance
standards of the NYSE and the SEC. Therefore, following the
election of the director nominees at the annual meeting, we
believe that 67% of our board members will be independent under
those rules.
Executive
Sessions
Our non-management directors meet regularly in separate
executive sessions without management participation. The
executive sessions typically occur after each regularly
scheduled meeting of our entire board of directors and at such
other times that our non-management directors deem appropriate.
The executive sessions are chaired by Mr. Pasquale, our
Lead Director.
Nominations
for Directors
The nominating and corporate governance committee will consider
nominees for director suggested by stockholders in written
submissions to our corporate secretary. Our bylaws currently
provide that in order for a stockholder to nominate a candidate
for election as a director at an annual meeting of stockholders
or propose business for consideration at such meeting, written
notice containing the information and materials required by our
bylaws generally must be delivered to our corporate secretary
not later than the close of business on the 120th day, and
not earlier than the 150th day, prior to the first
anniversary of the date of the notice for the preceding
year’s annual meeting.
In evaluating nominees for director, the nominating and
corporate governance committee does not differentiate between
nominees recommended by stockholders and others. The nominating
and corporate governance committee develops and recommends to
our board of directors for its consideration and approval such
criteria for identifying and recommending prospective nominees
for election as directors as the nominating and corporate
governance committee deems necessary or advisable in the context
of the current
make-up of
our board of directors. The criteria include such factors as
diversity, age, qualities (such as character, professional
integrity, independence, judgment and business acumen), skills
and experience, industry knowledge and experience, requirements
of the NYSE to maintain a minimum number of independent
directors, requirements of the SEC to have persons with
financial expertise on the Company’s audit committee, the
ability of a candidate to devote sufficient time to the affairs
of the Company, any actual or potential conflicts of interest,
and the extent to which the candidate generally would be a
desirable addition to our board of directors and any committees
of our board of directors.
We do not have a formal diversity policy. However, the criteria
above include a broad range of factors such as relevant
experience, independence, commitment, compatibility with our
board of directors and its committees and diversity.
Stockholder
Communications
Our board of directors has implemented a process by which our
stockholders may communicate with our board of directors as a
whole or with individual members of our board of directors.
Communications directed at our board
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of directors as a whole should be addressed to Terreno Realty
Corporation, 16 Maiden Lane, Fifth Floor, San Francisco,
California 94108, Attn: Chief Financial Officer, and
communications directed at individual directors, including our
Lead Director, should be addressed to the attention of the
individual director at the same address. Such communications may
be made on an anonymous or confidential basis. Our board of
directors has instructed our corporate secretary to promptly
forward all such communications to the specified addressees
thereof.
Board
Leadership Structure
Our corporate governance guidelines provide that our board of
directors will periodically appoint a chairman of the board, who
may either be independent or a management director, including
our chief executive officer. The positions of chairman and chief
executive officer are currently occupied by one individual,
Mr. Baird. Our board of directors believes that this
leadership structure serves us well, as Mr. Baird’s
deep industrial real estate expertise across markets and cycles,
as well as extensive public REIT operating experience, uniquely
qualify him to serve as both chairman and chief executive
officer. Combining the chairman and chief executive officer
roles fosters clear accountability, effective decision-making
and aligns corporate strategy with the Company’s
day-to-day
operations. Combining the roles also promotes unified leadership
and direction for our board of directors and management.
In his combined role, Mr. Baird sets the agenda for board
meetings and presides over all meetings of the full board. Since
the chairman and chief executive officer positions are currently
occupied by Mr. Baird, our board of directors appointed
Mr. Pasquale, an independent director, as our Lead Director
to ensure strong independent oversight. As Lead Director,
Mr. Pasquale chairs the executive sessions of the
non-employee directors, facilitates communications and resolves
conflicts, if any, between our non-employee directors, other
directors and our management and consults with and provides
counsel to our chief executive officer as needed or requested.
In performing these duties, our Lead Director consults with the
chairpersons of the appropriate committees of our board of
directors and solicits their participation in order to avoid
diluting the authority or responsibility of the board committees
and their chairpersons.
Risk
Oversight
Our board of directors provides oversight of the Company’s
risk exposure by receiving periodic reports from senior
management regarding matters relating to financial, operational,
legal and strategic risks and mitigation strategies for such
risks. In addition, as reflected in the audit committee charter,
our board of directors has delegated to the audit committee
responsibility to discuss and evaluate our policies and
guidelines with respect to risk assessment and risk management.
During these discussions, the audit committee may discuss or
consider our major financial risk exposures and the steps that
our management has taken to monitor and control such exposures.
Code of
Business Conduct and Ethics
Our board of directors has adopted a code of business conduct
and ethics that applies to all of our directors, officers and
employees.
Day-to-day
responsibility for administering and interpreting our code of
business conduct and ethics has been delegated by our board of
directors to our chief financial officer. Our code of business
conduct and ethics contains compliance procedures, allows for
the anonymous reporting of a suspected violation of our code of
business conduct and ethics and specifically forbids retaliation
against any officer or employee who reports suspected misconduct
in good faith. The provisions of our code of business conduct
and ethics may only amended, or waived for the benefit of our
directors and executive officers, by our board of directors or,
if permitted, a committee of our board of directors. Such
waivers or amendments must be promptly disclosed to our
stockholders in accordance with applicable laws and rules and
regulations of the NYSE. We intend to disclose any amendments or
waivers to our code of business conduct and ethics that apply to
any of our executive officers on our website at
http://www.terreno.com.
The full text of our code of business conduct and ethics is
available on our website at
http://www.terreno.com,
under the heading “Investors & Media”, under
the subheading “Corporate Information” and under the
heading entitled “Governance Documents.”
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Corporate
Governance Guidelines
Our board of directors has adopted Corporate Governance
Guidelines, a copy of which is available on our website at
http://www.terreno.com
under the heading “Investors & Media”, under
the subheading “Corporate Information” and under the
heading entitled “Governance Documents.”
MEETINGS
AND COMMITTEES OF OUR BOARD OF DIRECTORS
Meetings
During the fiscal period from February 16, 2010
(commencement of operations) to December 31, 2010, our
board of directors held a total of four meetings. Each of our
directors attended 100% of the aggregate of (i) the number
of the meetings of our board of directors which were held during
the period that such person served on our board of directors and
(ii) the number of meetings of committees of our board of
directors held during the period that such person served on such
committee. Members of our board of directors are encouraged to
attend the annual meeting, but we currently do not have a formal
policy with regard to Board members’ attendance at the
annual meeting.
Committee
Membership
Our board of directors has established three standing committees
of our board of directors: the audit committee; the compensation
committee; and the nominating and corporate governance
committee, and has adopted written charters for each committee.
The current members of our board committees are as follows:
|
Nominating |
||||||||||||
|
and Corporate |
||||||||||||
|
Name
|
Audit | Compensation | Governance | |||||||||
|
LeRoy E. Carlson
|
X | * | X | X | ||||||||
|
Peter J. Merlone
|
X | X | * | X | ||||||||
|
Douglas M. Pasquale**
|
X | X | X | |||||||||
|
Dennis Polk
|
X | X | X | * | ||||||||
| * | Chair | |
| ** | Lead Director |
Audit Committee. The audit committee is
composed of Messrs. Carlson, Merlone, Pasquale and Polk,
each of whom is an independent director and “financially
literate” under the rules of the NYSE and the SEC.
Mr. Carlson chairs the audit committee and has been
determined by our board of directors to be an audit committee
financial expert within the meaning of the rules of the SEC. The
audit committee met four times during the period from
February 16, 2010 (commencement of operations) to
December 31, 2010.
The purposes of the audit committee are to:
| • | assist our board of directors in its oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) the qualifications, independence and performance of our independent auditors and (4) our internal audit function; and | |
| • | prepare the report required by the rules of the SEC, which is set forth on page 15 of this proxy statement. |
The audit committee is also responsible for engaging our
independent registered certified public accounting firm,
reviewing with the independent registered certified public
accounting firm the plans and results of the audit engagement,
approving professional services provided by the independent
registered certified public accounting firm, reviewing the
independence of the independent registered certified public
accounting firm, considering the range of audit and non-audit
fees and reviewing the adequacy of our internal accounting
controls.
Compensation Committee. The compensation
committee is composed of Messrs. Carlson, Merlone, Pasquale
and Polk, each of whom is an independent director under the
rules of the NYSE and the SEC. Mr. Merlone
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chairs the compensation committee. The compensation committee
met two times during the period from February 16, 2010
(commencement of operations) to December 31, 2010.
The purposes of the compensation committee are to:
| • | discharge our board of directors’ responsibilities relating to compensation of our directors and executives; | |
| • | oversee our overall compensation structure, policies and programs; | |
| • | review our processes and procedures for the consideration and determination of director and executive compensation; and | |
| • | prepare the compensation committee report which is set forth on page 16 of this proxy statement in accordance with the applicable rules and regulations of the SEC, the NYSE and any other rules and regulations applicable to us. |
Nominating and Corporate Governance
Committee. The nominating and corporate
governance committee is composed of Messrs. Carlson,
Merlone, Pasquale and Polk, each of whom is an independent
director under the rules of the NYSE and the SEC. Mr. Polk
chairs the nominating and corporate governance committee. The
nominating and corporate governance committee met once during
the period from February 16, 2010 (commencement of
operations) to December 31, 2010.
The purposes of the nominating and corporate governance
committee are to:
| • | identify individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors, and recommend that our board of directors select the director nominees for election at each annual meeting of stockholders; | |
| • | review and make recommendations to our board of directors for committee appointments to our board of directors; | |
| • | develop and recommend to our board of directors a set of corporate governance guidelines applicable to us and periodically review and recommend any changes to such guidelines; and | |
| • | oversee the evaluation of our board of directors. |
Other
Committees
Our board of directors may from time to time establish special
or standing committees to facilitate the management of the
Company or to discharge specific duties delegated to the
committee by our full board of directors. Our board of directors
has established the following committee:
Investment Committee. Our investment committee
is currently composed of Mr. Baird and Mr. Coke. Our
board of directors has delegated to our investment committee the
authority to approve any investment under $100 million. Our
board of directors must approve any investments of
$100 million or more. Approval by our investment committee
requires a unanimous vote and may be given with conditions.
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PROPOSAL 1 —
ELECTION OF DIRECTORS
Our board of directors proposes that the nominees described
below each be elected to serve until the 2012 annual meeting of
stockholders and until their successors are duly elected and
qualify. All of the nominees are currently serving as our
directors. The biographical descriptions for the nominees
include the specific experience, qualifications, attributes and
skills that led to the conclusion by our board of directors in
the last sentence of each biography that such person should
serve as a director.
|
Nominee
|
Principal Occupation, Business Experience and Other Directorships Held | |
|
W. Blake Baird
Age 50 |
Mr. Baird has served as chairman of our board of directors and our chief executive officer since February 2010. Mr. Baird was managing partner and co-founder of Terreno Capital Partners LLC, a private real estate investment firm, from September 2007 to February 2010. Mr. Baird served as president of AMB Property Corporation (“AMB”), a leading global developer, owner and operator of industrial real estate, from January 2000 to December 2006. Mr. Baird also served as a director of AMB from 2001 to 2006 and chairman of its investment committee. Mr. Baird joined AMB as its chief investment officer in 1999. Prior to that, Mr. Baird was a managing director of Morgan Stanley & Co., most recently as head of Real Estate Investment Banking for the Western United States. Mr. Baird spent 15 years at Morgan Stanley and Dean Witter, the last 11 focusing on real estate. Mr. Baird currently serves as a director of Alexander & Baldwin, Inc. (NYSE: ALEX), a Honolulu-headquartered ocean transportation, real estate and agribusiness company. Mr. Baird is a member of the Young Presidents’ Organization and a former member of the Board of Governors of the National Association of Real Estate Investment Trusts. Mr. Baird holds a B.S. in Economics from the Wharton School (magna cum laude) and a B.A. in History from the College of Arts and Sciences (magna cum laude) at the University of Pennsylvania. He also holds an M.B.A. from New York University. Our board of directors has determined that Mr. Baird’s qualifications to serve on our board of directors include his deep industrial real estate expertise across markets and cycles, as well as extensive public REIT operating experience, from his eight years of experience most recently as president of AMB and his experience as our chairman and chief executive officer. | |
|
Michael A. Coke
Age 42 |
Mr. Coke has served as our president and chief financial officer and as a director since February 2010. Mr. Coke was managing partner and co-founder of Terreno Capital Partners LLC, a private real estate investment management firm, from September 2007 to February 2010. From January 1999 to March 2007, Mr. Coke served as chief financial officer of AMB, a leading global developer, owner and operator of industrial real estate. While at AMB, Mr. Coke also served as executive vice president until May 2007, and was AMB’s chief accounting officer from 1998 until January 2007. Mr. Coke was a member of AMB’s investment committee and was responsible for capital markets, accounting, tax, information systems, dispositions, valuations, risk management and financial planning groups totaling more than 130 officers and associates in five countries. During his tenure at AMB, Mr. Coke was a three time recipient of Realty Stock Review’s Annual Outstanding CFO Award. From October 2005 to May 2007, Mr. Coke served as president and chief executive officer of IAT Aviation Facilities, Inc., a listed Canadian Income Trust. Prior to AMB, Mr. Coke spent seven years with Arthur Andersen LLP, where he most recently served as an audit manager. At Arthur Andersen, he primarily served public and private real estate companies, including several public real estate investment trusts, and specialized in real estate auditing and accounting, mergers, initial public offerings and business acquisition due diligence. Mr. Coke is a director and chairman of the audit committee of DuPont Fabros Technology, Inc. (NYSE: DFT), a leading owner, developer, operator and manager of wholesale data centers headquartered in Washington, D.C. Mr. Coke received a bachelor’s degree in business administration and accounting from California State University at Hayward. He is a former Certified Public Accountant. Our board of directors has determined that Mr. Coke’s qualifications to serve on our board of directors include his deep industrial real estate expertise across markets and cycles, as well as extensive public REIT operating experience, from his nine years of experience most recently as chief financial officer of AMB and his experience as our president and chief financial officer. |
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Table of Contents
|
Nominee
|
Principal Occupation, Business Experience and Other Directorships Held | |
|
LeRoy E. Carlson
Age 65 |
Mr. Carlson has served on our board of directors since February 2010. Mr. Carlson has been a principal of NNC Apartment Ventures, LLC, a well established firm specializing in the long-term investment in multi-family assets on the West Coast, since 1999. Mr. Carlson formerly served as executive vice president, chief operating officer, chief financial officer and board member of BRE Properties, Inc. BRE Properties, Inc. is a large multi-family NYSE — listed real estate investment trust based in San Francisco, California. In his role as chief operating officer, Mr. Carlson oversaw the company’s capital market activities, asset management and development and played a key role in two company mergers with an aggregate value of two billion dollars. Mr. Carlson retired from BRE Properties, Inc. in October 2002. Prior to joining BRE Properties, Inc., Mr. Carlson served as vice president, chief financial officer and as a director of Real Estate Investment Trust of California from 1990 to March 1996. He was a partner and chief financial officer of William Walters Company, a southern California based asset management company and investor, from 1976 to 1990. Mr. Carlson is a Certified Public Accountant in California. He is a graduate of the University of Southern California where he serves as a member of the board at the Lusk Center for Real Estate. Our board of directors has determined that Mr. Carlson’s qualifications to serve on our board of directors include his over 30 years of experience in the real estate industry and his prior experiences as a director, chief operating officer and chief financial officer of a NYSE-listed REIT. | |
|
Peter J. Merlone
Age 54 |
Mr. Merlone has served on our board of directors since February 2010. Mr. Merlone is a founder, co-owner and co-managing partner of the general partner entities of Merlone Geier Partners, or MGP, a private real estate investment firm focused on the acquisition, development and redevelopment of retail and mixed-use properties in California and other western states, and Merlone Geier Management, or MGM, which provides all management, leasing and construction services for all MGP and M&H funds. Mr. Merlone is also a founder, co-owner and president of the general partner entities of M&H Realty Partners, or M&H, the predecessor to MGP, and was a founder and president of M&H Property Management, or MHPM, the predecessor to MGM. From 1986 to 1993, prior to the formation of the first M&H fund, Mr. Merlone was the founder and owner of The Merlone Company, MHPM’s predecessor. Mr. Merlone’s primary responsibilities are to formulate and oversee the strategy, financial and operating affairs of MGP and the activities of MGM. Since 1993, Mr. Merlone has overseen nine institutional limited partnerships with aggregate equity capital commitments of $1.6 billion which have acquired approximately 70 operating properties aggregating more than 11 million square feet of retail improvements, and land developments totaling 1,500 acres. Mr. Merlone graduated from UCLA in 1979, simultaneously earning an undergraduate degree in economics, summa cum laude, and a master’s degree in education; he was also elected to Phi Beta Kappa. Mr. Merlone is a member of the International Council of Shopping Centers and is a licensed real estate broker. Our board of directors has determined that Mr. Merlone’s qualifications to serve on our board of directors include his over 20 years of experience in the real estate industry and his experience operating a real estate investment firm. |
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Table of Contents
|
Nominee
|
Principal Occupation, Business Experience and Other Directorships Held | |
|
Douglas M. Pasquale
Age 56 |
Mr. Pasquale has served on our board of directors since February 2010. Mr. Pasquale has served as president and chief executive officer of Nationwide Health Properties, Inc., or NHP (NYSE: NHP), a publicly traded real estate investment trust that invests in senior housing facilities, long-term care facilities and medical office buildings throughout the United States, since April, 2004 and as executive vice president, chief operating officer and a director of NHP since November 2003. On February 10, 2009, Mr. Pasquale was elected to serve as chairman of the board of NHP, effective immediately prior to NHP’s annual meeting on May 5, 2009. Mr. Pasquale served as the chairman and chief executive officer of ARV Assisted Living, an operator of assisted living facilities, from December 1999 to September 2003. From April 2003 to September 2003, Mr. Pasquale concurrently served as president and chief executive officer of Atria Senior Living Group. From March 1999 to December 1999, Mr. Pasquale served as the president and chief executive officer at ARV, and he served as the president and chief operating officer at ARV from June 1998 to March 1999. Previously, Mr. Pasquale served as president and chief executive officer of Richfield Hospitality Services, Inc. and Regal Hotels International — North America a hotel ownership and hotel management company from 1996 to 1998, and as its chief financial officer from 1994 to 1996. Mr. Pasquale earned a BS Accounting degree, summa cum laude, in 1976 from the University of Colorado and a MBA degree from the University of Colorado in 1981. Mr. Pasquale is a director of Alexander & Baldwin, Inc. (NYSE: ALEX), a Honolulu-headquartered ocean transportation, real estate and agribusiness company. Our board of directors has determined that Mr. Pasquale’s qualifications to serve on our board of directors include his over 20 years of experience in the real estate industry and his experience as chairman, president and chief executive officer of a NYSE-listed REIT. | |
|
Dennis Polk
Age 44 |
Mr. Polk has served on our board of directors since February 2010. Mr. Polk joined SYNNEX Corporation (NYSE: SNX) in 2002 as senior vice president of corporate finance and chief financial officer. In July 2006, he was promoted to his current position of chief operating officer. SYNNEX is a business process services company, including the distribution of information technology products, manufacturing and logistics services and business process outsourcing. Prior to SYNNEX, Mr. Polk held senior executive positions in finance and operations at DoveBid, Inc. and Savoir Technology Group. Prior to Savoir, Mr. Polk was an audit manager for Grant Thornton LLP. A graduate of Santa Clara University, Mr. Polk received his bachelor’s degree in accounting. Our board of directors has determined that Mr. Polk’s qualifications to serve on our board of directors include his current experience as a chief operating officer and his prior experience as a chief financial officer of a NYSE-listed company. |
RECOMMENDATION — Our board of directors unanimously
recommends a vote “FOR” each named nominee. Unless
otherwise instructed, properly authorized proxies solicited by
our board of directors will be voted FOR each named nominee.
Vote
Required — Majority Vote Standard for Election of
Directors
Our bylaws provide that the vote standard for election of
directors is a “majority vote of the votes cast”
standard in uncontested elections of directors. This means that
in an uncontested election, a nominee is elected as a director
if he or she receives more “for” votes than the total
number of “against” votes and votes affirmatively
“withheld”. In an election where the number of
nominees is greater than the number of directors to be elected
at the meeting, the nominees will be elected by a plurality of
the votes cast in the election of directors.
Under our corporate governance guidelines, any director who
fails to be elected by a majority vote is required to tender his
or her resignation to our board of directors, subject to
acceptance. The nominating and corporate governance committee
will make a recommendation to our board of directors on whether
to accept or reject the resignation, or whether other action
should be taken. Our board of directors will then act on the
nominating and corporate governance committee’s
recommendation and publicly disclose its decision and the
rationale behind it within 90 days from the date of the
certification of election results. If the resignation is not
accepted, the director will continue to serve until the next
annual meeting and until the director’s successor is duly
elected and qualifies. The director who tenders his or her
resignation will not participate in our board’s decision.
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EXECUTIVE
OFFICERS
As of the date of this proxy statement, our executive officers
are as follows:
|
Name
|
Age
|
Position
|
||||
|
W. Blake Baird
|
50 | Chairman and Chief Executive Officer | ||||
|
Michael A. Coke
|
42 | President and Chief Financial Officer | ||||
Mr. Baird and Mr. Coke also serve as directors. Their
biographical information can be found in the section entitled
“Proposal 1 — Election of Directors” on
page 9.
PROPOSAL 2 —
NON-BINDING, ADVISORY APPROVAL OF EXECUTIVE
COMPENSATION
General
As required by Section 14A of the Securities Exchange Act
of 1934, as amended, or the Exchange Act, our board of directors
is submitting for stockholder action a resolution to approve, on
a non-binding, advisory basis, the compensation paid to our
named executive officers as disclosed in this proxy statement.
This is commonly known as, and is referred to in this proxy
statement as, a
“say-on-pay”
proposal or resolution.
This
say-on-pay
proposal gives our stockholders the opportunity to express their
views on the compensation of our named executive officers. We
are asking our stockholders to indicate their support for the
compensation of our named executive officers as described in
this proxy statement This vote is not limited to any specific
item of compensation, but rather addresses the overall
compensation of our named executive officers and our philosophy,
policies and practices relating to their compensation as
described in this proxy statement.
As described in detail under the heading “Compensation
Discussion and Analysis” in this proxy statement, our
executive compensation programs are designed to attract, retain
and motivate our named executive officers, who are critical to
our success. Our compensation program is designed to create
incentives for our named executive officers to maximize
long-term stockholder value. Under these programs, our named
executive officers are rewarded for the achievement of our
annual, long-term and strategic objectives, and the realization
of increased stockholder value. Please refer to the
“Compensation Discussion and Analysis” in this
proxy statement for additional details about our executive
compensation programs, including information about the fiscal
year 2010 compensation of our named executive officers.
Text of
Resolution
“RESOLVED, that the stockholders of the Company approve, on
a non-binding, advisory basis, the compensation of the
Company’s named executive officers, as disclosed in this
proxy statement pursuant to Item 402 of
Regulation S-K,
including the Compensation Discussion and Analysis, compensation
tables and narrative discussion.”
RECOMMENDATION — Our board of directors unanimously
recommends a vote FOR adoption of this resolution. Unless
otherwise instructed, properly authorized proxies solicited by
our board of directors will be voted FOR adoption of this
resolution.
Vote
Required; Effect of Vote
The affirmative vote of a majority of the votes cast on this
proposal will be required for adoption of this resolution.
Abstentions and broker non-votes will not be treated as votes
cast and, accordingly, will have no effect on the outcome of the
vote on this proposal.
The
say-on-pay
resolution is advisory, and therefore will not have any binding
legal effect on the Company, our board of directors or the
compensation committee and may not be construed as overruling a
decision by the Company, our board of directors or the
compensation committee or to create or imply any change to the
fiduciary duties of our board of directors. Furthermore, because
this non-binding advisory resolution primarily relates to
12
Table of Contents
compensation of the named executive officers that has already
been paid or contractually committed, there is generally no
opportunity for us to revisit those decisions.
However, the compensation committee does value the opinions of
our stockholders and intends to take the results of the vote on
this proposal into account in its future decisions regarding the
compensation of our named executive officers.
PROPOSAL 3 —
NON-BINDING, ADVISORY DETERMINATION OF THE FREQUENCY OF FUTURE
NON-BINDING, ADVISORY VOTES ON EXECUTIVE COMPENSATION
General
As required by Section 14A of the Exchange Act, our board
of directors is also submitting for stockholder consideration a
proposal to determine, on a non-binding, advisory basis, how
frequently the Company will submit
say-on-pay
proposals to our stockholders in the future. Stockholders will
be able to specify one of three alternative frequencies for the
proposal on the proxy card: every year, every two years or every
three years, or stockholders may mark “abstain”.
Our board of directors believes that, of the three alternative
frequencies, submitting a non-binding, advisory
say-on-pay
resolution to stockholders every year is preferable. Annual
votes will provide the Company with clearer feedback regarding
the compensation of our named executive officers. The primary
focus of the disclosure of the compensation of our named
executive officers required to be included in the Company’s
proxy statements is compensation granted in or for the prior
fiscal year. Additionally, the compensation committee
re-evaluates the compensation of our named executive officers
each year. An annual
say-on-pay
resolution will match the annual focus of this proxy statement
disclosure and provide the Company with the clearest and most
timely feedback of the three options. This feedback may then be
considered by the compensation committee in its next annual
decision-making process. Additionally, the administrative
process of submitting a non-binding, advisory
say-on-pay
resolution to stockholders on an annual basis is not expected to
impose any substantial additional costs on the Company.
Please mark on the proxy card your preferred frequency by
choosing the option of every year, two years or three years or
mark “abstain”.
RECOMMENDATION — Our board of directors unanimously
recommends a vote to hold a
say-on-pay
vote every year. However, stockholders are not voting to approve
or disapprove the recommendation of our board of directors.
Unless otherwise instructed, properly authorized proxies
solicited by our board of directors will be voted in favor of
including a
say-on-pay
vote every year.
Vote
Required; Effect of Vote
In order for any of the three alternative frequencies to be
approved, it must receive a majority of the votes cast on this
proposal. Because there are four choices (one year, two years,
three years or abstain), it is possible that none of the choices
will receive a majority of the votes cast. However, stockholders
will still be able to communicate their preference with respect
to the frequency of
say-on-pay
proposals by choosing from among these three alternatives.
Abstentions and broker non-votes will not be treated as votes
cast and, accordingly, will have no effect on the outcome of the
vote on this proposal.
This proposal is a non-binding, advisory determination, and
therefore will not have any binding legal effect on the Company
or our board of directors and may not be construed as overruling
a decision by the Company or our board of directors or to create
or imply any change to the fiduciary duties of our board of
directors. However, our board of directors does intend to take
the results of the vote on this proposal into account in its
decision regarding the frequency with which the Company submits
say-on-pay
proposals in the future.
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PROPOSAL 4 —
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED
CERTIFIED PUBLIC ACCOUNTING FIRM
CERTIFIED PUBLIC ACCOUNTING FIRM
The audit committee has selected and appointed the firm of
Deloitte & Touche LLP to act as our independent
registered certified public accounting firm for 2011.
Deloitte & Touche LLP has served as our independent
registered certified public accounting firm since our
incorporation on November 6, 2009. Ratification of the
appointment of our registered certified public accounting firm
requires a majority of the votes cast on this proposal. Any
votes not cast, whether by abstention, broker non-vote, or
otherwise, will have no impact on the vote.
RECOMMENDATION: Our board of directors unanimously recommends
that the stockholders vote FOR ratification of the appointment
of Deloitte & Touche LLP.
Although stockholder ratification of the appointment of our
independent registered certified public accounting firm is not
required by our bylaws or otherwise, we are submitting the
selection of Deloitte & Touche LLP to our stockholders
for ratification as a matter of good corporate governance
practice. Even if the selection is ratified, the audit committee
in its discretion may select a different independent registered
certified public accounting firm at any time if it determines
that such a change would be in our best interest and the best
interests of our stockholders. If our stockholders do not ratify
the audit committee’s selection, the audit committee will
take that fact into consideration, together with such other
factors it deems relevant, in determining its next selection of
independent registered certified public accounting firm.
In choosing our independent registered certified public
accounting firm, the audit committee conducts a comprehensive
review of the qualifications of those individuals who will lead
and serve on the engagement team, the quality control procedures
the firm has established and any material issue raised by the
most recent quality control review of the firm. The review also
includes matters required to be considered under the SEC rules
on auditor independence, including the nature and extent of
non-audit services to ensure that they will not impair the
independence of any such firm.
Representatives of Deloitte & Touche LLP are expected
to be present at the annual meeting. These representatives will
have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
Fees Paid
to Independent Registered Certified Public Accounting
Firm
Deloitte & Touche LLP served as our independent
registered certified public accounting firm for the period from
our incorporation on November 6, 2009 through
December 31, 2009 and during the 2010 fiscal year,
including from February 16, 2010 (commencement of
operations) through December 31, 2010. Aggregate fees for
professional services rendered by Deloitte & Touche
LLP during such periods were as follows:
|
November 6, 2009 — |
||||||||
| December 31, 2009 | 2010 | |||||||
|
Audit Fees
|
$ | 55,000 | $ | 197,700 | ||||
|
Tax Fees
|
7,150 | $ | 100,000 | |||||
|
All Other Fees
|
— | — | ||||||
|
Total
|
$ | 62,150 | $ | 297,700 | ||||
Audit
Fees
Audit fees for 2010 were incurred for professional services in
connection with the audit of our consolidated financial
statements and internal control over financial reporting for the
period from February 16, 2010 (commencement of operations)
to December 31, 2010, reviews of our interim consolidated
financial statements, which were included in each of our
quarterly reports on
Form 10-Q
during the period from February 16, 2010 (commencement of
operations) to December 31, 2010 and professional services
related to property acquisition due diligence. In 2009, audit
fees included fees for professional services rendered for the
audit of our financial statements as of November 9, 2009 in
connection with our initial public offering and as of
December 31, 2009.
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Tax
Fees
The tax fees set forth in the table above for 2010 related to
tax compliance, tax advice and tax planning services rendered by
Deloitte & Touche LLP. The tax fees set forth in the
table above for 2009 related to tax compliance, tax advice and
tax planning services rendered by Deloitte & Touche
LLP in connection with our initial public offering.
All Other
Fees
There were no fees billed for 2009 or 2010 for products and
services that are not disclosed above.
Pre-Approval
Procedures
The Audit Committee pre-approves all audit and permissible
non-audit services provided by the independent registered
certified public accounting firm unless an exception to such
pre-approval exists under the Exchange Act or the rules of the
SEC. These services may include audit services, audit-related
services, tax services and other services.
REPORT OF
THE AUDIT COMMITTEE
The following report of the audit committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any of our other filings under
the Securities Act of 1933 or the Securities Exchange Act of
1934.
In accordance with its written charter adopted by the board of
directors, the audit committee’s role is to assist the
board of directors in the oversight of the integrity of the
Company’s financial statements, the Company’s
compliance with legal and regulatory requirements, the
qualifications, independence and performance of the
Company’s independent auditors and the Company’s
internal audit function. The audit committee currently consists
of four members, each of whom is “independent” as that
term is defined by the governance standards of the NYSE and the
rules and regulations of the SEC.
Management is responsible for the Company’s financial
reporting process including its system of internal controls, and
for the preparation of the Company’s consolidated financial
statements in accordance with generally accepted accounting
principles. The Company’s independent auditors are
responsible for auditing those financial statements. It is the
audit committee’s responsibility to monitor and review
these processes. It is not the audit committee’s duty or
responsibility to conduct auditing or accounting reviews or
procedures. The audit committee does not consist of the
Company’s employees and it may not be, and may not
represent itself to be or to serve as, accountants or
accountants by profession or experts in the fields of accounting
or auditing. Therefore, the audit committee has relied on
management’s representation that the financial statements
have been prepared with integrity and objectivity and in
conformity with accounting principles generally accepted in the
United States and on the representations of the Company’s
independent auditors included in their report on our financial
statements. The audit committee’s oversight does not
provide it with an independent basis to determine that
management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal
controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations.
Furthermore, the audit committee’s considerations and
discussions with management and with our independent auditors do
not assure that our financial statements are presented in
accordance with generally accepted accounting principles, that
the audit of our financial statements has been carried out in
accordance with generally accepted auditing standards or that
the Company’s independent auditors are in fact
“independent.”
In fulfilling its oversight responsibilities, the audit
committee reviewed the audited financial statements for the
fiscal period from February 16, 2010 (commencement of
operations) to December 31, 2010 with management, including
a discussion of the quality of the accounting principles, the
reasonableness of significant judgments, the clarity of
disclosures in the financial statements and the effectiveness of
our disclosure controls and procedures and internal controls
over financial reporting. The audit committee reviewed the
financial statements for the fiscal period from
February 16, 2010 (commencement of operations) to
December 31, 2010 with our independent auditors and
discussed with them all of the matters required to be discussed
by Statement of Auditing Standards No. 61 (Communications
with Audit Committees), as amended and as adopted by the Public
Company Accounting
15
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Oversight Board, including their judgments as to the quality,
not just the acceptability, of our accounting principles. In
addition, the audit committee has received the written
disclosures and the letter from our independent auditors
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
auditors’ communications with the audit committee
concerning independence and has discussed with our independent
auditors their independence from our management and from us.
Upon its review, the audit committee has satisfied itself as to
our independent auditors’ independence.
Based on the review and discussions with management and the
independent auditors, and subject to the limitations on its role
and responsibilities described above, the audit committee
recommended to the board of directors, and the board of
directors has approved, that the audited financial statements be
included in the Company’s annual report on
Form 10-K
for the period from February 16, 2010 (commencement of
operations) to December 31, 2010, as filed with the SEC on
February 24, 2011. The undersigned members of the audit
committee have submitted this report to the Company.
Members
of the Audit Committee
LeRoy A Carlson, Chair
Peter J. Merlone
Douglas M. Pasquale
Dennis Polk
LeRoy A Carlson, Chair
Peter J. Merlone
Douglas M. Pasquale
Dennis Polk
COMPENSATION
COMMITTEE REPORT
The undersigned members of the compensation committee of the
board of directors of Terreno Realty Corporation submit this
report in connection with our review of the Compensation
Discussion and Analysis section of this proxy statement for the
fiscal year ended December 31, 2010.
The compensation committee notes that we have oversight
responsibilities only. We rely without independent verification
on the information provided to us and on the representations
made by management. Accordingly, our oversight does not provide
an independent basis to determine whether the Compensation
Discussion and Analysis section of this proxy statement is
accurate and complete. We also note that management has the
primary responsibility for the preparation of the Compensation
Discussion and Analysis section of this proxy statement.
We, however, have reviewed the Compensation Discussion and
Analysis and have discussed it with management; and in reliance
on the reviews and discussions referred to above, we recommended
to the board of directors that the Compensation Discussion and
Analysis section of this proxy statement be included in this
proxy statement.
Members
of the Compensation Committee
Peter J. Merlone, Chair
LeRoy E. Carlson
Douglas M. Pasquale
Dennis Polk
Peter J. Merlone, Chair
LeRoy E. Carlson
Douglas M. Pasquale
Dennis Polk
Risk
Considerations in our Compensation Programs
We have reviewed our compensation structures and policies as
they pertain to risk and have determined that our compensation
programs do not create or encourage the taking of risks that are
reasonably likely to have a material adverse effect on the
Company.
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Compensation
Committee Interlocks and Insider Participation
No member of the compensation committee during 2010 was an
officer, employee or former officer of ours or any of our
subsidiaries or had any relationship that would be considered a
compensation committee interlock and would require disclosure in
this proxy statement pursuant to SEC regulations. None of our
executive officers served as a member of a compensation
committee or a director of another entity under the
circumstances requiring disclosure in this proxy statement
pursuant to SEC regulations.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
The following discussion is intended to supplement the more
detailed information concerning executive compensation that
appears in the tables and the accompanying narrative that
follows. It is also intended to provide both a review of our
compensation policies for 2010 and describe our compensation
policies with respect to our executive officers. Our goal is to
provide a better understanding of our compensation practices and
the decisions made concerning the compensation payable to our
executive officers, consisting of the chairman and chief
executive officer and the president and chief financial officer
in the “Summary Compensation Table” below. These
officers are referred to herein as the “named executive
officers.”
The compensation committee of our board of directors, referred
to in this section as the “committee,” designs and
administers our executive compensation program. All principal
elements of compensation paid to our executive officers are
subject to approval by the compensation committee. The
Compensation Committee Report appears on page 16 of this
proxy statement.
Objectives
The principal objectives of our executive compensation program
are to:
| • | align the interest of our executives and stockholders by motivating executives to increase stockholder value and rewarding executives when stockholder value increases; | |
| • | motivate our executives to manage our business to meet our near, medium, and long-term objectives; and reward them for meeting these objectives and for exceptional performance; | |
| • | assist in attracting and retaining talented and well-qualified executives; | |
| • | be competitive with other industrial real estate investment trusts; and | |
| • | encourage executives to achieve meaningful levels of ownership of our stock. |
Management’s
and Advisor’s Role in Compensation Decisions
The compensation committee evaluates the performance of our
chairman and chief executive officer, Mr. Baird, and
president and chief financial officer, Mr. Coke, and
determines their compensation based on this evaluation.
Mr. Baird and Mr. Coke make recommendations to the
compensation committee for equity awards to other employees
throughout the Company. The compensation committee can accept,
reject or modify Mr. Baird and Mr. Coke’s
recommendations as it sees fit. Under its charter, the
compensation committee has the authority to engage independent
compensation consultants or other advisors. To date, we have not
retained a compensation consultant.
Principal
Elements of Compensation and Total Direct Compensation
We have designed our executive compensation program to include
two principal elements — base salary and long-term
equity incentives, such as stock awards. Both base salary and
long-term equity incentives are integrated into our compensation
program and are intended to achieve different objectives. For
example, we believe that a competitive base salary is a
necessary element of any compensation program that is designed
to attract and retain talented and experienced executives. We
also believe that attractive base salaries can motivate and
reward
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executives. We believe that long-term equity incentives align
the interests of our executives and stockholders by motivating
executives to increase stockholder value and rewarding
executives when stockholder value increases and encourage
executives to achieve meaningful levels of ownership of our
stock.
Base Salaries. In order to attract and retain
the most talented executives in our industry, we must set the
base salaries of executive officers at levels that are
competitive with other companies engaged in the industrial real
estate industry and of comparable size and scope that compete
with us for executive talent. Although base salaries are
established in part based on the individual experience, skills
and expected contributions during the coming year of our
executive and our executive’s performance during the prior
year, we do not view base salaries as primarily serving our
objective of paying for performance.
Increases in base salary are left to the discretion of the
compensation committee. The annual base salary of each of
Mr. Baird and Mr. Coke, which was established prior to
the time of our initial public offering and subsequently
ratified by the compensation committee following our initial
public offering, is $400,000. For 2011, the compensation
committee did not adjust Mr. Baird and Mr. Coke’s
annual base salaries.
Annual Cash Incentive Bonus. We do not have,
nor are we currently planning to adopt, an annual cash incentive
bonus plan for our executives, although we reserve our right to
do so in the future.
Long Term Incentive Plan. In order to directly
align the long-term incentive compensation of our executives
with the achievement of enhanced value for our stockholders and
to provide executives with the potential to earn equity awards
subject to the long-term performance of our common stock, in
2010, the compensation committee adopted the Company’s
Long-Term Incentive Plan (the “Long-Term Incentive
Plan”). Under our Long-Term Incentive Plan, our executives
are granted a target award (generally measured as a percentage
of the executive’s base salary) measured in dollars, that
may be payable in shares of our common stock after the
conclusion of each pre-established performance measurement
period. Generally, performance measurement periods under the
Long-Term Incentive Plan will run for three calendar years and
begin on January 1, 2011 and each anniversary thereof,
however, the first performance measurement period began on the
closing of our initial public offering and will end on
December 31, 2011 and the second performance measurement
period began on the closing of our initial public offering and
will end on December 31, 2012.
The amount that will be earned under our Long-Term Incentive
Plan for any performance measurement period will be determined
by our success in attaining or exceeding performance goals
linked to each of two metrics during the performance measurement
period:
| • | 50% of the determination will be based on our total stockholder return for the performance measurement period, measured at the end of the period compared to the total stockholder return for the same period of the MSCI U.S. REIT Index; and | |
| • | 50% of the determination will be based on our total stockholder return for the performance measurement period, measured at the end of the period compared to the total stockholder return for the same period of the FTSE NAREIT Equity Industrial Index. |
The two main performance goals were established to focus our
named executive officers on generating significant total
stockholder returns over time. Our management believes that
achievement of the “target” level of performance of
the two main performance goals, i.e., exceeding the applicable
indices, will require significant effort and substantial
progress toward the goals of our strategic plan. At the target
level for each performance goal, each participating executive
will receive an award equal to 50% of his target award.
Accordingly, if we achieve the target level for both performance
goals, each participating executive will receive an award equal
to 100% of his target award for the performance period. If our
performance is below the target level for either of the
performance goals, then no payouts will be made with respect to
such goal. To the extent that our performance exceeds the
applicable index by at least 100 basis points per year,
each participating executive will receive an award equal to 150%
of his target award. Accordingly, if our performance exceeds
both indices by at least 100 basis points per year, each
participating executive will receive an award equal to 300% of
his target award. In the event that our total stockholder return
is negative for any performance period, even if we have
outperformed the applicable indices, any incentive compensation
earned for that performance period will be reduced by 50%. Once
we have determined the dollar value of the award earned for any
performance period, such amount will be converted to shares of
our
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common stock based on the average closing price of our common
stock for the last ten business days immediately preceding the
day the shares are issued.
On February 16, 2010, in connection with the completion of
our initial public offering, our board of directors granted the
following target awards to our executives under the Long-Term
Incentive Plan, which were ratified by the compensation
committee following our initial public offering:
|
February 16, 2010 — |
February 16, 2010 — |
|||||||
|
December 31, 2011 |
December 31, 2012 |
|||||||
| Performance Measurement Period | Performance Measurement Period | |||||||
|
W. Blake Baird
|
$ | 400,000 | $ | 400,000 | ||||
|
Michael A. Coke
|
$ | 400,000 | $ | 400,000 | ||||
On February 17, 2011, the compensation committee granted a
target award of $400,000 to each of Mr. Baird and
Mr. Coke under the Long-Term Incentive Plan for the
three-year performance period commencing on January 1, 2011
and ending on December 31, 2013.
2010 Equity Incentive Plan. We believe that
providing our executives with equity incentives will create
longer-term alignment with stockholders and further meet the
Company’s objectives of building equity ownership and
meaningful value for the Company’s executives. As such, our
executives are eligible to receive grants of restricted stock
under our 2010 Equity Incentive Plan. At the completion of our
initial public offering, each of Mr. Baird and
Mr. Coke received a grant of 50,000 shares of
restricted stock with an approximate value of $1,000,000, based
on the initial public offering price of $20.00 per share. These
grants vest ratably in annual installments over a five-year
period commencing on the completion of our initial public
offering, with the first vesting having occurred on
February 16, 2011, the first anniversary of our initial
public offering.
Other
Elements of Compensation
Retirement Benefits. Effective January 1,
2011, we maintain a 401(k) retirement plan in which all
employees can participate on the same terms. Under the 401(k)
retirement plan, we contribute 3% of the participant’s
annual compensation. Our contributions are 100% vested when
made. Our matching contributions are subject to applicable IRS
limits and regulations.
Severance Agreements. We have severance
agreements with Mr. Baird and Mr. Coke. A summary of
these severance agreements appears in the section of this proxy
statement entitled “Payments Upon Termination of Employment
and Change of Control.” These agreements provide for
various payments and benefits to the executives if their
employment with us is terminated for certain reasons or if there
is a termination for certain reasons upon a change of control.
The circumstances in which payments may be made and the
potential amounts of those payments are described in more detail
below. These agreements are intended to ensure the ongoing
commitment and continued attention and dedication of these
executive officers to their assigned duties and to the best
interest of our stockholders in the event of a change of control
or other potential termination events.
Other
Compensation Policies
Equity Award Grant Practices. The compensation
committee expects to make annual equity awards at its quarterly
meeting in February or March each year. In 2011, the awards were
made to our non-executive employees at the compensation
committee’s regularly scheduled meeting on
February 17, 2011. The grant date of those awards is the
date of the meeting, which date is determined without regard to
current or anticipated stock price levels or the release of
material non-public information and is set during the prior
calendar year.
The compensation committee may also make special grants during
the course of the year, primarily for new hires, promotions to
retain valued employees, to award exceptional performance or
otherwise. Generally, these special grants are subject to
performance or time vesting, and are issued on the date of grant
approval or upon a date certain following the grant approval
date, such as the date on which a new hire commences his or her
employment with the Company.
Section 162(m). The SEC requires that we
comment upon our policy with respect to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the
“Code”), which limits the deductibility on our tax
return of
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compensation over $1 million to any of the named executive
officers unless, in general, the compensation is paid pursuant
to a plan which is performance-related, non-discretionary and
has been approved by our stockholders. We believe that, because
we intend to qualify as a REIT under the Code and pay
distributions sufficient to minimize federal income taxes, the
payment of compensation that does not satisfy the requirements
of Section 162(m) will generally not affect our net income.
To the extent that compensation does not qualify for a deduction
under Section 162(m), a larger portion of stockholder
distributions may be subject to federal income taxation as
dividend income rather than return of capital. We do not believe
that Section 162(m) will materially affect the taxability
of stockholder distributions, although no assurance can be given
in this regard due to the variety of factors that affect the tax
position of each stockholder. For these reasons, the
compensation committee’s compensation policy and practices
are not directly guided by considerations relating to
Section 162(m).
SUMMARY
COMPENSATION TABLE
The table below summarizes the total compensation paid or
awarded to each of our named executive officers for 2010. For a
more thorough discussion of our executive compensation program,
see “Compensation Discussion and Analysis” which
begins on page 17 of this proxy statement.
|
Salary |
Stock Awards |
Total |
||||||||||||||
|
Name and Principal Position
|
Year | ($) | ($) | ($) | ||||||||||||
|
W. Blake Baird,
|
2010 | 350,000 | (1) | 1,000,000 | (2) | 1,350,000 | ||||||||||
|
Chairman and Chief Executive
Officer |
||||||||||||||||
|
Michael A. Coke
|
2010 | 350,000 | (1) | 1,000,000 | (2) | 1,350,000 | ||||||||||
|
President and Chief Financial
Officer |
||||||||||||||||
| (1) | Amount reflects the executive’s 2010 base salary received for the period from February 16, 2010 (commencement of operations) through December 31, 2010. | |
| (2) | Represents shares of restricted common stock that were issued upon completion of our initial public offering on February 16, 2010, which vest ratably in equal installments over a five-year period commencing on the first anniversary of our initial public offering. The amount reflects the grant date fair value based on the initial public offering price, computed in accordance with FASB ASC Topic 718. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2010 fiscal year for a discussion of the relevant assumptions used in calculating the value. |
GRANTS OF
PLAN-BASED AWARDS
|
All other Stock |
Grant Date Fair |
|||||||||||||||||||
|
Estimated Future Payouts |
Awards: Number of |
Value of Stock |
||||||||||||||||||
|
under Non-Equity |
Shares of Stock |
Awards |
||||||||||||||||||
|
Name
|
Grant Date | Incentive Plan Awards | (#) | ($) | ||||||||||||||||
| Target ($) | Maximum ($) | |||||||||||||||||||
|
W. Blake Baird
|
2/16/2010 | (1) | $ | 400,000 | $ | 1,200,000 | ||||||||||||||
| 2/16/2010 | (2) | $ | 400,000 | $ | 1,200,000 | |||||||||||||||
| 2/16/2010 | 50,000 | (3) | $ | 1,000,000 | (4) | |||||||||||||||
|
Michael A. Coke
|
2/16/2010 | (1) | $ | 400,000 | $ | 1,200,000 | ||||||||||||||
| 2/16/2010 | (2) | $ | 400,000 | $ | 1,200,000 | |||||||||||||||
| 2/16/2010 | 50,000 | (3) | $ | 1,000,000 | (4) | |||||||||||||||
| (1) | Amounts presented represent the payout under our Long-Term Incentive Plan for the performance measurement period ending on December 31, 2011. The size of the actual award will depend on our achievement of specified performance metrics during the performance period. Actual awards, if earned, are measured in dollars but will be paid out in shares of our common stock in early 2012. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis — Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. |
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| (2) | Amounts presented represent the payout under our Long-Term Incentive Plan for the performance measurement period ending on December 31, 2012. The size of the actual award will depend on our achievement of specified performance metrics during the performance period. Actual awards, if earned, are measured in dollars but will be paid out in shares of our common stock in early 2013. For a further discussion of the awards under our Long-Term Incentive Plan reflected in the table above, see “Long-Term Incentive Plan” under “Compensation Discussion and Analysis — Principal Elements of Compensation and Total Direct Compensation” in this proxy statement. | |
| (3) | Represents shares of restricted common stock that were issued upon completion of our initial public offering on February 16, 2010, which vest ratably in equal installments over a five-year period commencing on the first anniversary of our initial public offering. | |
| (4) | The amount reflects the grant date fair value based on the initial public offering price, computed in accordance with FASB ASC Topic 718, of each award. Refer to note 2 to our consolidated financial statements in our annual report on Form 10-K for the 2010 fiscal year for a discussion of the relevant assumptions used in calculating the value. |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
| Stock Awards | ||||||||
|
Number of Shares that |
Market Value of Shares |
|||||||
|
Have Not Vested |
that Have Not Vested |
|||||||
|
Name
|
(#) | ($) | ||||||
|
W. Blake Baird
|
50,000 | (1) | $ | 896,500 | (2) | |||
|
Michael A. Coke
|
50,000 | (3) | $ | 896,500 | (2) | |||
| (1) | Represents shares of restricted common stock that were issued to Mr. Baird upon completion of our initial public offering on February 16, 2010, which will vest ratably in equal installments over a five-year period commencing on the first anniversary of our initial public offering. | |
| (2) | The dollar amounts indicated under the “Market Value of Shares That Have Not Vested” column is the fair value of each grant, calculated based on the closing price per share of our common stock on the last trading day of the fiscal year. | |
| (3) | Represents shares of restricted common stock that were issued to Mr. Coke upon completion of our initial public offering on February 16, 2010, which will vest ratably in equal installments over a five-year period commencing on the first anniversary of our initial public offering. |
PAYMENTS
UPON TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
Severance agreements that we entered into upon the completion of
our initial public offering with our chairman and chief
executive officer and our president and chief financial officer
require us to make certain payments and provide certain benefits
to them in the event of a termination of their employment
following a change of control of our company. This section
provides a discussion of those payments and benefits, along with
certain other terms of those agreements that are in effect as of
the date of this proxy statement.
Severance Agreements. We entered into
severance agreements with Mr. Baird and Mr. Coke
effective on February 16, 2010. Under these agreements,
each of these executives will be entitled to receive benefits
under the agreements if (1) we terminate the
executive’s employment without cause, or (2) the
executive resigns with good reason. Under these scenarios, each
of the executives is entitled to receive, subject to the
executive’s execution of a general release of claims, a
severance payment equal to one times the executive’s
current salary plus the dollar value of his most recent target
award under the Long-Term Incentive Plan. In addition, all
time-based restricted stock will fully vest while all long-term
incentive awards will be forfeited. The executive will also
receive health insurance coverage for a period of
18 months. If such termination of employment occurs after a
change of control, the severance payment, subject to the
executive’s execution of a general release of claims, will
be two times the sum of the executive’s current salary plus
the dollar value of the most recent target award under the
Long-Term Incentive Plan. No payments will be made to compensate
the executive for additional taxes, if any, imposed under
Section 4999 of the Code for receipt of excess parachute
payments.
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In the event an executive’s employment is terminated on
account of death or disability, all his time-based restricted
stock will fully vest. Additionally, to compensate the executive
for the loss of opportunity to earn his long-term incentive
awards, we will also provide him (or his estate in the case of
death) with a cash payment equal to his target award under the
Long-Term Incentive Plan, subject to the executive’s
execution of a general release of claims in the case of
disability.
The severance agreements provide that during the term of each
executive’s employment and for 12 months after the
termination of their employment for any reason, each executive
has agreed not to solicit our employees to leave their
employment with us or to solicit any customer or supplier to
terminate or otherwise modify adversely its business
relationship with us.
The following chart sets forth the cost that we would have
incurred if one of the executives were terminated as of
December 31, 2010 under the terms of the severance
agreements assuming a stock price of $17.93, the closing market
price of our common stock on the NYSE on December 31, 2010.
Cost of
Termination Under Severance Agreements
|
Accelerated |
||||||||||||||||
|
Continued |
Vesting of |
|||||||||||||||
|
Cash |
Medical |
Restricted |
Total |
|||||||||||||
|
Severance |
Benefits |
Stock |
Payments |
|||||||||||||
|
Name
|
($) | ($) | ($)(7) | ($) | ||||||||||||
|
W. Blake Baird
|
||||||||||||||||
|
Termination upon Death or Disability(1)
|
400,000 | (5) | — | 896,500 | 1,296,500 | |||||||||||
|
Termination by Company Without Cause or by Executive with Good
Reason(2)(3)
|
800,000 | (6) | 18,000 | 896,500 | 1,714,500 | |||||||||||
|
Termination by Company Without Cause or by Executive with Good
Reason following a Change in Control(4)
|
1,600,000 | (4) | 18,000 | 896,500 | 2,514,500 | |||||||||||
|
Michael A. Coke
|
||||||||||||||||
|
Termination upon Death or Disability(1)
|
400,000 | (5) | — | 896,500 | 1,296,500 | |||||||||||
|
Termination by Company Without Cause or by Executive with Good
Reason(2)(3)
|
800,000 | (6) | 18,000 | 896,500 | 1,714,500 | |||||||||||
|
Termination by Company Without Cause or by Executive with Good
Reason following a Change in Control(4)
|
1,600,000 | (4) | 18,000 | 896,500 | 2,514,500 | |||||||||||
| (1) | Under our severance agreement with each executive, we may terminate the executive’s employment in the event that the executive is disabled and unable to perform the essential functions of his employment with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period. | |
| (2) | Under our severance agreement with each executive, we may terminate the executive’s employment at any time without cause. Cause generally includes, among other things, (i) conduct by the executive constituting a material act of misconduct in connection with the performance of his duties; (ii) the commission by the executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the executive that would reasonably be expected to result in material injury or reputational harm to us if he were retained in his position; (iii) continued non-performance by the executive of his duties (other than by reason of the executive’s physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from our board of directors; (iv) a breach by the executive of any of his confidentiality or non-solicitation obligations under his severance agreement; (v) a material violation by the executive of our written employment policies, or (vi) failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation. |
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| (3) | Under our severance agreement with each executive, the executive may terminate his employment with good reason. Good reason means that the executive has complied with the good reason process following the occurrence of any of the following events: (i) a material diminution in the executive’s responsibilities, authority or duties; (ii) a material diminution in the executive’s base salary except for across-the-board salary reductions based on our financial performance similarly affecting all or substantially all senior management employees of the Company; (iii) a material change in the geographic location at which the executive provides services to the Company; or (iv) our material breach of the severance agreement. Good reason process means that (i) the executive reasonably determines in good faith that a good reason condition has occurred; (ii) the executive notifies us in writing of the first occurrence of the good reason condition within 60 days of the first occurrence of such condition; (iii) the executive cooperates in good faith with our efforts, for a cure period not less than 30 days following such notice, to remedy the condition; (iv) notwithstanding such efforts, the good reason condition continues to exist; and (v) the executive terminates his employment within 60 days after the end of the cure period. If we cure the good reason condition during the cure period, good reason will not be deemed to have occurred. | |
| (4) | Under our severance agreement with each executive, if we terminate the executive’s employment without cause or the executive terminates his employment with us with good reason as described in footnotes 2 and 3 above and such termination occurs within 12 months after a change in control, the severance amount will be equal to two times the sum of the executive’s current salary plus the dollar value of his most recent target award under our Long-Term Incentive Plan. | |
| (5) | Under our severance agreement with each executive, if the executive’s employment is terminated upon death or disability as described in footnote 1, the executive, or his estate, as the case may be, is entitled to receive the dollar value of his most recent target award under our Long-Term Incentive Plan. | |
| (6) | Under our severance agreement with each executive, if we terminate the executive’s employment without cause or the executive terminates his employment with us with good reason as described in footnotes 2 and 3 above, the executive is entitled to receive a severance payment equal to one times the executive’s current salary plus the dollar value of his most recent target award under our Long-Term Incentive Plan. | |
| (7) | Represents the value of the acceleration of the executive’s unvested shares of restricted stock owned by the executive as of December 31, 2010, calculated by multiplying the number of shares by $17.93, the closing market price of our common stock on the NYSE on December 31, 2010. |
DIRECTOR
COMPENSATION
Our board of directors has approved a compensation program for
our independent directors in the form of cash and equity awards.
Although we do not intend to pay our independent directors an
annual retainer fee, we pay the following fees, payable
quarterly in cash:
| • | our lead director will be paid an annual fee of $15,000; | |
| • | the chair of the audit committee will be paid an annual fee of $12,000; | |
| • | the chair of the compensation committee will be paid an annual fee of $10,000; and | |
| • | the chair of the nominating and corporate governance committee will be paid an annual fee of $5,000. |
We pay independent directors cash fees of $1,500 for each board
meeting attended, $1,000 for each committee meeting attended,
and $500 for each telephonic meeting attended. In addition, we
reimburse our directors for reasonable
out-of-pocket
expenses incurred in connection with performance of their duties
as directors, including, without limitation, travel expenses in
connection with their attendance at board and committee
meetings. We also reimburse our directors for approved director
education programs. Furthermore, directors do not receive any
perquisites or above-market nonqualified deferred compensation
plan earnings.
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Upon completion of our initial public offering, each of our
independent directors received $100,000 payable in the form of
restricted common stock. The shares of restricted common stock
became fully vested on February 16, 2011, the first
anniversary of the completion of our initial public offering.
In connection with each annual meeting of stockholders
commencing in 2011, each of our independent directors will
receive $75,000 payable in the form of unrestricted common stock.
Dividends on unvested shares of restricted stock generally will
be paid in cash.
The following table summarizes the compensation of our
non-employee directors in 2010:
|
Fees Earned |
||||||||||||
|
or Paid |
||||||||||||
|
Name
|
in Cash | Stock Awards | Total | |||||||||
|
LeRoy E. Carlson
|
$ | 23,500 | $ | 100,000 | $ | 123,500 | ||||||
|
Peter J. Merlone
|
$ | 21,500 | $ | 100,000 | $ | 121,500 | ||||||
|
Douglas M. Pasquale
|
$ | 26,500 | $ | 100,000 | $ | 126,500 | ||||||
|
Dennis Polk
|
$ | 16,500 | $ | 100,000 | $ | 116,500 | ||||||
The following table sets forth the aggregate number of shares of
restricted stock held by each non-employee director as of
December 31, 2010:
|
Market Value of |
||||||||
|
Number of |
Shares That Have |
|||||||
|
Shares That |
Not Vested |
|||||||
|
Name
|
Have Not Vested | (1) | ||||||
|
LeRoy E. Carlson
|
5,000 | $ | 89,650 | |||||
|
Peter J. Merlone
|
5,000 | $ | 89,650 | |||||
|
Douglas M. Pasquale
|
5,000 | $ | 89,650 | |||||
|
Dennis Polk
|
5,000 | $ | 89,650 | |||||
| (1) | The market value of shares that have not vested was calculated by multiplying the number of shares by $17.93, the closing market price of our common stock on the NYSE on December 31, 2010. |
The aggregate ASC 718, Compensation — Stock
Compensation grant date fair value of each of the restricted
stock awards granted in 2010 was as follows:
|
Number of |
||||||||
|
Shares of |
||||||||
|
Restricted |
||||||||
|
Name
|
Stock | Stock Awards | ||||||
|
LeRoy E. Carlson
|
5,000 | $ | 100,000 | |||||
|
Peter J. Merlone
|
5,000 | $ | 100,000 | |||||
|
Douglas M. Pasquale
|
5,000 | $ | 100,000 | |||||
|
Dennis Polk
|
5,000 | $ | 100,000 | |||||
24
Table of Contents
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2010 regarding our 2010 Equity Incentive Plan.
| Equity Compensation Plan Information | ||||||||||||
|
Number of |
||||||||||||
|
Securities |
||||||||||||
|
Remaining Available |
||||||||||||
|
Number of |
for Future Issuance |
|||||||||||
|
Securities to be |
Under Equity |
|||||||||||
|
Issued Upon |
Weighted Average |
Compensation Plan |
||||||||||
|
Exercise of |
Exercise Price of |
(Excluding |
||||||||||
|
Outstanding |
Outstanding |
Securities |
||||||||||
|
Options, Warrants |
Options, Warrants |
Referenced in |
||||||||||
|
Plan Category
|
and Rights | and Rights | Column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
|
Equity compensation plans approved by security holders:
|
—(1 | )(2) | N/A | 304,222 | ||||||||
|
Equity compensation plans not approved by security holders:
|
N/A | N/A | N/A | |||||||||
|
Total
|
—(1 | )(2) | N/A | 304,222 | ||||||||
| (1) | The 2010 Equity Incentive Plan does not allow options, warrants or rights. | |
| (2) | Does not include 150,778 shares of unvested restricted stock as of December 31, 2010, which were already outstanding. |
SHARE
OWNERSHIP INFORMATION
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and persons who own
more than ten percent of our outstanding common stock to file
with the SEC, initial reports of ownership and reports of
changes in ownership of common stock. Such persons are required
by SEC regulations to furnish us with copies of all such reports
they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no
other reports are required, all Section 16(a) filing
requirements applicable to our executive officers, directors and
greater than ten percent beneficial owners have been complied
with during the fiscal year ended December 31, 2010.
CERTAIN
TRANSACTIONS
Related
Person Transaction Approval Policy
All related person transactions must be reviewed and approved by
our board of directors in advance of our or any of our
subsidiaries entering into the transaction. If we or any of our
subsidiaries enters into a transaction without recognizing that
the transaction constitutes a related person transaction, this
approval requirement will be satisfied if the transaction is
ratified by our board of directors after we recognize that the
transaction constituted a related person transaction. The term
“related person transaction” refers to a transaction
required to be disclosed by the Company pursuant to
Item 404 of
Regulation S-K
(or any successor provision) promulgated by the SEC. The
transactions set forth below were approved by our board of
directors.
In addition to any applicable requirements under the Maryland
General Corporation Law, the affirmative vote of a majority of
disinterested directors, even if the disinterested directors
constitute less than a quorum, is required to authorize, approve
or ratify any transaction, agreement or relationship of the
Company in which any director, officer or employee of the
Company has an interest.
25
Table of Contents
Contribution
of Fixed Assets
Concurrently with the completion of our initial public offering,
Terreno Capital Partners LLC, of which our executive officers
Mr. Baird and Mr. Coke were managing partners and
co-founders, contributed its fixed assets to us at their net
book value of approximately $240,000. In exchange for the
contribution of these fixed assets, we issued to Terreno Capital
Partners LLC 12,000 shares of our common stock. These
shares were subsequently distributed to each of Mr. Baird
and Mr. Coke.
Other
Benefits to Related Parties and Related Party
Transactions
We used approximately $272,000 of the net proceeds of our
initial public offering and the concurrent private placement to
reimburse Terreno Capital Partners LLC for
out-of-pocket
expenses it incurred in connection with the formation of our
company and our initial public offering. We also used $1,000 of
the net proceeds of our initial public offering and the
concurrent private placement to repurchase the shares of our
common stock that Mr. Baird and Mr. Coke acquired in
connection with the formation and initial capitalization of our
company.
Private
Placements
Concurrently with the completion of our initial public offering,
Mr. Baird acquired 250,000 shares of our common stock
for an aggregate purchase price of $5.0 million and
Mr. Coke acquired 100,000 shares of our common stock
or an aggregate purchase price of $2.0 million in a private
placement at the same price per share of $20.00 as in our
initial public offering but without payment of any underwriting
discount.
SECURITY
OWNERSHIP
The table below sets forth, as of February 28, 2011, the
number of shares of our common stock which were owned
beneficially by:
| • | each person who is known by us to beneficially own more than 5% of our common stock; | |
| • | each director and nominee for director; | |
| • | each named executive officer; and | |
| • | all of our directors and executive officers as a group. |
Unless otherwise indicated, the address of each of the
individuals listed in the table is
c/o Terreno
Realty Corporation, 16 Maiden Lane, Fifth Floor,
San Francisco, CA 94108.
26
Table of Contents
The number of shares beneficially owned by each individual or
group is based upon information in documents filed by such
person with the SEC. Percentage ownership in the following table
is based on 9,292,169 shares of common stock outstanding as
of the close of business on February 28, 2011. Beneficial
ownership is determined in accordance with the rules of the SEC
and generally includes voting or dispositive power with respect
to the securities.
|
Number of Shares |
Percent of |
|||||||||||
|
Beneficially |
Outstanding Shares |
|||||||||||
|
Name of Beneficial Owner
|
Owned(1) | Beneficially Owned(2) | ||||||||||
|
W. Blake Baird(3)
|
306,000 | 3.3 | % | |||||||||
|
Michael A. Coke(4)
|
156,000 | 1.7 | % | |||||||||
|
LeRoy E. Carlson
|
5,000 | * | ||||||||||
|
Peter J. Merlone
|
5,000 | * | ||||||||||
|
Douglas M. Pasquale
|
5,000 | * | ||||||||||
|
Dennis Polk
|
5,000 | * | ||||||||||
|
All directors and executive officers as a group (6 persons)
|
482,000 | 5.2 | % | |||||||||
|
T. Rowe Price Associates, Inc.(5)
|
1,062,250 | 11.4 | % | |||||||||
|
FMR LLC(6)
|
1,000,000 | 10.8 | % | |||||||||
|
U.S. Bancorp(7)
|
857,109 | 9.2 | % | |||||||||
|
Robeco Investment Management, Inc.(8)
|
789,666 | 8.5 | % | |||||||||
|
APG Asset Management US Inc.(9)
|
762,111 | 8.2 | % | |||||||||
|
Private Management Group, Inc.(10)
|
547,504 | 5.9 | % | |||||||||
|
Arrowpoint Asset Management, LLC(11)
|
507,981 | 5.5 | % | |||||||||
|
Ameriprise Financial, Inc.(12)
|
490,785 | 5.3 | % | |||||||||
|
Wellington Management Company, LLP(13)
|
481,036 | 5.2 | % | |||||||||
| * | Represents less than 0.1% of the shares of common stock outstanding as of February 28, 2011. |
| (1) | Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. A person is deemed to be the beneficial owner of any shares of common stock if that person has or shares voting power or investment power with respect to those shares, or has the right to acquire beneficial ownership at any time within 60 days of the date of the table. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares. | |
| (2) | Based on a total of 9,292,169 shares of common stock outstanding as of February 28, 2011. | |
| (3) | Includes 50,000 shares of restricted common stock granted to Mr. Baird at the completion of our initial public offering on February 16, 2010, which vest ratably in annual installments over a five-year period commencing on the date of grant, with the first vesting having occurred on February 16, 2011. | |
| (4) | Includes 50,000 shares of restricted common stock granted to Mr. Coke at the completion of our initial public offering on February 16, 2010, which vest ratably in annual installments over a five-year period commencing on the date of grant, with the first vesting having occurred on February 16, 2011. | |
| (5) | Based solely on information contained in a Schedule 13G/A filed by T. Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Value Fund, Inc. with the SEC on February 10, 2011. The address of T. Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Value Fund, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. The Schedule 13G/A states that T. Rowe Price Associates, Inc. has sole voting power with respect to 100,550 of such shares and sole dispositive power over all of such shares and that T. Rowe Price Small-Cap Value Fund, Inc. has sole voting power with respect to 510,000 of such shares and no sole or shared dispositive power with respect to any of such shares. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (6) | Based solely on information contained in a Schedule 13G filed by FMR LLC with the SEC on June 10, 2010. The address of FMR LLC is 82 Devonshire Street, Boston, MA 02109. The Schedule 13G states that neither of FMR LLC or Edward C. Johnson 3d has sole or shared voting power with respect to any of such shares and that each has sole dispositive power over all of such shares. The Schedule 13G also states that FMR LLC is a parent holding company and that Fidelity Management & Research Company, a wholly-owned subsidiary of FMR LLC and an investment advisor, and Fidelity Magellan Fund, an investment company, each beneficially owns |
27
Table of Contents
| all of such shares. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | ||
| (7) | Based solely on information contained in a Schedule 13G filed by U.S. Bancorp and FAF Advisors, Inc. with the SEC on February 16, 2011. The address of U.S. Bancorp and FAF Advisors, Inc. is 800 Nicollet Mall, Minneapolis, MN 55402. The Schedule 13G states that each of U.S. Bancorp and FAF Advisors, Inc. has sole voting power with respect to all of such shares and sole dispositive power with respect to 852,720 of such shares. The Schedule 13G states that U.S. Bancorp is a parent holding company and FAF Advisors, Inc. is an investment advisor. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (8) | Based solely on information contained in a Schedule 13G/A filed by Robeco Investment Management, Inc. with the SEC on February 28, 2011. The address of Robeco Investment Management, Inc. is 909 Third Ave., New York, NY 10022. The Schedule 13G/A filed by Robeco Investment Management, Inc. states that Robeco Investment Management, Inc. has sole voting power with respect to 343,931 of such shares and sole dispositive power over all of such shares. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (9) | Based solely on information contained in a Schedule 13G filed by APG Asset Management US Inc. with the SEC on February 14, 2011 and a Schedule 13G filed by Stichting Pensioenfonds ABP with the SEC on February 14, 2011. The address of APG Asset Management US Inc. is 666 Third Avenue, New York, NY 10017. The address of Stichting Pensioenfonds ABP is Oude Lindestraat 70, Postbus 2889, 6401 DL Heerlen, The Kingdom of the Netherlands. The Schedule 13G filed by APG Asset Management US Inc. states that each of APG Asset Management US Inc., APG Group and APG All Pensions Group NV has sole voting and dispositive power over all of such shares. The Schedule 13G filed by Stichting Pensioenfonds ABP also states that Stichting Pensioenfonds ABP has sole voting and dispositive power over all of such shares. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (10) | Based solely on information contained in a Schedule 13G filed by Private Management Group, Inc. with the SEC on February 10, 2011. The address of Private Management Group, Inc. is 20 Corporate Park, Suite 400, Irvine, CA 92606. The Schedule 13G states that Private Management Group, Inc. has sole voting and dispositive power with respect to all of such shares. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (11) | Based solely on information contained in a Schedule 13G filed by Arrowpoint Asset Management, LLC with the SEC on February 14, 2011. The address of Arrowpoint Asset Management, LLC is 100 Fillmore Street, Suite 325, Denver, CO 80206. The Schedule 13G states that Arrowpoint Asset Management, LLC has sole voting and dispositive power with respect to all of such shares. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (12) | Based solely on information contained in a Schedule 13G filed by Ameriprise Financial, Inc. and Columbia Management Investment Advisers, LLC with the SEC on February 11, 2011. The address of Ameriprise Financial, Inc. is 145 Ameriprise Financial Center, Minneapolis, MN 55474, and the address of Columbia Management Investment Advisers, LLC is 100 Federal St., Boston, MA 02110. The Schedule 13G states that Ameriprise Financial, Inc. and Columbia Management Investment Advisers, LLC share voting and dispositive power with respect to all of such shares. The Schedule 13G states that Ameriprise Financial, Inc. is a parent holding company and Columbia Management Investment Advisers, LLC is an investment advisor. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. | |
| (13) | Based solely on information contained in a Schedule 13G filed by Wellington Management Company, LLP with the SEC on February 14, 2011. The address of Wellington Management Company, LLP is 280 Congress Street, Boston, MA 02210. The Schedule 13G states that Wellington Management Company, LLP shares voting power with respect to 432,636 of such shares and shares dispositive power with respect to all of such shares. The Schedule 13G also states that Wellington Management Company, LLP, in its capacity as an investment advisor, may be deemed to beneficially own such shares, which are held of record by clients of Wellington Management Company, LLP. The percentage beneficial ownership has been readjusted to reflect our actual shares of common stock outstanding as of the close of business on February 28, 2011. |
28
Table of Contents
STOCKHOLDER
PROPOSALS
Our bylaws currently provide that in order for a stockholder to
nominate a candidate for election as a director at an annual
meeting of stockholders or propose business for consideration at
such meeting, written notice accompanied by the information and
other materials specified in our bylaws generally must be
delivered to our corporate secretary not later than the close of
business on the 120th day, and not earlier than the
150th day, prior to the first anniversary of the date of
the notice for the preceding year’s annual meeting.
Accordingly, a stockholder nomination or proposal intended to be
considered at the 2012 annual meeting of stockholders, but not
included in our proxy statement, generally must be received by
our corporate secretary after October 12, 2011, and prior
to 5:00 p.m., Eastern Time, on November 12, 2011. If
the 2012 annual meeting of stockholders is scheduled to take
place before April 18, 2012 or after June 17, 2012,
then notice must be delivered no earlier than the 150th day
prior to the 2012 annual meeting of stockholders and not later
than the close of business on the later of the 120th day
prior to the 2012 annual meeting of stockholders or the tenth
day following the day on which public announcement of the date
of the 2012 annual meeting of stockholders is first made by the
Company. If the number of directors to be elected at the 2012
annual meeting of stockholders is increased, and there is no
public announcement of such increase before November 2,
2011, then notice of nominees for any new positions created by
such increase must be delivered not later than 5:00 p.m.,
Eastern Time, on the later of November 12, 2011 and the
tenth day after the day on which public announcement of such
increase is first made by the Company.
The date by which we must receive stockholder proposals for
inclusion in the proxy materials relating to the 2012 annual
meeting of stockholders, or for presentation at such meeting, is
November 12, 2011. Stockholder proposals must comply with
all of the applicable requirements set forth in the rules and
regulations of the SEC, including
Rule 14a-8.
Stockholder proposals should be mailed to the attention of our
corporate secretary, and copies of the advance notification
requirements may be obtained from, our corporate secretary at 16
Maiden Lane, Fifth Floor, San Francisco, CA 94108. A copy
of our bylaws may be obtained from our corporate secretary by
written request to the same address.
2010
ANNUAL REPORT
Copies of our 2010 Annual Report, financial statements and
Form 10-K
for the period from February 16, 2010 (commencement of
operations) to December 31, 2010, as filed with the SEC,
may be obtained without charge by contacting Terreno Realty
Corporation — Investor Relations, 16 Maiden Lane,
Fifth Floor, San Francisco, CA 94108.
OTHER
MATTERS
Our board of directors knows of no other matters that may
properly be presented for stockholder action at the 2011 annual
meeting of stockholders, other than procedural matters relating
to the proposals disclosed in this proxy statement. If any other
matters are properly presented at the meeting for action, the
persons named in the proxies will vote upon such matters in
accordance with their discretion.
29
Table of Contents
| IMPORTANT ANNUAL MEETING INFORMATION Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X Annual Meeting Proxy Card PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — The Board of Directors unanimously recommends a vote FOR all of the nominees listed in Proposal 1, FOR Proposals 2 and 4 and for a frequency of every 1 YEAR in Proposal 3. 1. Election of six directors, each to serve until the next annual meeting of stockholders and until his successor has been duly elected and qualifies: 01 — W. Blake Baird 02 — Michael A. Coke 03 — LeRoy E. Carlson 04 — Peter J. Merlone 05 — Douglas M. Pasquale 06 — Dennis Polk Mark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees 01 02 03 04 05 06 For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. For Against Abstain 2. Adoption of a resolution to approve, on a non-binding, advisory basis, the compensation of certain executives, as more fully described in the proxy statement. 1 Yr 2 Yrs 3 Yrs Abstain 3. Determination, on a non-binding, advisory basis, of the frequency of future non-binding, advisory votes on executive compensation. 4. Ratification of the appointment of Deloitte & Touche LLP as our independent registered certified public accounting firm for the 2011 fiscal year. 5. The proxies are also authorized to vote in their discretion upon such other business as may properly come before the annual meeting, including any adjournments or postponements of the meeting. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X 1 1 2 6 2 8 2 01AD9B |
Table of Contents
| PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy — Terreno Realty Corporation 2011 Annual Meeting of Stockholders Proxy Solicited by the Board of Directors of Terreno Realty Corporation for the 2011 Annual Meeting of Stockholders to be Held on May 18, 2011 The undersigned stockholder of Terreno Realty Corporation, a Maryland corporation, signing on the reverse side of this proxy card, hereby appoints W. Blake Baird and Michael A. Coke, and each of them, as proxies of the undersigned, with full power of substitution in each of them, to attend the 2011 Annual Meeting of Stockholders to be held at the corporate headquarters of Terreno Realty Corporation, 16 Maiden Lane, Fifth Floor, San Francisco, CA 94108 on Wednesday, May 18, 2011 at 8:00 a.m., local time, and at any adjournments or postponements of the meeting, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at such meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned stockholder hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders with respect to such meeting and of the accompanying proxy statement, which are incorporated herein by reference, and revokes any proxy heretofore given with respect to such meeting. When properly executed, the votes entitled to be cast by the undersigned will be cast in the manner directed by the undersigned stockholder. If this proxy is properly executed but no direction is given, this proxy will be voted FOR the election of all of the nominees listed in Proposal 1, FOR Proposals 2 and 4 and FOR a frequency of every 1 YEAR in Proposal 3. The Board of Directors unanimously recommends a vote FOR all of the nominees listed in Proposal 1, FOR Proposals 2 and 4 and FOR a frequency of every 1 YEAR in Proposal 3. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 18, 2011: Our proxy statement and 2010 annual report, including our annual report on Form 10-K for the fiscal year ended December 31, 2010, are available at www.edocumentview.com/TRNO. (Items to be voted appear on reverse side.) |
TABLE OF CONTENTS
Questions and AnswersCorporate Governance and Related MattersIndependent DirectorsExecutive SessionsNominations for DirectorsStockholder CommunicationsBoard Leadership StructureRisk OversightCode of Business Conduct and EthicsCorporate Governance GuidelinesMeetings and Committees of Our Board of DirectorsMeetingsCommittee MembershipOther CommitteesProposal 1 Election of DirectorsExecutive OfficersProposal 2 Non-Binding, Advisory Approval of Executive CompensationProposal 3 Non-Binding, Advisory Determination of the Frequency of Future Non-Binding, Advisory Votes on Executive CompensationProposal 4 Ratification of the Appointment of Independent Registered Certified Public Accounting FirmFees Paid to Independent Registered Certified Public Accounting FirmAudit FeesTax FeesAll Other FeesPre-Approval ProceduresReport of the Audit CommitteeCompensation Committee ReportRisk Considerations in our Compensation ProgramsCompensation Committee Interlocks and Insider ParticipationCompensation Discussion and AnalysisOverviewObjectivesManagements and Advisors Role in Compensation DecisionsPrincipal Elements of Compensation and Total Direct CompensationOther Elements of CompensationOther Compensation PoliciesSummary Compensation TableGrants of Plan-Based AwardsOutstanding Equity Awards at Fiscal Year EndPayments upon Termination of Employment and Change of ControlDirector CompensationEquity Compensation Plan InformationShare Ownership InformationSection 16(a) Beneficial Ownership Reporting ComplianceCertain TransactionsSecurity OwnershipStockholder Proposals2010 Annual ReportOther Matters