Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 22, 2021, AvalonBay Communities, Inc. (the "Company" or "AvalonBay")
announced that its Board of Directors (the "Board") had appointed Benjamin W.
Schall, the Company's current President and a director, to the additional role
of Chief Executive Officer effective January 3, 2022, reporting directly to the
Board. Also effective January 3, 2022, Timothy J. Naughton, the Company's
current Chairman of the Board and Chief Executive Officer, will retire as the
Company's Chief Executive Officer and assume the role of Executive Chairman of
the Board. These appointments are consistent with the expectations previously
announced by the Company in a Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 10, 2020.
Mr. Naughton's role as Executive Chairman in 2022 will be a half time role and
will include serving as a member of the Company's Management Investment
Committee, assisting the Company with the identification and evaluation of
strategic initiatives and technology opportunities, and assisting with business
development opportunities, particularly in the Company's expansion markets.
Commensurate with the reduction in Mr. Naughton's time commitment, the
Compensation Committee of the Board determined that the following compensation
for Mr. Naughton will apply for 2022: a base salary of $800,000; a cash bonus
with a target value of $1,200,000, with target, threshold and maximum
performance levels and performance metrics of a type similar to the levels and
metrics applied to cash bonuses awarded in the past to Mr. Naughton in his role
as Chief Executive Officer; and a performance award for the 2022-2024
performance period with a target value of $3,000,000. The performance award will
use metrics and terms that are of a type similar to the metrics and terms used
in recent performance awards awarded to officers and will be the same as apply
generally to performance awards awarded to other officers for the 2022-2024
performance period, except that upon a termination of employment or other
business relationship after the first year of the performance period by reason
of "Retirement" (as defined in the Company's form of performance award
agreement, a copy of which is filed as an exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2020), Mr. Naughton shall
vest in 100% (rather than a pro rata portion) of the award, with the ultimate
amount earned for such award determined after the end of the performance period
in the ordinary course.
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