Simon Property Group Inc.'s shareholders overwhelmingly rejected the company's plan to boost its CEO's pay over an eight-year period, according to a document filed Tuesday with the Securities and Exchange Commission.
The vote was not binding, and the country's largest mall operator appears unlikely to revise its arrangement.
Simon Property struck a deal in July with CEO David Simon that's intended to keep him in place. It included a base salary of at least $1.2 million, paid starting in 2011, and a performance-based cash bonus of up to three times his salary.
The CEO of 17 years also would get 1 million in long-term incentive plan units, valued at roughly $120 million, if he stayed with the company another eight years; these units convert to company stock beginning in six years.
Simon already was one of the highest paid CEOs in the country prior to the deal. His 2010 compensation package was worth $24.6 million, according to an Associated Press analysis. The AP's calculation counts salary, bonuses, perks, stock and options awarded to the executive during the year and may differ from the total companies report to regulators.
His compensation jumped to $137.2 million in 2011 as the company recorded the value of the retention agreement, although the bulk of those payments won't be made for several years.
At the company's annual meeting last week, shareholders voted 67.7 million shares in support of the proposal and 186.1 million against it. Simon Properties is required to let shareholders voice their opinion on executive pay. But the board gets the ultimate say, and it doesn't appear to be backing down.
The company said in a statement Tuesday that David Simon has led the company to deliver some of the best returns in corporate America and it is critical to retain him.
"We value our stockholders' input, and our compensation committee will take their views into consideration as it reviews compensation plans for our management team," the company said.
Corporate governance advisory firms had criticized the deal prior to the vote. Glass Lewis & Co. said it was "wrought with over-zealous provisions and egregious payments." The firm highlighted that the company for paying Simon more than twice as much as most of the company's other executives.
Simon Properties President and Chief Operating Officer Richard Sokolov was paid nearly $800,000 in 2011, but the other top executives earned around $500,000. Glass Lewis also criticized the company for granting long-term incentive units regardless of performance.
Glass Lewis urged shareholders to vote no on the proposal.
Simon Properties, based in Indianapolis, owns or has an interest in 337 retail real estate properties in North America and Asia as well as a stake in French real estate investment trust that owns roughly 270 shopping centers in Europe.
Shares of Simon Property Group fluctuated all day but were up 3 cents by late Tuesday, trading at $147.50.