DEF 14A 1 d843359ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

 

 

 

 

SCHEDULE 14A

 

 

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

 

 

 

 

 

 

 

Filed by the Registrant  ☒                                  Filed by a Party other than the Registrant  ☐

 

 

 

Check the appropriate box:

 

 

 

Preliminary Proxy Statement

 

 

 

Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

 

Definitive Proxy Statement

 

 

 

Definitive Additional Materials

 

 

 

Soliciting Material Pursuant to §240.14a-12

 

 

 

CBRE Group, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

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)

 

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(5)

 

Total fee paid:

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:

 

 

(2)

 

Form, Schedule or Registration Statement No.:

 

 

(3)

 

Filing Party:

 

 

(4)

 

Date Filed:

 

 

 

 


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LOGO

 

400 South Hope Street, 25th Floor

Los Angeles, California 90071

(213) 613-3333

April 1, 2020

Dear Fellow Stockholder:

On behalf of the Board of Directors and management of CBRE Group, Inc., I cordially invite you to attend our annual meeting of stockholders on Thursday, May 14, 2020 at 9:30 a.m. (Central Time) (the “Annual Meeting” or the “2020 Annual Meeting”). The 2020 Annual Meeting will be a virtual meeting of stockholders. You will be able to attend the 2020 Annual Meeting, vote your shares electronically and submit your questions during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/CBRE2020. Stockholders will be able to listen, vote, and submit questions from their home or any location with internet connectivity. To participate in the meeting, you must have the 16-digit number that is shown on your Notice of Internet Availability of Proxy Materials or on your proxy card if you elected to receive proxy materials by mail. The notice of meeting and proxy statement that follow describe the business that we will consider at the meeting.

We hope that you will be able to attend the meeting via our live webcast. However, regardless of whether you attend the meeting, your vote is very important. We are pleased to again offer multiple options for voting your shares. You may vote by telephone, via the internet, by mail or through our live webcast of the Annual Meeting, as described beginning on page 1 of the proxy statement.

Thank you for your continued support of CBRE Group, Inc.

Sincerely yours,

 

LOGO

Robert E. Sulentic

President and Chief Executive Officer


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LOGO

 

 

 

May 14, 2020

9:30 a.m. (Central Time)

www.virtualshareholdermeeting.com/CBRE2020

You can attend the Annual Meeting online through our live webcast, vote your shares electronically and submit your questions during the Annual Meeting, by visiting www.virtualshareholdermeeting.com/CBRE2020. You will need to have the 16-digit number included on your notice or your proxy card (if you received a printed copy of the proxy materials) to join the Annual Meeting.

AGENDA:

 

1.

Elect the 11 Board-nominated directors named in the Proxy Statement;

 

2.

Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;

 

3.

Conduct an advisory vote on named executive officer compensation for the fiscal year ended December 31, 2019;

 

4.

If properly presented, consider a stockholder proposal regarding our stockholders’ ability to call special stockholder meetings; and

 

5.

Transact any other business properly introduced at the Annual Meeting.

Only stockholders of record as of March 16, 2020 will be entitled to attend and vote at the Annual Meeting and any adjournments or postponements thereof. A list of these stockholders will be open for examination by any stockholder for any purpose germane to the 2020 Annual Meeting for a period of 10 days prior to the 2020 Annual Meeting at our principal executive offices at 400 South Hope Street, 25th Floor, Los Angeles, California 90071, and electronically during the 2020 Annual Meeting at www.virtualshareholdermeeting.com/CBRE2020.

Please note that if you held common stock on March 16, 2020 in “street name” (that is, through a broker, bank or other nominee), you are considered the “beneficial owner” of those shares. As the beneficial owner of those shares, you have the right to direct your broker, bank or other nominee how to vote your shares. You will receive instructions from your broker, bank or other nominee that you must follow in order to have your shares of common stock voted.

We hope that you can attend the Annual Meeting. Regardless of whether you will attend via our live webcast, please complete and return your proxy so that your shares can be voted at the Annual Meeting in accordance with your instructions.

We are pleased to furnish proxy materials to our stockholders on the internet. We believe that this allows us to provide you with the information that you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.

April 1, 2020

By Order of the Board of Directors

 

LOGO

Laurence H. Midler

Executive Vice President, General Counsel and Secretary

This Proxy Statement and accompanying proxy card are first being made available on or about April 1, 2020.

References in this Proxy Statement to “CBRE,” “the company,” “we,” “us” or “our” refer to CBRE Group, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise. References to “the Board” refer to our Board of Directors. A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, including financial statements, is being sent simultaneously with this Proxy Statement to each stockholder who requested paper copies of these materials and will also be available at www.proxyvote.com.


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Proxy Summary Information

To assist you in reviewing the proposals to be voted upon at our 2020 Annual Meeting, we have summarized important information contained in this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. This summary does not contain all of the information that you should consider, and you should carefully read the entire Proxy Statement and Annual Report on Form 10-K before voting.

Voting

Stockholders of record as of March 16, 2020 may cast their votes in any of the following ways:

 

LOGO   LOGO   LOGO   LOGO
Internet   Phone   Mail   Via webcast during the Annual
Meeting
Visit www.proxyvote.com. You will need the 16-digit number included in your proxy card, voter instruction form or notice.   Call 1-800-690-6903 or the number on your voter instruction form. You will need the 16-digit number included in your proxy card, voter instruction form or notice.   Send your completed and signed proxy card or voter instruction form to the address on your proxy card or voter instruction form.  

Visit www.virtualshareholdermeeting.com

/CBRE2020. You will need the 16-digit number included in your proxy card, voter instruction form or notice. Online access begins at 9:15 a.m. Central Time.

Voting Matters and Board Recommendation

 

  Proposal

 

  

Board Vote Recommendation

 

 

Elect Directors (page 8)

 

  

 

ü FOR each Director Nominee

 

 

Ratify the Appointment of Independent Registered Public Accounting Firm for 2020 (page 26)

 

  

 

ü FOR

 

 

Advisory Vote to Approve Named Executive Officer Compensation for 2019 (page 29)

 

  

 

ü FOR

 

 

If Properly Presented, Consider a Stockholder Proposal Regarding Special Stockholder Meetings (page 70)

 

 

    AGAINST

 

Fiscal Year 2019 Business Highlights(1)

 

We are the world’s largest commercial real estate services and investment firm, based on 2019 global revenue of $23.9 billion, with leading global market positions in our leasing, property sales, occupier outsourcing and valuation businesses.

 

 

Our service offering is supported by more than 530 offices worldwide with over 100,000 employees, excluding independent affiliates. We serve clients in more than 100 countries.

 

Our services include:

 

   

real estate advisory and outsourcing services operating under the “CBRE” brand name;

 

   

investment management services operating under the “CBRE Global Investors” brand name;

 

   

U.S. development services operating under the “Trammell Crow Company” brand name;

 

   

U.K. development services operating under the “Telford Homes” brand name; and

 

   

flexible-space solutions operating under the “Hana” brand name.

 

 

  (1)

For more complete information regarding our fiscal year 2019 performance, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. You can obtain a free copy of our Annual Report on Form 10-K at the SEC’s website (www.sec.gov) or by submitting a written request by (i) mail to CBRE Group, Inc., Attention: Investor Relations, 200 Park Avenue, New York, New York 10166, (ii) telephone at (212) 984-6515 or (iii) email at investorrelations@cbre.com.



 

CBRE - 2020 Proxy Statement     1  


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     PROXY SUMMARY INFORMATION

 

In fiscal year 2019, we delivered strong results:

 

 

Our revenue totaled $23.9 billion, up 12% from 2018.

 

 

Our fee revenue totaled $11.9 billion, up 9% from 2018.(2)(3)

 

 

On a GAAP basis, net income for 2019 increased 21% to $1.3 billion and earnings per diluted share rose 22% to $3.77 per share.

 

 

Our adjusted net income was $1.3 billion, up 12% from 2018.(3)

 

 

Our adjusted earnings per share (“adjusted EPS”) was $3.71, up 13% from 2018.(3)

 

 

Our adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) was $2.1 billion, up 8% from 2018.(3)

 

 

We generated revenue from a highly-diversified base of clients. In 2019, our client roster included over 90 of the Fortune 100 companies.

 

 

During 2019, we acquired Telford Homes Plc, a leading U.K. developer of multifamily residential properties in the London area. We also acquired a leading advanced analytics software company based in the United Kingdom, a commercial and residential real estate appraisal firm headquartered in Florida, our former affiliate in Omaha, a

 

project management firm in Australia, a valuation and consulting business in Switzerland, a leading project management firm in Israel, a full-service real estate services firm in San Antonio with a focus on retail, office, medical office and land, and a debt-focused real estate investment management business in the United Kingdom.

 

 

We have been voted the most recognized commercial real estate brand in the Lipsey Company survey for 19 consecutive years (including 2020). We have also been rated a World’s Most Ethical Company by the Ethisphere Institute for seven consecutive years (including 2020), and are included in the Dow Jones World Sustainability Index and the Bloomberg Gender Equality Index.

Like most businesses, we are currently faced with unprecedented challenges due to the coronavirus pandemic. In these highly uncertain times, it is important to know that we have built an operating model and balance sheet that we believe can help us navigate through difficult circumstances. We ended 2019 in a strong financial position with low leverage, high liquidity, considerable cash flow and significant geographic and business line diversification. Thus, while the coronavirus pandemic will have unforeseen consequences for our company and industry, we believe we have built a resilient business that is prepared to weather the current crisis.

 

 

The following charts highlight our growth in GAAP net income, GAAP EPS, adjusted EBITDA, adjusted net income and adjusted EPS for 2019 relative to 2018:

 

 

LOGO

 

LOGO

 

 (2)

Fee revenue is gross revenue less both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients.

 

 (3)

These are non-GAAP financial measures. For supplemental financial data and a corresponding reconciliation of (i) revenue computed in accordance with GAAP to fee revenue, (ii) net income computed in accordance with GAAP to adjusted net income and to adjusted EPS, and (iii) net income computed in accordance with GAAP to adjusted EBITDA, in each case for the fiscal years ended December 31, 2019 and 2018, see Annex A to this Proxy Statement. We also refer to “adjusted net income,” “adjusted EPS,” and “adjusted EBITDA” from time to time in our public reporting as “net income attributable to CBRE Group, Inc., as adjusted,” “diluted income per share attributable to CBRE Group, Inc. stockholders, as adjusted” and “EBITDA, as adjusted,” respectively. As described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, our Board and management use non-GAAP financial measures to evaluate our performance and manage our operations. However, non-GAAP financial measures should be viewed in addition to, and not as an alternative for, financial results prepared in accordance with GAAP. The term “GAAP,” as used in this Proxy Statement, means generally accepted accounting principles in the United States.



 

2   CBRE - 2020 Proxy Statement


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PROXY SUMMARY INFORMATION     

 

Our Corporate Strategy

 

We operate in an industry that is characterized by secular trends that support the long-term growth of our business. These include:

 

 

Occupiers’ growing acceptance of the outsourcing of real estate services;

 

 

Investors’ increasing allocation of capital to commercial real estate, and

 

 

The continuing consolidation of occupier and investor activity to the highest-quality, globally diversified service providers.

In addition, technological advancements hold significant opportunities for commercial real estate services firms that invest prudently in digital capabilities.

We have a clear strategy to capitalize on the inherent opportunities within our industry. Our strategy is focused on delivering consistently superior client outcomes that are difficult for other firms to replicate. This strategy is underpinned by six key elements:

 

An intense focus on client outcomes. We deeply study the results we produce for clients and then use the insights we gain to improve those results.

 

 

Having top talent—both client-facing professionals and business line/geographic leaders—in every key role.

 

 

Maintaining a premier operating platform—from research to marketing to human resources to, most especially, data/technology capabilities—that helps our professionals serve clients.

 

 

Leveraging our scale as the world’s largest commercial real estate services provider and using our collaborative culture to connect our people and capabilities around the world.

 

 

Making strategic investments in targeted M&A, data and technology, and other initiatives that enhance our capabilities.

 

 

Operating efficiently. We prudently manage our expense base to enable re-investment in the business while maintaining strong margins.

 

 

Corporate Governance Highlights

 

Board Independence

 

 

Independent director nominees

 

  

 

10 out of 11 

 

 

Independent Board Chair

 

  

 

Brandon B. Boze 

 

 

Director Elections

 

 

Frequency of Board elections

 

  

 

Annual 

 

 

Voting standard for uncontested elections

 

  

 

Majority Requirement 

 

 

Director term limits

 

  

 

12 Years(4) 

 

 

Limit on number of Board-nominated executive officers

 

  

 

Maximum 1 

 

 

Evaluating and Improving Board Performance

 

    

 

Board evaluations

 

  

 

Annual 

 

 

Committee evaluations

 

  

 

Annual 

 

 

Aligning Director and Executive Interests with Stockholder Interests

 

 

Director stock ownership requirements

 

  

 

Yes 

 

 

Executive officer stock ownership requirements

 

  

 

Yes 

 

 

Policy restricting trading, and prohibiting hedging and short-selling of, CBRE stock

 

  

 

Yes 

 

 

Compensation clawback policy for executive officers

 

  

 

Yes 

 

 

Stockholder Rights

 

 

Proxy access for director nominations

 

  

 

Yes 

 

 

Stockholder rights to call a special meeting

 

  

 

Yes 

 

 

Ongoing stockholder outreach and engagement

 

 

  

 

Yes 

 

 

 

 

 (4)

The application of this term-limit restriction does not go into effect until December 17, 2020 for any of the company’s directors who were serving on the Board as of December 17, 2015. See “Corporate Governance—Term Limits” on page 17.



 

CBRE - 2020 Proxy Statement     3  


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     PROXY SUMMARY INFORMATION

 

Summary of Board Nominees

The following table provides summary information about each of the director nominees who is being voted on by stockholders at the Annual Meeting.

 

  Name

 

 

 

Age

 

 

   

Director

Since

 

 

   

Principal Occupation

 

 

  

Committees

 

 

  

Other Public 

Company Boards 

 

 

 

 

  Brandon B. Boze*

 

 

 

 

 

 

39

 

 

 

 

 

 

 

 

 

 

2012

 

 

 

 

 

 

 

 

Partner of ValueAct Capital

 

 

  

 

EC

 

 

  

 

 

 

 

 

 

 

 

  Beth F. Cobert*

 

 

 

 

 

 

 

61

 

 

 

 

 

 

   

 

 

2017

 

 

 

 

 

 

Chief Executive Officer of Skillful

 

 

  

CC, GC

 

 

    

 

 

 

 

  Curtis F. Feeny*

 

 

   

 

 

62

 

 

 

 

 

   

 

 

2006

 

 

 

 

 

 

Managing Director of Silicon Valley Data Capital

 

 

  

AC, GC, EC

 

    

 

 

 

  Reginald H. Gilyard*

 

   

 

 

56

 

 

 

 

 

   

 

 

2018

 

 

 

 

 

 

Senior Advisor to The Boston Consulting Group

 

 

  

CC, GC

 

 

    

 

 

 

 

  Shira D. Goodman*

 

   

 

 

59

 

 

 

 

 

   

 

2019

 

 

 

 

Advisory Director of Charlesbank Capital Partners

 

 

  

AC, CC

 

    

 

 

 

 

  Christopher T. Jenny*

 

   

 

 

64

 

 

 

 

 

   

 

 

2016

 

 

 

 

 

 

Chair of Jennus Innovation

 

 

  

AC, GC

 

    

 

 

 

  Gerardo I. Lopez*

 

   

 

 

60

 

 

 

 

 

   

 

 

2015

 

 

 

 

 

 

Operating Partner of Softbank Group

 

 

  

CC, GC

 

    

 

 

 

  Robert E. Sulentic

 

   

 

 

63

 

 

 

 

 

   

 

 

2012

 

 

 

 

 

 

President and Chief Executive Officer of CBRE

 

 

  

EC

 

    

 

 

 

  Laura D. Tyson*

 

   

 

 

72

 

 

 

 

 

   

 

2010

 

 

 

 

Distinguished Professor of the Graduate School, Haas

School of Business, University of California, Berkeley

 

 

  

AC

 

    

 

 

 

  Ray Wirta*

 

   

 

 

76

 

 

 

 

 

   

 

 

2001

 

 

 

 

 

 

Chief Executive Officer of The Koll Company

 

 

  

EC

 

    

 

 

 

 

  Sanjiv Yajnik*

 

   

 

63

 

 

 

   

 

2017

 

 

 

 

President of Capital One Financial Services

 

  

AC, CC

 

    

 

 

 

  *

Independent Director

 

  †

Board Chair

 

  Key:

 

  AC

Audit Committee

 

  CC

Compensation Committee

 

  EC

Executive Committee

 

  GC

Corporate Governance and Nominating Committee

 

Executive Compensation Highlights

 

Our Philosophy—Our executive compensation program is designed to reinforce our corporate strategy and to attract and retain accomplished and high-performing executives and to motivate those executives to consistently achieve short- and long-term goals consistent with and in furtherance of our corporate strategy. To do this, we focus a significant percentage of our executive officers’ compensation on both annual and long-term incentive awards intended to drive growth in our business and in our share price in the short and long term, with a relatively modest portion of compensation paid in fixed base salary.

In 2019, we continued to place a significant percentage of our named executive officers’ total annual target direct compensation “at risk,” with incentive programs tied to

financial and strategic performance objectives. In 2019, our named executive officers (“NEOs”) collectively had on average approximately (1) 86% of their total annual target direct compensation tied to variable, as opposed to fixed, compensation, (2) 52% of their total annual target direct compensation tied to financial and strategic objectives (our annual cash bonus awards and Adjusted EPS Equity Awards) and (3) 65% of their total annual target direct compensation tied to our stock price performance (our Adjusted EPS Equity Awards and Time Vesting Equity Awards). This program design is intended to motivate our executive officers to achieve positive short- and long-term results for our stockholders consistent with and in furtherance of our corporate strategy.

 


 

 

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PROXY SUMMARY INFORMATION     

 

The total target direct compensation mix for 2019 for (i) our Chief Executive Officer (“CEO”) and (ii) our CEO together with our other NEOs is illustrated in the following charts:

 

LOGO    LOGO

 

Say on Pay—We received strong support for our executive compensation from our stockholders at our 2019 annual meeting of stockholders, at which approximately 95% of the votes cast on the “say on pay” proposal were in favor of the 2018 compensation that we paid to our named executive officers. In addition, stockholders that we engaged with as part of our outreach program generally reported that executive compensation was viewed as well-aligned with performance.

2019 Financial Performance—We achieved strong overall financial and operational performance in 2019. Historically, our Board has set aggressive annual financial targets to achieve strategic growth and increase stockholder value, and our 2019 operating plan assumed continued solid growth over

2018. In 2019, we outperformed our internal growth target on a global basis and for our Advisory Services and Global Workplace Solutions segments. As we describe in greater detail under the heading “Compensation Discussion and Analysis” beginning on page 30, our overall performance directly impacted a portion of the compensation of all of our named executive officers. The performance of our Advisory Services segment directly impacted a portion of the compensation for Michael J. Lafitte (who served as our Global CEO—Advisory Services during 2019) and the performance of our Global Workplace Solutions segment directly impacted a portion of the compensation for William F. Concannon (who served as our Global CEO—Global Workplace Solutions during 2019).

 


 

CBRE - 2020 Proxy Statement     5  


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PROXY SUMMARY INFORMATION     

 

Annual Compensation—Set forth below is the 2019 compensation for our named executive officers. See the footnotes accompanying the Summary Compensation Table on page 54 for more information.

 

Name and Principal Position

 

 

  

Year

 

 

    

Salary

($)

    

Bonus

($)

   

Annual

Stock Awards

($)

   

Non-Equity

Incentive Plan

Compensation

($)

    

All Other

Compensation

($)

   

Total  

($)  

 

Robert E. Sulentic

President and Chief Executive Officer

 

  

 

 

 

 

2019

 

 

 

 

  

 

 

 

 

1,000,000

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

9,999,919

 

 

 

 

 

 

 

 

 

2,415,000

 

 

 

 

  

 

 

 

 

4,500

 

 

 

 

 

 

 

 

 

13,419,419  

 

 

 

Leah C. Stearns(1)

Chief Financial Officer

 

  

 

 

 

 

2019

 

 

 

 

  

 

 

 

 

443,014

 

 

 

 

  

 

 

 

 

632,877

 

 

(3) 

 

 

 

 

 

 

1,392,294

 

 

(4) 

 

 

 

 

 

 

114,709

 

 

 

 

  

 

 

 

 

4,500

 

 

(5) 

 

 

 

 

 

 

2,587,394  

 

 

 

James R. Groch(2)

Global Group President and Chief Investment

Officer

 

  

 

 

 

 

2019

 

 

 

 

  

 

 

 

 

770,000

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

2,999,931

 

 

 

 

 

 

 

 

 

1,152,113

 

 

 

 

  

 

 

 

 

4,500

 

 

 

 

 

 

 

 

 

4,926,544  

 

 

 

Michael J. Lafitte(6)

Global Chief Executive Officer—Real Estate

Investments

 

  

 

 

 

 

2019

 

 

 

 

  

 

 

 

 

735,000

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

2,659,921

 

 

 

 

 

 

 

 

 

1,175,167

 

 

 

 

  

 

 

 

 

4,500

 

 

 

 

 

 

 

 

 

4,574,588  

 

 

 

William F. Concannon(7)

Global Group President, Clients and Business

Partners

 

  

 

 

 

 

2019

 

 

 

 

  

 

 

 

 

700,000

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

2,319,960

 

 

 

 

 

 

 

 

 

1,247,014

 

 

 

 

  

 

 

 

 

4,500

 

 

 

 

 

 

 

 

 

4,271,474  

 

 

 

John E. Durburg(8)

Global Chief Executive Officer—Global

Workplace Solutions

 

  

 

 

 

 

2019

 

 

 

 

  

 

 

 

 

687,500

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

2,199,939

 

 

 

 

 

 

 

 

 

1,181,250

 

 

 

 

  

 

 

 

 

4,500

 

 

 

 

 

 

 

 

 

4,073,189  

 

 

 

(1)

Ms. Stearns joined our company in May 2019, so this does not represent a full year of compensation for her.

(2)

Mr. Groch served as our Chief Financial Officer and Chief Investment Officer until May 15, 2019, at which time he became our Global Group President and Chief Investment Officer.

(3)

Represents the guaranteed portion of Ms. Stearns’ 2019 bonus. Does not include the one-time cash transition bonus paid to Ms. Stearns.

(4)

Does not include the one-time Strategic Equity Awards and one-time transition equity award granted to Ms. Stearns.

(5)

Does not include relocation expenses reimbursed by us in connection with Ms. Steams’ relocation to Dallas, Texas.

(6)

During 2019, Mr. Lafitte served as our Global Chief Executive Officer—Advisory Services. On November 14, 2019, we announced his new role as Global Chief Executive Officer—Real Estate Investments, effective January 1, 2020.

(7)

During 2019, Mr. Concannon served as our Global Chief Executive Officer—Global Workplace Solutions. On November 14, 2019, we announced his new role as Global Group President, Clients and Business Partners, effective January 1, 2020.

(8)

During 2019, Mr. Durburg served as our Global Chief Operating Officer. On November 14, 2019, we announced his new role as Global Chief Executive Officer—Global Workplace Solutions, effective January 1, 2020.



 

 

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TABLE OF CONTENTS

 

PROPOSAL  1    Elect Directors

     8  

 

CORPORATE GOVERNANCE      15  

 

PROPOSAL  2    Ratify Appointment of Independent Registered Public Accounting Firm

     26  

 

AUDIT AND OTHER FEES      27  

 

PROPOSAL  3    Advisory Vote on Executive Compensation

     29  

 

COMPENSATION DISCUSSION AND ANALYSIS      30  

 

EXECUTIVE MANAGEMENT      51  

 

EXECUTIVE COMPENSATION      54  

 

PROPOSAL  4    Consider a Stockholder Proposal Regarding Stockholders’ Ability to Request a Special Stockholder Meeting

     70  

 

STOCK OWNERSHIP      73  

 

RELATED-PARTY TRANSACTIONS      75  

 

GENERAL INFORMATION ABOUT THE ANNUAL MEETING      76  

 

ANNEX A     Reconciliation of Certain Non-GAAP Financial Measures

     A-1  

 

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PROPOSAL 1  ELECT DIRECTORS

Our Board has nominated 11 directors for election at this Annual Meeting to hold office until the next annual meeting and the election of their successors. All of the nominees were selected to serve on our Board based on one or more of the following criteria:

 

 

outstanding achievement in their professional careers;

 

 

broad experience;

 

 

personal and professional integrity;

 

 

their ability to make independent, analytical inquiries;

 

 

financial literacy;

 

 

mature judgment;

 

high-performance standards;

 

 

familiarity with our business and industry; and

 

 

an ability to work collegially.

We also believe that all of our director nominees have a reputation for honesty and adherence to high ethical standards. Each agreed to be named in this Proxy Statement and to serve if elected.

 

 

Director Nomination Criteria: Qualifications, Skills and Experience

 

Our by-laws provide that our Board may not nominate (i) more than one member of the company’s current management to serve on the Board at any one time or (ii) any non-management director for re-election to the Board if that director has completed 12 years of service as an independent member of the Board.1 Our Board believes that these restrictions contribute to Board stability, vitality and diversity and help ensure that our Board continuously benefits from a balanced mix of perspectives and experiences. Our focus on Board refreshment has resulted in the addition of six new directors since October 2015.

Our Board seeks directors who represent a mix of backgrounds and experiences that will enhance the quality of our Board’s deliberations and decisions. In nominating candidates, our Board considers a diversified membership in the broadest sense, including persons diverse in experience, gender and ethnicity. Our Board does not discriminate on the basis of race, color, national origin, gender, religion, disability or sexual preference. When evaluating candidates, our Board considers whether potential nominees possess integrity, accountability, informed judgment, financial literacy, mature confidence and high-performance standards.

Our Board is especially interested in adding candidates over time who are operating executives (particularly current chief executives or other operating executives of other large public companies) or who have a strong technology background and in both cases a passion for building a transformative business on a global basis. Other factors include having directors with international experience, including knowledge of emerging markets or management of business operations and resources

that are dispersed across a global platform. In addition, a majority of our Board must be independent, consistent with our Corporate Governance Guidelines and New York Stock Exchange, or NYSE, listing standards. Further, at least one member of our Board should have the qualifications and skills necessary to be considered an “Audit Committee Financial Expert” under Section 407 of the Sarbanes-Oxley Act, as defined by the rules of the Securities and Exchange Commission, or SEC.

The Corporate Governance and Nominating Committee of our Board of Directors, or the Governance Committee, is, among other things, responsible for identifying and evaluating potential candidates and recommending candidates to our Board for nomination, as well as performing assessments of the skills and experience needed to properly oversee our interests.

The Governance Committee regularly reviews the composition of our Board and determines whether the addition of directors with particular experience, skills or characteristics would make our Board more effective. When a need arises to fill a vacancy, or it is determined that a director possessing particular experiences, skills or characteristics would make our Board more effective, the Governance Committee conducts targeted efforts to identify and recruit individuals who have the identified qualifications. As a part of the search process, the Governance Committee may consult with other directors and members of our senior management and may also hire a search firm to assist in identifying and evaluating potential candidates.

 

 

1      Theapplication of this term-limit restriction does not go into effect until December 17, 2020 for any of the company’s directors who were serving on the Board as of December 17, 2015. See “Term Limits” on page 17.

 

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PROPOSAL 1

 

All potential candidates are interviewed by our CEO, our Board Chair, our Governance Committee Chair and, to the extent practicable, the other members of the Governance Committee, and may be interviewed by other directors and members of senior management as desired and as schedules permit. In addition, the General Counsel reviews a director questionnaire submitted by the candidate, and a background and reference check is conducted as appropriate. The Governance Committee then meets to consider and approve the final candidates, and either makes its recommendation to the Board to fill a vacancy and to add an additional Board

member, or recommends a slate of candidates to the Board for nomination for election to the Board. The selection process for candidates is intended to be flexible, and the Governance Committee, in the exercise of its discretion, may deviate from the selection process when particular circumstances so warrant.

The Governance Committee will also consider candidates recommended to our Board by our stockholders. See “Corporate Governance—Stockholder Recommendations and Nominations of Director Candidates—Stockholder Recommendations” on page 16 for more information.

 

 

Director Skills Matrix

 

 

 

We believe our director nominees bring a well-rounded variety of experiences, qualifications, attributes and skills, and represent a mix of deep knowledge of the company and fresh perspectives. The director skills matrix below represents some of the key skills that our Board has identified as particularly valuable to the effective oversight of our company and the execution of our corporate strategy. This skills matrix highlights the depth and breadth of the skills of

our director nominees. This director skills matrix is not intended to be an exhaustive list of each of our director nominees’ skills or contributions to the Board. Further information on each director nominee, including some of their specific experience, qualifications, attributes and skills is set forth in the biographies on pages 10 to 14 of this Proxy Statement.

 

 

LOGO

 

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PROPOSAL 1

 

2020 Director Nominees

 

Brandon B. Boze

 

 

Age: 39

Director Since: December 2012

Board Committee:   Executive (Chair)

Mr. Boze has served as the Independent Chair of our Board since May 2018. He is a Partner and a member of the Management Committee of ValueAct Capital, a privately-owned investment firm that he joined in August 2005. Prior to joining ValueAct Capital, Mr. Boze was an investment banker at Lehman Brothers, focused on power utilities and technology mergers and acquisitions.

Qualifications, Attributes, Skills and Experience:

Mr. Boze brings to our Board experience in finance, strategy and mergers and acquisitions as well as deep knowledge of our business as a Partner at a significant stockholder. He serves on the board of directors of Trinity Industries, Inc. and previously served on the board of directors of Valeant Pharmaceuticals International. Mr. Boze holds a B.E. from Vanderbilt University and is a CFA charterholder.

Beth F. Cobert

 

 

Age: 61

Director Since: May 2017

Board Committees:   Compensation (Chair)
  Governance

Ms. Cobert has served as the Chief Executive Officer of Skillful, a non-profit organization focused on creating a skills-based labor market, since June 2017. She previously served as the Acting Director of the U.S. Office of Personnel Management from July 2015 to January 2017, and as the Deputy Director for Management of the U.S. Office of Management and Budget from October 2013 to July 2015. From 2001 to October 2013, Ms. Cobert served as a Senior Partner at McKinsey & Company, a global business strategy consulting firm. From 1990 to 2001, Ms. Cobert was a Partner at McKinsey & Company. She joined the firm in 1984 as an Associate and served in various leadership roles at McKinsey & Company.

Qualifications, Attributes, Skills and Experience:

Ms. Cobert brings to our Board nearly 30 years of experience as a consultant in business strategy, where she worked with corporate, non-profit and government entities on key strategic, operational and organizational issues across a range of sectors, including financial services, health care, legal services, real estate and telecommunications. Our Board also benefits from Ms. Cobert’s government service. Ms. Cobert previously served as a member of the board of directors and chair of the United Way of the Bay Area and as a member of the Stanford University Graduate School of Business Advisory Council. Ms. Cobert holds a B.A. from Princeton University and an M.B.A. from Stanford University.

Curtis F. Feeny

 

 

Age: 62

Director Since: December 2006

Board Committees:   Audit (Chair)
  Governance Executive

Mr. Feeny has served as a Managing Director of Silicon Valley Data Capital, a venture capital firm, since July 2017. He previously served as a Managing Director of Voyager Capital, a venture capital firm, from January 2000 to December 2017. From 1992 through 1999, Mr. Feeny served as Executive Vice President of Stanford Management Co., which manages the Stanford University endowment.

Qualifications, Attributes, Skills and Experience:

Mr. Feeny brings broad knowledge of the commercial real estate industry and our business from his service as an employee and later director of Trammell Crow Company as well as from his many years of service as Chair of our Audit Committee. He also has broad experience counseling companies through growth and experience in corporate finance matters. Mr. Feeny previously served on the board of directors of Staples, Inc. and Trammell Crow Company, which we acquired in 2006. Mr. Feeny holds a B.S. from Texas A&M University and an M.B.A. from Harvard Business School.

 

 

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PROPOSAL 1

 

Reginald H. Gilyard

 

 

Age: 56

Director Since: November 2018

Board Committees:   Compensation
  Governance

Mr. Gilyard has served as a Senior Advisor to The Boston Consulting Group, Inc. (BCG), a global management consulting firm, since August 2017. Prior to this role, Mr. Gilyard served as the Dean of The Argyros School of Business and Economics at Chapman University from August 2012 to July 2017. Prior to joining Chapman University, Mr. Gilyard served as Partner and Managing Director at BCG, where he led strategy, M&A and business transformation initiatives for large corporations, from 1996 to 2012. Prior to BCG, he served nine years in the U.S. Air Force and three years in the U.S. Air Force Reserves, rising to Major in the Reserves.

Qualifications, Attributes, Skills and Experience:

Mr. Gilyard brings to our Board more than 20 years of experience developing and implementing successful strategies for Fortune 500 companies, educational institutions and large national foundations. Mr. Gilyard serves on the board of directors of First American Financial Corporation and Realty Income Corporation. He also serves as the Board Chair of Pacific Charter School Development, a real estate development company serving low income families in urban centers across the country. Mr. Gilyard holds a B.S. from the United States Air Force Academy, an M.S. from the United States Air Force Institute of Technology and an M.B.A. from Harvard Business School.

Shira D. Goodman

 

 

Age: 59

Director Since: May 2019

Board Committees:

  Audit
  Compensation

Ms. Goodman has served as an Advisory Director to Charlesbank Capital Partners, a private equity firm, since January 2019. She previously served as the Chief Executive Officer of Staples, Inc. from September 2016 to January 2018. Ms. Goodman served in roles with increasing responsibility at Staples since joining Staples in 1992, including President and Interim Chief Executive Officer from June 2016 to September 2016, President, North American Operations from January 2016 to June 2016, and President, North American Commercial from February 2014 to June 2016. Prior to that, she served as Executive Vice

President of Global Growth from February 2012 to February 2014, Executive Vice President of Human Resources from March 2009 to February 2012, Executive Vice President of Marketing from May 2001 to March 2009, and in various other management positions. Prior to Staples, Ms. Goodman worked at Bain & Company from 1986 to 1992, in project design, client relationships and case team management.

Qualifications, Attributes, Skills and Experience:

Ms. Goodman brings to our Board more than 25 years of experience in business operations, marketing, sales force management, human resources, business growth and distribution logistics. She serves on the board of directors of CarMax, Inc. and Henry Schein, Inc. and previously served on the board of directors of Staples, Inc. and The Stride Rite Corporation. She holds a B.A. from Princeton University, an M.S. in Management from the Massachusetts Institute of Technology and a J.D. from Harvard University.

Christopher T. Jenny

 

 

Age: 64

Director Since: January 2016

Board Committees:   Audit
  Governance (Chair)

Mr. Jenny has served as the Chair of Jennus Innovation, a business development incubator/accelerator, since January 2018. He previously served as a Senior Advisor to EY-Parthenon from January 2016 to December 2018 and as a Senior Managing Director from August 2014 to December 2015. He previously served as President and Senior Partner with The Parthenon Group LLC, a Boston-based private management consulting firm, from 1995 to 2014 prior to its merger with Ernst & Young in August 2014. Prior to joining The Parthenon Group LLC in 1995, Mr. Jenny was a Partner at Bain & Company, Inc., a global business strategy consulting firm.

Qualifications, Attributes, Skills and Experience:

Mr. Jenny brings to our Board more than 20 years of experience as a consultant in business strategy, and has worked on issues related to business-unit strategy, profit improvement and mergers and acquisitions. He has experience as a senior operating executive and has managed portfolio companies for two of the nation’s leading private-equity firms. In addition to serving as the Chair of Jennus Innovation, he serves on the board of directors of The Guardian Life Insurance Company of America, Mobile Virtual Player and PLT4M. He previously served on the board of directors of Mac-Gray Corporation. Mr. Jenny holds a B.A. from Dartmouth College and an M.B.A. from Harvard Business School.

 

 

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PROPOSAL 1

 

Gerardo I. Lopez

 

 

Age: 60

Director Since: October 2015

Board Committees:

  Compensation
  Governance

Mr. Lopez has served as an Operating Partner at Softbank Group since December 2018. He previously served as an Operating Partner at High Bluff Capital from June 2018 to December 2018. From January 2018 to March 2018, Mr. Lopez served as a Senior Advisor to Extended Stay America, Inc. and its paired-share REIT, ESH Hospitality, Inc. and was its President and Chief Executive Officer from August 2015 to December 2017. Mr. Lopez previously served as President and Chief Executive Officer of AMC Entertainment Holdings, Inc. and its subsidiary, AMC Entertainment Inc., from March 2009 through August 2015. Prior to that, he was Executive Vice President of Starbucks Coffee Company and President of its Global Consumer Products, Seattle’s Best Coffee and Foodservice divisions from September 2004 to March 2009, and President of the Handleman Entertainment Resources division of Handleman Company from November 2001 to September 2004. Mr. Lopez has also held a variety of executive management positions with International Home Foods, Frito Lay, Pepsi-Cola and the Procter & Gamble Company.

Qualifications, Attributes, Skills and Experience:

Mr. Lopez brings to our Board his skills, knowledge and business leadership as a senior executive at hospitality, entertainment and consumer products companies. He has over 30 years of experience in marketing, sales and operations and management in public and private companies and has public company experience across diverse consumer-focused industries. He serves on the board of directors of Newell Brands and Realty Income Corporation, and previously served on the board of directors of Brinker International, Inc., Extended Stay America, Inc., AMC Entertainment Holdings, Inc., Digital Cinema Implementation Partners, National Cinemedia, LLC, Open Road Films, Safeco Insurance, TXU, Inc. and Recreational Equipment, Inc. Mr. Lopez holds a B.A. from George Washington University and an M.B.A. from Harvard Business School.

Robert E. Sulentic

 

 

Age: 63

Director Since: December 2012

Board Committee:

  Executive

Mr. Sulentic has been our CEO since December 2012 and President since March 2010. He previously served as the President of our Development Services business from December 2006 to April 2011, as our Chief Financial Officer from March 2009 until March 2010 and as our Group President from July 2009 until March 2010. Mr. Sulentic was a member of our Board and Group President of Development Services, Asia Pacific and Europe, Middle East and Africa from December 2006 through March 2009. He was President and Chief Executive Officer of Trammell Crow Company from October 2000 through our acquisition of that company in December 2006, and prior to that served as its Executive Vice President and Chief Financial Officer from September 1998 to October 2000.

Qualifications, Attributes, Skills and Experience:

Mr. Sulentic brings to our Board a significant operating background in the commercial real estate industry through extensive experience, previously with the Trammell Crow Company before its acquisition by us, and later with the company in his capacities as Group President of several service lines, as our Chief Financial Officer, and currently as our President and CEO. He previously served as the Independent Board Chair and member of the board of directors of Staples, Inc., and previously served on the board of directors of Trammell Crow Company from December 1997 through December 2006, including as its Chair from May 2002 through December 2006. Mr. Sulentic holds a B.A. from Iowa State University and an M.B.A. from Harvard Business School.

 

 

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PROPOSAL 1

 

Laura D. Tyson

 

 

Age: 72

Director Since: March 2010

Board Committee:

  Audit

Dr. Tyson has been a Distinguished Professor of the Graduate School, Haas School of Business, University of California, Berkeley since July 2016. She was a Professor at the Haas School of Business, University of California, Berkeley from January 2007 to July 2016 and has also been the Director of the Institute for Business and Social Impact at the Haas School since July 2013. Dr. Tyson was previously Dean of the London Business School from January 2002 to December 2006 and Dean of the Haas School of Business from July 1998 to December 2001, and was Professor of Business Administration and Economics there from January 1997 to June 1998. She was a member of President Clinton’s cabinet from 1993 through 1996. During that time, she served as the Chair of the National Economic Council and as the National Economic Adviser to the President of the United States from February 1995 to December 1996, and she was the first woman to Chair the White House Council of Economic Advisers, in which capacity she served from January 1993 to February 1995.

Qualifications, Attributes, Skills and Experience:

Dr. Tyson brings experience from serving on the boards of directors of complex global organizations, and is a noted economist who brings experience in government and broad knowledge of macroeconomics and international economic issues to our Board. Dr. Tyson served as a member of President Obama’s Economic Recovery Advisory Board from 2009 through 2011, as a member of President Obama’s Council on Jobs and Competitiveness from 2011 through 2012, and as a member of the U.S. State Department Foreign Affairs Policy Board from 2011 through 2013. She serves on the board of directors of AT&T Inc., Lexmark International, Inc. and APEX Swiss Holdings SARL. She also serves as Chair of the Board of Trustees of the Blum Center for Developing Economies at the University of California, Berkeley and serves on the board of the Opportunity Institute. She previously served on the board of directors of Eastman Kodak Company, Morgan Stanley and Silver Spring Networks, Inc. Dr. Tyson holds a B.A. from Smith College and a Ph.D. in Economics from the Massachusetts Institute of Technology.

Ray Wirta

 

 

Age: 76

Director Since: September 2001

Board Committee:   Executive

Mr. Wirta served as the Independent Chair of our Board from May 2014 to May 2018. Prior to that, he served as the Vice Chair of our Board from November 2013 to May 2014. He has served as the Chief Executive Officer of The Koll Company since November 2009. He previously served as President of the Irvine Company from June 2016 to March 2019 and President of the Investment Properties Group at the Irvine Company from June 2010 through June 2016. Mr. Wirta served as our Chief Executive Officer from September 2001 to June 2005, and Chief Executive Officer of our predecessor company, CBRE Services, Inc., from May 1999 to September 2001. He also served as Chief Operating Officer of that predecessor company from May 1998 to May 1999. Mr. Wirta served as a director and Non-Executive Chair of Realty Finance Corporation, where he was the Chair from May 2005 through August 2009. He also served as Interim Chief Executive Officer and President of that company from April 2007 to September 2007.

Qualifications, Attributes, Skills and Experience:

Mr. Wirta brings to our Board many years of experience in the commercial real estate industry, including a depth of knowledge about the real estate investment management and development services business and operational experience in our business operations as our former chief executive officer. He serves as the Chair of the board of directors of RW Holdings NNN REIT, Inc. (“RW Holdings”) and was the Chair of the board of directors of Rich Uncles Real Estate Investment Trust I until it merged into RW Holdings on December 31, 2019. Mr. Wirta holds a B.A. from California State University, Long Beach and an M.B.A. from Golden Gate University.

 

 

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PROPOSAL 1

 

Sanjiv Yajnik

 

Age: 63

Director Since: November 2017

Board Committees:  

Audit

 

Compensation

Mr. Yajnik has been the President of Capital One Financial Services, a division of Capital One, since June 2009. He is also President and Director of Capital One National Association, one of Capital One’s two national bank subsidiaries, and serves on Capital One’s Executive Committee. In addition, Mr. Yajnik oversees Capital One’s community relations throughout Texas, Oklahoma and Louisiana as President of the company’s South-Central Region. Since joining Capital One in 1998, he has held a number of senior leadership positions in Europe, Canada and the United States. Prior to Capital One, he held leadership positions at PepsiCo and Circuit City and was a Chief Engineer for Mobil Oil Corporation’s shipping business. In

November 2015, Mr. Yajnik was appointed by Texas Governor Greg Abbott to be Chair of the Texas Economic Development Corporation. He is the Chair of the Dallas Symphony Association, and leads the Board of Governors in overseeing the direction and governance for the Dallas Symphony Orchestra.

Qualifications, Attributes, Skills and Experience:

Mr. Yajnik brings to our board his broad business background and his experience in leading the transformation of a large, service-oriented global organization through technology enablement. Mr. Yajnik has spent the past two decades in financial services, with a wide range of experience in the U.S and international markets. He received an M.B.A. with honors from the University of Western Ontario, Canada, and completed the Executive Management Program at Stanford University. He is a medalist Chartered Engineer (I), and graduated with distinction from the Marine Engineering Research Institute, India.

 

 

 

The following summarizes the independence, diversity and tenure of our 2020 director nominees:

 

LOGO

Required Vote

This is an uncontested Board election. As such, in order to be elected, each nominee must receive the affirmative vote of a majority of the votes cast on his or her election (i.e., votes cast “FOR” a nominee must exceed votes cast as “AGAINST”). Votes to “ABSTAIN” with respect to a nominee and broker non-votes are not considered votes cast, and so will not affect the outcome of the nominee’s election.

Recommendation

Our Board recommends that stockholders vote “FOR” all of the nominees.

 

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CORPORATE GOVERNANCE

 

We are governed by a Board and committees of the Board that meet several times throughout the year, and we are committed to maintaining the highest standards of business conduct and corporate governance. Governance is a continuous focus for us, starting with our Board and

extending to management and our employees. Our Board has also established Corporate Governance Guidelines that provide a framework for the effective governance of the company.

 

 

GOVERNANCE HIGHLIGHTS

 

Corporate Governance    Compensation    Stockholder Rights

 

 11 director nominees, 10 of whom are independent

  

 

 Pay-for-performance compensation program, which includes performance-based equity grants

  

 

 Annual election of all directors

 

 Director Term Limits (12 years)2

  

 

 Annual “say on pay” votes, with most recent favorable “say on pay” vote of approximately 95%

  

 

 Majority voting requirement for directors in uncontested elections

 

 Independent Board Chair

  

 

 Stock ownership requirements for directors and executive officers

  

 

 Stockholder rights to call special meetings

 

 Regular executive sessions of independent directors

  

 

 Policy restricting trading, and prohibiting hedging and short-selling, of CBRE stock

  

 

 No poison pill takeover defense plans

 

 Risk oversight by the Board and its key committees

  

 

 Compensation clawback policy for executive officers

  

 

 Stockholders may act by written consent

 

 Maximum of one Board-nominated management director

     

 

 Proxy access for director nominations

 

 All incumbent directors attended at least 75% of Board and Board committee meetings

     

 

 Ongoing stockholder outreach and engagement

 

 Robust Standards of Business Conduct and governance policies

     

 

 No “over-boarding” by our directors on other public-company boards

 

 

         

Process for Selecting Director Candidates

 

The Governance Committee identifies and evaluates potential candidates and recommends candidates to our Board for nomination. For greater detail about the criteria for director

candidates and the nomination process, see “Proposal 1—Elect Directors—Director Nomination Criteria: Qualifications, Skills and Experience” on page 8.

 

  

 

2         The application of this term-limit restriction does not go into effect until December 17, 2020 for any of the company’s directors who were serving on the Board as of December 17, 2015. See “Term Limits” on page 17.

 

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CORPORATE GOVERNANCE

 

Stockholder Recommendations and Nominations of Director Candidates

 

Stockholder Recommendations

If you are a stockholder who would like to recommend a candidate for our Governance Committee to consider for possible inclusion in our 2021 proxy statement, you must send notice to Laurence H. Midler, Secretary, CBRE Group, Inc., 400 South Hope Street, 25th Floor, Los Angeles, California 90071, by registered, certified or express mail, and provide him with a brief biographical sketch of the recommended candidate, a document indicating the recommended candidate’s willingness to serve if elected, and evidence of your stock ownership. The Governance Committee or its chair will then consider the recommended director candidate in accordance with the criteria for director selection described under “Proposal 1—Elect Directors—Director Nomination Criteria: Qualifications, Skills and Experience” on page 8.

 

Stockholder Nominations

Our “proxy access” by-laws allow stockholders to submit director nominations to be included in our proxy materials. A stockholder who wishes to nominate a candidate and have that candidate included in our proxy materials through proxy access must follow the procedures described in Article I, Section 12 of our by-laws. See “Submission of Stockholder Proposals and Board Nominees—Stockholder Director Nominations for Inclusion in the 2021 Proxy Statement” on page 25 for additional details. In addition, our by-laws also allow stockholders to nominate one or more persons for election as directors outside of the proxy access process described above. See “Submission of Stockholder Proposals and Board Nominees” on page 25 for further information.

 

 

Director Independence

 

Pursuant to our Board’s Corporate Governance Guidelines and the listing standards of the NYSE, our Board must consist of a majority of independent directors. In addition, all members of the Audit Committee, Compensation Committee and Governance Committee must be independent directors as defined by our Corporate Governance Guidelines and NYSE listing standards. Members of the Compensation Committee must also meet applicable NYSE independence requirements for compensation committee members, and members of the Audit Committee must further satisfy a separate SEC independence requirement, which generally provides that they may not (i) accept directly or indirectly any consulting, advisory or other compensatory fee from us or any of our subsidiaries, other than their compensation as directors or members of the Audit Committee or any other committees of our Board or (ii) be an affiliated person of ours.

Our Board regularly conducts a review of possible conflicts of interest and related-party transactions through the use of questionnaires, director self-reporting and diligence conducted by management. This review includes consideration of any investments and agreements between directors and their related persons and the company, including those described under “Related-Party Transactions” in this Proxy Statement, and such person’s beneficial ownership of our securities. The Board has determined that 91% of our director nominees (all except for Mr. Sulentic) are independent in accordance with NYSE listing standards and our Board’s Categorical Independence Standards that it has adopted relating to our director independence. These Categorical Independence Standards are posted on the Corporate Governance section of the Investor Relations page on our website at www.cbre.com.

 

 

Independent Director Meetings

 

Our non-management directors meet in executive session without management present each time the full Board convenes for a regularly scheduled meeting. If our Board convenes for a special meeting, the non-management

directors will meet in executive session if circumstances warrant. The Chair of our Board is a non-management director that presides over executive sessions of our Board.

 

 

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CORPORATE GOVERNANCE

 

Majority Voting to Elect Directors

 

In uncontested elections, directors are elected by a “majority vote” requirement. Under this requirement, in order for a nominee to be elected in an uncontested election, the nominee must receive the affirmative vote of a majority of the votes cast in his or her election (i.e., votes cast “FOR” a nominee must exceed votes cast as “AGAINST”). Votes to “ABSTAIN” with respect to a nominee and broker non-votes

are not considered votes cast, and so will not affect the outcome of the nominee’s election.

The company maintains a plurality vote standard in contested director elections, where the number of nominees exceeds the number of directors to be elected.

 

 

Director Resignation Policy Upon Change of Employment

 

Our Board’s Corporate Governance Guidelines require that directors tender their resignation upon a change of their employment. The Governance Committee will then consider whether the change in employment has any bearing on the

director’s ability to serve on our Board, our Board’s goals regarding Board composition or any other factors considered appropriate and relevant. Our Board will then determine whether to accept or reject the tendered resignation.

 

 

Term Limits

 

The Board may not nominate any non-management director for re-election to the Board if that director has completed 12 years of service as an independent member of the Board on or prior to the date of election to which such nomination relates. The application of this term-limit restriction does not go into

effect until December 17, 2020 for any of the company’s directors who were serving on the Board as of December 17, 2015. The Board believes that this restriction will contribute to Board stability and vitality.

 

 

Board Structure and Leadership

 

Our Board currently consists of 11 directors, all of whom have been nominated for re-election.

All of our directors are elected at each annual meeting of stockholders and hold office until the next election. Our Board has authority under our by-laws to fill vacancies and to increase or, upon the occurrence of a vacancy, decrease its size between annual meetings of stockholders.

The Board has determined that it is in the best interests of the company and its stockholders that the size of the Board remain at 11 members effective as of the date of the Annual Meeting.

Since 2001, we have separated the roles of CEO and Chair of the Board in recognition of the differences between the two positions. Our CEO is responsible for setting the strategic direction and overseeing the day-to-day leadership and performance of the company. The Chair of our Board, who is independent of management, provides oversight and guidance to our CEO. Although it has been our longstanding policy to have an independent Board Chair, we amended our by-laws in 2015 to require that the Board Chair be an independent director.

 

 

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Board Risk Management

 

Oversight of Risk

  The Board oversees risk management.

 Board committees, which meet regularly and report back to the full Board, play significant roles in carrying out our Board’s risk oversight function.

 Company management is charged with managing risk through rigorous risk mitigation activities and strong internal controls.

 

Our Board regularly reviews information regarding our most significant strategic, operational, financial and compliance risks and is responsible for ensuring that the company has crisis management and business continuity plans in place to deal with potential crises. Our Board maintains direct oversight over our enterprise risk management process rather than delegating this function to a Board or management committee.

We have assembled a cross-disciplinary crisis management team, which includes all our executive officers, for the continuous monitoring of the rapidly evolving situation involving the coronavirus pandemic and timely implementation of measures to help support safe and continuous operations. The health, safety and well-being of our people and the communities, in which we live and work is paramount, and we are committed to being a responsible corporate citizen during this time of unprecedented crisis. Our Board has been actively engaged with management in monitoring the severe market developments and other effects of the coronavirus outbreak, and management is in regular communication with the Board about the assessment and management of the significant risks to the company and impact on our business.

We maintain an executive risk committee chaired by our Chief Risk Officer and consisting of senior executives representing a cross-section of our lines of business, operational areas and geographic regions who are responsible for identifying, assessing and managing our most significant risks. Multiple times during the year, our Chief Risk Officer provides a detailed presentation on identified significant risks to the Board. Certain risks that are determined to be best managed directly by the Board versus management or that are in areas specific to a particular Board committee expertise are monitored and overseen at the Board or committee level as appropriate.

 

The Compensation Committee is responsible for overseeing the management of risks relating to our compensation plans and arrangements. For additional information regarding the Compensation Committee’s assessment of our compensation-related risk, please see “Compensation Discussion and Analysis—How We Make Compensation Decisions—Compensation Risk Assessment” on page 38.

 

 

The Audit Committee oversees management of risks related to our financial reports and record-keeping and potential conflicts of interest, and also oversees our risk assessment and risk management more generally, including major business, financial, cybersecurity, legal and reputational risk exposures, as well as risks related to crisis management and business continuity. In furtherance of this oversight responsibility, the Audit Committee typically receives quarterly reports from our Chief Accounting Officer, our Chief Ethics & Compliance Officer, our Director of Internal Audit, our Chief Digital & Technology Officer as well as updates from our General Counsel and Chief Risk Officer on any developments affecting our overall risk profile and on issues of non-compliance and incident management.

 

 

The Governance Committee manages risks associated with the independence of the Board and the composition of our Board and its committees.

Although each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee chair reports about such risks. These reports are presented at every regularly scheduled Board meeting.

 

 

Succession Planning

 

Our Board reviews management succession and development plans with the CEO on at least an annual basis, and as-needed throughout the year. These plans include CEO succession in

the event of an emergency or retirement, as well as the succession plans for the CEO’s direct reports and other employees critical to our continued operations and success.

 

 

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Board Meetings and Committees

 

Our Board held five meetings during fiscal year 2019 to review significant developments, engage in strategic planning and act on matters requiring Board approval. In 2019, each incumbent director attended at least 75% of our Board meetings and meetings of committees on which he or she served (taken in the aggregate) during the period that he or she served thereon.

 

Our Board currently has four standing committees that met or acted by written consent during fiscal year 2019: the Audit Committee, the Compensation Committee, the Governance Committee and the Executive Committee.

 

 

The following table describes the current members of each of the committees of our Board, and the number of meetings held during fiscal year 2019:

 

  Director    Board    Audit    Compensation    Governance    Executive

  Brandon B. Boze

   CHAIR             CHAIR

  Beth F. Cobert

   ü       CHAIR    ü   

  Curtis F. Feeny

   ü    CHAIR       ü    ü

  Reginald H. Gilyard

   ü       ü    ü   

  Shira D. Goodman

   ü    ü    ü      

  Christopher T. Jenny

   ü    ü       CHAIR   

  Gerardo I. Lopez

   ü       ü    ü   

  Robert E. Sulentic

   ü             ü

  Laura D. Tyson

   ü    ü         

  Ray Wirta

   ü             ü

  Sanjiv Yajnik

   ü    ü    ü      

  Number of Meetings

   5    9    3    4    0(1)
  (1)

Our Executive Committee did not hold any formal meetings in 2019, but acted four times by unanimous written consent.

 

Each committee (other than the Executive Committee) is composed entirely of directors whom our Board has determined to be independent under current NYSE standards. Each committee operates under a charter approved by our Board that sets out the purposes and responsibilities of the committee and that are published in the Corporate Governance section of the Investor Relations page on our website at www.cbre.com. In accordance with our Board’s Corporate Governance Guidelines, our Board and each of the Audit Committee, Compensation Committee and Governance Committee conducts an annual performance self-assessment with the purpose of increasing the effectiveness of our Board and its committees. The responsibilities of all of our Board committees are described below.

Audit Committee—The Audit Committee provides oversight of our accounting and financial reporting and disclosure processes; the adequacy of the systems of disclosure and internal control established by management; our compliance with legal and regulatory requirements; risk oversight and management generally; and the audit of our financial statements. Among other things, the Audit Committee: (i) retains, compensates, oversees and terminates the independent auditor and evaluates its qualifications, independence and performance; (ii) pre-approves all audit and any non-audit services performed by the independent auditor; (iii) reviews the results of the independent audit and internal audits as well as reports from our Chief Financial Officer, our Chief Accounting Officer, our Chief Ethics & Compliance Officer, our Director of Internal Audit, our Chief Digital &

Technology Officer and our General Counsel and Chief Risk Officer; (iv) reviews the independent auditor’s report describing our internal quality-control procedures and any material issues raised by the most recent internal quality-control review or any inquiry by governmental authorities; (v) in consultation with the independent auditor, management and internal auditors, reviews the integrity of our internal and external financial reporting processes; (vi) reviews financial statements and releases and guidance provided to analysts and rating agencies; (vii) reviews the Chief Ethics & Compliance Officer’s report on the effectiveness of our compliance with applicable ethical, legal, and regulatory requirements; (viii) reviews our cybersecurity readiness and other policies and procedures related to data governance; and (ix) establishes procedures to handle complaints regarding accounting, internal controls or auditing matters.

All of the members of the Audit Committee are independent within the meaning of SEC regulations, the listing standards of the NYSE and our Board’s Corporate Governance Guidelines. Our Board has determined that each member of the Audit Committee is financially literate as required under NYSE rules. Our Board has also determined that each of Dr. Tyson and Messrs. Feeny, Jenny and Yajnik meets the qualifications of an “audit committee financial expert” in accordance with SEC rules and that they have the requisite accounting, related financial management and/or other relevant expertise, as described under “Proposal 1—Elect Directors” beginning on page 8.

 

 

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Compensation Committee—The Compensation Committee oversees the development and administration of our executive compensation policies, plans and programs, including reviewing and approving compensation of our executive officers and any compensation contracts or arrangements with our executive officers. In addition, the Compensation Committee reviews the performance of our executive officers, including our CEO. Each of the members of the Compensation Committee qualifies as a “non-employee director” within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and as an “outside director” for purposes of Section 162(m) of the Internal Revenue Code, and each of them is also independent within the meaning of the listing standards and rules of the NYSE applicable to members of compensation committees. For additional information on the responsibilities and activities of the Compensation Committee, including the Compensation Committee’s processes for determining executive compensation, see the “Compensation Discussion and Analysis” section of this Proxy Statement beginning on page 30.

Governance Committee—The Governance Committee oversees our Board’s corporate governance procedures and practices, including the recommendations of individuals for service on our Board and recommendations to our Board regarding corporate governance matters and practices, including as to director compensation and directors’ and officers’ liability insurance. In addition, the Governance Committee consults with our CEO regarding management succession planning. All of the members of the Governance Committee are independent within the meaning of the listing standards and rules of the NYSE.

Executive Committee—The Executive Committee implements policy decisions of our Board and is authorized to act on our Board’s behalf between meetings of our Board, including by approving certain transactions within dollar thresholds established by our Board. The Executive Committee also engages in the periodic review of our balance sheet management, borrowings and capital markets activities.

 

 

Board Attendance at Annual Meeting of Stockholders

Although the Board understands that there may be situations that prevent a director from attending an annual meeting of stockholders, it is the Board’s policy that all directors should attend these meetings. All of our incumbent directors attended our 2019 annual meeting of stockholders on May 17, 2019.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee are set forth in the table on page 19. None of Mses. Cobert and Goodman or Messrs. Gilyard, Lopez and Yajnik has ever been an officer or employee of the company or any of its subsidiaries. In addition, during 2019, none of our directors was employed as an executive officer of another entity where any of our executive officers served on that entity’s board of directors or compensation committee (or its equivalent).

Director Compensation

 

Our director compensation policy provides for the following annual compensation for each of our non-employee directors:

 

 

a $100,000 annual cash retainer payable in full upon commencement of the director’s term;

 

 

a restricted stock unit grant for a number of shares equal to $200,000 divided by the fair market value of our common stock on the date of grant, which shares vest in full on the earlier of the one-year anniversary of grant or the next annual meeting of stockholders;

 

 

the Chair of the Audit Committee receives an additional annual cash retainer of $25,000;

 

the Chair of the Compensation Committee receives an additional annual cash retainer of $20,000;

 

 

the Chair of the Governance Committee receives an additional annual cash retainer of $15,000; and

 

 

there are no board or committee meeting attendance fees.

In all cases, our non-employee directors may elect to receive shares of our common stock in lieu of cash payments (in like amounts). Non-employee directors who are appointed or elected off-cycle (i.e., outside an annual meeting) receive a pro rata portion of their cash retainer and restricted stock unit grant based on the length of their service until the next annual meeting.

 

 

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Our non-employee directors are eligible to defer their compensation through our Deferred Compensation Plan, as described under “Executive Compensation—Summary of Plans, Programs and Agreements—Deferred Compensation Plan” on page 61. We also reimburse our non-employee directors for all reasonable out-of-pocket expenses incurred in the performance of their duties as directors. Employee

directors do not receive any fees for attendance at meetings or for their service on our Board.

Our Board has also adopted stock ownership requirements that are applicable to non-employee directors. A description of these stock ownership requirements can be found under “Stock Ownership Requirements” on page 23.

 

 

The following table provides information regarding compensation earned during the fiscal year ended December 31, 2019 by each non-employee director for his or her Board and committee service. Robert E. Sulentic, who is our President and CEO, is not compensated for his role as a director. Compensation information for Mr. Sulentic is described under “Compensation Discussion and Analysis” beginning on page 30 and under “Executive Compensation” beginning on page 54. For stock awards in the table below, the dollar amounts indicated reflect the aggregate grant date fair value for awards granted during the fiscal year ended December 31, 2019.

 

  Name   

Fees Earned or

Paid in Cash(1)

($)

    

Stock

Awards(2)(3)

($)

    

Change in Pension

Value and Nonqualified

Deferred Compensation

Earnings

($)

      

Total  

($)  

 

 

 

  Brandon B. Boze

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

 

 

  Beth F. Cobert

  

 

 

 

 

 

120,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

319,984  

 

 

 

 

  Curtis F. Feeny

  

 

 

 

 

 

125,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

324,984  

 

 

 

 

  Reginald H. Gilyard

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

 

 

  Shira D. Goodman

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

 

 

  Christopher T. Jenny

  

 

 

 

 

 

115,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

314,984  

 

 

 

 

  Gerardo I. Lopez

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

 

 

  Paula R. Reynolds(4)

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

—  

 

 

 

 

 

  Laura D. Tyson

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

 

 

  Ray Wirta

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

 

 

  Sanjiv Yajnik

  

 

 

 

 

 

100,000

 

 

 

  

 

 

 

 

 

199,984

 

 

 

  

 

 

 

 

 

 

 

 

    

 

 

 

 

 

299,984  

 

 

  (1)

Includes fees associated with the annual Board service retainer and chairing a Board committee. Our non-employee directors may elect to receive shares of our common stock in lieu of cash payments (in like amounts). We reflect these “stock in lieu of cash” payments under the column titled “Fees Earned or Paid in Cash,” and not under the “Stock Awards” column.

 

  (2)

This represents the grant date fair value under Financial Accounting Standards Board, Accounting Standards Codification (“ASC”), Topic 718, Stock Compensation, of all restricted stock units granted to the directors during 2019. See also Note 2 “Significant Accounting Policies” and Note 14 “Employee Benefit Plans” to our consolidated financial statements as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for a discussion of the valuation of our stock awards.

 

  (3)

Each of Mses. Cobert, Goodman and Dr. Tyson and Messrs. Boze, Feeny, Gilyard, Jenny, Lopez, Wirta and Yajnik was awarded 4,228 restricted stock units pursuant to our director compensation policy, valued at the fair market value of our common stock of $47.30 per share on the award date of May 17, 2019.

 

  (4)

Ms. Reynolds did not stand for re-election at our May 2019 annual meeting and accordingly did not receive any compensation for her service as a director in 2019.

The table below shows the aggregate number of stock awards (i.e., restricted stock units) outstanding for each non-employee director as of December 31, 2019 (no option awards were outstanding on that date):

 

  Name

 

  

Aggregate Number of
Stock Awards
Outstanding

 

    

Aggregate Number of Shares  
Underlying Options  
Outstanding  

 

 

 

 

  Brandon B. Boze

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Beth F. Cobert

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Curtis F. Feeny

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Reginald H. Gilyard

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Shira D. Goodman

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Christopher T. Jenny

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Gerardo I. Lopez

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Paula R. Reynolds

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Laura D. Tyson

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

 

  Ray Wirta

  

 

 

 

 

 

4,228

 

 

 

  

 

 

 

 

 

—  

 

 

 

 

  Sanjiv Yajnik

  

 

 

 

4,228

 

 

  

 

 

 

—  

 

 

 

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Standards of Business Conduct and Corporate Governance Guidelines

 

Our Board has adopted a Standards of Business Conduct applicable to all directors, officers and employees that set forth our corporate values and ethical standards, including our commitment to respect, integrity, service and excellence. We are firmly committed to conducting business with the highest integrity and in compliance with the letter and spirit of the law. In addition, our Board has adopted Corporate Governance Guidelines, which set forth a framework within which our Board, assisted by its committees, directs our affairs.

Other key governance policies include:

 

 

Policy Regarding Transactions with Interested Parties and Corporate Opportunities. Our Board has adopted a related-party transactions and corporate opportunities policy that directs our Audit Committee to review and approve, among other things, potential conflicts of interest between us and our directors and executive officers. See “Related-Party Transactions—Review and Approval of Transactions with Interested Persons” on page 75.

 

 

Whistleblower Policy. We have a Whistleblower Policy that directs our Audit Committee to investigate complaints (received directly or through management) regarding:

 

   

deficiencies in or noncompliance with our internal accounting controls or accounting policies;

 

   

circumvention of our internal accounting controls;

 

   

fraud in the preparation or review of our financial statements or records;

 

   

misrepresentations regarding our financial statements or reports;

   

violations of legal or regulatory requirements; and

 

   

retaliation against whistleblowers.

 

 

Equity Award Policy. We have an Equity Award Policy that is designed to maintain the integrity of the equity award process and to ensure compliance with all applicable laws. The Equity Award Policy sets forth the procedures that must be followed in connection with employee awards and imposes stringent controls around any award made outside of the normal cycle. Our Equity Award Policy is described in greater detail under the heading “Compensation Discussion and Analysis—Other Relevant Policies and Practices—Equity Award Policy and procedures for equity grants” on page 49.

 

 

Compensation Clawback Policy. We have a policy that permits us, subject to the discretion and approval of our Board, to recover cash-based and performance-based-equity incentive compensation paid to any current or former “Section 16 officer” if there is a restatement of our financial results in certain circumstances. These circumstances are described in greater detail under “Compensation Discussion and Analysis—Other Relevant Policies and Practices—Compensation Clawback Policy” on page 49.

 

 

Anti-Corruption Policy. Our global Anti-Corruption Policy contains strict prohibitions on any employee or agent of the company offering or providing anything that could be perceived as a bribe to gain or maintain any business advantage.

 

 

Current copies of our Board’s Standards of Business Conduct, Corporate Governance Guidelines, Policy Regarding Transactions with Interested Parties and Corporate Opportunities, Whistleblower Policy, Equity Award Policy and Anti-Corruption Policy are available on our website and in print upon written request to our Investor Relations Department at CBRE Group, Inc., 200 Park Avenue, New York, New York 10166, or by email at investorrelations@cbre.com. If the Board grants any waivers from the Board’s Standards of Business Conduct to any of our directors or executive officers, or if we amend such policies, we will, if required, disclose these matters through the Investor Relations section of our website on a timely basis.

 

 

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Stock Ownership Requirements

 

In order to align the interests of our Board members and executives with the interests of our stockholders, our Board has adopted stock ownership requirements for non-employee directors, and the Compensation Committee has adopted executive officer stock ownership requirements that are applicable to all of our Section 16 officers.

Non-Employee Directors. Each non-employee director has a target minimum common stock ownership requirement of five times the value of the annual stock grants made by us to the non-employee director pursuant to our then current director compensation plan. If at any time the target common stock ownership requirement is not satisfied, the director must retain the shares remaining after payment of taxes and exercise price upon exercise of stock options, the vesting of restricted stock or the settlement of vested restricted stock units, as applicable. Shares that count toward compliance with the requirements include: shares owned outright by the director (either directly or beneficially, e.g., through a family trust); and shares issued upon the settlement of vested restricted stock units. Shares that do not count toward achievement of the requirements include: (i) shares held by mutual or hedge funds in which the non-employee director is a general partner, limited partner or investor; (ii) unexercised outstanding stock options (whether or not vested); (iii) unvested/unearned restricted stock units or restricted

stock; and (iv) shares transferred to a non-employee director’s employer pursuant to such employer’s policies.

Executive Officers. Depending on their positions, our executive officers have a target minimum common stock ownership requirement of two to five times their annual base salary. The CEO’s target minimum ownership requirement is five times his annual base salary, and the target minimum ownership requirement for our other named executive officers for 2019 is three times their annual base salary. If at any time an executive officer’s equity holdings do not satisfy these target minimum ownership requirements, depending on his or her position, the executive must retain 100% (for our CEO) or 75% (for our other named executive officers) of the shares remaining after payment of taxes and exercise price upon the exercise of stock options or upon the vesting of restricted stock or the settlement of vested restricted stock units, as applicable. Shares that count toward compliance with the requirements include: shares owned outright (either directly or indirectly); shares issued upon the settlement of vested restricted stock units; and allocated shares in other company benefit plans. Unexercised outstanding stock options (whether or not vested) and unvested/unearned restricted stock and restricted stock units do not count toward compliance with the requirements.

 

 

Corporate Responsibility

 

We view it as a priority to operate in an environmentally and socially responsible manner, and it is our practice to act responsibly in relationships with our stockholders, customers, suppliers, employees, communities and other stakeholders. The seven pillars of our Corporate Responsibility program are:

 

 

Environmental Sustainability;

 

 

People and Culture;

 

 

Workplace Safety and Wellbeing;

 

 

Communities and Giving;

 

 

Procurement;

 

 

Ethics and Compliance; and

 

 

Governance.

We believe that we can make the greatest impact by:

 

 

mitigating the impact of the built environment on climate change;

 

 

helping our employees to reach their full potential while providing a safe and ethical workplace; and

 

using our talent, energy and resources to improve the quality of our communities and the lives of others.

In 2019 and in early 2020, our corporate responsibility efforts were recognized with the following awards and accolades:

 

 

We were named to the Dow Jones Sustainability World Index in 2019 and included in the Dow Jones Sustainability Index – North America for the sixth year in a row. Inclusion in these indexes are based on an assessment of a company’s financially material environmental, social and governance (“ESG”) factors.

 

 

We remained a constituent of the FTSE4Good Index, which we have been a part of since 2014. The FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong environmental, social and governance practices.

 

 

For the seventh consecutive year, we were named as one of the World’s Most Ethical Companies by Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices.

 

 

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In 2020, we were listed #13 on Barron’s list of the 100 Most Sustainable Companies in the U.S., marking the third consecutive year of recognition. The 1,000 largest U.S. publicly held companies were considered for this recognition based on various environmental, social and governance performance indicators.

 

 

In 2019, we were listed at #23 in the Investor’s Business Daily (“IBD”) list of Top 50 Best ESG Companies. The list is comprised of companies with strong environmental, social and governance ratings from MSCI ESG Research and high IBD Composite Ratings, reflecting broad strength in earnings and share-price performance.

 

 

We were ranked #15 in Corporate Responsibility Magazine’s 2019 100 Best Corporate Citizens list, which recognizes outstanding environmental, social and governance transparency and performance.

 

 

We earned a place in the 2020 Bloomberg Gender-Equality Index (“GEI”). The public companies in the Bloomberg GEI

   

support gender equality through policy development, representation and transparency.

 

 

We were named a Best Place to Work for LGBTQ Equality according to the Human Rights Campaign. CBRE received a perfect score on the 2020 Corporate Equality Index, a national benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality, for the seventh consecutive year.

 

 

We received a 2020 EPA ENERGY STAR® Partner of the Year – Sustained Excellence Award, marking the 13th consecutive year of ENERGY STAR recognition.

To learn more about our corporate responsibility and sustainability efforts, please view our Corporate Responsibility Report on www.cbre.com/responsibility. The information contained on or available through this website is not a part of, or incorporated by reference into, this Proxy Statement.

 

 

Stockholder Engagement

 

Throughout each year, management and members of our Board engage with a significant portion of our stockholders through a number of forums, including quarterly earnings presentations, our annual meeting, our annual Corporate Responsibility Report, investor conferences and web communications, as well as our SEC filings, our annual report and proxy statement.

We also have a formal corporate governance outreach program. This program covers a wide array of topics with a broad group of stockholders, and stockholder feedback is regularly provided to the Board and the company’s management. In 2019, topics of discussion included company strategy and performance, executive compensation, board diversity and refreshment, corporate governance policies and corporate responsibility and sustainability initiatives.

 

 

Communications with our Board

 

Stockholders and other interested parties may write to the Board Chair (who acts as the lead independent director), the entire Board or any of its members at CBRE Group, Inc., c/o Laurence H. Midler, Executive Vice President, General Counsel and Secretary, 400 South Hope Street, 25th Floor, Los Angeles, California 90071 or via email to larry.midler@cbre.com. The Board considers stockholder questions and comments to be important and endeavors to respond promptly and appropriately, even though the Board may not be able to respond to all stockholder inquiries directly.

The Board has developed a process to assist with managing inquiries and communications. The General Counsel will review any stockholder communications and will forward to the Chair of our Board, our Board or any of its members a summary and/or copies of any such correspondence that deals with the functions of our Board or committees thereof or that the General Counsel otherwise determines requires their attention. Certain circumstances may require that our Board depart from the procedures described above, such as the receipt of threatening letters or emails or voluminous inquiries with respect to the same subject matter.

 

 

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CORPORATE GOVERNANCE

 

Submission of Stockholder Proposals and Board Nominees

 

If you would like to include a proposal for stockholder consideration in our 2021 proxy statement or bring business before our annual meeting of stockholders in 2021, you must send notice to Laurence H. Midler, Secretary, CBRE Group, Inc., 400 South Hope Street, 25th Floor, Los Angeles, California 90071, by registered, certified, or express mail and provide the required information and follow the other procedural requirements described below.

Stockholder Proposals for Inclusion in the 2021 Proxy Statement. Stockholders who wish to present a proposal in accordance with SEC Rule 14a-8 for inclusion in our proxy materials to be distributed in connection with our 2021 annual meeting of stockholders must submit their proposals in accordance with that rule so that they are received by the Secretary at the address set forth above no later than the close of business on December 2, 2020. If the date of our 2021 annual meeting is more than 30 days before or after May 14, 2021, then the deadline to timely receive such material shall be a reasonable time before we begin to print and send our proxy materials. Failure to deliver a proposal in accordance with this procedure may result in it not being deemed timely received. As the rules of the SEC make clear, simply submitting a timely proposal does not guarantee that it will be included in our proxy materials.

Stockholder Director Nominations for Inclusion in the 2021 Proxy Statement. Our by-laws permit any stockholder, or group of up to 20 stockholders, who has beneficially owned 3% or more of our outstanding common stock continuously for at least three years to submit director nominations to be included in our proxy materials. The maximum number of director nominees included in our proxy pursuant to this process (known as “proxy access”) shall be the greater of (i) 20% of the total number of directors serving in office at the deadline for nominations (rounded down to the nearest whole number) and (ii) two. The notice required to nominate a director for the 2021 annual meeting through this proxy access process must be delivered to (or mailed to and received at) the address set forth above no later than February 13, 2021 and no earlier than January 14, 2021, unless our 2021 annual meeting of stockholders is to be held more than 30 days before, or more than 70 days after, May 14, 2021, in which case the stockholder’s notice must be delivered not earlier than the close of business on the 120th day prior to the 2021 annual meeting and not later than the close of business on the later of the 90th day prior to the 2021 annual meeting or the 10th day after public announcement of the date of the 2021 annual meeting is first made. The notice must set forth the information required by our by-laws with respect to each proxy access director nomination that eligible stockholder or

stockholders intend to present at the 2021 annual meeting and must otherwise be in compliance with our by-laws.

Other Stockholder Proposals or Nominations for Presentation at the 2021 Annual Meeting. If a stockholder wishes to bring business to a meeting for consideration other than a matter brought pursuant to SEC Rule 14a-8, the stockholder must give our Secretary written notice of the stockholder’s intent to do so and provide the information required by the provision of our by-laws dealing with stockholder proposals. In addition, our by-laws allow stockholders to nominate one or more persons for election as directors outside of the proxy access process described above (although doing so relieves the company of the obligation to include a director nominee in the proxy materials prepared for the relevant stockholders meeting). The notice of such a proposal or director nomination must be delivered to (or mailed to and received at) the address set forth above no later than February 13, 2021 and no earlier than January 14, 2021, unless our 2021 annual meeting of stockholders is to be held more than 30 days before, or more than 70 days after, May 14, 2021, in which case the stockholder’s notice must be delivered not earlier than the close of business on the 120th day prior to the 2021 annual meeting and not later than the close of business on the later of the 90th day prior to the 2021 annual meeting or the 10th day after public announcement of the date of the 2021 annual meeting is first made. In the event that the number of directors to be elected at the annual meeting is increased and no public announcement naming all of the nominees or specifying the size of the increased Board has been made by February 3, 2021, then notice of a stockholder’s nomination to fill the new position or positions may be delivered to (or mailed to and received at) the address set forth above no later than the close of business on the 10th day after public announcement of such increase is first made. The requirements for such stockholder’s notice are set forth in our by-laws, which are posted in the Corporate Governance section of the Investor Relations page on our website at www.cbre.com. We will submit all candidates nominated by a stockholder pursuant to the procedures and requirements outlined in this “—Other Stockholder Proposals or Nominations for Presentation at the 2021 Annual Meeting” section to the Governance Committee for its review, and this submission may include an analysis of the candidate from our management. Any stockholder making a nomination in accordance with the foregoing process will be notified of the Governance Committee’s decision. The information contained on or accessible through our corporate websites is not part of or incorporated by reference into this Proxy Statement.

 

 

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PROPOSAL 2  RATIFY APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of our Board appointed KPMG LLP as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2020. During 2019, KPMG LLP served as our independent accountant and reported on our consolidated financial statements for that year. KPMG LLP has been our independent auditor at all times since 2008.

The Audit Committee periodically considers whether to rotate our independent auditor in order to assure continuing auditor independence. The Board and the members of the Audit Committee believe that the continued retention of KPMG LLP as the company’s independent auditor in fiscal year 2020 is in the best interests of the company and its stockholders.

We expect that representatives of KPMG LLP will attend the Annual Meeting and will have the opportunity to make a

statement if they so desire and to respond to appropriate questions.

Although stockholder ratification is not required, the appointment of KPMG LLP is being submitted for ratification at the Annual Meeting with a view towards soliciting stockholders’ opinions, which the Audit Committee will take into consideration in future deliberations. If KPMG LLP’s selection is not ratified at the Annual Meeting, the Audit Committee will consider the engagement of other independent accountants. The Audit Committee may terminate KPMG LLP’s engagement as our independent accountant without the approval of our stockholders whenever the Audit Committee deems termination appropriate.

 

 

Required Vote

Approval of this Proposal 2 requires the affirmative vote (i.e., “FOR” votes) of a majority of the shares present or represented and entitled to vote thereon at our 2020 Annual Meeting. A vote to “ABSTAIN” will count as “present” for purposes of this proposal and so will have the same effect as a vote “AGAINST” this proposal. In the absence of instructions, your broker may vote your shares on this proposal. For more information, see “General Information about the Annual Meeting—Voting Instructions and Information—If you do not vote/effect of broker non-votes” beginning on page 78.

Recommendation

Our Board recommends that stockholders vote “FOR” ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.

 

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AUDIT AND OTHER FEES

The following table shows the fees for audit and other services provided by KPMG LLP for the fiscal years ended December 31, 2019 and 2018 (in millions):

 

Fees    Fiscal 2019      Fiscal 2018    

 

  Audit Fees

 

  

 

$

 

 

13.4

 

 

 

 

  

 

 

 

 

12.5  

 

 

 

 

 

  Audit-Related Fees

 

  

 

 

 

 

3.0

 

 

 

 

  

 

 

 

 

2.7  

 

 

 

 

 

  Tax Fees

 

  

 

 

 

 

1.9

 

 

 

 

  

 

 

 

 

1.1  

 

 

 

 

 

  All Other Fees

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

—  

 

 

 

 

  

 

 

    

 

 

 

 

  Total Fees

 

 

  

 

$

 

 

 

                18.3

 

 

 

 

 

 

  

 

 

 

 

 

                  16.3  

 

 

 

 

 

 

  

 

 

    

 

 

 

A description of the types of services provided in each category is as follows:

 

Audit Fees—Includes fees associated with the audit of our annual financial statements, review of our annual report on Form 10-K and quarterly reports on Form 10-Q, statutory audits, and consents and assistance with and review of registration statements filed with the SEC. In addition, audit fees include those fees related to KPMG LLP’s audit of the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.

Audit-Related Fees—Includes fees associated with the audit of our employee benefit plans, accounting consultations

related to GAAP and the application of GAAP to proposed transactions. In addition, audit-related fees include those fees related to KPMG LLP’s audit of the effectiveness of our internal controls over client accounting.

Tax Fees—Includes fees associated with tax compliance at international locations, domestic and international tax advice and planning and assistance with tax audits and appeals.

 

 

Audit Committee Pre-Approval Process

 

The Audit Committee is responsible for overseeing and approving our independent auditor’s fees, and pre-approves all audit and permissible non-audit services provided by our independent auditor. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent auditors and management are

required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval process and the fees for the services performed to date. In certain one-off cases, the Audit Committee Chair (on behalf of the Audit Committee) may also pre-approve particular services, with that pre-approval subject to subsequent Audit Committee ratification.

 

 

Audit Committee Report

 

The Audit Committee consists of five directors, each of whom is independent under NYSE rules and applicable securities laws. The Board has determined that each member of the Audit Committee is financially literate as required under NYSE rules. Our Board has also determined that each of Dr. Tyson and Messrs. Feeny, Jenny and Yajnik meets the qualifications of an audit committee financial expert as

described under “Corporate Governance—Board Meetings and Committees—Audit Committee” on page 19. The Audit Committee operates under a written charter adopted by the Board, a copy of which is published in the Corporate Governance section of the Investor Relations page of our website at www.cbre.com.

 

 

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AUDIT AND OTHER FEES

 

The Audit Committee assists the Board in fulfilling its responsibilities to our stockholders with respect to our independent auditors, our corporate accounting and reporting practices, risk oversight and the quality and integrity of our financial statements and reports. The Audit Committee is directly responsible for overseeing the appointment, compensation, retention and oversight of the work of our independent auditor, and the Audit Committee and its chair oversee the selection of our independent auditor’s lead engagement partner. In addition, the Audit Committee reviews and considers all potential related-party and corporate-opportunity transactions involving us and our directors and executive officers.

The Audit Committee discussed with our independent auditors the scope, extent and procedures for the fiscal 2019 audit. Following completion of the audit, the Audit Committee met with our independent auditors, with and without management present, to discuss the results of their examinations, the cooperation received by the auditors during the audit examination, their evaluation of our internal controls over financial reporting and the overall quality of our financial reporting.

Management is primarily responsible for our financial statements, reporting process and systems of internal controls. In ensuring that our management fulfilled that responsibility, the Audit Committee reviewed and discussed with management the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Discussion topics included the quality and acceptability of the accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements and an assessment of the work of the independent auditors.

The independent auditors are responsible for expressing an opinion on the conformity of the audited financial statements with GAAP. The Audit Committee reviewed and discussed with the independent auditors their judgments as to the quality and acceptability of our accounting principles and such other matters as are required to be discussed by Public Company Accounting Oversight Board and the SEC. In addition, the Audit Committee received from the independent auditors written disclosures and a letter regarding their

independence as required by applicable rules of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Audit Committee, discussed with the independent auditors their independence from us and our management and considered the compatibility of non-audit services with the auditors’ independence.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board (and the Board subsequently approved) the inclusion of the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for filing with the SEC.

In addition, the Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. The Board concurred with the selection of KPMG LLP. The Board has recommended to our stockholders that they ratify and approve the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.

In accordance with law, the Audit Committee is responsible for establishing procedures for the receipt, retention and treatment of complaints that we receive regarding accounting, internal accounting controls or auditing matters, including the confidential, anonymous submission of complaints by our employees received through established procedures of concerns regarding questionable accounting or auditing matters. The Audit Committee approved the establishment of an ethics and compliance program in 2004 and receives periodic reports from our Chief Ethics & Compliance Officer regarding that program.

Audit Committee

Curtis F. Feeny, Chair

Shira D. Goodman

Christopher T. Jenny

Laura D. Tyson

Sanjiv Yajnik

Notwithstanding any statement in any of our filings with the SEC that might be deemed to incorporate part or all of any filings with the SEC by reference, including this Proxy Statement, the foregoing Report of the Audit Committee is not incorporated into any such filings.

 

 

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PROPOSAL 3  ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

Our Board is committed to excellence in governance and recognizes the interest of our stockholders in our executive compensation program. As a part of that commitment, and in accordance with SEC rules, we are asking you to approve, on an advisory basis, a resolution on the compensation of the named executive officers as reported in this Proxy Statement. This proposal, commonly known as a “say on pay” proposal, gives you the opportunity to endorse or not endorse our 2019 executive compensation program and policies for our named executive officers. The Board has adopted a policy providing for annual “say on pay” advisory votes. Accordingly, the next “say on pay” vote will occur at our annual meeting of stockholders in 2021.

In deciding how to vote on this proposal, our Board encourages you to review the “Compensation Discussion and Analysis” in this Proxy Statement beginning on page 30 for a detailed description of our executive compensation philosophy and programs.

This vote is not intended to address any specific item of compensation, but rather the overall compensation that was paid in 2019 to our named executive officers resulting from our compensation objectives, policies and practices as described in this Proxy Statement. Because your vote is advisory, it will not be binding upon the Board. However, the Board and the Compensation Committee value the opinions expressed by our stockholders and will review the voting results in connection with their ongoing evaluation of our executive compensation program.

We received strong support for our executive compensation from our stockholders at our 2019 annual meeting of stockholders, at which approximately 95% of the votes cast on the “say on pay” proposal were in favor of the 2018 compensation that we paid to our named executive officers. In addition, stockholders that we engaged with as part of our outreach program generally reported that executive compensation was viewed as well-aligned with performance.

Our executive compensation program is designed to reinforce our corporate strategy and to attract and retain accomplished and high-performing executives and to motivate those executives to consistently achieve short- and long-term goals consistent with and in furtherance of our corporate strategy. To achieve this goal, we have designed an executive compensation program based on the following principles:

 

 

Paying for performance—A significant portion of each executive’s potential compensation is “at risk,” with incentive programs tied to financial metrics and strategic performance objectives. The financial objectives may be at the global company level, or based on a combination of global and segment performance, depending on the executive’s position.

 

 

Alignment with the interests of stockholders—Equity awards (including those tied to our financial performance) and promoting stock ownership align our executives’ financial interests with those of our stockholders.

 

 

Attracting and retaining top talent—The compensation of our executives must be competitive so that we may attract and retain talented and experienced executives.

 

 

Transparency and corporate governance—It is critical to us that we are transparent and reflect best practices in corporate governance when establishing our executive compensation.

The text of the resolution in respect of Proposal 3 is as follows:

RESOLVED, that the compensation paid to our named executive officers for 2019 set forth in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narrative in this Proxy Statement, as disclosed pursuant to Item 402 of Regulation S-K, is hereby approved on an advisory basis.

 

 

Required Vote

Approval of this Proposal 3 requires the affirmative vote (i.e., “FOR” votes) of a majority of the shares present or represented and entitled to vote thereon at our 2020 Annual Meeting. A vote to “ABSTAIN” will count as “present” for purposes of this proposal and so will have the same effect as a vote “AGAINST” this proposal. A broker non-vote will not count as “present,” and so will have no effect in determining the outcome with respect to this proposal.

Recommendation

Our Board recommends that stockholders vote “FOR” the advisory approval of the compensation of our named executive officers for the fiscal year ended December 31, 2019.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis, or CD&A, provides you with detailed information regarding the material elements of compensation paid to our executive officers, including the considerations and objectives underlying our compensation policies and practices. Although our executive compensation program is generally applicable to all of our executive officers, this CD&A focuses primarily on the program as applied to the following executives (whom we refer to as “named executive officers”):

 

 

Robert E. Sulentic

 

  

 

President and CEO

 

   

 

Leah C. Stearns(1)

 

  

 

Chief Financial Officer

 

 

 

James R. Groch(2)

 

  

 

Global Group President and Chief Investment Officer

 

 

 

Michael J. Lafitte(3)

 

  

 

Global Chief Executive Officer—Real Estate Investments

 

 

 

William F. Concannon(4)

 

  

 

Global Group President, Clients and Business Partners

 

 

 

John E. Durburg(5)

 

 

  

 

Global Chief Executive Officer—Global Workplace Solutions

 

 

 

   
  (1)

Ms. Stearns joined our company in May 2019.

 

  (2)

Mr. Groch served as our Chief Financial Officer and Chief Investment Officer until May 15, 2019, at which time he became our Global Group President and Chief Investment Officer.

 

  (3)

During 2019, Mr. Lafitte served as our Global Chief Executive Officer—Advisory Services. On November 14, 2019, we announced his new role as Global Chief Executive Officer—Real Estate Investments, effective January 1, 2020.

 

  (4)

During 2019, Mr. Concannon served as our Global Chief Executive Officer—Global Workplace Solutions. On November 14, 2019, we announced his new role as Global Group President, Clients and Business Partners, effective January 1, 2020.

 

  (5)

During 2019, Mr. Durburg served as our Global Chief Operating Officer. On November 14, 2019, we announced his new role as Global Chief Executive Officer—Global Workplace Solutions, effective January 1, 2020.

2019 Executive Summary

Business Highlights

 

 

In fiscal year 2019, we delivered strong results. Some highlights are as follows:

 

 

Our revenue totaled $23.9 billion, up 12% from 2018.

 

 

Our fee revenue totaled $11.9 billion, up 9% from 2018.3,4

 

 

On a GAAP basis, net income for 2019 increased 21% to $1.3 billion and earnings per diluted share rose 22% to $3.77 per share.

 

 

Our adjusted net income was $1.3 billion, up 12% from 2018.4

 

 

Our adjusted EPS was $3.71, up 12% from 2018.4

 

 

Our adjusted EBITDA was $2.1 billion, up 8% from 2018.4

 

 

We generated revenue from a highly-diversified base of clients. In 2019, our client roster included over 90 of the Fortune 100 companies.

 

 

During 2019, we acquired Telford Homes Plc, a leading U.K. developer of multifamily residential properties in the London area. We also acquired a leading advanced analytics software company based in the United Kingdom, a commercial and residential real estate appraisal firm headquartered in Florida, our former affiliate in Omaha, a project management firm in Australia, a valuation and consulting business in Switzerland, a leading project management firm in Israel, a full-service real estate services firm in San Antonio with a focus on retail, office, medical office and land, and a debt-focused real estate investment management business in the United Kingdom.

 

 

3        Fee revenue is gross revenue less both client reimbursed costs largely associated with employees that are dedicated to client facilities and subcontracted vendor work performed for clients.

4        For supplemental financial data and a corresponding reconciliation of (i) revenue computed in accordance with GAAP to fee revenue, (ii) net income computed in accordance with GAAP to adjusted net income and to adjusted EPS, and (iii) net income computed in accordance with GAAP to adjusted EBITDA, in each case for the fiscal years ended December 31, 2019 and 2018, please see Annex A to this Proxy Statement.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

We have been voted the most recognized commercial real estate brand in the Lipsey Company survey for 19 years in a row (including 2020). We have also been rated a World’s Most Ethical Company by the Ethisphere Institute for seven consecutive years (including 2020), and are included in the Dow Jones World Sustainability Index and the Bloomberg Gender Equality Index.

Like most businesses, we are currently faced with unprecedented challenges due to the coronavirus pandemic. In these highly uncertain times, it is important to know that we have built an operating model and balance sheet that we believe can help us navigate through difficult circumstances. We ended 2019 in a strong financial position with low leverage, high liquidity, considerable cash flow and significant geographic and business line diversification. Thus, while the coronavirus pandemic will have unforeseen consequences for our company and industry, we believe we have built a resilient business that is prepared to weather the current crisis.

The following charts highlight our growth in GAAP net income, GAAP EPS, adjusted EBITDA, adjusted net income and adjusted EPS for 2019 relative to 2018:

 

 

 

LOGO

 

LOGO

Executive Compensation Highlights

 

 

 

We achieved strong overall financial and operational performance in 2019 over 2018. Historically, our Board has set aggressive targets to achieve strategic growth and increase stockholder value consistent with stockholder expectations of growth in profits each year, and our 2019 operating plan assumed continued solid growth over 2018. In 2019, we outperformed our internal growth target on a global basis and for our Advisory Services and Global Workplace Solutions segments. As we describe in greater detail in this CD&A, our overall performance directly impacted a portion of the compensation of all of our named executive officers. The performance of our Advisory Services segment directly impacted a portion of the compensation for Michael J. Lafitte (who served as our Global CEO—Advisory Services during 2019) and the performance of our Global Workplace Solutions segment directly impacted a portion of the compensation for William F. Concannon (who served as our Global CEO—Global Workplace Solutions during 2019).

Our executive compensation program is designed to reinforce our corporate strategy, to attract and retain accomplished and high-performing executives and to motivate those executives to consistently achieve short- and long-term goals consistent with our corporate strategy. Our pay philosophy emphasizes pay-for-performance through significant variable compensation tied to accomplishment of financial and strategic objectives. Due to our solid overall financial and operational performance in 2019, and after giving effect to each executive’s strong performance on their respective strategic objectives, the total direct cash compensation earned in respect of 2019 was above the target amounts established for Mr. Sulentic, Ms. Stearns and Messrs. Lafitte, Concannon and Durburg.

Summarized on page 33 are the key components of our executive compensation program established and administered by the Board’s Compensation Committee (referred to in this CD&A as the “Committee”) with respect to our executive compensation program for the named executive officers for 2019.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

As part of the review of target annual compensation, and after consultation with the Committee’s independent compensation consultant and consideration of market compensation data, in early 2019, the Committee approved increases to Mr. Durburg’s annual base salary, target annual performance award and annual long-term equity target. These increases reflect Mr. Durburg’s strong performance and his promotion in 2019 to Global Chief Operating Officer. The Committee

also approved an increase to Mr. Sulentic’s annual long-term equity target. The increase reflects Mr. Sulentic strong performance as well as better alignment relative to his respective market peers and other CBRE global executives.

Lastly, Ms. Stearns joined the company as our Chief Financial Officer in May 2019. Information regarding the terms of Ms. Stearns’ employment can be found on page 55 under “Executive Management—Employment Agreements.”

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAM

 

  Compensation

  Component

  Description and Purpose         Committee Actions for 2019     

 

  Base Salary

 

 

 Provides a level of fixed compensation necessary to attract and retain senior executives.

 Set at a level that recognizes the skills, experience, leadership and individual contribution of each executive as well as the scope and complexity of the executive’s role, giving due consideration to appropriate comparator group benchmarking.

 

      

 

 In 2019, the Committee increased Mr. Durburg’s base salary to $700,000 (an increase of $50,000), to reflect his strong performance and his promotion in 2019 to Global Chief Operating Officer.

 Ms. Stearns’ base salary of $700,000 was established in her offer letter in connection with her recruitment to join our company.

 The other named executive officers did not receive base salary increases for 2019.

   

 

Annual Performance Awards

 

 

 Variable cash incentive opportunity tied to achievement of financial and individual strategic objectives.

 The financial performance measure that determined a significant portion of each executive’s 2019 earned award was the company’s global adjusted EBITDA. Messrs. Lafitte and Concannon’s awards were also impacted by adjusted EBITDA generated by the Advisory Services segment and the GWS segment, respectively.

 In 2019 the Committee used adjusted EBITDA to establish financial performance objectives in order to effectively tie compensation to our operating results. We believe that adjusted EBITDA is an appropriate measure to evaluate our operating performance because it focuses on profitability but excludes certain items that management does not consider directly indicative of the company’s ongoing performance.

 Each executive had a target cash performance award opportunity, which is initially funded depending on the company’s financial performance (the “financial adjustment factor”). Fifty percent of the funded amount may be further adjusted up or down (+50%/-100%) based on the executive’s personal performance (the “strategic adjustment factor”).

      

 

 In 2019, the Committee increased Mr. Durburg’s target annual performance award to $1,000,000 (an increase of $250,000), to reflect his promotion in 2019 to Global Chief Operating Officer.

 Ms. Stearns’ target annual performance award of $1,000,000 was established in her offer letter in connection with her recruitment to join our company. The payout of Ms. Stearns’ 2019 annual bonus was prorated based on her start date and was guaranteed to pay out at not less than the prorated amount of her target bonus.

 2019 target annual performance award opportunities for the other named executive officers were unchanged.

 Global Adjusted EBITDA for 2019 was $2.1 billion, which was above the target level and resulted in a financial adjustment factor of 105%. Adjusted EBITDA for our Advisory Services segment was $1.5 billion, which was above target, and resulted in a financial adjustment factor of 112.3%. Adjusted EBITDA for our Global Workplace Solutions segment was $424.0 million, which was also above target, and resulted in a financial adjustment factor of 110.9%. The financial adjustment factor for Ms. Stearns and Messrs. Sulentic, Groch and Durburg was based solely on Global Adjusted EBITDA. Global Adjusted EBITDA comprised 75% of the financial adjustment factor for Mr. Lafitte and Adjusted EBITDA for our Advisory Services segment determined the other 25%. Global Adjusted EBITDA comprised half of the financial adjustment factor for Mr. Concannon and Adjusted EBITDA for our Global Workplace Solutions segment determined the other half.

 In 2019, the Committee approved a change to the company’s bonus calculation methodology. Pursuant to the revised methodology, the portion of the initially funded bonus amount that is further adjusted based on the executive’s personal performance was increased from 20% to 50%.

 For more detail on each named executive officer’s target bonus opportunity and the performance factors considered in determining actual earned bonuses for 2019, please refer to the discussion beginning on page 39 in this CD&A.

 

   

 

Annual Long-Term Incentives

 

 

 Annual grants of restricted stock units intended to align the interests of our executives with those of stockholders over a multi-year period, and to support executive retention objectives.

 In 2019, our CEO was granted one-third of his target annual long-term incentive award value in the form of a Time Vesting Equity Award, and two-thirds in the form of an Adjusted EPS Equity Award. Our other named executive officers were granted two-thirds of their target annual long-term incentive award value in the form of a Time Vesting Equity Award, and one-third of their target award value in the form of an Adjusted EPS Equity Award. (We describe these two types of awards in greater detail under the heading “Components of Our Program—Elements of our compensation program” on page 44).

 

      

 

 In 2019, the Committee increased the target annual equity award for the following executives, to reflect their strong performance, to better align with market rates, and in the case of Mr. Durburg, to reflect his promotion to Global Chief Operating Officer:

 Mr. Sulentic to $10,000,000 (an increase of $3,200,000).

 Mr. Durburg to $2,200,000 (an increase of $800,000).

 Ms. Stearns’ target annual equity award for 2019 of $2,200,000 was established in her offer letter in connection with her recruitment to join our company but is also prorated based on her start date.

 2019 target annual equity awards for the other named executive officers were unchanged from 2018.

 The Adjusted EPS Equity Awards granted in 2018 and held by each of our named executive officers other than Ms. Stearns were earned at 200% of target, based on our cumulative Adjusted EPS of $6.99 for 2018 and 2019. Such awards will vest in February 2021, subject to each executive’s continued service.

   

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

  Compensation

  Component

  Description and Purpose         Committee Actions for 2019     
   

 

 In 2020, our CEO’s target annual long-term incentive award was granted in the same mix between Time Vesting Equity Awards, and Adjusted EPS Equity Awards. Our other named executive officers were granted half of their target annual long-term incentive award value in the form of a Time Vesting Equity Award, and the other half of their target award value in the form of an Adjusted EPS Equity Award.

 

            

Corporate Governance Highlights

 

 

 

 

Compensation and Corporate Governance Policies and Practices     

 

 Independence

  

 

100% of our Compensation Committee members are independent. The Committee engages its own compensation consultant and confirms each year that the consultant has no conflicts of interest and is independent.

 

 

 No Hedging

  

 

We have a policy that prohibits all directors, executive officers and other designated insiders from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in hedging or other derivative transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities.

 

 

 Compensation
Clawback Policy

  

 

We have a “compensation clawback policy” that permits the company, subject to the discretion and approval of our Board, to recover cash-based and performance-based-equity incentive compensation paid to any current or former “Section 16 officer” if there is a restatement of our financial results in certain circumstances. These circumstances are described in greater detail in this CD&A under the heading “Other Relevant Policies and Practices—Compensation Clawback Policy” on page 49.

 

 

 Stock Ownership Requirements

  

 

We have stock ownership requirements for directors and our executive officers that require retention of threshold amounts of the net shares acquired upon the exercise of stock options, the vesting of restricted stock or the settlement of vested restricted stock units until required ownership levels are met. The stock ownership requirements for our named executive officers are set forth in this CD&A under “Other Relevant Policies and Practices—Equity Ownership Policy” on page 48.

 

 

 Equity Award Policy

  

 

We have an Equity Award Policy that is designed to maintain the integrity of the equity award process and to ensure compliance with all applicable laws. The Equity Award Policy sets forth the procedures that must be followed in connection with employee awards and imposes stringent controls around any award made outside of the normal cycle. Our Equity Award Policy is described in greater detail in this CD&A under the heading “Other Relevant Policies and Practices—Equity Award Policy and procedures for equity grants” on page 49.

 

 

 No “Single Trigger” Change of Control Payments

  

 

We do not have employment contracts, plans or other agreements that provide for “single trigger” change of control payments or benefits (including automatic accelerated vesting of equity awards upon a change of control only) to any of our named executive officers.

 

 

 No Special Perquisites

  

 

Our named executive officers receive no special perquisites or other personal benefits, unless such benefits serve a reasonable business purpose, such as benefits specifically relating to healthcare and insurance.

 

 

 No Tax Gross-Ups

  

 

As a policy matter, we do not provide tax gross-ups to our named executive officers, other than in connection with tax liabilities incurred with relocations and, if applicable, expatriate tax equalization.

   

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Philosophy and Objectives of Our Executive Compensation Program

 

Compensation plays a vital role in supporting short- and long-term business objectives that ultimately drive business success. We believe that our compensation programs should reinforce our corporate strategy and focus our executives on creating sustainable long-term stockholder value. As a result, we reward our executives for annual and long-term business performance based on global company and/or segment financial performance as well as based on progress against individual strategic performance objectives.

The Committee establishes and administers our executive compensation program. The primary objectives of the program are to attract and retain accomplished and high-performing executives and to motivate those executives to consistently achieve short- and long-term goals consistent with our corporate strategy. These short- and long-term compensation incentives are designed to:

 

 

Link pay to performance—We place a significant portion of each executive officer’s potential compensation “at risk,” with incentive programs tied to financial and strategic performance objectives. Depending on the executive’s position, the financial objectives may be at the global level (i.e., based on our global consolidated results) or based on a combination of global company and segment performance. Depending on the achievement of these financial and strategic objectives, the resulting payout could be above, at or below target amounts. In addition, all of our long-term incentives have a performance component in that the ultimate value of those incentives depends upon our stock price over a multi-year period. We seek to further link our long-term incentives to our financial results and stockholder returns by awarding a combination of Adjusted EPS Equity Awards and Time Vesting Equity Awards. The one-time Strategic Equity Award granted in 2017 (and to Ms. Stearns upon her commencement of employment with us in 2019) is

   

also strongly performance-based, with the payout on two-thirds of the award driven by the extent to which the company achieves rigorous cumulative Adjusted EPS and total shareholder return performance hurdles relative to the S&P 500 over a six-year performance period. Such performance awards will not vest unless the company’s performance on the relevant metric exceeds 50th percentile performance. These awards are further described under the heading “Components of Our Program—Elements of our compensation program—One-Time Strategic Equity Award” beginning on page 45.

 

 

Align the interests of our executives with those of our stockholders—We seek to instill a sense of ownership in the company through equity-based awards and stock ownership requirements applicable to our directors and executives. Equity awards align an executive’s financial interests with those of our stockholders by creating incentives to preserve and increase stockholder value as well as achieve solid financial results for our stockholders over a multi-year period.

 

 

Attract and retain top leadership talent—To successfully execute our business strategy, we must attract and retain top talent in our industry. This requires us to provide our executives with compensation opportunities at a level commensurate with other organizations competing for their talents.

 

 

Be transparent and reflect best practices in corporate governance—In addition to implementing compensation programs that are easily understood and tracked, we have adopted specific policies and practices that are designed to further align executive compensation with long-term stockholder interests as described under “Corporate Governance Highlights” on page 34.

 

 

How We Make Compensation Decisions

Our Compensation Committee

 

 

 

At the beginning of each performance year, the Committee determines the appropriate target levels of each component of compensation and establishes annual financial and strategic performance objectives for each executive officer based on factors the Committee deems relevant in its business judgment. Following year-end, performance relative to these

objectives is measured, and individual annual performance awards are then determined. When establishing target compensation levels and annual performance objectives the Committee may consider such factors as they deem relevant, including:

 

 

Industry and market conditions;

 

 

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The company’s financial performance (i.e., based on our global consolidated results and/or segment results);

 

 

The company’s global and segment performance relative to competitors;

 

 

Our Board-approved annual operating plan and related strategy and objectives;

 

 

Individual factors, including performance and expectations, responsibilities, experience, retention risk, succession planning, prior compensation and positioning among other senior executives;

 

 

Overall effectiveness of the compensation program in achieving, measuring and rewarding desired performance levels;

 

The results of our annual “say on pay” vote from the prior year’s annual meeting of stockholders;

 

 

Advice from the Committee’s independent compensation consultant;

 

 

Market compensation data among comparable companies; and

 

 

Current and evolving practices and trends among comparable companies.

These factors may vary from year to year based upon the Committee’s subjective business judgment reflecting its members’ collective experience.

 

 

Our Chief Executive Officer

 

 

 

Our CEO meets with the Committee and its independent compensation consultant to provide perspective about us and our industry that may be helpful in conducting an accurate survey of relevant market data from time to time. In addition, our CEO makes recommendations on non-CEO executive compensation and reviews and provides the Committee with commentary on the competitive pay information regarding non-CEO executive compensation contained in the consultant’s report to the Committee. At the invitation of the Committee, our CEO also attends meetings when the performance of other executive officers is discussed. During

these meetings, our CEO provides an assessment of those executives’ performance and recommends a payout percentage with respect to the strategic objectives portion of the annual performance bonus for each of those executive officers. The Committee makes all ultimate compensation decisions with respect to our executive officers (including for our CEO), incorporating both the feedback from its independent compensation consultant and our CEO. Our CEO does not attend Committee discussions where the Committee evaluates his performance or sets his compensation.

 

 

The Committee’s Independent Compensation Consultant

 

 

 

The Committee has retained Frederic W. Cook & Co., Inc., or FW Cook, as its independent compensation consultant. FW Cook reports directly to the Committee, attends meetings and provides advice to the Committee Chair. FW Cook prepares analyses for the Committee based on its review of market data that it believes to be relevant, including compensation levels at, and the financial performance of, a comparator group of companies identified for the relevant period. FW Cook meets with the Committee and with management to solicit input on job scope, performance, retention issues and other factors that it views as relevant. FW Cook then prepares reports for the Committee with respect to management recommendations as to compensation opportunities of the applicable executive officers and the reasonableness of such recommendations. FW Cook also advises the Committee on compensation-related developments and best practices.

FW Cook has not provided the company any services other than the services that it provided to the Committee. After considering, among other things, the other factors described elsewhere in this Proxy Statement with respect to FW Cook’s work for the Committee and (i) the absence of any business or personal relationship between FW Cook and any member of the Committee or any of our executive officers, (ii) a certification from FW Cook that it does not trade in our securities, (iii) FW Cook’s Independence Policy that is reviewed annually by its board of directors, and (iv) FW Cook’s policy of proactively notifying the Committee chair of any potential or perceived conflicts of interest, the Committee has concluded that FW Cook is independent and that its work does not raise any conflict of interest.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Comparative Market Data

 

 

 

We seek to offer total compensation competitive with the market in which we compete for executive talent. For some positions, this market is broader than the commercial real estate services and investment industry in which we operate. Accordingly, the Committee periodically reviews comparator company compensation data, general industry compensation survey data and recommendations from the Committee’s independent compensation consultant to understand whether our executive compensation is reasonable and competitive.

For certain executives, the Committee examines target compensation levels against business services sector comparators and a broad group of non-manufacturing companies, including those that the Committee considers to be our most comparable public company competitors. This group changes from time to time, and for 2019 executive-compensation-planning purposes it consisted of the following companies:

 

 

   

AECOM

 

 

    Jones Lang LaSalle Incorporated

   
 

Aon plc

 

 

    ManpowerGroup Inc.

 
 

Brookfield Asset Management Inc.

 

 

    Marsh & McLennan Companies, Inc.

 
 

Cognizant Technology Solutions Corporation

 

 

    Realogy Holdings Corp

 
 

DXC Technology Company

 

 

    Waste Management, Inc.

 
 

Fidelity National Financial, Inc.

 

 

    Willis Group Holdings plc

 
 

Fluor Corporation

 

 

    Xerox Corporation

 
   

Jacobs Engineering Group Inc.

 

       

 

The group of companies listed above includes business services companies outside our industry, with stature, size and complexity that are generally similar to our own, in recognition of the fact that all of our direct competitors are smaller than us and/or are non-public organizations, and competition for certain senior management talent is not limited to our industry. We believe that the compensation paid by the comparator group, taken as a whole, serves as one appropriate reference for our executive compensation, and we do not target any particular compensation percentile within the comparator group when setting executive compensation.

The Committee considers market compensation data that it believes to be reliable and relevant when establishing executive compensation targets. As one factor in setting compensation targets for our CEO, the Committee examines data for comparable positions in the comparator group described above, which indicates, for example, that our CEO’s base salary and annual incentive targets should be significantly more than those of the next highest paid company executive. This is partly a function of competitive market data, which indicates that chief executive officers are

paid significantly higher than other executives, but it also reflects the Committee’s view that our CEO bears ultimate responsibility for our global results and our overall success, such that his compensation opportunity should be set higher. Because reliable comparative data for other positions that might be specific to our business, such as a business-line chief executive officer, is not broadly available from the comparator group, the Committee also reviews compensation data from the comparator group for the most comparable level positions (e.g., 2nd or 3rd highest paid), as well as other data from outside the identified comparator group that it considers to be a reliable indicator of market compensation levels for those positions. As noted above under “—How We Make Compensation Decisions—Our Compensation Committee” on page 35, market compensation data is only one of many factors considered by the Committee when setting the compensation mix and levels for any particular executive. The actual factors considered by the Committee may vary from year to year based upon the Committee’s subjective business judgment reflecting its members’ collective experience.

 

 

Say on Pay Results

 

 

 

The Committee also considers the results of annual stockholder advisory votes on the compensation of our named executive officers in connection with the discharge of its responsibilities. We received strong support for our executive compensation from our stockholders at our 2019 annual meeting of stockholders, at which approximately 95% of the votes cast on the “say on pay” proposal were in favor of the 2018 compensation for our named executive officers. At the

2020 Annual Meeting, we will again hold an advisory vote to approve our named executive officer compensation for 2019. See “Proposal 3—Advisory Vote on Executive Compensation” on page 29. The Committee will continue to consider the results of these annual advisory votes in evaluating our executive compensation policies and programs.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Stockholder Outreach

 

 

 

In 2019, we continued our stockholder outreach program and sought feedback from stockholders on a variety of topics, including company strategy and performance, executive compensation, board diversity and refreshment, corporate governance policies, corporate responsibility and

sustainability initiatives. With respect to executive compensation, stockholders generally reported that executive compensation was viewed as well-aligned with performance. The Committee endeavors to incorporate feedback from our stockholders into our annual compensation decisions.

 

 

Compensation Risk Assessment

 

 

 

The Committee annually reviews the risks that may arise from our compensation programs, and in 2019, we undertook a comprehensive assessment of risk relating to those programs. Our management prepared a detailed inventory of all of our compensation programs, and FW Cook, on behalf of the Committee, worked with our management to analyze each

program’s design to determine whether the program creates or encourages excessive or inappropriate risk taking. Based on this review and analysis, we and the Committee have concluded that our compensation programs do not present any risk that is reasonably likely to have a material adverse effect on us.

 

 

Components of Our Program

Elements of our compensation program

 

 

 

The compensation program for our named executive officers consists primarily of three elements, which are described in more detail below:

 

 

Base salary;

 

 

Annual performance awards (paid in cash); and

 

 

Long-term equity-based incentives (granted with time-based and performance-based vesting conditions).

We endeavor to attract, motivate and retain exceptional individuals with demonstrated leadership and other capabilities required to implement innovative business initiatives, while concurrently encouraging those leaders to work towards ambitious long-term business objectives. We further seek to customize our pay practices based on

individual performance, leadership and potential, as well as global company and segment results. We assess our executives in the context of a methodical performance management process. We believe that our pay practices support all of these efforts.

A significant percentage of our executive officers’ annual compensation package is variable, consisting of annual cash performance awards and long-term equity-based incentives. As shown in the charts below, for 2019, the targeted annual cash performance awards and long-term equity incentives comprised approximately (i) 92% of total target direct compensation for our CEO and (ii) on average 86% of total target direct compensation for our CEO together with our other named executive officers.

 

 

 

LOGO    LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Base Salary

We provide competitive base salaries that allow us to attract and retain a high-performing leadership team at a reasonable level of fixed costs. Base pay levels generally reflect a variety of factors, such as the executive’s skill and experience, the seniority of the position, the difficulty of finding a replacement, affordability and the positioning of the base pay against market salary levels and against base salaries of other senior executives at the company. Base salaries are generally reviewed annually during the first quarter of the year but may

also be reviewed at other times if an executive officer’s responsibilities have materially changed or other special circumstances so warrant.

In 2019, the Committee established the annual base salaries for our named executive officers as set forth in the table below. For additional information regarding the base salaries (and the reasons for any associated increases) of our named executive officers for 2019, see the heading entitled “2019 Executive Summary—Executive Compensation Highlights” beginning on page 31.

 

 

 Name

 

 

2019 Base

Salary

 

   

Change from 2018

 

 

 Robert E. Sulentic

    President and Chief Executive Officer

 

 

 

$

 

1,000,000

 

 

 

 

No change.

 

 Leah C. Stearns

    Chief Financial Officer

 

 

 

$

 

700,000

 

 

 

 

N/A. Ms. Stearns joined the company in May 2019.

 

 James R. Groch

    Global Group President and Chief Investment Officer

 

 

 

$

 

770,000

 

 

 

 

No change.

 

 Michael J. Lafitte

    Global Chief Executive Officer—Real Estate Investments

 

 

 

$

 

735,000

 

 

 

 

No change.

 

 William F. Concannon

    Global Group President, Clients and Business Partners

 

 

 

 

$

 

 

700,000

 

 

 

 

 

 

No change.

 

 John E. Durburg

    Global Chief Executive Officer—Global Workplace Solutions

 

 

 

$

 

 

700,000

 

 

 

 

 

 

Increased in 2019 by $50,000, to reflect his promotion in 2019 to Global Chief Operating Officer.

             

 

Annual Performance Awards

In 2019, the Committee granted annual performance awards to our executive officers under our Executive Bonus Plan, or EBP. Within the framework of the EBP, the Committee establishes target and maximum award opportunities and corresponding performance goals and determines actual payouts thereunder for our executives. The EBP is designed to motivate and reward executives by aligning pay with annual performance, and the amount of an award thereunder is measured by the executive’s success against a combination of challenging financial and strategic performance objectives established by the Committee. In addition, we may determine

in any year to pay an award under the EBP in cash, or in the form of company stock or other non-cash forms of compensation.

Annual EBP Target Award

In 2019, the Committee established annual performance award targets for our named executive officers under the EBP as set forth in the table below. For additional information regarding the annual performance award targets (and the reasons for any associated increases) of our named executive officers for 2019, see the heading entitled “2019 Executive Summary—Executive Compensation Highlights” beginning on page 31.

 

 

 Name

 

 

2019 EBP

Target Awards

 

   

Change from 2018

 

 

 Robert E. Sulentic

    President and Chief Executive Officer

 

 

 

$

 

2,000,000

 

 

 

 

No change.

 

 Leah C. Stearns

    Chief Financial Officer(1)

 

 

 

$

 

1,000,000

 

 

 

 

 

 James R. Groch

    Global Group President and Chief Investment Officer

 

 

 

$

 

1,155,000

 

 

  No change.

 

 Michael J. Lafitte

    Global Chief Executive Officer—Real Estate Investments

 

 

 

$

 

1,100,000

 

 

  No change.

 

 William F. Concannon

    Global Group President, Clients and Business Partners

 

 

 

$

 

1,050,000

 

 

  No change.

 

 John E. Durburg

    Global Chief Executive Officer—Global Workplace Solutions

 

 

 

$

 

1,000,000

 

 

 

 

Increased in 2019 by $250,000 to reflect his promotion in 2019 to Global Chief Operating Officer.

             
  (1)

Ms. Stearns joined our company in May 2019; her EBP target award reflects an annualized amount.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

2019 Adjusted EBITDA Target under the EBP

The Committee used adjusted EBITDA5 when establishing 2019 financial performance targets under the EBP to effectively tie compensation to our operating results. We believe that adjusted EBITDA is an appropriate measure to evaluate our operating performance because it focuses on profitability but excludes certain items that management does not consider directly indicative of the company’s ongoing performance. We believe sustained growth in profitability over time significantly correlates to value creation for our stockholders. As such, we seek to appropriately align our executives’ compensation to performance of the portions of our business where they have the most direct impact. For our CEO and other corporate executives with enterprise-wide roles, their 2019 financial performance targets were based on adjusted EBITDA for our global business (measured against plan). For our executives who run our business segments, their 2019 financial performance targets were based on adjusted EBITDA at both the global level and at the segment level (measured against plan). We believe that this combined measurement encourages our executives to collaborate across and contribute to the success of our entire enterprise, while also holding executives accountable for the results of the segment they lead.

Following year-end, our actual financial performance is then compared to the targeted financial performance. For our executives to be eligible to receive any award under the EBP for 2019, our actual financial performance had to exceed 70% of the applicable target for adjusted EBITDA (as indicated in the table below). Performance at the target level for adjusted EBITDA would have resulted in a 100% financial adjustment factor (i.e., no premium or discount applied to the EBP target

award), and performance at 130% or greater of the target level for adjusted EBITDA would have resulted in a 200% financial adjustment factor. The financial adjustment factor for performance between 70% and 130% of the target level is linearly interpolated. For example, in 2019 our adjusted EBITDA at the global level was 101.5% of target (resulting in a 105% financial adjustment factor to the portion of the EBP target subject to global performance); adjusted EBITDA for our Advisory Services segment was 103.7% of target, resulting in a 112.3% financial adjustment factor which was applied to 25% of the EBP target for Mr. Lafitte (who served as our Global CEO—Advisory Services during 2019); and adjusted EBITDA for our Global Workplace Solutions segment was 103.3% of target, resulting in a 110.9% financial adjustment factor which was applied to 50% of the EBP target for Mr. Concannon (who served as our Global CEO—Global Workplace Solutions during 2019).

For 2019, the preliminary 2019 EBP award for our named executive officers was initially funded based on the extent to which they met their financial performance objectives. Fifty percent of such initial funding was then modified depending on performance against individual strategic objectives (as discussed below), subject to an overall maximum payout of 200% of the executive’s target under the EBP. In 2019, the Committee increased to 50% (from 20%) the portion of the initially funded EBP award that could be modified by individual performance objectives. This change was made because the Committee believes that strategic accomplishments and individual performance should have a greater impact on bonus payouts for our most senior executives who are charged with driving our corporate strategy.

 

 

 

 

5      For additional information on adjusted EBITDA, please see footnote (3) under “Proxy Summary Information” on page 2.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

The 2019 adjusted EBITDA targets for our named executive officers, as compared to actual adjusted EBITDA in 2019, were as follows:

    

Target for

2019 adjusted

EBITDA

(in millions)

   

Actual

2019 adjusted

EBITDA

(in millions)

    Actual
Achievement
Against Target
   

Financial
Adjustment

Factor

    Relevant Business Objective
Weighting
 

  Robert E. Sulentic

   President and Chief Executive Officer

  Leah C. Stearns

   Chief Financial Officer

  James R. Groch

   Global Group President and Chief

   Investment Officer

  John E. Durburg

   Global Chief Executive Officer—Global    Workplace Solutions(1)

  $  2,034.0     $  2,063.8       101.5     105.0     Global (100%)

 

 

  Michael J. Lafitte

   Global Chief Executive Officer—Real Estate Investments(2)

 

 

 

$

$

 

 

 2,034.0

 1,413.3

 

 

 

 

 

 

 

$

$

 

 

 2,063.8

 1,465.8

 

 

 

 

 

 

 

 

 

 

101.5

103.7

 

 

 

 

 

 

 

 

105.0

112.3

 

 

 

 

 

 

 

 

Global (75%)

Advisory Services (25%)

 

 

 

 

  William F. Concannon

   Global Group President, Clients and Business Partners(3)

 

 

 

$

$

 

 

2,034.0

 410.6

 

 

 

 

 

 

 

$

$

 

 

 2,063.8

 424.0

 

 

 

 

 

 

 

 

 

 

101.5

103.3

 

 

 

 

 

 

 

 

105.0

110.9

 

 

 

 

 

 

 

 

Global (50%)

Global Workplace Solutions (50%)

 

 

 (1)

In 2019, Mr. Durburg served as our Global Chief Operating Officer. On November 14, 2019, we announced his new role as Global Chief Executive Officer—Global Workplace Solutions, effective January 1, 2020.

 

 (2)

In 2019, Mr. Lafitte served as our Global Chief Executive Officer—Advisory Services. On November 14, 2019, we announced his new role as Global Chief Executive Officer—Real Estate Investments, effective January 1, 2020.

 

 (3)

In 2019, Mr. Concannon served as our Global Chief Executive Officer—Global Workplace Solutions. On November 14, 2019, we announced his new role as Global Group President, Clients and Business Partners, effective January 1, 2020.

 

2019 Strategic Objectives under the EBP

Although company financial performance is critical to our success, the Committee also believes that a substantial portion of the EBP award (50% for 2019) should be affected by the executive’s overall performance and against important strategic objectives. The strategic objective component of annual performance awards under the EBP is more subjective in nature and qualitative in measurement. These objectives—which the Committee approves for each executive at the beginning of each performance year—enable the Committee to influence management’s performance against strategies beyond near-term financial objectives to include certain strategic objectives related to the quality of our earnings, the positioning of our business for the future and the mitigation of risk.

Pursuant to the EBP, following the end of the performance year, the CEO (or where the executive is the CEO, the Committee) reviews each executive’s overall performance, taking into account the various strategic objectives that were established at the beginning of the year and any special factors that could have affected performance during the year, such as other objectives and measures that may have become important to us or the executive during the year that are not reflected in the formal strategic objectives approved at the beginning of the performance year.

Under our EBP, the CEO (or the Committee, as applicable) then determines a “strategic adjustment factor” using the ratings framework below:

STRATEGIC PERFORMANCE MEASUREMENT SCORECARD

 

 Rating

 

  

Performance Assessment

 

    Strategic
 Adjustment
 Factor
    

 

1

 

  

 

Far Below Expectations

  

 

 0%

 

 

 

2

  

 

 

Partially Met Expectations

 

  

 

 75%

 

 

 

3

  

 

Met Expectations

  

 

 100%

 

 

 

4

  

 

 

Somewhat Exceeded Expectations

 

  

 

 125%

 

 

 

5

 

 

  

 

Far Exceeded Expectations

 

 

  

 

 150%

 

 

   

The “strategic adjustment factor” is then applied to the strategic objectives portion of the EBP award (50% of the amount initially funded by the “financial adjustment factor” described above), subject to an overall maximum payout of 200% of each executive’s target under the EBP. The resulting product becomes the “final strategic performance portion” of the total EBP award.

 

 

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With respect to the CEO, the Committee determines his overall performance, including his strategic adjustment factor. With respect to other executive officers, the Committee reviews the determinations and recommendations of the CEO and then makes the final decision as to their performance and percentage payout assigned.

2019 EBP Award Payout Determination

The “financial performance portion” and the “strategic performance portion” of the EBP award, each as described above, were then added together to arrive at a total 2019 EBP award, subject to an overall cap of 200% of the target EBP award under the terms of the EBP.

 

 

The table below generally describes the financial and strategic objectives applied to each of our named executive officers and their resulting payouts against targets under the EBP for 2019.

 

  Name    Financial Objectives    Strategic Objectives   2019 Target     2019 Payout    

 

  Robert E. Sulentic

    President and Chief

    Executive Officer

  

 

 Global adjusted EBITDA—100%

  

 

Mr. Sulentic was expected to achieve specific objectives set for him in the following general areas in support of the company’s corporate strategy:

 Work with the senior leadership team to drive strategic and operational excellence

 Develop plans to differentiate service offerings from competitors

 Improve employee engagement

 

 

 

 

$    2,000,000

 

 

 

 

 

 

$       2,415,000  

 

    

Actual Achievement Against Target: 101.5%

Financial Adjustment Factor: 105.0%

 

   Strategic Adjustment Factor: 130%                

 

  Leah C. Stearns

    Chief Financial

    Officer

  

 

 Global adjusted EBITDA—100%

  

 

Ms. Stearns was expected to achieve specific objectives set for her in the following general areas in support of the company’s corporate strategy:

 Ensure that the finance/accounting organization effectively supports the company’s business strategy

 Provide insight into the financial performance of all service lines

 Identify and execute operating efficiency and cost management initiatives

 

 

 

 

$    632,877(1)

 

 

 

 

 

 

$    747,586  

 

    

Actual Achievement Against Target: 101.5%

Financial Adjustment Factor: 105.0%

 

   Strategic Adjustment Factor: 125%                

 

  James R. Groch

    Global Group

    President and

    Chief Investment

    Officer

  

 

 Global adjusted EBITDA—100%

  

 

Mr. Groch was expected to achieve specific objectives set for him in the following general areas in support of the company’s corporate strategy:

 Support an effective and efficient transition of the new CFO

 Redefine the company’s philosophy and approach to M&A and make meaningful progress advancing that approach

 Establish the company as a measurably superior commercial real estate investor

 

 

 

 

$    1,155,000

 

 

 

 

 

 

$    1,152,113  

 

    

Actual Achievement Against Target: 101.5%

Financial Adjustment Factor: 105.0%

 

   Strategic Adjustment Factor: 90%                
  (1)

Ms. Stearns joined the company in May 2019. The amount reflects an annual target EBP of $1,000,000, prorated for Ms. Stearns’ length of service during 2019. Pursuant to the terms of her offer letter, Ms. Stearns’ 2019 annual bonus was guaranteed to pay out at an amount not less than the prorated amount of her target bonus.

 

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  Name    Financial Objectives      Strategic Objectives   2019 Target     2019 Payout    

 

  Michael J. Lafitte

    Global Chief Executive Officer— Real Estate Investments

  

 

 Global adjusted EBITDA—75%

 Advisory Services adjusted
EBITDA—25%

    

 

Mr. Lafitte was expected to achieve specific objectives set for him in the following general areas in support of the company’s corporate strategy:

 Clearly define performance expectations for division presidents in the Advisory Services business

 Materially advance the company’s Capital Markets business by executing the comprehensive strategy established in 2017

 Working with Messrs. Groch and Sulentic, redefine the company’s philosophy and approach to M&A and make meaningful progress advancing that approach

 

 

 

 

$    1,100,000

 

 

 

 

 

 

$    1,175,167  

 

    

Actual Achievement Against Target: 101.5% (Global); 103.7% (Advisory Services)

 

Global Financial Adjustment Factor: 105.0%

Advisory Services Adjustment Factor: 112.3%

 

     Strategic Adjustment Factor: 100%                

 

  William F. Concannon

    Global Group President, Clients and Business Partners

  

 

 Global adjusted EBITDA—50%

 Global Workplace Solutions adjusted
EBITDA—50%

    

 

Mr. Concannon was expected to achieve specific objectives set for him in the following general areas in support of the company’s corporate strategy:

 Make material gains in succession planning and executive development for the most senior GWS leaders and roles

 Develop and execute a plan to differentiate the company’s facilities management service offerings

 Materially advance the company’s project management business

 

 

 

 

$    1,050,000

 

 

 

 

 

 

$    1,247,014  

 

    

Actual Achievement Against Target:
101.5% (Global); 103.3% (Global Workplace Solutions)

 

Global Financial Adjustment Factor: 105.0%

Global Workplace Solutions Financial Adjustment Factor: 110.9%

 

     Strategic Adjustment Factor: 120%                

 

  John E. Durburg

    Global Chief Executive Officer—Global Workplace Solutions

  

 

 Global adjusted EBITDA—100%

    

 

Mr. Durburg was expected to achieve specific objectives set for him in the following general areas in support of the company’s corporate strategy:

 Working with Mr. Lafitte, materially advance the company’s Capital Markets business by executing the comprehensive strategy established in 2017

 Design a new client care approach with clear and measurable objectives for client satisfaction

 Working with Ms. Stearns, develop a meaningfully different approach to achieving insight into and managing the company’s costs globally

 

 

 

 

$    1,000,000

 

 

 

 

 

 

$    1,181,250  

 

 

    

Actual Achievement Against Target: 101.5%

 

Financial Adjustment Factor: 105.0%

     Strategic Adjustment Factor: 125%                

 

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Cash Transition Bonus

In connection with her commencing employment with us, Ms. Stearns received a one-time transition bonus of $1,000,000, which bonus is repayable in full if she resigns her employment with us prior to the fourth anniversary of her start date. This award (in conjunction with the transition RSU award described below) was intended to make Ms. Stearns whole for equity awards granted by her prior employer that she forfeited in order to join us.

Long-Term Incentives

We use equity compensation as a long-term incentive to create alignment with stockholders, to reward achievement of multi-year financial objectives, and as a retention tool for top executives that have the most direct impact on corporate results. The link to performance in our long-term incentive grants is prospective in nature. For example, equity grants encourage executives not only to contribute to the creation of additional stockholder value but also to help maintain and preserve existing stockholder value—because the executives share in that value through their equity. Our equity grants are subject to multi-year vesting schedules, which help us to retain key talent.

Annual Long-Term Incentive Program

In 2019, the Committee granted annual equity awards in two forms—a Time Vesting Equity Award and an Adjusted EPS Equity Award, as outlined below:

 

 

Time Vesting Equity Award—A time vesting award that vests 25% per year on each of February 28, 2020, 2021, 2022 and 2023.

 

 

Adjusted EPS Equity Award—A performance-vesting award that vests in full in February 2022, depending on the extent to which our cumulative 2019 to 2020 adjusted EPS performance meets, exceeds or falls short of established targets. If actual adjusted EPS is less than the minimum threshold, then none of the units will be earned. If actual adjusted EPS exceeds the target, then up to 200% of the target units will be earned. The payout is linearly

   

interpolated for performance between the adjusted EPS threshold and the adjusted EPS maximum.

With respect to our CEO, the Committee determines the amount of his equity award. With respect to other executive officers, our CEO recommends to the Committee each year the recipients of equity awards as well as the amount of each award. In evaluating these recommendations and making its final award determinations for all executive officers, the Committee considers:

 

 

the executive’s position within our organization;

 

 

ongoing performance and expected contributions by the executive to our future success; and

 

 

input from the Committee’s independent compensation consultant (FW Cook), taking into consideration relevant market data (when applicable), pay equity among the relevant employee group and other factors.

As part of the review of target annual compensation opportunities, the Committee approved increases in 2019 to the annual long-term equity targets for Messrs. Sulentic and Durburg. These increases reflect their strong performance as well as better alignment relative to their respective market peers and other CBRE global executives, and with respect to Mr. Durburg, his promotion to Global Chief Operating Officer. Ms. Stearns’ offer letter provides that her annual target equity award for 2019 was $2,200,000 (her actual award was prorated based on her start date).

The 2019 annual equity award for Mr. Sulentic was granted two-thirds in Adjusted EPS Equity Awards and one-third in Time-Vesting Equity Awards. The 2019 annual equity awards for the other named executive officers were granted one-third in Adjusted EPS Equity Awards and two-thirds in Time-Vesting Equity Awards. For 2020, Mr. Sulentic’s annual equity award was granted in the same mix between Adjusted EPS Equity Awards and Time-Vesting Equity Awards, while annual equity awards to other executives were granted 50% in Adjusted EPS Equity Awards and 50% in Time-Vesting Equity Awards.

 

 

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The table below represents the dollar values (measured at grant date fair value) underlying the annual equity awards that were made to our named executive officers for 2019.

 

  Name   Adjusted EPS
Equity Award
(at Target)(1)(2)
  Time Vesting
Equity
Award(1)(3)
 

Total 2019

Annual
Equity Awards(1)

  Change from
2018 Target

 

  Robert E. Sulentic

    President and Chief Executive Officer(4)

 

 

$    6,600,000

 

 

$    3,400,000

 

 

$    10,000,000

 

 

Increased in 2019   

by $3,200,000 to reflect his
strong performance and better
align with market levels of
compensation for other
CEO’s.

 

  Leah C. Stearns

    Chief Financial Officer(5)

 

 

 

$    464,110

 

 

$    928,219

 

 

$    1,392,329

 

 

 

  James R. Groch

    Global Group President and Chief Investment Officer(4)

 

 

 

$    1,000,000

 

 

$    2,000,000

 

 

$    3,000,000

 

 

No change.

 

  Michael J. Lafitte

    Global Chief Executive Officer—Real Estate Investments

 

 

 

$    886,667

 

 

$    1,773,333

 

 

$    2,660,000

 

 

No change.

 

  William F. Concannon

    Global Group President, Clients and Business Partners(4)

 

 

 

$    773,333

 

 

$    1,546,667

 

 

$    2,320,000(4)

 

 

No change.

 

  John E. Durburg

    Global Chief Executive Officer—Global Workplace Solutions

 

 

 

$    733,333

 

 

$    1,466,667

 

 

$    2,200,000(4)

 

 

Increased in 2019 by
$800,000 to reflect his strong
performance and his
promotion to Global Chief
Operating Officer.

 

 (1)

These amounts reflect the Committee-approved award values, with the actual number of restricted stock units granted rounded down to the nearest whole share as set forth on the “Grants of Plan-Based Awards” table on page 56.

 

 (2)

The Adjusted EPS Equity Award was granted with a target number of restricted stock units, zero to 200% of which may be earned based on the extent of our achievement against adjusted EPS performance targets (over a minimum threshold) as measured on a cumulative basis for the 2019 and 2020 fiscal years, with full vesting of any earned amount on February 28, 2022 for Messrs. Sulentic, Groch, Lafitte, Concannon and Durburg and on May 15, 2022 for Ms. Stearns. If actual adjusted EPS is less than the minimum threshold, then none of the units will be earned. The maximum number of units available under the award is 200% of the target number of units, and the payout is linearly interpolated for performance between the various adjusted EPS performance goals.

 

 (3)

The Time Vesting Equity Award will vest 25% per year on each of February 28, 2020, 2021, 2022 and 2023 for Messrs. Sulentic, Groch, Lafitte, Concannon and Durburg and on each of May 15, 2020, 2021, 2022 and 2023 for Ms. Stearns.

 

 (4)

Mr. Concannon became retirement eligible in November 2017, Mr. Sulentic became retirement eligible in September 2018 and Mr. Groch became retirement eligible in December 2019. For additional information regarding the treatment of their outstanding equity awards upon retirement, please refer to the discussion under “—Severance Plan; Treatment of Death, Disability and Retirement Under 2016, 2017, 2018 and 2019 Equity Award Agreements; Treatment of Qualifying Termination and Retirement Under Strategic Equity Award Agreements” beginning on page 62.

 

 (5)

Ms. Stearns joined the company in May 2019. The amounts reflect an annual target Adjusted EPS Award of $733,333 and an annual target Time Vesting Equity Award of $1,466,667, each prorated for Ms. Stearns’ length of service during 2019.

 

One-Time Strategic Equity Award

In 2017, in exchange for the execution of certain restrictive covenants described below, a group of our most senior executives around the globe, including Messrs. Groch, Lafitte, Concannon and Durburg, received a one-time Strategic Equity Award with a six-year cliff vesting period. The Committee also offered Mr. Sulentic a significant Strategic Equity Award. Mr. Sulentic determined (and the Committee agreed) that it was in the best interest of the company that he decline such award in order to maintain his independence and avoid any conflict of interest or appearance of conflict of interest as he was actively involved in designing the program and advocating for such awards and the related

restrictive covenants with both our Board and our senior executives around the globe. Upon joining the company in 2019, Ms. Stearns also received a one-time Strategic Equity Award having a grant date value of $3,000,000 and having the same terms and conditions as the Strategic Equity Awards granted in 2017. For additional information, please refer to the discussion under “Executive Management—Employment Agreements” beginning on page 55.

The one-time Strategic Equity Award granted to Messrs. Groch, Lafitte, Concannon and Durburg and Ms. Stearns is strongly performance-based, with vesting of two-thirds of the award to each executive driven by the extent to which the company achieves rigorous cumulative Adjusted EPS and

 

 

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total shareholder return performance hurdles relative to the S&P 500 over a six-year performance period. The Strategic Equity Award was structured to:

 

 

encourage focus on longer-term business outcomes (performance periods are six years); and

 

 

provide our executives with a significant and incremental financial incentive to achieve superior outcomes for our stockholders.

The Strategic Equity Award is split into three types of restricted stock unit (“RSU”) awards:

 

 

Time Vesting Strategic Equity Award (one-third of target grant value)—cliff vests on December 1, 2023.

 

 

Relative TSR (“rTSR”) Strategic Equity Award (one-third of target grant value)—granted with a target number of restricted stock units, zero to 175% of which may be earned

   

based on the cumulative total shareholder return (“TSR”) of the company compared to the cumulative TSR of each of the other companies comprising the S&P 500 on December 1, 2017 (the “S&P 500 Comparison Group”) over a six-year measurement period commencing on December 1, 2017 and ending on December 1, 2023.

 

 

Relative EPS (“rEPS”) Strategic Equity Award (one-third of target grant value)—granted with a target number of restricted stock units, zero to 175% of which may be earned based on the cumulative adjusted EPS growth of the company compared to the cumulative EPS growth, as reported under GAAP, of each of the other companies in the S&P 500 Comparison Group over a six-year measurement period commencing on January 1, 2018 and ending on December 31, 2023.

 

 

The performance and payout schedule for the rTSR and rEPS Strategic Equity Awards is intended to be extremely challenging, as evidenced by the fact that such performance awards will not vest unless the company’s performance on the relevant metric exceeds 50th percentile performance. The payout schedule for the rTSR and rEPS Strategic Equity Awards is as follows:

 

CBRE’s rTSR Performance
(Percentile Rank)
 

% of Target rTSR

Share Units that Vest

  CBRE’s rEPS Performance
(Percentile Rank)
 

% of Target rEPS

Share Units that Vest

 

<= 50th Percentile

 

 

0%

 

 

<= 50th Percentile

 

 

0%

 

 

>= 75th Percentile

 

 

 

175%

 

 

 

>= 75th Percentile

 

 

 

175%

 

 

If the company’s performance percentile ranking is less than or equal to the 50th percentile, then none of the relevant performance awards will be earned. If the company’s performance percentile ranking is greater than or equal to the 75th percentile, then 175% of the relevant performance awards will be earned. The payout percentage is linearly interpolated if the company’s performance percentile ranking falls between the 50th percentile and 75th percentile. The rTSR Strategic Equity Awards and rEPS Strategic Equity Awards will vest on the date on which the Committee certifies the performance percentile ranking achieved (which certification will occur as soon as practicable following the end of the performance period, but in no event more than 60 days with respect to the rTSR Strategic Equity Awards and 90 days with respect to the rEPS Strategic Equity Awards).

Restrictive Covenants Agreement Executed in Connection with Strategic Equity Award

As a condition to receiving the Strategic Equity Award, the group of global senior executives participating in the program, including Messrs. Groch, Lafitte, Concannon and Durburg entered into a restrictive covenants agreement with the company which provides for certain post-termination non-competition, non-solicitation of clients and non-solicitation of employees covenants. Ms. Stearns also entered into this restrictive covenants agreement upon joining the company. For additional information, please refer to the discussion under “Executive Management—Employment

Agreements” beginning on page 55. Although Mr. Sulentic declined his Strategic Equity Award as stated above, he nonetheless entered into the same restrictive covenants agreement with the company as our other named executive officers. All of our senior executives who were offered such Strategic Equity Award accepted their awards and executed the required restrictive covenants agreement.

Transition RSU Award

In connection with her commencement of employment with us, Ms. Stearns received a one-time grant of 41,884 restricted stock units scheduled to vest ratably over four years on May 15 of each of 2020 through 2023. This award (in conjunction with the cash transition bonus discussed above) was intended to make Ms. Stearns whole for equity awards granted by her prior employer that she forfeited in order to join us.

Certified Achievement for Adjusted EPS Equity Awards Granted in 2018

On February 16, 2018, we granted (including to Messrs. Sulentic, Groch, Lafitte, Concannon and Durburg) Adjusted EPS Equity Awards. These 2018 Adjusted EPS Equity Awards were granted with a target number of restricted stock units, zero to 200% of which could be earned based on the extent to which the company achieves cumulative adjusted EPS targets (over a minimum threshold) as measured on a cumulative basis for the 2018 and 2019 fiscal years, with full

 

 

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vesting of any earned amount on February 16, 2021. On March 3, 2020, the Committee certified the company’s cumulative adjusted EPS performance for the performance period at $6.99, versus a cumulative adjusted EPS “target” for

those grants of $6.39. As such, the recipients of these awards will vest on February 16, 2021 into 200% of the target number of restricted stock units, subject to forfeiture in certain circumstances as set forth in their award agreement.

 

 

Additional Elements of Our Compensation Program

 

 

Deferred Compensation Plan—The purpose of our Deferred Compensation Plan, or DCP, is to provide select employees of management whose incomes exceed a certain threshold (including our executive officers) and non-employee directors a tax-efficient manner in which to defer compensation to future years, thus increasing the value of our overall compensation program in support of our recruitment and retention objectives. None of our non-employee directors or named executive officers deferred compensation under the DCP in 2019. The DCP is described in more detail under “Executive Compensation—Summary of Plans, Programs and Agreements—Deferred Compensation Plan” on page 61.

 

 

No “Single Trigger” Change of Control Payments—We do not have agreements or plans that provide for “single trigger” change of control payments or benefits (including automatic accelerated vesting of equity awards upon a change of control only) to any of our named executive officers.

 

 

Severance Plan; Treatment of Annual Equity Awards on Termination due to Death, Disability and Retirement; Treatment of Strategic Equity Awards on Qualifying Termination or Retirement—We have a Change in Control and Severance Plan for Senior Management, which we refer to in this Proxy Statement as the Severance Plan, in which all of our named executive officers for 2019 participate. The Committee believes that the Severance Plan is reflective of current compensation practices and trends and is essential to recruiting, retaining and developing high-quality executive talent in the competitive market because it provides protection to the executive if the company does not retain him or her in certain circumstances. Participants under the Severance Plan are eligible to receive (i) severance benefits upon a qualifying termination of employment, including enhanced benefits for a qualifying termination that occurs within a window period surrounding a change in control of the company, and (ii) continued vesting in respect of equity awards held by them if they remain employed with us on the date of a change in control of the company (or accelerated

   

vesting if such equity awards are not assumed by the successor company). In addition, the award agreements pursuant to which we granted our 2016, 2017, 2018 and 2019 equity awards provide for continued or accelerated vesting of the unvested portion of those awards in the event of termination of employment due to death, disability or retirement. Furthermore, the award agreements pursuant to which we granted the one-time Strategic Equity Awards provide for continued or accelerated vesting of a pro-rata amount of the unvested portion of those awards in the event of termination of employment due to death or disability, by the company without cause or the grantee for good reason, or due to retirement. We describe these severance benefits and continued or accelerated vesting terms in greater detail under the heading “Executive Compensation—Summary of Plans, Programs and Agreements—Severance Plan; Treatment of Death, Disability and Retirement Under 2016, 2017, 2018 and 2019 Equity Award Agreements; Treatment of Qualifying Termination and Retirement Under Strategic Equity Award Agreements” beginning on page 62.

 

 

Indirect Elements of Compensation—Our named executive officers are eligible to participate in the same health, welfare and insurance benefit plans in which our employees are generally able to participate. In addition, we offer our named executive officers out of country medical coverage and reimbursement for an annual physical. Some or all of our executive officers may also participate in broad-based plans and policies (such as our 401(k) plan), and our named executive officers for 2019 also participate in our Severance Plan as described briefly above and in more detail under “Executive Compensation—Summary of Plans, Programs and Agreements” beginning on page 60. We believe that these other elements of compensation are important to attract, motivate and retain the top executive talent for which we compete.

 

 

No Tax Gross-Ups—As a policy matter, we do not provide tax gross-ups to our named executive officers, other than in connection with tax liabilities incurred with relocations and, if applicable, expatriate tax equalization.

 

 

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Other Relevant Policies and Practices

Equity Ownership Policy

 

 

 

Our objective to link compensation to our long-term success is reinforced by an equity ownership policy applicable to our executives. To further align our executives’ interests with our stockholders over the long term, this policy restricts selling of company stock by each executive officer until the executive acquires and maintains significant levels of company stock.

For our named executive officers, the minimum ownership requirements are indicated in the table below. Our executives

are permitted to satisfy their ownership requirements over time through existing and new equity awards. As of December 31, 2019, all of our named executive officers (except for Ms. Stearns and Mr. Durburg, who became executive officers on May 15, 2019 and August 17, 2018, respectively) have satisfied their minimum ownership requirements.

 

STOCK OWNERSHIP REQUIREMENT

 

 

 Name

 

  

 

Minimum Requirement

 

 

 

  Robert E. Sulentic

    President and Chief Executive Officer

 

  

 

 

 

 

5x Base Salary

 

 

 

 

 

  Leah C. Stearns

    Chief Financial Officer

 

  

 

 

 

 

3x Base Salary

 

 

 

 

 

  James R. Groch

    Global Group President and Chief Investment Officer

 

  

 

 

 

 

3x Base Salary

 

 

 

 

 

  Michael J. Lafitte

    Global Chief Executive Officer—Real Estate Investments

 

  

 

 

 

 

3x Base Salary

 

 

 

 

 

  William F. Concannon

    Global Group President, Clients and Business Partners

 

  

 

 

 

 

3x Base Salary

 

 

 

 

 

  John E. Durburg

    Global Chief Executive Officer—Global Workplace Solutions

 

  

 

 

 

 

3x Base Salary

 

 

 

 

A further description of this policy and the applicable thresholds can be found under “Corporate Governance—Stock Ownership Requirements” on page 23.

Policies restricting stock trading and prohibiting hedging and short-selling

 

 

 

We have a pre-clearance policy and process for trades in company securities that all directors, executive officers and other designated insiders must follow. Under this policy, our directors, executive officers and other designated insiders are prohibited from trading in company securities outside of our quarterly trading windows, and trades inside the windows are subject to pre-clearance through our General Counsel, in each case except under pre-approved SEC Rule 10b5-1 trading plans. In addition, as part of this policy, we prohibit all directors, executive officers and other designated insiders from (i) engaging in short-term investment activities such as

arbitrage trading or day trading, (ii) taking short positions in the company’s securities and (iii) purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in hedging or other derivative transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities. This is intended to, among other things, prohibit our directors, executive officers and designated insiders from insulating themselves from the effects of poor stock price performance.

 

 

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Compensation Clawback Policy

 

 

 

We have a compensation clawback policy. This policy permits us, subject to the discretion and approval of the Board, to recover cash-based and performance-based-equity incentive compensation (e.g., our Adjusted EPS Equity Awards) paid to any current or former “Section 16 officer” (as so designated by the Board and our Audit Committee under Rule 16a-1(f) of the Exchange Act) in the event of a restatement of our financial results in certain circumstances described below.

Specifically, the policy provides that (i) if we are required to restate our financial statements due to material non-compliance by us with any financial reporting requirement under securities laws (other than due to changes in accounting policy, generally accepted accounting

principles or applicable law), (ii) fraud or willful misconduct contributed to the restatement, and (iii) any executive officer received a recoverable incentive-based compensation award in excess of the amount that he or she would have received had the restated financial statements been in effect for the period in which the incentive-based compensation amount was awarded, then we are entitled to recover the overpayment. The policy permits clawback from any executive who received an award overpayment, irrespective of whether the executive contributed to the fraud or willful misconduct. Awards are subject to clawback under the policy for up to three years after the award (or any portion thereof) vests (for awards subject to vesting conditions) or is granted (for all other recoverable incentive-based compensation).

 

 

Equity Award Policy and procedures for equity grants

 

 

 

We have an Equity Award Policy that is designed to maintain the integrity of the equity award process. This policy has the following characteristics:

 

 

Requires Board approval for delegation by the Committee to any other committee or individual of its authority under our equity incentive plans;

 

 

Provides that the effective date of a grant is the date the Committee approves the award, unless a later date is required (for instance in connection with a grant to a new hire who starts work on a date after the Committee has approved the award, or the opening of a trading window);

 

Provides that the exercise price of stock options and value of restricted stock and restricted stock unit awards is

 

determined using the closing price of our common stock on the NYSE on the grant date; and

 

 

Permits our CEO to make special recruitment and retention awards in the periods between Committee meetings, but never to executive officers or an award consisting of stock options, and there are limitations on the terms and amounts of those grants as well as a requirement to provide reports of such grants to the Committee.

The policy is published in the Corporate Governance section of the Investor Relations page on our website at www.cbre.com.

 

 

Tax Deductibility and Accounting Implications

 

 

 

As a general matter, the Committee always takes into account the various tax and accounting implications of compensation. When determining amounts of equity grants to executives and employees, the Committee also examines the accounting cost associated with the grants.

Certain of the company’s incentive compensation programs allow the company to make awards to executive officers that are deductible under Section 162(m) of the Internal Revenue Code as in effect prior to December 22, 2017 (“Pre-TCJA Section 162(m)”), which provision otherwise sets limits on the tax deductibility of compensation paid to a company’s most highly compensated executive officers. Commencing with the company’s 2018 fiscal year, the performance-based compensation exception to the deductibility limitations under Pre-TCJA Section 162(m) no longer applies (other than with

respect to certain “grandfathered” performance-based awards granted prior to November 2, 2017) and the deduction limitation under Section 162(m) (as in effect on December 22, 2017) will generally apply to compensation paid to any of our then current or former named executive officers. The Committee may continue to seek ways to limit the impact of Section 162(m) of the Internal Revenue Code. However, the Committee believes that the tax deduction limitation should not compromise the company’s ability to establish and implement compensation and incentive programs that support the compensation objectives discussed above under “—Components of Our Program—Elements of our compensation program.” Accordingly, achieving these objectives and maintaining required flexibility in this regard is expected to result in compensation that is not deductible for federal income tax purposes.

 

 

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Compensation Committee Report

The Compensation Committee reviewed and discussed with management of the company the foregoing Compensation Discussion and Analysis. Based on such review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Compensation Committee

Beth F. Cobert, Chair

Reginald H. Gilyard

Shira D. Goodman

Gerardo I. Lopez

Sanjiv Yajnik

Notwithstanding any statement in any of our filings with the SEC that might incorporate part or all of any filings with the SEC by reference, including this Proxy Statement, the foregoing Compensation Committee Report is not incorporated into any such filings.

 

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EXECUTIVE MANAGEMENT

We have provided below summary biographies of our named executive officers who are described above in the CD&A, as well as our other executive officers as of March 16, 2020 (other than Mr. Sulentic). Information on Mr. Sulentic can be found on page 12 under “Elect Directors—2020 Director Nominees.”

 

Dara A. Bazzano

 

 

Age: 51

Senior Vice President, Global Finance and Chief Accounting Officer

Ms. Bazzano has been our Senior Vice President, Global Finance since April 2018 and our Chief Accounting Officer since May 2018. Ms. Bazzano previously served as the Chief Accounting Officer of The Gap, Inc. from May 2017 to April 2018 and its Vice President and Corporate Controller from July 2013 to March 2018. Prior to that, she served as Assurance Partner, Retail & Consumer SF Section Leader at PricewaterhouseCoopers LLP from March 2011 to June 2013 and Audit Partner at KPMG LLP from January 2000 to March 2011. Ms. Bazzano holds a B.S. with a Concentration in Accountancy from California State University, Sacramento.

William F. Concannon

 

 

Age: 64

Global Group President—Clients and Business Partners

Mr. Concannon has been our Global Group President, Clients and Business Partners since January 2020. He previously served as our Global Chief Executive Officer—Global Workplace Solutions from August 2018 to December 2019. He has also served the Global Workplace Solutions business in other senior roles, including as Global Group President from January 2018 to August 2018, as Chief Executive Officer from July 2012 to August 2018, as President from August 2009 until July 2012, and as Vice Chair from 2006 until August 2009. Mr. Concannon served as Vice Chair from June 2003, and as director, from 1991, of Trammell Crow Company, a diversified commercial real estate firm, until its acquisition by CBRE in December 2006. From February 2001 to June 2003, Mr. Concannon was the president of the global services group of Trammell Crow Company. Mr. Concannon has also served as the president and chief executive officer of Trammell Crow Corporate Services, a real estate company, and from 2002 to 2006, he served on the board of directors of FPD Savills, a real estate company based in the United Kingdom. He is a member of the board of directors of CRA International, Inc. Mr. Concannon holds a B.S. from Providence College.

Chandra Dhandapani

 

 

Age: 52

Global Group President and Chief Digital & Technology Officer

Ms. Dhandapani has been our Chief Digital & Technology Officer since July 2016 and our Global Group President since May 2019. Prior to joining CBRE, Ms. Dhandapani served in senior technology roles at Capital One Financial for 17 years, including serving as Digital Transformation Leader and Chief Information Officer, Financial Services division of Capital One from January 2013 to July 2016, Managing Vice President and Chief Information Officer, Financial Services division from March 2010 to December 2012 and Vice President and Chief Information Officer, Capital One Auto Finance from August 2009 to March 2010. She is a member of the board of directors of On Deck Capital, Inc. Ms. Dhandapani holds a B.S. from Stella Maris College, University of Madras, India, an M.B.A. from IRMA India and an M.B.A. from the University of Texas at Arlington.

John E. Durburg

 

 

Age: 54

Global Chief Executive Officer—Advisory Services

Mr. Durburg has been our Global Chief Executive Officer—Global Workplace Solutions since January 2020. He previously served as our Global Chief Operating Officer from August 2018 to December 2019, Group President from January 2018 to August 2018, Chief Executive Officer—Americas from June 2016 to August 2018, Global President, Advisory and Transaction Services from July 2012 to June 2016 and President of the Central division from August 2011 to July 2012. Prior to that, Mr. Durburg served as Executive Managing Director of the Chicago region from April 2008 to August 2011, Senior Managing Director of the Chicago region from July 2003 to April 2008 and Managing Director of the Chicago region from May 2001 to July 2003. From June 1995 to May 2001, Mr. Durburg was a Vice President and Regional Leasing Director with Jones Lang LaSalle, Chicago. Mr. Durburg holds a B.A. from the Kelley School of Business from Indiana University, Bloomington and an M.B.A. from the Charles H. Jellstadt Graduate School of Business at DePaul University.

 

 

CBRE - 2020 Proxy Statement     51  


Table of Contents

EXECUTIVE MANAGEMENT

 

James R. Groch

 

 

Age: 58

Global Group President and Chief Investment Officer

Mr. Groch served as our Chief Financial Officer and Chief Investment Officer from March 2014 through May 2019, at which time he became our Global Group President and Chief Investment Officer. From January 2009 to March 2014 he served as our Global Chief Investment Officer and Executive Vice President, Strategy and Corporate Finance. From 2006 to 2009, he served as the Chief Investment Officer, President of Funds and Investment Management and Director of Corporate Finance of our subsidiary Trammell Crow Company; he served in the Chief Investment Officer role at Trammell Crow Company from 1998 and in roles of President of Funds and Investment Management and Director of Corporate Finance from 2000 until our acquisition of Trammell Crow Company in December 2006. From 1997 to 1998, Mr. Groch served as Trammell Crow Company’s President of Development and Investments for the Eastern U.S., and was a Managing Director of Trammell Crow Northeast from 1991 until 1997. In 1988, Mr. Groch became a partner in Trammell Crow Company after joining the company three years earlier. Mr. Groch holds a B.A. from Dickinson College and an M.B.A. from the Darden School of Business at the University of Virginia.

J. Christopher Kirk

 

 

Age: 54

Global Chief Operating Officer

Mr. Kirk has been our Global Chief Operating Officer since January 2020. He previously served as our Chief Executive Talent Officer from August 2018 to December 2019 and Chief Administrative Officer from July 2012 to December 2019. He was our Global Director of Human Resources from June 2010 to July 2012. Mr. Kirk previously served as the Chief Operating Officer from 2007 to July 2011 and General Counsel from 2001 to 2011 of Trammell Crow Company. Prior to joining Trammell Crow Company, Mr. Kirk was a partner at the Dallas office of Vinson & Elkins LLP, where he was a corporate finance, securities and M&A lawyer. Mr. Kirk holds a B.B.A. and an M.B.A. from the University of Texas and a J.D. from the University of Texas School of Law.

Michael J. Lafitte

 

 

Age: 59

Global Chief Executive Officer—Real Estate Investments

Mr. Lafitte has been our Global Chief Executive Officer—Real Estate Investments since January 2020. He previously served as our Global Chief Executive Officer—Advisory Services from August 2018 to December 2019, Global Group President from June 2016 to August 2018, Chief Operating Officer from February 2013 to June 2016, Global President of our Services business from July 2012 to February 2013 and prior to that was the President of our Americas region from August 2009 to July 2012. Prior to that, he served as President of our Institutional & Corporate Services business beginning in December 2006. He served as President, Global Services of Trammell Crow Company from June 2003 until our acquisition of that company in December 2006, and prior to that served as Trammell Crow Company’s Chief Operating Officer, Global Services beginning in September 2002. Mr. Lafitte holds a B.B.A. from the University of Texas and an M.B.A. from Southern Methodist University.

Laurence H. Midler

 

 

Age: 55

Executive Vice President, General Counsel, Chief Risk Officer and Secretary

Mr. Midler has been our Executive Vice President and General Counsel since April 2004 and Chief Risk Officer since August 2018. He also serves as our Secretary. Mr. Midler previously served as our Chief Compliance Officer from April 2004 to January 2014. Mr. Midler served as Executive Vice President, General Counsel and Secretary to Micro Warehouse, Inc., from July 2001 until April 2004. Mr. Midler began his legal career as an associate at Latham & Watkins, a global law firm, in 1990. He holds a B.A. from the University of Virginia and a J.D. from The New York University School of Law.

 

 

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EXECUTIVE MANAGEMENT

 

Daniel G. Queenan

 

 

Age: 48

Global Chief Executive Officer—Advisory Services

Mr. Queenan has been our Global Chief Executive Officer—Advisory Services since January 2020. He previously served as our Global Chief Executive Officer—Real Estate Investments from August 2018 to December 2019, Group President, Real Estate Investments from January 2018 to December 2019, President, CBRE Global Investors from April 2017 to December 2019, Chief Operating Officer, CBRE Global Investors from October 2015 to April 2017, Chief Executive Officer, Trammell Crow Company from April 2011 to March 2016, Chief Executive Officer, Asia Pacific from March 2014 to October 2015, Chief Operating Officer, Asia Pacific from August 2013 to March 2014 and President, Central division of Trammell Crow Company from March 2010 to November 2011. From May 2005 to March 2010, Mr. Queenan was the President and Chief Executive Officer of Opus North Corporation, a large U.S. real estate development company. Mr. Queenan holds a B.A. from Marquette University and a J.D. from Mitchell Hamline School of Law.

Leah C. Stearns

 

 

 

Age: 39

Chief Financial Officer

Ms. Stearns has been our Chief Financial Officer since May 2019. She previously served as Senior Vice President and Chief Financial Officer for the U.S. division of American Tower Corporation, a real estate investment trust, from November 2018 to May 2019. Prior to that, Ms. Stearns served in roles of increasing responsibility at American Tower for 17 years, including serving as Senior Vice President, Corporate Finance and Treasurer from July 2018 to November 2018, Chief Executive Officer, EMEA from July 2017 to July 2018, Senior Vice President, Treasurer and Investor Relations from December 2014 to July 2017 and Vice President, Treasurer and Investor Relations from December 2013 to December 2014. Ms. Stearns holds a B.S. from Boston University and an M.B.A. from Boston College.

 

 

CBRE - 2020 Proxy Statement     53  


Table of Contents

 

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth compensation information in respect of the fiscal years ended December 31, 2019, 2018 and 2017 for our CEO, the executive officers that served as Chief Financial Officer during 2019, and the three other most highly compensated executive officers for 2019 (and reflects the principal capacity in which each of those named executive officers served as of December 31, 2019).

 

                      Stock Awards ($)                    

  Name and Principal

  Position

  Year    

Salary

($)

   

Bonus(1)

($)

   

Annual
Stock
Award(2)(3)

($)

   

One-Time
Strategic
Equity
Award(4)

($)

   

One-Time
Transition
Equity
Award(5)

($)

   

Total
Stock

Awards

($)

   

Non-Equity
Incentive Plan
Compensation(6)

($)

   

All

Other

Compensation(7)

($)

   

Total

($)

 

  Robert E. Sulentic(8)

    2019       1,000,000             9,999,919                   9,999,919       2,415,000       4,500       13,419,419  

  President and

  Chief Executive Officer

    2018       997,500             6,799,978                   6,799,978       2,532,843       4,500       10,334,821  
    2017       990,000             5,129,964                   5,129,964       2,485,824       4,500       8,610,288  
                                                           

  Leah C. Stearns(9)

    2019       443,014       1,632,877       1,392,294       3,060,919       1,999,961       6,453,174       114,709       472,826       9,116,600  

  Chief Financial Officer*

                       
                       
                                                                               

  James R. Groch(8)

    2019       770,000             2,999,931                   2,999,931       1,152,113       4,500       4,926,544  

  Global Group

    2018       770,000             2,999,924                   2,999,924       1,409,039       4,500       5,183,463  

  President and Chief   Investment Officer**

    2017       770,000       150,000       2,999,938       5,637,461             8,637,399       1,436,512       4,500       10,998,411  
                                                                               

  Michael J. Lafitte

    2019       735,000             2,659,921                   2,659,921       1,175,167       4,500       4,574,588  

  Global CEO—Advisory   Services

    2018       726,250             2,659,975                   2,659,975       1,367,503       4,500       4,758,228  
    2017       700,000       150,000       2,319,936       5,637,461             7,957,397       1,330,560       4,500       10,142,457  

  William F. Concannon(8)

    2019       700,000             2,319,960                   2,319,960       1,247,014       4,500       4,271,474  

  Global CEO—Global   Workplace Solutions

    2018       700,000             2,319,981                   2,319,981       1,273,068       4,500       4,297,549  
    2017       693,750       150,000       2,169,990       5,637,461             7,807,451       1,265,400       4,500       9,921,101  

  John E. Durburg(10)

    2019       687,500             2,199,939                   2,199,939       1,181,250       4,500       4,073,189  

  Global Chief Operating   Officer

    2018       637,500             1,399,935                   1,399,935       976,552       4,500       3,018,487  
                                                                               
*

Ms. Stearns became our Chief Financial Officer effective May 15, 2019.

 

**

Mr. Groch served as our Chief Financial Officer until May 15, 2019, at which time he became our Global Group President and Chief Investment Officer.

 

(1)

The amounts in this column with respect to Ms. Stearns represent a cash transition bonus of $1,000,000 paid to Ms. Stearns in connection with her commencement of employment with us and the guaranteed portion of Ms. Stearns’ 2019 bonus under the EBP, i.e., the portion up to target and prorated for the portion of 2019 during which she was employed with us. The cash transition bonus (in conjunction with the Transition Equity Award discussed in footnote (5) below) is intended to compensate Ms. Stearns for equity awards she forfeited from her previous employer.

 

(2)

See Note 2 (“Significant Accounting Policies”) and Note 14 (“Employee Benefit Plans”) to our consolidated financial statements as reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for a discussion of the valuation of our stock awards.

 

(3)

Our 2019 annual equity awards were made under and governed by the 2017 Equity Incentive Plan, as described under “Summary of Plans, Programs and Agreements” on page 60, and include (i) Time Vesting Equity Awards that were granted to each of Messrs. Sulentic, Groch, Lafitte, Concannon and Durburg in the amount of 68,327, 40,192, 35,637, 31,082 and 29,474 restricted stock units, respectively, which are scheduled to vest 25% per year over four years (on each of February 28, 2020, 2021, 2022 and 2023) and to Ms. Stearns a pro-rata amount of 19,439 restricted stock units, which are scheduled to vest 25% per year over four years (on each of May 15, 2020, 2021, 2022 and 2023) and (ii) Adjusted EPS Equity Awards that were granted to each of Messrs. Sulentic, Groch, Lafitte, Concannon and Durburg with a target unit amount equal to 132,636, 20,096, 17,818, 15,541 and 14,737 restricted stock units, respectively, which are eligible to be earned based on the extent to which the company achieves adjusted EPS targets (over a minimum threshold) measured on a cumulative basis for the 2019 and 2020 fiscal years, with full vesting of any earned amount on February 28, 2022 and to Ms. Stearns a pro-rata target unit amount equal to 9,719 restricted stock units, which are eligible to be earned based on the extent to which the company achieves adjusted EPS targets (over a minimum threshold) measured on a cumulative basis for the 2019 and 2020 fiscal years, with full vesting of any earned amount on May 15, 2022. For our Adjusted EPS Equity Awards, in this table we have assumed that achievement at 100% of target is the probable outcome of the related performance conditions, which was our assumption on the grant date. With respect to the Adjusted EPS Equity Awards granted for 2019, the aggregate grant date fair value for these awards, assuming the achievement of the highest level of performance (which is 200% of the target unit amount), is $13,199,935 for Mr. Sulentic, $1,999,954 for Mr. Groch, $1,773,247 for Mr. Lafitte, $1,546,640 for Mr. Concannon, $1,466,626 for Mr. Durburg and $928,165 for Ms. Stearns.

 

(4)

The amount in this column with respect to Ms. Stearns represents a one-time Strategic Equity Award granted to Ms. Stearns on the same vesting terms as the Strategic Equity Awards made to our other senior executives in 2017. These Strategic Equity Awards were made and governed by the 2017 Equity Incentive Plan, as described under “Summary of Plans, Programs and Agreements” on page 60, and include (i) Time Vesting Strategic Equity Awards in the amount of 20,942 restricted stock units, which are scheduled to vest on December 1, 2023, (ii) Relative TSR (“rTSR”) Strategic Equity Awards with a target unit amount equal to 20,942 restricted stock units, which are eligible to be earned based on measuring the cumulative total stockholder return (“TSR”) of the company against the cumulative TSR of each of the other companies comprising the S&P 500 on December 1, 2017 (the “Comparison Group”) with a minimum threshold over a six-year measurement period, with full vesting of any earned amount no later than 60 days after December 1, 2023 and (iii) Relative EPS (“rEPS”) Strategic Equity Awards

 

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EXECUTIVE COMPENSATION

 

 

with a target unit amount equal to 20,942 restricted stock units, which are eligible to be earned based on measuring the cumulative Adjusted EPS growth of the company against the cumulative EPS growth, as reported under GAAP (“GAAP EPS”), of each of the other members of the Comparison Group with a minimum threshold over a six-year measurement period, with full vesting of any earned amount no later than 90 days after December 31, 2023. For the rTSR Strategic Equity Awards granted to Ms. Stearns, we have assumed based on a Monte Carlo simulation that achievement at 106.1% of target is the probable outcome of the related performance conditions, which was our assumption on the grant date. For the rEPS Strategic Equity Awards granted to Ms. Stearns, we have assumed that achievement at 100% of target is the probable outcome of the related performance conditions, which was our assumption on the grant date. With respect to the (i) rTSR Strategic Equity Awards granted to Ms. Stearns in 2019, the aggregate grant date fair value for these awards, assuming the achievement of the highest level of performance (which is 175% of the target unit amount), is $1,749,966 and (ii) rEPS Strategic Equity Awards granted to Ms. Stearns in 2019, the aggregate grant date fair value for these awards, assuming the achievement of the highest level of performance (which is 175% of the target unit amount), is $1,749,966.

 

(5)

The amounts in this column represent a one-time transition equity award granted to Ms. Stearns that was made under and governed by the 2017 Equity Incentive Plan, as described under “Summary of Plans, Programs and Agreements” on page 60, and consists of 41,884 restricted stock units, which are scheduled to vest 25% per year over four years (on each of May 15, 2020, 2021, 2022 and 2023) (the “Transition Equity Award”). The Transition Equity Award (in conjunction with the cash transition bonus described in footnote (1) above) is intended to compensate Ms. Stearns for compensation she forfeited from her previous employer.

 

(6)

Amounts in this column relate to compensation pursuant to our annual performance award plan referred to in this Proxy Statement as the EBP, which is described below under “Summary of Plans, Programs and Agreements” on page 60. Amounts reflected in this table generally are based on the achievement of financial and strategic performance objectives that are established at the beginning of each fiscal year and that are further described under the heading “Compensation Discussion and Analysis—Components of Our Program—Elements of our compensation program” beginning on page 38 and “Grants of Plan-Based Awards” on page 56. In the case of Ms. Stearns, the amount shown is this column is the amount of bonus she earned under the EBP that exceeds the guaranteed portion of her 2019 bonus, which guaranteed portion is included in the Bonus column. Ms. Stearns’ bonus under the EBP for 2019 was $747,586 in total.

 

(7)

The amounts in this column for each of Ms. Stearns and Messrs. Sulentic, Groch, Lafitte, Concannon and Durburg reflect our matching contributions to their 401(k) accounts pursuant to our employee 401(k) match policy based on their respective contributions to such accounts. In addition, for Ms. Stearns, this column also includes $292,743 in relocation expenses reimbursed by us in connection with her relocation to Dallas, Texas and a $175,583 tax gross-up payment in connection with the tax liabilities she incurred as a result of our reimbursement of her relocation expenses.

 

(8)

Mr. Concannon became retirement eligible in November 2017, Mr. Sulentic became retirement eligible in September 2018 and Mr. Groch became retirement eligible in December 2019. For additional information regarding the treatment of their outstanding equity awards upon retirement, please refer to the discussion under “—Severance Plan; Treatment of Death, Disability and Retirement Under 2016, 2017, 2018 and 2019 Equity Award Agreements; Treatment of Qualifying Termination and Retirement Under Strategic Equity Award Agreements” beginning on page 62.

 

(9)

We have not shown compensation for Ms. Stearns for the fiscal years ended December 31, 2018 and 2017 because Ms. Stearns was not a named executive officer for those years.

 

(10)

We have not shown compensation for Mr. Durburg for the fiscal year ended December 31, 2017 because Mr. Durburg was not a named executive officer for that year.

Employment Agreements

 

Except for Ms. Stearns, none of our named executive officers for 2019 are parties to an employment agreement. The company and Ms. Stearns entered into a letter agreement on April 4, 2019 (the “offer letter”) in connection with her joining the company as Chief Financial Officer. Pursuant to the offer letter, Ms. Stearns will earn an annual base salary of $700,000 and will be eligible for an annual bonus targeted at $1,000,000 and an annual target equity award of $2,200,000 (with her 2019 annual bonus and 2019 annual equity award prorated based on her start date and her 2019 bonus guaranteed to pay out at not less than the prorated amount of her target bonus). Upon joining the company, Ms. Stearns received a one-time equity award of $3,000,000 on the same terms as the Strategic Equity Awards received by other senior executives described under the heading “Components of Our Program—Elements of our compensation program—One-Time Strategic Equity Award” beginning on page 45,

including that Ms. Stearns’ Strategic Equity Awards will vest on the same dates as the Strategic Equity Awards granted to our other named executive officers and the requirement that Ms. Stearns execute the same restrictive covenants agreement entered into by our other senior executives. Ms. Stearns also received a $2,000,000 transition equity award which will vest ratably over a four-year period, beginning on the first anniversary of the grant date, subject to the terms of the company’s 2017 Equity Incentive Plan and a cash transition bonus of $1,000,000, which will be subject to repayment in full if she resigns from the company prior to the fourth anniversary of her start date. The transition equity award and cash transition bonus are intended to compensate Ms. Stearns for equity awards that she forfeited at her previous employer. In addition, the company reimbursed Ms. Stearns for certain expenses in connection with her relocation to Dallas, where she is based.

 

 

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EXECUTIVE COMPENSATION

 

Grants of Plan-Based Awards

The following table sets forth information concerning stock and cash awards in respect of the fiscal year ended December 31, 2019 to the persons named in the table under the heading “Summary Compensation Table,” which awards were granted pursuant to our 2017 Equity Incentive Plan or Executive Bonus Plan described below under “Summary of Plans, Programs and Agreements” on page 60.

 

  Name

  

Grant Date

   

Estimated Future Payouts Under
Non-Equity Incentive Plan

Awards(1)

         

Estimated Future Payouts Under
Equity Incentive Plan

Awards

    All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#)
    Grant Date
Fair Value
of Stock
and Option
Awards(2)(3)
($)
 
  Threshold
($)
   

Target

($)

    Maximum
($)
          Threshold
(#)
   

Target

(#)

   

Maximum

(#)

 

 

  Robert E. Sulentic

          

 

 

 

 

 

 

 

 

 

2,000,000

 

 

 

 

 

 

4,000,000

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

02/28/19(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,327

 

 

 

 

 

 

3,399,952

 

(6) 

  

 

 

 

02/28/19(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

66,318

 

 

 

 

 

 

132,636

 

 

 

 

 

 

 

 

265,272

 

 

 

 

 

 

 

 

 

 

 

 

 

6,599,967

 

(6) 

  Leah C. Stearns

          

 

 

 

 

 

 

 

 

 

632,877

 

 

 

 

 

 

1,265,754

 

 

                           

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

05/15/19(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,439

 

 

 

 

 

 

928,212

 

 

  

 

 

 

05/15/19(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

4,859

 

 

 

 

 

 

9,719

 

 

 

 

 

 

19,438

 

 

 

 

 

 

 

 

 

 

 

 

464,082

 

 

  

 

 

 

05/15/19(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,942

 

 

 

 

 

 

999,981

 

 

  

 

 

 

05/15/19(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

20,942

 

 

 

 

 

 

36,648

 

 

 

 

 

 

 

 

 

 

 

 

1,060,957

 

 

  

 

 

 

05/15/19(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

20,942

 

 

 

 

 

 

36,648

 

 

 

 

 

 

 

 

 

 

 

 

999,981

 

 

  

 

 

 

05/15/19(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

 

 

41,884

 

 

 

 

 

 

1,999,961

 

 

  James R. Groch

          

 

 

 

 

 

 

 

 

 

1,155,000

 

 

 

 

 

 

2,310,000

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

02/28/19(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,192

 

 

 

 

 

 

1,999,954

 

 

  

 

 

 

02/28/19(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      10,048       20,096       40,192    

 

 

 

 

 

 

 

 

 

999,977

 

 

  Michael J. Lafitte

          

 

 

 

 

 

 

 

 

 

1,100,000

 

 

 

 

 

 

2,200,000

 

 

         

 

 

 

 

 

             

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

02/28/19(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

 

 

35,637

 

 

 

 

 

 

1,773,297

 

 

  

 

 

 

02/28/19(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      8,909       17,818       35,636    

 

 

 

 

 

 

 

 

 

886,624

 

 

 

  William F. Concannon

          

 

 

 

 

 

 

 

 

 

1,050,000

 

 

 

 

 

 

2,100,000

 

 

                           

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

02/28/19(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,082

 

 

 

 

 

 

1,546,640

 

 

  

 

 

 

02/28/19(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

7,770

 

 

 

 

 

 

15,541

 

 

 

 

 

 

31,082