DEF 14A 1 tmb-20210513xdef14a.htm DEF 14A

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 Section 240.14a-12

PARAMOUNT 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)

Proposed maximum aggregate value of transaction:

 

(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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NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

Date:

Thursday, May 13, 2021

Place:

The Whitby Hotel, 18 West 56th Street,
New York, New York

Time:

10:30 a.m., Eastern Time

Record Date:

You may vote if you were a stockholder of record as of the close of business on March 17, 2021.

Since becoming a public company, our intention has always been to hold our annual meetings in person. However, we are actively monitoring information about the coronavirus (COVID-19), and we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or we deem it inadvisable to hold the annual meeting in person or at the originally scheduled time and location, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication.

Please monitor our website at www.paramount-group.com for updated information. If we decide to hold the meeting solely by means of remote communication, you will be able to attend our annual meeting through a link at this location on our website using your control number, which is included in the proxy card sent to you or, if you are a beneficial owner who did not receive such number, may be obtained upon request to the broker, bank, or other nominee that holds your shares. As always, we strongly encourage you to vote your shares by proxy prior to the annual meeting.

Items of Business:

1.To elect the nine director nominees named in the proxy statement, each to serve on our Board for a one-year term and until their respective successors are duly elected and qualified.
2.To hold an advisory vote on named executive officer compensation.
3.To approve the Paramount Group, Inc. Amended and Restated 2014 Equity Incentive Plan.
4.To ratify the Audit Committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.
5.To consider and act upon any other matters that are properly brought before the annual meeting and at any adjournments or postponements thereof.


Proxy Voting

If you do not plan to attend the meeting and vote your shares of common stock in person, we urge you to vote your shares as instructed in the proxy statement. If you received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the postage-paid envelope provided.

If your shares of common stock are held by a broker, bank or other nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares of common stock voted.

Any proxy may be revoked at any time prior to its exercise at the annual meeting.

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY 13, 2021.

The proxy statement and our 2020 Annual Report to stockholders are available at http://www.proxyvote.com.


Senior Vice President, General Counsel and Secretary

By Order of our Board of Directors,

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Gage Johnson
Senior Vice President, General Counsel and Secretary

New York, New York

March 30, 2021


TABLE OF CONTENTS

1

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

1

Who is entitled to vote at the annual meeting?

1

What is the purpose of the annual meeting?

1

What constitutes a quorum?

2

What vote is required to approve each proposal?

2

Can I change my vote after I submit my proxy card?

2

How do I vote?

3

How is my vote counted?

3

How does the Board recommend that I vote on each of the proposals?

4

What other information should I review before voting?

4

Who is soliciting my proxy?

4

Why didn’t I automatically receive a paper copy of the proxy statement, proxy card and annual report?

4

How can I change how I receive proxy materials in the future?

5

CORPORATE GOVERNANCE MATTERS

5

Corporate Governance Highlights

5

Corporate Governance Guidelines

6

Board Overview

15

Code of Business Conduct and Ethics

15

Communications with the Board

15

Audit Committee Complaint Procedures

16

Director Attendance at Annual Meetings

16

Identification of Director Candidates

17

Executive Sessions of Non-Management Directors

17

Annual Elections; Majority Voting

17

Anti-Hedging and Anti-Pledging Policy

18

Minimum Share Ownership Guidelines for Executive Officers and Directors

18

Risk Oversight

19

PROPOSAL 1: ELECTION OF DIRECTORS

20

Information Regarding the Director Nominees

29

EXECUTIVE OFFICERS

32

COMPENSATION DISCUSSION AND ANALYSIS

32

2020 Say-on-Pay Vote

33

Process for Determining Executive Compensation

35

Executive Compensation Philosophy

36

Compensation Best Practices

37

Peer Group Benchmarking

39

CEO Pay-for-Performance Alignment

41

Elements of Our Compensation Program

57

Total Direct Compensation

58

Roles of the Compensation Committee, Compensation Consultant and Management

59

Other Compensation Policies and Practices

64

Compensation Committee Report

65

COMPENSATION OF EXECUTIVE OFFICERS

65

Summary Compensation Table

67

2020 Grants of Plan-Based Awards

71

Outstanding Equity Awards at Fiscal Year-End 2020

73

2020 Option Exercises and Stock Vested

74

Nonqualified Deferred Compensation

77

Potential Payments Upon Termination or Change in Control

80

Pay Ratio Disclosure Rule

80

Compensation Committee Interlocks and Insider Participation

81

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

85

PROPOSAL 2: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

86

PROPOSAL 3: APPROVAL OF AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

97

PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

97

Fee Disclosure

98

Pre-Approval Policies and Procedures of our Audit Committee

99

AUDIT COMMITTEE REPORT

100

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

100

Management Agreements

100

1633 Broadway Lease

100

Mannheim Trust

100

Hamburg Trust Consulting HTC GmbH

101

Kramer Design Services

101

Waiver of Ownership Limit

101

Review and Approval of Future Transactions with Related Persons

102

OTHER MATTERS

102

Solicitation of Proxies

102

Stockholder Proposals

103

Attendance at the Meeting

103

Householding of Proxy Materials

103

Other Matters

104

APPENDIX A

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2021 Proxy Statement | i


PARAMOUNT GROUP, INC.

1633 Broadway, Suite 1801, New York, New York 10019

PROXY STATEMENT

These proxy materials are being made available in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Paramount Group, Inc., a Maryland corporation, for use at our 2021 annual meeting of stockholders to be held on Thursday, May 13, 2021, at 10:30 a.m., local time, at the Whitby Hotel, 18 West 56th Street, New York, New York or at any postponement or adjournment of the annual meeting. References in this proxy statement to “we,” “us,” “our,” “ours” and the “Company” refer to Paramount Group, Inc., unless the context otherwise requires. This proxy statement and a form of proxy have been made available to our stockholders on the internet and the Notice of Internet Availability of Proxy Materials has been mailed to stockholders on or about March 30, 2021.

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QUESTIONS AND ANSWERS ABOUT THE MEETING

Who is entitled to vote at the annual meeting?

Holders of record of our common stock, $0.01 par value per share, at the close of business on March 17, 2021, the record date for the annual meeting, are entitled to receive notice of the annual meeting and to vote at the annual meeting. If you are a holder of record of our common stock as of the record date, you may vote the shares that you held on the record date even if you sell such shares after the record date. Each outstanding share as of the record date entitles its holder to cast one vote for each matter to be voted upon and, with respect to the election of directors, one vote for each director to be elected. Stockholders do not have the right to cumulate voting for the election of directors.

What is the purpose of the annual meeting?

At the annual meeting, you will be asked to vote on the following proposals:

Proposal 1

Graphic FOR each
Director nominee

The election of the nine director nominees named in this proxy statement to serve on our Board until our next annual meeting of stockholders and until their successors are duly elected and qualified;

Proposal 2

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The approval, on a non-binding advisory basis, of the compensation paid to our named executive officers, as described in this proxy statement;

Proposal 3

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The approval of an amendment and restatement of the 2014 Equity Incentive Plan; and

Proposal 4

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The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

You also may be asked to consider and act upon any other matters that may properly be brought before the annual meeting and at any adjournments or postponements thereof.

What constitutes a quorum?

The presence, in person or by proxy, of holders of a majority of the total number of outstanding shares of common stock entitled to vote at the annual meeting is necessary to constitute a quorum for the transaction of any business at the annual meeting. As of March 17, 2021, there were 218,950,596 shares of common stock outstanding and entitled to vote at the annual meeting.

Each share of common stock outstanding on the record date is entitled to one vote on each matter properly submitted at the annual meeting and, with respect to the election of directors, one vote for each director to be elected. Abstentions and “broker non-votes” (i.e., shares represented at the meeting held by brokers, as to which instructions have not been received from the beneficial owners or persons entitled to vote such shares and with respect to which, on a particular matter, the broker does not have discretionary voting power to vote such shares) will be counted for purposes of determining whether a quorum is present for the transaction of business at the annual meeting.

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2021 Proxy Statement | 1  


QUESTIONS AND ANSWERS ABOUT THE MEETING

What vote is required to approve each proposal?

In respect of Proposal 1, a nominee is elected if he or she receives more votes for his or her election than votes against his or her election. Under our Corporate Governance Guidelines, any incumbent director who fails to be elected by a majority vote in an uncontested election is required to tender his or her resignation to the Board, subject to acceptance, and any nominee who is not yet a director must receive a majority of votes for his or her election to be affected. Our Nominating and Corporate Governance Committee is required to make a recommendation to the Board with respect to the resignation. The Board is required to take action with respect to this recommendation and to disclose its decision and, if applicable, the Board’s reasons for rejecting the tendered resignation. The policy is described more fully below under the caption “Corporate Governance Matters – Annual Elections; Majority Voting.” Abstentions and broker non-votes with respect to Proposal 1 will have no effect on the election of directors.

A majority of votes cast with respect to the proposal is required for approval of each of Proposal 2, Proposal 3 and Proposal 4. In addition, the rules of the New York Stock Exchange (the “NYSE”) require that votes for Proposal 3 must be at least a majority of all of the votes cast on the proposal (including votes for and against and abstentions). In respect of Proposal 2 and Proposal 4, abstentions and broker non-votes will have no effect on the votes for these proposals. Abstentions, if any, will have the effect of voting “against” Proposal 3 and broker non-votes will have no effect on the votes for Proposal 3. The vote for Proposal 2 is advisory and not binding on the Board or the Company in any way.

Can I change my vote after I submit my proxy card?

If you cast a vote by proxy, you may revoke it at any time before it is voted by:

filing a written notice revoking the proxy with our Secretary at our address;
properly submitting to us a proxy with a later date; or
appearing in person and voting by ballot at the annual meeting.

If you attend the annual meeting, you may vote in person whether or not you previously have given a proxy, but your presence (without further action) at the annual meeting will not constitute revocation of a previously given proxy. Unless you have received a legal proxy to vote the shares, if you hold your shares through a bank, broker or other nominee, that is, in “street name,” only that bank, broker or other nominee can revoke your proxy on your behalf.

You may revoke a proxy for shares held by a bank, broker or other nominee by submitting new voting instructions to the bank, broker or other nominee or, if you have obtained a legal proxy from the bank, broker or other nominee giving you the right to vote the shares at the annual meeting, by attending the annual meeting and voting in person.

How do I vote?

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INTERNET

TELEPHONE

MAIL

IN PERSON

Go to www.proxyvote.com.
You will need the control
number included in your
Proxy Card.

Dial toll-free 1-800-690-6903.
You will need the control
number included in your
Proxy Card.

Mark, sign and date your
Proxy Card and return it in
the postage paid envelope
provided.

Stockholders who own their
shares in street name may
vote in person at the Annual
Meeting only if they provide
a legal proxy, executed in
their favor, from the holder
of record of their shares.

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QUESTIONS AND ANSWERS ABOUT THE MEETING

If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in “street name,” and the Notice of Internet Availability of Proxy Materials was forwarded to you by that organization. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. You should instruct your broker or nominee how to vote your shares by following the voting instructions provided by your broker or nominee. If you request printed copies of the proxy materials by mail, you will receive a vote instruction form for this purpose.

Even if you plan to attend the annual meeting, we recommend that you submit a proxy to vote your shares in advance so that your vote will be counted if you later are unable to attend the annual meeting.

How is my vote counted?

If you authorize your proxy to vote your shares electronically via the internet or by telephone, or, if you received a proxy card by mail and you properly marked, signed, dated and returned it, the shares that the proxy represents will be voted in the manner specified on the proxy. If no specification is made, your shares will be voted “for” the election of the nominees for the directors named in this proxy statement, “for” advisory approval of the compensation of our named executive officers, “for” the amendment and restatement of our 2014 Equity Incentive Plan, and “for” ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. It is not anticipated that any matters other than those set forth in this proxy statement will be presented at the annual meeting. If other matters are presented, proxies will be voted in accordance with the discretion of the proxy holders.

How does the Board recommend that I vote on each of the proposals?

The Board recommends that you vote:

FOR Proposal 1: the election of Albert Behler, Thomas Armbrust, Martin Bussmann, Colin Dyer, Karin Klein, Peter Linneman, Katharina Otto-Bernstein, Mark Patterson and Greg Wright as directors to serve on our Board until our next annual meeting of stockholders and until their successors are duly elected and qualified;
FOR Proposal 2: the approval, on a non-binding advisory basis, of the compensation paid to our named executive officers, as described in this proxy statement;
FOR Proposal 3: the approval of an amendment and restatement of the 2014 Equity Incentive Plan; and
FOR Proposal 4: the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

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2021 Proxy Statement | 3


QUESTIONS AND ANSWERS ABOUT THE MEETING

What other information should I review before voting?

Our 2020 annual report, including our consolidated financial statements for the fiscal year ended December 31, 2020, is being made available to you along with this proxy statement. You may obtain, free of charge, copies of our 2020 annual report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which contains additional information about the Company, on our website at www.paramount-group.com or by directing your request in writing to Paramount Group, Inc., 1633 Broadway, Suite 1801, New York, New York 10019, Attention: Investor Relations. The 2020 annual report and the Annual Report on Form 10-K, however, are not part of the proxy solicitation materials, and the information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the Securities and Exchange Commission (the “SEC”).

Who is soliciting my proxy?

This solicitation of proxies is made by and on behalf of the Board. We will pay the cost of the solicitation of proxies. In addition to the solicitation of proxies by mail, our directors, officers and employees may solicit proxies personally or by telephone. No arrangements or contracts have been made with any solicitors as of the date of this proxy statement, although we reserve the right to engage solicitors if we deem them necessary. Such solicitations may be made by mail, telephone, facsimile, e-mail or personal interviews.

Why didn’t I automatically receive a paper copy of the proxy statement, proxy card and annual report?

Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials via the internet. Accordingly, rather than paper copies of our proxy materials, we are sending a Notice of Internet Availability of Proxy Materials to our stockholders.

How can I change how I receive proxy materials in the future?

The Notice of Internet Availability of Proxy Materials includes instructions on how to access our proxy materials over the internet at www.proxyvote.com and how to request a printed set of the proxy materials by mail or an electronic set of materials by e-mail.

Instead of receiving a Notice of Internet Availability of Proxy Materials in the mail, stockholders may elect to receive future proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. Choosing to receive future proxy materials by e-mail will save the Company the cost of printing and mailing documents to you and will reduce the environmental impact of the annual meeting. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. You can change your election by sending a blank e-mail with the 16-digit control number on your proxy card to sendmaterial@proxyvote.com, via the internet at www.proxyvote.com or by telephone at (800) 579-1639. Your election to receive future proxy materials by e-mail will remain in effect until you terminate it.

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CORPORATE GOVERNANCE MATTERS

Corporate Governance Highlights

Annual Election of All Directors

Anti-Hedging and Anti-Pledging Policies

8 of 9 Director Nominees are Independent

Clawback Policy

Majority Voting for Directors

Minimum Share Ownership Guidelines for Directors and Executive Officers

Lead Independent Director

No Shareholder Rights Plan

Executive Sessions without Management

Board and Committee Risk Oversight

Annual Board and Committee Self
Evaluations

Code of Business Conduct and Ethics for Directors and Employees

Corporate Governance Guidelines

We are committed to operating our business under strong and accountable corporate governance practices. The Board has adopted Corporate Governance Guidelines that address significant issues of corporate governance and set forth procedures by which the Board carries out its responsibilities. Among the areas addressed by the Corporate Governance Guidelines are director qualification standards, director responsibilities, Board structure, director access to management and independent advisors, director compensation, director orientation and continuing education, management succession, annual performance evaluation of the Board and committees, related person transaction approval and disclosure policy, and stockholder rights plan. Under the Corporate Governance Guidelines, the Company will not adopt a stockholder rights plan unless the Company’s stockholders approve in advance the adoption of a plan or, if adopted by the Board, the Company will submit the stockholder rights plan to its stockholders for a ratification vote within 12 months of adoption or the plan will terminate. Our Nominating and Corporate Governance Committee is responsible for, among other things, assessing and periodically reviewing the adequacy of the Corporate Governance Guidelines and will recommend, as appropriate, proposed changes to the Board.

You are encouraged to visit the “Investors–Corporate Governance” section of our website at www.paramount-group.com to view or to obtain copies of our committee charters, Code of Business Conduct and Ethics, Corporate Governance Guidelines and stockholder communication policy. The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC. You also may obtain, free of charge, a copy of the respective charters of our committees, Code of Business Conduct and Ethics, Corporate Governance Guidelines and stockholder communication policy by directing your request in writing to Paramount Group, Inc., 1633 Broadway, Suite 1801, New York, New York 10019, Attention: Investor Relations. Additional information relating to the corporate governance of the Company also is included in other sections of this proxy statement.

Environmental, Social and Governance (“ESG”) Commitment

We are dedicated to responsible environmental, social and community stewardship as an essential part of our mission to build a successful business and to shape the communities we serve throughout our portfolio, in addition to our workplace community. To learn more about our ESG initiatives, please visit the “Sustainability” section of our website at www.paramount-group.com. The information found on, or otherwise through, our website is not incorporated by reference into, nor does it form a part of, the proxy statement.

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2021 Proxy Statement | 5  


CORPORATE GOVERNANCE MATTERS

Board Overview

The following pages provide information about our Board of Directors standing for election at the 2021 Annual Meeting.

DIRECTOR

COMMITTEES

NAME/AGE/INDEPENDENCE

SINCE

POSITION(S)

AC

COMP

NCG

IFC

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Albert Behler, 69

Chairman
since 2014

Chairman, Chief Executive Officer and President

C

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Thomas Armbrust, 68
Independent

2014

Director

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Martin Bussmann, 69
Independent

2016

Director

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Colin Dyer, 68
Independent

2019

Director

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Karin Klein, 49
Independent

2016

Director

C

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Peter Linneman, 70
Independent

2014

Director

C

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Katharina Otto-Bernstein, 56
Independent

2014

Director

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Mark Patterson, 60
Independent

2018

Director

C

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Greg Wright, 56
Independent

2020

Director

Chair C Member   ●

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CORPORATE GOVERNANCE MATTERS

Board Nominees Composition and Attributes

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Director Skills

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Leadership

6

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Industry Knowledge

9

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Investment and Capital Markets

8

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2021 Proxy Statement | 7


CORPORATE GOVERNANCE MATTERS

Board Leadership

Leadership Structure

Our Board currently is comprised of eight independent directors and one non-independent director slated for election at the annual meeting. Albert Behler, our Chief Executive Officer and President, serves as Chairman of the Board. Our Board believes that the Company and our stockholders are best served by having Mr. Behler serve as Chairman and Chief Executive Officer. Mr. Behler’s over 29 years of experience leading the Company and its predecessor and significant ownership interest in the Company uniquely qualify him to serve as both Chairman and Chief Executive Officer. In addition, our Board believes that Mr. Behler’s combined role as an executive officer and the Chairman of our Board promotes unified leadership and direction for our Board and executive management, and it allows for a single, clear focus for the chain of command to execute our strategic initiatives and business plans.

Lead Independent Director

To facilitate the role of the independent directors, the Board has determined that it is appropriate for the independent directors to appoint one independent director to serve as Lead Independent Director. The Lead Independent Director is currently Mark Patterson. We believe that the number of independent, experienced directors that make up our Board, along with the independent oversight of our Lead Independent Director, benefits the Company and its stockholders.

We recognize that different board leadership structures may be appropriate for companies in different situations, and that no one structure is suitable for all companies. Our current Board leadership structure is optimal for us because it demonstrates to our employees and other stakeholders that the Company is under strong leadership. In our judgment, the Company, like many companies, has been well-served by this leadership structure.

The Lead Independent Director has the following responsibilities:

presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of independent directors;
serving as liaison between the Chairman and the independent directors;
approving information sent to our Board;
approving Board meeting agendas;
approving Board meeting schedules to assure that there is sufficient time for discussion of all agenda items; and
if requested by major stockholders, ensuring that he or she is available for consultation and direct communication.

Our Lead Independent Director also has the authority to call meetings of the independent directors. We believe that the Lead Independent Director is an integral part of the Board’s structure that promotes strong, independent oversight of our management and affairs.

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CORPORATE GOVERNANCE MATTERS

Board Committees

The Board held five meetings during fiscal year 2020, and all directors attended 75% or more of the board of directors meetings and meetings of the committees on which they served during the periods they served. The Board currently has the following four standing committees:

Audit Committee,
Compensation Committee,
Nominating and Corporate Governance Committee; and
Investment and Finance Committee.

The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are composed exclusively of independent directors, in accordance with the NYSE listing standards. The principal functions of each committee are briefly described below. The current charters for each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on our website at www.paramount-group.com under the “Investors–Corporate Governance” section. Further, we will provide a copy of these charters free of charge to each stockholder upon written request. Requests for copies should be addressed to Gage Johnson, Senior Vice President, General Counsel and Secretary, at Paramount Group, Inc., 1633 Broadway, Suite 1801, New York, New York 10019. From time to time, the Board also may create additional committees for such purposes as the Board may determine.

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2021 Proxy Statement | 9


CORPORATE GOVERNANCE MATTERS

Audit

Members:
Peter Linneman (Chair)
Colin Dyer
Karin Klein

Meetings:
4

The Audit Committee currently consists of Peter Linneman (Chair), Colin Dyer and Karin Klein, each of whom is an independent director. The Board has determined that Dr. Linneman qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and NYSE corporate governance listing standards and that each of the Audit Committee members is “financially literate” as that term is defined by the NYSE corporate governance listing standards. The Board has also determined that Dr. Linneman’s simultaneous service on the audit committees of four other public companies for a short period of time during 2020 did not impair his ability to serve on our Audit Committee. We have adopted an Audit Committee charter, which details the principal functions of the Audit Committee, including oversight related to:

our accounting and financial reporting processes;

the integrity of our consolidated financial statements;

our systems of disclosure controls and procedures and internal control over financial reporting;

our compliance with financial, legal and regulatory requirements;

the performance of our internal audit function;

our overall risk assessment and management; and

certain environmental and sustainability matters and issues related to social responsibility.

The Audit Committee is also responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, including all audit and non-audit services, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The Audit Committee also prepares the Audit Committee Report required by SEC regulations to be included in this proxy statement. Additional information regarding the functions performed by our Audit Committee is set forth in the Audit Committee Report.

The Audit Committee held four meetings during fiscal year 2020.

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CORPORATE GOVERNANCE MATTERS

Compensation

Members:
Karin Klein (Chair)
Peter Linneman
Greg Wright

Meetings:
12

The Compensation Committee currently consists of Karin Klein (chair), Peter Linneman and Greg Wright, each of whom is an independent director. We have adopted a Compensation Committee charter, which details the principal functions of the Compensation Committee, including:

reviewing and approving the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration of our Chief Executive Officer based on such evaluation;

reviewing and approving the compensation of other senior officers;

reviewing our executive compensation policies and plans;

implementing and administering our incentive compensation and equity-based plans;

assisting management in complying with our proxy statement and annual report disclosure requirements;

producing a report on executive compensation to be included in our annual proxy statement; and

reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

The Compensation Committee held 12 meetings during fiscal year 2020.

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2021 Proxy Statement | 11


CORPORATE GOVERNANCE MATTERS

Nominating and Corporate Governance

Members:
Mark Patterson (Chair)
Martin Bussmann
Greg Wright

Meetings:
4

The Nominating and Corporate Governance Committee currently consists of Mark Patterson (chair), Martin Bussmann and Greg Wright, each of whom is an independent director. We have adopted a Nominating and Corporate Governance Committee charter, which details the principal functions of the Nominating and Corporate Governance Committee, including:

identifying and recommending to the Board qualified candidates for election as directors and recommending nominees for election as directors at the annual meeting of stockholders;

developing and recommending to the Board corporate governance guidelines and implementing and monitoring such guidelines;

reviewing and making recommendations on matters involving the general operation of the Board, including board size and composition, and committee composition and structure;

recommending to the Board nominees for each committee of the Board that is required by NYSE listing rules;

annually facilitating the assessment of the Board’s performance, as required by applicable laws, regulations and the NYSE corporate governance listing standards; and

annually reviewing and making recommendations to the Board regarding revisions to the Corporate Governance Guidelines and the Code of Business Conduct and Ethics.

The Nominating and Corporate Governance Committee held four meetings during fiscal year 2020.

Investment and Finance

Members:
Albert Behler (Chair)
Thomas Armbrust

Meetings:
3

The Investment and Finance Committee currently consists of Albert Behler (chair) and Thomas Armbrust. If Mr. Armbrust is unavailable, Mr. Wright would serve in his place. This committee is responsible for approving certain material acquisitions, dispositions and other investment and financing decisions of the Company.

The Investment and Finance Committee held three meetings during fiscal year 2020.

12 | ir.paramount-group.com

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CORPORATE GOVERNANCE MATTERS

Director Independence

Our Corporate Governance Guidelines provide that a majority of our directors serving on the Board and all directors serving on the Board committees (other than the Investment and Finance Committee) must be independent as required by the listing standards of the NYSE and the applicable rules promulgated by the SEC. The Board has determined affirmatively, based upon its review of all relevant facts and circumstances and after considering all applicable relationships of which the Board had knowledge, between or among the directors and the Company or our management, that each of the following directors and director nominees has no direct or indirect material relationship with us and is independent under the listing standards of the NYSE: Thomas Armbrust, Martin Bussmann, Colin Dyer, Karin Klein, Peter Linneman, Katharina Otto-Bernstein, Mark Patterson and Greg Wright. Some of the relationships considered by our board of directors are described in the section of this proxy statement entitled “Certain Relationships and Related Party Transactions.” For Ms. Otto-Bernstein and Mr. Armbrust, the Board considered the direct and indirect interests of each director in (i) the Company’s real estate funds and the distributions made by those funds, (ii) previously disclosed transactions in connection with the Company’s formation and initial public offering, (iii) a lease of space at 1325 Avenue of Americas to ParkProperty Capital, LP (formerly known as CNBB-RDF Holdings LP) and (iv) the extension of the maturity of notes entered into in connection with the Company’s formation that were owed by certain executive officers of the Company to ParkProperty Capital, LP. In addition, the Board considered certain additional transactions and relationships, including (i) for Dr. Bussmann and Dr. Linneman, the direct and indirect interests each director held in the Company’s real estate funds and the distributions made by those funds, (ii) for Dr. Bussmann, a lease of space at 712 Fifth Avenue to a subsidiary of a trust for which Dr. Bussmann is a trustee and director and his children are beneficiaries, (iii) for Mr. Dyer, his prior service as a member of the Advisory Board of the Company’s operating partnership, (iv) for Mr. Patterson, the employment of a member of his immediate family as an intern, and (v) for Mr. Wright, his prior relationship with the Company in his former role at Bank of America Merrill Lynch, which was the lead investment bank for the Company’s initial public offering.

Director Compensation

The Board has established a compensation program for our non-employee directors. Our Compensation Committee reviews our director compensation at least annually and makes recommendations to the Board based on its review. For 2020, FPL Associates L.P. (“FPL”) was hired to evaluate the structure and competitiveness of our director compensation and recommend changes, as appropriate. Based on this review, our Compensation Committee recommended no changes to our Board compensation, and the full Board followed this recommendation.

We pay the following fees to our nonemployee directors on a quarterly basis, in cash:

an annual retainer of $65,000;
an additional annual retainer of $50,000 to our lead director;
an additional annual retainer of $25,000 to our Audit Committee chair, and $15,000 to each Compensation Committee chair and Nominating and Corporate Governance chair; and
an additional annual retainer of $5,000 to each committee member.

We will also reimburse each of our directors for his or her travel expenses incurred in connection with his or her attendance at full Board and committee meetings. No additional compensation is received by the members of our Investment and Finance Committee. Directors of the Company who are also employees receive no additional compensation for their services as directors.

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2021 Proxy Statement | 13


CORPORATE GOVERNANCE MATTERS

In order to encourage our non-employee directors to acquire a significant equity stake in us and to align our non-employee directors and stockholders, at each annual stockholder meeting we will grant each of our non-employee directors LTIP units or shares of restricted common stock under our 2014 Equity Incentive Plan with a value of $110,000 which will vest upon the earlier of the anniversary of the date of grant or the next annual stockholder meeting.

The following table sets forth information regarding the compensation paid to our non-employee directors during the fiscal year ended December 31, 2020:

Name

Fees Earned
or
Paid in Cash

Stock 
Awards
(1)

Total

Thomas Armbrust

  

$ 65,000

  

$ 110,000

  

$ 175,000

Martin Bussmann

70,000

105,165

(2)

175,165

Colin Dyer

68,125

105,094

(2)

173,219

Karin Klein

81,250

105,165

(2)

186,415

Peter Linneman

93,125

105,165

(2)

198,290

Katharina Otto-Bernstein

65,000

105,165

(2)

170,165

Mark Patterson

109,375

105,094

(2)

214,469

Greg Wright (3)

46,875

99,000

145,875

Dan Emmett (4)

48,750

6,165

(2)

54,915

Lizanne Galbreath (4)

31,875

6,165

(2)

38,040

(1)On May 19, 2020, we granted 14,212 LTIP units to each of Messrs. Bussmann, Dyer, Linneman, Patterson and Wright and Mmes. Klein and Otto-Bernstein, and 14,212 shares of restricted stock to Mr. Armbrust, under our 2014 Equity Incentive Plan. Such awards will vest if they remain on our Board until the 2021 annual meeting. Amounts shown reflect the aggregate grant date fair value of LTIP units or shares of restricted stock issued to each director as determined pursuant to Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 “Compensation—Stock Compensation” (“ASC Topic 718”), disregarding the estimate of forfeitures. The assumptions we used for calculating the grant date fair values are set forth in Note 17 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. As of December 31, 2020, each of Messrs. Bussmann, Dyer, Linneman, Patterson and Wright and Mmes. Klein and Otto-Bernstein held 14,212 unvested LTIP units that had been granted by us as director compensation. As of December 31, 2020, Mr. Armbrust held 14,212 unvested shares of restricted stock that had been granted by us as director compensation.
(2)Includes incremental fair value of amendments to existing LTIP unit awards (calculated pursuant to ASC Topic 718), which are described in more details under “– Compensation Discussion and Analysis – Other Compensation Policies and Practices – Tax Considerations.” The amendments relate to 22,232 LTIP units granted to each of Messrs. Bussmann, Linneman and Emmett and Mmes. Klein, Otto-Bernstein and Galbreath, 15,158 LTIP units granted to Mr. Patterson and 7,524 LTIP units granted to Mr. Dyer, and resulted in an aggregate increase in the incremental fair value of those LTIP units for accounting purposes of $6,165 for each of Messrs. Bussmann, Linneman and Emmett and Mmes. Klein, Otto-Bernstein and Galbreath and $6,094 for each of Messrs. Patterson and Dyer.
(3)Mr. Wright was elected to serve as a director beginning May 19, 2020 from and after the 2020 annual stockholder meeting.
(4)Mr. Emmett and Ms. Galbreath served as directors through the 2020 annual stockholders meeting held on May 19, 2020.

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CORPORATE GOVERNANCE MATTERS

Code of Business Conduct and Ethics

Our Board has established a Code of Business Conduct and Ethics that applies to our officers, directors and employees. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;
compliance with laws, rules and regulations;
prompt internal reporting of violations of the code to appropriate persons identified in the code; and
accountability for adherence to the Code of Business Conduct and Ethics.

Any waiver of the Code of Business Conduct and Ethics for our directors or officers may be made only by our Board or our Nominating and Corporate Governance Committee and will be promptly disclosed as required by law or NYSE regulations. We intend to disclose on our website any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.

Communications with the Board

We have a process by which stockholders and other interested parties may communicate with the non-employee directors, both individually and as a group, through the Board’s Lead Independent Director. In cases where stockholders or other interested parties wish to communicate directly with non-employee directors, messages can be sent in writing or by email to: Lead Independent Director, Paramount Group, Inc., c/o Navex Ethics Hotline (“Navex”) using the following link: www.paramount-group.ethicspoint.com, or any other link to or toll-free number of a third party reporting service approved by the Lead Independent Director from time to time and posted on our website or otherwise appropriately disseminated. Navex acts as agent for the Lead Independent Director in facilitating direct communications to him and any other non-employee directors he requests. Any such communications may be made anonymously.

Audit Committee Complaint Procedures

Our Audit Committee has established procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls, or auditing matters and (ii) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. If you wish to contact our Audit Committee to report complaints or concerns relating to the financial reporting of the Company, you may do so in writing to the Chairperson of our Audit Committee, c/o Navex using the following link: www.paramount-group.ethicspoint.com, or the toll-free number provided in the link, or any other link to or toll-free number of a third party reporting service approved by the Chairperson of the Audit Committee from time to time and posted on our website or otherwise appropriately disseminated. Any such communications may be made anonymously.

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2021 Proxy Statement | 15


CORPORATE GOVERNANCE MATTERS

Director Attendance at Annual Meetings

We encourage each member of the Board to attend each annual meeting of stockholders. All of our directors serving at that time, (except for Mr. Emmett and Ms. Galbreath), attended the annual meeting of stockholders held on May 19, 2020.

Identification of Director Candidates

Our Nominating and Corporate Governance Committee assists the Board in identifying and reviewing director candidates to determine whether they qualify for membership on the Board and recommends director nominees to the Board to be considered for election at our annual meeting of stockholders. Our Nominating and Corporate Governance Committee has adopted a written policy on the criteria and process of identifying and reviewing director candidates.

At a minimum, the Nominating and Corporate Governance Committee must be satisfied that each director candidate (i) has experience at a strategic or policymaking level in a business, legal, accounting, government, non-profit or academic organization of high standing, (ii) is highly accomplished in his or her respective field, (iii) is well regarded in the community and shall have a reputation for the highest ethical and moral standards and (iv) has sufficient time and availability to devote to the affairs of the Company, particularly in light of the number of boards on which the nominee may serve.

In addition to the minimum qualifications for each nominee set forth above, the Nominating and Corporate Governance Committee must recommend that the Board select persons for nomination to help ensure that (i) a majority of the Board will be “independent” in accordance with the standards established pursuant to Section 303A of the NYSE Listed Company Manual, (ii) each of its Audit, Compensation and Nominating and Corporate Governance Committees will be comprised entirely of independent directors and (iii) at least one member of the Audit Committee will have accounting or related financial management expertise.

Finally, in addition to any other standards the Nominating and Corporate Governance Committee may deem appropriate from time to time for the overall structure and composition of the Board, the Nominating and Corporate Governance Committee may, but is not required to, consider (i) whether the nominee has direct experience in the real estate industry, particularly in the office real estate industry, or in the markets in which the Company operates, and (ii) whether the nominee, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience. In this regard, the Nominating and Corporate Governance Committee’s procedures require it to ensure to the greatest extent practicable that the pool of prospective candidates that it considers to fill any vacancy or additional director position includes one or more female candidates or one or more racially or ethnically diverse candidates if, at such time, the Board is lacking gender diversity or racial/ethnic diversity, respectively.

Our Nominating and Corporate Governance Committee may consider director candidates recommended by our stockholders. Our Nominating and Corporate Governance Committee will apply the same standards in considering candidates submitted by stockholders as it does in evaluating candidates submitted by members of the Board. Any recommendations by stockholders are to follow the procedures outlined under “Stockholder Proposals” in this proxy statement and should provide the reasons supporting a candidate’s recommendation, the candidate’s qualifications and the candidate’s written consent to being considered as a director nominee.

As previously disclosed, we have entered into a stockholders agreement with Maren Otto, Katharina Otto-Bernstein and Alexander Otto providing these members of the Otto family with the right, collectively, to designate up to three director nominees to our Board. The number of director nominees that these members of the Otto family will have the right to designate may be reduced in the future based on reductions in the percentage of our total outstanding common stock owned by these individuals, their lineal descendants or entities they own or control collectively. Albert Behler, Thomas Armbrust and Katharina Otto-Bernstein have been designated for nomination to our Board pursuant to the stockholders agreement.

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CORPORATE GOVERNANCE MATTERS

Executive Sessions of Non-Management Directors

Our Corporate Governance Guidelines require the non-management directors serving on the Board to meet at regularly scheduled executive sessions without management participation and to hold an executive session at least once each year with only independent directors present. In accordance with such requirement, our non-management directors and/or our independent directors meet in executive sessions from time to time on such a basis. The executive sessions are chaired by our Lead Independent Director.

Annual Elections; Majority Voting

Each of our directors will be elected by our stockholders to serve until our next annual meeting of stockholders and until his or her successor is duly elected and qualified. Our bylaws provide for majority voting in uncontested director elections. Pursuant to our bylaws, in a contested election, directors are elected by a plurality of all of the votes cast in the election of directors, and in an uncontested election, a director is elected if he or she receives more votes for his or her election than votes against his or her election. Under our Corporate Governance Guidelines, any director who fails to be elected by a majority vote in an uncontested election is required to tender his or her resignation to our Board, subject to acceptance. Our Nominating and Corporate Governance Committee will make a recommendation to our Board on whether to accept or reject the resignation, or whether other action should be taken. Our Board will then act on our Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results. If the resignation is not accepted, the director will continue to serve until the next annual meeting and until the director’s successor is duly elected and qualifies. The director who tenders his or her resignation will not participate in our Board’s decision.

Anti-Hedging and Anti-Pledging Policy

None of our executives have engaged in any hedging transactions with respect to our stock and none of our executives have engaged in any pledging transactions with respect to our stock except as noted in “Security Ownership of Certain Beneficial Owners and Management.” Under our anti-hedging policy no executive or director may buy or sell puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities or engage in any other hedging transaction with respect to the Company’s securities, at any time unless such transaction has been approved by the Nominating and Corporate Governance Committee.

We also have an anti-pledging policy whereby no executive or director may pledge Company securities as collateral for a loan (or modify an existing pledge) unless the pledge has been approved by the Nominating and Corporate Governance Committee.

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2021 Proxy Statement | 17


CORPORATE GOVERNANCE MATTERS

Minimum Share Ownership Guidelines for Executive Officers and Directors

We have adopted minimum stock ownership guidelines that require each executive officer to maintain a minimum number of shares of our common stock (including operating partnership units and LTIP units) having a value equal to or greater than a multiple (six times, in the case of our Chief Executive Officer, and three times, in the case of all other Section 16 executive officers) of such executive officer’s base salary. Each executive officer must achieve the minimum equity investment within five years from the later of the date of the adoption of the policy (for executive officers in place at that time) and the date of such officer’s appointment (for subsequently appointed executive officers), and until such time as the executive officer achieves such minimum, he or she must retain 50 percent of the value of any vested award, net of taxes.

We have adopted minimum stock ownership guidelines that require our independent directors to hold a number of shares of our common stock (including operating partnership units and LTIP units) having a market value equal to or greater than five times the portion of the annual base retainer which is eligible to be paid in cash. Each independent director must achieve the minimum equity investment within five years from the later of the date of the adoption of the policy (for directors in place at that time) and the date of such director’s election to our Board (for subsequently appointed directors) to attain compliance with the stock ownership requirements.

Risk Oversight

Our Board is responsible for overseeing the Company’s risk management process. The Board focuses on the Company’s general risk management strategy and the most significant risks facing the Company, and ensures that appropriate risk mitigation strategies are implemented by management. The Board also is apprised of particular risk management matters in connection with its general oversight and approval of corporate matters.

The Board has delegated to the Audit Committee oversight of the Company’s risk management process. Among its duties, the Audit Committee reviews with management (a) the Company policies with respect to risk assessment and management of risks that may be material to the Company, including enterprise risk management, (b) the Company’s system of internal controls over financial reporting and (c) the Company’s compliance with legal and regulatory requirements. Our other Board committees also consider and address risk as they perform their respective committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.

In addition, the Compensation Committee considers the risks to the Company’s stockholders and to achievement of our goals that may be inherent in the Company’s compensation program.

The Company’s management is responsible for day-to-day risk management, including the primary monitoring and testing function for companywide policies and procedures, and management of the day-to-day oversight of the risk management strategy for the ongoing business of the Company. This oversight includes identifying, evaluating and addressing potential risks that may exist at the enterprise, strategic, financial, operational and compliance and reporting levels.

We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing the Company and that our Board leadership structure supports this approach.

18 | ir.paramount-group.com

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PROPOSAL 1: ELECTION OF DIRECTORS

The Board currently consists of nine members. Each member of the Board is serving (or will serve) for a term of one year and until his or her successor is duly elected and qualified. Their term expires at each annual meeting of stockholders. Our charter and bylaws provide that a majority of the Board may at any time increase or decrease the number of directors. However, the number of directors may never be less than the minimum number required by the Maryland General Corporation Law which is one and, unless our bylaws are amended, more than nine.

At the 2021 annual meeting, all of the directors will be elected to serve until the 2022 annual meeting and until their successors are duly elected and qualified. The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the following to serve as directors:

Albert Behler
Colin Dyer
Katharina Otto-Bernstein
Thomas Armbrust
Karin Klein
Mark Patterson
Martin Bussmann
Peter Linneman
Greg Wright

Each of these nominees is a current director of the Company. The Board anticipates that each nominee will serve, if elected, as a director. However, if any nominee is unable to accept election, proxies voted in favor of such nominee will be voted for the election of such other person or persons as the Board may select.

Our bylaws provide for majority voting in uncontested director elections. Pursuant to our bylaws, in an uncontested election a director is elected if he or she receives more votes for his or her election than votes against his or her election. Under our Corporate Governance Guidelines, any incumbent director who fails to be elected by a majority vote in an uncontested election is required to tender his or her resignation to our Board, subject to acceptance, and any nominee who is not yet a director must receive a majority of votes for his or her election to be effected. Our Nominating and Corporate Governance Committee will make a recommendation to our Board on whether to accept or reject the resignation, or whether other action should be taken. Our Board will then act on our Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of election results. If the resignation is not accepted, the director will continue to serve until the next annual meeting and until the director’s successor is duly elected and qualified. The director who tenders his or her resignation will not participate in our Board’s decision.

We will treat broker non-votes as shares that are present and entitled to vote for purposes of determining the presence or absence of a quorum. Abstentions and broker non-votes, if any, will have no effect on this proposal.

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The Board unanimously recommends that you vote FOR each of its director nominees.

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2021 Proxy Statement | 19  


PROPOSAL 1: ELECTION OF DIRECTORS

Information Regarding the Director Nominees

The following table and biographical descriptions set forth certain information with respect to each nominee for election as a director at the 2021 annual meeting, based upon information furnished by each director. The biographical information includes the specific experience, qualifications, attributes and skills that led to the conclusion by our Board that such person should serve as a director.

Name

Age

Position

Albert Behler

69

Chairman, Chief Executive Officer and President

Thomas Armbrust

68

Director

Martin Bussmann

69

Director

Colin Dyer

68

Director

Karin Klein

49

Director

Peter Linneman

70

Director

Katharina Otto-Bernstein

56

Director

Mark Patterson

60

Director

Greg Wright

56

Director

DIRECTOR NOMINEES

ALBERT BEHLER

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Director since 2014
Age 69
Chairman, Chief Executive Officer and President;
Chair, Investment and Finance Committee

Biography

Mr. Behler has been our Chairman, Chief Executive Officer and President since 2014. Mr. Behler joined our company in October 1991 as President and Chief Executive Officer, where he oversaw all of the acquisitions and dispositions that produced our current portfolio of assets. Prior to joining our company, Mr. Behler held various leadership positions at Thyssen, a German multinational conglomerate that he joined in 1973. He ran Thyssen Saudia Company, Ltd as Managing Director and was President of Thyssen Rheinstahl in Atlanta, Georgia from 1985 to 1991. In his positions with Thyssen, Mr. Behler was responsible for, among other duties, the acquisition, financing, development and disposition of more than ten million square feet of commercial real estate in various countries. Mr. Behler’s board and association memberships presently include serving as a member of The Real Estate Roundtable, Washington, D.C.; a member of the Board of Governors of the Real Estate Board of New York; a member of the Urban Land Institute, a member of the American Council on Germany’s Business Advisory Committee; and a member of the Board of Directors of Citymeals-on-Wheels. Mr. Behler is also a former member of the Executive Committee of the Greenprint Foundation and the Board of Directors of the ULI Greenprint Center for Building Performance, and a former Chairman of the Association of Foreign Investors in Real Estate (AFIRE).

Qualifications

Mr. Behler studied law at the University of Cologne and graduated from Georgia State University with a Master’s degree in Business Administration.

20 | ir.paramount-group.com

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PROPOSAL 1: ELECTION OF DIRECTORS

THOMAS ARMBRUST

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Director since 2014
Age 68
Chairman of the Supervisory Board,
Cura Vermögensverwaltung;
Member, Investment and Finance Committee

Biography

Mr. Armbrust has been a member of our Board since 2014. Mr. Armbrust was the Managing Director of CURA Vermögensverwaltung, a real estate management firm, from 1992 through 2019 and, since January 1, 2020, has served as chairman of its supervisory board. From 1985 to 1992, Mr. Armbrust was Vice President Tax, Accounting, Reporting and M&A of Gruner & Jahr Publishing Group, Hamburg. Prior to that, Mr. Armbrust held various other finance positions since 1977. Mr. Armbrust served as a member of the supervisory board of Deutsche EuroShop AG, a public German real estate stock company until June 12, 2019, and as a member of the supervisory board of Otto Versand, an international retailer until February 29, 2020. He serves as chairman of the supervisory board of ECE Group, an international shopping center manager and developer.

Qualifications

Mr. Armbrust studied national economics and received his Masters of Economics from the University of Mainz. Mr. Armbrust was selected to serve on our Board based on his extensive experience in the real estate industry, his background in finance and his extensive knowledge of the Company.

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2021 Proxy Statement | 21


PROPOSAL 1: ELECTION OF DIRECTORS

MARTIN BUSSMANN

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Director since 2016
Age 69

Trustee, Mannheim Trust;
Member, Nominating and Corporate Governance Committee

Biography

Dr. Bussmann has been a member of our Board since March 2016. Dr. Bussmann has been a trustee of the Mannheim Trust in New York since 1998, responsible for the investment and management of its assets in real estate, private equity and financial investments in public equity and fixed income. He also serves as director or manager of a number of the Mannheim Trust portfolio companies, including Mannheim Holdings LLC and Mannheim Real Estate LLC and their subsidiaries. He was a board member of the private Cellwar Holding AG in Switzerland and, since its reorganization, is President of Rhodanie Investment AG. From 1998 to 2005, he was co-trustee of the Marico Trust in New York, and from 1995 to 1998 he was manager of Margna SA/Margna Holding SA, a Luxembourg company that invested in European blue chip stocks. Prior to holding these positions, from 1980 until 1994, Dr. Bussmann spent 15 years in the pharmaceutical and chemical industries in Germany and the United States, at Knoll AG, Abbott Laboratories, BASF AG and BASF Corporation.

Qualifications

Dr. Bussmann received his Dr. juris utriusque degree from Heidelberg University and in 1977 was a Visiting Scholar at Harvard Law School. Dr. Bussmann was selected to serve on our Board based on his extensive experience in industries other than real estate, his background in finance and his senior leadership background.

22 | ir.paramount-group.com

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PROPOSAL 1: ELECTION OF DIRECTORS

COLIN DYER

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Director since 2019
Age 68

Former Chairman and Current Member of the

Supervisory Board, Unibail-Rodamco S.E.;

Member, Audit Committee

Biography

Mr. Dyer has been a member of our Board since 2019. He is the former Chairman and a current member of the supervisory board of Unibail-Rodamco S.E., a publicly traded global developer and operator of flagship shopping destinations. Mr. Dyer was previously the President and Chief Executive Officer of JLL Incorporated from 2004 to 2016, and a member of its board of directors from 2004 to 2017. He was also formerly Chief Executive Officer of Worldwide Retail Exchange, Chief Executive Officer of Courtaulds Textiles, and a consultant at McKinsey & Company. Mr. Dyer currently serves on the board of directors for Treliant and Altus Limited, Canada.

Qualifications

Mr. Dyer holds a Bachelor of Science in Mechanical Engineering from Imperial College London and a Master of Business Administration from INSEAD. Mr. Dyer was selected to serve on our Board based on his extensive experience in the real estate industry as well as his senior leadership background.

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2021 Proxy Statement | 23


PROPOSAL 1: ELECTION OF DIRECTORS

KARIN KLEIN

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Director since 2016
Age 49

Founding Partner, Bloomberg BETA;
Chair, Compensation Committee and
Member, Audit Committee

Biography

Ms. Klein has been a member of our Board since March 2016. Ms. Klein has been a founding partner of Bloomberg Beta, a venture capital firm which invests in early stage technology companies that make businesses work better, since 2013. Prior to launching Bloomberg Beta, Ms. Klein led new initiatives at Bloomberg L.P. from 2010 to 2013. Before joining Bloomberg L.P., from 2000 to 2010, Ms. Klein served in various roles at SoftBank, a global company which provides information technology and telecommunication services. Previously, she also held various investing and operating roles at several investment companies and co-founded a children’s education business. Ms. Klein has also served on the board of directors of Regency Centers Corporation since 2019.

Qualifications

Ms. Klein graduated summa cum laude, Phi Beta Kappa, and as a Joseph Wharton Scholar with a Master of Business Administration and a Bachelor of Science from The Wharton School and a Bachelor of Arts from the Annenberg School for Communication at the University of Pennsylvania. Ms. Klein was selected to serve on our Board based on her extensive experience outside the real estate industry, particularly in technology-related industries, and her senior leadership background.

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PROPOSAL 1: ELECTION OF DIRECTORS

PETER LINNEMAN

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Director since 2014
Age 70

Professor Emeritus, The University of Pennsylvania,
Wharton School of Business;
Chair, Audit Committee and
Member, Compensation Committee

Biography

Dr. Linneman has been a member of our Board since 2014. From 1979 to 2011, Dr. Linneman was a Professor of Real Estate, Finance and Public Policy at the University of Pennsylvania, Wharton School of Business and is currently an Emeritus Albert Sussman Professor of Real Estate there. Dr. Linneman is also currently a principal of Linneman Associates, a real estate advisory firm, and a principal of American Land Funds, a private equity firm. Dr. Linneman has served on over 20 public and private company boards, including serving as Chairman of the Board of Rockefeller Center Properties, Inc., a REIT, as a member of the board of trustees of Equity Commonwealth (formerly known as CommonWealth REIT), a publicly-traded REIT, and as a member of the board of directors of Regency Centers Corporation, a publicly-traded REIT. Dr. Linneman is also currently serving as an independent director of AG Mortgage Investment Trust, Inc., a publicly-traded REIT. Dr. Linneman previously served as a director of Equity One, Inc., prior to its merger with Regency Centers Corporation, Bedford Property Investors, Inc., Atrium European Real Estate Ltd, and JER Investors Trust, Inc., a finance company that acquires real estate debt securities and loans.

Qualifications

Dr. Linneman holds both Masters and Doctorate degrees in economics from the University of Chicago and a Bachelor of Arts degree from Ashland University. Dr. Linneman was selected to serve on our Board based on his experience over many years in financial and business advisory services and investment activity and his experience as a member of numerous public and private boards, including many real estate companies.

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2021 Proxy Statement | 25


PROPOSAL 1: ELECTION OF DIRECTORS

KATHARINA OTTO-BERNSTEIN

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Director since 2014
Age 56

President, Film Manufacturers Inc.

Biography

Ms. Otto-Bernstein has been a member of our Board since 2014. Ms. Otto-Bernstein is an award winning, Emmy-nominated writer and film maker, who began her career as a journalist. Currently, she is the President of Film Manufacturers Inc., an international production company specializing in the development, production and co-production of high quality fiction and non-fiction motion pictures, as well as selected works for stage and print, a position which she has held since 1992. Ms. Otto-Bernstein is also a principal owner of ECE Group, an international shopping center manager and developer, and a member of the board of directors of CURA Vermögensverwaltung, a real estate management firm. Ms. Otto-Bernstein is the chair of the Dean’s Council of the Columbia University School of the Arts and was awarded the Columbia University Alumni Medal of Achievement in 2009. She is also a member of the board of directors of the Metropolitan Opera and of the International Council of the Guggenheim Museum and served for ten years on the board of the Wildlife Conservation Society.

Qualifications

Ms. Otto-Bernstein received a Bachelor of Arts from Columbia College in philosophy and political science and a Masters of Fine Arts in film from Columbia University. Ms. Otto-Bernstein was selected to serve on our Board based on her significant ownership interest in the Company and experience in the real estate industry.

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PROPOSAL 1: ELECTION OF DIRECTORS

MARK PATTERSON

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Director since 2018
Age 60

President MRP Holdings LLC;
Lead Independent Director and
Chair, Nominating and Corporate Governance Committee

Biography

Mr. Patterson has been a member of our Board since 2018. Mr. Patterson has, since 2010, been President of MRP Holdings LLC and serves as a real estate consultant and financial advisor. He is also an Advisory Director of Investcorp, Inc. and a Senior Advisor to Rockefeller Capital Management. From August 2010 until January 2015, Mr. Patterson served as Chief Executive Officer of Boomerang Systems, Inc. In August 2015, Boomerang Systems, Inc. filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Until January of 2009 Mr. Patterson was a Managing Director and the Head of Real Estate Global Principal Investments at Merrill Lynch where he oversaw the real estate principal investing activities of the firm. Mr. Patterson joined Merrill Lynch in April 2005 as the Global Head of Real Estate Investment Banking and in 2006 also became the Co-Head of Global Commercial Real Estate which encompassed real estate investment banking, principal investing and mortgage debt. Prior to joining Merrill Lynch, he served as the Global Head of Real Estate Investment Banking at Citigroup from 1996 until 2005. Mr. Patterson currently serves on the board of directors for UDR, Inc. and Digital Realty Trust, Inc., is the Chairman of the Board of Americold Realty Trust, Inc., and is a former director of GGP, Inc. Throughout his career, Mr. Patterson has been involved in a variety of financing and investing activities spanning virtually all types of real estate in most major global property markets.

Qualifications

Mr. Patterson has a Bachelor of Business Administration degree from the College of William and Mary, and a Master of Business Administration degree from the Darden School of Business at the University of Virginia. He is also a Certified Public Accountant. Our Board selected Mr. Patterson to serve as director because it believes he possesses valuable financial and real estate industry expertise, including extensive experience working with public companies in the real estate industry, as well as experience on the boards of directors of public companies and his senior leadership background.

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2021 Proxy Statement | 27


PROPOSAL 1: ELECTION OF DIRECTORS

GREG WRIGHT

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Director since 2020
Age
56

Chief Investment Officer, Digital Realty Trust, Inc.;

Member, Compensation Committee and
Nominating and Corporate Governance Committee

Biography

Mr. Wright has been a member of our Board since 2020. Since January 2019, he has been the Chief Investment Officer at Digital Realty Trust, Inc., a publicly traded REIT specializing in data centers, with responsibility for spearheading the company’s investment and other capital allocation activities.

Prior to joining Digital Realty, from 2005 to December 2018, Mr. Wright was Co-Head of Americas Real Estate and Managing Director of the Real Estate, Gaming & Lodging Group at Bank of America Merrill Lynch. During his tenure at Bank of America Merrill Lynch, he provided strategic and financial advice to clients across a broad spectrum of real estate, infrastructure and related sectors, including the Company during its initial public offering. Before his time at Bank of America Merrill Lynch, Mr. Wright served as a Managing Director in the Real Estate & Lodging Group at Citigroup where he was responsible for originating and executing strategic advisory and capital raising assignments, as well as general client coverage. During his 25-year investment banking career, he successfully completed over $200 billion of M&A transactions, asset sales, joint ventures, public and private debt and equity offerings, and bank loans for clients. Many of these transactions have been the largest, most noteworthy transactions in the REIT sector. For example, Mr. Wright led teams that acted as the sole sell-side advisor on the largest REIT merger in history and that served as an active bookrunner on the two largest REIT initial public offerings to date, one of which was the Company's. He also worked at Trammell Crow Company in Washington, DC where he was a member of the finance team responsible for acquisitions, dispositions and joint ventures, as well as construction and permanent debt financings across multiple product types.

Qualifications

Mr. Wright received a Bachelor of Arts degree in Finance from the University of Maryland and a Master of Business Administration degree from the University of Michigan. Mr. Wright was selected to serve on our Board based on his extensive experience in the real estate industry and his valuable financial industry expertise, including extensive experience working with public companies.

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EXECUTIVE OFFICERS

Biographical Information Regarding Executive Officers Who Are Not Directors

As of the date of this proxy statement, our executive officers who are not directors are as follows:

Name

Age

Position

Wilbur Paes

43

Chief Operating Officer, Chief Financial Officer and Treasurer

Peter Brindley

44

Executive Vice President, Head of Real Estate

David Zobel

35

Executive Vice President, Head of Acquisitions

Gage Johnson

59

Senior Vice President, General Counsel and Secretary

Ermelinda Berberi (1)

40

Senior Vice President, Chief Accounting Officer

(1)Denotes our executive officer who is not a named executive officer (“NEO”).

WILBUR PAES

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Chief Operating Officer, Chief Financial Officer
and Treasurer since 2021

Age 43

Biography

Mr. Paes has been our Chief Operating Officer, Chief Financial Officer and Treasurer since February 2021. Before being appointed Chief Operating Officer, Chief Financial Officer and Treasurer, Mr. Paes served as Executive Vice President, Chief Financial Officer and Treasurer since March 2016; and prior to that, Mr. Paes served as Senior Vice President and Chief Accounting Officer since 2014. Prior to joining our executive management team in 2014, Mr. Paes was a Senior Vice President at Vornado Realty Trust, a publicly traded REIT, where he spent over 11 years and held a myriad of positions in accounting and finance. Prior to that, Mr. Paes worked for the international public accounting firms of KPMG LLP and Arthur Andersen LLP, where he served some of the firms’ largest real estate clients.

Qualifications

Mr. Paes graduated from Queens College of the City University of New York with a Bachelor of Arts degree in Accounting and Information Systems. He is a Certified Public Accountant, licensed in the State of New York, and a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.

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2021 Proxy Statement | 29  


EXECUTIVE OFFICERS

PETER BRINDLEY

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Executive Vice President, Head of Real Estate since 2021
Age 44

Biography

Mr. Brindley has been our Executive Vice President, Head of Real Estate since February 2021. Before being appointed Executive Vice President, Head of Real Estate, Mr. Brindley served as Executive Vice President, Leasing since December 2017. Before being appointed Executive Vice President, Leasing, Mr. Brindley was Senior Vice President, Leasing of our New York portfolio since September 2015. Mr. Brindley joined our company in December 2010 as Vice President of Leasing. Prior to joining our Company, he served as a Senior Director at Tishman Speyer in their New York office. Prior to joining Tishman Speyer in 2004, Mr. Brindley worked at CB Richard Ellis in the brokerage services group. He is a member of the board of directors of the Avenue of the Americas Association, where he serves as Treasurer. He is also a member of the Real Estate Board of New York.

Qualifications

Mr. Brindley graduated from Ithaca College with a Bachelor of Science in Business and received his Master of Science degree in Real Estate Finance & Investment from New York University.

DAVID ZOBEL

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Executive Vice President, Head of Acquisitions since 2018
Age 35

Biography

Mr. Zobel has been our Executive Vice President, Head of Acquisitions, since June 2018. He is responsible for all acquisition and disposition related activities, including sourcing, underwriting, and structuring all debt and equity investments on behalf of our Company and our funds. Mr. Zobel joined our company in 2008 and since 2016, served as Senior Vice President, Acquisitions. During his time at our Company, Mr. Zobel has been instrumental in completing transactions in excess of $5 billion. Prior to joining our Company, Mr. Zobel worked in the Real Estate Finance and Securitization Group at Credit Suisse, where he specialized in high-yield distribution and was involved in the structuring, pricing, and sale of over $4 billion of subordinated commercial mortgage debt.

Qualifications

Mr. Zobel graduated from the Wharton School of the University of Pennsylvania with a Bachelor of Science degree in Economics with a concentration in Finance.

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EXECUTIVE OFFICERS

GAGE JOHNSON

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Senior Vice President, General Counsel
and Secretary since 2014

Age 59

Biography

Mr. Johnson has been our Senior Vice President, General Counsel and Secretary since 2014. Mr. Johnson joined our company in May 2009 as General Counsel. Previously, since 2005, Mr. Johnson was General Counsel of Citi Property Investors, the global real estate investment management arm of Citigroup, where he was a Managing Director responsible for virtually all legal aspects of real estate investments throughout the United States, Europe and Asia in all property sectors. From 2003 to 2005, Mr. Johnson was an Executive Director in the Law Department at Morgan Stanley Real Estate, the investment firm’s real estate unit. From 1998 to 2003, Mr. Johnson served in various roles at Lend Lease Real Estate, part of a publicly-traded property group specializing in project management and construction, real estate investment and development, most recently as General Counsel. Prior to joining Lend Lease Real Estate, Mr. Johnson was an attorney with the law firm of Paul Hastings LLP in Washington, D.C. He was formerly the Vice Chairman, Treasurer, and a member of the Executive Committee of the Board of Directors of The National Aquarium in Washington, D.C.

Qualifications

Mr. Johnson graduated from Princeton University with a Bachelor of Arts degree from the Princeton School of Public & International Affairs and from the University of Virginia School of Law with a Juris Doctorate.

ERMELINDA BERBERI

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Senior Vice President, Chief Accounting Officer since 2017
Age 40

Biography

Ermelinda Berberi has been our Senior Vice President, Chief Accounting Officer since April 2017. Before being appointed Senior Vice President, Chief Accounting Officer, Ms. Berberi was Senior Vice President, Finance since April 2016. Prior to joining us in 2016, Ms. Berberi spent over 12 years at Deloitte & Touche LLP in various positions, most recently as an audit Senior Manager in the northeast real estate audit practice, where she served some of the firm’s largest publicly traded REITs.

Qualifications

Ms. Berberi graduated from Montclair State University with a Bachelor of Arts degree in Accounting and received her Master of Business Administration degree from Rutgers University. She is a Certified Public Accountant, licensed in the State of New Jersey, and a member of the American Institute of Certified Public Accountants and the New Jersey Society of Certified Public Accountants.

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2021 Proxy Statement | 31


COMPENSATION DISCUSSION AND ANALYSIS

The individuals who constitute our named executive officers (“NEOs”) in any given year are determined in accordance with applicable SEC rules and include our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and the other three most highly-compensated executive officers who were serving as such as of the end of the fiscal year and. During 2020, the following individuals are collectively referred to as our NEOs:

Name

Title

Albert Behler

 

Chairman, President and Chief Executive Officer

Wilbur Paes

Chief Operating Officer, Chief Financial Officer and Treasurer

Peter Brindley

Executive Vice President, Head of Real Estate

David Zobel

Executive Vice President, Head of Acquisitions

Gage Johnson

Senior Vice President, General Counsel and Secretary

2020 Say-on-Pay Vote

At our 2020 annual meeting of stockholders, a non-binding, advisory resolution approving the compensation paid to our NEOs, as disclosed in our 2020 proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussions, was approved by our stockholders, with approximately 87% of the votes cast having been voted in favor of the proposal to approve such resolution. The Compensation Committee has considered the results of this vote and, as a result of the high percentage of votes cast in favor of this resolution, the Committee viewed these results as an indication of stockholders’ overall satisfaction with the manner in which we compensated our NEOs.

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COMPENSATION DISCUSSION AND ANALYSIS

Process for Determining Executive Compensation

Based on the continued strong stockholder support we received in 2020 on our “Say-on-Pay” advisory vote, which was in line with our historical average, the Compensation Committee continued to use a similar process in determining the executive compensation of our NEOs, which included:

commissioning a Peer Group Compensation Benchmarking Analysis prepared by FPL, an independent compensation consultant retained by the Compensation Committee, to ensure that our compensation program was competitive with those of other publicly traded REITs in our Peer Group;
establishing an appropriate balance between fixed compensation (base salary), variable Short-Term Incentive Compensation (“STIC”) (cash bonus) and variable Long-Term Incentive Compensation (“LTIC”) (equity awards);
awarding majority of the NEOs’ equity compensation in the form of performance-based equity awards that use relative Total Shareholder Return (“TSR”) over overlapping three-year measurement periods as the primary performance metric to further align management interests with the interests of our stockholders;
assessing our performance against rigorous pre-established formulaic quantitative financial and operational goals (“Corporate Objectives”), and qualitative individual performance goals (“Individual Objectives”) pursuant to our STIC program, which were approved by the Compensation Committee in early 2020 and only slightly modified as a result of the extraordinary events of 2020; and
considering our NEOs’ total compensation over time, both on a reported basis and on a realized basis after forfeitures.

2020 COVID-19 Impact

The outbreak of COVID-19 caused severe disruptions and had significant adverse impacts to all business, including ours;
New York and San Francisco, the markets in which we operate, issued “pause orders” and “shelter in place” rules and restrictions on travel and the types of business that can operate;
Leasing and Transaction volumes in New York and San Francisco slowed considerably as investors sought to “preserve” rather than “deploy” capital;
Despite the adverse impacts of COVID-19, the Company’s business remained resilient as demonstrated by the following:
oPortfolio-wide rent collections from the Company’s “blue-chip” tenant roster remained stellar at 97.2% from the onset of the pandemic in April 2020 through year end 2020;
oCash NOI increased by $3.3 million, or 0.9% compared to 2019 and Same Store Cash NOI also grew by 0.2% when compared to 2019;
oThe Company strengthened its balance sheet executing on several strategic initiatives, including:
Selling a 10.0% stake in 1633 Broadway at robust valuation in a pandemic stricken environment where transaction volumes had decreased tremendously when compared to prior quarters and prior years;

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2021 Proxy Statement | 33


COMPENSATION DISCUSSION AND ANALYSIS

Selling the last asset it owned in Washington, DC completing its strategic exit from the market making it a bi-coastal REIT in two of the nation’s most desirable markets – New York and San Francisco; and
Increasing its liquidity and cash positions to $1.47 billion and $465.3 million, respectively, which was up from $1.29 billion and $331.5 million, respectively, in 2019

Notwithstanding the aforementioned adverse impacts of COVID-19 to our businesses while still being able to recognize management’s extraordinary achievements in positioning the Company to successfully weather the impacts of COVID-19, the Compensation Committee evaluated whether the goals established in early 2020 “pre-pandemic” were still appropriate in a “post-pandemic” environment and concluded as follows:

Five of the six previously established goals were left unchanged, including the related ranges for threshold and maximum performance set for such goals; and
One goal (Capital Raising) was removed and replaced with a new goal (Sale of Minority Interest in 1633 Broadway) to meet shifting strategic priorities as the pandemic unfolded;

Below is a summary that highlights the Compensation decision made by the Compensation Committee for 2020 performance.

2020 COMPENSATION HIGHLIGHTS

CEO

60%

of Equity award is based on relative TSR hurdles

71%

of Total Compensation paid in Equity

8.5%

Decrease in Total Compensation over 2019

88%

of Pay is Variable and not Guaranteed

35%

Decrease in Cash Bonus

over 2019

All Other NEOs

79%

of Pay is Variable and not Guaranteed

50%

of Equity award is based on relative TSR hurdles

8.4%

Decrease in Total Compensation over 2019

55%

of Total Compensation paid in Equity

29%

Decrease in Cash Bonus

over 2019

For a reconciliation of Cash NOI and Same Store Cash NOI growth to the most directly comparable GAAP measure and additional information regarding this non-GAAP financial measure, see pages 71 – 75 of our Annual Report on Form 10-K for the year ended December 31, 2020.

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Compensation Philosophy

Our executive compensation program is designed to incentivize the creation of long-term shareholder value by aligning the compensation structure for executives with the achievement of our business strategies and to maximize total shareholder return over the long term. In order to meet our objectives, our executive compensation program includes several elements designed to:

Attract and Retain Highly Talented Executives: We provide fixed base salaries that reflect the highly competitive markets in which we operate, changes in responsibilities and merit increases.
Pay-for-Performance: We seek to align the interests of our executives with our long-term shareholders by tying the vast majority of their non-salary compensation to performance-based incentives, through a:
oShort-Term Incentive Compensation (cash bonus) program designed to motivate our executives through a strong emphasis on performance, with components rewarding financial, operational and individual performance; and
oLong-Term Incentive Compensation (equity awards) program to create an appropriate link between compensation and the creation of shareholder value, including multi-year performance-based awards tied to total shareholder returns.
Create a Balanced Approach: The Compensation Committee recognizes that our unique portfolio of highly coveted assets is among the most concentrated in the industry, both in terms of the number of markets in which we operate, as well as in the unusually high value per asset that we own. As such, in order to mitigate some of the potential volatility which can arise through concentration, the Compensation Committee believes that an executive compensation program with a greater number of elements (but with less value in each) will:
oReduce the volatility of annual compensation, resulting in potentially higher employee retention;
oPotentially mitigate the risk that any individual element may receive inordinate focus and encourage excessively risky behaviors; and
oPromote a long-term view by connecting executives’ eventual realized compensation to the decisions that they make, as the majority of their annual compensation vests over a period of four years.

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2021 Proxy Statement | 35


COMPENSATION DISCUSSION AND ANALYSIS

Compensation Best Practices

What We Do

What We Do Not Do

A significant portion of our executive officers’ total compensation opportunity is based on performance (i.e., not guaranteed) and salaries comprise a modest portion of each executive officer’s total compensation opportunity.

Ð

We do not provide tax gross-up payments to any of our executive officers.

We established a formulaic short-term incentive bonus program based on rigorous goals for management.

Ð

We do not provide “single-trigger” change in control cash severance payments.

We align our executive officers with our long-term investors by awarding a significant percentage of their equity compensation in the form of multi-year, performance-based equity awards that use relative Total Shareholder Returns as the main metric.

Ð

We do not encourage unnecessary or excessive risk taking as a result of our compensation policies; incentive compensation is not based on a single performance motive.

We enhance executive officer retention with time-based, multi-year vesting equity incentive awards granted for prior-year performance.

Ð

We do not guarantee annual salary increases or minimum cash bonuses.

We have a clawback policy.

Ð

We do not have uncapped bonus pay-outs.

We have robust minimum stock ownership guidelines for our executives and directors.

Ð

We do not allow hedging of our stock.

We engage an independent compensation consultant to advise the Compensation Committee, which is comprised solely of independent directors.

Ð

We do not allow for repricing of stock options.

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COMPENSATION DISCUSSION AND ANALYSIS

Peer Group Benchmarking

In developing our executive compensation programs, the Compensation Committee commissioned a peer group compensation benchmarking analysis to ensure that our programs are competitive with those of other publicly traded REITs, including taking into account the cost of attracting and retaining talented executives in the New York City marketplace. The Compensation Committee developed an appropriate peer group for our Company with the advice of FPL, an independent compensation consultant. In establishing an appropriate peer group, the Compensation Committee not only focused on publicly traded REITs relative to our size, but also included publicly traded REITs in the office sector that compete in high-barrier, high-cost markets like New York City and San Francisco, markets in which we operate and compete for talent. The Compensation Committee included companies like Boston Properties, Inc., SL Green Realty Corp. and Vornado Realty Trust in our peer group, notwithstanding their larger relative size, because these companies are office REITs that operate in the same markets as we do. As a result, they compete with us for talent and deal flow and, like us, two of these companies are headquartered in New York City where approximately 95% of our employees are based, including all of our NEOs. For example, our Chief Operating Officer, Chief Financial Officer and Treasurer, Wilbur Paes, joined us from Vornado Realty Trust, where he had previously spent 11 years and prior to his departure was a Senior Vice President.

Other factors are also examined such as what other companies cite Paramount as a peer, to what companies sell-side analysts compare us, as well as what companies are selected by outside proxy advisory firms for their comparative peer groups.

Based on these factors, the Compensation Committee selected the following 12 publicly traded REITs focused on the office sector as members of our peer group. The Compensation Committee evaluates the members of our peer group each year to ensure that they continue to be appropriate and to determine whether other companies should be added. Notwithstanding such annual evaluations, there have been no changes to our peer group since 2019.

Alexandria Real Estate Equities, Inc.

Douglas Emmett, Inc.

Kilroy Realty Corporation

Boston Properties, Inc.

Empire State Realty Trust, Inc.

Piedmont Office Realty Trust, Inc.

Columbia Property Trust, Inc.

Highwoods Properties, Inc.

SL Green Realty Corp.

Corporate Office Properties Trust

Hudson Pacific Properties, Inc.

Vornado Realty Trust

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2021 Proxy Statement | 37


COMPENSATION DISCUSSION AND ANALYSIS

Fund and Asset Management Business

Our Company maintains a slightly different structure than the majority of our peers in that in addition to the real estate assets owned by us, we also maintain a meaningful ancillary fund and asset management business that is not directly captured in our total capitalization. The total value of assets under management underlying our fund and asset management business is approximately $2.8 billion, which includes equity and debt fund investments and commitments, investments in properties by third party joint venture partners and other assets for which we typically provide leasing, asset management and property management services. To better depict the full breadth of oversight, we have provided a comparison of our size to our compensation peers by showing our total capitalization both with and without the impact of the fund and asset management business as well as the value of total assets versus the peers and both with and without the impact of our fund and asset management business.

As of December 31, 2020, excluding our fund and asset management business, on a total capitalization and total assets basis, we ranked at the 35th percentile and 48th percentile, respectively.
As of December 31, 2020, including our fund and asset management business, on a total capitalization and total asset basis, we ranked at the 50th percentile and 71st percentile, respectively.

Select size statistics for the peer group are shown below:

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After our peer group was established, FPL provided market data and practices of the peer group for the Compensation Committee to consider, as well as executive compensation trends and developments. Specifically, FPL provided information regarding the design and levels of compensation paid by our peers and overall counsel to determine the appropriate incentive design for our Company. Such compensation data for peers was analyzed by the Compensation Committee with the assistance of FPL.

For purposes of determining our overall level of executive compensation (i.e. base salary, annual incentive cash bonus and long-term equity incentive compensation), the Compensation Committee reviews both total compensation and the mix of compensation components paid by our peer group to executives in comparable positions. However, an executive’s target compensation is not mechanically set to be at a particular percentile of the peer group. The Compensation Committee also takes into account the executive’s role and experience, as compared to our peers’ executives, and other factors, such as retention and responsibility. In addition, the Compensation Committee believes that ultimately the decision as to appropriate target compensation for a particular executive should be made based on a full review of the individual and his role within the organization, Company performance as well as market data.

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COMPENSATION DISCUSSION AND ANALYSIS

CEO Pay-for-Performance Alignment

CEO Pay Structure

FIXED PAY

Base Salary

 

l No increase in base salary since our initial public offering
in 2014)

VARIABLE PAY

Short-Term Incentive
Compensation
(Cash Bonus)

l 100% based on rigorous goals largely established in early 2020;
l 60% based on formulaic Corporate Objectives;
l 40% based on Individual Objectives

Long-Term Incentive
Compensation
(Equity Awards)

l 60% based on the achievement of three-year TSR metrics, which
include TSR hurdles relative to the performance of our CBD-
focused New York City office peers and the performance of the
SNL U.S. Office REIT Index, with a modifier based on
absolute TSR;
l 40% based on continued service over a four-year vesting period;
l Additional one-year post-vesting restriction on any earned units
after the initial three-year performance period

CEO Performance-Based Equity Awards

The chart below provides a summary of the status of the performance-based awards granted to our CEO over the past 5 years (2016-2020), which represents the vast majority of his compensation opportunity, including the actual and/or potential payout outcomes based on our TSR performance over the respective periods.Graphic

___________

(1)Assuming performance for the three-year performance measurement period applicable to these awards continued at the same annualized rate as we experienced from the beginning of the performance period through December 31, 2020.

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2021 Proxy Statement | 39


COMPENSATION DISCUSSION AND ANALYSIS

Reported vs. Earned Pay

Below is a chart comparing the “Reported Pay” for our CEO in the Summary Compensation Table against the actual pay earned by our CEO. For purposes of this chart, we excluded from each “earned” column all performance-based equity awards that were not earned based on our performance through the end of the applicable performance period or, if the performance period had not yet concluded, would not have been earned as of December 31, 2020 (as referenced in the chart on page 39 – CEO Performance-Based Equity Awards). Additionally, the dollar amounts for all equity awards included as earned in the table below are based on a value of $9.04 per unit, which was the closing price on the NYSE of one share of our common stock on December 31, 2020.

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The Compensation Committee believes that TSR should ultimately drive actual pay earned in order to ensure alignment with our stockholders. Accordingly, a significant portion of what our CEO earns over time is driven by our TSR. By awarding a substantial portion of our CEO’s total compensation in the form of multi-year long-term performance-based equity awards, there is a strong alignment of the actual pay earned by our CEO with that of the returns to our stockholders. For example, over the past five years, our TSR has fallen short of our required thresholds and our stock has underperformed our peer set on a relative basis. As a result, the actual pay earned over the past 5 years (2016 – 2020) by our CEO has equated to only 45% of his total “Reported Pay” demonstrating our strong “pay-for-performance” philosophy.

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COMPENSATION DISCUSSION AND ANALYSIS

Elements of Our Compensation Program

The compensation provided to our NEOs in 2020 primarily consisted of Base Salary, Short-Term Incentive Compensation (cash bonus) and Long-Term Incentive Compensation (equity awards). The following charts illustrate the mix of compensation elements for our CEO and other NEOs for 2020.

Graphic

*

Includes Messrs. Paes, Brindley, Zobel and Johnson.

(1)Represents the cash bonuses awarded to our NEOs irrespective of their decision to exchange such bonuses for equity awards in connection with our bonus exchange program.
(2)Consists of annual equity grants comprised of 60% performance-based equity awards and 40% time-based equity awards.
(3)Consists of annual equity grants comprised of 50% performance-based equity awards and 50% time-based equity awards.

Base Salary

The base salary payable to each NEO provides a fixed component of compensation that reflects the executive’s position and responsibilities. Base salaries are reviewed annually by the Compensation Committee and, subject to contractual obligations we have with the NEO, may be adjusted to better match competitive market levels or to recognize an executive’s professional growth, development and increased responsibility. Below are the details of the annual base salaries for each of our NEOs.

Base Salary

Executive

2020

2019

Change (%)

Albert Behler

 

$ 1,100,000

 

$ 1,100,000

 

0.0%

Wilbur Paes

624,000

600,000

4.0%

Peter Brindley

520,000

500,000

4.0%

David Zobel

416,000

400,000

4.0%

Gage Johnson

390,000

375,000

4.0%

Total

$ 3,050,000

$ 2,975,000

2.5%

Mr. Behler’s base salary has remained the same since 2014. The base salaries for the rest of our NEOs were increased in early 2020 based on available market data with respect to their roles and responsibilities.

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2021 Proxy Statement | 41


COMPENSATION DISCUSSION AND ANALYSIS

Short-Term Incentive Compensation (“STIC”)

The Compensation Committee has established a STIC (cash bonus) program for our NEOs pursuant to our Executive Compensation Philosophy, which is to (i) promote a “pay-for-performance” structure and align the interests of our NEOs with that of our long-term shareholders by tying a vast majority of our NEOs non-salary compensation to performance-based incentives, and (ii) create a balanced approach with an appropriate mix of cash and equity compensation. The STIC program is intended to cover annual performance periods and provides our NEOs with the opportunity to earn awards at various performance levels based on the achievement of:

Quantitative financial and operational goals (“Corporate Objectives”), and
Qualitative individual performance goals (“Individual Objectives”)

The STIC program is designed to encourage outstanding individual and Company performance by motivating the NEOs to achieve key Corporate and Individual Objectives by rewarding performance measured against those objectives. The STIC program results in awards being paid 100% in cash, however in an effort to further align the interests of our NEOs with that of our stockholders, for 2020, each NEO had the opportunity to exchange all or a portion of his cash bonus for equity, pursuant to our “Bonus Exchange Program” as more fully described on page 53.

For our CEO, 60% of his STIC opportunity is based on the achievement of Corporate Objectives and the remaining 40% is based on the achievement of Individual Objectives. For the rest of our NEOs, 50% of their STIC opportunity is based on the achievement of Corporate Objectives and the remaining 50% is based on the achievement of Individual Objectives.

In February 2020, the Compensation Committee approved our STIC program. For each NEO, the Compensation Committee established three specific performance levels that could be achieved:

Threshold (50% of target);
Target; and
Maximum (150% of target)

To the extent performance falls between two levels, awards would be earned by linear interpolation. In the event that actual performance does not meet the threshold requirement, no awards are earned, and to the extent actual performance is above the maximum requirement, the earned awards are capped at the maximum.

The Compensation Committee determined the target amount for each NEO under the STIC program primarily based on a combination of the NEO’s historical compensation, skill, experience and position, competitive market factors, feedback received from our stockholders and contractual obligations we have with the NEO. The target amounts for Messrs. Behler and Paes were equal to 150% of their base salaries and represented the minimum target amounts set forth in their employment agreements with us that were in effect for 2020. The target amounts for Messrs. Brindley and Zobel were set at 125% of their base salaries and the target amount for Mr. Johnson was set at 80% of his base salary, consistent with their respective targets in the prior year.

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COMPENSATION DISCUSSION AND ANALYSIS

The following pages describe the Corporate Objectives for management that were approved by the Compensation Committee, including the reasons the objectives were selected and the rationale for the designated hurdles. These objectives were based on the Company’s internal models and budgets, including the Company’s initial guidance for 2020, which was set forth in its earnings release dated February 12, 2020. Prior to approving our STIC program, the Compensation Committee was extensively involved with the goal-setting process to ensure that the performance objectives were both appropriate and rigorous. In several instances, the Compensation Committee established “target goals” that were more rigorous than those set forth in the Company’s Earnings Guidance. For example, the Company’s Earnings Guidance provided for a 2020 Core FFO Target of $1.03 per share but the Compensation Committee set an even more rigorous Core FFO Target of $1.05 per share for the purposes of our STIC program. Similarly, most of the other goals had more rigorous “targets” than those set forth in the Company’s Earnings Guidance. The following is a list of the goals and related Targets that were established by our Compensation Committee in February 2020.

Pre-COVID-19 Pandemic

Goals

Threshold

Target

Maximum

Core FFO Per Share

$1.03

$1.05

$1.07

Same Store Cash NOI Growth

4.2%

4.5%

4.8%

Square Footage of Signed Leases

700,000

825,000

950,000

Same Store Leased Occupancy

96.6%

96.9%

97.2%

G&A Expenses (in millions)

$62.5

$61.5

$60.5

Capital Raising (in millions)

$600.0

$700.0

$800.0

Subsequent to approving our STIC program, in March 2020, the World Health Organization declared the Coronavirus (“COVID-19”) a global pandemic. The outbreak of COVID-19 had caused severe disruptions in the global economy, including that of the United States and the circumstances surrounding COVID-19 were evolving at a rapid pace. Specifically, New York City and San Francisco, the markets in which we operate and where a majority of our assets are located, reacted by instituting quarantines, “pause” orders, “shelter-in-place” rules, restrictions on travel, and restrictions on the types of business that could operate.

Beginning in March and throughout 2020, we received notices from several tenants requesting rent relief in the form of abatements and deferrals as their businesses were severely disrupted as a result of COVID-19. Leasing in New York City and San Francisco slowed considerably as tenants opted to defer decisions for long-term space needs amidst the pandemic and growing unemployment. Acquisition and capital raising activities also slowed as investors chose to preserve capital rather than deploy it. As a result of COVID-19 and the uncertainty that arose, in April 2020, the Company withdrew its Earnings Guidance that it previously provided in February 2020.

In light of the Company’s decision to withdraw its Earnings Guidance amidst the uncertainty that arose as the pandemic began to unfold, the Compensation Committee decided to re-evaluate the rigorous goals that were established for management prior to the COVID-19 pandemic, which were largely based on the framework used in the Company’s Earnings Guidance. The Compensation Committee’s evaluation considered, among other things, whether the previously established goals and targets were still appropriate, whether new goals were warranted in light of the ongoing pandemic, and management’s intentions with respect to reinstating Earnings Guidance. After much consideration and various discussions with management and the independent compensation consultant, the Compensation Committee concluded as follows:

Five of the six previously established goals were left unchanged, including the related ranges for threshold and maximum performance set for such goals; and
One goal (Capital Raising) was removed and replaced with a new goal (Sale of Minority Interest in 1633 Broadway)

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2021 Proxy Statement | 43


COMPENSATION DISCUSSION AND ANALYSIS

Given that Capital Raising and Transaction related activity had slowed considerably in the wake of the COVID-19 pandemic, and investors’ focus had shifted from “deploying” capital to preserving it, the Compensation Committee deemed it more appropriate to replace the Capital Raising goal with that of the completion of the Sale of a Minority Interest in 1633 Broadway. The Compensation Committee’s decision to leave all of the remaining goals unchanged was based on, among other factors, the following:

(1)management’s decision not to reinstate its 2020 Earnings Guidance given the fluidity of the pandemic and lack of visibility as to the degree at which the Company’s financial and operational goals would be achieved;

(2)a desire to avoid elevated payouts if the targets for the existing goals were downwardly revised at a particular point in time where the outlook was highly uncertain; and

(3)an intention to maintain a rigorous pay program despite the challenges brought on by COVID-19.

The table below provides a summary of the 2020 Goals that were in effect after the Compensation Committee’s evaluation of such goals in the light of the COVID-19 pandemic.

Post-COVID-19 Pandemic

Compensation

Committee

Goals

Threshold

Target

Maximum

Conclusion

Core FFO Per Share

$1.03

$1.05

$1.07

Unchanged

Same Store Cash NOI Growth

4.2%

4.5%

4.8%

Unchanged

Square Footage of Signed Leases

700,000

825,000

950,000

Unchanged

Same Store Leased Occupancy

96.6%

96.9%

97.2%

Unchanged

G&A Expenses (in millions)

$62.5

$61.5

$60.5

Unchanged

Capital Raising (in millions)

$600.0

$700.0

$800.0

Replaced

Sale of 10% Interest in 1633 Broadway

$2,300.0

$2,350.0

$2,400.0

New

Graphic

(in millions, except psf data)

$920/sf

$940/sf

$960/sf

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COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objective #1

Core FFO Per Share

Why was this measure chosen:

FFO is a widely-used non-GAAP measure of operating performance for REITs to assist investors and analysts in comparing results of real estate companies because it excludes the effect of real estate depreciation and amortization and net gain on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions.

Core FFO is an alternative measure of operating performance used by us because it adjusts FFO for certain other items that we believe enhance the comparability of our FFO across periods in order to reflect the Core FFO of our real estate portfolio and operations.

What was our Target:

The 2020 Core FFO Target for the purposes of our STIC program was $1.05 per share with a range of $1.03 to $1.07 per share. The 2020 Target that was established by the Compensation Committee was significantly ahead of consensus estimates and represented a $0.07 per share, or 7.1%, increase in Core FFO earnings when compared to 2019.

In establishing the 2020 Core FFO Target, the Compensation Committee considered, among other things, (i) our internal projections and earnings guidance, (ii) the growth in Core FFO earnings as compared to the prior year, and (iii) consensus estimates of Core FFO by the analyst community that cover the Company.

Graphic

Threshold

Maximum

Actual

Name

Weighting

Opportunity

Opportunity

Payout

($)

($)

($)

Behler

25.0%

123,750

371,250

-

Paes

25.0%

58,500

175,500

-

Brindley

15.0%

24,375

73,125

-

Zobel

20.0%

26,000

78,000

-

Johnson

25.0%

19,500

58,500

-

What were the Actual Results:

We ended 2020 with Core FFO of $0.96 per share, which was well below our Target of $1.05 per share primarily due to the significant impact of the COVID-19 pandemic. Given that this outcome was also below the threshold of $1.03 per share, it resulted in no payout with respect to this objective. For a reconciliation of Core FFO to the most directly comparable GAAP measure and additional information regarding this non-GAAP financial measure, see pages 75-76 of our Annual Report on Form 10-K for the year ended December 31, 2020.

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2021 Proxy Statement | 45


COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objective #2

Same Store Cash NOI Growth

Why was this measure chosen:

Same Store Cash NOI is used to measure the operating performance of properties that were owned by us in a similar manner during both the current period and prior reporting periods and consists of propertyrelated revenue less operating expenses excluding non-cash adjustments such as straightline rent and the amortization of above and belowmarket leases, net. We use this measure internally as a performance measure and believe it provides useful information to investors regarding our financial condition and results of operations because it only reflects income and expense items that are incurred at property level.

What was our Target:

The 2020 Target for Same Store Cash NOI growth for the purposes of our STIC program was 4.5%, with a range of 4.2% to 4.8%.

In establishing the 2020 Target for Same Store Cash NOI growth, the Compensation Committee considered, among other things, (i) our internal projections and earnings guidance, (ii) the historical average growth in Same Store Cash NOI , and (iii) the historical average growth in Same Store Cash NOI of that of our New York City focused peer group.

Graphic

Threshold

Maximum

Actual

Name

Weighting

Opportunity

Opportunity

Payout

($)

($)

($)

Behler

12.5%

61,875

185,625

-

Paes

15.0%

35,100

105,300

-

Brindley

10.0%

16,250

48,750

-

Zobel

15.0%

19,500

58,500

-

Johnson

15.0%

11,700

35,100

-

What were the Actual Results:

We ended 2020 with Same Store Cash NOI growth of 0.2%, which was well below our Target of 4.5%, primarily due to the significant impact of the COVID-19 pandemic. Given that this outcome was also well below the threshold of 4.2%, it resulted in no payout with respect to this objective. For a reconciliation of Same Store Cash NOI to the most directly comparable GAAP measure and additional information regarding this non-GAAP financial measure, see pages 71-75 of our Annual Report on Form 10-K for the year ended December 31, 2020.

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COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objective #3

Square Footage of Signed Leases

Why was this measure chosen:

Leasing is a very important aspect of our business and the amount of square feet leased has a direct impact on the current and future cash flows of our business.

What was our Target:

The 2020 Target for Square footage of Signed Leases for the purposes of our STIC program was 825,000 square feet, with a range of 700,000 to 950,000 square feet.

In establishing the 2020 Target for signed leases, the Compensation Committee considered, among other things, (i) our internal projections and earnings guidance, (ii) our historical average leasing volume, (iii) the existing amount of vacant square feet and square feet of leases expiring in 2020, including the timing of such expirations, and (iv) our historical average lease renewal rates.

Graphic

Threshold

Maximum

Actual

Name

Weighting

Opportunity

Opportunity

Payout

($)

($)

($)

Behler

12.5%

61,875

185,625

-

Paes

15.0%

35,100

105,300

-

Brindley

25.0%

40,625

121,875

-

Zobel

12.5%

16,250

48,750

-

Johnson

15.0%

11,700

35,100

-

What were the Actual Results:

We ended 2020 with signed leases aggregating 699,159 square feet of space, which was well below our Target of 825,000 square feet, primarily due to the significant impact of the COVID-19 pandemic. Notwithstanding that this outcome was slightly below the threshold of 700,000 square feet, it resulted in no payout with respect to this objective.

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2021 Proxy Statement | 47


COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objective #4

Same Store Leased Occupancy

Why was this measure chosen:

Same Store Leased Occupancy is used to measure the occupancy of properties that were owned by us in a similar manner during both the current period and prior reporting periods. The occupancy levels of our properties have a direct impact on the current and future cash flows of our business.

What was our Target:

The 2020 Target for the Same Store Leased Occupancy rate of our portfolio for the purposes of our STIC program was 96.9%, with a range of 96.6% to 97.2%. The 2020 Target established by the Compensation Committee represented a 100 bps increase in Same Store Leased Occupancy over 2019.

In establishing the 2020 Target for Same Store Leased Occupancy, the Compensation Committee considered, among other things, (i) our internal projections and earnings guidance, (ii) the leased occupancy rate of our same store portfolio at the end of December 2019, (iii) the existing amount of vacant square feet and square feet of leases expiring in 2020, including the timing of such expirations, and (iv) our historical average lease renewal rates.

Graphic

Threshold

Maximum

Actual

Name

Weighting

Opportunity

Opportunity

Payout

($)

($)

($)

Behler

12.5%

61,875

185,625

-

Paes

10.0%

23,400

70,200

-

Brindley

20.0%

32,500

97,500

-

Zobel

12.5%

16,250

48,750

-

Johnson

10.0%

7,800

23,400

-

What were the Actual Results:

We ended 2020 with a Same Store Leased Occupancy rate of 95.2%, which was well below our Target of 96.9%, primarily due to the significant impact of the COVID-19 pandemic. Given that this outcome was also well below the threshold of 96.6%, it resulted in no payout with respect to this objective.

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COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objective #5

General and Administrative Expense

Why was this measure chosen:

General and administrative expense represents our corporate overhead, of which a meaningful component is executive compensation. It is used by our investors and analysts to assess how efficiently we manage our overhead.

What was our Target:

The 2020 Target for General and Administrative expenses for the purposes of our STIC program was $61.5 million, with a range of $62.5 million to $60.5 million. The 2020 Target established by the Compensation Committee represented a 3.9% decrease in general and administrative expenses over 2019. For the purposes of our STIC program, general and administrative expenses exclude the impact of the mark-to-market of our deferred compensation plan assets, the impact of cash bonuses pursuant to our STIC program that are above target levels and certain other one-time items approved by our Board or Compensation Committee.

In establishing the 2020 Target for general and administrative expenses, the Compensation Committee considered, among other things, (i) our internal projections and earnings guidance, (ii) the degree of change in general and administrative expenses in relation to the prior year, (iii) historical increases in general and administrative expenses, including the impact of the amortization of stock-based compensation, and (iv) the overall general and administrative costs to run our business, including the cost to compete for talent in New York City (our headquarters) and the markets in which we operate.

.

Graphic

Threshold

Maximum

Actual

Name

Weighting

Opportunity

Opportunity

Payout

($)

($)

($)

Behler

15.0%

74,250

222,750

222,750

Paes

20.0%

46,800

140,400

140,400

Brindley

15.0%

24,375

73,125

73,125

Zobel

15.0%

19,500

58,500

58,500

Johnson

15.0%

11,700

35,100

35,100

What were the Actual Results:

We ended 2020 with general and administrative expenses of $60.4 million, which was better than our Target of $61.5 million. Given that this outcome was also better than the maximum goal of $60.5 million, it resulted in maximum payout with respect to this objective.

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2021 Proxy Statement | 49


COMPENSATION DISCUSSION AND ANALYSIS

Corporate Objective #6

Sale of a 10% interest in 1633 Broadway

Why was this measure chosen:

As a result of the COVID-19 pandemic in March 2020, the stock markets began to tumble and the Company’s stock price declined by over 57% from a high of $15.00 in February 2020 to a new 52-week low of $6.42 in March 2020, thereby implying that the value of the Company’s Class A real estate assets had declined to approximately $525 per square foot. Executing on the sale of a portion of the Company’s largest real estate asset in a challenging pandemic-stricken environment, at a price substantially higher than the value being implied by the current stock price not only helped validate the “true market value” of the Company’s real estate assets, but also enabled the Company to generate additional liquidity thereby strengthening its balance sheet to weather the ongoing COVID-19 crisis. Accordingly, the Compensation Committee chose to replace the previously established objective relating to capital raising with an objective relating to our sale of a 10% interest in 1633 Broadway. While this was a strategic objective of the Company from early 2020, it was not added as a formal objective under the STIC until after the closing of the sale.

We executed the sale of a 10% interest in 1633 Broadway at a price that valued the asset at $2.4 billion, or $960 per square foot. In light of the importance of our completion of this sale, the Compensation Committee determined that the maximum payout should be paid with respect to this metric.

Graphic

Threshold

Maximum

Actual

Name

Weighting

Opportunity

Opportunity

Payout

($)

($)

($)

Behler

22.5%

111,375

334,125

334,125

Paes

15.0%

35,100

105,300

105,300

Brindley

15.0%

24,375

73,125

73,125

Zobel

25.0%

32,500

97,500

97,500

Johnson

20.0%

15,600

46,800

46,800

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COMPENSATION DISCUSSION AND ANALYSIS

After evaluating the achievement of each Corporate Objective and factoring their relative weighting with respect to each NEO, the Compensation Committee awarded cash bonuses that were well below Target and only slightly above the Threshold amounts that were established for each NEO. The following table summarizes the cash bonuses awarded to each NEO based on their achievement of the Corporate Objectives.

% of Total

Corporate Objective Component

STI Compensation

Threshold

Target

Maximum

Actual

% of

Name

Opportunity

(50%)

(100%)

(150%)

Payout

Target

Albert Behler

 

60%

 

$ 495,000

 

$ 990,000

 

$ 1,485,000

 

$ 556,875

 

56%

Wilbur Paes

50%

234,000

468,000

702,000

245,700

53%

Peter Brindley

50%

162,500

325,000

487,500

146,250

45%

David Zobel

50%

130,000

260,000

390,000

156,000

60%

Gage Johnson

50%

78,000

156,000

234,000

81,900

53%

Total

$ 1,099,500

$ 2,199,000

$ 3,298,500

$ 1,186,725

54%

The table below describes the Individual Objectives for 2020 that were established for each of our NEOs.

Albert

Wilbur

Peter

David

Gage

Individual Objectives

Behler

Paes

Brindley

Zobel

Johnson

Executing the overall strategy and business plan

l

Overseeing the investment and capital allocation strategy

l

Developing new and expanding existing joint venture relationships

l