SITC-K SITE Centers Corp

2023 Proxy Statement Table of Contents

  PROXY STATEMENT SUMMARY  

1. Proxy Statement Summary

This Proxy Statement Summary contains highlights and information that can be found elsewhere in this Proxy Statement as indicated by the applicable page references. This summary does not contain all of the information that you should consider, and therefore you should read the entire Proxy Statement.

How to Vote

Shareholders of record (i.e., shareholders who own shares in their own name as reflected in the records of our transfer agent, Computershare Trust Company, N.A. (“Computershare”)) may vote their shares in any of the following ways:

By Internet: To submit a proxy over the Internet, go to www.investorvote.com/sitc. You will need the control number that appears on your Notice of Annual Meeting of Shareholders and Proxy Card.
By Telephone: To submit a proxy by telephone, call toll free 1-800-652-8683. You will need the control number that appears on your Notice of Annual Meeting of Shareholders and Proxy Card.
By Mail: If you received a full paper set of proxy materials, date and sign your Proxy Card and mail it in the enclosed, postage-paid envelope. You do not need to mail the Proxy Card if you are submitting your proxy by Internet or telephone.
At the Meeting: To vote at the Annual Meeting, visit www.meetnow.global/MW2XNAP. You will need the control number that appears on your Notice of Annual Meeting of Shareholders and Proxy Card.

  PROXY STATEMENT SUMMARY  

Shareholders whose shares are held of record by a broker, bank, trust or other nominee may vote their shares by following the instructions provided by such broker, bank, trust or other nominee or at the Annual Meeting. Please note that if your shares are held of record by a broker, bank, trust or other nominee, you must register in advance in order to vote electronically at the Annual Meeting. To register in advance, you must forward a legal proxy from your broker, bank, trust or other nominee holding your shares to Computershare at legalproxy@computershare.com no later than 5:00 p.m. Eastern Time on Friday, May 5, 2023. You will receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetnow.global/MW2XNAP and enter your control number.

Even if you intend to attend the Annual Meeting, we encourage you to submit your proxy in advance of the Annual Meeting.

In accordance with Alexander Otto’s 2009 investor rights agreement and the number of our common shares owned by Alexander Otto and certain members of his family (the “Otto Family”) as of the record date for the Annual Meeting, the Otto Family was entitled to propose one Director for nomination at the Annual Meeting. The Otto Family has proposed, and the Board of Directors (the “Board”) has nominated, Mr. Otto for election at the Annual Meeting.

Our Board strives to maintain an independent, balanced and diverse set of Directors that collectively possess the expertise to ensure effective oversight of management. Three of our Director nominees are women and one of our Director nominees is African American.

  PROXY STATEMENT SUMMARY  

2022 Performance Highlights

In 2022, SITE Centers continued to position the Company to take advantage of favorable operating conditions that emerged following the COVID-19 pandemic, with retail tenants looking to expand their store footprints within the suburban, high household income communities in which our properties are located. The impact of elevated tenant demand for new space on our results was amplified by relatively low levels of existing tenant fallout from bankruptcies and lease non-renewals along with the Company’s positioning in supply constrained sub-markets with compelling demographics. SITE Centers continued to selectively recycle capital from the sale of joint venture investments and stabilized properties into unanchored, convenience retail properties that offer enhanced prospects for cash flow growth through rent increases and lower capital expenditure requirements. Base rent growth from elevated leasing activity, the net impact of acquisition activity and prudent expense management offset declining management fees from the Company’s asset management business and helped to generate net income and operating funds from operations (“Operating FFO” or “OFFO”) attributable to common shareholders for the year ended December 31, 2022 that were well in excess of original Company guidance issued in February 2022. Highlights of the Company’s 2022 accomplishments include:

  PROXY STATEMENT SUMMARY  

Corporate Governance Highlights

We are committed to the highest standards of corporate governance, which we believe will ensure that the Company is managed for the long-term benefit of our stakeholders. We monitor developments and best practices in corporate governance and consider feedback from shareholders when evaluating our governance, policies and structure.

Corporate Values, Social Responsibility and Environmental Sustainability

 

 

Our Company and its 267 employees (as of year-end 2022) are committed to being Fearless, Authentic, Curious and Thoughtful (our “Matters of FACT”) members of the community. We consider social and environmental issues in all aspects of our business, including the well-being of our employees and our impact on the communities in which our properties are located. Recent recognition includes:

 

		Recognized as a Top Workplace in Northeast Ohio in 2022 by Cleveland.com and The Plain Dealer.				Green Star rated by Global Real Estate Sustainability Benchmark (GRESB)
		Included in Bloomberg’s 2023 Gender Equality Index. 63% of our employees and 38% of our Director nominees are women.				Recognized as a Green Lease Leader (Gold Level) by U.S. Department of Energy and The Institute for Market Transformation.

Our dedication to our community and the environment is detailed in our eighth annual Corporate Responsibility and Sustainability Report which was prepared in 2022 in alignment with Global Reporting Initiative (“GRI”) principles and certain Sustainability Accounting Standards Board (“SASB”) and Task Force on Climate-Related Financial Disclosures (“TCFD”) standards. Our Corporate Responsibility and Sustainability Report can be found on our website at www.sitecenters.com/sustainability.

  PROXY STATEMENT SUMMARY  

Compensation Practices

The Compensation Committee oversees the design and administration of the Company’s executive compensation programs. Our compensation programs reward executives not only for delivering superior returns but also for reducing the risk profile of the Company and achieving financial and non-financial measures of performance that enhance long-term shareholder and stakeholder value. The following are key features of our executive compensation programs.

What We Do

 

 

		We tie pay to performance by making a significant portion of compensation “at risk”.
		Annual incentive pay is typically based on multiple performance metrics, which are established at the beginning of each year, and individual performance.
		A significant portion of the value of long-term performance incentives depends on relative shareholder return.
		The Compensation Committee, which is comprised solely of independent Directors, engages an independent compensation consultant to advise it.

What We Don’t Do

 

 

		We do not guarantee minimum incentive bonus awards.
		We do not encourage excessive risk taking as we use different performance metrics for our annual and long-term incentive compensation programs.
		We do not pay dividend equivalents on unearned equity awards subject to performance-based vesting.
		We do not allow for repricing of stock options without shareholder approval.
		We do not include excise tax gross-up provisions in our executive compensation arrangements.
		We do not offer excessive perquisites or special health and welfare plans to executives.

Pay Aligned With Performance

Our executive compensation is aligned with Company performance. The majority of the targeted level of annualized compensation for our CEO under his September 2020 employment agreement is variable and “at risk” based on performance.

  PROXY STATEMENT SUMMARY  

2022 Executive Compensation

 

 

The table below summarizes 2022 compensation awarded or paid to our named executive officers as reported in the 2022 Summary Compensation Table included in this Proxy Statement. Our Compensation Committee typically establishes both quantitative and qualitative performance metrics governing our annual incentive compensation program in the first quarter of each year. In February 2022, the Compensation Committee established our 2022 annual incentive compensation program.

The 2022 annual compensation program included both quantitative performance metrics, namely Operating FFO and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), and subjectively-evaluated qualitative performance metrics. The quantitative metrics comprised 60% of the program’s overall assessment of executive performance. The remaining 40% of the annual incentive award program involved a qualitative assessment of each named executive officer’s individual performance.

Based on the Compensation Committee’s evaluation in early 2023 of executive performance during 2022, including the Company’s achievements outlined in “2022 Performance Highlights” above, Messrs. Lukes (President and CEO), Fennerty (Executive Vice President (“EVP”) and Chief Financial Officer (“CFO”)) and Cattonar (EVP and Chief Investment Officer (“CIO”)) and Ms. Vesy (EVP and Chief Accounting Officer (“CAO”)) were awarded 2022 incentive compensation payouts of $2,250,000, $675,000, $525,000 and $510,000, respectively, which represented the maximum amount of the annual incentive award opportunities provided for under their employment agreements in effect at the end of 2022. All executives received their 2022 incentive compensation payouts in cash.

Of the approximately $6.8 million total compensation reported for Mr. Lukes in the 2022 Summary Compensation Table, approximately $2.6 million consisted of the grant date fair value of an annual award of performance-based RSUs which becomes payable, if at all, based on the percentile rank of the Company’s total shareholder return (“TSR”) measured over a three-year period relative to an identified group of peer companies.

For more details on 2022 executive compensation, including factors considered by our Compensation Committee in evaluating the qualitative elements of the 2022 annual incentive compensation program, see the “Compensation Discussion and Analysis” section beginning on page 26 of this Proxy Statement and the 2022 Summary Compensation Table on page 36 of this Proxy Statement.

 

NAMED EXECUTIVE OFFICER		POSITION		SALARY				BONUS				STOCK AWARDS				NON-EQUITY INCENTIVE PLAN COMPENSATION				ALL OTHER COMPENSATION				TOTAL
David R. Lukes		President and CEO		$	900,000			$	0			$	3,606,484			$	2,250,000			$	43,001			$	6,799,485
Conor M. Fennerty		EVP and CFO		$	450,000			$	0			$	901,655			$	675,000			$	11,178			$	2,037,833
Christa A. Vesy		EVP and CAO		$	425,000			$	0			$	180,349			$	510,000			$	11,994			$	1,127,343
John M. Cattonar		EVP and CIO		$	350,000			$	0			$	450,828			$	525,000			$	11,649			$	1,337,477

Historical Say-on-Pay Voting Results

 

 

 

		Shareholders have continued to show strong support for our executive compensation programs with approximately 96%, 95% and 97% of votes cast for the approval of the “say-on-pay” proposals at our 2020, 2021 and 2022 Annual Meetings of Shareholders, respectively.

 

6		SITE Centers Corp.  ï  2023 Proxy Statement

2. Proposal One: Election of Eight Directors

Proposal Summary and Board Recommendation

At the Annual Meeting, unless you specify otherwise, the common shares represented by your proxy will be voted to elect the eight Director nominees identified below. If any of the Director nominees is not a candidate when the election occurs for any reason (which is not expected) and the size of our Board remains unchanged, then our Board intends that proxies will be voted for the election of a substitute Director nominee designated by our Board as recommended by the Nominating and ESG Committee.

BOARD RECOMMENDATION:

“FOR” ALL EIGHT DIRECTOR NOMINEES

Director Nominees for Election at the Annual Meeting

Our Board has nominated and recommends that shareholders vote “FOR” the election of each of the following Director nominees, each to serve a one-year term until the next annual meeting of shareholders and until a successor has been duly elected and qualified. All nominees are currently serving as Directors and were elected by the shareholders at the 2022 Annual Meeting, with the exception of Mr. Sholem. Mr. Sholem was recommended to the Nominating and ESG Committee for election as a director by Company management, as described below in “2022 Director Recruitment Process.” Mr. Sholem previously served as a director of the Company from 1998 to 2018.

Transactions with the Otto Family

In 2009, we entered into a stock purchase agreement with Mr. Alexander Otto. Pursuant to this agreement, the Otto Family purchased 40,000,000 common shares of the Company (the “Purchased Shares”). In connection with the sale of the Purchased Shares, we also entered into an investor rights agreement with Mr. Otto under which he has a right to nominate individuals for election to our Board depending on the Otto Family’s level of ownership in the Company as of the record date for the applicable meeting of shareholders. If the Otto Family beneficially owns 17.5% or more of our outstanding common shares as of the applicable record date, our Board will nominate two persons recommended by the Otto Family who are suitable to us to become members of our Board at each annual election of Directors, and if the Otto Family beneficially owns less than 17.5% but more than 7.5% of our outstanding common shares as of the applicable record date, our Board will nominate one person recommended by the Otto Family who is suitable to us to become a member of our Board. In February 2022, in accordance with the terms of our Fourth Amended and Restated Articles of Incorporation, our Board reduced the ownership limit applicable to the Otto Family from 29.8% of our common shares to 17.5% of our common shares.

As of March 15, 2023, the record date for the Annual Meeting, to our knowledge the Otto Family beneficially owned approximately 13.4% of our outstanding common shares. In accordance with the investor rights agreement, the Otto Family has proposed, and our Board has nominated, Mr. Otto for election at the Annual Meeting.

Independent Directors

Our Board has affirmatively determined that all Directors who served during 2022 (except for Mr. Lukes) were, and all Directors nominated by the Board for election in 2023 (except for Mr. Lukes) are, independent within the meaning of the rules of the New York Stock Exchange (“NYSE”) and, as applicable, the rules of the Securities and Exchange Commission (“SEC”), including with respect to the applicable Director’s service on the Compensation Committee and/or the Audit Committee. Our Corporate Governance Guidelines provide that our Board will be comprised of a majority of independent Directors and that only those Directors or Director nominees who meet the listing standards of the NYSE will be considered independent. Our Board reviews annually the relationships that each Director or Director nominee has with us (either directly or indirectly), and only those Directors or Director nominees whom our Board affirmatively determines have no material relationship with us will be considered independent.

Director Qualifications and Review of Director Nominees

The Nominating and ESG Committee reviews annually with our Board the composition of our Board as a whole and recommends, if necessary, actions to be taken so that our Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for our Board as a whole and contains at least the minimum number of independent Directors required by applicable laws and regulations and our Corporate Governance Guidelines. The Nominating and ESG Committee is responsible for ensuring that the composition of our Board appropriately reflects the needs of our business and, in furtherance of this goal, proposing the addition of Directors and requesting the resignation of Directors for purposes of ensuring the requisite skill sets and commitment of the Directors to actively participate in Board and committee meetings. Directors should possess such attributes and experience as are necessary to provide a broad range of personal characteristics including diversity, management skills, and real estate and general business experience. Directors should commit the requisite time for preparation and attendance at regularly scheduled Board and committee meetings, as well as participate in other matters necessary to ensure we are well-positioned to engage in best corporate governance practices.

In evaluating a Director candidate, the Nominating and ESG Committee considers factors that are in the best interests of the Company and its shareholders, including the knowledge, experience, integrity and judgment of each candidate; the potential contribution of each candidate to the diversity of backgrounds, experience and competencies that our Board desires to have represented; each candidate’s ability to devote sufficient time and effort to his or her duties as a Director; independence and willingness to consider all strategic proposals; any other criteria established by our Board and any core competencies or real estate expertise necessary to staff Board committees. In addition, the Nominating and ESG Committee will consider potential members’ qualifications to be independent under the NYSE listing standards in accordance with our Corporate Governance Guidelines, and will assess whether a candidate possesses the integrity, judgment, knowledge, experience, skills, and expertise that are likely to enhance our Board’s ability to oversee our affairs and business, including, when applicable, to enhance the ability of committees of our Board to fulfill their duties.

The Nominating and ESG Committee will consider suggestions forwarded by shareholders to our Secretary concerning qualified candidates for election as Directors. To recommend a prospective candidate for the Nominating and ESG Committee’s consideration and potential recommendation to the Board for nomination for Director, a shareholder may submit the candidate’s name and qualifications to our Secretary, Aaron M. Kitlowski, at the following address: 3300 Enterprise Parkway, Beachwood, Ohio 44122. The Nominating and ESG Committee has not established specific minimum qualifications that a candidate must have to be recommended to our Board. However, in determining qualifications for new Directors, the Nominating and ESG Committee considers those guidelines described above. The Nominating and ESG Committee will consider a pool of potential Board candidates established from recommendations from shareholders and third parties, including management and current Directors, as well as pursuant to the investor rights agreement described above under the caption “Transactions with the Otto Family.” The Nominating and ESG Committee may, in its discretion, retain a search consultant to supplement the pool of potential Board candidates considered for nomination.

Our Code of Regulations sets forth the requirements with respect to the nomination of candidates for Director by shareholders.

2022 Director Recruitment Process

During the course of 2022, the Board and Nominating and ESG Committee concluded that it would be appropriate to identify and appoint a new director to replace Dr. Thomas Finne who departed from service to the Board on May 11, 2022. Management identified real estate investment experience as a desired background for the new director and recommended that the Nominating and ESG Committee consider Mr. Barry Sholem for appointment to the Board. Mr. Sholem previously served as a Company Director from 1998 to 2018 when he resigned to join the board of directors of RVI, where he served from 2018 to May 2022. Following a recommendation by the Nominating and ESG Committee, the Board elected Mr. Sholem as a director on September 13, 2022.    

Proxy Access

Our Code of Regulations provides proxy access pursuant to which a shareholder or group of up to 20 shareholders satisfying specified eligibility requirements may include Director nominees in our proxy materials for annual meetings. To be eligible to use proxy access, such shareholders must, among other requirements:

The maximum number of Director nominees that may be submitted pursuant to these provisions may not exceed 20% of the number of Directors then in office but in no event shall such maximum number be less than two.

Majority Vote Standard

Consistent with best corporate governance practices, the Company’s Articles of Incorporation provide for a majority vote standard in uncontested elections and a plurality vote standard in contested elections of Directors. An election of Directors is contested when the number of nominees for election as a Director exceeds the number of Directors to be elected. Under a majority vote standard, each vote is specifically counted “For” or “Against” the Director nominee’s election and an affirmative majority of the total number of votes cast “For” or “Against” a Director nominee will be required for election. Shareholders are entitled to abstain with respect to the election of a Director nominee. With respect to the election of Directors, broker non-votes and abstentions will not be considered votes cast at the Annual Meeting and will be excluded in determining the number of votes cast at the Annual Meeting.

3. Board Governance

Board Leadership

Mr. Ahern serves as Chairman of the Board. The position of Chairman of the Board is a non-executive officer position and is expected to be held by a non-management, independent Director. The Chairman of the Board has the following responsibilities, among others as may be determined by our Board:

We believe that an independent Chairman of the Board, separate from our CEO, recognizes the time, effort and commitment that our CEO is required to devote to his position and to fulfill his responsibilities and the independent oversight required by our Chairman of the Board. This structure also enables our Board as a whole to fulfill its responsibility to oversee the risks presented by the Company’s long-term strategy, business plan and model.

Meetings of Our Board

During the fiscal year ended December 31, 2022, our Board held four meetings and undertook five written actions. Each of our Directors attended at least 75% of the aggregate of (i) the number of meetings of the Board that were held during the period that such person served on the Board and (ii) the number of meetings of committees of the Board held during the period that such person served on such committee. As stated in our Corporate Governance Guidelines, all Directors are expected to attend the Annual Meeting. All of our Directors nominated for election virtually attended the Annual Meeting of Shareholders in May 2022, other than Mr. Sholem, who was elected to the Board in September 2022. Our Board conducts and reviews its operations through a self-assessment process on an annual basis.

Meetings of Non-Management and Independent Directors

The non-management Directors meet in executive session in conjunction with each regularly scheduled Board meeting. These meetings are chaired by the Chairman of the Board. In addition, as required by our Corporate Governance Guidelines, the independent Directors meet at least once per year to the extent our Board includes one or more non-management Directors who are not independent.

Committees of Our Board

During 2022, our Board had the committees described below. Our Board has approved the written charters of the Audit Committee, the Compensation Committee and the Nominating and ESG Committee, which, along with our Corporate Governance Guidelines, are posted on our website at www.sitecenters.com, under “Governance” in the “Investor Relations” section. Each of the Audit Committee, Compensation Committee and Nominating and ESG Committee conducts a self-evaluation and review of its charter annually and reports the results of these evaluations and reviews to our Board. The information contained on or accessible through our website is not incorporated by reference into this Proxy Statement, and you should not consider such information to be part of this Proxy Statement.

Risk Oversight

Management is responsible for the day-to-day management of risks, while the Board, as a whole and through our Audit Committee, is responsible for overseeing the risk assessment and risk management functions of the Company. The Board has delegated responsibility for reviewing our policies with respect to risk assessment and risk management to our Audit Committee through its charter. The Board has determined that this oversight responsibility can be most efficiently performed by our Audit Committee as part of its overall responsibility for providing independent, objective oversight with respect to our accounting and financial reporting functions, internal and external audit functions, systems of internal control over financial reporting, security of information technology systems and data, and legal, ethical and regulatory compliance. Our Audit Committee regularly reports to the Board with respect to its oversight of these areas.

2022, the annual cash retainer paid to our non-employee Directors was increased from $50,000 to $60,000. In addition, the structure of the annual stock retainer paid to our non-employee Directors was changed from an annual grant of shares having a market value of $100,000 at the time of grant (paid quarterly) to a combination of a fixed-share grant of 3,800 common shares per year (which equated to a market value of $55,000 at the time of the Board’s review of the Director compensation program) and an annual grant of shares having a market value of $60,000 at the time of grant (in both cases, paid quarterly). The revised Director compensation program, including the fixed-share portion of the annual equity retainer, is intended to align the interests of our Directors and our shareholders and is summarized below.

Non-employee Directors are also paid fees for service on certain committees as set forth below and for service as the Chairman of the Board. The Director who serves as the Chairman of the Board receives an annual fee of $100,000 in addition to the fees paid to all non-employee Directors. Fees are paid to committee members, the respective committee chairs and the Chairman of the Board in quarterly installments in the form of cash or common shares, at the Director’s election. No changes were made to the level of fees paid to the Chairman of the Board, committee chairs or committee members as a result of the Board’s review of the Company’s Director compensation program in early 2022. Each Director is also reimbursed for expenses incurred in attending meetings because we view meeting attendance as integrally and directly related to the performance of the Directors’ duties.

Directors’ Deferred Compensation Plan

Non-employee Directors have the right to defer the receipt of all or a portion of their fees pursuant to our Directors’ Deferred Compensation Plan. Our Directors’ Deferred Compensation Plan is an unsecured, general obligation of the Company. Participants’ contributions are converted to units, based on the market value of our common shares on the date of contribution, so that each unit is the economic equivalent of one common share but without voting rights. Settlement of units is made in cash, common shares or a combination of both (as permitted by the plan administrators) at a date determined by the participant at the time a deferral election is made. Prior to settlement, each unit earns dividend equivalents in an amount equal to any dividends paid on our common shares during the deferral period. We have established a “rabbi” trust, which holds our common shares, to satisfy our payment obligations under the plan. Common shares equal to the number of units credited to participants’ accounts under the plan are contributed to the rabbi trust. In the event of our insolvency, the assets of the rabbi trust are available to general creditors of the Company. As of December 31, 2022, the following Directors hold units in our Directors’ Deferred Compensation Plan:

Director Stock Ownership Guidelines

Each non-employee Director must own common shares or common share equivalents with an aggregate market value of no less than five times the cash portion of the annual retainer paid to a Director (in other words, $300,000 worth of shares). This ownership requirement generally must be met no later than the fifth anniversary of the date restricted shares or common shares comprising a component of the Director’s compensation are first granted to the Director, and on each December 31st thereafter. Our Board established this particular level of stock ownership for our non-employee Directors in order to align the interests of our non-employee Directors with the investment interests of our shareholders. To this end, and unless otherwise approved by the Nominating and ESG Committee, each non-employee Director is required to retain at least 50% of the common shares and common share equivalents received by the Director as compensation until such time as the minimum share ownership requirement has been satisfied. Common share units acquired by Directors under our deferred compensation plans constitute common share equivalents and count toward satisfying the stock ownership guidelines. All Directors were in compliance with the Director stock ownership guidelines as of December 31, 2022.

5. Proposal Three: Shareholder Advisory

Vote to Approve the Frequency for

Future Shareholder Advisory Votes to

Approve the Compensation of the

Company’s Named Executive Officers

Proposal Summary and Board Recommendation

As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, we are asking you to cast an advisory (non-binding) vote recommending the frequency with which we should hold future shareholder advisory votes to approve the compensation of our named executive officers.

This advisory vote, commonly known as a “frequency” or “say-when-on-pay” vote, gives you the opportunity to express your views about how frequently (but at least once every three years) we should conduct a Say-on-Pay vote. You may vote for future Say-on-Pay votes to be held every “1 YEAR,” “2 YEARS” or “3 YEARS” or abstain from voting in response to this proposal. We are required to hold a “frequency” or “say-when-on-pay” vote at least once every six years. Our last “frequency” or “say-when-on-pay” vote was held on May 9, 2017.

The result of the “frequency” or “say-when-on-pay” vote will not be binding on us or our Board; however, the Board values the views of our shareholders. The Board and the Compensation Committee will review the results of the vote and expect to take them into consideration in determining the frequency of future Say-on-Pay votes.

This non-binding advisory vote is scheduled to be conducted every six years. The next “frequency” or “say-when-on-pay” vote is expected to take place at our 2029 Annual Meeting of Shareholders.

BOARD RECOMMENDATION:

“FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF A FREQUENCY OF EVERY “1 YEAR” FOR FUTURE SHAREHOLDER
ADVISORY VOTES TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

Recommendation on the Frequency of Say-on-Pay Vote

We believe you should vote for us to conduct Say-on-Pay votes every year. Before you vote, we encourage you to consider the following:

For these reasons, the Board unanimously recommends that shareholders vote for us to conduct a shareholder advisory vote to approve named executive officer compensation every 1 YEAR.

6. Compensation Discussion and Analysis

Overview

In this section of the Proxy Statement, we explain our compensation arrangements with our executive officers and provide a review of decisions made with respect to the Company’s 2022 executive compensation program. Our goal is to provide a better understanding, both in absolute terms and relative to our performance, of our compensation practices and the decisions made concerning the compensation payable to our executive officers, including the Chief Executive Officer and the other executive officers named in the “2022 Summary Compensation Table” below. We refer to the executive officers included in that table, namely Mr. Lukes (our President and CEO), Mr. Fennerty (our EVP and CFO), Ms. Vesy (our EVP and CAO) and Mr. Cattonar (our EVP and CIO), as our “named executive officers”.

The Compensation Committee of our Board, referred to in this section as the “Committee,” generally designs and administers our executive compensation program. All principal elements of compensation paid to our named executive officers are subject to approval by the Committee.

Executive Summary

2022 Performance Highlights

In 2022, SITE Centers continued to position the Company to take advantage of favorable operating conditions that emerged following the COVID-19 pandemic, with retail tenants looking to expand their store footprints within the suburban, high household income communities in which our properties are located. The Company’s aggregate occupancy increased on a pro rata basis to 92.4% at December 31, 2022 from 90.0% at December 31, 2021, and SITE Centers signed new leases and renewals aggregating approximately 4.3 million square feet of GLA which represented the Company’s highest leasing volume of the last five years (despite a decrease in the GLA of the Company’s portfolio over that period) and is expected to contribute to growth in property revenues in 2023 and 2024. The impact of elevated tenant demand for new space on our results was amplified by relatively low levels of existing tenant fallout from bankruptcies and lease non-renewals along with the Company’s positioning in supply constrained sub-markets with compelling demographics. SITE Centers continued to selectively recycle capital from the sale of joint venture investments and stabilized properties into unanchored, convenience retail properties that offer enhanced prospects for cash flow growth through rent increases and lower capital expenditure requirements. Base rent growth from elevated leasing activity, the net impact of acquisition activity and prudent expense management offset declining management fees from the Company’s asset management business and helped to generate net income and Operating FFO attributable to common shareholders for the year ended December 31, 2022 that were well in excess of original Company guidance issued in February 2022.

2022 Annual Incentive Compensation Program Overview

Our 2022 annual performance-based incentive compensation program for our named executive officers was adopted by the Committee in February 2022 and was based upon a combination of quantitative and qualitative performance measures. 60% of our named executive officers’ annual incentive awards for 2022 were linked to the Company’s performance during the year with respect to two key metrics: Operating FFO and Adjusted EBITDA. The remaining 40% of the annual incentive award determinations involved a qualitative assessment of each named executive officer’s performance with particular consideration given to the achievement of pre-identified goals for which each executive was individually responsible.

According to this design, and based on the achievements highlighted above and discussed in further detail below, the Committee approved annual incentive payouts to Messrs. Lukes, Fennerty and Cattonar and Ms. Vesy for 2022 in the amounts of $2,250,000, $675,000, $525,000 and $510,000, respectively, which represented the maximum level of the annual incentive award opportunities provided in their employment agreements.

Mr. Lukes elected to receive his annual incentive payout in cash (as opposed to in RSUs at a 20% increase) as permitted by his employment agreement. In accordance with their employment agreements, annual incentives were paid to Messrs. Fennerty and Cattonar and Ms. Vesy in cash.

Overview of 2022 Equity Grants and Performance-Based Equity Results

Annual Service-Based RSU Awards. Pursuant to the terms of their employment agreements, on February 22, 2022, Messrs. Lukes, Fennerty and Cattonar and Ms. Vesy were granted 65,727, 16,434, 8,217 and 3,288 service-based RSUs having a value of approximately $1 million, $250,000, $125,000 and $50,000, respectively, which grants will generally vest in substantially equal installments on each of the first three anniversaries of the grant date.

2022 Performance-Based RSU Awards. Pursuant to the terms of their employment agreements, on March 1, 2022, Messrs. Lukes, Fennerty and Cattonar and Ms. Vesy were granted 129,116, 32,279, 16,140 and 6,456 performance-based RSUs having “target” values of approximately $2 million, $500,000, $250,000 and $100,000, respectively, subject to a three-year performance period beginning on March 1, 2022 and ending February 28, 2025. These performance-based RSUs (or “PRSUs”) become payable to the executives in common shares after the end of the performance period, if at all, based on the percentile rank of the Company’s TSR measured over the performance period as compared to the TSR of a defined group of peer companies, subject generally to the executives’ continued employment with us.

Settlement of 2019 CEO Performance-Based RSU Award. On March 1, 2019, in accordance with the terms of his prior employment agreement, the Company granted Mr. Lukes PRSUs having a performance period ending on February 28, 2022 and a target value of approximately $3 million (excluding accrued dividends). Based on the Company’s relative TSR during the three-year period ended February 28, 2022, this award paid out at the maximum level in March 2022, and Mr. Lukes received 494,334 common shares (which included accrued dividends) having a market value of $7,686,894 based on the closing price of the Company’s common shares on February 28, 2022.

The result of this performance-based award is evidence of the alignment of our compensation program with actual performance. Due to the lagging relative performance of our share price during calendar year 2017, no shares were earned by Mr. Lukes with respect to the one-, two- and three-year performance-based equity awards granted to him in March 2017 and therefore Mr. Lukes earned less compensation through December 31, 2020 than originally intended under our performance-based equity programs. However, as a result of the relative outperformance of our share price relative to the PRSU peer group following the Company’s December 2017 announcement of its plans to spin-off RVI, the value realized by Mr. Lukes in March 2021 and March 2022 with respect to PRSUs granted to him in March 2018 and March 2019 exceeded the target values originally established by the Committee.

Settlement of 2020 CFO Performance-Based RSU Awards. On March 1, 2020, in accordance with the terms of his employment agreement, the Company granted Mr. Fennerty 5,954 PRSUs having a performance period ending on February 28, 2021 and a target value of approximately $75,000 (excluding accrued dividends), 11,909 PRSUs having a performance period ending on February 28, 2022 and a target value of approximately $150,000 (excluding accrued dividends) and 17,863 PRSUs having a performance period ending on February 28, 2023 and a target value of approximately $225,000 (excluding accrued dividends). Based on the relative TSR of the Company during the 12-month period ended February 28, 2021, Mr. Fennerty received 12,131 common shares (which included accrued dividends) having a market value of $164,496 based on the closing price of the Company’s common shares on February 28, 2021. Based on the relative TSR of the Company during the 24-month period ending February 28, 2022, Mr. Fennerty received 24,921 common shares (which included accrued dividends) having a market value of $387,519 based on the closing price of the Company’s common shares on February 28, 2022.

Investor Outreach

We proactively meet with our largest shareholders from time to time in order to discuss a variety of topics regarding the Company and to give these investors an opportunity to raise questions and provide our management team with feedback. Since January 1, 2022, we have held meetings with 12 of our 25 largest institutional investors who we believe collectively own, together with members of the Otto Family, over 45% of our common shares as of December 31, 2022. Topics of discussion in these meetings often include executive compensation, the composition of our Board of Directors and other corporate governance matters. Based on the discussion of our executive compensation program at these meetings, we believe that these investors understand our executive compensation program and have a favorable view of the alignment of pay and performance created by the program’s significant use of performance-based equity. Based on these meetings, we are not aware of any significant shareholder concerns regarding our pay practices or executive compensation program.

Compensation Program Design

Compensation Philosophy and Objectives

Our primary executive compensation objectives are to:

Our compensation program rewards executives for not only delivering superior returns but also for reducing the risk profile of the Company, as well as for achieving financial and non-financial measures of performance that enhance long-term shareholder value. Our executives and the Board have intentionally avoided short-term decisions that might produce inflated short-term shareholder returns in favor of longer term strategies that provide sustainable growth opportunities and enhance net asset value.

Structure and Principal Elements of Our Executive Compensation Program

We entered into our current employment agreement with Mr. Lukes, our CEO, in September 2020. In negotiating this agreement, the Committee emphasized the use of performance-based awards for both the annual and long-term incentive components of Mr. Lukes’ compensation in order to align the interest of Mr. Lukes with those of the Company’s shareholders. The annualized “target” level of compensation for Mr. Lukes under his September 2020 employment agreement is summarized in the chart below:

Based on the foregoing design of Mr. Lukes’ employment agreement:

The Committee felt that this program’s focus on “at risk” incentive compensation and greater emphasis on equity over cash compensation and performance-based equity over service-based equity were in the best interests of the Company’s shareholders, consistent with institutional investor preferences and best practices in executive compensation and generally in line with chief executive compensation programs implemented by peer companies.

Pay Governance

Over the past several years we have entered into employment agreements with our executives in order to implement several best practices in executive compensation. The following are key features of our executive compensation program.

What We Do

 

 

		We tie pay to performance by making a significant portion of compensation “at risk”.
		Annual incentive pay is typically based on multiple performance metrics, which are established at the beginning of each year, and individual performance.
		A significant portion of the value of long-term performance incentives depends on relative shareholder return.
		We have stock ownership guidelines for our Directors and our named executive officers.
		We engage an independent compensation consultant to advise the Committee, which is comprised solely of independent Directors.

What We Don’t Do

 

 

		We do not guarantee minimum incentive bonus awards.
		We do not encourage excessive risk taking as we use different performance metrics for our annual and long-term incentive compensation programs.
		We do not pay dividend equivalents on unearned equity awards subject to performance-based vesting.
		We do not allow Directors or officers to hedge or pledge company securities.
		We do not allow for repricing of stock options without shareholder approval.
		We do not include excise tax gross-up provisions in our executive compensation arrangements.
		We do not offer excessive perquisites or special health and welfare plans to executives.

Role of the Committee and Management in Executive Compensation

The Committee has overall responsibility for the compensation programs provided to our named executive officers. Pursuant to the Committee’s charter, the Committee has the authority to review and approve the compensation for executive officers, including the review and approval of the design and implementation of any incentive arrangements, equity compensation and supplemental retirement programs. Consistent with this authority, the Committee generally establishes financial performance metrics and targets used for annual performance-based incentives, conducts an in-depth review of performance against these objectives and subjectively evaluates individual performance, reviews from time to time market pay practices as they relate to both cash-based and equity-based award programs primarily to remain informed about general compensation trends in the market, designs and adopts our long-term equity incentive compensation programs and specifically approves compensation arrangements for our named executive officers.

Our CEO provides significant input in setting the compensation for our other named executive officers by providing the Committee with an evaluation of their performance and making recommendations for any adjustments to their base and target annual incentive compensation. The Committee can accept, reject or modify the CEO’s recommendations as it sees fit, subject to the terms of any applicable employment agreement.

Role of the Compensation Consultant in Executive Compensation

For 2022, the Committee continued its retention of Gressle & McGinley as its independent compensation consultant. Gressle & McGinley was selected as the advisor to the Committee based on its extensive knowledge of the REIT sector, especially retail REITs, its experience with the Company, and its deep knowledge and experience in designing executive

compensation programs over the past 30 years across multiple sectors of the economy. The Committee has assessed the independence of Gressle & McGinley, as required under NYSE listing rules. The Committee has also considered and assessed all relevant factors, including but not limited to those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, that could give rise to a potential conflict of interest with respect to Gressle & McGinley. Based on this review, the Committee is not aware of any conflict of interest that has been raised by the work performed by Gressle & McGinley.

Among other matters, in 2022 Gressle & McGinley assisted the Committee with its:

Consideration of 2022 Say-on-Pay Voting Results

At our 2022 Annual Meeting, we received approximately 97% approval, based on the total votes cast, for our annual advisory Say-on-Pay vote to approve the compensation of our named executive officers. The Committee considered this result in connection with its review of compensation policies and decisions in 2022. The Committee believes these voting results demonstrate significant, continuing support for our named executive officer compensation program, and the Committee chose not to make any substantial changes to the existing program for 2022 specifically in response to the 2022 Say-on-Pay voting results. The Committee will, however, continue to work with Gressle & McGinley to monitor changes in executive compensation to keep our executive compensation program aligned with best practices in our competitive market.

2022 Compensation Program

Base Salary Levels

We pay salaries to our named executive officers to provide them with a base level of income for services rendered. These base salaries are originally established at the time of the named executive officer’s first employment with us based on an analysis of the salaries paid to executives in comparable positions within our industry provided by Gressle & McGinley. Base salaries may be increased by the Committee from time to time, including at the time we extend employment agreements with our named executive officers, based on market conditions and prior performance. Base salaries were established for our named executive officers in 2020 and 2021 in connection with the execution of their current employment agreements and were not adjusted for 2022.

Annual Incentive Compensation Design

The employment agreements with our named executive officers specify threshold, target and maximum annual incentive amounts as a percentage of year-end base salary. Our named executive officers are not guaranteed an annual incentive payment and each named executive officer’s annual incentive payment can be as low as zero or as high as the maximum amount set forth in his or her agreement based on the degree of achievement of corporate and individual performance measures typically established by the Committee in the beginning of each year. Expressed in dollar values, the minimum, threshold, target and maximum annual incentive award payable to each of our named executive officers for 2022 pursuant to the terms of his or her employment agreement, and the maximum amount expressed as a percentage of the executive’s base salary, were as follows:

The 2022 annual incentive compensation program for our named executive officers was established by the Committee in February 2022 and used a combination of company-wide quantitative performance metrics as well as qualitative objectives. In each case, the Committee believed that the performance measures were appropriate because their achievement was expected to contribute to our long-term success and the creation of value for our shareholders. The quantitative objectives, namely Operating FFO and Adjusted EBITDA, comprised 60% of the program’s overall assessment of each named executive officer’s performance for 2022. The remaining 40% of the annual incentive compensation program involved a qualitative assessment of each named executive officer’s performance, with consideration given to the achievement of pre-identified goals for which each executive was individually responsible.

The following charts identify the performance measures applicable to our named executive officers, the range of performance in 2022 for which points were awarded in our scoring system and the weighting of each of the performance measures to the overall score. Within the performance ranges applicable to each quantitative metric, the program awarded from one to five points based on the Company’s level of actual performance relative to break-points within the stated performance range on a formulaic, nondiscretionary basis. No points were earned on account of any quantitative measure to the extent actual performance was below the bottom end of the identified performance range. In the case of each individualized performance measure, the applicable executive received from zero to five points based on the Committee’s subjective assessment of performance. After points were awarded for each performance measure, each named executive officer was given an overall score based on the weighting of each measure as indicated below. An overall score of one point corresponded to a “threshold” incentive payout, a score of three points corresponded to a “target” incentive payout and a score of five points corresponded to a “maximum” incentive payout, in each case as indicated in the applicable executive’s employment agreement (with straight line interpolation applicable to scores between those break-points).