JBG SMITH Properties 10-Q

ITEM 5. OTHER INFORMATION LTIP Unit Awards On July 29, 2021 (the “Grant Date”), upon the recommendation of the Compensation Committee (the “Compensation Committee”) of the Board of Trustees (the “Board”) of JBG SMITH Properties (the “Company”), the Board approved grants of special LTIP unit awards (“Retention LTIP Grant”) to the Company’s executive officers and certain other employees, including to each of the following named executive officers: W. Matthew Kelly, Chief Executive Officer, David P. Paul, President and Chief Operating Officer, Kevin “Kai” Reynolds, Chief Development Officer, and M. Moina Banerjee, Chief Financial Officer (the “NEOs”). The Retention LTIP Grant comprises 50% time-based vesting LTIPs (the “Time-Based LTIPs”) and 50% performance-based vesting LTIPs (the “Performance-Based LTIPs” and together with the “Time-Based LTIPs”, the “LTIP Units”), based on grant-date fair value. The Time-Based LTIPs vest 50% on the fifth anniversary of the Grant Date and 25% on each of the sixth and seventh anniversaries of the Grant Date, subject to the recipient's continued employment with the Company. The Performance-Based LTIPs earn based on the Company’s achievement of four share price targets during the period commencing on the first anniversary of the Grant Date and ending on the sixth anniversary of the Grant Date (the “Performance Period”) and will vest, if earned, over a seven-year period. Specifically, a number of Performance-Based LTIPs, rounded up to the nearest whole unit, equal to 17.5%, 22.5%, 27.5%, and 32.5% of the total Performance-Based LTIPs awarded earn on the first date during the Performance Period on which the closing sales price of the Company’s common shares, as reported on the NYSE, equals or exceed each of the following four share price targets for a consecutive 20 trading day period: $35.00, $40.00, $45.00, and $50.00. A maximum of 50% of the Performance-Based LTIPs can vest on the fifth anniversary of the Grant Date, and a maximum of an additional 25% of the Performance-Based LTIPs can vest on each of the sixth and seventh anniversaries of the Grant Date, in each case subject to such Performance-Based LTIPs being earned, as described above. Any Performance-Based LTIPs granted but not earned by the end of the Performance Period will be forfeited. The total number of LTIP Units granted to each named executive officer is as follows: (i) 308,000 LTIP Units for Mr. Kelly; (ii) 62,000 LTIP Units for Mr. Paul; (iii) 103,000 LTIP Units for Mr. Reynolds; and (iv) 103,000 LTIP Units for Ms. Banerjee. The aggregate fair value of these awards is $15.4 million. The purpose of the Retention LTIP Grant, which was made under the Company’s existing 2017 Omnibus Share Plan (the “Omnibus Plan”), is to further align the Company's senior team with its transformational objectives for the next seven years and its long-term NAV per share growth strategy as well as to provide incentive to the senior team to remain with the Company. Further, the Compensation Committee believes that the pandemic has had a significant impact on the job market – an impact that will likely hinder the ability to attract and retain employees. Consequently, the Compensation Committee believes the Retention LTIP Grant is critical for the Company to retain its talented senior team. Vesting of the Retention LTIP Grant is generally contingent on the named executive officer’s continued employment through each vesting date, provided that, notwithstanding the language in each NEO’s employment agreement, if such executive’s employment terminates without cause or for good reason more than one year after the Grant Date, due to death or disability at any point after the Grant Date, the grantee will vest in the Performance-Based LTIPs that have been earned 51 Table of Contents through the date of termination at the next vesting date and Time-Based LTIPs that would have vested at the next vesting date had such grantee continued to be employed by the Company. Solely in the case of Mr. Paul, if his employment terminates without cause, for good reason or due to his retirement more than one year after the Grant Date, or due to death or disability at any point after the Grant Date, he will fully vest in the Time-Based LTIPs and he will be eligible to continue to earn and vest in the Performance-Based LTIPs through the seventh anniversary of the Grant Date as though he had remained employed with the Company through that date. If any such grantee’s employment terminates for any reason other than as described in the preceding sentences, any outstanding unvested LTIP Units as of the date of such termination will be forfeited and cancelled. In connection with a “change in control” (as defined in the Omnibus Plan), if the acquirer of the Company assumes or replaces the Time-Based LTIPs on substantially the same terms, the awards will continue to vest; otherwise, the Time-Based LTIPs will vest in full immediately prior to the consummation of the Change in Control. With regard to the Performance-Based LTIPs and commencing more than one year after the grant date , if the acquirer of the Company assumes or replaces the awards such that it preserves the intent, economic opportunity and value of the award following the change in control, the award shall convert and continue to vest; otherwise, the Performance-Based LTIPs will become vested to the extent earned based on the price received in the change in control. If the Performance-Based LTIPs or Time-Based LTIPs are assumed by the acquirer in a change in control and the grantee is terminated without cause or for good reason within 18 months of the change in control, such Performance-Based LTIPs will become fully vested to the extent earned through the date of termination and the Time-Based LTIPs will become fully vested. Any Performance-Based LTIPs granted one year or less prior to the change in control, as of the date of such change in control will be forfeited and cancelled. Copies of the forms of Executive LTIP Unit Agreements are being filed as Exhibits 10.3, 10.4, 10.5 and 10.6 to this Form 10-Q, and each is incorporated herein by this reference. The foregoing description of the terms of the LTIP Unit Awards is qualified in its entirety by reference to the full text of such award agreements. ​ ​ ​ 52 Table of Contents ITEM 6. EXHIBITS (a) Exhibit Index ​ ​ Exhibits Description 3.1 Declaration of Trust of JBG SMITH Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on July 21, 2017). 3.2 Articles Supplementary to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on March 6, 2018). 3.3 Articles of Amendment to Declaration of Trust of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K, filed on May 3, 2018). 3.4 Amended and Restated Bylaws of JBG SMITH Properties (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on February 21, 2020). 10.1† Amendment No. 3 to the JBG SMITH Properties 2017 Omnibus Share Plan, effective April 29, 2021 (incorporated by reference to Exhibit 4.8 to our Registration Statement on Form S-8, filed on April 29, 2021). 10.2 Amendment No. 1 to Second Amended and Restated Limited Partnership Agreement of JBG SMITH Properties LP, effective April 29, 2021 (incorporated by reference to Exhibit 10.2 to our Registration Statement on Form S-3, filed on June 30, 2021). 10.3** Form of July 2021 Performance LTIP Unit Agreement. 10.4** Form of July 2021 Performance LTIP Unit Agreement (Special Termination & Vesting Provisions). 10.5** Form of July 2021 Restricted LTIP Unit Agreement. 10.6** Form of July 2021 Restricted LTIP Unit Agreement (Special Termination & Vesting Provisions). 31.1** Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended and Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and 18 U.S.C 1350, as created by Section 906 of the Sarbanes- Oxley Act of 2002. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Extension Calculation Linkbase 101.LAB Inline XBRL Extension Labels Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ​ ​ ** Filed herewith. † Denotes a management contract or compensatory plan, contract or arrangement. ​ ​ ​ ​ 53 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ​ ​ ​ ​ JBG SMITH Properties ​ Date: August 3, 2021 /s/ M. Moina Banerjee ​ M. Moina Banerjee ​ Chief Financial Officer ​ (Principal Financial Officer) ​ ​ ​ ​ ​ ​ JBG SMITH Properties ​ Date: August 3, 2021 /s/ Angela Valdes ​ Angela Valdes ​ Chief Accounting Officer ​ (Principal Accounting Officer) ​ ​ ​ 54