Simon Property Wins Dismissal of Fund’s Executive Pay Suit

Simon Property Group Inc. (SPG), the biggest U.S. shopping-mall owner, won’t have to face a lawsuit alleging it improperly barred investors from voting on an executive-pay plan that resulted in a $120 million stock award to Chief Executive Officer David Simon.

Delaware Chancery Court Judge Travis Laster in Wilmington today backed the mall owner’s arguments that a Louisiana pension fund’s shareholder suit should be thrown out because Simon officials agreed to change the executive-compensation plan that was targeted by investors.

Simon, based in Indianapolis, faced criticism last year over its chief executive’s compensation package. More than 70 percent of the Simon shares voted at the company’s 2012 annual meeting opposed the retention award. To address those complaints, directors changed the CEO’s compensation package in April to cut the number of shares eligible to vest if Simon, 52, leaves before 2015.

The ruling comes as the U.S. continues to weigh a proposal to require corporations to disclose how much more their chief executives earn than rank-and-file employees. The pay-ratio disclosures are mandated by a provision in the U.S. Dodd-Frank Act.

Brooke Gordon, an outside spokeswoman for Simon at Sard Verbinnen & Co., didn’t immediately respond to a call seeking comment on today’s ruling.

Say-on-Pay

Simon investors sued in Delaware last year after shareholders’ so-called say-on-pay vote over the CEO’s stock grants. In the past, company officials have defended Simon’s compensation by noting total stockholder returns for the past 10 years were 597 percent compared with 58 percent for the S&P 500. Simon was one of the company’s top executives during that period and has been CEO since 1995 and chairman since 2007.

The Louisiana Municipal Police Employees Retirement System, a Simon shareholder, and other investors accused directors of exceeding their authority by amending the company’s stock-incentive plan, created in 1998, to allow Simon’s retention grant without shareholders’ approval.

Stuart Grant, a lawyer for the pension fund, didn’t immediately respond to a call seeking comment on the judge’s decision to dismiss the lawsuit.

The case is Louisiana Municipal Police Employees Retirement System v. Bergstein, CA No. 7764, Delaware Chancery Court (Wilmington).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net; Phil Milford in Wilmington, Delaware at pmilford@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Andrew Dunn

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