UDR Inc
For the period ended May 23, 2024. Filed Apr 4, 2024.
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May 23, 2024 · Filed Apr 4, 2024
Contents
Proxy Overview
PROXY OVERVIEW
This summary highlights selected information about UDR**and the items to be voted on at the annual meeting. This summary does not contain all of the information that you should consider in deciding how to vote. You should read the entire proxy statement carefully before voting.
Company Overview
About UDR, Inc.
UDR is a $20 billion enterprise value multifamily REIT that owns, operates, develops and redevelops a diversified portfolio of apartment homes across top-tier U.S. markets. Founded in 1972, UDR is an S&P 500 company that consistently generates strong total shareholder return through innovation, best-in-class operations and disciplined capital allocation across a wide range of opportunities. UDR’s strategy is founded on diversification across markets, price points, and product types which coupled with our best-in-class operations delivers a full-cycle investment that generates both growth and stability. As of December 31, 2023, we owned 188 communities including 60,336 homes and had 1,397 full-time and 13 part-time associates who worked to generate in excess of $1.6 billion of revenue in 2023.
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UDR’s Business Strategy
Why UDR?
Strategy
Our primary goal is to consistently generate above-peer (our apartment peers include AIRC, AVB, CPT, EQR, ESS, and MAA) average total shareholder return (“TSR”) while considering our stakeholders and the environments in which we operate. The following attributes aid us in executing this goal through growth in Funds from Operations as Adjusted (“FFOA”), Net Asset Value (“NAV”), and the Dividend per share combined with being a strong Corporate Citizen.
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| ► Operating Excellence | | ► Culture and ESG |
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| ●Generate above-peer median same-store growth.●Enhance controllable operating margin via innovative technological solutions.●Increase resident satisfaction through self-service enablement. | | ●Promote an innovative, inclusive culture where associate engagement is high, sustainability is more than a catch phrase, and top-notch customer service is a central focus.●Reduce our environmental footprint through accretive capital investments in energy, water, and waste initiatives. |
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| ► Portfolio Diversification | | ► Accretive Capital Allocation |
| ●Reduce metropolitan statistical area concentration risk and same-store growth volatility and appeal to a wide renter/investor audience.●Implement our best-in-class operating and capital allocation platforms. | | ●Invest in and pivot to the best risk-adjusted return opportunities.●Apply predictive analytics that influence investments and capital deployment. |
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| ► Balance Sheet Strength | | |
| ●Maintain a safe, liquid and flexible balance sheet that can fully fund our needs throughout real estate cycles.●Sustain a diverse, efficient set of capital sources. | ||
These efforts contribute to creating above-peer average TSR:
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2023 Performance Highlights
In 2023, UDR achieved a variety of successes, which include:
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| ► Earnings and Growth Highlights | ||
| ●Generating above-peer-average earnings growth of 6%, marking the seventh time in the last ten years UDR has outperformed the peer group.●Accretively growing the Company through $402 million of wholly owned acquisitions.●Formed the LaSalle joint venture, contributed $507 million of properties and acquired one property for $114 million.●Our dividend paid in January 2024 (for the fourth quarter of 2023) was our 206th consecutive dividend paid and our annualized dividend for 2024 increased by 1.2% over 2023, while our 2023 annualized dividend increased by 10.5% over the annualized dividend for 2022. | ||
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| ► Operational Highlights | ||
| ●Implementing the Company’s Next Generation Operating Platform to improve the customer experience and our operating efficiency through a self-service model. Since 2018, UDR has reduced onsite staffing by approximately 40% mostly through natural attrition, resulting in UDR having the best controllable operating margin in the multifamily peer group at approximately 300 basis points above what would be expected for a company with UDR’s average rent. We are continuing our innovation efforts and have identified future projects which we estimate will increase net operating income by as much as $40 million while at the same time enhancing our residents’ experience.●Second highest same-store net operating income growth among our apartment peers for 2023. | ||
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| ► ESG Highlights | | |
| ●Enhanced our ESG related disclosure resulting in receiving a GRESB Sector Leader designation, being named one of America’s Most Responsible Companies by Newsweek for the third consecutive year, and we have committed to invest $30 million (including $10 million in early 2024) in strategic ESG and climate focused venture capital funds. ●We were an inaugural donor to the NAREIT Foundation’s Dividends through Diversity, Equity and Inclusion campaign.●Achieved 80% participation by our associates in our quarterly Associate Engagement Pulse Survey.●Introduced quarterly pulse surveys to promptly examine and consider the needs and perceptions of our associates.●Associate turnover of 22% in 2023 outperforming the industry average of 40%.●Updated our Scope 1, 2, and 3 emissions intensity goals to align with science-based targets. | ||
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| ► Investment/Balance Sheet | | |
| ●Invested in ~$1 billion of joint venture and operating partnership unit transactions.●Maintained our investment-grade balance sheet and have the lowest cost of debt in our sector and the best liquidity profile – only 12% of debt (apartment peer group average is 25%) maturing through 2026. | ||
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Innovation Accomplishments
UDR’s history of innovation has delivered better SS NOI growth and controllable operating margin versus peers.
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| Long-Term Same-Store OutperformanceUDR vs. Peer Median(1) SS NOI Growth (2013-2023) | Controllable Operating Margin (“COM”) ExpansionCOM vs. Avg. Monthly Rent(2) (TTM THROUGH 4Q 2023) |
| (1) | Peer group includes AIRC (AIV prior to 2021), AVB, CPT, EQR, ESS, and MAA; 2Q 2020 through 4Q 2023 UDR same-store NOI results have been adjusted where appropriate to reflect concessions on a straight-line basis for peer comparability. |
| (2) | Based on disclosures across the peer group, Average Monthly Rent is defined as average monthly rental rates for EQR, ESS, and MAA and is defined as average monthly revenue per occupied home for AIRC, AVB, CPT, and UDR. |
Source: Company and peer documents.
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| ~300 bps controllable operating margin advantage vs. peer average | Same-Store EBITDA margin (including G&A and property management) is ~100 bps higher than the peer average | Higher Same-Store EBITDA margin in 9 of 14 primary UDR markets in which we compete with our apartment peers |
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Human Capital Management
Our associates are critical to our success and, in recognition of that fact, below we describe some of the tools and initiatives we utilize to attract, develop, and retain our associates as well as to measure the results of our efforts. Our goal is to build a culture that results in high associate satisfaction and retention, which in turn should help us to achieve results for our other stakeholders, including our shareholders. Our efforts in 2023 resulted in a turnover rate of 22%, a 4% decrease from 2022, as compared to an industry average turnover rate of 40%.
Board Oversight
The board believes that it is critical to our success that we continue to attract, develop and retain high quality associates in all areas of our business. Through its oversight function, the board sets the “tone at the top,” and holds senior management accountable for creating a culture that embodies our values and that allows us to attract and retain the high-quality associates that we need. Each year in its annual report to the board, the human resources team furnishes a thorough overview of our human capital initiatives, encompassing the evaluation process and results, workforce analysis, and strategic planning components.
In 2018, in connection with our belief as to the importance of our associates to our success, a “Health of the Workforce” performance metric was added to our short-term incentive compensation program for our named executive officers and certain other senior officers, which has been retained for subsequent years. In 2023, we continued to track the Rooney Rule metric as part of the “Health of the Workforce” scorecard, which ties compensation to performance with respect to an initiative to consider all candidates for all open positions across the entire company. A new ESG metric was added to our 2021 short term incentive compensation program and retained for 2022 and 2023, although for 2023 such metric was revised to be determined based on the percentile of our overall GRESB score as opposed to an absolute score. In addition, for 2022 and 2023 we expanded our Health of the Workforce and ESG metrics so that they impact associate compensation for many associates beginning at the vice president level and in 2024 we expanded this concept to many associates at the director and senior director level.
Helping Our Associates Thrive
At UDR, our culture is defined by choice, transparency, and trust. We seek to empower our associates to make decisions that align with their individual interests and benefit the company as a whole. Our approach to human capital has resulted in high levels of associate engagement as shown by our associate surveys, leading to increased associate retention (turnover in 2023 of 22% outperforming the industry average of 40%) and better performance outcomes. To continue this success, our human resources team continues to evaluate and adjust our strategies to create alignment between the needs and expectations of our business and our associates.
To further enhance our commitment to human capital development, in 2023, we hired a Vice President of Organizational Development, a new position that will focus on career development and succession for associates throughout the organization. These efforts will play a pivotal role in ensuring that UDR cultivates and retains the right talent in the right positions.
In 2022, as part of our ongoing commitment to optimizing our human resources strategy, our human resources team spearheaded an HR Priority Ranking Assessment involving approximately 50 UDR leaders, including Senior Vice Presidents and Vice Presidents. The objective was to synchronize our strategic direction with the specific needs of our business, allowing the creation of tailored and impactful solutions. Based on the insights gleaned from this assessment, five key HR Goals for 2023 were identified and subsequently approved by the senior executive team. In addition, drawing upon feedback garnered from quarterly pulse surveys begun in 2023, our objectives were adjusted for 2024. For 2024, our five core objectives are as follows: (1) enhance the associate experience to drive engagement and elevate customer satisfaction; (2) strengthen our approach to learning, development, and succession planning; (3) pursue excellence in associate health, wellness, and compensation to maintain competitive standing in the market; (4) optimize our talent acquisition function to attract and retain top talent effectively, and (5) advance our DEI programs and expand opportunities for community engagement among associates.
Following up on the comprehensive benefits survey of our associates conducted in 2022, and the changes we made to our benefits program in 2022 based on the results of the survey, we dedicated our third quarter 2023 associate engagement pulse survey to benefits. That survey revealed that 88% of associates have a clear understanding of their benefits, with a strong favorability rating of 77% across our UDR benefit offerings. Drawing from the survey and additional feedback from associates we further enhanced our benefit package for 2024 by reducing the benefit waiting period from 60 to 30 days, instituting a 401(k) auto-enrollment for new hires at 3% of salary, introducing Teen Support to our Associate Resource Program, and launching a new Annual Virtual Health & Wellness Fair.
For a number of years, we have worked in our recruitment endeavors to attract qualified candidates including candidates from underrepresented groups. In connection with that effort, we have implemented various strategies such as integrating our Human Resources Information System with job board platforms, including those most used by potential candidates from underrepresented groups, collaborating with organizations such as the National Diversity Council, actively participating in military job fairs, and making other concerted efforts to recruit from diverse candidate pools. These efforts have been successful, in 2023, 61% of our newly hired associates were from ethnic groups other than white, and 42% were female. In addition to recruiting efforts, we continue to furnish resources on DEI-related topics, offering a range of avenues, including webinars, training, workshops, and other tools. These efforts are complemented by our ongoing initiatives to promote community engagement, exemplified through activities such as food drives and volunteer opportunities. We measure our efforts in this area through our quarterly pulse surveys with a survey in 2023 showing that 80% of associates believe that everyone can succeed at UDR irrespective of age, cultural background, gender, or race.
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Compensation programs are also important to recruiting, attracting and retaining talent and along with our surveys we use tools to measure our compensation across a variety of metric including a compensation market data tool we began using in 2022, that provides near real-time market data, which we use to measure and update our salary ranges.
Set forth below are graphs that show the average salary by gender and ethnicity versus the average salary company wide, in each case by job title:
| by gender: | |||||||
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| Salaries compared to average salary by job title · Workforce Gender · Management Gender · Management Promotions Gender (2020-2023) | |||||||
| 100% | 100% | 40% | 60% | 43% | 57% | 48% | 52% |
| Female | Male | Female | Male | Female | Male | Female | Male |
| by ethnicity: | |||||||
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| SALARIES BY ETHNIC GROUP TO AVERAGE SALARY BY JOB TITLE · Workforce ethnicity · Management ethnicity · Management Promotions ethnicity (2013-2023) | |||||||
| Asian | 106% | Asian | 2% | Non-white | 39% | Asian | 5% |
| Black | 101% | Black | 13% | White | 61% | Black | 18% |
| White | 100% | White | 53% | | | White | 52% |
| Hispanic/Latino | 99% | Hispanic/Latino | 26% | | | Hispanic/Latino | 21% |
| Other | 102% | Other | 6% | | | Other | 4% |
| * | Data as of or for the period ending December 31, 2023. |
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| ** | Management is defined as Resident Services Manager and more senior job classifications. |
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Other includes: American Indian, Alaska Native, Native Hawaiian, Pacific Islander, Not Specified or two or more races.
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While we believe the metrics with respect to our workplace and workforce set forth above are more useful to us in managing our business, the data from our EEO-1 report for 2022, filed in May 2023 (the most recent report available), is below.
| Job Categories · Hispanic or Latino · Non-Hispanic or Latino · Overall Total | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Male | Female | ||||||||||||||
| Male · Female · White · Black or AfricanAmerican · Native Hawaiian orPacific Islander · Asian · American Indian or Alaska Native · Two or More Races · White · Black or AfricanAmerican · Native Hawaiian orPacific Islander · Asian · American Indian or Alaska Native · Two or More Races | |||||||||||||||
| Exec/Sr. Officials & Mgr | 3 | 0 | 35 | 0 | 0 | 0 | 0 | 0 | 13 | 0 | 0 | 0 | 0 | 0 | 51 |
| First/Mid Officials & Mgrs | 39 | 11 | 84 | 9 | 0 | 4 | 1 | 4 | 113 | 12 | 0 | 8 | 0 | 4 | 289 |
| Professionals | 15 | 25 | 91 | 11 | 1 | 3 | 0 | 5 | 77 | 17 | 2 | 7 | 2 | 7 | 263 |
| Technicians | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Sales Workers | 2 | 6 | 6 | 2 | 0 | 0 | 0 | 1 | 21 | 4 | 0 | 0 | 0 | 2 | 44 |
| Administrative Support | 13 | 40 | 41 | 15 | 1 | 6 | 0 | 3 | 85 | 29 | 1 | 4 | 0 | 14 | 252 |
| Craft Workers | 156 | 1 | 92 | 42 | 1 | 1 | 1 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | 297 |
| Operatives | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Laborers & Helpers | 14 | 0 | 23 | 4 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 42 |
| Service Workers | 15 | 6 | 28 | 10 | 1 | 0 | 0 | 3 | 8 | 3 | 0 | 1 | 0 | 1 | 76 |
| Total | 257 | 89 | 400 | 93 | 4 | 14 | 2 | 20 | 317 | 65 | 3 | 20 | 2 | 28 | 1314 |
| Previous Year Total | 245 | 78 | 376 | 79 | 4 | 12 | 3 | 15 | 312 | 50 | 2 | 20 | 0 | 31 | 1227 |
We believe that a critical component of human capital is training, which is a cornerstone for enhancing associate job satisfaction, effectiveness, career progression, and retention. We have a comprehensive two-day onboarding process for new associates during which we prioritize instilling our culture, values, mission, and administrative procedures, providing our associates with the groundwork for success. In addition, we have mandatory annual regulatory training covering areas such as harassment, cybersecurity, and fair housing for all associates. Further, associates can participate in management development programs such as ULEAD and Level Up! Career Mobility Programs. Through these programs we intend to equip associates with the essential skills required for career advancement. Our extensive training catalog boasts over 6,000 courses encompassing leasing skills, property maintenance, customer service, project management, and system applications. In 2023, our associates collectively dedicated 13,924 hours to training, averaging 10 hours per full-time associate. In addition, with respect to required training, we implemented enhanced controls to ensure timely completion of courses, resulting in a 95% completion rate by year end 2023.
Certifications are widely recognized as key elements in career progression within the apartment industry. To support our associates' professional growth, we actively encourage them to pursue certifications aligned with their interests, offering partial tuition reimbursement. Additionally, we require annual performance reviews, providing valuable feedback on career development and engagement levels, thereby integrating robust human capital management strategies into our practices.
We also believe in actively engaging with our communities and facilitating our associates' involvement in meaningful community initiatives. To this end, each associate receives 8 hours of paid volunteer time per year. In 2023, UDR associates collectively contributed 1,041 hours of paid time off for volunteer work, collaborating with over 20 local organizations. Additionally, we organized various drives and initiatives, including food, clothing, and blood drives, to support non-profit organizations and causes, fostering a culture of giving back.
Throughout 2023, in addition to our quarterly pulse survey program we also implemented various measures focused on improving communication in order to foster data-driven decisions and promote collaboration between operations and corporate teams. These initiatives included: centralizing information, creating an HR Monthly Newsletter, and establishing internal publications and recognition programs.
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Sustainability
HIGHLIGHTS OF OUR SUSTAINABILITY EFFORTS OVER RECENT YEARS INCLUDE:
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| | 1M kWh of Renewable EnergyProduced over 1 million kWh of renewable energy through onsite solar in 2023, reducing our reliance on the electric grid in California, Washington, D.C., and Seattle. | | SCOPE 1, 2, AND 3 EMISSIONS INTENSITY REDUCTION GOALS We updated our environmental goals to align with science-based targets and to reflect our updated long-term Sustainability Strategy, including Scope 1 + 2 combined emissions intensity reduction of 40% and Scope 3 emissions intensity reduction of 30% between 2020 and 2035. | | ESG and Climate Tech FundsCommitted to invest $30M (including $10M in early 2024) into strategic ESG and Climate Technology Funds. | |
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| | Over 300 Sustainability ProjectsOver the last nine years, we completed over 300 sustainability projects, including 240 energy conservation projects, to promote more efficient water and energy consumption and more sustainable waste management. | | United Nations Sustainable Development GoalsOur ESG goals align with the 10 United Nations Sustainable Development Goals that we believe are the most relevant to our industry and stakeholders. | | 32,071,000 kWh in RECsIn 2023 we retired Green-e certified renewable energy credits (“RECs”) representing 32,071,000 kWh of energy usage. Cumulatively since 2019, we have retired RECs representing over 110 million kWh. | |
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| | More than 420 Electric Vehicle Charging PortsWe now have more than 420 Electric Vehicle (“EV”) charging points across our portfolio as of the end of 2023, which represents a greater than 20% increase when compared to 2022. | | PaperlessUtilizing our resident app and on-line transactions, 97% of leasing, 91% of payments, 83% of service requests, and 83% of renewals were completed on-line in 2023. | | 11,000 kWThrough demand response program participation we reduced our electricity demand during high use periods by over 11,000 kW over the past six years. | |
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| | Physical Climate Change RiskAnnually, using third-party assessments, we assess all UDR assets and markets to better understand risks relating to climate change over seven risk factors that represent longer-term and event driven risk. Results are provided to the board for review. | | 15,978,000 Gallons ReclaimedIn 2023, we used 15,978,000 gallons of reclaimed water for irrigation purposes reducing our use of potable water. | | Carbon Footprint and Climate Related RiskWe assessed our portfolio for greenhouse gas emissions as well as climate related regulatory and transition risk to help target emission reduction investments. | |
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| | 41,700 Metric Tons CO2e AvoidedCumulative avoided CO2e emissions have totaled 41,700 metric tons since 2015. | | Resident CommunicationWe promoted sustainable practices with our residents by sending over 82,700 environmental communications in 2023. | | ||
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| | Sustainable Building CertificationUDR owns 36 communities that have obtained sustainable certifications since 2010, including two design certifications for properties to be developed. | | Compensation Tied to ESGIn 2023 our short-term incentive compensation metrics for UDR’s senior executive team continued to include ESG- and DEI-specific criteria to ensure accountability for these important initiatives. | | ||
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Commitment to Corporate Responsibility Reporting
In 2023, we published our fifth ESG Report covering calendar year 2022, which is available on the investor relations page of our website under the heading ESGà 2023 ESG Report. Our Report aligns with SASB and TCFD standards and we updated our GRI disclosures to reflect the GRI Universal Standards (2021). Highlights of our report include:
| ● | Our updated long-term Sustainability Strategy which positions UDR well to navigate the still-evolving sustainability environment, including the adoption of science-based Scope 1, 2, and 3 GHG emissions intensity reduction targets and revised sub-goals related to reduced energy, water, and waste usage as well as greater renewable energy procurement. |
| ● | The expansion of our Environmental Metrics table to include Scope 3 emissions as we work towards our Scope 3 emissions intensity reduction goal. |
| ● | The introduction of our top five people goals, intended to help shape the direction of our future people initiatives, which are: |
| o | Monitor and enhance the associate experience; |
| o | Enhance our approach to learning, development, and succession planning; |
| o | Improve associate health and wellness; |
| o | Strengthen our talent acquisition function; and |
| o | Advance Diversity, Equity, and Inclusion (“DEI”) and community engagement programs. |
| ● | Additional disclosures related to associate engagement, including quarterly pulse survey results and the addition of “Associate Compensation and Benefits” to our ESG Report Materiality Assessment, which prioritizes ESG topics to include in our disclosures based on rankings periodically performed by senior leadership through a survey to reflect current ESG initiatives and relevant ESG engagement across our stakeholder groups. |
We will continue to evaluate our ESG strategy through consistent reviews of our ESG processes and initiatives to ensure that they (1) remain aligned with and enhance our strategic and sustainability goals, (2) address the evolving needs and expectations of our stakeholders, and (3) continue to provide useful and actionable ESG data metrics. Continued ESG improvement is critical to our long-term success, the results and the TSR we generate over time, enhancing our culture, and improving our residents’ experience.
Awards and Leadership
UDR’s ongoing commitment to enhancing its comprehensive ESG program resulted in the Company earning a variety of honors from widely recognized institutions as a leader in ESG and sustainability in 2023.
| | | GRESB Score of 87Earned a Sector Leader designation.SustainalyticsClassified “Low Risk.”Climate Tech FundsCommitted to invest $30M (including an additional $10M committed in early 2024) into strategic ESG and Climate Technology Funds. | | SDG AlignmentAligned with 10 United Nations Sustainable Development Goals.ResponsibilityNamed one of America's Most Responsible Companies by Newsweek in three consecutive years.Green BondsTwo Green Bond issuances totaling $650 million of proceeds since 2019. | | Sustainable Building Certifications UDR owns 36 communities that have obtained sustainability certification, including two design certifications for properties to be developed.DEI CommitmentInaugural donor to the NAREIT Foundation's Dividends Through Diversity, Equity & Inclusion campaign. | |
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| | 2020 | 2021 | 2022 | 2023 |
| GRESB | 83 | 86 | 87 | 87 |
| Sustainalytics(note, a lower score is better) | 13 | 13 | 12 | 14 |
| MSCI | A | BB | BB | BB |
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Protecting the Environment and Our Stakeholders
We understand the impact our business can have on the environment and our stakeholders. When appropriate, we undertake initiatives designed to improve our operational quality, improve quality of life for and retention of our associates and residents, and reduce our environmental footprint. Examples of efforts completed over the past couple of years include having third parties assess climate-change risks for each of our assets (the results of which are reported to the board and are used to inform future decision making), conducting environmental assessments of each UDR asset that we acquire, investing in ESG and Climate Technology Funds that are on the cutting edge of sustainability technology, including “green lease” addendums in all our leases to better educate our residents on their environmental impact, improving our employee benefits packages based on extensive internal feedback, and enhancing our resident experience through self-service and leading technologies. Over the past nine years we have completed 240 energy conservation projects which have resulted in estimated avoided emissions of more than 41,700 metric tons of carbon dioxide equivalent (CO2e) since 2015 and have also provided a strong financial return. In 2023, we updated our Sustainability Strategy to (1) reinforce our long-standing commitment to being a sustainability leader in the REIT space, and (2) better address the evolution that the sustainability space has undergone over the past 5+ years by layering on more programmatic sustainability actions and capital investment to our already best-in-class compliance and reporting framework. This updated strategy is governed by our Environmental Policy, which states that UDR is committed to incorporating efforts towards the protection of the environment within the Company’s environmental governance, risk management, and business strategy in order to operate more sustainably and create long-term value for our stakeholders.
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proposal 1 highlights
| 01 | Election of 10 Directors |
| The Board recommends a vote “FOR” each director nominee | |
| ●Diverse slate of directors (40% of our directors are diverse) with broad leadership experience.●All candidates are highly successful executives with relevant skills and expertise.●Average director tenure of 13.7 years with 9 of 10 directors to be voted upon independent of management.●Board ranked number 3 in the 2023 Institutional Investor All-America Executive Team Rankings out of approximately 150 companies. | |
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Our Existing Board
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| Katherine A. CattanachFormer General Partner of INVESCO Private Capital, Inc. | Jon A. GroveFormer Chairman, President and Chief Executive Officer of ASR Investments Corporation | Mary Ann KingCo-Head of Berkadia Institutional Solutions | ||||
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| IndependentTenure: 18 yearsOther Current Public Company Boards: 0Committee(s): AC, GC (Chair), NC | | IndependentTenure: 26 yearsOther Current Public Company Boards: 0Committee(s): CC | | IndependentTenure: 9 yearsOther Current Public Company Boards: 0Committee(s): CC, GC | ||
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| James D. KlingbeilChairman and CEO of Klingbeil Capital Management and The Klingbeil Company | Clint D. McDonnoughManaging Partner of McDonnough Consulting LLC; Former Office Managing Partner for Ernst & Young LLP’s Dallas office | Robert A. McNamaraFormer Group Chief Risk Officer of Lend Lease Corporation | ||||
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| Lead Independent DirectorTenure: 26 yearsOther Current Public Company Boards: 0Committee(s): NC (Chair), EC (Chair) | | IndependentTenure: 8 yearsOther Current Public Company Boards: 0Committee(s): AC, EC | | IndependentTenure: 10 yearsOther Current Public Company Boards: 1Committee(s): CC (Chair), GC, NC | ||
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| Diane M. MorefieldFormer Executive Vice President, Chief Financial Officer of CyrusOne | Kevin C. NickelberryManaging Director and Co-Head of the Elevate Strategy at GCM Grosvenor | Mark R. PattersonPresident of MRP Holdings LLC | ||||
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| IndependentTenure: 4 yearsOther Current Public Company Boards: 1Committee(s): AC (Chair), GC, NC | | IndependentTenure: 3 yearsOther Current Public Company Boards: 0Committee(s): AC, GC | | IndependentTenure: 10 yearsOther Current Public Company Boards: 3Committee(s): CC | ||
| AC = Audit and Risk Management CommitteeCC = Compensation and Management Development CommitteeGC = Governance CommitteeNC = Nominating CommitteeEC = Executive Committee | | | | | | |
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| Thomas W. ToomeyChairman and CEO of UDR, Inc. | | |||||
| | Tenure: 23 yearsOther Current Public Company Boards: 0Committee(s): EC | | | |||
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Board Snapshot
Skills and Attributes
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| Accounting/Financial Literacy | | C-Level Management Experience | | Capital Market Experience | | Corporate Governance |
| 10/10 | | 8/10 | | 9/10 | | 10/10 |
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| Multifamily Experience | | Non-UDR Board Experience | | Property Mangement and Operations | | Public Company CEO Experience |
| 4/10 | | 6/10 | | 5/10 | | 2/10 |
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| Real Estate Industry Experience | | Sales and Marketing Experience | | Stakeholder Advocacy | | Strategic Oversight | | Technology, Cybersecurity, and Innovation |
| 9/10 | | 8/10 | | 10/10 | | 10/10 | | 6/10 |
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Shareholder Engagement
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| 85.0% | In 2023 and early 2024, we had 708 interactions with our investors through meetings and property tours, representing ownership of approximately 85.0% of our outstanding common stock. | 43.1% | In addition, we proactively contacted the governance or stewardship departments of 119 of our investors and received responses from and had engagement meetings with representatives of 17 of such departments, representing ownership of approximately 43.1% of our outstanding common stock. |
Governance Highlights
UDR has a history of strong corporate governance guided by three primary principles – dialogue, transparency and responsiveness. The board has adjusted our governance approach over time to align with evolving best practices, drive sustained shareholder value, and serve the interests of shareholders.
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| ► Good Governance | |
| ●Extensive board and committee dialogue with formal processes for shareholder engagement ●Annual board and committee self-evaluations●Annual individual director evaluation process●Periodic continuing education for directors●All directors attended at least 75% of meetings held●Policies, incorporated in our Statement on Corporate Governance and Nominating Committee Charter, requiring the initial pools of candidates for the board and external searches for a Chief Executive Officer to include diverse candidates. This concept has been expanded to cover associates at all levels●Annual advisory approval of named executive officer compensation●Robust Code of Business Conduct and Ethics, and Code of Ethics for Senior Financial Officers●Stock ownership guidelines for executive officers and directors●Board Overboarding Policy | ●Prohibition on hedging transactions●Pledging transactions prohibited without prior approval●Recoupment Policy (updated in 2023)●Charitable Donations and Political Contributions Policy ●Annual ESG reporting●Double-trigger acceleration of vesting in the event of a change in control●Twelve-month minimum vesting on equity awards generally●Board and committee oversight of material short-term and long-term risks (including climate change and cybersecurity risk), ESG and human capital management |
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| ► Shareholder Rights | |
| ●Annual election of all directors●Majority voting in uncontested director elections●Proxy access for eligible director candidates nominated by eligible shareholders●No shareholder rights plan (poison pill)●Confidential voting | ●No material restrictions on shareholders’ right to call a special meeting ●Active shareholder engagement●Ability for shareholders to propose binding bylaw amendments●No issued and outstanding shares of capital stock that have no voting rights and no treasury stock |
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| ► Independent Oversight | |
| ●Strong Lead Independent Director role with clearly articulated responsibilities●Audit, Compensation, Governance and Nominating Committees consist entirely of Independent Directors | ●All directors are independent, except the Chairman and Chief Executive Officer●Independent directors and committees meet regularly in executive session |
| 2024 Proxy Statement | 19 |
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Proposal 2 highlights
| 02 | Say-on-Pay: Advisory Vote on the Compensation of the Named Executive Officers |
| The Board recommends a vote “FOR” this proposal | |
| ●Independent oversight by our Compensation and Management Development Committee, with the assistance of an independent compensation consultant.●Executive compensation that is competitive with our peers and that is structured to be aligned with our strategy and is measured against both absolute and relative to our peers total return to shareholders.●Executive compensation comprised of a mix of base salary, short-term incentive compensation and long-term incentive compensation, and is determined based on the consideration of a number of factors described in more detail in “Executive Compensation — Compensation Discussion and Analysis.”●Our TSR over time compares favorably to the peer group. | |
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Components of 2023 Compensation
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| component | Fixed/Variable | objective | | performance metrics |
| Base Salary | Fixed | Designed to reward individual effort associated with job-related duties and to attract and retain talented executive officers for our Company. | | |
| Short-Term Incentive Compensation (STI) | Variable | Designed to encourage outstanding individual and Company performance by motivating the named executive officers to achieve short-term Company and individual goals by rewarding performance measured against key annual strategic objectives and, for the CEO, using the independent directors’ evaluation of the CEO’s performance towards achieving short-term goals. | | ●FFO as Adjusted per share●Transactions Index●Operations Index●GRESB Percentile ●Associate Engagement & DEI●Individual and Department Goals |
| Long-Term Incentive Compensation (LTI) | Variable | Our LTI compensation is designed to closely align the interests of our management with the creation of shareholder value, to motivate our management to achieve long-term growth and success of our Company and to foster significant ownership of our common stock by our management.LTI compensation is the most significant component of the named executive officers’ compensation. | | ●3-Year Relative TSR vs. Apartment Peers●3-Year Relative TSR vs. NAREIT Equity REITs Total Return Index●3-Year Relative FFO as Adjusted Growth Rate vs. Apartment Peers●Annual FFO as Adjusted per share |
Say-on-Pay/Shareholder Engagement
While we have consistently had strong shareholder support for our executive compensation program, we continue to engage in dialogue with shareholders on executive compensation issues. We will consider the outcome of future advisory votes and the input we receive from shareholder engagement when establishing the Company’s compensation programs and policies and making compensation decisions regarding our named executive officers.
Our shareholders have consistently supported our executive compensation program and over the last five years, shareholder support for our advisory vote on executive compensation has averaged 85.86%.
| 2024 Proxy Statement | 20 |
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Compensation Earned
Total compensation, as reported in the Summary Compensation Table and calculated as required by applicable rules and regulations, includes items driven by accounting rules and assumptions with respect to incentive compensation that has not yet been earned and may in the future not be earned. Therefore, it is not reflective of the compensation our named executive officers actually earned in a given year. Accordingly, to supplement the disclosure contained in the Summary Compensation Table and the narrative disclosure accompanying the table starting on page 89, we are providing the table below to compare the compensation earned by our named executive officers in 2023, 2022, and 2021 to the total compensation shown by the Summary Compensation Table.
The amounts set forth below for “Earned Compensation” differ materially from the amounts reported as total compensation in the Summary Compensation Table and are not a substitute for those amounts.
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| | | | | Total | | Earned |
| | | | | (from Summary | | Compensation |
| Name and | | | | Compensation Table) | | Total |
| Principal Position | | Year | | ($) | | ($) |
| Thomas W. | 2023 | | 11,755,015 | | 6,727,096 | |
| Toomey | 2022 | | 8,149,435 | | 9,852,300 | |
| Chief Executive Officer | 2021 | | 14,228,383 | | 11,040,952 | |
| Joseph D. Fisher | 2023 | | 4,855,745 | | 3,701,277 | |
| President - Chief | 2022 | | 8,191,454 | | 4,288,540 | |
| Financial Officer | 2021 | | 3,068,246 | | 4,668,698 | |
| Harry G. Alcock | 2023 | | 3,601,319 | | 2,916,140 | |
| Senior Vice | 2022 | | 3,236,130 | | 4,332,375 | |
| President - Chief Investment Officer | | 2021 | | 2,963,709 | | 5,004,658 |
| Michael D. Lacy | | 2023 | | 2,765,854 | | 2,478,862 |
| Senior Vice | 2022 | | 1,815,398 | | 2,395,045 | |
| President - Property Operations | 2021 | | 1,711,463 | | 1,857,987 | |
Earned Compensation for 2023 includes 2023 salary, any bonus earned in 2023, short-term incentive compensation earned for 2023, the portion of the long-term incentive programs with respect to which the performance period ended on December 31, 2023 and the “All Other Compensation” from the Summary Compensation Table for 2023.
Earned Compensation for 2022 includes 2022 salary, any bonus earned in 2022, short-term incentive compensation earned for 2022, the portion of the long-term incentive programs with respect to which the performance period ended on December 31, 2022 and the “All Other Compensation” from the Summary Compensation Table for 2022.
Earned Compensation for 2021 includes 2021 salary, any bonus earned in 2021, short-term incentive compensation earned for 2021, the portion of the long-term incentive programs with respect to which the performance period ended on December 31, 2021, and the “All Other Compensation” from the Summary Compensation Table for 2021.
| 2024 Proxy Statement | 21 |
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Our Compensation Best Practices
Our compensation policies and programs are built upon a strong foundation of corporate governance and compensation best practices, including:
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| WHAT WE DO | WHAT WE DON’T DO | ||
| ●Provide a significant portion of our named executive officers’ total compensation in the form of awards tied to executing our long-term strategy, performance relative to key business and individual objectives, and performance versus our peers as measured by a diverse set of metrics.●Require compliance with our Executive Stock Ownership Guidelines, which require that our executive officers own a specified number of shares of the Company’s common stock or equivalent (110,000 shares for the Chairman and Chief Executive Officer and President, 50,000 shares for any Executive Vice President, and 20,000 for any Senior Vice President).●Have a Recoupment Policy that applies to certain of our executive officers, including all our named executive officers, and their performance-based incentive compensation. This policy was updated in 2023 to satisfy rules adopted by the SEC and the NYSE in 2023.●Have a Compensation Committee comprised entirely of independent directors. The Compensation Committee has retained its own independent compensation advisor.●Have a Compensation Committee that reviews external market considerations, internal considerations, and the long-term interests of our shareholders, when making compensation decisions.●Have the ongoing consideration and oversight by the Compensation Committee with respect to any potential risks associated with our incentive compensation programs.●Have a “double trigger” change of control provision and no awards outstanding that are subject to the legacy “single trigger” provision. | | ●Permit any Company personnel, which includes directors, officers and all other employees of the Company, to engage in any short-term, speculative securities transactions, engage in short sales, buying or selling put or call options, trading in options (other than those granted by the Company) or engaging in hedging transactions, in each case with respect to our securities.●Permit purchasing securities on margin or pledging our securities as collateral without prior approval.●Provide tax gross-ups for our named executive officers.●Grant only time-vested restricted stock units, LTIP Units (including Performance LTIP Units), options, or other equity awards to our named executive officers as part of our long-term incentive compensation program other than in limited circumstances such as the appointment of a new executive officer or to recognize extraordinary achievements.●Time the grants of restricted stock, restricted stock units, LTIP Units, options or other equity awards to coordinate with the release of material non-public information, or time the release of material non-public information for the purpose of affecting the value of any named executive officer compensation.●Make one-time or special awards to our named executive officers other than in connection with the appointment of a new named executive officer or other special circumstance. | |
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Compensation Changes Made in Response to Stakeholder Feedback
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| | Minimum Vesting PeriodBeginning with grants made in 2021 and thereafter, all equity grants will have a minimum vesting period of 12 months subject to certain limited exclusions. | | Double Trigger ProvisionAll grants made in 2021 and thereafter are subject to a double-trigger change in control provision. | | ||
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| | Specific ESG and DEI MetricsWe have added both ESG and DEI specific metrics to our short-term incentive compensation program for both our named executive officers and, when appropriate, for other officers | | “Rooney Rule” MetricsWe modified the associate engagement metric for 2022 and subsequent years that is part of our short-term incentive compensation program, and is applicable to all our named executive officers, to incorporate in our compensation programs performance with respect to our “Rooney Rule” initiative. This expands the Rooney Rule concept to all job openings across the Company regardless of the position we are seeking to fill. | | ||
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| 2024 Proxy Statement | 22 |
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Proposal 3 highlights
| 03 | Independent Registered Public Accounting Firm |
| The Board recommends a vote “FOR” ratification of Ernst & Young LLP for 2024. | |
| ●Independent firm with few ancillary services and reasonable fees.●Significant industry and financial reporting expertise. | |
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Ernst & Young LLP, an independent registered public accounting firm, served as our auditors for fiscal 2023. Our Audit Committee again selected Ernst & Young LLP to audit our financial statements for fiscal 2024. Although it is not required to do so, the board is submitting the Audit Committee’s selection of our independent registered public accounting firm for ratification by the shareholders at the annual meeting in order to ascertain the view of our shareholders regarding such selection. Below is summary information about Ernst & Young’s fees for services during fiscal years 2023 and 2022:
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| · · · · · · | ||||
| Description of Services · 2023 · 2022 | ||||
| Audit Fees | | $1,341,609 | | $1,476,705 |
| Audit-Related Fees | | — | | — |
| Tax Fees | | $68,170 | | $209,896 |
| All Other Fees | | — | | — |
| TOTAL | | $1,409,779 | | $1,686,601 |
| 2024 Proxy Statement | 23 |
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The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.