Business Context and Reporting Period
Company: Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: February 11, 2014
Event: Entry into a Material Definitive Agreement and approval of executive compensatory arrangements.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on corporate governance and executive compensation agreements.
Material Changes and Agreements
Partnership Agreement Amendment: On February 11, 2014, the Company entered into the Twelfth Amended and Restated Agreement of Limited Partnership. This amendment facilitates the issuance of Class D profits interest units under the 2004 Incentive Award Plan.
Executive Compensation Grants: The Compensation Committee approved grants to named executive officers (NEOs) consisting of three award types:
- Class D Units: Performance-based profits interest units in the Operating Partnership.
- Performance-Based RSUs: Restricted Stock Units tied to Total Shareholder Return (TSR).
- Time-Based RSUs: Restricted Stock Units tied to continued service.
Grant Details by Executive
| Named Executive Officer | Total Class D Units | Base Units (Class D) | Performance-Based RSUs | Time-Based RSUs |
|---|---|---|---|---|
| Michael F. Foust | 169,197 | 130,152 | N/A | N/A |
| A. William Stein | 90,239 | 69,414 | N/A | N/A |
| Scott E. Peterson | 56,399 | 43,384 | N/A | N/A |
| David J. Caron | 62,039 | 47,722 | N/A | N/A |
| Kris Kumar | N/A | N/A | 28,200 | 9,979 |
Outlook, Risks, and Vesting Conditions
Performance Metrics: Vesting for Class D Units and Performance-Based RSUs is contingent on the Company's TSR relative to the MSCI US REIT Index over a three-year period (commencing January 2014).
- Threshold (0% vesting): Relative performance < 0 basis points.
- Target (50% vesting): Relative performance of 325 basis points.
- High (100% vesting): Relative performance > 650 basis points.
- Interpolation: Linear interpolation applies between levels.
Vesting Schedule:
- Performance Vesting: Determined at the end of the three-year period.
- Time Vesting (Post-Performance): 50% on February 27, 2017, and 50% on February 27, 2018.
- Time-Based RSUs Only: 25% on Feb 27, 2015; 50% on Feb 27, 2016; 25% on Feb 27, 2017.
Change in Control: All outstanding performance-vested units and RSUs will vest in full immediately upon a change in control, subject to continued service until the event.
Termination of Service:
- Death/Disability: Units remain eligible for performance vesting; time-vested units vest fully upon termination.
- Good Reason/Retirement/Without Cause: Units remain eligible for performance vesting on a pro-rata basis based on days employed during the performance period.
- Other Termination: Unvested units are generally cancelled and forfeited.
Investor Verification Checklist
- Verify the specific TSR performance targets relative to the MSCI US REIT Index in the full 2004 Incentive Award Plan.
- Confirm the total number of shares underlying the RSU grants and their impact on diluted earnings per share.
- Review the full text of the Twelfth Amended and Restated Agreement of Limited Partnership (to be filed as an exhibit to the 2013 Form 10-K).
- Assess the potential cash flow impact of dividend equivalent payments on unvested units.
- Monitor the Company's TSR performance against the MSCI US REIT Index over the 2014-2016 period to estimate actual vesting outcomes.