def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ
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Filed by a Party other than the Registrant o |
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
CORESITE REALTY CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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2. Aggregate number of securities to which transaction applies: |
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3. Per unit price or other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it
was determined): |
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4. Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing. |
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1. Amount Previously Paid: |
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2. Form, Schedule or Registration Statement No.: |
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1050 17th
Street, Suite 800
Denver, Colorado 80265
(866) 777-2673
April 5,
2011
Dear CoreSite Stockholder:
You are cordially invited to the CoreSite Realty Corporation
Annual Meeting of Stockholders to be held on Thursday,
May 19, 2011, at 1:00 p.m., Mountain Time. The meeting
will be held at The Brown Palace Hotel, 321 17th Street,
Denver, Colorado 80202.
At the Annual Meeting, you will be asked to (i) elect seven
directors to our Board of Directors, (ii) ratify the
appointment of KPMG LLP as our independent registered public
accounting firm for the 2011 fiscal year, (iii) participate
in an advisory vote on executive compensation,
(iv) participate in an advisory vote on the frequency of
the advisory vote on executive compensation, and
(v) transact such other business as may properly come
before the meeting or any postponements or adjournments thereof.
We have included a copy of our Annual Report for the fiscal year
ended December 31, 2010 with this Notice of Annual Meeting
of Stockholders and Proxy Statement. Please read the enclosed
information carefully before submitting your proxy.
Please join us at the meeting. Whether or not you plan to
attend, it is important that you vote your proxy promptly. If
you do attend the meeting, you may withdraw your proxy should
you wish to vote in person.
Sincerely,
Thomas M. Ray
President, Chief Executive Officer and Director
1050 17th
Street, Suite 800
Denver, Colorado 80265
(866) 777-2673
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To the Stockholders of CoreSite Realty Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of CoreSite Realty Corporation will be held at The Brown Palace
Hotel, 321 17th Street, Denver, Colorado 80202, at
1:00 p.m., Mountain Time on May 19, 2011, for the
following purposes:
1. To elect directors to the Board of Directors to serve
until the next Annual Meeting or until their successors have
been duly elected and qualified;
2. To ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2011;
3. To hold an advisory vote on executive compensation;
4. To hold an advisory vote on the frequency of future
advisory votes on executive compensation; and
5. To transact such other business as may properly come
before the meeting and any adjournments or postponements thereof.
We know of no other matters to come before the annual meeting.
Only stockholders of record at the close of business on
Wednesday, March 23, 2011 are entitled to notice of and to
vote at the Annual Meeting or at any adjournments or
postponements thereof.
The proxy statement, proxy card and the Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 are available
at the Investors section of our website at
www.coresite.com.
Regardless of the number of shares of common stock you hold,
as a stockholder your role is very important and the Board of
Directors strongly encourages you to exercise your right to
vote.
BY ORDER OF THE BOARD OF DIRECTORS
Robert G. Stuckey
Chairman
Dated April 5, 2011
Denver, Colorado
TABLE OF
CONTENTS
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1050 17th
Street, Suite 800
Denver, Colorado 80265
(866) 777-2673
PROXY
STATEMENT
GENERAL
INFORMATION
Proxy
Solicitation
The Board of Directors (the Board) of CoreSite
Realty Corporation, a Maryland corporation, has made these
materials available to you on the Internet or, upon your
request, has delivered printed versions of these materials to
you by mail, in connection with its solicitation of proxies for
CoreSites Annual Meeting of Stockholders to be held on
May 19, 2011 at 1:00 p.m., Mountain Time, at The Brown
Palace Hotel, 321 17th Street, Denver, Colorado 80202,
and at any adjournments or postponements thereof (the
Annual Meeting). These materials were first made
available to stockholders on April 5, 2011. Unless the
context requires otherwise, references in this proxy statement
to CoreSite, we, our,
us and our company refer to CoreSite
Realty Corporation, a Maryland corporation, together with its
consolidated subsidiaries, including CoreSite, L.P., a Delaware
limited partnership of which CoreSite Realty Corporation is the
sole general partner (our Operating Partnership),
and CoreSite Services, Inc., a Delaware corporation, our taxable
REIT subsidiary.
Pursuant to rules adopted by the SEC, we have elected to provide
access to its proxy materials via the Internet. Accordingly, we
are sending a Notice of Internet Availability of Proxy Materials
(the Notice) to our stockholders. All stockholders
will have the ability to access the proxy materials at
www.proxyvote.com or request to receive a printed set of the
proxy materials by mail or an electronic set of materials by
email. Instructions on how to access the proxy materials over
the Internet or to request a printed copy may be found in the
Notice. In addition, stockholders may request to receive proxy
materials in printed form by mail or electronically by email on
an ongoing basis. We believe these rules allow us to provide our
stockholders with the information they need, while lowering the
cost of delivery and reducing the environmental impact of our
Annual Meeting.
In addition to solicitation by mail, certain of our directors,
officers and employees may solicit proxies by telephone,
personal contact, or other means of communication. They will not
receive any additional compensation for these activities. Also,
brokers, banks and other persons holding common stock on behalf
of beneficial owners will be requested to solicit proxies or
authorizations from beneficial owners. We will bear all costs
incurred in connection with the preparation, assembly and
mailing of the proxy materials and the solicitation of proxies
and will reimburse brokers, banks and other nominees,
fiduciaries and custodians for reasonable expenses incurred by
them in forwarding proxy materials to beneficial owners of our
common stock. Although no proxy solicitor has been engaged at
this time, we may determine it is necessary to employ an outside
firm to assist in the solicitation process. If so, we will pay
the proxy solicitor reasonable and customary fees.
No person is authorized to give any information or to make any
representation not contained in this proxy statement and, if
given or made, you should not rely on that information or
representation as having been authorized by us. The delivery of
this proxy statement does not imply that the information herein
has remained unchanged since the date of this proxy statement.
Purposes
of the Annual Meeting
The purposes of the Annual Meeting are to: (1) elect seven
members to the Board of Directors (Proposal One);
(2) ratify the appointment of KPMG LLP as our independent
registered public accounting firm for 2011 (Proposal Two);
(3) hold an advisory vote on executive compensation
(Proposal Three); (4) hold an advisory vote on the
frequency of future advisory votes on executive compensation
(Proposal Four); and (5) transact such other business
as may properly come before the Annual Meeting or any
adjournment or postponement thereof. Our Board of Directors
knows of no other matters to be brought before the Annual
Meeting.
CoreSite
Contact Information
The mailing address of our principal executive offices is 1050
17th Street, Suite 800, Denver, Colorado 80265, and
our main telephone number is
(866) 777-2673.
We maintain an Internet website at www.coresite.com. Information
at or connected to our website is not and should not be
considered part of this proxy statement.
VOTING
Stockholders
Entitled to Vote
The close of business on March 23, 2011 has been fixed as
the record date (the Record Date) for the
determination of stockholders entitled to receive notice of and
to vote at the Annual Meeting. Only stockholders of record as of
the close of business on the Record Date are entitled to receive
notice of, to attend, and to vote at the Annual Meeting. On that
date, our outstanding voting securities consisted of
19,870,508 shares of common stock. Each share of common
stock is entitled to one vote. Votes may not be cumulated.
If your shares are registered directly in your name with our
transfer agent, American Stock Transfer &
Trust Company, LLC, you are considered the stockholder of
record with respect to those shares, and the Notice was sent
directly to you by us. You may vote by proxy via the Internet by
following the instructions provided in the Notice. If you
request printed copies of the proxy materials by mail, you may
also vote by filling out the proxy card included with the
materials or by calling the toll free number found on the proxy
card.
If your shares are held in an account at a brokerage firm, bank,
broker-dealer, or other similar organization, then you are the
beneficial owner of shares held in street name, and
the Notice was forwarded to you by that organization. The
organization holding your account is considered the stockholder
of record for purposes of voting at the Annual Meeting. As a
beneficial owner, you have the right to instruct that
organization on how to vote the shares held in your account.
Those instructions are contained in a vote instruction
form. If you request printed copies of the proxy materials
by mail, you will receive a vote instruction form.
Attending
and Voting at the Annual Meeting
Only stockholders as of the Record Date, or their duly appointed
proxies, may attend the Annual Meeting. Stockholders may be
asked to present valid picture identification such as a
drivers license or passport and proof of stock ownership
as of the Record Date. If you are not a stockholder of record
but hold shares through a broker or nominee (i.e., in street
name), you should provide proof of beneficial ownership on the
Record Date, such as your most recent account statement prior to
March 23, 2011, a copy of the voting instruction card
provided by your broker, trustee or nominee, or other similar
evidence of ownership. The use of cell phones, smartphones,
pagers, recording and photographic equipment
and/or
computers is not permitted in the meeting rooms at the Annual
Meeting.
Shares held in your name as the stockholder of record may be
voted in person at the Annual Meeting. If you are not a
stockholder of record but hold shares through a broker or
nominee (i.e., in street name), you
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may vote your shares in person only if you obtain a legal proxy
from the broker, trustee or nominee that holds your shares
giving you the right to vote the shares. Even if you plan to
attend the Annual Meeting, we recommend that you also submit
your proxy or voting instructions prior to the meeting as
described below so that your vote will be counted if you later
decide not to attend the meeting.
Voting
Without Attending the Annual Meeting
Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct how your shares are
voted without attending the Annual Meeting. If you are a
stockholder of record, you may vote by submitting a proxy,
either by mail or via the Internet, or by calling the toll free
number found on the Notice and the proxy card. If you hold
shares beneficially in street name, you may vote by submitting
voting instructions to your broker, trustee or nominee. For
directions on how to vote, please refer to the instructions
included in the Notice or, for shares held beneficially in
street name, the voting instruction card provided by your
broker, trustee or nominee.
Proxies submitted properly via one of the methods discussed
above will be voted in accordance with the instructions
contained therein. If the proxy is submitted but voting
directions are not made, the proxy will be voted FOR
each of the seven director nominees, FOR the
ratification of the appointment of KPMG LLP as our independent
registered public accounting firm, FOR approval of
the current compensation structure of our named executive
officers as described in this proxy statement, EVERY THREE
YEARS with respect to the frequency with which we will
hold an advisory vote regarding executive compensation, and in
such manner as the proxy holders named on the proxy (the
Proxy Agents), in their discretion, determine upon
such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
If your shares of our common stock are held through a broker,
bank or other nominee (collectively referred to as
brokers), under applicable rules of the New York
Stock Exchange (the NYSE) (the exchange on which our
common stock is traded), the brokers will vote your shares
according to the specific instructions they receive from you. If
brokers that hold shares of our common stock for a beneficial
owner do not receive voting instructions from that owner, the
broker may vote on the proposal if it is considered a
routine matter under the NYSEs rules,
including this years ratification of the appointment of
KPMG LLP as our independent registered public accounting firm
for 2011, or leave your shares unvoted. Under recent amendments
to the rules of the NYSE, the election of directors is no longer
a routine matter as to which brokerage firms may
vote in their discretion on behalf of clients who have not
furnished voting instructions with respect to an uncontested
director election. Because we have a plurality voting standard,
however, broker non-votes will not affect the outcome of the
vote on the election of directors.
The proposals set forth in this proxy statement constitute the
only business that the Board intends to present or is informed
that others will present at the meeting. The proxy does,
however, confer discretionary authority upon the Proxy Agents or
their substitutes, to vote on any other business that may
properly come before the meeting. If the Annual Meeting is
adjourned, the Proxy Agents can vote your shares on the new
meeting date as well, unless you have revoked your proxy.
Quorum
Holders of a majority of our outstanding common stock entitled
to vote must be present, in person or by proxy, at the Annual
Meeting for a quorum to exist. If the shares present in person
or by proxy at the Annual Meeting do not constitute a quorum,
the Annual Meeting may be adjourned to a subsequent time. Shares
that are voted FOR, AGAINST,
ABSTAIN, or, with respect to the election of
directors, WITHHOLD, will be treated as being
present at the Annual Meeting for purposes of establishing a
quorum. Accordingly, if you have returned a valid proxy or
attend the Annual Meeting in person, your shares will be counted
for the purpose of determining whether there is a quorum, even
if you wish to abstain from voting on some or all matters at the
Annual Meeting. Broker non-votes will also be
counted as present for purposes of determining the presence of a
quorum. A broker non-vote occurs when a bank, broker or other
person holding shares for a
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beneficial owner does not vote on a particular proposal because
that holder does not have discretionary voting power for that
particular item and has not received voting instructions from
the beneficial owner.
Required
Vote
You may vote FOR or WITHHOLD authority
to vote on Proposal One, relating to the election of
directors. Members of the Board are elected by a plurality of
votes cast. This means that the seven nominees who receive the
largest number of FOR votes cast will be elected.
Neither broker non-votes nor WITHHOLD votes cast
with respect to any nominee will affect the election of that
nominee.
You may vote FOR, AGAINST or
ABSTAIN on Proposals Two and Three. You may
vote EVERY YEAR, EVERY TWO YEARS,
EVERY THREE YEARS, OR ABSTAIN on
Proposal Four. To be approved, Proposal Two must
receive the affirmative vote of a majority of the voting shares
that are present, in person or by proxy, at the meeting and
entitled to vote on the proposal. An abstention will have the
effect of a vote against Proposal Two. A broker non-vote
will not have any effect on the outcome of the vote on
Proposal Two. Since Proposals Three and Four are
advisory votes, there is no vote requirement.
Board
Recommendation
The Board recommends that you vote as follows:
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FOR Proposal One, relating to the election of
directors;
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FOR Proposal Two, relating to the ratification
of KPMG LLP as our independent registered public accounting firm
for the fiscal year ending December 31, 2011;
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FOR Proposal Three, relating to the advisory
vote on executive compensation; and
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EVERY THREE YEARS with regard to Proposal Four,
relating to an advisory vote on the frequency of the advisory
vote on executive compensation.
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Any proxy as to which no instructions are given will be voted in
accordance with the foregoing recommendations.
Revocation
of Proxies
You may revoke your proxy at any time prior to its use by
(i) delivering a written notice of revocation to our
Secretary, (ii) filing a duly executed proxy bearing a
later date with us or (iii) attending the Annual Meeting
and voting in person.
Voting
Privacy
Proxy instructions, ballots and voting tabulations that identify
individual stockholders are handled in a manner that protects
your voting privacy. Your vote will not be disclosed either
within CoreSite or to third parties, except (i) as
necessary to meet applicable legal requirements, (ii) to
allow for the tabulation and certification of votes, and
(iii) to facilitate a successful proxy solicitation.
Occasionally, stockholders provide written comments on their
proxy cards, which may be forwarded to the companys
management and the Board.
Voting
Results
The voting results will be tallied by the inspector of election
appointed for the meeting and filed with the SEC in a Current
Report on
Form 8-K
within four business days following the Annual Meeting.
4
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Board has fixed the number of directors at seven. The seven
persons named below, each of whom currently serves on our Board,
have been recommended by our Nominating/Corporate Governance
Committee and nominated by our Board to serve on the Board until
our 2012 Annual Meeting of Stockholders and until their
respective successors are elected and qualified. The Board of
Directors has no reason to believe that any of the persons named
below as a nominee for our Board will be unable, or will
decline, to serve if elected. In addition, the Board has
determined that all of the persons named below other than
Mr. Ray are independent under applicable SEC and NYSE
rules. A plurality of all the votes cast at the Annual Meeting
at which a quorum is present is necessary for the election of a
director. There is no cumulative voting in the election of
directors.
The Nominating/Corporate Governance Committee has not set forth
minimum qualifications for Board nominees. However, pursuant to
its charter, in identifying candidates to recommend for election
to the Board, the Nominating/Corporate Governance Committee
considers the following criteria:
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personal and professional integrity, ethics and values;
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experience in corporate governance including as an officer,
board member or senior executive or as a former officer, board
member or senior executive of a publicly held company, and a
general understanding of marketing, finance and other elements
relevant to the success of a publicly traded company in
todays business environment;
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experience in the real estate industry, including real estate
investment trusts (REITs) and with relevant social
policy concerns;
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experience as a board member of another publicly held company;
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academic expertise in an area of our operations;
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diversity of experience, profession, skill and background, both
on an individual level and in relation to the Board as a
whole; and
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practical and mature business judgment, including ability to
make independent analytical inquiries.
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The Board does not have a formal policy specifying how diversity
of background and personal experience should be applied in
identifying or evaluating director candidates. A director
candidates background and personal experience, however,
will be significant in the Boards candidate identification
and evaluation process to help ensure that the Board remains
sensitive and responsive to the needs and interests of our
customers, stockholders and other stakeholders.
Under the partnership agreement governing our Operating
Partnership (the Operating Partnership Agreement),
The Carlyle Group (Carlyle), which directly or
indirectly holds 57.3% of our Operating Partnership, is
currently entitled to nominate up to two directors for election
to our Board. (See Information about our Board of
Directors and its Committees for more information about
the circumstances under which Carlyle is entitled to appoint
nominees to our Board.) Carlyle has exercised this right by
nominating James A. Attwood, Jr. and Robert G. Stuckey for
election in 2011.
5
Nominees
for Election as Directors
The table below sets forth the names and biographical
information of each of the directors nominated for election at
the Annual Meeting.
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Age as of
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the Annual
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Director
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Position With the Company
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Meeting
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Since
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Robert G. Stuckey
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Director and Chairman of the Board
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2010
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Thomas M. Ray
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Director and Chief Executive Officer
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2010
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James A. Attwood, Jr.
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Director
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2010
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Michael Koehler
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Director
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2010
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Paul E. Szurek
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Director
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2010
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J. David Thompson
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Director
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2010
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David A. Wilson
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Director
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2010
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Directors
Robert G. Stuckey has been a Director of CoreSite since
September 2010. Mr. Stuckey is a Managing Director and
Fund Head, US Real Estate, at The Carlyle Group. Prior to
joining Carlyle Realty in 1998, Mr. Stuckey was Chief
Investment Officer at CarrAmerica. Prior to that, he was Senior
Vice President of ProLogis and Chief Financial Officer for
Trammel Crow Company, N.E. Mr. Stuckey was twice Academic
All-American
in football at the University of Nebraska and received an M.B.A.
from Harvard University. In determining Mr. Stuckeys
qualifications to serve on our Board, the Board considered,
among other things, Mr. Stuckeys significant
experience concerning the acquisition, disposition, financing,
operations and market opportunities of data center properties
and private and publicly traded REITs, which provide us with
valuable insight into REIT and data center industry trends that
affect our business.
Thomas M. Ray is our President and Chief Executive
Officer and a member of our board of directors since September
2010. Mr. Ray has been responsible for our companys
activities since its founding in 2001. Prior to the initial
public offering of our company, Mr. Ray also served as a
Managing Director of The Carlyle Group, focusing upon
opportunities for the firms real estate funds and leading
those funds activities in the data center sector. He
brings over 20 years of experience making and managing
investments and businesses throughout the U.S., Europe and Asia.
Prior to joining Carlyle and our company, Mr. Ray held
management-level roles at companies such as ProLogis,
CarrAmerica and predecessors to Archstone-Smith. Prior thereto
he practiced real estate and transactional law. Mr. Ray
received his M.B.A. from the University of Texas at Austin
Graduate School of Business, where he was a Longhorn Scholar. He
received a J.D. from the University of Colorado at Boulder
School of Law and a B.S. in Business Administration with
emphasis in Finance from the University of Denver, where he was
a Hornbeck Scholar. In determining Mr. Rays
qualifications to serve on our Board, the Board considered,
among other things, Mr. Rays significant experience
with publicly traded REITs and in the acquisition, finance and
operation of commercial real estate, as well as over a decade of
experience in the data center industry, which provide us with
insight into commercial real estate, REIT and data center trends
that affect our business.
James A. Attwood, Jr. has been a Director of
CoreSite since September 2010. Mr. Attwood is a Managing
Director and Head of the Global Telecommunications and Media
Group at The Carlyle Group. Prior to joining Carlyle in 2000,
Mr. Attwood served as Executive Vice President for
Strategy, Development and Planning at Verizon Communications,
Inc. and GTE Corporation prior to that. Prior to his four years
at Verizon and GTE, Mr. Attwood served as an investment
banker at Goldman, Sachs & Co. for 11 years.
Mr. Attwood graduated summa cum laude from Yale University
in 1980 with a B.A. in applied mathematics and an M.A. in
statistics. In 1985, he received both J.D. and M.B.A. degrees
from Harvard University. Mr. Attwood serves as a member of
the Boards of Directors of Syniverse Holdings, Inc., Insight
Communications and The Nielsen Company. Mr. Attwood has
gained significant knowledge of the telecommunications industry
through his work with
6
Verizon and The Carlyle Group. In determining
Mr. Attwoods qualifications to serve on our Board,
the Board considered, among other things,
Mr. Attwoods private equity experience, together with
the experience gained by having served on the boards of
directors of various telecommunications companies, which provide
us with a valuable perspective in monitoring and evaluating our
business.
Michael Koehler has been a Director of CoreSite since
September 2010. During 2008 and 2009, Mr. Koehler served as
Senior Vice President, Americas Region, of Electronic Data
Systems Corporation, or EDS, a division of the Hewlett-Packard
Company, or HP. EDS, a global provider of information technology
and business process outsourcing services, was acquired by HP in
2008. During 2008, and prior to HPs acquisition of EDS,
Mr. Koehler served as Executive Vice President, Global ITO
Services and, following a promotion, as Senior Vice President,
Infrastructure Technology and Business Process Outsourcing, in
each case, at EDS. During 2007, and prior to his assuming the
position of Executive Vice President, Global ITO Services,
Mr. Koehler served as Regional Senior Vice President,
Europe, Middle East and Africa Operations, at EDS and, from 2006
to 2008, as Enterprise Client Executive, Navy Marine Corps
Intranet Account, at EDS. From 2004 to 2006, Mr. Koehler
served as Chief Operating Officer of The Feld Group, a
management information technology consulting firm that was
acquired by EDS in 2004. From 1994 to 2001, he held management
positions of increasingly greater responsibility at The Feld
Group. Mr. Koehler received his B.S. in Industrial
Engineering from Texas Tech University. In determining
Mr. Koehlers qualifications to serve on our Board,
the Board considered, among other things,
Mr. Koehlers significant experience in the technology
consulting and outsourcing industries and extensive operational
and strategic planning experience in complex, global companies,
which provide us with valuable insight into the technology
trends that affect our business.
Paul E. Szurek has been a Director of CoreSite since
September 2010. Mr. Szurek has been Chief Financial Officer
of Biltmore Farms, LLC, a residential and commercial real estate
development and operating company, since 2003. Prior to joining
Biltmore Farms, Mr. Szurek served as Chief Financial
Officer of Security Capital Group Incorporated, a real estate
investment, development and operating company. He has also
served as Director to two publicly traded real estate companies,
Regency Centers and Security Capital U.S. Realty.
Mr. Szurek received a J.D. with honors from Harvard Law
School and a B.A. in Government, magna cum laude, from the
University of Texas at Austin. In determining
Mr. Szureks qualifications to serve on our Board, the
Board considered, among other things, Mr. Szureks
significant experience concerning the acquisition, disposition,
financing, operations and market opportunities of private and
publicly traded REITs, which provide us with valuable insight
into REIT-industry trends that affect our business.
J. David Thompson has been a Director of CoreSite
since September 2010. Since 2006, Mr. Thompson has been
Group President of the Symantec Services Group and Chief
Information Officer of Symantec Corporation, a global provider
of security, storage, and systems management solutions. From
2004 to 2006, prior to joining Symantec Corporation,
Mr. Thompson served as Senior Vice President and Chief
Information Officer for Oracle Corporation. Before joining
Oracle Corporation, Mr. Thompson was Senior Vice President
and Chief Information Officer at PeopleSoft, Inc. from 1998 to
2005, prior to its acquisition by Oracle Corporation.
Mr. Thompson began his career as an officer in the
U.S. Air Force as an Intelligence Systems Officer.
Mr. Thompson studied computer science at American
University. In determining Mr. Thompsons
qualifications to serve on our Board, the Board considered,
among other things, Mr. Thompsons significant
experience in the technology industry and extensive operational
experience in information technology systems optimization, which
provide us with valuable insights into the information
technology trends that affect our business.
David A. Wilson has been a Director of CoreSite since
September 2010. Mr. Wilson has been the President and Chief
Executive Officer of the Graduate Management Admission Council,
or the Council, since 1995. The Council is a $100.0 million
enterprise that is the owner of the Graduate Management
Admission Test, the GMAT. Prior to that, he was a Managing
Partner and National Director for Professional Development at
Ernst & Young. From 1968 to 1978, he held faculty
positions at the University of Texas at Austin, where he was
awarded tenure, and at Harvard Business School. Mr. Wilson
completed his undergraduate studies at Queens University
in Canada, received his M.B.A. at the University of California,
Berkeley, and received his doctorate at the University of
Illinois. He is a Chartered Accountant in Canada and a Certified
Public Accountant in the United States. He has served on the
board of directors of Laureate Education, Inc., and of
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Terra Industries, Inc. At Laureate, he chaired the Audit
Committee and served as a member of the Nominating and
Governance Committee and the Conflicts Committee. He served on
the Audit Committee of Terra. He has served on the Worldwide
Board of Junior Achievement, the Conseil dAdministration
de la Confrérie de la Chaîne des Rôtisseurs
(Paris) and The Wolf Trap Foundation. He presently serves on the
board of directors of Barnes and Noble, Inc. and as a member of
the board of The Atlantic Council, and is a national trustee of
the National Symphony Orchestra. Mr. Wilson currently
serves as Chairman of and the Financial Expert on our Audit
Committee. In determining Mr. Wilsons qualifications
to serve on our Board, the Board considered, among other things,
Mr. Wilsons significant industry experience in the
areas of accounting policy, internal controls, and risk
management.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF
EACH OF MESSRS. STUCKEY, RAY, ATTWOOD, KOEHLER, SZUREK,
THOMPSON, AND WILSON.
PROPOSAL TWO:
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board, which is composed entirely of
independent directors, has appointed KPMG LLP as our
companys independent registered public accounting firm for
the year ending December 31, 2011. Although stockholder
approval is not required, we desire to obtain from our
stockholders an indication of their approval or disapproval of
the Audit Committees action in appointing KPMG LLP as the
independent registered public accounting firm of our company for
2011. If our stockholders do not ratify and approve this
appointment, the appointment will be reconsidered by the Audit
Committee and our Board.
A representative of KPMG LLP will be present at our Annual
Meeting, where the representative will be afforded an
opportunity to make a statement and to respond to appropriate
questions.
The vote of a majority of all votes cast at the Annual Meeting
at which a quorum is present is necessary to ratify the
appointment of KPMG LLP as our independent registered public
accounting firm for 2011.
Audit
Committee Report
The following report of the Audit Committee shall not be
deemed to be soliciting material or to otherwise be
considered filed with the SEC, nor shall such
information be incorporated by reference into any future filing
under the Securities Act of 1933 (the Securities
Act) or the Securities Exchange Act of 1934 (the
Exchange Act) except to the extent that we
specifically incorporate it by reference into such filing.
The Audit Committee of the Board of Directors (the
Board) of CoreSite Realty Corporation (the
Company) consists of David A. Wilson (Chairman and
Audit Committee Financial Expert), Paul E. Szurek and Michael
Koehler, and operates under a written charter adopted by the
Board.
The Audit Committee assists the Board with its oversight
responsibilities regarding the Companys financial
reporting process. The Companys management is responsible
for the preparation, presentation and integrity of the
Companys financial statements and the reporting process,
including the Companys accounting policies, internal audit
function, internal control over financial reporting and
disclosure controls and procedures. KPMG LLP, the Companys
independent registered public accounting firm, is responsible
for performing an audit of the Companys financial
statements.
The Audit Committee has reviewed and discussed with management
the audited financial statements in the Annual Report on
Form 10-K
for the year ended December 31, 2010 (the Annual
Report). The Audit Committee has discussed with KPMG LLP
the overall scope of and plans for the audit by KPMG LLP. The
Audit Committee regularly meets with KPMG LLP, with and without
management present, to discuss the results of its examination,
its evaluation of the Companys internal control over
financial reporting, and the overall quality of the
Companys financial reporting. In the performance of their
oversight function, the members of the Audit Committee
necessarily relied upon the information, opinions, reports and
statements presented to them by management and by KPMG LLP. The
Audit Committee also has discussed with KPMG
8
LLP the matters required to be discussed by the statement on
Auditing Standards 114, as modified or supplemented, including
the overall scope and plan for their audit, the auditors
judgment as to the quality, not just the acceptability, of the
accounting principles, the consistency of their application and
the clarity and completeness of the audited financial statements.
The Audit Committee has received the written disclosures and the
letter from the independent accountant required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with
the Audit Committee concerning independence, and has discussed
with the independent accountant the independent
accountants independence.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board (and the Board
agreed) that the audited financial statements be included in the
Companys Annual Report on
Form 10-K,
for filing with the Securities and Exchange Commission. The
Audit Committee also appointed KPMG LLP as the Companys
auditors for the 2011 fiscal year.
David A. Wilson
Paul E. Szurek
Michael Koehler
Relationship
with Independent Registered Public Accounting Firm
Principal
Accountant Fees and Services
The following table summarizes the fees billed by KPMG LLP for
professional services rendered to us for 2010:
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2010
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Audit Fees
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$
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807,000
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Audit-Related Fees
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619,000
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Tax Fees
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100,632
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All Other Fees
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Total
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$
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1,525,632
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Audit Fees. Audit fees for 2010
consisted of aggregate fees billed for professional services
rendered for the audit of our consolidated annual financial
statements, review of interim consolidated financial statements,
consultations on accounting matters directly related to the
audit, or services that are normally provided by the independent
registered public accounting firm in connection with statutory
and regulatory filings or engagements.
Audit-Related Fees. Audit-related fees
consists of aggregate fees billed for accounting consultations
and other services that were reasonably related to the
performance of audits or reviews of our financial statements and
were not reported above under Audit Fees. The amount
includes $618,869 of costs associated with the Registration
Statement on
Form S-11
relating to our initial public offering.
Tax Fees. Tax fees consisted
principally of assistance with matters related to tax compliance
and reporting. On September 7, 2010, our executive
management team approved a reduction in the scope of services
provided by KPMG LLP and hired Deloitte Tax LLP for the purposes
of providing tax advisory services for the remainder of 2010 and
through 2011, and to prepare the federal and state income tax
returns for us and our affiliates for 2010.
All Other Fees. All other fees consists
of aggregate fees billed for products and services provided by
the independent registered public accounting firm other than
those disclosed above.
Change
in Independent Registered Accounting Firms
On September 21, 2009, our executive management team
approved the dismissal of Ernst & Young LLP
(E&Y) as our independent registered public
accounting firm, which was immediately effective, and
9
appointed KPMG LLP as our independent registered public
accounting firm for the year ended December 31, 2009.
E&Ys reports on our financial statements of our
significant subsidiaries for the years ended December 31,
2008 and 2007, did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles. During our
two most recent fiscal years and any subsequent interim period
preceding the dismissal of E&Y, there were no disagreements
with E&Y on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to E&Ys
satisfaction, would have caused E&Y to make reference to
the matter in their report, and there have been no
reportable events as defined in
Item 304(a)(1)(v) of
Regulation S-K.
Prior to the engagement of KPMG LLP, we did not consult with
such firm regarding the application of accounting principles to
a specific completed or contemplated transaction, or any matter
that was either the subject of a disagreement or a reportable
event. We also did not consult with KPMG LLP regarding the type
of audit opinion which might be rendered on our financial
statements and no oral or written report was provided by KPMG
LLP.
On September 21, 2009, our executive management team
approved the dismissal of Beers and Cutler, PLLC
(B&C) as our independent registered public
accounting firm, which was immediately effective, and appointed
KPMG LLP as our independent registered public accounting firm
for the year ended December 31, 2009.
B&Cs reports on our financial statements of our
significant subsidiaries for the years ended December 31,
2008 and 2007, did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles. During our
two most recent fiscal years and any subsequent interim period
preceding the dismissal of B&C, there were no disagreements
with B&C on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to B&Cs
satisfaction, would have caused B&C to make reference to
the matter in their report, and there have been no
reportable events as defined in
Item 304(a)(1)(v) of
Regulation S-K.
Prior to the engagement of KPMG LLP, we did not consult with
such firm regarding the application of accounting principles to
a specific completed or contemplated transaction, or any matter
that was either the subject of a disagreement or a reportable
event. We also did not consult with KPMG LLP regarding the type
of audit opinion which might be rendered on our financial
statements and no oral or written report was provided by KPMG
LLP.
Pre-Approval
Policies and Procedures
The Audit Committee pre-approves all audit and non-audit
services provided by our independent registered public
accounting firm. Requests to provide services requiring
pre-approval by the Audit Committee are submitted to the Audit
Committee with a description of the services to be provided and
an estimate of the fees to be charged in connection with such
services. The Audit Committee approved all services to be
performed by our independent registered accounting firm during
2010.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL TWO.
PROPOSAL THREE:
AN ADVISORY VOTE APPROVING OUR EXECUTIVE COMPENSATION
Our stockholders are entitled to cast an advisory vote at the
Annual Meeting to approve the compensation of our named
executive officers, as disclosed pursuant to the SECs
compensation disclosure rules, including the Compensation
Discussion & Analysis section of this proxy
statement, or CD&A, the compensation tables and
accompanying narrative disclosures. While this stockholder vote
on executive compensation is an advisory vote that is not
binding on the company or the Board, we value the opinions of
our stockholders and will consider the outcome of the vote when
making future compensation decisions.
As described more fully in the CD&A, our executive
compensation program is designed to attract, motivate and retain
individuals with the skills required to formulate and drive our
strategic direction and
10
achieve annual and long-term performance necessary to create
stockholder value. The program also seeks to align executive
compensation with stockholder value on an annual and long-term
basis through a combination of base pay, annual incentives and
long-term incentives. Our practice of placing a significant
portion of each executives compensation at risk
demonstrates this
pay-for-performance
philosophy.
We actively review and assess our executive compensation program
in light of the industry in which we operate, the marketplace
for executive talent in which we compete, and evolving
compensation governance and best practices. We are focused on
compensating our executive officers fairly and in a manner that
promotes our compensation philosophy. Specifically, our
compensation program for executive officers focuses on the
following principal objectives:
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align executive compensation with stockholder interests;
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attract and retain talented personnel by offering competitive
compensation packages;
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motivate employees to achieve strategic and tactical corporate
objectives and the profitable growth of our company; and
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reward employees for individual, functional and corporate
performance.
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Our Board believes that our executive compensation program
satisfies these objectives, properly aligns the interests of our
executive officers with those of our stockholders, and is worthy
of stockholder support. In determining whether to approve this
proposal, we believe that stockholders should consider the
following:
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Independent Compensation Committee. Executive
compensation is reviewed and established by a Compensation
Committee of the Board consisting solely of independent
directors. The Compensation Committee meets in executive
session, without executive officers present, in determining
annual compensation. The Compensation Committee receives data,
analysis and input from an independent compensation consultant
that is not permitted to perform any additional services for
CoreSite management.
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Performance-Based Incentive
Compensation. Elements of performance-based,
incentive compensation are largely aligned with financial and
operational objectives established in the Board-approved annual
operating plan.
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Limited Perquisites. Our executive officers do
not receive any perquisites other than those that are offered to
non-executive, salaried employees.
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Equity Plans. Grants under our equity plans
generally include four-year vesting periods, and our plan
prohibits repricing or exchange of outstanding option awards
without consent of stockholders, requires options be granted
with exercise prices at fair market value and does not include
liberal share recycling provisions.
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Stock Ownership Guidelines. Our executive
officers are subject to stock ownership guidelines described in
Compensation Discussion and Analysis.
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Finally, our compensation programs are objective, transparent
and do not tend to materially change from year to year. While
the Compensation Committee and the company retain discretion to
alter these programs and to introduce new ones, they intend to
exercise this discretion infrequently.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL THREE.
PROPOSAL FOUR:
FREQUENCY OF ADVISORY VOTE REGARDING EXECUTIVE
COMPENSATION
Our stockholders are entitled to cast an advisory vote at the
Annual Meeting to determine how frequently they should consider
and cast an advisory vote to approve the compensation of our
named executive officers. The choices are annually, every other
year, or every three years. While this stockholder vote
regarding frequency is an advisory vote that is not binding on
the company or the Board, we value the opinions of our
stockholders and will consider the outcome of the vote when
making our determination regarding how frequently this advisory
vote will be held.
11
The company, the Compensation Committee and the Board of
Directors believe that it is appropriate and in the best
interest of CoreSite for our stockholders to cast an advisory
vote on executive compensation every three years, for the
following reasons:
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We believe that determining whether executive compensation has
been properly calibrated to company performance is best viewed
over a multi-year period rather than any single year, given that
a single year can be impacted by various factors (difficulty in
forecasting, changes in macro-economic environment, etc.),
especially in times of highly volatile economic conditions. We
believe that an annual stockholder vote on executive
compensation runs the risk of becoming a referendum in hindsight
with respect to the amount of executive compensation paid in a
particular year and is not likely to provide the company or the
Board with meaningful guidance as to whether our executive
compensation programs and policies are generally appropriate and
effective.
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Along the same lines, in the event that we were to receive an
advisory vote disapproving of our compensation program for our
named executive officers, we would want to understand our
stockholders views that led to such vote. We believe that
it would take more than a year to understand and consider these
concerns and any potential alternatives, to actually institute
any warranted changes to our compensation programs, and for us
and our stockholders to assess whether such changes were
effective. We do not believe that it would be in the best
interest of stockholders for the company or the Board to respond
to a negative advisory vote on executive compensation in a
reactive fashion.
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This is particularly true when one considers the fact that
elements of our executive compensation programs apply well
beyond our named executive officers described in the
Compensation Discussion and Analysis. We believe
that these programs have proven to be valuable in the
recruitment and retention of key employees (in addition to our
named executive officers), and before we eliminated or
materially changed these programs, we would want to fully
understand the human resources implications of doing so.
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Perhaps most importantly, we believe that we have open lines of
communication with our major stockholders and that we generally
have an open door philosophy in responding to any
stockholder who expresses a concern regarding any of our
policies and practices, including those related to executive
compensation. As a practical matter, we believe that our
stockholders and potential investors will continue to have ample
opportunity to engage in meaningful dialogue regarding executive
compensation matters during the period of time between advisory
votes and that they will not be prejudiced or in any way
disenfranchised by the three-year term.
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In light of the above, we believe that our resources in
preparing for and seeking an advisory vote on executive
compensation will be most effectively deployed every three years
as opposed to a shorter time period, without sacrificing the
ability of our stockholders to be heard.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR A FREQUENCY OF
THREE YEARS WITH RESPECT TO PROPOSAL
FOUR.
INFORMATION
ABOUT OUR BOARD OF DIRECTORS AND ITS COMMITTEES
Our Board of Directors currently consists of seven directors.
Our charter provides that the number of directors constituting
our Board may be increased or decreased by a majority vote of
our entire Board, provided the number of directors may not be
decreased to fewer than one, the minimum number required under
the Maryland General Corporate Law (MGCL). On the
other hand, the Operating Partnership Agreement provides that,
for so long as real estate funds affiliated with The Carlyle
Group (the Funds) collectively own 10% or more of
the outstanding common stock (assuming all Operating Partnership
units are exchanged for common stock), the Board may not
increase or decrease the number of directors unless, in the case
of an increase, the number of directors that the Funds are
entitled to nominate is also increased, provided that the number
of such nominees shall not exceed one-third of the entire Board.
12
Our bylaws require that nominees for director, whether for
election by the stockholders or by the Board, shall include such
individuals as are entitled to be nominated pursuant to the
Operating Partnership Agreement. The Operating Partnership
Agreement provides that, for so long as the number of Operating
Partnership units and shares of common stock held collectively
by the Funds is equal to or greater than 50% of the total number
of shares of outstanding common stock (assuming all Operating
Partnership units are exchanged for common stock), certain of
the Funds shall have the right to nominate the number of
directors that is one less than the lowest whole number that
would exceed one-third of the directors, but not less than one
director. With the Board having seven members, the Funds
presently are entitled to nominate two directors. Such rights to
nominate directors are subject to decrease as follows (in each
case assuming all Operating Partnership units are exchanged for
common stock):
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If the Funds collectively own less than 50% but at least 10% of
the outstanding common stock, then the Funds will be entitled to
nominate the number of directors that is one less than the
lowest whole number that would exceed 20% of the directors, but
not less than one director. Assuming that the Board still had
seven directors, then the Funds would be entitled to nominate
only one director.
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If the Funds collectively own less than 10% of the outstanding
common stock, then the Funds will no longer be entitled to
nominate any directors.
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During 2010, the Board held three meetings. Each member of the
Board attended or participated in 75% or more of the aggregate
of (i) the total number of meetings of the Board (held
during the period for which such person has been a director) and
(ii) the total number of meetings held by all committees of
the Board on which such person served (during the periods that
such person served), except for Mr. Attwood, who was not
able to attend one of the three Board meetings.
There are no family relationships among executive officers and
directors of CoreSite.
Committees
of the Board of Directors
Our Board has a standing Audit Committee, Compensation Committee
and Nominating/Corporate Governance Committee. Each of these
committees must be composed exclusively of independent
directors. The Audit Committee and the Nominating/Corporate
Governance Committee must each have at least three directors;
the Compensation Committee must have at least two directors. Our
Board may from time to time establish other committees to
facilitate the management of our company. The Operating
Partnership Agreement currently requires that, so long as the
Funds collectively own at least 10% of the outstanding common
stock (assuming all Operating Partnership units are exchanged
for common stock), the Funds shall have the right to have at
least one of their nominees on each committee, unless prohibited
by law or the rules of the NYSE, other than any committee whose
purpose is to evaluate or negotiate any transaction with the
Funds. The Funds have exercised this right by requesting that
Mr. Stuckey be appointed to the Nominating/Corporate
Governance Committee, but have not requested that either of its
two nominees be appointed to either the Audit Committee or the
Compensation Committee.
The Audit Committee, Compensation Committee and
Nominating/Corporate Governance Committee operate under written
charters adopted by the Board. These charters are available on
our website at www.coresite.com.
Audit
Committee
The Audit Committee, established in accordance with
Section 3(a)(58)(A) of the Exchange Act, helps ensure the
integrity of our financial statements, the qualifications and
independence of our independent auditor and the performance of
our internal audit function and independent auditors. The Audit
Committee selects, appoints, assists and meets with the
independent auditor, oversees each annual audit and quarterly
review, establishes and maintains our internal audit controls
and prepares an annual report for inclusion in our annual proxy
statement pursuant to federal securities laws.
Messrs. Wilson, Koehler and Szurek currently serve as
members of the audit committee, with Mr. Wilson serving as
chair. The Board has determined that all three members of the
committee are financially literate as defined under
the NYSE rules, that Mr. Wilson qualifies
13
as an Audit Committee Financial Expert as defined in
Item 407(d)(5) of SEC
Regulation S-K
and that all three members of the committee are independent
under applicable NYSE and SEC rules. The Audit Committee met a
total of two times between its formation in September 2010 and
the end of 2010.
Nominating/Corporate
Governance Committee
The Nominating/Corporate Governance Committee assists the Board
in identifying qualified individuals to become directors, makes
recommendations to the Board concerning the size, structure and
composition of the Board and its committees, monitors the
process to assess the Boards effectiveness and is
primarily responsible for oversight of corporate governance,
including implementing our Corporate Governance Guidelines. In
evaluating potential nominees to the Board, the
Nominating/Corporate Governance Committee considers, among other
things, independence, character, ability to exercise sound
judgment, age, demonstrated leadership, skills, including
financial literacy, and experience in the context of the needs
of the Board. The Nominating/Corporate Governance Committee
considers candidates proposed by stockholders and evaluates them
using the same criteria as for other candidates.
Messrs. Szurek, Stuckey and Thompson currently serve as
members of the Nominating/Corporate Governance Committee, with
Mr. Szurek serving as chair. The Board has determined that
all three members of the committee are independent under
applicable NYSE rules. The Nominating/Corporate Governance
Committee met a total of two times between its formation in
September 2010 and the end of 2010, and met after the end of
2010 to recommend to the full Board each of the nominees for
election to the Board, as presented herein.
At least annually, the Nominating/Corporate Governance Committee
evaluates the performance of each current director and considers
the results of such evaluation when determining whether to
recommend the nomination of such director for an additional
term. At an appropriate time prior to each annual meeting at
which directors are to be elected or re-elected, the
Nominating/Corporate Governance Committee recommends to the
Board for nomination by the Board such candidates as the
Nominating/Corporate Governance Committee, in the exercise of
its judgment, has found to be well qualified and willing and
available to serve.
At an appropriate time after a vacancy arises on the Board or a
director advises the Board of his or her intention to resign,
the Nominating/Corporate Governance Committee will recommend to
the Board for election by the Board to fill such vacancy, such
prospective member of the Board as the Nominating/Corporate
Governance Committee, in the exercise of its judgment, has found
to be well qualified and willing and available to serve. In
determining whether a prospective member is qualified to serve,
the Nominating/Corporate Governance Committee will consider the
factors listed above.
The foregoing notwithstanding, if we are legally required by
contract or otherwise to permit a third party to designate one
or more of the director nominees to be elected (for example,
pursuant to rights contained in the Operating Partnership
Agreement), then the nomination or election of such directors
will be governed by such requirements. Additionally,
recommendations received from stockholders will be considered
and are subject to the same criteria as are candidates nominated
by the Nominating/Corporate Governance Committee.
Compensation
Committee
The Compensation Committee reviews and approves the compensation
and benefits of our executive officers, administers and makes
recommendations to the Board regarding our compensation and
stock incentive plans, produces an annual report on executive
compensation for inclusion in our annual proxy statement and
publishes an annual committee report for our stockholders.
Messrs. Koehler, Wilson and Thompson currently serve as
members of the Compensation Committee, with Mr. Koehler
serving as chair. The Board has determined that all three
members of the committee are independent under applicable NYSE
rules. The Compensation Committee met a total of one time
between its formation in September 2010 and the end of 2010. For
a description of the Compensation Committees processes and
procedures, including the roles of our executive officers and
independent compensation consultants in the Compensation
Committees decision-making process, see the section titled
Compensation Discussion and Analysis.
14
Board
Oversight of Risk Management
The Board believes that evaluating how the executive team
manages the various risks confronting the company is one of its
most important areas of oversight. In carrying out this critical
responsibility, the Board has designated the Audit Committee
with primary responsibility for overseeing enterprise risk
management. While the Audit Committee has primary responsibility
for overseeing enterprise risk management, each of the other
Board committees also considers risk within its area of
responsibility. For example, the Nominating/Corporate Governance
Committee reviews risks related to legal and regulatory
compliance as they relate to corporate governance structure and
processes, and the Compensation Committee reviews risks related
to compensation matters. The Board is apprised by the committee
chairs of significant risks and managements response to
those risks via periodic reports. While the Board and its
committees oversee risk management strategy, management is
responsible for implementing and supervising
day-to-day
risk management processes and reporting to the Board and its
committees on such matters.
With respect to risk related to compensation matters, the
Compensation Committee considers, in establishing and reviewing
our executive compensation program, whether the program
encourages unnecessary or excessive risk taking and has
concluded that it does not. Executives base salaries are
fixed in amount and thus do not encourage risk-taking. Bonuses
are capped and are tied to overall corporate performance, and
also are a relatively small percentage of executive
officers total compensation opportunities. The majority of
compensation provided to the executive officers is in the form
of long-term equity awards that are important to help further
align executives interests with those of our stockholders.
The Compensation Committee believes that these awards do not
encourage unnecessary or excessive risk-taking because the
ultimate value of the awards is tied to our stock price and
because awards are staggered and subject to long-term vesting
schedules to help ensure that executives have significant value
tied to long-term stock price performance.
The Compensation Committee also has reviewed our compensation
programs for employees generally and has concluded that these
programs do not create risks that are reasonably likely to have
a material adverse effect on the company. The Compensation
Committee believes that the design of our annual cash and
long-term equity incentives provides an effective and
appropriate mix of incentives to help ensure our performance is
focused on long-term stockholder value creation and does not
encourage the taking of short-term risks at the expense of
long-term results. In general, bonus opportunities for our
employees are capped, and we have discretion to reduce bonus
payments (or pay no bonus) based on individual performance and
any other factors we may determine to be appropriate in the
circumstances. As with the compensation of our executive
officers, a substantial portion of the compensation for
employees generally is delivered in the form of equity awards
that help further align the interests of employees with those of
stockholders.
Although our Chief Executive Officer is also a director, he is
not our chairman. In addition to an independent chairman, our
bylaws also require us to have a lead independent director, who
may preside over meetings of independent directors in the event
of a potential conflict of interest that precludes our chairman
from participating.
Code of
Ethics
Our Code of Business Conduct and Ethics applies to all of our
employees, including our principal executive officer, principal
financial officer and principal accounting officer, and the
Board. A copy of the Code is available on our website at
www.coresite.com. We intend to disclose any changes in or
waivers from the Code by posting such information on our website
or by filing a
Form 8-K.
Compensation
of Directors
The Board determines the form and amount of director
compensation after its review of recommendations made by the
Compensation Committee. A substantial portion of each
directors annual retainer is in the form of equity. Under
our 2010 Equity Incentive Plan (the 2010 Plan),
members of the Board who are not also employees
(Non-Employee Directors) are given an annual grant
of restricted stock units (RSUs) and an equal number
of tandem dividend equivalents under our 2010 Plan on the date
of the annual meeting of stockholders (each, an Annual RSU
Award), having a fair market value as of the date of grant
equal to
15
$40,000. Dividend equivalents give holders the right to receive,
upon payment of any ordinary cash dividend paid to holders of
our common stock, an equivalent payment in the form of
additional RSUs and dividend equivalents. All Annual RSU Awards
granted within the first year following our IPO will vest on
September 28, 2011, and all Annual RSU Awards granted
thereafter will vest immediately upon grant. In addition, each
Non-Employee Director is given an annual cash retainer of
$40,000 for services as a director. Directors who are employees
of our company or our subsidiaries and those directors nominated
by the Funds do not receive compensation for their services as
directors.
Non-Employee Directors who serve on our Audit,
Nominating/Corporate Governance
and/or
Compensation Committees other than as chair of the committee
receive an additional annual cash retainer fee of $5,000 for
each committee on which they serve. Directors who serve as the
chair of our Audit Committee receive an additional annual
retainer of $15,000. Directors who serve as the chair of one of
our other board committees receive an additional annual retainer
of $10,000. In addition, upon the closing of our initial public
offering (IPO) on September 28, 2010, each of
our Non-Employee Directors received a one-time grant of 2,500
stock options, with a per share exercise price of $15.98.
The following table presents information regarding the
compensation paid during 2010 to Non-Employee Directors who
served on the Board during the year. All 2010 compensation, as
reflected in the chart below, was prorated from
September 28, 2010, when the directors commenced service.
The compensation paid to Mr. Ray is presented below under
Executive Compensation in the table titled
Summary Compensation Table and the related
explanatory tables. Mr. Ray does not receive any
compensation for his services as a member of the Board.
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Fees Earned
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Stock
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Option
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All Other
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Name
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or Paid in Cash
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Awards(1)(2)
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Awards(1)(3)
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Compensation
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Total
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Michael Koehler
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$
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13,750
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(4)
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$
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10,000
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$
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12,375
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$
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0.00
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$
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36,125
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Paul E. Szurek
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13,750
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(5)
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10,000
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12,375
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|
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0.00
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36,125
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J. David Thompson
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12,500
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(6)
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10,000
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12,375
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0.00
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34,875
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David A. Wilson
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15,000
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(7)
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10,000
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12,375
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0.00
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37,375
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(1) |
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The value reported reflects the aggregate grant date fair value
of stock awards and option awards, respectively, granted to
Non-Employee Directors during 2010 and computed in accordance
with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718
(Stock Compensation). For a discussion of the
assumptions and methodologies used to calculate the amounts
referred to above, please see the discussion of option awards
contained in Part II, Item 8, Financial
Statements and Supplementary Data of our Annual Report on
Form 10-K
(the Annual Report), in Notes to Consolidated
Financial Statements at Note 12, Equity Incentive
Plan. |
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(2) |
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Represents a prorated annual grant of RSUs having a fair market
value as of the date of grant of $10,000. These RSUs will vest
on September 28, 2011. |
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(3) |
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Represents a one-time grant of 2,500 stock options to all
Non-Employee Directors other than Messrs. Attwood and
Stuckey, with a per share exercise price of $15.98, upon the
closing of our IPO on September 28, 2010. |
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(4) |
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Includes a $10,000 prorated annual cash retainer, an additional
$1,250 prorated cash retainer for service as a member of the
Audit Committee and an additional $2,500 prorated cash retainer
for service as chair of the Compensation Committee. |
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(5) |
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Includes a $10,000 prorated annual cash retainer, an additional
$1,250 prorated cash retainer for service as a member of the
Audit Committee and an additional $2,500 prorated cash retainer
for service as chair of the Nominating and Corporate Governance
Committee. |
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(6) |
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Includes a $10,000 prorated annual cash retainer, and an
additional $2,500 prorated cash retainer for service as a member
of the Compensation Committee and the Nominating and Corporate
Governance Committee. |
16
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(7) |
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Includes a $10,000 prorated annual cash retainer, an additional
$1,250 prorated cash retainer for service as a member of the
Compensation Committee and an additional $3,750 prorated cash
retainer for service as chair of the Audit Committee. |
The following table presents the number of outstanding and
unexercised option awards and the number of outstanding RSUs
held by each of the Non-Employee Directors as of
December 31, 2011.
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Number of Shares
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Number of Shares
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Subject to Outstanding
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Subject to Outstanding
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Director
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Options as of December 31, 2010
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RSUs as of December 31, 2010(1)
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Michael Koehler
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2,500
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2,500
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Paul E. Szurek
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2,500
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2,500
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J. David Thompson
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2,500
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2,500
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David A. Wilson
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2,500
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2,500
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(1) |
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The Company granted 2,500 RSUs to all Non-Employee Directors on
September 28, 2010. The grant date fair value for each
grant was $15.98. Tandem dividend equivalents were issued with
the RSUs, giving holders the right to receive, upon payment of
any ordinary cash dividend paid to holders of our common stock,
an equivalent payment in the form of additional RSUs and
dividend equivalents. For a discussion of the assumptions and
methodologies used to calculate the amounts referred to above,
please see the discussion of option awards contained in
Part II, Item 8, Financial Statements and
Supplementary Data of the Annual Report in Notes to
Consolidated Financial Statements at Note 12, Equity
Incentive Plan. |
Communications
with the Board
Any matter intended for the Board, or for any individual member
or members of the Board, should be directed to our Corporate
Secretary at 1050 17th Street, Suite 800, Denver,
Colorado 80265, with a request to forward the communication to
the intended recipient or recipients. In general, any
stockholder communication delivered to our Corporate Secretary
for forwarding to the Board or specified Board member or members
will be forwarded in accordance with the stockholders
instructions. However, our Corporate Secretary reserves the
right not to forward to Board members any abusive, threatening
or otherwise inappropriate materials. Information regarding the
submission of comments or complaints relating to our accounting,
internal accounting controls or auditing matters can be found on
our website at www.coresite.com.
Attendance
of Directors at 2011 Annual Meeting of Stockholders
While we do not have a formal policy requiring our directors to
attend stockholder meetings, directors are invited and
encouraged to attend all meetings of stockholders.
Compensation
Committee Interlocks and Insider Participation
Messrs. Koehler, Wilson and Thompson were Compensation
Committee members during the fourth quarter of 2010 and the
first quarter of 2011. No member of the Compensation Committee
is or has ever been an executive officer of the company, and no
member of the Compensation Committee had any relationships
requiring disclosure by us under the SECs rules requiring
disclosure of certain relationships and related-party
transactions. None of our executive officers served on any
compensation committee (or its equivalent) of any other entity,
the executive officers of which served as a director of the
company or a member of our Compensation Committee.
17
EXECUTIVE
OFFICERS
The following table sets forth certain information as of
March 31, 2011, regarding our executive officers.
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Age as of
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the Annual
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Name
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Position With the Company
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Meeting
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Thomas M. Ray
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Chief Executive Officer
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48
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Christopher M. Bair
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Senior Vice President, Sales
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42
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Deedee Beckman*
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Former Chief Financial Officer
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39
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David W. Dunn
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Senior Vice President, Strategy and Marketing
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31
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Jeffrey S. Finnin
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Chief Financial Officer
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47
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Billie R. Haggard
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Senior Vice President, Data Centers
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45
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Derek McCandless
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Senior Vice President, Legal, General Counsel and Secretary
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40
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Dominic M. Tobin
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Senior Vice President, Operations, of CoreSite Services, Inc.
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57
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Ari Brumer*
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Former General Counsel
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38
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* |
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Ms. Beckman served as our chief financial officer until
January of 2011. Mr. Brumer served as our general counsel
until May of 2010. |
Christopher M. Bair is our Senior Vice President, Sales.
Mr. Bair brings 15 years of executive sales and
management experience in the data center and information
technology industries. Prior to joining our company in May 2010,
Mr. Bair was Senior Vice President of Sales and Marketing
at Qualifacts Systems, a software service provider of enterprise
systems for healthcare providers. Mr. Bair has also held
roles of increasing responsibility in sales and operations at
SunGard Availability Services/Inflow, which he joined in 1999.
Prior to entering the private sector Mr. Bair was a Captain
and Pilot in the United States Air Force. Mr. Bair received
a M.S. in Management from Embry Riddle Aeronautical University
and a B.S. from the United States Air Force Academy in Colorado
Springs, CO.
David W. Dunn is our Senior Vice President, Strategy and
Marketing. Mr. Dunn joined our company in 2004 and has led
our marketing and business development activities since 2006.
Mr. Dunn served as our Sales Director from 2004 to 2005,
Real Estate Asset Manager from 2005 to 2006 and Vice President
of Sales and Marketing from 2006 to 2007. Prior to joining us in
March 2004, Mr. Dunn was a Senior Analyst at The Carlyle
Group, where he played a role in managing several strategic
projects as well as Carlyles data center investments.
Before joining The Carlyle Group, he was an Analyst at another
private equity fund, JER Partners, where he evaluated
acquisition opportunities and conducted due diligence on
multiple real estate property types. Mr. Dunn graduated
magna cum laude from The Wharton School at the University of
Pennsylvania with a B.S. in Economics and is currently an M.B.A.
candidate at the Kellogg School of Management at Northwestern
University.
Jeffrey S. Finnin is our Chief Financial
Officer. Before joining us as Chief Financial Officer
in January 2011, Mr. Finnin served as Managing Director and
Chief Accounting Officer of ProLogis for over five years. Prior
to his tenure at ProLogis, Mr. Finnin spent 18 years
in public accounting with significant history as a partner with
KPMG and Arthur Andersen, where he served as the partner in
charge of real estate practices in Denver.
Billie R. Haggard is our Senior Vice President, Data
Centers. In this role Mr. Haggard is responsible for the
design, construction, maintenance, facilities staffing and
ultimately uptime, reliability and energy efficiency of our data
centers. Mr. Haggard served as our Vice President of
Facilities from 2009 to 2010. Prior to joining our company in
March 2009, Mr. Haggard was the Senior Technical Manager at
Switch and Data, where he oversaw all aspects of data center
design and management for more than 40 data centers across North
America. Prior to joining Switch and Data in 2003,
Mr. Haggard held the position of Technical Manager for Lee
Technologies focused upon data center and mission-critical
facilities. Mr. Haggard studied Engineering at
18
Louisiana State University and Louisiana Tech University.
Additionally, Mr. Haggard held positions of increasing
responsibility focused upon nuclear power technology and
maintenance during his
14-year
career as an officer in the United States Navy. Mr. Haggard
was recognized with four Naval Achievement Medals and numerous
letters of commendation stemming from his work and teachings
concerning highly sensitive, mission-critical facilities.
Derek McCandless is our Senior Vice President, Legal,
General Counsel and Secretary. Prior to joining CoreSite in
March 2011, Mr. McCandless served as Senior Vice President
and Assistant General Counsel at Apartment Investment and
Management Company, which he joined in 2003. Prior to his tenure
with Apartment Investment and Management Company,
Mr. McCandless was in private practice with the law firms
of Holme Roberts & Owen LLP and Cooley LLP.
Mr. McCandless received a J.D. from The University of
Chicago and a B.S., cum laude, from Brigham Young University.
Dominic M. Tobin is the Senior Vice President, Operations
for CoreSite Services, Inc. Mr. Tobin is responsible for
our companys operations activities, including all
Any2
Exchange®
related initiatives. Mr. Tobin served as our Field
Operations Director from 2007 to 2009 and Vice President of
Operations from 2009 to 2010. Prior to joining our company in
January 2007, Mr. Tobin spent 15 combined years at First
Level Technology and AT&T, where he held roles of
increasing responsibility including Field Operations Director
and District Manager. Mr. Tobin obtained his B.S. degree in
Telecommunications Management, magna cum laude, from Golden Gate
University. He also received a Network Management Certificate
from U.C. Santa Cruz Extension and was a First
Class Electronics Technician in the U.S. Coast Guard.
Material
Proceedings to which an Executive Officer or Director is a
Party
As disclosed in our Annual Report, prior to the completion of
our IPO, Ari Brumer, the former general counsel of our
affiliate, CoreSite, LLC, filed a suit in federal court in
Colorado against us, certain of our affiliates, our Chief
Executive Officer and certain affiliates of the Funds and
Carlyle. In his complaint, Mr. Brumer alleged that he was
fraudulently induced to accept employment with CoreSite, LLC,
and that his employment was terminated in retaliation for his
assertions that we and certain of our officers and affiliates
had been involved in or committed certain illegal or improper
acts. We investigated the assertions of illegal or improper acts
made by Mr. Brumer. Based on the results of that
investigation, we concluded that those assertions were not based
on, or supported by, facts but were raised by Mr. Brumer in
bad faith after his termination, which termination was unrelated
to his avowed concerns about the subject matter of the
assertions. Because the case is still in the preliminary stages,
the cost of the litigation and its ultimate resolution are not
estimable at this time. For more information regarding this
legal proceeding, see Item 3. Legal Proceedings
in our Annual Report.
COMPENSATION
COMMITTEE REPORT
The following report of the Compensation Committee shall not
be deemed to be soliciting material or to otherwise
be considered filed with the SEC, nor shall such
information be incorporated by reference into any future filing
under the Securities Act or the Exchange Act except to the
extent that we specifically incorporate it by reference into
such filing.
The Compensation Committee consists of three Non-Employee
Directors: Messrs. Koehler, Thompson and Wilson, each of
whom the Board has determined is independent under the
applicable NYSE rules. The Compensation Committee has duties and
powers as described in its written charter adopted by the Board.
A copy of the charter can be found on our website at
www.coresite.com.
The Compensation Committee has reviewed and discussed with
management the disclosures contained in the following section
entitled Compensation Discussion and Analysis. Based
on this review and discussion, the Compensation Committee
recommended to the Board that the section entitled
Compensation Discussion and Analysis be included in
this Proxy Statement for the Annual Meeting.
Michael Koehler
J. David Thompson
David A. Wilson
19
COMPENSATION
DISCUSSION AND ANALYSIS
This section explains our executive compensation program as it
relates to the following named executive officers whose
compensation information is presented in the tables following
this discussion in accordance with SEC rules:
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Thomas M. Ray
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Chief Executive Officer
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Jeffrey Finnin
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Chief Financial Officer
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David W. Dunn
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Senior Vice President, Strategy and Marketing
|
Derek McCandless
|
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Senior Vice President, Legal and General Counsel
|
Billie R. Haggard
|
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Senior Vice President, Data Centers
|
Dominic M. Tobin
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Senior Vice President, Operations, of CoreSite Services, Inc.
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Deedee Beckman
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Former Chief Financial Officer
|
Executive
Summary
Our compensation program is designed to recruit and retain as
executive officers individuals with the highest capacity to
develop, grow and manage our business, and to align their
compensation with our short-term and long-term goals. To do
this, our compensation program for executive officers is made up
of the following components: (i) base salary, designed to
compensate our executive officers for work performed during the
fiscal year; (ii) short-term incentive programs, designed
to reward our executive officers for our yearly performance and
for their individual performance during the fiscal year; and
(iii) equity-based awards, meant to align our executive
officers interests with our long-term performance. For all
named executive officers, compensation is intended to be
significantly performance-based, with a belief that compensation
paid to executive officers should be closely aligned with the
performance of our company on both a short-term and long-term
basis, in order to create value for equityholders.
In establishing compensation for executive officers, the
following summarizes our primary objectives:
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Attract and retain individuals of superior ability and
managerial talent;
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Ensure senior officer compensation is aligned with our corporate
strategies and business objectives and the long-term interests
of our equityholders;
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Increase the incentive to achieve key strategic and financial
performance measures by linking incentive award opportunities to
the achievement of performance goals in these areas; and
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Enhance the officers incentives to provide increased value
to equityholders, as well as promote retention of key management
personnel, by providing a portion of total compensation
opportunities for senior management in the form of ownership in
our company in the form of shares of our common stock and other
equity and equity-based awards.
|
Our companys overall compensation program is structured to
attract, motivate and retain highly qualified executive officers
by awarding compensation that is consistent with our
companys success and their contributions to that success.
Our company believes compensation should be structured to ensure
that a significant portion of compensation opportunity will be
directly related to company performance and other factors that
directly and indirectly influence equityholder value. Total
compensation for our named executive officers has been allocated
between cash and equity compensation, taking into consideration
the balance between providing short-term incentives and
long-term investment in our financial performance to align the
interests of management with equityholders.
Taking into consideration the foregoing objectives, we structure
total compensation for our executives to provide a guaranteed
amount of cash compensation in the form of base salaries, while
also providing a meaningful amount of annual cash compensation
that is at risk and dependent on our performance and the
individual performance of the executives, in the form of
discretionary annual bonuses. We also seek to provide
20
a portion of total compensation in the form of equity-based
awards in order to align the interests of executives and other
key employees with those of our equityholders, and for retention
purposes.
Role of
the Board of Directors, the Compensation Committee and
Management
Our Compensation Committee is charged with, among other things,
the responsibility of reviewing executive officer compensation
policies and practices to ensure adherence to our compensation
philosophies and that the total compensation paid to our
executive officers is fair, reasonable and competitive, taking
into account our competitive position within our industry and
our named executive officers level of expertise and
experience in their positions. The Compensation Committees
primary responsibilities with respect to determining executive
compensation are (i) setting performance targets under all
annual bonus and long-term and management incentive compensation
plans, including our 2010 Equity Incentive Plan (the 2010
Plan); (ii) verifying that performance targets used
for any performance-based equity compensation plans have been
met before payment of any executive bonus or compensation;
(iii) approving all amendments to, and terminations of, all
compensation plans and any awards under such plans;
(iv) granting any awards under any performance-based annual
bonus, long-term incentive compensation and equity compensation
plans to executive officers; (v) approving which executive
officers and other employees receive awards under our equity and
incentive compensation plan(s), including the 2010 Plan;
(vi) repurchasing securities from terminated employees and
(vii) conducting an annual review of all compensation
plans. All plan reviews include reviewing the plans
administrative costs, reviewing current plan features relative
to any proposed new features, and assessing the performance of
the plans internal and external administrators if any
duties have been delegated.
Prior to our IPO, the performance of our named executive
officers was assessed, and the performance-driven aspects of our
named executive officers compensation determined,
primarily by our Chief Executive Officer on an annual basis.
Since our IPO, the Compensation Committee reviews and considers
our Chief Executive Officers recommendations with respect
to compensation decisions for our named executive officers other
than himself and makes all compensation decisions with regard to
our Chief Executive Officer. The Compensation Committee believes
it is valuable to consider the recommendations of our Chief
Executive Officer with respect to these matters because, given
his knowledge of our operations, the data center industry and
the
day-to-day
responsibilities of our executive officers, he is in a unique
position to provide the Committee perspective into the
performance of our executive officers in light of our business
at a given point in time.
Compensation
Processes
For the development of our 2011 compensation program, the
Compensation Committee retained W.T. Haigh & Company,
Inc. (W.T. Haigh) as its independent compensation
consultant. W.T. Haigh provides us advisory services only with
respect to executive compensation, and works with management
only at the request and under the direction of the Compensation
Committee. W.T. Haigh reviewed the compensation components for
our 2010 program for our named executive officers and advised
the Compensation Committee on the appropriateness of the
components of the program, including our incentive and
equity-based compensation plans. A representative of W.T. Haigh
attended the meeting of the Compensation Committee in March 2011
and continues to make himself available on an ongoing basis to
provide guidance to the Compensation Committee on compensation
issues as they arise.
Prior to our IPO, we set base salary structures, annual
incentive targets and equity awards in amounts as determined by
our Chief Executive Officer, in consultation with the Funds. In
making such compensation determinations, our Chief Executive
Officer and the Funds did not historically review executive
compensation against a specific group of comparable companies,
but instead relied upon their own judgment and industry
experience in making decisions with respect to total
compensation and with respect to the allocation of total
compensation among our three main components of compensation.
For 2010, actual pay for each named executive officer was
determined based on the named executive officers
historical compensation levels, which were set based on our
Chief Executive Officers general knowledge, including
information he received from W.T. Haigh, our compensation
consultant, and
21
understanding of compensation levels for similarly situated
executives in our industry, the performance of the executive
over time, and our company-wide performance.
Elements
of 2010 Compensation
Base Salaries. In 2010, we sought to
compensate our named executive officers for their performance
throughout the year with annual base salaries that were fair and
competitive within our marketplace, taking into account the
considerations described above under
Compensation Processes. We provide base
salaries to our named executive officers in order to ensure the
attraction, development and retention of superior talent and
relative base salary levels reflecting the named executive
officers historic contributions to our performance as well
as their level of responsibility within our organization and
length of service with us. Going forward, we expect that base
salary determinations will continue to focus on the above
considerations.
At the end of 2010, base salaries were reviewed to ensure
continuing consistency with market levels and our level of
financial performance during the previous year. We expect that
future adjustments to base salaries and salary ranges will
reflect average movement in the competitive market as well as
individual performance. No formulaic base salary increases are
provided to the named executive officers; however, annual merit
increases are provided when we determine that such increases are
warranted in light of individual or overall Company performance.
In January 2010, we awarded the following merit increases to our
named executive officers: Mr. Dunns salary was
increased from $155,000 to $160,000; Mr. Haggards
salary was increased from $160,000 to $165,000; and
Mr. Tobins salary was increased from $98,175 to
$145,000. In September 2010, we awarded the following additional
increases: Mr. Dunns salary was increased from
$160,000 to $185,000; Mr. Haggards salary was
increased from $165,000 to $190,000; and Mr. Tobins
salary was increased from $145,000 to $185,000. These increases
were based on individual performance considerations, on
assignment of additional responsibilities, and on overall
Company performance as discussed in more detail below under
Annual Cash Incentive Awards. In addition,
Mr. Ray received a salary increase of $175,000 upon
completion of our initial public offering, pursuant to the terms
of his employment agreement, as further discussed below under
Employment Agreements Tom Ray.
Annual Cash Incentive Awards. As one
way of accomplishing our compensation objectives, executive
officers are rewarded for their contribution to our financial
and operational success through the award of discretionary
annual incentive cash bonuses, which were historically
determined by our Chief Executive Officer and the Funds and
which are now determined annually by the Compensation Committee,
taking into account the recommendation of our Chief Executive
Officer.
Bonuses for our named executive officers historically have not
been based on a prescribed formula, but rather have been
determined individually for each named executive officer on a
subjective basis. We believe that this approach to assessing
performance results in a more comprehensive evaluation for
compensation decisions. In addition to our level of achievement
of our economic forecasts for the year, our Chief Executive
Officer and Compensation Committee have considered the following
factors in determining the amount of the annual bonus to be
awarded to each of our named executive officers:
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the named executive officers length of service with us;
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the scope, level of expertise and experience required for the
named executive officers position;
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analysis of executive compensation paid by certain peer
companies, considering adjustments for the cost of living in the
geographical region in which each respective executive
resides; and
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a subjective performance evaluation, based on our Chief
Executive Officers view of each named executive
officers level of contribution toward our achievement of
economic forecasts for the year.
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These additional factors were selected as the most appropriate
measures upon which to base the annual incentive cash bonus
decisions because we believe that they help to align individual
compensation with both competency and contribution.
For 2010, bonus amounts for our named executive officers were
determined primarily based upon our level of achievement against
our economic forecast for revenue, net operating income (NOI),
earnings before
22
interest, taxes, depreciation and amortization (EBITDA) and
funds from operations (FFO) for the period from
September 28, 2010 through December 31, 2010. Based
upon our company performance for the period, as well as
individual performance benchmarks, we determined to award the
following annual incentive bonus amounts to our named executive
officers for performance in 2010: Mr. Ray: $468,750 (which
includes a bonus of $220,000 paid upon execution of
Mr. Rays employment agreement in August 2010);
Ms. Beckman: $405,000; Mr. Dunn: $95,000;
Mr. Haggard: $100,000; and Mr. Tobin: $90,000.
2010 Equity Compensation. Prior to our
IPO, our equity incentive program consisted of a profits
interest incentive program (the PIP) in which
profits interests in a limited liability company controlled by
the Funds, each representing a percentage grant in an equity
pool, were awarded to our named executive officers, with the
exception of our CEO, and other employees. The
participants profits interests represented the right to
receive a percentage of the net profits generated from company
investments to the extent the net profits exceed specified
internal rate of return thresholds. Holders of the PIP interests
were entitled to cash distributions in respect of their
interests to the extent company investments generated net
profits in excess of the specified internal rate of return
thresholds. The PIP was designed to provide incentives to
executives and employees toward, and to reward, the sustained
superior financial performance of our company and to align the
interests of employees and executives with the long-term
interests of equityholders. In addition, the PIP was designed to
aid our company in retaining the services of key executives and
employees by requiring vesting conditions on each percentage
interest grant in the pool, which provided that the participant
would forfeit the unvested portion of the grant upon their
termination of service with us. Each individual percentage
interest grant vested as to 20% of the grant each year until a
maximum vesting of 80% had been reached. However, for so long as
participants remained employed with us, and to the extent cash
distributions were made, participants would be entitled to
receive cash distributions with respect to 100% of their
interests, regardless of whether they were vested.
In connection with our IPO, we (i) exchanged all of the
outstanding awards under the PIP for Operating Partnership units
and shares of our common stock, and (ii) made additional
awards of common stock to all participants in our PIP, including
the named executive officers. In exchange for their PIP awards,
Ms. Beckman, Mr. Dunn, Mr. Haggard and
Mr. Tobin received a number of Operating Partnership units,
based on our good faith estimate of the value of the Operating
Partnership immediately prior to the IPO, based on a value per
unit of $16.00. In exchange for their PIP awards,
Ms. Beckman received 8,024 Operating Partnership units,
Mr. Dunn received 14,902 Operating Partnership units,
Mr. Haggard received 2,407 Operating Partnership units, and
Mr. Tobin received 6,591 Operating Partnership units. In
recognition of their services to us in connection with the IPO,
the vesting of the Operating Partnership units received by
Ms. Beckman, Mr. Dunn, Mr. Haggard and
Mr. Tobin in exchange for their PIP awards were accelerated
upon the closing of the IPO, such that their Operating
Partnership units were 100% vested for Ms. Beckman, 70%
vested for Mr. Dunn, 20% vested for Mr. Haggard and
55% vested for Mr. Tobin. The unvested Operating
Partnership units will vest in three equal annual installments
beginning September 28, 2011.
Defined Contribution Plans. We have
maintained a Section 401(k) Savings/Retirement Plan, (the
401(k) Plan), for eligible employees of our company
and any designated affiliate, including our named executive
officers. The 401(k) Plan Provides our named executive officers
and other employees with the opportunity to save for their
future retirement by deferring compensation up to IRS imposed
limits. We currently make safe harbor contributions to the
401(k) Plan in an amount equal to three percent (3%) of the
participants annual salary and subject to certain other
limits. Plan participants vest immediately in the amounts
contributed by us. Our employees are eligible to participate in
the 401(k) Plan after six months of credited service.
Other Elements of Compensation and
Perquisites. In addition to other elements of
compensation, as described above, we provide the following
benefits to our named executive officers:
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Medical Insurance. We offer to each named
executive officer, the named executive officers spouse and
the named executive officers children such health, dental
and vision insurance programs as we make available to other
eligible employees of our company.
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23
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Life and Disability Insurance. We provide each
named executive officer such short-term and long-term disability
and/or life
insurance as we make available to other eligible employees of
our company. Our company offers life insurance coverage equal to
the annual salary of each employee, up to a designated maximum
amount per employee.
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Relocation Allowance. From time to time we
provide our named executive officers and certain other employees
with a relocation allowance as part of the overall compensation
package intended to persuade such named executive officer to
begin work for our company. In addition, our company may provide
a named executive officer with a relocation allowance as part of
an agreement to work in a specific company location. In 2009, we
provided a relocation allowance to Mr. Haggard, consisting
of reimbursement of relocation and temporary housing expenses,
in connection with his relocation upon commencement of
employment.
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Parking Allowance. We provide each named
executive officer with the choice of paid parking at each
company location or reimbursement of public transportation
expenses, such as our company makes available to every other
employee of our company.
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Employment
Agreements
Thomas
Ray
On August 1, 2010, Thomas Ray, our President and Chief
Executive Officer, resigned from his position as a Managing
Director of The Carlyle Group and entered into an employment
agreement with us. The agreement has an initial one-year term,
subject to automatic annual renewal, unless either party elects
to terminate the agreement by providing at least 90 days
notice prior to the applicable anniversary date. The agreement
provides for an initial annual base salary of $250,000 and
contains other customary employment terms including base
salaries, bonuses and other incentive compensation and other
benefits. Upon the completion of the IPO, Mr. Rays
annual base salary increased to $425,000. Mr. Rays
employment agreement provides for an initial target annual
performance bonus amount of $375,000, subject to adjustment at
the discretion of the Board based on achievement of performance
goals. Mr. Ray also received a bonus of $220,000 upon the
execution of his employment agreement, which payment was treated
as a partial prepayment of his full 2010 target annual
performance bonus.
Mr. Rays employment agreement also provides for,
among other things, severance payments and the continuation of
certain benefits following certain terminations of employment by
us or the termination of employment for Good Reason
by Mr. Ray. Under these provisions, if Mr. Rays
employment is terminated by us without Cause, or in
connection with our non-renewal of the agreement, or
Mr. Ray resigns for Good Reason, Mr. Ray will have the
right to receive continued payment of his base salary and the
continuation of health benefits at our expense for a period of
18 months following termination. In addition, Mr. Ray
would receive a pro-rated lump sum payment upon termination in
respect of his performance bonus amount for the year of
termination. Mr. Ray would also be entitled to accelerated
vesting of any outstanding unvested equity awards that would
have vested based on the passage of time had he remained
employed for 12 months after termination, and any of
Mr. Rays stock options would remain exercisable for
at least a year following termination.
Mr. Rays employment agreement provides that if he is
terminated by us without Cause, or in connection with our
non-renewal of the agreement, or he resigns for Good Reason, in
each case within 60 days prior to or 12 months
following a change in control of our company, then in addition
to the payments and benefits described above, he would also
receive an additional payment equal to his target performance
bonus amount for the year of termination. In addition, the
salary continuation amount described above would be paid in a
lump sum and Mr. Ray would receive accelerated vesting of
all of his outstanding unvested equity awards.
All of the foregoing severance benefits are conditioned on
Mr. Ray executing a release of claims in favor of us
following his termination. Mr. Rays employment
agreement also provides that if his employment is terminated by
us due to his disability, he will receive accelerated vesting of
any of his outstanding unvested
24
equity awards that would have vested based on the passage of
time if he had remained employed with us for 12 months
following his termination.
Cause is defined in Mr. Rays employment
agreement as (i) failure to substantially perform his
duties or carry out a reasonable directive from the Board of
Directors, (ii) material breach of the employment
agreement, or (iii) conviction of certain crimes,
unlawfully used illegal drugs during the performance of his
duties, or committed an act of fraud, embezzlement,
misappropriation, willful misconduct or breach of fiduciary duty
against us, in each case subject to certain cure rights (other
than with respect to clause (iii) in the foregoing).
Good Reason is defined in Mr. Rays
employment agreement as (i) our material breach of the
employment agreement, (ii) our reduction of
Mr. Rays base salary by more than 10% or outside of a
broad-based based reduction for all executives, (iii) a
material relocation of our executive offices, (iv) a
requirement that Mr. Ray report to anyone other than our
board of directors, or (v) a material reduction in
Mr. Rays position, duties or responsibilities, in
each case subject to certain cure rights.
Mr. Rays employment agreement also contains certain
confidentiality covenants prohibiting Mr. Ray from, among
other things, disclosing confidential information relating to
us. The employment agreement also contains non-competition and
non-solicitation restrictions, pursuant to which Mr. Ray
will not be permitted to compete with us in certain
circumstances for a period of 12 months following his
termination of employment for any reason.
Jeffrey
Finnin
On January 24, 2011, Mr. Finnin became our Chief
Financial Officer. In connection with his appointment, he
entered into an executive employment agreement with us, with an
initial one-year term, subject to automatic annual renewal,
unless either party provides 90 days notice of non-renewal.
Mr. Finnins employment agreement provides for an
initial annual base salary of $350,000, an initial target annual
performance bonus amount of $210,000 and contains other
customary employment terms and benefits. Mr. Finnin also
received 26,095 stock options and 59,151 shares of
restricted stock under the 2010 Plan, all of which vest over
three years.
Mr. Finnins employment agreement also provides for
severance payments and certain benefits following certain
terminations of employment. If Mr. Finnin is terminated by
the company without Cause, or in connection with our
non-renewal of his employment agreement, or if he resigns for
Good Reason, he will have the right to receive continued payment
of base salary and health benefits at our expense for
12 months after termination. In addition, Mr. Finnin
would receive a pro-rated lump sum payment based on his
performance bonus amount for the year of termination and
accelerated vesting of his unvested equity awards that would
have vested in the 12 months after such termination, and
his stock options would remain exercisable for at least one year
following termination. If such a termination occurs within
60 days prior to, or 12 months following, a change in
control of our company, Mr. Finnin would also receive a
payment equal to his target performance bonus amount for the
year, a cash payment equal to 125% of his annual base salary on
the termination date, and acceleration of all of outstanding
unvested equity awards. Any such severance benefits would be
conditioned on Mr. Finnin executing a release of claims in
favor of CoreSite following his termination.
The definitions of Cause and Good Reason
in Mr. Finnins employment agreement are substantially
similar to those in Mr. Rays agreement.
Mr. Finnins employment agreement also contains
confidentiality, non-competition and non-solicitation covenants
similar to those described above for Mr. Ray.
Derek
McCandless
On March 11, 2011, Mr. McCandless became our Senior
Vice President, Legal, General Counsel and Secretary. In
connection with his appointment, he entered into an executive
employment agreement with us, with an initial one-year term,
subject to automatic annual renewal, unless either party
provides 90 days notice of non-renewal.
Mr. McCandless employment agreement provides for an
initial annual base salary of $250,000, an initial target annual
performance bonus amount of $160,000 and contains other
customary
25
employment terms and benefits. Mr. McCandless also received
4,924 stock options and 11,162 shares of restricted stock
under the 2010 Plan, all of which vest over three years.
Mr. McCandless employment agreement also includes
provisions for severance payments, the continuation of certain
benefits, the accelerated vesting of equity awards and extended
stock option exercise periods following certain terminations of
employment that are substantially identical to those provided in
Mr. Finnins employment agreement. Like
Mr. Finnin, those payments and benefits are conditioned
upon the execution of a release of claims, and
Mr. McCandless has agreed to confidentiality,
non-competition and non-solicitation covenants similar to those
found in Mr. Finnins agreement.
Deedee
Beckman
Ms. Deedee Beckman served as our Chief Financial Officer
from January 1, 2010 and through our IPO, until she
resigned on January 24, 2011. Ms. Beckmans
September 2, 2010, employment agreement provided for an
initial annual base salary of $245,000, an initial target bonus
of $160,000 per annum, an IPO bonus of $245,000, and customary
non-competition, non-disparagement, non-solicitation and
non-disclosure provisions. Ms. Beckmans agreement
also provided for certain severance payments if she was
terminated by the company without Cause or if she
resigned for Good Reason, with the definitions of
Cause and Good Reason substantially
similar to the definitions in Mr. Rays employment
agreement.
In connection with Mr. Finnins appointment as our
Chief Financial Officer and Ms. Beckmans concurrent
resignation, we entered into a release agreement with
Ms. Beckman, by which we agreed to pay her the target bonus
and IPO bonus provided for in her employment agreement and she
provided the releases required by that agreement.
Senior
Management Severance and Change in Control Program
In connection with our IPO, we adopted a senior management
severance and change in control program, in which members of our
senior membership team, other than Mr. Ray, Mr. Finnin
and Mr. McCandless, participate. The severance plan
provides that if a participant is terminated by us at any time
without Cause or resigns for Good Reason, the participant will
be entitled to receive the following severance payments and
benefits: (i) continued payment of his or her base salary
for a period of time equal to three months, plus one additional
month for each year of service with us (subject to a maximum of
12 months); (ii) continued payment of health insurance
premiums for a similar period of time; and
(iii) accelerated vesting of any unvested equity awards
that would have vested solely based on the passage of time had
the participant remained employed with us for 12 months
following termination. If such a termination occurs within
60 days prior to or nine months following a change in
control of our company, participants will receive
(i) 12 months of continued salary payments and health
insurance premiums, (ii) a lump sum payment on termination
of the participants target bonus amount for the year of
termination, (iii) an additional lump sum payment amount
equal to the participants pro-rated bonus for the year of
termination, and (iv) accelerated vesting of all
outstanding and unvested equity awards held by the participant.
Each of the foregoing benefits is conditioned on the participant
executing a release of claims in favor of us following
termination. The senior management severance and change in
control plan also contains certain confidentiality,
non-solicitation and non-competition covenants. The
non-competition and non-solicitation covenants take effect
following termination for the period in which the participant
would have received severance payments, based on an assumed
termination (not in connection with a change in control) of the
participants employment by us without Cause on the date
the participants actual termination of employment occurs,
and applies regardless of whether severance payments are
actually received under the plan.
The definitions of Cause and Good Reason
in the senior management severance and change in control
program, as applicable, are substantially similar to the
definitions of those terms in Mr. Rays employment
agreement, other than changes related to differences in
reporting relationships.
26
Potential
Payments upon Termination or Change in Control
Our named executive officers are entitled to certain benefits
upon a change in control of our company, as described above
under Senior Management Severance and Change
in Control Program. Certain of our named executive
officers are also entitled to severance payments pursuant to the
terms of their employment agreements, as set forth under
Employment Agreements above. The
following table sets forth an estimate of the payments to be
made to our named executive officers in the event any of the
terminations described above or a change in control occurs,
assuming that the triggering event took place on
December 31, 2010.
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Without Cause or
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Without Cause or
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for Good Reason
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for Good Reason
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Death or
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(without Change
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(with Change in
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Disability
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in Control)
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Control)
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Thomas Ray
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Severance Payment
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$
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375,000
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$
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1,012,500
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$
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1,387,500
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Stock and Option Awards
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102,300
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102,300
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409,200
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Health Insurance
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7,061
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7,061
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Total
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477,300
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$
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1,121,861
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$
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1,803,761
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Deedee Beckman
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Severance Payment
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$
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405,000
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$
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486,667
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$
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565,000
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Stock and Option Awards
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51,723
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170,977
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Health Insurance
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Total
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$
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405,000
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$
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538,390
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$
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735,977
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David Dunn
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Severance Payment
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$
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138,750
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$
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185,000
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Stock and Option Awards
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60,821
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199,553
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Health Insurance
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6,118
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8,158
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Total
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$
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205,689
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$
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392,711
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Billie Haggard
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Severance Payment
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$
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63,333
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$
|
190,000
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Stock and Option Awards
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41,438
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|
|
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141,379
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Health Insurance
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1,522
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|
4,567
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|
|
|
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Total
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$
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106,293
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$
|
335,946
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Dominic Tobin
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Severance Payment
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$
|
107,917
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|
|
$
|
185,000
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Stock and Option Awards
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46,226
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|
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|
155,742
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|
Health Insurance
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|
|
|
|
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6,802
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|
|
|
11,661
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|
|
|
|
|
|
|
|
|
|
|
|
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Total
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|
|
|
$
|
160,945
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|
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$
|
352,403
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Other
Compensation Components
We believe that it is important to maintain flexibility to adapt
our compensation structure to properly attract, motivate, and
retain the top executive talent for which we compete. We may
provide compensation components that are different from or in
addition to the components described above, including benefits
and/or
perquisites to our named executive officers, to ensure that we
provide a balanced, comprehensive and competitive compensation
structure, as deemed appropriate by the Compensation Committee.
Other
Compensation Considerations
Tax Considerations. We seek to
compensate our named executive officers and other employees in a
manner that is tax efficient for both the employee and for us,
while maintaining flexibility with respect to the awards we may
choose to grant under our compensation programs. For example,
Section 162(m) of the Internal Revenue Code, which we
expect will begin to impact us following our annual
stockholders meeting in 2014, disallows a tax deduction
for individual compensation exceeding $1.0 million in any
taxable year for
27
our Chief Executive Officer and each of the other named
executive officers (other than our Chief Financial Officer),
unless compensation is performance based. We are in the process
of qualifying the variable compensation paid to our named
executive officers for an exemption from the deductibility
limitations of Section 162(m). As such, we will consider
all elements of the cost to our company of providing such
compensation, including the potential impact of
Section 162(m). However, our Compensation Committee may, in
its judgment, authorize compensation payments that do not comply
with the exemptions in Section 162(m), such as when it
believes that such payments are appropriate to attract and
retain executive talent.
Accounting Considerations. ASC Topic
718, Compensation Stock Compensation
(referred to as ASC Topic 718 and formerly known as FASB
123R), requires us to recognize an expense for the fair value of
equity-based compensation awards. Grants of stock options,
restricted stock, restricted stock units and performance units
under our equity incentive award plans will be accounted for
under ASC Topic 718. Going forward, we expect to consider the
accounting implications of significant compensation decisions,
especially in connection with decisions that relate to our
equity incentive award plans and programs. As accounting
standards change, we may revise certain programs to
appropriately align accounting expenses of our equity awards
with our overall executive compensation philosophy and
objectives.
Summary
Compensation Table
The following table sets forth certain information with respect
to the compensation paid to our named executive officers who
were employed by us during the year ended December 31, 2010
for that year and for the year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
Name
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Awards(1)
|
|
Awards(1)
|
|
Compensation
|
|
Total
|
|
Thomas Ray,
|
|
|
2010
|
|
|
$
|
151,843
|
|
|
$
|
220,000
|
(2)
|
|
$
|
479,400
|
(3)
|
|
$
|
556,875
|
(4)
|
|
$
|
4,680
|
(5)
|
|
$
|
1,412,798
|
|
Chief Executive Officer
|
|
|
2009
|
|
|
|
540,000
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540,000
|
|
Deedee Beckman,
|
|
|
2010
|
|
|
|
245,000
|
|
|
|
160,000
|
(7)
|
|
|
266,259
|
|
|
|
85,853
|
|
|
|
45,832
|
(8)
|
|
|
802,944
|
|
Former Chief Financial Officer
|
|
|
2009
|
|
|
|
79,167
|
|
|
|
100,000
|
|
|
|
86,574
|
|
|
|
|
|
|
|
34,540
|
(9)
|
|
|
300,281
|
|
David Dunn,
|
|
|
2010
|
|
|
|
168,333
|
|
|
|
|
(10)
|
|
|
162,341
|
(11)
|
|
|
92,813
|
(12)
|
|
|
65,548
|
(13)
|
|
|
489,035
|
|
Senior Vice President, Strategy and Marketing
|
|
|
2009
|
|
|
|
152,578
|
(14)
|
|
|
100,000
|
|
|
|
160,780
|
|
|
|
|
|
|
|
13,070
|
(15)
|
|
|
426,428
|
|
Billie Haggard,
|
|
|
2010
|
|
|
|
173,333
|
|
|
|
|
(16)
|
|
|
134,855
|
(17)
|
|
|
92,813
|
(18)
|
|
|
43,753
|
(19)
|
|
|
444,754
|
|
Senior Vice President, Data Centers
|
|
|
2009
|
|
|
|
126,667
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
28,005
|
(20)
|
|
|
279,672
|
|
Dominic Tobin,
|
|
|
2010
|
|
|
|
158,333
|
|
|
|
|
(21)
|
|
|
134,855
|
(22)
|
|
|
92,813
|
(23)
|
|
|
40,113
|
(24)
|
|
|
426,114
|
|
Senior Vice President, Operations of CoreSite Services,
Inc.
|
|
|
2009
|
|
|
|
98,175
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
4,879
|
(25)
|
|
|
228,054
|
|
|
|
|
(1) |
|
The values reported reflect the aggregate grant date fair value
of stock awards and option awards, respectively, granted to our
named executive officers during 2010 and computed in accordance
with FASB ASC Topic 718. For a discussion of the assumptions and
methodologies used to calculate the amounts referred to above,
please see the discussion of option awards contained in
Part II, Item 8, Financial Statements and
Supplementary Data of our Annual Report on
Form 10-K
(the Annual Report), in Notes to Consolidated
Financial Statements at Note 12, Equity Incentive
Plan. |
|
(2) |
|
Does not include an additional cash bonus of $248,750 paid in
March 2011 in connection with Mr. Rays contributions
to our company in 2010. |
28
|
|
|
(3) |
|
Does not include an additional grant of 47,275 shares of
restricted common stock, subject to vesting restrictions, made
in March 2011 in connection with Mr. Rays
contributions to our company in 2010. |
|
(4) |
|
Does not include an additional grant of 108,352 stock options,
subject to vesting restrictions, made in March 2011 in
connection with Mr. Rays contributions to our company
in 2010. |
|
(5) |
|
Consists of (i) our contributions to Mr. Rays
account under our 401(k) plan in the amount of $4,555, and
(ii) company-paid life insurance premiums in the amount of
$125. |
|
(6) |
|
During 2009, Mr. Ray was a managing director of The Carlyle
Group (Carlyle) and received all of his compensation
directly from an affiliate of Carlyle, rather than from us. For
fiscal year 2009, we paid the Carlyle affiliate $575,000 as
reimbursement for services rendered to us by Mr. Ray and
certain other Carlyle employees. The amount shown is an estimate
of the portion of this payment that is allocable to the services
provided to us by Mr. Ray. For a further discussion of
payments we have made to Carlyle in respect of compensation for
Mr. Rays services to us, refer to the discussion
under Certain Relationships and Related Party
Transactions elsewhere in this proxy statement. |
|
(7) |
|
Does not include an additional cash bonus of $245,000 paid in
2011 in connection with Ms. Beckmans efforts with
respect to our IPO. |
|
(8) |
|
Consists of (i) pre-IPO cash distributions under our PIP in
the amount of $38,188, (ii) our contributions to
Ms. Beckmans account under our 401(k) plan in the
amount of $7,350, and (iii) company-paid life insurance
premiums in the amount of $294. |
|
(9) |
|
Consists of (i) our contributions to
Ms. Beckmans account under our 401(k) plan in the
amount of $2,250, (ii) company-paid life insurance premiums
in the amount of $60, and (iii) $32,230 in consulting fees
paid to Ms. Beckman in 2009 prior to her becoming an
employee. |
|
(10) |
|
Does not include a cash bonus of $95,000 paid in March 2011 in
connection with Mr. Dunns contributions to our
company in 2010. |
|
(11) |
|
Does not include an additional grant of 7,091 shares of
restricted common stock, subject to vesting restrictions, made
in March 2011 in connection with Mr. Dunns
contributions to our company in 2010. |
|
(12) |
|
Does not include an additional grant of 16,253 stock options,
subject to vesting restrictions, made in March 2011 in
connection with Mr. Dunns contributions to our
company in 2010. |
|
(13) |
|
Consists of (i) pre-IPO cash distributions under our PIP in
the amount of $60,296, (ii) our contributions to
Mr. Dunns account under our 401(k) plan in the amount
of $5,050, and (iii) company-paid life insurance premiums
in the amount of $202. |
|
(14) |
|
Includes $2,578 in sales commissions paid to Mr. Dunn in
2009 in connection with a lease agreement with one of our
customers in May 2008, which were paid based upon our receiving
payment under the contract. |
|
(15) |
|
Consists of (i) a relocation allowance of $6,900,
(ii) our contributions to Mr. Dunns account
under our 401(k) plan in the amount of $6,077, and
(iii) company-paid life insurance premiums in the amount of
$93. |
|
(16) |
|
Does not include a cash bonus of $100,000 paid in March 2011 in
connection with Mr. Haggards contributions to our
company in 2010. |
|
(17) |
|
Does not include an additional grant of 7,879 shares of
restricted common stock, subject to vesting restrictions, made
in March 2011 in connection with Mr. Haggards
contributions to our company in 2010. |
|
(18) |
|
Does not include an additional grant of 18,059 stock options,
subject to vesting restrictions, made in March 2011 in
connection with Mr. Haggards contributions to our
company in 2010. |
|
(19) |
|
Consists of (i) pre-IPO cash distributions under our PIP in
the amount of $20,500, (ii) our contributions to
Mr. Haggards account under our 401(k) plan in the
amount of $5,720, (iii) company-paid life insurance
premiums in the amount of $208, and (iv) a relocation
allowance of $17,325. |
|
(20) |
|
Consists of (i) our contributions to
Mr. Haggards account under our 401(k) plan in the
amount of $3,075, (ii) company-paid life insurance premiums
in the amount of $96, and (iii) a relocation allowance of
$24,834. |
29
|
|
|
(21) |
|
Does not include a cash bonus of $90,000 paid in March 2011 in
connection with Mr. Tobins contributions to our
company in 2010. |
|
(22) |
|
Does not include an additional grant of 7,091 shares of
restricted common stock, subject to vesting restrictions, made
in March 2011 in connection with Mr. Tobins
contributions to our company in 2010. |
|
(23) |
|
Does not include an additional grant of 16,253 stock options,
subject to vesting restrictions, made in March 2011 in
connection with Mr. Tobins contributions to our
company in 2010. |
|
(24) |
|
Consists of (i) pre-IPO cash distributions under our PIP in
the amount of $35,173, (ii) our contributions to
Mr. Tobins account under our 401(k) plan in the
amount of $4,750, and (iii) company-paid life insurance
premiums in the amount of $190. |
|
(25) |
|
Consists of (i) our contributions to Mr. Tobins
account under our 401(k) plan in the amount of $4,820, and
(ii) company-paid life insurance premiums in the amount of
$59. |
2010
Grants of Plan-Based Awards
The following table presents information regarding the incentive
awards granted at any time during 2010 to the named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Base
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price of
|
|
Value of
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts Under
|
|
Option
|
|
Stock and
|
|
|
Grant
|
|
Non-Equity Incentive Plan Awards
|
|
Equity Incentive Plan Awards
|
|
Awards
|
|
Option
|
Name
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
($/Sh)
|
|
Awards(1)
|
|
Thomas Ray, CEO
|
|
|
9/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
|
|
|
$
|
15.98
|
|
|
|
|
9/22/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,500
|
|
|
|
|
|
|
|
16.00
|
|
|
|
4.95
|
|
Deedee Beckman,
|
|
|
9/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,686
|
|
|
|
|
|
|
|
|
|
|
|
15.98
|
|
Former CFO
|
|
|
9/22/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,344
|
|
|
|
|
|
|
|
16.00
|
|
|
|
4.95
|
|
David Dunn,
|
|
|
9/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,061
|
|
|
|
|
|
|
|
|
|
|
|
15.98
|
|
SVP Strategy and
|
|
|
9/22/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
16.00
|
|
|
|
4.95
|
|
Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billie Haggard,
|
|
|
9/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,846
|
|
|
|
|
|
|
|
|
|
|
|
15.98
|
|
SVP Data Centers
|
|
|
9/22/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
16.00
|
|
|
|
4.95
|
|
Dominic Tobin,
|
|
|
9/28/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,030
|
|
|
|
|
|
|
|
|
|
|
|
15.98
|
|
SVP Operations, of
|
|
|
9/22/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
16.00
|
|
|
|
4.95
|
|
CoreSite Services, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts reported reflect the fair value of these awards on
the grant date as determined under the principles used to
calculate the value of equity awards for purposes of our
financial statements. |
Outstanding
Equity Awards at December 31, 2010
The following table presents information regarding the
outstanding equity awards (consisting of restricted common
stock, stock options and unvested Operating Partnership units)
held by each of the named executive
30
officers who were employed by us in 2010 as of December 31,
2010, including the vesting dates for the portions of these
awards that had not vested as of that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
|
Equity
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
Incentive
|
|
|
|
|
|
Plan
|
|
Market or
|
|
|
Plan
|
|
|
|
|
|
Awards:
|
|
Payout
|
|
|
Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
Number of
|
|
|
|
|
|
Unearned
|
|
Unearned
|
|
|
Securities
|
|
|
|
|
|
Shares, Units
|
|
Shares, Units
|
|
|
Underlying
|
|
|
|
|
|
or Other
|
|
or Other
|
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Rights That
|
|
Rights That
|
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
Name
|
|
Options(1)
|
|
Price
|
|
Date
|
|
Vested
|
|
Vested(2)
|
|
Thomas Ray
|
|
|
112,500
|
|
|
$
|
16.00
|
|
|
|
9/22/2020
|
|
|
|
30,000
|
(3)
|
|
$
|
409,200
|
|
Deedee Beckman
|
|
|
17,344
|
|
|
$
|
16.00
|
|
|
|
9/22/2020
|
|
|
|
12,535
|
(4)
|
|
$
|
170,977
|
|
David Dunn
|
|
|
18,750
|
|
|
$
|
16.00
|
|
|
|
9/22/2020
|
|
|
|
14,630
|
(5)
|
|
$
|
199,553
|
|
Billie Haggard
|
|
|
18,750
|
|
|
$
|
16.00
|
|
|
|
9/22/2020
|
|
|
|
10,365
|
(6)
|
|
$
|
141,379
|
|
Dominic Tobin
|
|
|
18,750
|
|
|
$
|
16.00
|
|
|
|
9/22/2020
|
|
|
|
11,418
|
(7)
|
|
$
|
155,742
|
|
|
|
|
(1) |
|
Represents a grant of stock options made in connection with our
IPO, which vest evenly in four equal annual installments
commencing on September 22, 2011. |
|
(2) |
|
Valued at the closing price of $13.64 on December 31, 2010. |
|
(3) |
|
Represents 30,000 shares of restricted common stock granted
in connection with our IPO, which vest in four equal annual
installments commencing on September 28, 2011. |
|
(4) |
|
Represents (i) 4,625 shares of restricted common stock
granted in connection with our IPO, which vest in four equal
annual installments commencing on September 28, 2011,
(ii) 2,866 shares of restricted common stock granted
in exchange for Ms. Beckmans retired PIP award, which
vest in three equal annual installments commencing on
September 28, 2011, and (iii) 5,044 shares of
restricted common stock granted to Ms. Beckman in the form
of a one-time bonus, which vest in three equal annual
installments commencing on September 28, 2011. |
|
(5) |
|
Represents (i) 5,000 shares of restricted common stock
granted in connection with our IPO, which vest in four equal
annual installments commencing on September 28, 2011,
(ii) 2,293 shares of restricted common stock granted
in exchange for Mr. Dunns retired PIP award, which
vest in three equal annual installments commencing on
September 28, 2011, (iii) 2,866 shares of
restricted common stock granted to Mr. Dunn in the form of
a one-time bonus, which vest in three equal annual installments
commencing on September 28, 2011, and (iv) 4,471
unvested Operating Partnership units, which vest in three equal
annual installments beginning September 28, 2011. |
|
(6) |
|
Represents (i) 5,000 shares of restricted common stock
granted in connection with our IPO, which vest in four equal
annual installments commencing on September 28, 2011,
(ii) 3,439 shares of restricted common stock granted
in exchange for Mr. Haggards retired PIP award, which
vest in three equal annual installments commencing on
September 28, 2011, and (iii) 1,926 unvested Operating
Partnership units, which vest in three equal annual installments
commencing on September 28, 2011. |
|
(7) |
|
Represents (i) 5,000 shares of restricted common stock
granted in connection with our IPO, which vest in four equal
annual installments commencing on September 28, 2011,
(ii) 3,439 shares of restricted common stock granted
in exchange for Mr. Tobins retired PIP award, which
vest in three equal annual installments commencing on
September 28, 2011, and (iii) 2,979 unvested Operating
Partnership units, which vest in three equal annual installments
commencing on September 28, 2011. |
31
Option
Exercises and Stock Vested in 2010
The following table presents information regarding the exercise
of stock options by named executive officers during 2010, and on
the vesting during 2010 of other stock awards previously granted
to the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
Number of
|
|
|
|
|
Number of
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Shares
|
|
Realized
|
|
Acquired
|
|
Realized
|
|
|
Acquired
|
|
on
|
|
on
|
|
on
|
Name
|
|
on Exercise
|
|
Exercise
|
|
Vesting
|
|
Vesting
|
|
Thomas Ray
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deedee Beckman
|
|
|
|
|
|
|
|
|
|
|
12,151
|
(1)
|
|
$
|
194,173
|
|
David Dunn
|
|
|
|
|
|
|
|
|
|
|
10,431
|
(2)
|
|
|
166,687
|
|
Billie Haggard
|
|
|
|
|
|
|
|
|
|
|
481
|
(2)
|
|
|
7,686
|
|
Dominic Tobin
|
|
|
|
|
|
|
|
|
|
|
3,612
|
(2)
|
|
|
57,720
|
|
|
|
|
(1) |
|
Represents (i) 8,024 Operating Partnership units that
vested in connection with our IPO, and
(ii) 4,127 shares of common stock issued in the form
of a one-time bonus. |
|
(2) |
|
Represents Operating Partnership units that vested in connection
with our IPO. |
Pension
Benefits
The named executive officers do not participate in any pension
plans and received no pension benefits during the year ended
December 31, 2010, other than with respect to our defined
contribution 401(k) plan.
Nonqualified
Deferred Compensation
The named executive officers do not participate in any
nonqualified deferred compensation plans and received no
nonqualified deferred compensation during the year ended
December 31, 2010.
2011
Salary and Bonus Targets
In March 2011, the Compensation Committee set the following
salaries for our named executive officers. The 2011 salaries
became effective retroactively as of January 1, 2011 for
those officers who were employed on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Base
|
|
2011 Bonus
|
|
2011 Bonus
|
Name
|
|
Salary
|
|
Target %
|
|
Target
|
|
Thomas Ray
|
|
$
|
425,000
|
|
|
|
88
|
%
|
|
$
|
375,000
|
|
Jeffrey Finnin
|
|
|
350,000
|
|
|
|
60
|
%
|
|
|
210,000
|
|
David Dunn
|
|
|
195,000
|
|
|
|
45
|
%
|
|
|
87,750
|
|
Billie Haggard
|
|
|
195,000
|
|
|
|
50
|
%
|
|
|
97,500
|
|
Dominic Tobin
|
|
|
190,000
|
|
|
|
50
|
%
|
|
|
95,000
|
|
Derek McCandless
|
|
|
250,000
|
|
|
|
64
|
%
|
|
|
160,000
|
|
Base Salaries. In 2011, taking into
account the considerations described above under
Compensation Processes, the Compensation
Committee increased the annual base salary of each of the named
executive officers that continue to be employed with us in 2011
with the exception of Messrs. Finnin, McCandless and Ray.
The Compensation Committee believed that these increases were
appropriate in recognition of the performance of these
individuals during 2010.
Annual Cash Incentive Awards. The
Compensation Committee has established the following 2011 target
bonus amounts for each of our named executive officers:
Mr. Ray: $375,000; Mr. Finnin: $210,000;
Mr. McCandless: $160,000; Mr. Dunn: $87,750;
Mr. Haggard: $97,500; and Mr. Tobin: $95,000. In
determining the amount of the annual cash incentive awards to be
paid to each named executive officer, the
32
Compensation Committee will consider the following factors:
(i) the named executive officers length of service
with us; (ii) the scope, level of expertise and experience
required for the named executive officers position;
(iii) our company-wide level of achievement against our
economic forecast for revenue, net operating income (NOI),
earnings before interest, taxes, depreciation and amortization
(EBITDA) and funds from operations (FFO) for the period from
January 1, 2011 through December 31, 2011; and
(iv) a subjective performance evaluation, based on our
Chief Executive Officers view of each named executive
officers level of contribution toward our achievement of
economic forecasts for the year.
2010
Equity Incentive Plan
In connection with our initial public offering, we adopted an
equity incentive plan ( the 2010 Plan), under which
we have granted and intend to continue to grant incentive awards
to eligible service providers in order to attract, motivate and
retain the talent for which we compete. The material terms of
the 2010 Plan are summarized below.
Eligibility
and Administration
Our employees and our subsidiaries employees, consultants
and directors are eligible to receive awards under the 2010
Plan. The 2010 Plan is generally administered by the
Compensation Committee or the plan administrator. However, our
Board of Directors determines the terms and conditions of,
interprets and administers the 2010 Plan for awards granted to
our non-employee directors and, with respect to these awards,
the term plan administrator refers to our Board of
Directors. As appropriate, administration of the 2010 Plan may
be re-vested in our Board of Directors. In addition, for
administrative convenience, our Board of Directors or the
compensation committee may determine to grant to one or more
members of our Board of Directors or to one or more officers the
authority to make grants to individuals who are not directors or
executive officers.
Securities
Subject to the 2010 Plan
We have reserved a total of 3,000,000 shares of our common
stock for issuance pursuant to the 2010 Plan. That number may be
adjusted for changes in our capitalization and certain corporate
transactions, as described below under the heading
Changes in Control and Corporate
Transactions.
To the extent that an award expires, terminates or lapses, or an
award is settled in cash without the delivery of shares of
common stock to the participant, any unexercised shares subject
to the award will be available for future grant or sale under
the 2010 Plan. Shares of restricted stock which are forfeited or
repurchased by us pursuant to the 2010 Plan may again be
optioned, granted or awarded under the 2010 Plan. The payment of
dividend equivalents in cash in conjunction with any outstanding
awards will not be counted against the shares available for
issuance under the 2010 Plan.
Awards
Stock Options. The 2010 Plan provides
for discretionary grants of non-qualified stock options, or
NQSOs, to employees, non-employee directors and consultants. The
2010 Plan also provides for the grant of incentive stock
options, or ISOs, which may only be granted to our employees and
employees of our qualifying subsidiaries. Options may be granted
with terms determined by the plan administrator; provided that
ISOs must meet the requirements of Section 422 of the Code.
The exercise price for stock options granted under the 2010 Plan
is set by the plan administrator and may not be less than fair
market value on the date of grant.
Stock Appreciation Rights. The 2010
Plan provides for discretionary grants of stock appreciation
rights to employees, non-employee directors and consultants.
Stock appreciation rights may be granted with terms determined
by the plan administrator, provided that the exercise price for
stock appreciation rights may not be less than fair market value
on the date of grant. The plan administrator may pay amounts
owed upon exercise of a stock appreciation right in shares of
common stock or cash or a combination of both, at the plan
administrators discretion.
33
Other Stock Based Awards. The 2010 Plan
allows for various other awards including dividend equivalents,
stock payments, restricted stock units and other incentive
awards, with such terms generally as the plan administrator may
determine in its discretion, provided that no dividend
equivalents may be payable with respect to options or stock
appreciation rights.
Awards
Generally Not Transferable
Awards under the 2010 Plan are generally not transferable during
the award holders lifetime without the consent of the plan
administrator. The plan administrator may allow an award to be
transferable to certain permitted transferees for estate or tax
planning purposes.
Changes
in Control and Corporate Transactions
In the event of certain changes in the capitalization of the
company or certain corporate transactions involving us (such as
a stock split, stock dividend, a combination or exchange of
shares, merger, recapitalization, distribution of assets to
stockholders (other than normal cash dividends) or any other
corporate event affecting our stock or the share price of our
stock) and certain other events (including a change in control,
as defined in the 2010 Plan), the plan administrator may make
proportionate adjustments to:
|
|
|
|
|
the aggregate number and type of shares that may be issued under
the 2010 Plan;
|
|
|
|
the limitations on the maximum number of shares that may be
subject to awards granted under the 2010 Plan to any individual
in any calendar year;
|
|
|
|
the terms and conditions of any outstanding awards under the
2010 Plan; and
|
|
|
|
the grant or exercise price per share for any outstanding awards
under the 2010 Plan.
|
Should any of the foregoing events or certain other events
(including a change in control, as defined in the 2010 Plan)
occur, the plan administrator is authorized to provide for the
acceleration, cash-out, termination, assumption, substitution or
conversion of awards under the 2010 Plan. Except as may be set
forth in the applicable award agreement, if a change in control
occurs and the holders awards are not continued,
converted, assumed or replaced, those awards become fully
exercisable and vested. Award holders will also have an
opportunity to exercise any vested awards prior to the
consummation of such changes in control or other corporate
transactions or events.
Term
of the Plan; Amendment and Termination
The 2010 Plan will be in effect until September 10, 2020,
unless our Board terminates the 2010 Plan at an earlier date.
Our Board may terminate the 2010 Plan at any time with respect
to any shares not then subject to an award under the Plan. Our
Board may also modify the 2010 Plan from time to time, except
that our Board may not, without prior stockholder approval,
(1) amend the 2010 Plan so as to increase the number of
shares of stock that may be issued under the 2010 Plan, or
(2) amend the 2010 Plan in any manner which would require
stockholder approval to comply with any applicable law,
regulation or rule.
IPO
Awards to Employees under 2010 Plan
We made awards under our 2010 Plan to approximately
90 employees upon the consummation of our IPO, to reward
the services of certain of our employees in connection with the
IPO and to implement appropriate retention and performance
incentives for our workforce. The number of shares subject to
these awards was determined by reference to a total dollar
amount, with the number of shares determined based on the
initial public offering price of $16.00 per share of our common
stock in the IPO. Such awards consisted of the following:
|
|
|
|
|
Options to purchase an aggregate amount of 577,555 shares
of our common stock, with a per share exercise price of $16.00,
which options were granted effective on September 22, 2010.
With respect to the named executive officers, these options
included 112,500 options granted to Mr. Ray, 17,344 options
granted to Ms. Beckman, 18,750 options granted to
Mr. Dunn, 18,750 options granted to
|
34
|
|
|
|
|
Mr. Haggard, and 18,750 options granted to Mr. Tobin.
These options will vest and become exercisable over a period of
four years.
|
|
|
|
|
|
181,992 of our restricted common shares, which restricted common
shares were granted on September 28, 2010. With respect to
the named executive officers, these restricted common shares
included 30,000 shares granted to Mr. Ray,
16,662 shares granted to Ms. Beckman,
10,159 shares granted to Mr. Dunn, 8,439 shares
granted to Mr. Haggard, and 8,439 shares granted to
Mr. Tobin. A portion of the shares will vest over a period
of three years and a portion will vest over a period of four
years (all of the shares granted to Mr. Ray will vest over
four years), provided, however, that (i) to reward their
service to us in connection with the IPO, Ms. Beckman
received a special grant of 9,171 restricted common shares
(which amount is included in the amount set forth for
Ms. Beckman above), of which approximately 45% vested on
the date of grant of such shares, with the remaining portion
vesting over three years following the date of grant, and
(ii) for certain recipients (not including any of our named
executive officers), a portion of the shares, totaling
6,627 shares in the aggregate, will vest in April 2011 to
provide liquidity to address tax obligations related to the
exchange of their awards under our PIP, as described above under
2010 Equity Compensation.
|
Equity
Compensation Plan Information
The following table sets forth certain information, as of
December 31, 2010, concerning shares of our common stock
authorized for issuance under all of our equity compensation
plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by stockholders
|
|
|
587,555
|
(1)
|
|
$
|
16.00
|
|
|
|
2,204,405
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity compensation plans
|
|
|
587,555
|
|
|
$
|
16.00
|
|
|
|
2,204,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This amount does not include (i) 168,607 shares of
unvested restricted stock issued under the 2010 Plan, or
(ii) 16,828 shares of unvested restricted stock issued
in September 2010 in connection with the retirement of our PIP,
as described above under the heading Elements of 2010
Compensation 2010 Equity Compensation. |
35
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of
March 31, 2011 (the Table Date) with
respect to the beneficial ownership of our common stock by
(i) each person we believe beneficially holds more than 5%
of the outstanding shares of our common stock based solely on
our review of SEC filings; (ii) each director/nominee;
(iii) each named executive officer, other than Deedee
Beckman, listed in the table titled Summary Compensation
Table under the section entitled Executive
Compensation; and (iv) all directors and executive
officers as a group. As of the Table Date,
19,870,508 shares of our common stock were issued and
outstanding. Unless otherwise indicated, all persons named as
beneficial owners of our common stock have sole voting power and
sole investment power with respect to the shares indicated as
beneficially owned. In addition, unless otherwise indicated, all
persons named below can be reached at CoreSite Realty
Corporation, 1050 17th Street, Suite 800, Denver,
Colorado 80265.
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
Percent of
|
|
|
Common Stock
|
|
Outstanding
|
Name of Beneficial Owner
|
|
Beneficially Owned(1)
|
|
Common Stock
|
|
Beneficial holders of five percent or more of our common
stock
|
|
|
|
|
|
|
|
|
DBD Investors V, L.L.C.
|
|
|
27,724,200
|
(2)
|
|
|
58.25
|
%
|
TCG Holdings, L.L.C.
|
|
|
975,800
|
(3)
|
|
|
4.68
|
%
|
FMR LLC and Edward C. Johnson 3d
|
|
|
2,916,748
|
(4)
|
|
|
14.68
|
%
|
Morgan Stanley and Morgan Stanley Investment Management
Inc.
|
|
|
1,692,951
|
(5)
|
|
|
8.52
|
%
|
Davis Selected Advisers, L.P.
|
|
|
1,582,065
|
(6)
|
|
|
7.96
|
%
|
Brookfield Investment Management Inc. AMP Capital Brookfield
(US) LLC
|
|
|
1,470,500
|
(7)
|
|
|
7.40
|
%
|
Named Executive Officers, Directors and Director
Nominees
|
|
|
|
|
|
|
|
|
James A. Attwood, Jr.
|
|
|
0
|
|
|
|
*
|
|
Michael Koehler
|
|
|
6,250
|
(8)
|
|
|
*
|
|
Thomas M. Ray
|
|
|
26,100
|
(9)
|
|
|
*
|
|
Robert G. Stuckey
|
|
|
0
|
|
|
|
*
|
|
Paul E. Szurek
|
|
|
5,000
|
(10)
|
|
|
*
|
|
J. David Thompson
|
|
|
500
|
(11)
|
|
|
*
|
|
David A. Wilson
|
|
|
5,000
|
(12)
|
|
|
*
|
|
David W. Dunn
|
|
|
2,250
|
(13)
|
|
|
*
|
|
Billie R. Haggard
|
|
|
550
|
(14)
|
|
|
*
|
|
Dominic M. Tobin
|
|
|
850
|
(15)
|
|
|
*
|
|
All current executive officers and directors as a group
(13 persons)
|
|
|
46,800
|
|
|
|
*
|
|
|
|
|
* |
|
Represents less than 1% of the issued and outstanding shares of
our common stock as of the Table Date. |
|
(1) |
|
Represents shares of our common stock held and options held by
such individuals that were exercisable at the Table Date or
within 60 days thereafter. This does not include RSUs or
options that vest more than 60 days after the Table Date.
The excluded options and RSUs are noted in the footnotes below.
RSUs are awards granted by us and payable, subject to vesting
requirements, in shares of our common stock. |
|
(2) |
|
Based on information provided to us by The Carlyle Group.
Amounts shown reflect the number of Operating Partnership units
beneficially owned by DBD Investors V, L.L.C. Although the
Operating Partnership units will not become convertible into
common stock until September 28, 2011, the table assumes
that all Operating Partnership units held by DBD
Investors V, L.L.C. are exchanged for shares of our common
stock. DBD Investors V, L.L.C. is managed by a three-person
managing board and all board action relating to the voting or
disposition of these units requires approval of a majority of
the board. |
36
|
|
|
|
|
The members of the managing board are William E. Conway, Jr.,
Daniel A. DAniello and David M. Rubenstein, each of whom
may be deemed to share beneficial ownership of the units shown
as beneficially owned by DBD Investors V, L.L.C. Such
persons disclaim beneficial ownership of these units. DBD
Investors V, L.L.C. can be reached
c/o The
Carlyle Group, 1001 Pennsylvania Ave NW, Suite 220 South,
Washington, DC 20004. |
|
(3) |
|
Based on information provided to us by The Carlyle Group.
Amounts shown reflect the number of Operating Partnership units
beneficially owned by TCG Holdings, L.L.C. Although the
Operating Partnership units will not become convertible into
common stock until September 28, 2011, the table assumes
that all Operating Partnership units held by TCG Holdings,
L.L.C. are exchanged for shares of our common stock. TCG
Holdings, L.L.C. is managed by a three-person managing board and
all board action relating to the voting or disposition of these
units requires approval of a majority of the board. The members
of the managing board are William E. Conway, Jr., Daniel A.
DAniello and David M. Rubenstein, each of whom may be
deemed to share beneficial ownership of the units shown as
beneficially owned by TCG Holdings, L.L.C. Such persons disclaim
beneficial ownership of these units. TCG Holdings, L.L.C. can be
reached
c/o The
Carlyle Group, 1001 Pennsylvania Ave NW, Suite 220 South,
Washington, DC 20004. |
|
(4) |
|
Based on a Schedule 13G filed February 14, 2011 by FMR
LLC and Edward C. Johnson 3d. FMR LLC lists its address as 82
Devonshire Street, Boston, Massachusetts 02109, in such filing. |
|
(5) |
|
Based on a Form 13G filed February 14, 2011 by Morgan
Stanley and Morgan Stanley Investment Management Inc. Morgan
Stanley lists its address as 1585 Broadway, New York, New York
10036, and Morgan Stanley Investment Management Inc. lists its
address as 522 Fifth Avenue, New York, New York 10036, in
such filing. |
|
(6) |
|
Based on a Form 13G filed February 14, 2011 by Davis
Selected Advisers, L.P. Davis Selected Advisers, L.P. lists its
address as 2949 East Elvira Road, Suite 101, Tucson,
Arizona 85756, in such filing. |
|
(7) |
|
Based on a Form 13G filed February 14, 2011 by
Brookfield Investment Management Inc. and AMP Capital Brookfield
(US) LLC. Brookfield Investment Management Inc. lists its
address as Three World Financial Center, 200 Vesey Street, New
York, NY 10281, and AMP Capital Brookfield (US) LLC lists its
address as 71 S. Wacker Drive, Suite 3400,
Chicago, Illinois 60606, in such filing. |
|
(8) |
|
Excludes 2,523 RSUs and 2,500 stock options, all of which are
subject to future vesting requirements. |
|
(9) |
|
Excludes 220,852 stock options and 77,275 shares of
restricted stock, all of which are subject to future vesting
requirements. |
|
(10) |
|
Excludes 2,523 RSUs and 2,500 stock options, all of which are
subject to future vesting requirements. |
|
(11) |
|
Excludes 2,523 RSUs and 2,500 stock options, all of which are
subject to future vesting requirements. |
|
(12) |
|
Excludes 2,523 RSUs and 2,500 stock options, all of which are
subject to future vesting requirements. |
|
(13) |
|
Excludes 35,003 stock options and 17,250 shares of
restricted common stock, all of which are subject to future
vesting requirements, and 14,902 Operating Partnership units
that will be redeemable for cash or, at the option of the
company, exchangeable into shares of common stock on a
one-for-one
basis beginning September 28, 2011. |
|
(14) |
|
Excludes 36,809 stock options and 16,318 shares of
restricted common stock, all of which are subject to future
vesting requirements and 2,407 Operating Partnership units that
will be redeemable for cash or, at the option of the company,
exchangeable into shares of common stock on a
one-for-one
basis beginning September 28, 2011. |
|
(15) |
|
Excludes 35,003 stock options and 15,530 shares of
restricted common stock, all of which are subject to future
vesting requirements, and 6,591 Operating Partnership units that
will be redeemable for cash or, at the option of the company,
exchangeable into shares of common stock on a
one-for-one
basis beginning September 28, 2011. |
37
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who own more than ten
percent of a registered class of our equity securities, to file
reports of securities ownership and changes in such ownership
with the SEC. Executive officers, directors and greater than ten
percent stockholders also are required by rules promulgated by
the SEC to furnish us with copies of all Section 16(a)
forms they file.
Based solely upon a review of Forms 3 and 4 and amendments
thereto and written representations furnished to us during the
most recent fiscal year, no person who at any time during the
fiscal year was a director, officer, or beneficial owner or more
than 10% of any class of equity securities of CoreSite failed to
file on a timely basis, as disclosed in the above forms, reports
required by Section 16(a) of the Exchange Act during the
most recent fiscal year, except for the following:
|
|
|
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Messrs. Ray, Haggard, Tobin, Thompson, Wilson, Szurek, and
Koehler purchased shares of common stock in our initial public
offering on September 28, 2010 that were inadvertently
omitted from the Forms 4 filed on September 30, 2010.
Amended Forms 4 for these transactions were filed on
October 12, 2010.
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CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The
Restructuring Transactions
Immediately prior to the completion of our IPO, we entered into
a series of transactions with the Funds to create our current
organizational structure. In connection with this restructuring,
all of the property and non-cash assets that are now used in the
operation of our companys business were contributed by the
Funds to our Operating Partnership. In the Restructuring
Transactions, the Funds contributed 100% of their ownership
interests in the entities that, directly or indirectly, owned or
leased all of the properties that comprise our portfolio and all
the other non-cash assets used in our business. The aggregate
undepreciated book value plus construction in progress of the
contributed properties was $586.2 million as of
June 30, 2010. In exchange for this contribution, our
Operating Partnership issued to the Funds 34,600,000 Operating
Partnership units in the aggregate having a total value of
$553.6 million, based upon a price of $16.00 per unit. Of
these Operating Partnership units, approximately 19.5%, or
$108.1 million in value, 11.4%, or $63.2 million in
value, and 15.6%, or $86.2 million in value, respectively,
were issued to the Funds contributing One Wilshire Holdings,
LLC, 900 N. Alameda Holdings, LLC and 12100 Sunrise
Valley Drive Holdings, LLC, each of which now holds Operating
Partnership units exchangeable (without giving effect to the
12 month restriction on such an exchange) into five percent
or more of our common stock. All of the Operating Partnership
units held by each of these three entities are beneficially held
by DBD Investors V, L.L.C. See Security Ownership of
Certain Beneficial Owners and Management.
In connection with the Restructuring Transactions, we entered
into an agreement with certain of the Funds granting them
certain rights to receive information about us and to consult
with and advise us on significant matters so long as they
continue to own any Operating Partnership units or shares of our
common stock and the number of Operating Partnership units and
shares of common stock held collectively by the Funds is equal
to or greater than 5% of the total number of shares of
outstanding common stock (assuming all Operating Partnership
units are exchanged for common stock). This agreement also
provides that for so long as the Funds have the right to
nominate directors for election to our Board, such rights will
be assigned to two of these Funds. The Funds have agreed to
maintain the confidentiality of any material non-public
information they receive in connection with the foregoing and
the Funds will not receive any compensation or expense
reimbursement pursuant to this agreement.
Registration
Rights Agreement
In connection with the IPO, we granted those persons who
received Operating Partnership units in the Restructuring
Transactions certain registration rights with respect any shares
of our common stock that may be
38
acquired by them in connection with the exchange of units
tendered for redemption. An aggregate of 28,700,000 million
shares of our common stock issuable upon exchange of units
issued in the Restructuring Transactions are subject to a
registration rights agreement. Beginning as early as September
2011, the holders of such units will be entitled to require us
to seek to register all such shares of common stock underlying
the units for public sale, subject to certain exceptions,
limitations and conditions precedent. We will bear expenses
incident to our registration requirements under the registration
rights agreement, except that such expenses shall not include
any underwriting fees, discounts or commissions, brokerage or
sales commissions,
out-of-pocket
expenses of the persons exercising the redemption rights or
transfer taxes, if any, relating to the sale of such shares.
Tax
Protection Agreement
We have agreed with each of the Funds that have directly or
indirectly contributed their interests in the properties in our
portfolio to our Operating Partnership that if we directly or
indirectly sell, convey, transfer or otherwise dispose of all or
any portion of these interests in a taxable transaction, we will
make an interest-free loan to the contributors in an amount
equal to the contributors tax liabilities, based on an
assumed tax rate. Any such loan would be repayable out of the
after-tax proceeds (based on an assumed tax rate) of any
distribution from the Operating Partnership to, or any sale of
Operating Partnership units (or common stock issued by us in
exchange for such units) by, the recipient of such loan, and
would be non-recourse to the borrower other than with respect to
such proceeds. These tax protection provisions apply for a
period expiring on the earlier of (i) September 28,
2017 and (ii) the date on which these contributors (or
certain transferees) dispose in certain taxable transactions of
90% of the Operating Partnership units that were issued to them
in connection with the contribution of these properties.
Indemnification
Agreements
Maryland law permits a Maryland corporation to include in its
charter a provision eliminating the liability of its directors
and officers to the corporation and its stockholders for money
damages, except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or
services or (b) active and deliberate dishonesty that is
established by a final judgment and is material to the cause of
action. Our charter contains a provision that eliminates our
directors and officers liability to the maximum
extent permitted by Maryland law.
Maryland law requires a Maryland corporation (unless its charter
provides otherwise, which our charter does not) to indemnify a
director or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he or she
is made or threatened to be made a party by reason of his or her
service in that capacity. Maryland law permits a Maryland
corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made or
threatened to be made a party by reason of their service in
those or other capacities unless it is established that:
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the act or omission of the director or officer was material to
the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and
deliberate dishonesty;
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the director or officer actually received an improper personal
benefit in money, property or services; or
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in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was
unlawful.
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Under Maryland law, a Maryland corporation also may not
indemnify a director or officer in a suit by or in the right of
the corporation in which the director or officer was adjudged
liable to the corporation or for a judgment of liability on the
basis that a personal benefit was improperly received. A court
may order indemnification if it determines that the director or
officer is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the
director or officer met the prescribed standard of conduct;
however, indemnification for an adverse judgment in a suit by us
or in our right, or for a judgment of liability on the basis
that personal benefit was improperly received, is limited to
expenses.
39
In addition, Maryland law permits a Maryland corporation to
advance reasonable expenses to a director or officer upon
receipt of (a) a written affirmation by the director or
officer of his or her good faith belief that he or she has met
the standard of conduct necessary for indemnification and
(b) a written undertaking by him or her or on his or her
behalf to repay the amount paid or reimbursed if it is
ultimately determined that the standard of conduct was not met.
Our charter authorizes us to obligate our company, and our
bylaws obligate us, to the maximum extent permitted by Maryland
law, to indemnify
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any present or former director or officer who is made or
threatened to be made a party to a proceeding by reason of his
or her service in such capacity and
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any individual who, while a director or officer and, at our
request, serves or has served as a director, officer, trustee,
partner, member or manager of another corporation, real estate
investment trust, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise who is
made or threatened to be made a party to a proceeding by reason
of his or her service in such capacity,
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against any claim or liability by reason of that status and to
pay or reimburse his or her reasonable expenses in advance of
final disposition of a proceeding without requiring a
preliminary determination of his or her ultimate entitlement to
indemnification. The rights to indemnification and advance of
expenses provided by our charter and bylaws vest immediately
upon election of a director or officer. Our charter and bylaws
also permit us to indemnify and advance expenses to any
individual who served a predecessor of our company or any entity
acquired by our company, or its predecessors, if any, or any
partnership controlled by our company, or its predecessors, if
any, in any of the capacities described above and any employee
or agent of us or a predecessor of our company or acquired
entity. We have entered into indemnification agreements with
each of our executive officers and directors that will obligate
us to indemnify them to the maximum extent permitted by Maryland
law.
In addition, our directors and officers are indemnified by our
Operating Partnership for the same or similar liabilities and
expenses pursuant to the Operating Partnership Agreement.
Other
Transactions
We lease 1,515 NRSF of space at our 12100 Sunrise Valley
property to an affiliate of Carlyle. The lease commenced on
July 1, 2008 and expires on June 30, 2013. Rental
revenue was approximately $0.2 million for the year ended
December 31, 2010. From approximately December 20,
2008 through approximately September 14, 2010, we subleased
space in our Denver corporate headquarters from an affiliate of
Carlyle. The lease commenced on April 25, 2007 and was
terminated when we entered into a new lease agreement with our
third-party landlord on arms-length terms on September 14,
2010. Rental expense paid by us to Carlyle was $58,795 for the
year ended December 31, 2009, and $47,434 for the year
ended December 31, 2010.
On August 1, 2010, Thomas M. Ray, a member of our Board and
formerly a managing director of Carlyle, resigned from his
position at Carlyle and entered into an employment agreement
with us to serve exclusively as our President and Chief
Executive Officer. Historically, Mr. Rays
compensation and the salary of his executive assistant were paid
by an affiliate of Carlyle. However, we paid the affiliate of
Carlyle $287,500 and $575,000 as partial reimbursement for
related services rendered to us by Mr. Ray and his
executive assistant during the six months ended June 30,
2010 and the year ended December 31, 2009, respectively.
On February 17, 2010, in connection with our formation,
Mr. Ray was issued 1,000 shares of our common stock
for total consideration of $10.00 in cash in order to provide
CoreSite Realty Corporations initial capitalization.
40
Statement
of Policy Regarding Transactions with Related Parties
Pursuant to the MGCL, a contract or other transaction between us
and a director or between us and any other corporation or other
entity in which any of our directors is a director or has a
material financial interest is not void or voidable solely on
the grounds of such common directorship or interest, the
presence of such director at the meeting at which the contract
or transaction is authorized, approved or ratified or the
counting of the directors vote in favor thereof, provided
that:
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the fact of the common directorship or interest is disclosed or
known to our Board of Directors or a committee of our Board of
Directors, and our Board of Directors or committee authorizes,
approves or ratifies the transaction or contract by the
affirmative vote of a majority of disinterested directors, even
if the disinterested directors constitute less than a quorum;
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the fact of the common directorship or interest is disclosed or
known to our stockholders entitled to vote thereon, and the
transaction or contract is authorized, approved or ratified by a
majority of the votes cast by the stockholders entitled to vote
other than the votes of shares of stock owned of record or
beneficially by the interested director or corporation, firm or
other entity; or
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the transaction or contract is fair and reasonable to us as of
the time it is authorized, approved or ratified.
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Furthermore, under Delaware law (where our Operating Partnership
is formed), we, as general partner, have a fiduciary duty to our
Operating Partnership and, consequently, such transactions are
also subject to the duties of care and loyalty that we, as
general partner, owe to limited partners in our Operating
Partnership (to the extent such duties have not been eliminated
pursuant to the terms of the partnership agreement). Our Code of
Business Conduct and Ethics, which applies to all directors,
officers, employees and agents of CoreSite, includes a process
for identifying and resolving potential conflicts of interest,
including conflicts arising from transactions with related
parties. Further, we intend to adopt a policy which requires
that all contracts and transactions between us, our Operating
Partnership or any of our subsidiaries, on the one hand, and any
of our directors or executive officers or any entity in which
such director or executive officer is a director or has a
material financial interest, on the other hand, must be approved
by the affirmative vote of a majority of the disinterested
directors even if less than a quorum. Where appropriate in the
judgment of the disinterested directors, our Board may obtain a
fairness opinion or engage independent counsel to represent the
interests of nonaffiliated securityholders, although our Board
will have no obligation to do so.
MISCELLANEOUS
Internet
Website
Our Internet address is www.coresite.com. We make available,
free of charge, on our website, our Annual Report on
Form 10-K,
our Quarterly Reports on
Form 10-Q,
our Current Reports on
Form 8-K
and amendments to such reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after such forms are electronically filed
with the SEC. In addition, the following corporate governance
documents can be found on our website: (a) charters for the
Audit Committee, the Nominating/Corporate Governance Committee
and the Compensation Committee of the Board of Directors;
(b) Code of Business Conduct and Ethics and
(c) Corporate Governance Guidelines. Copies of all of these
documents can also be obtained, free of charge, upon written
request to the General Counsel, CoreSite Realty Corporation,
1050 17th Street, Suite 800, Denver, Colorado 80265.
Stockholder
Proposals and Nominations
Stockholder
Recommendation of Director Nominees
The Nominating/Corporate Governance Committee will consider
director nominees recommended by our stockholders. All
recommendations must be directed to our Corporate Secretary, at
1050 17th Street, Suite 800, Denver, Colorado 80265.
Recommendations for director nominees to be considered at the
2012 Annual
41
Meeting must be received in writing not later than
5:00 p.m., Eastern Time, on December 7, 2011 and not
earlier than November 7, 2011. In the event that the date
of the 2012 Annual Meeting is advanced or delayed by more than
30 days from the first anniversary of the date of the 2011
Annual Meeting, notice by the stockholder must be received no
earlier than the 150th day prior to the date of the meeting
and not later than 5:00 p.m., Eastern Time, on the later of
the 120th day prior to the date of the meeting or the
10th day following the date of the first public
announcement of the meeting.
The stockholder filing the notice of nomination must include:
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As to the stockholder giving the notice:
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the name and address of such stockholder
and/or
stockholder associated person, as they appear on our stock
ledger, and current name and address, if different;
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to the extent known, the name and address of any other
stockholder supporting the nominee for election or re-election
as a director, or the proposal of other business known on the
date of such stockholders notice; and
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the investment strategy or objective of such stockholder and
each stockholder associated person who is not an individual, and
a copy of any prospectus or similar document, if any, provided
to investors.
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As to the stockholder and each person whom the stockholder
proposes to nominate for election as a director:
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the number of shares of our common stock beneficially owned by
that stockholder, nominee
and/or
stockholder associated person, the date on which such shares
were acquired, the investment intent of such acquisition;
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the nominee, holder for, and number of any of our common stock
owned beneficially but not of record by such stockholder,
nominee
and/or
stockholder associated person;
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any short interest of such stockholder, nominee
and/or
stockholder associated person in our common stock (including any
opportunity to profit or share in any benefit from any decrease
in the price of our common stock), and whether and to what
extent such stockholder, nominee
and/or
stockholder associated person is subject to or engaged in any
hedging, derivative or other transaction or series of
transactions or entered into any other agreement, arrangement or
understanding the effect of which is to (i) manage risk or
benefit of changes in the price of our common stock or
(ii) increase or decrease the voting power of such
stockholder, nominee
and/or
stockholder associated person disproportionately to such
persons economic interest in our common stock;
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any substantial interest in our company other than that arising
from the ownership of our common stock; and
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all other information relating to the nomination or proposed
business which may be required to be disclosed under applicable
law.
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As to each person whom the stockholder proposes to nominate for
election as a director:
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all information relating to the person that is required to be
disclosed in solicitations of proxies for election of directors
or is otherwise required by the rules and regulations of the
SEC; and
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the certificate of the person certifying that such person
(i) is not and will not become a party to any agreement,
arrangement or understanding with any person other than our
company in connection with service or action as a director that
has not been disclosed, and (ii) will serve as a director
if elected.
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The Nominating/Corporate Governance Committee will consider all
recommended director candidates submitted to it in accordance
with these established procedures, though it will only recommend
to the Board as potential nominees those candidates it believes
are most qualified. However, the Nominating/Corporate Governance
Committee will not consider any director candidate if the
candidates candidacy or, if elected, Board membership,
would violate controlling state law or federal law.
42
Stockholders who wish to propose a nominee for our Board should
consult our bylaws for more information regarding the criteria
listed above. A copy of our bylaws can be obtained from our
Corporate Secretary, who can be reached at 1050
17th Street, Suite 800, Denver, Colorado 80265.
Manner by which Stockholders May Bring Other Business before
our 2012 Annual Meeting of Stockholders
In order for a stockholder to bring other business before a
meeting of the stockholders, notice must be received by us
within the time limits described above. That notice must include:
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the information described above with respect to the stockholder
proposing such business;
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a description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at
the annual meeting; and
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any material interest of the stockholder in such business.
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Stockholders who wish to bring other business before our 2010
Annual Meeting should consult our bylaws for more information
regarding the criteria listed above. A copy of our bylaws can be
obtained from our Corporate Secretary, who can be reached at
1050 17th Street, Suite 800, Denver, Colorado 80265.
Annual
Report
Our 2010 Annual Report on
Form 10-K
is being mailed to stockholders concurrently with this proxy
statement and does not form part of the proxy solicitation
material, though parts of this proxy statement are incorporated
by reference into that Annual Report.
By Order of the Board of Directors
Robert G. Stuckey
Chairman
Denver, Colorado
April 5, 2011
43
VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in
mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE -
1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR
Proposals 1, 2, 3, and 5, and 3 Years with regard to Proposal 4. 1. Election of Directors
Nominees To ratify the appointment of KPMG LLP as independent registered public accounting firm for
the fiscal year ending December 31, 2011. To approve, by non-binding vote, executive compensation.
1 To recommend, by non-binding vote, the frequency of future advisory votes on executive
compensation. To act upon all other business that may properly come before the Annual Meeting of
Stockholders or any adjournment thereof Please sign exactly as your name(s) appear(s) hereon. When
signing as attorney, executor, administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name, by authorized officer. |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form
10-K, Notice & Proxy Statement, and Letter to Shareholders is/are available at www.proxyvote.com .
CORESITE REALTY CORPORATION Annual Meeting of Stockholders May 19, 2011 1:00 PM This proxy is
solicited on behalf of the Board of Directors The undersigned hereby appoints Thomas M. Ray and
Derek S. McCandless, and each of them, with power to act without the other and with power of
substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as
provided on the other side, all the shares of CoreSite Realty Corporation Common Stock which the
undersigned is entitled to vote and, in their discretion, to vote upon such other business as may
properly come before the Annual Meeting of Stockholders of the Company to be held May 19, 2011 or
any adjournment thereof, with all powers which the undersigned would possess if present at the
Meeting. THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3, FOR THREE YEARS FOR
PROPOSAL 4 AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING. Continued and to be marked, dated and signed on reverse side |
*** Exercise Your Right to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Meeting to Be Held on . May 19, 2011
Meeting Information
CORESITE REALTY CORPORATION Meeting Type: Annual Meeting
For holders as of: March 23, 2011 <recdate> B
Date: May 19, 2011 Time: 1:00 PM MDT <mtgtime> A Location: The Brown Palace Hotel R
321 17th Street C
BROKER
Denver, Colorado 80202
LOGO O HERE D
E
You are receiving this communication because you hold Return Address Line 1 shares
in the above named company.
Return Address
Line 2 Return
Address Line 3
51 MERCEDES WAY This is not a ballot. You cannot use this notice to vote EDGEWOOD NY 11717
these shares. This communication presents only an Investor Address Line 1 overview
of the more complete proxy materials that are Investor Address Line 2 1 available to you
on the Internet. You may view the proxy Investor Address Line 3 materials online at
www.proxyvote.com or easily request a Investor Address Line 4 15 12 OF paper copy (see
reverse side).
Investor Address Line 5
John Sample 2 We encourage you to access and review all of the important 1234 ANYWHERE
STREET information contained in the proxy materials before voting.
ANY CITY, ON A1A 1A1
See the reverse side of this notice to
obtain proxy materials and voting
instructions.
Broadridge Internal Use Only
Job # Envelope # Sequence # # of # Sequence # |
Before You Vote
How to Access the Proxy Materials
Proxy Materials Available to VIEW or RECEIVE:
1. Form 10-K 2. Notice & Proxy Statement 3. and Letter to Shareholders
How to View Online:
Have the information that is printed in the box marked by the arrow XXXX XXXX XXXX
(located on the following page) and visit: www.proxyvote.com.
How to Request and Receive a PAPER or E-MAIL Copy:
If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO
charge for requesting a copy. Please choose one of the following methods to make your request:
1) BY INTERNET: www.proxyvote.com
2) BY TELEPHONE: 1-800-579-1639
3) BY E-MAIL*: sendmaterial@proxyvote.com
* If requesting materials by e-mail, please send a blank e-mail with the information that is
printed in the box marked by the arrow XXXX XXXX XXXX (located on the following page) in
the subject line.
Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded
to your investment advisor. Please make the request as instructed above on or before April 26, 2011
to facilitate timely delivery.
How To Vote
Please Choose One of the Following Voting Methods
Vote In Person: If you choose to vote these shares in person at the meeting, you must request
a legal proxy. To do so, please follow the instructions at www.proxyvote.com or request a paper
copy of the materials, which will contain the appropriate instructions. Many shareholder meetings
have attendance requirements including, but not limited to, the possession of an attendance ticket
issued by the entity holding the meeting. Please check the meeting materials for any special
requirements for meeting attendance.
Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is
printed in the box marked by the arrow available and follow the instructions. Internal Use
XXXX XXXX XXXX Only
Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will
include a voting instruction form. |
Voting items
The Board of Directors recommends
that you vote FOR the following:
1. Election of Directors
Nominees |
01 Robert G. Stuckey02 Thomas M. Ray03 James A. Attwood, Jr. 04 Michael Koehler 05 Paul E. Szurek
06 J. David Thompson07 David A. Wilson
The Board of Directors recommends you vote FOR the following proposal(s): B
2 To ratify the appointment of KPMG LLP as independent registered public accounting firm for the fiscal year A ending December 31, 2011.
R
3 To approve, by non-binding vote, executive compensation. C
O
The Board of Directors recommends you vote 3 YEARS on the following proposal: D
4 To recommend, by non-binding vote, the frequency of future advisory votes on executive compensation. E
The Board of Directors recommends you vote FOR the following proposal(s):
5 To act upon all other business that may properly come before the Annual Meeting of Stockholders or any adjournment thereof.
Broadridge Internal Use Only xxxxxxxxxx xxxxxxxxxx Cusip Job # Envelope # Sequence # # of #
Sequence # |
Reserved for Broadridge Internal Control
Information
Voting Instructions
THIS SPACE RESERVED FOR LANGUAGE PERTAINING TO
BANKS AND BROKERS
AS REQUIRED BY THE NEW YORK STOCK EXCHANGE
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