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FPO > SEC Filings for FPO > Form 8-K on 15-May-2014All Recent SEC Filings

Show all filings for FIRST POTOMAC REALTY TRUST

Form 8-K for FIRST POTOMAC REALTY TRUST


15-May-2014

Change in Directors or Principal Officers, Regulation FD Disclosure, F


Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 15, 2014, the Board of Trustees (the "Board") of First Potomac Realty Trust (the "Company") appointed Robert Milkovich to the position of Executive Vice President and Chief Operating Officer of the Company. As previously disclosed, Douglas J. Donatelli, the Company's Chairman and Chief Executive Officer, has served as the Company's interim Chief Operating Officer since October 3, 2013. Mr. Milkovich is expected to begin his service with the Company on or about June 2, 2014.

Mr. Milkovich, 54, previously served as President of Spaulding & Slye Investments, a comprehensive real estate services and investment company that is a wholly owned subsidiary of JLL (Jones Lang LaSalle Incorporated), where he managed the company's portfolio of assets, headed the investment committee, developed the company's investment portfolio strategies, oversaw investment management and sourced new business opportunities. Prior to joining Spaulding & Slye Investments in 2012, Mr. Milkovich spent over 20 years in various commercial real estate leadership roles, including serving as Regional Director of Archon Group, L.P., an investment arm of the merchant banking division of Goldman Sachs, where he spearheaded the asset management of $2 billion for their merchant bank, special situations group and other parts of the firm, in addition to generating investment opportunities. Prior to his tenure with Archon Group, L.P., Mr. Milkovich served as a Market Managing Director with CarrAmerica Realty Corporation, then a publicly traded real estate investment trust, with primary responsibilities including overseeing asset management, development activities, portfolio investments and acquisition efforts.

Mr. Milkovich serves on the Board of Directors of the University System of Maryland Foundation, overseeing real estate investment activities and administering and managing funds for the benefit of institutions and foundations affiliated with the University System of Maryland. Mr. Milkovich is a member of the Economic Club of Washington, D.C., the Urban Land Institute's Office Development Counsel and is the past President of The Real Estate Group in Washington, D.C.

The Company and Mr. Milkovich have not entered into an employment agreement, and Mr. Milkovich's employment is on an "at-will" basis. However, pursuant to the offer letter between the Company and Mr. Milkovich, upon commencement of his employment with the Company, Mr. Milkovich will be paid an annual base salary of $350,000. In addition, Mr. Milkovich will participate in the Company's short-term incentive compensation plan with a 2014 target payment equal to 80% of his base salary. He will also participate in the Company's long-term incentive compensation program (the "LTI Program") with an aggregate target award of $550,000 for the 2014 plan year. Under the LTI Program, annual long-term incentive awards are broken into two parts, each of which will be made in the first quarter of the following fiscal year (with the first award under the LTI Program to Mr. Milkovich to be made in February 2015): (i) 40% of the award will be fixed based on the aggregate target amount of the award; and
(ii) the balance of the award will be determined based on performance metrics set annually by the Compensation Committee. For the 2014 plan year, the number of restricted shares to be granted pursuant to the performance component of the annual award will be determined based on achievement of the following performance metrics measured over a two-year period ending December 31, 2014:

                                             Award
Performance Metrics                        Weighting         Threshold         Target          Stretch
Relative Annualized Shareholder
Return(1) - Total Shareholder Return
vs. the Morgan Stanley REIT Index
("RMS")                                            50 %        -300 bps          0 bps          +300 bps
Absolute Annualized Total Shareholder
Return(1)                                          50 %            7.00 %        10.00 %           13.00 %

Percent of Performance Portion of
Award Earned                                                         50 %          100 %             150 %

(1) Total return takes into account both share price appreciation and assumes all dividends are reinvested in common shares of the Company.

Once awarded (upon achieving the performance metrics, if applicable), the long-term incentive awards will be made in the form of restricted common shares of beneficial interest, $0.001 par value per share, of the Company ("Common Shares") that will vest ratably on an annual basis over a three-year period from the date of grant. In addition, Mr. Milkovich will be eligible to participate in the Company's retirement and other benefit plans on the same terms as all other Company employees.


Upon commencement of his service with the Company, Mr. Milkovich will receive a one-time cash payment of $150,000 and an award of restricted Common Shares having a grant date fair value of $200,000, which will vest ratably as to one-third of the shares on each of the first three anniversaries of the date on which Mr. Milkovich commences employment with the Company.

In the event of a termination of his employment, Mr. Milkovich will be entitled to receive certain severance benefits based on the nature of his termination. If his employment is terminated by the Company without cause (as defined below) or by him for good reason (as defined below), Mr. Milkovich will be entitled to receive:

an amount equal to the sum of his highest annual base salary paid and the average annual bonus earned during the prior three years (or the period of his employment, if less than three years);

acceleration of vesting of all unvested non-performance equity awards and a period of one year to exercise his vested share options (unless they sooner expire);

an additional lump sum payment equal to $15,000; and

if the termination is by the Company without cause; outplacement assistance selected by the Company for up to one year.

In the event of a change in control of the Company, if Mr. Milkovich is terminated by the Company without cause or he resigns for good reason within 12 months of the change in control, he will be entitled to receive:

an amount equal to two times the sum of his highest annual base salary paid and the average annual bonus earned during the prior three years (or the period of his employment, if less than three years);

acceleration of vesting of all unvested non-performance equity awards and a period of one year to exercise his vested share options (unless they sooner expire);

an additional lump sum payment equal to $22,500; and

if termination is by the Company without cause or by him for good reason within 12 months of the change in control, outplacement assistance selected by the Company for up to one year.

If Mr. Milkovich is terminated by the Company for cause or he terminates his employment without good reason, he will immediately forfeit any unvested equity awards and, in the case of termination by the Company for cause, the right to exercise any vested equity options. In the event Mr. Milkovich terminates his employment without good reason, he will have a one-year period from the date of termination in which to exercise any vested equity options (unless such options expire pursuant to their terms prior to the first anniversary of the date of termination).

If Mr. Milkovich dies or becomes disabled, he (or his estate, as applicable) will receive (i) acceleration of any unvested non-performance equity awards, and
(ii) a lump sum death or disability benefit payment, as applicable, equal to $15,000. Finally, if Mr. Milkovich retires (meaning that he resigns after the age of 58), he will be entitled to receive acceleration of vesting of 50% of his unvested non-performance equity awards if he retires before age 62, 75% of his unvested non-performance equity awards if he retires before age 65, or 100% of his unvested non-performance equity awards if he retires after age 65, as well as, in each case, a period of one year to exercise any vested equity options (unless such options expire pursuant to their terms prior to the first anniversary of the date of retirement).

Payment of any of the foregoing severance benefits will be conditioned upon the execution by Mr. Milkovich of a release and waiver of all claims arising from his employment or termination.

Pursuant to the terms of the offer letter between the Company and Mr. Milkovich, "cause," "change in control" and "good reason" have the following meanings. "Cause" is defined as: (i) indictment or conviction of or a plea of guilty or nolo contendere for the commission of a felony; (ii) commission of one or more acts involving fraud or moral turpitude; (iii) misappropriation of any assets of the Company; (iv) misconduct which is materially injurious to the Company and/or its employees, officers and the trustees; and (v) fraud or willful misconduct by Mr. Milkovich that caused or otherwise contributed to the requirement for an . . .



Item 7.01 Regulation FD Disclosure

A copy of the press release announcing the matters described in Item 5.02 of this Current Report on Form 8-K is furnished herewith as Exhibit 99.1 and incorporated herein by reference.



Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibit is being furnished with this Current Report on Form 8-K.

Exhibit
No.

99.1 Press Release dated May 15, 2014


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