UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant

☑

​

Filed by a Party other than the Registrant

☐

​

Check the appropriate box:

☐

Preliminary Proxy Statement

​

☐

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

​

☒

Definitive Proxy Statement

​

☐

Definitive Additional Materials

​

☐

Soliciting Material Pursuant to §240.14a-12

​

VORNADO REALTY TRUST

(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):

☑

No fee required.

​

☐

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

​

(1)

Title of each class of securities to which transaction applies:

​

(2)

Aggregate number of securities to which transaction applies:

​

(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):

​

(4)

Proposed maximum aggregate value of transaction:

​

(5)

Total fee paid:

​

☐

Fee paid previously with preliminary materials.

​

☐

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.

​

(1)

Amount Previously Paid:

​

(2)

Form, Schedule or Registration Statement No.:

​

(3)

Filing Party:

​

(4)

Date Filed:

​

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT

This Proxy Statement is printed on recycled paper and is recyclable.

888 Seventh Avenue
New York, New York 10019

Notice of Annual Meeting of Shareholders to Be Held on May 14, 2020

To our Shareholders:

The 2020 Annual Meeting of Shareholders of Vornado Realty Trust, a Maryland real estate investment trust (“Vornado” or the “Company”), will be held at the Saddle Brook Marriott, Interstate 80 and the Garden State Parkway, Saddle Brook, New Jersey 07663, on Thursday, May 14, 2020, beginning at 11:30 A.M., New York City time, for the following purposes:

(1)

To consider and vote upon the election of 10 persons to the Board of Trustees of the Company, each to serve for a one-year term expiring at the 2021 Annual Meeting of Shareholders of the Company and until his or her successor is duly elected and qualified.

​

(2)

To consider and vote upon the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the current fiscal year.

​

(3)

To consider and vote upon the approval of a non-binding, advisory resolution on executive compensation.

​

(4)

To consider and vote upon amendments to the Company’s 2019 Omnibus Share Plan.

​

(5)

To transact any other business as may properly come before the meeting and any postponement or adjournment of the meeting.

​

The Board of Trustees of the Company has fixed the close of business on March 16, 2020 as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting.

Please review the accompanying proxy statement and proxy card or voting instruction form. Whether or not you plan to attend the meeting, it is important that your shares be represented and voted. You may authorize your proxy through the Internet or by touch-tone telephone as described on the proxy card or voting instruction form. Alternatively, you may sign the proxy card or voting instruction form and return it in accordance with the instructions included with the proxy card or voting instruction form. You may revoke your proxy by (1) timely executing and submitting a later-dated proxy card or voting instruction form, (2) subsequently authorizing a proxy through the Internet or by telephone, (3) timely sending a written revocation of proxy to our Secretary at our principal executive office located at 888 Seventh Avenue, New York, New York 10019, or (4) attending the meeting and voting in person. To be effective, later-dated proxy cards, voting instruction forms, proxies authorized via the Internet or telephone or written revocations of proxies must be received by us by 11:59 P.M., New York City time, on Wednesday, May 13, 2020.

Important Notice Regarding COVID-19

Due to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Company’s Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available at www.vno.com. If you are planning to attend our meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

By Order of the Board of Trustees,

Alan J. Rice
Secretary

April 3, 2020

 

(This page has been left blank intentionally.)

​

​

VORNADO REALTY TRUST

​

​

​

i

​

​

​

2020 PROXY STATEMENT SUMMARY​

​

​	SHAREHOLDER VOTING ITEMS					​	​	​	BOARD VOTE RECOMMENDATION	​
​	Proposal 1	​	​	​	Election of 10 Trustees	​	​	​	For	​
​	Proposal 2	​	​	​	Ratification of appointment of Independent Accounting Firm	​	​	​	For	​
​	Proposal 3	​	​	​	Advisory approval of executive compensation	​	​	​	For	​
​	Proposal 4	​	​	​	Approval of amendments to the Company’s 2019 Omnibus Share Plan	​	​	​	For	​

​

 

​

​

ii

​

​

​

VORNADO REALTY TRUST

​

​

​

2020 PROXY STATEMENT SUMMARY

​

 

​

​

VORNADO REALTY TRUST

​

​

​

iii

​

​

​

2020 PROXY STATEMENT SUMMARY​

​

 

​

​

iv

​

​

​

VORNADO REALTY TRUST

​

​

​

2020 PROXY STATEMENT SUMMARY

​

​	Board Refreshment	​	​	​	• One new Trustee standing for election at the annual meeting ​ • Appointed a new Chair for our Audit Committee ​ • Our focus on board diversity resulted in 30% of the Board being comprised of female Trustees and 20% ethnically diverse ​	​
​	Executive Compensation	​	​	​	• Changed the performance-conditioned Long Term Incentive awards to Outperformance Plan Awards as had been granted and approved by shareholders through favorable “say-on-pay” votes in prior years ​ • Provided clear disclosure on all compensation decisions related to executive promotions and new executive hire ​ • Enhanced disclosure showing total direct/realizable compensation compared to realized compensation to showcase the strong alignment of pay with stock performance ​ • Enhanced disclosure related to how the Compensation Committee aligns pay with performance through program design ​ • Enhanced claw-back policy to include violations of Company policies as well as for bad faith or dishonest actions or receipt of an improper personal benefit ​	​
​	Environmental Social and Governance	​	​	​	• In addition to reporting in accordance with the Global Real Estate Sustainability Benchmark (“GRESB”) and Sustainability Accounting Standards Board (“SASB”) frameworks, we have begun evaluating exposure to climate-related risks using various scenario analyses including the Task Force on Climate-Related Financial Disclosures (“TCFD”) ​ • Changed the Corporate Governance and Nominating Committee Charter to give the Committee direct oversight responsibility for ESG matters ​ • Enhanced disclosure of how the Board and the Corporate Governance and Nominating Committee oversee ESG matters ​ • Refreshed and updated our claw-back and political contributions policies and strengthened their oversight by the Corporate Governance and Nominating Committee ​ • Provided additional disclosure on ESG practices including recent updates to polices ​	​

 

​

​

VORNADO REALTY TRUST

​

​

​

v

​

​

​

2020 PROXY STATEMENT SUMMARY​

​

​	• RETAIN a highly-experienced, “best-in-class” team of executives who have worked together as a team for a long period of time and who make major contributions to our success. ​	​
​	• ATTRACT other highly-qualified executives to strengthen that team as needed. ​	​
​	• MOTIVATE our executives to contribute to the achievement of company-wide and business-unit goals as well as to pursue individual goals. ​	​
​	• EMPHASIZE equity-based incentives with long-term performance measurement periods and vesting conditions. ​	​
​	• ALIGN the interests of executives with shareholders by linking payouts under annual incentives to performance measures that promote the creation of long-term shareholder value. ​	​
​	• ACHIEVE an appropriate balance between risk and reward in our compensation programs that does not encourage excessive or inappropriate risk-taking. ​	​

 

​

​

vi

​

​

​

VORNADO REALTY TRUST

​

​

​

2020 PROXY STATEMENT SUMMARY

​

 

​

​

VORNADO REALTY TRUST

​

​

​

vii

​

​

​

2020 PROXY STATEMENT SUMMARY​

​

​	BOARD OF TRUSTEES	​
​	✓ Highly engaged, experienced Board with diverse skills and expertise ​ ✓ Commitment to Board refreshment, with a focus on diversity ​ ✓ 90% of Board is independent ​ ✓ 30% of our Board members are female and 20% are ethnically diverse ​ ✓ Lead Independent Trustee with significant authority and responsibility ​ ✓ Annual Board and committee self-evaluations ​ ✓ Annual review of Board leadership structure ​ ✓ Robust stock ownership guidelines that align the interests of Trustees with those of our shareholders ​ ✓ Four of our Board members each own more than 1% of our shares ​ ✓ Actively engaged in strategic, risk and management oversight ​ ✓ Active approach to management succession planning ​ ✓ Corporate Governance and Nominating Committee oversees ESG program and sustainability initiatives ​ ✓ Corporate Governance and Nominating Committee actively oversees and monitors internal compliance with ethical and social policies ​	​

​	GOVERNANCE PRACTICES	​
​	✓ Robust and ongoing shareholder engagement program and demonstrated responsiveness to feedback ​ ✓ Annual Trustee elections and committee appointments ​ ✓ Market standard proxy access ​ ✓ Shareholders may amend the Bylaws ​ ✓ Trustee resignation policy in uncontested elections for failure to receive majority support ​ ✓ No poison pill ​ ✓ Declaration of Trust may be amended by a majority of the Board of Trustees and a majority vote of outstanding shares (excluding limited provisions to protect REIT tax status and removal of Trustees) ​	​

 

​

​

viii

​

​

​

VORNADO REALTY TRUST

​

​

​

2020 PROXY STATEMENT SUMMARY

​

​	COMPENSATION PRACTICES	​
​	✓ Pay-for-performance philosophy, including 98% of CEO’s and 71% of other previously-serving NEOs’ compensation in the form of equity with actual value tied to Vornado’s Share price performance ​ ✓ Significant portion of long-term compensation is in the form of performance-based equity, which requires the achievement of significant performance hurdles to have any value ​ ✓ Implemented changes reflected in our 2020 executive compensation program, including restoration of our Outperformance Plan which was previously approved through favorable “say-on-pay” votes ​ ✓ Robust claw-back policy, subject to the oversight of the Corporate Governance and Nominating Committee, which was recently enhanced to also provide for potential claw-backs for violations of Company policies as well as for bad faith or dishonest actions or receipt of an improper personal benefit ​ ✓ Formula-driven annual bonus plan cap ​ ✓ We design our compensation so that a significant portion of the actual realized compensation of our CEO and other named executive officers closely aligns with actual Share performance ​ ✓ Maintain a cap on incentive compensation payments ​ ✓ Anti-hedging and anti-pledging policies ​ ✓ Our equity plans have a double-trigger equity acceleration upon a change of control ​ ✓ CEO has no employment agreement and is not entitled to any special severance upon a change of control or other employment termination ​ ✓ No excessive perks and no retirement plan other than a 401(k) ​ ✓ No tax gross-ups ​ ✓ We require our CEO to hold Company equity having a value equal to at least 6x his salary and each of our other named executive officers to hold Company equity with a value equal to at least 3x such executive’s salary ​	​

​	ENVIRONMENTAL STEWARDSHIP AND SOCIAL RESPONSIBLITY​	​
​	✓ Strong Code of Business Conduct and Ethics applies to all Trustees and employees ​ ✓ Refreshed and renewed anti-harassment policy ​ ✓ Employee policies and manuals prohibit bribes, money laundering and other corruption ​ ✓ Restrictions on conflicts of interest ​ ✓ Established and circulated straightforward procedures for reporting any policy violations or other wrongdoing ​ ✓ Comply with the strictest rules regarding employing child labor, respecting human rights and not purchasing conflict minerals ​ ✓ Strictly restrict political contributions on behalf of the Company and compliance with that policy is subject to the oversight of the Corporate Governance and Nominating Committee ​ ✓ Industry-leading sustainability program ​ ✓ Energy Star Partner of the Year Award with Sustained Excellence received seven times, most recently in 2019 ​ ✓ Global Real Estate Sustainability Benchmark Green Star Ranking in every year since 2013 ​ ✓ Nareit Leader in the Light Award every year since 2010 ​ ✓ One of the largest owners of LEED-certified property in the United States ​	​

 

​

​

VORNADO REALTY TRUST

​

​

​

ix

​

​

​

2020 PROXY STATEMENT SUMMARY​

​

​	ENVIRONMENTAL STEWARDSHIP AND SOCIAL RESPONSIBLITY​	​
​	✓ Reporting pursuant to SASB framework in 2018 and 2019 ESG reports, examined by third party and furnished to the SEC with a Form 8-K filing ​ ✓ 2019 signatory of the Task Force on Climate-related Financial Disclosures ​ ✓ Include diversity data in our annual ESG report; 55% of our corporate employees are female and 34% are racial minorities ​	​

 

TABLE OF CONTENTS

 

 

 

 

888 Seventh Avenue
New York, New York 10019

PROXY STATEMENT

Annual Meeting of Shareholders to Be Held on May 14, 2020

The accompanying proxy is being solicited by the Board of Trustees (the “Board of Trustees” or the “Board”) of Vornado Realty Trust, a Maryland real estate investment trust (“we,” “us,” “our,” the “Company” or “Vornado”), for exercise at our 2020 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on Thursday, May 14, 2020, beginning at 11:30 A.M., New York City time, at the Saddle Brook Marriott, Interstate 80 and the Garden State Parkway, Saddle Brook, New Jersey 07663. Our principal executive office is located at 888 Seventh Avenue, New York, New York 10019. Our proxy materials, including this proxy statement, the Notice of Annual Meeting of Shareholders, the proxy card or voting instruction form and our 2019 Annual Report are being distributed and made available on or about the date of this proxy statement.

In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our shareholders access to our proxy materials on the Internet. Accordingly, a notice of Internet availability of proxy materials will be mailed on or about the date of this proxy statement to our shareholders of record as of the close of business on March 16, 2020. Shareholders may (1) access the proxy materials on the website referred to in the notice or (2) request that a printed set of the proxy materials be sent, at no cost to them, by following the instructions in the notice. You will need your 12-digit control number that is included with the notice mailed on or about the date of this proxy statement, to authorize your proxy for your Shares (as defined below) through the Internet. If you have not received a copy of this notice of internet availability, please contact our investor relations department at 201-587-1000 or send an e-mail to ircontact@vno.com. If you wish to receive a printed version of these materials, you may request them at www.proxyvote.com or by dialing 1-800-579-1639 and following the instructions at that website or phone number.

Important Notice Regarding COVID-19

Due to the emerging public health impact of coronavirus disease 2019 (COVID-19), we are planning for the possibility that the Company’s Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available at www.vno.com. If you are planning to attend our meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

 

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

How do you vote?

If you hold your shares of record in your own name as a registered holder, you may vote in person at the Annual Meeting or you may authorize your proxy over the Internet (at www.proxyvote.com), by telephone (at 1-800-690-6903) or by executing and returning a proxy card or voting instruction form. Once you authorize a proxy, you may revoke that proxy by (1) timely executing and submitting a later-dated proxy card or voting instruction form, (2) subsequently authorizing a proxy through the Internet or by telephone, (3) timely sending a written revocation of your proxy to our Secretary at our principal executive office or (4) attending the Annual Meeting and voting in person. Attending the Annual Meeting without submitting a new proxy or voting in person will not automatically revoke your prior authorization of your proxy.

If you hold your shares in “street name” (that is, as beneficial owner through a bank, broker or other nominee), your nominee will not be permitted to vote your shares (other than with respect to the ratification of the appointment of our independent registered public accounting firm) unless you provide instructions to your nominee on how to vote your shares. If you hold Shares in “street name,” you will receive instructions and a voting instruction form from your nominee that you must follow in order to have your proxy authorized, or you may contact your nominee directly to request these voting instructions. You should instruct your nominee how to vote your shares by following the directions provided by your nominee.

To be effective, later-dated proxy cards, voting instruction forms, proxies authorized via the Internet or telephone or written revocations of proxies must be received by us by 11:59 P.M., New York City time, on Wednesday, May 13, 2020.

We will pay the cost of soliciting proxies. We have hired MacKenzie Partners, Inc. to solicit proxies for a fee not to exceed $6,000. In addition to solicitation by mail, by telephone and by e-mail or the Internet, arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to their principals and we may reimburse them for their expenses in so doing. Members of our Board of Trustees and members of management of the Company may also solicit proxies.

Who is entitled to vote?

Only holders of record of our common shares of beneficial interest, par value $0.04 per share (the “Shares”), as of the close of business on March 16, 2020 are entitled to notice of and to vote at the Annual Meeting. We refer to this date as the “record date.” On that date, 191,103,928 of our Shares were outstanding. Holders of Shares as of the record date are entitled to one vote per Share on each matter properly presented at the Annual Meeting.

How do you attend the meeting in person?

If you hold your Shares in your own name, you will need only to present satisfactory evidence of your identity. If you hold your Shares in “street name” and would like to attend the Annual Meeting in person, you will need to bring an account statement or other evidence acceptable to us of ownership of your Shares as of the close of business on the record date. If you hold Shares in “street name” and wish to vote in person at the Annual Meeting, you will need to contact your bank, broker or other nominee and obtain a “legal proxy” from your nominee and bring it to the Annual Meeting. Obtaining a legal proxy may take several days. Directions to attend the Annual Meeting and vote in person are available upon request to the Secretary of the Company at its offices.

What is the quorum necessary for the meeting?

The holders of a majority of the outstanding Shares as of the close of business on the record date, present in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.

How will your votes be counted?

Any proxy, properly executed and returned, will be voted as directed and, if no direction is given, will be voted as recommended by the Board of Trustees in this proxy statement and in the discretion of the proxy holder as to any

 

other matter that may properly come before the meeting. A broker non-vote or an abstention from voting, as applicable, will count for the purposes of determining a quorum, but will have no effect on the result of the votes on any of the proposals, except that an abstention will have the effect of a vote against the amendments to the Company’s 2019 Omnibus Share Plan (the “Amended 2019 Omnibus Share Plan”). Any proxy marked “withhold” will count for the purposes of determining a quorum and will have no effect on the result of the votes on election of Trustees, but, if any Trustee fails to receive majority approval (more “for” votes cast than “withhold” votes), that Trustee must tender his or her offer of resignation to the Board of Trustees for its consideration. A broker non-vote is a vote that is not cast on a non-routine matter because the Shares entitled to cast the vote are held in street name, the broker lacks discretionary authority to vote the Shares on that matter and the broker has not received voting instructions from the beneficial owner.

The election of each of our nominees for Trustee (Proposal 1) requires a plurality of the votes cast at the Annual Meeting; however, any nominee for Trustee who does not receive the approval of a majority of the votes cast (more “for” votes than “withhold” votes) will be required, pursuant to our Corporate Governance Guidelines (the “Guidelines”), to tender his or her offer of resignation to the Board of Trustees for its consideration. The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm (Proposal 2), the approval of the non-binding, advisory vote on executive compensation (Proposal 3), and the approval of the amendments to the Company’s 2019 Omnibus Share Plan (Proposal 4), each requires the affirmative vote of a majority of the votes cast on such matter at the Annual Meeting. For the purposes of Proposal 4, abstentions will count as votes against the Proposal.

 

PROPOSAL 1: ELECTION OF TRUSTEES

Trustees Standing for Election

Our Board has 10 Trustees who have been nominated for election at our Annual Meeting. Our Board, on the recommendation of our Corporate Governance and Nominating Committee, has nominated each of Mr. Steven Roth, Ms. Candace K. Beinecke, Mr. Michael D. Fascitelli, Ms. Beatrice Hamza Bassey, Messrs. William W. Helman IV and David M. Mandelbaum, Ms. Mandakini Puri, Mr. Daniel R. Tisch, Dr. Richard R. West and Mr. Russell B. Wight, Jr. for election at our Annual Meeting. If elected, such persons will serve until the Annual Meeting of Shareholders in 2021 and until their respective successors are duly elected and qualified. Each of these nominees currently serves as a member of our Board.

Unless you direct otherwise in your signed and returned proxy, each of the persons named in the accompanying proxy will vote your Shares for the election of each of the 10 nominees for Trustees. If any nominee at the time of election is unavailable to serve, it is intended that each of the persons named in the proxy will vote for an alternate nominee who will be recommended by the Corporate Governance and Nominating Committee of our Board and nominated by the Board. Alternatively, the Board may reduce the size of the Board and the number of nominees. Proxies may be exercised only for the nominees named or such alternates. We do not currently anticipate that any nominee for Trustee will be unable to serve as a Trustee.

The Board of Trustees recommends that shareholders vote “FOR” the election of each of the nominees listed below to serve as a Trustee until the Annual Meeting of Shareholders in 2021 and until his or her respective successor has been duly elected and qualified.

Under our Bylaws, a plurality of all the votes cast at the Annual Meeting, if a quorum is present, is sufficient to elect a Trustee. However, any Trustee who does not receive the affirmative vote of a majority of the votes cast for his or her election to the Board (a greater number of  “for” votes than “withhold” votes) in an uncontested election (such as this election) will be required, pursuant to our Corporate Governance Guidelines, to tender his or her offer of resignation to the Board for its consideration. A “withhold” vote or an abstention, as applicable, will count for the purposes of determining a quorum, but will have no effect on the result of the votes on this proposal.

 

The following table lists the nominees for election to the Board at the 2020 Annual Meeting for a term of one year and until his or her successor is duly elected and qualified. For each such person, the table lists the age, principal occupation, position presently held with the Company, if any, and the year in which the person first became a member of our Board or a director of our predecessor, Vornado, Inc.

(1)

Independent pursuant to the rules of the New York Stock Exchange (“NYSE”) as determined by the Board.

​

(2)

Beneficially owns in excess of 1% of our Shares.

​

 

Biographies of our Trustees

Steven Roth

Mr. Roth has been the Chairman of our Board of Trustees since May 1989 and Chairman of the Executive Committee of the Board since April 1980. From May 1989 until May 2009, Mr. Roth served as our Chief Executive Officer. Since April 15, 2013, Mr. Roth has again been serving in that position. Since 1968, he has been a general partner of Interstate Properties (an owner of shopping centers and investor in securities and partnerships, “Interstate”) and he currently serves as its Managing General Partner. He is the Chairman of the Board and Chief Executive Officer of our affiliate, Alexander’s, Inc. (a New York Stock Exchange-listed real estate investment trust 32.4% of which is owned by the Company). Since January 2015, Mr. Roth has been a member of the Board of Trustees of Urban Edge Properties (a New York Stock Exchange-listed real estate investment trust and the spin-off of the Company’s former shopping center business, “Urban Edge”). Since July 18, 2017, Mr. Roth has been the Chairman of the Board of Trustees of JBG SMITH Properties (a New York Stock Exchange-listed real estate investment trust and the spun-off successor to our former Washington D.C. business, “JBG SMITH”). Each of these other Boards upon which Mr. Roth serves is either a current affiliate of the Company or a company spun-off from Vornado. Our board believes the presence of Mr. Roth on each of these Boards is beneficial to the Company and/or the broadly overlapping shareholder base of the Company, Urban Edge, and JBG SMITH.

Candace K. Beinecke

Ms. Beinecke has served as Senior Partner or Chair of Hughes Hubbard & Reed LLP, a New York law firm, since 1999 and is a practicing partner in Hughes Hubbard’s Corporate Department. Ms. Beinecke serves as Chair of the Board of Arnhold & S. Bleichroeder Advisors LLC’s First Eagle Funds, Inc. (a U.S. public mutual fund family). Since September 2018, Ms. Beinecke has also served as a member of the Board of Directors of ViacomCBS (a New York Stock Exchange-listed U.S. media company) or its predecessor company, CBS Corporation.

Michael D. Fascitelli

Mr. Fascitelli has served as a member of our Board of Trustees since December 1996. Since June 2013, Mr. Fascitelli has been the owner and principal of MDF Capital LLC (a private investment firm). Since November 2017, Mr. Fascitelli has served as Co-Founder and Managing Partner of Imperial Companies (a private real estate company). Since December 2014, Mr. Fascitelli has served as Chair of the Investment Committee, Senior Advisor and Board Member of Quadro Partners Inc. (a private online real estate investment platform). Previously, Mr. Fascitelli served as our President from December 1996, and as our Chief Executive Officer from May 2009, until his resignation from both positions effective April 15, 2013. Since January 16, 2014, Mr. Fascitelli has served on the Board of Trustees of Invitation Homes Inc. (a New York Stock Exchange-listed residential real estate investment trust) or its predecessors. From 2015 to 2017, Mr. Fascitelli also served as a member of the Board of Commissioners of the Port Authority of New York and New Jersey. Since June 2018, Mr. Fascitelli has also served as a director of Sculptor Capital Management (formerly Och Ziff Capital Management Group LLC) (a New York Stock Exchange-listed, global, institutional, alternative asset manager).

Beatrice Hamza Bassey

Ms. Hamza Bassey has served as the Group General Counsel, Chief Compliance Officer and Corporate Secretary of Atlas Mara Ltd. (an African-focused banking group) since February 2015. In her capacity as such, she has served as a member of the boards of directors of a number of Atlas Mara Ltd.’s subsidiary or affiliated banks operating in Africa. From September 1998 until February 2015, Ms. Hamza Bassey was an attorney with Hughes Hubbard & Reed LLP where she served as a partner, a member of the firm’s Executive Committee and Chair of the Africa Practice. Ms. Hamza Bassey has served on the board of directors of International Game Technology PLC (a New York Stock Exchange-listed, a global gaming company) since March 2020.

William W. Helman IV

Mr. Helman is a general partner at Greylock Partners, a venture capital firm. He joined Greylock in 1984 and served as its managing partner from 1999 to 2013. Mr. Helman has been a member of the Board of Directors of the Ford Motor Company (a public company) since 2011 and serves on its finance committee, its nominating and governance committee and as chair of its sustainability and innovation committee.

 

David M. Mandelbaum

Mr. Mandelbaum has been a member of the law firm of Mandelbaum & Mandelbaum, P.C. since 1960. Since 1968, he has been a general partner of Interstate. Mr. Mandelbaum is also a director of Alexander’s.

Mandakini Puri

Ms. Puri has been an independent consultant since May 2013. From May 2011 until May 2013, she served as a Managing Director and Co-Head of BlackRock Private Equity, a private equity business affiliated with BlackRock, Inc. From April 2009 until April 2011, Ms. Puri served as a consultant to Bank of America/Merrill Lynch Global Private Equity and prior to that she co-founded and served as Chief Investment Officer of Merrill Lynch Global Private Equity. Ms. Puri has been a member of the Board of Directors of Alexander’s since March 2020. She was a member of the Board of Validus Holdings Ltd., a public insurance holding company until it was acquired in July 2018, where she served as Chair of the Executive and Compensation Committees. She is also a member of the Wharton School Graduate Executive Board. Ms. Puri has a Bachelor of Commerce degree from Delhi University and an MBA from the Wharton School at the University of Pennsylvania and is a member of the Indian Institute of Chartered Accountants.

Daniel R. Tisch

Mr. Tisch has been the Managing Member of TowerView LLC (a private investment partnership) since 2001. Mr. Tisch also serves as a member of the Board of Directors of Tejon Ranch Company (a New York Stock Exchange-listed real estate development and agribusiness company). Mr. Tisch is also a Board member and member of the Finance, Audit and Investment Committees of New York University.

Richard R. West

Dr. West is Dean Emeritus of the Leonard N. Stern School of Business at New York University. He was a professor there from September 1984 until September 1995 and Dean from September 1984 until August 1993. Prior thereto, Dr. West was Dean of the Amos Tuck School of Business Administration at Dartmouth College. Dr. West is also a director of Alexander’s.

Russell B. Wight, Jr.

Mr. Wight has been a general partner of Interstate since 1968. Mr. Wight is also a director of Alexander’s.

Relationships Among our Trustees

We are not aware of any family relationships among any of our Trustees or executive officers or persons nominated or chosen by us to become Trustees or executive officers.

Messrs. Roth, Wight and Mandelbaum each are general partners of Interstate. Since 1992, Vornado has managed all the operations of Interstate for a fee as described in “Certain Relationships and Related Transactions— Transactions Involving Interstate Properties.”

Messrs. Roth, Wight and Mandelbaum and Ms. Puri are also directors of Alexander’s. As of the record date, the Company, together with Interstate and its general partners, beneficially owns approximately 59% of the outstanding common stock of Alexander’s.

For more information concerning Interstate, Alexander’s and other relationships involving our Trustees, see “Certain Relationships and Related Transactions.”

 

CORPORATE GOVERNANCE

Governance Highlights

 

Shareholder Engagement and Governance Changes

Over the past several years we have adopted a number of significant governance changes following outreach to our shareholders for their views. During each of the last six years, we met with or spoke to holders of more than 50% of our Shares. Based on that outreach, we believe the combination of actions we have taken present an overall governance structure responsive to our shareholders’ views. The changes implemented include:

•

We have added three new independent Trustees, Ms. Hamza Bassey, Mr. Helman and Ms. Puri.

​

•

We have increased the diversity of our Board so that now 30% of our Board members are female and 20% are ethnically diverse.

​

•

We have appointed a new Chair for our Audit Committee.

​

•

We oversaw the promotion and hire of a new generation of management leadership.

​

•

We amended our organizational documents to provide shareholders with the power to amend our Bylaws.

​

•

We declassified our Board so that we now have a single class of Trustees elected annually.

​

•

We adopted proxy access with a 3/3/20/20 market standard.

​

•

We adopted anti-hedging and anti-pledging policies.

​

•

We enhanced our claw-back policy to also provide for potential claw-backs for violations of Company policies as well as for bad faith or dishonest actions or receipt of an improper personal benefit.

​

 

•

We provided greater disclosure concerning our policy restricting political contributions and spending and strengthened the oversight by the Corporate Governance and Nominating Committee of our compliance with this policy.

​

•

We made specific changes to our compensation program in response to shareholder input such as restoring our previously approved Outperformance Plan.

​

•

We provided greater disclosure concerning our sustainability efforts with a report reviewed by independent auditors.

​

•

We provided greater disclosure concerning our employee training and inclusion programs.

​

•

We refreshed and renewed our anti-harassment policy.

​

•

We amended our Corporate Governance and Nominating Committee Charter to formalize and strengthen the oversight by that Committee of environmental, social and governance matters.

​

•

We added disclosure to our table of Board members to indicate which members beneficially own in excess of 1% of our Shares.

​

•

We provided increased and tabular disclosure regarding our Trustee selection process and our current and desired Trustees skill sets.

​

NYSE-Listed

The common shares of the Company or its predecessor have been continuously listed on the NYSE since January 1962 and the Company is subject to the NYSE’s Corporate Governance Standards.

Our Corporate Governance Framework

Vornado is committed to effective corporate governance and high ethical standards. Our Board believes that these values are conducive to strong performance and creating long-term shareholder value. Our governance framework gives our highly experienced independent Trustees the structure necessary to provide oversight, advice and counsel to the Company. The Board of Trustees has adopted the following documents, which are available on our website (www.vno.com/governance/overview):

•

Audit Committee Charter

​

•

Compensation Committee Charter

​

•

Corporate Governance and Nominating Committee Charter

​

•

Corporate Governance Guidelines

​

•

Code of Business Conduct and Ethics

​

We will post any future changes to these documents to our website and may not otherwise publicly file such changes. Our regular filings with the SEC and our Trustees’ and executive officers’ filings under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”), are also available on our website. In addition, copies of these documents are available free of charge from the Company upon your written request. Requests should be sent to our investor relations department located at our principal executive office.

The Code of Business Conduct and Ethics applies to all of our Trustees, executive officers and other employees.

 

Corporate Governance at a Glance

Board Independence

•

Nine of 10 of our Trustees are independent.

​

•

Our only non-independent Trustee is our current CEO, who has extensive and valuable experience with our Company.

​

•

Our Board members generally have significant personal investments in our Company and engage in robust and open debates concerning all significant matters affecting our Company.

​

Board Composition

•

Currently the Board has fixed the number of Trustees at 10.

​

•

The Board at least annually assesses its performance through Board and committee self-evaluation as well as an evaluation of each individual member.

​

•

Our Trustees are highly experienced in their fields of endeavor and apply valuable and diverse skill sets to address our business and strategic needs.

​

•

The Corporate Governance and Nominating Committee leads the full Board in considering Board competencies and refreshment and actively seeks new candidates to consider as Board members.

​

Board Committees

•

Our Board has four committees—Audit, Compensation, Corporate Governance and Nominating, and Executive.

​

•

With the exception of the Executive Committee (our Chairman serves on this Committee), all other Committees are composed entirely of independent Trustees.

​

Leadership Structure

•

Our Chairman is the CEO of our Company. He interacts closely with our independent Lead Trustee, who has powers and duties that reflect corporate governance best practices.

​

•

The independent Board members consider our Lead Trustee annually. Our Board re-appointed Ms. Candace K. Beinecke as Lead Trustee on February 12, 2020. Among other duties, our Lead Trustee chairs executive sessions of the independent Trustees at every regular Board meeting to discuss certain matters without management present and approves agenda items and materials sent to the Board. Furthermore, Ms. Beinecke works closely with Mr. Roth in identifying overall Company strategy and other matters to be discussed in depth at regular Board meetings and takes an active role in engaging with our investors.

​

•

The Board will consider whether an independent chairperson is appropriate at the time of the next CEO transition.

​

Risk Oversight

•

Our full Board is responsible for risk oversight, and has designated, and may in the future designate, committees to have particular oversight of certain key risks. Our Board oversees management as management fulfills its responsibilities for the assessment and mitigation of risks and for taking appropriate risks. Our Board regularly has in-depth discussions concerning the Company’s strategies and risks where the Board actively questions and considers these topics.

​

Open Communication and Shareholder Engagement

•

We encourage open communication and strong working relationships among the Lead Trustee, the Chairs of our Board committees, our Chairman and our other Trustees.

​

•

Our Trustees have access to, and regularly meet with, senior management and other employees.

​

•

We actively seek input from our shareholders through our shareholder engagement programs; shareholders may also contact our Board, Lead Trustee or management through our website or by regular mail.

​

•

We host quarterly earnings conference calls to which all shareholders have access.

​

 

Trustee Stock Ownership

•

Our Trustees are required to own (or acquire within a specified time-frame) Company equity having a value equal to at least five times their annual cash retainer.

​

Management Succession Planning

•

Our Corporate Governance and Nominating Committee actively monitors our succession planning.

​

•

Our Board regularly reviews senior management succession and development plans. Our Board regularly reviews future candidates for the CEO position and other senior leadership roles and potential succession timing for those positions, including under emergency circumstances. Our Board has adopted a formal CEO-succession plan and reviews that plan regularly.

​

•

In 2019, the Board oversaw the promotion and hire of a new generation of leadership by creating, and filling, of the roles of President, Co-Heads of Real Estate and Head of Retail.

​

•

The Board reviews and discusses career development plans for individuals identified as high-potential candidates for senior leadership positions and the Board members interact with these candidates in formal and informal settings during the year.

​

•

The Board recognizes that succession planning is a key component of the Company’s continued success. Pursuant to our Corporate Governance Guidelines, on at least an annual basis and typically more frequently, the Board, in full meetings and in its executive sessions, considers and reviews succession candidates for the CEO and other executive leadership positions for both near—and long-term planning. The Board reviews potential candidates for promotion in light of their performance, leadership qualities and ability to manage additional responsibilities. The Board also considers potential risks regarding the retention of the Company’s current executive officers and succession candidates, the timeline for implementing each succession plan, and the extent of disruption likely to be caused as a result of unplanned attrition. In addition, as part of its risk management process, the Board has developed an interim emergency succession plan.

​

Sustainability and Corporate Responsibility

•

Our Corporate Governance and Nominating Committee as well as our full Board actively monitor our programs and initiatives on sustainability, environmental matters, climate change and social responsibility and receive updates regularly.

​

•

Our Corporate Governance and Nominating Committee monitors our policy restricting political contributions and spending. Our policy strictly restricts political contributions or political spending on behalf of the Company subject to senior management approval and Corporate Governance and Nominating Committee oversight.

​

Board Independence

The Board has determined that Mses. Beinecke, Hamza Bassey and Puri and Messrs. Fascitelli, Helman, Mandelbaum, Tisch and Wight and Dr. West are independent Trustees under the Corporate Governance Standards of the NYSE, with the result that nine of our 10 Trustees standing for election are independent. The Board reached these conclusions after considering all applicable relationships between or among such Trustees and the Company or management of the Company. These relationships are described in the sections of this proxy statement entitled “Relationships Among Our Trustees” and “Certain Relationships and Related Transactions.” Among other factors considered by the Board in making its determinations regarding independence was the Board’s determination that these Trustees met all of the “bright-line” requirements of the NYSE’s Corporate Governance Standards as well as the categorical standards adopted by the Board as contained in our Corporate Governance Guidelines.

Approval of Related Party Transactions

Our Code of Business Conduct and Ethics include a policy for the review and approval of transactions involving the Company and related parties. Under the policy, “related parties” means our executive officers and Trustees, as well as any such person’s immediate family members. The policy also covers entities that are owned or controlled by related parties, or entities in or of which related parties have a substantial ownership interest or control. Under the policy, all related party transactions are submitted to the Board or an independent committee thereof for review and are subject to approval.

 

Board Participation

Our Board is actively involved in strategic, risk and management oversight and regularly has in-depth discussions concerning the Company’s strategies and risks during which the Board actively questions and considers these topics. Our Board is involved in every strategic decision made by the Company, agendas are organized so that, at every regular meeting, strategic and business decisions receive the most prominent importance and our CEO regularly consults with Board members on these matters between meetings. Furthermore, the Board regularly meets with the Company’s most senior executive officers as well as the officers who directly report to the most senior executives. The Board believes a good working knowledge of these multiple levels of management aid it considerably in its important role of management oversight as well as with succession planning. Our Company relies upon the measured financial and strategic guidance, probing questions and judgment of our Board members.

Developing an Effective Board

Trustee Recruitment Process

Our Board believes that the Board should be comprised of members who encompass a broad range of skills, expertise, industry knowledge and diversity of opinion, experience, perspective and contacts relevant to our business. Our Board is deeply involved in the business and strategy of our Company and the great depth of experience and insight that our Board members bring to meetings continues to be invaluable. The Board has not established any minimum qualifications that must be met by Trustee candidates or any set of specific qualities or skills that it believes our Trustees must possess. The Corporate Governance and Nominating Committee and the Board believe that considering a Board candidate involves various objective and subjective assessments, many of which are difficult to quantify or categorize. However, the Corporate Governance and Nominating Committee and the Board do consider the following characteristics, competencies, and attributes when considering candidates for inclusion on our Board.

Personal Characteristics

•

Integrity and Accountability: High ethical standards, integrity and strength of character in his or her personal and professional dealings and a willingness to act on and be accountable for his or her decisions.

​

•

Informed Judgment: Demonstrate intelligence, wisdom and thoughtfulness in decision-making. Demonstrate a willingness to thoroughly discuss issues, ask questions, express reservations, and voice dissent.

​

•

Financial Literacy: An ability to read and understand financial statements, financial ratios and various other indices for evaluating the Company’s performance.

​

•

Mature Confidence: Assertive, responsible and supportive in dealing with others. Respect for others, openness to others’ opinions and the willingness to listen.

​

•

High Standards: History of achievements that reflect high standards for himself or herself and others.

​

Core competencies

•

Accounting and Finance: Experience in financial accounting and corporate finance, especially with respect to the industry in which our Company operates.

​

 

•

Business Judgment: Record of making good business decisions and evidence that he or she will act in good faith and in a manner that is in the best interests of our Company.

​

•

Strategic Insight: Record of insight with respect to our industry and market and other trends and conditions and applying such insight to create value or limit risk.

​

•

Management: Experience in corporate management. Understand management trends in general and in the areas in which we conduct our business.

​

•

Crisis Response: Ability and time to perform during periods of both short-term and prolonged crisis.

​

•

Industry: Specialized experience and skills in areas in which the Company conducts its business, including real estate, investments, capital markets and technology relevant to the Company.

​

•

Local Markets: Experience in markets in which our Company operates.

​

•

Leadership: Understand and possess leadership skills and have a history of motivating high-performing, talented managers.

​

•

Strategy and Vision: Skills and capacity to provide strategic insight and direction by encouraging innovations, conceptualizing key trends, evaluating strategic decisions, and challenging our management to sharpen its vision.

​

•

Environmental, Social and Governance: Experience in management and oversight of environmental, climate change, social and governance issues to be able to assist the Board in overseeing and advising management with regard to long-term value creation using a responsible, sustainable business plan.

​

Commitment to our Company

•

Time and Effort: Able and willing to commit the time and energy necessary to satisfy the requirements of Board and Board committee membership and service. Expected to attend and participate in all Board meetings and meetings of Board committees for which they are members. Encouraged to attend all annual meetings of shareholders. A willingness to rigorously prepare prior to each meeting and actively participate in the meeting. Willingness to make himself or herself available to management upon request to provide advice and counsel.

​

•

Awareness and Ongoing Education: Possess, or be willing to develop, a broad knowledge of both critical issues affecting our Company (including industry-, technology- and market-specific information), and Trustee’s roles and responsibilities (including the general legal principles that guide Board members).

​

•

Other Commitments: In light of other existing commitments, the ability to perform adequately as a Trustee and a willingness to do so.

​

•

Stock Ownership: Complies with the Company’s equity ownership requirements.

​

Team and Company considerations

•

Balancing the Board: Contributes talent, skills and experience to the Board as a team to supplement existing resources and provide talent for future needs preferably as evidenced by a pattern of dealings with one or more current Board members.

​

•

Diversity: Contributes to the Board in a way that can enhance perspective and judgment through diversity in gender, age, background, geographic origin, professional experience (public, private, and non-profit sectors) and other factors.

​

Nomination of a candidate should not be based solely on these listed factors.

****************

The following chart summarizes the competencies currently represented on our Board; the details of each of our Trustee’s competencies are included in each Trustee’s profile.

 

Board Leadership Structure

Our Board is deeply focused on our corporate governance practices. We value independent board oversight as an essential component of strong corporate performance to enhance shareholder value. All of our Trustees are independent, except our Chief Executive Officer. In addition, all of the members of our Board’s committees, except the Executive Committee, are independent.

Our Board of Trustees is responsible for selecting the Chairman of the Board and the CEO. The Board annually reviews its leadership structure. The Board has determined that the combined role of Chairman and CEO, alongside an active and independent Lead Trustee position, is currently the best structure for Vornado and its shareholders. In its review of our leadership structure, the Board considered the following:

•

Our current structure promotes clear lines of responsibility and accountability, while maintaining the Board’s independence from management.

​

•

Mr. Roth, our Chairman and CEO, is a well-seasoned leader with over 35 years of experience in building and leading our Company. He has effectively guided the Company through various real estate cycles and over a long period of increase in shareholder value. After considering the views expressed by our shareholders and other constituents, as well as the particular circumstances affecting the Company, the Board concluded he is the best person to serve as Chairman.

​

•

Mr. Roth fulfills his responsibilities in chairing an independent board through close interaction with our Lead Trustee, Ms. Beinecke.

​

•

The power and authority of our Lead Trustee role was increased in 2015 and 2017 and the Lead Trustee works closely with Mr. Roth in identifying overall Company strategy and other matters to be discussed in depth at regular Board meetings and takes an active role in engaging with our investors. See “Lead Trustee Role.”

​

•

The views expressed by shareholders through direct outreach and engagement.

​

•

Our governance culture fosters open communication among the Lead Trustee, Chairman and other Trustees, which we believe is essential to developing an understanding of important issues, promoting appropriate oversight and encouraging frank discussion of key topics relevant to a complex and dynamic enterprise.

​

Lead Independent Trustee Role

A Lead Trustee is elected annually by the independent Trustees. We refer to this role as the Lead Trustee or the Lead Independent Trustee. Ms. Beinecke was first elected by our independent Trustees to serve as Lead Trustee

 

for a one-year term on March 16, 2016, and was most recently re-elected on February 12, 2020. When making the selection, the independent Trustees considered the attributes desired in a Lead Trustee, including being an effective communicator, having the ability to provide leadership and encourage open dialogue, and having a relevant background and the ability to devote sufficient time and attention to the position.

Our Lead Trustee position has clearly defined duties and responsibilities, which are set forth in our Governance Guidelines. They include the following authorities and responsibilities:

•

preside at all meetings of the Board at which the Chairman is not present;

​

•

serve as liaison between the Chairman and the independent Trustees;

​

•

approve, in consultation with the Chairman:

​

◦

the schedule of Board meetings,

​

◦

Board meeting agenda items,

​

◦

materials sent in advance of Board meetings, including the quality, quantity, appropriateness and timeliness of such information;

​

•

ability to call meetings of the independent Trustees as necessary and appropriate;

​

•

participate in annual self-evaluations of the Board and its committees;

​

•

contribute to ongoing management succession and development planning;

​

•

participate in shareholder outreach, and be available for consultation and direct communication if requested by major shareholders; and

​

•

communicate shareholder feedback to the full Board.

​

As Lead Trustee, Ms. Beinecke works closely with Mr. Roth identifying overall Company strategy and other matters to be discussed in depth at regular Board meetings and takes an active role in engaging with our investors.

As both Lead Trustee and Chair of the Corporate Governance and Nominating committee, Ms. Beinecke has been actively involved in governance-related discussions with our shareholders. As Lead Trustee, Ms. Beinecke has worked closely with our Chairman, Mr. Roth, to develop Board meeting agenda items and ensure sufficient time allocation to these items and Ms. Beinecke has also facilitated robust discussions regarding long-term strategy and shareholder value creation and talent retention and development.

The strong working relationships among the Lead Trustee, Chairman and other Trustees are supported by a board governance culture that fosters open communications among the members, both during meetings and in the intervals between meetings. Open communication is important to develop an understanding of issues, promote appropriate oversight, and encourage the frank discussion of matters essential to leading a complex and dynamic enterprise.

Board Refreshment

Over the last four years, we have added three new independent Trustees, Ms. Hamza Bassey, Mr. Helman and Ms. Puri. We are committed to ongoing Board refreshment and will continue to actively pursue qualified, diverse candidates for election to our Board. Currently, 30% of our Board members are persons who have joined the Board within the last four years.

Committees of the Board of Trustees

The Board has an Audit Committee, a Compensation Committee, a Corporate Governance and Nominating Committee and an Executive Committee. Other than the Executive Committee, each committee is comprised solely of independent Trustees.

The Board held 13 meetings during 2019. Each of our Trustees then in office attended at least 75% of the combined total of the meetings of the Board and all committees on which he or she served during 2019.

In addition to full meetings of the Board, our non-management Trustees met seven times in sessions without members of management present. Ms. Beinecke, as Lead Trustee, acted as presiding member during these

 

non-management sessions. We do not have a formal policy with regard to Trustees’ attendance at the Annual Meetings of Shareholders. All of our Trustees serving at the time of our 2019 Annual Meeting of Shareholders were present at the meeting.

Audit Committee

The Audit Committee held eight meetings during 2019. During 2019, the members of the Audit Committee were Dr. West, as Chair, Ms. Puri and Mr. Tisch. On March 26, 2020, we appointed Ms. Mandakini Puri to be Chair of our Audit Committee. Dr. Richard West, after many years as the Chair of our Audit Committee has stepped down from that role, but we have asked him to stay on the Audit Committee to provide for a smooth transition.

The Board has adopted a written Audit Committee Charter, which sets forth the membership requirements and responsibilities of the Audit Committee, among other matters. The Audit Committee Charter is available on our website (www.vno.com/governance/committee-charters). The Board has determined that all existing Audit Committee members meet the NYSE and SEC standards for independence and the NYSE standards for financial literacy.

The Board has determined that each of Dr. West, Ms. Puri and Mr. Tisch is an “audit committee financial expert,” as defined by SEC Regulation S-K (and thus has three such experts serving on its Audit Committee) and that each of such persons also meets the NYSE standards for financial management expertise. The Board reached this conclusion based on the relevant experience of each of Dr. West, Ms. Puri and Mr. Tisch, including as described above under “Biographies of our Trustees.”

The Audit Committee’s purposes are to: (i) assist the Board in its oversight of  (a) the integrity of our financial statements, (b) our compliance with legal and regulatory requirements, (c) the independent registered public accounting firm’s qualifications and independence and (d) the performance of the independent registered public accounting firm and the Company’s internal audit function; and (ii) prepare an Audit Committee report as required by the SEC for inclusion in our annual proxy statement. The function of the Audit Committee is oversight. The management of the Company is responsible for the preparation, presentation and integrity of our financial statements and for the effectiveness of internal control over financial reporting. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for planning and carrying out a proper audit of our annual financial statements prior to the filing of our Annual Report on Form 10-K, reviewing our quarterly financial statements prior to the filing of each of our Quarterly Reports on Form 10-Q and annually auditing the effectiveness of internal control over financial reporting and other procedures. Persons interested in contacting our Audit Committee members with regard to accounting, auditing or financial concerns will find information on how to do so on our website (www.vno.com/governance/confidential-board-contact).

Compensation Committee

The Compensation Committee is responsible for establishing the terms of the compensation of the executive officers and the granting and administration of awards under the Company’s omnibus share plans. The committee, which held four meetings during 2019, consisted of the following members: Mr. Tisch, as Chair, Mr. Helman and Dr. West. Mr. Helman was appointed to the Compensation Committee upon his joining the Board on April, 3, 2019. Mr. Helman was appointed to the Compensation Committee to serve the vacancy left by the passing in 2019 of Mr. Michael Lynne. Each of Mr. Helman, Mr. Tisch and Dr. West had or have been determined by the Board to be independent. The Board has adopted a written Compensation Committee Charter which is available on our website (www.vno.com/governance/committee-charters).

Compensation decisions for our executive officers are made by the Compensation Committee. Decisions regarding compensation of other employees are made by our Chief Executive Officer or other senior managers and are subject to review and approval of the Compensation Committee. Compensation decisions for our Trustees are made by the Compensation Committee and/or the full Board.

The agenda for meetings of the Compensation Committee is determined by its Chairman with the assistance of the Company’s Secretary and/or other members of management. Compensation Committee meetings are attended from time to time by members of management at the invitation of the Compensation Committee. The Compensation Committee’s Chairman reports the committee’s determination of executive compensation to the Board. The Compensation Committee has authority under its charter to elect, retain and approve fees for, and to

 

terminate the engagement of, compensation consultants, special counsel or other experts or consultants as it deems appropriate to assist in the fulfillment of its responsibilities. The Compensation Committee reviews the total fees paid by us to outside consultants to ensure that such consultants maintain their objectivity and independence when rendering advice to the committee. The Compensation Committee may receive advice from compensation consultants, special counsel or other experts or consultants only after consideration of relevant factors related to their fees, services and potential conflicts of interests, as outlined in the Compensation Committee’s Charter.

The Compensation Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the committee. In particular, the Compensation Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the committee who are (i) “Non-Employee Directors” for the purposes of SEC Rule 16b-3; and (ii) “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. Currently, all members of the Compensation Committee meet these criteria.

See “Compensation Discussion and Analysis” below for a discussion of the role of executive officers in determining or recommending compensation for our executive officers. We have also included under “Compensation Discussion and Analysis” a discussion of the role of compensation consultants in determining or recommending the amount or form of executive or Trustee compensation.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee, which met once during 2019, currently consists of Ms. Beinecke, as Chair, and Mr. Helman and Ms. Puri as the two other members. Prior to April 3, 2019, the Committee consisted of Ms. Beinecke, as Chair, and Messrs. Mandelbaum and Wight who rotated off the Committee. During 2019, members of the Corporate Governance and Nominating Committee led several discussions of governance matters with the full Board. Further, in the past year Ms. Beinecke (and members of management) met in person or telephonically with several significant shareholders to discuss our governance practices. Each of Ms. Beinecke and Mr. Helman, and Ms. Puri have been determined by the Board to be independent. The Board has adopted a written Corporate Governance and Nominating Committee Charter, which is available on our website (www.vno.com/governance/committee-charters). The committee’s responsibilities include the selection of potential candidates for the Board and the development and review of our governance principles. It also reviews Trustee compensation and benefits, and oversees annual self-evaluations of the Board and its committees. The committee also makes recommendations to the Board concerning the structure and membership of the other Board committees as well as management succession plans. The committee selects and evaluates candidates for the Board in accordance with the criteria set out in the Company’s Corporate Governance Guidelines and as are set forth below. The committee is then responsible for recommending to the Board a slate of candidates for Trustee positions for the Board’s approval. Generally, candidates for a position as a member of the Board are suggested by existing Board members; however, the Corporate Governance and Nominating Committee will consider shareholder recommendations for candidates for the Board sent to the Corporate Governance and Nominating Committee, c/o Alan J. Rice, Secretary, Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019, and will evaluate any such recommendations using the criteria set forth in the Corporate Governance and Nominating Committee Charter and our Corporate Governance Guidelines.

In nominating Steven Roth for re-election at the 2020 Annual Meeting and assuming Mr. Roth were to be re-elected at all the boards on which he currently serves, the Corporate Governance and Nominating Committee (and later the full Board) considered that Mr. Roth would serve on boards of three public companies in addition to our Board. However, the Committee noted that one of those companies, Alexander’s, is an affiliate for which we manage its properties and the two other companies (JBG SMITH and Urban Edge) resulted from spinning business units out of our company and have a broadly overlapping shareholder base. The Corporate Governance and Nominating Committee and the full Board each determined that Mr. Roth’s service on these other Boards does not detract from his ability to represent, and devote time to, our company and such other Board service may in fact benefit our company. In particular, the Committee considered that:

•

Alexander’s is managed by the Company and Mr. Roth’s service on the Alexander’s Board is important to the performance of his duties to Vornado; and

​

•

Prior to the spinoffs, Mr. Roth served as the CEO of the businesses comprising Urban Edge and substantially comprising JBG Smith, both of which were fully integrated in Vornado. The spinoffs represented a significant

​

 

reduction in Mr. Roth’s time devoted to these businesses. In the Committee’s view, Mr. Roth’s current service on the Boards of Urban Edge and JBG Smith provides industry knowledge that benefits Vornado and the Vornado shareholders who continue to own these companies.

The Committee will continue to assess the benefits of Mr. Roth’s service on these Boards.

Executive Committee

The Executive Committee possesses and may exercise certain powers of the Board in the direction of the management of the business and affairs of the Company. The Executive Committee consists of three members, Mr. Roth, Ms. Beinecke and Mr. Wight. Mr. Roth is the Chairman of the Executive Committee. The Executive Committee did not meet in 2019.

The Board’s Role in Risk Oversight

While day-to-day risk management is primarily the responsibility of the Company’s senior management team, the Board of Trustees is responsible for the overall supervision of the Company’s risk management activities. The Board’s oversight of the material risks faced by our Company occurs at both the full Board level and at the committee level. The Board’s role in the Company’s risk oversight process includes receiving reports from members of senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, strategic, reputational, environmental and climate change risks. The full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives these reports from the appropriate “risk owner” within our organization or in connection with other management-prepared presentations of risk to enable the Board (or committee, as applicable) to understand our risk identification, risk management and risk mitigation strategies. By “risk owner,” we mean that person or group of persons who is or are primarily responsible for overseeing a particular risk. As part of its charter, the Audit Committee discusses our guidelines and policies with respect to which our management assesses and manages the Company’s exposure to risk and reports to the full Board its conclusions as a partial basis for further discussion by the full Board. This enables the Board and the applicable committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. In addition to the Board’s review of risks applicable to the Company generally, the Board conducts regular strategic and personnel reviews.

* * * * *

Persons wishing to contact the independent members of the Board should call (866) 537-4644. A recording of each phone call to this number will be sent to one independent member of the Audit Committee as well as to a member of management who may respond to any such call if the caller provides a return number. This means of contact should not be used for solicitations or communications with us of a general nature. Information on how to contact us generally is available on our website (www.vno.com).

 

CORPORATE SOCIAL RESPONSIBILITY

We believe that sound corporate citizenship, governance and environmental principles are essential to our success. Our goal is to operate with the highest level of integrity and in a sustainable manner. We believe that an integrated approach to business strategy, corporate governance, sustainability and corporate citizenship provides for a better operating company, creates more attractive properties and creates long-term value. The following table highlights certain of our policies and initiatives in the area of corporate social responsibility.

Strong Ethical and Social Policies

•

We maintain a strong Code of Business Conduct and Ethics that applies to all our Trustees and employees.

​

•

We have adopted a refreshed and renewed anti-harassment policy. This policy prohibits hostility towards individuals in protected categories, prohibits sexual harassment in any form, details how to report harassment issues and prohibits retaliation.

​

•

We have recently enhanced our claw-back policy to also provide for potential claw-backs for violations of significant Company policies as well as for bad faith or dishonest actions or receipt of an improper personal benefit.

​

•

We have anti-hedging and anti-pledging policies.

​

•

Our policies and manuals prohibit bribes, money laundering and other corruption.

​

•

We strictly restrict conflicts of interest.

​

•

We strictly restrict political contributions on behalf of the Company and these are subject to the oversight of our Corporate Governance and Nominating Committee.

​

•

We have a policy restricting the receipt of gifts.

​

•

We have established and circulated straight-forward procedures for reporting any policy violations or other wrongdoing.

​

•

We comply with the strictest rules regarding employing child labor, respecting human rights and not purchasing conflict minerals.

​

•

We require our vendors and their subcontractors to comply with our applicable policies.

​

•

We require our employees to be trained in, and to regularly review and acknowledge, our policies.

​

•

We have established reporting procedures, guidelines and hotlines to facilitate the reporting of violations of our policies.

​

•

We actively monitor and audit internal compliance with our policies with the oversight of the Corporate Governance and Nominating Committee and, ultimately, the full Board.

​

Employee Inclusion

•

We seek to maintain a working environment that is open, diverse and inclusive, and where our people feel valued, included and accountable.

​

•

We have a human capital management program where we provide extensive opportunities and programs for training to promote career and personal development for employees and to encourage innovation and engagement.

​

Leader in Sustainability Practices

•

We have received the Energy Star Partner of the Year Award with Sustained Excellence four times, most recently in 2019.

​

•

In every year since 2013, we have received the Global Real Estate Sustainability Benchmark Green Star Ranking, we were recognized as a sector leader in 2018, and we scored in the top 6% of over 950 responding companies in 2019.

​

 

•

We have received the Nareit Leader in the Light Award for every year since 2010.

​

•

We are one of the largest owners of LEED-certified properties in the United States.

​

Sustainability

We believe that our Company has been a leader in promoting sustainability practices. We regularly report to the Board on our sustainability programs and our Board plays an active role in the oversight of Vornado’s sustainability practices, recognizing that sustainability and energy efficiency are central to Vornado’s business strategy. In connection with our sustainability programs, we focus on:

•

Sustainable and efficient practices in the way we design, build, retrofit and maintain our portfolio of buildings. We believe that energy efficiency and resource conservation achieve the twofold benefit of controlling our operating expenses and reducing our impact on the environment.

​

•

Maintaining healthy indoor environments for our tenants and employees, and incorporating health and wellness into our design principles and operating standards.

​

•

Recognizing climate change as a material issue to our business, due to the risks that it may present to our assets. We assess opportunities to fortify our assets against these risks while mitigating our own contribution to climate change through reduction of our carbon footprint. We are assessing our Company’s exposure to climate change through analysis of the potential impact of various global warming scenarios. We further our impact on climate change mitigation through membership in business associations in our markets and support for climate change policy and regulation.

​

•

Smart infrastructure improvements, investing in sustainable technologies and employing best practices for building operations. We make investments in low-carbon technologies, including energy efficiency, retrofitting our buildings to rely on lower carbon sources of energy, smart building technology to optimize our energy demand, and exploratory opportunities in energy storage and renewable power.

​

•

Establishing partnerships with our tenants and communities.

​

•

Setting goals around our sustainability policies, and reporting on our progress and achievements in our annual sustainability report available on our website at www.vno.com/sustainability/overview.

​

Social Engagement

Our greatest and most scarce asset is our people. We strongly believe in training and retaining talented employees and having management at many levels engage with our Board.

Furthermore, a good relationship with the communities in which we operate is essential. We foster and encourage community engagement and volunteerism for all employees.

 

PRINCIPAL SECURITY HOLDERS

The following table lists the number of Shares and Units beneficially owned, as of March 16, 2020, by (i) each person who holds more than a 5% interest in the Company or our operating partnership, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”), (ii) Trustees of the Company, (iii) the executive officers of the Company defined as “Named Executive Officers” in “Executive Compensation” below, and (iv) the Trustees and all current executive officers of the Company as a group. Unless otherwise specified, “Units” are Class A units of limited partnership interest of our Operating Partnership and other classes of units convertible into Class A units. The Company’s ownership of Units is not reflected in the table but is described in footnotes (1) and (2).

*

Less than 1%.

​

 

(1)

Unless otherwise indicated, each person is the direct owner of, and has sole voting power and sole investment power with respect to, such Shares and Units. Numbers and percentages in the table are based on 191,103,928 Shares and 13,426,822 Units (other than Units held by the Company) outstanding as of March 16, 2020.

​

(2)

In April 1997, the Company transferred substantially all of its assets to the Operating Partnership. As a result, the Company conducts its business through, and substantially all of its interests in properties are held by, the Operating Partnership. The Company is the sole general partner of, and owned approximately 93% of the Units of, the Operating Partnership as of March 16, 2020 (one Unit for each Share outstanding). Generally, any time after one year from the date of issuance (or two years in the case of certain holders), holders of Units (other than the Company) have the right to have their Units redeemed in whole or in part by the Operating Partnership for cash equal to the fair market value, at the time of redemption, of one Share for each Unit redeemed or, at the option of the Company, cash or one Share for each Unit tendered, subject to customary anti-dilution provisions (the “Unit Redemption Right”). Holders of Units may be able to sell publicly Shares received upon the exercise of their Unit Redemption Right pursuant to registration rights agreements with the Company or otherwise pursuant to applicable securities laws and rules. The Company has filed registration statements with the SEC to register the issuance or resale of certain of the Shares issuable upon the exercise of the Unit Redemption Right.

​

(3)

The total number of Shares outstanding used in calculating this percentage assumes that all Shares that each person has the right to acquire within 60 days of the record date (pursuant to the exercise of options or upon the redemption or conversion of other Company or Operating Partnership securities for or into Shares) are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other person.

​

(4)

The total number of Shares and Units outstanding used in calculating this percentage assumes that all Shares and Units that each person has the right to acquire within 60 days of the record date (pursuant to the exercise of options or upon the redemption or conversion of Company or Operating Partnership securities for or into Shares or Units) are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other person.

​

(5)

Interstate, a partnership of which Messrs. Roth, Wight and Mandelbaum are, directly or indirectly, the three general partners, owns 5,503,548 Shares. These Shares are included in the total Shares and the percentage of class for each of them. Messrs. Roth, Wight and Mandelbaum share voting power and investment power with respect to these Shares.

​

(6)

Includes 3,873 Shares owned by the Daryl and Steven Roth Foundation over which Mr. Roth holds sole voting power and sole investment power. Does not include 37,299 Shares owned by Mr. Roth’s spouse, as to which Mr. Roth disclaims any beneficial interest.

​

(7)

The number of Shares beneficially owned by the following persons includes the number of Shares indicated due to the vesting of options: Steven Roth—193,451; Michael D. Fascitelli—193,451; Michael J. Franco—83,309; Joseph Macnow—32,238; Glen Weiss—8,888; and all Trustees and executive officers as a group—549,199.

​

(8)

The number of Shares and Units (but not the number of Shares alone) beneficially owned by the following persons also includes the number of vested and redeemable restricted units (as described below) as indicated: Steven Roth—49,797; David Mandelbaum—12,227; Russell B. Wight, Jr.—12,227; Michael D. Fascitelli—7,889; Michael J. Franco—24,246; Joseph Macnow—20,916; Glen J. Weiss—1,489; Daniel R. Tisch—11,941; Richard R. West—11,619; Candace K. Beinecke—14,768; William W. Helman IV—0; Mandakini Puri—2,628; Haim H. Chera—0; Beatrice Hamza Bassey—0; and all Trustees and executive officers as a group—201,924. The number of Shares or Units beneficially owned by the following persons does not include the number of unvested or unredeemable restricted units as indicated: Steven Roth—252,865; David Mandelbaum—3,956; Russell B. Wight, Jr.—3,956; Michael D. Fascitelli—3,956; Michael J. Franco—231,068; Joseph Macnow—105,241; Glen J. Weiss—116,549; Daniel R. Tisch—3,956; Richard R. West—3,956; Candace K. Beinecke—3,956; William W. Helman IV—6,341; Mandakini Puri—6,645; Haim H. Chera—375,607; Beatrice Hamza Bassey—0; and all Trustees and executive officers as a group—1,429,589. The number of Shares or Units beneficially owned by the following persons does not include the number of unearned and unvested Outperformance Plan Units (“OPP Units”) as indicated: Steven Roth—238,257; Michael J. Franco—74,455; Joseph Macnow—52,119; Glen J. Weiss—8,434; and all Trustees and executive officers as a group—461,057. The number of Shares or Units beneficially owned by the following persons does not include the number of unearned and unvested Appreciation Only Long-Term Incentive Plan Units as indicated: Steven Roth—265,824; Michael J. Franco—83,072; Joseph Macnow—58,150; Glen J. Weiss—43,246; and all Trustees and executive officers as a group—610,067.

​

(9)

The address of each of such person(s) is c/o Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019.

​

(10)

Of these Shares, 2,909,252 are held in a partnership of which the general partner is Mr. Mandelbaum and the limited partners are Mr. Mandelbaum and trusts for the benefit of Mr. Mandelbaum and his issue. In addition, 122,002 of these Shares are held in trusts for the benefit of Mr. Mandelbaum’s grandchildren.

​

(11)

Includes 31,907 Shares owned by the Wight Foundation, over which Mr. Wight holds sole voting power and sole investment power. Does not include 20,575 Shares owned by the spouse and children of Mr. Wight as to which Mr. Wight disclaims any beneficial interest.

​

(12)

The number of Shares beneficially owned by Mr. Fascitelli includes 672,334 Shares held in a grantor annuity trust, 67,537 Shares held by a limited partnership and 105,191 Shares held in a limited liability company and does not include 3,150 Shares owned by his children as to which Mr. Fascitelli disclaims any beneficial interest.

​

(13)

Excludes 3,128 Shares held by Mr. Macnow’s spouse.

​

(14)

50,000 of these Shares are held through a foundation. Mr. Tisch maintains the right to control the vote and disposition of these Shares, but disclaims any pecuniary interest therein.

​

(15)

Dr. West and his wife own 3,231 of these Shares jointly. Also included are 1,953 Shares that may be acquired upon conversion of 1,000 Series A preferred shares of beneficial interest owned by Dr. West.

​

 

(16)

According to an amendment to Schedule 13G filed on February 11, 2020.

​

(17)

According to an amendment to Schedule 13G filed on February 11, 2020.

​

(18)

According to an amendment to Schedule 13G filed on February 6, 2020.

​

(19)

According to an amendment to Schedule 13G filed on February 14, 2020.

​

(20)

According to an amendment to Schedule 13G filed on January 21, 2020.

​

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act requires our Trustees and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership of, and transactions in, certain classes of our equity securities with the SEC. Such Trustees, executive officers and 10% shareholders are also required to furnish us with copies of all Section 16(a) reports they file.

Based solely on a review of the Forms 3, 4 and 5, and any amendments thereto, furnished to us, and on written representations from certain reporting persons, we believe that the only filing deficiencies under Section 16(a) by our Trustees, executive officers and 10% shareholders in the year ended December 31, 2019 (or in 2020, prior to the mailing of this proxy statement) were one late filing in 2019 by Mr. Glen Weiss with regard to a transaction reported on a Form 4 and one late filing in 2020 by Mr. William W. Helman IV with regard to a transaction reported on a Form 4.

 

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

Key Compensation Highlights

Shareholder Engagement and Board Responsiveness

✓

Robust shareholder engagement, with participation by our Lead Independent Trustee, seeking input on our executive compensation program

​

✓

Continued in-depth review of our compensation program, led by the Compensation Committee, with input from shareholders and our independent compensation consultant

​

Changes for 2020 and Beyond

✓

Implemented changes to our 2020 executive compensation program for 2019 performance, including modifying our long-term incentive to re-introduce the Outperformance Plan (OPP) Awards, and enhancing our claw-back policy

​

✓

Made a reasonable increase to the bonus pool under our annual incentive program for 2020, subject to threshold performance, to account for the three additional executives eligible to receive bonuses under the plan; bonus pool will be reduced as appropriate based on future reduction in the size of the executive team

​

Substantial Performance-Based and At-Risk Components

✓

Pay-for-performance philosophy, including 98% of CEO’s and 71% of other previously-serving NEOs’ compensation in the form of equity with actual value tied to Vornado’s Share price performance

​

✓

Significant portion of long-term compensation in the form of performance-based equity that requires the achievement of significant performance hurdles to have any value

​

✓

Realized pay outcomes demonstrate the strong pay-for-performance alignment within our program

​

✓

Our annual bonus plan has a formula-driven cap and we disclose goals and results

​

✓

Metrics in our compensation program continue to align with the most important business metrics that drive value creation: FFO, NOI, and Total Shareholder Return (“TSR”)

​

Shareholder Friendly Compensation Programs

✓

CEO required to hold equity having a value of at least 6x salary and other NEOs must hold equity with a value of at least 3x salary

​

✓

Maintain a cap on incentive compensation payouts

​

✓

Double-trigger equity acceleration upon a change of control

​

✓

No excessive retirement benefits or retirement plan (other than a 401(k))

​

✓

No excessive perquisites or benefits

​

✓

Anti-hedging and anti-pledging policies; our anti-hedging policy applies to Trustees and executive officers and covers hedging their ownership in Shares, including by trading in options, puts, calls, or other derivative instruments related to Shares

​

✓

No tax gross-ups

​

✓

No dividends or distributions on unearned equity awards subject to performance-based vesting (other than limited distributions on operating partnership awards for tax purposes)

​

 

Approach of this Compensation Discussion and Analysis

This Compensation Discussion and Analysis, or “CD&A,” describes our executive compensation program for 2019, including certain elements of our 2020 program and the executive pay philosophy used by our Compensation Committee to make decisions.

We use our program to attract, retain and appropriately reward our senior executive team. This CD&A explains how the Compensation Committee made 2019 compensation decisions for the following named executive officers (the “Named Executive Officers” or “NEOs”):

•

Steven Roth, Chairman and Chief Executive Officer (our “CEO”)

​

•

Joseph Macnow, Chief Financial Officer and Chief Administrative Officer

​

•

Michael J. Franco, President

​

•

Haim H. Chera, Executive Vice President—Head of Retail

​

•

Glen J. Weiss, Executive Vice President—Office Leasing, Co-Head of Real Estate

​

Under SEC rules and regulations, the “Summary Compensation Table” must disclose the salary paid and cash bonus earned during that year. That table also shows all equity-based awards in the year granted, even if that year is different than the year for which a grant was earned. Because the equity we grant is awarded for performance in the prior year, the SEC’s approach requires that we disclose our equity awards for 2018 performance as 2019 compensation in the Summary Compensation Table. In other words, we grant annual incentive equity retrospectively—in the first quarter of a new year for the actual performance in the most recently completed year. To more accurately present our compensation information in line with how our decisions are actually made (as described in more detail under “—Comparison of 2017-2019 Direct/Realizable Compensation”), the following discusses both the annual incentive paid for a year and the equity granted following that applicable year after performance has been assessed. We also present (under “—Realized Compensation Table”), the actual compensation received for 2019, 2018, and 2017. We believe realized compensation is helpful in evaluating the effectiveness of our compensation program.

Recent Management Changes; 2019 Promotions, New Hire and Promotion and Inducement Grants

In April 2019, we announced a number of generational leadership changes, including four promotions (“Promotions”) and one new-hire (“New Hire”):

1.

Michael J. Franco (age 51), previously our Executive Vice President—Chief Investment Officer, was promoted to serve as our President;

​

2.

David R. Greenbaum (age 68), previously our President—New York Division, was promoted to serve as our Vice Chairman;

​

3.

Glen J. Weiss (age 50), our Executive Vice President—Office Leasing, was appointed to the additional position of Co-Head of Real Estate;

​

4.

Barry S. Langer (age 41), our Executive Vice President—Development, was appointed to the additional position of Co-Head of Real Estate; and

​

5.

Haim H. Chera (age 50), was hired as our new Executive Vice President—Head of Retail.

​

Three of these individuals (Messrs. Franco, Weiss and Chera) are designated as NEOs for purposes of our CD&A and these five individuals listed above, together with Messrs. Roth and Macnow, comprise our senior management team (and to whom we refer in this Proxy Statement as the “Senior Executives”). We believe that the Promotions and the New Hire to be important steps in establishing a firm path for management succession and to have attracted a world-class retail talent to run our important street retail and train station retail business. We strongly believe that the ability of this younger generation to step into their new roles while existing senior management continues to be serving the Company provides this younger generation with a strong and smooth transition.

Our Board, directly and through, and our Corporation Governance and Nominating Committee and/or Compensation Committee:

•

reviewed and considered the strategic and business implications of the Promotions and the New Hire and alternative approaches;

​

 

•

reviewed and considered the need and desirability of the Promotions and the New Hire in light of strategic and business needs;

​

•

interviewed each of the candidates for promotion and hire;

​

•

considered alternative candidates and structures; and

​

•

considered the appropriateness and need for the compensation of the Promotions and the New Hire.

​

After careful consideration, we made one-time promotion grants to Messrs. Franco, Weiss and Langer of $5,000,000 in restricted units that vest in one lump-sum on June 10, 2023. These grants are referred to as the “Promotion Grants.”

Also after careful consideration, in connection with the New Hire and as an inducement to attract Mr. Chera from his family business, we made a one-time inducement grant of  $25,500,000 to Mr. Chera in restricted units with the award vesting 20% at grant, 40% on June 10, 2022 and 40% on June 10, 2023. This grant is referred to as the “Inducement Grant.”

Our Compensation Committee and our full Board viewed the Promotion Grants and the Inducement Grant as an important step in directly aligning this younger generation of leadership’s interests with those of our shareholders. The Board structured the vesting conditions to be an important inducement for this younger generation of talent to continue to stay and grow with the Company and successfully execute against Vornado’s long-term strategy.

As the Promotion Grants and Inducement Grant are one-time and unique from our normal compensation arrangements, in certain of our presentations and discussions of compensation, we may exclude those grants. In addition, as those promoted or hired were not NEOs in prior years, in certain year-to-year comparisons of NEO compensation, we have excluded them and refer only to the compensation of Messrs. Roth, Franco and Macnow who we refer to as our “Same Store NEOs.”

Our Board and CEO are thrilled with the talent we have been able to retain and attract through these Promotions and the New Hire and believe we have established a solid framework for future Company growth.

In addition, as a result of the Promotions and New Hire, our Compensation Committee made a reasonable increase to the bonus pool under the annual, short-term incentive program, subject to threshold performance, to account for the additional persons eligible to receive bonuses under the plan. This change was previously disclosed and discussed with shareholders representing about 55% of our outstanding Shares, who understood the rationale of the increase. Upon any decrease in the number of Senior Executives eligible to participate in the bonus pool, our Compensation Committee will consider reducing the size of the pool.

Shareholder Engagement and Board Responsiveness

In response to the vote outcome of our 2019 say-on-pay proposal, which received support from 65% of votes cast, we undertook an extensive engagement effort to obtain shareholder feedback on our compensation program, with the aim of making meaningful changes. Since our 2019 annual meeting, we reached out to shareholders representing more than 70% of our outstanding shares and had conversations with 55%, including many who voted against our say-on-pay proposal. Our Lead Independent Trustee participated in 73% of these conversations.

 

In direct response to the feedback we received, our Compensation Committee implemented changes to our executive compensation program for 2020, which are discussed in detail in this CD&A.

The following table summarizes key topics discussed with shareholders during our most recent engagement, the feedback we received and the actions taken in response for 2020:

 

Commitment to Compensation Enhancements and Program Revamp

We made progress with the design of our 2019 compensation program and will continue to do so, based on feedback from our continuing dialogue with shareholders. In doing so, we will continue to maintain a compensation program that encourages long-term focus with pay outcomes that are at-risk and aligned with performance.

2019 Business Highlights

In 2019, we continued our long track record of delivering value to shareholders. We executed on our goals, accomplishing the following strategic initiatives and achieving the following results. These factors were among those considered in the compensation decision process, as discussed more fully in this Compensation Discussion & Analysis:

•

Net income for the year ended December 31, 2019 was $16.21 per diluted share, compared to $2.01 per diluted share for 2018.

​

•

Total Funds From Operations (“FFO”) for the year ended December 31, 2019 was $5.25 per diluted share, compared to $3.82 per diluted share for 2018. FFO, as adjusted for the year ended December 31, 2019 was $3.49 per diluted share, compared to $3.73 per diluted share for 2018. The reduction in FFO, as adjusted per diluted share is entirely attributable to the asset sales described below. FFO and FFO, as adjusted, are non-GAAP measures defined in Annex A to this Proxy Statement.

​

•

Company-wide 2019 cash basis “same store” Net Operating Income (“NOI”) increased 3.6%. NOI is a non-GAAP measure defined in Annex A to this Proxy Statement.

​

•

Leasing activity for the year, across the entire business, totaled 1.7 million square feet in 215 leases, with mark-to-market increases of 14.0% GAAP and 8.8% cash.

​

•

At December 31, 2019, overall occupancy was 96.5%.

​

•

On April 18, 2019, we transferred a 48.5% common interest in a joint venture of our seven upper Fifth Avenue and Times Square retail properties to a group of institutional investors for net cash proceeds of  $1.179 billion. We retained the remaining 51.5% common interest and an aggregate of  $1.828 billion of preferred equity interests in certain of the properties. The transaction valued the properties at $5.556 billion (a 4.5% cap rate) resulting in a financial statement net gain of  $2.571 billion. On December 18, 2019 we declared a $1.95 per share special dividend resulting from the transaction which was paid to shareholders on January 15, 2020.

​

•

In addition to the Fifth Avenue and Times Square retail properties transfer, we completed the following sale transactions during 2019:

​

◦

$1.61 billion net proceeds from the sale of 54 condominium units at our 220 Central Park South luxury residential condominium development project resulting in a financial statement net gain of  $604 million;

​

◦

$168 million sale of all of our common shares of Lexington Realty Trust;

​

◦

$109 million sale of all of our partnership units of Urban Edge Properties;

​

◦

$100 million sale of our 25% interest in 330 Madison Avenue; and

​

◦

$50 million sale of 3040 M Street.

​

•

In 2019, we completed $5 billion of financings in 13 transactions.

​

•

Sustainability – in 2019, we were designated Energy Star Partner of the Year for the seventh time; we received the NAREIT Leader in the Light Award for the tenth year in a row and were a top performer among all global real estate sustainability benchmark respondents. We were cited as the industry model with our innovative approach to having our ESG Report examined by a third party and furnishing it to the SEC.

​

•

Lastly, and perhaps most importantly, we advanced the redevelopment of the Penn District, positioning our Company to capitalize on the enormous opportunity we have on the West Side of Manhattan. Our redevelopments are now in full construction mode and we have made very substantial progress in leasing these assets.

​

 

Executive Compensation Philosophy

Our compensation program is based on a pay-for-performance philosophy and is designed to incentivize executives to achieve financial and strategic goals that are aligned with the Company’s long-term business strategy and the creation of sustained, long-term value for our shareholders.

The objectives of the program include:

The following shows the pay mix for our CEO. 98% of his total direct/realizable 2019 compensation is variable and subject to Company performance. For our 2020 performance-based equity award (granted for 2019 performance), we re-introduced OPP awards with three-year performance periods.

 

Compensation Outcomes Demonstrate Performance-Based and At-Risk Nature of Our Compensation Programs

Our executive compensation program is designed so that the actual realized compensation closely aligns with Share performance. Total direct/realizable compensation for our CEO has remained flat in each of the last three years and his realized compensation is significantly lower than total direct/realizable compensation in each year. Long-term equity awards for the three-year performance periods were not earned and no payouts were made in 2017, 2018 or 2019, demonstrating the at-risk nature of our performance-based program and the alignment of our program with the interests of shareholders.

 

Compensation Components

Our Named Executive Officers’ compensation currently has three primary components:

•

annual base salary, which includes cash payments or equity in lieu thereof;

​

•

annual incentive award, which includes cash payments and/or equity in lieu thereof; and

​

•

long-term equity incentive, which includes restricted units and long-term incentive performance awards.

​

The overall compensation levels and allocation among these components are determined annually by our Compensation Committee considering the Company’s performance during the year and a review of the competitive market for executive talent. Historically, most of the total compensation for our CEO has been in long-term equity awards. These longer-term, equity-based awards reflect the Compensation Committee’s desire to directly align management and shareholder interests and to provide incentives to successfully implement our long-term strategic objectives.

The compensation program for management is described in the table below. Importantly, each component of compensation is subject to a cap.

 

 

 

Pay Mix

We believe that the executive team’s compensation should be tied to Company goals. 98% of the Chief Executive Officer’s 2019 compensation and 77% of the other NEOs’ compensation is tied to performance. About 44% of our Chief Executive Officer’s 2019 compensation and 26% of the other NEOs’ compensation are dependent on the achievement of objective performance criteria. The charts below reflect the pay mix of our CEO and other NEOs (other than the Promotion Grants and Inducement Grant referred to below).

 

How Pay Aligns with Performance

2019 Performance Metrics Considered

For 2019 compensation, among the factors considered, both objectively and subjectively, were the changes, as adjusted in the Company’s and the applicable division’s results during the year (NOI at share, FFO and FFO, as adjusted), our TSR for the year, and the factors mentioned below. Increases or decreases in pay and allocations for 2019, 2018, and 2017 of various compensation elements to our Named Executive Officers were based, in part, upon these factors. “NOI” (or Net Operating Income) means total revenues less operating expenses. “FFO” means funds from operations as defined by the Nareit. “FFO, as adjusted,” means FFO as adjusted to exclude non-comparable gains and losses, impairments and non-real estate-related items. Each of these metrics are presented in our regular annual and quarterly reports with reconciliations to the most comparable metric presented in accordance with Generally Accepted Accounting Principles applicable in the United States (“GAAP”). Although they are non-GAAP metrics, we use them in making compensation decisions because they facilitate meaningful comparisons in operating performance between periods and among our peers. TSR means our total shareholder return (including dividends) for a given period.

Key Year-Over-Year Comparisons

Our TSR for 2019 was 12.0% while that of the FTSE Nareit Office Index (“Office REIT”) was 31.4%. For 2019, we have kept flat or decreased each of our Same Store NEO’s base and total direct/realizable compensation as reflected in the “Direct/Realizable Compensation Table.” In addition, as shown in the “Realized Compensation Table,” in 2019 our CEO’s total realized compensation was 56.1% of his total direct/realizable compensation reflecting alignment with shareholder returns. The same is the case for our other Same Store NEOs where the average of the total realized compensation was 81.8% of the average of their total direct/realizable compensation.

Key Considerations

We operate in a highly competitive commercial real estate industry where we actively compete for business opportunities and executive talent. In determining compensation levels for 2019, our Compensation Committee did not weight any one factor, but sought to find a balance among (i) appropriately rewarding the significant operational achievements during the year, (ii) maintaining total compensation levels in line with the competitive market and at a level adequate to address our recruitment and retention needs and (iii) maintaining a balanced program to foster alignment of management and shareholder interests consistent with evolving market “best practices” as well as views of our shareholders.

How We Determine Executive Compensation

Our Compensation Committee, comprised solely of independent Trustees, determines compensation for our Named Executive Officers and other Senior Executives. Our Compensation Committee exercises independent judgment on executive compensation and administers our equity incentive programs, including reviewing and approving equity grants under our 2019 Omnibus Share Plan and its predecessor, our 2010 Omnibus Share Plan (each as may be, or may have been amended, the “Omnibus Plan”). Our Compensation Committee operates under a written charter adopted by the Board, which is available on our website (www.vno.com/governance/​committee-charters).

We make our compensation decisions in the first quarter of a year. These decisions cover the prior year’s performance and contributions. In addition, in the first quarter of a fiscal year, we establish that year’s performance threshold for our short-term annual incentive program.

Our decisions are based primarily upon our assessment of each executive’s leadership, operational performance and potential to enhance long-term shareholder value. For our CEO, this assessment is made by the Compensation Committee. For our other Named Executive Officers, this assessment is initially made by our CEO subject to the review and approval of the Compensation Committee. Our annual, short-term incentive program provides for a minimum performance threshold for, and a cap on, a bonus pool for annual incentive awards to our senior executive team. Key factors we consider when making compensation decisions include: actual performance compared to the financial, operational and strategic goals established for the Company or the executive’s operating division; the nature, scope and level of responsibilities; contribution to the Company’s financial results, particularly on metrics such as NOI at share, FFO, FFO, as adjusted, and TSR for the year; and contribution to the Company’s

 

commitment to corporate responsibility, including success in creating a culture of unyielding integrity and compliance with applicable laws and our ethics policies. These factors may be considered on an absolute and/or relative basis with respect to other companies or indices.

In determining individual pay levels, we also consider each executive’s historical compensation, the value of an executive’s equity stake in the Company, the appropriate balance between incentives for long-term and short-term performance and the compensation paid to the executive’s peers within the Company. We also consider competitive market compensation paid by other companies that operate in our business or that compete for the same talent pool, such as other S&P 500 REITs, other real estate companies operating in our core markets and, in some cases, investment banking, hedge fund and private equity firms. However, we do not formulaically tie our compensation decisions to any particular range or level of total compensation paid to executives at these companies. Furthermore, we consider the actual realized pay historically received by our management in determining whether our compensation program meets our goals of alignment with shareholder interests.

In addition, we encourage alignment with shareholders through equity-based compensation. We apportion incentive awards in order to provide the appropriate incentives to meet our compensation objectives both individually and in the aggregate for executives and other employees. Typically, our CEO receives a higher proportion of his compensation in equity than other Named Executive Officers who, in turn, receive a higher proportion in equity than our other employees. We regularly review our compensation program to determine whether we have given the proper incentives to our Named Executive Officers to deliver superior performance on a cost-effective basis and for them to continue their careers with us.

Role of the Corporate Governance and Nominating Committee, the Compensation Committee, and the CEO

The Corporate Governance and Nominating Committee is responsible for evaluating potential candidates for Chairman and CEO, and for overseeing executive succession plans. The Compensation Committee (1) reviews and approves the compensation of our executive officers and other employees whose total cash compensation exceeds $200,000 per year, (2) oversees the administration and implementation of our incentive compensation and other equity-based awards, and (3) regularly evaluates the effectiveness of our overall executive compensation program.

The Compensation Committee oversees the compensation program for our CEO and our other Named Executive Officers. The Compensation Committee evaluates CEO performance and sets his compensation. Our CEO and the Compensation Committee together assess the performance of other senior executives and our Compensation Committee determines their compensation, based on the initial recommendations of our CEO. The other NEOs do not play a role in determining their own compensation, other than discussing individual performance objectives with our CEO.

In support of these responsibilities, members of our senior executive team, along with other senior executives, have the initial responsibility of reviewing the performance of the employees reporting to them and recommending compensation for those employees.

Role of Compensation Consultants

Our Compensation Committee has retained Willis Towers Watson Public Limited Company (“Willis Towers Watson”) as its independent compensation consultant to provide the Compensation Committee with relevant data concerning the marketplace and our peer group as well as its own independent analysis and recommendations concerning executive compensation. Willis Towers Watson regularly participates in Compensation Committee meetings. Our Compensation Committee has the authority to set Willis Towers Watson’s compensation and to replace Willis Towers Watson as its independent outside compensation consultant or hire additional consultants at any time. In addition, prior to the 2016 merger of Towers Watson & Co. with Willis Group, Willis Group had provided us with insurance-related services including services to our captive insurance company. Willis Towers Watson has continued to provide us with such insurance-related services. In 2019, we paid Willis Towers Watson approximately $554,000 in fees for such services and $157,000 for compensation-related services. In 2015, in light of the then anticipated merger of Towers Watson & Co. and Willis Group, and in each year since then, the Compensation Committee assessed the independence of Willis Towers and the NYSE listing standards and concluded that no conflict of interest existed that would prevent Willis Towers Watson from independently advising the Compensation Committee. The Compensation Committee regularly assesses the independence of its compensation consultants.

 

For 2019 compensation decisions, Willis Towers Watson prepared, among other reports, an analysis of compensation levels and performance at the following companies that it identified as peer companies within the context of the executive pay philosophy of the Compensation Committee: American Tower Corporation; Boston Properties, Inc.; CBRE Group, Inc.; Equity Residential; HCP, Inc.; Host Hotels & Resorts, Inc.; Kimco Realty Corporation; Prologis, Inc.; Public Storage; Simon Property Group, Inc.; SL Green Realty Corp.; Ventas, Inc.; and Welltower, Inc. Our Compensation Committee has elected to use the foregoing executive compensation peer group, because the competitive landscape in which we compete for investment capital and executive talent is comprised of other publicly-traded REITs as well as real estate operating companies. Additionally, as many of our competitors in the markets in which we operate, particularly with respect to our New York division, are asset managers not structured as REITs and private entities such as real estate opportunity funds, sovereign wealth funds and pension funds, among others, our Compensation Committee, from time to time, has also considered compensation levels and trends among our non-public competitors as obtained from surveys and other proprietary data sources. In addition, during 2019, Willis Towers Watson advised the Compensation Committee on the Promotion Awards.

Consistent with prior years, the Compensation Committee reviewed and discussed the analyses prepared by Willis Towers Watson and determined that the analyses were useful in indicating that the compensation opportunities awarded to executive officers are in line with the prevailing competitive market. Furthermore, realized awards metrics align with the performance of the Company and the shareholder value created.

From time to time, the Company also engages the services of FTI Consulting, Inc., as a compensation consultant, to provide assistance with gathering and presenting third-party data used in determining industry- or market-specific results.

Analysis of Risk Associated with Our Executive Compensation Program

Our Compensation Committee has discussed risk as it relates to our executive compensation program and the Compensation Committee does not believe our program encourages excessive or inappropriate risk-taking for the reasons stated below.

We structure our pay to consist of both fixed and variable compensation. The fixed portion (base salary) of compensation is designed to provide a base level of income regardless of our financial or Share price performance.

The variable elements of compensation encourage and reward both short- and long-term corporate performance. For short-term performance, annual incentives are based on the formulaic funding of our annual incentive pool and assessments of performance during the prior year. For long-term performance, awards generally vest over three, four or five years. Awards of OPP Units, Performance Conditioned AO LTIP Units, AO LTIP Units or options have value only if our Share price increases over time. Awards of restricted units can be redeemed for Shares only if our Share price increases over time. Awards of Performance Conditioned AO LTIP Units and AO LTIP Units and of restricted units require a two-year holding period (regardless of vesting). For OPP awards, we require our Named Executive Officers to hold the equity received on earned and vested awards for one additional year after they have vested. We and our Compensation Committee also believe that the mix of formulaic criteria and a non-formulaic evaluation of historic performance provides an incentive for our executives to produce superior performance without the distorting effects of providing a pre-determinable compensation award based on the performance of only one division or business unit or upon other results that may not reflect the long- or short-term results of the Company as a whole.

As demonstrated above, our executive compensation program is structured to achieve its objectives by (i) providing incentives to manage the Company for the long-term, (ii) avoiding disproportionately large, short-term incentives that could encourage the taking of risks, (iii) requiring our executives to maintain a significant investment in the Company and (iv) evaluating annually an array of performance criteria rather than focusing on a singular metric that may encourage unnecessary risk-taking. This combination of factors encourages our executives to manage the Company prudently.

 

Elements of Our Compensation Program

Annual Base Salary

Base salaries are established based on the scope of responsibilities, taking into account the compensation paid by other companies as well as salaries of peers within the Company. Consistent with our pay-for-performance philosophy, annual base salary is a relatively low percentage of total compensation. There were no increases in our Same Store Named Executive Officers’ base salary levels for 2019 and there have not been any increases in our Same Store NEO’s base salary levels since 2008.

For each of 2020 and 2019, Mr. Roth elected to receive 80% of his annual base salary in restricted units (scheduled to vest pro rata over the applicable year).

Annual Incentive Awards

Our Compensation Committee has established a short-term incentive program for the senior executive team that formulaically ties a maximum award pool to achieving an FFO, as adjusted, performance threshold. The Company believes FFO, as adjusted, is one of the key operating metrics within the REIT industry and a primary driver of long-term TSR performance. We use FFO, as adjusted, as the primary metric for our annual incentive awards rather than total FFO. FFO, as adjusted, excludes the impact of certain non-recurring items, such as gains on the sale of non-depreciable property, non-cash impairment losses, income or loss from discontinued operations and sold properties, gains and losses from the early extinguishment of debt and restructuring costs, among others, and thus the Compensation Committee believes it provides a better metric than total FFO for assessing management’s performance. Under our annual compensation program participants have the ability to earn annual cash incentive payments and/or equity awards if and only if FFO, as adjusted, is at least 80% or more of the prior year’s FFO, as adjusted Moreover, even if the Company does achieve the stipulated FFO, as adjusted, performance requirement, the Compensation Committee retains the right, consistent with best practices, to elect to reduce or make no payments under the program.

For 2019, we revised our annual incentive awards formula so that the aggregate pool of the bonuses is capped at 1.75% of FFO, as adjusted (from 1.25% of FFO, as adjusted, in prior years). Our Compensation Committee considered, and adopted, this change, because in 2019, due to the Promotions and New Hire, the number of senior executives eligible to participate in awards from the annual bonus increased from four persons (Messrs. Roth, Greenbaum, Franco and Macnow) to seven persons (Messrs. Roth, Greenbaum, Franco, Macnow, Chera, Weiss and Langer). We refer to these seven persons as our “Senior Executives.” The bonuses paid to Messrs. Roth, Greenbaum, Franco and Macnow did not increase from 2018 to 2019, but due to the addition of new participants, the Compensation Committee made a reasonable increase to the bonus pool under the annual incentive program, subject to threshold performance. For 2019, the change resulted in an increase in the aggregate size of the pool of  $3.3 million. Upon any decrease in the number of senior executives eligible to participate in the bonus pool, our Compensation Committee will consider an appropriate reduction in the size of the pool.

Accordingly, current aggregate incentive awards under the annual short-term incentive program are subject to a cap of 1.75% of FFO, as adjusted, with individual award allocations determined by the Compensation Committee from an assessment of individual and Company performance. Performance criteria used when determining awards include, among others, the following:

•

TSR, both on an absolute basis and relative to the performance of the peer group and the REIT industry;

​

•

Leasing performance and occupancy levels;

​

•

Capital markets performance and maintenance of a strong balance sheet;

​

•

Same store NOI at share;

​

•

FFO and FFO, as adjusted;

​

•

Implementation and achievement of goals, including expense control and adherence to budget; and

​

•

Achievement of business unit and/or departmental objectives.

​

Any awards under the annual incentive program are payable in cash and/or equity awards, generally in the first quarter of each year for the prior year’s performance.

 

For annual incentive awards paid in 2019 (for 2018 performance), each of our Same Store NEOs elected to receive all or some of that award in restricted units (which vest upon grant, but which may not be redeemed for Shares for two years).

Long-Term Equity Incentives

Compensation is typically awarded in long-term equity issued under our Omnibus Plan through performance-based awards, such as those under our OPP Units or Performance Conditioned AO LTIP Units, and grants of time-based restricted units. Equity awards link compensation directly to the performance of our Share price. We believe this encourages our NEOs to make business decisions with an ownership mentality. Our NEOs were awarded OPP Units and time-based restricted units on a 50/50% basis for 2019 performance. Other employees received awards of securities such as AO LTIP Units or stock options and time-based restricted units or restricted shares, for 2019 performance. There were no Performance Conditioned AO LTIP Units awards for 2019 performance. Our long-term equity programs were developed with input of FTI Consulting, Inc. (a compensation consultant retained by the Company) and Willis Towers Watson.

Description of Awards:

OPP Awards.   We awarded OPP Units in 2020 for 2019 performance and in 2018 for 2017 performance. In 2020, these awards were made to only to our Senior Executives. These performance-based awards are earned over a three-year period, which is then followed by back-end vesting requirements (during years three, four and five) The awards provide for immediate cancellation if the executive voluntarily leaves or is terminated for cause (and, in either case, such person is no longer providing services to the Company, excluding certain outstanding awards held by retirement eligible executives the age of 65 (or above age 60 with at least 20 years of service). Furthermore, we require our Senior Executives to hold earned and vested awards for one additional year after they have vested.

Our OPP is designed to provide compensation in a “pay-for-performance” structure. Awards under the OPP are a class of units (collectively referred to as “OPP Units”) of the Company’s Operating Partnership, Vornado Realty L.P. If the specific performance objectives of the OPP are achieved, earned OPP Units become convertible into Class A common units of the Operating Partnership (and ultimately into Shares) following vesting, and their value fluctuates with changes in the value of our Shares. If the performance objectives are not met, the OPP Units are cancelled. Generally, unvested OPP Units are forfeited if the executive leaves the Company. OPP Units are intended to also provide recipients with better income tax attributes than grants of Shares. Under our OPP, participants have the opportunity to earn compensation payable in equity if we outperform a predetermined TSR and/or outperform the market on relative TSR over a three-year performance period measured at the end of the third year. Awards under our OPP may be earned if the Company (i) achieves a TSR above that of an industry index or indices over a three-year period (the “Relative Component”), and/or (ii) achieves a TSR level greater than 21% (over the three-year performance period) (the “Absolute Component”). For the 2020 OPP Plan (awarded for 2019 performance), we used a combination of the SNL US Office REIT Index (80%) and the SNL US Retail REIT Index (20%) for the Relative Component. To the extent awards would be earned under the Absolute Component, but the Company underperforms the Index by more than a specified margin, awards earned under the Absolute Component would be reduced based on the degree to which the Company underperforms the Index with the maximum payout being 50% under the Absolute Component. If the Company outperforms the Index, but awards would not otherwise be earned under the Absolute Component, awards may still be earned under the Relative Component. Moreover, to the extent awards would otherwise be earned under the Relative Component but the Company fails to achieve at least a 3% per annum absolute TSR level, awards earned under the Relative Component would be reduced. If the TSR is less than 0% the maximum payout is 50% of the total award regardless of relative performance. If the performance objectives are achieved, OPP Units are also subject to time-based vesting. This creates a five-year retention period (plus the additional one-year holding period for Executives) for participants. Holders will continue to bear the same Share price and total return risk as our shareholders and have the same “book-up” requirements as apply to Restricted Units and which are described below. Dividend payments on OPP Units issued accrue during the performance period and are paid to participants if awards are ultimately earned.

Performance Conditioned AO LTIP Units:   “Performance Conditioned AO LTIP Units” are AO LTIP Units that require the achievement of performance conditions by a specified date or they are forfeited. Performance Conditioned AO LTIP Units were only awarded in 2019 (for 2018 performance) and have been awarded only to our Senior Executives. The performance condition for Performance Conditioned AO LTIP Units granted in 2019 is

 

that, prior to the fourth anniversary of grant, the Company’s Shares must trade (for 20 consecutive trading days) at a price at least 110% of the price per Share on the date of grant. If the performance conditions are not met, the awards are forfeited. If the performance conditions are met, once vested, the awards may be converted into Class A common units of Vornado Realty L.P. in the same manner as other AO LTIP units until 10 years from grant.

AO LTIPs.   “AO LTIP Units” are limited partnership units in Vornado Realty L.P. that are intended to produce a substantially similar non-tax economic effect as that of options. AO LTIP Units are issued under the Appreciation-Only Long-Term Incentive Plan. In 2020, Awards of AO LTIP Units were awarded to executives other than our Senior Executives. AO LTIP Units are potentially convertible into Class A Units of Vornado Realty L.P. and then are ultimately redeemable for Company Shares or cash at the option of the Company. AO LTIP Units are issued under our Omnibus Plan and may be convertible for up to a period of 10 years from grant. Awards of AO LTIP Units vest ratably over four years from grant. On the date of grant, each AO LTIP Unit has a strike price. That strike price is equal to or greater than the price of a Share on the date of grant. Each AO LTIP Unit, on exercise, is converted Class A Units that have a value equal to the excess of the closing price per Share on the date of conversion over the strike price. After a required two-year holding period, those Class A Units, in turn, may be redeemable by the holder for Shares or cash, at the option of the Company. Recipients of AO LTIPs do not receive any distributions on their outstanding AO LTIP awards.

Restricted Shares and Units.   “Restricted shares” are grants of Shares issued under our Omnibus Plan that generally vest in three or four equal annual installments beginning approximately one year after grant. “Restricted units” are grants of limited partnership interests in Vornado Realty L.P. under our Omnibus Plan. These units generally vest in three or four equal annual installments beginning approximately one year after grant and are exchangeable on a one-for-one basis into Vornado Realty L.P.’s Class A common units in certain circumstances. These circumstances principally include the requirement that Vornado Realty L.P. must have gone through certain tax “book-up” events whereby sufficient profits have been allocated to the restricted units so that they have the same capital account (and value) as Class A common units. In addition, there is a two-year holding requirement. Vornado Realty L.P.’s Class A common units can be redeemed for Shares on a one-for-one basis (or in cash at the Company’s option) with only limited restrictions, such as a 60-day waiting period between when a redemption notice is given and when Shares may be delivered. Restricted units are intended to also provide recipients with better income tax attributes than restricted shares and unlike option grants, restricted units do not have a term at which they expire. During the restricted period, each restricted share or restricted unit entitles the recipient to receive payments equal to the dividends on one Share. Further, our Compensation Committee believes restricted equity awards are a key component of a balanced program, because a portion of each executive’s equity compensation retains value even in a depressed market and provides a baseline of value that lessens the likelihood that executives will take unreasonable risks to keep their performance equity award vehicles “in the money.”

Stock Options.   Since 2012, we have awarded stock options only to employees who do not receive AO LTIP Units, OPP Awards or Performance Conditioned AO LTIP Units. Stock option awards provide the opportunity to purchase Shares at an exercise price determined at grant. Historically, our stock option awards have either been of at-the-money stock options, where the option exercise price is equal to the market price of Shares on grant, or of premium stock options, where the option exercise price is at a level above the market price at grant. In both instances, the market price must increase above the option exercise price for the executives to achieve any value from their awards. Generally, stock options vest and become exercisable in equal annual installments over a four-year period beginning one year after the grant, and remain exercisable for ten years from grant. Our Omnibus Plan (i) prohibits the granting of in-the-money stock options and (ii) prohibits, without shareholder approval, the repricing of outstanding stock options that have fallen out of the money. Recipients of stock options do not receive any dividends on their outstanding option awards.

Nonqualified Deferred Compensation Plans

We maintain two nonqualified deferred compensation plans, the Vornado Realty Trust Nonqualified Deferred Compensation Plan (“Plan I”) and the Vornado Realty Trust Nonqualified Deferred Compensation Plan II (“Plan II”). Plan I and Plan II are substantially similar, except that Plan II, which applies to deferrals on and after January 1, 2005, is designed to comply with the restrictions of Section 409A of the Internal Revenue Code.

Employees having annual compensation of least $200,000 can participate in Plan II, provided they are “accredited investors” under securities laws. Members of our Board of Trustees are also eligible to participate. To participate,

 

an individual must make an irrevocable election to defer at least $20,000 compensation (whether cash or equity) per year. Participant deferrals are fully vested. The Company may make discretionary credits on behalf of participants, but has not done so. Deferrals are credited with the rate of return of specific investments or various “benchmark funds”, some of which are based on the performance of the Company’s securities.

Participants may have their deferrals in a “Retirement Account” or a “Fixed Date Account.” Retirement Accounts are generally payable following retirement or termination of employment. Fixed Date Accounts are generally payable at a time, which is at least two full calendar years after the year for which deferrals are made. Participants may elect to receive distributions as a lump sum or in the form of annual installments over no more than 10 years. In the event of a change of control of the Company, all accounts become immediately payable in a lump sum. Plan I also permits a participant to withdraw all or a portion of their account at any time, subject to a 10% withdrawal penalty.

Retirement and 401(k) Plans

We offer a 401(k) Retirement Plan to all of our employees in which we provide matching contributions (up to 75% of the statutory maximum but not more than 7.5% of cash compensation) that fully vest after five years of employment. We do not sponsor any other retirement plan. Retirement plans are not a factor in our current compensation determinations.

Perquisites and Other Compensation

We provide select perquisites we believe are reasonable and in line with the competitive market. These perquisites include supplemental life insurance and an allowance for financial counseling and tax preparation services for certain Executives. Additionally, due to the extensive business-related travel requirements, we provide some of our Executives with a car and/or driver. Providing a car and driver allows these executive officers to use their travel time efficiently and productively for business purposes The amounts disclosed in this proxy statement for car and driver costs include the entire value of the benefit, both business purpose and personal use.

Equity Ownership Guidelines

To further foster the strong ownership culture among our senior executive team and ensure the continued direct alignment of management and shareholder interests, and consistent with emerging corporate governance trends, we have adopted equity ownership guidelines requiring a minimum ownership level. The equity ownership requirements (Shares and certain securities convertible or redeemable for Shares) for our executives are as follows:

Executive officers have five years from the date of becoming an executive officer to satisfy the ownership requirement. All of our Named Executive Officers satisfy these guidelines.

We have also adopted equity ownership guidelines for members of our Board of Trustees. Under the guidelines, all non-employee Trustees are required to maintain a minimum ownership having a value at least five times their annual cash retainers. Non-employee Trustees have five years from the time of initial election to satisfy the guidelines. All non-employee Trustees currently satisfy these guidelines or are expected to satisfy these guidelines.

Comparison of 2017-2019 Direct/Realizable Compensation

Each year the “Summary Compensation Table” must disclose the salary paid during that year, the annual incentive earned for that year and the equity-based, long-term incentive granted during that year, which for us is the long-term incentive award for the prior year. Because the equity we award in the first quarter of each year (similar to the cash bonus paid in the first quarter) was earned on performance in the prior year, the SEC’s approach prevents us from showing together all the pay—salary, annual cash incentive and the Fair Value of equity-based pay—earned for any one year. In order to provide our shareholders with the aggregate amount of compensation potentially earnable for a given calendar year, we are including below a supplemental Direct/Realizable Compensation Table. The Direct/Realizable Compensation Table consists of  (i) the actual salary paid for the year, (ii) the annual incentives awarded for the year and (iii) the Fair Value of equity awarded for service and performance

 

for the year, irrespective of when ultimately granted. We also believe it demonstrates further the ongoing correlation between the executive’s pay and overall Company performance. “Fair Value” is determined in accordance with securities and accounting rules (excluding the impact of estimated forfeitures related to service-based vesting conditions).

The principal difference between the Direct/Realizable Compensation Table and the Summary Compensation Table is that the Direct/Realizable Compensation Table achieves an “apples to apples” presentation of equity awards in the performance year to which such grants relate, rather than in the year in which such grants were made. Other companies may calculate Total Direct/Realizable Compensation differently than we do. The table presented below should is not a substitute for, and should be read in conjunction with, the Summary Compensation Table.

Direct/RealizableCompensation Table

The Direct/Realizable Compensation earned by our Named Executive Officers for the 2017-2019 period was as follows: