Stephen E. Budorick
About Stephen E. Budorick
Stephen E. Budorick is President and Chief Executive Officer of COPT Defense Properties (CDP) and a member of the Board of Trustees. He has served as CEO since May 2016 and previously was EVP & COO (2011–2016). He holds a BS in Industrial Engineering from the University of Illinois and an MBA from the University of Chicago. Age 64. As CEO, he anchors CDP’s Defense/IT portfolio strategy and compensation is explicitly linked to multi-year TSR and operating scorecards. CDP’s 2024 results included FFO/share of $2.57, +6.2% YoY, and TSR of 26.1% for 2024, with 3- and 5-year TSR well above the Nareit Office sector median, supporting maximum performance equity payouts over multiple cycles .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| COPT Defense Properties | President & CEO | 2016–Present | Drove Defense/IT focus; multi-year TSR outperformance vs office peers; improved occupancy and leasing metrics . |
| COPT Defense Properties | EVP & COO | 2011–2016 | Led operations; foundation for development-led growth in Defense/IT . |
| Callahan Capital Partners | EVP, Asset Management | 2006–2011 | Portfolio/asset management experience . |
| Trizec Properties | EVP, Central Region | 1997–2006 | Regional leadership in office REIT operations . |
| Miglin Beitler Management | EVP | 1991–1997 | Property/asset operations . |
| LaSalle Partners (now JLL) | VP, Asset Management | 1988–1991 | Institutional asset management . |
| American Hospital Association | Facilities Mgmt & Planning | 1983–1988 | Early career facilities planning . |
External Roles
- None disclosed for Budorick in the latest proxy (skip if not disclosed).
Fixed Compensation
Multi-year summary of CEO compensation elements:
| Metric (USD) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary | $774,038 | $775,000 | $784,615 |
| Target Annual Incentive (% of salary) | 130% | 130% | 140% |
| Actual Annual Incentive (AIA) | $1,177,768 | $1,428,635 | $1,648,500 |
| LTIP Grant Value (Time + Performance) | $3,583,054 | $3,951,507 | $5,129,176 |
Notes:
- 2024 base salary increased ~1.3% to $785,000 effective 2024 year-end; AIA target lifted to 140% (from 130%) .
- Employee trustees receive no additional pay for Board service .
Performance Compensation
2024 plan structure and outcomes:
- Annual Incentive (AIA): 100% formulaic, based on corporate scorecard; payout capped at 150% despite calculated 152.3% .
- LTIP mix: 60% performance-based PB-PIUs (3-year TSR vs Nareit Office sector and stand-alone TSR guardrails), 40% time-based TB-PIUs vesting ratably over 3 years .
2024 AIA scorecard targets and results:
| Objective | Weight | Target | Actual | Achievement | Contribution |
|---|---|---|---|---|---|
| FFO/share (as adjusted) | 30% | $2.51 | $2.57 | 175.0% | 52.5% |
| Same Property cash NOI change | 10% | 6.0% | 9.1% | 200.0% | 20.0% |
| Net debt to in-place adj. EBITDA | 10% | 6.35x | 5.82x | 200.0% | 20.0% |
| Investment properties leased (000 sq ft) | 20% | 350 | 285 | 67.6% | 13.5% |
| Vacant space leasing (000 sq ft) | 20% | 400 | 451 | 163.7% | 32.7% |
| Year-end occupancy | 10% | 93.5% | 94.2% | 135.0% | 13.5% |
| Calculated total | 100% | — | — | 152.3% | — (capped at 150%) |
CEO 2024 AIA payout: $1,648,500 (210% of salary) at 150% capped achievement; AIA target set at 140% of salary .
2024 LTIP awards (CEO):
- PB-PIUs: Target value $2,449,210; 193,920 PB-PIUs granted at maximum potential (200% of target), Monte Carlo fair value $18.03 per PB-PIU ($36.06 per target award) .
- TB-PIUs: $1,632,798 value; 66,482 TB-PIUs; vest 1/3 annually (2025–2027) .
- Recent performance cycle: 2022–2024 PB-PIUs paid at 200% based on 100th percentile relative TSR; settled Feb 1, 2025 .
Equity Ownership & Alignment
- Beneficial ownership: Budorick beneficially owns 913,512 common shares (includes 759,630 OP common units exchangeable for common shares); less than 1% of outstanding shares .
- Ownership guidelines: CEO must hold equity equal to 6x base salary; executives and trustees must meet guidelines within 5 years and cannot sell company-granted equity until met .
- Anti-hedging/anti-pledging: Executives and trustees prohibited from hedging or pledging company securities; pre-clearance and blackout windows apply .
- Outstanding awards at 12/31/2024 (CEO):
- Time-based units unvested: 16,141 (3/1/2022), 36,159 (3/1/2023), 66,482 (3/1/2024) TB-PIUs; market value $2,057,618 for 2024 grant (valued at $30.95) .
- Performance-based (estimated at period end): 173,049 (2023 award, est. 200%), 167,357 (2024 award, est. 167%); market values $5,355,867 and $5,179,699, respectively (valued at $30.95), with settlement mechanics adding vested PIUs for excess distributions .
- Vested in 2024: 203,701 units vested (incl. 154,097 PB-PIUs) with realized value $5,971,207, indicating potential post-vesting liquidity considerations around settlement dates .
Employment Terms
- No individual employment agreements for NEOs; covered by a Change in Control & Severance (CIC) Plan .
- Severance economics (CEO):
- Without cause/constructive discharge: 2.0x (salary + 3-year average bonus) plus pro-rated AIA, up to 18 months vesting for time-based awards; performance awards per award terms; benefits continuation .
- CIC (6 months before to 12 months after): 2.99x multiple; lump-sum; performance awards pro-rated to elapsed period; no excise tax gross-ups .
- Restrictive covenants: 12-month non-compete with peers, non-solicit and confidentiality required to receive benefits .
- Clawback: NYSE/Rule 10D-1 compliant incentive compensation recovery policy adopted Nov 2023 .
Illustrative CEO termination table (as of 12/31/2024):
| Scenario | Cash Severance | Benefits | Time-based vesting value | Performance-based vesting value | Total |
|---|---|---|---|---|---|
| Premature/Constructive Termination | $5,381,602 | $25,395 | $3,676,303 | $5,287,766 | $14,371,066 |
| Constructive Termination in CIC | $7,501,490 | $25,395 | $3,676,303 | $5,287,766 | $16,490,954 |
| CIC only | — | — | — | $5,287,766 | $5,287,766 |
| Death/Disability | — | — | — | $5,287,766 | $5,287,766 |
Company Performance Context (for pay-for-performance)
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues | $580.2m | $619.8m | $671.4m |
| EBITDA | $326.8m* | $339.6m* | $369.7m* |
| Net Income | $173.0m | $(73.5)m | $138.9m |
| FFO per Share (as adj.) | $2.36 | $2.42 | $2.57 |
- Values retrieved from S&P Global.
Business/operating highlights supporting incentives:
- 2024: Year-end occupancy 93.6% total (Defense/IT 95.6%); tenant retention 86%, strong vacancy leasing; two operating acquisitions to meet Defense/IT demand; 399k sf placed in service; 606k sf under development; no significant maturities until 2026 .
- TSR: 1-year 26.1%; 3-year 26.3%; 5-year 31.0% vs Office sector declines; supports maximum performance-equity outcomes across 2021–2023 and 2022–2024 cycles .
Board Governance and Budorick’s Board Service
- Board service: Trustee since 2016; no committee memberships (management trustee) .
- Independence: Board determined all trustees independent except CEO; independent Chairman (Robert L. Denton Sr.) since Jan 2024; committees entirely independent .
- Structure: Separate Chair/CEO; executive sessions of independent trustees; robust governance practices; no poison pill; shareholders can call special meetings and amend bylaws; say-on-pay approval 96.9% in 2024 .
- Director compensation: Employee trustees (incl. CEO) receive no Board fees .
- Attendance: Each incumbent trustee attended ≥75% of Board/committee meetings in 2024 .
Dual-role implications:
- CEO/Trustee combination mitigated by independent Chair, independent committees, and regular executive sessions; anti-hedging/pledging and ownership guidelines enhance alignment .
Compensation Structure Analysis
- Increased at-risk components: CEO LTIP target raised to 520% of salary in 2024 (from 450% in 2023); AIA target increased to 140% (from 130%)—heightening performance leverage .
- Strong formulaic alignment: AIA uses FFO/share, same-property NOI growth, leverage (net debt/EBITDA), leasing volumes, occupancy, with caps to limit windfalls; LTIP 60% PB-PIUs tied to relative TSR with negative TSR guardrails and absolute TSR floors .
- Governance protections: No options outstanding/repricing; no excise tax gross-ups; robust clawback; independent consultant (Ferguson Partners) .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval: 96.9% support at 2024 annual meeting (voted in 2025 proxy); historically strong support (97.7% in 2023) .
Equity Ownership & Pledging Policies (Detail)
- Beneficial ownership and OP unit holdings (see above); anti-hedging/anti-pledging policy covers executives and trustees; strict trading pre-clearance and blackout policy .
Risk Indicators & Red Flags
- No related-party transactions for trustees/NEOs in 2024; no hedging or pledging; no option repricing; strong clawback; sustained Say-on-Pay support—low governance risk signals .
- CIC severance multiple at 2.99x is market-typical for REIT CEOs; separate non-CIC multiple at 2.0x; performance awards prorated—limits windfalls .
Compensation Peer Group (2024 Review for 2025 Proxy)
- Peer set (12): AAT, BDN, CUZ, DEI, DEA, ESRT, HIW, HPP, JBGS, KRC, PDM, STAG; CDP near 50th percentile total cap, 73rd percentile implied equity cap at review time; benchmarking used to ensure competitiveness around median .
Investment Implications
- Pay-for-performance is credible: variable pay dominates (≈68% variable for CEO in 2024) with formulaic AIA and TSR-based LTIP; multi-year maximum payouts align with superior TSR and rising FFO/share .
- Retention risk looks contained: meaningful unvested TB-PIUs and ongoing PB-PIU cycles, plus ownership guidelines, create strong stickiness; anti-hedging/pledging and pre-clearance reduce governance risk .
- Potential supply from vesting: February settlements of PB-PIUs and annual TB-PIU vesting could create periodic insider selling windows; 2024 vesting value for CEO was material ($6.0m) .
- Alignment: No employment agreement, robust CIC framework (pro-rated performance equity), and absence of shareholder-unfriendly features (gross-ups, repricing) support high-quality governance; strong Say-on-Pay further reduces headline risk .