Kenneth M. Panzer
About Kenneth M. Panzer
Kenneth M. Panzer (age 64 as of April 1, 2025) is Chief Operating Officer and a Director of Douglas Emmett, Inc. (DEI), roles he has held since 2006. He joined DEI’s predecessor in 1984, co-founded DEI’s immediate predecessor in 1991, and holds a bachelor’s degree from Penn State University (1982) . DEI evaluates executive performance against five equally weighted goal categories (FFO, TSR, ESG, Operating, and External Activities) and in 2024 rated overall CEO/COO performance “Outperform,” with FFO per share of $1.71 vs. a $1.67 target and 1-year TSR of 34.4% (79th percentile vs. the Benchmark Group as of 12/31/24) . Pay-versus-performance disclosures show DEI 1/3/5-year TSR indices of $53/$40/$40 for 2024/2023/2022 and FFO of $345.5M, $377.3M, and $419.7M for 2024/2023/2022, respectively .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| DEI predecessor operating companies | Various roles; ultimately COO of predecessor | Joined 1984; COO 1991–2006 | Co-founded DEI’s immediate predecessor in 1991; deep operating knowledge of DEI’s markets . |
| Douglas Emmett, Inc. | Chief Operating Officer; Director | 2006–present | Long-tenured operator across Los Angeles/Honolulu Class A office and multifamily footprint; nominated due to extensive operating and market knowledge . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| The Panzer Family Foundation | Sole director (disclaims beneficial ownership of 695,826 DEI shares held by the foundation) | Not disclosed | Charitable foundation oversight; sole voting and dispositive power over foundation-held DEI shares . |
Fixed Compensation
- Base salary: Contractual minimum $1,000,000; reduced at executive request to $800,000 since May 1, 2020 and continued at that level in 2022–2024 .
- Perquisites: 401(k) match; personal use of company car; in 2024, incremental personal use of an executive assistant; each perquisite < $25,000 in 2022–2024 .
| Year | Base Salary ($) | Bonus ($) | All Other Compensation ($) | Source |
|---|---|---|---|---|
| 2022 | 800,000 | — | 12,215 | 2025 Proxy |
| 2023 | 800,000 | — | 14,517 | 2025 Proxy |
| 2024 | 800,000 | — | 24,575 | 2025 Proxy |
Performance Compensation
- Structure: For CEO/COO, ~91% of 2024 total compensation in “at-risk” restricted LTIP Units, with future stock-price performance hurdle; equity awards vest over 3 years and are restricted from transfer for 4–7 years after grant; no option repricing .
- 2024 outcome: Committee rated CEO/COO “Outperform,” increasing 2024 awards ~10% vs. 2023; equity awards approved Dec 4, 2024 and granted Dec 12, 2024 (598,681 LTIP Units; $8,261,798 grant-date fair value for Panzer) .
2024 Goals, Targets, Outcomes, and Ratings
| Metric | Weight | Target | Actual/Outcome | Rating | Source |
|---|---|---|---|---|---|
| FFO per share | 20% | $1.67 | $1.71 | Outperform | |
| Total Shareholder Return (absolute/relative) | 20% | Top-quartile vs. Benchmark Group considered outperformance | 1-yr TSR 34.42%, 79th percentile; 3-yr (35.70)%, 39th percentile; 5-yr (46.88)%, 26th percentile | Perform | |
| ESG | 20% | Long-term GHG reduction; ≥80% ENERGY STAR certification (eligible office) | GHG down 13% vs. 2019; 84% ENERGY STAR-certified eligible office space | Outperform | |
| Operating Goals | 20% | IT upgrades; G&A % of revenue in lower half; portfolio leasing; progress on key projects | IT enhancements; G&A 4.6% vs. 8.8% peer avg; substantial project progress (Studio Plaza, Barrington Plaza, Bishop Place) | Outperform | |
| External Business Activities | 20% | Opportunistic financing/transactions | $325M secured JV loan; new Westwood JV and $61.8M loan | Outperform |
2024 LTIP Awards (Grant mechanics)
| Name | Approval Date | Grant Date | LTIP Units | Grant Date Fair Value ($) |
|---|---|---|---|---|
| Kenneth M. Panzer | Dec 4, 2024 | Dec 12, 2024 | 598,681 | 8,261,798 |
Notes: All equity subject to future stock-price hurdle (transfer restricted unless future stock price exceeds 102% of grant-date price within 10 years) and post-vest transfer lockout for 4–7 years; 2024 grant price $19.71 .
Equity Vesting and Realized Value (Supply/pressure indicators)
| Item | 2024 |
|---|---|
| LTIP Units vested | 595,304 units |
| Value realized on vesting | $11,048,842 (based on $18.56 on 12/31/2024) |
| Post-vest restrictions | Still subject to stock-price performance hurdle and 4-year lockout before redemption eligibility |
Equity Ownership & Alignment
Beneficial ownership and OP Units
| As of Record Date | Common Shares Beneficially Owned | % of Class | OP Units (share equivalents) |
|---|---|---|---|
| Apr 1, 2024 | 9,214,484 | 5.3% | 7,645,068 |
| Apr 1, 2025 | 9,551,336 | 5.4% | 7,981,920 |
Unvested LTIP Units and scheduled vesting (as of 12/31/2024)
| Year-end Unvested LTIPs | Market Value | 12/31/2025 | 12/31/2026 | 12/31/2027 | Total |
|---|---|---|---|---|---|
| 392,024 | $7,275,965 (at $18.56) | 201,100 | 131,056 | 59,868 | 392,024 |
Alignment policies and practices
- Stock ownership guidelines: 3x salary for executive officers; all executives/directors in compliance as of the record date .
- Hedging prohibited; pledging discouraged and only allowed if Audit Committee determines the loan can be repaid without resorting to pledged securities .
- Transfer restrictions: executives restricted from transferring equity awards for 4–7 years after grant (based on vesting date) and subject to stock-price hurdle; directors restricted for at least 2 years .
Employment Terms
Key provisions (Employment Agreement effective Jan 1, 2024; term through Dec 31, 2028)
| Topic | Term/Detail | Source |
|---|---|---|
| Term | Jan 1, 2024–Dec 31, 2028; 30-day notice for termination by Company without cause or by executive for good reason | |
| Base salary | Not less than $1,000,000; reduced at executive request to $800,000 since May 1, 2020 | |
| Annual bonus | Based on individual and company performance and benchmark group; may be paid in cash or equity at Committee discretion | |
| Perquisites/benefits | Automobile; medical/dental (no co-pay); use of assistant for personal matters consistent with past practice; 25 PTO days/year | |
| Severance (without cause/for good reason) | Lump sum equal to 3x average Annual Compensation (salary + bonus, equity valued at face value) over last 3 full calendar years; 3 years continued medical/dental for executive and eligible dependents (COBRA satisfied) | |
| Change of control | No single-trigger; after CoC, total salary+bonus may not be less than prior-year total; severance terms as above if terminated without cause/for good reason; equity acceleration only if class is no longer publicly traded after CoC | |
| Death/disability | 12 months continued medical/dental benefits; equity scheduled to vest in the calendar year of death vests | |
| Non-compete | During agreement term: no competing business in counties where DEI operates or contemplates operating (LA County and Hawaii focus); allows passive ownership ≤5% of publicly traded securities | |
| Clawback | Subject to DEI’s clawback policy adopted Dec 1, 2023 (SEC/NYSE compliant) | |
| 280G | Executive may elect reduction to avoid excise tax; ordering rules specified | |
| Dispute resolution | Arbitration; prevailing party entitled to reasonable attorneys’ fees |
Board Governance and Director Service
- Board service: Panzer has served as a Director since 2006; he is also COO (non-independent). Independent directors constitute all standing committees (Audit, Compensation, Nominating & Corporate Governance) .
- Committee composition and independence: Panzer is not listed on board committees; 2025 Compensation Committee members: Leslie E. Bider (Chair), William E. Simon Jr., Shirley Wang; no interlocks or insider participation . Audit Committee members are independent; two are “audit committee financial experts” (O’Hern and Bider) in 2025 .
- Board structure and independence: Board separates Chair and CEO; Lead Independent Director is the Nominating & Corporate Governance Committee chair and presides over independent director meetings .
- Meetings and attendance: Board met 4 times in 2023 (four written consents); directors attended all Board meetings with one absence; committees met per charters .
- Director pay: Employee directors (Kaplan, Panzer) receive no additional compensation for director service .
Performance & Track Record
Pay-versus-Performance summary (company-level metrics)
| Year | Our TSR (Value of $100) | Peer TSR (Value of $100) | Net Income (Loss) ($000s) | FFO ($000s) |
|---|---|---|---|---|
| 2020 | 69 | 88 | 38,553 | 372,541 |
| 2021 | 82 | 101 | 56,131 | 383,456 |
| 2022 | 40 | 63 | 96,540 | 419,683 |
| 2023 | 40 | 67 | (75,840) | 377,291 |
| 2024 | 53 | 73 | 7,588 | 345,528 |
2024 peer benchmarking and compensation framework: DEI targets CEO/COO average pay above median when performance is “Outperform,” near median for “Perform,” and bottom third for “Underperform” relative to a consistent peer group of office/multifamily REITs .
Compensation Committee and Shareholder Feedback
- Independent consultant: FTI Consulting retained; confirmed independence; DEI fees <1% of FTI revenues .
- Interlocks: None; no members are officers/employees .
- Say-on-pay and engagement: 2023 say-on-pay outcome prompted extensive outreach (offered to 87% of shares; substantive discussions with holders of 76%); enhanced disclosure and more rigorous ESG targets followed .
- 2025 say-on-pay proposal and rationale: Board recommends “FOR”; emphasizes performance-linked, equity-heavy pay and long holding/transfer restrictions .
Director Compensation (for context; Panzer is an employee director)
- Non-employee director program: Annual LTIP Unit grants with $220,000 face value (vest quarterly during service year); chair retainers in LTIPs; transfer restrictions limit exchange until Dec 31 two years after full vest .
- Employee directors receive no additional compensation for director service .
Related Party Transactions
- DEI employs Panzer’s daughter; 2023 total compensation < $250,000; consistent with peers of equivalent qualifications; not an officer under Section 16 .
Equity Plan Mechanics and Overhang
- As of 12/31/2023: 4.734 million share equivalents to be issued upon exercise/settlement (consisting of 2.7M vested and 2.0M unvested LTIP Units); no stock options outstanding; 16.542 million shares available for future issuance (full value awards count as two shares) .
Compensation Structure Analysis (signals)
- Strong pay-at-risk mix: For CEO/COO, ~91% of 2024 total was performance-based LTIPs; DEI has no cash bonuses for CEO/COO in 2022–2024, aligning payouts with multi-year stock performance .
- Long deferral and performance hurdles: Equity vests over 3 years, then remains locked 4–7 years and is forfeit if stock-price hurdle (>102% of grant price) isn’t met within 10 years—curbing short-term monetization .
- No tax gross-ups; no single-trigger CoC; option repricing prohibited; hedging prohibited; pledging restricted—shareholder-friendly features .
Equity Ownership Guidelines and Compliance
- Executives must hold equity equal to 3x salary; all executives and directors were in compliance at the record date; aggregate 18.3% of outstanding share equivalents held by insiders as of 2025 record date .
Employment & Retention Risk
- Retention hooks: Multi-year vesting and long transfer lock-ups; substantial unvested/locked equity (392,024 unvested LTIPs as of 12/31/24; 595,304 LTIPs vested in 2024 but still locked) .
- Severance economics: If terminated without cause or for good reason, Panzer receives 3x average Annual Compensation (salary + bonus, with equity valued at face value) plus 3 years medical/dental—material protection designed to retain leadership through cycle volatility .
Investment Implications
- Alignment and low near-term selling pressure: Panzer’s compensation is overwhelmingly equity-based with multi-year vesting, 4–7 year transfer restrictions, and a 102% stock-price hurdle, meaning realized/transferable supply is limited near term even when units vest—supportive of alignment and dampening insider selling pressure .
- Performance linkage credible: 2024 “Outperform” rating reflects FFO beat ($1.71 vs. $1.67 target) and specific operating/ESG execution, leading to a measured 10% award increase; continued reliance on FFO, TSR, and qualitative operating goals suggests pay outcomes will track execution rather than one-off financial engineering .
- Governance risk mitigants: No single-trigger CoC, no tax gross-ups, no option repricing, hedging prohibited, pledging constrained, and robust ownership guidelines—all positive for shareholder alignment; dual role (COO + Director) is balanced by an independent chair, lead independent director, and committees comprised solely of independent directors .
- Change-of-control and severance optics: Severance uses a broad “Annual Compensation” definition that includes equity at face value, which can be sizable in equity-heavy years—investors should pro forma potential payouts in downside or CoC scenarios .