David M. Klein
About David M. Klein
Executive Vice President—General Counsel and Secretary of Sunstone Hotel Investors, Inc. (SHO), with current role evidenced in the 2025 proxy and signature block . His employment agreement was amended and restated on August 29, 2022 (at-will) . Compensation is heavily pay-for-performance: annual bonus tied 75% to company objectives and 25% to individual goals, and equity awards predominantly performance RSUs linked to Relative TSR vs FTSE Nareit Lodging/Resorts Index, with a penalty if company TSR is negative . Recent performance metrics: AFFO per share was $0.80 in 2024 vs $0.95 in 2023; cumulative Company TSR (value of $100 investment) measured $91.84 in 2024 and $80.68 in 2023 .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $425,000 | $435,000 | $435,000 |
| Target Bonus (% of Salary) | 100% | 100% | 100% |
| Maximum Bonus (% of Salary) | 150% | 150% | 150% |
| Actual Annual Bonus ($) | $572,422 | $460,375 | $275,953 |
| Cash Bonus Structure | 75% Company, 25% Individual | 75% Company, 25% Individual | 75% Company, 25% Individual |
Performance Compensation
Equity Grants (Grant-Date Fair Value)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards Grant-Date Fair Value ($) | $1,286,522 | $808,005 | $738,858 |
2024 Equity Award Detail
| Component | Grant Date | Grant Amount ($) | Shares Granted | Vesting | Performance Conditions |
|---|---|---|---|---|---|
| Performance RSUs | Feb 12, 2024 | $525,000 | 48,974 | End of 3-year period | RSR vs FTSE Nareit Lodging/Resorts (>=$500mm mkt cap); Threshold 30th pct=50% payout, Target 55th pct=100%, Max ≥80th pct=200%; −25% if Company TSR is negative |
| Time-Based RSAs | Feb 12, 2024 | $175,000 | 16,325 | Vest in equal annual installments Feb 15, 2025/2026/2027 | N/A |
2024 Annual Cash Incentive (Metric-Level Payouts)
| Metric | Weight (% of Total Cash Incentive at Target) | Target | Actual | David M. Klein Payout ($) | Vesting/Timing |
|---|---|---|---|---|---|
| AFFO per Share | 15.00% | $0.89 | $0.80 | $32,625 | Paid Feb 2025 |
| Capital Recycling | 26.25% | 3.0 (target on 1–5 scale) | 2.0 | $85,641 | Paid Feb 2025 |
| Investment/Rebranding | 18.75% | 3.0 | Below threshold (— shown) | $0 | Paid Feb 2025 |
| Asset Management | 15.00% | 3.0 | 2.0 | $48,938 | Paid Feb 2025 |
| Individual Objectives | 25.00% | 3.0 | 2.43–4.30 (committee assessment) | $108,750 | Paid Feb 2025 |
| Total Cash Incentive | — | — | — | $275,953 | Paid Feb 2025 |
Klein’s 2024 individual achievements included leading legal work for the $230M Hyatt Regency San Antonio Riverwalk acquisition, advancing litigation with favorable resolution of a wage-and-hour class action, and overseeing ESG program implementation .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (as of Mar 5, 2025) | 204,754 shares |
| Ownership as % of Shares Outstanding | <1.0% |
| Unvested Time-Based RSAs Included in Ownership | 33,162 shares |
| Unvested Performance RSUs (Target, excluded from ownership) | Up to 305,206 RSUs |
| Outstanding Unvested Awards Summary (12/31/2024) | RSAs: 16,325 (2024 grant) + prior grants; RSUs (target): 48,974 (2024) + 55,179 (2023) |
| Upcoming RSA Vesting Dates | Feb 15, 2025/2026/2027 per 2024 grant tranches |
| Stock Ownership Guideline (EVP) | 3x base salary |
| Compliance with Guideline (as of Jan 1, 2025) | Met/exceeded (all execs except CFO Reyes) |
| Hedging/Pledging | Prohibited for insiders |
| Insider Trading Controls | Blackout periods and trade preclearance required |
Employment Terms
| Term | Provision |
|---|---|
| Agreement Date & Nature | Amended & restated employment agreement Aug 29, 2022; at-will |
| Bonus Opportunity | Threshold 50%, Target 100%, Max 150% of base salary (no guarantees) |
| Severance (No CIC) | 2x (base salary + greater of target bonus or prior-year actual), pro-rata target bonus, any earned unpaid bonus; 18 months COBRA; time-based equity vests; performance RSUs vest pro-rata based on actual performance through termination date |
| Change-of-Control Treatment | Double-trigger; if terminated without cause/for good reason in connection with a CIC, time-based equity vests; performance RSUs vest based on actual performance, fully vested; company-wide policy maintains double-trigger accelerated vesting |
| Potential Payments (hypothetical if event on 12/31/2024) | Without cause/with good reason: Severance $2,225,750; Health $70,160; Equity $2,717,393; Total $5,013,303 . With CIC: Severance $2,225,750; Health $70,160; Equity $3,976,998; Total $6,272,908 . |
| Restrictive Covenants | Non-solicitation and non-disparagement; non-compete not specified |
| Clawback Policy | Adopted consistent with SEC/NYSE rules; awards subject to clawback |
| Tax Gross-Ups | None for CIC or severance payments |
Performance Compensation – Additional Details
| Item | Detail |
|---|---|
| RSR Program Design | 75% of annual equity in Performance RSUs; vesting tied to RSR vs FTSE Nareit Lodging/Resorts index; threshold 30th pct, target 55th pct, max ≥80th pct; −25% if Company TSR is negative |
| 2022 3-year Performance RSUs Outcome | Earned at 169.2% of target, vesting Jan 30, 2025 (between target and max) |
| Options | None outstanding or exercised by NEOs in 2024 |
Investment Implications
- Strong alignment signals: pay-for-performance structure, double-trigger CIC vesting, and no excise tax gross-ups reduce shareholder-unfriendly risk and align incentives with TSR and capital discipline .
- Ownership and compliance: Klein meets the 3x salary ownership guideline; pledging and hedging are prohibited, reducing misalignment and credit risk; insider trading controls constrain opportunistic selling .
- Vesting-driven supply: Upcoming RSA vesting tranches (2025–2027) and potential high payout on 2023/2024 PSU cohorts (tracking above target as of YE 2024) may create periodic selling pressure; monitor blackout windows and vest dates .
- Cash incentive sensitivity: 2024 bonus reduced by below-threshold results on AFFO and Investment/Rebranding (actual AFFO $0.80 vs $0.89 target), signaling disciplined committee calibration and direct linkage to operating KPIs .
- Severance economics: At-will with 2x cash severance and equity treatment implies moderate retention protection; CIC double-trigger mitigates windfall risk while ensuring transition continuity .
- Governance and shareholder support: 2024 Say-on-Pay approval of 96.9% indicates broad investor endorsement of the redesign; continued clawback policy and anti-repricing plan features reinforce governance quality .