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

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Soliciting Material under §240.14a-12

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iStar Inc.

(Name of Registrant as Specified In Its Charter)

 

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Notice of 2021 Annual Meeting of
Shareholders

Items of Business

Record Date

The Board has fixed the close of business on March 17, 2021 as the record date for the determination of shareholders entitled to receive notice of and to vote at the annual meeting or any postponement or adjournment of the meeting. Only holders of record of our common stock and 8.00% Series D preferred stock at the close of business on that date will be entitled to vote at the annual meeting.

 

 

Proxy Statement

Contents

​	Proxy Summary				​	​	1	​
​	Proposal 1—Election of Directors				​	​	8	​
​	​	​	​	Candidates for Election as Director	​	​	10	​
​	Corporate Governance				​	​	16	​
​	​	​	​	Board Leadership Structure	​	​	16	​
​	​	​	​	Board Refreshment	​	​	17	​
​	​	​	​	Director Independence	​	​	18	​
​	​	​	​	Nominations for the Board	​	​	18	​
​	​	​	​	Board’s Role in Risk Oversight	​	​	19	​
​	​	​	​	Board Evaluation Process	​	​	20	​
​	​	​	​	Board Meetings Held during 2020	​	​	20	​
​	​	​	​	Executive Sessions	​	​	20	​
​	​	​	​	Service on Other Boards	​	​	20	​
​	​	​	​	Director Resignation Policy	​	​	21	​
​	​	​	​	Defensive Measures Profile	​	​	21	​
​	​	​	​	“Whistleblower Policy”	​	​	21	​
​	​	​	​	Governing Documents	​	​	22	​
​	​	​	​	Disclosure Committee	​	​	22	​
​	​	​	​	Succession Planning	​	​	22	​
​	​	​	​	Communications with the Board	​	​	23	​
​	​	​	​	Environmental, Social and Governance (ESG) Program	​	​	24	​
​	​	​	​	Cybersecurity	​	​	25	​
​	Board Committees				​	​	26	​
​	​	​	​	Audit Committee	​	​	27	​
​	​	​	​	Compensation Committee	​	​	28	​
​	​	​	​	Nominating and Governance Committee	​	​	29	​
​	​	​	​	Investment Committee	​	​	29	​
​	Director Compensation				​	​	30	​
​	Indemnification				​	​	32	​

​	Proposal 2—Approval of Proposed Amendment and Restatement of iStar Inc. 2009 Long Term Incentive Plan				​	​	33	​
​	Proposal 3—Advisory Vote to Approve Executive Compensation				​	​	42	​
​	​	​	​	Compensation Discussion and Analysis Contents	​	​	43	​
​	​	​	​	Compensation Discussion and Analysis	​	​	44	​
​	​	​	​	Overview	​	​	44	​
​	​	​	​	2020 Compensation Program	​	​	46	​
​	​	​	​	Compensation Committee Report	​	​	58	​
​	​	​	​	Chief Executive Officer Pay Ratio	​	​	59	​
​	​	​	​	Executive Compensation Tables	​	​	60	​
​	Proposal 4—Ratification of the Appointment of Independent Registered Accounting Firm				​	​	66	​
​	​	​	​	Accounting Fees and Services	​	​	66	​
​	Report of the Audit Committee				​	​	68	​
​	Stock Ownership Information				​	​	70	​
​	​	​	​	Security Ownership of Certain Beneficial Owners and Management	​	​	70	​
​	​	​	​	Section 16(a) Beneficial Ownership Reporting Compliance	​	​	71	​
​	Certain Relationship and Related Party Transactions				​	​	72	​
​	Information about the Annual Meeting of Shareholders				​	​	74	​
​	Exhibit A—Non-GAAP Reconciliations				​	​	A-1	​
​	Exhibit B—Proposed Amendments to iStar Inc. 2009 Long-Term Incentive Plan				​	​	B-1	​

Proxy Summary

This summary highlights information contained elsewhere in this proxy statement, but does not contain all of the information that you should consider. Please read the entire proxy statement carefully before voting.

Voting Matters

Overview of Our Business

Who We Are

 

What We Do

iStar currently operates through four primary business lines:

Note: $ in millions unless otherwise specified. Figures based on Gross Book Value of the Company’s total investment portfolio and includes 100% of the assets of iStar’s consolidated joint ventures and the carrying value of iStar’s investment in non-consolidated joint ventures and affiliates.

(1)

Based on market value of SAFE as of December 31, 2020 of  $72.49 per share with 34.8 m shares.

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2020 Business Highlights and Performance

At the beginning of 2019 we announced our new three-pronged business strategy to (1) scale our ground lease business, through the Safehold Inc. platform, (2) simplify our portfolio, and (3) strengthen our balance sheet. We are pleased to have made excellent progress since then. Overall, our 2020 results have been strong, despite the devastating impact of the Covid-19 pandemic during 2020 throughout the United States and the world, including many parts of our business and the communities in which we work and live.

Specific highlights of our 2020 performance include:

These successes have helped fuel iStar’s strong recent performance, with total shareholder return (TSR) for 2020 of 6%, outperforming benchmarks such as MSCI US REIT Index/RMZ (-8%) and mortgage REITs generally (-24%) and compared to TSR of 20% for Russell 2000.

 

Current Board and Nominees

The following table provides summary information about each current director and director nominee. Detailed information about each nominee’s background, skill set, and areas of experience can be found beginning on page 9.

Our Nominees

Board Highlights

Highly Skilled Directors​

Shareholder Engagement

Why We Engage

Shareholder engagement is key to management and the Board’s ongoing review and analysis of iStar’s strategy, compensation program and corporate governance policies. These shareholder discussions provide valuable feedback and enable us to address shareholder feedback and interests in designing and implementing our programs and practices.

 

How We Engage

Investor outreach is a year-round process that involves both iStar’s Board and management team.

Scope of Recent Engagement

This year, we reached out to holders representing approximately 80% of our outstanding shares and held discussions with all shareholders who responded positively to the outreach and requested an opportunity to speak with us.

The priority topics for our shareholder outreach this year were to report on iStar’s business performance and the evolution of iStar’s business strategy, changes to our executive compensation program and disclosure implemented in 2020, recent ESG initiatives, and other matters of interest to our investors. Our Lead Director and the Chairman of our Compensation Committee participated in these outreach activities. Throughout the year, our senior management team communicates regularly with our shareholders through individual calls or meetings and presentations at investor conferences.

Corporate Governance Best Practices

iStar’s corporate governance policies and practices support our business and align with best practices.

What we do

 

Proposal 1—Election of Directors

The Board of Directors has nominated six current directors for election at the 2021 Annual Meeting to serve until the 2022 Annual Meeting and until their respective successors have been elected and qualified. All current directors were elected at the 2020 Annual Meeting, with the exception of David Eisenberg, who was appointed to fill a vacancy on our Board in August 2020 and is a nominee for election by the shareholders for the first time.

Each of the nominees has consented to serve as a director if elected. If, at the time of the Annual Meeting, any nominee is unable or declines to serve as a director, the discretionary authority provided in the enclosed proxy will be exercised to vote for a substitute candidate designated by the Board of Directors, unless the Board chooses to reduce its own size. The Board of Directors has no reason to believe that any of the nominees will be unable or will decline to serve if elected. Proxies cannot be voted for more than six persons.

We believe that our directors should satisfy several qualifications, including demonstrated integrity, a record of personal accomplishments, a commitment to participation in Board activities and other attributes discussed below in “Director Nominations and Qualifications.” We also endeavor to have a Board that represents a range of qualities, skills, diverse perspectives and depth of experience in areas that are relevant to and contribute to the Board’s oversight of the Company’s business activities. In addition to the qualities described above under the heading “Board Highlights,” we describe below the key experiences, qualifications, skills and attributes the director nominees bring to the Board that, for reasons discussed below, are important considering iStar’s business and structure. The Board considered these key experiences, qualifications, skills and attributes and the nominees’ other qualifications in determining to recommend that they be nominated for election.

Ms. Anita Sands, a current director, has advised us that she will not stand for re-election at the 2021 annual meeting. Among her other commitments, Ms. Sands will be assuming a teaching position at Princeton University. She will continue to serve as a director until her term expires at the 2021 annual meeting. In view of Ms. Sands’ decision, the board has taken action to reduce the size of the board to six directors when Ms. Sands’ term expires.

All of the nominees, other than Mr. Sugarman, are independent under the standards prescribed by the New York Stock Exchange.

Director Nominations and Qualifications

The Nominating and Governance Committee (the “Committee”) is charged with identifying potential Board members and recommending qualified individuals to the Board for its consideration. The Committee is authorized to employ third-party search firms to identify potential candidates. In evaluating candidates, the Committee considers, among other things:

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Education, background, skills, and experience that provide knowledge of business, financial, governmental, or legal matters relevant to our business or to our status as a public company

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The Board’s objective to have members who represent diversity in gender, race, ethnicity and perspective

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A high level of personal and professional ethics, integrity, and values

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A reputation for exercising good business judgment

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Commitment to representing the long-term interests of our shareholders

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The fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to our needs

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Sufficient available time to fulfill the responsibilities of a member of iStar’s Board

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The Committee also considers whether individuals satisfy the independence criteria set forth in the NYSE listing standards, as well as any special criteria applicable to service on various standing committees of the Board.

The Committee generally identifies nominees by first assessing whether the current members of the Board continue to provide the appropriate mix of knowledge, skills, judgment, experience, diversity and other qualities necessary to the Board’s ability to oversee and guide the business and affairs of the organization. The Board generally nominates for re-election current members of the Board who are willing to continue in service, collectively satisfy the criteria listed above and are available to devote enough time and attention to the affairs of the organization. When the Committee seeks new candidates for director roles, it seeks individuals with qualifications that will complement or enhance the experience, skills, diversity and perspectives of the other members of the Board. The full Board (1) considers candidates that the Committee recommends; (2) considers the optimum size of the Board; (3) determines how to address any vacancies on the Board; and (4) determines the composition of all Board committees.

We believe our director nominees are well-equipped to oversee management and address the complex issues confronting iStar as it continues to focus on key strategic objectives, including:

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sustaining and increasing our market leadership of the ground lease sector

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increasing the pace at which we monetize our legacy assets

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continuing to invest our capital where we believe we can capture appropriate risk-adjusted returns

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Since the 2020 annual meeting, we added a new director, David Eisenberg, who joined our Board in August 2020 and is a nominee for election by our shareholders at the annual meeting. Mr. Eisenberg’s addition to the Board resulted from our ongoing evaluation of potential Board candidates who would bring diversity and skills valuable to help us execute on our go-forward strategy.

 

Candidates for Election as Director

 

 

 

Corporate Governance

Board Leadership Structure

In determining the appropriate Board leadership structure it believes will be in the best interests of the organization and shareholders, the Board takes into account a variety of factors, including the business circumstances and needs at a given time. These positions may be held by one individual or by two different individuals. If the Chairman is not an independent director, the Board will designate a lead independent director.

Our current leadership structure consists of a combined Chairman of the Board and Chief Executive Officer position, an independent lead director, an active, involved and independent set of directors, and board committees chaired by independent directors.

Role of the Chairman

Our Board of Directors continues to believe it is in our best interests to have Mr. Sugarman serve as Chairman of our Board of Directors and Chief Executive Officer. When combined with the current composition of the Board, the use of a lead independent director, and the other elements of our corporate governance structure, the combined CEO and Chairman position strikes an appropriate balance between strong and consistent leadership and independent and effective oversight of our business and affairs.

Mr. Sugarman is an experienced real estate executive and long-time employee with years of board experience. As CEO he has the primary responsibility of developing corporate strategy and managing our day-to-day business operations. As a Board member, he understands the responsibilities and duties of a director and is well positioned to (1) chair regular Board meetings; (2) provide direction to management regarding the needs, interests and opinions of the Board; and (3) help ensure that key business issues and shareholder matters are brought to the attention of the Board. As both CEO and Chairman, Mr. Sugarman promotes unified leadership and direction for the Board and management. In addition, strong corporate governance structure and process ensures our independent directors will continue to effectively oversee management and key issues such as strategy, risk and integrity. Board committees are comprised solely of independent directors. As such, independent directors oversee critical matters, including the integrity of our financial statements, the compensation of our CEO and management executives, management succession planning, financial commitments for capital projects, the selection and annual evaluation of directors, and the development and implementation of corporate governance and corporate responsibility programs.

Our Board and each Board committee have complete and open access to any member of management and the authority to retain independent legal, financial and other advisors as appropriate. The non-employee directors, all of whom are independent, meet in executive session without management either before or after regularly scheduled Board and Board committee meetings to discuss various issues and matters including the effectiveness of management, as well as our performance and strategic plans.

Role of the Lead Director

Every year, the independent members of the board elect an independent lead director. Robin Josephs is currently designated as our lead independent director and, in that role, is responsible for the following duties:

The lead independent director is selected from among the non-employee directors. The Nominating and Governance Committee and management discuss candidates for the lead independent director position, and consider many of the same types of criteria as candidates for the chair of other Board committees including:

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Tenure

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Previous service as a Board committee chair

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Diverse experience

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Participation in and contributions to activities of the Board

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Ability and willingness to commit adequate time to the role

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Board Refreshment

The Nominating and Governance Committee believes it is important to have a mix of experienced directors with a deep understanding of our business and others who bring fresh perspectives. The committee discusses board refreshment on an ongoing basis. In addition, the Nominating and Governance Committee regularly assesses the size and composition of our Board to help ensure that the Board functions effectively given the size, diversity and complexity of our business and the range of business segments and markets in which we operate. The committee believes the current size and balance of tenure (see “Board Highlights” above) of the Board are appropriate considering the need for our directors to communicate and act efficiently, the time commitment required of our directors and the nature of our strategic plans.

We recognize the value of nominating individuals who will bring a variety of diverse opinions, perspectives, skills, experiences, backgrounds and orientations to the Board’s discussions and decision-making processes. An overriding principle is that all nominations to the Board should be based on merit and suitability of the candidate. Subject to those considerations, the Board recognizes the need to consider director candidates from different backgrounds. The charter of the Nominating and Governance Committee identifies diversity as one factor the committee may consider when nominating a candidate for election to the Board. To that end, the committee strives for diversity not just in terms of innate factors like gender, race and age, but also in the categories of background, experience, skills, accomplishments, personal qualities and specific traits that would contribute to our Board.

 

Director Independence

Our Corporate Governance Guidelines require that a majority of the Board consist of directors who the Board has determined are independent. Our Board has determined that all of our current directors, other than our Chairman and Chief Executive Officer, are independent. Specifically, each of the following non-employee director nominees qualifies as independent under NYSE rules and satisfies our independence standards: Clifford De Souza, David Eisenberg, Robin Josephs, Richard Lieb and Barry Ridings.

In determining director independence, the Board considers all relevant facts and circumstances, as well as New York Stock Exchange (NYSE) listing standards. Under the NYSE listing standards, no director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with iStar, either directly or as a partner, stockholder, or officer of an organization that has a relationship with us. In addition, the Board has adopted the following standards to assist them in determining director independence:

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The director is not an iStar employee and no member of the director’s immediate family is an executive officer of iStar, currently or within the preceding 36 months. For purposes of these standards, “immediate family” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the person’s home.​

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The director is not a current partner or employee of a firm that is iStar’s internal or external auditor. No member of the director’s immediate family is a current partner of such firm, or an employee of such a firm and personally works on the iStar audit. Neither the director nor any member of his or her immediate family was within the last three years a partner or employee of such a firm and personally worked on iStar’s audit within that time.​

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The director does not serve as an executive officer of a charitable or non-profit organization to which iStar has made contributions that, in any of the last three fiscal years, exceed the greater of  $1 million or 2% of the charitable or non-profit organization’s consolidated gross revenues.

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Neither the director nor a member of the director’s immediate family is employed as an executive officer (and has not been employed for the preceding 36 months) by another company where any of iStar’s present executive officers serves or served on that company’s compensation committee.

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The Nominating and Governance Committee ensures that there is a review of each director’s employment status and other board commitments and, where applicable, each director’s (and his or her immediate family members’) affiliation with consultants, service providers or suppliers of the organization. With respect to each non-employee director, the Committee has determined that either the director was not providing goods or services to us or the amounts involved were below the monetary thresholds set forth in the independence standards noted above.

No arrangement or understanding exists between any director and any other person or entity pursuant to which any director was, or is, to be selected as a director or nominee.

Nominations by Shareholders

The Nominating and Governance Committee is responsible for recruiting new directors. To contribute to that process, the committee may solicit and consider suggestions regarding possible nominees from current directors, management, or shareholders. In addition, we may retain professional search firms or consultants to help us identify potential directors with desired skills and disciplines.

Shareholder nominations for election to the Board should be sent to the attention of our Corporate Secretary at the address provided under “Communications with the Board.” This correspondence should describe the candidate’s qualifications and include the candidate’s written statement of willingness and affirmative desire to serve as a director and to represent the interests of all shareholders. Shareholders also may nominate candidates directly by following the procedures specified in our bylaws for nominations and other shareholder proposals. See “When are shareholder proposals due for the 2022 annual meeting?” in this proxy statement.

Candidates proposed by shareholders will be considered in the same manner and using the same criteria as candidates identified by the Nominating and Governance Committee.

Board’s Role in Risk Oversight

Due to the nature of our business, it is not possible or desirable to eliminate risk from our activities. Instead, we believe our focus should be on identifying, pricing, managing and monitoring risk, with the objective of achieving attractive, long-term, risk-adjusted returns. We have robust internal processes and a strong internal control environment designed to identify, manage, and mitigate material risks and to keep the Board and its committees informed with respect to risk management matters.

The Board’s role in risk oversight is consistent with our leadership structure generally.

The Board and its committees receive regular reports from members of senior management, outside auditors and internal audit firm on areas of material risk—including operational, IT, ESG compliance, financial, legal, regulatory, strategic and reputational risk—in order to review and understand risk identification, risk management and risk mitigation strategies.

The Board and management are focused on risk management issues pertaining to our information systems and technology, including cybersecurity. Management is pursuing initiatives intended to identify and, if necessary, remediate weaknesses in our information security; enhance our internal cyber awareness training programs; and improve access to key information for the purpose of promoting operational efficiencies in data management. Management reports regularly to the Board on the status of these initiatives.

The Board and management are also focused on risk management pertaining to environmental, social and governance issues, including human capital issues. At the management level, we have formed an ESG Advisory

 

Council and a Cultural Equity Council, each of which is designed to guide our development of policies, initiatives and objectives in these areas and monitor our progress in achieving our objectives. Our management is responsible for identifying and reporting material ESG and human capital risks to the Board. The Board, through the Nominating and Governance Committee and our Compensation Committee, exercises oversight of our identification, monitoring and management of material ESG and human capital risks.

Board Evaluation Process

To ensure the effectiveness of the Board as a whole and its committees, our directors engage in an annual assessment of Board and committee performance. For the purpose of ensuring the effectiveness of the Board as a whole and its committees, an independent third-party interviews each director individually on a wide range of topics including:

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the involvement of the Board in issues material to the company

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board and committee structure and composition

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communications between management, the Board, and its committees

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information furnished to the Board

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the Board’s relationship with management

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the effectiveness of the Board and its committees.

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The independent third-party then summarizes the individual comments and assessments in an oral report to the Board in executive session. The Board utilizes the results of this process to help refine and improve the operations of the Board and its committees. In 2020, the annual assessment occurred in the fourth quarter of 2020.

Areas in which the recent Board and committee evaluations have led to further focus and enhancement include: additional presentations on various topics, improved organization of board materials for greater efficiency and effectiveness, continued focus on risk management with an emphasis on forward looking issues and continued focus on human capital.

Board Meetings Held during 2020

During 2020, the board held nine meetings, either in person or by telephone conference call. Directors are expected to attend a majority of the Board meetings. All directors attended at least 92% of all Board meetings and applicable committee meetings, and five directors attended 100% of all Board meetings and applicable committee meetings, held during 2020. The Board also acts by unanimous written consent in appropriate circumstances. All of our current directors were present at the 2020 annual meeting and were re-elected at that meeting (other than Mr. Eisenberg, who joined the Board after the 2020 annual meeting and is a nominee for the first time in 2020).

Executive Sessions

Our Board of Directors meet in executive session at least quarterly without management present. The Audit Committee also meets in executive session at least quarterly, without management present, with representatives of our independent registered public accounting firm and with representatives with the accounting firm engaged to assist us in the preparation of our documentation, testing, and evaluation of internal controls over financial reporting.

Service on Other Boards

In view of the commitment of time and effort that is required of a director of a public company, our board has established a guideline that its non-employee directors should not serve on the boards of more than four public companies, including iStar, and that our chief executive officer should not serve on the boards of more than two other public companies.

Director Resignation Policy

In an uncontested election, an incumbent nominee for director who fails to receive the requisite majority of votes cast for his or her election must offer to resign from the Board promptly following certification of the voting results. The Nominating and Governance Committee will consider any such resignation offer, determine whether to recommend acceptance of that resignation, and submit its recommendation for consideration by the Board. The director whose offer to resign is under consideration may not participate in any deliberation or vote of the Nominating and Governance Committee or the Board regarding the proposed resignation. The Nominating and Governance Committee and the board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

Within 90 days after the results of the shareholder vote are certified, the Board will disclose its decision in a press release, filing with the SEC, or by other public announcement. If an incumbent director’s offer to resign is not accepted by the Board, such director will continue to serve until a successor is elected and qualifies, or until the director dies, resigns, retires, or is removed, whichever shall occur first. If a director’s offer to resign is accepted by the board, then the board, in its sole discretion, may fill the resulting vacancy pursuant to iStar’s Bylaws.

Defensive Measures Profile

Opt-Out from MUTA Provisions

Subtitle 8, Title 3 of the Maryland General Corporation Law—commonly referred to as the Maryland Unsolicited Takeover Act, or MUTA—permits companies to unilaterally classify their boards into staggered classes and adopt certain other takeover defense measures. Under an amendment to our charter approved by the board in 2015, iStar is prohibited from electing to be subject to those provisions, meaning we cannot implement the takeover defense measures they describe. Our decision to opt out from the MUTA may not be repealed without the approval of a majority of our shareholders.

Shareholder Rights Plan

We do not have a shareholder rights plan, commonly known as a “poison pill,” in effect.

“Whistleblower” Policy

Our Code of Conduct includes a policy on reporting suspected misconduct (a “whistleblower” policy) that describes how employees can report any concerns or suspected violations of our standards of conduct, policies, or laws and regulations to a named Compliance Officer, any other member of our Compliance Committee, our chief executive officer, or the chair of the Audit Committee. This reporting may be done on an anonymous basis. We also have established an independent “hotline” telephone service that may be used by employees who wish to report concerns or suspected violations, on an anonymous basis or otherwise. We prohibit retaliation against employees who report actual or suspected violations; anyone who attempts to retaliate will be subject to disciplinary action, up to and including termination. Reports of misconduct made in bad faith and false or misleading information provided in the course of an investigation will be subject to disciplinary action, up to and including termination.

 

Governing Documents

The documents described below are available on our website at ir.istar.com/corporate-governance/highlights. We will provide paper copies to our shareholders, without charge, on request.

Corporate Governance Guidelines

Our Board has approved a set of general guidelines that provide the framework for our corporate governance. The Board reviews these guidelines and other aspects of our governance annually or as needed.

Code of Conduct

Our Code of Conduct documents the principles of conduct and ethics to be followed by our directors, officers, and employees. The purpose of the Code of Conduct is to promote honest and ethical conduct; compliance with applicable governmental rules and regulations; full, fair, accurate, timely and understandable disclosure in periodic reports; prompt internal reporting of violations of the Code of Conduct; and a culture of honesty and accountability. All of our directors, officers and employees are required to acknowledge that they have received and will comply with the Code of Conduct. We will disclose any material changes to the Code of Conduct, and any waivers that are approved for directors or executive officers, in our public SEC filings and on our website within four business days of any such event.

Disclosure Committee

iStar’s Disclosure Committee is made up of members of our executive management and senior staff. The purpose of the Disclosure Committee is to oversee our system of disclosure controls and to assist and advise the chief executive officer and chief financial officer in making the required certifications in SEC reports. The Disclosure Committee was established to bring together on a regular basis representatives from our core business lines and employees involved in the preparation of our financial statements. These individuals meet quarterly, or otherwise as needed, to discuss any issues or matters they believe should be considered for disclosure in our public SEC filings, and to review our draft periodic SEC reports before they are filed. The Disclosure Committee reports to our Chief Executive Officer and, as appropriate, to our Audit Committee.

The Disclosure Committee has adopted a written charter to memorialize the committee’s purpose and procedures. A copy of the charter will be provided, without charge, to any shareholder who requests one.

Succession Planning

Our Compensation Committee, pursuant to its charter, annually reviews and discusses with the independent directors of the Board the performance of our CEO and certain other senior officers and the succession plans for each management position, including recommendations and evaluations of potential successors to fill these positions. The Compensation Committee also reviews annually our management development and succession planning practices and strategies.

Our Chairman and CEO provides an annual review to the Board of Directors assessing the members of the executive leadership team. This review, which is developed in consultation with Compensation Committee, includes a discussion about development plans for the Company’s executive officers and senior officers to help prepare them for future succession and contingency plans. The full board has the primary responsibility to develop succession plans for the Chairman and CEO position.

Communications with the Board

Interested parties, including shareholders, are welcome to communicate with our lead director, the other independent board members or the Chair of any committee of the Board, by e-mail or regular mail. All communications should be sent to:

Our Chief Legal Officer and our Corporate Secretary will review each communication directed to the Board or individual directors. These officers will forward all appropriate communications received, or a summary of such communications, to the appropriate board member(s). Our Chief Legal Officer and Corporate Secretary have the authority to disregard any inappropriate communications or to take other appropriate actions with respect to inappropriate communications including abusive, repetitive, or in bad taste communications or communications that present safety or security concerns. Communications we receive that relate to accounting, internal accounting controls or auditing matters will be referred to the Audit Committee unless the communication is directed otherwise. You may communicate anonymously and/or confidentially.

 

Environmental, Social & Governance (ESG) Program

We have published an ESG report that may be found on our website at https://www.istar.com/sustainability/​. Our inaugural 2020 ESG report provides an overview of the sustainability and ESG issues that we prioritize. Our 2021 ESG report, due to be published in April, will describe the progress we have made and our efforts to infuse corporate social responsibility throughout our business—from formalizing our approach to ESG oversight, to reducing our environmental impact, to building on our commitment to create a more rewarding, diverse and inclusive workplace culture.

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We appointed an ESG Advisory Council, including key members of senior management, to guide our organization on ESG issues. Near-term priorities include identifying gaps in our current ESG approach; identifying and managing ESG-related risks, engaging with ESG ratings groups and ESG-conscious investors; and intensifying ESG data collection processes. A representative of the ESG Advisory Council reports to our Nominating and Governance Committee, and/or the full Board, periodically on the activities of the council

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We conduct a materiality assessment process to help us identify the environmental, social and governance issues and possible risks that are most critical to our business and stakeholders. This information helps us decide what to report and where to focus our internal resources.

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The nature of our business as a capital provider/net lease owner limits our day-to-day influence over environmental factors affecting our tenants and borrowers; however, we do consider environmental factors when underwriting potential investments. In the near term, we are focused on the areas we do control—our corporate operations and the flagship assets we manage. We took steps toward reducing iStar’s environmental impact in 2020, such as implementing projects to improve stormwater management and reduce flood risk at our Asbury Park, New Jersey master development property; continuing stormwater treatment and stream restoration measures at our Magnolia Green, Virginia master development community; and pursuing strategies in our internal operations to reduce energy consumption, by migrating our server infrastructure to the cloud and replacing laptop and desktop computers with newer, more energy-efficient models, reduce paper consumption, and eliminate plastic use. As we look to the future, we are evaluating new, more ambitious strategies to reduce our operational carbon footprint, starting with exploring methods of creating a structured carbon accounting process.

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We are working hard to support the people in our workforce and our communities. From health and wellness programs to professional development opportunities to cultivating a culture of inclusiveness, we partner with our employees to build a talented, diverse and fully engaged workforce.

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A 12-member Cultural Equity Council, including key members of senior management, sets and oversees our Diversity, Equity and Inclusion (DEI) agenda and goals, provides governance and oversight on our diversity initiatives, creates strategic accountability for results, and communicates our progress both internally and externally. A representative of the Cultural Equity Council reports to our Nominating and Governance Committee, and/or the full Board, periodically on the activities of the council

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We are committed to engaging with the communities within which we operate, ensuring their priorities are heard and working to enhance community well-being. We regularly engage with local government officials, community groups and our tenants and customers to understand their priorities and seek their input.

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Governance and business ethics at iStar are focused on meeting and exceeding legal requirements, staying in alignment with corporate best practices and remaining actively engaged with stakeholders. Our approach to governance is guided by our investment, financing and corporate governance policies—​including conflicts of interest policies—that are managed under the ultimate supervision of our board of directors.

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Our Board of Directors, acting primarily through the Nominating and Governance Committee, has responsibility for oversight of our ESG program. Management provides periodic reports to the Board of Directors, at its regular meetings throughout the year, on relevant ESG initiatives and related issues.

Cybersecurity

To protect our internal and our customers’ data, we continued to pursue initiatives in 2020 to identify and, if necessary, remediate potential weaknesses in our information security; enhance our internal cyber awareness training programs; and improve access to key information for the purpose of promoting operational efficiencies in data management. Our recent cybersecurity initiatives include:

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Data migration. We migrated all company data and on-premise infrastructure to the cloud, allowing us to take advantage of cloud providers’ security innovations against malware and DDoS (distributed denial of service) attacks. Our employees working from home are required to connect through a VPN (virtual private network).

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Cyber training. Our workforce participated in two mandatory cyber awareness trainings using an independent third-party security training provider. After each training was complete, we performed monthly penetration and phishing tests to keep our workers sharp.

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Communications plan. We created a cyber breach communications plan using protocols from our cybersecurity consultants. The plan offers defined crisis guidelines for communicating a security breach to affected stakeholders, so we can answer questions and respond to concerns quickly, accurately and transparently.

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Authorization. iStar uses Multiple Factor Authentication (MFA) for ensuring that only authorized individuals can access our network, as well as password protection and other protective measures.

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Our Board exercises its oversight of cybersecurity risk management primarily through the Audit Committee. Management provides periodic reports to the Audit Committee, at regular Committee meetings throughout the year, on relevant cybersecurity issues. We have not experienced any material cybersecurity or information security breaches and, accordingly, have not incurred any expenses due to information security breach penalties or settlements. We maintain cyber liability insurance coverage to mitigate against risks of cyber attacks and other information security breaches.

 

Board Committees

Our Board has four standing committees—Audit, Compensation, Nominating and Governance and Investment—​made up entirely of independent directors. The Audit, Compensation, and Nominating and Governance Committees have adopted charters that meet applicable standards prescribed by the NYSE. These charters are available on our website at https://ir.istar.com/corporate-governance/board-of-directors, and will be provided in print, without charge, to any shareholder who requests copies.

Our Board appoints special committees from time to time, as necessary.

 

 

Director Compensation

The compensation program for our non-employee directors provides for the following annual payments:

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(1)

The number of CSEs or restricted shares is based on the average NYSE closing price for our common stock for the twenty days prior to the date of the annual shareholders meeting.

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Directors do not receive additional fees for attending board or committee meetings.

CSEs and restricted shares are granted effective on the date of the annual shareholders meeting and generally vest after one year, on the date of the next annual shareholders meeting. Dividends will accrue in respect of the CSEs and restricted shares from the date of grant as and when dividends are paid on the common stock, but such dividends will not be paid unless and until the associated CSEs or restricted shares vest. Dividends on CSEs are paid in the form of additional CSEs credited to the directors’ accounts, based on the amount of the dividend and the value of a share of our common stock on the dividend payment date.

Under the Non-Employee Directors’ Deferral Plan, directors may defer the receipt of some or all of their compensation.

The table below summarizes the compensation information for our non-employee directors for the fiscal year ended December 31, 2020. Jay Sugarman is not included in this table as he is our employee and receives no additional compensation for his services as a director.

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(1)

Amounts included in the “Stock Awards” column reflect the grant date fair value of restricted share awards made to directors in 2020 computed in accordance with FASB ASC Topic 718 (without regard to forfeitures). These awards were made to the directors under the Non-Employee Directors’ Deferral Plan. Directors may elect to receive these awards in the form of CSEs or restricted shares. No directors have presently elected to receive CSEs. The CSEs or restricted share awards are valued using the closing price of our common stock on the date of grant. Restricted shares are subject to a one-year vesting period from the grant date.

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As of December 31, 2020, the directors held the following aggregate amounts of previously-awarded CSEs and restricted shares:

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(2)

Our directors are eligible to participate in our broad-based matching gifts program under which we will donate funds equal to contributions made by directors or employees to qualified nonprofit organizations, up to a maximum annual matching contribution per individual of  $5,000 for directors and senior officers, $2,500 for other officers, and $1,500 for other employees. Our directors also are eligible for reimbursement of the costs of attending continuing director education programs. Amounts included in the “All Other Compensation” column include any matching gifts made by us on behalf of the director and any education costs reimbursed by us to the director.

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(3)

Ms. Sands has advised us she will not stand for re-election at the 2021 annual meeting. Mr. Eisenberg was elected to our Board by action of the Directors in August 2020.

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Indemnification

Our charter provides that we will indemnify and advance expenses to our directors and officers to the full extent required or permitted by Maryland law. In addition, we have entered into indemnification agreements with each of our directors and executive officers. These agreements provide that we will indemnify our directors and executive officers to the fullest extent permitted by our charter and Maryland law against certain liabilities (including settlements) and expenses actually and reasonably incurred by them in connection with any threatened or pending legal action, proceeding, or investigation to which any of them is, or is threatened to be, made a party because of their status as our director, officer or agent, or because they serve as a director, officer or agent of another company at our request.

To supplement these indemnification provisions, we have obtained directors and officers liability insurance, which covers our directors and executive officers.

Proposal 2—Approval of Proposed Amendment and Restatement of iStar Inc. 2009 Long-Term Incentive Plan

Our 2009 Long-Term Incentive Plan (2009 LTIP) was adopted by our board and approved by our shareholders, in 2009, and has been amended with shareholder approval in 2014 and 2019. The 2009 LTIP has been an important factor in attracting, retaining, motivating, and rewarding certain employees, officers, directors, and consultants by aligning the interests of such individuals with those of our shareholders. On March 30, 2021, our Compensation Committee approved an amendment and restatement of the 2009 LTIP, subject to approval by our shareholders. We are asking our shareholders to approve the amendment and restatement of the 2009 LTIP that would:

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Increase the number of shares of common stock reserved for issuance by 1,000,000, from 2,099,266 (which is the number remaining available for grants under the 2009 LTIP on March 17, 2021) to 3,099,266, subject to adjustment as provided in the 2009 LTIP, with an equivalent increase to the number of shares of common stock available for grant pursuant to incentive stock options.

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Extend the expiration date of the 2009 LTIP from May 16, 2029 to May 13, 2031

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Clarify Compensation Committee powers and prerogatives under the 2009 LTIP, including granting procedures under the 2009 LTIP

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Add an annual total equity and cash fee limit for our non-employee directors

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Reflect amendments previously adopted and approved

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Update the administrative provisions of the 2009 LTIP

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We believe that increasing the share reserve and amending other provisions of the 2009 LTIP as proposed will facilitate continued use of the 2009 LTIP and is in the best interest of iStar and our shareholders. Approval of this proposal will enable us to continue to motivate outstanding performance by our employees, officers, directors, and consultants.

In considering the proposed share increase to the 2009 LTIP, the Board and the Compensation Committee considered various factors, including potential dilution and potential burn rate. As of March 17, 2021, 2,099,266 shares of common stock remained available for issuance under the 2009 Plan, and the Company has 73,950,152 shares of common stock outstanding. The following table provides information regarding our annual burn rate over the past three fiscal years:

Burn Rate
(shares in millions)

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(1)

Includes restricted stock, restricted stock units and performance units. For performance units, includes the number of shares actually vested and delivered upon achievement of the applicable performance goals.

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(2)

Burn rate is calculated by dividing the number of awards granted by our weighted average basic shares outstanding.

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If our shareholders approve this proposal, the amendment and restatement of the 2009 LTIP will become effective as of the date of shareholder approval. If our shareholders do not approve this proposal, the amendments described in this proposal will not take effect and our capacity to make future awards under the 2009 LTIP will be impacted. As a result, our ability to attract, reward and retain valuable employees will be constrained and a larger proportion of our incentive awards may need to be cash-based awards.

Summary of the 2009 LTIP

The following is a summary of the material features of the 2009 LTIP assuming the proposed amendment and restatement is approved by shareholders at the annual meeting. This summary of the 2009 LTIP is qualified in its entirety by reference to the full text of the proposed amendment and restatement, a copy of which is attached to this proxy statement as Exhibit B. To the extent there is a conflict between this summary and the 2009 LTIP, the 2009 LTIP will govern. Capitalized terms used but not defined herein have the meanings ascribed to them in the 2009 LTIP.

Purpose

The purpose of the 2009 LTIP is to provide incentives (which may be equity-based or cash-based) as a means of attracting and retaining qualified key employees, directors, officers, advisors, consultants, and other personnel and encouraging those individuals to increase their efforts to make our business more successful—whether directly or through our subsidiaries or other affiliates. Awards under the 2009 LTIP may be in the form of options, restricted stock, restricted stock units (referred to as “phantom shares”), dividend equivalent rights, and other forms of equity-based compensation, or cash-based compensation. We will consider awards pursuant to the 2009 LTIP in light of our overall compensation philosophy and competitive conditions in the marketplace.

Duration

If the proposed amendment and restatement is approved by shareholders, awards may be granted under the 2009 LTIP until May 13, 2031, which will be the 10th anniversary of such approval. However, the 2009 LTIP may be terminated by the board at any time before that date.

Administration

The 2009 LTIP will be administered by the Compensation Committee of our board. If no committee exists, the functions of the Compensation Committee will be exercised by the board. Nevertheless, any grants to members of the Compensation Committee will be made and administered by the board rather than the Compensation Committee.

The Compensation Committee has broad discretion and full authority to administer and interpret the 2009 LTIP. The Compensation Committee’s powers include but are not limited to the granting of awards, making eligibility determinations under the 2009 LTIP, determining the sizes of Awards, the forms of Awards, the properties of Awards, and determining the number of shares of common stock to be covered by each award (subject to the individual participant limitations provided in the 2009 LTIP). Each award agreement will contain other terms, provisions and conditions consistent with the 2009 LTIP, as determined by the Compensation Committee. The Compensation Committee may (subject to such considerations as may arise under Section 16 of the Securities Exchange Act of 1934, or under other corporate, securities, or tax laws) take any steps it deems appropriate, that are not inconsistent with the purposes and intent of the 2009 LTIP, to establish performance-based criteria applicable to awards otherwise permitted to be granted under the 2009 LTIP.

The Compensation Committee, in its discretion, may delegate to our chief executive officer all or part of the Compensation Committee’s authority and duties with respect to awards. However, the Compensation Committee may not delegate its authority and duties with respect to awards that have been, or will be, granted to our chief executive officer, our directors, or are granted to Section 16 officers. Any other delegation by the Compensation Committee may, in the sole discretion of the Compensation Committee, include a limitation as to the number of

awards that may be granted during the period of the delegation and guidelines as to the determination of the option exercise price (or price of other awards) and the vesting criteria. The Compensation Committee may revoke or amend the terms of a delegation at any time but such action will not invalidate any prior actions of the Compensation Committee’s delegate that were consistent with the terms of the 2009 LTIP.

Eligibility

Persons who are eligible to be granted awards under the 2009 LTIP are our officers, our directors, our and our subsidiaries’ key employees, consultants, or advisers to us or our subsidiaries, or any other person expected to provide significant services (of a type expressly approved by the Compensation Committee as covered services for these purposes) to us, our subsidiaries, or certain of our affiliates. Anyone who would receive an Award under the 2009 LTIP must be someone who may be offered our securities and whose offers and sales may be registered on Form S-8.

Available Shares

If the proposed amendments are approved by shareholders, and subject to adjustment upon certain corporate transactions or events, a maximum of 3,099,266 shares of common stock may be issued (or deemed issued) under the 2009 LTIP in connection with awards of stock options, shares of restricted stock, restricted stock units and phantom shares, dividend equivalent rights, and other equity-based or cash-based awards. The maximum number of shares of common stock issuable under the 2009 LTIP reflects the number of shares that may actually be issued (or deemed issued) in connection with awards under the 2009 LTIP, after required settlement of tax withholding obligations. Awards granted under the 2009 LTIP will be settled on a net, after-tax basis, after deducting shares for taxes and other applicable withholdings. In addition, subject to adjustment upon certain corporate transactions or events, a maximum of 3,099,266 shares of common stock may underlie awards of incentive stock options. In the event an option or other award granted under the 2009 LTIP is forfeited or canceled, is settled in cash, or otherwise expires or terminates, or if shares of common stock are delivered in full or partial payment of the exercise price in connection with an option, or if tax withholding obligations are satisfied by using shares of common stock on settlement of an award, the shares subject to any portion of such award will again become available for the issuance of additional awards.

The maximum number of shares subject to Awards granted during a single fiscal year to any non-employee director under the 2009 LTIP, taken together with any cash fees paid to such director during the fiscal year, will not exceed $500,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes).

Types of Awards

Stock Options

Other than as specifically set forth under the terms of the 2009 LTIP, the Compensation Committee will determine the terms of specific options, including whether options will constitute incentive stock options. The award agreement evidencing an award of options will specify the extent to which, and period during which, an option may be exercised after termination of employment. Generally, an option cannot be exercised after a termination of employment (or other service) to the extent it was not exercisable at the time of termination.

The exercise price of an option will be determined by the Compensation Committee and reflected in the applicable award agreement, but unless otherwise determined by the Compensation Committee, the exercise price must be at least equal to the fair market value of a share of common stock on the date of grant. The exercise price with respect to incentive stock options may not be lower than 100%, or 110% in the case of an incentive stock option granted to a 10% shareholder, of the fair market value of our common stock on the date of grant. The aggregate fair market value (determined as of the date an option is granted) of the shares for which any option holder may be awarded incentive stock options that become exercisable for the first time during any calendar year (under the 2009 LTIP or any other stock option plan required to be taken into account under Section 422(d) of the Code) may not exceed $100,000.

 

Each option will be exercisable for the period or periods specified in the applicable award agreement, which will generally not exceed ten years from the date of grant (or five years in the case of an incentive stock option granted to a 10% shareholder). The Compensation Committee will determine the time or times at which an option may be exercised in whole or in part, and the method or methods by which, and the form or forms in which, payment of the option price with respect thereto may be made or deemed to have been made (including by cash, loans or third-party sale programs, or by the tender of previously-owned shares).

Options granted under the 2009 LTIP generally will not be transferable except by will or the laws of descent and distribution. The Compensation Committee may establish a program under which participants will have phantom shares credited upon their exercise of options rather than receiving shares at that time.

Restricted Stock

Restricted stock is an award of common stock that is subject to restrictions (such as limitations on transferability or the right to vote) as the Compensation Committee may determine. Subject to the other terms of the 2009 LTIP, the Compensation Committee may provide a specified purchase price for restricted stock, determine the restrictions applicable to restricted stock, and determine or impose other conditions to the grant of restricted stock under the 2009 LTIP as it may deem appropriate.

Unless otherwise provided in the applicable award agreement, dividends paid on shares of restricted stock before the shares vest will be held by iStar until the shares vest, and paid to the grantee as soon as practicable after vesting.

Restrictions on the shares will lapse in accordance with the terms of the applicable award agreement, as determined by the Compensation Committee. Unless otherwise provided in the applicable award agreement, upon a termination of employment or other service for cause or by the grantee for any reason other than death, disability or retirement, all shares of restricted stock still subject to restrictions will be forfeited to us and we will pay an amount equal to the lesser of the amount paid by the grantee for such shares and the fair market value on the date of forfeiture. It is generally expected that, upon a termination of employment or other service on account of death, disability or retirement of a grantee, or if the grantee’s service is terminated by us for any reason other than cause, in each case during the applicable restricted period, then restrictions under the 2009 LTIP will immediately lapse on all restricted stock granted to such individual.

Restricted Stock Units and Phantom Shares

A restricted stock unit or phantom share represents a right to receive the fair market value of a share of our common stock, or, if provided by the Compensation Committee, the right to receive the fair market value of a share of our common stock in excess of a base value established by the Compensation Committee at the time of grant. The Compensation Committee may provide in an award agreement that any particular unit or phantom share will expire at the end of a specified term.

Units and phantom shares will vest as provided in the applicable award agreement. Unless otherwise determined by the Compensation Committee at the time of the grant, units and phantom shares will be settled in shares of common stock. Ordinarily, units and phantom shares will be settled with a single distribution, but the Compensation Committee may, in its discretion and under certain circumstances, permit a participant to instead receive installments over a period not to exceed ten years. Unless otherwise provided in the applicable award agreement, the settlement date with respect to a unit or phantom share is the first day of the month to follow the date on which the restrictions lapse or the phantom share vests. However, in accordance with procedures to be established by the Compensation Committee, a grantee may elect that such settlement date will follow the grantee’s termination of service, or such other time as may be permitted by the Compensation Committee.

Dividend Equivalents

A dividend equivalent is a right to receive (or have credited) the equivalent value (in cash or shares of common stock) of dividends declared on shares of common stock otherwise subject to an award. The Compensation

Committee may provide that amounts payable with respect to dividend equivalents will be converted into cash or additional shares of our common stock provided that dividend or dividend equivalents will not be paid on unvested awards and will only be paid if the underlying award vests. The Compensation Committee will establish all other limitations and conditions of awards of dividend equivalents.

Other Awards

The 2009 LTIP authorizes the making of cash awards and the granting of other awards based upon the common stock (including the grant of securities convertible into our common stock and stock appreciation rights), and subject to terms and conditions established by the board.

Performance Goals

The Compensation Committee may, in its discretion, establish one or more performance goals as a precondition to the issuance or vesting of awards, and also provide for predetermined awards to those participants with respect to whom the applicable performance goals are satisfied. The performance goals may be based upon one or more of the following criteria: pre-tax income; after tax income; net income; operating income; cash flow; earnings per share; return on equity; return on invested capital or assets; cash and/or funds available for distribution; appreciation in the fair market value of the common stock; return on investment; shareholder return; net earnings growth; stock appreciation; related return ratios; increase in revenues; net earnings; changes in the per share or aggregate market price of our common stock; number of securities sold; earnings before any one or more of the following: interest, taxes, depreciation or amortization for the applicable period, as reflected in our financial reports for the applicable period; total revenue growth; changes in our book value; changes in our general and administrative expenses; our published ranking against a peer group of real estate investment trusts based on total shareholder return; and funds from operations.

Special Rules Upon Reorganizations, Changes in Control, Etc.

If iStar or its subsidiaries is involved in a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or stock of iStar or its subsidiaries or a similar transaction, any stock dividend, stock split, reverse stock split, stock combination, reclassification, recapitalization or other similar change in the capital structure of iStar or its subsidiaries, or if there is any distribution to shareholders other than cash dividends or any other event which in the judgment of the Compensation Committee necessitates adjustments to the terms of the outstanding Awards, then the maximum aggregate number and kind of shares which may be made subject to options and dividend equivalent rights under the 2009 LTIP, the maximum aggregate number and kind of shares of restricted stock that may be granted under the 2009 LTIP, and the maximum aggregate number of phantom shares and other Awards which may be granted under the 2009 LTIP may be appropriately adjusted by the Compensation Committee in its discretion.

The Committee will take any such action as it determines necessary to maintain each participant’s rights so that each participant’s rights with respect to his or her respective options, phantom shares and dividend equivalent rights are substantially proportionate to the rights existing in such options, phantom shares and dividend equivalent rights before the event, including, without limitation, adjustments in the number of options, phantom shares and dividend equivalent rights granted, the number and kind of shares or other property to be distributed in respect of options, phantom shares and dividend equivalent rights (and other Awards as applicable), the option price and phantom share value, and any performance-based criteria established in connection with Awards.

In the case of any “equity restructuring” ​(within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto)), the Compensation Committee will make an equitable or proportionate adjustment to outstanding Awards to reflect such equity restructuring.

If a Change in Control does occur, then the Compensation Committee, as constituted immediately before such Change in Control, may in its sole discretion, provide for any one or more of the following:

 

A.

Substitution or assumption of Awards, or to the extent that the surviving entity (or affiliate thereof) of such Change in Control does not substitute or assume the Awards, full acceleration of vesting of, exercisability of, or lapse of restrictions on, as applicable, any Awards; and

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B.

Cancellation of any one or more outstanding Awards and payment to the holders of such Awards that are vested as of such cancellation (including, without limitation, any Awards that would vest as a result of the occurrence of such event but for such cancellation or for which vesting is accelerated by the Committee in connection with such event pursuant to the preceding clause), the value of such Awards, if any, as determined by the Committee (which value, if applicable, may be based upon the price per share of Common Stock received or to be received by other stockholders of iStar in such event), including, without limitation, in the case of an outstanding Option, a cash payment in an amount equal to the excess, if any, of the fair market value (as of a date specified by the Compensation Committee) of the shares of Common Stock subject to the option over the aggregate option price of such option (any option having a per share option price equal to, or in excess of, the fair market value of a Share subject thereto may be canceled and terminated without any payment or consideration).

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Annual Grants to Independent Directors

Annual awards of common stock equivalents to our non-employee directors under the Non-Employee Directors’ Deferral Plan are counted as awards under the 2009 LTIP.

Amendment and Termination

The board may amend the 2009 LTIP as it deems advisable, except that it may not amend the 2009 LTIP in any way that would adversely affect a participant with respect to an award previously granted unless the amendment is required in order to comply with applicable laws.

Prohibition on Re-Pricing

The 2009 LTIP provides that no option or stock appreciation right issued under the 2009 LTIP may be amended to reduce the exercise price below the exercise price assigned on the date of grant. In addition, no option or stock appreciation right may be granted in exchange for, or in connection with, the cancellation or surrender of an option, stock appreciation right, or other award having a lower exercise price.

Prohibition on Loans to Executives

The 2009 LTIP prohibits the extension of any loans by us to any officer in respect of the exercise of options or with respect to any other award granted under the 2009 LTIP.

Certain U.S. Federal Income Tax Consequences

The following is a general summary of the material U.S. federal income tax consequences of the grant, exercise and vesting of awards under the 2009 Plan and the disposition of shares acquired pursuant to the exercise or settlement of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local or payroll tax considerations. This summary assumes that all awards described in the summary are exempt from, or comply with, the requirement of Section 409A of the Code. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.

Non-Qualified Stock Options

No income will be recognized by an option holder at the time a non-qualified stock option is granted. Ordinary income generally will be recognized by an option holder at the time a non-qualified stock option is exercised, in an

amount equal to the excess of the fair market value of the underlying common stock on the exercise date over the exercise price. iStar generally will be entitled to a deduction for federal income tax purposes in the same amount as the amount included in ordinary income by the option holder with respect to a non-qualified stock option. Gain or loss on a subsequent sale or other disposition of the shares acquired upon the exercise of a non-qualified stock option will be measured by the difference between the amount realized on the disposition and the tax basis of such shares, and generally will be long-term or short-term capital gain, depending on the holding period involved. The tax basis of the shares acquired upon the exercise of any non-qualified stock option will be equal to the sum of the exercise price of the non-qualified stock option and the amount included in income with respect to the option. If exercise of an option is permitted other than by cash payment of the exercise price, various special tax rules may apply.

Incentive Stock Options

In general, neither the grant nor the exercise of an incentive stock option will result in taxable income to an option holder or a deduction for us. To receive special tax treatment under the Code as to shares acquired upon exercise of an incentive stock option, an option holder cannot dispose of the shares within two years after the incentive stock option is granted, nor within one year after the transfer of the shares to the option holder pursuant to exercise of the option. In addition, the option holder must be an employee of iStar or a qualified subsidiary at all times between the date of grant and the date three months (one year in the case of disability) before exercise of the option. (Special rules apply in the case of the death of the option holder.)

In the event of a sale of shares of our common stock received upon the exercise of an incentive stock option, the Code generally allows any gain to be treated as a capital gain to the option holder, but iStar will not be entitled to a tax deduction. The exercise of an incentive stock option (if the holding period rules described above are satisfied) will give rise to income includable by the option holder in alternative minimum taxable income in an amount equal to the excess of the fair market value of the stock acquired on the date of the exercise over the exercise price.

If the holding period rules noted above are not satisfied, gain recognized on the disposition of the shares acquired upon the exercise of an incentive stock option will be characterized as ordinary income. This gain will be equal to the difference between the exercise price and the fair market value of the shares at the time of exercise. (Special rules may apply to disqualifying dispositions where the amount realized is less than the value at exercise.) iStar generally will be entitled to a deduction equal to the amount of such gain included by an option holder as ordinary income. Any excess of the amount realized upon such disposition over the fair market value at exercise generally will be long-term or short-term capital gain, depending on the holding period involved. If exercise of an option is permitted other than by cash payment of the exercise price, various special tax rules may apply.

Restricted Stock

Unless a holder of restricted stock makes an “83(b) election” ​(as discussed below), there generally will be no tax consequences as a result of the grant of restricted stock until the restricted stock is no longer subject to a substantial risk of forfeiture or is transferable (free of the risk). Dividends paid on unvested shares, if retained by the grantee, generally will be treated as ordinary compensation income for U.S. federal income tax purposes (unless an 83(b) election has been made). Generally, when the restrictions are lifted, the holder will recognize ordinary compensation income, and iStar will be entitled to a deduction, equal to the difference between the fair market value of the stock at the time restrictions are lifted and the amount, if any, paid by the holder for the restricted stock, subject to any limitations under Section 162(m). Subsequently realized changes in the value of the stock generally will be treated as long-term or short-term capital gain or loss, depending on the length of time the shares were held.

In general terms, if a holder makes an election under Section 83(b) of the Code upon the award of restricted stock, the holder will recognize ordinary compensation income on the date of the award, and iStar will be entitled to a deduction, equal to (i) the fair market value of the restricted stock as though the stock were (A) not subject to a substantial risk of forfeiture or (B) transferable, minus (ii) the amount, if any, paid for the restricted stock. If a holder makes an 83(b) election, there generally will be no tax consequences to the holder when restrictions are lifted, and all subsequent appreciation in the restricted stock generally would be eligible for capital gains treatment. In the

 

event of a forfeiture after an 83(b) election is made, no deduction or loss will be available, other than with respect to amounts actually paid for the stock.

Phantom Shares and Restricted Stock Units

It is generally expected that phantom shares will be designed with the intention there are no tax consequences as a result of the grant of a phantom share until the associated payment is made. When payment is made, the grantee generally will recognize ordinary income, and iStar generally will be entitled to a deduction, equal to the fair market value of the common stock and cash, as applicable, received upon payment, subject to any limitations under Section 162(m).

Dividend Equivalents

There generally will be no tax consequences as a result of the award of a dividend equivalent. When payment is made, the holder of the dividend equivalent generally will recognize ordinary income, and iStar will be entitled to a deduction, equal to the amount received, subject to any limitations under Section 162(m).

Cash Bonuses

When a cash bonus payment is made, the participant generally will recognize ordinary income, and iStar will be entitled to a deduction, equal to the amount of such payment, subject to any limitations under Section 162(m).

New Plan Benefits Table

It is not possible to determine the benefits or amounts that will be received by or allocated to participants under the 2009 LTIP or would have been received by or allocated to participants for the last completed year because awards under the 2009 LTIP will be made at the discretion of the Compensation Committee.

Required Vote

The approval of the 2009 LTIP amendment requires the affirmative vote of the holders of a majority of our common stock represented and entitled to vote thereon at the meeting. Abstentions are deemed entitled to vote on the incentive plan proposal; therefore, they have the same effect as a vote against the incentive plan proposal. Broker non-votes are not deemed entitled to vote on the proposal and, therefore, they will have no effect on the vote.

Disclosure of Equity Compensation Plan Information

(1)

Restricted Stock — The amount shown in column (a) includes 530,945 unvested restricted stock units which may vest in the future based on the employees’ continued service to the Company (see Note 15 of our consolidated financial statements in our 2020 10-K Report for further details of the Company’s restricted stock grants). All of the unvested restricted stock units included in column (a) are required to be settled on a net, after-tax basis (after deducting shares for minimum required statutory withholdings); therefore, the actual number of shares issued will be less than the gross amount of the awards. The amount shown in column (a) also includes 179,522 of common stock equivalents and restricted stock awarded to our non-employee directors in consideration of their service to the Company as directors. Common stock equivalents represent rights to receive shares of common stock at the date the common stock equivalents are settled. Common stock equivalents have dividend equivalent rights beginning on the date of grant. The amount in column (c) represents the aggregate amount of stock options, shares of restricted stock units or other performance awards that could be granted under compensation plans approved by the Company’s security holders after giving effect to previously issued awards of stock options, shares of restricted stock units and other performance awards (see Note 15 of our consolidated financial statements in our 2020 10-K Report for further details).

​

(2)

The amount shown in column (a) does not include a currently indeterminable number of shares that may be issued upon the satisfaction of performance and vesting conditions of awards made under the Company’s Performance Incentive Plan (“iPIP”) approved by shareholders. In no event may the number of shares issued exceed the amount available in column (c) unless shareholders authorize additional shares (see Note 15 of our consolidated financial statements in our 2020 10-K Report for further details).

​

(3)

The data in this table is as of December 31, 2020. Based on awards granted under the 2009 LTIP since December 31, 2020, as of March 17, 2021, the number of securities to be issued upon exercise of outstanding options, warrants and rights, as reported in column (a) is equal to 931,333, and the number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)), as reported in column (c) is 2,099,266.

​

 

Proposal 3—Advisory Resolution to Approve Executive Compensation

We are asking shareholders to approve, on an advisory basis, the Company’s executive compensation as reported in this proxy statement. Although this advisory vote is non-binding upon the Company, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.

We encourage shareholders to read the entire Compensation Discussion and Analysis section of this proxy statement, which describes how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, which provide detailed information on the compensation of our named executive officers.

The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the Compensation Discussion and Analysis are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to the Company’s recent and sustainable long-term success.

RESOLVED, that the shareholders of iStar Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the proxy statement for the Company’s Annual Meeting of Shareholders.

Compensation Discussion and Analysis Contents

​	Overview				​	​	​	​
​	​	​	​	Compensation Philosophy and Guiding Principles	​	​	44	​
​	​	​	​	Shareholder Engagement	​	​	45	​
​	2020 Compensation Program				​	​	46	​
​	​	​	​	Base Salaries	​	​	47	​
​	​	​	​	Annual Incentive Plan	​	​	47	​
​	​	​	​	Long-Term Incentive Compensation—iPIP	​	​	49	​

​	​	​	​	Long-Term Incentive Compensation—Legacy 2009 LTIP	​	​	53	​
​	​	​	​	Risk and Compensation	​	​	54	​
​	​	​	​	Compensation Governance	​	​	54	​
​	​	​	​	Roles and Responsibilities in Setting Named Executive Officer Compensation	​	​	56	​
​	​	​	​	Compensation Committee	​	​	56	​
​	​	​	​	Independent Compensation Consultant	​	​	56	​
​	​	​	​	Chief Executive Officer	​	​	56	​
​

 

Compensation Discussion and Analysis

Overview

In 2019-2020, the Compensation Committee conducted a comprehensive review of iStar’s existing compensation program and engaged in extensive shareholder outreach seeking feedback and input, to identify any appropriate changes to ensure that our compensation program is aligned with shareholders interests and concerns.

During that engagement process, shareholders told us they were generally comfortable with the core structure of our long-term performance program and recognized the merit in linking executive compensation with Company returns on specific assets and overall market performance. However, they consistently expressed a desire for greater detail and transparency around our program and the process we use to determine payouts.

Following our outreach conversations and its review of the compensation program, in 2020 the Committee made several significant changes to our program structure and design. These changes are set forth in the table on page 46, under “Shareholder Engagement”, and described elsewhere in this CD&A.

These changes were meaningful and reflective of our shareholders’ suggestions. We believe they better align our compensation with shareholder interests, by further linking pay with performance and increasing transparency and disclosure. We were very pleased when our shareholders overwhelmingly supported our 2020 Say on Pay vote. As time and circumstances shift, we will continue to seek feedback from our shareholders so their interests and iStar’s executive compensation program are aligned.

This CD&A details how our executive compensation programs are designed and operate for our named executive officers (“NEOs”), who in 2020 included:

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Compensation Philosophy and Guiding Principles

Our compensation programs are designed to foster a strong pay-for-performance culture by ensuring we balance emphasis on near-term and long-term performance. The Compensation Committee, and the Board as a whole, believe this approach is essential given the nature of our portfolio of assets and investment opportunities.

We strive to provide our employees with meaningful reward opportunities while maintaining alignment with shareholder interests and business imperatives. In setting and overseeing the compensation of our executive officers, the Compensation Committee believes our compensation philosophy is best enacted by designing programs and policies to achieve three core objectives:

Shareholder Engagement

Following disappointing say-on-pay votes in 2018 and 2019, the Compensation Committee conducted a thorough evaluation of iStar’s compensation program with a focus on identifying the aspects of the program believed to cause concern for shareholders. The Compensation Committee then engaged in extensive dialogue with shareholders to understand their perspectives as well as to seek feedback on potential areas of change. As a result of the feedback received in these discussions, the Compensation Committee made meaningful changes to the executive compensation program effective in 2020.

 

The strong shareholder support received in the 2020 Say on Pay vote, with 98% of shares voting “FOR” our compensation program, indicated to us that we had addressed shareholders’ expressed concerns and utilize a program that shareholders view as strongly aligned with their interests. Going forward, the Compensation Committee and full Board are committed to ensuring iStar’s pay program aligns with shareholders’ interests and supports long-term, sustainable value creation.

2020 Compensation Program

Our executive compensation program for 2020 consisted of three primary components:

For the named executive officers, the Compensation Committee determines the amounts of these compensation components annually after considering:

Each compensation component is discussed below.

Base Salaries

The Compensation Committee reviews the annual base salaries of our named executive officers every year. Salaries of our current NEOs for 2019 and 2020 are shown below. In 2020, the Compensation Committee reduced the CEO’s base salary and included him as a participant in the AIP, increasing the portion of his pay that is at risk and aligning him with the rest of the management team. Base salary for Mr. Fox- Geen is shown at an annualized rate of base salary, as Mr. Fox-Geen’s employment commenced in March 2020

Annual Incentive Plan (AIP)

Our named executive officers, as well as our other employees, are eligible to earn an annual incentive award under the AIP if we achieve financial performance goals approved by the Compensation Committee.

Each year, the Committee discusses and approves performance and payout levels under the AIP after a multi-step process of reviewing our current strategy, business plans and budgets, headcount and roles, and other relevant factors. As described elsewhere, our business strategy has evolved in recent years as we focus on scaling the ground lease platform, simplifying our balance sheet, and accelerating the disposition of legacy assets. Consequently, our prior results are not necessarily indicative of our future results. Our projected financial performance in 2020 was highly variable and based on a wide range of assumptions and uncertainties.

In the beginning of 2020, and prior to the onset of the COVID-19 pandemic in the United States, the Committee approved two performance metrics to determine 2020 AIP funding: (1) Adjusted Earnings Per Share, and (2) Adjusted Book Value Per Share:

○

Adjusted Earnings Per Share measures the quality of the earnings we are generating. We believe our ability to generate high quality earnings directly impacts share price and shareholder value creation.

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○

Adjusted Book Value Per Share was added as a second performance metric, based on the Committee’s conclusion that Adjusted Earnings Per Share, which is based on GAAP earnings and profitability, alone does not adequately take into consideration several of the business’ key performance indicators.

​

For each metric, the Compensation Committee approved performance requirements and corresponding AIP pool funding levels for 2020, to be assessed based on actual performance achieved during 2020.

Starting in March 2020, our business was impacted by the COVID-19 pandemic, as was virtually every other business. While we have a diversified portfolio of loans, net leases and operating and development properties, many of our tenants, borrowers and other customers experienced significant economic challenges as the lockdowns commenced and continued, especially in the entertainment, hotel, and land categories. In addition, our ability to execute our strategy of monetizing legacy assets was affected as overall transaction activity diminished significantly.

As the pandemic continued, with great uncertainty as to how and when economic activity would recover, the Committee began a process of reevaluating our financial results and forecasts, and the resulting impact on AIP performance metrics and funding levels. The Committee considered our revised forecasts, which indicated our Adjusted Book Value Per Share was tracking at or around target and Adjusted Earnings Per Share was unlikely to achieve the threshold performance level. The Committee also considered that, under the circumstances of the pandemic, our ability to achieve cost savings and efficiencies in our business operations had taken on increased importance.

 

After extensive deliberation and consultation with management and the Committee’s consultants, the Committee elected not to modify any aspects of the outstanding performance metrics or targets. However, the Committee determined it was appropriate to establish an additional performance metric under the AIP to recognize specific actions that became more critical in the current environment. Specifically, the Committee approved adding Core G&A (net of Safehold management fee income) as a third AIP performance metric, in addition to Adjusted Earnings Per Share and Adjusted Book Value Per Share. The Committee established threshold and target performance requirements, and associated AIP funding levels, if we achieved Core G&A that was below the specified threshold and target levels, and concluded that no additional AIP funding would be authorized for achieving Core G&A savings beyond the target level, as follows:

Promptly following year-end 2020, in connection with its consideration of annual compensation determinations, the Committee reviewed our 2020 financial results relative to the three performance metrics that had been established under the AIP for 2020 and the funding levels associated with those performance results. Based on its consideration of these results, the Committee approved funding the AIP pool as follows:

NOTES:

(1)

See Exhibit A to this proxy statement for our methodology and calculations of Adjusted Earnings, Adjusted Book Value and Core G&A.

​

(2)

A linear scale of performance targets and payout levels is utilized to determine performance and funding for results that fall between the specified amounts.

​

Under the terms of the AIP, if our TSR is negative for the year, AIP pool funding is capped at the threshold level, regardless of level of performance achieved under the established performance metrics. Due to our positive TSR performance during 2020, the cap did not apply, and no adjustments were made to the AIP pool for 2020.

To account for unanticipated circumstances and external economic factors, including the impact of shifts in timing of our asset transactions, the Compensation Committee has discretion to adjust the size of the total AIP bonus pool by up to 25% (up or down) based on its assessment of our overall performance; factors relevant to how the performance results were achieved; our financial condition, including liquidity; and other relevant considerations. However, the Committee does not have discretion to override the impact of the TSR modifier when it caps the AIP pool funding amount at the threshold level. The Committee made no discretionary adjustments to the AIP pool for 2020.

AIP Awards for 2020 (Approved and Paid in February 2021)

For services during 2020, 81% of our AIP pool was awarded to employees other than our NEOs. AIP awards for our current NEOs for 2019 and 2020 are shown below. The AIP awards shown for 2019 were approved and paid in

February 2020 for services performed in 2019. The AIP awards shown for 2020 were approved and paid in February 2021 for services performed in 2020. 80% of the award shown was paid in cash and 20% was paid in the form of fully-vested shares of our Common Stock, subject to transfer restrictions for 18 months, with the exception of the 2020 award to Mr. Fox-Geen, which was paid all in cash in accordance with the terms of his employment offer. In accordance with SEC disclosure rules, the cash portion of the AIP awards is reported in the Summary Compensation Table on page 60 as compensation for the year in which the services were performed and the shares portion is reported as compensation in the following year in which the shares are granted.

In approving individual AIP awards to our NEOs for services in 2020, the Committee took into consideration the contributions and accomplishments of each NEO, including their performance with reference to specific individual goals developed for each executive, including the following:

○

For Mr. Sugarman, goals based on increasing our adjusted book value, increasing our dividend, increasing our share price, achieving adjusted earnings per share in excess of a stated target, hiring and successfully integrating a new chief financial officer, and continuing the scaling of our ground lease business

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○

For Mr. Alvarado, goals based on originating ground lease investments in excess of a stated target, leading and enabling our key business functions to achieve a specified level of operating framework targets, and improving our employee engagement scores in excess of stated target.

​

○

For. Mr. Fox-Geen, who was hired after 2020 goals had been set for the other NEOs, goals relating to his integration into the role of chief financial officer, the effectiveness of his leadership of the finance and accounting functions, and other contributions to the executive leadership team.

​

Long-Term Incentive Compensation—iPIP

Long-term incentive compensation for our NEOs is delivered primarily through the iPIP. The ultimate value of awards, if any, under the iPIP is directly tied to the performance of our assets and investments, as well as our relative TSR performance. Commencing in 2019, with awards of points in the 2019-2020 iPIP pool, and going forward, iPIP awards are granted biennially. Accordingly, our NEOs who received grants of iPIP points in the 2019-2020 iPIP pools in 2019 did not receive grants of any iPIP points in 2020. Mr. Fox-Geen, who was hired as our Chief Financial Officer in March 2020, received an award of 2.0 iPIP points in the 2019-2020 iPIP pools in connection with the commencement of his employment.

The following table shows awards of iPIP points made during 2020 to our NEOs:

Why We Created iPIP

iPIP is the primary form of performance-based incentive compensation for our NEOs, as well as other executives, investment professionals and select other employees. iPIP was implemented in 2013 and approved by our shareholders in 2014. iPIP has been designed to incentivize executives and other investment professionals to participate in the long-term financial success of iStar by directly linking their pay with the performance of our portfolio assets.

 

○

iStar’s compensation program is intentionally unique because of our differentiated and unique asset mix and business platform

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○

iPIP provides a compensation opportunity consistent with expectations of top-tier executives in other high-caliber, investment-based organizations with whom we compete for talent

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○

Payout is not guaranteed, is subject to long vesting requirements, and is contingent upon strict performance criteria being met, incentivizing executives to drive the performance of portfolio assets over the long-term

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How iPIP Works

One consistent piece of feedback iStar received during shareholder engagement efforts was the request for more transparency on the iPIP program and how it pays out. Below is a graphic illustrating the principles that govern the determination of payouts, if any, to iPIP participants. For more complete description of the iPIP, including the complete iPIP document, see our Definitive Proxy Statement filed on April 11, 2014, incorporated by reference as Exhibit 10.2 to our 2020 annual report on Form 10-K. Historically, there have been no payouts to management prior to the fifth year after an iPIP pool is established.

(1)

Net cash proceeds means cash proceeds net of asset-level debt costs.

​

(2)

The FTSE NAREIT REITs Index and the Russell 2000 Index.

​

The ultimate value of awards under iPIP is directly tied to the performance of iStar’s portfolio assets and investments over the long-term and is subject to reduction based on our TSR. If iStar’s total shareholder return (TSR) for the period commencing January 1, 2013, when the iPIP was first adopted, and ending on the date an iPIP payout is calculated, is below the average of the median TSR of the select indices on that date, the amount paid out to iPIP participants from an iPIP pool will be reduced by the percentage difference of such underperformance. For the 2021-2022 pools and all future pools, this negative TSR modifier for iPIP payouts has been toughened and that penalty for TSR performance vs. index is doubled.

iPIP Investment Periods and Pools

Every other year, we establish two iPIP pools tied to investments we make during that year and the following year. One pool, a “short-term pool,” includes investments that we generally expect, as of the origination date, should have a realization date that is six years or less from the origination date. A second pool, a “long-term pool,” includes investments that we generally expect, as of the origination date, should have a realization date that is more than six years from the origination date. The performance of each pool is tracked separately and payouts, if any, to participants are solely based on the performance of each pool. For purposes of allocating certain types of investments between short-term and long-term pools, the Compensation Committee has adopted policies that, unless the committee approves otherwise, all net lease investments will be allocated to the long-term pool, and investments in SAFE securities will be allocated 50% to the short-term pool and 50% to the long-term pool, in effect when the investments are made. Shares of SAFE common stock are included in each of the 2017-2018 and 2019-2020 short-term and long-term pools and may also be included in the 2021-2022 pools. The Compensation Committee retains the final authority to exclude certain assets as investments that will be allocated to an iPIP pool and has determined, for example, that iStar equity and debt securities that are repurchased by the company and certain additional investments in pre-existing assets will be excluded.

Since the iPIP program was initially adopted, we have established and awarded points in short-term and long-term pools for each of 2013-2014, 2015-2016, 2017-2018, 2019-2020 and 2021-2022. We grant participation interests, or points, in each iPIP pool, primarily to senior executives and select professionals engaged in our investment activities. As noted above, beginning with the iPIP awards made in 2019, awards of iPIP points are being granted biennially.

Vesting of iPIP Points

iPIP points vest over a six-year period—40% after the initial two years, and 15% at the end of each of the next four years, provided the recipient is still employed at iStar. Vesting occurs even if the pools have not yet reached the payout stage (described below). However, no payouts are made from an iPIP pool on vested points unless and until the performance criteria for that pool have been met.

The values of iPIP points shown in the Summary Compensation Table are based upon the fair value on the date the points are granted, but for participants, the realizable value of iPIP points at the time they are granted is zero. The ultimate value participants may realize from their iPIP points, if any, depends on how well the investments in an iPIP pool perform over time, and that depends on a number of performance factors, including the amount investments originated, realization on those investments, asset-specific leverage, corporate leverage, credit losses, and other relevant factors.

The below flow chart details the timeline from a short-term iPIP pool investment period to payout:

 

iPIP Fundings and Distributions

Under the iPIP, management calculates the performance of the investments in the iPIP pools on a quarterly basis. These calculations, together with supporting materials, are furnished to our independent registered public accounting firm as part of the overall audit process. If it is determined that the performance of the investments in an iPIP pool has achieved sufficient net cash to provide for funding and payouts from the iPIP pool, a negative TSR modifier is applied to determine if iStar’s relative TSR is below the average of the medians of the FTSE NAREIT REITs Index & the Russell 2000 Index. An independent valuation consultant performs the necessary TSR calculations to determine the extent to which reductions in iPIP pool fundings are required based on TSR performance. Management’s calculations, supporting materials, and the TSR calculations are reviewed by the Compensation Committee before payout distributions are made to iPlP participants.

Illustration of 2013-2014 iPIP Short-Term Pool

CEO Award and Payouts

For purposes of illustration, the following table sets forth information on our CEO’s award and payouts from the 2013-2014 short-term iPIP pool through December 31, 2020. No assets in the 2013-2014 long-term iPIP pool have yet been monetized and no payouts have yet been paid to participants in that pool.

​

(1)

Dollars in thousands

​

(2)

Equals total realized value as a percentage of total grant date value

​

(3)

Realized value paid 50% in our stock and 50% in cash.

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iPIP Distributions Paid in 2020

The initial payouts from the 2013-2014 short-term iPIP pool were first made during 2018 to participants holding vested points and additional payouts were made in 2019, based upon determinations that the performance of the investments in the 2013-2014 short-term iPIP pool had achieved sufficient net cash to provide for funding and payouts from this short-term iPIP pool, after appropriate adjustments based on application of the negative TSR modifier, in accordance with the terms of the iPIP. No payouts were made from the 2013-2014 short-term pool in 2020. No payouts have yet been made from the 2013-2014 long-term iPIP pool.

The initial payouts from the 2015-2016 short-term iPIP pool were first made during 2019 to participants holding vested points and additional payouts were made in 2020, based upon determinations that the performance of the investments in the 2015-2016 short-term iPIP pool had achieved sufficient net cash to provide for funding and payouts from this short-term iPIP pool, after appropriate adjustments based on application of the negative TSR modifier, in accordance with the terms of the iPIP. No payouts have yet been paid to participants in the 2015-2016 long-term iPIP pool.

​

(1)

These distributions were paid 50% in cash and 50% in shares of our common stock, net of applicable tax withholdings.

​

(2)

Calculated from date of inception of short-term iPIP pool through December 31, 2020.

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Advantages of the iPIP Structure

iPIP’s features foster strong alignment with shareholder interests.

First, the assets and investments in an iPIP pool must perform well before our executives receive any payout for their points. Even if the assets and investments do perform well, payouts will be reduced if iStar’s TSR underperforms benchmark indices.

Second, the iPIP instills a long-term mindset. Points vest over the course of six years, and iPIP pools must perform successfully over the long term to satisfy the performance tests that are preconditions to any payout.

Third, to further align our executives’ interests with those of our shareholders, iPIP payouts are divided equally between shares of our common stock and cash, rather than all-cash payouts. (However, if there happen to be insufficient shares available for issuance under shareholder-approved plans, iPIP payouts may be made in cash.)

Finally, the iPIP program is structured to be similar to executive compensation programs offered by other investment platforms with whom we compete for talent (including real estate funds, hedge funds, and private equity firms). We can only compete for the best executive talent if we offer market competitive incentive opportunities.

Long-Term Incentive Compensation—Legacy 2009 LTIP

As noted above, the iPIP is intended to serve as the primary vehicle for providing long-term incentive compensation to our named executive officers, other senior executives, and investment professionals. However, as deemed appropriate, we will also grant equity-based awards under the 2009 LTIP. These awards typically are in the form of restricted stock units (Units) that entitle the holder to receive an equivalent number of shares of our common stock if and when the Units vest.

During 2020, the Compensation Committee granted LTIP awards to our NEOs as shown in the table below. The LTIP award to Mr. Alvarado was granted in February 2020 in recognition of his service and performance during 2019, in the form of Units that cliff vest in one installment in January 2023. The LTIP award to Mr. Fox-Geen was granted in March 2020 in connection with the commencement of his employment, in the form of Units that vest in equal annual installments over a three-year period ending in January 2023. On vesting, the Units entitle the holder to receive an equivalent number of shares of our Common Stock, net of applicable tax withholdings.

 

Risk and Compensation

We believe that both the company and our individual employees should focus on identifying, pricing, managing, and monitoring risk, with the objective of achieving attractive, long-term, risk-adjusted returns for our shareholders. Our compensation program is designed to support and motivate our employees in achieving this objective without encouraging excessive risk-taking. We believe the following attributes contribute to an executive compensation program that does not create risks that are reasonably likely to have a material adverse effect on iStar.

Appropriate pay mix. We rely on an assortment of compensation elements—both fixed and variable, cash and equity-based, and short- and long-term—to ensure our executives focus on objectives that help us achieve our business plans and create alignment with long-term shareholder interests.

Focus on long-term performance-based compensation. A significant portion of the compensation we pay our senior executives consists of long-term incentive awards that vest over multiple years. These awards will not pay out until iStar earns a complete return of our invested capital, as well as actual or imputed interest and a preferred return hurdle rate, and any payouts are subject to reduction if our total shareholder return is below market.

iStar executives are also shareholders. Our NEOs, other executive officers, and directors must comply with rigorous stock ownership guidelines.

Reduced incentive for misconduct. Our clawback policy allows us to recover incentive compensation paid to an executive in the event such executive’s fraud, willful misconduct, or violation of a company policy leads to a restatement of our financial statements or negative revision of a financial measure used to determine that incentive compensation.

No hedging or pledging. Our executives and directors are prohibited from engaging in transactions that hedge the risk of owning iStar common stock. In addition, directors, officers, and other employees may not pledge our securities as collateral for a loan or hold iStar securities in a margin account except with prior approval in accordance with guidelines approved by our board from time to time.

No guaranteed employment. We have no employment agreements with executive officers. All of our executives are employed on an “at will” basis and may be terminated with or without cause at any time. Similarly, our executives have no “golden parachute” or “golden coffin” arrangements. Taken as a whole, our compensation arrangements reward executives for appropriately identifying and managing risks, but provide no guaranteed “safety net” if they are ineffective in doing so. Moreover, the structure of our incentive compensation program ensures that any loss of value to our shareholders is shared by management.

Compensation Governance

In addition to structuring our compensation programs with objective, predetermined goals, and providing for direct oversight by our Compensation Committee, we employ a number of features to enhance our compensation governance, as described below.

Stock Ownership Guidelines

Our non-employee directors, executive officers, and other senior officers are expected to maintain equity ownership interests having at least minimum prescribed values. Our ownership guidelines are as follows:

Non-employee directors and officers have five years from the date they are elected to the board or appointed to an officer position, as the case may be, to satisfy the ownership guidelines. All of our non-employee directors and named executive officers are currently in compliance with the guidelines.

Clawback Policy

We have a “clawback” policy that is reflected in the provisions of our incentive compensation awards. If we determine that an employee has engaged in fraud, willful misconduct, or violation of a company policy, and we further determine that misconduct caused or contributed to a material restatement or adjustment of iStar’s financial results within two years after the period presented, or caused a material negative revision of a financial measure used to determine incentive compensation, the Compensation Committee will review performance-based compensation awarded to that employee and, if appropriate, seek recoupment of an appropriate portion of such award.

Insider Trading Policies and Procedures

The federal securities laws prohibit a company’s directors, officers, employees and other “insiders” from engaging in securities trading on the basis of material, non-public information. It is our policy, without exception, to comply with all applicable laws and regulations in conducting our business. Accordingly, iStar has adopted an insider trading policy that prohibits each member of our Board of Directors and each of our officers and other employees from buying or selling our securities on the basis of material, non-public information, and from assisting or working in concert with others to do so. We impose “blackout periods” on a quarterly basis, and otherwise as appropriate, that prohibit insiders from trading in our securities, and require that any trading by an insider must be approved in advance by our compliance officer.

“Double Trigger” Change-in-Control Provision for Long-Term Incentive Compensation

All long-term incentive compensation awards for our executive officers include a “double trigger” change-in-control provision, meaning that a change in control of iStar will not alone cause any acceleration of vesting of those awards. Only if a change-in-control transaction is followed by termination of employment (or effective termination due to a material reduction in position, responsibilities, compensation, or other significant terms of employment), will the incentive compensation awards continue to vest, either in full or on a prorated basis.

Tax Considerations

Section 162(m) of the Internal Revenue Code generally limits tax deductibility of compensation paid by a public company to its chief executive officer and certain other highly compensated executive officers to $1 million annually. Prior to enactment of the Tax Cuts and Jobs Act in November 2017, Section 162(m) included an exception for performance-based compensation that meets specific requirements. This exception has now been repealed, subject to certain grandfathered exceptions, which means employers generally lose the deduction for compensation to covered executives in excess of  $1 million. Notwithstanding the loss of the exception for performance-based compensation, the Compensation Committee generally intends to continue to utilize the grandfathering rule under the Tax Cuts and Jobs Act where available. However, the Compensation Committee reserves the right to pay nondeductible compensation.

 

Roles and Responsibilities in Setting Named Executive Officer Compensation

Compensation Committee

The Compensation Committee reviews and approves overall compensation philosophy and strategy, as well as the compensation programs in which executive officers participate. Ultimately, the Compensation Committee is responsible for:

○

approving specific compensation for the executive officers

​

○

determining the form and amount of that compensation

​

○

aligning executive compensation with shareholders’ interests

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To that end, at the beginning of each year the Compensation Committee works with the CEO to set company performance goals and benchmarks for individual executive performance that we expect will positively influence shareholder value. At the end of each year, the Compensation Committee, taking into consideration the CEO’s recommendations for his direct reports, determines and approves specific compensation amounts for our executive officers.

With respect to the CEO, the Compensation Committee annually:

○

reviews and approves objectives

​

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evaluates the CEO’s performance against those objectives and iStar’s overall performance

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determines the CEO’s compensation level based on that evaluation

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When appropriate, members of the Compensation Committee engage with shareholders and other stakeholders to seek input on executive compensation matters.

The Compensation Committee has authority to retain independent compensation consultants and legal counsel to assist it in fulfilling its obligations.

Independent Compensation Consultant

As requested by the Compensation Committee, Pay Governance:

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provides advice and opinion on the appropriateness and competitiveness of our executive compensation programs relative to market practice

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provides advice on our compensation strategy and our internal compensation-setting processes and governance

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attends Compensation Committee meetings

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Chief Executive Officer

The CEO works with iStar’s other executive officers to set performance goals for the company and individual executives, as appropriate, at the beginning of each year. Using that collective insight, the CEO recommends incentive plan designs and goals for the Compensation Committee’s review and approval.

The CEO makes recommendations to the Compensation Committee regarding compensation for the NEOs after reviewing iStar’s overall performance and each executive’s personal contributions. The CEO incorporates numerous qualitative factors into his recommendations. The CEO does not participate in the Committee’s executive session discussions or deliberations related to his own compensation.

 

Compensation Committee Report

In connection with our oversight of the compensation programs of iStar Inc., we, the members of the Compensation Committee listed below, have reviewed and discussed with management the Compensation Discussion and Analysis set forth in this proxy statement. Based upon this review and discussion, the Compensation Committee has recommended to iStar’s board of directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in iStar’s 2020 annual report on Form 10-K.

Submitted by the Compensation Committee

Barry W. Ridings (Chairman)
Robin Josephs
Anita Sands

Chief Executive Officer Pay Ratio

For 2020, the ratio of the annual total compensation of Mr. Sugarman, our CEO, to the median of the annual total compensation of all of our employees other than our CEO (“Median Annual Compensation”) was 5 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of SEC Regulation S-K using the data summarized below. For purposes of this disclosure, we refer to the employee who received Median Annual Compensation as the “Median Employee.” The date used to identify the Median Employee was December 31, 2020.

To identify the Median Employee, we first determined our employee population as of December 31, 2020. On that date, iStar and our consolidated subsidiaries collectively had 146 employees. This number includes both full-time and part-time employees, but not independent contractors or “leased” workers. We then measured compensation for the period beginning on January 1, 2020, and ending on December 31, 2020, for these employees. This compensation measurement was calculated by totaling, for each employee, gross taxable earnings, including salary and bonuses as shown in our payroll and human resources records for 2020. We annualized compensation for any employee who worked for less than the full year.

For purposes of calculating this ratio, we used the total compensation of  $935,522 reported for Mr. Sugarman in the Summary Compensation Table for 2020. Median Annual Compensation for 2020 was $195,530. This amount was calculated by totaling all applicable elements of compensation for our Median Employee for 2020 in accordance with Item 402(c)(2)(x) of Regulation S-K.

 

Executive Compensation Tables

Summary Compensation Table

The following table and the accompanying footnotes set forth compensation information for the past three years for our named executive officers who served during 2020

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(1)

Amounts reported in the “Stock Awards” column include our performance-based iPIP awards, which vest over six years. Amounts reported in this column include the dollar value of iPIP points granted in the year listed. The executives realized no value and did not receive income at the time these awards were granted. Actual payments will be made to the executives in respect of these awards only if meaningful performance hurdles are achieved by iStar’s investments and long vesting periods are satisfied. In addition, iPIP payouts will be reduced if our TSR underperforms. See “Compensation Discussion and Analysis—iPIP distributions paid in 2020,” for a discussion of payouts made to our NEOs in 2020.

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The values of the iPIP awards are based on the grant date fair value calculated in accordance with FASB ASC Topic 718 (without regard to forfeitures) based on various assumptions with respect to forecasted investment originations, expected realization dates of investments (including maturities or sale dates), asset-specific leverage, corporate leverage, investment returns, credit losses, and other relevant factors. These assumptions are subject to risks and uncertainties that may cause actual results or outcomes to differ materially. Refer to Note 15 of our consolidated financial statements in our 2020 10-K Report for further details.

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Amounts reported in the “Stock Awards” column for 2019 include the dollar value of iPIP points granted in 2019 to our named executive officers in the 2019-2020 iPIP pools. Amounts reported in the “Stock Awards” column for 2018 include the dollar value of iPIP points granted in 2018 to our named executive officers in the 2017-2018 iPIP pools. Starting in 2019, awards of iPIP points are intended as two-year awards; accordingly, no iPIP points were awarded in 2020, except for an award made to Mr. Fox-Geen on commencement of his employment. See Note (5) below.

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(2)

Amounts reported in the “Non-Equity Incentive Plan Compensation” column include cash awards paid under our AIP to our named executive officers. Pursuant to the SEC’s disclosure rules and regulations, cash bonuses paid under the AIP are reported under the “Non-Equity Incentive Plan Compensation” column for the year in which services were performed.

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(3)

Amounts reported in the “All Other Compensation” column include our matching contributions to the accounts of our named executive officers in our 401(k) Plan, additional compensation attributable to certain life and disability insurance premiums, and accrued dividend equivalents paid upon the vesting of our long-term incentive awards.

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(4)

No annual incentive awards were paid to Mr. Sugarman under our AIP for services in 2019 and 2018.

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(5)

Amounts reported in the “Stock Awards” column for 2020 for Mr. Alvarado include the dollar value of  (a) shares of our common stock issued in February 2020 as part of his annual incentive awards for services rendered in 2019, which

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shares were fully vested but subject to sales restrictions for specified periods, and (b) LTIP awards in the form of restricted stock units (Units) granted in February 2020, which Units vest at the end of three years, based on the grant date fair value of such awards calculated in accordance with FASB ASC Topic 718. The fair value of the time-based Units was calculated based upon the share price of our common stock at the date of grant.

 

Amounts reported in the “Stock Awards” column for 2020 for Mr. Fox-Geen include the dollar value of LTIP awards in the form of Units and the dollar value of points in the 2019-2020 iPIP pool granted to Mr. Fox-Geen on commencement of his employment on March 23, 2020, based on the grant date fair value of such awards calculated in accordance with FASB ASC Topic 718. The fair value of the time-based Units was calculated based upon the share price of our common stock at the date of grant.

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Amounts reported in the “Stock Awards” column for 2019 for Mr. Alvarado include the dollar value of LTIP awards granted in February 2019, which Units vest in annual installments vest over three years, based on the grant date fair value of such awards calculated in accordance with FASB ASC Topic 718. The fair value of the time-based Units was calculated based upon the share price of our common stock at the date of grant.

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Grants of Plan-Based Awards

The following table includes information on plan-based awards granted to our named executive officers who served during 2020.