UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

(Amendment No.   )

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Preliminary Proxy Statement

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

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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iStar Inc.

(Name of Registrant as Specified In Its Charter)

   

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

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Notice of 2022 Annual Meeting of
Shareholders

Items of Business

Record Date

The Board has fixed the close of business on March 22, 2022 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				​	​	7	​
​	​	​	​	Candidates for Election as Director	​	​	9	​
​	Corporate Governance				​	​	15	​
​	​	​	​	Board Leadership Structure	​	​	15	​
​	​	​	​	Board Refreshment	​	​	16	​
​	​	​	​	Director Independence	​	​	17	​
​	​	​	​	Nominations for the Board	​	​	17	​
​	​	​	​	Board’s Role in Risk Oversight	​	​	18	​
​	​	​	​	Board Evaluation Process	​	​	19	​
​	​	​	​	Board Meetings Held during 2021	​	​	19	​
​	​	​	​	Executive Sessions	​	​	19	​
​	​	​	​	Service on Other Boards	​	​	20	​
​	​	​	​	Director Resignation Policy	​	​	20	​
​	​	​	​	Defensive Measures Profile	​	​	20	​
​	​	​	​	“Whistleblower Policy”	​	​	20	​
​	​	​	​	Governing Documents	​	​	21	​
​	​	​	​	Disclosure Committee	​	​	21	​
​	​	​	​	Succession Planning	​	​	21	​
​	​	​	​	Communications with the Board	​	​	22	​
​	​	​	​	Environmental, Social and Governance (ESG) Practices and Programs	​	​	22	​
​	​	​	​	Cybersecurity	​	​	24	​
​	Board Committees				​	​	25	​
​	​	​	​	Audit Committee	​	​	26	​
​	​	​	​	Compensation Committee	​	​	27	​
​	​	​	​	Nominating and Governance Committee	​	​	28	​
​	​	​	​	Investment Committee	​	​	28	​
​	Director Compensation				​	​	29	​
​	Indemnification				​	​	31	​

​	Proposal 2—Advisory Vote to Approve Executive Compensation				​	​	32	​
​	​	​	​	Compensation Discussion and Analysis Contents	​	​	33	​
​	​	​	​	Compensation Discussion and Analysis	​	​	34	​
​	​	​	​	Overview	​	​	34	​
​	​	​	​	2021 Compensation Program	​	​	35	​
​	​	​	​	Compensation Committee Report	​	​	47	​
​	​	​	​	Chief Executive Officer Pay Ratio	​	​	48	​
​	​	​	​	Executive Compensation Tables	​	​	49	​
​	Proposal 3—Ratification of the Appointment of Independent Registered Accounting Firm				​	​	55	​
​	​	​	​	Accounting Fees and Services	​	​	55	​
​	Report of the Audit Committee				​	​	57	​
​	Stock Ownership Information				​	​	59	​
​	​	​	​	Security Ownership of Certain Beneficial Owners and Management	​	​	59	​
​	​	​	​	Section 16(a) Beneficial Ownership Reporting Compliance	​	​	60	​
​	Certain Relationship and Related Party Transactions				​	​	61	​
​	Information about the Annual Meeting of Shareholders				​	​	63	​
​	Exhibit A—Non-GAAP Reconciliations				​	​	A-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:

2021 Business Highlights and Performance

Our 2021-2022 business strategy has been to (1) simplify our business by monetizing our legacy assets and recycling capital into the ground lease ecosystem, (2) maintain a strong and flexible balance sheet, and (3) scale Safehold Inc. (NYSE:SAFE) by growing the ground lease ecosystem and communicating the full value of SAFE’s platform. We made significant progress in 2021:

1. Simplify iStar’s business to focus resources and drive shareholder value

A multi-year commitment to simplifying the business positions iStar to continue investing in a market-leading modern ground lease ecosystem while simultaneously returning capital to shareholders.

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78% total shareholder return, making iStar one of the top performing REITs in 2021

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We sold over $400M in legacy and non-core assets, generating over $115M in gains and reducing legacy assets below 10% of the portfolio

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We also sold a large portfolio of net leased assets in Q1 2022 for over $3B, a value significantly above our carrying balance

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$122.4M stock repurchased, continuing iStar’s history of returning capital to shareholders when the market underestimates intrinsic value

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14% dividend increase from an annualized $0.44 per share to $0.50 per share

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Note: Dividend was raised in third quarter of each year. Graph reflects the third quarter dividend in each year on an annualized basis.

2. Strengthen the balance sheet to enhance liquidity and flexibility

We have taken a proactive approach to strengthening our balance sheet by refinancing debt maturities early, bolstered by the $3.1 B sale of our net lease portfolio (in March 2022)(1) with proceeds primarily used to repay indebtedness, removing almost all secured debt.

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$109.0M ($1.51 per share) net income (allocable to common shareholders)

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$244.9M ($3.12 per share) Adjusted Earnings (allocable to common shareholders) [See Exhibit A]

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$1.1B reduction in total indebtedness, including a 98% reduction in total secured indebtedness, pro forma net lease transaction

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$1.4B of cash on balance sheet, pro forma net lease transaction

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0.2x leverage(2) pro forma the net lease portfolio sale, a material reduction since year-end 2020

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Fitch credit rating upgrade to BB Stable with progress at Moody’s and S&P

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3.6 years weighted average debt maturity

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(1)

A definitive sales agreement for sale of the net lease portfolio was signed on 2/2/22. The transaction closed on March 22, 2022. For more information, please refer to the Form 8-K filed with the SEC filed on or before March 28, 2022.

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(2)

Corporate leverage is the ratio of total debt less cash and cash equivalents divided by Adjusted Total Equity, gross of NCI. Adjusted Total Equity includes the market value of iStar’s investment in SAFE based on December 31, 2021 closing stock price of  $79.85.

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Scale market-leading modern ground lease ecosystem

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As Safehold’s founder, manager and largest shareholder, iStar helped Safehold generate $1.5 billion of originations in 2021, culminating in a record 17 ground leases closed in Q4 ‘21. Safehold’s portfolio has grown 14x since IPO in 2017. Safehold was awarded investment grade credit ratings in February 2021 of Baa1 from Moody’s and BBB+ from Fitch.

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$1.5B ground lease originations in 2021, bringing Safehold’s portfolio to nearly $5B across more than 100 transactions

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$121M invested by iStar in SAFE shares, bringing iStar’s total ownership to 64.6% of shares outstanding

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$1.75B valuation of Caret, a separate security interest that tracks the value of Unrealized Capital Appreciation (UCA) at Safehold (to the extent UCA is realized upon, certain specified events), from a private sale to a group of leading FinTech, PropTech, institutional and high net worth investors. As part of the sale, Caret Ventures (Caret) is obligated to seek to provide a public market listing for the Caret units, or securities for which they may be exchanged, within two years at a value in excess of the new investors’ basis. If it is impossible to provide public market liquidity within two years, the investors have the right to cause Caret to redeem their Caret units at their original purchase price.

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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’s 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

Through our shareholder engagement, we provide investors with means of communicating their views, concerns, ideas and opinions to the board of directors and our senior management. Simultaneously, the process gives our board and management an opportunity to share their perspectives on the company, its historical performance and future plans. During 2021 and the first quarter of 2022, we reached out to investors representing approximately 87% of our outstanding shares and met or communicated directly with those who requested the opportunity, through individual meetings, presentations at investor conferences and other communications.

The priority topics for our shareholder outreach this past year have been iStar’s business performance and the evolution of iStar’s business strategy, especially with respect to the development and growth of SAFE’s ground lease business. In addition, our discussions with investors have addressed our governance policies and practices, our ESG initiatives, our executive compensation program and other matters of interest to our investors. In addition to our management team, our Lead Director and the Chairman of our Compensation Committee participated in investor outreach activities.

Corporate Governance Best Practices

iStar’s corporate governance policies and practices support our business and align with best practices. Key elements of these policies and practices include the following:

Proposal 1—Election of Directors

The Board of Directors has nominated six current directors for election at the 2022 Annual Meeting to serve until the 2023 Annual Meeting and until their respective successors have been elected and qualified. All current directors were elected at the 2021 Annual Meeting.

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.

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 is charged with identifying potential Board members and recommending qualified individuals to the Board for its consideration. This 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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Building on our company-wide diversity, equity and inclusion initiatives, the Board has committed that, when considering potential additions to our Board, the recruitment plan shall adequately ensure consideration of a diverse candidate pool based on race, gender and other groups that have been historically underrepresented on corporate boards.

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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simplifying our business by continuing to monetize our legacy assets

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strengthening our balance sheet to enhance liquidity and flexibility

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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 within the meaning of the NYSE listing standards, 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.

As noted above in “Director Nominations and Qualifications”, our Board has committed that, when considering potential additions to our Board, the recruitment plan shall adequately ensure consideration of a diverse candidate pool based on race, gender and other groups that have been historically underrepresented on corporate boards.

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 2023 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. See Page 25.

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. Our 2021 Corporate Sustainability Report provides an overview of our approach to sustainability and ESG issues. See page 24.

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 typically 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 2021, the annual assessment occurred during the first quarter and results were reported to our executive leadership and our Lead Director.

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 2021

During 2021, the board held ten meetings, either in person or by telephone conference call. Directors are expected to attend a majority of the Board meetings. All nominees for election as directors attended 100% of all Board meetings and applicable committee meetings held during 2021. The Board also acts by unanimous written consent in appropriate circumstances. All of our current directors were present at the 2021 annual meeting and were re-elected at that meeting.

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 of 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.

Majority Votes / 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 reports to the Board of Directors regularly, and at least annually, assessing the members of the executive leadership team. These reports, developed in consultation with Compensation Committee, include 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 Practices and Programs

Overview

Our 2021 Corporate Sustainability Report (CSR) is being published in April 2022 and will be found on our website at https://www.istar.com/sustainability/. Our 2021 CSR provides an overview of the environmental, social and governance (ESG) issues that we prioritize and the strategic and forward-thinking steps we have taken in ESG practices that we consider most relevant to our business and stakeholders both now and into the future, including the following:

○

Environmental: This year’s CSR outlines our process and data-driven approach to integrating climate risk considerations into our real estate finance business and, given the significance of Safehold to iStar’s business, specifically Safehold’s naturally long investment horizon. While we believe that Safehold’s highly diversified, nationwide portfolio protects against many individual risks, we are still proactive about identifying ways we can help offset the impacts of climate change. Tenant engagement is a growing focus, with numerous approaches being taken to promote more environmentally friendly building practices. Lastly, we are making progress on assessing and reporting our greenhouse gas (GHG) emissions — we are targeting a 20% emissions reduction by 2025 and are committing to carbon neutrality by then as well.

​

○

Green Portfolio Exposure and Tenant Engagement Efforts. As of 12/31/21, Safehold’s green portfolio exposure — the share of ground leases with completed or pending LEED certified buildings atop them — totaled $1.8 billion, representing 38% of the overall $4.8 billion portfolio. For reference, this is up from zero at the time of Safehold’s 2017 IPO, highlighting its success in growing the green investment component of its portfolio. While Safehold’s ground lease position vests day-to-day control over asset operations to its tenants through the duration of the lease term, its tenant engagement efforts include promoting initiatives that support green building.

​

○

Social: Like other companies in 2021, our team faced the ups and downs of COVID-19 office shutdowns and re-openings. We learned a great deal about ourselves through these moments, and they ultimately strengthened our resolve to provide a culture that is both inclusive and responsive to our team members’ rapidly changing needs. Through it all, we maintained a highly engaged workforce and launched a new coaching and mentorship platform for professional development focusing on mid-level positions and diverse talent. We achieved many of our diversity, equity and inclusion (DEI) goals, which notably included expanding our diverse hiring, creating a program to support and increase our work with diverse vendors, and establishing a company-wide link between inclusivity and compensation.

​

○

Cultivating engagement and inclusivity. We utilize a third-party platform to measure and improve employee engagement. Our 2021 Engagement Surveys had a 99% employee response rate and our Engagement Score of 80% meets the criterion for a Highly Engaged workforce. Our Engagement Survey helped guide our actions regarding navigating COVID-19 and our return-to-work arrangements, enabling us to create a company-wide hybrid model with appropriate accommodations to achieve more flexible work arrangements.

​

○

Inclusivity and Compensation. In 2021, we incorporated peer feedback on employees’ inclusivity performance into the annual review and compensation process. This clear link—with nearly a 10% overall weighting—between inclusivity and pay promotes an environment of awareness and accountability, which facilitates the collegial workplace we wish to demonstrate and promote. Performing well as an inclusive leader and/or colleague contributes to a potentially higher overall performance rating and increased compensation

​

○

Cultural Equity Council. Our Cultural Equity Council (CEC) is charged with helping iStar sustain and evolve our culture so that we are as equitable and inclusive as possible. The CEC is led by our Chief People Officer and includes members of our executive management, including our President and Chief Investment Officer and Chief Legal Officer.

​

○

Recruiting / Talent Management. 100% of iStar job searches in 2021 consisted of diverse candidate pools by race and gender and diverse interview panels by race and gender; half of our recent 2021 hires are women or minorities. Similarly, our Board has committed that, when evaluating potential additions to the Board, a diverse candidate pool based on race, gender and other groups will be considered. We developed and supported employees in reaching their professional goals through enhanced employee development programs, including partnering with an outside company to provide formal career training, development and coaching/mentorship. Our first program included 30% of our employees, who were diverse in terms race, gender, level, role and geographic location.

​

○

Governance: In addition to the features of our corporate governance practices and programs described elsewhere in this proxy statement, in 2021 we published our Vendor Code of Conduct, updated our Corporate Code of Conduct, and updated our employee training program to include new ESG topics. Our training includes:

​

○

Corporate Code of Conduct

​

○

Human rights, including raising awareness and prevention of harassment, discrimination and exploitation

​

○

Vendor Code of Conduct

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○

Diversity, equity and Inclusion

​

○

Sexual harassment

​

○

Cybersecurity

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○

Anti-money laundering, anti-corruption and bribery policies

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○

Ethics hotline and whistleblower program

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○

Document management and retention

​

 

ESG Governance and Leadership

Our Board of Directors is responsible for overseeing ESG factors as part of its risk management including climate related risk and opportunities and strategic business planning responsibilities. All members of our executive leadership team are actively engaged in how iStar approaches and manages ESG risks and opportunities. We have established an ESG Advisory Council, including our Chief People Officer, Chief Administrative Officer, Chief Legal Officer, and General Counsel, to ensure that we are appropriately considering and taking actions aligned with our ESG risks and opportunities, business strategy, policies, and initiatives.

In 2021, we took an important step to further embed ESG into our culture by creating a formal Head of ESG. This role is responsible for guiding ESG data gathering, strategy, disclosures, and communication, in addition to ensuring that ESG matters are thoughtfully integrated into the organization’s decision making relating to investments, risk management, underwriting, legal, asset management, stakeholder engagement efforts and employee and vendor relationships.

The ESG Advisory Council typically meets every other month and the Head of ESG further meets with individual Council members as needed. Executive management approves individual actions and suggest new areas for the team to explore. Findings and progress are reported to the Board of Directors periodically during the year in its regular quarterly meetings.

Cybersecurity

We continue to pursue our digital transformation and are on track to complete our multi-year phased cyber security and information technology program by the end of 2022. Our initial efforts targeted stablizing our infrastructure, commencing our data migration to the Cloud and defining our capability roadmap. In 2021-2022, we are focused on modernizing our overall technology platform, an important component of supporting our future growth. Our key initiatives include:

□

Completing data migration. All company data and on-premise infrastructure will be migrated 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)

​

□

Improving cyber security. We engage an outside security platform to monitor and control our Cloud infrastructure. We will be launching ISO 27001 Certification and continuing our mandatory cyber awareness training for our workforce. Our incident response plan created in 2021 documents our action plans to address cybersecurity incidents such as ransomware

​

□

Replacing and decommissioning bespoke legacy applications

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□

Enhancing data management

​

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:

​

(1)

The number of restricted shares of common stock or CSEs 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.

​

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

Restricted shares or CSEs 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 restricted shares and CSEs 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 restricted shares or CSEs 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.

Pursuant to our Non-Employee Director Share Election Program, our non-employee directors may elect to receive shares of our common stock in lieu of the cash retainers payable to them for their service on the Board of Directors. Mr. Eisenberg has made such an election, effective with the payment of retainers for his services during the first quarter of 2021.

 

The table below summarizes the compensation information for our non-employee directors for the fiscal year ended December 31, 2021. Jay Sugarman is not included in this table as he is our employee and receives no additional compensation for his services as a director.

​

(1)

Amounts included in the “Stock Awards” column reflect the grant date fair value of restricted share awards made to directors in 2021 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 restricted shares of common stock or CSEs. No directors have presently elected to receive CSEs. The restricted share awards or CSEs 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.

​

As of December 31, 2021, 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.

​

(3)

Mr. Eisenberg has elected to receive shares of our common stock in lieu of cash retainers effective with the payment for services as a director during first quarter of 2021.

​

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—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 on 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				​	​	34	​
​	​	​	​	Compensation Philosophy and Guiding Principles	​	​	34	​
​	2021 Compensation Program				​	​	35	​
​	​	​	​	Base Salaries	​	​	35	​
​	​	​	​	Annual Incentive Plan	​	​	36	​
​	​	​	​	Long-Term Incentive Compensation—iPIP	​	​	38	​
​	​	​	​	Long-Term Incentive Compensation—LTIP	​	​	42	​
​	​	​	​	Performance-Based Pay	​	​	43	​
​	​	​	​	Risk and Compensation	​	​	43	​
​	​	​	​	Compensation Governance	​	​	44	​

​		​	​	​	​	​	​	​
​	​	​	​	Stock Ownership Guidelines	​	​	44	​
​	​	​	​	Clawback Policy	​	​	44	​
​	​	​	​	Insider Trading Policies and Procedures	​	​	45	​
​	​	​	​	Double Trigger” Change-in-Control Provision for Long-Term Incentive Compensation	​	​	45	​
​	​	​	​	Tax Considerations	​	​	45	​
​	​	​	​	Roles and Responsibilities in Setting Named Executive Officer Compensation	​	​	45	​
​	​	​	​	Compensation Committee	​	​	45	​
​	​	​	​	Independent Compensation Consultant	​	​	46	​
​	​	​	​	Chief Executive Officer	​	​	46	​
​

 

Compensation Discussion and Analysis

Overview

iStar’s current executive compensation program is the product of the comprehensive review undertaken by our Compensation Committee in recent years and the extensive shareholder outreach seeking feedback and input to ensure that our compensation program is aligned with shareholder interests and concerns.

The changes to the structure and design of our compensation program have been meaningful, reflect our shareholders’ feedback, and align our compensation with shareholder interests by further linking pay with performance and increasing transparency and disclosure. We have been pleased that our shareholders have overwhelmingly supported our Say on Pay vote in recent years. 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 2021 included the following individuals:

Mr. Rosenblum, our chief accounting officer, served as our principal financial officer from May 2021, following Mr. Fox-Geen’s resignation, until February 2022 when Mr. Brett Asnas, our Executive Vice President and Head of Capital Markets, was appointed as our chief financial officer.

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:

2021 Compensation Program

Our executive compensation program for 2021 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 at the beginning of every year. Salaries of our NEOs who served during 2021 are shown below. Base salary for Mr. Fox-Geen is shown at an annualized rate of base salary, as Mr. Fox-Geen’s employment ended in May 2021

 

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 projected financial performance heading into 2021 relied upon a number of variables and assumptions.

In the beginning of 2021, the Committee approved three performance metrics to determine AIP funding for 2021:

○

Adjusted Book Value Per Share

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○

Total Shareholder Return for our common stock

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○

Strategic Framework Success Rate, a scorecard that assesses performance relative to seven predetermined goals directly linked to our strategic framework, as follows:

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○

Ground leases originated at SAFE

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○

Investment grade unsecured credit rating and capital markets offering

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○

Monetization of legacy assets

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○

Improved employee engagement score

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○

Improved DEI culture score

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○

Improved ESG scores with leading ESG rating agencies

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○

SAFE stock price increase beyond target, standalone or relative to index

​

To better reflect our evolving strategy and align employees with our critical objectives, for the 2021 AIP bonus pool the Committee replaced Adjusted Earnings Per Share and Core G&A with the Strategic Framework Success Rate and retained Adjusted Book Value Per Share and iStar TSR as performance metrics.

For each of these performance metrics, the Compensation Committee approved performance requirements and corresponding AIP pool funding levels for 2021, to be evaluated at year-end based on actual performance achieved during 2021, as follows:

NOTES:

(1)

See Exhibit A to this proxy statement for our methodology and calculations of Adjusted Book Value.

​

(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 of 78.1% during 2021, the cap did not apply, and no adjustments were made to the AIP pool for 2021.

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 funding of the 2021 AIP pool.

AIP Awards for 2021 (Approved and Paid in February 2022)

For services during 2021, 83% of our AIP pool was awarded to employees other than our NEOs. AIP awards for our NEOs during 2021 are shown below. The AIP awards shown below were approved and paid in February 2022 for services performed in 2021. For our NEOs, the AIP award shown was paid in a mix of cash and fully-vested shares of our Common Stock, subject to transfer restrictions for 18 months. In accordance with SEC disclosure rules, the cash portion of the AIP awards is reported in the Summary Compensation Table on page 49 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 2021, 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, 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.

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○

For Mr. Rosenblum, goals based on his leadership of our accounting department and, after the resignation of our chief financial officer in May 2021, his performance as our primary financial officer.

​

 

The following table lists the AIP awards granted to our NEOs for their services during 2021. The Committee considers it important for our CEO to participate in the AIP as do our other NEOs and employees generally. Nevertheless, in assessing the CEO’s overall pay arrangements, the Committee has emphasized the long-term incentives paid to Mr. Sugarman, in particular through the iPIP, given his role. Accordingly, the Committee has put relatively less weight on the amount of Mr. Sugarman’s AIP award compared to his long-term incentive pay. Conversely, the AIP awards paid to Mr. Alvarado and Mr. Rosenblum reflect that relatively more weight is given their annual incentives compared to their long-term incentive pay. Mr. Fox-Geen left the Company in May 2021 and no individual AIP award was paid to him for any services during 2021.

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 every two years.

The following table shows awards of iPIP points made during 2021 to our NEOs, from a new 2021-2022 iPIP pool:

Mr. Fox-Geen, our former chief financial officer, was granted 10.0 iPIP points in February 2021, which were forfeited when he resigned in May 2021.

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

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.

(1)

Net cash proceeds means cash proceeds net of asset-level debt costs. If shares of Safehold are the last remaining material asset in a pool, we may elect not to sell the shares for cash but instead to wind up a pool by calculating the performance of the shares as if they had been sold, and then distributing such portion of the shares to iPIP participants as is determined in accordance with Steps 2 and 3 above.

​

(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 such that payouts will be reduced by twice the percentage difference between iStar’s TSR and the average of the median of the indices.

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, 2019-2020 and 2021-2022 short-term and long-term iPIP 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 every two years.

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. If shares of Safehold are the last remaining material asset in a pool, we may elect not to sell the shares for cash but instead to wind up a pool by calculating the performance of the shares as if they had been sold, and then distributing such portion of the shares to iPIP participants as is determined in accordance with the distributions “waterfall” as described above. 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, 2021. The final payout on the assets in the 2013-2014 short-term iPIP pool occurred during 1st quarter 2019 and the first payout on assets in the 2013-2014 long-term iPIP pool is expected during the 2nd quarter 2022.

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(1)

Dollars in thousands

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(2)

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

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(3)

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

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iPIP Distributions Paid in 2021

No payouts were made from the 2013-2014 short-term or long-term iPIP pools during 2021. The final payout from the 2013-2014 short-term iPIP pool occurred during 1st quarter 2019. The first payout from the 2013-2014 long-term iPIP pool is expected during 2nd quarter 2022.

The final payout from the 2015-2016 short-term iPIP pool was made during 2021. The first and final payout from 2015-2016 long-term iPIP pool is expected during 2nd quarter 2022.

 

No payouts have yet been made from the 2017-2018 iPIP pool, the 2019-2020 iPIP pool or the 2021-2022 iPIP pool.

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(1)

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

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(2)

Calculated from date of inception of short-term iPIP pool through December 31, 2021.

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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.) Additionally, under certain circumstances described above, we may elect to distribute Safehold shares to satisfy our obligations to iPIP participants.

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—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 2021, the Compensation Committee granted LTIP awards to our NEOs as shown in the table below. The LTIP awards were granted in February 2021 in recognition of service and performance during 2020, in the form of Units that cliff vest in one installment in January 2024. On vesting, the Units entitle the holder to receive an equivalent number

of shares of our Common Stock, net of applicable tax withholdings. The LTIP award granted to Mr. Fox-Geen in February 2021 was forfeited upon his resignation in May 2021.

Performance-Based Pay

The Compensation Committee allocates pay among base salary, short-term incentives, and long-term incentives to emphasize performance-based, variable compensation. This mix ensures the appropriate alignment of executive compensation with financial performance and shareholder value creation. Notably, a substantial majority of the compensation opportunity for our CEO and is delivered through iPIP, a long-term, performance-based incentive compensation program.

The chart below illustrates our NEOs’ mix of pay for 2021

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:

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approving specific compensation for the executive officers

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determining the form and amount of that compensation

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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:

 

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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 performs the following services:

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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 2021 annual report on Form 10-K.

Submitted by the Compensation Committee

Barry W. Ridings (Chairman)
Robin Josephs
David Eisenberg

 

Chief Executive Officer Pay Ratio

For 2021, 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 10 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, 2021.

To identify the Median Employee, we first determined our employee population as of December 31, 2021. On that date, iStar and our consolidated subsidiaries collectively had 142 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, 2021, and ending on December 31, 2021, 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 2021. 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   $2,327,438 reported for Mr. Sugarman in the Summary Compensation Table for 2021. Median Annual Compensation for 2021 was $229,832. This amount was calculated by totaling all applicable elements of compensation for our Median Employee for 2021 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 2021

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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 2021,” for a discussion of payouts made to our NEOs in 2021.

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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 2021 10-K Report for further details.

Amounts reported in the “Stock Awards” column for 2021 include the dollar value of iPIP points granted in 2021 to our named executive officers in the 2021-2022 iPIP pools. Mr. Fox-Geen forfeited his 2021 iPIP award upon his departure from the Company in May 2021. 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. 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.

(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. Amounts reported in the “All Other Compensation” column for Mr. Fox-Geen also includes accrued vacation paid to him upon his departure from the Company in May 2021.

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(4)

No annual incentive award was paid to Mr. Sugarman under our AIP for services in 2019.

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(5)

Amounts reported in the “Stock Awards” column for 2021 for Mr. Sugarman include the dollar value of shares of our common stock issued in February 2021 as part of his annual incentive awards for services rendered in 2020, which shares were fully vested but subject to sales restrictions for specified periods based on the grant date fair value of such awards calculated in accordance with FASB ASC Topic 718.

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Amounts reported in the “Stock Awards” column for 2021 for Mr. Alvarado and Mr. Rosenblum include the dollar value of  (a) shares of our common stock issued in February 2021 as part of his annual incentive awards for services rendered in 2020, which 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 2021, 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 2021 for Mr. Fox-Geen include the dollar value of LTIP awards in the form of restricted stock units (Units) granted in February 2021, 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. Mr. Fox-Geen forfeited his LTIP award upon his departure from the Company in May 2021.

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 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. Mr. Fox-Geen forfeited his unvested LTIP award and his points in the 2019-2020 iPIP pool upon his departure from the Company in May 2021.

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.

Grants of Plan-Based Awards

The following table includes information on plan-based awards granted to our named executive officers who served during 2021.