Simon 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS

WHAT WE PAY AND WHY: PRINCIPAL ELEMENTS OF COMPENSATION

To accomplish our compensation objectives, we designed our executive compensation program with three major elements—Base Salary, Annual Cash Incentive Compensation, and Performance-Based Long-Term Incentives.

OBJECTIVES

KEY FEATURES

Base Salary

• Provide an appropriate level of fixed compensation that will

• Fixed compensation.

promote executive recruitment and retention.

Annual Cash Incentive

• Reward achievement of our annual financial and operating goals • Variable, short-term cash compensation.

Compensation

based on the Committee’s quantitative and qualitative assessment of the executive’s contributions to that performance.

• Funded upon achievement of threshold FFO level. • Allocated based on objective and subjective evaluation of Company, business unit, and individual performance. • Variable, performance-based long-term equity compensation. • Amount is earned over a three-year performance period based – Relative TSR • MSCI U.S. REIT Index (RMS) (weighted 60%); and • TSR Relative to S&P 500 Index (weighted 20%). • Additional two years of service-vesting. • Maximum amount that may be earned is 100% of the target amount of performance-based LTIP units awarded. • Rigorous minimum thresholds to receive any payout. on: – Absolute TSR (weighted 20%);

2015-2017 and 2016-2018

• Promote the creation of long-term shareholder value.

Performance-Based Long-Term • Align the interests of our executives with the interests of our

Incentives

shareholders.

• Promote the retention of our executives through multi-year

service vesting requirements after they are earned.

ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

The Committee has retained Semler Brossy as its independent consultant since 2011. The Consultant reports directly to the Committee and performs no other work for the Company unless directed by the Committee. The Committee has analyzed whether the work of Semler Brossy as a compensation consultant has raised any conflict of interest, taking into consideration the following factors: i. The provision of other services to the Company by Semler Brossy; ii. The amount of fees from the Company paid to Semler Brossy as a percentage of the firm’s total revenue; iii. Semler Brossy’s policies and procedures that are designed to prevent conflicts of interest; iv. Any business or personal relationship of Semler Brossy or the individual compensation advisors employed by the firm with an executive officer of the Company; v. Any business or personal relationship of the individual compensation advisors with any member of the Committee; and vi. Any stock of the Company owned by Semler Brossy or the individual compensation advisors employed by the firm. The Committee has determined, based on its analysis of the above factors, that the work of Semler Brossy and the individual compensation advisors employed by Semler Brossy as compensation consultants to the Company has not created any conflict of interest. Our CEO provides recommendations to the Committee on the compensation of each of the other NEOs. The CEO develops recommendations using peer group data, assessments of individual performance and achievement of the Company’s strategic and tactical plans, the state of the business environment, and input from our human resources department on various factors (e.g., compensation history, tenure, responsibilities, market data for competitive positions and retention concerns). The Committee considers our CEO’s recommendations together with the input of our independent compensation consultant; however, all final compensation decisions affecting NEOs’ pay are made by the Committee itself. Additionally, all aspects of the CEO’s compensation and resulting compensation decisions are determined by the Committee. ROLE OF MANAGEMENT IN COMPENSATION DECISIONS

SIMON PROPERTY GROUP 2018 PROXY STATEMENT 27