<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
IRT PROPERTY COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
IRT PROPERTY COMPANY
200 GALLERIA PARKWAY, SUITE 1400
ATLANTA, GEORGIA 30339
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 9, 1997
To the Shareholders of IRT Property Company:
The Annual Meeting of Shareholders (the "Annual Meeting") of IRT Property
Company, a Georgia corporation (the "Company"), will be held at the Cobb
Galleria Centre, Two Galleria Parkway, Room 105, Atlanta, Georgia, on Friday,
May 9, 1997, at 10:00 a.m. local time, for the following purposes:
1. To elect seven directors to serve until the annual meeting of
shareholders in 1998 or, in the case of each director, until his or her
successor is duly elected and qualified;
2. To vote upon a proposal to amend Article VI of the Articles of
Incorporation to authorize the Company to issue, in one or more series, up
to 10,000,000 shares of $1.00 par value Preferred Stock, which, in the
event any voting rights are granted, shall have not more than one vote per
share;
3. To vote upon a proposal to amend Article XIII of the Articles of
Incorporation, in accordance with recently adopted policies of the New York
Stock Exchange, to indicate that nothing in the Articles of Incorporation
will preclude the settlement of any trade entered into through the
facilities of the New York Stock Exchange; and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Only shareholders of record at the close of business on March 21, 1997 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. A complete list of shareholders entitled to vote at the Annual Meeting
will be available at the Annual Meeting.
The Company's Proxy Statement and the Annual Report for the fiscal year
ended December 31, 1996 are enclosed.
By Order of the Board of Directors
W. BENJAMIN JONES III
Executive Vice President
Atlanta, Georgia
April 4, 1997
YOU ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY IN THE
ENVELOPE PROVIDED SO THAT YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR
WISHES. RETURNING YOUR PROXY DOES NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE
MEETING AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
IRT PROPERTY COMPANY
200 GALLERIA PARKWAY, SUITE 1400
ATLANTA, GEORGIA 30339
---------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1997 AND ANY ADJOURNMENTS THEREOF
---------------------
APPROXIMATE DATE PROXY MATERIALS FIRST SENT TO SHAREHOLDERS:
APRIL 4, 1997
GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of IRT Property
Company (the "Company") for use at the Annual Meeting of Shareholders (the
"Annual Meeting") of the Company to be held at 10:00 a.m. local time at the Cobb
Galleria Centre, Two Galleria Parkway, Room 105, Atlanta, Georgia, on May 9,
1997 and any adjournments thereof. The enclosed proxy is revocable at any time
before its exercise at the Annual Meeting by (i) written notice to the Executive
Vice President of the Company, (ii) properly submitting to the Company a duly
executed proxy bearing a later date, or (iii) attending the Annual Meeting and
voting in person.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with directions
given. Regarding the election of directors to serve until the annual meeting of
shareholders in 1998, in voting by proxy, shareholders may vote in favor of all
nominees, withhold their votes as to all nominees, or withhold their votes as to
specific nominees. If a shareholder does not specify otherwise, the shares
represented by his or her proxy will be voted "FOR" the election of all
nominees.
The Company has only one class of capital stock, its common stock, $1.00
par value (the "Common Stock"), of which 32,016,752 shares were outstanding as
of March 21, 1997 (the "Record Date"). Each outstanding share of Common Stock is
entitled to one vote. Only shareholders of record at the close of business on
the Record Date are entitled to vote or to execute proxies with respect to the
Annual Meeting.
Pursuant to the Company's Articles of Incorporation and By-Laws, the
holders of Common Stock entitled to cast a majority of the votes on the matters
at issue at the Annual Meeting, present in person or by proxy, shall constitute
a quorum. For the purpose of determining a quorum, abstentions and broker
non-votes will be counted as present. A broker non-vote occurs when shares held
by brokers or nominees for beneficial owners are voted on some matters, but not
on others.
<PAGE> 4
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL HOLDERS
The following table sets forth information as of the date indicated with
respect to the only persons who are known by the Company to be the beneficial
owners of more than 5% of the outstanding shares of the Company's common stock,
$1.00 par value per share (the "Common Stock"):
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER DATE OWNERSHIP OF CLASS
- ------------------------------------ ------- ----------------- --------
<S> <C> <C> <C>
Franklin Resources, Inc........................ 2/13/97 1,484,200(1) 5.8%
777 Mariners Island Blvd.
San Mateo, California 94404
</TABLE>
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(1) This information is contained in a Schedule 13G dated February 13, 1997
filed by Franklin Resources, Inc. with the Securities and Exchange
Commission (the "SEC"), a copy of which was received by the Company. Such
Schedule 13G states that Franklin Resources, Inc. and Templeton Global
Advisors Limited have sole voting and sole dispositive power with respect
to 12,000 shares of Common Stock and 1,472,200 shares of Common Stock,
respectively.
The beneficial ownership of directors and executive officers is set forth
under "ELECTION OF DIRECTORS" below.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Board of Directors is elected at each annual meeting of shareholders
for a one-year term. Seven incumbent directors have been nominated and have
agreed to serve as directors if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DONALD W. MACLEOD; THOMAS H.
MCAULEY; MARY M. THOMAS; HOMER B. GIBBS, JR.; SAMUEL W. KENDRICK; BRUCE A.
MORRICE; AND JAMES H. NOBIL AS DIRECTORS TO HOLD OFFICE UNTIL THE ANNUAL MEETING
OF SHAREHOLDERS IN 1998 AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF THE SHARES OF COMMON STOCK
CAST AT THE ANNUAL MEETING IS REQUIRED WITH RESPECT TO THE ELECTION OF THE
NOMINEES. ABSTENTIONS AND BROKER NON-VOTES WILL HAVE NO EFFECT ON THE ELECTION
OF DIRECTORS.
CERTAIN INFORMATION CONCERNING NOMINEES AND NAMED EXECUTIVE OFFICERS
The following table sets forth the name and age of each nominee for
election to the Board of Directors of the Company and information as of March 3,
1997 regarding the beneficial ownership of the Company's Common Stock by each
director of the Company, by the Named Executive Officers (as hereinafter
defined),
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<PAGE> 5
and by all directors and executive officers as a group. The amounts shown are
based upon information furnished by the individuals named.
<TABLE>
<CAPTION>
COMPANY SHARES
OWNED PERCENTAGE OF
BENEFICIALLY AND OUTSTANDING
NAME CURRENT POSITION WITH NATURE OF BENEFICIAL SHARES OWNED
(DIRECTOR SINCE) AGE COMPANY OWNERSHIP(1) BENEFICIALLY(1)
- --------------------------------- --- ---------------------------- -------------------- ---------------
<S> <C> <C> <C> <C>
NOMINEES
Donald W. MacLeod(2) 71 Chairman of the Board 291,597(6) (9)
(1969)
Thomas H. McAuley(2) 51 President and Chief 89,750(7) (9)
(1987) Executive Officer, Director
Mary M. Thomas(2) 50 Executive Vice President 76,428(7)(8) (9)
(1994) and Chief Financial Officer,
Director
Homer B. Gibbs, Jr.(3)(4) 65 Director 29,966(7)(8) (9)
(1976)
Samuel W. Kendrick(2)(4) 57 Director 6,680(7) (9)
(1993)
Bruce A. Morrice(2)(4) 63 Director 17,512(7)(8) (9)
(1986)
James H. Nobil(3)(4) 66 Director 41,206(7)(8) (9)
(1976)(5)
OTHER NAMED EXECUTIVE OFFICERS
W. Benjamin Jones III 47 Executive Vice President 58,228(7) (9)
Robert E. Mitzel 48 Executive Vice President 57,297(7)(8) (9)
ALL DIRECTORS, NOMINEES, AND
EXECUTIVE OFFICERS (17 PERSONS)
AS A GROUP 879,896(10) 2.71%
</TABLE>
- ---------------
(1) The amounts and percentages of the Company's Common Stock beneficially
owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities. The beneficial owner
has both voting and investment power over the shares, unless otherwise
indicated.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee. The Compensation Committee also acts
as the Stock Option Committee.
(5) Date of initial service as a trustee of Summit Properties. Directorship in
the Company commenced on the June 20, 1979 effective date of the merger of
Summit Properties with and into the Company.
(6) This amount includes 75,000 shares which Mr. MacLeod has the right to
acquire pursuant to grants under the Company's Stock Option Plan. This
amount also includes 7,233 shares owned by Mr. MacLeod's wife. Mr. MacLeod
is deemed to be the beneficial owner of such shares under the regulations
of the SEC, but he disclaims such beneficial ownership.
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<PAGE> 6
(7) The number of shares reflected as being owned includes 72,500 shares for
Mr. McAuley; 48,000 shares for Ms. Thomas; 7,500 shares for Mr. Nobil;
10,000 shares each for Messrs. Gibbs and Morrice; 5,000 shares for Mr.
Kendrick; 45,918 shares for Mr. Jones; and 46,250 shares for Mr. Mitzel
which each has the right to acquire pursuant to the Company's Stock Option
Plan.
(8) The number of shares reflected as being beneficially owned by Mr. Morrice
includes 2,966 shares owned by a marital trust, over which he has no voting
or investment power; and with regard to Mr. Nobil includes 30,932 shares
owned by his wife and 781 shares owned by a trust; and with regard to
Messrs. Gibbs and Mitzel includes 2,500 and 392 shares, respectively, owned
by their wives; and with regard to Ms. Thomas includes 100 shares owned by
her daughter. Messrs. Morrice, Nobil, Gibbs, and Mitzel and Ms. Thomas are
deemed to be beneficial owners of such shares under the regulations of the
SEC, but they disclaim such beneficial ownership.
(9) Less than 1%.
(10) This amount includes 65,178 shares owned by Louis P. Wolfort who has served
as a director since 1970 and is not seeking reelection. This amount also
includes 399,943 shares which the Company's executive officers have the
right to acquire and 41,250 shares which the Company's non-management
directors have the right to acquire pursuant to the Company's Stock Option
Plan. Additionally, this amount includes 49,784 shares owned by spouses of
the directors and executive officers (including Mr. Wolfort), 3,747 shares
owned by two separate trusts, and 100 shares owned by Ms. Thomas' daughter.
The directors and executive officers are deemed to be the beneficial owners
of such shares under the regulations of the SEC, but they disclaim
beneficial ownership in such shares.
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS AND COMPENSATION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
established an Executive Committee, an Audit Committee, and a Compensation
Committee (which also serves as a Stock Option Committee). The members of these
Committees are indicated in the preceding section of this Proxy Statement.
The Executive Committee may exercise the powers of the Board of Directors
except with respect to a limited number of matters which include (i) amending
the Articles of Incorporation or the By-Laws of the Company, (ii) adopting a
plan of merger or consolidation, (iii) the sale, lease, exchange, or other
disposition of all or substantially all the property and assets of the Company,
and (iv) a voluntary dissolution of the Company or a revocation thereof. The
Executive Committee may also serve as a Nominating Committee which serves the
limited purpose of nominating persons to serve as directors of the Company. The
full Board of Directors, however, currently acts as the Nominating Committee
and, as such, nominated the seven persons named in the foregoing table. No
recommendations were submitted by shareholders with respect to the nomination of
directors, and the Nominating Committee has no policy with respect to whether or
not it would consider such recommendations by shareholders. The Executive
Committee held no meetings during 1996.
The Audit Committee, composed entirely of outside directors, approves any
transactions involving related parties, recommends to the Board of Directors the
engagement of the independent auditors of the Company, and reviews with the
independent auditors the scope and results of the Company's audits, the
Company's internal accounting controls and the professional services furnished
by the independent auditors to the Company. The Audit Committee met once in
1996.
The Compensation Committee, composed entirely of outside directors,
determines the salary and other compensation to be paid to the executive
officers of the Company. It also acts as the Stock Option Committee
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<PAGE> 7
and is responsible for the administration of the Company's Stock Option Plan.
The Compensation Committee met twice in 1996.
During the Company's fiscal year ended December 31, 1996, the Company's
Board of Directors held eight meetings. All of the directors attended more than
75% of the aggregate of all meetings of the Board of Directors and the
committees on which they served during 1996.
The Company's policy regarding the compensation of directors is to pay
directors who are not also employees of the Company a retainer fee of $1,000 per
month; $1,000 plus expenses for each Board meeting attended; and $500 plus
expenses for each Executive Committee, Audit Committee or Compensation Committee
meeting attended. Directors' fees in 1996 aggregated $91,500, a portion of which
was deferred. In addition, under the Company's 1989 Stock Option Plan, each
non-employee director receives nonqualified stock options to purchase 1,250
shares of the Company's Common Stock upon his or her election and each annual
re-election to the Board.
On December 22, 1995, the Company adopted the IRT Property Company Deferred
Compensation Plan for Outside Directors. Such plan allows non-employee directors
to defer retainer and/or meeting fees to the earlier of the date selected by the
director or the date the director ceases to be a board member. Any such fees
deferred will accrue interest monthly at an annual rate based on 13-week
Treasury Bills. During 1996, $6,500 in fees were deferred in accordance with
this plan.
There is no family relationship between any of the directors and/or
executive officers of the Company.
PRINCIPAL OCCUPATIONS OF NOMINEES FOR ELECTION DURING THE PAST FIVE YEARS
The principal occupations during the past five years of the nominees for
election as directors of the Company are as follows:
Mr. MacLeod has been Chairman of the Board of Directors of the Company
since its inception in 1979 and was Chief Executive Officer from June 1979 to
January 1, 1997. He also served as President from June 1979 to October 1995. He
previously served as President and Managing Trustee of the Company's
predecessor, Investors Realty Trust. He is a director of Abrams Industries,
Inc., a real estate development and contracting company, and a member of the
American Institute of Real Estate Appraisers ("M.A.I.").
Mr. McAuley has been President of the Company since October 1, 1995 and was
named Chief Executive Officer of the Company on January 1, 1997. He was regional
partner of Faison Associates, Inc. ("Faison"), a real estate development and
management company headquartered in Charlotte, North Carolina, from May 1993
through September 1995. From June 1988 to May 1993, he served as Chairman and
Chief Executive Officer and part owner of Ewing Southeast Realty, Inc.
("Ewing"), an Atlanta, Georgia real estate company. Faison purchased Ewing on
May 1, 1993, the date Mr. McAuley became a Faison partner. Prior to 1988, Mr.
McAuley held various senior management positions, including serving as President
and a director of Ewing and Johnstown Mortgage Company, an Atlanta mortgage
banking company.
Ms. Thomas has been Executive Vice President of the Company since May 1991
and Chief Financial Officer of the Company or its predecessor, Investors Realty
Trust, since 1976. She served as Senior Vice President from May 1987 to May 1991
and Vice President from 1981 to 1987.
Mr. Gibbs is currently occupied as a private investor. He retired as Vice
Chairman of Mid-South Financial Corporation, a Nashville, Tennessee mortgage
banking firm, on January 1, 1994, a position he held
5
<PAGE> 8
since 1986. He was President of Gibbs and Company, a Nashville, Tennessee
mortgage banking firm, from 1965 through 1986.
Mr. Kendrick has been President of Ruddick Investment Company ("RIC") since
November 1994. RIC, an affiliate of Harris Teeter, Inc. ("Harris Teeter"), is
involved in real estate development and venture capital investment. Mr. Kendrick
served as Executive Vice President of Harris Teeter, a supermarket chain with
principal executive offices in Charlotte, North Carolina, from July 1992 to
October 1994. He was Senior Vice President/Finance and Administration for Harris
Teeter from October 1989 to 1992, Vice President/ Real Estate and Construction
from February 1986 to 1989, and Vice President/Real Estate from February 1984 to
1986. Mr. Kendrick currently serves as a director of RIC and Harris Teeter.
Mr. Morrice is Managing Director of Morrice Financial Corp., a Dallas,
Texas real estate finance and investment firm. He was President of Lion Service
Corp., a Dallas, Texas service corporation of Federated Savings and Loan,
engaged in the origination and servicing of loans and real estate investment
mortgage banking, from 1983 to 1987. He was President of Morrice Financial Corp.
from 1977 until 1985.
Mr. Nobil is President of JLJ Realty, Inc., a Florida property management
firm. He is also a founding principal of the IMMO Group, Inc., a Fort
Lauderdale, Florida commercial real estate brokerage company. Mr. Nobil was the
managing joint venture partner in Kokomo Mall Associates, an Indiana Joint
Venture, from August 1986 to June 1992. On April 5, 1991, Kokomo Mall Associates
filed a petition for relief under Chapter 11 of the United States Bankruptcy
Code, 11 U.S.C., sections 101 et seq. On June 30, 1992, the Bankruptcy Court
entered an order dismissing the Chapter 11 proceeding filed by Kokomo Mall
Associates based upon its finding that all payments to creditors had been made.
Mr. Nobil was the President and 30% owner of Pearl Britain, Inc., a Florida
corporation, from 1989 to March 1993. Pearl Britain, Inc. was a general partner
of Pearl Britain Associates, Ltd., a Florida limited partnership. On September
21, 1992, the Circuit Court for the Fifth Judicial Circuit in and for Marion
County, Florida, appointed a receiver for Pearl Britain Plaza, a shopping center
located in Ocala, Florida, which center was owned by Pearl Britain Associates,
Ltd. The receivership terminated when, on March 11, 1993, Pittsburgh National
Bank acquired this property by foreclosure. Mr. Nobil was the managing general
partner of Powell Center Associates, an Ohio limited partnership, from 1984 to
December 20, 1996. On May 10, 1996, the Court of Common Pleas, Montgomery
County, Ohio, appointed a receiver for Powell Plaza, a shopping center located
in Huber Heights, Ohio, which center was owned by Powell Center Associates. The
receivership ended when, on December 20, 1996, the Equitable Life Assurance
Society acquired the property by foreclosure. Mr. Nobil was also a Trustee and
Chairman of Summit Properties from 1976 until its merger into the Company in
June 1979.
EXECUTIVE OFFICERS
In addition to Donald W. MacLeod, Chairman, Thomas H. McAuley, President
and Chief Executive Officer, and Mary M. Thomas, Executive Vice President and
Chief Financial Officer, the executive officers of the Company are as follows:
Mr. W. Benjamin Jones III has been Executive Vice President of the Company
since May 1994. He served as Senior Vice President from May 1987 to May 1994 and
Secretary of the Company or its predecessor, Investors Realty Trust, from 1977
to May 1992, and Vice President from 1981 to 1987.
Mr. Robert E. Mitzel has been Executive Vice President of the Company since
May 1994. He served as Senior Vice President from May 1991 to May 1994 and Vice
President from January 1988 to May 1991.
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<PAGE> 9
Mr. Lee A. Harris, age 38, has been Senior Vice President of the Company
since August 1992 and Secretary of the Company since May 1992. He served as Vice
President from May 1989 to August 1992 and Assistant Secretary from May 1987 to
May 1992.
Mr. James G. Levy, age 38, was employed by the Company in June 1994 as Vice
President and Treasurer. He served as Regional Controller for Faison from May
1993 to May 1994 and Chief Financial Officer of Ewing from July 1991 until May
1993. He was with Arthur Andersen & Co., the Company's present accounting firm,
from January 1987 to June 1991.
Ms. Nanette B. Cook, age 39, has been Vice President of the Company since
August 1992. She served as Controller of The Sofran Company, an Atlanta, Georgia
real estate company specializing in the development and management of
neighborhood and community shopping centers, from 1988 to 1992.
Mr. E. Denton Williams III, age 64, was employed by the Company in February
1993 and elected Vice President in May 1993. He served as associate broker for
O'Brien Realty, a Lexington Park, Maryland residential and commercial real
estate company, from 1991 to 1993. From 1987 to 1990 he served as Vice President
of Home Federal Savings Bank in Washington, D.C.
Mr. William E. Novick, age 41, has been Vice President of the Company since
June 1994. From May 1991 to May 1994, he served as Senior Vice President of JLJ
Realty, Inc. From August 1982 to April 1991, he was employed by TMI Realty,
Inc., serving in various management positions, including Senior Vice President
from 1990 to April 1991.
Mr. Daniel F. Lovett, age 50, was employed by the Company in October 1994
as Vice President and Director of Construction. From 1979 to September 1994, he
was with Southeast Shopping Centers Corp., a South Florida neighborhood and
community shopping center developer, serving as Vice President and Director of
Development.
Mr. Mitchell L. Rippe, age 32, was employed by the Company in March 1997 as
Vice President. He served as Vice President of Venturvest Realty Corp., a
Florida commercial real estate brokerage company, from October 1995 to March
1997, and as Senior Acquisitions Officer of Milestone Properties, Inc., a
Florida real estate investment trust, from 1990 to September 1995.
The executive officers are elected by and serve at the pleasure of the
Board of Directors.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview and Philosophy
The Compensation Committee, composed entirely of outside directors,
determines the salary and other compensation to be paid to the executive
officers of the Company. The Compensation Committee typically reviews the salary
of each executive officer once each year at its November meeting. At that
meeting, the Compensation Committee, acting as a Stock Option Committee, also
usually determines the individuals to whom incentive stock options are to be
awarded and the number of shares for which options are to be granted.
The Company's executive compensation program has three primary objectives:
* Reward executives for long-term management focus and the enhancement
of shareholder value.
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<PAGE> 10
* Attract and retain key executives critical to the long-term success
of the Company.
* Support the achievement of desired Company performance.
In determining the compensation to be paid to the executive officers of the
Company, the Compensation Committee considers compensation paid to other
executives performing similar jobs within the industry. Some of the companies
considered by the Compensation Committee are included in the NAREIT All REIT
Index included in the Comparative Stock Performance section of this Proxy
Statement. In addition, the members of the Compensation Committee rely upon
their own knowledge of compensation paid to executives of companies of
comparable size and complexity. In these comparisons the Compensation Committee
strives to fix the compensation of the Company's executive officers in the
middle of the class of comparable companies. The members also consider the
performance of the Company and the merits of the individual under consideration.
The members will use their discretion to set executive compensation where in
their judgment external, internal or an individual's circumstances warrant it.
Executive Officer Compensation Program
The Company's executive officer compensation program is comprised of base
salary, year-end additional cash compensation, long-term incentive compensation
in the form of stock options, and various benefits, including medical and life
insurance and contributions under the Company's 401(k) Plan, generally available
to all employees of the Company.
Base Salary
The Chairman and the Chief Executive Officer recommend to the Compensation
Committee the base salary levels for the Company's executive officers (other
than the Chairman and the Chief Executive Officer) based on their evaluation of
individual experience and performance, on their review of employee evaluation
reports prepared by certain of the executive officers and in their subjective
discretion on the overall operating performance of the Company. Base salary
levels are then set in the discretion of the Compensation Committee after
consideration of the foregoing recommendations. The Compensation Committee
members also have access to salary levels of executive officers of other
companies within the industry which they may consult.
Year-End Additional Cash Compensation, 401(k) Plan and Certain Employment
Agreements
During 1980 the Board of Directors approved and adopted a pension program
for the employees of the Company. The program included a noncontributory pension
plan for all employees of the Company, under which the Company accrued and
funded pension costs each year equal to 12% of employees' annual base salaries,
and each employee became "vested" with respect to his or her accumulated pension
account at the rate of 20% per year, with full "vesting" upon completion of five
years of service with the Company. Effective June 30, 1990, the Board of
Directors elected to terminate the pension plan.
Upon termination of the pension plan, the Board of Directors determined
that it would be appropriate to substitute in lieu thereof a program of year-end
cash payments to the executive officers of the Company and certain other
corporate employees of the Company selected in the discretion of the Chief
Executive Officer and the President. This program was instituted in 1990. Under
this program (the "Year-End Additional Cash Compensation Program"), participants
received a year-end cash payment from the Company, the amount of which was based
upon each participant's length of service with the Company. Each participant who
had been employed by the Company for more than five years received a year-end
cash payment equal to 12% of his or her salary. Each participant with less than
five years received year-end cash payments in graduated amounts
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<PAGE> 11
designed to produce a cumulative 12% payment after completion of five years of
service. The Company paid or accrued approximately $179,000, $200,000, and
$168,000 under this program in 1996, 1995, and 1994, respectively.
In August 1996, the Company terminated the Year-End Additional Cash
Compensation Program and adopted a 401(k) Plan. All employees who have completed
one year of service and are at least 18 years of age are eligible to participate
in the 401(k) Plan, and the Company matches 100% of employee contributions, up
to 6% of each individual participant's compensation, based on the length of
service. The Company contributed approximately $56,000 to the 401(k) Plan for
the period from August 1 through December 31, 1996.
The Company, in 1980, in conjunction with the adoption of the
noncontributory pension plan, agreed to provide deferred compensation to Mr.
MacLeod and Ms. Thomas upon their retirement in recognition of their time in
service with the Company, which had been significantly longer than that of the
remaining employees. In the case of Mr. MacLeod, the Company has agreed to
annually accrue deferred compensation allocable to him for each year beginning
in 1980 in amounts ranging from approximately $6,000 in 1980 to approximately
$23,000 in 1996. Benefits payable to Mr. MacLeod under this agreement vary
depending upon the reason and timing of the termination of his employment. If
his employment is terminated after Mr. MacLeod has reached age 70, the Company
has agreed to pay him deferred compensation of approximately $29,000 per year.
Termination due to death or disability at any time will entitle Mr. MacLeod or
his beneficiary to the cumulative total accrual in his deferred compensation
account at the December 31st next preceding the date of his death or disability.
Based upon Ms. Thomas' length of service with the Company, it is expected that
her agreement with the Company will not add any benefits to those otherwise
payable to her under the Company's benefit plans described above.
The Company currently has no other postretirement or postemployment
benefits.
Stock Option Program
Long-term incentives are provided through the Company's 1989 Stock Option
Plan (the "Plan"). The purpose of the Plan is to promote the long-term success
of the Company by providing financial incentives to the directors, officers, and
key employees of the Company who are in positions to make significant
contributions toward the success of the Company.
Options granted under the Plan may be either incentive stock options
(options that meet certain requirements of the Internal Revenue Code, thereby
receiving special tax treatment) or nonqualified stock options (options that do
not meet the special requirements for incentive stock options). Incentive stock
options ("ISOs") may be granted only to persons who are employees of the
Company, including members of the Board of Directors who are also employees of
the Company. Nonqualified stock options may also be granted to officers and
employees of the Company.
The Plan is currently administered by the Compensation Committee. Subject
to the approval of the Board of Directors, the Compensation Committee has the
authority to determine the individuals to whom stock options are awarded, the
number of shares for which options are granted (the aggregate fair market value
of stock with respect to which ISOs are exercisable for the first time by any
individual during any calendar year shall not, however, exceed $100,000, and no
person shall be eligible to receive an ISO for shares in excess of such
limitation), and the determination of whether an option shall be an incentive
stock option or a nonqualified stock option. In addition, the Plan provides for
the automatic grant of nonqualified options to purchase 1,250 shares of the
Company's Common Stock to each non-employee director upon his or her election
and each annual re-election to the Board.
9
<PAGE> 12
Options granted under the Plan are exercisable no later than ten years from
the date of grant with the exercise price being equal to 100% of the market
value on the date of grant. The 1989 Plan replaced the Key Employee Stock Option
Plan adopted in 1983, as amended by the Board of Directors on February 9, 1987
(the "1983 Plan"). No further options or Stock Appreciation Rights ("SARs") may
be granted under the 1983 Plan, although unexercised options previously granted
under the 1983 Plan remain in full force and effect. The 1989 Plan does not
provide for SARs.
In determining the grants of stock options to officers and key employees of
the Company, including the executive officers other than the Chief Executive
Officer and the President, the Compensation Committee reviewed with the Chairman
and Chief Executive Officer, the recommended individual awards, based on the
respective performance, responsibilities, and contributions of each of the
individuals under consideration, and the operating performance of the Company.
The Compensation Committee also considered the expected performance requirements
and contributions, as well as the position level, of each of these individuals.
The Chairman and Chief Executive Officer and the Compensation Committee did not
give consideration to current holdings of the Common Stock or options to
purchase the Common Stock of the Company when making their decision regarding
option awards.
Compensation to Chairman and Chief Executive Officer
Mr. MacLeod has been Chairman of the Board of Directors of the Company
since its inception in 1979, served as Chief Executive Officer of the Company
from June 1977 to January 1, 1997, and served as President from June 1979 to
October 1995. He previously served as President and Managing Trustee of
Investors Realty Trust, the predecessor of the Company, founded in 1969.
Mr. MacLeod's base salary for fiscal year 1996 was $300,000, as compared to
$300,000 for fiscal year 1995 and $279,170 for fiscal year 1994. Under the
Company's program of year-end cash payments, Mr. MacLeod also received $36,000
in additional cash compensation for fiscal year 1996 compared to $36,000 for
fiscal year 1995 and $33,500 for fiscal year 1994. Although Mr. MacLeod received
no compensation during these years under his agreement relating to deferred
compensation, the Company accrued $22,571 during each of fiscal years 1996,
1995, and 1994, for payments that will be made after his retirement. Mr. MacLeod
also was awarded, during fiscal years 1996, 1995, and 1994, incentive stock
options to purchase 10,000, 9,500, and 8,000 shares of the Company's Common
Stock, respectively.
The Compensation Committee considered Mr. MacLeod's dual role as both
Chairman and Chief Executive Officer during fiscal years 1996, 1995, and 1994
and the salaries and benefits of other chief executive officers for similar
companies within the industry in determining his cash compensation. The award of
stock options to the Chairman and Chief Executive Officer was made separately
and was based, among other things, on competitive practice within the industry,
the Committee's perception of his past and expected contributions to the
Company's long-term performance, and the $100,000 ISO limitation as described
above.
Section 162(m) of the Internal Revenue Code (the "Code") adopted as part of
the Revenue Reconciliation Act of 1993, generally limits to $1 million the
deduction that can be claimed by any publicly-held corporation for compensation
paid to any "covered employee" in any taxable year beginning after December 31,
1993. The term "covered employee" for this purpose is defined generally as the
Chairman and Chief Executive Officer and the four other highest paid employees
of the Company. Performance-based compensation is outside the scope of the $1
million limitation and, hence, generally can be deducted by a publicly-held
corporation without regard to amount, provided that, among other requirements,
such compensation is approved by the shareholders. The Compensation Committee
has not and does not anticipate the
10
<PAGE> 13
need to develop a formal policy on this matter since the compensation of the
Company's executive officers is clearly outside the scope of the limitations of
Section 162(m).
COMPENSATION COMMITTEE
Samuel W. Kendrick, Chairman
Homer B. Gibbs, Jr.
Bruce A. Morrice
James H. Nobil
Louis P. Wolfort
SUMMARY COMPENSATION TABLE
The following table shows the compensation for the past three years of the
Chief Executive Officer and each of the four other most highly-compensated
executive officers (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------- ------------
SECURITIES
OTHER ANNUAL 401(K) UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) CONTRIBUTION OPTIONS(#) COMPENSATION
- --------------------------- ---- -------- -------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald W. MacLeod 1996 $300,000 $ -- $36,000 $ -- 10,000 $22,571(2)
Chairman of the 1995 300,000 -- 36,000 -- 9,500 22,571(2)
Board(3) 1994 279,170 -- 33,500 -- 8,000 22,571(2)
Thomas H. McAuley 1996 251,250 -- 17,500 5,255 5,000 --
President and Chief 1995 62,502 100,000(4) -- -- 50,000(4)(5) --
Executive Officer(6) 1994 -- -- -- -- -- --
Mary M. Thomas 1996 161,438 -- 11,025 3,853 7,500 --
Executive Vice 1995 150,000 -- 18,000 -- 7,500 --
President and Chief 1994 137,500 -- 16,500 -- 6,000 --
Financial Officer
W. Benjamin Jones III 1996 134,788 -- 9,205 3,217 7,500 --
Executive Vice 1995 125,000 -- 15,000 -- 7,500 --
President 1994 114,583 -- 13,750 -- 6,000 --
Robert E. Mitzel 1996 134,788 -- 9,205 3,217 7,500 --
Executive Vice 1995 125,000 -- 15,000 -- 7,500 19,393(7)
President 1994 104,167 520(8) 12,500 -- 6,000 --
</TABLE>
- ---------------
(1) Year-End Additional Cash Compensation in lieu of pension.
(2) Amounts accrued by the Company during fiscal years 1996, 1995 and 1994 under
Mr. MacLeod's agreement relating to deferred compensation for amounts
payable to him after retirement.
(3) Mr. MacLeod has served as Chairman since 1979 and served as Chief Executive
Officer from June 1979 to January 1, 1997.
(4) See "-- Employment Agreements" for a description of Mr. McAuley's $100,000
commencement bonus and a 50,000 share nonqualified stock option granted to
Mr. McAuley upon acceptance of employment.
11
<PAGE> 14
The payment of the $100,000 commencement bonus was deferred until January
1996 but was expensed by the Company in 1995 for financial reporting
purposes.
(5) Excludes a nonqualified option for 1,250 shares granted to Mr. McAuley in
May 1995 upon his reelection as a nonemployee director of the Company, as
this was prior to Mr. McAuley's October 1, 1995 commencement of employment.
(6) Mr. McAuley has served as President and Chief Operating Officer since
October 1, 1995, and was named Chief Executive Officer on January 1, 1997.
(7) Amount comprised entirely of expenses related to Mr. Mitzel's relocation
from the Charlotte regional office to the Atlanta corporate office.
(8) From August 1992 through May 1994, Mr. Mitzel received certain leasing
commissions based on the performance of leasing agents for certain
properties. Mr. Mitzel's entitlement to such commissions ceased June 1,
1994.
STOCK OPTION PLAN
The following table sets forth (i) all individual grants of stock options
made by the Company during fiscal 1996 to each of the Named Executive Officers
(all of which are incentive stock options granted under the Plan and exercisable
immediately upon grant), (ii) the ratio that the number of options granted to
each individual bears to the total number of options granted to all employees of
the Company, (iii) the exercise price and expiration date of these options, and
(iv) estimated potential realizable values assuming the stock price appreciates
over a ten-year term at rates of 5% and 10% compounded annually.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED (#) 1996 ($/SH) DATE 5% 10%
- ---- ----------- ---------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald W. MacLeod 10,000 11.24% $9.25 1/01/06 $58,173 $147,421
Thomas H. McAuley 5,000 5.62 9.25 1/01/06 29,086 73,711
Mary M. Thomas 7,500 8.43 9.25 1/01/06 43,630 110,566
W. Benjamin Jones III 7,500 8.43 9.25 1/01/06 43,630 110,566
Robert E. Mitzel 7,500 8.43 9.25 1/01/06 43,630 110,566
</TABLE>
12
<PAGE> 15
The following table sets forth (i) the number of shares received and the
aggregate dollar value realized in connection with each exercise of outstanding
stock options during fiscal 1996 by each of the Named Executive Officers, (ii)
the total number and value of all outstanding, unexercised options (all of which
are exercisable) held by the Named Executive Officers as of the end of fiscal
1996, and (iii) the aggregate dollar value of all such unexercised options that
are in-the-money; that is, when the fair market value of the common stock that
is subject to the option exceeds the exercise price of the option.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT OPTIONS AT
NAME EXERCISE REALIZED 12/31/96 12/31/96(1)
---- ----------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Donald W. MacLeod $-- $ -- 72,500 $ 64,063
Thomas H. McAuley -- -- 63,750(2) 111,719
Mary M. Thomas -- -- 42,375 51,750
W. Benjamin Jones III -- -- 40,293 40,503
Robert E. Mitzel -- -- 38,750 45,188
</TABLE>
- ---------------
(1) Value based on market value of the Company's Common Stock at the date of
exercise or the end of fiscal 1996 minus the exercise price.
(2) Includes nonqualified options totaling 8,750 shares, consisting of 1,250
shares each granted during 1989 through 1995 as a non-employee director, a
nonqualified option for 50,000 shares granted upon acceptance of employment
as President and Chief Operating Officer in 1995, and an Incentive Stock
Option for 5,000 shares granted in 1996.
13
<PAGE> 16
COMPARATIVE STOCK PERFORMANCE
The line graph below compares the cumulative total shareholder return on
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the NAREIT All REIT Total Return Index and the S&P 500 Index
over the same period. This comparison assumes that the value of the investment
in the Company Common Stock and each index was $100 on December 31, 1991 and
that all dividends were reinvested.
<TABLE>
<CAPTION>
NAREIT ALL REIT
MEASUREMENT PERIOD IRT PROPERTY TOTAL RETURN
(FISCAL YEAR COVERED) COMPANY INDEX(1) S&P 500 INDEX
<S> <C> <C> <C>
12/31/91 100.00 100.00 100.00
12/31/92 189.51 112.18 107.67
12/31/93 178.07 132.98 118.43
12/31/94 184.39 134.05 119.97
12/31/95 182.20 158.60 164.88
12/31/96 248.47 215.30 202.74
</TABLE>
- ---------------
(1) The NAREIT All REIT Total Return Index is maintained by the National
Association of Real Estate Investment Trusts. It contained 198 tax-qualified
REITs with a total market capitalization of $88.8 billion as of December 31,
1996.
EMPLOYMENT AGREEMENTS
Mr. MacLeod, Chairman of the Company, and Ms. Thomas, Executive Vice
President and Chief Financial Officer, each entered into an employment agreement
with the Company in July 1980. The employment agreements continue until
terminated by either party on at least 90 days' prior written notice. The
employment agreements established that the base salary for Mr. MacLeod and Ms.
Thomas would not be less than $90,000 or $35,000, respectively, with the annual
base salary determined in the discretion of the Board of Directors. In addition,
the employment agreements provided for deferred compensation for each of Mr.
MacLeod and Ms. Thomas which has been more fully described under
"-- Compensation Committee Report on Executive Compensation" and "-- Summary
Compensation Table."
14
<PAGE> 17
On October 1, 1995, the Company entered into an employment agreement with
Mr. McAuley as President and Chief Operating Officer of the Company, which
provides for a minimum annual base salary of $250,000, a commencement bonus of
$100,000, and the opportunity to participate in such incentive bonus as may be
determined by the Board. In addition, the agreement requires the Company to
provide certain other benefits to Mr. McAuley, including reimbursement for
reasonable out-of-pocket expenses, participation in any health, welfare and
retirement benefit plans of the Company in which he is eligible to participate,
paid vacation in accordance with Company policies, and the use and maintenance
costs of a Company automobile (or a compatible automobile allowance). The
agreement acknowledges that, at the time of acceptance of employment, Mr.
McAuley was granted an option to purchase 50,000 shares of Company Common Stock
under the Company's 1989 Stock Option Plan. The Company or Mr. McAuley may
terminate the agreement at any time upon 30 days' notice, but the agreement will
remain in effect until all required payments and benefits have been paid or
provided in full. Notwithstanding the above, the agreement will terminate in the
event of Mr. McAuley's death or disability, subject to the payment of accrued
and unpaid salary.
The employment agreement provides that if Mr. McAuley's employment is
terminated before October 1, 1997, either by the Company without cause or by Mr.
McAuley due to a material reduction of his duties, Mr. McAuley will receive for
a period of 12 months from the date of termination his base salary in effect at
the time of termination, and, when and as due, any other amounts to which he is
entitled at the date of termination under any compensation plans of the Company
in accordance with the terms of such plans.
In addition to the above, Mr. McAuley's employment agreement contains
change-in-control provisions, as described below, which are substantially
identical to those contained in change-in-control agreements entered into by the
Company with Mr. MacLeod and Ms. Thomas on October 1, 1995. The agreements
provide that if the executive's employment is terminated (a) any time within
three months following the occurrence of a change in control (as defined in the
agreements) by the Company without cause or by the executive with or without
cause, or (b) at any time following a change in control in the case of
termination by the executive by reason of a material reduction in his or her
regular duties, such executive will receive for a period of 36 months (in the
case of Messrs. McAuley and MacLeod) or 24 months (in the case of Ms. Thomas)
from the date of termination (i) his or her base salary in effect at the time of
termination, (ii) an amount equal to the average incentive bonus, if any, paid
to him or her during the two years prior to termination, and (iii) when and as
due, any other amounts to which he or she is entitled at the date of termination
under any compensation plans of the Company in accordance with the terms of such
plans. The executive or the Company may elect (by notifying the other within 30
days after termination) that, in lieu of the installments described above, such
severance benefits will be paid in a lump sum cash payment payable within five
days of such notice.
In addition, during the period that change-in-control payments are being
made under the agreements (or for a period of 12 months after termination of
employment in the case of a lump sum election, as described above), the Company
is required to maintain for the benefit of the executive all employee benefit
plans and programs in which the executive was entitled to participate
immediately prior to termination; or if such continued participation is not
permitted under the terms of such plans, the Company is required to provide the
executive with substantially similar benefits.
Benefits under the agreements described above may be modified or reduced to
the extent necessary to avoid exposing the executive to an excise tax and to
avoid disallowance of a deduction to the Company for payments to the executive
for federal tax purposes. The change-in-control agreements with Mr. MacLeod and
Ms. Thomas will terminate in the event of the executive's death or disability,
subject to the payment of accrued and unpaid salary.
15
<PAGE> 18
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE PREFERRED
STOCK (PROXY ITEM NO. 2)
The expansion and growth of the Company's business is dependent on
establishing and maintaining various sources of capital. A potential source of
such capital that is widely used by REITs and other public companies is the sale
of preferred stock. Accordingly, the Board of Directors adopted on December 16,
1996 a resolution proposing and declaring the authorization of preferred stock
desirable and in the best interests of the Company's shareholders. There are no
current plans to designate or issue any shares of preferred stock.
The creation of the preferred stock is to be effected by an amendment (the
"Amendment") to Article VI of the Company's Articles of Incorporation, as
amended (the "Articles"), a copy of which is attached as APPENDIX A to this
Proxy Statement. This Amendment provides for the authorization of 10,000,000
shares of preferred stock, with a par value of $1.00 per share (the "Preferred
Stock"). The Preferred Stock will include such rights, qualifications,
restrictions and preferences as the Board of Directors may designate from time
to time which are consistent with the Company's Articles and Bylaws and which
may be required by prospective purchasers, including dividend, liquidation
preferences, and conversion, exchange and voting rights (if any). Holders of the
Preferred Stock, if any, would have a general preferred and possibly cumulative
right to any distribution of assets or payment of dividends, senior to the
rights of the holders of the Company's Common Stock. This flexibility in
structuring the Preferred Stock is deemed necessary to facilitate the Company's
ability to timely offer, sell and deliver its Preferred Stock consistent with
favorable market conditions and to meet any financing requirements without
undergoing the expense and delay of holding meetings of the Shareholders.
Each series of Preferred Stock may or may not having voting rights, but in
no case will any shares of Preferred Stock have more than one vote per share. To
the extent any shares of Preferred Stock are convertible into shares of Common
Stock equal to 20% or more of the outstanding shares of Common Stock giving
effect to such conversion, the New York Stock Exchange would require additional
shareholders' approval.
The Company's Board of Directors believes having preferred stock available
to meet financing needs, including issuance in connection with acquisitions and
other transactions is desirable and in the best interests of the Company's
shareholders. It may be useful to maintain a class of securities which are
equity in nature, but which may not dilute the interest of common shareholders.
Furthermore, while shares of one or more series of Preferred Stock may contain
voting rights, no shares of Preferred Stock will have more than one vote per
share. Company management seeks the authorization of the Preferred Stock not in
response to any efforts to acquire the Company. The Board of Directors has
adopted a policy that no Preferred Stock will be issued for the primary purpose
of discouraging an unsolicited takeover of the Company. However, the terms of
any Preferred Stock, as is the case with any financial instrument, could have
the effect of discouraging persons who might otherwise seek to attempt to
acquire the Company or control or affect its management or policies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSED AMENDMENT TO
ARTICLE VI OF THE COMPANY'S ARTICLES OF INCORPORATION. THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF THE COMPANY'S OUTSTANDING SHARES OF COMMON STOCK IS
REQUIRED FOR THE APPROVAL OF THIS PROPOSED AMENDMENT. ABSTENTIONS AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE PROPOSED AMENDMENT.
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION REGARDING TRANSACTIONS
ON THE NEW YORK STOCK EXCHANGE (PROXY ITEM NO. 3)
16
<PAGE> 19
At its meeting on February 17, 1997, the Board of Directors of the Company
unanimously adopted a resolution approving an amendment to Article XIII of the
Company's Articles of Incorporation in accordance with recently adopted policies
of the New York Stock Exchange, and recommending that such amendment be
submitted to the shareholders for approval and adoption. The amendment to
Article XIII of the Articles, which is attached as APPENDIX B to this Proxy
Statement, would add a sentence to indicate that nothing in the Articles of
Incorporation will preclude the settlement of any trade entered into through the
facilities of the New York Stock Exchange.
This amendment is not expected to have any effect on the operation of the
Company or the rights of its shareholders, is being made at the request of the
New York Stock Exchange and is consistent with the New York Stock Exchange's
policies with respect to shares of REITs listed on such exchange.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSED AMENDMENT TO
ARTICLE XIII OF THE COMPANY'S ARTICLES OF INCORPORATION. THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF THE COMPANY'S OUTSTANDING SHARES OF COMMON STOCK IS
REQUIRED FOR THE APPROVAL OF THIS PROPOSED AMENDMENT. ABSTENTIONS AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE PROPOSED AMENDMENT.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been appointed by the Board of Directors as the
independent public accountants for the Company for 1997. It has served as the
independent public accountants for the Company since 1979.
Representatives of the firm of Arthur Andersen LLP will be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and will be available to answer questions concerning the financial affairs of
the Company.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
solicitations by mail, officers, directors, and regular employees of the Company
may solicit proxies personally or by telephone, telegraph or other means without
additional compensation. Further, the Company has retained Corporate Investors
Communications, Inc., a proxy solicitation firm to assist in soliciting proxies.
The Company anticipates that such assistance will cost approximately $6,000. The
Company will reimburse brokers, fiduciaries, and custodians for their costs in
forwarding proxy materials to beneficial owners of Common Stock held in their
names.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 1998 annual
meeting of shareholders must be received at the Company's principal executive
offices on or before December 1, 1997 to be eligible for inclusion in the
Company's proxy statement and proxy relating to that meeting.
OTHER MATTERS
The management of the Company does not know of any matters to be presented
at the meeting other than those mentioned in this Proxy Statement.
17
<PAGE> 20
The management of the Company urges you to attend the Annual Meeting and to
vote your shares in person. Whether or not you plan to attend, please sign and
promptly return your proxy. Your proxy may be revoked at any time before it is
voted. Such proxy, if executed and returned, gives discretionary authority with
respect to any other matters that may come before the meeting.
IRT PROPERTY COMPANY
By: W. BENJAMIN JONES III
------------------------------------
Executive Vice President
18
<PAGE> 21
APPENDIX A
ARTICLE VI
AUTHORIZED SHARES
A. The total number of shares of capital stock which the Corporation shall
have authority to issue is 85,000,000, of which 75,000,000 shall be Common Stock
of the par value of $1.00 per share (hereinafter called the "Common Stock") and
10,000,000 shall be Preferred Stock of the par value of $1.00 per share
(hereinafter called the "Preferred Stock").
B. The Preferred Stock may be issued from time to time by the Corporation
in one or more distinct series, with such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issuance of such stock adopted by the Board of
Directors of the Corporation pursuant to authority to do so which is hereby
vested in the Board of Directors. Each such series of Preferred Stock shall be
distinctly designated. Shares of Preferred Stock of each series shall be alike
in every particular, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon may cumulate, if
made cumulative. The voting rights, if any, of each such series and the
preferences and relative, participating, optional and other special rights of
each such series and the qualifications, limitations and restrictions thereof,
if any, may differ from those of any and all other series at any time
outstanding; and the Board of Directors of the Corporation is hereby expressly
granted authority to fix, by resolutions duly adopted prior to the issuance of
any shares of a particular series of Preferred Stock so designated by the Board
of Directors, the voting powers of stock of such series, if any, and the
designations, preferences and relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof, if
any, for such series, including without limitation the following:
(1) The distinctive designation of and the number of shares of
Preferred Stock which shall constitute such series; provided that such
number may be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of Directors;
(2) The rate or rates and times at which, and the terms and conditions
upon which, dividends, if any, on Preferred Stock of such series shall be
payable upon declaration by the Board of Directors, whether such dividends
shall be cumulative or noncumulative, and the extent of the preference,
subordination or other relation, if any, of such dividends to the dividends
payable on any other series of Preferred Stock or any other class of stock
of the Corporation;
(3) Conversion, exchange, purchase or other privileges, if any, to
acquire shares or other securities of any class or series, whether at the
option of the Corporation or of the holder, and if subject to conversion,
exchange, purchase or similar privileges, the conversion, exchange or
purchase prices or rates and such adjustments thereto as may be determined,
the manner and time or times at which such privileges may be exercised, and
the terms and conditions of such conversion, exchange, purchase or other
privileges;
(4) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices, redemption rate or rates,
and any adjustments to such redemption prices or redemption rates as may be
determined and the time or times at which, and the terms and conditions
upon which, Preferred Stock of such series may be redeemed;
A-1
<PAGE> 22
(5) The rights, including the amount or amounts, if any, of
preferential or other payments to which holders of shares of any series are
entitled upon the dissolution, winding-up, voluntary or involuntary
liquidation, distribution, or sale or lease of all or substantially all of
the assets of the Corporation;
(6) The terms of the sinking fund, retirement or redemption or
purchase account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing, include the right, voting as a series by itself or together with
any other series of the Preferred Stock as a class, (i) to vote not more
than one vote per share of Preferred Stock on any or all matters voted upon
by the shareholders and/or (ii) to elect one or more directors of the
Corporation if there has been a default in the payment of dividends on any
one or more series of the Preferred Stock or under other circumstances and
upon such other conditions as the Board of Directors may fix.
C. Except as otherwise provided herein, the Board of Directors shall have
authority to authorize the issuance, from time to time, without any vote or
other action by the shareholders, of any or all shares of stock of the
Corporation of any class or series at any time authorized, and any securities
convertible into or exchangeable for any such shares, and any options, rights or
warrants to purchase or acquire any such shares, in each case to such persons
and on such terms (including as a dividend or distribution on or with respect
to, or in connection with a split or combination of, the outstanding shares of
stock of the same or any other class or series) as the Board of Directors from
time to time in its discretion lawfully may determine; provided, that the
consideration for the issuance of shares of stock of the Corporation (unless
issued as such a dividend or distribution or in connection with such a split or
combination) shall not be less than the par value of such shares. Shares so
issued shall be fully paid stock, and the holders of such stock shall not be
liable to any further call or assessments thereon.
A-2
<PAGE> 23
APPENDIX B
Article XIII of the Articles of Incorporation of the Company shall be
amended by adding the following sentence to the end of such Article:
"Notwithstanding the provisions of this Article XIII, nothing in these
Articles of Incorporation will preclude the settlement of any trade entered
into through the facilities of the New York Stock Exchange."
B-1
<PAGE> 24
APPENDIX
IRT PROPERTY COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints DONALD W. MACLEOD and W. BENJAMIN JONES III,
as Proxies, each with the full power of substitution to represent the
undersigned and to vote all of the shares of IRT Property Company (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Cobb Galleria Centre, Two Galleria
Parkway, Room 105, Atlanta, Georgia 30339 on Friday, May 9, 1997 at 10:00 a.m.
local time, and any adjournments thereof (1) as hereinafter specified upon the
proposals listed below and more particularly described in the Company's proxy
statement, receipt of which is hereby acknowledged, and (2) in their discretion
upon such other matters as may properly come before the meeting.
A vote "FOR" the following is recommended by the Board of Directors:
1. Election of Directors as proposed in the accompanying proxy statement.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary below) nominees listed below
</TABLE>
(INSTRUCTIONS : To Withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
D.W. MacLeod; T.H. McAuley; M.M. Thomas; H.B. Gibbs, Jr.; S.W. Kendrick; B.A.
Morrice; J.H. Nobil.
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2. Amendment of the Articles of Incorporation to authorize the Company to
issue up to 10,000,000 shares of Preferred Stock in one or more series.
[ ] FOR [ ] AGAINST [ ] ABSTAIN FROM VOTING
(Please sign and date on the reverse side)
(continued from other side)
3. Amendment of the Articles of Incorporation to indicate that nothing in
the Articles of Incorporation will preclude the settlement of any trade
entered into through the facilities of the New York Stock Exchange.
[ ] FOR [ ] AGAINST [ ] ABSTAIN FROM VOTING
The shares represented hereby will be voted as specified. If no
specification is made, such shares will be voted "FOR" Proposals 1, 2, and 3 and
with discretionary authority on all other matters that may properly come before
the meeting or any adjournment thereof.
Dated: , 1997
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Signature of Shareholder
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Signature of Shareholder
PLEASE SIGN IN THE EXACT FORM AS
APPEARS AT THE LEFT AND DATE
YOUR PROXY. When signing as
attorney, executor,
administrator, guardian,
trustee, etc., please give full
title as such.
