<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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
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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[ ] 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.
<PAGE> 2
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<PAGE> 3
IRT PROPERTY COMPANY
200 GALLERIA PARKWAY, SUITE 1400
ATLANTA, GEORGIA 30339
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 20, 1999
To our Shareholders:
Our Annual Meeting of Shareholders will be held at the Renaissance
Waverly Hotel, 2450 Galleria Parkway, Chambers Room, Atlanta, Georgia, on
Thursday, May 20, 1999, at 10:00 a.m. Eastern Time, for the following purposes:
1. To elect five directors to serve until the annual meeting of
shareholders in 2000 and until their successors have been duly elected
and qualified;
2. To approve an amendment to IRT Property Company's (the
"Company's") Articles of Incorporation to increase the authorized
shares of Common Stock from 75 million to 150 million; and
3. To transact such other business as may properly come before
the Annual Meeting of Shareholders and any adjournments thereof (the
"Meeting").
Only shareholders of record at the close of business on March 19, 1999,
are entitled to notice of, and to vote at, the Meeting. A complete list of
shareholders entitled to vote at the Meeting will be available at the Meeting.
The Company's Proxy Statement is enclosed along with the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1998.
By Order of the Board of Directors
W. BENJAMIN JONES III
Executive Vice President
and Secretary
Atlanta, Georgia
April , 1999
---
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> 4
IRT PROPERTY COMPANY
200 GALLERIA PARKWAY, SUITE 1400
ATLANTA, GEORGIA 30339
--------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
----------------------
GENERAL
The enclosed proxy is solicited by the Board of Directors of IRT
Property Company (the "Company") for use at the Company's Annual Meeting of
Shareholders to be held at 10:00 A.M. Eastern Time at the Renaissance Waverly
Hotel, 2450 Galleria Parkway, Chambers Room, Atlanta, Georgia, on May 20, 1999,
and any adjournments or postponements thereof (the "Meeting"). The enclosed
proxy is revocable at any time before its exercise at the Meeting by (i) written
notice to the Executive Vice President and Secretary of the Company, (ii)
properly submitting to the Company a duly executed proxy bearing a later date,
or (iii) attending the Meeting and voting in person. All written notices of
revocation or other communications with respect to proxies should be addressed
as follows: IRT Property Company, 200 Galleria Parkway, Suite 1400, Atlanta,
Georgia 30339, Attention: W. Benjamin Jones, III, Executive Vice President and
Secretary.
As of March 19, 1999 (the "Record Date"), 33,234,206 shares of Company
$1.00 par value common stock ("Common Stock") were issued and outstanding. 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 at the
Meeting. No shares of the Company's $1.00 par value Preferred Stock ("Preferred
Stock") were issued and outstanding as of the Record Date.
The 1998 Annual Report to Shareholders ("Annual Report"), including
financial statements for the fiscal year ended December 31, 1998, accompanies
this Proxy Statement. These materials are first being mailed to shareholders of
the Company on or about April __, 1999.
Holders of Common Stock are entitled to one vote on each matter
considered and voted upon at the Meeting for each share of Common Stock held of
record at the close of business on the Record Date. Shares of Common Stock
represented by a properly executed proxy, if such proxy is received in time and
not revoked, will be voted at the Meeting in accordance with the instructions
indicated in such proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF COMMON
STOCK WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR NAMED IN THE
PROXY STATEMENT, "FOR" THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 75,000,000 TO
150,000,000, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER BUSINESS
PROPERLY BROUGHT BEFORE THE MEETING.
The approval of each proposal set forth in this Proxy Statement
requires that a quorum be present at the Meeting. The presence, in person or by
properly executed proxy, of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Meeting is necessary to constitute a
quorum. Each shareholder is entitled to one vote on each proposal per share of
Common Stock held as of the Record Date.
<PAGE> 5
Proposal One, relating to the election of the nominees for directors,
requires approval by a "plurality" of the votes cast by the shares of Common
Stock entitled to vote in the election. This means that Proposal One will be
approved only if the holders of a majority of the shares of Common Stock
entitled to vote and voting at the Meeting vote in favor of Proposal One. With
respect to Proposal One, abstentions and "broker non-votes" will be counted as
shares of Common Stock present for purposes of determining the presence of a
quorum. However, neither abstentions nor "broker non-votes" will be counted as
votes cast for purposes of determining whether a particular proposal has
received sufficient votes for approval. A "broker non-vote" occurs when a
nominee does not have discretionary voting power with respect to that proposal
and has not received instructions from the beneficial owner.
Proposal Two, and any other proposal that is properly brought before
the Meeting, requires approval by the holders of a majority of the shares of
Common Stock entitled to vote at the Meeting. With respect to such proposals,
abstentions will be counted, but "broker non-votes" will not be counted, as
Shares present for purposes of determining the presence of a quorum. Both
abstentions and "broker non-votes" will be counted as votes cast against such
proposals for purposes of determining whether such proposal has received
sufficient votes for approval.
In the event that a quorum is not represented in person or by proxy at
the Meeting, a majority of shares represented at that time may adjourn the
Meeting to allow the solicitation of additional proxies or other measures to
obtain a quorum.
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<PAGE> 6
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors is elected annually by the shareholders for a
one-year term. Five incumbent directors have been nominated and have agreed to
serve as directors if elected. The Company has not nominated anyone to replace
Donald W. MacLeod or Mary M. Thomas, both of whom resigned as directors in 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES FOR ELECTION AS 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
15, 1999 regarding the beneficial ownership of the Company's Common Stock by
each director of the Company, by the Named Executive Officers (as hereinafter
defined), and by all directors and executive officers as a group. The amounts
shown are based upon information furnished by the individuals named. Management
is not aware of any person that beneficially owns 5% or more of the Company's
Common Stock.
<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>
Thomas H. McAuley(2) 53 Chairman, President 203,358(5)(6) (8)
(1987) and Chief Executive
Officer, Director
Patrick L. Flinn(2)(4) 56 Director 3,500(5) (8)
(1997)
Homer B. Gibbs, Jr.(3)(4) 66 Director 33,466(5)(7) (8)
(1976)
Samuel W. Kendrick(2)(3)(4) 59 Director 9,190(5) (8)
(1993)
Bruce A. Morrice(2)(3)(4) 65 Director 20,573(5)(7) (8)
(1986)
OTHER NAMED EXECUTIVE OFFICERS
W. Benjamin Jones III 48 Executive Vice President 123,327(5)(6) (8)
Robert E. Mitzel 50 Executive Vice President 121,646(5)(6)(7) (8)
Daniel F. Lovett 52 Senior Vice President 36,800(5) (8)
James G. Levy 40 Senior Vice President 28,302(5)(7) (8)
Kip R. Marshall 49 Senior Vice President 18,500(5) (8)
ALL DIRECTORS, NOMINEES, AND
EXECUTIVE OFFICERS
AS A GROUP (10 PERSONS) 598,662(9) 1.78% (9)
</TABLE>
-------------
(1) Information relating to beneficial ownership of Company Common Stock
is based upon information furnished by each person using "beneficial
ownership" concepts set forth in the rules of the Securities and
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Exchange Commission. Under those rules, a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting
power," which includes the power to vote or direct the voting of such
security, or "investment power," which includes the power to dispose
of or to direct the disposition of such security. The person is also
deemed to be a beneficial owner of any security of which that person
has a right to acquire beneficial ownership within 60 days. Under
those rules, more than one person may be deemed to be a beneficial
owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he or she may disclaim any
beneficial interest. Accordingly, directors are named as beneficial
owners of shares as to which they may disclaim any beneficial
interest.
(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) The number of shares reflected as being owned includes 90,300 shares
for Mr. McAuley; 2,500 shares for Mr. Flinn; 12,500 shares each for
Messrs. Gibbs and Morrice; 7,500 shares for Mr. Kendrick, 58,718
shares for Mr. Jones; 60,300 shares for Mr. Mitzel; 34,800 shares for
Mr. Lovett; 27,700 shares for Mr. Levy; and 15,500 shares for Mr.
Marshall, which each has the right to acquire pursuant to the
Company's Stock Option Plan.
(6) Includes 47,904 shares received by Mr. McAuley and 23,952 shares
received by each of Mssrs. Jones and Mitzel of restricted stock,
pursuant to the Company's 1998 Long-Term Incentive Plan, with a fair
market value on the date of distribution in 1998 of $10.437 per share.
(7) 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 Messrs. Gibbs,
Mitzel and Levy includes 2,500, 392 and 400 shares, respectively,
owned by their wives. Messrs. Morrice, Gibbs, Mitzel, and Levy are
deemed to be beneficial owners of such shares under the regulations of
the SEC, but they disclaim such beneficial ownership.
(8) Less than 1%.
(9) Includes 287,318 shares which the Company's executive officers have
the right to acquire and 35,000 shares which the Company's
non-management directors have the right to acquire pursuant to the
Company's Stock Option Plans. Also includes 3,292 shares owned by
spouses of the directors and executive officers, and 2,966 shares
owned by trusts. 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 held by their
spouses and related trusts.
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS AND COMPENSATION OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee,
and a Compensation Committee (which also serves as a Stock Option Committee).
The Executive Committee may exercise all the powers of the Board of
Directors between meetings of the Board, except as limited by law. The Executive
Committee may also serve as a Nominating Committee which nominates persons to
serve as directors of the Company. The full Board of Directors, however,
currently acts as the Nominating Committee and, as such, has nominated the five
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 one meeting during
1998.
The Audit Committee, which is composed 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
1998.
The Compensation Committee, composed 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 and
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<PAGE> 8
is responsible for the administration of the Company's Stock Option Plans. The
Compensation Committee met once in 1998.
During the Company's fiscal year ended December 31, 1998, the Company's
Board of Directors held six meetings. The directors attended all meetings of the
Board of Directors and the committees on which they served during 1998.
The Company pays 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 1998 aggregated
$85,500. In addition, 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.
The Company adopted the IRT Property Company Deferred Compensation Plan
for Outside Directors at the end of 1995. This plan allows non-employee
directors to defer their director 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 1998, $13,000 of director fees were deferred in
accordance with this plan.
There are no family relationships among 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. McAuley has been President of the Company since October 1, 1995,
and was named Chief Executive Officer of the Company on January 1, 1997, and
Chairman in June 1998. 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.
Ewing was acquired by Faison Associates, Inc. ("Faison") on May 1, 1993, when
Mr. McAuley became a Faison partner.
Mr. Flinn is currently occupied as a private investor and serves as a
director of Metrotrans Corporation [NASDAQ: MTRN] and of Theragenics, Inc.
[NYSE: TGX]. He retired from BankSouth Corporation after serving as Chairman and
Chief Executive Officer from August 1991 to January 1996.
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 from 1986.
Mr. Kendrick retired from Ruddick Investment Company ("RIC") after
serving as President from November 1994 to April 1998. RIC, an affiliate of
Harris Teeter, Inc. ("Harris Teeter"), a grocery store owner/operator, 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. Harris Teeter is a tenant in some of the shopping centers owned
and managed by the Company.
Mr. Morrice has been Managing Director of Morrice Financial Corp., a
Dallas, Texas real estate finance and investment firm since 1987.
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<PAGE> 9
EXECUTIVE OFFICERS
In addition to Thomas H. McAuley, President and Chief Executive
Officer, the executive officers of the Company are as follows:
W. Benjamin Jones III has been employed by the Company since 1977, and
has been Executive Vice President since May 1994.
Robert E. Mitzel has been with the Company since 1987, and has served
as Executive Vice President since May 1994.
Daniel F. Lovett joined the Company in October 1994 as Vice President
and Director of Construction and became Senior Vice President in February 1998.
From 1979 to September 1994, he was with Southeast Shopping Centers Corp., a
South Florida neighborhood and community shopping center developer, last serving
as Vice President and Director of Development.
James G. Levy has been Senior Vice President and Chief Accounting
Officer of the Company since December 1998. He served as Vice President and
Treasurer from June 1994 to December 1998. From May 1993 to May 1994, he was
with Faison, serving as Regional Comptroller.
Kip R. Marshall joined the Company in March 1998 as Senior Vice
President. From 1996 to 1997, he was employed as an Asset Manager for Bullock,
Terrell & Mannelly, a full service commercial real estate firm based in Atlanta,
Georgia, and from 1991 to 1995, he served as Vice President of Travelers Realty
Investment Company.
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.
- 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 to be of comparable size and complexity
are included in the NAREIT All REIT Index included in the Comparative Stock
Performance section of this Proxy Statement. 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
Committee also considers the performance of the
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<PAGE> 10
Company and the merits of the individual under consideration. Committee members
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 generally available to all employees of the Company.
Base Salary
The Chief Executive Officer recommends to the Compensation Committee
the base salary levels for the Company's other executive officers based on his
evaluation of individual experience and performance, on his review of employee
evaluation reports prepared by certain of the executive officers and in his
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 such recommendations. The Compensation Committee members also
may consider salary levels of executive officers of other comparable companies.
401(k) Plan and Year-End Additional Cash Compensation Program
The Company maintained a pension plan during 1980 to 1990, which was
terminated June 30, 1990. 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. 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 has 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 designed to produce a cumulative 12%
payment after completion of five years of service. The Company paid or accrued
approximately $170,000 and $200,000 under this program in 1996 and 1995,
respectively. The Company has not paid or accrued any amounts under this program
since 1996.
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. Employees vest in the
Company match based on length of service, with full vesting at 5 years of
service. The Company contributed approximately $56,000 to the 401(k) Plan for
the period from August 1 through December 31, 1996, approximately $131,000
during 1997 and approximately $152,000 during 1998.
Compensation to Chief Executive Officer
Mr. McAuley has been Chief Executive Officer since January 1, 1997, and
has served as President since October 1, 1995 and Chairman since June 18, 1998.
Mr. McAuley's base salary for 1998 was $307,154, as compared to
$302,608 for 1997, and prior to becoming Chief Executive Officer was $251,250
for 1996. Mr. McAuley received $132,938 in performance bonuses during 1998. Mr.
McAuley also was awarded, during fiscal years 1998, 1997, and 1996, incentive
stock options to purchase 9,500, 8,750 and 5,000 shares of Company Common Stock,
respectively.
The Compensation Committee considered Mr. McAuley's role as Chairman,
Chief Executive Officer and President during 1998, and as President and Chief
Executive Officer during 1997 and President in 1996, and the salaries and
benefits of other chief executive officers for similar companies within the
industry in determining his cash compensation. The stock option awards to Mr.
McAuley were based, among other things, on competitive
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<PAGE> 11
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
incentive stock option ("ISO") limitation as described below.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), 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 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 need to develop a
formal policy on this matter since the compensation of the Company's executive
officers has been less than the limitations contemplated by Section 162(m).
COMPENSATION COMMITTEE
Bruce A. Morrice, Chairman
Homer B. Gibbs, Jr.
Samuel W. Kendrick
Patrick L. Flinn
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 whose total annual salary and bonus exceeded $100,000 in
fiscal 1998 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
-----------------------------------------------------------------------------------------------
NAME AND PRINCIPAL RESTRICTED SECURITIES
- ------------------- OTHER ANNUAL 401(K) STOCK UNDERLYING
POSITION YEAR SALARY BONUS COMPENSATION(2) CONTRIBUTION AWARD(S) OPTIONS(#)
- -------- ---- ------ ----- --------------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas H. McAuley 1998 $307,154 $132,938(4) -- $10,000 $500,000(5)(6) 8,300
Chairman, President 1997 302,808 -- -- 9,500 -- 8,750
and Chief Executive 1996 251,250 -- $17,500 5,255 -- 5,000
Officer(3)
W. Benjamin Jones III 1998 150,209 22,552 -- 9,012 250,000(5)(6) 8,300
Executive Vice 1997 145,788 -- -- 8,747 -- 7,500
President 1996 134,788 -- 9,205 3,217 -- 7,500
Robert E. Mitzel 1998 150,209 22,552 -- 9,349 250,000(5)(6) 8,300
Executive Vice 1997 145,788 -- -- 8,747 -- 7,500
President 1996 134,788 -- 9,205 3,217 -- 7,500
Daniel F. Lovett 1998 109,848 16,653 -- 7,220 -- 8,300
Executive Vice 1997 91,568 -- -- 5,394 -- 6,000
President 1996 84,920 -- 5,950 2,009 -- 6,000
Mary M. Thomas 1998 186,141 27,011 -- 10,000 250,000(5)(6)(7) 8,300
Executive Vice 1997 174,613 -- -- 9,500 -- 7,500
President and Chief 1996 161,438 -- 11,025 3,853 -- 7,500
Financial Officer
</TABLE>
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<PAGE> 12
- -------------------
(1) Excludes perquisites and other personal benefits, the aggregate amount
of which did not, in the case of any Named Executive Officer, exceed
$50,000 or 10% of such Named Executive Officer's annual salary and
bonus in any year.
(2) Year-End Additional Cash Compensation in lieu of pension.
(3) President and Chief Operating Officer since October 1, 1995, Chief
Executive Officer since January 1, 1997, and Chairman since June 18,
1998.
(4) Mr. McAuley received a $75,000 performance bonus approved in February
1998 by the Board of Directors and a $57,938 bonus under the 1998
Long-Term Incentive Plan based upon the attainment of certain
performance goals. See "Employment Agreements."
(5) Represents the value of 47,904 shares received by Mr. McAuley and
23,952 shares received by each of Mssrs. Jones and Mitzel and Ms.
Thomas, pursuant to the 1998 Plan, with a fair market value on the date
of distribution in 1998 of $10.44 per share. On June 18,1998, 119,760
restricted shares of common stock (the "Restricted Shares") were
granted and 119,760 shares (the "Loan Shares") were issued pursuant to
loans made to certain Company officers as incentives for future
services. The Restricted Shares and the Loan Shares were valued at the
closing price of the Company's common stock on June 18, 1998 of
$10.437.
(6) Each of the restricted stock awards provides that the shares of
restricted stock shall vest 10% on January 31st of each year beginning
in 1999 and ending in 2008. The restricted stock is subject to the
Executive remaining an employee of the Company or a subsidiary, except
in the case of death or disability. The Company also loaned each
Executive the respective amounts shown pursuant to secured promissory
notes bearing interest at 7% per annum, with interest payable
quarterly. The principal is payable at the maturity of the notes on
July 1, 2008. The proceeds of the notes were used to buy a number of
shares equal to the shares granted under the restricted stock awards.
The secured promissory notes are accompanied by a pledge agreement on
all Restricted Shares to secure the employee's obligations to the
notes. The Company can release collateral in the Company's judgment at
any time after July 10, 2003, provided the fair market value of the
remaining collateral is not less than 200% of the then outstanding
principal balance of the related note, and provided further all
interest payments are current.
(7) As a result of Ms. Thomas' resignation from the Company effective
December 31, 1998, 21,557 of these shares were forfeited by her and
surrendered to the Company. Consequently, Ms. Thomas now only holds
2,395 shares with a fair market value on the date of original
distribution of $25,000 or $10.44 per share.
STOCK OPTION PLANS
Long-term incentives are presently provided through the Company's 1989
Stock Option Plan (the "1989 Plan") and its 1998 Long-Term Incentive Plan (the
"1998 Plan," and collectively with the 1989 Plan, the "Plans"). These Plans are
intended to promote the long-term success of the Company by providing financial
incentives to the directors, officers, and employees of the Company who are in
positions to make significant contributions toward the success of the Company.
Options granted under the 1989 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). 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 ("NSOs") may also be granted to officers and employees of the
Company. The 1998 Plan also provides for awards of stock appreciation rights
("SARs").
The Plans are 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 ISO or a
NSO.
9
<PAGE> 13
Options granted under the Plans are exercisable no later than 10 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 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, but the 1998
Plan does include SARs.
In determining the grants of stock options to officers and employees of
the Company, including the executive officers other than the Chief Executive
Officer, the Compensation Committee reviewed with the 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
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.
The following table sets forth (i) all individual grants of stock
options made by the Company during fiscal 1998 to each of the Named Executive
Officers (all of which are ISOs granted under the 1989 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.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1998
INDIVIDUAL GRANTS
--------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) IN 1998 ($/SH) DATE 5% 10%
- ---- ---------- ------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Thomas H. McAuley 8,300 5.52% $11.688 1/01/08 $61,007 $154,603
W. Benjamin Jones III 8,300 5.52 11.688 1/01/08 61,007 154,603
Robert E. Mitzel 8,300 5.52 11.688 1/01/08 61,007 154,603
Daniel F. Lovett 8,300 5.52 11.688 1/01/08 61,007 154,603
Mary M. Thomas 8,300 5.52 11.688 1/01/08 61,007 154,603
</TABLE>
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 1998 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
1998, 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.
10
<PAGE> 14
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR-END OPTION VALUES
NUMBER OF SHARES NUMBER OF VALUE OF UNEXERCISED
ACQUIRED ON UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME EXERCISE VALUE REALIZED AT 12/31/98 AT 12/31/98(1)
---- -------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Thomas H. McAuley -- -- 80,800(2) $22,812
W. Benjamin Jones, III -- -- 51,718 8,563
Robert E. Mitzel -- -- 52,675 10,125
Daniel F. Lovett -- -- 25,300 4,500
Mary M. Thomas -- -- 53,800 15,750
</TABLE>
- ----------------
(1) Value based on market value of the Company's Common Stock at the date
of exercise or the end of 1998 minus the exercise price.
(2) Includes NSOs totaling 8,750 shares, consisting of 1,250 shares each
granted during 1989 through 1995 as a non-employee director, an NSO for
50,000 shares granted upon employment as President in 1995, an ISO for
5,000 shares granted in 1996 and an ISO for 8,750 shares granted in
1997, and 8,300 granted in 1998.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of the date of this Proxy Statement, the Board granted restricted
stock awards under the Incentive Plan to Messrs. McAuley, Jones, and Mitzel, and
Ms. Thomas. The following table shows the Incentive Plan awards approved by the
Board for the persons and groups indicated below. Any future awards will be made
at the discretion of the Compensation Committee.
<TABLE>
<CAPTION>
DOLLAR VALUE OF NO. OF SHARES OF
NAME AND POSITION RESTRICTED STOCK ($) RESTRICTED STOCK (#)
----------------- -------------------- --------------------
<S> <C> <C>
Thomas H. McAuley $ 500,000(1) 47,904
President and Chief Executive Officer
W. Benjamin Jones III $ 250,000(1) 23,952
Executive Vice President
Robert E. Mitzel $ 250,000(1) 23,952
Executive Vice President
Mary M. Thomas $ 250,000(1)2) 23,952
Executive Vice President and
Chief Financial Officer
All current executive officers, as a group $1,250,000(1) 119,760
All non-executive directors, as a group $ -0- -0-
All other employees, as a group $ -0- -0-
</TABLE>
11
<PAGE> 15
- ----------------------------
(1) On a per share basis, this amount will be equal to the fair market
value of the Common Stock on the date of award of the restricted stock.
(2) As a result of Ms. Thomas' resignation from the Company effective
December 31, 1998, 21,557 of these shares were forfeited by her and
surrendered to the Company. Consequently, Ms. Thomas now only holds
2,395 shares from such awards with a fair market value on the date of
original distribution of $25,000 or $10.44 per share.
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
Russell 2000 Index over the same period. The Company is using the Russell 2000
Index in place of the S&P 500, which was used last year, because the companies
comprising the Russell 2000 Index have more comparable market capitalization to
the Company than those comprising the S&P 500. 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.
[ INSERT PERFORMANCE CHART ]
<TABLE>
<CAPTION>
PERIOD ENDING
--------------------------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IRT Property Company 100.00 103.60 102.28 139.59 154.60 142.51
Russell 2000 100.00 98.18 126.11 146.91 179.76 175.19
NAREIT All REIT Index 100.00 100.80 118.87 162.89 194.38 159.36
</TABLE>
- -------------------
(1) The NAREIT All REIT Total Return Index is maintained by the National
Association of Real Estate Investment Trusts. It contained 211
tax-qualified REITs, including the Company, with a total market
capitalization of $141.4 billion as of December 31, 1998.
(2) The Russell 2000 Index is maintained by the Frank Russell Company and
contains companies based in the United States, including the Company. As
of December 31, 1998, the average market capitalization of companies
comprising the Russell 2000 Index was approximately $592.0 million, the
median market capitalization was approximately $500.0 million, and the
largest company in the index had an approximate market capitalization of
$1,402.7 million.
(3) The above performance graph was prepared by SNL Securities,
Charlottesville, VA.
12
<PAGE> 16
EMPLOYMENT AND SEVERANCE AGREEMENTS
On October 1, 1995, the Company entered into an employment agreement
with Mr. McAuley as President and Chief Operating Officer of the Company, which
provided, among other things, for a minimum annual base salary of $250,000, a
commencement bonus of $100,000, and the opportunity to participate in such
incentive bonus plans, as may be determined by the Board. Mr. McAuley also was
granted a NSO to purchase 50,000 shares of Company Common Stock under the 1989
Plan.
The Company entered into an Amended and Restated Employment Agreement
with Mr. McAuley as of November 11, 1997. This Employment Agreement provides for
an initial annual salary of $306,000 with annual reviews and permits
participation in all other incentive, benefit, welfare and retirement plans
offered by the Company, and the use and maintenance costs of a Company
automobile (or a compatible automobile allowance). It is automatically renewable
each year unless sooner terminated. Following a "Change In Control" as defined
therein, Mr. McAuley may, for good reason, terminate his employment and receive
the sum of 2.99 times the sum of his annual base salary and his most recent
bonus. Following a Change in Control and termination of employment, the Company
will continue to provide benefits to Mr. McAuley for two years, consistent with
the benefits he received prior to such termination.
As of November 11, 1997, the Company also entered into Change In
Control Employment Agreements with Mary M. Thomas, W. Benjamin Jones III, and
Robert E. Mitzel, its three Executive Vice Presidents. These are generally
similar to the Change In Control provisions contained in the President's
Employment Agreement. The provisions of Mr. Jones' and Mr. Mitzel's agreements
provide for payments of the sum of one year's salary and bonus in the event of a
Change In Control and termination of employment. Benefits are payable for one
year in the case of each of Mr. Jones and Mr. Mitzel. Ms. Thomas' agreement
expired upon her resignation in December 1998.
On January 13, 1999, the Company entered into an agreement with Mary
M. Thomas following her resignation from the Company and the Board of Directors
and the expiration of her Change in Control Employment Agreements. This
Severance Agreement provided for, among other things, a $202,000
separation/transition incentive, up to $20,000 in matching 401(k) contributions
and other cash payments, and vesting of 10% of her restricted stock award, as
well as certain other benefits, including payment of medical and dental
insurance for one year.
The Company also has an agreement with Mr. MacLeod, its former
Chairman, dated October 1, 1995, that provides that in the event of a "Change in
Control," as defined therein, between July 1, 1997 and June 30, 1999, Mr.
MacLeod will receive a $600,000 bonus.
PROPOSAL TWO
INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has adopted a resolution to amend the Company's
Articles to increase the number of authorized shares of Common Stock. This
amendment would increase the number of shares of Common Stock that the Company
is authorized to issue from 75,000,000 to 150,000,000 to provide additional
authorized but unissued shares available for issuance to meet business demands
as they may arise. The Board of Directors believes that such additional shares
will provide the Company with the flexibility to issue Common Stock for possible
future stock dividends or splits, acquisitions, stock option plans, possible
future financings or other corporate purposes which may be identified in the
future by the Board of Directors, without the possible expense and delay of a
special shareholders' meeting.
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable, without further action by the Company's
shareholders, except as may be required by applicable law or by the rules of any
stock exchange or national securities association trading system on which the
securities may be listed or traded. Upon issuance, such shares will have the
same rights as the outstanding shares of Common Stock. Holders of Common Stock
have no preemptive rights.
The Company has no arrangements, agreements, understandings or plans at
the present time for the issuance or use of the additional shares of Common
Stock proposed to be authorized, except that the Company is required under its
dividend reinvestment plan, Stock Option Plans, provisions regarding issues of
OP Units by IRT Partners, LP, a subsidiary of the Company, and the convertible
debentures to maintain sufficient authorized but unissued shares of Common Stock
to meet the Company's obligations under such plans and instruments. If all
13
<PAGE> 17
options were exercised, and taking into account the Common Stock needed for the
Company's shareholder rights plan and other plans, the Company would have an
insufficient number of authorized shares of Common Stock.
The issuance of additional shares of Common Stock may have a dilutive
effect on earnings per share and, for persons who do not purchase additional
shares to maintain their pro rata interest in the Company, on such shareholders'
percentage voting power.
Although the Company has no present intention to issue shares of Common
Stock to make acquisitions of control of the Company more difficult and is
unaware of any pending proposals to acquire the Company, future issuances of
Common Stock could have that effect. For example, the acquisition of shares of
the Company's Common Stock by an entity seeking to acquire control of the
Company might be discouraged through the public or private issuance of
additional shares of Common Stock, since such issuance could dilute the stock
ownership of the acquiring entity. Common Stock could also be issued to existing
shareholders as a dividend or privately placed with purchasers who might side
with the Board in opposing a takeover bid, thus discouraging such a bid.
This proposal requires approval by a majority of all the votes entitled
to be cast by the shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL TWO.
ADDITIONAL INFORMATION
The closing price of the Common Stock, as reported by the New York
Stock Exchange on March 15, 1999 was $8.9375.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been appointed by the Board of Directors as the
independent public accountants for the Company for fiscal year 1999. 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Directors, executive officers, and greater than 10% shareholders
are required by SEC regulation to furnish the Company the copies of all 16(a)
reports they file. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended December 31, 1998,
all Section 16(a) filing requirements applicable to directors, executive
officers, and greater than 10% beneficial owners were complied with by
such persons.
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. The Company is contemplating retaining
Regan & Associates, Inc. to solicit proxies and will pay the charges of such
firm, presently estimated at approximately $4,500. 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.
14
<PAGE> 18
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 2000 annual
meeting of shareholders must be received at the Company's principal executive
offices on or before December ___, 1999 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. If
any other matters properly come before the Meeting, the persons designated as
proxies will vote on such matters in accordance with their best judgment.
The management of the Company urges you to attend the 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.
ANNUAL REPORT ON FORM 10-K
Upon the written request of any person whose Proxy is solicited by this
Proxy Statement, the Company will furnish to such person without charge (other
than for exhibits) a copy of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, including financial statements and
schedules thereto, as filed with the Securities and Exchange Commission.
Requests may be made to IRT Property Company, 200 Galleria Parkway, Suite 1400,
Atlanta, Georgia 30339, Attention: W. Benjamin Jones, III, Executive Vice
President and Secretary.
IRT PROPERTY COMPANY
By: W. BENJAMIN JONES III
Executive Vice President
and Secretary
15
<PAGE> 19
<TABLE>
<S> <C>
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
IRT PROPERTY COMPANY
ELECTION OF DIRECTORS FOR WITHHOLD FOR ALL To withhold authority to vote for any individual
1. Nominees: 01) T.H. McAuley, All All Except: nominee, mark "For All Except" and write the
02) P.L. Flinn, nominee's number on the line below.
03) H.B. Gibbs, Jr. [ ] [ ] [ ]
04) S.W. Kendrick, -------------------------------------------------
05) B.A. Morrice
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. To increase the company's [ ] [ ] [ ] Please mark this box if you plan to attend the [ ]
authorized shares of Annual Meeting.
$1.00 par value common
stock from 75 million
to 150 million.
This proxy when properly executed will be voted in the manner directed herein by the shareholder whose signature appears
below. If no direction is made, the proxy will be voted FOR Items 1 and 2, and in the discretion of the Proxies on any
other matters.
When signing as attorney-in-fact, executor, administrator, trustee, guardian or officer of a corporation, please give
full title as such. On joint accounts, each owner should sign.
----------------------------------------------------- --------------------------------------------------
Signature (PLEASE SIGN WITHIN BOX) DATE Signature (Joint Owners) DATE
</TABLE>
<PAGE> 20
PROXY FORM PROXY FORM
[IRT LOGO]
IRT Property Company
Please date and sign this proxy on the reverse side and mail without delay in
the enclosed envelope
IRT PROPERTY COMPANY
PROXY FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
Proxy For Annual Meeting of Shareholders Solicited By the Board of Directors
The undersigned hereby appoints Thomas H. McAuley and W. Benjamin
Jones III, and either of them, as Proxies, each with the full power of
substitution to represent the undersigned and to vote all 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 Renaissance
Waverly Hotel, 2450 Galleria Parkway, Chambers Room, Atlanta, Georgia 30339 on
Thursday, May 20, 1999 at 10:00 A.M. local time, and any adjournments thereof
(the "Meeting") (1) as hereinafter specified upon the proposals listed on the
reverse side 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.
THIS PROXY IS SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE
