FOREST CITY ENTERPRISES, INC.
Notice of Annual Meeting of Shareholders
To Be Held June 14, 1994
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of Forest
City Enterprises, Inc. will be held in the English Oak Room, 50 Public Square,
Cleveland, Ohio 44113, on Tuesday, June 14, 1994 at 9:00 a.m., eastern
daylight saving time, for the purpose of considering and acting upon:
(1) The immediate adjournment of the Annual Meeting of Shareholders until
Tuesday, June 21, 1994. The Annual Meeting of Shareholders will be
reconvened on June 21, 1994 at 3:00 p.m. in the English Oak Room, 50
Public Square, Cleveland, OH 44113.
(2) The election of twelve (12) directors, each to hold office until the
next annual shareholders' meeting and until his successor shall be
elected and qualify. Three (3) directors will be elected by holders
of Class A common stock and nine (9) by holders of Class B common
stock.
(3) The election of Coopers & Lybrand as independent auditors for the
Company for the fiscal year ending January 31, 1995.
(4) An amendment to the Company's Code of Regulations establishing the date
for the Annual Meeting of Shareholders as the second Tuesday in June,
unless the Board of Directors schedules the meeting on another date
between June 1 and June 30.
(5) The approval of the proposed 1994 Stock Option Plan.
(6) Such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of business on April 15, 1994 will
be entitled to notice of and to vote at such annual meeting or any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas G. Smith, Secretary
Cleveland, Ohio
April 15, 1994
IMPORTANT: It is important that your stock be represented at the meeting.
Whether or not you intend to be present, please mark, date and
sign the appropriate enclosed Proxy or Proxies and send them by
return mail in the enclosed envelope, which requires no postage if
mailed in the United States.
FOREST CITY ENTERPRISES, INC.
Proxy Statement
Solicitation and Revocation of Proxies
The enclosed Proxy or Proxies relating to shares of Class A common
stock and Class B common stock are solicited by and on behalf of the
management of Forest City Enterprises, Inc. (hereinafter referred to as the
"Company") for use at the annual meeting of shareholders to be held on
Tuesday, June 14, 1994 at 9:00 a.m., eastern daylight saving time, in the
English Oak Room, 50 Public Square, Cleveland, Ohio 44113. The first order
of business will be to request the immediate adjournment of the Annual
Meeting until Tuesday, June 21, 1994 at 3:00 p.m. in the English Oak Room, 50
Public Square, Cleveland, Ohio 44113. A shareholder giving a Proxy may
revoke the same by notifying the Company in writing or at the annual meeting,
without affecting any vote previously taken.
Outstanding Shares and Voting Rights
As of April 15, 1994, the record date fixed for the determination of
shareholders entitled to vote at the annual meeting, there were outstanding
5,146,226 shares of Class A common stock, par value $.33-1/3 per share, and
3,845,388 shares of Class B common stock, par value $.33-1/3 per share, of
the Company. At the annual meeting, the holders of Class A common stock will
be entitled as a class to elect three (3) directors. Max Ratner, Nathan
Shafran and J Maurice Struchen have been nominated for election to serve as
these directors. At the annual meeting, the holders of Class B common stock
will be entitled as a class to elect nine (9) directors. Albert B. Ratner,
Samuel H. Miller, Charles A. Ratner, Scott S. Cowen, Harry O. Schloss, Jr.,
James A. Ratner, Ronald A. Ratner, Jerry V. Jarrett and Brian J. Ratner have
been nominated for election to serve as these directors. Except for the
election of directors, the holders of Class A common stock and Class B common
stock will vote together on all other matters presented at the meeting and
will be entitled to one (1) vote per share of Class A common stock and ten
(10) votes per share of Class B common stock held of record.
If notice in writing is given by any shareholder to the President, a
Vice President or the Secretary of the Company not less than forty-eight
hours before the time fixed for the holding of the meeting that such
shareholder desires cumulative voting with respect to the election of
directors by a class of shareholders to which he belongs, and if an
announcement of the giving of such notice is made upon the convening of the
meeting by the Chairman or Secretary or by or on behalf of the shareholder
giving such notice, each holder of shares of that class shall have the right
to accumulate such voting power as he possesses at such election with respect
to shares of that class. Each holder of shares of Class A common stock or
Class B common stock, as the case may be, shall have as many votes as equal
the number of shares of that class of common stock owned by him multiplied by
the number of directors to be elected by the holders of that class of common
stock. These votes may be equally divided among the total number of
directors to be elected by the holders of that class of common stock, or
distributed among any lesser number, in such proportion as the holder may
desire.
Under Ohio law and the Company's Articles of Incorporation, broker
nonvotes and abstaining votes will not be counted in favor of or against any
nominee for election to the Board of Directors of the Company nor will such
votes be counted in favor of or against the election of Coopers & Lybrand as
the Company's independent auditors for the fiscal year ending January 31,
1995. Under Ohio law and the Company's Articles of Incorporation, broker
nonvotes and abstaining votes with respect to the proposals to amend the
Company's Code of Regulations and to approve the proposed 1994 Stock Option
Plan will in effect be votes against such proposals.
Annual Report
The Company's Annual Report for the fiscal year ended January 31,
1994 is enclosed herewith, but is not part of this Proxy Statement.
Election of Directors
It is intended that proxies will be voted for the election of the
nominees named in the following table as directors of the Company unless
authority is withheld. Each is to serve until the next annual shareholders'
meeting and until his successor shall be elected and shall qualify. In the
event any one or more of such nominees unexpectedly becomes unavailable for
election, proxies will be voted in accordance with the best judgment of the
proxy holder. All of the nominees are presently directors of the Company.
The following table sets forth the security ownership of management
for each director, nominee, other named executive officer and all directors,
nominees, named executive officers and officers as a group.
<TABLE>
<CAPTION>
---------- Number of Shares of Capital Stock -------
--------- Beneficially Owned at March 1, 1994 ------
Class A Class B
Occupation Director Common Percent Percent Common Percent
Name And Age Since Stock of Class of Class(e) Stock of Class
<S> <C> <C> <C> <C> <C> <C> <C>
(1) Max Ratner Founder Chairman of the Board 1960 78,792 (3) 1.53% 1.54% 209 (4) 0.01%
of Directors of the Company.
Age 86. (c)
(1) Nathan Shafran Vice Chairman of the Board of 1960 172,776 (5) 3.36% 12.44% 533,779 (6) 13.88%
Directors of the Company.
Age 80. (c)
(1) J Maurice Struchen Retired Chairman and Chief 1971 500 0.01% 0.02% 500 0.01%
Executive Officer and Director
of Society Corporation (banking);
Greif Bros. Corporation (creative
packaging); Director of Davey
Tree Expert Co. (tree and lawn
care). Age 73. (a,b)
(2) Albert B. Ratner Vice Chairman of the Board of 1960 222,909 (7) 4.33% 7.45% 173,424 (8) 4.51%
Directors and Chief Executive
Officer of the Company; Director
of American Greetings Corporation
(greeting cards). Age 66. (c)
(2) Samuel H. Miller Chairman of the Board of 1960 184,401 (9) 3.58% 7.23% 202,401 (10) 5.26%
Directors and Treasurer of the
Company. Age 72. (c)
(2) Charles A. Ratner President and Chief Operating 1972 176,597 (11) 3.43% 6.87% 189,992 (12) 4.94%
Officer of the Company;
Chairman of Forest City Rental
Properties Corporation, a
subsidiary of the Company.
Age 52. (c)
(2) Harry O. Schloss Jr. Executive Consultant and Director 1978 2,500 0.05% 0.05% - -
of U.S. Trust Co. of Florida.
Age 84. (a,b)
(2) James A. Ratner Executive Vice President of the 1984 216,056 (13) 4.20% 7.17% 164,471 (14) 4.28%
Company and President of Forest
City Rental Properties Corporation,
a subsidiary of the Company.
Age 49. (c)
(2) Jerry V. Jarrett Retired Chairman and Chief 1984 - - - - -
Executive Officer of Ameritrust
Corporation and Ameritrust
Company National Association
(banking); Director of Developers
Diversified Realty Corporation
(real estate investment trust).
Age 62. (a,b)
(2) Ronald A. Ratner Executive Vice President of the 1985 222,152 (15) 4.32% 7.52% 178,110 (16) 4.63%
Company and President of Forest
City Residential Development, Inc.,
a subsidiary of the Company.
Age 47. (c)
(2) Scott S. Cowen Dean, Weatherhead School of 1989 400 0.01% 0.01% - -
Management, Case Western Reserve
University; Director of FabriCenters
of America, Inc. (specialty retailing),
Premier Industrial Corporation
(industrial distribution), LDI
Corporation (equipment leasing),
American Greetings Corporation
(greeting cards) and Society Nat-
ional Bank (banking). Age 47. (a)
(2) Brian J. Ratner Managing Director-Urban 1993 139,581 (17) 2.71% 4.19% 79,541 (18) 2.07%
Development. Age 37. (c)
OTHER NAMED EXECUTIVE OFFICERS
Thomas G. Smith (d) - - 0.00% 18 0.00%
Gilles A. E. Stucker (21) (d) - - - - -
ALL DIRECTORS, NOMINEES
AND OFFICERS AS A GROUP (19 in number) 1,416,925 (19) 27.53% 44.08% 1,522,445 (20) 39.59%
<FN>
(1) Nominated for election by holders of Class A common stock.
(2) Nominated for election by holders of Class B common stock.
(3) Includes 77,801 shares of Class A common stock held in a trust in which
Max Ratner has an income interest but no interest in the remainder. Max
Ratner disclaims beneficial ownership in 167,687 shares of Class A common
stock that are not included in the table above. Certain of these shares
are beneficially owned by Max Ratner because of his relationship as a
trustee over shares in which he has no residual interest. The remainder,
which are beneficially owned by his wife, are shares in which Max Ratner
disclaims any beneficial interest.
(4) Max Ratner disclaims beneficial ownership in 5,350 shares of Class B
common stock held by RMS, Ltd. that are not included in the table above.
These shares, which are beneficially owned by his wife, are shares in
which Max Ratner disclaims any beneficial interest. RMS, Limited
Partnership ("RMS, Ltd.") is a limited partnership in which various
members of the Ratner, Miller and Shafran families and family trusts are
partners and in which Charles A. Ratner, Ronald A. Ratner, Brian J.
Ratner and Samuel H. Miller have shared voting powers by virtue of their
being among the general partners.
(5) Includes 85,219 shares of Class A common stock held in a partnership in
which Mr. Shafran and his wife have shared voting and investment power.
Mr. Shafran disclaims beneficial ownership in 815,083 shares of Class A
common stock that are not included in the table above. Certain of these
shares are beneficially owned by Nathan Shafran because of his
relationship as a trustee over shares in which he has no residual
interest. The remainder, which are beneficially owned by his wife, are
shares in which Mr. Shafran disclaims any beneficial ownership.
(6) These represent shares held in a partnership in which Mr. Shafran and his
wife have shared voting and investment power. In addition, these shares
are held by RMS, Ltd. Excluded from the table above are 100 shares of
Class B common stock, also held by RMS, Ltd., that are beneficially owned
by Mr. Shafran's wife in which he disclaims any beneficial ownership.
(7) Includes 184,946 shares of Class A common stock held in a trust in which
Albert B. Ratner has an income interest but no interest in the remainder.
Mr. Ratner disclaims beneficial ownership in 804,698 shares of Class A
common stock that are not included in the table above. Certain of these
shares are beneficially owned by Albert Ratner because of his
relationship as a trustee over shares in which he has no residual
interest. The remainder, which are beneficially owned by his wife, are
shares in which Mr. Ratner disclaims any beneficial ownership.
(8) Includes 173,180 shares of Class B common stock held by RMS, Ltd.
Excluded from the table above are 70,671 shares of Class
B common stock that are beneficially owned by Albert Ratner because of
his relationship as a trustee over shares in which he has
no residual interest and for which Mr. Ratner disclaims any beneficial
ownership. Also excluded are 100 shares of Class B common stock
beneficially owned by his wife in which he disclaims any beneficial
ownership.
(9) Samuel Miller disclaims any beneficial ownership in 739,548 shares of
Class A common stock that are not included in the table above. These
shares are beneficially owned by him because of his relationship as a
trustee over these shares in which he has no residual interest.
(10) All of these shares of Class B common stock beneficially owned by Samuel
Miller are held by RMS, Ltd.
(11) Includes 60,201 shares of Class A common stock held in a trust in which
Charles A. Ratner has an income interest but no interest in the
remainder. Charles A. Ratner disclaims any beneficial ownership in
491,938 shares of Class A common stock that are not included in the table
above. Certain of these shares are beneficially owned by Charles Ratner
because of his relationship as a trustee over shares in which he has no
residual interest. The remainder, which are beneficially owned by his
wife, are shares in which Mr. Ratner disclaims any beneficial ownership.
(12) All of these shares are held by RMS, Ltd. Excluded from the table above
are 925,443 shares of Class B common stock held by RMS, Ltd. that are
beneficially owned by Charles Ratner because of his relationship as a
trustee over shares in which he has no residual interest. An additional
1,350 shares of Class B common stock, which are beneficially owned by his
children, are shares in which Mr. Ratner disclaims any beneficial
ownership.
(13) Includes 45,724 shares of Class A common stock held in a trust in which
James A. Ratner has a term income interest but no interest in the
remainder. James A. Ratner disclaims any beneficial ownership in 446,636
shares of Class A common stock that are not included in the table above.
Certain of these shares are beneficially owned by James Ratner because of
his relationship as a trustee over shares in which he has no residual
interest. The remainder, which are beneficially owned by his wife, are
shares in which Mr. Ratner disclaims any beneficial ownership.
(14) All of these shares are held by RMS, Ltd. Excluded from the table above
are 173,281 shares of Class B common stock held by RMS, Ltd. that are
beneficially owned by James Ratner because of his relationship as a
trustee over shares in which he has no residual interest or which are
shares beneficially owned by his children in which Mr. Ratner disclaims
any beneficial ownership.
(15) Includes 45,907 shares of Class A common stock held in a trust in which
Ronald A. Ratner has a term income interest but no interest in the
remainder. Ronald A. Ratner disclaims any beneficial ownership in 75,925
shares of Class A common stock that are not included in the table above.
Certain of these shares are beneficially owned by Ronald Ratner because
of his relationship as a trustee over shares in which he has no residual
interest. The remainder, which are beneficially owned by his w ife, are
shares in which Mr. Ratner disclaims any beneficial ownership.
(16) All of these shares of Class B common stock beneficially owned by Ronald
Ratner are held by RMS, Ltd. Excluded from the table above are 893,682
shares of Class B common stock held by RMS, Ltd. that are beneficially
owned by Ronald Ratner because of his relationship as a trustee over
shares in which he has no residual interest or which are shares
beneficially owned by his children in which Mr. Ratner disclaims any
beneficial ownership.
(17) Brian J. Ratner disclaims any beneficial ownership in 27,150 shares of
Class A common stock that are not included in the table above. Certain
of these shares are beneficially owned by Brian Ratner because of his
relationship as a trustee over shares in which he has no residual
interest. The remainder, which are beneficially owned by his wife and
children, are shares in which Mr. Ratner disclaims any beneficial
ownership.
(18) All of these shares of Class B common stock beneficially owned by Brian
Ratner are held by RMS, Ltd. Excluded from the table above are 283,532
shares of Class B common stock held by RMS, Ltd. that are beneficially
owned by Brian Ratner because of his relationship as a trustee over
shares in which he has no residual interest or which are shares
beneficially owned by his wife and children in which Mr. Ratner disclaims
any beneficial ownership. Also excluded from the table above are 300 sh
ares of Class B common stock not held by RMS, Ltd. that are beneficially
owned by Brian Ratner's wife in which Mr. Ratner disclaims any beneficial
ownership.
(19) These shares of Class A common stock represent all the shares in which
beneficial ownership is claimed by these persons. Those shares of which
any of these persons disclaim beneficial ownership are disclosed in the
footnotes above.
(20) Included in this total are 1,521,683 shares of Class B common stock that
are held by RMS, Ltd. These shares represent all the shares in which
beneficial ownership is claimed by these persons. Those shares of which
any of these persons disclaim beneficial ownership are disclosed in the
footnotes above.
(21) Mr. Stucker resigned as an officer of the Company, effective January 31,
1994.
(a) Member of the Audit Committee.
(b) Member of the Compensation Committee.
(c) Officer and director of various subsidiaries of the Company.
(d) This officer is not a director.
(e) Shares of Class B common stock are convertible into shares of Class A
common stock at any time on a 1-for-1 basis. If conversion of Class B
common shares for the nominee or officer listed were to be converted, the
ownership of Class A common shares for that person would be as disclosed
in the table above.
</TABLE>
The Company has been advised that the RMS, Ltd. shares and other
Ratner, Miller and Shafran shares will be voted for the approval of the
election of the directors nominated and that such vote will be sufficient to
elect said nominees.
There are certain family relationships among some of the nominees for
Director, executive officers and principal shareholders. Max Ratner is the
brother-in-law of Nathan Shafran, the father of Charles A. Ratner, James A.
Ratner, Ronald A. Ratner and the uncle of Albert B. Ratner. Albert B.
Ratner is the father of Brian J. Ratner.
Directors who are not officers of the Company received fees of
$20,000 each for the fiscal year ended January 31, 1994. In addition,
Messrs. Schloss, Cowen, Struchen and Jarrett performed certain special
consulting services for the Company, including participation on various
committees, for which they received, in the aggregate, $86,000. Mr. Struchen
received $59,000, primarily for attending meetings of the Company's Executive,
Audit and Compensation Committees, monthly meetings of the Operating Committee
and for other special projects. Messrs. Jarrett and Schloss received $13,000
and $12,500 , respectively, for attending meetings of the Company's Executive,
Audit and Compensation Committees. Mr. Cowen received $1,500 for attending
meetings of the Company's Audit Committee. Officers of the Company who serve
as directors do not receive any
additional compensation.
The following table sets forth the security ownership of all other persons who
beneficially own 5% or more of the Company's common stock.
<TABLE>
------------- Number of Shares of Capital Stock ----------------
------------- Beneficially Owned at March 1, 1994 --------------
Class A Class B
Name and Address of Other 5% Common Percent Percent Common Percent
Holders of Common Stock Stock of Class of Class(a) Stock of Class
<S> <C> <C> <C> <C> <C>
Irving B. Harris 129,297 (1) 2.51% 3.52% 53,925 (1) 1.40%
Suite 505
Two North La Salle Street
Chicago, IL 60602-3703
William Harris Investors, Inc. 231,409 (2) 4.50% 6.90% 132,947 (2) 3.46%
Suite 505
Two North La Salle Street
Chicago, IL 60602-3703
Wanger Asset Management, L.P. & 303,920 (3) 5.91% 8.68% 156,320 (3) 4.07%
Wanger Asset Management, Ltd.
227 West Monroe, Suite 3000
Chicago, IL 60606
Acorn Investment Trust, 155,000 (3) 3.01% 5.28% 123,000 3.20%
Series Designated Acorn Fund
227 West Monroe, Suite 7450
Chicago, IL 60606
Heine Securities Corporation & 389,600 (4) 7.57% 8.78% 68,100 (4) 1.77%
Michael F. Price
51 J.F.K. Parkway
Short Hills, N.J. 07078
Interstate Properties 41,943 (5) 0.82% 4.82% 216,300 (5) 5.62%
Prk 80 West, Plaza 2
Saddlebrook, NJ 07662
Ratner, Miller & Shafran Family Interests 2,443,675 (6) 47.48% 65.46% 2,677,899 (6) 69.64%
10800 Brookpark Road
Cleveland, OH 44130
<FN>
(1) Not included in the table above are 21,400 shares of Class A common stock
and 11,300 shares of Class B common stock that are beneficially owned by
associates of Irving Harris. Mr. Harris disclaims beneficial ownership of
these shares. In a Schedule 13D filing, he also reported that, to the
best of his knowledge, neither he nor any of the other persons named in
the filings have any plans or proposals concerning the Company relating to
any type of influence upon the control or management of the Company.
Such holdings, including those in which Mr. Harris disclaims any
beneficial ownership, amounted in the aggregate to 4.1% of the number of
shares of Class A common stock outstanding, after giving effect to the
assumed conversion of the holdings of Class B common stock included in
the report into shares of Class A common stock.
(2) William Harris Investors, Inc. ("WHI") is a registered investment advisor.
It has reported to the Company that it is the beneficial owner of the
shares included in the table above by virtue of its advisory relationship
with persons owning the shares. WHI is also under the control of Irving
B. Harris.
(3) Wanger Asset Management, L.P. is a Delaware limited partnership and Wanger
Asset Management, Ltd. is a Delaware corporation (collectively referred to
as "Wanger"). Acorn Investment Trust, Series Designated Acorn Fund
("Acorn") is a Massachusetts business trust. In their reports to the
Company, both Wanger and Acorn stated that they know of no plans or
proposals to change or influence the control of the Company. Power over
disposition of the securities reported by Acorn is shared with Wanger
Asset Management, L.P., which is the investment advisor of Acorn.
(4) Heine Securities Corporation ("Heine") is an investment advisor registered
under the Investment Advisors Act of 1940. It has reported to the Company
that pursuant to investment advisory agreements with Mutual Series Fund,
Inc. ("Funds"), comprised of three separate series, it has sole
investment discretion and voting authority with respect to the securities
shown in the table above. Michael F. Price, as president of Heine, also
may be deemed to have investing and voting power over the same shares.
Both Mr. Price and Heine disclaim any economic beneficial interest in any
shares owned by the Funds. In addition, Mr. Michael Price or members of
his immediate family beneficially own 2,800 shares of Class A common stock
not included in the table above.
(5) Interstate Properties and two of its general partners, Mr. Steven Roth and
Mr. Russell B. Wight, Jr. (collectively referred to as "Interstate"),
reported in a Schedule 13D filed April 4, 1994 beneficial ownership of
216,300 shares of Class B common stock. Mr. Roth and Mr. Wight each also
own 1,750 shares and 1,150 shares, respectively, of Class B common stock
in which they have sole voting and dispositive power that are excluded
from the amount listed in the table above. In addition to its
Class B common shares, Interstate also owns 41,943 shares of Class A
common stock. Interstate did not state in its Schedule 13D filing the
purpose for its ownership of either the Class A common shares or the Class
B common shares.
(6) The Ratner, Miller and Shafran families ("RMS") have an ownership interest
in the Company as reflected in the table above. These shares are
beneficially owned by members of these families either individually or
through a series of trusts and custodianships. Of the Class B common
shares listed above, RMS, Ltd. owns 2,667,705 shares which represents 69%
of the Class B common stock outstanding at March 1, 1994.
Certain members of RMS have been nominated for election to serve on
the Board of Directors of the Company. (See information regarding nominees
and directors previously disclosed for further information regarding the
beneficial ownership of the Company's common stock by these individuals.)
Included in the data referred to above are shares owned by Fannye
Shafran, wife of Nathan Shafran. Mrs. Shafran has a beneficial interest in
200,754 shares of Class A common stock and 533,779 shares of Class B
common stock. Of those amounts, 85,219 shares of Class A common stock and
533,779 shares of Class B common stock are in a partnership with Nathan
Shafran in which they have shared voting and investment power. If the
Class B common shares were converted into Class A common shares, Fannye
Shafran would own 12.9% of the Class A common shares outstanding.
(a) Shares of Class B common stock are convertible into shares of Class A
common stock at any time on a 1-for-1 basis. If conversion of Class B
common shares for each holder of common stock listed were to be converted,
the ownership of Class A common shares for that holder would be as
disclosed in the table above.
</TABLE>
Committees of the Board of Directors
During the last fiscal year, the Company's Board of Directors held four
regular meetings.
The Audit Committee is currently composed of all four outside directors:
Messrs. Harry O. Schloss, Jr. (Chairman), J Maurice Struchen, Jerry V. Jarrett
and Scott S. Cowen. The Audit Committee recommends the firm of independent
accountants to be appointed by the Board of Directors, subject to approval by
the stockholders, reviews the fee structure and the scope of the annual audit,
reviews the results of the annual audit, reviews reports of significant audits
performed by the Company's internal auditors, reviews the adequacy of internal
controls and consults with independent accountants and financial management on
accounting issues, including significant changes in accounting practices. The
Audit Committee met four times during the last fiscal year.
The Compensation Committee is comprised of three members of the Board
of Directors who are not employees of the Company: Messrs. Jerry V. Jarrett
(Chairman), Harry O. Schloss, Jr. and J Maurice Struchen. The Compensation
Committee reviews the compensation arrangements for senior management. Two
Compensation Committee meetings were held during fiscal 1993.
Each nonemployee director who serves on either the Audit or Compensation
Committees receives $500 for each meeting attended. In addition, any
nonemployee director who chairs a meeting receives an additional $500.
The Board does not have a nominating committee. Board of Director
nominees are proposed by the existing Board members.
All Board members and Committee members attended at least 75% of
their respective meetings during fiscal 1993.
Compensation Committee Report
The Compensation Committee of the Board of Directors consists
entirely of the following nonemployee Directors:
Jerry V. Jarrett, Chairman
Harry O. Schloss, Jr.
J Maurice Struchen
The primary role of the Compensation Committee is to develop and
implement compensation policies which are consistent with and integrally
linked to the accomplishment of the Company's strategic objectives.
The Company believes that shareholder value is best maximized through the
increase in Earnings Before Depreciation and Deferred Taxes and the increase
in the value of its real estate portfolio over time.
The Company adheres to certain principles in developing its compensation
policies. First, total compensation should be competitive with other
companies in the real estate industry of similar size. Incentive compensation
should be linked both to each individual's performance and the performance of
the Company as a whole. Compensation opportunities should be structured to
attract and retain those individuals that can help achieve the Company's
strategic objectives and thus maximize shareholder value.
The Compensation Committee reviews and approves all of the policies
under which each form of compensation is paid or awarded to the Company's
"key" officers as defined by the Committee. The Committee approves the
compensation of the Chief Executive Officer and the other four most highly
compensated executive officers. The Compensation Committee also reviews the
salaries and incentives for each of the members of the Ratner, Miller and
Shafran families identified as executive officers.
The proposed Stock Option Plan is intended to grant options for key
executives to purchase shares of Company stock at fair market value.
Consistent with its approach to all incentive compensation, stock awards
under the Plan will be granted based upon the Committee's evaluation of all
performance criteria and at target levels commensurate with industry survey
data regarding long-term incentives.
Section 162(m) of the Internal Revenue Code of 1986, as amended, and
recently adopted under the Omnibus Budget Reconciliation Act of 1993, limits
the deduction a publicly-held corporation may take for compensation paid to
its chief executive officer and its four other most highly compensated
employees. This Section of the Code currently does not apply to executive
officer compensation for the Company. The Compensation Committee, therefore,
does not have a policy regarding the qualification of executive officer
compensation for deductibility under that Section of the Code.
There is no other long-term incentive plan covering either the Chief
Executive Officer or any of the named executive officers. If the Company
initiates any new plans, the Compensation Committee will review and approve
such plans.
The Company entered into an employment agreement with Albert B.
Ratner, the Vice Chairman of the Board of Directors and Chief Executive
Officer, on July 1, 1989. The agreement provides for an annual salary of
$450,000. The contract was initially for a term of one year but is
renewable annually. Although no formal bonus plan exists, an annual bonus
may be awarded, determined on a discretionary basis. No bonus has been
awarded for the past four years. During fiscal 1991 and 1992, Mr. Ratner
agreed to a reduction in his salary to $240,000 and $340,000, respectively,
as part of an overall salary reduction program of the executive officers of
the Company. During fiscal 1993, Mr Ratner's salary was increased to
$400,000. Effective February 1, 1994, the Compensation Committee increased
Mr. Ratner's salary to his stated contractual amount of $450,000 with
existing benefits. In reviewing Mr. Ratner's compensation, the Compensation
Committee feels one of the most important indicators of performance on the
part of a chief executive officer is that person's ability to understand and
react to changing conditions affecting our industry and to adjust strategic
directions and tactical plans to be responsive. Maintaining shareholder
value and development of management succession plans also rank high on the
list of performance indicators.
Jerry V. Jarrett, Chairman Harry O. Schloss, Jr. J Maurice Struchen
Executive Compensation
The following table sets forth the compensation awarded to, earned
by, or paid to the Company's chief executive officer and the four other most
highly compensated named executive officers.
<TABLE>
Annual Compensation
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
<S> <C> <C> <C> <C> <C>
Albert B. Ratner, Vice Chairman 1993 $399,985 - - $28,307
of the Board of Directors and 1992 340,000 - - 18,566
Chief Executive Officer 1991 257,486 - - 25,134
Samuel H. Miller, Chairman 1993 349,986 - - 30,677
of the Board of Directors 1992 329,175 - - 22,138
and Treasurer. 1991 242,902 - - 29,631
Gilles A. E. Stucker, 1993 298,828 - $34,063 290,731
Senior Vice President-Finance. 1992 300,000 - - 4,372
1991 300,000 - - 5,259
Thomas G. Smith, 1993 274,024 $125,000 - 51,826
Senior Vice President, 1992 275,000 - - 51,787
Chief Financial Officer 1991 253,846 75,000 - 50,577
and Secretary.
Charles A. Ratner, 1993 248,062 - - 11,923
President and Chief 1992 250,000 - - 6,522
Operating Officer. 1991 205,769 - - 11,362
</TABLE>
The caption "Other Annual Compensation" in the table above includes the
cost of an automobile provided to the employee by the Company and
reimbursements under a medical plan. No disclosure is provided where the
aggregate amount for a particular named executive is less than the lesser of
$50,000 or 10% of the named executive's gross annual salary and bonus.
"All Other Compensation" includes the cost of group term life
insurance, profit sharing payments under the Company's profit sharing plan,
the accrual of annual benefits and interest income on each employee's vested
balance in the Company's deferred compensation plan and the Company's
contribution to each employee participating in the 401(k) plan. It also
includes the accrual of an amount for Mr. Smith that is provided in lieu of a
profit sharing plan that existed with his prior employer .
Mr. Stucker resigned effective January 31, 1994. In accordance with
the terms of his separation agreement, he received $125,000 during fiscal
1993 and he will receive additional payments during fiscal 1994 totaling
$475,000. He also will continue in the Company's medical program for one
year. In addition, he was paid for his accrued vacation and deferred
compensation at January 31, 1994. These amounts are included in "All Other
Compensation" in the table above.
On July 1, 1989, the Company entered into an employment agreement
with Samuel H. Miller providing for an annual salary of $385,000. Effective
as of February 1, 1991 the Company entered into an employment agreement with
Charles A. Ratner providing for an annual salary of $250,000. Effective
February 1, 1994, the Compensation Committee increased the annual base
salaries of Samuel H. Miller and Charles A. Ratner to $385,000 and $325,000,
respectively. These contracts, which were initially for a term of one year
but which are renewable annually, provide for the payment of premiums for
life insurance with the Company as beneficiary. The Company has no bonus
plan; however, each year bonuses may be awarded based upon performance,
determined on a discretionary basis.
The employment agreements for Albert Ratner, Samuel Miller and
Charles Ratner further provide that upon the death of such officer his
beneficiaries will receive an annual payment for five years equal to one-half
of his average annual contractual salary, as stated in the contract, and
bonus, if any, for the five calendar years immediately preceding his death.
Notwithstanding their employment agreements, Samuel Miller and
Charles Ratner agreed to have their salaries adjusted effective March 1991 as
part of an overall salary reduction program of the executive officers of the
Company. Mr. Miller's salary was reduced from $385,000 to $230,000 and
subsequently restored to $350,000 during 1992. Charles Ratner's salary was
reduced from $250,000 to $200,000. During 1992, his salary was restored to
$250,000.
Performance Graph
(The performance graph is printed in this space.
The table below represents the data points of the
performance graph)
<TABLE>
1/31 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
FCE 100 94 39 43 65 101
S&P 100 114 124 152 168 190
DJ 100 125 99 105 95 112
</TABLE>
The above graph shows a comparison of five-year cumulative total return to
shareholders for Forest City Enterprises, Standard & Poor's 500 Stock Index
("S&P") and the Dow Jones Real Estate Investment Index ("Dow Index").
Companies that comprise the Dow Index include Catellus Development
Corporation, Federal Realty Investment Trust, First Union Real Estate Equity,
Newhall Land & Farming, Rockefeller Center Properties and The Rouse Company.
Forest City Enterprises is not included in the Dow Index. The cumulative
total return is based on a $100 investment on January 31, 1989 and the
subsequent change in market prices of the securities at each respective
fiscal year end. It also assumes that dividends were reinvested quarterly.
Transactions with Affiliated Persons
The Company paid approximately $80,000 during the fiscal year ended
January 31, 1994 to RMS Investment Corp., a company owned by the principal
shareholders that is engaged in property management and leasing, to serve as
an owner's representative for four of its properties in Greater Cleveland.
The rate of compensation for such services was based on an hourly rate for
time expended and is believed to be comparable to that which other management
companies would charge. Beginning with fiscal 1993, RMS Investment Corp.
also serves as the property manager for these four properties and is
responsible for leasing vacant space. The rate of compensation for such
management services is 4% of all tenant rentals plus a fee to lease vacant
space. Management believes these fees are comparable to that which other
management companies would charge.
Those of the principal shareholders who are officers or employees of
the Company own, alone or in conjunction with others, certain commercial,
industrial and residential properties which may be developed, expanded,
operated and sold independently of the business of the Company. The
ownership of these properties by these principal shareholders makes it
possible that conflicts of interest may arise between them and the Company.
Areas of possible conflict may be in the development or expansion of
properties which may compete with the Company or the solicitation of tenants
for the use of such properties. However, no such conflicts are anticipated.
The Company was informed by these principal shareholders in 1960 that, except
for these properties, they would in the future engage in all business
activities of the type conducted by the Company only through and on behalf of
the Company as long as they were employed by the Company. This would not
preclude them from making personal investments in real estate on which
buildings and improvements have been completed prior to such investments.
During 1991, the Company borrowed $10,000,000 from each of two
related parties pursuant to a nonrecourse loan and security agreement. The
creditors, both of whom are shareholders, are the Ratner, Miller and Shafran
families and related parties, and the Harris family and related parties. The
Harris family is also a partner with the Company in several development
projects. The loans are secured by selected real estate assets of the
Company and a note receivable . During 1992, the Company paid $70,220 to the
Harris family and related parties from the proceeds of the sale of a part of
the collateral. In September 1992, Society National Bank purchased the
obligation from the Harris family and related parties at par for $9,929,780.
Later in 1992, the Company paid $7,075,375 to Society National Bank to
further reduce the balance outstanding to $2,854,405 at January 31, 1993.
This balance subsequently was paid off in 1993. During 1992 and 1993, the
Company paid $1,115,022 to the Ratner, Miller and Shafran families, leaving
a balance outstanding of $8,884,978 on this portion of the debt at January
31, 1994.
The Company and its subsidiaries also had credit agreements and real
estate mortgages with Society National Bank, of which J Maurice Struchen,
who is a director of the Company, is a retired Chairman of the Board and is
presently a director of Society Corporation. The amount outstanding against
these credit lines and mortgages as of January 31, 1994 was $148,256,000.
The terms of all the foregoing borrowing arrangements are no less
favorable to the Company or its subsidiaries than those available from
unrelated parties for comparable transactions.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who are beneficial owners of more
than ten percent of a registered class of the Company's equity securities
("Reporting Persons"), to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the American Stock Exchange.
Reporting Persons are required by regulations of the Securities and Exchange
Commission to furnish the Company's Corporate Secretary with copies of all
Section 16(a) forms that they file.
Based solely on its review of the copies of Section 16(a) forms received
by it, or written representations from Reporting Persons that no
Forms 5 were required for those persons, the Company believes that during
1993 all filing requirements applicable to Reporting Persons were complied
with except for the following: Nathan Shafran, Fannye Shafran, Joseph
Shafran, all general partners of the Berimore Company, each filed an amended
Form 4 to report one transfer of stock transaction inadvertently omitted from
their previous Form 4 report.
Due to an accounting error, Max Ratner filed an amended Form 4 to
correct the amount of stock disposed in a gift of stock transaction and to
report two gift transactions by his spouse.
Election of Independent Auditors
The Board of Directors has nominated Coopers & Lybrand, Certified
Public Accountants, for election by the shareholders at the annual
meeting as the Company's independent auditors for the fiscal year
ending January 31, 1994.
A representative of Coopers & Lybrand will attend the annual meeting
to respond to appropriate questions from shareholders and will have
the opportunity to make a statement.
The affirmative vote of the holders of a majority of the combined
voting power of the outstanding shares of Class A common stock and Class B
common stock of the Company is required for approval of proposal 3. The
Company has been advised that the shares held by the Ratner, Miller and
Shafran families and partnerships will be voted in favor of the proposal and
that such vote will be sufficient to approve such proposal.
Immediate Adjournment of the Annual Meeting
The annual meeting of shareholders will be held on Tuesday, June 14,
1994 at 9:00 a.m. in the English Oak Room, 50 Public Square, Cleveland, Ohio
44113. The first order of business will be to adjourn the annual meeting
until 3:00 p.m., Tuesday, June 21, 1994, in the English Oak Room, 50 Public
Square, Cleveland, Ohio 44113. The reason for the immediate adjournment is
that Max Ratner, the Founder Chairman of the Board of Directors, is receiving
an honorary degree from Hebrew University in Israel during this time and
certain members of the Board of Directors want to be with him. The Company
has been advised that the shares held by the Ratner, Miller and Shafran
families and partnerships will be voted in favor of adjournment and that
such vote will be sufficient to approve such proposal.
Approval of Proposed Amendment to the Company's Code of Regulations
The Board of Directors is recommending the adoption of an amendment
to the provisions of the Company's Code of Regulations as amended June 11,
1991, relating to the date for the Annual Meeting of Shareholders. Under the
amendment, the date of the annual meeting for any one year would remain the
second Tuesday in June, unless the Board of Directors schedules the meeting
on another date between June 1 and June 30. The amendment would give the
Board of Directors the flexibility to schedule the Annual Meeting of
Shareholders each year in a manner that minimizes schedule conflicts and
encourages attendance by all interested shareholders. Exhibit A to this
Proxy Statement sets forth the complete text of the proposed amendment. The
affirmative vote of the holders of a majority of the combined voting power
of the outstanding shares of Class A common stock and Class B common stock of
the Company is required to adopt the amendment.
The Board of Directors recommends a vote FOR the adoption of the
amendment to the Company's Amended Regulations. The Company has been advised
that the shares held by the Ratner, Miller and Shafran families and
partnerships will be voted in favor of the amendment and that such vote will
be sufficient to approve such amendment.
Approval of Proposed 1994 Stock Option Plan
Background
On March 17, 1994, the Board of Directors of the Company approved the
1994 Stock Option Plan ("the Plan") and recommended its approval by the
stockholders. The Plan is designed to enhance the retention and motivation
of key employees including officers, executives and other members of the
management team who can contribute materially to the Company's success by
granting these key employees options to purchase shares of the Company's
Class A common stock. The Plan also is intended to foster within these key
employees an identification with ownership and shareholder interests. Stock
options granted under the Plan are intended to qualify for the performance-
based exception of Section 162(m) of the Internal Revenue Code of 1986, as
amended.
The following is a summary of the significant Plan features. A
complete text of the 1994 Plan is set forth in Exhibit B of this Proxy
Statement.
Summary of 1994 Plan
Administration. The 1994 Plan is administered by the Compensation Committee
(the "Committee") of the Board of Directors. No member of the Committee may
exercise discretion with respect to, or participate in, the administration of
the Plan if, at any time during the twelve month period prior to such
exercise of discretion or participation, he or she has been granted stock,
restricted stock, stock options, stock appreciation rights or any other
derivative security of the Company, except as permitted by Rule 16b-3 of the
Securities and Exchange Act of 1934, or any successor rule or regulation.
Within the limits of the Plan, the Committee is authorized to
interpret its provisions and to determine those employees who shall receive
awards, the number of shares subject to each grant, the form of the awards,
and all applicable limitations and terms under which the awards are made.
In making awards, the Committee will take into consideration the performance
of each employee.
Eligibility. Stock options under the Plan may be awarded to key employees as
determined by the Committee, based upon each employee's duties and
performance, including officers, senior executives, employee directors and
other members of the managemen t team. The Committee anticipates that
approximately 75 such key employees will be eligible to participate in the
Plan.
Share Awards Under the Plan. Shares may be awarded under the Plan in the
form of either incentive stock options or nonqualified stock options. The
aggregate number of shares which may be awarded during the term of the Plan
is 250,000 shares, subject to adjustments by the Committee. The aggregate
number of shares which may be awarded to an individual participant during the
term of the Plan is 25,000 shares. Shares awarded may be either authorized
but unissued shares or shares held in the Company's treasury.
Terms and Conditions. Stock options under the Plan will be awarded by an
agreement between the Company and the Grantee in a form approved by the
Committee and delivered by authorized officers of the Company. Grantees will
be employees of the Company at the time of grant and may exercise their
option subject to the term of the grant (maximum of ten years) but no later
than three months following their termination from the Company. The exercise
price for options will be at least equal to the fair market value on the
date of the grant. In the event that incentive stock options are awarded to
a Grantee who owns more than ten percent of the voting power of all classes
of stock, the exercise price will be at least 110 percent of the fair mark et
value on the date of the grant. No stock options awarded under the Plan may
be exercised during the first year of the term of exercise.
Duration. The Plan will allow the granting of stock options for a period of
ten years from the date the Plan is approved by shareholders and will remain
in effect until all stock options awarded under the Plan have been exercised,
surrendered or expired.
Termination of Employment. If a Grantee's employment with the Company
terminates by reason of death, disability or retirement, the option remains
exercisable in accordance with its terms and may be exercised by the Grantee
or his or her estate, heir or legatee. If the Grantee's employment
terminates for any reason other than death, disability or retirement, all
rights to exercise will terminate and be forfeited on the date of
termination of employment.
Adjustments in the Event of Change in Common Stock. In the event of any
change in the common stock of the Company by reason of a stock dividend,
recapitalization, reorganization, merger, consolidation, combination, split-
up or exchange of shares, the number of shares which may be awarded
thereafter, the kinds of stock and the option purchase price will be adjusted
by the Committee consistent with such changes.
Merger or Other Reorganization. In the event that the Company is the
surviving Company in a merger or other reorganization, stock options will
extend to the new Company to the same extent that they applied at the former
Company. If the Company is not the surviving Company in a merger or other
reorganization, any Grantee will retain the right to receive the value of his
or her stock option awards received prior to the merger or reorganization,
subject to Plan provisions.
Amendment and Termination. The Board may, without further action by the
shareholders, from time to time, amend, alter, suspend or terminate the Plan,
except as otherwise required by applicable federal securities' laws.
Accounting Treatment. Under present accounting rules, neither the grant nor
the exercise of stock options under the 1994 Plan will result in a charge
against the Company's earnings However, the Financial Accounting Standards
Board's (FASB) proposed exposure draft would change this treatment and
result in a charge to earnings based upon the estimated fair value of the
options at the time of grant, accrued ratably over the service period
(generally the vesting period).
Federal Income Tax Aspects. The following is only a brief summary of the
federal income tax aspects of awards made under the 1994 Plan based upon the
federal income tax laws in effect on this date. This summary is not
intended to be exhaustive, and does not describe a number of special tax
rules, including the alternative minimum tax, state or local tax laws, and
various elections which may be applicable under certain circumstances.
A Grantee who has been awarded a stock option under the 1994 Plan
will not realize taxable income on the date of grant, and the Company will
not be entitled to a deduction at that time. A Grantee who exercises an
incentive stock option (with in the meaning of Section 422A of the Internal
Revenue Code) will not be subject to taxation at the time of exercise nor
will the Company be entitled to a deduction. However, a disposition of the
purchased shares after the expiration of the required holding period (one
year after exercise and two years after grant) will result in long-term
capital gains rates in the year of disposition on the spread between the
option price and the fair market value on the date of sale, and the Company
will not be entitled to a deduction for federal income tax purposes. A
disposition of the purchased shares prior to the expiration of the applicable
holding periods will subject the Grantee to taxation at ordinary income rates
in the year of disposition and the Company will be entitled to a
corresponding deduction for federal tax purposes.
A Grantee who exercises a nonqualified stock option will realize
ordinary income in an amount measured by the spread between the option price
and the fair market value on the date of exercise, and the Company will
realize a corresponding deduction for federal tax purposes. In the year of
disposition, the Grantee will be subject to long-term capital gains rates on
any gain over the fair market value on the date of exercise.
The Board of Directors recommends a vote "FOR" approval of the 1994 Stock
Option Plan (Item 5 on Proxy Card).
Shareholder Proposals for 1994 Annual Meeting
Any shareholder proposals intended to be presented at the Company's
1994 annual meeting of shareholders must be received by the Company at 10800
Brookpark Road, Cleveland, Ohio 44130 on or before December 31, 1994 for
inclusion in the Company's proxy statement and form of proxy relating to the
1994 annual meeting of shareholders.
Other Business
It is not anticipated that matters other than those described in this
Proxy Statement will be brought before the meeting for action, but if any
other matters properly come before the meeting, it is intended that votes
thereon will be cast pursuant to said proxies in accordance with the best
judgment of the proxy holders.
Upon the receipt of a written request from any stockholder entitled
to vote at the forthcoming annual meeting, the company will mail, at no
charge to the stockholder, a copy of the company's annual report on Form 10-K
including the financial statements and schedules and excluding exhibits
required to be filed with the Securities and Exchange Commission pursuant to
rule 13a-1 under the Securities Exchange Act of 1934, as amended, for the
company's most recent fiscal year. Requests from beneficial owners of the
company's common stock must set forth a good faith representation that, as of
the record date for the annual meeting, the person making the request was the
beneficial owner of securities entitled to vote at such meeting. Written
requests for such report should be directed to:
Secretary
Forest City Enterprises, Inc.
10800 Brookpark Road
Cleveland, Ohio 44130
Cost and Method of Proxy Solicitation
The cost of solicitation will be paid by the Company. In addition to
solicitation by mail, arrangements may be made with brokers and other
custodians, nominees and fiduciaries to send proxies and proxy material to
their principals, and the Company may reimburse them for their expense in so
doing. Officers and other regular employees of the Company may, if
necessary, request the return of proxies by telephone, telegram or in person.
By order of the Board of Directors.
/s/ Thomas G. Smith, Secretary
Cleveland, Ohio
April 15, 1994
EXHIBIT A
AMENDMENT TO COMPANY'S CODE OF REGULATIONS,
as amended June 11, 1991
SECTION 1. The annual meeting of the shareholders of the Company for the
election of directors, the consideration of reports to be laid before the
meeting, and the transaction of such other business as may properly be brought
before the meeting shall be held in the place described in the Articles of
Incorporation as the place where the principal office of the Company is or is
to be located, or at such other place either within or without the State of
Ohio as may be designated by the Board of Directors, the Chairman of the
Board, or the President and specified in the notice of the meeting at ten
o'clock a.m., on the second Tuesday of June in each year, OR AT SUCH OTHER
TIME AND ON SUCH OTHER DATE (NOT, HOWEVER, EARLIER THAN JUNE 1 OR LATER THAN
JUNE 30 IN ANY YEAR) AS THE BOARD OF DIRECTORS MAY DETERMINE.
*Capitalized material added to existing provisions.
EXHIBIT B
PROPOSED
FOREST CITY ENTERPRISES, INC.
1994 STOCK OPTION PLAN
1. Purpose
The purpose of the 1994 Stock Option Plan (the "Plan") shall be to
enhance the retention and motivation of key employees including
officers, executives and other employees who are members of the Company's
management team and who, in the judgement of the Committee, can contribute
materially to the Company's success by awarding these key employees the
opportunity to receive stock options to purchase shares of the Company's
Class A common stock. The Plan is also intended to foster within these
key employees an identification with ownership and shareholder interests.
2. Definitions
Unless the context of the applicable section clearly indicates otherwise,
the terms below, when used within the Plan, shall have the
meaning set forth in this Section 2.
A. Beneficiary means the person or persons designated in
writing by the Grantee or, in the absence of such a
designation or if the designated person or persons
predecease the Grantee, the Grantee's beneficiary
shall be the person or persons who acquire the right to
exercise an option by bequest or inheritance.
B. Board of Directors or Board means the Board of
Directors of the Company.
C. Code means the Internal Revenue Code of 1986, as amended
from time to time.
D. Company means Forest City Enterprises, Inc.
E. Compensation Committee or Committee means the
Compensation Committee of the Board of Directors.
F. Disability means a disability as defined in the Company's
Long Term Disability Plan, as amended from time
to time.
G. Grantee means an executive or management team member to
whom an Option has been granted under the Plan.
H. Incentive Stock Options means options to purchase shares
of stock within the meaning of Section 422(b) of the Code.
I. Nonqualified Stock Options means options which do not
qualify as Incentive Stock Options within the meaning of
Section 422(b) of the Code.
J. Option means an option to purchase a share or shares of
the Company's par value common stock.
K. Plan means the 1994 Stock Option Plan.
L. Retirement means retirement pursuant to the Company's
retirement policies.
M. Shares means shares of the Company's par Class A
common stock.
N. Term of Exercise means the time period during which a
particular Option may be exercised in accordance with
Section 6(G) of this Plan.
O. Wherever used herein, unless indicated otherwise,
words in the masculine form shall be deemed to refer
to females as well as to males.
3. Administration
A. Compensation Committee
The Plan shall be administered by the Compensation
Committee of the Board of Directors. No member of the
Compensation Committee may exercise discretion with respect to, or
participate in, the administration of the Plan
if, at any time during the twelve month period prior to such
exercise or participation, he or she has been granted or awarded
stock, restricted stock, stock options, stock appreciation rights, or
any other derivative security of the
Company, except as permitted in Rule 16b-3 of
the Securities and Exchange Act of 1934, or any successor rule or
regulation.
B. Determinations
Within the limits of the provisions of the Plan, the Committee shall
have the plenary authority to determine (i) the key employees to whom
awards hereunder shall be granted, (ii) the number of shares
subject to each option; provided that, if the award is an incentive
stock option, the aggregate fair market value of the shares (as
determined at the time the option is granted) which become
exercisable in any calendar year for any employee shall not exceed
$100,000, (iii) the form (incentive stock options or nonqualified
stock options) and amount of each award granted, (iv) the
provisions of each Option Agreement, and (v) the limitations,
restrictions and conditions applicable to any such
award. In making such awards the Committee shall take into
consideration the performance of each eligible employee. The
determinations of the Committee on all matters regarding the
Plan shall be final and conclusive unless
otherwise determined by the Board of Directors.
C. Interpretation
Subject to the provisions of the Plan, the Committee may interpret
the Plan, and prescribe, amend and rescind rules and regulations
relating to it. The interpretation of any provision of the Plan
by the Committee shall be final and conclusive unless otherwise
determined by the Board of Directors.
4. Eligibility
Stock options may be granted under the Plan to key employees of the
Company, as determined by the Committee, based upon the Committee's
evaluation of employees' duties and their overall performance including
current and potential contributions to the Company's success.
Generally, this group of eligible key employees includes officers,
senior executives, directors who are also employees, and any other
members of the Company's management team deemed appropriate by the
Committee. All determinations by the Committee as to the
identity of persons eligible to be granted awards hereunder shall be
conclusive.
5. Share Awards Under the Plan
A. Form
Awards under the Plan shall be granted in the form of incentive stock
options or nonqualified stock options as herein defined in Section 2.
B. Shares Subject to the Plan
The aggregate number of shares that may be awarded as stock options
during the term of the plan may not exceed 250,000
authorized but unissued shares or shares held by the Company in its
Treasury, subject to adjustments described in section 9-A. The
aggregate number of shares which may be awarded to an individual
participant during the term of the plan is 25,000 shares, subject to
adjustments described in section 9-A. If any stock option granted
under the Plan shall terminate, expire or, with the consent of the
grantee, be canceled as to any shares, such shares may be offered by
new options granted hereunder the Plan.
C. Adjustment Provisions
The aggregate number of shares of common stock with respect to which
stock options may be granted, and the aggregate number of shares of
common stock subject to each outstanding stock option award may be
adjusted by the Committee as it deems appropriate from time to time.
6. Terms and Conditions of Awards
Stock options granted under the Plan shall be in such form and upon
such terms and conditions as the Committee shall determine from time to
time, subject to the following:
A. Stock Option Agreement
Each stock option granted under the Plan shall be evidenced by an
agreement between the Company and the Grantee, in a form approved by
the Committee, which has been executed and delivered. Appropriate
officers of the Company are hereby authorized to execute and deliver
these agreements in the name of the Company as directed from time to
time by the Committee.
B. Employment by the Company
Each grantee shall be an employee of the Company at all times during
the period beginning on the date of the granting of the stock option
and ending on the day three (3) months before the date of exercise of
options granted pursuant to the Plan.
C. Exercise Price for Stock Options
(1) With respect to any non-qualified stock options the exercise
price to be paid by the Grantee to the Company for each share shall
be at least equal to the fair market value of a share on the date the
option is granted.
(2) With respect to any incentive stock option awarded to a Grantee
who, on the date of the grant, owns ten percent or less of the total
combined voting power of all classes of stock of the Company, the
exercise price to be paid by the Grantee to the Company for each
share shall be at least equal to the fair market value of a share on
the date the option is granted.
(3)With respect to any incentive stock option awarded to a Grantee
who, on the date of the grant, owns more than ten percent of
the total combined voting power of all classes of stock of the
Company, the exercise price to be paid by the Grantee to the Company
for each share shall be not be less than 110% of the fair market
value of a share on the date the incentive stock option award is
granted. At no time may an option be granted under the plan if the
option price per share is less than the par value of the stock.
D. Exercise
Stock options shall be exercisable subject to provisions of this Plan
and any other conditions as determined by the Committee, and shall be
evidenced by a written Option Agreement between the key employee and
the Company as provided in Section 6(A) of this Plan.
E. Payment
At the time that a stock option granted under the Plan, or any part
thereof, is exercised, payment for the stock issuable thereupon shall
be made in full in cash, money order, certified check, cashier's
check, or in shares of stock currently owned by the key employee
which have satisfied any required holding period and are valued at
the fair market value of the shares on the date of exercise. As soon
as reasonably possible following such exercise of a stock option, a
certificate representing the shares of stock purchased, registered in
the name of the key employee (Grantee), shall be delivered to same
F. Term of Exercise
The term during which each stock option granted under the Plan may be
exercised shall be as provided within the fully executed and
delivered Option Agreement. In no event shall the term during which
an option may be exercised exceed ten years from the date upon which
such option was granted.
G. Stock Option Vesting
No stock options awarded under the Plan may be exercised during the
first year of the term of exercise.
H. Fair Market Value
Fair Market Value shall be determined by the price per share at the
close of business on the date on which the stock option grant
is awarded or, if the grant date is not a regular business day, by
the price per share on the next regular business day following the
date of the grant.
7. Duration
With respect to any stock option awarded to a Grantee, such award
shall be granted within a period of 10 years from the date on which the
Plan is adopted or the date on which the Plan is approved by shareholders,
whichever is earlier. The Plan shall remain in effect thereafter until
all stock options awarded under the Plan have been exercised, surrendered
or expired.
8. Exercise in the Event of Death or Other Termination of Employment
A. Death
If a Grantee shall die while an employee of the Company or during a
period of disability, the option can be exercised by his estate, heir
or legatee at any time during its original term.
B. Disability
If a Grantee's employment by the Company shall terminate because of
disability, and Grantee has not died within the following twelve
months, he may exercise his options to the extent that he was
entitled to do so on the date of his termination of employment, at
any time, but not later than the expiration date specified in the
Option Agreement by which such award was granted.
C. Retirement
If a Grantee's employment shall terminate (i) by reason of his
retirement in accordance with the Company's retirement plan or (ii)
with the consent of the Committee, his right to exercise shall
terminate and be forfeited on the expiration data specified in the
Option Agreement by which such award was granted, or three months
after termination of employment, whichever date is earlier.
D. Other
If a Grantee's employment shall terminate for any reason other than
death, disability or retirement as provided in Sections 8(A) through
8(C) of the Plan herein, all rights to exercise his option shall
terminate and be forfeited on the date of such termination of
employment.
9. Miscellaneous
A. Adjustments in the Event of Change in Common Stock
In the event of any change in the common stock of the Company by
reason of a stock dividend, recapitalization, reorganization, merger,
consolidation, combination, split-up, or exchange of shares, or of
any similar change affecting the common stock, the number and kind of
shares which thereafter may be awarded under the Plan and the
number and kind of shares subject to option in outstanding
agreements, and the option purchase price per share thereof
shall be appropriately adjusted consistent with such change in such
manner as the Committee may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for,
eligible key employees.
B. Non-Transferability and Non-Assignability
No stock options granted hereunder may be transferred, assigned,
pledged or hypothecated, except as provided by will or the
applicable laws of descent or distribution, and no awards granted
hereunder shall be subject to execution, attachment, or similar
process. Each option granted hereunder may be exercised only by the
individual to whom it is issued or the executor of the estate and is
subject to the terms, conditions and provisions herein.
C. Investment Representation
Each stock option agreement may provide that, upon demand by the
Committee, the Grantee shall deliver to the Committee at the time of
exercise of an option or portion thereof, a written representation
that the shares to be acquired upon such exercise are to be acquired
for investment and not for resale or with a view to the distribution
thereof.
D. Rights as a Shareholder
Any eligible key employee who receives a stock option under the Plan
shall have no rights to the underlying shares until the date of the
issuance of a stock certificate to him, and only after such shares
are fully paid. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock
certificate is issued.
E. No Obligation to Exercise
The granting of a stock option under the Plan shall impose no
obligation upon an eligible key employee to exercise such option.
F. Incentive Stock Options
Each option agreement which provides for the grant of an incentive
stock option to an eligible key employee shall contain such terms and
provisions as the Committee may determine to be necessary or
desirable in order to qualify such option as an incentive stock
option within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended from time to time.
G. Beneficiary Designation and Change
Each Grantee shall file with the Committee a written designation of
one or more persons as the Beneficiary who shall be entitled to
receive the amount, if any, payable under the Plan upon his death.
A Grantee may, from time to time, revoke or change his Beneficiary
designation without the consent of any prior Beneficiary by filing a
new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Grantee's
death.
H. Application of Proceeds
The proceeds received by the Company from the sale of common stock
under the Plan shall be used for general corporate purposes.
I. Withholding Taxes
Upon the issuance of any stock pursuant to the exercise of a stock
option, the Company shall have the right to require the Grantee to
remit to the Company an amount payable in cash, money order,
certified check or cashier's check that is sufficient to satisfy all
federal, state and local withholding tax requirements prior to the
delivery of any certificate(s) for shares of common stock.
Alternatively, the grantee may relinquish existing unexercised stock
options with an aggregate value of the difference between the
exercise price and the market value of the underlying stock
sufficient to satisfy the withholding tax requirements. The amount
of withholding must also include tax liabilities associated with the
gains on the options relinquished for this purpose.
J. Right to Terminate Employment
Nothing in the Plan or any agreement entered into pursuant to the
Plan shall confer upon any key employee the right to continue in the
employment of the Company or affect any right which the Company has
to terminate any key employee.
K. Governing Law
The Plan shall be construed and its provisions enforced and
administered in accordance with the laws of Ohio, except to the
extent that such laws may be superseded by any federal laws.
L. Awards Not Treated as Compensation Under Benefit Plans
No awards under the Plan shall be considered as compensation under
any employee benefit plan of the Company, except as specifically
provided in any such plan or as otherwise determined by the Board
of Directors.
M. Effect of Merger or Other Reorganization
In the event that the Corporation shall be the surviving Corporation
in a merger or other reorganization, stock options shall extend to
the new Corporation to the same extent that they applied at the
former Corporation. In the event that the Corporation shall not be
the surviving Corporation in a merger or other reorganization, any
Participant to whom a stock option has been granted under the Plan
shall retain the right to receive the value of such stock option
awards, subject to all applicable Plan provisions and restrictions,
for awards granted prior to the effective date of such merger or
other reorganization.
N. Elimination of Fractional Shares
If, under any provision of the Plan or formula used to calculate
award levels of stock options, the number so computed is not a whole
number, such number of shares shall be rounded down to the next whole
number.
10. Effective Date/Approval by Shareholders
The effective date of the Plan shall be the date on which it is adopted by
the Board, subject to approval of the Plan by the holders of a majority of
the shares of common stock of the Company within a period beginning 12
months prior to and ending 12 months following approval of the Plan by the
Board. The Plan and any grants made as a part of the Plan shall be null
and void and of no effect if such condition is not fulfilled.
11. Amendment and Termination of the Plan
The Board may, without further action by the shareholders, from time to
time, amend, alter, suspend or terminate the Plan, except as otherwise
required by applicable federal securities laws.
PROXY CARDS
CLASS A SHAREHOLDERS
FRONT
The front of the proxy cards has a space for the shareholder's name and
address as well as the number of shares registered in his name. There are
two lines for signatures and dates as well as the following language below
the second signature line:
"NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such."
The card contains boxes for which the shareholder is to indicate his
vote for each of the issues. Each issue is identified by number and a
brief description as follows:
1. Immediate Adjournment: For, Against, Abstain
2. Directors: For, Withheld
For, except vote withheld from the following nominee(s):
(a line is printed below this language to allow the
shareholder to indicate the withheld nominee(s))
3. Auditors: For, Against, Abstain
4. Code Of Regulations: For, Against, Abstain
5. Stock Option Plan: For, Against, Abstain
The following language is in the lower right hand corner
in bold type:
"The Board of Directors recommends a vote FOR
items 1,2,3,4 and 5.
BACK
The back of the proxy card contains the following language:
FOREST CITY ENTERPRISES, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for the Annual Meeting of Shareholders
The undersigned hereby appoints Max Ratner, Nathan Shafran and Samuel H.
Miller, and each of them, with full power of substitution, as proxies for
the undersigned to attend the annual meeting of shareholders of Forest
City Enterprises, Inc. to be held in the English Oak Room, 50 Public Square,
Cleveland, Ohio 44113, on Tuesday, June 14, 1994 at 9:00 a.m., eastern
daylight saving time, and at any adjournment thereof, to vote and act with
respect to all shares of Class A common stock of the Company which the
undersigned would be entitled to vote, with all the power the undersigned
would possess if present in person, as follows:
(1) The immediate adjournment of the Annual Meeting of Shareholder
until Tuesday, June 21, 1994. The Annual Meeting of Shareholders
will be reconvened on June 21, 1994 at 3:00 p.m. in the English
Oak Room, 50 Public Square, Cleveland, OH 44113.
(2) The election of three (3) directors, each to hold office until the
next annual shareholders' meeting and until his successor shall
be elected and qualify.
(3) The election of Coopers & Lybrand as independent auditors for the
Company for the fiscal year ending January 31, 1995.
(4) An amendment to the Company's Code of Regulations establishing the
date for the Annual Meeting of Shareholders as the second Tuesday
in June, unless the Board of Directors schedules the meeting on
another date between June 1 and June 30.
(5) The approval of the proposed 1994 Stock Option Plan.
(6) In their discretion, to vote upon such other business as may
properly come before the meeting.
Please specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE. When properly executed, this proxy will be voted in
accordance with your instructions, or, IF YOU GIVE NO INSTRUCTIONS, this
proxy will be voted FOR items 1,2,3,4 and 5.
PROXY CARDS
CLASS B SHAREHOLDERS
FRONT
The front of the proxy cards has a space for the shareholder's name and
address as well as the number of shares registered in his name. There are
two lines for signatures and dates as well as the following language below
the second signature line:
"NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such."
The card contains boxes for which the shareholder is to indicate his
vote for each of the issues. Each issue is identified by number and a
brief description as follows:
1. Immediate Adjournment: For, Against, Abstain
2. Directors: For, Withheld
For, except vote withheld from the following nominee(s):
(a line is printed below this language to allow the
shareholder to indicate the withheld nominee(s))
3. Auditors: For, Against, Abstain
4. Code Of Regulations: For, Against, Abstain
5. Stock Option Plan: For, Against, Abstain
The following language is in the lower right hand corner
in bold type:
"The Board of Directors recommends a vote FOR
items 1,2,3,4 and 5.
BACK
The back of the proxy card contains the following language:
FOREST CITY ENTERPRISES, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for the Annual Meeting of Shareholders
The undersigned hereby appoints Max Ratner, Nathan Shafran and Samuel H.
Miller, and each of them, with full power of substitution, as proxies for
the undersigned to attend the annual meeting of shareholders of Forest
City Enterprises, Inc. to be held in the English Oak Room, 50 Public Square,
Cleveland, Ohio 44113, on Tuesday, June 14, 1994 at 9:00 a.m., eastern
daylight saving time, and at any adjournment thereof, to vote and act with
respect to all shares of Class B common stock of the Company which the
undersigned would be entitled to vote, with all the power the undersigned
would possess if present in person, as follows:
(1) The immediate adjournment of the Annual Meeting of Shareholder
until Tuesday, June 21, 1994. The Annual Meeting of Shareholders
will be reconvened on June 21, 1994 at 3:00 p.m. in the English
Oak Room, 50 Public Square, Cleveland, OH 44113.
(2) The election of nine (9) directors, each to hold office until the
next annual shareholders' meeting and until his successor shall
be elected and qualify.
(3) The election of Coopers & Lybrand as independent auditors for the
Company for the fiscal year ending January 31, 1995.
(4) An amendment to the Company's Code of Regulations establishing the
date for the Annual Meeting of Shareholders as the second Tuesday
in June, unless the Board of Directors schedules the meeting on
another date between June 1 and June 30.
(5) The approval of the proposed 1994 Stock Option Plan.
(6) In their discretion, to vote upon such other business as may
properly come before the meeting.
Please specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE. When properly executed, this proxy will be voted in
accordance with your instructions, or, IF YOU GIVE NO INSTRUCTIONS, this
proxy will be voted FOR items 1,2,3,4 and 5.
