FOREST CITY ENTERPRISES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 13, 1995
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of Forest
City Enterprises, Inc. will be held in the ballroom at the Ritz-Carlton Hotel,
1515 West Third Street, Cleveland, Ohio 44113, on Tuesday, June 13, 1995 at
2:00 p.m., eastern daylight saving time, for the purpose of considering and
acting upon:
(1) The election of thirteen (13) directors, each to hold office until the
next annual shareholders' meeting and until his successor shall be elected
and qualify. Four (4) directors will be elected by holders of Class A
common stock and nine (9) by holders of Class B common stock.
(2) The election of Coopers & Lybrand as independent auditors for the Company
for the fiscal year ending January 31, 1996.
(3) Such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of business on April 14, 1995 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 14, 1995
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 13, 1995 at 2:00
p.m., eastern daylight saving time, in the ballroom at The Ritz-Carlton Hotel,
1515 West Third Street, 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 14, 1995, the record date fixed for the determination of
shareholders entitled to vote at the annual meeting, there were outstanding
5,158,269 shares of Class A common stock, par value $.33-1/3 per share, and
3,833,345 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 four (4) directors. Max Ratner, Nathan Shafran, J
Maurice Struchen and Michael P. Esposito, Jr. 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, James A.
Ratner, Ronald A. Ratner, Jerry V. Jarrett, Brian J. Ratner and Deborah Ratner
Salzberg 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, 1996.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended January 31, 1995 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, except for Harry O. Schloss, Jr. who is not
standing for reelection, 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 except for Michael P.
Esposito, Jr.
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, 1995
------------------------------------------------------
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 107,849 (3) 2.09% 2.22% 6,658 (4) 0.17%
of Directors of the Company.
Age 87. (c)
(1) Nathan Shafran Vice Chairman of the Board 1960 174,876 (5) 3.39% 12.47% 535,279 (6) 13.96%
of Directors of the Company.
Age 81. (c)
(1) J Maurice Struchen Retired Chairman and Chief 1971 500 0.01% 0.02% 500 0.01%
Executive Officer of Society
Corporation (banking); Director of
Greif Bros. Corporation (creative
packaging); Davey Tree Expert Co.
(tree and lawn care). Age 74. (a,b)
(1) Michael P. Executive Vice President of - - - - - -
Esposito, Jr. The Chase Manhattan Corporation
(banking); Director of Exel Limited
(Bermuda; insurance). Age 55. (f)
(2) Albert B. Ratner Vice Chairman of the Board of 1960 222,909 (7) 4.32% 7.44% 173,674 (8) 4.53%
Directors and Chief Executive
Officer of the Company; Director
of American Greetings Corporation
(greeting cards). Age 67. (c)
(2) Samuel H. Miller Chairman of the Board of 1960 184,401 (9) 3.57% 7.22% 202,401 (10) 5.28%
Directors and Treasurer of the
Company. Age 73. (c)
(2) Charles A. Ratner President and Chief Operating 1972 176,597 (11) 3.42% 6.84% 189,092 (12) 4.93%
Officer of the Company.
Age 53. (c)
(g) Harry O. Schloss, Jr. Executive Consultant and Director 1978 2,500 0.05% 0.05% - -
of U.S. Trust Co. of Florida.
Age 85. (a,b)
(2) James A. Ratner Executive Vice President of the 1984 216,056 (13) 4.19% 7.12% 162,921 (14) 4.25%
Company and President of Forest
City Rental Properties Corporation,
a subsidiary of the Company.
Age 50. (c)
(2) Jerry V. Jarrett Retired Chairman and Chief 1984 - - - - -
Executive Officer of Ameritrust
Corporation (banking); Director
of Developers Diversified Realty
Corporation (real estate investment
trust). Age 63. (a,b)
(2) Ronald A. Ratner Executive Vice President of the 1985 221,502 (15) 4.29% 7.46% 176,560 (16) 4.61%
Company and President of Forest
City Residential Development, Inc.,
a subsidiary of the Company.
Age 48. (c)
(2) Scott S. Cowen Dean and Albert J. Weatherhead, III 1989 400 0.01% 0.01% - -
Professor of Management,
Weatherhead School of 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 National Bank
(banking). Age 48. (a,b)
(2) Brian J. Ratner Vice President-Urban Entertainment 1993 139,581 (17) 2.71% 4.17% 78,541 (18) 2.05%
of the Company. Age 38. (c)
(2) Deborah Ratner Vice President of Forest City 1995 116,127 (19) 2.25% 4.56% 124,969 (20) 3.26%
Salzberg Residential Development, Inc., a
subsidiary of the Company.
Age 41. (c)
OTHER NAMED EXECUTIVE OFFICER
Thomas G. Smith (d) - 0.00% 0.00% 77 0.00%
ALL DIRECTORS, NOMINEES
AND OFFICERS AS A GROUP (19 in number) 1,563,659 (21) 30.31% 47.21% 1,650,672 (22) 43.06%
</TABLE>
(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 154,957 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 5,559 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, Ltd. ("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, Deborah Ratner Salzberg 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 803,072 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,
also held by RMS, Ltd., 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 520,339 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 943,163 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 469,371
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 196,263 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 wife, 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 895,232
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 474,335
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
shares 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) Deborah Ratner Salzberg disclaims any beneficial ownership in 32,250
shares of Class A common stock that are not included in the table above.
Certain of these shares are beneficially owned by Deborah Salzberg because
of her relationship as a trustee over shares in which she has no residual
interest. The remainder, which are beneficially owned by her husband and
children, are shares in which Ms. Salzberg disclaims any beneficial
interest.
(20) All of these shares of Class B common stock beneficially owned by Deborah
Ratner Salzberg are held by RMS, Ltd. Excluded from the table above are
427,907 shares of Class B common stock held by RMS, Ltd. that are
beneficially owned by Ms. Salzberg because of her relationship as a
trustee over shares in which she has no residual interest or which are
shares beneficially owned by her husband and children in which Ms.
Salzberg disclaims any beneficial interest.
(21) 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.
(22) Included in this total are 1,648,101 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.
(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.
(f) Mr. Esposito is not currently a director of the Company. He is being
nominated for election by the shareholders of Class A common stock to the
Company's Board of Directors at the annual meeting of shareholders to be
held June 13, 1995.
(g) Mr. Schloss is not standing for reelection to the Board of Directors.
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 and Deborah Ratner Salzberg.
Directors who are not officers of the Company received fees of $20,000 each
for the fiscal year ended January 31, 1995. 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, $60,125. Mr. Struchen received $40,500, 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 $12,125 and $7,000,
respectively, for attending meetings of the Company's Executive, Audit and
Compensation Committees. Mr. Cowen received $500 for attending meetings of
the Company's Audit Committee. Officers of the Company who serve as directors
do not receive any additional compensation.
<TABLE>
The following table sets forth the security ownership of all other persons
who beneficially own 5% or more of the Company's common stock.
<CAPTION>
Number of Shares of Capital Stock
Beneficially Owned at March 1, 1995
-----------------------------------------------------------------
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>
William Harris Investors, Inc. 222,688 (1) 4.33% 6.62% 126,500 (1) 3.29%
Suite 400
Two North La Salle Street
Chicago, IL 60602-3703
Wanger Asset Management, L.P. & 303,920 (2) 5.91% 8.68% 156,320 (2) 4.07%
Wanger Asset Management, Ltd.
227 West Monroe, Suite 3000
Chicago, IL 60606
Acorn Investment Trust, 155,000 (2) 3.01% 5.28% 123,000 3.20%
Series Designated Acorn Fund
227 West Monroe, Suite 3000
Chicago, IL 60606
Heine Securities Corporation & 292,800 (3) 5.69% 5.69% - -
Michael F. Price
51 J.F.K. Parkway
Short Hills, NJ 07078
Interstate Properties - (4) - 3.60% 192,200 (4) 5.00%
Park 80 West, Plaza 2
Saddlebrook, NJ 07662
Private Capital Management, Inc. 306,200 (5) 5.95% 5.95% - -
3003 Tamiami Trail North
Naples, FL 33940
Ratner, Miller & Shafran Family Interests 2,434,143 (6) 47.19% 65.24% 2,678,149 (6) 69.86%
10800 Brookpark Road
Cleveland, OH 44130
</TABLE>
(1) William Harris Investors, Inc. ("WHI"), a Delaware corporation, is an
investment advisor registered under the Investment Adviser Act of 1940. 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 disclaims any economic interest in any of
these shares. WHI is also under the control of Irving B. Harris.
(2) 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
voting and disposition of the securities reported by Acorn is shared with
Wanger Asset Management, L.P., which is the investment advisor of Acorn.
(3) Heine Securities Corporation ("Heine") is an investment advisor registered
under the Investment Adviser Act of 1940. Heine has reported to the
Company that one or more of its clients is the legal owner of these
securities. Pursuant to investment advisory agreements with its advisory
clients, Heine 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 of these shares.
(4) 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 February 24, 1995 beneficial ownership of
the shares included in the above table. Of the total shares of Class B
common stock included in the table above, Mr. Roth and Mr. Wight each have
sole voting and dispositive power over 1,750 shares and 1,150 shares,
respectively.
(5) Private Capital Management, Inc. ("PCM"), a Florida corporation, is an
investment advisor registered under the Investment Adviser Act of 1940. PCM
is deemed to be the beneficial owner of 306,200 shares of Class A common
stock because of its shared power to dispose or to direct the disposition
of these shares; PCM disclaims any power to vote or to direct the voting of
these shares. Bruce S. Sherman, as president of PCM, also may be deemed to
be the beneficial owner of the 306,200 shares beneficially owned by PCM.
In addition, Mr. Sherman beneficially owns 4,250 shares of Class A common
stock not included in the table above. Mr. Michael J. Seaman, an employee
of PCM or its affiliates, also owns 3,000 shares of Class A common stock
not included in the table above. Mr. Seaman disclaims any beneficial
ownership in any of the shares beneficially owned by either PCM or Mr.
Sherman. PCM stated that it acquired these shares in the ordinary course
of business and has no plans to change or influence the control of the
Company.
(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
69.59% of the Class B common stock outstanding at March 1, 1995.
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
190,843 shares of Class A common stock and 535,379 shares of Class B common
stock. Of those amounts, 127,319 shares of Class A common stock and
535,279 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 12.76% 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.
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 composed of all four outside directors: Messrs.
Scott S. Cowen (Chairman), J Maurice Struchen, Harry O. Schloss, Jr. and Jerry
V. Jarrett. 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 all four outside directors:
Messrs. Jerry V. Jarrett (Chairman), Harry O. Schloss, Jr., Scott S. Cowen and
J Maurice Struchen. The Compensation Committee reviews the compensation
arrangements for senior management. Two Compensation Committee meetings were
held during fiscal 1994.
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 1994, except for Harry O. Schloss, Jr.
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.
Scott S. Cowen
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 five 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 Compensation Committee utilizes nationally recognized outside experts as
consultants to assist it in the performance of its duties. These consultants
were asked to analyze officers salaries and compare those paid by Forest City
Enterprises with comparable corporations in the real estate field. In
addition, the consultants were asked to provide the committee with guidance on
ranges in annual salary and incentive compensation so officers of Forest City
Enterprises would be compensated on a competitive basis. The committee has met
twice with these consultants and expects to continue to use their services in
the future.
The 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 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 five 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.
Scott S. Cowen 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 five other most highly
compensated named executive officers.
<TABLE>
<CAPTION>
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 1994 $430,946 - - $29,923
of the Board of Directors and 1993 399,985 - - 28,307
Chief Executive Officer 1992 340,000 - - 18,566
Samuel H. Miller, Chairman 1994 384,986 - - 32,893
of the Board of Directors 1993 349,986 - - 30,677
and Treasurer. 1992 329,175 - - 22,138
Charles A. Ratner, 1994 321,812 - - 13,254
President and Chief 1993 248,062 - - 11,923
Operating Officer. 1992 250,000 - - 6,522
Thomas G. Smith, 1994 274,986 $125,000 - 60,265
Senior Vice President, 1993 274,024 125,000 - 51,826
Chief Financial Officer 1992 275,000 - - 51,787
and Secretary.
Ronald A. Ratner, 1994 249,985 - - 11,628
Executive Vice President 1993 248,062 - - 10,190
1992 249,986 - - 9,443
James A. Ratner, 1994 249,985 - - 11,960
Executive Vice President 1993 248,062 - - 10,473
1992 249,986 - - 9,937
</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 (which was
terminated at the end of 1993), 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 matching 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 deferred compensation plan that existed with his prior
employer.
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. On
March 1, 1993, the Company entered into employment agreements with James A.
Ratner and Ronald A. Ratner providing for annual salaries of $250,000 each.
All of these contracts, which were initially for a term of one year, are
renewable annually. 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, Charles Ratner,
James Ratner and Ronald Ratner further provide that upon the death of such
officer his beneficiary 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>
<CAPTION>
1/31 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
FCE 100 42 45 69 107 81
S&P 100 108 133 147 166 167
DJ 100 79 84 76 90 82
</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 this Dow Index. The cumulative
total return is based on a $100 investment on January 31, 1990 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 $135,000 as total compensation during the
fiscal year ended January 31, 1995 to RMS Investment Corp. ("RMS"), a company
owned by the principal shareholders of the Company that is engaged in property
management and leasing. RMS serves as an owner's representative for four of the
Company's 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. RMS 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 the Ratner, Miller and
Shafran families and related parties. The loan accrues interest at 2% over
Prime with an 8% minimum per year, and is secured by selected real estate
assets of the Company and a note receivable. During 1992, 1993 and 1994, the
Company repaid $1,377,000 to the Ratner, Miller and Shafran families, leaving a
balance outstanding of $8,623,000 on this debt at January 31, 1995.
The Company and its subsidiaries have 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. Scott Cowen, also a director of the Company,
is a director of Society National Bank. The amount outstanding against these
credit lines and mortgages as of January 31, 1995 was $148,906,000.
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 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 1994 all Reporting
Persons complied with all applicable filing requirements.
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, 1996.
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 present or represented at the meeting is required for
approval of proposal 2. 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.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1995
annual meeting of shareholders must be received by the Company at 10800
Brookpark Road, Cleveland, Ohio 44130 on or before December 15, 1995 for
inclusion in the Company's proxy statement and form of proxy relating to the
1995 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 14, 1995
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 their 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 their vote
for each of the issues. Each issue is identified by number and a brief
description as follows:
1. 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).)
2. AUDITORS: 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 and 2."
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 Salon I at the Ritz-Carlton Hotel, 1515 West
Third Street, Cleveland, Ohio 44113, on Tuesday, June 13, 1995 at 2:00 p.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 election of four (4) directors, each to hold office until the next
annual shareholders' meeting and until his successor shall be elected
and qualify.
(2) The election of Coopers & Lybrand as independent auditors for the
Company for the fiscal year ending January 31, 1996.
(3) 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 and 2.
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 their 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 their vote
for each of the issues. Each issue is identified by number and a brief
description as follows:
1. 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).)
2. AUDITORS: 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 and 2."
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 Salon I at the Ritz-Carlton Hotel, 1515 West
Third Street, Cleveland, Ohio 44113, on Tuesday, June 13, 1995 at 2:00 p.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 election of nine (9) directors, each to hold office until the next
annual shareholders' meeting and until his successor shall be elected
and qualify.
(2) The election of Coopers & Lybrand as independent auditors for the
Company for the fiscal year ending January 31, 1996.
(3) 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 wit h your
instructions, or, IF YOU GIVE NO INSTRUCTIONS, this proxy will be voted FOR
items 1 and 2.
