SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Forest City Enterprises, Inc.
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(Name of Registrant as Specified In Its Charter)
- ----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
PRELIMINARY COPY
FOREST CITY ENTERPRISES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 1997
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Forest City Enterprises, Inc. will be held in the auditorium of the
Brooklyn Union Gas Building, One MetroTech North, Brooklyn, New York 11201,
on Tuesday, June 10, 1997 at 9:00 a.m. eastern daylight saving time, for
the purpose of considering and acting upon:
(1) The election of (12) directors, each to hold office until the next
annual shareholders' meeting and until his or her successor shall be
elected and qualified. Three (3) directors will be elected by holders
of Class A Common Stock and nine (9) by holders of Class B Common Stock.
(2) The proposed amendment of Articles of Incorporation of the Company to
increase the number of shares of Class A Common Stock and Class B
Common Stock which the Company is authorized to issue from 16,000,000
shares to 48,000,000 shares and 6,000,000 shares to 18,000,000 shares,
respectively.
(3) The proposed amendment of Articles of Incorporation of the Company to
increase the number of shares of Preferred Stock which the Company is
authorized to issue from 1,000,000 shares to 5,000,000 shares.
(4) The ratification of Coopers & Lybrand, L.L.P. as independent auditors
for the Company for the fiscal year ending January 31, 1998.
(5) 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, 1997 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
May 1, 1997
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 Board of
Directors 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 10, 1997 at 9:00 a.m., eastern daylight saving time, in the
auditorium of the Brooklyn Union Gas Building, One MetroTech North,
Brooklyn, New York 11201. This Proxy Statement and related form of proxy
are being first sent to shareholders on May 7, 1997. A shareholder giving a
Proxy may revoke the same by notifying the Secretary of the Company in
writing or at the annual meeting, without affecting any vote previously taken.
OUTSTANDING SHARES AND VOTING RIGHTS
As of April 15, 1997, the record date fixed for the determination of
shareholders entitled to vote at the annual meeting, there were
outstanding 7,702,633 shares of Class A Common Stock, par value
$.33-1/3 per share, and 5,409,343 shares of Class B Common Stock, par
value $.33-1/3 per share, of the Company (hereinafter collectively
referred to as "Common Stock"). The number of shares outstanding and all
other share numbers in this Proxy Statement reflect the effect of a
3-for-2 stock split of the Class A Common Stock and Class B Common Stock
that took effect on February 17, 1997. At the annual meeting, the holders of
Class A Common Stock will be entitled as a class to elect three (3) directors,
and will be entitled to one vote per share for this purpose. J Maurice
Struchen, Michael P. Esposito, Jr. and Joan K. Shafran 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, and will be entitled to one vote per share for this purpose.
Albert B. Ratner, Samuel H. Miller, Charles A. Ratner, James A. Ratner,
Jerry V. Jarrett, Ronald A. Ratner, Scott S. Cowen, 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 distributed 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
non-votes and abstaining votes will be counted for purposes of determining
whether a quorum is present at the annual meeting, but will not be counted
in favor of or against any nominee for election to the Board of Directors
of the Company. Broker non-votes and abstentions will have the same effect
as votes against the proposed amendments to the Articles of Incorporation
or the ratification of Coopers & Lybrand, L.L.P. as the Company's
independent auditors for the fiscal year ending January 31, 1998.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended January 31, 1997 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 or her successor is elected and qualified. 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 Joan K. Shafran. Joan K. Shafran is the nominee to replace Nathan
Shafran who will retire from the Board at the end of his term.
The following table sets forth the security ownership as of March 4, 1997
of each director, nominee, other named executive officer and all directors
and executive officers as a group. Except as otherwise noted, each person
has had the principal occupation shown for at least five years.
<TABLE>
<CAPTION>
Number of Shares of Common
Stock Beneficially Owned
--------------------------------------------------------------
Combined
Class
Class A A and B Percent Class B
Occupation Director Common Percent Common of Common Percent
Name And Age Since Stock(e) of Class(e) Stock(f) Class(f) Stock of Class
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT DIRECTOR NOT STANDING FOR RE-ELECTION
Nathan Vice Chairman 1960 98,348 (3) 1.28% 100,598 1.31% 2,250 (4) 0.04%
Shafran of the Board of
Directors of the
Company. Age 83. (c)
NOMINEES
(1) J Maurice Retired Chairman 1971 750 0.01% 1,500 0.02% 750 0.01%
Struchen and Chief Executive
Officer of Society
Corporation (now Key
Corporation) (banking);
Director of Greif Bros.
Corporation (creative
packaging).
Age 76. (a,b)
(1) Michael P. Partner, Inter-Atlantic 1995 1,800 0.02% 1,800 0.02% - -
Esposito, Securities Corporation
Jr. (financial services);
Retired Chief Administrative
and Control Officer of The
Chase Manhattan Bank, N.A.
(banking); Chairman of the
Board of Exel Limited
(Bermuda; insurance).
Age 57. (a,b)
(1) Joan K. Managing Partner, - 52,588 (5) 0.68% 54,838 0.71% 2,250 (6) 0.04%
Shafran The Berimore Company
(investments); Principal,
Do While Studio, Boston
(art and technology nonprofit);
Faculty of School of the
Museum of Fine Arts,
Boston (education). Age 49.
(2) Albert B. Co-Chairman of the 1960 332,142 (7) 4.31% 590,100 7.41% 257,958 (8) 4.77%
Ratner Board of Directors of the
Company since June, 1995,
Vice Chairman of the Board
of the Company from June,
1993 to July, 1995, Chief
Executive Officer prior to
July, 1995 and President prior
to July, 1993. Director
of American Greetings
Corporation (greeting cards)
and RPM, Inc.
(manufacturing).
Age 69. (c)
(2) Samuel H. Co-Chairman 1960 277,630 (9) 3.60% 581,231 7.26% 303,601 (10) 5.61%
Miller of the Board
of Directors of the Company since
June, 1995, Chairman of the
Board of the Company from
June, 1993 to June, 1995 and
Vice Chairman of the Board,
Chief Operating Officer of the
Company prior to June, 1993,
Treasurer of the Company since
December, 1992.
Age 75. (c)
(2) Charles President of 1972 426,666 (11) 5.54% 718,324 8.99% 291,658 (12) 5.39%
A. Ratner the Company
since June, 1993, Chief Executive
Officer of the Company since
June, 1995, Chief Operating
Officer from June, 1993 to
June, 1995 and Executive Vice
President prior to June, 1993.
Director of Cole National
Corporation (retail) and Cole
National Group Inc. (retail).
Age 55. (c)
(2) James A. Executive Vice 1984 484,767 (13) 6.29% 739,135 9.29% 254,368 (14) 4.70%
Ratner President of the Company and
President of Forest
City Rental Properties
Corporation,
a subsidiary of the
Company.
Age 52. (c)
(2) Jerry V. Retired Chairman 1984 - - - - - -
Jarrett and Chief Executive
Officer of Ameritrust
Corporation (banking).
Age 65. (a,b)
(2) Ronald A. Executive 1985 330,864 (15) 4.30% 606,108 7.60% 275,244 (16) 5.09%
Ratner Vice President of the Company and
President of Forest
City Residential Group, Inc.,
a subsidiary of the
Company.
Age 50. (c)
(2) Scott S. Dean and 1989 1,050 0.01% 1,050 0.01% - -
Cowen Professor of
Weatherhead School
of Management, Case Western
Reserve University (education);
Director of
FabriCenters of America, Inc.,
(specialty retailing);
Rubbermaid Corporation
(consumer products);
American Greetings
Corporation (greeting cards)
and KeyBank, N.A.
(banking).
Age 50. (a,b)
(2) Brian Senior Vice President- 1993 210,061 (17) 2.73% 326,598 4.18% 116,537 (18) 2.15%
J.Ratner Development of the Company
since December, 1996, Vice
President-Urban Entertainment
from June, 1995 to January, 1997,
Vice President of the Company
from May, 1994 to June, 1995 and
an officer of various subsidiaries.
Age 39. (c)
(2) Deborah Officer of 1995 174,445 (19) 2.26% 360,954 4.58% 186,509 (20) 3.45%
Ratner various
Salzberg subsidiaries
of the Company.
Age 43. (c)
OTHER NAMED EXECUTIVE OFFICER
Thomas G. Senior Vice - - 205 0.00% 205 0.00%
Smith President, Chief
Financial Officer and
Secretary of the
Company. Director
of Cleveland Region
Advisory Board, First
National Bank of Ohio
(banking). Age 56. (c,d)
ALL DIRECTORS, NOMINEES
AND EXECUTIVE OFFICERS 2,392,034 (21) 31.06% 4,084,251 43.47% 1,692,217 (22) 31.28%
AS A GROUP (21 in number)
(1) Nominated for election by holders of Class A Common Stock.
(2) Nominated for election by holders of Class B Common Stock.
(3) Includes 52,588 shares of Class A Common Stock held in a partnership
in which Mr. Shafran, his wife, and his daughter, Joan K. Shafran, have
shared voting and investment power. Mr. Shafran disclaims beneficial
ownership in 1,192,944 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 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.
(4) These represent shares held in a partnership in which Mr. Shafran and
his wife have shared voting and investment power. Excluded from the table
above are 800,818 shares of class B Common Stock owned by the Shafran
family partnership and are held by RMS, Limited Partnership, an entity
owned by the Ratner, Miller and Shafran families. Mr. Shafran's wife has
voting power over these shares and he disclaims any beneficial ownership.
(5) These represent shares of Class A Common Stock held in a family
partnership in which Joan K. Shafran shares voting and investment power.
Joan K. Shafran disclaims beneficial ownership in 91,879 shares of Class A
Common Stock that are beneficially owned by Ms. Shafran because of her
relationship as a trustee over shares in which she has no residual interest.
(6) These represent shares of Class B Common Stock held in a family
partnership in which Joan K. Shafran shares voting and investment power.
Excluded from the table above are 800,668 shares of Class B Common Stock
owned by the Shafran family partnership and are held by RMS, Limited
Partnership. Joan K. Shafran's mother has voting power over these shares
and Joan K. Shafran disclaims any beneficial ownership.
(7) Includes 277,419 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 1,201,960 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 256,530 shares of Class B Common Stock held by RMS, Limited
Partnership. Excluded from the table above are 106,007 shares of Class B
Common Stock, also held by RMS, Limited Partnership, that are beneficially
owned by Albert B. 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 150 shares of
Class B Common Stock beneficially owned by his wife in which he disclaims
any beneficial ownership.
(9) Samuel H. Miller disclaims any beneficial ownership in 1,109,321
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 H. Miller are held by RMS, Limited Partnership.
(11) Includes 161,772 shares of Class A Common Stock held in trusts of
which Charles A. Ratner is trustee and/or has a residual interest.
Includes 90,301 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 624,634 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 remander, 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, Limited Partnership. Excluded
from the table above are 1,406,723 shares of Class B Common Stock held by
RMS, Limited Partnership that are beneficially owned by Charles A. Ratner
because of his relationship as a trustee over shares in which he has no
residual interest. An additional 2,025 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 160,683 shares of Class A Common Stock held in trusts of which
James A. Ratner is trustee and/or has a residual interest. Includes 68,586
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 544,749 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, Limited Partnership. Excluded
from the table above are 286,075 shares of Class B Common Stock held by RMS,
Limited Partnership that are beneficially owned by James A. 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 68,860 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 113,886 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, Limited Partnership. Excluded from the table above
are 1,332,442 shares of Class B Common Stock held by RMS, Limited Partnership
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 44,175 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
J. Ratner are held by RMS, Limited Partnership. Excluded from the table
above are 712,781 shares of Class B Common Stock held by RMS, Limited
Partnership 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 450 shares of Class B Common Stock not held by RMS, Limited
Partnership 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 51,825
shares of Class A Common Stock that are not included in the table above.
Certain of these shares are beneficially owned by Ms. 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, Limited Partnership. Excluded from
the table above are 642,809 shares of Class B Common Stock held by RMS,
Limited Partnership 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 1,684,447 shares of Class B Common Stock
that are held by RMS, Limited Partnership 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/or director of various subsidiaries of the Company.
(d) This officer is not a director.
(e) Does not reflect potential conversion of Class B Common Stock to
Class A Common Stock.
(f) Reflects potential conversion of all Class B Common Stock held by the
nominee or officer listed to Class A Common Stock. Shares of Class B
Common Stock are convertible into shares of Class A Common Stock at any
time on a 1-for-1 basis.
The Company has been advised that the shares owned by RMS, Limited
Partnership and shares owned by other Ratner, Miller and Shafran families
will be voted for the approval of the election of the directors nominated
and that such vote will be sufficient to elect the nominees voted on by
the Class B shareholders.
Nathan Shafran is the father of Joan K. Shafran and is the uncle of
Charles A. Ratner, James A. Ratner and Ronald A. Ratner, who are brothers,
and is the uncle of Albert B. Ratner. Albert B. Ratner is the father of
Brian J. Ratner and Deborah Ratner Salzberg and is first cousin to
Charles A. Ratner, James A. Ratner, Ronald A. Ratner and Joan K. Shafran.
DIRECTOR COMPENSATION
Directors who are not officers of the Company received fees of $5,000
each for attending each of four regular Board of Directors meetings during
the fiscal year ended January 31, 1997. Each Director also receives fees
for attending any committee meeting and for acting as chairman for any
committee meeting. During fiscal 1996, Messrs. Cowen, Struchen, Jarrett
and Esposito received $4,000, $11,000, $3,500 and $2,500, respectively,
for attending or acting as chairman for such meetings. In addition,
Messrs. Struchen and Esposito received $45,500 and $3,000, respectively, for
attending various operating, strategic planning and other special meetings
in their capacity as a Director of the Company. During fiscal 1996,
Messrs. Cowen, Esposito, Jarrett and Struchen were each granted 2,250
non-qualified stock options to purchase shares of Class A Common Stock
pursuant to the 1994 Stock Option Plan. The options have a term of 10
years and vest as follows: 25% after two years, 50% after three years and
100% after four years from date of grant. The exercise price of $28.75 is
equal to the fair market value of a share of Class A Common Stock on the
date of grant. Officers of the Company who serve as directors do not
receive any additional compensation.
PRINCIPAL SECURITY HOLDERS
The following table sets forth the security ownership as of March 4, 1997
of all other persons who beneficially own 5% or more of the Company's
Common Stock.
<CAPTION>
Number of Shares of Common
Stock Beneficially Owned
------------------------------------------------------------------------
Combined
Class
Class A A and B Class B
Common Percent Common Percent Common Percent
Name and Address Stock(a) of Class(a) Stock(b) of Class(b) Stock of Class
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William Harris Investors, Inc. 338,322 (1)(4) 4.39% 534,908 6.77% 196,586 (1)(4) 3.63%
2 North LaSalle Street, Suite 400
Chicago, IL 60602-3703
Wanger Asset Management, L.P., 184,500 (2)(4) 2.40% 417,000 5.26% 232,500 (2)(4) 4.30%
Wanger Asset Management, Ltd.,
Ralph Wanger and Acorn Investment
Trust, Series Designated Acorn Fund
227 West Monroe, Suite 3000
Chicago, IL 60606
Private Capital Management, Inc. 617,625 (3)(4) 8.02% 617,625 8.02% - -
3003 Tamiami Trail North
Naples, FL 33940
Ratner, Miller & Shafran
Family Interest 3,378,987 (5) 43.87% 7,396,897 63.11% 4,017,910 (5) 74.27%
10800 Brookpark Road
Cleveland, OH 44130
</TABLE>
(1) William Harris Investors, Inc. (WHI), a Delaware corporation, is an
investment advisor registered under Section 203 of the Investment Advisers
Act of 1940. WHI has reported to the Company that it is the beneficial
owner of the securities included in the table above by virtue of its
advisory relationship with persons owning the securities. WHI disclaims
any economic interest in any of these securities.
(2) Wanger Asset Management, L.P. (WAM) is a Delaware limited partnership
registered under Section 203 of the Investment Advisers Act of 1940, Wanger
Asset Management, Ltd. (WAM Ltd) is a Delaware corporation, and Ralph
Wanger (WANGER) is a U.S. Citizen. WAM Ltd. is the sole general partner
of WAM. Wanger is the principal stockholder of WAM Ltd. Acorn Investment
Trust, Series Designated Acorn Fund (Acorn) is a Massachusetts business
trust. Power over voting and disposition of the securities reported by
Acorn is shared with WAM, which is the investment advisor of Acorn.
(3) Private Capital Management, Inc. (PCM), a Florida corporation, is
an investment advisor registered under Section 203 of the Investment
Advisers Act of 1940. PCM is deemed to be the beneficial owner of 411,750
shares of Class A Common Stock because of its shared power to dispose or
to direct the disposition of these securities; PCM disclaims any power to
vote or to direct the voting of these securities. Bruce S. Sherman, as
president of PCM, may also be deemed to be the beneficial owner of
the 411,750 shares beneficially owned by PCM. Mr. Michael J. Seaman, an
employee of PCM or its affiliates, 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 securities beneficially owned by
either PCM or Mr. Sherman.
(4) The number of shares of capital stock beneficially owned represent
shares beneficially owned at December 31, 1996 as disclosed in Form 13G
filed by the Principal Security Holder. The number of shares beneficially
owned have been adjusted to reflect the February, 1997 stock split.
(5) The Ratner, Miller and Shafran families have an ownership interest in
the Company as reflected in the table above. These securities 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, Limited Partnership owns 4,001,557 shares
which represents 73.97% of the Class B Common Stock outstanding at
March 4, 1997.
Certain members of the Ratner, Miller and Shafran families 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 securities owned by Fannye
Shafran, wife of Nathan Shafran and mother of Joan K. Shafran.
Fannye Shafran has a beneficial interest in 136,211 shares of Class A
Common Stock and 803,068 shares of Class B Common Stock. Of those amounts,
52,588 shares of Class A Common Stock and 802,918 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 Stock were converted
into Class A common shares, Fannye Shafran would own 11.04% of the Class A
Common Stock outstanding.
(a) Does not reflect potential conversion of Class B Common Stock to
Class A Common Stock.
(b) Reflects potential conversion of all Class B Common Stock held by the
principal security holder listed to Class A Common Stock. Shares of
Class B Common Stock are covertible into shares of Class A Common Stock
at anytime on a 1-for-1 basis.
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 four outside directors:
Messrs. Scott S. Cowen (Chairman), Michael P. Esposito, Jr.,
Jerry V. Jarrett and J Maurice Struchen. The Audit Committee
recommends the firm of independent accountants to be appointed by the
Board of Directors, subject to approval by the shareholders, 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. Three Audit Committee meetings were held
during the 1996 fiscal year.
The Compensation Committee is comprised of four outside directors:
Messrs. Jerry V. Jarrett (Chairman), Scott S. Cowen,
Michael P. Esposito, Jr., and J Maurice Struchen. The Compensation
Committee reviews the compensation arrangements for senior management.
Three Compensation Committee meetings were held during the 1996 fiscal year.
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 any such 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 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists entirely of
the following nonemployee Directors:
Jerry V. Jarrett, Chairman
Michael P. Esposito, Jr
Scott S. Cowen
J Maurice Struchen
No member of the Compensation Committee is a current or former officer
or employee of the Company or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT
THE COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THE INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
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, as discussed
in the Management's Discussion and Analysis section of the Company's
Annual Report, 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 policies under which
each form of compensation is paid or awarded to the Company's "key"
officers as defined by the Committee. The Committee reviews and approves
the compensation of the Chief Executive Officer and the other five most
highly compensated executive officers as proposed by the Chief Executive
Officer. The Compensation Committee also reviews the salaries and
incentives for each member 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 are 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 are 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 meets with these consultants as
required, 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 Class A Common Stock of the Company 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 this Section of the Code.
In December, 1996, the Compensation Committee approved the Executive
Compensation Plan (the "Plan"). The Plan includes executives who are part
of the Company's strategic planning group, except that Albert B. Ratner
and Samuel H. Miller are not included in the Plan. It features a
short-term Management Incentive Plan ("MIP") and a Long-Term Performance
Plan ("LTPP"). The MIP provides short-term incentives for outstanding
individual performance and achievement of annual objectives. Annually
the Compensation will set a range of performance objectives and related
target incentives. Incentive awards may be in cash or deferral
arrangements. The MIP is jointly administered by the Compensation
Committee, the Chief Executive Officer and senior management. Incentive
award payments require the approval of the Compensation Committee.
The LTPP is designed to reward the achievement of long-term performance
goals as set forth in the strategic plan which, in turn, are expected to lead
to improved shareholder return performance. Incentive awards may be in
cash, stock-based compensation and deferral arrangements. The performance
period over which awards may be earned span four fiscal years. The LTPP
is administered by the Compensation Committee.
The Company entered into an agreement with Charles A.Ratner, President
and Chief Executive Officer, on February 1, 1994. The Agreement provides
for an annual salary of $325,000. The contract was initially for a one year
term but is renewable annually. In reviewing the Chief Executive Officer's
compensation, the Compensation Committee feels one of the most important
indicators of performance on his part is his ability to understand and
react to changing conditions affecting our industry and to adjust
strategic directions and tactical plans to be responsive. Improving
shareholder value and development of management succession plans also rank
high on the list of performance indicators.
Jerry V. Jarrett, Chairman Scott S. Cowen
Michael P. Esposito, Jr. J Maurice Struchen
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded to, earned by,
or paid to the Company's Chief Executive Officer and the five other most
highly compensated named executive officers.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term
Compensation
Awards
------------
Annual Compensation Securities
------------------- Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options (#) Compensation ($)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles A. Ratner, 1996 $324,986 $ - 14,400 $11,875
President and Chief 1995 324,986 - - 11,551
Executive Officer 1994 321,812 - - 7,551
Albert B. Ratner, Co-Chairman 1996 449,986 - - 12,550
of the Board of Directors 1995 449,987 - - 12,550
1994 430,946 - - 13,490
Samuel H. Miller, Co-Chairman 1996 385,121 109,000 - 12,103
of the Board of Directors 1995 384,986 60,000 - 12,103
and Treasurer 1994 384,986 - - 13,103
Thomas G. Smith, 1996 310,804 100,000 7,200 51,875
Senior Vice President, 1995 287,005 100,000 - 51,875
Chief Financial Officer 1994 274,986 125,000 - 52,551
and Secretary
Ronald A. Ratner 1996 249,985 - 9,000 6,323
Executive Vice President 1995 249,985 - - 6,323
1994 249,985 - - 7,243
James A. Ratner 1996 249,985 - 9,000 6,551
Executive Vice President 1995 249,985 - - 6,551
1994 249,985 - - 7,552
</TABLE>
Amounts reported as "All Other Compensation" in 1996 include (i) accrual
of annual benefits to each named executive officer's vested balance in the
Company's deferred compensation plan as follows: Charles A. Ratner $10,000,
Albert A. Ratner $10,000, Samuel H. Miller $10,000, Ronald A. Ratner
$5,000 and James A. Ratner $5,000; (ii) accrual of an amount for
Thomas G. Smith that is provided in lieu of a deferred compensation plan
that existed with his prior employer $50,000; (iii) cost of group term
life insurance; and (iv) the Company's matching contribution to the
401(k) Plan.
The Company entered into employment agreements with Albert B. Ratner
and Samuel H. Miller, Co-Chairmen of the Board of Directors effective
July 1, 1989 which provide for an annual salary of $450,000 and $385,000,
respectively. The contracts were initially for a term of one year and are
renewable annually. Although no formal bonus plan exists, an annual bonus
may be awarded, determined on a discretionary basis.
The Company entered into employment agreements with James A. Ratner and
Ronald A. Ratner effective February 1, 1993 providing for annual salaries
of $250,000 each. These contracts, which were initially for a term of
one year, are renewable annually.
The employment agreements for Albert Ratner, Samuel Miller, Charles Ratner,
James Ratner and Ronald Ratner further provide that upon the death of such
officer his beneficiary will receive an annual payment for five years
equal to one-half of his average annual contractual salary, as stated
in the contract, and bonus, if any, for the five calendar years
immediately preceding his death.
Option Grants In Last Fiscal Year
---------------------------------
The following table sets forth information regarding stock options
granted during fiscal 1996 to the six executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------
Number
of % of Total Grant Date
Securities Options Value
Underlying Granted to Exercise -----------
Options Employees or Base Grant Date
Granted in Fiscal Price Expiration Present
Name (#) (1) Year ($/Sh) Date Value $(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles A. Ratner 14,400 8.0% $28.75 9/8/06 $206,928
Albert B. Ratner - - - - -
Samuel H. Miller - - - - -
Thomas G. Smith 7,200 4.0% $28.75 9/8/06 $103,464
Ronald A. Ratner 9,000 5.0% $28.75 9/8/06 $129,330
James A. Ratner 9,000 5.0% $28.75 9/8/06 $129,330
</TABLE>
(1) On September 9, 1996, stock options to purchase Class A Common Stock
were granted under the 1994 Stock Option Plan ("Plan"). The options
have a term of 10 years and vest as follows: 25% after two years,
50% after three years and 100% after four years from date of grant.
The exercise price is equal to the fair market value of a share of
Class A Common Stock on the date of grant. Under the Plan, awards may
be incentive stock options or non-qualified stock options. All the
options granted in the above table were non-qualified stock options,
except Thomas G. Smith was granted 6,900 incentive stock options and
300 non-qualified stock options.
(2) The options were valued using the Black-Scholes option-pricing model
using the following assumptions: expected volatility of 30.7%, based on
closing prices of Class A Common Stock for 43 months prior to grant;
risk-free interest rate of 6.5%, based on return of U.S. Government
notes and bonds; dividend yield of .5% and expected life of 8.7 years.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
------------------------------------------------
The following table sets forth information with respect to the six
executive officers named in the Summary of Compensation Table concerning
the number and value of stock options to purchase Class A Common Stock
outstanding at the end of fiscal 1996.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares FY-End (#) FY-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles A. Ratner - - 0/14,400 $0/$176,400
Albert B. Ratner - - - -
Samuel H. Miller - - - -
Thomas G. Smith - - 0/ 7,200 $0/$ 88,200
Ronald A. Ratner - - 0/ 9,000 $0/$110,250
James A. Ratner - - 0/ 9,000 $0/$110,250
</TABLE>
The closing price of the Company's Class A Common Stock on January 31, 1997,
was $41.00 per share.
The following graph shows a comparison of five-year cumulative total
return of Forest City Enterprises, Inc. Class A Common Stock (FCEA),
Forest City Enterprises, Inc. Class B Common Stock (FCEB), Standard &
Poor's 500 Stock Index (S&P) and the Dow Jones Real Estate Investment
Index (Dow Index).
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 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
FCEA 100 151 227 176 194 361
FCEB 100 152 251 182 194 361
S&P 100 111 125 125 174 220
DJ 100 90 106 97 119 161
</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, Health & Retirement
Properties Trust, Healthcare Properties Investments, Inc., Host Marriott
Corp., Kimco Realty Corp., Meditrust, New Plan Realty Trust, Newhall
Land & Farming, The Rouse Company, Security Capital Pacific Trust,
Simon DeBartolo Group, Vornado Realty Trust and Weingarten Realty Trust.
Forest City Enterprises is not included in this Dow Index. The
cumulative total return is based on a $100 investment on January 31, 1992
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 $182,000 as total compensation during
1996 to RMS Investment Corp. (RMS), a company controlled by the children of
Charles A. Ratner (the President, Chief Executive Officer and a Director of
the Company), the children of James Ratner (an Executive Vice President
and a Director of the Company), the children of Ronald Ratner (an Executive
Vice President and a Director of the Company), the children of Albert
Ratner (a Co-Chairman of the Company's Board of Directors), the children
of Mark Ratner, (brother of Charles Ratner, James Ratner and Ronald Ratner)
and Albert Ratner as trustee, Nathan Shafran (a Director of the Company),
as Trustee, and Fannye Shafran, as Trustee, that is engaged in property
management and leasing. RMS manages and provides leasing services to two
of the Company's Cleveland-area specialty retail shopping centers,
Golden Gate (260,000 square feet) and Midtown (256,000 square feet). The
rate of compensation for such management services is 4% of all tenant
rentals, plus a lease fee of 2% to 3%. Management believes these fees are
comparable to that which other management companies would charge.
Under the Company's current policy, no director, officer or employee,
including members of the Ratner, Miller or Shafran families, is allowed to
invest in a competing real estate opportunity without first obtaining
approval of the Company's Conflict of Interest Committee. However, the
Company currently does not have non-compete agreements with any of its
directors, officers and employees and, upon leaving the Company, any
director, officer or employee could compete with the Company. An
exception to the Company's conflict of interest policy permits existing
directors, officers and employees, including Albert B. Ratner, Co-Chairman
of the Board of Directors, Samuel H. Miller, Co-Chairman of the Board of
Directors and Treasurer, Charles A. Ratner, President, Chief Executive
Officer and Director, Ronald A. Ratner, Executive Vice President and
Director, Brian J. Ratner, Senior Vice President - Development and Director,
and Deborah Ratner Salzberg, Vice President of Forest City Residential, Inc.
(a subsidiary of the Company) and Director, James A. Ratner, Executive
Vice President and President of Forest City Rental Properties Corporation,
and Nathan Shafran, Director, to retain an interest in 16 properties which
were acquired before 1960 with a cost of $94.0 million. All but one of
those properties are located in Cleveland and are in competition with
properties owned by the Company. The ownership of these properties by
these directors, officers and employees makes it possible that conflicts
of interest may arise between them and the Company. Although no such
conflicts are anticipated, 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.
The Company is a partner with an affiliate of William Harris Investors,
Inc., identified in this Proxy Statement as a principal security holder,
in three syndicated apartments and three land projects. Management
believes that all related transactions have been conducted on an arm's
length basis.
The Company and its subsidiaries have credit agreements and real estate
mortgages with KeyBank National Association ("KeyBank") of which J Maurice
Struchen, who is a director of the Company, is a retired Chairman of the
Board. Scott Cowen, also a director of the Company, is a director of
KeyBank. The amount outstanding against these credit lines and mortgages
as of January 31, 1997 was $130,458,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING/COMPLIANCE
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 1996 all
filing requirements applicable to Reporting Persons were complied with
except for the following: Joseph M. Shafran inadvertently filed one
Form 4 late to report a transfer of shares of stock.
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The authorized capital stock of the Company consists of 1,000,000 shares
of Preferred Stock without par value (none issued at April 15, 1997)
and 22,000,000 shares of Common Stock with a par value of $.33 1/3
divided into two classes: (1) 16,000,000 shares of Class A Common Stock
(7,938,583 shares issued and 7,702,633 shares outstanding at April 15, 1997)
and (2) 6,000,000 shares of Class B Common Stock (5,548,393 shares issued
and 5,409,343 shares outstanding at April 15, 1997).
Of the 16,000,000 shares of Class A Common Stock authorized at
January 31,1997, approximately 13,862,000 shares of Class A Common Stock
have been issued or are reserved for issuance under the Company's 1994
Stock Option Plan or for issuance upon the conversion of issued Class B
Common Stock to Class A Common Stock. Only 2,138,000 additional shares of
Class A Common Stock would remain available for issuance under these
circumstances. On March 4, 1997, the Company filed a shelf registration
statement with the Securities and Exchange Commission for the potential
offering on a delayed basis of up to $250 million in debt or equity
securities. The long-term utility of the registration statement will be
reduced unless the additional shares of Class A Common Stock are approved.
The Board of Directors have recommended the adoption of an amendment to
the Articles of Incorporation to increase the authorized shares of Class A
Common Stock from 16,000,000 shares to 48,000,000 shares and Class B
Common Stock from 6,000,000 shares to 18,000,000 shares. To effect this
change, Article IV of the Articles of Incorporation would be amended to
read as follows:
ARTICLE IV
CAPITAL STOCK
A. Authorized Shares
The number of shares which the Corporation is authorized to have
issued and outstanding is 67,000,000 shares, consisting of 48,000,000
shares of Class A Common Stock with a par value of $.33 1/3 per
share (hereinafter designated "Class A Common Stock"), 18,000,000
shares of Class B Common Stock with a par value of $.33 1/3 per
share (hereinafter designated "Class B Common Stock"), and
1,000,000 shares of preferred stock without par value (hereinafter
designated "Preferred Stock").
The purpose of the increase in authorized shares is to provide additional
Common Stock that could be issued for future purposes without further
shareholder approval unless required by applicable law, rule or regulation.
Future purposes could include affecting acquisitions of other businesses
or properties, securing additional financing through the issuance of additional
shares or for general corporate purposes. The Company has no definite plan,
committment or understanding at this time to issue any shares of the proposed
additional Common Stock. If authorization of any increase in the Common
Stock is postponed until a specific need arises, the delay and expense
incident to obtaining the approval of stockholders at that time could impair
the Company's ability to meet its objectives.
The additional shares of Common stock issued hereafter would be identical to
the Common Stock currently outstanding. No stockholder has any preemptive
rights, and issuance of the additional Common Stock could dilute the
voting rights of present holders of Common Stock. It is possible, depending
upon the transaction in which Common Stock is issued, that issuance of such
Common Stock could have a dilutive effect on shareholders' equity and
earnings per share attributable to present holders.
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 the proposed amendment to Article IV. 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.
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK
The Board of Directors have recommended the adoption of an amendment to the
Articles of Incorporation to increase the authorized shares of Preferred
Stock from 1,000,000 shares to 5,000,000 shares. To effect this change,
Article IV of the Articles of Incorporation would be amended to read as
follows (numbers in parenthesis represent number of shares if the proposal
to increase the number of authorized shares of Common Stock is approved):
ARTICLE IV
CAPITAL STOCK
A. Authorized Shares
The number of shares which the Corporation is authorized to have issued
and outstanding is 27,000,000 (71,000,000) shares, consisting of
16,000,000 (48,000,000) shares of Class A Common Stock with a par
value of $.33 1/3 per share (hereinafter designated "Class A Common
Stock"), 6,000,000 (18,000,000) shares of Class B Common Stock with
a par value of $.33 1/3 per share (hereinafter designated "Class B
Common Stock"), and 5,000,000 shares of Preferred Stock without
par value (hereinafter designated "Preferred Stock").
The purpose of the increase in authorized shares is to provide additional
Preferred Stock that could be issued for future purposes without further
shareholder approval unless required by applicable law, rule or regulation.
Future purposes could include affecting acquisitions of other businesses or
properties, securing additional financing through the issuance of
additional shares or for general corporate purposes. The Company has no
definite plan, commitment or understanding at this time to issue any
shares of the proposed additional Preferred Stock. If authorizaiton of any
increase in the Preferred Stock is postponed until a specific need arises,
the delay and expense incident to obtaining the approval of stockholders
at that time could impair the Company's ability to meet its objectives.
The additional shares of Preferred Stock issued hereafter would be identical
to the Preferred Stock currently authorized. No stockholder has any preemptive
rights. It is possible, depending upon the transaction in which Preferred
Stock is issued, that issuance of such Preferred Stock could have a dilutive
effect on shareholders' equity and earnings per share attributable to present
holders of the Company's Common Stock.
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 the proposed amendment to Article IV. 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.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors recommends the ratification of Coopers & Lybrand,
L.L.P. Certified Public Accountants, by the shareholders at the annual
meeting as the Company's independent auditors for the fiscal year ending
January 31, 1998.
Coopers & Lybrand, L.L.P. has indicated that a representative of Coopers
& Lybrand, L.L.P. will attend the annual meeting to respond to appropriate
questions from shareholders. Their representative will also have the
opportunity to make a statement at the meeting.
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 the proposed amendment to Article IV. 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 1998 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1998
annual meeting of shareholders must be received by the Company at the
address below on or before January 4, 1998 for inclusion in the Company's
proxy statement and form of proxy relating to the 1998 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 shareholder entitled to
vote at the forthcoming annual meeting, the Company will mail, at no
charge to the shareholder, 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:
Investor Relations
Forest City Enterprises, Inc.
10800 Brookpark Road
Cleveland, Ohio 44130
www.fceinc.com
Effective October, 1997
1100 Terminal Tower
Cleveland, Ohio 44113
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
May 1, 1997
CLASS PRELIMINARY COPY CLASS
A A
P FOREST CITY ENTERPRISES, INC.
R PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
O THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS
X
Y
The undersigned hereby appoints Albert B. Ratner, Samuel H. Miller and
Nathan Shafran, 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 auditorium of the
Brooklyn Union Gas Building, One MetroTech North, Brooklyn, New York 11201,
on June 10, 1997 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 election of three (3) directors, each to hold office until the next
annual shareholders' meeting and until his or her successor shall be
elected and qualified.
Nominees: J Maurice Struchen, Michael P. Esposito, Jr., Joan K. Shafran
(2) The proposed amendment of Articles of Incorporation of the Company to
increase the number of Class A and Class B common shares which the Company
is authorized to issue as described in the accompanying proxy statement.
(3) The proposed amendment of Articles of Incorporation of the Company to
increase the number of preferred shares which the Company is authorized to
issue as described in the accompanying proxy statement.
(4) The ratification of Coopers & Lybrand, L.L.P. as independent auditors
for the Company for the fiscal year ending January 31,1998.
(5) 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 AND 4.
SEE REVERSE SIDE
<TABLE>
<CAPTION>
<S> <C> <C>
[X] PLEASE MARK YOUR VOTES SHARES IN YOUR NAME
AS IN THIS EXAMPLE.
1. FOR WITHHELD 2. FOR AGAINST ABSTAIN 3. FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
DIRECTORS AUTHORIZE COMMON STOCK AUTHORIZE PREFERRED STOCK
For, except vote
withheld from the
following nominee(s):
___________________
4. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
AUDITORS
CHANGE OF ADDRESS [ ]
ATTEND MEETING
(no ticket required) [ ]
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR ITEMS 1, 2, 3 AND 4.
SIGNATURE(S) _____________________________________ DATE __________________
SIGNATURE(S) _____________________________________ DATE __________________
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.
CLASS PRELIMINARY COPY CLASS
B B
P FOREST CITY ENTERPRISES, INC.
R PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
O THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS
X
Y
The undersigned hereby appoints Albert B. Ratner, Samuel H. Miller and
Nathan Shafran, 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 auditorium of the
Brooklyn Union Gas Building, One MetroTech North, Brooklyn, New York 11201,
on June 10, 1997 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 election of nine (9) directors, each to hold office until the
next annual shareholders' meeting and until his or her successor
shall be elected and qualified.
Nominees: Albert B. Ratner, Samuel H. Miller, Charles A. Ratner,
James A. Ratner, Jerry V. Jarrett, Ronald A. Ratner, Scott S. Cowen,
Brian J. Ratner, Deborah Ratner Salzberg
(2) The proposed amendment of Articles of Incorporation of the Company
to increase the number of Class A and Class B common shares which
the Company is authorized to issue as described in the accompanying
proxy statement.
(3) The proposed amendment of Articles of Incorporation of the Company
to increase the number of preferred shares which the Company is
authorized to issue as described in the accompanying proxy statement.
(4) The ratification of Coopers & Lybrand, L.L.P. as independent auditors
for the Company for the fiscal year ending January 31,1998.
(5) 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 AND 4.
SEE REVERSE SIDE
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<S> <C> <C>
[X] PLEASE MARK YOUR VOTES SHARES IN YOUR NAME
AS IN THIS EXAMPLE.
1. FOR WITHHELD 2. FOR AGAINST ABSTAIN 3. FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
DIRECTORS AUTHORIZE COMMON STOCK AUTHORIZE PREFERRED STOCK
For, except vote
withheld from the
following nominee(s):
____________________
4. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
AUDITORS
CHANGE OF ADDRESS [ ]
ATTEND MEETING
(no ticket required) [ ]
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR ITEMS 1, 2, 3 AND 4.
SIGNATURE(S) _______________________________________ DATE ________________
SIGNATURE(S) _______________________________________ DATE ________________
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.
</TABLE>
