<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Eastgroup Properties
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Eastgroup Properties
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EASTGROUP PROPERTIES
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 1995
To the holders of Shares of Beneficial Interest:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of EastGroup
Properties (the "Trust") will be held at the Edison Walthall Hotel, 225 East
Capitol Street, Jackson, Mississippi, on Thursday, June 1, 1995, at 11:00 a.m.,
Jackson time, for the following purposes:
1. To elect seven trustees.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The trustees have fixed the close of business on April 17, 1995 as the
record date for the determination of shareholders entitled to receive notice of
and to vote at the Annual Meeting.
The trustees sincerely desire your presence at the meeting. However, so
that we may be sure your vote will be included, please sign and return the
enclosed proxy promptly. A self-addressed, postage-paid return envelope is
enclosed for your convenience.
The prompt return of your proxy will avoid delay and save the expense
involved in further communication. The proxy may be revoked by you at any time
prior to its exercise, and the giving of your proxy will not affect your right
to vote in person if you wish to attend the meeting.
By Order of the Board of Trustees
N. KEITH MCKEY
Executive Vice-President, Chief
Financial Officer
and Secretary
DATED: April 27, 1995
***************************************************************************
* *
* SHAREHOLDERS ARE URGED TO VOTE BY SIGNING, DATING AND RETURNING THE *
* ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE *
* AFFIXED IF MAILED IN THE UNITED STATES. *
* *
***************************************************************************
<PAGE> 3
April 27, 1995
EASTGROUP PROPERTIES
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 1995
The following information is furnished in connection with the Annual
Meeting of Shareholders of EastGroup Properties (the "Trust") to be held at the
Edison Walthall Hotel, 225 East Capitol Street, Jackson, Mississippi, on
Thursday, June 1, 1995, at 11:00 a.m., Jackson time. A copy of the Trust's
Annual Report to Shareholders for the fiscal year ended December 31, 1994
accompanies this Proxy Statement. Additional copies of the Annual Report,
Notice, Proxy Statement and form of proxy may be obtained from the Trust's
Secretary, P.O. Box 22728, Jackson, Mississippi 39225-2728. This Proxy Statement
will first be sent to shareholders on or about April 27, 1995.
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy for the Annual Meeting of Shareholders is being
solicited by the trustees of the Trust. Any person giving a proxy may revoke it
any time prior to the exercise thereof by filing with the Secretary of the Trust
a written revocation or duly executed proxy bearing a later date. The proxy may
also be revoked by a shareholder attending the meeting, withdrawing the proxy
and voting in person.
The cost of soliciting the proxies on the enclosed form will be paid by the
Trust. In addition to the use of the mails, proxies may be solicited by the
trustees and their agents (who will receive no additional compensation therefor)
by means of personal interview, telephone or facsimile, and it is anticipated
that banks, brokerage houses and other institutions, nominees or fiduciaries
will be requested to forward the soliciting material to their principals and to
obtain authorization for the execution of proxies. The Trust may, upon request,
reimburse banks, brokerage houses and other institutions, nominees and
fiduciaries for their expenses in forwarding proxy material to their principals.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The record date for determining Shares of Beneficial Interest of the Trust
("Shares") entitled to vote at the Annual Meeting has been fixed at the close of
business on April 17, 1995. On such date there were 4,221,656 Shares
outstanding. The holders of Shares are entitled to cumulative voting. Each
shareholder is entitled to as many votes in the election of trustees as shall
equal the number of Shares owned by that shareholder multiplied by the number of
trustees to be elected, and each shareholder may cast all such votes for a
single candidate for trustee or may distribute them among two or more candidates
as that shareholder may determine.
<PAGE> 4
The presence, in person or by properly executed proxy, of the holders of
Shares entitled to cast a majority of the votes entitled to be cast by the
holders of all outstanding Shares is necessary to constitute a quorum. Shares
represented by a properly signed, dated and returned proxy will be treated as
present at the meeting for purposes of determining a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to the Trust
with respect to Shares owned by each trustee, each executive officer, and all
trustees and executive officers as a group. The Trust is not aware of any person
who is the beneficial owner, as determined by the rules of the Securities and
Exchange Commission, of more than 5% of the Trust's outstanding Shares.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
TRUSTEES, EXECUTIVE OFFICERS AND BENEFICIALLY PERCENTAGE
MORE THAN 5% SHAREHOLDERS OWNED OF SHARES
------------------------------------------------------------ ------------ ----------
<S> <C> <C>
Alexander G. Anagnos........................................ 5,201(1) *%
H.C. Bailey, Jr. ........................................... 6,500(2) *
Harold B. Judell............................................ 10,960(2) *
John N. Palmer.............................................. 5,000(1) *
David M. Osnos.............................................. 9,500(2) *
Leland R. Speed............................................. 97,623 2.3
David H. Hoster II.......................................... 26,428(3) 0.6
N. Keith McKey.............................................. 10,361 *
All trustees and executive officers as a group.............. 171,573(4) 4.0%
<FN>
- ---------------
* Less than 0.5%
(1) Includes 5,000 Shares the indicated person has the right to acquire under
the EastGroup Properties 1991 Trustees Stock Option Plan, as amended (the
"Trustees Plan").
(2) Includes 6,500 Shares the indicated person has the right to acquire under
the Trustees Plan.
(3) Includes 3,120 Shares beneficially owned by Mr. Hoster's wife and daughters,
as to which he disclaims beneficial ownership.
(4) Includes 29,500 Shares that trustees of the Trust have the right to acquire
under the Trustees Plan.
</TABLE>
ELECTION OF TRUSTEES
NOMINEES
The Trust's Restated Declaration of Trust, as amended, provides that the
number of trustees shall not be less than three nor more than twelve, and that
the number of trustees shall be set forth in the Trustees' Regulations. The
Trustees' Regulations provide that the Trust shall have seven Trustees. All
seven positions on the Board of Trustees are to be filled by the vote of the
shareholders at the Annual Meeting. Each person so elected shall serve until the
Trust's next Annual Meeting and until his successor is elected and qualified.
The trustees recommend a vote FOR the seven nominees listed below. Except
where authority to do so has been withheld, it is the intention of the persons
named in the accompanying form of proxy to vote at the
2
<PAGE> 5
Annual Meeting FOR these nominees, reserving the right, however, to cumulate
their votes and distribute them among the nominees in their discretion so as to
elect as many of the nominees as possible. Each of the other nominees listed
below was elected a trustee at the Trust's 1994 Annual Meeting of Shareholders,
except for Mr. Anagnos, who joined the Board after the 1994 Annual Meeting.
Although the trustees do not contemplate that any of the nominees listed
below will be unable to serve, if such a situation arises prior to the meeting,
the enclosed proxy will be voted in accordance with the best judgment of the
person or persons voting the proxy.
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND
TENURE WITH THE TRUST AGE BUSINESS FOR PAST FIVE YEARS (1)
- --------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Alexander G. Anagnos............. 68 Financial Advisor with WR Family Associates.
Trustee since 1994
H.C. Bailey, Jr. ................ 55 President of H.C. Bailey Company (real estate
Trustee since 1980 development and investment); President of Bailey
Mortgage Company (mortgage banking) and Chairman of
the Board and Chief Executive Officer and President of
Security Savings & Loan Association(2) until 1992.
David H. Hoster II............... 49 President of the Trust since 1993 and Executive Vice
Trustee and President President of the Trust until 1993; Executive Vice
since 1993 President of LNH REIT, Inc. since 1992; Executive Vice
President of Congress Street Properties, Inc. from
1988 to 1994, Eastover Corporation from 1988 to 1994,
EB, Inc. from 1993 to 1994, The Parkway Company from
1988 to 1994, and Rockwood National Corporation 1988
to 1994.
Harold B. Judell................. 80 Senior partner in the law firm of Foley & Judell LLP
Trustee since 1981 (municipal bond attorneys).
John N. Palmer................... 60 Chairman of Mobile Telecommunications Technologies
Trustee since 1994 Corp. since 1989.
David M. Osnos................... 63 Partner in the law firm of Arent, Fox, Kintner,
Trustee since 1993 Plotkin & Kahn.
Leland R. Speed.................. 62 Chief executive officer of the Trust, The Parkway
Trustee since 1978 and Managing Company and LNH REIT, Inc.; served as Chief Executive
Trustee and President since Officer of Eastover Corporation, Congress Street
1983 Properties, Inc., and Rockwood National Corporation
until 1994 and EB, Inc. until 1995.
- ---------------
<FN>
(1) Unless otherwise stated, each nominee has held the positions indicated for
at least the past five years.
(2) Security Savings & Loan Association was seized by the Resolution Trust
Company in 1992.
(3) The principal businesses of Congress Street Properties, Inc., Eastover
Corporation, EB, Inc., LNH REIT, Inc. and The Parkway Company are described
under "Expense-Sharing Agreement."
</TABLE>
3
<PAGE> 6
OTHER DIRECTORSHIPS AND TRUSTEESHIPS
Nominees to the Board of Trustees serve on the Boards of Directors or the
Boards of Trustees of the following publicly-held companies:
<TABLE>
<CAPTION>
NOMINEE COMPANY
----------------------------------------- ---------------------------------------------
<S> <C>
H.C. Bailey, Jr. ........................ EB, Inc.
LNH REIT, Inc.
The Parkway Company
David H. Hoster II....................... EB, Inc.
Harold B. Judell......................... Cellular Information Systems, Inc.
Sizeler Property Investors, Inc.
David M. Osnos........................... VSE Corporation
Washington Real Estate Investment Trust
John N. Palmer........................... Entergy Corporation
Mobile Telecommunications Technologies Corp.
Leland R. Speed.......................... EB, Inc.
Farm Fish, Inc.
First Mississippi Corporation
LNH REIT, Inc.
The Parkway Company
</TABLE>
COMMITTEES AND MEETING DATA
The Audit Committee of the Board of Trustees consists of Messrs. Bailey,
Judell and Osnos. The Audit Committee met two times during the Trust's 1994
fiscal year. The functions performed by this committee consist principally of
conferring with and reviewing the reports of the Trust's independent accountants
and bringing to the entire Board of Trustees for review those items relating to
audits or to accounting practices which the Audit Committee believes merit such
review.
The Compensation Committee of the Board of Trustees consists of Messrs.
Bailey (Chairman), Palmer and Anagnos. Its function is to recommend compensation
levels for trustees, review compensation levels for executive officers and
administer the Trust's 1994 Management Incentive Plan. The Compensation
Committee met two times during the Trust's 1994 fiscal year.
The Trust does not have a standing nominating committee or any committee
performing a similar function.
The Board of Trustees held eight meetings during the Trust's 1994 fiscal
year. Each trustee attended at least 75% of the aggregate of the total number of
meetings of the Board of Trustees and the total number of meetings held by all
committees of the Board on which he served.
4
<PAGE> 7
EXECUTIVE OFFICERS
The following is a list of the Trust's executive officers:
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE TRUST AGE EXPERIENCE FOR PAST FIVE YEARS
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Leland R. Speed........................... 62 See table under "Nominees."
Managing Trustee since 1983
David H. Hoster II........................ 49 See table under "Nominees."
Trustee and President since 1993
N. Keith McKey............................ 44 Executive Vice-President of the Trust
Executive Vice-President since 1993, since 1993 and Chief Financial Officer
Chief Financial Officer since 1992; Senior Vice President of LNH
and Secretary since 1992 REIT, Inc. since 1992; Senior Vice
President of Congress Street Properties,
Inc., Eastover Corporation, EB, Inc., The
Parkway Company and Rockwood National
Corporation until 1994.
- ---------------
<FN>
There are no family relationships between any of the trustees or executive
officers of the Trust.
</TABLE>
EXECUTIVE COMPENSATION
Until December 31, 1994, the executive officers of the Company also served
as executive officers of all the Expense-Sharing Participants (described below),
which participated in the expense-sharing agreement described below. Their
salaries were paid by Congress Street Properties, Inc. ("Congress Street") and
then allocated among the members of the Expense-Sharing Participants in
accordance with the allocation formula set forth in the agreement.
5
<PAGE> 8
The following table summarizes, for the fiscal years ended December 31,
1994, 1993 and 1992 the amount of the compensation allocated to the Company that
was paid by Congress Street to the Company's Chief Executive Officer and all
other officers whose cash compensation service to all of the Expense-Sharing
Participants during the year ended December 31, 1994 exceeded $100,000 (the
"Named Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS
----------------------------------- ------------------------------------------
NAME AND OTHER ANNUAL OPTIONS/ LTIP PAYOUTS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS(2) $(3) COMPENSATION(4)
- ------------------------ ---- -------- ------- ------------ ------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leland R. Speed......... 1994 $139,423 $58,715 -0- 50,000 $ 23,047 $ 5,145
Chief Executive 1993 113,367 -0- -0- -0- 13,608 6,664
Officer 1992 131,027 30,179 -0- -0- 4,230 6,028
David H. Hoster II...... 1994 $ 89,977 $42,314 -0- 40,000 21,203 5,145
President 1993 72,240 12,230 -0- -0- 12,519 4,991
1992 78,360 12,031 -0- -0- 3,892 4,245
Steven G. Rogers........ 1994 $ 73,770 $30,996 -0- 5,000 18,438 5,145
Senior Vice-President 1993 60,051 15,288 -0- -0- 10,886 5,019
1992 76,470 15,038 -0- -0- 3,384 3,261
N. Keith McKey.......... 1994 $ 63,911 $30,103 -0- 25,000 13,828 4,397
Executive 1993 51,900 3,669 -0- -0- 8,165 2,878
Vice-President, 1992 48,332 3,609 -0- -0- 2,538 2,441
Chief Financial
Officer
and Secretary
- ---------------
<FN>
(1) All amounts are the Trust's share of the particular Named Officer's
compensation as allocated under the expense-sharing agreement.
(2) These options were granted under the Trust's 1994 Management Incentive Plan
(the "1994 Incentive Plan") and become exercisable with respect to one-half
the shares on the first anniversary date of grant and one-half the shares on
the second anniversary date of grant.
(3) These payments were made under Incentive Compensation Units granted under
the Trust's 1989 Incentive Plan (the "1989 Plan"). The amount for 1994
includes a payment made in December 1994 in consideration of the officer
agreeing to cancel the remaining term of the Incentive Compensation Units,
which payment was made in Shares. An Incentive Compensation Unit was a right
to receive an amount equal to the dividend paid on a specified number of
Shares during a five year period beginning on the date of the grant of the
unit. The amount that was payable with respect to an Incentive Compensation
Unit was credited to an account for the holder of such unit. The grantee of
the Incentive Compensation Unit shall be entitled to a cash payment of 20%
of the amount in the account on the first anniversary date of its grant, 40%
on the second anniversary date, 60% on the third anniversary date, 80% on
the fourth anniversary date and 100% on the fifth anniversary date.
(4) This amount is the Trust's share of Congress Street's discretionary
contribution to a 401(k) plan for the respective Named Officer's benefit.
</TABLE>
Option Grants. The following table gives information with respect to
options granted to the Named Officers during the year ended December 31, 1994.
The "Potential Realizable Value" columns assume that
6
<PAGE> 9
the price of Shares will appreciate at annual rates of 5% and 10%, respectively,
during the term of the options. There can be no assurance that such appreciation
will take place.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- --------------------------------------------------------------------- VALUE AT ASSUMED
(B) ANNUAL RATES OF
NUMBER OF (C) STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS/SARS (D) OPTION TERM
OPTIONS/ GRANTED TO EXERCISE -----------------------
SARS EMPLOYEES OR BASE (E)
(A) GRANTED IN FISCAL PRICE EXPIRATION (F) (G)
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------- ---------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Leland R. Speed................ 50,000(1) 27.4% $ 19 9/21/04 $1,548,500 $2,460,500
David H. Hoster II............. 40,000(1) 21.9 19 9/21/04 1,238,800 1,968,400
Steven G. Rogers............... 5,000(1) 2.7 19 9/21/04 154,850 246,050
N. Keith McKey................. 25,000(1) 13.7 19 9/21/04 774,250 1,230,250
- ---------------
<FN>
(1) These Options were granted on September 22, 1994 and vest one-half on the
first anniversary date of grant and one-half on the second anniversary date
of grant.
</TABLE>
Option Exercises and Year End Values. The following table shows the value
realized by the Named Officers upon the exercise of options and SARs and the
year end value of unexercised in-the-money options held by the Named Officers.
Year end values are based upon the closing price of Shares on the New York Stock
Exchange on December 30, 1994 ($18.125).
AGGREGATED OPTIONS/SAR EXERCISES WITH LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired Value Number of Unexercised In-The-Money Options
Name on Exercise Realized Options at FY-End(#) at FY-End($)
---- ----------- ------- -------------------- ---------------------
Exercisable/Unexercisable(1) Exercisable/Unexercisable
---------------------------- -------------------------
<S> <C> <C> <C> <C>
Leland R. Speed.............. 25,000 $275,000 0/50,000 $0/$0
Chief Executive Officer
David H. Hoster II........... 23,000 255,500 0/40,000 $0/$0
President
Steven G. Rogers............. 15,000 138,750 0/ 5,000 $0/$0
Senior Vice President
N. Keith McKey............... 15,000 172,500 0/25,000 $0/$0
Executive Vice President,
Chief Financial Officer and
Secretary
- ---------------
<FN>
(1) The unexercisable options represent the options granted to the Named Officer
on September 22, 1994 under the 1994 Incentive Plan.
</TABLE>
Compensation Committee Report. The Compensation Committee of the Board of
Trustees consists of Messrs. Bailey, Palmer and Anagnos. Prior to December 31,
1994, the primary obligation of the Compensa-
7
<PAGE> 10
tion Committee was to evaluate the performance of the employees for the purpose
of determining whether to grant options under the 1994 Incentive Plan and to
determine the amount of awards, if any, payable to executive officers under the
Trust's Incentive Compensation Plan (i.e. bonus plan). Because of the structure
of the expense-sharing agreement under which (i) Congress Street provided the
facilities and personnel necessary to operate the Trust's day-to-day business
and (ii) the executive officers of the Trust were also executive officers of the
other Expense-Sharing Participants and were compensated by Congress Street,
decisions with respect to most of the salary and benefits for officers of the
Trust were made by Congress Street. However, certain members of the Trust's
Compensation Committee were also on the Compensation Committee of Congress
Street, so the Compensation Committee had input into the base compensation and
any bonus compensation paid to the Trust's executive officers through their
positions on the Compensation Committee of Congress Street.
The Compensation Committee believes that the main purpose of base
compensation is to provide sufficient base compensation to the executive
officers of the Company relative to salary levels for other real estate
companies and the officer's level of responsibility. With respect to Mr. Speed,
the chief executive officer of the Trust and the other Expense-Sharing
Participants, the Committee considered a number of factors in setting his
compensation, the most important of which were the level of compensation paid to
the chief executive officers of other real estate companies the same relative
size as the Expense-Sharing Participants, solely with respect to the Trust, the
success of the Trust's recent program of acquiring new properties and his
importance in delineating and implementing the Trust's strategic plans.
The year ended December 31, 1994 was the last for the Trust's incentive
compensation program adopted in 1991. Under this program, the Trust set aside a
bonus pool of 15% of the amount by which the Trust's funds from operations
exceeded $2.00 times the weighted average number of Shares outstanding for the
year. During 1994, this bonus pool amounted to $122,000. Of this amount, $45,768
was paid to Mr. Speed, $29,514 to Mr. Hoster, $20,960 to Mr. McKey, and $15,758
to Mr. Rogers. The bonus amounts were determined primarily in relation to base
salary. This incentive compensation program has been replaced by the incentive
award portion of the 1994 Incentive Plan.
The Compensation Committee believes that stock-based incentive compensation
encourages senior management to operate in a manner consistent with the best
interests of the Trust's shareholders. In the summer of 1994, the Compensation
Committee, in conjunction with the Compensation Committee of The Parkway Company
(another Expense-Sharing Participant), retained an independent consultant, and
with such consultant conducted a comprehensive review of the Trust's
compensation policies and practices. After the review, the Compensation
Committee decided that the primary goals of the Trust's compensation policies
should be as follows:
- To provide total compensation opportunities for executive officers which
are competitive with those provided to persons in similar positions with
which the Company competes for employees.
- To strengthen the mutuality of interest between management and
shareholders through the use of incentive compensation directly related
to corporate performance and through the use of stock-based incentives
that result in increased Share ownership by executive officers.
- To eliminate adverse accounting charges and to simplify reporting of
plans to participants and investors.
As a result of this study, the Trust has adopted the 1994 Incentive Plan,
which was approved by the Trust's shareholders at the 1994 annual meeting. The
option grants described in "Executive Compensation"
8
<PAGE> 11
were made under the 1994 Incentive Plan. The Compensation Committee believes
that the 1994 Incentive Plan aligned and will continue to align the interests of
the executive officers with those of the shareholders by (i) requiring the
Trust's executive officers to exercise outstanding options and SARs as a
condition to receiving new grants, thereby increasing the officers' equity
ownership in the Company, (ii) basing incentive awards on funds from operations
per share, which the Company and the real estate investment trust industry
believe to be an important measure of the financial performance of a real estate
investment trust and (iii) paying one-third of each incentive award in Shares.
The Compensation Committee will continue to evaluate the above plan to ensure
that it is providing the incentives for which it was intended.
H.C. BAILEY, JR.
JOHN N. PALMER
ALEXANDER G. ANAGNOS
Performance Comparison. Set forth below is a line graph comparing the
percentage change in the cumulative return to shareholders on the Trust's Shares
over the five years ending December 31, 1994 against the cumulative return of
the Standard & Poor's 500, and the Equity REIT Index prepared by the National
Association of Real Estate Investment Trusts ("NAREIT").
<TABLE>
<CAPTION>
Measurement Period NAREIT
(Fiscal Year Covered) The Trust S&P 500 Equity
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 69.29 96.90 84.65
1991 84.75 126.43 114.86
1992 123.53 136.06 131.62
1993 163.20 149.77 157.49
1994 156.12 151.45 162.49
</TABLE>
Trustees' Fees. Under the Trust's standard compensation arrangements with
trustees (except Mr. Speed and Mr. Hoster, who are salaried officers), trustees
are paid a monthly stipend of $500, plus $1,000 and reimbursement of actual
expenses for attendance at each meeting of the Board and $750 and reimbursement
of expenses for each meeting of a committee established by the Board. Only one
fee is paid in the event more than one meeting is held on a single day.
9
<PAGE> 12
Trustees Stock Option Plan. At the 1991 Meeting, the shareholders of the
Trust approved the EastGroup Properties 1991 Trustees Stock Option Plan (the
"Trustees Plan"). The Trustees Plan authorizes the issuance of options for up to
100,000 Shares to trustees of the Trust who are not, and have not been for at
least one year prior to the date of determination, employees of the Trust
("Non-Employee Trustees"). Under the Trustees Plan, each Non-Employee Trustee of
the Trust on March 15, 1991 was automatically granted an option to purchase
5,000 Shares. Each person who first becomes a Non-Employee Trustee after March
15, 1991 will automatically be granted an option to purchase 5,000 Shares on the
date the person becomes a Non-Employee Trustee, if such Shares are available.
Each Non-Employee Trustee will also be granted an option to purchase 1,500
additional Shares on the date of any annual meeting at which such Non-Employee
Trustee is reelected to the Board. The option exercise price is the closing
price of a Share if the Trust's Shares are listed on an exchange or the average
between the bid and the asked price for the date if the Shares are traded over-
the-counter (or, if no Shares were publicly traded on that date, the next
preceding date that such Shares were so traded). Such options are exercisable in
full on the date of grant and expire ten years after the date of grant, or, if
earlier, six months after the termination of the optionee's service as a
Non-Employee Trustee, unless such service is terminated by reason of death, in
which case the optionee's legal representative shall have one year in which to
exercise the option.
No options were exercised by trustees under the Trustees Plan during 1994.
On December 16, 1994, Mr. Palmer was granted an option to purchase 5,000 Shares
and Messrs. Bailey, Judell and Osnos were granted options to purchase 1,500
Shares at an exercise price of $16.875 per Share. On December 22, 1994, Mr.
Anagnos was granted an option to purchase 5,000 Shares at an exercise price of
$17.00 per Share.
EXPENSE-SHARING AGREEMENT
Description of Arrangements. Until December 31, 1994, the Trust had an
expense-sharing agreement with Congress Street, The Parkway Company ("Parkway")
and Eastover Corporation ("Eastover") (which are more fully described below)
pursuant to which the participants shared administrative offices at the same
location in Jackson, Mississippi and common officers and other personnel,
subject to the authority of the board of each member company to elect or appoint
and remove its officers in accordance with its certificate of incorporation,
declaration of trust or other charter documents and applicable law. EB, Inc.
("EB") had a separate administrative agreement with Congress Street which
allowed EB to participate in the expense-sharing agreement on the same basis as
the companies which were parties to the expense-sharing agreement. Under this
arrangement, the participants shared the cost of the common officers and other
employees and of shared facilities and activities. These common costs were
initially paid by Congress Street, which served as the administrator of the
arrangement, and the other participants paid Congress Street an annual fee (on a
monthly basis) of one-half of one percent of their assets which were
publicly-traded securities. After these fees and any profits of Eastover Realty
Corporation (see "Eastover Realty Corporation" below) were subtracted from total
common costs, the remaining common costs were allocated on a monthly basis among
the Trust, Parkway, Congress Street, Eastover and EB in proportion to their
assets other than publicly-traded securities, based on their balance sheets as
contained in their most recent SEC filing. Certain costs which the common
officers believed to be particularly attributable to each member company were
not shared. These non-allocable costs included but were not limited to
directors' and trustees' fees, legal, audit and stock transfer expenses,
stationery and items of similar nature. Since the allocation formula was not
based upon actual costs incurred by each member company, the allocation may
have, from time to time, resulted in a greater or lesser charge to each member
company than would have resulted if actual costs to each member company were
allocated.
10
<PAGE> 13
LNH REIT, Inc. ("LNH") also had a separate administration agreement with
Congress Street pursuant to which LNH shared common offices and personnel with
Congress Street, Parkway, EB and the other participants, and LNH paid Congress
Street a fixed annual fee of $125,000. The Trust assumed Congress Street's
obligations under this agreement on January 1, 1995.
Because conflicts of interest may have arisen from the management of the
participating companies by common officers, agreements governing these
expense-sharing arrangements included the following provisions designed to
prevent such conflicts of interest and to deal with those that have arisen on an
equitable basis:
(1) Subject to the conditions described below, when officers submit and
recommend to the board of any company the proposed acquisition of any property
or security, the officers of that company shall cause the same opportunity to be
presented to the board of each of the other companies. If two or more of the
companies determine to participate in the transaction, the provisions of
paragraph (3) below will govern. Notwithstanding the foregoing provisions, an
investing company need not present an investment opportunity to another company
if it proposes to purchase securities issued by it or if, in the good faith
judgment of their common officers, the investment opportunity involves the
acquisition of (i) an investment which is one in which that company would not
invest because it does not come under that company's Investment Strategy (as
defined below), (ii) property in which the investing company has an existing
ownership or other type of interest and the latter company has none, or (iii)
securities of an issuer in which the investing company has an existing
investment and the latter company has none. Whenever any company authorizes the
sale, transfer or modification of its interest in a property or of its holdings
of securities of an issuer, it must so inform the board of each company which
also has an interest in that property or which owns securities of that issuer;
unless impractical to do so, that information must be given to the board of the
latter company at the next scheduled meeting of the board of the latter company.
If the board of the latter company authorizes similar action, the provisions of
paragraph (3) will govern.
(2) No company will sell any property or security to, or purchase any
property or security from, any other company unless that sale or purchase is
approved and determined to be fair to each company in the transaction by a
majority of the trustees or directors of that company who are not affiliated as
officers, trustees, directors or controlling persons of any other company in the
transaction.
(3) Whenever two or more of the companies shall concurrently undertake to
acquire or dispose of interests in the same property or in the same class of
securities under circumstances in which it appears likely that the price or
other consideration to be paid or received will not be equal for all property or
securities to be acquired or disposed of in a single transaction, the property
or securities will be acquired or disposed of in such a manner that, as nearly
as feasible, each company will participate in each transaction in proportion to
the total amount of such property or securities which its board has determined
to acquire or dispose of until each company has acquired or disposed of the
total amount of that property or class of security which its board has
determined to acquire or dispose of. In the event that the boards have not
determined in advance the total amount to be acquired or disposed of or the
participating companies desire in the aggregate to acquire more than is
available, the participation of each company in each transaction will be
proportionate to its total assets as shown on its balance sheet as at the close
of its quarterly fiscal period ended on or prior to the date of that
transaction, or, if that balance sheet is not available, as at the close of the
latest quarterly fiscal period for which a balance sheet is available. The
provisions of this paragraph may be modified with respect to a particular
transaction by the board of each company if it appears that such modification is
required in the interests of fairness, but any such modification must be
approved by majorities of the trustees or directors of each company
participating in the transaction, including a majority of the trustees or
directors of each
11
<PAGE> 14
participating company who are not officers, trustees, directors or controlling
persons of any other company participating in the transaction.
(4) Each company shall from time to time provide each of the other
companies with a statement approved by that company's board of directors or
trustees setting forth that company's present strategy with respect to the
acquisition of additional property or other investments, describing the type of
assets which that company desires to purchase, that company's financial and
other objectives with respect to investments, the types of assets in which that
company does not wish to invest, and any other factors deemed appropriate by the
company's board of directors or trustees (the "Investment Strategy"). A company
may change its Investment Strategy by giving notice to the other companies, and
such change shall take effect 30 days after the date of the notice.
The expense-sharing agreement was in effect from year to year and was
automatically renewable although any participant may have terminated its
participation in the arrangement at any time upon 60 days notice (or a shorter
period if necessary for a participating real estate investment trust to maintain
its tax status). If a participant did terminate, the expense-sharing agreement
would remain in effect with the remaining participants so long as Congress
Street had not given notice of termination. The expense-sharing agreement
contemplated that other real estate companies may have participated in the
future upon the same terms, unless one or more of the other participating
companies objected.
Background of Participants. The participants and the dates they began
participating in the expense-sharing arrangement are as follows: The Trust,
since 1983; Congress Street, a former Delaware corporation engaged in the real
estate business which merged with a wholly-owned subsidiary of Parkway on
November 29, 1994, since 1984; Eastover, a former Louisiana real estate
investment trust which merged with a wholly-owned subsidiary of the Trust on
December 22, 1994, since 1979; EB, a Mississippi corporation since 1993; and
LNH, a Maryland corporation operating as a real estate investment trust, since
1992. (The companies which participated in the expense-sharing arrangement,
including LNH, are collectively referred to herein as the "Expense-Sharing
Participants.")
Total Assets and Common Costs. The following table shows the total assets
of each of the participants in the expense-sharing arrangement that were
publicly-traded securities and assets other than publicly-traded securities as
shown on their most recent publicly available balance sheets, the date of such
balance sheets and the percentage relationship of each participant's
non-securities assets to the total non-securities assets of all participants as
a group.
<TABLE>
<CAPTION>
AMOUNT OF ASSETS
AMOUNT OF ASSETS OTHER THAN PERCENT OF TOTAL
DATE OF THAT ARE PUBLICLY PUBLICLY TRADED NON-SECURITIES
NAME OF COMPANY(1) BALANCE SHEET TRADED SECURITIES(2) SECURITIES(2) ASSETS OF GROUPS
- ------------------------------ ------------- -------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
the Trust..................... 9/30/94 $ 978,000 $149,940,000 68.60%
Parkway....................... 9/30/94 16,371,000 46,083,000 21.08
Eastover...................... 9/30/94 14,551,000 385,000 .18
EB............................ 9/30/94 14,154,000 22,164,000 10.14
Congress Street............... 8/31/94 11,957,000 -- (3) -- (3)
- ---------------
<FN>
(1) Asset information as to LNH is not included because it paid a fixed annual
fee as its contribution to the expense-sharing agreement.
(2) Asset figures are unaudited with respect to all companies.
(3) Number is negative and assumed to be zero for purposes of allocating common
costs.
</TABLE>
12
<PAGE> 15
During the twelve months ended December 31, 1994, a total of $2,133,913 of
common costs were incurred by the Trust, Parkway, Eastover, Congress Street and
EB. These common costs were allocated under the expense-sharing arrangement as
follows: $1,225,021 to the Trust; $508,041 to Parkway; $74,617 to Eastover;
$50,745 to Congress Street; and $275,489 to EB.
Termination of Arrangements. In connection with the business combinations
involving the Expense-Sharing Participants (i.e., Congress Street merged with a
wholly-owned subsidiary of Parkway on November 29, 1994, EB is combining with
Parkway and Eastover combined with the Trust on December 22, 1994), the above
described expense-sharing arrangements terminated on December 31, 1994. Since
that date, the Trust and Parkway each have their own respective officers and
employees, who do not serve as officers or employees of the other company,
except for Leland R. Speed, who continues to serve as the Chief Executive
Officer of both companies, and a small number of clerical and support staff
employees. The officers of the Trust also continue to serve as officers of LNH;
in addition, the President of Parkway -- Steven G. Rogers -- continues to serve
as an officer of LNH. David H. Hoster II and N. Keith McKey, who formerly served
as officers of all the Expense-Sharing Participants, now serve as officers of
the Trust and LNH and not Parkway.
Eastover Realty Corporation. Eastover Realty Corporation ("Eastover
Realty"), currently a wholly-owned subsidiary of Parkway and prior to November
29, 1994, a wholly-owned subsidiary of Congress Street, manages several
commercial and multi-family residential properties, for which it receives
management fees. Eastover Realty also performs leasing and brokerage services on
a commission basis. Pursuant to an understanding among the Expense-Sharing
Participants, any income derived from Eastover Realty was used to offset common
costs under the expense-sharing arrangements.
CERTAIN TRANSACTIONS
Until December 31, 1994, the Trust retained Eastover Realty to be the
rental and operating manager of Pin Oaks Apartments ("Pin Oaks") and 8150
Leesburg Pike. The fee payable to Eastover Realty with respect to Pin Oaks is 3%
of the gross collections of Pin Oaks. Gross collections means all amounts
actually collected as rents for use and occupancy of the property. For the year
ended December 31, 1994, the Trust paid Eastover Realty $29,264 in management
fees with respect to Pin Oaks. The management fee for Leesburg Pike was 3% of
gross revenues, and Eastover Realty also receives leasing commissions equal to
1.5% of the total fixed minimum rent payable for new leases and 0.5% of the
total fixed minimum rent payable for renewals or expansion of leases. For the
year ended December 31, 1994, the Trust paid Eastover Realty $91,152 in
management fees with respect to Leesburg Pike.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees has not appointed a firm to act as the Trust's
auditors for the year ending December 31, 1995. KPMG Peat Marwick LLP ("Peat
Marwick") served as auditors for the Trust since the Trust's inception. A
representative of Peat Marwick is expected to be present at the Annual Meeting
and will have an opportunity to make a statement, if he so desires, and will be
available to respond to appropriate questions.
13
<PAGE> 16
OTHER MATTERS
The trustees know of no business to be brought before the Annual Meeting
other than as set forth above. If, however, any other business should properly
come before the meeting, it is the intention of the persons named in the
enclosed form of proxy to vote such proxies in accordance with their best
judgment on such matters.
SHAREHOLDER PROPOSALS FOR THE 1996
ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals must be received by the Trust at its office at 300
One Jackson Place, 188 East Capitol Street, Jackson, Mississippi 39201 no later
than December 27, 1995, in order to be considered for inclusion in the Trust's
proxy materials for the 1996 Annual Meeting of Shareholders.
By Order of the Board of Trustees
N. KEITH MCKEY
Executive Vice-President, Chief
Financial Officer
and Secretary
- ---------------
The name EastGroup Properties is the designation of the Trust under the
Restated Declaration of Trust made as of December 14, 1971, as amended from time
to time. Under the terms of such Restated Declaration of Trust, no trustee,
shareholder, officer, employee or agent of the Trust shall be personally liable
for, nor shall resort be had to his private property for the satisfaction of,
any claim against or obligation of the Trust. All persons dealing with the Trust
must look solely to the Trust's property for satisfaction of any such claim or
obligation.
14
<PAGE> 17
<TABLE>
<S> <C>
EASTGROUP PROPERTIES THIS PROXY IS SOLICITED ON BEHALF
300 One Jackson Place OF THE BOARD OF TRUSTEES
188 East Capitol Street
P Jackson, Mississippi 39201
R The undersigned hereby appoints LELAND R. SPEED and H. C. BAILEY,
JR., and each or either of them, Proxies
O for the undersigned, with full power of substitution, to vote all
Shares of Beneficial Interest of EastGroup Properties (the "Trust")
X which the undersigned would be entitled to vote at the Annual
Meeting of Shareholders to be held at the Edison Walthall Hotel,
Y 225 East Capitol Street, Jackson, Mississippi, on Thursday, June 1,
1995, at 11:00 a.m., Jackson time, or any adjournment thereof, and
directs that the shares represented by this Proxy shall be voted as
indicated below:
<S> <C>
Election of Trustees: (change of address)
Alexander G. Anagnos; H. C. Bailey, Jr.; David H. Hoster II; _____________________________________
Harold B. Judell; David M. Osnos; John N. Palmer; and _____________________________________
Leland R. Speed. _____________________________________
_____________________________________
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
</TABLE>
NOTE: THE HOLDERS OF THIS PROXY RESERVE THE RIGHT TO CUMULATE THEIR
VOTES AND DISTRIBUTE THEM AMONG THE NOMINEES AS DIRECTED BY THE BOARD
OF TRUSTEES OR, IF NOT SO DIRECTED, IN THEIR DISCRETION SO AS TO ELECT
AS MANY OF THE NOMINEES FOR TRUSTEE NAMED IN THE ACCOMPANYING PROXY
STATEMENT AS POSSIBLE. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY
MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK
ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
TRUSTEES' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS
YOU SIGN AND RETURN THIS CARD. _______________
| SEE REVERSE |
| SIDE |
|_______________|
<PAGE> 18
<TABLE>
<S> <C> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
<CAPTION>
<S> <C> <C> <C>
1. Election of FOR WITHHELD 2. In their discretion, the Proxies are authorized to
Trustees vote upon such other business as may properly
(see reverse) come before the meeting or any adjournments
thereof.
For, except vote withheld from the following nominee(s):
THE SHARES REPRESENTED BY THIS PROXY
- -------------------------------------------------------- WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. THE BOARD OF TRUSTEES
FAVORS A VOTE FOR PROPOSAL 1. IF NO
DIRECTION IS MADE, THE PROXY WILL BE
VOTED FOR THAT PROPOSAL.
Change / / Please date and sign name exactly as it
of / / appears hereon and return this Proxy promptly
Address / / in the enclosed envelope, which requires no
postage if mailed in the United States.
/ /
Attend / /
Meeting / /
SIGNATURE(S) _________________________________________________________ DATE __________________
SIGNATURE(S) _________________________________________________________ DATE __________________
NOTE: Joint owners should each sign. Executors, administrators, trustees, guardians and corporate officers should give title.
</TABLE>
