<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:
[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 Section 240.14a-11(c) or Section 240.14a-12
PARKWAY PROPERTIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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
PARKWAY PROPERTIES, INC.
ONE JACKSON PLACE
SUITE 1000
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
NOTICE OF
1997 ANNUAL STOCKHOLDERS' MEETING
To the Stockholders:
Notice is hereby given that the 1997 Annual Meeting of Stockholders (the
"Meeting"), of Parkway Properties, Inc. (the "Company"), will be held at the
Company's offices, One Jackson Place, Suite 1000, 188 East Capitol Street,
Jackson, Mississippi, at 1:30 p.m., Jackson time, on June 6, 1997 for the
following purposes:
1. To elect nine directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified;
2. To consider and take action on certain amendments to the Company's
Articles of Incorporation concerning the settlement of transactions
entered into through the facilities of any interdealer quotation system
or national securities exchange on which shares of the capital stock of
the Company are traded;
3. To consider and take action on a proposal to approve the adoption of the
Company's 1997 Non-Employee Directors' Stock Ownership Plan;
4. To consider and take action on amendments to the 1991 Directors Stock
Option Plan which (a) increases the number of shares of common stock,
par value $0.001 per share, of the Company ("Shares"), to be granted
pursuant to an option awarded to each director (who is not also an
employee of the Company) on the date of any annual meeting at which such
director is reelected to the Board of Directors from 2,250 Shares to
3,000 Shares and (b) increases the number of Shares available under the
1991 Directors Stock Option Plan from 150,000 to 250,000; and
5. To consider and take action upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 16, 1997 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
SARAH P. CLARK
Vice President, Chief Financial
Officer,
Treasurer and Secretary
Date: , 1997
STOCKHOLDERS 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
, 1997
PARKWAY PROPERTIES, INC.
ONE JACKSON PLACE
SUITE 1000
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 6, 1997
The following information is furnished in connection with the Annual
Meeting of Stockholders (the "Meeting"), of Parkway Properties, Inc. (the
"Company"), to be held on June 6, 1997 at 1:30 p.m., Jackson time, at the
Company's offices, One Jackson Place, Suite 1000, 188 East Capitol Street,
Jackson, Mississippi. A copy of the Company's Annual Report to Stockholders for
the fiscal period ended December 31, 1996 accompanies this Proxy Statement.
Additional copies of the Annual Report, Notice, Proxy Statement and form of
proxy may be obtained from the Company's Secretary, P.O. Box 22728, Jackson,
Mississippi 39225-2728. This Proxy Statement, Annual Report, and form of proxy
will first be sent to stockholders on or about , 1997.
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy for the Meeting is being solicited by the directors of
the Company. The proxy may be revoked by a stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy may also be
revoked by a stockholder attending the Meeting, withdrawing such proxy and
voting in person. The cost of soliciting the proxies on the enclosed form will
be paid by the Company. In addition to the use of the mails, proxies may be
solicited by the directors 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
Company 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 common stock, $0.001 par value
per share, of the Company ("Shares"), entitled to vote at the Meeting has been
fixed at the close of business on April 16, 1997. On such date there were
Shares outstanding, entitled to one vote each. The Share amounts and per
Share information set forth in this proxy statement give retroactive effect to a
three-for-two stock split effected by the Company on April 30, 1996.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), beneficially owned, as of January 31, 1997 more than five
percent of the Shares outstanding, except as set forth in the following table.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
----------------------------------------------------------- ------------------ --------
<S> <C> <C>
Morgan Stanley Group Inc.
1585 Broadway
New York, New York 10036................................... 488,000(1) 8.11%
</TABLE>
- ---------------
(1) Based upon an amended Statement on Schedule 13G filed with the Securities
and Exchange Commission (the "SEC"), which indicated that Morgan Stanley
Group Inc. ("Morgan Stanley"), had shared voting power with its wholly-owned
subsidiary Morgan Stanley Asset Management Inc. ("MSAM"), with respect to
70,400 Shares and shared dispositive power with MSAM with respect to 488,000
Shares, and which include 244,000 Shares with respect to which Morgan
Stanley's wholly-owned subsidiary, Morgan Stanley Institutional Fund
Inc.--U.S. Real Estate Portfolio, has shared dispositive power.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the Shares beneficially owned, as of January
31, 1997 by each director and executive officer of the Company. Unless otherwise
stated, each person has sole voting and investment power with respect to the
Shares set forth in the table.
<TABLE>
<CAPTION>
AMOUNT PERCENT
NAME BENEFICIALLY OWNED OF CLASS
----------------------------------------------------------- ------------------ --------
<S> <C> <C>
Daniel C. Arnold........................................... 35,302(1) *%
George R. Farish........................................... 14,851(2) *
Roger P. Friou............................................. 25,701(3) *
Joe F. Lynch............................................... 61,617(1) 1.02
C. Herbert Magruder........................................ 66,413(4) 1.10
W. Lincoln Mossop, Jr...................................... 24,250(1) *
Leland R. Speed............................................ 166,522(5) 2.76
Steven G. Rogers........................................... 112,037(6) 1.85
Sarah P. Clark............................................. 15,772(7) *
James M. Ingram............................................ 13,575(8) *
David R. Fowler............................................ 9,579(9) *
G. Mitchel Mattingly....................................... 19,437 *
------- ----
Directors and officers as a group.......................... 565,056(10) 9.17
======= ====
</TABLE>
- ---------------
* Less than 1%.
2
<PAGE> 5
(1) Includes 14,250 Shares the indicated person has the right to acquire under
the 1991 Directors Stock Option Plan, as amended (the "1991 Directors
Plan").
(2) Includes 6,750 Shares Mr. Farish has the right to acquire under the 1991
Directors Plan.
(3) Includes 2,250 Shares Mr. Friou has the right to acquire under the 1991
Directors Plan.
(4) Includes 14,250 Shares Dr. Magruder has the right to acquire under the 1991
Directors Plan. Does not include 450 Shares beneficially owned by Dr.
Magruder's wife, as to which he disclaims beneficial ownership.
(5) Includes 16,210 Shares Mr. Speed has the right to acquire pursuant to
exercisable options granted under the 1994 Stock Option Plan. Does not
include 97,592 Shares owned by members of Mr. Speed's family, as to all of
which Mr. Speed disclaims beneficial ownership.
(6) Includes 48,437 Shares Mr. Rogers has the right to acquire pursuant to
exercisable options granted under the 1994 Stock Option Plan. Does not
include 12,040 Shares beneficially owned by Mr. Rogers' wife as to which he
disclaims beneficial ownership.
(7) Includes 2,872 Shares Ms. Clark has the right to acquire pursuant to
exercisable options granted under the 1994 Stock Option Plan.
(8) Includes 8,575 Shares Mr. Ingram has the right to acquire pursuant to
exercisable options granted under the 1994 Stock Option Plan.
(9) Includes 4,987 Shares Mr. Fowler has the right to acquire pursuant to
exercisable options granted under the 1994 Stock Option Plan.
(10) Includes 66,000 Shares that the directors of the Company have the right to
acquire under the 1991 Directors Plan and 81,081 Shares that officers of
the Company have the right to acquire pursuant to exercisable options
granted under the Company's 1994 Stock Option Plan.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
In accordance with the Bylaws of the Company, the Board of Directors has by
resolution fixed the number of directors to be elected at the Meeting at nine.
All nine positions on the Board are to be filled by the vote of the stockholders
at the Meeting. Each person so elected shall serve until the next Annual Meeting
of Stockholders and until his successor is elected and qualified.
The directors of the Company recommend a vote FOR the nominees listed
below. All nominees, except Mr. Lipsey, are currently serving as directors of
the Company and were elected at the 1996 Annual Meeting of Stockholders.
Unless instructed otherwise, proxies will be voted FOR the nominees listed
below. Although the directors do not contemplate that any of the nominees will
be unable to serve prior to the Meeting, if such a situation arises, the
enclosed proxy will be voted in accordance with the best judgment of the person
or persons voting the proxy.
3
<PAGE> 6
The table below sets forth certain information regarding the nominees for
election to the Company's Board of Directors.
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Daniel C. Arnold.............. 67 Private investor; Director of Farm & Home Savings
Director since 1994 Association from 1989 to 1994.
George R. Farish.............. 44 Chief Executive Officer of Houston Savings
Director since 1981 Association.
Roger P. Friou................ 62 Private investor; Director of Jitney Jungle Stores of
Director since 1995 America, Inc. (a regional supermarket chain) from
1991 to 1997, its President from 1996 to 1997, and
its Vice Chairman and Chief Financial Officer from
1991 to 1996.
Michael J. Lipsey............. 47 President of The Lipsey Company (provides training
Nominee for Director and consulting services for national and
international clients, encompassing all aspects of
the commercial real estate industry).
Joe F. Lynch.................. 64 Consultant to the Company since 1994; Chairman of the
Director since 1994 Board and Chief Executive Officer of First
Continental Corporation (a real estate company) since
1994; Chairman of the Board and Chief Executive
Officer of First Continental Real Estate Investment
Trust from 1989 to 1994; Vice Chairman of the Board
of Farm & Home Financial Corporation and of Farm &
Home Savings Association from 1991 to 1994.
C. Herbert Magruder........... 64 Physician and a partner in the medical firm of
Director since 1988 Carolina Pathology Associates.
W. Lincoln Mossop, Jr......... 63 General partner, President and Chief Executive
Director since 1986 Officer until 1997 of Barrett & Co. (securities
brokers and dealers and a member firm of the Boston
Stock Exchange, Inc.).
Steven G. Rogers.............. 42 President and Chief Operating Officer of the Company
Director since 1996; since 1993, Director of the Company since 1996 and
President and Chief Senior Vice President of the Company from 1988 to
Operating Officer since 1993 1993; Senior Vice President of LNH REIT, Inc. ("LNH")
from 1992 to 1996; Senior Vice President of Congress
Street Properties, Inc. ("Congress Street"), Eastover
Corporation ("Eastover"), EastGroup Properties
("EastGroup") and Rockwood National Corporation
("Rockwood") until 1994 and EB, Inc. ("EB") until
1995.
Leland R. Speed............... 64 Chief Executive Officer of the Company and EastGroup;
Chairman and Director since Chief Executive Officer of LNH from 1992 to 1996;
1978; Chief Executive Chief Executive Officer of Congress Street, Eastover
Officer since 1980 and Rockwood until 1994 and EB until 1995.
</TABLE>
- ---------------
(1) Unless otherwise stated, each nominee has held the position indicated for at
least the past five years.
4
<PAGE> 7
OTHER DIRECTORSHIPS AND TRUSTEESHIPS
Members of the Board of Directors serve on the Boards of Directors or the
Boards of Trustees of the following publicly held companies:
<TABLE>
<CAPTION>
NOMINEE COMPANY
- ----------------------------------- ------------------------------
<S> <C>
Daniel C. Arnold................... U.S. Physical Therapy Inc.
Belco Oil & Gas Corp.
W. Lincoln Mossop, Jr.............. Citizens Growth Properties
Leland R. Speed.................... ChemFirst Inc.
EastGroup
Farm Fish, Inc.
KLLM Transport Services, Inc.
</TABLE>
COMMITTEES AND MEETING DATA
The Audit Committee of the Board of Directors currently consists of Messrs.
Farish, Lynch and Mossop. The functions performed by this Committee consist
principally of conferring with and reviewing the reports of the Company's
independent accountants and bringing to the entire Board of Directors for review
those items relating to audits or accounting practices which the Audit Committee
believes merit such review. The Audit Committee met twice during the year ended
December 31, 1996.
The Compensation Committee of the Board, which currently consists of
Messrs. Arnold, Friou and Magruder, met twice during the year ended December 31,
1996. The Committee's function is to recommend compensation levels for officers
and review compensation levels for officers and administer the Company's 1994
Stock Option Plan.
The Company does not have a standing nominating committee or any committee
performing a similar function.
During the year ended December 31, 1996, the full Board of Directors met on
seven occasions. Each director, except Mr. Arnold, attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number of
meetings held by all committees of the Board on which he served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that directors, officers and
more than 10 percent stockholders of the Company file reports with the SEC
within the first 10 days of the month following any purchase or sale of Shares.
During 1996, no officer or director of the Company was late in filing a report
under Section 16(a).
5
<PAGE> 8
EXECUTIVE OFFICERS
The following is a list of the Company's executive officers:
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
- ------------------------------ ----- -----------------------------------------------------
<S> <C> <C>
Leland R. Speed............... 64 See table under "Nominees."
Chief Executive Officer
since 1980
Steven G. Rogers.............. 42 See table under "Nominees."
President and Chief
Operating Officer since 1993
Sarah P. Clark................ 37 Vice President of the Company since 1992, Chief
Vice President, Chief Financial Officer and Secretary of the Company since
Financial Officer, Treasurer 1994, Treasurer since 1996 and Controller from 1986
and Secretary to 1990; Vice President and Assistant Secretary of
Congress Street, Eastover, EastGroup and Rockwood
from 1992 to 1994 and of EB from 1992 to 1995; Vice
President of LNH from 1992 to 1996; Controller of
Eastover from 1986 to 1992 and EastGroup from 1990 to
1992.
David R. Fowler............... 39 Vice President of the Company since 1996 and its
Vice President Asset Manager since 1985; Vice President of Parkway
Realty Services, Inc. since 1992; Executive Vice
President of EB from 1995 to 1996.
James M. Ingram............... 40 Vice President of the Company since 1996 and its
Vice President Asset Manager since 1992; Vice President of Parkway
Realty Services, Inc. since 1992.
G. Mitchel Mattingly.......... 41 Vice President of the Company since 1996; President
Vice President of Parkway Texas Corporation since 1994; President of
First Continental Real Estate Investment Trust from
1990 to 1994.
</TABLE>
- ---------------
(1) Unless otherwise stated, the indicated person has held the position
indicated for at least the past five years.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table summarizes, for the fiscal years ended December 31,
1996, 1995 and 1994, the amount of the compensation paid by the Company to its
Chief Executive Officer and all other executive officers, including those whose
cash compensation during the year ended December 31, 1996 exceeded $100,000 (the
"Named Officers").
<TABLE>
<CAPTION>
| LONG TERM
| COMPENSATION AWARDS
| ---------------------
ANNUAL COMPENSATION(1) | SECURITIES
------------------------------------- | UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL | OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION | SARs(7) (8) (9)
- ------------------------- ---- -------- -------- ------------ | ---------- ------- ------------
<S> <C> <C> <C> <C> | <C> <C> <C>
Leland R. Speed.......... 1996 $130,000(2) $ 78,000 -- | 10,943 $ 0 $ 9,082
Chief Executive Officer 1995 $130,000(2) $ 68,250 -- | 9,187 $ 0 $ 6,930
1994(3) $ 58,673 $ 7,379 -- | 22,500 $21,220 $ 1,581
|
Steven G. Rogers......... 1996 $145,000 $145,000 -- | 8,208 $ 0 $ 13,564
President and Chief 1995 $145,000 $118,322(4) -- | 6,891 $ 0 $ 13,860
Operating Officer 1994(3) $ 30,761 $ 5,985 -- | 67,500 $16,977 $ 1,581
|
Sarah P. Clark........... 1996 $ 90,000 $ 45,000 -- | 6,840 $ 0 $ 12,282
Vice President, 1995 $ 72,600 $ 32,156 -- | 5,743 $ 0 $ 8,148
Chief Financial Officer 1994(3) $ 15,607 $ 2,527 -- | 12,000 $ 1,268 $ 1,054
Treasurer and Secretary |
|
David R. Fowler.......... 1996 $ 57,828 $ 27,309 -- | 1,500 $ 0 $ 9,615
Vice President 1995 $ 55,125 $ 44,792(5) -- | 1,875 $ 0 $ 7,218
1994(3) $ 13,013 $ 11,551 -- | 7,500 $ 845 $ 1,042
|
James M. Ingram.......... 1996 $ 57,874 $108,644 -- | 1,500 $ 0 $ 13,658
Vice President 1995 $ 57,530 $133,804(6) -- | 3,000 $ 0 $ 11,614
1994(3) $ 11,184 $ 15,849(6) -- | 12,000 $ 845 $ 1,201
|
G. Mitchel Mattingly..... 1996 $110,250 $ 10,000 -- | 1,500 $ 0 $ 12,426
Vice President 1995 $105,000 $ 15,000 -- | 3,000 $ 0 $ 9,750
1994(3) $ 14,517 $ 0 -- | 12,000 $ 0 $ 728
</TABLE>
- ---------------
(1) Until December 31, 1994, the executive officers of the Company were paid by
Congress Street and those costs were then allocated among the
Expense-Sharing Participants (described below) in accordance with the
expense-sharing arrangements.
(2) Mr. Speed's salary is paid one-half by the Company and one-half by
EastGroup, of which he is also Chief Executive Officer. This amount is the
Company's share of Mr. Speed's compensation.
(3) Until December 31, 1994, the Company had an expense-sharing agreement with
Congress Street, EastGroup and Eastover 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 charter documents and applicable law. EB had a separate
administrative agreement with Congress Street which allowed EB to
participate in the expense-sharing arrangement on the same basis as the
companies which were parties to the expense-sharing agreement. LNH had a
separate administration agreement with Congress Street (and later EastGroup)
which terminated effective March 31, 1995. Under this arrangement, the
participants shared the cost of the common officers and other employees and
of shared
7
<PAGE> 10
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, and
Congress Street was paid a fixed annual fee in equal monthly installments
by LNH. After these fees and any profits of Eastover Realty Corporation
("Eastover Realty"), were subtracted from total common costs, the remaining
common costs were allocated on a monthly basis among EastGroup, the
Company, Congress Street, Eastover and EB (collectively, the
"Expense-Sharing Participants") in proportion to their assets other than
publicly-traded securities, based on their balance sheets as contained in
their most recent SEC filings. Certain costs which the common officers
believed to be particularly attributable to each member company were not
shared. For 1994 all amounts are the Company's share of the particular
Named Officer's compensation as allocated under the expense-sharing
arrangement.
(4) Includes $57,072 paid pursuant to Mr. Rogers' agreement with Eastover
Realty, the predecessor to Parkway Realty Services, Inc.
(5) For 1995 includes $2,093 paid pursuant to Mr. Fowler's agreement with
Eastover Realty.
(6) For 1994 includes $2,467 and for 1995 includes $6,280, paid pursuant to Mr.
Ingram's agreement with Eastover Realty.
(7) The options granted in 1994 were granted on September 23, 1994, the options
granted in 1995 were granted on December 7, 1995 and the options granted in
1996 were granted on July 1, 1996, all under the Company's 1994 Stock Option
Plan. The options vest one-half on the first anniversary date of grant and
one-half on the second anniversary date of grant.
(8) These payments were made under Incentive Compensation Units granted under
the Company's 1991 Incentive Plan (the "Incentive 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 option 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
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 was 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.
(9) For 1996 and 1995, this consists primarily of the Company's contribution to
its 401(k) Plan for the Named Officer's benefit and for 1994 this amount
consists primarily of the Company's share of Congress Street's discretionary
contribution to a 401(k) plan for the respective Named Officer's benefit.
8
<PAGE> 11
Option Grants. The following table gives information with respect to
options granted to the Named Officers during the year ended December 31, 1996.
The "Potential Realizable Value" columns assume that 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. The
price of Shares on the date of grant was $15.75. Certain officers were granted
an option to purchase Shares at an exercise price of 133% of the market price on
the date of grant.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------- POTENTIAL REALIZABLE
(B) VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SECURITIES (C) APPRECIATION FOR OPTION
UNDERLYING % OF TOTAL (D) TERM
OPTIONS/ OPTIONS/SARS EXERCISE -------------------------
SARS GRANTED TO OR BASE (E)
(A) GRANTED EMPLOYEES PRICE EXPIRATION (F) (G)
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------ ---------- -------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Leland R. Speed............... 8,052 13.9% $21.00 6/30/06 $ 106,528 $ 268,856
2,891 5.0% $15.75 6/30/06 $ 28,686 $ 72,398
Steven G. Rogers.............. 6,039 10.5% $21.00 6/30/06 $ 79,896 $ 201,642
2,169 3.8% $15.75 6/30/06 $ 21,522 $ 54,317
Sarah P. Clark................ 5,034 8.7% $21.00 6/30/06 $ 66,600 $ 168,085
1,806 3.1% $15.75 6/30/06 $ 17,920 $ 45,227
David R. Fowler............... 1,500 2.6% $15.75 6/30/06 $ 14,884 $ 37,564
James M. Ingram............... 1,500 2.6% $15.75 6/30/06 $ 14,884 $ 37,564
G. Mitchel Mattingly.......... 1,500 2.6% $15.75 6/30/06 $ 14,884 $ 37,564
</TABLE>
- ---------------
(1) These options were granted on July 1, 1996. They become exercisable one-half
on the first anniversary of the date of grant and one-half on the second
anniversary of the date of grant.
9
<PAGE> 12
Option Exercises and Year End Values. The following table shows the value
realized by the Named Officers upon the exercise of options 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, Inc. (the "NYSE"), on December 31, 1996 ($26.00).
AGGREGATED OPTIONS/SAR EXERCISES WITH LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#) OPTIONS AT FY-END($)
ACQUIRED VALUE ---------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE
- -------------------------- ----------- -------- ---------------------------- -------------------------
<S> <C> <C> <C> <C>
Leland R. Speed........... 10,884 $ 62,974 16,210/15,537 $ 238,730/$128,082
Chief Executive Officer
Steven G. Rogers.......... 11,000 $ 73,592 48,437/11,654 $ 725,048/$96,076
President and
Chief Operating Officer
Sarah P. Clark............ 12,000 $171,902 2,872/9,712 $ 36,378/$80,059
Vice President,
Chief Financial Officer,
Treasurer and Secretary
David R. Fowler........... 3,450 $ 49,078 4,987/2,438 $ 79,957/$27,256
Vice President
James M. Ingram........... 4,925 $ 63,111 8,575/3,000 $ 137,948/$34,375
Vice President
G. Mitchel Mattingly...... 13,500 $195,438 0/3,000 $ 0/$34,375
Vice President
</TABLE>
- ---------------
(1) These represent certain options granted to the Named Officer on September
23, 1994, December 7, 1995 and July 1, 1996 under the 1994 Stock Option
Plan.
Compensation Committee Report. The Compensation Committee of the Board of
Directors consists of Messrs. Arnold and Friou and Dr. Magruder. The
Compensation Committee believes that the main purpose of base compensation is to
provide sufficient base compensation to the executive officers of the Company in
relation to salary levels for other real estate companies and the officer's
level of responsibility. For 1996, the base compensation of Mr. Speed, the chief
executive officer of the Company, was shared equally by the Company and
EastGroup, another real estate investment trust ("REIT"), of which Mr. Speed is
chief executive officer. The Company's Compensation Committee and EastGroup's
Compensation Committee jointly determined Mr. Speed's base salary. The
Compensation 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 Company, the success of the Company's recent strategy of increasing
its market capitalization and acquiring office properties, which was developed
under Mr. Speed's leadership, and his importance in delineating and implementing
the Company's strategic plans.
The Compensation Committee has determined that the primary goals of the
Company's compensation policies should be as follows:
10
<PAGE> 13
- 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
stockholders 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.
The Compensation Committee believes that incentive compensation payable to
the executive officers of the Company should be based upon the Company's
performance and align the interests of management and the Company's
stockholders. In 1996, the Compensation Committee, in conjunction with an
independent compensation consultant, formulated targets for funds from
operations per share ("FFO"), upon which the executive officers' incentive
compensation would be based. In 1996, the targets were FFO of $1.57 per Share
before accrual for bonuses for the executive officers to earn the target bonus
set forth below and FFO of $1.73 per Share before accrual for bonuses for the
executive officers to earn a bonus of two times the target bonus amount. The
target bonus amounts were 15% of total base salary (from both EastGroup and the
Company) for Mr. Speed, 50% of base salary for Mr. Rogers and 25% of base salary
for Ms. Clark. The Compensation Committee determined the FFO targets with the
advice of an independent compensation consultant based upon an analysis of the
Company's internal projected financial results for 1996 and the estimates of
1996 FFO prepared by independent securities analysts who followed the Company.
The Compensation Committee believed that the stockholders of the Company would
be benefitted significantly if the FFO goal was met and would be further
benefitted if such goal were exceeded, and that management should be compensated
for the benefits derived by the Company stockholders.
The Company's 1996 FFO per Share was $1.74 after taking account of bonus
accruals. After consideration, the Compensation Committee believed that each of
Messrs. Speed and Rogers and Ms. Clark should be paid the amount of incentive
compensation provided by the above formula, under which Messrs. Speed and Rogers
and Ms. Clark received bonuses with respect to 1996 of two times the target
amount for 1996, which was $78,000, $145,000 and $45,000 respectively.
The Compensation Committee also believes that stock based incentive
compensation in the form of stock options helps to align the interest of the
management of the Company and its stockholders. During 1996, the Compensation
Committee (i) granted options for 2,891 Shares to Mr. Speed, 2,169 Shares to Mr.
Rogers and 1,806 Shares to Ms. Clark with an exercise price of $15.75 per Share
(the market price on the date of grant) and (ii) granted options for 8,052
Shares to Mr. Speed, 6,039 Shares to Mr. Rogers and 5,034 Shares to Ms. Clark
with an exercise price of $21.00 per Share (133% of the market price on the date
of grant). In determining the number of options to be granted, the Compensation
Committee took into account the executive's current salary, the amount of
stock-based compensation previously granted to the executive, the executive's
duties and performance, and competitive industry practices.
DANIEL C. ARNOLD
ROGER P. FRIOU
C. HERBERT MAGRUDER
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this document or
any portion thereof into any filing under the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act and shall not otherwise be deemed
filed under such acts.
11
<PAGE> 14
Performance Comparison. Set forth below is a line graph comparing the
percentage change in the cumulative return to stockholders on Shares over the
five years ending December 31, 1996 against the cumulative return of the
Standard & Poor's 500 ("S&P 500"), and the Equity REIT Index prepared by the
National Association of Real Estate Investment Trusts ("NAREIT Equity").
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) THE COMPANY S&P 500 NAREIT EQUITY
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 104.65 107.67 114.59
1993 271.28 118.43 137.11
1994 309.32 119.97 141.46
1995 472.82 164.88 163.08
1996 994.71 202.74 220.56
</TABLE>
Directors' Fees. Under the Company's standard compensation arrangement
with directors (other than Messrs. Speed and Rogers, who are salaried officers),
directors are paid a monthly stipend of $500, plus $1,000 and reimbursement of
expenses for each meeting of the Board of Directors and $750 and reimbursement
of expenses for each meeting of a committee established by the Board of
Directors. If the 1997 Non-Employee Directors' Stock Ownership Plan is approved
by the shareholders, the monthly stipend will be discontinued. See "Proposal No.
3 -- 1997 Non-Employee Directors' Stock Ownership Plan."
Directors Plan. The Company's 1991 Directors Plan authorizes the issuance
of options for up to 150,000 Shares to directors of the Company who are not, and
have not been for at least one year prior to the date of determination,
employees of the Company ("Non-Employee Directors"). Under the 1991 Directors
Plan, each Non-Employee Director of the Company on September 13, 1991 was
automatically granted an option to purchase 7,500 Shares. Each person who first
becomes a Non-Employee Director after September 13, 1991 will automatically be
granted an option to purchase 7,500 Shares on the date the person becomes a Non-
Employee Director, if such Shares are available. Each Non-Employee Director will
also be granted an option to purchase an additional 2,250 Shares on the date of
any annual meeting at which such Non-Employee Director is reelected to the
Board. The option exercise price is the closing price of a Share if the Shares
are listed on an exchange or the average between the bid and the asked price for
that 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
12
<PAGE> 15
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 Director, 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. Certain
provisions of the 1991 Directors Plan are proposed to be amended. See "Proposal
No. 4 -- Amendments to the 1991 Directors Stock Option Plan, as amended."
One director exercised options under the 1991 Directors Plan during 1996.
On March 23, 1996, Mr. Friou exercised options to purchase 1,500 Shares at an
exercise price of $14.1667 and 2,250 Shares at an exercise price of $14.1667. On
July 18, 1996, Messrs. Arnold, Farish, Friou, Lynch, Magruder and Mossop were
each granted options to purchase 2,250 Shares at an exercise price of $16.00 per
Share.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Cost Sharing Arrangement with EastGroup. Until April 1997, EastGroup and
the Company shared the same leased office space at One Jackson Place in Jackson,
Mississippi. EastGroup and the Company shared the rent with respect to their
shared office space based upon the number of employees each had in such office
space divided by the total number of employees of both companies using the
office space. In addition, EastGroup and the Company shared the services of Mr.
Speed and a limited number of clerical and support staff employees and expenses
related thereto were shared equally between EastGroup and the Company. The
Company and EastGroup also shared the expenses of certain office supplies and
equipment, and EastGroup reimbursed the Company for the services of certain
employees of the Company who performed services for EastGroup on an as requested
basis. During the year ended December 31, 1996, EastGroup paid the Company
$385,000 under this cost-sharing arrangement. On April 18, 1997, the Company
relocated into separate office space at One Jackson Place, following which
EastGroup and the Company no longer share office space, supplies or equipment.
EastGroup and the Company will continue to share the services of Mr. Speed and
his assistant and share the expenses of Mr. Speed's assistant and certain
non-cash fringe benefits paid to Mr. Speed.
Change in Control Agreement. The Company has entered into a Change in
Control Agreement (the "Change in Control Agreement") with each of the Company's
executive officers (the "Executives"). The Change in Control Agreement provides
that if an Executive's employment is terminated or the Executive leaves the
Company's employment for certain reasons during a defined period (30 months in
the case of Leland R. Speed, Steven G. Rogers and Sarah P. Clark and 20 months
in the case of James Ingram, David Fowler and G. Mitchel Mattingly) after a
Change in Control (as hereinafter defined), the Company will pay a lump sum
benefit to the Executive equal to a multiple of (2.5 times in the case of
Messrs. Speed and Rogers and Ms. Clark and 1.667 times in the case of Messrs.
Fowler, Ingram and Mattingly) the average of the Executive's salary and accrued
bonus for the three calendar year period ending on the December 31 prior to the
Change in Control. The Change in Control Agreement also gives the Executive the
ability to leave the employment of the Company at any time during the six month
period after the Change in Control in which case the Executive will receive the
lump-sum payment of one-half of the amount set forth above. Change in Control is
defined in such agreement as (i) any change in control of a nature that would be
required to be represented under the Exchange Act proxy rules; (ii) any person
acquiring beneficial ownership of securities representing 30 percent or more of
the combined voting power of the Company's outstanding securities; (iii) certain
changes in the Company's Board of Directors; (iv) certain mergers; or (v) the
approval of a plan of liquidation by the Company.
13
<PAGE> 16
PROPOSAL NO. 2
AMENDMENTS TO THE ARTICLES OF INCORPORATION
At the Meeting, stockholders of the Company will be asked to vote on a
proposal to approve and adopt two amendments to the Articles of Incorporation
concerning the settlement of transactions on an interdealer quotation system or
national securities exchange (the "Amendments"). The affirmative vote of at
least a majority of Shares outstanding and entitled to vote is required to
approve and adopt the Amendments. The Board of Directors recommends a vote FOR
approval of the Amendments. Unless otherwise instructed, proxies will be voted
FOR approval of the Amendments. The proposed Amendments are attached hereto as
Appendix A.
For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), no more than 50% in value of its outstanding
Shares may be owned, actually and constructively under the applicable
attribution provisions of the Code, by five or fewer individuals (as defined in
the Code to include certain entities) during the last half of a taxable year
(other than the first year) or during a proportionate part of a shorter taxable
year. The Shares must also be beneficially owned by 100 or more persons during
at least 335 days of a taxable year (other than the first year) or during a
proportionate part of a shorter taxable year. Because the Company elects to be
treated as a REIT, the Articles of Incorporation contain restrictions on the
acquisition of Shares intended to ensure compliance with these requirements.
Pursuant to the provisions of the Articles of Incorporation, if a transfer
of stock occurs whereby any person would own, beneficially or constructively, in
excess of 9.8 percent (in value or in number, whichever is more restrictive) of
the outstanding capital stock of the Company (excluding shares of excess stock,
par value $0.001 per share, of the Company ("Excess Stock")), then such amount
in excess of the 9.8 percent limit shall automatically be converted into shares
of Excess Stock, and any such transfer will be void ab initio. Although holders
of Excess Stock have no dividend or voting rights, such holders do have certain
rights in the event of any liquidation, dissolution or winding up of the
Company. The Articles of Incorporation further provide that the Excess Stock
will be held by the Company as trustee for the person or persons in whose hands
the shares would not be Excess Stock and certain price-related restrictions are
satisfied. These provisions are designed to enable the Company to meet the share
ownership requirements applicable to REITs under the Code, but may also have an
anti-takeover effect. The Company currently has 30,000,000 shares of Excess
Stock authorized pursuant to its Articles of Incorporation.
The Articles of Incorporation presently provide that nothing in the
Articles of Incorporation concerning the capital stock of the Company, including
the REIT related restrictions described above, will preclude the settlement of
transactions entered into through the facilities of any interdealer quotation
system or national securities exchange upon which shares of the capital stock of
the Company are traded; provided, however, that certain transactions may be
settled by providing shares of Excess Stock.
The Amendments make it clear by separating the clause concerning settlement
through the provision of Excess Stock from the settlement provision and by
subjecting the Board of Directors' authority to protect the Company's REIT
status to the settlement provision, that the settlement of any transaction on an
interdealer quotation system or national securities exchange is not contingent
on any other provision or requirement under the Articles of Incorporation. These
revisions have been requested by officials of the NYSE, the exchange on which
the Shares are currently listed and traded, because of concerns on the part of
such officials that the provisions presently contained in the Articles of
Incorporation make settlement of transactions contingent upon certain
requirements in the Articles of Incorporation.
14
<PAGE> 17
PROPOSAL NO. 3
1997 NON-EMPLOYEE DIRECTORS' STOCK OWNERSHIP PLAN
At the Meeting, stockholders will be asked to vote on a proposal to ratify
the adoption by the Board of Directors of the Company's 1997 Non-Employee
Directors' Stock Ownership Plan (the "1997 Directors' Plan"). The affirmative
vote of a majority of the Shares entitled to vote on the proposal is required
for ratification of the 1997 Directors' Plan. As described below, the 1997
Directors' Plan provides for awards of Shares to non-employee directors, and
stockholder ratification is sought for the purpose of complying with Rule 16b-3
under the Exchange Act. In the event that the 1997 Directors' Plan is not
ratified, the Company will continue to pay cash fees to its directors. The
directors recommend a vote FOR the 1997 Directors' Plan. Unless otherwise
instructed, proxies will be voted FOR the 1997 Directors' Plan. The description
of the 1997 Directors' Plan set forth below is qualified in its entirety by the
text of the 1997 Directors' Plan, which is attached as Appendix B hereto.
MATERIAL FEATURES OF PLAN
The 1997 Directors' Plan provides for an annual award of Shares to the
members of the Board of Directors who are not employees of the Company, in place
of the Company's former policy of paying an annual cash retainer to those
directors. The 1997 Directors' Plan is intended to secure for the Company and
its stockholders the benefits of the incentive inherent in increased Share
ownership by members of the Board of Directors and to strengthen the Company's
ability to attract and retain the services of experienced and knowledgeable
directors. The 1997 Directors' Plan provides for a stock award of 300 Shares to
be made to each director annually on the date of the annual meeting of
stockholders. A director newly appointed or elected at a time other than the
annual meeting of stockholders will receive a fraction of the 300 Shares
determined with reference to the number of days between the annual meeting of
stockholders and the date of appointment or election of the director. The Board
of Directors may amend or terminate the 1997 Directors' Plan, provided, however,
that no amendment or termination may be made which adversely affects any award
to which a director has previously become entitled.
FEDERAL INCOME TAX CONSEQUENCES
The award of Shares under the 1997 Directors' Plan will result in the
recognition of ordinary compensation income by the non-employee director and in
a deduction for the Company, in each case in an amount equal to the fair market
value of the Shares awarded on the date of the award.
AMOUNT OF AWARDS FOR 1997
Each director, except Messrs. Speed and Rogers (who are salaried officers),
will receive an award of 300 Shares on June 6, 1997, contingent on stockholder
ratification.
PROPOSAL NO. 4
AMENDMENTS TO THE 1991 DIRECTORS STOCK OPTION PLAN, AS AMENDED
At the Meeting, the stockholders will be asked to vote on a proposal to
ratify the adoption of amendments to the 1991 Directors Plan. The affirmative
vote of a majority of the Shares entitled to vote on the matter is required for
ratification of the amendments to the 1991 Directors Plan. The 1991 Directors
Plan provides for the granting of options to purchase Shares to certain
directors who are not also employees of the Company. The amendments would (i)
increase the number of Shares subject to such options from 2,250 Shares to 3,000
15
<PAGE> 18
Shares and (ii) increase the number of Shares available under the 1991 Directors
Plan to 250,000. The amendments to the 1991 Directors Plan are intended to
encourage directors to increase their proprietary interest in the Company and
thereby better align director interests with those of the Company's
stockholders. The amendments to the 1991 Directors Plan are necessary to
continue to attract, retain and motivate the highly qualified board members
necessary to achieve the Company's objectives.
Stockholder ratification is sought, in part, for purposes of complying with
Rule 16b-3 under the Exchange Act. The directors recommend a vote FOR approval
of the amendments to the 1991 Directors Plan. Unless otherwise instructed,
proxies will be voted FOR approval of the amendments to the 1991 Directors Plan.
A copy of the 1991 Directors Plan incorporating the amendments is attached
hereto as Appendix C and any description of the 1991 Directors Plan herein is
qualified in its entirety by the text of the 1991 Directors Plan. Stockholders
of the Company are urged to read the 1991 Directors Plan.
SUMMARY OF THE PLAN, AS AMENDED
The 1991 Directors Plan authorizes the issuance of options for up to
150,000, or if the amendments are adopted, 250,000, Shares to directors of the
Company who are not, and have not been for at least one year prior to the date
of determination, employees of the Company ("Non-Employee Directors"). Under the
1991 Directors Plan, each Non-Employee Director of the Company on March 15, 1991
was automatically granted an option to purchase 7,500 Shares. Each person who
first becomes a Non-Employee Director after March 15, 1991 will automatically be
granted an option to purchase 7,500 Shares on the date the person becomes a Non-
Employee Director, if such Shares are available. Each Non-Employee Director will
also be granted an option to purchase 2,250, or if the amendments are adopted,
3,000, additional Shares on the date of any annual meeting at which such
Non-Employee Director is re-elected to the Board. The option exercise price is
the closing price of a Share if the Company's Shares are listed on an exchange
or the average between the bid and the asked price for that 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 six months after the date they are granted 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 Director, 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.
GRANT OF OPTIONS
If the amendments are approved, an option to purchase 3,000 Shares will be
granted to each of the Company's Non-Employee Directors who is re-elected at the
Meeting.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an option under the 1991 Directors Plan will not result in the
Non-Employee Director's recognition of income for federal income tax purposes,
nor in a deduction for the Company. The exercise of an option under the 1991
Directors Plan will result in the recognition of ordinary compensation income by
the Non-Employee Director and in a deduction for the Company, in each case in an
amount equal to the excess of the fair market value on the date of exercise of
the Shares acquired through the option exercise over the option exercise price.
16
<PAGE> 19
PROPOSAL NO. 5
OTHER MATTERS
So far as Management is aware, no matters other than those outlined in this
Proxy Statement will be presented at the Meeting for action on the part of the
stockholders. If any other matters are properly brought before the Meeting, it
is the intention of the persons named in the accompanying proxy to vote thereon
the Shares to which the proxy relates in accordance with their best judgment.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP, independent public
accountants, to act as auditors for the fiscal year ending December 31, 1997.
Ernst & Young LLP has audited the accounts of the Company since 1986. A
representative of Ernst & Young LLP is expected to be present at the Meeting and
will have an opportunity to make a statement, if he so desires, and will be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received at the Company's offices no later
than , 1998 in order to be considered for inclusion in the Company's
proxy materials for the 1998 Annual Meeting of Stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
SARAH P. CLARK
Vice President, Chief Financial
Officer,
Treasurer and Secretary
Jackson, Mississippi
17
<PAGE> 20
APPENDIX A
PROPOSED AMENDMENTS
ARTICLE V
SECTION 2. REIT-RELATED RESTRICTIONS AND LIMITATIONS ON THE EQUITY STOCK.
(e) Notice Requirements and General Authority of the Board of Directors to
Implement REIT-Related Restrictions and Limitations.
(v) Subject to Section 2(f)(iii) of this Article V, nothing contained in
this Article V shall limit the authority of the Board of Directors to take such
other action as it deems necessary or advisable to protect the Corporation and
the interests of its stockholders by preservation of the Corporation's status as
a REIT.
(f) Exemptions.
(iii) Nothing in this Article V shall preclude the settlement of a
transaction entered into through the facilities of any interdealer quotation
system or national securities exchange upon which Equity Stock is traded.
Notwithstanding the previous sentence, certain transactions may be settled by
providing Excess Stock as set forth in this Article V.
<PAGE> 21
APPENDIX B
PARKWAY PROPERTIES, INC.
1997 NON-EMPLOYEE DIRECTORS' STOCK OWNERSHIP PLAN
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION TITLE PAGE NO.
- ------------ ----------------------------------------------------------------------------------
<S> <C> <C>
Section 1. Introduction............................................................. 1
Section 2. Purpose.................................................................. 1
Section 3. Participation............................................................ 1
Section 4. Annual Stock Award....................................................... 1
Section 5. Restrictions on Issuance of Shares; Rights as Stockholders............... 1
Section 6. Administration........................................................... 2
Section 7. No Assignment............................................................ 2
Section 8. Capital Adjustments...................................................... 2
Section 9. Amendment and Termination................................................ 2
Section 10. Approval of Stockholders................................................. 2
Section 11. Other Non-Employee Director Compensation................................. 2
Section 12. Authorization............................................................ 2
</TABLE>
i
<PAGE> 23
PARKWAY PROPERTIES, INC.
1997 NON-EMPLOYEE DIRECTORS' STOCK OWNERSHIP PLAN
SECTION 1. INTRODUCTION
Parkway Properties, Inc., (the "Company") establishes the Parkway
Properties, Inc. 1997 Non-Employee Directors' Stock Ownership Plan (the "Plan")
effective upon approval by the Company's stockholders, to provide for an annual
award of shares of the common stock, $0.001 par value, ("Common Stock") of the
Company to the members of the Board of Directors of the Company who are not
employees of the Company, in place of the Company's former policy of paying a
monthly cash retainer to those directors, which policy will be discontinued
effective as of June 30, 1997.
SECTION 2. PURPOSE
The purpose of the Plan is to secure for the Company and its stockholders
the benefits of the incentive inherent in increased Common Stock ownership by
members of the Board of Directors and to strengthen the Company's ability to
attract and retain the services of experienced and knowledgeable directors.
SECTION 3. PARTICIPATION
Each member of the Board of Directors of the Company who is not an employee
of the Company or any of its subsidiaries (a "Non-Employee Director") shall be
eligible to participate in the Plan.
SECTION 4. ANNUAL STOCK AWARD
(a) Beginning in 1997, each year, as of the date of the annual meeting of
stockholders of the Company, the Company shall automatically issue 300 shares of
Common Stock to each Non-Employee Director who has been elected or reelected as
a member of the Board of Directors of the Company as of the adjournment of the
annual meeting. This Plan shall refer to such an award and to any award pursuant
to Section 4(b) as the "Annual Stock Award."
(b) If a Non-Employee Director is appointed to the Board of Directors of
the Company or elected to the Board of Directors other than at an annual meeting
of the stockholders of the Company and has not received an Annual Stock Award
during the twelve months preceding election or appointment, the Company shall
automatically issue to the Non-Employee Director, on the fifth business day
following the effective date of the election or appointment, a number of shares
of Common Stock that is equal to 300 multiplied by a fraction, the numerator of
which is the remainder of 365 minus the number of days between the adjournment
of the last annual meeting of stockholders and the effective date of the
appointment or election, and the denominator of which is 365; if a fraction
results, product shall be rounded up to the next whole number.
SECTION 5. RESTRICTIONS ON ISSUANCE OF SHARES; RIGHTS AS STOCKHOLDERS
The obligation of the Company to issue shares of Common Stock pursuant to
an Annual Stock Award shall be subject to the condition that, should the Board
of Directors of the Company determine that the listing, registration, or
qualification of the shares upon any securities exchange or under any state or
federal law or the consent or approval of any regulatory body is necessary or
desirable as a condition to or in connection with the
B-1
<PAGE> 24
issuance of the shares, no such shares may be issued unless such listing,
registration, qualification, consent, or approval has been effected or obtained
free of any conditions not acceptable to the Board of Directors.
The certificates representing shares of Common Stock issued by the Company
in connection with an award under this Plan may bear a legend describing any
restrictions on resale of such shares under applicable securities laws. Stop
transfer orders with respect to such certificates may be entered on the stock
transfer records of the Company.
A Non-Employee Director will have no rights as a stockholder of the Company
with respect to any shares of Common Stock to be issued in connection with an
award under this Plan until the date of issuance of the certificate for such
shares. No adjustment shall be made for dividends or other rights for which the
record date precedes the date the certificate is issued.
SECTION 6. ADMINISTRATION
The Board of Directors of the Company shall administer the Plan and have
full power and authority to interpret and construe the Plan. Any determination
of the Board of Directors with respect to participation, the amount of awards,
the issuance of shares of Common Stock, or any other matter involving the
interpretation of the Plan shall be conclusive and binding on all participants.
SECTION 7. NO ASSIGNMENT
A Non-Employee Director may not assign any right to an award under this
Plan. Awards shall not be subject to alienation whether by garnishment, lien, or
otherwise, except as required by law.
SECTION 8. CAPITAL ADJUSTMENTS
The number of shares of Common Stock to be included in a future Annual
Stock Award pursuant to Section 4 shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock dividend, stock split, reclassification, recapitalization,
combination, or exchange with respect to the shares.
SECTION 9. AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend or terminate this Plan at
any time by resolution, provided, however, that no amendment or termination of
the Plan may adversely affect any award to which a Non-Employee Director has
previously become entitled.
SECTION 10. APPROVAL OF STOCKHOLDERS
This Plan shall be subject to approval by the stockholders of the Company.
No shares of Common Stock shall be issued under the Plan prior to the approval
of the Plan by the stockholders of the Company.
SECTION 11. OTHER NON-EMPLOYEE DIRECTOR COMPENSATION
This Plan does not preclude payment of fees to a Non-Employee Director for
attendance at meetings of the Board of Directors and of committees of the Board
of Directors in such amounts and upon such terms as the Board of Directors shall
approve from time to time.
SECTION 12. AUTHORIZATION
The Board of Directors of the Company authorized the establishment of this
Plan by action duly taken at its meeting on March 18, 1997.
B-2
<PAGE> 25
APPENDIX C
PARKWAY PROPERTIES, INC.
1991 DIRECTORS STOCK OPTION PLAN, AS AMENDED
1. PURPOSE.
The purpose of the Parkway Properties, Inc. 1991 Directors Stock Option
Plan (the "Plan") is to encourage the ownership of Shares of common stock of
Parkway Properties, Inc. (the "Company") by directors of the Company and, by
doing so, to increase the incentive for such to put forth the maximum effort for
the success of the Company's business.
2. DEFINITIONS.
As used in this Plan:
(a) "Shares" means shares of common stock, $0.001 par value per share,
of the Company.
(b) "Fair Market Value" of a Share on any date means the closing price
of a Share if the Company's Shares are listed on an exchange or the average
between the bid and the asked price for that 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), all as published in
The Wall Street Journal.
(c) "Option" means an option granted pursuant to the Plan to purchase
Shares.
(d) "Committee" means the Compensation Committee of the Board of
Directors of the Company or such other committee of the Board that the
Board has appointed to administer the Plan. The Committee shall consist of
three or more members of the Board of Directors of the Company who are
Non-Employee Directors.
(e) "Non-Employee Director" means a director of the Company who is
not, and has not been for a period of at least one year prior to that date
as of which the determination is made, an employee of the Company.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
all the powers vested in it by the terms of the Plan. The Committee shall be
authorized to interpret the Plan and the Options granted under the Plan, to
establish, amend and rescind rules and regulations relating to the Plan, and to
make any determinations it believes necessary or advisable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option in the
manner and to the extent the Committee deems desirable. Any decision of the
Committee in the administration of the Plan shall be in its sole discretion and
conclusive. The Committee may act only by a majority of its members in office,
except that the members of the Committee may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on behalf
of the Committee.
4. SHARES AVAILABLE
A total of 250,000 Shares of the Company shall be available for grant under
the Plan. The aggregate number of Shares that may be purchased pursuant to
Options shall not exceed the available number of Shares.
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Upon the expiration or termination in whole or in part of any unexercised
Option, the Shares subject to such Option shall again be available for grant
under the Plan.
5. GRANT OF OPTIONS
On March 15, 1991, each person who is then a Non-Employee Director will
automatically be granted an Option to purchase 7,500 Shares. To the extent
Shares are available under the Plan, each person who first becomes a
Non-Employee Director after March 15, 1991, will automatically be granted on the
date such person becomes a Non-Employee Director a non-qualified stock option to
purchase 7,500 Shares. In addition, each Non-Employee Director shall be granted
a non-qualified stock option to purchase 3,000 Shares on the date of each annual
meeting at which such Non-Employee Director is reelected to the Board of
Directors.
6. TERMS OF OPTIONS
Each Option granted under the Plan to a Non-Employee Director shall be
evidenced by a written stock option agreement executed by the Company and the
holder of the Option, including the following terms and conditions:
(a) The purchase price of each Share subject to an Option granted to a
Non-Employee Director shall equal the Fair Market Value of a Share on the
date the Option is granted.
(b) An Option granted to a Non-Employee Director shall be exercisable
in full on the date that is six months after the date it is granted and, to
the extent not already exercised, shall expire upon the earlier to occur of
(i) the date that is six months after the termination of the Non-Employee
Director's service as a Non-Employee Director (whether by resignation,
retirement or disability); (ii) the date that is one year after the death
of a Non-Employee Director while he is in office; or (iii) the date that is
ten years after the date of the grant of the Option.
(c) An Option shall require that the optionee represent at the time of
each exercise of the Option that the Shares purchased are being acquired
for investment and not with a view to distribution.
(d) The purchase price of the Shares with respect to which an Option
is exercised shall be payable in full on the date the Option is exercised,
in cash or in Shares or in a combination of cash and Shares. The value of a
Share delivered in payment of the purchase price shall be its Fair Market
Value on the date the Option is exercised.
(e) An Option shall not be assignable or transferable by the optionee
except by will or the laws of descent and distribution and shall be
exercisable, during the optionee's lifetime, only by him or her.
7. ADJUSTMENT OF SHARES AVAILABLE
If there is any change in the number of outstanding Shares of the Company
through the declaration of stock dividends or through stock splits, then the
number of Shares available for Options and of Shares subject to any Option and
the purchase price of any Shares subject to any Option shall be automatically
adjusted. If there is any change in the number of outstanding Shares of the
Company through any change in the capital account of the Company or through any
other transaction referred to in Section 424(a) (formerly 425(a)) of the
Internal Revenue Code, then the number of Shares available for Options and of
Shares subject to any Option and the purchase price of any Shares subject to any
Option shall be appropriately adjusted by the Committee.
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8. AMENDMENT
The Board of Directors of the Company may amend the Plan in any respect,
provided, however, that without the approval of the stockholders of the Company
the Board may not (a) except as provided in Section 7, increase the maximum
number of Shares that may be issued under the Plan or decrease the minimum
purchase price of Shares subject to an Option; (b) extend the term of the Plan;
(c) change the classes of directors to whom Options may be granted under the
Plan; (d) provide for the administration of the Plan otherwise than by a
Committee composed entirely of Non-Employee Directors; or (e) materially
increase the cost of the Plan to the Company. No amendment of the Plan shall
adversely affect any right of any holder of an Option already granted without
such optionee's written consent.
9. TERMINATION OF PLAN
The Board of Directors may terminate the Plan at any time with respect to
any Shares that are not then subject to Options. Unless terminated earlier by
the Board of Directors, the Plan shall terminate on March 14, 2001.
10. RIGHTS AS STOCKHOLDER
No person shall have the rights of a stockholder with respect to Shares
subject to an Option until the date of issuance, if any, of a stock certificate
pursuant to the exercise of an Option.
11. REGULATORY APPROVALS AND LISTING
The Company shall not be required to issue any certificate or certificates
for Shares upon the exercise of an Option prior to (a) the obtaining of any
approval from any government agency that the Company shall, in its sole
discretion, determine to be necessary or advisable; (b) the admission of such
Shares to listing on any stock exchange on which the Shares may then be listed;
and (c) the completion of any registration or other qualification of such Shares
under any state or Federal law or rulings or regulations of any governmental
body that the Company shall, in its sole discretion, determine to be necessary
or advisable.
12. CONSTRUCTION
The Plan shall be construed in accordance with the laws of the State of
Maryland.
13. SATISFACTION OF TAX LIABILITIES.
Notwithstanding any other provision of this Plan, the Company shall not be
required to issue any certificate for Shares upon the exercise of an Option
unless any Federal, state, or local tax withholding obligation incurred by the
Company in connection with the exercise of the Option has been provided for by
the optionee through the delivery of a sufficient amount of cash to the Company
or, with the consent of the Committee, through the retention of Shares otherwise
issuable on the exercise of the Option or the delivery of Shares to the Company
by the optionee, under such terms as the Committee finds appropriate.
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PROXY
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PARKWAY PROPERTIES, INC.
One Jackson Place
Suite 1000
188 East Capitol Street
Jackson, Mississippi 39201
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Leland R. Speed and Steven G. Rogers, and each
or either of them, Proxies for the undersigned, with full power of
substitution, to vote all shares of common stock, $0.001 par value per share
("Shares") of Parkway Properties, Inc. (the "Company") which the undersigned
would be entitled to vote at the Annual Meeting of Stockholders (the "Meeting")
to be held at the Company's offices, One Jackson Place, Suite 1000, 188 East
Capitol Street, Jackson, Mississippi on June 6, 1997, at 1:30 p.m., Jackson
time, and directs that the Shares represented by this Proxy shall be voted as
indicated below:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (EXCEPT AS MARKED to vote for all
TO THE CONTRARY BELOW) nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH HIS NAME IN THE LIST BELOW:
Daniel C. Arnold; George R. Farish; Roger P. Friou; Michael J. Lipsey;
Joe F. Lynch; C. Herbert Magruder; W. Lincoln Mossop, Jr.; Steven G.
Rogers; and Leland R. Speed.
2. AMENDMENTS TO THE ARTICLES OF INCORPORATION
Proposal to adopt two amendments to the Articles of Incorporation
concerning the settlement of transactions on an interdealer quotation system or
national securities exchange.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 1997 NON-EMPLOYEE DIRECTORS' STOCK OWNERSHIP PLAN
Proposal to adopt the 1997 Non-Employee Directors' Stock Ownership
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. AMENDMENTS TO 1991 DIRECTORS STOCK OPTION PLAN, AS AMENDED.
Proposal to adopt amendments to 1991 Directors Stock Option Plan, as
amended.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment thereof.
FRONT
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. THE BOARD OF DIRECTORS FAVORS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4
ABOVE AND WILL BE VOTED IN THE DISCRETION OF THE PROXIES NAMED HEREIN WITH
RESPECT TO ANY MATTER REFERRED TO IN 5 ABOVE. YOU ARE ENCOURAGED TO SPECIFY
YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
Dated: ______________, 1997
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON
STOCK CERTIFICATE(S). A corporation is
requested to sign its name by its President
or other authorized officer, with the office
held so designated. A partnership should
sign in the partnership name by an authorized
person. Executors, administrators, trustees,
guardians and corporate officers are
requested to indicate the capacity in which
they are signing. JOINT TENANTS SHOULD BOTH
SIGN.
---------------------------------------------
---------------------------------------------
(Signature of Stockholder(s))
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
BACK
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