<PAGE>
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:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THE ROUSE COMPANIES
(Name of Registrant as Specified In Its Charter)
DAVID R. SCHWIESOW
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $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:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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:
Notes:
<PAGE>
THE ROUSE COMPANY
10275 LITTLE PATUXENT PARKWAY
COLUMBIA, MARYLAND 21044-3456
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE HOLDERS OF COMMON STOCK:
The Annual Meeting of Stockholders of The Rouse Company is called to be held
on Thursday, May 12, 1994, at 11:00 a.m. at The Rouse Company Building,
Columbia, Maryland, for the following purposes:
(a) Election of directors to hold office until the next Annual Meeting of
Stockholders and until their respective successors are duly elected and
qualify;
(b) Consideration of a proposal by the Board of Directors to approve The
Rouse Company 1994 Stock Incentive Plan (THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE PROPOSAL); and
(c) Consideration of such other business as may properly come before the
meeting.
Holders of Common Stock of the Company as of the close of business on March
4, 1994 will be entitled to notice of, and to vote at, the meeting. The stock
transfer books will not be closed.
For the convenience of stockholders, a form of proxy is enclosed. You are
urged to complete and return the proxy.
By Order of the Board of Directors
Richard G. McCauley
Secretary
April 5, 1994
<PAGE>
THE ROUSE COMPANY
10275 LITTLE PATUXENT PARKWAY
COLUMBIA, MARYLAND 21044-3456
PROXY STATEMENT
(FIRST MAILED TO STOCKHOLDERS ON APRIL 5, 1994)
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The Rouse Company (the
"Company") to be voted at the Annual Meeting of Stockholders on May 12, 1994
and at any adjournment or adjournments thereof (the "meeting"). The
solicitation of proxies generally will be by mail and by directors, officers
and regular employees of the Company. In some instances, solicitation may be
made by telephone, telegraph or other means. All costs incurred in connection
with the solicitation of proxies will be borne by the Company. Arrangements may
be made with brokers and other custodians, nominees and fiduciaries to send
proxies and proxy material to their principals, and the Company may reimburse
them for reasonable out-of-pocket and clerical expenses. The Company has
retained Georgeson & Company, Inc. to assist in the solicitation of proxies
from stockholders for a fee of approximately $10,000 plus a charge for
contacting specific stockholders and reasonable out-of-pocket expenses and
disbursements.
Each properly executed proxy will be voted in accordance with the
instructions marked on it. In the absence of specific instructions, a proxy
will be voted for the election of directors and nominees listed in the Proxy
Statement, in accordance with the Board of Directors' recommendation as to any
proposal listed in the Proxy Statement and in the best discretion of the proxy
holders as to any other matters, including, but not limited to, the election of
one or more persons to fill any vacancy that exists on the Board of Directors
at the time of the meeting or any adjournment or adjournments thereof. Any
proxy given pursuant to this solicitation may be revoked by the stockholder at
any time prior to exercise of the proxy. Such right of revocation is not
limited or subject to compliance with any formal procedure.
Directors are elected by a plurality of the votes cast by the holders of
shares of Common Stock of the Company ("Common Stock") present in person or
represented by proxy at the meeting, with a quorum present. For purposes of the
election of directors, abstentions and broker non-votes are not considered to
be votes cast and do not affect the plurality vote required for directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the meeting,
with a quorum present, is required for approval of The Rouse Company 1994 Stock
Incentive Plan as set forth in Exhibit A to this Proxy Statement. For purposes
of approval of The Rouse Company 1994 Stock Incentive Plan, abstentions are
treated as present and entitled to vote on the matter and have the effect of a
vote against the proposal, and broker non-votes are not considered to be votes
cast.
On March 4, 1994, the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting of Stockholders, the
Company had outstanding and entitled to vote 47,562,449 shares of Common Stock,
par value $.01 per share. This class of stock has no cumulative voting rights,
and each issued and outstanding share of Common Stock is entitled to one vote
at the meeting and any adjournment or adjournments thereof.
<PAGE>
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1993, has been mailed to all stockholders with
this Proxy Statement.
ELECTION OF DIRECTORS AND RELATED MATTERS
It is proposed that 10 directors be elected at the meeting, each to serve
until the next Annual Meeting of Stockholders and until his or her successor is
duly elected and qualified.
If one or more of the nominees is unable to serve for any reason or if a
vacancy otherwise exists on the Board of Directors, the holders of proxies
solicited hereby reserve the right to nominate and vote for any other person or
persons of their choice. Certain information as to the nominees follows:
<TABLE>
<CAPTION>
DIRECTORSHIPS HELD IN OTHER
PRINCIPAL OCCUPATION AND COMPANIES WITH PUBLICLY
NAME, AGE AND YEAR BUSINESS OR PROFESSIONAL HELD SECURITIES AND NON-
IN WHICH FIRST EXPERIENCE DURING THE PAST PROFIT
ELECTED A DIRECTOR(1) FIVE YEARS ORGANIZATIONS(2)
- --------------------- -------------------------- ---------------------------
<S> <C> <C>
David H. Benson, 56 Member of the Board, British Gas plc; The
1987 Kleinwort Benson Group plc, Centerland Funds; Harrow
a bank holding company, and Corporation; Kleinwort
Chairman of the Board, Benson Group plc; Kleinwort
Kleinwort Charter Investment Benson International Equity
Trust plc, and Trustee, The Fund; Kleinwort Charter
Centerland Funds, management Investment Trust plc; and
investment companies; Trustee, Charities Official
formerly, Vice-Chairman of Investment Fund
the Board, Kleinwort Benson
Group plc
Jeremiah E. Casey, 54 Chief Executive, USA, Allied Allied Irish Banks plc;
1990 Irish Banks plc; and First Maryland Bancorp;
Chairman of the Board of Director and President,
First Maryland Bancorp and Associated Catholic
its banking subsidiaries Charities of Baltimore;
Trustee, Mercy Medical
Center; Trustee, The Walters
Art Gallery; and Director of
each of the following
entities: Children's
Research and Healing Center,
Inc.; Ireland United States
Council for Commerce &
Industry, Inc.; Irish
Educational Development
Foundation, Inc.; The
Kennedy Kreiger Institute,
Inc.; and The World Trade
Center Institute
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTORSHIPS HELD IN OTHER
PRINCIPAL OCCUPATION AND COMPANIES WITH PUBLICLY
NAME, AGE AND YEAR BUSINESS OR PROFESSIONAL HELD SECURITIES AND NON-
IN WHICH FIRST EXPERIENCE DURING THE PAST PROFIT
ELECTED A DIRECTOR(1) FIVE YEARS ORGANIZATIONS(2)
--------------------- -------------------------- ---------------------------
<S> <C> <C>
Anthony W. Deering, 49 Director, President and Kleinwort Benson Holdings
1993 Chief Operating Officer of Inc.; T. Rowe Price Fixed
the Company; formerly, Income and International
Executive Vice-President, Mutual Funds; Trustee,
Finance and Administration Baltimore Museum of Art;
and Chief Financial Officer Trustee, Friends School of
of the Company; and Senior Baltimore; Member, Mayor's
Vice-President and Chief Business Advisory Council;
Financial Officer of the and Trustee, Parks and
Company People Foundation of The
Foundation for Baltimore
Recreation and Parks
Rohit M. Desai, 55 Chairman of the Board and Sunglass Hut International,
1980 President, Desai Capital Inc.
Management Incorporated
("DCMI"), a specialized
investment firm managing
assets of various
institutional clients, and
Managing General Partner of
Rohit M. Desai Associates
and Rohit M. Desai
Associates-II, which are the
general partners,
respectively, of Equity-
Linked Investors, L.P.
("ELI") and Equity-Linked
Investors - II
("ELI-II"), New York
partnerships for
institutional investors
(DCMI is an adviser to ELI
and ELI-II)
Mathias J. DeVito, 63 Chairman of the Board and First Maryland Bancorp;
1972 Chief Executive Officer of USAir Group, Inc.; Member,
the Company; formerly, Business Committee for the
Chairman of the Board, Arts, Inc.; Director, The
President and Chief Enterprise Foundation; and
Executive Officer of the Immediate Past Chair, The
Company Greater Baltimore Committee
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTORSHIPS HELD IN OTHER
PRINCIPAL OCCUPATION AND COMPANIES WITH PUBLICLY
NAME, AGE AND YEAR BUSINESS OR PROFESSIONAL HELD SECURITIES AND NON-
IN WHICH FIRST EXPERIENCE DURING THE PAST PROFIT
ELECTED A DIRECTOR(1) FIVE YEARS ORGANIZATIONS(2)
- --------------------- -------------------------- ---------------------------
<S> <C> <C>
Juanita T. James, 41 Senior Vice-President, Book- Charter Trustee, Princeton
1989 of-the-Month Club, Inc., a University; Member, Advisory
subsidiary of Time Warner Board, Columbia University
Inc.; formerly, President Graduate School of Business;
and Chief Executive Officer, Member, Advisory Council,
Time-Life Libraries, Bethune-Cookman College; and
Incorporated and Vice- Member, National Coalition
President for Human of 100 Black Women
Resources of Time-Life
Books, Inc.
Thomas J. McHugh, 62 President, McHugh Philadelphia Consolidated
1980 Associates, Inc., a Holding Corp.; and Vice
registered investment Chairman and Trustee, St.
adviser Joseph's University
Hanne M. Merriman, 52 Retail Business Consultant, AnnTaylor Stores
1992 Hanne Merriman Associates, a Corporation; CIPSCO
retail consulting firm; Incorporated; State Farm
formerly, President and Mutual Automobile Insurance
Chief Operating Officer of Company; USAir Group, Inc.;
Nan Duskin, Inc.; and Trustee, American-
President and Chief Scandinavian Foundation; and
Executive Officer of Member, National Women's
Honeybee, Inc. Forum
Roger W. Schipke, 57 Chairman of the Board and The Brunswick Corporation;
1992 Chief Executive Officer of Legg Mason, Inc.; and
Sunbeam-Oster Company, Inc., Sunbeam-Oster Company, Inc.
a corporation that engages
in the sale of various
consumer products; formerly,
Chairman of the Board,
President and Chief
Executive Officer, The
Ryland Group, Inc.; and
Senior Vice-President of
G.E. Co., with worldwide
responsibility for appliance
products
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTORSHIPS HELD IN OTHER
PRINCIPAL OCCUPATION AND COMPANIES WITH PUBLICLY
NAME, AGE AND YEAR BUSINESS OR PROFESSIONAL HELD SECURITIES AND NON-
IN WHICH FIRST EXPERIENCE DURING THE PAST PROFIT
ELECTED A DIRECTOR(1) FIVE YEARS ORGANIZATIONS(2)
--------------------- -------------------------- ---------------------------
<S> <C> <C>
Alexander B. Trowbridge, President, Trowbridge The Gillette Co.; Harris
64 Partners, Inc., a Corp.; ICOS Corp.; New
1985 corporation that engages in England Mutual Life
the consulting business; Insurance Co.; PHH
formerly, President of the Corporation; Sun Company,
National Association of Inc.; Sun Resorts
Manufacturers, a national International Ltd.; and WMX
trade association that Technologies, Inc. Also
represents its members on serves as a director of
national public policy several publicly owned
issues mutual funds managed by
Warburg Pincus Counsellors,
Inc. Also, Trustee, The
Aspen Institute; and
Trustee, Phillips Academy
Andover
</TABLE>
- --------
(1) There exist no family relationships between any of the director-nominees or
between any of such nominees and any executive officer of the Company.
(2) All corporations identified have securities registered under the Securities
Exchange Act of 1934, as amended, except for non-profit organizations, the
companies identified with respect to Mr. Benson and New England Mutual Life
Insurance Co. and State Farm Mutual Automobile Insurance Company, both of
which are mutual insurance companies.
The Board of Directors has established three permanent committees of the
Board--the Audit, Executive and Personnel Committees--to perform certain
designated functions.
The Audit Committee, composed of Messrs. Desai (Chairman), Benson and
Schipke, Ms. James and Ms. Merriman recommends to the Board of Directors the
appointment of the Company's independent certified public accountants, reviews
the year-end financial statements and related matters with management and the
Company's independent certified public accountants and independent real estate
consultants, reviews the Company's Form 10-K Annual Report filed with the
Securities and Exchange Commission and reviews such accounting and auditing
issues concerning the Company and its subsidiaries and affiliates as may be
deemed appropriate. The Audit Committee held four meetings during 1993.
The Executive Committee, composed of Messrs. DeVito (Chairman), Casey, Desai,
McHugh and Trowbridge and Ms. James, takes action with respect to approved
projects and corporate financings of the Company, such special matters as may
be delegated to it by the Board and any other appropriate matters that arise
between Board meetings. In addition, this Committee serves as a nominating
committee. In this capacity, the Executive Committee determines the criteria
and qualifications for membership on the Board of Directors, develops an
orderly process for nominating persons to fill vacancies on the Board,
considers nominees for election to the Board and makes recommendations
regarding the compensation of directors. Stockholders may submit to the
Secretary of the Company names of nominees for membership on the Board of
Directors to be considered by the Executive Committee. The Executive Committee
held two meetings during 1993.
The Personnel Committee, composed of Messrs. McHugh (Chairman), Casey and
Trowbridge, reviews and makes recommendations to the Board regarding the
compensation programs of the Company, including
5
<PAGE>
the compensation of its executive officers, and reviews and approves grants
under the Company's stock option plans. See "Personnel Committee Report on
Executive Officer Compensation" below. In May, 1993, the Personnel Committee
assumed the responsibilities of the Pension Plan Committee of the Board.
Pursuant thereto, the functions of the Personnel Committee were expanded to
include responsibility for the appointment and review of the performance of an
investment manager or managers for Pension Plan assets, the direction of the
Pension Plan trustee with respect to the investment of Pension Plan assets, the
provision for proper communications with Pension Plan participants and their
beneficiaries and the review and approval of amendments to the Pension Plan
that do not significantly increase the Company's funding costs or that are
required to maintain the Pension Plan's compliance with federal or state law or
regulations. In March, 1994, the Personnel Committee also was given general
oversight responsibility for The Rouse Company Supplemental Retirement Benefit
Plan. The Supplemental Plan provides supplemental benefits for those employees
whose benefits under the Company's qualified Pension Plan and Savings Plan are
limited due to federal tax and pension limitations, and also permits employees
to defer all or any portion of their annual cash bonus under the Plan. The
Personnel Committee held four meetings during 1993.
During 1993, the Board of Directors of the Company held six meetings in
addition to the meetings held by Board Committees. During their respective
terms as directors, all directors of the Company attended 75% or more of the
aggregate of all Board meetings and all meetings of Committees of which they
were a member.
The following table sets forth the number of shares of Common Stock and
Series A Convertible Preferred Stock beneficially owned by each named executive
officer (see Summary Compensation Table on page 15), director and nominee for
director of the Company, by all directors and executive officers of the Company
as a group and by all persons, to the knowledge of the Company, beneficially
owning more than five percent (5%) of Company Common Stock or Series A
Convertible Preferred Stock.
EQUITY SECURITIES BENEFICIALLY OWNED
ON MARCH 4, 1994
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
COMMON STOCK PREFERRED STOCK
------------------------ ------------------------
PERCENT OF PERCENT OF
NAME OF BENEFICIAL OWNER NUMBER OF SHARES NUMBER OF SHARES
OR IDENTITY OF GROUP SHARES OUTSTANDING SHARES OUTSTANDING
- ------------------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
NAMED EXECUTIVE
OFFICERS(1)
Bruce D. Alexander...... 236,787 (2) -- --
Anthony W. Deering...... 380,980(3) (2) 3,500 (2)
Mathias J. DeVito....... 762,808(4) 1.58% -- --
Richard G. McCauley..... 178,149 (2) 52 (2)
Douglas A. McGregor..... 418,469 (2) -- --
DIRECTORS
David H. Benson......... 1,350(5) (2) -- --
Jeremiah E. Casey....... 3,500 (2) -- --
Anthony W. Deering...... See above See above See above See above
Rohit M. Desai.......... 1,903,007(6) 3.70% 140,000(6) 3.48%
Mathias J. DeVito....... See above See above -- --
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE
COMMON STOCK PREFERRED STOCK
------------------------- -------------------
PERCENT OF NUMBER PERCENT OF
NAME OF BENEFICIAL OWNER NUMBER OF SHARES OF SHARES
OR IDENTITY OF GROUP SHARES OUTSTANDING SHARES OUTSTANDING
------------------------ --------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Juanita T. James.......... 200 (2) -- --
Thomas J. McHugh.......... 10,000 (2) -- --
Hanne M. Merriman......... 500 (2) -- --
Roger W. Schipke.......... 6,500 (2) -- --
Alexander B. Trowbridge... 450 (2) -- --
All executive officers and
directors as a group
(22 persons)............. 4,500,627(7) 9.24% 143,669 3.57%
NAME AND ADDRESS OF OTHER
5% HOLDERS OF COMMON STOCK
Ariel Capital Management,
Inc. .................... 3,981,405(8) 8.37%
307 N. Michigan Avenue
Suite 500
Chicago, Illinois 60601
Eagle Asset Management,
Inc. .................... 3,797,627(9) 7.99%
880 Carillon Parkway
St. Petersburg, Florida
33716
FMR Corp. ................ 2,685,811(10) 5.65%
82 Devonshire Street
Boston, Massachusetts
02109
T. Rowe Price Associates,
Inc. .................... 2,367,721(11) 5.00%
100 East Pratt Street
Baltimore, Maryland 21202
Onroerend Goed
Belegginsmaatschappij
Omlandia B.V. ........... 2,381,000(12) 5.01%
Coolsingel 120
NL-3011 AG
Rotterdam, The Netherlands
</TABLE>
- --------
(1) With respect to named executive officers of the Company, includes (i)
240,600 shares of Common Stock subject to stock options granted under the
Company's 1980, 1985 and 1990 Stock Option Plans that either are presently
exercisable or will become exercisable within 60 days of March 4, 1994,
(ii) 41,359 shares of Common Stock in such named executive officers'
accounts under The Rouse Company Savings Plan as of February 14, 1994,
(iii) 5,589 shares of Common Stock that are issuable if the Company's 5
3/4% Convertible Subordinated Debentures due 2002 that are beneficially
held by a named executive officer were converted, and (iv) 8,358 shares of
Common Stock that are issuable if the Company's Series A Convertible
Preferred Stock attributable to two of the named executive officers were
converted. Also includes 340,823 shares of Common Stock owned directly or
indirectly by spouses of named executive officers, children who share the
same residence and certain other family members, as to which shares the
named executive officers in some instances disclaim beneficial ownership.
Unless otherwise
7
<PAGE>
indicated below, and with the exception of shares owned by spouses,
children and certain other family members, each of the beneficial owners
indicates that he has sole voting and dispositive powers.
(2) Beneficial ownership does not exceed one percent of the shares of Common
Stock or Series A Convertible Preferred Stock outstanding.
(3) Includes 5,589 shares of Common Stock that are issuable if the Company's 5
3/4% Convertible Subordinated Debentures due 2002 that are beneficially
held by Mr. Deering were converted. Also includes 3,500 shares of Series A
Convertible Preferred Stock that are convertible into 8,235 shares of
Common Stock and 31,610 shares that are owned by a Foundation of which Mr.
Deering is the Trustee. Mr. Deering disclaims beneficial ownership of the
shares that are owned by the Foundation.
(4) Includes 146,000 shares that are in trusts for Mr. DeVito's children and
other descendants and as to which shares Mr. DeVito has no voting or
dispositive power. Mr. DeVito disclaims beneficial ownership of such
shares.
(5) Includes 450 shares of Common Stock owned directly by Mr. Benson's spouse,
as to which shares he disclaims beneficial ownership. Mrs. Benson has sole
voting and dispositive powers with respect to such shares. Does not
include 208,350 shares of Common Stock that, as of March 8, 1994, are
owned and held in accounts managed by Kleinwort Benson Investment
Management Limited or its affiliates, all of which are subsidiaries of
Kleinwort Benson Group plc. Mr. Benson is a member of the Board of
Kleinwort Benson Group plc. Mr. Benson has no voting or dispositive power
with respect to such shares and disclaims beneficial ownership of them.
(6) Includes 1,500 shares directly owned by Mr. Desai. Mr. Desai disclaims
beneficial ownership as to all other shares. Desai Capital Management
Incorporated, of which Mr. Desai is Chairman of the Board and President,
has dispositive power on behalf of clients with respect to 1,090,000
shares of Common Stock, 140,000 shares of Series A Convertible Preferred
Stock and $13.8 million principal amount of the Company's 5 3/4%
Convertible Subordinated Debentures due 2002. The 5 3/4% Debentures are
convertible into 482,096 shares of Common Stock. The Series A Convertible
Preferred Stock is convertible into 329,411 shares of Common Stock. The
number of shares of Common Stock includes those shares that are issuable
upon conversion of the Series A Convertible Preferred Stock and the 5 3/4%
Debentures.
(7) Includes 328,900 shares of Common Stock subject to stock options granted
under the Company's 1980, 1985 and 1990 Stock Option Plans that either are
presently exercisable or will become exercisable within 60 days of March
4, 1994, and 70,688 shares of Common Stock in executive officers' accounts
under The Rouse Company Savings Plan as of February 14, 1994. Also
includes 487,685 shares of Common Stock that are issuable if the Company's
5 3/4% Convertible Subordinated Debentures due 2002 that are attributable
to directors and executive officers were converted, and 338,042 shares of
Common Stock that are issuable if the Company's Series A Convertible
Preferred Stock attributable to directors and executive officers were
converted. Does not include 208,350 shares of Common Stock of the Company
that, as of March 8, 1994, are owned and held in accounts managed by
Kleinwort Benson Investment Management Limited or its affiliates, all of
which are subsidiaries of Kleinwort Benson Group plc. See Footnote (5)
above.
(8) Represents shares beneficially held as of December 31, 1993 by Ariel
Capital Management, Inc., which has sole voting power with respect to
2,769,900 shares, shared voting power with respect to 318,580 shares and
sole dispositive power with respect to all 3,981,405 shares.
8
<PAGE>
(9) Represents shares beneficially held as of December 31, 1993 by Eagle Asset
Management, Inc., which has sole voting and dispositive power with respect
to all 3,797,627 shares.
(10) Represents shares beneficially held as of December 31, 1993 by FMR Corp.,
which has sole voting power with respect to 43,799 shares and sole
dispositive power with respect to all 2,685,811 shares.
(11) Represents shares beneficially held as of February 14, 1994 by T. Rowe
Price Associates, Inc. ("Price Associates"), which has sole voting power
with respect to 87,927 shares and sole dispositive power with respect to
all 2,367,721 shares. These shares are owned by various individual and
institutional investors for whom Price Associates serves as investment
adviser. Price Associates disclaims that it is, in fact, the beneficial
owner of such shares.
(12) Represents shares beneficially held as of December 21, 1993 by Onroerend
Goed Belegginsmaatschappij Omlandia B.V. ("Omlandia"), a Dutch private
limited liability company. Rodamco North America B.V. ("Rodamco North
America"), a Dutch private limited liability company, owns 100% of the
outstanding securities of Omlandia. Rodamco N.V., a Dutch public limited
liability company, owns 80% of the outstanding securities of Rodamco North
America. Omlandia, Rodamco North America and Rodamco N.V. have shared
voting power and shared dispositive power with respect to all of the
2,381,000 shares.
PERSONNEL COMMITTEE REPORT ON
EXECUTIVE OFFICER COMPENSATION
The Personnel Committee of the Board of Directors (the "Committee") is
pleased to present its report on executive compensation for 1993. The Committee
is composed of three outside directors of the Company and is responsible for
reviewing and making recommendations to the Board generally with respect to the
compensation of the Company's executive officers. The Board of Directors
reviews these recommendations and approves all executive compensation actions
with the exception of grants of stock options which, as approved by
stockholders and the Board, are made by the Committee under the Company's Stock
Option Plan.
OVERALL COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company has developed an overall compensation program and specific
compensation plans which are designed to enhance corporate performance and thus
stockholder value, by aligning the financial interests of executives with those
of its stockholders. This linkage is established by tying a significant portion
of executive compensation to the Company's success in meeting specified
performance goals adopted annually as described below. In pursuit of these
overall objectives, the structure and scope of the Company's compensation
program are designed to attract to the Company and retain the best possible
executive talent; to motivate these executives to achieve specific performance
goals which are integral to the Company's business plan approved by its Board
of Directors; to reinforce and link executive and stockholder interests through
equity-based plans; and finally to provide a compensation package that
recognizes individual performance in conjunction with overall corporate
performance.
The Committee has primary responsibility for evaluating the Company's overall
compensation program and specific compensation plans and establishing
compensation policies that meet the objectives described above. Periodically,
the Committee's deliberations include a comprehensive review by independent
compensation consultants having a broad, national practice, conducted under the
direction of the Committee,
9
<PAGE>
assessing the design and effectiveness of the Company's compensation programs
and comparing the Company's executive compensation and corporate performance to
comparable corporations that define its competitive marketplace for executive
talent.
In 1993 such a comprehensive review was conducted by William M. Mercer,
Incorporated (the "Compensation Consultant"), which issued its report and
recommendations to the Committee. The Compensation Consultant's Report included
the results of a comprehensive study of competitive compensation practices,
surveying in depth twelve major real estate firms deemed to be most comparable
to the Company (including four firms that are included in the peer group used
in the current Performance Graph) as well as executive compensation practices
of national corporations whose comparability is based on asset size and market
capitalization. The Report's primary focus was upon current competitive
compensation practices for the Company's executive officers and most senior
management positions, and included a detailed review and recommendations with
respect to the overall design, effectiveness and competitiveness of the
Company's annual and long-term incentive compensation programs. The
recommendations reflected compensation practices among both the major real
estate firms and comparable national corporations (referred to collectively as
"comparable companies").
In addition to reviewing and giving careful consideration to the results of
reports of independent compensation consultants, consideration is given to the
performance of the Company in its industry as compared to the performance of
competitive companies surveyed. The Committee also uses its discretion when, in
its judgment, external, internal or an individual's circumstances are deemed
relevant. These periodic compensation reviews permit an ongoing evaluation of
the link between the Company's performance and its executive compensation in
the context of the compensation programs of comparable companies.
The Committee reviews and makes recommendations to the Board with respect to
the compensation of the Chief Executive Officer and the other executive
officers of the Company. In reviewing the individual performance of the
Company's executive officers (other than the Chief Executive Officer), the
Committee and Board each year take into account the views of Mr. DeVito to
whom, as Chief Executive Officer, these officers are responsible.
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION
The principal elements of the Company's executive compensation program
consist of both annual and long-term programs and include base salary and
annual incentive cash bonus, and at appropriate intervals, long-term incentive
compensation in the form of stock option and stock bonus grants. The Company
also provides medical, pension and other fringe benefits generally available to
Company employees.
BASE SALARIES
Base salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
aligning such salaries with reference to market data and periodic independent
compensation consultant recommendations with respect to the competitive
marketplace for executive talent. In addition to comparing base salary
compensation of other companies, consideration is given to the relative overall
corporate performance of the Company in relation to its competitors in the
industry, with the objective of achieving and maintaining a higher level of
performance than industry averages through establishing high performance
standards and setting base executive salaries in the Company within the top
quartile of base salaries at comparable companies.
10
<PAGE>
Upon being aligned appropriately as described above, annual salary
adjustments, if any, are determined by evaluating the performance of the
Company and its executive officers, and by taking into account any additional
or new responsibilities assumed by individual executive officers in connection
with promotions or organizational changes. Whether salaries should be adjusted
in a particular year, and the amount thereof, is determined largely upon
recommendation from the Chief Executive Officer to the Personnel Committee, and
upon recommendation by that Committee to the Board with respect to all
executive officers, based principally on overall corporate performance and with
reference to the overall corporate salary budgets established for the Company
as a whole.
In recent years, salary adjustments for the Company's executive officers
typically have been made not more frequently than every two years, with these
officers having received two salary adjustments in the past five years except
in connection with promotions. During 1993, no base salary adjustment was made
for Mr. DeVito, Chairman and Chief Executive Officer of the Company, as he and
other executive officers had received salary adjustments in 1992.
ANNUAL INCENTIVE BONUS
The Company's executive officers and other key persons are eligible for an
annual cash bonus under the Incentive Compensation Plan, which was approved a
number of years ago by the Board of Directors. While the number of persons who
are eligible for such bonuses varies from year to year, approximately 250-300
persons have participated each year.
Under the Plan, the executive officers of the Company as a group have been
held responsible for the Company's annual corporate objectives as common
individual objectives, and their bonus awards have been determined by the
Board's overall evaluation of corporate performance. The incentive bonus
potential for executive officers, under the 1993 Plan, ranges from 27% to 80%
of salary according to position, subject to the Board's discretion to grant
special supplemental bonus awards in exceptional cases based upon extraordinary
performance, and subject further to overall limitations on aggregate bonus
payments to all participants which may result in no bonuses being awarded for
the applicable year.
As part of the Board's annual review of the principal business objectives of
the Company's five-year business plan, a set of annual corporate objectives,
assigned individual relative weightings, is recommended by the Chief Executive
Officer to the Executive Committee of the Board of Directors, which in turn
makes recommendations to the Board for final approval by that body. The
specific targeted objectives are set at challenging levels, so that
substantially achieving earnings and other corporate objectives would represent
good performance; for excellent performance, achieving higher levels of
performance for earnings and other objectives is required. As shown by the
relative weightings approved for 1993 as shown in parentheses, these Board-
approved objectives, on which the executive officers' bonuses are based, place
heavy emphasis on objectives regarding earnings results and financial position
(totalling 72 1/2%), including specific earnings targets for total corporate
and individual business segment Earnings Before Depreciation and Deferred Taxes
("EBDDT") as well as for Columbia land sales and income property earnings, and
specific objectives relating to corporate liquidity and cash position and
internal staffing and related costs. Additional corporate objectives included
specific strategic near- and long-term objectives for 1993 (totalling 27 1/2%)
relating to capital expenditures and leasing, retail center construction and
openings, future retail and office development, retail center acquisitions and
annual human resource equal opportunity goals.
11
<PAGE>
For 1993, the Board of Directors determined that the Company had achieved
excellent results for the year, meeting or significantly exceeding its targeted
corporate performance objectives overall for the year. Based on these results,
the Board of Directors awarded to Mr. DeVito a bonus of $438,900, representing
80% of his base salary, the full potential incentive bonus payment under the
provisions of the Company's Incentive Bonus Plan.
LONG-TERM INCENTIVE STOCK PLANS
The Company's long-term incentive stock program includes the Company's 1990
Stock Bonus Plan and 1990 Stock Option Plan, both approved by stockholders. The
purpose of this stock program has been to provide a meaningful equity interest
in the Company to proven senior Company executives and other key executives in
a format which is designed to retain these executives and align their financial
interests with those of stockholders. This stock program has been utilized by
the Company over several decades and is targeted compositely to achieve overall
long-term incentive compensation within the top quartile of comparable long-
term executive compensation.
STOCK BONUS AWARDS
The Board of Directors is authorized to grant stock bonus awards, and to make
loans to recipients in connection therewith, upon such terms and conditions as
they may approve. These grants are made following review by and upon
recommendation of the Committee, which has available to it upon request the
services of independent compensation specialists providing data and advice to
assist it in making these recommendations.
Stock bonus awards have been made periodically to executive officers and a
small group of other executives in the Company upon consultation with and
recommendation of the Chief Executive Officer. It has been the practice of the
Company to make these grants subject to restrictions which cause forfeiture of
the applicable shares in the event the executive recipient voluntarily leaves
the employ of the Company. The term over which these restrictions have applied
typically is five to seven years, with installments of share amounts becoming
free of restrictions over a period sufficient to incentivize the continuance of
employment of those executives deemed key to the performance of the Company and
building stockholder value over the longer term.
In conjunction with and in order to facilitate the payment of taxes payable
by the recipients in connection with these restricted stock grants, the Company
in most instances has made loans to recipients, subject to annual payment of
interest and to subsequent forgiveness in annual installments dependent upon
continued employment in the Company, typically over a period of five or more
years.
In 1993, based on the Compensation Consultant's Report, the Board established
a competitive range of annualized values of long-term incentives for each of
the executive officer positions as a multiple of base salary. Mr. DeVito
received no bonus stock award in 1993.
STOCK OPTIONS
Under the Company's 1990 Incentive Stock Option Plan, stock options may be
granted by the Committee to the Company's executive officers and to other key
executives with such frequency and, subject to certain terms and limitations as
set forth in the Plan, as approved by the Committee under and subject to the
oversight of the Board of Directors. Based upon market data, independent
consultants' advice and
12
<PAGE>
management's recommendations, the Committee approves the size of stock option
awards using approved award size criteria which, together with other long-term
incentive programs, are designed to place the Company within the top quartile
of competitive long-term compensation pay.
Stock options are granted for terms not exceeding 10 years, with an exercise
price equal to the market price of the Common Stock on the date of grant or the
closing price of the Common Stock the day before, and typically are granted
subject to vesting in installments of share amounts over a three- to five-year
period. Stock options thus are designed to align the interests of executives
with those of Company stockholders, since no benefit inures to the employee
unless stock price appreciation occurs over a number of years.
In 1993, grants of stock options were made to Mr. DeVito and to other
executive officers of the Company based upon specific recommendations contained
in the Compensation Consultant's Report. The amount of such grants fell within
approved market-based competitive ranges of annualized values of long-term
compensation established for each executive officer position. Individually, the
size of each such grant was based upon a multiple of base salary, using a two-
year stock option grant value guideline and utilizing the Black-Scholes method
of valuing options. Details concerning grants made in 1993 are set forth below
in the table entitled "Option Grants in Last Fiscal Year."
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION EXPENSE UNDER FEDERAL TAX LAWS
The Committee has considered the impact of newly enacted provisions of the
Internal Revenue Code of 1986 (the "Code") that in certain circumstances
disallow compensation deductions in excess of $1 million for any year with
respect to the Company's Chief Executive Officer and its four other most highly
compensated officers. This disallowance provision does not apply to
performance-based compensation.
While the Company expects that this provision will not limit its tax
deductions for executive compensation in the near term, the Personnel Committee
has determined that the provisions of The Rouse Company 1994 Stock Incentive
Plan (the "Plan") should enable the Company to comply, to the extent deemed
advisable, with the Code's requirements for performance-based compensation to
insure that the Company will be able to avail itself of all deductions
otherwise available with respect to stock awards made under the Plan.
One of the Code's requirements is that the stockholders approve the material
terms of performance goals the Board or the Committee may establish with
respect to certain stock awards under the Plan. In this regard, the Company's
stockholders are being asked to approve the Plan at the 1994 Annual Meeting of
Stockholders, including Article VIII of the Plan, which contains the business
criteria that may be used by the Board or the Personnel Committee in connection
with such stock awards. See Exhibit A.
13
<PAGE>
CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to corporate performance.
The Personnel Committee intends to continue the policy of linking executive
compensation to corporate performance in order to continue to align the
interests of executives with those of Company stockholders.
Thomas J. McHugh,
Chairman
Jeremiah E. Casey
Alexander B. Trowbridge
14
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to the Company for the years
ended December 31, 1993, 1992 and 1991 of those persons who were the Chief
Executive Officer and the four other most highly compensated officers of the
Company in 1993. The amounts reported below under the columns captioned
"Salary," "Bonus," "Restricted Stock Awards" and "Securities Underlying
Options" are payable under and in accordance with the Company's annual and
long-term compensation plans as described above in the "Personnel Committee
Report on Executive Officer Compensation." No stock appreciation rights
("SARs") were granted during 1991-1993, nor have any SARs been granted at any
time in prior years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------- ------------------------
RESTRICTED SECURITIES
NAME STOCK UNDERLYING ALL OTHER
AND PRINCIPAL AWARD(S) OPTIONS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) (#) ($)(1)
- ------------- ---- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mathias J. 1993 548,625 438,900 None 100,000 92,497(5)(6)
DeVito
Chairman of 1992 548,625 438,900 None None 3,114,364(6)(7)
the Board and
Chief Exec- 1991 522,500 313,500 None None
utive Officer
Anthony W. 1993 450,000(2) 315,000 1,256,250(2) 75,000 54,497(5)
Deering
President 1992 341,000 250,000 None None 122,364(7)
and Chief
Operating 1991 310,000 151,900 None None
Officer
Douglas A. 1993 358,000 232,700 456,250(3) 25,000 54,497(5)
McGregor
Executive 1992 341,000 221,650 None None 122,364(7)
Vice-President
for
Development 1991 310,000 151,900 None None
and Operations
Bruce D. 1993 288,750 158,815 None(4) 50,000 4,497(5)
Alexander
Senior Vice- 1992 288,750 158,800 None None 72,364(7)
President and
Director of 1991 275,000 112,750 None None
New Business
Richard G. 1993 288,750 158,815 None(4) 40,000 4,497(5)
McCauley
Senior Vice- 1992 288,750 158,800 None None 72,364(7)
President,
General 1991 275,000 112,750 None None
Counsel and
Secretary
</TABLE>
- --------
(1) In accordance with the Securities and Exchange Commission's transition
rules under the executive compensation rules, the amounts under the column
captioned "All Other Compensation" are not reported for the year 1991. Such
amounts are reported only for the years 1992 and 1993.
(2) In February, 1993, in conjunction with the election of Anthony W. Deering
as President and Chief Operating Officer of the Company, the Board of
Directors adjusted his salary and, acting pursuant to the Company's 1990
Stock Bonus Plan, awarded Mr. Deering 75,000 shares of Common Stock (the
"1993 Bonus Shares"). Ownership of the 1993 Bonus Shares vests 10% on
January 2nd of 1994, 1995
15
<PAGE>
and 1996, 15% on January 2nd of 1997 and 1998, and 20% on January 2nd of
1999 and 2000. Any 1993 Bonus Shares that have not vested will be
forfeited if the recipient leaves the Company's employ for any reason
other than death, disability or discharge without good cause (which is
defined to include certain changes in control of the Company). Dividends
are paid on the restricted shares. At December 31, 1993, Mr. Deering had
aggregate restricted shareholdings of 124,000 shares of Common Stock
having a value, based on the value of the Company's shares on that date,
of $2,201,000.
(3) In September, 1993, in conjunction with Douglas A. McGregor's assumption of
expanded responsibilities as Executive Vice-President for Development and
Operations, the Board of Directors adjusted his salary, and acting pursuant
to the Company's 1990 Stock Bonus Plan, awarded Mr. McGregor 25,000 shares
of Common Stock (the "1993 Bonus Shares"). Ownership of the 1993 Bonus
Shares vests 25% on September 23rd in each of the years 1995, 1996, 1997
and 1998. Any 1993 Bonus Shares that have not vested will be forfeited if
the recipient leaves the Company's employ for any reason other than death,
disability or discharge without good cause (which is defined to include
certain changes in control of the Company). Dividends are paid on the
restricted shares. At December 31, 1993, Mr. McGregor had aggregate
restricted shareholdings of 74,000 shares of Common Stock having a value,
based on the value of the Company's shares on that date, of $1,313,500.
(4) As of December 31, 1993, Messrs. Alexander and McCauley each had aggregate
restricted shareholdings of 9,000 shares of Common Stock having a value,
based on the value of the Company's shares on that date, of $159,750.
(5) Includes installments on loans by the Company relating to restricted stock
awards under the Company's 1990 Stock Bonus Plan. Installments were
forgiven by the Company during 1993 in the amount of $50,000 as to both
Messrs. Deering and McGregor. Also includes matching contributions
available to employees of the Company generally under the Company's 401(k)
Savings Plan in the amount of $4,497 for each of the named executive
officers.
(6) Includes distributions of $2,940,000 in 1992 and $88,000 in 1993 as partial
payment of Mr. DeVito's vested pension benefits that had accrued under the
Company's Pension Plan and Supplemental Retirement Benefit Plan during his
more than 24 years of service to the Company. The distributions, the
purpose of which was to provide Mr. DeVito with funds for the payment of
taxes, were approved by the Board of Directors as part of an agreement
intended to remove any detriment in respect to Mr. DeVito's pension benefit
resulting from his continuing to serve the Company after attaining age 62
in August, 1992, the normal retirement age at which full benefits become
payable under the Company's retirement plans. The agreement relating to
certain of Mr. DeVito's retirement benefits, including the distributions
referred to above, is described below in "Employment Contracts and
Termination of Employment and Change of Control Arrangements." Other
compensation included for Mr. DeVito is described in Note (5) above and
Note (7) below.
(7) Includes installments on loans by the Company relating to restricted stock
awards under the Company's 1985 Stock Bonus Plan or 1990 Stock Bonus Plan,
which installments were forgiven by the Company during 1992 in the
following amounts: $170,000 as to Mr. DeVito; $118,000 as to both Messrs.
Deering and McGregor; and $68,000 as to both Messrs. Alexander and
McCauley. Also includes matching contributions available to employees of
the Company generally under the Company's 401(k) Savings Plan in the amount
of $4,364 for each of the named executive officers.
16
<PAGE>
OPTIONS AND STOCK APPRECIATION RIGHTS
The following table summarizes information relating to stock option grants
during 1993 to the executive officers named in the Summary Compensation Table.
No SARs have been granted at any time under the Company's Stock Option Plans to
any of the named executive officers or any other Company employee.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANT
OPTIONS GRANTED TO EXERCISE DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE VALUE(2)
---- ---------- ------------ --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Mathias J. DeVito 100,000 28.6 19.75 9/22/03 $603,400
Anthony W. Deering 75,000 21.4 19.75 9/22/03 $452,550
Douglas A. McGregor 25,000 7.1 19.75 9/22/03 $150,850
Bruce D. Alexander 50,000 14.3 19.75 9/22/03 $301,700
Richard G. McCauley 40,000 11.4 19.75 9/22/03 $241,360
</TABLE>
- --------
(1) All of the shares were granted on September 23, 1993. With respect to Mr.
DeVito, the shares are exercisable as to 33,334 shares of Common Stock on
September 23, 1994 and 33,333 shares of Common Stock on September 23rd in
each of the years 1995 and 1996. With respect to Messrs. Deering, McGregor,
McCauley and Alexander, the shares are exercisable as to 25% of the shares
granted on September 23rd for each of the years 1995 through 1998.
(2) These values are based on the Black-Scholes option pricing model, which
produces a per option share value of $6.034 using the following
assumptions: options exercised after 7 years, stock price volatility of
.1219, dividend yield of 3.44% and an interest rate of 4.98%, which was the
7-year Treasury note rate at the time of grant. No adjustments have been
made for forfeitures or nontransferability. The actual value, if any, that
the executive officer will realize from these options will depend solely on
the increase in the stock price over the $19.75 exercise price when the
options are exercised.
The following table summarizes information relating to stock option
exercises during 1993 and the number and value of unexercised stock options
previously granted to the executive officers named in the Summary Compensation
Table. As previously indicated, no SARs have been granted at any time under the
Company's Stock Option Plans to any of the named executive officers or any
other Company employee.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS(1)
ACQUIRED ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Mathias J. DeVito None None 64,000/156,000 None/none
Anthony W. Deering 300 $2,275 49,300/126,000 $86,775/$127,500
Douglas A. McGregor 300 $2,350 49,300/ 76,000 $86,775/$127,500
Bruce D. Alexander None None 29,000/ 71,000 None/none
Richard G. McCauley None None 29,000/ 61,000 None/none
</TABLE>
17
<PAGE>
- --------
1) An "in-the-money" stock option is an option for which the market price, on
December 31, 1993, of Company Common Stock underlying the option exceeds the
exercise price (i.e., the market price of Company Common Stock on the date
the option was granted). The value shown represents stock price
appreciation, if any, since the grant date of the option.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the S&P 500 Index and a Peer Group of real estate companies
identified below. The graph assumes that $100 is invested initially and all
dividends are reinvested.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93
<S> <C> <C> <C> <C> <C> <C>
ROUSE $100 $110 $63 $82 $83 $85
S&P 500 $100 $132 $128 $166 $179 $197
PEER GROUP $100 $115 $62 $56 $41 $47
</TABLE>
The Peer Group consists of the following publicly traded real estate
companies: Bramalea Ltd., Cambridge Shopping Centers, Catellus Development
Corp., Crown America Realty Trust, Federal Realty Investment Trust, First Union
Realty, Forest City Enterprises, General Growth Properties, Inc., Kimco Realty,
Koger Properties, Simon Property Group, Inc., Taubman Centers, Inc., Trizec
Corporation Ltd., Urban Shopping Centers, Inc. and Weingarten Realty
Investment.
18
<PAGE>
The Peer Group consists of all the real estate companies that were included
in the Company's proxy statement last year plus Crown America Realty Trust,
General Growth Properties, Inc., Simon Property Group, Inc. and Urban Shopping
Centers, Inc. The four new companies were added to the Peer Group because they
are real estate companies whose properties consist primarily of regional retail
centers. These companies first became publicly traded in 1993.
Assuming a $100 investment in the Common Stock of the Company on December 31,
1988 and reinvestment of all dividends, the value of the investment on December
31, 1993 would be $85. Based on the same assumptions, the value of the same
investment in this year's Peer Group and in the Peer Group that was used in
last year's proxy statement would be $46.72 and $46.61, respectively. The
minimal difference between the returns for the two Peer Groups results from the
fact that the four companies that were added to the Peer Group this year first
became publicly traded in 1993 and thus had an impact on total return for the
Peer Group for less than one year.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
In August, 1992, Mr. DeVito attained age 62, which is the normal retirement
age under the Company's Pension Plan and Supplemental Retirement Benefit Plan
(the "Supplemental Plan"). At that time, Mr. DeVito could have retired and
received a full distribution of the pension benefits that he had accrued during
his more than 24 years of service as a senior officer of the Company. Due to
the operation and effect of the provisions of these two retirement plans, Mr.
DeVito would have been penalized economically if he continued in service to the
Company beyond the Company's normal retirement date.
To remove any detriment with respect to Mr. DeVito's vested pension benefits
under the Company's retirement plans resulting from his continuing to serve the
Company after attaining the normal retirement age, the Company entered into an
Agreement with Mr. DeVito, dated September 24, 1992, that was recommended by
the Pension Plan Committee of the Board of Directors and approved by the Board
of Directors. Under the terms of the Agreement, Mr. DeVito was given the right
to withdraw his entire benefit under the Supplemental Plan. Mr. DeVito elected
to receive the aggregate amount of $3,028,000, a partial payment sufficient for
him to pay federal, state and local taxes owing by him with respect to his
vested benefits under the Supplemental Plan. The Company agreed to pay the
remaining portion of his vested pension benefit due to him under that Plan,
$4,672,032, with interest on all unpaid amounts at the average Pension Benefit
Guaranty Corporation ("PBGC") rate for each twelve-month period ending July
31st or any shorter applicable period, upon his future retirement or other
termination of employment.
The Company also agreed to pay Mr. DeVito upon his retirement or other
termination of employment an additional lump sum amount equivalent to the
amount, if any, that the present value of his benefits then payable to him
under the Company's Pension Plan is less than $1,167,307, the present value of
Mr. DeVito's benefits on September 24, 1992, with interest at the average PBGC
rate as described above.
Stock option grants, bonus stock grants and related loans under the Company's
Stock Option and Stock Bonus Plans provide that any non-vested portion of a
stock option grant will vest, any remaining restrictions upon bonus stock
shares will be released and any related loan balance will be forgiven if the
person dies, becomes disabled or is discharged without good cause (which is
defined to include certain changes in control of the Company). If such an event
were to occur with respect to an executive officer, all stock options not yet
19
<PAGE>
exercised, as set forth above in the table captioned "Aggregated Option
Exercises in Last Fiscal Year and FY-End Option Values," would become vested,
and the outstanding principal loan balances set forth below in "Indebtedness of
Executive Officers" would be forgiven. In addition, Mr. Deering and Mr.
McGregor would have forfeiture restrictions released on 102,500 and 60,000
shares, respectively, of bonus stock.
The Company also has a severance plan available on a non-discriminatory basis
to all employees, including executive officers, that provides benefits for
involuntary terminations of employment, except for discharges for cause or
disciplinary reasons. Severance pay generally is equal to one week's salary for
each six months (or portion of six months) of service performed in the first
three years of employment and one week's salary for each full or partial year
worked in excess of three years. Group medical and life insurance coverage also
are continued at no cost to the individual for up to 90 days.
INDEBTEDNESS OF EXECUTIVE OFFICERS
In November, 1990, upon the elections of Anthony W. Deering and Douglas A.
McGregor as Executive Vice-Presidents of the Company, the Board of Directors
awarded Messrs. Deering and McGregor shares of Common Stock pursuant to the
Company's 1990 Stock Bonus Plan. In February, 1993, upon the election of Mr.
Deering as President and Chief Operating Officer, the Board of Directors
awarded Mr. Deering shares of Common Stock pursuant to the Company's 1990 Stock
Bonus Plan. In September, 1993, the Board of Directors, acting pursuant to the
Company's 1990 Stock Bonus Plan, awarded shares of Common Stock as incentive
awards to certain of the Company's executive officers in conjunction with a
reorganization of the responsibilities of senior management, which included the
election of eight new Senior Vice-Presidents. In connection with such grants of
bonus stock and to assist the recipients in paying related tax and other
obligations, the Board of Directors approved loans to such executive officers.
Each loan is to be forgiven, except as to interest, in five equal annual
installments if the person continues to serve the Company.
In March, 1989, the Personnel Committee of the Board of Directors granted
stock options to Messrs. Kassolis, Minutoli, Riedy and Smalley (elected as
Senior Vice-Presidents in 1993) pursuant to the Company's 1990 Stock Option
Plan. At the same time, the Board of Directors authorized loans to each person
to be made in connection with the exercise of the options. Subsequently, the
terms of the options were modified by the Board or the Personnel Committee to
permit, as an alternative, open market purchases of the same number of shares
of Common Stock and loans in the amount of the open market purchases. Each loan
is to be forgiven, except as to interest, in five equal annual installments if
the person continues to serve the Company.
20
<PAGE>
The following table lists those executive officers who received loans in
connection with the bonus stock grants and the stock option grants described in
the two preceding paragraphs, and whose maximum indebtedness to the Company
from January 1, 1993 through March 4, 1994 exceeded $60,000:
<TABLE>
<CAPTION>
MAXIMUM
PRINCIPAL
AMOUNT OF
LOANS PRINCIPAL
OUTSTANDING AMOUNT
FROM 1-1-93 OF LOANS
NAME OF RELATIONSHIP THROUGH OUTSTANDING
INDIVIDUAL WITH COMPANY 3-4-94(1) ON 3-4-94
---------- ------------ ----------- -----------
<S> <C> <C> <C>
Anthony W. President and Chief Operating $778,125 $602,500
Deering Officer
Jeffrey H. Dona- Senior Vice-President, Chief 92,619 92,619
hue Financial Officer and Director of
the Finance Division
Duke S. Kassolis Senior Vice-President and Director 174,563 154,375
of Office and Mixed-Use Operations
Paul I. Latta, Senior Vice-President and Director 92,619 92,619
Jr. of Retail Operations
Douglas A. McGre- Executive Vice-President for 200,000 100,000
gor Development and Operations
Robert Minutoli Senior Vice-President and Director 315,434 241,428
of Acquisitions
Robert D. Riedy Senior Vice-President and Director 150,869 133,743
of Retail Leasing
Alton J. Scavo Senior Vice-President, Director of 121,700 121,700
the Community Development Division
and General Manager of Columbia
Jerome D. Smalley Senior Vice-President and Director 163,403 90,653
of the Commercial and Office
Development Division
George L. Senior Vice-President, Controller 118,750 118,750
Yungmann and Director of the Controller's
Division
</TABLE>
- --------
(1) Interest accrues on the principal amount of the outstanding loans and is
payable on December 31st of each year. The interest rate on all the loans
is 6% per year, except that the interest rate on the loans relating to the
stock bonus grants that were made in September, 1993 is 5.35% per year.
PENSION PLAN
The persons named in the Summary Compensation Table participate in the
Company's noncontributory Pension Plan, which is a career average plan. The
Pension Plan provides for a combination of "past service" benefits and "future
service" benefits. The past service benefit is (i) 1.15% of the lower of the
employee's 1991 gross earnings or "high 3 average" direct cash compensation
(defined as cash compensation plus
21
<PAGE>
non-cash taxable amounts relating to bonus share grants that were made prior to
January 1, 1989 and certain loan forgiveness relating to these bonus share
grants) up to the Social Security covered compensation level plus (ii) 1.65% of
the lower of the employee's 1991 gross earnings or "high 3 average" direct cash
compensation over the Social Security covered compensation level, multiplied by
the employee's years of service prior to January 1, 1992. For each year of
service commencing after December 31, 1991 (future service), the employee
receives an annual benefit accrual of 1.15% of the employee's annual direct
cash compensation up to the Social Security covered compensation level, plus
1.65% of the employee's annual direct cash compensation over the Social
Security covered compensation level.
The Company also maintains its Supplemental Plan primarily to provide for the
payment of retirement benefits to those Company employees whose pension benefit
under the Pension Plan, described above, would be limited to amounts less than
the Pension Plan would normally provide due to tax and pension laws enacted
since 1982. The Supplemental Plan is a nonqualified, unfunded plan, and
benefits are payable from the general assets of the Company. The primary
purpose of the Supplemental Plan is to insure that the total retirement
benefits of affected employees payable under both pension plans (the "Plans")
are determined on the same basis, so that the retirement benefits to be
received are no more or less than what could have been received by affected
employees under the Pension Plan but for the enactment since 1982 of federal
tax and pension laws limiting such benefits.
Messrs. Alexander, Deering, McCauley and McGregor have, respectively, 24, 21,
22 and 22 credited years of service under the Plans, and their estimated annual
benefits payable under such Plans at the normal retirement age of 62 (assuming
each continues to live and receives his 1994 rate of compensation to
retirement) are $282,560, $333,286, $255,289 and $293,631, respectively. Mr.
DeVito has 25 credited years of service under the Plans. He is 63 years old and
his annual benefit payable upon retirement (assuming that he receives his 1994
rate of compensation to retirement) is $575,598. See "Employment Contracts and
Termination of Employment and Change of Control Arrangements" above for a
description of an agreement between Mr. DeVito and the Company regarding
certain payments supplementing such annual benefit payable under the Plans.
All benefits payable under the Pension Plan are subject to certain
limitations contained in the Internal Revenue Code of 1986 and the regulations
promulgated thereunder. The limit on benefits for 1993 was $115,641 as to any
individual who retired at the normal retirement age.
DIRECTORS' FEES AND OTHER TRANSACTIONS
Under current Company policy, an annual fee of $27,500 is paid to each
director of the Company who is not employed by the Company on a full-time or
other basis, and the Chairman of a Board Committee receives an additional
annual fee of $3,000. Each director also is paid a fee of $1,250 for attendance
at any meeting of the Board and $1,000 for attendance at any meeting of a
Committee of the Board or for special assignments. Directors who retire from
the Board after serving for at least 5 years will receive an annual retirement
income equal to one-half of the annual fee paid to directors as such fee is
established from time to time.
It is proposed that stockholders approve The Rouse Company 1994 Stock
Incentive Plan under which directors who are not employed by the Company would
receive stock option grants. See "Proposal to Approve the Adoption of The Rouse
Company 1994 Stock Incentive Plan" below for a description of the Plan and the
stock option grants that directors would receive under the Plan.
22
<PAGE>
During a portion of 1993, Roger W. Schipke was Chairman of the Board,
President and Chief Executive Officer of The Ryland Group, Inc. ("Ryland").
Ryland leases its headquarters in Columbia, Maryland from a Company subsidiary.
On an ongoing basis, Ryland also purchases land in Columbia for residential
development. Mr. Schipke's interest in these matters arose solely from his
former positions with Ryland.
David H. Benson is a member of the Board of Kleinwort Benson Group plc
(together with its subsidiaries and affiliates, "Kleinwort Benson"), and his
interest in the matters described below arises solely from such position. The
Company has investment banking relationships with Kleinwort Benson under which
the Company maintains a revolving credit facility with Kleinwort Benson and is
indebted to Kleinwort Benson for certain loans. In addition, Kleinwort Benson
assists from time to time in obtaining various forms of financing for the
Company.
Transactions between the Company and certain companies with which Jeremiah E.
Casey is associated are described under "Compensation Committee Interlocks and
Insider Participation" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, the persons who served on the Personnel Committee of the Board
were Jeremiah E. Casey, Thomas J. McHugh and Alexander B. Trowbridge. Mr.
Casey, Chairman of the Board of First Maryland Bancorp and its principal
subsidiary The First National Bank of Maryland, is a member of the Personnel
Committee, which Committee has certain responsibilities relating to the
compensation of executive officers of the Company. See "Personnel Committee
Report on Executive Officer Compensation" above. Mathias J. DeVito, Chairman of
the Board and Chief Executive Officer of the Company, is a director of First
Maryland Bancorp. Mr. DeVito also is a member of the Management and
Compensation Committee of First Maryland Bancorp, which Committee reviews and
recommends compensation arrangements for executive officers, including Mr.
Casey.
The Company maintains various banking relationships with The First National
Bank of Maryland (the "Bank") involving depositary accounts, the issuance of
letters of credit, the purchase of short-term, high quality money market
instruments from the Bank and other cash management services. The Bank also
serves as the transfer agent for the Company's Common Stock and Series A
Convertible Preferred Stock. Further, subsidiaries and affiliates of the
Company are indebted to the Bank for certain loans. In addition, the Bank
leases space at various locations in Maryland from subsidiaries and affiliates
of the Company. Mr. Casey's interest in these matters arises solely from the
positions he holds with the Bank and its parent, First Maryland Bancorp.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
On September 30, 1993, Anthony W. Deering, President and Chief Operating
Officer and a director of the Company, purchased 3,500 shares of the Series A
Convertible Preferred Stock of the Company. The Company person who was
responsible for preparing the necessary SEC form inadvertently failed to do so
by the filing deadline, but the required form was filed promptly upon discovery
of the error. All other SEC reports relating to Mr. Deering were filed in a
timely fashion in 1993.
23
<PAGE>
PROPOSAL TO APPROVE THE ADOPTION OF
THE ROUSE COMPANY 1994 STOCK INCENTIVE PLAN
As indicated in the section entitled "Personnel Committee Report on Executive
Officer Compensation," beginning on page 9, in 1993 William M. Mercer,
Incorporated (the "Compensation Consultant") conducted a comprehensive review
of the Company's compensation practices relating to its executive officers and
most senior management positions. One of the Compensation Consultant's
recommendations was that the Company adopt a stock incentive plan under which
2,000,000 shares of Common Stock could be issued to officers and other key
employees of the Company as long-term incentive compensation. See "Personnel
Committee Report on Executive Compensation" above.
The Compensation Consultant also reviewed the compensation of the Company's
outside directors. The Compensation Consultant reported that nearly half of
comparable companies included in their survey provide stock-based compensation
to their directors, generally in the form of stock options, and that the
percentage is growing. The conclusion was that stock options should be granted
to the Company's outside directors pursuant to an established plan. The
recommended authorized number of shares reserved for issuance was increased by
250,000 to accommodate this purpose.
Consistent with the Compensation Consultant's recommendations, on March 4,
1994, the Board of Directors adopted The Rouse Company 1994 Stock Incentive
Plan (the "Plan") contained in Exhibit A, subject to approval by the
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented and entitled to vote at the meeting or any adjournment
or adjournments thereof. The Plan will succeed The Rouse Company 1990 Stock
Option Plan (the "1990 Option Plan") and The Rouse Company 1990 Stock Bonus
Plan (the "1990 Bonus Plan," which collectively with the 1990 Option Plan are
referred to as the "1990 Plans"), which, although they have not expired, have
available for grant only 98,305 shares of the 1,500,000 shares reserved for
issuance. It is the judgment of the Board of Directors that stock awards made
under the 1990 Plans have been an effective and efficient means of attracting,
retaining and motivating officers and other key employees.
The Plan contains the major features of the 1990 Plans and authorizes stock
awards to officers and other key employees in the form of stock options, bonus
stock, stock appreciation rights and stock-equivalent units. In addition, the
Plan provides for stock option grants to the Company's non-employee directors.
A maximum of 2,250,000 shares may be awarded under the Plan. The closing price
of Company Common Stock on March 3, 1994 was $18.00 per share. Significant
provisions of the portions of the Plan that provide for stock awards to
officers and other key employees are:
1. The number of shares of Common Stock that may be issued pursuant to
the Plan will not exceed 2,250,000 shares, except that, unless the Board of
Directors expressly determines otherwise, the maximum number of shares will
be adjusted automatically to reflect stock dividends, stock splits,
recapitalizations and the like.
2. The portions of the Plan relating to stock options and stock
appreciation rights ("SARs") are to be administered by a committee of the
Board (the "Committee") appointed by the Board of Directors and consisting
of not less than two nor more than five directors, none of whom shall be
eligible to receive a stock option grant except pursuant to the provisions
of the Plan relating solely to directors. The 1990 Option Plan is
administered by the Personnel Committee of the Board of Directors, which
also will administer the portions of the Plan relating to stock options and
stock appreciation rights.
24
<PAGE>
The portions of the Plan relating to stock awards (basically, bonus stock
or stock-equivalent units) are to be administered by the Board, which may
delegate any or all of its responsibilities to the Committee.
In the remainder of this proxy statement, the administrator of the
different portions of the Plan, whether the Board or the Committee, is
referred to as the "Administrator."
3. The Administrator is authorized to determine which officers and other
key employees will be granted stock awards, whether in the form of stock
options, SARs, bonus stock or stock-equivalent units. The Administrator
also is to determine the number of shares covered by each award and the
terms and conditions of the awards, including the vesting provisions, if
any. At December 31, 1993, there were 142 officers of the Company and its
affiliates and a total of approximately 300 key employees, including
officers of the Company and its affiliates. Under the Plan, the
Administrator has discretion to determine which employees will receive
stock awards.
4. No individual may receive awards under the Plan totalling more than
500,000 shares, except that, unless the Board of Directors expressly
determines otherwise, the maximum number of shares will be adjusted
automatically to reflect stock dividends, stock splits, recapitalizations
and the like.
5. If an award holder's employment with the Company is terminated for
cause, the remaining portion of the award is cancelled, including the
unexercised portion of any stock option. Upon the death, disability or
retirement after attaining age 62 (the normal retirement age for Company
employees) by an award holder or the termination of an award holder's
employment under specific circumstances defined by the Administrator (which
may include a discharge without good cause, including a change in control
of the Company), the entire award vests and becomes exercisable. Awards are
not transferable or assignable and may be exercised only by the award
holder, his or her guardian or legal representative or the recipient of the
award through the award holder's estate.
6. With respect to stock options, an option generally may be exercised
not earlier than 6 months nor later than 10 years after the date of grant,
as determined by the Administrator. An option generally is exercisable for
the full term specified in the grant, except that an option is exercisable
for only one year following a voluntary termination of employment other
than at normal retirement or a termination of employment due to a discharge
without good cause other than as a result of a reduction in force. The
option price is the fair market value of a share of the Common Stock as
determined by the Administrator. Generally, the fair market value of the
Common Stock will be based on the NASDAQ close the day before the grant.
The option price must be paid to the Company by the option holder prior to
delivery of the stock. The option price may be paid in cash or by check,
bank draft, money order, wire transfer or, unless the Administrator
determines otherwise, through the delivery of shares of Common Stock or
other securities issued by the Company having a fair market value equal to
the option price, or by a combination of the foregoing.
7. With respect to bonus stock, shares may be issued for or without cash
consideration for past services rendered to the Company or its subsidiaries
or affiliates. Awards may be restricted and subject to such terms and
conditions as the Administrator deems appropriate.
8. The Administrator may grant stock appreciation rights or stock-
equivalent units. A stock appreciation right entitles the recipient to
receive a payment from the Company of an amount equal to the difference
obtained by subtracting the aggregate exercise price for such shares of
Common Stock from the fair market value of such shares on the date the
stock appreciation right is exercised. A stock-equivalent unit entitles the
recipient to receive an amount equal to the full fair market value of a
specific number of shares of Common Stock. Payment of amounts due under a
stock appreciation right or
25
<PAGE>
stock-equivalent unit may be made in shares of Common Stock, cash or any
combination of cash and stock, as the Administrator determines.
9. In the Administrator's discretion, vesting of a stock award may be
based on the Company's performance with respect to one or more of the
following: Earnings Before Depreciation and Deferred Taxes from Operations,
Earnings Before Depreciation and Deferred Taxes from Operating Properties,
Current Value Shareholders' Equity and revenues. This provision is in
response to potential federal tax law limitations effective beginning in
1994 affecting the deductibility of compensation expense relating to the
Chief Executive Officer and the four other most highly compensated Company
employees. Stock awards that meet certain requirements, including vesting
based on pre-established objective performance goals, are exempt from the
deductibility limitations.
10. The Company or any of its subsidiaries or affiliates may lend money
to any officer or employee or guarantee a loan from a third party to an
officer or employee in connection with a stock award.
11. On terms and conditions determined by the Administrator, an award
holder may be offered the opportunity to surrender an award for
cancellation and receive in return securities of the Company or cash, or
any combination thereof.
12. Unless the Administrator determines otherwise, an employee may have
the Company retain or accept a sufficient number of shares of Common Stock
or other securities issued by the Company in connection with the grant or
exercise of an award, a sale of the underlying shares or the receipt or
forgiveness of a related loan to satisfy the Company's tax withholding
obligations or the employee's tax liabilities with respect to such
transactions.
13. The Board of Directors may amend, modify or terminate the Plan or
waive any of its provisions, subject to the limitations contained in
Article X of the Plan.
14. The Plan becomes effective as of March 4, 1994 and terminates as of
March 4, 2004, but any stock awards granted prior to termination may be
exercised according to their terms.
On March 4, 1994, the Board of Directors granted options for a total of
190,500 shares of Common Stock under the Plan to officers of the Company (none
of whom were executive officers) and other key employees. In addition, under
the terms of the Plan as described in the second paragraph below, the eight
non-employee directors received options aggregating 40,000 shares of Common
Stock on March 4, 1994, and, assuming that all eight directors are re-elected
at the next meeting, such directors will receive additional options aggregating
8,000 shares of Common Stock at that time. All option grants described in this
paragraph are subject to the approval of the Plan by the stockholders at the
next meeting.
With the exception of the option grants described in the immediately
preceding and following paragraphs, it has not been determined at this time who
will be selected to receive stock awards or the amount of stock to be awarded
to any person other than non-employee directors. The Administrator will make
these determinations on the basis of the individual's responsibilities, his or
her present and potential contribution to the success of the Company as
indicated by an evaluation of the position occupied and past, present and
expected future performance, and other relevant factors. Among those who
qualify as recipients are officers and other key employees in executive,
administrative, professional and technical positions of the Company and its
subsidiaries and affiliates.
With respect to non-employee directors, stock options may be granted under
Article VII of the Plan, which establishes fixed rules for the timing, pricing
and amount of options to be granted. Each director will
26
<PAGE>
receive an initial grant of 5,000 shares of Common Stock as of March 4, 1994,
and new directors also will receive 5,000 share grants upon their initial
election. Each director will receive an additional 1,000 share grant upon re-
election as a director at each annual meeting.
The exercise price of options that are granted to directors will be the fair
market value of Common Stock based on the NASDAQ close the day before the
grant. The minimum vesting period will be six months, except that options will
automatically vest upon death, disability, retirement as a director at age 70
or a change in control of the Company. The exercise period generally will be 10
years. All terms of the option other than the timing, pricing and amount of
options to be granted to non-employee directors will be determined by the
Administrator, which is the Committee, unless the Board determines otherwise.
A resolution substantially in the form set forth as Exhibit B will be
submitted to stockholders for adoption.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RESOLUTION.
TAX ASPECTS--1994 STOCK INCENTIVE PLAN
The following is a brief summary of the significant aspects of current
federal income tax treatment under the Internal Revenue Code of 1986 (the
"Code") and regulations promulgated thereunder of the stock options, stock
appreciation rights, bonus stock awards and stock-equivalent units that may be
granted under The Rouse Company 1994 Stock Incentive Plan. This summary does
not cover the federal tax effects if the described conditions are not met.
Incentive Stock Options: Incentive stock options under the Plan are intended
to meet the requirements of Section 422 of the Code. No tax consequences result
from the grant of the option. If an option holder acquires stock upon the
exercise of the option, no income will be recognized by the option holder for
ordinary income tax purposes (although the difference between the option
exercise price and the fair market value of the stock subject to the option may
result in alternative minimum tax liability to the option holder) and the
Company will be allowed no deduction as a result of such exercise, if the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the option and ending on the day three months
before the date of such exercise, the option holder is an employee of the
Company or a subsidiary, and (b) the option holder makes no disposition of the
stock within two years from the date the option is granted nor within one year
after the stock is transferred to the option holder. The three-month period is
extended to one year in the event of disability and is waived in the event of
death of the employee. In the event of a sale of such stock by the option
holder after compliance with these conditions, any gain realized over the price
paid for the stock ordinarily will be treated as long-term capital gain, and
any loss will be treated as long-term capital loss, in the year of the sale.
If the option holder fails to comply with the employment or holding period
requirements discussed above, the option holder will recognize ordinary income
in an amount equal to the lesser of (i) the excess of the fair market value of
the stock on the date the option was exercised over the exercise price or (ii)
the excess of the amount realized upon such disposition over the exercise
price. If the option holder is treated as having received ordinary income
because of this failure to comply with either condition above, an equivalent
deduction will be allowed to the Company in the same year.
27
<PAGE>
Non-Qualified Stock Options: No tax consequences result from the grant of the
option. An option holder who exercises a non-qualified stock option with cash
generally will realize compensation taxable as ordinary income in an amount
equal to the difference between the option price and the fair market value of
the shares on the date of exercise, and the Company will be entitled to a
deduction from income in the same amount in the fiscal year in which the
exercise occurred. Option holders subject to Section 16 of the Securities
Exchange Act of 1934 may not recognize income until six months after the grant
date if the option is exercised during that period. The option holder's basis
in such shares will be the fair market value on the date income is realized,
and when he or she disposes of the shares, he or she will recognize capital
gain or loss, either long-term or short-term, depending on the holding period
of the shares.
Stock Appreciation Rights: The grant of a stock appreciation right will not
result in income tax consequences to the Company or to the grantee. A grantee
who exercises a stock appreciation right will realize compensation taxable as
ordinary income in an amount equal to the cash or the fair market value of the
shares received on the date of exercise, and the Company will be entitled to a
deduction in the same amount.
Stock Awards: Stock awards (or bonus stock awards) granted under the Plan and
paid in Common Stock will constitute ordinary income to the recipient and a
deductible expense to the Company in the year paid if the stock is then
transferable and not subject to forfeiture restrictions, or in the first year
in which transfer or forfeiture restrictions lapse unless the participant
elects to recognize income in the year the stock is received by making a timely
election under Section 83(b) of the Code. Unless such an election is made, the
amount of the taxable income and corresponding deduction for the Company will
be equal to the fair market value of the stock on the date the restrictions
lapse. Stock awards structured as stock-equivalent units and payable in cash or
in Common Stock will be treated for federal income tax purposes in
substantially the same manner as stock appreciation rights.
Deductibility of Certain Executive Compensation Expense Under Federal Tax
Laws: Beginning in 1994, newly enacted provisions of the Code under certain
circumstances disallow compensation deductions in excess of $1,000,000 for any
year with respect to the Company's Chief Executive Officer and its four other
most highly compensated officers. Compensation payable under certain
performance-based compensation arrangements is not subject to the deduction
limitation if the performance goals are objective, pre-established and
determined by a compensation committee comprised solely of two or more outside
directors, the material terms under which the compensation is to be paid are
disclosed to the stockholders and approved by a majority vote, and the
compensation committee certifies that the performance goals and other material
terms were in fact satisfied before amounts are paid.
The Company expects that this provision will not limit its tax deductions for
executive compensation under the Plan in the near term. In addition, as noted
in the "Personnel Committee Report on Executive Officer Compensation" appearing
at pages 9-14, the Personnel Committee of the Board of Directors has determined
that, if the Company's stockholders approve the Plan at the meeting, the
provisions of the Plan should enable the Company to comply, to the extent
deemed desirable, with the Code's requirements for performance-based
compensation with respect to stock awards made under the Plan.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
The Company provides all stockholders with the opportunity, under certain
circumstances and consistent with SEC Rule 14a-8, to participate in the
governance of the Company by submitting proposals
28
<PAGE>
that they believe merit consideration at the annual meeting of stockholders to
be held in May, 1995. To enable management adequately to analyze and respond to
proposals and to prepare appropriate proposals for presentation in the
Company's Proxy Statement for the 1995 annual meeting, any such proposal must
be received by the Company by December 1, 1994, addressed to the attention of
its Secretary at its principal place of business in Columbia, Maryland.
ACCOUNTING MATTERS
The Board of Directors first appointed KPMG Peat Marwick as its auditors in
December, 1956. The audit services rendered by KPMG Peat Marwick for the fiscal
year ended December 31, 1993 included: examination of the financial statements
of the Company and its subsidiaries, review of unaudited quarterly financial
information, consultation in connection with the preparation of the Annual
Report to Stockholders and the filing of the Form 10-K Annual Report with the
Securities and Exchange Commission, issuance of reports of compliance with debt
and other agreements, and consultation with Company personnel on accounting and
related matters.
Representatives of KPMG Peat Marwick will attend the Annual Meeting of
Stockholders, will have an opportunity to make a statement and will be
available to respond to appropriate questions submitted by stockholders.
OTHER MATTERS
As provided in Article XII of the Company's Bylaws, amendments to the Bylaws
adopted by the Board of Directors are to be reported at the next annual meeting
of stockholders. No affirmative action is required by the stockholders to
approve the Board action, but any such amendment may be changed or rescinded by
the stockholders.
On March 4, 1994, the Board of Directors amended Section 1 of Article I of
the Bylaws to provide that the Board of Directors may fix the date of the
annual meeting of stockholders anytime during the month of May, instead of
anytime during the 31-day period from May 15 through June 14. Since 1977, the
Company has held its annual meetings in the month of May. The amendment thus
conforms the Bylaws to actual practice while giving the Company additional
flexibility to hold the Annual Meeting anytime during May.
Article XII also was amended by deleting the following sentence: "The action
taken by the Board of Directors in altering, amending, or adding to these
Bylaws shall be reported to the stockholders at the next annual meeting and may
be changed or rescinded by the stockholders." While this was once a common
bylaw provision for Maryland corporations, most corporations do not have such a
reporting requirement, which adds an unnecessary procedural step to bylaw
amendments. In addition, reporting of bylaw amendments increases the length and
complexity of proxy statements with, in the Company's view, little or no
corresponding benefit to stockholders. In this regard, the deletion of the
reporting requirement does not affect the existing related rights of
stockholders under Maryland corporate law, which provides that, absent a
charter or bylaw provision to the contrary, stockholders may modify or rescind
bylaw provisions by a proper vote at a stockholders meeting. In addition, the
Company's Bylaws and all amendments thereto are available to stockholders
through the Company's filings with the Securities and Exchange Commission, and
additional reporting of bylaw amendments at annual meetings is duplicative.
29
<PAGE>
If it is properly proposed to change or rescind these bylaw amendments at the
meeting, the proxy holders will vote all proxies in favor of the amendments as
adopted by the Board of Directors.
Management is not aware of any other matters that may be brought before the
meeting. If any matters properly come before the meeting, including, but not
limited to, the election of one or more persons to fill any vacancy that exists
on the Board of Directors at the time of the meeting or any adjournment or
adjournments thereof, the proxy holders will vote in accordance with their
judgment as to the best interests of the Company with respect to such matters.
30
<PAGE>
EXHIBIT A
THE ROUSE COMPANY
1994 STOCK INCENTIVE PLAN
PURPOSE
The purpose of The Rouse Company 1994 Stock Incentive Plan (the "Plan") is to
advance the interests of The Rouse Company (together with all present and
future subsidiaries and affiliates which meet the definition of "subsidiary"
contained in Section 424(f) of the Internal Revenue Code of 1986 (the "Code")
or any successor provision thereto referred to as the "Company") and its
Stockholders by affording its directors, officers and key employees, upon whose
judgment, initiative and efforts the Company is largely dependent for the
successful conduct of its business, with the additional incentives arising from
increased opportunity for equity ownership in the Company. Awards granted under
the Plan may consist of options (pursuant to Articles IV and VII), stock
appreciation rights (or "Rights," pursuant to Article V) or stock awards
(pursuant to Article VI). Awards may be granted separately or in tandem with
any other type of award.
ARTICLE I
Administration
(a) (1) Awards under Articles IV and V of the Plan shall be administered by a
committee (the "Committee") of not less than two nor more than five directors.
The Board of Directors shall appoint the members of the Committee, who shall
serve at the Board's pleasure.
(2) Awards under Article VI of the Plan shall be administered by the Board
of Directors, which may delegate any or all of its responsibilities to the
Committee.
(3) Awards under Article VII of the Plan shall be administered by the
Committee, unless otherwise determined by the Board of Directors.
(4) Subsequent references in the Plan to the "Administrator" shall refer
either to the Committee or the Board of Directors, as applicable under the
division of responsibility described in Sections (a)(1), (a)(2) and (a)(3)
above.
(b) Subject to the express provisions of the Plan, the Administrator shall
have the authority:
(1) to determine the employees to whom and the time or times at which
awards under the Plan shall be made, the number of shares to be covered by
each award and all other terms and conditions of the awards;
(2) to interpret the Plan and to prescribe, amend and rescind rules and
regulations relating to it;
(3) to determine the terms and provisions of the respective agreements
evidencing awards under the Plan (which need not be identical);
(4) except as provided in Article VII, to determine, for purposes of the
Plan, the fair market value (the "Fair Market Value") at any time of a
share of the Company's common stock (the "Common Stock"), such
determination of Fair Market Value to be in accordance with such standard
as the
<PAGE>
Administrator by rule of general application or specific determination
selects as reasonably representative of the fair market value of the Common
Stock, but in no case less than par value. The Fair Market Value may, but
need not, be equal to the last sale price for Common Stock for the business
day immediately preceding the date the option is granted as reported on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System, or, if the Company's Common Stock is not traded on
the NASDAQ National Market System, on the exchange on which the Company's
Common Stock is principally traded or, if no sale price is reported for
such day, the first preceding business day for which a sale price for
Common Stock is reported;
(5) to accelerate the time in which such award may be exercised and to
waive, in whole or in part, any restriction with respect to such award,
including with respect to any option or Right issued under the Plan, any
restriction with respect to the exercisability of such award following the
termination of employment by the employee; and
(6) to make all other determinations and to take all other actions deemed
necessary or advisable for the administration of the Plan.
(c) The Committee shall select one of its members as its chairman and shall
hold its meetings at such times and places as it deems advisable, including by
telephone. A majority of its members shall constitute a quorum. All decisions
of the Committee shall be made by a majority of those present, whether in
person or by telephone. Any action required or permitted to be taken at any
meeting of the Committee may be taken without a meeting if a written consent to
such action is signed by all members of the Committee and such written consent
is filed with the minutes of the proceedings of the Committee. The effective
date of any decision shall be the actual date of the decision, unless the
Committee establishes a different effective date, which may be either before or
after the actual date of the decision. The Committee may appoint a secretary
(who may, but need not be a member of the Committee), shall keep minutes of its
meetings, and shall make such rules and regulations for the conduct of its
business as it deems advisable.
(d) No member of the Board of Directors or the Committee shall be liable for
any action or determination made under the Plan in good faith, nor for any
matter as to which the Company's charter limits the liability of directors.
Such members shall be entitled to indemnification and reimbursement in the
manner provided in the Company's charter or bylaws and under any directors' and
officers' liability insurance coverage that is in effect from time to time.
(e) The Administrator shall have no discretion with respect to the timing,
pricing or amount of options granted pursuant to Article VII, but, subject to
the express provisions of Article VII, the Administrator shall have full
discretion to establish all other terms and conditions of such option grants.
ARTICLE II
Participation in the Plan
(a) Except as provided in Article VII, participation in the Plan shall be
limited to such officers and other key employees of the Company as the
Administrator designates.
(b) Directors who are not employees of the Company shall be eligible to
participate in the Plan solely as provided in Article VII.
2
<PAGE>
ARTICLE III
Common Stock Subject to the Plan
(a) Subject to the provisions of Sections (d) and (e) of this Article, the
maximum number of shares of Common Stock that may be issued under the Plan
shall be 2,250,000 shares; provided, however, that the number of shares of
Common Stock that may be issued under the Plan pursuant to incentive stock
options intended to qualify under Section 422 of the Code, shall be determined
without regard to section (f) of this Article. The total number of shares of
Common Stock subject to issuance under the Plan, and any balance remaining
unoptioned or unawarded, shall be reserved for those purposes during the life
of the Plan.
(b) Subject to the provisions of Sections (d) and (e) of this Article, during
the period in which the Plan is effective, no person shall be eligible to
receive under this Plan an award or awards for, in the aggregate, more than
500,000 shares of Common Stock.
(c) Except with respect to option grants under Article VII, the exercise or
purchase price for any award shall be payable (i) in U.S. dollars in cash or by
wire transfer, check, bank draft or money order payable to the Company, (ii) in
the discretion of the Administrator, through the delivery of Common Stock or
other securities issued by the Company with a Fair Market Value on the date the
award is exercised or purchased equal to the total amount due, (iii) by a
combination of the methods described in (i) and (ii), or (iv) through such
other means as may be acceptable to the Administrator. No shares shall be
delivered until full payment of any amount due has been made to the Company. A
holder of an award shall have none of the rights of a stockholder until the
shares are issued to him.
(d) Unless the Board of Directors expressly determines otherwise, if the
capital stock of the Company changes as a result of stock dividends, split-ups,
recapitalization or the like, proportionate adjustments shall automatically be
made in the maximum number of shares of Common Stock authorized for awards
under this Plan, the number and kind of shares reserved for awards under the
Plan, the number, kind and price of shares covered by outstanding awards, the
maximum number of shares under Section (b) of this Article that may be awarded
to any one person, and the minimum number of shares as to which options and
Rights shall be exercisable at any one time. Fractional shares resulting from
any such adjustment shall be eliminated. Unless the Board of Directors
expressly determines otherwise, any adjustments under this Section (d) shall be
effective on the effective date of the event giving rise to such adjustment.
(e) If the outstanding shares of Common Stock are changed into or exchanged
for a different number or kind of shares or other securities or property
(including cash) of the Company or of another corporation for any reason,
including by reason of reorganization, merger, sale or transfer of all or
substantially all of the Company's assets to another corporation, or exchange
of shares or consolidation, the Administrator shall make appropriate
adjustments in the number and kind of shares, other securities or property for
which awards may be granted under the Plan, including the maximum number that
may be granted to any participant and the number and kind of shares to be
covered by options granted pursuant to Article VII. In addition, the
Administrator shall make appropriate adjustments in the number and kind of
shares, other securities or property as to which outstanding awards shall be
exercisable or payable. If any event giving rise to an adjustment involves an
election afforded stockholders to receive cash or some security or other
property, then such adjustment shall be made as if only cash were available to
stockholders; the amount of cash used in determining the appropriate adjustment
shall be the amount of cash per share provided by such election or such higher
per share amount, if any, as the Administrator determines to be the fair market
value of the
3
<PAGE>
security or other property available to stockholders pursuant to the election.
Unless the Board of Directors expressly determines otherwise, any adjustment or
determination made by the Administrator under this Section (e) shall be
effective on the effective date of the event giving rise to such adjustment or
determination and shall be conclusive when made by the Committee.
(f) If for any reason an award or portion of an award expires or is
terminated, cancelled, forfeited or paid in cash, the number of shares of
Common Stock covered by the award or portion of the award shall be restored to
the number of shares available for awards under the Plan as if the award or
portion of the award had never been issued, provided, however, that if the
recipient received any benefit of ownership of such shares other than the
exercise of voting rights, such shares shall be again available for awards only
to persons who are not subject to Section 16 of the 1934 Act. If an award or
portion of an award is surrendered in connection with the exercise of a Right
or is cancelled in accordance with Article IX, the number of shares of Common
Stock covered by the award shall be restored to the number of shares available
for awards under the Plans, except for the number of shares, if any, of Common
Stock issued in conjunction with such cancellation or issued pursuant to such
exercise. Shares tendered as consideration for the exercise or purchase of an
award by persons who are not subject to Section 16 of the 1934 Act shall again
be available for award to persons who are not subject to Section 16 of the 1934
Act.
(g) Subject to the provisions of Articles VII and XV, the stock reserved for
issuance and sale under the Plan may be optioned or awarded in its entirety in
any one year or over a period of years.
ARTICLE IV
Options
The Committee in its discretion may grant options to any employee who is
eligible to participate in the Plan on such terms and conditions as it shall,
in its discretion, deem advisable. Options granted under this Article IV may be
either incentive stock options intended to qualify under Section 422 of the
Code or non-qualified stock options not intended to so qualify. Unless the
Committee, in its sole discretion, provides otherwise, the terms and conditions
of such grants shall include the following:
(a) An option shall not be exercisable in whole or in part for at least
six months from the date of grant.
(b) The option exercise price per share shall be the Fair Market Value of
a share of Common Stock.
(c) An option shall vest in its entirety upon the option holder's death,
disability, retirement from the Company after attaining age 62 (the normal
retirement age under the Company's Pension Plan) or termination of
employment under circumstances specified by the Committee (which may
include a discharge without good cause, including a change of control of
the Company).
(d) An option generally shall be exercisable for not more than 10 years
from the date of grant, and shall be subject to earlier termination as
provided in the Plan or under the terms of the option agreement as
established by the Committee. An option generally shall be exercisable for
the full term specified in the grant, except that an option shall be
exercisable for only one year following a voluntary termination of
employment other than at normal retirement or a termination of employment
due to a discharge without good cause other than as a result of a reduction
in force. If an option holder's employment is terminated for cause, all
unexercised rights under his or her option or options shall expire on the
date of such termination.
4
<PAGE>
(e) An option may be exercised from time to time during the option period
in whole or in part, but not as to less than ten shares at any one time. An
option holder shall exercise an option in whole or in part by giving
written notice to the Secretary of the Company of his or her intention to
purchase such shares, specifying the number of shares and the date that the
purchase is to occur.
(f) Unless the Committee otherwise determines, an employee may have the
Company retain or accept a sufficient number of shares in connection with
the receipt or exercise of an option, a sale of the underlying shares or
the receipt or forgiveness of a loan relating to the option to satisfy the
Company's tax withholding obligations or the employee's tax liabilities
with respect to such transactions.
ARTICLE V
Stock Appreciation Rights
The Committee, in its sole discretion, may grant Rights to employees under
the Plan. A grant of Rights shall be evidenced by a stock appreciation right
agreement containing such terms and conditions as the Committee shall
establish, including the following unless the Committee, in its sole
discretion, provides otherwise:
(a) A Right may relate to a specific option or portion of an option and
may be granted to the option holder at any time prior to the exercise of
such option. The Committee may fix such waiting periods and exercise dates
for Rights as it deems appropriate, provided that generally no Right shall
be exercisable prior to six months from the date of the grant of the Right
or after the expiration of any option to which it relates.
(b) A Right shall entitle the holder, to the extent he or she so
designates, to receive the number of shares of Common Stock determined
under Section (c) below, without payment to the Company. In lieu of issuing
shares upon exercise of a Right, the Committee may elect to make a cash
payment equal to the Fair Market Value on the exercise date of the shares
determined under Section (c) below, or may make such payment partially in
shares and partially in cash in such proportions as the Committee
determines.
(c) The number of shares to be issued upon the exercise of a Right shall
be determined by dividing
(1) the number of shares subject to or specified by the Right as of
the exercise date multiplied by the amount by which the Fair Market
Value of a share of Common Stock on the exercise date exceeds the
exercise price specified by such Right; by
(2) the Fair Market Value of a share of Common Stock on the exercise
date;
provided, however, that the total number of shares that may be received
pursuant to the Right shall not exceed the total number of shares
subject to a related option, if any.
(d) A Right may be exercised by giving written notice to the Secretary of
the Company. As soon as practicable following receipt of such notice, the
Company shall, without transfer or issue tax, deliver to the person
exercising the Right a certificate or certificates for such shares or, when
so directed by the Committee, make the required cash payment, or both. The
date the Company receives written notice of an exercise is the exercise
date.
(e) If the recipient of a Right awarded in tandem with an option ceases
to be an employee of the Company, the Right shall be exercisable only to
the extent and upon the conditions that its related option is exercisable
under Article IV.
5
<PAGE>
ARTICLE VI
Stock Awards
(a) The Administrator, at any time and from time to time, may authorize the
issuance of Common Stock for past services rendered and at no cost, or for such
payment as the Administrator shall determine, to any employee who is eligible
to participate in the Plan. An award of Common Stock may be denominated in
shares of Common Stock, units of Common Stock or stock-equivalent units, and
may be paid in Common Stock, in cash, or in a combination of Common Stock and
cash.
(b) Stock awards may be granted in lieu of a cash bonus or any other
compensation otherwise payable to an employee, either at the election of the
Administrator or, under rules approved by the Administrator, at the election of
an employee entitled to participate in the Plan.
(c) The Administrator, in its sole discretion, shall establish the terms and
conditions of all stock awards, including the officers and other key employees
who shall be granted stock awards, the timing of each grant, the circumstances
under which an award may be forfeited, cancelled or terminated, and whether
Common Stock issued pursuant to an award will be restricted or unrestricted.
The Administrator may permit an employee to have the Company retain or accept a
sufficient number of shares in connection with the receipt of a stock award,
the lapse of restrictions with respect to a stock award, the payment of a stock
award, the sale of Common Stock or the receipt or forgiveness of a loan
relating to a stock award to satisfy the Company's tax withholding obligations
or the employee's tax liabilities with respect to such transactions.
ARTICLE VII
Option Grants to Non-Employee Directors
(a) Each Director who is not an employee of the Company ("Non-Employee
Director") serving as such on March 4, 1994 shall be granted an option to
purchase 5,000 shares of Common Stock on that date, and each Non-Employee
Director who is first elected to the Board of Directors after March 4, 1994
shall be granted an option to purchase 5,000 shares of Common Stock on the date
of his or her election. In addition, each Non-Employee Director shall be
granted an option to purchase 1,000 shares of Common Stock on each date on
which he or she is re-elected as a Non-Employee Director. All grants under this
Article VII (a) shall be subject to stockholder approval of the Plan at the
next Annual Meeting of Stockholders of the Company that is held after March 4,
1994, or any adjournment thereof.
(b) As provided in Article I (e), unless the Board determines otherwise, the
Committee shall establish the terms and conditions of each option granted under
this Article VII, including the following:
(1) An option shall not be exercisable in whole or in part until six
months from the later of the date of the Annual Meeting of Stockholders of
the Company, or any adjournment thereof, at which the Plan is approved or
the date of the grant.
(2) The option exercise price per share shall be the Fair Market Value of
a share of Common Stock, which, solely for purposes of this Article VII,
shall be equal to the last sale price for Common Stock for the business day
immediately preceding the date such option is granted as reported on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System, or, if the Company's Common Stock is not traded on
the NASDAQ National Market System, on the exchange on which the Company's
Common Stock is principally traded, or, if no sale price is reported for
such day, the first preceding business day for which a sale price for
Common Stock is reported.
6
<PAGE>
(3) An option shall vest in its entirety upon the option holder's death,
disability or attainment of age 70 (the mandatory retirement age for
directors of the Company) or upon a change of control of the Company.
(4) An option generally shall be exercisable for not more than 10 years
from the date of grant.
(5) When an option becomes exercisable, it may be exercised from time to
time during the option period in whole or in part, but not as to less than
10 shares at any one time. An option holder shall exercise an option in
whole or in part by giving written notice to the Secretary of the Company
of his or her intention to purchase such shares, specifying the number of
shares and the date that the purchase is to occur.
(6) The option exercise price shall be payable (i) in U.S. dollars in
cash or by wire transfer, check, bank draft or money order payable to the
Company, (ii) through the delivery of Common Stock or other securities
issued by the Company with a Fair Market Value, determined, to the extent
possible, in a manner consistent with Section (b)(2) above, equal to the
total amount due, or (iii) by a combination of the methods described in (i)
and (ii).
ARTICLE VIII
Performance Goals
The Administrator may, in its sole discretion, cause awards granted under the
Plan to be conditioned upon, vest or become payable on account of the
attainment of performance goals established by the Administrator based on one
or more of the following business criteria relating to the Company, on a
consolidated basis:
(a) Earnings Before Depreciation and Deferred Taxes ("EBDDT") from
Operations;
(b) EBDDT from Operating Properties;
(c) Current Value Shareholders' Equity; or
(d) Revenues.
ARTICLE IX
Cancellation of Awards
The Administrator may offer to an award holder the opportunity, at such time
and on such terms and conditions as the Administrator prescribes, to surrender
his or her award to the Company for cancellation and to receive such payment in
cash, securities of the Company or both as the Administrator determines.
ARTICLE X
Amendment and Discontinuance
The Board of Directors may amend, modify or discontinue the Plan or waive any
of its provisions, except that (i) no such amendment, modification, waiver or
discontinuance shall revoke or alter the terms of any valid award previously
granted in accordance with the Plan without the consent of the award holder,
and (ii) the provisions of Article VII regarding the number of shares to be
optioned, the timing of option grants, the persons eligible to receive such
grants, the time period in which options may be exercised and the option
exercise price shall not be amended more than once every six months, other than
to comport with changes in
7
<PAGE>
the Code, the Employee Retirement Income Security Act of 1974 or rules and
regulations under the Securities Exchange Act of 1934 (the "1934 Act"). To the
extent required under Rule 16b-3 of the 1934 Act and to the extent required by
the Code, no action by the Board of Directors that materially modifies the Plan
shall become effective without the approval of the Company's stockholders,
except as the Board of Directors may otherwise expressly determine.
ARTICLE XI
Government Regulations
The Administrator may make such changes in the Plan as may be required, in
its opinion, to conform the Plan to state or federal law, rules and
regulations. The Plan is intended to comply with Rule 16b-3 of the 1934 Act and
shall be administered and interpreted in a manner consistent with such Rule.
ARTICLE XII
Loan Authorization
The Administrator may authorize the Company or its subsidiaries or affiliates
to grant loans or to guarantee loans from a third party to employees who are
holders of awards in conjunction with such awards, upon such terms as the
Administrator, in its sole discretion, deems appropriate.
ARTICLE XIII
Transferability of Awards
Options, Rights and, except as otherwise provided by the Administrator, other
awards issued under the Plan shall be nontransferable other than by will or law
of descent and distribution.
ARTICLE XIV
Use of Proceeds
The proceeds from the sale of Common Stock pursuant to the Plan shall be used
by the Company for its general corporate purposes.
ARTICLE XV
Effective Date of Plan
The Plan shall become effective as of March 4, 1994, and shall terminate as
of March 4, 2004.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its
duly authorized officer and its corporate seal to be hereunto affixed as of the
4th day of March, 1994.
ATTEST: THE ROUSE COMPANY
By:
- ------------------------------------- ---------------------------------
Richard G. McCauley Mathias J. DeVito
Senior Vice-President, Chairman of the Board and
General Counsel and Secretary Chief Executive Officer
8
<PAGE>
EXHIBIT B
The Board of Directors recommends a vote FOR the following resolution:
RESOLVED, that The Rouse Company 1994 Stock Incentive Plan (as set forth
in Exhibit A attached to the Proxy Statement accompanying the Notice of
Annual Meeting of Stockholders of The Rouse Company) is approved.
<PAGE>
THE ROUSE COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS--MAY 12, 1994
The undersigned holder of the Common Stock of The Rouse Company (the
"Company") acknowledges receipt of the Proxy Statement and Notice of Annual
Meeting of Stockholders, dated April 5, 1994, and hereby constitutes and
appoints Mathias J. DeVito, Chairman of the Board and Chief Executive Officer
of the Company, Anthony W. Deering, President and Chief Operating Officer of
the Company, and Richard G. McCauley, Senior Vice-President, General Counsel
and Secretary of the Company, or a majority of them or any one of them acting
singly in the absence of the others, the true and lawful proxy or proxies for
and in the name of the undersigned to vote the shares of Common Stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on Thursday, May 12, 1994, and at any adjournment or
adjournments thereof:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTORS.
(a) Election of Directors
[_] FOR all nominees [_] WITHHOLD VOTE ON
(except as marked to all nominees listed below
the contrary below)
DAVID H. BENSON, JEREMIAH E. CASEY, ANTHONY W. DEERING, ROHIT M. DESAI, MATHIAS
J. DEVITO, JUANITA T. JAMES, THOMAS J. MCHUGH, HANNE M. MERRIMAN, ROGER W.
SCHIPKE AND ALEXANDER B. TROWBRIDGE.
Instructions: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL (B) BELOW.
(b) Proposal to approve the adoption of The Rouse Company 1994 Stock
Incentive Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
(c) IN THEIR DISCRETION on such other matters as may properly come before
the meeting, including, but not limited to, the election of one or more
persons to fill any vacancy that exists on the Board of Directors at the
time of the Annual Meeting of Stockholders or any adjournment or
adjournments thereof.
(continued on reverse side)
<PAGE>
Shares represented by all properly executed proxies will be voted in
accordance with the instructions appearing on this proxy. In the absence of
specific instructions, proxies will be voted FOR the election of Directors; in
accordance with the Board of Directors' recommendation, FOR Proposal (b) above;
and in the best discretion of the proxy holders as to any other matters.
DATED: , 1994
--------------------------
(SEAL)
---------------------------------
(SEAL)
---------------------------------
Signature
(EXECUTE PROXY EXACTLY AS YOUR NAME
APPEARS ON THIS FORM. IF STOCK IS
REGISTERED IN MORE THAN ONE NAME, EACH
JOINT OWNER SHOULD SIGN. WHEN SIGNING
AS TRUSTEE, EXECUTOR OR OTHER
FIDUCIARY, PLEASE SO INDICATE.)
