ROUSE COMPANY, DEF 14A, 1995-03-31

ROUSE COMPANY
DEF 14A, 1995-03-31
OPERATORS OF NONRESIDENTIAL BUILDINGS

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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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

THE ROUSE COMPANY
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14a.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

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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 11, 1995, 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; and

(b) 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
3, 1995 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

March 31, 1995
<PAGE>

THE ROUSE COMPANY

10275 LITTLE PATUXENT PARKWAY
COLUMBIA, MARYLAND 21044-3456

PROXY STATEMENT

(FIRST MAILED TO STOCKHOLDERS ON MARCH 31, 1995)

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 11, 1995
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 $7,000 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, par value $.01 per share ("Common
Stock"), present in person or represented by proxy at the meeting, at which a
quorum is 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.

On March 3, 1995, 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 47,783,546 shares of Common Stock.
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.

The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1994, has been mailed to all stockholders with
this Proxy Statement or delivered separately prior to receipt of this Proxy
Statement. You may receive, without charge, a copy of the Company's 1994 Form
10-K as filed with the Securities and Exchange Commission by contacting David
L. Tripp, Vice-President and Director of Investor Relations, The Rouse Company,
10275 Little Patuxent Parkway, Columbia, Maryland 21044-3456.
<PAGE>

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, 57 Member of the Board, British Gas plc; Harrow
1987 Kleinwort Benson Group plc, Corporation; Kleinwort
a bank holding company, and Benson Group plc; Kleinwort
Chairman of the Board, Charter Investment Trust
Kleinwort Charter Investment plc; Trustee, Charities
Trust plc, and Trustee, The Official Investment Fund;
Pilot Funds, management Leach International, Inc.;
investment companies; Marshall Cavendish Ltd.; and
formerly, Vice Chairman of Trustee, The Pilot Funds
the Board, Kleinwort Benson
Group plc
Jeremiah E. Casey, 55 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: The Atlantic
Council of the United
States; 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.; United Way of Central
Maryland; and The World
Trade Center Institute
</TABLE>

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<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, 50 Director, President and Kleinwort Benson Holdings
1993 Chief Executive Officer of Inc.; T. Rowe Price Fixed
the Company; formerly, Income and International
President and Chief Mutual Funds; Trustee,
Operating Officer of the Baltimore Museum of Art;
Company; Executive Trustee, Friends School of
Vice-President, Finance and Baltimore; Member, Mayor's
Administration and Chief Business Advisory Council;
Financial Officer of the and Trustee, Parks and
Company; and Senior Vice- People Foundation of The
President and Chief Foundation for Baltimore
Financial Officer of the Recreation and Parks
Company
Rohit M. Desai, 56 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, 64 Chairman of the Board of the First Maryland Bancorp;
1972 Company; formerly, Chairman USAir Group, Inc.; Chairman
of the Board and Chief of the Board, Baltimore
Executive Officer of the Empowerment Management
Company, and Chairman of the Corporation; Member,
Board, President and Chief Business Committee for the
Executive Officer of the Arts, Inc.; Member, Greater
Company Baltimore Committee; and
Trustee, Maryland Institute,
College of Art
</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, 42 Senior Vice-President, Book- Charter Trustee, Princeton
1989 of-the-Month Club, Inc., a University; Member, Advisory
subsidiary of Time Warner Council, Bethune-Cookman
Inc.; formerly, President College; and Member,
and Chief Executive Officer, National Coalition of 100
Time-Life Libraries, Black Women
Incorporated, and Vice-
President for Human
Resources of Time-Life
Books, Inc.
Thomas J. McHugh, 63 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, 53 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; T. Rowe Price
Nan Duskin, Inc., a women's Mutual Funds; USAir Group,
specialty store, and Inc.; Trustee, American-
President and Chief Scandinavian Foundation; and
Executive Officer of Member, National Women's
Honeybee, Inc., a retailing Forum
business
Roger W. Schipke, 58 Chairman of the Board and The Brunswick Corporation;
1992 Chief Executive Officer, Legg Mason, Inc.; Mohawk
Sunbeam-Oster Company, Inc., Industries; and Sunbeam-
a corporation that engages Oster Company, Inc.
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>

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<PAGE>

(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, DeVito
and Schipke, and 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 1994.

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. Section 2.05
of the Company's Bylaws generally provides that nominations shall be made not
more than 90 days nor less than 60 days before the scheduled date of a
stockholders meeting at which directors are to be elected and specifies
information that the stockholder must provide at the time of the nomination.
The Executive Committee held four meetings during 1994.

5
<PAGE>

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 the compensation of its
executive officers, and reviews and approves grants of stock options under the
Company's stock plans. See "Personnel Committee Report on Executive Officer
Compensation" below. This Committee also has 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 addition, the Personnel
Committee has general oversight responsibility for The Rouse Company
Supplemental Retirement Benefit Plan. The Supplemental Plan provides
supplemental benefits for those eligible 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 eligible employees to defer all
or any portion of their annual incentive cash bonus. The Personnel Committee
held three meetings during 1994.

During 1994, the Board of Directors of the Company held four meetings in
addition to the 11 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 below), 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 1, 1995

<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 OFFI-
CERS(1)
Bruce D. Alexander....... 245,914 (2) -- --
Anthony W. Deering....... 601,379(3) 1.22% 3,500 (2)
Mathias J. DeVito........ 916,419(4) 1.86% -- --
Richard G. McCauley...... 175,880 (2) 202 (2)
Douglas A. McGregor...... 439,220 (2) -- --
DIRECTORS(5)
David H. Benson.......... 7,350(5)(6) (2) -- --
Jeremiah E. Casey........ 9,500(5) (2) -- --
Anthony W. Deering....... See above See above See above See above
Rohit M. Desai........... 1,909,007(5)(7) 3.88% 140,000(7) 3.11%
Mathias J. DeVito........ See above See above -- --
</TABLE>

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<PAGE>

<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>
Juanita T. James............ 6,200(5) (2) -- --
Thomas J. McHugh............ 16,000(5) (2) -- --
Hanne M. Merriman........... 6,500(5) (2) -- --
Roger W. Schipke............ 12,500(5) (2) -- --
Alexander B. Trowbridge..... 6,450(5) (2) -- --
All executive officers and
directors as a group
(22 persons)............... 4,990,284(8) 10.11% 144,852 3.22%
NAME AND ADDRESS OF OTHER
5% HOLDERS OF COMMON STOCK
Ariel Capital Management,
Inc......................... 3,887,560(9) 8.17%
307 N. Michigan Avenue,
Suite 500
Chicago, Illinois 60601
Cohen & Steers Capital Man-
agement Inc................. 2,571,100(10) 5.40%
757 Third Avenue
New York, New York 10017
Franklin Resources, Inc..... 3,186,280(11) 6.69%
777 Mariners Island Boule-
vard
San Mateo, California 94404
J.P. Morgan & Co. Incorpo-
rated....................... 2,823,509(12) 5.94%
60 Wall Street
New York, New York 10260
Onroerend Goed
Belegginsmaatschappij
Omlandia B.V. ............. 2,381,000(13) 5.01%
Coolsingel 120
NL-3011 AG
Rotterdam The Netherlands
Wanger Asset Management,
L.P., and Wanger Asset
Management, Ltd. and
Ralph Wanger............. 2,746,500(14) 5.77%
227 West Monroe, Suite 3000
Chicago, Illinois 60606
NAME AND ADDRESS OF 5% HOLDER OF
SERIES A CONVERTIBLE PREFERRED STOCK
Pier 17 Realty Holding Com-
pany, Inc................... 456,159 10.13%
c/o Morgan Guaranty Trust
Company of New York
522 Fifth Avenue
New York, New York 10036
</TABLE>

7
<PAGE>

--------
(1) With respect to the named executive officers of the Company, includes (i)
458,000 shares of Common Stock subject to stock options granted under the
Company's 1985 and 1990 Stock Option Plans and 1994 Stock Incentive Plan
that either are presently exercisable or will become exercisable within 60
days of March 1, 1995, (ii) with respect to such named executive officers'
accounts under The Rouse Company Savings Plan as of February 6, 1995,
43,828 shares of Common Stock and an additional 477 shares of Common Stock
that are issuable if the 202 shares of Series A Convertible Preferred
Stock held in the account of a named executive officer were converted,
(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) 8,235 shares of
Common Stock that are issuable if 3,500 shares of the Company's Series A
Convertible Preferred Stock directly owned by a named executive officer
were converted. Also includes 287,796 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 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 8,235 shares of Common
Stock that are issuable if the Company's Series A Convertible Preferred
Stock that is beneficially held by Mr. Deering were converted. Includes
56,610 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 148,100 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. Also includes 54,300 shares that are owned by a
Foundation of which Mr. DeVito is a Trustee and has shared voting and
dispositive powers. Mr. DeVito disclaims beneficial ownership of the
shares in both the trusts and the Foundation.

(5) Includes 6,000 shares of Rouse Company Common Stock subject to stock
options granted under the Company's 1994 Stock Incentive Plan to each non-
employee director. All of the options are presently exercisable.

(6) 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 181,025 shares of Common Stock that, as of March 1, 1995, 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.

(7) 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

8
<PAGE>

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.

(8) Includes 635,931 shares of Common Stock subject to stock options granted
under the Company's 1985 and 1990 Stock Option Plans and 1994 Stock
Incentive Plan that either are presently exercisable or will become
exercisable within 60 days of March 1, 1995. With respect to executive
officers' accounts under The Rouse Company Savings Plan as of February 6,
1995, includes 70,472 shares of Common Stock and an additional 3,183
shares of Common Stock that are issuable if 1,352 shares of Series A
Convertible Preferred Stock held in the accounts of such executive
officers were converted. 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 one director and one executive officer
were converted, and 337,646 shares of Common Stock that are issuable if
143,500 shares of the Company's Series A Convertible Preferred Stock
attributable to one director and one executive officer (other than shares
held in The Rouse Company Savings Plan) were converted. Does not include
181,025 shares of Common Stock of the Company that, as of March 1, 1995,
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 (6) above.

(9) Represents shares beneficially held as of December 31, 1994 by Ariel
Capital Management, Inc., which has sole voting power with respect to
2,824,155 shares, shared voting power with respect to 224,030 shares and
sole dispositive power with respect to all 3,887,560 shares.

(10) Represents shares beneficially held as of January 18, 1995 by Cohen &
Steers Capital Management Inc., which has sole voting power with respect
to 2,292,700 shares and sole dispositive power with respect to all
2,571,100 shares.

(11) Represents shares beneficially held as of December 31, 1994 by Franklin
Resources, Inc., which has sole voting and dispositive power with respect
to all 3,186,280 shares.

(12) Represents shares beneficially held as of December 30, 1994 by J.P. Morgan
& Co. Incorporated, which has sole voting power with respect to 2,804,679
shares and sole dispositive power with respect to all 2,823,509 shares.

(13) Represents shares beneficially held as of December 31, 1994 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.

(14) Represents shares beneficially held as of December 31, 1994 by Wanger
Asset Management, L.P., Wanger Asset Management, Ltd. and Ralph Wanger.
Mr. Wanger and both firms have shared voting and dispositive power with
respect to all of the 2,746,500 shares.

9
<PAGE>

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 1994. 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 and Stock Incentive Plans.

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, 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 the real estate industry generally and reviewing 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) and nine real estate investment trusts ("REITs") with assets that
include retail centers. The study also included the executive compensation
practices of national corporations whose comparability is based on asset size
and market capitalization and other corporations identified through the
Compensation Consultant's review of 1993 proxy statements and long-term
incentive survey. 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.

10
<PAGE>

The recommendations for all types of executive compensation reflected
compensation practices among the real estate industry generally, the twelve
major real estate firms and the comparable national corporations. With respect
to the long-term incentive stock plans, the recommendations also reflected
compensation practices among the nine REITs referred to above and the results
of the Compensation Consultant's review of 1993 proxy statements and its long-
term incentive survey. References in this report to "comparable companies,"
"competitive pay," "competitive ranges" and the like refer to the comparison
groups described above, as applicable to the particular type of compensation.

In addition to reviewing and giving careful consideration to the results of
reports of independent compensation consultants, the Committee considers 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 connection with the comprehensive review of the
Company's compensation programs described above, the Committee considered the
Compensation Consultant's recommendations and the specific recommendations of
Mr. DeVito with respect to proposed salaries, bonus levels and long-term
incentive stock compensation for the other executive officers. With respect to
Mr. DeVito, the Committee considered the Compensation Consultant's recommended
parameters for salary, bonus level and long-term incentive stock compensation.
The Committee provided recommendations to the Board, which were consistent with
the recommendations of the Compensation Consultant and Mr. DeVito. The Board
approved the Committee's recommendations.

In reviewing the individual performance of the Company's executive officers
(other than the Chief Executive Officer), the Committee and the Board each year
take into account the views of Mr. DeVito to whom, as Chief Executive Officer
during 1994, these officers were responsible. Mr. DeVito's recommendations with
respect to proposed salaries, bonuses and stock option grants for the executive
officers for 1994 were concurred in by the Committee and approved by the Board.

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.

11
<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.

Mr. DeVito, Chairman and Chief Executive Officer of the Company during 1994,
received an increase in his 1994 salary to $700,000. The Committee recommended
this salary based upon the excellent performance of the Company in the
preceding year and the recommendations of the Compensation Consultant as to
appropriate salary parameters. The Board approved the Committee's
recommendation.

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 bonus awards of the executive officers of the Company as
a group are based in whole or in part upon the Company's annual corporate
objectives as evaluated by the Board. The bonus awards of Messrs. DeVito,
Deering and McGregor for 1994 were determined based on the Board's overall
evaluation of corporate performance. The bonus awards of the other executive
officers for 1994 were based 50% on the Board's overall evaluation of corporate
performance and 50% on individual performance. The maximum incentive bonus
potential for executive officers under the 1994 Plan ranged from 60% to 90% 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. 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
1994 as shown in parentheses, these Board-approved objectives, on which the
executive officers' bonuses are wholly or partially 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 1994 (totalling 27 1/2%) relating
to capital expenditures and leasing, retail center construction and openings,
future retail and office

12
<PAGE>

development, retail center acquisitions or management agreements and annual
human resource equal opportunity goals.

For 1994, 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 $630,000, representing
90% of his base salary, the full potential incentive bonus payment under the
provisions of the Company's Incentive Bonus Plan. The other executive officers
were awarded bonuses for 1994 ranging from 48.5% to 82.5% of their 1994
salaries based on the same evaluation of corporate performance and, in certain
instances, their individual performance.

LONG-TERM INCENTIVE STOCK PLANS

The Company's long-term incentive stock program includes the Company's 1985
and 1990 Stock Bonus Plans, 1985 and 1990 Stock Option Plans and 1994 Stock
Incentive Plan, all approved by stockholders. The purpose of these stock
programs 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 make
related loans 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.

In determining whether and how many shares should be awarded, the Committee
has available the compensation history, including amounts and terms of previous
stock bonus awards, of the executive officers. In making grants, the Committee
principally considers such grant history for the preceding three years together
with approved ranges of annualized values using the formula guidelines
recommended by the Compensation Consultant and referred to below. It has been
the practice of the Company to make these stock bonus awards 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 1994.

13
<PAGE>

STOCK OPTIONS

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, the prior grant history for each person, independent
consultants' advice and 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 for
comparable companies.

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 1994, grants of stock options for a total of 327,500 shares were made to
all executive officers except for Mr. DeVito. 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 1994
to the named executive officers 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 Rouse Company 1994
Stock Incentive Plan (the "Plan") enables 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.

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, 1994, 1993 and 1992 of those persons who were the Chief
Executive Officer and the four other most highly compensated officers of the
Company in 1994. 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 1992-1994, 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 ($) BONUS ($) ($) (#) ($)
------------- ---- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mathias J. DeVito 1994 700,000 630,000 None None 4,620(7)
Chairman of the Board and 1993 548,625 438,900 None 100,000 92,497(8)(9)
Chief Executive Officer(1) 1992 548,625 438,900 None None 3,114,364(9)(10)
Anthony W. Deering 1994 500,000 412,500 None(4) 50,000 180,245(7)
President and Chief 1993 450,000(3) 315,000 1,256,250(3) 75,000 54,497(8)
Operating Officer(2) 1992 341,000 250,000 None None 122,364(10)
Douglas A. McGregor 1994 400,000 300,000 None(5) 30,000 54,620(7)
Executive Vice-President for 1993 358,000(6) 232,700 456,250(6) 25,000 54,497(8)
Development and Operations 1992 341,000 221,650 None None 122,364(10)
Bruce D. Alexander 1994 310,000 172,050 None 22,500 4,620(7)
Senior Vice-President and 1993 288,750 158,815 None 50,000 4,497(8)
Director of New Business 1992 288,750 158,800 None None 72,364(10)
Richard G. McCauley 1994 300,000 147,750 None 22,500 4,620(7)
Senior Vice-President, 1993 288,750 158,815 None 40,000 4,497(8)
General Counsel and Secre- 1992 288,750 158,800 None None 72,364(10)
tary
</TABLE>
--------
(1) Mr. DeVito retired as Chief Executive Officer and from his employment with
the Company on February 23, 1995. He continues to serve as Chairman of the
Company's Board of Directors.

(2) During 1994, Mr. Deering was President and Chief Operating Officer of the
Company. Mr. Deering was elected as Chief Executive Officer on February
23, 1995 upon Mr. DeVito's retirement from this position.

(3) In February, 1993, in conjunction with the election of Mr. 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 and

15
<PAGE>

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.

(4) As of December 31, 1994, Mr. Deering had aggregate restricted
shareholdings of 102,500 shares of Common Stock having a value, based on
the value of the Company's shares on that date, of $1,973,125.

(5) As of December 31, 1994, Mr. McGregor had aggregate restricted
shareholdings of 60,000 shares of Common Stock having a value, based on
the value of the Company's shares on that date, of $1,155,000.

(6) In September, 1993, in conjunction with Mr. 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.

(7) 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 1994 in the amount of $175,625 as to Mr.
Deering and $50,000 as to Mr. McGregor. Also includes matching
contributions available to employees of the Company generally under the
Company's 401(k) Savings Plan in the amount of $4,620 for each of the
named executive officers.

(8) 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.

(9) 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
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."

(10) 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 1994 to the executive officers named in the Summary Compensation Table.
No SARs have been granted at any time under the Company's Stock Option or Stock
Incentive 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 None None None None None
Anthony W. Deering 50,000 9.7 19.00 9/21/04 $280,500
Douglas A. McGregor 30,000 5.8 19.00 9/21/04 $168,300
Bruce D. Alexander 22,500 4.3 19.00 9/21/04 $126,225
Richard G. McCauley 22,500 4.3 19.00 9/21/04 $126,225
</TABLE>
--------
(1) All of the shares were granted on September 22, 1994, and are exercisable
as to 25% of the shares granted on September 22nd in each of the years 1996
through 1999.
(2) These values are based on the Black-Scholes option pricing model, which
produces a per option share value as of September 22, 1994, the grant date,
of $5.61 using the following assumptions: options exercised after 7 years,
stock price volatility of .27719, dividend yield of 3.68% and an interest
rate of 7.39%, 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 $19.00 exercise price when the options are exercised.

The following table summarizes information relating to stock option exercises
during 1994 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 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 125,334/ 94,666 None/none
Anthony W. Deering 300 $2,338 69,500/155,500 $172,500/$127,500
Douglas A. McGregor 300 $2,263 69,500/ 85,500 $172,500/$122,500
Bruce D. Alexander None None 39,500/ 83,000 None/$5,625
Richard G. McCauley None None 39,500/ 73,000 None/$5,625
</TABLE>
--------
(1) An "in-the-money" stock option is an option for which the market price, on
December 30, 1994, 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.

17
<PAGE>

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.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE ROUSE COMPANY
S&P 500 AND PEER GROUP

PERFORMANCE GRAPH APPEARS HERE

Measurement Period THE ROUSE S&P PEER
(Fiscal Year Covered) COMPANY 500 GROUP
--------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/1989 $100 $100 $100
FYE 12/31/1990 $ 57 $ 97 $ 54
FYE 12/31/1991 $ 74 $126 $ 49
FYE 12/31/1992 $ 75 $136 $ 34
FYE 12/31/1993 $ 77 $150 $ 38
FYE 12/31/1994 $ 87 $152 $ 33
</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>

EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS

The Company entered into an Agreement with Mr. DeVito, dated September 24,
1992 (the "Pension Agreement"), to remove any economic detriment with respect
to his vested pension benefits under the Company's Supplemental Retirement
Benefit Plan (the "Supplemental Plan") and Pension Plan resulting from his
continuing to serve the Company after he attained the normal retirement age of
62 in August, 1992. Mr. DeVito was given the right to withdraw his entire
benefit under the Supplemental Plan. With respect to his benefit under the
Pension Plan and the portion of his vested pension benefit under the
Supplemental Plan that Mr. DeVito did not withdraw, the Company agreed to pay
him interest based on Pension Benefit Guaranty Corporation rates. The Company
also agreed to pay Mr. DeVito upon his retirement or other termination of
employment an additional lump sum equal to any decline in the present value of
his benefits under the Pension Plan after the date of the Pension Agreement.

On November 30, 1994, the Company entered into an agreement with Mr. DeVito
in connection with his retirement as Chief Executive Officer and retirement
from employment with the Company that became effective on February 23, 1995
(the "Retirement Agreement"). Under the Retirement Agreement, Mr. DeVito
received a special retirement bonus of $1,605,358, which was paid in a lump sum
on February 23, 1995.

Mr. DeVito continues to serve as Chairman of the Board of Directors of the
Company. In that capacity, Mr. DeVito will preside over meetings of the Board
of Directors and stockholders of the Company, serve as Chairman of the
Executive Committee and a member of the Audit Committee of the Board, and
oversee the Contributions Committee of the Company. Mr. DeVito will also be
available to consult with management of the Company and undertake certain
specific advisory services at the request of the Board of Directors or the
Chief Executive Officer. For his services as Chairman of the Board as described
above, and in lieu of any other directors' fees, Mr. DeVito will receive an
annual fee of $100,000 through December 31, 1997, at which time the Board will
review Mr. DeVito's role as Chairman. The Company will also provide appropriate
office space and secretarial and other support to Mr. DeVito and will reimburse
him for expenses incurred in connection with his responsibilities as Chairman.

With respect to all named executive officers, stock option grants, bonus
stock grants and related loans under the Company's Stock Option, Stock Bonus
and Stock Incentive 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, retires on or after the normal retirement age of 62 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 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 302,500 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

19
<PAGE>

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 February, 1995, upon the
election of Mr. Deering as Chief Executive Officer, the Board of Directors
awarded Mr. Deering shares of Common Stock pursuant to the Company's 1994 Stock
Incentive Plan. 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 either four or 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, 1994 through March 3, 1995 exceeded $60,000:

<TABLE>
<CAPTION>
MAXIMUM
PRINCIPAL
AMOUNT OF
LOANS PRINCIPAL
OUTSTANDING AMOUNT
FROM 1-1-94 OF LOANS
NAME OF RELATIONSHIP THROUGH OUTSTANDING
INDIVIDUAL WITH COMPANY 3-3-95(1) ON 3-3-95
---------- ------------ ----------- -----------
<S> <C> <C> <C>
Anthony W. Deering President and Chief Executive $2,326,875 $2,326,875
Officer
Jeffrey H. Donahue Senior Vice-President, Chief 131,939 131,939
Financial Officer and Director
of the Finance Division
Duke S. Kassolis Senior Vice-President and 179,375 179,375
Director of Office and Mixed-
Use Operations
Paul I. Latta, Jr. Senior Vice-President and 166,250 166,250
Director of Retail Operations
Douglas A. McGregor Executive Vice-President for 337,500 287,500
Development and Operations
Robert Minutoli Senior Vice-President and 281,422 253,701
Director of Acquisitions
Robert D. Riedy Senior Vice-President and 174,743 174,743
Director of Retail Leasing
Alton J. Scavo Senior Vice-President, Director 166,250 166,250
of the Community Development
Division and General Manager of
Columbia
Jerome D. Smalley Senior Vice-President and 271,050 248,850
Director of the Commercial and
Office Development Division
George L. Yungmann Senior Vice-President, 118,750 118,750
Controller 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 generally as cash compensation

21
<PAGE>

(including any deferred cash bonus) plus 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 eligible 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, 25, 22,
23 and 23 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 1995 rate of compensation to
retirement) are $282,560, $379,103, $255,289 and $309,302, respectively. Mr.
DeVito had 26 credited years of service under the Plans. Upon his retirement as
Chief Executive Officer on February 23, 1995, Mr. DeVito was entitled to
receive his accrued benefit under the Plans, which was $575,598 per year. See
"Employment Contracts and Termination of Employment and Change of Control
Arrangements" above for a description of agreements 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 1994 was $118,800 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 (other than Mr. DeVito) 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 (other than Mr.
DeVito) 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. Mr. DeVito receives an annual fee of $100,000 for his
services as Chairman of the Board of Directors, Chairman of the Executive
Committee and a member of the Audit Committee and for advisory services
rendered to the Company. See "Employment Contracts and Termination of
Employment and Change of Control Arrangements" above.

22
<PAGE>

Directors who retire from the Board after serving for at least 5 years will
receive an annual retirement income beginning at age 70 equal to one-half of
the annual fee paid to directors as such fee is established from time to time.

On March 4, 1994, the Board of Directors adopted The Rouse Company 1994 Stock
Incentive Plan (the "Plan"). The Plan was approved by the stockholders on May
12, 1994. Pursuant to Article VII of the Plan, non-employee directors receive
5,000-share grants of the Company's Common Stock upon their initial election,
and each director receives an additional 1,000-share grant upon re-election as
a director at each subsequent annual meeting.

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 1994, 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 during 1994, 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.

STOCKHOLDER PROPOSALS FOR 1996 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

23
<PAGE>

that they believe merit consideration at the annual meeting of stockholders to
be held in May, 1996. 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 1996 annual meeting, any such proposal must
be received by the Company by December 1, 1995, 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 LLP as its auditors
in December, 1956. The audit services rendered by KPMG Peat Marwick LLP for the
fiscal year ended December 31, 1994 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 LLP 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

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.

24
<PAGE>

THE ROUSE COMPANY
Proxy Solicited on Behalf of the Board of Directors--Annual
Meeting of Stockholders--May 11, 1995

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 March 31, 1995, and hereby constitutes and
appoints Anthony W. Deering, President and Chief Executive Officer of the
Company, and Richard G. McCauley, Senior Vice-President, General Counsel and
Secretary of the Company, or either of them acting singly in the absence of the
other, 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 11, 1995, and at any adjournment or adjournments thereof.

The Board of Directors recommends a vote FOR the election of all
nominees for directors. Please mark votes (x) in black or blue ink.

(a) Election of Directors

FOR all nominees [_] WITHHOLD VOTE ON [_]
listed below all nominees listed below.
(except as marked to
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.

--------------------------------------------------------------------------------

(Please turn this card over)

(Please sign, date and return this proxy
in the enclosed postage prepaid envelope.)

<PAGE>

(b) 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.

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 and
in the best discretion of the proxy holders as to any other matters.

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.)

Dated: , 1995
----------------------------------

---------------------------------------- (SEAL)

---------------------------------------- (SEAL)
Signature