<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 [_] 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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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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 23, 1996, 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
27, 1996 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
Bruce I. Rothschild
Secretary
April 5, 1996
<PAGE>
THE ROUSE COMPANY
10275 LITTLE PATUXENT PARKWAY
COLUMBIA, MARYLAND 21044-3456
PROXY STATEMENT
(FIRST MAILED TO STOCKHOLDERS ON APRIL 5, 1996)
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 23, 1996
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. If, as discussed below, the proposed merger with The Hughes
Corporation is consummated prior to the meeting, William R. Lummis, a director
of The Hughes Corporation, will be nominated as a director of the Company, and
any proxy given pursuant to this solicitation will be voted for the election
of Mr. Lummis.
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, 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 27, 1996, 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 48,247,756 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.
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1995, has been mailed to all stockholders with
this Proxy Statement. You may receive, without charge, a copy of the Company's
1995 Form 10-K as filed with the Securities and Exchange Commission by
contacting
<PAGE>
David L. Tripp, Vice President and Director of Investor Relations, The Rouse
Company, 10275 Little Patuxent Parkway, Columbia, Maryland 21044-3456.
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.
In addition, at its meeting on February 22, 1996, the Board of Directors
determined to expand the Board by one and to elect William R. Lummis to fill
the vacancy if the proposed merger with The Hughes Corporation ("Hughes") is
consummated. In connection with the proposed merger, the Company will enter
into a Contingent Stock Agreement (the "Agreement") under which the owners of
Hughes (the "Owners") will receive rights to future distributions of Company
stock as part of the consideration in the merger. Under the Agreement, as long
as the Owners own at least 5% of the outstanding shares of Company Common
Stock (but in no event for longer than 10 years), the Owners will be entitled,
through certain representatives, to designate an individual for election to
the Company's Board. It is expected that Mr. Lummis will be designated under
this provision to serve as a director.
If one or more of the nominees for director 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. If the proposed merger with Hughes is
consummated prior to the meeting, the holders of proxies solicited hereby
reserve the right to nominate and vote for Mr. Lummis. If the proposed merger
is consummated after the meeting, Mr. Lummis will become a director at that
time in accordance with the action taken by the Board of Directors at its
February 22, 1996 meeting.
Certain information as to the nominees and Mr. Lummis follows:
David H. Benson, age 58, has been a member of the Company's Board since
1987. Mr. Benson is a member of the Board of Kleinwort Benson Group plc, a
bank holding company. He is also Chairman of the Board of Kleinwort Charter
Investment Trust plc and Trustee of The Pilot Funds, both of which are
investment management companies. Previously, Mr. Benson was Vice Chairman of
the Board of Kleinwort Benson Group plc. Mr. Benson is a director of British
Gas plc, The Dover Corporation, Harrow Corporation, Kleinwort Benson U.S.A.
Inc., Leach International, Inc. and Marshall Cavendish Ltd. He is also a
Trustee of the Charities Official Investment Fund and the Edward James
Foundation.
Jeremiah E. Casey, age 56, has been a member of the Company's Board since
1990. Mr. Casey is Chief Executive, USA, of Allied Irish Banks plc, and
Chairman of the Board of First Maryland Bancorp and its banking subsidiaries.
Mr. Casey is a director of Allied Irish Banks plc and a director of the
Federal Reserve Bank of Richmond, Baltimore Branch. In addition, he is a
director of the 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. Mr. Casey also is a Trustee of both Mercy Medical Center and
The Walters Art Gallery.
Anthony W. Deering, age 51, has been a member of the Company's Board since
1993. Mr. Deering is a Director and President and Chief Executive Officer of
the Company. Previously, he was President and Chief Operating Officer of the
Company; Executive Vice-President, Finance and Administration and Chief
Financial Officer of the Company; and Senior Vice-President and Chief
Financial Officer of the Company. Mr. Deering is a director of Kleinwort
Benson Holdings Inc. Advisory Board and a director of T. Rowe Price Fixed
Income and International Mutual Funds. He is a Trustee of the Baltimore Museum
of Art, the Friends School of Baltimore
2
<PAGE>
and the Parks and People Foundation of The Foundation for Baltimore Recreation
and Parks. Mr. Deering also is a member of the Mayor's Business Advisory
Council of the City of Baltimore.
Rohit M. Desai, age 57, has been a member of the Company's Board since 1980.
Mr. Desai is Chairman of the Board and President of Desai Capital Management
Incorporated ("DCMI"), a specialized investment firm managing assets of
various institutional clients. Mr. Desai is also a director of Sunglass Hut
International, Inc. and Finlay Enterprises, Inc.
Mathias J. DeVito, age 65, has been a member of the Company's Board since
1972. Mr. DeVito is Chairman of the Board of the Company. Previously, he was
Chairman of the Board and Chief Executive Officer of the Company. Mr. DeVito
is a director of Allied Irish Banks plc, First Maryland Bancorp and USAir
Group, Inc. He is Chairman of the Board of the Baltimore Empowerment
Management Corporation and a member of both the Business Committee for the
Arts, Inc. and The Greater Baltimore Committee. Mr. DeVito also is a Trustee
of the Maryland Institute, College of Art.
Juanita T. James, age 43, has been a member of the Company's Board since
1989. Ms. James is Senior Vice-President of the Book-of-the-Month Club, Inc.,
a subsidiary of Time Warner Inc. Previously, she was President and Chief
Executive Officer, Time-Life Libraries, Incorporated. Ms. James is a Charter
Trustee of Princeton University and a member of both the Advisory Council of
Bethune-Cookman College and the National Coalition of 100 Black Women.
William R. Lummis, age 67, has been Chairman of the Board of The Hughes
Corporation since 1976. He served as Chief Executive Officer of Hughes from
1977 until 1990. Prior to joining Hughes, Mr. Lummis was a partner in the
Houston law firm of Andrews & Kurth L.L.P. He has served as administrator of
the Estate of Howard R. Hughes, Jr. since 1976. He is a trustee of the Howard
Hughes Medical Institute.
Thomas J. McHugh, age 64, has been a member of the Company's Board since
1980. Mr. McHugh is President of McHugh Associates, Inc., a registered
investment adviser. Mr. McHugh is a director of Philadelphia Consolidated
Holding Corp. and is Vice Chairman and Trustee of St. Joseph's University.
Hanne M. Merriman, age 54, has been a member of the Company's Board since
1992. Ms. Merriman is a Retail Business Consultant for Hanne Merriman
Associates, a retail consulting firm. Previously, she was President and Chief
Operating Officer of Nan Duskin, Inc., a women's specialty store. Ms. Merriman
is a director of AnnTaylor Stores Corporation, CIPSCO Incorporated, State Farm
Mutual Automobile Insurance Company, T. Rowe Price Mutual Funds and USAir
Group, Inc. She is also a Trustee of the American-Scandinavian Foundation and
a member of the National Women's Forum.
Roger W. Schipke, age 59, has been a member of the Company's Board since
1992. Mr. Schipke is Chairman of the Board and Chief Executive Officer of
Sunbeam-Oster Company, Inc., a corporation that engages in the sale of various
consumer products. Previously, he was Chairman of the Board, President and
Chief Executive Officer of The Ryland Group, Inc., and Senior Vice-President
of G.E. Co., with worldwide responsibility for appliance products. Mr. Schipke
is a director of The Brunswick Corporation, Legg Mason, Inc. and Oakwood Homes
Corporation.
Alexander B. Trowbridge, age 66, has been a member of the Company's Board
since 1985. Mr. Trowbridge is President of Trowbridge Partners, Inc., a
corporation that engages in the consulting business. Mr. Trowbridge is a
director of The Gillette Co., Harris Corp., ICOS Corp., New England Mutual
Life Insurance Co., PHH Corporation, Sun Company, Inc., Sun Resorts
International Ltd., and WMX Technologies, Inc. He also serves as a director of
several publicly owned mutual funds managed by Warburg Pincus Counsellors,
Inc. Mr. Trowbridge is a Trustee of both The Aspen Institute and Phillips
Academy Andover.
3
<PAGE>
Please Note:
(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 with
the exception of British Gas plc, 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. 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 1995.
The Executive Committee, composed of Messrs. DeVito (Chairman), Casey,
Deering, 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 one meeting during 1995.
The Personnel Committee, composed of Messrs. McHugh (Chairman), Casey and
Trowbridge and Ms. James, 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 under the Company's
stock option plans. See "Personnel Committee Report on Executive Officer
Compensation" below. This Committee also has certain responsibilities with
respect to the Company's Pension Plan, including general oversight of the
investment of Pension Plan assets and approval of amendments to the Pension
Plan that do not significantly increase the Company's funding costs or that
are required under federal or state law. In addition, the Personnel Committee
has general oversight responsibility for The Rouse Company Supplemental
Retirement Benefit Plan. The Personnel Committee held three meetings during
1995.
During 1995, the Board of Directors of the Company held six meetings in
addition to the eight 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.
4
<PAGE>
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, 1996
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
COMMON STOCK PREFERRED STOCK
--------------------------- ------------------------
PERCENT OF PERCENT OF
NAME OF BENEFICIAL OWNER NUMBER OF SHARES NUMBER SHARES
OR IDENTITY OF GROUP SHARES OUTSTANDING OF SHARES OUTSTANDING
------------------------ --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
EXECUTIVE OFFICERS(1)
Anthony W. Deering........ 641,770(2) 1.34% 3,500 (3)
Jeffrey H. Donahue........ 100,468 (3) -- --
Paul I. Latta, Jr......... 92,412 (3) 226 (3)
Douglas A. McGregor....... 516,905 1.07% -- --
Larry M. Wolf............. 226,175 (3) -- --
DIRECTORS(4)(5)
David H. Benson........... 8,350(4)(6) (3) -- --
Jeremiah E. Casey......... 10,500(4) (3) -- --
Anthony W. Deering........ See above See above See above See above
Rohit M. Desai............ 1,840,138(4)(7) 3.70% 140,000(7) 3.11%
Mathias J. DeVito......... 913,200(4)(8) 1.90% -- --
Juanita T. James.......... 7,200(4) (3) -- --
Thomas J. McHugh.......... 17,000(4) (3) -- --
Hanne M. Merriman......... 7,500(4) (3) -- --
Roger W. Schipke.......... 13,500(4) (3) -- --
Alexander B. Trowbridge... 7,450(4) (3) -- --
All executive officers and
directors as a group (20
persons)................. 5,030,499(9) 10.12% 145,205 3.22%
<CAPTION>
NAME AND ADDRESS OF OTHER
5% HOLDERS OF COMMON STOCK
<S> <C> <C> <C> <C>
Algemeen Burgerlijk
Pensioenfonds............ 4,331,200(10) 9.04%
Oude Lindestraat 70
Postbus 2980, 6401 DL
Heerlen
The Netherlands
Ariel Capital Management,
Inc...................... 2,860,730(11) 5.98%
307 N. Michigan Avenue
Suite 500
Chicago, Illinois 60601
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
COMMON STOCK PREFERRED STOCK
------------------------- ---------------------
PERCENT OF PERCENT OF
NAME OF BENEFICIAL OWNER NUMBER OF SHARES NUMBER SHARES
OR IDENTITY OF GROUP SHARES OUTSTANDING OF SHARES OUTSTANDING
------------------------ --------- ----------- --------- -----------
NAME AND ADDRESS OF OTHER
5% HOLDERS OF COMMON STOCK
<S> <C> <C> <C> <C>
Cohen & Steers Capital Manage-
ment Inc. .................... 3,376,500(12) 7.05%
757 Third Avenue
New York, New York 10017
Franklin Resources, Inc. ...... 4,152,370(13) 8.66%
777 Mariners Island Boulevard
San Mateo, California 94404
Liberty Investment Management,
Inc. ......................... 2,712,100(14) 5.66%
2502 Rocky Point Drive, Suite
500
Tampa, Florida 33607
Onroerend Goed
Belegginsmaatschappij Omlandia
B.V. ......................... 2,381,000(15) 5.01%
Coolsingel 120
NL-3011 AG Rotterdam
The Netherlands
T. Rowe Price Associates,
Inc. ......................... 2,618,772(16) 5.46%
100 East Pratt Street
Baltimore, Maryland 21202
</TABLE>
- --------
(1) With respect to the named executive officers of the Company, includes (i)
442,334 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, 1996, (ii) with respect to such named executive officers'
accounts under The Rouse Company Savings Plan as of February 7, 1996,
57,396 shares of Common Stock and an additional 532 shares of Common Stock
that are issuable if the 226 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 30,228 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) 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
201,337 shares that are owned by the Deering
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<PAGE>
Family Limited Partnership of which Mr. Deering is a Trustee and has shared
voting and dispositive powers. 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.
(3) Beneficial ownership does not exceed one percent of the shares of Common
Stock or Series A Convertible Preferred Stock outstanding.
(4) Includes 7,000 shares of Rouse Company Common Stock subject to stock
options granted under the Company's 1994 Stock Incentive Plan to each non-
employee director, except for Mr. DeVito, who received a 1,000-share stock
option grant upon attaining non-employee status in February 1995. All of
the options are presently exercisable.
(5) As indicated above, William R. Lummis will become a director of the
Company if the proposed merger with The Hughes Corporation is consummated.
On March 1, 1996, Mr. Lummis owned no shares of Common Stock or Series A
Convertible Preferred Stock of the Company. Since Mr. Lummis is one of the
owners of Hughes, he will receive Company Common Stock if the merger is
consummated.
(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 power with respect to such shares. Does not include
147,525 shares of Common Stock that, as of March 1, 1996, 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 and 7,000 shares of
Rouse Company Common Stock subject to stock options referenced in Footnote
(4) above. 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 $11.8 million principal amount
of the Company's 5 3/4% Convertible Subordinated Debentures due 2002. The
5 3/4% Debentures are convertible into 412,227 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.
(8) 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 power. Mr. DeVito disclaims beneficial ownership of the shares
in both the trusts and the Foundation.
(9) Includes 719,334 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, 1996. With respect to executive
officers' accounts under The Rouse Company Savings Plan as of February 7,
1996, includes 57,396 shares of Common Stock and an additional 4,012
shares of Common Stock that are issuable if 1,705 shares of Series A
Convertible Preferred Stock held in the accounts of such executive
officers were converted. Also includes 417,816 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
7
<PAGE>
converted. Does not include 147,525 shares of Common Stock of the Company
that, as of March 1, 1996, 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.
(10) Represents shares beneficially held as of November 15, 1995 by Algemeen
Burgerlijk Pensioenfonds, which has sole voting power with respect to
4,195,800 shares and sole dispositive power with respect to all 4,331,200
shares.
(11) Represents shares beneficially held as of December 31, 1995 by Ariel
Capital Management, Inc., which has sole voting power with respect to
2,741,830 shares, shared voting power with respect to 30,500 shares and
sole dispositive power with respect to all 2,860,730 shares.
(12) Represents shares beneficially held as of January 18, 1996 by Cohen &
Steers Capital Management Inc., which has sole voting power with respect
to 2,998,800 shares and sole dispositive power with respect to all
3,376,500 shares.
(13) Represents shares beneficially held as of December 31, 1995 by Franklin
Resources, Inc., which includes 933,980 shares of Common Stock that are
issuable if the Company's 5 3/4% Convertible Subordinated Debentures due
2002 were converted. Franklin Resources, Inc. has sole voting power with
respect to 4,063,540 shares and shared dispositive power with respect to
all 4,152,370 shares.
(14) Represents shares beneficially held as of December 31, 1995 by Liberty
Investment Management, Inc., which has sole voting and dispositive power
with respect to all 2,712,100 shares.
(15) Represents shares beneficially held as of December 31, 1995 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.
(16) Represents shares beneficially held as of December 31, 1995 by T. Rowe
Price Associates, Inc. ("Price Associates"), which has sole voting power
with respect to 326,661 shares and sole dispositive power with respect to
all 2,618,772 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.
8
<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 1995. The
Committee is composed of four 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. In 1993 a
comprehensive review of the Company's compensation program was conducted by
William M. Mercer, Incorporated (the "Compensation Consultant"). The
Compensation Consultant's Report to the Committee 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.
References in this report to "comparable companies," "competitive pay,"
"competitive ranges" and the like refer to the comparison groups described
above.
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.
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. The Committee also considers the Compensation
Consultant's periodic recommendations and the specific recommendations of the
Chief Executive Officer with respect to proposed salaries, bonus levels and
long-term incentive stock compensation for the other executive officers. With
respect to the Chief Executive Officer, the Committee considers the
Compensation Consultant's recommended parameters for salary, bonus level and
long-term incentive stock compensation.
9
<PAGE>
Except with respect to stock options, the Board provides the final approval
for the compensation of all executive officers, including the Chief Executive
Officer.
In reviewing the individual performance of the Company's executive officers
(other than the Chief Executive Officer), the Committee and the Board take
into account the views of the Chief Executive Officer to whom these officers
were responsible. Mr. DeVito was the Chief Executive Officer of the Company
until February 23, 1995, and Mr. Deering was the Chief Executive Officer for
the balance of the year. Mr. DeVito's recommendations with respect to proposed
salaries for 1995, which were set early in 1995, and Mr. Deering's
recommendations with respect to proposed bonuses for the executive officers
for 1995, which were set early in 1996, 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.
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. Deering received an increase in his 1995 salary to $625,000 when he was
elected as Chief Executive Officer of the Company (in addition to President)
on February 23, 1995. The new salary was recommended by the Committee and
approved by the Board based upon Mr. Deering's increased responsibilities.
ANNUAL INCENTIVE BONUS
The Company's executive officers and other key persons are eligible for an
annual cash bonus under the Incentive Compensation Plan. While the number of
persons who are eligible for such bonuses varies from year to year,
approximately 200-250 persons participate each year.
10
<PAGE>
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. Deering and
McGregor for 1995 were determined based on the Board's overall evaluation of
corporate performance. The bonus awards of the other executive officers for
1995 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 1995 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.
Each year, a set of annual corporate performance 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
1995, these Board-approved objectives 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 1995 (totalling 27 1/2%) relating
to capital expenditures and leasing, retail center construction and openings,
future retail and office development, retail center acquisitions or management
agreements and annual human resource equal opportunity goals.
For 1995, 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. Deering a bonus of $520,313,
representing 83.25% of his base salary. The other executive officers were
awarded bonuses for 1995 ranging from 49.02% to 69.38% of their 1995 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 1990
Stock Bonus and 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 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. In recent years, stock bonus awards have been made periodically
to executive officers upon consultation with and recommendation of the Chief
Executive Officer.
11
<PAGE>
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 (typically lapsing in installments over five to seven
years) which cause forfeiture of the applicable shares if the executive
voluntarily leaves the employ of the Company. The term of the restrictions is
designed to incentivize the continued employment of those executives deemed
key to the performance of the Company and to build 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 with the Company, typically over a period
of five or more years.
Based on the Compensation Consultant's Report, the Board has 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. Deering received
a restricted stock award of 200,000 shares in February, 1995 upon assuming the
role of Chief Executive Officer. See footnote (2) of the Summary Compensation
Table on page 15.
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.
No stock options were granted to any executive officers during 1995.
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION EXPENSE UNDER FEDERAL TAX LAWS
The Committee has considered the impact of 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,
12
<PAGE>
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
Juanita T. James
Alexander B. Trowbridge
13
<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, 1995, 1994 and 1993 of those persons who were the Chief
Executive Officer and the four other most highly compensated officers of the
Company in 1995. 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 1993-1995, nor have any SARs been granted at any
time in prior years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------- ------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
AWARD(S) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#) ($)
- ---------------------------- ---- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mathias J. DeVito 1995 121,154 None None None 1,625,157(1)(7)
Chairman of the Board and 1994 700,000 630,000 None None 4,620(8)
Chief Executive Officer(1) 1993 548,625 438,900 None 100,000 92,497(9)(10)
Anthony W. Deering 1995 625,000 520,313 3,725,000(2) None 180,245(7)
President and Chief Executive 1994 500,000 412,500 None 50,000 180,245(8)
Officer(2) 1993 450,000(3) 315,000 1,256,250(3) 75,000 54,497(9)
Douglas A. McGregor 1995 430,000 298,334 None(4) None 113,995(7)
Executive Vice-President for 1994 400,000 300,000 None 30,000 54,620(8)
Development and Operations 1993 358,000(5) 232,700 456,250(5) 25,000 54,497(9)
Larry M. Wolf 1995 285,000 157,463 None None 4,620(7)
Senior Vice-President and Director 1994 285,000 138,225 None 22,500 4,620(8)
of Corporate Merchandising and 1993 277,200 152,460 None 40,000 4,497(9)
Creative Services
Jeffrey H. Donahue 1995 260,000 139,490 None(4) None 46,183(7)
Senior Vice-President and Chief 1994 240,000 134,400 None 22,500 4,620(8)
Financial Officer 1993 223,654 105,170 166,250(6) None 4,497(9)
Paul I. Latta, Jr. 1995 260,000 132,275 None(4) None 46,183(7)
Senior Vice-President and 1994 240,000 129,600 None 22,500 4,620(8)
Director of Retail Operations 1993 228,966 107,065 166,250(6) None 4,497(9)
</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. During 1995, Mr. DeVito received a
special retirement bonus of $1,605,358, financial planning services
having a value of $16,164 and matching contributions under the Company's
401(k) Savings Plan of $3,635. For additional information, see
"Employment Contracts and Termination of Employment and Change of Control
Arrangements" below.
14
<PAGE>
(2) During 1994 and early 1995, 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. Upon Mr. Deering's assumption of the role of Chief Executive
Officer of the Company, the Board of Directors, acting pursuant to the
Company's 1994 Stock Incentive Plan, awarded Mr. Deering 200,000 shares
of Common Stock (the "1995 Bonus Shares"). Ownership of the 1995 Bonus
Shares vests 20% on January 2nd in each of the years 1996, 1997, 1998,
1999 and 2000. Any 1995 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. As of December 31, 1995, Mr. Deering
had aggregate restricted shareholdings of 287,500 shares of Common Stock
having a value, based on the value of the Company's shares on that date,
of $5,857,813.
(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 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, 1995, Mr. McGregor had aggregate restricted
shareholdings of 46,250 shares of Common Stock having a value, based on
the value of the Company's shares on that date, of $942,344, and both
Messrs. Donahue and Latta had aggregate restricted shareholdings of
13,125 shares of Common Stock having a value, based on the value of the
Company's shares on that date, of $267,422.
(5) 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.
(6) In September, 1993, the Board of Directors, acting pursuant to the
Company's 1990 Stock Bonus Plan, awarded both Messrs. Donahue and Latta
17,500 shares of Common Stock (the "1993 Bonus Shares"). Ownership of the
1993 Bonus Shares vests 25% on January 2nd 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 1995 in the amount of $175,625 as to Mr.
Deering, $109,375 as to Mr. McGregor and $41,563 as to both Messrs.
Donahue and Latta. 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,
except for Mr. DeVito, who received $3,635 due to his partial year of
service as Chief Executive Officer.
15
<PAGE>
(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 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.
(9) 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.
(10) Includes a distribution of $88,000 in 1993 as partial payment of Mr.
DeVito's vested pension benefits that had accrued under the Company's
Pension Plan and Supplemental Retirement Benefit Plan during his more
than 24 years of service to the Company. The distribution was approved by
the Board of Directors as part of an agreement intended to remove any
detriment in respect to Mr. DeVito's pension benefit resulting from his
continuing to serve the Company after attaining age 62 in August, 1992,
the normal retirement age at which full benefits become payable under the
Company's retirement plans.
16
<PAGE>
OPTIONS AND STOCK APPRECIATION RIGHTS
No stock options were granted to any executive officer in 1995. No stock
appreciation rights have been granted at any time under the Company's Stock
Option and Stock Incentive Plans.
The following table summarizes information relating to stock option
exercises during 1995 and the number and value of unexercised stock options
previously granted to the executive officers named in the Summary Compensation
Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS(1)
ACQUIRED ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Anthony W. Deering...... None None 108,750/116,250 $286,719/$172,656
Mathias J. DeVito....... None None 221,000/None $64,125/None
Jeffrey H. Donahue...... None None 16,482/101,018 $8,336/$191,352
Paul I. Latta, Jr. ..... None None 16,482/101,018 $8,336/$191,352
Douglas A. McGregor..... None None 96,250/133,750 $278,906/$121,719
Larry M. Wolf........... None None 60,000/52,500 $6,250/$49,688
</TABLE>
- --------
(1) An "in-the-money" stock option is an option for which the market price, on
December 29, 1995, 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 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.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
The Rouse Company $100 $130 $132 $134 $151 $166
- --------------------------------------------------------------------------------
S&P 500/R/ $100 $130 $140 $155 $157 $215
- --------------------------------------------------------------------------------
Peer Group $100 $91 $63 $70 $64 $57
- --------------------------------------------------------------------------------
</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
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, and financial planning services having a value of
$16,164.
Mr. DeVito continues to serve as Chairman of the Board of Directors of the
Company. In that capacity, Mr. DeVito presides over meetings of the Board of
Directors and stockholders of the Company, serves as Chairman of the Executive
Committee and a member of the Audit Committee of the Board, and oversees the
Contributions Committee of the Company. Mr. DeVito also is available to
consult with management of the Company and undertake certain 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 also provides appropriate office space and
secretarial and other support to Mr. DeVito and reimburses him for expenses
incurred in connection with his responsibilities as Chairman.
With respect to all named executive officers, all 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 287,500 and 111,250 shares, respectively, of bonus
stock, and both Messrs. Donahue and Latta would have forfeiture restrictions
released on 48,125 shares 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,
19
<PAGE>
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 February, 1996,
the Personnel Committee of the Board of Directors awarded Messrs. McGregor,
Donahue and Latta, and certain other executive officers, 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.
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, 1995 through March 1, 1996 exceeded $60,000:
<TABLE>
<CAPTION>
MAXIMUM PRINCIPAL PRINCIPAL
AMOUNT OF LOANS AMOUNT
OUTSTANDING OF LOANS
FROM 1-1-95 OUTSTANDING
NAME OF INDIVIDUAL RELATIONSHIP WITH COMPANY THROUGH 3-1-96(1) ON 3-1-96
------------------ ------------------------- ----------------- -----------
<C> <S> <C> <C>
Anthony W. Deering President and Chief $2,326,875 $1,771,250
Executive Officer
Jeffrey H. Donahue Senior Vice-President, 166,250 124,687
Chief Financial Officer
and Director of the
Finance Division
Duke S. Kassolis Senior Vice-President and 179,375 132,625
Director of Office and
Mixed-Use Operations
Paul I. Latta, Jr. Senior Vice-President and 166,250 124,688
Director of Retail
Operations
Douglas A. McGregor Executive Vice-President 337,500 178,125
for Development and
Operations
Robert Minutoli Senior Vice-President and 275,901 187,449
Director of Acquisitions
Robert D. Riedy Senior Vice-President and 197,343 143,217
Director of Retail Leasing
Alton J. Scavo Senior Vice-President, 166,250 124,688
Director of the Community
Development Division and
General Manager of
Columbia
Jerome D. Smalley Senior Vice-President and 271,050 183,837
Director of the Commercial
and Office Development
Division
George L. Yungmann Senior Vice-President, 118,750 89,063
Controller and Director of
the Controller's Division
</TABLE>
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(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.
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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 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. Deering, Donahue, Latta, and McGregor have, respectively, 23, 22, 27
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 1996 rate of compensation to
retirement) are $418,696, $174,724, $175,092 and $315,155, respectively. Mr.
DeVito had 26 credited years of service under the Plans when he retired as
Chief Executive Officer on February 23, 1995. At that time, Mr. DeVito's
accrued benefit under the Plans was $575,598 per year. Mr. Wolf had 32
credited years of service under the Plans. Upon his retirement as Senior Vice-
President and Director of Merchandising early in 1996, Mr. Wolf was entitled
to receive his accrued benefit under the Plans, which was $246,708 per year.
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 annual benefits for 1995 was $120,000 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. 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
21
<PAGE>
Committee and for advisory services rendered to the Company. See "Employment
Contracts and Termination of Employment and Change of Control Arrangements"
above.
Under The Rouse Company 1994 Stock Incentive Plan (the "Plan"), which was
approved by the stockholders on May 12, 1994, non-employee directors receive
5,000-share stock option grants of the Company's Common Stock upon their
initial election. Each director receives an additional 1,000-share stock
option grant upon re-election as a director at each subsequent annual meeting.
In February, 1996, the Board replaced the directors' retirement income
benefit with a program of credits to a nonqualified Company Common Stock
account established for each director. Beginning in February, 1996, each
director's account will be credited with an amount equal to 10% of the annual
fee for each year of service on the Board, which amount shall be deemed
invested in Company Common Stock. A director will receive the value of this
account upon retirement from the Board. The retirement income benefit for
current directors would be eliminated, but each current director would receive
an initial credit to his or her account equal to 10% of the current annual fee
multiplied by the director's past years of service. At retirement from the
Board, each current director would be entitled to receive the value of his or
her account, but no current director would receive less than an amount equal
to the then present value of the payments such director would have received
under the terminated retirement plan, based on such director's years of
service as of February, 1996.
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 1995, the persons who served on the Personnel Committee of the Board
were Jeremiah E. Casey, Juanita T. James, 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 of the Company during 1995 and Chief Executive Officer
of the Company until February 23, 1995, is a director of First Maryland
Bancorp. Mr. DeVito also is Chairman 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
served as the transfer agent for the Company's Common Stock and Series A
Convertible Preferred Stock through December 31, 1995. Further, subsidiaries
and affiliates of the Company are indebted to the Bank for certain loans. In
22
<PAGE>
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 1997 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 that they believe merit
consideration at the annual meeting of stockholders to be held in May, 1997.
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 1997 annual meeting, any such proposal must be received by
the Company by December 15, 1996, addressed to the attention of its Secretary
at its principal place of business in Columbia, Maryland.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
On February 14, 1996, Alton J. Scavo filed with the Securities and Exchange
Commission a Form 5, Annual Statement of Changes in Beneficial Ownership of
Securities, indicating among routine transactions the sale in September, 1995
of 1,000 shares of Common Stock. The sale inadvertently was not timely
reported.
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, 1995 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 will 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.
As discussed above, if the proposed merger with Hughes is consummated prior to
the meeting, Mr. Lummis will be nominated as a director of the Company, and
the proxy holders will vote for his election.
23
<PAGE>
THE ROUSE COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS--
ANNUAL MEETING OF STOCKHOLDERS--
MAY 23, 1996
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, 1996, and hereby constitutes and
appoints Anthony W. Deering, President and Chief Executive Officer of the
Company, and Bruce I. Rothschild, 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 23,
1996, 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
(except as marked below
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 Stocklholders 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: , 1996
--------------------------
-------------------------------- (SEARL)
-------------------------------- (SEARL)
Signature
THE ROUSE COMPANY
P.O. BOX 11105
NEW YORK, N.Y. 10203-0105
