<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
TAUBMAN CENTERS, INC.
- -------------------------------------------------------------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
Taubman Logo
TAUBMAN CENTERS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD MAY 14, 1997
To the Shareholders of
Taubman Centers, Inc.
The Annual Meeting of Shareholders of TAUBMAN CENTERS, INC. (the "Company")
will be held on Wednesday, May 14, 1997, at the Community House, 380 South Bates
Street, Birmingham, Michigan, at 11 o'clock in the forenoon, local time, for the
following purposes:
1. To elect four (4) directors to serve until the annual meeting of
shareholders in 2000 and until their successors are elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 10, 1997,
as the record date for determining the shareholders that are entitled to notice
of, and to vote at, the annual meeting or any adjournments or postponements
thereof (the "Meeting").
By Order of the Board of Directors
A. ALFRED TAUBMAN,
Chairman of the Board
Bloomfield Hills, Michigan
March 28, 1997
SHAREHOLDERS WHO DO NOT INTEND TO BE PRESENT AT THE MEETING IN PERSON ARE
REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT IN THE
ACCOMPANYING ENVELOPE IN ORDER THAT THE NECESSARY QUORUM MAY BE ASSURED. ANY
PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT
AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE MEETING.
<PAGE> 3
TAUBMAN CENTERS, INC.
200 EAST LONG LAKE ROAD, SUITE 300
P.O. BOX 200
BLOOMFIELD HILLS, MICHIGAN 48303-0200
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1997
This Proxy Statement is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of Taubman Centers, Inc. (the
"Company") for use at the annual meeting of shareholders and at any adjournment
or adjournments thereof (the "Meeting") to be held, for the purposes set forth
in the accompanying Notice of Annual Meeting, on Wednesday, May 14, 1997, at the
Community House, 380 South Bates, Birmingham, Michigan at 11 o'clock in the
forenoon, local time. The Company expects to mail this Proxy Statement on or
about March 28, 1997.
Valid Proxies will be voted as specified thereon at the Meeting. Any
shareholder giving a Proxy in the accompanying form retains the power to revoke
the Proxy at any time prior to its exercise. Any person giving a Proxy may
revoke it by written notice to the Company at any time prior to its exercise. In
addition, attendance at the Meeting will not constitute a revocation of a Proxy
unless the shareholder affirmatively indicates at the Meeting that such
shareholder intends to vote the shares in person.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1996,
including financial statements audited by Deloitte & Touche LLP, independent
accountants, and their report thereon dated February 17, 1997, is being
furnished with this Proxy Statement. IN ADDITION, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE SENT TO ANY SHAREHOLDER, WITHOUT
CHARGE, UPON WRITTEN REQUEST TO TAUBMAN CENTERS INVESTOR SERVICES, 200 EAST LONG
LAKE ROAD, SUITE 300, P.O. BOX 200, BLOOMFIELD HILLS, MICHIGAN 48303-0200, WHICH
IS THE LOCATION OF THE COMPANY'S EXECUTIVE OFFICES.
VOTING SECURITIES
The holders of record of shares of Common Stock, par value $0.01 per share
(the "Common Stock"), of the Company at the close of business on March 10, 1997,
are entitled to vote at the Meeting. On that date, there were outstanding
50,720,358 shares of Common Stock, each of which is entitled to one vote.
Unless contrary instructions are indicated on the Proxy, all shares of
Common Stock represented by valid Proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted FOR the election of the
nominees for directors named in the Proxy and FOR the ratification of the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the year ending December 31, 1997.
The disposition of all business that may properly come before the Meeting,
other than the election of directors and ratification of the appointment of the
independent auditors, requires the affirmative vote of two-thirds of the
outstanding shares of Common Stock. The shares of Common Stock represented by a
valid proxy that are not voted by a broker on any matter or that abstain with
respect to any matter will not be counted as an affirmative vote in determining
whether the matter is approved, but will be counted for purposes of determining
the presence of a quorum. Because shareholder approval on all matters coming
before the Meeting is determined by a percentage of the votes cast rather than a
percentage of the outstanding shares, abstaining and nonvoting shares will not
affect the determination of whether a matter is approved.
The Company knows of no business other than that set forth above to be
transacted at the Meeting, but if other matters requiring a vote do arise, it is
the intention of the persons named in the Proxy to vote in accordance with their
judgment on such matters.
<PAGE> 4
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of 11 members divided into
three approximately equal classes of directors serving staggered three-year
terms, with one class of directors to be elected at each annual meeting. Four
directors are to be elected at the Meeting to serve until the annual meeting of
shareholders in 2000 and until their respective successors have been elected and
qualified. Each of the nominees, with the exception of Thomas E. Dobrowski, is
presently a member of the Board of Directors. Graham T. Allison, who previously
served on the Board from 1992 until he entered public service in September 1993,
was appointed to the Board in September 1996 when the size of the Board was
increased from 10 to 11 members.
An affirmative vote of the holders of a plurality of the votes cast at the
Meeting is required for the election of directors. The shares of Common Stock
represented by the enclosed Proxy, if given and unless otherwise specified, will
be voted by the persons named as proxies for the election of the following
individuals nominated by the Board of Directors:
NAME
------
Graham T. Allison
Claude M. Ballard
Thomas E. Dobrowski
W. Allen Reed
It is not contemplated that any of the nominees will be unable or unwilling
to serve; however, if any nominee is unable or unwilling to serve, it is
intended that the shares represented by the Proxy, if given and unless otherwise
specified therein, will be voted for a substitute nominee or nominees designated
by the Board of Directors. Additional information regarding the nominees is
contained under the caption "Management."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock and of partnership interests in The
Taubman Realty Group Limited Partnership ("TRG")* as of March 10, 1997. The
Company has relied upon information supplied by its officers, directors, and
certain shareholders and upon information contained in filings with the
Securities and Exchange Commission and/or obtained from direct inquiries of
certain beneficial holders.
- ---------------
* The Company is the managing general partner of, and owns a 36.68% interest in,
TRG, which is a partnership that owns, develops, acquires and operates
regional shopping centers nationally. TRG owns as its primary assets interests
in 21 regional shopping centers (the "Taubman Shopping Centers"). TRG owns 50%
or more of each of the 21 Taubman Shopping Centers and effectively owns 100%
of 13 Taubman Shopping Centers. TRG also owns certain regional shopping center
development projects and approximately 99% of the beneficial interests in the
management entity, The Taubman Company Limited Partnership (the "Manager"),
that manages all of the Taubman Shopping Centers. The Manager provides
property management and leasing services for all of the Taubman Shopping
Centers and provides development, acquisition, corporate, and administrative
services for TRG and the Company.
The Company has made an offer (the "Continuing Offer") to all present holders
(other than the General Motors Hourly-Rate Employes Pension Trust and the
General Motors Salaried Employes Pension Trust (the "GM Trusts"), A. Alfred
Taubman's trust, and certain excluded TRG partners), to their respective
assignees, to those future holders of partnership interests in TRG (the "Units
of Partnership Interest") as the Company may designate, in its sole
discretion, and to all existing and future optionees under TRG's 1992
Incentive Option Plan (the "Incentive Option Plan") to issue shares of Common
Stock in exchange for Units of Partnership Interest.
2
<PAGE> 5
<TABLE>
<CAPTION>
PERCENTAGE
UNITS OF OWNERSHIP OF
DIRECTORS, NOMINEES, PARTNERSHIP UNITS OF
EXECUTIVE OFFICERS, NO. OF PERCENT OF INTEREST PARTNERSHIP
AND 5% SHAREHOLDERS SHARES SHARES IN TRG INTEREST IN TRG
-------------------- ------ ---------- ----------- ---------------
<S> <C> <C> <C> <C>
A. Alfred Taubman................... 186,937(1) * 12,176(2) 17.39%
Robert C. Larson.................... 1,837,781(3) 3.50% 934(4) 1.33%
Robert S. Taubman................... 2,030,290(5) 3.85% 1,036(6) 1.46%
Lisa A. Payne....................... 0 0 0 0
Bernard Winograd.................... 0 0 0 0
Richard B. McGlinn.................. 31,355(7) * 16(8) *
William S. Taubman.................. 82,308(9) * 42(10) *
Graham T. Allison................... 1,312 * 0 0
Claude M. Ballard................... 11,000 * 0 0
Allan J. Bloostein.................. 5,000 * 0 0
Jerome A. Chazen.................... 10,000 * 0 0
Thomas E. Dobrowski................. 0(11) 0 0 0
S. Parker Gilbert................... 50,000 * 0 0
W. Allen Reed....................... 0(11) 0 0 0
Directors and Executive Officers as
a Group (consisting of 14
individuals named)................ 4,245,983(12) 7.76% 14,204(12) 19.88%
Algemeen Burgerlijk Pensioenfonds... 2,262,900 4.46% 0 0
Oude Lindestraat 70
postbus 2980
6401 KL Heerlen, The Netherlands
AT&T Master Pension Trust........... 5,270,868 10.39% 0 0
One Monarch Drive
North Quincy, MA 02171
Cohen & Steers Capital
Management, Inc..................... 6,230,000(13) 12.28% 0 0
757 Third Avenue
New York, NY 10017
GM Trusts........................... 8,376,807 16.52% 25,328 36.18%
767 Fifth Avenue
New York, NY 10153
LaSalle Advisors Limited
Partnership,
ABKB/LaSalle Securities Limited
Partnership......................... 3,023,200(14) 5.96% 0 0
11 S. LaSalle Street
Chicago, IL 60603
The Pacific Telesis Group
Master Pension Trust................ 6,067,355(15) 10.68% 3,096 4.42%
130 Kearny Street
Suite 3401
San Francisco, CA 94108
</TABLE>
- ---------------
* less than 1%
(1) Includes 186,837 shares of Common Stock held by TRA Partners ("TRAP").
Because Mr. A. Alfred Taubman's trust is the managing general partner of
TRAP and has the sole authority to vote and dispose of the Common Stock
held by TRAP, Mr. Taubman may be deemed to be the beneficial owner of all
of the shares of Common Stock held by TRAP. Mr. Taubman disclaims any
beneficial ownership of the Common Stock held by TRAP beyond his pecuniary
interest in TRAP.
(2) Includes 5 Units of Partnership Interest held by Mr. A. Alfred Taubman's
trust, 8,961 Units of Partnership Interest owned by TRAP, of which Mr. A.
Alfred Taubman's trust is the managing general
3
<PAGE> 6
partner, 6 Units of Partnership Interest owned by Taubman Realty Ventures
("TRV"), of which Mr. A. Alfred Taubman's trust is also the managing
general partner, and 1 Unit of Partnership Interest held by Taub-Co
Management Inc. ("Taub-Co"). Because the sole holder of voting shares of
Taub-Co is Taub-Co Holdings Limited Partnership, of which Mr. Taubman's
trust is the managing general partner, Mr. Taubman may be deemed to be the
beneficial owner of the Unit of Partnership Interest held by Taub-Co. Mr.
Taubman disclaims beneficial ownership of the Unit held by Taub-Co beyond
his pecuniary interest in Taub-Co. Also includes 3,203 Units of Partnership
Interest owned by TG Partners Limited Partnership ("TG"). Because Mr.
Taubman, through control of TRV's and TG's managing partner, has sole
authority to vote and (subject to certain limitations) dispose of the Units
of Partnership Interest held by TRV and TG, respectively, Mr. Taubman may
be deemed to be the beneficial owner of all of the Units of Partnership
Interest held by TRV and TG. Mr. Taubman disclaims beneficial ownership of
any Units of Partnership Interest held by TRAP, TRV and TG beyond his
pecuniary interest in TRAP, his pecuniary interest in TRV and his pecuniary
interest in TG.
(3) Includes 678,070 shares of Common Stock that Mr. Larson has the right to
receive upon the exercise of exercisable Incentive Options covering 346
Units of Partnership Interest and 1,152,327 shares of Common Stock that Mr.
Larson has the right to receive in exchange for 588 Units of Partnership
Interest that he owns directly, in each instance pursuant to the terms of
the Continuing Offer. See Note (4) to the Summary Compensation Table.
(4) Includes 346 Units of Partnership Interest subject to exercisable Incentive
Options held by Mr. Larson. Excludes all Units of Partnership Interest
owned by TG. Mr. Larson is a general partner in TG, but has no voting or
dispositive control over TG's assets. Mr. Larson disclaims any beneficial
ownership in the Units of Partnership Interest owned by TG beyond his
pecuniary interest in TG.
(5) Includes 2,024,411 shares of Common Stock that Mr. Robert S. Taubman has
the right to receive upon the exercise of exercisable Incentive Options
covering 1,033 Units of Partnership Interest and 5,879 shares of Common
Stock that Mr. Taubman has the right to receive in exchange for 3 Units of
Partnership Interest that he owns directly, in each instance pursuant to
the Continuing Offer. Excludes all shares of Common Stock held by TRAP. Mr.
Robert S. Taubman is a general partner of TRAP but has no voting or
dispositive control over TRAP's assets. Mr. Taubman disclaims any
beneficial interest in the Common Stock held by TRAP beyond his pecuniary
interest in TRAP. See Note (4) to the Summary Compensation Table.
(6) Includes 1,033 Units of Partnership Interest subject to exercisable
Incentive Options held by Mr. Robert S. Taubman. Excludes all Units of
Partnership Interest owned by TRAP and all Units of Partnership Interest
owned by TG. Mr. Taubman is a general partner of TRAP but has no voting or
dispositive control over TRAP's assets. Mr. Taubman is not a direct partner
in TG. Mr. Taubman disclaims any beneficial ownership in the Units of
Partnership Interest owned by TRAP and TG beyond his pecuniary interest in
TRAP and his pecuniary interest in TG.
(7) Represents shares of Common Stock that Mr. McGlinn has the right to receive
upon the exercise of exercisable Incentive Options covering 16 Units of
Partnership Interest.
(8) Represents Units of Partnership Interest subject to exercisable Incentive
Options held by Mr. McGlinn.
(9) Includes 76,429 shares of Common Stock that Mr. William S. Taubman has the
right to receive upon the exercise of exercisable Incentive Options
covering 39 Units of Partnership Interest and 5,879 shares of Common Stock
that Mr. Taubman has the right to receive in exchange for 3 Units of
Partnership Interest that he owns directly, in each instance pursuant to
the terms of the Continuing Offer. Excludes all shares of Common Stock held
by TRAP. Mr. William S. Taubman is a general partner of TRAP but has no
voting or dispositive control over TRAP's assets. Mr. Taubman disclaims any
beneficial interest in the Common Stock held by TRAP beyond his pecuniary
interest in TRAP. See Note (4) to the Summary Compensation Table.
(10) Includes 39 Units of Partnership Interest subject to exercisable Incentive
Options held by Mr. William S. Taubman. Excludes all Units of Partnership
Interest owned by TRAP and all Units of Partnership Interest owned by TG.
Mr. Taubman is a general partner of TRAP but has no voting or dispositive
control over TRAP's assets. Mr. Taubman is not a direct partner in TG. Mr.
Taubman
4
<PAGE> 7
disclaims any beneficial ownership in the Units of Partnership Interest
owned by TRAP and TG beyond his pecuniary interest in TRAP and his
pecuniary interest in TG.
(11) The corporate guidelines of the General Motors Investment Management
Corporation do not permit its executive officers to invest in certain
companies whose securities are represented in the portfolios managed by the
General Motors Investment Management Corporation. The GM Trusts own
8,376,807 shares of Common Stock.
(12) See Notes (1) through (11) above.
(13) Represents shares held for the accounts of various investment advisory
clients of Cohen & Steers Capital Management, Inc.
(14) Based on a group filing of a Schedule 13G made by such investment advisory
firms whose employees, William K. Morrill and Keith R. Pauley, are
responsible for the investment decisions made by such firms on behalf of
their respective clients.
(15) Represents shares of Common Stock that The Pacific Telesis Group Master
Pension Trust has the right to acquire as of July 19, 1997, pursuant to the
terms of the Continuing Offer, in exchange for the 3,096 Units of
Partnership Interest it owns. See Note (4) to the Summary Compensation
Table.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities ("insiders"), file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Insiders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based on the Company's
review of the filings made by the Company's directors and executive officers,
all transactions in and beneficial ownership of the Company's equity securities
were reported in a timely manner, except that Graham T. Allison's Form 3
reporting his becoming a director was filed approximately one month late.
5
<PAGE> 8
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of the Company consists of 11 members divided into
three classes serving staggered three-year terms. Under the Company's Articles
of Incorporation, at least four of the Company's directors must be "Independent"
(i.e. not affiliated with A. Alfred Taubman or the GM Trusts). Officers of the
Company serve at the pleasure of the Board.
The directors, nominees and executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE TITLE TERM EXPIRES
---- --- ----- ------------
<S> <C> <C> <C>
A. Alfred Taubman.................... 72 Chairman of the Board....................... 1999
Robert C. Larson..................... 62 Vice Chairman of the Board.................. 1999
Robert S. Taubman.................... 43 President, Chief Executive Officer, and
Director.................................... 1999
Lisa A. Payne........................ 38 Executive Vice President, Chief Financial
Officer, and Director....................... 1999
Richard B. McGlinn................... 64 Senior Vice President, Treasurer, and Chief
Accounting Officer
William S. Taubman................... 38 Executive Vice President
Graham T. Allison*................... 56 Director.................................... 1997
Claude M. Ballard*................... 67 Director.................................... 1997
Allan J. Bloostein*.................. 67 Director.................................... 1998
Jerome A. Chazen*.................... 70 Director.................................... 1998
Thomas E. Dobrowski.................. 53 Nominee
S. Parker Gilbert*................... 63 Director.................................... 1998
W. Allen Reed........................ 49 Director.................................... 1997
</TABLE>
- ---------------
* "Independent" Director
A. Alfred Taubman is a private investor. He is the Chairman of the Board of
the Company and the Chairman of the Manager. Mr. Taubman has been a director of
the Company since its incorporation in 1973. He is the largest shareholder and
Chairman of the Board of Sotheby's Holdings, Inc., the international art auction
house. In addition, he serves as a member of the Board of Directors of Livent
Inc., a producer of theatrical productions. Mr. Taubman also serves as a
director of Hollinger International, Inc., a publisher of English language
newspapers.
Robert C. Larson is the Vice Chairman of the Board of the Company, the
Chairman of TRG's Partnership Committee, and until August 1994, served as the
Vice Chairman of the Manager. Mr. Larson has been a director of the Company
since 1992. Since prior to 1992, he has been a director of the Manager's
predecessor. In addition, Mr. Larson serves as a nonexecutive director of Bass
PLC, the London-based international beverage, leisure, and hospitality company,
and a director of Lifestyle Furnishings International Ltd., a manufacturer and
marketer of residential furniture and home furnishings fabrics. He is also
Chairman of the Board of Trustees and acting president of Cranbrook Educational
Community, a director and past Chairman of the National Realty Committee,
Chairman of the Detroit Economic Growth Corporation, and Trustee of the Kresge
Foundation.
Robert S. Taubman is the President, Chief Executive Officer, and a director
of the Company, Vice Chairman of TRG's Partnership Committee, Chairman of TRG's
Executive Committee, and the President and Chief Executive Officer of the
Manager. Mr. Taubman has been a director of the Company since 1992. Since prior
to 1992, he has been President, Chief Executive Officer, and a director of the
Manager's predecessor. He is also a director of Comerica Bank and a Trustee of
the International Council of Shopping Centers and of the Urban Land Institute.
Mr. Taubman is the son of A. Alfred Taubman and the brother of William S.
Taubman.
6
<PAGE> 9
Richard B. McGlinn is the Senior Vice President, Treasurer, and Chief
Accounting Officer of the Company. He serves the Manager in a similar capacity.
Between 1989 and 1992, he was the Treasurer of the Manager's predecessor.
Lisa A. Payne is an Executive Vice President, the Chief Financial Officer,
and a director of the Company, and an Executive Vice President and the Chief
Financial Officer of the Manager. Ms. Payne was appointed a director of the
Company in March 1997 to fill the vacancy resulting from Bernard Winograd's
resignation. From 1986 until 1996, Ms. Payne was employed by Goldman, Sachs &
Co., the New York-based investment banking firm, serving most recently as a vice
president of its real estate department. Prior to joining Goldman Sachs, Ms.
Payne served as a vice president in Chemical Bank's real estate department.
William S. Taubman is an Executive Vice President of the Company and
Executive Vice President of the Manager in charge of Development and
Acquisitions. He joined the Manager's predecessor in 1986 from Oppenheimer &
Co., Inc., where he was a financial analyst. Mr. Taubman is also a member of the
Board of Trustees of the Founders Society of the Detroit Institute of Arts. Mr.
Taubman is the son of A. Alfred Taubman and the brother of Robert S. Taubman.
Graham T. Allison has been a professor at Harvard University since 1964. He
is a director of New England Securities Corporation and Belco Oil & Gas Corp. He
is also a member of the International Advisory Board for The Chase Manhattan
Bank. Mr. Allison has been a director of the Company since 1996 and previously
served on the Board from 1992 until 1993.
Claude M. Ballard has been a limited partner and consultant of The Goldman
Sachs Group, L.P. since prior to 1992. He is a director of Bedford Property
Investors, a real estate investment trust, and CBL & Associates, a real estate
investment trust. Mr. Ballard is also a Trustee of The Mutual Life Insurance
Company of New York. Mr. Ballard has been a director of the Company since 1993.
Allan J. Bloostein has served as a consultant in retail and consumer goods
marketing since prior to 1992. Mr. Bloostein currently serves as a director of
CVS Corporation, Smith Barney Zenix Income Fund Inc., Smith Barney Municipal
High Income Fund Inc., Smith Barney Managed Municipals Portfolios I, Smith
Barney Managed Municipals Portfolios II, Smith Barney Adjustable Rate Government
Inc. Fund and as a Trustee of Smith Barney Special Income Portfolios and Smith
Barney Special Equity Portfolios. He served as Vice Chairman of the Board of
Directors of May Department Stores Company until his retirement in 1987. Mr.
Bloostein has been a director of the Company since 1992.
Jerome A. Chazen is Chairman Emeritus of Liz Claiborne, Inc., where he has
served in various senior executive positions and as a director since prior to
1992. Mr. Chazen also serves as a director of The Gymboree Corporation, as
Chairman of the American Craft Museum, as a member of the Board of Overseers of
the Columbia University Business School, and as Vice-Chairman of the Greater New
York Council of the Boy Scouts of America. Mr. Chazen has been a director of the
Company since 1992.
Thomas E. Dobrowski is Managing Director, Real Estate and Alternative
Investments at General Motors Investment Management Corporation ("GMIMCo").
Since prior to 1992, he has been responsible for the General Motors pension
funds' investments in real estate, oil and gas. Mr. Dobrowski serves as a
director of GMIMCo, Manufactured Homes, Inc. and Red Roof Inn, Inc.
S. Parker Gilbert is a director of Morgan Stanley Group Inc., ITT
Industries, Inc. and Burlington Resources Inc. Mr. Gilbert also serves as
President of The Pierpont Morgan Library Board of Trustees; member, Board of
Trustees, the Metropolitan Museum of Art, the Alfred P. Sloan Foundation and the
John Simon Guggenheim Memorial Foundation; and director, Josiah H. Macy
Foundation. Mr. Gilbert has been a director of the Company since 1992.
W. Allen Reed has been President and Chief Executive Officer of GMIMCo
since July 1994 and is a Corporate Vice President of General Motors Corporation.
He is responsible for the investment of the assets held by the General Motors
U.S. and foreign pension plans, the U.S. savings plans, the assets of Motors
Insurance Corporation, and the GM Foundation Fund. Between 1990 and July 1994,
he was Vice President and Treasurer of Hughes Electronics, a subsidiary of
General Motors Corporation. He is a member of the
7
<PAGE> 10
Board of Directors of FLIR Systems, a publicly held electronics company, Foreign
Fund, Inc., an open-end mutual fund, and General Motors Acceptance Corporation,
a wholly owned subsidiary of General Motors Corporation. Mr. Reed has been a
director of the Company since 1995.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held four meetings during 1996. The
Board of Directors has three standing committees: a four-member Audit Committee,
a four-member Compensation Committee, and a three-member Nominating Committee.
During 1996, all directors attended at least 75% of the aggregate of the
meetings of the Board of Directors and all committees of the Board on which they
served. Directors fulfill their responsibilities not only by attending board and
committee meetings, but also through communication with the Chief Executive
Officer and other members of management on matters that affect the Company.
The Audit Committee is composed of Jerome A. Chazen, Chairman, Claude M.
Ballard, Allan J. Bloostein and S. Parker Gilbert. The Audit Committee is
responsible for overseeing and reviewing the audit results and monitoring the
effectiveness of the Company's internal audit function. In addition, the Audit
Committee recommends to the Board of Directors the appointment of the
independent auditors. The Audit Committee met twice during 1996.
The Compensation Committee of the Board of Directors is composed of S.
Parker Gilbert, Chairman, W. Gordon Binns, Jr.*, Jerome A. Chazen and W. Allen
Reed. The Compensation Committee of the Board is responsible for establishing
compensation and benefit policies with respect to the members of the Board of
Directors and confirming the availability of the Continuing Offer for Units of
Partnership Interest issued upon the exercise of options (the "Incentive
Options") to purchase Units of Partnership Interest granted under the TRG 1992
Incentive Option Plan (the "Incentive Option Plan"). The Compensation Committee
of TRG is responsible for reviewing and approving, when necessary, the
compensation and employee benefit policies of TRG and the Manager, and
administering the Incentive Option Plan and The Taubman Company Long-Term
Performance Compensation Plan. The Compensation Committee of the Board did not
meet during 1996. The Compensation Committee of TRG met twice during 1996.
The Nominating Committee is composed of A. Alfred Taubman, W. Gordon Binns,
Jr.* and S. Parker Gilbert. The Nominating Committee is responsible for advising
and making recommendations to the Board of Directors on matters concerning the
selection of candidates as nominees for election as directors in the event a
vacancy arises on the Board of Directors. In recommending candidates to the
Board, the Nominating Committee seeks individuals of proven competence who have
demonstrated excellence in their chosen fields. The Nominating Committee did not
meet during 1996. The Nominating Committee does not have a procedure for
shareholders to submit nominee recommendations.
- ---------------
*Mr. Binns is retiring from service on the Board of Directors upon completion of
his current term in
May 1997.
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for the years ended December 31, 1994,
1995, and 1996, information concerning the annual and long-term compensation for
services in all capacities to the Company, TRG and the Manager of those persons
who were, during 1996, (i) the chief executive officer and (ii) the other
executive officers of the Company whose compensation is required to be disclosed
pursuant to the rules of the Securities and Exchange Commission (the "Named
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(2) LONG TERM COMPENSATION
---------------------------------- ----------------------
AWARDS
OTHER ANNUAL ---------------------- ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION NUMBER OF SHARES COMPENSATION(2,5)
POSITION(1) YEAR ($) ($) ($) UNDERLYING OPTIONS(4) ($)
------------------ ---- -------- -------- ------------ ---------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman........ 1996 $750,000 $487,500(3) -- -- $20,026(6)
President, Chief Executive 1995 750,000 300,375 -- 196,292 18,910
Officer 1994 750,000 230,000 -- 196,213 18,091
Robert C. Larson......... 1996 500,000 -- -- -- 19,935(7)
Vice Chairman 1995 500,000 -- -- -- 18,835
1994 610,000 135,000 -- 74,485 18,066
Bernard Winograd......... 1996 498,000 -- -- -- 75,368(8)
Executive Vice President, 1995 500,000 164,205 -- 78,517 18,912
Chief Financial Officer 1994 500,000 135,000 -- 78,485 18,072
William S. Taubman....... 1996 350,000 236,250(3) -- -- 19,597(9)
Executive Vice President 1995 325,000 120,150 -- 157,641 18,492
1994 200,000 130,000(3) -- 19,621 16,061
Richard B. McGlinn....... 1996 250,000 98,875(3) -- -- 19,282(10)
Senior Vice President, 1995 240,000 93,603(3) -- 17,666 18,098
Treasurer, and Chief 1994 227,000 84,000(3) -- 17,659 17,189
Accounting Officer
</TABLE>
- ---------------
(1) The principal position shown for each Named Officer, with the exception of
Robert C. Larson, represents the individual's position with the Company and
also with the Manager. Mr. Larson stepped down as Vice Chairman of the
Manager effective August 31, 1994, but remains an executive employee of the
Manager. Mr. Winograd resigned from his executive positions with the
Manager and the Company effective December 11, 1996.
(2) All amounts shown in the "Annual Compensation" and "All Other Compensation"
columns represent compensation paid to the Named Officers by the Manager.
The Company, which has no employees, does not pay any compensation to any
of the Named Officers, including those who are also directors of the
Company.
(3) Bonus amount awarded under the Senior Short Term Incentive Plan.
(4) Determined as of the date of grant. All Incentive Options were granted to
the Named Officers under the Incentive Option Plan. The Incentive Options
cover Units of Partnership Interest, which, in turn, may be exchanged for
shares of Common Stock pursuant to the Continuing Offer. The exercise price
of each Incentive Option is the fair market value, on the date of grant, of
the Units of Partnership Interest covered by the Incentive Option.
Under the terms of the Continuing Offer, the number of shares of Common
Stock for which a Unit of Partnership Interest may be exchanged on any
given date is determined by (a) calculating the market capitalization of
the Company (i.e., the market price of the Common Stock multiplied by the
number of shares of Common Stock issued and outstanding) as of the close of
trading on the New York Stock Exchange on the business day most immediately
preceding such date (the "Valuation Date"), adjusted for any outstanding
indebtedness and all cash, cash equivalents, and other assets (other than
its interest in TRG) held by the Company on such date (hereinafter referred
to as the "Adjusted Market Valuation of the Company"); (b) dividing the
Adjusted Market Valuation of the Company by the percentage interest in TRG
held by the Company on the Valuation Date (the resulting amount is the
"Value of TRG" on such date); (c) dividing the Value of TRG by that number
of Units of Partnership Interest outstanding on the Valuation Date,
determined without regard to any Incentive Options that have not been
exercised (the resulting amount is the "Fair Market Value of each Unit of
Partnership Interest" on
9
<PAGE> 12
such date); and (d) dividing the Fair Market Value of each Unit of Partnership
Interest by the closing price per share of the Common Stock, on the Valuation
Date, on the New York Stock Exchange.
(5) Includes Employer Matching and Employer Supplemental Contributions made by
the Manager on behalf of each Named Officer under The Taubman Company and
Related Entities Employee Retirement Savings Plan (the "Retirement Savings
Plan"), a defined contribution plan. Also includes supplemental retirement
benefits accrued under The Taubman Company Supplemental Retirement Savings
Plan (the "Supplemental Retirement Savings Plan"), an excess benefit plan.
(6) Includes $12,246 contributed to the Retirement Savings Plan on behalf of
Mr. Robert S. Taubman and $7,780 accrued under the Supplemental Retirement
Savings Plan.
(7) Includes $12,246 contributed to the Retirement Savings Plan on behalf of
Mr. Larson and $7,689 accrued under the Supplemental Retirement Savings
Plan.
(8) Includes $12,246 contributed to the Retirement Savings Plan on behalf of
Mr. Winograd, $7,771 accrued under the Supplemental Retirement Savings
Plan, and $55,351 paid to Mr. Winograd for accrued vacation time.
(9) Includes $12,246 contributed to the Retirement Savings Plan on behalf of
Mr. William S. Taubman and $7,351 accrued under the Supplemental Retirement
Savings Plan.
(10) Includes $12,246 contributed to the Retirement Savings Plan on behalf of
Mr. McGlinn and $7,036 accrued under the Supplemental Retirement Savings
Plan.
Senior Short Term Incentive Plan
The Manager's officers and senior management receive part of their annual
compensation pursuant to the Manager's Senior Short Term Incentive Plan (the
"SSTIP"). Under the SSTIP, the actual amount awarded depends upon management's
review and assessment of the employee's performance and ranges from 0% to 150%
of the employee's bonus target amount. Employees who meet expectations are paid
approximately 100% of their assigned bonus targets. Employees who exceed
expectations may be paid more than 100%, up to a maximum of 150% for
distinguished performance. Performance that does not meet expectations results
in a payment of less than 100% of the bonus target.
Incentive Option Plan
TRG maintains the 1992 Incentive Option Plan for the employees of the
Manager. The purposes of the Incentive Option Plan are to provide employees of
the Manager with incentives to continue in the employ of the Manager for the
benefit of TRG, to encourage a proprietary interest in TRG, and to attract new
employees with outstanding qualifications to serve the Manager on behalf of TRG.
Under the Incentive Option Plan, executive officers and employees of the
Manager may be granted options to acquire Units of Partnership Interest in TRG.
The Manager makes periodic recommendations regarding grants to TRG's
Compensation Committee (the "Compensation Committee"). The Compensation
Committee, in its discretion (based on each employee's expected future
contribution to the Manager for the benefit of TRG), determines grants after
review of the Manager's recommendations. The exercise price of each Incentive
Option is equal to the fair market value of the Units of Partnership Interest in
TRG on the date of grant, utilizing a formula which makes various adjustments to
the price of the Company's Common Stock to determine the fair market value of
the Units of Partnership Interest. The adjustments relate to the Company's
assets (other than its interest in TRG) and indebtedness. See Note (4) to the
preceding Summary Compensation Table.
Generally, an Incentive Option may be exercised only after the optionee has
completed three years of employment with the Manager following the date of the
grant of the Incentive Option. An Incentive Option will vest and become
exercisable to the extent of one-third of the Units of Partnership Interest
subject to the Incentive Option on each of the third, fourth and fifth
anniversaries of the date of the grant of the Incentive Option. If the
optionee's employment is terminated within the first three years of the date of
grant for reasons
10
<PAGE> 13
other than death, disability, or retirement, the right to exercise the Incentive
Option is forfeited. If the optionee's employment is terminated more than three
years after the date of grant for reasons other than death, disability,
retirement, or cause, the Incentive Option may be exercised to the extent it was
exercisable at the time of termination of employment. If the termination is for
cause, the right to exercise the Incentive Option is forfeited. If the
termination of employment is because of death, disability, or retirement, the
Incentive Option may be exercised in full. Outstanding Incentive Options also
vest in full upon the termination of the Manager's engagement by TRG, upon any
change in control of TRG (as defined in the Incentive Option Plan), or upon the
termination of TRG. No Incentive Option may be exercised after ten years from
the date of the grant.
Notwithstanding the foregoing paragraph, the Compensation Committee, in its
sole and absolute discretion, may allow the exercise of any Incentive Option
held by an optionee at any time, as determined by the Compensation Committee, in
its sole and absolute discretion, more than six months after the date of grant
of an Incentive Option.
The aggregate number of Units of Partnership Interest in TRG that may be
issued under the Incentive Option Plan is 4,500; however, TRG's Partnership
Committee has the right to increase the number of Units of Partnership Interest
that may be issued under the Plan. If an optionee is not a permissible owner of
Units of Partnership Interest as a result of restrictions under any agreement to
which TRG is a party or by which TRG is bound, then the optionee must pay the
cash exercise price to TRG and assign to the Company the right to receive the
Units of Partnership Interest subject to the Incentive Option in exchange for
shares of Common Stock (pursuant to the Continuing Offer), and TRG will issue to
the Company the Units of Partnership Interest subject to the exercised Incentive
Option. Any Incentive Options that expire or terminate unexercised may be
re-granted pursuant to the Plan. For a further discussion of the Incentive
Option Plan, see "Report of the Compensation Committee."
Option Grants
There were no Incentive Option Grants to the Named Officers during 1996.
Aggregated Option Exercises in 1996 and Year-End Option Values
The following table sets forth information with respect to Incentive
Options exercised during 1996 and the unexercised Incentive Options (converted
into share equivalents of the Company's Common Stock) held by the Named Officers
at December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT YEAR END(1) OPTIONS AT YEAR END(2)($)
ACQUIRED ON RECEIVED ---------------------------- ----------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman..... 0 0 1,982,130 1,387,491 $3,519,940 $2,546,492
Robert C. Larson...... 0 0 660,049 410,300(3) 1,172,140 647,184
Bernard Winograd...... 652,245 $1,149,551 0 0(4) 0 0
William S. Taubman.... 0 0 71,356 202,177 126,718 559,658
Richard B. McGlinn.... 0 0 21,803 61,446 38,719 81,347
</TABLE>
- ---------------
(1) The number of unexercisable Incentive Options at year end, as disclosed in
terms of the number of underlying shares of Common Stock for which each Unit
of Partnership Interest would have been exchangeable on that day, varies
from the number of Incentive Options on the date of grant due to adjustments
required to be made pursuant to the provisions of the Continuing Offer in
determining the fair market value of each Unit of Partnership Interest at
year-end and the resulting number of shares for which each Unit of
Partnership Interest would be exchangeable pursuant to the Continuing Offer.
The number of Units of Partnership Interest covered by each Named Officer's
Incentive Options does not vary. See Note (4) to the Summary Compensation
Table for a further description of the Continuing Offer.
11
<PAGE> 14
(2) As of December 31, 1996, the market value of the Units of Partnership
Interest (which are exchangeable for the underlying shares pursuant to the
Continuing Offer) minus the per Unit exercise price.
(3) In December 1994, the Compensation Committee of TRG made the determination
that, in the event of Mr. Larson's termination of employment with the
Manager for any reason other than death or disability, such termination will
be deemed to be by reason of his "Retirement" (as defined in the Incentive
Option Plan) for all Plan purposes. Under the terms of the Plan, any
nonvested Incentive Options held by Mr. Larson upon his Retirement will vest
immediately and may be exercised at any time during the remainder of the
ten-year term of such Options. In consideration of the Compensation
Committee's agreed upon determination, Mr. Larson has agreed that, in the
event of Mr. Larson's termination of employment, (i) he will not exercise
any of his Incentive Options until such date as the Options otherwise would
have become exercisable under the Plan had Mr. Larson's employment with the
Manager not terminated and (ii) if, prior to the date upon which Mr. Larson
may exercise an Option pursuant to the preceding clause, Mr. Larson violates
the non-compete provisions of the Amended and Restated Agreement of Limited
Partnership of TRG, he will forfeit any such Options that are not then
exercisable pursuant to the preceding clause.
(4) Under the terms of the Incentive Option Plan, Mr. Winograd's unexercisable
Incentive Options were automatically forfeited upon his resignation.
Long-Term Incentive Plans
The Taubman Company Long-Term Performance Compensation Plan (the
"Performance Plan") was adopted by the Manager and approved by the Compensation
Committee effective January 1, 1996. Under the Performance Plan, each eligible
participant (including executive officers) is granted Notional Units (i.e.,
phantom units) of TRG (a "Notional Unit Award") initially and contingently equal
to a base number of notional units of TRG (a "Basic Grant Amount") established
for him by the Committee, upon the recommendation of the Manager. After the end
of the year in which the grant is made, the amount of the participant's Notional
Unit Award is finally established, depending on his performance rating under the
SSTIP for that year. If the participant achieves exactly 100% of his SSTIP
target, his Notional Unit Award will remain unchanged (i.e., it will be fixed at
the Basic Grant Amount). If the participant achieves a rating of 130% or more in
respect of his SSTIP target, his Notional Unit Award will be increased from 100%
to 200% of his Basic Grant Amount. If the participant achieves a rating between
100% and 130% in respect of his SSTIP target, his Notional Unit Award will be
increased by an amount that is proportionately between 100% and 200% of his
Basic Grant Amount. In the event the participant's rating in respect of the
SSTIP is less than 100%, his Notional Unit Award will be reduced to zero. The
Notional Unit Award, when finally established, will be deemed to have been
granted as of the date of grant of the Basic Grant Amount.
A bookkeeping account (a "Sub Account") is established for each Notional
Unit Award granted to a participant under the Performance Plan. Each time TRG
makes a distribution in respect of actual TRG Units of Partnership Interest, a
deemed distribution (a "Distribution Equivalent"), in the form of additional
Notional Units having a cash value equal to the cash distribution that would
have been paid on the Notional Units if they were actual Units of Partnership
Interest, is credited to each Sub Account in proportion to the aggregate number
of Notional Units then credited to such Sub Account. Each Sub Account will vest
on the third anniversary of the date of grant, provided the participant is still
in the employ of the Manager. At the time a Sub Account vests, the Committee
may, in its sole discretion, award to the participant and credit to such Sub
Account additional Notional Units of TRG (up to a maximum of 40% of the Basic
Grant Amount for such Sub Account) if the Committee determines that the
performance of the participant and the Manager and/or TRG has been outstanding
over the vesting period. Upon the vesting of a Sub Account, the Notional Unit
balance credited to such Sub Account will be paid to the participant in a lump
sum, unless the participant elects to defer payment as provided in the plan.
Each participant may make, with respect to each Notional Unit Award (i.e.,
the Sub Account established in respect of such Award) granted to him, a one-time
irrevocable election to defer the payout date (the "Settlement Date") that would
otherwise occur on the vesting date of such Sub Account until the earlier of (a)
the date that is five (5) years after the vesting date of such award and (b) the
date on which the
12
<PAGE> 15
participant's employment with the Manager terminates for any reason.
Participants who meet certain requirements under the Employee Retirement Income
Security Act of 1974, as amended, may, in lieu of deferring the Settlement Date
for the aforementioned five-year period, make a one-time irrevocable election to
defer the Settlement Date for such Sub Account until the earlier of (x) the date
of termination of the participant's employment with the Manager for any reason
other than Retirement (as defined in the plan) and (y) a date, as selected by
the participant at the time of such deferral election, which is either (i) the
date of such participant's Retirement or (ii) the date on which such participant
attains sixty-two (62) years of age. Any election by a participant to defer the
Settlement Date for a Sub Account must be made at least one year prior to the
date on which such Sub Account becomes vested.
The following table sets forth information with respect to awards
established under the Performance Plan in 1996 for the participating Named
Officers:
LONG TERM INCENTIVE PLANS -- AWARDS IN 1996
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS
OTHER PERIOD UNDER NON-STOCK PRICE-BASED PLANS(2)
NUMBER OF UNTIL MATURATION ---------------------------------------------
NAME UNITS(#)(1) OR PAYOUT THRESHOLD($) TARGET($) MAXIMUM($)
---- ----------- ---------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Robert S. Taubman........... 21.00 1996-98 $674,588 $674,588 $1,563,543
Bernard Winograd............ 7.25 1996-98 0(3) 0(3) 0(3)
William S. Taubman.......... 7.25 1996-98 232,893 232,893 539,795
Richard B. McGlinn.......... 3.00 1996-98 96,370 96,370 223,363
</TABLE>
- ---------------
(1) Mr. Robert Taubman, Mr. William Taubman and Mr. McGlinn each achieved at
least 130% of their respective SSTI targets for 1996. Accordingly, each such
individual's Notional Unit Award for 1996 has been finally determined at
200% of the Basic Grant Amount shown for him. For a further discussion of
the Performance Plan, see "Long-Term Incentive Plans."
(2) The amounts shown are estimates based on (i) the actual dollar value of a
Notional Unit of Partnership Interest and the actual amount of Distribution
Equivalents per Notional Unit for the period from January 1, 1996 (the date
of grant of each award) until December 31, 1996, and (ii) the assumption
that the dollar value of a Notional Unit and the dollar amount of
Distribution Equivalents per Notional Unit remain constant from December 31,
1996, until January 1, 1999 (the end of the performance and vesting period
for each award). The dollar value of a Notional Unit was $25,519.94 as of
December 31, 1996. Distribution Equivalents are credited monthly and were
equal to $152 per Notional Unit per month during 1996. The actual payout
amounts at various performance levels will depend on the actual dollar value
of a Notional Unit and the actual dollar amount of Distribution Equivalents
per Notional Unit over the course of the performance and vesting period and
as of the Settlement Date for each award.
(3) Under the terms of the Performance Plan, the award to Mr. Winograd was
automatically forfeited upon his resignation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following sets forth the report of the Compensation Committee of TRG on
executive compensation.
REPORT OF THE COMPENSATION COMMITTEE
The Company serves as the Managing General Partner of, and owns a 36.68%
interest in, The Taubman Realty Group Limited Partnership ("TRG"), an operating
partnership that engages in the ownership, operation, management, leasing,
expansion, acquisition, development, redevelopment, financing, and refinancing
of regional shopping centers.
TRG owns, as its primary assets, interests in 21 regional shopping centers
(the "Taubman Shopping Centers"), certain regional shopping center development
projects and also owns, directly and indirectly,
13
<PAGE> 16
approximately 99% of the management entity, The Taubman Company Limited
Partnership (the "Manager"). The Manager provides substantially all property
management and leasing services for all of the Taubman Shopping Centers and
provides development, acquisition, corporate, and administrative services for
TRG and the Company.
Neither the Company nor TRG has any paid employees. Although the CEO and
the other Named Officers are executive officers of the Company, their
compensation in the form of base salary, bonus and incentive compensation is
paid entirely by the Manager (which is an indirect subsidiary of TRG). TRG
provides additional long-term incentive compensation through the TRG 1992
Incentive Option Plan.
This report therefore discusses the executive compensation policies of TRG
and the Manager, and the compensation tables provided in this proxy statement
disclose the compensation paid by the Manager to the Company's named executive
officers in 1996.
The Compensation Committee of TRG (the "Compensation Committee") consists
of S. Parker Gilbert, Chairman, Jerome A. Chazen, W. Allen Reed, and Joseph F.
Azrack. The Compensation Committee reviews and approves all of the policies
under which compensation is paid to the Named Officers. The Compensation
Committee, with the assistance of an independent compensation consultant, has
reviewed the Manager's compensation practices and confirmed them as reasonable
and competitive. The Compensation Committee met twice during 1996.
Revenue Reconciliation Act of 1993. Beginning in 1994, the Omnibus
Reconciliation Act of 1993 (the "Act") limits to $1 million the amount that may
be deducted by a publicly held corporation for compensation paid to each of its
named executives in a taxable year, unless the compensation in excess of $1
million is "qualified performance-based compensation." This deduction limit does
not affect the Company, which has no employees and pays no compensation, and
does not apply to TRG or the Manager, neither of which is a publicly held
corporation or an affiliate (as defined in the Act) of the Company.
Compensation Philosophy. The Manager has had a long-standing philosophy of
targeting executive compensation at a level above the average of competitive
practice. As part of this philosophy, the mix of compensation elements has
emphasized variable, performance-based programs. As a result of this philosophy,
the Manager has been successful at recruiting, retaining, and motivating
executives who are highly talented, performance-focused, and entrepreneurial.
The Compensation Committee has continued to apply this philosophy to its
decisions on compensation matters. The Manager's compensation program for
executive officers has consisted of the following key elements: annual
compensation in the form of base salary, bonus compensation under the Senior
Short Term Incentive Plan (the "SSTIP") and long-term compensation under the
1992 Incentive Option Plan (the "Incentive Option Plan") and the Taubman Company
Long-Term Performance Compensation Plan (the "Performance Plan") adopted in
January 1996. The compensation of the Named Officers is determined based on
individual performance and the performance of TRG and the Manager.
Following its evaluation in 1995 of the components of the Named Officers'
compensation, the Compensation Committee determined to expand the SSTIP to
include participation by all executive officers of the Manager. In addition, the
Committee determined that the Incentive Option Plan, since its adoption in 1992,
had not provided the long-term component of compensation it was originally
designed to provide. Accordingly, the Committee decided that future grants under
the Incentive Option Plan would be made only on a very limited basis, generally
under special circumstances. In lieu of regular grants to the executive officers
under the Incentive Option Plan, as of January 1, 1996, the Committee began
making grants under the Performance Plan.
The Committee believes that Notional Unit Awards granted to the executive
officers under the Performance Plan, while still performance based, will be more
effective than Incentive Options in providing long-term compensation to the
executive officers and aligning the interests of the Named Officers with those
of the partners in TRG, including the Company.
Base Salaries. Base salaries for the Manager's executive officers are generally
targeted at a level above the average for companies that are of comparable size
and complexity of operation and would be considered competitors of the Manager
in attracting and retaining quality executives. The salaries of the Named
Officers
14
<PAGE> 17
are reviewed and approved by the Compensation Committee based on its subjective
assessment of each executive's experience and performance and a comparison to
salaries of peers in other companies. The independent compensation consultant
retained by the Compensation Committee to advise it on compensation matters has
confirmed that compensation paid in 1996 to the Named Officers, including the
CEO, is consistent with the Manager's compensation philosophy.
TRG Incentive Option Plan. During 1996, the Compensation Committee did not grant
any Incentive Options to the Named Officers. As discussed under "-- Compensation
Philosophy" above, the Committee expects that grants under the Incentive Option
Plan will be made only under special circumstances and that the objectives of
the Incentive Option Plan will be accomplished through awards under the new
Performance Plan.
Performance Plan. Effective January 1, 1996, the Compensation Committee made the
initial grants of Notional Unit Awards under the Performance Plan to four of the
five Named Officers, including the CEO, as shown in the Long-Term Incentive
Plans table.
Compensation of Chief Executive Officer. Robert S. Taubman's base compensation
for 1996 was $750,000, unchanged from 1995. Mr. Taubman's performance is
evaluated based 25% on his individual performance and 75% on the performance of
TRG and the Manager. The Manager paid Mr. Taubman a bonus under the SSTIP for
1996 in the amount of $487,500. Mr. Taubman also was awarded long-term incentive
compensation in 1996 under the Performance Plan, as set forth in the Long-Term
Incentive Plans table. The compensation study prepared for the Compensation
Committee by the independent consultant compared the Company's compensation
practices and pay levels to those of other companies considered by the Company
to be its competitors with regard to executive talent. Based on this study, the
Compensation Committee determined that the base compensation, bonus amount, and
long-term awards to Mr. Taubman for 1996 were at appropriate levels consistent
with the Manager's compensation philosophy.
THE COMPENSATION COMMITTEE
S. Parker Gilbert, Chairman
Joseph F. Azrack
Jerome A. Chazen
W. Allen Reed
15
<PAGE> 18
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph sets forth a comparison of the percentage change
in the cumulative total shareholder return on the Company's Common Stock
compared to the cumulative total return of the S&P Composite -- 500 Stock Index
and the NAREIT Equity Retail REIT Index (the "Retail Index") for the period
November 20, 1992, the date on which trading of the Company's Common Stock
commenced, through December 31, 1996. The Company has selected the Retail Index
because it believes the Retail Index offers shareholders the most meaningful
basis for assessing total shareholder return on the Common Stock and comparing
it to the results of comparable retail REITs.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
TAUBMAN CENTERS, INC., THE NAREIT EQUITY RETAIL
REIT INDEX AND THE S&P 500 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TAUBMAN NAREIT S & P 500
(FISCAL YEAR COVERED) CENTERS, INC. EQUITY RETAIL INDEX
REIT INDEX
<S> <C> <C> <C>
11/20/92 $100.00 $100.00 $100.00
12/31/92 $105.68 $103.70 $102.86
12/31/93 $111.18 $111.88 $113.21
12/31/94 $101.09 $115.20 $114.66
12/31/95 $113.59 $121.08 $157.74
12/31/96 $159.36 $162.14 $193.96
</TABLE>
Please note: The stock price performance shown on the graph above is not
necessarily indicative of future price performance.
CERTAIN TRANSACTIONS
A. Alfred Taubman and certain of his affiliates receive various services
from the Manager. For such services, Mr. A. Taubman and certain of his
affiliates paid the Manager approximately $5.3 million in 1996.
A. Alfred Taubman, Robert C. Larson, Robert S. Taubman, William S. Taubman
and other members of Mr. Taubman's family own, in the aggregate, a 50% interest
in the partnership that owns the building in which the Company, through the
Manager, maintains its principal offices. In addition, A. Alfred Taubman, Robert
C. Larson, Robert S. Taubman, William S. Taubman and other members of Mr.
Taubman's family collectively own a 90% interest in a building in which the
Manager maintains its New York City offices. During 1996, the Manager paid to
such partnerships approximately $3.0 million in rent and operating expenses for
such office space.
The Manager believes that (i) the compensation paid to it for its services
to A. Alfred Taubman, and certain of his affiliates, as described above, and
(ii) the rent paid to Mr. Taubman, Robert C. Larson, Robert S. Taubman, William
S. Taubman and other members of Mr. Taubman's family as described above
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were fair and reasonable and no less favorable to the Manager than could have
been obtained through arm's-length negotiations.
CERTAIN EMPLOYMENT ARRANGEMENTS
The Compensation Committee determined in December 1994 that, in the event
of Mr. Larson's termination of employment with the Manager for any reason other
than death or disability, whether prior to or after attaining age 65, such
termination will be deemed to be by reason of his "Retirement" (as defined in
the TRG 1992 Incentive Option Plan) for all Plan purposes. This determination
means that, under the terms of the Plan, any nonvested Incentive Options held by
Mr. Larson upon his Retirement will vest immediately and, together with any
other vested Options, may be exercised at any time during the remainder of the
ten-year term of such Options. In consideration of the Compensation Committee's
agreed upon determination, Mr. Larson has agreed that, in the event of Mr.
Larson's termination of employment, (i) he will not exercise any of his
Incentive Options until such date as the Options otherwise would have become
exercisable under the Plan had Mr. Larson's employment with the Manager not
terminated and (ii) if, prior to the date upon which Mr. Larson may exercise an
Option pursuant to the preceding clause, Mr. Larson violates the non-compete
provisions of the Amended and Restated Agreement of Limited Partnership of TRG,
he will forfeit any such Options that are not then exercisable pursuant to the
preceding clause.
In January 1997, the Manager entered into a three-year agreement with Lisa
A. Payne regarding her employment as an Executive Vice President and the Chief
Financial Officer of the Manager and her service to the Company in the same
capacities. Beginning on the second anniversary of Ms. Payne's commencement of
employment with the Manager, and on each anniversary thereafter, the agreement
will automatically be extended an additional year unless, prior to such
anniversary, one of the parties gives written notice to the other that the
agreement is not to be so extended. The employment agreement provides for an
annual base salary of not less than $500,000, to be reviewed annually. The
agreement also provides for Ms. Payne's participation in the Company's Senior
Short Term Incentive Plan, with a target award of $250,000, a maximum annual
award of $375,000 and, for 1997, a minimum award of $250,000 under the plan. In
addition, the agreement provides for a grant to Ms. Payne in March 1997 of 7.25
Notional Units of Partnership Interest under the Manager's Performance Plan and
Incentive Options to purchase 51.05 Units of Partnership Interest under TRG's
1992 Incentive Option Plan. The Incentive Options were granted at an exercise
price of $25,959 per Unit, the fair market value of a Unit of Partnership
Interest on the date of grant. As of the date of grant, each Unit of Partnership
Interest was exchangeable for approximately 1,957 shares of Common Stock
pursuant to the terms of the Continuing Offer (see Note (4) to the Summary
Compensation Table). The agreement also provides that the Company will pay Ms.
Payne certain relocation expenses, up to a maximum of $175,000.
COMPENSATION OF DIRECTORS
The Company and TRG pay Independent Directors an annual fee of $35,000, a
meeting fee of $1,000 for each Board or committee or TRG committee meeting
attended, and reimbursement for expenses incurred in attending meetings and as a
result of other work performed for the Company or TRG. For 1996, the Company
incurred costs of $192,750 relating to the services of Messrs. Allison, Ballard,
Bloostein, Chazen and Gilbert as directors of the Company.
As part of its overall program of charitable giving, TRG maintains a
charitable gift program for the Independent Directors. Under this charitable
gift program, TRG matches an Independent Director's donation to one or more
qualifying charitable organizations, up to an aggregate maximum amount of
$10,000 per director per year. Individual directors derive no financial benefit
from this program since all charitable deductions accrue solely to TRG. During
1996, TRG made two matching contributions in the amount of $5,000 each.
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INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Company's Audit
Committee, has appointed Deloitte & Touche LLP as the independent auditors to
audit the financial statements of the Company for 1997. The Board of Directors
recommends that the shareholders vote FOR the appointment of Deloitte & Touche
LLP as the Company's independent auditors for 1997. Although shareholder
approval of the appointment is not required by law and is not binding on the
Board of Directors, the Board will take the appointment of Deloitte & Touche LLP
under advisement if such appointment is not approved by the affirmative vote of
a majority of the votes cast at the Meeting.
The Company expects that representatives of Deloitte & Touche LLP will be
present at the Meeting and will be afforded an opportunity to make a statement
if they desire to do so. The Company also expects that such representatives of
Deloitte & Touche LLP will be available at that time to respond to appropriate
questions addressed to the officer presiding at the Meeting.
PROPOSALS OF SECURITY HOLDERS
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 1998 must be received by the Company at 200 East
Long Lake Road, Suite 300, P.O. Box 200, Bloomfield Hills, Michigan 48303-0200
by the close of business on November 20, 1997. If the date of such meeting is
changed by more than 30 days from the date such meeting is scheduled to be held,
the proposal must be received by the Company at a reasonable time before the
solicitation of proxies for such meeting is made. Proposals should be sent to
the attention of the Secretary. A person may submit only one proposal for
inclusion in the proxy materials, and under certain circumstances enumerated in
the Securities and Exchange Commission's rules relating to the solicitation of
proxies, the Company may be entitled to omit the proposal and any statement in
support thereof (which in the aggregate may not exceed 500 words in length) from
its proxy statement and form of proxy.
COSTS OF PROXY SOLICITATION
The cost of preparing, assembling, and mailing the proxy material will be
borne by the Company. The Company will also request persons, firms, and
corporations holding shares in their names or in the names of their nominees,
which shares are beneficially owned by others, to send the proxy material to,
and to obtain Proxies from, such beneficial owners and will reimburse such
holders for their reasonable expenses in doing so.
Please complete the enclosed proxy card and mail it in the enclosed
postage-paid envelope as soon as possible.
By Order of the Board of Directors,
A. Alfred Taubman
Chairman of the Board
March 28, 1997
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TAUBMAN CENTERS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 14, 1997
The undersigned hereby appoints each of Robert S. Taubman, Robert C.
Larson and Lisa A. Payne, with full power of substitution, to represent the
undersigned at the annual meeting of shareholders of Taubman Centers, Inc. on
Wednesday, May 14, 1997, and at any adjournment thereof, and to vote at such
meeting the shares of Common Stock that the undersigned would be entitled to
vote if personally present in accordance with the following instructions and to
vote in their judgment upon all other matters which may properly come before
the meeting and any adjournment thereof. THE SHARES REPRESENTED HEREBY WILL BE
VOTED IN FAVOR OF ITEMS (1) AND (2) IF NO INSTRUCTION IS PROVIDED.
If more than one of the above named Proxies shall be present in person or
by substitution at such meeting or at any adjournment thereof, the majority of
said Proxies so present and voting, either in person or by substitution, shall
exercise all of the powers hereby given. The undersigned hereby revokes any
proxy heretofore given to vote at such meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PAID ENVELOPE.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<TABLE>
<S><C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. Please mark
your vote as
indicated in / x /
this example
1. ELECTION OF DIRECTORS
2. RATIFICATION OF INDEPENDENT FOR AGAINST ABSTAIN
FOR WITHHOLD AUTHORITY AUDITORS
all Nominees listed(except to vote for all Nominees Ratification of the selection of
as marked to the contrary Deloitte & Touche LLP as
below). independent auditors for 1997. /_____/ /_____/ /_____/
/_____/ /_____/ 3. In their discretion, the Proxies are authorized
to vote upon such other business as may properly
Election of four directors duly nominated come before the meeting.
Graham T. Allison, Claude M. Ballard,
Thomas E. Dobrowski and W. Allen Reed
Please sign exactly as name appears below. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name
by authorized person.
____________________________________________________________
Signature
Dated: _______________________________________________, 1997
</TABLE>
