<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:
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<PAGE> 2
[TAUBMAN LOGO]
TAUBMAN CENTERS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD MAY 14, 1998
To the Shareholders of
Taubman Centers, Inc.
The Annual Meeting of Shareholders of TAUBMAN CENTERS, INC. (the "Company")
will be held on Thursday, May 14, 1998, at the Community House, 380 South Bates
Street, Birmingham, Michigan, at 11:00 a.m., local time, for the following
purposes:
1. To elect three (3) directors to serve until the annual meeting of
shareholders in 2001 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, 1998; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 10, 1998,
as the record date for determining the shareholders that are entitled to notice
of, and to vote at, the annual meeting or any adjournment or postponement.
By Order of the Board of Directors
A. ALFRED TAUBMAN,
Chairman of the Board
Bloomfield Hills, Michigan
March 31, 1998
EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON, PLEASE SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE TO ENSURE THE
PRESENCE OF A QUORUM. 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
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE MEETING........................................... 1
What is the purpose of the annual meeting?................ 1
Who is entitled to vote?.................................. 1
What constitutes a quorum?................................ 1
How do I vote?............................................ 1
Can I change my vote after I return my Proxy?............. 1
What are the Board's recommendations?..................... 2
What vote is required to approve each item?............... 2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 2
Section 16(a) Beneficial Ownership Reporting Compliance... 5
ITEM 1 -- ELECTION OF DIRECTORS............................. 5
MANAGEMENT................................................ 6
Directors and Executive Officers....................... 6
The Board of Directors and Committees.................. 7
Compensation of Directors.............................. 8
Certain Transactions................................... 8
EXECUTIVE COMPENSATION.................................... 9
Summary Compensation Table............................. 9
Senior Short Term Incentive Plan....................... 10
Incentive Option Plan.................................. 10
Incentive Option Grants in 1997........................ 11
Aggregated Option Exercises During 1997 and Year-end
Option Values......................................... 11
Long-Term Performance Compensation Plan................ 12
Compensation Committee Report on Executive
Compensation.......................................... 12
Shareholder Return Performance Graph................... 14
Certain Employment Arrangements........................ 14
ITEM 2 -- RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS.................................................. 15
OTHER MATTERS............................................... 15
COSTS OF PROXY SOLICITATION................................. 15
ADDITIONAL INFORMATION...................................... 16
Presentation of Shareholder Proposals at 1999 Annual
Meeting................................................ 16
Annual Report............................................. 16
</TABLE>
<PAGE> 4
TAUBMAN CENTERS, INC.
200 EAST LONG LAKE ROAD, SUITE 300
P.O. BOX 200
BLOOMFIELD HILLS, MICHIGAN 48303-0200
PROXY STATEMENT
This Proxy Statement contains information regarding the annual meeting of
shareholders of Taubman Centers, Inc. (the "Company"), to be held at 11:00 a.m.,
local time, on Thursday, May 14, 1998, at the Community House, 380 South Bates,
Birmingham, Michigan. The Company's Board of Directors is soliciting Proxies for
use at the meeting and at any adjournment or postponement. The Company expects
to mail this Proxy Statement on or about March 31, 1998.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the annual meeting, holders of the Company's Common Stock will act upon
the matters outlined in the accompanying Notice of Meeting, including the
election of three directors to serve three-year terms and the ratification of
the Board's selection of the independent auditors. In addition, management will
report on the performance of the Company and The Taubman Realty Group Limited
Partnership (i.e., the entity through which the Company conducts its operations)
during 1997 and will respond to questions from shareholders.
Who is entitled to vote?
Only record holders of Common Stock at the close of business on the record
date of March 10, 1998, are entitled to receive notice of the annual meeting and
to vote those shares of Common Stock that they held on the record date. Each
outstanding share of Common Stock is entitled to one vote on each matter to be
voted upon at the annual meeting.
What constitutes a quorum?
The presence at the annual meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on the record date will
constitute a quorum for purposes of electing directors and ratifying the Board's
selection of auditors. The Board of Directors does not propose to conduct any
other business at the annual meeting, and any other business would require the
presence of two-thirds of the outstanding Common Stock. As of the record date,
50,759,657 shares of Common Stock were outstanding. If you hold your shares in
"street name" through a broker or other nominee to whom you do not give specific
voting instructions, your broker or nominee may not vote your shares. Such
"broker non-votes" will nevertheless be counted for purposes of determining
whether there is a quorum. Similarly, a Proxy marked "ABSTAIN" with respect to
any matter will not be voted but will be counted as present.
How do I vote?
If you complete and properly sign the accompanying Proxy and return it to
the Company, it will be voted as you direct. If you attend the annual meeting,
you may deliver your completed Proxy in person. If you own your shares through a
broker or other nominee but want to vote your shares in person, you need to
bring a copy of your brokerage statement (or comparable document) reflecting
your Common Stock ownership as of the record date and check in at the
registration desk at the meeting.
Can I change my vote after I return my Proxy?
You may change your vote at any time before the Proxy is exercised by
filing with the Secretary of the Company either a notice revoking the Proxy or a
properly signed proxy that is dated later than the Proxy. If you attend the
annual meeting, the proxies named in the enclosed Proxy will nevertheless have
authority to
<PAGE> 5
vote your shares in accordance with your instructions on the Proxy unless you
indicate at the meeting that you intend to vote your shares yourself.
What are the Board's recommendations?
Unless you give different instructions on the Proxy, the persons named in
the Proxy will vote in accordance with the recommendations of the Board of
Directors. The Board recommends a vote:
for election of the nominated slate of directors (see pages 5 - 8);
and
for ratification of Deloitte & Touche LLP as the Company's independent
auditors for 1998 (see page 15).
With respect to any other matter that properly comes before the annual meeting,
the persons named in the Proxy will vote as the Board recommends or, if the
Board gives no recommendation, as they determine in their discretion.
What vote is required to approve each item?
ELECTION OF DIRECTORS. Nominees who receive the most votes cast at the
annual meeting will be elected as directors. The Board of Directors has
nominated one individual for each of the three seats on the Board to be filled
at the annual meeting. A properly signed Proxy marked "WITHHOLD AUTHORITY" with
respect to the election of one or more directors will not be voted for the
director(s) so indicated, but it will be counted to determine whether there is a
quorum.
RATIFICATION OF AUDITORS. The affirmative vote of a majority of the votes
cast at the annual meeting will be necessary to ratify the Board of Directors'
appointment of Deloitte & Touche LLP as the Company's independent auditors for
1998.
OTHER MATTERS. If any other matter properly comes before the annual
meeting, its resolution will be determined by the vote of two-thirds of the
shares of Common Stock outstanding on the record date.
EFFECT OF BROKER NON-VOTES AND ABSTENTIONS. Since the election of directors
and the ratification of the Board's appointment of auditors will be determined
by votes cast rather than by a percentage of the shares present, "broker
non-votes" and abstentions will not affect the election of directors or the
ratification of auditors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The Company owns a 38.4% managing partner's interest in The Taubman Realty
Group Limited Partnership ("TRG"), through which the Company conducts all of its
operations. TRG is a partnership that owns, develops, acquires, and operates
regional shopping centers nationally. The following table sets forth certain
information regarding the beneficial ownership of the Company's Common Stock and
of partnership interests in TRG ("Units of Partnership Interest" or "Units") as
of March 16, 1998. The Company has relied upon information supplied by its
officers, directors, and certain shareholders and upon information contained
2
<PAGE> 6
in filings with the Securities and Exchange Commission or obtained from direct
inquiries of certain beneficial holders.
<TABLE>
<CAPTION>
PERCENTAGE
UNITS OF OWNERSHIP OF
PARTNERSHIP UNITS OF
DIRECTORS, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% SHAREHOLDERS SHARES SHARES TRG INTEREST IN TRG
----------------------------- ------ ---------- ----------- ---------------
<S> <C> <C> <C> <C>
A. Alfred Taubman.................. 186,937(1) * 24,049,838(2) 18.2%
Robert C. Larson................... 2,209,434(3) 4.2% 2,202,050(4) 1.7%
Robert S. Taubman.................. 3,166,053(5) 5.9% 3,166,053(6) 2.3%
Richard B. McGlinn(7).............. 82,956(7) * 82,956(8) *
William S. Taubman................. 166,565(9) * 166,565(10) *
Lisa A. Payne...................... 0 0 0 0
Graham Allison..................... 1,430 * 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 0 0 0
S. Parker Gilbert.................. 130,000(11) * 0 0
W. Allen Reed...................... 0 0 0 0
GMPTS Limited Partnership(12)...... 8,376,807 16.5% 50,025,713 37.8%
767 Fifth Avenue
New York, NY 10153
The Long-Term Investment Trust..... 5,270,868 10.4% 0 0
c/o AT&T Investment Management
Corporation
One Oak Way, Room 3ED143
Berkley Heights, NJ 07922
European Investors Inc............. 2,740,967 5.4% 0 0
EII Realty Securities Inc.
667 Madison Avenue, 16th Floor
New York, New York 10021
Morgan Stanley, Dean Witter,
Discover & Co.................... 6,658,200(13) 13.1% 0 0
Morgan Stanley Asset Management
Inc.
1585 Broadway
New York, New York 10036
Stichtung Pensioenfonds ABP........ 2,778,100 5.5% 0 0
Oude Lindestraat 70
P.O. Box 2889
6401 DJ Heerlen, The Netherlands
Directors and Executive Officers as
a Group.......................... 5,969,348(14) 10.6% 29,667,462(14) 21.7%
</TABLE>
- ---------------
* less than 1%
(1) Consists of 100 shares of Common Stock owned by Mr. A. Alfred Taubman's
revocable trust and 186,837 shares of Common Stock held by TRA Partners
("TRAP"). Mr. Taubman's trust is the
3
<PAGE> 7
managing general partner of TRAP and has the sole authority to vote and
dispose of the 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) Consists of 9,875 Units of Partnership Interest held by Mr. Taubman's
trust, 17,699,879 Units of Partnership Interest owned by TRAP, 11,011 Units
of Partnership Interest owned by Taubman Realty Ventures ("TRV"), of which
Mr. Taubman's trust is the managing general partner, and 1,975 Units 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 Units of
Partnership Interest held by Taub-Co. Mr. Taubman disclaims beneficial
ownership of any Units held by Taub-Co beyond his pecuniary interest in
Taub-Co. Also includes 6,327,098 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) Mr. Larson currently owns 7,384 shares of Common Stock. Under TRG's 1992
Incentive Option Plan (the "Incentive Option Plan"), Mr. Larson has vested
options ("Incentive Options") with respect to 1,040,209 Units of
Partnership Interest and owns 1,161,841 Units of Partnership Interest, all
of which are exchangeable for an equal number of shares of the Company's
Common Stock pursuant to the terms of the Company's continuous exchange
offer to certain partners in TRG and holders of TRG Incentive Options (the
"Continuing Offer").
(4) Includes 1,040,209 Units of Partnership Interest that Mr. Larson has the
right to receive upon the exercise of vested Incentive Options. Excludes
all Units of Partnership Interest owned by TG. Mr. Larson is a general
partner of 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) Consists of shares that Mr. Robert S. Taubman has the right to receive
under the Continuing Offer upon the exchange of 3,160,128 Units of
Partnership Interest subject to vested but unexercised Incentive Options
and 5,925 Units of Partnership Interest that Mr. Taubman currently owns.
Excludes all shares of Common Stock held by TRAP. Mr. 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.
(6) Includes 3,160,128 Units of Partnership Interest that Mr. Taubman has the
right to receive upon the exercise of vested Incentive Options. 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) Mr. McGlinn retired from all positions with the Company as of January 2,
1998. Ownership consists of 82,956 shares that Mr. McGlinn has the right to
receive under the Continuing Offer upon the exchange of an equal number of
Units of Partnership Interest that are subject to vested but unexercised
Incentive Options.
(8) Consists of Units of Partnership Interest subject to vested Incentive
Options held by Mr. McGlinn. The Units must be exchanged for shares of
Common Stock under the Continuing Offer upon the exercise of the Incentive
Options.
(9) Consists of shares that Mr. William S. Taubman has the right to receive
under the Continuing Offer upon the exchange of 160,640 Units of
Partnership Interest subject to vested but unexercised Incentive Options
and 5,925 Units of Partnership Interest that Mr. Taubman currently owns.
Excludes all shares
4
<PAGE> 8
of Common Stock held by TRAP. Mr. 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.
(10) Includes 160,640 Units of Partnership Interest subject to vested Incentive
Options held by Mr. 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.
(11) Includes 80,000 shares held by The Gilbert 1996 Charitable Remainder Trust,
an irrevocable trust of which Mr. Gilbert is a co-trustee. Mr. Gilbert
disclaims any beneficial ownership of such shares beyond any deemed
pecuniary interest as the result of his wife's current beneficial interest
in the trust.
(12) Wholly-owned by two employee pension funds of General Motors Corporation
(the "GM Trusts").
(13) Based on a Schedule 13G dated February 12, 1998, the shares are held for
the accounts of the consolidated group's clients, no one of which owns five
percent or more of the Company's Common Stock.
(14) See Notes 1 through 11 above.
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 that they file. Based on the Company's review
of the Forms 3, 4, and 5 filed by the Company's directors and executive officers
and representations made by them, no executive officer or director of the
Company failed to file on a timely basis a Section 16(a) report of beneficial
ownership that should have been filed during 1997.
ITEM 1 -- ELECTION OF DIRECTORS
The Board of Directors 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. Three
directors are to be elected at the annual meeting to serve until the annual
meeting of shareholders in 2001 and until their respective successors have been
elected and qualified. Each of the nominees is presently a member of the Board
of Directors.
Each of the nominees has consented to serve a three-year term. If any of
them should become unavailable, the Board may designate a substitute nominee. In
that case, the persons named as proxies in the accompanying Proxy will vote for
the Board's substitute nominee. The directors standing for election are:
NAME
------
Allan J. Bloostein
Jerome A. Chazen
S. Parker Gilbert
Additional information regarding the nominees, the directors whose terms
are not expiring, and management of the Company is contained under the caption
"Management" below.
5
<PAGE> 9
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors consists of 11 members divided into three classes
serving staggered three-year terms. Under the Company's Articles of
Incorporation, at least five 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 and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLE TERM
---- --- ----- ----
<S> <C> <C> <C>
A. Alfred Taubman.................... 73 Chairman of the Board............................ 1999
Robert C. Larson..................... 63 Vice Chairman of the Board....................... 1999
Robert S. Taubman.................... 44 President, Chief Executive Officer, and
Director......................................... 1999
Lisa A. Payne........................ 39 Executive Vice President, Chief Financial
Officer, and Director............................ 1999
Graham T. Allison*................... 57 Director......................................... 2000
Claude M. Ballard*................... 68 Director......................................... 2000
Allan J. Bloostein**................. 68 Director......................................... 1998
Jerome A. Chazen**................... 71 Director......................................... 1998
Thomas E. Dobrowski.................. 54 Director......................................... 2000
S. Parker Gilbert**.................. 64 Director......................................... 1998
W. Allen Reed........................ 50 Director......................................... 2000
William S. Taubman................... 39 Executive Vice President
Esther R. Blum....................... 43 Vice President, Controller, and Chief Accounting
Officer
</TABLE>
- ---------------
* "Independent" director.
** "Independent" director and standing for election to a three-year term.
A. Alfred Taubman is a private investor. He is the Chairman of the Board of
the Company and the Chairman of The Taubman Company Limited Partnership (the
"Manager"), which manages TRG's regional shopping center interests and provides
corporate and other services to the Company. 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. Mr. Larson is a director of Lifestyle Furnishings International
Ltd., a manufacturer and marketer of residential furniture and home furnishings
fabrics. He is also a director of Bass Plc, a London-based international hotel,
leisure retailing, and beverage firm. He is also a member of the Lazard Freres
Real Estate Advisory Board, a Trustee and Vice President of the Urban Land
Institute, and a director of the National Realty Committee.
Robert S. Taubman is the President, Chief Executive Officer, 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. He is also a member of the Board of
Governors of the National Association of Real Estate Investment Trusts, 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.
Lisa A. Payne became an Executive Vice President, the Chief Financial
Officer, and a director of the Company in 1997, when she also became an
Executive Vice President and the Chief Financial Officer of the
6
<PAGE> 10
Manager. From 1986 until 1996, Ms. Payne held various positions with Goldman,
Sachs & Co., most recently as a vice president of its real estate department.
William S. Taubman is an Executive Vice President of the Company and the
Manager. He has held various executive positions with the Manager since prior to
1993. He is also a director of the Detroit Institute of Arts. Mr. Taubman is the
son of A. Alfred Taubman and the brother of Robert S. Taubman.
Esther R. Blum became Vice President, Controller and Chief Accounting
Officer of the Company in January 1998. She serves the Manager in a similar
capacity. Between 1992 and 1997, Ms. Blum served as the Manager's Vice President
of Financial Reporting. Ms. Blum has been with the Manager since 1986. Prior to
1986, she was an audit manager at Deloitte & Touche LLP.
Graham T. Allison is a professor at Harvard University. He is a director of
New England Securities Corporation and Belco Oil & Gas Corp. Mr. Allison has
been a director of the Company since 1996 and previously served on the Board
from 1992 until 1993.
Claude M. Ballard is a limited partner and consultant of The Goldman Sachs
Group, L.P. He is a director of Bedford Property Investors and CBL & Associates,
both real estate investment trusts. 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 is President of Allan J. Bloostein Associates and serves
as a consultant in retail and consumer goods marketing. Mr. Bloostein is 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. Mr. Bloostein has been a director of
the Company since 1992.
Jerome A. Chazen is Chairman Emeritus of Liz Claiborne, Inc. 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"). He
is responsible for the General Motors pension funds' investments in real estate
and oil and gas. Mr. Dobrowski serves as a director of GMIMCo, Manufactured
Homes, Inc., Red Roof Inns, Inc., and Equity Office Properties Trust.
S. Parker Gilbert is a director of ITT Industries, Inc. and Burlington
Resources Inc. 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 investing 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. Until July 1994, he was Vice President
and Treasurer of Hughes Electronics, a subsidiary of General Motors Corporation.
He is a member of the Board of Directors of FLIR Systems, a publicly held
electronics company, WEBS Fund, Inc., a registered investment company, and
General Motors Acceptance 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 1997. The
Board of Directors has three standing committees: a five-member Audit Committee;
a four-member Compensation Committee; and a three-member Nominating Committee.
During 1997, 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 consultation 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, Graham
Allison, Claude M. Ballard, Allan J. Bloostein, and S. Parker Gilbert. The Audit
Committee is responsible for overseeing and
7
<PAGE> 11
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 1997.
The Compensation Committee of the Board of Directors is composed of S.
Parker Gilbert, Chairman, Thomas E. Dobrowski, Jerome A. Chazen, and W. Allen
Reed. The Compensation Committee of the Board's primary responsibility is
establishing compensation and benefit policies with respect to the members of
the Board of Directors. The Compensation Committee of the Board met one time
during 1997.
The Board's Nominating Committee consists of A. Alfred Taubman, S. Parker
Gilbert, and W. Allen Reed. 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 does
not have a procedure for shareholders to submit nominee recommendations. The
Nominating Committee did not meet during 1997.
The Compensation Committee of TRG reviews the compensation and employee
benefit policies of TRG and the Manager, which provide all of the compensation
of the Company's executive officers. Accordingly, it is TRG's Compensation
Committee that gives its report on executive compensation in this Proxy
Statement. The Compensation Committee of TRG met twice during 1997.
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 1997, the Company
incurred costs of $230,000 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
1997, TRG made three matching contributions in the total amount of $10,500.
CERTAIN TRANSACTIONS
A. Alfred Taubman and certain of his affiliates receive various services
from the Manager. For such services, Mr. A. Taubman and affiliates paid the
Manager approximately $4.1 million in 1997.
A. Alfred Taubman, Robert C. Larson, Robert S. Taubman, and William S.
Taubman have financial interests in the buildings in which the Manager maintains
its principal and New York City offices. During 1997, the Manager paid
approximately $3.1 million in rent and operating expenses for such office space.
During 1997, TRG acquired an option to purchase certain real estate on
which TRG may develop a shopping center. A. Alfred Taubman, Robert S. Taubman,
and William S. Taubman have a financial interest in the optionor. The option
agreement requires option payments of $150,000 during each of the first five
years, $400,000 in the sixth year, and $500,000 in the seventh year. If TRG
exercises the option, the purchase price for the property will be between $5
million and $10 million, depending upon the year of purchase. While the optionor
will have no interest in the shopping center itself, the optionor may
participate in the proceeds from TRG's future sales of parcels adjacent to the
shopping center.
Independent committees of TRG's Partnership Committee review business
transactions between TRG and the Manager and related parties to ensure that
TRG's and the Manager's involvement in such transactions, including those
described above, is on arm's length terms.
8
<PAGE> 12
In January 1998, the Manager paid Richard B. McGlinn, who had been the
Company's and the Manager's Senior Vice President, Treasurer, and Chief
Accounting Officer, $250,000 in exchange for his agreement not to compete with
the Company, TRG, or the Manager prior to January 2, 1999.
In June 1997, TRG guaranteed a short-term bank loan to Lisa A. Payne, the
Company's and the Manager's Executive Vice President and Chief Financial
Officer, in connection with her relocation to Michigan. The loan bears interest
at the bank's prime rate and had an initial principal balance of $1.8 million.
The guarantee was reduced in December 1997 to its current level of $200,000.
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 1995,
1996, and 1997, information concerning the annual and long-term compensation for
services in all capacities to the Company, TRG, and the Manager of those persons
who during 1997 were (i) the chief executive officer and (ii) the other
executive officers of the Company whose compensation is required to be disclosed
pursuant to the rules of the Securities and Exchange Commission (the "Named
Officers").
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS(2)
ANNUAL COMPENSATION ----------------------------
---------------------------------------- NUMBER OF
OTHER ANNUAL RESTRICTED SHARES
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK AWARDS(3) UNDERLYING ALL OTHER
POSITION YEAR ($) ($) ($) ($) OPTIONS(4) COMPENSATION
------------------ ---- -------- -------- ------------ --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert S. Taubman......... 1997 $778,842(5) $468,750(6) -- $979,028 0 $ 21,029(7)
President and Chief 1996 750,000 487,500(6) -- 829,534 0 20,026
Executive Officer 1995 750,000 300,375 -- 0 197,508 18,910
Robert C. Larson.......... 1997 $519,237(5) -- -- -- -- $ 20,925(8)
Vice Chairman 1996 500,000 -- -- -- -- 19,935
1995 500,000 -- -- -- -- 18,835
Lisa A. Payne(9).......... 1997 $455,765 $321,875(6) -- $361,054 100,828 $287,000(10)
Executive Vice --
President and Chief
Financial Officer
William S. Taubman........ 1997 $385,958(5) $244,625(6) -- $361,054 0 $ 20,578(11)
Executive Vice 1996 350,000 236,250(6) -- 286,387 0 19,597
President 1995 325,000 120,150 -- 0 79,004 18,492
Richard B. McGlinn(12).... 1997 $267,308(5) $105,000(6) -- $152,575 0 $ 20,498(13)
Senior Vice President, 1996 250,000 98,875(6) -- 118,505 0 19,282
Treasurer, and Chief 1995 240,000 93,603(6) -- 0 17,776 18,098
Accounting Officer
</TABLE>
- ---------------
(1) The Company has no employees. All cash remuneration is paid by the Manager.
The principal position shown for each Named Officer represents the
individual's position with the Company and also with the Manager, except
that Mr. Larson is an executive employee but is no longer the Vice Chairman
of the Manager.
(2) All information regarding long-term compensation awards reflects a split in
Units of Partnership Interest in TRG as of September 30, 1997. Because of
the one-for-one exchange ratio under the Company's Continuing Offer, each
Unit of Partnership Interest is deemed to be equal in value to one share of
the Company's Common Stock.
(3) Awards are made under the Manager's Long-Term Performance Compensation Plan
(the "Performance Plan") in respect of Notional (i.e., "phantom") Units of
Partnership Interest, which are credited with TRG partnership distribution
equivalents in the form of additional Notional Units as and when TRG makes
distributions. Grants under the Performance Plan may be settled only in
cash. Awards vest (and, unless deferred in accordance with the Performance
Plan, are payable) on the third January 1 after the date of grant. Each
award is contingent upon the Named Officer achieving at least his or her
target performance for the year under the Manager's Senior Short Term
Incentive Plan. In
9
<PAGE> 13
1996, the Named Officers received the following awards, which (except in
the case of Mr. McGlinn's award) vest on January 1, 1999: Robert S. Taubman
-- 82,953 Notional Units; William S. Taubman -- 28,639 Notional Units; and
Richard B. McGlinn -- 11,850 Notional Units. With respect to 1997, the
Named Officers received the following awards, which (except in the case of
Mr. McGlinn's award) vest on January 1, 2000: Robert S. Taubman -- 76,041
Notional Units; Lisa A. Payne -- 28,043 Notional Units; William S. Taubman
-- 28,043 Notional Units; and Richard B. McGlinn -- 11,850. At December 31,
1997, the Named Officers' aggregate holdings (including TRG partnership
distribution equivalents that have been credited as additional Notional
Units), and the value of such holdings based on the year-end value of the
Common Stock, were as follows: Robert S. Taubman -- 178,759 Notional Units
($2,323,865); Lisa A. Payne -- 30,099 Notional Units ($391,288); William S.
Taubman -- 63,636 Units ($827,273); and Richard B. McGlinn -- 26,597 Units
($345,759). Upon Mr. McGlinn's retirement as of January 2, 1998, his 1996
and 1997 grants vested, and he was paid a total of $345,759 in respect of
such grants and accrued distribution equivalents. See "Long-Term
Performance Compensation Plan" below for more information about the
Performance Plan.
(4) All Incentive Options were granted under the Incentive Option Plan with
respect to Units of Partnership Interest exchangeable for an equal number
of shares of Common Stock pursuant to the Continuing Offer.
(5) 1997 salaries include one additional pay period compared with 1996 and
1995.
(6) Bonus amount awarded under the Senior Short Term Incentive Plan.
(7) Includes $13,092 contributed to the Manager's defined contribution plan
(the "Retirement Savings Plan") on behalf of Mr. Robert S. Taubman and
$7,937 accrued under the Manager's supplemental retirement savings plan
(the "Supplemental Retirement Savings Plan").
(8) Includes $13,092 contributed to the Retirement Savings Plan on behalf of
Mr. Larson and $7,833 accrued under the Supplemental Retirement Savings
Plan.
(9) Ms. Payne joined the Company and the Manager in January 1997.
(10) Consists of relocation expenses paid to Ms. Payne during 1997 pursuant to
the terms of her employment agreement.
(11) Includes $13,092 contributed to the Retirement Savings Plan on behalf of
Mr. William S. Taubman and $7,486 accrued under the Supplemental Retirement
Savings Plan.
(12) Mr. McGlinn retired from all positions with the Company and the Manager
effective January 2, 1998.
(13) Includes $13,092 contributed to the Retirement Savings Plan on behalf of
Mr. McGlinn and $7,406 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 to a participant depends
upon a review and assessment of the employee's, the Company's, TRG's, and the
Manager's performance. Performance that meets expectations results in a bonus of
approximately 100% of an employee's target amount. Performance beyond
expectations may result in an employee receiving up to 150% of his target bonus.
Performance below expectations results in a payment of less than the bonus
target.
INCENTIVE OPTION PLAN
TRG maintains the 1992 Incentive Option Plan for the employees of the
Manager with respect to Units of Partnership Interest in TRG. Upon exercise, an
option holder may (and it is anticipated that substantially all employees will)
exchange each underlying Unit for one share of the Company's Common Stock under
the Continuing Offer.
The Manager makes periodic recommendations regarding grants to TRG's
Compensation Committee, which then approves grants. The exercise price of each
Incentive Option is equal to the fair market value of a Unit of Partnership
Interest on the date of grant.
10
<PAGE> 14
Generally, an Incentive Option vests in one-third increments on each of the
third, fourth, and fifth anniversaries of the date of grant, although TRG's
Compensation Committee may allow an exercise at any time more than six months
after the date of grant. If the optionee's employment terminates within the
first three years for reasons other than death, disability, or retirement, 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, or upon TRG's permanent dissolution. No Incentive Option may be
exercised after ten years from the date of grant.
INCENTIVE OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
NUMBER OF UNITS
OF PARTNERSHIP PERCENT OF
INTEREST TOTAL OPTIONS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE(2) GRANT DATE
NAME OPTION GRANTED(1) EMPLOYEES IN 1997 ($/UNIT) EXPIRATION DATE PRESENT VALUE(3)
---- ----------------- ----------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Lisa A. Payne........... 100,828 100%(4) $13.14 March 15, 2007 $234,929
</TABLE>
- ---------------
(1) As adjusted to reflect the September 1997 split in Units of Partnership
Interest. Exchangeable for an equal number of shares of Common Stock under
the Company's Continuing Offer.
(2) As adjusted to reflect the September 1997 split in Units of Partnership
Interest.
(3) The Company used a binomial pricing model to determine this value. The
estimated present value does not take into account the fact that the
Incentive Option awarded to the Named Officer is not transferable and,
unlike exchange traded options, must satisfy certain vesting requirements
before it becomes exercisable. The calculation is based on the following
assumptions: a volatility rate of 21%; a risk-free rate of return of 6.8%;
and a dividend yield of 6.9%. The actual value upon exercise will depend on
the excess of the fair market value of a Unit of Partnership Interest on the
date of exercise over the exercise price (i.e., $13.14 per Unit). There is
no assurance that an Incentive Option will vest or that the value realized
will be at or near the value estimated by the binomial model. The estimated
present value in the table does not provide any indication or assurance
regarding the future value of the Company's Common Stock.
(4) As discussed under "Compensation Committee Report on Executive
Compensation," the Incentive Option Plan has been replaced by the
Performance Plan as the primary source of long-term compensation.
AGGREGATED OPTION EXERCISES DURING 1997 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT YEAR END OPTIONS AT 12/31/97(1)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman......... 0 0 3,028,456 329,180 $5,565,117 $763,039
Robert C. Larson.......... 0 0 1,013,874 52,670 1,858,682 43,716
Lisa A. Payne............. 0 0 0 100,828 0 0
Richard B. McGlinn(2)..... 0 0 82,956 0 125,025 0
William S. Taubman........ 0 0 95,462 177,102 148,738 557,637
</TABLE>
- ---------------
(1) In accordance with the SEC's rules and based on the one-for-one exchange
ratio under the Company's Continuing Offer, the difference between fair
market value of Common Stock (and, therefore, Units of Partnership Interest)
and the exercise price.
(2) Mr. McGlinn retired from all positions with the Company and the Manager
effective January 2, 1998.
11
<PAGE> 15
LONG-TERM PERFORMANCE COMPENSATION PLAN
The Performance Plan was adopted by the Manager and approved by TRG's
Compensation Committee (the "Committee") in 1996. Under the Performance Plan,
each eligible participant is contingently granted Notional (i.e., "phantom")
Units of Partnership Interest in TRG (a "Notional Unit Award"). The following
March, the amount of the participant's Notional Unit Award is finally determined
by his performance rating under the SSTIP for the year in which the grant was
made. If the participant fails to achieve at least 100% of his SSTIP target, his
Notional Unit Award is canceled. If the participant achieves exactly 100% of his
SSTIP target, his Notional Unit Award will remain unchanged. If the participant
achieves a rating of 130% or more in respect of his SSTIP target, his Notional
Unit Award will be doubled, with proportionately smaller increases for ratings
of 101% - 129%. The Notional Unit Award, when finally established, will be
deemed to have been granted as of January 1 of the prior year.
Notional Units are credited with TRG partnership distribution equivalents
in the form of additional Notional Units as and when TRG pays distributions.
When a grant under the Performance Plan vests, the Committee has discretion to
award the participant additional Notional Units (up to a maximum of 40% of the
initial grant amount) if the Committee determines that performance (of the
participant, the Manager, or TRG) has been outstanding over the vesting period.
Upon vesting, the value of the award under the Performance Plan (including
distribution equivalents) will be paid to the participant in a lump sum, unless
the participant elects to defer payment as provided in the plan.
For each grant, a participant may make a one-time election to defer the
payout date (the "Settlement Date") that would otherwise occur on the vesting
date of such grant. The Settlement Date may be deferred for five years (unless
employment terminates earlier) or, under certain circumstances, until age 62 or
retirement. Any election by a participant to defer the Settlement Date for a
grant must be made at least one year prior to the date on which such grant
vests.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report has been provided by TRG's Compensation Committee.
TRG owns, as its primary assets, interests in 25 regional shopping centers
(the "Taubman Shopping Centers"), certain regional shopping center development
projects, and approximately 99% of the Manager, which provides substantially all
property management and leasing services for the Taubman Shopping Centers and
provides development, acquisition, corporate, and administrative services for
TRG and the Company.
The Company does not have any paid employees. The cash compensation of the
Named Officers is paid entirely by the Manager. TRG provides additional
long-term incentive compensation through the TRG 1992 Incentive Option Plan.
Accordingly, this report discusses the executive compensation policies of the
Manager, and the compensation tables provided in this Proxy Statement disclose
the compensation paid in accordance with those policies to the Company's Named
Officers.
TRG's Compensation Committee (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 met twice
during 1997.
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,
12
<PAGE> 16
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 independent compensation consultant
retained by the Compensation Committee has compared the Manager's compensation
practices with those of industry competitors and confirmed that the 1997
compensation of the Named Officers was consistent with the Manager's
compensation philosophy.
The Manager's compensation program for executive officers consists of the
following key elements: annual compensation in the form of base salary, bonus
compensation under the SSTIP, and long-term compensation under the Incentive
Option Plan and the Performance Plan. The compensation of the Named Officers is
determined based on their individual performance and the performance of the
Company, TRG, and the Manager.
The Committee determined, beginning in 1996, to replace Incentive Options
with awards of Notional Units under the Performance Plan as the primary source
of incentive compensation to the executive officers. Incentive Option grants
will continue to be made in special situations, such as upon hiring a new
executive officer.
Base Salaries. Base salaries for the Manager's executive officers are generally
targeted at a level above the average for executives of industry competitors.
The salaries of the Named Officers 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 senior management of industry
competitors.
TRG Incentive Option Plan. During 1997, the Compensation Committee made one
Incentive Option grant to Lisa A. Payne pursuant to her employment agreement
with the Manager. 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
Performance Plan.
Performance Plan. In 1997, the Compensation Committee made grants of Notional
Unit Awards under the Performance Plan to four of the five Named Officers,
including the CEO, as shown in the Summary Compensation Table.
Compensation of Chief Executive Officer. Robert S. Taubman's base salary for
1997 was at an annual rate of $750,000, which has not increased since prior to
the Company's initial public offering in 1992. Mr. Taubman's performance
evaluation is based 25% on the Compensation Committee's evaluation of his
individual performance and 75% on the Compensation Committee's evaluation of the
performance of the Company, TRG, and the Manager, which includes the
consideration of objective and subjective criteria. Based on that evaluation and
the report of the independent consultant, the Compensation Committee confirmed
that Mr. Taubman's base salary, his bonus under the SSTIP for 1997 in the amount
of $468,750, and his incentive compensation under the Performance Plan, as set
forth in the Summary Compensation Table, were consistent with the Manager's
compensation philosophy.
THE COMPENSATION COMMITTEE
S. Parker Gilbert, Chairman
Joseph F. Azrack
Jerome A. Chazen
W. Allen Reed
13
<PAGE> 17
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following line graph sets forth the cumulative total returns on a $100
investment in each of the Company's Common Stock, the S&P Composite -- 500 Stock
Index, and the NAREIT Equity Retail REIT Index for the period December 31, 1992
through December 31, 1997 (assuming, in all cases, the reinvestment of
dividends).
CUMULATIVE TOTAL RETURNS:
TAUBMAN CENTERS, INC., NAREIT EQUITY RETAIL REIT INDEX, AND S&P 500 INDEX
<TABLE>
<CAPTION>
NAREIT
MEASUREMENT PERIOD TAUBMAN EQUITY RETAIL S & P 500
(FISCAL YEAR COVERED) CENTERS, INC. REIT INDEX INDEX
<S> <C> <C> <C>
12/31/92 100.00 100.00 100.00
12/31/93 105.20 107.89 110.06
12/31/94 95.65 111.09 111.48
12/31/95 107.49 116.76 153.36
12/31/96 150.79 156.35 188.57
12/31/97 162.99 182.86 251.49
</TABLE>
Please note: The stock price performance shown on the graph above is not
necessarily indicative of future price performance.
CERTAIN EMPLOYMENT ARRANGEMENTS
TRG's Compensation Committee agreed in 1994 that if Mr. Larson's employment
with the Manager is terminated for any reason other than death or disability,
any unvested Incentive Options held by Mr. Larson 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. Mr. Larson has agreed that, in
the event of his termination of employment, (i) he will not exercise any of his
Incentive Options until such date as the Options otherwise would have become
exercisable 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 TRG's partnership agreement, 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
14
<PAGE> 18
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 Manager's SSTIP, with a target award of $250,000, a
maximum annual award of $375,000, and for 1997 a minimum award of $250,000. The
agreement also provides for a grant to Ms. Payne of 14,320 Notional Units of
Partnership Interest under the Manager's Performance Plan and Incentive Options
to purchase 100,828 Units of Partnership Interest under TRG's 1992 Incentive
Option Plan. Under the agreement, the Manager paid Ms. Payne $287,000 for
certain relocation expenses.
In 1997, the Manager and Mr. McGlinn entered into an agreement with respect
to his continued employment during 1997 and his retirement as of January 2,
1998. Under the agreement, Mr. McGlinn was assured a minimum bonus under the
SSTIP of $105,000 and an award under the Performance Plan of not less than
11,850 Notional Units (and distribution equivalents on such award credited from
January 1, 1997) with respect to 1997. On January 2, 1998, the Manager paid Mr.
McGlinn $165,351 with respect to his 1997 grant and $180,408 with respect to his
1996 grant under the Performance Plan.
ITEM 2 -- RATIFICATION OF SELECTION OF 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 1998. The Board of Directors
recommends that the shareholders vote FOR the appointment of Deloitte & Touche
LLP as the Company's independent auditors for 1998. 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 annual meeting.
The Company expects that representatives of Deloitte & Touche LLP will be
present at the annual 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 to respond to
appropriate questions addressed to the officer presiding at the meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters to be determined
by the shareholders at the annual meeting; however, if any other matter is
properly brought before the meeting, the proxies named in the enclosed Proxy
intend to vote in accordance with the Board's recommendation or, if there is no
recommendation, in their own discretion.
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.
15
<PAGE> 19
ADDITIONAL INFORMATION
PRESENTATION OF SHAREHOLDER PROPOSALS AT 1999 ANNUAL MEETING
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 1999 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 December 1, 1998.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1997,
including financial statements audited by Deloitte & Touche LLP, independent
accountants, and their reports dated February 18, 1998, 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, 1997, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WILL BE SENT TO ANY SHAREHOLDER, WITHOUT CHARGE, UPON
WRITTEN REQUEST SENT TO THE COMPANY'S EXECUTIVE OFFICES: TAUBMAN CENTERS
INVESTOR SERVICES, 200 EAST LONG LAKE ROAD, SUITE 300, P.O. BOX 200, BLOOMFIELD
HILLS, MICHIGAN 48303-0200.
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 31, 1998
16
<PAGE> 20
PROXY
TAUBMAN CENTERS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 14, 1998
The undersigned 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 Thursday, May 14,
1998, and at any adjournment, 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 that may properly come before the meeting and any
adjournment. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF
ITEMS (1) AND (2) IF NO INSTRUCTION IS PROVIDED.
If more than one of the above named individuals shall be present in person or
by substitution at such meeting or at any adjournment, the majority of said
individuals so present and voting, either in person or by substitution, shall
exercise all of the powers given. The undersigned revokes any proxy previously
given to vote at such meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE PAID ENVELOPE.
<TABLE>
<S><C>
- ---------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX
ON REVERSE SIDE
(Continued and to be SIGNED and dated on the reverse side.)
- ---------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
Please mark [X]
your vote as
indicated in
the is example
THE BOARD OF DIRECTORS RECOMMENDS FOR WITHHOLD
A VOTE FOR ITEMS 1 AND 2. AUTHORITY
to vote for
all Nominees
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS [ ] [ ] 2. RATIFICATION OF INDEPENDENT AUDITORS [ ] [ ] [ ]
(Nominees: Allan J. Bloostein, Ratification of the selection of
Jerome A. Chazen, Deloitte & Touche LLP as independent
and S. Parker Gilbert) auditors for 1998.
---------------------------
WITHHOLD AUTHORITY to vote for
Nominee(s) named to the right ---------------------------
Address Change [ ]
SIGNATURE DATED: , 1998
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Please sign exactly as name appears above. 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 authorized officer. If a partnership, please sign in partnership name by an authorized person.
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