<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 12, 1999
To the Shareholders of
Taubman Centers, Inc.
The Annual Meeting of Shareholders of TAUBMAN CENTERS, INC. (the "Company")
will be held on Wednesday, May 12, 1999, at the Community House, 380 South Bates
Street, Birmingham, Michigan, at 11:00 a.m., local time, for the following
purposes:
1. To elect one director to serve until the annual meeting of
shareholders in 2000 and three directors to serve until the annual meeting
of shareholders in 2002;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1999; 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 17, 1999,
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, 1999
EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD 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 counts as Voting Stock?.............................. 1
What is the Series B Stock?............................... 1
What constitutes a quorum?................................ 1
How do I vote?............................................ 2
Can I change my vote after I return my proxy card?........ 2
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... 6
ITEM 1 -- ELECTION OF DIRECTORS............................. 6
MANAGEMENT................................................ 6
Directors and Executive Officers....................... 6
The Board of Directors and Committees.................. 8
Compensation of Directors.............................. 9
Certain Transactions................................... 9
EXECUTIVE COMPENSATION.................................... 10
Summary Compensation Table............................. 10
Senior Short Term Incentive Plan....................... 11
Incentive Option Plan.................................. 11
Aggregated Option Exercises During 1998 and Year-end
Option Values......................................... 12
Long-Term Performance Compensation Plan................ 12
Compensation Committee Report on Executive
Compensation.......................................... 13
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 2000 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 Wednesday, May 12, 1999, 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, 1999.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the annual meeting, holders of the Company's Common Stock and Series B
Non-Participating Convertible Preferred Stock (the "Series B Stock" and,
together with the Common Stock, the "Voting Stock") will act upon the matters
outlined in the accompanying Notice of Meeting, including the election of one
director to serve a one-year term, 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 during 1998 and will respond to questions from shareholders.
Who is entitled to vote?
Only record holders of Voting Stock at the close of business on the record
date of March 17, 1999, are entitled to receive notice of the annual meeting and
to vote those shares of Voting Stock that they held on the record date. Each
outstanding share of Voting Stock is entitled to one vote on each matter to be
voted upon at the annual meeting.
What counts as Voting Stock?
The Company's Common Stock and Series B Stock constitute the Voting Stock
of the Company. The Common Stock and the Series B Stock vote together as a
single class. The Company's 8.30% Series A Cumulative Redeemable Preferred Stock
does not entitle its holders to vote.
What is the Series B Stock?
The Series B Stock was first issued in late 1998 and is currently held by
partners in The Taubman Realty Group Limited Partnership ("TRG") other than the
Company (TRG is the majority-owned subsidiary partnership through which the
Company conducts all of its operations). The Series B Stock entitles its holders
to one vote per share on all matters submitted to the Company's shareholders. In
addition, the holders of Series B Stock (as a separate class) are presently
entitled to nominate four individuals for election as directors of the Company.
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 Voting Stock outstanding on the record date will
constitute a quorum for purposes of electing directors and ratifying the Board's
selection of auditors. As of the record date, 84,427,420 shares of Voting Stock
were outstanding. Proxies received but marked as abstentions and "broker
non-votes" that may result from beneficial owners' failure to give specific
voting instructions to their brokers or other nominees holding in "street name"
will be counted as present to determine whether there is a quorum.
<PAGE> 5
How do I vote?
If you complete and properly sign the accompanying proxy card 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 card in person. If you own your
shares of Common Stock 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 card?
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 card. If you attend the
annual meeting, the individuals named as proxy holders in the enclosed proxy
card will nevertheless have authority to vote your shares in accordance with
your instructions on the proxy card 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 card, the proxy holders
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 6-7); and
for ratification of Deloitte & Touche LLP as the Company's independent
auditors for 1999 (see page 15).
With respect to any other matter that properly comes before the annual meeting,
the proxy holders named in the proxy card will vote as the Board recommends or,
if the Board gives no recommendation, in their own 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 slate of directors discussed in
this Proxy Statement consists of four individuals, one for each of the four
vacancies. The nominations have been approved by the holders of Series B Stock
and the Board of Directors. 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
1999.
OTHER MATTERS. If any other matter is properly submitted to the
shareholders at the annual meeting, its adoption will require the affirmative
vote of two-thirds of the shares of Voting Stock outstanding on the record date.
The Board of Directors does not propose to conduct any business at the annual
meeting other than the election of four directors and the ratification of
auditors.
EFFECT OF BROKER NON-VOTES AND ABSTENTIONS. The election of directors and
the ratification of the Board's appointment of auditors will be determined by
votes cast. Because "broker non-votes" and abstentions are included only in the
calculation of shares present and do not count as votes cast, they will not
affect the election of directors and the ratification of auditors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The Company owns a 62.8% managing partner's interest in TRG, through which
the Company conducts all of its operations. TRG is a partnership that owns,
develops, acquires, and operates regional shopping
2
<PAGE> 6
centers nationally. The following table sets forth certain information regarding
the beneficial ownership of the Company's Voting Stock and of partnership
interests in TRG ("Units of Partnership Interest" or "Units") as of March 17,
1999.
The shares information in the table (both numbers of shares and
percentages) reflects ownership of Common Stock and Series B Stock, which for
this purpose are treated as a single class of voting stock; however, the
footnotes to the table provide ownership information for the Common Stock and
Series B Stock on a separate basis, including (for any shareholder owning at
least one percent of the Common Stock or Series B Stock, as applicable) the
percentage of the outstanding shares of the separate class that the holder's
shares represent.
<TABLE>
<CAPTION>
PERCENTAGE
UNITS OF OWNERSHIP OF
PARTNERSHIP UNITS OF
DIRECTORS, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% SHAREHOLDERS SHARES(1) SHARES(1) TRG INTEREST IN TRG
----------------------------- ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
A. Alfred Taubman................. 24,681,966(2) 29.2% 24,495,029(3) 29.0%
Robert C. Larson.................. 2,235,769(4) 2.6% 2,228,385(5) 2.6%
Robert S. Taubman................. 3,845,670(6) 4.4% 3,845,670(7) 4.4%
William S. Taubman................ 225,819(8) * 225,819(9) *
Lisa A. Payne..................... 100,828(10) * 0 0
Douglas M. Lucey.................. 176,643(11) * 0 0
John L. Simon..................... 50,062(12) * 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
S. Parker Gilbert................. 130,000(13) * 0 0
GMPTS Limited Partnership(14)..... 8,376,807(15) 9.9%(15) 0 0
767 Fifth Avenue
New York, NY 10153
The Long-Term Investment Trust.... 5,270,868(16) 6.2%(16) 0 0
c/o AT&T Investment Management
Corporation
One Oak Way, Room 3ED143
Berkley Heights, NJ 07922
Morgan Stanley, Dean Witter, & Co.
Morgan Stanley Dean Witter
Asset Management Inc. .......... 4,295,300(17) 5.1% 0 0
1585 Broadway
New York, New York 10036
Stichtung Pensioenfonds ABP....... 2,923,300(18) 3.5% 0 0
Oude Lindestraat 70
P.O. Box 2889
6401 DJ Heerlen, The Netherlands
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
PERCENTAGE
UNITS OF OWNERSHIP OF
PARTNERSHIP UNITS OF
DIRECTORS, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% SHAREHOLDERS SHARES(1) SHARES(1) TRG INTEREST IN TRG
----------------------------- ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Alliance Capital Management
L.P. ........................... 3,059,900(19) 3.6% 0 0
c/o The Equitable Companies
Incorporated
1290 Avenue of the Americas
New York, New York 10104
Directors and Executive Officers
as a Group...................... 31,488,167(20) 35.2% 30,794,903(20) 34.6%
</TABLE>
- ---------------
* less than 1%
(1) The Company has relied upon information supplied by certain beneficial
owners and upon information contained in filings with the Securities and
Exchange Commission. Figures shown include shares of Common Stock and
Series B Stock, which vote together as a single class on all matters
generally submitted to shareholders. Each share of Common Stock and Series
B Stock is entitled to one vote. Under certain circumstances, the Series B
Stock is convertible into Common Stock at the ratio of 14,000 shares of
Series B Stock for each share of Common Stock (any resulting fractional
shares will be redeemed for cash). Share figures shown assume that
individuals who acquire Units of Partnership Interest upon the exercise of
options ("Incentive Options") granted under TRG's 1992 Incentive Option
Plan (the "Incentive Option Plan") exchange the newly issued Units for an
equal number of shares of Common Stock under the Company's exchange offer
(the "Continuing Offer") to certain partners in TRG and holders of
Incentive Options. Figures shown assume that outstanding Units are not
exchanged for Common Stock under the Continuing Offer and that outstanding
shares of Series B Stock are not converted into Common Stock. As of March
17, 1999, there were 84,427,420 outstanding shares of Voting Stock,
consisting of 53,027,507 shares of Common Stock and 31,399,913 shares of
Series B Stock.
(2) Includes 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 managing general partner of TRAP and
has the sole authority to vote and dispose of the Common Stock held by
TRAP. The remaining shares consist of 24,495,029 outstanding shares (or
78%) of Series B Stock that may be deemed to be owned by Mr. Taubman in the
same manner as the Units of Partnership Interest described in note 3 below.
Mr. Taubman disclaims any beneficial ownership of the Common Stock or
Series B Stock held by TRAP and the other entities identified in note 3
below beyond his pecuniary interest in the entities that own the
securities.
(3) 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 Partners") and 445,191 Units held by a
subsidiary of TG Partners (such subsidiary and TG Partners are collectively
referred to as "TG"). Because Mr. Taubman, through control of TRV's and TG
Partners' 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 TRG and TG beyond his pecuniary interest in those entities.
4
<PAGE> 8
(4) Consists of 7,384 shares of Common Stock and 1,161,841 shares (or 3.7%) of
Series B Stock that Mr. Larson owns and 1,066,544 shares (or 2.0%) of
Common Stock that Mr. Larson has the right to receive in exchange for Units
of Partnership Interest that are subject to vested Incentive Options.
(5) Consists of 1,161,841 Units of Partnership Interest that Mr. Larson owns
and 1,066,544 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
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.
(6) Consists of 5,925 shares of Series B Stock that Mr. Robert S. Taubman owns,
547,945 shares (or 1.7%) of Series B Stock held by R & W-TRG LLC ("R&W"), a
company that Mr. Taubman and his brother, William S. Taubman, own, and
3,291,800 shares (or 5.8%) of Common Stock that Mr. Taubman has the right
to receive in exchange for Units of Partnership Interest that are subject
to vested Incentive Options. Excludes all shares of Voting Stock held by
TRAP, TRV, Taub-Co, or TG because Mr. Taubman has no voting or dispositive
control over such entities' assets. Mr. Taubman disclaims any beneficial
interest in the Voting Stock held by or through entities beyond his
pecuniary interest in the entities that own the securities.
(7) Consists of 5,925 Units of Partnership Interest that Mr. Taubman owns,
547,945 Units of Partnership Interest held by R&W, and 3,291,800 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, TRV, Taub-Co, or TG. Mr. Taubman disclaims any
beneficial ownership in the Units held by R&W or the other entities beyond
his pecuniary interest in R&W and the other entities.
(8) Consists of 5,925 shares of Series B Stock that Mr. William S. Taubman owns
and 219,894 shares of Common Stock that Mr. Taubman has the right to
receive upon the exchange of Units of Partnership Interest that are subject
to vested Incentive Options. Excludes 547,945 shares of Series B Stock that
R&W holds and that are included in Robert S. Taubman's holdings described
above. Excludes all shares of Voting Stock held by TRAP, TRV, Taub-Co, or
TG because Mr. Taubman has no voting or dispositive control over such
entities' assets. Mr. Taubman disclaims any beneficial interest in the
Series B Stock held by R&W and in the Voting Stock held by TRAP, TRV,
Taub-Co, and TG beyond his pecuniary interest in the entities that own the
securities.
(9) Consists of 5,925 Units of Partnership Interest that Mr. Taubman owns and
219,894 Units of Partnership Interest subject to vested Incentive Options
held by Mr. Taubman. Excludes 547,945 Units that R&W holds and that are
included in Robert S. Taubman's holdings described above. Excludes all
Units of Partnership Interest owned by TRAP, TRV, Taub-Co, or TG. Mr.
Taubman disclaims any beneficial ownership in the Units held by R&W or the
other entities beyond his pecuniary interest in R&W and the other entities.
(10) Consists of 100,828 shares of Common Stock that Ms. Payne will have the
right to receive in exchange for Units of Partnership Interest that are
subject to unvested Incentive Options.
(11) Consists of 200 shares of Common Stock that Mr. Lucey owns and 176,443
shares of Common Stock that Mr. Lucey has the right to receive in exchange
for Units of Partnership Interest that are subject to vested Incentive
Options.
(12) Consists of 2,000 shares of Common Stock that Mr. Simon owns and 48,062
shares of Common Stock that Mr. Simon has the right to receive in exchange
for Units of Partnership Interest that are subject to vested Incentive
Options.
(13) Includes 80,000 shares of Common Stock 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.
(14) Wholly-owned by two employee pension funds of General Motors Corporation.
(15) Consists solely of shares of Common Stock (15.8%) acquired at the time of
the Company's initial public offering in 1992.
5
<PAGE> 9
(16) Consists solely of shares of Common Stock (9.9%) acquired at the time of
the Company's initial public offering in 1992.
(17) Consists solely of shares of Common Stock (8.1%) held on behalf of various
investment advisory clients, none of which holds more than 5% of the Common
Stock.
(18) Consists solely of shares of Common Stock (5.5%).
(19) Consists solely of shares of Common Stock (5.8%) held on behalf of
investment advisory clients of Alliance Capital Management, L.P., which
were reported in a group filing by its present holding company and control
group (The Equitable Companies and Mutuelles AXA of France, respectively).
(20) See Notes 2 through 13 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 insiders' forms furnished to the Company and representations made by the
Company's officers and directors, no insider failed to file on a timely basis a
Section 16(a) form with respect to any transaction in the Company's Common
Stock. Esther Blum was inadvertently delinquent in filing her initial statement
of ownership upon becoming an executive officer. A. Alfred Taubman, Robert
Larson, Robert Taubman, and William Taubman were inadvertently delinquent in
filing with respect to their acquisitions or deemed acquisitions (during the
fourth quarter of 1998) of the newly issued Series B Stock or rights to acquire
Series B Stock and (in Mr. Larson's case) an indirect acquisition of Units of
Partnership Interest, all of which involved shares directly issued by the
Company or transfers that received the prior approval of the Company.
ITEM 1 -- ELECTION OF DIRECTORS
The Board of Directors consists of nine members serving staggered terms.
Three directors are to be elected at the annual meeting to serve until the
annual meeting of shareholders in 2002. As the result of the September 1998
reduction in the size of the Board and to equalize the classes of directors, a
fourth director will be elected to a one-year term to serve until the annual
meeting in 2000. Commencing with the annual meeting in 2000, one class of three
directors will be elected at each annual meeting to serve for a three-year term.
Each of the nominees is presently a member of the Board of Directors.
Robert C. Larson has consented to serve a one-year term, and each of A.
Alfred Taubman, Robert S. Taubman, and Lisa A. Payne 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 proxy holders named as proxies
in the accompanying proxy card will vote for the Board's substitute nominee.
Additional information regarding the nominees, the directors whose terms are not
expiring, and management of the Company is contained under the caption
"Management" below.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors consists of nine members divided into three classes
serving staggered terms. Under the Company's Articles of Incorporation, a
majority of the Company's directors must be "outside" directors who are neither
officers nor employees of the Company or its subsidiaries. Officers of the
Company serve at the pleasure of the Board.
6
<PAGE> 10
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLE TERM
---- --- ----- ----
<S> <C> <C> <C>
A. Alfred Taubman*................... 74 Chairman of the Board............................ 1999
Robert C. Larson**................... 64 Vice Chairman of the Board....................... 1999
Robert S. Taubman*................... 45 President, Chief Executive Officer, and
Director......................................... 1999
Lisa A. Payne*....................... 40 Executive Vice President, Chief Financial
Officer, and Director............................ 1999
Graham T. Allison.................... 58 Director......................................... 2000
Claude M. Ballard.................... 69 Director......................................... 2000
Allan J. Bloostein................... 69 Director......................................... 2001
Jerome A. Chazen..................... 72 Director......................................... 2001
S. Parker Gilbert.................... 65 Director......................................... 2001
William S. Taubman................... 40 Executive Vice President
Esther R. Blum....................... 44 Senior Vice President, Controller, and Chief
Accounting Officer
Douglas M. Lucey..................... 51 Senior Vice President, Leasing
John L. Simon........................ 52 Senior Vice President and Managing Director,
Development
</TABLE>
- ---------------
* Standing for election to a three-year term.
** Standing for election to a one-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 is the indirect subsidiary of TRG (the Company's operating
partnership) that manages the Company's regional shopping center interests. Mr.
Taubman has been a director of the Company since its incorporation in 1973. He
is the controlling 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 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 and Chief Executive Officer of the
Company and 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 is an Executive Vice President and the Chief Financial
Officer of the Company and the Manager. Ms. Payne has been a director of the
Company since 1997. Prior to joining the Company in 1997, Ms. Payne was a vice
president in the real estate department of Goldman, Sachs & Co., where she held
various positions between 1986 and 1996.
William S. Taubman is an Executive Vice President of the Company and the
Manager. His responsibilities include the overall management of the development,
leasing, and center operations functions. He has held various executive
positions with the Manager since prior to 1994. 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.
7
<PAGE> 11
Esther R. Blum is a Senior Vice President, the Controller, and Chief
Accounting Officer of the Company. Ms. Blum became a Vice President of the
Company in January 1998, when she assumed her current principal functions, and a
Senior Vice President in March 1999. Between 1992 and 1997, Ms. Blum served as
the Manager's Vice President of Financial Reporting and served the Manager in
various other capacities between 1986 and 1992.
Douglas M. Lucey is the Manager's Senior Vice President, Leasing. Mr. Lucey
became a Senior Vice President of the Manager in 1988 and a Vice President and
the Manager's senior leasing officer in 1981. Between 1971 and 1981, Mr. Lucey
served the Manager in various other capacities.
John L. Simon is the Manager's Senior Vice President and Managing Director,
Development. Between 1988 and 1997, Mr. Simon served as the Manager's Senior
Vice President, Development.
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 Director of The MONY
Group, Inc. which is a life insurance holding company. Mr. Ballard has been a
director of the Company since 1993.
Allan J. Bloostein is a former Vice Chairman of The May Department Stores
Company, the 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, which operates the CVS Pharmacy and Revco drug store chains,
and a director or trustee of 31 mutual fund companies that Salomon Smith Barney
sponsors. Mr. Bloostein has been a director of the Company since 1992.
Jerome A. Chazen is Chairman Emeritus of Liz Claiborne, Inc. He is a
director of The Gymboree Corporation, which is a manufacturer and retailer of
children's apparel, and Chairman of Chazen Capital Partners, a private
investment company. Mr. Chazen has been a director of the Company since 1992.
S. Parker Gilbert is a retired Chairman of Morgan Stanley Group Inc. and a
director of Burlington Resources Inc., which operates in the oil and gas
industry. Mr. Gilbert has been a director of the Company since 1992.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held six meetings during 1998. The
Board of Directors has three standing committees: a five-member Audit Committee;
a three-member Compensation Committee; a three-member Executive Committee, and a
three-member Nominating Committee. During 1998, 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 the outside directors (Jerome A. Chazen,
Chairman, Graham Allison, 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 1998.
The Compensation Committee of the Board of Directors is composed of S.
Parker Gilbert, Chairman, Claude M. Ballard, and Jerome A. Chazen. Prior to TRG
becoming a majority-owned subsidiary in late 1998, the Compensation Committee of
the Board's primary responsibility was establishing compensation and benefit
policies with respect to the members of the Board of Directors. The Compensation
Committee now has the more traditional role of reviewing the compensation and
employee benefit policies applicable to employees of the operating company and,
in particular, senior management. The Compensation Committee, in its current
8
<PAGE> 12
form, met one time during 1998, and the corresponding TRG committee that
performed many of the Compensation Committee's current functions prior to
October 1998 also met during 1998.
The Board's Executive Committee consists of Robert S. Taubman, Allan J.
Bloostein, and Graham Allison. The Executive Committee has the authority to
exercise many of the functions of the full Board of Directors between meetings
of the Board and did not meet during 1998.
The Board's Nominating Committee consists of Robert S. Taubman, S. Parker
Gilbert, and Claude M. Ballard. 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 1998.
COMPENSATION OF DIRECTORS
The Company pays outside directors an annual fee of $35,000, a meeting fee
of $1,000 for each Board or committee meeting attended, and reimbursement for
expenses incurred in attending meetings and as a result of other work performed
for the Company. For 1998, the Company incurred costs of $247,000 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 Company's outside directors. Under this
charitable gift program, TRG matches an outside 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
1998, TRG made three matching contributions in the total amount of $13,000.
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 $3.2 million in 1998.
During 1998, the Manager paid approximately $2.8 million in rent and
operating expenses for office space in two buildings in which A. Alfred Taubman,
Robert C. Larson, Robert S. Taubman, and William S. Taubman had financial
interests. Those individuals continue to have financial interests in the
building in which the Manager maintains its principal offices.
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 minority 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 any future sales of parcels adjacent to the
shopping center.
Committees of outside directors review business transactions between the
Company and its subsidiaries and related parties to ensure that the Company's
involvement in such transactions, including those described above, is on arm's
length terms.
In August 1998, Lisa A. Payne, the Company's Executive Vice President and
Chief Financial Officer, repaid in full a bank loan that TRG had guaranteed in
mid-1997 in connection with Ms. Payne's relocation to Michigan. The interest
rate on the loan was the bank's prime rate, and the highest balance during 1998
was $200,000.
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation of those persons who during 1998 were (i) the chief
executive officer and (ii) the other executive officers of the Company whose
compensation is required to be disclosed pursuant to the rules of the Securities
and Exchange Commission (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
-----------------------------
NUMBER OF
ANNUAL COMPENSATION SHARES
---------------------- RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS(1) STOCK AWARDS(2) OPTIONS(3) COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
------------------ ---- -------- -------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman................ 1998 $750,000 $517,969 $1,131,000 0 $ 22,459(4)
President and Chief 1997 778,842(5) 468,750 979,028 0 21,029
Executive Officer 1996 750,000 487,500 829,534 0 20,026
Robert C. Larson................. 1998 $500,000 -- -- 0 $2,022,459(6)
Vice Chairman 1997 519,237(5) -- -- 0 20,925
1996 500,000 -- -- 0 19,935
Lisa A. Payne.................... 1998 $500,000 $345,313 $ 429,000 0 $ 243,533(7)
Executive Vice President 1997 455,765(8) 321,875 361,054 100,828 287,000
And Chief Financial Officer
William S. Taubman............... 1998 $395,000 $276,250 $ 429,000 0 $ 21,976(9)
Executive Vice President 1997 385,958(5) 244,625 361,054 0 20,578
1996 350,000 236,250 286,387 0 19,597
Douglas M. Lucey(10)............. 1998 $247,692 $240,422 $ 260,000 0 $ 20,701(11)
Senior Vice President
John L. Simon(12)................ 1998 $261,532 $226,256 $ 260,000 0 $ 21,231(13)
Senior Vice President
</TABLE>
- ---------------
(1) Bonus amount awarded under the Senior Short Term Incentive Plan.
(2) Awards were 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 Named Officer's annual award reflected in the table was
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 1996, the Named Officers received the following awards, which
vested on January 1, 1999: Robert S. Taubman -- 82,953 Notional Units; and
William S. Taubman 28,639 Notional Units. With respect to 1997, the Named
Officers received the following awards, which vest on January 1, 2000:
Robert S. Taubman -- 76,041 Notional Units; Lisa A. Payne -- 28,043
Notional Units; and William S. Taubman -- 28,043 Notional Units. With
respect to 1998, the Named Officers received the following awards, which
vest on January 1, 2001: Robert S. Taubman -- 87,000 Notional Units; Lisa
A. Payne -- 33,000 Notional Units; William S. Taubman -- 33,000 Notional
Units; Douglas M. Lucey -- 20,000 Notional Units; and John L.
Simon -- 20,000 Notional Units. At December 31, 1998, 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 -- 285,569 Notional Units ($3,926,580); Lisa A.
Payne -- 67,803 Notional Units ($932,287); William S. Taubman -- 103,840
Units ($1,427,800); Douglas M. Lucey -- 65,397 Units ($899,205); and John
L. Simon -- 61,669 Notional Units ($847,945). See "Long-Term Performance
Compensation Plan" below for more information about the Performance Plan.
The Performance Plan has been amended effective January 1, 1999, but the
amendments do not affect the awards shown above.
10
<PAGE> 14
(3) 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.
(4) Includes $13,032 contributed to the defined contribution plan (the
"Retirement Savings Plan") on behalf of Mr. Robert S. Taubman and $9,427
accrued under the supplemental retirement savings plan (the "Supplemental
Retirement Savings Plan").
(5) 1997 salaries include one additional pay period.
(6) Includes $13,032 contributed to the Retirement Savings Plan on behalf of
Mr. Larson and $9,304 accrued under the Supplemental Retirement Savings
Plan. Includes the $2,000,000 difference between (A) the initial value of
certain mutual fund shares that Mr. Larson has the right to acquire under a
ten-year option that the Manager granted to Mr. Larson in connection with
his retirement at the end of 1998 and (B) the exercise price of the option.
The amount that Mr. Larson realizes upon such exercise may be more or less
than $2,000,000. Excludes the cost to the Company of providing certain
office facilities, secretarial assistance, and the continuation of medical
insurance benefits. Mr. Larson has entered into a noncompetition agreement
with the Company expiring at the end of 2004. See "Certain Employment
Arrangements."
(7) Includes $13,032 contributed to the Retirement Savings Plan on behalf of
Ms. Payne and $6,542 accrued under the Supplemental Retirement Savings
Plan. Includes $223,959 of relocation expenses paid to Ms. Payne pursuant
to the terms of her employment agreement.
(8) Ms. Payne joined the Company in January 1997.
(9) Includes $13,032 contributed to the Retirement Savings Plan on behalf of
Mr. William S. Taubman and $8,944 accrued under the Supplemental Retirement
Savings Plan.
(10) Although Mr. Lucey has served the Manager in various capacities since 1971,
he first became an executive officer of the Company in 1998.
(11) Includes $13,032 contributed to the Retirement Savings Plan on behalf of
Mr. Lucey and $7,669 accrued under the Supplemental Retirement Savings
Plan.
(12) Although Mr. Simon has served the Manager in various capacities since 1977,
he first became an executive officer of the Company in 1998.
(13) Includes $13,032 contributed to the Retirement Savings Plan on behalf of
Mr. Simon and $8,199 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 and the Company'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 its employees with respect
to Units of Partnership Interest in TRG. Upon exercise, 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 Company's chief executive officer makes periodic recommendations
regarding grants to the Compensation Committee of the Board, 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.
Generally, an Incentive Option vests in one-third increments on each of the
third, fourth, and fifth anniversaries of the date of grant, although the
Compensation Committee may allow an exercise at any time
11
<PAGE> 15
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.
AGGREGATED OPTION EXERCISES DURING 1998 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 12/31/98(1)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman....... 0 0 3,160,128 197,508 $8,210,737 $638,609
Robert C. Larson........ 0 0 1,066,544 0 2,703,294 0
Lisa A. Payne........... 0 0 0 100,828 0 61,203
William S. Taubman...... 0 0 160,640 111,924 443,686 453,938
Douglas M. Lucey........ 0 0 158,667 26,994 331,780 88,369
John L. Simon........... 93,487 $185,140 34,894 19,752 22,957 63,865
</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.
LONG-TERM PERFORMANCE COMPENSATION PLAN
The Performance Plan was adopted by the Manager and approved by TRG's
compensation committee in 1996 (the Compensation Committee of the Board now
performs such functions). The Company has amended the Performance Plan effective
January 1, 1999. The following discussion relates to the grants under the
Performance Plan that are reflected in the Summary Compensation Table, which
were not affected by the amendment.
Under the Performance Plan, each eligible participant was 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 was finally determined by his performance rating under the
SSTIP for the year in which the grant was made. If the participant failed to
achieve at least 100% of his SSTIP target, his Notional Unit Award was canceled.
If the participant achieved exactly 100% of his SSTIP target, his Notional Unit
Award remained unchanged. If the participant achieved a rating of 130% or more
in respect of his SSTIP target, his Notional Unit Award was doubled, with
proportionately smaller increases for ratings of 101% -- 129%. The Notional Unit
Award, when finally established, was 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.
12
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Revenue Reconciliation Act of 1993. The Omnibus Reconciliation Act of 1993
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." Although TRG and the Manager are now part of
the Company's consolidated group for financial reporting purposes, this
deduction limit does not affect the Company and does not apply to TRG or the
Manager because TRG and the Manager are partnerships, and the Company itself has
no employees (other than through TRG and the Manager).
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 independent compensation consultant
retained by the Compensation Committee has compared the Manager's compensation
practices with those of industry competitors and confirmed that the 1998
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.
Since 1996, awards of Notional Units under the Performance Plan have been
selected over Incentive Options as the primary source of incentive compensation
to the executive officers. Incentive Option grants will continue to be made in
special situations.
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.
Performance Plan. In 1998, the Compensation Committee made grants of Notional
Unit Awards under the Performance Plan to the Named Officers, as shown in the
Summary Compensation Table.
Compensation of Chief Executive Officer. Robert S. Taubman's base salary for
1998 was at an annual rate of $750,000. 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, 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 1998 in the amount of $517,969 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
Claude M. Ballard
Jerome A. Chazen
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, 1993
through December 31, 1998 (assuming, in all cases, the reinvestment of
dividends).
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG TAUBMAN CENTERS, INC.,
THE NAREIT EQUITY RETAIL REIT INDEX, AND THE S&P 500 INDEX
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Taubman Centers, Inc. $100.00 $ 90.92 $102.17 $143.34 $154.93 $175.70
NAREIT Equity Retail REIT
Index $100.00 $102.97 $108.22 $144.92 $169.48 $165.08
S&P 500 Index $100.00 $101.29 $139.34 $171.34 $228.50 $293.81
----------------------------------------------------------------------------------------------------
</TABLE>
Please note: The stock price performance shown on the graph above is not
necessarily indicative of future price performance.
CERTAIN EMPLOYMENT ARRANGEMENTS
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. In January 1999, the agreement was extended for an additional year
and will continue to have automatic, one-year extensions unless either party
gives notice to the contrary. 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 and a maximum annual award of $375,000.
14
<PAGE> 18
In connection with Robert C. Larson's retirement at the end of 1998, the
Manager entered into an agreement with Mr. Larson. The agreement grants Mr.
Larson a ten-year option to purchase a fixed number of shares in a specified
mutual fund. Although Mr. Larson has not exercised the option, the difference
between the market value of the mutual fund shares on the option's grant date
and the option exercise price is included in Mr. Larson's 1998 compensation in
the Summary Compensation Table on page 10. Under the agreement, the Company has
agreed to provide Mr. Larson with an office and secretarial assistance for one
year at the Company's expense and will reimburse Mr. Larson for the expenses he
incurs in connection with certain business activities in which he participates
at the Company's request. The Company will also provide Mr. Larson with medical
insurance benefits through 2004. Mr. Larson has agreed not to compete with the
Company through 2004.
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 1999. The Board of Directors
recommends that the shareholders vote FOR the appointment of Deloitte & Touche
LLP as the Company's independent auditors for 1999. 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 proxy holders named in the enclosed
proxy card 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 nominees and others holding
shares for the benefit of others to send the proxy material to, and to obtain
proxies from, the beneficial owners and will reimburse such holders for their
reasonable expenses in doing so.
15
<PAGE> 19
ADDITIONAL INFORMATION
PRESENTATION OF SHAREHOLDER PROPOSALS AT 2000 ANNUAL MEETING
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 2000 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 2, 1999.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1998,
including financial statements audited by Deloitte & Touche LLP, independent
accountants, and their reports dated February 16, 1999, 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, 1998, 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, 1999
16
<PAGE> 20
TAUBMAN CENTERS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 12, 1999
The undersigned appoints each of Robert S. Taubman 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 12, 1999, 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 undersigned
revokes any proxy previously given to vote at such meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF ITEMS (1) AND (2)
IF NO INSTRUCTION IS PROVIDED.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PAID ENVELOPE.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
<PAGE> 21
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<S><C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. Please mark [X]
your votes as
indicated in
this example
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS 2. RATIFICATION OF INDEPENDENT AUDITORS [ ] [ ] [ ]
(Nominees: Robert C. Larson (for a one-year term); Ratification of the selection of
and A. Alfred Taubman, Robert S. Taubman, and Lisa A. Payne Deloitte & Touche LLP as independent
(each for a three-year term) auditors for 1999.
FOR WITHHOLD WITHHOLD AUTHORITY
AUTHORITY to vote for Nominee(s)
to vote for all Nominees named below
[ ] [ ] [ ]
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____ 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, partnership, or other business
entity, please sign in the name of the entity by
an authorized person.
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Signature
Dated: ,1999
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/ \ FOLD AND DETACH HERE / \
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