<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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[TAUBMAN LOGO]
TAUBMAN CENTERS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
To the Shareholders of
Taubman Centers, Inc.
The Annual Meeting of Shareholders of TAUBMAN CENTERS, INC. (the "Company")
will be held on Tuesday, May 16, 2000, 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 directors to serve until the annual meeting of
shareholders in 2003;
2. To approve the adoption of an amendment to the Company's Restated
Articles of Incorporation to increase the number of authorized shares of
Preferred Stock from 50,000,000 shares to 250,000,000 shares;
3. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2000; and
4. 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, 2000 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, 2000
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 Preferred Stock?..................... 1
What constitutes a quorum?................................ 2
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................................................ 3
Section 16(a) Beneficial Ownership Reporting Compliance... 7
ITEM 1 -- ELECTION OF DIRECTORS............................. 7
MANAGEMENT................................................ 7
Directors, Nominees and Executive Officers............. 7
The Board of Directors and Committees.................. 10
Compensation of Directors.............................. 10
Certain Transactions................................... 10
EXECUTIVE COMPENSATION.................................... 11
Summary Compensation Table............................. 11
Senior Short Term Incentive Plan....................... 12
Incentive Option Plan.................................. 13
Aggregated Option Exercises During 1999 and Year-End
Option Values......................................... 14
Long-Term Performance Compensation Plan................ 14
Compensation Committee Report on Executive
Compensation.......................................... 14
Shareholder Return Performance Graph................... 16
Certain Employment Arrangements........................ 16
ITEM 2 -- APPROVAL OF INCREASE IN AUTHORIZED SHARES OF
PREFERRED STOCK........................................... 17
ITEM 3 -- RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS.................................................. 19
OTHER MATTERS............................................... 19
COSTS OF PROXY SOLICITATION................................. 20
ADDITIONAL INFORMATION...................................... 20
Presentation of Shareholder Proposals at 2001 Annual
Meeting................................................ 20
Annual Report............................................. 20
</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 Tuesday, May 16, 2000, at the Community House, 380 South Bates
Street, 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, 2000.
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 Preferred Stock"
and, together with the Common Stock, the "Voting Stock") will act upon the
matters outlined in the accompanying Notice of Meeting, including the adoption
of an amendment to the Company's Restated Articles of Incorporation to increase
the number of authorized shares of Preferred Stock, 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 1999 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, 2000, 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 Preferred Stock constitute the
Voting Stock of the Company. The Common Stock and the Series B Preferred Stock
vote together as a single class. The Company's 8.30% Series A Cumulative
Redeemable Preferred Stock (the "Series A Preferred Stock") does not entitle its
holders to vote. Although the Company has authorized the issuance of shares of
additional series of Preferred Stock pursuant to the exercise of conversion
rights granted to certain holders of preferred equity in The Taubman Realty
Group Limited Partnership ("TRG"), the Company's majority-owned subsidiary
partnership through which the Company conducts all of its operations, at this
time no other shares of capital stock other than the Voting Stock and Series A
Preferred Stock are outstanding.
What is the Series B Preferred Stock?
The Series B Preferred Stock was first issued in late 1998 and is currently
held by partners in TRG other than the Company. The Series B Preferred 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 Preferred Stock (as
a separate class) are entitled to nominate up to four individuals for election
as directors. The number of individuals the holders of the Series B Preferred
Stock may nominate in any given year is reduced by the number of directors
nominated by such holders in prior years whose terms are not expiring. The
holders of Series B Preferred Stock are presently entitled to nominate one
individual for election as a director of the Company.
<PAGE> 5
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, adopting the proposed
amendment to the Company's Restated Articles of Incorporation and ratifying the
Board's selection of auditors. As of the record date, 84,998,209 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.
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 7 - 17);
for the amendment to the Company's Restated Articles of Incorporation
to increase the number of authorized shares of Preferred Stock (see pages
17 - 19); and
for ratification of Deloitte & Touche LLP as the Company's independent
auditors for 2000 (see page 19).
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 three individuals, one for each of the three
vacancies. Pursuant to their right to nominate one individual for election as a
director, the holders of Series B Preferred Stock have nominated William S.
Taubman. 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.
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION. The affirmative vote of
two-thirds of the shares of Voting Stock outstanding on the record date is
required to adopt the proposed amendment to the Company's Restated Articles of
Incorporation. Any shares not voted, whether by abstentions or broker non-votes
will have the same effect as votes against the proposed amendment.
2
<PAGE> 6
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
2000.
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 three directors, adoption of the proposed
amendment to the Company's Restated Articles of Incorporation described above
and the ratification of auditors.
EFFECT OF BROKER NON-VOTES AND ABSTENTIONS. The adoption of the proposed
amendment to the Company's Restated Articles of Incorporation requires the
affirmative vote of two-thirds of the shares of Voting Stock outstanding on the
record date. Any shares not voted, whether by abstentions or "broker non-votes"
will have the same effect as votes against the proposed amendment. 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 63% 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 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, 2000.
The shares information in the table (both numbers of shares and
percentages) reflects ownership of Common Stock and Series B Preferred 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 Preferred Stock on a separate basis, including (for any shareholder
owning at least one percent of the Common Stock or Series B Preferred 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, DIRECTOR NOMINEES, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% OF SHAREHOLDERS SHARES(1) SHARES(1) TRG INTEREST IN TRG
- ------------------------------------------------ ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
A. Alfred Taubman........................ 25,030,084(2) 29.5% 24,843,147(3) 29.2%
Robert C. Larson......................... 2,235,769(4) 2.6% 2,228,385(5) 2.6%
Robert S. Taubman........................ 3,911,506(6) 4.4% 3,911,506(7) 4.4%
William S. Taubman....................... 528,489(8) * 528,489(9) *
Lisa A. Payne............................ 291,109(10) * 0 0
Courtney Lord............................ 89,065(11) * 87,035(12) *
Douglas M. Lucey......................... 185,861(13) * 0 0
John L. Simon............................ 59,837(14) * 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(15) * 0 0
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
PERCENTAGE
UNITS OF OWNERSHIP OF
PARTNERSHIP UNITS OF
DIRECTORS, DIRECTOR NOMINEES, EXECUTIVE OFFICERS NO. OF PERCENT OF INTEREST IN PARTNERSHIP
AND 5% OF SHAREHOLDERS SHARES(1) SHARES(1) TRG INTEREST IN TRG
- ------------------------------------------------ ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Peter Karmanos, Jr....................... 0 0 0 0
GMPTS Limited Partnership(16)............ 7,471,007(17) 8.8%(17) 0 0
767 Fifth Avenue
New York, NY 10153
The Long-Term Investment Trust........... 5,270,868(18) 6.2%(18) 0 0
c/o AT&T Investment Management Corporation
One Oak Way, Room 3ED143
Berkley Heights, NJ 07922
Morgan Stanley, Dean Witter, & Co. ...... 6,235,187(19) 7.3%(19) 0 0
Morgan Stanley Dean Witter
Asset Management, Inc.
1585 Broadway
New York, New York 10036
Alliance Capital Management, L.P. ....... 3,304,200(20) 3.9% 0 0
c/o The Equitable Companies
Incorporated
1290 Avenue of the Americas
New York, New York 10104
European Investors, Inc. ................ 3,467,178(21) 4.1% 0 0
EII Realty Securities, Inc.
667 Madison Avenue
New York, New York 10021
Directors and Executive Officers as a Group... 32,505,106(22) 35.9% 31,598,562(22) 35.1%
</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 Preferred Stock, which vote together as a single class on all
matters generally submitted to shareholders. Each share of Common Stock and
Series B Preferred Stock is entitled to one vote. Under certain
circumstances, the Series B Preferred Stock is convertible into Common
Stock at the ratio of 14,000 shares of Series B Preferred 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. Share figures and
Unit figures shown assume that outstanding Units are not exchanged for
Common Stock under the Continuing Offer and that outstanding shares of
Series B Preferred Stock are not converted into Common Stock. As of March
17, 2000, there were 84,998,209 outstanding shares of Voting Stock,
consisting of 53,163,143 shares of Common Stock and 31,835,066 shares of
Series B Preferred 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 24,843,147 outstanding shares (or
78.0%) of Series B Preferred Stock that may be deemed to be owned by Mr.
Taubman in the same manner as the Units of
4
<PAGE> 8
Partnership Interest described in note 3 below. Mr. Taubman disclaims any
beneficial ownership of the Common Stock or Series B Preferred 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. A. Alfred
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"), 445,191 Units
held by a subsidiary of TG Partners (such subsidiary and TG Partners are
collectively referred to as "TG") and 348,118 Units of Partnership Interest
which are held by Mr. Lord but for which Mr. Lord has granted an
irrevocable proxy to TG Partners. The 348,118 Units held by Mr. Lord are
not presently entitled to any partnership distributions except in the event
of a liquidation. Such Units will be released from the irrevocable proxy
and become entitled to receive distributions over a five year period.
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) Consists of 7,384 shares of Common Stock and 1,161,841 shares (or 3.7%) of
Series B Preferred 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 Preferred Stock that Mr. Robert S.
Taubman owns, 547,945 shares (or 1.7%) of Series B Preferred Stock held by
R & W-TRG LLC ("R&W"), a company that Mr. Taubman and his brother, William
S. Taubman, own, and 3,357,636 shares (or 5.9%) 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. Robert S. Taubman
owns, 547,945 Units of Partnership Interest held by R&W, and 3,357,636
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 Preferred Stock that Mr. William S.
Taubman owns and 522,564 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 Preferred 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
5
<PAGE> 9
beneficial interest in the Series B Preferred 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. William S. Taubman
owns and 522,564 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 7,500 shares of Common Stock that Ms. Payne owns and 283,609
shares of Common Stock that Ms. Payne will have the right to receive in
exchange for Units of Partnership Interest that are subject to vested
Incentive Options held by Ms. Payne.
(11) Consists of 1,500 shares of Common Stock owned by Mr. Lord, 530 shares of
Common Stock owned by Mr. Lord's wife for which he disclaims any beneficial
ownership; and 87,035 shares of Series B Preferred Stock acquired by Mr.
Lord in exchange for all of Mr. Lord's equity interest in Lord Associates,
Inc. in November 1999. Does not include 348,118 shares of Series B
Preferred Stock acquired by Mr. Lord in connection with the Lord Associates
transaction for which Mr. Lord has granted to TG Partners an irrevocable
proxy and over which Mr. Lord has no voting or dispositive power, see notes
2 and 3 above.
(12) Consists of 87,035 Units of Partnership Interest acquired by Mr. Lord in
exchange for all of Mr. Lord's equity interest in Lord Associates, Inc. in
November 1999. Does not include 348,118 Units of Partnership Interest
acquired by Mr. Lord in connection with the Lord Associates transaction for
which Mr. Lord has granted to TG Partners an irrevocable proxy, which are
not presently entitled to receive any partnership distributions, except
upon liquidation and over which Mr. Lord has no voting or dispositive
power. Such units are released from the irrevocable proxy and become
entitled to receive partnership distributions over a period of five years.
See notes 2 and 3 above. See also "Certain Employment Arrangements."
(13) Consists of 200 shares of Common Stock that Mr. Lucey owns and 185,661
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.
(14) Consists of 2,000 shares of Common Stock that Mr. Simon owns, 3,191 shares
of Common Stock which Mr. Simon may be deemed to own through his investment
in the Taubman Centers Stock Fund, one of the investment options under the
Company's 401(k) Plan, and 54,646 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.
(15) 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.
(16) Wholly-owned by two employee pension funds of General Motors Corporation.
(17) Consists solely of shares of Common Stock (14.1%) acquired at the time of
the Company's initial public offering in 1992.
(18) Consists solely of shares of Common Stock (9.9%) acquired at the time of
the Company's initial public offering in 1992.
(19) Consists solely of shares of Common Stock (11.7%) held on behalf of various
investment advisory clients, none of which holds more than 5% of the Common
Stock.
(20) Consists solely of shares of Common Stock (6.2%) 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).
(21) Consists solely of shares of Common Stock (6.5%).
(22) See Notes 2 through 15 above.
6
<PAGE> 10
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 equity
securities.
ITEM 1 -- ELECTION OF DIRECTORS
The Board of Directors consists of nine members serving three-year
staggered terms. Three directors are to be elected at the annual meeting to
serve until the annual meeting of shareholders in 2003. The three nominees are
Graham T. Allison who is presently a member of the Board of Directors, William
S. Taubman who is presently an executive officer of the Company, and Peter
Karmanos, Jr.
Each of Graham T. Allison, William S. Taubman and Peter Karmanos, Jr. 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, NOMINEES 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.
7
<PAGE> 11
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
TERM
NAME AGE TITLE ENDING
---- --- ----- ------
<S> <C> <C> <C>
A. Alfred Taubman.................... 75 Chairman of the Board 2002
Robert S. Taubman.................... 46 President, Chief Executive Officer, and Director 2002
Lisa A. Payne........................ 41 Executive Vice President, Chief Financial
Officer, and Director 2002
Graham T. Allison*................... 59 Director 2000
Claude M. Ballard**.................. 70 Director 2000
Robert C. Larson**................... 65 Vice Chairman of the Board 2000
Allan J. Bloostein................... 70 Director 2001
Jerome A. Chazen..................... 73 Director 2001
S. Parker Gilbert.................... 66 Director 2001
Peter Karmanos, Jr.***............... 57 Nominee for Director
William S. Taubman***................ 41 Executive Vice President, Nominee for Director
Esther R. Blum....................... 45 Senior Vice President, Controller, and Chief
Accounting Officer
Courtney Lord........................ 49 Senior Vice President and Managing Director,
Leasing
John L. Simon........................ 53 Senior Vice President and Managing Director,
Development
</TABLE>
- ---------------
* Standing for re-election to a three-year term.
** Retiring upon election of successor.
*** 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 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 a director of Sotheby's Holdings, Inc., the
international art auction house. Mr. Taubman also serves as a director of
Hollinger International, Inc., a publisher of English language newspapers. He is
the father of both Robert S. Taubman and William S. Taubman.
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, a director of the
Real Estate Roundtable and a Trustee of the International Council of Shopping
Centers and of the Urban Land Institute. In addition, Mr. Taubman represents the
Company as a director of Fashionmall.com, Inc., a company which markets and
sells fashion apparel and related accessories and products over the internet,
and of Swerdlow Real Estate Group, Inc., a private real-estate investment trust.
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.
8
<PAGE> 12
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.
Courtney Lord is the Manager's Senior Vice President and Managing Director,
Leasing. Mr. Lord became the Senior Vice President and Managing Director of
Leasing of the Manager on January 1, 2000. Prior to January 1, 2000 and in
connection with TRG's acquisition of all of the outstanding stock of Lord
Associates, Inc. in November of 1999, he was employed as a Senior Vice President
of the Manager. Between 1989 and 1999, Mr. Lord served as president of Lord
Associates, Inc. a retail leasing firm based in Alexandria, Virginia.
John L. Simon is the Manager's Senior Vice President and Managing Director,
Development. Mr. Simon became a Senior Vice President and Managing Director,
Development of the Manager in 1998. 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, when he became the United States Assistant Secretary of
Defense.
Claude M. Ballard is a limited partner and consultant of The Goldman Sachs
Group, L.P. He is a director of CBL & Associates, a real estate investment
trust. Mr. Ballard was also a Director of The MONY Group, Inc., a life insurance
holding company, and Bedford Property Investors, a real estate investment trust
until his retirement from those positions earlier this year. Mr. Ballard has
been a director of the Company since 1993.
Robert C. Larson is a managing director of Lazard Freres & Co. LLC, a
financial services provider and Chairman of Lazard Freres Real Estate Investors,
LLC, which is engaged in real estate related principal investing activity. Mr.
Larson also serves as a director of Bass Plc, a London-based international
hotel, leisure retailing and beverage firm and represents Lazard as a director
of American Apartment Communities III, Inc., Brandywine Realty Trust,
Destination Europe Limited and as a director and non-executive chairman of
Commonwealth Atlantic Properties. Until his retirement earlier this month, Mr.
Larson also served as a director of Lifestyle Furnishing International Ltd., a
manufacturer and marketer of residential furniture and home furnishing fabrics.
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 chain, and a director or
trustee of over 30 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 Fashionmall.com, Inc., a company which markets and sells fashion
apparel and related accessories and products over the internet, 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 Dean Witter
Investment and Management, 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.
Peter Karmanos, Jr. is the founder of, and since July, 1987, has been
Chairman of the Board of Directors and Chief Executive Officer of Compuware
Corporation, a global provider of software solutions and professional services
headquartered in Farmington Hills, Michigan. Mr. Karmanos is a member of the
Board of Directors for the Barbara Ann Karmanos Cancer Institute, the North
American Hockey League, USA
9
<PAGE> 13
Hockey, Worthington Industries, Automation Alley and Detroit Renaissance. He is
a co-owner of three hockey teams: the Carolina Hurricanes, the Plymouth Whalers
and the Florida Everblades.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held seven meetings during 1999. The
Board of Directors has four standing committees: a five-member Audit Committee;
a three-member Compensation Committee; a three-member Executive Committee, and a
three-member Nominating Committee. During 1999, 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 five of the outside directors and during
1999 consisted of Jerome A. Chazen, Chairman, Graham Allison, Claude M. Ballard,
Allan J. Bloostein, and S. Parker Gilbert. The Audit Committee is responsible
for providing oversight and review of the Company's auditing, accounting and
financial reporting processes, including 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
1999.
During 1999, the Compensation Committee of the Board of Directors consisted
of S. Parker Gilbert, Chairman, Claude M. Ballard, and Jerome A. Chazen. The
Compensation Committee's primary responsibility is to review the compensation
and employee benefit policies applicable to employees of the operating company
and, in particular, senior management. The Compensation Committee met four times
during 1999.
During 1999, the Board's Executive Committee consisted 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 met once during 1999.
During 1999, the Board's Nominating Committee consisted 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 1999.
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 1999, the Company incurred costs of $253,000 relating to
the services of Messrs. Allison, Ballard, Bloostein, Chazen, Gilbert and Larson
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
1999, TRG made four matching contributions in the total amount of $15,000.
CERTAIN TRANSACTIONS
When the Company acquired Lord Associates, Inc. in November 1999, Courtney
Lord, who in January 2000 became the Manager's Senior Vice President and
Managing Director, Leasing, retained his interest in certain agreements with
third parties entitling him to receive a commission or other remuneration in
10
<PAGE> 14
the event TRG purchases, leases and/or develops certain parcels of real estate.
The remuneration Mr. Lord is entitled to receive is fixed for certain
agreements; for others the remuneration ultimately paid to Mr. Lord will depend
on the terms of any transaction between TRG and such third party. Mr. Lord did
not receive any remuneration as a result of such agreements during 1999. To
date, Mr. Lord has received $320,000 in commissions paid by the joint venture
between TRG and Swerdlow Real Estate Group to develop Dolphin Mall.
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 $2.5 million in 1999.
During 1999, the Manager paid approximately $2.7 million in rent and
operating expenses for office space in a building 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 $10 million, depending upon the year of purchase. While the optionor
will have no interest in the shopping center itself, the optionor may
participate in the proceeds from any future sales of parcels adjacent to the
shopping center.
Committees of outside directors review business transactions between the
Company and its subsidiaries and related parties to ensure that the Company's
involvement in such transactions, including those described above, is on arm's
length terms.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation of those persons who during 1999 were (i) the chief
executive officer and (ii) the other executive officers of the Company whose
compensation is required to be disclosed pursuant to the rules of the Securities
and Exchange Commission (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
-----------------------------
NUMBER OF
ANNUAL COMPENSATION SHARES
---------------------- RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS(1) STOCK AWARDS(2) OPTIONS(3) COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
------------------ ---- -------- -------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman................ 1999 $750,000 $500,625 $1,251,250 0 $ 23,320(4)
President and Chief 1998 750,000 517,969 1,131,000 0 22,459
Executive Officer 1997 778,842(5) 468,750 979,028 0 21,029
Lisa A. Payne.................... 1999 $500,000 $337,813 $ 508,750 500,000 $ 20,332(6)
Executive Vice President 1998 500,000 345,313 429,000 0 243,533
And Chief Financial Officer 1997 455,765(7) 321,875 361,054 100,828 287,000
William S. Taubman............... 1999 $436,547 $301,219 $ 508,750 500,000 $ 22,840(8)
Executive Vice President 1998 395,000 276,250 429,000 0 21,976
1997 385,958(5) 244,625 361,054 0 20,578
Douglas M. Lucey(9).............. 1999 $240,000 $261,510 $ 275,000 0 $ 20,937(10)
Senior Vice President 1998 247,692 240,422 260,000 0 20,701
John L. Simon(11)................ 1999 $273,000 $239,625 $ 275,000 0 $ 22,256(12)
Senior Vice President 1998 261,532 226,256 260,000 0 21,231
</TABLE>
- ---------------
(1) Bonus amount awarded under the Senior Short Term Incentive Plan.
11
<PAGE> 15
(2) Awards were made under the Manager's Long-Term Performance Compensation
Plan (the "Performance Plan") in respect of Notional (i.e., "phantom")
Shares of Common Stock, which are credited with dividend equivalents in the
form of additional Notional Shares as and when the Company pays dividends
on its shares of Common Stock. 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. Prior to the Plan's amendment effective January 1, 1999, grants were
made in respect of Notional (i.e. phantom) Units of Partnership Interest,
which were credited with TRG partnership distribution equivalents in the
form of additional Notional Units as and when TRG made distributions.
Effective with the Plan's amendment in 1999, all Notional Units held by a
participant were converted into Notional Shares on a one-for-one basis.
With respect to 1997, the Named Officers received the following awards,
which vested on January 1, 2000: Robert S. Taubman -- 76,041 Notional
Shares; Lisa A. Payne -- 28,043 Notional Shares; and William S.
Taubman -- 28,043 Notional Shares. With respect to 1998, the Named Officers
received the following awards, which vest on January 1, 2001: Robert S.
Taubman -- 87,000 Notional Shares; Lisa A. Payne -- 33,000 Notional Shares;
William S. Taubman -- 33,000 Notional Shares; Douglas M. Lucey -- 20,000
Notional Shares; and John L. Simon -- 20,000 Notional Shares. With respect
to 1999, the Named Officers received the following awards, which vest on
January 1, 2002: Robert S. Taubman -- 91,000 Notional Shares, Lisa A.
Payne -- 37,000 Notional Shares; William S. Taubman -- 37,000 Notional
Shares; Douglas M. Lucey -- 20,000 Notional Shares; and John L.
Simon -- 20,000 Notional Shares. At December 31, 1999, the Named Officers'
aggregate holdings (including dividend equivalents that have been credited
as additional Notional Shares), and the value of such holdings based on the
year-end value of the Common Stock, were as follows: Robert S.
Taubman -- 405,958 Notional Shares ($4,375,457); Lisa A. Payne -- 112,982
Notional Shares ($1,217,729); William S. Taubman -- 112,982 Shares
($1,217,729); Douglas M. Lucey -- 69,287 Shares ($746,786); and John L.
Simon -- 69,287 Notional Shares ($746,786). See "Long-Term Performance
Compensation Plan" below for more information about the Performance Plan.
(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 $12,948 contributed to the defined contribution plan (the
"Retirement Savings Plan") on behalf of Mr. Robert S. Taubman and $10,732
accrued under the supplemental retirement savings plan (the "Supplemental
Retirement Savings Plan").
(5) 1997 salaries include one additional pay period.
(6) Includes $12,948 contributed to the Retirement Savings Plan on behalf of
Ms. Payne and $7,384 accrued under the Supplemental Retirement Savings
Plan.
(7) Ms. Payne joined the Company in January 1997.
(8) Includes $12,948 contributed to the Retirement Savings Plan on behalf of
Mr. William S. Taubman and $9,892 accrued under the Supplemental Retirement
Savings Plan.
(9) Although Mr. Lucey has served the Manager in various capacities since 1971,
he first became an executive officer of the Company in 1998.
(10) Includes $12,948 contributed to the Retirement Savings Plan on behalf of
Mr. Lucey and $7,989 accrued under the Supplemental Retirement Savings
Plan.
(11) Although Mr. Simon has served the Manager in various capacities since 1977,
he first became an executive officer of the Company in 1998.
(12) Includes $12,948 contributed to the Retirement Savings Plan on behalf of
Mr. Simon and $9,308 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
12
<PAGE> 16
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 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 1999
<TABLE>
<CAPTION>
NUMBER OF UNITS
OF PARTNERSHIP PERCENT OF
INTEREST TOTAL OPTIONS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE GRANT DATE
NAME OPTION GRANTED(1) EMPLOYEES IN 1999 ($/UNIT) EXPIRATION DATE PRESENT VALUE(2)
---- ----------------- ----------------- ----------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Lisa A. Payne........ 500,000 50%(3) $12.25 March 29, 2009 $620,000
William S. Taubman... 500,000 50%(3) $12.25 March 29, 2009 $620,000
</TABLE>
- ---------------
(1) Exchangeable for an equal number of shares of Common Stock under the
Company's Continuing Offer. Each Option became exercisable with respect to
250,000 Units on September 30, 1999 and will become exercisable with respect
to the remaining 250,000 Units on the earlier of (i) the date on which the
closing price of the Company's Common Stock shall have equaled or exceeded
$15.00 on 10 consecutive trading dates or (ii) March 29, 2006.
(2) 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. The
calculation is based on the following assumptions: a volatility rate of 20%;
a risk-free rate of return of 5.3% and a dividend yield of 7.8% which grows
by 1.6% annually. 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., $12.25 per Unit). There is no
assurance that an Incentive Option will vest or that the value realized will
be at or near the value estimated by the binomial model. The estimated
present value in the table does not provide any indication or assurance
regarding the future value of the Company's Common Stock.
(3) As discussed under "Compensation Committee Report on Executive
Compensation," the Incentive Option Plan has been replaced by the
Performance Plan as the primary source of long-term compensation.
13
<PAGE> 17
AGGREGATED OPTION EXERCISES DURING 1999 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT YEAR END OPTIONS AT 12/31/99(1)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Taubman........... 0 $0 3,291,800 65,836 $139,572 $69,786
Lisa A. Payne............... 0 0 250,000 350,828 0 0
William S. Taubman.......... 0 0 469,894 302,670 127,512 63,757
Douglas M. Lucey............ 0 0 176,443 9,218 19,540 9,771
John L. Simon............... 0 0 48,062 6,584 6,979 6,979
</TABLE>
- ---------------
(1) In accordance with the SEC's rules, based on the difference between fair
market value of Common Stock 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's Performance Plan was amended effective
January 1, 1999. The following discussion relates to the 1999 grants under the
Performance Plan that are reflected in the Summary Compensation Table and which
were made under the amended terms of the Performance Plan.
Under the Performance Plan, in March of each year, each eligible
participant is granted Notional (i.e., "phantom") shares of the Company's Common
Stock (a "Notional Share Award"). Each Notional Share Award vests on the third
January 1 after the date of grant. Under the revised terms of the Performance
Plan, the amount of the participant's Notional Share Award is based on
individual and Company performance for the fiscal year prior to the date in
which the grant was made and the individual's position.
Notional Shares are credited with dividend equivalents in the form of
additional Notional Shares as and when the Company pays dividends on its shares
of Common Stock. Upon vesting, the value of the award under the Performance Plan
(including dividend equivalents) will be paid to the participant in a lump sum
in an amount based on the average closing price of the Company's Common Stock as
reported on the New York Stock Exchange for the last twenty business days
immediately preceding the vesting date, unless the participant elects to defer
payment in accordance with the terms of the Performance Plan. If a participant
elects to defer the payout date (the "Settlement Date") with respect to awards
granted prior to the Performance Plan's amendment (i.e., grants prior to 1999),
the award will continue to earn dividend equivalents and the payout amount will
be determined based on the average closing price of the Company's Common Stock,
as reported on the New York Stock Exchange, for the last twenty business days
immediately preceding the deferred Settlement Date. If a participant elects to
defer the Settlement Date with respect to awards granted in 1999, under the
terms of the revised Performance Plan, the payout amount is based on the average
closing price of the Company's Common Stock, as reported on the New York Stock
Exchange, for the last twenty business days immediately preceding the vesting
date. The award will not continue to earn dividend equivalents; however, the
payout amount will accrue interest from the vesting date until the deferred
Settlement Date.
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.
14
<PAGE> 18
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 1999
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 Shares under the Performance Plan have been
selected over Incentive Options as the primary source of incentive compensation
to the executive officers. Incentive Option grants have been and 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 1999, the Compensation Committee made grants of Notional
Share 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
1999 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 1999 in the amount of $500,625 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
15
<PAGE> 19
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, 1994
through December 31, 1999 (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
[LINE GRAPH]
<TABLE>
<CAPTION>
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12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
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Taubman Centers, Inc. $100.00 $112.37 $157.65 $170.40 $193.24 $162.84
NAREIT Equity Retail REIT Index $100.00 $105.10 $140.74 $164.59 $160.32 $141.45
S&P 500 Index $100.00 $137.57 $169.16 $225.59 $290.06 $351.10
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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.
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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 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 was approximately $2,000,000. Under the agreement, the Company provided
Mr. Larson with an office and secretarial assistance for one year at the
Company's expense and will continue to 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.
In November 1999, in connection with TRG's acquisition of the outstanding
stock of Lord Associates, Inc., the Manager entered into an employment agreement
with Courtney Lord pursuant to which Mr. Lord became a Senior Vice President of
the Manager and on January 1, 2000, the Manager's Senior Vice President and
Managing Director, Leasing. The agreement terminates on January 1, 2005 unless
sooner terminated by either the Company or Mr. Lord for cause or by Mr. Lord due
to his death, disability or voluntary termination. The employment agreement
provides for an annual base salary of not less than $270,000, to be reviewed
annually. The agreement also provides for Mr. Lord's participation in the
Manager's SSTIP, with a minimum award of $195,000 for each of the years
beginning January 1, 2000 and January 1, 2001 and for a grant of 10,000 Notional
Shares of the Company's Common Stock under the Performance Plan. Under the
Agreement, the Manager paid Mr. Lord $50,000 as a hiring bonus and will
reimburse Mr. Lord for certain relocation expenses estimated to be between
$30,000 and $50,000. Mr. Lord has agreed that in the event his employment is
terminated he will not thereafter compete with the Company for a period
(depending on the circumstances surrounding such termination) of between one and
two years. In addition, part of the consideration received by Mr. Lord in
exchange for his shares of Lord Associates, Inc. included 435,153 Units of
Partnership Interest and 435,153 shares of Series B Preferred Stock. At this
time, Mr. Lord has both voting and distribution rights with respect to 87,035
Units of Partnership Interest and 87,035 shares of Series B Preferred Stock. Mr.
Lord has granted an irrevocable proxy to TG Partners with respect to the
remaining Partnership Units and shares of Series B Preferred Stock. The
remaining Partnership Units are not entitled to receive partnership
distributions and allocations except upon liquidation. Under the terms of the
irrevocable proxy executed by Mr. Lord in favor of TG Partners and a letter
agreement between Mr. Lord and TRG, the remaining Partnership Units and shares
of Series B Preferred Stock will be released from the proxy and such Partnership
Units will become entitled to partnership distributions and allocations over a
period of five years. The final 65,271 Partnership Units and shares of Series B
Preferred Stock to be released from the proxy have been pledged by Mr. Lord as
collateral for his obligation to remit to TRG a portion of the cash
consideration he received in exchange for his shares of Lord Associates, Inc.,
in the event the acquired business does not meet certain performance criteria.
In addition, if Mr. Lord's employment is terminated, the Manager has the right
to purchase up to 100% of any Partnership Units which have not been released
from the proxy and become entitled to partnership distributions and allocations
for a cash lump sum payment of $50,000.
ITEM 2 -- APPROVAL OF INCREASE IN AUTHORIZED SHARES OF PREFERRED STOCK
On March 7, 2000, the Company's Board of Directors adopted and recommended
that the shareholders of the Company approve an amendment to Article III,
Section 1 of the Company's Restated Articles of Incorporation to increase the
number of authorized shares of Preferred Stock of the Company from 50,000,000
shares to 250,000,000 shares. The proposed amendment would replace Section 1 of
Article III in its entirety as follows:
"The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 500,000,000 shares. The
classes and the aggregate number of shares of stock of each class are as
follows:
250,000,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), which shall have the rights and limitations set forth
below.
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250,000,000 shares of Preferred Stock (the "Preferred Stock"), which
may be issued in one or more series having such relative rights,
preferences, priorities, privileges, restrictions and limitations as the
Board of Directors may determine from time to time."
No increase in the number of authorized shares of Common Stock of the
Company, currently 250,000,000 shares, will be made as a result of the
amendment. The rights and limitations of the Common Stock, the Series A
Preferred Stock, Series B Preferred Stock and the Company's 9% Series C
Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") and 9%
Series D Cumulative Redeemable Preferred Stock (the "Series D Preferred Stock")
under the amendment would remain the same. No shares of the Company's capital
stock have preemptive rights, and any future issuance of Preferred Stock, other
than on a pro rata basis, would dilute the percentage ownership position of
current shareholders.
Of the 50,000,000 currently authorized shares of Preferred Stock, as of
March 17, 2000: (1) 8,000,000 shares are designated Series A Preferred Stock,
all of which are issued and outstanding; (2) 40,000,000 shares are designated
Series B Preferred Stock, of which 31,835,066 shares are issued and outstanding;
(3) 1,000,000 shares are designated Series C Preferred Stock, none of which are
issued and outstanding, but all of which are reserved for issuance to certain
holders of preferred equity interests in TRG; and (4) 250,000 shares are
designated Series D Preferred Stock, none of which are issued and outstanding,
but all of which are reserved for issuance to certain holders of preferred
equity interests in TRG.
In September 1999, TRG completed a private placement of $75 million of 9%
Cumulative Redeemable Preferred Partnership Equity (the "Series C Preferred
Equity"), which was purchased by an institutional investor. In November 1999,
TRG completed another private placement of $25 million of 9% Cumulative
Redeemable Preferred Partnership Equity (the "Series D Preferred Equity"), which
was purchased by another institutional investor. Both the Series C Preferred
Equity and Series D Preferred Equity have a fixed 9% coupon rate, and no stated
maturity, sinking fund or mandatory redemption requirements. The Series C
Preferred Equity and the Series D Preferred Equity are exchangeable for Series C
Preferred Stock and Series D Preferred Stock, respectively, beginning in 2009,
or sooner under certain circumstances. The terms of the Series C Preferred Stock
and Series D Preferred Stock are substantially similar to those of the Series C
Preferred Equity and Series D Preferred Equity. Like the Series A Preferred
Stock, the Series C Preferred Stock and Series D Preferred Stock is non-voting.
The holders of Series C Preferred Equity have the right to exchange $75 in
liquidation value of such equity for one share of Series C Preferred Stock. The
holders of the Series D Preferred Equity have the right to exchange $100 in
liquidation value of such equity for one share of Series D Preferred Stock. In
connection with the private placement of the Series C Preferred Equity, the
Company undertook to amend its Restated Articles of Incorporation to increase
the total number of authorized shares of Preferred Stock and to increase the
total number of shares designated as Series C Preferred Stock, to a minimum of
2,000,000 shares. The Company has further undertaken, once additional shares of
Series C Preferred Stock are available for issuance, to lower the applicable
exchange ratio and to issue more shares with each share having a lower
liquidation value. The aggregate amount in liquidation value of each of the
Series C Preferred Stock and Series D Preferred Stock will remain $75 million
and $25 million, respectively.
The Company will not be able to fulfill its undertakings to the holders of
the Series C Preferred Equity without amending its Restated Articles of
Incorporation to increase the total number of authorized shares of Preferred
Stock. In addition, the Board of Directors believes that it is desirable to have
sufficient additional authorized shares of Preferred Stock available for future
corporate needs, such as financing, acquisition or joint venture transactions,
dividends or stock splits and other general corporate purposes. Since its
initial public offering in 1992, the Company has obtained financing for general
corporate purposes, working capital and special projects through, among other
methods, the sale of equity interests in TRG (which, in some instances, are
convertible into the Company's equity securities), Common Stock and Series A
Preferred Stock. The Company currently has an effective shelf registration
statement allowing it to sell shares of Common Stock and Preferred Stock,
debentures and warrants from time to time upon the filing with the SEC of a
prospectus supplement should it wish to raise financing in the public markets.
The additional authorized shares of Preferred Stock will allow the Company to
maintain flexibility to issue additional shares of Preferred Stock in the future
without the potential expense or delay of a special meeting of shareholders at
such time. If
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the amendment is approved, the Board of Directors could issue the additional
shares (either of an existing or new class or series), the terms of which,
including any dividend rights, conversion prices, voting rights, redemption
provisions, or similar matters, may be determined by the Board upon issuance
without further action by the shareholders, unless such action is required by
Michigan law or by the rules of any market or exchange where the Preferred Stock
is traded.
Although the increase in authorized shares of Preferred Stock will not have
an immediate effect on the rights of existing shareholders, under certain
circumstances, an increase in the authorized number of shares of a company's
capital stock could provide management with a means of preventing or
discouraging a change of control of a company. For example, additional shares or
shares with special voting rights the terms of which, including any dividend
rights, conversion prices, voting rights, redemption provisions, or similar
matters, may be determined by the Board upon issuance could be issued to a
holder expected to vote in accordance with the recommendations of a company's
management with respect to any stockholder proposal, including a proposal to
effect a merger or other extraordinary transaction. In addition, Preferred Stock
could be issued to dilute the percentage voting stock of a significant
stockholder. The Company has no present intention or understanding to issue
additional shares of Preferred Stock for such purposes, and the proposal to
increase the authorized shares is not made with any intent to impede any change
of control.
If the proposed amendment to the Company's Restated Articles of
Incorporation is approved, a Certificate of Amendment will be filed with the
Michigan Department of Consumer and Industry Services as promptly as practicable
thereafter. The amendment would be effective upon the date of filing.
Approval of the amendment to the Restated Articles of Incorporation will
require the affirmative vote of the holders of two-thirds of the shares of
Voting Stock outstanding on the Record Date. Any shares not voted, whether by
abstentions or broker non-votes, will have the same effect as votes against the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THIS
AMENDMENT. Unless instructions are given to the contrary, it is the intention of
the persons named as proxies to vote the shares to which the proxy is related
FOR adoption of the amendment to the Restated Articles of Incorporation to
increase the authorized shares of Preferred Stock.
ITEM 3 -- 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 2000. The Board of Directors
recommends that the shareholders vote FOR the appointment of Deloitte & Touche
LLP as the Company's independent auditors for 2000. 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.
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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.
ADDITIONAL INFORMATION
PRESENTATION OF SHAREHOLDER PROPOSALS AT 2001 ANNUAL MEETING
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 2001 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, 2000.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1999,
including financial statements audited by Deloitte & Touche LLP, independent
accountants, and their reports dated February 9, 2000, 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, 1999, 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, 2000
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TAUBMAN CENTERS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 16, 2000
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 Tuesday, May 16, 2000, 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),(2) AND
(3) 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.)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3. Please mark ------
your votes as | |
indicated in | X |
this example ------
1. ELECTION OF DIRECTORS 2. Amendment to Restated Articles of
(Nominees: Graham T. Allison, William S. Taubman, Incorporation to Increase Authorized
and Peter Karmanos, Jr. (each for a three-year term) Shares of Preferred Stock.
FOR AGAINST ABSTAIN
FOR WITHHOLD WITHHOLD AUTHORITY [ ] [ ] [ ]
AUTHORITY to vote for Nominee(s)
to vote for all Nominees named below
[ ] [ ] [ ] 3. RATIFICATION OF INDEPENDENT AUDITORS
--------------------- Ratification of the selection of
Deloitte & Touche LLP as independent
auditors for 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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.
-----------------------------------------
Signature
Dated: , 2000
-----------------------------
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