<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
GENERAL GROWTH PROPERTIES, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
GENERAL GROWTH PROPERTIES, INC.
55 WEST MONROE STREET -- SUITE 3100
CHICAGO, ILLINOIS 60603
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
To the Stockholders of
General Growth Properties, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of GENERAL
GROWTH PROPERTIES, INC. (the "Company") will be held on Thursday, May 15, 1997
at The Standard Club of Chicago, 320 S. Plymouth Court, Chicago, Illinois, at 10
o'clock a.m. local time, for the following purposes:
(1) To elect two (2) directors to serve until the annual meeting of
stockholders in 2000 and until their successors are elected and
qualified;
(2) To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation, as amended (the "Charter"), to increase
the number of authorized shares of common stock from 70,000,000 to
210,000,000 (the "Charter Amendment");
(3) To approve an amendment to the Company's 1993 Stock Incentive Plan, as
amended (the "Plan"), to increase the number of shares available for
issuance thereunder to 3,000,000 (the "Plan Amendment");
(4) To ratify the reappointment of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the year ending December 31, 1997
(the "Reappointment of Accountants"); and
(5) To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 28, 1997 as
the record date for determining the stockholders that are entitled to notice of,
and to vote at, the annual meeting or any adjournments or postponements thereof.
A complete list of the stockholders entitled to notice of and to vote at the
Meeting will be available for examination by any stockholder at the principal
executive offices of the Company, 55 West Monroe Street, Suite 3100, Chicago,
Illinois 60603, for any purpose germane to such meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting.
By Order of the Board of Directors
Matthew Bucksbaum
MATTHEW BUCKSBAUM
Chairman of the Board
Chicago, Illinois
April 9, 1997
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL STOCKHOLDERS TO
ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN
THE ACCOMPANYING REPLY ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE TO DO SO.
<PAGE> 3
GENERAL GROWTH PROPERTIES, INC.
55 WEST MONROE STREET -- SUITE 3100
CHICAGO, ILLINOIS 60603
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of General Growth Properties,
Inc. (the "Company"), for use at the annual meeting of stockholders and at any
adjournment(s) or postponement(s) thereof (the "Meeting") to be held, for the
purposes set forth in the accompanying Notice of Annual Meeting, on Thursday,
May 15, 1997 at The Standard Club of Chicago, 320 S. Plymouth Court, Chicago,
Illinois, at 10 o'clock a.m. local time. The Company expects to first mail this
Proxy Statement and the accompanying proxy card to stockholders on or about
April 9, 1997.
THE MEETING
VOTING AT THE MEETING
The holders of record of shares of the Company's Common Stock, par value
$.10 per share (the "Common Stock") at the close of business on March 28, 1997
are entitled to notice of and to vote at the Meeting. On that date, there were
outstanding 30,791,185 shares of Common Stock held by approximately 980 holders
of record. Each share of Common Stock issued and outstanding is entitled to one
vote on each matter submitted to a vote of stockholders at the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock will constitute a quorum. The affirmative
vote of the holders of a plurality of the shares of Common Stock represented at
the Meeting, in person or by proxy, will be necessary for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock outstanding will be necessary for the approval of the Charter
Amendment. The affirmative vote of the holders of a majority of the shares of
Common Stock cast, in person or by proxy, will be necessary for the approval of
the Plan Amendment, and the affirmative vote of the holders of a majority of the
shares of Common Stock represented at the Meeting, in person or by proxy, will
be necessary for approval of the Reappointment of Accountants.
PROXIES AND PROXY SOLICITATION
All shares of Common Stock represented by valid proxies will be voted at
the Meeting in accordance with the directions marked on the proxies, unless such
proxies previously have been revoked. If you return your proxy but do not
indicate how you want it voted, it will be voted FOR the election of each
nominee for director named in the proxy, FOR the Charter Amendment, FOR the Plan
Amendment and FOR the Reappointment of Accountants. If any other matters are
properly presented at the Meeting for action, which is not presently
anticipated, the proxy holders will vote the proxies (which confer discretionary
authority upon such holders to vote on such matters) in accordance with their
best judgment.
You may revoke your proxy at any time before it is voted by submitting
timely written notice of revocation or by submission of a properly executed
proxy bearing a later date (in either case directed to the Secretary of the
Company) or, if you attend the Meeting, you may elect to revoke your proxy and
vote your shares personally.
Abstentions will be treated as shares that are present for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted for a vote of the stockholders. If a broker
indicates on a proxy that he or she does not have discretionary authority to
vote on a particular matter as to certain shares, those shares will be counted
for quorum purposes but will not be considered as present and entitled to vote
with respect to that matter.
<PAGE> 4
In addition to solicitation by mail, certain directors, officers and other
employees of the Company, not specially employed for this purpose, may solicit
proxies, without additional remuneration therefor, by personal interview, mail,
telephone or other means of communication. The Company will also request brokers
and other fiduciaries to forward proxy soliciting material to the beneficial
owners of shares of Common Stock which are held of record by such brokers and
fiduciaries and will reimburse such persons for their reasonable out-of-pocket
expenses. The Company will bear the entire cost of soliciting management
proxies, which is currently estimated to be less than $10,000.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 28, 1997, certain information
concerning each stockholder who is known by the Company to beneficially own more
than 5% of the outstanding shares of Common Stock. Unless otherwise noted, the
persons named in the table have sole voting and investment power with respect to
all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES APPROXIMATE
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASS
- ---------------- ------------------ ----------------
<S> <C> <C>
General Trust Company, as trustee(1)........................ 7,884,243(2) 25.6%
4001 W. 41st Street, 04A
Empire Mall
Sioux Falls, South Dakota 57116
Cohen & Steers Capital Management, Inc...................... 3,904,300(3) 12.7%
757 Third Avenue
New York, New York 10017-2013
Scudder, Stevens & Clark, Inc............................... 3,306,200 10.7%
345 Park Avenue
New York, New York 10154
Franklin Resources, Inc..................................... 2,345,500(4) 7.6%
777 Mariners Island Blvd.
San Mateo, California 94404
Wellington Management Company............................... 2,270,250(5) 7.4%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- -------------------------
(1) The beneficiaries of the trusts are members of the Bucksbaum family which,
for purposes hereof, includes the descendants of Martin, Matthew and Maurice
Bucksbaum, including John Bucksbaum, an Executive Vice President of the
Company.
(2) Includes 7,362,480 shares of Common Stock issuable upon conversion of
certain limited partnership units in the Operating Partnership (as
hereinafter defined). See "Compensation Committee Interlocks and Insider
Participation" below.
(3) Owned by numerous investment counselling clients.
(4) Voluntarily reported on behalf of its principal shareholders and an
investment adviser, each of whom disclaims participation in a "group" and
beneficial ownership of securities attributable to each other.
(5) Owned by numerous investment counselling clients.
2
<PAGE> 5
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 28, 1997, certain information
regarding the beneficial ownership of the Company's Common Stock, by (a) each of
the directors and nominees for election as directors, (b) each of the executive
officers of the Company named in the Summary Compensation Table on page 9 and
(c) all directors and executive officers as a group. Unless otherwise indicated,
the person has sole voting and investment power with respect to such shares of
Common Stock.
<TABLE>
<CAPTION>
DIRECTORS AND NUMBER OF SHARES APPROXIMATE
EXECUTIVE OFFICERS BENEFICIALLY OWNED PERCENT OF CLASS
- ------------------ ------------------ ----------------
<S> <C> <C>
Matthew Bucksbaum......................................... 1,309,653(1)(2) 4.3%
John Bucksbaum............................................ 25,000(1)(3)(4) *
Anthony Downs............................................. 5,500(4) *
Morris Mark............................................... 10,000(4) *
Robert Michaels........................................... 35,000(4) *
Beth Stewart.............................................. 4,500(4) *
A. Lorne Weil............................................. 4,000(4) *
Bernard Freibaum.......................................... 195,000(4) *
Jon Batesole.............................................. 28,816(4)(6) *
Stanley Richards.......................................... 24,344(7) *
Joel Bayer................................................ 41,000(5) *
Mark London............................................... 6,000(5) *
All Directors and Executive Officers as a Group (12
persons)................................................ 1,688,813(8) 5.5%
</TABLE>
- -------------------------
* Less than 1%.
(1) Does not include shares of Common Stock beneficially owned by General Trust
Company in its capacity as trustee of trusts. Beneficial ownership of such
shares of Common Stock is hereby expressly disclaimed. See "Common Stock
Ownership of Certain Beneficial Owners" above.
(2) Includes 850,745 beneficially owned by Mr. Bucksbaum as co-trustee of the
Martin Bucksbaum Marital GST Trust and 62,296 shares held by Mr. Bucksbaum's
IRA. Does not include 3,000 shares of Common Stock beneficially owned by Mr.
Bucksbaum's spouse or 221,196 shares issuable to Mrs. Bucksbaum upon
conversion of certain limited partnership units in the Operating
Partnership, beneficial ownership of which is hereby expressly disclaimed.
(3) Does not include 900 shares of Common Stock beneficially owned by Mr.
Bucksbaum's spouse, beneficial ownership of which is hereby expressly
disclaimed, or 3,832 shares of Common Stock issuable upon conversion of
certain limited partnership units in the Operating Partnership.
(4) Includes 15,000, 2,500, 2,500, 20,000, 2,500, 2,000, 170,000, and 10,000
shares of Common Stock subject to immediately exercisable options granted
pursuant to the Plan to each of Messrs. John Bucksbaum, Downs, Mark,
Michaels, Ms. Stewart, Messrs. Weil, Freibaum and Batesole, respectively.
(5) Consists of shares of Common Stock subject to immediately exercisable
options granted pursuant to the Plan.
(6) Does not include 2,092 shares of Common Stock beneficially owned by Mr.
Batesole's spouse, beneficial ownership of which is hereby expressly
disclaimed.
(7) Does not include 6,000 shares held by two trusts of which Mr. Richards
serves as trustee, beneficial ownership of which is hereby expressly
disclaimed, or 72,812 shares issuable upon conversion of certain limited
partnership units in the Operating Partnership.
(8) See footnotes 1 through 7 above.
3
<PAGE> 6
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who beneficially own more than 10% of the Common Stock to file reports
of initial ownership and changes in ownership of Common Stock with the
Commission. Based solely on a review of such reports furnished to the Company,
the Company believes that during 1996, all of its directors, executive officers
and beneficial owners of more than 10% of Common Stock complied with all
applicable Section 16(a) filing requirements.
ELECTION OF DIRECTORS
The Board of Directors consists of seven members divided into three classes
serving staggered three-year terms. Pursuant to Article III of the Company's
By-Laws, two directors are to be elected at the Meeting to serve until the
annual meeting of stockholders in 2000 and until their respective successors
have been elected and qualified. Each of the nominees are now members of the
Board of Directors. Proxies may not be voted for more than two directors.
The shares of Common Stock represented by the enclosed proxy, if given and
unless otherwise specified, will be voted by the persons named as proxies for
the election of the individuals nominated by the Board of Directors.
NOMINEES FOR ELECTION AS DIRECTORS
The two individuals named below are nominees for election as directors at
the Meeting. It is not contemplated that either of the nominees will be unable
or unwilling to serve; however, if either nominee is unable or unwilling to
serve, it is intended that the shares represented by the proxy, if given and
unless otherwise specified therein, will be voted for a substitute nominee or
nominees designated by the Board of Directors.
<TABLE>
<CAPTION>
TERM
NAME EXPIRES AGE POSITION AND BACKGROUND(1)
- ---- ------- --- --------------------------
<S> <C> <C> <C>
Morris Mark.......................... 1997 56 Director of the Company. General partner of Mark
Partners (an investment partnership) since June
1985. President and director of Mark Asset
Management Corporation (an investment management
company) since December 1986. President and
director of Mark International Partners, Ltd. (an
investment management company) since December
1989.
Robert Michaels...................... 1997 53 Director of the Company since July 1995.
President and Chief Operating Officer of the
Company since May 1995. President, Chief
Executive Officer and Director of General Growth
Management, Inc., a property manager, since April
1994. From January 1989 until March 1994, Mr.
Michaels held various positions with General
Growth Management, Inc.
</TABLE>
4
<PAGE> 7
CONTINUING DIRECTORS
Terms of office of the five Directors named below will continue until the
annual meeting in the years indicated and until their respective successors have
been elected and duly qualified.
<TABLE>
<CAPTION>
TERM
NAME EXPIRES AGE POSITION AND BACKGROUND(1)
- ---- ------- --- --------------------------
<S> <C> <C> <C>
John Bucksbaum....................... 1998 40 Director of the Company. Executive Vice President
of the Company since December 1992. President of
General Growth of California, Inc. and Fallbrook
Mall Corporation, a predecessor to the Company
and previously one of the indirect owners of an
enclosed mall shopping center, from 1984 to
December 1992. Son of Matthew Bucksbaum.
Anthony Downs........................ 1998 66 Director of the Company. Senior Fellow at The
Brookings Institution (private, non-profit policy
research center) since 1977. Self-employed
speaker and writer since 1977. Executive
consultant to Salomon Brothers Inc (1986-1994)
and Aetna Realty Investors (1977-1994). Trustee
of each of The Urban Land Institute and The Urban
Institute. Director of The Pittway Corporation,
Bedford Properties, Inc. and Essex Property
Trust, Inc. Director of National Housing
Partnerships Foundation, Massachusetts Mutual
Life Insurance Company and NAACP Legal and
Education Defense Fund, Inc.
A. Lorne Weil........................ 1998 50 Director of the Company. Director (since 1989),
Chairman (since 1991) and Chief Executive Officer
(since 1992) of Autotote Corporation, worldwide
provider of computerized wagering systems for
gaming operations; from 1979 to 1992, President
of Lorne Weil Inc., a private consulting firm.
Director of Fruit of the Loom, Inc., a basic
apparel manufacturer.
Matthew Bucksbaum.................... 1999 71 Chairman and Chief Executive Officer and Director
of the Company since July 1995; President of the
Company from December 1992 through June 1995;
Director of the Company since December 1992;
Secretary, Treasurer and Director of the Company
from 1986 to December 1992. President of General
Growth Companies, Inc. from 1985 to present.
Chairman of the Board of Directors of General
Growth Management, Inc. from 1986 to December
1992. Director of General Growth Management, Inc.
since December 1992. Father of John Bucksbaum.
Beth Stewart......................... 1999 40 Director of the Company. Real estate consultant
from December 1992 to present. Vice President of
Goldman, Sachs & Co. from 1986 to November 1992.
</TABLE>
- -------------------------
(1) Only directorships of issuers with a class of securities registered pursuant
to Section 12 of the Exchange Act, or subject to the requirements of Section
15(d) of that Act or directorships of issuers registered as investment
companies under the Investment Company Act of 1940, as amended, are required
to be listed in the above table.
5
<PAGE> 8
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors has designated an Audit Committee, a Compensation
Committee and an Executive Committee. The Board of Directors has not designated
a Nominating Committee; rather, the Board as a whole performs the functions
which would otherwise be delegated to such committee. The members of the Audit
Committee are Mr. Mark and Ms. Stewart, the members of the Compensation
Committee are Messrs. Matthew Bucksbaum and Downs and Ms. Stewart, and the
members of the Executive Committee are Messrs. Matthew Bucksbaum, John
Bucksbaum, Michaels and Ms. Stewart.
The functions of the Audit Committee include recommending the engagement of
the Company's independent auditors, reviewing the independence of the Company's
independent auditors, reviewing with the independent auditors the plans for and
results of the audit engagement and reviewing the adequacy of the Company's
internal accounting controls.
The functions of the Compensation Committee include determining the
compensation for the Company's Chief Executive Officer, approving the
compensation for the Company's other executive officers and administering the
Plan and any and all other executive compensation plans adopted from time to
time by the Company.
During 1996, the Board of Directors of the Company met seven times, the
Audit Committee met one time and the Compensation Committee took action by
written consent one time. With the exception of A. Lorne Weil, during 1996, each
director attended at least 75% of the meetings held by the Board of Directors
and those committees thereof of which he or she is a member.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As stated above, the current members of the Compensation Committee are
Matthew Bucksbaum, Anthony Downs and Beth Stewart. Matthew Bucksbaum, the
Chairman of the Board and Chief Executive Officer of the Company, is the only
member of the Compensation Committee who is a present or former officer or
employee of the Company or of GGP Limited Partnership (the "Operating
Partnership"). The Company is the general partner of the Operating Partnership
and currently the owner of a 62.9% interest therein. Matthew Bucksbaum, his
family and trusts for the benefit of his family (collectively, the "Bucksbaums")
currently own a 36.8% limited partnership interest in the Operating Partnership
(subject to dilution in certain circumstances) and certain rights to sell the
units representing such interests or to increase their ownership in the Company
to 25% of the outstanding Common Stock by converting a portion of such units
into shares of Common Stock.
During 1996, the Company acquired a 95% non-voting preferred stock interest
in GGP Management, Inc. ("GGP Management"), a company which manages, leases,
develops and operates enclosed shopping center malls. The common stock of GGP
Management is held by Bernard Freibaum, John Bucksbaum, Robert Michaels, Jon
Batesole and Stanley Richards, each of whom is an executive officer of the
Company.
In August 1996, the Operating Partnership, acting through GGP Management,
completed the acquisition (the "Acquisition") of General Growth Management, Inc.
("GGMI") for approximately $51.5 million, consisting of an aggregate of 453,791
units in the Operating Partnership and 1,555,855 shares of Common Stock. Of such
consideration, Matthew Bucksbaum, solely as co-trustee of the Martin Bucksbaum
GST Marital Trust received an aggregate of 453,791 shares of the Company's
Common Stock, and his wife, Carolyn S. Bucksbaum, received 453,791 units in the
Operating Partnership, in consideration for their respective 22.6% ownership
interests in GGMI. The General Growth Management Employee Stock Ownership Plan
(the "ESOP"), received an aggregate of 1,102,064 shares of Common Stock in
consideration of its 54.8% ownership interest in GGMI.
Matthew Bucksbaum is a director of GGMI and Robert Michaels is the
President and Chief Executive Officer of the Company and a director of GGMI.
Until January 1996, Mr. Michaels also served as a trustee of the ESOP.
6
<PAGE> 9
Through August 30, 1996, 24 enclosed mall shopping centers controlled
directly or indirectly by the Company were managed and leased by GGMI pursuant
to a management and leasing agreement between GGMI and each property owner.
Through such date, the Company paid approximately $7.96 million to GGMI for such
services (exclusive of costs and expenses reimbursed to GGMI by the property
owners).
During 1996 and prior to the Acquisition, certain GGMI personnel rendered
services to the Company in connection with the development and construction of
two malls. The Company reimbursed GGMI for its expenses but did not pay GGMI
fees for its services as it typically did in connection with previous
development services rendered by GGMI. Also during such period, several members
of senior management and other employees of GGMI accepted positions with the
Company and GGP Management. GGMI was not directly compensated for the loss of
such persons' services.
In connection with the Acquisition, GGMI borrowed approximately $39.9
million from the Operating Partnership, which it used to purchase shares of
Common Stock to be delivered as consideration in the Acquisition. Such loan
bears interest at a rate of 14% per annum, is unsecured, will not amortize as to
principal and will mature in 20 years.
OTHER RELATED PARTY TRANSACTIONS
As of December 31, 1996, the Company forgave the remaining principal
balance of a loan, plus all accrued interest thereon, which it had previously
extended to Joel Bayer, who became an executive officer of the Company in May
1996. The Company originally extended the 6.77% loan to Mr. Bayer in 1993, when
he first joined the Company. During 1996, the largest aggregate amount of
indebtedness which Mr. Bayer had outstanding was $80,078 (including $5,078 of
accrued interest thereon).
7
<PAGE> 10
EXECUTIVE OFFICERS
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITION AND BACKGROUND
- ---- --- -----------------------
<S> <C> <C>
Matthew Bucksbaum.................... 71 Chairman of the Board of Directors and Chief Executive
Officer and Director of the Company since July 1995;
President and Director of the Company since December
1992. Secretary, Treasurer and Director of the Company
from 1986 to December 1992. President of General Growth
Companies, Inc. from 1985 to present. Chairman of the
Board of Directors of GGMI from 1986 to December 1992
and director of GGMI since December 1992.
John Bucksbaum....................... 40 Executive Vice President since December 1992. Director
of the Company. President of General Growth of
California, Inc. and Fallbrook Mall Corporation, a
predecessor to the Company and previously one of the
indirect owners of an enclosed mall shopping center,
from 1984 to December 1992.
Robert Michaels...................... 53 Director of the Company since July 1995. President and
Chief Operating Officer of the Company since May 1995.
President, Chief Executive Officer and Director of GGMI
since April 1994. From January 1989 until March 1994,
Mr. Michaels held various positions with GGMI.
Bernard Freibaum..................... 44 Executive Vice President and Chief Financial Officer of
the Company since October 1993. From August 1992 and
prior to joining the Company, Mr. Freibaum was a
consultant with Ernst & Young. From 1985 through 1992,
he was Chief Financial Officer and General Counsel of
Stein & Company, a real estate development and service
company. From 1973 through 1985, Mr. Freibaum held
various positions with Ernst & Young, American Invsco
Corp., and Coopers & Lybrand L.L.P.
Mark London.......................... 45 Senior Vice President since January 1994. From June 1993
through December 1993, Mr. London was a consultant to
the Company. From April 1987 to May 1993, Mr. London
served as President and Chief Executive Officer of
Equity Properties and Development Co., a real estate
management and acquisitions company.
Stanley Richards..................... 63 Senior Vice President of the Company since December
1992. Vice President of the Company from October 1986 to
December 1992. Vice President and General Counsel of
General Growth Companies, Inc. since October 1985.
Jon Batesole......................... 57 Senior Vice President of the Company since December
1992. President of General Growth Development Corp. from
1985 to December 1992.
Joel Bayer........................... 33 Vice President of the Company since September 1993. From
July 1988 through August 1993, Mr. Bayer held various
positions with Equity Financial and Management Company.
</TABLE>
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation paid by the Company for services rendered to each of (i) the Chief
Executive Officer and (ii) the five other most highly compensated executive
officers of the Company in 1996 (hereinafter, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- --------------------------- ---- ---------- --------- -----------
<S> <C> <C> <C> <C>
Matthew Bucksbaum................................ 1996 $175,000 -- --
Chairman of the Board and Chief Executive 1995 $175,000 -- --
Officer 1994 $175,000 -- --
Robert Michaels.................................. 1996 $400,000 $200,000 100,000
President and Chief Operating Officer(1) 1995 $266,666 $ 50,000 --
John Bucksbaum................................... 1996 $200,000 -- 75,000
Executive Vice President 1995 $175,000 $ 25,000 --
1994 $134,538 -- --
Bernard Freibaum................................. 1996 $300,000 $200,000 200,000
Executive Vice President and Chief Financial 1995 $225,000 $200,000 250,000(2)
Officer 1994 $228,846 $ 75,000 --
Jon Batesole..................................... 1996 $300,000 $100,000 50,000
Senior Vice President(3)
Joel Bayer....................................... 1996 $200,000 $230,000(4) 75,000
Vice President 1995 $110,000 $161,000(4) 60,000(2)
1994 $105,000 $ 30,000 --
</TABLE>
- -------------------------
(1) Mr. Michaels first became an executive officer and employee of the Company
in May 1995.
(2) In December 1995, options previously granted to Messrs. Freibaum and Bayer
covering an aggregate of 50,000 and 10,000 shares, respectively, were
cancelled and surrendered and replacement incentive options covering 50,000
and 10,000 shares were granted pursuant to the Plan.
(3) Mr. Batesole's compensation from the Company commenced January 1, 1996.
(4) Includes debt forgiveness of $80,078 (including accrued interest thereon)
and $60,946 (including accrued interest thereon) for 1996 and 1995,
respectively.
9
<PAGE> 12
OPTION GRANTS
The following table sets forth information on grants of options to the
Named Officers during 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
GRANTED (#) FISCAL YEAR ($/SHARE) DATE PRESENT VALUE(2)
------------ ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Matthew Bucksbaum............... -- -- -- -- --
Robert Michaels................. 100,000 20% $28 12/01/06 $227,000
John Bucksbaum.................. 75,000 15% $28 12/01/06 $170,250
Bernard Freibaum................ 200,000 40% $28 12/01/06 $454,000
Jon Batesole.................... 50,000 10% $28 12/01/06 $113,500
Joel Bayer...................... 75,000 15% $28 12/01/06 $170,250
</TABLE>
- -------------------------
(1) Each of the options was granted pursuant to the Plan, at Fair Market Value
on the date of grant, permits payment of the associated exercise price by
means of previously-acquired shares of Common Stock and withholding of
shares of Common Stock otherwise issuable upon such exercise, and has a tax
withholding right.
(2) The dollar amounts in this column were estimated using the widely-accepted
Black-Scholes Option Pricing Formula on the basis of the following
assumptions: expected volatility: 18.8%; risk free rate of return: 5.78%;
dividend yield: 7.75%; and expected time until exercise: 4.0 years.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to the unexercised
options held by the Named Officers at December 31, 1996. None of the Named
Officers exercised any options during 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS AT YEAR END OPTIONS AT YEAR-END
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Matthew Bucksbaum............................. -- -- -- --
Robert Michaels............................... 20,000 80,000 $ 82,600 $ 330,400
John Bucksbaum................................ 15,000 60,000 $ 61,950 $ 247,800
Bernard Freibaum.............................. 170,000 280,000 $1,872,100 $2,236,400
Jon Batesole.................................. 10,000 40,000 $ 41,300 $ 165,200
Joel Bayer.................................... 41,000 94,000 $ 403,330 $ 694,220
</TABLE>
On December 31, 1996, the Fair Market Value per share of Common Stock was
$32.13.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Bernard Freibaum in
1993 pursuant to which Mr. Freibaum serves as Executive Vice President and Chief
Financial Officer of the Company. During 1996, Mr. Freibaum received a base
salary of $300,000 and a bonus of $200,000 pursuant to his agreement. Subsequent
increases in base salary and annual bonuses will be determined on the basis of
Mr. Freibaum's performance. See "Report of the Compensation Committee of the
Board of Directors on Executive
10
<PAGE> 13
Compensation" below. Mr. Freibaum is also entitled to participate in the
Company's standard employee benefits program.
For 1996, standard employee benefits included a Company contribution toward
the cost of health, life and disability insurance for employees with dependents
and an opportunity to contribute pre-tax salary (subject to applicable
limitations) to a Company sponsored 401(K) plan. Messrs. Michaels, John
Bucksbaum, Freibaum, Batesole and Bayer elected to contribute a portion of their
respective salaries to the 401(K) plan during 1996 and the Company made a
matching contribution of $750 on behalf of each of them.
For information regarding options granted to executive officers in 1996,
see "Option Grants in Last Fiscal Year," "Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values" above.
DIRECTORS' COMPENSATION
Only those directors of the Company who are not employees of the Company
receive any compensation for serving on the Board of Directors. Such directors
receive an annual fee of $18,000, a meeting fee of $1,000 for each Board or
Committee meeting attended, and reimbursement of expenses incurred in attending
meetings.
In addition, each director of the Company who is not otherwise an employee
of the Company or any of its subsidiaries or affiliates will, on each January 1
of every year, automatically receive an annual grant of options pursuant to the
Plan to purchase 500 shares of Common Stock having an exercise price equal to
100% of the Fair Market Value of the Common Stock on the date of grant of such
option. In addition, each director, upon joining the Board of Directors, is
entitled to receive an initial grant of options pursuant to the Plan to purchase
500 shares of Common Stock having an exercise price equal to 100% of the Fair
Market Value of the Common Stock on the grant date.
To date, pursuant to the Plan, each of Messrs. Downs and Mark and Ms.
Stewart has received grants of options to purchase an aggregate of 2,500 shares
of Common Stock and Mr. Weil has received grants of options to purchase an
aggregate of 2,000 shares of Common Stock. The exercise price of each of such
options is the Fair Market Value per share of Common Stock on the respective
date of grant.
In connection with the acquisition of GGMI described elsewhere herein, Ms.
Stewart and Mr. Weil served on the Evaluation Committee of the Board of
Directors. Effective October 10, 1996, each of them was awarded 1,000 shares of
the Company's Common Stock as compensation for their service on such committee.
The Fair Market Value per share of Common Stock on such date was $24.63.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE REPORT PRESENTED BELOW
AND THE PERFORMANCE GRAPH FOLLOWING SHALL NOT BE INCORPORATED BY REFERENCE INTO
ANY SUCH FILINGS.
11
<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee, which currently consists of Matthew Bucksbaum,
Anthony Downs and Beth Stewart, is responsible for determining the level of
compensation paid to the Chief Executive Officer, approving the level of
compensation paid to the Company's other executive officers, determining awards
under, and administering, the Plan and for reviewing and establishing any and
all other executive compensation plans adopted from time to time by the Company.
The Committee's approval of the compensation for executive officers of the
Company reflects its policy that the Company's compensation programs should
enhance the Company's ability to attract and retain highly-qualified individuals
while providing the financial motivation necessary to achieve high levels of
Company performance.
The compensation paid to each of the Company's executive officers during
the most recent fiscal year is detailed in the Summary Compensation Table on
page 9 hereof. In establishing the compensation to be paid to each of Matthew
Bucksbaum and John Bucksbaum, the Compensation Committee (with Matthew Bucksbaum
abstaining), noted that both of their salaries were originally established prior
to the Company's initial public offering, at subjective levels which have not
been changed since such time. The Committee also recognized the unique position
occupied by each of Matthew Bucksbaum and John Bucksbaum by virtue of the
Bucksbaums' ownership of a 36.8% limited partnership interest in the Operating
Partnership (subject to dilution in certain circumstances) and their rights to
sell the units representing such interests or to increase their ownership in the
Company to 25% of the outstanding Common Stock by converting a portion of such
units into shares of Common Stock. See "Common Stock Ownership of Certain
Beneficial Owners," "Common Stock Ownership of Management" and "Compensation
Committee Interlocks and Insider Participation." Accordingly, the compensation
paid to Matthew Bucksbaum and John Bucksbaum during 1996 was not based upon, and
had no specific relation to, the Company's performance during such period.
Matthew Bucksbaum, as Chief Executive Officer, and Robert Michaels, as
President, have the authority to hire all other executive officers, subject to
approval by the Compensation Committee of the compensation to be paid to such
executive officers. The decision to hire executive officers and the amount of
compensation to be paid to an executive officer are generally based upon the
Chief Executive Officer's and the President's subjective analyses of each
individual's prior real estate experience, leadership qualities, expected
contributions to the Company and responsibilities to be undertaken on behalf of
the Company. An executive officer may also receive an annual bonus award based
upon a percentage of his salary, which percentage the Chief Executive Officer
and the President are also entitled to establish, subject to approval by the
Compensation Committee. The cash bonuses paid to executive officers during 1996
were awarded in recognition of the particular individual's extraordinary efforts
on behalf of the Corporation. In establishing the base salary to be paid to each
of the Company's executive officers for fiscal 1997, the Compensation Committee
reviewed the compensation paid by comparable REITs to their executive officers
and determined it to be in the best interests of the Company and its
stockholders for the Company to be in the lower-to-mid portion of the range.
Stock-based compensation is also an important element of the Company's
compensation program and is generally awarded to executive officers either as an
inducement to join the Company or as additional compensation in recognition of
exceptional performance. The Chief Executive Officer recommends to the Committee
the size of a particular award based upon his subjective assessment of the
factors described above without specific reference to any aspect of the
Company's performance at such time. The Compensation Committee believes awards
pursuant to the Plan align the interests of management with those of the
Company's stockholders by emphasizing long-term stock ownership and increases in
stockholder value. Options granted to executive officers generally vest over
time and are required to be granted at the Fair Market Value per share of Common
Stock on the date of the grant. In approving the Chief Executive Officer's
recommended stock-based awards for 1996, the Compensation Committee reviewed
similar compensation paid by comparable REITs to their executive officers and
determined it to be in the best interests of the Company and its stockholders
for the Company to be in the mid-to-higher portion of the range.
12
<PAGE> 15
As one of the factors in its review of compensation matters, the
Compensation Committee considers the anticipated tax treatment to the Company
and to the executives of various payments and benefits. The deductibility of
some types of compensation payments depends upon the timing of an executive's
vesting or exercise of previously granted rights. Furthermore, interpretations
of and changes in the tax laws and other factors beyond the Compensation
Committee's control also affect the deductibility of compensation. For these and
other reasons, the Committee will not necessarily limit executive compensation
to that deductible under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Compensation Committee will consider various
alternatives to preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable and to the extent consistent with
its other compensation objectives.
Respectfully submitted by the Compensation Committee,
Matthew Bucksbaum
Anthony Downs
Beth Stewart
13
<PAGE> 16
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph sets forth a comparison of the percentage change
in the cumulative total stockholder return on the Company's Common Stock
compared to the cumulative total return of the S&P Composite -- 500 Stock Index,
the NAREIT (National Association of Real Estate Investment Trusts) Equity REIT
Total Return Index and an enclosed mall REIT Index (consisting of CBL &
Associates Properties, Inc., Crown American Realty Trust, First Union Real
Estate Equity and Mortgage Investment, General Growth Properties, Inc., JP
Realty, Inc., The Macerich Company, Taubman Centers, Inc. and Urban Shopping
Centers, Inc.) for the period April 8, 1993, the date on which trading of the
Company's Common Stock commenced, through December 31, 1996.
The graph assumes that the shares of the Company's Common Stock were bought
at the IPO price of $22.00 per share and that the value of the investment in
each of the Company's Common Stock and the indices was $100 at the beginning of
the period. The graph further assumes the reinvestment of dividends. The NAREIT
Equity REIT Total Return Index, which is only published monthly based on the
last closing prices of the preceding month, has been prorated for the month of
April, 1993 to arrive at the beginning index used in this graph.
Please note that the stock price performance shown on the graph below is
not necessarily indicative of future price performance.
GENERAL GROWTH PROPERTIES, INC.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD GENERAL GROWTH S&P 500 INDEX NAREIT ENCLOSED MALL
(FISCAL YEAR COVERED) PROPERTIES, INC. EQUITY REIT REIT INDEX
TOTAL RETURN
INDEX
<S> <C> <C> <C> <C>
04/8/93 100 100 100 100
12/31/93 101 107 87 104
12/31/94 113 107 94 106
12/31/95 116 142 95 123
12/31/96 192 184 137 160
</TABLE>
14
<PAGE> 17
APPROVAL OF CHARTER AMENDMENT
GENERAL
On February 11, 1997, the Board of Directors adopted a resolution amending
Article IV of the Company's Amended and Restated Certificate of Incorporation,
as amended (the "Charter") to increase the number of shares of authorized Common
Stock from 70,000,000 to 210,000,000 shares (the "Charter Amendment"). The
affirmative vote of a majority of the outstanding shares of Common Stock is
required for approval of the Charter Amendment. The Charter Amendment seeks to
amend the first paragraph of Article IV of the Company's Charter to read as
follows:
The total number of shares of all classes of capital stock that the
Corporation shall have authority to issue is Two Hundred Fifteen Million
(215,000,000) shares, consisting of (i) Five Million (5,000,000) shares of
preferred stock, par value $100 per share (the "Preferred Stock"), and (ii)
Two Hundred Ten Million (210,000,000) shares of common stock, par value
$0.10 per share (the "Common Stock"). The additional shares would have the
same rights and privileges as the shares of Common Stock presently
outstanding.
If approved by the requisite majority of the Company's stockholders at the
Meeting, the increase in the number of shares of Common Stock would become
effective on the filing of the Charter Amendment with the Secretary of State of
the State of Delaware. Assuming approval of the Charter Amendment, the Company
currently intends to make such filing as soon as practicable following the
Meeting.
PURPOSE
The Board of Directors recommends that the number of authorized but
unissued shares of Common Stock be increased to provide a sufficient number of
shares available, as the occasion may arise, for possible future acquisitions
and financings, and other proper corporate purposes. The Operating Partnership
might also issue securities convertible into shares of Common Stock in the
acquisition of businesses or properties. The Company has previously filed a
shelf registration statement with the Securities and Exchange Commission for the
offering from time to time of up to $250 million of securities. Issuance of even
the maximum amount of Common Stock (or securities convertible into or
exercisable for Common Stock) remaining available pursuant to this Registration
Statement would not, however, require any increase in the authorized shares.
Nevertheless, while the Company does not currently have any commitment or
understanding to issue any shares of additional Common Stock, the Board of
Directors believes it is prudent to increase the authorized Common Stock at this
time so as to be in a position to have flexibility to issue additional shares as
favorable circumstances present themselves.
As of March 28, 1997, the Company had 75,000,000 shares of capital stock
authorized, 70,000,000 of which constitutes Common Stock, and 5,000,000 of which
constitutes preferred stock. Of the 70,000,000 shares of authorized Common
Stock, 30,791,185 are currently outstanding, 1,933,333 are currently reserved
for issuance pursuant to the Plan (See "Approval of the Plan Amendment"),
8,570,176 are reserved for other issuances, and 28,705,306 shares remain
available for issuance.
DILUTION
It should be noted that any issuance of additional shares of Common Stock
could be disadvantageous to existing stockholders since such issuance will serve
to dilute their percentage interest in the Company. Current stockholders do not
have preemptive rights to subscribe to additional securities that may be issued
by the Company, which means that current stockholders do not have a prior right
to purchase any new issue of capital stock of the Company in order to maintain a
proportionate ownership. However, stockholders wishing to maintain their
percentage interest may be able to do so through normal market purchases.
15
<PAGE> 18
ANTI-TAKEOVER
An increase in the authorized but unissued shares of Common Stock, could
under certain circumstances, have an anti-takeover effect, by for example,
allowing issuances of Common Stock that would dilute the stock ownership of a
person seeking to effect a change in the composition of the Board of Directors
or contemplating a tender offer or other transaction for the combination of the
Company with another company.
The Charter Amendment does not alter the Company's present ability to issue
up to 5,000,000 shares of preferred stock. The Company would not be required to
obtain stockholder approval to issue authorized but unissued shares of preferred
stock or Common Stock, unless required to do so by applicable law or the rules
of the New York Stock Exchange or any stock exchange on which the Company's
shares are then listed. The Board of Directors could use its ability to issue
Common Stock and/or preferred stock in a manner that would create impediments
which might discourage persons in attempting to gain control of the Company.
However, the Company has no present intention to use the additional shares
of Common Stock for anti-takeover purposes. This proposal to amend the Charter
is not in response to any effort of which the Company is aware to accumulate the
Company's stock or obtain control of the Company, nor is it part of a plan by
management to recommend a series of similar amendments to the Board of Directors
and stockholders. The Board does not presently contemplate recommending the
adoption of any other amendments to the Articles which could be construed to
affect the ability of third parties to take over or change control of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE CHARTER
AMENDMENT.
16
<PAGE> 19
APPROVAL OF PLAN AMENDMENT
GENERAL
The Plan permits stock-based awards to be made to eligible employees of the
Company. Under the Plan, automatic stock option awards are also made to
non-employee directors annually. As of March 28, 1997, a total of 2,000,000
shares had been reserved for issuance under the Plan and a total of 1,043,833
shares remained available for future grant under the Plan. In February 1997, the
Board of Directors, acting upon a recommendation from the Compensation Committee
of the Board of Directors (the "Committee"), adopted an amendment to the Plan,
subject to stockholder approval, to increase the number of shares of Common
Stock available for issuance thereunder by an additional 1,000,000. The Board
believes that the additional shares are necessary in order to provide key
employees and directors with an added incentive to continue in the employ or
service of the Company and to stimulate their efforts in promoting the growth,
efficiency and profitability of the Company.
The affirmative vote of a majority of the shares of Common Stock
represented at the Meeting, whether in person or by proxy, will be required to
approve the Plan Amendment.
The following summary of the Plan, as proposed to be amended, is qualified
in its entirety by reference to the full text of the Plan. All defined terms
used herein and not otherwise defined are deemed to have the meaning given
thereto in the Plan. The proposed Plan Amendment changes only the number of
shares available for issuance under the Plan and does not affect any other
provision thereunder.
PURPOSE
The purpose of the Plan is to give the Company an advantage in attracting,
retaining and motivating employees and directors and to provide the Company with
the ability to provide incentives which are directly linked to the profitability
of the Company's business and increases in stockholder value.
SHARES AVAILABLE UNDER THE PLAN
A maximum of 2,000,000 authorized and unissued or treasury shares of the
Company's Common Stock may currently be issued or delivered under the Plan. As
of March 28, 1997, options to acquire an aggregate of 829,500 shares of Common
Stock were outstanding under the Plan, options covering an aggregate of 66,667
shares of Common Stock had been exercised, options covering an aggregate of
60,000 shares of Common Stock were repriced in 1995 and an aggregate of
1,043,833 remain available for issuance. See "Option Grants in Last Fiscal Year"
and "Directors' Compensation" for certain information regarding options granted
under the Plan in 1996.
If the Plan Amendment is approved, a maximum of 3,000,000 authorized and
unissued or treasury shares of the Company's Common Stock will be available for
issuance pursuant to the Plan. Shares of Common Stock which are covered by any
unexercised portions of terminated options, forfeited by participants or subject
to any awards that are otherwise surrendered by a participant without receiving
any payment or other benefit with respect thereto may be subject to future
awards under the Plan.
PLAN ADMINISTRATION
The Plan is currently administered by the Committee. The Committee
determines the employees who will be eligible for awards and the amount and type
of awards, establishes rules and guidelines relating to the Plan, establishes
and modifies the terms of awards and is entitled to take such other action as
may be necessary for the proper administration of the Plan.
PLAN PARTICIPANTS
Any employee of the Company may be selected by the Committee to receive an
award under the Plan. Approximately 500 employees of the Company are currently
eligible to participate in the Plan. Non-employee
17
<PAGE> 20
directors are only eligible to receive automatic, non-discretionary stock option
awards. Currently, four non-employee directors are eligible to receive
automatic, non-discretionary stock option awards under the Plan.
AWARDS AVAILABLE UNDER PLAN
Awards to employees under the Plan may take the form of stock options and
restricted stock awards. Stock options may be granted either alone or in
addition to other awards granted under the Plan.
Stock Options
Stock options granted under the Plan are either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company and its subsidiaries.
The exercise price for an option must be at least equal to 100% of the Fair
Market Value per share of Common Stock on the date of grant and is generally
payable either in cash, shares of Common Stock or by reduction in the number of
shares of Common Stock otherwise issuable upon exercise. On March 27, 1997, the
Fair Market Value per share of common stock was $31.56.
The term during which each option may be exercised is determined by the
Committee, but no option will be exercisable more than ten years after the date
of grant. Options may also be subject to restrictions on exercise, such as
exercise in periodic installments, as determined by the Committee. In addition,
the Committee may at any time waive the installment exercise provisions or
accelerate the exercisability of any option.
If an optionee's employment terminates by reason of Disability, the options
held by such person may generally be exercised for a period equal to the shorter
of (a) three years from the date of termination or (b) the remaining term of the
option. If an optionee's employment terminates by reason of Retirement, the
Non-Qualified Stock Options held by such person may generally be exercised for a
period equal to the shorter of (a) three years from the date of termination or
(b) the remaining term of the Non-Qualified Stock Options and the Incentive
Stock Options held by such person may generally be exercised for a period equal
to the shorter of (x) three months from the date of termination or (y) the
remaining term of the Incentive Stock Options. If an optionee's employment
terminates by reason of death, the options held by such person may generally be
exercised for a period equal to the shorter of (a) one year from the date of
death or (b) the remaining term of the options. If an optionee's employment
terminates for any reason other than Disability, Retirement, death or Cause, the
Non-Qualified Stock Options held by such person may generally be exercised for a
period equal to the shorter of (a) one year from the date of such termination or
(b) the remaining term of the Non-Qualified Stock Options, and the Incentive
Stock Options held by such person may generally be exercised for a period equal
to the shorter of (x) three months from the date of such termination or (y) the
remaining term of the Incentive Stock Options. If a participant's employment is
terminated for "Cause", any unexercised options held by such optionee generally
expire immediately upon the giving of notice of such Termination of Employment
to the optionee.
The Committee may, upon receipt of written notice of exercise, elect to pay
the optionee an amount, in cash or Common Stock, equal to the excess of the Fair
Market Value over the relevant exercise price times the number of shares of the
Common Stock for which the option is being exercised.
Restricted Stock
The Committee may award shares of Restricted Stock to a participant either
alone or in addition to other awards granted under the Plan. An award of
Restricted Stock gives a participant the right to receive shares of Common Stock
subject to a risk of forfeiture based upon certain conditions. The forfeiture
restrictions on the Restricted Stock may be based upon the attainment of
specified performance goals or upon such other factors or criteria as the
Committee shall determine. The provisions of Restricted Stock awards need not be
the same with respect to each recipient. Until all restrictions are satisfied,
lapsed or waived, the Committee may require that the Company maintain control
over the shares of Restricted Stock but the participant will generally be able
to vote the shares of Restricted Stock and be entitled to receive cash dividends
paid with respect to such
18
<PAGE> 21
shares. Generally, upon termination of employment for any reason during the
Restriction Period, the participant will generally forfeit the right to the
shares of Restricted Stock to the extent the applicable restrictions were not
met at the time of such termination, unless the Committee, in its discretion,
shall have waived in whole or in part any or all of the remaining restrictions.
Director Stock Options
The Plan provides for the grant of a Non-Qualified Stock Option to purchase
500 shares of Common Stock to each non-employee director on the first day of
January during such director's term at an exercise price per share equal to 100%
of the Fair Market Value of the Common Stock on the grant date. Each such
director, upon joining the Board, shall also be entitled to an initial grant of
Non-Qualified Stock Options to purchase 500 shares of Common Stock having an
exercise price equal to 100% of the Fair Market Value of the Common Stock on the
grant date.
Options granted to non-employee directors are exercisable in full
commencing on the date of grant and expire on the tenth anniversary of the date
of grant.
TRANSFERABILITY
Stock options granted under the Plan may be exercised, during the
participant's lifetime, only by the participant, his guardian or legal
representative or by an alternative payee and are not transferable except by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order (as defined in the Code or Title 1 of the Employee Retirement
Income Security Act of 1974, as amended or the rules thereunder (collectively,
"ERISA"). A participant may not sell, assign, transfer or encumber shares of
Restricted Stock during the Restriction Period.
CHANGE IN CONTROL
All options outstanding as of the date of a Change in Control of the
Company generally will become fully exercisable and vested and the restrictions
applicable to any Restricted Stock will lapse and such Restricted Stock will
become fully vested and transferable. A Change in Control generally includes:
(1) An acquisition by any individual, entity or group of beneficial
ownership of 20% or more of either (i) the then outstanding shares of
Common Stock of the Company or (ii) the combined voting power of the then
outstanding shares of the Company's Common Stock.
(2) A change in the composition of the Board such that members of the
Incumbent Board cease to constitute at least a majority of the Board;
(3) The approval by the stockholders of the Company of certain
Corporate Transactions, including, a reorganization, merger, consolidation
or sale or other disposition of all or substantially all of the Company's
assets; or
(4) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
Generally, during the 60-day period from and after a Change in Control, an
optionee has the right to elect to surrender a stock option to the Company and
to receive cash in an amount equal to the difference between the Change in
Control Price on the date of election over the applicable exercise price times
the number of shares of Common Stock represented by the surrendered option.
TERMINATION, AMENDMENT AND ERISA STATUS
The Plan will remain in effect until April 4, 2003, unless terminated
earlier by the Board. The Board may generally amend, alter or discontinue the
Plan and the Committee may amend or alter the terms of the awards under the
Plan, including, without limitation, to take into account changes in law, tax
and accounting rules, but no such action shall affect or in any way impair the
rights of a participant under any award previously
19
<PAGE> 22
granted without such participant's consent; provided, that the provisions
establishing the formula for determining the automatic director's grants may not
be amended more often than once every six months.
The Committee may amend the terms of any option or other Award granted
pursuant to the Plan, prospectively or retroactively, but no such amendment
shall impair the rights of any holder without the holder's consent.
The Plan is not subject to the provisions of ERISA.
ANTIDILUTION PROVISIONS
The number of shares of Common Stock authorized to be issued under the Plan
and subject to outstanding awards (and the purchase or exercise or exercise
price thereof) may be adjusted to prevent dilution or enlargement of rights in
the event of any stock dividend, reorganization, reclassification,
recapitalization, stock split, combination, merger, consolidation or other
relevant capitalization change.
PARTICIPATION IN THE PLAN
The following table sets forth grants of stock options made under the Plan
during Fiscal Year 1996 to (i) each of the Named Officers; (ii) all current
executive officers as a group; (iii) all current non-employee directors as a
group; and (iv) all employees, including all current officers who are not
executive officers, as a group. Except for the annual automatic grants made to
non-employee directors described above under "Director Stock Options," grants
under the Plan are made at the discretion of the Committee. Accordingly, future
grants under the Plan are not yet determinable.
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO EXERCISE PRICE
NAME OPTIONS GRANTED PER SHARE
---- ---------------- --------------
<S> <C> <C>
Matthew Bucksbaum........................................... -- --
Robert Michaels............................................. 100,000 $28
John Bucksbaum.............................................. 75,000 $28
Bernard Freibaum............................................ 200,000 $28
Jon Batesole................................................ 50,000 $28
Joel Bayer.................................................. 75,000 $28
Current Executive Officers.................................. 500,000 $28
Non-Employee Directors...................................... 2,000 $31.75
All Non-Executive Officer Employees......................... -- --
</TABLE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of awards under the Plan based upon current federal income tax
laws. The Plan is not qualified under Section 401(a) of the Code. The summary is
not intended to be exhaustive and, among other things, does not describe state,
local or foreign tax consequences.
Stock Options. A participant is not subject to federal income tax either at
the time of grant or at the time of exercise of an Incentive Stock Option.
However, upon exercise, the difference between the fair market value of the
Shares and the exercise price is an item of tax preference subject to the
possible application of the alternative minimum tax. If a participant does not
dispose of shares of Common Stock acquired through the exercise of an Incentive
Stock Option within one year after their receipt (and within two years after the
date of grant of the stock option), he or she will be taxed only upon the sale
of such shares of Common Stock, and such tax will be at the capital gains rate.
The Company will not receive any tax deduction on the exercise of an
Incentive Stock Option or, if the holding requirements are met, on the sale of
the underlying shares of Common Stock. If there is a disqualifying disposition
(i.e. one of the holding requirements is not met), the participant will be
treated as receiving compensation subject to ordinary income tax in the year of
the disqualifying disposition and the
20
<PAGE> 23
Company will be entitled to a deduction for compensation expense in an amount
equal to the amount included in income by the participant. The tax will
generally be imposed on the difference between fair market value of the shares
of Common Stock at the time of exercise and the exercise price. Any appreciation
in value after the time of exercise will be taxed as capital gain and will not
result in any deduction by the Company.
If Non-Qualified Stock Options are granted to a participant, there are no
federal income tax consequences at the time of grant. Upon exercise of the
option, the participant must pay tax on ordinary income equal to the difference
between the exercise price and the fair market value of the shares of Common
Stock on the date of exercise. The Company will receive a commensurate tax
deduction at the time of exercise. Any appreciation in value after the time of
exercise will be taxed as capital gain and will not result in any deduction by
the Company.
Restricted Stock. A grant of Restricted Stock does not constitute a taxable
event for either a participant or the Company. However, the participant will be
subject to tax, at ordinary income rates, when any restrictions on ownership of
the Restricted Stock lapse. The Company will be entitled to take a commensurate
deduction at that time.
A participant may elect to recognize taxable ordinary income at the time
Restricted Stock is awarded in an amount equal to the fair market value of the
Restricted Stock at the time of grant, determined without regard to any
forfeiture restrictions. If such an election is made, the Company will be
entitled to a deduction at that time in the same amount. Future appreciation on
the Restricted Stock will be taxed at the capital gains rate when the Restricted
Stock are sold. However, if, after making such an election, the Restricted Stock
is forfeited, the participant will be unable to claim a deduction.
Non-Employee Directors Awards. Non-employee director options will receive
the same federal income tax treatment as other Non-Qualified Stock Options. The
directors will recognize ordinary income equal to the fair market value of the
shares of Common Stock received in lieu of directors' fees and the Company will
be entitled to a deduction in the same amount.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PLAN
AMENDMENT.
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. as the
independent accountants for 1997, subject to stockholder ratification. The
affirmative vote of a majority of the votes cast at the Meeting, in person or by
proxy, will be necessary to approve the Reappointment of Accountants.
The Company expects that representatives of Coopers & Lybrand L.L.P. will
be present at the Meeting and will be afforded an opportunity to make a
statement if they desire to do so and to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
REAPPOINTMENT OF ACCOUNTANTS.
PROPOSALS OF STOCKHOLDERS
Any stockholder proposal intended to be presented for consideration at the
annual meeting to be held in 1998 must be received by the Company at its
principal executive offices on or before December 10, 1997 in order to be
included in the Company's proxy statement and form of proxy relating to that
meeting.
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<PAGE> 24
GENERAL GROWTH PROPERTIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Matthew Bucksbaum, Beth Stewart and Marshall E. Eisenberg, and each of
them, are hereby constituted and appointed the lawful attorneys and proxies of
the undersigned, with full power of substitution, to vote and act as proxy with
respect to all shares of common stock, $.10 par value, of GENERAL GROWTH
PROPERTIES, INC. standing in the name of the undersigned on the Company's books
at the close of business on March 28, 1997, at the Annual Meeting of
Stockholders to be held at The Standard Club of Chicago, 320 South Plymouth
Court, Chicago, Illinois, at 10:00 a.m., local time, on May 15, 1997, or at any
postponement(s) or adjournment(s) thereof, as follows:
The powers hereby granted may be exercised by any of said attorneys or
proxies or their substitutes present and acting at the above-described Annual
Meeting of Stockholders or any postponement(s) or adjournment(s) thereof, or,
if only one be present and acting, then by that one. The undersigned hereby
revokes any and all proxies heretofore given by the undersigned to vote at said
meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Please mark
[ X ] votes as in
this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2,
3, AND 4.
1. ELECTION OF DIRECTORS
NOMINEES: Morris Mark and Robert Michaels.
FOR WITHHELD
/ / / /
[ ] ----------------------------------------------
* For both nominees except as noted above
2. APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 210,000,000.
FOR AGAINST ABSTAIN
/ / / / / /
3. APPROVAL OF THE PLAN AMENDMENT.
FOR AGAINST ABSTAIN
/ / / / / /
4. APPROVAL OF THE RATIFICATION OF THE REAPPOINTMENT OF ACCOUNTANTS FOR
FISCAL 1997.
FOR AGAINST ABSTAIN
/ / / / / /
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or at any postponement(s) or
adjournment(s) thereof.
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT [ ] THE MEETING [ ]
<TABLE>
<S> <C> <C> <C>
(Please sign proxy
as name appears on
corporate records.
Joint owners should
each sign
personally.
Trustees and others
signing in a
representative
capacity should Signature: ____________________________ Dated: _____________, 1997
indicate the
capacity in which Signature: ____________________________ Dated: _____________, 1997
they sign.)
</TABLE>
