<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:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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:
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(4) Date filed:
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<PAGE> 2
PRELIMINARY COPIES
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 (the "Meeting"). 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
Chairman of the Board
Chicago, Illinois
April __, 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 __, 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 30,789,185 shares of Common Stock held by approximately 600
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.
<PAGE> 4
PROXIES AND PROXY SOLICITATION
All shares of Common Stock represented by valid proxies will be voted
at the meeting in accordance with the directors 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.
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.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
Number of Shares Approximate Percent of
Name and Address Beneficially Owned Class (if more than 1%)
- ---------------- ------------------ -----------------------
<S> <C> <C>
7,884,243 (2) 25.6%
General Trust Company, as trustee (1)
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 of Cohen & Steers
Capital Management Inc.
(4) Voluntarily reported by Franklin Resources, Inc. on behalf of Charles
B. Johnson and Rupert H. Johnson, Jr., its principal shareholders, and
Templeton Global Advisors Limited, an investment adviser. The
reporting persons are of the view that they are not active as a
"group" for purposes of Section 13(d) under the Exchange Act and that
they are not otherwise required to attribute to each other the
beneficial ownership of securities under Rule 13d-3 promulgated under
such Act.
(5) Owned by numerous investment counselling clients of Wellington
Management Company.
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 ___ hereof 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 Percent of
Executive Officers Beneficially Owned Class (if more than 1%)
- ------------------ ------------------ -----------------------
<S> <C> <C>
Matthew Bucksbaum 1,309,653 (1)(2) 4.3%
John Bucksbaum 25,000 (1)(3)(4) *
Anthony Downs 5,500 (4) *
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C> <C>
Morris Mark 10,000 (4) *
Robert Michaels 35,000 (4) *
Beth Stewart 3,500 (4) *
A. Lorne Weil 3,000 (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) 1,687,155 (8) 5.4%
</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.
-4-
<PAGE> 7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of 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 Annual 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.
Term
Name Expires Age Position and Background (1)
---- ------- --- ---------------------------
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.
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.
-5-
<PAGE> 8
Term
Name Expires Age Position and Background (1)
---- ------- --- ---------------------------
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.
(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.
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
-6-
<PAGE> 9
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
The following directors currently serve on the Compensation Committee
of the Board of Directors: Matthew Bucksbaum, Anthony Downs and Beth Stewart.
With the exception of Matthew Bucksbaum, none of the other individuals who have
served on the Compensation Committee 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 63.2% interest therein.
Matthew Bucksbaum serves as the Chairman of the Board and Chief
Executive Officer of the Company. 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, as co-trustee of the
Martin Bucksbaum GST Marital Trust received an aggregate of 453,791 shares
of the Company's Common Stock in exchange for the Trust's 22.6% ownership
interest in GGMI and his wife, Carolyn S. Bucksbaum, received 453,791 units in
the Operating Partnership in consideration for her 22.6% ownership interest in
GGMI. The General Growth Management Employee Stock Ownership Plan (the
"ESOP"), which owned an aggregate of 54.8% of GGMI's outstanding stock prior to
the acquisition, received an aggregate of 1,102,064 shares of Common Stock
in consideration of its ownership interest in GGMI.
-7-
<PAGE> 10
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.
Through August 30, 1996, ________ 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 the
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, GGP Management 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).
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<PAGE> 11
EXECUTIVE OFFICERS
The following individuals currently serve as executive officers of the
Company:
Name Age Position and Background
---- --- -----------------------
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.
-9-
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain summary information concerning
the compensation paid by the Company for services rendered to each of (i) the
Chief Executive Officer and (ii) the four other most highly compensated
executive officers of the Company who were serving as executive officers on
December 31, 1996 (hereinafter, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------------------- ---------------
Awards
---------------
Securities
Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options (#)
- --------------------------- ---- ---------- --------- ---------------
<S> <C> <C> <C> <C>
Matthew Bucksbaum 1996 $175,000 -- --
Chairman of the Board 1995 $175,000 -- --
and Chief Executive 1994 $175,000 -- --
Officer
Robert Michaels 1996 $400,000 $200,000 100,000
President And Chief 1995 $266,666 $50,000 --
Operating Officer(1)
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 1995 $225,000 $200,000 250,000(2)
and Chief Financial 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(5) 60,000(2)
1994 $105,000 $ 30,000 --
(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).
(5) Includes debt forgiveness of $60,946 (including accrued interest thereon).
</TABLE>
-10-
<PAGE> 13
OPTION GRANTS
The following table sets forth information on grants of options to the
Named Officers during 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants(1)
--------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or
Options/SARs Employees in Base Price Expiration Grant Date
Granted(#) Fiscal Year ($/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 time of
exercise (expected life): 4.0 years.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to the
unexercised options granted to the Named Officers in 1996 under the Plan and
held by them at December 31, 1996. None of the Named Officers exercised any
options during 1996.
-11-
<PAGE> 14
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> <S> <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 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.
-12-
<PAGE> 15
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 of the Common Stock on such date was $24.63.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FLINGS 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.
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 10 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
-13-
<PAGE> 16
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.
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
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.
-14-
<PAGE> 17
Please note that the stock price performance shown on the graph below
is not necessarily indicative of future price performance.
[PERFORMANCE GRAPH APPEARS HERE}
General Growth Properties, Inc.
<TABLE>
<CAPTION>
Index: 4/8/93 12/31/93 12/31/94 12/31/95 12/31/96
- ------------------------------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C>
General Growth Properties, Inc. 100 101 113 116 192
S&P 500 100 107 107 142 184
Enclosed Mall REITs 100 87 94 95 137
NAREIT Equity Index 100 104 106 123 160
</TABLE>
-15-
<PAGE> 18
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 Annual 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 Annual 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, 30,789,185 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 28,707,306 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.
-16-
<PAGE> 19
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.
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.
-17-
<PAGE> 20
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 893,833
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 Amendment to the Plan 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, and an aggregate of 893,833
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.
-18-
<PAGE> 21
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 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
28, 1997, the fair market value per share of common stock was $______.
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.
-19-
<PAGE> 22
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 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 each 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;
-20-
<PAGE> 23
(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 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.
-21-
<PAGE> 24
<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 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
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<PAGE> 25
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 __, 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> 26
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>
