<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.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(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):
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[ ] 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:
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<PAGE> 2
PRELIMINARY COPIES
GENERAL GROWTH PROPERTIES, INC.
110 North Wacker Drive
Chicago, Illinois 60606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held May 12, 1999
To our Stockholders:
We are notifying you that the Annual Meeting of Stockholders of General
Growth Properties, Inc. will be held on Wednesday, May 12, 1999 at 10:00 a.m.
local time at our principal executive offices located at 110 North Wacker Drive,
Chicago, Illinois 60606 for the following purposes:
1. To elect two directors for a term of three years;
2. To approve an amendment to our certificate of incorporation to
provide that holders of shares of 7.25% Preferred Income Equity Redeemable
Stock, Series A that may be issued on or after the date of such amendment are
entitled to receive cumulative dividends which shall begin to accrue on the
first day of the current dividend period if the shares are issued on or before
the record date for such dividend period and on the first day of the next
dividend period if the shares are issued after the record date for such dividend
period;
3. To approve an amendment to our certificate of incorporation to
remove the IBM Retirement Plan as an exception to the ownership limit contained
in the certificate of incorporation;
4. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for fiscal 1999; and
5. To transact other business properly coming before the meeting.
Each of these matters is described in further detail in the enclosed proxy
statement. We have also enclosed a copy of our 1998 Annual Report. Only
stockholders of record at the close of business on March 25, 1999 are entitled
to vote at the meeting or any postponement or adjournment of the meeting. A
complete list of these stockholders will be available at our principal executive
offices prior to the meeting.
Please use this opportunity to take part in General Growth's affairs by
voting your shares. Whether or not you plan to attend the meeting, please
complete the enclosed proxy card and return it in the envelope provided as
promptly as possible. Your proxy can be withdrawn by you at any time before it
is voted.
By order of the Board of Directors,
/s/ Matthew Bucksbaum
Chairman of the Board
Chicago, Illinois
April 12, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ABOUT THE MEETING.................................................................................... 1
What is the purpose of the annual meeting?...................................................... 1
What are General Growth's voting recommendations?............................................... 1
Who is entitled to vote?........................................................................ 1
What constitutes a quorum?...................................................................... 1
How do I vote?.................................................................................. 2
Can I change my vote after I return my proxy card?.............................................. 2
What vote is required to approve each item?..................................................... 2
What happens if additional proposals are presented at the meeting?.............................. 2
Who will bear the costs of soliciting votes for the meeting?.................................... 3
PROPOSALS TO BE VOTED ON............................................................................. 3
Proposal No. 1 - Election of Directors.......................................................... 3
Proposal No. 2 - Approval of an Amendment with Respect to Cumulative Dividends Paid to
Holders of Shares of 7.25% Preferred Income Equity Redeemable Stock, Series A............... 5
Proposal No. 3 - Approval of an Amendment to Remove the IBM Retirement Plan as an
Exception to the Ownership Limit of the Certificate of Incorporation........................ 5
Proposal No. 4 - Ratification of Independent Accountants........................................ 6
BOARD STRUCTURE AND COMPENSATION..................................................................... 6
Board of Directors and Board Committees......................................................... 6
Compensation of Directors....................................................................... 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.......................................... 7
STOCK OWNERSHIP...................................................................................... 7
Common Stock Ownership of Certain Beneficial Owners............................................. 8
Equity Ownership of Management.................................................................. 9
Section 16(a) Beneficial Ownership Reporting Compliance......................................... 10
EXECUTIVE OFFICERS................................................................................... 11
EXECUTIVE COMPENSATION............................................................................... 12
Summary of Cash and Certain Other Compensation.............................................. 12
Summary Compensation Table.................................................................. 12
Option Grants............................................................................... 13
Option Exercises and Year-End Values........................................................ 13
Standard Employee Benefits.................................................................. 14
Report of the Compensation Committee on Executive Compensation.............................. 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................................................... 18
PERFORMANCE GRAPH.................................................................................... 20
STOCKHOLDER PROPOSALS................................................................................ 21
</TABLE>
<PAGE> 4
GENERAL GROWTH PROPERTIES, INC.
110 North Wacker Drive
Chicago, Illinois 60606
-----------------------
PROXY STATEMENT
-----------------------
The Board of Directors of General Growth Properties, Inc. is asking for
your proxy for use at the annual meeting of stockholders of General Growth to be
held on Wednesday, May 12, 1999 at 10:00 a.m. local time at our principal
executive offices located at 110 North Wacker Drive, Chicago, Illinois, and at
any postponements or adjournments of the meeting. We are initially mailing this
proxy statement and the enclosed proxy to stockholders of General Growth on or
about April 12, 1999.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At our annual meeting, stockholders will act upon the matters outlined
in the accompanying notice of meeting, including the election of directors, the
approval of two separate amendments to our Certificate of Incorporation
(collectively, the "Charter Amendments"), and ratification of our independent
auditors. In addition, our management will report on General Growth's
performance during fiscal 1998 and respond to questions from stockholders.
What are General Growth's voting recommendations?
Our Board of Directors recommends that you vote your shares "FOR" each
of the nominees to the Board and "FOR" each of the other proposals.
Who is entitled to vote?
Only stockholders of record at the close of business on the record
date, March 25, 1999, are entitled to receive notice of the annual meeting and
to vote the shares of common stock that they held on that date at the meeting,
or any postponement or adjournment of the meeting. Each outstanding share of
common stock entitles its holder to cast one vote on each matter to be voted
upon.
What constitutes a quorum?
If a majority of the shares outstanding on the record date are present
at the annual meeting, either in person or by proxy, we will have a quorum at
the meeting, permitting the conduct of business at the meeting. As of the record
date, we had approximately 39,052,095 shares of common stock outstanding and
entitled to vote. Any shares represented by proxies that are marked to abstain
from voting on a proposal will be counted as present for purposes of determining
whether we have a quorum. If a broker, bank, custodian, nominee or other record
holder of General Growth common stock indicates on a proxy
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that it does not have discretionary authority to vote certain shares on a
particular matter, the shares held by that record holder (referred to as "broker
non-votes") will also be counted as present in determining whether we have a
quorum.
How do I vote?
You may vote in person at the annual meeting or you may vote by proxy
by signing, dating and mailing the enclosed proxy card. If you vote by proxy,
the individuals named on the card as proxy holders will vote your shares in the
manner you indicate. If you sign and return the card without indicating your
instructions, your shares will be voted "FOR":
- the election of the two nominees for director,
- the approval of the Charter Amendments, and
- the ratification of PricewaterhouseCoopers LLP as our
independent auditors for fiscal 1999.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised at the annual meeting by delivering to
the Secretary of General Growth a written notice of revocation or a properly
signed proxy bearing a later date, or by attending the annual meeting and voting
in person (although attendance at the meeting will not cause your previously
granted proxy to be revoked unless you specifically so request).
What vote is required to approve each item?
Director nominees must receive the affirmative vote of a plurality of
the shares represented at the meeting, meaning that the two nominees for
director with the most votes will be elected. The ratification of
PricewaterhouseCoopers LLP as our independent auditors for fiscal 1999 requires
the affirmative vote of a majority of the shares of common stock represented at
the meeting in person or by proxy. Approval of the Charter Amendments requires
the affirmative vote of a majority of the outstanding shares of common stock.
Abstentions and broker non-votes will have the effect of a "no" vote as to the
Charter Amendments and will have no effect on the vote on the election of
directors or the ratification of PricewaterhouseCoopers LLP.
What happens if additional proposals are presented at the meeting?
Other than the matters described in this proxy statement, we do not
expect any additional matters to be presented for a vote at the annual meeting.
If you vote by proxy, your proxy grants the persons named as proxy holders the
discretion to vote your shares on any additional matters properly presented for
a vote at the meeting.
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Who will bear the costs of soliciting votes for the meeting?
General Growth will bear the entire cost of the solicitation of proxies
from its stockholders, which is currently estimated to be less than $10,000. In
addition to the mailing of these proxy materials, the solicitation of proxies or
votes may be made in person, by telephone or by electronic communication by our
directors, officers and employees, who will not receive any additional
compensation for such solicitation activities. We may also hire a solicitor, for
an additional fee that is estimated not to exceed $10,000, to assist us in the
solicitation process. We will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation materials to our stockholders.
PROPOSALS TO BE VOTED ON
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Our Board of Directors is currently comprised of seven members. Our
By-Laws divide the Board into three classes, as nearly equal in number as
possible, with each class of directors serving a three-year term. The term of
office of the classes of directors expires in rotation so that one class is
elected at each annual meeting for a full three-year term.
The Board of Directors has nominated and urges you to vote "FOR" the
election of the two nominees named below for terms of office ending in 2002.
Proxies will be so voted unless stockholders specify otherwise in their proxies.
In the event a nominee is not available to serve for any reason when
the election occurs, it is intended that the proxies will be voted for the
election of the other nominee and may be voted for any substitute nominee. The
Board of Directors has no reason to believe that either nominee will not be a
candidate or, if elected, will be unable or unwilling to serve as a director. In
no event will the proxies be voted for a greater number of persons then the
number of nominees named.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION TO
THE BOARD OF EACH OF THE NOMINEES NAMED BELOW.
NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING IN 2002:
Beth Stewart, 42, has served as a director of General Growth since
1993. Ms. Stewart has been a private real estate consultant since December 1992
and served as Vice President of Goldman, Sachs & Co. from 1986 to November 1992.
Matthew Bucksbaum, 73, has served as a director of General Growth since
1986 and as Chairman and Chief Executive Officer of General Growth since July
1995. Mr. Bucksbaum served as President of General Growth from December 1992
through June 1995 and as Secretary and Treasurer of General Growth from 1986 to
December 1992. Mr. Bucksbaum has served as President of General Growth
Companies, Inc. since 1985. He also served as Chairman of the Board of Directors
of General Growth Management, Inc., a property manager ("GGMI"), from 1986 to
December 1992 and, since December
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1996, has served as Co-Chairman of the Board of Directors and Chief Executive
Officer of GGMI. Mr. Bucksbaum has also served as a director of GGMI since
December 1992. See "Certain Relationships and Related Transactions." Mr.
Bucksbaum is an ex-officio trustee of the International Council of Shopping
Centers, and previously served as chairman. Mr. Bucksbaum is the father of John
Bucksbaum.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2000:
Morris Mark, 58, has served as a director of General Growth since 1993.
Mr. Mark has served as the 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, and
President and director of Mark International Partners, Ltd. (an investment
management company) since December 1989.
Robert Michaels, 55, has served as a director of General Growth since
1995. Mr. Michaels has served as President and Chief Operating Officer of
General Growth since May 1995. In addition, Mr. Michaels has served as
President, Chief Executive Officer and a director of GGMI since April 1994. From
January 1989 until March 1994, Mr. Michaels held various other positions with
GGMI.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2001:
John Bucksbaum, 42, has served as a director of General Growth since
1992, and has served as Executive Vice President of General Growth since
December 1992. From 1984 to December 1992, Mr. Bucksbaum served as President of
General Growth of California, Inc. and Fallbrook Mall Corporation, a predecessor
to General Growth and previously one of the indirect owners of an enclosed mall
shopping center. Mr. Bucksbaum has served as Co-Chairman of the Board of
Directors and Executive Vice President of GGMI since December 1996. Mr.
Bucksbaum is a member of the Board of Governors of the National Association of
Real Estate Investment Trusts ("NAREIT"), the Executive Committee of the
National Realty Council, the Policy Advisory Board of the University of
California Real Estate Center and the Executive Committee of the Wharton School
Advisory Board. He also serves as a trustee of the Urban Land Institute.
Mr. Bucksbaum is the son of Matthew Bucksbaum.
Anthony Downs, 68, has served as a director of General Growth since
1992. Since 1977, Mr. Downs has been a Senior Fellow at The Brookings
Institution (a private, non-profit policy research center) and a self-employed
speaker and writer. Mr. Downs served as an executive consultant to Salomon
Brothers Inc. from 1986 to 1994 and to Aetna Realty Investors from 1977 to 1994.
Mr. Downs is a trustee of The Urban Land Institute and The Urban Institute. He
is also a director of The Pittway Corporation, Bedford Properties, Inc., Essex
Property Trust, Inc., National Housing Partnerships Foundation, Massachusetts
Mutual Life Insurance Company, NAACP Legal and Education Defense Fund, Inc. and
Penton Media, Inc.
A. Lorne Weil, 52, has served as a director of General Growth since
1994. Mr. Weil has served as a director, Chairman and Chief Executive Officer of
Autotote Corporation, a worldwide provider of computerized wagering systems for
gaming operations, since 1989, 1991, and 1992, respectively. From 1979 to 1992,
Mr. Weil served as President of Lorne Weil, Inc., a private consulting firm. Mr.
Weil also serves as a director of Fruit of the Loom, Inc., a basic apparel
manufacturer.
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<PAGE> 8
PROPOSAL NO. 2 - APPROVAL OF AN AMENDMENT WITH RESPECT TO
CUMULATIVE DIVIDENDS PAID TO HOLDERS OF SHARES OF 7.25% PREFERRED
INCOME EQUITY REDEEMABLE STOCK, SERIES A
General Growth's Certificate of Incorporation authorizes our Board of
Directors to provide for the issuance of shares of preferred stock in series
and, by filing a certificate with the Delaware Secretary of State (a
"Certificate of Designations"), to fix the designation and rights of the shares
of each such series. Pursuant to such authority, our Board of Directors filed a
Certificate of Designations with the Delaware Secretary of State on June 9, 1998
which created a series of preferred stock designated as the 7.25% Preferred
Income Equity Redeemable Stock, Series A ("PIERS").
In fixing the rights to be afforded to the PIERS, the Board provided,
among other rights, that the holders of the PIERS are entitled to receive
cumulative dividends which shall accrue "beginning on June 10, 1998...." Shortly
after filing the Certificate of Designations, General Growth completed a public
offering of 13.5 million depositary shares, each representing 1/40 of a share of
PIERS. Thus, holders who purchased depositary shares in General Growth's public
offering were entitled to receive cumulative dividends on the underlying PIERS
which began to accrue on June 10, 1998, the date on which the PIERS were issued.
The Board of Directors proposes to amend the Certificate of
Designations (which, in turn, constitutes an amendment to the Certificate of
Incorporation) to provide that holders of PIERS that may be issued on or after
the date of such amendment are entitled to receive cumulative dividends which
shall begin to accrue on the first day of the current dividend period if the
shares are issued on or before the record date for such dividend period and on
the first day of the next dividend period if the shares are issued after the
record date for such dividend period. This amendment will have no effect on the
holders of the depositary shares who purchased such shares in General Growth's
June 1998 public offering. Rather, the amendment will permit General Growth to
issue additional PIERS that will be identical in all respects to the outstanding
PIERS without having to pay the holders of such additional PIERS cumulative
dividends from June 10, 1998. General Growth does not have any current plans or
understandings regarding the issuance of additional PIERS.
OUR BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THIS PROPOSAL IS
IN THE BEST INTERESTS OF GENERAL GROWTH AND OUR STOCKHOLDERS AND RECOMMENDS THAT
YOU VOTE "FOR" THE APPROVAL OF THIS AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION.
PROPOSAL NO. 3 - APPROVAL OF AN AMENDMENT TO REMOVE THE IBM
RETIREMENT PLAN AS AN EXCEPTION TO THE OWNERSHIP LIMIT
OF THE CERTIFICATE OF INCORPORATION
For General Growth to remain qualified as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986 (the "Internal Revenue
Code"), General Growth must comply with various requirements, including the
following:
- not more than 50% in value of its outstanding common stock and
preferred stock (collectively, the "Capital Stock") may be owned, directly or
indirectly, by five or fewer individuals during the last half of a taxable year,
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- the Capital Stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year, and
- certain percentages of the Company's gross income must be derived
from particular activities.
In order to maintain General Growth's qualification as a REIT, the Certificate
of Incorporation limits the number of shares of Capital Stock that may be owned
by a stockholder (the "Ownership Limit").
The Ownership Limit provides that, subject to the exceptions noted
below, no stockholder may own more than the Ownership Limit. The Ownership Limit
is currently set at 7.5% of the value of the outstanding Capital Stock, and the
Board is authorized to further increase the Ownership Limit to not more than
9.8% of the value of the outstanding Capital Stock.
The Certificate of Incorporation contains exceptions that allow certain
stockholders to exceed the Ownership Limit. Specifically, Martin Bucksbaum (now
deceased), Matthew Bucksbaum and their families and related trusts (the
"Bucksbaums") and the International Business Machines Retirement Plan (the "IBM
Retirement Plan") are allowed to exceed the Ownership Limit. While both the
Bucksbaums and the IBM Retirement Plan at one time exceeded the Ownership Limit,
only the Bucksbaums currently exceed such limit. Because the IBM Retirement Plan
no longer exceeds the Ownership Limit, there is no need to continue including a
provision in our Certificate of Incorporation permitting it to do so. Therefore,
the Board of Directors proposes to amend the Certificate of Incorporation to
remove this exception to the Ownership Limit.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THIS AMENDMENT TO OUR CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 4 - RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as
General Growth's independent accountants for fiscal 1999, subject to stockholder
ratification of such appointment. PricewaterhouseCoopers LLP and its
predecessor, Coopers & Lybrand L.L.P., served as General Growth's independent
accountants during fiscal 1998. Representatives of PricewaterhouseCoopers LLP
are expected to attend the annual meeting where they will be available to
respond to questions and, if they desire, to make a statement.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS GENERAL GROWTH'S INDEPENDENT
ACCOUNTANTS FOR FISCAL 1999. In the event stockholders do not ratify the
appointment, the appointment will be reconsidered by the Board of Directors.
BOARD STRUCTURE AND COMPENSATION
BOARD OF DIRECTORS AND BOARD COMMITTEES
Our Board of Directors has standing Audit and Compensation Committees.
The Board has no Nominating Committee; rather, the Board as a whole performs the
functions which would otherwise be
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delegated to such a committee. During 1998, the Board of Directors met twelve
times and took action by written consent six times. During 1998, all of the
directors attended at least 75% of all the meetings of the Board and those
committees on which he or she served.
The members of the Audit Committee are Mr. Mark and Ms. Stewart. The
functions of the Audit Committee include recommending the engagement of General
Growth's independent auditors, reviewing the independence of the independent
auditors, reviewing with the independent auditors the plans for and results of
the audit engagement and reviewing the adequacy of General Growth's internal
accounting controls. The Audit Committee met twice during 1998.
The members of the Compensation Committee are Messrs. Matthew Bucksbaum
and Downs and Ms. Stewart. The functions of the Compensation Committee include
determining the compensation for General Growth's Chief Executive Officer (with
Mr. Bucksbaum abstaining), approving the compensation for General Growth's other
executive officers and administering General Growth's 1993 Stock Incentive Plan
(the "1993 Plan"), Cash Value Added Incentive Compensation Plan (the "CVA
Plan"), and 1998 Incentive Stock Plan (the "1998 Incentive Plan") and all other
executive compensation plans which General Growth may adopt from time to time.
The Compensation Committee met once during 1998.
COMPENSATION OF DIRECTORS
Directors who are General Growth employees receive no fees for their
services as directors. Outside 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.
Under the 1993 Plan, all outside directors are entitled to receive upon
joining the Board of Directors, an initial grant of options to purchase 500
shares of common stock having an exercise price equal to the fair market value
of the common stock on the date of grant. In addition, under the 1993 Plan, each
outside director automatically receives on the first business day in January of
every year, an annual grant of options to purchase 500 shares of common stock
having an exercise price equal to the fair market value of the common stock on
the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Matthew Bucksbaum, the Chairman of the Board and Chief Executive
Officer of General Growth, is the only member of the Compensation Committee who
is a present or former officer or employee of General Growth or of GGP Limited
Partnership, the partnership in which General Growth owns approximately 66% and
is the sole general partner (the "Operating Partnership"). None of the members
of the Compensation Committee have any "interlocking" relationships as defined
by the Securities and Exchange Commission (the "SEC"), in that none of them
serve on the board of directors or compensation committee of any other company
where an executive officer of that company is on the Board or Compensation
Committee of General Growth.
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STOCK OWNERSHIP
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following sets forth, as of March 15, 1999, certain information
concerning each stockholder who is known by General Growth to beneficially own
5% or more of the outstanding common stock. The table is based upon reports on
Schedules 13G filed by the stockholders with the SEC. Unless otherwise noted,
each stockholder has sole voting and investment power for all shares shown.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY APPROXIMATE
NAME AND ADDRESS OWNED PERCENT OF CLASS
- ---------------- ------------------- ----------------
<S> <C> <C>
General Trust Company, as trustee(1)............................ 11,164,394(2) 22.4%
4001 W. 41st Street, 04A
Empire Mall
Sioux Falls, South Dakota 57116
Scudder Kemper Investments, Inc................................. 4,149,400 10.6%
345 Park Avenue
New York, New York 10154
Cohen & Steers Capital Management, Inc.......................... 3,800,100(3) 9.7%
757 Third Avenue
New York, New York 10017
Hexalon Real Estate, Inc........................................ 3,098,400(4) 7.4%
950 East Paces Ferry Road
Suite 2275
Atlanta, Georgia 30326
</TABLE>
(1) General Trust Company beneficially owns these shares as trustee of
various trusts and as general partner of a partnership. The
beneficiaries of the trusts are members of the Bucksbaum family which,
for purposes hereof, include the descendants of Martin, Matthew and
Maurice Bucksbaum, including John Bucksbaum, Executive Vice President
and a director of General Growth.
(2) This amount includes 10,829,947 shares of common stock issuable upon
conversion of certain limited partnership units in the Operating
Partnership. See "Certain Relationships and Related Transactions."
(3) As stated in the relevant reports on Schedules 13G, numerous investment
counseling clients own the reported shares.
(4) This amount consists of 2,158,013 shares and 940,387 shares of common
stock held by two wholly-owned subsidiaries of Hexalon Real Estate,
Inc.
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EQUITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 15, 1999, certain
information regarding the beneficial ownership of General Growth's common stock
by (a) each of our directors and nominees for election as directors, (b) each of
our executive officers named in the Summary Compensation Table on page 12 and
(c) all directors and executive officers as a group. Unless otherwise noted,
each person named in the table has sole voting and investment power for all
shares shown.
For information regarding the beneficial ownership of General Growth's
depositary shares by each of the persons indicated above, we refer you to
footnotes (5) and (8) below.
<TABLE>
<CAPTION>
DIRECTORS AND NUMBER OF SHARES APPROXIMATE
EXECUTIVE OFFICERS BENEFICIALLY OWNED PERCENT OF CLASS
- ------------------ ------------------ ----------------
<S> <C> <C>
Matthew Bucksbaum............................................. 1,170,603(1)(2) 3.0%
John Bucksbaum................................................ 67,596(1)(3)(4)(5) *
Anthony Downs ................................................ 7,373(4) *
Morris Mark................................................... 11,000(4) *
Robert Michaels............................................... 101,000(4) *
Beth Stewart.................................................. 4,500(4) *
A. Lorne Weil................................................. 5,000(4) *
Bernard Freibaum.............................................. 413,630(4)(5)(6) 1.1%
Jon Batesole ................................................. 46,751(4)(7) *
Joel Bayer.................................................... 101,000(4) *
All Directors and Executive Officers as a group............... 1,973,167(8) 5.0%
(13 persons)
</TABLE>
- -------------------
* Represents less than 1% of General Growth's outstanding common stock.
(1) This amount does not include shares of common stock beneficially owned
by General Trust Company in its capacities as trustee of various trusts
and as general partner of a partnership, as to which Messrs. Matthew
Bucksbaum and John Bucksbaum disclaim beneficial ownership. See "Common
Stock Ownership of Certain Beneficial Owners," above.
(2) This amount includes 850,745 shares beneficially owned by Mr. Bucksbaum
as co-trustee of the Martin Bucksbaum Marital GST Trust and 118,866
shares held by Mr. Bucksbaum in a retirement account. However, this
amount excludes 4,026 shares of common stock beneficially owned by Mr.
Bucksbaum's spouse and 211,881 shares of common stock beneficially
owned by the Matthew and Carolyn Bucksbaum Family Foundation, as to
which Mr. Bucksbaum disclaims beneficial ownership.
(3) This amount does not include 1,954 shares of common stock beneficially
owned by Mr. Bucksbaum's spouse, as to which Mr. Bucksbaum disclaims
beneficial ownership.
(4) A portion of this amount includes shares of common stock subject to
immediately exercisable options granted pursuant to the 1993 Plan.
These amounts are as follows: Mr. John Bucksbaum, 45,000 shares; Mr.
Downs, 4,000 shares; Mr. Mark, 1,000 shares; Mr. Michaels, 80,000
shares;
-9-
<PAGE> 13
Ms. Stewart, 1,500 shares; Mr. Weil, 3,000 shares; Mr. Freibaum,
160,000 shares; Mr. Batesole, 30,000 shares; and Mr. Bayer, 71,000
shares.
(5) Mr. John Bucksbaum and Mr. Freibaum own 1,550 and 1,000 depositary
shares, respectively. Each depositary share represents 1/40 of a share
of PIERS and is immediately convertible at the option of the holder
into shares of common stock at a conversion rate of 0.6297 shares of
common stock for each depositary share. Accordingly, the shares owned
by Mr. Bucksbaum and Mr. Freibaum include 976 and 630 shares of common
stock issuable upon conversion of their depositary shares.
(6) This amount does not include an aggregate of 8,000 shares of common
stock beneficially owned by Mr. Freibaum's spouse and his children or
an aggregate of 1,889 shares of common stock issuable upon conversion
of the depositary shares beneficially owned by Mr. Freibaum's spouse
and his children.
(7) This amount does not include 2,236 shares of Common Stock beneficially
owned by Mr. Batesole's spouse, as to which Mr. Batesole disclaims
beneficial ownership.
(8) This amount is comprised of an aggregate of 1,564,997 shares of common
stock, an aggregate of 405,500 shares of common stock subject to
immediately exercisable options granted pursuant to the 1993 Plan, and
an aggregate of 2,670 shares of common stock issuable upon conversion
of an aggregate of 4,240 depositary shares, each representing 1/40 of a
share of PIERS, which are immediately convertible at the option of the
holder. This amount does not include options to acquire an aggregate of
358,000 shares of common stock granted pursuant to the 1993 Plan which
are not exercisable within 60 days after the date of this table.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and holders of more than 10% of our common stock
to file with the SEC reports regarding their ownership and changes in ownership
of our common stock. Based solely on our review of the reports furnished to us,
we believe that all of our directors, executive officers and 10% stockholders
complied with all Section 16(a) filing requirements.
-10-
<PAGE> 14
EXECUTIVE OFFICERS
The executive officers of General Growth are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Matthew Bucksbaum 73 Chairman of the Board and Chief Executive Officer
John Bucksbaum 42 Executive Vice President
Robert Michaels 55 President and Chief Operating Officer
Bernard Freibaum 46 Executive Vice President and Chief Financial Officer
Ronald L. Gern 40 Senior Vice President and Assistant Secretary
Mark London 47 Senior Vice President
Stanley Richards 65 Senior Vice President
Jon Batesole 59 Senior Vice President
Joel Bayer 35 Senior Vice President - Acquisitions
</TABLE>
We refer you to "Proposal No. 1 - Election of Directors" above for
biographical information concerning Messrs. Matthew Bucksbaum, Robert Michaels
and John Bucksbaum. Biographical information concerning our other executive
officers is set forth below.
Bernard Freibaum, 46, has served as Executive Vice President and Chief
Financial Officer of General Growth since October 1993. From August 1992 and
prior to joining General Growth, Mr. Freibaum was a consultant with Ernst &
Young. From 1985 through 1992, Mr. Freibaum 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.
Ronald L. Gern, 40, has served as Senior Vice President and Assistant
Secretary of General Growth since December 1997. From 1985 to November 1997, Mr.
Gern was employed by Kravco Company, a shopping center management and
development company. From 1990 to November 1997, he held the position of Vice
President and General Counsel to Kravco, and from 1985 to 1990, he held the
position of Counsel to Kravco. From 1982 to 1985, Mr. Gern was associated with
the law firm of Wolf, Block, Schorr & Solis-Cohen.
Mark London, 47, has served as Senior Vice President of General Growth
since January 1994. From June 1993 through December 1993, Mr. London was a
consultant to General Growth. 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, 65, has served as Senior Vice President of General
Growth since December 1992. From October 1986 to December 1992, Mr. Richards
served as Vice President of General Growth. In addition, Mr. Richards has served
as Vice President and General Counsel of General Growth Companies, Inc. since
October 1985.
Jon Batesole, 59, has served as Senior Vice President of General Growth
since December 1992. From 1985 to December 1992, Mr. Batesole served as
President of General Growth Development Corp.
-11-
<PAGE> 15
Joel Bayer, 35, has served as Senior Vice President-Acquisitions of
General Growth since March, 1998 and as Vice President of General Growth since
September 1993. From July 1988 through August 1993, Mr. Bayer held various
positions with Equity Financial and Management Company.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table discloses compensation received by General Growth's
Chief Executive Officer and our five other most highly compensated executive
officers (together, the "Named Officers") in the three most recent years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
------------
AWARDS
----------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------------------------------------- OPTIONS (#)
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) -----------
- --------------------------- ---- ------------ ---------
<S> <C> <C> <C> <C>
Matthew Bucksbaum................................. 1998 $200,000 -- --
Chairman of the Board and 1997 $175,000 -- --
Chief Executive Officer 1996 $175,000 -- --
Robert Michaels................................. 1998 $450,000 $315,256(1) 50,000
President and Chief 1997 $425,000 $200,000 --
Operating Officer 1996 $400,000 $200,000 100,000
John Bucksbaum.................................... 1998 $225,000 $150,000 --
Executive Vice President 1997 $200,000 -- --
1996 $200,000 -- 75,000
Bernard Freibaum.................................. 1998 $450,000 $315,256(1) 100,000
Executive Vice President 1997 $400,000 $200,000 200,000
and Chief Financial Officer 1996 $300,000 $200,000 200,000
Jon Batesole...................................... 1998 $350,000 $210,100(1) --
Senior Vice President 1997 $325,000 $100,000 --
1996 $300,000 $100,000 50,000
Joel Bayer........................................ 1998 $275,000 $151,289(1) 15,000
Senior Vice President- 1997 $250,000 $125,000 --
Acquisitions 1996 $200,000 $230,000(2) 75,000
</TABLE>
- --------------------
(1) These bonuses represent amounts earned under the CVA Plan for 1998 and
paid during 1999. Additional amounts of $68,115, $68,115, $26,487 and
$10,407 have been credited to a "bonus bank" for each of Messrs.
Michaels, Freibaum, Batesole and Bayer, respectively, for 1998 but have
not been paid. The amounts credited to the "bonus bank" will either be
paid to such persons in subsequent years or forfeited, depending on the
extent to which future annual financial performance goals under the CVA
Plan are achieved. See "Report of the Compensation Committee on
Executive Compensation."
-12-
<PAGE> 16
(2) This amount includes debt forgiveness of $80,078 (including accrued
interest thereon).
OPTION GRANTS
The following table provides information on grants of options to the
Named Officers during 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1998
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
GRANTED FISCAL YEAR PER SHARE DATE VALUE(2)
------- ----------- --------- ---- --------
NAME
- ----
<S> <C> <C> <C> <C> <C>
Matthew Bucksbaum............ -- -- -- -- --
Robert Michaels(1)........... 50,000 6.0% $36.19 2/18/08 $159,000
John Bucksbaum............... -- -- -- -- --
Bernard Freibaum(1).......... 100,000 12.0% $36.19 2/18/08 $318,000
Jon Batesole................. -- -- -- -- --
Joel Bayer(1)................ 15,000 1.8% $36.19 2/18/08 $47,700
</TABLE>
(1) These options were granted with an exercise price equal to the fair
market value of the common stock on the date of grant, have a ten-year
term and become vested in 20% annual increments from the date of grant.
(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: 19.4%; risk free rate
of return: 5.48%; dividend yield: 7.28%; and expected time until
exercise: 4.2 years.
OPTION EXERCISES AND YEAR-END VALUES
The following table provides information on option exercises during
1998 by each of the Named Officers and the values of each of such officer's
unexercised options at December 31, 1998.
-13-
<PAGE> 17
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
NO. OF OPTIONS AT YEAR-END MONEY OPTIONS AT YEAR-END
SHARES -------------------------- ------------------------------
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Matthew Bucksbaum............ -- -- -- -- -- --
Robert Michaels.............. 0 -- 70,000 80,000 $ 609,350 $ 462,400
John Bucksbaum............... 0 -- 45,000 30,000 $ 444,375 $ 296,250
Bernard Freibaum............. 145,000 $2,374,375 180,000 200,000 $1,973,700 $1,679,800
Jon Batesole................. 0 -- 30,000 20,000 $ 296,250 $ 197,500
Joel Bayer................... 15,000 $ 231,563 68,000 52,000 $ 826,930 $ 505,220
</TABLE>
On December 31, 1998, the fair market value per share of common stock
was $37.88.
STANDARD EMPLOYEE BENEFITS
During 1998, General Growth contributed toward the cost of health, life
and disability insurance for employees with dependents, as part of a standard
employee benefit package. General Growth also provided employees the opportunity
to contribute pre-tax salary (subject to applicable limitations) to a
company-sponsored 401(k) plan. Messrs. Matthew Bucksbaum, John Bucksbaum,
Michaels, Freibaum, Batesole and Bayer chose to contribute a portion of their
respective salaries to the 401(k) plan during 1998, and General Growth made a
matching contribution of $7,200 on behalf of each of them.
The following Report of the Compensation Committee on Executive Compensation and
the performance graph included elsewhere in this proxy statement do not
constitute soliciting material and should not be deemed filed or incorporated by
reference into any other General Growth filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent General Growth
specifically incorporates this Report or the performance graph by reference
therein.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GENERAL. General Growth's executive compensation program is
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee currently consists of Matthew Bucksbaum, Anthony Downs
and Beth Stewart. The Compensation Committee is responsible for determining the
level of compensation paid to our Chief Executive Officer (with Matthew
Bucksbaum abstaining), approving the level of compensation paid to our other
executive officers and determining awards under, and administering, the 1993
Plan, the CVA Plan and the 1998 Incentive Plan. The Compensation Committee is
also responsible for reviewing and establishing all other executive compensation
plans which General Growth may adopt from time to time.
EXECUTIVE COMPENSATION POLICY. General Growth's compensation policy for
executive officers consists of three key elements:
- a base salary,
- a performance-based annual bonus comprised of both cash and
stock options, and
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<PAGE> 18
- periodic grants of stock options.
The Compensation Committee believes that this three-part approach best
serves the interests of General Growth and its stockholders. It enables General
Growth to recruit and retain highly-qualified individuals by providing them with
a compensation package which is competitive and has financial incentives which
are aligned with General Growth's performance. Under this approach, compensation
for these officers involves a portion of pay that is "at risk" -- namely, the
annual cash and stock option bonus. The annual bonus is variable and is based on
a measure of company performance known as "cash value added," as described
below. Annual stock option awards relate a significant portion of an employee's
long-term remuneration directly to stock price appreciation realized by all of
General Growth's stockholders.
BASE SALARY. In establishing the base salary paid to each of our
executive officers for fiscal 1998, the Compensation Committee reviewed the
compensation paid by comparable REITs to their executive officers and determined
it to be in the best interests of General Growth and its stockholders for our
executive officers to be in the lower-to-mid portion of the range. The
Compensation Committee also took into account such factors as a subjective
assessment of the nature of the position, the contribution and experience of the
executive officer, and the length of the executive officer's service to General
Growth.
ANNUAL BONUS. Since its adoption in 1998, bonus awards for General
Growth's executive officers have generally been determined in accordance with
the CVA Plan. The purpose of the CVA Plan is to provide additional incentive
compensation to participants by relating the financial reward of such
participants to the increase in the value of General Growth realized by its
stockholders. To date, various members of management of General Growth and GGMI
(excluding Matthew Bucksbaum and John Bucksbaum) have been designated by the
Compensation Committee as participants under the CVA Plan.
In general, "cash value added" or "CVA" is determined to be the excess
of net operating income less a capital charge that is intended to represent the
return expected by the providers of General Growth's capital. The Compensation
Committee believes that increases in CVA represent a performance standard that
is closely coordinated with increases in stockholder value.
The CVA Plan is intended to provide a target incentive award generally
ranging from between 10% and 50% of salary for participants. Under the CVA Plan,
the annual bonus award for a participant for a particular year is generally
equal to base salary x target incentive award x performance factor (although the
Compensation Committee may retain discretion to determine whether a participant
receives all or a portion of such award). The performance factor is determined
by reference to the amount of improvement or deterioration in CVA measured
against established targets based, in part, on prior performance. The
performance factor calculation will produce an amount in excess of the target
incentive award if actual CVA exceeds targeted CVA and will produce an amount
which is less than the target incentive award if actual CVA is less than
targeted CVA.
The CVA Plan provides the opportunity for enhanced bonuses, but also
uses a "bonus bank" feature to ensure that increases in CVA are sustained before
extraordinary bonus awards are paid out. Each year, any annual bonus award in
excess of 125% of the target incentive award is added to the outstanding bonus
bank balance. The bonus paid to a participant is equal to the annual bonus award
for the year, up to a maximum of 125% of the target incentive award, plus
payments from the bonus
-15-
<PAGE> 19
bank. Payments from the bonus bank are paid in equal installments over three
years, with the first payment being made at the time of the award. A bonus bank
balance is considered "at risk" in the sense that in any year the annual bonus
award is negative, the negative annual bonus award amount will be subtracted
from the outstanding bonus bank balance.
Our 1998 Incentive Plan has been integrated with the CVA Plan. Under
the 1998 Incentive Plan, the Compensation Committee is authorized to grant to
employees of General Growth and GGMI (other than Matthew Bucksbaum and John
Bucksbaum) stock incentive awards in the form of threshold-vesting stock options
("TSOs"). In any particular year, the number of TSOs to be granted to a
participant under the 1998 Incentive Plan will be determined, generally, by
multiplying the annual bonus award to a participant under the CVA Plan by 25%
(such product is the "percentage bonus amount") and then dividing the percentage
bonus amount by 10% of the fair market value of a share of common stock on the
date of grant. The exercise price of the TSOs to be granted to a participant
will be the fair market value on the date the TSO is granted. The threshold
price which must be achieved in order for the TSO to vest will be determined by
multiplying the fair market value on the date of grant by the estimated annual
growth rate (currently set at 7% pursuant to the 1998 Incentive Plan) and
compounding the product over a five year period. Shares of General Growth's
common stock must achieve and sustain the threshold price for at least 20
consecutive trading days at any time over the five years following the date of
grant in order for the TSO to vest. All TSOs granted will have a term of 10
years but must vest within 5 years of the grant date in order to avoid
forfeiture.
Compensation under the 1998 Incentive Plan is intended to reinforce the
attainment of annual performance goals while encouraging sustained profitable
long-term growth. We believe that the 1998 Incentive Plan accomplishes this by
providing a portion of annual compensation in options to purchase common stock,
the vesting of which is tied directly to a sustained increase in our economic
value to our stockholders. By doing so, the 1998 Incentive Plan aligns the
interests of our management employees with those of our stockholders.
OTHER STOCK OPTIONS AWARDS. Stock options have historically been an
important element of our compensation program and have generally been awarded to
our executive officers either as an inducement to join General Growth or as
additional compensation in recognition of exceptional performance. Particular
awards have generally been made without specific reference to any aspect of
General Growth's performance at such time. Rather, the Chief Executive Officer
and President have historically recommended to the Compensation Committee the
size of a particular award under the 1993 Plan based upon their subjective
assessments of factors such as job responsibilities undertaken and efforts
expended on behalf of General Growth, contributions to General Growth and
leadership qualities. Options granted to executive officers pursuant to the 1993
Plan have an exercise price equal to the fair market value of the common stock
on the date of grant, are for 10-year terms and are generally exercisable in
either 33-1/3% or 20% annual increments from the date of grant.
COMPENSATION OF MATTHEW AND JOHN BUCKSBAUM. In establishing the
compensation to be paid to each of Matthew Bucksbaum and John Bucksbaum, the
Compensation Committee (with Matthew Bucksbaum abstaining), noted that their
salaries were originally established at subjective levels prior to General
Growth's initial public offering in 1993, and that of the two, only John
Bucksbaum's salary has been adjusted, and then only moderately, 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 28.7%
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
-16-
<PAGE> 20
increase their ownership in General Growth, primarily as trust beneficiaries,
to 25% of the outstanding common stock by converting a portion of such units
into shares of common stock. See "Stock Ownership -- Common Stock Ownership of
Certain Beneficial Owners," "Stock Ownership -- Common Stock Ownership of
Management," and "Certain Relationships and Related Transactions." Accordingly,
the compensation paid to Matthew Bucksbaum and John Bucksbaum during 1998 was
not based upon, and had no specific relation to, General Growth's performance
during such period.
INTERNAL REVENUE CODE SECTION 162(M). As one of the factors in its
review of compensation matters, the Compensation Committee considers the
anticipated tax treatment to General Growth and to our 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. 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
-17-
<PAGE> 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General Growth is the general partner of the Operating Partnership and
currently the owner of an approximate 66% interest in the Operating Partnership.
The Bucksbaums currently own a 28.7% 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 General Growth, primarily as trust beneficiaries, to 25% of the
outstanding common stock by converting a portion of such units into shares of
common stock. The Operating Partnership currently holds all of the non-voting
preferred stock of GGMI, and certain executive officers and/or directors of GGMI
own 100% of the common stock which is entitled to all voting rights in GGMI.
General Growth has contracted with GGMI to provide management, leasing,
development and construction management services to the various enclosed mall
shopping centers which are owned by General Growth. In addition, certain
advertising and payroll costs of the shopping centers are paid by GGMI and
reimbursed by General Growth. During 1998, General Growth paid GGMI
approximately $15 million for management and leasing fees, $41.6 million for
cost reimbursements and $7.8 million for development costs.
During 1998, certain of our executive officers issued notes to General
Growth in connection with their exercise of options to purchase shares of common
stock. Specifically, (a) Mr. Freibaum issued a note in the principal amount of
$3,761,000, of which $1,006,000 represents withholding taxes paid by General
Growth on behalf of Mr. Freibaum relating to his exercise of an option to
purchase 145,000 shares of common stock, (b) Mr. Bayer issued a note in the
principal amount of $350,312, of which $65,312 represents withholding taxes paid
by General Growth on behalf of Mr. Bayer relating to his exercise of an option
to purchase 15,000 shares of common stock, and (c) Mr. London issued a note in
the principal amount of $123,780 in connection with his exercise of an option to
purchase 6,000 shares of common stock. These notes bear interest at a rate
computed as a formula of a market rate (5.61% per annum at December 31, 1998),
are collateralized by the shares of common stock issued upon the exercise of
such options, provide for quarterly payments of interest and are payable to
General Growth on demand.
Matthew Bucksbaum is the sole stockholder and director of General
Growth Companies, Inc., a Delaware corporation, which owns a parcel of land
adjacent to the Bowling Green Mall in Bowling Green, Kentucky. General Growth
Companies, Inc. has agreed to sell this land to the Operating Partnership for a
purchase price of $215,000. The purchase price was based upon an appraisal
performed by an independent third party. The Operating Partnership has agreed to
pay the purchase price in the form of limited partnership units in the Operating
Partnership. The transaction is expected to close during the first half of 1999.
General Growth Companies, Inc. owns a 25% undivided interest in two
airplanes which were used by certain of General Growth's executive officers
during 1998 for business travel. Aircraft expenses incurred and paid by General
Growth to General Growth Companies, Inc. in connection with such business travel
during 1998 were approximately $394,000.
Because of the Internal Revenue Code's ownership requirements for
REITs, certain executive officers of General Growth, certain trusts for the
benefit of the Bucksbaums and certain employees of
-18-
<PAGE> 22
GGMI receive, from time to time, a preferred stock ownership interest in one or
more private REITs in which General Growth and/or the Operating Partnership has
a controlling interest. While the aggregate value of all such preferred stock
ownership interests may exceed $60,000 at any time, no individual's ownership
interest in such preferred stock exceeds $60,000 at any time.
-19-
<PAGE> 23
PERFORMANCE GRAPH
The graph below compares the five-year cumulative total stockholder
return assuming the investment of $100 on January 1, 1994 (and the reinvestment
of dividends thereafter) in each of General Growth's common stock, the S&P 500
Stock Index, the NAREIT All Equity REIT Total Return Index and a peer index of
enclosed mall REITs (currently comprised of General Growth, CBL & Associates
Properties, Inc., Crown American Realty Trust, JP Realty, Inc., The Macerich
Company, Taubman Centers, Inc., Urban Shopping Centers, Inc., Simon Property
Group, Inc., Glimcher Realty Trust, The Mills Corporation, The Rouse Company and
Westfield America, Inc.). The comparisons in the graph below are not intended to
forecast the possible future performance of our common stock.
<TABLE>
<CAPTION>
PERIOD ENDING
-----------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
General Growth Properties, Inc. 100.00 113.36 114.88 190.88 225.30 245.49
S&P 500 100.00 101.32 139.39 171.26 228.42 293.69
NAREIT All Equity REIT Index 100.00 103.70 119.48 164.04 198.76 165.71
General Growth Properties Peer Index 100.00 106.42 110.66 159.97 179.94 174.84
</TABLE>
-20-
<PAGE> 24
STOCKHOLDER PROPOSALS
Notice of any stockholder proposal that is intended to be included in
General Growth's proxy statement and form of proxy for next year's annual
meeting must be received by General Growth at our principal executive offices no
later than December 18, 1999. Such notice must be in writing and must comply
with the other provisions of Rule 14a-8 under the Securities Exchange Act of
1934. In addition, the persons named in the proxy for the next annual meeting
will have discretionary authority to vote with respect to any matter that is
brought by any stockholder during the meeting and that is not described in the
proxy statement for such meeting if General Growth receives notice before
February 10, 2000 or after March 13, 2000 that such matter would be raised at
the meeting. Any notices regarding shareholder proposals must be received by the
Company at its principal executive offices at 110 North Wacker Drive, Chicago,
Illinois, 60606, Attention: Secretary.
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<PAGE> 25
PROXY
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 25, 1999, at the Annual Meeting of
Stockholders to be held at the Company's principal executive offices, 110 North
Wacker Drive, Chicago, Illinois, at 10:00 a.m., local time, on May 12, 1999, 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.
[X] Please mark votes as in this example.
1. ELECTION OF DIRECTORS: Nominees: Beth Stewart, Matthew Bucksbaum
[ ] FOR [ ] WITHHELD
[ ] ---------------------------------------------------
*For all nominees except as noted above
2. APPROVAL OF AN AMENDMENT WITH RESPECT TO CUMULATIVE DIVIDENDS PAID TO
HOLDERS OF SHARES OF 7.25% PREFERRED INCOME EQUITY REDEEMABLE STOCK,
SERIES A.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF AN AMENDMENT TO REMOVE THE IBM RETIREMENT PLAN AS AN EXCEPTION
TO THE OWNERSHIP LIMIT OF THE CERTIFICATE OF INCORPORATION.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 26
4. RATIFICATION OF THE APPOINTMENT OF ACCOUNTANTS FOR FISCAL 1999.
[ ] 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.
<TABLE>
<S> <C> <C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE MARK HERE MARK HERE
VOTED IN THE MANNER DIRECTED HEREIN. IF NO FOR ADDRESS IF YOU PLAN
DIRECTION IS MADE, THIS PROXY WILL BE VOTED CHANGE AND TO ATTEND
FOR PROPOSALS 1,2,3 AND 4. NOTE AT LEFT [ ] THE MEETING [ ]
Dated:_________________________, 1999.
_____________________________________
Signature(s)
_____________________________________
Signature(s)
(Please sign this proxy as your name appears on the Company's corporate records.
Joint owners should each sign personally. Trustees and others signing in a
representative capacity should indicate the capacity in which they sign.
</TABLE>
