SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Regency Realty Corporation
(Name of Registrant as Specified in its Charter)
-----------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Regency Realty Corporation
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NOTICE AND PROXY STATEMENT
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1999
TO THE HOLDERS OF COMMON STOCK:
PLEASE TAKE NOTICE that the annual meeting of shareholders of Regency
Realty Corporation (the "Company" or "Regency") will be held on Thursday,
May 6, 1999, at 11:00 A.M., local time, in the second floor Auditorium of the
Modis Building, Independent Square, One Independent Drive, Jacksonville,
Florida.
The meeting will be held for the following purposes:
1. To elect one Class I Director and four Class III Directors to
serve terms expiring at the annual meeting of shareholders to
be held in 2000 and 2002, respectively, and until their
successors have been elected and qualified.
2. To consider and vote on a proposed amendment to the Company's
1993 Long Term Omnibus Plan to increase the number of shares
available for award and to modify the limit on the number of
options and stock appreciation rights that may be granted to
any single employee.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The shareholders of record at the close of business on March 19, 1999 will
be entitled to vote at the annual meeting.
It is hoped you will be able to attend the meeting, but in any event we
would appreciate your dating, signing and returning the enclosed proxy as
promptly as possible. If you are able to be present at the meeting, you may
revoke your proxy and vote in person.
By Order of the Board of Directors,
/s/ J. Christian Leavitt
J. Christian Leavitt
Senior Vice President, Secretary
and Treasurer
Dated: April 2, 1999
<PAGE>
TABLE OF CONTENTS
Page
VOTING SECURITIES.......................................................... 1
Standstill............................................................ 4
PROPOSAL 1: ELECTION OF DIRECTORS.......................................... 5
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.................... 10
Annual Incentive Component............................................ 11
Long-Term Incentive Component......................................... 11
COMPARATIVE STOCK PERFORMANCE.............................................. 13
EXECUTIVE COMPENSATION..................................................... 14
Compensation Committee Interlocks and Insider Participation........... 17
CERTAIN TRANSACTIONS....................................................... 17
PROPOSAL 2: AMENDMENT TO THE REGENCY REALTY CORPORATION
1993 LONG TERM OMNIBUS................................................ 19
General ............................................................. 19
Increase in Number of Shares.......................................... 19
Possible Effect of Proposed Increase.................................. 20
Amendment to Per Employee Option Limit................................ 20
Description of the Plan............................................... 20
Options ............................................................. 21
Additional Information on Awards...................................... 22
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS................................... 22
OTHER MATTERS.............................................................. 22
SHAREHOLDER PROPOSALS...................................................... 23
ANNUAL REPORT.............................................................. 23
EXPENSES OF SOLICITATION................................................... 23
<PAGE>
Regency Realty Corporation
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
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PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 6, 1999
This Proxy Statement and the enclosed form of proxy are first being sent to
shareholders of Regency Realty Corporation on or about April 2, 1999 in
connection with the solicitation by the Company's Board of Directors of
proxies to be used at the 1999 annual meeting of shareholders of the Company.
The meeting will be held on Thursday, May 6, 1999, at 11:00 A.M., local time, in
the second floor Auditorium of the Modis Building, Independent Square, One
Independent Drive, Jacksonville, Florida.
The Board of Directors has designated Martin E. Stein, Jr., Mary Lou Rogers
and Bruce M. Johnson, and each or any of them, as proxies to vote the shares of
common stock solicited on its behalf. If the enclosed form of proxy is executed
and returned, it may nevertheless be revoked at any time insofar as it has not
been exercised by (1) giving written notice to the Secretary of the Company,
(2) delivery of a later dated proxy, or (3) attending the meeting and voting in
person. The shares represented by the proxy will be voted unless the proxy is
mutilated or otherwise received in such form or at such time as to render it not
votable.
If necessary, the holders of the proxies may vote in favor of a proposal to
adjourn the meeting to permit further solicitation of proxies in order to obtain
sufficient votes to approve any of the matters being considered at the meeting.
If the meeting is adjourned for any reason, at any subsequent reconvening of the
meeting all proxies may be voted in the same manner as such proxies would have
been voted at the original convening of the meeting (except for any proxies that
have effectively been revoked or withdrawn).
VOTING SECURITIES
The record of shareholders entitled to vote was taken at the close of
business on March 19, 1999. At such date, the Company had outstanding and
entitled to vote 57,841,449 shares of common stock, $.01 par value, 542,532
shares of Series 1 Cumulative Convertible Redeemable Preferred Stock, $.01 par
value (the "Series 1 Preferred Stock"), and 960,000 shares of Series 2
Cumulative Convertible Redeemable Preferred Stock, $.01 par value (the "Series 2
Preferred Stock"). The Series 1 Preferred Stock and the Series 2 Preferred Stock
vote together with the common stock as a single class (the "Voting Stock"). Each
share of Voting Stock entitles the holder to one vote. Holders of a majority of
the outstanding Voting Stock must be present in person or represented by proxy
to constitute a quorum at the annual meeting.
The following table shows certain information relating to the beneficial
ownership as of March 19, 1999 of (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Voting Stock, (ii) each
Director and nominee, (iii) each of the named executive officers shown in the
Summary Compensation Table elsewhere in this proxy statement, and (iv) all
Directors and executive officers as a group. Except as otherwise indicated, the
shareholders listed exercise sole voting and dispositive power over the shares.
<TABLE>
<CAPTION>
Amount and Nature of Shares Beneficially Owned(1)
Percent of
Number of Outstanding
Title of Shares Right to Restricted Percent of Voting
Name Class Owned(2) Acquire(3) Stock(4) Class(5) Shares(5)
---- -------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> >C> <C> <C>
Security Capital U.S. Realty Common 34,273,236(6) - 57.8% 56.3%
("SC-USRealty")(6)
LaSalle Advisors Limited Common 4,236,734 3,069,260 - 12.3% 12.0%
Partnership(7) Series 1 542,532 100% (7)
Preferred
Series 2 960,000 100%
Preferred
Martin E. Stein, Jr. Common 117,863 9,600 1.4% 1.4%
719,739(8)(9)
Mary Lou Rogers Common 3,349 1,920 22,472 * *
Thomas B. Allin Common - - - * *
Raymond L. Bank Common 3,553 4,000 - * *
A. R. Carpenter Common 10,349 7,000 - * *
Jeffrey A. Cozad Common 1,304 2,730 - * *
J. Dix Druce Common 27,985 7,000 - * *
John T. Kelley, III Common 955 2,543 - * *
Douglas S. Luke Common 20,466 2,000 - * *
John C. Schweitzer Common 10,815 1,920 - * *
Lee S. Wielansky Common 38,182 73,532 - * *
Terry N. Worrell Common 1,183 2,543 - * *
Bruce M. Johnson Common 76,615(9) 46,703 9,295 * *
Robert C. Gillander, Jr. Common 73,078 46,703 8,695 * *
James D. Thompson Common 67,628 45,044 6,347 * *
All directors and Common 1,125,164 361,501 56,409 2.4% 2.4%
Executive Officers as a
group (a total of 18
persons)
</TABLE>
- ------------------------
*Less than one percent
(1) Information presented in this table and related notes has been obtained
from the beneficial owner and from reports filed by the beneficial owner
with the Securities and Exchange Commission pursuant to Section 13 of
the Securities Act of 1934.
(2) Includes shares for which the named person:
o has sole voting and investment power, or
o has shared voting and investment power with his or her spouse,
unless otherwise indicated in the footnotes.
Excludes shares that:
o are restricted stock holdings,
o may be acquired through stock option exercises, or
o may be acquired upon conversion of limited partnership interests
in Regency Centers, L.P.
(3) Shares that can be acquired:
o through stock option exercises through May 8, 1999, or
o through conversion of limited partnership interest in Regency
Centers, L.P., or
o through conversion of Series 1 Preferred Stock or Series 2
Preferred Stock.
(4) Shares subject to a vesting schedule, forfeiture risk and other restric-
tions.
(5) The percentages shown on the above table assume conversion of the
Company's Class B Non-Voting Stock (the "Class B Stock"). The Company
has outstanding a total of 1,250,000 shares of Class B Stock held by a
single institutional investor which are convertible into common stock at
the holder's option. A total of 1,487,734 shares of common stock are
issuable upon conversion of the Class B Stock. Based on the number of
shares of common stock outstanding on the record date for the annual
meeting (and assuming no other changes), the 1,487,734 shares of common
stock issuable upon conversion of the Class B Stock would constitute
approximately 2.51% of the common stock outstanding immediately
following conversion.
(6) Includes the following shares which are held by wholly-owned sub-
sidiaries of Security Capital Holdings, S.A., a wholly-owned subsidiary
of Security Capital U.S. Realty:
2,037,600 shares held by Security Capital Shopping Center I Sarl
2,037,600 shares held by Security Capital Shopping Center II Sarl
2,037,600 shares held by Security Capital Shopping Center III Sarl
2,037,600 shares held by Security Capital Shopping Center IV Sarl
2,037,600 shares held by Security Capital Shopping Center V Sarl
2,033,828 shares held by Security Capital Shopping Center VI Sarl
The business address of SC-USRealty and each of the listed Security
Capital subsidiaries is 25b boulevard Royal, Luxembourg L-2449.
(7) The business address of LaSalle Advisors Limited Partnership is 11 South
LaSalle Street, Chicago, Illinois 60603. The Series 1 Preferred Stock
and Series 2 Preferred Stock each represent less than 1 percent of the
outstanding voting shares and are included in the percent of outstanding
voting shares shown for LaSalle Advisors Limited Partnership.
(8) Includes the following shares over which Mr. Stein is deemed to have
shared voting and investment power:
o 160,263 shares held by The Regency Group (Nevada) Limited
Partnership, the sole general partner of which is a
wholly-owned subsidiary of The Regency Group, Inc. All of the
outstanding stock of The Regency Group, Inc. is owned by two
testamentary trusts and a voting trust. Mr. Stein is a trustee
of each trust.
o 307,147 shares held by The Regency Group II. Mr. Stein is a
general partner of The Regency Group II and a trustee of a
trust which is also a general partner.
o 108,235 shares held by Regency Square II. Mr. Stein is a
general partner of Regency Square II and a trustee of a trust
which is also a general partner.
(9) Excludes 65,828 shares held by the Company's 401(k) plan, of which
Messrs. Martin E. Stein, Jr. and Johnson are trustees. The trustees have
shared voting power over these shares.
Standstill
SC-USRealty has agreed to a five-year "standstill" ending September 10,
2001 (renewable for additional one-year terms) in its Stockholders Agreement
with the Company, as amended. A "standstill" is an agreement by a shareholder to
refrain from changing its position, most frequently involving an agreement not
to acquire additional shares and/or not to take certain actions relating to
management or control, such as replacing one or more members of the Board of
Directors. Under the terms of SC-USRealty's standstill, SC-USRealty may not,
among other things, (1) acquire more than 60% of the Company's outstanding
common stock on a fully diluted basis, (2) transfer shares in a negotiated
transaction that would result in any transferee beneficially owning more than
9.8% of the Company's capital stock unless the Company approves the transfer, in
its sole discretion, (3) act in concert with any third parties as part of a 13D
group, or (4) seek to change the composition or size of the Board of Directors,
except as provided in the Stockholders Agreement with respect to SC-USRealty's
representation on the Board. During the standstill term, SC-USRealty is
generally required to vote its shares of common stock in accordance with the
recommendation of the Company's Board of Directors or proportionally in
accordance with the vote of the other holders of the common stock except (1)
with respect to the election of SC-USRealty's nominees to the Company's Board
(as to which SC-USRealty can vote its shares in its sole discretion) and (2)
with respect to any amendment to the Company's Articles of Incorporation or
Bylaws that would reasonably be expected to materially adversely affect
SC-USRealty and certain extraordinary matters (as to which SC-USRealty may vote
common stock owned by it, not to exceed 49% of the outstanding shares, in its
sole discretion).
SC-USRealty's standstill requires it to vote at the annual meeting for the
Board of Directors' nominees (other than SC-USRealty's representatives) or vote
proportionally for such nominees in accordance with the vote of the other share-
holders.
SC-USRealty's standstill provides for automatic termination prior to the
end of its stated term upon the occurrence of certain events, including the
acquisition by another person or group of 9.8% or more of the voting power of
the Company's outstanding voting securities. In connection with the merger on
February 28, 1999 of Pacific Retail Trust ("Pacific Retail") into the Company,
SC-USRealty agreed that the acquisition by LaSalle Advisors Limited Partnership
and its affiliates (collectively, "LaSalle") of Voting Stock pursuant to the
merger would not terminate the standstill even though the acquisition caused
LaSalle to beneficially own 11.7% of the voting power of the outstanding Voting
Stock, assuming conversion of the Class B non-voting common stock, which is held
by LaSalle Advisors Limited Partnership on behalf of a single client. However,
the standstill will be terminated if LaSalle acquires additional shares of
Voting Stock after the date of the merger and if after giving effect to the
acquisition LaSalle beneficially owns more than 9.8% of the voting power of the
outstanding Voting Stock. Under certain circumstances, a grace period will be
allowed after any such acquisition in order for LaSalle to divest itself of the
shares in excess of 9.8%.
In connection with the Company's acquisition of assets from Branch
Properties, L.P. ("Branch") in March 1997, Opportunity Capital Partners II
Limited Partnership, a Maryland limited partnership ("OCP"), acquired shares
of common stock in exchange for its interest in Branch. A subsidiary of LaSalle
Advisors Limited is the general partner of OCP and a LaSalle client is the
limited partner. The shares so acquired by OCP in the Branch transaction,
together with other shares beneficially owned by LaSalle at the time on behalf
of other clients, constituted more than 9.8% of the outstanding Voting Stock
after issuance, but SC-USRealty agreed that its standstill would not be
terminated by reason of such acquisition. OCP has agreed with the Company that
OCP will not, and OCP and a LaSalle affiliate, ABKB LaSalle Securities Limited
("ABKB/LaSalle"), have agreed that they will not, cause other managed accounts
for OCP's limited partner (collectively with OCP, the "OCP Accounts") to acquire
additional shares if, after giving effect to the acquisitions, the OCP Accounts
would own more than 9.8% of the common stock, on a fully diluted basis. However,
neither ABKB/LaSalle nor any of its affiliates is so bound with respect to any
of their other clients or accounts.
Accordingly, if LaSalle becomes the beneficial owner of any shares that are
not exempted from the standstill waivers described above, then all shares
beneficially owned by OCP, LaSalle and their affiliates will be counted in
determining whether SC-USRealty's standstill has terminated. If after any such
acquisition such persons then beneficially own more than 9.8% of the outstanding
common stock, the standstill will terminate, and SC-USRealty will not be
restricted in voting the shares that it owns or in any other action that it
might take as a shareholder of the Company.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Amended and Restated Articles of Incorporation divide the
Board of Directors into three classes, as nearly equal as possible. At the
meeting, one Class I Director will be elected to serve for a term of one
year and until his successor is elected and qualified, and four Class III
Directors will be elected to serve for terms of three years and until their
successors are elected and qualified. The Board of Directors has nominated Terry
N. Worrell to stand for reelection as a Class I Director; and Thomas B. Allin,
Jeffrey A. Cozad, John T. Kelley, III, and John C. Schweitzer to stand for
reelection as Class III Directors. With the exception of Mr. Allin, all were
recently elected to the Board in connection with the merger of Pacific Retail
Trust ("Pacific Retail") into the Company. Mr. Allin was elected to the Board to
fill the board seat vacated by Mr. Jonathan Smith during January 1999. Directors
will be elected by a plurality of votes cast by shares entitled to vote at the
meeting.
The accompanying proxy will be voted, if authority to do so is not
withheld, for the election as Directors of each of the Board's nominees.
Each nominee is presently available for election. If any nominee should become
unavailable, which is not now anticipated, the persons voting the accompanying
proxy may in their discretion vote for a substitute.
Information concerning all incumbent Directors and all nominees for
Director, based on data furnished by them, is set forth below. Under the terms
of a Stockholders Agreement between the Company and SC-USRealty, SC-USRealty has
the right, under certain circumstances, to nominate for election by shareholders
its proportionate share of the members of the Board (generally not fewer than
two, nor more than 49% of the Directors). Mr. Allin and Mr. Cozad have been
designated by SC-USRealty as its representatives to the Company's Board of
Directors but has chosen not to do so. SC-USRealty currently has the right to
designate a third member to the Board of Directors. Mr. Raymond Bank has been
designated by OCP as its representative to the Company's Board of Directors.
OCP will retain the right to nominate one member of the Board so long as it
retains the shares of common stock received in connection with the acquisition
of assets of Branch Properties, L.P. In accordance with the Agreement and Plan
of Merger between Regency and Pacific Retail, Pacific Retail named Mr. Kelley,
Mr. Schweitzer, and Mr. Worrell as its representatives to the Board.
The Board of Directors of the Company recommends a vote "for" the election
of each of its nominees. Proxies solicited by the Board will be so voted unless
shareholders specify in their proxies a contrary choice.
MARTIN E. STEIN, JR.
Director since 1993; Class II term expiring 2001
Mr. Stein, age 46, is Chairman of the Board and Chief Executive Officer of
the Company. He served as President of the Company from its initial public
offering in October 1993 until December 31, 1998. Mr. Stein also served as
President of the Company's predecessor real estate division since 1981, and Vice
President from 1976 to 1981. He is a Director of FRP Properties, Inc., a
publicly held transportation and real estate company.
MARY LOU ROGERS
Director since 1997; Class I term expiring 2000
Ms. Rogers, age 47, became President and Chief Operating Officer of the
Company in January 1999. Prior to joining the Company she was Managing Director
- - Security Capital U.S. Realty Strategic Group from March 1997 to January 1999.
Ms. Rogers was Senior Vice President and Director of Stores, New England -
Macy's East/ Federated Department Stores from 1994 to March 1997. She held
various retailing positions, including Senior Vice President for Federated's
Burdines Division and Henri Bendel.
THOMAS B. ALLIN
Director since 1999; standing for election to Class III term expiring 2002
Mr. Allin, age 49, became Managing Director of Security Capital Group
Incorporated, a publicly held real estate research, investment and operating
management company, in December 1998. He served as President of Strategic Hotel
Capital Incorporated, a privately held owner of luxury and upscale full service
hotels, from April 1998 to November 1998, and President and Chief Executive
Officer of Gordon Biersch Brewing Company, a regional microbrewery and
restaurant operation located in California, from 1996 to 1998. From 1973 to
1996, Mr. Allin was Senior Vice President and Zone Manager of the Western Zone
for McDonald's Corporation, spending 15 years in Europe where he launched the
McDonald's System in France and later was responsible for the direction and
support of 20 European countries, as well as the development of new markets in
Africa and the Middle East.
RAYMOND L. BANK
Director since 1997; Class II term expiring 2001
Mr. Bank, age 45, has been President and Chief Operating Officer of
Merchant Development Corporation, a venture capital and buy-out firm focusing on
consumer retail, direct marketing, and service companies since 1994. He has
also served as President of Raymond L. Bank Associates, Inc., a consulting firm
serving a diverse clientele in corporate development, retail, and direct
marketing strategies, since 1991. He is a Director of OfficeMax, Inc.
A. R. CARPENTER
Director since 1993; Class II term expiring 2001
Mr. Carpenter, age 56, is President and Chief Executive Officer (since
January 1992) of CSX Transportation, Inc., with which he has held a variety of
positions since 1962, including Executive Vice President-Sales and Marketing
(from 1989 to 1992). Mr. Carpenter is a Director of Florida Rock Industries,
Inc., Stein Mart, Inc. and American Heritage Life Insurance Company.
JEFFREY A. COZAD
Director since 1999; standing for election to Class III term expiring 2002
Mr. Cozad, age 34, has been Director of Security Capital U.S. Realty since
June 1996 and of Security Capital Holdings since April 1997, and Managing
Director of Security Capital U.S. Realty and Security Capital Holdings since
June 1996. He was Senior Vice President of Security Capital Markets Group
Incorporated from June 1995 to June 1996 and Vice President, Capital Markets
Services of Security Capital Group from December 1991 to June 1995. Prior to
joining Security Capital Group, Mr. Cozad was with LaSalle Partners
Incorporated, where he provided corporate real estate services to major
institutions.
J. DIX DRUCE, JR
Director since 1993; class II term expiring 2001
Mr. Druce, age 50, has been President and Chairman of the Board of Life
Service Corp., Inc., a life insurance management company, since 1988, and
President and Director of American Merchants Life Insurance Company and its
parent, AML Acquisition Company, since October 1992. He was President and
Director (Chairman from May 1989 to July 1991) of National Farmers Union
Life Insurance Company from 1987 to 1991, and President and Director of Loyalty
Life Insurance Company and NFU Acquisition Company from 1987 to 1991.
JOHN T. KELLEY, III
Director since 1999; standing for election to Class III term expiring 2002
Mr. Kelley, age 58, was Chairman of Pacific Retail Trust's Board of
Trustees prior to its merger into the Company on February 28, 1999. He is a
Trustee of Archstone Communities Trust, an Advisory Trustee of Prologis Trust
and a Director of Security Capital Group Incorporated. From 1987 to 1991 he was
Chairman of the Board of Kelley-Harris Company, Inc., a real estate investment
company, and from 1968 to 1987 he was Managing Director of LaSalle Partners
Limited, specializing in corporate real estate services.
DOUGLAS S. LUKE
Director since 1993; Class I term expiring 2000
Mr. Luke, age 56, was President and Chief Executive Officer of WLD
Enterprises, Inc., a Ft. Lauderdale, Florida based diversified private
investment and management company with interests in securities, real estate and
operating businesses from 1991 to 1998. From 1987 to 1990 he was Managing
Director of Rothschild Inc./Rothschild Ventures. He is Director of Orbital
Sciences Corporation, a space systems company, and Westvaco Corporation, a
diversified paper and chemicals manufacturing company.
JOHN C. SCHWEITZER
Director since 1999; standing for election to Class III term expiring 2002
Mr. Schweitzer, age 54, was a member of Pacific Retail Trust's Board of
Trustees prior to its merger into the Company on February 28, 1999. He is
President of Westgate Corporation and Managing Partner of Campbell Capital,
Ltd., which holds investments in real estate and venture capital operations. Mr.
Schweitzer is a Trustee of Archstone Communities Trust, a Director of Homestead
Village Incorporated, and a Director of Texas Christian University, Fort Worth,
Texas and KLRJ Austin Public Television. He previously served as a director or
officer of many public companies and financial institutions, including Franklin
Federal Bancorp, Elgin Clock Company, El Paso Electric Company, MBank El Paso,
Chase Bank of Texas-Austin, the Circle K Corporation and Enerserv Products.
LEE S. WIELANSKY
Director since 1998; Class I term expiring 2000
Mr. Wielansky, age 48, has been Managing Director - Investments of the
Company since March 1998. He was President and Chief Executive Officer of
Midland Development Group, Inc. from 1983 to March 1998. Mr. Wielansky is a
Director of Allegiant Bancorp, Inc.
TERRY N. WORRELL
Director since 1999; standing for election to Class I term expiring 2000
Mr. Worrell, age 54, was a member of Pacific Retail Trust's Board of
Trustees prior to its merger into the Company on February 28, 1999. He is a
private investor in commercial properties and other business ventures. From
1974 to 1989 he was President and CEO of Sound Warehouse of Dallas, Inc. prior
to its purchase by Blockbuster Music.
Board of Directors and Standing Committees.
The Board held six regular meetings and two special meetings during 1998.
All Directors attended at least 75% of all meetings of the Board and Board
committees on which they served during 1998.
The Board of Directors has established four standing committees: an
Executive Committee, an Audit Committee, a Compensation Committee and a
Nominating Committee, which are described below. Members of these committees
will be elected annually at the regular Board meeting held in conjunction with
the annual shareholders' meeting.
Executive Committee. The Executive Committee presently is comprised of
Martin E. Stein, Jr. (Chairman) or Mary Lou Rogers if Mr. Stein is unavailable,
one independent non-SC-USRealty Director, and any one independent Director
nominee of SC-USRealty. The Executive Committee did not meet during 1998. The
Executive Committee is authorized by the resolutions establishing the committee
to handle ministerial matters requiring Board approval. The Executive Committee
may not exercise functions reserved under Florida law for the full Board of
Directors and, in addition, may not declare dividends.
Audit Committee. The Audit Committee presently is comprised of J. Dix
Druce, Jr. (Chairman), Thomas B. Allin, and Douglas S. Luke, none of whom is an
officer of the Company. Mr. Allin was appointed to the Audit Committee in
January 1999 in place of Mr. Jonathan Smith who resigned from the Board. The
Audit Committee met once during 1998. The principal responsibilities of and
functions generally performed by the Audit Committee are reviewing the Company's
internal controls and the objectivity of its financial reporting, making
recommendations regarding the Company's employment of independent auditors, and
reviewing the annual audit with the auditors.
Nominating Committee. The Nominating Committee presently is comprised of
John C. Schweitzer (Chairman), A. R. Carpenter, John T. Kelley, III and
Martin E. Stein, Jr. Mr. Schweitzer and Mr. Kelley were appointed to the
Nominating Committee in place of Mr. Albert Ernest, Jr. and Mr. Edward L. Baker
who resigned from the Board following the merger of Pacific Retail into the
Company on February 28, 1999. The Nominating Committee, which makes nominations
for election of Directors, also has responsibility for accepting nominations
from shareholders. The Nominating Committee met twice during 1998. The
Company's Bylaws require that any nominations by shareholders be delivered to
the Company no later than the deadline for submitting shareholder proposals.
See "Shareholder Proposals."
Compensation Committee. The Compensation Committee presently is comprised
of John C. Schweitzer (Chairman), A.R. Carpenter and John T. Kelley, III. Mr.
Schweitzer and Mr. Kelley were appointed to the Compensation Committee in place
of Mr. Ernest and Mr. Baker following the merger on February 28, 1999. The
Compensation Committee held four meetings during 1998 to review annual
performance and to review and approve changes to the Company's current executive
compensation plans. This Committee has the responsibility of approving the
compensation arrangements for senior management of the Company, including annual
bonus and long term compensation. It also recommends to the Board of Directors
adoption of any compensation plans in which officers and Directors of the
Company are eligible to participate, as well as makes grants of employee stock
options and other stock awards under the Company's Long Term Omnibus Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for evaluating and establishing appropriate levels of executive
compensation and other benefit plans of the Company. The Committee is comprised
entirely of independent non-employee Directors.
Compensation Philosophy
The Company's executive compensation program is incentive based, and has
been designed to attract, motivate, reward and retain executives who are result-
oriented and capable of achieving the Company's key objectives. The Committee
recognizes that the interests of the shareholders are best served by allowing
executives the opportunity to participate in the appreciation of the Company
through the granting of stock awards and stock options.
The Committee evaluates and establishes the Company's executive compensa-
tion program based upon current market information including comparative
executive compensation studies. In 1998, the Committee engaged Arthur Andersen
to undertake a comprehensive compensation study which served as the basis for
the Company's 1998 compensation plan. Regency's program is comprised of an
annual incentive component and a long-term incentive component. Both of these
forms of incentive compensation are primarily variable in nature, and designed
to effectuate a pay-for-performance philosophy. This philosophy considers
management's ability to consistently generate total shareholder returns, grow
funds from operations per share (FFO is the most widely-accepted measure of
performance for real estate investment trusts), position the Company for future
FFO per share growth, and strengthen the Company's capital structure.
1998 Operating Results
The Company met or exceeded its 1998 key goals and objectives. FFO
increased by 14.1% in 1998 to $2.25 per share vs. $1.97 per share in 1997.
Including the acquisition of the Midland Group, the platform of quality
neighborhood retail centers was increased by 43 properties representing an
investment of $384 million. During 1998, the Company completed the development
of six retail centers started in 1997, and commenced development or
redevelopment of twelve retail centers in 1998, which when complete should yield
in excess of 10.6%. Although the Company was disappointed with 1998's total
shareholder return, three-year compounded annual shareholder return exceeded
20%. The Company successfully enhanced its capital structure during 1998 by
completing a cost effective $80 million perpetual preferred unit offering at 8
1/8% and a $100 million unsecured debt offering at 7 1/8% maturing in 2005.
Additionally, all of the office properties held by the Company were sold for an
aggregate of $31 million representing an 8.4% cap rate and $10 million in
profit.
In September 1998, the Company announced a merger with Pacific Retail
Trust. With this merger, Regency becomes the first national company to focus on
owning, operating and developing grocery anchored centers. At closing of the
merger on February 28, 1999, Regency's total assets exceeded $2.2 billion, and
Regency owned 200 retail centers totaling 23.1 million square feet primarily
located in high growth markets throughout the United States. The merger also
creates the largest grocery-driven developer in the country expanding the
development pipeline to over $400 million under development or in planning. In
addition to being the largest developer for both Kroger and Publix, the Company
will also have key relationships with Albertson's and Safeway - all dominant
players in the grocery industry.
Annual Incentive Component
Base Salary. Base salaries of executives are reviewed annually by the
Committee. In determining appropriate base salaries, the Committee considers
external competitiveness in relation to the Company's current financial
condition and capital resources, the roles and responsibilities of the
individual, the contributions of the individual to the Company's business, an
analysis of job requirements and the individual's prior experience and
accomplishments.
Annual Bonus. To provide additional incentive to achieve outstanding
performance, the Committee also makes cash bonus awards based on corporate and
individual performance. The compensation plan established by the Committee in
1998 establishes target cash bonuses based on achievement of quantitative
financial and quantitative and qualitative operational goals for the Company
and, where appropriate, those activities of the Company managed by the
executive. The Committee has the discretion to increase the annual bonus in
any given year to take into account what it deems to be extraordinary events.
Long-Term Incentive Component
The Committee strongly believes that providing executives with an
opportunity to increase their ownership of common stock aligns their interests
with and best serves the stockholders.
Stock Options and Dividend Equivalents. The Company grants stock options to
executives as part of their annual performance review. Annual options are
granted at fair market value on the date of grant, vest 25% per year after the
year of grant, and expire after 10 years. Annual options also receive dividend
equivalents equal to the Company's dividend yield less the average dividend
yield of the S&P 500. Dividend equivalents accrue quarterly, are funded in
Company common stock, and vest at the same rate as the options upon which they
are based.
Restricted Stock Plan. The Company granted restricted stock to certain
executive officers in December 1998 based on their position, their current
ownership of options and restricted stock, and their contribution to 1998's
performance including the merger with Pacific Retail Trust. The shares
were granted at fair market value on the date of grant, and vest 10% one year
after date of grant, 20% after year two, 30% after year three, and 40% after
year four, at which time they will be fully vested. The issuance of restricted
stock is included in the Summary Compensation Table as Restricted Stock Awards.
Stock Purchase Plan. The Committee structured a stock purchase plan ("SPP")
whereby executive officers and certain key employees acquired common stock at
fair market value by investing their own capital in combination with loans
provided by the Company. These full recourse loans are secured by the stock
purchased. The terms and amounts of existing SPP loans are further described
under the summary of Executive Compensation included elsewhere in this Proxy
Statement. Certain SPP loans originated during 1993 and 1996 provide for loan
forgiveness awards based upon growth in FFO per share and cumulative total
shareholder return. In 1998, the Company exceeded the performance targets that
provide loan forgiveness related to FFO per share growth and compounded annual
shareholder return. However, forgiveness amounts related to 1998 total
shareholder return were not achieved and accordingly not granted. Forgiveness
amounts for the executive officers are reported in the Summary Compensation
Table as SPP Loan Awards. SPP loans originated after 1996 have no forgiveness
programs.
CEO Compensation
The Committee's policies for determining the CEO's compensation are the
same as the other executives. For 1999, the CEO's base compensation was
increased to $400,000, and in accordance with the Company's incentive compensa-
tion program, the CEO received an incentive bonus of $350,000, and SPP loan
forgiveness of $135,775 related to 1998 performance. In December
1998, the CEO was granted annual options to purchase 123,596 shares of common
stock at $22.25 per share, the fair market value on the date of grant, related
to 1998 performance. The CEO continues to serve under a rolling three-year
employment agreement.
REGENCY REALTY CORPORATION
COMPENSATION COMMITTEE
John C. Schweitzer, Chairman
A. R. Carpenter
John T. Kelley, III
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below provides an indicator of cumulative total shareholder
returns for Regency as compared with the S&P Stock Index and the NAREIT All
Equity Index (excluding healthcare REITs), weighted by market value at each
measurement point. The graph assumes that $100 was invested on December 31, 1993
in Regency common shares and that all dividends were reinvested by the share-
holder.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN OF
COMPANY, PEER GROUP AND BROAD MARKET
<CAPTION>
Fiscal Year Ending
-----------------------------------------------------------------
COMPANY/INDEX/MARKET 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Regency Realty Corporation 100.00 109.25 123.59 208.24 233.92 201.83
NAREIT Equity Index W/O Health Care 100.00 102.99 117.63 160.45 193.38 159.48
S & P 500 Index 100.00 101.32 139.40 171.41 228.59 293.92
</TABLE>
THE INDUSTRY INDEX CHOSEN WAS:
NAREIT EQUITY INDEX W/O HEALTH CARE
THE BROAD MARKET INDEX CHOSEN WAS:
AN INDEX OF THE COMPANIES ON THE S&P 500
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during fiscal 1998, 1997 and 1996 to the Company's
Chief Executive Officer and the Company's four other most highly compensated
executive officers during the year ended December 31, 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Performance Securities
Name & Principal Stock Underlying SPP Loan All Other
Position Year Salary(1) Bonus(2) Awards(3) Options/SARs(4) Awards(5) Compensation(6)
---------------- ---- --------- -------- ----------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Martin E. Stein, Jr. 1998 $275,000 $350,000 $ 0 123,596 $135,775 $14,813
Chairman and Chief 1997 $275,000 $197,500 $265,800 232,626 $186,338 $17,325
Executive Officer 1996 $252,391 $225,000 $161,600 32,700 $186,338 $35,439
Bruce M. Johnson 1998 $190,000 $150,000 $100,000 29,213 $ 60,675 $15,870
Managing Director and 1997 $180,000 $104,400 $132,900 128,390 $ 84,083 $18,143
Chief Financial Officer 1996 $145,076 $115,000 $80,800 20,800 $ 84,083 $20,753
Robert C. Gillander, Jr. 1998 $185,000 $125,000 $100,000 29,213 $ 58,288 $14,813
Managing Director, 1997 $175,000 $100,000 $116,228 128,390 $ 80,502 $16,480
Investments Group - 1996 $137,500 $108,900 $ 70,700 20,800 $ 80,502 $19,266
Atlantic
James D. Thompson 1998 $185,000 $125,000 $100,000 29,213 $ 51,499 $14,146
Managing Director 1997 $175,000 $100,000 $107,981 128,390 $ 71,185 $16,795
Operations Group - East 1996 $129,826 $103,000 $ 65,650 20,800 $ 71,185 $18,929
Lee S. Wielansky 1998 $185,000 $72,000 $ 0 76,365 $ 0 $14,303
Managing Director 1997 $ 0 $ 0 $ 0 0 $ 0 $ 0
Investments Group - 1996 $ 0 $ 0 $ 0 0 $ 0 $ 0
Midwest
</TABLE>
- -------------------------
(1) Includes amounts deferred under the 401(k) feature of the Company's
profit sharing plan.
(2) Bonuses for the year ended December 31, 1998 and 1997 were paid 100% in
cash; for the year ended December 31, 1996 bonuses were paid 45% in cash
and 55% in stock.
(3) Consists of the fair market value of restricted stock awards in each of
the years of grant. 1998 awards vest as follows: year 1 - 10%, year 2 -
20%, year 3 - 30%, year 4 - 40%. 1997 and 1996 awards vest 34%, 33% and
33% on the first, second and third anniversary dates of the grant. The
executive is entitled to dividends and voting rights on unvested shares.
Shares representing the full amount of the awards listed above, held by
the named executives are as follows: Mr. Stein, 16,000 shares; Mr.
Johnson, 12,494 shares; Mr. Gillander, 11,494 shares; and Mr. Thompson,
10,994 shares.
(4) The exercise price of stock options grants are equal to fair market
value of the Company's common stock on date of grant.
(5) Represents amounts earned by the named executive officers in the form of
loan forgiveness in accordance with the terms of the stock purchase plan
that is part of the Company's 1993 Long Term Omnibus Plan, based upon
FFO per share growth greater than 7%, annual shareholder return of 15%
or more and cumulative return of 20% or more since January 1, 1996.
(6) The amounts shown in this column for 1998 include the following:
<TABLE>
<CAPTION>
Life Insurance Company Contribution to Other
Premiums 401(k)/Profit Sharing Plan Compensation
-------------- -------------------------- ------------
<S> <C> <C> <C>
Mr. Stein $1,613 $12,200 $1,000
Mr. Johnson $2,670 $12,200 $1,000
Mr. Gillander $1,613 $12,200 $1,000
Mr. Thompson $ 946 $12,200 $1,000
Mr. Wielansky $1,453 $11,850 $1,000
</TABLE>
<PAGE>
Stock Purchase Plan. The following table sets forth as of March 1, 1999,
the amounts outstanding under the SPP loan program due from each of the
Company's executive officers.
<TABLE>
<CAPTION>
Largest Balance
SPP Loan Balance During Fiscal Year Ended
Executive Officer March 1, 1999 Interest Rate December 31, 1998
----------------- ---------------- ------------- -------------------------
<S> <C> <C> <C> <C>
Martin E. Stein, Jr. $1,360,731 6% - 7.8% $1,662,868
Bruce M. Johnson $ 872,427 6% - 7.8% $1,013,337
Robert C. Gillander, Jr. $ 858,106 6% - 7.8% $ 993,048
James D. Thompson $ 841,628 6% - 7.8% $ 962,197
Lee S. Wielansky $ 947,107 6% $ 974,903
</TABLE>
Stock Options. The following table sets forth information concerning the
value of unexercised options as of December 31, 1998 held by the executive
officers named in the Summary Compensation Table above.
<TABLE>
AGGREGATED OPTION EXERCISES DURING FISCAL 1998
AND OPTION YEAR-END VALUES TABLE
<CAPTION>
Number of Number of Value of Unexercised
Shares Unexercised In-the-Money
Acquired Value Options at Options at
Upon Realized December 31, 1998 December 31, 1998
Exercise Upon Exercisable/ Exercisable/
Name Options Exercise Unexercisable Unexercisable
--- --------- -------- ----------------- --------------------
<S> <C> <C> <C> <C>
Martin E. Stein, Jr. 43,600 $70,850 117,863 (E) / $393,008 (E) /
333,191 (U) None (U)
Bruce M. Johnson 29,700 $48,263 46,703 (E) / $23,196 (E) /
133,604 (U) None (U)
Robert C. Gillander, Jr. 29,700 $48,263 46,703 (E) / $23,196 (E) /
133,604 (U) None (U)
James D. Thompson 29,700 $48,263 45,044 (E) / None (E) /
133,604 (U) None (U)
Lee S. Wielansky - - None (E) / None (E) /
76,364 (U) None (U)
</TABLE>
<PAGE>
The following table sets forth information with respect to option grants to
the executive officers named in the Summary Compensation Table above during 1998
and the potential realizable value of such option grants.
<TABLE>
OPTION GRANTS DURING FISCAL 1998
<CAPTION>
% of Total
Number of Options Exercise Hypothetical
Options Granted Price Expiration Value at
Executive Officer Granted during 1998 ($/share) Date Grant Date (1)
----------------- ------- ----------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Martin E. Stein, Jr. 123,596 16.7% $22.25 12-15-2008 $274,383
Bruce M. Johnson 29,213 3.9% $22.25 12-15-2008 $ 64,853
Robert L. Gillander, Jr. 29,213 3.9% $22.25 12-15-2008 $ 64,853
James D. Thompson 29,213 3.9% $22.25 12-15-2008 $ 64,853
Lee S. Wielansky 76,365 10.3% $26.1875 3-1-2008 $169,530
</TABLE>
- ---------------------
(1) The estimated present value at grant date of each option granted during
1998 has been calculated to be $2.22 using the Black-Scholes option
pricing model. The valuation is based upon the following assumptions:
o estimated time until exercise of 6.5 years
o a risk-free interest rate of 4.8%; a volatility rate of 21%
o a dividend yield of 7.5%.
The approach used in developing the assumptions upon which the
Black-Scholes valuation was calculated is consistent with the
requirements of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." The actual value of the
options may be significantly different, and the value actually realized,
if any, will depend upon the excess of the market value of the common
stock over the option exercise price at the time of exercise.
Employment Agreements. The Company has entered into a three-year employment
agreement with Martin E. Stein, Jr., the Company's Chairman and Chief Executive
Officer, providing for an annual base salary and participation in the Company's
executive compensation plans on the same terms as other executive officers. The
agreement, which was effective in October 1993, is renewed automatically for an
additional year on each anniversary date thereof so that the remaining term will
be three years, unless either party gives written notice of non-renewal. The
agreement provides for Mr. Stein to receive base salary and incentive compensa-
tion for the remainder of the term of the agreement in the event that he is
terminated, his responsibilities are materially reduced or the Company's head-
quarters are relocated from Jacksonville, Florida as a result of a sale, merger
or other change of control of the Company. The Company has entered into agree-
ments with Messrs. Johnson, Gillander and Thompson that provide for the payment
of salary and benefits for a specified period in the event of a change of
control only.
Compensation of Directors. In 1998, the Company paid an annual fee of
$17,000 to each of its non-employee Directors, plus $2,500 per year for
service on a Board committee ($3,000 per year for chairing a committee). The
annual fee has been increased to $18,000 for 1999, and the fees for committee
members changed to $500 per meeting attended. Directors' fees are currently paid
in shares of common stock, unless the Director elects to receive all or any
portion of the fees in cash. Non-employee Directors also receive non-qualified
options to purchase 1,000 shares of common stock at the end of each year. The
options fully vest one year after grant, have a term of ten years, and have an
exercise price equal to the greater of the fair market value of the common stock
on the date of grant or the average trading price of the common stock for the 20
business days preceding the date of grant. The annual option grant will be
increased to 5,000 shares each, to be awarded immediately following each annual
meeting beginning with the 1999 annual meeting, and the annual options awarded
beginning in 1999 also will entitle the Directors to receive dividend equivalent
units on the same basis as employee optionees. Beginning with the options
granted in 1999, the annual options will vest 25% on each of the first four
anniversary dates of the grant, and will become fully vested upon the
involuntary termination, death or disability of the Director. Directors may also
elect to participate in a stock purchase matching program that provides for a
stock value match equal to 50% of the common stock purchased by the Director,
limited to a Company match of $10,000 per year.
Compensation Committee Interlocks
and Insider Participation
During the year ended December 31, 1998, Martin E. Stein, Chairman and
Chief Executive Officer of the Company, served on the board of Directors of FRP
Properties, Inc. Edward L. Baker, Chairman of the Board of FRP Properties, Inc.
was a member of the Company's Compensation Committee during 1998. Mr. Baker
retired from the Company's Board of Directors effective February 28, 1999, the
date of the merger with Pacific Retail Trust.
CERTAIN TRANSACTIONS
The Audit Committee of the Board of Directors is responsible for evaluating
the appropriateness of all related-party transactions.
Management Services for Barnett Bank Plaza. The Company, through its
affiliate, Regency Realty Group, Inc. (the "Management Company"), provides
management and leasing services for Barnett Bank Plaza. These arrangements are
intended to give the Company the economic benefit from the management, leasing,
and brokerage activities with respect to the property. All of such services are
provided on terms and conditions no less favorable to the Management Company
than the terms and conditions on which the Management Company provides similar
services to third parties. The Audit Committee of the Board of Directors is
required to review annually the terms and conditions on which such services are
provided. During the year ended December 31, 1998, Barnett Bank Plaza paid the
Management Company an aggregate of $273,221 for such services. Barnett Bank
Plaza is owned by RSP II Barnett Bank Plaza, Ltd., a limited partnership
indirectly controlled by Martin E. Stein, Jr. and his family, and in which
certain executive officers of the Company also have an indirect ownership
interest.
Cost Sharing Arrangement with Management Company. The Company manages,
leases and develops properties under employee and cost sharing arrangements with
the Management Company. The Regency Group, Inc. owns 93% of the voting common
stock of the Management Company, and the Company, through its investment in
Regency Centers, L.P., owns 100% of the Management Company's non-voting
preferred stock and 7% of its voting common stock. The cost sharing arrangements
are based on allocations of management time and general overhead made on an
arm's-length basis and are in compliance with applicable regulations of the
Internal Revenue Service. All such cost sharing arrangements must be reviewed
annually by the Audit Committee of the Board of Directors, and any changes in
such arrangements must be approved by a majority of the Company's independent
Directors. Under generally accepted accounting principles, all items of income
and expense of the Management Company are consolidated with the Company and
included in the Company's financial statements, net of inter-company trans-
actions.
Sale of Office Buildings to Affiliate of LaSalle Advisors Limited Partner-
ship. In February 1998, the Company sold three office buildings and a parcel of
land to FBEC-Quadrant Buildings, L.P., an affiliate of LaSalle Advisors Limited
Partnership which owns 12.3% of the Company's common stock. The purchase price
for the properties, $26.7 million, was determined through arms-length negotia-
tions.
Transactions with SC-USRealty. In June 1998, the Company paid Security
Capital Markets Group, an affiliate of SC-USRealty, a placement fee of $1.2
million for its services as financial advisor in connection with the sale of $80
million of 8.125% Cumulative Redeemable Preferred Units of limited partnership
interest in Regency Centers, L.P., the Company's operating partnership.
In September 1998 the Company entered into an Agreement and Plan of Merger
with Pacific Retail Trust, a Dallas based real estate investment trust owning
grocery store anchored shopping centers in the western United States. Under the
terms of the merger agreement, shareholders of Pacific Retail Trust received .48
of a share of Regency stock for each Pacific Retail share that they owned.
SC-USRealty, the Company's largest shareholder owning 11,740,216 shares of
Regency common stock prior to the merger, received an additional 22,533,020
shares of Regency common stock in the merger in exchange for its 46,985,459
Pacific Retail shares. The terms of the merger, including the exchange ratio,
were negotiated by a special committee of the board comprised of Messrs. J. Dix
Druce (Chairman), Edward Baker, Douglas Luke and Albert Ernest.
In connection with the merger, the Company engaged Security Capital Markets
Group to solicit shareholder proxies for approval of the merger. Security
Capital Markets Group was paid $250,000 for their solicitation services.
The Company has an administrative services agreement with SC Group
Incorporated, an affiliate of SC-USRealty, to provide risk management services
for which the Company will pay to SC Group Incorporated an annual fee of
$80,000.
<PAGE>
PROPOSAL 2: AMENDMENT TO THE REGENCY REALTY CORPORATION
1993 LONG TERM OMNIBUS
The members of the Regency Board of Directors have unanimously approved,
and recommend that Regency shareholders vote "FOR" the approval of, the proposal
to amend the Regency Realty Corporation 1993 Long Term Omnibus Plan (the "Plan")
to increase the number of shares covered by the Plan and to modify the limit on
the number of options and stock appreciation rights that may be granted to any
single employee under the Plan. The affirmative vote of a majority of the Voting
Stock voted with respect to the matter is required to approve this proposal
(provided that more than 50% of the votes entitled to be cast are voted on the
proposal). Broker non-votes and abstentions will have no effect on the vote
(provided that more than 50% of the votes entitled to be cast are voted on the
proposal).
General
The Regency Board of Directors and shareholders initially approved the Plan
on September 29, 1993. The Regency Board has adopted, subject to shareholder
approval, an amendment to the Plan to increase the maximum number of shares of
common stock available for award by 3,000,000 to 8,520,000 shares, subject to
the existing ceiling of 12% of the outstanding shares of common stock, plus 12%
of outstanding common stock equivalents (but excluding shares subject to options
under the Plan). The Regency Board also has adopted, subject to shareholder
approval, an amendment to the Plan that would change the number of options and
stock appreciation rights that may be granted to any single employee from a
900,000 limit to an annual limit of 400,000. The Board believes, in light of the
significant growth that the Company has experienced since the Plan was
originally adopted in 1993, that these changes are desirable order for the
Company to be able to continue to attract and provide incentives to key
employees and non-employee directors.
Increase in Number of Shares
The first change to the Plan would increase the number of shares available
for award to the lesser of 8,520,000 shares or 12% of the outstanding shares of
common stock and share equivalents (excluding Plan options). The Plan presently
caps the maximum number of shares at the lesser of 12% of the common stock
outstanding on the prior December 31, or 5,520,000 shares. The proposed amend-
ment will apply the existing 12% cap to share equivalents (excluding outstanding
Plan options) as well as outstanding shares and will allow for increases
throughout the year when and as shares and share equivalents (excluding Plan
options) are issued.
The number of shares of the Company's common stock reserved for issuance
under the Plan initially was 6% of the shares outstanding upon consummation of
the Company's initial public offering in November 1993. The number of shares
reserved for issuance is increased each December 31 by 2% of the shares out-
standing on that date (plus 6% of any shares issued in any public offering
during the preceding 365 days), with the maximum number of shares limited to the
lesser of (1) 12% of the shares of common stock outstanding on the prior
December 31, or (2) 5,520,000 shares. As of March 15, 1999, the number of shares
reserved for issuance under the Plan was 5,520,000, and the closing price per
share of the common stock on that date was $20.375. The 5,520,000 share limit
includes a 2,520,000 share increase approved by shareholders in connection with
the merger of Pacific Retail into the Company in February 1999, representing the
number of shares covered by Pacific Retail's incentive stock plan prior to the
merger, as adjusted for the merger exchange ratio.
As of March 15, 1999, there were 2,960,635 shares subject to options
granted under the Plan, 25,887 shares subject to dividend equivalent awards,
135,405 shares issued under the restricted stock program of the Plan, 321,958
shares subject to employee stock purchase loans, and 1,653,903 shares remaining
available for award. As of March 19, 1999, there were 57,841,449 shares of
common stock outstanding, plus an additional 4,127,883 share equivalents
consisting of shares issuable upon the conversion of preferred stock and Class B
non-voting common stock and shares issuable in exchange for limited partnership
units of the Company's operating partnership, Regency Centers, L.P.
Possible Effect of Proposed Increase
The Company believes that the ability to grant options and other stock-
based incentive compensation improves its ability to attract and maintain
qualified personnel. At the time of the Company's initial public offering in
November 1993, the Company had total assets of approximately $150 million and
approximately 100 employees. As of March 15, 1999, the Company has total assets
of approximately $2.4 billion and approximately 375 employees. To align the
interests of the Company's officers, key employees and non-employee directors
with those of the Company's shareholders, the Company needs to be able to have a
sufficient pool of stock-based incentives, commensurate with the Company's
growth, to attract and motivate key personnel. However, authorizing the
additional shares under the Plan may cause dilution to Regency's current share-
holders.
Amendment to Per Employee Option Limit
The second change to the Plan would change the limit on the number of
options and stock appreciation rights that may be granted to any employee to an
annual 400,000 share limit. This limit is required in order for compensation
expense for non-qualified options to be exempt from limitations on deductibility
by the Company for federal income tax purposes under Section 162(m) of the
Internal Revenue Code. The Board believes that the change to a 400,000 share
annual limit is appropriate in order to provide sufficient flexibility for
future issuances to senior executives during the remaining five year term of the
Plan commensurate with the Company's growth and the increase in the responsi-
bilities of the executives. For example, Martin E. Stein, Jr., the Company's
Chairman and Chief Executive Officer, received options covering 123,596 shares
in 1998, increasing to 379,766 the total number of options awarded to him since
the inception of the Plan.
The change in the per individual limit will allow an individual to receive
more options over the life of the Plan than the 900,000 share limit currently in
effect.
Description of the Plan
The common stock issued under the Plan may be authorized and unissued
shares or treasury shares. In the event of certain transactions affecting the
type or number of outstanding shares, the number of shares subject to the Plan,
the number or type of shares subject to outstanding awards and the exercise
price thereof may be appropriately adjusted. The Plan authorizes the establish-
ment of options, dividend equivalent units on shares issuable upon exercise of
options, stock appreciation rights and share purchase programs, authorizes the
award of share grants (any of which may be subject to restrictions), provides
for options and dividend equivalent units for outside directors and payment of
their fees in shares unless the director elects payment in cash, and allows for
the establishment of other types of stock-based incentive programs. The
Compensation Committee administers the Plan.
All key employees of the Company or any of its affiliates designated by the
Compensation Committee are eligible to participate in the Plan. As of March 15,
1999, approximately 65 persons were eligible to participate. Subject to the
terms of the Plan, the Compensation Committee determines which employees are
eligible to receive awards, and the type, amount, price, timing, vesting
schedules and other terms and conditions applicable to awards. Non-employee
directors are eligible to participate in formula-based option and directors' fee
programs under the Plan. The Board of Directors is authorized to grant
additional options to non-employee directors, subject to the terms and condi-
tions of the Plan.
In connection with the merger of Pacific Retail into the Company,
substitute options were granted to senior executives of Pacific Retail who
either have not become Company employees following the merger or will leave
the Company after performing certain transitional services. The Plan permits the
Board of Directors to grant substitute awards under the Plan in connection with
other business combinations as part of severance compensation even though the
recipients do not become Company employees.
Options
Options awarded under the Plan may be either incentive stock options within
the meaning of Section 422 of the Code, which permits the deferral of taxable
income related to the exercise of such options, or nonqualified options not
entitled to such deferral. The exercise price and term of each option or stock
appreciation right is fixed by the Compensation Committee, except that the
exercise price for options must be at least equal to the fair market value of
the stock on the date of grant and the term of the options cannot exceed 10
years. The aggregate fair market value (determined at the time the option is
granted) of shares with respect to which incentive stock options may be granted
to any one individual under the Plan, or any other plan of the Company or any
parent or subsidiary, which stock options are exercisable for the first time
during any calendar year, may not exceed $100,000. An optionee may, with the
consent of the Compensation Committee, elect to pay for the shares to be
received upon exercise of his or her options in cash or shares of the Company's
common stock or any combination thereof.
The holder of an incentive option generally recognizes no income for
federal income tax purposes at the time of the grant or exercise of the option.
However, the spread between the exercise price and the fair market value of the
underlying shares on the date of exercise generally will constitute a tax
preference item for purposes of the alternative minimum tax. The optionee
generally will be entitled to long term capital gain treatment upon the sale of
shares acquired pursuant to the exercise of an incentive stock option, if the
shares have been held for more than two years from the date of the option grant
and for more than one year after exercise. Generally, if the optionee disposes
of the stock before the expiration of either of these holding periods (a
"disqualifying disposition"), the gain realized on disposition will be
compensation income to the optionee to the extent the fair market value of the
underlying stock on the date of exercise exceeds the applicable exercise price.
The Company will not be entitled to an income tax deduction in connection with
the exercise of an incentive stock option but will generally be entitled to a
deduction equal to the amount of any ordinary income recognized by an optionee
upon a disqualifying disposition.
No income will be recognized by a participant at the time a non-qualified
option is granted. The exercise of a non-qualified stock option will generally
be a taxable event that requires the participant to recognize, as ordinary
income, the difference between the fair market value of the shares at the time
of exercise and the option exercise price. Receipt of shares in payment of a
dividend equivalent unit held by the participant will generally be a taxable
event that will require the participant to recognize, as ordinary income, the
fair market value of the shares at the time of receipt. Regency ordinarily will
be entitled to claim a federal income tax deduction on account of the exercise
of a non-qualified option and settlement of dividend equivalent units. The
amount of the deduction will equal the ordinary income recognized by the
participant.
Additional Information on Awards
For additional information on awards outstanding under the Plan, see
"Compensation Committee Report - Long-Term Incentive Component" and the summary
compensation table and options tables appearing elsewhere in this Proxy State-
ment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG LLP to serve as the
independent certified public accountants for the Company for the current fiscal
year ending December 31, 1999. That firm has served as the auditors for the
Company since 1993. Representatives of KPMG LLP are expected to be present at
the annual meeting of shareholders and will be accorded the opportunity to make
a statement, if they so desire, and to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any other matters to come before
the meeting; however, if any other matters properly come before the meeting, it
is the intention of the persons designated as proxy to vote in accordance with
their best judgment on such matters. If any other matter should come before the
meeting, action on such matter will be approved if the number of votes cast in
favor of the matter exceeds the number opposed.
SHAREHOLDER PROPOSALS
Regulations of the Securities and Exchange Commission require proxy state-
ments to disclose the date by which shareholder proposals must be received by
the Company in order to be included in the Company's proxy materials for the
next annual meeting. In accordance with these regulations, shareholders are
hereby notified that if, pursuant to Rule 14a-8, they wish a proposal to be
included in the Company's proxy statement and form of proxy relating to the year
2000 annual meeting, a written copy of their proposal must be received at the
principal executive offices of the Company no later than December 4, 1999.
Proposals must comply with the proxy rules relating to shareholder proposals in
order to be included in the Company's proxy materials. Notice to the Company of
a shareholder proposal submitted otherwise than pursuant to Rule 14a-8 will be
considered untimely if received by the Company after December 4, 1999, and the
persons named in proxies solicited by the Company's Board for its Annual Meeting
of shareholders to be held in 2000 may exercise discretionary voting power with
respect to any such proposal as to which Regency does not receive timely notice.
To ensure prompt receipt by the Company, proposals should be sent certified mail
return receipt requested.
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 31, 1998
accompanies this Proxy Statement. Additional copies may be obtained by writing
to Lesley Stocker, at the Company's principal executive offices, at 121 West
Forsyth Street, Suite 200, Jacksonville, Florida 32202.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company
has engaged Corporate Investor Communications, Inc. to solicit shareholder
proxies for the annual meeting. The Company will pay Corporate Investor Communi-
cations a fee of approximately $5,000 for its solicitation services. In
addition, the Company may reimburse brokers and other persons holding stock in
their names, or in the names of nominees, for their expenses for sending proxy
material to principals and obtaining their proxies.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN PROVIDED.
YOUR PROMPT RESPONSE WILL BE APPRECIATED.
<PAGE>
REGENCY REALTY CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1999
The undersigned, having received the Notice of Annual Meeting of Share-
holders and Proxy Statement, appoints Martin E. Stein, Jr., Mary Lou Rogers and
Bruce M. Johnson, and each or any of them, as proxies, with full power of
substitution and resubstitution, to represent the undersigned and to vote all
shares of common stock of Regency Realty Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
on May 6, 1999, and any and all adjournments thereof, in the manner specified.
1. Election of Directors nominated by the Board of Directors--Class I:
Terry N. Worrell; Class III: Thomas B. Allin, Jeffrey A. Cozad, John T. Kelley,
III, and John C. Schweitzer.
<TABLE>
<CAPTION>
<S> <C> <C>
[ ] FOR all [ ] WITHHOLD INSTRUCTION: To withhold authority to vote for any
nominees listed AUTHORITY individual nominee, write that nominee's name in the space
(except as marked to to vote for provided below.)
the contrary to the all nominees.
right).
-------------------------------------------------------------
</TABLE>
2. Amendment to Regency's 1993 Long-Term Omnibus Plan to increase the
number of shares available for award.
[ ]FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be SIGNED and dated on the reverse side.)
<PAGE>
(Continued from reverse side)
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" EACH PROPOSAL.
Should any other matters requiring a vote of the shareholders arise, the
above named proxies are authorized to vote the same in accordance with their
best judgment in the interest of the Company. The Board of Directors is not
aware of any matter which is to be presented for action at the meeting other
than the matters set forth herein.
Dated:________________, 1999
________________________________(SEAL)
________________________________(SEAL)
(Please sign exactly as name or names appear hereon. Executors, administrators,
trustees or other representatives should so indicate when signing.)
