SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
CBL & ASSOCIATES PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter)
___________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14(a)-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:
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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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[ ] 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) Amounts Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
______________________________
<PAGE>
LETTERHEAD OF THE COMPANY
March 27, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
which will be held at the Chattanooga Marriott at the Convention Center,
2 Carter Plaza, Chattanooga, Tennessee, on Thursday, April 30, 1998 at
11:00 a.m.(EDT).
The Notice and Proxy Statement on the following pages contain details
concerning the business to come before the meeting. Management will report
on current operations and there will be an opportunity for discussion
concerning the Company and its activities. Please sign and return your
proxy card in the enclosed envelope to ensure that your shares will be
represented and voted at the meeting even if you cannot attend. You are
urged to sign and return the enclosed proxy card even if you plan to attend
the meeting.
I look forward to personally meeting all stockholders who are able
to attend.
Sincerely,
/s/ CHARLES B. LEBOVITZ
CHARLES B. LEBOVITZ
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CBL &
Associates Properties, Inc., a Delaware corporation (the "Company"), will be
held at the Chattanooga Marriott at the Convention Center, 2 Carter Plaza,
Chattanooga, Tennessee 37402, on Thursday, April 30, 1998 at 11:00 a.m. (EDT)
for the following purposes:
1. To re-elect two directors to serve for a term of three years and
until their respective successors are elected and qualified;
2. To act upon a proposal to ratify the selection of Arthur Andersen
LLP as independent public accountants for the fiscal year ending
December 31, 1998; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on March 16, 1998, as the record
date for the determination of the holders of Common Stock entitled to notice
of, and to vote at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Whether or not you plan to attend the meeting, we urge you to sign, date
and return the enclosed Proxy promptly in order to ensure representation of
your shares. An addressed envelope for which no postage is required if
mailed in the United States is enclosed for that purpose. Returning your
Proxy will not prevent you from voting your shares at the meeting if you
desire to do so, as your Proxy is revocable at your option.
By Order of the Board of Directors
/s/ JOHN N. FOY
JOHN N. FOY
Secretary
Chattanooga, Tennessee
March 27, 1998
<PAGE>
PROXY STATEMENT
CBL & ASSOCIATES PROPERTIES, INC.
SUITE 300
6148 LEE HIGHWAY
CHATTANOOGA, TENNESSEE 37421
ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1998
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of
Directors of CBL & Associates Properties, Inc., a Delaware corporation
(the "Company"), for use at the annual meeting of stockholders (the
"Annual Meeting") of the Company to be held at the Chattanooga Marriott at
the Convention Center, 2 Carter Plaza, Chattanooga, Tennessee, on Thursday,
April 30, 1998, at 11:00 a.m. (EDT) and at any and all postponements or
adjournments thereof. Any proxy given may be revoked at any time before
it is voted by filing with the Secretary of the Company an instrument
revoking it or a duly executed proxy bearing a later date. All expenses of
the solicitation of proxies for the Annual Meeting, including the cost of
mailing, will be borne by the Company. In addition to solicitation by mail,
officers and regular employees of the Company may solicit proxies from
stockholders by telephone, telegram or personal interview and will not
receive additional compensation for such services. In addition, the
Company's investor relations firm, Corporate Communications, Inc., will,
among other services performed for the Company, assist in the solicitation
of proxies. The Company also intends to request persons holding stock in
their name or custody, or in the name of nominees, to send proxy materials
to their principals and request authority for the execution of the proxies.
The Company will reimburse such persons for their expense in so doing.
The Company anticipates mailing proxy materials and the Annual Report
for the fiscal year ended December 31, 1997, to stockholders of record as of
March 16, 1998, on or about March 27, 1998.
VOTING SECURITIES
Only holders of record of the Company's Common Stock, par value $.01 per
share ("Common Stock"), at the close of business on March 16, 1998, are
entitled to vote on the matters to be presented at the Annual Meeting.
The number of shares of Common Stock outstanding on such date and entitled
to vote was 24,074,329. Each such share is entitled to one vote with respect
to such matters.
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting, but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
The affirmative vote of the holders of a plurality of the shares of the Common
Stock present or represented at the Annual Meeting is required for the
election of directors. The affirmative vote of the holders of a majority of
the shares of Common Stock present or represented at the Annual Meeting is
required for the ratification of the selection of the independent public
accountants.
Abstentions and broker non-votes (shares held by a broker or nominee
which are represented at the Annual Meeting, but with respect to which such
broker or nominee does not have discretionary authority to vote on a
particular proposal) will be counted as present at the Annual Meeting for
the purpose of determining whether or not a quorum exists. Abstentions and
broker non-votes will generally not be counted for any other purpose, except
that abstentions with respect to any proposal, other than the election of
directors, will be treated as negative votes.
Unless contrary instructions are indicated on the accompanying proxy,
the shares represented thereby will be voted in accordance with the
recommendations of the Board of Directors.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members divided into
three classes (having two, two and three members, respectively) serving
staggered three-year terms. Under the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and Amended
and Restated Bylaws (the "Bylaws"), a majority of the directors must be
unaffiliated ("Independent Directors") with the Company and CBL & Associates,
Inc. and its affiliates ("CBL"). The Company succeeded to the business of
CBL in November 1993. Each year the term of office of one class of directors
expires.
The Board of Directors intends to present for action at the Annual
Meeting the re-election of Stephen D. Lebovitz and Winston W. Walker, whose
present terms expire in 1998, to serve for a term of three years and until
their successors are duly elected and shall qualify. Mr. Walker is one of
the Company's four Independent Directors.
Unless authority to vote for such directors is withheld, the enclosed
proxy will be voted for such persons except that the persons designated as
proxies reserve discretion to cast their votes for other persons in the
unanticipated event that any of such nominees is unable or declines to serve.
NOMINEES
Set forth below is information with respect to the nominees for election:
<TABLE>
<S> <C> <C>
Name Age Current Position(1)
Stephen D. Lebovitz 37 Director, Executive Vice
President -
Development/Acquisitions
and Treasurer
Winston W. Walker 54 Director
</TABLE>
____________________
(1) The position shown represents the individual's position with the
Company and CBL & Associates Management, Inc., a Delaware corporation
(the "Management Company"), through which the Company's property
management and development activities are conducted.
STEPHEN D. LEBOVITZ has served as a Director and Executive Vice
President -- Development/Acquisitions since January 1, 1998. Prior to that
time, Mr. Lebovitz served as Director and Executive Vice President --
Development and Treasurer beginning on January 1, 1997, Director and Senior
Vice President -- New England Office and Treasurer of the Company beginning
in September 1993 and as Senior Vice President -- Community Center
Development beginning in May 1994. Mr. Lebovitz joined CBL in 1988 as Vice
President responsible for establishing and directing CBL's New England
office. Prior to that time, Mr. Lebovitz was affiliated with Goldman, Sachs
& Co. from 1984 to 1986. He is a Vice President of the Boston Jewish Family
and Children's Services, and a member of the United Jewish Appeal Young
Leadership Cabinet and a former state director for the New England states
(Maine, Massachusetts, New Hampshire, Rhode Island and Vermont) of the
International Council of Shopping Centers ("ICSC"). Stephen D. Lebovitz
is a son of Charles B. Lebovitz and a brother of Michael I. Lebovitz.
WINSTON W. WALKER was elected as a Director of the Company upon the
completion of the Company's initial public offering in November 1993 and is
a member of the Executive and Compensation Committees of the Board of
Directors. Mr. Walker served as President and Chief Executive Officer of
Provident Life and Accident Insurance Company of America ("Provident") from
1987 until October 1, 1993, and served in various other capacities with
Provident from 1974 to 1987. Mr. Walker is a director of SunTrust Bank,
Chattanooga, N.A. (formerly American National Bank) and Olan Mills, Inc. of
Chattanooga, Tennessee.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF THE
TWO DIRECTORS NAMED ABOVE
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<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information with respect to the directors (in addition
to Stephen D. Lebovitz and Winston W. Walker) and executive officers (in
addition to Stephen D. Lebovitz) of the Company:
<TABLE>
<S> <C> <C> <C>
Name Term Age Current Position(1)
Expires*
Charles B. Lebovitz 1999 61 Chairman of the Board of Directors,
President and Chief Executive Officer
John N. Foy 2000 54 Director, Executive Vice President --
Finance, Chief Financial Officer and
Secretary
Ben S. Landress -- 70 Executive Vice President -- Management
Ronald L. Fullam -- 55 Senior Vice President -- Development
Ronald S. Gimple -- 58 Senior Vice President and General
Counsel
Michael I. Lebovitz -- 34 Senior Vice President -- Mall Projects
Eric P. Snyder -- 48 Senior Vice President and Director of
Corporate Leasing
Jerry L. Sink -- 47 Senior Vice President -- Mall
Management
Augustus N. Stephas -- 55 Senior Vice President -- Accounting
and Controller
Claude M. Ballard 1999 68 Director
Leo Fields 1999 69 Director
William J. Poorvu 2000 62 Director
</TABLE>
__________________
* Indicates expiration of term as a director.
(1) The position shown represents the individual's position with the Company
and the Management Company.
CHARLES B. LEBOVITZ has served as Chairman of the Board, President and
Chief Executive Officer since the inception of the Company and is a member of
the Executive Committee of the Board of Directors. Prior to the Company's
formation, he served in a similar capacity with CBL. Mr. Lebovitz has been
involved in shopping center development since 1961 when he joined his family's
development business. In 1970, he became affiliated with Arlen Realty &
Development Corp. ("Arlen") where he served as President of Arlen's shopping
center division, and, in 1978, he founded CBL together with his associates
(the "Associates"), James Wolford, John N. Foy, Jay Wiston, and Ben S.
Landress. In addition to Mr. Lebovitz, Messrs. Foy and Landress currently
serve as executive officers of the Company. Mr. Lebovitz is an advisory
director of First Tennessee Bank, N.A., Chattanooga, Tennessee and a National
Vice Chairman of the United Jewish Appeal. Mr. Lebovitz has previously served
as a trustee, Vice President (Southern Division) and Chairman of the ICSC.
JOHN N. FOY has served as a Director and Executive Vice President --
Finance, Chief Financial Officer and Secretary of the Company since its
inception and is a member of the Executive Committee of the Board of
Directors. Prior thereto, he served in a similar capacity with CBL. Mr. Foy
has been involved in the shopping center industry since 1969 when he joined
the Lebovitz family's shopping center development business. In 1970, he
became affiliated with the shopping center division of Arlen, and, in 1978,
joined Charles B. Lebovitz in establishing CBL. Mr. Foy served as Chairman
of the Board of First Fidelity Savings Bank in Crossville, Tennessee from
December 1985 until April 1994. Since April 1994, Mr. Foy has served as a
member of the Advisory Board of the First American National Bank of
Chattanooga, Tennessee and he currently serves as a Director of the
Chattanooga Airport Authority.
-3-
<PAGE>
BEN S. LANDRESS has served as Executive Vice President -- Management of
the Company since January 1, 1997. Prior to that time, Mr. Landress served
as Senior Vice President -- Management of the Company and prior thereto, he
served in a similar capacity with CBL. Mr. Landress directs the day-to-day
management of the Company's properties and is responsible for general
corporate administration. Mr. Landress has been involved in the shopping
center business since 1961 when he joined the Lebovitz family's development
business. In 1970, he became affiliated with Arlen's shopping center
division, and, in 1978, joined Mr. Lebovitz as an Associate in establishing
CBL.
RONALD L. FULLAM has served as Senior Vice President -- Development of
the Company since January 1, 1997. Prior to that time, Mr. Fullam served as
Vice President -- Development of the Company. Mr. Fullam joined Arlen's
shopping center development division as a project manager in August 1977 and
CBL as a Vice President upon its formation in 1978.
RONALD S. GIMPLE has served as Senior Vice President and General Counsel
of the Company since January 1, 1997. Mr. Gimple joined the Company in 1994
as Vice President -- Development. Prior to joining the Company, Mr. Gimple
served as a Vice President of The Edward J. DeBartolo Corporation, from 1987
to 1994, and, prior to 1987, he served as General Counsel of Petrie Store
Corporation, Vice President and Real Estate Counsel of BATUS Retail Group and
Vice President and General Counsel of General Growth Company.
MICHAEL I. LEBOVITZ has served as Senior Vice President -- Mall Projects
of the Company since January 1, 1997. Prior to that time, Mr. Lebovitz served
as Vice President -- Development and as a project manager for the Company.
Mr. Lebovitz joined CBL in 1988 as a project manager for CoolSprings Galleria
in Nashville, Tennessee and was promoted to Vice President in 1993. Prior to
joining CBL, he was affiliated with Goldman, Sachs & Co. from 1986 to 1988.
He is Vice President of the Jewish Community Federation of Greater
Chattanooga. Michael I. Lebovitz is a son of Charles B. Lebovitz and a
brother of Stephen D. Lebovitz.
JERRY L. SINK, C.S.M. has served as Senior Vice President -- Mall
Management for the Company since February 5, 1998. Prior to that time,
Mr. Sink served as Vice President -- Mall Management. Prior to joining the
Company, Mr. Sink served as Vice President of Retail Management of Equitable
Real Estate, Chicago, Illinois, from January 1988 to June 1993 and prior to
June 1993, he was affiliated with General Growth Companies, Inc. as Vice
President of Management.
ERIC P. SNYDER has served as Senior Vice President and Director of
Corporate Leasing for the Company since January 1, 1997. Prior to that time,
Mr. Snyder served as the Company's Vice President and Director of Corporate
Leasing. Mr. Snyder joined CBL as a project manager in 1978 and was promoted
to Vice President in 1984 and to Director of Corporate Leasing in 1992. From
1974 to 1978, Mr. Snyder was a leasing agent and project manager in Arlen's
shopping center division.
AUGUSTUS N. STEPHAS has served as Senior Vice President -- Accounting and
Controller for the Company since January 1, 1997. Prior to that time, Mr.
Stephas served as the Company's Vice President -- Accounting and Controller.
He joined CBL in July 1978 as Controller and was promoted to Vice President
in 1984. From 1970 to 1978, Mr. Stephas was affiliated with the shopping
center division of Arlen, first as Accountant and later as Assistant
Controller.
CLAUDE M. BALLARD, CRE, M.A.I. was elected as a Director of the Company
upon the completion of the Company's initial public offering in November 1993
and is Chairman of the Compensation Committee and a member of the Audit
Committee of the Board of Directors. Mr. Ballard joined Goldman, Sachs & Co.
in 1981 as a general partner and as of December 1988 became a limited partner
and senior consultant. Prior to joining Goldman, Sachs & Co., Mr. Ballard was
a Senior Vice President in the real estate division of the Prudential Insurance
Company of America. He is currently a director of Bedford Property Investors,
Mutual Life Insurance Company of New York, Taubman Centers, Inc., a shopping
center real estate investment trust, Greater New York Council, Boy Scouts of
America and Horizon Hotel Corp. Mr. Ballard also served as Chairman of the
Board of Rockefeller Center Properties, Inc., a mortgage real estate
investment trust, until December 1994, and as a director of American Building
Maintenance
-4-
<PAGE>
Industries until October 1994. Mr. Ballard currently serves as Chairman of
the Board of Directors of Merit Equity Partners, Inc.
LEO FIELDS was elected as a Director of the Company upon the completion
of the Company's initial public offering in November 1993 and is a member of
the Compensation Committee and Chairman of the Audit Committee of the Board
of Directors. Mr. Fields is Co-Chairman of Weisberg & Fields, Inc., an
investment advisory firm he started in 1991. From 1984 through 1991, Mr.
Fields directed Leo Fields Interests, a private investment firm. He was
affiliated with Zale Corporation from 1947 until his retirement in 1984,
serving, from 1981 to 1984, as Vice Chairman and a member of Zale's Executive
Committee. He is Vice Chairman of the Institute for Social & Economic Policy
in the Middle East at the John F. Kennedy School of Government at Harvard
University, President of the Dallas Home for the Jewish Aged Endowment
Foundation and a trustee of the M. B. and Edna Zale Foundation.
WILLIAM J. POORVU was initially elected as a Director of the Company upon
the completion of the Company's initial public offering in November 1993 and
is a member of the Compensation and Audit Committees of the Board of
Directors. Mr. Poorvu has, since 1981, been a professor at Harvard Business
School specializing in real estate courses. Mr. Poorvu is also managing
partner in several private real estate companies and has previously consulted
for a number of real estate concerns. He is Chairman of the Board of Advisors
of Baupost Group, L.L.C. and a trustee/director of mutual funds in the
Massachusetts Financial Services Group of Funds.
In addition to the executive officers named above, James Wolford served
as Senior Executive Vice President -- Development for the Company for the
period beginning September 1993 to January 15, 1997 and Jay Wiston served as
Executive Vice President -- Leasing for the Company for the period beginning
September 1993 to June 20, 1997. Effective as of January 15, 1997 and
June 20, 1997, respectively, Messrs. Wolford and Wiston retired as officers
and employees of the Company.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors has established standing Executive, Audit and
Compensation Committees. The Board of Directors has no standing Nominating
Committee. The Board of Directors met nine times in 1997. Each director
attended more than 75% of the total number of Board meetings and meetings of
Board committees on which the director served during fiscal year 1997.
Executive Committee. The Executive Committee is composed of
Charles B. Lebovitz (Chairman), John N. Foy and Winston W. Walker, who is an
Independent Director. The Executive Committee may exercise all the powers and
authority of the Board of Directors of the Company in the management of the
business and affairs of the Company as permitted by law except with respect
to (i) the declaration of dividends, (ii) issuance of stock, (iii) amendment
to the Company's certificate of Incorporation or Bylaws, (iv) filling
vacancies on the Board of Directors, (v) approval of borrowings in excess of
$40 million per transaction or series of related transactions, (vi) hiring
executive officers, (vii) approval of acquisitions or dispositions of
property or assets in excess of $40 million per transaction and (viii)
certain transactions between the Company and its directors and officers and
certain sales of real estate and reductions of debt that produce
disproportionate tax allocations to CBL pursuant to the Company's Bylaws.
The Executive Committee met two times and took action by unanimous written
consent eight times during 1997.
Audit Committee. The Audit Committee is composed of Leo Fields
(Chairman), Claude M. Ballard and William J. Poorvu, all of whom are
Independent Directors. The Audit Committee makes recommendations concerning
the engagement of independent public accountants and the plans and results of
the audit engagement, approves professional services provided by the
independent public accountants, considers the range of audit and non-audit
fees and reviews the adequacy of the Company's internal accounting controls.
The Audit Committee met two times during 1997.
-5-
<PAGE>
Compensation Committee. The Compensation Committee is composed of the
four Independent Directors, with Claude M. Ballard serving as Chairman. The
Compensation Committee reviews and approves compensation programs generally
and, specifically, salaries, bonuses, stock awards and stock options for
officers of the Company of the level of vice president or higher. The
Compensation Committee met two times and took action by unanimous written
consent one time during 1997.
Advisory Committee. The Board of Directors has also appointed an
Advisory Committee which consists of Ben S. Landress. The member of this
committee participates in Board meetings and is otherwise available to
consult with and advise the Board as requested. James Wolford served on the
Advisory Committee until January 15, 1997, when he retired as an officer and
employee of the Company and as a member of the Advisory Committee. Jay
Wiston served on the Advisory Committee until June 20, 1997, when he retired
as an officer and employee of the Company and as a member of the Advisory
Committee.
COMPENSATION OF DIRECTORS
During 1997, each Independent Director received from the Company an
annual fee of $18,000. In addition to the annual fee, each Independent
Director receives a meeting fee of $1,000 for each Board or Committee
meeting attended (excluding telephonic meetings) and reimbursement of
expenses incurred in attending meetings. Each Independent Director serving
as a member of the Executive Committee receives from the Company a monthly
fee of $500 in lieu of meeting fees for each Executive Committee meeting.
Each Independent Director, on December 31 of each fiscal year of the
Company, automatically receives an annual grant of options to purchase 500
shares of Common Stock having an exercise price equal to 100% of the fair
market value of the shares of Common Stock at the date of grant of such
option. The options granted to the Independent Directors on December 31,
1997 have an exercise price equal to $24.75 per share (based upon the average
of the high and low sales prices of the Common Stock on the New York Stock
Exchange ("NYSE") Composite Tape on December 31, 1997). Each holder of a
director option granted pursuant to this arrangement also has the same rights
as other holders of options in the event of a change in control. By
Resolution dated April 30, 1996, the Compensation Committee adopted certain
additional terms for options granted to the Independent Directors. Pursuant
to the Resolution, options granted to the Independent Directors (i) shall have
a term of 10 years from date of grant, (ii) are 100% vested upon grant, (iii)
are nonforfeitable except upon the Independent Director's conviction for any
criminal activity involving the Company or, if non-exercised, within one year
following the date the Independent Director ceases to be a director of the
Company, and (iv) are non-transferrable. In addition, any person who becomes
an Independent Director will receive an initial grant of 500 shares of Common
Stock upon joining the Board of Directors. The transfer of such shares is
restricted during the Independent Director's term and for one year thereafter
pursuant to the CBL & Associates Properties, Inc. 1993 Stock Incentive Plan
(the "Stock Incentive Plan").
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information available to the Company as
of March 16, 1998, with respect to the ownership of Common Stock by (i) each
person known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each named
executive officer of the Company, as defined below, and (iv) all directors and
executive officers as a group. Except as otherwise indicated, each person
named below has sole investment and voting power with respect to the
securities shown. Except as otherwise indicated, the address of each person
is the Company's address.
<TABLE>
<CAPTION>
<C> <C> <C>
Number of Rule 13d-3 Fully-Diluted
Shares(1) Percentage(1) Percentage(2)
<S>
Cohen & Steers CapitalManagement,
Inc.(3)......................... 1,714,500 7.1% 5.1%
757 Third Avenue
New York, New York 10017
FMR Corp.(4)...................... 2,171,000 9.0 6.5
82 Devonshire Street
Boston, Massachusetts 02109
Morgan Stanley, Dean Witter,
Discover & Co.(5)............... 1,440,800 6.0 4.3
1585 Broadway
New York, New York 10036
CBL & Associates, Inc.(6)......... 8,718,693 27.9 21.4
Charles B. Lebovitz(7)............ 9,547,422 29.7 22.9
John N. Foy(8).................... 289,289 1.2 *
Stephen D. Lebovitz(9)............ 329,312 1.4 *
Ronald L. Fullam(10).............. 25,200 * *
Eric P. Snyder(11)................ 97,124 * *
Claude M. Ballard(12)
c/o Goldman, Sachs & Co........... 8,500 * *
85 Broad Street
New York, NY 10004
Leo Fields(13).................... 61,000 * *
c/o Weisberg & Fields, Inc.
Preston Commons East
8115 Preston Road
Dallas, Texas 75225
William J. Poorvu(12)............. 2,604 * *
c/o Investment Resource Group
44 Brattle Street
Cambridge, Massachusetts 02138
Winston W. Walker(12)............. 4,900 * *
1069 Constitution Drive
Chattanooga, Tennessee 37405
All executive officers and
directors as a group
(14 persons)...................... 10,729,289 32.5 25.2
</TABLE>
_________________
* Less than 1%
(1) The Company conducts all of its business activities through CBL Associates
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"). Pursuant to the amended and restated partnership agreement
of the Operating Partnership (the "Partnership Agreement"), each of the
limited partners of the Operating Partnership, which include CBL and
certain of the executive officers named in this Proxy Statement, has the
right ("CBL Rights") to (i) exchange all or a portion of its partnership
interest in the Operating Partnership for shares of Common Stock (based on
the trading price of the Common Stock at the time of exchange) until it
owns up
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<PAGE>
to the applicable ownership limit ("Ownership Limit") as prescribed in the
Company's Certificate of Incorporation and (ii) sell to the Company part or
all of its remaining partnership interest in the Operating Partnership in
exchange for shares of Common Stock or their cash equivalent (based on the
trading price of the Common Stock), at the Company's election. See
"Certain Relationships and Related Transactions." Under the terms of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), shares of Common Stock that may be acquired
within 60 days are deemed outstanding for purposes of computing the
percentage of Common Stock owned by a stockholder. Therefore, percentage
ownership of the Common Stock is computed based on the sum of
(i) 24,074,329 shares of Common Stock actually outstanding as of
March 16, 1998, (ii) shares of Common Stock that may be acquired upon
exercise of CBL Rights by the individual or entity whose percentage of
share ownership is being computed (but not taking account of the exercise
of CBL Rights by any other person or entity) and (iii) shares of Common
Stock that may be acquired within 60 days of March 16, 1998 upon the
exercise of outstanding options. Amounts shown were determined without
regard to applicable Ownership Limits.
(2) Calculated based on 24,074,329 shares of Common Stock outstanding and
assuming full exercise of all CBL Rights by all limited partners of the
Operating Partnership (without regard to applicable Ownership Limits) for
an aggregate of 33,550,184 shares of Common Stock. Calculation does not
include 1,693,600 shares of Common Stock subject to outstanding stock
options other than, with respect to each person whose fully-diluted
percentage is being computed, shares which may be acquired within 60 days
upon the exercise of outstanding options.
(3) In a Schedule 13G/A filed on February 12, 1998 by Cohen and Steers
Capital Management Inc. ("CSCM"), CSCM reported that as of December 31,
1997 it beneficially owned 1,714,500 shares of Common Stock, or 7.1% of
the total shares outstanding as of March 16, 1998. CSCM reported that it
possesses (i) sole dispositive power with respect to 1,714,500 shares of
Common Stock and (ii) sole voting power with respect to 1,480,900 shares
of Common Stock. The Schedule 13G/A also states that CSCM has not
acquired the Company's shares for the purpose of changing or influencing
the control of the Company.
(4) In a Schedule 13G/A filed on February 9, 1998 by FMR Corp. and certain
of its affiliates ("FMR Entities"), the FMR Entities reported that as of
December 31, 1997 they collectively beneficially owned 2,171,000 shares
of Common Stock, or 9.0% of the total shares outstanding as of March 16,
1998. The FMR Entities reported that they possess (i) sole dispositive
power with respect to 2,171,000 shares of Common Stock and (ii) sole
voting power with respect to 80,000 shares of Common Stock. The Schedule
13G/A also states that the FMR Entities have not acquired the Company's
shares for the purpose of changing or influencing the control of the
Company.
(5) In a Schedule 13G filed on February 12, 1998 by Morgan Stanley, Dean
Witter, Discover & Co. ("Morgan Stanley"), Morgan Stanley reported that
as of December 31, 1997 it beneficially owned 1,440,860 shares of Common
Stock, or 6.0% of the total shares outstanding as of March 16, 1998.
Morgan Stanley reported that it possesses (i) shared dispositive power
with respect to 1,440,860 shares of Common Stock and (ii) shared voting
power with respect to 1,305,260 shares of Common Stock. The Schedule 13G
states that Morgan Stanley has not acquired the Company's shares for the
present intention of acquiring control of the Company.
(6) Includes (i) 1,448,744 shares of Common Stock owned directly, (ii)
7,172,583 shares of Common Stock which may be acquired upon the exercise
of CBL Rights and (iii) 97,366 shares of Common Stock which may be
acquired by four entities controlled by CBL & Associates, Inc. (CBL
Employees Partnership/Conway, Foothills Plaza Partnership, Girvin Road
Partnership and Warehouse Partnership) upon the exercise of CBL Rights.
(7) Includes (i) 19,421 shares of Common Stock owned directly, (ii) 2,415
shares owned by Mr. Lebovitz' wife, 10,196 shares held in trusts for the
benefit of his step-daughter and grandchildren (of which Mr. Lebovitz
disclaims beneficial ownership) and 101,600 shares which may be acquired
upon the exercise of CBL Rights and held in trusts for the benefit of
Mr. Lebovitz and his sister, (iii) 352,903 shares of Common Stock which
may be acquired upon the exercise of CBL Rights, (iv) 72,000 shares of
Common Stock subject to options granted under the Stock Incentive Plan
(as defined herein) which are currently exercisable with respect to such
shares, (v) 42,000 shares of Common Stock subject to options granted
under the Stock Incentive Plan which become exercisable with respect to
such shares within sixty days of March 16, 1998, (vi) 8,718,693 shares of
Common Stock beneficially owned by CBL, which Mr. Lebovitz may be deemed
to beneficially own by virtue of his control of CBL, and (vii) 228,194
shares of Common Stock that may be acquired by College Station
Associates, an entity controlled by Mr. Lebovitz, upon the exercise of
CBL Rights.
-8-
<PAGE>
(8) Includes (i) 39,248 shares of Common Stock owned directly, (ii) 189,241
shares of Common Stock which may be acquired upon the exercise of CBL
Rights, (iii) 38,400 shares of Common Stock subject to options granted
under the Stock Incentive Plan which are currently exercisable with
respect to such shares, and (iv) 22,400 shares of Common Stock subject
to options granted under the Stock Incentive Plan which become
exercisable with respect to such shares within sixty days of March 16,
1998.
(9) Includes (i) 26,376 shares owned directly, (ii) 238,936 shares of Common
Stock which may be acquired upon the exercise of CBL Rights, (iii) 38,400
shares of Common Stock subject to options granted under the Stock
Incentive Plan which are currently exercisable with respect to such
shares, and (iv) 25,600 shares of Common Stock subject to options granted
under the Stock Incentive Plan which become exercisable with respect to
such shares within sixty days of March 16, 1998.
(10) Includes (i) 10,800 shares of Common Stock subject to options granted
under the Stock Incentive Plan which are currently exercisable with
respect to such shares, and (ii) 14,400 shares of Common Stock subject
to options granted under the Stock Incentive Plan which become
exercisable with respect to such shares within sixty days of March 16,
1998.
(11) Includes (i) 3,796 shares of Common Stock owned directly, (ii) 5,326
shares of Common Stock owned by Mr. Snyder's wife and 3,563 shares of
Common Stock owned by Mr. Snyder's children, (iii) 48,439 shares of
Common Stock which may be acquired upon the exercise of CBL Rights,
(iv) 21,600 shares of Common Stock subject to options granted under the
Stock Incentive Plan which are currently exercisable with respect to
such shares, and (v) 14,400 shares of Common Stock subject to options
granted under the Stock Incentive Plan which become exercisable with
respect to such shares within sixty days of March 16, 1998.
(12) Includes 2,000 shares of Common Stock subject to immediately
exercisable stock options granted to each Independent Director on
December 31 of each of 1994, 1995, 1996 and 1997, in the amounts of
500 stock options per grant pursuant to the Stock Incentive Plan.
(13) Includes (i) 20,500 shares of Common Stock owned by a family limited
partnership created by Mr. Fields and his wife on January 1, 1997 and
in which Mr. Fields serves as a general partner, (ii) 39,500 shares of
Common Stock held by members of Mr. Fields' family, with respect to
which Mr. Fields acts as investment adviser and of which Mr. Fields
disclaims beneficial ownership, and (iii) 1,000 shares of Common Stock
subject to immediately exercisable stock options granted under the
Stock Incentive Plan.
-9-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
beneficial ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file.
Based soley upon the Company's review of copies of such reports furnished
to it through the date hereof, or written representations that no reports
were required to be filed, the Company believes that during the fiscal year
ended December 31, 1997 there was full compliance with all filing
requirements applicable to its officers, directors and ten percent
stockholders, except that two executive officers (Charles B. Lebovitz and
Michael I. Lebovitz) failed to timely report the acquisitions in two
transactions of 800 shares each of Common Stock. These filings were
subsequently made.
-10-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Company's Chief Executive Officer and its next four most highly
compensated executive officers (these four and Charles B. Lebovitz being
herein referred to as the "named executive officers") for the fiscal year
ended December 31, 1997 and for the fiscal years ending December 31, 1996
and 1995:
<TABLE>
Summary Compensation Table(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
___________________________________
Annual Compensation Awards Payouts
__________________________________ ________________________ _______
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Compensation Awards(s) Options Payouts Compensation
Position(2) Year Salary($) Bonus($) ($) ($)(3) (#) ($) ($)
___________________ ______ _________ ________ ____________ ___________ ___________ ________ ____________
Charles B. Lebovitz, 1997 428,274 -- -- 75,000 30,000 -- 7,659(4)
Chairman of the
Board, President 1996 415,800 -- -- 75,000 60,000 -- 7,434(5)
and Chief Executive
Officer 1995 385,000 -- -- 75,011 60,000 -- 9,426(6)
______________________________________________________________________________________________________________________
John N. Foy, 1997 276,320 -- -- 100,026 16,000 -- 7,659(4)
Director, Executive
Vice President -- 1996 268,272 -- -- 75,000 32,000 -- 7,434(5)
Finance, Chief
Financial Officer 1995 248,400 -- -- 75,004 32,000 -- 6,444(7)
and Secretary
______________________________________________________________________________________________________________________
Ronald L. Fullam, 1997 200,764 75,000 75,000(9) -- 18,000 -- 4,520(8)
Senior Vice
President -- 1996 189,210 25,000 25,000(10) -- 18,000 -- 4,452(11)
Development
1995 173,865 35,000 -- -- 18,000 -- 6,444(7)
______________________________________________________________________________________________________________________
Stephen D. Lebovitz, 1997 192,223 -- -- 155,082 32,000 -- 7,659(4)
Director, Executive
Vice President -- 1996 186,624 50,000 -- 100,009 32,000 -- 4,452(11)
Development/
Acquisitions and 1995 172,800 -- -- 60,001 32,000 -- 6,444(7)
Treasurer
______________________________________________________________________________________________________________________
Eric P. Snyder, 1997 251,005 -- 55,000(13) -- 18,000 -- 5,798(12)
Senior Vice
President and 1996 236,933 -- 40,446(14) -- 18,000 -- 5,730(15)
Director of
Corporate Leasing 1995 223,825 -- 20,008(16) -- 18,000 -- 6,335(17)
______________________________________________________________________________________________________________________
</TABLE>
_______________________
(1) All amounts shown represent compensation paid to the named executive
officers by the Management Company.
(2) The position shown represents the individual's position with the Company
and the Management Company.
(3) Amounts shown are based upon the closing price of the Common Stock on the
NYSE as of the date of grant of the restricted stock awards. As of
December 31, 1995, 10,158 shares of restricted stock with a value as of
December 31, 1997 of $250,775 were outstanding and were held as follows:
(i) Charles B. Lebovitz - 3,615 shares with a value of $89,245; (ii) John
Foy - 3,705 shares with a value of $91,467; and (iii) Stephen Lebovitz -
2,838 share with a value of $70,063. The additional 10,158 shares of
restricted stock held by the above stated executive officers as of
December 31, 1995 vested on November 7, 1997, except for (i) 2,500 of the
shares held
-11-
<PAGE>
by Mr. Foy, which vested on January 9, 1997, (ii) 506 of the shares held
by Stephen Lebovitz, which vested on May 9, 1997, and (iii) 1,850 of the
shares held by Stephen Lebovitz, which vested on December 15, 1997. As
of December 31, 1996, 10,276 shares of restricted stock with a value as
of December 31, 1997 of $253,688 were outstanding and were held as
follows: (i) Charles Lebovitz - 3,125 shares with a value of $77,148;
(ii) John Foy - 3,062 shares with a value of $75,593; and (iii) Stephen
Lebovitz - 4,089 shares with a value of $100,947. The additional 10,276
shares of restricted stock held by the above stated executive officers as
of December 31, 1996 will vest on January 1, 1999, except for 442 of the
shares held by Stephen Lebovitz which will vest on June 26, 1998. As of
December 31, 1997, 13,541 shares of restricted stock with a value as of
December 31, 1997 of $334,293 were outstanding and held as follows: (i)
Charles Lebovitz - 3,085 shares with a value of $76,161; (ii) John Foy -
4,081 shares with a value of $100,750; and (iii) Stephen Lebovitz - 6,375
shares with a value of $157,383. The additional 13,541 shares of
restricted stock held by the above stated executive officers as of
December 31, 1997 will vest in 1999 as follows: Charles Lebovitz' 3,085
shares will vest on October 29, 1999, John Foy's 4,081 shares will vest
on January 2, 1999 and Stephen Lebovitz' shares will vest 2,973 on
April 1, 1999, 1,257 on April 25, 1999 and 2,145 on November 14, 1999.
During the vesting period, dividends will be paid on all outstanding
shares of restricted stock. All of the shares of restricted stock were
issued pursuant to the Stock Incentive Plan.
(4) For fiscal year 1997, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $3,909 and
matching contributions by the Management Company under the CBL &
Associates Management, Inc. 401(k) Profit Sharing Plan and Trust (the
"401(k) Plan") in the amount of $3,750.
(5) For fiscal year 1996, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $3,684 and
matching contributions by the Management Company under the Management
Company's 401(k) Plan in the amount of $3,750.
(6) For fiscal year 1995, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $5,856 and
matching contributions by the Management Company under the Management
Company's 401(k) Plan in the amount of $3,570.
(7) For fiscal year 1995, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $2,874 and
matching contributions by the Management Company under the Management
Company's 401(k) Plan in the amount of $3,570.
(8) For fiscal year 1997, amounts shown represent term life insurance
premiums paid by the Management Company in the amount of $770 and
matching contributions by the Management Company under the Management
Company's 401(k) Plan in the amount of $3,750.
(9) Represents amount paid by the Company's promissory note payable in
approximately nine years.
(10) Represents amount paid by the Company's promissory note payable in
approximately ten years.
(11) For fiscal year 1996, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $702 and
matching contributions by the Management Company under the Management
Company's 401(k) Profit Sharing Plan in the amount of $3,750.
(12) For fiscal year 1997, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $2,048 and
matching contributions by the Management Company under the Management
Company's 401(k) Profit Sharing Plan in the amount of $3,750.
(13) Represents amount deferred at Mr. Snyder's election pursuant to a
deferred compensation arrangement between Mr. Snyder and the Company.
-12-
<PAGE>
(14) Represents awards of 898 and 834 shares of unrestricted Common Stock
granted to Mr. Snyder during fiscal year 1996 but actual date of
receipt was January 1, 1997. Amount shown is based upon the closing
price of the Common Stock on the NYSE as of the date of grant.
(15) For fiscal year 1996, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $1,980 and
matching contributions by the Management Company under the Management
Company's 401(k) Profit Sharing Plan in the amount of $3,750.
(16) Represents an award of 982 shares of unrestricted Common Stock granted
to Mr. Snyder during fiscal year 1995. Amount shown is based upon the
closing price of the Common Stock on the NYSE as of the date of grant.
(17) For fiscal year 1995, amount shown represents term life insurance
premiums paid by the Management Company in the amount of $2,585 and
matching contributions by the Management Company under the Management
Company's 401(k) Profit Sharing Plan in the amount of $3,750.
The following table sets forth information regarding grants of stock
options made during fiscal year 1997 to each of the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable Value at
Securities % of Total Assumed Annual Rates of
Underlying Options Exercise Stock Price Appreciation For
Individual Grants Options Granted to or Base Option Term(4)
______________________ Granted Employees in Price Expiration _____________________________
Name (#)(1) Fiscal Yes(2) ($/Sh)(3) Date 5% 10%
______________________ __________ _____________ _________ __________ ____________ ____________
Charles B. Lebovitz 30,000 5.50 23.625 4/30/07 $445,729 $1,129,565
John N. Foy 16,000 2.97 23.625 4/30/07 237,722 602,435
Ronald L. Fullam 18,000 3.34 23.625 4/30/07 267,437 677,739
Stephen D. Lebovitz 32,000 5.94 23.625 4/30/07 475,443 1,204,869
Eric P. Snyder 18,000 3.34 23.625 4/30/07 267,437 677,739
</TABLE>
___________________
(1) All options granted to the named executive officers were granted pursuant
to the Stock Incentive Plan on April 30, 1997 and become exercisable in
five equal annual installments beginning April 30, 1998.
(2) Percentages listed are based on options to purchase a total of 539,000
shares of Common Stock granted by the Company to certain of its officers
and employees during fiscal year 1997. Calculations do not include
options to purchase an aggregate of 2,000 shares of Common Stock granted
to the Independent Directors in fiscal year 1997 pursuant to the Stock
Incentive Plan.
(3) The exercise price is generally payable in cash or, in certain
circumstances by the surrender, at the fair market value on the date on
which the option is exercised, of shares of Common Stock.
(4) Potential realizable value is calculated based on an assumption that
the fair market value of the Common Stock appreciates at the annual
rates shown (5% and 10%), compounded annually, from the date of grant
until the end of the option term (10 years). The 5% and 10% assumed
rates are mandated by the Securities and Exchange Commission for
purposes of calculating realizable value and do not represent the
Company's estimate or projection of future stock prices.
-13-
<PAGE>
AGGREGATED 1997 YEAR-END OPTION VALUES
The following table provides information regarding the number and value
of options held by each of the named executive officers at December 31, 1997.
No options were exercised by any named executive officer during fiscal year
1997:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of Securities underlying Value of Unexercised
Unexercised Options at In-the-Money
Shares Value December 31, 1997 Options at December 31, 1997
Acquired on Realized _______________________________ _______________________________
Name Exercised(#) ($) Exercisable Unexercisable Exercisable Unexercisable(1)
_____________________ ____________ ________ _____________ ________________ _____________ ________________
Charles B. Lebovitz -0- -0- 72,000 138,000 $356,268 $538,160
John N. Foy -0- -0- 38,400 73,600 190,010 287,018
Ronald L. Fullam -0- -0- 10,800 50,400 51,753 171,013
Stephen D. Lebovitz -0- -0- 38,400 89,600 190,010 304,022
Eric P. Snyder -0- -0- 21,600 50,400 106,880 171,013
</TABLE>
(1) Amounts listed are based upon the $24.6875 closing price for the Common
Stock on the NYSE on December 31, 1997 (last trading day in 1997).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Upon completion of the Company's initial public offering in November
1993, Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz entered into
employment agreements (an "Employment Agreement" and collectively, the
"Employment Agreements") with the Company and the Management Company
(collectively, the "Employer") expiring on November 2, 1996. Pursuant to
the Employment Agreements, Charles B. Lebovitz, John N. Foy and Stephen D.
Lebovitz held corresponding positions with the Management Company. Upon the
expiration of the Employment Agreements on November 2, 1996, these three
executive officers continued to hold corresponding positions with the
Management Company.
Upon the commencement of their terms in 1993, the Employment Agreements
provided for the following annual base salaries, which were paid by the
Management Company: (i) Charles B. Lebovitz -- $385,000; (ii) John N. Foy
- -- $230,000; and (iii) Stephen D. Lebovitz -- $160,000. The base salaries
are subject to review annually for increase at the discretion of the
Compensation Committee of the Board of Directors and, since 1993, the base
salaries referenced above have been increased to the levels set forth on the
Summary Compensation Table on page 11.
Additionally, pursuant to the Employment Agreements, Charles B.
Lebovitz, John N. Foy and Stephen D. Lebovitz were eligible for participation
in bonus programs and incentive compensation and stock incentive programs as
generally provided to executive officers commensurate with such officers'
performance, all at the discretion of the Compensation Committee. These
benefits have continued following the expiration of the Employment
Agreements. The Employment Agreements also provided for certain other
benefits, including life insurance, health, disability and major-medical
insurance and other benefit plans maintained from time to time for the
benefit of all employees of the Employer and these benefits have continued
following the expiration of the Employment Agreements.
-14-
<PAGE>
Charles B. Lebovitz has agreed to refrain from competing with the
Employer until the later of (i) November 3, 2003 or (ii) two years from the
date of termination of his employment. If his employment is terminated
without cause, the restrictive covenant will expire two years from the date
of termination. Each of John N. Foy and Stephen D. Lebovitz have agreed to
refrain from competing with the Employer, until the later of (i) November 3,
1996 or (ii) two years from the date of termination of his employment.
Prohibited competition includes any participation in the development,
improvement or construction of any shopping center project, acquiring any
interest in a shopping center project or acquiring vacant land for
development as a shopping center project. Charles B. Lebovitz, John N. Foy
and Stephen D. Lebovitz are, however, permitted to hold certain investments
which they owned prior to signing the Employment Agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of the
Independent Directors, Claude M. Ballard, Leo Fields, William J. Poorvu
and Winston W. Walker with Mr. Ballard serving as Chairman. None of the
members of the Compensation Committee are or have been officers or employees
of the Company.
Winston Walker is currently a member of the Board of Directors of
SunTrust Bank, Chattanooga, N.A. (formerly, American National Bank)
("SunTrust"). The Company is currently maintaining a $10,000,000 line of
credit from SunTrust that matures in 1999. In the future, the Company or
the Operating Partnership may, in the ordinary course of business, engage in
other transactions with such bank on competitive terms.
Claude Ballard is a limited partner of Goldman, Sachs & Co., which has
served as an underwriter in public offerings from the Company, the most
recent of which occurred in January 1997, and which performs investment
banking services for the Company from time to time.
No executive officer of the Company served on any board of directors
or compensation committee of any entity (other than the Company) with which
any member of the Compensation Committee is affiliated.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
General. The Company is a self-managed, self-administered, fully-
integrated real estate company which is engaged in the ownership, marketing,
management, leasing, expansion, development, redevelopment, acquisition and
financing of regional malls and community and neighborhood centers.
The Company operates through its two wholly-owned subsidiaries, CBL
Holdings I, Inc., a Delaware corporation ("CBL Holdings I"), and CBL
Holdings II, Inc., a Delaware corporation ("CBL Holdings II"). By transfers
dated April 1, 1997, the Company assigned its interests in the Operating
Partnership to CBL Holdings I and CBL Holdings II, which resulted in CBL
Holdings I becoming the 2.8% sole general partner of the Operating
Partnership and CBL Holdings II becoming a 69% limited partner of the
Operating Partnership. The Company conducts substantially all of its
business through the Operating Partnership. To comply with certain technical
requirements of the Code applicable to REITs, the Operating Partnership
carries out the Company's property management and development activities
through the Management Company.
Neither the Company nor the Operating Partnership has any paid
employees. Although Charles B. Lebovitz and the other executive officers
named in this Proxy Statement are executive officers of the Company, their
compensation is in the form of a base salary and bonus paid entirely by the
Management Company.
The Compensation Committee determines all matters related to the
compensation of all officers of the Company of the level of vice president
or higher and administers the Stock Incentive Plan.
-15-
<PAGE>
Philosophy. It is the philosophy of the Company to ensure that
executive compensation be directly linked to financial objectives that the
Company believes are primary determinates of stockholder value over time.
The Compensation Committee's objectives in administering the Company's
executive compensation plan are to ensure that pay levels and incentive
compensation are (i) competitive in attracting and retaining the best
personnel, (ii) properly linked to the Company's performance, and (iii)
simple in design. To fulfill these objectives, the compensation plan for
executives includes base salary, performance based discretionary bonuses
and periodic grants of stock awards and stock options pursuant to the Stock
Incentive Plan. Non-executive employees of the Company are also eligible to
participate in the Stock Incentive Plan.
The Company believes that the ability to use the Stock Incentive Plan to
attract and retain key personnel has substantial value and will be essential
to the growth of the Company. The stock option and stock award elements of
compensation are designed to encourage and create ownership and retention of
the Company's stock by key employees in order to align their long-range
interests with those of stockholders and to allow the opportunity for key
employees to build, through the achievement of corporate goals, a meaningful
ownership stake in the Company.
Financial Criteria. The Compensation Committee, based on
recommendations made by the Company, implemented an executive compensation
program in 1994 pursuant to which officers of the level of vice president
and higher received during fiscal year 1997, in addition to a base salary,
incentive compensation consisting of cash, stock options and stock awards
for the achievement of target levels of performance determined by the
Compensation Committee. The amount of this additional compensation was
determined for each executive officer based upon his contribution to the
overall success of the Company. Utilizing the program's basic theory for
incentivecompensation, cash, stock options and stock awards were granted
during fiscal year 1997 to other employees of the Company as performance-
based incentive compensation.
Compensation of the Chief Executive Officer. Charles B. Lebovitz' base
salary of $428,274 for 1997 was paid pursuant to his Employment Agreement.
The Employment Agreement provides for annual reviews for salary increases and
discretionary bonuses through the term of the agreement. Additionally, the
Employment Agreement provides for participation in the Company's incentive
plans, including the Stock Incentive Plan. During fiscal year 1997, Mr.
Lebovitz received options to purchase 30,000 shares of Common Stock and
awards of an aggregate of 3,085 shares of Common Stock under the Stock
Incentive Plan. The awards were determined upon the same criteria as
applied to the other executive officers of the Company.
Policy Regarding Qualifying Compensation. Section 162(m) of the Code
imposes a $1,000,000 ceiling on tax-deductible remuneration paid to the five
most highly compensated executive officers of a publicly-held corporation.
The limitation does not apply to remuneration payable solely on account of
the attainment of one or more performance goals approved by a compensation
committee. An amendment to the Company's Stock Incentive Plan was adopted
in 1996 that limits the number of stock options that may be granted to an
employee in any calendar year. This amendment conforms the Stock Incentive
Plan to the requirements of "performance-based compensation" exempt from the
deductibility limitations of Section 162(m) of the Code.
COMPENSATION COMMITTEE
CLAUDE M. BALLARD (CHAIRMAN)
LEO FIELDS
WILLIAM J. POORVU
WINSTON W. WALKER
-16-
<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the percentage change in the
cumulative stockholder return on the Common Stock with the cumulative total
return of the Standard & Poor's 500 Total Return Index ("S&P 500") and The
National Association of Real Estate Investment Trusts ("NAREIT") Equity REIT
Total Return Index(1) for the period commencing October 28, 1993 (the date
on which trading of the Company's Common Stock commenced) through
December 31, 1997. The following graph assumes that the value of the
investment in the Company and the indices was $100 at the beginning of the
period and that dividends were reinvested. The stock price performance
presented below is not necessarily indicative of future results:
The Following table set forth the indices used to determine the performance
graph.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Period Ending
_______________________________________________________________
Index 10/28/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
_________________________________ ________ ________ ________ ________ ________ ________
CBL & Associates Properties, Inc. 100.00 94.20 115.69 131.69 168.72 172.78
S & P 500 100.00 100.27 101.59 139.77 171.72 229.03
NAREIT Equity REIT Index 100.00 94.24 97.01 111.70 151.59 182.31
</TABLE>
____________________
1 The NAREIT Equity REIT Total Return Index is published monthly, based
on the last closing prices of the preceding month.
-17-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
The Company is party to a management agreement with the Management
Company pursuant to which the Management Company renders management and
administrative services with respect to the Company's properties. The
Company, through the Operating Partnership, owns 100% of the preferred
stock and 5% of the common stock of the Management Company and Charles B.
Lebovitz, his family and the Associates own 95% of the common stock of the
Management Company. Through the ownership of 100% of the preferred stock of
the Management Company, the Company enjoys substantially all of the economic
benefits of the Management Company's business. The Management Company also
provides management services for certain properties owned by CBL and certain
other third parties for which the Management Company is paid a management
fee. See "Retained Property Interests."
PARTNERSHIP AGREEMENT; CBL RIGHTS
The Company entered into the Partnership Agreement with CBL. Pursuant
to such agreement and as amended to show CBL Holdings I as the sole general
partner, the Company, through CBL Holdings I and II, currently owns a 2.8%
general partner interest and a 69% limited partner interest in the Operating
Partnership and CBL owns a 28.2% limited partner interest in the Operating
Partnership.
Pursuant to the Partnership Agreement, CBL was granted CBL Rights,
consisting of the rights to: (i) exchange all or a portion of its partnership
interest in the Operating Partnership for shares of Common Stock (based on
the trading price of the Common Stock at the time of conversion) until it
owns up to the applicable share Ownership Limit; and (ii) sell to the
Company part or all of its remaining partnership interest in the Operating
Partnershipin exchange for shares of Common Stock or their cash equivalent
(based on the trading price of the Common Stock), at the Company's election.
The Company, however, may not pay in shares of Common Stock to the extent
that this would result in CBL beneficially or constructively owning in the
aggregate more than the applicable Ownership Limit or otherwise jeopardize,
in the opinion of counsel to the Company, the Company's qualification as a
real estate investment trust for tax purposes.
The purchase price (the "Purchase Price") payable upon exercise of CBL
Rights is the fair market value of the partnership interests with respect to
which CBL Rights are exercised (the "Offered Interests") computed as of the
date on which such CBL Rights are exercised. The number of shares of Common
Stock and/or cash received by the limited partners of the Operating
Partnership upon exercise of CBL Rights will be based upon the trading
price of the shares of Common Stock at the time of exercise. If CBL Rights
are exercised for shares of Common Stock, the Purchase Price for the Offered
Interests is payable by the Company's issuance of the number of shares of
Common Stock having a market value at the time of exercise equal to the
Purchase Price. If the CBL Rights are satisfied in cash and the Company
raises such funds through a public offering of its securities, by borrowing
or otherwise, the purchase price otherwise payable for the Offered Interests
will be reduced by the amount equal to the transaction expenses incurred by
the Company in so raising such funds (but not exceeding 5% of the Purchase
Price computed without regard to such expenses).
CBL Rights will expire in November 2043 if not exercised prior to that
date. Charles B. Lebovitz, James Wolford and their respective affiliates
(as defined under the attribution rules of the Code) may not transfer rights
to acquire more than 6% of the outstanding shares of Common Stock to any
single entity that is not an affiliate under the applicable attribution
rules of the Code.
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RETAINED PROPERTY INTERESTS
CBL owns certain interests in the following properties (the
"Outparcels"): (i) Outparcels at certain of the Company's properties,
which are being offered for sale through the Management Company, and a
minority interest in one mall; (ii) three long-term mortgages on single-
user properties; and (iii) an interest in a vacant anchor store (a former
Hills Department Store) at an associated center which the Company has an
option to acquire. These properties were not transferred to the Operating
Partnership at the time of the Company's initial public offering because
their cash flow or capital structure was inconsistent with the Company's
investment objectives. The aggregate gross leasable area ("GLA") of the
one vacant anchor store subject to option is approximately 80,000 square
feet, which, if included in the Company's properties, would represent
approximately 0.3% of the total GLA.
The Company's acquisition option is a ten-year option to acquire each
property subject to option for a fixed acquisition price. The option
exercise price is payable in shares of Common Stock (valued at their market
price) or in cash, solely at the Company's election. If the Company elects
to pay in shares, CBL may elect to receive such payment in the form of
limited partner interests in the Operating Partnership which would be
convertible into shares of Common Stock. The aggregate option exercise
price for the remaining one vacant anchor store subject to option is $3.8
million, which amount did not exceed 10 times the annual base rent paid at
the time of the Company's initial public offering under an existing lease
by a tenant in place. At the time entered into, management believed that
the option exercise price for each property subject to option was greater
than its current fair market value. Such exercise price, however, was
determined without obtaining a real estate appraisal with respect to such
property. The option exercise price will be reduced by the amount of the
then existing mortgage indebtedness and any other known liabilities affecting
such property. The option will expire upon its sale to any non-CBL
affiliate. The option may be exercised only by a majority vote of the
Independent Directors. The option will enable the Company to obtain any
appreciation in the value of the property over the option exercise price.
The Company has an option to purchase any Outparcel if CBL enters into
a binding agreement to enter into a lease for such Outparcel with an
unaffiliated third party under which CBL agrees to construct improvements
on the Outparcel at the direction and for use by the tenant. CBL intends to
sell the Outparcels, and the Management Company will receive a commission of
5% of the net sales proceeds for serving as CBL's agent with respect to such
sales.
During 1997, the Company exercised its option to acquire 2 tracts of
land each adjacent to one of the Company's mall's. The Company acquired the
parcels from an entity comprised of CBL and a certain executive officer of
the Company (namely, Charles B. Lebovitz). The acquisition price was an
aggregate $1,572,970 for the two tracts and the Company acquired the parcels
in return for limited partner interests in the Operating Partnership. CBL
received an aggregate .2023% limited partner's interest in return for the
parcels.
Aside from the properties retained by CBL, certain members of Charles B.
Lebovitz' family and his father's estate continue to own four community and
neighborhood centers and two tracts of vacant land. The Company has agreed
that it will not acquire any of the four community and neighborhood centers.
The properties retained by CBL and the properties owned by the Lebovitz
family are managed by the Management Company for a management fee of 3% to 5%
per annum of such properties' annual rents. The Management Company is also
paid a leasing commission of 5% per annum of annual rental payments for new
leases and 3% per annum of annual rental payments for extensions or renewals
of existing leases at the properties retained by CBL and the properties owned
by the Lebovitz family. During fiscal year 1997, CBL and the Lebovitz family
paid the Management Company approximately $86,280 under such management
arrangements.
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AFFILIATED ENTITIES
The stockholders of CBL own interests in a number of entities that have
provided services to CBL in the past, some of which currently continue to
provide services to the Operating Partnership. Such services are provided
at competitive rates. The Independent Directors have, subsequent to the
Company's initial public offering, ratified each of the following
arrangements pursuant to which such services are provided.
CBL has a non-controlling interest in a major national construction
company that has been engaged by CBL in the building of substantially all of
the properties and is currently being engaged by the Company for building
and construction of the Company's construction properties. Charles B.
Lebovitz is also a director of the construction company. The majority
interest in the construction company is held by the members of its senior
management, none of whom are affiliated with CBL or the Company. As of
December 31, 1997, the Company had 9 active contracts (including contracts
in respect of each of the construction properties) with such construction
company having aggregate value of approximately $76 million. During fiscal
year 1997, the Company paid approximately $82 million to this construction
company.
The construction company and CBL own all of the interests of a
partnership that owns two aircraft used by the personnel of the Company and
the construction company. Each partner contributes equally to fixed costs
and shares variable costs through an hourly charge based on usage. The
Company reimburses the partnership for costs on an hourly basis associated
with use of the aircraft relating to the business of the Company. During
fiscal year 1997, the Company paid approximately $840,000 as reimbursement
for operating expenses pursuant to such arrangement.
A company that provided security, maintenance and cleaning services for
most of the Company's malls, office building and other properties not
affiliated with the Company is majority owned by certain executive officers
of the Company (namely, Charles B. Lebovitz, certain members of his family
and the Associates). On February 28, 1997, substantially all of the assets
of this company were sold to a third party not affiliated with CBL or any
executive officer of the Company.
An insurance agency that has in the past served as agent with respect to
the placing of insurance on substantially all of the Company's properties is
majority owned by Charles B. Lebovitz and the Associates. This company ceased
operations on January 31, 1997.
The Bylaws provide that any contract or transaction between the Company
or the Operating Partnership and one or more directors or officers of the
Company or between the Company or the Operating Partnership and any other
entity in which one or more of its directors or officers are directors or
officers, or have a financial interest, must be approved by disinterested
directors or stockholders after the material facts as to the relationship
or interest and as to the contract or transaction are disclosed or are
known to them.
CERTAIN LEASES
The executive officers named in this Proxy Statement and certain CBL
employees are partners in partnerships that lease 21 spaces representing
approximately 31,875 square feet in 14 of the Company's malls as tenants.
Such spaces are operated as food service and entertainment establishments.
Management believes that, at the time these leases were entered into, they
provided for rental payments at market rates and terms.
An entity owned by an executive officer of the Company (namely, John N.
Foy) leased 661 square feet of office space at the Company's office
building. Management believes that, at the time the lease was entered into,
it provided for rental payments at market rates and terms. This lease
expired on March 15, 1997 and this entity relocated to another space not
owned by the Company.
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<PAGE>
Shumacker & Thompson, P.C., local counsel to the Company and CBL, leases
2,536 square feet of office space at the Company's office building. The
construction company, a significant minority interest of which is owned by
CBL, leases 8,394 square feet of office space at the Company's office
building. Management believes that, at the time these leases were entered
into, they provided for rental payments at market rates and terms.
Renewals of any of the foregoing leases will provide for rental payments
at market rates and terms at the time such renewal leases are entered into.
OTHER
A member of the family of an executive officer of the Company (namely,
John N. Foy) owns an approximately 5,000 square foot store in Hamilton
Collection, a retail condominium center adjacent to Hamilton Place, one of
the Company's malls located in Chattanooga, Tennessee.
Charles B. Lebovitz, certain members of his family, the Associates and a
certain executive officer of the Company (namely, Eric P. Snyder), have
personally guaranteed an aggregate of $8.8 million of the mortgage debt
encumbering CoolSprings Galleria, one of the Company's malls located in
Nashville, Tennessee, for the length of the term of the mortgage. Such
guarantee is payable only if, and to the extent that, proceeds from a
foreclosure sale of the mall are not in excess of the guarantee.
Certain members of Shumacker & Thompson, P.C., local counsel to the
Company and CBL, are assistant secretaries of the Company. Shumacker &
Thompson, P.C. has also provided legal services to CBL in the past and
currently continues to provide such services.
The Company has retained the law firm of Finkel Goldstein Berzow &
Rosenbloom to represent the Company in connection with the bankruptcy of
Caldor Corporation, with whom the Company had entered into some pre-
development leases, which have been subsequently terminated prior to the
commencement of any construction. The fee arrangement is a contingent
arrangement providing for the firm to receive 25% of the first $1 million
of recoveries from the tenant, 15% of any additional recoveries and
reimbursement of all out-of-pocket expenses. Harvey L. Goldstein, Esq.,
a member of the firm, is the father-in-law of Stephen D. Lebovitz.
Charles B. Lebovtiz is currently an advisory director of First Tennessee
Bank, N.A., Chattanooga, Tennessee ("1st Tennessee"). The Company is
currently maintaining an $80 million line of credit from 1st Tennessee that
matures in 1999. There is currently approximately $67 million outstanding
on this line of credit. In the future, the Company or the Operating
Partnership may, in the ordinary course of business, engage in other
transactions with such bank on competitive terms.
See also the transactions described above under "Executive Compensation
- -- Compensation Committee Interlocks and Insider Participation".
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RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors proposes and recommends that the stockholders
ratify the selection of the firm of Arthur Andersen LLP to serve as
independent public accountants of the Company for the year ending
December 31, 1998. Arthur Andersen LLP served as the Company's independent
public accountants from the Company's inception in July 1993 to the present.
Unless otherwise directed by the stockholders, proxies will be voted for
approval of the selection of Arthur Andersen LLP to audit the Company's
consolidated financial statements for the 1998 fiscal year. A
representative of Arthur Andersen LLP will attend the Annual Meeting,
and will have an opportunity to make a statement and to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR 1998
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DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the rules established by the Securities and Exchange
Commission, stockholder proposals to be included in the Company's proxy
statement with respect to the 1999 Annual Meeting of Stockholders must be
received by the Company at its executive offices located at Suite 300,
6148 Lee Highway, Chattanooga, Tennessee 37421 no later than December 1, 1998.
In addition, the Company's Bylaws provide that any stockholder of record
desiring to nominate a director or have a stockholder proposal considered
at an annual meeting must provide written notice of such nomination or
proposal and appropriate supporting documentation, as set forth in the
Bylaws, to the Company at its principal executive offices not less than 60
days nor more than 90 days prior to the anniversary date of the prior year's
annual meeting (the "Anniversary Date"); provided, however, that
stockholders will have additional time to deliver the required notice in the
event the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from the Anniversary Date.
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OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, inasmuch as
matters of which the management is not now aware may come before the meeting
or any adjournment, the proxies confer discretionary authority with respect
to acting thereon, and the persons named in such proxies intend to vote, act
and consent in accordance with their best judgment with respect thereto.
Upon receipt of such proxies (in the form enclosed and properly signed) in
time for voting, the shares represented thereby will be voted as indicated
thereon and in this Proxy Statement.
By Order of the Board of Directors
JOHN N. FOY
Secretary
Chattanooga, Tennessee
March 27, 1998
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997 MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM
THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO INVESTOR RELATIONS,
CBL & ASSOCIATES PROPERTIES, INC., SUITE 300, 6148 LEE HIGHWAY, CHATTANOOGA,
TENNESSEE 37421.
