<PAGE>
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
SPG 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 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:
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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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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) Amount 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:
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<PAGE>
SPG Properties, Inc.
115 West Washington Street
Indianapolis, Indiana 46204
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To The Shareholders of SPG Properties, Inc.:
Please take notice that the 1999 Annual Meeting of Shareholders of SPG
Properties, Inc. will be held at The Indianapolis Hyatt Regency, One South
Capitol Avenue, Indianapolis, Indiana, on Wednesday, May 12, 1999 at 11:00
a.m., Indianapolis time, to consider the following proposals:
(1) to elect a total of thirteen (13) directors, each to serve until the
next annual meeting of shareholders; and
(2) to transact such other business as may come before the meeting.
Only shareholders of record at the close of business on March 17, 1999 will
be entitled to vote at the meeting or any adjournment or postponement thereof.
We cordially invite you to attend the meeting, but regardless of whether
you plan to be present, please promptly date, mark, sign and mail the enclosed
Proxy in the envelope provided, which requires no additional postage if mailed
in the United States. Any shareholder who executes and delivers a Proxy may
revoke the authority granted thereunder at any time prior to its use by giving
written notice of such revocation to the undersigned at 115 West Washington
Street, Indianapolis, Indiana 46204, by executing and delivering a Proxy
bearing a later date or by attending and voting at the meeting. Your vote is
important, regardless of the number of shares you own.
The Company's Annual Report on Form 10-K for the year ended December 31,
1998 is also enclosed.
By Order of the Board of Directors
of SPG Properties, Inc.
/s/ James M. Barkley, Secretary
Dated: April 2, 1999
<PAGE>
SPG Properties, Inc.
115 West Washington Street
Indianapolis, Indiana 46204
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of SPG Properties, Inc., a
Maryland corporation (the "Company"), for use at the 1999 annual meeting of
shareholders and at any adjournment or postponement thereof (the "Meeting") to
be held, for the purposes set forth in the accompanying Notice of Annual
Meeting, on Wednesday, May 12, 1999, at The Indianapolis Hyatt Regency, One
South Capitol Avenue, Indianapolis, Indiana, at 11:00 a.m., Indianapolis time.
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
are to be mailed on or about April 2, 1999, to shareholders of record on March
17, 1999.
The Company is the successor to Simon DeBartolo Group, Inc. ("SDG"), which
combined its operations with Corporate Property Investors, Inc. ("CPI") and
Corporate Realty Consultants, Inc. ("CRC") effective as of the close of
business on September 24, 1998 (the "CPI Merger").
Valid Proxies will be voted at the Meeting as specified thereon. Any person
giving a Proxy may revoke it by written notice at any time prior to its
exercise or by executing and delivering a Proxy bearing a later date.
Attendance at the Meeting by a shareholder will not constitute a revocation of
a Proxy unless such shareholder affirmatively indicates at the Meeting that
such shareholder intends to vote the shares in person.
Voting Securities
The Board of Directors has fixed the close of business on March 17, 1999 as
the record date for the Meeting. On that date, there were outstanding
113,688,557 shares of Common Stock, par value $0.0001 per share ("Common
Stock"), 8,000,000 shares of Series B Preferred Stock, par value $0.0001 per
share ("Series B Preferred Stock") and 3,000,000 shares of Series C Preferred
Stock, par value $0.0001 per share ("Series C Preferred Stock," together with
the Common Stock and the Series B Preferred Stock, "Voting Stock"). As to
matters subject to approval by the holders of Voting Stock, holders of Common
Stock, Series B Preferred Stock and Series C Preferred Stock are entitled to
one vote per share and vote together as a single class. The presence at the
Meeting in person or by proxy of a majority of all the votes entitled to be
cast at the Meeting or 62,344,279 shares of Voting Stock will constitute a
quorum for the transaction of business.
Unless contrary instructions are indicated on the Proxy, all shares of
Voting Stock represented by valid Proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees named in the Proxy.
All of the outstanding shares of Common Stock are owned by Simon Property
Group, Inc. ("SPG").
Required Vote
A plurality of the votes is required to elect directors. On any other
proposals, the proposal will be approved if the number of votes cast in favor
exceed the number of votes against. Abstentions and broker non-votes will be
treated as shares not voted and will have no effect on such voting. SPG, the
holder of all of the outstanding shares of Common Stock, has informed the
Company that it intends to vote all of its shares of Common Stock in favor of
the persons who are elected directors of SPG and its "paired share" affiliate,
SPG Realty Consultants, Inc. ("SRC" and together with SPG, the "Parent
Companies") at the annual meetings of stockholders of the Parent Companies
which will immediately precede the Meeting. Accordingly, the election of such
persons as directors of the Company is assured.
<PAGE>
Other Business
The Board of Directors knows of no business other than that set forth above
to be transacted at the Meeting, but if other matters requiring a vote do
arise, it is the intention of the persons named in the Proxy to vote in
accordance with their judgment on such matters.
COSTS OF PROXY SOLICITATION
The cost of preparing, assembling, and mailing the proxy material will be
borne by the Company. It is expected that solicitation will be made primarily
by mail, but employees of the Company or other representatives of the Company
may also solicit Proxies without additional compensation. The Company will
also request persons, firms and corporations holding shares in their names or
in the names of their nominees, which shares are beneficially owned by others,
to send the proxy material to, and to obtain Proxies from, such beneficial
owners and will reimburse such holders for their reasonable expenses in doing
so. In addition, the Company has retained Beacon Hill Partners, Inc., a proxy
solicitation firm, to assist in the solicitation of Proxies. Such firm will be
paid a fee of $1,500 for its services. The telephone number of Beacon Hill
Partners, Inc., is (212) 843-8500.
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has been or will be specifically
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, the section of
this Proxy Statement entitled "Report of Compensation Committee on Executive
Compensation" shall not be deemed to be so incorporated unless specifically
otherwise provided in any such filing.
SECURITY OWNERSHIP OF MANAGEMENT
No director, nominee for director, or executive officer beneficially owned
Voting Stock as of March 1, 1999.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning each person
(including any group) known to beneficially own more than five percent (5%) of
any class of Voting Stock as of March 1, 1999. Shares are owned directly and
the indicated person has sole voting and investment power.
<TABLE>
<CAPTION>
Percent of
Class of
Voting Stock
Name and Address of Class of Beneficially
Beneficial Owner Voting Stock Owned
------------------- ------------ ------------
<S> <C> <C>
Simon Property Group, Inc....................... Common Stock 99.99%
115 W. Washington Street
Indianapolis, IN 46204
</TABLE>
ELECTION OF DIRECTORS
At the Meeting, thirteen (13) directors are to be elected. Each director
will serve until the 2000 annual meeting of shareholders and until his or her
successor has been elected.
The directors of the Company also serve as the directors of the Parent
Companies. The annual meetings of stockholders of the Parent Companies will
take place immediately prior to the Meeting. The following nominees have also
been nominated for election as directors of the Parent Companies. SPG, the
holder of all of the outstanding shares of Common Stock, has informed the
Company that it intends to vote all of its shares of Common Stock in favor of
the persons who are elected directors of the Parent Companies. Accordingly,
the election of such persons as directors of the Company is assured.
2
<PAGE>
Set forth below are the names of and certain other information regarding
the nominees. Information about each such person's ownership of equity
securities of the Company appears elsewhere in this Proxy Statement.
The Board of Directors unanimously recommends that shareholders vote FOR
the nominees named below.
Robert E. Angelica, 52, has been a director of the Company and the Parent
Companies since 1998 and prior to that was a director of CPI, one of the
predecessors of the Parent Companies, since 1997. He is President and Chief
Investment Officer of the AT&T Investment Management Corporation, a position
he has held since 1992. Mr. Angelica is also a director of The Emerging
Markets Growth Fund, Inc. and The India Magnum Fund, Ltd.
Birch Bayh, 71, has been a director of the Company and the Parent Companies
since 1998 and prior to that was a director of SDG since 1993. He has been the
senior partner in the Washington, D.C. law firm of Oppenheimer, Wolff,
Donnelly & Bayh LLP (formerly Bayh, Connaughton, & Malone, P.C.) for more than
five years. He served as a United States Senator from Indiana from 1963 to
1981. Mr. Bayh also serves as a director of ICN Pharmaceuticals, Inc.
Hans C. Mautner, 61, has been a director of the Company and Vice Chairman
of the Board of Directors of the Parent Companies since 1998. Prior to that he
was Chairman of the Board of Directors and Chief Executive Officer of CPI and
its affiliate, CRC, one of the predecessors of the Parent Companies, since
1989. He was a director of CPI from 1973 to 1998 and of CRC from 1975 to 1998.
He served as Vice President of CPI from 1972 to 1973, when he was appointed
Executive Vice President. Mr. Mautner was elected President of CPI and CRC in
1976, was elected Chairman and President in 1988, and was elected Chairman,
President and Chief Executive Officer of CPI and CRC in 1989. Prior to joining
CPI, he was a General Partner of Lazard Freres. Mr. Mautner is currently a
director of Cornerstone Properties Inc. and a board member for seven funds in
The Dreyfus Family of Funds.
G. William Miller, 74, has been a director of the Company and the Parent
Companies since 1998 and prior to that was a director of SDG since 1996. He
has been Chairman of the Board and Chief Executive Officer of G. William
Miller & Co. Inc., a merchant banking firm, since 1983. He is a former
Secretary of the U.S. Treasury and a former Chairman of the Federal Reserve
Board. From January 1990 until February 1992, he was Chairman and Chief
Executive Officer of Federated Stores, Inc., the parent company of
predecessors to Federated Department Stores, Inc. Mr. Miller is Chairman of
the Board and a director of Waccamaw Corporation. He is also a director of GS
Industries, Inc., Kleinwort Benson Australian Income Fund, Inc. and Repligen
Corporation.
Fredrick W. Petri, 52, has been a director of the Company and the Parent
Companies since 1998 and prior to that was a director of SDG since 1996. He is
a partner of Petrone, Petri & Company, a real estate investment firm he
founded in 1993, and an officer of Housing Capital Company since its formation
in 1994. Prior thereto, he was an Executive Vice President of Wells Fargo
Bank, where for over 18 years he held various real estate positions. Mr. Petri
is currently a trustee of the Urban Land Institute and a director of Storage
Trust Realty. He previously was a member of the Board of Governors and a Vice
President of the National Association of Real Estate Investment Trusts and a
director of the National Association of Industrial and Office Park
Development. He is a director of the University of Wisconsin's Real Estate
Center.
Melvin Simon, 72, has been the Co-Chairman of the Board of the Parent
Companies and a director of the Company since 1998 and prior to that he was
the Co-Chairman of the Board and a director of SDG since its incorporation. In
addition, he is the Co-Chairman of the Board of Melvin Simon & Associates,
Inc. ("MSA"), a company he founded in 1960 with his brother, Herbert Simon. He
is also an officer of the indirect general partner of SZS 33 Associates, L.P.,
a Delaware limited partnership ("SZS"), which filed a bankruptcy petition in
the United States Bankruptcy Court for the Southern District of New York on
October 12, 1998, as part of a prepackaged Chapter 11 plan (the "Plan"). The
Plan was confirmed on January 13, 1999, and the assets of SZS were transferred
to a creditor on February 24, 1999.
3
<PAGE>
Herbert Simon, 64, has been the Co-Chairman of the Board of the Company and
has been a director of the Company and the Parent Companies since 1998 and
prior to that was a director of SDG since its incorporation. He served as
Chief Executive Officer of SDG from its incorporation to 1995 when he was
appointed Co-Chairman of the Board. In addition, he is the Co-Chairman of the
Board of MSA. He is also a director of Kohl's Corporation, a specialty
retailer and he is an officer of the indirect general partner of SZS.
David Simon, 37, has been the Chief Executive Officer of the Company and
the Parent Companies and has been a director of each of them since 1998 and
prior to that was a director of SDG since its incorporation. He served as
President of SDG from its incorporation until 1996 and was appointed Chief
Executive Officer in 1995. In addition, he is currently Executive Vice
President of MSA and he has held other offices with MSA since 1990. From 1988
to 1990, he was Vice President of Wasserstein Perella & Company, a firm
specializing in mergers and acquisitions. He is the son of Melvin Simon, the
nephew of Herbert Simon and a director of First Health Corp. He is also an
officer of the indirect general partner of SZS.
J. Albert Smith, Jr., 58, has been a director of the Company and the Parent
Companies since 1998 and prior to that was a director of SDG since 1993. He is
Managing Director of Bank One Corporation, a position he has held since
October 1998. Prior to his current position, he was the President of Bank One,
Indiana, NA, a commercial bank, a position he held since 1994. From 1974 until
1994, he was the President of Banc One Mortgage Corporation, a mortgage
banking firm.
Richard S. Sokolov, 49, is the President and Chief Operating Officer of the
Parent Companies and has been a director of the Company and the Parent
Companies since 1998. Prior to that, he was a director and executive officer
of SDG since 1996. He served as the President and Chief Executive Officer and
a director of DeBartolo Realty Corporation ("DRC") from its incorporation
until it merged with SDG in 1996. Prior to that he had served as Senior Vice
President, Development of The Edward J. DeBartolo Corporation ("EJDC") since
1986 and as Vice President and General Counsel since 1982. In addition, Mr.
Sokolov is President, a trustee and a member of the Executive Committee of the
International Council of Shopping Centers.
Pieter S. van den Berg, 53, has been a director of the Company and the
Parent Companies since 1998. He has been Director Controller of PGGM, a Dutch
pension fund, since 1991.
Philip J. Ward, 50, has been a director of the Company and the Parent
Companies since 1996 and prior to that was a director of SDG since 1996. He is
Senior Managing Director, Head of Real Estate Investments, for CIGNA
Investments, Inc., a wholly-owned subsidiary of CIGNA Corporation. He is a
member of the International Council of Shopping Centers, the Urban Land
Institute, the National Association of Industrial and Office Parks and the
Society of Industrial and Office Realtors. He is a director of Patriot
American Hospitality Inc.
M. Denise DeBartolo York, 48, has been a director of the Company and the
Parent Companies since 1998 and prior to that was a director of SDG since
1996. She served as a director of DRC from 1995 to 1996. She currently serves
as Chairman of the Board of EJDC. Ms. DeBartolo York previously served EJDC as
Executive Vice President of Personnel/Communications and has been associated
with EJDC in an executive capacity since 1975.
Attendance and Committees of the Board of Directors
The Board of Directors of SDG held nine meetings during 1998 prior to the
CPI Merger. The Company's Board of Directors held one meeting after the CPI
Merger. Joint meetings of the Company's Board of Directors and the Boards of
Directors of the Parent Companies are considered one meeting. The Board of
Directors has established four standing committees, the Compensation
Committee, the Audit Committee, the Executive Committee and the Nominating
Committee. Members of the four standing committees also serve on the same
standing committees of the Boards of Directors of the Parent Companies. Joint
meetings of the respective standing committees of the Company's Board of
Directors and the Boards of Directors of the Parent Companies
4
<PAGE>
are considered one meeting of each such standing committee. Except for William
T. Dillard, G. William Miller and Ms. DeBartolo York, all directors attended
75% or more of the meetings of the Board and each committee on which they
served.
The By-Laws of the Parent Companies require that each committee except the
Executive Committee, the Audit Committee and the Nominating Committee must
have at least one member who was elected by the holders of SPG Class B Common
Stock, par value $.0001 per share ("SPG Class B Common") and at least one
member elected by the holders of SPG Class C Common Stock, par value $.0001
per share ("SPG Class C Common"). The entire Audit Committee and a majority of
the Compensation Committee must be composed of Independent Directors. Further,
the Nominating Committee is required to have five members with two members
elected by the SPG Class B Common and one member elected by the SPG Class C
Common.
At the meeting of directors to be held following the Meeting, the Boards
will reappoint members of the Board to the four standing committees.
The Compensation Committee, which currently consists of Messrs. Herbert
Simon, Angelica, Bayh, Petri and Ward, sets remuneration levels for officers
of the Companies, reviews significant employee benefit programs and
establishes, as it deems appropriate, and administers executive compensation
programs, including bonus plans, stock option and other equity-based programs,
deferred compensation plans and any other cash or stock incentive programs.
The SDG Compensation Committee met one time during 1998 prior to the CPI
Merger.
The Audit Committee, which currently consists of Messrs. Smith, Miller and
Petri, makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the scope of the
audit engagement, reviews the independent public accountants' letter of
comments and management's responses thereto, approves professional services
provided by the independent public accountants, reviews the independence of
the independent public accountants, reviews any major accounting changes made
or contemplated, considers the range of audit and non-audit fees, and reviews
the adequacy of the Companies' internal accounting controls. During 1998, the
SDG Audit Committee met one time prior to the CPI Merger and the Company's
Audit Committee met one time after the CPI Merger.
The Executive Committee, which currently consists of Messrs. Melvin Simon,
Herbert Simon, David Simon, Mautner and Sokolov, approves the acquisition and
disposition of real property, authorizes the execution of certain contracts
and agreements, including those related to the borrowing of money by the
Companies, and generally exercises all other powers of the Board of Directors
between meetings of the Board of Directors, except in cases where action of
the entire Board of Directors is required and except where action by
Independent Directors (as defined in the Companies' Charters) is required by
the Companies' conflict of interest policies. During 1998, the SDG Executive
Committee met two times prior to the CPI Merger and the Company's Executive
Committee met one time after the CPI Merger.
The Nominating Committee, which currently consists of Messrs. Herbert
Simon, David Simon, Bayh and Miller and Ms. DeBartolo York, nominates persons
to serve as directors who are elected by the holders of units ("Paired
Shares") consisting of SPG Common Stock, par value $.0001 per share ("SPG
Common") paired with a beneficial interest in Common Stock, $.0001 per share,
of SRC. In considering persons to nominate, the Nominating Committee will
consider persons recommended by stockholders. The SDG Nominating Committee met
one time in 1998 prior to the CPI Merger.
Compensation of Directors
Directors of the Company are compensated by SPG for their services as
directors of the Parent Companies and receive no additional compensation. SPG
pays the directors of the Parent Companies who are not employees of them or
their affiliates annual compensation of $20,000 plus $1,000 for attendance (in
person or by telephone) at each meeting of the Boards of Directors or a
committee thereof. In addition, all directors are reimbursed for their
expenses incurred in attending directors' meetings.
5
<PAGE>
Directors who are employees of the Parent Companies or their affiliates do
not receive any compensation for their services as directors. Directors of SPG
who are not employees of the Parent Companies or their affiliates are
automatically granted each year options to purchase 3,000 shares of SPG Common
multiplied by the number of calendar years that have elapsed since such
person's last election to the Board of Directors of SPG. In addition, such
directors are eligible to be granted discretionary awards under and to
participate in SPG's incentive stock option plan, as described below under
"Executive Compensation--Option Plans." On March 1, 1999, eligible directors
were granted discretionary option awards under the plan to compensate them
either for initial election to the Boards of Directors or for having served as
directors for more than one year without receiving automatic grants under the
previous option plan, as follows: Mr. Angelica--3,000; Mr. Bayh--3,000; Mr.
Miller--6,000; Mr. Petri--6,000; Mr. Smith--6,000; Mr. van den Berg--5,000;
Mr. Ward--6,000; and Ms. DeBartolo York--3,000. Mr. Angelica will assign the
economic benefit of his options to Telephone Real Estate Equity Trust
("TREET") pursuant to an agreement dated May 7, 1997. Mr. van den Berg will
assign the economic benefit of these options granted to him to PGGM, a Dutch
pension fund.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and beneficial owners of more than
10% of the Company's capital stock to file reports of ownership and changes of
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Based solely on its review of the copies of such forms received by
it, and/or written representations from certain reporting persons, the Company
believes that, during the year ended December 31, 1998, its directors,
executive officers and beneficial owners of more than 10% of the Company's
capital stock have complied with all filing requirements applicable to them.
6
<PAGE>
EXECUTIVE COMPENSATION
After the CPI Merger, the Company ceased to separately compensate any
officers for their services to the Company. Instead, executive compensation is
paid by SPG for all services to the Parent Companies, including services to
the Company. The following table sets forth information concerning the
compensation for services in all capacities to the Parent Companies for the
year ended December 31, 1998 (the "Named Executives"). The amounts shown in
the table reflect all compensation paid to the Named Executives by the Parent
Companies and their predecessors, SDG, CPI and CRC.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
-------------------- ---------------------
Restricted Securities All Other
Name and Principal Stock Underlying Compensation
Position(1) Year Salary Bonus(2) Awards Options(3) (4)
- ------------------ ---- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
David Simon............. 1998 $800,000 $ 0 $ -- -- $ 9,394
Chief Executive Officer 1997 744,489(5) 450,000 -- -- 11,012
1996 610,389(5) 300,000 -- -- 11,056
Hans C. Mautner......... 1998 $626,676 $ 0 $ -- 237,500 $12,197,459(6)
Vice Chairman 1997 550,000 375,000 -- 60,000 119,585
Richard S. Sokolov...... 1998 $608,654 $ 0 $ -- -- $ 34,529
President and Chief 1997 522,264 250,000 -- -- 8,302
Operating Officer 1996 202,134 175,000 -- -- --
William J. Garvey....... 1998 $426,406 $100,000 $ -- -- $ 9,498
Executive Vice
President-- 1997 395,977 100,000 -- -- 15,563
Property Development 1996 375,000 100,000 -- -- 12,362
James A. Napoli......... 1998 $409,927 $250,000 $ -- -- $ 11,392
Executive Vice
President-- 1997 366,149 125,000 -- -- 15,563
Leasing 1996 316,154 110,000 -- -- 12,362
</TABLE>
- --------
(1) Does not include three former officers of CPI who are no longer employed
by SPG and who would have placed in the four most highly compensated
executive officers based on one-time or severance payments made in
connection with the CPI Merger, including Mark S. Ticotin, a former
executive officer of CPI and SPG who received approximately $7,580,297
total compensation in 1998, a substantial portion of which was a one-time
payment made by CPI immediately prior to and in connection with the CPI
Merger. Mr. Ticotin's total compensation also includes forgiveness of a
$1,248,729 debt relating to shares of CPI stock purchased under the CPI
Employee Share Purchase Plan, which debt was forgiven pursuant to the
terms of and in connection with the CPI Merger. In addition, CPI paid
taxes in the amount of $3,211,900 on behalf of Mr. Ticotin immediately
prior to and in connection with the CPI Merger.
(2) Bonus awards are accrued in the year indicated and paid in the following
year.
(3) For 1998, represents number of Paired Shares.
(4) Represents annualized amounts of (i) employer paid contributions to the
401(k) retirement plan and (ii) company paid employee and dependent life
insurance premiums. Employer contributions to the 401(k) retirement plan
become vested 30% after completion of three years of service, 40% after
four years and an additional 20% after each additional year until fully
vested after seven years. Does not include the following dollar values of
restricted stock which vested in 1998: David Simon--$267,743; Richard S.
Sokolov--$724,890; William J. Garvey--$267,743; and James A. Napoli--
$267,743.
(5) Includes $210,389 of salary attributable to each of 1997 and 1996, and
paid in 1998.
(6) Includes a one-time payment made by CPI immediately prior to and in
connection with the CPI Merger to Hans C. Mautner of $9,700,000. Also
includes forgiveness of a $2,497,459 debt relating to shares of CPI stock
purchased under the CPI Employee Share Purchase Plan. Such debt was
forgiven pursuant to the terms
7
<PAGE>
of and in connection with the CPI Merger. Does not include taxes in the
amount of $2,728,322 paid by CPI on behalf of Mr. Mautner immediately prior
to and in connection with the CPI Merger.
Options Granted in 1998
The following table sets forth information with respect to the Named
Executive awarded stock options by the Parent Companies in 1998.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term
- ----------------------------------------------------------------------- ------------------------------
% of Total
# of Options
Securities Granted to Exercise or
Underlying Employees in Base Price Expiration
Name Options* 1998 ($/Share) Date 5% 10%
- ------------------------ ---------- ------------ ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Hans C. Mautner......... 237,500 61.7% 30.375 9/24/2008 $ 4,536,884 $ 9,681,985
</TABLE>
- --------
* Represents number of shares of SPG Common paired with a beneficial interest
in SRC Shares.
Option Exercises and Year-End Values
The following table sets forth information with respect to the unexercised
stock options granted to the Named Executives and held by them at December 31,
1998.
AGGREGATED OPTION EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1998(1) December 31, 1998(2)
Shares Acquired Value ---------------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ --------------- -------- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Simon............. -- -- 200,000 -- $1,250,000 --
Hans C. Mautner......... -- -- 250,956 237,500 607,314 --
Richard S. Sokolov...... -- -- -- -- -- --
William J. Garvey....... -- -- 55,000 -- 343,750
James A. Napoli......... -- -- 50,000 -- 312,500 --
</TABLE>
- --------
(1) Represents number of shares of SPG Common paired with a beneficial
interest in SRC Shares.
(2) The closing price of the SPG Common as reported by the New York Stock
Exchange on December 31, 1998, was $28.50. Value is calculated on the
basis of the difference between the exercise price and $28.50, multiplied
by the number of shares of Common Stock underlying "in-the-money" options.
Employment Agreements
Employment Agreement with Hans C. Mautner. Hans C. Mautner is a party to an
employment agreement with SPG (the "Mautner Agreement"). The Mautner Agreement
has a term ending September 24, 2003. Under the Mautner Agreement, Mautner
receives an annual base salary of $762,000 and is eligible to receive an
annual bonus in an amount up to 135% of his annual base salary. The severance
provisions in the Mautner Agreement provide that, in the event Mautner is
terminated by SPG other than for "Cause", death or disability, or by Mautner
for "Good Reason" (as such terms are defined therein), SPG will pay Mautner an
amount equal to the product of three times the sum of (i) Mautner's then
annual base salary and (ii) his then annual bonus and will contribute an
amount to the CPI Supplemental Executive Retirement Plan, as amended and
restated effective as of August 1, 1997 (the "SERP") equal to 33% of the sum
of his annual base salary and bonus, as well as
8
<PAGE>
continue to provide certain employee benefits. In addition, all then
outstanding unvested options granted to Mautner shall become immediately
vested and exercisable and remain exercisable for their original term. In
addition, under the Mautner Agreement, SPG agreed to grant to Mautner on or
before September 24, 1999, an option to acquire 62,500 shares of SPG Common
with an option price equal to the fair market value of such stock on the date
of grant. Such option shall vest in installments within three years of the
date of grant.
The Mautner Agreement contains a golden parachute excise tax gross-up
provision, under which Mautner will be entitled to be made whole on excise
taxes imposed under Section 4999 of the Code.
Employment Agreement with Richard S. Sokolov. Richard S. Sokolov is a party
to an employment agreement with SPG (the "Sokolov Agreement"). The Sokolov
Agreement has an initial term which ended August 9, 1997 and provides for two
automatic one-year extensions of the term unless either party gives the other
party notice that the term will not be extended. Under the Sokolov Agreement,
Sokolov receives an annual base salary of $508,500, subject to annual review
and adjustment, and is eligible to receive a cash bonus of up to 75% of his
base salary.
The severance provisions in the Sokolov Agreement provide that, in the
event Sokolov is terminated by SPG other than for "Cause", death or
disability, or by Sokolov for "Good Reason" (as such terms are defined
therein), SPG will pay Sokolov an amount equal to the sum of all accrued and
unpaid base salary plus one-year's then current base salary and bonus, and
accelerate the vesting of his unearned stock awards.
Option Plans
General. During 1998, SPG maintained two option plans, the Employee Stock
Plan (the "1993 Plan") and the Director Stock Option Plan (the "Director
Plan") until September 24, 1998, the effective date of the CPI Merger. CPI
maintained its 1993 Share Option Plan (the "CPI Option Plan") until September
24, 1998. All options outstanding and not exercised under the 1993 Plan, the
Director Plan and the CPI Option Plan have been converted into similar awards
under SPG's 1998 Stock Incentive Plan (the "1998 Plan" and together with the
1993 Plan, the Director Plan and the CPI Option Plan, the "Option Plans").
Under the 1998 Plan, a maximum of 6,300,000 shares of SPG Common (subject to
adjustment) are available for issuance to eligible officers, key employees,
"Eligible Directors", advisors and consultants for positions of substantial
responsibilities with the Parent Companies. "Eligible Directors" are directors
of SPG who are not employees of the Parent Companies or their affiliates. All
officers, key employees, advisors and consultants of the Parent Companies and
their affiliates (except for Melvin Simon and Herbert Simon) and all Eligible
Directors are eligible to be granted awards under and participate in the 1998
Plan. In addition, Eligible Directors receive automatic grants, as described
below.
The 1998 Plan is administered by the Compensation Committee of the SPG
Board of Directors (the "Committee"). During the ten-year period following the
adoption of the 1998 Plan, the Committee may grant the following types of
awards: incentive stock options ("ISOs") within the meaning of section 422 of
the Code, "nonqualified stock options" ("NQSOs" and together with ISOs,
"Options"), stock appreciation rights ("SARs"), performance units and shares
of restricted or unrestricted SPG Common. Each share of SPG Common issued
under the 1998 Plan, whether issued directly, or through the exercise of an
Option, will be paired with a beneficial interest in SRC Shares.
Discretionary Awards. The terms and conditions of Options, SARs and
restricted stock awards granted under the 1998 Plan are set out in written
agreements which will contain such provisions as the Committee from time to
time deems appropriate.
The terms of Options granted under the 1998 Plan are generally determined
by the Committee within the terms of the 1998 Plan. The exercise price for any
Option may not be less than the fair market value of a share of SPG Common on
the date of grant. No Option will be exercisable after the expiration of ten
years from the date of its grant. The 1998 Plan provides that, unless
otherwise determined by the Committee, Options generally
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vest 40% on the first anniversary of the date of grant, an additional 30% on
the second anniversary of the date of grant and become 100% vested three years
after the date of grant. The Option exercise price may be paid (i) by
certified or official bank check, (ii) in the discretion of the Committee, by
personal check, (iii) in shares of SPG Common owned by the optionee for at
least six months and which have a fair market value on the date of exercise
equal to the exercise price, (iv) in the discretion of the Committee, by
delivery to SPG of a promissory note and agreement providing for payment with
interest on any unpaid balance, (v) through a brokered exercise, (vi) by any
combination of the above, or (vii) by any other means permitted by the
Committee, in its discretion.
A SAR may be granted in connection with all or any part of an Option
granted under the 1998 Stock Incentive Plan or may be granted independent of
any Option. SARs granted in connection with an Option will become exercisable
and lapse according to the same vesting schedule and lapse rules that are
established for the corresponding Option. SARs granted independent of any
Option will vest and lapse according to the terms and conditions set by the
Committee. A SAR will entitle its holder to be paid an amount equal to the
excess of the fair market value of the SPG Common subject to the SAR on the
date of exercise over the exercise price of the related Option, in the case of
a SAR granted in connection with an Option, or the fair market value of the
SPG Common subject to the SAR on the date of exercise over the fair market
value on the date of grant in the case of a SAR granted independent of an
Option.
Subject to the discretion of the Committee, certificates representing
restricted stock awards may (i) be issued to a grantee bearing an appropriate
legend specifying that such shares are subject to restrictions or (ii) be held
in escrow until the end of the restricted period set by the Committee. During
the restricted period, restricted stock will be subject to transfer
restrictions and forfeiture in the event of termination of employment with the
Parent Companies or any of their affiliates and such other restrictions and
conditions established by the Committee at the time the restricted stock is
granted.
To the extent deemed necessary and desirable by the Committee, the terms
and conditions of performance unit awards granted under the 1998 Plan will be
set out in written agreements. Performance unit awards provide for future
payment of cash or SRC Shares, or any other equivalent consideration deemed
appropriate by the Committee, to the grantee upon the attainment of certain
"Performance Goals" (as defined in the 1998 Plan) established by the Committee
over specified periods. At the end of each performance award period, the
Committee decides the extent to which the Performance Goals have been attained
and the amount of cash, SRC Shares, or other consideration, to be distributed
to the grantee.
Automatic Awards For Eligible Directors. The 1998 Plan provides for
automatic grants of Options ("Director Options") to Eligible Directors. Upon
the first day of the first calendar month following the month in which any
person first becomes an Eligible Director, such person will be automatically
granted without further action by the Board of Directors of SPG a Director
Option to purchase 5,000 shares of SPG Common (an "Initial Award"); provided,
however, that an Eligible Director who previously served as a director of SDG
or CPI shall not receive an Initial Award. Thereafter, on the date of each SPG
annual meeting of stockholders (the "Annual Meeting") held after January 1,
1999, each Eligible Director who continues as an Eligible Director will
automatically be granted each year, without further action by the Board of
Directors of SPG, a Director Option to purchase 3,000 shares of SPG Common
multiplied by the number of calendar years that have elapsed since such
person's last election to the Board of Directors of SPG, SDG or CPI (the
"Annual Award"); provided, however, that if any person becomes an Eligible
Director during the 60-day period prior to the Annual Meeting in any year,
then such Eligible Director will not receive the Annual Award.
The exercise price per share of Director Options is 100% of the fair market
value of the SPG Common on the date the Director Option is granted. All
Director Options shall become vested and exercisable on the first anniversary
of the date of grant or such earlier time in the event of a "Change in
Control" (as defined in the 1998 Plan). Upon termination of any person's
service as an Eligible Director, all Director Options granted will expire 30
days following the date of termination.
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Stock Incentive Program. Under SPG's five-year stock-based incentive
program (the "Stock Incentive Program"), an aggregate of 1,000,000 restricted
shares of SPG Common were allocated in March 1995 under the 1993 Plan to a
total of 50 executive officers and key employees. A percentage of the total
number of shares allocated, ranging from 15% to 25%, may be earned in each of
the five years of the program only if SPG attains annual and cumulative
targets for growth in Funds From Operations. The determination of whether SPG
has achieved its targets for a particular year is made in March of the
following year (the "Determination Date") and, to the extent the targets have
been achieved, a portion of the allocation of shares of restricted stock is
deemed to be earned and is awarded as of the Determination Date. Although the
participant is entitled to vote all earned shares and receive distributions
paid thereon as of the Determination Date, earned shares vest in four
installments of 25% each on January 1, of each year following the year in
which the Determination Date occurs. The participant must be employed by SPG
on the day prior to the vesting date to receive such shares, otherwise the
earned shares are forfeited. Each share of SPG Common issued under the Stock
Incentive Program is paired with a beneficial interest in SRC Shares.
Incentive Bonus Plan
The Incentive Bonus Plan (the "Bonus Plan") is intended to provide senior
executives and key employees with opportunities to earn incentives based upon
the performance of SPG, the participant's business unit and the individual
participant. At the beginning of a year, the Committee specifies the maximum
incentive pool available for distributions and approves performance measures
for each participant and three levels of performance that must be attained in
order to trigger the award of the bonuses. Each participant's bonus award for
the year is expressed as a percentage of base salary, a fixed dollar amount,
or a percentage of the available incentive pool. Bonus amounts for each year
are determined in the following February with disbursement in March.
Deferred Compensation Plan
The Parent Companies have a non-qualified deferred compensation plan (the
"Deferred Compensation Plan") that provides deferred compensation to certain
executives and key employees. Under the Deferred Compensation Plan, a
participant may defer all or a part of his compensation. SPG, at its
discretion, may contribute a matching amount equal to a rate selected by SPG,
and an additional incentive contribution amount on such terms as SPG may
specify. All participant deferrals and matching and incentive contributions
are credited to a participant's account and remain general assets of SPG. A
participant's elective deferrals are fully vested. Except in the case of death
or disability of the participant or insolvency or a change in control of SPG,
a participant becomes vested in matching and incentive contributions 20% after
one year of service and an additional 20% for each year thereafter. Upon death
or disability of the participant or insolvency or a change in control of SPG,
a participant becomes 100% vested in his account.
All contributions under the Deferred Compensation Plan are deposited in
what is commonly referred to as a "rabbi trust" arrangement pursuant to which
the assets of the trust are subject to the claims of SPG's general creditors
in the event of SPG's insolvency. The trust assets are invested by the trustee
in its sole discretion. Payments of a participant's elective deferrals and
vested matching contributions are made as elected by the participant. These
amounts would be paid earlier in the event of termination of employment or
death of the participant, an unforeseen emergency affecting the participant or
a change in control of SPG.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
General Principles
As a general matter, the Parent Companies have adopted a compensation
philosophy which embraces the concept of pay-for-performance. The Parent
Companies' strategy is to link executive management compensation with the
Parent Companies' performance and stockholder return and to reward management
for results that are consistent with the key goals of the Parent Companies.
This is described further below under "1998 Executive Officer Compensation."
The Parent Companies believe that their compensation program attracts result-
oriented employees and motivates them to achieve higher levels of performance.
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It is the Parent Companies' policy to establish executive officer base
salary at levels which are slightly below industry statistical norms for
comparable real estate investment trusts ("REITs"), while providing
significant additional compensation opportunities through programs which are
linked directly to performance of the Parent Companies.
1998 CEO Compensation
David Simon was paid a base salary of $800,000 for 1998 and did not receive
a bonus with respect to 1998 performance. In addition, David Simon was paid
$420,777 in 1998 as retroactive salary increases for 1996 and 1997. At
December 31, 1998, he held exercisable options to acquire 200,000 shares of
SPG Common. David Simon's total allocation under the Stock Incentive Program
of 54,600 shares of restricted stock was earned and awarded as of December 31,
1998 because the Companies had met targets for growth in Funds From Operations
for prior years. Based on information provided by third parties, management
believes that David Simon's total compensation in 1998 was in the 25th
percentile for chief executive officers of a peer group of REITs.
1998 Executive Officer Compensation
The Parent Companies compensate their executive officers through four
principal elements. The first element, base pay, is determined through a
review and analysis of peers in the REIT industry in order to determine
reasonable and competitive compensation levels. The second element is
participation in a discretionary Bonus Plan. Under the Bonus Plan,
participants have opportunities to participate in an incentive pool depending
upon performance of the Companies, the participant's business unit and the
individual participant. Aggregate bonuses of $900,000 were paid in 1998 to the
twelve eligible executive officers with respect to 1998 performance. See
"EXECUTIVE COMPENSATION--Incentive Bonus Plan." The two remaining compensation
elements are intended to link executive compensation more directly to
increases in value of the SPG Common. The third element consists of option
awards under the Option Plans. Options to purchase 380,000 shares were granted
to two former executive officers of CPI in connection with the CPI Merger. At
December 31, 1998, the twelve eligible executive officers held vested options
to acquire an aggregate of 853,456 shares that were previously granted under
the Option Plans. The fourth element consists of allocation of restricted
stock under the Stock Incentive Program. Under the Stock Incentive Program,
allocations of restricted shares are earned and awarded if the performance-
based goals of the program are met. All of the 514,556 shares of restricted
stock allocated to the ten eligible executive officers under the Stock
Incentive Program were earned and awarded as of December 31, 1998, because the
Parent Companies met targets for growth in Funds From Operations for prior
years. See "EXECUTIVE COMPENSATION--Option Plans--Stock Incentive Program."
The Parent Companies believe that each element of the executive compensation
program attracts results-oriented individuals and motivates them to achieve
levels of performance which are consistent with the performance goals of the
Parent Companies and their stockholders.
Compensation Committee:
Philip J. Ward, Chairman
Robert E. Angelica Birch Bayh
Herbert Simon Fredrick W. Petri
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Compensation Committee Interlocks and Insider Participation
Other than Herbert Simon, who is a Co-Chairman of the Board of the Parent
Companies, no member of the Compensation Committee during 1998 was an officer,
employee or former officer of the Parent Companies or any of their
subsidiaries or had any relationship requiring disclosure herein pursuant to
regulations of the Securities and Exchange Commission. No executive officer of
the Companies served as a member of a compensation committee or a director of
another entity under circumstances requiring disclosure herein pursuant to
regulations of the Securities and Exchange Commission. The Company has no
class of common stock registered under the Securities Exchange Act of 1934.
CERTAIN TRANSACTIONS
Transactions with the Simons
SPG has entered into noncompetition agreements with Melvin Simon, Herbert
Simon and David Simon (collectively, the "Simons"), all of whom are executive
officers. Pursuant to such agreements and except as set forth below, Melvin
Simon and Herbert Simon are prohibited from engaging in the shopping center
business in North America other than through SPG or as passive investors until
the later of (i) December 20, 2003, or (ii) the date that they are no longer
directors or officers of SPG, and David Simon is prohibited from engaging in
the shopping center business in North America other than through SPG and, with
certain exceptions, for two years thereafter if he resigns or is terminated
for cause. The foregoing restrictions will not prohibit Melvin Simon, Herbert
Simon or David Simon from having an ownership interest in the properties in
which the Simons previously owned an interest that were not contributed to the
predecessor of SPG in 1993 (the "Excluded Properties") and in M.S. Management
Associates, Inc. (the "Management Company"), and serving as directors and
officers of the Management Company. It is anticipated that such commitments
will not, in the aggregate, involve a material amount of time, but no
assurance can be given in this regard. In addition, Melvin Simon and Herbert
Simon may pursue other investment activities in which they are currently
engaged.
The Simons continue to own, in whole or in part, the Excluded Properties.
The Management Company has entered into management agreements with the
partnerships that hold the Excluded Properties, some of which agreements were
not negotiated on an arms-length basis. Management believes, however, that the
terms of such management agreements are fair to the Parent Companies.
The Simons and certain of their family members may from time to time and
are permitted by the Companies' conflicts of interest policies to invest in
tenants in shopping centers owned in whole or in part by the Companies or
their affiliates, provided that (1) such investment does not exceed 25% of the
outstanding equity capital of any such tenant, (2) the Simon family has no
right to participate in the day to day management of any such tenant and (3)
any lease transaction between the Parent Companies, Simon Property Group, L.P.
(the "Operating Partnership") and their respective affiliates and the tenant
in which an investment has been made by a member of the Simon family is an
arm's length transaction providing for payment of prevailing market rents. As
of December 31, 1998, members of the Simon family or entities controlled by
them have investments in seven tenants in shopping centers owned in whole or
in part by SPG. The investments and the leases were entered into on terms
consistent with the conflicts of interest policies set forth above. Such an
investment may cause income from the applicable tenant to be nonqualifying
income for purposes of one of the tests for SPG's qualification as a REIT for
federal income tax purposes. In this regard, rent received from a tenant will
not be qualifying income if SPG, or an owner of ten percent or more of SPG,
directly or constructively owns ten percent or more of the tenant. Management
believes that the amount of nonqualifying income due to these investments
under the foregoing income test does not, and future investments by the Simons
will not, adversely impact SPG's qualification as a REIT.
In connection with the use of the aggregate proceeds of the initial public
offering and related financing to repay certain indebtedness encumbering the
Operating Partnership's properties, the Company repaid approximately $180
million of indebtedness owed to the Simons, which represented loans made by
the Simons
13
<PAGE>
in lieu of third-party financing. Of this amount, approximately $110 million
was used by the Simons to pay income taxes and other third-party obligations
associated with their real estate business. In addition, the Simons were
released from personal liability under guaranties provided by the Simons by
substituting guaranties by the Company, or the provision by the Company of
back-up guaranties in favor of the Simons, on approximately $111 million of
such debt.
Management Company
The Management Company manages regional malls and community shopping
centers not wholly-owned by the Operating Partnership and certain other
properties and also engages in certain property development activities. Of the
outstanding voting common stock of the Management Company, 95% is owned by the
Simons, which will enable the Simons to control the election of the board of
directors of the Management Company. The Operating Partnership owns common
stock representing 80% of the value of the outstanding stock of the Management
Company, all of the outstanding participating preferred stock of the
Management Company and a mortgage note of the Management Company, which
entitles SPG to more than 90% of the anticipated after-tax economic benefits,
in the form of dividends and interest, of the Management Company. The
Management Company must receive the approval of a majority of the Independent
Directors in order to provide services for any property not currently managed
by the Management Company unless SPG owns at least a 25% interest in such
property. The Management Company has agreed with the SPG that, if in the
future SPG is permitted by applicable tax law and regulations to conduct any
or all of the activities that are now being conducted by the Management
Company, the Management Company will not compete with SPG with respect to new
or renewal business of this nature.
Relationship with Oppenheimer, Wolff, Donnelly & Bayh LLP
During 1998, the Company engaged the Washington, D.C. law firm of
Oppenheimer, Wolff, Donnelly & Bayh LLP (formerly Bayh, Connaughton & Malone,
P.C.) to provide certain legal services. Birch Bayh, a director of the Company
and the Parent Companies, is a member of such firm.
Other Transactions
The Operating Partnership leases office space in Ohio from 7655
Corporation, an affiliate of EJDC, pursuant to a lease dated as of January 1,
1999 (the "Lease"). Ms. DeBartolo York, a director of the Companies, serves as
Chairman of the Board of EJDC and has been associated with EJDC in an
executive capacity since 1975.
Phillip J. Ward, a director of the Company, is the Head of Real Estate
Investments for CIGNA Investments, Inc., which has, or its affiliates have,
made mortgage loans to the Company or its affiliates, or entities in which
they have an interest, totaling approximately $412.2 million as of December
31, 1998. These loans are considered to be arm's length agreements.
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Arthur Andersen LLP as
the Company's independent accountants for 1999. Arthur Andersen LLP has served
as the independent accountants of the Company for 1998 and prior to that date,
were independent accountants for SDG.
The Company expects that representatives of Arthur Andersen LLP will be
present at the Meeting and will be afforded an opportunity to make a statement
if they desire to do so. The Company also expects that such representatives of
Arthur Andersen LLP will be available at that time to respond to appropriate
questions addressed to the officer presiding at the Meeting.
14
<PAGE>
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the year ended December 31,
1998, which includes the Company's audited financial statements is being
mailed with this Proxy Statement. A copy of any exhibits to the report (for
which a reasonable fee will be charged) will be sent to any shareholder, upon
written request to Shelly J. Doran, Simon Property Group, Inc., Investor
Relations, P. O. Box 7033, Indianapolis, Indiana 46207.
SHAREHOLDER PROPOSALS AT 2000 ANNUAL MEETING
The date by which shareholder proposals must be received by the Companies
for inclusion in the proxy materials relating to the 2000 Annual Meetings of
Shareholders is December 6, 1999. Notice of any other shareholder proposals
must be received by the Company between February 12, 2000 and March 13, 2000,
as more fully set forth in the By-Laws of the Company. Shareholder proposals
must comply with all of the applicable requirements set forth in the rules and
regulations of the Securities and Exchange Commission, including Rule 14a-8,
as well as the advance notification requirements set forth in the Company's
By-laws. A copy of the advance notification requirements may be obtained from
James M. Barkley, General Counsel and Secretary, Simon Property Group, Inc.,
115 West Washington Street, Indianapolis, Indiana 46204.
15
<PAGE>
PROXY
SPG PROPERTIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned holder(s) of shares of Series B Preferred Stock of SPG
Properties, Inc. (the "Company") or Series C Preferred Stock of the Company
hereby appoints Herbert Simon and David Simon and each of them, the Proxies of
the undersigned, with full power of substitution, to attend and represent the
undersigned at the Annual Meeting of Shareholders of the Company to be held at
The Indianapolis Hyatt Regency, One South Capitol Avenue, Indianapolis, Indiana,
on Wednesday, May 12, 1999, at 11:00 a.m., Indianapolis time, and any
adjournment or adjournments thereof, and to vote all of the shares of Series B
Preferred Stock or Series C Preferred Stock that the undersigned is entitled to
vote at such Annual Meeting or at any adjournment or postponement thereof:
1. To elect thirteen directors to serve for a term of one year:
Nominees: Robert E. Angelica; Birch Bayh; Hans C. Mautner;
G. William Miller; Fredrick W. Petri; Melvin Simon;
Herbert Simon; David Simon; J. Albert Smith, Jr;
Richard S. Sokolov; Pieter S. van den Berg;
Philip J. Ward and M. Denise DeBartolo York
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED UNDER PROPOSAL 1.
(THIS PROXY CONTINUES AND MUST BE SIGNED AND DATED ON THE REVERSE SIDE)
-------------
SEE REVERSE
SIDE
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<PAGE>
[X] Please mark your
vote as in this
example.
Vote
1. Vote WITHHELD
FOR All for all
nominees nominees
listed above listed above
[ ] [ ] 2. In their discretion, the Proxies are
authorized to vote upon such other
matters (none known at the time of
solicitation of this proxy) as may
For, except vote witheld from properly come before the Annual
the following nominee(s): meeting or any adjourment or
prostponement thereof.
- ----------------------------------------
The undersigned hereby acknowledges
receipt of the Notice of the Annual
Meeting of Shareholders, the Proxy
Statement furnished therewith, and the
1998 Annual Report to Shareholders. Any
proxy heretofore given to vote the
shares of Series B Preferred Stock or
Series C Preferred Stock which the
undersigned is entitled to vote at the
Annual Meeting of Shareholders is
hereby revoked.
NOTE: Please fill in, sign and return
this proxy in the enclosed envelope.
When signing as Attorney, Executor,
Administrator, Trustee or Guardian,
please give full title as such. If
signer is a corporation, please sign
the full corporate name by authorized
officer. Joint owners should each sign
individually. (Please note any change
of address on this proxy.)
Please sign exactly as name appears
hereon. Joint owners should each sign.
---------------------------------------
---------------------------------------
SIGNATURE(S) DATE
