<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
JDN REALTY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
JDN REALTY CORPORATION
3340 PEACHTREE ROAD, N.E.
SUITE 1530
ATLANTA, GEORGIA 30326
March 31, 1997
TO THE SHAREHOLDERS OF
JDN REALTY CORPORATION:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of JDN Realty Corporation, to be held on Thursday, May 22, 1997, at 9:00 a.m.
(Nashville Time) at the Nashville City Club, SunTrust Bank Building, 201 Fourth
Avenue North, 20th Floor, Nashville, Tennessee 37219.
Please read the enclosed Annual Report to Shareholders and Proxy Statement
for the 1997 Annual Meeting of Shareholders. Whether or not you plan to attend
the meeting, please sign, date and return the enclosed proxy card as soon as
possible so that your vote will be recorded. If you attend the meeting, you may
withdraw your proxy and vote your shares personally.
Sincerely,
/s/ J. DONALD NICHOLS
---------------------------------------
J. Donald Nichols
Chairman and Chief Executive Officer
IMPORTANT
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY.
<PAGE> 3
JDN REALTY CORPORATION
3340 PEACHTREE ROAD, N.E.
SUITE 1530
ATLANTA, GEORGIA 30326
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
---------------------
TO THE SHAREHOLDERS OF
JDN REALTY CORPORATION:
The Annual Meeting of Shareholders of JDN Realty Corporation (the
"Company") will be held on Thursday, May 22, 1997, at 9:00 a.m. (Nashville Time)
at the Nashville City Club, SunTrust Bank Building, 201 Fourth Avenue North,
20th Floor, Nashville, Tennessee 37219, for the following purposes:
(1) To elect two nominees as Class III directors;
(2) To ratify the appointment of the accounting firm of Ernst & Young
LLP as independent auditors of the Company and its subsidiaries for the
Company's 1997 fiscal year; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 18, 1997 as
the record date for determining shareholders entitled to notice of and to vote
at the Annual Meeting and any adjournment thereof.
By order of the Board of Directors,
/s/ WILLIAM J. KERLEY
--------------------------------------
William J. Kerley
Corporate Secretary
Atlanta, Georgia
March 31, 1997
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, TO ASSURE THE
PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY
CARD AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES
PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE> 4
JDN REALTY CORPORATION
3340 PEACHTREE ROAD, N.E.
SUITE 1530
ATLANTA, GEORGIA 30326
---------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors") of JDN Realty
Corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held at the Nashville City Club, SunTrust Bank
Building, 201 Fourth Avenue North, 20th Floor, Nashville, Tennessee 37219, on
May 22, 1997, at 9:00 a.m. (Nashville Time), for the purposes set forth in the
accompanying notice, and at any adjournment thereof. This Proxy Statement and
the accompanying form of proxy are first being mailed or given to shareholders
of the Company on or about March 31, 1997.
If the enclosed proxy is properly executed, returned and not revoked, it
will be voted in accordance with the instructions, if any, given by the
shareholder, and if no instructions are given, will be voted (a) FOR the
election as directors of the nominees listed thereon and described in this Proxy
Statement, (b) FOR ratification of the appointment of the firm of Ernst & Young
LLP as independent auditors of the Company and its subsidiaries for the
Company's 1997 fiscal year, and (c) in accordance with the recommendations of
the Board of Directors on any other proposal that may properly come before the
Annual Meeting. The persons named as proxies in the enclosed form of proxy were
selected by the Board of Directors.
Shareholders who sign proxies have the right to revoke them at any time
before they are voted by written request to the Company. The giving of the proxy
will not affect the right of any shareholder to attend the Annual Meeting and
vote in person.
The close of business on March 18, 1997 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. As of the close of business on March 18, 1997, the Company had
authorized 150,000,000 shares of common stock, $.01 par value (the "Common
Stock"), of which 15,457,886 shares were outstanding and entitled to vote. The
Common Stock is the Company's only outstanding voting stock.
ELECTION OF DIRECTORS
INTRODUCTION
The Bylaws of the Company (the "Bylaws") provide that the Board of
Directors shall be divided into three classes of as nearly equal size as
possible. Pursuant to the Bylaws, the Board of Directors has divided the current
Board into three classes of two directors each. One class of directors is
elected each year. The terms of the Company's current Class III directors, J.
Donald Nichols and Craig Macnab, expire at the Annual Meeting.
The Board of Directors has nominated Messrs. Nichols and Macnab for
election at the Annual Meeting as Class III directors to serve until the annual
meeting of shareholders in 2000 or until their successors have been elected and
qualified. Messrs. Nichols and Macnab have consented to be candidates and to
serve as directors if elected.
In accordance with the Bylaws, directors are elected by a majority of the
votes cast at a meeting of shareholders at which a quorum is present. The
Company's Charter does not provide for cumulative voting
<PAGE> 5
and, accordingly, the holders of Common Stock do not have cumulative voting
rights with respect to the election of directors. Consequently, each shareholder
may cast only one vote per share for each of the nominees.
Unless a proxy specifies otherwise, the persons named in the proxy shall
vote the shares covered thereby for the individuals nominated by the Board of
Directors. Should either nominee become unavailable for election, shares covered
by a proxy will be voted for a substitute nominee selected by the current Board
of Directors.
The Board of Directors recommends that shareholders vote FOR the election
of the following nominees:
CLASS III NOMINEES
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DIRECTOR SINCE
- ---- --- ------------------- --------------
<S> <C> <C> <C>
J. Donald Nichols.................... 56 Chairman of the Board and Chief December 1993
Executive Officer, JDN Realty
Corporation (December 1993-Present);
Chairman of the Board, JDN
Enterprises, Inc. (1989-December
1993)
Craig Macnab......................... 41 President, Tandem Capital December 1993
(1996-Present); General Partner,
MacNiel Advisors (1993-1996);
Partner, J.C. Bradford & Co.
(1987-1993)
</TABLE>
CONTINUING DIRECTORS
The persons named below will continue to serve as directors until the
annual meeting of shareholders in the years indicated and until their successors
are elected and qualified. Shareholders are not voting on the election of the
Class I and Class II directors. The following table shows the names, ages and
principal occupations of each continuing director, and the month and year in
which each was first elected to the Board of Directors. Mr. Nichols and Ms.
Nichols are husband and wife.
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DIRECTOR SINCE
- ---- --- ------------------- --------------
<S> <C> <C> <C>
CLASS I -- 1998
William B. Greene.................... 59 Chairman of the Board, Bank of December 1993
Tennessee, BancTenn Corporation and
Carter County Bank (1989-Present)
Robert P. Corker, Jr................. 44 Chief Executive Officer, Owner and September 1996
Founder, The Corker Group (1982-
Present); Commissioner of Finance and
Administration, State of Tennessee
(1994-1996)
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DIRECTOR SINCE
- ---- --- ------------------- --------------
<S> <C> <C> <C>
CLASS II -- 1999
Elizabeth L. Nichols................. 43 President, JDN Realty Corporation December 1993
(December 1993-Present); President,
JDN Enterprises, Inc. (1989-December
1993)
Haywood D. Cochrane, Jr.............. 48 President and Chief Executive Officer, December 1993
Meridian Occupational Healthcare
Associates, Inc. (February
1997-Present); Chief Financial
Officer, Laboratory Corp. of America
Holdings, Inc. (April 1995-October
1996); National Health Laboratories,
Inc. (June 1994-April 1995);
President, Chief Executive Officer
and Director, Allied Clinical
Laboratories, Inc. (1989-June 1994)
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During 1996, the Board of Directors held six regular and special meetings.
All directors attended at least 75% of the meetings of the Board of Directors
held while they were directors. The Board of Directors has established the
standing committees described below.
The Executive Committee acts on behalf of the Board of Directors on all
matters concerning the management and conduct of the business and affairs of the
Company except those matters that cannot by law be delegated by the Board of
Directors. The Executive Committee is comprised of Messrs. Nichols, Cochrane and
Macnab. The Executive Committee held no meetings during 1996, instead taking
action throughout the year by unanimous written consent.
The Audit Committee selects and engages on behalf of the Company, subject
to the approval of the shareholders, and fixes the compensation of, a firm of
certified public accountants whose responsibility it is to audit the financial
statements of the Company and its subsidiaries for the fiscal year in which they
are appointed, and who also report to the Audit Committee. The Audit Committee
confers with the auditors and determines the scope of the auditing of the
financial statements of the Company and its subsidiaries. The Audit Committee is
also responsible for determining that the business practices and conduct of
employees and other representatives of the Company and its subsidiaries comply
with the Company's policies and procedures. None of the members of the Audit
Committee may be officers or employees of the Company. The Audit Committee is
comprised of Messrs. Cochrane and Greene. The Audit Committee held one meeting
during 1996, and took additional actions by unanimous written consent.
The Compensation Committee is responsible for establishing a general
compensation policy for the Company and has the responsibility for the approval
of increases in directors' fees and in salaries paid to officers and senior
employees earning an annual base salary in excess of $75,000. The Compensation
Committee also possesses all of the powers of administration under the Company's
employee benefit plans, including any stock option plans, bonus plans,
retirement plans, stock purchase plans and medical, dental and insurance plans.
In connection therewith, the Compensation Committee determines, subject to the
provisions of the Company's plans, the persons eligible to participate in any of
the plans, the extent of such participation and the terms and conditions under
which benefits may be vested, received or exercised. The Compensation Committee
is comprised of Messrs. Greene and Macnab. The Compensation Committee held one
meeting during 1996 and took additional action by unanimous written consent.
The Board of Directors has no standing nominating committee.
3
<PAGE> 7
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors or any committee thereof.
Directors who are not employees of the Company are paid annual compensation of
$12,000 for serving on the Board of Directors, plus a meeting fee of $1,000 for
each Board of Directors or committee meeting attended; only one fee is paid,
however, in the event that more than one such meeting is held on a single day.
All directors receive reimbursement for necessary travel expenses incurred in
attending Board of Directors or committee meetings.
The JDN Realty Corporation 1993 Non-Employee Director Stock Option Plan
(the "Director Plan") provides that directors who are not employees of the
Company will automatically receive options to purchase 3,000 shares of Common
Stock on January 1 of each year at an exercise price equal to the fair market
value of the Common Stock on the date of grant. The options (one-third of which
may be exercised two years from the date of grant, one-third three years from
the date of grant and one-third four years from the date of grant) terminate ten
years from the date of grant. In addition, the options terminate if not
exercised within 90 days after the director ceases to be a member of the Board
of Directors unless the director dies, becomes disabled, retires or is
terminated other than for cause.
As of March 31, 1997, options to purchase 3,000 shares at an exercise price
of $22.00 per share, options to purchase 3,000 shares at an exercise price of
$20.00 per share and options to purchase 3,000 shares at an exercise price of
$22.375 per share had been granted to Messrs. Cochrane, Greene and Macnab under
the Director Plan. In addition, as of March 31, 1997, options to purchase 3,000
shares at an exercise price of $27.625 per share had been granted to each of the
four non-employee directors under the Director Plan. In the aggregate, as of
March 31, 1997, options to purchase 39,000 shares were outstanding under the
Director Plan.
SELECTION OF AUDITORS
The Audit Committee of the Board of Directors has selected the firm of
Ernst & Young LLP as independent auditors of the Company for 1997, subject to
ratification by the shareholders. This firm has served as the independent
auditors of the Company since the Company's formation in December 1993.
Representatives of this firm are expected to be present at the meeting, will
have an opportunity to make a statement if they desire and will be available to
respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented and entitled to vote at the Annual Meeting is
needed to ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for 1997. If the appointment is not ratified, the matter will be
referred to the Audit Committee for further review.
The Board of Directors recommends that shareholders vote FOR ratification
of the appointment of Ernst & Young LLP.
4
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information with respect to ownership of the
Common Stock as of March 31, 1997 by (i) each of the Company's directors, (ii)
each of the executive officers named in the Summary Compensation Table, and
(iii) all directors and executive officers of the Company as a group. Unless
otherwise indicated, each of the shareholders listed below has sole voting and
investment power with respect to the shares beneficially owned. The Company is
unaware of any person other than those listed below that beneficially owns more
than 5% of the outstanding shares of the Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED(1)
------------------------ ------------------ -----------------------
<S> <C> <C>
J. Donald Nichols....................................... 979,748(2) 6.2%
Elizabeth L. Nichols.................................... 288,954(3) 1.9
William J. Kerley....................................... 76,220(4) *
David L. Henzlik........................................ 10,083(5) *
Jeb L. Hughes........................................... -- *
Haywood D. Cochrane, Jr................................. 6,000(6) *
Robert P. Corker, Jr.................................... -- *
William B. Greene....................................... 4,000(7) *
Craig Macnab............................................ 3,000(6) *
All Executive Officers and Directors as a Group (12
persons).............................................. 1,378,525 8.6%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Pursuant to the rules of the Securities and Exchange Commission (the "SEC"),
shares of Common Stock which beneficial owners set forth in this table have
a right to acquire within 60 days of the date hereof pursuant to the
exercise of stock options are deemed to be outstanding for the purpose of
computing the percent of Common Stock beneficially owned by that owner but
are not deemed outstanding for the purpose of computing percentage ownership
of any other beneficial owner shown in the table.
(2) Includes options currently exercisable to purchase 379,366 shares at an
exercise price of $22.00 per share. Mr. Nichols has disclaimed beneficial
ownership of shares beneficially owned by Ms. Nichols.
(3) Includes options currently exercisable to purchase 110,139 shares at an
exercise price of $22.00 per share. Ms. Nichols has disclaimed beneficial
ownership of shares beneficially owned by Mr. Nichols.
(4) Includes options currently exercisable to purchase 75,308 shares at an
exercise price of $22.00 per share.
(5) Includes options currently exercisable to purchase 10,000 shares at an
exercise price of $23.25 per share.
(6) Includes options currently exercisable to purchase 2,000 shares at an
exercise price $22.00 per share and 1,000 shares at an exercise price of
$20.00 per share.
(7) Includes 1,000 shares held by the William B. Greene Trust, of which Mr.
Greene serves as a trustee. Also includes options currently exercisable to
purchase 2,000 shares at an exercise price of $22.00 per share and 1,000
shares at an exercise price of $20.00 per share.
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 persons who own more than 10% of
the Common Stock to file with the SEC initial reports of ownership and reports
of changes in ownership of the Common Stock. These officers, directors and
shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) reports they file. There are specific dates by which these
reports are to be filed and the Company is required to report in this Proxy
Statement any failure to file reports as required during 1996.
Based solely upon its review of the copies of reports furnished to the
Company and written representations from certain of the Company's directors and
executive officers that no other reports were required, the Company believes
that all Section 16(a) reporting and filing requirements relating to ownership
of the Common Stock were complied with during 1996.
5
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY ANNUAL COMPENSATION
The following table reflects the compensation of the Company's Chief
Executive Officer and the four other most highly compensated executive officers
whose total annual salary and bonus exceeded $100,000 in 1996 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- ------------
OTHER SECURITIES
ANNUAL ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
- --------------------------- ---- -------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Donald Nichols,
Chairman................... 1996 $300,000 $150,000 $ -- -- $4,750
1995 294,254 100,000 -- 178,000 4,762
1994 209,423 5,729 -- 379,366 2,750
Elizabeth L. Nichols,
President.................. 1996 172,500 100,000 -- -- 6,777
1995 167,283 75,000 -- 50,000 3,379
1994 138,526 3,125 -- 110,139 1,500
William J. Kerley, Chief
Financial Officer.......... 1996 140,000 75,000 -- -- 7,416
1995 125,217 60,000 -- 22,000 2,504
1994 100,000 2,083 -- 75,308 1,000
Jeb L. Hughes, Vice
President, Development, JDN
Development Company, Inc... 1996 108,600 150,000 25,834(2) -- 453
1995 100,000 100,000 -- -- --
1994(3) -- -- -- -- --
David L. Henzlik, Vice
President, Leasing......... 1996 92,500 -- 123,915(2) -- 1,850
1995 55,000 10,000 126,586(2) 20,000 1,100
1994 45,000 938 85,499(2) 10,000 450
</TABLE>
- ---------------
(1) Represents (a) contributions by the Company to its Savings and Profit
Sharing Plan (a 401(k) plan) allocated to the accounts of the Named
Executive Officer, and (b) the portion of automobile lease payments made by
the Company that have been allocated to non-business uses by the Named
Executive Officer.
(2) Commissions paid to the Named Executive Officer for leasing services.
(3) Total salary and annual bonus in 1994 did not exceed $100,000.
6
<PAGE> 10
OPTION EXERCISES AND YEAR-END VALUES
The following table provides certain information with respect to the Named
Executive Officers concerning the exercise of options during 1996 and with
respect to unexercised options at December 31, 1996. No stock appreciation
rights were outstanding in 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Donald Nichols..... -- -- 379,366 178,000 $2,133,934 $1,312,750
Elizabeth L.
Nichols............. -- -- 110,139 50,000 619,532 368,750
William J. Kerley..... -- -- 75,308 22,000 423,608 162,250
David L. Henzlik...... -- -- 10,000 20,000 43,750 147,500
Jeb L. Hughes......... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Based upon the closing price of the Common Stock of $27.625 per share as
reported on the New York Stock Exchange on December 31, 1996, less the
exercise price of the options.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company's current employment agreements with Mr. Nichols, Ms. Nichols,
Mr. Kerley and Mr. Henzlik became effective on December 1, 1996. Mr. Nichols'
employment agreement, pursuant to which he serves as Chairman of the Board and
Chief Executive Officer of the Company, has a three-year term which is
automatically renewed each year. Under his agreement, Mr. Nichols receives an
annual base salary of $300,000, subject to cost-of-living adjustments and annual
increases at the discretion of the Compensation Committee of the Board of
Directors, and is entitled to participate in the Company's stock option plans
and all other benefit programs generally available to executive officers of the
Company. Mr. Nichols is also entitled to receive an annual bonus in the
discretion of the Compensation Committee of the Board of Directors.
If the Company terminates Mr. Nichols' employment without cause, he is
entitled to receive his accrued salary, earned bonus, vested deferred
compensation (other than plan benefits which will be paid in accordance with the
applicable plan), and other benefits through the date of termination. In
addition, Mr. Nichols will receive as severance compensation his base salary for
the remaining term of his employment agreement and for a period of one year
thereafter and an amount equal to his average annual bonus during the two years
immediately preceding his termination. At Mr. Nichols' election, he may receive
a lump sum severance amount equal to the present value of such severance
payments (using a discount rate equal to the 90-day Treasury bill interest rate
in effect on the date of delivery of such election notice).
If a "change-in-control" (as defined in the employment agreement) occurs,
Mr. Nichols may terminate his agreement and receive his accrued base salary and
other benefits described above through the remaining term of the agreement and a
period of one year thereafter, and an amount equal to his average annual bonus
during the two years immediately preceding the termination. Mr. Nichols may
elect to receive from the Company a lump sum severance payment (calculated as
provided above). Notwithstanding the foregoing, amounts payable under the
employment agreement are subject to certain "parachute payment" (as defined in
the employment agreement) reductions.
The Company may terminate Mr. Nichols' agreement for "cause," which is
defined to include willful dishonesty towards, fraud upon, or deliberate injury
or attempted injury to, the Company or Mr. Nichols' willful material breach of
the agreement which has resulted in material injury to the Company. In the event
of Mr. Nichols' termination for cause, he shall receive all accrued salary,
earned bonus compensation, vested deferred compensation (other than plan
benefits which will be payable in accordance with the applicable plan), and
other benefits through the date of termination, but shall receive no other
severance benefits.
7
<PAGE> 11
Mr. Nichols' agreement may also be terminated if Mr. Nichols dies or becomes
disabled and his disability continues for a period of 12 consecutive months. In
the event of termination of the agreement because of Mr. Nichols' death or
disability, Mr. Nichols (or his estate) shall receive these same payments but no
additional severance except that, if Mr. Nichols becomes disabled, the Company
will maintain his insurance benefits for the remaining term of his agreement.
The Company has agreed to indemnify Mr. Nichols for certain liabilities
arising from actions taken within the scope of his employment. Mr. Nichols'
employment agreement contains restrictive covenants pursuant to which Mr.
Nichols has agreed not to compete with the Company during the period of Mr.
Nichols' employment and any period following termination of his employment
during which he is receiving severance payments if terminated other than for
cause, and for a period of one year if terminated upon a "change in control" (as
defined in the employment agreement).
The employment agreement with Ms. Nichols, pursuant to which she serves as
President of the Company, is identical to Mr. Nichols' agreement, except that
Ms. Nichols' agreement provides for an annual base salary of $172,000.
The employment agreement with Mr. Kerley, pursuant to which he serves as
the Company's Chief Financial Officer, Secretary and Treasurer, is identical to
Mr. Nichols' employment agreement, except that the term of Mr. Kerley's
agreement is two years which is automatically renewed each year, and provides
for annual base salary of $140,000. The employment agreement with Mr. Henzlik,
pursuant to which he serves as Vice President, Leasing, is similar in scope to
Mr. Nichols' employment agreement, except that the term of Mr. Henzlik's
agreement is one year and provides for annual base salary of $117,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors are
Messrs. Greene and Macnab. There are no interlocks among the members of the
Compensation Committee.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
COMPENSATION COMMITTEE
The Compensation Committee has the responsibility for establishing and
administering a general compensation policy and program for the Company. The
Compensation Committee also is responsible for administering all of the
Company's employee benefit plans, including all stock option plans, stock
purchase plans, bonus plans, retirement plans, and medical, dental and insurance
plans. Subject to the provisions of these employee benefit plans, the
Compensation Committee must determine the individuals eligible to participate in
each one of the plans, the extent of such participation and the terms and
conditions under which benefits may be vested, received or exercised.
EXECUTIVE COMPENSATION
Executive compensation for the Company in 1996 was comprised of two
elements, base salaries and annual bonuses.
Base Salary. The Compensation Committee must approve all increases in
salaries paid to officers and senior employees of the Company who earn an annual
base salary in excess of $75,000. Salaries paid to Mr. Nichols, Ms. Nichols and
Mr. Kerley were initially established in March 1994 pursuant to employment
agreements approved by the Board of Directors based on the contributions of
these individuals to the Company and their efforts in positioning the Company to
go public without any specific relationship to corporate performance. Salaries
paid to these executive officers and certain other officers and senior employees
8
<PAGE> 12
of the Company were adjusted by the Compensation Committee in 1995 based on the
Company's progress since its initial public offering and the Compensation
Committee's review of executive compensation for real estate investment trusts
prepared by FPL Associates. New employment agreements were entered into with Mr.
Nichols, Ms. Nichols, and Mr. Kerley in December 1996 which provided for annual
base salaries in the amounts established by the Compensation Committee in 1995.
Under their respective employment agreements, Mr. Nichols' annual base salary is
$300,000, Ms. Nichols' annual base salary is $172,500, and Mr. Kerley's annual
base salary is $140,000. Each such employment agreement provides automatic
annual cost-of-living increases to base salary. Additional base salary
adjustments must be determined by the Compensation Committee on an annual basis.
In addition, in December 1996 the Company entered into an employment agreement
with David L. Henzlik, Vice President, Leasing, for an annual base salary of
$117,000, subject to adjustment by the Compensation Committee on an annual
basis. The salaries of Mr. Henzlik and other officers and senior employees of
the Company who earn an annual base salary in excess of $75,000 have been
established or adjusted based on management's subjective assessment of the
nature of their positions, the experience of the individuals filling the
positions and the tenure of such individuals with and their general
contributions to the Company. Management's evaluation of the compensation of
each employee focuses on three levels of performance: (i) corporate; (ii)
departmental; and (iii) individual. An evaluation of each employee's
contributions to the Company under this three-tiered assessment system allows
each employee to be compensated for successful individual, departmental or
Company-wide performance.
Annual Bonus. The Company awarded and paid bonuses in 1997 to each of the
following executive officers of the Company: J. Donald Nichols, $150,000;
Elizabeth L. Nichols, $100,000; William J. Kerley, $75,000; C. Sheldon
Whittelsey IV, $100,000; John D. Harris, Jr., $25,000; Leilani L. Jones,
$25,000; and Jeb L. Hughes, $150,000. Such bonuses were not based on any
particular quantitative performance-related factors, but instead were generally
based on management's assessment that, particularly as a result of the efforts
of these executive officers, the Company met its financial objectives and
experienced superior financial performance in 1996, which included two
successful follow-on public offerings, sound investments in retail shopping
center property acquisitions and developments, and payment of distributions to
shareholders as projected. An additional $201,625 in bonuses were paid in the
aggregate to all other employees of the Company and JDN Development Company,
Inc. ("JDN Development") based on management's subjective evaluation of each
employee's contributions to the overall success of the Company and/or JDN
Development in 1996. The Compensation Committee has ratified management's award
and payment of the above-described bonuses.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL YEAR 1995
As Chairman of the Board and Chief Executive Officer of the Company, Mr.
Nichols' employment agreement provides for an initial annual base salary of
$300,000, subject to automatic cost-of-living adjustments. Under the terms of
his employment agreement, Mr. Nichols is entitled to an annual bonus at the
discretion of the Compensation Committee, and is entitled to participate in the
Company's stock option plans and other benefit programs generally available to
executive officers of the Company. Mr. Nichols' annual base salary was set in
1995 based on the Compensation Committee's review of executive compensation for
executive officers of real estate investment trusts prepared by FPL Associates.
The Compensation Committee has ratified the award and payment of a 1996 bonus to
Mr. Nichols in the amount of $150,000. Such bonus was not based on any
particular quantitative performance-related factors, but instead was based on
management's assessment that the Company met its financial obligations and
experienced superior financial performance in 1996, which included two
successful follow-on public offerings, sound investment in retail shopping
center property acquisitions and developments, and payment of distributions to
shareholders as projected.
COMPENSATION PLANNING FOR FISCAL YEAR 1997
The Compensation Committee intends for the Company's executive compensation
program to attract, motivate and retain key executive officers of the Company,
its subsidiaries and affiliated entities, and to provide for (i) base salaries
competitive with those paid by comparable real estate investment trusts,
9
<PAGE> 13
(ii) variable annual incentives which would reflect executive officers'
contributions to the Company's annual performance objectives, and (iii) a
variable long-term incentive program utilizing equity ownership in the Company
which would reflect executive officers' contributions to the Company's
achievement of longer term goals.
In March 1996 management of the Company engaged FPL Associates to provide
the Company with recommendations for a comprehensive compensation policy in
light of the Company's strategic plan, as that plan is to be implemented in 1997
and beyond, with the goal of adopting a performance-based executive compensation
program specifically related to criteria that reflects the Company's performance
using quantifiable measures. The Compensation Committee intends to review with
management the recommendations of FPL Associates once they are made with the
goal of implementing a compensation policy providing for salary increases,
bonuses and non-cash incentive awards based on both qualitative and quantitative
measures of executives' performance within the framework of the Company's
strategic plan.
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction by a public company for compensation in excess of one million dollars
paid to the company's chief executive officer and four other most highly
compensated executive officers. Qualifying performance-based compensation is not
subject to the deduction limit if certain requirements are met. In 1996, no
executive named in the Summary Compensation Table above received compensation
exceeding the threshold for deductibility under Section 162(m). The Compensation
Committee intends to structure the performance-based portion of the compensation
of the Company's executive officers in a manner that complies with Section
162(m) to the extent necessary to maximize the corporate tax deduction while
enabling the Company to attract and retain qualified executives.
COMPENSATION COMMITTEE
Craig Macnab, Chairman
William B. Greene
10
<PAGE> 14
COMPARATIVE PERFORMANCE GRAPH
Rules promulgated by the SEC require that the Company include in this Proxy
Statement a line graph that compares the yearly percentage change in cumulative
total shareholder return on the Common Stock with (a) the performance of a broad
equity market indicator, and (b) the performance of a published industry index
or peer group index. The following graph compares the yearly percentage change
in the return on the Common Stock since March 22, 1994 with the cumulative total
return on the Standard and Poor's 500 Index and the Total Return Index for
Equity REITs, published by The National Association of Real Estate Investment
Trusts, Inc. ("NAREIT"). The graph assumes the investment of $100 on March 22,
1994 and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR THE PERIOD ENDING DECEMBER 31, 1996
<TABLE>
<CAPTION>
MEASUREMENT PERIOD JDN REALTY NAREIT EQUITY
(FISCAL YEAR COVERED) CORPORATION S&P 500 INDEX
<S> <C> <C> <C>
3/22/94 100.00 100.00 100.00
6/30/94 101.43 95.61 100.68
12/31/94 96.58 100.27 98.64
6/30/95 102.98 120.54 104.26
12/31/95 117.90 137.95 113.70
6/30/96 123.03 151.86 121.45
12/31/96 157.80 169.49 153.79
</TABLE>
11
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1995, JDN Development purchased from JDN Associates, Ltd.,
Turner Hill Road ("Associates") 20.84 acres of a 35.56 acre tract of unimproved
land for approximately $3,619,280. Mr. Nichols is the sole limited partner and
JDN Equities, Inc., which is wholly owned by Mr. Nichols, is the sole general
partner of Associates. Associates purchased this unimproved property in 1986,
financing the purchase through a bank loan which was evidenced by a promissory
note (the "Note") guaranteed by JDN Enterprises, Inc. ("Enterprises"), the
Company's predecessor. In April 1996, Associates repaid the entire indebtedness
due under the Note and the Company was released from Enterprises' guarantee.
In December 1994, JDN Development was formed for the purpose of the
development of retail shopping center properties. The Company owns 100% of the
non-voting common stock and 1% of the voting common stock of JDN Development,
and receives 99% of any dividends or other distributions paid by JDN
Development. J. Donald Nichols, the Chairman and Chief Executive Officer of the
Company, constitutes the sole member of JDN Development's board of directors. J.
Donald Nichols has the ability to elect future boards of directors and to
effectively control JDN Development. Mr. Nichols owns 99% of the voting common
stock of JDN Development and receives 1% of any dividends or other distributions
paid by JDN Development. As of December 31, 1996, the Company had contributed,
loaned or advanced approximately $36.5 million to JDN Development. The
shareholders of JDN Development also make capital contributions to JDN
Development as needed for development projects. The Company has guaranteed four
loans of JDN Development with principal balances totaling $29.0 million as of
December 31, 1996. These loans are secured by shopping center projects located
in Steubenville, Ohio, Canton, Georgia, Warner Robins, Georgia, and
Winston-Salem, North Carolina. These loans bear interest at rates ranging from
LIBOR plus 1.40% to LIBOR plus 1.75% (weighted average rate of 7.1255% at
December 31, 1996) and mature in 1998 and 1999. The Company has guaranteed 50%
of a loan of Dogwood Drive, L.L.C., a limited liability company which is 60%
owned by JDN Development. The loan is secured by a shopping center project in
Conyers, Georgia, had an outstanding balance at December 31, 1996, of $6.8
million, bears interest at LIBOR plus 1.50% (6.8875% at December 31, 1996) and
matures in 1999.
As of December 31, 1996, Jeb L. Hughes, Vice President, Development of JDN
Development, was the President and a 25% shareholder of Fast Rental, Inc. ("Fast
Rental"). Fast Rental is a tenant in three of the Company's shopping center
properties. During 1996, the Company recorded approximately $68,000 in base
rental revenue from Fast Rental.
12
<PAGE> 16
GENERAL INFORMATION
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1998 annual meeting
of shareholders must be received by the Company at its executive offices at 3340
Peachtree Road, N.E., Suite 1530, Atlanta, Georgia 30326 no later than December
1, 1997, in order to be included in the proxy statement and form of proxy for
that meeting.
COUNTING OF VOTES
All matters specified in this Proxy Statement that are to be voted on at
the Annual Meeting will be by written ballot. Inspectors of election will be
appointed to, among other things, determine the number of shares outstanding,
the shares represented at the Annual Meeting, the existence of a quorum and the
authenticity, validity and effect of proxies, to receive votes of ballots, to
hear and determine all challenges and questions in any way arising in connection
with the right to vote, to count and tabulate all votes and to determine the
result. Each item presented herein to be voted on at the Annual Meeting must be
approved by the affirmative vote of the holders of the number of shares
described under each such item. The inspectors of election will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions, however, do not constitute a vote "for" or "against" any matter and
thus will be disregarded in the calculation of "votes cast".
Inspectors of election will treat shares referred to as "broker non-votes"
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters).
MISCELLANEOUS
The Company will bear the cost of printing, mailing and other expenses in
connection with this solicitation of proxies and will also reimburse brokers and
other persons holding shares in their names or in the names of nominees for
their expenses in forwarding this proxy material to the beneficial owners of
such shares. Certain of the directors, officers and employees of the Company
may, without any additional compensation, solicit proxies in person or by
telephone.
Management of the Company is not aware of any matters other than those
described above which may be presented for action at the meeting. If any other
matters properly come before the Annual Meeting, it is intended that the proxies
will be voted with respect thereto in accordance with the judgement of the
person or persons voting such proxies subject to the direction of the Board of
Directors.
A copy of the Company's 1996 Annual Report to Shareholders is being mailed
along with this Proxy Statement.
FOR INFORMATION CONCERNING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1996 AS FILED WITH THE SEC, AVAILABLE TO SHAREHOLDERS
FREE OF CHARGE, PLEASE WRITE WILLIAM J. KERLEY, INVESTOR RELATIONS, JDN REALTY
CORPORATION, 3340 PEACHTREE ROAD, N.E., SUITE 1530, ATLANTA, GEORGIA 30326.
By order of the Board of Directors,
/s/William J. Kerley
--------------------
William J. Kerley
Corporate Secretary
March 31, 1997
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<PAGE> 17
APPENDIX A
PROXY CARD
JDN REALTY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints J. Donald Nichols and William J. Kerley, and
either of them, as proxies, with full power of substitution and resubstitution,
to vote all of the shares of Common Stock which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of JDN Realty Corporation, to be held
at the Nashville City Club, SunTrust Bank Building, 201 Fourth Avenue North,
20th Floor, Nashville, Tennessee, on Thursday, May 22, 1997, at 9:00 a.m.
(Nashville Time), and at any adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE NAMED PROXIES WILL VOTE (A) FOR
THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ON THE BACK OF THIS CARD, (B)
FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS, AND (C) IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING.
(Continued on reverse side)
1. Election of Class III Directors. Nominees: J. Donald Nichols, Craig
Macnab
<TABLE>
<S> <C> <C>
[ ]FOR nominees [ ] AGAINST [ ] WITHHOLD AUTHORITY
listed (except withheld nominees listed to vote for any individual nominee. Write
to the contrary) name of nominee here:
</TABLE>
2. Proposal to ratify the appointment of Ernst & Young LLP as the Company's
independent auditors.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
Dated: , 1997
--------------------
--------------------------------
Signature
--------------------------------
Signature if held jointly
IMPORTANT: Please sign exactly
as your name or names appear on
this proxy and mail promptly in
the enclosed envelope. If you
sign as agent or in any other
capacity, please state the
capacity in which you sign.
