-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IUAF41mXtzhJRMKyzMN2huqfsAzzNfdkcXjrxzdBcvDSahyXbMWgM6E1rlubzffH hFTzcq42Vym4wlHwIWcrOA== 0000950137-97-001478.txt : 19970411 0000950137-97-001478.hdr.sgml : 19970411 ACCESSION NUMBER: 0000950137-97-001478 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970515 FILED AS OF DATE: 19970410 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL GROWTH PROPERTIES INC CENTRAL INDEX KEY: 0000895648 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 421283895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11656 FILM NUMBER: 97577734 BUSINESS ADDRESS: STREET 1: 55 WEST MONROE ST STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60603 BUSINESS PHONE: 3125515000 MAIL ADDRESS: STREET 1: 55 WEST MONROE ST STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60603 DEF 14A 1 NOTICE & PROXY STATEMENT 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: [ ] 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 GENERAL GROWTH PROPERTIES, INC. - ------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) N/A - ------------------------------------------------------------------------------- (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: - -------------------------------------------------------------------------------- 2 GENERAL GROWTH PROPERTIES, INC. 55 WEST MONROE STREET -- SUITE 3100 CHICAGO, ILLINOIS 60603 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 1997 To the Stockholders of General Growth Properties, Inc. Notice is hereby given that the Annual Meeting of Stockholders of GENERAL GROWTH PROPERTIES, INC. (the "Company") will be held on Thursday, May 15, 1997 at The Standard Club of Chicago, 320 S. Plymouth Court, Chicago, Illinois, at 10 o'clock a.m. local time, for the following purposes: (1) To elect two (2) directors to serve until the annual meeting of stockholders in 2000 and until their successors are elected and qualified; (2) To approve an amendment to the Company's Amended and Restated Certificate of Incorporation, as amended (the "Charter"), to increase the number of authorized shares of common stock from 70,000,000 to 210,000,000 (the "Charter Amendment"); (3) To approve an amendment to the Company's 1993 Stock Incentive Plan, as amended (the "Plan"), to increase the number of shares available for issuance thereunder to 3,000,000 (the "Plan Amendment"); (4) To ratify the reappointment of Coopers & Lybrand L.L.P. as the Company's independent accountants for the year ending December 31, 1997 (the "Reappointment of Accountants"); and (5) To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. The Board of Directors has fixed the close of business on March 28, 1997 as the record date for determining the stockholders that are entitled to notice of, and to vote at, the annual meeting or any adjournments or postponements thereof. A complete list of the stockholders entitled to notice of and to vote at the Meeting will be available for examination by any stockholder at the principal executive offices of the Company, 55 West Monroe Street, Suite 3100, Chicago, Illinois 60603, for any purpose germane to such meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting. By Order of the Board of Directors Matthew Bucksbaum MATTHEW BUCKSBAUM Chairman of the Board Chicago, Illinois April 9, 1997 THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL STOCKHOLDERS TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN THE ACCOMPANYING REPLY ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE TO DO SO. 3 GENERAL GROWTH PROPERTIES, INC. 55 WEST MONROE STREET -- SUITE 3100 CHICAGO, ILLINOIS 60603 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 1997 INTRODUCTION This Proxy Statement is furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors of General Growth Properties, Inc. (the "Company"), for use at the annual meeting of stockholders and at any adjournment(s) or postponement(s) thereof (the "Meeting") to be held, for the purposes set forth in the accompanying Notice of Annual Meeting, on Thursday, May 15, 1997 at The Standard Club of Chicago, 320 S. Plymouth Court, Chicago, Illinois, at 10 o'clock a.m. local time. The Company expects to first mail this Proxy Statement and the accompanying proxy card to stockholders on or about April 9, 1997. THE MEETING VOTING AT THE MEETING The holders of record of shares of the Company's Common Stock, par value $.10 per share (the "Common Stock") at the close of business on March 28, 1997 are entitled to notice of and to vote at the Meeting. On that date, there were outstanding 30,791,185 shares of Common Stock held by approximately 980 holders of record. Each share of Common Stock issued and outstanding is entitled to one vote on each matter submitted to a vote of stockholders at the Meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of Common Stock will constitute a quorum. The affirmative vote of the holders of a plurality of the shares of Common Stock represented at the Meeting, in person or by proxy, will be necessary for the election of directors. The affirmative vote of the holders of a majority of the shares of Common Stock outstanding will be necessary for the approval of the Charter Amendment. The affirmative vote of the holders of a majority of the shares of Common Stock cast, in person or by proxy, will be necessary for the approval of the Plan Amendment, and the affirmative vote of the holders of a majority of the shares of Common Stock represented at the Meeting, in person or by proxy, will be necessary for approval of the Reappointment of Accountants. PROXIES AND PROXY SOLICITATION All shares of Common Stock represented by valid proxies will be voted at the Meeting in accordance with the directions marked on the proxies, unless such proxies previously have been revoked. If you return your proxy but do not indicate how you want it voted, it will be voted FOR the election of each nominee for director named in the proxy, FOR the Charter Amendment, FOR the Plan Amendment and FOR the Reappointment of Accountants. If any other matters are properly presented at the Meeting for action, which is not presently anticipated, the proxy holders will vote the proxies (which confer discretionary authority upon such holders to vote on such matters) in accordance with their best judgment. You may revoke your proxy at any time before it is voted by submitting timely written notice of revocation or by submission of a properly executed proxy bearing a later date (in either case directed to the Secretary of the Company) or, if you attend the Meeting, you may elect to revoke your proxy and vote your shares personally. Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum but as unvoted for purposes of determining the approval of any matter submitted for a vote of the stockholders. If a broker indicates on a proxy that he or she does not have discretionary authority to vote on a particular matter as to certain shares, those shares will be counted for quorum purposes but will not be considered as present and entitled to vote with respect to that matter. 4 In addition to solicitation by mail, certain directors, officers and other employees of the Company, not specially employed for this purpose, may solicit proxies, without additional remuneration therefor, by personal interview, mail, telephone or other means of communication. The Company will also request brokers and other fiduciaries to forward proxy soliciting material to the beneficial owners of shares of Common Stock which are held of record by such brokers and fiduciaries and will reimburse such persons for their reasonable out-of-pocket expenses. The Company will bear the entire cost of soliciting management proxies, which is currently estimated to be less than $10,000. COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth, as of March 28, 1997, certain information concerning each stockholder who is known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock. Unless otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them.
NUMBER OF SHARES APPROXIMATE NAME AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASS - ---------------- ------------------ ---------------- General Trust Company, as trustee(1)........................ 7,884,243(2) 25.6% 4001 W. 41st Street, 04A Empire Mall Sioux Falls, South Dakota 57116 Cohen & Steers Capital Management, Inc...................... 3,904,300(3) 12.7% 757 Third Avenue New York, New York 10017-2013 Scudder, Stevens & Clark, Inc............................... 3,306,200 10.7% 345 Park Avenue New York, New York 10154 Franklin Resources, Inc..................................... 2,345,500(4) 7.6% 777 Mariners Island Blvd. San Mateo, California 94404 Wellington Management Company............................... 2,270,250(5) 7.4% 75 State Street Boston, Massachusetts 02109
- ------------------------- (1) The beneficiaries of the trusts are members of the Bucksbaum family which, for purposes hereof, includes the descendants of Martin, Matthew and Maurice Bucksbaum, including John Bucksbaum, an Executive Vice President of the Company. (2) Includes 7,362,480 shares of Common Stock issuable upon conversion of certain limited partnership units in the Operating Partnership (as hereinafter defined). See "Compensation Committee Interlocks and Insider Participation" below. (3) Owned by numerous investment counselling clients. (4) Voluntarily reported on behalf of its principal shareholders and an investment adviser, each of whom disclaims participation in a "group" and beneficial ownership of securities attributable to each other. (5) Owned by numerous investment counselling clients. 2 5 COMMON STOCK OWNERSHIP OF MANAGEMENT The following table sets forth, as of March 28, 1997, certain information regarding the beneficial ownership of the Company's Common Stock, by (a) each of the directors and nominees for election as directors, (b) each of the executive officers of the Company named in the Summary Compensation Table on page 9 and (c) all directors and executive officers as a group. Unless otherwise indicated, the person has sole voting and investment power with respect to such shares of Common Stock.
DIRECTORS AND NUMBER OF SHARES APPROXIMATE EXECUTIVE OFFICERS BENEFICIALLY OWNED PERCENT OF CLASS - ------------------ ------------------ ---------------- Matthew Bucksbaum......................................... 1,309,653(1)(2) 4.3% John Bucksbaum............................................ 25,000(1)(3)(4) * Anthony Downs............................................. 5,500(4) * Morris Mark............................................... 10,000(4) * Robert Michaels........................................... 35,000(4) * Beth Stewart.............................................. 4,500(4) * A. Lorne Weil............................................. 4,000(4) * Bernard Freibaum.......................................... 195,000(4) * Jon Batesole.............................................. 28,816(4)(6) * Stanley Richards.......................................... 24,344(7) * Joel Bayer................................................ 41,000(5) * Mark London............................................... 6,000(5) * All Directors and Executive Officers as a Group (12 persons)................................................ 1,688,813(8) 5.5%
- ------------------------- * Less than 1%. (1) Does not include shares of Common Stock beneficially owned by General Trust Company in its capacity as trustee of trusts. Beneficial ownership of such shares of Common Stock is hereby expressly disclaimed. See "Common Stock Ownership of Certain Beneficial Owners" above. (2) Includes 850,745 beneficially owned by Mr. Bucksbaum as co-trustee of the Martin Bucksbaum Marital GST Trust and 62,296 shares held by Mr. Bucksbaum's IRA. Does not include 3,000 shares of Common Stock beneficially owned by Mr. Bucksbaum's spouse or 221,196 shares issuable to Mrs. Bucksbaum upon conversion of certain limited partnership units in the Operating Partnership, beneficial ownership of which is hereby expressly disclaimed. (3) Does not include 900 shares of Common Stock beneficially owned by Mr. Bucksbaum's spouse, beneficial ownership of which is hereby expressly disclaimed, or 3,832 shares of Common Stock issuable upon conversion of certain limited partnership units in the Operating Partnership. (4) Includes 15,000, 2,500, 2,500, 20,000, 2,500, 2,000, 170,000, and 10,000 shares of Common Stock subject to immediately exercisable options granted pursuant to the Plan to each of Messrs. John Bucksbaum, Downs, Mark, Michaels, Ms. Stewart, Messrs. Weil, Freibaum and Batesole, respectively. (5) Consists of shares of Common Stock subject to immediately exercisable options granted pursuant to the Plan. (6) Does not include 2,092 shares of Common Stock beneficially owned by Mr. Batesole's spouse, beneficial ownership of which is hereby expressly disclaimed. (7) Does not include 6,000 shares held by two trusts of which Mr. Richards serves as trustee, beneficial ownership of which is hereby expressly disclaimed, or 72,812 shares issuable upon conversion of certain limited partnership units in the Operating Partnership. (8) See footnotes 1 through 7 above. 3 6 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the Company's executive officers and directors and persons who beneficially own more than 10% of the Common Stock to file reports of initial ownership and changes in ownership of Common Stock with the Commission. Based solely on a review of such reports furnished to the Company, the Company believes that during 1996, all of its directors, executive officers and beneficial owners of more than 10% of Common Stock complied with all applicable Section 16(a) filing requirements. ELECTION OF DIRECTORS The Board of Directors consists of seven members divided into three classes serving staggered three-year terms. Pursuant to Article III of the Company's By-Laws, two directors are to be elected at the Meeting to serve until the annual meeting of stockholders in 2000 and until their respective successors have been elected and qualified. Each of the nominees are now members of the Board of Directors. Proxies may not be voted for more than two directors. The shares of Common Stock represented by the enclosed proxy, if given and unless otherwise specified, will be voted by the persons named as proxies for the election of the individuals nominated by the Board of Directors. NOMINEES FOR ELECTION AS DIRECTORS The two individuals named below are nominees for election as directors at the Meeting. It is not contemplated that either of the nominees will be unable or unwilling to serve; however, if either nominee is unable or unwilling to serve, it is intended that the shares represented by the proxy, if given and unless otherwise specified therein, will be voted for a substitute nominee or nominees designated by the Board of Directors.
TERM NAME EXPIRES AGE POSITION AND BACKGROUND(1) - ---- ------- --- -------------------------- Morris Mark.......................... 1997 56 Director of the Company. General partner of Mark Partners (an investment partnership) since June 1985. President and director of Mark Asset Management Corporation (an investment management company) since December 1986. President and director of Mark International Partners, Ltd. (an investment management company) since December 1989. Robert Michaels...................... 1997 53 Director of the Company since July 1995. President and Chief Operating Officer of the Company since May 1995. President, Chief Executive Officer and Director of General Growth Management, Inc., a property manager, since April 1994. From January 1989 until March 1994, Mr. Michaels held various positions with General Growth Management, Inc.
4 7 CONTINUING DIRECTORS Terms of office of the five Directors named below will continue until the annual meeting in the years indicated and until their respective successors have been elected and duly qualified.
TERM NAME EXPIRES AGE POSITION AND BACKGROUND(1) - ---- ------- --- -------------------------- John Bucksbaum....................... 1998 40 Director of the Company. Executive Vice President of the Company since December 1992. President of General Growth of California, Inc. and Fallbrook Mall Corporation, a predecessor to the Company and previously one of the indirect owners of an enclosed mall shopping center, from 1984 to December 1992. Son of Matthew Bucksbaum. Anthony Downs........................ 1998 66 Director of the Company. Senior Fellow at The Brookings Institution (private, non-profit policy research center) since 1977. Self-employed speaker and writer since 1977. Executive consultant to Salomon Brothers Inc (1986-1994) and Aetna Realty Investors (1977-1994). Trustee of each of The Urban Land Institute and The Urban Institute. Director of The Pittway Corporation, Bedford Properties, Inc. and Essex Property Trust, Inc. Director of National Housing Partnerships Foundation, Massachusetts Mutual Life Insurance Company and NAACP Legal and Education Defense Fund, Inc. A. Lorne Weil........................ 1998 50 Director of the Company. Director (since 1989), Chairman (since 1991) and Chief Executive Officer (since 1992) of Autotote Corporation, worldwide provider of computerized wagering systems for gaming operations; from 1979 to 1992, President of Lorne Weil Inc., a private consulting firm. Director of Fruit of the Loom, Inc., a basic apparel manufacturer. Matthew Bucksbaum.................... 1999 71 Chairman and Chief Executive Officer and Director of the Company since July 1995; President of the Company from December 1992 through June 1995; Director of the Company since December 1992; Secretary, Treasurer and Director of the Company from 1986 to December 1992. President of General Growth Companies, Inc. from 1985 to present. Chairman of the Board of Directors of General Growth Management, Inc. from 1986 to December 1992. Director of General Growth Management, Inc. since December 1992. Father of John Bucksbaum. Beth Stewart......................... 1999 40 Director of the Company. Real estate consultant from December 1992 to present. Vice President of Goldman, Sachs & Co. from 1986 to November 1992.
- ------------------------- (1) Only directorships of issuers with a class of securities registered pursuant to Section 12 of the Exchange Act, or subject to the requirements of Section 15(d) of that Act or directorships of issuers registered as investment companies under the Investment Company Act of 1940, as amended, are required to be listed in the above table. 5 8 INFORMATION REGARDING THE BOARD OF DIRECTORS The Board of Directors has designated an Audit Committee, a Compensation Committee and an Executive Committee. The Board of Directors has not designated a Nominating Committee; rather, the Board as a whole performs the functions which would otherwise be delegated to such committee. The members of the Audit Committee are Mr. Mark and Ms. Stewart, the members of the Compensation Committee are Messrs. Matthew Bucksbaum and Downs and Ms. Stewart, and the members of the Executive Committee are Messrs. Matthew Bucksbaum, John Bucksbaum, Michaels and Ms. Stewart. The functions of the Audit Committee include recommending the engagement of the Company's independent auditors, reviewing the independence of the Company's independent auditors, reviewing with the independent auditors the plans for and results of the audit engagement and reviewing the adequacy of the Company's internal accounting controls. The functions of the Compensation Committee include determining the compensation for the Company's Chief Executive Officer, approving the compensation for the Company's other executive officers and administering the Plan and any and all other executive compensation plans adopted from time to time by the Company. During 1996, the Board of Directors of the Company met seven times, the Audit Committee met one time and the Compensation Committee took action by written consent one time. With the exception of A. Lorne Weil, during 1996, each director attended at least 75% of the meetings held by the Board of Directors and those committees thereof of which he or she is a member. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION As stated above, the current members of the Compensation Committee are Matthew Bucksbaum, Anthony Downs and Beth Stewart. Matthew Bucksbaum, the Chairman of the Board and Chief Executive Officer of the Company, is the only member of the Compensation Committee who is a present or former officer or employee of the Company or of GGP Limited Partnership (the "Operating Partnership"). The Company is the general partner of the Operating Partnership and currently the owner of a 62.9% interest therein. Matthew Bucksbaum, his family and trusts for the benefit of his family (collectively, the "Bucksbaums") currently own a 36.8% limited partnership interest in the Operating Partnership (subject to dilution in certain circumstances) and certain rights to sell the units representing such interests or to increase their ownership in the Company to 25% of the outstanding Common Stock by converting a portion of such units into shares of Common Stock. During 1996, the Company acquired a 95% non-voting preferred stock interest in GGP Management, Inc. ("GGP Management"), a company which manages, leases, develops and operates enclosed shopping center malls. The common stock of GGP Management is held by Bernard Freibaum, John Bucksbaum, Robert Michaels, Jon Batesole and Stanley Richards, each of whom is an executive officer of the Company. In August 1996, the Operating Partnership, acting through GGP Management, completed the acquisition (the "Acquisition") of General Growth Management, Inc. ("GGMI") for approximately $51.5 million, consisting of an aggregate of 453,791 units in the Operating Partnership and 1,555,855 shares of Common Stock. Of such consideration, Matthew Bucksbaum, solely as co-trustee of the Martin Bucksbaum GST Marital Trust received an aggregate of 453,791 shares of the Company's Common Stock, and his wife, Carolyn S. Bucksbaum, received 453,791 units in the Operating Partnership, in consideration for their respective 22.6% ownership interests in GGMI. The General Growth Management Employee Stock Ownership Plan (the "ESOP"), received an aggregate of 1,102,064 shares of Common Stock in consideration of its 54.8% ownership interest in GGMI. Matthew Bucksbaum is a director of GGMI and Robert Michaels is the President and Chief Executive Officer of the Company and a director of GGMI. Until January 1996, Mr. Michaels also served as a trustee of the ESOP. 6 9 Through August 30, 1996, 24 enclosed mall shopping centers controlled directly or indirectly by the Company were managed and leased by GGMI pursuant to a management and leasing agreement between GGMI and each property owner. Through such date, the Company paid approximately $7.96 million to GGMI for such services (exclusive of costs and expenses reimbursed to GGMI by the property owners). During 1996 and prior to the Acquisition, certain GGMI personnel rendered services to the Company in connection with the development and construction of two malls. The Company reimbursed GGMI for its expenses but did not pay GGMI fees for its services as it typically did in connection with previous development services rendered by GGMI. Also during such period, several members of senior management and other employees of GGMI accepted positions with the Company and GGP Management. GGMI was not directly compensated for the loss of such persons' services. In connection with the Acquisition, GGMI borrowed approximately $39.9 million from the Operating Partnership, which it used to purchase shares of Common Stock to be delivered as consideration in the Acquisition. Such loan bears interest at a rate of 14% per annum, is unsecured, will not amortize as to principal and will mature in 20 years. OTHER RELATED PARTY TRANSACTIONS As of December 31, 1996, the Company forgave the remaining principal balance of a loan, plus all accrued interest thereon, which it had previously extended to Joel Bayer, who became an executive officer of the Company in May 1996. The Company originally extended the 6.77% loan to Mr. Bayer in 1993, when he first joined the Company. During 1996, the largest aggregate amount of indebtedness which Mr. Bayer had outstanding was $80,078 (including $5,078 of accrued interest thereon). 7 10 EXECUTIVE OFFICERS The following individuals currently serve as executive officers of the Company:
NAME AGE POSITION AND BACKGROUND - ---- --- ----------------------- Matthew Bucksbaum.................... 71 Chairman of the Board of Directors and Chief Executive Officer and Director of the Company since July 1995; President and Director of the Company since December 1992. Secretary, Treasurer and Director of the Company from 1986 to December 1992. President of General Growth Companies, Inc. from 1985 to present. Chairman of the Board of Directors of GGMI from 1986 to December 1992 and director of GGMI since December 1992. John Bucksbaum....................... 40 Executive Vice President since December 1992. Director of the Company. President of General Growth of California, Inc. and Fallbrook Mall Corporation, a predecessor to the Company and previously one of the indirect owners of an enclosed mall shopping center, from 1984 to December 1992. Robert Michaels...................... 53 Director of the Company since July 1995. President and Chief Operating Officer of the Company since May 1995. President, Chief Executive Officer and Director of GGMI since April 1994. From January 1989 until March 1994, Mr. Michaels held various positions with GGMI. Bernard Freibaum..................... 44 Executive Vice President and Chief Financial Officer of the Company since October 1993. From August 1992 and prior to joining the Company, Mr. Freibaum was a consultant with Ernst & Young. From 1985 through 1992, he was Chief Financial Officer and General Counsel of Stein & Company, a real estate development and service company. From 1973 through 1985, Mr. Freibaum held various positions with Ernst & Young, American Invsco Corp., and Coopers & Lybrand L.L.P. Mark London.......................... 45 Senior Vice President since January 1994. From June 1993 through December 1993, Mr. London was a consultant to the Company. From April 1987 to May 1993, Mr. London served as President and Chief Executive Officer of Equity Properties and Development Co., a real estate management and acquisitions company. Stanley Richards..................... 63 Senior Vice President of the Company since December 1992. Vice President of the Company from October 1986 to December 1992. Vice President and General Counsel of General Growth Companies, Inc. since October 1985. Jon Batesole......................... 57 Senior Vice President of the Company since December 1992. President of General Growth Development Corp. from 1985 to December 1992. Joel Bayer........................... 33 Vice President of the Company since September 1993. From July 1988 through August 1993, Mr. Bayer held various positions with Equity Financial and Management Company.
8 11 COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth certain information concerning the compensation paid by the Company for services rendered to each of (i) the Chief Executive Officer and (ii) the five other most highly compensated executive officers of the Company in 1996 (hereinafter, the "Named Officers"). SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ------------ AWARDS ------------ ANNUAL COMPENSATION SECURITIES ------------------------------- UNDERLYING NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) - --------------------------- ---- ---------- --------- ----------- Matthew Bucksbaum................................ 1996 $175,000 -- -- Chairman of the Board and Chief Executive 1995 $175,000 -- -- Officer 1994 $175,000 -- -- Robert Michaels.................................. 1996 $400,000 $200,000 100,000 President and Chief Operating Officer(1) 1995 $266,666 $ 50,000 -- John Bucksbaum................................... 1996 $200,000 -- 75,000 Executive Vice President 1995 $175,000 $ 25,000 -- 1994 $134,538 -- -- Bernard Freibaum................................. 1996 $300,000 $200,000 200,000 Executive Vice President and Chief Financial 1995 $225,000 $200,000 250,000(2) Officer 1994 $228,846 $ 75,000 -- Jon Batesole..................................... 1996 $300,000 $100,000 50,000 Senior Vice President(3) Joel Bayer....................................... 1996 $200,000 $230,000(4) 75,000 Vice President 1995 $110,000 $161,000(4) 60,000(2) 1994 $105,000 $ 30,000 --
- ------------------------- (1) Mr. Michaels first became an executive officer and employee of the Company in May 1995. (2) In December 1995, options previously granted to Messrs. Freibaum and Bayer covering an aggregate of 50,000 and 10,000 shares, respectively, were cancelled and surrendered and replacement incentive options covering 50,000 and 10,000 shares were granted pursuant to the Plan. (3) Mr. Batesole's compensation from the Company commenced January 1, 1996. (4) Includes debt forgiveness of $80,078 (including accrued interest thereon) and $60,946 (including accrued interest thereon) for 1996 and 1995, respectively. 9 12 OPTION GRANTS The following table sets forth information on grants of options to the Named Officers during 1996. OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1) --------------------------- NUMBER OF % OF TOTAL SECURITIES OPTIONS/SARS EXERCISE UNDERLYING GRANTED TO OR OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE GRANTED (#) FISCAL YEAR ($/SHARE) DATE PRESENT VALUE(2) ------------ ------------ ---------- ---------- ---------------- Matthew Bucksbaum............... -- -- -- -- -- Robert Michaels................. 100,000 20% $28 12/01/06 $227,000 John Bucksbaum.................. 75,000 15% $28 12/01/06 $170,250 Bernard Freibaum................ 200,000 40% $28 12/01/06 $454,000 Jon Batesole.................... 50,000 10% $28 12/01/06 $113,500 Joel Bayer...................... 75,000 15% $28 12/01/06 $170,250
- ------------------------- (1) Each of the options was granted pursuant to the Plan, at Fair Market Value on the date of grant, permits payment of the associated exercise price by means of previously-acquired shares of Common Stock and withholding of shares of Common Stock otherwise issuable upon such exercise, and has a tax withholding right. (2) The dollar amounts in this column were estimated using the widely-accepted Black-Scholes Option Pricing Formula on the basis of the following assumptions: expected volatility: 18.8%; risk free rate of return: 5.78%; dividend yield: 7.75%; and expected time until exercise: 4.0 years. OPTION EXERCISES AND YEAR-END VALUES The following table sets forth information with respect to the unexercised options held by the Named Officers at December 31, 1996. None of the Named Officers exercised any options during 1996. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY OPTIONS AT YEAR END OPTIONS AT YEAR-END --------------------------- --------------------------- EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ----------- ------------- ----------- ------------- Matthew Bucksbaum............................. -- -- -- -- Robert Michaels............................... 20,000 80,000 $ 82,600 $ 330,400 John Bucksbaum................................ 15,000 60,000 $ 61,950 $ 247,800 Bernard Freibaum.............................. 170,000 280,000 $1,872,100 $2,236,400 Jon Batesole.................................. 10,000 40,000 $ 41,300 $ 165,200 Joel Bayer.................................... 41,000 94,000 $ 403,330 $ 694,220
On December 31, 1996, the Fair Market Value per share of Common Stock was $32.13. EMPLOYMENT AGREEMENTS The Company entered into an employment agreement with Bernard Freibaum in 1993 pursuant to which Mr. Freibaum serves as Executive Vice President and Chief Financial Officer of the Company. During 1996, Mr. Freibaum received a base salary of $300,000 and a bonus of $200,000 pursuant to his agreement. Subsequent increases in base salary and annual bonuses will be determined on the basis of Mr. Freibaum's performance. See "Report of the Compensation Committee of the Board of Directors on Executive 10 13 Compensation" below. Mr. Freibaum is also entitled to participate in the Company's standard employee benefits program. For 1996, standard employee benefits included a Company contribution toward the cost of health, life and disability insurance for employees with dependents and an opportunity to contribute pre-tax salary (subject to applicable limitations) to a Company sponsored 401(K) plan. Messrs. Michaels, John Bucksbaum, Freibaum, Batesole and Bayer elected to contribute a portion of their respective salaries to the 401(K) plan during 1996 and the Company made a matching contribution of $750 on behalf of each of them. For information regarding options granted to executive officers in 1996, see "Option Grants in Last Fiscal Year," "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values" above. DIRECTORS' COMPENSATION Only those directors of the Company who are not employees of the Company receive any compensation for serving on the Board of Directors. Such directors receive an annual fee of $18,000, a meeting fee of $1,000 for each Board or Committee meeting attended, and reimbursement of expenses incurred in attending meetings. In addition, each director of the Company who is not otherwise an employee of the Company or any of its subsidiaries or affiliates will, on each January 1 of every year, automatically receive an annual grant of options pursuant to the Plan to purchase 500 shares of Common Stock having an exercise price equal to 100% of the Fair Market Value of the Common Stock on the date of grant of such option. In addition, each director, upon joining the Board of Directors, is entitled to receive an initial grant of options pursuant to the Plan to purchase 500 shares of Common Stock having an exercise price equal to 100% of the Fair Market Value of the Common Stock on the grant date. To date, pursuant to the Plan, each of Messrs. Downs and Mark and Ms. Stewart has received grants of options to purchase an aggregate of 2,500 shares of Common Stock and Mr. Weil has received grants of options to purchase an aggregate of 2,000 shares of Common Stock. The exercise price of each of such options is the Fair Market Value per share of Common Stock on the respective date of grant. In connection with the acquisition of GGMI described elsewhere herein, Ms. Stewart and Mr. Weil served on the Evaluation Committee of the Board of Directors. Effective October 10, 1996, each of them was awarded 1,000 shares of the Company's Common Stock as compensation for their service on such committee. The Fair Market Value per share of Common Stock on such date was $24.63. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE REPORT PRESENTED BELOW AND THE PERFORMANCE GRAPH FOLLOWING SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS. 11 14 REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The Compensation Committee, which currently consists of Matthew Bucksbaum, Anthony Downs and Beth Stewart, is responsible for determining the level of compensation paid to the Chief Executive Officer, approving the level of compensation paid to the Company's other executive officers, determining awards under, and administering, the Plan and for reviewing and establishing any and all other executive compensation plans adopted from time to time by the Company. The Committee's approval of the compensation for executive officers of the Company reflects its policy that the Company's compensation programs should enhance the Company's ability to attract and retain highly-qualified individuals while providing the financial motivation necessary to achieve high levels of Company performance. The compensation paid to each of the Company's executive officers during the most recent fiscal year is detailed in the Summary Compensation Table on page 9 hereof. In establishing the compensation to be paid to each of Matthew Bucksbaum and John Bucksbaum, the Compensation Committee (with Matthew Bucksbaum abstaining), noted that both of their salaries were originally established prior to the Company's initial public offering, at subjective levels which have not been changed since such time. The Committee also recognized the unique position occupied by each of Matthew Bucksbaum and John Bucksbaum by virtue of the Bucksbaums' ownership of a 36.8% limited partnership interest in the Operating Partnership (subject to dilution in certain circumstances) and their rights to sell the units representing such interests or to increase their ownership in the Company to 25% of the outstanding Common Stock by converting a portion of such units into shares of Common Stock. See "Common Stock Ownership of Certain Beneficial Owners," "Common Stock Ownership of Management" and "Compensation Committee Interlocks and Insider Participation." Accordingly, the compensation paid to Matthew Bucksbaum and John Bucksbaum during 1996 was not based upon, and had no specific relation to, the Company's performance during such period. Matthew Bucksbaum, as Chief Executive Officer, and Robert Michaels, as President, have the authority to hire all other executive officers, subject to approval by the Compensation Committee of the compensation to be paid to such executive officers. The decision to hire executive officers and the amount of compensation to be paid to an executive officer are generally based upon the Chief Executive Officer's and the President's subjective analyses of each individual's prior real estate experience, leadership qualities, expected contributions to the Company and responsibilities to be undertaken on behalf of the Company. An executive officer may also receive an annual bonus award based upon a percentage of his salary, which percentage the Chief Executive Officer and the President are also entitled to establish, subject to approval by the Compensation Committee. The cash bonuses paid to executive officers during 1996 were awarded in recognition of the particular individual's extraordinary efforts on behalf of the Corporation. In establishing the base salary to be paid to each of the Company's executive officers for fiscal 1997, the Compensation Committee reviewed the compensation paid by comparable REITs to their executive officers and determined it to be in the best interests of the Company and its stockholders for the Company to be in the lower-to-mid portion of the range. Stock-based compensation is also an important element of the Company's compensation program and is generally awarded to executive officers either as an inducement to join the Company or as additional compensation in recognition of exceptional performance. The Chief Executive Officer recommends to the Committee the size of a particular award based upon his subjective assessment of the factors described above without specific reference to any aspect of the Company's performance at such time. The Compensation Committee believes awards pursuant to the Plan align the interests of management with those of the Company's stockholders by emphasizing long-term stock ownership and increases in stockholder value. Options granted to executive officers generally vest over time and are required to be granted at the Fair Market Value per share of Common Stock on the date of the grant. In approving the Chief Executive Officer's recommended stock-based awards for 1996, the Compensation Committee reviewed similar compensation paid by comparable REITs to their executive officers and determined it to be in the best interests of the Company and its stockholders for the Company to be in the mid-to-higher portion of the range. 12 15 As one of the factors in its review of compensation matters, the Compensation Committee considers the anticipated tax treatment to the Company and to the executives of various payments and benefits. The deductibility of some types of compensation payments depends upon the timing of an executive's vesting or exercise of previously granted rights. Furthermore, interpretations of and changes in the tax laws and other factors beyond the Compensation Committee's control also affect the deductibility of compensation. For these and other reasons, the Committee will not necessarily limit executive compensation to that deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation Committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with its other compensation objectives. Respectfully submitted by the Compensation Committee, Matthew Bucksbaum Anthony Downs Beth Stewart 13 16 STOCKHOLDER RETURN PERFORMANCE PRESENTATION The following line graph sets forth a comparison of the percentage change in the cumulative total stockholder return on the Company's Common Stock compared to the cumulative total return of the S&P Composite -- 500 Stock Index, the NAREIT (National Association of Real Estate Investment Trusts) Equity REIT Total Return Index and an enclosed mall REIT Index (consisting of CBL & Associates Properties, Inc., Crown American Realty Trust, First Union Real Estate Equity and Mortgage Investment, General Growth Properties, Inc., JP Realty, Inc., The Macerich Company, Taubman Centers, Inc. and Urban Shopping Centers, Inc.) for the period April 8, 1993, the date on which trading of the Company's Common Stock commenced, through December 31, 1996. The graph assumes that the shares of the Company's Common Stock were bought at the IPO price of $22.00 per share and that the value of the investment in each of the Company's Common Stock and the indices was $100 at the beginning of the period. The graph further assumes the reinvestment of dividends. The NAREIT Equity REIT Total Return Index, which is only published monthly based on the last closing prices of the preceding month, has been prorated for the month of April, 1993 to arrive at the beginning index used in this graph. Please note that the stock price performance shown on the graph below is not necessarily indicative of future price performance. GENERAL GROWTH PROPERTIES, INC.
MEASUREMENT PERIOD GENERAL GROWTH S&P 500 INDEX NAREIT ENCLOSED MALL (FISCAL YEAR COVERED) PROPERTIES, INC. EQUITY REIT REIT INDEX TOTAL RETURN INDEX 04/8/93 100 100 100 100 12/31/93 101 107 87 104 12/31/94 113 107 94 106 12/31/95 116 142 95 123 12/31/96 192 184 137 160
14 17 APPROVAL OF CHARTER AMENDMENT GENERAL On February 11, 1997, the Board of Directors adopted a resolution amending Article IV of the Company's Amended and Restated Certificate of Incorporation, as amended (the "Charter") to increase the number of shares of authorized Common Stock from 70,000,000 to 210,000,000 shares (the "Charter Amendment"). The affirmative vote of a majority of the outstanding shares of Common Stock is required for approval of the Charter Amendment. The Charter Amendment seeks to amend the first paragraph of Article IV of the Company's Charter to read as follows: The total number of shares of all classes of capital stock that the Corporation shall have authority to issue is Two Hundred Fifteen Million (215,000,000) shares, consisting of (i) Five Million (5,000,000) shares of preferred stock, par value $100 per share (the "Preferred Stock"), and (ii) Two Hundred Ten Million (210,000,000) shares of common stock, par value $0.10 per share (the "Common Stock"). The additional shares would have the same rights and privileges as the shares of Common Stock presently outstanding. If approved by the requisite majority of the Company's stockholders at the Meeting, the increase in the number of shares of Common Stock would become effective on the filing of the Charter Amendment with the Secretary of State of the State of Delaware. Assuming approval of the Charter Amendment, the Company currently intends to make such filing as soon as practicable following the Meeting. PURPOSE The Board of Directors recommends that the number of authorized but unissued shares of Common Stock be increased to provide a sufficient number of shares available, as the occasion may arise, for possible future acquisitions and financings, and other proper corporate purposes. The Operating Partnership might also issue securities convertible into shares of Common Stock in the acquisition of businesses or properties. The Company has previously filed a shelf registration statement with the Securities and Exchange Commission for the offering from time to time of up to $250 million of securities. Issuance of even the maximum amount of Common Stock (or securities convertible into or exercisable for Common Stock) remaining available pursuant to this Registration Statement would not, however, require any increase in the authorized shares. Nevertheless, while the Company does not currently have any commitment or understanding to issue any shares of additional Common Stock, the Board of Directors believes it is prudent to increase the authorized Common Stock at this time so as to be in a position to have flexibility to issue additional shares as favorable circumstances present themselves. As of March 28, 1997, the Company had 75,000,000 shares of capital stock authorized, 70,000,000 of which constitutes Common Stock, and 5,000,000 of which constitutes preferred stock. Of the 70,000,000 shares of authorized Common Stock, 30,791,185 are currently outstanding, 1,933,333 are currently reserved for issuance pursuant to the Plan (See "Approval of the Plan Amendment"), 8,570,176 are reserved for other issuances, and 28,705,306 shares remain available for issuance. DILUTION It should be noted that any issuance of additional shares of Common Stock could be disadvantageous to existing stockholders since such issuance will serve to dilute their percentage interest in the Company. Current stockholders do not have preemptive rights to subscribe to additional securities that may be issued by the Company, which means that current stockholders do not have a prior right to purchase any new issue of capital stock of the Company in order to maintain a proportionate ownership. However, stockholders wishing to maintain their percentage interest may be able to do so through normal market purchases. 15 18 ANTI-TAKEOVER An increase in the authorized but unissued shares of Common Stock, could under certain circumstances, have an anti-takeover effect, by for example, allowing issuances of Common Stock that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for the combination of the Company with another company. The Charter Amendment does not alter the Company's present ability to issue up to 5,000,000 shares of preferred stock. The Company would not be required to obtain stockholder approval to issue authorized but unissued shares of preferred stock or Common Stock, unless required to do so by applicable law or the rules of the New York Stock Exchange or any stock exchange on which the Company's shares are then listed. The Board of Directors could use its ability to issue Common Stock and/or preferred stock in a manner that would create impediments which might discourage persons in attempting to gain control of the Company. However, the Company has no present intention to use the additional shares of Common Stock for anti-takeover purposes. This proposal to amend the Charter is not in response to any effort of which the Company is aware to accumulate the Company's stock or obtain control of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Board of Directors and stockholders. The Board does not presently contemplate recommending the adoption of any other amendments to the Articles which could be construed to affect the ability of third parties to take over or change control of the Company. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE CHARTER AMENDMENT. 16 19 APPROVAL OF PLAN AMENDMENT GENERAL The Plan permits stock-based awards to be made to eligible employees of the Company. Under the Plan, automatic stock option awards are also made to non-employee directors annually. As of March 28, 1997, a total of 2,000,000 shares had been reserved for issuance under the Plan and a total of 1,043,833 shares remained available for future grant under the Plan. In February 1997, the Board of Directors, acting upon a recommendation from the Compensation Committee of the Board of Directors (the "Committee"), adopted an amendment to the Plan, subject to stockholder approval, to increase the number of shares of Common Stock available for issuance thereunder by an additional 1,000,000. The Board believes that the additional shares are necessary in order to provide key employees and directors with an added incentive to continue in the employ or service of the Company and to stimulate their efforts in promoting the growth, efficiency and profitability of the Company. The affirmative vote of a majority of the shares of Common Stock represented at the Meeting, whether in person or by proxy, will be required to approve the Plan Amendment. The following summary of the Plan, as proposed to be amended, is qualified in its entirety by reference to the full text of the Plan. All defined terms used herein and not otherwise defined are deemed to have the meaning given thereto in the Plan. The proposed Plan Amendment changes only the number of shares available for issuance under the Plan and does not affect any other provision thereunder. PURPOSE The purpose of the Plan is to give the Company an advantage in attracting, retaining and motivating employees and directors and to provide the Company with the ability to provide incentives which are directly linked to the profitability of the Company's business and increases in stockholder value. SHARES AVAILABLE UNDER THE PLAN A maximum of 2,000,000 authorized and unissued or treasury shares of the Company's Common Stock may currently be issued or delivered under the Plan. As of March 28, 1997, options to acquire an aggregate of 829,500 shares of Common Stock were outstanding under the Plan, options covering an aggregate of 66,667 shares of Common Stock had been exercised, options covering an aggregate of 60,000 shares of Common Stock were repriced in 1995 and an aggregate of 1,043,833 remain available for issuance. See "Option Grants in Last Fiscal Year" and "Directors' Compensation" for certain information regarding options granted under the Plan in 1996. If the Plan Amendment is approved, a maximum of 3,000,000 authorized and unissued or treasury shares of the Company's Common Stock will be available for issuance pursuant to the Plan. Shares of Common Stock which are covered by any unexercised portions of terminated options, forfeited by participants or subject to any awards that are otherwise surrendered by a participant without receiving any payment or other benefit with respect thereto may be subject to future awards under the Plan. PLAN ADMINISTRATION The Plan is currently administered by the Committee. The Committee determines the employees who will be eligible for awards and the amount and type of awards, establishes rules and guidelines relating to the Plan, establishes and modifies the terms of awards and is entitled to take such other action as may be necessary for the proper administration of the Plan. PLAN PARTICIPANTS Any employee of the Company may be selected by the Committee to receive an award under the Plan. Approximately 500 employees of the Company are currently eligible to participate in the Plan. Non-employee 17 20 directors are only eligible to receive automatic, non-discretionary stock option awards. Currently, four non-employee directors are eligible to receive automatic, non-discretionary stock option awards under the Plan. AWARDS AVAILABLE UNDER PLAN Awards to employees under the Plan may take the form of stock options and restricted stock awards. Stock options may be granted either alone or in addition to other awards granted under the Plan. Stock Options Stock options granted under the Plan are either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company and its subsidiaries. The exercise price for an option must be at least equal to 100% of the Fair Market Value per share of Common Stock on the date of grant and is generally payable either in cash, shares of Common Stock or by reduction in the number of shares of Common Stock otherwise issuable upon exercise. On March 27, 1997, the Fair Market Value per share of common stock was $31.56. The term during which each option may be exercised is determined by the Committee, but no option will be exercisable more than ten years after the date of grant. Options may also be subject to restrictions on exercise, such as exercise in periodic installments, as determined by the Committee. In addition, the Committee may at any time waive the installment exercise provisions or accelerate the exercisability of any option. If an optionee's employment terminates by reason of Disability, the options held by such person may generally be exercised for a period equal to the shorter of (a) three years from the date of termination or (b) the remaining term of the option. If an optionee's employment terminates by reason of Retirement, the Non-Qualified Stock Options held by such person may generally be exercised for a period equal to the shorter of (a) three years from the date of termination or (b) the remaining term of the Non-Qualified Stock Options and the Incentive Stock Options held by such person may generally be exercised for a period equal to the shorter of (x) three months from the date of termination or (y) the remaining term of the Incentive Stock Options. If an optionee's employment terminates by reason of death, the options held by such person may generally be exercised for a period equal to the shorter of (a) one year from the date of death or (b) the remaining term of the options. If an optionee's employment terminates for any reason other than Disability, Retirement, death or Cause, the Non-Qualified Stock Options held by such person may generally be exercised for a period equal to the shorter of (a) one year from the date of such termination or (b) the remaining term of the Non-Qualified Stock Options, and the Incentive Stock Options held by such person may generally be exercised for a period equal to the shorter of (x) three months from the date of such termination or (y) the remaining term of the Incentive Stock Options. If a participant's employment is terminated for "Cause", any unexercised options held by such optionee generally expire immediately upon the giving of notice of such Termination of Employment to the optionee. The Committee may, upon receipt of written notice of exercise, elect to pay the optionee an amount, in cash or Common Stock, equal to the excess of the Fair Market Value over the relevant exercise price times the number of shares of the Common Stock for which the option is being exercised. Restricted Stock The Committee may award shares of Restricted Stock to a participant either alone or in addition to other awards granted under the Plan. An award of Restricted Stock gives a participant the right to receive shares of Common Stock subject to a risk of forfeiture based upon certain conditions. The forfeiture restrictions on the Restricted Stock may be based upon the attainment of specified performance goals or upon such other factors or criteria as the Committee shall determine. The provisions of Restricted Stock awards need not be the same with respect to each recipient. Until all restrictions are satisfied, lapsed or waived, the Committee may require that the Company maintain control over the shares of Restricted Stock but the participant will generally be able to vote the shares of Restricted Stock and be entitled to receive cash dividends paid with respect to such 18 21 shares. Generally, upon termination of employment for any reason during the Restriction Period, the participant will generally forfeit the right to the shares of Restricted Stock to the extent the applicable restrictions were not met at the time of such termination, unless the Committee, in its discretion, shall have waived in whole or in part any or all of the remaining restrictions. Director Stock Options The Plan provides for the grant of a Non-Qualified Stock Option to purchase 500 shares of Common Stock to each non-employee director on the first day of January during such director's term at an exercise price per share equal to 100% of the Fair Market Value of the Common Stock on the grant date. Each such director, upon joining the Board, shall also be entitled to an initial grant of Non-Qualified Stock Options to purchase 500 shares of Common Stock having an exercise price equal to 100% of the Fair Market Value of the Common Stock on the grant date. Options granted to non-employee directors are exercisable in full commencing on the date of grant and expire on the tenth anniversary of the date of grant. TRANSFERABILITY Stock options granted under the Plan may be exercised, during the participant's lifetime, only by the participant, his guardian or legal representative or by an alternative payee and are not transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order (as defined in the Code or Title 1 of the Employee Retirement Income Security Act of 1974, as amended or the rules thereunder (collectively, "ERISA"). A participant may not sell, assign, transfer or encumber shares of Restricted Stock during the Restriction Period. CHANGE IN CONTROL All options outstanding as of the date of a Change in Control of the Company generally will become fully exercisable and vested and the restrictions applicable to any Restricted Stock will lapse and such Restricted Stock will become fully vested and transferable. A Change in Control generally includes: (1) An acquisition by any individual, entity or group of beneficial ownership of 20% or more of either (i) the then outstanding shares of Common Stock of the Company or (ii) the combined voting power of the then outstanding shares of the Company's Common Stock. (2) A change in the composition of the Board such that members of the Incumbent Board cease to constitute at least a majority of the Board; (3) The approval by the stockholders of the Company of certain Corporate Transactions, including, a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the Company's assets; or (4) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. Generally, during the 60-day period from and after a Change in Control, an optionee has the right to elect to surrender a stock option to the Company and to receive cash in an amount equal to the difference between the Change in Control Price on the date of election over the applicable exercise price times the number of shares of Common Stock represented by the surrendered option. TERMINATION, AMENDMENT AND ERISA STATUS The Plan will remain in effect until April 4, 2003, unless terminated earlier by the Board. The Board may generally amend, alter or discontinue the Plan and the Committee may amend or alter the terms of the awards under the Plan, including, without limitation, to take into account changes in law, tax and accounting rules, but no such action shall affect or in any way impair the rights of a participant under any award previously 19 22 granted without such participant's consent; provided, that the provisions establishing the formula for determining the automatic director's grants may not be amended more often than once every six months. The Committee may amend the terms of any option or other Award granted pursuant to the Plan, prospectively or retroactively, but no such amendment shall impair the rights of any holder without the holder's consent. The Plan is not subject to the provisions of ERISA. ANTIDILUTION PROVISIONS The number of shares of Common Stock authorized to be issued under the Plan and subject to outstanding awards (and the purchase or exercise or exercise price thereof) may be adjusted to prevent dilution or enlargement of rights in the event of any stock dividend, reorganization, reclassification, recapitalization, stock split, combination, merger, consolidation or other relevant capitalization change. PARTICIPATION IN THE PLAN The following table sets forth grants of stock options made under the Plan during Fiscal Year 1996 to (i) each of the Named Officers; (ii) all current executive officers as a group; (iii) all current non-employee directors as a group; and (iv) all employees, including all current officers who are not executive officers, as a group. Except for the annual automatic grants made to non-employee directors described above under "Director Stock Options," grants under the Plan are made at the discretion of the Committee. Accordingly, future grants under the Plan are not yet determinable.
NUMBER OF SHARES SUBJECT TO EXERCISE PRICE NAME OPTIONS GRANTED PER SHARE ---- ---------------- -------------- Matthew Bucksbaum........................................... -- -- Robert Michaels............................................. 100,000 $28 John Bucksbaum.............................................. 75,000 $28 Bernard Freibaum............................................ 200,000 $28 Jon Batesole................................................ 50,000 $28 Joel Bayer.................................................. 75,000 $28 Current Executive Officers.................................. 500,000 $28 Non-Employee Directors...................................... 2,000 $31.75 All Non-Executive Officer Employees......................... -- --
CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a brief summary of the principal federal income tax consequences of awards under the Plan based upon current federal income tax laws. The Plan is not qualified under Section 401(a) of the Code. The summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences. Stock Options. A participant is not subject to federal income tax either at the time of grant or at the time of exercise of an Incentive Stock Option. However, upon exercise, the difference between the fair market value of the Shares and the exercise price is an item of tax preference subject to the possible application of the alternative minimum tax. If a participant does not dispose of shares of Common Stock acquired through the exercise of an Incentive Stock Option within one year after their receipt (and within two years after the date of grant of the stock option), he or she will be taxed only upon the sale of such shares of Common Stock, and such tax will be at the capital gains rate. The Company will not receive any tax deduction on the exercise of an Incentive Stock Option or, if the holding requirements are met, on the sale of the underlying shares of Common Stock. If there is a disqualifying disposition (i.e. one of the holding requirements is not met), the participant will be treated as receiving compensation subject to ordinary income tax in the year of the disqualifying disposition and the 20 23 Company will be entitled to a deduction for compensation expense in an amount equal to the amount included in income by the participant. The tax will generally be imposed on the difference between fair market value of the shares of Common Stock at the time of exercise and the exercise price. Any appreciation in value after the time of exercise will be taxed as capital gain and will not result in any deduction by the Company. If Non-Qualified Stock Options are granted to a participant, there are no federal income tax consequences at the time of grant. Upon exercise of the option, the participant must pay tax on ordinary income equal to the difference between the exercise price and the fair market value of the shares of Common Stock on the date of exercise. The Company will receive a commensurate tax deduction at the time of exercise. Any appreciation in value after the time of exercise will be taxed as capital gain and will not result in any deduction by the Company. Restricted Stock. A grant of Restricted Stock does not constitute a taxable event for either a participant or the Company. However, the participant will be subject to tax, at ordinary income rates, when any restrictions on ownership of the Restricted Stock lapse. The Company will be entitled to take a commensurate deduction at that time. A participant may elect to recognize taxable ordinary income at the time Restricted Stock is awarded in an amount equal to the fair market value of the Restricted Stock at the time of grant, determined without regard to any forfeiture restrictions. If such an election is made, the Company will be entitled to a deduction at that time in the same amount. Future appreciation on the Restricted Stock will be taxed at the capital gains rate when the Restricted Stock are sold. However, if, after making such an election, the Restricted Stock is forfeited, the participant will be unable to claim a deduction. Non-Employee Directors Awards. Non-employee director options will receive the same federal income tax treatment as other Non-Qualified Stock Options. The directors will recognize ordinary income equal to the fair market value of the shares of Common Stock received in lieu of directors' fees and the Company will be entitled to a deduction in the same amount. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PLAN AMENDMENT. INDEPENDENT ACCOUNTANTS The Board of Directors has selected Coopers & Lybrand L.L.P. as the independent accountants for 1997, subject to stockholder ratification. The affirmative vote of a majority of the votes cast at the Meeting, in person or by proxy, will be necessary to approve the Reappointment of Accountants. The Company expects that representatives of Coopers & Lybrand L.L.P. will be present at the Meeting and will be afforded an opportunity to make a statement if they desire to do so and to respond to appropriate questions from stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE REAPPOINTMENT OF ACCOUNTANTS. PROPOSALS OF STOCKHOLDERS Any stockholder proposal intended to be presented for consideration at the annual meeting to be held in 1998 must be received by the Company at its principal executive offices on or before December 10, 1997 in order to be included in the Company's proxy statement and form of proxy relating to that meeting. 21 24 GENERAL GROWTH PROPERTIES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS Matthew Bucksbaum, Beth Stewart and Marshall E. Eisenberg, and each of them, are hereby constituted and appointed the lawful attorneys and proxies of the undersigned, with full power of substitution, to vote and act as proxy with respect to all shares of common stock, $.10 par value, of GENERAL GROWTH PROPERTIES, INC. standing in the name of the undersigned on the Company's books at the close of business on March 28, 1997, at the Annual Meeting of Stockholders to be held at The Standard Club of Chicago, 320 South Plymouth Court, Chicago, Illinois, at 10:00 a.m., local time, on May 15, 1997, or at any postponement(s) or adjournment(s) thereof, as follows: The powers hereby granted may be exercised by any of said attorneys or proxies or their substitutes present and acting at the above-described Annual Meeting of Stockholders or any postponement(s) or adjournment(s) thereof, or, if only one be present and acting, then by that one. The undersigned hereby revokes any and all proxies heretofore given by the undersigned to vote at said meeting. CONTINUED AND TO BE SIGNED ON REVERSE SIDE ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Please mark [ X ] votes as in this example. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4. 1. ELECTION OF DIRECTORS NOMINEES: Morris Mark and Robert Michaels. FOR WITHHELD / / / / [ ] ---------------------------------------------- * For both nominees except as noted above 2. APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 210,000,000. FOR AGAINST ABSTAIN / / / / / / 3. APPROVAL OF THE PLAN AMENDMENT. FOR AGAINST ABSTAIN / / / / / / 4. APPROVAL OF THE RATIFICATION OF THE REAPPOINTMENT OF ACCOUNTANTS FOR FISCAL 1997. FOR AGAINST ABSTAIN / / / / / / 5. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or at any postponement(s) or adjournment(s) thereof. MARK HERE MARK HERE FOR ADDRESS IF YOU PLAN CHANGE AND TO ATTEND NOTE AT LEFT [ ] THE MEETING [ ] (Please sign proxy as name appears on corporate records. Joint owners should each sign personally. Trustees and others signing in a representative capacity should Signature: ____________________________ Dated: _____________, 1997 indicate the capacity in which Signature: ____________________________ Dated: _____________, 1997 they sign.)
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