SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Rule 14a-6(e)(2))
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CBL & ASSOCIATES PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[Letterhead of CBL & Associates Properties, Inc.]
CBL Center, Suite 500
2030 Hamilton Place Boulevard
Chattanooga, TN 37421-6000
March 31, 2005
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
which will be held at The Chattanoogan, 1201 South Broad Street, Chattanooga,
Tennessee, on Monday, May 9, 2005 at 4:00 p.m.(EDT).
The Notice and Proxy Statement on the following pages contain details
concerning the business to come before the meeting. Management will report on
current operations and there will be an opportunity for discussion concerning
the Company and its activities. Please sign and return your proxy card in the
enclosed envelope to ensure that your shares will be represented and voted at
the meeting even if you cannot attend. You are urged to sign and return the
enclosed proxy card even if you plan to attend the meeting.
I look forward to personally meeting all stockholders who are able to
attend.
Sincerely,
/s/ Charles B. Lebovitz
Chairman of the Board and
Chief Executive Officer
CBL & ASSOCIATES PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 9, 2005
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CBL &
Associates Properties, Inc., a Delaware corporation (the "Company"), will be
held at The Chattanoogan, 1201 South Broad Street, Chattanooga, Tennessee, on
Monday, May 9, 2005 at 4:00 p.m. (EDT) for the following purposes:
1. To re-elect two directors to serve for a term of three years and until
their respective successors are elected and qualified;
2. To act upon a proposal to approve and amendment to the Company's Amended
and Restated Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock, par value $.01 per share,
from 95,000,000 to 180,000,000 shares;
3. To act upon a proposal to ratify the selection of Deloitte & Touche LLP as
the independent registered public accountants for the Company's fiscal year
ending December 31, 2005; and
4. To consider and act upon any other matters which may properly come before
the meeting or any adjournment thereof.
In accordance with the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on March 14, 2005, as the record date
for the determination of the stockholders entitled to notice of, and to vote at,
the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Whether or not you plan to attend the meeting, we urge you to sign, date
and promptly return the enclosed Proxy in order to ensure representation of your
shares. An addressed envelope for which no postage is required if mailed in the
United States is enclosed for that purpose. Returning your Proxy will not
prevent you from voting your shares at the meeting if you desire to do so, as
your Proxy is revocable at your option.
By Order of the Board of Directors
/s/ Stephen D. Lebovitz
President and Secretary
Chattanooga, Tennessee
March 31, 2005
PROXY STATEMENT
CBL & ASSOCIATES PROPERTIES, INC.
2030 Hamilton Place Blvd.
Suite 500
CBL Center
Chattanooga, Tennessee 37421
ANNUAL MEETING OF STOCKHOLDERS
May 9, 2005
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of CBL & Associates Properties, Inc., a Delaware corporation (the "Company"),
for use at the annual meeting of stockholders (the "Annual Meeting") of the
Company to be held at The Chattanoogan, 1201 South Broad Street, Chattanooga,
Tennessee, on Monday, May 9, 2005, at 4:00 p.m. (EDT) and at any and all
postponements or adjournments thereof. Any proxy given may be revoked at any
time before it is voted by filing with the Secretary of the Company either an
instrument revoking it or a duly executed proxy bearing a later date. All
expenses of the solicitation of proxies for the Annual Meeting, including the
cost of mailing, will be borne by the Company. In addition to solicitation by
mail, officers and regular employees of the Company may solicit proxies from
stockholders by telephone, telegram or personal interview but will not receive
additional compensation for such services. The Company also intends to request
persons holding stock in their name or custody, or in the name of nominees, to
send proxy materials to their principals and request authority for the execution
of the proxies. The Company will reimburse such persons for the associated
expense.
The Company anticipates mailing proxy materials and the Annual Report for
the Company's fiscal year ended December 31, 2004, on or about March 31, 2005 to
stockholders of record as of March 14, 2005.
VOTING SECURITIES
Record Date and Shares Entitled to Vote
Only stockholders of record at the close of business on March 14, 2005, are
entitled to vote on the matters to be presented at the Annual Meeting. The
number of shares of the Company's Common Stock, par value $.01 per share
("Common Stock"), outstanding on such date and entitled to vote was 31,399,138
shares.
1
Quorum Requirements
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting with respect to those matters requiring approval
by the holders of Common Stock, but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
Votes Necessary to Approve the Proposals
The affirmative vote of the holders of a plurality of the shares of the
Common Stock present or represented at the Annual Meeting is required for the
election of directors. The approval of the proposed amendment to the Company's
Certificate of Incorporation will require the affirmative vote of the holders of
a majority of the Company's issued and outstanding shares of Common Stock,
voting as a class. The affirmative vote of the holders of a majority of the
shares of Common Stock present or represented at the Annual Meeting is required
for the ratification of the selection of the independent public accountants.
Each share of Common Stock is entitled to one vote with respect to those matters
upon which such share is to be voted.
Voting Procedures
A proxy card is being mailed to each holder of shares of the Company's
Common Stock for voting with respect to each stockholder's shares of Common
Stock. Stockholders holding shares of Common Stock should complete, sign and
return to the Company the proxy card.
Abstentions and broker non-votes (shares held by a broker or nominee which
are represented at the Annual Meeting, but with respect to which such broker or
nominee does not have discretionary authority to vote on a particular proposal)
will be counted as present at the Annual Meeting for the purpose of determining
whether or not a quorum exists. Abstentions and broker non-votes will generally
not be counted for any other purpose, except that abstentions and broker
non-votes, other than with respect to the election of directors, will generally
have the same effect as negative votes.
Unless contrary instructions are indicated on the accompanying proxy, the
shares represented thereby will be voted in accordance with the recommendations
of the Board of Directors.
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members divided into
three classes (having two, three and four members, respectively) serving
staggered three-year terms. Under the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Amended and Restated
Bylaws (the "Bylaws"), a majority of the directors must be unaffiliated
("Independent Directors") with the Company and its predecessor entity, CBL &
Associates, Inc. and its affiliates ("CBL's Predecessor"). Each year the term of
office of one class of directors expires.
Upon the recommendation of the Company's Nominating/Corporate Governance
Committee, the Board of Directors intends to present for action at the Annual
Meeting the re-election of Charles B. Lebovitz, Claude M. Ballard, Gary L.
Bryenton and Leo Fields, whose present terms expire in 2005, to serve for a term
of three years and until their successors are duly elected and shall qualify.
Mr. Lebovitz is a Director, Chairman of the Board and Chief Executive Officer of
the Company. Mr. Ballard, Mr. Bryenton and Mr. Fields are three of the Company's
five Independent Directors. Mr. Ballard currently serves as the Chairman of the
Company's Compensation Committee, and Mr. Bryenton currently serves as the
Chairman of the Company's Nominating/Corporate Governance Committee.
2
Unless authority to vote for such directors is withheld, the enclosed proxy
will be voted for such persons, except that the persons designated as proxies
reserve discretion to cast their votes for other persons in the unanticipated
event that any of such nominees is unable or declines to serve.
Nominees
Set forth below is information with respect to the
nominees for election:
Name Age Current Position*
- --------------------------- ------ ---------------------------------
Charles B. Lebovitz 68 Chairman of the Board of
Directors and Chief Executive
Officer
Claude M. Ballard 75 Director
Leo Fields 76 Director
Gary L. Bryenton 65 Director
- --------------------
<FN>
* The position shown represents the individual's position with the
Company and with CBL & Associates Management, Inc., a Delaware
corporation (the "Management Company"), through which the Company's
property management and development activities are conducted.
</FN>
CHARLES B. LEBOVITZ has served as Chairman of the Board and Chief Executive
Officer of the Company since the completion of its initial public offering and
is Chairman of the Executive Committee of the Board of Directors. Mr. Lebovitz
also served as President of the Company until February 1999. Prior to the
Company's formation, he served in a similar capacity with CBL's Predecessor. Mr.
Lebovitz has been involved in shopping center development since 1961 when he
joined his family's development business. In 1970, he became affiliated with
Arlen Realty & Development Corp. ("Arlen") where he served as President of
Arlen's shopping center division, and, in 1978, he founded CBL's Predecessor
together with his associates (the "Associates"), including John N. Foy and Ben
S. Landress. Mr. Lebovitz is an Advisory Director of First Tennessee Bank, N.A.,
Chattanooga, Tennessee and a National Vice Chairman of the United Jewish Appeal.
Mr. Lebovitz has previously served as a Trustee, Vice President (Southern
Division) and Chairman of the ICSC.
CLAUDE M. BALLARD, CRE, M.A.I. has served as a Director of the Company
since the completion of its initial public offering and is Chairman of the
Compensation Committee and a member of the Audit and Nominating/Corporate
Governance Committees of the Board of Directors. Mr. Ballard has served as a
general partner, limited partner and senior consultant of Goldman Sachs & Co.
and as a Senior Vice President in the real estate division of the Prudential
Insurance Company of America. He is currently a Director of Quapaw Council, Boy
Scouts of America, Horizon Hotel Corp. and Research Solutions, Inc. Mr. Ballard
is a member of the Board of Directors of St. Vincent's Infirmary, Little Rock,
Arkansas. In 1999, the United States Tax Court determined that Mr. Ballard had
underpaid federal taxes and underreported income over a period of years ending
in 1989 as result of participation in transactions found by the Tax Court to
have involved serious financial improprieties. (Investment Research Associates,
Ltd. and Subsidiaries, et al v. Commissioner of Internal Revenue Service, T.C.
Memo 1999-407). Because of the nature of the transactions, the Tax Court upheld
the imposition of penalties under Internal Revenue Code Section 6663 and its
predecessors, and Mr. Ballard has paid the taxes, penalties and interest at
issue. The Tax Court's decision was upheld by the United States Court of Appeals
for the Eleventh Circuit on February 13, 2003. Upon further appeal of the case
to the United States Supreme Court (the "Court"), the Court, by opinion dated
March 7, 2005, reversed the decision of the Eleventh Circuit Court of Appeals
and remanded the case for further proceedings consistent with the Court's
decision. As of the date of this proxy statement, the Company has no information
as to whether the Internal Revenue Service will pursue a retrial of the case.
3
LEO FIELDS has served as a Director of the Company since the completion of
its initial public offering and is a member of the Executive Committee of the
Board of Directors. Mr. Fields is Co-Chairman of Weisberg & Fields, Inc., an
investment advisory firm he started in 1991. From 1984 through 1991, Mr. Fields
directed Leo Fields Interests, a private investment firm. He was affiliated with
Zale Corporation from 1947 until his retirement in 1984, serving, from 1981 to
1984, as Vice Chairman and a member of Zale's Executive Committee. He is a
Trustee of the Dallas Home for the Jewish Aged Endowment Foundation and serves
on the Executive Committee of Legacy Senior Communities, Inc. Mr. Fields is also
a Director of the M. B. and Edna Zale Foundation.
GARY L. BRYENTON joined the Company as a Director on January 31, 2001, in
accordance with the terms of the Company's acquisition of a portfolio of
properties from Jacobs Realty Investors Limited Partnership, a Delaware limited
partnership ("JRI") and certain of its affiliates and partners (collectively
referred to herein as the "Jacobs Group" and the acquisition is referred to
herein as the "Jacobs Acquisition"). Mr. Bryenton is Chairman of the Companys'
Nominating/Corporate Governance Committee and a member of the Audit Committee of
the Board of Directors. Mr. Bryenton is a Senior Partner of the law firm of
Baker & Hostetler LLP and has formerly served as the firm's Executive Partner
and Chief Operating Officer. He currently serves as Chairman of the Board of
Trustees of Heidelberg College and is a member of the Boards of Trustees of the
Cleveland Orchestra, the Rock and Roll Hall of Fame and Museum and the
Rutherford B. Hayes Presidential Center.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF THE
FOUR DIRECTORS NAMED ABOVE
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Directors and Executive Officers
Set forth below is information with respect to the directors and executive
officers of the Company (other than Charles B. Lebovitz, Claude M. Ballard, Gary
L. Bryenton and Leo Fields):
Term
Name Expires (1) Age Current Position(2)
- ---- ----------- --- -------------------
Stephen D. Lebovitz 2007 44 Director, President and Secretary
John N. Foy 2006 61 Vice Chairman of the Board of Directors, Chief
Financial Officer and Treasurer
Martin J. Cleary 2006 69 Director
Winston W. Walker 2007 61 Director
Matthew S. Dominski 2006 50 Director
Ben S. Landress -- 77 Executive Vice President - Management
Ronald L. Fullam -- 62 Senior Vice President - Development
Ronald S. Gimple -- 65 Senior Vice President and General Counsel
Michael I. Lebovitz -- 41 Senior Vice President - Mall Projects
Charles H. May, II -- 61 Senior Vice President - Development
Farzana K. Mitchell -- 53 Senior Vice President - Finance
Jerry L. Sink -- 54 Senior Vice President - Mall Management
Eric P. Snyder -- 55 Senior Vice President and Director of Corporate
Leasing
Augustus N. Stephas -- 62 Senior Vice President - Accounting and Controller
R. Stephen Tingle -- 59 Senior Vice President - Community Center
Development
Charles W.A. Willett, Jr. -- 55 Senior Vice President - Real Estate Finance
- ---------------
<FN>
(1) Indicates expiration of term as a director.
(2) The position shown represents the individual's position with the Company
and with the Management Company.
</FN>
5
STEPHEN D. LEBOVITZ has served as President and Secretary of the Company
since February 1999 and as a Director of the Company since the completion of its
initial public offering in November 1993. Since joining CBL's Predecessor in
1988, Mr. Lebovitz has also served as Executive Vice President -
Development/Acquisitions, Executive Vice President - Development, Senior Vice
President - New England Office and as Senior Vice President - Community Center
Development and Treasurer of the Company. Before joining CBL's Predecessor, Mr.
Lebovitz was affiliated with Goldman, Sachs & Co. from 1984 to 1986. He is
President of the Boston Jewish Family and Children's Service, a member of the
Board of Directors of the Combined Jewish Philanthropic, Boston, Massachusetts
and a member of the Board of Directors of the Children's Hospital Trust, Boston,
Massachusetts. He is a Trustee and Divisional Vice President of the
International Council of Shopping Centers ("ICSC"). Stephen D. Lebovitz is a son
of Charles B. Lebovitz and a brother of Michael I. Lebovitz.
JOHN N. FOY has served as Vice Chairman of the Board of Directors and
Treasurer of the Company since February 1999 and as a Director and Chief
Financial Officer of the Company since the completion of its initial public
offering in 1993. Until February 1999, he served as Executive Vice President -
Finance and Secretary of the Company. Mr. Foy is a member of the Executive
Committee of the Board of Directors. Prior to the Company's formation, he served
in similar executive capacities with CBL's Predecessor. Mr. Foy has been
involved in the shopping center industry since 1968 when he joined the Lebovitz
family's shopping center development business. In 1970, he became affiliated
with the shopping center division of Arlen, and, in 1978, joined Charles B.
Lebovitz as an Associate in establishing CBL's Predecessor. Mr. Foy served as
Chairman of the Board of First Fidelity Savings Bank in Crossville, Tennessee
from December 1985 until April 1994. Mr. Foy currently serves as a member of the
Advisory Board of AmSouth Bank of Chattanooga, Tennessee and as a Director of
Chattanooga Neighborhood Enterprise, a non-profit organization based in
Chattanooga, Tennessee. Mr. Foy is also a member of the Board of Governors of
the National Association of Real Estate Investment Trusts (NAREIT).
MARTIN J. CLEARY joined the Company as Director on January 31, 2001, in
accordance with the terms of the Jacobs Acquisition. Mr. Cleary is a member of
the Company's Compensation Committee. Mr. Cleary is the former President and
Chief Operating Officer of The Richard E. Jacobs Group, Inc. He is currently a
Director and member of the Human Resources Committee of Guardian Life Insurance
Company and a Director and member of the Audit Committee of the Lamson &
Sessions Company. Mr. Cleary is also an ex-officio Trustee and former Chairman
of the ICSC.
MATTHEW S. DOMINSKI joined the Company as a Director on February 2, 2005,
when he was appointed to the Board of Directors to fill the un-expired term of
William J. Poorvu, who retired from CBL's Board in July 2004. Mr. Dominski is
joint-owner of Polaris Capital, LLC, a Chicago, Illinois based real estate
investment firm. From 1993 through 2000, Mr. Dominski served as Chief Executive
Officer of Urban Shopping Centers (Urban). Urban was formerly one of the largest
regional mall property companies in United States and was a publicly traded real
estate investment trust (REIT) listed on the New York Stock Exchange and the
Chicago Exchange. Following the purchase of Urban by Rodamco North America in
2000, Mr. Dominski served as Urban's President until 2002. In 2003, Mr. Dominski
formed Polaris Capital, LLC. From 1998 until 2004, Mr. Dominski served as a
member of the Board of Trustees of the ICSC.
WINSTON W. WALKER has served as a Director of the Company since the
completion of its initial public offering. He is a member of the Compensation
and Nominating/Corporate Governance Committees of the Board of Directors and is
Chairman of the Company's Audit Committee. Mr. Walker served as President and
Chief Executive Officer of Provident Life and Accident Insurance Company of
America ("Provident") from 1987 until October 1, 1993, and served in various
other capacities with Provident from 1974 to 1987. Mr. Walker is a Director, a
member of the Audit Committee and Chairman of the Compensation Committee of
American Campus Communities, Inc. of Austin, Texas.
BEN S. LANDRESS serves as Executive Vice President - Management of the
Company. He has held that position since January 1997. Prior to that time, Mr.
Landress served as Senior Vice President - Management and prior thereto, he
served in a similar capacity with CBL's Predecessor. Mr. Landress directs the
day-to-day management of the Company's properties and is responsible for general
corporate administration. Mr. Landress has been involved in the shopping center
6
business since 1961 when he joined the Lebovitz family's development business.
In 1970, he became affiliated with Arlen's shopping center division, and, in
1978, joined Mr. Lebovitz as an Associate in establishing CBL's Predecessor.
RONALD L. FULLAM serves as Senior Vice President - Development of the
Company. He has held that position since January 1997. Prior to that time, Mr.
Fullam served as Vice President - Development of the Company. Mr. Fullam joined
Arlen's shopping center development division as a project manager in August 1977
and CBL's Predecessor as a Vice President upon its formation in 1978.
RONALD S. GIMPLE serves as Senior Vice President and General Counsel of the
Company. He has held these positions since January 1997. Mr. Gimple joined the
Company in 1994 as Vice President - Development. Prior to joining the Company,
Mr. Gimple served as a Vice President of The Edward J. DeBartolo Corporation,
from 1987 to 1994, and, prior to 1987, he served as General Counsel of Petrie
Store Corporation, Vice President and Real Estate Counsel of BATUS Retail Group
and Vice President and General Counsel of General Growth Company.
MICHAEL I. LEBOVITZ serves as Senior Vice President - Mall Projects of the
Company. He has held that position since January 1997. Prior to that time, Mr.
Lebovitz served as Vice President - Development and as a project manager for the
Company. Mr. Lebovitz joined CBL's Predecessor in 1988 as a project manager for
CoolSprings Galleria in Nashville, Tennessee, and was promoted to Vice President
in 1993. Prior to joining CBL's Predecessor, he was affiliated with Goldman,
Sachs & Co. from 1986 to 1988. He is the immediate past President of the Jewish
Community Federation of Greater Chattanooga, serves as Campaign FRD Pillar Chair
and a Board Member of United Jewish Communities and is a Board Member of the
Chattanooga United Way. Michael I. Lebovitz is a son of Charles B. Lebovitz and
a brother of Stephen D. Lebovitz.
CHARLES H. MAY, II serves as a Senior Vice President - Development of the
Company. Mr. May joined the Company in June 2003. Prior to joining the Company,
he served as Vice President - Real Estate (2002 - 2003) and Senior Director -
Real Estate (1994 - 2002), for Sears Roebuck & Co. Prior to 1994, Mr. May served
in various capacities, including Vice President, Secretary and General Counsel
and Senior Vice President - Development, with Homart Development and served as
Vice President of Coldwell Banker Commercial Real Estate Group. Mr. May is a
member of the ICSC and the Urban Land Institute.
FARZANA K. MITCHELL serves as Senior Vice President - Finance of the
Company. She has held that position since September 2000. Prior to joining the
Company, Ms. Mitchell was an officer of Lend Lease Real Estate Investments in
Atlanta, Georgia (the successor of Equitable Real Estate Investment Management,
Inc. ("Equitable")). During her service with Equitable, she held various
positions from 1982 to 2000 and she served as Deputy Portfolio Manager for the
Equitable's portfolio of real estate mortgages from 1995 to 2000. From 1976 to
1982, Ms. Mitchell served as Assistant Treasurer of IRT Property Company, a real
estate investment trust. Ms. Mitchell is a certified public accountant, licensed
in the state of Georgia.
JERRY L. SINK serves as Senior Vice President - Mall Management for the
Company. He has held that position since February 1998. Prior to that time, Mr.
Sink served as Vice President - Mall Management. Mr. Sink has served as Vice
President of Retail Asset Management for Equitable Real Estate, Chicago,
Illinois, from January 1988 to June 1993 and, prior to June 1988, he was
affiliated with General Growth Companies, Inc. as Vice President of Management.
Mr. Sink holds the designation of Senior Certified Shopping Center Manager
("SCSM") as recognized by the ICSC.
ERIC P. SNYDER serves as Senior Vice President and Director of Corporate
Leasing for the Company. He has held these positions since January 1997. Mr.
Snyder joined CBL's Predecessor as a project manager in 1978 and was promoted to
Vice President in 1984 and to Vice President and Director of Corporate Leasing
in 1992. From 1974 to 1978, Mr. Snyder was a leasing agent and project manager
for Arlen's shopping centers.
7
AUGUSTUS N. STEPHAS serves as Senior Vice President - Accounting and
Controller for the Company. He has held these positions since January 1997. Mr.
Stephas joined CBL's Predecessor in July 1978 as Controller and was promoted to
Vice President in 1984. From 1970 to 1978, Mr. Stephas was affiliated with the
shopping center division of Arlen, first as accountant and later as assistant
controller.
R. STEPHEN TINGLE serves as Senior Vice President - Community Center
Development for the Company. He has held that position since January 2000. Prior
to that time, Mr. Tingle served as Vice President and Director of Community
Center Development - Chattanooga Office. Mr. Tingle joined CBL's Predecessor in
1986 as a project manager for community and neighborhood shopping centers and
was promoted to Vice President of Development in 1988. From 1978 to 1986, Mr.
Tingle engaged in the practice of law.
CHARLES W.A. WILLETT, JR. serves as Senior Vice President - Real Estate
Finance for the Company. He has held that position since January 2002. Mr.
Willett was promoted to Vice President - Real Estate Finance in 1996 and held
that position until his promotion to Senior Vice President as stated above.
Prior to 1996, Mr. Willett participated in the Company's finance department and
he served in a similar capacity with CBL's Predecessor prior to 1993. Mr.
Willett joined CBL's Predecessor in 1978 and prior thereto, he was affiliated
with Arlen in its finance and accounting departments.
Operation of the Company's Business
The Company operates through its two wholly-owned subsidiaries, CBL
Holdings I, Inc., a Delaware corporation ("CBL Holdings I"), and CBL Holdings
II, Inc., a Delaware corporation ("CBL Holdings II"). Through the referenced
subsidiaries, the Company currently holds a 1.6% sole general partner interest
and a 53.4% limited partner interest in CBL & Associates Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"). See "Certain
Relationships and Related Transactions - Operating Partnership Agreement; CBL
Rights". The Company conducts substantially all of its business through the
Operating Partnership.
Certain Terms of Jacobs Acquisition
In connection with the Jacobs Acquisition, the Company agreed to expand its
Board of Directors from seven to nine members and to nominate two designees of
JRI as members of the Board. Martin J. Cleary and Gary L. Bryenton were
appointed to the Board as these initial designees. JRI will continue to be
entitled to nominate two Board members until JRI, together with Richard E.
Jacobs and certain members of his family and certain trusts for the benefit of
the families of Richard E. Jacobs and David H. Jacobs (collectively, the "Jacobs
Persons"), as a group, beneficially own fewer than 6.78 million special common
units in the Operating Partnership ("SCUs") and shares of Common Stock,
following which JRI will be entitled to nominate only one Board member. JRI will
no longer be entitled to nominate any Board members if the Jacobs Persons, as a
group, beneficially own fewer than 3.34 million SCUs and shares of Common Stock.
CBL's Predecessor and certain of the Company's executive officers have agreed to
vote their shares in favor of JRI's designees until the twelfth anniversary of
the Jacobs Acquisition. The Jacobs Persons, together with Martin J. Cleary, have
agreed to a 12-year standstill period during which they will not seek to acquire
control of the Company and will not participate in a group which seeks to
acquire such control. The Jacobs Persons, together with Martin J. Cleary, also
agreed until the twelfth anniversary of the Jacobs Acquisition to vote their
shares in favor of the election of the Board's nominees to the Board of
Directors who are running unopposed and uncontested.
Corporate Governance Matters
Overview. The Board of Directors has adopted guidelines on corporate
governance (including director independence criteria), committee charters, and a
code of business conduct and ethics setting forth the Company's corporate
governance principles and practices. These documents can be accessed in the
"Investor Relations - Corporate Governance" section of the Company's website at
www.cblproperties.com or by directing a written request for copies to the
Company at CBL & Associates Properties, Inc., CBL Center, Suite 500, 2030
8
Hamilton Place Boulevard, Chattanooga, Tennessee 37421-6000, Attention: Director
of Investor Relations.
Director Independence. The Board has adopted a set of director independence
standards ("Director Independence Standards") for evaluating the independence of
each of the Directors in accordance with the requirements of the Securities and
Exchange Commission ("SEC") and of the New York Stock Exchange ("NYSE")
corporate governance standards. In March 2005, the Board undertook its annual
review of Director independence pursuant to NYSE Rule 303A.02(a) and pursuant to
the Company's Director Independence Standards. During this process, the Board
reviewed whether any Director has any relationship with the Company's
independent registered public accountants that would preclude independence under
SEC and NYSE rules, or any material relationship with the Company (either
directly or as a partner, member, shareholder or officer of an organization that
has a relationship with the Company) which could (directly or indirectly)
materially impact the ability of such director or nominee to exert his
independent judgment and analysis as a member of the Board. As a result of this
review, the Board affirmatively determined that six of the Company's nine
Directors were independent under the standards of the SEC and NYSE and as set
forth in the Company's Director Independence Standards. Messrs. Charles B.
Lebovitz, Stephen D. Lebovitz, and John N. Foy, who are executive officers of
the Company and employees of the Management Company, were not deemed
independent. In making the independence determinations with respect to the other
six directors, the Board considered the following matters and determined that
they do not interfere with the independence of the directors in question: (i)
with respect to Mr. Cleary and Mr. Bryenton, the Company's contractual
commitments in connection with the terms of the Jacobs Acquisition as described
above and (ii) with respect to Mr. Fields, the fact that he is Co-Chairman of
Weisberg & Fields, Inc., an investment advisory firm that provides certain
advisory services, from time to time, to Charles B. Lebovitz and members of his
family. The full text of the Director Independence Standards is as follows:
A. GENERAL INDEPENDENCE REQUIREMENTS
In determining whether or not any director or nominee for director may
be considered "independent", the Board shall apply the following
criteria:
(1) No director or nominee shall be deemed "independent"
unless the Board affirmatively determines that the director or nominee
satisfies the requirements stated herein and has no material
relationship with the Company (either directly or as a partner, member,
shareholder or officer of an organization that has a relationship with
the Company). For purposes of this test, a relationship with the
Company shall be deemed to be a "material" relationship which precludes
a determination that a director or nominee is independent if, in the
opinion of the Board and in light of all the relevant facts and
circumstances, such relationship (directly or indirectly) could
materially impact the ability of such director or nominee to exert his
or her independent judgment and analysis as a member of the Board. For
purposes hereof, ownership of the Company's stock (even in a
significant amount) or ownership of securities convertible to the
Company's stock shall not be viewed, in and of themselves, as a bar to
a finding of independence. To assist in this determination, the Company
shall periodically (at least annually and prior to any nominee becoming
a director for his or her initial term as a director) deliver to the
directors and/or nominees for directorships a Directors and Officers
Questionnaire designed to elicit information from such director or
nominee as to material relationships and other information relative to
these Independence Standards; and
(2) In addition, to be considered "independent," a director or
nominee must satisfy all other independence criteria for directors of a
publicly traded company which are now, or may be hereafter, set forth
in applicable federal statutes and rules promulgated by the SEC, and in
the related listing standards promulgated by the NYSE and any other
exchange upon which the Company's stock may be listed, as such statutes
and/or rules and listing standards may be revised or amended from time
to time.
9
B. ADDITIONAL AUDIT COMMITTEE INDEPENDENCE REQUIREMENTS
In determining whether or not any director or nominee
satisfies the "independence" requirement for Audit Committee
membership, in addition to satisfying all of the requirements set forth
in Paragraph A hereof, such director also must satisfy the following:
Such director or nominee must satisfy all additional requirements for
the independence of audit committee members of publicly traded
companies which are now, or may be hereafter, set forth in applicable
federal statutes and rules promulgated by the SEC, and in the related
listing standards promulgated by the NYSE and any other exchange upon
which the Company's stock may be listed, as such statutes and/or rules
and listing standards may be revised or amended from time to time.
The Director Independence Standards also are included as an exhibit to the
Company's guidelines on corporate governance, which can be found in the
"Investor Relations - Corporate Governance" section of the Company's website at
www.cblproperties.com. A copy may also be obtained upon request from the
Company's Director of Investor Relations at the address provided above.
Executive Sessions for Independent Directors. In accordance with the NYSE
Rule 303A.03, the Independent Directors of the Company will meet from time to
time in scheduled executive sessions without management participation. The Board
of Directors has designated Winston W. Walker as lead Independent Director,
solely for the purpose of chairing these executive sessions. The Independent
Directors met in four executive sessions during 2004.
Communicating with the Board of Directors. The Company provides a process
for stockholders to send communications to the Board or any of the Directors.
Stockholders may send written communication to the Board or any of the Directors
c/o the Corporate Secretary, CBL & Associates Properties, Inc., 2030 Hamilton
Place Blvd., Suite 500, CBL Center, Chattanooga, Tennessee, 37421-6000. All
communications will be compiled by the Company's Corporate Secretary and
submitted to the Board or the individual Directors(s) to whom such communication
is addressed. It is the Company's policy that all Directors attend the Annual
Meeting unless they are prevented from attending due to scheduling conflicts or
important personal or business reasons; provided, however, it is the Company's
policy that a majority of the Directors (including a majority of the Company's
Independent Directors) attend each Annual Meeting. All of the Company's
then-incumbent Directors attended the 2004 Annual Meeting of Stockholders.
Code of Business Conduct and Ethics. The Board has adopted an Amended and
Restated Code of Business Conduct and Ethics (the "Code of Business Conduct")
that applies to all Directors, officers and employees, including the Company's
principal executive officer, principal financial officer and principal
accounting officer. The Code of Business Conduct is available in the "Investor
Relations - Corporate Governance" section of the Company's website at
www.cblproperties.com, or by written request to the Company's Director of
Investor Relations at the address provided above. The purpose of the Code of
Business Conduct is to provide a codification of standards that is reasonably
designed to deter wrongdoing and to promote accountability for and adherence to
the standards of the Code, including honest and ethical conduct; the ethical
handling of actual or apparent conflicts of interest between personal and
professional relationships; full, fair, accurate, timely and understandable
disclosure in the Company's filings with the SEC and in other public
communications by the Company; and compliance with all applicable rules and
regulations that apply to the Company and to its Directors, officers and
employees.
10
Board of Directors' Meetings and Committees
The Board of Directors has established standing Executive, Audit,
Compensation and Nominating/ Corporate Governance Committees. The Board of
Directors met thirteen times and took action by unanimous written consent three
times during 2004. Each director attended more than 75% of the aggregate of (i)
the total number of Board meetings and (ii) meetings of Board committees on
which the director served at the time during 2004.
Executive Committee. The Executive Committee is comprised of Charles B.
Lebovitz (Chairman), John N. Foy and Leo Fields. The Executive Committee may
exercise all the powers and authority of the Board of Directors of the Company
in the management of the business and affairs of the Company as permitted by
law; provided, however, unless specifically authorized by the Board of
Directors, the Executive Committee may not exercise the power and authority of
the Board of Directors with respect to (i) the declaration of dividends, (ii)
issuance of stock, (iii) amendment to the Company's Certificate of Incorporation
or Bylaws, (iv) filling vacancies on the Board of Directors, (v) approval of
borrowings in excess of $40 million per transaction or series of related
transactions, (vi) hiring executive officers, (vii) approval of acquisitions or
dispositions of property or assets in excess of $40 million per transaction and
(viii) certain transactions between the Company and its directors and officers
and certain sales of real estate and reductions of debt that produce
disproportionate tax allocations to CBL's Predecessor pursuant to the Company's
Bylaws. The Executive Committee met four times during 2004.
Audit Committee. The Audit Committee is comprised of Winston W. Walker
(Chairman), Claude M. Ballard and Gary L. Bryenton, all of whom are Independent
Directors pursuant to the independence requirements of Sections 303A.02 and
303A.07(b) of the listing standards of the NYSE as currently applicable. The
Company does not have any set policy in regard to the number of audit committees
on which its Audit Committee members may serve. The Audit Committee operates
pursuant to a written amended and restated charter adopted by the Board of
Directors on February 3, 2004. A copy of the amended and restated charter is
available and can be accessed in the "Investor Relations - Corporate Governance"
section of the Company's website at www.cblproperties.com. The Audit Committee
is responsible for the engagement of independent public accountants and the
plans and results of the audit engagement. The Audit Committee approves audit
and non-audit services provided by the independent public accountants and the
fees therefore and reviews the adequacy of the Company's internal accounting
controls as well as the Company's accounting policies and results. The Audit
Committee met six times during 2004.
Compensation Committee. The Compensation Committee is comprised of Claude
M. Ballard (Chairman), Winston W. Walker and Martin J. Cleary, all of whom are
Independent Directors. The Compensation Committee operates pursuant to a written
charter adopted by the Board of Directors on February 3, 2004. A copy of the
charter is available and can be accessed in the "Investor Relations - Corporate
Governance" section of the Company's website at www.cblproperties.com. The
Compensation Committee reviews and approves compensation programs generally and,
specifically, salaries, bonuses, stock awards and stock options for officers of
the Company of the level of vice president or higher. The Compensation Committee
administers the Amended and Restated CBL & Associates Properties, Inc. Stock
Incentive Plan (the "Stock Incentive Plan"). The Compensation Committee met two
times and took action by unanimous written consent once during 2004.
Nominating/Corporate Governance Committee. The Nominating/Corporate
Governance Committee is comprised of Gary L. Bryenton (Chairman), Claude M.
Ballard and Winston W. Walker, all of whom are Independent Directors. The
Nominating/Corporate Governance Committee operates pursuant to a written charter
adopted by the Board of Directors on February 3, 2004. A copy of the charter is
available and can be accessed in the "Investor Relations - Corporate Governance"
section of the Company's website at www.cblproperties.com. The
Nominating/Corporate Governance Committee reviews and makes recommendations to
the Board of Directors regarding various aspects of the Board of Directors' and
the Company's governance processes and procedures. The Nominating/Corporate
Governance Committee also recommends candidates for election to fill vacancies
on the Board, including consideration of the renominations of members whose
terms are due to expire. The Nominating/Corporate Governance Committee requires
a majority of the Company's directors to be "independent," in accordance with
applicable requirements of the Company's Certificate of Incorporation and Bylaws
11
as well as rules of the SEC and NYSE (including certain additional independence
requirements for Audit Committee members). A set of uniform Independence
Standards, which was used in making all such Independent Director
determinations, is included in the Company's Corporate Governance Guildelines, a
copy of which is available on the Company's website at www.cblproperties.com. In
addition, the Nominating/Corporate Governance Committee considers the breadth of
a candidate's business and professional skills and experiences, diversity of
background, reputation for personal integrity, and ability to devote sufficient
time to Board service, as well as the Company's needs for particular skills,
insight and/or talents on the Board of Directors. For incumbent directors whose
terms of office are set to expire, the Nominating/Corporate Governance Committee
reviews such directors' overall service during their term, including the number
of meetings attended, level of participation and quality of performance. With
respect to the Board seats presently held by Mr. Cleary and Mr. Bryenton, the
Nominating/Corporate Governance Committee also considers the Company's
contractual commitments in connection with the terms of the Jacobs Acquisition,
as discussed above.
The Nominating/Corporate Governance Committee will consider candidates for
Board of Directors' seats proposed by stockholders. Any such proposals should be
made in writing to CBL & Associates Properties, Inc., 2030 Hamilton Place Blvd.,
Suite 500, CBL Center, Chattanooga, Tennessee, 37421-6000, Attention: Corporate
Secretary, and must be received no later than December 1, 2005, in order to be
considered for the company's 2006 Annual Meeting. In order to be considered by
the Nominating/Corporate Governance Committee, any candidate proposed by
stockholders will be required to submit appropriate biographical and other
information equivalent to that required of all other director candidates. The
Nominating/Corporate Governance Committee does not intend to alter the manner in
which it evaluates candidates on the criteria set forth above based on whether
or not the candidate was recommended by a stockholder. The Nominating/Corporate
Governance Committee met two times in 2004.
Compensation of Directors
During 2004, each Director not employed by the Company (a "Non-Employee
Director") received from the Company an annual fee of $25,000. In addition to
the annual fee, each Non-Employee Director received a meeting fee of $1,500 for
each Board, Compensation Committee and Nominating/Corporate Governance Committee
meeting attended and $500 for each telephonic Board meeting attended and
reimbursement of expenses incurred in attending meetings. In addition, but with
the exception of the Non-Employee Director who was Chairman of the Audit
Committee, each Non-Employee Director received from the Company a fee of $1,500
for each Audit Committee meeting attended. Each Non-Employee Director serving as
a member of the Executive Committee and the Non-Employee Director serving as
Chairman of the Audit Committee received from the Company a monthly fee of $750
in lieu of meeting fees for their participation on the Executive and Audit
Committees in 2004.
Effective as of January 1, 2005, fees to Non-Employee Directors were
increased such that each Non-Employee Director shall receive from the Company an
annual fee of $27,500 and a fee of $1,500 for each Board, Compensation and
Nominating/Corporate Governance Committee meeting attended. In addition, but
with the exception of the Non-Employee Director who is Chairman of the Audit
Committee, each Non-Employee Director shall receive from the Company a fee of
$1,500 for each Audit Committee meeting attended. Each Non-Employee Director
shall receive a fee of $750 for each telephonic Board meeting. Non-employee
directors also receive reimbursement of any expenses incurred in attending
meetings or participating in telephonic meetings. Effective as of January 1,
2005, each Non-Employee Director serving as a member of the Executive Committee
shall receive from the Company a monthly fee of $750, and the Non-Employee
Director serving as Chairman of the Audit Committee shall receive a monthly fee
of $2,000, in lieu of meeting fees for their participation on the Executive and
Audit Committees.
Each fiscal year of the Company, Non-Employee Directors receive either an
annual grant of options to purchase 500 shares of Common Stock having an
exercise price equal to 100% of the fair market value of the shares of Common
Stock on December 31 of such fiscal year or up to 500 shares of restricted
Common Stock of the Company. For 2004, each Non-Employee Director received 250
shares of restricted Common Stock of the Company with a value (on the date of
grant, January 3, 2005) of $75.44 per share, the average of the high and low
12
trading prices of the Company's Common Stock as reported on the NYSE on January
3, 2005. The restrictions on shares of Common Stock received by the Non-Employee
Directors are set forth in the Stock Incentive Plan and provide that such shares
may not be transferred during the Non-Employee Director's term and for one year
thereafter. Each holder of a Non-Employee Director option granted pursuant to
the above-stated arrangement has the same rights as other holders of options in
the event of a change in control. Options granted to the Non-Employee Directors
(i) shall have a term of 10 years from date of grant, (ii) are 100% vested upon
grant, (iii) are non-forfeitable prior to the expiration of the term except upon
the Non-Employee Director's conviction for any criminal activity involving the
Company or, if non-exercised, within one year following the date the
Non-Employee Director ceases to be a director of the Company, and (iv) are
non-transferable.
In addition, any person who becomes a Non-Employee Director will receive an
initial grant of 500 shares of restricted Common Stock upon joining the Board of
Directors.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information available to the Company as of
March 14, 2005, with respect to the ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each named
executive officer of the Company, as defined below, and (iv) all directors and
executive officers as a group. Except as otherwise indicated, each person named
below has sole investment and voting power with respect to the securities shown.
Except as otherwise indicated, the address of each person is the Company's
address.
Number of Rule 13d-3 Fully-Diluted
Shares(1) Percentage(1) Percentage(2)
--------------- --------------- ---------------
FMR Corporation (3) .......................................... 4,401,812 14.02% 7.72%
82 Devonshire St.
Boston, Massachusetts 02109
Cohen & Steers Capital Management, Inc.(4).................... 1,727,348 5.50% 3.03%
757 Third Avenue
New York, New York 10017-2013
Jacobs Realty Investors Limited Partnership, and affiliates(5) 11,922,626 27.52% 7.72%
25425 Center Ridge Road
Cleveland, OH 44145-4122
CBL & Associates, Inc.("CBL's Predecessor")(6)................ 8,828,028 22.85% 13.74%
Charles B. Lebovitz(7)........................................ 9,800,631 24.80% 15.04%
John N. Foy(8)................................................ 546,855 1.72% *
Stephen D. Lebovitz(9)........................................ 528,948 1.66% *
Eric P. Snyder(10)............................................ 178,680 * *
Augustus N. Stephas(11)....................................... 74,084 * *
Martin J. Cleary (12)......................................... 222,426 * *
619 Ocean Avenue
Sea Girt, New Jersey 08750
Leo Fields(13)................................................ 65,650 * *
c/o Weisberg & Fields, Inc.
8750 North Central Expressway
Suite 1010
Dallas, Texas 75231-6409
Claude M. Ballard(14)......................................... 56,450 * *
1421 N. University
Little Rock, Arkansas 72207
Winston W. Walker(15)......................................... 38,950 * *
13450 N. Kachina Drive
Tucson, Arizona 85737
Matthew S. Dominski(16)....................................... 500 * *
c/o Polavis Capital LLC
1033 Skokie Boulevard
Suite 660
Northbrook, Illinois 60062
Gary L. Bryenton(17).......................................... 2,450 * *
Baker & Hostetler LLP
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
All executive officers and directors as a group (20 persons).. 11,933,872 29.44% 18.07%
<FN>
* Less than 1%
</FN>
14
(1) The Company conducts all of its business activities through Operating
Partnership. Pursuant to the second amended and restated partnership
agreement of the Operating Partnership and all subsequent amendments
thereto (collectively, the "Operating Partnership Agreement"), each of the
partners of the Operating Partnership, which include, among others, CBL's
Predecessor, certain of the executive officers named in this Proxy
Statement and the holders of SCUs, and subject to the terms of SCUs as
outlined below, has the right ("CBL Rights") to exchange all or a portion
of its common partnership units in the Operating Partnership for shares of
Common Stock or their cash equivalent, at the Company's election. Pursuant
to the Jacobs Acquisition, on January 31, 2001 and in March, 2002, the
Operating Partnership issued to the Jacobs Group and certain third parties
12,358,187 SCUs and 499,730 SCUs, respectively, of the Operating
Partnership. SCUs may, at any time after the earlier of (i) January 31,
2004, or (ii) the death of the beneficial owner of the SCUs (the "Exchange
Date"), be exchanged for cash, shares of the Company's Common Stock (on a
one-for-one basis) or any combination of cash or shares of Common Stock, at
the Company's election. Under the terms of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), shares of
Common Stock that may be acquired within 60 days are deemed outstanding for
purposes of computing the percentage of Common Stock owned by a
stockholder. Therefore, for purposes of Rule 13d-3 of the Exchange Act,
percentage ownership of the Common Stock is computed based on the sum of
(i) 31,399,138 shares of Common Stock actually outstanding as of March 14,
2005, (ii) as described in the accompanying notes, each individual's share
of 25,630,561 shares of Common Stock that may be acquired upon exercise of
CBL Rights by the individual or entity whose percentage of share ownership
is being computed (but not taking account of the exercise of CBL Rights by
any other person or entity) and (iii) as described in the accompanying
notes, each individual's share of 1,236,896 shares of Common Stock that may
be acquired within 60 days of March 14, 2005 upon the exercise of
outstanding options by the individual or entity whose percentage of share
ownership is being computed (but not taking into account the exercise of
such outstanding options by any other person). Amounts shown were
determined without regard to applicable Ownership Limits.
(2) The Fully-Diluted Percentage calculation is based on (i) 31,399,138 shares
of Common Stock outstanding and (ii) assumes the full exercise of all CBL
Rights for shares of Common Stock by all holders of common units of the
Operating Partnership as well as the exchange of all SCUs for shares of
Common Stock (in each case, without regard to applicable Ownership Limits),
for an aggregate of 57,029,619 shares of Common Stock. The Fully-Diluted
Percentage calculation does not include 1,236,896 shares of Common Stock
subject to outstanding stock options other than, with respect to each
person whose fully-diluted percentage is being computed, shares which may
be acquired within 60 days of March 14, 2005 upon the exercise of
outstanding options.
(3) In a Schedule 13G/A filed on February 14, 2005 by FMR Corporation ("FMR"),
FMR reported that as of December 31, 2004, it beneficially owned 4,401,812
shares of Common Stock, or 14.02 of the total shares outstanding as of
March 14, 2005. FMR reported that it possesses sole voting power with
respect to 542,993 shares of Common Stock and sole dispositive power with
respect to 4,401,812 shares of Common Stock.
(4) In a Schedule 13G/A filed on February 14, 2005 by Cohen & Steers Capital
Management, Inc. ("Cohen & Steers"), Cohen & Steers reported that as of
December 31, 2004, it beneficially owned 1,727,348 shares of Common Stock,
or 5.5% of the total shares outstanding as of March 14, 2005. Cohen &
Steers reported that it possesses sole voting power with respect to
1,416,448 shares of Common Stock and sole dispositive power with respect to
16,285 shares of Common Stock.
(5) Includes 11,922,626 shares of Common Stock that may be acquired by the
Jacobs Group on exercise of CBL Rights with respect to SCUs owned by the
Jacobs Group. The Jacobs Group received the above-referenced SCUs as part
of the Jacobs Acquisition. See "Election of Directors - Certain Terms of
Jacobs Acquisition" and see Footnote #1 above.
15
(6) Includes (i) 1,492,839 shares of Common Stock owned directly, (ii)
7,237,823 shares of Common Stock that may be acquired upon the exercise of
CBL Rights and (iii) 97,366 shares of Common Stock that may be acquired by
four entities controlled by CBL's Predecessor (CBL Employees
Partnership/Conway, Foothills Plaza Partnership, Girvin Road Partnership
and Warehouse Partnership) upon the exercise of CBL Rights.
(7) Includes (i) 163,183 shares of Common Stock owned directly, (ii) 3,970
shares owned by Mr. Lebovitz' wife, 14,154 shares held in trusts for the
benefit of his grandchildren (of which Mr. Lebovitz disclaims beneficial
ownership) and 50,800 shares that may be acquired upon the exercise of CBL
Rights by interests held in a trust for the benefit of Mr. Lebovitz, (iii)
352,903 shares of Common Stock that may be acquired by Mr. Lebovitz upon
the exercise of CBL Rights, (iv) 159,400 shares of Common Stock subject to
options granted under the Stock Incentive Plan that are currently
exercisable or that become exercisable with respect to such shares within
sixty days of March 14, 2005, (v) 8,828,028 shares of Common Stock
beneficially owned by CBL's Predecessor, which Mr. Lebovitz may be deemed
to beneficially own by virtue of his control of CBL's Predecessor, and (vi)
228,194 shares of Common Stock that may be acquired by College Station
Associates, an entity controlled by Mr. Lebovitz, upon the exercise of CBL
Rights.
(8) Includes (i) 222,214 shares of Common Stock owned directly, (ii) 189,241
shares of Common Stock that may be acquired by Mr. Foy upon the exercise of
CBL Rights and (iii) 135,400 shares of Common Stock subject to options
granted under the Stock Incentive Plan that are currently exercisable or
that become exercisable with respect to such shares within sixty days of
March 14, 2005. Totals do not include 13,320 shares of Common Stock
previously transferred by Mr. Foy to a partnership consisting of Mr. Foy's
two sisters, with respect to which Mr. Foy disclaims any beneficial
ownership in such shares and in such partnership.
(9) Includes (i) 130,612 shares owned directly, (ii) 238,936 shares of Common
Stock that may be acquired by Mr. Lebovitz upon the exercise of CBL Rights
and (iii) 159,400 shares of Common Stock subject to options granted under
the Stock Incentive Plan which are currently exercisable or that become
exercisable with respect to such shares within sixty days of March 14,
2005.
(10) Includes (i) 117,454 shares of Common Stock owned directly, (ii) 6,283
shares of Common Stock owned by Mr. Snyder's wife and 1,104 shares of
Common Stock owned by Mr. Snyder's children, (iii) 48,439 shares of Common
Stock that may be acquired by Mr. Snyder upon the exercise of CBL Rights
and (iv) 5,400 shares of Common Stock subject to options granted under the
Stock Incentive Plan that are currently exercisable or that become
exercisable with respect to such shares within sixty days of March 14,
2005. Does not include 83,223 shares of Common Stock that Mr. Snyder is
entitled to receive upon the termination of his employment with the Company
under certain circumstances pursuant to a non-qualified deferred
compensation arrangement between Mr. Snyder and the Company.
(11) Includes (i) 6,814 shares of Common Stock owned directly, (ii) 27,670
shares of Common Stock that may be acquired by Mr. Stephas upon the
exercise of CBL Rights and (iii) 39,600 shares of Common Stock subject to
options granted under the Stock Incentive Plan that are currently
exercisable or that become exercisable with respect to such shares within
sixty days of March 14, 2005.
(12) Includes (i) 220,576 shares of Common Stock that may be acquired by Mr.
Cleary upon the exercise of CBL Rights with respect to SCUs indirectly
owned by Mr. Cleary; (ii) 1,000 shares of Common Stock subject to
immediately exercisable stock options granted to Mr. Cleary under the Stock
Incentive Plan and (iii) 850 shares of restricted Common Stock granted to
Mr. Cleary under the Stock Incentive Plan.
(13) Includes (i) 24,000 shares of Common Stock owned by a family limited
partnership created by Mr. Fields and his wife and in which Mr. Fields
serves as a general partner, (ii) 40,300 shares of Common Stock held by
members of Mr. Fields' family, with respect to which Mr. Fields acts as
investment adviser and of which Mr. Fields disclaims beneficial ownership,
(iii) 1,000 shares of Common Stock owned by Mr. Fields' individual
retirement account and (iv) 350 shares of restricted Common Stock granted
to Mr. Fields under the Stock Incentive Plan.
16
(14) Includes (i) 28,500 shares of Common Stock owned directly, (ii) 11,500
shares of Common Stock owned by a family limited partnership created by Mr.
Ballard and his wife and in which Mr. Ballard serves as a general partner,
(iii) 12,100 shares of Common Stock owned by the Ballard Family Foundation
of which Mr. Ballard disclaims beneficial ownership, (iv) 3,500 shares of
Common Stock subject to immediately exercisable stock options granted to
Mr. Ballard under the Stock Incentive Plan and (v) 850 shares of restricted
Common Stock granted to Mr. Ballard under the Stock Incentive Plan.
(15) Includes (i) 37,500 shares of Common Stock owned by a trust of which Mr.
Walker is a co-trustee and co-beneficiary, (ii) 600 shares of Common Stock
owned by Mr. Walker's wife and (iii) 850 shares of restricted Common Stock
granted to Mr. Walker under the Stock Incentive Plan.
(16) Includes 500 shares of restricted Common Stock granted to Mr. Dominski in
February, 2005 on his entry to the Company's Board under the Stock
Inventive Plan.
(17) Includes (i) 600 shares of Common Stock owned directly, (ii) 1,000 shares
of Common Stock subject to immediately exercisable stock options granted to
Mr. Bryenton under the Stock Incentive Plan and (iii) 850 shares of
restricted Common Stock granted to Mr. Bryenton under the Stock Incentive
Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
Based solely upon the Company's review of copies of such reports furnished
to it through the date hereof, or written representations that no other reports
were required to be filed, the Company believes that during the fiscal year
ended December 31, 2004 all officers, directors and ten percent stockholders
complied with the filing requirements applicable to them, except for the
following late filings for the following executive officers: William J. Poorvu,
Charles H. May, II (3), Charles W.A. Willett, Jr. (2), Charles B. Lebovitz, John
N. Foy, Stephen D. Lebovitz, Ben S. Landress, Ronald L. Fullam, R. Stephen
Tingle and Farzana K. Mitchell. These filings were subsequently made.
17
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Company's Chief Executive Officer and its next four most highly compensated
executive officers (these four and Charles B. Lebovitz being herein referred to
as the "named executive officers") for the Company's fiscal year ended December
31, 2004, and for the Company's fiscal years ending December 31, 2003, and 2002:
Summary Compensation Table(1)
Long Term Compensation
Annual Compensation Awards
------------------------ ----------------------------
Restricted Securities All
Stock Underlying Other
Name and Principal Award(s) Options Compensation
Position(2) Year Salary($) Bonus($) ($)(3) (#) ($)
- -------------------------- ---- ------------ ---------- ------------- ------------ -------------
Charles B. Lebovitz, 2004 526,724 500,000 75,424 -- 13,849(4)
Chairman of the Board and
Chief Executive Officer
2003 511,383 500,000 69,200 -- 13,724(4)
2002 496,488 -- 375,000 16,000 12,506(4)
- --------------------------- -------- ------------- ------------- -------------- -------------- --------------
John N. Foy, 2004 446,320 500,000 75,424 -- 13,849(4)
Vice Chairman of the
Board, Chief
Financial Officer
and Treasurer
2003 426,320 550,000 69,200 -- 13,724(4)
2002 406,320 -- 400,000 16,000 12,298(4)
- --------------------------- -------- ------------- ------------- -------------- -------------- --------------
Stephen D. Lebovitz 2004 425,000 500,000 75,424 -- 13,849(4)
Director, President and
Secretary
2003 400,000 500,000 69,200 -- 13,724(4)
2002 375,000 -- 400,000 16,000 11,506(4)
- --------------------------- -------- ------------- ------------- -------------- -------------- --------------
Eric P. Snyder 2004 391,823 275,000 42,426 -- 5,827(4)
Senior Vice President
and Director of
Corporate Leasing
2003 371,833 250,000(5) 38,925 -- 5,702(4)
2002 351,833 225,000(5) -- 9,000 5,702(4)
- --------------------------- -------- ------------- ------------- -------------- -------------- --------------
Augustus N. Stephas 2004 414,107 200,000 42,426 -- 5,827(4)
Senior Vice
President --
Accounting and Controller
2003 394,107 175,000 38,925 -- 5,702(4)
2002 374,107 150,000 -- 9,000 5,702(4)
=========================== ======== ============= ============= ============== ============== ==============
- -----------------------
<FN>
(1) All amounts shown represent compensation paid to the named executive
officers by the Management Company.
(2) The position shown represents the individual's position with the Company
and the Management Company.
(3) Amounts shown are based upon the closing price of the Common Stock on the
NYSE as of the date of grant of the restricted stock awards. As of December
31, 2004, an aggregate of 64,610 shares of restricted stock with a value of
$4,932,974 had been awarded and were outstanding with respect to the named
executive officers. Dividends, to the extent paid on the Company's Common
Stock, will be paid on all outstanding shares of restricted stock.
18
(4) For fiscal years 2004, 2003 and 2002, amount shown represents term life
insurance premiums paid by the Management Company and matching
contributions by the Management Company under the CBL & Associates
Management, Inc. 401(k) Profit Sharing Plan and Trust (the "401(k) Plan").
For fiscal year 2004, such amounts for each named executive officer were as
follows: Charles B. Lebovitz - $8,724 in insurance premiums, $5,125 in
401(k) matching contributions; John N. Foy - $8,724 in insurance premiums,
$5,125 in 401(k) matching contributions; Stephen D. Lebovitz - $8,724 in
insurance premiums, $5,125 in 401(k) matching contributions; Eric P. Snyder
- $702 in insurance premiums, $5,125 in 401(k) matching contributions; and
Augustus N. Stephas - $702 in insurance premiums, $5,125 in 401(k) matching
contributions.
(5) Represents amount deferred at Mr. Snyder's election pursuant to a
non-qualified deferred compensation arrangement between Mr. Snyder and the
Company payable in Common Stock. See below "Equity Compensation Plan
Information as of December 31, 2004" for a description of this deferred
compensation arrangement.
</FN>
Aggregated Option Exercises in 2004 and Year-End Option Values
--------------------------------------------------------------
The following table provides information regarding the number and value of
options held by each of the named executive officers at December 31, 2004. Mr.
Foy did not exercise any options during the Company's 2004 fiscal year.
Number of Securities
Underlying Unexercised Options Value of Unexercised
Shares at In-the-Money Options at
Acquired December 31, 2004 December 31, 2004 (1)
on Value -------------------------------- --------------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Charles B. Lebovitz 120,000 5,692,050 149,800 19,200 7,941,963 862,163
- ------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
John N. Foy -0- -0- 145,800 19,200 7,703,408 862,163
- ------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Stephen D. Lebovitz 64,000 2,330,962 149,800 19,200 7,830,556 862,163
- ------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Eric P. Snyder 99,000 3,531,893 7,200 10,800 347,348 484,967
- ------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Augustus N. Stephas 18,000 672,120 43,200 10,800 2,196,601 484,967
- ------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
<FN>
(1) Amounts listed are based upon the $76.35 closing price for the Common Stock
on the NYSE on December 31, 2004 (last trading day in 2004).
</FN>
Equity Compensation Plan Information as of December 31, 2004
The following table sets forth information as to the Company's equity
compensation plans as of the end of the Company's 2004 fiscal year:
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Plan Category (a) (b) (c)
Number of securities
remaining available for
Number of securities to be Weighted-average exercise future issuance under
issued upon exercise of price of outstanding equity compensation plans
the outstanding options, options, warrants and (excluding securities
warrants and rights rights reflected in column (a))
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity Compensation Plans 1,516,771 $26.78(1) 975,634
approved by security holders
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity Compensation Plans not None N/A N/A
approved by security holders
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
19
<FN>
(1) The weighted average calculation does not reflect 107,098 shares reserved
for issuance under deferred compensation arrangements. The Company's Stock
Incentive Plan permits the Compensation Committee to enter into deferred
compensation arrangements designed to provide a deferral of taxable income
to participants, which may be funded or unfunded and may provide for future
payments to participants in the form of Common Stock or cash. As used by
the Compensation Committee, these deferred compensation arrangements
typically allow the executive/employee to elect to defer a portion of
his/her salary or bonuses into the arrangement on an unfunded and unsecured
basis. For deferred compensation arrangements payable in Common Stock, the
amount of salary or bonus deferred is then deemed to be converted to shares
of the Company's Common Stock based on the closing price of the Common
Stock on the date of the deferral. Those deemed shares are then further
deemed to increase as dividends are paid on the Common Stock as if such
dividends had been utilized via the Company's Dividend Reinvestment Plan to
acquired additional shares of Common Stock at the price provided through
the Company's Dividend Reinvestment Plan. The arrangements generally
provide that on the earlier of (i) a date certain specified in each
deferred compensation arrangement or (ii) the death, disability or
termination of employment of the executive/employee or (iii) the merger,
consolidation or sale of the Company, the executive/employee will then be
entitled to receive the stated amount of cash or, for deferred compensation
arrangements payable in Common Stock, that number of shares of Common Stock
deemed set aside on the date of the deferral together with additional
shares of Common Stock deemed acquired through the Company's Dividend
Reinvestment Plan through the date of the payout.
</FN>
Non-Competition Arrangements
Each of Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz has agreed
to refrain from competing with the Company until two years from the date of
termination of his employment. Prohibited competition includes any participation
in the development, improvement or construction of any shopping center project,
acquiring any interest in a shopping center project or acquiring vacant land for
development as a shopping center project. Charles B. Lebovitz, John N. Foy and
Stephen D. Lebovitz are, however, permitted to hold certain investments which
they owned prior completion of the Company's initial public offering in November
1993.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of Claude M.
Ballard, Martin J. Cleary and Winston W. Walker, with Mr. Ballard serving as
Chairman. None of the members of the Compensation Committee are or have been
officers or employees of the Company and each member of the Compensation
Committee is an Independent Director.
No executive officer of the Company served on any board of directors or
compensation committee of any entity (other than the Company or its
subsidiaries) with which any member of the Compensation Committee, or any other
director of the Company is affiliated.
Report of the Compensation Committee of the Board of Directors
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
or report be deemed incorporated by reference into any future filing by the
Company under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
in such filing.
General. The Company is a self-managed, self-administered, fully-integrated
real estate company which is engaged in the ownership, marketing, management,
leasing, expansion, development, redevelopment, acquisition and financing of
regional malls and community and neighborhood centers.
The Compensation Committee determines all matters related to the
compensation of all officers of the Company of the level of vice president or
higher and administers the Stock Incentive Plan. The Compensation Committee
operates under a written charter adopted by the Board of Directors on February
3, 2004. A copy of the charter is available and can be accessed in the "Investor
Relations - Corporate Governance" section of the Company's website at
www.cblproperties.com.
20
Philosophy. It is the philosophy of the Company to ensure that executive
compensation be directly linked to financial objectives that the Company
believes are primary determinates of stockholder value over time. The
Compensation Committee's objectives in administering the Company's executive
compensation plan are to ensure that pay levels and incentive compensation are
(i) competitive in attracting and retaining the best personnel, (ii) properly
linked to the Company's performance, and (iii) simple in design. To fulfill
these objectives, the compensation plan for executives includes base salary,
performance based discretionary bonuses and periodic grants of stock awards and
stock options pursuant to the Stock Incentive Plan. Non-executive employees of
the Company are also eligible to participate in the Stock Incentive Plan.
The Company believes that the ability to use the Stock Incentive Plan to
attract and retain key personnel has substantial value and will be essential to
the growth of the Company. The stock option and stock award elements of
compensation are designed to encourage and create ownership and retention of the
Company's stock by key employees in order to align their long-range interests
with those of stockholders and to allow the opportunity for key employees to
build, through the achievement of corporate goals, a meaningful ownership stake
in the Company.
Financial Criteria. The Compensation Committee, based on recommendations
made by the Company, implemented an executive compensation program in 1994
pursuant to which officers of the level of vice president and higher received
during fiscal year 2004, in addition to a base salary, incentive compensation
consisting of cash and stock awards for the achievement of target levels of
performance determined by the Compensation Committee. The amount of this
additional compensation was determined for each executive officer based upon his
or her contribution to the overall success of the Company. Utilizing the
program's basic theory for incentive compensation, cash and stock awards were
granted during fiscal year 2004 to other employees of the Company as
performance-based incentive compensation.
Compensation of the Chief Executive Officer. During fiscal year 2004,
Charles B. Lebovitz was paid (i) a base salary of $526,724 which sum included
4,611 shares of Common Stock paid to Mr. Lebovitz as part of his salary and (ii)
a cash bonus of $500,000. Mr. Lebovitz receives annual reviews for salary
increases and discretionary bonuses. Additionally, Mr. Lebovitz participates in
the Company's incentive plans, including the Stock Incentive Plan. During fiscal
year 2004 and pursuant to the Stock Incentive Plan, Mr. Lebovitz received
restricted stock awards of an aggregate of 1,600 shares of Common Stock with a
value of $75.424 on grant. The awards were determined upon the same criteria as
applied to the other executive officers of the Company.
Policy Regarding Qualifying Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") imposes a $1,000,000 ceiling on
tax-deductible remuneration paid to any of the five most highly compensated
executive officers of a publicly-held corporation. The limitation does not apply
to remuneration that qualifies as performance-based compensation in Section
162(m) of the Code. Options granted under the Stock Incentive Plan qualify as
"performance-based compensation" exempt from the deductibility limitations of
Section 162(m) of the Code. All other compensation to the named executive
officers is below the $1,000,000 per-executive ceiling and was fully deductible
by the Company.
COMPENSATION COMMITTEE
Claude M. Ballard (Chairman)
Martin J. Cleary
Winston W. Walker
21
Report of the Audit Committee of the Board Of Directors
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
or report be deemed incorporated by reference into any future filing by the
Company under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
in such filing.
The Audit Committee of the Board of Directors of the Company is composed of
three Independent Directors (Winston W. Walker, Chairman, Claude M. Ballard and
Gary L. Bryenton) and operates under an amended and restated written charter
adopted by the Board of Directors on February 3, 2004. A copy of the amended and
restated charter is available and can be accessed in the "Investor Relations -
Corporate Governance" section of the Company's website at www.cblproperties.com.
Each of the members of the Audit Committee is "independent" as defined in
Sections 303A.02 and 303A.07(b) of the listing standards of the NYSE as
currently applicable.
Management is responsible for the Company's internal controls and financial
reporting process. The Company's independent accountants are responsible for
performing an independent audit of the Company's financial statements in
accordance with auditing standards generally accepted in the United States and
for issuing a report thereon. The Audit Committee's responsibility is to monitor
and oversee these processes.
In this context, the Audit Committee has met and held discussions with
Management and the Company's independent accountants. Management reported to the
Audit Committee that the Company's consolidated financial statements for the
Company's 2004 fiscal year were prepared in accordance with accounting
principles generally accepted in the United States, and the Audit Committee has
reviewed and discussed these consolidated financial statements with Management
and the Company's independent accountants. The Audit Committee discussed with
the independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committee), as amended.
The Company's independent accountants also provided to the Audit Committee
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and the Audit
Committee discussed with the independent accountants their firm's independence.
The Audit Committee considered whether the provision of services by the
independent accountants (other than audit services) is compatible with
maintaining the independent accountants' independence.
Pursuant to the mandates of the Sarbanes-Oxley Act of 2002, the Company's
Board of Directors has determined that Winston W. Walker, an Independent
Director and Chairman of the Audit Committee, qualifies as an "audit committee
financial expert" as such term is defined by the SEC.
Based on the Audit Committee's review and discussions referred to above,
the Audit Committee recommended that the Board of Directors include the
Company's audited consolidated financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2004, filed with the
Securities and Exchange Commission and provide in such Annual Report on Form
10-K the disclosure of Winston W. Walker as an "audit committee financial
expert".
AUDIT COMMITTEE
Winston W. Walker (Chairman)
Claude M. Ballard
Gary L. Bryenton
22
Performance Graph
The graph set forth below compares the percentage change in the cumulative
stockholder return on the Common Stock with the cumulative total return of the
Russell 2000 index of small companies ("Russell 2000") and NAREIT All Equity
REIT Total Return Index for the period commencing December 31, 1999, through
December 31, 2004. The following graph assumes that the value of the investment
in the Company and the indices was $100 at the beginning of the period and that
dividends were reinvested. The stock price performance presented below is not
necessarily indicative of future results:
[OBJECT OMITTED]
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
- ---------------------------------------------------------------------------------------------------------
CBL & Associates Properties, Inc. 100.00 133.61 179.15 241.87 361.26 511.86
Russell 2000 100.00 96.98 99.39 79.03 116.38 137.71
NAREIT All Equity REIT Index 100.00 126.37 143.97 149.47 204.98 269.70
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Company and Management Agreement
The Company is party to a management agreement with the Management Company
pursuant to which the Management Company renders management and administrative
services with respect to the Company's properties. From the Management Company's
inception in 1993 through March 11, 2004, the Company, through the Operating
Partnership, owned 100% of the preferred stock and a portion (initially, 5% then
increased to 6.23%) of the common stock of the Management Company, and Charles
B. Lebovitz, his family and certain of the Associates owned the balance
(initially, 95% then decreased to 93.77%) of the common stock of the Management
Company. The Management Company was initially structured to comply with certain
technical requirements of the Code applicable to real estate investment trusts
and through the ownership of 100% of the preferred stock of the Management
Company, the Company enjoyed substantially all of the economic benefits of the
Management Company's business. By virtue of certain revisions to the Code
eliminating the necessity of the initial structure of the Management Company,
the Company, on March 11, 2004, through the Operating Partnership, acquired the
93.77% of the common stock of the Management Company from Charles Lebovitz, his
family and certain of the Associates, thereby securing for the Company 100% of
the ownership of all classes of stock of the Management Company. The purchase
price paid to Charles Lebovitz, his family and certain of the Associates for the
93.77% of the common stock of the Management Company was $75,250, representing
the amount of their initial capital contributed to the Management Company on its
formation in 1993. The Management Company also provides management services for
certain properties owned by CBL's Predecessor and certain other third parties
for which the Management Company is paid a management fee. See "Retained
Property Interests."
Operating Partnership Agreement; CBL Rights
The Company, through subsidiaries, serves as the sole general partner of
the Operating Partnership and owns, as of March 14, 2005, 31,399,138 common
partnership units, representing a 1.6% interest as the sole general partner and
a 53.4% interest as a limited partner for an aggregate 55.0% interest in the
Operating Partnership. CBL's Predecessor owns 7,335,189 common partnership
units, representing a 12.86% limited partner interest in the Operating
Partnership. CBL's Predecessor also owned 1,492,839 shares of CBL's common stock
at December 31, 2004, for a combined total interest of 15.3% in the Operating
Partnership. Certain executive and senior officers also own common partnership
units.
Pursuant to the Operating Partnership Agreement, the limited partners were
granted CBL Rights, consisting of the rights to exchange all or a portion of
their common partnership units in the Operating Partnership for shares of Common
Stock or their cash equivalent, at the Company's election. The CBL Rights may be
exercised at any time and from time to time to the extent that, upon exercise of
the CBL Rights, the exercising party shall not beneficially or constructively
own shares of Common Stock in excess of the applicable share ownership limits
set forth in the Company's Certificate of Incorporation. The Company, however,
may not pay in shares of Common Stock to the extent that this would result in a
limited partner beneficially or constructively owning in the aggregate more than
its applicable Ownership Limit or otherwise jeopardize, in the opinion of
counsel to the Company, the Company's qualification as a real estate investment
trust for tax purposes.
The number of shares of Common Stock received by the limited partners of
the Operating Partnership upon exercise of CBL Rights will be based upon the
equivalent number of partnership units owned by the limited partners on a
one-for-one basis and the amount of cash received by the limited partners upon
such exercise, if the Company elects to pay cash, will be based upon the trading
price of the shares of Common Stock at the time of exercise.
CBL Rights will expire in November 2043 if not exercised prior to that
date.
24
Retained Property Interests
CBL's Predecessor owns interests in outparcels at certain of the Company's
malls and a minority interest in one mall, the majority interest of which is
owned by a third party. Certain members of Charles B. Lebovitz's family and his
father's estate continue to own four community and neighborhood centers. The
properties retained by CBL's Predecessor and the properties owned by the
Lebovitz family are managed and leased by the Management Company which receives
a fee for its services. During fiscal year 2004, CBL's Predecessor and the
Lebovitz family paid the Management Company approximately $234,000 under such
arrangement.
Affiliated Entities
Certain executive officers of the Company collectively have a significant
but non-controlling interest in a major national construction company that built
substantially all of the properties developed by the Company and is currently
building the Company's projects under construction, including renovations and
expansions. Charles B. Lebovitz is also a director of the construction company.
The majority interest in the construction company is held by the members of its
senior management, none of whom are affiliated with CBL's Predecessor or the
Company. As of December 31, 2004, the Company had 17 active contracts (including
contracts in respect of each of the construction properties) with such
construction company having aggregate value of approximately $205.3 million
($110.7 of which is the Company's obligation and the balance of which is the
obligation of third party partners). During fiscal year 2004, the Company and
its third party partners paid an aggregate of approximately $143.7 million to
this construction company ($116.0 of which was paid by the Company and the
balance of which was paid by third party partners). The Company's Audit
Committee reviews the relationship between the Company and the referenced
construction company pursuant to procedures established in November 1994. These
procedures include an ongoing review by the Company's independent accountant of
a cross section of the Company's contracts with the referenced construction
company for, among other things, the provisions for allocation of cost savings
between owner and contractor.
The construction company and CBL's Predecessor own all of the interests of
a partnership that owns two aircraft and a fractional interest in another
aircraft used by the personnel of the Company and the construction company. Each
partner contributes equally to fixed costs and shares variable costs through an
hourly charge based on usage. The Company reimburses the partnership for costs
on an hourly basis associated with use of the aircraft relating to the business
of the Company. During fiscal year 2004, the Company paid approximately $1.6
million as reimbursement for operating expenses pursuant to such arrangement.
The Bylaws provide that any contract or transaction between the Company or
the Operating Partnership and one or more directors or officers of the Company
or between the Company or the Operating Partnership and any other entity in
which one or more of its directors or officers are directors or officers, or
have a financial interest, must be approved by disinterested directors or
stockholders after the material facts as to the relationship or interest and as
to the contract or transaction are disclosed or are known to them.
Certain Leases
Certain officers and certain Company employees are partners in partnerships
that lease 36 spaces representing approximately 38,446 square feet in 25 of the
Company's malls as tenants. Such spaces are operated as food service and
entertainment establishments. Management believes that, at the time these leases
were entered into, they provided for rental payments at market rates and terms.
Shumacker Witt Gaither & Whitaker, P.C., local counsel to the Company and
CBL's Predecessor, leases 5,418 square feet of office space at the Company's
office building. The construction company also leases 20,637 square feet of
office space at the Company's office building. Management believes that, at the
time these leases were entered into, they provided for rental payments at market
rates and terms.
25
Other
Charles B. Lebovitz, certain members of his family, certain of the
Associates, a partnership consisting of certain of the Associates, and Eric P.
Snyder have personally guaranteed an aggregate of $12.99 million of the debt of
the Operating Partnership. Such guarantee is payable only if, and to the extent
that, proceeds from a foreclosure sale of all assets of the Operating
Partnership are not in excess of the guarantee.
Michael I. Lebovitz and Alan L. Lebovitz, sons of Charles B. Lebovitz, and
Daniel M. Backer, the son-in-law of Charles B. Lebovitz, are employed by the
Company and each receives compensation from the Company commensurate with his
level of experience and other employees with similar responsibilities.
Charles B. Lebovitz is currently an advisory director of First Tennessee
Bank, N.A., Chattanooga, Tennessee ("First Tennessee"). The Company is currently
maintaining an $80 million line of credit from First Tennessee that matures in
2006. Including outstanding letters of credit, there was approximately $23.4
million outstanding on this line of credit as of December 31, 2004. First
Tennessee also provides certain cash management services to the Company. In the
future, the Company or the Operating Partnership may, in the ordinary course of
business, engage in other transactions with First Tennessee on competitive
terms.
John N. Foy is currently an advisory director of AmSouth Bank of Tennessee
("AmSouth"). The Company is currently maintaining a $10 million line of credit
from AmSouth that matures in 2006. There was approximately $2.0 million of
letters of credit drawn on this line of credit as of December 31, 2004. In
addition, AmSouth is a 28% participant in the First Tennessee line of credit
referred to in the immediately preceding paragraph and provides certain cash
management services to the Company and also serves as the administrator of the
Management Company's 401(k) Plan. In the future, the Company or the Operating
Partnership may, in the ordinary course of business, engage in other
transactions with AmSouth on competitive terms.
APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM 95 MILLION TO 180 MILLION
The Board of Directors is seeking stockholder approval for an amendment to
the Company's Amended and Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), to increase the authorized number of shares of
Common Stock from 95 million shares to 180 million shares (the "Proposed
Amendment"). On March 14, 2005, the Board of Directors adopted resolutions
setting forth the Proposed Amendment in the form of an amendment to the first
sentence of Section A of Article IV of the Certificate of Incorporation,
determining the Proposed Amendment to be advisable and recommending that
stockholders approve the Proposed Amendment.
The following is the text of Paragraph A of Article IV of the Company's
Certificate of Incorporation, as proposed to be amended:
A. Classes and Number of Shares.
The total number of shares of all classes of Equity Stock that the
Corporation shall have authority to issue is One Hundred Ninety-Five
Million (195,000,000) shares, consisting of (i) Fifteen Million
(15,000,000) shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), and (ii) One Hundred Eighty Million (180,000,000)
shares of common stock, par value $.01 per share (the "Common Stock").
26
Purpose and Effect of the Proposed Amendment
The Board of Directors has considered authorizing a stock split as a means
of increasing the liquidity of the Company's Common Stock, taking into account,
among other things, the experiences of others companies (including REITs) that
have split their stock. The Board of Directors currently expects to adopt a
resolution authorizing a two-for-one split of the Company's Common Stock by
means of a stock dividend. A primary purpose of the Proposed Amendment is to
provide the Company with sufficient authorized shares of Common Stock to allow
the Board to make this determination while maintaining sufficient authorized but
unissued shares for other corporate purposes, including acquisitions through the
use of Common Stock and/or minority interests in the Operating Partnership
convertible into Common Stock, raising additional capital through the issuance
of Common Stock or of other securities that are convertible into Common Stock
and, subject to applicable stockholder approval requirements, adopting
additional equity-based employee benefit plans or to reserve additional shares
for issuance under such plans and under plans of any companies the Company may
acquire.
If stockholders approve the Proposed Amendment, the additional authorized
shares of Common Stock may be used for each or any of the purposes described
above. No additional action or authorization by the Company's stockholders would
be necessary prior to the issuance of such additional shares, unless required by
applicable law or by NYSE or other applicable rules. The Company reserves the
right to seek a further increase in authorized shares from time to time in the
future as considered appropriate by the Board of Directors. Because the
Certificate of Incorporation does not confer upon the Company's stockholders
preemptive rights with respect to Common Stock, should the Board of Directors
elect to issue additional shares of Common Stock, existing stockholders would
not have any preferential rights to purchase such shares.
Other than the Board of Directors' consideration of a possible future stock
split in the form of a stock dividend and for issuances under the Company's
employee benefit plans and dividend reinvestment plan, and the rights of the
minority limited partners in the Operating Partnership to exchange all or a
portion of their limited partnership interests for shares of the Company's
Common Stock or, at the Company's election, their cash equivalent, the Board of
Directors has no immediate plans, understandings, agreements or commitments to
issue additional Common Stock for any purposes.
As of March 14, 2005, the Company had 31,399,138 shares of Common Stock
issued and outstanding. In addition, as of such date, approximately 1,554,881
shares were subject to outstanding equity compensation awards, such as stock
options and restricted stock awards (which are treated as outstanding shares),
108,495 shares were reserved for issuance pursuant to outstanding deferred
compensation arrangements and an additional 964,686 shares were reserved for
additional awards under the Company's Amended and Restated Stock Incentive Plan,
as amended. Further, 25,630,481 shares were reserved for issuance pursuant to
the rights of each of the minority limited partners in the Operating Partnership
to exchange all or a portion of their limited partnership interests for shares
of the Company's Common Stock or, at the Company's election, their cash
equivalent. Thus, as of March 14, 2005, the Company had a total of 35,342,319
shares of authorized and unissued Common Stock remaining which are not reserved
for one of the purposes described above. Accordingly, the Company presently does
not have sufficient authorized and unissued shares to declare a stock split in
the form of a stock dividend, should the Board of Directors decide to do so,
without effecting the Proposed Amendment.
If the Proposed Amendment is approved and the Board of Directors thereafter
decides to proceed with a stock split in the form of a stock dividend with
respect to the Company's outstanding Common Stock, equitable adjustments will be
made, as of the effective date of any such stock split, in the number and price
of shares reserved for issuance under the Company's equity compensation plans
and pursuant to all outstanding awards thereunder, and to the conversion rights
associated with the outstanding minority limited partnership interests in the
Operating Partnership.
The Proposed Amendment could, under certain circumstances, have an
anti-takeover effect, although this is not the intention of this proposal. In
April 1999, the Company distributed rights to the holders of its outstanding
shares of Common Stock, pursuant to an arrangement designed to protect
27
stockholders from proposed takeovers which the Board believes are not in the
best interests of the stockholders, by providing stockholders with certain
rights to acquire capital stock of the Company or of an acquiring entity upon
the occurrence of certain events. Although the rights provide for the issuance
of the Company's Series 1999 Junior Participating Preferred Stock in the event
rights become exercisable, the Company may, under certain circumstances, be
required to issue a substantial number of shares of Common Stock with respect to
the rights. An increase in the number of authorized shares of Common Stock
could, therefore, make a change in control of the Company more difficult by
facilitating the issuance of additional shares of Common Stock pursuant to the
rights. Accordingly, the Proposed Amendment may have the effect of permitting
the Company's current management, including the current Board of Directors, to
retain its position, and place it in a better position to resist changes that
stockholders may wish to make if they are dissatisfied with the conduct of the
Company's business. However, the Board of Directors is not aware of any attempt
to take control of the Company, and the Board of Directors has not presented
this proposal with the intent that it be utilized as a type of anti-takeover
device.
If the Proposed Amendment is adopted, it will become effective upon filing
of a Certificate of Amendment to the Company's Certificate of Incorporation with
the Secretary of State of the State of Delaware. However, if the Company's
stockholders approve the Proposed Amendment to the Certificate of Incorporation,
the Board of Directors retains discretion under Delaware law not to implement
the Proposed Amendment. If the Board of Directors were to exercise such
discretion, the number of authorized shares would remain unchanged.
Votes Necessary to Approve the Proposal
Approval and adoption of the Proposed Amendment requires the affirmative
vote of the holders of a majority of the Company's issued and outstanding shares
of Common Stock, voting as a class. Since the Proposed Amendment concerns the
authorization of additional shares of Common Stock only, holders of the
Company's issued and outstanding shares of Preferred Stock are not entitled to
vote on the Proposed Amendment under the terms of the Certificate of Incorporate
or applicable Delaware law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED.
RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP ("Deloitte & Touche") has served as the
auditors for the Company since May 7, 2002, and the Audit Committee has
recommended, subject to ratification by the stockholders, that Deloitte & Touche
serve as the Company's independent registered public accountants for the fiscal
year ended December 31, 2005.
Independent Registered Public Accountant's Fees and Services
The Company was billed for professional services provided during fiscal
years 2003 and 2004 by Deloitte & Touche in the amounts set out in the following
table.
2003 2004
--------------------- ----------------------
Audit Fees (1) $587,500 $730,880
Audit-Related Fees (2) 182,000 537,700
Tax Fees (3) 374,460 590,780
All Other Fees (4) -- 48,043
--------------------- ----------------------
Total $1,143,960 $1,907,403
===================== ======================
28
<FN>
(1) Consists of fees billed for professional services in connection with the
audit of the Company's annual financial statements for the fiscal years
ended December 31, 2003, and December 31, 2004, the audit of the Company's
internal controls over financial reporting as of December 31, 2004, reviews
of the financial statements included in the Company's quarterly reports on
Form 10-Q during the 2003 and 2004 fiscal years, comfort letters and other
services normally provided by the independent auditor in connection with
statutory and regulatory filings or engagements.
(2) Consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the
Company's consolidated financial statements and are not reported under
"Audit Fees". These services include audits of the Company's subsidiaries
pursuant to requirements of certain loan agreements, joint venture
agreements and ground lease agreements, as well as fees related to the
Company's documentation of its internal controls over financial reporting.
(3) Consists of fees billed for professional services for tax compliance, tax
advice and tax planning. These services include assistance regarding
federal and state tax compliance, tax audit defense; tax services related
to mergers and acquisitions, and tax planning services.
(4) Consists of fees for products and services other than the services reported
above. These services included permitted software license and
implementation fees related to tax compliance software and an agreed-upon
procedures engagement.
</FN>
The Audit Committee of the Board of Directors has considered the services
rendered by Deloitte & Touche for services other than the audit of the Company's
financial statements and has determined that the provision of these services is
compatible with maintaining the independence of Deloitte & Touche.
The Audit Committee has adopted a policy that it is required to approve all
services (audit and/or non-audit) to be performed by the independent auditor to
assure that the provision of such services does not impair such auditor's
independence. All services, engagement terms, conditions and fees, as well as
changes in such terms, conditions and fees must be approved by the Audit
Committee in advance. The Audit Committee will annually review and approve
services that may be provided by the independent auditor during the next year
and will revise the list of approved services from time to time based on
subsequent determinations. The Audit Committee believes that the independent
auditor can provide tax services to the Company such as tax compliance, tax
planning and tax advice without impairing such auditor's independence. The
authority to approve services may be delegated by the Audit Committee to one or
more of its members, but may not be delegated to management. If authority to
approve services has been delegated to an Audit Committee member, any such
approval of services must be reported to the Audit Committee at its next
scheduled meeting.
The Board of Directors, in concurrence with the Audit Committee, proposes
and recommends that the stockholders ratify the selection of Deloitte & Touche
to serve as the independent registered public accountants for the Company's
fiscal year ending December 31, 2005. Unless otherwise directed by the
stockholders, proxies will be voted for approval of the selection of Deloitte &
Touche to serve as the Corporation's independent registered public accountants
for the 2005 fiscal year. A representative of Deloitte & Touche will attend the
Annual Meeting and will have an opportunity to make a statement and to respond
to appropriate questions.
Votes Necessary to Approve the Proposal
The ratification of the selection of Deloitte & Touche as the Corporation's
independent registered public accountants for the 2005 fiscal year must be
approved by a majority of the shares of Common Stock present or represented at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF
DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR 2005
29
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the rules established by the SEC, stockholder proposals
to be included in the Company's proxy statement with respect to the 2006 Annual
Meeting of Stockholders must be received by the Company at its executive offices
located at 2030 Hamilton Place Blvd., Suite 500, CBL Center, Chattanooga,
Tennessee 37421-6000 no later than December 1, 2005.
In addition, the Company's Bylaws provide that any stockholder of record
desiring to nominate a director or have a stockholder proposal considered at an
annual meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the Bylaws, to the Company
at its principal executive offices not less than 60 days nor more than 90 days
prior to the anniversary date of the prior year's annual meeting (the
"Anniversary Date"); provided, however, that stockholders will have additional
time to deliver the required notice in the event the annual meeting is advanced
by more than 30 days or delayed by more than 60 days from the Anniversary Date.
30
OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, inasmuch as matters of
which the management is not now aware may come before the meeting or any
adjournment, the proxies confer discretionary authority with respect to acting
thereon, and the persons named in such proxies intend to vote, act and consent
in accordance with their best judgment with respect thereto. Upon receipt of
such proxies (in the form enclosed and properly signed) in time for voting, the
shares represented thereby will be voted as indicated thereon and in this Proxy
Statement.
By Order of the Board of Directors
/s/ Stephen D. Lebovitz
STEPHEN D. LEBOVITZ
Secretary
Chattanooga, Tennessee
March 31, 2005
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2004, MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS PROXY
STATEMENT IS SENT UPON WRITTEN REQUEST TO INVESTOR RELATIONS, CBL & ASSOCIATES
PROPERTIES, INC., 2030 HAMILTON PLACE BLVD., SUITE 500, CBL CENTER, CHATTANOOGA,
TENNESSEE 37421-6000.
CBL & ASSOCIATES PROPERTIES, ICN. PROXY
ANNUAL MEETING OF STOCKHOLDERS OF
CBL & ASSOCIATES PROPERTIES, INC.
ON MAY 9, 2005
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints CHARLES B. LEBOVITZ and STEPHEN D. LEBOVITZ
and each or any of them proxies, with power of substitution, to vote all share
of the undersigned at the Annual Meeting of Stockholders to be held on Monday,
May 9, 2005, at 4:00 p.m., local time, at The Chattanooga, 1201 South Broad
Street, Chattanooga, Tennessee or at any adjournment thereof, upon the matters
set forth in the Proxy Statement of such meeting, and in their discretion, on
such other business as may properly come before the meeting.
1. TO RE-ELECT FOUR DIRECTORS TO SERVE FOR THREE YEARS AND UNTIL THEIR
RESPECTIVE SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED.
[ ] FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY to vote for
the nominees listed below
(INSTRUCTION: To withhold authority to vote for the nominee strike a line
through the nominee's name below:)
Charles B. Lebovitz Claude M. Ballard Gary L. Bryenton Leo Fields
2. To act upon a proposal to approve an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the number of authorized
shares of the Company's Common Stock, par value $0.1 per share from
95,000,000 to 180,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on reverse side)
3. TO RATIFY THE SELECTION OF DELOITTE & TOUCHE, LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY'S FISCAL YEAR ENDING DECEMBER 31, 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: ______________________, 2005
___________________________
Signature
___________________________
Signature if held jointly
NOTE: When shares are held by joint tenants, both
should sign. Persons signing as Executor, Administrator,
should so indicate. Please sign exactly as the name
appears on the proxy.
IF NO CONTRARY SPECIFCATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2. PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPLTY USING THE ENCLOSED
ENVELOPE.