SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check
the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use
of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CBL & ASSOCIATES PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amounts Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 23, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
which will be held at the Chattanooga Marriott at the Convention Center, 2
Carter Plaza, Chattanooga, Tennessee, on Thursday, April 29, 1999 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,
CHARLES B. LEBOVITZ
Chairman of the Board
and Chief Executive Officer
CBL & ASSOCIATES PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 29, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CBL &
Associates Properties, Inc., a Delaware corporation (the "Company"), will be
held at the Chattanooga Marriott at the Convention Center, 2 Carter Plaza,
Chattanooga, Tennessee 37402, on Thursday, April 29, 1999 at 4:00 p.m. (EDT) for
the following purposes:
1. To re-elect three directors to serve for a term of three years
and until their respective successors are elected and
qualified;
2. To act upon a proposal to ratify the selection of Arthur
Andersen LLP as independent public accountants for the fiscal
year ending December 31, 1999; and
3. To consider and act upon any other matters which may properly
come before the meeting or any adjournment thereof.
In accordance with the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on March 2, 1999, as the record date
for the determination of the holders of Common Stock entitled to notice of, and
to vote at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Whether or not you plan to attend the meeting, we urge you to sign, date
and return the enclosed Proxy promptly in order to ensure representation of your
shares. An addressed envelope for which no postage is required if mailed in the
United States is enclosed for that purpose. Returning your Proxy will not
prevent you from voting your shares at the meeting if you desire to do so, as
your Proxy is revocable at your option.
By Order of the Board of Directors
STEPHEN D. LEBOVITZ
Secretary
Chattanooga, Tennessee
March 23, 1999
PROXY STATEMENT
CBL & ASSOCIATES PROPERTIES, INC.
Suite 300
6148 Lee Highway
Chattanooga, Tennessee 37421
ANNUAL MEETING OF STOCKHOLDERS
April 29, 1999
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of CBL & Associates Properties, Inc., a Delaware corporation (the "Company"),
for use at the annual meeting of stockholders (the "Annual Meeting") of the
Company to be held at the Chattanooga Marriott at the Convention Center, 2
Carter Plaza, Chattanooga, Tennessee, on Thursday, April 29, 1999, 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 an instrument revoking it or a duly executed proxy bearing a later
date. All expenses of the solicitation of proxies for the Annual Meeting,
including the cost of mailing, will be borne by the Company. In addition to
solicitation by mail, officers and regular employees of the Company may solicit
proxies from stockholders by telephone, telegram or personal interview and will
not receive additional compensation for such services. In addition, the
Company's investor relations firm, Corporate Communications, Inc., will, among
other services performed for the Company, assist in the solicitation of proxies.
The Company also intends to request persons holding stock in their name or
custody, or in the name of nominees, to send proxy materials to their principals
and request authority for the execution of the proxies. The Company will
reimburse such persons for their expense in so doing.
The Company anticipates mailing proxy materials and the Annual Report for
the fiscal year ended December 31, 1998, to stockholders of record as of March
2, 1999, on or about March 23, 1999.
VOTING SECURITIES
Only holders of record of the Company's Common Stock, par value $.01 per
share ("Common Stock"), at the close of business on March 2, 1999, are entitled
to vote on the matters to be presented at the Annual Meeting. The number of
shares of Common Stock outstanding on such date and entitled to vote was
24,610,934. Each such share is entitled to one vote with respect to such
matters.
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting, but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
The affirmative vote of the holders of a plurality of the shares of the Common
Stock present or represented at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented at the Annual Meeting is required for the
ratification of the selection of the independent public accountants.
Abstentions and broker non-votes (shares held by a broker or nominee which
are represented at the Annual Meeting, but with respect to which such broker or
nominee does not have discretionary authority to vote on a particular proposal)
-1-
will be counted as present at the Annual Meeting for the purpose of determining
whether or not a quorum exists. Abstentions and broker non-votes will generally
not be counted for any other purpose, except that abstentions with respect to
any proposal, other than the election of directors, will be treated as negative
votes.
Unless contrary instructions are indicated on the accompanying proxy, the
shares represented thereby will be voted in accordance with the recommendations
of the Board of Directors.
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members divided into
three classes (having three, two and two members, respectively) serving
staggered three-year terms. Under the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Amended and Restated
Bylaws (the "Bylaws"), a majority of the directors must be unaffiliated
("Independent Directors") with the Company and CBL & Associates, Inc. and its
affiliates ("CBL"). The Company succeeded to the business of CBL in November
1993. Each year the term of office of one class of directors expires.
The Board of Directors intends to present for action at the Annual
Meeting the re-election of Charles B. Lebovitz, Claude M. Ballard and Leo
Fields, whose present terms expire in 1999, to serve for a term of three
years and until their successors are duly elected and shall qualify. Mr.
Ballard and Mr. Fields are two of the Company's four Independent Directors.
Unless authority to vote for such directors is withheld, the enclosed proxy
will be voted for such persons except that the persons designated as proxies
reserve discretion to cast their votes for other persons in the unanticipated
event that any of such nominees is unable or declines to serve.
Nominees
Set forth below is information with respect to the nominees for election:
Name Age Current Position(1)
- ---------------------- --- ---------------------------
Charles B. Lebovitz 62 Chairman of the Board of
Directors and Chief Executive
Officer
Claude M. Ballard 69 Director
Leo Fields 70 Director
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(1) 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.
Charles B. Lebovitz has served as Chairman of the Board and Chief
Executive Officer since the inception of the Company and is a member of the
Executive Committee of the Board of Directors. Mr. Lebovitz served as
President of the Company until February 1, 1999. Prior to the Company's
formation, he served in a similar capacity with CBL. Mr. Lebovitz has been
involved in shopping center development since 1961 when he joined his
family's development business. In 1970, he became affiliated with Arlen
Realty & Development Corp. ("Arlen") where he served as President of Arlen's
shopping center division, and, in 1978, he founded CBL together with his
associates (the "Associates"), James Wolford, John N. Foy, Jay Wiston, and
Ben S. Landress. In addition to Mr. Lebovitz, Messrs. Foy and Landress
currently serve as executive officers of the Company. Mr. Lebovitz is an
advisory director of First Tennessee Bank, N.A., Chattanooga, Tennessee and
a National Vice Chairman of the United Jewish Appeal. Mr. Lebovitz has
previously served as a trustee, Vice President (Southern Division) and
Chairman of the International Council of Shopping Centers ("ICSC").
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Claude M. Ballard, CRE, M.A.I. was elected as a Director of the Company
upon the completion of the Company's initial public offering in November 1993
and is Chairman of the Compensation Committee and a member of the Audit
Committee of the Board of Directors. Mr. Ballard joined Goldman, Sachs & Co. in
1981 as a general partner and as of December 1988 became a limited partner and
senior consultant. Prior to joining Goldman, Sachs & Co., Mr. Ballard was a
Senior Vice President in the real estate division of the Prudential Insurance
Company of America. He is currently a director of Bedford Property Investors,
The MONY Group (formerly, Mutual Life Insurance Company of New York), Taubman
Centers, Inc., a shopping center real estate investment trust, Greater New York
Council, Boy Scouts of America and Horizon Hotel Corp. Mr. Ballard also served
as Chairman of the Board of Rockefeller Center Properties, Inc., a mortgage real
estate investment trust, until December 1994, and as a director of American
Building Maintenance Industries until October 1994. Mr. Ballard currently serves
as Chairman of the Board of Directors of Merit Equity Partners, Inc.
Leo Fields was elected as a Director of the Company upon the completion of
the Company's initial public offering in November 1993 and is a member of the
Compensation Committee and Chairman of the Audit Committee of the Board of
Directors. Mr. Fields is Co-Chairman of Weisberg & Fields, Inc., an investment
advisory firm he started in 1991. From 1984 through 1991, Mr. Fields directed
Leo Fields Interests, a private investment firm. He was affiliated with Zale
Corporation from 1947 until his retirement in 1984, serving, from 1981 to 1984,
as Vice Chairman and a member of Zale's Executive Committee. He is Vice Chairman
of the Institute for Social & Economic Policy in the Middle East at the John F.
Kennedy School of Government at Harvard University, President of the Dallas Home
for the Jewish Aged Endowment Foundation and a trustee of the M. B. and Edna
Zale Foundation.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF THE
THREE DIRECTORS NAMED ABOVE
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information with respect to the directors (in addition
to Charles B. Lebovitz, Claude M. Ballard and Leo Fields) and executive officers
(in addition to Charles B. Lebovitz) of the Company:
Term
Name Expires* Age Current Position(1)
- ---------------------- -------- ---- ------------------------------
Stephen D. Lebovitz 2001 38 Director, President and
Secretary
John N. Foy 2000 55 Director, Vice Chairman of the
Board of Directors, Chief
Financial Officer and
Treasurer
William J. Poorvu 2000 63 Director
Winston W. Walker 2001 55 Director
Ben S. Landress 71 Executive Vice President
Management
Ronald L. Fullam 56 Senior Vice President
Development
Ronald S. Gimple 59 Senior Vice President and
General Counsel
Michael I. Lebovitz 35 Senior Vice President Mall
Projects
Jerry L. Sink 48 Senior Vice President Mall
Management
Eric P. Snyder 49 Senior Vice President and
Director of Corporate Leasing
Augustus N. Stephas 56 Senior Vice President
Accounting and Controller
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* Indicates expiration of term as a director.
(1) The position shown represents the individual's position with the Company
and with the Management Company.
-3-
Stephen D. Lebovitz has served as a Director and Executive Vice President
Development/Acquisitions since January 1, 1998. Prior to that time, Mr. Lebovitz
served as Director and Executive Vice President -Development and Treasurer
beginning on January 1, 1997, Director and Senior Vice President New England
Office and Treasurer of the Company beginning in September 1993 and as Senior
Vice President -- Community Center Development beginning in May 1994. Effective
February 1, 1999, Mr. Lebovitz was promoted to the position of President and
Secretary of the Company. Mr. Lebovitz joined CBL in 1988 as Vice President
responsible for establishing and directing CBL's New England office. Prior
to that time, Mr. Lebovitz was affiliated with Goldman, Sachs & Co. from
1984 to 1986. He is a Vice President of the Boston Jewish Family and
Children's Services, and a member of the United Jewish Appeal Young
Leadership Cabinet and a former state director for the New England states
(Maine, Massachusetts, New Hampshire, Rhode Island and Vermont) of the ICSC.
Stephen D. Lebovitz is a son of Charles B. Lebovitz and a brother of Michael
I. Lebovitz.
John N. Foy has served as a Director and Executive Vice President --
Finance, Chief Financial Officer and Secretary of the Company since its
inception and is a member of the Executive Committee of the Board of Directors.
Effective February 1, 1999, Mr. Foy was promoted to Vice Chairman of the Board
of Directors and Treasurer of the Company. Prior to the Company's formation, he
served in similar executive capacities with CBL. Mr. Foy has been involved in
the shopping center industry since 1969 when he joined the Lebovitz family's
shopping center development business. In 1970, he became affiliated with the
shopping center division of Arlen, and, in 1978, joined Charles B. Lebovitz as
an Associate in establishing CBL. Mr. Foy served as Chairman of the Board of
First Fidelity Savings Bank in Crossville, Tennessee from December 1985 until
April 1994. Since April 1994, Mr. Foy has served as a member of the Advisory
Board of the First American National Bank of Chattanooga, Tennessee and he
currently serves as a Director of the Chattanooga Airport Authority.
William J. Poorvu was initially elected as a Director of the Company upon
the completion of the Company's initial public offering in November 1993 and is
a member of the Compensation and Audit Committees of the Board of Directors. Mr.
Poorvu has, since 1981, been a professor at Harvard Business School specializing
in real estate courses. Mr. Poorvu is also managing partner in several private
real estate companies and has previously consulted for a number of real estate
concerns. He is Chairman of the Board of Advisors of Baupost Group, L.L.C. and a
trustee/director of mutual funds in the Massachusetts Financial Services Group
of Funds.
Winston W. Walker was elected as a Director of the Company upon the
completion of the Company's initial public offering in November 1993 and is
a member of the Executive and Compensation Committees of the Board of
Directors. Mr. Walker served as President and Chief Executive Officer of
Provident Life and Accident Insurance Company of America ("Provident") from
1987 until October 1, 1993, and served in various other capacities with
Provident from 1974 to 1987. Mr. Walker is a director of SunTrust Bank,
Chattanooga, N.A. (formerly American National Bank) and Olan Mills, Inc. of
Chattanooga, Tennessee.
Ben S. Landress has served as Executive Vice President -- Management of the
Company since January 1, 1997. Prior to that time, Mr. Landress served as Senior
Vice President Management of the Company and prior thereto, he served in a
similar capacity with CBL. Mr. Landress directs the day-to-day management of the
Company's properties and is responsible for general corporate administration.
Mr. Landress has been involved in the shopping center business since 1961 when
he joined the Lebovitz family's development business. In 1970, he became
affiliated with Arlen's shopping center division, and, in 1978, joined Mr.
Lebovitz as an Associate in establishing CBL.
Ronald L. Fullam has served as Senior Vice President -- Development of the
Company since January 1, 1997. Prior to that time, Mr. Fullam served as Vice
President -- Development of the Company. Mr. Fullam joined Arlen's shopping
center development division as a project manager in August 1977 and CBL as a
Vice President upon its formation in 1978.
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Ronald S. Gimple has served as Senior Vice President and General Counsel of
the Company since January 1, 1997. Mr. Gimple joined the Company in 1994 as Vice
President Development. Prior to joining the Company, Mr. Gimple served as a Vice
President of The Edward J. DeBartolo Corporation, from 1987 to 1994, and, prior
to 1987, he served as General Counsel of Petrie Store Corporation, Vice
President and Real Estate Counsel of BATUS Retail Group and Vice President and
General Counsel of General Growth Company.
Michael I. Lebovitz has served as Senior Vice President -- Mall Projects
of the Company since January 1, 1997. Prior to that time, Mr. Lebovitz
served as Vice President -- Development and as a project manager for the
Company. Mr. Lebovitz joined CBL in 1988 as a project manager for
CoolSprings Galleria in Nashville, Tennessee and was promoted to Vice
President in 1993. Prior to joining CBL, he was affiliated with Goldman,
Sachs & Co. from 1986 to 1988. He is Vice President of the Jewish Community
Federation of Greater Chattanooga. Michael I. Lebovitz is a son of Charles
B. Lebovitz and a brother of Stephen D. Lebovitz.
Jerry L. Sink, C.S.M. has served as Senior Vice President -- Mall
Management for the Company since February 5, 1998. Prior to that time, Mr. Sink
served as Vice President -- Mall Management. Prior to joining the Company, Mr.
Sink served as Vice President of Retail Management of Equitable Real Estate,
Chicago, Illinois, from January 1988 to June 1993 and prior to June 1993, he was
affiliated with General Growth Companies, Inc. as Vice President ofManagement.
Eric P. Snyder has served as Senior Vice President and Director of
Corporate Leasing for the Company since January 1, 1997. Prior to that time, Mr.
Snyder served as the Company's Vice President and Director of Corporate Leasing.
Mr. Snyder joined CBL as a project manager in 1978 and was promoted to Vice
President in 1984 and to Director of Corporate Leasing in 1992. From 1974 to
1978, Mr. Snyder was a leasing agent and project manager in Arlen's shopping
center division.
Augustus N. Stephas has served as Senior Vice President -- Accounting and
Controller for the Company since January 1, 1997. Prior to that time, Mr.
Stephas served as the Company's Vice President -- Accounting and Controller. He
joined CBL in July 1978 as Controller and was promoted to Vice President in
1984. From 1970 to 1978, Mr. Stephas was affiliated with the shopping center
division of Arlen, first as Accountant and later as Assistant Controller.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors has established standing Executive, Audit and
Compensation Committees. The Board of Directors has no standing Nominating
Committee. The Board of Directors met 9 times and took action by unanimous
written consent 3 times during 1998. Each director attended more than 75% of the
total number of Board meetings and meetings of Board committees on which the
director served during fiscal year 1998.
Executive Committee. The Executive Committee is composed of Charles B.
Lebovitz (Chairman), John N. Foy and Winston W. Walker, who is an Independent
Director. The Executive Committee may exercise all the powers and authority of
the Board of Directors of the Company in the management of the business and
affairs of the Company as permitted by law except with respect to (i) the
declaration of dividends, (ii) issuance of stock, (iii) amendment to the
Company's Certificate of Incorporation or Bylaws, (iv) filling vacancies on the
Board of Directors, (v) approval of borrowings in excess of $40 million per
transaction or series of related transactions, (vi) hiring executive officers,
(vii) approval of acquisitions or dispositions of property or assets in excess
of $40 million per transaction and (viii) certain transactions between the
Company and its directors and officers and certain sales of real estate and
reductions of debt that produce disproportionate tax allocations to CBL pursuant
to the Company's Bylaws. The Executive Committee met 3 times and took action by
unanimous written consent 7 times during 1998.
-5-
Audit Committee. The Audit Committee is composed of Leo Fields (Chairman),
Claude M. Ballard and William J. Poorvu, all of whom are Independent Directors.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants and the plans and results of the audit
engagement, approves professional services provided by the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls.
The Audit Committee met 2 times during 1998.
Compensation Committee. The Compensation Committee is composed of the four
Independent Directors, with Claude M. Ballard serving as Chairman. The
Compensation Committee reviews and approves compensation programs generally and,
specifically, salaries, bonuses, stock awards and stock options for officers of
the Company of the level of vice president or higher. The Compensation Committee
met 2 times and took action by unanimous written consent 1 time during 1998.
COMPENSATION OF DIRECTORS
During 1998, each Independent Director received from the Company an annual
fee of $18,000. In addition to the annual fee, each Independent Director
received a meeting fee of $1,000 for each Board or Committee meeting attended
(excluding telephonic meetings) and reimbursement of expenses incurred in
attending meetings. Each Independent Director serving as a member of the
Executive Committee received from the Company a monthly fee of $500 in lieu of
meeting fees for each Executive Committee meeting.
Effective on January 1, 1999, each Independent Director shall receive from
the Company an annual fee of $20,000 and a meeting fee of $1,000 and $500 for
each non-telephonic and telephonic Board meeting attended, respectively.
Each Independent Director, on December 31 of each fiscal year of the
Company, automatically receives an annual grant of options to purchase 500
shares of Common Stock having an exercise price equal to 100% of the fair market
value of the shares of Common Stock on the date of grant of such option. The
options granted to the Independent Directors on December 31, 1998 have an
exercise price equal to $25.594 per share (based upon the average of the high
and low sales prices of the Common Stock on the New York Stock Exchange ("NYSE")
Composite Tape on December 31, 1998). Each holder of a director option granted
pursuant to this arrangement also has the same rights as other holders of
options in the event of a change in control. By Resolution dated April 30, 1996,
the Compensation Committee adopted certain additional terms for options granted
to the Independent Directors. Pursuant to the Resolution, options granted to the
Independent Directors (i) shall have a term of 10 years from date of grant, (ii)
are 100% vested upon grant, (iii) are nonforfeitable except upon the Independent
Director's conviction for any criminal activity involving the Company or, if
non-exercised, within one year following the date the Independent Director
ceases to be a director of the Company, and (iv) are non-transferrable. In
addition, any person who becomes an Independent Director will receive an initial
grant of 500 shares of Common Stock upon joining the Board of Directors. The
transfer of such shares is restricted during the Independent Director's term and
for one year thereafter pursuant to the CBL & Associates Properties, Inc. 1993
Stock Incentive Plan (the "Stock Incentive Plan").
-6-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information available to the Company as of
March 2, 1999, 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 Corp. (3). . . . . . . . . . . 2,855,900 11.60% 7.82%
82 Devonshire Street
Boston, Massachusetts 02019
AMVESCAP PLC (4) . . . . . . . . . 1,314,553 5.34 3.60
11 Devonshire Square
London, England EC2M4YR
CBL & Associates, Inc.(5). . . . . 8,782,597 27.58 20.07
Charles B. Lebovitz(6) . . . . . . 9,638,161 29.42 21.58
John N. Foy(7) . . . . . . . . . . 334,744 1.34 *
Stephen D. Lebovitz(8) . . . . . . 380,631 1.53 1.03
Eric P. Snyder(9). . . . . . . . . 107,166 * *
Augustus N. Stephas(10). . . . . . 63,892 * *
Claude M. Ballard(11). . . . . . . 9,000 * *
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
William J. Poorvu(11). . . . . . . 3,152 * *
c/o Investment Resource Group
44 Brattle Street
Cambridge, Massachusetts 02138
Winston W. Walker(11). . . . . . . 26,250 * *
1069 Constitution Drive
Chattanooga, Tennessee 37405
Leo Fields(12) . . . . . . . . . . 61,500 * *
c/o Weisberg & Fields, Inc.
Preston Commons East
8115 Preston Road
Dallas, Texas 75225
All executive officers and
directors as a group (14
persons) . . . . . . . . . . . . . 11,003,501 32.55 24.08
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* Less than 1%
-7-
(1) The Company conducts all of its business activities through CBL &
Associates Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"). Pursuant to the second amended and restated
partnership agreement of the Operating Partnership (the "Partnership
Agreement"), each of the limited partners of the Operating Partnership,
which include, among others, CBL and certain of the executive officers
named in this Proxy Statement, has the right ("CBL Rights") to (i)
exchange all or a portion of its partnership interest in the Operating
Partnership for shares of Common Stock (on a one-for-one basis) until it
owns up to the applicable ownership limit ("Ownership Limit") as
prescribed in the Company's Certificate of Incorporation and (ii) sell
to the Company part or all of its remaining partnership interest in the
Operating Partnership in exchange for shares of Common Stock or their
cash equivalent (based on the trading price of the Common Stock), at the
Company's election. See "Certain Relationships and Related
Transactions." Under the terms of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), shares
of Common Stock that may be acquired within 60 days are deemed
outstanding for purposes of computing the percentage of Common Stock
owned by a stockholder. Therefore, percentage ownership of the Common
Stock is computed based on the sum of (i) 24,610,934 shares of Common
Stock actually outstanding as of March 2, 1999, (ii) shares of Common
Stock that may be acquired upon exercise of CBL Rights by the individual
or entity whose percentage of share ownership is being computed (but not
taking account of the exercise of CBL Rights by any other person or
entity) and (iii) shares of Common Stock that may be acquired within 60
days of March 2, 1999 upon the exercise of outstanding options. Amounts
shown were determined without regard to applicable Ownership Limits.
(2) Calculated based on 24,610,934 shares of Common Stock outstanding and
assuming full exercise of all CBL Rights by all limited partners of the
Operating Partnership (without regard to applicable Ownership Limits)
for an aggregate of 36,512,560 shares of Common Stock. Calculation does
not include 1,957,250 shares of Common Stock subject to outstanding
stock options other than, with respect to each person whose
fully-diluted percentage is being computed, shares which may be acquired
within 60 days upon the exercise of outstanding options.
(3) In a Schedule 13G/A filed on February 12, 1999 by FMR, Corp. ("FMR"),
FMR reported that as of December 31, 1998 it beneficially owned
2,855,900 shares of Common Stock, or 11.60% of the total shares
outstanding as of March 2, 1999. FMR reported that it possesses (i) sole
dispositive power with respect to 2,855,900 shares of Common Stock and
(ii) sole voting power with respect to 264,400 shares of Common Stock.
The Schedule 13G/A also states that FMR has not acquired the Company's
shares for the purpose of changing or influencing the control of the
Company.
(4) In a Schedule 13G filed on February 11, 1999 by AMVESCAP PLC and certain
of its affiliates ("AIM Entities"), the AIM Entities reported that as of
December 31, 1998 they collectively beneficially owned 1,314,553 shares
of Common Stock, or 5.34% of the total shares outstanding as of March 2,
1999. The AIM Entities reported that they possess (i) shared dispositive
power with respect to 1,314,553 shares of Common Stock and (ii) shared
voting power with respect to 1,314,553 shares of Common Stock. The
Schedule 13G also states that the AIM Entities have not acquired the
Company's shares for the purpose of changing or influencing the control
of the Company.
(5) Includes (i) 1,448,744 shares of Common Stock owned directly, (ii)
7,236,487 shares of Common Stock which may be acquired upon the exercise
of CBL Rights and (iii) 97,366 shares of Common Stock which may be
acquired by four entities controlled by CBL & Associates, Inc. (CBL
Employees Partnership/Conway, Foothills Plaza Partnership, Girvin Road
Partnership and Warehouse Partnership) upon the exercise of CBL Rights.
(6) Includes (i) 24,400 shares of Common Stock owned directly, (ii) 2,610
shares owned by Mr. Lebovitz' wife, 10,857 shares held in trusts for the
benefit of his step-daughter and grandchildren (of which Mr. Lebovitz
disclaims beneficial ownership) and 101,600 shares which may be acquired
upon the exercise of CBL Rights and held in trusts for the benefit of
Mr. Lebovitz and his sister, (iii) 352,903 shares of Common Stock which
may be acquired upon the exercise of CBL Rights, (iv) 114,000 shares of
Common Stock subject to options granted under the Stock Incentive Plan (
as defined herein) which are currently exercisable with respect to such
shares, (v) 21,000 shares of Common Stock subject to options granted
under the Stock Incentive Plan which become exercisable with respect to
such shares within sixty days of March 2, 1999, (vi) 8,782,597 shares of
Common Stock beneficially owned by CBL, which Mr. Lebovitz may be deemed
to beneficially own by virtue of his control of CBL, and (vii) 228,194
shares of Common Stock that may be acquired by College Station
Associates, an entity controlled by Mr. Lebovitz, upon the exercise of
CBL Rights.
-8-
(7) Includes (i) 48,503 shares of Common Stock owned directly, (ii) 189,241
shares of Common Stock which may be acquired upon the exercise of CBL
Rights, (iii) 85,800 shares of Common Stock subject to options granted
under the Stock Incentive Plan which are currently exercisable with
respect to such shares, and (iv) 11,200 shares of Common Stock subject
to options granted under the Stock Incentive Plan which become
exercisable with respect to such shares within sixty days of March 2,
1999.
(8) Includes (i) 36,695 shares owned directly, (ii) 238,936 shares of Common
Stock which may be acquired upon the exercise of CBL Rights, (iii)
89,000 shares of Common Stock subject to options granted under the Stock
Incentive Plan which are currently exercisable with respect to such
shares, and (iv) 16,000 shares of Common Stock subject to options
granted under the Stock Incentive Plan which become exercisable with
respect to such shares within sixty days of March 2, 1999.
(9) Includes (i) 4,122 shares of Common Stock owned directly, (ii) 5,755
shares of Common Stock owned by Mr. Snyder's wife and 3,850 shares of
Common Stock owned by Mr. Snyder's children, (iii) 48,439 shares of
Common Stock which may be acquired upon the exercise of CBL Rights, (iv)
36,000 shares of Common Stock subject to options granted under the Stock
Incentive Plan which are currently exercisable with respect to such
shares, and (v) 9,000 shares of Common Stock subject to options granted
under the Stock Incentive Plan which become exercisable with respect
to such shares within sixty days of March 2, 1999.
(10) Includes (i) 1,991 shares of Common Stock owned directly, (ii) 31 shares
of Common Stock owned by Mr. Stephas' wife, (iii) 27,670 shares of
Common Stock which may be aquired upon the exercise of CBL Rights, (iv)
25,200 shares of Common Stock subject to options granted under the Stock
Incentive Plan which are currently exercisable with respect to such
shares, and (v) 9,000 shares of Common Stock subject to options granted
under the Stock Incentive Plan which become exercisable with respect to
such shares within sixty days of March 2, 1999.
(11) Includes 2,500 shares of Common Stock subject to immediately exercisable
stock options granted to each Independent Director on December 31 of
each of 1994, 1995, 1996, 1997 and 1998, in the amounts of 500 stock
options per grant pursuant to the Stock Incentive Plan.
(12) Includes (i) 20,500 shares of Common Stock owned by a family limited
partnership created by Mr. Fields and his wife on January 1, 1997 and in
which Mr. Fields serves as a general partner, (ii) 39,500 shares of
Common Stock held by members of Mr. Fields' family, with respect to
which Mr. Fields acts as investment adviser and of which Mr. Fields
disclaims beneficial ownership, and (iii) 1,500 shares of Common Stock
subject to immediately exercisable stock options granted 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 Securities and Exchange Commission
initial reports of ownership and reports of changes in beneficial ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports they file.
-9-
Based solely upon the Company's review of copies of such reports furnished to
it through the date hereof, or written representations that no reports were
required to be filed, the Company believes that during the fiscal year ended
December 31, 1998 there was full compliance with all filing requirements
applicable to its officers, directors and ten percent stockholders except that
one executive officer failed to timely report an acquisition of Preferred Stock
of the Company on June 22, 1998. This filing was subsequently made.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of the
Company's Chief Executive Officer and its next four most highly compensated
executive officers (these four and Charles B. Lebovitz being herein referred to
as the "named executive officers") for the fiscal year ended December 31, 1998
and for the fiscal years ending December 31, 1997 and 1996:
Summary Compensation Table(1)
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
--------------------------------------- -------------
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Principal Compensation Award(s) Options Payouts Compensation
Position(2) Year Salary($) Bonus($) ($) ($)(3) (#) ($) ($)
- --------------------- ---- --------- -------- ------------ ---------- ---------- ------- ------------
Charles B. Lebovitz, 1998 441,122 508 -- 100,000 15,000 -- 8,124(4)
Chairman of the 1997 428,274 -- -- 75,000 30,000 -- 7,659(5)
Board and Chief 1996 415,800 -- -- 75,000 60,000 -- 7,434(6)
Executive Officer
- ----------------------------------------------------------------------------------------------------------------------
John N. Foy, 1998 296,320 508 -- 225,000 8,000 -- 8,124(4)
Director, Vice 1997 276,320 -- -- 100,026 16,000 -- 7,659(5)
Chairman of the 1996 268,272 -- -- 75,000 32,000 -- 7,434(6)
Board, Chief
Financial Officer
and Treasurer
- ----------------------------------------------------------------------------------------------------------------------
Stephen D. Lebovitz 1998 212,223 254 -- 200,000 16,000 -- 7,957(7)
Director, President 1997 192,223 -- -- 155,082 32,000 -- 7,659(5)
and Secretary 1996 186,624 50,000 -- 100,009 32,000 -- 4,452(8)
- ----------------------------------------------------------------------------------------------------------------------
Eric P. Snyder 1998 271,000 508 100,000(9) -- 9,000 -- 7,957(7)
Senior Vice President 1997 251,005 -- 55,000(9) -- 18,000 -- 5,798(10)
and Director of 1996 236,933 -- 40,446(11) -- 18,000 -- 5,730(12)
Corporate Leasing
- ----------------------------------------------------------------------------------------------------------------------
Augustus N. Stephas 1998 294,100 50,508 -- -- 9,000 -- 7,957(7)
Senior Vice 1997 274,100 25,000 -- -- 18,000 -- 5,798(10)
President 1996 254,225 25,000 -- -- 18,000 -- 5,730(12)
Accounting and
Controller
- ----------------------------------------------------------------------------------------------------------------------
(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, 1996, 10,276 shares of
restricted stock with a value as of December 31, 1998 of
$265,249 were outstanding and were held as follows: (i) Charles
Lebovitz - 3,125 shares with a value of $80,664; (ii) John Foy -
3,062 shares with a value of $79,038; and (iii) Stephen Lebovitz
- 4,089 shares with a value of $105,547. The additional 10,276
shares of restricted stock held by the above stated executive
officers as of December 31, 1996 vested on January 1, 1999,
except for 442 of the shares held by Stephen Lebovitz which
vested on June 26, 1998. As of December 31, 1997, 13,541 shares
of restricted stock with a value as of December 31, 1998 of
$349,528 were outstanding and held as follows: (i) Charles
Lebovitz - 3,085 shares with a value of $79,632; (ii) John Foy -
4,081 shares with a value of $105,341; and (iii) Stephen
Lebovitz - 6,375 shares with a value of $164,555. The additional
13,541 shares of restricted stock held by the above stated
executive officers as of December 31, 1997 will vest in 1999 as
follows: Charles Lebovitz' 3,085 shares will vest on October 29,
1999, John Foy's 4,081 shares vested on January 2, 1999 and
Stephen Lebovitz' shares will vest 2,973 on April 1, 1999, 1,257
on April 25, 1999 and 2,145 on November 14, 1999. As of December
31, 1998, 20,917 shares of restricted stock with a value as of
December 31, 1998 of $539,920 were outstanding and held as
follows: (i) Charles Lebovitz - 3,792 shares with a value of
$97,881; (ii) John Foy - 9,095 shares with a value of $234,765;
and (iii) Stephen Lebovitz - 8,030 shares with a value of
-10-
$207,274. The additional 20,917 shares of restricted stock held
by the above stated executive officers as of December 31, 1998
will vest as follows: Charles Lebovitz's 3,792 shares will vest
on October 28, 2002, John Foy's 9,095 shares vested in January,
1999, and Stephen Lebovitz's shares will vest 1,050 on April 23,
2000, 1,031 on June 26, 2000, 2,047 on July 1, 2000, 988 on July
15, 2000, 1,966 on August 27, 2003 and 948 on October 28, 2003.
During the vesting period, dividends will be paid on all
outstanding shares of restricted stock. All of the shares of
restricted stock were issued pursuant to the Stock Incentive
Plan.
(4) For fiscal year 1998, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $4,124 and matching contributions by the Management Company
under the CBL & Associates Management, Inc. 401(k) Profit
Sharing Plan and Trust (the "401(k) Plan") in the amount of
$4,000.
(5) For fiscal year 1997, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $3,909 and matching contributions by the Management Company
under the CBL & Associates Management, Inc. 401(k) Profit
Sharing Plan and Trust (the "401(k) Plan") in the amount of
$3,750.
(6) For fiscal year 1996, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $3,684 and matching contributions by the Management Company
under the Management Company's 401(k) Plan in the amount of
$3,750.
(7) For fiscal year 1998, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $3,957 and matching contributions by the Management Company
under the CBL & Associates Management, Inc. 401(k) Profit
Sharing Plan and Trust (the "401(k) Plan") in the amount of
$4,000.
(8) For fiscal year 1996, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $702 and matching contributions by the Management Company
under the Management Company's 401(k) Profit Sharing
Plan in the amount of $3,750.
(9) Represents amount deferred at Mr. Snyder's election pursuant to
a deferred compensation arrangement between Mr. Snyder and the
Company.
(10) For fiscal year 1997, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $2,048 and matching contributions by the Management Company
under the Management Company's 401(k) Profit Sharing Plan in the
amount of $3,750.
(11) Represents awards of 898 and 834 shares of unrestricted Common
Stock granted to Mr. Snyder during fiscal year 1996 but actual
date of receipt was January 1, 1997. Amount shown is based upon
the closing price of the Common Stock on the NYSE as of the date
of grant.
(12) For fiscal year 1996, amount shown represents term life
insurance premiums paid by the Management Company in the amount
of $1,980 and matching contributions by the Management Company
under the Management Company's 401(k) Profit Sharing Plan in the
amount of $3,750.
The following table sets forth information regarding grants of stock options
made during fiscal year 1998 to each of the named executive officers:
Option Grants in Last Fiscal Year
---------------------------------
% of Total Potential Realizable Value
Number of Options at Assumed Annual Rates
Securities Granted to of Stock Price
Underlying Employees Exercise Appreciation For Option
Individual Grants Options in or Base Term(4)
- -------------------- Granted Fiscal Price Expiration --------------------------
Name (#)(1) Year(2) ($/Sh)(3) Date 5% 10%
- -------------------- ---------- ---------- --------- ---------- --------------------------
Charles B. Lebovitz 15,000 4.76 24.094 4/29/08 $227,289 $575,994
John N. Foy 8,000 2.54 24.094 4/29/08 121,221 307,197
Stephen D. Lebovitz 16,000 5.08 24.094 4/29/08 242,441 614,394
Eric P. Snyder 9,000 2.86 24.094 4/29/08 136,373 345,597
Augustus N. Stephas 9,000 2.86 24.094 4/29/08 136,373 345,597
- -------------------
(1) All options granted to the named executive officers were granted
pursuant to the Stock Incentive Plan on April 29, 1998 and become
exercisable in five equal annual installments beginning April 29,
1999.
(2) Percentages listed are based on options to purchase a total of 315,000
shares of Common Stock granted by the Company to certain of its
officers and employees during fiscal year 1998. Calculations do not
include options to purchase an aggregate of 2,000 shares of Common
Stock granted to the Independent Directors in fiscal year 1998
pursuant to the Stock Incentive Plan.
-11-
(3) The exercise price is generally payable in cash or, in certain
circumstances by the surrender, at the fair market value on the date
on which the option is exercised, of shares of Common Stock.
(4) Potential realizable value is calculated based on an assumption
that the fair market value of the Common Stock appreciates at the
annual rates shown (5% and 10%), compounded annually, from the
date of grant until the end of the option term (10 years). The 5%
and 10% assumed rates are mandated by the Securities and Exchange
Commission for purposes of calculating realizable value and do
not represent the Company's estimate or projection of future stock
prices.
Aggregated 1998 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, 1998. No
options were exercised by any named executive officer during fiscal year 1998:
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money
Acquired Value December 31, 1998 Options at December 31, 1998
on Realized ------------------------------- ------------------------------
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable(1)
- --------------------- ----------- -------- ------------------------------- ------------------------------
Charles B. Lebovitz -0- -0- 114,000 111,000 $663,375 $493,028
John N. Foy -0- -0- 60,800 59,200 353,800 262,948
Stephen D. Lebovitz -0- -0- 64,000 80,000 360,800 304,696
Eric P. Snyder -0- -0- 36,000 45,000 202,950 171,392
Augustus N. Stephas -0- -0- 25,200 45,000 135,675 171,392
(1) Amounts listed are based upon the $25.8125 closing price for the
Common Stock on the NYSE on December 31, 1998 (last trading day in
1998).
Employment Contracts and Termination of Employment Arrangements
Upon completion of the Company's initial public offering in November 1993,
Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz entered into employment
agreements (an "Employment Agreement" and collectively, the "Employment
Agreements") with the Company and the Management Company (collectively, the
"Employer") expiring on November 2, 1996. Pursuant to the Employment Agreements,
Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz held corresponding
positions with the Management Company. Upon the expiration of the Employment
Agreements on November 2, 1996, these three executive officers continued to hold
corresponding positions with the Management Company.
Upon the commencement of their terms in 1993, the Employment Agreements
provided for the following annual base salaries, which were paid by the
Management Company: (i) Charles B. Lebovitz -- $385,000; (ii) John N. Foy --
$230,000; and (iii) Stephen D. Lebovitz -- $160,000. The base salaries are
subject to review annually for increase at the discretion of the Compensation
Committee of the Board of Directors and, since 1993, the base salaries
referenced above have been increased to the levels set forth on the Summary
Compensation Table on page 11.
Additionally, pursuant to the Employment Agreements, Charles B. Lebovitz,
John N. Foy and Stephen D. Lebovitz were eligible for participation in bonus
programs and incentive compensation and stock incentive programs as generally
provided to executive officers commensurate with such officers' performance, all
at the discretion of the Compensation Committee.
-12-
These benefits have continued following the expiration of the Employment
Agreements. The Employment Agreements also provided for certain other benefits,
including life insurance, health, disability and major-medical insurance and
other benefit plans maintained from time to time for the benefit of all
employees of the Employer and these benefits have continued following the
expiration of the Employment Agreements.
Charles B. Lebovitz has agreed to refrain from competing with the Employer
until the later of (i) November 3, 2003 or (ii) two years from the date of
termination of his employment. If his employment is terminated without cause,
the restrictive covenant will expire two years from the date of termination.
Each of John N. Foy and Stephen D. Lebovitz have agreed to refrain from
competing with the Employer, until the later of (i) November 3, 1996 or (ii) two
years from the date of termination of his employment. Prohibited competition
includes any participation in the development, improvement or construction of
any shopping center project, acquiring any interest in a shopping center project
or acquiring vacant land for development as a shopping center project. Charles
B. Lebovitz, John N. Foy and Stephen D. Lebovitz are, however, permitted to hold
certain investments which they owned prior to signing the Employment Agreements.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of the
Independent Directors, Claude M. Ballard, Leo Fields, William J. Poorvu and
Winston W. Walker with Mr. Ballard serving as Chairman. None of the members
of the Compensation Committee are or have been officers or employees of the
Company.
Winston Walker is currently a member of the Board of Directors of SunTrust
Bank, Chattanooga, N.A. (formerly, American National Bank) ("SunTrust"). The
Company is currently maintaining a $10,000,000 line of credit from SunTrust that
matures in 2000. In the future, the Company or the Operating Partnership may, in
the ordinary course of business, engage in other transactions with such bank on
competitive terms.
Claude Ballard is a limited partner of Goldman, Sachs & Co., which has
served as an underwriter in public offerings from the Company and which performs
investment banking services for the Company from time to time.
No executive officer of the Company served on any board of directors or
compensation committee of any entity (other than the Company) with which any
member of the Compensation Committee is affiliated.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
General. The Company is a self-managed, self-administered, fully-
integrated real estate company which is engaged in the ownership, marketing,
management, leasing, expansion, development, redevelopment, acquisition and
financing of regional malls and community and neighborhood centers.
The Company operates through its two wholly-owned subsidiaries, CBL
Holdings I, Inc., a Delaware corporation ("CBL Holdings I"), and CBL Holdings
II, Inc., a Delaware corporation ("CBL Holdings II"). By transfers dated April
1, 1997, the Company assigned its interests in the Operating Partnership to CBL
Holdings I and CBL Holdings II, which resulted in CBL Holdings I becoming the
2.8% sole general partner of the Operating Partnership and CBL Holdings II
becoming a 69% limited partner of the Operating Partnership. The Company
conducts substantially all of its business through the Operating Partnership. To
comply with certain technical requirements of the Code applicable to REITs, the
Operating Partnership carries out the Company's property management and
development activities through the Management Company.
-13-
Neither the Company nor the Operating Partnership has any paid employees.
Although Charles B. Lebovitz and the other executive officers named in this
Proxy Statement are executive officers of the Company, their compensation is in
the form of a base salary and bonus paid entirely by the Management Company.
The Compensation Committee determines all matters related to the
compensation of all officers of the Company of the level of vice president or
higher and administers the Stock Incentive Plan.
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 1998, in addition to a base salary, incentive compensation
consisting of cash, stock options and stock awards for the achievement of target
levels of performance determined by the Compensation Committee. The amount of
this additional compensation was determined for each executive officer based
upon his contribution to the overall success of the Company. Utilizing the
program's basic theory for incentive compensation, cash, stock options and stock
awards were granted during fiscal year 1998 to other employees of the Company as
performance-based incentive compensation.
Compensation of the Chief Executive Officer. Charles B. Lebovitz' base
salary of $441,122 for 1998 was paid pursuant to his Employment Agreement. The
Employment Agreement provides for annual reviews for salary increases and
discretionary bonuses through the term of the agreement. Additionally, the
Employment Agreement provides for participation in the Company's incentive
plans, including the Stock Incentive Plan. During fiscal year 1998, Mr. Lebovitz
received options to purchase 15,000 shares of Common Stock and awards of an
aggregate of 3,792 shares of Common Stock under the Stock Incentive Plan. The
awards were determined upon the same criteria as applied to the other executive
officers of the Company.
Policy Regarding Qualifying Compensation. Section 162(m) of the Code
imposes a $1,000,000 ceiling on tax-deductible remuneration paid to the five
most highly compensated executive officers of a publicly-held corporation. The
limitation does not apply to remuneration payable solely on account of the
attainment of one or more performance goals approved by a compensation
committee. An amendment to the Company's Stock Incentive Plan was adopted in
1996 that limits the number of stock options that may be granted to an employee
in any calendar year. This amendment conforms the Stock Incentive Plan to the
requirements of "performance-based compensation" exempt from the deductibility
limitations of Section 162(m) of the Code.
COMPENSATION COMMITTEE
Claude M. Ballard (Chairman)
Leo Fields
William J. Poorvu
Winston W. Walker
-14-
Performance Graph
The graph set forth below compares the percentage change in the cumulative
stockholder return on the Common Stock with the cumulative total return of the
Standard & Poor's 500 Total Return Index ("S&P 500") and The National
Association of Real Estate Investment Trusts ("NAREIT") Equity REIT Total Return
Index for the period commencing December 31, 1993 through December 31, 1998. 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:
GRAPH
Period Ending
--------------------------------------------------------------------
Index 12/31/93 10/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- --------------------------------- -------- -------- -------- -------- -------- --------
CBL & Associates Properties, Inc. 100.00 122.81 139.80 179.10 183.41 206.33
S & P 500 100.00 101.32 139.39 171.26 228.42 293.69
NAREIT Equity REIT Index 100.00 103.70 119.48 164.04 198.75 165.71
- ----------------------------
The NAREIT Equity REIT Total Return Index is published monthly, based on the
last closing prices of the preceding month.
-15-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
The Company is party to a management agreement with the Management Company
pursuant to which the Management Company renders management and administrative
services with respect to the Company's properties. The Company, through the
Operating Partnership, owns 100% of the preferred stock and 5% of the common
stock of the Management Company and Charles B. Lebovitz, his family and the
Associates own 95% of the common stock of the Management Company. Through the
ownership of 100% of the preferred stock of the Management Company, the Company
enjoys substantially all of the economic benefits of the Management Company's
business. The Management Company also provides management services for certain
properties owned by CBL and certain other third parties for which the Management
Company is paid a management fee. See "Retained Property Interests."
PARTNERSHIP AGREEMENT; CBL RIGHTS
The Company entered into the Partnership Agreement with CBL. The Company,
through CBL Holdings I and II, currently owns a 2.57% general partner interest
and a 65.16% limited partner interest in the Operating Partnership and CBL owns
a 20.07% limited partner interest in the Operating Partnership.
Pursuant to the Partnership Agreement, CBL was granted CBL Rights,
consisting of the rights to: (i) exchange all or a portion of its partnership
interest in the Operating Partnership for shares of Common Stock (on a
one-for-one basis) until it owns up to the applicable share Ownership Limit; and
(ii) sell to the Company part or all of its remaining partnership interest in
the Operating Partnership in exchange for shares of Common Stock or their cash
equivalent (based on the trading price of the Common Stock), at the Company's
election. The Company, however, may not pay in shares of Common Stock to the
extent that this would result in CBL beneficially or constructively owning in
the aggregate more than the applicable Ownership Limit or otherwise jeopardize,
in the opinion of counsel to the Company, the Company's qualification as a real
estate investment trust for tax purposes.
The number of shares of Common Stock and/or cash received by the limited
partners of the Operating Partnership upon exercise of CBL Rights will be based
upon the 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. If the CBL Rights
are satisfied in cash and the Company raises such funds through a public
offering of its securities, by borrowing or otherwise, the purchase price
otherwise payable for the offered interests will be reduced by the amount equal
to the transaction expenses incurred by the Company in so raising such funds
(but not exceeding 5% of the Purchase Price computed without regard to such
expenses).
By notice dated March 10, 1998, James Wolford notified the Company of his
intent to convert a portion of his limited partner's interest (a .3637%
interest) to 122,009 shares of Common Stock via the CBL Rights. On July 10,
1998, the Company opted to acquire the .3637% interest for a cash price of
$3,012,097 which was equal to the fair market value of the Common Stock on the
date of Wolford's exercise of the CBL Rights ($24.6875 per share).
CBL Rights will expire in November 2043 if not exercised prior to that
date. Charles B. Lebovitz, James Wolford and their respective affiliates (as
defined under the attribution rules of the Code) may not transfer rights to
acquire more than 6% of the outstanding shares of Common Stock to any single
entity that is not an affiliate under the applicable attribution rules of the
Code.
-16-
RETAINED PROPERTY INTERESTS
CBL owns certain interests in the following properties (the "Outparcels"):
(i) Outparcels at certain of the Company's properties, which are being offered
for sale through the Management Company, and a minority interest in one mall;
(ii) three long-term mortgages on single-user properties; and (iii) an interest
in a vacant anchor store (a former Hills Department Store) at an associated
center which the Company has an option to acquire. These properties were not
transferred to the Operating Partnership at the time of the Company's initial
public offering because their cash flow or capital structure was inconsistent
with the Company's investment objectives. The aggregate gross leasable area
("GLA") of the one vacant anchor store subject to option is approximately 80,000
square feet, which, if included in the Company's properties, would represent
approximately 0.3% of the total GLA.
The Company's acquisition option is a ten-year option to acquire each
property subject to option for a fixed acquisition price. The option exercise
price is payable in shares of Common Stock (valued at their market price) or in
cash, solely at the Company's election. If the Company elects to pay in shares,
CBL may elect to receive such payment in the form of limited partner interests
in the Operating Partnership which would be convertible into shares of Common
Stock. The aggregate option exercise price for the remaining one vacant anchor
store subject to option is $3.8 million, which amount did not exceed 10 times
the annual base rent paid at the time of the Company's initial public offering
under an existing lease by a tenant in place. At the time entered into,
management believed that the option exercise price for each property subject to
option was greater than its current fair market value. Such exercise price,
however, was determined without obtaining a real estate appraisal with respect
to such property. The option exercise price will be reduced by the amount of the
then existing mortgage indebtedness and any other known liabilities affecting
such property. The option will expire upon its sale to any non-CBL affiliate.
The option may be exercised only by a majority vote of the Independent
Directors. The option will enable the Company to obtain any appreciation in the
value of the property over the option exercise price.
The Company has an option to purchase any Outparcel if CBL enters into
a binding agreement to enter into a lease for such Outparcel with an
unaffiliated third party under which CBL agrees to construct improvements on
the Outparcel at the direction and for use by the tenant. CBL
intends to sell the Outparcels, and the Management Company will receive a
commission of 5% of the net sales proceeds for serving as CBL's agent with
respect to such sales.
During 1998, the Company exercised its option to acquire four tracts of
land each adjacent to one of the Company's properties. The Company acquired the
parcels from an entity comprised of CBL and a certain executive officer of the
Company (namely, Charles B. Lebovitz). The acquisition price was an aggregate
$1,608,157 for the four tracts and the Company acquired the parcels in return
for limited partner interests in the Operating Partnership. CBL received an
aggregate .154% limited partner's interest in return for the parcels.
Aside from the properties retained by CBL, certain members of Charles B.
Lebovitz' family and his father's estate continue to own four community and
neighborhood centers and two tracts of vacant land. The Company has agreed that
it will not acquire any of the four community and neighborhood centers.
The properties retained by CBL and the properties owned by the Lebovitz
family are managed by the Management Company for a management fee of 3% to 5%
per annum of such properties' annual rents. The Management Company is also paid
a leasing commission of 5% per annum of annual rental payments for new leases
and 3% per annum of annual rental payments for extensions or renewals of
existing leases at the properties retained by CBL and the properties owned by
the Lebovitz family. During fiscal year 1998, CBL and the Lebovitz family paid
the Management Company approximately $74,000 under such management arrangements.
AFFILIATED ENTITIES
The stockholders of CBL own interests in a number of entities that have
provided services to CBL in the past, some of which currently continue to
provide services to the Operating Partnership. Such services are provided at
competitive rates. The Independent Directors have, subsequent to the Company's
initial public offering, ratified each of the following arrangements pursuant to
which such services are provided.
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CBL has a non-controlling interest in a major national construction company
that has been engaged by CBL in the building of substantially all of the
properties and is currently being engaged by the Company for building and
construction of the Company's construction properties. Charles B. Lebovitz is
also a director of the construction company. The majority interest in the
construction company is held by the members of its senior management, none of
whom are affiliated with CBL or the Company. As of December 31, 1998, the
Company had 10 active contracts (including contracts in respect of each of the
construction properties) with such construction company having aggregate value
of approximately $136 million. During fiscal year 1998, the Company paid
approximately $71 million to this construction company.
The construction company and CBL own all of the interests of a partnership
that owns two aircraft used by the personnel of the Company and the construction
company. Each partner
contributes equally to fixed costs and shares variable costs through an hourly
charge based on usage. The Company reimburses the partnership for costs on an
hourly basis associated with use of the aircraft relating to the business of the
Company. During fiscal year 1998, the Company paid approximately $990,000 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
The executive officers named in this Proxy Statement and certain CBL
employees are partners in partnerships that lease 21 spaces representing
approximately 33,387 square feet in 12 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 & Thompson, P.C., local counsel to the Company and CBL, leases
2,536 square feet of office space at the Company's office building. The
construction company, a significant minority interest of which is owned by CBL,
leases 9,386 square feet of office space at the Company's office building.
Management believes that, at the time these leases were entered into, they
provided for rental payments at market rates and terms.
Renewals of any of the foregoing leases will provide for rental payments at
market rates and terms at the time such renewal leases are entered into.
OTHER
A member of the family of an executive officer of the Company (namely, John
N. Foy) owns an approximately 5,000 square foot store in Hamilton Collection, a
retail condominium center adjacent to Hamilton Place, one of the Company's malls
located in Chattanooga, Tennessee.
Charles B. Lebovitz, certain members of his family, certain of the
Associates, a partnership consisting of certain of the Associates and a certain
executive officer of the Company (namely, 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.
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Certain members of Shumacker & Thompson, P.C., local counsel to the Company
and CBL, are assistant secretaries of the Company. Shumacker & Thompson, P.C.
has also provided legal services to CBL in the past and currently continues to
provide such services.
The Company has retained the law firm of Finkel Goldstein Berzow &
Rosenbloom to represent the Company in connection with the bankruptcy of Caldor
Corporation, with whom the Company had entered into some pre- development
leases, which have been subsequently terminated prior to the commencement of any
construction. The fee arrangement is a contingent arrangement providing for the
firm to receive 25% of the first $1 million of recoveries from the tenant, 15%
of any additional recoveries and reimbursement of all out-of-pocket expenses.
Harvey L. Goldstein, Esq., a member of the firm, is the father-in-law of Stephen
D. Lebovitz.
Charles B. Lebovtiz is currently an advisory director of First Tennessee
Bank, N.A., Chattanooga, Tennessee ("1st Tennessee"). The Company is currently
maintaining an $80 million line of credit from 1st Tennessee that matures in
2000. There was approximately $27.3 million outstanding on this line of credit
at December 31, 1998. In the future, the Company or the Operating Partnership
may, in the ordinary course of business, engage in other transactions with such
bank on competitive terms.
See also the transactions described above under "Executive Compensation --
Compensation Committee Interlocks and Insider Participation".
RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors proposes and recommends that the stockholders ratify
the selection of the firm of Arthur Andersen LLP to serve as independent public
accountants of the Company for the year ending December 31, 1999. Arthur
Andersen LLP served as the Company's independent public accountants from the
Company's inception in July 1993 to the present. Unless otherwise directed by
the stockholders, proxies will be voted for approval of the selection of Arthur
Andersen LLP to audit the Company's consolidated financial statements for the
1999 fiscal year. A representative of Arthur Andersen LLP will attend the Annual
Meeting, and will have an opportunity to make a statement and to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR 1999
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DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the rules established by the Securities and Exchange
Commission, stockholder proposals to be included in the Company's proxy
statement with respect to the 2000 Annual Meeting of Stockholders must be
received by the Company at its executive offices located at Suite 300, 6148 Lee
Highway, Chattanooga, Tennessee 37421 no later than December
1, 1999.
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.
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
STEPHEN D. LEBOVITZ
Secretary
Chattanooga, Tennessee
March 23, 1999
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS
PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO INVESTOR RELATIONS, CBL &
ASSOCIATES PROPERTIES, INC., SUITE 300, 6148 LEE HIGHWAY, CHATTANOOGA, TENNESSEE
37421-6511.
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