SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
</Table>
PARKWAY PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
PARKWAY PROPERTIES, INC.
ONE JACKSON PLACE
SUITE 1000
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
www.pky.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2002
To the Stockholders:
Notice is hereby given that the 2002 Annual Meeting of Stockholders (the
"Meeting"), of Parkway Properties, Inc. (the "Company"), will be held at the
Suncom Building, 111 East Capitol Street, Jackson, Mississippi, at 1:30 p.m.,
Jackson time, on May 9, 2002 for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified.
2. To consider and take action on a proposal to ratify the adoption of the
Company's 2001 Directors' Stock Option Plan.
3. To consider and take action upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 25, 2002 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARSHALL A. LOEB
MARSHALL A. LOEB
Senior Vice President, Chief Financial
Officer and Secretary
Dated: April 1, 2002
STOCKHOLDERS ARE URGED TO VOTE BY SIGNING, DATING AND RETURNING THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES
April 1, 2002
PARKWAY PROPERTIES, INC.
ONE JACKSON PLACE
SUITE 1000
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
www.pky.com
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2002
The following information is furnished in connection with the Annual
Meeting of Stockholders (the "Meeting"), of Parkway Properties, Inc. (the
"Company"), to be held on May 9, 2002 at 1:30 p.m., Jackson time, at the Suncom
Building, 111 East Capitol Street, Jackson, Mississippi. A copy of the Company's
Annual Report to Stockholders for the fiscal period ended December 31, 2001
accompanies this Proxy Statement. Additional copies of the Annual Report,
Notice, Proxy Statement and Form of Proxy may be obtained from the Company's
Secretary, P.O. Box 24647, Jackson, Mississippi 39225-4647. A COPY OF THE
COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY'S INVESTOR
RELATIONS DEPARTMENT AT THE COMPANY'S CORPORATE OFFICES, VIA E-MAIL ADDRESSED TO
mail@pky.com, FROM THE COMPANY'S WEBSITE AT www.pky.com OR FROM THE SECURITIES
AND EXCHANGE COMMISSION'S WEB SITE AT www.sec.gov. This Proxy Statement, Annual
Report, and Form of Proxy will first be sent to stockholders on or about April
5, 2002.
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy for the Meeting is being solicited by the directors of
the Company. The proxy may be revoked by a stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy may also be
revoked by a stockholder attending the Meeting, withdrawing such proxy and
voting in person. The cost of soliciting the proxies on the enclosed form will
be paid by the Company. In addition to the use of the mails, proxies may be
solicited by the directors and their agents (who will receive no additional
compensation therefor) by means of personal interview, telephone, facsimile,
e-mail or other electronic means and it is anticipated that banks, brokerage
houses and other institutions, nominees or fiduciaries will be requested to
forward the soliciting material to their principals and to obtain authorization
for the execution of proxies. The Company may, upon request, reimburse banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding proxy material to their principals.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The record date for determining shares of common stock, par value $0.001
per share, of the Company ("Common Stock"), and shares of Series B cumulative
convertible preferred stock, par value $0.001 per share, of the Company ("Series
B Preferred Stock") entitled to vote at the Meeting has been fixed at the close
of business on March 25, 2002. On such date there were 9,266,864 shares of
Common Stock outstanding and 2,142,857 shares of Series B Preferred Stock
outstanding. The holders of Common Stock are generally entitled to one vote for
each share of Common Stock on each matter submitted to a vote at a meeting of
stockholders. The holders of Series B Preferred Stock are generally entitled to
one vote for each share of Series B Preferred Stock on each matter submitted to
a vote at a meeting of stockholders. Pursuant to the Company's Bylaws, directors
will be elected by a plurality of the votes with each share being voted for as
many individuals as there are directors to be elected and for whose election the
share is entitled to vote. Ratification of the adoption of the 2001 Directors'
Stock Option Plan (the "2001 Directors Plan"), requires the affirmative vote of
the holders of a majority of the shares of Common Stock and Series B Preferred
Stock entitled to vote on the proposal, provided that the total vote cast on the
proposal represents over 50% in interest of all securities entitled to vote on
the proposal.
The presence, in person or by properly executed proxy, of the holders of
shares of Common Stock and Series B Preferred Stock entitled to cast a majority
of all the votes entitled to be cast at the Meeting is necessary to constitute a
quorum. Shares of Common Stock and Series B Preferred Stock represented by a
properly signed, dated and returned proxy card will be treated as present at the
Meeting for purposes of determining a quorum. Proxies relating to "street name"
shares that are voted by brokers will be counted as shares present for purposes
of determining the presence of a quorum, but will not be treated as shares
having voted at the Meeting as to any proposal as to which the broker does not
vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), beneficially owned, as of March 25, 2002 more than five
percent of the Common Stock or Series B Preferred Stock, except as set forth in
the following table.
<Table>
<Caption>
AMOUNT OF AMOUNT OF PERCENT OF
COMMON STOCK SERIES B PERCENT SERIES B
NAME AND ADDRESS BENEFICIALLY BENEFICIALLY OF COMMON PREFERRED
OF BENEFICIAL OWNER OWNED OWNED STOCK (1) STOCK
------------------- ------------ ------------ --------- ----------
T. Rowe Price Associates, Inc....... 917,100(2) 0 9.9% 0
100 E. Pratt Street
Baltimore, Maryland 21202
Morgan Stanley Dean Witter & Co..... 555,657(3) 0 6.0 0
1585 Broadway
New York, New York 10036
Five Arrows Realty Securities III
L.L.C............................. 75,000(4) 2,142,857(4) (4) 100%
1251 Avenue of the Americas
New York, New York 10020
</Table>
- ---------------
(1) Based on the number of shares of Common Stock outstanding on March 25, 2002
which was 9,266,864 shares.
(2) Based upon a Statement on Schedule 13G filed with the SEC, which indicated
that these securities are owned by various individual and institutional
investors, including T. Rowe Price Small-Cap Stock Fund, Inc. (which has
sole voting power with respect to 669,700 shares of Common Stock,
representing 7.2% of the shares of Common Stock outstanding), which T. Rowe
Price Associates, Inc. ("Price Associates")
2
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements of
the Exchange Act, Price Associates is deemed to be a beneficial owner of
such securities; however, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such securities.
(3) Based upon a Statement on Schedule 13G filed with the SEC, which indicated
that Morgan Stanley Dean Witter & Co. had shared voting power with respect
to 494,357 shares of Common Stock and shared dispositive power with respect
to 555,657 shares of Common Stock and that its wholly-owned subsidiary,
Morgan Stanley Dean Witter Advisors Inc. had shared voting and dispositive
power with respect to 472,397 shares of Common Stock.
(4) Based upon a statement on Schedule 13D filed with the SEC, which indicated
that Five Arrows Realty Securities III L.L.C. and its managing member,
Rothschild Realty Investors III L.L.C., share voting and dispositive power
with respect to 2,142,857 shares of Series B Preferred Stock and 75,000
shares of Common Stock (or 0.8% of the outstanding shares of Common Stock)
issuable upon exercise of a warrant (the "Warrant"). The Series B Preferred
Stock is convertible on a one for one basis into shares of Common Stock (or
18.8% of the outstanding shares of Common Stock).
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the shares of Common Stock and Series B
Preferred Stock beneficially owned, as of March 25, 2002 by each director,
nominee for director, executive officer of the Company and by the directors,
nominees and executive officers as a group. Unless otherwise stated, each person
has sole voting
3
and investment power with respect to the shares of Common Stock and Series B
Preferred Stock set forth in the table.
<Table>
<Caption>
NUMBER OF
NUMBER OF SHARES OF
SHARES OF SERIES B PERCENT OF
COMMON STOCK PERCENT PREFERRED STOCK SHARES OF
BENEFICIALLY OF COMMON BENEFICIALLY SERIES B
NAME OWNED STOCK (1) OWNED PREFERRED STOCK
---- ------------- --------- --------------- ---------------
Roger P. Friou................... 39,651 (2) * 0 0
Martin L. Garcia................. 17,700 (3) * 0 0
Matthew W. Kaplan................ 83,011 (4)(5) (5) 2,142,857 (5) 100%
Michael J. Lipsey................ 18,183 (6) * 0 0
Joe F. Lynch..................... 72,500 (7) * 0 0
C. Herbert Magruder.............. 64,552 (8) * 0 0
Leland R. Speed.................. 205,887 (9) 2.2% 0 0
Steven G. Rogers................. 197,451 (10) 2.1 0 0
Marshall A. Loeb................. 7,000 (11) * 0 0
David R. Fowler.................. 37,619 (12) * 0 0
James M. Ingram.................. 41,233 (13) * 0 0
G. Mitchel Mattingly............. 47,095 (14) * 0 0
Sarah P. Clark................... 69,232 (15) * 0 0
Regina P. Shows.................. 24,162 (16) * 0 0
Jack R. Sullenberger............. 29,971 (17) * 0 0
Directors, nominees and executive
officers as a group............ 955,247 (18) 9.9% 2,142,857 (5) 100%
</Table>
- ---------------
* Less than 1%.
(1) Based on the number of shares of Common Stock outstanding on March 25, 2002
which was 9,266,864 shares.
(2) Includes 7,000 shares of Common Stock Mr. Friou has the right to acquire
under the 1991 Directors Stock Option Plan, as amended (the "1991 Directors
Plan"), and 28,351 shares of Common Stock owned by a limited partnership of
which Mr. Friou is the sole general partner and his wife and two adult
children are the sole limited partners.
(3) Includes 13,500 shares of Common Stock Mr. Garcia has the right to acquire
under the 1991 Directors Plan and 1,000 shares of Common Stock held in
trust for Mr. Garcia's children, of which Mr. Garcia is the trustee.
(4) Includes 7,500 shares of Common Stock Mr. Kaplan has the right to acquire
under the 1991 Directors Plan.
(5) Includes 75,000 shares of Common Stock issuable upon exercise of the
Warrant and 2,142,857 shares of Series B Preferred Stock held by Five
Arrows Realty Securities III L.L.C., a Delaware limited liability company
in which Rothschild Realty Investors III L.L.C., the managing member, has
appointed
4
Mr. Kaplan, among others, as manager of Five Arrows Realty Securities III
L.L.C. Mr. Kaplan disclaims beneficial ownership of all of the 2,142,857
shares of Series B Preferred Stock and the 2,142,857 shares of Common Stock
(or 18.8% of the outstanding shares of Common Stock) issuable upon
conversion of the shares of Series B Preferred Stock and he disclaims
beneficial ownership of the 75,000 shares of Common Stock (or 0.8% of the
outstanding shares of Common Stock) issuable upon exercise of the Warrant.
(6) Includes 16,500 shares of Common Stock Mr. Lipsey has the right to acquire
under the 1991 Directors Plan. Mr. Lipsey also owns directly, or
indirectly, 705 shares of 8.75% Series A cumulative redeemable preferred
stock ("Series A Preferred Stock") that do not have voting rights at the
Meeting.
(7) Includes 22,500 shares of Common Stock Mr. Lynch has the right to acquire
under the 1991 Directors Plan. Mr. Lynch also owns 2,300 shares of Series A
Preferred Stock that do not have voting rights at the Meeting.
(8) Includes 18,750 shares of Common Stock Dr. Magruder has the right to
acquire under the 1991 Directors Plan and 2,013 shares of Common Stock held
in a trust of which Dr. Magruder is a trustee. Does not include 450 shares
of Common Stock beneficially owned by Dr. Magruder's wife, as to which he
disclaims beneficial ownership. Dr. Magruder also owns 8,000 shares of
Series A Preferred Stock that do not have voting rights at the Meeting.
(9) Includes 49,737 shares of Common Stock Mr. Speed has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 20,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan. Does not include 21,157 shares of Common
Stock owned by Mr. Speed's wife, as to all of which Mr. Speed disclaims
beneficial ownership.
(10) Includes 67,878 shares of Common Stock Mr. Rogers has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 39,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan. Does not include 15,593 shares of Common
Stock beneficially owned by Mr. Rogers' wife as to which he disclaims
beneficial ownership. Mr. Rogers also owns 770 shares of Series A Preferred
Stock that do not have voting rights at the Meeting.
(11) Includes 6,000 shares of Common Stock granted to Mr. Loeb as incentive
restricted shares under the 1994 Stock Option Plan.
(12) Includes 14,158 shares of Common Stock Mr. Fowler has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 12,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan.
(13) Includes 22,233 shares of Common Stock Mr. Ingram has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 12,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan.
(14) Includes 13,408 shares of Common Stock Mr. Mattingly has the right to
acquire pursuant to exercisable options granted under the 1994 Stock Option
Plan and 12,000 shares of Common Stock granted as incentive restricted
shares under the 1994 Stock Option Plan. Mr. Mattingly also owns 1,560
shares of Series A Preferred Stock and his wife owns 280 shares of Series A
Preferred Stock that do not have voting rights at the Meeting.
(15) Includes 36,582 shares of Common Stock Ms. Clark has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan,
18,000 shares granted as incentive restricted shares under the 1994 Stock
Option Plan and 750 shares of Common Stock Ms. Clark owns as custodian for
5
her children. Ms. Clark also owns, indirectly, 220 shares of Series A
Preferred Stock that do not have voting rights at the Meeting.
(16) Includes 10,960 shares of Common Stock Ms. Shows has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 8,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan.
(17) Includes 16,883 shares of Common Stock Mr. Sullenberger has the right to
acquire pursuant to exercisable options granted under the 1994 Stock Option
Plan and 12,000 shares of Common Stock granted as incentive restricted
shares under the 1994 Stock Option Plan.
(18) Includes 85,750 shares of Common Stock that the directors of the Company
have the right to acquire under the 1991 Directors Plan, 231,839 shares of
Common Stock that officers of the Company have the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan,
139,000 shares of Common Stock granted to officers as incentive restricted
shares under the 1994 Stock Option Plan, and 75,000 shares of Common Stock
issuable upon exercise of the Warrant (see footnote 5 above).
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES
In accordance with the Bylaws of the Company, the Board of Directors has by
resolution fixed the number of directors to be elected at the Meeting at seven.
All seven positions on the Board are to be filled by the vote of the
stockholders at the Meeting. Each person so elected shall serve until the next
Annual Meeting of Stockholders and until his successor is elected and qualified.
The directors of the Company recommend a vote FOR the nominees listed
below. All nominees are currently serving as directors of the Company and were
elected at the 2001 Annual Meeting of Stockholders. Dr. Magruder, presently a
director of the Company, is retiring and therefore is not standing for
reelection.
Unless instructed otherwise, proxies will be voted FOR the nominees listed
below. Although the directors do not contemplate that any of the nominees will
be unable to serve prior to the Meeting, if such a situation arises, the
enclosed proxy will be voted in accordance with the best judgment of the person
or persons voting the proxy.
6
The table below sets forth certain information regarding the nominees for
election to the Company's Board of Directors.
<Table>
<Caption>
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------------- --- ----------------------------------
Roger P. Friou....................... 67 Private investor; President of Jitney Jungle Stores
Director since 1995 of America, Inc. (a regional supermarket chain) from
1996 to 1997, and its Vice Chairman and Chief
Financial Officer until 1996 having assumed those
positions more than five years prior thereto.
Martin L. Garcia..................... 46 Managing Director of Pinehill Capital Partners
Director since 1998 (investment company) since 2000; Director and
President of Garcia Enterprises (real estate holding
company) since 1988; Partner in the law firm of Hill,
Ward & Henderson, P.A. until 1999 and Of Counsel
thereafter; Managing Director of Garcia, Meyers & Co.
(a real estate service company) from 1993 to 1998.
Matthew W. Kaplan.................... 39 Managing Director of Rothschild Realty, Inc.
Director since 2000 (investment bank) and Portfolio Manager of Five
Arrows Realty Securities L.L.C., Five Arrows Realty
Securities II L.L.C., Five Arrows Realty Securities
III L.L.C., and Five Arrows Realty Securities IV
L.L.C. (each, a real estate investment fund).
Michael J. Lipsey.................... 52 President of The Lipsey Company (designs and delivers
Director since 1997 training programs concerning the commercial real
estate marketplace).
Joe F. Lynch......................... 69 Chairman of the Board and Chief Executive Officer of
Director since 1994 First Continental Corporation (a real estate company)
since 1994; Limited Partner and Manager of the
General Partner of First Continental Investment Co.,
Ltd. since 1996.
Steven G. Rogers..................... 47 Chief Executive Officer of the Company since 1997,
Director since 1996; President President since 1993, Director since 1996, Chief
since 1993; Chief Executive Operating Officer from 1993 until 1997, and Senior
Officer since 1997 Vice President of the Company from 1988 to 1993.
Leland R. Speed...................... 69 Chairman of the Board of the Company and EastGroup
Director since 1978 and Properties, Inc.(2); Chief Executive Officer of the
Chairman since 1980 Company and EastGroup Properties, Inc. until 1997.
</Table>
- ---------------
(1) Unless otherwise stated, each nominee has held the position indicated for at
least the past five years.
(2) Mr. Speed is involved in strategic issues relating to each company rather
than the operation of its business on a day to day basis. He allocates his
time between the two companies depending on which company is in need of his
strategic guidance at a particular time.
7
OTHER DIRECTORSHIPS AND TRUSTEESHIPS
Members of, and nominees to, the Board of Directors serve on the Boards of
Directors or the Boards of Trustees of the following publicly held companies:
<Table>
<Caption>
NOMINEE COMPANY
- ------- -------
Matthew W. Kaplan................................... CNL Hospitality Properties, Inc.
Leland R. Speed..................................... ChemFirst Inc.
EastGroup Properties, Inc.
Farm Fish, Inc.
</Table>
COMMITTEES AND MEETING DATA
The Audit Committee of the Board of Directors currently consists of Messrs.
Friou, Garcia and Kaplan. The functions performed by this committee consist
principally of conferring with and reviewing the reports of the Company's
independent accountants and bringing to the entire Board of Directors for review
those items relating to audits or accounting practices which the Audit Committee
believes merit such review. The Audit Committee met three times during the year
ended December 31, 2001. See "-- Audit Committee Report" below.
The Compensation Committee of the Board, which currently consists of
Messrs. Kaplan and Lipsey and Dr. Magruder, met once during the year ended
December 31, 2001. The committee's function is to review compensation levels for
officers and recommend compensation levels for officers and administer the 1994
Stock Option Plan.
The Investment Committee of the Board currently consists of Messrs. Kaplan,
Lipsey and Lynch. Its function is to act on behalf of the full Board of
Directors to authorize property purchases between regularly scheduled quarterly
Board of Directors meetings. The Investment Committee met once during the year
ended December 31, 2001.
The Corporate Governance and Nominating Committee of the Board currently
consists of Messrs. Garcia, Kaplan and Lynch. The functions of this committee
are to establish qualifications for membership on the Board of Directors, to
consider and recommend candidates for election to the Board, to recommend to the
Board persons to fill the positions of Chairman of the Board and Chief Executive
Officer, and to annually evaluate the performance of each director whose term is
set to expire in order to determine whether the director should be requested to
stand for re-election. The Corporate Governance and Nominating Committee was
established in 2001 and did not meet during the Company's 2001 fiscal year.
During the year ended December 31, 2001, the full Board of Directors met on
five occasions. Each director attended at least 75% of the aggregate of the
total number of meetings of the Board and meetings held by all committees of the
Board on which he served.
Audit Committee Report. The Audit Committee of the Board of Directors is
responsible for providing independent, objective oversight of the Company's
accounting functions and internal controls. The Audit Committee is composed of
three directors, Messrs. Friou, Garcia and Kaplan, each of whom is independent
as defined by the New York Stock Exchange listing standards. The Audit Committee
operates under a written charter approved by the Board of Directors.
Management is responsible for the Company's financial reporting process
including its system of internal control, and for the preparation of
consolidated financial statements in accordance with accounting principles
8
generally accepted in the United States. The Company's independent auditors are
responsible for auditing those financial statements. Our responsibility is to
monitor and review these processes. It is not our duty or our responsibility to
conduct auditing or accounting reviews or related procedures. We are not
employees of the Company and we may not be, and we may not represent ourselves
to be or to serve as, accountants or auditors by profession or experts in the
fields of accounting or auditing. Therefore, we have relied, without independent
verification, on management's representation that the financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States and on the representations of
the independent auditors included in their report on the Company's financial
statements. Our oversight does not provide us with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, our considerations and discussions
with management and the independent auditors do not assure that the Company's
financial statements are presented in accordance with accounting principles
generally accepted in the United States, that the audit of our Company's
financial statements has been carried out in accordance with generally accepted
auditing standards or that our Company's independent accountants are in fact
"independent."
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States,
and the Audit Committee has reviewed and discussed the consolidated financial
statements with management and the independent accountants. The Audit Committee
also discussed with the independent accountants the matters required by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee received written disclosures from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants that firm's independence.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001, to be filed with the Securities
and Exchange Commission.
THE AUDIT COMMITTEE
ROGER P. FRIOU, Chair
MARTIN L. GARCIA
MATTHEW W. KAPLAN
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that directors, officers and
more than 10 percent stockholders of the Company file reports with the SEC
within the first 10 days of the month following any purchase or sale of shares
of Common Stock. During 2001, Mr. Speed was late in filing a Form 5 with respect
to a gift made in December 2000. No other directors or executive officers of the
Company were late in filing reports under Section 16(a).
9
EXECUTIVE OFFICERS
The following is a list of the Company's executive officers:
<Table>
<Caption>
NAME AND POSITION PRINCIPAL OCCUPATION AND BUSINESS
WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------- --- ----------------------------------
Leland R. Speed...................... 69 See table under "Nominees."
Chairman
Steven G. Rogers..................... 47 See table under "Nominees."
President and
Chief Executive Officer
Marshall A. Loeb..................... 39 Chief Financial Officer since 2000; Senior Vice
Senior Vice President, Chief President -- Western Region of EastGroup Properties,
Financial Officer and Secretary Inc. from 1991 until 2000; Portfolio Manager with
Investment Development Services in 2000.
David R. Fowler...................... 44 Senior Vice President of the Company since 1997, Vice
Senior Vice President of President from 1995 to 1997 and an Asset Manager
Operations since 1983; Vice President of Parkway Realty
Services, L.L.C. ("Parkway Realty") since 1998.
James M. Ingram...................... 45 Senior Vice President of the Company since 1997, Vice
Senior Vice President President from 1994 to 1997 and an Asset Manager
since 1989; President of Parkway Realty since 1998.
G. Mitchel Mattingly................. 46 Senior Vice President of the Company since 1997 and
Senior Vice President Vice President from 1996 to 1997; President of
Parkway Texas Corporation from 1994 to 1997; Vice
President of Parkway Realty since 1998.
Sarah P. Clark....................... 42 Senior Vice President of the Company since 1997,
Senior Vice President of Assistant Secretary since 2000, Vice President from
Administration and Strategic 1992 until 1997, Chief Financial Officer and
Planning and Assistant Secretary of the Company from 1994 to 2000, Treasurer
Secretary from 1996 to 1999 and Controller from 1986 to 1992.
Regina P. Shows...................... 35 Senior Vice President of the Company since 1999, Vice
Senior Vice President President from 1998 to 1999, Treasurer from 1999 to
2001 and Controller from 1992 to 2001.
Jack R. Sullenberger................. 48 Senior Vice President of the Company since 1997, Vice
Senior Vice President of President from 1996 to 1997 and an Asset Manager from
Technical Services 1986 to 1996.
</Table>
- ---------------
(1) Unless otherwise stated, the indicated person has held the position
indicated for at least the past five years.
Ms. Clark, Senior Vice President of Administration and Strategic Planning
and Assistant Secretary of the Company, is the sister of Ms. Shows, Senior Vice
President of the Company. There are no other family relationships between any of
the directors or executive officers of the Company.
10
EXECUTIVE COMPENSATION
The following table summarizes, for the fiscal years ended December 31,
2001, 2000 and 1999, the amount of compensation paid by the Company to its Chief
Executive Officer and five other executive officers whose cash compensation
during the year ended December 31, 2001 exceeded $100,000 (the "Named
Officers").
<Table>
<Caption>
LONG TERM COMPENSATION
--------------------------------
AWARDS
--------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------- STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS AWARDS(1) OPTIONS/SARS (#)(2) COMPENSATION(3)
------------------ ---- -------- -------- ---------- ------------------- ---------------
Leland R. Speed.......... 2001 $147,000 $ 75,228 $ 0 0 $19,084
Chairman 2000 147,000 88,200 0 12,500 13,825
1999 140,000 84,000 567,506 0 14,746
Steven G. Rogers......... 2001 231,525 197,475 0 9,000 19,630
President and Chief 2000 220,500 220,500 0 24,375 13,880
Executive Officer 1999 210,000 210,000 1,106,625 0 13,966
Marshall A. Loeb......... 2001 150,000 51,176 0 6,000 19,351
Senior Vice President, 2000(4) 24,749 0 171,378 20,000 2,291
Chief Financial Officer
and Secretary
David R. Fowler.......... 2001 126,788 46,367 0 4,000 19,420
Senior Vice President 2000 120,750 51,765 0 7,500 13,670
of Operations 1999 115,000 59,305 340,500 0 13,449
James M. Ingram.......... 2001 126,788 46,367 0 4,000 19,630
Senior Vice President 2000 120,750 51,765 0 7,500 13,670
1999 115,000 59,302 340,500 0 22,015
G. Mitchel Mattingly..... 2001 142,080 44,852 0 4,000 19,630
Senior Vice President 2000 135,285 50,082 0 7,500 13,880
1999 128,843 47,700 340,500 0 13,426
</Table>
- ---------------
(1) On March 4, 1999, a committee of the Board of Directors granted restricted
shares to the Named Officers. Under these grants of restricted shares,
employees' rights to the restricted shares are conditioned on the Company's
achievement of specified performance goals set forth in the Company's 5 IN
50 Plan and, alternatively, the employee's continued employment. The 5 IN 50
Plan is the Company's strategic plan to increase funds from operations
("FFO") per basic share from $3.05 for 1998 to $5.00 per basic share for the
year ended December 31, 2002 before expense accruals for the restricted
share grants (a compounded annual growth in FFO per basic share of
approximately 13%). In early 2001 the employees' agreements were revised to
increase the minimum FFO per basic share from $5.00 to $5.23. The agreements
now provide that if the Company achieves FFO per basic share before taking
into account any expense accruals for grants of incentive restricted shares
of $5.23 for any year ended on or prior to December 31, 2002, the employees'
interest in 100 percent of the restricted shares will become nonforfeitable
as of December 31 of the year in which that goal is met. Alternatively, if
the Company's FFO per basic share before taking into account any expense
accruals for grants of incentive restricted shares for the year 2002 is at
least $4.75 but not more than $5.22, the employees' interest in 50 percent
of the restricted shares will become nonforfeitable; or, if the FFO per
basic share before taking into account any expense accruals for grants of
incentive restricted shares for 2002 is at least $4.50 but not more than
$4.74, 25 percent will become nonforfeitable. If an employee remains
employed on March 4, 2009 or ten
11
years from the date of grant, the employee's interest in all restricted
shares will become nonforfeitable, to the extent they are not already
nonforfeitable. If an employee's employment terminates before March 4, 2009
or ten years from the date of grant, by reason of death or disability, the
employee's interest in any forfeitable restricted shares will become
nonforfeitable according to a graduated schedule based on years elapsed
after the date of grant. Dividends on the restricted shares will be retained
by the Company, to be paid only when the related shares become
nonforfeitable.
(2) The options granted in 2000 were granted on May 31, 2000, and the options
granted in 2001 were granted on July 23, 2001, all under the 1994 Stock
Option Plan. One-third of the options granted in 2000 and 2001 vest on the
second anniversary of the date of grant, one-third on the third anniversary
of the date of grant and one-third on the fourth anniversary of the date of
grant. No options were granted in 1999.
(3) This is the Company's contribution to its 401(k) Plan for the Named
Officer's benefit and the amount of premium paid by the Company for group
term life insurance on the Named Officer's life.
(4) Mr. Loeb began his employment with the Company in November 2000. The amount
set forth as salary for Mr. Loeb for 2000 represents actual salary paid to
him for work performed from his hire date to December 31, 2000. His
annualized salary for 2000 was $150,000.
Option Grants. The following table gives information with respect to
options granted to the Named Officers during the year ended December 31, 2001.
Mr. Speed did not receive options during 2001. The "Potential Realizable Value"
columns assume that the price of the shares of Common Stock will appreciate at
annual rates of 5% and 10%, respectively, during the term of the options. There
can be no assurance that such appreciation will take place.
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ----------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS/SARS EMPLOYEES OF BASE EXPIRATION -----------------------
NAME GRANTED (#) IN FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- ------------ ---------------- ------------ ---------- ---------- ----------
(a) (b) (c) (d) (e) (f) (g)
Steven G. Rogers............ 9,000 5.1% $33.65 7/22/11 $190,796 $481,532
President and Chief
Executive Officer
Marshall A. Loeb............ 6,000 3.4% $33.65 7/22/11 127,197 321,021
Senior Vice President,
Chief Financial Officer
and Secretary
David R. Fowler............. 4,000 2.3% $33.65 7/22/11 84,798 214,014
Senior Vice President
of Operations
James M. Ingram............. 4,000 2.3% $33.65 7/22/11 84,798 214,014
Senior Vice President
G. Mitchel Mattingly........ 4,000 2.3% $33.65 7/22/11 84,798 214,014
Senior Vice President
</Table>
Option Exercises and Year End Values. The following table shows the value
realized by the Named Officers upon the exercise of options and the year end
value of unexercised in-the-money options held by the
12
Named Officers. Year end values are based upon the closing price of shares of
Common Stock on the New York Stock Exchange, Inc., on December 31, 2001
($33.20).
AGGREGATED OPTIONS/SAR EXERCISES WITH LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<Table>
<Caption>
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
Leland R. Speed........... 0 N/A 49,737/17,510 $ 668,723/$48,813
Chairman
Steven G. Rogers.......... 3,553 $52,050 67,878/45,733 $782,324/$100,597
President and Chief
Executive Officer
Marshall A. Loeb.......... 0 N/A 0/26,000 $ 0/$92,740
Senior Vice President,
Chief Financial Officer
and Secretary
David R. Fowler........... 1,000 $15,387 15,033/15,842 $ 87,823/$32,073
Senior Vice President
of Operations
James M. Ingram........... 0 N/A 22,233/15,842 $ 251,904/$32,073
Senior Vice President
G. Mitchel Mattingly...... 0 N/A 13,408/15,842 $ 57,353/$32,073
Senior Vice President
</Table>
Compensation Committee Report. The Compensation Committee of the Board of
Directors consists of Messrs. Kaplan and Lipsey and Dr. Magruder. The
Compensation Committee believes that the main purpose of base compensation is to
provide sufficient base compensation to the executive officers of the Company in
relation to salary levels for other real estate companies and the officer's
level of responsibility. The Compensation Committee considered a number of
factors in setting the compensation of Mr. Rogers, the Company's Chief Executive
Officer, the most important of which were the level of compensation paid to the
chief executive officers of other real estate companies the same relative size
as the Company, the success of the Company's program of increasing profitability
and funds from operations and his importance in delineating and implementing the
Company's strategic plans. In setting the base compensation of Mr. Speed for
2001, the Compensation Committee took account of the fact that Mr. Speed was
also a salaried officer of EastGroup Properties, Inc., another real estate
investment trust, and as such, was not working full-time for the Company. The
Compensation Committee considered the amount of time Mr. Speed had spent on
Company business in the past and estimated the amount of time Mr. Speed would
spend on Company matters in the future.
The Compensation Committee has determined that the primary goals of the
Company's compensation policies should be as follows:
- To provide total compensation opportunities for executive officers which
are competitive with those provided to persons in similar positions with
which the Company competes for employees.
13
- To align the interests of management and stockholders through the use of
incentive compensation directly related to corporate performance and
through the use of stock-based incentives that result in increased Common
Stock ownership by executive officers.
The Compensation Committee believes that incentive compensation payable to
the executive officers of the Company should be based upon the Company's
performance and align the interests of management and the Company's
stockholders. In 2001, the Compensation Committee formulated targets for FFO per
share, upon which the executive officers' incentive compensation would be based.
In 2001, the targets were FFO of $4.41 per diluted share of Common Stock before
accrual for bonuses for the executive officers and the amortization of
restricted shares to earn the target bonus set forth below (a 6.7% increase over
2000 FFO of $4.01 per diluted share) and FFO of $4.58 per diluted share of
Common Stock before accrual for bonuses for the executive officers and the
amortization of restricted shares to earn a bonus of two times the target bonus
amount (a 10.0% increase over 2000 FFO of $4.01 per diluted share). To the
extent that actual FFO was greater than $4.41 and less than $4.58, the Committee
determined that there would be proration of the bonuses. The target bonus
amounts were 35% of total base salary for Mr. Speed, 50% of base salary for Mr.
Rogers and 20% of base salary for Mr. Loeb. The Compensation Committee
determined the FFO targets based upon an analysis of the Company's internal
projected financial results for 2001 and the estimates of 2001 FFO prepared by
independent securities analysts who followed the Company. The Compensation
Committee believed that the stockholders of the Company would be benefitted
significantly if the FFO goal were met and would be further benefitted if such
goal were exceeded, and that management should be compensated for the benefits
derived by the Company's stockholders. The bonus targets for the Company's other
named executive officers (Messrs. Fowler, Ingram and Mattingly) were also based
upon FFO. The FFO targets were the same as those set forth above, and the target
bonuses were fixed dollar amounts.
The Company's 2001 FFO per diluted share of Common Stock was $4.53 before
taking account of bonus accruals and the amortization of restricted shares.
After consideration, the Compensation Committee believed that each of the
Company's executive officers should be paid the amount of incentive compensation
provided by the above formula, under which Messrs. Speed, Rogers, Loeb, Fowler,
Ingram and Mattingly received bonuses with respect to 2001 of $75,228, $197,475,
$51,176, $46,367, $46,367 and $44,852, respectively.
C. HERBERT MAGRUDER, Chair
MATTHEW W. KAPLAN
MICHAEL J. LIPSEY
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this document or
any portion thereof into any filing under the Securities Act of 1933, as
amended, or the Exchange Act and shall not otherwise be deemed filed under such
acts.
14
Performance Comparison. Set forth below is a line graph comparing the
percentage change in the cumulative return to stockholders on shares of Common
Stock over the five years ending December 31, 2001 against the cumulative return
of the Standard & Poor's 500 ("S&P 500"), the Equity REIT Index prepared by the
National Association of Real Estate Investment Trusts ("NAREIT Equity"), and the
Office REIT Index prepared by the National Association of Real Estate Investment
Trusts ("NAREIT Office").
[GRAPH] (in dollars)
<Table>
<Caption>
- --------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------
Company 100.00 139.37 133.63 131.08 144.85 174.60
- --------------------------------------------------------------------------------
S&P 500 100.00 133.36 171.48 207.56 188.66 166.24
- --------------------------------------------------------------------------------
NAREIT Equity 100.00 120.26 99.21 94.63 119.58 136.24
- --------------------------------------------------------------------------------
NAREIT Office 100.00 129.00 106.62 111.15 150.56 160.57
- --------------------------------------------------------------------------------
</Table>
Directors' Fees. Under the Company's compensation arrangement with
directors (other than Mr. Speed and Mr. Rogers who are salaried officers),
directors receive an annual stock award of 300 shares of Common Stock (valued at
approximately $30.70 on the date of the 2001 award) on the date of the annual
meeting of stockholders as an annual retainer fee plus $1,000 and reimbursement
of expenses for each meeting of the Board of Directors attended and $750 and
reimbursement of expenses for each meeting of a committee established by the
Board of Directors attended.
Directors Plan. In 2001, the directors of the Company approved the 2001
Directors Plan which, subject to stockholder ratification, will replace the 1991
Directors Plan. See "Proposal 2 -- 2001 Directors' Stock Option Plan." The 2001
Directors Plan authorizes the issuance of up to 300,000 shares of Common Stock
to directors of the Company who are not employees of the Company. Under the 1991
Directors Plan, each non-employee director of the Company on September 13, 1991
was automatically granted an option to purchase 7,500 shares of Common Stock.
Under the 2001 Directors Plan, each person who first becomes a non-employee
director after May 15, 2001 will automatically be granted an option to purchase
7,500 shares of Common Stock on the date the person becomes a non-employee
director, if such shares of Common Stock are available. Each non-employee
director will also be granted an option to purchase an additional 3,000 shares
of Common Stock on the date of any annual meeting at which such non-employee
director is re-elected to the Board. The option exercise price is the closing
price of a share of Common Stock if the shares of Common Stock are listed on an
exchange or the average between the bid and the asked price for that date if the
shares
15
of Common Stock are traded over-the-counter (or, if no shares of Common Stock
were publicly traded on that date, the next preceding date that such shares of
Common Stock were so traded). Such options are exercisable in full six months
after the date of grant and expire ten years after the date of grant or, if
earlier, six months after the termination of the optionee's service as a
non-employee director, unless such service is terminated by reason of death, in
which case the optionee's legal representative shall have one year in which to
exercise the option.
No director exercised options under the 1991 Directors Plan during 2001.
Subject to stockholder ratification, Messrs. Friou, Garcia, Kaplan, Lipsey and
Lynch and Dr. Magruder were granted options to purchase 3,000 shares of Common
Stock at an exercise price of $30.70 per share effective as of May 15, 2001.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Cost Sharing Arrangement with EastGroup Properties, Inc. Currently,
EastGroup Properties, Inc. and the Company equally share the services and
expenses of the Chairman of the Board of Directors. These services and expenses
include rent for office and storage space, administrative costs, insurance
benefits, entertainment and travel expenses, and the salary and benefits
associated with the Chairman's administrative assistant. For the year ended
December 31, 2001, Parkway's share for these services and expenses was
approximately $50,000. Mr. Speed's base compensation is determined by our
Compensation Committee which considers the amount of time Mr. Speed has spent on
Parkway business in the past and estimates the amount of time Mr. Speed will
spend on Parkway matters in the future. See "Executive Compensation --
Compensation Committee Report."
Change in Control Agreement. The Company has entered into a Change in
Control Agreement (the "Change in Control Agreement") with each of the Company's
executive officers (the "Executives"). The Change in Control Agreement provides
that if an Executive's employment is terminated or the Executive leaves the
Company's employment for certain reasons during a defined period (30 months in
the case of Leland R. Speed, Steven G. Rogers and Marshall A. Loeb and 20 months
in the case of James M. Ingram, David R. Fowler and G. Mitchel Mattingly) after
a Change in Control (as hereinafter defined), the Company will pay a lump sum
benefit to the Executive equal to a multiple of (2.5 times in the case of
Messrs. Speed, Rogers and Loeb and 1.667 times in the case of Messrs. Fowler,
Ingram and Mattingly) the average of the Executive's salary and accrued bonus
for the three calendar year period ending on the December 31 prior to the Change
in Control. The Change in Control Agreement also gives the Executive the ability
to leave the employment of the Company at any time during the six month period
after the Change in Control in which case the Executive will receive the
lump-sum payment of one-half of the amount set forth above. Change in Control is
defined in such agreement as (i) any change in control of a nature that would be
required to be represented under the Exchange Act proxy rules; (ii) any person
acquiring beneficial ownership of securities representing 30 percent or more of
the combined voting power of the Company's outstanding securities; (iii) certain
changes in the Company's Board of Directors; (iv) certain mergers; or (v) the
approval of a plan of liquidation by the Company.
PROPOSAL 2 -- 2001 DIRECTORS' STOCK OPTION PLAN
At the meeting, the stockholders will be asked to vote on a proposal to
ratify the adoption of the 2001 Directors Plan. The 2001 Directors Plan would
replace the 1991 Directors Plan, which provided for identical option grants to
directors. The 1991 Directors Plan expired on March 14, 2001. Ratification of
the adoption of the 2001 Directors Plan requires the affirmative vote of the
holders of a majority of the shares of Common
16
Stock and Series B Preferred Stock entitled to vote on the proposal, provided
that the total vote cast on the proposal represents over 50% in interest of all
securities entitled to vote on the proposal. The directors recommend a vote FOR
ratification of the adoption of the 2001 Directors Plan. Unless otherwise
instructed, proxies will be voted FOR ratification of the adoption of the 2001
Directors Plan.
Appendix A to this Proxy Statement sets forth the text of the 2001
Directors Plan. The following description of the 2001 Directors Plan contains
summaries of certain provisions of the 2001 Directors Plan and is qualified in
its entirety by reference to the 2001 Directors Plan itself.
SUMMARY OF THE 2001 DIRECTORS PLAN
The 2001 Directors Plan provides for automatic option grants to directors
who are not employees of the Company: an option to purchase 7,500 shares of
Common Stock granted when an individual first becomes a non-employee director,
and an option to purchase 3,000 shares of Common Stock granted on the date of
each annual meeting (including the 2001 annual meeting) at which a non-employee
director is re-elected to the board.
The 2001 Directors Plan authorizes the issuance of 300,000 shares of Common
Stock pursuant to options granted under the plan. The Compensation Committee of
the Board of Directors administers the 2001 Directors Plan.
The exercise price per share of Common Stock under an option granted under
the 2001 Directors Plan will equal the fair market value of a share of Common
Stock on the date of grant. Options are exercisable in full six months after the
date of grant and expire ten years after the date of grant or, if earlier, six
months after termination of service as a director (other than by death) or one
year after death while in office.
Outstanding options are subject to adjustment in the event of a subdivision
or consolidation of shares of Common Stock, a share dividend, a
recapitalization, or other change in the Company's capital structure. If the
Company is merged or consolidated with another corporation, the Compensation
Committee is authorized to adjust outstanding options to give effect to the
merger or consolidation on an equitable basis.
The Board of Directors may amend the 2001 Directors Plan, except that the
Board of Directors may not, without stockholder approval, increase the number of
shares of Common Stock available under the plan, decrease the option purchase
price per share of Common Stock, extend the term of the plan, or change the
classes of directors to whom options may be granted.
FEDERAL TAX TREATMENT OF PLAN
The Company believes that under present law the federal income tax
consequences of options granted under the 2001 Directors Plan will generally be
the following: The grant of an option will have no tax consequences for the
director or the Company. Upon the exercise of an option, the director will
recognize ordinary income in an amount equal to the excess of the fair market
value of the acquired shares of Common Stock on the exercise date over the
option purchase price, and the Company will be entitled to a deduction in the
same amount.
The Board of Directors adopted the proposed 2001 Directors Plan on May 15,
2001, subject to ratification by the stockholders at the meeting.
17
OPTION GRANTS IN 2001 AND 2002
Each director, except Messrs. Speed and Rogers (who are salaried officers),
received option grants for 3,000 shares of Common Stock on May 15, 2001,
contingent on stockholder ratification. In addition, each director, except
Messrs. Speed and Rogers, and Dr. Magruder (who is retiring) will receive option
grants for 3,000 shares of Common Stock on May 9, 2002, in the event the
stockholders ratify the 2001 Directors Plan.
PROPOSAL 3 -- OTHER MATTERS
So far as management of the Company is aware, no matters other than those
outlined in this Proxy Statement will be presented to the Meeting for action on
the part of the stockholders. If any other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying proxy
to vote thereon the shares of Common Stock to which the proxy relates in
accordance with their best judgment.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP, independent public
accountants, to act as auditors for the fiscal year ending December 31, 2002.
Ernst & Young LLP has audited the accounts of the Company since 1986. A
representative of Ernst & Young LLP is expected to be present at the Meeting and
will have an opportunity to make a statement, if he so desires, and will be
available to respond to appropriate questions.
During the fiscal year ending December 31, 2001, Ernst & Young LLP provided
various audit and non-audit services to the Company as follows:
Audit Fees. The aggregate fees billed to the Company by Ernst & Young LLP
during the fiscal year 2001 for review of the Company's annual financial
statements and those financial statements in the Company's quarterly reports on
Form 10-Q totaled $110,000.
Financial Information Systems Design and Implementation Fees. Our
independent auditors did not render information technology services to us during
the fiscal year ending December 31, 2001.
All Other Fees. The aggregate fees billed by Ernst & Young LLP for
professional services rendered to us during fiscal year 2001, other than the
audit services referred to above, were $170,080, of which $38,250 were for audit
related services and $131,830 were for tax preparation and tax consulting
services.
The Audit Committee of the Board has considered whether provision of the
services described above is compatible with maintaining the independent
accountants' independence and has determined that those services have not
adversely affected Ernst & Young LLP's independence.
STOCKHOLDER PROPOSALS
PROPOSALS IN THE COMPANY'S PROXY STATEMENT
Stockholder proposals submitted for inclusion as a stockholder proposal in
the Company's proxy materials for the 2003 Annual Meeting of Stockholders must
be received at the Company's offices no later than December 6, 2002.
18
PROPOSALS TO BE INTRODUCED AT THE MEETING BUT NOT INTENDED TO BE INCLUDED IN THE
COMPANY'S PROXY MATERIAL
For any stockholder proposal to be presented in connection with the 2003
Annual Meeting of Stockholders, including any proposal relating to the
nomination of a director to be elected to the Board of Directors of the Company,
a stockholder must give timely written notice thereof in writing to the
Secretary of the Company in compliance with the advance notice and eligibility
requirements contained in the Company's Bylaws. To be timely, a stockholder's
notice must be delivered to the Secretary at the principal executive offices of
the Company not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made. The
notice must contain specified information about each nominee or the proposed
business and the stockholder making the nomination or proposal.
In the event that the number of directors to be elected to the Board of
Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Company at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice will be considered
timely, but only with respect to nominees for any new positions created by such
increase, if the notice is delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Company.
Based upon a meeting date of May 9, 2003 for the 2003 Annual Meeting of
Stockholders, a qualified stockholder intending to introduce a proposal or
nominate a director at the 2003 Annual Meeting of Stockholders should give
written notice to the Company's Secretary not later than March 10, 2003 and not
earlier than February 8, 2003.
The advance notice provisions in the Company's Bylaws also provide that in
the case of a special meeting of stockholders called for the purpose of electing
one or more directors, a stockholder may nominate a person or persons (as the
case may be) for election to such position if the stockholder's notice is
delivered to the Secretary at the principal executive offices of the Company not
earlier than the 90th day prior to the special meeting and not later than the
close of business on the later of the 60th day prior to the special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
19
The specific requirements of these advance notice and eligibility
provisions are set forth in Article II, Section 11 of the Company's Bylaws, a
copy of which is available upon request. Such requests and any stockholder
proposals should be sent to the Secretary of the Company at One Jackson Place,
Suite 1000, 188 East Capitol Street, Jackson, Mississippi 39201.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARSHALL A. LOEB
MARSHALL A. LOEB
Senior Vice President, Chief
Financial Officer
and Secretary
Jackson, Mississippi
20
APPENDIX A
PARKWAY PROPERTIES, INC.
2001 DIRECTORS STOCK OPTION PLAN
1. PURPOSE
The purpose of the Parkway Properties, Inc. 2001 Directors Stock Option
Plan (the "Plan") is to encourage the ownership of Shares of common stock of
Parkway Properties, Inc. (the "Company") by directors of the Company and, by
doing so, to increase the incentive for them to put forth the maximum effort for
the success of the Company's business.
2. DEFINITIONS
As used in this Plan:
(a) "Shares" means shares of common stock, $0.001 par value of the
Company.
(b) "Fair Market Value" of a Share on any date means (i), if the
Shares are traded in the over-the-counter market, the mean between the
closing bid and asked prices of a Share quoted on that date, or, if no
prices are so quoted on that date, on the next preceding date on which such
prices are so quoted or (ii), if the Shares are traded on a national
securities exchange, the closing price of a Share as reported on such
exchange or under any composite transaction report of such exchange on that
date, or, if no prices are so reported on that date, on the next preceding
date on which such prices are so reported.
(c) "Option" means an option granted pursuant to the Plan to purchase
Shares.
(d) "Committee" means the Compensation Committee of the Board of
Directors or such other committee of the Board that the Board has appointed
to administer the Plan.
(e) "Non-Employee Director" means a director of the Company who is not
an employee of the Company.
(f) "Board of Directors" or "Board" shall mean the Board of Directors
of the Company.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
all the powers vested in it by the terms of the Plan. The Committee shall be
authorized to interpret the Plan and the Options granted under the Plan, to
establish, amend and rescind rules and regulations relating to the Plan, and to
make any determinations it believes necessary or advisable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option in the
manner and to the extent the Committee deems desirable. Any decision of the
Committee in the administration of the Plan shall be in its sole discretion and
conclusive. The Committee may act only by a majority of its members in office,
except that the members of the Committee may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on behalf
of the Committee.
A-1
4. SHARES AVAILABLE
A total of 300,000 Shares of the Company shall be available for grant under
the Plan. The aggregate number of Shares that may be purchased pursuant to
Options shall not exceed the available number of Shares. Upon the expiration or
termination in whole or in part of any unexercised Option, the Shares subject to
the Option shall again be available for grant under the Plan.
5. GRANT OF OPTIONS
To the extent Shares are available under the Plan, each person who first
becomes a Non-Employee Director on or after the date of the 2001 annual meeting
of the Company shall automatically be granted on the date such person becomes a
Non-Employee Director a non-qualified stock option to purchase 7,500 Shares. In
addition, each Non-Employee Director shall be granted a non-qualified stock
option to purchase 3,000 Shares on the date of each annual meeting (including
the 2001 annual meeting) at which such Non-Employee Director is reelected to the
Board of Directors.
6. TERMS OF OPTIONS
Each Option granted under the Plan to a Non-Employee Director shall be
evidenced by an agreement executed on behalf of the Company and by the holder of
the Option, including the following terms and conditions:
(a) The purchase price of each Share subject to an Option granted to a
Non-Employee Director shall equal the Fair Market Value of a Share on the
date the Option is granted.
(b) An Option granted to a Non-Employee Director shall be exercisable
in full on the date that is six months after the date it is granted and, to
the extent not already exercised, shall expire upon the earliest to occur
of (i) the date that is six months after the termination of the
Non-Employee Director's service as a Non-Employee Director other than by
reason of death; (ii) the date that is one year after the death of a
Non-Employee Director while in office; or (iii) the date that is ten years
after the date of the grant of the Option.
(c) An Option shall require that the optionee represent at the time of
each exercise of the Option that the Shares purchased are being acquired
for investment and not with a view to distribution.
(d) The purchase price of the Shares with respect to which an Option
is exercised shall be payable in full on the date the Option is exercised,
in cash or in Shares (by surrender or attestation to ownership, and
provided the Optionholder owned the Shares for at least six months or did
not acquire them from the Company) or in a combination of cash and Shares.
The value of a Share used in payment of the purchase price shall be its
Fair Market Value on the date the Option is exercised. The Committee may
provide that payment of the purchase price may be made by deliver of a
properly executed exercise notice together with irrevocable instructions to
a broker to deliver promptly to the Company the appropriate amount of sale
or loan proceeds, subject to any conditions the Committee may impose, and
may establish other methods for payment of the purchase price.
(e) An Option shall not be assignable or transferable by the optionee
except by will or the laws of descent and distribution and shall be
exercisable, during the optionee's lifetime, only by him or her.
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7. RECAPITALIZATION OR REORGANIZATION
The existence of the Plan and the grant of Options under the Plan shall not
affect the right or power of the Board or the shareholders of the Company to
make or authorize the adjustment, recapitalization, reorganization, or other
change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting Shares or the rights of Shares, the
dissolution or liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
Any Shares with respect to which Options may be granted are Shares as
presently constituted, but if, and whenever, before the expiration of an Option,
the Company shall effect a subdivision or consolidation of Shares or the payment
of a Share dividend on Shares without receipt of consideration by the Company,
the number of Shares subject to the grant (i) in the event of an increase in the
number of outstanding Shares shall be proportionately increased and the purchase
price per Share shall be proportionately reduced, and (ii) in the event of a
reduction in the number of outstanding Shares shall be proportionately reduced
and the purchase price per Share shall be proportionately increased, and the
number of Shares available under Section 4 for grant shall be adjusted
accordingly.
If the Company shall effect a recapitalization or other change in its
capital structure, the number of Shares subject to an outstanding grant shall be
the number and class of Shares to which the holder would have been entitled
pursuant to the terms of such recapitalization if, immediately prior to such
recapitalization, the holder had been the holder of record of the number of
Shares subject to the grant, and the number of Shares available under Section 4
for grant shall be adjusted accordingly. If the Company is merged or
consolidated with a corporation, the Committee shall make appropriate
adjustments to outstanding Option grants to give effect to the merger or
consolidation on an equitable basis in terms of issuance of shares of the
corporation surviving the merger or the consolidated corporation.
Except as expressly provided in this Section, the issuance by the Company
of shares of any class or securities convertible into shares of any class, for
cash, property, labor or services, upon direct sale, upon the exercise of rights
or warrants, or upon the conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment shall be made with respect
to, the number of Shares subject to Options previously granted or the purchase
price per Share.
8. CHANGE IN CONTROL
For purpose of this Plan, a "Change in Control" of the Company shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirements; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (a) any
"person" (as such term is used in section 13(d) and 14(d) of the Exchange Act)
is or becomes "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 30
percent or more of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years, the following
persons (the "Continuing Directors") cease for any reason to constitute a
majority of the Board: individuals who at the beginning of such period
constitute the Board and new directors each of whose election to the Board or
nomination for election to the Board by the Company's security holders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the
A-3
beginning of the period or whose election or nomination for election was
previously so approved; or (C) the security holders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(i) a merger or consolidation that would result in the voting securities of the
Company outstanding immediately before the merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of such surviving entity) more than 50 percent of the combined voting
power of the voting securities of the Company or of such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger of
consolidation that is approved by a Board having a majority of its members
persons who are Continuing Directors, of which Continuing Directors not less
than two-thirds have approved the merger or consolidation; or (D) the security
holders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets.
9. AMENDMENT
The Board of Directors may amend the Plan and Options granted under the
Plan in any respect, provided, however, that without the approval of the
shareholders of the Company the Board may not (a) except as provided in Section
7, increase the maximum number of Shares that may be issued under the Plan or
decrease the minimum purchase price of Shares subject to an Option; (b) extend
the term of the Plan; or (c) change the classes of directors to whom Options may
be granted under the Plan. No amendment of the Plan or an Option shall adversely
affect any right of any holder of an Option already granted without such
optionee's written consent.
10. TERMINATION OF PLAN
The Board of Directors may terminate the Plan at any time with respect to
any Shares that are not then subject to Options. Unless terminated earlier by
the Board of Directors, the Plan shall terminate on May 14, 2011.
11. RESTRICTIONS ON ISSUANCE OF SHARES; RIGHTS AS SHAREHOLDERS
Should the Board of Directors determine that the listing, registration, or
qualification of Shares upon any securities exchange or under any state or
federal law or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition to or in connection with the issuance or
delivery of Shares upon the exercise of an Option under the Plan, no such Shares
shall be issued or delivered unless such listing, registration, qualification,
consent, or approval has been effected or obtained free of any conditions not
acceptable to the Board of Directors.
The certificates representing Shares issued by the Company upon the
exercise of an Option under the Plan may bear a legend describing any
restrictions on resale of such Shares under applicable securities laws, and stop
transfer orders with respect to such certificates may be entered on the
Company's stock transfer records.
An Option holder shall have no rights as a shareholder of the Company with
respect to any Shares to be issued in connection with the exercise of an Option
until the date of issuance of the certificate for such Shares. No adjustment
shall be made for dividends or other rights for which the record date precedes
the date the certificate is issued.
A-4
12. CONSTRUCTION
The Plan shall be construed in accordance with the laws of the State of
Maryland.
13. SATISFACTION OF TAX LIABILITIES
Whenever under the Plan Shares are to be issued or delivered upon the
exercise of Options, the Company shall have a right to require the holder of the
Option to remit to the Company an amount sufficient to satisfy federal, state,
and local withholding tax requirements, if any, before the issuance of delivery
of any certificate for such Shares. In the holder's discretion, such
requirements shall be satisfied through the retention of Shares otherwise
issuable on the exercise of the Option or by the delivery of Shares to the
Company by the holder (by surrender or attestation to ownership), under such
terms as the Committee finds appropriate. The value of a Share used to satisfy
withholding requirements shall be its Fair Market Value on the date the
withholding obligation is calculated. The Committee may also provide that
provision for the tax withholding obligation may be made, in connection with the
exercise of an Option, in any manner provided pursuant to Section 6(d) for the
payment of the purchase price.
14. APPROVAL OF SHAREHOLDERS
This Plan is adopted on May 15, 2001, subject to the approval of the
Company's shareholders. If such approval is not obtained within thirteen months
of May 15, 2001, this Plan and all Options granted pursuant to this Plan shall
be void.
A-5
[Parkway logo] PROXY
PARKWAY PROPERTIES, INC.
One Jackson Place, Suite 1000
188 East Capitol Street
Jackson, Mississippi 39201
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints LELAND R. SPEED and STEVEN G. ROGERS,
and each or either of them, Proxies for the undersigned, with full power of
substitution, to represent and to vote all shares of common stock, $0.001 par
value per share, of Parkway Properties, Inc. (the "Company"), and all shares of
Series B cumulative convertible preferred stock, $0.001 par value per share, of
the Company which the undersigned would be entitled to vote at the Annual
Meeting of Stockholders (the "Meeting") to be held at the Suncom Building, 111
East Capitol Street, Jackson, Mississippi on May 9, 2002, at 1:30 p.m., Jackson
time, and directs that the shares represented by this Proxy shall be voted as
indicated on the reverse side.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. THE BOARD OF DIRECTORS FAVORS A VOTE FOR PROPOSAL 1 AND PROPOSAL 2.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 ON THE
REVERSE AND WILL BE VOTED IN THE DISCRETION OF THE PROXIES NAMED HEREIN WITH
RESPECT TO ANY MATTER REFERRED TO IN 3 ON THE REVERSE. YOU ARE ENCOURAGED TO
SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, BUT YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN
THIS CARD.
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
(continued and to be signed on the reverse side)
(FRONT)
A. ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD FOR WITHHOLD
Roger P. Friou [ ] [ ] Joe F. Lynch [ ] [ ]
Martin L. Garcia [ ] [ ] Steven G. Rogers [ ] [ ]
Matthew W. Kaplan [ ] [ ] Leland R. Speed [ ] [ ]
Michael J. Lipsey [ ] [ ]
B. ISSUES
The Board of Directors recommends a vote FOR the following resolution.
2. PROPOSAL TO CONSIDER AND RATIFY THE ADOPTION OF THE COMPANY'S
2001 DIRECTORS' STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Meeting or any
adjournment thereof.
C. AUTHORIZED SIGNATURES -- SIGN HERE -- THIS SECTION MUST BE COMPLETED
FOR YOUR INSTRUCTIONS TO BE EXECUTED.
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON STOCK CERTIFICATE(S). A
corporation is requested to sign its name by its President or other
authorized officer, with the office held so designated. A partnership
should sign in the partnership name by an authorized person.
Executors, administrators, trustees, guardians and corporate officers
are requested to indicate the capacity in which they are signing.
JOINT TENANTS SHOULD BOTH SIGN.
Signature 1__________________________________________
Signature 2__________________________________________
Date (dd/mm/yyyy)
___/___/____
(BACK)