1
--------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-K/A
AMENDMENT TO FORM 10-K
Filed Pursuant to
THE SECURITIES EXCHANGE ACT OF 1934
EASTGROUP PROPERTIES
--------------------------
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for
the year ended December 31, 1995 as set forth in the pages attached hereto:
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April 12, 1996 EASTGROUP PROPERTIES
By /s/ Keith McKey
---------------------------
N. Keith McKey
Executive Vice President,
Chief Financial Officer
and Secretary
Page 1 of 8 Pages
2
Item 10. Directors and Executive Officers of the Registrant.
BOARD OF TRUSTEES
The following table describes the present trustees of EastGroup
Properties ("EastGroup" or the "Trust").
NAME, POSITION(S) AND PRINCIPAL OCCUPATION AND
TENURE WITH THE TRUST AGE BUSINESS FOR PAST FIVE YEARS(1)
- ---------------------- --- --------------------------------------------------------------
Alexander G. 69 Financial Advisor with WR Family Associates.
Anagnos.............
Trustee since 1994
H. C. Bailey, Jr...... 56 President of H. C. Bailey Company (real estate development and
Trustee since 1980 investment); President of Bailey Mortgage Company (mortgage
banking) and Chairman of the Board and Chief Executive Officer
and President of Security Savings & Loan Association(2) until
1992.
David H. Hoster II.... 50 President and Trustee of EastGroup since 1993 and Executive
Trustee and Vice President of EastGroup until 1993; President of LNH REIT, Inc.
President ("LNH") since 1995 and Executive Vice President of LNH from 1992
since 1993 until 1995; Executive Vice President of Congress Street
Properties, Inc. ("Congress Street") from 1988 to 1994, Eastover
Corporation from 1988 to 1994, EB, Inc. from 1993 to 1994, The
Parkway Company ("Parkway") from 1988 to 1994, and Rockwood National
Corporation from 1988 to 1994.
Harold B. Judell...... 81 Senior partner in the law firm of Foley & Judell LLP
Trustee since 1981 (municipal bond attorneys).
John N. Palmer........ 61 Chairman of Mobile Telecommunication Technologies Corp. since
Trustee since 1994 1989
David M. Osnos........ 64 Partner in the law firm of Arent, Fox, Kintner, Plotkin &
Trustee since 1993 Kahn.
Leland R. Speed....... 63 Chief executive officer of EastGroup, Parkway and LNH; served
Trustee since 1978 as Chief Executive Officer of Eastover Corporation, Congress
and Managing Trustee Street, and Rockwood National Corporation until 1994 and EB,
and Chief Executive Inc. until 1995.
Officer since 1983
- ---------------
(1) Unless otherwise stated, each nominee has held the positions indicated for
at least the past five years.
(2) Security Savings & Loan Association was seized by the Resolution Trust
Company in 1992.
(3) The principal businesses of Congress Street, Eastover Corporation, EB, Inc.,
LNH and Parkway are described under "Item 13. Certain Relationships and
Related Transactions -- Expense-Sharing Arrangements."
Page 2
3
OTHER DIRECTORS AND TRUSTEESHIPS
Members of the Board of Trustees serve on the Boards of Directors
or the Boards of Trustees of the following publicly-held companies:
NAME COMPANY
---------------------------------- -------------------------------------------------
H.C. Bailey, Jr................... LNH
Parkway
Harold B. Judell.................. Sizeler Property Investors, Inc.
David M. Osnos.................... VSE Corporation
Washington Real Estate Investment Trust
John N. Palmer.................... Entergy Corporation
Mobile Telecommunication Technologies Corp.
Deposit Guaranty National Bank
Leland R. Speed................... Farm Fish, Inc.
First Mississippi Corporation
KLLM Transport Services, Inc.
LNH
Parkway
EXECUTIVE OFFICERS
The following is a list of the Trust's executive officers:
NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE TRUST(1) AGE EXPERIENCE FOR PAST FIVE YEARS
- ---------------------------------------- --- ----------------------------------------
Leland R. Speed ........................ 63 See table under "-- Board of
Managing Trustee since 1983 Trustees."
David H. Hoster II ..................... 50 See table under "-- Board of
Trustee and President since 1993 Trustees."
N. Keith McKey ......................... 45 Executive Vice President of EastGroup
Executive Vice President since 1993, since 1993 and Chief Financial Officer
Chief Financial Officer and Secretary since 1992; Senior Vice President of LNH
since 1992 since 1992; Senior Vice President of
Congress Street, Eastover Corporation,
EB, Inc., Parkway and Rockwood National
Corporation until 1994.
- ---------------
(1) There are no family relationships between any of the trustees or executive
officers of the Trust.
Page 3
4
Item 11. EXECUTIVE COMPENSATION
The following table summarizes, for the fiscal years ended December 31,
1995, 1994 and 1993, the amount of the compensation paid by the Trust to its
Chief Executive Officer and all other executive officers whose cash compensation
during 1995 exceeded $100,000 (the "Named Officers").
LONG TERM
ANNUAL COMPENSATION(1)(2) COMPENSATION AWARDS
---------------------------------------------- ------------------------------
OTHER LTIP
ANNUAL PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SARS(5) $(6) COMPENSATION(7)
- --------------------------- ---- -------- -------- ------------ --------------- ------------ ---------------
Leland R. Speed............ 1995 $129,863(3) $139,014(4) -0- -0- -0- $ 7,500
Chief Executive Officer 1994 $139,423 $ 58,715 -0- 50,000 $ 23,047 $ 5,145
1993 $113,367 -0- -0- -0- $ 13,608 $ 6,664
David H. Hoster II......... 1995 $174,745 $140,351(4) -0- -0- -0- $ 7,500
President 1994 $ 89,977 $ 42,314 -0- 40,000 $ 21,203 $ 5,145
1993 $ 72,240 $ 12,230 -0- -0- $ 12,519 $ 4,991
N. Keith McKey............. 1995 $127,212 $102,256(4) -0- -0- -0- $ 7,500
Executive Vice President, 1994 $ 63,911 $ 30,103 -0- 25,000 $ 13,828 $ 4,397
Chief Financial Officer 1993 $ 51,900 $ 3,669 -0- -0- $ 8,165 $ 2,878
and Secretary
- ---------------
(1) Until December 31, 1994, the executive officers of EastGroup also served as
executive officers of all the Expense-Sharing Participants (as defined
below). See "Item 13. Certain Relationships and Related Transactions --
Expense-Sharing Arrangements." Their salaries were paid by Congress Street
and then allocated among the Expense- Sharing Participants in accordance
with the allocation formula set forth in the expense-sharing agreement.
(2) For 1993 and 1994, all amounts are EastGroup's share of the particular Named
Officer's compensation as allocated under the expense-sharing agreement.
(3) Mr. Speed's salary is paid one-half by EastGroup and one-half by Parkway, of
which he is also Chief Executive Officer. See "Item 13. Certain
Relationships and Related Transactions -- Expense-Sharing Arrangements.
" This amount is EastGroup's share of Mr. Speed's compensation.
(4) This is the amount of incentive compensation payable to the Named Officer
under the 1994 Incentive Plan. The amount was paid two-thirds in cash and
one-third in shares of beneficial interest, $1.00 par value per value, of
EastGroup ("Shares").
(5) These options were granted under EastGroup's 1994 Incentive Plan and become
exercisable with respect to one-half the shares on the first anniversary
date of grant and one-half the shares on the second anniversary date of
grant.
(6) These payments were made under Incentive Compensation Units granted under
EastGroup's 1989 Incentive Plan (the "1989 Plan"). The amount for 1994
includes a payment made in December 1994 in consideration of the officer
agreeing to cancel the remaining term of the Incentive Compensation Units,
which payment was made in EastGroup Shares. An Incentive Compensation Unit
was a right to receive an amount equal to the dividend paid on a specified
number of EastGroup Shares during a five year period beginning on the date
of the grant of the unit. The amount that was payable with respect to an
Incentive Compensation Unit was credited to an account for the holder of
such unit. The grantee of the Incentive Compensation Unit was entitled to a
cash payment of 20% of the amount in the account on the first anniversary
date of its grant, 40% on the second anniversary date, 60% on the third
anniversary date, 80% on the fourth anniversary date and 100% on the fifth
anniversary date.
(7) For 1995, this is EastGroup's discretionary contribution to its 401(k) Plan
for the Named Officer's benefit and for 1993 and 1994 this amount is
EastGroup's share of Congress Street's discretionary contribution to a
401(K) plan for the respective Named Officer's benefit.
Option Grants. No options were granted to the Named Officers during the
year ended December 31, 1995.
Page 4
5
Option Exercises and Year End Values. No options were exercised by the
Named Officers during 1995. The following table shows the year end value of
unexercised in-the-money options held by the Named Officers. Year end values are
based upon the closing price of EastGroup Shares on the NYSE on December 29,
1995 ($21.375).
AGGREGATED OPTIONS/SAR EXERCISES WITH LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NAME
- ---------------------------------------------- NUMBER OF UNEXERCISED VALUE OF
OPTIONS AT FY-END (#) UNEXERCISED IN-THE-MONEY
---------------------------- OPTIONS AT FY-END($)
EXERCISABLE/UNEXERCISABLE(1) ------------------------
EXERCISABLE/UNEXERCISABLE
Leland R. Speed............................... 25,000/25,000 $59,375/$59,375
Chief Executive Officer
David H. Hoster II............................ 20,000/20,000 $47,500/$47,500
President
N. Keith McKey................................ 12,500/12,500 $29,687.50/$29,687.50
Executive Vice President, Chief Financial
Officer and Secretary
- ---------------
(1) These options, both exercisable and unexercisable, represent options granted
to the Named Officer on September 22, 1994 under the 1994 Incentive Plan.
Page 5
6
Trustees' Fees. Under EastGroup's standard compensation arrangements with
trustees (except Mr. Speed and Mr. Hoster, who are salaried officers), trustees
are paid a monthly stipend of $500, plus $1,000 and reimbursement of actual
expenses for attendance at each meeting of the Board of Trustees and $750 and
reimbursement of expenses for each meeting of a committee established by the
Board of Trustees. Only one fee is paid in the event more than one meeting is
held on a single day.
Trustees Stock Option Plan. At the 1991 annual meeting, the shareholders
of EastGroup approved the Trustees Plan. The Trustees Plan authorizes the
issuance of options for up to 100,000 EastGroup Shares to trustees of EastGroup
who are not, and have not been for at least one year prior to the date of
determination, employees of EastGroup ("Non-Employee Trustees"). Under the
Trustees Plan, each Non-Employee Trustee of EastGroup on March 15, 1991 was
automatically granted an option to purchase 5,000 EastGroup Shares. Each person
who first becomes a Non-Employee Trustee after March 15, 1991 will automatically
be granted an option to purchase 5,000 EastGroup Shares on the date the person
becomes a Non-Employee Trustee, if such EastGroup Shares are available. Each
Non-Employee Trustee will also be granted an option to purchase 1,500 additional
EastGroup Shares on the date of any annual meeting at which such Non-Employee
Trustee is reelected to the Board of Trustees. The option exercise price is the
closing price of an EastGroup Share if EastGroup Shares are listed on an
exchange or the average between the bid and the asked price for the date if the
EastGroup Shares are traded over-the-counter (or, if no EastGroup Shares were
publicly traded on that date, the next preceding date that such EastGroup Shares
were so traded). Such options are exercisable in full on 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 Trustee, 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.
Page 6
7
No options were exercised by trustees under the Trustees Plan during 1995.
On June 1, 1995, Messrs. Palmer, Bailey, Judell, Anagnos and Osnos were each
granted options to purchase 1,500 EastGroup Shares at an exercise price of
$19.00 per EastGroup Share.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to EastGroup
with respect to EastGroup Shares owned by each trustee, each executive officer,
all trustees and executive officers as a group, and each
person who is the beneficial owner, as determined by the rules of the SEC, of
more than 5% of the outstanding EastGroup Shares.
NO. OF
EASTGROUP PERCENTAGE
SHARES OF
BENEFICIALLY EASTGROUP
TRUSTEES, EXECUTIVE OFFICERS AND MORE THAN 5% SHAREHOLDERS OWNED SHARES
- ---------------------------------------------------------------------- ------------ ----------
Alexander G. Anagnos.................................................. 6,700(1) * %
H.C. Bailey, Jr....................................................... 26,663(2) *
Harold B. Judell...................................................... 12,460(2) *
John N. Palmer........................................................ 7,500(1) *
David M. Osnos........................................................ 11,000(2) *
Leland R. Speed....................................................... 116,762(3) 2.73
David H. Hoster II.................................................... 49,292(4) 1.16
N. Keith McKey........................................................ 23,890(5) 0.56
All trustees and executive officers as a group........................ 254,267(6) 5.86
Copley Properties, Inc. ("Copley")(7)................................. 213,438 5.03
- ---------------
* Less than 0.5%
(1) Includes 6,500 EastGroup Shares the indicated person has the right to
acquire under the EastGroup Properties 1991 Trustees Stock Option Plan, as
amended (the "Trustees Plan").
(2) Includes 8,000 EastGroup Shares the indicated person has the right to
acquire under the Trustees Plan.
(3) Includes 25,000 EastGroup Shares that Mr. Speed has the right to acquire
pursuant to exercisable options granted under EastGroup's 1994 Incentive
Plan, and does not include 79,994 EastGroup Shares beneficially owned by Mr.
Speed's spouse and children in which he disclaims beneficial ownership.
(4) Includes 18,000 EastGroup Shares that Mr. Hoster has the right to acquire
pursuant to exercisable options granted under EastGroup's 1994 Incentive
Plan and 3,120 EastGroup Shares beneficially owned by Mr. Hoster's wife and
daughters, as to which he disclaims beneficial ownership.
(5) Includes 12,500 EastGroup Shares that Mr. McKey has the right to acquire
pursuant to exercisable options granted under EastGroup's 1994 Incentive
Plan and includes 1,035 EastGroup Shares beneficially owned by Mr. McKey's
children, as to which he disclaims beneficial ownership.
(6) Includes 30,500 EastGroup Shares that trustees of EastGroup have the right
to acquire under the Trustees Plan and 57,000 EastGroup Shares that officers
of EastGroup have the right to acquire pursuant to exercisable options
granted under EastGroup's 1994 Incentive Plan.
(7) Copley is deemed to beneficially own these Shares pursuant to a Proxy
Agreement entered into with certain officers of EastGroup and members of
their immediate families. The Proxy Agreement gives Copley irrevocable
proxies to vote all the Shares held by them in favor of the merger of
Copley and EastGroup and the related merger agreement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Expense-Sharing Arrangements. Until December 31, 1994, EastGroup had an
expense-sharing agreement with Congress Street, Parkway, and Eastover
Corporation ("Eastover") pursuant to which the participants shared
administrative offices at the same location in Jackson, Mississippi and common
officers and other personnel, subject to the authority of the board of each
member company to elect or appoint and remove its officers in accordance with
its certificate of incorporation, declaration of trust or other charter
documents and applicable law. EB, Inc. ("EB") had a separate administrative
agreement with Congress Street which allowed EB to participate in the
expense-sharing arrangement on the same basis as the companies which were
parties to the expense-sharing agreement. LNH had a separate administration
agreement with Congress Street (and later EastGroup) which terminated effective
March 31, 1995. See "-- Administration Agreement." Under this arrangement, the
participants shared the cost of the common officers and other employees and of
shared facilities and activities. These common costs were initially paid by
Congress Street, which served as the administrator of the arrangement, and the
other participants paid Congress Street an annual fee (on a monthly basis) of
one-half of one percent of their assets which were publicly-traded securities,
and Congress Street was paid a fixed annual fee in equal monthly installments by
LNH. After these fees and any profits of Eastover Realty Corporation, a real
estate company that was a subsidiary of Congress Street, were subtracted from
total common costs, the remaining common costs were allocated on a monthly basis
among EastGroup, Parkway, Congress Street, Eastover and EB (collectively, the
"Expense-Sharing Participants") in proportion to their assets other than
publicly-traded securities, based on their balance sheets as contained in their
most recent SEC filings. Certain costs which the common officers believed to be
particularly attributable to each member company were not shared. These
non-allocable costs included but were not limited to directors' and trustees'
fees, legal, audit and stock transfer expenses, stationery and items of similar
nature. Since the allocation formula was not based upon actual costs incurred by
each member company, the allocation may have, from time to time, resulted in a
greater or lesser charge to each member company than would have resulted if
actual costs to each member company were allocated.
In connection with the business combinations involving the Expense-Sharing
Participants (i.e., Congress Street merged with a wholly-owned subsidiary of
Parkway on November 29, 1994, Eastover combined with EastGroup on December 22,
1994 and EB combined with Parkway on April 27, 1995), the above described
expense-sharing arrangements terminated on December 31, 1994, except that
EastGroup had the responsibility for managing LNH under the prior administration
agreement between LNH and Congress Street. See "-- Administration Agreement."
Since that date, Parkway and EastGroup each have their own respective officers
and employees, who do not serve as officers or employees of the other company,
except for Leland R. Speed, who continues to serve as the Chief Executive
Officer of both companies, and a small number of clerical and support staff
employees. The officers of EastGroup also continue to serve as officers of LNH;
in addition, the President of Parkway -- Steven G. Rogers -- continues to serve
as an officer of LNH. David H. Hoster II and N. Keith McKey, who formerly served
as officers of all the Expense-Sharing Participants, now serve as officers of
EastGroup and LNH and not Parkway. EastGroup, LNH and Parkway continue to share
the same leased office space at One Jackson Place in Jackson, Mississippi and
share the services of Mr. Speed and certain clerical and support staff employees
and expenses related thereto are shared among Parkway and EastGroup (except for
certain costs which can be attributed to either company based on its actual use
of the services involved). LNH's costs are paid as provided in the Management
Agreement (described below).
Administration Agreement. Effective April 22, 1992, LNH REIT Managers
entered into an administration agreement (the "Administration Agreement"), with
Congress Street. Under the Administration Agreement, Congress Street (and later
EastGroup) administered the day-to-day business of LNH in return for a $125,000
annual fee, payable by LNH's manager. In connection with the termination of the
expense-sharing arrangements described above, EastGroup assumed Congress
Street's duties under the Administration Agreement. The Administration Agreement
was terminated effective March 31, 1995.
Page 7
8
Cost Sharing Arrangement with Parkway. EastGroup and Parkway continue to
share the same office space at One Jackson Place in Jackson, Mississippi.
EastGroup and Parkway share the rent with respect to their shared office space
based upon the number of employees each has in such office space divided by the
total number of employees of both companies using the office space. In addition,
EastGroup and Parkway share the services of Mr. Speed and a limited number of
clerical and support staff employees and expenses related thereto are shared
equally between EastGroup and Parkway. Parkway and EastGroup also share the
expenses of certain office supplies and equipment, and EastGroup reimburses
Parkway for the services of certain employees of Parkway who perform services
for EastGroup on an as requested basis. During the year ended December 31, 1995,
EastGroup paid Parkway $387,000 under this cost-sharing arrangement.
Management Agreement with LNH. LNH has no salaried employees; its officers
are elected by the Board of Directors solely to facilitate the execution of
commitments and other obligations on behalf of LNH. Except for certain benefits
received pursuant to the Incentive Compensation Plan effective October 1, 1993,
none of the officers of LNH receives any remuneration from LNH in his or her
capacity as an officer of LNH. EGP Managers provides all executive and
administrative personnel, office space and general services required by LNH.
Management services for LNH are rendered by EGP Managers under a Management
Agreement. Until April 3, 1995, the manager, pursuant to the Management
Agreement, was LNH REIT Managers, a Mississippi general partnership in which
Walker Managers, L.P. ("Walker") and EGP Managers were equal partners. In
connection with EastGroup's purchase of 383,775 LNH Shares for $7.50 in cash per
LNH Share from affiliates of Walker, EGP Managers purchased Walker's one-half
interest in LNH REIT Managers, and EGP Managers replaced LNH REIT Managers as
manager under the Management Agreement. EGP Managers is entitled to receive a
basic annual fee (the "Basic Fee"), payable in monthly installments, equal to
the sum of 1.25% of the first $100,000,000 or portion thereof of LNH's Invested
Assets (as defined in the Management Agreement), 1.125% of the second
$100,000,000 or portion thereof, 1.00% of the third $100,000,000 or portion
thereof, 0.875% of the fourth $100,000,000 or portion thereof and 0.75% of the
portion (if any) of Invested Assets exceeding $400,000,000.
EGP Managers may also receive incentive compensation equal to the excess,
if any, of (x) the Average Annual Incentive Fee (as defined below) for the
period from May 26, 1981 (the date on which LNH received the net proceeds of the
public offering of LNH Shares), to the end of any fiscal year, multiplied by the
number of 12-month fiscal years and fractions thereof in such period, over (y)
the aggregate amount of incentive fee, if any, earned by the manager in prior
years. The "Average Annual Incentive Fee" at the end of any fiscal year will be
equal to the sum of:
(i) 10% of the amount by which the Average Annual Net Profit (as
defined in the Management Agreement) from May 26, 1981, to such time
exceeds 12% of the Average Net Worth (as defined in the Management
Agreement) for such period; and
(ii) 5% of the amount by which the Average Annual Net Profit from May
26, 1981, to such time exceeds 17% of the Average Net Worth for such
period; and
(iii) 5% of the amount by which the Average Annual Net Profit from May
26, 1981, to such time exceeds 22% of the Average Net Worth for such
period.
During the year ended December 31, 1995, LNH paid Management Fees of
$294,000. EGP Managers did not receive incentive compensation in the fiscal year
ended December 31, 1995, and is not expected to receive incentive compensation
in the current fiscal year. Effective July 1, 1994, EGP Managers agreed to amend
the Management Agreement to provide that the Management Fee paid by LNH will not
exceed $29,167 per month. The Management Agreement will be terminated upon the
effective date of the EastGroup-LNH Merger.
Page 8