SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CBL & ASSOCIATES PROPERTIES, INC.
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[CBL & ASSOCIATES PROPERTIES, INC LETTERHEAD]
April 1, 2005
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
which will be held at The Chattanoogan, 1201 South Broad Street, Chattanooga,
Tennessee, on Monday, May 9, 2005 at 4:00 p.m. (EDT).
The Notice and Proxy Statement on the following pages contain details
concerning the business to come before the meeting. Management will report on
current operations and there will be an opportunity for discussion concerning
the Company and its activities. Please sign and return your proxy card in the
enclosed envelope to ensure that your shares will be represented and voted at
the meeting even if you cannot attend. You are urged to sign and return the
enclosed proxy card even if you plan to attend the meeting.
I look forward to personally meeting all stockholders who are able to
attend.
Sincerely,
/s/ Charles B. Lebovitz
Chairman of the Board and
Chief Executive Officer
CBL & ASSOCIATES PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 9, 2005
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CBL &
Associates Properties, Inc., a Delaware corporation (the "Company"), will be
held at The Chattanoogan, 1201 South Broad Street, Chattanooga, Tennessee, on
Monday, May 9, 2005 at 4:00 p.m. (EDT) for the following purposes:
1. To re-elect four directors to serve for a term of three years and until
their respective successors are elected and qualified;
2. To act upon a proposal to approve an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the number of authorized
shares of the Company's Common Stock (the "Common Stock"), par value $.01
per share, from 95,000,000 to 180,000,000 shares;
3. To act upon a proposal to ratify the selection of Deloitte & Touche LLP as
the independent registered public accountants for the Company's fiscal year
ending December 31, 2005; and
4. To consider and act upon any other matters which may properly come before
the meeting or any adjournment thereof.
In accordance with the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on March 14, 2005, as the record date
for the determination of the stockholders entitled to notice of, and to vote at,
the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Whether or not you plan to attend the meeting, we urge you to sign, date
and promptly return the enclosed Proxy in order to ensure representation of your
shares. An addressed envelope for which no postage is required if mailed in the
United States is enclosed for that purpose. Returning your Proxy will not
prevent you from voting your shares at the meeting if you desire to do so, as
your Proxy is revocable at your option.
By Order of the Board of Directors
/s/ Stephen D. Lebovitz
President and Secretary
Chattanooga, Tennessee
April 1, 2005
PROXY STATEMENT
CBL & ASSOCIATES PROPERTIES, INC.
2030 Hamilton Place Blvd.
Suite 500
CBL Center
Chattanooga, Tennessee 37421
ANNUAL MEETING OF STOCKHOLDERS
May 9, 2005
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of CBL & Associates Properties, Inc., a Delaware corporation (the "Company"),
for use at the annual meeting of stockholders (the "Annual Meeting") of the
Company to be held at The Chattanoogan, 1201 South Broad Street, Chattanooga,
Tennessee, on Monday, May 9, 2005, at 4:00 p.m. (EDT) and at any and all
postponements or adjournments thereof. Any proxy given may be revoked at any
time before it is voted by filing with the Secretary of the Company either an
instrument revoking it or a duly executed proxy bearing a later date. All
expenses of the solicitation of proxies for the Annual Meeting, including the
cost of mailing, will be borne by the Company. In addition to solicitation by
mail, officers and regular employees of the Company may solicit proxies from
stockholders by telephone, telegram or personal interview but will not receive
additional compensation for such services. The Company also intends to request
persons holding stock in their name or custody, or in the name of nominees, to
send proxy materials to their principals and request authority for the execution
of the proxies. The Company will reimburse such persons for the associated
expense. Although the Company presently does not intend to retain a solicitor to
assist in the solicitation of proxies, the Company may retain a paid solicitor
if it becomes necessary to obtain the required vote. If the Company elects to
retain such a paid solicitor, the Company anticipates that the cost of such
services shall be approximately $25,000.
The Company anticipates mailing proxy materials and the Annual Report for
the Company's fiscal year ended December 31, 2004, on or about April 1, 2005, to
stockholders of record as of March 14, 2005.
VOTING SECURITIES
Record Date and Shares Entitled to Vote
Only stockholders of record at the close of business on March 14, 2005 are
entitled to vote on the matters to be presented at the Annual Meeting. The
number of shares of the Company's Common Stock, par value $.01 per share,
outstanding on such date and entitled to vote was 31,399,138 shares.
Quorum Requirements
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting with respect to those matters requiring approval
by the holders of Common Stock, but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
1
Votes Necessary to Approve the Proposals
The affirmative vote of the holders of a plurality of the shares of the
Common Stock present or represented at the Annual Meeting is required for the
election of directors. The approval of the proposed amendment to the Company's
Certificate of Incorporation will require the affirmative vote of the holders of
a majority of the Company's issued and outstanding shares of Common Stock,
voting as a class. The affirmative vote of the holders of a majority of the
shares of Common Stock present or represented at the Annual Meeting is required
for the ratification of the selection of the independent public accountants.
Each share of Common Stock is entitled to one vote with respect to those matters
upon which such share is to be voted, no cumulative voting rights are authorized
and dissenters' rights are not applicable to these matters.
Voting Procedures
A proxy card is being mailed to each holder of shares of the Company's
Common Stock for voting with respect to each stockholder's shares of Common
Stock. Stockholders holding shares of Common Stock should complete, sign and
return to the Company the proxy card.
Abstentions and broker non-votes (shares held by a broker or nominee which
are represented at the Annual Meeting, but with respect to which such broker or
nominee does not have discretionary authority to vote on a particular proposal)
will be counted as present at the Annual Meeting for the purpose of determining
whether or not a quorum exists. Abstentions and broker non-votes will generally
not be counted for any other purpose, except that abstentions and broker
non-votes, other than with respect to the election of directors, will generally
have the same effect as negative votes.
Unless contrary instructions are indicated on the accompanying proxy, the
shares represented thereby will be voted in accordance with the recommendations
of the Board of Directors.
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members divided into
three classes (having two, three and four members, respectively) serving
staggered three-year terms. Under the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Amended and Restated
Bylaws (the "Bylaws"), a majority of the directors must be unaffiliated
("Independent Directors") with the Company and its predecessor entity, CBL &
Associates, Inc. and its affiliates ("CBL's Predecessor"). Each year the term of
office of one class of directors expires.
Upon the recommendation of the Company's Nominating/Corporate Governance
Committee, the Board of Directors intends to present for action at the Annual
Meeting the re-election of Charles B. Lebovitz, Claude M. Ballard, Gary L.
Bryenton and Leo Fields, whose present terms expire in 2005, to serve for a term
of three years and until their successors are duly elected and shall qualify.
Mr. Lebovitz is Chairman of the Board and Chief Executive Officer of the
Company. Mr. Ballard, Mr. Bryenton and Mr. Fields are three of the Company's six
Independent Directors. Mr. Ballard currently serves as the Chairman of the
Company's Compensation Committee and as a member of the Company's Audit and
Nominating/Corporate Governance Committees, Mr. Bryenton currently serves as the
Chairman of the Company's Nominating/Corporate Governance Committee and as a
member of the Company's Audit Committee, and Mr. Fields serves as a member of
the Company's Executive Committee.
Unless authority to vote for such directors is withheld, the enclosed proxy
will be voted for such persons, except that the persons designated as proxies
reserve discretion to cast their votes for other persons in the unanticipated
event that any of such nominees is unable or declines to serve.
2
Nominees
Set forth below is information with respect to the nominees for election:
Name Age Current Position*
------------------------- ------------ ----------------------------------------
Charles B. Lebovitz 68 Chairman of the Board of Directors and
Chief Executive Officer
------------------------- ------------ ----------------------------------------
Claude M. Ballard 75 Director
------------------------- ------------ ----------------------------------------
Leo Fields 76 Director
------------------------- ------------ ----------------------------------------
Gary L. Bryenton 65 Director
------------------------- ------------ ----------------------------------------
* The position shown represents the individual's position with the Company
and with CBL & Associates Management, Inc., a Delaware corporation (the
"Management Company"), through which the Company's property management and
development activities are conducted.
CHARLES B. LEBOVITZ has served as Chairman of the Board and Chief Executive
Officer of the Company since the completion of its initial public offering in
November 1993 and is Chairman of the Executive Committee of the Board of
Directors. Mr. Lebovitz also served as President of the Company until February
1999. Prior to the Company's formation, he served in a similar capacity with
CBL's Predecessor. Mr. Lebovitz has been involved in shopping center development
since 1961 when he joined his family's development business. In 1970, he became
affiliated with Arlen Realty & Development Corp. ("Arlen") where he served as
President of Arlen's shopping center division, and, in 1978, he founded CBL's
Predecessor together with his associates (the "Associates"), including John N.
Foy and Ben S. Landress. Mr. Lebovitz is an Advisory Director of First Tennessee
Bank, N.A., Chattanooga, Tennessee and a National Vice Chairman of the United
Jewish Appeal. Mr. Lebovitz has previously served as a Trustee, Vice President
(Southern Division) and Chairman of the ICSC. He is the father of Stephen D.
Lebovitz and Michael I. Lebovitz, executive officers of the Company, and Alan L.
Lebovitz, one of the Company's vice-presidents.
CLAUDE M. BALLARD, CRE, M.A.I. has served as a Director of the Company
since the completion of its initial public offering in November 1993 and is
Chairman of the Compensation Committee and a member of the Audit and
Nominating/Corporate Governance Committees of the Board of Directors. Mr.
Ballard has served as a general partner, limited partner and senior consultant
of Goldman Sachs & Co. and as a Senior Vice President in the real estate
division of the Prudential Insurance Company of America. He is currently a
Director of Quapaw Council, Boy Scouts of America, Horizon Hotel Corp. and
Research Solutions, Inc. Mr. Ballard is a member of the Board of Directors of
St. Vincent's Infirmary, Little Rock, Arkansas. In 1999, the United States Tax
Court determined that Mr. Ballard had underpaid federal taxes and underreported
income over a period of years ending in 1989 as result of participation in
transactions found by the Tax Court to have involved serious financial
improprieties. (Investment Research Associates, Ltd. and Subsidiaries, et al v.
Commissioner of Internal Revenue Service, T.C. Memo 1999-407). Because of the
nature of the transactions, the Tax Court upheld the imposition of penalties
under Internal Revenue Code Section 6663 and its predecessors, and Mr. Ballard
has paid the taxes, penalties and interest at issue. The Tax Court's decision
was upheld by the United States Court of Appeals for the Eleventh Circuit on
February 13, 2003. Upon further appeal of the case to the United States Supreme
Court (the "Court"), the Court, by opinion dated March 7, 2005, reversed the
decision of the Eleventh Circuit Court of Appeals and remanded the case for
further proceedings consistent with the Court's decision. As of the date of this
proxy statement, the Company has no information as to whether the Internal
Revenue Service will pursue a retrial of the case.
3
LEO FIELDS has served as a Director of the Company since the completion of
its initial public offering in November 1993 and is a member of the Executive
Committee of the Board of Directors. Mr. Fields is Co-Chairman of Weisberg &
Fields, Inc., an investment advisory firm he started in 1991. From 1984 through
1991, Mr. Fields directed Leo Fields Interests, a private investment firm. He
was affiliated with Zale Corporation from 1947 until his retirement in 1984,
serving, from 1981 to 1984, as Vice Chairman and a member of Zale's Executive
Committee. He is a Trustee of the Dallas Home for the Jewish Aged Endowment
Foundation and serves on the Executive Committee of Legacy Senior Communities,
Inc. Mr. Fields is also a Director of the M. B. and Edna Zale Foundation.
GARY L. BRYENTON joined the Company as a Director on January 31, 2001, in
accordance with the terms of the Company's acquisition of a portfolio of
properties from Jacobs Realty Investors Limited Partnership, a Delaware limited
partnership ("JRI") and certain of its affiliates and partners (collectively
referred to herein as the "Jacobs Group" and the acquisition is referred to
herein as the "Jacobs Acquisition"). Mr. Bryenton is Chairman of the Companys'
Nominating/Corporate Governance Committee and a member of the Audit Committee of
the Board of Directors. Mr. Bryenton is a Senior Partner of the law firm of
Baker & Hostetler LLP and has formerly served as the firm's Executive Partner
and Chief Operating Officer. He currently serves as Chairman of the Board of
Trustees of Heidelberg College and is a member of the Boards of Trustees of the
Cleveland Orchestra, the Rock and Roll Hall of Fame and Museum and the
Rutherford B. Hayes Presidential Center.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF THE
FOUR DIRECTORS NAMED ABOVE
4
Directors and Executive Officers
Set forth below is information with respect to the directors and executive
officers of the Company (other than Charles B. Lebovitz, Claude M. Ballard, Gary
L. Bryenton and Leo Fields):
Term
Name Expires (1) Age Current Position(2)
----------------------------- -------------- ------------ ---------------------------------------------------
Stephen D. Lebovitz 2007 44 Director, President and Secretary
----------------------------- -------------- ------------ ---------------------------------------------------
John N. Foy 2006 61 Vice Chairman of the Board of Directors, Chief
Financial Officer and Treasurer
----------------------------- -------------- ------------ ---------------------------------------------------
Martin J. Cleary 2006 69 Director
----------------------------- -------------- ------------ ---------------------------------------------------
Winston W. Walker 2007 61 Director
----------------------------- -------------- ------------ ---------------------------------------------------
Matthew S. Dominski 2006 50 Director
----------------------------- -------------- ------------ ---------------------------------------------------
Ben S. Landress -- 77 Executive Vice President - Management
----------------------------- -------------- ------------ ---------------------------------------------------
Ronald L. Fullam -- 62 Senior Vice President - Development
----------------------------- -------------- ------------ ---------------------------------------------------
Ronald S. Gimple -- 65 Senior Vice President and General Counsel
----------------------------- -------------- ------------ ---------------------------------------------------
Michael I. Lebovitz -- 41 Senior Vice President - Mall Projects
----------------------------- -------------- ------------ ---------------------------------------------------
Charles H. May, II -- 61 Senior Vice President - Development
----------------------------- -------------- ------------ ---------------------------------------------------
Farzana K. Mitchell -- 53 Senior Vice President - Finance
----------------------------- -------------- ------------ ---------------------------------------------------
Jerry L. Sink -- 54 Senior Vice President - Mall Management
----------------------------- -------------- ------------ ---------------------------------------------------
Eric P. Snyder -- 55 Senior Vice President and Director of Corporate
Leasing
----------------------------- -------------- ------------ ---------------------------------------------------
Augustus N. Stephas -- 62 Senior Vice President - Accounting and Controller
----------------------------- -------------- ------------ ---------------------------------------------------
R. Stephen Tingle -- 59 Senior Vice President - Community Center
Development
----------------------------- -------------- ------------ ---------------------------------------------------
Charles W.A. Willett, Jr. -- 55 Senior Vice President - Real Estate Finance
----------------------------- -------------- ------------ ---------------------------------------------------
(1) Indicates expiration of term as a director.
(2) The position shown represents the individual's position with the Company
and with the Management Company.
5
STEPHEN D. LEBOVITZ has served as President and Secretary of the Company
since February 1999 and as a Director of the Company since the completion of its
initial public offering in November 1993. Since joining CBL's Predecessor in
1988, Mr. Lebovitz has also served as Executive Vice President -
Development/Acquisitions, Executive Vice President - Development, Senior Vice
President - New England Office and as Senior Vice President - Community Center
Development and Treasurer of the Company. Before joining CBL's Predecessor, Mr.
Lebovitz was affiliated with Goldman, Sachs & Co. from 1984 to 1986. He is past
president of the Boston Jewish Family and Children's Service, a member of the
Board of Directors of the Combined Jewish Philanthropic, Boston, Massachusetts
and a member of the Board of Directors of the Children's Hospital Trust, Boston,
Massachusetts. He is a Trustee and Divisional Vice President of the
International Council of Shopping Centers ("ICSC"). Stephen D. Lebovitz is a son
of Charles B. Lebovitz and a brother of Michael I. Lebovitz and Alan L.
Lebovitz.
JOHN N. FOY has served as Vice Chairman of the Board of Directors and
Treasurer of the Company since February 1999 and as a Director and Chief
Financial Officer of the Company since the completion of its initial public
offering in November 1993. Until February 1999, he served as Executive Vice
President - Finance and Secretary of the Company. Mr. Foy is a member of the
Executive Committee of the Board of Directors. Prior to the Company's formation,
he served in similar executive capacities with CBL's Predecessor. Mr. Foy has
been involved in the shopping center industry since 1968 when he joined the
Lebovitz family's shopping center development business. In 1970, he became
affiliated with the shopping center division of Arlen, and, in 1978, joined
Charles B. Lebovitz as an Associate in establishing CBL's Predecessor. Mr. Foy
served as Chairman of the Board of First Fidelity Savings Bank in Crossville,
Tennessee from December 1985 until April 1994. Mr. Foy currently serves as a
member of the Advisory Board of AmSouth Bank of Chattanooga, Tennessee and as a
Director and Vice Chairman of the Board of Chattanooga Neighborhood Enterprise,
a non-profit organization based in Chattanooga, Tennessee. Mr. Foy is a former
member of the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT").
MARTIN J. CLEARY joined the Company as Director on January 31, 2001, in
accordance with the terms of the Jacobs Acquisition. Mr. Cleary is a member of
the Company's Compensation Committee. Mr. Cleary is the former President and
Chief Operating Officer of The Richard E. Jacobs Group, Inc. He is currently a
Director and member of the Human Resources Committee of Guardian Life Insurance
Company and a Director and member of the Audit Committee of the Lamson &
Sessions Company. Mr. Cleary is also an ex-officio Trustee and former Chairman
of the ICSC.
MATTHEW S. DOMINSKI joined the Company as a Director on February 2, 2005,
when he was appointed to the Board of Directors to fill the un-expired term of
William J. Poorvu, who retired from the Company's Board in July 2004. Mr.
Dominski is joint-owner of Polaris Capital, LLC, a Chicago, Illinois based real
estate investment firm. From 1993 through 2000, Mr. Dominski served as Chief
Executive Officer of Urban Shopping Centers ("Urban"). Urban was formerly one of
the largest regional mall property companies in United States and was a publicly
traded real estate investment trust listed on the New York Stock Exchange
("NYSE") and the Chicago Exchange. Following the purchase of Urban by Rodamco
North America in 2000, Mr. Dominski served as Urban's President until 2002. In
2003, Mr. Dominski formed Polaris Capital, LLC. From 1998 until 2004, Mr.
Dominski served as a member of the Board of Trustees of the ICSC.
WINSTON W. WALKER has served as a Director of the Company since the
completion of its initial public offering in November 1993. He is a member of
the Compensation and Nominating/Corporate Governance Committees of the Board of
Directors and is Chairman of the Company's Audit Committee. Mr. Walker served as
President and Chief Executive Officer of Provident Life and Accident Insurance
Company of America ("Provident") from 1987 until October 1, 1993, and served in
various other capacities with Provident from 1974 to 1987. Mr. Walker is a
Director, a member of the Audit Committee and Chairman of the Compensation
Committee of American Campus Communities, Inc. of Austin, Texas, a real estate
investment trust listed on the NYSE.
6
BEN S. LANDRESS serves as Executive Vice President - Management of the
Company. He has held that position since January 1997. Prior to that time, Mr.
Landress served as Senior Vice President - Management and prior thereto, he
served in a similar capacity with CBL's Predecessor. Mr. Landress directs the
day-to-day management of the Company's properties and is responsible for general
corporate administration. Mr. Landress has been involved in the shopping center
business since 1961 when he joined the Lebovitz family's development business.
In 1970, he became affiliated with Arlen's shopping center division, and, in
1978, joined Mr. Lebovitz as an Associate in establishing CBL's Predecessor.
RONALD L. FULLAM serves as Senior Vice President - Development of the
Company. He has held that position since January 1997. Prior to that time, Mr.
Fullam served as Vice President - Development of the Company. Mr. Fullam joined
Arlen's shopping center development division as a project manager in August 1977
and CBL's Predecessor as a Vice President upon its formation in 1978.
RONALD S. GIMPLE serves as Senior Vice President and General Counsel of the
Company. He has held these positions since January 1997. Mr. Gimple joined the
Company in 1994 as Vice President - Development. Prior to joining the Company,
Mr. Gimple served as a Vice President of The Edward J. DeBartolo Corporation,
from 1987 to 1994, and, prior to 1987, he served as General Counsel of Petrie
Store Corporation, Vice President and Real Estate Counsel of BATUS Retail Group
and Vice President and General Counsel of General Growth Company.
MICHAEL I. LEBOVITZ serves as Senior Vice President - Mall Projects of the
Company. He has held that position since January 1997. Prior to that time, Mr.
Lebovitz served as Vice President - Development and as a project manager for the
Company. Mr. Lebovitz joined CBL's Predecessor in 1988 as a project manager for
CoolSprings Galleria in Nashville, Tennessee, and was promoted to Vice President
in 1993. Prior to joining CBL's Predecessor, he was affiliated with Goldman,
Sachs & Co. from 1986 to 1988. He is the immediate past President of the Jewish
Community Federation of Greater Chattanooga, serves as a Board Member of United
Jewish Communities and is a Board Member of the Chattanooga United Way. Michael
I. Lebovitz is a son of Charles B. Lebovitz and a brother of Stephen D. Lebovitz
and Alan L. Lebovitz.
CHARLES H. MAY, II serves as a Senior Vice President - Development of the
Company. Mr. May joined the Company in June 2003. Prior to joining the Company,
he served as Vice President - Real Estate (2002 - 2003) and Senior Director -
Real Estate (1994 - 2002), for Sears Roebuck & Co. Prior to 1994, Mr. May served
in various capacities, including Vice President, Secretary and General Counsel
and Senior Vice President - Development, with Homart Development and served as
Vice President of Coldwell Banker Commercial Real Estate Group. Mr. May is a
member of the ICSC and the Urban Land Institute.
FARZANA K. MITCHELL serves as Senior Vice President - Finance of the
Company. She has held that position since September 2000. Prior to joining the
Company, Ms. Mitchell was an officer of Lend Lease Real Estate Investments in
Atlanta, Georgia (the successor of Equitable Real Estate Investment Management,
Inc. ("Equitable")). During her service with Equitable, she held various
positions from 1982 to 2000 and she served as Deputy Portfolio Manager for the
Equitable's portfolio of real estate mortgages from 1995 to 2000. From 1976 to
1982, Ms. Mitchell served as Assistant Treasurer of IRT Property Company, a real
estate investment trust. Ms. Mitchell is a certified public accountant, licensed
in the state of Georgia.
JERRY L. SINK serves as Senior Vice President - Mall Management for the
Company. He has held that position since February 1998. Prior to that time, Mr.
Sink had served as Vice President - Mall Management since joining the Company in
July 1993. Mr. Sink has served as Vice President of Retail Asset Management for
Equitable Real Estate, Chicago, Illinois, from January 1988 to June 1993 and,
prior to January 1988, he was affiliated with General Growth Companies, Inc. as
Vice President of Management. Mr. Sink holds the designation of Senior Certified
Shopping Center Manager ("SCSM") as recognized by the ICSC.
7
ERIC P. SNYDER serves as Senior Vice President and Director of Corporate
Leasing for the Company. He has held these positions since January 1997. Mr.
Snyder joined CBL's Predecessor as a project manager in 1978 and was promoted to
Vice President in 1984 and to Vice President and Director of Corporate Leasing
in 1992. From 1974 to 1978, Mr. Snyder was a leasing agent and project manager
for Arlen's shopping centers.
AUGUSTUS N. STEPHAS serves as Senior Vice President - Accounting and
Controller for the Company. He has held these positions since January 1997. Mr.
Stephas joined CBL's Predecessor in July 1978 as Controller and was promoted to
Vice President in 1984. From 1970 to 1978, Mr. Stephas was affiliated with the
shopping center division of Arlen, first as accountant and later as assistant
controller.
R. STEPHEN TINGLE serves as Senior Vice President - Community Center
Development for the Company. He has held that position since January 2000. Prior
to that time, Mr. Tingle served as Vice President and Director of Community
Center Development - Chattanooga Office. Mr. Tingle joined CBL's Predecessor in
1986 as a project manager for community and neighborhood shopping centers and
was promoted to Vice President of Development in 1988. From 1978 to 1986, Mr.
Tingle engaged in the practice of law.
CHARLES W.A. WILLETT, JR. serves as Senior Vice President - Real Estate
Finance for the Company. He has held that position since January 2002. Mr.
Willett was promoted to Vice President - Real Estate Finance in 1996 and held
that position until his promotion to Senior Vice President as stated above.
Prior to 1996, Mr. Willett participated in the Company's finance department and
he served in a similar capacity with CBL's Predecessor prior to 1993. Mr.
Willett joined CBL's Predecessor in 1978 and prior thereto, he was affiliated
with Arlen in its finance and accounting departments.
Operation of the Company's Business
The Company operates through its two wholly-owned subsidiaries, CBL
Holdings I, Inc., a Delaware corporation ("CBL Holdings I"), and CBL Holdings
II, Inc., a Delaware corporation ("CBL Holdings II"). Through the referenced
subsidiaries, the Company currently holds a 1.6% sole general partner interest
and a 53.4% limited partner interest in CBL & Associates Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"). See "Certain
Relationships and Related Transactions - Operating Partnership Agreement; CBL
Rights". The Company conducts substantially all of its business through the
Operating Partnership.
Certain Terms of Jacobs Acquisition
In connection with the Jacobs Acquisition, the Company agreed to expand its
Board of Directors from seven to nine members and to nominate two designees of
JRI as members of the Board. Martin J. Cleary and Gary L. Bryenton were
appointed to the Board as these initial designees. JRI will continue to be
entitled to nominate two Board members until JRI, together with Richard E.
Jacobs and certain members of his family and certain trusts for the benefit of
the families of Richard E. Jacobs and David H. Jacobs (collectively, the "Jacobs
Persons"), as a group, beneficially own fewer than 6.78 million special common
units in the Operating Partnership ("SCUs") and shares of Common Stock,
following which JRI will be entitled to nominate only one Board member. JRI will
no longer be entitled to nominate any Board members if the Jacobs Persons, as a
group, beneficially own fewer than 3.34 million SCUs and shares of Common Stock.
CBL's Predecessor and certain of the Company's executive officers have agreed to
vote their shares in favor of JRI's designees until the twelfth anniversary of
the Jacobs Acquisition. The Jacobs Persons, together with Martin J. Cleary, have
agreed to a 12-year standstill period during which they will not seek to acquire
control of the Company and will not participate in a group which seeks to
acquire such control. The Jacobs Persons, together with Martin J. Cleary, also
agreed until the twelfth anniversary of the Jacobs Acquisition to vote their
shares in favor of the election of the Board's nominees to the Board of
Directors who are running unopposed and uncontested.
8
Corporate Governance Matters
Overview. The Board of Directors has adopted guidelines on corporate
governance (including director independence criteria), committee charters, and a
code of business conduct and ethics setting forth the Company's corporate
governance principles and practices. These documents can be accessed in the
"Investor Relations - Corporate Governance" section of the Company's website at
cblproperties.com or by directing a written request for copies to the Company at
CBL & Associates Properties, Inc., CBL Center, Suite 500, 2030 Hamilton Place
Boulevard, Chattanooga, Tennessee 37421-6000, Attention: Director of Investor
Relations.
Director Independence. The Board has adopted a set of director independence
standards ("Director Independence Standards") for evaluating the independence of
each of the Directors in accordance with the requirements of the Securities and
Exchange Commission ("SEC") and of the NYSE corporate governance standards. In
March 2005, the Board undertook its annual review of Director independence
pursuant to NYSE Rule 303A.02(a) and pursuant to the Company's Director
Independence Standards. During this process, the Board reviewed whether any
Director has any relationship with the Company's independent registered public
accountants that would preclude independence under SEC and NYSE rules, or any
material relationship with the Company (either directly or as a partner, member,
shareholder or officer of an organization that has a relationship with the
Company) which could (directly or indirectly) materially impact the ability of
such director or nominee to exert his independent judgment and analysis as a
member of the Board. As a result of this review, the Board affirmatively
determined that six of the Company's nine Directors were independent under the
standards of the SEC and NYSE and as set forth in the Company's Director
Independence Standards. Messrs. Charles B. Lebovitz, Stephen D. Lebovitz, and
John N. Foy, who are executive officers of the Company and employees of the
Management Company, were not deemed independent. In making the independence
determinations with respect to the other six directors, the Board considered the
following matters and determined that they did not interfere with the
independence of the directors in question: (i) with respect to Mr. Cleary and
Mr. Bryenton, the Company's contractual commitments in connection with the terms
of the Jacobs Acquisition as described above and (ii) with respect to Mr.
Fields, the fact that he is Co-Chairman of Weisberg & Fields, Inc., an
investment advisory firm that provides certain advisory services, from time to
time, to Charles B. Lebovitz and members of his family. The full text of the
Director Independence Standards is as follows:
A. GENERAL INDEPENDENCE REQUIREMENTS
In determining whether or not any director or nominee for
director may be considered "independent", the Board shall apply the
following criteria:
(1) No director or nominee shall be deemed "independent"
unless the Board affirmatively determines that the director or nominee
satisfies the requirements stated herein and has no material
relationship with the Company (either directly or as a partner, member,
shareholder or officer of an organization that has a relationship with
the Company). For purposes of this test, a relationship with the
Company shall be deemed to be a "material" relationship which precludes
a determination that a director or nominee is independent if, in the
opinion of the Board and in light of all the relevant facts and
circumstances, such relationship (directly or indirectly) could
materially impact the ability of such director or nominee to exert his
or her independent judgment and analysis as a member of the Board. For
purposes hereof, ownership of the Company's stock (even in a
significant amount) or ownership of securities convertible to the
Company's stock shall not be viewed, in and of themselves, as a bar to
a finding of independence. To assist in this determination, the Company
shall periodically (at least annually and prior to any nominee becoming
a director for his or her initial term as a director) deliver to the
directors and/or nominees for directorships a Directors and Officers
Questionnaire designed to elicit information from such director or
nominee as to material relationships and other information relative to
these Independence Standards; and
9
(2) In addition, to be considered "independent," a director or
nominee must satisfy all other independence criteria for directors of a
publicly traded company which are now, or may be hereafter, set forth
in applicable federal statutes and rules promulgated by the SEC, and in
the related listing standards promulgated by the NYSE and any other
exchange upon which the Company's stock may be listed, as such statutes
and/or rules and listing standards may be revised or amended from time
to time.
B. ADDITIONAL AUDIT COMMITTEE INDEPENDENCE REQUIREMENTS
In determining whether or not any director or nominee
satisfies the "independence" requirement for Audit Committee
membership, in addition to satisfying all of the requirements set forth
in Paragraph A hereof, such director also must satisfy the following:
Such director or nominee must satisfy all additional requirements for
the independence of audit committee members of publicly traded
companies which are now, or may be hereafter, set forth in applicable
federal statutes and rules promulgated by the SEC, and in the related
listing standards promulgated by the NYSE and any other exchange upon
which the Company's stock may be listed, as such statutes and/or rules
and listing standards may be revised or amended from time to time.
The Director Independence Standards also are included as an exhibit to the
Company's guidelines on corporate governance, which can be found in the
"Investor Relations - Corporate Governance" section of the Company's website at
cblproperties.com. A copy may also be obtained upon request from the Company's
Director of Investor Relations at the address provided above.
Executive Sessions for Independent Directors. In accordance with the NYSE
Rule 303A.03, the Independent Directors of the Company will meet from time to
time in scheduled executive sessions without management participation. The Board
of Directors has designated Winston W. Walker as lead Independent Director,
solely for the purpose of chairing these executive sessions. The Independent
Directors met in four executive sessions during 2004.
Communicating with the Board of Directors. The Company provides a process
for stockholders to send communications to the Board or any of the Directors.
Stockholders may send written communication to the Board or any of the Directors
c/o the Corporate Secretary, CBL & Associates Properties, Inc., 2030 Hamilton
Place Blvd., Suite 500, CBL Center, Chattanooga, Tennessee, 37421-6000. All
communications will be compiled by the Company's Corporate Secretary and
submitted to the Board or the individual Directors(s) to whom such communication
is addressed. It is the Company's policy that all Directors attend the Annual
Meeting unless they are prevented from attending due to scheduling conflicts or
important personal or business reasons; provided, however, it is the Company's
policy that a majority of the Directors (including a majority of the Company's
Independent Directors) attend each Annual Meeting. All of the Company's
then-incumbent Directors attended the 2004 Annual Meeting of Stockholders.
Code of Business Conduct and Ethics. The Board has adopted an Amended and
Restated Code of Business Conduct and Ethics (the "Code of Business Conduct")
that applies to all Directors, officers and employees, including the Company's
principal executive officer, principal financial officer and principal
accounting officer. The Code of Business Conduct is available in the "Investor
Relations - Corporate Governance" section of the Company's website at
cblproperties.com, or at no charge by written request to the Company's Director
of Investor Relations at the address provided above. The purpose of the Code of
Business Conduct is to provide a codification of standards that is reasonably
designed to deter wrongdoing and to promote accountability for and adherence to
the standards of the Code, including honest and ethical conduct; the ethical
handling of actual or apparent conflicts of interest between personal and
professional relationships; full, fair, accurate, timely and understandable
disclosure in the Company's filings with the SEC and in other public
communications by the Company; and compliance with all applicable rules and
regulations that apply to the Company and to its Directors, officers and
employees.
10
Board of Directors' Meetings and Committees
The Board of Directors has established standing Executive, Audit,
Compensation and Nominating/ Corporate Governance Committees. The Board of
Directors met thirteen times and took action by unanimous written consent three
times during 2004. Each director attended more than 75% of the aggregate of (i)
the total number of Board meetings and (ii) meetings of Board committees on
which the director served at the time during 2004.
Executive Committee. The Executive Committee is comprised of Charles B.
Lebovitz (Chairman), John N. Foy and Leo Fields. The Executive Committee may
exercise all the powers and authority of the Board of Directors of the Company
in the management of the business and affairs of the Company as permitted by
law; provided, however, unless specifically authorized by the Board of
Directors, the Executive Committee may not exercise the power and authority of
the Board of Directors with respect to (i) the declaration of dividends, (ii)
issuance of stock, (iii) amendment to the Company's Certificate of Incorporation
or Bylaws, (iv) filling vacancies on the Board of Directors, (v) approval of
borrowings in excess of $40 million per transaction or series of related
transactions, (vi) hiring executive officers, (vii) approval of acquisitions or
dispositions of property or assets in excess of $40 million per transaction and
(viii) certain transactions between the Company and its directors and officers
and certain sales of real estate and reductions of debt that produce
disproportionate tax allocations to CBL's Predecessor pursuant to the Company's
Bylaws. The Executive Committee met four times during 2004.
Audit Committee. The Audit Committee is comprised of Winston W. Walker
(Chairman), Claude M. Ballard and Gary L. Bryenton, all of whom the Board of
Directors has determined are Independent Directors pursuant to the independence
requirements of Sections 303A.02 and 303A.07(b) of the listing standards of the
NYSE as currently applicable. The Audit Committee operates pursuant to a written
amended and restated charter adopted by the Board of Directors on February 3,
2004. A copy of the amended and restated charter is available and can be
accessed in the "Investor Relations - Corporate Governance" section of the
Company's website at cblproperties.com. The Audit Committee is responsible for
the engagement of independent public accountants and the plans and results of
the audit engagement. The Audit Committee approves audit and non-audit services
provided by the independent public accountants and the fees therefore and
reviews the adequacy of the Company's internal accounting controls as well as
the Company's accounting policies and results. The Audit Committee met six times
during 2004.
Compensation Committee. The Compensation Committee is comprised of Claude
M. Ballard (Chairman), Winston W. Walker and Martin J. Cleary, all of whom the
Board of Directors has determined are Independent Directors. The Compensation
Committee operates pursuant to a written charter adopted by the Board of
Directors on February 3, 2004. A copy of the charter is available and can be
accessed in the "Investor Relations - Corporate Governance" section of the
Company's website at cblproperties.com. The Compensation Committee reviews and
approves compensation programs generally and, specifically, salaries, bonuses,
stock awards and stock options for officers of the Company of the level of vice
president or higher. The Compensation Committee administers the Amended and
Restated CBL & Associates Properties, Inc. Stock Incentive Plan (the "Stock
Incentive Plan"). The Compensation Committee met two times and took action by
unanimous written consent once during 2004.
Nominating/Corporate Governance Committee. The Nominating/Corporate
Governance Committee is comprised of Gary L. Bryenton (Chairman), Claude M.
Ballard and Winston W. Walker, all of whom the Board of Directors has determined
are Independent Directors. The Nominating/Corporate Governance Committee
operates pursuant to a written charter adopted by the Board of Directors on
February 3, 2004. A copy of the charter is available and can be accessed in the
"Investor Relations - Corporate Governance" section of the Company's website at
cblproperties.com. The Nominating/Corporate Governance Committee reviews and
makes recommendations to the Board of Directors regarding various aspects of the
Board of Directors' and the Company's governance processes and procedures. The
Nominating/Corporate Governance Committee also recommends candidates for
election to fill vacancies on the Board, including consideration of the
renominations of members whose terms are due to expire. The Nominating/Corporate
Governance Committee requires a majority of the Company's directors to be
"independent," in accordance with applicable requirements of the Company's
Certificate of Incorporation and Bylaws as well as rules of the SEC and NYSE
11
(including certain additional independence requirements for Audit Committee
members). A set of uniform Independence Standards, which was used in making all
such Independent Director determinations, is included in the Company's Corporate
Governance Guildelines, a copy of which is available on the Company's website at
cblproperties.com. In addition, the Nominating/Corporate Governance Committee
considers the breadth of a candidate's business and professional skills and
experiences, diversity of background, reputation for personal integrity, and
ability to devote sufficient time to Board service, as well as the Company's
needs for particular skills, insight and/or talents on the Board of Directors.
For incumbent directors whose terms of office are set to expire, the
Nominating/Corporate Governance Committee reviews such directors' overall
service during their term, including the number of meetings attended, level of
participation and quality of performance. With respect to the Board seats
presently held by Mr. Cleary and Mr. Bryenton, the Nominating/Corporate
Governance Committee also considers the Company's contractual commitments in
connection with the terms of the Jacobs Acquisition, as discussed above.
The Nominating/Corporate Governance Committee will consider candidates for
Board of Directors' seats proposed by stockholders. Any such proposals should be
made in writing to CBL & Associates Properties, Inc., 2030 Hamilton Place Blvd.,
Suite 500, CBL Center, Chattanooga, Tennessee, 37421-6000, Attention: Corporate
Secretary, and must be received no later than December 2, 2005, in order to be
considered for the Company's 2006 Annual Meeting. In order to be considered by
the Nominating/Corporate Governance Committee, any candidate proposed by
stockholders will be required to submit appropriate biographical and other
information equivalent to that required of all other director candidates. The
Nominating/Corporate Governance Committee does not intend to alter the manner in
which it evaluates candidates on the criteria set forth above based on whether
or not the candidate was recommended by a stockholder. The Nominating/Corporate
Governance Committee met two times in 2004.
Compensation of Directors
During 2004, each Director not employed by the Company (a "Non-Employee
Director") received from the Company an annual fee of $25,000. In addition to
the annual fee, each Non-Employee Director received a meeting fee of $1,500 for
each Board, Compensation Committee and Nominating/Corporate Governance Committee
meeting attended and $500 for each telephonic Board meeting attended and
reimbursement of expenses incurred in attending meetings. In addition, but with
the exception of the Non-Employee Director who was Chairman of the Audit
Committee, each Non-Employee Director received from the Company a fee of $1,500
for each Audit Committee meeting attended. Each Non-Employee Director serving as
a member of the Executive Committee and the Non-Employee Director serving as
Chairman of the Audit Committee received from the Company a monthly fee of $750
in lieu of meeting fees for their participation on the Executive and Audit
Committees in 2004.
Effective as of January 1, 2005, fees to Non-Employee Directors were
increased such that each Non-Employee Director shall receive from the Company an
annual fee of $27,500 and a fee of $1,500 for each Board, Compensation and
Nominating/Corporate Governance Committee meeting attended. In addition, but
with the exception of the Non-Employee Director who is Chairman of the Audit
Committee, each Non-Employee Director shall receive from the Company a fee of
$1,500 for each Audit Committee meeting attended. Each Non-Employee Director
shall receive a fee of $750 for each telephonic Board meeting. Non-Employee
Directors also receive reimbursement of any expenses incurred in attending
meetings or participating in telephonic meetings. Effective as of January 1,
2005, each Non-Employee Director serving as a member of the Executive Committee
shall receive from the Company a monthly fee of $750, and the Non-Employee
Director serving as Chairman of the Audit Committee shall receive a monthly fee
of $2,000, in lieu of meeting fees for their participation on the Executive and
Audit Committees.
Each fiscal year of the Company, Non-Employee Directors receive either an
annual grant of options to purchase 500 shares of Common Stock having an
exercise price equal to 100% of the fair market value of the shares of Common
Stock on December 31 of such fiscal year or up to 500 shares of restricted
Common Stock of the Company. For 2004, each Non-Employee Director received 250
shares of restricted Common Stock of the Company with a value (on the date of
grant, January 3, 2005) of $75.44 per share, the average of the high and low
12
trading prices of the Company's Common Stock as reported on the NYSE on January
3, 2005. The restrictions on shares of Common Stock received by the Non-Employee
Directors are set forth in the Stock Incentive Plan and provide that such shares
may not be transferred during the Non-Employee Director's term and for one year
thereafter. Each holder of a Non-Employee Director option granted pursuant to
the above-stated arrangement has the same rights as other holders of options in
the event of a change in control. Options granted to the Non-Employee Directors
(i) shall have a term of 10 years from date of grant, (ii) are 100% vested upon
grant, (iii) are non-forfeitable prior to the expiration of the term except upon
the Non-Employee Director's conviction for any criminal activity involving the
Company or, if non-exercised, within one year following the date the
Non-Employee Director ceases to be a director of the Company, and (iv) are
non-transferable.
In addition, any person who becomes a Non-Employee Director will receive an
initial grant of 500 shares of restricted Common Stock upon joining the Board of
Directors.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information available to the Company as of
March 14, 2005, with respect to the ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each named
executive officer of the Company, as defined below, and (iv) all directors and
executive officers as a group. Except as otherwise indicated, each person named
below has sole investment and voting power with respect to the securities shown.
Except as otherwise indicated, the address of each person is the Company's
address.
Number of Rule 13d-3 Fully-Diluted
Shares(1) Percentage(1) Percentage(2)
------------ ------------- -------------
FMR Corporation (3) .......................................... 4,401,812 14.02% 7.72%
82 Devonshire St.
Boston, Massachusetts 02109
Cohen & Steers Capital Management, Inc.(4).................... 1,727,348 5.50% 3.03%
757 Third Avenue
New York, New York 10017-2013
Jacobs Realty Investors Limited Partnership, and affiliates(5) 11,922,626 27.52% 7.72%
25425 Center Ridge Road
Cleveland, OH 44145-4122
CBL & Associates, Inc.("CBL's Predecessor")(6)................ 8,828,028 22.85% 13.74%
Charles B. Lebovitz(7)........................................ 9,800,631 24.80% 15.04%
John N. Foy(8)................................................ 546,855 1.72% *
Stephen D. Lebovitz(9)........................................ 528,948 1.66% *
Eric P. Snyder(10)............................................ 178,680 * *
Augustus N. Stephas(11)....................................... 74,084 * *
Martin J. Cleary (12)......................................... 222,426 * *
619 Ocean Avenue
Sea Girt, New Jersey 08750
Leo Fields(13)................................................ 65,650 * *
c/o Weisberg & Fields, Inc.
8750 North Central Expressway
Suite 1010
Dallas, Texas 75231-6409
Claude M. Ballard(14)......................................... 56,450 * *
1421 N. University
Little Rock, Arkansas 72207
Winston W. Walker(15)......................................... 38,950 * *
13450 N. Kachina Drive
Tucson, Arizona 85737
Matthew S. Dominski(16)....................................... 500 * *
c/o Polaris Capital LLC
1033 Skokie Boulevard
Suite 660
Northbrook, Illinois 60062
Gary L. Bryenton(17).......................................... 2,450 * *
Baker & Hostetler LLP
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
All executive officers and directors as a group (20 persons).. 11,933,872 29.44% 18.07%
* Less than 1%
14
(1) The Company conducts all of its business activities through the
Operating Partnership. Pursuant to the second amended and restated
partnership agreement of the Operating Partnership and all subsequent
amendments thereto (collectively, the "Operating Partnership
Agreement"), each of the partners of the Operating Partnership, which
include, among others, CBL's Predecessor, certain of the executive
officers named in this Proxy Statement and the holders of SCUs, and
subject to the terms of SCUs as outlined below, has the right ("CBL
Rights") to exchange all or a portion of its common partnership units
in the Operating Partnership for shares of Common Stock or their cash
equivalent, at the Company's election. Pursuant to the Jacobs
Acquisition, on January 31, 2001 and in March, 2002, the Operating
Partnership issued to the Jacobs Group and certain third parties
12,358,187 SCUs and 499,730 SCUs, respectively, of the Operating
Partnership. SCUs may, at any time after the earlier of (i) January
31, 2004, or (ii) the death of the beneficial owner of the SCUs (the
"Exchange Date"), be exchanged for cash, shares of the Company's
Common Stock (on a one-for-one basis) or any combination of cash or
shares of Common Stock, at the Company's election. Under the terms of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), shares of Common Stock that may be
acquired within 60 days are deemed outstanding for purposes of
computing the percentage of Common Stock owned by a stockholder.
Therefore, for purposes of Rule 13d-3 of the Exchange Act, percentage
ownership of the Common Stock is computed based on the sum of (i)
31,399,138 shares of Common Stock actually outstanding as of March 14,
2005, (ii) as described in the accompanying notes, each individual's
share of 25,630,481 shares of Common Stock that may be acquired upon
exercise of CBL Rights by the individual or entity whose percentage of
share ownership is being computed (but not taking account of the
exercise of CBL Rights by any other person or entity) and (iii) as
described in the accompanying notes, each individual's share of
1,233,932 shares of Common Stock that may be acquired within 60 days
of March 14, 2005 upon the exercise of outstanding options by the
individual or entity whose percentage of share ownership is being
computed (but not taking into account the exercise of such outstanding
options by any other person). Amounts shown were determined without
regard to applicable Ownership Limits.
(2) The Fully-Diluted Percentage calculation is based on (i) 31,399,138
shares of Common Stock outstanding and (ii) assumes the full exercise
of all CBL Rights for shares of Common Stock by all holders of common
units of the Operating Partnership as well as the exchange of all SCUs
for shares of Common Stock (in each case, without regard to applicable
Ownership Limits), for an aggregate of 57,029,619 shares of Common
Stock. The Fully-Diluted Percentage calculation does not include
1,233,932 shares of Common Stock subject to outstanding stock options
other than, with respect to each person whose fully-diluted percentage
is being computed, shares which may be acquired within 60 days of
March 14, 2005 upon the exercise of outstanding options.
(3) In a Schedule 13G/A filed on February 14, 2005 by FMR Corporation
("FMR"), FMR reported that as of December 31, 2004, it beneficially
owned 4,401,812 shares of Common Stock, or 14.02% of the total shares
outstanding as of March 14, 2005. FMR reported that it possesses sole
voting power with respect to 542,993 shares of Common Stock and sole
dispositive power with respect to 4,401,812 shares of Common Stock.
(4) In a Schedule 13G/A filed on February 14, 2005 by Cohen & Steers
Capital Management, Inc. ("Cohen & Steers"), Cohen & Steers reported
that as of December 31, 2004, it beneficially owned 1,727,348 shares
of Common Stock, or 5.5% of the total shares outstanding as of March
14, 2005. Cohen & Steers reported that it possesses sole voting power
with respect to 1,416,448 shares of Common Stock and sole dispositive
power with respect to 16,285 shares of Common Stock.
(5) Includes 11,922,626 shares of Common Stock that may be acquired by the
Jacobs Group on exercise of CBL Rights with respect to SCUs owned by
the Jacobs Group. The Jacobs Group received the above-referenced SCUs
as part of the Jacobs Acquisition. See "Election of Directors -
Certain Terms of Jacobs Acquisition" and see Footnote 1 above.
15
(6) Includes (i) 1,492,839 shares of Common Stock owned directly, (ii)
7,237,823 shares of Common Stock that may be acquired upon the
exercise of CBL Rights and (iii) 97,366 shares of Common Stock that
may be acquired by four entities controlled by CBL's Predecessor (CBL
Employees Partnership/Conway, Foothills Plaza Partnership, Girvin Road
Partnership and Warehouse Partnership) upon the exercise of CBL
Rights.
(7) Includes (i) 138,759 shares of unrestricted Common Stock owned
directly, (ii) 24,424 shares of restricted Common Stock that Mr.
Lebovitz received under the Stock Incentive Plan (640 of which will
vest within sixty days of March 14, 2005), (iii) 3,970 shares owned by
Mr. Lebovitz' wife, 14,154 shares held in trusts for the benefit of
his grandchildren (of which Mr. Lebovitz disclaims beneficial
ownership) and 50,800 shares that may be acquired upon the exercise of
CBL Rights by interests held in a trust for the benefit of Mr.
Lebovitz, (iv) 352,903 shares of Common Stock that may be acquired by
Mr. Lebovitz upon the exercise of CBL Rights, (v) 159,400 shares of
Common Stock subject to options granted under the Stock Incentive Plan
that are currently exercisable or that become exercisable with respect
to such shares within sixty days of March 14, 2005, (vi) 8,828,028
shares of Common Stock beneficially owned by CBL's Predecessor, which
Mr. Lebovitz may be deemed to beneficially own by virtue of his
control of CBL's Predecessor, and (vii) 228,194 shares of Common Stock
that may be acquired by College Station Associates, an entity
controlled by Mr. Lebovitz, upon the exercise of CBL Rights.
(8) Includes (i) 219,334 shares of unrestricted Common Stock owned
directly, (ii) 2,880 shares of restricted Common Stock that Mr. Foy
received under the Stock Incentive Plan (640 of which will vest within
sixty days of March 14, 2005), (iii) 189,241 shares of Common Stock
that may be acquired by Mr. Foy upon the exercise of CBL Rights and
(iv) 135,400 shares of Common Stock subject to options granted under
the Stock Incentive Plan that are currently exercisable or that become
exercisable with respect to such shares within sixty days of March 14,
2005. Totals do not include 13,320 shares of Common Stock previously
transferred by Mr. Foy to a partnership consisting of Mr. Foy's two
sisters, with respect to which Mr. Foy disclaims any beneficial
ownership in such shares and in such partnership.
(9) Includes (i) 95,646 shares of unrestricted Common Stock owned
directly, (ii) 34,066 shares of restricted Common Stock that Mr.
Lebovitz received under the Stock Incentive Plan (640 of which will
vest within sixty days of March 14, 2005), (iii) 238,936 shares of
Common Stock that may be acquired by Mr. Lebovitz upon the exercise of
CBL Rights and (iv) 159,400 shares of Common Stock subject to options
granted under the Stock Incentive Plan which are currently exercisable
or that become exercisable with respect to such shares within sixty
days of March 14, 2005.
(10) Includes (i) 115,834 shares of unrestricted Common Stock owned
directly, (ii) 1,620 shares of restricted Common Stock that Mr. Snyder
received under the Stock Incentive Plan (360 of which will vest within
sixty days of March 14, 2005), (iii) 6,283 shares of Common Stock
owned by Mr. Snyder's wife and 1,104 shares of Common Stock owned by
Mr. Snyder's children, (iv) 48,439 shares of Common Stock that may be
acquired by Mr. Snyder upon the exercise of CBL Rights and (v) 5,400
shares of Common Stock subject to options granted under the Stock
Incentive Plan that are currently exercisable or that become
exercisable with respect to such shares within sixty days of March 14,
2005. Does not include 83,223 shares of Common Stock that Mr. Snyder
is entitled to receive upon the termination of his employment with the
Company under certain circumstances pursuant to a non-qualified
deferred compensation arrangement between Mr. Snyder and the Company.
(11) Includes (i) 5,194 shares of unrestricted Common Stock owned directly,
(ii) 1,620 shares of restricted Common Stock that Mr. Stephas received
under the Stock Incentive Plan (360 of which will vest within sixty
days of March 14, 2005), (iii) 27,670 shares of Common Stock that may
be acquired by Mr. Stephas upon the exercise of CBL Rights and (iv)
39,600 shares of Common Stock subject to options granted under the
Stock Incentive Plan that are currently exercisable or that become
exercisable with respect to such shares within sixty days of March 14,
2005.
16
(12) Includes (i) 220,576 shares of Common Stock that may be acquired by
Mr. Cleary upon the exercise of CBL Rights with respect to SCUs
indirectly owned by Mr. Cleary and which are included in the amount
shown for the Jacobs Group, see Footnote 5 above, (ii) 1,000 shares of
Common Stock subject to immediately exercisable stock options granted
to Mr. Cleary under the Stock Incentive Plan and (iii) 850 shares of
restricted Common Stock granted to Mr. Cleary under the Stock
Incentive Plan.
(13) Includes (i) 24,000 shares of Common Stock owned by a family limited
partnership created by Mr. Fields and his wife and in which Mr. Fields
serves as a general partner, (ii) 40,300 shares of Common Stock held
by members of Mr. Fields' family, with respect to which Mr. Fields
acts as investment adviser and of which Mr. Fields disclaims
beneficial ownership, (iii) 1,000 shares of Common Stock owned by Mr.
Fields' individual retirement account and (iv) 350 shares of
restricted Common Stock granted to Mr. Fields under the Stock
Incentive Plan.
(14) Includes (i) 28,500 shares of Common Stock owned directly, (ii) 11,500
shares of Common Stock owned by a family limited partnership created
by Mr. Ballard and his wife and in which Mr. Ballard serves as a
general partner, (iii) 12,100 shares of Common Stock owned by the
Ballard Family Foundation of which Mr. Ballard disclaims beneficial
ownership, (iv) 3,500 shares of Common Stock subject to immediately
exercisable stock options granted to Mr. Ballard under the Stock
Incentive Plan and (v) 850 shares of restricted Common Stock granted
to Mr. Ballard under the Stock Incentive Plan.
(15) Includes (i) 37,500 shares of Common Stock owned by a trust of which
Mr. Walker is a co-trustee and co-beneficiary, (ii) 600 shares of
Common Stock owned by Mr. Walker's wife and (iii) 850 shares of
restricted Common Stock granted to Mr. Walker under the Stock
Incentive Plan.
(16) Includes 500 shares of restricted Common Stock granted to Mr. Dominski
in February, 2005 on his entry to the Company's Board under the Stock
Incentive Plan.
(17) Includes (i) 600 shares of Common Stock owned directly, (ii) 1,000
shares of Common Stock subject to immediately exercisable stock
options granted to Mr. Bryenton under the Stock Incentive Plan and
(iii) 850 shares of restricted Common Stock granted to Mr. Bryenton
under the Stock Incentive Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) reports they file.
Based solely upon the Company's review of copies of such reports furnished
to it through the date hereof, or written representations that no other reports
were required to be filed, the Company believes that during the fiscal year
ended December 31, 2004 all officers, directors and ten percent stockholders
complied with the filing requirements applicable to them, except for the
following late filings for the following executive officers: William J. Poorvu
(a retired director of the Company), Charles H. May, II (3 reports), Charles
W.A. Willett, Jr. (2 reports), Charles B. Lebovitz, John N. Foy, Stephen D.
Lebovitz, Ben S. Landress, Ronald L. Fullam, R. Stephen Tingle and Farzana K.
Mitchell. These filings were subsequently made. Additionally, one report was
filed late for each of Messrs. Leo Fields, Winston W. Walker, Gary L. Bryenton,
Martin J. Cleary and Claude M. Ballard upon their receipt of grants of
restricted Common Stock in 2004 due to an error in the Company's reporting
procedures. The error in procedures has been corrected and these filings have
been made. The Company is not aware of any failure to file a required report by
any of its Section 10(a) reporting persons.
17
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Company's Chief Executive Officer and its next four most highly compensated
executive officers (these four and Charles B. Lebovitz being herein referred to
as the "named executive officers") for the Company's fiscal year ended December
31, 2004, and for the Company's fiscal years ending December 31, 2003, and 2002:
Summary Compensation Table(1)
=============================================================================================================
Long Term Compensation
Annual Compensation Awards
-------------------------- -----------------------------
All
Restricted Securities Other
Stock Underlying Compensation
Name and Principal Award(s) Options ($)
Position(2) Year Salary($) Bonus($) ($)(3) (#) (4)
--------------------------- -------- ------------- ------------- -------------- -------------- --------------
Charles B. Lebovitz, 2004 526,724 500,000 75,424 -- 13,849
Chairman of the Board and
Chief Executive Officer
2003 511,383 500,000 69,200 -- 13,724
2002 496,488 -- 375,000 16,000 12,506
--------------------------- -------- ------------- ------------- -------------- -------------- --------------
John N. Foy, 2004 446,320 500,000 75,424 -- 13,849
Vice Chairman of the
Board, Chief 2003 426,320 550,000 69,200 -- 13,724
Financial Officer
and Treasurer 2002 406,320 -- 400,000 16,000 12,298
--------------------------- -------- ------------- ------------- -------------- -------------- --------------
Stephen D. Lebovitz 2004 425,000 500,000 75,424 -- 13,849
Director, President and
Secretary 2003 400,000 500,000 69,200 -- 13,724
2002 375,000 -- 400,000 16,000 11,506
--------------------------- -------- ------------- ------------- -------------- -------------- --------------
Eric P. Snyder 2004 391,823 275,000(5) 42,426 -- 5,827
Senior Vice President
and Director of 2003 371,833 250,000(5) 38,925 -- 5,702
Corporate Leasing
2002 351,833 225,000(5) -- 9,000 5,702
--------------------------- -------- ------------- ------------- -------------- -------------- --------------
Augustus N. Stephas 2004 414,107 200,000 42,426 -- 5,827
Senior Vice
President -- 2003 394,107 175,000 38,925 -- 5,702
Accounting and Controller
2002 374,107 150,000 -- 9,000 5,702
=============================================================================================================
-----------------------
(1) All amounts shown represent compensation paid to the named executive
officers by the Management Company.
(2) The position shown represents the individual's position with the
Company and the Management Company.
(3) Amounts shown are based upon the closing price of the Common Stock on
the NYSE as of the date of grant of the restricted stock awards. As of
December 31, 2004, an aggregate of 64,610 shares of restricted stock
with a value of $4,932,974 had been awarded and were outstanding with
respect to the named executive officers. Dividends, to the extent paid
on the Company's Common Stock, will be paid on all outstanding shares
of restricted stock.
18
(4) For fiscal years 2004, 2003 and 2002, amount shown represents term
life insurance premiums paid by the Management Company and matching
contributions by the Management Company under the CBL & Associates
Management, Inc. 401(k) Profit Sharing Plan and Trust (the "401(k)
Plan"). For fiscal year 2004, such amounts for each named executive
officer were as follows: Charles B. Lebovitz - $8,724 in insurance
premiums, $5,125 in 401(k) matching contributions; John N. Foy -
$8,724 in insurance premiums, $5,125 in 401(k) matching contributions;
Stephen D. Lebovitz - $8,724 in insurance premiums, $5,125 in 401(k)
matching contributions; Eric P. Snyder - $702 in insurance premiums,
$5,125 in 401(k) matching contributions; and Augustus N. Stephas -
$702 in insurance premiums, $5,125 in 401(k) matching contributions.
(5) Represents amount deferred at Mr. Snyder's election pursuant to a
non-qualified deferred compensation arrangement between Mr. Snyder and
the Company payable in Common Stock. See below "Equity Compensation
Plan Information as of December 31, 2004" for a description of this
deferred compensation arrangement.
Aggregated Option Exercises in 2004 and Fiscal Year-End Option Values
---------------------------------------------------------------------
The following table provides information regarding the number and value of
options held by each of the named executive officers at December 31, 2004. Mr.
Foy did not exercise any options during the Company's 2004 fiscal year.
----------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Options Value of Unexercised
Shares at In-the-Money Options at
Acquired December 31, 2004 December 31, 2004($) (1)
on Value -------------------------------- --------------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Charles B. Lebovitz 120,000 5,692,050 149,800 19,200 7,941,963 862,163
------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
John N. Foy -0- -0- 145,800 19,200 7,703,408 862,163
------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Stephen D. Lebovitz 64,000 2,330,962 149,800 19,200 7,830,556 862,163
------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Eric P. Snyder 99,000 3,531,893 7,200 10,800 347,348 484,967
------------------------- ------------ ------------- --------------- ---------------- ---------------- ---------------
Augustus N. Stephas 18,000 672,120 43,200 10,800 2,196,601 484,967
----------------------------------------------------------------------------------------------------------------------
(1) Amounts listed are based upon the $76.35 closing price for the Common
Stock on the NYSE on December 31, 2004 (last trading day in 2004).
Equity Compensation Plan Information as of December 31, 2004
The following table sets forth information as to the Company's equity
compensation plans as of the end of the Company's 2004 fiscal year:
----------------------------------------------------------------------------------------------------------------------
Plan Category (a) (b) (c)
Number of securities
remaining available for
Number of securities to be Weighted-average exercise future issuance under
issued upon exercise of price of outstanding equity compensation plans
the outstanding options, options, warrants and (excluding securities
warrants and rights rights reflected in column (a))
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans 1,516,771 $26.78(1) 976,634
approved by security holders
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not None N/A N/A
approved by security holders
----------------------------------------------------------------------------------------------------------------------
19
(1) The weighted average calculation does not reflect 107,098 shares
reserved for issuance under deferred compensation arrangements as of
December 31, 2004. The Company's Stock Incentive Plan permits the
Compensation Committee to enter into deferred compensation
arrangements designed to provide a deferral of taxable income to
participants, which may be funded or unfunded and may provide for
future payments to participants in the form of Common Stock or cash.
As used by the Compensation Committee, these deferred compensation
arrangements typically allow the executive/employee to elect to defer
a portion of his/her salary or bonuses into the arrangement on an
unfunded and unsecured basis. For deferred compensation arrangements
payable in Common Stock, the amount of salary or bonus deferred is
then deemed to be converted to shares of the Company's Common Stock
based on the closing price of the Common Stock on the date of the
deferral. Those deemed shares are then further deemed to increase as
dividends are paid on the Common Stock as if such dividends had been
utilized via the Company's Dividend Reinvestment Plan to acquired
additional shares of Common Stock at the price provided through the
Company's Dividend Reinvestment Plan. The arrangements generally
provide that on the earlier of (i) a date certain specified in each
deferred compensation arrangement or (ii) the death, disability or
termination of employment of the executive/employee or (iii) the
merger, consolidation or sale of the Company, the executive/employee
will then be entitled to receive the stated amount of cash or, for
deferred compensation arrangements payable in Common Stock, that
number of shares of Common Stock deemed set aside on the date of the
deferral together with additional shares of Common Stock deemed
acquired through the Company's Dividend Reinvestment Plan through the
date of the payout.
Non-Competition Arrangements
Each of Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz has agreed
to refrain from competing with the Company until two years from the date of
termination of his employment. Prohibited competition includes any participation
in the development, improvement or construction of any shopping center project,
acquiring any interest in a shopping center project or acquiring vacant land for
development as a shopping center project. Charles B. Lebovitz, John N. Foy and
Stephen D. Lebovitz are, however, permitted to hold certain investments which
they owned prior to completion of the Company's initial public offering in
November 1993.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of Claude M.
Ballard, Martin J. Cleary and Winston W. Walker, with Mr. Ballard serving as
Chairman. None of the members of the Compensation Committee are or have been
officers or employees of the Company or any of its subsidiaries and each member
of the Compensation Committee is an Independent Director.
No executive officer of the Company served on any board of directors or
compensation committee of any entity (other than the Company or its
subsidiaries) with which any member of the Compensation Committee, or any other
director of the Company, is affiliated.
Report of the Compensation Committee of the Board of Directors
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
or report be deemed incorporated by reference into any future filing by the
Company under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
in such filing.
General. The Company is a self-managed, self-administered, fully-integrated
real estate company which is engaged in the ownership, marketing, management,
leasing, expansion, development, redevelopment, acquisition and financing of
regional malls and community and neighborhood centers.
The Compensation Committee determines all matters related to the
compensation of all officers of the Company of the level of vice president or
higher and administers the Stock Incentive Plan. The Compensation Committee
operates under a written charter adopted by the Board of Directors on February
3, 2004. A copy of the charter is available and can be accessed in the "Investor
Relations - Corporate Governance" section of the Company's website at
cblproperties.com.
20
Philosophy. It is the philosophy of the Company to ensure that executive
compensation be directly linked to financial objectives that the Company
believes are primary determinates of stockholder value over time. The
Compensation Committee's objectives in administering the Company's executive
compensation are to ensure that pay levels and incentive compensation are (i)
competitive in attracting and retaining the best personnel, (ii) properly linked
to the Company's performance, and (iii) simple in design. To fulfill these
objectives, the compensation approach for executives includes base salary,
performance based discretionary bonuses and periodic grants of stock awards and
stock options pursuant to the Stock Incentive Plan. Non-executive employees of
the Company are also eligible to participate in the Stock Incentive Plan.
The Company believes that the ability to use the Stock Incentive Plan to
attract and retain key personnel has substantial value and will be essential to
the growth of the Company. The stock option and stock award elements of
compensation are designed to encourage and create ownership and retention of the
Company's stock by key employees in order to align their long-range interests
with those of stockholders and to allow the opportunity for key employees to
build, through the achievement of corporate goals, a meaningful ownership stake
in the Company.
Financial Criteria. The Compensation Committee, based on recommendations
made by the Company, utilized an executive compensation approach in 1994
pursuant to which officers of the level of vice president and higher received
during fiscal year 2004, in addition to a base salary, incentive compensation
consisting of cash and stock awards determined by the Compensation Committee.
The amount of this additional compensation was determined for each executive
officer based upon his or her contribution to the overall success of the
Company. Utilizing the Company's basic theory for incentive compensation, cash
and stock awards were granted during fiscal year 2004 to other employees of the
Company as performance-based incentive compensation.
Compensation of the Chief Executive Officer. During fiscal year 2004,
Charles B. Lebovitz was paid (i) a base salary of $526,724 which sum included
4,611 shares of Common Stock paid to Mr. Lebovitz as part of his salary pursuant
to a quarterly deferral arrangement under the Stock Incentive Plan and (ii) a
cash bonus of $500,000. Mr. Lebovitz receives annual reviews for salary
increases and discretionary bonuses. Additionally, Mr. Lebovitz participates in
the Company's incentive plans, including the Stock Incentive Plan. During fiscal
year 2004 and pursuant to the Stock Incentive Plan, Mr. Lebovitz received
restricted stock awards of an aggregate of 1,600 shares of Common Stock with a
value of $47.42 per share, based on the closing price of the Common Stock on the
NYSE as of the date of grant (May 10, 2004). The awards were determined upon the
same criteria as applied to the other executive officers of the Company.
Policy Regarding Qualifying Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") imposes a $1,000,000 ceiling on
tax-deductible remuneration paid to any of the five most highly compensated
executive officers of a publicly-held corporation. The limitation does not apply
to remuneration that qualifies as performance-based compensation in Section
162(m) of the Code. Options granted under the Stock Incentive Plan qualify as
"performance-based compensation" exempt from the deductibility limitations of
Section 162(m) of the Code. All other compensation to the named executive
officers is below the $1,000,000 per-executive ceiling and was fully deductible
by the Company.
COMPENSATION COMMITTEE
Claude M. Ballard (Chairman)
Martin J. Cleary
Winston W. Walker
21
Report of the Audit Committee of the Board Of Directors
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
or report be deemed incorporated by reference into any future filing by the
Company under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
in such filing.
The Audit Committee of the Board of Directors of the Company is composed of
three Independent Directors (Winston W. Walker, Chairman, Claude M. Ballard and
Gary L. Bryenton) and operates under an amended and restated written charter
adopted by the Board of Directors on February 3, 2004. A copy of the amended and
restated charter is available and can be accessed in the "Investor Relations -
Corporate Governance" section of the Company's website at cblproperties.com. The
Company's Board of Directors has determined that each of the members of the
Audit Committee is "independent" pursuant to the listing standards of the NYSE
as currently applicable.
Management is responsible for the Company's internal controls and financial
reporting process. The Company's independent accountants are responsible for
performing an independent audit of the Company's financial statements in
accordance with auditing standards generally accepted in the United States and
for issuing a report thereon. The Audit Committee's responsibility is to monitor
and oversee these processes.
In this context, the Audit Committee has met and held discussions with
Management and the Company's independent accountants. Management reported to the
Audit Committee that the Company's consolidated financial statements for the
Company's 2004 fiscal year were prepared in accordance with accounting
principles generally accepted in the United States, and the Audit Committee has
reviewed and discussed these consolidated financial statements with Management
and the Company's independent accountants. The Audit Committee discussed with
the independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committee), as amended.
The Company's independent accountants also provided to the Audit Committee
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and the Audit
Committee discussed with the independent accountants their firm's independence.
The Audit Committee considered whether the provision of services by the
independent accountants (other than audit services) is compatible with
maintaining the independent accountants' independence.
Pursuant to the mandates of the Sarbanes-Oxley Act of 2002, the Company's
Board of Directors has determined that Winston W. Walker, an Independent
Director and Chairman of the Audit Committee, qualifies as an "audit committee
financial expert" as such term is defined by the SEC.
Based on the Audit Committee's review and discussions referred to above,
the Audit Committee recommended that the Board of Directors include the
Company's audited consolidated financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2004, filed with the SEC and
provide in such Annual Report on Form 10-K the disclosure of Winston W. Walker
as an "audit committee financial expert".
AUDIT COMMITTEE
Winston W. Walker (Chairman)
Claude M. Ballard
Gary L. Bryenton
22
Performance Graph
The graph set forth below compares the cumulative stockholder return on the
Company's Common Stock of the Company with the cumulative total return of the
Russell 2000 index of small companies ("Russell 2000") and the NAREIT All Equity
REIT Total Return Index for the period commencing December 31, 1999, through
December 31, 2004. The following graph assumes that the value of the investment
in the Company and the indices was $100 at the beginning of the period and that
dividends were reinvested. The stock price performance presented below is not
necessarily indicative of future results:
[OBJECT OMITTED]
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
--------------------------------------------------------------------------------------------------------------
CBL & Associates Properties, Inc. 100.00 133.61 179.15 241.87 361.26 511.86
Russell 2000 100.00 96.98 99.39 79.03 116.38 137.71
NAREIT All Equity REIT Index 100.00 126.37 143.97 149.47 204.98 269.70
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Company and Management Agreement
The Company is party to a management agreement with the Management Company
pursuant to which the Management Company renders management and administrative
services with respect to the Company's properties. From the Management Company's
inception in 1993 through March 11, 2004, the Company, through the Operating
Partnership, owned 100% of the preferred stock and a portion (initially, 5% then
increased to 6.23%) of the common stock of the Management Company, and Charles
B. Lebovitz, his family and certain of the Associates owned the balance
(initially, 95% then decreased to 93.77%) of the common stock of the Management
Company. The Management Company was initially structured to comply with certain
technical requirements of the Code applicable to real estate investment trusts
and through the ownership of 100% of the preferred stock of the Management
Company, the Company enjoyed substantially all of the economic benefits of the
Management Company's business. By virtue of certain revisions to the Code
eliminating the necessity of the initial structure of the Management Company,
the Company, on March 11, 2004, through the Operating Partnership, acquired the
93.77% of the common stock of the Management Company from Charles Lebovitz, his
family and certain of the Associates, thereby securing for the Company 100% of
the ownership of all classes of stock of the Management Company. The purchase
price paid to Charles Lebovitz, his family and certain of the Associates for the
93.77% of the common stock of the Management Company was $75,250, representing
the amount of their initial capital contributed to the Management Company on its
formation in 1993. The Management Company also provides management services for
certain properties owned by CBL's Predecessor and certain other third parties
for which the Management Company is paid a management fee. See "Retained
Property Interests."
Operating Partnership Agreement; CBL Rights
The Company, through subsidiaries, serves as the sole general partner of
the Operating Partnership and owns, as of March 14, 2005, 31,399,138 common
partnership units, representing a 1.6% interest as the sole general partner and
a 53.4% interest as a limited partner for an aggregate 55.0% interest in the
Operating Partnership. CBL's Predecessor owns 7,335,189 common partnership
units, representing a 12.86% limited partner interest in the Operating
Partnership. CBL's Predecessor also owned 1,492,839 shares of CBL's common stock
at December 31, 2004, for a combined total interest of 15.3% in the Operating
Partnership. Certain executive and senior officers also own common partnership
units.
Pursuant to the Operating Partnership Agreement, the limited partners were
granted CBL Rights, consisting of the rights to exchange all or a portion of
their common partnership units in the Operating Partnership for shares of Common
Stock or their cash equivalent, at the Company's election. The CBL Rights may be
exercised at any time and from time to time to the extent that, upon exercise of
the CBL Rights, the exercising party shall not beneficially or constructively
own shares of Common Stock in excess of the applicable share ownership limits
set forth in the Company's Certificate of Incorporation. The Company, however,
may not pay in shares of Common Stock to the extent that this would result in a
limited partner beneficially or constructively owning in the aggregate more than
its applicable Ownership Limit or otherwise jeopardize, in the opinion of
counsel to the Company, the Company's qualification as a real estate investment
trust for tax purposes.
The number of shares of Common Stock received by the limited partners of
the Operating Partnership upon exercise of CBL Rights will be based upon the
equivalent number of partnership units owned by the limited partners on a
one-for-one basis and the amount of cash received by the limited partners upon
such exercise, if the Company elects to pay cash, will be based upon the trading
price of the shares of Common Stock at the time of exercise.
CBL Rights will expire in November 2043 if not exercised prior to that
date.
24
Retained Property Interests
CBL's Predecessor owns interests in outparcels at certain of the Company's
malls and a minority interest in one mall, the majority interest of which is
owned by third parties. Certain members of Charles B. Lebovitz's family continue
to own four community and neighborhood centers. The properties retained by CBL's
Predecessor and the properties owned by the Lebovitz family are managed and
leased by the Management Company which receives a fee for its services. During
fiscal year 2004, CBL's Predecessor and the Lebovitz family paid the Management
Company approximately $245,000 under such arrangement.
Affiliated Entities
Certain executive officers of the Company collectively have a significant
but non-controlling interest in a major national construction company that built
substantially all of the properties developed by the Company and is currently
building the Company's projects under construction, including renovations and
expansions. Charles B. Lebovitz is also a director of the construction company.
The majority interest in the construction company is held by the members of its
senior management, none of whom are affiliated with CBL's Predecessor or the
Company. As of December 31, 2004, the Company had 17 active contracts (including
contracts in respect of each of the construction properties) with such
construction company having an aggregate value of approximately $135.3 million
($110.7 million of which is the Company's obligation and the balance of which is
the obligation of third party partners). During fiscal year 2004, the Company
and its third party partners paid an aggregate of approximately $143.7 million
to this construction company ($116.0 million of which was paid by the Company
and the balance of which was paid by third party partners). The Company's Audit
Committee reviews the relationship between the Company and the referenced
construction company pursuant to procedures established in November 1994. These
procedures include an ongoing review by the Company's independent accountant of
a cross section of the Company's contracts with the referenced construction
company for, among other things, the provisions for allocation of cost savings
between owner and contractor.
The construction company and CBL's Predecessor own all of the interests of
a partnership that owns two aircraft and a fractional interest in another
aircraft used by the personnel of the Company and the construction company. Each
partner contributes equally to fixed costs and shares variable costs through an
hourly charge based on usage. The Company reimburses the partnership for costs
on an hourly basis associated with use of the aircraft relating to the business
of the Company. During fiscal year 2004, the Company paid approximately $1.6
million as reimbursement for operating expenses pursuant to such arrangement
with the amount of such reimbursement being previously approved by the Company's
Independent Directors.
The Bylaws provide that any contract or transaction between the Company or
the Operating Partnership and one or more directors or officers of the Company
or between the Company or the Operating Partnership and any other entity in
which one or more of its directors or officers are directors or officers, or
have a financial interest, must be approved by disinterested directors or
stockholders after the material facts as to the relationship or interest and as
to the contract or transaction are disclosed or are known to them.
Certain Leases
Certain officers and certain Company employees are partners in partnerships
that lease 36 spaces representing approximately 38,446 square feet in 25 of the
Company's malls as tenants. Such spaces are operated as food service and
entertainment establishments. Management believes that, at the time these leases
were entered into, they provided for rental payments at market rates and terms.
Shumacker Witt Gaither & Whitaker, P.C., local counsel to the Company and
CBL's Predecessor, leases 5,418 square feet of office space at the Company's
office building. The construction company also leases 20,637 square feet of
office space at the Company's office building. Management believes that, at the
time these leases were entered into, they provided for rental payments at market
rates and terms.
25
Other
Charles B. Lebovitz, certain members of his family, certain of the
Associates, a partnership consisting of certain of the Associates, and Eric P.
Snyder have personally guaranteed an aggregate of $12.99 million of the debt of
the Operating Partnership. Such guarantee is payable only if, and to the extent
that, proceeds from a foreclosure sale of all assets of the Operating
Partnership are not in excess of the guarantee.
Michael I. Lebovitz and Alan L. Lebovitz, sons of Charles B. Lebovitz, and
Daniel M. Backer, the son-in-law of Charles B. Lebovitz, are employed by the
Company and each receives compensation from the Company commensurate with his
level of experience and other Company employees having similar responsibilities.
Charles B. Lebovitz is currently an advisory director of First Tennessee
Bank, N.A., Chattanooga, Tennessee ("First Tennessee"). The Company is currently
maintaining a $100 million line of credit from First Tennessee that matures in
2007. There was approximately $23.4 million outstanding on this line of credit
as of December 31, 2004. First Tennessee also provides certain cash management
services to the Company. In the future, the Company or the Operating Partnership
may, in the ordinary course of business, engage in other transactions with First
Tennessee on competitive terms.
John N. Foy is currently an advisory director of AmSouth Bank of Tennessee
("AmSouth"). The Company is currently maintaining a $10 million line of credit
from AmSouth that matures in 2007. There was approximately $2.0 million of
letters of credit drawn on this line of credit as of December 31, 2004. In
addition, AmSouth is a 25% participant in the First Tennessee line of credit
referred to in the immediately preceding paragraph and provides certain cash
management services to the Company and also serves as the administrator of the
Management Company's 401(k) Plan. In the future, the Company or the Operating
Partnership may, in the ordinary course of business, engage in other
transactions with AmSouth on competitive terms.
APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM 95,000,000 TO 180,000,000
The Board of Directors is seeking stockholder approval for an amendment to
the Company's Amended and Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), to increase the authorized number of shares of
Common Stock from 95,000,000 shares to 180,000,000 shares (the "Proposed
Amendment"). On March 14, 2005, the Board of Directors adopted resolutions
setting forth the Proposed Amendment in the form of an amendment to the first
sentence of Section A of Article IV of the Certificate of Incorporation,
determining the Proposed Amendment to be advisable and recommending that
stockholders approve the Proposed Amendment.
The following is the text of Paragraph A of Article IV of the Company's
Certificate of Incorporation, as proposed to be amended:
A. Classes and Number of Shares.
The total number of shares of all classes of Equity Stock that the
Corporation shall have authority to issue is One Hundred Ninety-Five
Million (195,000,000) shares, consisting of (i) Fifteen Million
(15,000,000) shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), and (ii) One Hundred Eighty Million (180,000,000)
shares of common stock, par value $.01 per share (the "Common Stock").
26
Purpose and Effect of the Proposed Amendment
The Board of Directors has considered authorizing a stock split as a means
of increasing the liquidity of the Company's Common Stock, taking into account,
among other things, the experiences of others companies (including REITs) that
have split their stock. The Board of Directors currently expects to adopt a
resolution authorizing a two-for-one split of the Company's Common Stock by
means of a stock dividend. A primary purpose of the Proposed Amendment is to
provide the Company with sufficient authorized shares of Common Stock to allow
the Board to make this determination while maintaining sufficient authorized but
unissued shares for other corporate purposes, including acquisitions through the
use of Common Stock and/or minority interests in the Operating Partnership
convertible into Common Stock, raising additional capital through the issuance
of Common Stock or of other securities that are convertible into Common Stock
and, subject to applicable stockholder approval requirements, adopting
additional equity-based employee benefit plans or to reserve additional shares
for issuance under such plans and under plans of any companies the Company may
acquire.
If stockholders approve the Proposed Amendment, the Company presently
expects to use approximately 69% of the 85,000,000 additional authorized shares
of Common Stock for purposes of the contemplated stock split, including, without
limitation, the additional shares of Common Stock to be reserved for issuance
upon any exercise of CBL Rights (after adjustment for the stock split). Any
additional authorized shares of Common Stock may be used for each or any of the
purposes described above. No additional action or authorization by the Company's
stockholders would be necessary prior to the issuance of such additional shares,
unless required by applicable law or by NYSE or other applicable rules. The
Company reserves the right to seek a further increase in authorized shares from
time to time in the future as considered appropriate by the Board of Directors.
Because the Certificate of Incorporation does not confer upon the Company's
stockholders preemptive rights with respect to Common Stock, should the Board of
Directors elect to issue additional shares of Common Stock, existing
stockholders would not have any preferential rights to purchase such shares.
Other than the contemplated future stock split in the form of a stock
dividend, future issuances under the Company's employee benefit plans and
dividend reinvestment plan, and the rights of the minority limited partners in
the Operating Partnership to exchange all or a portion of their limited
partnership interests for shares of the Company's Common Stock or, at the
Company's election, their cash equivalent, the Board of Directors has no
immediate plans, understandings, agreements or commitments to issue additional
Common Stock for any purposes.
As of March 14, 2005, the Company had 31,399,138 shares of Common Stock
issued and outstanding. In addition, as of such date, approximately 1,554,881
shares were subject to outstanding equity compensation awards, such as stock
options and restricted stock awards (which are treated as outstanding shares),
108,785 shares were reserved for issuance pursuant to outstanding deferred
compensation arrangements and an additional 964,686 shares were reserved for
additional awards under the Company's Amended and Restated Stock Incentive Plan,
as amended. Further, 25,630,481 shares were reserved for issuance pursuant to
the rights of each of the minority limited partners in the Operating Partnership
to exchange all or a portion of their limited partnership interests for shares
of the Company's Common Stock or, at the Company's election, their cash
equivalent. Thus, as of March 14, 2005, the Company had a total of 35,342,319
shares of authorized and unissued Common Stock remaining which are not reserved
for one of the purposes described above. Accordingly, the Company presently does
not have sufficient authorized and unissued shares to declare a stock split in
the form of a stock dividend, should the Board of Directors decide to do so,
without effecting the Proposed Amendment.
If the Proposed Amendment is approved and the Board of Directors thereafter
decides to proceed with a stock split in the form of a stock dividend with
respect to the Company's outstanding Common Stock, equitable adjustments will be
made, as of the effective date of any such stock split, in the number and price
of shares reserved for issuance under the Company's equity compensation plans
and pursuant to all outstanding awards thereunder, and to the conversion rights
associated with the outstanding minority limited partnership interests in the
Operating Partnership.
The Proposed Amendment could, under certain circumstances, have an
anti-takeover effect, although this is not the intention of this proposal. In
April 1999, the Company distributed rights to the holders of its outstanding
shares of Common Stock, pursuant to an arrangement designed to protect
stockholders from proposed takeovers which the Board believes are not in the
best interests of the stockholders, by providing stockholders with certain
27
rights to acquire capital stock of the Company or of an acquiring entity upon
the occurrence of certain events. Although the rights provide for the issuance
of the Company's Series 1999 Junior Participating Preferred Stock in the event
rights become exercisable, the Company may, under certain circumstances, be
required to issue a substantial number of shares of Common Stock with respect to
the rights. An increase in the number of authorized shares of Common Stock
could, therefore, make a change in control of the Company more difficult by
facilitating the issuance of additional shares of Common Stock pursuant to the
rights. Accordingly, the Proposed Amendment may have the effect of permitting
the Company's current management, including the current Board of Directors, to
retain its position, and place it in a better position to resist changes that
stockholders may wish to make if they are dissatisfied with the conduct of the
Company's business. However, the Board of Directors is not aware of any attempt
to take control of the Company, and the Board of Directors has not presented
this proposal with the intent that it be utilized as a type of anti-takeover
device.
If the Proposed Amendment is adopted, it will become effective upon filing
of a Certificate of Amendment to the Company's Certificate of Incorporation with
the Secretary of State of the State of Delaware. However, if the Company's
stockholders approve the Proposed Amendment to the Certificate of Incorporation,
the Board of Directors retains discretion under Delaware law not to implement
the Proposed Amendment. If the Board of Directors were to exercise such
discretion, the number of authorized shares would remain unchanged.
Votes Necessary to Approve the Proposal
Approval and adoption of the Proposed Amendment requires the affirmative
vote of the holders of a majority of the Company's issued and outstanding shares
of Common Stock, voting as a class. Since the Proposed Amendment concerns the
authorization of additional shares of Common Stock only, holders of the
Company's issued and outstanding shares of Preferred Stock are not entitled to
vote on the Proposed Amendment under the terms of the Certificate of Incorporate
or applicable Delaware law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED
RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP ("Deloitte & Touche") has served as the
auditors for the Company since May 7, 2002, and the Audit Committee has
recommended, subject to ratification by the stockholders, that Deloitte & Touche
serve as the Company's independent registered public accountants for the fiscal
year ended December 31, 2005.
Independent Registered Public Accountant's Fees and Services
The Company was billed for professional services provided during fiscal
years 2003 and 2004 by Deloitte & Touche in the amounts set out in the following
table.
2003 2004
--------------------- ----------------------
Audit Fees (1) $587,500 $730,880
Audit-Related Fees (2) 182,000 537,700
Tax Fees (3) 374,460 590,780
All Other Fees (4) -- 48,043
--------------------- ----------------------
Total $1,143,960 $1,907,403
===================== ======================
28
(1) Consists of fees billed for professional services in connection with the
audit of the Company's annual financial statements for the fiscal years
ended December 31, 2003, and December 31, 2004, the audit of the Company's
internal controls over financial reporting as of December 31, 2004, reviews
of the financial statements included in the Company's quarterly reports on
Form 10-Q during the 2003 and 2004 fiscal years, comfort letters and other
services normally provided by the independent auditor in connection with
statutory and regulatory filings or engagements.
(2) Consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the
Company's consolidated financial statements and are not reported under
"Audit Fees". These services include audits of the Company's subsidiaries
pursuant to requirements of certain loan agreements, joint venture
agreements and ground lease agreements, as well as fees related to the
Company's documentation of its internal controls over financial reporting.
(3) Consists of fees billed for professional services for tax compliance, tax
advice and tax planning. These services include assistance regarding
federal and state tax compliance, tax audit defense; tax services related
to mergers and acquisitions, and tax planning services.
(4) Consists of fees for products and services other than the services reported
above. These services included permitted software license and
implementation fees related to tax compliance software and an agreed-upon
procedures engagement.
The Audit Committee of the Board of Directors has considered the services
rendered by Deloitte & Touche for services other than the audit of the Company's
financial statements and has determined that the provision of these services is
compatible with maintaining the independence of Deloitte & Touche.
The Audit Committee has adopted a policy that it is required to approve all
services (audit and/or non-audit) to be performed by the independent auditor to
assure that the provision of such services does not impair such auditor's
independence. All services, engagement terms, conditions and fees, as well as
changes in such terms, conditions and fees must be approved by the Audit
Committee in advance. The Audit Committee will annually review and approve
services that may be provided by the independent auditor during the next year
and will revise the list of approved services from time to time based on
subsequent determinations. The Audit Committee believes that the independent
auditor can provide tax services to the Company such as tax compliance, tax
planning and tax advice without impairing such auditor's independence and that
such tax services do not constitute prohibited services pursuant to SEC and/or
NYSE rules. The authority to approve services may be delegated by the Audit
Committee to one or more of its members, but may not be delegated to management.
If authority to approve services has been delegated to an Audit Committee
member, any such approval of services must be reported to the Audit Committee at
its next scheduled meeting.
The Board of Directors, in concurrence with the Audit Committee, proposes
and recommends that the stockholders ratify the selection of Deloitte & Touche
to serve as the independent registered public accountants for the Company's
fiscal year ending December 31, 2005. Unless otherwise directed by the
stockholders, proxies will be voted for approval of the selection of Deloitte &
Touche to serve as the Corporation's independent registered public accountants
for the 2005 fiscal year. A representative of Deloitte & Touche will attend the
Annual Meeting and will have an opportunity to make a statement and to respond
to appropriate questions.
Votes Necessary to Approve the Proposal
The ratification of the selection of Deloitte & Touche as the Corporation's
independent registered public accountants for the 2005 fiscal year must be
approved by a majority of the shares of Common Stock present or represented at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF
DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR 2005
29
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the rules established by the SEC, stockholder proposals
to be included in the Company's proxy statement with respect to the 2006 Annual
Meeting of Stockholders must be received by the Company at its executive offices
located at 2030 Hamilton Place Blvd., Suite 500, CBL Center, Chattanooga,
Tennessee 37421-6000 no later than December 2, 2005.
In addition, the Company's Bylaws provide that any stockholder of record
desiring to nominate a director or have a stockholder proposal considered at an
annual meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the Bylaws, to the Company
at its principal executive offices not less than 60 days nor more than 90 days
prior to the anniversary date of the prior year's annual meeting (the
"Anniversary Date"); provided, however, that stockholders will have additional
time to deliver the required notice in the event the annual meeting is advanced
by more than 30 days or delayed by more than 60 days from the Anniversary Date.
30
OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, inasmuch as matters of
which the management is not now aware may come before the meeting or any
adjournment, the proxies confer discretionary authority with respect to acting
thereon, and the persons named in such proxies intend to vote, act and consent
in accordance with their best judgment with respect thereto. Upon receipt of
such proxies (in the form enclosed and properly signed) in time for voting, the
shares represented thereby will be voted as indicated thereon and in this Proxy
Statement.
By Order of the Board of Directors
/s/ Stephen D. Lebovitz
STEPHEN D. LEBOVITZ
Secretary
Chattanooga, Tennessee
April 1, 2005
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2004, MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS PROXY
STATEMENT IS SENT UPON WRITTEN REQUEST TO INVESTOR RELATIONS, CBL & ASSOCIATES
PROPERTIES, INC., 2030 HAMILTON PLACE BLVD., SUITE 500, CBL CENTER, CHATTANOOGA,
TENNESSEE 37421-6000.
ANNUAL MEETING OF STOCKHOLDERS OF
CBL & ASSOCIATES PROPERTIES, INC.
ON MAY 9, 2005
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints CHARLES B. LEBOVITZ and STEPHEN D. LEBOVITZ and
each or any of them proxies, with power of substitution, to vote all shares of
the undersigned at the Annual Meeting of Stockholders to be held on Monday, May
9, 2005, at 4:00 p.m., local time, at The Chattanoogan, 1201 South Broad Street,
Chattanooga, Tennessee or at any adjournment thereof, upon the matters set forth
in the Proxy Statement for such meeting, and in their discretion, on such other
business as may properly come before the meeting.
1. TO RE-ELECT FOUR DIRECTORS TO SERVE FOR THREE YEARS AND UNTIL THEIR
RESPECTIVE SUCCESSORS HAVE BEEN DULY ELECTED AND QUALIFIED.
[ ] FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
to vote for the nominees listed below
(INSTRUCTION: To withhold authority to vote for the nominee strike a line
through the nominee's name below:)
Charles B. Lebovitz Claude M. Ballard Gary L. Bryenton Leo Fields
2. To act upon a proposal to approve an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the number of authorized
shares of the Company's Common Stock, par value $0.01 per share, from 95,000,000
to 180,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on reverse side)
(Continued from other side)
3. TO RATIFY THE SELECTION OF DELOITTE & TOUCHE, LLP AS THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS FOR THE COMPANY'S FISCAL YEAR ENDING DECEMBER 31,
2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: _________________________, 2005
______________________________
Signature
______________________________
Signature if held jointly
NOTE: When shares are held by joint
tenants, both should sign. Persons
signing as Executor, Administrator,
Trustee, etc. should so indicate.
Please sign exactly as the name
appears on the proxy.
IF NO CONTRARY SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2 AND 3. PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.