def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Taubman Centers, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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TAUBMAN
CENTERS, INC.
Notice of 2007 Annual Meeting
of Shareholders
To be
held May 9, 2007
To the Shareholders of Taubman Centers, Inc.:
The Annual Meeting of Shareholders of Taubman Centers, Inc. (the
Company) will be held on Wednesday, May 9,
2007, at the Community House, 380 South Bates Street,
Birmingham, Michigan 48009, at 11:00 a.m., Eastern time,
for the following purposes:
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To elect two directors to serve until the annual meeting of
shareholders in 2010; |
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To ratify the appointment of KPMG LLP as the Companys
independent registered public accounting firm for the year
ending December 31, 2007; |
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To consider a shareholder proposal, if presented at the
meeting; and |
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To transact such other business as may properly come before the
meeting. |
The Board of Directors has fixed the close of business on
March 22, 2007 as the record date for determining the
shareholders that are entitled to notice of, and to vote at, the
annual meeting or any adjournment or postponement of the annual
meeting.
By Order of the Board of Directors
Robert S. Taubman,
Chairman of the Board, President and Chief Executive Officer
Bloomfield Hills, Michigan
March 30, 2007
Even if you intend to be present at the Annual Meeting
in person, please sign and date the enclosed proxy card or
voting instruction card and return it in the accompanying
envelope, or vote via telephone or internet (as indicated on
your proxy card or voting instruction card), to ensure the
presence of a quorum. Any proxy may be revoked in the manner
described in the accompanying proxy statement at any time before
it has been voted at the Annual Meeting.
TABLE OF
CONTENTS
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TAUBMAN
CENTERS, INC.
200 East Long Lake Road, Suite 300
P.O. Box 200
Bloomfield Hills, Michigan
48303-0200
Proxy
Statement for 2007 Annual Meeting
This proxy statement contains information regarding the annual
meeting of shareholders of Taubman Centers, Inc. (the
Company) to be held at 11:00 a.m., Eastern
time, on Wednesday, May 9, 2007 at the Community House, 380
South Bates Street, Birmingham, Michigan 48009. The
Companys Board of Directors is soliciting proxies for use
at such meeting and at any adjournment or postponement of such
meeting. The Company expects to mail this proxy statement on or
about March 30, 2007.
About
the Meeting
What is
the purpose of the annual meeting of shareholders?
At the annual meeting of shareholders, holders of the
Companys common stock (the common stock) and
Series B Non-Participating Convertible Preferred Stock (the
Series B Preferred Stock and, together with the
common stock, the Voting Stock) will act upon the
matters outlined in the accompanying Notice of Meeting,
including the election of two directors to serve until the
annual meeting of shareholders in 2010, the ratification of the
appointment of KPMG LLP (KPMG) as the Companys
independent registered public accounting firm for 2007, and the
consideration of a shareholder proposal (if presented at the
meeting).
In addition, management will report on the performance of the
Company and will respond to appropriate questions from
shareholders. The Company expects that representatives of KPMG
will be present at the annual meeting and will be available to
respond to appropriate questions. Such representatives will also
have an opportunity to make a statement.
Who is
entitled to vote?
Only record holders of Voting Stock at the close of business on
the record date of March 22, 2007 are entitled to receive
notice of the annual meeting and to vote those shares of Voting
Stock that they held on the record date. Each outstanding share
of Voting Stock is entitled to one vote on each matter to be
voted upon at the annual meeting.
What
counts as Voting Stock?
The Companys common stock and Series B Preferred
Stock vote together as a single class and constitute the voting
stock of the Company. The Companys 8% Series G
Cumulative Redeemable Preferred Stock and 7.625% Series H
Cumulative Redeemable Preferred Stock (collectively, the
Non-Voting Preferred Stock) do not entitle their
holders to vote at the annual meeting. No other shares of the
Companys capital stock other than the Voting Stock and the
Non-Voting Preferred Stock are outstanding, although the Company
has authorized the issuance of shares of an additional series of
preferred stock subject to the exercise of conversion rights
granted to certain holders of preferred equity in The Taubman
Realty Group Limited Partnership (TRG), the
Companys majority-owned subsidiary partnership through
which the Company conducts all of its operations.
What is
the Series B Preferred Stock?
The Series B Preferred Stock entitles its holders to one
vote per share on all matters submitted to the Companys
shareholders and votes together with the common stock on all
matters as a single class. In addition, the holders of
Series B Preferred Stock (as a separate class) are entitled
to nominate up to four individuals for election as directors.
The number of individuals the holders of the Series B
Preferred Stock may nominate in any given year is reduced by the
number of directors nominated by such holders in prior years
whose terms are not expiring. Three current directors whose
terms are not expiring, Robert S. Taubman, Lisa A. Payne and
William A. Taubman, were nominated by the holders of the
Series B Preferred Stock. The holders of Series B
Preferred Stock are entitled to
nominate one more individual for election as a director of the
Company, but they have chosen not to do so with respect to this
annual meeting.
The Series B Preferred Stock was first issued in late 1998
and is currently held by partners in TRG other than the Company.
Only TRG partners can acquire shares of Series B Preferred
Stock; for nominal consideration, TRG partners can acquire such
number of shares of Series B Preferred Stock equal to the
number of TRG units that they hold. If a TRG partner tenders
their TRG units for common stock under the Companys
Continuing Offer (described herein), they are required to redeem
an equal number of shares of Series B Preferred Stock. If a
partner exercises TRG incentive options and they elect to hold
TRG units, they may also acquire an equal number of
Series B shares; as of the date hereof, only
Messrs. Robert Taubman and William Taubman are TRG partners
who are eligible to receive TRG units. If a non-TRG partner
exercises TRG incentive options, the TRG units are automatically
converted to shares of common stock under the Continuing Offer
and such persons cannot acquire shares of Series B
Preferred Stock.
What
constitutes a quorum?
The presence at the annual meeting, in person or by proxy, of
the holders of a majority of the shares of Voting Stock
outstanding on the record date will constitute a quorum for all
purposes. As of the record date, 81,046,432 shares of
Voting Stock were outstanding, consisting of
53,602,344 shares of common stock and
27,444,088 shares of Series B Preferred Stock. Broker
non-votes (defined below), and proxies marked with abstentions
or instructions to withhold votes, will be counted as present in
determining whether or not there is a quorum.
What is
the difference between holding shares as a shareholder of record
and a beneficial owner?
Shareholders of Record. If your shares are
registered directly in your name with the Companys
transfer agent, Mellon Investor Services LLC, you are considered
the shareholder of record with respect to those shares, and
these proxy materials (including a proxy card) are being sent
directly to you by the Company. As the shareholder of record,
you have the right to grant your voting proxy directly to the
Company through the enclosed proxy card or to vote in person at
the annual meeting.
Beneficial Owners. Most of the Companys
shareholders hold their shares through a broker, trustee, bank
or other nominee rather than directly in their own name. If your
shares are held in a stock brokerage account or by a bank,
trustee or other nominee, you are considered the beneficial
owner of shares, and these proxy materials (including a voting
instruction card) are being forwarded to you by your broker,
trustee, bank or nominee who is considered the shareholder of
record with respect to those shares. As the beneficial owner,
you have the right to direct your broker, trustee, bank or
nominee on how to vote and are also invited to attend the annual
meeting. However, since you are not the shareholder of record,
you may not vote these shares in person at the annual meeting
unless you request and obtain a proxy from your broker, trustee,
bank or nominee. Your broker, trustee, bank or nominee has
enclosed a voting instruction card for you to use in directing
the broker, trustee, bank or nominee on how to vote your shares.
How do I
vote?
Shareholders of Record. If you complete and
properly sign the accompanying proxy card and return it to the
Company, it will be voted as you direct. You may also vote via
telephone or internet (as indicated on your proxy card). If you
attend the annual meeting, you may deliver your completed proxy
card in person or vote by ballot.
Beneficial Owners. If you complete and
properly sign the accompanying voting instruction card and
return it to your broker, trustee, bank or other nominee, it
will be voted as you direct. You may also vote via telephone or
internet (as indicated on your voting instruction card). If you
want to vote your shares at the annual meeting, you must request
and obtain a proxy from such broker, trustee, bank or other
nominee confirming that you beneficially own such shares and
giving you the power to vote such shares.
2
Can I
change my vote after I return my proxy card or voting
instruction card?
Shareholders of Record. You may change your
vote at any time before the proxy is exercised by filing with
the Secretary of the Company either a notice revoking the proxy
or a properly signed proxy that is dated later than the proxy
card. If you attend the annual meeting, the individuals named as
proxy holders in the enclosed proxy card will nevertheless have
authority to vote your shares in accordance with your
instructions on the proxy card unless you properly file such
notice or new proxy.
Beneficial Owners. If you hold your shares
through a bank, trustee, broker or other nominee, you should
contact such person prior to the time such voting instructions
are exercised.
What if I
do not vote for some of the items listed on my proxy card or
voting instruction card?
Shareholders of Record. If you return your
signed proxy card but do not mark selections, the selections not
marked will be voted in accordance with the recommendations of
the Board of Directors. With respect to any other matter that
properly comes before the annual meeting, the proxy holders
named in the proxy card will vote as the Board recommends or, if
the Board gives no recommendation, in their own discretion.
Beneficial Owners. If you hold your shares in
street name through a broker, trustee, bank or other nominee and
do not return the proxy card, such nominee will determine if it
has the discretionary authority to vote on the particular
matter. Under applicable law, brokers have the discretion to
vote on routine matters, such as the uncontested election of
directors and the ratification of the appointment of the
Companys independent registered public accounting firm,
but do not have discretion to vote on non-routine matters. If
the broker does not have discretionary authority to vote on a
particular proposal, the absence of votes on that proposal with
respect to your Voting Stock will be considered broker
non-votes with regard to that matter. Voting stock
subject to broker non-votes will be considered present at the
meeting for purposes of determining whether there is a quorum
but the broker non-votes will not be considered votes cast with
respect to that proposal.
What does
it mean if I receive more than one proxy card or voting
instruction card?
If you receive more than one proxy card or voting instruction
card, it means that you have multiple accounts with banks,
trustees, brokers, other nominees
and/or our
transfer agent. Please sign and deliver each proxy card and
voting instruction card that you receive. We recommend that you
contact your nominee
and/or our
transfer agent, as appropriate, to consolidate as many accounts
as possible under the same name and address.
What are
the Boards recommendations?
The Board recommends a vote:
Proposal 1 FOR the election of
the nominated slate of directors.
Proposal 2 FOR the ratification
of KPMG as the Companys independent registered public
accounting firm for 2007.
Proposal 3 AGAINST the
shareholder proposal.
What vote
is required to approve each item?
Proposal 1 Election of
Directors. Nominees who receive the most votes
cast at the annual meeting will be elected as directors. The
slate of directors discussed in this proxy statement consists of
two directors whose terms are expiring. A properly signed proxy
with instructions to withhold authority with respect to the
election of one or more directors will not be voted for the
director(s) so indicated and will have no effect on the outcome
of the vote.
Proposal 2 Ratification of Appointment of
Independent Registered Public Accounting
Firm. The affirmative vote of two-thirds of the
shares of Voting Stock outstanding on the record date will be
necessary to ratify the Audit Committees appointment of
KPMG as the Companys independent registered public
accounting firm for 2007. Abstentions will have the same effect
as a vote against the matter. Although shareholder ratification
of the
3
appointment is not required by law and is not binding on the
Company, the Audit Committee will take the appointment under
advisement if such appointment is not so ratified.
Proposal 3 Shareholder
Proposal. The affirmative vote of two-thirds of
the shares of Voting Stock outstanding on the record date will
be necessary to approve the shareholder proposal. Abstentions
and broker non-votes will have the same effect as a vote against
the matter. Shareholder approval of this proposal would not
automatically eliminate the classified board, but would amount
to an advisory recommendation to the Board to take the necessary
steps to achieve a declassified board. The Board will consider
the results of this proposal in light of its fiduciary duties to
act in a manner it believes to be in the best interests of the
Company and all of its shareholders.
Other Matters. If any other matter is properly
submitted to the shareholders at the annual meeting, its
adoption will require the affirmative vote of two-thirds of the
shares of Voting Stock outstanding on the record date. The Board
of Directors does not propose to conduct any business at the
annual meeting other than as stated above.
How can I
access the Companys proxy materials and annual report on
Form 10-K?
The Corporate Governance subsection under Investor
Relations on the Companys website,
http://www.taubman.com,
provides access, free of charge, to Securities and Exchange
Commission (SEC) reports as soon as reasonably
practicable after the Company electronically files such reports
with, or furnishes such reports to, the SEC, including proxy
materials, Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and amendments to these reports. In addition, a copy of the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2006, as filed with the
SEC, will be sent to any shareholder, without charge, upon
written request sent to the Companys executive offices:
Taubman Centers Investor Services, 200 East Long Lake Road,
Suite 300, P.O. Box 200, Bloomfield Hills, Michigan
48303-0200.
You may also read and copy any materials that the Company files
with the SEC at the SECs Public Reference Room at 100 F
Street, NE, Washington, DC 20549. You may obtain information on
the operations of the Public Reference Room by calling the SEC
at
1-800-SEC-0330.
The SEC maintains a website that contains reports, proxy and
information statements and other information regarding issuers
that file electronically with the SEC, including the Company, at
http://www.sec.gov.
The references to the website addresses of the Company and the
SEC in this proxy statement are not intended to function as a
hyperlink and, except as specified herein, the information
contained on such websites are not part of this proxy statement.
Is a
registered list of shareholders available?
The names of shareholders of record entitled to vote at the
annual meeting will be available to shareholders entitled to
vote at the meeting on Wednesday, May 9, 2007 at The
Community House for any purpose reasonably relevant to the
meeting.
How do I
find out the voting results?
Preliminary voting results will be announced at the annual
meeting, and final voting results will be published in the
Companys Quarterly Report on
Form 10-Q
for the quarter ending June 30, 2007.
4
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the Companys equity as of
March 22, 2007. The share information set forth in the
table below (both numbers of shares and percentages) reflects
ownership of common stock and Series B Preferred Stock in
aggregate; however, the notes to the table provide ownership
information for the common stock and Series B Preferred
Stock on a separate basis, including the percentage of the
outstanding shares of the separate class that the holders
shares represent. Each share of common stock and Series B
Preferred Stock is entitled to one vote on each matter to be
voted upon. Shares of the Companys Non-Voting Preferred
Stock held by directors or executive officers are specified in
the applicable notes to the table, but are not included in the
table. Unless otherwise indicated in the table, each
persons address is
c/o Taubman
Centers, Inc., 200 East Long Lake Road, Suite 300, P. O.
Box 200, Bloomfield Hills, Michigan
48303-0200.
Further, unless otherwise indicated, each owner has sole voting
and investment powers with respect to the shares listed below.
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Directors, Executive Officers
and 5%
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Number of
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Shareholders (1)
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Shares (1)
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Percent of Shares (1)
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Robert S. Taubman
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2,877,524
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(2)
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3
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.5%
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William S. Taubman
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1,919,793
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(3)
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2
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Lisa A. Payne
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208,952
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(4)
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*
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Stephen J. Kieras
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17,753
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(5)
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David T. Weinert
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16,614
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(6)
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*
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Graham T. Allison
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3,912
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(7)
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*
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Jerome A. Chazen
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13,060
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(8)
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*
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Craig M. Hatkoff
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3,944
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(9)
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Peter Karmanos, Jr.
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52,482
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(10)
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William U. Parfet
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14,333
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(11)
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*
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A. Alfred Taubman
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22,963,212
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(12)
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.3
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ING Groep N.V
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3,954,691
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(13)
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4
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.9
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Amstelveenseweg 500
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1081 KL Amsterdam
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The Netherlands
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LaSalle Investment Management,
Inc.
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3,918,050
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(14)
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4
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.8
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and related entity
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200 East Randolph Drive
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Chicago, Illinois 60601
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The Vanguard Group, Inc.
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3,352,464
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(15)
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4
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.1
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100 Vanguard Blvd.
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Malvern, PA 19355
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Adelante Capital Management, LLC
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2,661,793
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(16)
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3
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.3
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555
12th Street,
Suite 2100
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Oakland, CA 94607
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Directors and Executive Officers as
a Group
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3,329,754
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(17)
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4
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.1
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(12 persons)
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* less than 1%
(1) The Company has relied
upon information supplied by certain beneficial owners and upon
information contained in filings with the SEC. A 5%
shareholder is defined as a holder of five percent of
either the common stock or Series B Preferred Stock, while
Percent of Shares provides information on the
percentage of voting securities owned on an aggregate basis.
Except as set forth in note 2 below regarding Units subject
to issuance under the Deferral Agreement (as defined below), the
share figures assume that all Units of Partnership Interest
in TRG (Units) issued upon the exercise of options
(Incentive Options) granted under The Taubman Realty
Group Limited Partnership 1992 Incentive Option Plan, as
amended (the TRG 1992 Incentive Option Plan), will
be immediately exchanged for an equal number of shares of common
stock under the Companys exchange offer (the
Continuing Offer) to holders of Incentive Options
and certain partners in TRG. Share figures shown also assume
that outstanding Units are not exchanged for common stock under
the Continuing Offer (to avoid duplication, as a corresponding
number of shares of Series B Preferred Stock are owned by
each holder of Units) and that outstanding shares of
Series B Preferred Stock are not converted into common
stock (which is permitted, under specified circumstances, at the
ratio of one share of common stock for each
5
14,000 shares of Series B Preferred Stock, with any
resulting fractional shares redeemed for cash). As of
March 22, 2007, there were 81,046,432 beneficially owned
shares of Voting Stock, consisting of 53,602,344 shares of
common stock and 27,444,088 shares of Series B
Preferred Stock.
References below to shares of common stock subject to issuance
under the Taubman Centers, Inc. Non-Employee Directors
Deferred Compensation Plan (the Non-Employee
Directors Deferred Compensation Plan) refer to
restricted stock units granted under such plan. Such restricted
stock units are fully vested at the time of grant but do not
have voting rights.
(2) Consists of
(i) 5,925 shares of Series B Preferred Stock that
Mr. Robert S. Taubman owns, 1,338,496 shares of
Series B Preferred Stock owned by R & W-TRG LLC
(R&W), a company owned by Mr. Taubman and
his brother, Mr. William S. Taubman, and
871,262 shares of Series B Preferred Stock subject to
issuance under the Deferral Agreement (as defined and described
below) (in the aggregate, 7.8% of the Series B Preferred
Stock), and (ii) 500,000 shares of common stock owned
by R&W, 92,711 shares of common stock that
Mr. Taubman has the right to receive upon the exercise and
conversion of Incentive Options that have vested or will vest
within 60 days of the record date, and 69,130 shares
of common stock owned by his wife and children for which
Mr. Taubman disclaims any beneficial interest (in the
aggregate, 1.2% of the common stock).
To avoid duplication, excludes 5,925 Units that Mr. Robert
S. Taubman owns, 1,338,496 Units owned by R&W and 871,262
Units subject to issuance under the Deferral Agreement. Also
excludes all shares owned by TRA Partners (TRAP),
Taubman Realty Ventures (TRV), Taub-Co Management,
Inc. (Taub-Co), TG Partners Limited Partnership
(TG) and TG Acquisitions (TGA), because
Mr. Taubman has no voting or dispositive control over such
entities assets (see note 12 below). Mr. Taubman
disclaims any beneficial interest in the Voting Stock and Units
owned by R&W or the other entities described in the previous
sentence beyond his pecuniary interest in R&W or such other
entities. R&W has pledged 1,338,496 shares of
Series B Preferred Stock and 1,338,496 Units to Comerica
Bank as collateral for various loans.
Pursuant to an Option Deferral Agreement entered into in
December 2001 among the Manager, TRG and Mr. Taubman (the
Deferral Agreement), Mr. Taubman deferred his
right to receive 871,262 Units (the Deferred Units)
pursuant to an incentive option granted to Mr. Taubman in
1992 that Mr. Taubman exercised during 2002. Until the
Deferred Units are distributed in full, Mr. Taubman will
receive distribution equivalents on the Deferred Units in the
form of cash payments as and when TRG makes distributions on
actual Units outstanding. Beginning with the earlier of
Mr. Taubmans cessation of employment for any reason
or the ten-year anniversary of the date of exercise, the
Deferred Units will be paid to Mr. Taubman in ten annual
installments. The Deferral Agreement will terminate and the
Deferred Units will be paid to Mr. Taubman in a single
distribution upon a change in control of TRG if followed by
Mr. Taubmans termination of employment within six
months of such change of control.
(3) Consists of
(i) 5,925 shares of Series B Preferred Stock that
Mr. William S. Taubman owns, and 1,338,496 shares of
Series B Preferred Stock owned by R&W (in the
aggregate, 4.9% of the Series B Preferred Stock), and
(ii) 500,000 shares of common stock owned by R&W,
48,822 shares of common stock that Mr. Taubman has the
right to receive upon the exercise and conversion of Incentive
Options that have vested or will vest within 60 days of the
record date, and 26,550 shares of common stock owned by his
children and for which Mr. Taubman disclaims any beneficial
interest (in the aggregate, 1.1% of the common stock).
To avoid duplication, excludes 5,925 Units that Mr. William
S. Taubman owns and 1,338,496 Units owned by R&W. Also
excludes all shares owned by TRAP, TRV, Taub-Co, TG or TGA
because Mr. Taubman has no voting or dispositive control
over such entities assets (see note 12 below).
Mr. Taubman disclaims any beneficial interest in the Voting
Stock and Units owned by R&W and the other entities
described in the previous sentence beyond his pecuniary interest
in R&W and such other entities. R&W has pledged
1,338,496 shares of Series B Preferred Stock and
1,338,496 Units to Comerica Bank as collateral for various loans.
(4) Consists of
158,002 shares of common stock owned and 50,950 shares
of common stock that Ms. Payne has the right to receive
upon the exercise and conversion of Incentive Options that have
vested or will vest within 60 days of the record date (in
the aggregate, less than 1.0% of the common stock).
Ms Payne is party to a 10b5-1 trading plan adopted on
March 2, 2007. The plan provides for monthly sales of
2,000 shares of common stock if the specified minimum
trading price is satisfied. Shares that are not sold in a
6
particular month will be available for sale in subsequent months
under the plan. A maximum of 22,000 shares remain available
for sale under the plan, which is set to expire on
February 29, 2008.
(5) Consists of
3,405 shares of common stock which Mr. Kieras may be
deemed to own through his investment in the Taubman Centers
Stock Fund, one of the investment options under the
Companys 401(k) Plan, and 14,348 shares of common
stock that Mr. Kieras has the right to receive upon the
exercise and conversion of Incentive Options that have vested or
will vest within 60 days of the record date (in the
aggregate, less than 1.0% of the common stock).
(6) Consists solely of
16,614 shares of common stock which Mr. Weinert has
the right to receive upon the exercise and conversion of
Incentive Options that have vested or will vest within
60 days of the record date (less than 1.0% of the common
stock).
(7) Consists of
1,430 shares of common stock owned and 2,482 shares of
common stock subject to issuance under the Non-Employee
Directors Deferred Compensation Plan (in the aggregate,
less than 1.0% of the common stock).
(8) Consists of
10,000 shares of common stock owned and 3,060 shares
of common stock subject to issuance under the Non-Employee
Directors Deferred Compensation Plan (in the aggregate,
less than 1.0% of the common stock). Excludes 15,000 shares
of Series G Preferred Stock owned by Mr. Chazen,
5,000 shares of Series G Preferred Stock owned by his
wife, and 20,000 shares of Series G Preferred Stock
owned by his children and for which Mr. Chazen disclaims
any beneficial ownership (in the aggregate, 1.0% of the
Series G Preferred Stock).
(9) Consists solely of shares
of common stock owned (less than 1.0% of the common stock).
(10) Consists of 50,000 shares
of common stock owned and 2,482 shares of common stock
subject to issuance under the Non-Employee Directors
Deferred Compensation Plan (in the aggregate, less than 1.0% of
the common stock).
(11) Consists of
12,645 shares of common stock owned and 1,688 shares
of common stock subject to issuance under the Non-Employee
Directors Deferred Compensation Plan (in the aggregate,
less than 1.0% of the common stock).
(12) Includes 100 shares
of common stock owned by Mr. A. Alfred Taubmans
revocable trust and 186,837 shares of common stock owned by
TRAP (in the aggregate, less than 1.0% of the common stock).
Mr. Taubmans trust is the managing general partner of
TRAP and has the sole authority to vote and dispose of the
common stock owned by TRAP. Also includes 9,875 shares of
Series B Preferred Stock owned by Mr. Taubmans
trust, 17,699,879 shares of Series B Preferred Stock
owned by TRAP, 4,605,361 shares of Series B Preferred
Stock owned by TG, 445,191 shares of Series B
Preferred Stock owned by TGA, 11,011 shares of
Series B Preferred Stock owned by TRV, and
4,958 shares of Series B Preferred Stock owned by
Taub-Co. (in the aggregate 83.0% of the Series B Preferred
Stock). To avoid duplication, excludes TRG units of the same
amount as Series B Preferred Stock owned by such entities.
The sole holder of voting shares of Taub-Co is Taub-Co Holdings
Limited Partnership, of which Mr. Taubmans trust is
the managing general partner, and therefore Mr. Taubman may
be deemed to be the beneficial owner of the shares of
Series B Preferred Stock owned by Taub-Co. Mr. Taubman
disclaims beneficial ownership of any shares of Series B
Preferred Stock owned by Taub-Co beyond his pecuniary interest
in Taub-Co. Mr. Taubman, through control of the managing
partner of each of TRV (through Mr. Taubmans trust),
TG and TGA, also has sole authority to vote and (subject to
certain limitations) dispose of the shares of Series B
Preferred Stock owned by TRV and TG and TGA, respectively, and
therefore Mr. Taubman may be deemed to be the beneficial
owner of all of the shares of Series B Preferred Stock
owned by TRV, TG and TGA. Mr. Taubman disclaims beneficial
ownership of any shares of Series B Preferred Stock owned
by TRV, TG and TGA beyond his pecuniary interest in those
entities.
(13) Pursuant to
Schedule 13G filed on February 14, 2007. Consists
solely of shares of common stock owned (7.4% of the common
stock).
(14) Pursuant to
Schedule 13G/A filed on February 14, 2007. Consists
solely of shares of common stock owned (7.3% of the common
stock). LaSalle Investment Management, Inc. has sole voting and
dispositive power of 119,066 shares and shared voting and
dispositive power of 341,479 shares. LaSalle Investment
7
Management (Securities), L.P. has sole voting and dispositive
power of 2,846,568 shares and shared voting and dispositive
power of 610,937 shares.
(15) Pursuant to
Schedule 13G/A filed on February 14, 2007. Consists
solely of shares of common stock owned (6.3% of the common
stock). The entity has sole power to
vote 20,060 shares (through Vanguard Fiduciary Trust
Company, a wholly owned subsidiary, which serves as investment
manager of collective trust accounts) and sole power to dispose
of 3,352,464 shares.
(16) Pursuant to
Schedule 13G filed on February 14, 2006. Consists
solely of shares of common stock (5.0% of the common stock)
owned on behalf of clients. The entity has (i) sole power
to vote 1,361,815 shares and shared power to
vote 32,800 shares and (ii) sole power to dispose
of 2,661,793 shares.
(17) Consists of an aggregate
of (i) 844,318 shares of common stock owned,
254,115 shares of common stock that such persons have the
right to receive upon the exercise and conversion of Incentive
Options that have vested or will vest within 60 days of the
record date, and 9,713 shares of common stock subject to
issuance under the Non-Employee Directors Deferred
Compensation Plan (in the aggregate, 2.1% of the common stock),
and (ii) 1,350,346 shares of Series B Preferred
Stock owned and 871,262 shares of Series B Preferred
Stock subject to issuance under the Deferral Agreement (see
note 2 above) (in the aggregate, 7.8% of the Series B
Preferred Stock).
See note 8 for Series G Preferred Stock beneficially
owned by Mr. Chazen and his wife and children.
8
Proposal 1
Election of Directors
The Board of Directors currently consists of eight members
serving three-year staggered terms. Two directors are to be
elected at the annual meeting to serve until the annual meeting
of shareholders in 2010. The Board of Directors recommends that
the shareholders vote FOR each of the two
directors listed below that stand for election.
Mr. Allan J. Bloostein, an independent director of the
Company since 1992, died on February 8, 2007. His term was
expiring in 2007. Mr. Bloostein served as Chairman of the
Nominating and Corporate Governance Committee and a member of
the Executive Committee. Due to the timing of
Mr. Bloosteins unexpected death, the Board has
determined not to nominate a third director for election at the
2007 annual meeting. The Nominating and Corporate Governance
Committee will begin a thorough director search beginning later
this year.
Each of the nominees has consented to serve a three-year term.
If either of them should become unavailable, the Board may
designate a substitute nominee. In that case, the proxy holders
named as proxies in the accompanying proxy card will vote for
the Boards substitute nominee. Additional information
regarding the directors, director nominees and executive
officers of the Company is set forth below.
Directors
and Executive Officers
The Board of Directors currently consists of eight members
divided into three classes serving staggered terms. Under the
Companys Restated Articles of Incorporation, a majority of
the Companys directors must not be officers or employees
of the Company or its subsidiaries. Officers of the Company
serve at the pleasure of the Board.
The directors, director nominees and executive officers of the
Company are as follows:
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Term
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Name
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Age
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Title
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Ending
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Jerome A. Chazen (1)
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80
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Director
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2007
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Craig M. Hatkoff (1)
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53
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Director
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2007
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Robert S. Taubman
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53
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Chairman of the Board, President
and Chief Executive Officer
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2008
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Lisa A. Payne
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48
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Vice Chairman, Chief Financial
Officer and Director
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2008
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William U. Parfet
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60
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Director
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2008
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Graham T. Allison
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67
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Director
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2009
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Peter Karmanos, Jr.
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64
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Director
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2009
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William S. Taubman
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48
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Chief Operating Officer and Director
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2009
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Esther R. Blum
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52
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Senior Vice President, Controller
and Chief Accounting Officer
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Stephen J. Kieras
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53
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Senior Vice President, Development
of The Taubman Company LLC
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David T. Weinert
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47
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Senior Vice President, Leasing of
The Taubman Company LLC
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Robert R. Reese
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43
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Senior Vice President, Chief
Administrative Officer of The Taubman Company LLC
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(1) Standing for re-election
to a three-year term.
Jerome A. Chazen has been the Chairman of Chazen Capital
Partners, a private investment company, since 1996.
Mr. Chazen is also the Chairman Emeritus of Liz Claiborne,
Inc., a company he founded with three other partners in 1976. He
also serves as a board member, executive or trustee for numerous
educational and charitable organizations. Mr. Chazen has
been a director of the Company since 1992.
Craig M. Hatkoff served as Vice Chairman of Capital
Trust, Inc., a real estate investment management company listed
on the New York Stock Exchange (the NYSE) and one of
the largest dedicated real estate mezzanine lenders, from 1997
to 2000. He has also served on the Board of Directors of Capital
Trust since July 1997. From
2002-2005,
Mr. Hatkoff was a trustee of the New York City School
Construction Authority, the agency responsible for the
construction of all public schools in New York City.
Mr. Hatkoff is a co-founder of the
9
Tribeca Film Festival. Mr. Hatkoff is also Chairman of
Turtle Pond Publications LLC, which is active in childrens
publishing and entertainment and is a private investor in other
entrepreneurial ventures. Prior to joining Capital Trust, Inc.,
Mr. Hatkoff was a founder and a managing partner of Victor
Capital Group, L.P., from 1989 until its acquisition in 1997 by
Capital Trust, Inc. Mr. Hatkoff has been a director of the
Company since 2004.
Robert S. Taubman is the Chairman of the Board, and
President and Chief Executive Officer of the Company and the
Manager, which is a subsidiary of TRG. Mr. Taubman has been
Chairman since December 2001 and President and CEO since 1990.
Mr. Taubman has been a director of the Company since 1992.
Mr. Taubman is also a director of Comerica Bank and of
Sothebys Holdings, Inc., the international art auction
house. He is also a member of the United States Department of
Commerce Travel and Tourism Promotion Advisory Board, a director
of the Real Estate Roundtable, a Trustee of the Urban Land
Institute, a former trustee of the International Council of
Shopping Centers, and a member of the Board of Governors of the
National Association of Real Estate Investment Trusts.
Mr. Taubman is the brother of Mr. William S. Taubman.
Lisa A. Payne is the Chief Financial Officer and Vice
Chairman of the Company, as appointed in 2005, and previously
served as the Executive Vice President and the Chief Financial
and Administrative Officer of the Company from 1997 to 2005.
Ms. Payne has been a director of the Company since 1997.
Prior to joining the Company in 1997, Ms. Payne was a vice
president in the real estate department of Goldman,
Sachs & Co., where she held various positions between
1986 and 1996. Ms. Payne serves as a trustee of Munder
Series Trust and Munder Series Trust II and a
director of Masco Corporation.
William U. Parfet is currently chairman and chief
executive officer of MPI Research, a Michigan-based,
privately-held research laboratory conducting risk assessment
toxicology studies. From 1993 to 1996, he served as
president & chief executive officer of Richard-Allan
Medical Industries (now Thermo Fisher Scientific Inc. ), a
worldwide manufacturer of surgical and laboratory products.
Prior to that, he had served in a variety of positions at The
Upjohn Company, a pharmaceutical company, most recently as Vice
Chairman of the Board. He currently serves on the boards of
Monsanto Company, where he chairs the Audit Committee, and
Stryker Corporation, where he is the lead director and chairs
the Compensation Committee. Mr. Parfet has been a director
of the Company since 2005.
Graham T. Allison is the Douglas Dillon Professor of
Government and the Director of the Belfer Center for Science and
International Affairs at Harvard University. He also serves as a
director of IXIS Asset Advisors and has served on the boards of
Belfer Oil and Gas, Chase Manhattan Bank, Getty Oil Company, and
USEC. Mr. Allison has been a director of the Company since
1996 and previously served on the Board from 1992 until 1993,
when he became the United States Assistant Secretary of Defense.
Peter Karmanos, Jr. is the founder, and has served
as a director since the inception, of Compuware Corporation, a
global provider of software solutions and professional services
headquartered in Detroit, Michigan. Mr. Karmanos has served
as Compuwares Chairman since November 1978, and as its
Chief Executive Officer since July 1987. Mr. Karmanos
serves as a director of Worthington Industries, Inc. and served
as a director of Adherex Technologies, Inc. (listed on the
Toronto Stock Exchange) through July 15, 2005.
Mr. Karmanos has been a director of the Company since 2000.
William S. Taubman is the Chief Operating Officer of the
Company, appointed in 2005, and served as Executive Vice
President of the Company from 1994 to 2005. Mr. Taubman is
also the Executive Vice President of the Manager, a position he
has held since 1994. Mr. Taubman has also been a director
of the Company since 2000. His responsibilities include the
overall management of the development, leasing, and center
operations functions. He held various other positions with the
Manager prior to 1994. Mr. Taubman also serves on the board
of trustees of the International Council of Shopping Centers,
and is a member of the Urban Land Institute and the National
Association of Real Estate Investment Trusts. He is also a
trustee for New Detroit and serves on the Board of Governors for
the Museum of Arts & Design in New York.
Mr. Taubman is the brother of Mr. Robert S. Taubman.
Esther R. Blum is a Senior Vice President, the
Controller, and Chief Accounting Officer of the Company, a
position she has held since 1999. Ms. Blum became a Vice
President of the Company in January 1998, when she assumed her
current principal functions. Between 1992 and 1997,
Ms. Blum served as the Managers Vice President of
Financial Reporting and served the Manager in various other
capacities between 1986 and 1992.
10
Stephen J. Kieras is Senior Vice President, Development
of the Manager, a position he has held since September 2004.
Mr. Kieras was a Group Vice President, Development of the
Manager from 2001 to September 2004, a Vice President,
Development from 1998 to 2001 and a Director, Development from
1990, when he joined the Manager, to 1998.
David T. Weinert is Senior Vice President, Leasing of the
Manager, a position he has held since July 2004.
Mr. Weinert was a Group Vice President, Leasing of the
Manager from 2001 to July 2004, a Vice President heading leasing
for the Managers western region based in
San Francisco from 1992 to 2001 and served the
Managers leasing department in various other capacities
between 1986 and 1992.
Robert R. Reese is Senior Vice President, Chief
Administrative Officer of the Manager, a position he has held
since June 2005. Mr. Reese was Senior Vice President,
Strategy and Business Performance of the Manager from 2004 to
June 2005. Prior to joining the Company, Mr. Reese was a
partner in the Chicago-based management consulting firm of RNW
Consulting from 1998 to 2004, where he advised the Company on a
range of corporate performance initiatives. Earlier in his
career he served as a senior manager with Accenture and a vice
president at Citibank.
The Board
of Directors and Committees
During 2006, the Board consisted of nine directors, held five
meetings and acted twice by unanimous written consent. The table
below sets forth the membership and meeting information for the
four standing committees of the Board (1):
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Nominating and
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Corporate
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Name
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Audit
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Compensation
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Governance
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Executive
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Graham T. Allison
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X
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X
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Peter Karmanos, Jr.
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X
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William S. Taubman
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Allan J. Bloostein(2)
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Chair
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X
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Jerome A. Chazen
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Chair
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X
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Craig M. Hatkoff
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X
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Chair
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Robert S. Taubman
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Chair
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Lisa A. Payne
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William U. Parfet
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X
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X
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Meetings
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9
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3
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2
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1
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Action by Unanimous
Written Consent
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7
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(1)
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Represents committee membership
from March 8, 2006 through the date of this proxy
statement. From January 1 to March 8, 2006, the committees
consisted of the following directors: (1)
Audit Messrs. Allison, Bloostein, Chazen
(Chair), Karmanos, Jr. and Hatkoff; (2)
Compensation Messrs. Chazen, Hatkoff
(Chair) and Karmanos, Jr.; (3) Nominating and Corporate
Governance Messrs. Bloostein (Chair),
Chazen and Hatkoff; and (4) Executive
Committee Messrs. Allison, Bloostein and R.
Taubman (Chair)
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(2)
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Died on February 8, 2007. In
2007, the Board intends to appoint a new Chair of the Nominating
and Corporate Governance Committee and appoint a third director
to such committee.
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The Companys Board has determined, after considering all
of the relevant facts and circumstances, that
Messrs. Allison, Chazen, Hatkoff, Karmanos and Parfet are
independent from management in accordance with the
NYSE listing standards and the Companys Corporate
Governance Guidelines. To be considered independent, the Board
must determine that a director does not have any direct or
indirect material relationships with the Company and must meet
the categorical and other criteria for independence set forth in
the Companys Corporate Governance Guidelines. In addition,
after considering all of the relevant facts and circumstances,
the Board has determined that each member of the Audit Committee
of the Board qualifies under the Audit Committee independence
standards established by the SEC. The Audit Committee, the
Compensation Committee and the Nominating and Corporate
Governance Committee are composed entirely of independent
directors.
11
During 2006, all directors attended at least 75%, in aggregate,
of the meetings of the Board of Directors and all committees of
the Board on which they served. Directors are expected to attend
all meetings, including the annual meeting of shareholders, and
it is the Companys policy to schedule a meeting of the
Board of Directors on the date of the annual meeting of
shareholders. All members of the Board in 2006 attended the 2006
annual meeting. In addition to attending Board and committee
meetings, directors fulfill their responsibilities by consulting
with the Chief Executive Officer and other members of management
on matters that affect the Company.
Non-management directors hold regularly scheduled executive
sessions in which non-management directors meet without the
presence of management. These executive sessions generally occur
around regularly scheduled meetings of the Board of Directors.
Each meeting, the position of presiding director is rotated in
alphabetical order among the non-management directors. For more
information regarding the Companys Board of Directors and
other corporate governance procedures, see Corporate
Governance. For information on how you can communicate
with the Companys non-management directors, including the
presiding director, see Communicating with the
Board.
Audit Committee. The Audit Committee is
responsible for providing independent, objective oversight and
review of the Companys auditing, accounting and financial
reporting processes, including reviewing the audit results and
monitoring the effectiveness of the Companys internal
audit function. In addition, the Audit Committee engages the
independent registered public accounting firm. See Report
of the Audit Committee. The Audit Committees charter
is available on the Companys website,
www.taubman.com, in the Corporate Governance subsection
of the Investor Relations page (Corporate Governance
Section).
Each of the directors on the Audit Committee is financially
literate. The Board of Directors has determined that
Mr. Parfet qualifies as an audit committee financial
expert within the meaning of SEC regulations and that he
has the accounting and related financial management expertise
required by the NYSE listing standards.
Compensation Committee. The
Compensation Committee is responsible for overseeing
compensation and benefit plans and policies, reviewing and
approving equity grants and otherwise administering share-based
plans, and reviewing and approving annually all compensation
decisions relating to the Companys executive officers. See
Compensation Discussion and Analysis. The
Compensation Committees charter is available on the
Companys website, www.taubman.com, in the Corporate
Governance Section.
Executive Committee. The Executive
Committee has the authority to exercise many of the functions of
the full Board of Directors between meetings of the Board.
Nominating and Corporate Governance
Committee. The Nominating and Corporate
Governance Committee is responsible for identifying and
nominating individuals qualified to serve as Board members,
other than vacancies for which holders of the Series B
Preferred Stock are entitled to propose nominees, and
recommending directors for each Board committee. Generally, the
Nominating and Corporate Governance Committee will re-nominate
incumbent directors who continue to satisfy its criteria for
membership on the Board, who it believes will continue to make
important contributions to the Board and who consent to continue
their service on the Board.
In recommending candidates to the Board, the Nominating and
Corporate Governance Committee reviews the experience, mix of
skills and other qualities of a nominee to assure appropriate
Board composition after taking into account the current Board
members and the specific needs of the Company and the Board. The
Board looks for individuals who have demonstrated excellence in
their chosen field, high ethical standards and integrity, and
sound business judgment. The process also seeks to ensure that
the Board includes members with diverse backgrounds, skills and
experience, including appropriate financial and other expertise
relevant to the Companys business. The Company also
requires that independent directors comprise a majority of the
Board, and the nominee must not serve on more than five other
public company boards.
The Nominating and Corporate Governance Committee generally
relies on multiple sources for identifying and evaluating
nominees, including referrals from the Companys current
directors and management. The Nominating and Corporate
Governance Committee does not solicit director nominations, but
will consider recommendations by shareholders with respect to
elections to be held at an annual meeting, so long as such
recommendations are sent on a timely basis to the Secretary of
the Company and are in accordance with the Companys
by-laws. The committee will evaluate nominees recommended by
shareholders against the same criteria
12
that it uses to evaluate other nominees. The Company did not
receive any timely nominations of directors by shareholders for
the 2007 annual meeting of shareholders.
Under the Companys by-laws, shareholders must follow an
advance notice procedure to nominate candidates for election as
directors (or to bring other business before an annual meeting).
The advanced notice procedures do not affect the right of
shareholders to request the inclusion of proposals in the
Companys proxy statement and form of proxy pursuant to SEC
rules. Under the by-law procedures, a shareholder that proposes
to nominate a candidate for director or propose other business
at the annual meeting of shareholders, must give the Company
written notice of such nomination or proposal not less than
60 days and not more than 90 days prior to the first
anniversary of the preceding years annual meeting; if,
however, the date of the annual meeting is more than
30 days before or more than 60 days after such
anniversary date, notice by the shareholder must be delivered
not less than 60 days and not more than 90 days prior
to such annual meeting or the 10th day following the day on
which public announcement of the date of the annual meeting is
first made by the Company. The notice must include:
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for director nominations, the name and address of the person or
persons being nominated and such other information regarding
each nominated person that would be required in a proxy
statement filed pursuant to the SECs proxy rules in the
event of an election contest;
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for director nominations, the consent of each nominee to serve
as a director if elected;
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for other business, a brief description of such business, the
reasons for conducting such business and any material interest
in such business;
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the name and address of the shareholder (and beneficial owner,
if any) making the nomination; and
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the class and number of shares of the Companys stock that
the nominating shareholder (and beneficial owner, if any) owns.
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The Nominating and Corporate Governance Committee is also
responsible for recommending to the Board appropriate Corporate
Governance Guidelines applicable to the Company and overseeing
governance issues.
The Nominating and Corporate Governance Committees charter
is available on the Companys web site,
www.taubman.com, in the Corporate Governance Section.
Director
Compensation
The Nominating and Corporate Governance Committee intends to
bi-annually review director compensation and will make
recommendations to the Board, the body responsible for approving
director compensation, as appropriate. The Nominating and
Corporate Governance Committee and Board believe that directors
should receive a mix of cash and equity, with the directors
retaining the option to defer such compensation. The combination
of cash and equity compensation is intended to provide
incentives for directors to continue to serve on the Board of
Directors and to attract new directors with outstanding
qualifications. Directors who are employees or officers of the
Company or any of its subsidiaries do not receive any
compensation for serving on the Board or any committees thereof.
Annual Cash Retainer and Meeting Fees. In
2006, each non-employee director earned an annual retainer of
$35,000 and a meeting fee of $1,000 for each Board or committee
meeting attended. In addition, the chair of the Audit,
Compensation and Nominating and Corporative Governance
Committees earned an additional retainer fee of $12,500, $7,500
and $2,500, respectively.
Annual Equity Retainer. In 2006, each
non-employee director was granted shares of common stock having
a fair market value of $3,750 each quarter (in advance) pursuant
to the Taubman Centers, Inc. Non-Employee Directors Stock
Grant Plan. The fair market value is based on the closing price
as of the last business day of the preceding quarter. The
Company does not coordinate the timing of share grants with the
release of material non-public information, as the grant date is
always the first business day of each quarter.
Deferral of Cash and Equity. In accordance
with the Taubman Centers, Inc. Non-Employee Directors
Deferred Compensation Plan, non-employee directors are permitted
to defer the receipt of all or a portion of the cash retainer
and equity retainer until the earlier of the termination of his
or her service on the Board of Directors or upon a change of
control. The deferred compensation is denominated in restricted
stock units, representing the right to receive shares of the
Companys common stock at the end of the deferral period.
During the deferral period, when
13
the Company pays cash dividends on its common stock, the
directors deferral accounts are credited with dividend
equivalents on their deferred restricted stock units, payable in
additional restricted stock units based on the then-fair market
value of the Companys common stock. Each directors
account is 100% vested at all times.
Other. The Company reimburses all directors
for expenses incurred in attending meetings or performing their
duties as directors. The Company does not provide any
perquisites to directors.
Director
Compensation Table
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Fees Earned or
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Paid in Cash
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Stock Awards
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Total
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Name
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($) (1)(2)
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($) (2)(3)
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($)
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Graham T. Allison
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$
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45,000
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$
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15,000
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$
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60,000
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Allan J. Bloostein (4)
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46,620
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14,880
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61,500
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Jerome A. Chazen
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68,500
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15,000
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83,500
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Craig M. Hatkoff
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59,620
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14,880
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74,500
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Peter Karmanos, Jr.
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45,000
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15,000
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60,000
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William U. Parfet
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49,000
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15,000
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64,000
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Total
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$
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313,740
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$
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89,760
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$
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403,500
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(1)
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Represents amounts earned in cash
in 2006 with respect to the annual cash retainer (including
chairman cash retainer, if any), meeting fees and fractional
shares awarded under the Taubman Centers, Inc. Non-Employee
Directors Stock Grant Plan that are paid in cash.
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(2)
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In 2006, each of
Messrs. Allison, Chazen, Karmanos and Parfet elected to
defer fully the receipt of their cash retainer and equity
retainer under the Taubman Centers, Inc. Non-Employee
Directors Deferred Compensation Plan.
Messrs. Allison, Chazen, Karmanos and Parfet deferred
$50,000, $62,500, $50,000 and $50,000, respectively, and were
credited with 1,247, 1,558, 1,247 and 1,247 restricted stock
units, respectively. The restricted stock units are fully vested
upon issuance; therefore, the grant date fair value of each
award, equal to the corresponding cash value of such award (as
specified in the narrative above), is fully recognized upon
issuance for financial statement reporting purposes in
accordance with FAS 123(R).
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(3)
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Represents shares of common stock
granted under the Taubman Centers, Inc. Non-Employee
Directors Stock Grant Plan in 2006. The common stock is
fully vested upon issuance; therefore, the grant date fair value
of each award, equal to the corresponding cash value of such
award (as specified in the narrative above), is fully recognized
upon issuance for financial statement reporting purposes in
accordance with FAS 123(R).
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(4)
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Died on February 8, 2007.
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Revised
2007 Compensation and
Policies.
In December 2006, a third party consultant, Towers Perrin,
provided an analysis of non-employee director compensation to
the Nominating and Corporate Governance Committee. Towers Perrin
was separately engaged to analyze senior management compensation
for the benefit of the Compensation Committee. Towers
Perrins analysis focused on proxy statement data of two
comparator groups: (a) a primary comparator group of 18
REITs with a median market capitalization of approximately
$6 billion (the same comparator group used in connection
with the 2006 senior management compensation analysis) and
(b) a secondary comparator group of 15 companies
across industries with market capitalizations between
$3 billion to $6 billion. In particular, Towers Perrin
noted that the total compensation paid to the Companys
non-employee directors was below market, primarily resulting
from lower equity compensation.
Effective January 1, 2007, the Board approved the following
changes to director compensation based upon the recommendation
of the Nominating and Corporate Governance Committee:
(1) the annual equity retainer increased from a fair market
value of $15,000 to $50,000; (2) meeting fees for each
Board or committee meeting attended increased from $1,000 to
$1,500; and (3) the additional cash retainer for the chair
of the Nominating and Corporate Governance Committee was
increased from $2,500 to $5,000.
In addition, effective January 1, 2007, the Board approved
stock ownership guidelines for non-employee directors based upon
the recommendation of the Nominating and Corporate Governance
Committee. Non-employee directors are required to retain a
number of shares of the Companys common stock equal to
five times the annual cash retainer (excluding the additional
cash retainer for committee chairs), divided by the
Companys
14
average closing stock price over the 90 trading days prior to
the date of Board approval. Such directors have a five-year
grace period to comply with the new guidelines.
Corporate
Governance
The Board of Directors has adopted Corporate Governance
Guidelines, a copy of which can be found at the Companys
web site, www.taubman.com, in the Corporate Governance
Section. These guidelines address, among other things, director
responsibilities, qualifications (including independence),
compensation and access to management and advisors. The
Nominating and Corporate Governance Committee is responsible for
overseeing and reviewing these guidelines and recommending any
changes to the Board.
The Board also has adopted a Code of Business Conduct and Ethics
(the Code), which sets out basic principles to guide
the actions and decisions of all of the Companys
employees, officers and directors. The Code, also available at
the Companys web site in the Corporate Governance Section,
covers numerous topics including honesty, integrity, conflicts
of interest, compliance with laws, corporate opportunities and
confidentiality. Waivers of the Code are discouraged, but any
waiver that relates to the Companys executive officers or
directors may only be made by the Board or a Board committee and
will be publicly disclosed on the Companys website in the
Corporate Governance Section.
In December 2006, the Board approved a formal policy regarding
related person transactions. See Related Person
Transactions for additional information.
The Company is required to comply with the NYSE listing
standards applicable to corporate governance and on
June 14, 2006, the Company timely submitted to the NYSE the
Annual CEO Certification, pursuant to Section 303A.12 of
the NYSEs listing standards, whereby the Chief Executive
Officer of the Company, Mr. Robert S. Taubman, certified
that he is not aware of any violation by the Company of the
NYSEs corporate governance listing standards as of the
date of the certification. In addition, the Company has filed
with the SEC, as exhibits to its Quarterly Reports on
Form 10-Q
for the quarters ended March 31, June 30 and
September 30, 2006, respectively, and its Annual Report on
Form 10-K
for the year ended December 31, 2006, certifications by the
Companys CEO and CFO in accordance with Sections 302
and 906 of the Sarbanes-Oxley Act of 2002.
A copy of the Companys committee charters, Corporate
Governance Guidelines and Code will be sent to any shareholder,
without charge, upon written request sent to the Companys
executive offices: Taubman Centers Investor Services, 200 East
Long Lake Road, Suite 300, P.O. Box 200, Bloomfield
Hills, Michigan
48303-0200.
Communicating
with the Board
Any shareholder or interested party who desires to communicate
with the Board or any specific director, including
non-management directors, the presiding director, or committee
members, may write to: Taubman Centers, Inc., Attn: Board of
Directors, 200 East Long Lake Road, Suite 300, P.O.
Box 200, Bloomfield Hills, Michigan
48303-0200.
Depending on the subject matter of the communication, management
will:
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forward the communication to the director or directors to whom
it is addressed (matters addressed to the Chairman of the Audit
Committee will be forwarded unopened directly to the Chairman);
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attempt to handle the inquiry directly where the communication
does not appear to require direct attention by the Board or an
individual member, e.g. the communication is a request
for information about the Company or is a stock-related matter;
or
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not forward the communication if it is primarily commercial in
nature or if it relates to an improper or irrelevant topic.
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To submit concerns regarding accounting matters, shareholders
and other interested persons may also call the Companys
toll free, confidential hotline number published at
www.taubman.com in the Corporate Governance Section in
the document entitled, Procedures for Submitting Concerns
About the Companys Accounting and Auditing Matters.
Employees may submit such concerns on a confidential and
anonymous basis.
Communications made through the confidential hotline number are
reviewed by the Audit Committee at each regularly scheduled
meeting; other communications will be made available to
directors at any time upon their request.
15
Compensation
Discussion And Analysis
The Taubman Company LLC (the Manager), which is
99% beneficially owned by TRG, provides property management,
leasing, development and other administrative services to, among
others, the Company and its shopping centers. All employees of
the Company are employed directly by the Manager, and the
Companys executive officers generally have similar titles
and responsibilities with the Manager. The Manager assists the
Compensation Committee in determining executive officer
compensation, equity grants to the Companys employees
generally and other compensation matters. References in this
Compensation Discussion and Analysis, and the following
compensation-related tables and narrative to the Company
includes the Manager, unless the context otherwise requires.
Overview
of Compensation Program
The Compensation Committee, composed entirely of independent
directors, administers the executive compensation program of the
Company. The role of the Committee is to oversee compensation
and benefit plans and policies, review and approve equity grants
and otherwise administer share-based plans, and review and
approve annually all compensation decisions relating to the
Companys executive officers, including the Chief Executive
Officer and the Chief Financial Officer and the other executive
officers named in the Summary Compensation Table
(the named executive officers). The Committees
charter, which is reviewed at least annually by the
Committee, reflects such responsibilities and is
available on the Companys website, www.taubman.com,
in the Corporate Governance subsection of the Investor Relations
page. The Committee last reviewed and updated its charter in
December 2006.
The Company and the Committee together set the meeting dates and
agendas for Committee meetings. In 2006, the Committee had three
meetings and a substantial amount of the Committees work
related to the determination of compensation for the
Companys executive officers. The Committee customarily
takes significant direction from the recommendations of
Mr. Robert Taubman, the Companys Chairman, President
and Chief Executive Officer, and other members of management as
necessary, as it believes they have the best understanding of
the overall effectiveness of the management team and each
persons individual contribution to the Companys
achievements. The Committee reviews such compensation
recommendations for their reasonableness based on the
Committees compensation philosophy and related
considerations. The Committee regularly meets in executive
session to review the performance and determine the compensation
of Mr. Robert Taubman and to discuss compensation issues
generally outside the presence of management.
The Committee has the authority to retain and obtain advice and
assistance from internal or external legal, accounting or other
advisors. Pursuant to such authority, the Committee customarily
utilizes a compensation consultant to advise the Committee of
best practices in compensation, assess the
Companys competitive position regarding compensation and
assist in the implementation of the Committees
compensation philosophy. The Company and the Committee together
determine the consultants responsibilities and direct its
work product. The Committees charter provides that the
Committee has the sole authority to retain and terminate
compensation consultants of the Committee and the sole authority
to approve the engagement fees and other retention terms. In
2006, the Committee engaged Towers Perrin to provide such
services, and the Company negotiated the consultants fees
at the direction of the Committee. Towers Perrin received
$148,507 from the Company for its executive officer and director
compensation analyses. In addition, Towers Perrin advises
management of the Company on other compensation issues and
received $82,026 from the Company for such work. A
representative of Towers Perrin attended two of the
Committees meetings in 2006. The legal advisors, human
resources department and corporate accounting department of the
Company support the Committee in its work pursuant to delegated
authority to fulfill various functions in administering the
compensation plans and programs.
During 2006, the Committee has also taken steps to enhance its
ability to effectively carry out its responsibilities in the
future, including:
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expanding the compensation consultants annual analysis
from the Companys top three executive officers to include,
every other year, all of the Companys executive
officers; and
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16
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reviewing change of control and other severance benefits, and
outstanding equity holdings and awards, as part of its annual
compensation review.
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Compensation
Philosophy for Named Executive Officers
The Committee seeks to ensure that total compensation paid to
the Companys named executive officers is fair, reasonable
and competitive. Total annual compensation of named executive
officers consists of base salary, annual cash incentive awards,
long-term incentive compensation and certain other benefits. The
Company also has various deferred compensation arrangements for
its named executive officers, although the Company does not
maintain any defined benefit pension plans or defined benefit
SERPs for such persons.
The Committee also recognizes the importance of maintaining
sound principles for the development and administration of
compensation and benefit programs, including maintaining strong
links between executive pay and performance. The Committee
believes that compensation paid to named executive officers
should be closely aligned with the performance of the Company on
both a short-term and long-term basis, and that such
compensation should assist the Company in attracting, retaining,
motivating and rewarding key executives critical to its
long-term success. In addition, the Committee believes that the
proportion of total compensation that is
(i) performance-based compensation, (ii) long-term
compensation subject to vesting and (iii) share-based
compensation should increase as an employees level of
responsibility increases, and therefore the named executive
officers of the Company should have the highest proportion of
their total compensation at-risk.
The Committee further strives to have a competitive pay
structure within applicable peer groups, while recognizing the
significance of maintaining internal pay equity and other
factors described herein. In 2006, the Committee clarified its
pay philosophy to be the midpoint of the applicable peer group
with respect to base salary, while maintaining above-median
targets for performance incentives. The Committee also takes
into account internal pay equity, individual performance
reviews, hiring and retention needs and other external market
pressures in finalizing its compensation determinations. The
Committee anticipates using a compensation consultant on an as
needed basis to assist it in properly balancing these objectives.
Stock
Ownership Guidelines
Stock ownership guidelines reinforce the Committees
philosophy of having share-based compensation represent a
significant proportion of annual compensation. Effective
January 1, 2007, the Committee approved stock ownership
guidelines for its executive officers. The guidelines require
covered employees to hold a fixed number of shares of the
Companys common stock equal to two times their March 2007
base salary divided by the Companys average closing stock
price over the 90 trading days prior to March 7, 2007.
Covered employees have a five-year grace period to comply with
the new guidelines. At the end of the grace period, if a covered
employee does not hold the requisite amount of shares, then the
Company will pay 50% of such persons annual bonus in
restricted stock units until the minimum threshold is reached.
The Committee will review the minimum equity holding level and
other trends on a periodic basis. The Committee has confirmed
that all covered employees have met or are making significant
progress toward their milestone guidelines.
Accounting
and Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the IRC), provides that subject to certain
exceptions (the most significant of which is performance-based
compensation), a publicly-held corporation may not deduct
compensation exceeding $1 million in any one year paid to
its chief executive officer and its four other most highly
compensated executive officers. However, the Companys
chief executive officer and all of its other executive officers
are employed by the Manager, and Section 162(m) does not
apply to the Manager because it is a partnership for federal
income tax purposes. The executive officers perform limited
services for the Company pursuant to a services agreement
between the Company and the Manager. The Committee does not
anticipate that any portion of Managers compensation
expense that may be allocable to the Company will be limited by
Section 162(m). Even if the Companys compensation
expense deduction were limited by Section 162(m), as long
as the Company continues to qualify as a real estate investment
trust under the IRC, the payment of non-deductible compensation
should not have a material adverse impact on the Company.
17
On October 22, 2004, the American Jobs Creation Act of 2004
was signed into law, changing the tax rules applicable to
nonqualified deferred compensation arrangements. The statutory
rules were effective January 1, 2005. Although the final
regulations regarding these rules have not become effective,
they may be relied upon at the present time and the Committee
believes the Company is operating in good faith compliance with
the rules and proposed regulations.
Beginning on January 1, 2006, the Company began accounting
for share-based payments in accordance with the requirements of
FASB Statement No. 123(R), Share-Based Payment.
The Company had previously adopted in 2003 the fair value
recognition provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation and,
consequently, the Company has been expensing the costs of stock
options since such time. The impact on the Company from the
adoption of FASB Statement No. 123(R) was a change in the
amortization period of option costs for employees who are
eligible for retirement.
Timing
and Pricing of Share-Based Grants
The Company resumed its share-based grant program in 2005
following a period from 2001 to 2004 in which it did not have
any share-based grants. The Company does not coordinate the
timing of share-based grants with the release of material
non-public information. The Committee has regularly scheduled
meeting dates in March and December each year that are scheduled
at least a year in advance, with additional meetings as
necessary. Share-based grants for executive officers and other
employees have been and will be generally made at the March
meeting; however, due to the circumstances noted below, grants
were also made at special meetings in May 2005 and 2006. In
2005, an additional meeting was held in May due to shareholder
approval of The Taubman Company 2005 Long-Term Incentive Plan
(the TTC 2005 Long-Term Incentive Plan) at the
annual shareholders meeting in May. In 2006, initial
share-based grants were made in March under such plan based on
preliminary recommendations of Towers Perrin and management;
upon finalizing such analyses and recommendations in May,
additional grants were made in May to specified executive
officers.
In accordance with the Companys compensation plans, the
exercise price of each stock option is the closing price of the
Companys common stock (as reported by the NYSE) on the
date approved by the Committee to be the date of grant (which
date is not earlier than the date the Committee approved such
grant). The Committee is authorized to modify, extend or renew
outstanding stock options, or accept the cancellation or
surrender of such options, except to the extent such actions
would constitute a repricing of options without satisfying the
applicable shareholder approval requirements of the NYSE;
however, the Committee has not utilized this authority since it
resumed the granting of stock options in 2005.
Policy
Regarding Retroactive Adjustments
The Committee does not have a formal policy regarding whether
the Committee will make retroactive adjustments to cash or
share-based incentive compensation paid to executive officers
and certain other officers in which the payment was predicated
upon the achievement of certain financial results that are
subsequently the subject of a restatement. The Committee
reserves the right to seek to recover any amount determined to
have been inappropriately received by the individual executive
to the extent permitted by applicable law.
Peer
Group Analyses
In 2006, in respect of base salary, the Committee generally
focused on a peer group of seven regional mall REITs, while it
considered annual and long-term incentives in the context of
five peer group markets consisting of (i) the seven
regional mall REITs, (ii) retail REITs, (iii) REITs
with a market capitalization above $2 billion,
(iv) REITs generally and (v) companies with annual
revenues of at least $750 million that participate in
general executive compensation surveys conducted by three
compensation consulting firms (including one by Towers Perrin).
The Committee uses the market data as a guideline, and also
considers internal equity and other administrative factors
(including hiring and retention needs) when making final
compensation determinations. The Committee is committed to
reviewing the peer groups as appropriate to ensure that they are
the appropriate benchmarks.
18
The regional mall REIT peer group was comprised of seven
companies which the Committee believes is the Companys
primary comparator group: CBL & Associates Properties,
Inc., General Growth Properties, Inc., Glimcher Realty Trust,
The Mills Corporation, The Macerich Company, Pennsylvania Real
Estate Investment Trust and Simon Property Group, Inc. The
retail REIT survey consisted of 37 companies of various
capitalizations. The REIT market cap survey (above
$2 billion) contained 35 companies. The REIT survey
group consisted of 100 companies of various
capitalizations. The National Association of Real Estate
Investment Trusts (NAREIT) 2005 Compensation Survey
was used as the data source for the foregoing REIT-related
surveys, which was supplemented by 2006 proxy statement data
where available. The three general surveys conducted by
compensation consulting firms covered a range of companies with
at least $750 million in annual revenues.
The 2006 proxy statement data included six regional mall REITs
(highlighted above, except The Mills Corporation) and 12
shopping center and office REITs (Arden Realty, Inc., Boston
Properties, Inc., Developers Diversified Realty Corporation,
Duke Realty Corporation, Equity Office Properties Trust, Federal
Realty Investment Trust, Forest City Enterprises, Inc., Kimco
Realty Corporation, Mack-Cali Realty Corporation, Regency
Centers Corporation, SL Green Realty Corp. and Trizec
Properties, Inc.). The Mills Corporation, CarrAmerica Realty
Corporation and Highwoods Properties, Inc. are REITs that were
not included in the proxy data but would have been included had
they filed their respective 2006 proxy statements prior to the
time of the analysis.
Elements
of Compensation in 2006 for Named Executive Officers
The Company provides the following elements of compensation to
the named executive officers: base salary, annual cash incentive
bonus and long-term share-based incentives (collectively,
total direct compensation or TDC), as
well as perquisites, contributions to defined contribution plans
and customary benefits provided to all salaried employees.
Further, the Company provides certain of the named executive
officers with deferred compensation arrangements, and certain
named executive officers have a right to contingent compensation
relating to change of control
and/or
employment agreements.
Summary
The Committee reviewed applicable analyses from Towers Perrin
that suggested that certain pay shortfalls existed among certain
named executive officers, while also considering various
internal pay equity and administrative concerns. As a result of
the foregoing, the Committee approved an increase of
approximately $0.8 million in aggregate, or 11%, of base
salary, target annual cash incentive awards and target long-term
share-based incentives (collectively, target TDC)
for named executive officers in 2006. Consistent with the
Committees increasing emphasis on
pay-for-performance
criteria, approximately 97% of such net increase was performance
oriented. The Committee also addressed internal pay equity by
increasing the target TDC of the other named executive officers
relative to Mr. Robert Taubman.
Specifically as to Messrs. Weinert and Kieras, they were
given significant promotions, with corresponding additional
responsibilities, in Summer and Fall 2004, respectively; the
Committee, having had the opportunity to review their
performance over an extended time period, determined to increase
their compensation significantly in 2006.
The Committee also believes that the target TDC in 2006 is fair
and reasonable in light of the Companys financial
performance, which has been reflected in the Companys
stock price a sector-leading 50.8% total return to
shareholders in 2006 and a compound annual average total return
to shareholders of 22.0% over the last 10 years. In 2006,
the Companys properties achieved record, industry-leading
average tenant sales per square foot of $539, and the Company
increased its common dividend by 23 percent (the eleventh
consecutive 4th quarter dividend increase).
19
The following table sets forth the target TDC approved for the
named executive officers in 2006. The TDC paid or earned in 2006
by named executive officers exceeded target TDC to the extent
the Companys
and/or
individuals performance exceeded applicable goals.
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Internal Pay Equity
|
|
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% Increase of Target TDC
|
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(% of CEO Target TDC)
|
Name
|
|
2006 Target TDC
|
|
(2006 vs. 2005)
|
|
2005
|
|
2006
|
|
Robert S. Taubman
|
|
$
|
2,637,500
|
|
|
|
|
|
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Lisa A. Payne
|
|
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1,716,250
|
|
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|
14
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%
|
|
|
58
|
%
|
|
|
65
|
%
|
William S. Taubman
|
|
|
1,675,000
|
|
|
|
12
|
|
|
|
57
|
|
|
|
64
|
|
David T. Weinert
|
|
|
977,500
|
|
|
|
37
|
|
|
|
27
|
|
|
|
37
|
|
Stephen J. Kieras
|
|
|
819,750
|
|
|
|
20
|
|
|
|
26
|
|
|
|
31
|
|
Base
Salary
General. Each named executive officer
receives a base salary paid in cash. The Company does not have
existing plans that permit persons to defer base salary other
than in connection with defined contribution plans.
The Committee believes that the base salary is a primary method
of retaining and attracting key employees in a competitive
marketplace, especially in light of the recent consolidation of
retail REITs. During downturns in the REIT or equity markets, an
employees base salary also serves to preserve an
employees commitment to the Company. The base salaries of
named executive officers are reviewed on an annual basis, as
well as at the time of a promotion or other change in
responsibilities. Changes in salary are based on an evaluation
of the individuals experience, current performance,
potential for advancement, internal pay equity and level of pay
compared to REIT and general industry peer group pay levels.
Merit increases normally take effect in early April.
2006 Analysis. In 2006, the Committee
determined to enhance its
pay-for-performance
philosophy by placing greater emphasis on compensation subject
to performance measures compared to base salary. The Committee
is now targeting the midpoint of the applicable peer group for
base salary, subject to other important considerations discussed
above. The primary peer group analyzed relating to base salary
consists of seven regional mall REITs. Among the base salaries
of the named executive officers, Mr. Robert Taubmans
base salary was the only amount significantly above the market
median and therefore it was reduced by $100,000. The other base
salaries were increased due to a combination of competitive
pressures, merit, and the market analysis. Of particular note,
Ms. Paynes increase in base salary represented the
first such increase since she joined the Company in 1997; the
increase in Mr. William Taubmans base salary was the
first increase he received since 2002; and Mr. Robert
Taubmans base salary has not been increased since 1992.
The following table sets forth the base salaries approved for
the named executive officers in 2005 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2005 Base Salary
|
|
2006 Base Salary
|
|
% Increase (decrease)
|
|
Robert S. Taubman
|
|
$
|
750,000
|
|
|
$
|
650,000
|
|
|
|
(13.3
|
)%
|
Lisa A. Payne
|
|
|
500,000
|
|
|
|
525,000
|
|
|
|
5.0
|
|
William S. Taubman
|
|
|
487,500
|
|
|
|
500,000
|
|
|
|
2.6
|
|
David T. Weinert
|
|
|
300,000
|
|
|
|
350,000
|
|
|
|
16.7
|
|
Stephen J. Kieras
|
|
|
280,000
|
|
|
|
315,000
|
|
|
|
12.5
|
|
Annual
Cash Incentive Bonus
General. Each named executive officer
participates in the Companys annual cash bonus incentive
plan. The Committee believes the cash bonus provides a
meaningful incentive for the achievement of short-term Company
and individual goals, while assisting the Company in retaining,
attracting and motivating employees in the near term.
The annual cash bonus is predicated on the Companys
satisfaction of two annual performance measures: growth in funds
from operations (FFO) per share and comparable center net
operating income (NOI). Target FFO and NOI are typically
established at the Committees December meeting prior to
the applicable fiscal year and are intended to reflect the
Companys long-term growth goals and competitive pressures,
the anticipated economic climate (including interest rates) and
other budgetary risks and opportunities. The Committee has the
authority to
20
adjust reported financial results for unusual or nonrecurring
items that impact the financial results in a given year
and/or that
were not contemplated when the original targets were set; the
Committee customarily utilizes this discretion as appropriate.
Typically at its March meeting during the fiscal year (although
this occurred at the May 2006 meeting due to timing of the
Towers Perrin analyses), the Committee will approve a target
bonus for each member of senior management (expressed as a
percentage of each executive officers base salary) based
upon job level and experience, and the aggregate of these target
amounts for all eligible employees is referred to as the target
bonus pool.
Generally at the Committees March meeting following the
applicable year, the Committee approves final FFO and NOI (as
adjusted), which will be compared to target FFO and NOI; the
Committees pre-approved formula determines the size of the
actual bonus pool as a percentage of the target pool, ranging
from 0% to 200%. The Committee then approves the allocation of
the actual bonus pool for senior management based on individual
performance reviews (with significant input from the CEO).
Bonuses are paid solely in cash, and the Company does not have
existing plans that permit persons to defer such bonus.
In 2004, 2005 and 2006, the actual bonus pool was 136%, 162.5%
and 185%, respectively, of the target bonus pool. Generally, the
Committee approves minimum, target and maximum levels such that
the relative difficulty of achieving the target bonus level is
consistent from year to year.
FFO and NOI. NAREIT defines FFO as net
income (loss) computed in accordance with generally accepted
accounting principles (GAAP), excluding gains (or
losses) from extraordinary items and sales of properties, plus
real estate related depreciation and after adjustments for
unconsolidated partnerships and joint ventures. The Company and
the Committee believe that FFO is a useful supplemental measure
of operating performance for REITs. Historical cost accounting
for real estate assets implicitly assumes that the value of real
estate assets diminishes predictably over time. Since real
estate values instead have historically risen or fallen with
market conditions, the Company and most industry investors and
analysts consider presentations of operating results that
exclude historical cost depreciation to be useful in evaluating
the operating performance of REITs.
The Company uses NOI as an additional measure to evaluate the
operating performance of centers. The Company defines NOI as
property-level operating revenues (includes rental income
(excluding straight-line adjustments of minimum rent), tenant
recoveries, and other shopping center-related income) less
maintenance, taxes, utilities, ground rent, and other
property-level operating expenses. Since NOI excludes general
and administrative expenses, pre-development charges, interest
expense, depreciation and amortization, and gains from land and
property dispositions, the Company and the Committee believe it
provides a performance measure that, when compared period over
period, reflects the revenues and expenses most directly
associated with owning and operating rental properties, as well
as the impact on their operations from trends in tenant sales,
occupancy and rental rates, and operating costs.
FFO and NOI are non-GAAP measures and these should not be
considered alternatives to net income as an indicator of the
Companys operating performance, and they do not represent
cash flows from operating, investing or financing activities as
defined by GAAP. These non-GAAP measures as presented by the
Company are not necessarily comparable to similarly titled
measures used by other REITs due to the fact that not all REITs
use common definitions.
2006 Analysis. In May 2006, upon the
completion of Towers Perrin compensation review, the Committee
increased target bonuses for the named executive officers to a
range of 65% to 75% of base salary, as shown in the table below.
The increases in annual target bonuses for named executive
officers either reflected an increase in incentive pay resulting
primarily from the Committees increased focus on at-risk
compensation and the related market-based analyses or an
increase in base salary for the reasons stated above.
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Annual Target
|
|
% of 2005
|
|
2006 Annual Target
|
|
% of 2006
|
|
% Increase
|
Name
|
|
Bonus (100%)
|
|
Base Salary
|
|
Bonus (100%)
|
|
Base Salary
|
|
(2006 vs. 2005)
|
|
Robert S. Taubman
|
|
$
|
375,000
|
|
|
|
50
|
%
|
|
$
|
487,500
|
|
|
|
75
|
%
|
|
|
30.0
|
%
|
Lisa A. Payne
|
|
|
250,000
|
|
|
|
50
|
|
|
|
341,250
|
|
|
|
65
|
|
|
|
36.5
|
|
William S. Taubman
|
|
|
250,000
|
|
|
|
51
|
|
|
|
325,000
|
|
|
|
65
|
|
|
|
30.0
|
|
David T. Weinert
|
|
|
195,000
|
|
|
|
65
|
|
|
|
227,500
|
|
|
|
65
|
|
|
|
16.7
|
|
Stephen J. Kieras
|
|
|
182,000
|
|
|
|
65
|
|
|
|
204,750
|
|
|
|
65
|
|
|
|
12.5
|
|
2006 target FFO and NOI were increased in March 2006 from
amounts initially established in December 2005 to account for
better than expected financial results in 2005 as well as
certain accounting reclassifications in the fourth quarter of
2005. In March 2007, the Committee finalized the Companys
FFO and NOI measures for 2006 and the aggregate annual bonus
pool was determined to be 185% of the target bonus pool based on
the pre-determined formula. The FFO measure was adjusted for
unusual charges in 2006 related to the redemption of preferred
equity and the refinancing of debt. Actual bonus amounts earned
in 2006 by the named executive officers are reflected in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table.
Long-Term
Share-Based IncentivesStock Options and Restricted Stock
Units
General. The Committee believes the
Companys share-based performance awards, with
multiple-year vesting, provide the strongest incentive for
employees to focus on the long-term fundamentals of the Company
and thereby create long-term shareholder value. These awards
also assist the Company in maintaining a stable, continuous
management team in a competitive market.
At the Committees December meeting preceding each
applicable year, the Committee reviews the Companys
financial and strategic performance goals applicable to the
long-term incentive plan (with significant input from
management). Generally, as is the case with the annual bonus
plan, the Committee utilizes its discretion as appropriate to
adjust reported financial results for unusual or nonrecurring
items that impact the financial performance measures in a given
year and/or
that were not contemplated when the original targets were set.
Upon completion of the year, the Committee approves a long-term
incentive pool (in dollars) for eligible participants
(approximately 90 employees), currently consisting of two
components: (1) a static amount that generally varies only
due to new hires, terminations and promotions (the
participation pool), and (2) a pool that is
based on the Committees review of the Companys
performance against the established performance goals (the
performance pool). The performance pool has
historically been between 75% to 125% of the participation pool,
with a target of 100%. Upon finalizing the performance pool, the
Committee approves the allocation of the performance pool for
senior management based on individual performance reviews. The
dollar value of the award for each person is then converted into
share-based awards. Senior management generally receives
two-thirds of the award value in restricted stock units (under
the TTC 2005 Long-Term Incentive Plan) and one-third in
nonqualified stock options (under the TRG 1992 Incentive Option
Plan), while the other eligible employees receive only
restricted stock units. This methodology is consistent with the
Committees objective of increasing at-risk compensation
for its executive officers, as executive officers do not benefit
from stock option grants unless the value of the Companys
common stock increases following the grant.
In 2004, 2005 and 2006, the Committee approved a performance
pool of 96%, 115% and 125%, respectively, of the participation
pool. Generally, the Committee sets the minimum, target and
maximum levels such that the relative difficulty of achieving
the target level is consistent from year to year.
TRG
1992 Incentive Option
Plan.
This shareholder-approved plan permits the grant of nonqualified
stock options to employees. The exercise price of each stock
option is the closing price of the Companys common stock
(as reported by the NYSE) on the date approved by the Committee
to be the date of grant (which date must not be earlier than the
date the Committee approved such grant), and a holder may elect
to surrender a portion of the stock options to pay such exercise
price. The Committee is authorized to grant stock options with
vesting dates at least six months after the date of grant,
although the Committee generally intends to grant stock options
that vest in equal installments on approximately the first,
second and third anniversaries of the grant date (provided that
the participant is still an employee of the
22
Company on the vesting date). In 2005, the Committee also
authorized a special grant of stock options that vest in equal
installments on approximately the third, fifth and seventh
anniversaries of the grant date (provided that the participant
is still an employee of the Company on the vesting date) and
further conditioned on the satisfaction of certain market-based
performance measures. Stock options may not be exercised after
ten years from the date of grant.
Each stock option represents the right to receive one unit of
TRG upon vesting and payment of the exercise price. Upon
exercise, substantially all employees are required to exchange
each underlying unit for one share of the Companys common
stock under the Companys Continuing Offer. Holders of
stock options will not have any rights as a shareholder of the
Company unless and until the stock option is exercised in
accordance with its terms and exchanged in accordance with the
Continuing Offer. The Committee has the authority to accelerate
vesting of stock options at any time more than six months after
the grant date.
TTC
2005 Long-Term Incentive
Plan.
This shareholder-approved plan permits the grant of restricted
stock units to employees. Each restricted stock unit represents
the right to receive upon vesting one share of the
Companys common stock plus a cash payment equal to the
aggregate cash dividends that would have been paid on such share
of common stock from the grant date to the vesting date.
Although the plan allows the Committee to make grants at any
time and to set the terms of vesting for each award, the
Committee anticipates granting awards on an annual basis on or
around March with vesting on or around the third anniversary of
the grant date, provided that the participant is still an
employee of the Company on the vesting date.
Holders of restricted stock units will not have any rights as a
shareholder of the Company unless and until shares of the
Companys common stock are issued upon vesting of the
applicable award. The Committee has the authority to accelerate
vesting of restricted stock units at any time.
2006 Analysis. Financial objectives in
2005 were FFO per share, comparable center NOI growth,
three-year total shareholder return compared to a peer group
(consisting of CBL & Associates Properties, Inc.,
General Growth Properties, Inc., The Mills Corporation, The
Macerich Company, and Simon Property Group, Inc.) and meeting
the development budget for a center in development. Strategic
initiatives in 2005 included implementing fixed CAM, developing
the Companys Asia strategy, developing and implementing
leasing and store opening strategies, improving tenant net
revenue analysis, completing specified work on particular
shopping centers, and reviewing the Companys development
strategy.
The participation pool, as it relates to named executive
officers, increased 12.7% in 2006. The Committee determined to
set the 2006 performance pool at 125% of the participation pool,
the high end of the pools historical range, due to the
Companys robust performance in respect of its financial
and strategic objectives in 2005.
In 2006, the Committee approved the following formula for
converting the dollar value awards into restricted stock and
stock options. The number of restricted stock units awarded was
determined by dividing the dollar value of the restricted stock
unit grant by the aggregate of (a) the average closing
price of the Companys common stock on the date of grant
and two days prior, and (b) three years of dividends
assuming a fixed percentage of compounded growth rate. The
number of stock options awarded was determined by dividing the
dollar value of the stock option grant by the closing price of
the Companys common stock on the date of grant, and then
multiplying by a factor approved by the Compensation Committee.
Based on the foregoing, the Committee authorized grants in March
2006 to the named executive officers. However, in May 2006, upon
the completion of Towers Perrin compensation review, the
Committee determined to increase the grant awards primarily due
to the Committees objective of increasing incentive pay
based on the market-based analysis and retention. As seen in the
table below, the Committee increased the equity compensation of
each named executive officer except Mr. Robert Taubman.
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original 2006
|
|
Revised 2006
|
|
|
Name
|
|
Target LTIP Award
|
|
Target LTIP Award
|
|
% Increase
|
|
Robert S. Taubman
|
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
|
|
|
|
Lisa A. Payne
|
|
|
760,000
|
|
|
|
850,000
|
|
|
|
11.8
|
%
|
William S. Taubman
|
|
|
760,000
|
|
|
|
850,000
|
|
|
|
11.8
|
|
David T. Weinert
|
|
|
220,000
|
|
|
|
400,000
|
|
|
|
81.8
|
|
Stephen J. Kieras
|
|
|
220,000
|
|
|
|
300,000
|
|
|
|
36.4
|
|
The amounts expensed in the Companys financial statements
for the 2006 awards are set forth in the Summary
Compensation Table. Additional information regarding the
2006 awards is reflected in the Grants of Plan-Based
Awards in 2006 table.
Perquisites
General. The Company has historically
maintained a conservative approach to providing perquisites to
senior management. The perquisites are primarily additional
benefits related to health programs and plans. These perquisites
have been carefully selected to ensure that the value provided
to employees is not at the expense of shareholder concern.
The Company permits Messrs. Robert Taubman and William
Taubman to use the Companys leased airplane for personal
purposes. Such persons are required to fully reimburse the
Company for the incremental cost of such use, which is the
aggregate of the following expenses related to each flight leg:
total pilot expenses (lodging, meals and transportation), fuel
costs and landing fees. Therefore, the Company has no
incremental cost in providing this benefit.
The
Taubman Company Long-Term Performance Compensation
PlanCash Awards
From 1996 through 2004, awards under The Taubman Company
Long-Term Performance Compensation Plan, as amended (the
TTC Long-Term Performance Plan), were generally
favored as the primary source of incentive compensation to
senior management. Under this plan, persons received annual
grants of notional shares
(1996-1997)
or cash awards
(1998-2004)
based on individual and Company performance measures. Such
awards were further subject to the Companys satisfaction
of the Committees target FFO per share compounded growth
rate, subject to reasonable adjustments for unusual or
nonrecurring events, over a three-year period from the date of
grant. The payout amount of each award is the target award if
target FFO is achieved, and the award is increased up to a
maximum premium of 30% for performance above target FFO. Upon
vesting, the participant receives a lump sum cash payment unless
the participant elects to defer payment in accordance with the
terms of the plan. Certain of the named executive officers
elected to defer the receipt of prior awards; see
Deferred Compensation Arrangements
TTC Long-Term Performance Plan for additional information.
As of January 1, 2007, the performance measures related to
the cash awards granted by the Committee on January 1, 2004
were satisfied. Such awards were paid to the applicable
employees on January 26, 2007. The Company has determined
to disclose such amounts in this years Summary
Compensation Table under Non-Equity Incentive Plan
Compensation because the measures were essentially
satisfied at the end of 2006. However, as a result of such
determination, the Companys cash awards granted on
January 1, 2003 (and paid on January 27, 2006 upon the
satisfaction of the applicable performance measures as of
January 1, 2006) are not disclosed in the
Summary Compensation Table in any of the
Companys proxy statements. The named executive officers
earned the following amounts in respect of the cash awards
granted on January 1, 2003: Robert S. Taubman, $1,285,000;
Lisa A. Payne, $705,000; William S. Taubman, $630,000; David T.
Weinert, $87,250; and Stephen J. Kieras, $68,000.
Deferred
Compensation Arrangements
See the Nonqualified Deferred Compensation in 2006
table for information regarding contributions, earnings and
withdrawals in 2006 and aggregate balances as of
December 31, 2006 in respect of the following deferred
compensation arrangements.
24
TTC
Long-Term Performance
Plan.
For each deferred award under the plan, the participant was
required to irrevocably elect the deferral settlement date at
least one year in advance of vesting of the applicable award.
Mr. Weinert and Ms. Payne deferred receipt of the
notional share awards granted in 1996 and 1997, respectively.
During the deferral period, the notional shares are credited
with dividend equivalents in the form of additional notional
shares as and when the Company pays dividends on its shares of
common stock. Both participants have elected to terminate the
deferral period at the earlier of (i) the date that his or
her employment with the Company terminates for any reason and
(ii) retirement. Upon the end of the deferral period, such
participant will be paid a lump sum cash payment equal to the
number of notional shares in the deferral account multiplied by
the average closing price of the Companys common stock on
the NYSE for the last twenty business days immediately preceding
and including the day the deferral period is terminated.
Messrs. Robert Taubman and William Taubman deferred receipt
of cash awards granted in 1998 and 1999. While deferred, the
cash awards accrued interest at a rate equal to the sum of
(a) the average five-year Treasury rate for the last 20
business days of the applicable year plus (b) 50 basis
points. Both participants elected to terminate the deferral
periods of the 1998 and 1999 awards in January 2006 and 2007,
respectively, and such cash payments were made accordingly.
Supplemental
Retirement Savings
Plan.
This plan provides benefits to senior management in the form of
Company contributions which would have been payable under the
tax-qualified retirement plan (The Taubman Company and Related
Entities Employee Retirement Savings Plan, the 401(k)
plan) but for the reduction in recognizable compensation
to $220,000 (as of December 31, 2006, as adjusted by the
IRS from time to time) as required by the IRC. There are no
employee contributions permitted under this plan. In addition to
any Company contributions, the Company also credits earnings at
a rate of 1% above the prime rate of return established by
JPMorgan Chase Bank, N.A. Employees are vested in these
contributions at the same time such employees vest in the
matching contributions under the Companys 401(k) plan: 10%
after the first year of service; 30% after two years of service;
50% after three years of service; 70% after four years of
service; and 100% after five years of service. No withdrawals
are permitted under the plan during employment.
Mr. Robert
Taubmans Deferral of TRG
Units.
Pursuant to an option deferral agreement entered into in
December 2001 among the Manager, TRG and Mr. Robert
Taubman, Mr. Taubman deferred his right to receive
871,262 units of TRG pursuant to an incentive option
granted to Mr. Taubman in 1992 that he exercised in 2002.
Until the deferred units are distributed in full,
Mr. Taubman receives distribution equivalents on the
deferred units in the form of cash payments as and when TRG
makes distributions on actual units outstanding. Beginning with
the earlier of Mr. Taubmans cessation of employment
for any reason or the ten-year anniversary of the date of
exercise, actual units will be paid to Mr. Taubman in ten
annual installments. The deferral agreement will terminate and
actual units will be paid to Mr. Taubman in a single
distribution upon a change of control of TRG if followed by
Mr. Taubmans termination of employment within six
months of such change of control.
Customary
Benefits to All Salaried Employees
The Company also provides customary benefits such as medical,
dental and life insurance and disability coverage to each named
executive officer, which is also provided to all other eligible
employees. The Company also provides vacation and other paid
holidays to all employees, including the named executive
officers, which are comparable to those provided at similar
companies.
25
Severance
Payments
See Potential Payments Upon Termination or
Change-in-Control
for a description of potential payments and benefits to the
named executive officers under compensation plans and
arrangements described above upon termination of employment or a
change of control of the Company.
Change of Control Agreements. The
Company and TRG are party to change of control agreements with
certain of the senior management, including the following named
executive officers: Ms. Payne and Messrs. Weinert and
Kieras. The Committee believes that such agreements are in the
best interests of the Company and its shareholders to ensure the
continued dedication of such employees, notwithstanding the
possibility, threat or occurrence of a change of control. The
Committee believes it is imperative to diminish the inevitable
distraction of such employees by virtue of the personal
uncertainties and risks created by a pending or threatened
change of control, and to provide such employees with
compensation and benefits arrangements upon a change of control
that ensure that such employees compensation and benefits
expectations will be satisfied and such compensation and
benefits are competitive with those of other corporations. These
agreements were originally entered into in connection with a
hostile takeover bid in 2003, and the Committee believes these
agreements were instrumental in the continued success of the
Company during such period.
A fundamental feature of these agreements that is different from
some change of control agreements is that most of the benefits
have a double-trigger, which means that two events
must occur for payments to be made (a change of control
and the termination of employment, in this case within
three years from such trigger event). This is consistent with
the purpose of the program, which is to provide employees with a
guaranteed level of financial protection upon loss of
employment. The only exceptions relate to vesting of share-based
awards, which the Committee believes is appropriate due to the
difficulty in converting the Companys performance awards
into awards of the surviving company.
Employment Agreements. Ms. Payne
also is party to an employment agreement with the Company,
initially entered into in 1997, that provides for certain
severance benefits. All other named executive officers are
at-will employees of the Company.
2006 Analysis. In 2006, the change of
control agreements were amended primarily to provide for a full
tax-gross up
on benefits that exceeded limits set forth in Section 280G
of the IRC by 110%; the amendments also clarified certain
ambiguous terms and accounted for new compensation plans and
arrangements of the Company since the agreements were initially
entered into. The Committee believes the additional
gross-up
payments ensure the full payout to applicable employees, which
reinforces the purpose of such agreements.
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis (CD&A) in
this proxy statement with management, including the Chief
Executive Officer. Based on such review and discussion, the
Compensation Committee recommended to the Board of Directors
that the CD&A be included in the Companys annual
report on
Form 10-K
for the year ended December 31, 2006 and the proxy
statement for the 2007 annual meeting of shareholders.
The Compensation Committee
Craig M. Hatkoff, Chairman
Jerome A. Chazen
Peter Karmanos, Jr.
26
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or has been
an officer or an employee of the Company. In addition, during
2006, none of the Companys executive officers served on
the board of directors or compensation committee (or committee
performing equivalent functions) of any other company that had
one or more executive officers serving on the Companys
Board of Directors or Compensation Committee.
27
Summary
Compensation Table
The table below summarizes the total compensation paid or earned
by each of the named executive officers in 2006.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
Name and
|
|
|
|
|
Salary
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
Robert S. Taubman
|
|
|
2006
|
|
|
$
|
688,462
|
|
|
$
|
570,681
|
(4)
|
|
$
|
497,937
|
(5)
|
|
$
|
2,104,609
|
(6)
|
|
$
|
26,204
|
(7)
|
|
$
|
3,887,893
|
|
Chairman, President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
2006
|
|
|
|
518,269
|
|
|
|
316,935
|
(8)
|
|
|
354,425
|
(9)
|
|
|
1,341,313
|
(10)
|
|
|
26,204
|
(7)
|
|
|
2,557,146
|
|
Vice Chairman and CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
|
2006
|
|
|
|
496,635
|
|
|
|
307,275
|
(11)
|
|
|
277,149
|
(12)
|
|
|
1,345,000
|
(13)
|
|
|
26,204
|
(7)
|
|
|
2,452,263
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
2006
|
|
|
|
336,538
|
|
|
|
113,166
|
(14)
|
|
|
172,039
|
(15)
|
|
|
586,875
|
(16)
|
|
|
26,204
|
(7)
|
|
|
1,234,822
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing (Manager)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
|
2006
|
|
|
|
305,577
|
|
|
|
94,739
|
(17)
|
|
|
148,485
|
(18)
|
|
|
518,313
|
(19)
|
|
|
25,358
|
(20)
|
|
|
1,092,472
|
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development (Manager)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
All awards in this column relate to
restricted stock units granted under the TTC 2005 Long-Term
Incentive Plan. Each restricted stock unit includes the right to
receive dividend equivalents, and upon vesting, the holder will
receive a cash payment equal to the aggregate cash dividends
that are paid on the Companys common stock during the
vesting period. The amounts reported reflect the amounts
recognized for financial statement reporting purposes in 2006 in
accordance with FAS 123(R) (although estimates for
forfeitures related to service-based conditions are
disregarded), and therefore may include amounts from awards
granted in and prior to 2006. The amortization period for awards
included in this column are:
|
|
|
|
|
|
Award Date
|
|
Amortization Period (months)
|
|
May 2005
|
|
|
38
|
|
March 2006
|
|
|
36
|
|
May 2006
|
|
|
34
|
|
|
|
|
|
|
Generally, amortization begins in
the month of the award date. Valuation assumptions used in
determining these amounts are included in note 15 of the
Companys audited financial statements included in the
Companys annual report on
Form 10-K
for the year ended December 31, 2006 (the 2006
10-K).
|
|
(2)
|
|
All awards in this column relate to
stock options granted under the TRG 1992 Incentive Option Plan.
The amounts reported reflect the amounts recognized for
financial statement reporting purposes in 2006 in accordance
with FAS 123(R), and therefore may include amounts from
awards granted in and prior to 2006. The amortization period for
awards included in this column are:
|
|
|
|
|
|
|
|
Award Date
|
|
Options Vested
|
|
Amortization Period (months)
|
|
March 2005
|
|
One-third
|
|
|
36
|
|
|
|
One-third
|
|
|
60
|
|
|
|
One-third
|
|
|
84
|
|
May 2005
|
|
One-third
|
|
|
17
|
|
|
|
One-third
|
|
|
29
|
|
|
|
One-third
|
|
|
41
|
|
March 2006
|
|
One-third
|
|
|
12
|
|
|
|
One-third
|
|
|
24
|
|
|
|
One-third
|
|
|
36
|
|
May 2006
|
|
One-third
|
|
|
10
|
|
|
|
One-third
|
|
|
22
|
|
|
|
One-third
|
|
|
34
|
|
|
|
|
|
|
Generally, amortization begins in
the month of the award date. Valuation assumptions used in
determining these amounts are included in note 15 of the
Companys audited financial statements included in the 2006
10-K.
|
|
(3)
|
|
Amounts earned under the 2006
Annual Bonus Plan were approved by the Compensation Committee on
March 6, 2007 and were paid out shortly thereafter. The
performance measures for the cash grant in 2004 under the TTC
Long-Term Performance Plan were satisfied on January 1,
2007 and the award was paid on January 26, 2007.
|
|
(4)
|
|
Includes $299,765 for restricted
stock units granted in May 2005 and $270,916 for restricted
stock units granted in March 2006.
|
|
(5)
|
|
Includes $170,300 for stock options
granted in May 2005 and $327,637 for stock options granted in
March 2006.
|
28
|
|
|
(6)
|
|
Includes $804,609 from the 2006
Annual Bonus Plan and $1,300,000 from a cash grant in 2004 under
the TTC Long-Term Performance Plan.
|
|
(7)
|
|
Includes $17,916 and $8,288
contributed by the Company to such persons account in the
401(k) Plan and Supplemental Retirement Savings Plan,
respectively.
|
|
(8)
|
|
Includes $160,215 for restricted
stock units granted in May 2005, $143,878 for restricted stock
units granted in March 2006, and $12,842 for restricted stock
units granted in May 2006.
|
|
(9)
|
|
Includes $71,789 for stock options
granted in March 2005, $91,027 for stock options granted in May
2005, $173,996 for stock options granted in March 2006, and
$17,613 for stock options granted in May 2006.
|
|
(10)
|
|
Includes $631,313 from the 2006
Annual Bonus Plan and $710,000 from a cash grant in 2004 under
the TTC Long-Term Performance Plan.
|
|
(11)
|
|
Includes $150,555 for restricted
stock units granted in May 2005, $143,878 for restricted stock
units granted in March 2006, and $12,842 for restricted stock
units granted in May 2006.
|
|
(12)
|
|
Includes $85,541 for stock options
granted in May 2005, $173,995 for stock options granted in March
2006, and $17,613 for stock options granted in May 2006.
|
|
(13)
|
|
Includes $650,000 from the 2006
Annual Bonus Plan and $695,000 from a cash grant in 2004 under
the TTC Long-Term Performance Plan.
|
|
(14)
|
|
Includes $41,211 for restricted
stock units granted in May 2005, $46,280 for restricted stock
units granted in March 2006, and $25,675 for restricted stock
units granted in May 2006.
|
|
(15)
|
|
Includes $57,431 for stock options
granted in March 2005, $23,416 for stock options granted in May
2005, $55,966 for stock options granted in March 2006, and
$35,226 for stock options granted in May 2006.
|
|
(16)
|
|
Includes $455,000 from the 2006
Annual Bonus Plan and $131,875 from a cash grant in 2004 under
the TTC Long-Term Performance Plan.
|
|
(17)
|
|
Includes $39,569 for restricted
stock units granted in May 2005, $43,758 for restricted stock
units granted in March 2006, and $11,412 for restricted stock
units granted in May 2006.
|
|
(18)
|
|
Includes $57,431 for stock options
granted in March 2005, $22,486 for stock options granted in May
2005, $52,912 for stock options granted in March 2006, and
$15,656 for stock options granted in May 2006.
|
|
(19)
|
|
Includes $358,313 from the 2006
Annual Bonus Plan and $160,000 from a cash grant in 2004 under
the TTC Long-Term Performance Plan.
|
|
(20)
|
|
Includes $17,916 and $7,442
contributed by the Company to such persons account in the
401(k) Plan and Supplemental Retirement Savings Plan,
respectively.
|
29
Grants
of Plan-Based Awards in 2006
The following table provides information about equity and
non-equity awards granted to the named executive officers in
2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Underlying
|
|
|
of Option
|
|
|
Stock and
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
($)
|
|
|
(#)(2)
|
|
|
(#)(3)
|
|
|
($/Sh)
|
|
|
Awards(4)
|
|
|
Robert S. Taubman
|
|
|
N/A
|
|
|
|
|
|
|
$
|
487,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,147
|
|
|
|
|
|
|
|
|
|
|
$
|
975,297
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,723
|
|
|
$
|
40.39
|
|
|
|
643,365
|
|
Lisa A. Payne
|
|
|
N/A
|
|
|
|
|
|
|
|
341,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,824
|
|
|
|
|
|
|
|
|
|
|
|
517,961
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,338
|
|
|
|
40.39
|
|
|
|
341,668
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,356
|
|
|
|
|
|
|
|
|
|
|
|
54,579
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,473
|
|
|
|
40.25
|
|
|
|
37,752
|
|
William S. Taubman
|
|
|
N/A
|
|
|
|
|
|
|
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,824
|
|
|
|
|
|
|
|
|
|
|
|
517,961
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,338
|
|
|
|
40.39
|
|
|
|
341,668
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,356
|
|
|
|
|
|
|
|
|
|
|
|
54,579
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,473
|
|
|
|
40.25
|
|
|
|
37,752
|
|
David T. Weinert
|
|
|
N/A
|
|
|
|
|
|
|
|
227,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,125
|
|
|
|
|
|
|
|
|
|
|
|
166,609
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,618
|
|
|
|
40.39
|
|
|
|
109,897
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,711
|
|
|
|
|
|
|
|
|
|
|
|
109,118
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,945
|
|
|
|
40.25
|
|
|
|
75,496
|
|
Stephen J. Kieras
|
|
|
N/A
|
|
|
|
|
|
|
|
204,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
|
157,521
|
|
|
|
|
03/08/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,875
|
|
|
|
40.39
|
|
|
|
103,901
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,205
|
|
|
|
|
|
|
|
|
|
|
|
48,501
|
|
|
|
|
05/15/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,976
|
|
|
|
40.25
|
|
|
|
33,557
|
|
|
|
|
(1)
|
|
The amounts in this column relate
to the 2006 Annual Bonus Plan. The aggregate amount payable to
senior management under such plan is up to 200% of the aggregate
target bonuses of senior management; however, since there is no
maximum established for individual members of such plan, the
Company has determined not to disclose a maximum amount in this
table. The relevant performance measures were satisfied on
December 31, 2006 and amounts earned were approved by the
Compensation Committee on March 6, 2007 (and were paid out
shortly thereafter); such amounts are reported in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table.
|
|
(2)
|
|
All awards in this column relate to
restricted stock units under the TTC 2005 Long-Term Incentive
Plan. All restricted stock units granted in 2006 provide for
vesting on March 1, 2009, subject to the terms of such
award. See Compensation Discussion and
AnalysisElements of Compensation in 2006 for Named
Executive Officers for a description of the material terms
of the restricted stock units.
|
|
(3)
|
|
All awards in this column relate to
stock options granted under the TRG 1992 Incentive Option Plan.
All stock options granted in 2006 provide for vesting in equal
installments on March 1, 2007, 2008 and 2009, respectively,
subject to the terms of such award. See Compensation
Discussion and AnalysisElements of Compensation in 2006
for Named Executive Officers for a description of the
material terms of the stock options.
|
|
(4)
|
|
The grant-date fair value is
calculated in accordance with FAS 123(R). The fair value of
each restricted stock unit, which includes the right to receive
dividend equivalents, is equal to the stock price on the date of
grant. Upon vesting, the holder will receive a cash payment
equal to the aggregate cash dividends that are paid on the
Companys common stock during the vesting period; the
foregoing is taken into account in calculating the grant-date
fair value. The fair value of each stock option is calculated
using the Black-Scholes model, using assumptions which are
included in note 15 to the Companys audited financial
statements included in the 2006
10-K.
|
|
|
|
Each restricted stock unit granted
on March 8, 2006 and May 15, 2006 had a grant-date
fair value of $40.39 and $40.25, respectively. Each stock
option granted on March 8, 2006 and May 15, 2006 had a
grant-date fair value of $8.07 and $8.44, respectively.
|
30
Outstanding
Equity Awards at December 31, 2006
The following table provides information on the current holdings
of stock option and stock awards by the named executive officers
as of December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
Number
|
|
Value of
|
|
|
of Securities
|
|
of Securities
|
|
of Securities
|
|
|
|
|
|
of Shares
|
|
Shares or
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
or Units
|
|
Units of
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
of Stock
|
|
Stock That
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
That Have
|
|
Have Not
|
|
|
(#)
|
|
(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
Robert S. Taubman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,465(2)
|
|
|
$
|
2,770,090
|
|
|
|
|
|
|
|
|
79,723(3)
|
|
|
|
|
|
|
$
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
33,068
|
|
|
|
66,134(4)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,384(5)
|
|
|
|
1,545,330
|
|
|
|
|
|
|
|
|
4,473(3)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,338(3)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
17,673
|
|
|
|
35,346(4)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000(6)
|
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,407(7)
|
|
|
|
1,495,640
|
|
|
|
|
|
|
|
|
4,473(3)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,338(3)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
16,609
|
|
|
|
33,216(4)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,004(8)
|
|
|
|
559,663
|
|
|
|
|
|
|
|
|
8,945(3)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,618(3)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
4,546
|
|
|
|
9,092(4)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000(6)
|
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,107(9)
|
|
|
|
463,182
|
|
|
|
|
|
|
|
|
3,976(3)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,875(3)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
4,365
|
|
|
|
8,730(4)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000(6)
|
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based upon the closing price of the
Companys common stock on the NYSE on December 29,
2006 (the last business day of 2006) of $50.86.
|
|
(2)
|
|
30,318 restricted stock units vest
on March 1, 2008 and 24,147 restricted stock units vest on
March 1, 2009.
|
|
(3)
|
|
The stock options vest in three
equal installments on March 1, 2007, 2008 and 2009,
respectively.
|
|
(4)
|
|
The stock options vest in two equal
installments on May 18, 2007 and 2008, respectively.
|
|
(5)
|
|
16,204 restricted stock units vest
on March 1, 2008 and 14,180 restricted stock units vest on
March 1, 2009.
|
|
(6)
|
|
The stock options vest in three
equal installments on March 4, 2008, 2010 and 2012,
respectively, subject to the satisfaction of certain Company
performance criteria as of each vesting date.
|
|
(7)
|
|
15,227 restricted stock units vest
on March 1, 2008 and 14,180 restricted stock units vest on
March 1, 2009.
|
|
(8)
|
|
4,168 restricted stock units vest
on March 1, 2008 and 6,836 restricted stock units vest on
March 1, 2009.
|
|
(9)
|
|
4,002 restricted stock units vest
on March 1, 2008 and 5,105 restricted stock units vest on
March 1, 2009.
|
31
Option
Exercises and Stock Vested in 2006
None of the named executive officers exercised stock options in
2006. The following table provides information on the vesting of
notional units under the TTC Long-Term Performance Plan related
to the deferral of notional unit awards under such plan. During
the deferral period, the notional shares are credited with
dividend equivalents in the form of additional notional shares
as, and in the amount that, the Company pays dividends on its
shares of common stock.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized
|
|
|
Acquired on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
Robert S. Taubman
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
1,529
|
|
|
$
|
62,556
|
|
William S. Taubman
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
294
|
|
|
|
12,017
|
|
Stephen J. Kieras
|
|
|
|
|
|
|
|
|
32
Nonqualified
Deferred Compensation in 2006
The table below provides information on the nonqualified
deferred compensation of the named executive officers in 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Contributions
|
|
Contributions
|
|
Earnings
|
|
Withdrawals/
|
|
Balance at
|
|
|
|
|
in Last FY
|
|
in Last FY
|
|
in Last FY
|
|
Distributions
|
|
Last FYE
|
Name
|
|
Plan
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
Robert S. Taubman
|
|
TTC Long-Term
Performance Plan
|
|
|
|
|
|
|
|
|
|
$
|
72,392
|
(3)
|
|
$
|
1,482,867
|
(4)
|
|
$
|
1,539,873
|
(5)
|
|
|
Supplemental Retirement
Savings Plan
|
|
|
|
|
|
$
|
8,288
|
|
|
|
11,559
|
|
|
|
|
|
|
|
139,039
|
|
|
|
Option Deferral
Agreement(6)
|
|
|
|
|
|
|
|
|
|
|
1,103,600
|
|
|
|
1,103,600
|
|
|
|
44,312,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
TTC Long-Term
Performance Plan
|
|
|
|
|
|
|
|
|
|
|
843,334
|
(7)
|
|
|
|
|
|
|
2,613,226
|
(8)
|
|
|
Supplemental Retirement
Savings Plan
|
|
|
|
|
|
|
8,288
|
|
|
|
6,600
|
|
|
|
|
|
|
|
82,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
TTC Long-Term
Performance Plan
|
|
|
|
|
|
|
|
|
|
|
29,434
|
(3)
|
|
|
562,467
|
(4)
|
|
|
626,102
|
(5)
|
|
|
Supplemental Retirement
Savings Plan
|
|
|
|
|
|
|
8,288
|
|
|
|
10,778
|
|
|
|
|
|
|
|
131,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
TTC Long-Term
Performance Plan
|
|
|
|
|
|
|
|
|
|
|
162,012
|
(9)
|
|
|
|
|
|
|
502,024
|
(8)
|
|
|
Supplemental Retirement
Savings Plan
|
|
|
|
|
|
|
8,288
|
|
|
|
6,112
|
|
|
|
|
|
|
|
78,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
Supplemental Retirement
Savings Plan
|
|
|
|
|
|
|
7,442
|
|
|
|
889
|
|
|
|
|
|
|
|
17,463
|
|
|
|
|
(1)
|
|
The Companys contributions to
the supplemental retirement savings plan are included in the
All Other Compensation column of the Summary
Compensation Table.
|
|
(2)
|
|
None of the earnings set forth in
the table are above-market or preferential, and therefore none
of such amounts are reflected in the Summary Compensation
Table.
|
|
(3)
|
|
Represents interest paid on
outstanding amounts related to cash awards granted in 1999 under
the plan. The interest rate paid in each year is the sum of
(a) the average five-year Treasury rate for the last 20
business days of the applicable year plus (b) 50 basis
points.
|
|
(4)
|
|
Amount paid in January 2006 due to
the participants election to end the deferral period with
respect to the 1998 cash award. The awards accrued interest at
the rate specified in note (3) above.
|
|
(5)
|
|
These amounts were paid in January
2007 due to the participants election to end the deferral
period with respect to the 1999 cash award. The awards accrued
interest at the rate specified in note (3) above.
|
|
(6)
|
|
Mr. Taubman acquired phantom
stock in 2002 in connection with his deferral of TRG units. The
deferral account has 871,262 outstanding shares of phantom
stock. The distributions accrued in 2006 were $1.27 per
unit. See Compensation Discussion and
AnalysisDeferred Compensation
ArrangementsMr. Robert Taubmans Deferral of
Units for additional information.
|
|
(7)
|
|
Includes $62,556 for dividends and
$780,778 for stock price growth related to the deferral of a
notional unit award granted in 1997 under the plan. During the
deferral period, the notional shares are credited with dividend
equivalents in the form of additional notional shares as, and in
the amount that, the Company pays dividends on its shares of
common stock. Stock price growth is calculated as
(i) difference between the Companys average common
stock price for the last 20 business days immediately preceding
and including December 31, 2006 and such comparable period
in 2005, multiplied by (ii) the number of notional units
held at December 31, 2006.
|
|
(8)
|
|
At the end of the deferral period,
such participant will be paid a lump sum cash payment equal to
the number of notional shares in the deferral account multiplied
by the average closing price of the Companys common stock
on the NYSE for the last twenty business days immediately
preceding and including the day the deferral period is
terminated. Such participant has elected to terminate the
deferral period at the earlier of (i) the date that his or
her employment with the Company terminates for any reason and
(ii) retirement.
|
|
(9)
|
|
Includes $12,017 for dividends and
$149,995 for stock price growth related to the deferral of a
notional unit award granted in 1996 under the plan. During the
deferral period, the notional shares are credited with dividend
equivalents in the form of additional notional shares as, and in
the amount that, the Company pays dividends on its shares of
common stock. Stock price growth is calculated as
(i) difference between the Companys average common
stock price for the last 20 business days immediately preceding
and including December 31, 2006 and such comparable period
in 2005, multiplied by (ii) the number of notional units
held at December 31, 2006.
|
33
Potential
Payments Upon Termination or
Change-in-Control
The following section describes potential payments and benefits
to the named executive officers under the Companys
compensation and benefit plans and arrangements upon termination
of employment or a change of control of the Company.
Ms. Payne is party to an employment agreement and change of
control agreement with the Company. None of the other named
executive officers has an employment agreement with the Company.
Messrs. David Weinert and Stephen Kieras have each entered
into a change of control agreement with the Company, while
Messrs. Robert Taubman and William Taubman have not entered
into such agreements.
Certain of the Companys compensatory plans contain
provisions regarding the acceleration of vesting and payment
upon specified termination events; see Company
Share-Based Plans below. In addition, the Compensation
Committee may authorize discretionary severance payments to its
named executive officers upon termination.
Company
Share-Based Plans
TRG
1992 Incentive Option Plan
The Committee is authorized to accelerate the vesting of stock
options at any time more than six months after the grant date.
The Committee is also permitted to modify, extend or renew
outstanding stock options, or accept the cancellation or
surrender of such options, except to the extent such actions
would constitute a repricing of options without satisfying the
applicable shareholder approval requirements of the NYSE.
If a participants employment is terminated for cause, all
vested and unvested stock options will be forfeited as of the
termination date.
If a participants employment with the Company is
terminated for any reason, other than the death, disability, or
retirement of such employee or for cause, (i) the
participants stock options that have not vested as of such
termination date will be forfeited, and (ii) the
participant shall have 90 days (or such other period in the
Compensation Committees discretion) from the termination
date to exercise vested options, subject to specified
limitations.
Stock options held by an employee that dies while employed will
vest immediately, and the beneficiary will have 730 days to
exercise such stock options. Stock options held by an employee
that becomes disabled or retires will also vest immediately upon
such trigger event, and will be exercisable any time prior to
the tenth anniversary of the date of grant.
Stock options will vest immediately upon the termination
(without renewal) of the Managers services agreement with
TRG, upon any change in control of TRG, or upon TRGs
permanent dissolution.
TTC
2005 Long-Term Incentive Plan
The Committee has the authority to accelerate vesting of
restricted stock units at any time.
The restricted stock units will vest immediately if a
participants employment with the Company is terminated for
death, disability or retirement of such employee, or upon a
change of control of TRG, the dissolution of TRG or the
termination (without renewal) of the Managers services
agreement with TRG. If a participants employment with the
Company is terminated for any other reason, the restricted stock
units that have not vested as of such date will be forfeited.
Deferred
Compensation Plans and Arrangements
TTC
Long-Term Performance
Plan.
As of December 31, 2006, Robert Taubman, William Taubman,
David Weinert and Lisa Payne had outstanding, irrevocable
deferred awards under the plan. The deferral period is
immediately terminated upon the
34
termination of the participants employment with the
Company for any reason, upon a change of control, the
dissolution of TRG or the termination (without renewal) of the
Managers services agreement with TRG.
Supplemental
Retirement Savings
Plan.
Each of the named executive officers participates in the plan.
No withdrawals are permitted under the plan during employment.
As soon as practicable following the termination of employment
for any reason, the employee must elect a lump-sum payment (to
be paid no earlier than one year following such termination
date) or annual installments (such first installment to be paid
no earlier than one year following the last day of the month of
termination); however, in its sole discretion, the Company may
accelerate such payment plan. The acceleration provisions will
be amended as necessary to comply with the new tax rules
applicable to nonqualified deferred compensation arrangements.
In the event the employee dies before distribution of all
amounts, the beneficiary may change the form of payment with the
consent of the Company.
Mr. Robert
Taubmans Deferral of TRG
Units.
Beginning with the earlier of Mr. Taubmans cessation
of employment for any reason or the ten-year anniversary of the
date of exercise, the TRG units will be paid to Mr. Taubman
in ten annual installments. The deferral agreement will
terminate and the deferred units will be paid to
Mr. Taubman in a single distribution of units upon a change
of control of TRG if followed by Mr. Taubmans
termination of employment within six months of such change of
control.
Change of
Control Agreements
The agreements have three-year terms that automatically extend
for an additional year on each anniversary of the first day of
their terms unless a notice not to extend is given by the
Company at least 60 days prior to the renewal date. If a
change of control of the Company occurs during the term of the
agreement, then the agreements become operative for a fixed
three-year period commencing on the date of the change of
control and supersede any other employment agreement between the
Company and any of its affiliates, on the one hand, and the
executive, on the other.
Each agreement provides generally that the executives
terms and conditions of employment, including position,
location, compensation and benefits, will not be adversely
changed during the three-year period after a change of control.
In addition, each agreement also provides that upon a change of
control or a termination of employment in anticipation of a
change of control, all of the executives share-based
compensation awards that are outstanding on the date of the
change of control will vest and, in specified circumstances,
will become payable.
After a change of control, if the executives employment is
terminated for cause, the executive will generally be entitled
to receive:
accrued and unpaid compensation and benefits;
and
other vested benefits in effect on the date of
the termination.
After a change of control, if the executives employment is
terminated by reason of the persons death or disability,
the executive or his or her beneficiary or estate will generally
be entitled to receive:
the amounts noted above for termination for
cause; and
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an annual bonus for the year in which the termination of
employment occurs, pro-rated through the date of termination.
|
After a change of control, if the executives employment is
terminated by the Company other than for cause, death or
disability, or if the executive resigns for good reason, or upon
certain terminations in connection with or in anticipation of a
change of control, the executive will generally be entitled to
receive:
the amounts noted above for termination by
reason of death or disability;
two and a half times the executives
annual base salary and annual bonus;
35
continued welfare benefits and perquisites for
at least thirty months; and
outplacement services for one year.
The annual bonus components of this severance amount will be
based on the higher of the highest bonus paid to the executive
during the three years prior to the change of control or the
most recent bonus paid to the executive prior to the date of
termination of employment. The Company will additionally provide
each executive with a full tax
gross-up on
the above benefits to the extent such benefits exceed 110% of
the limits set forth in Section 280G of the Code.
Further, as a condition to receiving such funds and subject to
limited specified exceptions, the executive must sign an
agreement to forever release and discharge the Company and its
agents from any and all liabilities of any kind whatsoever
related in any way to the Companys employment of the
executive that the executive has ever had or may thereafter have
against the Company or its agents. The executive is also subject
to customary confidentiality provisions after the termination of
employment with the Company.
Lisa
Paynes Change of Control Agreement
The change of control agreement supersedes Ms. Paynes
employment agreement upon the occurrence of a change of control.
Ms. Paynes change of control agreement is identical
to the description set forth above in Potential Payments
Upon Termination or
Change-in-ControlChange
of Control Agreements, except that to preserve an existing
benefit under her employment agreement, such agreement provides
that her termination of employment for any reason following a
Change of Control or in anticipation of a Change of Control, is
deemed to be Good Reason.
Lisa
Paynes Employment Agreement
In January 1997, the Company entered into a three-year agreement
with Ms. Payne regarding her employment as an Executive
Vice President and the Chief Financial Officer of the Manager
and her service to the Company in the same capacities. Since the
end of the initial term, the agreement has been extended
pursuant to one-year automatic renewals in accordance with its
terms. The agreement shall continue to be extended in such
manner unless either party gives sufficient notice to the
contrary. In June 2005, Ms. Payne became Vice Chairman in
addition to her role as Chief Financial Officer.
The employment agreement provides for an annual base salary of
not less than $500,000, with consideration of upward adjustments
to be reviewed annually, as well as customary benefits and
perquisites. The agreement also provides for
Ms. Paynes participation in the Companys annual
bonus plan, with a target award of $250,000 and a maximum annual
award of $375,000, and other share-based compensation plans.
Notwithstanding the foregoing, the Company, in its sole
discretion, may increase Ms. Paynes compensation at
any time.
Pursuant to the agreement, if Ms. Paynes employment
with the Company is terminated for any reason other than
(1) Ms. Paynes voluntary termination of her
employment, (2) death or disability or (3) a
termination by the Company for cause, Ms. Payne shall be
entitled to receive payment of her base salary and target bonus
for the remaining term of her employment agreement, and all
benefits granted to Ms. Payne under the Companys
various compensation plans shall immediately vest in full.
Ms. Payne shall also receive such payments if her
termination of employment is within in 90 days of any of
the following events: (w) a change of control, (x) a
substantial diminution of duties or responsibilities, (y) a
change in title without consent and (z) a change in
location of employment outside metro Detroit area. Payments
under the clause will be reduced by amounts Ms. Payne
receives from other employment during such payment period.
For any other termination, including for cause, voluntary
termination without good reason, death or disability,
Ms. Payne shall receive any amounts accrued to the date of
termination and as provided for in Companys compensatory
plans.
36
Change of
Control/Severance Payment Table
The following table estimates the potential payments and
benefits to the named executive officers upon termination of
employment or a change of control, assuming such event occurs on
December 31, 2006. These estimates do not reflect the
actual amounts that would be paid to such persons, which would
only be known at the time that they become eligible for payment
and would only be payable if the specified event occurs.
Items Not
Reflected in
Table.
The following items are not reflected in the table set forth
below:
Accrued salary, bonus and vacation.
Costs of COBRA or any other mandated
governmental assistance program to former employees.
Welfare benefits provided to all salaried
employees.
Amounts outstanding under the Companys
401(k) plan.
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TTC Long-Term Performance Plan. If such
participants employment is terminated for any reason, upon
the occurrence of specified events (including a change of
control of TRG, the dissolution of TRG or the termination
(without renewal) of the Managers services agreement with
TRG), or the Company accelerates such payment as of
December 31, 2006, then such participants would receive the
aggregate balance amount relating to the plan as set forth in
the Nonqualified Deferred Compensation in 2006
table. Such payment is required to be made as soon as
administratively practicable.
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Supplemental Retirement Savings Plan. If such
participants employment is terminated for any reason, upon
the occurrence of specified events (including a change of
control of TRG, the dissolution of TRG or the termination
(without renewal) of the Managers services agreement with
TRG), or the Company accelerates such payment as of
December 31, 2006, then the participant would receive the
aggregate balance amount relating to the plan as set forth in
the Nonqualified Deferred Compensation in 2006 table.
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Mr. Robert Taubmans Deferral of
Units. If Mr. Taubmans employment is
terminated for any reason as of December 31, 2006, the
deferred units will be paid to Mr. Taubman in ten annual
installments. If Mr. Taubmans employment is
terminated within six months of a change of control, then the
deferred units will be paid to Mr. Taubman in a single
distribution. The aggregate balance amount relating to this
deferral arrangement is set forth in the Nonqualified
Deferred Compensation in 2006 table.
|
Change
of Control PaymentsIRC Section 280G
valuation.
For purposes of the table below, the Company engaged Towers
Perrin to estimate the excise
tax-gross-up
payment to be paid by the Company arising under IRC
Section 280G in connection with the change of control
agreements. IRC Section 280G imposes tax sanctions for
payments made by the Company that are contingent upon a change
of control and equal to or greater than three times an
executives most recent five-year average annual taxable
compensation (the base amount). If tax sanctions
apply, all payments above the base amount become subject to a
20% excise tax (paid by the executive) and are ineligible for a
tax deduction by the Company. Key assumptions of the analysis
include:
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Change of control and termination of employment occurs as of
December 31, 2006; and
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The only applicable payments are cash severance (2.5x salary
plus annual bonus, with the bonus being the highest bonus earned
in prior three years), welfare benefits (10% of base salary),
one year of outplacement services (20% of base salary), and
accelerated vesting of stock options and restricted stock.
|
Other
Notes Applicable to
Table.
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For accelerated vesting of share-based awards, the table
reflects the intrinsic value of such acceleration, which is
(i) for each unvested stock option, $50.86 less the
exercise price, and (ii) for each unvested
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37
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restricted stock unit, $50.86. $50.86 represents the closing
price on the NYSE on December 29, 2006, the last business
day of 2006.
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As previously noted, the Compensation Committee has discretion
to accelerate the vesting of stock options (six months after the
grant date) and restricted stock awards; the table assumes such
discretion is not utilized.
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Life insurance amounts only reflect policies paid for by the
Company.
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The table assumes a disability is of a long-term
nature, which triggers vesting of share-based awards. Disability
payments are shown on an annual basis.
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Named
Executive Officers
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|
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Share-
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Life
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Cash
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Miscellaneous
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Based
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Insurance
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Disability
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280G Tax
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Severance
|
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Benefits(1)
|
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Awards
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Dividends
|
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Proceeds
|
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Benefits
|
|
Gross Up
|
|
Robert S.
Taubman(2)
Retirement
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$
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4,897,709
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$
|
96,788
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Death
|
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4,897,709
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96,788
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$
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1,400,000
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|
|
|
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Disability
|
|
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4,897,709
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96,788
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$
|
360,000
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|
|
|
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|
Change of control
|
|
|
|
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|
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4,897,709
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96,788
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Lisa A.
Payne(3)
Retirement
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2,728,841
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52,960
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|
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Termination without cause
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$
|
1,732,500
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2,728,841
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52,960
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|
|
|
|
|
|
|
|
|
|
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Death
|
|
|
|
|
|
|
|
|
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2,728,841
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52,960
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|
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1,400,000
|
|
|
|
|
|
|
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Disability
|
|
|
|
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2,728,841
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52,960
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|
|
|
|
|
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360,000
|
|
|
|
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|
Change of control
|
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|
2,328,125
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$
|
236,250
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2,728,841
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52,960
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(4)
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William S.
Taubman(2)
Retirement
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2,635,770
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50,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
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|
2,635,770
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|
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50,845
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|
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1,400,000
|
|
|
|
|
|
|
|
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Disability
|
|
|
|
|
|
|
|
|
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2,635,770
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|
|
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50,845
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
Change of control
|
|
|
|
|
|
|
|
|
|
|
2,635,770
|
|
|
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50,845
|
|
|
|
|
|
|
|
|
|
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David T. Weinert(2)
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
915,662
|
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|
17,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
915,662
|
|
|
|
17,015
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
915,662
|
|
|
|
17,015
|
|
|
|
|
|
|
|
346,500
|
|
|
|
|
|
Change of control
|
|
|
1,667,188
|
|
|
|
157,500
|
|
|
|
915,662
|
|
|
|
17,015
|
|
|
|
|
|
|
|
|
|
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$
|
1,256,851
|
|
Stephen J. Kieras(2)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
810,840
|
|
|
|
14,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
810,840
|
|
|
|
14,882
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
810,840
|
|
|
|
14,882
|
|
|
|
|
|
|
|
311,850
|
|
|
|
|
|
Change of control
|
|
|
1,526,875
|
|
|
|
141,750
|
|
|
|
810,840
|
|
|
|
14,882
|
|
|
|
|
|
|
|
|
|
|
|
1,271,722
|
|
|
|
|
(1)
|
|
Amount includes the value of
continuing health and welfare benefits for 30 months after
December 31, 2006 and outplacement services for one year
after December 31, 2006.
|
|
(2)
|
|
Except as noted in the table above
or as specified in Items Not Reflected in
Table, such person does not receive any additional
payments if (i) he voluntarily terminates his employment,
or (ii) his employment is terminated by the Company with or
without cause.
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(3)
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Except as noted in the table above
or as specified in Items Not Reflected in
Table, Ms. Payne does not receive any additional
payments if (i) she voluntarily terminates her employment,
or (ii) her employment is terminated by the Company with
cause.
|
|
(4)
|
|
Ms. Payne is eligible for a
280G tax gross up, but no such payment would have been necessary
upon a change of control as of December 31, 2006.
|
38
Related
Person Transactions
Policies
and Procedures
Historically, directors and executive officers have been
required to complete an annual questionnaire in connection with
the Companys proxy statement for its annual meeting of
shareholders, which includes questions regarding related person
transactions (previously referred to as related party
transactions). Directors and executive officers have also
been required to provide written notice to the Companys
General Counsel or outside general counsel of any updates to
such information. Further, the Companys financial and
other departments have established additional procedures to
assist the Company in identifying existing and potential related
person transactions.
In accordance with revised SEC rules that have expanded the
definition of a related person transaction, the Company is now
required to disclose any transactions since the beginning of
2006, or any currently proposed transaction, in which the
Company was or is to be a participant, the amount involved
exceeds $120,000, and in which any related person (including,
among others, directors, executive officers and their immediate
family), had or will have a direct or indirect material
interest. To assist the Company in complying with such
disclosure obligations and to enhance the Companys
disclosure controls, the Board approved a formal policy in
December 2006 regarding related person transactions, which
generally reflects the historical process and procedures
utilized by the Company on an informal basis. Specifically, the
policy establishes a process for identifying related persons and
procedures for reviewing and approving such transactions.
From 2006 through the date hereof, the Companys related
person transactions were solely with the Taubman family and
their affiliates. The Audit Committee
and/or the
independent directors of the Board reviewed such business
transactions to ensure that the Companys involvement in
such transactions were on terms comparable to those that could
be obtained in arms length dealings with an unrelated
third party and were in the best interests of the Company and
its shareholders. When necessary or appropriate, the Company has
engaged third party consultants and special counsel, and the
Board has created a special committee, to review such
transactions. While Messrs. Robert Taubman and William
Taubman may participate in certain discussions regarding Company
transactions with the Taubman family and affiliates, they recuse
themselves from the approval process by the Board or Audit
Committee and do not negotiate contractual terms or control the
Companys strategies with respect to such transactions.
Related
Person Transactions in 2006 and 2007
The Manager is the manager of the Sunvalley shopping center
(Sunvalley) in Contra Costa County, California, and has been the
manager since its development. TRG owns a 50% general
partnership interest in SunValley Associates, a California
general partnership, which owns the center. The other 50%
partner is an entity owned and controlled by Mr. A. Alfred
Taubman, the Companys largest shareholder, former Chairman
of the Board of Directors and the father of Messrs. Robert
and William Taubman. Sunvalleys partnership agreement
names TRG as the managing general partner and provides that so
long as TRG has an ownership interest in the property, the
Manager will remain its manager and leasing agent.
In October 2006, the Company purchased the land under Sunvalley,
which is subject to two ground leases. The investment was made
in a 50% partnership with an entity affiliated with the Taubman
family. The purchase price was $42.5 million. The seller
was an unrelated trust for which Wells Fargo Bank served as
trustee.
A. Alfred Taubman and certain of his affiliates receive
various property management services from the Manager. For such
services, Mr. A. Taubman and affiliates paid the Manager
approximately $1.9 million in 2006.
During 2006, the Manager paid approximately $2.4 million in
rent and operating expenses for office space in the building in
which the Manager maintains its principal offices and in which
A. Alfred Taubman, Robert S. Taubman and William S. Taubman have
financial interests. The office lease, which was renewed in 2004
effective May 1, 2005, terminates in April 2015. The lease
also provides for a five-year renewal option at the end of the
term. During 2005, the Manager had an option to reduce the
amount of space leased by up to 19% but elected not to do so.
The Manager also has an option to surrender an additional 10% of
space in 2010. Effective May 1, 2005, the first
39
year annual rent was $1.4 million, the second to fifth
years rent is $2.4 million per year and the sixth to
tenth years rent is $2.6 million per year. The
Manager received an allowance in 2005 for $3.4 million
based upon the actual amount of space leased; of this amount,
approximately $214,000 was paid to Taubman Asset Group (defined
in the next paragraph) for its share of the allowance. In 2006,
the Manager received an additional allowance of $368,000 based
upon the square footage not surrendered in 2005.
The Taubman Asset Group, an entity which manages the personal
assets of, and provides administrative services to, the Taubman
family, including A. Alfred Taubman (collectively, the
Taubman Family), utilize a portion of the
Managers Bloomfield Hills, Michigan offices and a portion
of the Managers New York offices. For the use of the
office space, they paid the Manager approximately $279,000 in
2006, representing their pro rata share of the total occupancy
costs. In addition, employees of the Taubman Asset Group, A.
Alfred Taubman and certain employees of members of the Taubman
Family and other affiliated companies of the Taubman Family were
enrolled in the benefit program of the Manager. For
participation in the Managers benefit program,
participants paid the Manager approximately $708,000 in 2006,
representing 100% reimbursement of the costs associated with
their employees participation in the benefit program plus
a 15% administrative fee. Offsetting this expense is a $99,000
refund paid by the Manager due to a health and dental surplus as
a result of lower claims. This refund was calculated based on
the participants share of participating employees in the
benefit program.
The Manager leases a corporate jet for business use and was
reimbursed approximately $472,000 in 2006 by the Taubman Family
for personal use of the corporate jet, representing 100% of the
incremental costs of such use. See Compensation Discussion
and Analysis Elements of Compensation in 2006 for
Named Executive Officers Perquisites for
information on calculating incremental cost to the Company in
respect of corporate jet use.
During 1997, TRG acquired an option to purchase certain real
estate on which TRG was exploring the possibility of developing
a shopping center. A. Alfred Taubman, Robert S. Taubman and
William S. Taubman have a financial interest in the optionor.
Through December 31, 2000, TRG made payments of $450,000
under the option agreement, but in 2000, TRG decided not to go
forward with the project. Pursuant to an agreement between TRG
and the optionor, TRG was to be reimbursed at the time of sale
or lease of the real estate for $350,000 in project costs. As of
the date hereof, TRG has received $350,000 in connection with
such reimbursement obligations.
In January 2007, the Company announced its involvement as a
third party leasing agent for a lifestyle center in the city of
North Las Vegas, Nevada. This is a mixed use project that will
include retail, dining, and entertainment of up to
1.3 million square feet and a residential component
consisting of approximately 800 units. The shopping center
will open in late 2008. The developer of the residential
component is a joint venture, which includes an affiliate of the
Taubman Family. The Taubman Family affiliate also participates
in the projects non-residential component.
40
Audit
Committee Disclosure
The Audit Committee of the Board is responsible for providing
independent, objective oversight and review of the
Companys accounting functions and internal controls. The
Audit Committee acts under a written charter available at
www.taubman.com in the Corporate Governance Section. Each
of the members of the Audit Committee is independent as
independence for audit committee members is defined by the rules
adopted by the SEC and the NYSE and the Companys Corporate
Governance Guidelines. An Audit Committee member may not
simultaneously serve on more than two other audit committees of
public companies.
The responsibilities of the Audit Committee include engaging an
accounting firm to be the Companys independent registered
public accounting firm. Additionally, and as appropriate, the
Audit Committee reviews and evaluates, and discusses and
consults with management, internal audit personnel and the
independent registered public accounting firm on matters which
include the following:
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the plan for, and the independent registered public accounting
firms report on, each audit of the Companys
financial statements;
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the Companys quarterly and annual financial statements
contained in reports filed with the SEC or sent to shareholders;
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changes in the Companys accounting practices, principles,
controls or methodologies, or in its financial statements;
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significant developments in accounting rules;
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the adequacy of the Companys internal accounting controls,
and accounting, financial and auditing personnel; and
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the continued independence of the Companys independent
registered public accounting firm and the monitoring of any
engagement of the independent registered public accounting firm
to provide non-audit services.
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Pre-Approval
Policies and Procedures for Audit and Non-Audit
Services
The Audit Committee has developed policies and procedures
concerning its pre-approval of the performance of audit and
non-audit services. These policies and procedures provide that
the Audit Committee must pre-approve all audit and permitted
non-audit services (including the fees and terms thereof) to be
performed for the Company. If a product or service arises that
was not already pre-approved, the Audit Committee has delegated
to the Chairman of the Audit Committee the authority to consider
and pre-approve such services between quarterly meetings of the
Audit Committee. In pre-approving all audit services and
permitted non-audit services, the Audit Committee or a delegated
member must consider whether the provision of the permitted
non-audit services is consistent with maintaining the
independence of the Companys independent registered public
accounting firm. Any interim approvals granted by the Chairman
of the Audit Committee are reported to the entire Audit
Committee at its next regularly scheduled meeting.
Service
Fees Paid to the Independent Registered Public Accounting
Firm
Audit Fees. The Company was billed
$1,204,700 and $1,148,141 by KPMG for audit services in 2006 and
2005, respectively. Audit services consist of professional
services rendered by the Companys principal accountant for
the audits of the Companys annual financial statements and
managements assessment of the Companys internal
control over financial reporting, review of the financial
statements included in the Companys quarterly reports on
Form 10-Q
and services that are normally provided by the accountant in
connection with these filings. This includes $553,800 and
$593,000 in 2006 and 2005, respectively, related to individual
shopping center audit reports, and $0 and $42,000 in 2006 and
2005, respectively, related to audit work done in connection
with equity offerings. All of the audit services provided to the
Company by KPMG during 2006 and 2005 were pre-approved by the
Audit Committee.
41
Audit-Related Fees. The Company was
billed $23,500 and $17,500 by KPMG in 2006 and 2005,
respectively, for assurance and related services by the
principal accountant that are reasonably related to the
performance of the audit or review of the Companys
financial statements. These audit related services, consisting
primarily of an audit of an employee benefit plan, provided to
the Company by KPMG were pre-approved by the Audit Committee.
Tax Fees. The Company was not billed by
KPMG for any tax related services in 2006. The Company was
billed $2,100 by KPMG in 2005 for the preparation of a
Form 5500 in connection with the audit of the
Companys 401(k) plan, which was pre-approved by the Audit
Committee.
Other Fees. The Company was not billed
any other fees from KPMG in 2006 or 2005.
The Audit Committee, based on its reviews and discussions with
management and KPMG noted above, determined that the provision
of these services was compatible with maintaining KPMGs
independence.
Report
Of The Audit Committee
In connection with the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and the
financial statements to be included therein, the Audit Committee
has:
(1) reviewed and discussed the audited financial statements
with management;
(2) discussed with KPMG, the Companys independent
registered public accounting firm, the matters required to be
discussed by the statement on Auditing Standards No. 61, as
amended; and
(3) received the written disclosure and letter from KPMG
regarding the matters required by Independence Standards Board
Standard No. 1.
Based upon these reviews and discussions, the Audit Committee
recommended to the Board that the Companys audited
financial statements be included in the Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the SEC.
The Audit Committee
Jerome A Chazen, Chairman
Craig M. Hatkoff
William U. Parfet
42
Proposal 2
Ratification of Appointment of Independent Registered Public
Accounting Firm
The Board of Directors recommends that the shareholders vote
FOR the ratification of KPMG as the Companys
independent registered public accounting firm for the year
ending December 31, 2007.
Although shareholder ratification of the appointment is not
required by law and is not binding on the Company, the Audit
Committee will take the appointment of KPMG under advisement if
such appointment is not ratified by the affirmative vote of
two-thirds of the shares of Voting Stock outstanding on the
record date. KPMG served as the Companys independent
registered public accounting firm for 2004, 2005 and 2006, and
the appointment of KPMG in such years was ratified by the
Companys shareholders at the respective annual meetings.
See Audit Committee Disclosure for a description of
fees and other matters related to KPMGs provision of
services to the Company.
The Company expects that representatives of KPMG will be present
at the annual meeting and will be available to respond to
appropriate questions. Such representatives will also have an
opportunity to make a statement.
43
Proposal 3
Shareholder Proposal
The SEIU General Fund, claiming beneficial ownership of
92 shares of the Companys common stock for more than
one year and representing that it will continue to hold the
92 shares through the date of the annual meeting, submitted
the following resolution and supporting statement to be included
in this proxy statement and has noted its intention to present
such resolution for consideration at the annual meeting. The
Company will furnish the address of the shareholder upon
request. The Company disclaims any responsibility for the
content of this proposal and the supporting statement, which are
presented as received verbatim from the shareholder.
Declassifying
the Board
Resolved: The
shareholders of Taubman Centers, Inc. (Taubman)
request that the board of directors take the necessary steps, in
accordance with applicable state law, to declassify the board of
directors so that all directors are elected annually, with such
declassification to be carried out in a manner that does not
affect the unexpired terms of directors previously elected.
Supporting Statement
The election of directors is the primary avenue for shareholders
to influence corporate governance policies and to hold
management accountable for its implementation of those policies.
We believe that classification of the board of directors, which
results in only a portion of the board being elected annually,
is not in the best interests of Taubman and its shareholders.
Taubmans board of directors is divided into three classes,
with approximately one-third of all directors elected annually
to three-year terms. Eliminating this classification system
would require each director to stand for election annually and
would give shareholders an opportunity to register their views
on the performance of the board collectively and each director
individually.
Several recent academic studies have found a significant
positive relationship between governance practices that empower
shareholders (like declassifying the board) and firm value. One
such study, The Costs of Entrenched Boards, by
Harvard Law Schools Lucian Arye Bebchuk and Alma Cohen,
found that staggered boards were associated with an economically
meaningful reduction in firm value (as measured by Tobins
Q.). The authors also found evidence that staggered boards
bring about, and not merely reflect, an economically significant
reduction in firm value (Journal of Financial
Economics, 2005).
We believe investors increasingly favor requiring annual
elections for all directors. Shareholder proposals recommending
annual elections received, on average, 66.8% of the vote in the
first half of 2006, according to Institutional Shareholder
Services (ISS), compared with a 60.5% average in the first half
of 2005 (2006 ISS Postseason Report). ISS also found that
the prevalence of classified boards among S&P
500 companies fell to 45.3% in 2006, putting companies with
classified boards in the minority. And in the first half of
2006, 50 companies in the Russell 3000 index sought and
received shareholder approval to declassify their boards,
according to ISS.
We regard as unfounded the concern expressed by some companies
that the annual election of all directors could leave
corporations without experienced directors in the event that all
incumbents are voted out by shareholders. In the unlikely event
that shareholders do vote to replace all directors, such a
decision would express enormous dissatisfaction with the
incumbent directors and would reflect an urgent need for change.
We feel that annually elected directors are equally capable of
focusing on the long-term performance of our company and would
additionally be more accountable to company owners.
We urge shareholders to vote FOR this resolution.
44
Your
Board of Directors unanimously recommends a vote AGAINST
this proposal for the following reasons:
Since Taubmans initial public offering in 1992, the Board
has been divided into three classes with directors elected to
three-year staggered terms. The Board believes that this
classified structure provides benefits to the company and its
shareholders, including by ensuring the stability and continuity
of leadership that enable management and the Board to focus on
generating superior returns for the shareholders. The Board and
the Nominating & Governance Committee take the views of
shareholders very seriously and have given this proposal careful
consideration. After a thorough review of the potential benefits
and costs associated with eliminating the classified board, the
Board has concluded that the classified board structure
continues to be in the best interests of Taubman and its
shareholders for the following reasons:
Board Commitment to Excellence Enhanced by
Classified Board. The Board is committed to
continuing and enhancing Taubmans superior performance,
which has been reflected in its stock price a
sector-leading 50.8% total return to shareholders in 2006 and a
compound annual average return of 22.0% over the last
10 years. Indeed, for the reasons described below, the
Board believes that the classified board structure, which is one
element of Taubmans overall corporate governance
structure, enhances its ability to focus on delivering superior
returns to shareholders. In 2006, Taubmans properties
achieved record average tenant sales per square foot of $539,
and Taubman increased its common dividend by 23 percent
(the eleventh consecutive 4th quarter dividend increase).
The Board is Fully Accountable to
Shareholders. The Board understands the
importance of accountability to shareholders, and believes such
accountability is not compromised by its classified board
structure. All directors have the same fiduciary duties to
Taubman and its shareholders, regardless of the length of their
term. In this connection, the Board believes that the classified
board structure was an important element in Taubmans
ability to resist an inadequate $20 per share takeover bid
three years ago.
Stability and Continuity. The
classified board structure and its three year terms promote
greater continuity, stability and knowledge of Taubmans
business operations, strategies and core values by ensuring that
at any time at least two thirds of the
directors have prior experience as directors of Taubman.
Directors who have experience and familiarity with
Taubmans business affairs and operations are valuable
resources and are better suited to develop and execute long-term
strategic decisions that are in the best interests of Taubman
and its shareholders. Long-term planning capabilities and focus
are especially critical among shopping mall REITs, such as
Taubman, that emphasize new developments. This continuity,
stability and knowledge has been an important factor in the
success of Taubman.
Majority of Taubmans Peers Have Classified
Boards. In a late-2006 study of 1,433 companies in the
S&P 1,500, Institutional Investor Services noted that 55% of
such companies had classified boards in 2006 (ISS Board
Practices/Board Pay, 2007 Edition). Specifically, among
companies having a similar market capitalization to Taubman
(384 companies in the S&P MidCap 400 Index), 63% had
staggered boards in 2006. Further, among companies having
similar revenues to Taubman (248 companies with
$500 million to $1 billion in revenues), 62% had
staggered boards in 2006.
Director Recruitment and
Retention. The market for highly qualified
directors is becoming increasingly competitive due to the
current corporate governance and regulatory climate. The Board
believes that Taubmans three-year director term helps
Taubman to attract and retain highly qualified candidates who
are willing to commit the time and resources necessary to
understand Taubmans business operations and competitive
environment.
Corporate Governance. The Board
and the Nominating & Corporate Governance Committee are
committed to corporate governance practices that benefit
shareholders and accordingly regularly evaluate these practices
in light of the changing environment. The Corporate Governance
Guidelines adopted by the Board focus on the independence and
quality of the members of the Board and its effective
functioning.
45
For the foregoing reasons, the Board of Directors has
unanimously determined that retention of the classified board is
in the best interests of the Company and its shareholders, and
recommends a vote AGAINST this proposal. A proxy
will be voted AGAINST this proposal unless a
shareholder otherwise specifies in such proxy.
Additional
Information
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires that the Companys officers and directors
and persons who own more than 10% of a registered class of the
Companys equity securities (insiders) file
reports of ownership and changes in ownership with the SEC and
to furnish copies of these reports to the Company. Based on the
Companys review of the insiders forms furnished to
the Company or filed with the SEC and representations made
by the Companys officers and directors, no insider failed
to file on a timely basis a Section 16(a) form with respect
to any transaction in the Companys equity securities,
except that Mr. Robert Taubman filed three purchases late
(750 shares of common stock in aggregate) on one
Form 4 and Mr. William Taubman filed one purchase late
(250 shares of common stock) on one Form 4.
Cost of
Proxy Solicitation
The cost of preparing, assembling and mailing the proxy material
will be paid by the Company. The Company will request banks,
trustees, brokers and other nominees to send the proxy material
to, and to obtain proxies from, the beneficial owners and will
reimburse such holders for their reasonable expenses in doing
so. In addition, the Companys directors, officers and
regular employees may solicit proxies by mail, telephone,
facsimile or in person, but they will not receive any additional
compensation for such work. Further, Innisfree M&A
Incorporated has been retained to provide proxy solicitation
services for a fee not to exceed $12,000.
Presentation
of Shareholder Proposals at 2008 Annual Meeting
Any shareholder proposal intended to be included in the
Companys proxy statement and form of proxy for the annual
meeting to be held in 2008 must be received by the Company at
200 East Long Lake Road, Suite 300, P.O. Box 200,
Bloomfield Hills, Michigan
48303-0200
by the close of business on November 28, 2007, and must
otherwise be in compliance with the requirements of the
SECs proxy rules.
Any shareholder proposal intended to be presented for
consideration at the 2008 annual meeting, but not intended to be
considered for inclusion in the Companys proxy statement
and form of proxy relating to such meeting, must be received by
the Company at the address stated above between
February 11, 2008 and the close of business on
March 10, 2008 to be considered timely. See
Proposal 1-Election
of DirectorsThe Board of Directors and Committees
for further information on the advance notice provisions set
forth in the Companys by-laws.
Householding
The Company has elected to send a single copy of its annual
report and this proxy statement to any household at which two or
more shareholders reside unless one of the shareholders at such
address provides notice that he or she desires to receive
individual copies or has elected electronic delivery of proxy
materials. This householding practice reduces the
Companys printing and postage costs. Shareholders may
request to discontinue or re-start householding, or to request a
separate copy of the 2007 annual report and proxy statement, as
follows:
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Shareholders owning their Voting Stock through a bank, trustee,
broker or other holder of record should contact such record
holder directly; and
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Record shareholders should contact ADP Investor Communications,
toll-free at
1-800-542-1061,
or may write to: ADP Investor Communications, Householding
Department, 51 Mercedes Way, Edgewood, New York 11717.
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Annual
Report
The Annual Report of the Company for the year ended
December 31, 2006, including financial statements for the
three years ended December 31, 2006 audited by KPMG, LLP,
the Companys independent registered public accounting
firm, are being furnished with the proxy statement.
Please complete the enclosed proxy card or voting instruction
card and mail it in the enclosed postage-paid envelope as soon
as possible. Alternatively, please vote via telephone or
internet (as indicated on your proxy card or voting instruction
card).
By Order of the Board of Directors,
Robert S. Taubman,
Chairman of the Board, President and
Chief Executive Officer
March 30, 2007
47
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 9, 2007
The undersigned appoints each of Robert S. Taubman and Lisa A. Payne, with full power of substitution,
to represent the undersigned at the annual meeting of shareholders of Taubman Centers, Inc. on Wednesday,
May 9, 2007, and at any adjournment, and to vote at such meeting the shares of Common Stock that the undersigned
would be entitled to vote if personally present in accordance with the following instructions and to vote in their judgment
upon all other matters that may properly come before the meeting and any adjournment. The undersigned revokes any proxy
previously given to vote at such meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF ITEMS (1) AND (2) AND AGAINST ITEM (3) IF NO INSTRUCTION IS PROVIDED.
This proxy also provides voting instructions for shares for which the undersigned has the right to
give voting instructions to Vanguard Fiduciary Trust Company, Trustee of The Taubman Company and Related Entities
Employee Retirement Savings Plan (the Plan). This proxy, when properly executed, will be voted as directed. If no direction
is given to the Trustee, the Plans Trustee will vote shares held in the plan in the same proportion as votes received from
other participants in the Plan.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE PAID ENVELOPE.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
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200 EAST LONG LAKE RD. SUITE 200 BLOOMFIELD HILLS, MI 48303
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VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern
Time on May 6, 2007 for 401(k) Plan shareholders and up until 11:59 P.M. Eastern Time on May 8, 2007 for registered shareholders.
Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER
COMMUNICATIONS
If you would like to reduce the costs incurred by Taubman Centers, Inc. in mailing proxy materials, you can consent to receiving
all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder
communications electronically in future years. VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May 6, 2007 for 401(k) Plan
shareholders and up until 11:59 P.M. Eastern Time on May 8, 2007 for registered shareholders. Have your proxy card in
hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to
Taubman Centers, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. Proxy cards must be received by May 8, 2007.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS: |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH
AND RETURN THIS PORTION
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THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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TAUBMAN CENTERS, INC. |
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The
Board of Directors recommends a vote FOR Items 1 and 2 and
AGAINST Item 3.
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Vote
on Directors |
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ELECTION OF DIRECTORS Nominees: (each for a three-year term) 01) Jerome A.Chazen
02) Craig M. Hatkoff |
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For All
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
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RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ratification of the appointment of KPMG LLP as the independent registered public accounting firm for 2007.
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SHAREHOLDER PROPOSAL
Requesting that the Board of Directors take the necessary steps to declassify the Board of Directors.
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PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PARTNERSHIP OR OTHER BUSINESS ENTITY, PLEASE SIGN IN THE NAME OF THE ENTITY BY AN AUTHORIZED PERSON.
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For address changes and/or comments, please check this box and write them on the back where indicated.
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Signature [PLEASE SIGN WITHIN
BOX] |
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Signature (Joint Owners) |
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TAUBMAN CENTERS, INC.
PROXY
Series B Non-Participating Convertible Preferred Stock
This Proxy is Solicited on Behalf of the Board of Directors
Annual Meeting of Shareholders May 9, 2007
The undersigned appoints each of Robert S. Taubman and Lisa A. Payne, with full power of
substitution, to represent the undersigned at the annual meeting of shareholders of Taubman
Centers, Inc. on Wednesday, May 9, 2007, and at any adjournment, and to vote at such meeting the
shares of Series B Non-Participating Convertible Preferred Stock that the undersigned would be
entitled to vote if personally present in accordance with the following instruction and to vote in
their judgment upon all other matters that may properly come before the meeting and any
adjournment. The undersigned revokes any proxy previously given to vote at such meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF ITEMS (1) AND (2) AND AGAINST ITEM
(3) IF NO INSTRUCTION IS PROVIDED.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE
PAID
ENVELOPE. PROXY CARDS MUST BE RECEIVED BY MAY 8, 2007.
The Board of Directors recommends a vote FOR Items 1 and 2 and AGAINST Item 3.
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1.
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ELECTION OF DIRECTORS
Nominees: Jerome A. Chazen and Craig M. Hatkoff (each for a three-year term)
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Please
mark your votes as indicated in this example
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FOR
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RATIFICATION
OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ratification of the appointment of KPMG LLP as the
independent registered public accounting firm for 2007.
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SHAREHOLDER PROPOSAL
Requesting that the Board of Directors take the necessary steps to declassify the Board of
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Please sign exactly as name appears below. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full
title as such. If a corporation, partnership, or other business entity, please sign in the name of
the entity by an authorized person. |
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Signature and Title |
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Signature and Title |
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Dated:
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