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 2008 Annual Meeting
of Shareholders
To be
held May 29, 2008
To the Shareholders of Taubman Centers, Inc.:
The Annual Meeting of Shareholders of Taubman Centers, Inc. (the
Company) will be held on Thursday, May 29,
2008, 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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1.
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To elect one director to serve until the annual meeting of
shareholders in 2010 and to elect three directors to serve until
the annual meeting of shareholders in 2011;
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2.
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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, 2008;
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3.
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To approve the 2008 Omnibus Long-Term Incentive Plan;
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4.
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To consider a shareholder proposal, if presented at the
meeting; and
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5.
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To transact such other business as may properly come before the
meeting.
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The Board of Directors has fixed the close of business on
April 7, 2008 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
April 16, 2008
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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A-1
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TAUBMAN
CENTERS, INC.
200 East Long Lake Road, Suite 300
Bloomfield Hills, Michigan
48304-2324
Proxy
Statement for 2008 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 Thursday, May 29, 2008 at the Community House, 380
South Bates Street, Birmingham, Michigan 48009. The
Companys Board of Directors (the Board) 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 April 16, 2008.
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 one director to serve until the annual
meeting of shareholders in 2010 and three directors to serve
until the annual meeting of shareholders in 2011, the
ratification of the appointment of KPMG LLP (KPMG)
as the Companys independent registered public accounting
firm for the year ending December 31, 2008, the approval of
the 2008 Omnibus Long-Term Incentive Plan (the 2008
Omnibus Plan) 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 April 7, 2008 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. Two current directors whose terms
are expiring, Robert S. Taubman and Lisa A. Payne, have been
re-nominated by the holders of the Series B Preferred
Stock. One current director whose term is not expiring, William
S. Taubman, was
also 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
TRG partner exercises options to acquire TRG units and elects to
hold TRG units, such partner may also acquire an equal number of
Series B shares. As of the date hereof, Messrs. Robert
Taubman and William Taubman are the only TRG partners eligible
to receive options to acquire TRG units related to their
employment. If a non-TRG partner exercises options to acquire
TRG units, 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, 79,332,767 shares of
Voting Stock were outstanding, consisting of
52,808,532 shares of common stock and
26,524,235 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, BNY Mellon Shareowner Services, 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 properly
complete and 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. Even if you intend to be
present at the annual meeting, we encourage you to vote your
shares prior to the annual meeting.
Beneficial Owners. If you properly complete
and 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 new 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 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 if I
do not vote for some of the items listed on my proxy card or
voting instruction card?
Shareholders of Record. Proxy cards that are
signed and returned without voting instructions on certain
matters will be voted in accordance with the recommendations of
the Board on such matters. With respect to any matter not set
forth on the proxy card 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 voting instruction card or do not provide
voting instructions for each matter, such nominee will determine
if it has the discretionary authority to vote your shares. Under
applicable law and NYSE rules and regulations, 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.
The Company believes the approval of the 2008 Omnibus Plan and
the shareholder proposal will each be considered a non-routine
matter. Therefore, if you do not provide voting instructions,
your shares will be considered broker non-votes with
regard to such proposals because the broker will not have
discretionary authority to vote thereon. Voting Stock subject to
broker non-votes will be considered present at the meeting for
purposes of determining whether there is a quorum and will be
considered outstanding, but not voted, with respect to such
proposals.
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 2008.
Proposal 3 FOR the approval of
the 2008 Omnibus Long-Term Incentive Plan.
Proposal 4 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 nominees discussed in this proxy statement consists of
(i) one director, Ronald W. Tysoe, appointed in December
2007 to fill the existing vacancy in the class of directors
whose term will expire in 2010, and (ii) three directors,
Robert S. Taubman, Lisa A. Payne and William U. Parfet, whose
terms are expiring. Withheld votes will have no effect on the
outcome of the vote.
3
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 the year ending December 31, 2008.
Abstentions will have the same effect as a vote against the
matter. 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 under advisement if such
appointment is not so ratified.
Proposal 3 Approval of 2008 Omnibus
Long-Term Incentive Plan. The affirmative vote of
two-thirds of the shares of Voting Stock outstanding on the
record date will be necessary to approve the 2008 Omnibus Plan.
Abstentions and broker non-votes will have the same effect as a
vote against the matter.
Proposal 4 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, if presented
at the meeting. 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
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,
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, 2007, 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, Bloomfield Hills, Michigan
48304-2324.
Further, 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 www.sec.gov. See also Additional
InformationImportant Notice Regarding the Availability of
Proxy Materials for the Shareholder Meeting to be Held On
May 29, 2008.
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 Thursday, May 29, 2008 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, 2008.
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
April 7, 2008. 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, 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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Percent of
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Shareholders (1)
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Shares (1)
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Shares (1)
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Robert S. Taubman
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2,978,357
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(2)
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3
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.7%
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William S. Taubman
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1,973,681
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(3)
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2
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.5
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Lisa A. Payne
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193,816
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(4)
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*
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Stephen J. Kieras
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61,428
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(5)
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David T. Weinert
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63,540
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(6)
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Graham T. Allison
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7,148
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(7)
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Jerome A. Chazen
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15,535
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(8)
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Craig M. Hatkoff
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5,131
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(9)
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Peter Karmanos, Jr.
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54,633
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(10)
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*
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William U. Parfet
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16,453
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(11)
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Ronald W. Tysoe
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843
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(12)
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*
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A. Alfred Taubman
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22,963,212
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(13)
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.9
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ING Groep N.V.
Amstelveenseweg 500
1081 KL Amsterdam
The Netherlands
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4,470,561
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(14)
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5
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.6
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The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
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3,585,272
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(15)
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4
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.5
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Directors and Executive Officers as a Group
(13 persons)
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3,629,842
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(16)
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4
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.5
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*
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less than 1%
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(1)
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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
(Options) granted under The Taubman Realty Group
Limited Partnership 1992 Incentive Option Plan, as amended (the
1992 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 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
14,000 shares of Series B Preferred Stock, with any
resulting fractional shares redeemed for cash). As of
April 7, 2008, there were 79,332,767 beneficially owned
shares of Voting Stock, consisting of 52,808,532 shares of
common stock and 26,524,235 shares of Series B
Preferred Stock.
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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. The deferral period
continues until the earlier of the termination of director
service of a change of control.
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(2)
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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 (shared voting and
dispositive power), and 871,262 shares of Series B
Preferred Stock subject to issuance under the Deferral Agreement
(as defined and described below) (in the aggregate, 8.1% of the
Series B Preferred Stock), and (ii) 19,457 shares
of common stock that Mr. Taubman owns, 172,477 shares
of common stock that Mr. Taubman has the right to receive
upon the exercise and conversion of Options that have vested or
will vest within 60 days of the record date,
70,740 shares of common stock
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owned by his wife and children for
which Mr. Taubman disclaims any beneficial interest, and
500,000 shares of common stock owned by R&W (shared
voting and dispositive power) (in the aggregate, 1.4% of the
common stock).
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To avoid duplication, excludes
5,925 Units that Mr. 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 13 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.
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|
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 Options 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 of control of TRG if followed
by Mr. Taubmans termination of employment within six
months of such change of control.
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(3)
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|
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 (shared voting
and dispositive power) (in the aggregate, 5.1% of the
Series B Preferred Stock), and (ii) 9,443 shares
of common stock that Mr. Taubman owns, 92,438 shares
of common stock that Mr. Taubman has the right to receive
upon the exercise and conversion of Options that have vested or
will vest within 60 days of the record date,
27,379 shares of common stock owned by his children and for
which Mr. Taubman disclaims any beneficial interest, and
500,000 shares of common stock owned by R&W (shared
voting and dispositive power) (in the aggregate, 1.2% of the
common stock).
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|
To avoid duplication, excludes
5,925 Units that Mr. 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 13 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.
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(4)
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|
Consists of 164,738 shares of
common stock owned and 29,078 shares of common stock that
Ms. Payne has the right to receive upon the exercise and
conversion of 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). 143,386 shares of common stock
owned are held in a margin account.
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Ms Payne is party to a 10b5-1
trading plan adopted on March 3, 2008. The plan provides
for monthly sales of 2,400 shares of common stock if the
specified minimum trading price is satisfied. Shares that are
not sold in a particular month will be available for sale in
subsequent months under the plan. A maximum of
24,000 shares remain available for sale under the plan,
which is set to expire on February 27, 2009.
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(5)
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Consists of 2,704 shares of
common stock owned, 3,701 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 55,023 shares of
common stock that Mr. Kieras has the right to receive upon
the exercise and conversion of 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).
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(6)
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Consists of 2,825 shares of
common stock owned and 60,715 shares of common stock which
Mr. Weinert has the right to receive upon the exercise and
conversion of Options that have vested or will vest within
60 days of the record date (less than 1.0% of the common
stock).
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(7)
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Consists of 2,516 shares of
common stock owned and 4,632 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).
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(8)
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|
Consists of 10,000 shares of
common stock owned and 5,535 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).
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(9)
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Consists solely of shares of common
stock owned (less than 1.0% of the common stock).
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(10)
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|
Consists of 50,000 shares of
common stock owned and 4,633 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).
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(11)
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|
Consists of 12,645 shares of
common stock owned and 3,808 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).
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(12)
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Consists solely 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).
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(13)
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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 85.9% 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
|
6
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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.
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(14)
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Pursuant to Schedule 13G/A
filed on February 14, 2008. Consists solely of shares of
common stock owned (8.5% of the common stock). Of the shares set
forth in the table, 2,429,561 shares are held by indirect
subsidiaries of ING Groep N.V. in their role as discretionary
manager of client portfolios and 8,000 shares are held by
indirect subsidiaries of ING Groep N.V. in their role as trustee.
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(15)
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Pursuant to Schedule 13G/A
filed on February 12, 2008. Consists solely of shares of
common stock owned (6.8% of the common stock). The entity has
sole power to vote 19,203 shares and sole power to dispose
of 3,585,272 shares.
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(16)
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Consists of an aggregate of
(i) 892,761 shares of common stock owned and
496,022 shares of common stock that such persons have the
right to receive upon the exercise and conversion of Options
that have vested or will vest within 60 days of the record
date, and 19,451 shares of common stock subject to issuance
under the Non-Employee Directors Deferred Compensation
Plan (in the aggregate, 2.6% 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, 8.1% of the Series B
Preferred Stock).
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See note 8 for Series G
Preferred Stock beneficially owned by Mr. Chazen and his
wife and children.
|
7
Proposal 1
Election of Directors
The Board currently consists of nine members serving three-year
staggered terms. Three directors are to be elected at the annual
meeting to serve until the annual meeting of shareholders in
2011. In addition, one director is to be elected at the annual
meeting to serve until the annual meeting of shareholders in
2010. The Board recommends that the shareholders vote
FOR each of the four directors listed below that
stand for election.
Robert S. Taubman, Lisa A. Payne and William U. Parfet have
consented to serve a three-year term, and Ronald W. Tysoe has
consented to serve a two-year term. Mr. Tysoe was appointed
to the Board in December 2007 to fill the existing vacancy in
the class of directors whose term will expire in 2010, and the
Board determined that he stand for election at the 2008 annual
meeting. If any 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 currently consists of nine members serving three-year
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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Robert S. Taubman (1)
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54
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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 (1)
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49
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Vice Chairman, Chief Financial Officer and Director
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2008
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William U. Parfet (1)
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61
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Director
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2008
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Graham T. Allison
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68
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Director
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2009
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Peter Karmanos, Jr.
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65
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Director
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2009
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William S. Taubman
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49
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Chief Operating Officer and Director
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2009
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Ronald W. Tysoe (2)
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55
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Director
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2010
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Jerome A. Chazen
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81
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Director
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2010
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Craig M. Hatkoff
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54
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Director
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2010
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Esther R. Blum
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53
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Senior Vice President, Controller and Chief Accounting Officer
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Stephen J. Kieras
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54
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Senior Vice President, Development of The Taubman Company LLC
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David T. Weinert
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48
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Senior Vice President, Leasing of The Taubman Company LLC
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Robert R. Reese
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44
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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.
(2) Standing for election to a
two-year term.
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
8
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 pre-clinical toxicology research laboratory. He
joined MPI Research in November 1995 as co-Chairman. 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. Mr. Parfet
currently serves on the boards of Monsanto Company (Audit,
People and Compensation, and Executive Committees) and Stryker
Corporation (Audit, Compensation, Executive, Investment and
Finance Committees). 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 the Nauticus Funds, the Loomis Sayles Funds and the
Hansburger Funds 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.
Ronald W. Tysoe was a Senior Advisor at Perella Weinberg
Partners LP, a boutique investment banking firm in New York from
October 2006 through September 2007. Prior to that he was Vice
Chairman, Finance and Real Estate, of Federated Department
Stores, Inc., a position he held since April of 1990.
Mr. Tysoe served as Chief Financial Officer of Federated
from 1990 to 1997 and served on the Federated Board of Directors
from 1988 until May of 2005. Mr. Tysoe is a member of the
Board of Directors of the E.W. Scripps Company, a media and
broadcasting enterprise and serves as Chairman of the Audit
Committee and is a member of the Compensation Committee.
Mr. Tysoe is also a member of the Board of Directors of
Canadian Imperial Bank of Commerce and serves on the Audit
Committee. In addition, Mr. Tysoe is a director and member
of the Audit Committee of NRDC Acquisition Corp., a recently
formed special purpose acquisition corporation listed on the
Amex exchange. Further, Mr. Tysoe is a director of Cintas
Corporation and is a member of its Corporate Governance and
Nominating Committee. Mr. Tysoe has been very active in the
Cincinnati community over the last 15 years, serving as a
trustee of The Cincinnati Zoo, The Cincinnati Museum Center and
Cincinnati Country Day School, where he also served as President
of the Board of Trustees for a number of years. Mr. Tysoe
has been a director of the Company since 2007.
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.
Mr. Chazen is a director of New Motion, Inc. and is a
member of its Audit Committee and Compensation Committee. 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.
9
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 to 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 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.
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.
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
Meetings. In 2007, the Board held eight
meetings. During 2007, all directors, except Mr. Karmanos,
attended at least 75%, in aggregate, of the meetings of the
Board 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 on the date of the
annual meeting of shareholders. All members of the Board as of
the 2007 annual meeting attended such meeting, except
Mr. Karmanos. 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. Each meeting,
the position of presiding director is rotated in alphabetical
order among the non-management directors. For more information
regarding the Board 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
Communication with the Board.
Director Independence. The Board has
determined, after considering all of the relevant facts and
circumstances, that Messrs. Allison, Chazen, Hatkoff,
Karmanos, Parfet and Tysoe 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
10
Committee independence standards established by the SEC and
NYSE. The Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee are composed
entirely of independent directors.
Committees
of the Board
The Board has delegated various responsibilities and authority
to Board committees. Each committee reports on its activities to
the full Board and each committee, except the Executive
Committee, has regularly scheduled meetings. Each committee,
other than the Executive Committee, operates under a written
charter approved by the Board, which is reviewed annually by the
respective committees and the Board and is available on the
Companys website, www.taubman.com, in the Corporate
Governance subsection of the Investor Relations page (the
Corporate Governance Subsection). The table below
sets forth the current membership of the four standing
committees of the Board and the number of meetings and written
consents in 2007 of such committees (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
|
|
Executive
|
|
Graham T. Allison
|
|
|
|
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X
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X
|
Jerome A. Chazen
|
|
Chair
|
|
X
|
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|
Craig M. Hatkoff(2)
|
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Chair
|
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X
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Peter Karmanos, Jr.
|
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X
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William U. Parfet
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X
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X
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Lisa A. Payne
|
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|
Robert S. Taubman
|
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Chair
|
William S. Taubman
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Ronald W. Tysoe(2)
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X
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X
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Meetings
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|
11
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4
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3
|
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1
|
Action by Unanimous Written Consent
|
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1
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(1)
|
Allan J. Bloostein was the Chair of
the Nominating and Corporate Governance Committee and a member
of the Executive Committee in 2007 until his death on
February 8, 2007. The Board has not appointed a new Chair
to the Nominating and Corporate Governance Committee.
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(2)
|
Upon the appointment of
Mr. Tysoe to the Board on December 17, 2007, the Board
determined to reallocate members of the Board committees.
Mr. Tysoe was appointed to the Audit Committee, and
Mr. Hatkoff was moved from the Audit Committee to the
Nominating and Corporate Governance Committee. Mr. Tysoe
was appointed to the Executive Committee in 2008.
|
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 for additional information on the
responsibilities and activities of the Audit Committee.
The Board has determined that each Audit Committee member has
sufficient knowledge in reading and understanding financial
statements to serve thereon and is otherwise financially
literate. The Board has further determined that Mr. Parfet
and Mr. Tysoe each qualify as an audit committee
financial expert within the meaning of SEC regulations and
that each of them has the accounting and related financial
management expertise required by the NYSE listing standards. The
designation of audit committee financial experts do
not impose upon such persons any duties, obligations or
liabilities that are greater than are generally imposed on each
of them as members of the Audit Committee and the Board, and
such designation does not affect the duties, obligations or
liabilities of any other member of the Audit Committee or the
Board.
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 for additional
information on the responsibilities and activities of the
Compensation Committee.
11
Executive Committee. The Executive
Committee has the authority to exercise many of the functions of
the full Board 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 conducting the selection and nomination process, 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. If a vacancy on the Board occurs, the Nominating
and Corporate Governance Committee will actively seek
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. Upon Mr. Bloosteins death
in February 2007, the Nominating and Corporate Governance
Committee determined to rely initially on referrals from the
Companys current directors and management in filling such
vacancy. The committee spent significant time in 2007 evaluating
numerous candidates before determining to appoint Mr. Tysoe
in December 2007. Mr. Robert Taubman had introduced
Mr. Tysoe to the committee based upon the recommendations
of various industry acquaintances.
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 that it uses to evaluate other nominees. The Company
did not receive any timely nominations of directors by
shareholders for the 2008 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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12
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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.
Director
Compensation
In 2007 and prior years, the Nominating and Corporate Governance
Committee was responsible for reviewing director compensation
and making recommendations to the Board, the body responsible
for approving director compensation. Beginning in 2008, the
Compensation Committee will be responsible for such matters. The
Compensation Committee intends to bi-annually review director
compensation and make recommendations to the Board as
appropriate. Director compensation consists of a mix of cash and
equity, with 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 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.
2007 Revisions to Compensation
Program. In December 2006, the Nominating and
Corporate Governance Committee utilized Towers Perrin, a third
party consultant also used by the Compensation Committee, to
analyze non-employee director compensation. Towers Perrins
analysis focused on proxy statement data of two comparator
groups: (a) a primary comparator group of 18 real estate
investment trusts (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 Perrins analysis of
the two comparator groups noted that the total compensation paid
to the Companys non-employee directors was below the
market median, primarily resulting from relatively 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
3,307 shares of the Companys common stock, which
corresponds to $175,000 (five times the annual cash retainer,
excluding the additional cash retainer for committee chairs)
divided by $52.92 (the Companys average closing stock
price over the 90 trading days prior to March 7, 2007, the
date of Board approval). Directors have a five-year period to
comply with the guidelines.
2007 Non-Employee Director
Compensation. The following table sets forth
the compensation program for non-employee directors in 2007:
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Annual cash retainer:
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Audit Committee chair
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$
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47,500
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Compensation Committee chair
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42,500
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Nominating and Corporate Governance chair
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40,000
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Other directors
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35,000
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Annual equity retainer (fair market cash value)
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50,000
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Attendance fees per Board or Committee meeting
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1,500
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In respect of the annual equity retainer, non-employee directors
receive shares of common stock having a fair market value of
$12,500 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.
13
In accordance with the Taubman Centers, Inc. Non-Employee
Directors Deferred Compensation Plan, non-employee
directors may defer the receipt of all or a portion of the cash
retainer and equity retainer until the earlier of the
termination of Board service or upon a change of control. The
deferred compensation is denominated in restricted stock units,
and the number of restricted stock units received equals the
deferred retainer fee divided by the fair market value of the
Companys common stock on the business day immediately
before the date the director would have been otherwise entitled
to receive the retainer fee. During the deferral period, the
directors deferral accounts are credited with dividend
equivalents on their deferred restricted stock units
(corresponding to cash dividends paid on the Companys
common stock), payable in additional restricted stock units
based on the fair market value of the Companys common
stock on the business day immediately before the record date of
the applicable dividend payment. Each directors deferral
account is 100% vested. The restricted stock units are converted
into the Companys common stock at the end of the deferral
period for distribution.
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.
2007 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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53,000
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$
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50,000
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$
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103,000
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Allan J. Bloostein (4)
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10,000
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12,500
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22,500
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Jerome A. Chazen
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82,000
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50,000
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132,000
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Craig M. Hatkoff
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77,136
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49,864
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127,000
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Peter Karmanos, Jr.
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45,500
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50,000
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95,500
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William U. Parfet
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66,500
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50,000
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116,500
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Ronald W. Tysoe (5)
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Total
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$
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334,136
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$
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262,364
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$
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596,500
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(1)
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Represents amounts earned in cash
in 2007 with respect to the annual cash retainer, 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 2007, the following directors
elected to defer fully the receipt of their cash retainer and
equity retainer under the Taubman Centers, Inc. Non-Employee
Directors Deferred Compensation Plan:
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Restricted Stock
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Units Credited
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2007 Deferrals
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(excl. dividend
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($)
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equivalents)
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Graham T. Allison
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85,000
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1,601
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Jerome A. Chazen
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97,500
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1,836
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Peter Karmanos, Jr.
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85,000
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1,601
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William U. Parfet
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85,000
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1,601
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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 2007. 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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(5)
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Appointed December 17, 2007.
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Corporate
Governance
The Board 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
14
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. See Related Person
Transactions for additional information on the
Boards policies and procedures regarding related person
transactions.
The Company is required to comply with the NYSE listing
standards applicable to corporate governance and on June 8,
2007, the Company timely submitted to the NYSE the annual CEO
certification, pursuant to Section 303A.12 of the
NYSEs listing standards, whereby 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, 2007, respectively, and its Annual Report on
Form 10-K
for the year ended December 31, 2007, 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, Bloomfield Hills, Michigan
48304-2324.
Communication
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, Bloomfield
Hills, Michigan
48304-2324.
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
approximately 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.
The Compensation Committee (referred to as the
Committee in this section), composed entirely of
independent directors, administers the executive compensation
program of the Company. The Committees responsibilities
include recommending and 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, including the Chief Executive
Officer, the Chief Financial Officer and the other executive
officers named in the Summary Compensation Table (the
named executive officers). This section of the proxy
statement explains how the Companys compensation programs
are designed and operate in practice with respect to the named
executive officers.
Compensation
Philosophy for Named Executive Officers
The Companys compensation program for named executive
officers generally consists of base salary, annual cash bonus,
long-term share-based incentive awards and certain other
benefits. The Company also provides certain deferred
compensation and severance 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 compensation program is designed to:
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provide total compensation that is both fair and competitive;
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attract, retain and motivate key executives who are critical to
the Companys operations;
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increase the proportion of at-risk pay as an
employees level of responsibility increases, while
rewarding superior individual and Company performance on both a
short-term and long-term basis; and
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align executives long-term interests with those of
shareholders.
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The Committee seeks to ensure the foregoing objectives by
targeting the midpoint of the applicable peer group with respect
to base salary, while maintaining above-median targets for
performance incentives. The Committee uses market data as a
guideline, and also considers Company performance, internal pay
equity, individual performance reviews, hiring and retention
needs and other external market pressures in finalizing its
compensation determinations.
16
Determining
Compensation for Named Executive Officers
The timing of the Committees compensation determinations
for named executive officers is generally as set forth below.
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Element of
Compensation
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Meeting Date/Review and
Approval Steps
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Base salary
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First quarter of applicable year
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Approve
base salary
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Annual bonus plan
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Fourth quarter of prior year
Approve
preliminary financial performance goals of Company and cash
bonus payment formula
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First quarter of applicable year
Approve
cash bonus targets (as percentage of base salary)
Approve
revised financial performance goals, and a revised cash bonus
payment formula, based on final results of prior year
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Fourth quarter of applicable year
Review
preliminary achievement of financial performance goals and
approve any permitted adjustments
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First quarter of following year
Review
and approve achievement of financial performance goals and
approve any permitted adjustments
Allocate
aggregate cash bonus pool of senior management among members of
senior management based on subjective factors
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Long-term incentive program
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Fourth quarter of prior year
Approve
strategic and preliminary financial performance goals of
Company
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First quarter of applicable year
Approve
revised financial performance goals based on final results of
prior year
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First quarter of following year
Approve
overall evaluation of Company performance based on strategic and
financial performance goals
Approve
performance incentive pool based on evaluation of Company
performance and approve participation pool
Approve
grant of restricted stock units and Options based on
participation and performance pools
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The Committee also reviews and proposes changes to
post-termination benefits, perquisites and other compensation
matters as it deems appropriate.
Management and Other Employees. The
Committee customarily takes significant direction from the
recommendations of Mr. Robert S. Taubman, the
Companys Chairman, President and Chief Executive Officer,
and other members of management as appropriate, as it believes
they have the best understanding of the overall effectiveness of
the management team and of each persons individual
contribution to the Companys performance. For each named
executive officer, the Committee is provided a compensation
recommendation as well as information regarding the
individuals experience, current performance, potential for
advancement and other subjective factors. The Committee retains
the discretion to modify the recommendations of management and
reviews such recommendations for their reasonableness based on
the Committees compensation philosophy and related
considerations.
17
The Company and the Committee together set the meeting dates and
agendas for Committee meetings, and Mr. Robert Taubman is
invited regularly to attend such meetings. 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 Companys legal advisors, human resources
department and corporate accounting department support the
Committee in its work in developing and administering the
Companys compensation plans and programs.
Third-Party Consultants. In 2007, the
Committee engaged Towers Perrin to advise the Committee of
best practices and market trends in compensation,
assess the Companys competitive position regarding
compensation and assist in the implementation of the
Committees compensation philosophy. The Committee has the
sole authority to retain and terminate any consultant and the
sole authority to approve the engagement fees and other
retention terms. In practice, the Committee works with
management to determine the consultants responsibilities
and direct its work product. Towers Perrin received $110,208
from the Company for its services to the Committee in 2007. In
addition, Towers Perrin advises management of the Company on
other compensation issues and received $126,507 from the Company
for such work in 2007. A representative of Towers Perrin
attended three of the four Committee meetings in 2007.
The Committee receives a report on market competitiveness from
Towers Perrin on at least a bi-annual basis and reviews the peer
groups as appropriate to ensure that they are the appropriate
benchmarks. The Committee determined that it would not
materially change its compensation program for named executive
officers in 2007 and therefore concluded that an update of
Towers Perrins 2006 market data was not necessary. Set
forth below is a summary of the 2006 market data.
In 2006, with respect to 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 regional mall REIT peer group was comprised of seven
companies, which the Committee believed was the Companys
primary comparator group as of such date: 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 2007 for Named Executive Officers
The primary elements of compensation to the named executive
officers in 2007 were base salary, annual cash bonus, and
long-term share-based incentive awards (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.
18
The Committee generally focuses on target total direct
compensation (target TDC), which consists of base
salary, target annual cash bonus and target long-term
share-based incentive awards, in determining compensation
changes for named executive officers from year to year.
Summary
The Committee determined to have modest increases in target TDC
to named executive officers in 2007, following an aggregate
increase of 11% in target TDC in 2006. The Committee concluded
that the target TDC increases in 2006 sufficiently addressed the
need to increase at-risk pay, improve internal pay equity,
improve its competitive pay program and otherwise tailor the
compensation program to meet the Companys compensation
objectives. In 2007, the Committee determined to increase the
base salary and target cash bonus by 4.25%, which was consistent
with the overall average wage increase provided to the
Companys other employees. The target value of long-term
share-based incentive awards did not change from 2006.
The Committee also believes that the target TDC in 2007 is fair
and reasonable in light of the Companys financial
performance, which has been reflected in the Companys
stock price. With a flat total return in 2007, the Company
continued to have the best stock performance of any mall REIT
and was in the top 15 percent of more than 120
U.S. REITs, and it has achieved a compound annual average
total return to shareholders of 21.0% over the last
10 years. Further, in 2007, the Companys properties
achieved record, industry-leading average tenant sales per
square foot of $555 for comparable centers, and the Company
increased its common dividend by 11 percent (the twelfth
consecutive annual dividend increase).
The following table sets forth the target TDC approved for the
named executive officers in 2007. The TDC paid or earned in 2007
by named executive officers exceeded target TDC to the extent
the Companys
and/or
individuals performance exceeded applicable goals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Internal Pay Equity
|
|
Name
|
|
2007 Target TDC
|
|
|
(% of CEO Target TDC)
|
|
|
Robert S. Taubman
|
|
$
|
2,685,844
|
|
|
|
|
|
Lisa A. Payne
|
|
|
1,753,066
|
|
|
|
65
|
|
William S. Taubman
|
|
|
1,710,063
|
|
|
|
64
|
|
David T. Weinert
|
|
|
1,002,044
|
|
|
|
37
|
|
Stephen J. Kieras
|
|
|
841,840
|
|
|
|
31
|
|
Base
Salary
General. The Committee believes that
base salary is a primary factor in retaining and attracting key
employees in a competitive marketplace. 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.
2007 Analysis. As noted previously, the
Committee determined to increase base salaries by 4.25%, which
was consistent with the overall average wage increase provided
to the Companys other employees.
The following table sets forth the base salaries approved for
the named executive officers in 2006 and 2007.
|
|
|
|
|
|
|
|
|
Name
|
|
2006 Base Salary
|
|
|
2007 Base Salary
|
|
|
Robert S. Taubman
|
|
$
|
650,000
|
|
|
$
|
677,625
|
|
Lisa A. Payne
|
|
|
525,000
|
|
|
|
547,313
|
|
William S. Taubman
|
|
|
500,000
|
|
|
|
521,250
|
|
David T. Weinert
|
|
|
350,000
|
|
|
|
364,875
|
|
Stephen J. Kieras
|
|
|
315,000
|
|
|
|
328,388
|
|
19
Annual
Bonus Plan
General. The Committee believes the
Companys annual bonus plan 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 bonus plan is predicated on the Companys
satisfaction of two annual performance measures: growth in funds
from operations (FFO) per diluted share and
comparable center net operating income (Comp Center
NOI). Target FFO per diluted share and Comp Center NOI 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 adjust
reported financial measures for unusual or nonrecurring items
that impact the 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,
including for write-offs related to financings.
Upon the Committees approval of any adjustments to actual
FFO per diluted share and Comp Center NOI for purposes of
determining the cash bonus pool, the Committees
pre-approved payment formula determines the size of the actual
cash bonus pool as a percentage of the target pool, ranging from
0% to 200%. Actual cash bonuses earned by each member of senior
management are determined by the Committee upon its allocation
of the aggregate, actual cash bonus pool of senior management
based on individual performance reviews (with significant input
from the CEO).
In 2005, 2006 and 2007, the actual cash bonus pool was 162.5%,
185% and 155%, respectively, of the target cash bonus pool,
reflecting the Companys above target performance results.
Generally, the Committee approves minimum, target and maximum
levels such that the relative difficulty of achieving the target
cash 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.
2007 Analysis. As noted previously, the
Committee determined to increase target cash bonus by 4.25%,
which was consistent with the overall average wage increase
provided to the Companys other employees.
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Annual Target
|
|
|
2007 Annual Target
|
|
|
% of 2007
|
|
Name
|
|
Bonus (100%)
|
|
|
Bonus (100%)
|
|
|
Base Salary
|
|
|
Robert S. Taubman
|
|
$
|
487,500
|
|
|
$
|
508,219
|
|
|
|
75
|
%
|
Lisa A. Payne
|
|
|
341,250
|
|
|
|
355,753
|
|
|
|
65
|
|
William S. Taubman
|
|
|
325,000
|
|
|
|
338,813
|
|
|
|
65
|
|
David T. Weinert
|
|
|
227,500
|
|
|
|
237,169
|
|
|
|
65
|
|
Stephen J. Kieras
|
|
|
204,750
|
|
|
|
213,452
|
|
|
|
65
|
|
The Committee increased 2007 target FFO per diluted share and
modestly decreased Comp Center NOI in the first quarter of 2007
from amounts initially established in the fourth quarter of 2006
to account for better than expected financial results in 2006,
revised assumptions for Taubman Asia and improved center
operations. The Committee determined in the first quarter of
2008 that no adjustments to 2007 actual FFO per diluted share
and Comp Center NOI were appropriate for purposes of determining
the cash bonus pool, with the resulting aggregate annual cash
bonus pool of 155% of the target cash bonus pool based on the
pre-determined payment formula. The Committee divided up the
actual cash bonus pool for senior management based on individual
performance reviews (with significant input from the CEO), and
such determinations are reflected in the Non-Equity
Incentive Plan Compensation column of the Summary
Compensation Table.
Long-Term
Share-Based IncentivesOptions and Restricted Stock
Units
General. The Committee believes the
Companys share-based incentive 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.
Awards under the long-term incentive program are based on two
components, (1) a static dollar pool that generally varies
only due to new hires, terminations and promotions (the
participation pool), and (2) a dollar pool that
is based on the Committees review of the Companys
performance against pre-established financial and strategic
performance goals (the performance pool). Generally,
as is the case with the annual bonus plan, the Committee
utilizes its discretion as appropriate to adjust reported
financial measures for unusual or nonrecurring matters that
impact the results in a given year
and/or that
were not contemplated when the original targets were set. The
performance pool historically has ranged from 75% to 125% of the
participation pool, with a target of 100%.
The dollar value of the combined 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 Taubman Company 2005 Long-Term Incentive Plan
(2005 RSU Plan)) and one-third in nonqualified
Options (under the 1992 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 Option grants unless the value of
the Companys common stock increases following the grant.
The number of restricted stock units awarded by the Committee is
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 the two days prior, and (b) three years of dividends
assuming a fixed percentage of compounded growth rate. 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. The Committee generally anticipates granting
awards with vesting on or around the third anniversary of the
grant date.
The number of Options awarded by the Committee is determined by
dividing the dollar value of the 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. Each Option represents the right to receive one unit
of TRG upon vesting and payment of the exercise price. The
Committee generally intends to grant Options that vest in equal
installments on approximately the first, second and third
anniversaries of the grant date. Upon exercise, all employees,
other than Messrs. Robert S. Taubman and William S.
Taubman, are required to exchange each underlying unit for one
share of the Companys common stock under the
Companys Continuing Offer.
21
In 2006, 2007 and 2008 (relating to the prior years
performance), the Committee approved a performance pool of 125%,
125% and 120%, respectively, of the participation pool,
reflecting the Companys above target performance results.
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.
Awards Granted in First Quarter of 2007 for 2006
Performance Measures. Financial objectives in
2006 were FFO per diluted share, Comp Center NOI growth, and
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.). Strategic
initiatives in 2006 were to implement and utilize tenant net
revenue analyses, implement and utilize leasing and store
opening strategies, review and analyze the Companys
business strategy and strategic goals and develop a scorecard to
track such performance, design and test center-specific business
planning processes, and review and test key elements of the
Companys development strategy.
In 2006, the Committee determined it was necessary to increase
at-risk pay and improve its competitive pay program, and
therefore determined to increase the target participation pool
and performance pool by 12.7% for the named executive officers
in 2006, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Target
|
|
|
2006 Target
|
|
|
|
|
Name
|
|
RSU Award
|
|
|
RSU 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
|
|
Due to the Companys robust performance in respect of its
financial and strategic objectives in 2006, the Committee
established the 2006 performance pool at 125% of the
participation pool, the high end of the pools historical
range. The amounts expensed in the Companys financial
statements for the awards made in 2007 are set forth in the
Summary Compensation Table. Additional information
regarding the awards is reflected in the Grants of
Plan-Based Awards in 2007 table.
Awards Granted in First Quarter of 2008 for 2007
Performance Measures. Financial objectives in
2007 were FFO per diluted share, Comp Center NOI growth, and
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.). Strategic
initiatives in 2007 were to continue implementation and
utilization of tenant net revenue analyses, continue
implementation and utilization of leasing and store opening
strategies, design and test center review processes, and
implement the Companys revised development strategy.
Based on the reasons noted above, the Committee determined not
to change the target participation pool and performance pool in
2007.
|
|
|
|
|
|
|
2007 Target
|
|
Name
|
|
RSU Award
|
|
|
Robert S. Taubman
|
|
$
|
1,500,000
|
|
Lisa A. Payne
|
|
|
850,000
|
|
William S. Taubman
|
|
|
850,000
|
|
David T. Weinert
|
|
|
400,000
|
|
Stephen J. Kieras
|
|
|
300,000
|
|
Due to the Companys strong performance in respect of its
financial and strategic objectives in 2007, the Committee
established the 2007 performance pool at 120% of the
participation pool. The amounts expensed in the Companys
financial statements and additional information regarding the
awards made in 2008 will be set forth in the executive
compensation tables in the 2009 proxy statement.
Adjustment to Total Shareholder Return Performance Measure
for 2005 Options. In March 2005, the
Committee approved Option grants to Ms. Payne and
Messrs. Weinert and Kieras, and other members of senior
22
management, which vest in three equal installments based on
relative total shareholder return (stock price plus value of
reinvested dividends, TSR) at three, five and seven
year measurement periods, respectively. The peer group
originally consisted of seven companies and satisfaction of the
performance goal required the Companys TSR to be at least
the median TSR for the peer group at the applicable measurement
date. In March 2007, Simon Property Group acquired The Mills
Corporation, which was one of the peer group companies. The
Committee determined to keep Mills in the index by taking the
undisturbed stock price of Mills and indexing it forward based
on the average TSR of the remaining peer group companies.
2008 Omnibus Plan. See
Proposal 3Approval of 2008 Omnibus Long-Term
Incentive Plan for a description of the Companys new
proposed share-based plan. The 2008 Omnibus Plan would permit
the Company to make grants from one plan, with uniform terms and
conditions, and with updated provisions to ensure compliance
with existing laws and best market practices. Further, it would
provide flexibility to grant new award vehicles, rebalance the
number of shares between Options and full value shares and
extend the number of years of grants available under the
Companys share-based plans.
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
$52.92, which represents the Companys average closing
stock price over the 90 trading days prior to March 7,
2007, the date of Board approval. Covered employees have a
five-year period to comply with the guidelines. At the end of
the five-year period, if a covered employee does not hold the
requisite amount of shares, then the Company will pay 50% of
such persons annual cash bonus in restricted stock units
until the minimum threshold is reached. The Committee will
review the minimum equity holding level and other market trends
and practices on a periodic basis. The Committee has confirmed
that all covered employees have met or are making significant
progress toward their milestone guidelines.
Timing and Pricing of Share-Based
Grants. The Company does not coordinate the
timing of share-based grants with the release of material
non-public information. The Committee generally establishes
dates for regularly scheduled meetings at least a year in
advance, and share-based grants for executive officers and other
employees generally are granted at the regular Committee
meetings in the first
and/or
second quarter each year.
In accordance with the 1992 Option Plan, the exercise price of
an 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 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.
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.
Deferred
Compensation Arrangements
The Committee believes nonqualified deferred compensation
arrangements are a useful tool to assist in tax planning and
ensure retirement income for its named executive officers.
Existing deferred compensation
23
arrangements do not provide for above-market or preferential
earnings as defined under SEC regulations. The Company did not
enter into any new nonqualified deferred compensation
arrangements with its named executive officers in 2007. See
Nonqualified Deferred Compensation in 2007 for
information regarding the Companys nonqualified deferred
compensation arrangements existing in 2007, as well as
contributions, earnings and withdrawals in 2007 and aggregate
balances as of December 31, 2007.
Customary
Benefits to All Salaried Employees
The Company also provides customary benefits such as medical,
dental, life insurance and disability coverage to each named
executive officer, which are also provided to all other eligible
employees. The Company also provides paid time off to all
employees, including the named executive officers, which are
comparable to those provided at similar companies.
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 the Companys compensation
plans and arrangements 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. 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 and would be
instrumental in the success of the Company in the event of any
future hostile takeover bid. 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. Further, 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 companies.
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 share-based performance awards
into awards of the surviving company. Another fundamental
feature of these agreements is the provision of a full
tax-gross
up, which reinforces the purpose of such agreements, on benefits
that exceed limits set forth in Section 280G of the IRC by
110%. This conditional
gross-up
ensures excise tax
gross-ups
are only provided if the amount is at least 110% above the 280G
limit, and if so, results in the full payout to applicable
employees.
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, including upon the Companys
termination of her employment without cause. This employment
agreement was entered into in order to recruit Ms. Payne in
a competitive market for her services, and the Committee
continues to believe the potential severance benefits are
consistent with its original objectives and are within current
market practices. All other named executive officers are at-will
employees of the Company.
Policy
Regarding Retroactive Adjustments
The Committee does not have a formal policy regarding whether
the Committee will make retroactive adjustments to, or attempt
to recover, cash or share-based incentive compensation granted
or paid to executive officers in which the payment was
predicated upon the achievement of certain financial results
that are subsequently
24
the subject of a restatement. The Committee may seek to recover
any amount determined to have been inappropriately received by
the individual executive to the extent permitted by applicable
law.
Accounting
and Tax Considerations
Deductibility of Executive
Compensation. 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 three 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.
Nonqualified Deferred
Compensation. Section 409A of the Code
provides that amounts deferred under nonqualified deferred
compensation arrangements will be included in an employees
income when vested unless certain conditions are met. If the
certain conditions are not satisfied, amounts subject to such
arrangements will be immediately taxable and employees will be
subject to income tax penalties and interest to the extent such
taxes were not timely paid. All of the Companys employment
and severance arrangements and benefit plans are or will be
intended to meet the requirements of Section 409A to allow
for deferral without immediate taxation, penalty or interest.
Change in Control Payments, Section 280G of
the IRC disallows a companys tax deduction for
excess parachute payments, generally defined as
payments to specified persons that are contingent upon a change
of control in an amount equal to or greater than three times the
persons base amount (the five-year average of
Form W-2
compensation). Additionally, IRC Section 4999 imposes a 20%
excise tax on any person who receives excess parachute payments.
The Companys share-based plans entitle participants to
payments in connection with a change in control that may result
in excess parachute payments. Further, Ms. Payne and
Messrs. Weinert and Kieras have employment agreements
and/or
change in control agreements which entitle them to payments upon
termination of their employment following a change in control of
the Company that may qualify as excess parachute payments. As
noted earlier, the change in control agreements provide a full
tax-gross up
on benefits that exceed limits set forth in Section 280G of
the IRC by 110%.
Accounting for Share-Based
Compensation. 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 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.
25
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, 2007 and the proxy
statement for the 2008 annual meeting of shareholders.
The Compensation Committee
Craig M. Hatkoff, Chairman
Jerome A. Chazen
Peter Karmanos, Jr.
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
2007, 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 Board or
Compensation Committee.
26
Executive
Compensation Tables
Summary
Compensation Table
The table below summarizes the total compensation paid or earned
by each of the named executive officers in 2007 and 2006.
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Non-Equity
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Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
Name and
|
|
|
|
|
Salary
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Taubman
|
|
|
2007
|
|
|
$
|
670,719
|
|
|
$
|
911,755
|
|
|
$
|
655,581
|
|
|
$
|
686,095
|
|
|
$
|
27,075
|
|
|
$
|
2,951,225
|
|
Chairman, President and
|
|
|
2006
|
|
|
|
688,462
|
|
|
|
570,681
|
|
|
|
497,937
|
|
|
|
2,104,609
|
|
|
|
26,204
|
|
|
|
3,887,893
|
|
CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
2007
|
|
|
|
541,306
|
|
|
|
514,708
|
|
|
|
446,935
|
|
|
|
551,418
|
|
|
|
27,075
|
|
|
|
2,081,442
|
|
Vice Chairman and CFO
|
|
|
2006
|
|
|
|
518,269
|
|
|
|
316,935
|
|
|
|
354,425
|
|
|
|
1,341,313
|
|
|
|
26,204
|
|
|
|
2,557,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
|
2007
|
|
|
|
515,529
|
|
|
|
505,048
|
|
|
|
372,593
|
|
|
|
508,219
|
|
|
|
27,075
|
|
|
|
1,928,464
|
|
Chief Operating Officer
|
|
|
2006
|
|
|
|
496,635
|
|
|
|
307,275
|
|
|
|
277,149
|
|
|
|
1,345,000
|
|
|
|
26,204
|
|
|
|
2,452,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
2007
|
|
|
|
360,870
|
|
|
|
211,764
|
|
|
|
229,138
|
|
|
|
438,762
|
|
|
|
27,075
|
|
|
|
1,267,609
|
|
Senior Vice President,
|
|
|
2006
|
|
|
|
336,538
|
|
|
|
113,166
|
|
|
|
172,039
|
|
|
|
586,875
|
|
|
|
26,204
|
|
|
|
1,234,822
|
|
Leasing (Manager)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
|
2007
|
|
|
|
324,784
|
|
|
|
166,587
|
|
|
|
187,207
|
|
|
|
298,833
|
|
|
|
26,503
|
|
|
|
1,003,914
|
|
Senior Vice President,
|
|
|
2006
|
|
|
|
305,577
|
|
|
|
94,739
|
|
|
|
148,485
|
|
|
|
518,313
|
|
|
|
25,358
|
|
|
|
1,092,472
|
|
Development (Manager)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
All awards in this column relate to
restricted stock units granted under the 2005 RSU 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 the applicable year 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 the applicable year. The amortization
period for awards included in this column are:
|
|
|
|
|
|
Award Date
|
|
Amortization Period (months)
|
|
|
May 2005
|
|
|
38
|
|
March 2006
|
|
|
36
|
|
May 2006
|
|
|
34
|
|
March 2007
|
|
|
36
|
|
|
|
|
|
|
Generally, amortization begins in
the month of the award date. Valuation assumptions used in
determining these amounts are included in note 14 of the
Companys audited financial statements included in the
Companys annual report on
Form 10-K
for the year ended December 31, 2007 (the 2007
10-K).
|
27
|
|
|
|
|
The following table includes the
compensation expense reported for restricted stock units in 2007
and 2006 on a grant-date by grant-date basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Expense
|
|
|
2006 Expense
|
|
Name
|
|
Grant Date
|
|
($)
|
|
|
($)
|
|
|
Robert S. Taubman
|
|
May 2005
|
|
|
299,765
|
|
|
|
299,765
|
|
|
|
March 2006
|
|
|
325,099
|
|
|
|
270,916
|
|
|
|
March 2007
|
|
|
286,891
|
|
|
|
| |
|
|
|
|
|
Total
|
|
|
|
|
911,755
|
|
|
|
570,681
|
|
Lisa A. Payne
|
|
May 2005
|
|
|
160,215
|
|
|
|
160,215
|
|
|
|
March 2006
|
|
|
172,654
|
|
|
|
143,878
|
|
|
|
May 2006
|
|
|
19,263
|
|
|
|
12,842
|
|
|
|
March 2007
|
|
|
162,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
514,708
|
|
|
|
316,935
|
|
William S. Taubman
|
|
May 2005
|
|
|
150,555
|
|
|
|
150,555
|
|
|
|
March 2006
|
|
|
172,654
|
|
|
|
143,878
|
|
|
|
May 2006
|
|
|
19,263
|
|
|
|
12,842
|
|
|
|
March 2007
|
|
|
162,576
|
|
|
|
| |
|
|
|
|
|
Total
|
|
|
|
|
505,048
|
|
|
|
307,275
|
|
David T. Weinert
|
|
May 2005
|
|
|
41,211
|
|
|
|
41,211
|
|
|
|
March 2006
|
|
|
55,536
|
|
|
|
46,280
|
|
|
|
May 2006
|
|
|
38,512
|
|
|
|
25,675
|
|
|
|
March 2007
|
|
|
76,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
211,764
|
|
|
|
113,166
|
|
Stephen J. Kieras
|
|
May 2005
|
|
|
39,569
|
|
|
|
39,569
|
|
|
|
March 2006
|
|
|
52,509
|
|
|
|
43,758
|
|
|
|
May 2006
|
|
|
17,118
|
|
|
|
11,412
|
|
|
|
March 2007
|
|
|
57,391
|
|
|
|
| |
|
|
|
|
|
Total
|
|
|
|
|
166,587
|
|
|
|
94,739
|
|
|
|
|
(2)
|
|
All awards in this column relate to
Options granted under the 1992 Option Plan. The amounts reported
reflect the amounts recognized for financial statement reporting
purposes in the applicable year in accordance with
FAS 123(R), and therefore may include amounts from awards
granted in and prior to the applicable year. The amortization
period for awards included in this column are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization Period by Grant Date (months)
|
|
Vesting
|
|
March 2005
|
|
|
May 2005
|
|
|
March 2006
|
|
|
May 2006
|
|
|
March 2007
|
|
|
One-third
|
|
|
36
|
|
|
|
17
|
|
|
|
12
|
|
|
|
10
|
|
|
|
12
|
|
One-third
|
|
|
60
|
|
|
|
29
|
|
|
|
24
|
|
|
|
22
|
|
|
|
24
|
|
One-third
|
|
|
84
|
|
|
|
41
|
|
|
|
36
|
|
|
|
34
|
|
|
|
36
|
|
|
|
|
|
|
Generally, amortization begins in
the month of the award date. Valuation assumptions used in
determining these amounts are included in note 14 of the
Companys audited financial statements included in the 2007
10-K.
|
28
|
|
|
|
|
The following table includes the
compensation expense reported for Options in 2007 and 2006 on a
grant-date by grant-date basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Expense
|
|
|
2006 Expense
|
|
Name
|
|
Grant Date
|
|
($)
|
|
|
($)
|
|
|
Robert S. Taubman
|
|
|
May 2005
|
|
|
|
79,157
|
|
|
|
170,300
|
|
|
|
|
March 2006
|
|
|
|
214,453
|
|
|
|
327,637
|
|
|
|
|
March 2007
|
|
|
|
361,971
|
|
|
|
| |
|
|
|
|
|
Total
|
|
|
|
|
|
|
655,581
|
|
|
|
497,937
|
|
Lisa A. Payne
|
|
|
March 2005
|
|
|
|
71,789
|
|
|
|
71,789
|
|
|
|
|
May 2005
|
|
|
|
42,313
|
|
|
|
91,027
|
|
|
|
|
March 2006
|
|
|
|
113,888
|
|
|
|
173,996
|
|
|
|
|
May 2006
|
|
|
|
13,829
|
|
|
|
17,613
|
|
|
|
|
March 2007
|
|
|
|
205,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
446,935
|
|
|
|
354,425
|
|
William S. Taubman
|
|
|
May 2005
|
|
|
|
39,760
|
|
|
|
85,541
|
|
|
|
|
March 2006
|
|
|
|
113,888
|
|
|
|
173,995
|
|
|
|
|
May 2006
|
|
|
|
13,829
|
|
|
|
17,613
|
|
|
|
|
March 2007
|
|
|
|
205,116
|
|
|
|
| |
|
|
|
|
|
Total
|
|
|
|
|
|
|
372,593
|
|
|
|
277,149
|
|
David T. Weinert
|
|
|
March 2005
|
|
|
|
57,431
|
|
|
|
57,431
|
|
|
|
|
May 2005
|
|
|
|
10,887
|
|
|
|
23,416
|
|
|
|
|
March 2006
|
|
|
|
36,632
|
|
|
|
55,966
|
|
|
|
|
May 2006
|
|
|
|
27,658
|
|
|
|
35,226
|
|
|
|
|
March 2007
|
|
|
|
96,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
229,138
|
|
|
|
172,039
|
|
Stephen J. Kieras
|
|
|
March 2005
|
|
|
|
57,431
|
|
|
|
57,431
|
|
|
|
|
May 2005
|
|
|
|
10,451
|
|
|
|
22,486
|
|
|
|
|
March 2006
|
|
|
|
34,633
|
|
|
|
52,912
|
|
|
|
|
May 2006
|
|
|
|
12,293
|
|
|
|
15,656
|
|
|
|
|
March 2007
|
|
|
|
72,399
|
|
|
|
| |
|
|
|
|
|
Total
|
|
|
|
|
|
|
187,207
|
|
|
|
148,485
|
|
|
|
|
(3)
|
|
The amounts earned in 2007 consist
of payments earned under the 2007 annual bonus plan, which were
approved by the Compensation Committee on February 27, 2008.
|
|
|
|
The amounts earned in 2006 consist
of payments earned (i) under the 2006 annual bonus plan,
which were approved by the Compensation Committee on
March 6, 2007 and (ii) under the TTC Long-Term
Performance Plan (the performance measures for the cash grant in
2004 were satisfied on January 1, 2007). See
Nonqualified Deferred Compensation in 2007 for
additional information on the TTC Long-Term Performance Plan.
|
|
|
|
The following table includes the
amounts earned in 2006 under the two plans:
|
|
|
|
|
|
|
|
|
|
|
|
2006 Annual Bonus Plan
|
|
|
TTC Long-Term Performance Plan
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Robert S. Taubman
|
|
|
804,609
|
|
|
|
1,300,000
|
|
Lisa A. Payne
|
|
|
631,313
|
|
|
|
710,000
|
|
William S. Taubman
|
|
|
650,000
|
|
|
|
695,000
|
|
David T. Weinert
|
|
|
455,000
|
|
|
|
131,875
|
|
Stephen J. Kieras
|
|
|
358,313
|
|
|
|
160,000
|
|
|
|
|
(4)
|
|
Includes $18,300 and $8,775 (or
$8,203 for Mr. Kieras) contributed by the Company to such
persons account in the 401(k) Plan and Supplemental
Retirement Savings Plan, respectively. See Nonqualified
Deferred Compensation in 2007 for additional information
on the Supplemental Retirement Savings Plan.
|
29
Grants
of Plan-Based Awards in 2007
The following table provides information about equity and
non-equity awards granted to the named executive officers in
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Underlying
|
|
|
of Option
|
|
|
Stock and
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
($)
|
|
|
(#)(2)
|
|
|
(#)(3)
|
|
|
($/Sh)
|
|
|
Awards(4)
|
|
|
Robert S. Taubman
|
|
|
N/A
|
|
|
|
|
|
|
$
|
508,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,476
|
|
|
|
|
|
|
|
|
|
|
$
|
1,032,808
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,376
|
|
|
$
|
55.90
|
|
|
|
710,626
|
|
Lisa A. Payne
|
|
|
N/A
|
|
|
|
|
|
|
|
355,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,470
|
|
|
|
|
|
|
|
|
|
|
|
585,273
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,213
|
|
|
|
55.90
|
|
|
|
402,687
|
|
William S. Taubman
|
|
|
N/A
|
|
|
|
|
|
|
|
338,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,470
|
|
|
|
|
|
|
|
|
|
|
|
585,273
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,213
|
|
|
|
55.90
|
|
|
|
402,687
|
|
David T. Weinert
|
|
|
N/A
|
|
|
|
|
|
|
|
237,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,927
|
|
|
|
|
|
|
|
|
|
|
|
275,419
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,101
|
|
|
|
55.90
|
|
|
|
189,509
|
|
Stephen J. Kieras
|
|
|
N/A
|
|
|
|
|
|
|
|
213,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,696
|
|
|
|
|
|
|
|
|
|
|
|
206,606
|
|
|
|
|
03/07/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,076
|
|
|
|
55.90
|
|
|
|
142,135
|
|
|
|
|
(1)
|
|
The amounts in this column relate
to the 2007 annual bonus plan. The aggregate amount payable to
senior management under such plan is up to 200% of the aggregate
target cash 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, 2007 and amounts earned were approved by the
Compensation Committee on February 27, 2008; 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 2005 RSU Plan. All restricted
stock units granted in 2007 provide for vesting on March 1,
2010, subject to the terms of such award. See Compensation
Discussion and AnalysisElements of Compensation in 2007
for Named Executive Officers for a description of the
material terms of the restricted stock units.
|
|
(3)
|
|
All awards in this column relate to
Options granted under the 1992 Option Plan. All Options granted
in 2007 provide for vesting in equal installments on
March 1, 2008, 2009 and 2010, respectively, subject to the
terms of such award. See Compensation Discussion and
AnalysisElements of Compensation in 2007 for Named
Executive Officers for a description of the material terms
of the 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 Option is calculated using
the Black-Scholes model, using assumptions which are included in
note 14 to the Companys audited financial statements
included in the 2007
10-K.
|
|
|
|
Each restricted stock unit granted
on March 7, 2007 had a grant-date fair value of $55.90.
Each Option granted on March 7, 2007 had a grant-date fair
value of $11.77.
|
30
Outstanding
Equity Awards at December 31, 2007
The following table provides information on the current holdings
of Option and stock awards by the named executive officers as of
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
|
of Securities
|
|
|
of Securities
|
|
|
of Securities
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
of Stock
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)(1)
|
|
|
($)(2)
|
|
|
Robert S. Taubman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,941
|
|
|
$
|
3,587,968
|
|
|
|
|
|
|
|
|
60,376(3)
|
|
|
|
|
|
|
$
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
26,575
|
|
|
|
53,148(4)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
66,136
|
|
|
|
33,066(5)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,854
|
|
|
|
2,009,608
|
|
|
|
|
|
|
|
|
34,213(3)
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
1,491
|
|
|
|
2,982(4)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
14,113
|
|
|
|
28,225(4)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
35,346
|
|
|
|
17,673(5)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000(6)
|
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,877
|
|
|
|
1,961,550
|
|
|
|
|
|
|
|
|
34,213(3)
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
1,491
|
|
|
|
2,982(4)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
14,113
|
|
|
|
28,225(4)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
33,218
|
|
|
|
16,607(5)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,931
|
|
|
|
783,646
|
|
|
|
|
|
|
|
|
16,101(3)
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
2,982
|
|
|
|
5,963(4)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
4,540
|
|
|
|
9,078(4)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
9,092
|
|
|
|
4,546(5)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000(6)
|
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,803
|
|
|
|
629,780
|
|
|
|
|
|
|
|
|
12,076(3)
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
1,326
|
|
|
|
2,650(4)
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
4,292
|
|
|
|
8,583(4)
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
|
|
|
|
|
|
|
|
|
8,730
|
|
|
|
4,365(5)
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000(6)
|
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The restricted stock units vest as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 1,
|
|
Name
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
Robert S. Taubman
|
|
|
30,318
|
|
|
|
24,147
|
|
|
|
18,476
|
|
Lisa A. Payne
|
|
|
16,204
|
|
|
|
14,180
|
|
|
|
10,470
|
|
William S. Taubman
|
|
|
15,227
|
|
|
|
14,180
|
|
|
|
10,470
|
|
David T. Weinert
|
|
|
4,168
|
|
|
|
6,836
|
|
|
|
4,927
|
|
Stephen J. Kieras
|
|
|
4,002
|
|
|
|
5,105
|
|
|
|
3,696
|
|
|
|
|
(2)
|
|
Based upon the closing price of the
Companys common stock on the NYSE on December 31,
2007 of $49.19.
|
|
(3)
|
|
The Options vest in three equal
installments on March 1, 2008, 2009 and 2010, respectively.
|
|
(4)
|
|
The Options vest in two equal
installments on March 1, 2008 and 2009, respectively.
|
|
(5)
|
|
The Options vest on May 18,
2008.
|
|
(6)
|
|
The Options vest in three equal
installments on March 4, 2008, 2010 and 2012, respectively,
subject to the satisfaction of certain Company performance
criteria as of each vesting date.
|
31
Option
Exercises and Stock Vested in 2007
None of the named executive officers exercised Options in 2007.
The following table provides information on the vesting of
notional units under the TTC Long-Term Performance Plan related
to the deferral of notional unit awards under such plan. During
the deferral period, the notional shares are credited with
dividend equivalents in the form of additional notional shares
as, and in the amount that, the Company pays dividends on its
shares of common stock. See Nonqualified Deferred
Compensation in 2007 for additional information on the TTC
Long-Term Performance Plan.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
Robert S. Taubman
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
1,446
|
|
|
$
|
79,096
|
|
William S. Taubman
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
278
|
|
|
|
15,195
|
|
Stephen J. Kieras
|
|
|
|
|
|
|
|
|
32
Nonqualified
Deferred Compensation in 2007
The Company had the following nonqualified deferred compensation
arrangements in 2007:
TTC Long-Term Performance Plan. 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 to 1997) or cash awards
(1998-2004)
based on individual and Company performance measures. 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. 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 notional
share awards granted in 1996 and 1997, respectively. During the
deferral period, the notional shares are credited with:
(A) dividend equivalents in the form of additional notional
shares as, and in the amount, of the dividends paid on the
Companys shares of common stock, and (B) common stock
price growth, which for 2007 is calculated as (i) the
difference between the Companys average common stock price
for the last 20 business days immediately preceding and
including December 31, 2007 and such comparable period in
2006, multiplied by (ii) the number of notional units held
at December 31, 2007. 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 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
1999 awards in January 2007 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 $225,000 (as of December 31,
2007, 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.
33
The table below provides information on the nonqualified
deferred compensation of the named executive officers in 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,539,873
|
|
|
|
|
|
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
$
|
8,775
|
|
|
$
|
13,516
|
|
|
|
|
|
|
$
|
161,330
|
|
|
|
Option Deferral Agreement
|
|
|
|
|
|
|
|
|
|
|
(124,881
|
)(3)
|
|
|
1,330,126
|
|
|
|
42,857,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
TTC Long-Term Performance Plan
|
|
|
|
|
|
|
|
|
|
|
189,922
|
(4)
|
|
|
|
|
|
|
2,803,148
|
|
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,775
|
|
|
|
8,078
|
|
|
|
|
|
|
|
98,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
TTC Long-Term Performance Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
626,102
|
|
|
|
|
|
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,775
|
|
|
|
12,689
|
|
|
|
|
|
|
|
152,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
TTC Long-Term Performance Plan
|
|
|
|
|
|
|
|
|
|
|
36,486
|
(4)
|
|
|
|
|
|
|
538,510
|
|
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,775
|
|
|
|
7,562
|
|
|
|
|
|
|
|
95,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,203
|
|
|
|
1,723
|
|
|
|
|
|
|
|
27,389
|
|
|
|
|
(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 $1,330,126 of
distributions paid on such deferred units and a loss of
$(1,455,007) due to a $1.67 per share decrease in the common
stock price.
|
|
(4)
|
|
For Ms. Payne, this amount
includes $79,096 for dividends and $110,826 for stock price
growth related to the deferral of a notional unit award granted
in 1997 under the plan. For Mr. Weinert, this amount
includes $15,195 for dividends and $21,291 for stock price
growth related to the deferral of a notional unit award granted
in 1996 under the plan.
|
Potential
Payments Upon Termination or
Change-in-Control
The following section describes and quantifies 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.
34
Company
Share-Based Plans
1992
Option Plan
The Committee is authorized to accelerate the vesting of Options
at any time more than six months after the grant date. The
Committee is also permitted to modify, extend or renew
outstanding 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 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 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.
Options held by an employee who dies while employed will vest
immediately, and the beneficiary will have 730 days to
exercise such Options. 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.
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.
2005
RSU 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, 2007, David Weinert and Lisa Payne had
outstanding, irrevocable deferred awards under the plan. The
deferral period is immediately terminated upon the 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.
35
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
|
|
|
|
an annual cash 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 cash bonus;
|
|
|
|
continued welfare benefits and perquisites for at least thirty
months; and
|
|
|
|
outplacement services for one year.
|
The annual cash bonus portion of this severance amount will be
based on the higher of the highest award paid to the executive
during the three years prior to the change of control or the
most recent award 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.
36
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. Beginning
on the second anniversary date of such initial term and
continuing on each anniversary date thereafter, the employment
agreement has been extended one-year (effectively resulting in a
two-year employment agreement as of each extension date). The
agreement will 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 cash
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.
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, 2007. 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, cash bonus (except to the extent specifically
noted in Ms. Paynes employment agreement) and paid
time off.
|
|
|
|
Costs of COBRA or any other mandated governmental assistance
program to former employees.
|
|
|
|
Welfare benefits provided to all salaried employees having
substantially the same value.
|
|
|
|
Amounts outstanding under the Companys 401(k) plan.
|
37
|
|
|
|
|
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, 2007, then such participants would receive the
aggregate balance amount relating to the plan as set forth in
the Nonqualified Deferred Compensation in 2007
table. Such payment is required to be made as soon as
administratively practicable.
|
|
|
|
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, 2007, then the participant would receive the
aggregate balance amount relating to the plan as set forth in
the Nonqualified Deferred Compensation in 2007 table.
|
|
|
|
Mr. Robert Taubmans Deferral of
Units. If Mr. Taubmans employment is
terminated for any reason as of December 31, 2007, 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 2007 table.
|
Change
of Control PaymentsIRC Section 280G
valuation.
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:
|
|
|
|
|
Change of control and termination of employment occurs as of
December 31, 2007; and
|
|
|
|
The only applicable payments are cash severance (2.5x salary
plus annual cash bonus, with the cash bonus being the highest
annual cash bonus earned in the prior three years), welfare
benefits (10% of base salary), one year of outplacement services
(20% of base salary), and accelerated vesting of Options and
restricted stock.
|
Other
Notes Applicable to
Table.
|
|
|
|
|
The 1992 Option Plan and 2005 RSU Plan provide for the
acceleration of vesting of share-based awards upon retirement,
death, disability or a change of control. In addition, for
Ms. Payne, such share-based awards will vest upon a
termination by the Company without cause. The table reflects the
intrinsic value of such acceleration, which is (i) for each
unvested Option, $49.19 less the exercise price, and
(ii) for each unvested restricted stock unit, $49.19.
$49.19 represents the closing price on the NYSE on
December 31, 2007.
|
|
|
|
The Compensation Committee has discretion to accelerate the
vesting of Options (six months after the grant date) and
restricted stock awards to the extent not expressly set forth
above; however, the table assumes such discretion is not
utilized.
|
|
|
|
Life insurance amounts only reflect policies paid for by the
Company.
|
|
|
|
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.
|
38
Change
of Control and Severance Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Share-
|
|
|
|
|
|
Life
|
|
|
Annual
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Miscellaneous
|
|
|
Based
|
|
|
|
|
|
Insurance
|
|
|
Disability
|
|
|
280G Tax
|
|
|
|
|
|
|
Severance
|
|
|
Benefits(1)
|
|
|
Awards
|
|
|
Dividends
|
|
|
Proceeds
|
|
|
Benefits
|
|
|
Gross Up
|
|
|
Total
|
|
|
Robert S. Taubman(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
$
|
4,646,899
|
|
|
$
|
209,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,856,016
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
4,646,899
|
|
|
|
209,117
|
|
|
$
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
6,256,016
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
4,646,899
|
|
|
|
209,117
|
|
|
|
|
|
|
$
|
360,000
|
|
|
|
|
|
|
|
5,216,016
|
|
Change of control
|
|
|
|
|
|
|
|
|
|
|
4,646,899
|
|
|
|
209,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,856,016
|
|
Lisa A. Payne(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
2,600,641
|
|
|
|
115,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,716,516
|
|
Termination without cause
|
|
$
|
1,334,075
|
|
|
|
|
|
|
|
2,600,641
|
|
|
|
115,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,050,591
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
2,600,641
|
|
|
|
115,875
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
4,116,516
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
2,600,641
|
|
|
|
115,875
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
3,076,516
|
|
Change of control
|
|
|
2,257,665
|
|
|
$
|
246,291
|
|
|
|
2,600,641
|
|
|
|
115,875
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
5,220,472
|
|
William S. Taubman(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
2,533,522
|
|
|
|
112,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,645,778
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
2,533,522
|
|
|
|
112,256
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
4,045,778
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
2,533,522
|
|
|
|
112,256
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
3,005,778
|
|
Change of control
|
|
|
|
|
|
|
|
|
|
|
2,533,522
|
|
|
|
112,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,645,778
|
|
David T. Weinert(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
998,133
|
|
|
|
41,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,039,682
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
998,133
|
|
|
|
41,549
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
2,439,682
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
998,133
|
|
|
|
41,549
|
|
|
|
|
|
|
|
346,500
|
|
|
|
|
|
|
|
1,386,182
|
|
Change of control
|
|
|
1,505,110
|
|
|
|
164,194
|
|
|
|
998,133
|
|
|
|
41,549
|
|
|
|
|
|
|
|
|
|
|
$
|
930,253
|
|
|
|
3,639,239
|
|
Stephen J. Kieras(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
807,056
|
|
|
|
34,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
841,655
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
807,056
|
|
|
|
34,599
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
2,241,655
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
807,056
|
|
|
|
34,599
|
|
|
|
|
|
|
|
311,850
|
|
|
|
|
|
|
|
1,153,505
|
|
Change of control
|
|
|
1,526,875
|
|
|
|
147,775
|
|
|
|
807,056
|
|
|
|
34,599
|
|
|
|
|
|
|
|
|
|
|
|
932,995
|
|
|
|
3,449,300
|
|
|
|
|
(1)
|
|
Amount includes the value of
continuing health and welfare benefits for 30 months after
December 31, 2007 and outplacement services for one year
after December 31, 2007.
|
|
(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.
|
|
(3)
|
|
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, 2007.
|
39
Related
Person Transactions
Policies
and Procedures
To assist the Company in complying with its 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 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.
In addition, directors and executive officers are 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. 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.
From January 1, 2007 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 2007 and 2008
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 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.
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 $2.1 million in 2007.
During 2007, 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. At its option, the Manager may surrender 10% of leased
space in 2010. Effective May 1, 2005, the first 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 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 $307,000 in
2007, representing their pro rata share of the total occupancy
costs. In addition, employees of the Taubman Asset Group, A.
Alfred Taubman and certain
40
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
$741,000 in 2007, 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 $58,000 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 $476,000 in 2007 by the Taubman Family
for personal use of the corporate jet, representing 100% of the
incremental costs of such use. See Compensation Discussion
and AnalysisElements of Compensation in 2007 for Named
Executive OfficersPerquisites for information on
calculating incremental cost to the Company in respect of
corporate jet use.
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
is expected to open in 2010. 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.
At the time of our initial public offering and acquisition of
our partnership interest in TRG, we entered into an agreement
(the Cash Tender Agreement) with A. Alfred Taubman, who owns an
interest in TRG, whereby he has the annual right to tender to us
units of partnership interest in TRG (provided that the
aggregate value is at least $50 million) and cause us to
purchase the tendered interests at a purchase price based on our
market valuation on the trading date immediately preceding the
date of the tender. At A. Alfred Taubmans election, his
family and certain others may participate in tenders. We will
have the option to pay for these interests from available cash,
borrowed funds, or from the proceeds of an offering of our
common stock. Generally, we expect to finance these purchases
through the sale of new shares of our stock. The tendering
partner will bear all market risk if the market price at closing
is less than the purchase price and will bear the costs of sale.
Any proceeds of the offering in excess of the purchase price
will be for the sole benefit of us. We account for the Cash
Tender Agreement as a freestanding written put option. As the
option put price is defined by the current market price of our
stock at the time of tender, the fair value of the written
option defined by the Cash Tender Agreement is considered to be
zero. Based on a market value at December 31, 2007 of
$49.19 per common share, the aggregate value of interests in TRG
that may be tendered under the Cash Tender Agreement was
approximately $1.3 billion. The purchase of these interests
at December 31, 2007 would have resulted in us owning an
additional 32% interest in TRG.
41
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 unless the Board determines that such
simultaneous service would not impair the ability of such
Committee member to effectively serve on the Companys
audit committee and discloses such determination in the
Companys annual proxy statement. Mr. Tysoe, appointed
to the Audit Committee and Board in December 2007, is a member
of three other public company audit committees. In December
2007, the Board determined that the foregoing would not impair
Mr. Tysoes ability to effectively serve on the Audit
Committee, primarily because one audit committee on which he
serves is a special purpose acquisition corporation without any
business operations and therefore such service would require
minimal time.
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:
|
|
|
|
|
the plan for, and the independent registered public accounting
firms report on, each audit of the Companys
financial statements;
|
|
|
|
the Companys quarterly and annual financial statements
contained in reports filed with the SEC or sent to shareholders;
|
|
|
|
changes in the Companys accounting practices, principles,
controls or methodologies, or in its financial statements;
|
|
|
|
significant developments in accounting rules;
|
|
|
|
the adequacy of the Companys internal accounting controls,
and accounting, financial and auditing personnel; and
|
|
|
|
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.
|
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.
Fees of
the Independent Registered Public Accounting Firm
The following table sets forth the fees we were billed for audit
and other services provided by KPMG in 2007 and 2006. The Audit
Committee, based on its reviews and discussions with management
and KPMG noted
42
above, determined that the provision of these services was
compatible with maintaining KPMGs independence. All of
such services were approved in conformity with the pre-approval
policies and procedures described above.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
1,244,264
|
|
|
$
|
1,204,700
|
|
Audit-Related
|
|
|
19,000
|
|
|
|
23,500
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,263,264
|
|
|
$
|
1,228,200
|
|
Audit Fees. Audit fees relate to
professional services rendered by KPMG for the audits of the
Companys annual financial statements and 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. The table includes $667,864 and
$553,800 in 2007 and 2006, respectively, related to individual
shopping center audit reports.
Audit-Related Fees. Audit-related fees
relate to assurance and related services by KPMG that are
reasonably related to the performance of the audit or review of
the Companys financial statements. In 2007 and 2006, these
audit related services primarily consisted of an audit of an
employee benefit plan.
Report
Of The Audit Committee
In connection with the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, 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, 2007 filed with the SEC.
The Audit Committee
Jerome A Chazen, Chairman
William U. Parfet
Ronald W. Tysoe
43
Proposal 2
Ratification of Appointment of Independent Registered Public
Accounting Firm
The Board recommends that the shareholders vote FOR
the ratification of KPMG as the Companys independent
registered public accounting firm for the year ending
December 31, 2008.
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 entitled to vote on the
record date. KPMG served as the Companys independent
registered public accounting firm since 2004, 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 in 2007 and 2006 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.
44
Proposal 3
Approval Of 2008 Omnibus Long-Term Incentive Plan
The Board recommends that the shareholders vote
FOR the approval of the 2008 Omnibus Long-Term
Incentive Plan.
The Company currently maintains The Taubman Realty Group Limited
Partnership 1992 Incentive Option Plan, as amended (the
1992 Option Plan), The Taubman Company 2005
Long-Term Incentive Plan (the 2005 RSU Plan) and the
Taubman Centers, Inc. Non-Employee Directors Stock Grant
Plan (the Director Stock Grant Plan). Under the 1992
Option Plan, employees receive units of limited partnership
interest in TRG upon the exercise of their vested options, and
each unit generally is exchanged into one share of Common Stock
(one Share) under the Companys Continuing
Offer. Under the 2005 RSU Plan, employees receive restricted
stock units, which represent the right to one Share upon
vesting. Under the Director Stock Grant Plan, non-employee
directors receive grants of Shares on a quarterly basis, which
currently have a value of $12,500. As used in this section, the
phrase the Company refers to Taubman Centers, Inc.
and its subsidiaries and affiliates on a consolidated basis,
unless the context otherwise requires.
As discussed in this proxy statement, grants to employees of
options to purchase TRG Units and restricted stock units and
awards to non-employee directors of Shares are an important part
of the Companys compensation program, providing a basis
for long-term incentive compensation and helping to tie together
the interests of the Companys shareholders and the
Companys directors, officers and employees. In order to
simplify and conform the administration of its share award
plans, the Company desires to replace its current 1992 Option
Plan, 2005 RSU Plan and Director Stock Grant Plan with a single
share award plan. Accordingly, the Board has adopted The Taubman
Company 2008 Omnibus Long-Term Incentive Plan, and in accordance
with the rules of the New York Stock Exchange and the
requirements of the Internal Revenue Code of 1986 (the
Code), the Company is seeking the approval of the
shareholders of the adoption of the 2008 Omnibus Long-Term
Incentive Plan. In this discussion, the 2008 Omnibus Long-Term
Incentive Plan is referred to as the 2008 Plan.
The 2008 Plan provides for the award to directors, officers,
employees and other service providers of the Company of
restricted shares, restricted share units, restricted units of
limited partnership in TRG (TRG Units), restricted
TRG Unit units, options to purchase Shares or TRG Units, share
appreciation rights, unrestricted Shares or TRG Units, and other
awards to acquire up to an aggregate of 6,100,000 Shares or
TRG Units. (TRG Units are generally exchangeable for Shares on a
one-for-one basis, pursuant to our registered Continuing Offer.)
For purposes of the 6,100,000 Share or TRG Unit limit, each
option to purchase a Share or TRG Unit and each share
appreciation right will be counted as one Share or TRG Unit, and
each restricted share, restricted share unit, restricted TRG
Unit, restricted TRG Unit unit, or unrestricted Share or TRG
Unit will be counted as 2.85 Shares or TRG Units. Rights to
receive dividends on a Share or TRG Unit (except for rights to
receive dividends in cash, which are related to other awards
which are counted as 2.85 Shares or TRG Units) will also
themselves be counted as 2.85 Shares or TRG Units. This
method of counting recognizes the greater value inherent in a
Share or TRG Unit than in an option to purchase a Share or TRG
Unit at a price equal to its fair market value on the date of
grant. If an award under the 2008 Plan of restricted shares,
restricted share units, restricted TRG Units or restricted TRG
Unit units is forfeited or an award of options or other rights
granted under the 2008 Plan expires without being exercised, the
Shares or TRG Units covered by any such award would again become
available for issuance under new awards.
The 2008 Plan prohibits the repricing of options without the
approval of the shareholders. This provision relates to both
direct repricingslowering the exercise price of an
optionand indirect repricingscanceling an
outstanding option and granting a replacement or substitute
option with a lower exercise price, or exchanging options for
cash, other options or other awards. The repricing prohibition
also applies to share appreciation rights.
As of the Record Date, there were options to purchase units
exchangeable for 1,461,325 Shares outstanding under the
1992 Option Plan and 348,392 restricted stock units outstanding
under the 2005 RSU Plan, none of which will be affected by the
adoption of the 2008 Plan. However, if a grant of options under
the 1992 Option Plan expires or is terminated without being
exercised or an award under the 2005 RSU Plan is forfeited, the
TRG Units or Shares covered by those awards will not be
available for issuance under new awards under the 2008 Plan. The
Company anticipates that upon approval of the 2008 Plan, all
subsequent awards of restricted shares, restricted share units,
restricted TRG Units, restricted TRG Unit units, unrestricted
Shares or TRG Units, or options would be granted
45
under the 2008 Plan, and no further awards would be made under
the 1992 Option Plan, the 2005 RSU Plan or the Director Stock
Grant Plan.
As of the Record Date, the Company had 52,808,532 Shares
outstanding, and an additional 26,557,444 TRG Units were
outstanding. TRG Units are exchangeable by Plan participants for
Shares on a one-for-one basis. As of the Record Date, the
Company had a pro forma total of 79,365,976 Shares
outstanding, on an as-exchanged basis. The Company intends that
options granted in the future will continue to be options to
purchase TRG Units.
Description
of 2008 Plan
A description of the provisions of the 2008 Omnibus Long-Term
Incentive Plan is set forth below. This summary is qualified in
its entirety by the detailed provisions in the 2008 Plan, which
is attached as an appendix to this proxy statement.
Overview. The purpose of the 2008 Plan is to
enhance the ability of the Company to attract and retain highly
qualified directors, officers, key employees and other persons
and to motivate such persons to serve the Company and to improve
the business results and earnings of the Company by providing to
such persons an opportunity to acquire or increase a direct
proprietary interest in the operations and future success of the
Company.
There are 6,100,000 Shares or TRG Units (each of which TRG
Units is generally exchangeable for one Share) reserved for
issuance under the 2008 Plan, and no awards have been granted
under the 2008 Plan. The maximum number of Shares or TRG Units
subject to options or share appreciation rights that can be
awarded under the 2008 Plan to any person is 500,000 per year.
The maximum number of Shares or TRG Units that can be awarded
under the 2008 Plan to any person, other than pursuant to an
option or share appreciation rights, is 500,000 per year.
Administration. The 2008 Plan is administered
by our compensation committee. Subject to the terms of the 2008
Plan, the compensation committee may select participants to
receive awards, determine the types of awards and terms and
conditions of awards and interpret provisions of the 2008 Plan.
The compensation committee may delegate to a subcommittee of
directors
and/or
officers the authority to grant or administer Awards to persons
who are not then reporting persons under Section 16 of the
Securities Exchange Act of 1934. Options and share appreciation
rights may not be amended to lower their exercise prices without
shareholder approval.
Shares Reserved for Issuance Under the 2008
Plan. The Shares issued or to be issued under the
2008 Plan consist of authorized but unissued Shares. Shares or
TRG Units issued under the 2008 Plan pursuant to awards assumed
in connection with mergers and acquisitions by us will not
reduce the number of Shares or TRG Units reserved for issuance
under the 2008 Plan. The closing price of a Share as reported by
the New York Stock Exchange on the Record Date was $54.90.
Eligibility. Awards may be made under the 2008
Plan to our directors, officers, employees or consultants and to
any other individual whose participation in the 2008 Plan is
determined to be in our best interests by our compensation
committee. We estimate that currently approximately
110 persons are eligible to receive awards under the 2008
Plan.
Amendment or Termination of the Plan. The
Board of Directors may terminate or amend the 2008 Plan at any
time and for any reason. However, no amendment may adversely
impair the rights of grantees with respect to outstanding
awards. Further, unless terminated earlier, the 2008 Plan will
terminate 10 years after its effective date. Amendments
will be submitted for shareholder approval to the extent
required by the Code or other applicable laws, rules or
regulations.
Types of
Awards Available for Grant under the 2008 Plan
Restricted Shares, Restricted Share Units, Restricted TRG
Units and Restricted TRG Unit Units. The 2008
Plan permits the granting of restricted shares, restricted share
units, restricted TRG Units and restricted TRG Unit units.
Restricted shares are Shares granted subject to forfeiture if
specified holding periods
and/or
performance targets are not met. Restricted share units are
substantially similar to restricted shares but result in the
issuance of Shares upon meeting specified holding periods
and/or
performance targets, rather than the issuance of the Shares in
advance. Restricted TRG Units are TRG Units granted subject to
forfeiture if specified holding periods
and/or
46
performance targets are not met. Restricted TRG Unit units are
substantially similar to restricted TRG Units but result in the
issuance of TRG Units upon meeting specified holding periods
and/or
performance targets, rather than the issuance of the TRG Units
in advance. Restricted shares, restricted share units,
restricted TRG Units, and restricted TRG Unit units granted
under the 2008 Plan may not be sold, transferred, pledged or
assigned prior to meeting the specified holding periods
and/or
performance targets. The compensation committee determines the
holding periods
and/or
performance targets and the circumstances under which the
holding periods
and/or
performance targets may be waived, such as upon death,
disability, retirement, termination of employment, or change in
control.
Options. The 2008 Plan permits the granting of
options to purchase Shares intended to qualify as incentive
options under the Code and also options to purchase Shares or
TRG Units that do not qualify as incentive stock options
(non-qualified options). The options we have granted
have historically been principally non-qualified options to
acquire TRG Units. The Committee currently intends to continue
that practice under the 2008 Plan. The exercise price of each
option may not be less than 100% of the fair market value of the
Shares or TRG Units on the date of grant. In the case of certain
10% shareholders who receive incentive options, the exercise
price may not be less than 110% of the fair market value of the
Shares on the date of grant. An exception to these requirements
is made for any options that we grant in substitution for
options held by directors, officers, employees and consultants
of a company that we acquire. In such a case, the exercise price
would be adjusted to preserve the economic value of such
holders option from his or her former employer.
The term of each option is fixed by the compensation committee
and may not exceed 10 years from the date of grant. The
compensation committee determines at what time or times each
option may be exercised and the period of time, if any, after
death, disability, retirement, or termination of employment
during which options may be exercised.
Options may be made exercisable in
installments. The exercisability of options may
be accelerated by the compensation committee, such as upon
death, disability, retirement, termination of employment, or
change in control. In general, an optionee may pay the exercise
price of an option by cash, certified check, by tendering Shares
(which, if acquired from us, have been held by the optionee for
at least six months), or by means of a broker-assisted cashless
exercise.
Options granted under the 2008 Plan may not be sold,
transferred, pledged or assigned other than by will or under
applicable laws of descent and distribution. However, we may
permit limited transfers of non-qualified options for the
benefit of immediate family members of grantees to address
estate planning concerns.
Other Awards. The compensation committee may
also award under the 2008 Plan:
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dividend equivalent rights, which are rights entitling the
recipient to receive amounts equal to dividends that would have
been paid if the recipient had held a specified number of
Shares; provided, that dividend equivalent rights may not be
granted relating to Shares or TRG Units subject to an option or
share appreciation right;
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share appreciation rights, which are rights to receive a number
of Shares or, in the discretion of the compensation committee,
an amount in cash or a combination of Shares and cash, based on
the increase in the fair market value of the Shares underlying
the right over the market value of such Shares on the date of
grant (or over an amount greater than the grant date fair market
value, if the compensation committee so determines) during a
stated period specified by the compensation committee not to
exceed 10 years from the date of grant; and
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unrestricted Shares or TRG Units, which are Shares or TRG Units
granted without restrictions.
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Section 162(m) of the Internal Revenue Code
Compliance. Section 162(m) of the Code
limits publicly-held companies to an annual deduction for
U.S. federal income tax purposes of $1,000,000 for
compensation paid to their Chief Executive Officer and the three
highest compensated executive officers (other than the Chief
Executive Officer) determined at the end of each year (the
covered employees). However, performance-based
compensation may be excluded from this limitation. The 2008 Plan
is designed to permit the compensation committee to grant awards
that qualify for purposes of satisfying the conditions of
Section 162(m). The Companys Chief Executive
47
Officer and all of its other executive officers are employed by
the Manager, and not by Taubman Centers, Inc., 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 Taubman Centers, Inc.
pursuant to a services agreement between Taubman Centers, Inc.
and the Manager. The compensation committee does not anticipate
that any portion of the Managers compensation expense that
may be allocable to Taubman Centers, Inc. will be limited by
Section 162(m). Even if Taubman Centers, Inc.s
compensation expense deduction were limited by
Section 162(m), as long as Taubman Centers, Inc. continues
to qualify as a real estate investment trust under the Code, the
payment of non-deductible compensation should not have a
material adverse effect on the Company.
Business Criteria. The compensation committee
would exclusively use one or more of the following business
criteria, on a consolidated basis,
and/or with
respect to specified subsidiaries or business units (except with
respect to the total shareholder return and earnings per share
criteria), in establishing performance goals for awards to
covered employees if the award is to be intended to
satisfy the conditions of Section 162(m):
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total shareholder return;
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net income;
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earnings per share;
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funds from operations;
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funds from operations per share;
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return on equity;
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return on assets;
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return on invested capital;
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increase in the market price of Shares or other securities;
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revenues;
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net operating income;
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comparable center net operating income;
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operating margin (operating income divided by revenues);
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earnings before interest expense, taxes, depreciation and
amortization (EBITDA) or adjusted EBITDA;
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the performance of the Company in any one or more of the items
mentioned in the clauses above in comparison to the average
performance of the companies used in a self-constructed peer
group for measuring performance under an award; and
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the performance of the Company in any one or more of the items
mentioned in the clauses above in comparison to a budget or
target for measuring performance under an award.
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Effect of Certain Corporate
Transactions. Unless the compensation committee
otherwise provides, transactions resulting in a change in
control of Taubman Centers, Inc. may cause awards granted under
the 2008 Plan to vest.
Adjustments for Stock Dividends and Similar
Events. The compensation committee will make
appropriate adjustments in outstanding awards and the number of
Shares or TRG Units available for issuance under the 2008 Plan,
including the individual limitations on awards, to reflect
dividends, splits, extraordinary cash dividends and other
similar events.
U.S.
Federal Income Tax Consequences
Restricted Shares and restricted TRG Units. A
grantee who is awarded restricted shares or restricted TRG Units
will not recognize any taxable income for U.S. federal
income tax purposes in the year of the award, provided
48
that the Shares or TRG Units are subject to restrictions (that
is, the restricted shares or TRG Units are nontransferable and
subject to a substantial risk of forfeiture). However, the
grantee may elect under Section 83(b) of the Code to
recognize compensation income (which is ordinary income) in the
year of the award in an amount equal to the fair market value of
the Shares or TRG Units on the date of the award (less the
purchase price, if any), determined without regard to the
restrictions. If the grantee does not make such a
Section 83(b) election, the fair market value of the Shares
or TRG Units on the date the restrictions lapse (less the
purchase price, if any) will be treated as compensation income
to the grantee and will be taxable in the year the restrictions
lapse and dividends or distributions that are paid while the
Shares or TRG Units are subject to restrictions will be subject
to withholding taxes. The Manager will generally be entitled to
a compensation expense deduction in the same amount and
generally at the same time as the grantee recognizes ordinary
income.
Restricted Share Units and Restricted TRG Unit
Units. There are no immediate tax consequences of
receiving an award of restricted share units or restricted TRG
Unit units under the 2008 Plan. A grantee who is awarded
restricted share units or restricted TRG Unit units will be
required to recognize ordinary income in an amount equal to the
fair market value of the Shares or TRG Units issued to such
grantee at the end of the restriction period. The Manager will
generally be entitled to a compensation expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Incentive Stock Options. Under the Code, we
are not able to grant incentive stock options, because such
options may only be granted to employees of a corporation, and
our employees are employed by The Taubman Company LLC (the
Manager), which is a limited liability company.
Incentive stock options are included in the Plan so that we will
be in a position to grant them in the event the tax law or our
corporate structure changes.
The grant of an incentive stock option will not be a taxable
event for the grantee or for the employer. A grantee will not
recognize taxable income upon exercise of an incentive option
(except that the alternative minimum tax may apply), and any
gain realized upon a disposition of Shares received pursuant to
the exercise of an incentive option will be taxed as long-term
capital gain if the grantee holds the Shares for at least two
years after the date of grant and for one year after the date of
exercise (the holding period requirement). The
employer will not be entitled to any compensation expense
deduction with respect to the exercise of an incentive option,
except as discussed below.
For the exercise of an option to qualify for the foregoing tax
treatment, the grant must be made by the employees
employer or a parent or subsidiary of the employer. The employee
must remain employed from the date the option is granted through
a date within three months before the date of exercise of the
option. If all of the foregoing requirements are met except the
holding period requirement mentioned above, the grantee will
recognize ordinary income upon the disposition of the Shares in
an amount generally equal to the excess of the fair market value
of the Shares at the time the option was exercised over the
option exercise price (but not in excess of the gain realized on
the sale). The balance of the realized gain, if any, will be
capital gain. The employer will be allowed a compensation
expense deduction to the extent that the grantee recognizes
ordinary income.
Non-Qualified Options. The grant of an option
will not be a taxable event for the grantee or for us. Upon
exercising a non-qualified option, a grantee will recognize
ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the Shares or TRG
Units on the date of exercise. Upon a subsequent sale or
exchange of Shares or TRG Units acquired pursuant to the
exercise of a non-qualified option, the grantee will have
taxable capital gain or loss, measured by the difference between
the amount realized on the disposition and the tax basis of the
Shares or TRG Units (generally, the amount paid for the Shares
or TRG Units plus the amount treated as ordinary income at the
time the option was exercised). The Manager will generally be
entitled to a compensation expense deduction in the same amount
and generally at the same time as the grantee recognizes
ordinary income.
Dividend Equivalent Rights. Participants who
receive dividend equivalent rights will be required to recognize
ordinary income in an amount equal to the amount paid to the
grantee pursuant to the award. The Manager will generally be
entitled to a compensation expense deduction in the same amount
and generally at the same time as the grantee recognizes
ordinary income.
49
Share Appreciation Rights. There are no
immediate tax consequences of receiving an award of share
appreciation rights under the 2008 Plan. Upon exercising a share
appreciation right, a grantee will recognize ordinary income in
an amount equal to the difference between the exercise price and
the fair market value of the Shares on the date of exercise. The
Manager will generally be entitled to a compensation expense
deduction in the same amount and generally at the same time as
the grantee recognizes ordinary income.
Unrestricted Shares. Participants who are
awarded unrestricted Shares will be required to recognize
ordinary income in an amount equal to the fair market value of
the Shares on the date of the award, reduced by the amount, if
any, paid for such Shares. The Manager will generally be
entitled to a compensation expense deduction in the same amount
and generally at the same time as the grantee recognizes
ordinary income.
New Plan
Benefits
Awards under the 2008 Plan will be made at the discretion of the
compensation committee. Accordingly, we cannot currently
determine the amount of awards that will be made under the 2008
Plan. We anticipate that the compensation committee will utilize
the 2008 Plan to continue to grant long-term equity incentive
compensation to employees and Shares to directors similar to the
awards described in this proxy statement.
Registration
with SEC
The Company intends to file a registration statement with the
SEC pursuant to the Securities Act of 1933, as amended, covering
the offering of the Shares under the 2008 Plan.
Vote
Required for Approval
Approval of the 2008 Plan requires the vote of holders of
two-thirds of the outstanding Voting Stock entitled to vote at
the Annual Meeting.
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Proposal 4
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
In 2007, 56% of Taubmans shareholders supported a proposal
asking the Company to declassify its board and establish the
annual election of directors.
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. It is also the venue for shareholders to elect our
representatives on the Board charged with that job. 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 fellow shareholders seem to
agree that annual elections would be a positive move by our
Board.
Taubmans Board is currently divided into three classes,
with approximately one-third of all directors elected annually
to three-year terms. Eliminating this classification system
would give shareholders an opportunity to register their views
on the performance of the board collectively and each director
individually, on a more routine basis.
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,
also found evidence that staggered boards bring about, and
not merely reflect, an economically significant reduction in
firm value (Journal of Financial Economics, 2005).
Approximately one-third of shareholder proposals to declassify
the board were withdrawn in 2007, largely because companies
agreed to declassify or put the measure to a vote of investors
in 2008, according to RiskMetrics Groups 2007
Post-season Report. RiskMetrics also reported that roughly
60% of S&P 500 companies have declassified their
boards.
We believe 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.
Additionally, Taubman has a substantially high level of insider
ownership at the Company, making the 56% vote in favor of
declassifying even more reflective of shareholder sentiment on
this issue.
We therefore urge shareholders to vote FOR this resolution.
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. In
51
2007, Taubman received a similar proposal from SEIU, with 47.9%
of the shares outstanding (or 55.5% of the shares actually
voted) supporting such proposal at the 2007 annual meeting.
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 pricea
sector-leading -0.4% total return to shareholders in 2007 and a
compound annual average return of 20.9% over the last
10 years, which has been recognized as the best
10-year
performance among all U.S. REITs. 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 2007,
Taubmans properties achieved record average tenant sales
per square foot of $555, and Taubman increased its common
dividend by 11 percent (the twelfth consecutive annual
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 four
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 twothirds 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-2007 study of
1,425 companies in the S&P 1,500, RiskMetrics Group
noted that 52% of such companies had classified boards in 2007
(RiskMetrics Board Practices, 2008 Edition).
Specifically, among companies having a similar market
capitalization to Taubman (378 companies in the S&P
MidCap 400 Index), 59% had staggered boards in 2007.
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 Taubman s 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.
For the foregoing reasons, the Board 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.
52
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. Tysoes Form 3 due upon his appointment
as director was late.
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 $15,000 (excluding expenses).
Presentation
of Shareholder Proposals at 2009 Annual Meeting
Any shareholder proposal intended to be included in the
Companys proxy statement and form of proxy for the 2009
annual meeting must be received by the Company at 200 East Long
Lake Road, Suite 300, Bloomfield Hills, Michigan
48304-2324
by the close of business on December 17, 2008, 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 2009 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 March 2,
2009 and the close of business on March 30, 2009 to be
considered timely. See
Proposal 1-Election
of DirectorsCommittees of the Board 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 2008 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 Broadridge Investor
Communications Solutions, toll-free at
1-800-542-1061,
or may write to: Broadridge Investor Communications Solutions,
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, 2007, including financial statements for the
three years ended December 31, 2007 audited by KPMG, LLP,
the Companys independent registered public accounting
firm, is being furnished with the proxy statement.
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Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be Held On May 29, 2008
The 2008 proxy statement and 2007 annual report are available at
www.proxyvote.com.
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
April 16, 2008
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APPENDIX A
The
Taubman Company Llc
2008
Omnibus Long-Term Incentive Plan
The Taubman Company LLC, a Delaware limited liability company
(the Company), sets forth herein the terms of its
2008 Omnibus Long-Term Incentive Plan (the Plan), as
follows:
1. PURPOSE. The Plan is intended to
enhance the ability of the Company, TCO (as defined below), TRG
(as defined below), and the Subsidiaries and Affiliates of each
of them to attract and retain highly qualified Directors,
officers, key employees and other persons and to motivate such
persons to serve the Company, TCO, TRG, and the Subsidiaries of
each of them and to improve the business results and earnings of
TCO and TRG, by providing to such persons an opportunity to
acquire or increase a direct proprietary interest in the
operations and future success of TCO and TRG. To this end, the
Plan provides for the grant of Share options, Share appreciation
rights, restricted Shares, restricted Share units, restricted
TRG Units, restricted TRG Unit units, unrestricted Shares and
TRG Units and dividend equivalent rights. Any of these awards
may, but need not, be made as performance incentives to reward
attainment of performance goals in accordance with the terms
hereof. Share options granted under the Plan may be incentive
stock options or non-qualified options, as provided herein.
2. DEFINITIONS. For purposes of
interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:
2.1 Affiliate means a person or entity
which controls, is controlled by, or is under common control
with the Company or TCO.
2.2 Award means a grant of an Option,
Share Appreciation Right, Restricted Shares, Restricted Share
Units, Restricted TRG Units, Restricted TRG Unit Units,
Unrestricted Shares or Dividend Equivalent Rights under the Plan.
2.3 Award Agreement means the written
agreement between the Company and a Participant that evidences
and sets out the terms and conditions of an Award.
2.4 Benefit Arrangement shall have the
meaning set forth in Section 15 hereof.
2.5 Board means the Board of Directors
of TCO.
2.6 Cause means, unless otherwise
provided in an applicable written agreement with the Company,
TCO, TRG, or a Subsidiary or affiliate of any of them, the
commission of a felony, fraud, or willful misconduct, which has
resulted in, or is likely to result in, damage to the Company,
TCO, TRG, or a Subsidiary or Affiliate of any of them, as the
Committee may conclusively determine.
2.7 Change in Control means an occasion
upon which (i) any person (as such term is used
in Section 13(d) and 14(d) of the Exchange Act) other than
(A) a director or other fiduciary holding securities under
an employee benefit plan of the Company, TCO, TRG, or a
Subsidiary or Affiliate of any of them, and other than
(B) A. Alfred Taubman, or any of his immediate family
members or lineal descendants, any heir of the foregoing, any
private charitable foundation or any partnership, limited
liability company, or corporation owned by any of the foregoing,
is or becomes the beneficial owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of TCO representing 40% or more of the combined voting power or
combined total fair market value of TCOs then outstanding
securities; or (ii) any removal or election of a member of
the Board, which removal or election was not approved by a vote
of at least 70% of the directors comprising the Board on the
date immediately preceding the date of the removal or election.
Notwithstanding the preceding, to the extent Change in
Control is a payment trigger, and not merely a vesting
trigger, for any 409A Award, Change in Control means
a change in the ownership or effective control of the Company,
or a change in the ownership of a substantial portion of the
assets of the Company, as described in Treas. Reg.
Section 1.409A-3(i)(5),
but replacing the term Trust for the term
Company in such regulation.
2.8 Code means the Internal Revenue Code
of 1986, as now in effect or as hereafter amended.
A-1
2.9 Committee means the Compensation
Committee of the Board, or, if the Board so elects, a different
committee of, and designated from time to time by resolution of,
the Board, which shall be constituted as provided in
Section 3.1.
2.10 Company means The Taubman Company
LLC, a Delaware limited liability company.
2.11 Corporate Transaction means
(i) the dissolution or liquidation of TCO or a merger,
consolidation, or reorganization of TCO with one or more other
entities in which TCO is not the surviving entity, (ii) a
sale of substantially all of the assets of TCO to another person
or entity which does not constitute a related person
to the TCO, as such term is defined in the Treasury Regulations
issued in connection with Section 409A of the Code, or
(iii) any transaction (including without limitation a
merger or reorganization in which TCO is the surviving entity)
which results in any person or entity (other than persons who
are shareholders or Affiliates immediately prior to the
transaction) owning more than 50% of the combined voting power
of all classes of shares of TCO.
2.12 Covered Employee means a
Participant who is a Covered Employee within the meaning of
Section 162(m)(3) of the Code.
2.13 Disability means a
Participants physical or mental condition resulting from
any medically determinable physical or mental impairment that
renders such Participant incapable of engaging in any
substantial gainful employment and that can be expected to
result in death or that has lasted or can be expected to last
for a continuous period of not less than 365 days.
Notwithstanding the foregoing, a Participant shall not be deemed
to be Disabled as a result of any condition that:
(a) was contracted, suffered, or incurred while such
Participant was engaged in, or resulted from such Participant
having engaged in, a felonious activity;
(b) resulted from an intentionally self-inflicted injury or
an addiction to drugs, alcohol, or substances which are not
administered under the direction of a licensed physician as part
of a medical treatment plan; or
(c) resulted from service in the Armed Forces of the United
States for which such Participant received or is receiving a
disability benefit or pension from the United States, or from
service in the armed forces of any other country irrespective of
any disability benefit or pension.
The Disability of a Participant and the date on which a
Participant ceases to be employed by reason of Disability shall
be determined by the Company, in accordance with uniform
principles consistently applied, on the basis of such evidence
as the Committee and the Company deem necessary and desirable,
and its good faith determination shall be conclusive for all
purposes of the Plan. The Committee or the Company shall have
the right to require a Participant to submit to an examination
by a physician or physicians and to submit to such
reexaminations as the Committee or the Company shall require in
order to make a determination concerning the Participants
physical or mental condition; provided, however, that a
Participant may not be required to undergo a medical examination
more often than once each 180 days, nor at any time after
the normal date of the Participants Retirement. If any
Participant engages in any occupation or employment (except for
rehabilitation as determined by the Committee) for remuneration
or profit, which activity would be inconsistent with the finding
of Disability, or if the Committee, on the recommendation of the
Company, determines on the basis of a medical examination that a
Participant no longer has a Disability, or if a Participant
refuses to submit to any medical examination properly requested
by the Committee or the Company, then in any such event, the
Participant shall be deemed to have recovered from such
Disability. The Committee in its discretion may revise this
definition of Disability for any grant, except to
the extent that the Disability is a payment event under a 409A
Award.
2.14 Dividend Equivalent Right means a
right, granted to a Participant under Section 13
hereof, to receive cash, Shares, other Awards or other
property equal in value to dividends paid with respect to a
specified number of Shares, or other periodic payments.
2.15 Effective Date means the date that
the Plan is approved by the shareholders of TCO, provided that
such date is not more than one year after the approval of the
Plan by the Board.
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2.16 Exchange Act means the Securities
Exchange Act of 1934, as now in effect or as hereafter amended.
2.17 Fair Market Value means the value
of a Share, determined as follows: if on the Grant Date or other
determination date the Shares are listed on an established
national or regional share exchange, is admitted to quotation on
the New York Stock Exchange (NYSE) or is publicly
traded on an established securities market, the Fair Market
Value of a Share shall be the closing price of the Shares on
such exchange or in such market (if there is more than one such
exchange or market the Committee shall determine the appropriate
exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low
sale prices on such trading day) or, if no sale of Shares is
reported for such trading day, on the next preceding day on
which any sale shall have been reported. If the Shares are not
listed on such an exchange, quoted on such system or traded on
such a market, Fair Market Value shall be the value of the
Shares as determined by the Committee in good faith; provided
that such valuation with respect to any Award that the Company
intends to be a stock right not providing for the deferral of
compensation under Treas. Reg.
Section 1.409A-1(b)(5)(i)
(Non-Qualified Options) shall be determined by the reasonable
application of a reasonable valuation method, as described in
Treas. Reg
Section 1.409A-1(b)(5)(iv)(B).
2.18 Family Member means a person who is
a spouse, former spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother, sister,
brother-in-law,
or
sister-in-law,
including adoptive relationships, of the Participant, any person
sharing the Participants household (other than a tenant or
employee), a trust in which any one or more of these persons
have more than fifty percent of the beneficial interest, a
foundation in which any one or more of these persons (or the
Participant) control the management of assets, and any other
entity in which one or more of these persons (or the
Participant) own more than fifty percent of the voting interests.
2.19 409A Award means any Award that is
treated as a deferral of compensation subject to the
requirements of Code Section 409A.
2.20 Grant Date means the date on which
the Committee approves an Award or such later date as may be
specified by the Committee.
2.21 Incentive Stock Option means an
incentive stock option within the meaning of
Section 422 of the Code, or the corresponding provision of
any subsequently enacted tax statute, as amended from time to
time.
2.22 Non-Qualified Option means an
Option that is not an Incentive Stock Option.
2.23 Option means an option to purchase
Shares or TRG Units pursuant to the Plan.
2.24 Option Price means the exercise
price for each Share or TRG Unit subject to an Option.
2.25 Other Agreement shall have the
meaning set forth in Section 15 hereof.
2.26 Outside Director means a member of
the Board who is not an officer or employee of the Company, of
TCO, of TRG, or of any of their Affiliates.
2.27 Participant means a person who
receives or holds an Award under the Plan.
2.28 Performance Award means an Award
made subject to the attainment of performance goals (as
described in Section 14) over a performance period
of up to 10 years.
2.29 Plan means The Taubman Company LLC
2008 Omnibus Long-Term Incentive Plan.
2.30 Restricted Share means a Share
awarded to a Participant pursuant to Section 10
hereof.
2.31 Restricted Share Unit means a
bookkeeping entry representing the equivalent of a Share awarded
to a Participant pursuant to Section 10 hereof.
2.32 Restricted TRG Unit means a TRG
Unit awarded to a Participant pursuant to Section 10
hereof.
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2.33 Restricted TRG Unit Unit means a
bookkeeping entry representing the equivalent of a TRG Unit
awarded to a Participant pursuant to Section 10
hereof.
2.34 Retirement means termination of
Service on or after age 62, or any other definition
established by the Compensation Committee, in its discretion,
either in any Award or in writing after the grant of any Award,
provided that the definition of Retirement with respect to the
timing of payment (and not merely vesting) of any 409A Award
cannot be changed after the Award is granted.
2.35 SAR Exercise Price means the per
share exercise price of an SAR granted to a Participant under
Section 9 hereof.
2.36 Securities Act means the Securities
Act of 1933, as now in effect or as hereafter amended.
2.37 Service means service as a Service
Provider to the Company, TCO, TRG, or a Subsidiary or Affiliate
of any of them. Unless otherwise stated in the applicable Award
Agreement, a Participants change in position or duties
shall not result in interrupted or terminated Service, so long
as such Participant continues to be a Service Provider to the
Company, TCO, TRG, or a Subsidiary or Affiliate of any of them.
Subject to the preceding sentence, whether a termination of
Service shall have occurred for purposes of the Plan shall be
determined by the Committee, which determination shall be final,
binding and conclusive. With respect to the timing of payment
(and not merely vesting) of any 409A Award, whether a
termination of Service shall have occurred shall be determined
in accordance with the definition of Separation from
Service under Treas. Reg.
Section 1.409(A)-1(h).
2.38 Service Provider means an employee,
officer or Director of the Company, TCO, TRG, or a Subsidiary or
Affiliate of any of them, or a consultant or adviser providing
services to the Company, TCO, TRG, or a Subsidiary or Affiliate
of any of them.
2.39 Share or Shares
means the common shares of TCO.
2.40 Share Appreciation Right or
SAR means a right granted to a Participant
under Section 9 hereof.
2.41 Subsidiary means any
subsidiary corporation of the Company, TRG, or of
TCO within the meaning of Section 424(f) of the Code.
2.42 Substitute Awards means Awards
granted upon assumption of, or in substitution for, outstanding
awards previously granted by a company or other entity acquired
by the Company, TCO, TRG, or a Subsidiary or Affiliate of any of
them or with which the Company, TCO, TRG, or a Subsidiary or
Affiliate of any of them combines.
2.43 TCO means Taubman Centers, Inc., a
Michigan corporation.
2.44 Ten Percent Shareholder means
an individual who owns more than ten percent (10%) of the total
combined voting power of all classes of outstanding shares of
the Company, TCO, TRG or any of their Subsidiaries. In
determining share ownership, the attribution rules of
Section 424(d) of the Code shall be applied.
2.45 Termination Date means the date
upon which an Option shall terminate or expire, as set forth in
Section 8.3 hereof.
2.46 TRG means The Taubman Realty Group
Limited Partnership, a Delaware limited partnership.
2.47 TRG Unit means a unit of limited
partnership interest in TRG.
2.48 Unrestricted Share Award means an
Award pursuant to Section 11 hereof.
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3.
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ADMINISTRATION
OF THE PLAN
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3.1. Committee. The Plan shall be administered
by or pursuant to the direction of the Committee. The Committee
shall have such powers and authorities related to the
administration of the Plan as are consistent with the governing
documents of the Company and TCO and applicable law. The
Committee shall have full power and
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authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award
Agreement and shall have full power and authority to take all
such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan
that the Committee deems to be necessary or appropriate to the
administration of the Plan, any Award or any Award Agreement.
All such actions and determinations shall be by the affirmative
vote of a majority of the members of the Committee present at a
meeting or by unanimous consent of the Committee executed in
writing in accordance with the Companys governing
documents and applicable law; provided, that subject to the
governing documents of the Company and TCO and applicable law,
the Committee may delegate all or any portion of its authority
under the Plan to a subcommittee of directors
and/or
officers of the Company or TCO for the purposes of determining
or administering Awards granted to persons who are not then
subject to the reporting requirements of Section 16 of the
Exchange Act.. The interpretation and construction by the
Committee of any provision of the Plan, any Award or any Award
Agreement shall be final, binding and conclusive. The Committee
shall consist of not less than three (3) members of the
Board, which members shall be Non-Employee Directors
as defined in
Rule 16b-3
under the Exchange Act (or such greater number of members which
may be required by said
Rule 16b-3).
3.2. Terms of Awards. Subject to the
other terms and conditions of the Plan, the Committee shall have
full and final authority to:
(i) designate Participants,
(ii) determine the type or types of Awards to be made to a
Participant,
(iii) determine the number of Shares or TRG Units to be
subject to an Award,
(iv) establish the terms and conditions of each Award
(including, but not limited to, the exercise price of any
Option, the nature and duration of any restriction or condition
(or provision for lapse thereof) relating to the vesting,
exercise, transfer, or forfeiture of an Award or the Shares or
TRG Units subject thereto, and any terms or conditions that may
be necessary to qualify Options as Incentive Stock Options) or
to ensure exemption from or compliance with Code
Section 409A,
(v) prescribe the form of each Award Agreement evidencing
an Award, and
(vi) amend, modify, or supplement the terms of any
outstanding Award. Notwithstanding the foregoing, no amendment,
modification or supplement of any Award shall, without the
consent of the Participant, impair the Participants rights
under such Award, or subject to the requirements of Code
Section 409A any Award that was excluded from Code
Section 409A coverage upon grant.
The Company may retain the right in an Award Agreement to cause
a forfeiture of the gain realized by a Participant on account of
actions taken by the Participant in violation or breach of or in
conflict with any employment agreement, non-competition
agreement, any agreement prohibiting solicitation of employees
or clients of the Company, TCO, TRG, or a Subsidiary or
Affiliate of any of them or any confidentiality obligation with
respect to the Company, TCO, TRG, or a Subsidiary or Affiliate
of any of them or otherwise in competition with the Company,
TCO, TRG, or a Subsidiary or Affiliate of any of them, to the
extent specified in such Award Agreement applicable to the
Participant. Furthermore, unless the Committee provides
otherwise in the applicable Award Agreement, the Company may
annul an Award if the Participant is an employee of the Company,
TCO, TRG, or a Subsidiary or Affiliate of any of them and is
terminated for Cause as defined in the applicable Award
Agreement or the Plan, as applicable.
Notwithstanding the foregoing, no amendment or modification may
be made to an outstanding Option or SAR which reduces the Option
Price or SAR Exercise Price, either by lowering the Option Price
or SAR Exercise Price or by canceling the outstanding Option or
SAR and granting a replacement or substitute Option or SAR with
a lower exercise price without the approval of Companys
shareholders, provided, that, appropriate adjustments may be
made to outstanding Options and SARs pursuant to
Section 17.
3.3. Deferral Arrangement. The Committee
may permit or require the deferral of any award payment into a
deferred compensation arrangement, subject to compliance with
Section 409A, where applicable, and such rules and
procedures as it may establish, which may include provisions for
the payment or crediting of interest or dividend equivalents,
including converting such credits into deferred Share
equivalents and restricting deferrals to
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comply with hardship distribution rules affecting 401(k) plans.
Notwithstanding the foregoing, no deferral shall be allowed if
the deferral opportunity would be subject to the requirements of
Code Section 409A any Award that would otherwise be
excluded from Code Section 409A.
3.4. No Liability. No member of the Board
or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Award or Award Agreement.
3.5. Book Entry. Notwithstanding any
other provision of this Plan to the contrary, the Company, TCO,
TRG, or a Subsidiary or Affiliate of any of them may elect to
satisfy any requirement under this Plan for the delivery of
Share certificates through the use of book-entry.
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4.
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SHARES
SUBJECT TO THE PLAN
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Subject to adjustment as provided in Section 17
hereof, the aggregate number of Shares or TRG units
available for issuance under the Plan shall be six million one
hundred thousand (6,100,000); provided, however, that for
every Share subject to Awards of Restricted Shares, Restricted
Share Units, Restricted TRG Units, Restricted TRG Unit Units,
Dividend Equivalent Rights (except for Dividend Equivalent
Rights settled only in cash and relating to Awards otherwise
counted pursuant to this proviso) and Unrestricted Shares under
this Plan, the Shares or TRG Units available for grant hereunder
shall be reduced by 2.85 Shares or TRG Units (including the
one Share or TRG Unit issued). Shares issued or to be issued
under the Plan shall be authorized but unissued Shares or issued
Shares that have been reacquired by the Company, TCO, TRG, or a
Subsidiary or Affiliate of any of them. If any Shares or TRG
Units covered by an Award are not purchased or are forfeited, or
if an Award otherwise terminates without delivery of Shares or
TRG Units subject thereto, then the number of Shares or TRG
Units related to such Award and subject to such forfeiture or
termination shall not be counted against the limit set forth
above (or included for purposes of the calculation in the
proviso, above), but shall again be available for making Awards
under the Plan. If an Award (other than a Dividend Equivalent
Right) is denominated in Shares or TRG Units, the number of
Shares or TRG Units covered by such Award, or to which such
Award relates, shall be counted on the date of grant of such
Award against the aggregate number of Shares or TRG Units
available for granting Awards under the Plan as provided above.
Notwithstanding anything herein to the contrary, Shares or TRG
Units subject to an Award under the Plan may not again be made
available for issuance under the Plan if such Shares or TRG
Units are: (x) Shares or TRG Units that were subject to an
Option or a share-settled Share Appreciation Right and were not
issued upon the net settlement or net exercise of such Option or
Share Appreciation Right, (y) Shares or TRG Units delivered
to or withheld by the Company, TCO, TRG, or a Subsidiary or
Affiliate of any of them to pay the exercise price or the
withholding taxes under Options or Share Appreciation Rights, or
(z) Shares repurchased on the open market with the proceeds
of an Option exercise.
The Committee shall have the right to substitute or assume
Awards in connection with mergers, reorganizations, separations,
or other transactions to which Section 424(a) of the Code
applies. The number of Shares or TRG Units reserved pursuant to
Section 4 may be increased by the corresponding
number of Awards assumed and, in the case of a substitution, by
the net increase in the number of Shares subject to Awards
before and after the substitution.
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5.
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EFFECTIVE
DATE, DURATION AND AMENDMENTS
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5.1. Effective Date. The Plan shall be
effective as of the Effective Date.
5.2. Term. The Plan shall terminate
automatically ten (10) years after the Effective Date and
may be terminated on any earlier date as provided in
Section 5.3. The termination of the Plan shall not
affect any Award outstanding on the date of such termination.
5.3. Amendment and Termination of the
Plan. The Board may, at any time and from time to
time, amend, suspend, or terminate the Plan as to any Shares or
TRG Units as to which Awards have not been made. An amendment
shall be contingent on approval of the TCOs shareholders
to the extent stated by the Board, required by applicable law or
required by applicable stock exchange listing requirements. In
addition, an amendment will be contingent on approval of
TCOs shareholders if the amendment would:
(i) materially increase the benefits accruing to
Participants under the Plan, (ii) materially increase the
aggregate number of Shares or TRG Units that may be
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issued under the Plan, (iii) materially modify the
requirements as to eligibility for participation in the Plan, or
(iv) except as permitted pursuant to the provisions of
Section 17, reduce the Option Price of any
previously granted Option or the grant price of any previously
granted SAR, cancel any previously granted Options or SARs and
grant substitute Options or SARs with a lower Option Price than
the canceled Options or a lower grant price than the canceled
SARs, or exchange any Options or SARs for cash, other awards, or
Options or SARs with an Option Price or grant price that is less
than the exercise price of the original Options or SARs. No
Awards shall be made after termination of the Plan. No
amendment, suspension or termination of the Plan shall
(i) without the consent of the Participant, impair rights
or obligations under any Award theretofore awarded under the
Plan, nor (ii) accelerate any payment under any 409A Award
except as otherwise permitted under Treas. Reg.
Section 1.409A-3(j).
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6.
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AWARD
ELIGIBILITY AND LIMITATIONS
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6.1. Service Providers and Other
Persons. Subject to this Section 6,
Awards may be made under the Plan to: (i) any Service
Provider to the Company, TCO, TRG, or a Subsidiary or Affiliate
of any of them, including any Service Provider who is an officer
or Director of the Company, TCO, TRG, or a Subsidiary or
Affiliate of any of them, as the Committee shall determine and
designate from time to time, (ii) any Outside Director and
(iii) any other individual whose participation in the Plan
is determined to be in the best interests of TCO by the
Committee.
6.2. Successive Awards and Substitute
Awards. An eligible person may receive more than
one Award, subject to such restrictions as are provided herein.
Notwithstanding Sections 8.1 and 9.1, the
Option Price of an Option or the grant price of an SAR that is a
Substitute Award may be less than 100% of the Fair Market Value
of a Share on the original Grant Date provided that the Option
Price or grant price is determined in accordance with the
principles of Code Section 424 and the regulations
thereunder.
6.3. Limitation on Shares or TRG Units Subject to
Awards. During any time when the Company has a
class of equity security registered under Section 12 of the
Exchange Act:
(i) the maximum number of Shares or TRG Units subject to
Options or SARs that can be awarded under the Plan to any person
eligible for an Award under Section 6 hereof is five
hundred thousand (500,000) per calendar year; and
(ii) the maximum number of Shares or TRG Units that can be
awarded under the Plan, other than pursuant to an Option or
SARs, to any person eligible for an Award under
Section 6 hereof is five hundred thousand (500,000)
per calendar year.
The preceding limitations in this Section 6.3 are
subject to adjustment as provided in Section 17
hereof.
Each Award granted pursuant to the Plan shall be evidenced by an
Award Agreement, in such form or forms as the Committee shall
from time to time determine. Award Agreements granted from time
to time or at the same time need not contain similar provisions
but shall be consistent with the terms of the Plan. Each Award
Agreement evidencing an Award of Options shall specify whether
such Options are intended to be Non-Qualified Options or
Incentive Stock Options, and in the absence of such
specification such options shall be deemed Non-Qualified Options.
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8.
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TERMS AND
CONDITIONS OF OPTIONS
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8.1. Option Price. The Option Price of
each Option shall be fixed by the Committee and stated in the
Award Agreement evidencing such Option. The Option Price of each
Option shall be at least the Fair Market Value on the Grant Date
of a Share; provided, however, that in the event that a
Participant is a Ten Percent Shareholder, the Option Price
of an Option granted to such Participant that is intended to be
an Incentive Stock Option shall be not less than
110 percent of the Fair Market Value of a Share on the
Grant Date.
8.2. Vesting. Subject to
Sections 8.3, 8.4, 8.5 and 17.3 hereof, each Option
granted under the Plan shall become exercisable at such times
and under such conditions (including based on achievement of
performance goals
and/or
future service requirements) as shall be determined by the
Committee and stated in the Award Agreement.
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For purposes of this Section 8.2, fractional numbers
of Shares or TRG Units subject to an Option shall be rounded to
the next nearest whole number.
8.3. Term. Each Option granted under the
Plan shall terminate, and all rights to purchase Shares or TRG
Units thereunder shall cease, upon the expiration of ten years
from the date such Option is granted, or under such
circumstances and on such date prior thereto as is set forth in
the Plan or as may be fixed by the Committee and stated in the
Award Agreement relating to such Option (the Termination
Date); provided, however, that in the event that
the Participant is a Ten Percent Shareholder, an Option
granted to such Participant that is intended to be an Incentive
Stock Option shall not be exercisable after the expiration of
five years from its Grant Date.
8.4. Termination of Service. Unless the
Committee otherwise provides in an Award Agreement or in a
written agreement with the Participant after the Award Agreement
is issued, upon the termination of a Participants Service,
except to the extent that such termination is due to death,
Disability, Retirement, lay-off in connection with a reduction
in force or Change in Control of the Company or as otherwise
specified in the Award Agreement, any Option held by such
Participant that has not vested shall immediately be deemed
forfeited and any otherwise vested Option or unexercised portion
thereof shall terminate three (3) months after the date of
such termination of Service, but in no event later than the date
of expiration of the Option. If a Participants Service is
terminated for Cause, the Option or unexercised portion thereof
shall terminate as of the date of such termination. Unless the
Committee otherwise provides in an Award Agreement or in a
written agreement with the Participant after the Award Agreement
is issued, if a Participants Service is terminated
(i) due to Retirement or lay-off in connection with a
reduction in force, the Option shall become fully vested and
shall continue in accordance with its terms and shall expire
upon its normal date of expiration (except that an Incentive
Stock Option shall cease to be an Incentive Stock Option upon
the expiration of three (3) months from the date of the
Participants Retirement or lay-off and thereafter shall be
a Non-Qualified Option), (ii) due to Disability, the Option
shall become fully vested and shall continue in accordance with
its terms and shall expire upon its normal date of expiration
(except that an Incentive Stock Option shall cease to be an
Incentive Stock Option upon the expiration of twelve
(12) months from the date of the Participants
termination due to Disability and thereafter shall be a
Non-Qualified Option) or (iii) due to death, any Option of
the deceased Participant shall become fully vested and shall
continue in accordance with its terms, may be exercised, to the
extent of the number of Shares or TRG Units with respect to
which he/she
could have exercised the Option on the date of
his/her
death, by
his/her
estate, personal representative or beneficiary who acquires the
Option by will or by the laws of descent and distribution, and
shall expire on its normal date of expiration unless previously
exercised (except that an Incentive Stock Option shall cease to
be an Incentive Stock Option upon the expiration of twelve
(12) months from the date of the Participants death
and thereafter shall be a Non-Qualified Option). Such provisions
shall be determined in the sole discretion of the Committee,
need not be uniform among all Options issued pursuant to the
Plan, and may reflect distinctions based on the reasons for
termination of Service.
8.5. Change in Control. Unless the
Committee otherwise provides in an Award Agreement or in a
written agreement with the Participant after the Award Agreement
is issued, in the event of a Change in Control, a
Participants unvested Options shall become fully vested
and may be exercised until their normal date of expiration.
8.6. Limitations on Exercise of
Option. Notwithstanding any other provision of
the Plan, in no event may any Option be exercised, in whole or
in part, after the occurrence of an event referred to in
Section 17 hereof which results in termination of
the Option.
8.7. Method of Exercise. An Option that
is exercisable may be exercised by the Participants
delivery to the Company of written notice of exercise on any
business day, at the Companys principal office, on the
form specified by the Committee. Such notice shall specify the
number of Shares or TRG Units with respect to which the Option
is being exercised and, except to the extent provided in
Section 12.3 or Section 12.4, shall be
accompanied by payment in full of the Option Price of the Shares
or TRG Units for which the Option is being exercised plus the
amount (if any) of federal
and/or other
taxes which the Company or an Affiliate may, in its judgment, be
required to withhold with respect to an Award. The minimum
number of Shares or TRG Units with respect to which an Option
may be exercised, in whole or in part, at any time shall be the
lesser of (i) 100 Shares or TRG Units or such lesser
number set forth in the applicable Award Agreement and
(ii) the maximum number of Shares or TRG Units available
for purchase under the Option at the time of exercise.
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8.8. Rights of Holders of Options. Unless
otherwise stated in the applicable Award Agreement, a
Participant holding or exercising an Option shall have none of
the rights of a shareholder or of a limited partner of TRG (for
example, the right to receive cash or dividend payments or
distributions attributable to the subject Shares or to direct
the voting of the subject Shares) until the Shares or TRG Units
covered thereby are fully paid and issued to the Participant.
Except as provided in Section 17 hereof, no
adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such
issuance.
8.9. Delivery of Share
Certificates. Promptly after the exercise of an
Option to purchase Shares by a Participant and the payment in
full of the Option Price, such Participant shall be entitled to
the issuance of a Share certificate or certificates evidencing
his/her
ownership of the Shares purchased upon such exercise.
8.10. Transferability of Options. Except
as provided in Section 8.11, during the lifetime of
a Participant, only the Participant (or, in the event of legal
incapacity or incompetency, the Participants guardian or
legal representative) may exercise an Option. Except as provided
in Section 8.11, no Option shall be assignable or
transferable by the Participant to whom it is granted, other
than by will or the laws of descent and distribution.
8.11. Family Transfers. If authorized in
the applicable Award Agreement, a Participant may transfer, not
for value, all or part of an Option which is not an Incentive
Stock Option to any Family Members. For the purpose of this
Section 8.11, a not for value transfer
is a transfer which is (i) a gift to a trust for the
benefit of the participant
and/or one
or more Family Members, or (ii) a transfer under a domestic
relations order in settlement of marital property rights.
Following a transfer under this Section 8.11, any
such Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer.
Subsequent transfers of transferred Options are prohibited
except in accordance with this Section 8.11 or by
will or the laws of descent and distribution. The events of
termination of Service of Section 8.4 hereof shall
continue to be applied with respect to the original Participant,
following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in
Section 8.4.
8.12. Limitations on Incentive Stock
Options. An Option shall constitute an Incentive
Stock Option only (i) if the Participant of such Option is
an employee of TCO or any Subsidiary of TCO; (ii) to the
extent specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the Shares
with respect to which all Incentive Stock Options held by such
Participant become exercisable for the first time during any
calendar year (under the Plan and all other plans of the
Participants employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options
into account in the order in which they were granted.
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9.
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TERMS AND
CONDITIONS OF SHARE APPRECIATION RIGHTS
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9.1. Right to Payment and Grant Price. An
SAR shall confer on the Participant to whom it is granted a
right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one Share on the date of
exercise over (B) the grant price of the SAR as determined
by the Committee. The Award Agreement for an SAR shall specify
the grant price of the SAR, which shall be at least the Fair
Market Value of a Share on the Grant Date. SARs may be granted
in conjunction with all or part of an Option granted under the
Plan or at any subsequent time during the term of such Option,
in conjunction with all or part of any other Award or without
regard to any Option or other Award.
9.2. Other Terms. The Committee shall
determine at the Grant Date or thereafter, the time or times at
which and the conditions under which an SAR may be exercised
(including based on achievement of performance goals
and/or
future service requirements), the time or times at which SARs
shall cease to be or become exercisable following termination of
Service or upon other conditions (provided that no SAR shall be
exercisable following the tenth anniversary of its Grant Date),
the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which
Shares will be delivered or deemed to be delivered to
Participants, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and
conditions of any SAR.
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10.
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TERMS AND
CONDITIONS OF RESTRICTED SHARES, RESTRICTED SHARE UNITS,
RESTRICTED TRG UNITS AND RESTRICTED TRG UNIT UNITS
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10.1. Grant of Restricted Shares or Restricted Share
Units. Awards of Restricted Shares, Restricted
Share Units, Restricted TRG Units or Restricted TRG Unit Units
may be made to eligible persons. Restricted Shares, Restricted
Share Units, Restricted TRG Units or Restricted TRG Unit Units
may also be referred to as performance shares, performance share
units, performance TRG Units or performance TRG Unit units. If
so indicated in the Award Agreement at the time of grant, a
Participant may vest in more than 100% of the number of
Restricted Share Units or Restricted TRG Unit Units awarded to
the Participant.
10.2. Restrictions. At the time an Award
of Restricted Shares, Restricted Share Units, Restricted TRG
Units or Restricted TRG Unit Units is made, the Committee may,
in its sole discretion, establish a period of time (a
restricted period) applicable to such Restricted
Shares, Restricted Share Units, Restricted TRG Units or
Restricted TRG Unit Units, during which a portion of the Shares
or TRG Units related to such Award shall become nonforfeitable
or vest, on each anniversary of the grant Date or otherwise, as
the Committee may deem appropriate. Each Award of Restricted
Shares, Restricted Share Units, Restricted TRG Units or
Restricted TRG Unit Units may be subject to a different
restricted period. The Committee may, in its sole discretion, at
the time a grant of Restricted Shares, Restricted Share Units,
Restricted TRG Units or Restricted TRG Unit Units is made,
prescribe restrictions in addition to or other than the
expiration of the restricted period, including the satisfaction
of corporate or individual performance conditions, which may be
applicable to all or any portion of the Restricted Shares,
Restricted Share Units, Restricted TRG Units or Restricted TRG
Unit Units in accordance with Section 14.1 and
14.2. Neither Restricted Shares, Restricted Share Units,
Restricted TRG Units nor Restricted TRG Unit Units may be sold,
transferred, assigned, pledged or otherwise encumbered or
disposed of during the restricted period or prior to the
satisfaction of any other restrictions prescribed by the
Committee with respect to such Restricted Shares, Restricted
Share Units, Restricted TRG Units or Restricted TRG Unit Units.
Each Participant may designate a beneficiary for the Restricted
Shares, Restricted Share Units, Restricted TRG Units or
Restricted TRG Unit Units awarded to him or her under the Plan.
If a Participant fails to designate a beneficiary, the
Participant shall be deemed to have designated his or her estate
as his or her beneficiary.
10.3. Restricted Shares Certificates. The
Company shall issue, in the name of each Participant to whom
Restricted Shares have been granted, Share certificates
representing the total number of Restricted Shares granted to
the Participant, as soon as reasonably practicable after the
Grant Date. The Committee may provide in an Award Agreement that
either (i) the Company shall hold such certificates for the
Participants benefit until such time as the Restricted
Shares are forfeited to the Company or the restrictions lapse,
or (ii) such certificates shall be delivered to the
Participant, provided, however, that such
certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate
reference to the restrictions imposed under the Plan and the
Award Agreement.
10.4. Rights of Holders of Restricted Shares and
Restricted TRG Units. Unless the Committee
otherwise provides in an Award Agreement, holders of Restricted
Shares shall have the right to vote such Shares and holders of
Restricted Shares or Restricted TRG Units shall have the right
to receive any dividends or distributions declared or paid with
respect to such Shares or TRG Units. All distributions, if any,
received by a Participant with respect to Restricted Shares or
Restricted TRG Units as a result of any share split, share
dividend, combination of shares, or other similar transaction
shall be subject to the restrictions applicable to the original
Award.
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10.5.
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Rights of Holders of Restricted Share Units and Restricted
TRG Unit Units.
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10.5.1. Dividend Rights. Unless the
Committee otherwise provides in an Award Agreement, holders of
Restricted Share Units shall have no rights as shareholders of
the Company and holders of Restricted TRG Unit Units shall have
no rights as a limited partner of TRG. The Committee may provide
in an Award Agreement evidencing a grant of Restricted Share
Units or Restricted TRG Unit Units that the holder of such
Restricted Share Units or Restricted TRG Unit Units shall be
entitled to receive, upon the payment of a cash dividend or
distribution on outstanding Shares or TRG Units, as the case may
be, or at any time thereafter, a cash payment for each
Restricted Share Unit or Restricted TRG Unit Units held equal to
the per-share dividend or per-TRG Unit distribution, as the case
may be, paid on the Shares or TRG Units in accordance with
Section 13.
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10.5.2. Creditors Rights. A holder
of Restricted Share Units or Restricted TRG Unit Units shall
have no rights other than those of a general creditor of the
Company. Restricted Share Units and Restricted TRG Unit Units
represent an unfunded and unsecured obligation of the Company,
subject to the terms and conditions of the applicable Award
Agreement.
10.6. Termination of Service. Unless the
Committee otherwise provides in an Award Agreement or in a
written agreement with the Participant after the Award Agreement
is issued, upon the termination of a Participants Service,
any Restricted Shares, Restricted Share Units, Restricted TRG
Units or Restricted TRG Unit Units held by such Participant that
have not vested, or with respect to which all applicable
restrictions and conditions have not lapsed, shall immediately
be deemed forfeited, except to the extent that such termination
is due to death, Disability, Retirement, lay-off in connection
with a reduction in force or Change in Control or as otherwise
specified in the Award Agreement. Further, the Award Agreement
may specify that the vested portion of the Award shall continue
to be subject to the terms of any applicable transfer or other
restriction. Upon forfeiture of Restricted Shares, Restricted
Share Units, Restricted TRG Units or Restricted Unit Units, the
Participant shall have no further rights with respect to such
Award, including but not limited to any right to vote Restricted
Shares or any right to receive dividends with respect to
Restricted Shares, Restricted Share Units, Restricted TRG Units
or Restricted TRG Unit Units.
10.7. Delivery of Share. Except as
otherwise specified in an Award Agreement with respect to a
particular Award of Restricted Shares or unless TCO shall then
have uncertificated Shares, within thirty (30) days of the
expiration or termination of the restricted period, a
certificate or certificates representing all Shares relating to
such Award which have not been forfeited shall be delivered to
the Participant or to the Participants beneficiary or
estate, as the case may be. Except as otherwise specified with
respect to a particular Award of Restricted Share Units or
unless TCO shall then have uncertificated shares, within thirty
(30) days of the satisfaction of the vesting criterion
applicable to such Award, a certificate or certificates
representing all Shares relating to such Award which have vested
shall be issued or transferred to the Participant.
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11.
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TERMS AND
CONDITIONS OF UNRESTRICTED SHARE AWARDS
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The Committee may, in its sole discretion, grant (or sell at
such purchase price determined by the Committee) an Unrestricted
Share Award to any Participant pursuant to which such
Participant may receive Shares or TRG Units free of any
restrictions (Unrestricted Shares) under the Plan.
Unrestricted Share Awards may be granted or sold as described in
the preceding sentence in respect of past services and other
valid consideration, or in lieu of, or in addition to, any cash
compensation due to such Participant.
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12.
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FORM OF
PAYMENT FOR OPTIONS
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12.1. General Rule. Payment of the Option
Price for the Shares or TRG Units purchased pursuant to the
exercise of an Option shall be made in cash or in cash
equivalents acceptable to the Company.
12.2. Surrender of Shares or TRG
Units. To the extent approved by the Committee in
its sole discretion, payment of the Option Price for Shares or
TRG Units purchased pursuant to the exercise of an Option may be
made all or in part through the tender to the Company of Shares
or TRG Units, which Shares, if acquired from the Company, shall
have been held for at least six months at the time of tender and
which shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their Fair
Market Value on the date of exercise or surrender.
12.3. Cashless Exercise. To the extent
permitted by law and to the extent permitted by the Committee in
its sole discretion, payment of the Option Price for Shares or
TRG Units purchased pursuant to the exercise of an Option may be
made all or in part by delivery (on a form acceptable to the
Committee) of an irrevocable direction to a registered
securities broker acceptable to the Company to sell Shares and
to deliver all or part of the sales proceeds to the Company in
payment of the Option Price and any withholding taxes described
in Section 18.3.
12.4. Other Forms of Payment. To the
extent permitted by the Committee in its sole discretion,
payment of the Option Price for Shares or TRG Units purchased
pursuant to exercise of an Option may be made in any other form
that is consistent with applicable laws, regulations and rules.
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13.
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TERMS AND
CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS
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13.1. Dividend Equivalent Rights. A
Dividend Equivalent Right is an Award entitling the recipient to
receive credits based on cash distributions that would have been
paid on the Shares or TRG Units specified in the Dividend
Equivalent Right (or other Award to which it relates) if such
Shares or TRG Units had been issued to and held by the
recipient. A Dividend Equivalent Right may be granted hereunder
to any Participant, provided that any Award of Dividend
Equivalent Rights that is a 409A Award and shall comply with the
Code Section 409A requirements applicable to deferred
compensation. Dividend Equivalent Rights may not be granted
hereunder relating to Shares or TRG Units that are subject to
Options or Share Appreciation Rights. The terms and conditions
of Dividend Equivalent Rights shall be specified in the Award.
Dividend equivalents credited to the holder of a Dividend
Equivalent Right may be paid currently or may be deemed to be
reinvested in additional Shares or TRG Units, which may
thereafter accrue additional equivalents. Any such reinvestment
shall be at Fair Market Value on the date that the distribution
otherwise would have been paid. Dividend Equivalent Rights may
be settled in cash or Shares or TRG Units or a combination
thereof, in a single installment or installments, all determined
in the sole discretion of the Committee. A Dividend Equivalent
Right granted as a component of another Award may provide that
such Dividend Equivalent Right shall be settled upon exercise,
settlement, or payment of, or lapse of restrictions on, such
other Award, unless such settlement would cause an Award that is
otherwise exempt from Code Section 409A to become subject
to Code Section 409A (e.g., in the case of a Non-Qualified
Option), such Dividend Equivalent Right shall expire or be
forfeited or annulled under the same conditions as such other
Award. A Dividend Equivalent Right granted as a component of
another Award may also contain terms and conditions different
from such other Award.
13.2. Termination of Service. Except as
may otherwise be provided by the Committee either in the Award
Agreement or in a written agreement with the Participant after
the Award Agreement is issued, a Participants rights in
all Dividend Equivalent Rights shall automatically terminate
upon the Participants termination of Service for any
reason.
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14.
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TERMS AND
CONDITIONS OF PERFORMANCE AWARDS
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14.1. Performance Conditions. The right
of a Participant to exercise or receive a grant or settlement of
any Performance Award, and the timing thereof, may be subject to
such corporate or individual performance conditions as may be
specified by the Committee. The Committee may use such business
criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any
Award subject to performance conditions, except as limited under
Sections 14.2 hereof in the case of a Performance
Award intended to qualify under Code Section 162(m).
14.2. Performance Awards Granted to Designated Covered
Employees. If and to the extent that the
Committee determines that a Performance Award to be granted to a
Participant who is designated by the Committee as likely to be a
Covered Employee should qualify as performance-based
compensation for purposes of Code Section 162(m), the
grant, exercise
and/or
settlement of such Performance Award shall be contingent upon
achievement of pre-established performance goals and other terms
set forth in this Section 14.2.
14.2.1. Performance Goals Generally. The
performance goals for such Performance Awards shall consist of
one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified
by the Committee consistent with this Section 14.2.
Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement
of performance goals being substantially uncertain.
The Committee may determine that such Performance Awards shall
be granted, exercised
and/or
settled upon achievement of any one performance goal or that two
or more of the performance goals must be achieved as a condition
to grant, exercise
and/or
settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or
to different Participants.
14.2.2. Business Criteria. One or more of
the following business criteria for TCO, on a consolidated
basis,
and/or
specified Subsidiaries or business units of TCO or the Company
(except with respect to the total shareholder return and
earnings per share criteria), shall be used exclusively by the
Committee in
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establishing performance goals for such Performance Awards:
(1) total shareholder return (share price appreciation plus
dividends), (2) net income, (3) earnings per share,
(4) funds from operations, (5) funds from operations
per share, (6) return on equity, (7) return on assets,
(8) return on invested capital, (9) increase in the
market price of Shares or other securities, (10) revenues,
(11) net operating income, (12) comparable center net
operating income, (13) operating margin (operating income
divided by revenues), (14) earnings before interest, taxes,
depreciation and amortization (EBITDA) or adjusted EBITDA,
(15) the performance of the Company in any one or more of
the items mentioned in clauses (1) through (14) in
comparison to the average performance of the companies used in a
self-constructed peer group for measuring performance under an
Award, or (16) the performance of the Company in any one or
more of the items mentioned in clauses (1) through
(14) in comparison to a budget or target for measuring
performance under an Award. Business criteria may be measured on
an absolute basis or on a relative basis (i.e., performance
relative to peer companies) and on a GAAP or non-GAAP basis.
14.2.3. Timing For Establishing Performance
Goals. Performance goals shall be established, in
writing, not later than 90 days after the beginning of any
performance period applicable to such Performance Awards, or at
such other date as may be required for performance-based
compensation under Code Section 162(m).
14.2.4. Settlement of Performance Awards; Other
Terms. Settlement of such Performance Awards
shall be in Shares, other Awards or other property, in the
discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards. The Committee
shall specify in the Award Agreement the circumstances in which
such Performance Awards shall be paid or forfeited in the event
of termination of Service by the Participant prior to the end of
a performance period or settlement of Performance Awards.
14.3. Written Determinations. All
determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards
shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). To the extent required
to comply with Code Section 162(m), the Committee may
delegate any responsibility relating to such Performance Awards.
14.4. Status of Section 14.2 Awards Under Code
Section 162(m). It is the intent of the
Company that Performance Awards under Section 14.2
hereof granted to persons who are designated by the
Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder shall, if
so designated by the Committee, constitute qualified
performance-based compensation within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, the
terms of Section 14.2, including the definitions of
Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder. The foregoing notwithstanding, the
term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance
Awards, as likely to be a Covered Employee with respect to that
fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards does not comply or is
inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such
requirements.
15. PARACHUTE
LIMITATIONS. Notwithstanding any other provision
of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a
Participant with the Company, TCO, TRG, or a Subsidiary or
affiliate of any of them, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an Other
Agreement), and notwithstanding any formal or informal
plan or other arrangement for the direct or indirect provision
of compensation to the Participant (including groups or classes
of Participants or beneficiaries of which the Participant is a
member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Participant
(a Benefit Arrangement), if the Participant is a
disqualified individual, as defined in
Section 280G(c) of the Code, any Option, Restricted Shares,
Restricted Share Units, Restricted TRG Units or Restricted TRG
Unit Units held by that Participant and any right to receive any
payment or other benefit under this Plan shall not become
exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all
other rights,
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payments, or benefits to or for the Participant under this Plan,
all Other Agreements, and all Benefit Arrangements, would cause
any payment or benefit to the Participant under this Plan to be
considered a parachute payment within the meaning of
Section 280G(b)(2) of the Code as then in effect (a
Parachute Payment) and (ii) if, as a
result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Participant from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would
be less than the maximum after-tax amount that could be received
by the Participant without causing any such payment or benefit
to be considered a Parachute Payment. In the event that the
receipt of any such right to exercise, vesting, payment, or
benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Participant under any Other
Agreement or any Benefit Arrangement would cause the Participant
to be considered to have received a Parachute Payment under this
Plan that would have the effect of decreasing the after-tax
amount received by the Participant as described in
clause (ii) of the preceding sentence, then the Participant
shall have the right, in the Participants sole discretion,
to designate those rights, payments, or benefits under this
Plan, any Other Agreements, and any Benefit Arrangements that
should be reduced or eliminated so as to avoid having the
payment or benefit to the Participant under this Plan be deemed
to be a Parachute Payment, provided that any such payment or
benefit that is excluded from the coverage of Code
Section 409A shall be reduced or eliminated prior to the
reduction or elimination of any benefit that is related to a
409A Award.
16.1. General. The Company shall not be
required to sell, deliver or cause to be issued any Shares or
TRG Units under any Award if the sale or issuance of such Shares
or TRG Units would constitute a violation by the Participant,
any other individual exercising an Option, or the Company, TCO
or TRG of any provision of any law or regulation of any
governmental authority, including without limitation any federal
or state securities laws or regulations. If at any time the
Company shall determine, in its discretion, that the listing,
registration or qualification of any Shares or TRG Units subject
to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of
shares hereunder, no Shares or TRG Units may be issued or sold
to the Participant or any other individual exercising an Option
pursuant to such Award unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company,
TCO or TRG, and any delay caused thereby shall in no way affect
the date of termination of the Award. Any determination in this
connection by the Company, TCO or TRG shall be final, binding,
and conclusive. The Company may, but shall in no event be
obligated to, cause to be registered any securities covered
hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of Shares or TRG Units
pursuant to the Plan to comply with any law or regulation of any
governmental authority.
16.2. Rule 16b-3. During
any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the
intent of the Company that Awards pursuant to the Plan and the
exercise of Options granted hereunder will qualify for the
exemption provided by
Rule 16b-3
under the Exchange Act. To the extent that any provision of the
Plan or action by the Committee does not comply with the
requirements of
Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law
and deemed advisable by the Committee and shall not affect the
validity of the Plan. In the event that
Rule 16b-3
is revised or replaced, the Board may exercise its discretion to
modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
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17.
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EFFECT OF
CHANGES IN CAPITALIZATION
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17.1. Changes in Shares or TRG Units. If
the number of outstanding Shares or TRG Units is increased or
decreased or the Shares or TRG Units are changed into or
exchanged for a different number or kind of shares or other
securities of TCO or TRG on account of any recapitalization,
reclassification, share split, reverse split, combination of
shares, exchange of shares, share dividend or other distribution
payable in capital stock or interests in TRG, or other increase
or decrease in such Shares or TRG Units effected without receipt
of consideration by TCO or TRG, as the case may be, occurring
after the Effective Date, the number and kinds of Shares or TRG
Units for which grants of Options and other Awards may be made
under the Plan shall be adjusted proportionately and accordingly
by the Company. In addition, the number and kind of Shares of
TRG Units for which Awards are
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outstanding shall be adjusted proportionately and accordingly so
that the proportionate interest of the Participant immediately
following such event shall, to the extent practicable, be the
same as immediately before such event. Any such adjustment in
outstanding Options or SARs shall not change the aggregate
Option Price or SAR Exercise Price payable with respect to
Shares or TRG Units that are subject to the unexercised portion
of an outstanding Option or SAR, as applicable, but shall
include a corresponding proportionate adjustment in the Option
Price or SAR Exercise Price per Share or TRG Unit. The
conversion of any convertible securities of TCO shall not be
treated as an increase in Shares effected without receipt of
consideration. Notwithstanding the foregoing, in the event of
any distribution to TCOs shareholders of securities of any
other entity or other assets (including an extraordinary cash
dividend but excluding a non-extraordinary dividend payable in
cash or in share of TCO) without receipt of consideration by
TCO, the Company may, in such manner as the Company deems
appropriate, adjust (i) the number and kind of Shares or
TRG Units subject to outstanding Awards
and/or
(ii) the exercise price of outstanding Options and Share
Appreciation Rights to reflect such distribution.
17.2. Reorganization in which TCO is the Surviving
Entity. Subject to Section 17.3
hereof, if TCO shall be the surviving entity in any
reorganization, merger, or consolidation of TCO with one or more
other entities which does not constitute a Corporate
Transaction, any Option or SAR theretofore granted pursuant to
the Plan shall pertain to and apply to the securities to which a
holder of the number of Shares or TRG Units subject to such
Option or SAR would have been entitled immediately following
such reorganization, merger, or consolidation, with a
corresponding proportionate adjustment of the Option Price or
SAR Exercise Price per share so that the aggregate Option Price
or SAR Exercise Price thereafter shall be the same as the
aggregate Option Price or SAR Exercise Price of the Shares or
TRG Units remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation. Subject
to any contrary language in an Award Agreement, any restrictions
applicable to such Award shall apply as well to any replacement
securities received by the Participant as a result of the
reorganization, merger or consolidation. In the event of a
transaction described in this Section 17.2,
Restricted Share Units shall be adjusted so as to apply to the
securities that a holder of the number of Shares subject to the
Restricted Share Units would have been entitled to receive
immediately following such transaction.
17.3. Corporate Transaction. Subject to
the exceptions set forth in the last sentence of this
Section 17.3, the last sentence of
Section 17.4 and the requirements of
Section 409A of the Code:
(i) upon the occurrence of a Corporate Transaction, all
outstanding Options, Restricted Shares and Restricted TRG Units
shall be deemed to have vested, and all Restricted Share Units
and Restricted TRG Unit Units shall be deemed to have vested and
the Shares or TRG Units subject thereto shall be delivered,
immediately prior to the occurrence of such Corporate
Transaction, and
(ii) either of the following two actions shall be taken:
(A) fifteen days prior to the scheduled consummation of a
Corporate Transaction, all Options and SARs outstanding
hereunder shall become immediately exercisable and shall remain
exercisable for a period of fifteen days, or
(B) the Committee may elect, in its sole discretion, to
cancel any outstanding Awards of Options, Restricted Shares,
Restricted Share Units, Restricted TRG Units, Restricted TRG
Unit Units,
and/or SARs
and pay or deliver, or cause to be paid or delivered, to the
holder thereof an amount in cash or securities having a value
(as determined by the Committee acting in good faith), in the
case of Restricted Shares, Restricted Share Units, Restricted
TRG Units or Restricted TRG Unit Units, equal to the formula or
fixed price per Share paid to holders of Shares and, in the case
of Options or SARs, equal to the product of the number of Shares
or TRG Units subject to the Option or SAR (the Award
Shares) multiplied by the amount, if any, by which
(I) the formula or fixed price per Share paid to holders of
Shares pursuant to such transaction exceeds (II) the Option
Price or SAR Exercise Price applicable to such Award Shares.
With respect to the Companys establishment of an exercise
window, (i) any exercise of an Option or SAR during such
fifteen-day
period shall be conditioned upon the consummation of the event
and shall be effective only immediately before the consummation
of the event, and (ii) upon consummation of any Corporate
Transaction, the Plan and all outstanding but unexercised
Options and SARs shall terminate. The Committee shall send
written notice of an event that will result in such a
termination to all individuals who hold Options and SARs not
later than
A-15
the time at which the Company gives notice thereof to its
shareholders. This Section 17.3 shall not apply to
any Corporate Transaction to the extent that provision is made
in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options, SARs, Restricted
Shares, Restricted Share Units, Restricted TRG Units and
Restricted TRG Unit Units theretofore granted, or for the
substitution for such Options, SARs, Restricted Shares,
Restricted Share Units, Restricted TRG Units and Restricted TRG
Unit Units of new options, SARs, restricted shares, restricted
shares units, and restricted units relating to the shares of a
successor entity, or a parent or subsidiary thereof, with
appropriate adjustments as to the number of shares or
partnership units (disregarding any consideration that is not
common shares or partnership units) and option and share
appreciation right exercise prices, in which event the Plan,
Options, SARs, Restricted Shares, Restricted Share Units,
Restricted TRG Units and Restricted TRG Unit Units theretofore
granted shall continue in the manner and under the terms so
provided. Appropriate adjustments shall be made taking into
account Treas. Reg.
Section 1.409A-1(b)(5)(v)(D)
regarding substitutions and assumptions of stock rights by
reason of a corporate transaction.
17.4. Adjustments. Adjustments under this
Section 17 related to Shares or other securities of
the Company, TCO and TRG shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive. No fractional Shares, TRG Units or other securities
shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated
in each case by rounding to the nearest whole Share or TRG Unit.
The Committee shall determine the effect of a Corporate
Transaction upon Awards other than Options, SARs, Restricted
Shares, Restricted Share Units, Restricted TRG Units and
Restricted TRG Unit Units, and such effect shall be set forth in
the appropriate Award Agreement. The Committee may provide in
the Award Agreements at the Grant Date, or any time thereafter
with the consent of the Participant, for different provisions to
apply to an Award in place of those described in
Sections 17.1, 17.2 and 17.3.
17.5. No Limitations on Company. The
making of Awards pursuant to the Plan shall not affect or limit
in any way the right or power of the Company, TCO, TRG, or a
Subsidiary or Affiliate of any of them to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its
business or assets.
18.1. Disclaimer of Rights. No provision
in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual the right to remain in
the employ or service of the Company, TCO, TRG, or a Subsidiary
or Affiliate of any of them, or to interfere in any way with any
contractual or other right or authority of the Company either to
increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other
relationship between any individual and the Company, TCO, TRG,
or a Subsidiary or Affiliate of any of them. In addition,
notwithstanding anything contained in the Plan to the contrary,
unless otherwise stated in the applicable Award Agreement, no
Award granted under the Plan shall be affected by any change of
duties or position of the Participant, so long as such
Participant continues to be a Director, officer, consultant or
employee of the Company, TCO, TRG, or a Subsidiary or Affiliate
of any of them. The obligation of the Company to pay any
benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party or otherwise
hold any amounts in trust or escrow for payment to any
Participant or beneficiary under the terms of the Plan.
18.2. Nonexclusivity of the Plan. Neither
the adoption of the Plan nor the submission of the Plan to
TCOs shareholders for approval shall be construed as
creating any limitations upon the right and authority of the
Board to adopt such other incentive compensation arrangements
(which arrangements may be applicable either generally to a
class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its
discretion determines desirable, including, without limitation,
the granting of options otherwise than under the Plan.
18.3. Withholding Taxes. The Company,
TCO, TRG, or a Subsidiary or Affiliate of any of them, as the
case may be, shall have the right to deduct from payments of any
kind otherwise due to a Participant any federal, state, or local
taxes of any kind required by law to be withheld with respect to
the vesting of or other lapse of restrictions applicable to an
Award or upon the issuance of any Shares or TRG Units upon the
exercise of an Option
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or pursuant to an Award. At the time of such vesting, lapse, or
exercise, the Participant shall pay to the Company, TCO, TRG, or
a Subsidiary or Affiliate of any of them, as the case may be,
any amount that the Company, TCO, TRG, or a Subsidiary or
Affiliate of any of them may reasonably determine to be
necessary to satisfy such withholding obligation. The Company
may elect to, or may cause TCO, TRG, or a Subsidiary or
Affiliate of any of them, to withhold Shares or TRG Units
otherwise issuable to the Participant in satisfaction of a
Participants withholding obligations. Subject to the prior
approval of the Company, which may be withheld by the Company in
its sole discretion, the Participant may elect to satisfy such
obligations, in whole or in part, by delivering to the Company,
TCO, TRG, or a Subsidiary or Affiliate of any of them Shares or
TRG Units already owned by the Participant, which Shares, if
acquired from the Company, shall have been held for at least six
months at the time of tender. Any Shares or TRG Units so
delivered or withheld shall have an aggregate Fair Market Value
equal to such withholding obligations. The Fair Market Value of
the Shares or TRG Units used to satisfy such withholding
obligation shall be determined by the Company as of the date
that the amount of tax to be withheld is to be determined. A
Participant who has made an election pursuant to this
Section 18.3 to deliver Shares may satisfy
his/her
withholding obligation only with Shares that are not subject to
any repurchase, forfeiture, unfulfilled vesting, or other
similar requirements.
18.4. Captions. The use of captions in
this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.
18.5. Other Provisions. Each Award
granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined
by the Committee, in its sole discretion.
18.6. Number and Gender. With respect to
words used in this Plan, the singular form shall include the
plural form, the masculine gender shall include the feminine
gender, etc., as the context requires.
18.7. Severability. If any provision of
the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall
be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other
jurisdiction.
18.8. Governing Law. The validity and
construction of this Plan and the instruments evidencing the
Awards hereunder shall be governed by the laws of the State of
Michigan, other than any conflicts or choice of law rule or
principle that might otherwise refer construction or
interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other
jurisdiction.
18.9. Section 409A of the Code. The
Board intends to comply with Code Section 409A, or an
exclusion from Code Section 409A coverage, with regard to
Awards hereunder and all provisions herein shall be interpreted
accordingly.
* * *
As adopted and approved by the Board as of February 27,
2008, subject to approval of the Plan by the shareholders of TCO
as set forth in this Plan.
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200 EAST LONG LAKE RD.
SUITE 300
BLOOMFIELD HILLS, MI 48303
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 23, 2008 for 401(k) Plan shareholders and up until 11:59 P.M. Eastern Time on May 28, 2008 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 23, 2008 for 401(k) Plan shareholders and up until 11:59 P.M. Eastern Time on May 28, 2008 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 Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Proxy cards must be received by May 28, 2008.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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TAUBM1 |
KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
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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, 2, and 3 and AGAINST Item 4. |
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For |
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Withhold |
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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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Vote on Directors |
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1. |
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Election
of Directors |
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Nominees: |
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01) Ronald W. Tysoe (for a two-year term) |
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02) Robert S. Taubman (for a three-year term) |
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03) Lisa A. Payne (for a three-year term) |
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04) William U. Parfet (for a three-year term) |
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Vote on Proposals |
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Abstain |
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2. |
Ratification of the appointment of KPMG LLP as the independent registered public accounting firm for 2008.
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3. |
Approval of the 2008 Omnibus Long-Term Incentive Plan.
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4. |
Shareholder proposal requesting that the Board of Directors take the necessary steps to declassify the Board of Directors.
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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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PLEASE SIGN EXACTLY AS NAME APPEARS HEREIN. 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 [PLEASE SIGN WITHIN
BOX] |
Date |
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Signature (Joint Owners) |
Date |
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Important Notice Regarding Internet Availability of Proxy Materials for the Annual
Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
ê FOLD AND DETACH HERE ê
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS MAY 29, 2008
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 Thursday, May 29, 2008, and at any adjournment or postponement, 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 or postponement. 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), (2) AND (3) AND AGAINST ITEM (4) 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 Plan's 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.)