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
Filed by the Registrant
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Filed by a Party other than the Registrant
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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 Under § 240.14a-12
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CBL & ASSOCIATES PROPERTIES, 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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Fee computed on table below per Exchange Act Rules
14(a)-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction
applies:
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2)
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Aggregate number of securities to which transaction
applies:
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3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
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(Set forth the amount on which the filing fee is calculated and state
how it was determined):
4)
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Proposed maximum aggregate value of
transaction:
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of
its filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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CBL &
Associates Properties, Inc. Letterhead
2030
Hamilton Place Blvd., Suite 500
Chattanooga, TN 37421
(423)
855-0001
Dear
Stockholder:
You are cordially invited to attend the annual meeting of stockholders
which will be held at The Chattanoogan, 1201 South Broad Street, Chattanooga,
Tennessee, on Monday, May 5, 2008 at 4:00 p.m. (EDT).
The Notice and Proxy Statement on the following pages contain details
concerning the business to come before the meeting. Management will report on current
operations and there will be an opportunity for discussion concerning the Company and
its activities. Please sign and return your proxy card in the enclosed envelope, or
vote your shares by telephone or via the Internet, to ensure that your shares will be
represented and voted at the meeting even if you cannot attend. Even if you plan to
attend the meeting, you are urged to sign and return the enclosed proxy card, or to
vote your shares by telephone or via the Internet in accordance with the instructions
on the enclosed proxy card.
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I look forward to personally meeting all stockholders
who are able to attend.
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Chairman of the Board and
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CBL & ASSOCIATES PROPERTIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 5, 2008
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CBL
& Associates Properties, Inc., a Delaware corporation (the “Company”),
will be held at The Chattanoogan, 1201 South Broad Street, Chattanooga, Tennessee, on
Monday, May 5, 2008 at 4:00 p.m. (EDT) for the following purposes:
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1.
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To re-elect four directors to serve for a term of three
years and until their respective successors are elected and
qualified;
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2.
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To act upon a proposal to ratify the selection of
Deloitte & Touche LLP as the independent registered public
accountants for the Company’s fiscal year ending December 31,
2008; and
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3.
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To consider and act upon any other matters which may
properly come before the meeting or any adjournment thereof.
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In accordance with the provisions of the Company’s Bylaws, the
Board of Directors has fixed the close of business on March 10, 2008, as the record
date for the determination of the stockholders entitled to notice of, and to vote at,
the Annual Meeting.
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Your attention is directed to the accompanying Proxy
Statement.
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Whether or not you plan to attend the meeting, we urge you to submit
your Proxy. To submit your Proxy by mail, please sign, date and promptly return the
enclosed Proxy in order to ensure representation of your shares. An addressed envelope
for which no postage is required if mailed in the United States is enclosed for that
purpose. Alternatively, you may use the toll-free telephone number indicated on the
enclosed Proxy to vote by telephone or visit the website indicated on the enclosed
Proxy to vote via the Internet. This will not prevent you from voting your shares at
the meeting if you desire to do so, as your Proxy is revocable at your
option.
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By Order of the Board of Directors
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Chattanooga, Tennessee
March
27, 2008
PROXY STATEMENT
CBL & ASSOCIATES PROPERTIES, INC.
2030 Hamilton Place Blvd.
Suite 500
CBL Center
Chattanooga, Tennessee 37421
ANNUAL MEETING OF STOCKHOLDERS
May 5, 2008
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of
Directors of CBL & Associates Properties, Inc., a Delaware corporation (the
“Company” or “CBL”), for use at the annual meeting of
stockholders of the Company (the “Annual Meeting”) to be held at The
Chattanoogan, 1201 South Broad Street, Chattanooga, Tennessee, on Monday, May 5, 2008,
at 4:00 p.m. (EDT) and at any and all postponements or adjournments thereof. Any proxy
given may be revoked at any time before it is voted by filing with the Secretary of the
Company either an instrument revoking it or a duly executed proxy bearing a later date.
All expenses of the solicitation of proxies for the Annual Meeting, including the cost
of mailing, will be borne by the Company. In addition to solicitation by mail, officers
and regular employees of the Company may solicit proxies from stockholders by
telephone, telegram or personal interview but will not receive additional compensation
for such services. The Company also intends to request persons holding stock in their
name or custody, or in the name of nominees, to send proxy materials to their
principals and request authority for the execution of the proxies. The Company will
reimburse such persons for the associated expense.
The Company anticipates mailing proxy materials and the Annual Report
for the Company’s fiscal year ended December 31, 2007, on or about March 27,
2008, to stockholders of record as of March 10, 2008.
VOTING SECURITIES
Record Date and Shares Entitled to Vote
Only stockholders of record at the close of business on March 10, 2008
are entitled to vote on the matters to be presented at the Annual Meeting. The number
of shares of the Company’s common stock, par value $.01 per share (“Common
Stock”), outstanding on such date and entitled to vote was 66,298,415
shares.
Quorum Requirements
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact business at
the Annual Meeting with respect to those matters requiring approval by the holders of
Common Stock, but if a quorum should not be present, the Annual Meeting may be
adjourned from time to time until a quorum is obtained.
Votes Necessary to Approve the Proposals
The affirmative vote of the holders of a plurality of the shares of the
Common Stock present or represented at the Annual Meeting is required for the election
of directors. The affirmative vote of a majority of the votes cast by the holders of
shares of Common Stock present or represented at the Annual Meeting is required for the
ratification of the selection of Deloitte & Touche LLP as the independent
registered public accountants (the “independent auditors”) for the
Company’s fiscal year ending December 31, 2008. Each share of Common Stock is
entitled to one vote with respect to those matters upon which such share is to be
voted. No cumulative voting rights are authorized and dissenters’ rights are not
applicable to these matters.
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Voting Procedures
A proxy card is being mailed to each holder of shares of the
Company’s Common Stock for voting with respect to each stockholder’s shares
of Common Stock. Stockholders holding shares of Common Stock should complete, sign and
return the proxy card to the Company. Alternatively, stockholders may use the toll-free
telephone number indicated on the enclosed proxy card to vote by telephone or visit the
website indicated on the enclosed proxy card to vote via the Internet.
Abstentions and broker non-votes (shares held by a broker or nominee
which are represented at the Annual Meeting, but with respect to which such broker or
nominee does not have discretionary authority to vote on a particular proposal) will be
counted as present at the Annual Meeting for the purpose of determining whether or not
a quorum exists. Abstentions and broker non-votes will have no effect on the election
of any nominee for director, so long as such nominee receives any affirmative votes.
Abstentions and broker non-votes also are not counted as votes cast “for”
or “against” a proposal, and so will have no effect on the ratification of
the selection of the independent auditors.
Unless contrary instructions are indicated on the accompanying proxy,
the shares represented thereby will be voted in accordance with the recommendations of
the Board of Directors.
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members divided into
three classes (having two, three and four members, respectively) serving staggered
three-year terms. Under the Company’s Amended and Restated Certificate of
Incorporation (the “Certificate of Incorporation”) and Amended and Restated
Bylaws (the “Bylaws”), a majority of the directors must be unaffiliated
(“Independent Directors”) with the Company and its predecessor entity, CBL
& Associates, Inc. and its affiliates (“CBL’s Predecessor”). Each
year the term of office of one class of directors expires.
Upon the recommendation of the Company’s Nominating/Corporate
Governance Committee, the Board of Directors intends to present for action at the
Annual Meeting the re-election of Charles B. Lebovitz, Claude M. Ballard, Gary L.
Bryenton and Leo Fields, whose present terms expire in 2008, to serve for a term of
three years and until their successors are duly elected and shall qualify. Mr. Lebovitz
is Chairman of the Board and Chief Executive Officer of the Company and is the Chairman
of the Company’s Executive Committee. Mr. Ballard, Mr. Bryenton and Mr. Fields
are three of the Company’s six Independent Directors. Mr. Ballard currently
serves as the Chairman of the Company’s Compensation Committee and as a member of
the Company’s Audit and Nominating/Corporate Governance Committees. Mr. Bryenton
currently serves as the Chairman of the Company’s Nominating/Corporate Governance
Committee and as a member of the Company’s Audit Committee. Mr. Fields serves as
a member of the Company’s Executive Committee.
Unless authority to vote for such directors is withheld, the enclosed
proxy will be voted for such persons, except that the persons designated as proxies
reserve discretion to cast their votes for other persons in the unanticipated event
that any of such nominees is unable or declines to serve.
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Nominees
Set
forth below is information with respect to the nominees for election:
Name
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Age
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Current Position*
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Charles B. Lebovitz
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71
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Chairman of the Board of Directors
and Chief Executive Officer
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Claude M. Ballard
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78
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Director
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Gary L. Bryenton
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68
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Director
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Leo Fields
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79
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Director
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__________________
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*
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The position shown represents the individual’s
position with the Company and with CBL & Associates Management,
Inc., a Delaware corporation (the “Management Company”),
through which the Company’s property management and development
activities are conducted.
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Charles B. Lebovitz
has served as Chairman
of the Board and Chief Executive Officer of the Company since the completion of its
initial public offering in November 1993 and is Chairman of the Executive Committee of
the Board of Directors. Mr. Lebovitz also served as President of the Company until
February 1999. Prior to the Company’s formation, he served in a similar capacity
with CBL’s Predecessor. Mr. Lebovitz has been involved in shopping center
development since 1961 when he joined his family’s development business. In 1970,
he became affiliated with Arlen Realty & Development Corp. (“Arlen”)
where he served as President of Arlen’s shopping center division, and, in 1978,
he founded CBL’s Predecessor together with his associates (the
“Associates”), including John N. Foy and Ben S. Landress. Mr. Lebovitz is
currently a member of the Board of Governors of the National Association of Real Estate
Investment Trusts (“NAREIT”), an Advisory Director of First Tennessee Bank,
N.A., Chattanooga, Tennessee and a National Vice Chairman of the United Jewish Appeal.
Mr. Lebovitz has previously served as Chairman of the International Council of Shopping
Centers (“ICSC”) and as a Trustee and Vice President (Southern Division) of
the ICSC. He is the father of Stephen D. Lebovitz and Michael I. Lebovitz, executive
officers of the Company, and Alan L. Lebovitz, one of the Company’s vice
presidents.
Claude M. Ballard, CRE, M.A.I.
has served
as a director of the Company since the completion of its initial public offering in
November 1993 and is Chairman of the Compensation Committee and a member of the Audit
and Nominating/Corporate Governance Committees of the Board of Directors. Mr. Ballard
has served as a general partner, limited partner and senior consultant of Goldman,
Sachs & Co. and as a Senior Vice President in the real estate division of the
Prudential Insurance Company of America. He is currently a director of Quapaw Council,
Boy Scouts of America, Horizon Hotel Corp. and Research Solutions, Inc. Mr. Ballard is
a member of the Board of Directors of St. Vincent’s Infirmary, Little Rock,
Arkansas. In 1999, the United States Tax Court determined that Mr. Ballard had
underpaid federal taxes and underreported income over a period of years ending in 1989
as result of participation in transactions found by the Tax Court to have involved
serious financial improprieties. (Investment Research Associates, Ltd. and
Subsidiaries, et al. v. Commissioner of Internal Revenue Service, T.C. Memo 1999-407).
Because of the nature of the transactions, the Tax Court upheld the imposition of
penalties under Internal Revenue Code Section 6663 and its predecessors. The Tax
Court’s decision was upheld by the United States Court of Appeals for the
Eleventh Circuit on February 13, 2003. Upon further appeal of the case to the United
States Supreme Court, on March 7, 2005, the Supreme Court in Ballard v. Commissioner
(544 U.S. 40 (2005)) reversed the decision of the Eleventh Circuit Court of Appeals and
remanded the case for further proceedings consistent with the Supreme Court’s
decision. The Eleventh Circuit Court of Appeals subsequently remanded the case to the
Tax Court on November 2, 2005, with instructions to review the matter in accordance
with the dictates of the Supreme Court. On February 1, 2007, the Tax Court issued an
opinion on its reconsideration of the case (Estate of Burton W. Kanter, et al. v.
Commissioner of Internal Revenue, T.C. Memo 2007-21), in which the Tax Court affirmed
its
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original findings regarding underreporting of income, underpayment of
taxes and the imposition of penalties under Internal Revenue Code Section 6663 and its
predecessors. Mr. Ballard has paid the taxes, penalties and interest at issue, and is
appealing the Tax Court’s decision on remand in this case.
Gary L. Bryenton
joined the Company as a
director on January 31, 2001, in accordance with the terms of the Company’s
acquisition of a portfolio of properties from Jacobs Realty Investors Limited
Partnership, a Delaware limited partnership (“JRI”) and certain of its
affiliates and partners (collectively referred to herein as the “Jacobs
Group” and the acquisition is referred to herein as the “Jacobs
Acquisition”). Mr. Bryenton is Chairman of the Company’s
Nominating/Corporate Governance Committee and a member of the Audit Committee of the
Board of Directors. Mr. Bryenton is a Senior Partner of the law firm of Baker &
Hostetler LLP and has formerly served as the firm’s Executive Partner and Chief
Operating Officer. He currently is a member of the Board of Trustees of each of
Heidelberg College and the Rutherford B. Hayes Presidential Center.
Leo Fields
has served as a director of the
Company since the completion of its initial public offering in November 1993 and is a
member of the Executive Committee of the Board of Directors. Mr. Fields is Co-Chairman
of Weisberg & Fields, Inc., an investment advisory firm he started in 1991. From
1984 through 1991, Mr. Fields directed Leo Fields Interests, a private investment firm.
He was affiliated with Zale Corporation from 1947 until his retirement in 1984,
serving, from 1981 to 1984, as Vice Chairman and a member of Zale’s Executive
Committee. Mr. Fields is also a director of the M. B. and Edna Zale
Foundation.
THE BOARD OF DIRECTORS RECOMMENDS
A
VOTE “FOR” THE ELECTION OF THE
FOUR DIRECTORS NAMED ABOVE
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Directors and Executive Officers
Set forth below is information with respect to the directors and
executive officers of the Company (other than Charles B. Lebovitz, Claude M. Ballard,
Gary L. Bryenton and Leo Fields):
Name
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Term
Expires (1)
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Age
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Current Position (2)
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Stephen D. Lebovitz
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2010
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47
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Director, President and Secretary
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John N. Foy
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2009
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64
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Vice Chairman of the Board of Directors, Chief Financial
Officer and Treasurer
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Martin J. Cleary
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2009
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72
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Director
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Matthew S. Dominski
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2009
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53
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Director
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Winston W. Walker
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2010
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64
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Director
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Ben S. Landress
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—
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80
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Executive Vice President - Management
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Augustus N. Stephas
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—
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65
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Chief Operating Officer – Senior Vice
President
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Michael I. Lebovitz
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—
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44
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Senior Vice President – Chief Development
Officer
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Victoria S. Berghel
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—
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55
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Senior Vice President - General Counsel
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Ronald L. Fullam
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—
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65
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Senior Vice President - Development
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Timothy S. Lowe
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—
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47
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Senior Vice President – Development
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Mark D. Mancuso
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—
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53
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Senior Vice President - Director of Development - New
England Office
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Charles H. May, II
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—
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64
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Senior Vice President - Development
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Farzana K. Mitchell
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—
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56
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Senior Vice President - Finance
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Jerry L. Sink
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—
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57
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Senior Vice President - Mall Management
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Eric P. Snyder
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—
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58
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Senior Vice President - Director of Corporate Leasing
(3)
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R. Stephen Tingle
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—
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62
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Senior Vice President - Development
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Charles W.A. Willett, Jr.
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—
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58
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Senior Vice President - Real Estate Finance
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(1)
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Indicates expiration of term as a director.
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(2)
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The position shown represents the individual’s
position with the Company and with the Management Company.
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(3)
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Mr. Snyder is retiring effective March 31,
2008.
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Stephen D. Lebovitz
has served as President
and Secretary of the Company since February 1999 and as a director of the Company since
the completion of its initial public offering in November 1993. Since joining
CBL’s Predecessor in 1988, Mr. Lebovitz has also served as Executive Vice
President - Development/Acquisitions, Executive Vice President - Development, Senior
Vice President - New England Office and as Senior Vice President - Community Center
Development and Treasurer of the Company. Before joining CBL’s Predecessor, Mr.
Lebovitz was affiliated with Goldman, Sachs & Co. from 1984 to 1986. He holds a MBA
from Harvard University and he is past president of the Boston Jewish Family and
Children’s Service, a member of the Board of Governors of the Combined Jewish
Philanthropic, Boston, Massachusetts and a member of the Board of Directors of the
Children’s Hospital Trust, Boston, Massachusetts. He is a Trustee and Divisional
Vice President of the ICSC. Stephen D. Lebovitz is a son of Charles B. Lebovitz and a
brother of Michael I. Lebovitz and Alan L. Lebovitz.
John N. Foy
has served as Vice Chairman of
the Board of Directors and Treasurer of the Company since February 1999 and as a
director and Chief Financial Officer of the Company since the completion of its initial
public offering in November 1993. Until February 1999, he served as Executive Vice
President – Finance, Chief Financial Officer and Secretary of the Company. Mr.
Foy is a member of the Executive Committee of the Board of Directors. Prior to the
Company’s formation, he served in similar executive capacities with CBL’s
Predecessor. Mr. Foy has been involved in the shopping center industry since 1968 when
he joined the Lebovitz family’s shopping center development business. In 1970, he
became affiliated with the shopping center division of Arlen, and, in 1978, joined
Charles B. Lebovitz in establishing CBL’s Predecessor. Mr. Foy served as Chairman
of the Board of First Fidelity Savings Bank in Crossville, Tennessee from December 1985
until April 1994. Mr. Foy currently serves as a member of the Advisory Board of Regions
Bank of Chattanooga, Tennessee, as Chairman of the Board of Directors of Chattanooga
Neighborhood Enterprise, a non-profit organization based in Chattanooga, Tennessee and
as a member of the Board of Directors of the Electric Power Board of Chattanooga, a
non-profit agency of the City of Chattanooga, Tennessee. Mr. Foy is a former member of
the Board of Governors of NAREIT.
Martin J. Cleary
joined the Company as
director on January 31, 2001, in accordance with the terms of the Jacobs Acquisition.
Mr. Cleary is a member of the Company’s Compensation Committee. Mr. Cleary is the
former President and Chief Operating Officer of The Richard E. Jacobs Group, Inc. Mr.
Cleary is also an ex-officio Trustee and former Chairman of the ICSC.
Matthew S. Dominski
joined the Company as a
director on February 2, 2005, when he was appointed to the Board of Directors to fill
the un-expired term of William J. Poorvu, who retired from the Company’s Board in
July 2004. Mr. Dominski is a member of the Company’s Audit, Compensation and
Nominating/Corporate Governance Committees. From 1993 through 2000, Mr. Dominski served
as Chief Executive Officer of Urban Shopping Centers (“Urban”). Urban was
formerly one of the largest regional mall property companies in the United States and
was a publicly traded real estate investment trust (“REIT”) listed on the
New York Stock Exchange (“NYSE”) and the Chicago Exchange. Following the
purchase of Urban by Rodamco North America in 2000, Mr. Dominski served as
Urban’s President until 2002. In 2003, Mr. Dominski formed Polaris Capital, LLC,
a Chicago, Illinois based real estate investment firm of which he currently is joint
owner. From 1998 until 2004, Mr. Dominski served as a member of the Board of Trustees
of the ICSC.
Winston W. Walker
has served as a director
of the Company since the completion of its initial public offering in November 1993. He
is a member of the Compensation and Nominating/Corporate Governance Committees of the
Board of Directors and is Chairman of the Company’s Audit Committee. Mr. Walker
served as President and Chief Executive Officer of Provident Life and Accident
Insurance Company of America (“Provident”) from 1987 until 1993, and served
in various other capacities with Provident from 1974 to 1987. Mr. Walker is a director,
a member of the Audit Committee and Chairman of the Compensation Committee of American
Campus Communities, Inc. of Austin, Texas, a REIT listed on the NYSE.
Ben S. Landress
serves as Executive Vice
President – Management of the Company. He has held that position since January
1997. Prior to that time, Mr. Landress served as Senior Vice President - Management and
prior thereto, he served in a similar capacity with CBL’s Predecessor. Mr.
Landress is responsible for general corporate administration and is the Company’s
Compliance Officer. Mr. Landress has been involved in the shopping center business
since 1961 when he joined the Lebovitz family’s development business. In 1970,
he
7
became affiliated with Arlen’s shopping center division, and, in
1978, joined Charles B. Lebovitz as an Associate in establishing CBL’s
Predecessor.
Augustus N. Stephas
serves as Chief
Operating Officer – Senior Vice President of the Company. He was promoted to that
position in February 2007. Previously, Mr. Stephas served as Senior Vice President
– Accounting and Controller of the Company, having held these positions since
January 1997. Mr. Stephas joined CBL’s Predecessor in July 1978 as Controller and
was promoted to Vice President in 1984. From 1970 to 1978, Mr. Stephas was affiliated
with the shopping center division of Arlen, first as accountant and later as assistant
controller.
Michael I. Lebovitz
serves as Senior Vice
President – Chief Development Officer of the Company. He was promoted to that
position in June 2006. Previously, Mr. Lebovitz served the Company as Senior Vice
President – Mall Projects, having held that position since January 1997. Prior to
that time, Mr. Lebovitz served as Vice President - Development and as a project manager
for the Company. Mr. Lebovitz joined CBL’s Predecessor in 1988 as a project
manager for CoolSprings Galleria in Nashville, Tennessee, and was promoted to Vice
President in 1993. Prior to joining CBL’s Predecessor, he was affiliated with
Goldman, Sachs & Co. from 1986 to 1988. He is past President of the Jewish
Community Federation of Greater Chattanooga, serves on the national boards of United
Jewish Communities, Hillel and the United States Holocaust Memorial Council and is a
Board Member of the Chattanooga United Way. Michael I. Lebovitz is a son of Charles B.
Lebovitz and a brother of Stephen D. Lebovitz and Alan L. Lebovitz.
Victoria S. Berghel
serves as Senior Vice
President – General Counsel of the Company. She was promoted to that position
effective January 1, 2006. Ms. Berghel formerly served as Vice President – Deputy
General Counsel since joining the Company in February 2004. Prior to joining the
Company, Ms. Berghel served as a Vice President – Law – Real Estate,
Construction and Environmental Affairs for Sears, Roebuck and Co. (1996 – 2004).
Before joining Sears in 1996, she was a partner with the Baltimore, Maryland law firm
of Weinberg & Green (now part of the law firm of Saul Ewing LLP). Ms. Berghel
earned her law degree from the University of Maryland School of Law (J.D., 1977) where
she was on the Editorial Board of the Maryland Law Review. Ms. Berghel has been a
member of the American College of Real Estate Lawyers since 1989 and has served as
Chair of the Maryland State Bar Association’s Section of Real Property, Planning
and Zoning from 1994 to 1996. She serves on the Advisory Board of the John Marshall
School of Law LLM-Real Estate program and is a member of the Law Conference Program
Committee for the ICSC having previously served as co-chair (2003) and chair (2004) of
the ICSC Law Conference and as a dean of the ICSC University of Shopping Centers School
of Shopping Center Law.
Ronald L. Fullam
serves as Senior Vice
President – Development of the Company. He has held that position since January
1997. Prior to that time, Mr. Fullam served as Vice President - Development of the
Company. Mr. Fullam joined Arlen’s shopping center development division as a
project manager in August 1977 and CBL’s Predecessor as a Vice President upon its
formation in 1978.
Timothy S. Lowe
serves as Senior Vice
President – Development of the Company. He has held that position since joining
the Company in October 2007 in connection with the Company’s acquisition of
certain properties from the Westfield Group (“Westfield”). Prior to that
time, Mr. Lowe had served as Executive Vice President of Westfield Corporation since
1994, with responsibility for leading Westfield’s shopping center development
activities in the Midwest and Mid-Atlantic regions.
Mark D. Mancuso
serves as Senior Vice
President – Director of Development – New England Office of the Company. He
was promoted to that position effective January 1, 2006. Mr. Mancuso formerly served as
Vice President and Director of Community Center Development – Boston Office.
Prior to joining the Company in 1989, he was a partner with The Pyramid Companies
(1984-1989). Mr. Mancuso holds a MBA from Harvard University and is currently a State
Director for the ICSC and Chairman of the Board of the West Suburban YMCA in Newton,
Massachusetts.
Charles H. May, II
serves as a Senior Vice
President – Development of the Company. Mr. May joined the Company in June 2003.
Prior to joining the Company, he served as Vice President – Real Estate (2002
– 2003) and Senior Director – Real Estate (1994 – 2002), for Sears,
Roebuck and Co. Prior to 1994, Mr. May served in various capacities, including Vice
President, Secretary and General Counsel and Senior Vice President – Development,
with
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Homart Development and served as Vice President of Coldwell Banker
Commercial Real Estate Group. Mr. May is a member of the ICSC and the Urban Land
Institute.
Farzana K. Mitchell
serves as Senior Vice
President – Finance of the Company. She has held that position since September
2000. Prior to joining the Company, Ms. Mitchell was Vice President of Equitable Real
Estate (successor to Lend Lease Real Estate Investments prior to its acquisition by
Morgan Stanley). Ms. Mitchell served the Equitable and Lend Lease Companies for 18
years in various senior financial positions and as Deputy Portfolio Manager for
Equitable/Axa Financial’s mortgage portfolio. From 1976 to 1982, she served as
Assistant Treasurer of IRT Property Company, a former REIT. Ms. Mitchell received her
BBA degree in Economics, MBA in Accounting and a MS in Real Estate and Urban Affairs
from Georgia State University. She is a certified public accountant, licensed in the
state of Georgia.
Jerry L. Sink
serves as Senior Vice
President – Mall Management of the Company. He has held that position since
February 1998. Prior to that time, Mr. Sink had served as Vice President - Mall
Management since joining the Company in July 1993. Mr. Sink served as Vice President of
Retail Asset Management for Equitable Real Estate, Chicago, Illinois, from January 1988
to June 1993 and, prior to January 1988, he was affiliated with General Growth
Companies, Inc. as Vice President of Management. Mr. Sink holds the designation of
Senior Certified Shopping Center Manager (“SCSM”) as recognized by the
ICSC.
Eric P. Snyder
serves as Senior Vice
President – Director of Corporate Leasing of the Company. He has held this
position since January 1997. Mr. Snyder joined CBL’s Predecessor as a project
manager in 1978 and was promoted to Vice President in 1984 and to Vice President and
Director of Corporate Leasing in 1992. From 1974 to 1978, Mr. Snyder was a leasing
agent and project manager for Arlen’s shopping centers. Mr. Snyder has announced
his retirement from the Company, effective March 31, 2008.
R. Stephen Tingle
serves as Senior Vice
President – Development of the Company. He has held that position since January
2000. Prior to that time, Mr. Tingle served as Vice President and Director of Community
Center Development – Chattanooga Office. Mr. Tingle joined CBL’s
Predecessor in 1986 as a project manager for community and neighborhood shopping
centers and was promoted to Vice President of Development in 1988. From 1978 to 1986,
Mr. Tingle engaged in the practice of law.
Charles W.A. Willett, Jr.
serves as Senior
Vice President – Real Estate Finance of the Company. He has held that position
since January 2002. Mr. Willett was promoted to Vice President - Real Estate Finance in
1996 and held that position until his promotion to Senior Vice President as stated
above. Prior to 1996, Mr. Willett participated in the Company’s finance
department and he served in a similar capacity with CBL’s Predecessor prior to
1993. Mr. Willett joined CBL’s Predecessor in 1978 and prior thereto, he was
affiliated with Arlen in its finance and accounting departments.
Operation of the Company’s Business; Certain Aspects of the
Company’s Capital Structure
The Company operates through its two wholly-owned subsidiaries, CBL
Holdings I, Inc., a Delaware corporation (“CBL Holdings I”), and CBL
Holdings II, Inc., a Delaware corporation (“CBL Holdings II”). Through the
referenced subsidiaries, the Company currently holds a 1.6% sole general partner
interest and a 55.1% limited partner interest in CBL & Associates Limited
Partnership, a Delaware limited partnership (the “Operating Partnership”).
See “Certain Relationships and Related Transactions – Operating Partnership
Agreement; CBL Rights”. The Company conducts substantially all of its business
through the Operating Partnership. The Company conducts its property management and
development activities through the Management Company, which is a taxable REIT
subsidiary of the Operating Partnership, to comply with certain technical requirements
of the Internal Revenue Code of 1986, as amended.
On May 9, 2005, the Company’s stockholders approved an increase in
the authorized shares of Common Stock under the Certificate of Incorporation to
180,000,000 shares from 95,000,000 shares. On May 10, 2005, the Board of Directors
approved a two-for-one stock split of the Company’s Common Stock, which was
effected in the form of a stock dividend (the “6/15/05 Stock Split”). The
record date for the 6/15/05 Stock Split was June 1, 2005,
9
and
the distribution date was June 15, 2005. The common units and special common units of
limited partnership interest in the Operating Partnership were also split on a
two-for-one basis so that they continue to be exchangeable on a one-for-one basis into
shares of the Company’s Common Stock.
Certain Terms of the Jacobs Acquisition
In connection with the Jacobs Acquisition and pursuant to a voting and
standstill agreement (the “Voting/Standstill Agreement”), the Company
agreed to expand its Board of Directors from seven to nine members and to nominate two
designees of JRI as members of the Board. Martin J. Cleary and Gary L. Bryenton were
appointed to the Board as these initial designees. Under the Voting/Standstill
Agreement, JRI will continue to be entitled to nominate two Board members until JRI,
together with Richard E. Jacobs and certain members of his family and certain trusts
for the benefit of the families of Richard E. Jacobs and David H. Jacobs (collectively,
the “Jacobs Persons”), as a group, beneficially own fewer than 13.55
million special common units in the Operating Partnership (“SCUs”) and
shares of Common Stock (adjusted to reflect the 6/15/05 Stock Split), following which
JRI will be entitled to nominate only one Board member. JRI will no longer be entitled
to nominate any Board members if the Jacobs Persons, as a group, beneficially own fewer
than 6.67 million SCUs and shares of Common Stock (adjusted to reflect the 6/15/05
Stock Split). Pursuant to the Voting/Standstill Agreement, CBL’s Predecessor and
certain of the Company’s executive officers have agreed to vote their shares in
favor of JRI’s designees until the twelfth anniversary of the Jacobs Acquisition.
The Jacobs Persons have agreed to a 12-year standstill period during which they will
not seek to acquire control of the Company and will not participate in a group which
seeks to acquire such control. The Jacobs Persons also agreed until the twelfth
anniversary of the Jacobs Acquisition to vote their shares in favor of the election of
the Board’s nominees to the Board of Directors who are running unopposed and
uncontested. Effective as of January 1, 2006, the Voting/Standstill Agreement was
amended to remove Martin J. Cleary as a party to that agreement. Neither Martin J.
Cleary nor Gary L. Bryenton are parties to the Voting/Standstill Agreement, nor is
either of them a party to any agreement which obligates them to vote with management of
the Company on any matter.
Corporate Governance Matters
Overview.
The Board of Directors has
adopted guidelines on corporate governance (including director independence criteria),
committee charters, and a code of business conduct and ethics setting forth the
Company’s corporate governance principles and practices and, effective as of
January 1, 2006, the Company adopted amended and restated guidelines on corporate
governance incorporating all previous guidelines on corporate governance and including
additional policy statements (collectively, as amended and restated, referred to herein
as the “Corporate Governance Guidelines”). See “Corporate Governance
Matters – Additional Policy Statements”. These documents can be accessed in
the “Investing – Corporate Governance” section of the Company’s
website at
cblproperties.com
or by
directing a written request for copies to the Company at CBL & Associates
Properties, Inc., CBL Center, Suite 500, 2030 Hamilton Place Boulevard, Chattanooga,
Tennessee 37421-6000, Attention: Director of Corporate Communications and Investor
Relations.
Director Independence.
The Board has
adopted a set of director independence standards (“Director Independence
Standards”) for evaluating the independence of each of the directors in
accordance with the requirements of the SEC and of the NYSE corporate governance
standards. In March 2008, the Board undertook its annual review of director
independence pursuant to NYSE Rule 303A.02(a) and the provisions of the Company’s
Director Independence Standards (as set forth below). During this process, the Board
reviewed whether any director has any relationship with the Company’s independent
auditors that would preclude independence under SEC and NYSE rules, or any material
relationship with the Company (either directly or as a partner, member, shareholder or
officer of an organization that has a relationship with the Company) which could
(directly or indirectly) materially impact the ability of such director or nominee to
exert his independent judgment and analysis as a member of the Board. As a result of
this review, the Board affirmatively determined that six of the Company’s nine
directors were independent under the standards of the SEC and NYSE and as set forth in
the Company’s Director Independence Standards. Messrs. Charles B. Lebovitz,
Stephen D. Lebovitz and John N. Foy, who are executive officers of the Company and
employees of the Management Company, were not deemed independent. In making the
independence determinations with respect to the other six directors, the Board
considered the following matters and determined that they did not interfere with the
independence of the following three directors: (i) with respect to Mr. Cleary
and
10
Mr.
Bryenton, the Company’s contractual commitments in connection with the terms of
the Jacobs Acquisition as described above (see above “Certain Terms of the Jacobs
Acquisition”); (ii) with respect to Mr. Cleary, the fact that, due to his
retained ownership interests in certain entities within the Jacobs Group that
contributed properties to the Operating Partnership in connection with the Jacobs
Acquisition, he intends to recuse himself from participation in any Board decision
involving the taxable sale of, or a significant reduction in the debt encumbering, any
such properties that could trigger income tax liability based on the unrealized gain
attributable to the difference between the fair market value and the adjusted tax basis
in such properties immediately prior to the Jacobs Acquisition; (iii) with respect to
Mr. Bryenton, the fact that he continues to serve as legal counsel to the Jacobs Group
and to certain members of the Jacobs family, but solely concerning matters unrelated to
the Company and the Jacobs Acquisition (for which such parties employ separate
counsel); and (iv) with respect to Mr. Fields, the fact that he is Co-Chairman of
Weisberg & Fields, Inc., an investment advisory firm that provides certain advisory
services, from time to time, to Charles B. Lebovitz, members of his family and to the
Lebovitz Family Charitable Trust, a charitable foundation. In 2007, fees paid to
Weisberg & Fields, Inc. by Charles B. Lebovitz, members of his family and the
Lebovitz Family Charitable Trust totaled approximately $200,047. The full text of the
Director Independence Standards is as follows:
|
A.
|
GENERAL INDEPENDENCE REQUIREMENTS
|
In determining whether or not any director or nominee for director may
be considered “independent”, the Board shall apply the following
criteria:
(1) No
director or nominee shall be deemed “independent” unless the Board
affirmatively determines that the director or nominee satisfies the requirements stated
herein and has no material relationship with the Company (either directly or as a
partner, member, shareholder or officer of an organization that has a relationship with
the Company). For purposes of this test, a relationship with the Company shall be
deemed to be a “material” relationship which precludes a determination that
a director or nominee is independent if, in the opinion of the Board and in light of
all the relevant facts and circumstances, such relationship (directly or indirectly)
could materially impact the ability of such director or nominee to exert his or her
independent judgment and analysis as a member of the Board. For purposes hereof,
ownership of the Company’s stock (even in a significant amount) or ownership of
securities convertible to the Company’s stock shall not be viewed, in and of
themselves, as a bar to a finding of independence. To assist in this determination, the
Company shall periodically (at least annually and prior to any nominee becoming a
director for his or her initial term as a director) deliver to the directors and/or
nominees for directorships a Directors and Officers Questionnaire designed to elicit
information from such director or nominee as to material relationships and other
information relative to these Independence Standards; and
(2) In
addition, to be considered “independent,” a director or nominee must
satisfy all other independence criteria for directors of a publicly traded company
which are now, or may be hereafter, set forth in applicable federal statutes and rules
promulgated by the SEC, and in the related listing standards promulgated by the NYSE
and any other exchange upon which the Company’s stock may be listed, as such
statutes and/or rules and listing standards may be revised or amended from time to
time.
|
B.
|
ADDITIONAL AUDIT COMMITTEE INDEPENDENCE
REQUIREMENTS
|
In determining whether or not any director or nominee satisfies the
“independence” requirement for Audit Committee membership, in addition to
satisfying all of the requirements set forth in Paragraph A hereof, such director also
must satisfy the following:
Such director or nominee must satisfy all additional requirements for
the independence of audit committee members of publicly traded companies which are now,
or may be hereafter, set forth in applicable federal statutes and rules promulgated by
the SEC, and in the related listing standards promulgated by the NYSE and any other
exchange upon which the Company’s stock may be listed, as such statutes and/or
rules and listing standards may be revised or amended from time to time.
11
The
Director Independence Standards also are included as an exhibit to the Company’s
Corporate Governance Guidelines, which can be found in the “Investing –
Corporate Governance” section of the Company’s website at
cblproperties.com. A copy may also be obtained upon request from the
Company’s Director of Corporate Communications and Investor Relations at the
address provided above.
Additional Policy Statements
. Effective as
of January 1, 2006, the Company has included additional policy statements as part of
the Corporate Governance Guidelines. A summary of these policy statements is as
follows:
Limits on Other Board Participation
–
a policy statement that limits to four (4) the number of other public company boards
(not counting the Company’s Board) upon which a director may serve at any given
time.
Minimum Stock Ownership for Non-Employee Directors
– a policy statement that provides that by the later of five (5)
years from the adoption of the policy or becoming a member of the Company’s
Board, a Non-Employee Director (a director that is not an employee of the Company,
currently, the Independent Directors) must own at least the lesser of 3,500 shares of
the Company’s Common Stock or $150,000 worth of the Company’s Common
Stock.
Minimum Stock Ownership for Executive Officers
– a policy statement that provides that by the later of five (5)
years from the adoption of the policy or becoming an executive officer, such executive
officer must own an amount of the Company’s Common Stock, determined as set forth
in the policy statement, having a value at least equal to the following formula
amounts:
|
Executive Officer
|
Level of Stock Ownership
|
|
Chief Executive Officer
|
3x prior calendar year’s annual base
salary
|
|
President
|
2x prior calendar year’s annual base
salary
|
|
Chief Financial Officer
|
2x prior calendar year’s annual base
salary
|
|
Executive Vice President
|
2x prior calendar year’s annual base
salary
|
|
Senior Vice Presidents
|
1x prior calendar year’s annual base
salary
|
Changes in Director’s Principal Occupation or Business
Association
– a policy statement that provides that
when the principal occupation or business association of a member of the Board of
Directors changes substantially from the position he or she held when originally
invited to join the Board of Directors, such director shall promptly tender his or her
resignation as a director to the Chairman of the Board of Directors. The
Nominating/Corporate Governance Committee shall then review whether it is appropriate
and in the best interests of the Company to allow the continued participation of such
director as a member of the Board of Directors of the Company. If the
Nominating/Corporate Governance Committee recommends that such director should no
longer serve as a member of the Board of Directors of the Company as a result of such
change, and the full Board of Directors (excluding the director at issue) ratifies such
recommendation, then the tender of resignation by the affected director shall be
accepted by the Board of Directors.
Initial Term of Director Appointed to Fill a Board Vacancy
– a policy statement that provides that any director appointed by
the Board of Directors of the Company to fill a vacancy created by the departure of
another director shall serve only until the next regularly scheduled annual meeting of
the Company’s stockholders. In order for such director to continue to serve
thereafter, he or she must be nominated and duly elected to fill the remainder of the
term to which the director was originally appointed (or for another full term, as
appropriate).
Executive Sessions for Independent Directors.
In accordance with the NYSE Rule 303A.03, the Independent Directors of
the Company meet from time to time in scheduled executive sessions without management
participation. The Board of Directors has designated Winston W. Walker as lead
Independent Director, solely for the purpose of chairing these executive sessions. The
Independent Directors met in four executive sessions during 2007.
Communicating with the Board of Directors.
The Company provides a process for stockholders and other interested
parties to send communications to the Board or any of the directors. Such persons may
send written communications to the Board or any of the directors c/o the Director of
Corporate Communications and Investor
12
Relations, CBL & Associates Properties, Inc., 2030 Hamilton Place
Blvd., Suite 500, CBL Center, Chattanooga, Tennessee, 37421-6000. All communications
will be compiled by the Company’s Director of Corporate Communications and
Investor Relations and submitted to the Board or the individual director(s) to whom
such communication is addressed. It is the Company’s policy that all directors
attend the Annual Meeting unless they are prevented from attending due to scheduling
conflicts or important personal or business reasons; provided, however, it is the
Company’s policy that a majority of the directors (including a majority of the
Company’s Independent Directors) attend each Annual Meeting. All of the
Company’s directors attended the 2007 Annual Meeting of Stockholders.
Code of Business Conduct and Ethics.
The
Board has adopted a Second Amended and Restated Code of Business Conduct and Ethics
(the “Code of Business Conduct”) that applies to all directors, officers
and employees, including the Company’s principal executive officer, principal
financial officer and principal accounting officer. The Code of Business Conduct is
available in the “Investing – Corporate Governance” section of the
Company’s website at
cblproperties.com, or at no charge by
written request to the Company’s Director of Corporate Communications and
Investor Relations at the address provided above. The purpose of the Code of Business
Conduct is to provide a codification of standards that is reasonably designed to deter
wrongdoing and to promote accountability for and adherence to the standards of the
Code, including honest and ethical conduct; the ethical handling of actual or apparent
conflicts of interest between personal and professional relationships; full, fair,
accurate, timely and understandable disclosure in the Company’s filings with the
SEC and in other public communications by the Company; and compliance with all
applicable rules and regulations that apply to the Company and to its directors,
officers and employees.
Board of Directors’ Meetings and Committees
The Board of Directors has established standing Executive, Audit,
Compensation and Nominating/ Corporate Governance Committees. The Board of Directors
met eight times during 2007. Each director attended more than 75% of the aggregate of
(i) the total number of Board meetings and (ii) the total number of meetings of Board
committees on which the director served at the time during 2007.
Executive Committee.
The Executive
Committee is comprised of Charles B. Lebovitz (Chairman), John N. Foy and Leo Fields.
The Executive Committee may exercise all the powers and authority of the Board of
Directors of the Company in the management of the business and affairs of the Company
as permitted by law; provided, however, unless specifically authorized by the Board of
Directors, the Executive Committee may not exercise the power and authority of the
Board of Directors with respect to (i) the declaration of dividends, (ii) issuance of
stock, (iii) amendment to the Company’s Certificate of Incorporation or Bylaws,
(iv) filling vacancies on the Board of Directors, (v) approval of borrowings in excess
of $40 million per transaction or series of related transactions, (vi) hiring executive
officers, (vii) approval of acquisitions or dispositions of property or assets in
excess of $40 million per transaction and (viii) certain transactions between the
Company and its directors and officers and certain sales of real estate and reductions
of debt that produce disproportionate tax allocations to CBL’s Predecessor
pursuant to the Company’s Bylaws. The Executive Committee met four times and took
action by unanimous written consent three times during 2007.
Audit Committee.
The Audit Committee is
comprised of Winston W. Walker (Chairman), Claude M. Ballard, Gary L. Bryenton and
Matthew S. Dominski, all of whom the Board of Directors has determined are Independent
Directors pursuant to the independence requirements of Sections 303A.02 and 303A.07(b)
of the listing standards of the NYSE as currently applicable. The Audit Committee
operates pursuant to a written amended and restated charter adopted by the Board of
Directors on February 3, 2004. A copy of the amended and restated charter is available
and can be accessed in the “Investing – Corporate Governance” section
of the Company’s website at
cblproperties.com, or at no
charge by written request to the Company’s Director of Corporate Communications
and Investor Relations at the address provided above. The Audit Committee is
responsible for the engagement of the independent auditors and the plans and results of
the audit engagement. The Audit Committee approves audit and non-audit services
provided by the independent auditors and the fees for such services and reviews the
adequacy of the Company’s internal accounting controls as well as the
Company’s accounting policies and results. The Audit Committee met seven times
during 2007.
13
Compensation Committee.
The Compensation
Committee is comprised of Claude M. Ballard (Chairman), Martin J. Cleary, Matthew S.
Dominski and Winston W. Walker, all of whom the Board of Directors has determined are
Independent Directors. The Compensation Committee operates pursuant to a written
charter adopted by the Board of Directors on February 3, 2004. A copy of the charter is
available and can be accessed in the “Investing – Corporate
Governance” section of the Company’s website at
cblproperties.com, or at no charge by written request to the
Company’s Director of Corporate Communications and Investor Relations at the
address provided above. The Compensation Committee generally reviews and approves
compensation programs and, specifically, reviews and approves salaries, bonuses, stock
awards and stock options for officers of the Company of the level of vice president or
higher. The Compensation Committee administers the Amended and Restated CBL &
Associates Properties, Inc. Stock Incentive Plan (the “Stock Incentive
Plan”), but typically delegates the responsibility for routine, ministerial
functions related to the Stock Incentive Plan, such as the documentation and
record-keeping functions concerning awards issued under the plan, to employees in the
Company’s accounting and treasury departments, with assistance from Company
counsel. Additional information concerning the Compensation Committee’s processes
and procedures for determining director and executive officer compensation is set forth
herein under the sections entitled “Director Compensation” and
“Executive Compensation – Compensation Discussion and Analysis.” The
Compensation Committee met two times during 2007.
Nominating/Corporate Governance Committee.
The Nominating/Corporate Governance Committee is comprised of Gary L.
Bryenton (Chairman), Claude M. Ballard, Matthew S. Dominski and Winston W. Walker, all
of whom the Board of Directors has determined are Independent Directors. The
Nominating/Corporate Governance Committee operates pursuant to a written charter
adopted by the Board of Directors on February 3, 2004. A copy of the charter is
available and can be accessed in the “Investing – Corporate
Governance” section of the Company’s website at
cblproperties.com, or at no charge by written request to the
Company’s Director of Corporate Communications and Investor Relations at the
address provided above. The Nominating/Corporate Governance Committee reviews and makes
recommendations to the Board of Directors regarding various aspects of the Board of
Directors’ and the Company’s governance processes and procedures. The
Nominating/Corporate Governance Committee also evaluates and recommends candidates for
election to fill vacancies on the Board, including consideration of the renominations
of members whose terms are due to expire. The Nominating/Corporate Governance Committee
requires a majority of the Company’s directors to be “independent” in
accordance with applicable requirements of the Company’s Certificate of
Incorporation and Bylaws as well as rules of the SEC and NYSE (including certain
additional independence requirements for Audit Committee members). A set of uniform
Director Independence Standards, which was used in making all such Independent Director
determinations, is set forth above and is included in the Company’s Corporate
Governance Guidelines, a copy of which is available in the “Investing –
Corporate Governance” section of the Company’s website at
cblproperties.com. In addition and as part of the evaluation of
potential candidates, the Nominating/Corporate Governance Committee considers the
breadth of a candidate’s business and professional skills and experiences,
diversity of background, reputation for personal integrity, and ability to devote
sufficient time to Board service, as well as the Company’s needs for particular
skills, insight and/or talents on the Board of Directors. For incumbent directors whose
terms of office are set to expire, the Nominating/Corporate Governance Committee
reviews such directors’ overall service during their term, including the number
of meetings attended, level of participation and quality of performance. With respect
to the Board seats presently held by Mr. Cleary and Mr. Bryenton, the
Nominating/Corporate Governance Committee also considers the Company’s
contractual commitments in connection with the terms of the Jacobs Acquisition, as
discussed above.
The Nominating/Corporate Governance Committee will consider candidates
for Board of Directors’ seats proposed by stockholders. Any such proposals should
be made in writing to CBL & Associates Properties, Inc., 2030 Hamilton Place Blvd.,
Suite 500, CBL Center, Chattanooga, Tennessee, 37421-6000, Attention: Corporate
Secretary, and must be received no later than November 27, 2008, in order to be
considered for inclusion in the Company’s proxy statement for the 2008 Annual
Meeting. In order to be considered by the Nominating/Corporate Governance Committee,
any candidate proposed by stockholders will be required to submit appropriate
biographical and other information equivalent to that required of all other director
candidates, including consent to an initial background check. The Nominating/Corporate
Governance Committee does not intend to alter the manner in which it evaluates
candidates on the criteria set forth above regardless of whether the candidate was
recommended by a stockholder or by the Company. The Nominating/Corporate Governance
Committee met three times in 2007.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information available to the Company as
of March 10, 2008, with respect to the ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) each director of the Company, (iii) each Named Executive Officer of
the Company, as defined below, and (iv) all directors and executive officers as a
group. Except as otherwise indicated, each person named below has sole investment and
voting power with respect to the securities shown. Except as otherwise indicated, the
address of each beneficial owner of more than 5% of the outstanding Common Stock is the
Company’s address.
|
Number of
Shares(1)
|
Rule 13d-3
Percentage(1)
|
Fully-Diluted
Percentage(2)
|
Lazard Asset Management LLC (3)
30 Rockefeller Plaza
New York, NY 10112
|
8,241,310
|
12.43%
|
7.05%
|
Barclays Global Investors, NA (4)
45 Fremont St., 17
th
Floor
San Francisco, CA 94105
|
6,715,159
|
10.13%
|
5.74%
|
The Vanguard Group, Inc (5).
100 Vanguard Blvd.
Malvern, PA 19355
|
3,896,136
|
5.88%
|
3.33%
|
Invesco Ltd. (6)
1360 Peachtree Street NE
Atlanta, GA 30309
|
3,718,108
|
5.61%
|
3.18%
|
Affiliates of Jacobs Realty Investors Limited
Partnership (7)
25425 Center Ridge Road
Cleveland, OH 44145-4122
|
22,937,764
|
25.70%
|
19.62%
|
CBL & Associates, Inc.(“CBL’s
Predecessor”) (8)
|
17,663,908
|
21.81%
|
15.11%
|
Charles B. Lebovitz (9)
|
19,276,099
|
23.47%
|
16.48%
|
John N. Foy (10)
|
1,187,050
|
1.77%
|
1.01%
|
Stephen D. Lebovitz (11)
|
981,269
|
1.47%
|
*
|
Eric P. Snyder (12)
|
559,708
|
*
|
*
|
Augustus N. Stephas (13)
|
87,869
|
*
|
*
|
Martin J. Cleary (14)
|
446,386
|
*
|
*
|
Leo Fields (15)
|
132,800
|
*
|
*
|
Claude M. Ballard (16)
|
113,400
|
*
|
*
|
Winston W. Walker (17)
|
100,800
|
*
|
*
|
Matthew S. Dominski (18)
|
2,500
|
*
|
*
|
Gary L. Bryenton (19)
|
6,400
|
*
|
*
|
All executive officers and directors (22 persons) as a
group (20)
|
24,347,871
|
28.86%
|
20.76%
|
15
*
Less than 1%
(1)
|
The Company conducts all of its business activities
through the Operating Partnership. Pursuant to the third amended and
restated partnership agreement of the Operating Partnership and all
subsequent amendments thereto (collectively, the “Operating
Partnership Agreement”), each of the partners of the Operating
Partnership, which include, among others, CBL’s Predecessor and
certain of the executive officers named in this Proxy Statement, has
the right (“CBL Rights”) to exchange all or a portion of
its common units or special common units (as applicable) in the
Operating Partnership for shares of Common Stock or their cash
equivalent, at the Company’s election. Under the terms of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), shares of Common Stock that may be
acquired within 60 days are deemed outstanding for purposes of
computing the percentage of Common Stock owned by a stockholder.
Therefore, for purposes of Rule 13d-3 of the Exchange Act, percentage
ownership of the Common Stock is computed based on the sum of (i)
66,298,415 shares of Common Stock actually outstanding as of March 10,
2008, (ii) as described in the accompanying footnotes, each
individual’s or entity’s share of 50,634,839 shares of
Common Stock that may be acquired upon exercise of CBL Rights by the
individual or entity whose percentage of share ownership is being
computed (but not taking account of the exercise of CBL Rights by any
other person or entity) and (iii) as described in the accompanying
footnotes, each individual’s share of 633,255 shares of Common
Stock that may be acquired within 60 days of March 10, 2008 upon the
exercise of outstanding options by the individual whose percentage of
share ownership is being computed (but not taking into account the
exercise of such outstanding options by any other person). Amounts
shown were determined without regard to applicable ownership limits
contained in the Company’s Certificate of
Incorporation.
|
(2)
|
The Fully-Diluted Percentage calculation is based on (i)
66,298,415 shares of Common Stock outstanding and (ii) assumes the full
exercise of all CBL Rights for shares of Common Stock by all holders of
common units and SCUs of the Operating Partnership (in each case,
without regard to applicable ownership limits), for an aggregate of
116,933,254 shares of Common Stock. The Fully-Diluted Percentage
calculation does not include 633,255 shares of Common Stock subject to
outstanding stock options other than, with respect to each person whose
fully-diluted percentage is being computed, shares which may be
acquired within 60 days of March 10, 2008 upon the exercise of
outstanding options.
|
(3)
|
In a Schedule 13G/A filed on February 7, 2008 by Lazard
Asset Management LLC (“Lazard”), Lazard reported that as of
December 31, 2007, it beneficially owned 8,241,310 shares of Common
Stock, or 12.43% of the total shares outstanding as of March 10, 2008.
Lazard reported that of the 8,241,310 shares of Common Stock
beneficially owned, it possesses sole voting power with respect to
4,972,064 shares of Common Stock and sole dispositive power with
respect to 8,241,310 shares of Common Stock.
|
(4)
|
In a Schedule 13G filed on February 5, 2008 by Barclays
Global Investors, NA (“BGI”) and a group of its affiliated
companies, BGI reported, as of December 31, 2007, aggregate beneficial
ownership of 6,715,159 shares of Common Stock, or 10.13% of the total
shares outstanding as of March 10, 2008. Of the 6,715,159 shares of
Common Stock beneficially owned, BGI and its affiliates reported that
they possessed sole voting power with respect to 5,673,189 shares of
Common Stock and sole dispositive power with respect to 6,715,159
shares of Common Stock, as follows: BGI (sole voting power over
4,201,783 shares and sole dispositive power over 5,227,055 shares);
Barclays Global Fund Advisors (sole voting and dispositive power over
1,309,049 shares); Barclays Global Investors, Ltd. (sole voting power
over 46,766 shares and sole dispositive power over 63,464 shares); and
Barclays Global Investors Japan Limited (sole voting and dispositive
power over 115,591 shares).
|
(5)
|
In a Schedule 13G filed on February 14, 2008 by The
Vanguard Group, Inc. (“Vanguard”), Vanguard reported that
as of December 31, 2007, it beneficially owned 3,896,136 shares of
Common Stock, or 5.88% of the total shares outstanding as of March 10,
2008. Vanguard reported that of the 3,896,136 shares of Common Stock
beneficially owned, it possesses sole voting power with respect to
26,046 shares of Common Stock and sole dispositive power with respect
of 3,896,136 shares of Common Stock.
|
16
(6)
|
In a Schedule 13G/A filed on February 11, 2008 by
Invesco Ltd. (“Invesco”) and a group of its affiliated
companies, Invesco reported, as of December 31, 2007, aggregate
beneficial ownership of 3,718,108 shares of Common Stock, or 5.61% of
the total shares outstanding as of March 10, 2008. Of the 3,718,108
shares of Common Stock beneficially owned, Invesco and its affiliates
reported that they possessed sole voting power and sole dispositive
power with respect to all of such shares, as follows: Invesco National
Trust Company (sole voting and dispositive power over 3,711,963
shares); PowerShares Capital Management LLC (sole voting and
dispositive power over 6,121 shares); and PowerShares Capital
Management Ireland LLC (sole voting and dispositive power over 24
shares).
|
(7)
|
Includes 22,937,764 shares of Common Stock that may be
acquired by the Jacobs Group on exercise of CBL Rights with respect to
SCUs owned by the Jacobs Group. The Jacobs Group received the
above-referenced SCUs as part of the Jacobs Acquisition. See
“Election of Directors – Certain Terms of the Jacobs
Acquisition.”
|
(8)
|
Includes (i) 2,985,678 shares of Common Stock owned
directly (410,000 of which are pledged to First Tennessee Bank as
security for a line of credit extended to CBL’s Predecessor),
(ii) 14,483,498 shares of Common Stock that may be acquired upon the
exercise of CBL Rights and (iii) 194,732 shares of Common Stock that
may be acquired by four entities controlled by CBL’s Predecessor
(CBL Employees Partnership/Conway, Foothills Plaza Partnership, Girvin
Road Partnership and Warehouse Partnership) upon the exercise of CBL
Rights.
|
(9)
|
Includes (i) 376,387 shares of unrestricted Common Stock
owned directly, (ii) 33,420 shares of restricted Common Stock that Mr.
Lebovitz received under the Stock Incentive Plan (7,640 of which will
vest within sixty days of March 10, 2008), (iii) 9,254 shares owned by
Mr. Lebovitz’ wife and 30,936 shares held in trusts for the
benefit of his grandchildren (of which Mr. Lebovitz disclaims
beneficial ownership), all as to which Mr. Lebovitz may be deemed to
share voting and investment power, (iv) 705,806 shares of Common Stock
that may be acquired by Mr. Lebovitz upon the exercise of CBL Rights,
(v) 17,663,908 shares of Common Stock beneficially owned by CBL’s
Predecessor as described in Note (8) above, which Mr. Lebovitz may be
deemed to beneficially own by virtue of his control of CBL’s
Predecessor, and (vi) 456,388 shares of Common Stock that may be
acquired by College Station Associates, an entity controlled by Mr.
Lebovitz, upon the exercise of CBL Rights.
|
(10)
|
Includes (i) 708,692 shares of unrestricted Common Stock
owned directly, (ii) 33,420 shares of restricted Common Stock that Mr.
Foy received under the Stock Incentive Plan (7,640 of which will vest
within sixty days of March 10, 2008), (iii) 2,456 shares of Common
Stock held by a family trust as to which Mr. Foy serves as trustee;
(iv) 378,482 shares of Common Stock that may be acquired by Mr. Foy
upon the exercise of CBL Rights and (v) 64,000 shares of Common Stock
subject to options granted under the Stock Incentive Plan that are
currently exercisable or that become exercisable with respect to such
shares within sixty days of March 10, 2008. Totals do not include Mr.
Foy’s pro-rata interest in 1,000 shares held by an investment
club of which he is a member, but as to which he exercises no voting or
investment power.
|
(11)
|
Includes (i) 444,577 shares of unrestricted Common Stock
owned directly (including 421,882 shares held, together with other
securities, in brokerage accounts with respect to which Mr. Lebovitz
maintains margin lending arrangements), (ii) 33,420 shares of
restricted Common Stock that Mr. Lebovitz received under the Stock
Incentive Plan (7,640 of which will vest within sixty days of March 10,
2008), and (iii) 503,272 shares of Common Stock that may be acquired by
Mr. Lebovitz upon the exercise of CBL Rights.
|
(12)
|
Includes (i) 440,310 shares of unrestricted Common Stock
owned directly (435,801 of which are held, together with other
securities, in a brokerage account with respect to which Mr. Snyder
maintains margin lending arrangements), (ii) 7,380 shares of restricted
Common Stock that Mr. Snyder received under the Stock Incentive Plan
(7,380 of which will vest within sixty days of March 10, 2008), (iii)
12,566 shares of Common Stock owned by Mr. Snyder’s wife and
2,574 shares of Common Stock owned by Mr. Snyder’s children, as
to which Mr. Snyder may be deemed to share voting and investment power,
and (iv) 96,878 shares of Common Stock that may be acquired by Mr.
Snyder upon the exercise of CBL Rights.
|
17
(13)
|
Includes (i) 13,849 shares of unrestricted Common Stock
owned directly, (ii) 7,880 shares of restricted Common Stock that Mr.
Stephas received under the Stock Incentive Plan (1,760 of which will
vest within sixty days of March 10, 2008), (iii) 55,340 shares of
Common Stock that may be acquired by Mr. Stephas upon the exercise of
CBL Rights and (iv) 10,800 shares of Common Stock subject to options
granted under the Stock Incentive Plan that are currently exercisable
or that become exercisable with respect to such shares within sixty
days of March 10, 2008.
|
(14)
|
Includes (i) 441,186 shares of Common Stock that may be
acquired by Mr. Cleary upon the exercise of CBL Rights with respect to
SCUs indirectly owned by Mr. Cleary and which are included in the
amount shown for the Jacobs Group, see Footnote (7) above, (ii) 2,000
shares of Common Stock subject to immediately exercisable stock options
granted to Mr. Cleary under the Stock Incentive Plan and (iii) 3,200
shares of restricted Common Stock granted to Mr. Cleary under the Stock
Incentive Plan.
|
(15)
|
Includes (i) 48,000 shares of Common Stock owned by a
family limited partnership created by Mr. Fields and his wife and in
which Mr. Fields serves as a general partner (including 1,000 shares of
restricted Common Stock, as discussed below), (ii) 80,600 shares of
Common Stock held by members of Mr. Fields’ family, with respect
to which Mr. Fields acts as investment adviser and might be deemed to
share investment power, and of which Mr. Fields disclaims beneficial
ownership, (iii) 2,000 shares of Common Stock owned by Mr. Fields
as a tenant-in-common with his wife and (iv) 3,200 shares of restricted
Common Stock granted to Mr. Fields under the Stock Incentive Plan
(2,200 of which Mr. Fields holds directly and 1,000 of which he holds
as part of the 48,000 shares held by his family limited
partnership).
|
(16)
|
Includes (i) 63,000 shares of Common Stock owned
directly, (ii) 23,000 shares of Common Stock owned by a family limited
partnership created by Mr. Ballard and his wife and in which Mr.
Ballard serves as a general partner, (iii) 24,200 shares of Common
Stock owned by the Ballard Family Foundation as to which Mr. Ballard
may be deemed to share voting and investment power and of which Mr.
Ballard disclaims beneficial ownership, and (iv) 3,200 shares of
restricted Common Stock granted to Mr. Ballard under the Stock
Incentive Plan.
|
(17)
|
Includes (i) 90,000 shares of Common Stock owned by a
trust of which Mr. Walker is a co-trustee and co-beneficiary, as to
which he may be deemed to share voting and investment power,
(ii) 5,800 shares of Common Stock owned by Mr. Walker’s
individual retirement account (iii) 1,800 shares of Common Stock owned
by Mr. Walker’s wife, as to which he may be deemed to share
voting and investment power and (iv) 3,200 shares of restricted
Common Stock granted to Mr. Walker under the Stock Incentive
Plan.
|
(18)
|
Includes 2,500 shares of restricted Common Stock granted
to Mr. Dominski under the Stock Incentive Plan.
|
(19)
|
Includes (i) 1,200 shares of Common Stock owned
directly, (ii) 2,000 shares of Common Stock subject to immediately
exercisable stock options granted to Mr. Bryenton under the Stock
Incentive Plan and (iii) 3,200 shares of restricted Common Stock
granted to Mr. Bryenton under the Stock Incentive Plan.
|
(20)
|
Includes an aggregate of (i) 6,098,832 shares of
unrestricted Common Stock beneficially owned directly or indirectly by
members of such group (410,000 of which are pledged as security for a
line of credit and an additional 567,938 of which are held in brokerage
accounts subject to margin lending arrangements), (ii) 203,680
shares of restricted Common Stock that members of such group received
under the Stock Incentive Plan (48,240 of which will vest within sixty
days of March 10, 2008), (iii) 17,739,990 shares of Common Stock that
may be acquired by members of such group upon the exercise of CBL
Rights which they hold directly or indirectly through other entities
and (iv) 306,430 shares of Common Stock subject to options granted to
members of such group under the Stock Incentive Plan that are currently
exercisable or that become exercisable with respect to such shares
within sixty days of March 10, 2008.
|
18
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires the Company’s
directors, executive officers and persons who own more than ten percent of a registered
class of the Company’s equity securities to file with the SEC initial reports of
ownership and reports of changes in beneficial ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies of all
Section 16(a) reports they file.
Based solely upon the Company’s review of copies of such reports
furnished to it through the date hereof, or written representations that no other
reports were required to be filed, the Company believes that during the fiscal year
ended December 31, 2007 all officers, directors and ten percent stockholders complied
with the filing requirements applicable to them, except for the following late filings
for the following executive officers: Charles B. Lebovitz (1 report covering 1
transaction); John N. Foy (1 report covering 1 transaction); Stephen D. Lebovitz
(2 reports covering 6 transactions); Augustus N. Stephas (1 report covering 2
transactions); Ben S. Landress (1 report covering 1 transaction); Michael I.
Lebovitz (1 report covering 5 transactions); and Charles W. A. Willett, Jr. (4 reports
covering 4 transactions). Additionally, the Company has determined that the historic
Section 16 reporting of deferral elections under CBL’s Stock Incentive Plan did
not appear to match the SEC’s preferred approach to these arrangements (that is,
treating each creation of deemed shares as a reportable “phantom stock”
transaction). Under this analysis, the reporting for transactions in prior years
involving deferred compensation arrangements for Eric P. Snyder, Ronald L. Fullam and
Farzana K. Mitchell may have been inconsistent with the SEC’s preferred approach
referenced above. However, the officers reported the full number of shares issued upon
settlement of these arrangements on a timely basis. All such arrangements involving any
of the Company’s reporting persons terminated before the end of 2007. The Company
is not aware of any other failures to file a required report by any of its Section
16(a) reporting persons.
19
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Company is a self-managed, self-administered, fully-integrated real
estate company which is engaged in the ownership, marketing, management, leasing,
expansion, development, redevelopment, acquisition and financing of regional malls,
open air and community and neighborhood centers. The Company itself has no employees
other than its statutory officers and its officers receive all of their compensation in
their capacity as employees of the Management Company, which also employs all of the
other personnel engaged in the operation of the Company’s business.
The Compensation Committee determines all matters related to the
compensation of all officers of the Company of the level of vice president or higher
and administers the Company’s Amended and Restated Stock Incentive Plan, as
amended (the “Stock Incentive Plan”). The Compensation Committee operates
under a written charter adopted by the Board of Directors on February 3, 2004. A copy
of the charter is available and can be accessed in the “Investing –
Corporate Governance” section of the Company’s website at
cblproperties.com. Historically, the Compensation Committee typically
has met twice during each year; however, the Committee may meet more often if needed.
Going forward, a third regularly scheduled meeting will be added in the first quarter
of each year (generally in February), in accordance with the Compensation
Committee’s new procedure for making the annual restricted stock awards, as
discussed below.
The factors, objectives and policies underlying each element of
compensation paid to the Company’s Chief Executive Officer, its Chief Financial
Officer and its next three most highly compensated executive officers (these three,
together with Charles B. Lebovitz and John N. Foy being herein referred to as the
“Named Executive Officers”) are discussed below.
The Compensation Committee’s objectives in administering the
Company’s executive compensation with respect to the Named Executive Officers are
to ensure that pay levels and incentive compensation are competitive in attracting and
retaining the best personnel, properly linked to the Company’s performance, and
simple in design. To fulfill these objectives, the compensation approach for the Named
Executive Officers includes three primary elements: (i) base salary, (ii) discretionary
bonuses and (iii) periodic grants of stock awards and stock options pursuant to the
Stock Incentive Plan. Rather than utilize complicated, formula-based plans to
compensate the Company’s executives on the basis of performance targets or other
criteria, the Compensation Committee has chosen (as discussed in more detail below) to
rely on grants of time-vesting restricted stock, coupled with an opportunity for
officers to elect to receive annual bonuses in unrestricted shares of Common Stock, as
a means of providing compensation to CBL’s executives which rewards them for the
creation of long-term value for the Company’s stockholders. The Compensation
Committee believes that this approach best serves the objective of linking
management’s long-term economic interests with those of CBL’s stockholders
while also making this linkage as transparent as possible by preserving relative
simplicity in the design and operation of the compensation plans.
The base salary and discretionary cash bonus components of the
compensation of the Named Executive Officers are designed to provide the
Company’s executives with immediate, tangible rewards commensurate with the
Compensation Committee’s evaluation of their current contributions to the
Company’s performance.
The Compensation Committee believes that one of the most effective means
of both encouraging and rewarding the creation of long-term value for the
Company’s stockholders by senior executives (including the Named Executive
Officers), as well as retaining superior management talent, is to use the Stock
Incentive Plan to ensure that such individuals attain a significant proprietary
interest in the Company. As detailed above under the heading “Corporate
Governance Matters – Additional Policy Statements,” the Company has adopted
stock ownership guidelines for both non-employee directors and executive officers in
its Corporate Governance Guidelines. The Compensation Committee, as well as the entire
Board of Directors, believes that it is in the best interests of the Company’s
stockholders for those who manage and oversee the Company’s operations to have a
stake in the creation of long-term stockholder value. The time-vested stock option and
stock award elements of
20
compensation, coupled with the opportunity (as discussed below) offered
to all of the Company’s officers to receive amounts payable with respect to
annual bonuses in unrestricted shares of Common Stock, are designed to work in
conjunction with the stock ownership guidelines to encourage and create ownership and
retention of the Company’s stock by both directors and key employees (including
the Named Executive Officers), thereby matching their interests to those of
stockholders and allowing the opportunity for such individuals to build a meaningful
ownership stake in the Company.
Additionally, the Company’s four most senior executives –
three of whom are Named Executive Officers Charles B. Lebovitz, John N. Foy and Stephen
D. Lebovitz – have entered into agreements under the Stock Incentive Plan
pursuant to which they receive all amounts representing annual increases over each of
their base salaries since 1995 (net of the dollar amounts withheld for taxes) in the
form of quarterly installments of the Company’s unrestricted Common Stock rather
than cash, with the number of shares issued in payment of each such installment
determined based on application of the market price for the Common Stock on the last
trading day in each of the three months during the quarter to the amount of salary
accrued during each such month. The Compensation Committee believes that these
arrangements set a favorable tone for management decisions throughout the organization,
in that they represent a significant commitment by the Company’s top management
to align both their immediate and long-term financial interests with those of the
Company’s stockholders.
The Compensation Committee receives recommendations from CBL’s
senior management as to the three elements that make up the compensation of the Named
Executive Officers: (1) the base salaries for the Named Executive Officers, in
conjunction with the preparation and approval of an annual executive compensation
budget for the Company; (2) the maximum potential bonus to be provided for each Named
Executive Officer, in conjunction with the preparation and approval of the annual
executive compensation budget; and (3) the recommended amount of annual restricted
stock grants to each Named Executive Officer, in conjunction with the preparation and
approval of annual grants of restricted stock under the Company’s Stock Incentive
Plan. Management’s recommended executive compensation budget, pursuant to which
annual base salaries and bonus opportunities are determined, is normally approved for
each year during the fourth quarter of the preceding fiscal year. Management’s
recommendations concerning the annual restricted stock grants historically have been
reviewed and approved at the Compensation Committee’s May meeting following
CBL’s annual meeting of stockholders (although, as described below, this
procedure has been revised for fiscal 2007 and future years).
Management’s recommendations are presented to the Compensation
Committee by the Company’s Chief Executive Officer, Charles B. Lebovitz, who, in
consultation with senior management, including Augustus N. Stephas, John N. Foy and
Stephen D. Lebovitz and others, prepares management’s recommendations regarding
these matters. These recommendations include a recommendation regarding the annual base
salary and potential annual bonus for Charles B. Lebovitz as the Company’s Chief
Executive Officer, although the final decisions regarding these matters are left to the
discretion of the Compensation Committee to determine based on the Committee’s
own deliberations. Charles B. Lebovitz attends each meeting of the Compensation
Committee and participates actively in the discussion of the compensation for the other
Named Executive Officers and other officers of the Company.
Each executive officer of the Company, including the Named Executive
Officers (other than Charles B. Lebovitz), receives an annual review of his/her
performance in accordance with the procedure described below during each fiscal year.
The Compensation Committee undertakes the annual review of the performance of Charles
B. Lebovitz and meets with him in connection with such review. For all other executive
officers, one or both of Charles B. Lebovitz and Stephen D. Lebovitz will participate
in the annual review of each executive officer, and will meet with such officer as part
of the review process. If the executive officer has an immediate supervisor, such
supervisor will likewise participate in such annual review and in the in-person
performance review with the officer, and will provide his or her subjective evaluation
of the performance of the particular officer under his/her supervision. The role of
both Charles B. Lebovitz and Stephen D. Lebovitz, as well as the role of any immediate
supervisors involved in these annual reviews, has been to subjectively evaluate the
performance of each officer as to his/her contribution to the overall success and
growth of the Company taking into account the individual’s performance and
results. Charles B. Lebovitz is responsible for conveying the results of these
performance reviews to the Compensation Committee in conjunction with its review of
management’s recommendations concerning the compensation of such individuals. In
making compensation decisions for the Named Executive Officers, the
21
Compensation Committee gives significant weight to the recommendations
made by the Company’s senior management in consultation with Charles B. Lebovitz,
but the Compensation Committee is not bound by management’s recommendations and
makes its own determinations as to these matters.
The Compensation Committee’s determination of each Named Executive
Officer’s compensation also includes a review (for informational purposes only)
of compensation for executives at a group of seven comparable publicly traded mall
REITs. The seven publicly traded mall REITs used for comparison during 2007 were:
General Growth Properties, Inc.; The Macerich Company; The Mills Corporation (for
periods prior to when it ceased to be a public company in April 2007); Glimcher Realty
Trust; Simon Property Group, Inc.; Taubman Centers, Inc. and Pennsylvania Real Estate
Investment Trust. This review of the compensation of similarly-situated executive
officers is for the purpose of giving the Compensation Committee a general sense of the
manner in which the compensation of the Named Executive Officers compares with
similarly-situated executive officers at these industry peers and to provide to the
Compensation Committee an understanding of whether the Company is competitive in the
compensation paid to the Named Executive Officers (taking into account differences in
size and scope of operations between the Company and certain of its peers). The
Compensation Committee does not, however, set specific competitive pay targets or
objectives in this review or otherwise engage in any formal “benchmarking”
comparisons of the compensation of the Company’s Named Executive Officers against
that of the executives of these peer companies.
The Compensation Committee also gives general consideration in making
compensation decisions to such issues as historical levels of compensation for each
officer, the relationship of the level of each officer’s compensation to the
overall compensation of the Company’s officers and the performance of the
Company’s business for the year in question. While neither management nor the
Compensation Committee utilizes any specific formulas or quantitative metrics in
recommending and approving compensation for the Named Executive Officers,
management’s recommendations and the Compensation Committee’s review of
those recommendations both take into account the overall performance of the Company.
The performance of each Named Executive Officer is considered as set forth above, along
with consideration of a number of indicators of the overall performance of the Company,
including without limitation (i) the Company’s annual growth in funds from
operations (or “FFO”, since FFO is one of the performance measures most
commonly utilized by the market in analyzing the performance of REITs); (ii) the
Company’s achievement of growth in net operating income (“NOI”);
(iii) the Company’s maintenance of occupancy levels in its shopping centers and
achievement of increases in such occupancy levels; and (iv) the stock price
appreciation for the Company’s common equity securities. Each of these factors
may be given more or less weight in the Compensation Committee’s overall
evaluation from year to year, depending upon the Compensation Committee’s
subjective evaluation, in consultation with the Chief Executive Officer, of the overall
performance of the Company in a given year in relation to the performance of the
overall economy and of the Company’s peers. While the individual performance of
each Named Executive Officer is an important factor in the determination of his
compensation, such performance is evaluated on a largely subjective basis by the
Compensation Committee, considering the foregoing factors as well as the criteria
discussed below with respect to each of the three major elements of compensation, but
without any specific formulaic relationship to the overall performance of the Company
or to any specific, quantitative performance metrics.
As discussed in the Annual Report to Stockholders which accompanies this
proxy statement, after a nearly uninterrupted thirteen year track record of solid
growth in FFO, CBL posted negative growth in 2007. Additionally, as was true of most of
CBL’s peer mall REITs, the Company’s stock price came under significant
pressure in the difficult economic environment of 2007. In light of these developments,
the Compensation Committee elected to accept management’s recommendations to
award less than the full amounts originally budgeted for executive bonuses for 2007 and
to defer consideration of the Company’s annual restricted stock grants under the
Stock Incentive Plan from May 2007 until February 2008, when year end results were
known. Ultimately, the Compensation Committee reduced the number of shares included in
the annual grant by approximately 50% versus the levels granted during the prior two
years, and the restricted stock grants to the Named Executive Officers for 2007 reflect
similar proportionate reductions. The following discussion provides additional
information as to the factors considered by the Compensation Committee in evaluating
and acting upon management’s recommendations with respect to each of the three
major elements of compensation for CBL’s Named Executive Officers.
22
Base Salaries
– Management’s
recommendations in the annual executive compensation budget as to base salaries are
based on the historical levels of base salaries paid to the Named Executive Officers,
with adjustments that management subjectively has deemed appropriate based on the
overall performance of the Company and the overall performance of the Named Executive
Officer. In reviewing and acting upon management’s recommendations as to base
salaries, the Compensation Committee considers each officer’s level of
responsibility, experience and tenure with the Company, in addition to the performance
of such officer in carrying out his responsibilities and in overseeing the
responsibilities of those under his supervision. The achievements of the particular
division over which a Named Executive Officer has supervision are also considered by
the Compensation Committee.
The Compensation Committee annually evaluates and approves adjustments
to the base salaries of the Named Executive Officers, with such review and adjustments
normally being undertaken during the fourth quarter to be effective for the following
fiscal year. At meetings held on November 1, 2006 and
November 5, 2007, based on management’s recommendations as presented to
the Compensation Committee by the Chief Executive Officer and on the Compensation
Committee’s subjectiveevaluation of the factors described above, the Compensation
Committee set the base salaries of each of the Named Executive Officers as
follows:
|
|
2007
Base
Salary
|
|
2008
Base
Salary
|
Charles B. Lebovitz
Chairman of the Board and
Chief Executive Officer
|
|
$575,566
|
|
$592,833
|
John N. Foy
Vice Chairman of the Board,
Chief Financial Officer and
Treasurer
|
|
$506,320
|
|
$526,320
|
Stephen D. Lebovitz
Director, President and
Secretary
|
|
$500,000
|
|
$525,000
|
Eric P. Snyder
Senior Vice President –
Director of Corporate Leasing
|
|
$466,000
|
|
$486,000
|
Augustus N. Stephas
Senior Vice President –
Chief Operating Officer
|
|
$476,600
|
|
$496,600
|
In the case of Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz,
these base salaries were approved to take effect as of January 1 of the relevant year.
In the case of Mr. Stephas, the effective date is February 28 of the relevant year, and
in the case of Mr. Snyder, the effective date is September 15 of the relevant year. For
2007, the increases in base salary as compared to 2006 amounted to approximately 3.0%
for Charles B. Lebovitz, 4.1% for John N. Foy, 5.3% for Stephen D. Lebovitz, 4.5% for
Eric P. Snyder and 4.4% for Augustus N. Stephas. For 2008, the increases in base salary
as compared to 2007 amounted to approximately 3.0% for Charles B. Lebovitz, 4.0% for
John N. Foy, 5.0% for Stephen D. Lebovitz, 4.3% for Eric P. Snyder and 4.2% for
Augustus N. Stephas. The weighted average increases in the base salaries of the Named
Executive Officers in 2007 and 2008 were 4.2% and 4.1%, respectively.
Annual Bonus Opportunities
– As part
of establishing the annual executive compensation budget submitted to the Compensation
Committee for approval, management also recommends a targeted maximum amount of annual
bonus that may be earned by each Named Executive Officer for performance during the
upcoming fiscal year. Management’s recommendations for these bonus targets are
generally based on the amount of such awards that have been made in past years in
relation to the criteria considered for each officer (as discussed below), with such
increases or other adjustments as management deems advisable in light of the
Company’s business plans for the current year. As with the base salary
recommendations discussed above, management subjectively considers the overall
performance of both the Named Executive Officers and the Company,
23
including consideration of the factors referenced above, in preparing
its recommendations as to annual bonus awards. Neither management nor the Compensation
Committee, however, set targets or utilize specific formulas or quantitative metrics in
developing and acting upon such recommendations. In light of the overall results
experienced by the Company during fiscal 2007, the Compensation Committee accepted
senior management’s recommendation that it exercise its discretion to award less
than the full targeted amounts for annual bonuses for 2007, and these reductions were
reflected in the bonuses received by each of the Named Executive Officers.
For three of the Company’s Named Executive Officers (John N. Foy,
Stephen D. Lebovitz and Eric P. Snyder), the determination of the maximum targeted
bonus for each officer as set forth in the annual compensation budget, as well as the
determination of the amount of bonus ultimately paid, also reflects consideration by
both senior management (particularly the Chief Executive Officer) and the Compensation
Committee of various factors related to the successful continuation and/or completion
of development, financing, leasing and re-leasing, expansions, acquisitions, joint
ventures and market transactions with respect to the Company and its properties
identified by senior management and the Compensation Committee as being within such
executive’s areas of responsibility. The material factors considered in making
bonus determinations with reference to such projects include successful completion of
development projects (
i.e.
,
completion of project construction or phases of construction on multi-phased projects
and grand openings); achievement of acceptable pro forma returns; achievement of lease
up levels for new developments and maintaining and increasing occupancy levels in
existing projects in the Company’s portfolio; successful completion of financings
(
i.e.
, closing on financings and
re-financings and enhancement of the Company’s debt structure); successful
closing of acquisitions of additional properties for the Company’s portfolio; and
successful completion of market transactions
(
i.e.
, issuances of additional
equity securities and other market transactions). Since each of these factors may be
significantly influenced by events affecting the national economy, as well as the local
economies of the markets in which our shopping center properties are located, the
degree of challenge presented to each officer in achieving successful performance may
vary significantly from year to year, and may differ within a given year from that
which was anticipated by the Compensation Committee in budgeting for annual executive
bonuses. Accordingly, the Compensation Committee’s final decision as to the
bonuses paid each year is based on its overall, qualitative evaluation of each
officer’s performance with regard to such factors in light of the Company’s
performance and the external factors (economic and otherwise) that impacted such
performance during the year.
It also is not unusual for changes in the projects so considered for
each officer to be made during the course of the year based on changes in the
Company’s development, acquisition, financing and market plans which may occur
throughout any given year. Certain of these changes may be due to internal
considerations, while others may be due to changes in market factors that are beyond
the control of the Company or any of its individual executives. Accordingly, while the
bonus paid to each executive for the year typically is not increased beyond the
targeted amount approved by the Compensation Committee, the final bonus payment may be
decreased (or, in cases of exceptional performance, increased within an approved level
of allowable increases set forth in the overall executive compensation budget) versus
the budgeted amount, and the projects ultimately considered in determining the amount
of annual bonus paid to each officer may differ from those utilized in setting such
officer’s maximum targeted bonus in the initial executive compensation budget
based on such changes in the Company’s business plans during the year. These
matters are reviewed by the Compensation Committee with the Chief Executive Officer,
and revised as needed, when the Compensation Committee meets during the year, with
final decisions for the year typically being made at the Compensation Committee’s
meeting during the fourth quarter. The final bonus payout for each Named Executive
Officer is determined by the Compensation Committee based on the Committee’s
ultimate evaluation of such officer’s performance during the year, but within the
parameters of the approved executive compensation budget and giving such consideration
as the Compensation Committee deems appropriate, based on developments throughout the
year, to the project-related matters and other factors described above.
For Named Executive Officers John N. Foy and Stephen D. Lebovitz, the
projects among which the Compensation Committee allocates various components of their
potential annual bonuses typically include the
24
completion of acquisitions, closing of financing transactions,
completion of phases of construction on development of shopping centers, completion and
grand opening of shopping centers, completion of joint ventures and completion of
securities offerings. The Company paid annual bonuses of $625,000 to each of John N.
Foy and Stephen D. Lebovitz during 2007. In determining the bonus paid to Mr. Foy, the
Compensation Committee considered his direct contribution to one of the development
projects opened by the Company during the year, as well as his overall contributions to
the leadership of the Company’s financing, joint venture and acquisition
activities during 2007. In determining the bonus paid to Mr. Lebovitz, the Compensation
Committee considered his direct contributions to twelve of the development projects
opened by the Company during the year or under development at year end, as well as his
overall contributions to the leadership of the Company’s mall remodeling and
expansion, financing and acquisition activities during 2007. During the fourth quarter
of 2007, the Compensation Committee approved maximum potential bonuses that each of
these two officers could earn for fiscal 2008 performance, based on the Compensation
Committee’s ultimate evaluation of similar criteria during fiscal 2008, as
follows: John N. Foy – $775,000 and Stephen D. Lebovitz –
$775,000.
For Named Executive Officer Eric P. Snyder, the Compensation Committee
allocates components of his potential annual bonus based on the achievement of various
leasing thresholds and leasing spreads for the Company’s development projects and
the maintaining and increasing of occupancy levels and leasing spreads for the
Company’s existing projects. During fiscal 2007, the Company paid an annual bonus
of $250,000 to Mr. Snyder. In determining the bonus paid to Mr. Snyder, the
Compensation Committee considered his contribution to the successful leasing of five
specific development projects opened by the Company during the year or under
development at year end, as well as his overall contributions to the leadership of the
Company’s mall remodeling and expansion and corporate leasing activities during
2007. During the fourth quarter of 2007, the Compensation Committee approved maximum
potential bonus compensation of $375,000 that Mr. Snyder could earn for fiscal 2008
performance, based on the Compensation Committee’s ultimate evaluation of similar
criteria during fiscal 2008.
For the Company’s other two Named Executive Officers, Charles B.
Lebovitz and Augustus N. Stephas, the targeted bonuses approved by the Compensation
Committee in the annual executive compensation budget, as well as the Compensation
Committee’s discretionary decision during the fourth quarter concerning the
annual bonus ultimately paid to such officers, are based on the Compensation
Committee’s subjectiveevaluation of the overall performance of the Company and
each of these officers’ contributions to such performance for the relevant fiscal
year. The bonus payments to these two Named Executive Officers are not determined
pursuant to the Compensation Committee’s consideration of any specifically
designated projects. Rather, for fiscal 2007, the Compensation Committee allocated up
to $1,150,000 of funds to be available as bonuses that could be earned by such officers
for 2007, consisting of specified maximum bonuses that could be earned by each of these
two Named Executive Officers totaling $1,000,000 plus the opportunity to share
(together with one other senior executive officer) in an unallocated discretionary
bonus pool of up to $150,000. The potential bonus payouts set by the Compensation
Committee for Mr. Lebovitz and Mr. Stephas pursuant to this allocation were as follows:
Charles B. Lebovitz - $725,000 plus any additional participation in the unallocated
$150,000 pool, and Augustus N. Stephas - $275,000 plus any additional participation in
the unallocated $150,000 pool. The actual bonus payments to these two Named Executive
Officers for 2007, $625,000 to Charles B. Lebovitz and $295,000 to Augustus N. Stephas,
were determined during the fourth quarter of 2007 by the Compensation Committee, based
upon its evaluation of such officer’s performance and contributions to the
Company’s overall performance during the year. During the fourth quarter of 2007,
the Compensation Committee also approved the allocation of up to $1,225,000 of funds to
be available as bonuses that could be earned by such officers for 2008, based on the
same bonus mechanism as utilized for 2007. The potential bonus payouts set by the
Compensation Committee for Mr. Lebovitz and Mr. Stephas for fiscal 2008 are as follows:
Charles B. Lebovitz - $775,000 plus any additional participation (with one other senior
executive officer) in the unallocated $150,000 pool, and Augustus N. Stephas - $300,000
plus any additional participation in the unallocated $150,000 pool. As in fiscal 2007,
the actual bonus payments to these two Named Executive Officers, including the amount
(if any) to be paid out of the $150,000 unallocated pool, will be determined during the
fourth quarter of 2008 by the Compensation Committee, based upon its evaluation of such
officer’s performance and
25
contributions to the Company’s overall performance during the
year.
As discussed above, the Compensation Committee allows each officer who
receives a bonus (including the Named Executive Officers) the choice of whether to have
the bonus paid in cash or in unrestricted shares of the Company’s Common Stock
issued under the Stock Incentive Plan as an additional means of encouraging equity
ownership in the Company. The number of shares issued for any bonus that an officer
elects to receive in Common Stock is determined based on the market value of the Common
Stock on the date when such bonus becomes payable. Pursuant to this mechanism, each of
Charles B. Lebovitz and John N. Foy elected to have their bonus compensation for 2007
paid in the form of the Company’s Common Stock rather than in cash.
Restricted Stock Awards
– The third
principal element of the compensation of the Company’s officers (including the
Named Executive Officers) for 2007 was awards of shares of restricted stock under the
Company’s Stock Incentive Plan. The Compensation Committee’s objective in
making restricted stock awards to the Company’s officers (including the Named
Executive Officers) is to increase the alignment of their economic interests with the
interests of the Company’s stockholders, thereby supplementing the incentives
provided by annual bonuses with additional incentives for the officers (including the
Named Executive Officers) to manage the Company with a view towards maximizing
long-term stockholder value.
Each year, management prepares and presents to the Compensation
Committee a list of suggested amounts for the annual grant of restricted stock awards
to participants in the Company’s Stock Incentive Plan, including the Named
Executive Officers. The recommended levels of restricted stock awards are based on
historical levels of such awards in past years with increases or decreases that
management has subjectivelydeemed appropriate based on the overall performance of the
Company, and also taking into account such matters as potential dilution and the number
of shares available for issuance under the Stock Incentive Plan. As with the base
salaries and annual bonus awards discussed above, no formulaic approach is utilized to
determine management’s recommendations as to restricted stock awards to the Named
Executive Officers. Both management’s recommendations and the Compensation
Committee’s approval of such awards, however, are determined with reference to
the principle that the number of shares of restricted stock included in each annual
grant should reflect the recipient’s level of responsibility, such that the
number of shares awarded is higher for individuals with greater responsibility and
greater ability to influence the Company’s performance. Accordingly, the three
largest grants of restricted stock, on an annual basis, normally are made to the
Company’s three most senior executive officers – Charles B. Lebovitz,
Stephen D. Lebovitz and John N. Foy. Eric P. Snyder and Augustus N. Stephas typically
receive grants of restricted stock commensurate with the amounts of such grants awarded
to the other senior vice presidents of the Company.
Management does not necessarily consider any specific element of the
performance of a Named Executive Officer in recommending to the Compensation Committee
the levels of annual grants of restricted stock but, rather, subjectively considers the
overall performance of both the Company and the Named Executive Officer, the number of
shares granted in the past, and the scope of authority of each Named Executive Officer.
The Compensation Committee reviews and acts upon management’s recommendations
based upon its subjective evaluation of these same considerations. Ultimately, while
the Compensation Committee’s decision regarding the number of shares of
restricted stock granted to each Named Executive Officer in a given year incorporates
consideration of both Company and individual officer performance, the most important
elements that influence this decision are the Committee’s judgment regarding the
overall number of shares to be granted and the appropriate allocation of shares to
individuals at different levels of responsibility. In keeping with this philosophy, the
Compensation Committee made a one-time grant of 500 additional shares of restricted
Common Stock to Mr. Stephas related to his promotion to Chief Operating Officer of the
Company during 2007.
The Compensation Committee historically made annual grants of restricted
stock at its May meeting following the Company’s annual meeting of shareholders.
For 2007, however, management recommended, and the Compensation Committee agreed, that,
based on its evaluation of the Company’s performance during the first quarter of
fiscal 2007, consideration of the annual restricted stock awards to be made (if any)
should be deferred until later in the year, so as to provide management and the
Compensation Committee the opportunity to further
26
evaluate the overall performance of the Company for 2007. Subsequently,
the Compensation Committee accepted senior management’s recommendation to change
the timing of this process for all future years. Accordingly, management will now
present its recommendations for the annual restricted stock awards for each year to the
Compensation Committee at a meeting during the first quarter of the following year
(generally in February). This will allow both management and the Compensation Committee
to consider the Company’s financial and operating results for the full preceding
year in making such awards. As discussed above, at its February 2008 meeting, the
Compensation Committee approved annual grants of restricted stock under the Stock
Incentive Plan (including the annual grants to the Named Executive Officers) at a level
that reflected a 50% reduction as compared to the number of shares granted for each of
the two prior years, in light of the Company’s overall results for fiscal
2007.
Section 162(m) Issues.
Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”) imposes a
$1,000,000 ceiling on a publicly traded company’s federal income tax deduction
for compensation paid in a taxable year to an individual who, on the last day of the
taxable year, was (i) the chief executive officer or (ii) among the four other most
highly compensated executive officers whose compensation is reported in the Summary
Compensation Table in such company’s proxy statement. The limitation does not
apply to any compensation that satisfies the certain specific and detailed requirements
to be treated as “qualified performance-based compensation” under Section
162(m) and its associated regulations.
The Compensation Committee has reviewed the potential impacts of Section
162(m) on the anticipated tax treatment to the Company and its officers (including the
Named Executive Officers) in its review and establishment of compensation programs and
payments. While the Compensation Committee generally seeks to preserve the
Company’s ability to claim any applicable tax deductions for compensation paid to
executives to the greatest extent practicable, the Compensation Committee also believes
that stockholder interests are best served by having the Committee retain the
discretion and flexibility to structure certain elements of the Company’s
incentive compensation programs based on considerations other than the full
deductibility of compensation.
27
Summary Compensation Table
The following table sets forth information regarding the compensation of
the Company’s Named Executive Officers”) for the Company’s fiscal
years ended December 31, 2006 and 2007:
Summary Compensation Table (1)
|
Name and Principal
Position(2)
|
Year
|
Salary($) (3)
|
Bonus($) (3)
|
Stock
Award(s)
($) (4)
|
Option
Award(s)
($) (5)
|
All
Other
Compensation
($) (6)
|
Total
Compensation
($)
|
Charles B. Lebovitz,
Chairman of the Board and Chief Executive
Officer
|
2007
|
442,488
|
—
|
1,140,698
|
4,086
|
5,625
|
1,592,897
|
2006
|
440,184
|
675,000
|
698,384
|
22,416
|
5,500
|
1,841,484
|
John N. Foy,
Vice Chairman of the Board, Chief
Financial Officer
and Treasurer
|
2007
|
318,757
|
—
|
1,116,010
|
4,086
|
5,625
|
1,444,478
|
2006
|
318,077
|
—
|
1,107,917
|
22,416
|
5,500
|
1,453,910
|
Stephen D. Lebovitz,
Director, President and Secretary
|
2007
|
294,489
|
625,000
|
508,958
|
4,086
|
5,625
|
1,438,158
|
2006
|
277,274
|
675,000
|
462,400
|
22,416
|
5,500
|
1,442,590
|
Eric P. Snyder,
Senior Vice President – Director of Corporate
Leasing
|
2007
|
451,832
|
250,000
|
71,573
|
2,298
|
5,625
|
781,328
|
2006
|
431,832
|
325,000
|
63,398
|
12,612
|
5,500
|
838,342
|
Augustus N. Stephas,
Chief Operating Officer –
Senior Vice President
|
2007
|
474,101
|
295,000
|
72,061
|
2,298
|
5,625
|
849,085
|
2006
|
454,107
|
250,000
|
63,398
|
12,612
|
5,500
|
785,617
|
(1)
|
All compensation cost resulting from amounts paid to the
Named Executive Officers as shown in this table is recognized at the
Management Company, which is a taxable REIT subsidiary of the
Company.
|
(2)
|
The position shown represents the individual’s
position with the Company and the Management Company.
|
(3)
|
As described in more detail in the Grants of Plan-Based
Awards Table and related footnotes herein, each of Charles B. Lebovitz,
John N. Foy and Stephen D. Lebovitz have elected to receive a portion
of their salary and/or bonus compensation payable with respect to 2006
and 2007 in the form of unrestricted shares of the Company’s
Common Stock issued under the Stock Incentive Plan. The aggregate
amount of salary and bonus compensation paid in this manner for each of
such officers during 2007 was as follows: Charles B. Lebovitz –
$133,077 of salary and $625,000 of bonus compensation; John N. Foy
– $187,563 of salary and $625,000 of bonus compensation; and
Stephen D. Lebovitz – $205,512 of salary. The aggregate amount of
salary and bonus compensation paid in this manner for each of such
officers during 2006 was as follows: Charles B. Lebovitz –
$118,310 of salary; John N. Foy – $168,243 of salary and $675,000
of bonus compensation; and Stephen D. Lebovitz – $197,762 of
salary. Each of the Named Executive Officers also elected to contribute
a portion of his salary to the CBL & Associates Management, Inc.
401(k) Profit Sharing Plan and Trust (the “401(k) Plan”)
during 2006 and 2007.
|
(4)
|
This column represents the dollar amount of compensation
expense recognized for financial statement reporting purposes with
respect to fiscal years 2006 and 2007, respectively, for the fair value
of all stock awards (both restricted and unrestricted) granted under
the Stock Incentive Plan in 2006 and 2007 as well as in prior fiscal
years, calculated in accordance with Statement of Financial Accounting
Standards No. 123(R),
Share-Based
Payment
, issued by the Financial Accounting
Standards Board (“SFAS 123(R)”). Pursuant to SEC rules, the
amounts shown exclude the impact of estimated forfeitures related to
service-based vesting conditions. For additional information, refer to
Note 17 – Share Based Compensation in the Company’s audited
financial statements contained in the Annual Report to Shareholders
that accompanies this proxy
|
28
statement and in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2007, as amended, filed with the SEC. Amounts shown reflect the
Company’s accounting expense for these awards (excluding the impact of estimated
forfeitures), and do not correspond to the actual value that will be realized by each
Named Executive Officer. Additional information on awards made during 2006 and 2007 is
also presented in the Grants of Plan-Based Awards Table and related footnotes
herein.
(5)
|
The Company did not grant any stock options during 2006
or 2007. This column represents the dollar amount of compensation
expense recognized for financial statement reporting purposes with
respect to fiscal 2006 and 2007 for the fair value of stock options
granted to each of the Named Executive Officers under the Stock
Incentive Plan in prior fiscal years. Pursuant to SEC rules, the
amounts shown exclude the impact of estimated forfeitures related to
service-based vesting conditions. The fair values per option of $0.87
and $1.755 for the May 2001 and May 2002 grants, respectively, were
estimated using the Black-Scholes option–pricing model in
accordance with SFAS 123(R). The following assumptions were used for
the May 2001 and May 2002 grants, respectively: expected life of 5.9
years and 7.0 years, expected volatility of 18.00% and 19.69%, expected
dividend yield of 8.34% and 6.83%, and a risk free rate of 5.07% and
4.84%. For additional information, refer to Note 17 – Share Based
Compensation in the Company’s audited financial statements
contained in the Annual Report to Shareholders that accompanies this
proxy statement and in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2007 filed with the SEC. Amounts shown
reflect the Company’s accounting expense for these awards, and do
not correspond to the actual value that will be realized by each Named
Executive Officer.
|
(6)
|
For fiscal years 2006 and 2007, amounts shown represent
matching contributions by the Management Company under the 401(k)
Plan.
|
29
2007 Grants of Plan-Based Awards
Name of Executive
|
Grant Date
|
Date of Compensation Committee Approval of
Bonus
|
All Other Stock Awards:
Number of Shares of
Stock or Units (#)
|
Grant Date Fair Value of Stock and Option Awards
(5)
|
Charles B. Lebovitz
|
3/30/2007
6/29/2007
9/28/2007
11/19/2007
12/20/2007
|
N/A
N/A
N/A
11/5/2007
N/A
|
754 (1)
862 (1)
906 (1)
19,975 (2)
1,054 (1)
|
$ 35,299
36,152
29,208
625,000
32,418
|
John N. Foy
|
1/24/2007
3/30/2007
6/29/2007
9/28/2007
11/28/2007
12/20/2007
|
11/1/2006
N/A
N/A
N/A
11/5/2007
N/A
|
15,737 (3)
1,098 (1)
1,084 (1)
1,320 (1)
19,975 (3)
1,535 (1)
|
$682,858
51,394
46,435
42,524
625,000
47,210
|
Stephen D. Lebovitz
|
3/30/2007
6/29/2007
9/28/2007
12/20/2007
|
N/A
N/A
N/A
N/A
|
1,070 (1)
1,223 (1)
1,489 (1)
1,731 (1)
|
$ 50,666
53,100
47,572
54,174
|
Eric P. Snyder
|
—
|
—
|
—
|
—
|
Augustus N. Stephas
|
11/5/2007
|
N/A
|
500 (4)
|
$ 15,965
|
(1)
|
Represents fully vested, unrestricted shares of stock
issued to such officer pursuant to agreements entered into under the
Stock Incentive Plan, which provide that the amounts representing
annual increases over each of such officers’ base salaries since
1995 (net of the dollar amounts withheld for taxes) are paid in
quarterly installments (generally on the last business day of each
quarter) in the form of the Company’s Common Stock rather than
cash, with the number of shares issued in payment of each such
quarterly installment determined based on application of the market
price for the Common Stock on the last trading day in each of the three
months during the quarter to the amount of salary accrued during each
such month.
|
(2)
|
Represents an award of fully vested, unrestricted shares
issued to Mr. Lebovitz under the Stock Incentive Plan in payment of a
bonus earned for fiscal 2007 performance, pursuant to each
officer’s option to elect whether to have his or her bonus paid
in cash or in shares of the Company’s Common Stock, as described
below.
|
(3)
|
Represents an award of fully vested, unrestricted shares
issued to Mr. Foy under the Stock Incentive Plan in payment of bonuses
earned for fiscal 2006 performance (1/24/2007 grant) and fiscal 2007
performance (11/28/2007 grant), pursuant to each officer’s option
to elect whether to have his or her bonus paid in cash or in shares of
the Company’s Common Stock, as described below.
|
(4)
|
Represents an award of shares of restricted stock to Mr.
Stephas under the Stock Incentive Plan in connection with his promotion
to Chief Operating Officer of the Company earlier in the year, with the
additional terms and conditions as described in the narrative presented
below.
|
(5)
|
Represents the FAS 123(R) grant date fair value of the
equity award. For awards of restricted Common Stock, such value is
calculated using the average of the high and low trading price of our
Common Stock on the grant date for the award. For unrestricted shares
of Common Stock issued in lieu of salary or bonus compensation to
certain officers as described above, such value is equal to the amount
of such salary or bonus compensation that the officer has elected to
receive in the form of stock.
|
30
Additional Information Concerning Compensation Reported
Above
The following discussion presents additional information relevant to the
compensation reported above for each of the Named Executive Officers in the Summary
Compensation Table and the 2007 Grants of Plan-Based Awards Table.
Quarterly Deferred Compensation Arrangements for Three Named
Executive Officers
As described in the footnotes to the two preceding tables, each of
Charles B. Lebovitz, John N. Foy and Stephen D. Lebovitz are parties to agreements
entered into under the Stock Incentive Plan, dated as of January 1, 2004, pursuant to
which the amounts representing annual increases over each of such officers’ base
salaries since 1995 (net of the dollar amounts withheld for taxes) are paid in
quarterly installments (generally on the last business day of each quarter) in the form
of the Company’s Common Stock rather than cash, with the number of shares issued
in payment of each such quarterly installment determined based on application of the
market price for the Common Stock on the last trading day in each of the three months
during the quarter to the amount of salary accrued during each such month.
Bonus Arrangements for Named Executive Officers
The terms of the bonus arrangements for the Named Executive Officers for
fiscal 2007 are described above in the “Compensation Discussion and
Analysis” section. Each officer who received a bonus had the option of electing
whether to have his or her bonus paid in cash or in shares of the Company’s
Common Stock pursuant to the terms of the Stock Incentive Plan. The number of shares
issued with respect to any bonus that an officer elects to receive in Common Stock is
determined based on the market value of the Common Stock on the date when such bonus
becomes payable. During January 2007, John N. Foy was awarded 15,737 fully vested,
unrestricted shares of Common Stock after making such an election with respect to his
bonus compensation payable for fiscal year 2006. During November 2007, the following
two Named Executive Officers were awarded the following number of fully vested,
unrestricted shares of Common Stock after making such elections with respect to their
bonus compensation payable for fiscal year 2007 performance: Charles B. Lebovitz
(19,975 shares) and John N. Foy (19,975 shares).
Terms of Restricted Stock Grants to Named Executive
Officers
The terms of each award of restricted shares of Common Stock granted to
the Named Executive Officers with respect to performance during 2007 provide that the
recipient of the award generally has all of the rights of a stockholder during the
vesting/restricted period, including the right to receive dividends on the same basis
and at the same rate as all other outstanding shares of Common Stock and the right to
vote such shares on any matter on which holders of the Company’s Common Stock are
entitled to vote. Each such award of restricted stock was made in February 2008, other
than one award of 500 shares made to Augustus N. Stephas in November 2007 related to
his promotion to Chief Operating Officer of the Company earlier in the year. The
restrictions expire with respect to 20% of the shares granted to each Named Executive
Officer annually beginning on the first anniversary of the date of grant. The shares
generally are not transferable during the restricted period, except for any transfers
which may be required by law (such as pursuant to a domestic relations order). If the
Named Executive Officer’s employment terminates during the restricted period for
any reason other than death, disability, or retirement after reaching age 70 with at
least 10 years of continuous service, the award agreements provide that any non-vested
portion of the restricted stock award is immediately forfeited by such officer. If
employment terminates during the restricted period due to death or disability (as
defined in the award), or due to the officer having retired after reaching age 70 and
having maintained at least 10 years of continuous employment with the Company, its
subsidiaries or affiliates, any portion of the restricted stock award that is not
vested as of such date shall immediately become fully vested in the officer or his
estate, as applicable. The terms of the restricted stock awards to the Named Executive
Officers are substantially identical (except as to the number of shares subject to each
such award) to the terms of all other annual restricted stock awards granted under the
Stock Incentive Plan in February 2008 to employees of the Company.
31
Non-Competition Arrangements
Pursuant to agreements entered into at the time of the Company’s
initial public offering in November 1993, each of Charles B. Lebovitz, John N. Foy and
Stephen D. Lebovitz has agreed to refrain from competing with the Company until two
years from the date of termination of his employment. Prohibited competition includes
any participation in the development, improvement or construction of any shopping
center project, acquiring any interest in a shopping center project or acquiring vacant
land for development as a shopping center project. Charles B. Lebovitz, John N. Foy and
Stephen D. Lebovitz are, however, permitted to hold certain investments which they
owned prior to completion of the Company’s initial public offering in November
1993.
2007 Outstanding Equity Awards at Fiscal
Year-End
|
Option Awards
|
Stock Awards
|
Name
|
Number of
Securities Underlying Unexercised
Options (#)
Exercisable (1)
|
Number of Securities Underlying
Unexercised
Options (#)
Unexercisable (1)
|
Option Exercise
Price ($)(1)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not
Vested (#)(2)
|
Market Value of Shares or Units of Stock That Have
Not Vested ($)(2)
|
Charles B.
Lebovitz
|
—
|
—
|
—
|
—
|
25,920 (3)
|
$619,747
|
John N. Foy
|
32,000
32,000
|
—
—
|
13.8375
18.2675
|
5/02/2011
5/07/2012
|
25,920 (3)
—
|
619,747
—
|
Stephen D. Lebovitz
|
—
|
—
|
—
|
—
|
25,920 (3)
|
619,747
|
Eric P. Snyder
|
—
|
—
|
—
|
—
|
5,880 (4)
|
140,591
|
Augustus N. Stephas
|
10,800
|
—
|
18.2675
|
5/07/2012
|
6,380 (5)
|
152,546
|
(1)
|
The Company has not granted any stock options since
2002. All option awards reflected in the table vest in 20% increments
on each of the first through fifth anniversaries of their date of grant
and expire on the tenth anniversary of their date of grant;
accordingly, all of the options reflected in the table are now fully
vested. Both the number of shares subject to each such option and the
option exercise price have been adjusted to reflect the 6/15/05 Stock
Split.
|
(2)
|
Except as otherwise noted, all of these shares were
issued as part of the Company’s annual restricted stock grants to
officers and other key employees under the Stock Incentive Plan. Shares
issued pursuant to each such annual restricted stock grant vest in 20%
increments on each of the first through fifth anniversaries of their
date of grant. Market value shown for all unvested shares of restricted
stock is based on the closing price for the Company’s Common
Stock on the NYSE on the last trading day of fiscal 2007 (December 31)
of $23.91 per share.
|
(3)
|
Such shares were issued as part of the annual restricted
stock grants described in Note (2) above, and vest as follows: 640
shares will vest on May 5 in 2008; 640 shares will vest on May 10 in
each of the years 2008 and 2009; 4,000 shares will vest on May 9 in
each of the years 2008, 2009 and 2010; and 3,000 shares will vest on
May 8 in each of the years 2008, 2009, 2010 and 2011.
|
(4)
|
Such shares were issued as part of the annual restricted
stock grants described in Note (2) above, and were scheduled to have
vested as follows: 360 shares on May 5 in 2008; 360 shares on May 10 in
each of the years 2008 and 2009; 800 shares on May 9 in each of the
years 2008, 2009 and 2010; and 600 shares on May 8 in each of the years
2008, 2009, 2010 and 2011. As described below, however, all 5,880
shares of restricted stock outstanding at December 31, 2007, as well as
1,500 additional shares of restricted stock issued to Mr. Snyder as
part of the Company’s annual grants under the Stock Incentive
Plan in February 2008, will be fully vested as of April 1, 2008
pursuant to an agreement entered into with Mr. Snyder in connection
with his decision to retire from the Company effective March 31,
2008.
|
32
(5)
|
Such shares were issued as part of the annual restricted
stock grants described in Note (2) above, other than the one-time grant
of 500 shares in November 2007 related to Mr. Stephas’ promotion
to Chief Operating Officer as described above, and vest as follows: 360
shares will vest on May 5 in 2008; 360 shares will vest on May 10 in
each of the years 2008 and 2009; 800 shares will vest on May 9 in each
of the years 2008, 2009 and 2010; 600 shares will vest on May 8 in each
of the years 2008, 2009, 2010 and 2011; and 100 shares will vest on
November 5 in each of the years 2008, 2009, 2010, 2011 and
2012.
|
2007 Option Exercises and Stock Vested
|
Option Awards
|
Stock Awards
|
Name
|
Number of
Shares
Acquired
on Exercise
(#)
|
Value Realized
on Exercise
($)(1)
|
Number of
Shares
Acquired
on Vesting
(#)
|
Value Realized
on Vesting
($)(1)
|
Charles B. Lebovitz
|
158,000
|
$3,410,806
|
31,831 (2)
|
$1,025,015 (2)
|
John N. Foy
|
130,000
|
2,099,844
|
49,029 (3)
|
1,808,018 (3)
|
Stephen D. Lebovitz
|
210,000
|
3,561,572
|
35,573 (4)
|
1,215,155 (4)
|
Eric P. Snyder
|
3,600
|
49,149
|
2,120 (5)
|
88,002 (5)
|
Augustus N. Stephas
|
7,200
|
177,498
|
2,120 (5)
|
88,002 (5)
|
(1)
|
For option exercises by each Named Executive Officer
during 2007, amounts shown represent the aggregate sum of the
difference between the closing price of the Company’s Common
Stock on the NYSE on the date that each option was exercised and the
option exercise price, times the number of shares underlying the
exercised options. For vesting of restricted stock awards, amounts
shown are based on the closing market price for the Company’s
Common Stock on the NYSE on the respective dates when each installment
vests. For awards of unrestricted stock in lieu of salary or bonus,
amounts shown are based on the closing market price for the
Company’s Common Stock on the NYSE on the respective dates when
such shares are issued. In each case, the officer either (A) may elect
to sell all (or some portion) of the underlying shares immediately
following the option exercise or the vesting or issuance date or (B)
may elect to hold all (or some portion) of the underlying shares
indefinitely or for sale at a later date. Accordingly, such amounts do
not correspond to the actual value that will be realized by each Named
Executive Officer pursuant to stock option exercises or the vesting of
restricted stock during the year.
|
(2)
|
Includes 23,551 immediately vested shares (valued at
$681,415) which Charles B. Lebovitz received in payment of quarterly
salary deferrals and a fiscal year 2007 bonus that Mr. Lebovitz elected
to receive in stock in November 2007, as discussed above, and 8,280
shares (valued at $343,600) received pursuant to restricted stock
awards which vested during fiscal 2007.
|
(3)
|
Includes 40,749 immediately vested shares (valued at
$1,464,418) which Mr. Foy received in payment of quarterly salary
deferrals, as well as a fiscal year 2006 bonus that Mr. Foy elected to
receive in stock in January 2007 and a fiscal year 2007 bonus that Mr.
Foy elected to receive in stock in November 2007, as discussed above,
and 8,280 shares (valued at $343,600) received pursuant to restricted
stock awards which vested during fiscal 2007.
|
(4)
|
Includes 5,513 immediately vested shares (valued at
$187,880) which Stephen D. Lebovitz received in payment of quarterly
salary deferrals, as discussed above, and 30,060 shares (valued at
$1,027,275) received pursuant to restricted stock awards which vested
during fiscal 2007.
|
(5)
|
Includes 2,120 shares (valued at $88,002) received
pursuant to restricted stock awards which vested during fiscal
2007.
|
33
Potential Payments Upon Termination
Except for the noncompetition arrangements described above, and except
for the agreement described below entered into with Mr. Snyder in conjunction with the
announcement of his retirement in March 2008, the Named Executive Officers do not have
any employment, severance or change of control agreements with the Company.
Accordingly, except for certain impacts on outstanding equity awards and the individual
agreement with Mr. Snyder, each as described below, such officers will not receive
compensation in connection with any termination of employment due to death, disability,
retirement or any other reason, except for such benefits as are available generally to
all salaried employees under the Company’s 401(k) Plan, insurance and other
benefits programs (including the Company’s current policy on continuation of
medical benefits for certain retirees, as described below).
Impact of Death, Disability or Retirement on Outstanding Awards Under
the Stock Incentive Plan
All of the outstanding options granted to the Named Executive Officers
under the Stock Incentive Plan provide that if the grantee’s employment
terminates by reason of death, the option may be exercised by the grantee’s
estate or representative for up to one year thereafter, but only to the extent that it
was vested/exercisable on the date of death. In the case of a termination of employment
due to disability or retirement, such options provide that they generally may be
exercised by the grantee or the grantee’s representative for up to three years
following such event, but only to the extent that they were vested/exercisable on the
date of termination.
Outstanding restricted stock awards made to the Named Executive Officers
prior to 2004 under the Stock Incentive Plan generally provide that all unvested shares
are immediately forfeited if the grantee’s employment terminates for any reason,
including death, disability or retirement. The only exception to this was one award of
21,780 shares of restricted stock made to Stephen D. Lebovitz on October 28, 2002,
which vested on the fifth anniversary of the date of grant (October 28, 2007), and
provided that it would immediately vest prior to that time if the grantee’s
employment should terminate due to death, disability or termination by the Company
without “cause” (as defined to include dishonesty, gross neglect of duties
or persistent failure to abide by Company policies). Restricted stock awards made to
the Named Executive Officers in 2004 and subsequent years, however, provide that if the
grantee’s employment terminates by reason of death or disability, any portion of
the award that is not vested on the date of such termination shall immediately vest in
the grantee or the grantee’s estate.
“Disability” for these purposes generally means the
employee’s complete and permanent disability as defined by the Company’s
health insurance plans or as otherwise defined by the Company from time to
time.
Beginning with the 2006 annual restricted stock grants, the Company has
added a provision which states that, if the grantee’s employment terminates due
to retirement after reaching age 70 and having maintained at least 10 years of
continuous employment with the Company, its subsidiaries or affiliates, any portion of
the award that is not vested as of such date shall immediately vest in the
grantee.
Based on the foregoing, the following table summarizes the intrinsic
value (that is, the value based on the Company’s stock price, and in the case of
options, the Company’s stock price minus the exercise price) of all equity awards
that each of the Named Executive Officers would have been entitled to retain if he had
retired, died or become disabled, assuming that such event occurred as of December 31,
2007 (and using the NYSE closing price of $23.91 per share on December 31, 2007, the
last trading day of the year):
34
Name
|
Termination
Due to Retirement
|
Termination
Due to Death/Disability
|
Options
|
Restricted
Stock Grants
|
Options
|
Restricted
Stock Grants
|
Charles B. Lebovitz
|
—
|
$286,920 (1)
|
—
|
$604,445
|
John N. Foy
|
$502,880
|
—
|
$502,880
|
604,445
|
Stephen D. Lebovitz
|
—
|
—
|
—
|
604,445
|
Eric P. Snyder (2)
|
—
|
—
|
—
|
131,983
|
Augustus N. Stephas
|
60,939
|
—
|
60,939
|
143,938
|
|
(1)
|
Since Charles B. Lebovitz is the only Named Executive
Officer to have attained age 70 with 10 years of continuous employment
with the Company as of December 31, 2007, no other Named Executive
Officer would have retained any unvested shares of restricted stock if
he had retired as of such date.
|
|
(2)
|
The actual compensation payable to Mr. Snyder pursuant
to a letter agreement dated March 3, 2008 and entered into with Mr.
Snyder in conjunction with his announcement of his retirement from the
Company is described below.
|
Agreement with Eric P. Snyder
On March 3, 2008, Eric P. Snyder announced his retirement from the
Company, effective March 31, 2008. In conjunction with Mr. Snyder’s announcement,
the Company entered into a letter agreement with Mr. Snyder dated March 3, 2008. The
letter agreement provides for compensation to Mr. Snyder in conjunction with his
retirement as follows:
|
•
|
The Company will pay to Mr. Snyder a total of $1.0
million in cash, with 50% of such amount payable April 1, 2008 and the
remainder payable February 1, 2009.
|
|
•
|
The Company will pay to Mr. Snyder in cash the amount of
$75,000 on April 1, 2008, as a pro-rata share of his bonus compensation
for fiscal 2008.
|
|
•
|
Outstanding restricted stock award agreements under the
Stock Incentive Plan will be modified, such that all of Mr.
Snyder’s 7,380 currently outstanding shares of restricted Common
Stock issued under the Company’s Stock Incentive Plan will be
fully vested as of April 1, 2008. (The market value of such shares on
the date of the letter agreement, based on the closing price of
CBL’s Common Stock on the NYSE on such date, was $24.08 per
share, or $177,710.)
|
|
•
|
Mr. Snyder and his wife shall be entitled to continue to
participate in the Company’s health insurance plans on the same
terms as similarly situated retirees under current Company
policy.
|
|
•
|
The letter agreement also contains customary provisions
requiring Mr. Snyder to refrain from any disparagement of the Company
or its employees and affiliates and from any disclosure of confidential
business information known to Mr. Snyder in his capacity as an
executive officer of the Company. Mr. Snyder also executed a customary
release in connection with the letter agreement.
|
35
DIRECTOR COMPENSATION
The following table sets forth information regarding the compensation of
each director not employed by the Company (a “Non-Employee Director”) for
the Company’s fiscal year ended December 31, 2007. Directors who are employees of
the Company do not receive any separate compensation for service in their capacity as a
director.
2007 Director Compensation Table
Name
|
Fees Earned or
Paid in Cash ($)(1)
|
Stock
Awards
($)(2)(3)
|
Option
Awards
($)(4)(5)
|
Total ($)
|
Claude M. Ballard
|
$50,750
|
$21,487
|
—
|
$72,237
|
Gary L. Bryenton
|
47,750
|
21,487
|
—
|
69,237
|
Martin J. Cleary
|
43,250
|
21,487
|
—
|
64,737
|
Matthew S. Dominski
|
47,000
|
21,487
|
—
|
68,487
|
Leo Fields
|
46,250
|
21,487
|
—
|
67,737
|
Winston W. Walker
|
68,750
|
21,487
|
—
|
90,237
|
(1)
|
This column reports the aggregate amount of all cash
compensation paid to each Non-Employee Director during 2007 for Board
and committee service, determined as described below under
“Additional Information Concerning Director
Compensation.”
|
(2)
|
This column represents the dollar amount of compensation
expense recognized for financial statement reporting purposes with
respect to fiscal 2007 for the fair value of all stock awards granted
to the Non-Employee Directors under the Stock Incentive Plan in 2007 as
well as in prior fiscal years, calculated in accordance with SFAS
123(R). The fair value of these restricted stock grants is calculated
using the high low average price for the Company’s Common Stock
on the NYSE on the date of grant. For additional information, refer to
Note 17 – Share Based Compensation in the Company’s audited
financial statements contained in the Annual Report to Shareholders
that accompanies this proxy statement and in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007 filed with the
SEC. Amounts shown reflect the Company’s accounting expense for
these awards, and do not correspond to the actual value that will be
realized by each Non-Employee Director.
|
(3)
|
During 2007, each Non-Employee Director was granted 500
shares of restricted Common Stock under the Stock Incentive Plan,
having a grant date fair value of $42.975 per share, which was the
average of the high and low trading prices of the Company’s
Common Stock as reported on the NYSE on January 3, 2007. The aggregate
number of the outstanding shares of restricted Common Stock held by
each Non-Employee Director as of December 31, 2007 was as follows:
Claude M. Ballard –2,700 shares; Gary L. Bryenton – 2,700
shares; Martin J. Cleary – 2,700 shares; Matthew S. Dominski
– 2,000 shares; Leo Fields – 2,700 shares; and Winston W.
Walker – 2,700 shares.
|
(4)
|
The Company did not grant any stock options during 2007.
The Company did not record any compensation expense in fiscal 2007
related to stock options granted to directors in prior years because
all of such options were fully vested on the date of grant and,
accordingly, all related compensation expense was recognized at that
time.
|
(5)
|
The aggregate number of shares of Common Stock subject
to outstanding options held by each Non-Employee Director as of
December 31, 2007 was as follows: Claude M. Ballard – none; Gary
L. Bryenton –2,000 shares; Martin J. Cleary –2,000 shares;
Matthew S. Dominski – none; Leo Fields – none; and Winston
W. Walker – none.
|
36
Additional Information Concerning Director
Compensation
Both the Company’s senior management and the Compensation
Committee intend for the compensation of the Company’s Non-Employee Directors to
be competitive and reasonable in relation to the directors’ responsibilities for
supervising the overall management and policies of the Company, and in relation to the
compensation of non-employee directors at the same group of peer companies reviewed by
the Compensation Committee in setting base salaries for the Named Executive Officers
(taking into account differences in size and scope of operations between the Company
and certain of its peers). Additional compensation is provided to non-employee
directors who serve on the Executive Committee, and to the Chairman of the Audit
Committee, in recognition of the additional workload undertaken by such directors.
While senior management and the Compensation Committee periodically review the
compensation paid to the Non-Employee Directors, the Company typically has not adjusted
such compensation on an annual basis, but only when senior management and the
Compensation Committee decide that such review indicates that some adjustments may be
warranted. As in the case of the Compensation Committee’s review of executive
salaries at the peer companies discussed above, such review is only intended to provide
the Compensation Committee with a general understanding of whether the Company’s
compensation of its outside directors is competitive for purposes of attracting and
retaining well-qualified individuals to serve as Non-Employee Directors of the Company.
As in the case of executive officer compensation, the Compensation Committee does not
set specific competitive compensation objectives or otherwise engage in any formal
“benchmarking” comparisons of the compensation of the Company’s
directors against that of directors of the peer companies considered. The equity
component of director compensation, as described under “Director
Compensation” herein, in conjunction with the Company’s stock ownership
guidelines for non-employee directors, is intended by the Compensation Committee to
align the interests of the non-employee directors with those of the Company’s
stockholders by ensuring that they attain and maintain a significant proprietary
interest in the Company.
During 2007, each Non-Employee Director received from the Company an
annual fee of $27,500. In addition to the annual fee, each Non-Employee Director
received a meeting fee of $1,500 for each Board, Compensation Committee and
Nominating/Corporate Governance Committee meeting attended and $750 for each telephonic
Board meeting attended and reimbursement of expenses incurred in attending meetings. In
addition, with the exception of Mr. Walker, the Chairman of the Audit Committee, each
Non-Employee Director received from the Company a fee of $1,500 for each Audit
Committee meeting attended. Each Non-Employee Director serving as a member of the
Executive Committee received from the Company a monthly fee of $750 in lieu of meeting
fees for participation on the Executive Committee in 2007. Mr. Walker, who served as
Chairman of the Audit Committee, received a monthly fee of $2,000, in lieu of meeting
fees for participation on the Audit Committee in 2007.
In November 2007, upon the recommendation of the Company’s
Compensation Committee, the Board of Directors voted to make the adjustments summarized
below to the cash portion of the Company’s compensation arrangements for each
Non-Employee Director, which had not been adjusted since January 1, 2005. The column
listing fees payable prior to January 1, 2008 reflects the fees paid to Non-Employee
Directors during 2007, as described above, while the column for fees effective January
1, 2008 summarizes the new fee arrangements effective for the current year:
37
Description
|
Amount of Fee
Prior to
January 1, 2008
|
New Fees
Effective
January 1, 2008
|
Annual Fee for each Non-Employee Director
|
$27,500
|
$30,000
|
Meeting Fee for each Board, Compensation Committee,
Nominating/Corporate Governance Committee or Audit Committee Meeting
Attended*
|
$1,500
|
$1,750
|
Monthly Fee for each Non-Employee Director Who Serves as
a Member of the Executive Committee (in lieu of Executive Committee
Meeting Fees)
|
$750
|
$875
|
Monthly Fee for the Audit Committee Chairman*
|
$2,000
|
$2,500
|
Fee for each Telephonic Board or Committee
Meeting
|
$750
|
$875
|
*The
Non-Employee Director who serves as Chairman of the Audit Committee receives a monthly
fee in lieu of meeting fees for his participation on the Audit Committees.
|
Each Non-Employee Director also receives reimbursement
of expenses incurred in attending meetings.
|
Each fiscal year of the Company, Non-Employee Directors also receive
either an annual grant of options to purchase 1,000 shares of Common Stock having an
exercise price equal to 100% of the fair market value of the shares of Common Stock on
December 31 of such fiscal year or up to 1,000 shares of restricted Common Stock of the
Company. For 2007, each Non-Employee Director received 500 shares of restricted Common
Stock of the Company with a value (on the date of grant, January 2, 2008) of $24.005
per share, the average of the high and low trading prices of the Company’s Common
Stock as reported on the NYSE on January 2, 2008. The restrictions on shares of Common
Stock received by the Non-Employee Directors are set forth in the Stock Incentive Plan
and provide that such shares may not be transferred during the Non-Employee
Director’s term and for one year thereafter. Each holder of a Non-Employee
Director option granted pursuant to the above-stated arrangement has the same rights as
other holders of options in the event of a change in control. Options granted to the
Non-Employee Directors (i) shall have a term of 10 years from date of grant, (ii) are
100% vested upon grant, (iii) are non-forfeitable prior to the expiration of the term
except upon the Non-Employee Director’s conviction for any criminal activity
involving the Company or, if non-exercised, within one year following the date the
Non-Employee Director ceases to be a director of the Company, and (iv) are
non-transferable.
In addition, any person who becomes a Non-Employee Director will receive
an initial grant of 1,000 shares of restricted Common Stock upon joining the Board of
Directors.
38
Equity Compensation Plan Information as of December 31,
2007
The following table sets forth information as to the Company’s
equity compensation plans as of the end of the Company’s 2007 fiscal
year:
Plan Category
|
(a)
Number of securities to be issued upon exercise of
the outstanding options, warrants and rights
|
(b)
Weighted-average exercise price of outstanding
options, warrants and rights
|
(c)
Number of securities remaining available for future
issuance under equity compensation plans (excluding securities
reflected in column (a))
|
Equity compensation plans approved by security
holders
|
652,030
|
$15.71 (1)
|
1,478,752
|
Equity compensation plans not approved by security
holders
|
None
|
N/A
|
N/A
|
(1)
|
The weighted average calculation does not reflect 47,601
shares reserved for issuance under deferred compensation arrangements
as of December 31, 2007. The Company’s Stock Incentive Plan
permits the Compensation Committee to enter into deferred compensation
arrangements designed to provide a deferral of taxable income to
participants, which may be funded or unfunded and may provide for
future payments to participants in the form of Common Stock or cash. As
used by the Compensation Committee, these deferred compensation
arrangements typically allow the executive/employee to elect to defer a
portion of his/her salary or bonuses into the arrangement on an
unfunded and unsecured basis. For deferred compensation arrangements
payable in Common Stock, the amount of salary or bonus deferred is then
deemed to be converted to shares of the Company’s Common Stock
based on the closing price of the Common Stock on the date of the
deferral. The number of such shares is then further deemed to increase
as dividends are paid on the Common Stock as if such dividends had been
utilized via the Company’s Dividend Reinvestment Plan to acquire
additional shares of Common Stock at the price provided through the
Company’s Dividend Reinvestment Plan. The arrangements generally
provide that on the earlier of (i) a date certain as specified in each
deferred compensation arrangement or (ii) the death, disability or
termination of employment of the executive/employee or (iii) the
merger, consolidation or sale of the Company, the executive/employee
will then be entitled to receive the stated amount of cash or, for
deferred compensation arrangements payable in Common Stock, that number
of shares of Common Stock deemed set aside on the date of the deferral
together with additional shares of Common Stock deemed acquired through
the Company’s Dividend Reinvestment Plan through the date of the
payout.
|
Compensation Committee Interlocks and Insider
Participation
The Compensation Committee of the Board of Directors consists of Claude
M. Ballard, Martin J. Cleary, Matthew S. Dominski and Winston W. Walker, with Mr.
Ballard serving as Chairman. None of the members of the Compensation Committee are or
have been officers or employees of the Company or any of its subsidiaries and each
member of the Compensation Committee is an Independent Director.
No executive officer of the Company served on any board of directors or
compensation committee of any entity (other than the Company or its subsidiaries) with
which any member of the Compensation Committee, or any other director of the Company,
is affiliated.
39
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
The information contained in this report shall not be deemed to be
“soliciting material” or to be “filed” with the SEC, nor shall
such information or report be deemed incorporated by reference into any future filing
by the Company under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference in such
filing.
The Compensation Committee of the Board of Directors of the Company is
composed of four Independent Directors (Claude M. Ballard, Chairman, Martin J. Cleary,
Matthew S. Dominski and Winston W. Walker) and operates under an amended and restated
written charter adopted by the Board of Directors on February 3, 2004. A copy of the
amended and restated charter is available and can be accessed in the “Investing
– Corporate Governance” section of the Company’s website at
cblproperties.com. The Company’s Board of Directors has determined
that each of the members of the Compensation Committee is “independent”
pursuant to the listing standards of the NYSE as currently applicable.
The Compensation Committee has reviewed and discussed with Management of
the Company the Compensation Discussion and Analysis required by Item 402(b) of SEC
Regulation S-K and presented elsewhere in this proxy statement.
Based on the Compensation Committee’s review and discussions
referred to above, the Compensation Committee recommended that the Board of Directors
include the Compensation Discussion and Analysis in the Company’s proxy statement
for its 2008 Annual Meeting and in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2007, filed with the SEC.
COMPENSATION COMMITTEE
Claude M. Ballard (Chairman)
Martin J. Cleary
Matthew S. Dominski
Winston W. Walker
40
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
The information contained in this report shall not be deemed to be
“soliciting material” or to be “filed” with the SEC, nor shall
such information or report be deemed incorporated by reference into any future filing
by the Company under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference in such
filing.
The Audit Committee of the Board of Directors of the Company is composed
of four Independent Directors (Winston W. Walker, Chairman, Claude M. Ballard, Gary L.
Bryenton and Matthew S. Dominski) and operates under an amended and restated written
charter adopted by the Board of Directors on February 3, 2004. A copy of the amended
and restated charter is available and can be accessed in the “Investing –
Corporate Governance” section of the Company’s website at
cblproperties.com. The Company’s Board of Directors has determined
that each of the members of the Audit Committee is “independent” pursuant
to the listing standards of the NYSE as currently applicable.
Management is responsible for the Company’s internal controls and
financial reporting process. The Company’s independent auditors are responsible
for performing an independent audit of the Company’s financial statements in
accordance with auditing standards generally accepted in the United States and for
issuing a report thereon. The Audit Committee’s responsibility is to monitor and
oversee these processes.
In this context, the Audit Committee has met and held discussions with
Management and the Company’s independent auditors. Management reported to the
Audit Committee that the Company’s consolidated financial statements for the
Company’s 2007 fiscal year were prepared in accordance with accounting principles
generally accepted in the United States, and the Audit Committee has reviewed and
discussed these consolidated financial statements with Management and the
Company’s independent auditors. The Audit Committee discussed with the
independent auditors the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as amended.
The Company’s independent auditors also provided to the Audit
Committee the written disclosures and the letter required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) and the Audit
Committee discussed with the independent auditors their firm’s independence. The
Audit Committee considered whether the provision of services by the independent
auditors (other than audit services) is compatible with maintaining the independent
auditors’ independence.
Pursuant to the mandates of the Sarbanes-Oxley Act of 2002, the
Company’s Board of Directors has determined that Winston W. Walker, an
Independent Director and Chairman of the Audit Committee, qualifies as an “audit
committee financial expert” as such term is defined by the SEC.
Based on the Audit Committee’s review and discussions referred to
above, the Audit Committee recommended that the Board of Directors include the
Company’s audited consolidated financial statements in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007, filed with the SEC and
provide in such Annual Report on Form 10-K the disclosure of Winston W. Walker as an
“audit committee financial expert”.
AUDIT COMMITTEE
Winston W. Walker (Chairman)
Claude M. Ballard
Gary L. Bryenton
Matthew S. Dominski
41
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review and Approval of Related Person Transactions
The Company’s Bylaws provide that any contract or transaction (i)
between the Company or the Operating Partnership and one or more directors or officers
of the Company or (ii) between the Company or the Operating Partnership and any other
entity in which one or more of its directors or officers are directors or officers, or
have a financial interest, must be approved by a majority of the Independent Directors
(excluding any director who has an interest in the matter) or by the Company’s
stockholders, after the material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to them. The Company’s Second
Amended and Restated Code of Business Conduct and Ethics also contains provisions
governing the approval of certain transactions involving the Company and employees (or
immediate family members of employees, as defined therein) that are not subject to the
provision of the Bylaws described above. The application of these provisions to the
review and approval of those transactions and relationships reported for fiscal 2007 is
described in pertinent detail below.
Management Company and Management Agreement
The Company is party to a management agreement with the Management
Company pursuant to which the Management Company renders management and administrative
services with respect to the Company’s properties. The Management Company also
provides management services for certain properties owned by CBL’s Predecessor
and certain other third parties for which the Management Company is paid a management
fee. See “Retained Property Interests.” The Operating Partnership owns 100%
of both of the Management Company’s preferred stock and its common
stock.
Operating Partnership Agreement; CBL Rights
The Company, through subsidiaries, serves as the sole general partner of
the Operating Partnership and owned, as of March 10, 2008, 66,298,415 common
partnership units, representing a 1.6% interest as the sole general partner and a 55.1%
interest as a limited partner for an aggregate 56.7% interest in the Operating
Partnership. As of March 10, 2008, CBL’s Predecessor owned 14,678,230 common
partnership units, representing a 12.6% limited partner interest in the Operating
Partnership and CBL’s Predecessor also owned 2,985,678 shares of the
Company’s Common Stock, for a combined total interest of 15.1% in the Operating
Partnership. Certain executive and senior officers also own common partnership
units.
Pursuant to the Operating Partnership Agreement, the limited partners
possess CBL Rights, consisting of the rights to exchange all or a portion of their
common units or special common units (as applicable) in the Operating Partnership for
shares of Common Stock or their cash equivalent, at the Company’s election. The
CBL Rights may be exercised at any time and from time to time to the extent that, upon
exercise of the CBL Rights, the exercising party shall not beneficially or
constructively own shares of Common Stock in excess of the applicable share ownership
limits set forth in the Company’s Certificate of Incorporation. The Company,
however, may not pay in shares of Common Stock to the extent that this would result in
a limited partner beneficially or constructively owning in the aggregate more than its
applicable ownership limit or otherwise jeopardize, in the opinion of counsel to the
Company, the Company’s qualification as a REIT for tax purposes.
The number of shares of Common Stock received by the limited partners of
the Operating Partnership upon exercise of CBL Rights will be based upon the equivalent
number of partnership units owned by the limited partners on a one-for-one basis and
the amount of cash received by the limited partners upon such exercise, if the Company
elects to pay cash, will be based upon the trading price of the shares of Common Stock
at the time of exercise.
|
CBL Rights will expire in November 2043 if not exercised
prior to that date.
|
42
Retained Property Interests
CBL’s Predecessor owns interests in outparcels at certain of the
Company’s malls and a 22.5% minority interest in Jacksonville Avenues Limited
Partnership, the majority interest of which is owned by third parties. The properties
retained by CBL’s Predecessor are managed and leased by the Management Company,
which receives a fee for its services pursuant to property management agreements that
were already in place prior to the Company’s initial public offering in November
1993. Accordingly, these agreements were not subject to review under the procedures
prescribed in the Company’s Bylaws since they predate the adoption of the Bylaws,
and their existence was disclosed in the Company’s initial public offering
prospectus and has been continually disclosed to investors in the Company’s
periodic reports filed with the SEC since that time. During fiscal year 2007,
CBL’s Predecessor paid the Management Company approximately $251,000 under such
arrangements. The following individuals, collectively, own 100% of the equity interests
in CBL’s Predecessor: Charles B. Lebovitz (Chairman and CEO of the Company); the
four children of Charles B. Lebovitz (Stephen D. Lebovitz (President and Secretary of
the Company); Michael I. Lebovitz (Senior Vice President – Chief Development
Officer of the Company); Alan L. Lebovitz (Vice President – Asset Management of
the Company); and Beth Lebovitz-Backer); John N. Foy (Vice Chairman of the Board and
Chief Financial Officer of the Company); and Ben S. Landress (Executive Vice President
– Management of the Company).
These property management arrangements are expected to continue on
substantially similar terms, with management fees paid on the same basis, during fiscal
year 2008.
Affiliated Entities
Certain executive officers of the Company and two members of the
immediate family of Charles B. Lebovitz collectively have a significant but
non-controlling interest in EMJ Corporation, a major national construction company that
built substantially all of the properties developed by the Company and was building 17
of the Company’s projects under construction as of December 31, 2007, including
renovations and expansions. Such interests, which collectively aggregate to 46.28% of
the total equity interests in the construction company, are held by the following
individuals: Charles B. Lebovitz (Chairman and CEO of the Company); the four children
of Charles B. Lebovitz (Stephen D. Lebovitz (President and Secretary of the Company);
Michael I. Lebovitz (Senior Vice President – Chief Development Officer of the
Company); Alan L. Lebovitz (Vice President – Asset Management of the Company);
and Beth Lebovitz-Backer); John N. Foy (Vice Chairman of the Board and Chief Financial
Officer of the Company); and Ben S. Landress (Executive Vice President –
Management of the Company). Charles B. Lebovitz is also a director of this construction
company and receives substantial director fees in such capacity. The majority interest
in the construction company is held by members of the construction company’s
senior management and a majority of the construction company’s directors are
members of its senior management, none of whom are affiliated (as shareholders or
directors) with CBL’s Predecessor or the Company.
As of December 31, 2007, the Company had 32 active contracts (including
contracts with respect to each of the construction properties) with such construction
company having an aggregate value of approximately $405.3 million (the portion of such
amount that is the Company’s obligation is $379.0 million and the balance is the
obligation of its third party partners). During fiscal year 2007, the Company and its
third party partners paid an aggregate of approximately $262.1 million to this
construction company (the portion of such amount that was paid by the Company was$249.1
million and the balance was paid by its third party partners). Gross revenues to the
construction company from its contracts with the Company in 2007 represented less than
one-third of the 2007 aggregate gross revenues of the construction company.
The Company’s Audit Committee reviews the relationship between the
Company and the referenced construction company pursuant to procedures approved by the
Independent Directors in accordance with the Bylaws upon their establishment in
November 1994. These procedures include an ongoing review by the Company’s
independent auditors of a cross section of the Company’s contracts with the
referenced construction company for, among other things, the provisions for allocation
of cost savings between owner and contractor.
43
During 2007, the construction company also leased 20,637 square feet of
office space from the Company. This lease was approved at the time that it was entered
into by the Independent Directors in accordance with the Bylaws. In connection with
such approval, the Independent Directors considered management’s opinion that, at
the time such lease was entered into, it provided for rental payments at market rates
and terms. The aggregate of all payments made (or to be made) by the construction
company to the Company from January 1, 2007 through the end of the contract term of
such lease is $3,745,000, with such payments during fiscal 2007 having totaled
$732,000. During 2007, the construction company also negotiated a new lease agreement
with the Company with respect to office space in a new office building adjacent to the
Company’s existing office building. The construction company relocated its office
facilities to this new space, pursuant to the terms of the new lease, effective
February 1, 2008. This move replaced the office space subject to the arrangement that
was in effect during 2007 with a new lease for 41,964 square feet of space in the new
building. The aggregate of all payments made (or to be made) by the construction
company to the Company from February 1, 2008 through the end of the contract term of
the new lease (based on estimates of tenant cost recoveries currently in effect) is
$12,335,885. This new lease also was approved by the Company’s Independent
Directors in accordance with the Bylaws. In connection with such approval, as with the
prior lease, the Independent Directors considered management’s opinion that, at
the time such lease was entered into, it provided for rental payments at market rates
and terms.
100 SC Partners, a limited partnership that owns two aircraft used by
the personnel of the Company and the construction company, is beneficially owned as
follows: 560, Inc., which holds a 1% interest as the sole general partner of the
partnership, is wholly owned by Charles B. Lebovitz; CBL’s Predecessor holds a
98% limited partner interest and the construction company owns a 1% limited partner
interest. 560, Inc. also owns a fractional interest in another aircraft used by the
personnel of the Company and the construction company. Each partner contributes equally
to fixed costs and shares variable costs through an hourly charge based on usage. The
Company reimburses the partnership for costs on an hourly basis associated with use of
the aircraft relating to the business of the Company. During fiscal year 2007, the
Company paid approximately $2.9 million as reimbursement for operating expenses
pursuant to such arrangement, with the amount of such reimbursement being previously
approved by the Company’s Independent Directors in accordance with the Bylaws. As
described above, certain individuals who are deemed to be “related persons”
with respect to the Company in accordance with applicable SEC rules collectively own
100% of CBL’s Predecessor and own 46.28% of the equity interests in the
construction company.
Certain Retail Leases
Certain officers and certain Company employees are partners in
partnerships that lease 32 spaces representing approximately 26,486 square feet in 24
of the Company’s malls as tenants. Such spaces are operated as food service and
entertainment establishments. The aggregate of all payments made (or to be made) by
such entities to the Company from January 1, 2007 through the end of the contract term
of each of the relevant leases (based on estimates of tenant cost recoveries currently
in effect) is $11,935,019, with such payments during fiscal 2007 having totaled
$2,647,884. The following table sets forth information concerning the interest of each
of the Company’s executive officers who participate in any of these partnerships,
to the extent that the value of such officer’s pro-rata interest in the aggregate
lease payments described above exceeds $120,000:
44
Officer’s
Name and Title
|
Number of
Partnerships in Which
The Officer Participates
|
Pro-Rata Interest in Total Lease
Payments Based on Officer’s
Aggregate Ownership Interest(1)
|
John N. Foy
Vice Chairman of the Board of Directors,
Chief Financial Officer and Treasurer
|
4
|
$462,848
|
Augustus N. Stephas
Senior Vice President – Chief Operating
Officer
|
9
|
1,045,467
|
Eric P. Snyder
Senior Vice President –
Director of Corporate Leasing
|
9
|
1,045,467
|
Stephen D. Lebovitz
President and Secretary
|
3
|
171,821
|
Ronald L. Fullam
Senior Vice President – Development
|
8
|
789,188
|
Ben S. Landress
Executive Vice President – Management
|
4
|
457,895
|
Michael I. Lebovitz
Senior Vice President – Chief Development
Officer
|
9
|
608,634
|
Mark D. Mancuso
Senior Vice President – Director of Development
– New England Office
|
7
|
621,976
|
Farzana K. Mitchell
Senior Vice President – Finance
|
2
|
219,475
|
Jerry L. Sink
Senior Vice President – Mall Management
|
3
|
277,882
|
R. Stephen Tingle
Senior Vice President – Development
|
7
|
691,424
|
Charles W.A. Willett, Jr.
Senior Vice President – Real Estate
Finance
|
4
|
418,170
|
(1)
|
Excludes any future percentage rents based on sales
levels which are not presently determinable.
|
Each
of these leases has been approved at the time that they were entered into by the
Independent Directors in accordance with the Bylaws. In connection with such approvals,
the Independent Directors considered management’s opinion that, at the time each
of these leases were entered into, they provided for rental payments at market rates
and terms.
Certain Employment Relationships
Michael I. Lebovitz and Alan L. Lebovitz, sons of Charles B. Lebovitz,
are employed by the Company as Senior Vice President – Chief Development Officer
and Vice President – Asset Management, respectively. Each receives compensation
from the Company commensurate with his level of experience and other Company employees
having similar responsibilities, and based upon an annual review of his individual
performance conducted in the same manner described above for all Company officers.
During 2007, the aggregate compensation paid by the Company to these individuals
(including both cash compensation and the amount of compensation expense recognized by
the Company pursuant to SFAS 123(R) with respect to outstanding stock and option
awards) was as follows: Michael I. Lebovitz – $747,000 and Alan L. Lebovitz
– $512,000. Each also is eligible for equity awards under the Company’s
Stock Incentive Plan and the Company’s insurance and other employee benefit
programs on the same basis as other, similarly situated employees. The compensation of
both Michael I. Lebovitz and Alan L. Lebovitz is subject to approval by the
Compensation Committee in connection with that Committee’s approval of the
compensation of all officers of the Company of the level of vice president or
higher.
45
Other
Charles B. Lebovitz is currently an advisory director of First Tennessee
Bank, N.A., Chattanooga, Tennessee (“First Tennessee”). The Company is
currently maintaining a $100 million line of credit from a group of banks led by First
Tennessee that matures in 2009. There was approximately $13.8 million outstanding on
this line of credit as of December 31, 2007. First Tennessee also provides certain cash
management services to the Company. In the future, the Company or the Operating
Partnership may, in the ordinary course of business, engage in other transactions with
First Tennessee on competitive terms. All such transactions have been, and will
continue to be, approved by the Company’s Board of Directors.
John N. Foy is currently an advisory director of Regions Bank of
Tennessee (“Regions”). The Company is currently maintaining an unsecured
$10 million line of credit from Regions to be used only for Letters of Credit that
matures in 2009. There was approximately $1.5 million of Letters of Credit drawn on
this line of credit as of December 31, 2007. The Company also maintains a secured $17.1
million line of credit to be used only for Letters of Credit from Regions that matures
in 2009. There was approximately $1.3 million of Letters of Credit drawn on this line
of credit as of December 31, 2007. Regions is a 25% participant in the First Tennessee
line of credit referred to in the immediately preceding paragraph and provides certain
cash management services to the Company. In the future, the Company or the Operating
Partnership may, in the ordinary course of business, engage in other transactions with
Regions on competitive terms. All such transactions have been, and will continue to be,
approved by the Company’s Board of Directors.
46
RATIFICATION OF THE SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP (“Deloitte &
Touche”) has served as the independent auditors for the Company since May 7,
2002, and the Audit Committee has recommended, subject to ratification by the
stockholders, that Deloitte & Touche serve as the Company’s independent
auditors for the fiscal year ending December 31, 2008.
Independent Registered Public Accountants’ Fees and
Services
The Company was billed for professional services provided during fiscal
years 2006 and 2007 by Deloitte & Touche in the amounts set out in the following
table.
|
2006
|
|
2007
|
Audit Fees (1)
|
$ 772,470
|
|
$ 933,002
|
Audit-Related Fees (2)
|
312,820
|
|
217,429
|
Tax Fees – Compliance (3)
|
235,000
|
|
235,000
|
Tax Fees – Consulting (4)
|
293,800
|
|
725,900
|
Total
|
$1,614,090
|
|
$2,111,331
|
(1)
|
Consists of fees billed for professional services in
connection with the audit of the Company’s annual financial
statements for the fiscal years ended December 31, 2006 and December
31, 2007, the audit of the Company’s internal controls over
financial reporting as of December 31, 2006 and December 31, 2007,
reviews of the financial statements included in the Company’s
quarterly reports on Form 10-Q during the 2006 and 2007 fiscal years,
comfort letters and other services normally provided by the independent
auditor in connection with statutory and regulatory filings or
engagements.
|
(2)
|
Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or
review of the Company’s consolidated financial statements and are
not reported under “Audit Fees”. These services include
audits of the Company’s subsidiaries pursuant to requirements of
certain loan agreements, joint venture agreements and ground lease
agreements.
|
(3)
|
Consists of fees billed for professional services for
assistance regarding federal and state tax compliance.
|
(4)
|
Consists of fees billed for professional services for
tax advice and tax planning, which consists of tax services related to
mergers and acquisitions, joint ventures and tax planning
services.
|
The Audit Committee of the Board of Directors has considered the
services rendered by Deloitte & Touche for services other than the audit of the
Company’s financial statements and has determined that the provision of these
services is compatible with maintaining the independence of Deloitte &
Touche.
The Audit Committee has adopted a policy that it is required to approve
all services (audit and/or non-audit) to be performed by the independent auditor to
assure that the provision of such services does not impair such auditor’s
independence. All services, engagement terms, conditions and fees, as well as changes
in such terms, conditions and fees, must be approved by the Audit Committee in advance.
The Audit Committee will annually review and approve services that may be provided by
the independent auditor during the next year and will revise the list of approved
services from time to time based on subsequent determinations. The Audit Committee
believes that the independent auditor can provide tax services to the Company such as
tax compliance, tax planning and tax advice without impairing such auditor’s
independence and that such tax services do not constitute prohibited services pursuant
to SEC and/or NYSE rules. The authority to approve services may be delegated by the
Audit Committee to one or more of its members including the Chairman of the Audit
Committee, but may not be delegated to management. If authority to approve services has
been delegated to an Audit Committee member, any such approval of services must be
reported to the Audit Committee at its next scheduled meeting. The Audit Committee has
not relied on the
de minimis
exception under applicable SEC rules in approving any of the non-audit
fees described above.
47
Recommendation and Vote Necessary to Approve the
Proposal
The Board of Directors, in concurrence with the Audit Committee,
proposes and recommends that the stockholders ratify the selection of Deloitte &
Touche to serve as the independent auditors for the Company’s fiscal year ending
December 31, 2008. Unless otherwise directed by the stockholders, proxies will be voted
for approval of the selection of Deloitte & Touche to serve as the Company’s
independent auditors for the 2008 fiscal year. A representative of Deloitte &
Touche will attend the Annual Meeting and will have an opportunity to make a statement
and to respond to appropriate questions.
The ratification of the selection of Deloitte & Touche as the
Company’s independent auditors for the 2008 fiscal year must be approved by a
majority of the shares of Common Stock present or represented at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
THE RATIFICATION OF THE SELECTION OF
DELOITTE & TOUCHE LLP AS THE COMPANY’S
INDEPENDENT AUDITORS FOR 2008
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the rules established by the SEC, stockholder
proposals to be included in the Company’s proxy statement with respect to the
2008 Annual Meeting of Stockholders must be received by the Company at its executive
offices located at 2030 Hamilton Place Blvd., Suite 500, CBL Center, Chattanooga,
Tennessee 37421-6000 no later than November 27, 2008, and must comply with other
applicable SEC rules.
In addition, the Company’s Bylaws provide that any stockholder of
record desiring to nominate a director or have a stockholder proposal considered at an
annual meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the Bylaws, to the Company at its
principal executive offices not less than 60 days nor more than 90 days prior to the
anniversary date of the prior year’s annual meeting (the “Anniversary
Date”); provided, however, that stockholders will have additional time to deliver
the required notice in the event the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from the Anniversary Date.
HOUSEHOLDING OF PROXY MATERIALS
If you and other residents at your mailing address own common stock in
street name, your broker or bank may have sent you a notice that your household will
receive only one annual report and proxy statement for each company in which you hold
shares through that broker or bank. This practice of sending only one copy of proxy
materials is known as “householding.” If you did not respond that you did
not want to participate in householding, you were deemed to have consented to the
process. If the foregoing procedures apply to you, your broker has sent one copy of our
annual report and proxy to your address. However, even if your broker has sent only one
copy of these proxy materials, you should receive a proxy card for each stockholder in
your household.
You may revoke your consent to householding at any time by sending your
name, the name of your brokerage firm and your account number to Householding
Department, 51 Mercedes Way, Edgewood, NY 11717 (telephone number: 1-800-542-1061). The
revocation of your consent to householding will be effective 30 days following its
receipt. If you are receiving multiple copies of our annual report and proxy statement,
you can request householding by contacting us in the same manner. In any event, if you
did not receive an individual copy of this proxy statement or our annual report, you
can obtain a copy by contacting our Director of Corporate Communications and Investor
Relations, either by mail at our corporate office or by e-mail to
Katie_Reinsmidt@cblproperties.com.
48
OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, if any matters of which
management is not now aware should come before the meeting or any adjournment, the
proxies confer discretionary authority with respect to acting thereon, and the persons
named in such proxies intend to vote, act and consent in accordance with their best
judgment with respect thereto. Upon receipt of such proxies (in the form enclosed and
properly signed) in time for voting, the shares represented thereby will be voted as
indicated thereon and in this Proxy Statement.
By Order of the Board of Directors
STEPHEN D. LEBOVITZ
Secretary
Chattanooga, Tennessee
March 27, 2008
COPIES OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 2007, MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS
PROXY STATEMENT IS SENT UPON WRITTEN REQUEST TO DIRECTOR OF CORPORATE COMMUNICATIONS
AND INVESTOR RELATIONS, CBL & ASSOCIATES PROPERTIES, INC., 2030 HAMILTON PLACE
BLVD., SUITE 500, CBL CENTER, CHATTANOOGA, TENNESSEE 37421-6000.
49
CBL
CBL & ASSOCIATES PROPERTIES,
INC.
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE
TITLE BAR.
Proxies submitted by the Internet or telephone must be received
by
12:00 a.m., Eastern Time, on May 5, 2008.
Vote by Internet
|
•
|
Log on to the Internet and go to
www.investorvote.com
|
|
•
|
Follow the steps outlined on the secured
website.
|
Vote by telephone
|
•
|
Call toll free 1-800-652-VOTE (8683) within the United
States, Canada & Puerto Rico any time on a touch tone
telephone. There is
NO CHARGE
to you for the
call.
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•
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Follow the instructions provided by the recorded
message.
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Using a
black
ink
pen, mark your votes with an
X
as shown in this
example. Please do not write outside the designated
areas.
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x
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Annual Meeting Proxy Card
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IF
YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
A
Proposals — The Board of
Directors recommends a vote
FOR
all the nominees listed and
FOR
Proposal 2.
1. To
re-elect four directors to serve for three years and until their respective successors
have been duly elected and qualifies.
|
For
|
Withhold
|
For
|
Withhold
|
|
01 – Charles B. Lebovitz
|
o
|
o
|
02 – Claude M. Ballard
|
o
|
o
|
|
For
|
Withhold
|
For
|
Withhold
|
|
03 – Leo Fields
|
o
|
o
|
04 – Gary L. Bryenton
|
o
|
o
|
|
2. To ratify the selection of Deloitte & Touche,
LLP as the independent registered public accountants for the company's
fiscal year ending December 31, 2008
|
o
|
o
|
o
|
B
Non-Voting Items
Change of Address
— Please print your
new address below.
C
Authorized Signatures — This
section must be completed for your vote to be counted. — Date and
Sign
Please
sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian,
please give full title.
|
Date (mm/dd/yyyy) – Please print date
below.
|
Signature 1 - Please keep signature within the
box
|
Signature 2 - Please keep signature within the
box
|
|
________________________________________
|
________________________________________
|
________________________________________
|
IF
YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
Proxy –
CBL & ASSOCIATES PROPERTIES, INC.
|
ANNUAL MEETING OF STOCKHOLDERS ON MAY 5, 2008
This Proxy is Solicited on Behalf of the Board of
Directors
The undersigned hereby appoints CHARLES B. LEBOVITZ and STEPHEN D.
LEBOVITZ and each or any of them proxies, with power of substitution, to vote all
shares of the undersigned at the Annual Meeting of Stockholders to be held on Monday,
May 5, 2008, at 4:00 p.m., local time, at The Chattanoogan, 1201 South Broad Street,
Chattanooga, Tennessee or at any adjournment thereof, upon the matters set forth in the
Proxy Statement for such meeting, and in their discretion, on such other business as
may properly come before the meeting.
IF NO CONTRARY
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND
2.
(PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.)(Items to be voted appear on reverse side.)