UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
October 27, 2010
Date of Report (Date of
earliest event reported)
General Growth Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware
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1-11656
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42-1283895
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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110 N. Wacker Drive, Chicago, Illinois
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60606
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(Address of principal executive offices)
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(Zip Code)
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(312) 960-5000
(Registrants telephone
number, including area code)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (
see
General
Instruction A.2. below):
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
ITEM 3.02
UNREGISTERED SALES OF EQUITY SECURITIES.
(a) Item
5.02 below is hereby incorporated by reference.
The
securities issued pursuant to the Option Agreement (as defined below) are
exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933 because the issuance did not involve any public offering.
ITEM 5.02
DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
(c) Sandeep
Mathrani Employment Agreement
On
October 27, 2010, New GGP, Inc. (
New GGP
), a wholly-owned
subsidiary of General Growth Properties, Inc. (the
Company
),
entered into an Employment Agreement (the
Employment Agreement
) with
Sandeep Mathrani, pursuant to which Mr. Mathrani has agreed to serve,
commencing on January 17, 2011 (the
Commencement Date
), as Chief
Executive Officer of New GGP (which will become the successor registrant, and
indirect parent, of the Company following the Companys emergence from
bankruptcy) and of GGP Limited Partnership (
GGPLP
), which will become
a party to the Employment Agreement by joinder upon the Companys emergence
from bankruptcy. New GGP has agreed to
nominate Mr. Mathrani to New GGPs board of directors for so long as Mr. Mathrani
serves as Chief Executive Officer of New GGP.
Prior to the Commencement Date, Mr. Mathrani will serve as a
consultant to New GGP and GGPLP.
The
Employment Agreement provides for a five-year initial term commencing on the
Commencement Date (the
Initial Term
) that automatically renews
for one-year terms thereafter. The
Employment Agreement further provides for a $1,000,000 signing bonus,
reimbursement of reasonable relocation expenses up to $350,000, an annual base
salary of $1,200,000 and a target annual bonus of $1,500,000, including a
guaranteed minimum annual bonus of $1,000,000 for the 2011 and 2012 calendar
years.
In
accordance with the terms and conditions of the Employment Agreement, (i) New
GGP will grant to Mr. Mathrani, at the Companys emergence from
bankruptcy, 1,500,000 shares of New GGP common stock (the
Restricted Stock
),
which will vest in three equal installments on each of the first three
anniversaries of the grant date and (ii) pursuant to a Nonqualified Stock
Option Award Agreement (the
Option Agreement
), on October 27,
2010, New GGP granted to Mr. Mathrani options to acquire 2,000,000 shares
of New GGPs common stock (the
Options
), which will vest in four equal
installments on each of the first four anniversaries of the grant date. The Options have an exercise price of $10.25
per share. The Restricted Stock and Options were awarded pursuant to, and
subject to the terms and conditions of, the Equity Plan (as defined below).
Commencing in 2012, Mr. Mathrani will be entitled to receive, on an annual
basis, at his election, either options to purchase an additional number of
shares of New GGPs common stock equal to five times his previous years annual
base salary divided by the then current trading price of New GGP common stock,
or shares of restricted stock of equivalent value (based on the Black-Scholes
pricing model).
If
New GGP terminates Mr. Mathranis employment without cause or does not
renew the Employment Agreement following the Initial Term, or if Mr. Mathrani
terminates his employment for good reason, then Mr. Mathrani is eligible
to receive two years of salary continuation, two times his annual bonus for the
previous year, pro rata annual bonus for the year of termination (based on his
annual bonus for the previous year), full vesting of the Restricted Stock and
Options, vesting of the portion of the annual
2
equity
awards that would otherwise vest during the two year period following
termination and two years of welfare benefit continuation.
If
Mr. Mathranis employment is terminated due to death or disability, then Mr. Mathrani
is eligible to receive pro rata annual bonus for the year of termination (based
on his annual bonus for the previous year) and full vesting of the Restricted
Stock, the Options and the annual equity awards.
The
above descriptions of the Employment Agreement and the Option Agreement are
qualified in their entirety by references to the Employment Agreement and the
Option Agreement, respectively. The
Employment Agreement and the Option Agreement are attached as Exhibits 10.1 and
10.2 hereto, and are hereby incorporated by reference.
The
Press Release (as defined below) is hereby incorporated by reference.
(e) Equity
Plan
On
October 27, 2010, New GGP adopted the General Growth Properties, Inc.
2010 Equity Incentive Plan (the
Equity Plan
).
Equity
Plan
The number of shares of New
GGP common stock reserved for issuance under the Equity Plan is equal to 4% of
New GGPs outstanding shares on a fully diluted basis as of the Companys
emergence from bankruptcy. The Equity Plan provides for grants of nonqualified
stock options, incentive stock options, stock appreciation rights, restricted
stock, other stock-based awards and performance-based compensation
(collectively,
the Awards
). Directors, officers and other employees of
New GGP and its subsidiaries and affiliates are eligible for Awards. The Equity
Plan is not subject to the Employee Retirement Income Security Act of 1974, as
amended.
The purpose of the Equity
Plan is to provide incentives that will attract, retain and motivate New GGPs
directors, officers and employees by providing them with either a proprietary
interest in New GGPs long-term success or compensation based on their
performance. The following is a summary of the material terms of the Equity
Plan, but does not include all of the provisions of the Equity Plan.
Administration
The Equity Plan is
administered by the compensation committee of New GGPs board of directors or
any committee designated by New GGPs board of directors to administer the
Equity Plan. The administrator is empowered to determine the form, amount and
other terms and conditions of Awards, clarify, construe or resolve any
ambiguity in any provision of the Equity Plan or any Award agreement and adopt
such rules and guidelines for administering the Equity Plan as it deems
necessary or proper. All actions, interpretations and determinations by the
administrator are final and binding.
Shares
Available
The Equity Plan reserves for
issuance the number of shares of New GGPs common stock described above,
subject to adjustments. In the event that any outstanding Award expires or
terminates without the issuance of shares or is otherwise settled for cash, the
shares allocable to such Award, to the extent of such expiration, termination
or settlement for cash, will again be available for issuance. No participant
may be granted more than 4,000,000 shares, or the equivalent dollar value of
such shares, in any year.
3
Eligibility
for Participation
Members of New GGPs board
of directors, as well as officers and employees (including prospective
employees) of New GGP and its subsidiaries and affiliates, are eligible to
participate in the Equity Plan. The selection of participants is within the
sole discretion of the administrator.
Types of Awards
The Equity Plan provides for
the grant of nonqualified stock options, incentive stock options, stock
appreciation rights, restricted stock, other stock-based awards and
performance-based compensation. The administrator will determine the terms and
conditions of each Award, including the number of shares subject to each Award,
the vesting terms, and the purchase price. Awards may be made in assumption of
or in substitution for outstanding Awards previously granted by New GGP or its
affiliates, or a company acquired by New GGP or with which it combines.
Award Agreement
Awards granted under the
Equity Plan will be evidenced by Award agreements that provide additional terms
and conditions associated with the Awards, as determined by the administrator
in its discretion. In the event of any conflict between the provisions of the
Equity Plan and any such Award agreement, the provisions of the Equity Plan
will control.
Options
An option granted under the
Equity Plan permits a participant to purchase from New GGP a stated number of
shares at an exercise price established by the administrator. Subject to the
terms of the Equity Plan, the terms and conditions of any option will be
determined by the administrator. Options will be designated as either
nonqualified stock options or incentive stock options. An option granted as an
incentive stock option will, to the extent it fails to qualify as an incentive
stock option, be treated as a nonqualified option. The exercise price of an
option may not be less than the fair market value of a share of New GGPs
common stock on the date of grant. The term of each option will be determined
prior to the date of grant, but may not exceed ten years.
Stock
Appreciation Rights
A stock appreciation right
granted under the Equity Plan entitles the holder to receive, upon its
exercise, the excess of the fair market value of a specified number of shares
of New GGPs common stock on the date of exercise over the grant price of the
stock appreciation right. Payment may be in the form of cash, shares of New GGPs
common stock, other property or any combination thereof. Subject to the terms
of the Equity Plan, the terms and conditions of any stock appreciation right
will be determined by the administrator.
Restricted
Stock
An Award of restricted stock
granted under the Equity Plan is a grant of a specified number of shares of New
GGPs common stock, which are subject to forfeiture upon the occurrence of
specified events. Each Award agreement evidencing a restricted stock grant will
specify the period of restriction, the conditions under which the restricted
stock may be forfeited to us and such other provisions as the administrator may
determine, subject to the terms of the Equity Plan.
4
Other
Stock-Based Awards
The administrator may grant
Awards of shares of New GGPs common stock and Awards that are valued, in whole
or in part, by reference to New GGPs common stock. Such Awards will be in such
form and subject to such terms and conditions as the administrator may
determine, including, the right to receive one or more shares of New GGPs
common stock (or the equivalent cash value of such stock) upon the completion
of a specified period of service, the occurrence of an event and/or the
attainment of performance objectives. Subject to the provisions of the Equity
Plan, the administrator will determine whether such other stock-based awards
will be settled in cash, shares of New GGPs common stock or a combination of
cash and such shares, and all other terms and conditions of such Awards.
Performance-Based
Compensation
To the extent permitted by Section 162(m) of
the Internal Revenue Code, the administrator may design any Award so that the
amounts or shares payable thereunder are treated as qualified
performance-based compensation within the meaning of Section 162(m) of
the Internal Revenue Code. The grant, vesting, crediting and/or payment of performance-based
compensation will be based or conditioned on the achievement of objective
performance goals established in writing by the compensation committee of New
GGPs Board of Directors. Performance goals may be based on one or more of the
following measures:
·
consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization);
·
net income;
·
operating
income;
·
earnings per
share;
·
book value per
share;
·
return on
shareholders equity;
·
expense
management;
·
return on
investment;
·
improvements
in capital structure;
·
profitability
of an identifiable business unit or product;
·
maintenance or improvement of profit
margins;
·
stock price;
·
market share;
·
revenues or
sales;
·
costs;
·
cash flow;
·
working
capital;
·
return on
assets;
·
store openings
or refurbishment plans;
·
staff
training; and
·
corporate
social responsibility policy implementation.
Transferability
Unless otherwise determined
by the administrator, Awards may not be transferred by a participant except in
the event of death. Any permitted transfer of the Awards to heirs or legatees
of a participant will not be effective unless the administrator has been
furnished with written notice thereof and a copy of such evidence as the administrator
may deem necessary to establish the validity of the transfer.
5
The administrator may impose
such transfer restrictions on any shares received in connection with an Award
as it may deem advisable or desirable. These restrictions may include a
requirement that the participant hold the shares received for a specified
period of time or a requirement that a participant represent and warrant in
writing that the participant is acquiring the shares for investment and without
any present intention to sell or distribute such shares.
Stockholder
Rights
Except as otherwise provided
in the applicable Award agreement or with respect to Awards of restricted
stock, a participant will have no rights as a stockholder with respect to
shares of New GGPs common stock covered by any Award until the participant
becomes the record holder of such shares. Participants holding Awards or
restricted stock will have the right to vote and receive dividends with respect
to the restricted stock, unless otherwise provided in the applicable Award
Agreement.
Adjustment
of Awards
In the event of a corporate
event or transaction such as a recapitalization, in order to prevent dilution
or enlargement of participants rights under the Equity Plan, the administrator
will make certain adjustments to Awards, including, in its sole discretion,
substitution or adjustment of the number and kind of shares that may be issued
under the Equity Plan or under particular Awards, the exercise price or
purchase price applicable to outstanding Awards, and other value determinations
applicable to the Equity Plan or outstanding Awards.
In the event New GGP
experiences a change in control, the administrator may make adjustments to the
terms and conditions of outstanding Awards, including, acceleration of vesting
and exercisability of Awards, substitution of Awards with substantially similar
Awards and cancellation of Awards for fair value.
Amendment
and Termination
The administrator may amend
or terminate the Equity Plan or any Award agreement at any time. However, no
amendment or termination is permitted without shareholder approval if such
approval is necessary to comply with any tax or regulatory requirement and no
amendment or termination is permitted without the consent of the participants
if such amendment or termination would materially diminish the participants
rights under the Equity Plan or any Award.
No Awards will be granted
after October 27, 2020.
The
above description of the Equity Plan is qualified in its entirety by reference
to the Equity Plan, which is attached as Exhibit 4.1 hereto, and is hereby
incorporated by reference.
ITEM 8.01
OTHER EVENTS.
On
October 28, 2010, the Company issued a press release (the
Press
Release
) announcing the Agreement, a copy of which is filed as Exhibit 99.1
of this report.
ITEM 9.01
FINANCIAL STATEMENT AND EXHIBITS.
(d) Exhibits
6
Exhibit No.
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Description
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4.1
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General
Growth Properties, Inc. 2010 Equity Incentive Plan
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10.1
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Employment
Agreement, dated October 27, 2010, by and between New GGP, Inc. and
Sandeep Mathrani
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10.2
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Nonqualified
Stock Option Award Agreement, dated October 27, 2010, by and between New
GGP, Inc. and Sandeep Mathrani
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99.1
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Press
release, dated October 28, 2010, titled General Growth Properties Names
Sandeep Mathrani as Chief Executive Officer
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7
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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GENERAL
GROWTH PROPERTIES, INC.
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/s/
Edmund Hoyt
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Name:
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Edmund
Hoyt
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Title:
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Senior
Vice President and Chief Accounting Officer
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Date: October 29, 2010
8
EXHIBIT INDEX
Exhibit No.
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Description
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4.1
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General
Growth Properties, Inc. 2010 Equity Incentive Plan
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10.1
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Employment
Agreement, dated October 27, 2010, by and between New GGP, Inc. and
Sandeep Mathrani
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10.2
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Nonqualified
Stock Option Award Agreement, dated October 27, 2010, by and between New
GGP, Inc. and Sandeep Mathrani
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99.1
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Press
release, dated October 28, 2010, titled General Growth Properties Names
Sandeep Mathrani as Chief Executive Officer
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9
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