def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Taubman Centers, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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TAUBMAN
CENTERS, INC.
Notice of 2011 Annual Meeting
of Shareholders
To be
held June 2, 2011
To the Shareholders of Taubman Centers, Inc.:
The 2011 Annual Meeting of Shareholders of Taubman Centers, Inc.
(the Company) will be held on Thursday, June 2,
2011, at The Townsend Hotel, 100 Townsend Street, Birmingham,
Michigan 48009, at 11:00 a.m., Eastern time, for the
following purposes:
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1.
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To elect three directors named in the accompanying proxy
statement to serve until the 2014 Annual Meeting of Shareholders;
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To ratify the appointment of KPMG LLP as the Companys
independent registered public accounting firm for the year
ending December 31, 2011;
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To approve (on an advisory basis) the compensation of our named
executive officers;
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To approve (on an advisory basis) whether an advisory vote on
the compensation of our named executive officers should occur
once every one, two or three years; and
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To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
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The Board of Directors has fixed the close of business on
April 4, 2011 as the record date for determining the
shareholders that are entitled to notice of, and to vote at, the
annual meeting or any adjournment or postponement of the annual
meeting.
We have elected again to furnish proxy materials to you
primarily through the Internet, which expedites your receipt of
materials, lowers our expenses and conserves natural resources.
On or about April 19, 2011, we intend to mail to our
shareholders of record (other than shareholders who previously
requested
e-mail or
paper delivery of proxy materials) a notice containing
instructions on how to access our 2011 proxy statement and 2010
annual report through the Internet and how to vote through the
Internet. The notice also will include instructions on how to
receive such materials, at no charge, by paper delivery (along
with a proxy card) or by
e-mail.
Beneficial owners received a similar notice from their broker,
bank or other nominee. Please do not mail in the notice, as it
is not intended to serve as a voting instrument. Notwithstanding
anything to the contrary, the Company may send certain
shareholders of record a full set of proxy materials by paper
delivery instead of the notice or in addition to sending the
notice.
If you elected to receive the proxy materials by paper delivery,
the annual report, proxy statement (together with the notice of
annual meeting), and proxy card or voting instruction card will
be enclosed. You can elect to receive future proxy materials by
e-mail at no
charge instead of receiving these materials by paper delivery by
voting using the Internet and, when prompted, indicate you agree
to receive or access shareholder communications electronically
in future years.
By Order of the Board of Directors
Robert S. Taubman,
Chairman of the Board, President and Chief Executive Officer
Bloomfield Hills, Michigan
April 12, 2011
Your vote is important. Whether or not you plan to attend the
annual meeting, we urge you to vote promptly to save us the
expense of additional solicitation. If you attend the annual
meeting, you may revoke your proxy in accordance with the
procedures set forth in the proxy statement and vote in
person.
TABLE OF
CONTENTS
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TAUBMAN
CENTERS, INC.
200 East Long Lake Road, Suite 300
Bloomfield Hills, Michigan
48304-2324
Proxy
Statement for 2011 Annual Meeting of Shareholders
References in this proxy statement to the Company
mean Taubman Centers, Inc.
and/or one
or more subsidiaries, including, but not limited to, The Taubman
Realty Group Limited Partnership (TRG), the
Companys majority-owned subsidiary partnership through
which the Company owns interests in shopping centers, and The
Taubman Company LLC (the Manager), which is
approximately 99% beneficially owned by TRG and provides
property management, leasing, development and other
administrative services to, among others, the Company and its
shopping centers. The Manager employs all U.S. employees of
the Company and assists in all employee compensation matters.
This proxy statement contains information regarding the Annual
Meeting of Shareholders of Taubman Centers, Inc. to be held at
11:00 a.m., Eastern time, on Thursday, June 2, 2011 at
The Townsend Hotel, 100 Townsend Street, Birmingham, Michigan
48009 (the annual meeting). The Companys Board
of Directors (the Board) is soliciting proxies for
use at the annual meeting and at any adjournment or postponement
of such meeting. On or about April 19, 2011, the Company
intends to mail to its shareholders of record (other than
shareholders who previously requested
e-mail or
paper delivery of proxy materials) a notice (the
Notice) containing instructions on how to access
this proxy statement and the 2010 annual report through the
Internet. Beneficial owners will receive a similar notice from
their broker, bank or other nominee. In addition, on or about
April 19, 2011, the Company and brokers, banks and other
nominees will begin mailing or
e-mailing
the proxy materials to shareholders of record who previously
requested such delivery. Notwithstanding anything to the
contrary in this proxy statement, the Company may send certain
shareholders of record a full set of proxy materials by paper
delivery instead of the Notice or in addition to sending the
Notice.
About
the Meeting
What is
the purpose of the annual meeting?
At the annual meeting, holders of the Companys common
stock (the common stock) and Series B
Non-Participating Convertible Preferred Stock (the
Series B Preferred Stock and, together with the
common stock, the Voting Stock) will act upon the
matters outlined in the accompanying notice of meeting,
including:
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the election of three directors named in this proxy statement to
serve until the 2014 annual meeting of shareholders;
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the ratification of the appointment of KPMG LLP
(KPMG) as the Companys independent registered
public accounting firm for the year ending December 31,
2011;
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the approval (on an advisory basis) of the compensation of our
named executive officers; and
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the approval (on an advisory basis) of whether an advisory vote
on the compensation of our named executive officers should occur
every one, two or three years.
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We are not aware of any other matters that will be brought
before the shareholders for a vote at the annual meeting. If any
other matter is appropriately brought before the meeting, your
properly voted proxy card or voting instruction card gives
authority to your proxies to vote on such matter in their best
judgment. The proxy holders named in the proxy card will vote as
the Board recommends or, if the Board gives no recommendation,
in their own discretion.
In addition, management will report on the performance of the
Company and will respond to appropriate questions from
shareholders. The Company expects that representatives of KPMG
will be present at the annual meeting and will be available to
respond to appropriate questions. Such representatives will also
have an opportunity to make a statement.
What are
the Boards recommendations?
The Board recommends a vote:
Proposal 1 FOR each of the director
nominees listed in this proxy statement.
Proposal 2 FOR the ratification of
KPMGs appointment as the Companys independent
registered public accounting firm for 2011.
Proposal 3 FOR the advisory approval of
the compensation of our named executive officers.
Proposal 4 FOR an advisory vote on named
executive officer compensation every THREE YEARS.
Who is
entitled to vote?
Only record holders of Voting Stock at the close of business on
the record date of April 4, 2011 are entitled to receive
notice of the annual meeting and to vote the shares of Voting
Stock that they held on the record date. Each outstanding share
of Voting Stock is entitled to one vote on each matter to be
voted upon at the annual meeting.
What
counts as Voting Stock?
The Companys common stock and Series B Preferred
Stock vote together as a single class and constitute the voting
stock of the Company. The Companys 8% Series G
Cumulative Redeemable Preferred Stock and 7.625% Series H
Cumulative Redeemable Preferred Stock (collectively, the
Non-Voting Preferred Stock) do not entitle their
holders to vote at the annual meeting. No other shares of the
Companys capital stock other than the Voting Stock and the
Non-Voting Preferred Stock are outstanding, although the Company
has authorized the issuance of shares of an additional series of
preferred stock subject to the exercise of conversion rights
granted to certain holders of preferred equity in TRG.
What is
the Series B Preferred Stock?
The Series B Preferred Stock was first issued in late 1998
and is currently held by partners in TRG other than the Company.
Only TRG partners can acquire shares of Series B Preferred
Stock; for nominal consideration, TRG partners can acquire such
number of shares of Series B Preferred Stock equal to the
number of units of limited partnership in TRG (TRG
units) that they hold. If a TRG partner tenders its TRG
units for common stock under the Companys Continuing Offer
(described herein), it is required to redeem an equal number of
shares of Series B Preferred Stock. If a TRG partner
exercises options to acquire TRG units and elects to hold TRG
units, such partner may also acquire an equal number of
Series B shares. As of the date hereof, Robert Taubman and
William Taubman are the only TRG partners who are also
employees. All other employees are not TRG partners and upon
their exercise of options to acquire TRG units, the TRG units
are automatically converted to shares of common stock under the
Continuing Offer.
The Series B Preferred Stock entitles its holders to one
vote per share on all matters submitted to the Companys
shareholders and votes together with the common stock on all
matters as a single class. In addition, the holders of
Series B Preferred Stock (as a separate class) are entitled
to nominate up to four individuals for election as directors.
The number of individuals the holders of the Series B
Preferred Stock may nominate in any given year is reduced by the
number of directors nominated by such holders in prior years
whose terms are not expiring. Two current directors whose terms
are expiring, Robert Taubman and Lisa Payne, and one current
director whose term is not expiring, William Taubman, were
nominated by the holders of the Series B Preferred Stock.
The holders of Series B Preferred Stock are entitled to
nominate one more individual for election as a director of the
Company, but they have chosen not to do so with respect to this
annual meeting.
What
constitutes a quorum?
The presence at the annual meeting, in person or by proxy, of
the holders of a majority of the shares of Voting Stock
outstanding on the record date will constitute a quorum for all
purposes. As of the record date, 81,016,282 shares of
Voting Stock were outstanding, consisting of
55,875,846 shares of common stock and
25,140,436 shares of Series B Preferred Stock. Proxies
marked with abstentions or instructions to withhold votes, as
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well as broker non-votes (defined below), will be counted as
present in determining whether or not there is a quorum.
What is
the difference between holding shares as a shareholder of record
and a beneficial owner?
Shareholders of Record. If your shares are
registered directly in your name with the Companys
transfer agent, BNY Mellon Shareowner Services, you are
considered the shareholder of record with respect to those
shares, and the applicable proxy materials are being sent
directly to you by Broadridge Investor Communications Solutions
on behalf of the Company. As the shareholder of record, you have
the right to grant your voting proxy directly to the Company
through a proxy card, through the Internet or by telephone or to
vote in person at the annual meeting.
Beneficial Owners. Many of the Companys
shareholders hold their shares through a broker, bank or other
nominee rather than directly in their own name. If your shares
are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares, and
the applicable proxy materials are being forwarded to you by
your broker, bank or nominee who is considered the shareholder
of record with respect to those shares. As the beneficial owner,
you have the right to direct your broker, bank or nominee on how
to vote and are also invited to attend the annual meeting. Your
broker, bank or nominee has enclosed voting instructions for you
to use in directing the broker, bank or nominee on how to vote
your shares. Since you are not the shareholder of record, you
may not vote these shares in person at the annual meeting unless
you obtain a proxy from your broker, bank or nominee and bring
such proxy to the annual meeting.
Why did
many shareholders receive a Notice in the mail regarding the
Internet availability of proxy materials this year instead of a
full set of proxy materials?
The Company has elected again to furnish proxy materials to you
primarily through the Internet, which expedites the receipt of
materials, lowers our expenses and conserves natural resources.
If you received the Notice containing instructions on how to
access this proxy statement and the 2010 annual report through
the Internet, please do not mail in the Notice, as it is not
intended to serve as a voting instrument.
How can I
access the Companys proxy materials and other reports
filed with the SEC?
The Companys website, www.taubman.com, under the
InvestingSEC Filings tab provides free access to reports
of the U.S. Securities and Exchange Commission
(SEC) as soon as reasonably practicable after the
Company electronically files such reports with, or furnishes
such reports to, the SEC, including proxy materials, Annual
Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and amendments to these reports. Further, you can view these
documents on a website maintained by the SEC at
www.sec.gov.
As noted above, most shareholders will receive a Notice with
instructions on how to view the proxy materials through the
Internet (at www.proxyvote.com). The Notice includes a
control number that must be entered on the Internet in order to
view the proxy materials. The Notice also describes how to
receive the proxy materials by paper delivery or
e-mail. You
can elect to receive future proxy materials by
e-mail at no
charge by voting using the Internet and, when prompted, indicate
you agree to receive or access shareholder communications
electronically in future years. If you would like additional
paper copies without charge, please send a written request to
the Companys executive offices: Taubman Centers Investor
Services, 200 East Long Lake Road, Suite 300, Bloomfield
Hills, Michigan
48304-2324.
The references to the website addresses of the Company and the
SEC in this proxy statement are not intended to function as a
hyperlink and, except as specified herein, the information
contained on such websites are not part of this proxy statement.
May I
vote my shares in person at the annual meeting?
Even if you plan to be present at the meeting, the Company
encourages you to vote your shares prior to the meeting.
Shareholders of Record. If you are a
shareholder of record and attend the annual meeting, you may
deliver your completed proxy card or vote by ballot.
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Beneficial Owners. If you hold your shares
through a broker, bank or other nominee and want to vote such
shares in person at the annual meeting, you must obtain a proxy
from your broker, bank or other nominee giving you the power to
vote such shares and bring such proxy to the annual meeting.
Can I
vote my shares without attending the annual meeting?
By Mail. If you received your annual meeting
materials by paper delivery, you may vote by completing, signing
and returning the enclosed proxy card or voting instruction
card. Please do not mail in the Notice, as it is not intended to
serve as a voting instrument.
By Telephone. If you received your annual
meeting materials by paper delivery, you may vote by telephone
as indicated on your enclosed proxy card or voting instruction
card.
Through the Internet. You may vote through the
Internet as instructed on your Notice, proxy card, voting
instruction card, or
e-mail
notification. In order to vote through the Internet, you must
enter the control number that was provided on your Notice, proxy
card, voting instruction card, or
e-mail
notification. If you do not have any of these materials and are
a shareholder of record, you may contact Taubman Centers
Investor Services
(248-258-7367)
to request a proxy card (which will include your control number)
to be mailed to your address on record or an
e-mail with
your control number to be sent to your
e-mail
address on record. If you do not have any of these materials and
are a beneficial owner, you must contact your broker,
bank or other nominee to obtain your control number.
Can I
change my vote?
Shareholders of Record. You may change your
voting instructions at any time prior to the vote at the annual
meeting. You may enter a new vote by mailing a new proxy card
bearing a later date, through the Internet, by telephone, or by
attending the annual meeting in person. Your attendance at the
annual meeting in person will not cause your previously granted
proxy to be revoked unless you specifically so request and file
the proper documentation with the Secretary of the Company. You
may also revoke your proxy at any time by delivering a
later-dated written revocation to the Secretary of the Company.
Beneficial Owners. If you hold your shares
through a broker, bank or other nominee, you should contact such
person prior to the time such voting instructions are exercised.
What if I
beneficially own shares through the Companys 401(k)
Plan?
Your proxy will serve to instruct the trustee of the 401(k) Plan
how to vote your shares. If no direction is given to the
trustee, the trustee will vote your shares held in the plan in
the same proportion as votes received from other participants in
the plan. To allow sufficient time for the trustee to vote your
shares, your proxy must be received by 11:59 p.m. Eastern
time on May 27, 2011. If you would like to revoke or change
your voting instructions, you must do so by such time and date.
What does
it mean if I receive more than one Notice, proxy card or voting
instruction card?
If you receive more than one Notice, proxy card or voting
instruction card, it means that you have multiple accounts with
banks, brokers, other nominees
and/or the
Companys transfer agent. Please take action with respect
to each Notice, proxy card and voting instruction card that you
receive. The Company recommends that you contact such persons to
consolidate as many accounts as possible under the same name and
address.
What if I
do not vote for some of the proposals?
Shareholders of Record. Proxies that are
properly executed without voting instructions on certain matters
will be voted in accordance with the recommendations of the
Board on such matters. With respect to any matter not set forth
on the proxy that properly comes before the annual meeting, the
proxy holders named therein will vote as the Board recommends
or, if the Board gives no recommendation, in their own
discretion.
Beneficial Owners. If you hold your shares in
street name through a broker, bank or other nominee and do not
provide voting instructions for any or all matters, such nominee
will determine if it has the discretionary
4
authority to vote your shares. Under applicable law and New York
Stock Exchange (NYSE) rules and regulations, brokers
have the discretion to vote on routine matters, such as the
ratification of the appointment of the Companys
independent registered public accounting firm, but do not have
discretion to vote on non-routine matters. For all other matters
at the annual meeting, the Company believes that your bank,
broker or nominee will be unable to vote on your behalf if you
do not instruct them on how to vote your shares. If you do not
provide voting instructions, your shares will be considered
broker non-votes with regard to the non-routine
proposals because the broker will not have discretionary
authority to vote thereon. Therefore, it is very important for
you to vote your shares for each proposal.
What vote
is required to approve each item?
Proposal 1 Election of
Directors. The three nominees who receive the
most votes cast at the annual meeting will be elected as
directors. The slate of nominees discussed in this proxy
statement consists of three directors, Robert Taubman, Lisa
Payne and William Parfet, whose terms are expiring. Withheld
votes and broker non-votes will have no effect on the outcome of
the vote.
Proposal 2 Ratification of Appointment of
Independent Registered Public Accounting
Firm. The affirmative vote of two-thirds of the
shares of Voting Stock outstanding on the record date will be
necessary to ratify the Audit Committees appointment of
KPMG as the Companys independent registered public
accounting firm for the year ending December 31, 2011.
Abstentions will have the same effect as a vote against the
matter.
Proposal 3 Advisory Approval of the
Compensation of Our Named Executive Officers. The
affirmative vote of two-thirds of the shares of Voting Stock
outstanding on the record date will be necessary to approve the
compensation of our named executive officers. Abstentions and
broker non-votes will have the same effect as a vote against the
matter.
Proposal 4 Advisory Approval as to the
Frequency of Having an Advisory Vote on the Compensation of Our
Named Executive Officers. The option of one year,
two years or three years that receives the highest number of
votes cast by shareholders will be deemed the shareholder
recommendation as to the frequency of having an advisory vote on
the compensation of our named executive officers. Abstentions
and broker non-votes will have no effect on the outcome of the
vote.
Other Matters. If any other matter is properly
submitted to the shareholders at the annual meeting, its
adoption generally will require the affirmative vote of
two-thirds of the shares of Voting Stock outstanding on the
record date. However, by a vote of the shares present, even if
less than a quorum, the meeting may be adjourned to another
place and time for a period not exceeding thirty (30) days
in any one case. The Board does not propose to conduct any
business at the annual meeting other than as stated above.
Although the advisory votes in Proposal Nos. 2, 3 and 4 are
not binding on the Company, the Board
and/or
respective Committee will take your vote into consideration in
determining future activities.
Is a
registered list of shareholders available?
The names of shareholders of record entitled to vote at the
annual meeting will be available to shareholders entitled to
vote at the meeting on Thursday, June 2, 2011 at The
Townsend Hotel for any purpose reasonably relevant to the
meeting.
How do I
find out the voting results?
The Company intends to announce preliminary voting results at
the annual meeting and intends to disclose the final voting
results in a current report on
Form 8-K
within four business days of the annual meeting.
5
Security
Ownership of Certain Beneficial Owners and Management
Ownership
Table
The following table sets forth information regarding the
beneficial ownership of the Companys equity securities as
of April 4, 2011 by each of the directors and named
executive officers and all of the directors and executive
officers as a group. The following table also sets forth
information regarding the beneficial ownership of the
Companys Voting Stock by beneficial owners of more than 5%
of either class of the Companys Voting Stock. Each share
of common stock and Series B Preferred Stock is entitled to
one vote on each matter to be voted upon. The share information
set forth in the table below (both numbers of shares and
percentages) reflects ownership of common stock and
Series B Preferred Stock in aggregate. The notes to the
table include information regarding Series B Preferred
Stock holdings of Robert Taubman, William Taubman and A. Alfred
Taubman. The notes also include the percentage ownership of the
shares of common stock
and/or
Series B Preferred Stock on a separate basis to the extent
the holders ownership of such class represents greater
than 1% of the outstanding shares. Further, the notes to the
table include shares of the Companys Non-Voting Preferred
Stock held by directors or executive officers, including the
percentage ownership of the Non-Voting Preferred Stock on a
separate basis to the extent the holders ownership of such
class represents greater than 1% of the outstanding shares.
Unless otherwise indicated and subject to applicable community
property laws, each owner has sole voting and investment powers
with respect to the shares listed below.
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Number of Shares Which Can Be
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Acquired Within 60 Days of
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Record Date
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Number of
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Number of Shares
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Upon Exercise of
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Held in
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Shares
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Directors, Executive Officers and
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Owned Directly or
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Options Exercisable
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Deferral
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Percent of
|
More Than 5% Shareholders (1)
|
|
Indirectly
|
|
Within 60 Days
|
|
Plans (2)
|
|
Owned
|
|
Shares
|
|
Robert S. Taubman
|
|
|
1,997,805
|
|
|
|
307,416
|
|
|
|
871,262
|
|
|
|
3,176,483
|
(3)
|
|
|
3
|
.9
|
|
Lisa A. Payne
|
|
|
76,070
|
|
|
|
140,705
|
|
|
|
|
|
|
|
216,775
|
(4)
|
|
|
*
|
|
|
William S. Taubman
|
|
|
1,896,966
|
|
|
|
170,731
|
|
|
|
|
|
|
|
2,067,697
|
(5)
|
|
|
2
|
.5
|
|
David T. Weinert
|
|
|
14,584
|
|
|
|
84,285
|
|
|
|
|
|
|
|
98,869
|
|
|
|
*
|
|
|
Stephen J. Kieras
|
|
|
12,689
|
|
|
|
270,290
|
|
|
|
|
|
|
|
282,979
|
|
|
|
*
|
|
|
Graham T. Allison
|
|
|
2,946
|
|
|
|
|
|
|
|
13,628
|
|
|
|
16,574
|
|
|
|
*
|
|
|
Jerome A. Chazen
|
|
|
60,000
|
|
|
|
|
|
|
|
15,823
|
|
|
|
75,823
|
(6)
|
|
|
*
|
|
|
Craig M. Hatkoff
|
|
|
9,616
|
|
|
|
|
|
|
|
|
|
|
|
9,616
|
|
|
|
*
|
|
|
Peter Karmanos, Jr.
|
|
|
50,000
|
|
|
|
|
|
|
|
13,628
|
|
|
|
63,628
|
|
|
|
*
|
|
|
William U. Parfet
|
|
|
12,645
|
|
|
|
|
|
|
|
13,158
|
|
|
|
25,803
|
|
|
|
*
|
|
|
Ronald W. Tysoe
|
|
|
|
|
|
|
|
|
|
|
6,181
|
|
|
|
6,181
|
|
|
|
*
|
|
|
A. Alfred Taubman
|
|
|
22,963,212
|
|
|
|
|
|
|
|
|
|
|
|
22,963,212
|
(7)
|
|
|
28
|
.3
|
|
The Vanguard Group, Inc.
|
|
|
5,595,509
|
|
|
|
|
|
|
|
|
|
|
|
5,595,509
|
(8)
|
|
|
6
|
.9
|
|
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ING Clarion Real Estate Securities, LLC
|
|
|
3,605,897
|
|
|
|
|
|
|
|
|
|
|
|
3,605,897
|
(9)
|
|
|
4
|
.5
|
|
201 King of Prussia Rd., Suite 600
Radnor, PA 19087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cohen & Steers, Inc.
|
|
|
3,112,934
|
|
|
|
|
|
|
|
|
|
|
|
3,112,934
|
(10)
|
|
|
3
|
.8
|
|
280 Park Avenue, 10th Floor
New York, NY 10017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LaSalle Investment Management
|
|
|
2,973,911
|
|
|
|
|
|
|
|
|
|
|
|
2,973,911
|
(11)
|
|
|
3
|
.7
|
|
(Securities), L.P. 100 East Pratt Street
Baltimore, MD 21202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackrock, Inc.
|
|
|
2,849,309
|
|
|
|
|
|
|
|
|
|
|
|
2,849,309
|
(12)
|
|
|
3
|
.5
|
|
40 East 52nd Street
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deutsche Bank AG
|
|
|
2,793,124
|
|
|
|
|
|
|
|
|
|
|
|
2,793,124
|
(13)
|
|
|
3
|
.4
|
|
Theodor-Heuss-Allee 70 60468
Frankfurt am Main Federal Republic of Germany
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive Officers as a Group (13 persons)
|
|
|
2,320,798
|
|
|
|
1,074,130
|
|
|
|
933,680
|
|
|
|
4,328,608
|
(14)
|
|
|
5
|
.2
|
|
|
|
|
*
|
|
less than 1%
|
|
(1)
|
|
The Company has relied upon
information supplied by certain beneficial owners and upon
information contained in filings with the SEC. Except as set
forth in note 3 below regarding TRG units subject to
issuance under the option deferral agreement, the share figures
assume that all TRG units issued upon the exercise of options
(options) granted under the 1992 Option Plan or the
2008 Omnibus Plan will be immediately exchanged for an equal
number of shares of common stock in accordance with the
Companys exchange offer (the Continuing Offer)
to holders of options and certain partners in TRG. Share figures
shown also assume that outstanding TRG units are not exchanged
for common stock under the Continuing Offer (to avoid
duplication, as a corresponding number of shares of
Series B Preferred Stock are owned by each holder of TRG
units) and that outstanding shares of Series B Preferred
Stock are not converted into common stock (which is permitted,
under specified circumstances, at the ratio of one share of
common stock for each 14,000 shares of Series B
Preferred
|
6
|
|
|
|
|
Stock, with any resulting
fractional shares redeemed for cash). As of April 4, 2011,
there were 81,016,282 beneficially owned shares of Voting Stock
outstanding, consisting of 55,875,846 shares of common
stock and 25,140,436 shares of Series B Preferred
Stock.
|
|
(2)
|
|
See note 3 below for a
description of Robert Taubmans option deferral agreement.
|
|
|
|
Under the Taubman Centers, Inc.
Non-Employee Directors Deferred Compensation Plan, the
restricted share units granted are fully vested at the time of
grant but do not have voting rights. The deferral period
continues until the earlier of the termination of director
service or a change of control.
|
|
(3)
|
|
Consists of
(A) 5,925 shares of Series B Preferred Stock that
Robert Taubman owns, 1,338,496 shares of Series B
Preferred Stock owned by R & W-TRG LLC
(R&W), a company owned by Mr. Taubman and
his brother, William Taubman (shared voting and dispositive
power), and 871,262 shares of Series B Preferred Stock
subject to issuance under an option deferral agreement (See
Nonqualified Deferred Compensation in 2010 for a
description of such agreement) (in the aggregate, 8.5% of the
Series B Preferred Stock), and (B) 2,094 shares
of common stock that Mr. Taubman owns, 307,416 shares
of common stock that Mr. Taubman has the right to receive
upon the exercise and conversion of options that have vested or
will vest within 60 days of the record date,
144,000 shares of common stock owned by his wife,
15,315 shares of common stock owned in UTMA accounts for
the benefit of his children, and 491,975 shares of common
stock owned by R&W (shared voting and dispositive power)
(in the aggregate, 1.7% of the common stock).
|
|
|
|
To avoid duplication, excludes
5,925 TRG units that Mr. Taubman owns, 1,338,496 TRG units
owned by R&W and 871,262 TRG units subject to issuance
under the option deferral agreement. Also excludes all shares
owned by TRA Partners LLC (TRAP), Taubman Realty
Ventures (TRV), Taub-Co Management, Inc.
(Taub-Co), TG Partners Limited Partnership
(TG) and TG Acquisitions (TGA), because
Mr. Taubman has no voting or dispositive control over such
entities assets (see note 7 below). Mr. Taubman
disclaims any beneficial interest in the Voting Stock and TRG
units owned by R&W or the other entities described in the
previous sentence beyond his pecuniary interest in R&W or
such other entities. R&W has pledged 1,338,496 shares
of Series B Preferred Stock and 1,338,496 TRG units, and
491,975 shares of common stock, to Citibank, N.A. as
collateral for various loans.
|
|
(4)
|
|
76,070 shares of common stock
owned are pledged; no related loan is outstanding. Excludes
3,000 shares of Series G Preferred Stock and
8,500 shares of Series H Preferred Stock owned by
Ms. Payne.
|
|
|
|
Ms Payne is party to a 10b5-1
trading plan entered into on February 24, 2011. The plan
provides for monthly sales of 4,000 shares of common stock
if the specified minimum trading price is satisfied. Shares that
are not sold in a particular month will be available for sale in
subsequent months under the plan. A maximum of
40,000 shares remain available for sale under the plan as
of April 4, 2011, which is set to expire on
February 29, 2012.
|
|
(5)
|
|
Consists of
(A) 5,925 shares of Series B Preferred Stock that
William Taubman owns, and 1,338,496 shares of Series B
Preferred Stock owned by R&W (shared voting and dispositive
power) (in the aggregate, 5.3% of the Series B Preferred
Stock), and (B) 28,626 shares of common stock that
Mr. Taubman owns, 170,731 shares of common stock that
Mr. Taubman has the right to receive upon the exercise and
conversion of options that have vested or will vest within
60 days of the record date, 31,944 shares of common
stock owned in UTMA accounts for the benefit of his children,
and 491,975 shares of common stock owned by R&W
(shared voting and dispositive power) (in the aggregate, 1.3% of
the common stock).
|
|
|
|
To avoid duplication, excludes
5,925 TRG units that Mr. Taubman owns and 1,338,496 TRG
units owned by R&W. Also excludes all shares owned by TRAP,
TRV, Taub-Co, TG and TGA because Mr. Taubman has no voting
or dispositive control over such entities assets (see
note 7 below). Mr. Taubman disclaims any beneficial
interest in the Voting Stock and TRG units owned by R&W and
the other entities described in the previous sentence beyond his
pecuniary interest in R&W and such other entities. R&W
has pledged 1,338,496 shares of Series B Preferred
Stock and 1,338,496 TRG units, and 491,975 shares of common
stock, to Citibank, N.A. as collateral for various loans.
|
|
(6)
|
|
60,000 shares of common stock
owned by a Grantor Retained Annuity Trust, for which
Mr. Chazen is the grantor and trustee. The remainder
beneficiaries are trusts for the benefit of
Mr. Chazens children.
|
|
|
|
Excludes 75,000 shares of
Series G Preferred Stock owned by a Grantor Retained
Annuity Trust (for which Mr. Chazen is the grantor and
trustee, and the remainder beneficiaries are trusts for the
benefit of Mr. Chazens children), 30,675 shares
of Series G Preferred Stock owned by his wife, and
20,000 shares of Series G Preferred Stock owned in
trusts for the benefit of his children (in the aggregate, 3.1%
of the Series G Preferred Stock).
|
|
(7)
|
|
Includes 100 shares of common
stock owned by A. Alfred Taubmans revocable trust and
186,837 shares of common stock owned by TRAP.
Mr. Taubmans trust is a member of TRAP and has shared
authority to vote and dispose of the common stock owned by TRAP.
Also includes 9,875 shares of Series B Preferred Stock
owned by Mr. Taubmans trust, 17,699,879 shares
of Series B Preferred Stock owned by TRAP,
4,605,361 shares of Series B Preferred Stock owned by
TG, 445,191 shares of Series B Preferred Stock owned
by TGA, 11,011 shares of Series B Preferred Stock
owned by TRV, and 4,958 shares of Series B Preferred
Stock owned by Taub-Co. (in the aggregate, 90.6% of the
Series B Preferred Stock). To avoid duplication, excludes
TRG units of the same amount as Series B Preferred Stock
owned by such entities. The sole holder of voting shares of
Taub-Co is Taub-Co Holdings Limited Partnership, of which
Mr. Taubmans trust is the managing general partner,
and therefore Mr. Taubman may be deemed to be the
beneficial owner of the shares of Series B Preferred Stock
owned by Taub-Co. Mr. Taubman disclaims beneficial
ownership of any shares of Series B Preferred Stock owned
by Taub-Co beyond his pecuniary interest in Taub-Co.
Mr. Taubman, through control of the managing partner of
each of TRV (through Mr. Taubmans trust), TG and TGA,
also has sole authority to vote and (subject to certain
limitations) dispose of the shares of Series B Preferred
Stock owned by TRV and TG and TGA, respectively, and therefore
Mr. Taubman may be deemed to be the beneficial owner of all
of the shares of Series B Preferred Stock owned by TRV, TG
and TGA. Mr. Taubman disclaims beneficial ownership of any
shares of Series B Preferred Stock owned by TRV, TG and TGA
beyond his pecuniary interest in those entities.
|
|
(8)
|
|
Pursuant to Schedule 13G/A
filed with the SEC on February 17, 2011. Represents 10.0%
of the common stock. The Vanguard Group, Inc. has sole power to
vote and shared power to dispose of 36,392 shares and sole
power to dispose of 5,559,117 shares. Pursuant to a
Schedule 13G filed with the SEC on February 10, 2011,
Vanguard Specialized Funds-Vanguard REIT Index Fund
(23-2834924)
has sole power to vote 2,891,191 shares (representing 5.2%
of the common stock).
|
|
(9)
|
|
Pursuant to Schedule 13G/A
filed with the SEC on February 15, 2011. Represents 6.5% of
the common stock. ING Clarion Real Estate Securities, LLC has
sole power to vote 1,489,873 shares, shared power to vote
1,800 shares and sole power to dispose of
3,605,897 shares.
|
7
|
|
|
(10)
|
|
Pursuant to Schedule 13G/A
filed with the SEC on February 14, 2011. Represents 5.6% of
the common stock. Cohen & Steers, Inc. has sole power
to vote 2,754,113 shares and sole power to dispose of
3,112,934 shares. Cohen & Steers Capital
Management has sole power to vote 2,754,113 shares and sole
power to dispose of 3,027,170 shares. Cohen &
Steers Europe S.A. has sole power to dispose of
85,764 shares.
|
|
(11)
|
|
Pursuant to Schedule 13G/A
filed with the SEC on February 11, 2011. Represents 5.3% of
the common stock. LaSalle Investment Management (Securities),
L.P. has sole power to vote 625,308 shares and sole power
to dispose of 2,750,480 shares. LaSalle Investment
Management, Inc. has sole power to dispose of
223,431 shares.
|
|
(12)
|
|
Pursuant to Schedule 13G/A
filed with the SEC on February 8, 2011. Represents 5.1% of
the common stock.
|
|
(13)
|
|
Pursuant to Schedule 13G filed
with the SEC on February 11, 2011. Represents 5.0% of the
common stock. Reflects securities beneficially owned by the
Private Clients and Asset Management business group of Deutsche
Bank AG and its subsidiaries and affiliates. Deutsche Bank AG
has sole power to vote 2,054,674 shares and sole power to
dispose of 2,793,124 shares. Deutsche Bank Securities Inc.
has the sole power to dispose of 1,000 shares. Deutsche
Bank Trust Company Americas has sole power to vote and
dispose of 1,450 shares. Deutsche Investment Management
Americas has sole power to vote and dispose of
12,800 shares. RREEF America, L.L.C. has sole power to vote
2,032,989 shares and sole power to dispose of
2,770,439 shares. Oppenheim Asset Management Services
S.a.r.l. has sole power to vote and dispose of 7,435 shares.
|
|
(14)
|
|
Consists of an aggregate of
(A) 970,452 shares of common stock owned and
1,074,130 shares of common stock that such persons have the
right to receive upon the exercise and conversion of options
that have vested or will vest within 60 days of the record
date, and 62,418 shares of common stock subject to issuance
under the Non-Employee Directors Deferred Compensation
Plan (in the aggregate, 3.7% of the common stock), and
(B) 1,350,346 shares of Series B Preferred Stock
owned and 871,262 shares of Series B Preferred Stock
subject to issuance under the option deferral agreement (see
note 3 above) (in the aggregate, 8.5% of the Series B
Preferred Stock).
|
|
|
|
See notes 4 and 6 for
Series G Preferred Stock beneficially owned by
Ms. Payne and Mr. Chazen. See note 4 for
Series H Preferred Stock beneficially owned by
Ms. Payne. See notes 3, 4 and 5 for shares and units
pledged as collateral or held in a margin account.
|
8
Ownership
Limitation
Under the Companys Restated Articles of Incorporation (the
Articles), in general, no shareholder may own more
than 8.23% (the General Ownership Limit) in value of
the Companys Capital Stock (which term refers
to the common stock, preferred stock and Excess Stock, as
defined below). The Articles specifically permit two pension
trusts to each own 9.9% in value of the Companys Capital
Stock and a third pension trust to own 13.74% in value of the
Companys Capital Stock (collectively, the Existing
Holder Limit). In addition, the Board of Directors has the
authority to allow a look through entity to own up
to 9.9% in value of the Capital Stock (the Look Through
Entity Limit), provided that after application of certain
constructive ownership rules under the Internal Revenue Code and
rules defining beneficial ownership under the Michigan Business
Corporation Act, no person would constructively or beneficially
own more than the General Ownership Limit. A look through entity
is an entity (other than a qualified trust under
Section 401(a) of the Internal Revenue Code, certain other
tax-exempt entities described in the Articles, or an entity that
owns 10% or more of the equity of any tenant from which the
Company or TRG receives or accrues rent from real property)
whose beneficial owners, rather than the entity, would be
treated as owning the capital stock owned by such entity.
Changes in the ownership limits cannot be made by the Board and
would require an amendment to our Articles. Amendments to the
Articles require the affirmative vote of holders owning not less
than two-thirds of the outstanding Voting Stock.
The Articles provide that if the transfer of any shares of
Capital Stock or a change in the Companys capital
structure would cause any person (the Purported
Transferee) to own Capital Stock in excess of the General
Ownership Limit, the Look Through Entity Limit, or the
applicable Existing Holder Limit, then the transfer is to be
treated as invalid from the outset, and the shares in excess of
the applicable ownership limit automatically acquire the status
of Excess Stock. A Purported Transferee of Excess
Stock acquires no rights to shares of Excess Stock. Rather, all
rights associated with the ownership of those shares (with the
exception of the right to be reimbursed for the original
purchase price of those shares) immediately vest in one or more
charitable organizations designated from time to time by the
Companys Board of Directors (each, a Designated
Charity). An agent designated from time to time by the
Board (each, a Designated Agent) will act as
attorney-in-fact for the Designated Charity to vote the shares
of Excess Stock, take delivery of the certificates evidencing
the shares that have become Excess Stock, and receive any
distributions paid to the Purported Transferee with respect to
those shares. The Designated Agent will sell the Excess Stock,
and any increase in value of the Excess Stock between the date
it became Excess Stock and the date of sale will inure to the
benefit of the Designated Charity. A Purported Transferee must
notify the Company of any transfer resulting in shares
converting into Excess Stock, as well as such other information
regarding such persons ownership of the capital stock as
the Company requests.
Under the Articles, only the Designated Agent has the right to
vote shares of Excess Stock; however, the Articles also provide
that votes cast with respect to certain irreversible corporate
actions (e.g., a merger or sale of the Company) will not
be invalidated if erroneously voted by the Purported Transferee.
The Articles also provide that a director is deemed to be a
director for all purposes, notwithstanding a Purported
Transferees unauthorized exercise of voting rights with
respect to shares of Excess Stock in connection with such
directors election.
Although A. Alfred Taubman beneficially owns 28.3% of the Voting
Stock, most of such Voting Stock consists of Series B
Preferred Stock (see the beneficial ownership table above). The
Series B Preferred Stock is convertible into shares of
common stock at a ratio of 14,000 shares of Series B
Preferred Stock to one share of common stock, and therefore one
share of Series B Preferred Stock has a value of
1/14,000ths of the value of one share of common stock.
Accordingly, A. Alfred Taubmans significant ownership of
Voting Stock does not violate the ownership limitations set
forth in the Companys charter.
9
Proposal 1Election
of Directors
The Board currently consists of nine members serving three-year
staggered terms. Three directors are to be elected at the annual
meeting to serve until the 2014 annual meeting of shareholders
or until such directors earlier resignation, retirement or
other termination of service. The Board has re-nominated Robert
Taubman, Lisa Payne and William Parfet for new three-year terms.
Each of the nominees have consented to be named in this proxy
statement and agreed to continue to serve as a director if
elected by the shareholders. If any of them should become
unavailable, the Board may designate a substitute nominee. In
that case, the proxy holders named as proxies in the
accompanying proxy card will vote for the Boards
substitute nominee. Alternatively, the Board may reduce the size
of the Board or leave the position vacant. Additional
information regarding the directors and director nominees of the
Company is set forth below.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR EACH OF THE COMPANYS THREE DIRECTOR
NOMINEES THAT STAND FOR RE-ELECTION.
Under the Companys Restated Articles of Incorporation, a
majority of the Companys directors must not be officers or
employees of the Company or its subsidiaries. The directors and
director nominees of the Company are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
|
Name
|
|
Age
|
|
Title
|
|
Ending
|
|
Robert S. Taubman
|
|
|
57
|
|
|
Chairman of the Board, President and Chief Executive Officer
|
|
|
2011
|
|
Lisa A. Payne
|
|
|
52
|
|
|
Vice Chairman, Chief Financial Officer and Director
|
|
|
2011
|
|
William U. Parfet
|
|
|
64
|
|
|
Director
|
|
|
2011
|
|
Graham T. Allison
|
|
|
71
|
|
|
Director
|
|
|
2012
|
|
Peter Karmanos, Jr.
|
|
|
68
|
|
|
Director
|
|
|
2012
|
|
William S. Taubman
|
|
|
52
|
|
|
Chief Operating Officer and Director
|
|
|
2012
|
|
Jerome A. Chazen
|
|
|
84
|
|
|
Director
|
|
|
2013
|
|
Craig M. Hatkoff
|
|
|
57
|
|
|
Director
|
|
|
2013
|
|
Ronald W. Tysoe
|
|
|
58
|
|
|
Director
|
|
|
2013
|
|
Director
Background and Qualifications
As set forth in the Corporate Governance Guidelines, the
Nominating and Corporate Governance Committee considers the
experience, mix of skills and other qualities of the existing
Board to ensure an appropriate Board composition. The Nominating
and Corporate Governance Committee believes that Board members
must have demonstrated excellence in their chosen field, high
ethical standards and integrity, and sound business judgment. In
addition, it seeks to ensure the Board includes members with
diverse backgrounds, skills and experience, including
appropriate financial and other expertise relevant to the
Companys business, to enable the Board to fulfill its
oversight responsibilities and act in the best interests of
shareholders. In addition, the Nominating and Corporate
Governance Committee believes that directors and nominees with
the following qualities and experiences can assist in meeting
this goal:
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Senior Leadership experience. Directors with
experience in significant leadership positions provide the
Company with experience and perspective in analyzing, shaping
and overseeing the execution of operational, organizational and
policy issues at a senior level. Further, they have a practical
understanding of balancing operational needs and risk
management. Through their service as top leaders at other
organizations, they also have access to important sources of
market intelligence, analysis and relationships that benefit the
Company.
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Business Entrepreneurship and Transactional
Experience. Directors who have a background in
entrepreneurial businesses and growth transactions can provide
insight into developing and implementing strategies for entering
into new business segments, partnering in joint ventures,
and/or
growing via mergers and acquisitions. Further, they have a
practical understanding of the importance of fit
with the Companys culture and strategy, the valuation of
transactions and business opportunities, and managements
plans for integration with existing operations. Continuing
efforts to expand in Asia and
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the recent determination to pursue developing outlet centers
have benefitted from the Boards entrepreneurial experience.
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Financial and Accounting Experience. An
understanding of the financial markets, corporate finance,
accounting requirements and regulations, and accounting and
financial reporting processes allows directors to understand,
oversee and advise management with respect to the Companys
operating and strategic performance, capital structure,
financing and investing activities, financial reporting, and
internal control of such activities. The Company also seeks to
have a number of directors who qualify as financial experts
under SEC rules, and we expect all of our directors to be
financially knowledgeable.
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Real Estate Experience. An understanding of
real estate issues, particularly with respect to regional mall
shopping centers, department stores and other key tenants, real
estate development and real estate investment companies
generally, allows directors to bring critical industry-specific
knowledge and experience to our company. Education and
experience in the real estate industry is useful in
understanding the Companys development, leasing and
management of shopping centers, acquisition and disposition of
centers, the Companys strategic vision and the competitive
landscape of the industry.
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Brand Marketing Expertise. The Company
utilizes a retailing approach to the management and leasing of
its centers, with a key focus on having a large, diverse
selection of retail stores in each center and a constantly
changing mix of tenants to address retail trends and new retail
concepts. The Company also provides innovative initiatives to
heighten the shopping experience and build customer loyalty.
Directors who have brand marketing experience
and/or
knowledge of the fashion industry can provide expertise and
guidance as we seek to maintain and expand brand and product
awareness and a positive reputation.
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Public Company Board Experience. Directors who
serve or have served on other public company boards can offer
advice and insights with regard to the dynamics and operation of
a board of directors, the relations of a board to the CEO and
other management personnel, the importance of particular agenda
and oversight matters, and oversight of a changing mix of
strategic, operational, and compliance-related matters.
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Global Expertise. The Company is expanding its
platform into the Asia-Pacific region, and therefore directors
with global expertise can provide a useful business and cultural
perspective regarding aspects of our business.
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The following sets forth the business experience during at least
the past five years of each Board nominee and each of the
directors whose term of office will continue after the annual
meeting. In addition, the following includes, for each director,
a brief discussion of the specific experiences, qualifications,
attributes and skills that led to the conclusion that each of
the directors should serve on the Board at this time in light of
the goals set forth above.
Robert S. Taubman. Mr. Taubman is
the Chairman of the Board, and President and Chief Executive
Officer of the Company and the Manager, which is a subsidiary of
TRG. Mr. Taubman has been Chairman since December 2001 and
President and CEO since 1990. Mr. Taubman has been a
director of the Company since 1992. Mr. Taubman has been a
director of Comerica Bank since 2000 (currently, a member of the
Enterprise Risk Committee) and of Sothebys Holdings, Inc.,
the international art auction house, since 2000 (currently,
Chairman of the Compensation Committee and a member of the
Finance Committee). He is also a member of the United States
Department of Commerce Travel and Tourism Promotion Advisory
Board, a director of the Real Estate Roundtable, a Trustee of
the Urban Land Institute, a former trustee of the International
Council of Shopping Centers, and a member of the Board of
Governors of the National Association of Real Estate Investment
Trusts. Mr. Taubman is the brother of William Taubman.
Mr. Taubman has led the Company as a principal executive
officer for 35 years, as a director for 19 years and
as Chairman for 10 years. Mr. Taubman is a recognized
leader in the REIT and regional mall industries.
Mr. Taubman has a unique perspective and understanding of
the Companys business, culture and history, having led the
Company through many economic cycles, internal and external
growth and curtailment, global expansion and other key
operational and strategic initiatives. His
day-to-day
leadership of the Company gives him critical insights into the
Companys operations, strategy and competition, and allows
him to facilitate the Boards ability to
11
perform its critical oversight function. Through his work at the
Company and his leadership roles in numerous real estate and
shopping center industry associations in Michigan and
nationally, he possesses an in-depth knowledge of the REIT and
regional mall industries on a global basis, and has significant
relationships with key developers, potential and current joint
venture partners, and tenants. Mr. Taubmans extensive
Board and Board committee experience at other public companies,
including through his current and long-standing service as a
director of Comerica Bank and Sothebys Holdings, also
provide him significant insight as to governance and
compliance-related matters of companies generally.
Lisa A. Payne. Ms. Payne is the
Chief Financial Officer and Vice Chairman of the Company, as
appointed in 2005, and previously served as the Executive Vice
President and the Chief Financial and Administrative Officer of
the Company from 1997 to 2005. Ms. Payne has been a
director of the Company since 1997. Prior to joining the Company
in 1997, Ms. Payne was a vice president in the real estate
department of Goldman, Sachs & Co., where she held
various positions between 1986 and 1996. Ms. Payne has
served as a trustee of Munder Series Trust and Munder
Series Trust II, open-end management investment
companies, since 2005 and a director of Masco Corporation since
2007 (currently, a member of the Audit and Governance
Committees).
Ms. Payne has led the Company as a principal executive
officer and director for 14 years. Ms. Payne also has
a unique perspective and understanding of the Companys
business, culture and history, having led the Company through
many economic cycles, internal and external growth and
curtailment, global expansion and other key operational and
strategic initiatives. Her
day-to-day
leadership of the Company gives her critical insights into the
Companys operations, strategy and competition, and allows
her to facilitate the Boards ability to perform its
critical oversight function. Through her work at the Company and
in the investment banking community, she possesses an in-depth
knowledge of the REIT and regional mall industries on a global
basis, including with respect to the financial markets and
corporate finance, and significant expertise in financial and
accounting matters. Ms. Payne also has significant
relationships with key financing sources. Ms. Paynes
Board and Board committee experience at Masco also provides her
with significant insight as to governance and compliance-related
matters of companies generally.
William U. Parfet. Mr. Parfet has
served as a director of the Company since 2005. Mr. Parfet
is currently Chairman and Chief Executive Officer of MPI
Research, a Michigan-based, privately-held pre-clinical
toxicology research laboratory. He joined MPI Research in
November 1995 as co-Chairman and has served as Chairman and
Chief Executive Officer since 1999. From 1993 to 1996, he served
as president and chief executive officer of Richard-Allan
Medical Industries (now Thermo Fisher Scientific Inc.), a
worldwide manufacturer of surgical and laboratory products.
Prior to that, from 1973 to 2003, he served in a variety of
positions at The Upjohn Company, a pharmaceutical company, most
recently as Vice Chairman of the Board. Previously,
Mr. Parfet also served as Trustee for the Financial
Accounting Foundation, which oversees the Financial Accounting
Standards Board (FASB), as a member of the Emerging Issues Task
Force (EITF), and as National Chairman of the Financial
Executives Institute. Mr. Parfet has served on the board of
Monsanto Company since June 2000 (currently a member of the
Audit, Executive and People and Compensation Committees) and
Stryker Corporation since April 1993 (currently a member of the
Audit, Governance and Nominating Committees, and the Lead
Independent Director). He also served as a director of PAREXEL
International Corporation from June 2001 to May 2006 (served on
the Executive, Audit and Compensation Committees), and a
director of CMS Energy Corporation from November 1991 to May
2005 (served on the Audit, Executive, Finance and Pension,
Organization and Compensation Committees).
Mr. Parfets long-standing service as an executive and
director of multinational companies has provided him with
extensive knowledge and experience in executive management,
transactional, brand marketing, strategic planning and
international business matters. In addition, he possesses an
in-depth knowledge of accounting, finance and capital markets
resulting from his executive and director positions, which
included serving as a chief financial officer, controller and
treasurer of a multinational corporation, as well as his
numerous leadership positions with national financial and
accounting industry groups. Mr. Parfet also has extensive
Board and Board committee experience at other public companies,
including through his current and long-standing service as a
director of Monsanto Company and Stryker Corporation. Such Board
experience, including his role as lead independent director at
Stryker, enables Mr. Parfet to provide significant insight
as to governance and compliance-related matters and in
particular accounting and finance matters. As a result of the
foregoing expertise and experience, Mr. Parfet qualifies as
a financial expert under SEC rules.
12
Graham T. Allison. Mr. Allison has
served as a director of the Company since 1996, as well as one
year of service from 1992 to 1993 prior to becoming the United
States Assistant Secretary of Defense in the first Clinton
administration. Mr. Allison is the Douglas Dillon Professor
of Government and the Director of the Belfer Center for Science
and International Affairs at Harvard University, serving in such
capacities since 1995. He has been a leading analyst of
U.S. national security and defense policy for over three
decades. As founding dean of the Kennedy School of
Harvard University, Mr. Allison built a major professional
school of public policy and government from 1977 to 1989.
Mr. Allison also served as a special advisor to the
Secretary of Defense under President Reagan and numerous public
committees and commissions related to national security and
defense issues. He has served as a director of Natixis Global
Asset Management, the Loomis Sayles Funds and the Hansburger
Funds since 1984. He also previously served as a director of CDC
Nvest Funds and IXIS Asset Advisors, as well as Belco Oil and
Gas, Chase Manhattan Bank, Getty Oil Company, and USEC.
Mr. Allison has significant knowledge of the Company and
its culture based on his 15 years of service as a director.
Mr. Allisons extensive Board and Board committee
experience across industries enables him to provide significant
insight as to governance and compliance-related matters.
Mr. Allisons extensive knowledge and experience in
complex international affairs and government policy, and the
resulting significant contacts he has established therefore, has
benefitted the Company development plans domestically and
internationally. His career in academia and government policy
also has provided a unique insight into strategic planning and
risk management issues.
Peter
Karmanos, Jr. Mr. Karmanos has
served as a director of the Company since 2000.
Mr. Karmanos is the founder, and has served as a director
since its inception in 1973, of Compuware Corporation, a global
provider of software solutions and professional services
headquartered in Detroit, Michigan. Mr. Karmanos has served
as Compuwares Chairman since November 1978, and as its
Chief Executive Officer since July 1987. He also served as
President of Compuware from October 2003 to March 2008. Mr.
Karmanos founded the Barbara Ann Karmanos Institute and is a
co-owner of the Carolina Hurricanes. Mr. Karmanos has been
a director of Worthington Industries, Inc. since 1997 (currently
a member of its Compensation and Executive Committees and Chair
of its Nominating and Governance Committee).
Mr. Karmanos has significant knowledge of the Company and
its culture based on his 11 years of service as a director.
Mr. Karmanos has significant expertise and experience in
public company management, entrepreneurial leadership, brand
marketing, strategic planning, international business and
informational technology resulting from his development and
leadership of Compuware for over 38 years, from
start-up to
member of the S&P 500. Mr. Karmanos unique
perspective enables him to bridge the gap between Chairman and
CEO and the independent directors of a public company. He also
has in-depth entrepreneurial and strategic planning experience
from his leadership of numerous civic and charitable
organizations, many of which are focused on finance, technology
and business matters. Mr. Karmanos also has extensive Board
and Board committee experience at other public companies,
including through his current and long-standing service as a
director of Worthington Industries and Compuware (as Chairman),
which enables him to provide significant insight as to
governance and compliance-related matters.
William S. Taubman. Mr. Taubman is
the Chief Operating Officer of the Company, appointed in 2005,
and served as Executive Vice President of the Company from 1994
to 2005. Mr. Taubman is also the Executive Vice President
of the Manager, a position he has held since 1994.
Mr. Taubman has also been a director of the Company since
2000. His responsibilities include the overall management of the
development, leasing, and center operations functions. He held
various other positions with the Manager prior to 1994.
Mr. Taubman also serves as Chairman of the board of
trustees of the International Council of Shopping Centers, and
is a member of the Urban Land Institute and the National
Association of Real Estate Investment Trusts. He is also
Chairman of New Detroit and serves on the Board of Governors for
the Museum of Arts & Design in New York.
Mr. Taubman is the brother of Robert Taubman.
Mr. Taubman has led the Company as a principal executive
officer for 17 years and as a director for 11 years.
Mr. Taubman has a unique perspective and understanding of
the Companys business, culture and history, having led the
Company through many economic cycles, internal and external
growth and curtailment, global expansion and other key
operational and strategic initiatives. His
day-to-day
leadership of the Company gives him critical insights
13
into the Companys operations, strategy and competition,
and allows him to facilitate the Boards ability to perform
its critical oversight function. Through his work at the Company
and his leadership roles in numerous real estate and shopping
center industry associations in Michigan and nationally, he
possesses an in-depth knowledge of the REIT and regional mall
industries on a global basis, and has significant relationships
with key developers, potential and current joint venture
partners, and tenants. He also served as a financial analyst
specializing in mergers and acquisitions before joining the
Company.
Jerome A. Chazen. Mr. Chazen has
served as a director of the Company since its initial offering
in 1992. Mr. Chazen has been the Chairman of Chazen Capital
Partners, a private investment company, since 1996.
Mr. Chazen is also the Chairman Emeritus of Liz Claiborne,
Inc., a company he founded with three other partners in 1976.
Mr. Chazen is also the founder of the Jerome A. Chazen
Institute of International Business, the focal point of all
international programs at Columbia University Business School.
Mr. Chazen has been a director of Atrinsic, Inc. (f/k/a New
Motion, Inc.) since April 2005 (currently non-Executive Chairman
of the Board and a member of its Audit and Compensation
Committees). He also serves as a board member, executive or
trustee for numerous educational and charitable organizations.
Mr. Chazen has significant knowledge of the Company and its
culture based on his 19 years of service as a director.
Mr. Chazen has in-depth knowledge and expertise in retail
shopping, brand marketing, senior leadership, strategic
planning, and international business through his development and
leadership of Liz Claiborne, which enables him to provide a
unique insight to the Companys tenants, centers and
international expansion. Mr. Chazen also has significant
expertise in entrepreneurship, finance and accounting, executive
management, acquisitions and dispositions, and strategic
planning through his private investment entity and numerous
charitable organizations. Mr. Chazen also has Board and
Board committee experience at other public companies, including
through his current service at Atrinsic, which enables him to
provide significant insight as to governance and
compliance-related matters.
Craig M. Hatkoff. Mr. Hatkoff has
served as a director of the Company since 2004. Mr. Hatkoff
served as Vice Chairman of Capital Trust, Inc., a real estate
investment management company listed on the New York Stock
Exchange and one of the largest dedicated real estate mezzanine
lenders, from 1997 to 2000, and served on the Board of Directors
from 1997 to 2010. From 2002 to 2005, Mr. Hatkoff was a
trustee of the New York City School Construction Authority, the
agency responsible for the construction of all public schools in
New York City. Mr. Hatkoff was a founder and a managing
partner of Victor Capital Group, L.P., from 1989 until its
acquisition in 1997 by Capital Trust, Inc. Previously, he spent
11 years at Chemical Bank, including as co-head of the real
estate investment banking unit, where he was a pioneer in
commercial mortgage securitization. Mr. Hatkoff is a
co-founder of the Tribeca Film Festival. Mr. Hatkoff is
also Chairman of Turtle Pond Publications LLC, which is active
in childrens publishing and entertainment and is a private
investor in other entrepreneurial ventures. Mr. Hatkoff has
been a director of SL Green Realty Corp since January 2011.
Mr. Hatkoff has in-depth expertise and knowledge of real
estate, capital markets, finance, private investing,
entrepreneurship and executive management through his work with
Chemical Bank, Victor Capital Group and Capital Trust. As a
result of the foregoing, Mr. Hatkoff provides a unique
insight into the financial markets generally, valuation
analysis, strategic planning, and unique financing structures
and alternatives. He also possesses entrepreneurial, brand
marketing and senior leadership experience through his service
on the Boards of numerous educational and charitable
organizations. Mr. Hatkoff also has extensive Board and
Board committee experience at other public companies, including
his current service at SL Green Realty and his long-standing
service to Capital Trust, which enables him to provide
significant insight as to governance and compliance-related
matters particular to real estate companies.
Ronald W. Tysoe. Mr. Tysoe has
served as a director of the Company since 2007. Mr. Tysoe
was a Senior Advisor at Perella Weinberg Partners LP, a boutique
investment banking firm in New York from October 2006 through
September 2007. Prior to that he was Vice Chairman, Finance and
Real Estate, of Federated Department Stores, Inc. (now
Macys, Inc.), a position he held since April 1990.
Mr. Tysoe served as Chief Financial Officer of Federated
from 1990 to 1997 and served on the Federated Board of Directors
from 1988 until 2005. Mr. Tysoe is currently a member of
the Board of Directors of the following companies and currently
serves on the following Board committees: Scripps Networks
Interactive, Inc. (spun off from E.W. Scripps Company), a media
and
14
broadcasting enterprise, since July 2008 (Chairman of the Audit
Committee and a member of the Compensation Committee); Canadian
Imperial Bank of Commerce, since February 2004 (Chairman of the
Audit Committee and a member of the Corporate Governance
Committee); Cintas Corporation, since December 2007 (Chairman of
the Audit Committee and a member of the Corporate Governance and
Nominating Committee); and Pzena Investment Management, Inc.,
since December 2008 (member of the Audit, Compensation and
Corporate Governance Committees). He also served as a director
of Retail Investment Opportunities Corp (f/k/a NRDC Acquisition
Corp., a special purpose acquisition corporation listed on the
Amex exchange) from October 2007 to December 2009 (served on the
Audit and Compensation Committees), and Ohio Casualty
Corporation from February 2006 to September 2007 (served on the
Audit and Governance Committees).
Mr. Tysoes long-standing service as a director of a
company in the retail industry has provided him with extensive
knowledge and experience in transactional, brand marketing,
strategic planning, governance and international business
matters. Such experience enables Mr. Tysoe to provide
unique insight into tenant and development matters and the
retail industry generally. In addition, he possesses an in-depth
knowledge of accounting and finance from his executive and
director positions, which included serving as a chief financial
officer. Mr. Tysoe has extensive Board and Board committee
experience at other public companies across many industries,
including through his current service to four other public
companies, which enables him to provide significant insight as
to governance and compliance-related matters and in particular
accounting and finance matters. As a result of the foregoing
expertise and experience, Mr. Tysoe qualifies as a
financial expert under SEC rules.
Director
Independence
The NYSE listing standards set forth objective requirements for
a director to satisfy, at a minimum, in order to be determined
to be independent by the Board. In addition, in order to
conclude a director is independent in accordance with the NYSE
listing standards, the Board must also consider all relevant
facts and circumstances, including the directors
commercial, industrial, banking, consulting, legal, accounting,
charitable and familial relationships, and such other criteria
as the Board may determine from time to time. The Board has
adopted additional categorical standards regarding relationships
that the Board does not consider material for purposes of
determining a directors independence. The Companys
Corporate Governance Guidelines set forth the NYSE objective
requirements and the Companys additional categorical
standards for Board independence, as well as additional
independence standards for members of the Audit Committee
established by the SEC and the NYSE.
The Board has determined, after considering all of the relevant
facts and circumstances including written information provided
by each director, that Messrs. Allison, Chazen, Hatkoff,
Karmanos, Parfet and Tysoe are independent from
management in accordance with the NYSE listing standards and the
Companys Corporate Governance Guidelines. In particular,
the Board considered that Mr. Parfet is a member of the
Board for the College of Creative Studies in Detroit, Michigan.
An affiliated charity of A. Alfred Taubman and the Company
contributed $20,000 in aggregate to the College of Creative
Studies in 2010, and A. Alfred Taubman has made a
$15 million pledge as well. The Board determined these
donations did not impair independence because (A) A. Alfred
Taubman has been a member of the Board for the College of
Creative Studies since October 1987 and serves as chairman of
the building committee, and (B) Mr. Parfet did not
solicit any of such donations.
The Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee are composed
entirely of independent directors. In addition, after
considering all of the relevant facts and circumstances, the
Board has determined that each member of the Audit Committee of
the Board qualifies under the Audit Committee independence
standards established by the SEC and the NYSE.
15
Board
Matters
The Board
of Directors
General
The Board has general oversight responsibility for the
Companys affairs and the directors, in exercising their
fiduciary duties, represent and act on behalf of the
shareholders. Although the Board does not have responsibility
for the Companys
day-to-day
management, it stays regularly informed about the Companys
business and provides guidance to management through periodic
meetings and other informal communications. The Board is
significantly involved in, among other things, the
Companys strategic and financial planning process,
leadership development, as well as other functions carried out
through the Board committees as described below. The Board also
performs an annual performance review of the Board and
individual directors.
Board
Leadership
Our Board is led by Robert Taubman, the Companys Chairman,
President and Chief Executive Officer. Although the Board
recognizes the increasing utilization of Non-Executive Chairmen
and lead directors in many public companies, the Board believes
its current leadership structure is most appropriate for the
Company and best serves the shareholders of the Company at the
current time, as it has since Robert Taubman became Chairman in
2001. There is no one size fits all approach to
ensuring independent leadership. The Board believes that its
independent directors, who represent two-thirds of the Board,
are deeply engaged and provide significant independent
leadership and direction given their executive and Board
experience noted above. See
Proposal 1-Election
of DirectorsDirector Background and Qualifications.
The independent directors are the sole members of the Audit,
Nominating and Corporate Governance, and Compensation
Committees, collectively which oversee critical matters of the
Company such as the integrity of the Companys financial
statements, the compensation of executive management, the
selection and evaluation of directors, and the development and
implementation of the Companys corporate governance
policies and structures. The independent directors also meet
regularly in executive session at Board and committee meetings
and have access to independent advisors as they deem
appropriate. Management supports this oversight role through its
tone-at-the-top
and open communication.
Risk
Management
The Board oversees the Companys risk management. This
oversight is administered primarily through the following:
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the Boards review and approval of the management annual
business plan and five-year strategic plan, including the
projected opportunities and challenges facing the business each
year;
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the Boards review, on at least a quarterly basis, of
business developments, strategic plans and implementation,
liquidity and financial results;
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the Boards oversight of succession planning;
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the Boards oversight of capital spending and financings;
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the Audit Committees oversight of financial reporting,
internal control over financial reporting and the internal audit
function, including its discussions with management, the
independent accountants and internal auditors regarding the
quality and adequacy thereof;
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the Nominating and Corporate Governances oversight of the
corporate governance policies of the Company and leadership in
the self-evaluation assessments of the Board and
committees; and
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the Compensation Committees review and approvals regarding
executive officer compensation and its relationship to the
Companys business plan, as well its review of compensation
plans generally and the related risks.
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16
Meetings
The Board and its committees meet throughout the year at
regularly scheduled meetings, and also hold special meetings and
act by written consent as appropriate. In 2010, the Board held
four meetings. During 2010, each director attended at least 75%,
in aggregate, of the meetings of the Board and all committees of
the Board on which he or she served. Directors are expected to
attend all meetings, including the annual meeting of
shareholders, and it is the Companys policy to schedule a
meeting of the Board on the date of the annual meeting of
shareholders. All directors attended the 2010 annual meeting.
Non-management directors hold regularly scheduled executive
sessions at which they meet without the presence of management.
These executive sessions generally occur around regularly
scheduled meetings of the Board. Each meeting, the position of
presiding director is rotated in alphabetical order among the
non-management directors. For more information regarding the
Board and other corporate governance policies and procedures,
see Corporate Governance. For information on
how you can communicate with the Companys non-management
directors, including the presiding director, see
Communication with the Board.
Committees
of the Board
The Board has delegated various responsibilities and authority
to Board committees and each committee regularly reports on its
activities to the Board. Each committee, except the Executive
Committee, has regularly scheduled meetings and often has
executive sessions at which they meet without the presence of
management. Each committee, other than the Executive Committee,
operates under a written charter approved by the Board, which is
reviewed annually by the respective committees and the Board and
is available on the Companys website,
www.taubman.com, under InvestingCorporate
Governance. The table below sets forth the current membership of
the four standing committees of the Board and the number of
meetings in 2010 of such committees:
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Nominating and
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Corporate
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Name
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Audit
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Compensation
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Governance
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Executive
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Graham T. Allison
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X
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X
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Jerome A. Chazen
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Chair
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X
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Craig M. Hatkoff
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Chair
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X
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Peter Karmanos, Jr.
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X
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William U. Parfet
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X
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Chair
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Lisa A. Payne
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Robert S. Taubman
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Chair
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William S. Taubman
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Ronald W. Tysoe
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X
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X
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Meetings
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4
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2
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2
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Audit
Committee
The Audit Committee is responsible for providing independent,
objective oversight and review of the Companys auditing,
accounting and financial reporting processes, including
reviewing the audit results and monitoring the effectiveness of
the Companys internal control over financial reporting and
internal audit function. In addition, the Audit Committee
engages the independent registered public accounting firm and
approves its work plan. See Audit Committee
Disclosure, Report of the Audit Committee and
the Audit Committees charter for additional information on
the responsibilities and activities of the Audit Committee.
The Board has determined that each Audit Committee member has
sufficient knowledge in reading and understanding financial
statements to serve thereon and is otherwise financially
literate. The Board has further determined that Mr. Parfet
and Mr. Tysoe each qualify as an audit committee
financial expert within the meaning of SEC regulations and
that each of them has the accounting and related financial
management expertise required by the NYSE listing standards. The
designation of an audit committee financial expert
does not impose upon such person any duties, obligations or
liabilities that are greater than are generally imposed on such
person as a member
17
of the Audit Committee and the Board, and such designation does
not affect the duties, obligations or liabilities of any other
member of the Audit Committee or the Board.
In accordance with NYSE rules, an Audit Committee member may not
simultaneously serve on more than two other audit committees of
public companies unless the Board determines that such
simultaneous service would not impair the ability of such person
to effectively serve on the Audit Committee and discloses such
determination. Mr. Tysoe, appointed to the Audit Committee
and Board in December 2007, is a member of more than two other
public company audit committees. In March 2011, after
considering all of the relevant facts and circumstances,
including but not limited to Mr. Tysoes other
activities and commitments (noting, in particular, that he does
not have full time employment other than his service on various
Boards) as well as his exemplary service to the Board and Audit
Committee since his appointment, the Board determined that the
foregoing would not impair Mr. Tysoes ability to
effectively serve on the Audit Committee.
Compensation
Committee
The Compensation Committee is responsible for overseeing
compensation and benefit plans and policies, reviewing and
approving equity grants and otherwise administering share-based
plans, and reviewing and approving annually all compensation
decisions relating to the Companys senior management. The
Compensation Committee also reviews and discusses, at least
annually, the relationship between risk management policies and
practices, corporate strategy and the Companys
compensation programs. See Compensation Discussion and
Analysis, Compensation Committee Report and
the Compensation Committees charter for additional
information on the responsibilities and activities of the
Compensation Committee.
Role of Management. Similar to prior
years, in 2010 the Compensation Committee took significant
direction from the recommendations of the Manager, including
Robert Taubman and Robert Reese, Senior Vice President, Chief
Administrative Officer of the Manager, with respect to the
design and implementation of the Companys compensation
program for its senior management. See Compensation
Discussion and AnalysisAdvisors Utilized in Compensation
Determinations for further information.
Role of Compensation Consultant. The
Compensation Committee has the sole authority to engage outside
advisors and establish the terms of such engagement, including
compensatory fees. The Compensation Committee determined to
re-engage Towers Watson as its compensation consultant for 2010
with respect to the Companys senior management and
director compensation programs and approved the terms of such
engagement. A representative of Towers Watson often is invited
to attend the Compensation Committee meetings.
The Compensation Committee works with management to determine
the consultants responsibilities and direct its work
product, although the Compensation Committee is responsible for
the formal approval of the annual work plan. Towers
Watsons responsibilities in 2010 with respect to executive
compensation included, among other things: (A) to discuss
best practices and market trends in compensation;
(B) to assess generally the Companys competitive
position regarding compensation of named executive officers
based on proxy data; (C) to assess in detail the
competitiveness of target TDC for senior management; (D) to
assess the stock ownership guidelines for executive officers;
and (E) to review the CD&A in the 2010 proxy statement
and assist in calculating the 280G amounts for purposes of the
2010 proxy statement. See Compensation Discussion and
Analysis for further information regarding Towers
Watsons services as part of the 2010 compensation program
for named executive officers.
The Compensation Committee intends to review the non-employee
director compensation program every other year and make
recommendations to the Board as appropriate. The Compensation
Committee engaged Towers Watson to assess the Companys
competitive position regarding its non-employee director
compensation program in 2010, which resulted in a revised
program effective January 1, 2011. See Director
Compensation below for further information.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible
for identifying and nominating individuals qualified to serve as
Board members, other than vacancies for which holders of the
Series B Preferred
18
Stock propose nominees, and recommending directors for Board
committees. The Nominating and Corporate Governance Committee
also is responsible for recommending to the Board appropriate
Corporate Governance Guidelines and overseeing governance
issues. See the Nominating and Corporate Governance
Committees charter for additional information on its
responsibilities and activities.
As set forth in the Corporate Governance Guidelines, the
Nominating and Corporate Governance Committee considers the
experience, mix of skills and other qualities of the existing
Board to ensure appropriate Board composition. The Nominating
and Corporate Governance Committee believes directors and
nominees must have demonstrated excellence in their chosen
field, high ethical standards and integrity, and sound business
judgment. The Nominating and Corporate Governance Committee does
not have a specific diversity policy underlying its nomination
process, although it seeks to ensure the Board includes members
with diverse backgrounds, qualifications, skills and experience,
including appropriate financial, governance, capital market,
real estate, retail and other expertise relevant to the
Companys business. Generally, the Nominating and Corporate
Governance Committee will re-nominate incumbent directors who
continue to satisfy its criteria for membership on the Board,
who it believes will continue to make important contributions to
the Board and who consent to continue their service on the
Board. If a vacancy on the Board occurs, the Nominating and
Corporate Governance Committee will seek individuals who satisfy
its criteria for membership on the Board.
The Nominating and Corporate Governance Committee generally
relies on multiple sources for identifying and evaluating
non-incumbent nominees, including referrals from the
Companys current directors and management. In 2010, the
Nominating and Corporate Governance Committee did not engage a
search firm or pay fees to other third parties in connection
with identifying or evaluating Board nominee candidates. The
Nominating and Corporate Governance Committee does not solicit
director nominations, but will consider recommendations by
shareholders with respect to elections to be held at an annual
meeting, so long as such recommendations are sent on a timely
basis to the Secretary of the Company and are in accordance with
the Companys Restated By-Laws (the By-Laws)
and applicable law. The Nominating and Corporate Governance
Committee will evaluate nominees recommended by shareholders
against the same criteria that it uses to evaluate other
nominees. The Company did not receive any nominations of
directors by shareholders for the annual meeting.
Under the By-Laws, shareholders must follow an advance notice
procedure to nominate candidates for election as directors or to
bring other business before an annual meeting. The advanced
notice procedures set forth in the By-Laws do not affect the
right of shareholders to request the inclusion of proposals in
the Companys proxy statement and form of proxy pursuant to
SEC rules. See Additional InformationPresentation of
Shareholder Proposals and Nominations at 2012 Annual
Meeting for information regarding providing timely notice
of shareholder proposals and nominations. For nominations and
shareholder proposals, the notice provided by shareholders to
the Company must include, among other things:
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for director nominations:
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the name and address of the person or persons being nominated;
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the consent of each nominee to serve as a director if elected
and to be named in the proxy statement;
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a description of all direct and indirect compensation and other
material monetary agreements, arrangements and understandings
during the past three years, and any other material
relationships, between or among the shareholder and beneficial
owner, if any, and their respective affiliates and associates
and others acting in concert therewith, on the one hand, and
each proposed nominee, and his or her respective affiliates and
associates or others acting in concert therewith;
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a description of certain voting or compensatory arrangements;
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information regarding the nominee to enable the Company to
determine whether the proposed nominee qualifies as an
independent director and otherwise is in compliance with the
Companys policies and guidelines applicable to
directors; and
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such other information regarding each nominated person that
would be required in a proxy statement filed pursuant to the
SECs proxy rules in the event of an election contest.
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19
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for other business, a brief description of such business, the
reasons for conducting such business and any material interest
in such business; and
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for a shareholder and beneficial owner(s), if any, on whose
behalf the action is being made:
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the name and address of the shareholder (and beneficial owner,
if any) making the nomination;
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the class and number of shares of the Companys stock that
the nominating shareholder (and beneficial owner, if any) owns;
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information regarding such persons interest (and the
interest of related persons) in the matters being proposed;
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arrangements between the persons proposing such action;
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the interests of such persons and related persons in the
Companys stock, including disclosure of agreements that
involve hedging, short positions and similar arrangements and
agreements that involve acquiring, voting, holding or disposing
of the Companys stock; and
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whether such persons intend to solicit proxies in support of the
proposed business or nominee.
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In addition, such information provided to the Company must be
updated and supplemented so that all applicable information is
true and correct as of the record date and within 15 days
prior to the applicable meeting or any adjournment or
postponement thereof. See the By-Laws for complete information
required to be included in such notice to the Company.
Executive
Committee
The Executive Committee has the authority to exercise many of
the functions of the full Board between meetings of the Board.
Corporate
Governance
The Board and management are committed to responsible corporate
governance to ensure that the Company is managed for the benefit
of its shareholders. To that end, the Board and management
periodically review and update, as appropriate, the
Companys corporate governance policies and practices. The
Company also updates policies and practices as mandated by the
Sarbanes-Oxley Act of 2002, Dodd-Frank and other SEC or NYSE
rules and regulations.
The Board has adopted Corporate Governance Guidelines, a copy of
which can be found at the Companys web site,
www.taubman.com, under InvestingCorporate
Governance. These guidelines address, among other things,
director responsibilities, qualifications (including
independence), compensation and access to management and
advisors. The Nominating and Corporate Governance Committee is
responsible for overseeing and reviewing these guidelines and
recommending any changes to the Board.
The Board also has adopted a Code of Business Conduct and Ethics
(the Code), which sets out basic principles to guide
the actions and decisions of all of the Companys
employees, officers and directors. The Code, also available at
the Companys web site under InvestingCorporate
Governance, covers numerous topics including honesty, integrity,
conflicts of interest, compliance with laws, corporate
opportunities and confidentiality. Waivers of the Code are
discouraged, but any waiver or material amendment that relates
to the Companys executive officers or directors may only
be made by the Board or a Board committee and will be publicly
disclosed on the Companys website under
InvestingCorporate Governance within four business days of
such waiver. See Related Person Transactions for
additional information on the Boards policies and
procedures regarding related person transactions.
A copy of the Companys committee charters, Corporate
Governance Guidelines and Code will be sent to any shareholder,
without charge, upon written request sent to the Companys
executive offices: Taubman Centers Investor Services, 200 East
Long Lake Road, Suite 300, Bloomfield Hills, Michigan
48304-2324.
20
Director
Compensation
Non-employee director compensation consists of a mix of cash and
equity, with such directors retaining the option to defer such
compensation under the Non-Employee Directors Deferred
Compensation Plan. The combination of cash and equity
compensation is intended to provide incentives for non-employee
directors to continue to serve on the Board, to further align
the interests of the Board and shareholders and to attract new
non-employee directors with outstanding qualifications.
Directors who are employees or officers of the Company or any of
its subsidiaries do not receive any compensation for serving on
the Board and therefore are excluded from the director
compensation table below. The Company reimburses all directors
for expenses incurred in attending meetings or performing their
duties as directors.
The Compensation Committee intends to review the non-employee
director compensation program every other year and make
recommendations to the Board as appropriate. As described below,
the Board revised the non-employee director compensation program
effective January 1, 2011.
Stock
Ownership Guidelines
Effective March 2010, the Board revised the stock ownership
guidelines for non-employee directors based upon the
recommendation of the Compensation Committee. The prior
guidelines were effective since March 2007 and required
non-employee directors to retain 3,307 shares of the
Companys common stock. Under the revised guidelines,
non-employee directors are required to retain 5,095 shares
of the Companys common stock, which corresponds to
$175,000 (five times the annual cash retainer, excluding the
additional cash retainer for committee chairs) divided by $34.35
(the Companys average closing stock price over the 90
trading days prior to March 1, 2010, the date of Board
approval). Directors generally will have a six-year period to
comply with the guidelines, with the initial compliance deadline
being March 1, 2013 for current directors. The Compensation
Committee will review the minimum equity holding level and other
market trends and practices on a periodic basis. The
Compensation Committee has confirmed that all directors
currently satisfy the guidelines or are making significant
progress toward the guidelines.
Summary
of 2010 Non-Employee Director Compensation Program
The following table sets forth the compensation program for
non-employee directors in 2010:
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Annual cash retainer:
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Audit Committee chair
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$
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47,500
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Compensation Committee chair
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42,500
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Nominating and Corporate Governance chair
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40,000
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Other directors
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35,000
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Annual equity retainer (fair market value)
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50,000
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Attendance fees per Board or Committee meeting
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1,500
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Annual Equity Retainer. Non-employee
directors receive shares of common stock having a fair market
value of $12,500 each quarter (in advance). The fair market
value is based on the closing price as of the last business day
of the preceding quarter. The awards are made pursuant to the
2008 Omnibus Plan. The Company does not coordinate the timing of
share grants with the release of material non-public
information, as the grant date is always the first business day
of each quarter.
Non-Employee Directors Deferred Compensation
Plan. Non-employee directors may defer the
receipt of all or a portion of the cash retainer and equity
retainer until the earlier of the termination of Board service
or upon a change of control. The deferred compensation is
denominated in restricted share units, and the number of
restricted share units received equals the deferred retainer fee
divided by the fair market value of the Companys common
stock on the business day immediately before the date the
director would have been otherwise entitled to receive the
retainer fee. During the deferral period, the non-employee
directors deferral accounts are credited with dividend
equivalents on their deferred restricted share units
(corresponding to cash dividends paid on the Companys
common stock), payable in additional restricted share units
based on the fair market value of the Companys common
stock on the business day immediately before the record date of
the applicable dividend
21
payment. Each non-employee directors deferral account is
100% vested. The restricted share units are converted into the
Companys common stock at the end of the deferral period
for distribution.
Perquisites. The Company does not
provide any perquisites to directors.
2010 Director
Compensation Table
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Fees Earned or
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Paid in Cash
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Stock Awards
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Total
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Name
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($) (1)(3)
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($) (2)(3)
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($)
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Graham T. Allison
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51,500
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50,000
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101,500
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Jerome A. Chazen
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74,500
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50,000
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124,500
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Craig M. Hatkoff
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57,524
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49,976
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107,500
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Peter Karmanos, Jr.
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47,000
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50,000
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97,000
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William U. Parfet
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65,500
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50,000
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115,500
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Ronald W. Tysoe
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60,500
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50,000
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110,500
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Total
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356,524
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299,976
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656,500
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(1) |
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Represents amounts earned in cash in 2010 with respect to the
annual cash retainer, meeting fees and fractional shares awarded
under the 2008 Omnibus Plan that are paid in cash. |
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(2) |
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Reflects shares of common stock granted under the 2008 Omnibus
Plan in 2010. The amounts reported reflect the grant date fair
value of each award, which equals the corresponding cash value
of the award. |
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(3) |
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In 2010, the following directors elected to defer the receipt of
all or a portion of their cash retainer and equity retainer
under the Non-Employee Directors Deferred Compensation
Plan. The restricted share units are fully vested at the grant
date. |
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Restricted Share
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Units Credited
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2010 Cash Deferrals
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2010 Stock Deferrals
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(excl. dividend
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($)
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($)
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equivalents) (#)
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Graham T. Allison
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35,000
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50,000
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2,165
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Jerome A. Chazen
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47,500
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50,000
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2,484
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Peter Karmanos, Jr.
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35,000
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50,000
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2,165
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William U. Parfet
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40,000
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50,000
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2,293
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Ronald W. Tysoe
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50,000
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1,274
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Mr. Hatkoff did not defer any retainer amounts. Therefore,
the value of fractional shares related to the equity retainer
was paid in cash.
2011
Revisions to Director Compensation Program
The Compensation Committee engaged Towers Watson to assess the
Companys competitive position regarding its non-employee
director compensation program in 2010. The market data reviewed
(based on 2009 compensation data) included the 32-REIT peer
group also utilized for executive compensation market data and a
general industry group of 24 non-financial public companies with
2009 year-end market capitalizations similar to the
Company. The Compensation Committee determined to position the
director compensation between the 75th percentile of the REIT
peer group and the median of the general industry peer group.
Based on such market data and benchmarking, the Committee
recommended and the Board approved, effective January 1,
2011, an increase in the cash retainer from $35,000 to $60,000,
an increase in the equity retainer from $50,000 to $70,000, and
increases in the additional cash retainer for the Chairs of the
Compensation Committee (from $7,500 to $10,000) and the
Nominating and Corporate Governance Committee (from $5,000 to
$7,500).
Under the stock ownership guidelines implemented in March 2010,
current directors generally will have until March 1, 2013
to own 5,095 shares of the Companys common stock. The
Compensation Committee anticipates revising these guidelines in
2011 to reflect the increased annual cash retainer.
22
Communication
with the Board
Any shareholder or interested party who desires to communicate
with the Board or any specific director, including
non-management directors, the presiding director, or committee
members, may write to: Taubman Centers, Inc., Attn: Board of
Directors, 200 East Long Lake Road, Suite 300, Bloomfield
Hills, Michigan
48304-2324.
Depending on the subject matter of the communication, management
will:
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forward the communication to the director or directors to whom
it is addressed (matters addressed to the Chairman of the Audit
Committee will be forwarded unopened directly to such Chairman);
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attempt to handle the inquiry directly where the communication
does not appear to require direct attention by the Board or an
individual member, e.g. the communication is a request for
information about the Company or is a stock-related
matter; or
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not forward the communication if it is primarily commercial in
nature or if it relates to an improper or irrelevant topic.
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To submit concerns regarding accounting matters, shareholders
and other interested persons may also call the Companys
toll free, confidential hotline number published at
www.taubman.com under InvestingCorporate
Governance. Employees may submit such concerns on a confidential
and anonymous basis.
Communications made through the confidential hotline number are
reviewed by the Audit Committee at each regularly scheduled
meeting; other communications will be made available to
directors at any time upon their request.
23
Executive
Officers
The executive officers of the Company serve at the pleasure of
the Board. The executive officers of the Company are as follows:
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Name
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Age
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Title
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Robert S. Taubman
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57
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Chairman of the Board, President and Chief Executive Officer
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Lisa A. Payne
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52
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Vice Chairman, Chief Financial Officer and Director
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William S. Taubman
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52
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Chief Operating Officer and Director
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Esther R. Blum
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56
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Senior Vice President, Controller and Chief Accounting Officer
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Stephen J. Kieras
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57
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Senior Vice President, Development of The Taubman Company LLC
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Robert R. Reese
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47
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Senior Vice President, Chief Administrative Officer of The
Taubman Company LLC
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David T. Weinert
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51
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Senior Vice President, Leasing of The Taubman Company LLC
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See
Proposal 1-Election
of Directors for biographical and other information
regarding Robert Taubman, Lisa Payne and William Taubman.
Esther R. Blum is a Senior Vice President, the
Controller, and Chief Accounting Officer of the Company, a
position she has held since 1999. Ms. Blum became a Vice
President of the Company in January 1998, when she assumed her
current principal functions. Between 1992 and 1997,
Ms. Blum served as the Managers Vice President of
Financial Reporting and served the Manager in various other
capacities between 1986 and 1992.
Stephen J. Kieras is Senior Vice President,
Development of the Manager, a position he has held since
September 2004. Mr. Kieras was a Group Vice President,
Development of the Manager from 2001 to September 2004, a Vice
President, Development from 1998 to 2001 and a Director,
Development from 1990, when he joined the Manager, to 1998.
Robert R. Reese is Senior Vice President, Chief
Administrative Officer of the Manager, a position he has held
since June 2005. Mr. Reese was Senior Vice President,
Strategy and Business Performance of the Manager from 2004 to
June 2005. Prior to joining the Company, Mr. Reese was a
partner in the Chicago-based management consulting firm of RNW
Consulting from 1998 to 2004, where he advised the Company on a
range of corporate performance initiatives. Earlier in his
career he served as a senior manager with Accenture and a vice
president at Citibank.
David T. Weinert is Senior Vice President, Leasing
of the Manager, a position he has held since July 2004.
Mr. Weinert was a Group Vice President, Leasing of the
Manager from 2001 to July 2004, a Vice President heading leasing
for the Managers western region based in
San Francisco from 1992 to 2001 and served the
Managers leasing department in various other capacities
between 1986 and 1992.
24
Compensation
Discussion And Analysis
The Compensation Committee (referred to as the
Committee in this section and the Named Executive
Officer Compensation Tables) is composed entirely of independent
directors and administers the senior management compensation
program of the Company. The Committees responsibilities
include recommending and overseeing compensation and benefit
plans and policies, reviewing and approving equity grants and
otherwise administering share-based plans, and reviewing and
approving annually all compensation decisions relating to the
Companys senior management, including the Chief Executive
Officer, the Chief Financial Officer and the other executive
officers named in the Summary Compensation Table (the
named executive officers). The term senior
management as used herein refers to the 11 members of the
Companys operating committee in 2010, a key managerial
unit for the Companys business, consisting of the
executive officers and other key employees. This Compensation
Discussion and Analysis (CD&A) explains how the
Companys compensation programs are designed and operate in
practice with respect to the named executive officers.
Executive
Summary
Overview
of Compensation Program
The following is a summary of key aspects of our 2010
compensation program for named executive officers.
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Straightforward compensation
program. The primary compensation elements
consist of base salary, an annual cash bonus, and a long-term
incentive award (collectively, total direct
compensation or TDC).
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Limited perquisites and no defined benefit
plans. The Company provides limited
perquisites to named executive officers that are not generally
available to all employees. Further, the Company does not
maintain any defined benefit pension plans for its named
executive officers.
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Limited nonqualified deferred compensation
plans. The Company provides a supplemental
retirement plan with limited benefits. Further, Robert Taubman
has an option deferral agreement that was initially entered into
in 2002.
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Limited increases in target annual compensation since 2007
in recognition of economic and industry uncertainty and
difficulties. The Committee approved a 3% increase in
base salaries for 2010, which was commensurate with the overall
average wage increase of 3% provided to the Companys
salaried employees. The annual bonus and LTIP targets remained
unchanged. This correlated to a 1% increase in target TDC
(defined below) for each named executive officer. This was the
first increase in target annual compensation since March 2007
(although certain named executive officers received special
option grants in 2009).
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Emphasis on pay-for performance, with utilization of a
variety of key metrics. Target
performance-based compensation equaled 46% to 49% of the target
TDC of named executive officers in 2010, with a slight increase
in the percentage of at-risk pay for those named executive
officers with increased responsibilities. Further, the Committee
ensures that executives focus on a few key performance metrics.
The 2010 annual bonus plan was predicated on the achievement of
Funds from Operations (FFO) per diluted share. The
2010 performance share unit grants represent a contingent number
of units of stock granted at the beginning of a three-year
performance cycle, with the actual payout of units at 0% to 300%
of the target grant amount based on the Companys relative
total shareholder return (compared to 26 REITs) over such
performance period.
|
|
|
|
Focus on Company and management performance as a whole,
while recognizing individual
responsibilities. The performance metrics
utilized generally are based on the Company and management team
as a collective unit, to foster teamwork and maximize the
Companys performance. However, the allocation of the
annual bonus pool earned by senior management in aggregate is
based on individual considerations.
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|
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|
Balance of short-term and long-term
compensation. In 2010, long-term incentive
compensation represented 38% to 55% of target TDC, with an
increasing percentage of long-term pay as a named executive
officers level of responsibility increases. In addition,
named executive officers have
|
25
|
|
|
|
|
significant amounts of equity awards granted in prior years
subject to vesting over a number of years. The stock ownership
guidelines reinforce shareholder alignment for long-term
performance.
|
|
|
|
|
|
Employment and change of control agreements with certain
named executive officers. The Company and TRG
are party to change of control agreements with certain members
of senior management, including Ms. Payne, Mr. Weinert
and Mr. Kieras. These agreements were originally entered
into in connection with a hostile takeover bid in 2003, and the
Committee believes these agreements were instrumental in the
continued success of the Company. A fundamental feature of these
agreements is that most of the benefits have a
double-trigger, which means a change of control and
the actual or constructive termination of employment, in this
case within three years of the trigger event. The agreements
also provide for a tax gross up on benefits that exceed 110% of
the Section 280G limits, which ensures that the benefits of such
agreements are fully realized. Ms. Payne is also party to
an employment agreement, which provides additional severance
benefits other than those resulting from a change of control.
|
Overview
of 2010Establishing Target TDC
In determining compensation changes for named executive officers
from year to year, the Committee generally focuses on target
total direct compensation (target TDC), which
consists of base salary, a target annual cash bonus and target
long-term incentive awards. In 2010, the Committee continued to
be challenged to remain fiscally responsible, while also
ensuring the named executive officers were retained,
incentivized and aligned with shareholders. The Committee also
noted anticipated regulatory reforms addressing executive
compensation, which created additional uncertainties.
The Committee engagement of Towers Watson for 2010 included a
market study of target TDC of senior management to a 32-REIT
comparator group to assist the Committee in understanding market
conditions and the competitiveness of the existing program. The
32-REIT peer group utilized for this purpose was comprised of 22
of 26 REITs (excluding the Company) included in the FTSE NAREIT
ALL REIT Index, Property Sector: Retail (the NAREIT
Index) and other REITs selected based on total
capitalization, business mix, and market for executive talent.
The four companies in the index were excluded from the market
data because the Company believed they were not in the same
market for executive talent primarily based on their size.
Historically, such market study was used by the Committee to
benchmark compensation for named executive officers in certain
years. However, after review of all such data and in light of
the macroeconomic, industry and internal factors noted below,
the Committee determined that it was not the appropriate time
for benchmarking or other market-driven changes in compensation.
In addition, the Committee received proxy statement data and
information on material compensation trends with respect to the
named executive officers to provide a general understanding of
current compensation practices, but such information is not used
for benchmarking purposes.
In March 2010, the Committee determined that it was prudent to
increase base salaries by 3%, which was commensurate with the
overall average wage increase of 3% provided to the
Companys salaried employees, and to maintain the target
annual cash bonus and target long-term incentive awards at 2009
levels for the named executive officers. This correlated to a 1%
increase in target TDC for each named executive officer.
The following table sets forth target TDC approved for the named
executive officers in 2010.
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Target TDC
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Target
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|
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Internal
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Target
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Performance-
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Target Long-
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Pay Equity
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Target
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LTIP
|
|
Based
|
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Target
|
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Term Incentive
|
|
|
|
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(% of CEO
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|
|
|
Annual
|
|
Award-
|
|
Compensation
|
|
LTIP Award-
|
|
Compensation
|
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|
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|
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2010
|
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Base Salary
|
|
Bonus
|
|
PSUs
|
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(% of Target
|
|
RSUs
|
|
(% of Target
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2010
|
|
% Change
|
|
Target
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
TDC)(1)
|
|
($)
|
|
TDC)(2)
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|
($)
|
|
from 2009
|
|
TDC)
|
|
Robert S. Taubman
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697,954
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635,274
|
|
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825,000
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49
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%
|
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825,000
|
|
|
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55
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%
|
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2,983,228
|
|
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1
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%
|
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Lisa A. Payne
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563,732
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444,692
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500,000
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47
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%
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500,000
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|
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50
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%
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2,008,424
|
|
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|
1
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%
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67
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%
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William S. Taubman
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536,888
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423,516
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|
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500,000
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47
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%
|
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|
500,000
|
|
|
|
51
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%
|
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|
1,960,404
|
|
|
|
1
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%
|
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|
66
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%
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David T. Weinert
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375,821
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296,461
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240,000
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47
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%
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|
240,000
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|
|
42
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%
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|
1,152,282
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|
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|
1
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%
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|
39
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%
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Stephen J. Kieras
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338,240
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266,816
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185,000
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46
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%
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|
185,000
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|
|
|
38
|
%
|
|
|
975,056
|
|
|
|
1
|
%
|
|
|
33
|
%
|
|
|
|
(1)
|
|
Target Annual Bonus plus Target
LTIP Award-PSUs, divided by Target TDC in 2010.
|
|
(2)
|
|
Target LTIP Award-PSUs plus Target
LTIP Award-RSUs, divided by Target TDC in 2010.
|
26
Overview
of 2010Operating Performance and
Pay-For-Performance
Target Performance Metrics. The global
economic and financial market downturn in 2008 and 2009 caused,
among other things, a significant tightening in the credit
markets, lower levels of liquidity, increases in the rates of
default and bankruptcy, lower consumer and business spending,
and lower consumer confidence and net worth, all of which had a
negative effect on the Companys business, results of
operations, financial condition and liquidity. In late 2009 and
early 2010, when the Committee discussed and finalized the 2010
target TDC and other compensation determinations for named
executive officers, forecasts for 2010 generally called for a
continuing weak economy in the United States, with a long, slow
recovery from the severe economic recession. Although management
was unable to predict the duration and depth of the economic
slowdown and the precise impact on the Companys business
at such time, management noted that the timing and nature of any
recovery in the general economy, credit and financial markets,
and REIT industry remained uncertain. Management also noted that
a continuing weak economy would strain the resources of the
Companys tenants and their customers, as well as the
Companys joint venture partners, and negatively impact the
Companys ongoing business and future operations. In
addition, there were a significant number of economic
indicators, general and industry specific, that indicated the
regional shopping center industry and the real estate sector
would be negatively affected for a number of years in terms of
operations, liquidity and access to the capital markets. Such
conditions made it very difficult to forecast operating results,
make business decisions and identify and address material
business risks.
2010 Bonus. The 2010 annual bonus plan was
predicated on the achievement of FFO per diluted share. In early
2010, the Company announced guidance for 2010 FFO per diluted
share of $2.55 to $2.75 (excluding the impact of the continued
ownership of The Pier Shops at Caesars (The Pier
Shops)) The 2010 guidance represented a range of 12% to
18% down from 2009 Adjusted FFO per diluted share (further
adjusted to exclude The Pier Shops). Adjusted FFO per diluted
share in 2009 excluded the Westfarms litigation charges, a
restructuring charge (primarily representing the costs of
termination of personnel), and impairment charges related to the
write down of The Pier Shops and Regency Square to their fair
values. The Company also anticipated lower lease cancellation
income in 2010 compared to a record amount in 2009, as well as a
decrease in NOI excluding lease cancellation income. The
foregoing factors materially affected the design and
implementation of the 2010 compensation program.
2010 PSU Awards. The 2010 performance unit
grants represent a contingent number of units of stock, with the
actual payout of units at 0% to 300% of the target grant amount
based upon the Companys total shareholder return over a
three-year period compared to the 26 other REITs in the NAREIT
Index. The Company utilized the full NAREIT Index to ensure the
perception of objectivity in setting such performance measure.
2010 Results and Earned
Compensation. The named executive officers
earn the target TDC only to the extent target performance
measures are achieved. To the extent target performance measures
are not achieved or are exceeded, the named executive officers
generally will earn compensation below or above the target TDC,
respectively. Notwithstanding the foregoing, the Committee
retains the discretion to revise performance-based compensation
for individual performance (as utilized for the allocation of
the senior management annual bonus pool) or extraordinary
circumstances. The Committee also retains discretion to provide
bonuses outside the Companys annual bonus plan, make
equity grants other than under the existing long-term incentive
program, and to provide other compensation.
2010 Performance. Net income allocable to
common shareholders was $0.86 per diluted common share in 2010,
compared to net loss allocable to common shareholders of $(1.31)
per diluted share in 2009. Funds from Operations (FFO) was $2.86
per diluted share, compared to Adjusted FFO of $3.06 per diluted
share in 2009. Adjusted FFO for 2009 excludes the impact of
$2.38 per diluted share of litigation, restructuring and
impairment charges. During 2010, the Company had a 46.8% total
shareholder return, which compares to the MSCI US REIT Index of
28.5%, the FTSE NAREIT Equity Retail Index of 33.4% and the
S&P 500 Index of 15.1%.
2010 Bonus. As noted above, the 2010 bonus
plan provided for Committee discretion to establish the bonus
pool if the Companys performance corresponded to a payout
of more than 150% of target. The Committee initially considered
a bonus pool of 182.5% of target, which was based on 2010 FFO of
$2.98 per diluted share after excluding The Pier Shops and
adjusting for the impact of additional bonus expense at such
payout level. The Committee calculated the 182.5% payout level
assuming the extrapolation of the performance curve approved by
27
the Committee for payout levels between 50% and 150% of target.
Notwithstanding the foregoing, although lease cancellation
income was regularly included in FFO for purposes of the bonus
plan, the Committee determined that bonus plan participants
should only receive approximately 50% of the benefit of the
lease cancellation income attributable to a specified anchor
store, given the negative impact of losing such anchor. As a
result, the Committee approved a bonus pool of 167.5% of target.
Overall, the 2010 bonus expense for senior management was
approximately $5.0 million compared to a target bonus pool
of $3.0 million, as well as compared to 2009 expense of
$448,000 and a target bonus pool of $3.0 million. In March
2011, the Committee allocated the actual cash bonus pool for
senior management based on the target bonuses for each person
and its subjective determination of individual performance.
2010 PSU Awards. From May 21, 2010 (the
beginning of the performance period for the 2010 awards) through
December 31, 2010, the Companys total shareholder
return was 19.4%. As of December 31, 2010, such performance
correlated to a 228% payout of the 2010 target performance share
unit awards. The actual payout determination will be made for
the three-year period ended March 1, 2013.
Compensation
Philosophy, Program Objectives and Key Features
The Companys compensation program for its named executive
officers is designed to:
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|
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|
|
provide total compensation that is both fair and competitive;
|
|
|
|
attract, retain and motivate key executives who are critical to
the Companys operations;
|
|
|
|
increase the proportion of at-risk pay as an
employees level of responsibility increases, while
rewarding superior individual and Company performance on both a
short-term and long-term basis; and
|
|
|
|
align executives long-term interests with those of
shareholders.
|
In furtherance of the foregoing objectives, the Committee has
designed the compensation program for named executive officers
generally to consist of base salary, an annual cash bonus, and
long-term incentive awards, as well as limited perquisites,
contributions to defined contribution plans and customary
benefits provided to all salaried employees. Further, certain
named executive officers have a right to contingent compensation
relating to change of control
and/or
employment agreements.
The following table sets forth how each element of compensation
to named executive officers for 2010 is intended to satisfy one
or more of the Companys compensation objectives, as well
as key features of the compensation elements that address such
objectives.
|
|
|
|
|
Element of
Compensation
|
|
Compensation
Objectives
|
|
Key Features
|
|
Base Salary
|
|
Provide
a minimum, fixed level of cash compensation
Primary
factor in retaining and attracting key employees in a
competitive marketplace
Preserve
an employees commitment during downturns in the REIT
industry and/or equity markets
|
|
Determinations
based on an evaluation of the individuals experience,
current performance, and internal pay equity and a comparison
to peer group
|
28
|
|
|
|
|
Element of
Compensation
|
|
Compensation
Objectives
|
|
Key Features
|
|
Annual Cash Bonus
|
|
Incentive
for the achievement of annual Company financial goals and
individual performance
Assist
in retaining, attracting and motivating employees in the near
term
|
|
Performance
measure was FFO per diluted share, as adjusted for extraordinary
and/or unusual charges
Target
cash bonus pool for senior management consisted of aggregate
target cash bonuses of each member of senior
management
Earned
cash bonus pool of senior management was a percentage of the
target bonus pool of senior management, ranging from 0% to 200%
based on satisfaction of the performance goal; the Committee
also utilized discretion as
permitted
Cash
bonuses earned by each member of senior management were
determined by the Committee upon its allocation of the
aggregate, earned cash bonus pool of senior management based on
each persons target bonus and a subjective determination
of individual performance
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Program (RSUs and PSUs)
|
|
Provide
incentive for employees to focus on long-term fundamentals and
thereby to create long-term shareholder
value
Incentive
for the achievement of Company financial or strategic goals, as
well as total shareholder
return
Assist
in maintaining a stable, continuous management team in a
competitive market
Limited
dilution to existing shareholders
|
|
Stock
Ownership Guidelinesreinforce focus on long-term
fundamentals
|
|
|
|
|
|
Restricted share units
|
|
Maintain
shareholder-management
alignment
Provide
upside incentive in up market, with some down market protection
|
|
50%
of long-term incentive compensation award
Three-year
cliff vest, with no dividends paid on vesting
|
|
|
|
|
|
Performance share units
|
|
Enhance
pay-for-performance objective (using long-term performance
measure and vesting) and shareholder
alignment
Provide
some upside in up or down market based on relative
performance
Easy
to understand and track performance
|
|
50%
of long-term incentive compensation award
Performance
share units represent a contingent number of units of stock
granted at beginning of performance cycle, with the actual
payout of units at 0% to 300% of the target grant amount based
on relative performance of total shareholder return over such
three-year period. compared to 26 other REITs in NAREIT
Index
Three-year
cliff vest, with no dividends paid on vesting
|
29
|
|
|
|
|
Element of
Compensation
|
|
Compensation
Objectives
|
|
Key Features
|
|
Perquisite
|
|
Assist
in retaining and attracting employees in competitive
marketplace, with indirect benefit to Company
|
|
May
include financial planning assistance, health club membership
dues and (with reimbursement by users) personal use of Company
leased aircraft
|
|
|
|
|
|
|
|
|
|
|
Change of control agreements
|
|
Ensure
continued dedication of employees in case of personal
uncertainties or risk of job
loss
Ensure
compensation and benefits expectations are
satisfied
Retain
and attract employees in a competitive market
|
|
Ms.
Payne, Mr. Weinert and Mr. Kieras have change of control
agreements
Double
trigger (change of control and actual or constructive
termination of employment) required for benefits, except
acceleration of certain equity awards
Full
tax-gross up on benefits that exceed 110% of limits set forth in
Section 280G of the IRC
|
|
|
|
|
|
|
|
|
|
|
Employment agreements
|
|
Retain
and attract employees in a competitive
market
Ensure
continued dedication of employees in case of personal
uncertainties or risk of job loss
|
|
Ms.
Payne has employment agreement
|
Process
for Making Compensation Determinations
Target
TDC
In determining compensation changes for named executive officers
from year to year, the Committee generally focuses on target
TDC, which consists of base salary, a target annual cash bonus
and target long-term incentive awards. See
Executive SummaryOverview of
2010Establishing Target TDC for further information.
Historical
Compensation Differences Among Named Executive
Officers
In 2007 and years prior, benchmarking by job responsibilities
and position had been a significant factor in the Companys
compensation program for named executive officers. However, the
2007 benchmarking continues to impact the compensation program.
The job responsibilities and positions of the named executive
officers were, as of the 2007 benchmarking, and continue to be
as follows: Robert Taubman, Chairman, President and Chief
Executive Officer, leads the management of the Company across
all departments as well as serving as the leader of the Board.
Lisa Payne, Vice Chairman and Chief Financial Officer, and
William Taubman, Chief Operating Officer, are primarily
responsible for the financial and operational divisions of the
Company, respectively; however, they also share significant
responsibilities, leadership and decision-making authority with
Robert Taubman in their core areas of responsibility as well as
the Company as a whole and both are directors of the Board (with
Ms. Payne as Vice Chairman). David Weinert, Senior Vice
President, Leasing, and Stephen Kieras, Senior Vice President,
Development, are both responsible for key operating divisions of
the Company and report to William Taubman.
In addition, the Committee utilized internal pay equity as an
additional data point, but does not target specific internal pay
equity metrics.
In 2010, the Committee also allocated the target cash bonus pool
among senior management based on the target bonus for each
person and its subjective determination of individual
performance.
30
Advisors
Utilized in Compensation Determinations
Management and Other Employees. The
Committee takes significant direction from the recommendations
of the Manager, including Robert Taubman and Robert Reese,
regarding the design and implementation of the compensation
program for senior management. The Committee relies on the
Manager because it has significant involvement in and knowledge
of the Companys business goals, strategies and
performance, the overall effectiveness of senior management and
each persons individual contribution to the Companys
performance. For each named executive officer, the Committee is
provided a compensation recommendation for target TDC as well as
information regarding historical TDC, the individuals
experience, current performance and other subjective factors.
The Manager also provides recommendations for the performance
metrics to be utilized in the incentive compensation programs,
the appropriate performance targets and an analysis of whether
such performance targets have been achieved (including
recommended adjustments). Further, the Manager provides a
general, subjective assessment of each member of senior
management to assist the Committee in determining compensation,
including the allocation of the earned annual bonus pool of
senior management. The Committee retains the discretion to
modify the recommendations of the Manager and reviews such
recommendations for their reasonableness based on the
Companys compensation philosophy and related
considerations.
The Company and the Committee together set the meeting dates and
agendas for Committee meetings, and Robert Taubman is invited
regularly to attend such meetings. Mr. Reese is invited to
attend certain meetings as appropriate. The Committee also meets
regularly in executive session outside the presence of
management to discuss compensation issues generally, as well as
to review the performance of and determine the compensation of
Robert Taubman. The Companys legal advisors, human
resources department and corporate accounting department support
the Committee in its work in developing and administering the
Companys compensation plans and programs.
Third-Party Consultants. The Committee
re-engaged Towers Watson as its compensation consultant for 2010
with respect to the Companys senior management
compensation program. The Committee believes it is appropriate
to obtain a new peer group study relating to the target TDC of
senior management at least every other year to ensure the
Committee understands and assesses current market conditions,
and the Committee has benchmarked target TDC as a result of such
market data in certain years. In addition, proxy statement data
and information on material compensation trends is obtained
annually with respect to the named executive officers to provide
a general understanding of current compensation practices, but
such information is not used for benchmarking purposes.
With respect to the 2010 compensation program for named
executive officers, Towers Watson reviewed with the Committee
best practices and market trends in compensation
throughout the year, proxy compensation data in December 2009
(based on 2009 proxy statements, which included 2008
compensation data of two comparator groups, six regional mall
REITs and the 32-REIT peer group), and detailed survey
compensation data for the 32-REIT peer group in March 2010.
However, the Committee did not benchmark the target TDC for the
named executive officers in 2010. Towers Watson also reviewed
its assessment of the executive stock ownership guidelines in
March 2010.
31
Timing of
Compensation Determinations of TDC
The following table sets forth the timing of the
Committees compensation determinations for named executive
officers with respect to TDC for 2010.
|
|
|
|
|
Element of
|
|
|
|
|
Compensation
|
|
Meeting Date
|
|
Review and Approval Steps
|
|
Base salary
|
|
March 2010
|
|
Approved base salary, effective April 2010.
|
|
|
|
|
|
Annual bonus plan
|
|
December 2009
|
|
Approved preliminary financial performance goal of Company and
cash bonus payment formula.
|
|
|
|
|
|
|
|
March 2010
|
|
Approved financial performance goal of Company and cash bonus
payment formula. Approved cash bonus targets (as percentage of
base salary).
|
|
|
|
|
|
|
|
December 2010
|
|
Reviewed preliminary achievement of financial performance goal.
Discussion of adjustments to actual financial results for
unusual or non-recurring items in accordance with plan.
|
|
|
|
|
|
|
|
March 2011
|
|
Approved adjustment(s) in actual financial performance. Reviewed
achievement of financial performance goal, as adjusted. Utilized
Committee discretion to establish aggregate bonus pool.
Allocated cash bonus pool of senior management among members of
senior management based on target bonus and subjective factors.
|
|
|
|
|
|
Long-term incentive program
|
|
March 2009
|
|
Approved dollar value of target awards, subject to promotions
and performance changes through December 31, 2009.
|
|
|
|
|
|
|
|
March 2010
|
|
Approved long-term incentive program. Determined performance
goal for performance share units.
|
|
|
|
|
|
|
|
May 2010
|
|
Following shareholder approval of additional shares authorized
under 2008 Omnibus Plan, granted restricted share units and
performance share units.
|
The Committee also reviews and proposes changes to
post-termination benefits, perquisites and other compensation
matters as it deems appropriate. There were no changes to
post-termination benefits or perquisites for the 2010
compensation program for named executive officers.
2010
Compensation Determinations
Base
Salary
The base salaries of named executive officers are reviewed on an
annual basis, as well as at the time of a promotion or other
change in responsibilities. Merit increases normally take effect
in early April.
As noted previously, the Committee determined to increase base
salaries by 3% over 2009 levels, which was commensurate with the
overall average wage increase of 3% provided to the
Companys salaried employees. The following table sets
forth the base salaries approved for the named executive
officers in 2009 and 2010.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2010
|
Name
|
|
($)
|
|
($)
|
|
Robert S. Taubman
|
|
|
677,625
|
|
|
|
697,954
|
|
Lisa A. Payne
|
|
|
547,313
|
|
|
|
563,732
|
|
William S. Taubman
|
|
|
521,250
|
|
|
|
536,888
|
|
David T. Weinert
|
|
|
364,875
|
|
|
|
375,821
|
|
Stephen J. Kieras
|
|
|
328,388
|
|
|
|
338,240
|
|
32
Annual
Bonus Plan
The target bonus for each member of senior management is
calculated based on a percentage of each persons base
salary. The Committee then establishes the target cash bonus
pool for senior management, which consists of the aggregate
target cash bonuses of each member of senior management. Upon
the Committees approval of any adjustments to reported
financial measures for purposes of determining the cash bonus
pool, the Committees pre-approved payment formula
generally determines the size of the earned cash bonus pool as a
percentage of the target pool, subject to Committee discretion.
Cash bonuses earned by each member of senior management are
determined by the Committee upon its allocation of the earned
cash bonus pool for senior management based on the
Committees subjective analysis of an individuals
performance and other factors it deems relevant.
The annual bonus plan is predicated on the Companys
satisfaction of one or more annual performance measures. Target
performance measures are established based upon the
Companys operating goals and competitive pressures, the
anticipated economic climate (including interest rates) and
other budgetary risks and opportunities. In the 2010 annual
bonus plan, the Committee continued to move to a more flexible
and subjective program due to general economic and industry
uncertainty, which made it difficult to determine the likelihood
of achieving the budget and to determine appropriate payout
levels for performance. Similar to the prior year, the 2010
annual bonus plan was subject only to the level of change in FFO
per diluted share (defined below). The Committee established the
performance targets for bonuses between 50% to 150% of the
target pool, with the Committee retaining full discretion to
determine the bonus pool outside those performance parameters.
Achievement of the 2010 budget (excluding The Pier Shops) would
result in a bonus pool of 75% of the target bonus pool. The
bonus pool quickly decreased to 50% of the target bonus pool for
performance below budget, whereas there was a more moderate rate
of increase in the bonus pool above budget to 150% of the target
bonus pool. Consistent with prior years, the Committee retained
authority to adjust reported financial measures for unusual or
nonrecurring items that impact the results in a given year
and/or that
were not contemplated when the original targets were set; the
Committee customarily utilizes this discretion as appropriate.
NAREIT defines FFO as net income (loss) computed in accordance
with generally accepted accounting principles
(GAAP), excluding gains (or losses) from
extraordinary items and sales of properties, plus real estate
related depreciation and after adjustments for unconsolidated
partnerships and joint ventures. The Company and the Committee
believe that FFO is a useful supplemental measure of operating
performance for REITs. Historical cost accounting for real
estate assets implicitly assumes that the value of real estate
assets diminishes predictably over time. Since real estate
values instead have historically risen or fallen with market
conditions, the Company and most industry investors and analysts
consider presentations of operating results that exclude
historical cost depreciation to be useful in evaluating the
operating performance of REITs. FFO is a non-GAAP measure and it
should not be considered an alternative to net income as an
indicator of the Companys operating performance, and it
does not represent cash flows from operating, investing or
financing activities as defined by GAAP. FFO as presented by the
Company is not necessarily comparable to similarly titled
measures used by other REITs due to the fact that not all REITs
use common definitions.
The following table sets forth the target annual cash bonus
approved for the named executive officers for 2009 and 2010 and
the earned annual bonus for 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Annual Bonus
|
|
|
|
|
2009 and 2010
|
|
% of 2010
|
|
Earned Annual Bonus
|
Name
|
|
($)
|
|
Base Salary
|
|
2010 ($)
|
|
Robert S. Taubman
|
|
|
635,274
|
|
|
|
91
|
|
|
|
917,685
|
|
Lisa A. Payne
|
|
|
444,692
|
|
|
|
79
|
|
|
|
744,860
|
|
William S. Taubman
|
|
|
423,516
|
|
|
|
79
|
|
|
|
709,390
|
|
David T. Weinert
|
|
|
296,461
|
|
|
|
79
|
|
|
|
533,630
|
|
Stephen J. Kieras
|
|
|
266,816
|
|
|
|
79
|
|
|
|
446,917
|
|
33
The following table sets forth the objective performance goal
for FFO per diluted share, excluding the impact of The Pier
Shops, to earn 50% to 150% of the bonus pool.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
|
|
Threshold
|
|
Company Budget
|
|
(100% bonus
|
|
Maximum
|
|
|
(50% bonus pool)
|
|
(75% of bonus pool)
|
|
pool)
|
|
(150% bonus pool)
|
|
FFO per diluted share
|
|
$
|
2.50
|
|
|
$
|
2.55
|
|
|
$
|
2.65
|
|
|
$
|
2.85
|
|
At the time such performance goal was established, the
Companys guidance for FFO per diluted shares was $2.55 to
$2.75, excluding The Pier Shops.
As described above in Executive
SummaryOverview of 2010Operating Performance and
Pay-For-Performance2010
Results and Earned Compensation, the Committee approved an
earned annual bonus pool of 167.5%. Overall, the 2010 bonus
expense for senior management was approximately
$5.0 million compared to a target bonus pool of
$3.0 million.
In March 2011, the Committee allocated the actual cash bonus
pool for senior management based on the target bonuses for each
person and its subjective determination of individual
performance. Overall, the Committee believed all senior
management was responsible for the strong 2010 performance.
However, based on Robert Taubmans recommendation, certain
members of senior management received a bonus payout in excess
of 167.5% to acknowledge extraordinary performance and Robert
Taubman received a payout of 144.5% to ensure no change to the
overall bonus pool earned by senior management. In particular,
Mr. Weinert received a bonus payout of 180% of target due
to his leadership with respect to the leasing department, whose
strong performance contributed to greater than expected
occupancy and positive net operating income in spite of the
challenging leasing environment. Ms. Payne, William Taubman
and Mr. Kieras each received a bonus payout of 167.5% of
target.
Long-Term
Incentive Program
Beginning with the equity grants made in March 2009, 50% of the
long-term incentive dollar award is converted into performance
share units, which represent a contingent number of units of
stock granted at the beginning of a specified performance cycle,
with the actual payout of units at 0% to 300% of the target
grant amount based on the Companys relative performance
against members of a comparator group with respect to total
shareholder return over a three-year period. For grants in 2010,
the Company used a comparator group consisting of companies in
the NAREIT Index. The Company utilized the full NAREIT Index to
ensure the perception of objectivity in setting such performance
measure. The performance share units will cliff vest after three
years based on the satisfaction of the performance measure. The
other 50% of the long-term incentive award is converted into
restricted share units.
The companies comprising the NAREIT Index applicable to the 2010
performance share unit grants is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agree
Realty Corporation
|
|
Federal
Realty Investment Trust
|
|
National
Retail Properties, Inc.
|
|
Simon
Property
Group, Inc.
|
|
|
|
|
Pennsylvania
Real Estate Investment
Trust
|
|
Tanger
Factory Outlet Centers,
Inc.
|
CBL &
Associates Properties,
Inc.
|
|
|
|
Ramco
Gershenson Properties
Trust
|
|
Urstadt
Biddle Properties Inc.
|
Cedar
Shopping Centers, Inc.
|
|
Inland
Real Estate Corporation
|
|
Realty
Income Corporation
|
|
Weingarten
Realty Investors
|
Developers
Diversified Realty
Corporation
|
|
Kimco
Realty Corporation
|
|
Regency
Centers Corporation
|
|
|
|
|
Kite
Realty Group Trust
|
|
Roberts
Realty Investors, Inc.
|
|
|
The Committee did not change the dollar value of the target
long-term incentive award for 2010. The number of restricted
share units and performance share units are generally determined
by dividing the dollar award by the average closing price of the
common stock for the three trading days prior to and including
the grant date. In
34
2010, the Committee delayed the actual grant of its long-term
incentive plan equity awards from its March 2, 2010 meeting
until the annual meeting on May 21, 2010 in order to
benefit from the 2008 Omnibus Plan amendment approved by
shareholders on such date. However, the number of awards were
still based on dividing the dollar award by the
three-day
average as of March 2, 2010. All restricted share units and
performance share units granted in 2010 provide for vesting on
March 1, 2013, subject to the terms of such award.
The LTIP grants for the 2010 compensation program were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
LTIP Award ($)
|
|
RSUs (#)
|
|
PSUs (#)
|
|
Robert S. Taubman
|
|
|
1,650,000
|
|
|
|
21,379
|
|
|
|
21,379
|
|
Lisa A. Payne
|
|
|
1,000,000
|
|
|
|
12,957
|
|
|
|
12,957
|
|
William S. Taubman
|
|
|
1,000,000
|
|
|
|
12,957
|
|
|
|
12,957
|
|
David T. Weinert
|
|
|
480,000
|
|
|
|
6,220
|
|
|
|
6,220
|
|
Stephen J. Kieras
|
|
|
370,000
|
|
|
|
4,794
|
|
|
|
4,794
|
|
Equity
CompensationOther Policies
Stock Ownership Guidelines. Effective
March 2010, the Committee revised the stock ownership guidelines
for senior management, which resulted in an increase in the
number of shares required to be retained. The Committee also
determined that unvested restricted stock would no longer be
counted towards satisfaction of the guidelines. The prior
guidelines were effective since March 2007.
The revised guidelines require covered employees to hold a fixed
number of shares of the Companys common stock equal to
(A) five times, in the case of the CEO, CFO and COO, and
(B) two times, in the case of all other executive officers,
their March 2010 base salary divided by $34.35, which represents
the Companys average closing stock price over the 90
trading days prior to March 1, 2010, the date of Board
approval. Covered employees generally have a six-year period to
comply with the guidelines, with the initial compliance deadline
being March 1, 2013. At the end of the compliance period,
if a covered employee does not hold the requisite amount of
shares, then the Company will pay 50% of such persons
annual cash bonus in restricted share units until the minimum
threshold is reached. The Committee will review the minimum
equity holding level and other market trends and practices on a
periodic basis. The Committee has confirmed that all employees
currently satisfy the guidelines or are making significant
progress toward the guidelines.
Timing and Pricing of Share-Based
Grants. The Committee and Company do not
coordinate the timing of share-based grants with the release of
material non-public information. The Committee generally
establishes dates for regularly scheduled meetings at least a
year in advance, and share-based grants for senior management
and other employees generally are granted at the regular
Committee meetings in the first
and/or
second quarter each year. In 2010, the Committee delayed the
actual grant of its long-term incentive plan equity awards from
its March 2, 2010 meeting until the annual meeting on
May 21, 2010 in order to benefit from the 2008 Omnibus Plan
amendment approved by shareholders on such date. However, the
number of awards were still based on dividing the dollar award
by the
three-day
average as of March 2, 2010.
In accordance with The Taubman Realty Group Limited Partnership
1992 Incentive Option Plan, as amended (the 1992 Option
Plan), and 2008 Omnibus Plan, the exercise price of an
option is the closing price of the Companys common stock
(as reported by the NYSE) on the date approved by the Committee
to be the date of grant (which date is not earlier than the date
the Committee approved such grant). The Committee is authorized
to modify, extend or renew outstanding options, or accept the
cancellation or surrender of such options, except to the extent
such actions would constitute a repricing of options without
satisfying the applicable shareholder approval requirements of
the NYSE. In particular the 1992 Option Plan and the 2008
Omnibus Plan prohibit direct repricings (lowering the exercise
price of an option) and indirect repricings (canceling an
outstanding option and granting a replacement or substitute
option with a lower exercise price, or exchanging options for
cash, other options or other awards).
Trading Limitations. In addition to the
restrictions set forth in SEC regulations, the Company has an
insider trading policy, which among other things, prohibits
directors, executive officers and other employees from engaging
in hedging or monetization transactions (such as zero-cost
collars and forward sale contracts), short sales,
35
trading in puts, calls, options or other derivative securities
for speculative purposes or to separate the financial interest
in such securities from the related voting rights with respect
to the Companys stock.
Perquisites
The Company has historically maintained a conservative approach
to providing perquisites to senior management. The available
perquisites in 2010 were primarily additional benefits related
to health programs and plans, as well as financial planning
assistance. These perquisites have been carefully selected to
ensure that there is an indirect benefit to the Company and that
the value provided to employees is not excessive.
The Manager leases a corporate plane for business use and was
reimbursed by the Taubman family (including Robert Taubman and
William Taubman) for personal use of the corporate jets. Such
persons are required to fully reimburse the Company for the
incremental cost of such use, which is the aggregate of the
following expenses related to each flight leg: total pilot
expenses (lodging, meals and transportation), fuel costs and
landing fees. Therefore, the Company has no incremental cost in
providing this benefit.
Deferred
Compensation Arrangements
The Committee believes nonqualified deferred compensation
arrangements are a useful tool to assist in tax planning and
ensure retirement income for its named executive officers.
Existing deferred compensation arrangements do not provide for
above-market or preferential earnings as defined under SEC
regulations. The Company did not enter into any new nonqualified
deferred compensation arrangements with its named executive
officers in 2010. See Nonqualified Deferred Compensation
in 2010 for information regarding the Companys
nonqualified deferred compensation arrangements existing in
2010, as well as contributions, earnings and withdrawals in 2010
and aggregate balances as of December 31, 2010.
Severance
Payments
See Potential Payments Upon Termination or
Change-in-Control
for a description of potential payments and benefits to the
named executive officers under the Companys compensation
plans and arrangements upon termination of employment or a
change of control of the Company.
Change of Control Agreements. The
Company and TRG are party to change of control agreements with
certain members of senior management, including Ms. Payne,
Mr. Weinert and Mr. Kieras. These agreements were
originally entered into in connection with a hostile takeover
bid in 2003, and the Committee believes these agreements were
instrumental in the continued success of the Company during such
period and would be instrumental in the success of the Company
in the event of any future hostile takeover bid. The Committee
believes that such agreements are in the best interests of the
Company and its shareholders to ensure the continued dedication
of such employees, notwithstanding the possibility, threat or
occurrence of a change of control. Further, it is imperative to
diminish the inevitable distraction of such employees by virtue
of the personal uncertainties and risks created by a pending or
threatened change of control, and to provide such employees with
compensation and benefits arrangements upon a change of control
that ensure that such employees compensation and benefits
expectations will be satisfied and such compensation and
benefits are competitive with those of other companies.
A fundamental feature of these agreements is that most of the
benefits have a double-trigger, which requires a
change of control and the actual or constructive termination of
employment, in this case within three years from such trigger
event. This is consistent with the purpose of the program, which
is to provide employees with a guaranteed level of financial
protection upon loss of employment. The only exceptions relate
to vesting of share-based awards, which the Committee believes
is appropriate due to the significant investment change that
would likely result from converting such shares into awards of
the surviving company. Another fundamental feature of these
agreements is the provision of a full
tax-gross
up, which reinforces the purpose of such agreements, on benefits
that exceed 110% of the limits set forth in Section 280G of
the IRC. This conditional
gross-up
ensures excise tax
gross-ups
are only provided if the amount is at least 110% of the 280G
limit, and if so, results in the full payout to applicable
employees.
36
Employment Agreements. Ms. Payne
also is party to an employment agreement with the Company,
initially entered into in 1997, that provides for specified
severance benefits. This employment agreement was entered into
in order to recruit Ms. Payne in a competitive market for
her services, and the Committee continues to believe the
potential severance benefits are consistent with its original
objectives and are within current market practices.
Policy
Regarding Retroactive Adjustments
Section 304 of the Sarbanes-Oxley Act of 2002 requires a
company to claw back certain incentive-based compensation and
stock profits of the Chief Executive Officer and Chief Financial
Officer if the company is required to prepare an accounting
restatement due to the material noncompliance of the company, as
a result of misconduct, with any financial reporting requirement
under the securities laws. The Committee does not otherwise have
a formal policy regarding whether the Committee will make
retroactive adjustments to, or attempt to recover, cash or
share-based incentive compensation granted or paid to senior
management in which the payment was predicated upon the
achievement of certain financial results that are subsequently
the subject of a restatement. The Committee intends to adopt an
appropriate recoupment policy following the approval of
applicable regulations required by the Dodd-Frank Act.
Accounting
and Tax Considerations
Deductibility
of Executive Officer Compensation
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the IRC), provides that subject to certain
exceptions (the most significant of which is performance-based
compensation), a publicly-held corporation may not deduct
compensation exceeding $1 million in any one year paid to
its chief executive officer and its three other most highly
compensated executive officers. However, the Companys
chief executive officer and all of its other executive officers
are employed by the Manager, and Section 162(m) does not
apply to the Manager because it is a partnership for federal
income tax purposes. The executive officers perform limited
services for the Company pursuant to a services agreement
between the Company and the Manager. The Committee does not
anticipate that any portion of Managers compensation
expense that may be allocable to the Company will be limited by
Section 162(m). Even if the Companys compensation
expense deduction were limited by Section 162(m), as long
as the Company continues to qualify as a real estate investment
trust under the IRC, the payment of non-deductible compensation
should not have a material adverse impact on the Company. The
2008 Omnibus Plan is designed to permit the Committee to grant
awards that qualify for purposes of satisfying the conditions of
Section 162(m).
Nonqualified
Deferred Compensation
Section 409A of the Code provides that amounts deferred
under nonqualified deferred compensation arrangements will be
included in an employees income when vested unless certain
conditions are met. If the conditions are not satisfied, amounts
subject to such arrangements will be immediately taxable and
employees will be subject to additional income tax, penalties
and a further additional income tax calculated as interest on
income taxes deferred under the arrangement. In December 2008,
the Company revised certain of its compensation agreements to
ensure that all of the Companys employment, severance and
deferred compensation arrangements satisfy the requirements of
Section 409A to allow for deferral without accelerated
taxation, penalties or interest.
Change in
Control Payments
Section 280G of the IRC disallows a companys tax
deduction for excess parachute payments, generally
defined as payments to specified persons that are contingent
upon a change of control in an amount equal to or greater than
three times the persons base amount (the five-year average
of
Form W-2
compensation). Additionally, IRC Section 4999 imposes a 20%
excise tax on any person who receives excess parachute payments.
The Companys share-based plans entitle participants to
payments in connection with a change in control that may result
in excess parachute payments. Further, Ms. Payne,
Mr. Weinert and Mr. Kieras have employment agreements
and/or
change in control agreements which entitle them to payments upon
termination of their employment following a change in control of
the Company that may qualify as excess parachute payments. As
noted earlier, the change in control agreements provide a full
tax-gross up
on benefits that exceed 110% of the limits set forth in
Section 280G of the IRC.
37
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed the CD&A in this proxy statement with management,
including the Chief Executive Officer. Based on such review and
discussion, the Compensation Committee recommended to the Board
of Directors that the CD&A be included in the
Companys annual report on
Form 10-K
for the year ended December 31, 2010 and this proxy
statement for the annual meeting.
The Compensation Committee
Craig M. Hatkoff, Chairman
Jerome A. Chazen
Peter Karmanos, Jr.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or has been
an officer or an employee of the Company. In addition, during
2010, none of the Companys executive officers served on
the board of directors or compensation committee (or committee
performing equivalent functions) of any other company that had
one or more executive officers serving on the Board or
Compensation Committee.
38
Named
Executive Officer Compensation Tables
Summary
Compensation Table
The table below summarizes the total compensation paid or earned
by the named executive officers in 2010, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Taubman
|
|
|
2010
|
|
|
|
697,954
|
|
|
|
|
|
|
|
2,114,597
|
|
|
|
|
|
|
|
917,685
|
|
|
|
38,706
|
|
|
|
3,768,942
|
|
Chairman, President and CEO
|
|
|
2009
|
|
|
|
677,625
|
|
|
|
|
|
|
|
1,371,646
|
|
|
|
|
|
|
|
|
|
|
|
38,942
|
|
|
|
2,088,213
|
|
|
|
|
2008
|
|
|
|
677,625
|
|
|
|
|
|
|
|
1,035,894
|
|
|
|
634,460
|
|
|
|
127,055
|
|
|
|
37,304
|
|
|
|
2,512,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
2010
|
|
|
|
563,732
|
|
|
|
|
|
|
|
1,281,577
|
|
|
|
|
|
|
|
744,860
|
|
|
|
38,200
|
|
|
|
2,628,369
|
|
Vice Chairman and CFO
|
|
|
2009
|
|
|
|
547,313
|
|
|
|
|
|
|
|
831,302
|
|
|
|
585,684
|
|
|
|
|
|
|
|
36,373
|
|
|
|
2,000,672
|
|
|
|
|
2008
|
|
|
|
547,313
|
|
|
|
|
|
|
|
606,534
|
|
|
|
371,482
|
|
|
|
195,664
|
|
|
|
38,304
|
|
|
|
1,759,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
|
2010
|
|
|
|
536,888
|
|
|
|
|
|
|
|
1,281,577
|
|
|
|
|
|
|
|
709,390
|
|
|
|
48,706
|
|
|
|
2,576,561
|
|
Chief Operating Officer
|
|
|
2009
|
|
|
|
521,250
|
|
|
|
|
|
|
|
831,302
|
|
|
|
|
|
|
|
|
|
|
|
28,942
|
|
|
|
1,381,494
|
|
|
|
|
2008
|
|
|
|
521,250
|
|
|
|
|
|
|
|
606,534
|
|
|
|
371,482
|
|
|
|
84,703
|
|
|
|
27,304
|
|
|
|
1,611,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
2010
|
|
|
|
375,821
|
|
|
|
|
|
|
|
615,220
|
|
|
|
|
|
|
|
533,630
|
|
|
|
29,706
|
|
|
|
1,554,377
|
|
Senior Vice President,
|
|
|
2009
|
|
|
|
364,875
|
|
|
|
|
|
|
|
399,032
|
|
|
|
281,128
|
|
|
|
74,116
|
|
|
|
29,942
|
|
|
|
1,149,093
|
|
Leasing (Manager)
|
|
|
2008
|
|
|
|
364,875
|
|
|
|
|
|
|
|
288,249
|
|
|
|
176,548
|
|
|
|
130,443
|
|
|
|
28,304
|
|
|
|
988,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
|
2010
|
|
|
|
338,240
|
|
|
|
|
|
|
|
474,175
|
|
|
|
|
|
|
|
446,917
|
|
|
|
28,688
|
|
|
|
1,288,020
|
|
Senior Vice President
|
|
|
2009
|
|
|
|
328,388
|
|
|
|
|
|
|
|
307,602
|
|
|
|
216,703
|
|
|
|
66,704
|
|
|
|
27,419
|
|
|
|
946,816
|
|
Development (Manager)
|
|
|
2008
|
|
|
|
328,388
|
|
|
|
150,000
|
|
|
|
219,213
|
|
|
|
134,250
|
|
|
|
74,709
|
|
|
|
26,615
|
|
|
|
933,175
|
|
|
|
|
(1)
|
|
The amounts reported reflect the
grant date fair value (excluding the effect of estimated
forfeitures). All awards in the Stock Awards column for 2010
relate to restricted share units and performance share units
granted in 2010 under the 2008 Omnibus Plan. Valuation
assumptions used in determining the grant date fair value of
2010 awards are included in note 12 of the Companys
audited financial statements included in the Companys
Annual Report on
Form 10-K
for the year ended December 31, 2010.
|
|
|
|
The grant date fair value of the
performance share units granted in 2010 reflects the probable
outcome of the award. The relative total shareholder feature of
the performance share unit awards represents a market
condition under applicable accounting requirements. As
such, the grant date fair value of the award must reflect the
probabilities of all possible outcomes of the market condition
as they existed at that date. To that end, the Company employed
a valuation method that statistically simulated an expected
total shareholder return performance relative to the comparator
group and determined the corresponding number of the contingent
awards that would result. The single grant date fair value
computed by this valuation method is recognized by the Company
in accounting for the awards regardless of the actual future
outcome of the relative total shareholder return feature.
Therefore, there is no separate maximum grant date fair value
reported with respect to the performance share units.
|
|
|
|
The grant date fair value of each
restricted share unit granted in 2010 is calculated as the
closing price of the Companys common stock as of the grant
date, less the present value of the expected dividends during
the vesting period using a risk free interest rate of 1.1%.
|
|
(2)
|
|
The amounts earned in 2010,
consisting of payments earned under the 2010 annual bonus plan,
were approved by the Committee on March 2, 2011. Payment of
such bonus occurred on March 11, 2011.
|
|
(3)
|
|
Amounts for 2010 include $19,914
and $8,792 (or $7,874 for Mr. Kieras) contributed by the
Company to such persons account in the 401(k) Plan and
Supplemental Retirement Savings Plan, respectively. See
Nonqualified Deferred Compensation in 2010 for
additional information on the Supplemental Retirement Savings
Plan. Also includes the following perquisites: Robert Taubman
(financial planning); Ms. Payne (financial planning and
health club membership dues); William Taubman (financial
planning); Mr. Weinert (health club membership dues) and
Mr. Kieras (health club membership dues).
|
Narrative
Discussion of Summary Compensation Table
Employment
AgreementMs. Payne. See
Potential Payments Upon Termination or
Change-in-Control
for a description of the material terms of Ms. Paynes
employment agreement.
Stock Awards and Option Awards. In 2009
and 2010, stock awards were made under the revised long-term
incentive program, pursuant to which 50% of the dollar value of
the long-term incentive award was paid in restricted share units
and 50% of the dollar value of the long-term incentive award was
paid in performance share units. In 2009, the number of
restricted share units and performance share units were
determined by dividing the dollar award by the average closing
price of the common stock for the three trading days prior to
and including the grant date. In 2010, the Committee delayed the
actual grant of its long-term incentive plan equity awards from
its March 2, 2010 meeting until the annual meeting on
May 21, 2010 in order to benefit from the 2008 Omnibus Plan
amendment approved by shareholders on such date. However, the
number of awards were still based on dividing the dollar award
by the
three-day
average as of March 2, 2010.
39
Additionally in 2009, discretionary performance-based option
awards were made to Lisa Payne, David Weinert, Stephen Kieras
and certain other senior management. The options were granted at
an exercise price of $13.83, with a vesting condition requiring
the closing price of the Companys common stock to be
greater than or equal to $30 for 10 consecutive trading days
(corresponding to a stock price increase of at least 117%). The
options vested in September 2009. The performance-based option
grants to named executive officers were as follows:
|
|
|
|
|
|
|
|
|
|
|
Award
|
|
Options
|
Name
|
|
($)
|
|
(#)
|
|
Lisa A. Payne
|
|
|
1,000,000
|
|
|
|
433,840
|
|
David T. Weinert
|
|
|
480,000
|
|
|
|
208,243
|
|
Stephen J. Kieras
|
|
|
370,000
|
|
|
|
160,521
|
|
In 2008, stock and option awards were generally made under the
long-term incentive program in effect at such time, pursuant to
which two-thirds of the dollar value of the long-term incentive
award was paid in restricted share units and one-third of the
dollar value of the long-term incentive award was paid in
nonqualified options.
Non-Equity Incentive Plan
Compensation. For amounts earned in 2010, the
Committee approved an annual bonus pool of 167.5%. In March
2011, the Committee allocated the actual cash bonus pool for
senior management based on the target bonuses for each person
and its subjective determination of individual performance.
Overall, the Committee believed all senior management was
responsible for the strong 2010 performance. However, based on
Mr. Taubmans recommendation, certain members of
senior management received a bonus payout in excess of 167.5%
and Mr. Taubman received a payout of 144.5% to ensure no
change to the overall bonus pool earned by senior management. In
particular, Mr. Weinert received a bonus payout of 180% of
target due to his leadership with respect to the leasing
department, whose strong performance contributed to strong
occupancy and positive net operating income in spite of the
challenging leasing environment.
The amounts earned in 2009 and 2008 also consist of payments
earned under the annual bonus plan.
40
Grants
of Plan-Based Awards in 2010
The following table provides information about equity and
non-equity awards granted to the named executive officers in
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
Estimated Future Payouts
|
|
Number
|
|
Grant Date
|
|
|
|
|
Under Non-Equity
|
|
Under Equity
|
|
of Shares
|
|
Fair Value of
|
|
|
|
|
Incentive Plan Awards(1)
|
|
Incentive Plan Awards(2)
|
|
of Stock
|
|
Stock and
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Option
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)(3)
|
|
Awards ($)(4)
|
|
Robert S. Taubman
|
|
|
N/A
|
|
|
|
|
|
|
|
635,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,379
|
|
|
|
756,175
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,379
|
|
|
|
64,137
|
|
|
|
|
|
|
|
1,358,422
|
|
Lisa A. Payne
|
|
|
N/A
|
|
|
|
|
|
|
|
444,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,957
|
|
|
|
458,289
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,957
|
|
|
|
38,871
|
|
|
|
|
|
|
|
823,288
|
|
William S. Taubman
|
|
|
N/A
|
|
|
|
|
|
|
|
423,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,957
|
|
|
|
458,289
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,957
|
|
|
|
38,871
|
|
|
|
|
|
|
|
823,288
|
|
David T. Weinert
|
|
|
N/A
|
|
|
|
|
|
|
|
296,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,220
|
|
|
|
220,001
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,220
|
|
|
|
18,660
|
|
|
|
|
|
|
|
395,219
|
|
Stephen J. Kieras
|
|
|
N/A
|
|
|
|
|
|
|
|
266,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,794
|
|
|
|
169,564
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,794
|
|
|
|
14,382
|
|
|
|
|
|
|
|
304,611
|
|
|
|
|
(1)
|
|
The amounts in this column relate
to the 2010 annual bonus plan.
|
|
(2)
|
|
All awards in this column relate to
performance share units under the 2008 Omnibus Plan.
|
|
(3)
|
|
All awards in this column relate to
restricted share units under the 2008 Omnibus Plan.
|
|
(4)
|
|
See Note 1 to the Summary
Compensation Table for information regarding the grant date fair
value of each award. Each restricted share unit had a grant-date
fair value of $35.37. Each performance share unit had a
grant-date fair value of $63.54.
|
Narrative
Discussion of Grants of Plan-Based Awards in 2010
Annual Bonus Plan. In the 2010 annual
bonus plan, the Committee continued to move to a more flexible
and subjective program. The Committee established the
performance targets for bonuses between 50% to 150% of the
target pool, with the Committee retaining full discretion to
determine the bonus pool outside those performance parameters.
Achievement of the 2010 budget (excluding The Pier Shops) would
result in a bonus pool of 75% of the target bonus pool. The
bonus pool quickly decreased to 50% of the target bonus pool for
performance below budget, whereas there was a more moderate rate
of increase in the bonus pool above budget to 150% of the target
bonus pool. Consistent with prior years, the Committee retained
authority to adjust reported financial measures for unusual or
nonrecurring items that impact the results in a given year
and/or that
were not contemplated when the original targets were set; the
Committee customarily utilizes this discretion as appropriate.
The 2010 annual bonus plan was predicated on the Companys
satisfaction of one annual performance measure, FFO per diluted
share.
The Committee utilizes a target cash bonus pool for senior
management, which consists of the aggregate target cash bonuses
of each member of senior management. Cash bonuses earned by each
member of senior management are determined by the Committee upon
its allocation of the earned cash bonus pool for senior
management based on the Committees subjective analysis of
an individuals performance and other factors it deems
relevant. Since there was no maximum established for the target
bonus pool or the allocation of bonus amounts to individual
members of senior management, the Company has determined not to
disclose a maximum amount in the table above. Earned bonus
amounts for 2010 were approved by the Committee on March 2,
2011; such amounts are reported in the Non-Equity
Incentive Plan Compensation column of the Summary
Compensation Table.
41
Long-Term Incentive Program. 50% of the
dollar value of the long-term incentive award was paid in
restricted share units and 50% of the dollar value of the
long-term incentive award was paid in performance share units.
The number of restricted share units and performance share units
are generally determined by dividing the dollar award by the
average closing price of the common stock for the three trading
days prior to and including the grant date. In 2010, the
Committee delayed the actual grant of its long-term incentive
plan equity awards from its March 2, 2010 meeting until the
annual meeting on May 21, 2010 in order to benefit from the
2008 Omnibus Plan amendment approved by shareholders on such
date. However, the number of awards were still based on dividing
the dollar award by the
three-day
average as of March 2, 2010.
Restricted Share Unit Awards. Each
restricted share unit represents the right to receive upon
vesting one share of the Companys common stock. All
restricted share units granted in 2010 provide for vesting on
March 1, 2013, subject to the terms of such award.
Performance Share Units. Performance
share units represent a contingent number of units of stock
granted at the beginning of a specified performance cycle, with
the actual payout of units at 0% to 300% of the target grant
amount based on the Companys relative performance against
members of a comparator group with respect to total shareholder
return over a three-year period. Each performance share unit
represents the right to receive upon vesting one share of the
Companys common stock. The performance share unit grants
in 2010 utilize total shareholder return over a three-year
period beginning May 21, 2010 and ending March 1,
2013, as the performance period. For grants in 2010, the Company
used a comparator group consisting of companies in the NAREIT
Index. Total shareholder return is measured using the
30-day
average stock price before the beginning and end of the
performance period to mitigate volatility for all comparator
group members. All performance share units granted in 2010
provide for vesting on March 1, 2013, subject to the terms
of such award.
42
Outstanding
Equity Awards at December 31, 2010
The following table provides information on the current holdings
of option and stock awards by the named executive officers as of
December 31, 2010. Unless otherwise noted, all option
awards vest in one-third annual increments on March 1 of the
applicable year beginning approximately one year from the grant
date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
or Payout
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Value of
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Value of
|
|
|
|
Market
|
|
of Unearned
|
|
Unearned
|
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
Unexercised
|
|
Number
|
|
Value of
|
|
Shares,
|
|
Shares,
|
|
|
|
|
of Securities
|
|
of Securities
|
|
of Securities
|
|
|
|
|
|
In-The-Money
|
|
of Shares
|
|
Shares or
|
|
Units or
|
|
Units or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Options/
|
|
or Units
|
|
Units of
|
|
Other
|
|
Other
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
SARs at
|
|
of Stock
|
|
Stock That
|
|
Rights
|
|
Rights
|
|
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
Fiscal
|
|
That Have
|
|
Have Not
|
|
That Have
|
|
That Have
|
|
|
Grant
|
|
(#)
|
|
(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Year End
|
|
Not Vested
|
|
Vested
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
($)(1)(2)
|
|
(#)(3)
|
|
($)(1)
|
|
(#)(4)
|
|
($)(1)
|
|
Robert S. Taubman
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,954
|
|
|
|
4,944,718
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,137
|
|
|
|
3,237,636
|
|
|
|
|
03/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,369
|
|
|
|
8,499,267
|
|
|
|
|
02/27/08
|
|
|
|
45,410
|
|
|
|
22,705
|
|
|
|
|
|
|
|
50.65
|
|
|
|
02/27/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
60,376
|
|
|
|
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
79,723
|
|
|
|
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
804,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/18/05
|
|
|
|
99,202
|
|
|
|
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
1,901,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa A. Payne
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,946
|
|
|
|
2,975,594
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,871
|
|
|
|
1,962,208
|
|
|
|
|
03/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,042
|
|
|
|
5,151,080
|
|
|
|
|
02/27/08
|
|
|
|
26,588
|
|
|
|
13,294
|
|
|
|
|
|
|
|
50.65
|
|
|
|
02/27/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
34,213
|
|
|
|
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/15/06
|
|
|
|
1,491
|
|
|
|
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
15,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
14,112
|
|
|
|
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
142,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/18/05
|
|
|
|
17,673
|
|
|
|
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
338,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/04/05
|
|
|
|
33,334
|
|
|
|
|
|
|
|
33,332
|
(5)
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
1,406,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William S. Taubman
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,946
|
|
|
|
2,975,594
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,871
|
|
|
|
1,962,208
|
|
|
|
|
03/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,042
|
|
|
|
5,151,080
|
|
|
|
|
02/27/08
|
|
|
|
26,588
|
|
|
|
13,294
|
|
|
|
|
|
|
|
50.65
|
|
|
|
02/27/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
34,213
|
|
|
|
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/15/06
|
|
|
|
4,473
|
|
|
|
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
45,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
42,338
|
|
|
|
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
427,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/18/05
|
|
|
|
49,825
|
|
|
|
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
955,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Weinert
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,238
|
|
|
|
1,425,454
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,660
|
|
|
|
941,957
|
|
|
|
|
03/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,981
|
|
|
|
2,472,561
|
|
|
|
|
02/27/08
|
|
|
|
12,636
|
|
|
|
6,318
|
|
|
|
|
|
|
|
50.65
|
|
|
|
02/27/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
16,101
|
|
|
|
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/15/06
|
|
|
|
8,945
|
|
|
|
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
91,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
13,618
|
|
|
|
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
137,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/04/05
|
|
|
|
26,667
|
|
|
|
|
|
|
|
26,666
|
(5)
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
1,125,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kieras
|
|
|
Various
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,708
|
|
|
|
1,095,820
|
|
|
|
|
|
|
|
|
|
|
|
|
05/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,382
|
|
|
|
726,003
|
|
|
|
|
03/05/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,758
|
|
|
|
1,906,024
|
|
|
|
|
03/05/09
|
|
|
|
160,521
|
|
|
|
|
|
|
|
|
|
|
|
13.83
|
|
|
|
03/05/19
|
|
|
|
5,883,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/27/08
|
|
|
|
9,609
|
|
|
|
4,804
|
|
|
|
|
|
|
|
50.65
|
|
|
|
02/27/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/07/07
|
|
|
|
12,076
|
|
|
|
|
|
|
|
|
|
|
|
55.90
|
|
|
|
03/07/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/15/06
|
|
|
|
3,976
|
|
|
|
|
|
|
|
|
|
|
|
40.25
|
|
|
|
05/15/16
|
|
|
|
40,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/08/06
|
|
|
|
12,875
|
|
|
|
|
|
|
|
|
|
|
|
40.39
|
|
|
|
03/08/16
|
|
|
|
129,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/18/05
|
|
|
|
13,095
|
|
|
|
|
|
|
|
|
|
|
|
31.31
|
|
|
|
05/18/15
|
|
|
|
251,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/04/05
|
|
|
|
53,334
|
|
|
|
|
|
|
|
26,666
|
(5)
|
|
|
29.38
|
|
|
|
03/04/15
|
|
|
|
1,688,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
|
|
|
(1)
|
|
Based upon the closing price of the
Companys common stock on the NYSE on December 31,
2010 of $50.48.
|
|
(2)
|
|
Assumes the satisfaction of vesting
and performance-based conditions.
|
|
(3)
|
|
The restricted share units vest as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 1,
|
Name
|
|
2011
|
|
2012
|
|
2013
|
|
Robert S. Taubman
|
|
|
20,452
|
|
|
|
56,123
|
|
|
|
21,379
|
|
Lisa A. Payne
|
|
|
11,975
|
|
|
|
34,014
|
|
|
|
12,957
|
|
William S. Taubman
|
|
|
11,975
|
|
|
|
34,014
|
|
|
|
12,957
|
|
David T. Weinert
|
|
|
5,691
|
|
|
|
16,327
|
|
|
|
6,220
|
|
Stephen J. Kieras
|
|
|
4,328
|
|
|
|
12,586
|
|
|
|
4,794
|
|
|
|
|
(4)
|
|
Assumes the achievement of the
maximum performance goal, which would result in a 300% payout of
the target performance share unit grant.
|
|
(5)
|
|
The options vest on March 4,
2012, subject to the satisfaction of certain Company performance
criteria as of each vesting date.
|
44
Option
Exercises and Stock Vested in 2010
The following table provides information about the value
realized by the named executive officers on the vesting of stock
awards in 2010. There were no option exercises by named
executive officers in 2010.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(1)
|
|
|
Number of Shares
|
|
Value Realized on
|
|
|
Acquired on Vesting
|
|
Vesting
|
Name
|
|
(#)
|
|
($)
|
|
Robert S. Taubman
|
|
|
18,476
|
|
|
|
717,423
|
|
Lisa A. Payne
|
|
|
10,470
|
|
|
|
406,550
|
|
William S. Taubman
|
|
|
10,470
|
|
|
|
406,550
|
|
David T. Weinert
|
|
|
4,927
|
|
|
|
191,315
|
|
Stephen J. Kieras
|
|
|
3,696
|
|
|
|
143,516
|
|
|
|
|
(1)
|
|
Represents the vesting of
restricted share units. The value realized for purposes of the
table is based upon the number of shares of common stock
received upon vesting multiplied by the closing price of the
common stock on the NYSE on the vesting date. The restricted
stock units vested on March 1, 2010 and the closing price
of the common stock was $38.83.
|
45
Nonqualified
Deferred Compensation in 2010
The Company had the following nonqualified deferred compensation
arrangements in 2010 relating to the named executive officers:
Supplemental
Retirement Savings Plan
This plan provides benefits to senior management in the form of
Company contributions which would have been payable under the
tax-qualified retirement plan (The Taubman Company and Related
Entities Employee Retirement Savings Plan, the 401(k)
plan) but for the reduction in recognizable compensation
to $245,000 (as of December 31, 2010, as adjusted by the
IRS from time to time) as required by the IRC. There are no
employee contributions permitted under this plan. In addition to
any Company contributions, the Company also credits earnings at
a rate of 1% above the prime rate of return established by
JPMorgan Chase Bank, N.A. Employees are vested in these
contributions at the same time such employees vest in the
matching contributions under the Companys 401(k) plan: 10%
after the first year of service; 30% after two years of service;
50% after three years of service; 70% after four years of
service; and 100% after five years of service. No withdrawals
are permitted under the plan during employment.
Robert
Taubmans Deferral of TRG Units
Pursuant to an option deferral agreement entered into in
December 2001 among the Manager, TRG and Robert Taubman,
Mr. Taubman deferred his right to receive 871,262 TRG units
pursuant to an incentive option granted to Mr. Taubman in
1992 that he exercised in 2002. Until the Deferred TRG units are
distributed in full, Mr. Taubman receives distribution
equivalents on the Deferred TRG units in the form of cash
payments as and when TRG makes distributions on actual units
outstanding. Beginning with the earlier of
Mr. Taubmans cessation of employment for any reason
or the ten-year anniversary of the date of exercise, actual TRG
units will be paid to Mr. Taubman in ten annual
installments. In January 2011, an amendment to the option
deferral agreement extended the issuance of the deferred units
to begin in December 2017. The deferral agreement will terminate
and actual TRG units will be paid to Mr. Taubman in a
single distribution upon a change of control of TRG if followed
by Mr. Taubmans termination of employment within six
months of such change of control.
Nonqualified
Deferred Compensation in 2010
The table below provides information on the nonqualified
deferred compensation of the named executive officers in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Contributions
|
|
Contributions
|
|
Earnings
|
|
Withdrawals/
|
|
Balance at
|
|
|
|
|
in Last FY
|
|
in Last FY
|
|
in Last FY
|
|
Distributions
|
|
Last FYE
|
Name
|
|
Plan
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
Robert S. Taubman
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,792
|
|
|
|
8,745
|
|
|
|
|
|
|
|
214,909
|
|
|
|
Option Deferral Agreement
|
|
|
|
|
|
|
|
|
|
|
12,694,287
|
(5)
|
|
|
1,634,515
|
|
|
|
43,981,306
|
|
Lisa A. Payne
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,792
|
|
|
|
5,706
|
|
|
|
|
|
|
|
142,654
|
|
William S. Taubman
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,792
|
|
|
|
8,274
|
|
|
|
|
|
|
|
204,736
|
|
David T. Weinert
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
8,792
|
|
|
|
5,417
|
|
|
|
|
|
|
|
138,046
|
|
Stephen J. Kieras
|
|
Supplemental Retirement Savings Plan
|
|
|
|
|
|
|
7,874
|
|
|
|
2,027
|
|
|
|
|
|
|
|
56,111
|
|
|
|
|
(1)
|
|
The Companys contributions to
the supplemental retirement savings plan in 2010 are included in
the All Other Compensation column in the Summary
Compensation Table for 2010.
|
|
(2)
|
|
None of the earnings set forth in
the table are above-market or preferential, and therefore none
of such amounts are reflected in the Summary Compensation Table.
|
|
(3)
|
|
Withdrawals and distributions are
not reflected in the Summary Compensation Table.
|
|
(4)
|
|
For each person in this table,
$43,527 (or $38,979 for Mr. Kieras) was reported in the
Summary Compensation Table since 2006 as compensation, in
aggregate, all of which related to the Companys
contributions to the supplemental retirement savings plan.
|
|
(5)
|
|
Represents a gain due to a $14.57
per share increase in the common stock price.
|
46
Potential
Payments Upon Termination or
Change-in-Control
The following section describes and quantifies potential
payments and benefits to the named executive officers under the
Companys compensation and benefit plans and arrangements
upon termination of employment or a change of control of the
Company.
Ms. Payne is party to an employment agreement and change of
control agreement with the Company. Mr. Weinert and
Mr. Kieras each has entered into a change of control
agreement with the Company, while Robert Taubman and William
Taubman have not entered into such agreements.
Certain of the Companys compensatory plans contain
provisions regarding the acceleration of vesting and payment
upon specified termination events; see Company
Share-Based Plans below. In addition, the Committee may
authorize discretionary severance payments to its named
executive officers upon termination.
Company
Share-Based Plans
1992 Option Plan. The Committee is
authorized to accelerate the vesting of options at any time more
than six months after the grant date. The Committee is also
permitted to modify, extend or renew outstanding options, or
accept the cancellation or surrender of such options, except to
the extent such actions would constitute a repricing of options
without satisfying the applicable shareholder approval
requirements of the NYSE.
If a participants employment is terminated for cause, all
vested and unvested options will be forfeited as of the
termination date.
If a participants employment with the Company is
terminated for any reason, other than the death, disability, or
retirement of such employee or for cause, (A) the
participants options that have not vested as of such
termination date will be forfeited, and (B) the participant
shall have 90 days (or such other period in the
Committees discretion) from the termination date to
exercise vested options, subject to specified limitations.
Options held by an employee who dies while employed will vest
immediately, and the beneficiary will have 730 days to
exercise such options. Options held by an employee that becomes
disabled or retires will also vest immediately upon such trigger
event, and will be exercisable any time prior to the tenth
anniversary of the date of grant.
Options will vest immediately upon the termination (without
renewal) of the Managers services agreement with TRG, upon
any change in control of TRG, or upon TRGs permanent
dissolution.
The Taubman Company 2005 Long-Term Incentive Plan (the
2005 RSU Plan). The Committee has
the authority to accelerate vesting of restricted share units at
any time.
The restricted share units will vest immediately if a
participants employment with the Company is terminated for
death, disability or retirement of such employee, or upon a
change of control of TRG, the dissolution of TRG or the
termination (without renewal) of the Managers services
agreement with TRG. If a participants employment with the
Company is terminated for any other reason, the restricted share
units that have not vested as of such date will be forfeited.
2008 Omnibus Plan. The Committee has
the authority to accelerate vesting of any of the applicable
awards at any time.
The restricted share units will vest immediately if a
participants employment with the Company is terminated for
death, disability or retirement of such employment, or upon a
change of control of TRG. If a participants employment
with the Company is terminated for any other reason, the
restricted share units that have not vested as of such date will
be forfeited.
The performance share units will vest immediately if a
participants employment with the Company is terminated for
death, disability or retirement of such employment, or upon a
change of control of TRG. The multiplier applicable to such
vesting will be determined in the same manner as set forth in
the award, although the vesting date will be substituted by the
date of such vesting condition; provided, that, upon death,
disability or retirement, the multiplier shall be one times if
such vesting event occurs less than one year from the grant
date. If a
47
participants employment with the Company is terminated for
any other reason, the performance share units that have not
vested as of such date will be forfeited.
Deferred
Compensation Plans and Arrangements
Supplemental Retirement Savings
Plan. Each of the named executive officers
participates in the plan. No withdrawals are permitted under the
plan during employment. As soon as practicable following the
termination of employment for any reason, the employee must
elect a lump-sum payment (to be paid no earlier than one year
following such termination date) or annual installments (such
first installment to be paid no earlier than one year following
the last day of the month of termination); however, in its sole
discretion, the Company may accelerate such payment plan. The
acceleration provisions will be amended as necessary to comply
with the new tax rules applicable to nonqualified deferred
compensation arrangements. In the event the employee dies before
distribution of all amounts, the beneficiary may change the form
of payment with the consent of the Company.
Robert Taubmans Deferral of TRG
Units. Beginning with the earlier of
Mr. Taubmans cessation of employment for any reason
or the ten-year anniversary of the date of exercise, the TRG
units will be paid to Mr. Taubman in ten annual
installments. In January 2011, an amendment to the option
deferral agreement extended the issuance of the deferred units
to begin in December 2017. The deferral agreement will terminate
and the Deferred TRG units will be paid to Mr. Taubman in a
single distribution of TRG units upon a change of control of TRG
if followed by Mr. Taubmans termination of employment
within six months of such change of control.
Change of
Control Agreements
The agreements have three-year terms that automatically extend
for an additional year on each anniversary of the first day of
their terms unless a notice not to extend is given by the
Company at least 60 days prior to the renewal date. If a
change of control of the Company occurs during the term of the
agreement, then the agreements become operative for a fixed
three-year period commencing on the date of the change of
control and supersede any other employment agreement between the
Company and any of its affiliates, on the one hand, and the
executive, on the other.
Each agreement provides generally that the executives
terms and conditions of employment, including position,
location, compensation and benefits, will not be adversely
changed during the three-year period after a change of control.
In addition, each agreement also provides that upon a change of
control or a termination of employment in anticipation of a
change of control, all of the executives share-based
compensation awards that are outstanding on the date of the
change of control will vest and, in specified circumstances,
will become exercisable or payable.
After a change of control, if the executives employment is
terminated for cause, the executive will generally be entitled
to receive:
|
|
|
|
|
accrued and unpaid compensation and benefits; and
|
|
|
|
other vested benefits in effect on the date of the termination.
|
After a change of control, if the executives employment is
terminated by reason of the persons death or disability,
the executive or his or her beneficiary or estate will generally
be entitled to receive:
|
|
|
|
|
the amounts noted above for termination for cause; and
|
|
|
|
an annual cash bonus for the year in which the termination of
employment occurs, pro-rated through the date of termination.
|
After a change of control, if the executives employment is
terminated by the Company other than for cause, death or
disability, or if the executive resigns for good reason, or upon
certain terminations in connection with or in anticipation of a
change of control, the executive will generally be entitled to
receive:
|
|
|
|
|
the amounts noted above for termination by reason of death or
disability;
|
|
|
|
two and a half times the executives annual base salary and
annual cash bonus;
|
48
|
|
|
|
|
continued welfare benefits and perquisites for at least thirty
months; and
|
|
|
|
outplacement services for one year.
|
The annual cash bonus portion of this severance amount will be
based on the higher of the highest award paid to the executive
during the three years prior to the change of control or the
most recent award paid to the executive prior to the date of
termination of employment. The Company will additionally provide
each executive with a full tax
gross-up on
the above benefits to the extent such benefits exceed 110% of
the limits set forth in Section 280G of the Code.
Further, as a condition to receiving such funds and subject to
limited specified exceptions, the executive must sign an
agreement to forever release and discharge the Company and its
agents from any and all liabilities of any kind whatsoever
related in any way to the Companys employment of the
executive that the executive has ever had or may thereafter have
against the Company or its agents. The executive is also subject
to customary confidentiality provisions after the termination of
employment with the Company.
Change of Control
AgreementMs. Payne. The change of
control agreement supersedes Ms. Paynes employment
agreement upon the occurrence of a change of control.
Ms. Paynes change of control agreement is identical
to the description set forth above in Potential Payments
Upon Termination or
Change-in-ControlChange
of Control Agreements, except that to preserve an existing
benefit under her employment agreement, such agreement provides
that her termination of employment for any reason following a
Change of Control or in anticipation of a Change of Control, is
deemed to be Good Reason.
Employment
AgreementMs. Payne
In January 1997, the Company entered into a three-year agreement
with Ms. Payne regarding her employment as an Executive
Vice President and the Chief Financial Officer of the Manager
and her service to the Company in the same capacities. Beginning
on the second anniversary date of such initial term and
continuing on each anniversary date thereafter, the employment
agreement has been extended one-year (effectively resulting in a
two-year employment agreement as of each extension date). The
agreement will continue to be extended in such manner unless
either party gives sufficient notice to the contrary. In June
2005, Ms. Payne became Vice Chairman in addition to her
role as Chief Financial Officer.
The employment agreement provides for an annual base salary of
not less than $500,000, with consideration of upward adjustments
to be reviewed annually, as well as customary benefits and
perquisites. The agreement also provides for
Ms. Paynes participation in the Companys annual
bonus plan and other share-based compensation plans.
Pursuant to the agreement, if Ms. Paynes employment
with the Company is terminated for any reason other than
(1) Ms. Paynes voluntary termination of her
employment, (2) death or disability or (3) a
termination by the Company for cause, Ms. Payne shall be
entitled to receive payment of her base salary and target cash
bonus for the remaining term of her employment agreement, and
all benefits granted to Ms. Payne under the Companys
various compensation plans shall immediately vest in full.
Ms. Payne shall also receive such payments if her
termination of employment is within 90 days of any of the
following events: (w) a change of control, (x) a
substantial diminution of duties or responsibilities, (y) a
change in title without consent and (z) a change in
location of employment outside metro Detroit area. Payments
under the clause will be reduced by amounts Ms. Payne
receives from other employment during such payment period.
For any other termination, including for cause, voluntary
termination without good reason, death or disability,
Ms. Payne shall receive any amounts accrued to the date of
termination and as provided for in Companys compensatory
plans.
49
Change of
Control/Severance Payment Table
The following table estimates the potential payments and
benefits to the named executive officers upon termination of
employment or a change of control, assuming such event occurs on
December 31, 2010. These estimates do not reflect the
actual amounts that would be paid to such persons, which would
only be known at the time that they become eligible for payment
and would only be payable if the specified event occurs.
Items Not Reflected in Table. The
following items are not reflected in the table set forth below:
|
|
|
|
|
Accrued salary, cash bonus (except to the extent specifically
noted in Ms. Paynes employment agreement) and paid
time off.
|
|
|
|
Costs of COBRA or any other mandated governmental assistance
program to former employees.
|
|
|
|
Amounts outstanding under the Companys 401(k) plan.
|
|
|
|
Supplemental Retirement Savings
Plan. If such participants employment
is terminated for any reason, upon the occurrence of specified
events (including a change of control of TRG, the dissolution of
TRG or the termination (without renewal) of the Managers
services agreement with TRG), or the Company accelerates such
payment as of December 31, 2010, then the participant would
receive the aggregate balance amount relating to the plan as set
forth in the Nonqualified Deferred Compensation in
2010 table.
|
|
|
|
Robert Taubmans Deferral of TRG
Units. If Mr. Taubmans employment
is terminated for any reason as of December 31, 2010, the
Deferred TRG units will be paid to Mr. Taubman in ten
annual installments. If Mr. Taubmans employment is
terminated within six months of a change of control, then the
Deferred TRG units will be paid to Mr. Taubman in a single
distribution. The aggregate balance amount relating to this
deferral arrangement is set forth in the Nonqualified
Deferred Compensation in 2010 table.
|
Change of Control PaymentsIRC Section 280G
Valuation. IRC Section 280G imposes tax
sanctions for payments made by the Company that are contingent
upon a change of control and equal to or greater than three
times an executives most recent five-year average annual
taxable compensation (the base amount). If tax
sanctions apply, all payments above the base amount become
subject to a 20% excise tax (paid by the executive) and are
ineligible for a tax deduction by the Company. Key assumptions
of the analysis include:
|
|
|
|
|
Change of control and termination of employment occurs as of
December 31, 2010; and
|
|
|
|
The only applicable payments are cash severance (2.5x salary
plus annual cash bonus, with the cash bonus being the highest
annual cash bonus earned in the prior three years), welfare
benefits (10% of base salary), one year of outplacement services
(20% of base salary), and accelerated vesting of options,
restricted share units and performance share units.
|
Other Notes Applicable to Table.
|
|
|
|
|
The 1992 Option Plan, 2005 RSU Plan and 2008 Omnibus Plan
provide for the acceleration of vesting of share-based awards
upon retirement, death, disability or a change of control. In
addition, for Ms. Payne, such share-based awards will vest
upon a termination by the Company without cause. The table
reflects the intrinsic value of such acceleration, which is
(A) for each unvested option, $50.48 less the exercise
price, (B) for each unvested restricted share unit, $50.48,
and (C) for each performance share unit, (i) in the
case of death, disability or retirement, $50.48 per performance
share unit (1x multiplier) for 2010 awards, and $50.48
multiplied by 2.16 per performance share unit (the multiplier as
of December 31, 2010 for the 2009 awards) for the 2009
awards and (ii) in the case of a change of control and for
Ms. Payne upon a termination by the Company without cause,
$50.48 multiplied by 2.28 per performance share unit (the
multiplier based on current performance through
December 31, 2010 for the 2010 awards) or 2.16 per
performance share unit (the multiplier based on current
performance through December 31, 2010 for the 2009 awards).
$50.48 represents the closing price on the NYSE on
December 31, 2010. The table does not reflect the intrinsic
value of vested options.
|
50
|
|
|
|
|
The Committee has discretion to accelerate the vesting of
options (six months after the grant date), restricted share unit
and performance share unit awards to the extent not expressly
set forth above. The table assumes the Committee does not
utilize such discretion.
|
|
|
|
For a termination following a change of control, the table below
assumes such termination is other than for cause, death or
disability, or due to the executive resigning for good reason,
or upon certain terminations in connection with or in
anticipation of a change of control.
|
|
|
|
None of the named executive officers are eligible for retirement
and therefore termination due to retirement is not included in
the table below.
|
|
|
|
Life insurance amounts only reflect policies paid for by the
Company.
|
|
|
|
The table assumes a disability is of a long-term
nature, which triggers vesting of share-based awards. Disability
payments are shown on an annual basis.
|
51
Change
of Control and Severance Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Share-
|
|
|
|
|
|
Life
|
|
|
Annual
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Miscellaneous
|
|
|
Based
|
|
|
|
|
|
Insurance
|
|
|
Disability
|
|
|
280G Tax
|
|
|
|
|
|
|
Severance ($)
|
|
|
Benefits ($)(1)
|
|
|
Awards ($)
|
|
|
Dividends ($)
|
|
|
Proceeds ($)
|
|
|
Benefits ($)
|
|
|
Gross Up ($)
|
|
|
Total ($)(5)
|
|
|
Robert S. Taubman(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
12,143,402
|
|
|
|
106,062
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
13,649,464
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
12,143,402
|
|
|
|
106,062
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
12,609,464
|
|
Change of control
|
|
|
|
|
|
|
|
|
|
|
13,524,793
|
|
|
|
106,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,630,855
|
|
Lisa A. Payne(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without cause
|
|
|
1,453,116
|
|
|
|
|
|
|
|
8,878,955
|
|
|
|
62,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,394,172
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
8,041,746
|
|
|
|
62,101
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
9,503,847
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
8,041,746
|
|
|
|
62,101
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
8,463,847
|
|
Change of control
|
|
|
4,016,340
|
|
|
|
56,000
|
|
|
|
8,878,955
|
|
|
|
62,101
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
13,013,396
|
|
William S. Taubman(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
7,338,441
|
|
|
|
62,101
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
8,800,542
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
7,338,441
|
|
|
|
62,101
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
7,760,542
|
|
Change of control
|
|
|
|
|
|
|
|
|
|
|
8,175,649
|
|
|
|
62,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,237,750
|
|
David T. Weinert(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
4,082,337
|
|
|
|
29,513
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
5,511,850
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
4,082,337
|
|
|
|
29,513
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
4,471,850
|
|
Change of control
|
|
|
2,807,258
|
|
|
|
56,000
|
|
|
|
4,484,238
|
|
|
|
29,513
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
7,377,009
|
|
Stephen J. Kieras(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
3,272,812
|
|
|
|
22,445
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
4,695,257
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
3,272,812
|
|
|
|
22,445
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
3,655,257
|
|
Change of control
|
|
|
2,409,810
|
|
|
|
56,000
|
|
|
|
3,672,573
|
|
|
|
22,445
|
|
|
|
|
|
|
|
|
|
|
|
1,380,407
|
(4)
|
|
|
7,541,235
|
|
|
|
|
(1)
|
|
Amount includes the value of
continuing health and welfare benefits for 30 months after
December 31, 2010 and outplacement services for one year
after December 31, 2010.
|
|
(2)
|
|
Except as specified in
Items Not Reflected in Table, such
person does not receive any additional payments if (A) he
voluntarily terminates his employment, or (B) his
employment is terminated by the Company with or without cause.
|
|
(3)
|
|
Except as specified in
Items Not Reflected in Table, she
does not receive any additional payments if (A) she
voluntarily terminates such employment, or (B) her
employment is terminated by the Company with cause.
|
|
(4)
|
|
Ms. Payne, Mr. Weinert
and Mr. Kieras each are eligible for a 280G tax gross up.
No such payment would have been necessary upon a change of
control as of December 31, 2010 for Ms. Payne and
Mr. Weinert.
|
|
(5)
|
|
For terminations due to disability,
the total amounts only include one year of disability benefits.
In actuality, such amount will be paid on an annual basis.
|
52
Related
Person Transactions
Policies
and Procedures
To assist the Company in complying with its disclosure
obligations and to enhance the Companys disclosure
controls, the Board approved a formal policy in December 2006
regarding related person transactions, which generally reflects
the historical process and procedures utilized by the Company on
an informal basis. A related person is a director,
officer, nominee for director or a more than 5% shareholder (of
any class of the Companys Voting Stock) since the
beginning of the Companys last completed fiscal year, and
their immediate family members. A related person transaction is
any transaction or any series of transactions in which the
Company was or is to be a participant, the amount involved
exceeds $120,000, and in which any related person had or will
have a direct or indirect material interest.
Specifically, the policy establishes a process for identifying
related persons and procedures for reviewing and approving such
related person transactions. In addition, directors and
executive officers are required to complete an annual
questionnaire in connection with the Companys proxy
statement for its annual meeting of shareholders, which includes
questions regarding related person transactions, and such
persons also are required to provide written notice to the
Companys General Counsel or outside general counsel of any
updates to such information prior to the annual meeting.
Further, the Companys financial and other departments have
established additional procedures to assist the Company in
identifying existing and potential related person transactions
and other potential conflict of interest transactions.
From January 1, 2010 through the date hereof, the
Companys related person transactions were solely with the
Taubman family and their affiliates. The Audit Committee
and/or the
independent directors of the Board reviewed such business
transactions to ensure that the Companys involvement in
such transactions were on terms comparable to those that could
be obtained in arms length dealings with an unrelated
third party and were in the best interests of the Company and
its shareholders. When necessary or appropriate, the Company has
engaged third party consultants and special counsel, and the
Board has created a special committee, to review such
transactions. While Robert Taubman and William Taubman may
participate in certain discussions regarding Company
transactions with the Taubman family and affiliates, they recuse
themselves from the approval process by the Board or Audit
Committee and do not negotiate contractual terms or control the
Companys strategies with respect to such transactions.
Related
Person Transactions
The Manager is the manager of the Sunvalley shopping center
(Sunvalley) in Contra Costa County, California, and has been the
manager since its development. TRG owns a 50% general
partnership interest in SunValley Associates, a California
general partnership, which indirectly owns the center. The other
50% partner consists of two entities owned and controlled by A.
Alfred Taubman, the Companys largest shareholder, former
Chairman of the Board and the father of Robert and William
Taubman. Sunvalleys partnership agreement names TRG as the
managing general partner and provides that so long as TRG has an
ownership interest in the property, the Manager will remain its
manager and leasing agent.
A. Alfred Taubman and certain of his affiliates receive
various management services from the Manager. For such services,
Mr. A. Taubman and affiliates paid the Manager
approximately $2.1 million in 2010.
During 2010, the Manager paid approximately $2.7 million in
rent and operating expenses for office space in the building in
which the Manager maintains its principal offices and in which
A. Taubman, Robert Taubman and William Taubman have financial
interests. The office lease, which was renewed in 2004 effective
May 1, 2005, terminates in April 2015. The lease also
provides for a five-year renewal option at the end of the term.
Effective May 1, 2005, the first year annual rent was
$1.4 million, the second to fifth years rent is
$2.4 million per year and the sixth to tenth years
rent is $2.6 million per year.
The Taubman Asset Group, an entity which manages the personal
assets of, and provides administrative services to, the Taubman
family, including A. Alfred Taubman (collectively, the
Taubman Family), utilize a portion of the
Managers Bloomfield Hills, Michigan offices and a portion
of the Managers New York offices. For
53
the use of the office space, they paid the Manager approximately
$337,000 in 2010, representing their pro rata share of the total
occupancy costs. In addition, employees of the Taubman Asset
Group, Mr. A. Taubman and certain employees of members of
the Taubman Family and other affiliated companies of the Taubman
Family were enrolled in the benefit program of the Manager. For
participation in the Managers benefit program,
participants paid the Manager approximately $886,000 in 2010,
representing 100% reimbursement of the costs associated with
their employees participation in the benefit program plus
a 15% administrative fee. Offsetting this expense is a $118,000
refund paid by the Manager due to a health and dental surplus as
a result of lower claims. This refund was calculated based on
the participants share of participating employees in the
benefit program.
The Manager leases a corporate plane for business use and was
reimbursed approximately $291,000 in 2010 by the Taubman Family
for personal use of the corporate jets, representing 100% of the
incremental costs of such use. See Compensation Discussion
and Analysis2010 Compensation
DeterminationsPerquisites for information on
calculating incremental cost to the Company in respect of
corporate jet use.
At the time of the Companys initial public offering and
its acquisition of its partnership interest in TRG, the Company
entered into an agreement (the Cash Tender Agreement) with A.
Alfred Taubman, who owns an interest in TRG, whereby he has the
annual right to tender to the Company TRG units (provided that
the aggregate value is at least $50 million) and cause the
Company to purchase the tendered interests at a purchase price
based on its market valuation on the trading date immediately
preceding the date of the tender. At Mr. A. Taubmans
election, his family may participate in tenders. The Company
will have the option to pay for these interests from available
cash, borrowed funds, or from the proceeds of an offering of
common stock. Generally, the Company expects to finance these
purchases through the sale of new shares of its stock. The
tendering partner will bear all market risk if the market price
at closing is less than the purchase price and will bear the
costs of sale. Any proceeds of the offering in excess of the
purchase price will be for the sole benefit of the Company. The
Company accounts for the Cash Tender Agreement as a freestanding
written put option. As the option put price is defined by the
current market price of the Companys stock at the time of
tender, the fair value of the written option defined by the Cash
Tender Agreement is considered to be zero. Based on a market
value at December 31, 2010 of $50.48 per common share, the
aggregate value of interests in TRG that may be tendered under
the Cash Tender Agreement was approximately $1.2 billion.
The purchase of these interests at December 31, 2010 would
have resulted in the Company owning an additional 30% interest
in TRG.
54
Audit
Committee Disclosure
The Audit Committee acts under a written charter available at
www.taubman.com under InvestingCorporate
Governance. Each of the members of the Audit Committee is
independent under the Companys Corporate Governance
Guidelines and as independence for audit committee members is
defined by the rules adopted by the SEC and the NYSE.
As described more fully in its charter, the Audit Committee of
the Board is responsible for providing independent, objective
oversight and review of the Companys accounting functions
and internal controls. Management has the primary responsibility
for the preparation, presentation and integrity of the
Companys financial statements, accounting and financial
reporting principles, internal controls and compliance with
applicable laws and regulations. KPMG, the Companys
independent registered public accounting firm, is responsible
for performing an independent audit of the Companys
consolidated financial statements and the effectiveness of the
Companys internal control over financial reporting in
accordance with the standards of the Public Company Accounting
Oversight Board (U.S.) (PCAOB) and for expressing
their opinions thereon.
The responsibilities of the Audit Committee include engaging an
accounting firm to be the Companys independent registered
public accounting firm and establishing the terms of retention,
including compensation. Additionally, the Audit Committee
reviews and evaluates, and discusses and consults with
management, internal audit personnel and the independent
registered public accounting firm on matters which include the
following:
|
|
|
|
|
the plan for, and the independent registered public accounting
firms report on, each audit of the Companys
financial statements;
|
|
|
|
the Companys quarterly and annual financial statements
contained in reports filed with the SEC or sent to shareholders;
|
|
|
|
changes in the Companys accounting practices, principles,
controls or methodologies, or in its financial statements;
|
|
|
|
significant developments in accounting rules;
|
|
|
|
the adequacy of the Companys internal accounting controls,
and accounting, financial and auditing personnel; and
|
|
|
|
the continued independence of the Companys independent
registered public accounting firm and the monitoring of any
engagement of the independent registered public accounting firm
to provide non-audit services.
|
Pre-Approval
Policies and Procedures for Audit and Non-Audit
Services
The Audit Committee has developed policies and procedures
concerning its pre-approval of the performance of audit and
non-audit services. These policies and procedures provide that
the Audit Committee must pre-approve all audit and permitted
non-audit services (including the fees and terms thereof) to be
performed for the Company. If a product or service arises that
was not already pre-approved, the Audit Committee has delegated
to the Chairman of the Audit Committee the authority to consider
and pre-approve such services between quarterly meetings of the
Audit Committee. In pre-approving all audit services and
permitted non-audit services, the Audit Committee or a delegated
member must consider whether the provision of the permitted
non-audit services is consistent with maintaining the
independence of the Companys independent registered public
accounting firm. Any interim approvals granted by the Chairman
of the Audit Committee are reported to the entire Audit
Committee at its next regularly scheduled meeting.
Fees of
the Independent Registered Public Accounting Firm
The following table sets forth the fees the Company was billed
for audit and other services provided by KPMG in 2010 and 2009.
All of such services were approved in conformity with the
pre-approval policies and procedures described above. The Audit
Committee, based on its reviews and discussions with management
and
55
KPMG noted above, determined that the provision of these
services was compatible with maintaining KPMGs
independence.
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
($)
|
|
|
($)
|
|
|
Audit Fees
|
|
|
1,173,600
|
|
|
|
1,266,476
|
|
Audit-Related
|
|
|
20,500
|
|
|
|
20,000
|
|
Tax Fees
|
|
|
11,309
|
|
|
|
8,380
|
|
Other Fees
|
|
|
169,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
|
1,374,545
|
|
|
|
1,294,856
|
|
Audit Fees. Audit fees relate to
professional services rendered by KPMG for the audits of the
Companys annual financial statements and the
Companys internal control over financial reporting, review
of the financial statements included in the Companys
quarterly reports on
Form 10-Q
and services that are normally provided by the accountant in
connection with these filings. The table includes $631,100 and
$643,750 in 2010 and 2009, respectively, related to individual
shopping center audit reports.
Audit-Related Fees. Audit-related fees
relate to assurance and related services by KPMG that are
reasonably related to the performance of the audit or review of
the Companys financial statements. In 2010 and 2009, these
audit related services primarily consisted of an audit of an
employee benefit plan.
Tax Fees. Tax fees in 2010 and 2009
relate to tax consulting and compliance services for certain tax
filings.
Other Fees. Other fees in 2010 relate
to advisory services regarding an analysis of enterprise risk
management.
Report
Of The Audit Committee
In connection with the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010, and the consolidated
financial statements to be included therein, the Audit Committee
has:
(1) reviewed and discussed the audited consolidated
financial statements with management;
(2) discussed with KPMG, the Companys independent
registered public accounting firm, the matters required to be
discussed by the Statement on Auditing Standards No. 61, as
amended; and
(3) received the written disclosures and letter from KPMG
required by the applicable requirements of the PCAOB regarding
KPMGs communications with the Audit Committee concerning
independence, and has discussed with KPMG its independence with
respect to the Company.
Based upon these reviews and discussions, the Audit Committee
recommended to the Board that the Companys audited
financial statements be included in the Annual Report on
Form 10-K
for the year ended December 31, 2010 filed with the SEC.
The Audit Committee
Jerome A. Chazen, Chairman
William U. Parfet
Ronald W. Tysoe
56
Proposal 2
Ratification of Appointment of Independent Registered Public
Accounting Firm For 2011
Although shareholder ratification of the appointment is not
required by law and is not binding on the Company, the Audit
Committee will take the appointment of KPMG under advisement if
such appointment is not ratified by the affirmative vote of
two-thirds of the shares of Voting Stock entitled to vote on the
record date. KPMG has served as the Companys independent
registered public accounting firm since 2004, and the
appointment of KPMG in such years was ratified by the
Companys shareholders at the respective annual meetings.
See Audit Committee Disclosure for a description of
fees in 2010 and 2009 and other matters related to KPMGs
provision of services to the Company.
The Company expects that representatives of KPMG will be present
at the annual meeting and will be available to respond to
appropriate questions. Such representatives will also have an
opportunity to make a statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE RATIFICATION OF KPMG AS THE COMPANYS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR
ENDING DECEMBER 31, 2011.
57
Proposal 3
Advisory Vote on Named Executive Officer Compensation
Our Board of Directors proposes that shareholders provide
advisory (non-binding) approval of the compensation of our named
executive officers, as disclosed in this proxy statement in
accordance with the SECs rules (commonly known as a
say-on-pay
proposal). We recognize the interest our shareholders have in
the compensation of our executives and we are providing this
advisory proposal in recognition of that interest and as
required by the recently enacted Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010, or the Dodd-Frank Act.
As described in detail under the heading Compensation
Discussion and Analysis, our named executive officer
compensation program is designed to attract, motivate, and
retain our named executive officers, who are critical to our
success, and ensure alignment of such persons with shareholders.
Under this program, our named executive officers are rewarded
for their service to the Company, the achievement of specific
performance goals and the realization of increased shareholder
value. We believe our executive officer compensation programs
also are structured appropriately to support our Company and
business objectives, as well as to support our culture. The
Compensation Committee regularly reviews the compensation
programs for our named executive officers to ensure the
fulfillment of our compensation philosophy and goals.
Please read the Compensation Discussion and
Analysis, beginning on page 25, and the Named
Executive Officer Compensation Tables, beginning on
page 39, for additional details about our named executive
officer compensation program, including information about the
target and earned compensation of our named executive officers
in 2010.
We are asking our shareholders to indicate their support for our
named executive officer compensation as described in this proxy
statement. This vote is not intended to address any specific
item of compensation, but rather the overall compensation of our
named executive officers and the philosophy, policies and
practices described in this proxy statement. Accordingly, we
will ask our shareholders to vote FOR the following
resolution at the Annual Meeting:
RESOLVED, that the Companys shareholders approve, on
an advisory basis, the compensation of the named executive
officers, as disclosed in the Companys Proxy Statement for
the 2011 Annual Meeting of Shareholders pursuant to the
compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis,
the Summary Compensation Table and the other related tables and
disclosure.
The
say-on-pay
vote is advisory, and therefore not binding on the Company, the
Compensation Committee or our Board. We value the opinions of
our shareholders and to the extent there is any significant vote
against the named executive officer compensation as disclosed in
this proxy statement, we will consider our shareholders
concerns and the Compensation Committee will evaluate whether
any actions are necessary to address those concerns.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS
DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION
DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE
COMMISSION.
58
Proposal 4
Advisory Vote on the Frequency of an Advisory Vote on Named
Executive Officer Compensation
The Dodd-Frank Act also enables our shareholders to indicate how
frequently we should seek an advisory vote on the compensation
of our named executive officers, as disclosed pursuant to the
SECs compensation disclosure rules, such as
Proposal 3 included on page 58 of this proxy
statement. By voting on this Proposal No. 4,
shareholders may indicate whether they would prefer an advisory
vote be held on named executive officer compensation once every
one, two, or three years.
After careful consideration, the Board recommends that future
advisory votes on executive compensation occur every three years
(triennially). We believe that this frequency is appropriate for
a number of reasons, including:
|
|
|
|
|
our compensation programs do not change significantly from
year-to-year
and we seek to be consistent;
|
|
|
|
we believe our compensation program for named executive officers
does not contain any significant risks that might be of concern
to our shareholders, as confirmed by a review performed by the
Compensation Committee together with management;
|
|
|
|
a longer frequency is consistent with long-term compensation
objectives to reward and incentivize long-term performance, as
well as the performance and vesting periods for our long-term
incentive awards; and
|
|
|
|
we believe that a triennial advisory vote on executive
compensation reflects the appropriate time frame for our
Compensation Committee and the Board to evaluate the results of
the most recent advisory vote on executive compensation, to
discuss the implications of that vote with shareholders to the
extent needed, to develop and implement any adjustments to our
executive compensation programs that may be appropriate in light
of a past advisory vote on executive compensation, and for
shareholders to see and evaluate the Compensation
Committees actions in context. In this regard, because the
advisory vote on executive compensation occurs after we have
already implemented our executive compensation programs for the
current year, and because the different elements of compensation
are designed to operate in an integrated manner and to
complement one another, we expect that in certain cases it may
not be appropriate or feasible to fully address and respond to
any one years advisory vote on executive compensation by
the time of the following years annual meeting of
shareholders.
|
For the foregoing reasons, we encourage our shareholders to
evaluate our executive compensation programs over a multi-year
horizon and to review our named executive officers
compensation over the past three fiscal years.
The Board is aware of and took into account views that some have
expressed in support of conducting an annual advisory vote on
executive compensation. We are aware that some shareholders
believe that annual advisory votes will enhance or reinforce
accountability. However, we have in the past been, and will in
the future continue to be, proactively engaged with our
shareholders on a number of topics and in a number of forums.
Thus, we view the advisory vote on executive compensation as an
additional, but not exclusive, opportunity for our shareholders
to communicate with us regarding their views on the
Companys executive compensation programs. In addition,
because our executive compensation programs have typically not
changed materially from
year-to-year
and are designed to operate over the long-term and to enhance
long-term performance, we are concerned that an annual advisory
vote on executive compensation could lead to a near-term
perspective inappropriately bearing on our executive
compensation programs. Finally, although we believe that holding
an advisory vote on executive compensation every three years
will reflect the right balance of considerations in the normal
course, we will periodically reassess that view and can provide
for an advisory vote on executive compensation on a more
frequent basis if changes in our compensation programs or other
circumstances suggest that such a vote would be appropriate.
59
Shareholders are not voting to approve or disapprove the
Boards recommendation. You may cast your vote on your
preferred voting frequency by choosing the option of one year,
two years, three years or abstain. This advisory vote on the
frequency of future advisory votes on executive compensation is
non-binding on the Board. Notwithstanding the Boards
recommendation and the outcome of the shareholder vote, the
Board may in the future decide to conduct advisory votes on a
more or less frequent basis and may vary its practice based on
factors such as discussions with shareholders and the adoption
of material changes to compensation programs.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO CONDUCT
FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
ONCE EVERY THREE YEARS.
60
Additional
Information
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys directors, its executive
officers and persons who beneficially own more than 10% of a
registered class of the Companys equity securities
(insiders) to file reports with the SEC regarding
their pecuniary interest in any of the Companys equity
securities and any changes thereto, and to furnish copies of
these reports to the Company. Based on the Companys review
of the insiders forms furnished to the Company or filed
with the SEC and representations made by the directors and
executive officers of the Company, no insider failed to file on
a timely basis a Section 16(a) report in 2010, except
Ms. Payne filed one late Form 4 with three purchase
transactions reported late relating to the acquisition of
3,500 shares of Series H preferred stock.
The Board has determined that the current members of the
Compensation Committee qualify as non-employee directors as
defined in
Rule 16b-3
of the Exchange Act.
Cost of
Proxy Solicitation
The cost of preparing, assembling and mailing the proxy material
will be paid by the Company. The Company will request brokers,
banks and other nominees to send the Notice
and/or proxy
material to, and to obtain proxies from, the beneficial owners
and will reimburse such holders for their reasonable expenses in
doing so. In addition, the Companys directors, officers
and regular employees may solicit proxies by mail, telephone,
facsimile or in person, but they will not receive any additional
compensation for such work. Further, Innisfree M&A
Incorporated has been retained to provide proxy solicitation
services for a fee not to exceed $12,500 (excluding expenses).
Presentation
of Shareholder Proposals and Nominations at 2012 Annual
Meeting
Any shareholder proposal intended to be included in the
Companys proxy statement and form of proxy for the 2012
annual meeting (pursuant to
Rule 14a-8
of the Exchange Act) must be received by the Company at 200 East
Long Lake Road, Suite 300, Bloomfield Hills, Michigan
48304-2324
by the close of business on December 21, 2011, and must
otherwise be in compliance with the requirements of the
SECs proxy rules.
Any director nomination or shareholder proposal of other
business intended to be presented for consideration at the 2012
annual meeting, but not intended to be considered for inclusion
in the Companys proxy statement and form of proxy relating
to such meeting (i.e. not pursuant to
Rule 14a-8
of the Exchange Act), must be received by the Company at the
address stated above between February 3, 2012 and the close
of business on March 2, 2012 to be considered timely.
However, if the 2012 annual meeting occurs more than
30 days before or 60 days after June 2, 2012, the
Company must receive nominations or proposals (A) not later
than the close of business on the later of the 90th day prior to
the date of the 2012 annual meeting or the 10th day following
the day on which public announcement is made of the date of the
2012 annual meeting, and (B) not earlier than the 120th day
prior to the 2012 annual meeting. See Board Matters
Committees of the Board Nominating and
Corporate Governance Committee for further information on
the advance notice provisions set forth in the By-laws.
Householding
The Company has elected to send a single copy of its annual
report and this proxy statement to any household at which two or
more shareholders reside unless one of the shareholders at such
address provides notice that he or she desires to receive
individual copies or has elected
e-mail
delivery of proxy materials. This householding
practice reduces the Companys printing and postage costs.
Shareholders may request to discontinue or re-start
householding, or to request a separate copy of the 2010 annual
report and 2011 proxy statement, as follows:
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Shareholders owning their Voting Stock through a broker, bank or
other nominee should contact such record holder
directly; and
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Shareholders of record should contact Broadridge Investor
Communications Solutions, toll-free at
1-800-542-1061,
or may write to: Broadridge Investor Communications Solutions,
Householding Department, 51 Mercedes Way, Edgewood, New York
11717.
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2010
Annual Report
The Annual Report of the Company for the year ended
December 31, 2010, including financial statements for the
three years ended December 31, 2010 audited by KPMG, LLP,
the Companys independent registered public accounting
firm, is being furnished with the proxy statement through the
Internet, via
e-mail or by
paper delivery. See About the MeetingHow can I
access the Companys proxy materials and other reports
filed with the SEC? for further information about delivery
of the 2010 annual report.
We urge you to vote promptly to save us the expense of
additional solicitation.
By Order of the Board of Directors,
Robert S. Taubman,
Chairman of the Board, President and
Chief Executive Officer
April 12, 2011
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TAUBMAN CENTERS, INC.
200 EAST LONG LAKE RD.
SUITE 300
BLOOMFIELD HILLS, MI 48304-2324 |
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VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions
and for electronic delivery of information up until
11:59 P.M. Eastern Time on May 27, 2011 for
shareholders in The Taubman Companys 401(k) Plan and
up until 11:59 P.M. Eastern Time on June 1, 2011 for
registered shareholders. Have your proxy card in hand
when you access the web site and follow the
instructions to obtain your records and to create an
electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by
Taubman Centers, Inc. in mailing proxy materials, you
can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to
vote using the Internet and, when prompted, indicate
that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on May
27, 2011 for shareholders in The Taubman Companys
401(k) Plan and up until 11:59 P.M. Eastern Time on
June 1, 2011 for registered shareholders. Have your
proxy card in hand when you call and then follow the
instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in
the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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KEEP THIS PORTION FOR YOUR
RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual nominee(s), mark For All Except and write
the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends you vote FOR the following: |
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1. |
Election
of Directors
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Nominees |
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01
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Robert S. Taubman |
02 Lisa A. Payne |
03 William U. Parfet
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The Board of Directors recommends you vote FOR proposals 2 and 3. |
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For |
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Against |
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Abstain |
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2 |
Ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the year ending December 31, 2011. |
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3 |
Advisory approval of the named executive officer compensation. |
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The Board of Directors recommends you vote 3 YEARS on the following proposal: |
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1 year |
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2 years |
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3 years |
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Abstain |
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4 |
Advisory approval on the frequency of an
advisory vote on named executive officer compensation. |
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NOTE: Election of Nominees above is for a three-year term. |
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Please sign exactly as your name(s) appear(s) hereon. When
signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners
should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate
or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Signature (Joint Owners) |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/
are available at www.proxyvote.com.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - JUNE 2, 2011
The undersigned appoints each of Robert S. Taubman and Lisa A. Payne, with full power
of substitution, to represent the undersigned at the annual meeting of shareholders of
Taubman Centers, Inc. on Thursday, June 2, 2011, and at any adjournment or postponement,
and to vote at such meeting the shares of Common Stock that the undersigned would be
entitled to vote if personally present in accordance with the following instructions and to
vote in their judgment upon all other matters that may properly come before the meeting and
any adjournment or postponement. The undersigned revokes any proxy previously given to vote
at such meeting.
EXCEPT AS SET FORTH BELOW FOR SHARES HELD IN THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
FAVOR OF ITEMS (1), (2) AND (3) AND FOR 3 YEARS ON ITEM (4) IF THIS PROXY IS PROPERLY
EXECUTED AND NO INSTRUCTION IS PROVIDED FOR SUCH ITEM(S).
This proxy also provides voting instructions for shares for which the undersigned has the
right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the
Taubman Stock Fund in The Taubman Company and Related Entities Employee Retirement Savings
Plan (the 401(k) Plan). This proxy, when properly executed, will be voted as directed. If
no direction is given to the Trustee by 11:59 P.M. Eastern Time on May 27, 2011 the 401(k)
Plans Trustee will vote shares held in the plan in the same proportion as votes received
from other participants in the 401(k) Plan.
Continued and to be signed on reverse side