SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
REGENCY CENTERS CORPORATION
(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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________
(2) Form, schedule or registration statement no.:
________________________________________________________________________
(3) Filing party:
________________________________________________________________________
(4) Date filed:
________________________________________________________________________
Preliminary Copy
Regency CENTERS Corporation
---------------
NOTICE AND PROXY STATEMENT
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 2004
TO THE HOLDERS OF COMMON STOCK:
PLEASE TAKE NOTICE that the annual meeting of shareholders of Regency
Centers Corporation will be held on Wednesday, April 28, 2004, at 11:00 A.M.,
Eastern time, in the Ft. George Room of the River Club, 35th Floor of the Modis
Building, One Independent Drive, Jacksonville, Florida.
The meeting will be held for the following purposes:
1. To elect four Class II directors to serve terms expiring at
the annual meeting of shareholders to be held in 2007 (or if
proposal 2 is approved, until the 2004 annual meeting of
shareholders) and until their successors have been elected and
qualified.
2. To consider and vote on a proposal to amend our Restated
Articles of Incorporation to eliminate the classification of
our board of directors.
3. To consider and vote on a proposal to amend our Restated
Articles of Incorporation to increase the number of authorized
shares of preferred stock to 30 million shares.
4. To consider and vote on a proposal to amend our Restated
Articles of Incorporation to delete matters of historical
interest relating to the ownership limit for Security Capital
Group Incorporated.
5. To transact such other business as may properly come before
the meeting or any adjournment.
The shareholders of record at the close of business on March 22, 2004
will be entitled to vote at the annual meeting.
We hope you will be able to attend the meeting, but in any event we
would appreciate your dating, signing and returning the enclosed proxy as
promptly as possible. You may also vote via the Internet, or by telephone, as
instructed on the enclosed proxy. If you attend the meeting, you may revoke your
proxy and vote in person.
By Order of the Board of Directors,
J. Christian Leavitt
Senior Vice President, Secretary
and Treasurer
Dated: March 29, 2004
TABLE OF CONTENTS
Page
VOTING ELECTRONICALLY OR BY TELEPHONE.........................................1
VOTING SECURITIES.............................................................2
Stock Ownership Policy for Officers and Directors....................4
PROPOSAL 1: ELECTION OF DIRECTORS............................................4
Board of Directors and Standing Committees...........................8
AUDIT COMMITTEE REPORT.......................................................10
Compensation Committee Report on Executive Compensation......................11
COMPARATIVE STOCK PERFORMANCE................................................14
EXECUTIVE COMPENSATION.......................................................15
EXECUTIVE COMPENSATION.......................................................16
CERTAIN TRANSACTIONS.........................................................19
PROPOSAL 2: PROPOSAL TO ELIMINATE CLASSIFICATION OF THE BOARD OF DIRECTORS..20
PROPOSAL 3: PROPOSAL TO INCREASE NUMBER OF AUTHORIZED SHARES OF PREFERRED
STOCK................................................................20
PROPOSAL 4: PROPOSAL TO DELETE SECURITY CAPITAL OWNERSHIP LIMIT............22
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.....................................24
OTHER MATTERS................................................................24
SHAREHOLDER PROPOSALS AND COMMUNICATIONS WITH THE BOARD OF DIRECTORS.........24
ANNUAL REPORT................................................................25
EXPENSES OF SOLICITATION.....................................................25
APPENDIX A - ...............................................................A-1
APPENDIX B - ...............................................................B-1
APPENDIX C - ...............................................................C-1
Regency Centers Corporation
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
---------------
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 28, 2004
This proxy statement and the enclosed form of proxy are first being
sent to shareholders of Regency Centers Corporation on or about March 29, 2004
in connection with the solicitation by Regency's board of directors of proxies
to be used at Regency's 2004 annual meeting of shareholders. The meeting will be
held on Wednesday, April 28, 2004, at 11:00 A.M., Eastern time, in the Ft.
George Room of the River Club, 35th Floor of the Modis Building, One Independent
Drive, Jacksonville, Florida.
The board of directors has designated Martin E. Stein, Jr., Mary Lou
Fiala and Bruce M. Johnson, and each or any of them, as proxies to vote the
shares of common stock solicited on its behalf. If you sign and return the
enclosed form of proxy, you may nevertheless revoke it at any time insofar as it
has not been exercised by (1) giving written notice to Regency's Secretary, (2)
delivering a later dated proxy, or (3) attending the meeting and voting in
person. The shares represented by your proxy will be voted unless the proxy is
mutilated or otherwise received in such form or at such time as to render it not
votable.
If the meeting is adjourned for any reason, at any subsequent
reconvening of the meeting all proxies may be voted in the same manner as the
proxies would have been voted at the original convening of the meeting (except
for any proxies that have effectively been revoked or withdrawn).
VOTING ELECTRONICALLY OR BY TELEPHONE
If your shares are registered in your own name (instead of through a
broker or other nominee), you can vote your shares on the Internet by following
the instructions at the Internet voting website at www.proxyvotenow.com. Please
carefully follow the directions on your proxy card. If you vote via the Internet
you may be required to bear costs associated with electronic access, such as
usage charges from your Internet access providers and telephone companies.
If your shares are held in an account at a brokerage firm or bank
participating in a "street name" program, you may already have been offered the
opportunity to vote using the Internet. A number of brokerage firms and banks
are participating in a program for shares held in "street name" that offers
Internet voting options.
To vote by telephone, you should dial (toll-free) 1-888-216-1308; you
will then be prompted to enter the control number printed on your proxy card and
to follow subsequent instructions.
The giving of a proxy via the Internet or by telephone will not affect
your right to vote in person should you decide to attend the annual meeting or
to change your vote electronically or by telephone.
Regency reserves the right to cancel the electronic voting or telephone
voting program at any time.
1
VOTING SECURITIES
The record of shareholders entitled to vote was taken at the close of
business on March 22, 2004. At such date, Regency had outstanding and entitled
to vote _________ shares of common stock, $.01 par value. Each share of common
stock entitles the holder to one vote. Holders of a majority of the outstanding
common stock must be present in person or represented by proxy to constitute a
quorum at the annual meeting.
The following table shows information relating to the beneficial
ownership as of March 22, 2004 of
o each person known to Regency to be the beneficial owner of more than 5%
of Regency's voting stock,
o each director and nominee,
o each of the executive officers named in the summary compensation table
elsewhere in this proxy statement, and
o all directors and executive officers as a group. Except as otherwise
indicated, the shareholders listed exercise sole voting and dispositive
power over the shares.
Amount and Nature of Shares Beneficially Owned(1)
Number of
Title of Shares Right to Percent
Name Class Owned(2) Acquire(3) of Class
---- ----- ----- ------- --------
LaSalle Investment Common 5,810,720(4) - 9.7%
Management, Inc. (4)
Stichting Pensioenfonds Common 4,561,200 - 7.6%
ABP (5)
UBS AG (6) Common 4,311,335 - 7.2%
Deutsche Bank AG(7) Common 4,069,955 - 6.8%
Wellington Management Company, Common 3,892,900 - 6.5%
LLP(8)
Morgan Stanley(9) Common 3,120,407 - 5.2%
Martin E. Stein, Jr. Common 874,647(10) 489,036 2.3%
Mary Lou Fiala Common 69,038 178,522 *
Raymond L. Bank Common 19,294 17,544 *
C. Ronald Blankenship Common - -
A. R. Carpenter Common 27,697 17,147 *
J. Dix Druce Common 19,294 17,544 *
Douglas S. Luke Common 25,857 18,465 *
John C. Schweitzer Common 12,500 22,420 *
Thomas G. Wattles Common 7,073 500
Terry N. Worrell Common 69,673(11) 16,573 *
Bruce M. Johnson Common 151,647 193,174 *
All directors and Common 1,276,720 970,925 3.7%
executive officers as a
group (a total of 11
persons)
- ------------------------
*Less than one percent
(1) Information presented in this table and related notes has been obtained
from the beneficial owner or from reports filed by the beneficial owner
with the Securities and Exchange Commission pursuant to Section 13 of
the Securities Exchange Act of 1934.
2
(2) Excludes shares that:
o are restricted stock or stock rights, or
o may be acquired through stock option exercises.
(3) Shares that can be acquired through stock option exercises through May
28, 2004. Excludes shares which may be issued upon vesting of restricted
stock or stock rights described in footnote (2) to the Summary
Compensation Table included elsewhere in this proxy.
(4) Includes the following shares which are held by LaSalle Investment
Management, Inc. ("LaSalle") and LaSalle Investment Management
(Securities), L.P. ("LIMS"). LIMS is a Maryland limited partnership, the
limited partner of which is LaSalle and the general partner of which is
LaSalle Investment Management (Securities), Inc., a Maryland corporation
and LaSalle's wholly-owned subsidiary:
367,784 shares held by LaSalle
5,442,936 shares held by LIMS
The business address of LaSalle and LIMS is 200 East Randolph Drive,
Chicago, Illinois 60601.
(5) The business address of Stichting Pensioenfonds ABP is Oude Lindestraat
70, Postbus 2889, 6401 DL Heerlen, The Kingdom of the Netherlands.
(6) The business address of UBS AG is Bahnhofstrasse 45, P. O. Box CH-8021,
Zurich, Switzerland.
(7) Includes the following shares which are held by RREEF America, L.L.C.,
Deutsche Investment Management Americas Inc. and Deutsche Bank Trust
Company Americas, each of which is a subsidiary of Deutsche Bank AG:
3,783,955 shares held by RREEF America, L.L.C.
274,000 shares held by Deutsche Investment Management Americas
Inc.
12,000 shares held by Deutsche Bank Trust Company Americas
The business address for Deutsche Bank AG is Taunusanlage 12, D-60325,
Frankfort am Main, Federal Republic of Germany.
(8) The business address for Wellington Management Company, LLP is 75 State
Street, Boston, Massachusetts 02109.
(9) The business address for Morgan Stanley is 1585 Broadway, New York, New
York 10036.
(10) Includes the following shares over which Mr. Stein is deemed to have
shared voting and investment power:
o 160,263 shares held by The Regency Group (Nevada) Limited
Partnership, the sole general partner of which is a
wholly-owned subsidiary of The Regency Group, Inc. All of the
outstanding stock of The Regency Group, Inc. is owned by The
Regency Square Group II (Nevada) Limited Partnership, the sole
general partner of which is a corporation all of the
outstanding stock of which is owned by Mr. Stein and members of
his family.
o 307,147 shares held by The Regency Group II. Mr. Stein is a
general partner of The Regency Group II and a trustee of a
trust that is also a general partner.
o 108,235 shares held by Regency Square II. Mr. Stein is a
general partner of Regency Square II and a trustee of a trust
that is also a general partner.
o 4,000 shares held for the benefit of Mr. Stein by the Wellhouse
Trust. Mr. Stein has investment power with respect to such
shares.
(11) Includes 7,500 shares held in two trusts. Mr. Worrell has investment
power over these shares.
3
Stock Ownership Policy for Officers and Directors
Our board of directors has adopted a stock ownership policy for senior
officers and outside directors in order to encourage them to focus on creating
long-term shareholder value. The policy sets stock ownership targets for
officers as a multiple of base salary. For example, the target for the chief
executive officer is five times his annual base salary. The target for outside
directors is five times their annual retainer fees (exclusive of fees for
committee service or attendance fees). The targets are to be achieved by
directors and executive officers over a five-year accumulation period. The new
stock ownership policy also requires the chief executive officer, the chief
operating officer, the chief financial officer and the board of directors:
o to retain the after-tax value of Regency shares acquired on the
exercise of stock options or on the vesting of stock awards for one
year after exercise or vesting, and
o to retain 60% of that value so long as they remain an officer or
director.
Compliance with the policy is measured by using the higher of the
trading price of the shares on the date of acquisition or the 30-day average
before the measurement date. Any options, restricted stock or stock rights
awards granted to a participant while he or she is not in compliance with these
guidelines will vest over five rather than four years or such longer period as
the compensation committee determines, in its discretion.
PROPOSAL 1: ELECTION OF DIRECTORS
Regency's Restated Articles of Incorporation divide the board of
directors into three classes, as nearly equal as possible. At the meeting, four
Class II directors will be elected to serve for a three-year term expiring at
the 2007 annual meeting (or, if proposal 2 is approved, until the 2005 annual
meeting). All directors will serve until their successors are elected and
qualified. The board of directors has nominated Martin E. Stein, Jr., Raymond L.
Bank, A. R. Carpenter and J. Dix Druce to stand for reelection as Class II
directors. All nominees are presently directors having been elected at the 2001
annual meeting of shareholders. Directors will be elected by a plurality of
votes cast by shares entitled to vote at the meeting.
Regency's board of directors has determined that Messrs. Raymond L.
Bank, C. Ronald Blankenship, A. R. Carpenter, J. Dix Druce, Douglas S. Luke,
John C. Schweitzer, Thomas G. Wattles and Terry N. Worrell, being a majority of
our directors, are independent as defined by Sections 303.1(B)(2)(a) and (3) of
the New York Stock Exchange listing standards. In determining independence, the
following commercial or charitable relationships will not be considered to be
material relationships that would impair a director's independence:
(i) if a Regency director or his or her immediate family member is an
executive officer of another company that does business with
Regency and the annual payments by Regency to the other company
are less than 1% of the annual consolidated revenues of the other
company;
(ii) if a Regency director or his or her immediate family member is an
executive officer of another company which is indebted to Regency,
or to which Regency is indebted, and the total amount of either
company's indebtedness to the other is less than 1% of the total
consolidated assets of the other company; and
4
(iii) if a Regency director serves as an officer, director or trustee of
a charitable organization, and Regency's discretionary charitable
contributions to the organization are less than 1% of that
organization's total annual charitable receipts (Regency's
automatic matching of employee charitable contributions will not
be included in the amount of Regency's contributions for this
purpose).
The board will annually review all commercial and charitable relationships
of directors and determine whether directors meet these categorical
independence tests.
During 2003, the spouse of Mr. Douglas S. Luke provided services to
Regency in connection with preparation of our annual report to shareholders. The
board considered the terms of Mrs. Luke's engagement and determined that it was
not material because of the nominal fees involved, and that Mr. Luke therefore
qualifies as independent. See "Certain Transactions" for additional information
concerning Mrs. Luke's engagement.
The board of directors has adopted a code of business conduct and
ethics for our directors, officers and employees. The text of this code of
conduct is posted on our website at www.regencycenters.com.
The accompanying proxy will be voted, if authority to do so is not
withheld, for the election as directors of each of the board's nominees. Each
nominee is presently available for election. If any nominee should become
unavailable, which is not now anticipated, the persons voting the accompanying
proxy may, in their discretion, vote for a substitute.
The board of directors of Regency recommends a vote "for" the election
of each of its nominees. Proxies solicited by the board will be so voted unless
shareholders specify in their proxies a contrary choice.
Information concerning all incumbent directors and all nominees for
director, based on data furnished by them, is set forth below. If proposal 2
eliminating classification of the board of directors is approved and
effectuated, the term of all of our directors, including the four currently
standing for reelection, will expire at our 2005 annual meeting.
MARTIN E. STEIN, JR.
Director since 1993; standing for reelection to Class II term expiring 2007.
Mr. Stein, age 51, is Chairman of the Board and Chief Executive Officer
of Regency. He served as President of Regency from its initial public offering
in October 1993 until December 31, 1998. Mr. Stein also served as President of
Regency's predecessor real estate division since 1981, and Vice President from
1976 to 1981. He is a director of Patriot Transportation Holding, Inc., a
publicly held transportation and real estate company, and Stein Mart, Inc., a
publicly held upscale discount retailer.
MARY LOU FIALA
Director since 1997; Class I term expiring 2006.
Mrs. Fiala, age 52, became President and Chief Operating Officer of
Regency in January 1999. Before joining Regency she was Managing Director -
Security Capital U.S. Realty Strategic Group from March 1997 to January 1999.
Mrs. Fiala was Senior Vice President and Director of Stores, New England -
Macy's East/ Federated Department Stores from 1994 to March 1997. From 1976 to
1994, Mrs. Fiala held various merchandising and store operations positions with
Macy's/Federated Department Stores. Mrs. Fiala is a member of the board of
trustees of the International Councel of Shopping Centers and the University of
North Florida Foundation.
5
RAYMOND L. BANK
Director since 1997; standing for reelection to Class II term expiring 2007.
Mr. Bank, age 50, has been President and Chief Operating Officer of
Merchant Development Corporation, a venture capital and buy-out firm focusing on
consumer retail, direct marketing, and service companies, since 1994. He has
also served as President of Raymond L. Bank Associates, Inc., a consulting firm
serving a diverse clientele in corporate development, retail, and direct
marketing strategies, since 1991.
C. RONALD BLANKENSHIP
Director since 2001; Class I term expiring 2006.
Mr. Blankenship, age 54, has been Co-Chairman of Verde Group since June
2003. He was Vice Chairman of Security Capital from May 1998 until June 2003. He
was Chief Operating Officer of Security Capital from 1998 to May 2002 and
Managing Director from 1991 until May 1998. Prior to June 1997, he was the
Chairman of Archstone Communities Trust. Mr. Blankenship was formerly a trustee
of ProLogis Trust, and was formerly a director of BelmontCorp, InterPark
Holdings Incorporated, Storage USA, Inc. and Macquarie Capital Partners, LLC. He
also served as Interim Chairman, Chief Executive Officer and director of
Homestead Village Incorporated from May 1999 until November 2001.
A. R. CARPENTER
Director since 1993; standing for reelection to Class II term expiring 2007.
Mr. Carpenter, age 62, was formerly Vice Chairman of CSX Corporation, a
position he held from July 1999 to February 2001. From 1962 until February 2001,
he held a variety of positions with CSX, including President and Chief Executive
Officer (from 1992 to July 1999) and Executive Vice President-Sales and
Marketing (from 1989 to 1992) of CSX Transportation, Inc. Mr. Carpenter is a
director of Florida Rock Industries, Inc. and Stein Mart, Inc.
J. DIX DRUCE, JR.
Director since 1993; standing for reelection to Class II term expiring 2007.
Mr. Druce, age 56, has been President and Chairman of the Board of
National P.E.T. Scan, LLC since June 2000. From 1988 until 2000, he served as
President and Chairman of the Board of Life Service Corp., Inc., a life
insurance management company, and President and director of American Merchants
Life Insurance Company and its parent, AML Acquisition Company, from October
1992 until the companies' sale in 2000. He was President and director (Chairman
from May 1989 to July 1991) of National Farmers Union Life Insurance Company
from 1987 to 1991, and President and director of Loyalty Life Insurance Company
and NFU Acquisition Company from 1987 to 1991. Mr. Druce is a director of
Florida Rock Industries, Inc.
DOUGLAS S. LUKE
Director since 1993; Class I term expiring 2006.
Mr. Luke, age 62, is President and Chief Executive Officer of HL
Capital, Inc., a personal management and investment company. Mr. Luke was
President and Chief Executive Officer of WLD Enterprises, Inc., a Ft.
Lauderdale, Florida-based diversified private investment and management company
with interests in securities, real estate and operating businesses from 1991 to
1998. From 1987 to 1990 he was Managing Director of Rothschild Inc./Rothschild
Ventures. He is director of MeadWestvaco Corporation, a diversified paper and
chemicals manufacturing company.
6
JOHN C. SCHWEITZER
Director since 1999; Class III term expiring 2005.
Mr. Schweitzer, age 59, was a member of Pacific Retail Trust's board of
trustees before its merger into Regency in February 1999. He is President of
Westgate Corporation and Managing Partner of Campbell Capital, Ltd., which holds
investments in real estate and venture capital operations. Mr. Schweitzer is a
trustee of Archstone Smith Communities Trust, and a director of J.P. Morgan
Chase Bank of Texas-Austin and KLRU Austin Public Television. He previously
served as a director or officer of a number of public companies and financial
institutions, including Franklin Federal Bancorp, Elgin Clock Company, El Paso
Electric Company, MBank El Paso, the Circle K Corporation, Homestead Village
Incorporated and Enerserv Products.
THOMAS G. WATTLES
Director since 2001; Class III term expiring 2005.
Mr. Wattles, age 52, has been Chairman and Chief Investment Officer of
Dividend Capital Trust, an industrial property private REIT, since March 2003
and Principal of Black Creek Group, a real estate investment management firm,
since February 2003. He served as Managing Director of Security Capital from
1991 to 2002 and as a trustee of ProLogis Trust from 1993 to May 2002. He was a
director of ProLogis' predecessor from its formation in 1991, and was
Non-Executive Chairman of ProLogis from March 1997 to May 1998. Mr. Wattles was
Co-Chairman and Chief Investment Officer of ProLogis and its former REIT manager
from November 1993 to March 1997, and director of the former REIT manager from
June 1991 to March 1997.
TERRY N. WORRELL
Director since 1999; Class I term expiring 2006.
Mr. Worrell, age 59, was a member of Pacific Retail Trust's board of
trustees before its merger into Regency in February 1999. He is a private
investor in commercial properties and other business ventures. Mr. Worrell is a
director of Crescent Real Estate Equities Company, a real estate investment
trust, NL Industries, Inc., an international producer of titanium dioxide
pigments, and Titanium Metals Corporation, a producer of titanium products. From
1974 to 1989 he was President and CEO of Sound Warehouse of Dallas, Inc. prior
to its purchase by Blockbuster Music.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act, an officer,
director or 10% shareholder must file a Form 4 reporting the acquisition or
disposition of Regency equity securities with the Securities and Exchange
Commission no later than the end of the second business day after the day the
transaction occurred unless certain exceptions apply. Transactions not reported
on Form 4 must be reported on Form 5 within 45 days after the end of the
company's fiscal year. To Regency's knowledge, based solely on a review of the
copies of these reports furnished to it and written representations that no
other reports were required, the officers, directors, and greater than 10%
beneficial owners complied with all applicable Section 16(a) filing requirements
during 2003, except as described below.
o On March 10, 2003, Martin E. Stein, Jr. made an open market sale of
7,500 shares. Through inadvertence, Mr. Stein's Form 4 reporting the
sale was filed late.
7
o On April 4, 2003, Douglas S. Luke sold 2,500 shares from his DRIP
account. Because confirmation of the sale was not received timely from
the plan administrator, Mr. Luke's Form 4 reporting the sale was filed
late.
Board of Directors and Standing Committees
The board held four regular meetings and four special meetings during
2003. All directors attended at least 75% of all meetings of the board and board
committees on which they served during 2003.
Regency's independent directors meet quarterly in conjunction with the
regular board meetings. The independent directors have elected John C.
Schweitzer as lead director. As lead director, Mr. Schweitzer presides at the
independent directors' meetings.
The board of directors has established five standing committees: an
executive committee, an audit committee, a compensation committee, a nominating
and corporate governance committee and an investment committee, which are
described below. Members of these committees are elected annually at the regular
board meeting held in conjunction with the annual shareholders' meeting.
Executive Committee. The executive committee presently is composed of
Martin E. Stein, Jr. (Chairman) or Mary Lou Fiala if Mr. Stein is unavailable
and any two other directors who qualify as "independent" directors, as defined
by the New York Stock Exchange, who are available to meet when committee action
is required. The executive committee met twice during 2003. The executive
committee is authorized by the resolutions establishing the committee to handle
ministerial matters requiring board approval. The executive committee may not
perform functions reserved under Florida law or the rules of the New York Stock
Exchange for the full board of directors and, in addition, may not declare
dividends.
Audit Committee. The audit committee, which has been established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act, presently is
composed of J. Dix Druce, Jr. (Chairman), Raymond L. Bank, and A. R. Carpenter,
all of whom are considered independent under the rules of the New York Stock
Exchange. The audit committee met seven times during 2003. The principal
responsibilities of and functions to be performed by the audit committee are
established in the audit committee charter. The audit committee charter was
adopted by the board of directors and is reviewed annually by the audit
committee. See "Audit Committee Report" for a description of the audit
committee's responsibilities.
The board of directors has determined that Messrs. Carpenter, Druce and
Raymond L. Bank are independent as defined by Sections 303.1(B)(2)(a) and (3) of
the New York Stock Exchange listing standards. Our board of directors also has
determined that Messrs. Carpenter and Druce are audit committee financial
experts.
Nominating and Corporate Governance Committee. The nominating and
corporate governance committee is presently composed of A. R. Carpenter
(Chairman), Raymond L. Bank and John C. Schweitzer. The purpose of the
nominating and corporate governance committee is:
o to assist the board in establishing criteria and qualifications for
potential board members;
8
o to identify high quality individuals who have the core competencies and
experience to become members of Regency's board and to recommend to the
board the director nominees for the next annual meeting of
shareholders;
o to establish corporate governance practices in compliance with
applicable regulatory requirements and consistent with the highest
standards, and recommend to the board the corporate governance
guidelines applicable to Regency;
o to lead the board in its annual review of the board's performance and
establish appropriate programs for director development and education;
and
o to recommend to the board director nominees for each committee.
A copy of the nominating and corporate governance committee charter is available
on our website at www.regencycenters.com. The nominating and corporate
governance committee met twice during 2003.
The nominating and corporate governance committee will consider written
recommendations from shareholders for nominees for director. Shareholders
wishing to submit names for consideration should submit the following to the
Corporate Secretary, at Regency's address set forth on page 1 of this proxy
statement:
o Biographical information about the candidate and a statement about his
or her qualifications;
o Any other information required to be disclosed about the candidate
under the Securities and Exchange Commission's proxy rules (including
the candidate's written consent to being named in the proxy statement
and to serve as a director, if nominated and elected);
o The names and addresses of the shareholder(s) recommending the
candidate for consideration and the number of shares of Regency common
stock beneficially owned by each.
Shareholders should submit written recommendations in the time frame described
under the caption "Shareholder Proposals and Communications with the Board of
Directors" below.
The committee will apply the same criteria to all candidates it
considers, including any candidates submitted by shareholders. These criteria
include independence, personal integrity, leadership skills, strategic thinking,
willingness to make a time commitment, and breadth of knowledge about matters
affecting Regency and its industry. In addition, the committee will look for
skills and experience that will complement the board's existing make-up.
The committee evaluates incumbent directors to determine whether they
should be nominated to stand for re-election, based on the types of criteria
outlined above as well as the directors' contributions to the board during their
current term. Since the committee's appointment in 2002, all nominees have been
incumbent directors. When vacancies develop, the committee will solicit input
regarding potential new candidates from a variety of sources, including existing
directors and senior management. If the committee deems it appropriate, it may
engage a third-party search firm. The committee will evaluate potential
candidates based on their biographical information and qualifications and also
may arrange personal interviews
9
of qualified candidates by one or more committee members, other board members
and senior management.
Compensation Committee. The compensation committee presently is
composed of John C. Schweitzer (Chairman), C. Ronald Blankenship, A. R.
Carpenter and Douglas S. Luke. The compensation committee held three meetings
related to reviewing 2003 annual performance and to review and approve
modifications to Regency's current executive compensation plans. This committee
has the responsibility of approving the compensation arrangements for senior
management of Regency, including annual bonus and long-term compensation. It
also recommends to the board of directors adoption of any compensation plans in
which officers and directors of Regency are eligible to participate, and makes
grants of employee stock options and other stock awards under Regency's
Long-Term Omnibus Plan.
Investment Committee. The investment committee presently is composed of
Thomas G. Wattles (Chairman), C. Ronald Blankenship and Terry N. Worrell. This
committee was formed to review and approve Regency's capital allocation
strategy, to approve investments and dispositions exceeding certain thresholds
and to review Regency's investment and disposition programs and the performance
of in-process developments. The investment committee met five times during 2003.
AUDIT COMMITTEE REPORT
The charter of the audit committee of the board of directors specifies
that the committee is responsible for providing oversight of the integrity of
Regency's financial statements, the adequacy of Regency's system of internal
controls, and the qualification, independence and performance of Regency's
independent auditors. The audit committee is composed of three directors, each
of whom is independent as defined by the New York Stock Exchange's listing
standards.
Management is responsible for the company's internal controls and
financial reporting process. The audit committee monitors management's
preparation of quarterly and annual financial reports in accordance with
accounting principles generally accepted in the USA and oversees the
implementation and maintenance of effective systems of internal and disclosure
controls. The independent auditors are responsible for performing an audit of
Regency's consolidated financial statements in accordance with auditing
standards generally accepted in the USA and issuing a report thereon. The audit
committee supervises the relationship between Regency and its independent
auditors, including making decisions about their appointment or removal,
reviewing the scope of their audit services, approving non-audit services, and
confirming their independence.
In connection with these responsibilities, the audit committee met with
management and the independent auditors seven times during 2003 to review and
discuss Regency's annual and quarterly financial statements prior to their
issuance. These meetings also included executive sessions with the independent
auditors without the presence of management. During 2003, management advised the
audit committee that each set of financial statements reviewed had been prepared
in accordance with accounting principles generally accepted in the USA. The
audit committee also discussed with the independent auditors the matters
required by Statement on Auditing Standards No. 61 (Communication with Audit
Committees) including the quality of Regency's accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements. The audit committee received written disclosures from the
independent auditors required by Independence Standards Board
10
Standard No. 1 (Independence Discussions with Audit Committees), and discussed
with the independent auditors their firm's independence.
Based upon the audit committee's review and discussions with management
and the independent auditors and its review of their representations, the audit
committee recommended that the board of directors include the audited
consolidated financial statements in Regency's annual report on Form 10-K for
the year ended December 31, 2003, to be filed with the Securities and Exchange
Commission.
J. Dix Druce, Chairman
Raymond L. Bank A. R.
Carpenter
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors is responsible for
evaluating and establishing executive compensation and other benefit plans for
Regency that attract, motivate, and retain a top notch management team and align
the interests of executives with shareholders. Part of this responsibility
includes evaluating CEO performance and determining CEO compensation.
Additionally the committee oversees company policies and practices that advance
organizational development, including those designed to achieve the most
productive engagement of the company's workforce. The committee is composed
entirely of independent directors, as defined by the New York Stock Exchange.
What is Regency's philosophy of executive compensation?
Regency's executive compensation program is incentive-based, and has
been designed to attract, motivate, and retain executives who are capable of
achieving the company's key strategic goals. The committee aligns the interest
of management with shareholders by awarding executives cash bonuses for
achieving key objectives and providing the opportunity to participate in the
appreciation in shareholder value through the granting of stock awards.
Regency's compensation philosophy is to set base salaries in a range that is
near the competitive median. Total direct compensation opportunities, including
the cash bonuses and the long-term incentives are targeted to a range near the
70th percentile for high levels of performance.
The committee evaluates and establishes the company's executive
compensation program based upon current market information, including
comparative executive compensation studies. During 2003 the committee consulted
with Deloitte & Touche to determine current market compensation of comparable
real estate investment trusts and operating companies with a market
capitalization of at least $1 billion.
What are the annual incentive components?
Base Salary. The compensation committee reviews base salaries annually.
In determining appropriate base salaries, the committee considers external
competitiveness in relation to Regency's performance and capital structure, the
roles and responsibilities of the executives, their contribution to the
company's business, an analysis of job requirements and the executives' prior
experience and accomplishments.
Annual Performance Bonus. To provide incentives to achieve key
corporate objectives, the committee makes cash bonus awards based on corporate
and individual
11
performance. Each year the committee establishes a compensation
plan that establishes target cash bonuses based on achievement of specific
financial and operating objectives for the company and those activities managed
by the executive. The primary objective is increases in funds from operations
("FFO") per share. FFO is the most widely accepted measure of performance for
REITs.
The compensation committee also gives significant consideration to the
achievement of other key financial and strategic goals, including:
* Return on equity;
* Maintenance of unsecured debt ratings;
* Growth in same property net operating income;
* Value achieved from development completions;
* Dollar amount of new development starts;
* Growth in joint ventures and third party income; and
* Total shareholder return.
Regency's philosophy is that the consistent achievement of these
objectives should, over time, result in total shareholder returns that are above
the average for shopping center REITs.
The committee does not mechanically apply the quantitative criteria
outlined above. Rather, the compensation committee uses these measures, along
with a qualitative analysis, in awarding compensation. Additionally, the
compensation committee has the discretion to increase the annual bonus in any
given year to take into account what it deems to be significant contributions,
which may not necessarily be quantifiable, to Regency's strategic objectives.
What is Regency's philosophy for long-term incentive compensation?
The committee strongly believes that providing executives with an
opportunity to increase their ownership of common stock aligns their interests
with stockholders. The company has stock ownership and retention guidelines for
senior executive officers as well as the board of directors, which are described
elsewhere in the proxy statement.
Regency grants stock rights awards to executive officers based upon
their contribution to the company's performance and achievement of specific
objectives. The shares will not be issued until vesting requirements are
satisfied. Shares issued upon vesting will be accounted for based on the fair
market value of the underlying stock on the date of grant. The amount of the
annual grant is tied to annual performance, primarily growth in FFO per share.
The compensation committee also gives consideration to the achievement of the
other key financial and strategic goals listed above.
For the senior executive officers, including the officers named in the
compensation table, a significant portion of the most recent grants vest after
eight years. However, vesting may be accelerated as a result of achieving FFO
per-share growth targets, total shareholder
12
returns or other key financial and strategic objectives. The portion of the most
recent grants that are eight-year cliff vested with an accelerated vesting
feature, ranges from a high of 50% for top management to 25% for managing
directors. The remaining stock rights awards that are not subject to the eight
year cliff-vesting term, vest at the rate of 25% per year over four years. The
number of shares issued upon vesting will be increased as though dividends that
would have been paid on these shares, had they been outstanding from the date of
the stock rights award, were reinvested annually in Regency common stock.
How Did Regency Perform in 2003?
Based on the quantitative performance criteria outlined above, Regency
achieved a high level of performance, including the following:
* 5% growth in FFO per share before the impact of changes
that were made in the definition of FFO during 2003 as
published by the National Association of Real Estate
Investment Trusts;
* a 13.7% increase in return on equity (including
construction in progress), up from 12.9% for 2002;
* maintaining Regency's unsecured debt ratings;
* a 2.74% growth in same property net operating income,
coupled with a 95% occupancy rate at December 31, 2003 and
a 9.5% rental rate growth;
* $381 million of completed or sold developments with
profits recognized of $40 million;
* $328 million of new development starts;
* execution of Regency's self-funding capital strategy
through property sales, including sales to joint ventures,
of $525 million;
* 30.6% total shareholder return.
Based on these achievements, the committee awarded to top management a
multiple of 1.25 times the target cash bonus awards and 1.5 times the target
long-term incentive awards in the form of unvested stock rights awards. These
awards resulted in less than a 2.5% increase in total direct compensation over
2002 levels. The committee also granted the executive officers named in the
compensation table, together with a small group of other senior executives, a
special cash bonus and stock rights award, based on their key role in achieving
the sale by General Electric of its $1.3 billion, 57% stake in Regency in June
2003, in a manner that was beneficial to the company. The total value of the
special awards was approximately $750,000.
How is the CEO compensated?
The committee's policies for determining the CEO's compensation are the
same as for the other top executives. As a result of 2003 performance, Mr. Stein
received a cash bonus of $619,000. Mr. Stein received stock rights awards for
46,460 shares, of which 50% have an accelerated performance-vesting feature.
These stock rights awards are subject to eight year
13
cliff - vesting that may be accelerated over four years as a result of achieving
specific targets for FFO per share growth, and other performance criteria that
may be established by the committee. The remainder of the stock rights award
grant will vest over four years at 25% per year. Mr. Stein continues to serve
under a severance and change-in-control agreement. For 2004, Mr. Stein's base
compensation was increased to $520,000, based on the fact that his 2003 base
salary of $450,000 was 28% below the peer group median of $575,000.
How is the company addressing Internal Revenue Code limits?
The compensation committee is aware of the limitations imposed by
Section 162(m) of the Internal Revenue Code on the deductibility of compensation
paid to senior executives named in the compensation table to the extent it
exceeds $1 million per executive. The law exempts compensation paid under plans
that relate compensation to performance. Although Regency's plans are designed
to relate compensation to performance, certain elements of the plans do not meet
the tax law's requirements, e.g., because they allow the compensation committee
to exercise discretion in setting compensation. The compensation committee is of
the opinion that it is better to retain discretion in determining executive
compensation. However, the compensation committee will continue to monitor the
requirements of the Internal Revenue Code to determine what actions, if any,
should be taken with respect to Section 162(m).
John C. Schweitzer, Chairman
A. R. Carpenter
Douglas S. Luke
COMPARATIVE STOCK PERFORMANCE
The graph below provides an indicator of cumulative total shareholder
returns for Regency as compared with the S&P Stock Index and the NAREIT Equity
Index, weighted by market value at each measurement point. The graph assumes
that $100 was invested on January 1, 1999 in Regency common shares and that all
dividends were reinvested by the shareholder.
14
[GRAPHIC OMITTED]
1998 1999 2000 2001 2002 2003
REGENCY CENTERS CORP. 100.00 97.99 126.80 161.02 201.23 262.88
NAREIT EQUITY INDEX 100.00 79.10 99.96 113.89 118.04 162.15
S&P 500 INDEX 100.00 121.04 110.02 96.95 75.52 97.18
15
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by
Regency for services rendered during fiscal 2003, 2002 and 2001 to Regency's
Chief Executive Officer and Regency's two other executive officers during the
year ended December 31, 2003.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------- ------------------------------
Restricted
Stock/Stock Securities SPP
Name & Principal Rights Underlying Loan All Other
Position Year Salary(1) Bonus Awards(2) Options/SARs(3) Awards(4) Compensation(5)
-------- ---- --------- ----- --------- --------------- --------- ---------------
Martin E. Stein, Jr. 2003 $450,000 $619,000 $1,857,000 241,510 $ 0 $ 10,174
Chairman and Chief 2002 $440,000 $550,000 $1,650,000 379,330 $ 0 $ 10,174
Executive Officer 2001 $425,000 $535,000 $1,485,000 31,250 $ 138,129 $ 8,991
Mary Lou Fiala 2003 $368,000 $430,000 $1,214,000 133,781 $ 0 $ 10,174
President and Chief 2002 $360,000 $382,500 $1,080,000 78,989 $ 0 $ 10,174
Operating Officer 2001 $350,000 $372,000 $1,032,742 21,733 $ 0 $ 10,052
Bruce M. Johnson 2003 $277,000 $248,000 $ 719,000 88,691 $ 0 $ 12,934
Managing Director and 2002 $271,000 $211,000 $ 542,000 158,761 $ 0 $ 12,934
Chief Financial Officer 2001 $260,000 $195,000 $ 512,450 10,784 $ 58,959 $ 10,052
- -------------------------
(1) Includes amounts deferred under the 401(k) feature of Regency's profit
sharing plan.
(2) Consists of the fair market value of stock rights awards in each of the
years of grant, based on the trading price of our common stock at the
time of grant. In the past, we have referred to the 2001 grants as
restricted stock. We refer to those grants as stock rights awards
because, for all practical purposes, they are no different. The total
number and value of stock rights held by the named executives at
December 31, 2003 are as follows:
Stock Aggregate
Rights Value
------ -----
Mr. Stein 126,548 $ 5,042,952
Mrs. Fiala 87,677 $ 3,493,916
Mr. Johnson 46,895 $ 1,868,769
In January 2004, we granted stock rights awards for an aggregate of
94,820 shares to the named executive officers based on performance in
2003. One half of these awards vest 25% per year beginning on the first
anniversary of the date of grant and the remaining half cliff vest after
eight years, but contain provisions that allow annual accelerated
vesting based upon FFO per share growth and total shareholder return in
relation to Regency's peers.
In December 2002, we granted stock rights awards for an aggregate of
104,908 shares to the named executive officers. One-third of these
awards vest 25% per year beginning on the first anniversary of the date
of grant. The remaining two-thirds cliff vest after eight years, but
contain provisions that allow annual accelerated vesting based upon FFO
per share growth and total shareholder return in relation to Regency's
peers. In addition, during 2002 Messrs. Stein and Johnson received stock
rights awards for 11,761 shares and 4,988 shares, respectively, which
vest one-third per year beginning January 1, 2003 to provide them with
the same level of benefit that they would have received for specified
forgiveness amounts on stock purchase loans that they repaid in
September 2002.
Sixty-seven percent of the stock rights awards granted for 2001 cliff
vest after eight years, but contain provisions that allow annual
accelerated vesting based upon FFO per share growth. In 2002, 18.75% of
the amounts granted for 2001 with these provisions vested. All other
stock rights awards for 2001 vest over a four-year period at the rate of
25% per year.
16
Stock rights awards earn dividend equivalent units at the same rate as
dividends paid on the common stock. The executive is entitled to these
dividend equivalents under the same vesting schedule as the related
restricted stock rights. Executives do not have voting rights on shares
subject to stock rights awards until vested.
(3) The exercise prices of stock option grants are equal to fair market
value of Regency's common stock on date of grant.
(4) Represents amounts earned by the named executive officers in the form of
loan forgiveness in accordance with the terms of the stock purchase plan
that was part of Regency's 1993 Long Term Omnibus Plan, primarily based
upon FFO per share growth and annual shareholder return. We ceased
making these types of loans after 1998 and have not originated any new
personal loans to our employees since that date. As of September 30,
2002 all participants in the stock purchase plan repaid the entire
balance of their loans outstanding.
(5) The amounts shown in this column for 2003 include the following:
Life Insurance Company Contribution to Other
Premiums 401(k)/Profit Sharing Plan Compensation
-------- -------------------------- ------------
Mr. Stein $3,174 $6,000 $1,000
Mrs. Fiala $3,174 $6,000 $1,000
Mr. Johnson $5,934 $6,000 $1,000
Stock Options. The following table sets forth information with respect
to option grants to the executive officers named in the summary compensation
table above during 2003 and the potential realizable value of such option
grants.
OPTION GRANTS DURING FISCAL 2003
% of
Number Total Options Hypothetical
of Options Granted Exercise Price Expiration Value at
Executive Officer Granted(1) during 2003 ($/share) Date Grant Date (2)
----------------- ------- ----------- --------- ---- -----------
Martin E. Stein, Jr. 25,784 1.6% $37.68 10/01/08 $ 57,499
25,243 1.6% $32.03 12/15/08 $ 56,292
70,240 4.3% $35.90 12/15/08 $ 156,634
24,406 1.5% $31.70 07/29/09 $ 54,425
11,392 0.7% $35.90 07/29/09 $ 25,403
11,132 0.7% $37.68 07/29/09 $ 24,825
12,187 0.7% $32.03 12/14/09 $ 27,178
21,645 1.3% $37.68 12/14/09 $ 48,268
32,517 2.0% $32.03 01/01/11 $ 72,513
6,964 0.4% $32.24 12/14/11 $ 15,530
Mary Lou Fiala 17,900 1.1% $32.03 12/15/08 $ 39,916
49,806 3.1% $35.90 12/15/08 $ 111,068
14,193 0.9% $32.03 07/29/09 $ 31,651
6,731 0.4% $35.90 07/29/09 $ 15,011
6,449 0.4% $37.68 07/29/09 $ 14,382
7,421 0.5% $32.03 12/14/09 $ 16,548
3,319 0.2% $37.68 12/14/09 $ 7,402
23,118 1.4% $32.03 01/01/11 $ 51,553
4,843 0.3% $32.24 12/14/11 $ 10,800
Bruce M. Johnson 18,689 1.1% $37.68 10/01/08 $ 41,677
5,998 0.4% $31.70 12/15/08 $ 13,376
16,602 1.0% $35.90 12/15/08 $ 37,022
5,322 0.3% $38.53 12/15/08 $ 11,869
5,588 0.3% $32.03 07/29/09 $ 12,462
2,693 0.2% $35.90 07/29/09 $ 6,005
2,631 0.2% $37.68 07/29/09 $ 5,868
2,983 0.2% $31.70 12/14/09 $ 6,652
5,272 0.3% $37.68 12/14/09 $ 11,756
2,647 0.2% $38.53 12/14/09 $ 5,903
5,603 0.3% $38.53 01/01/11 $ 12,494
12,260 0.8% $31.70 01/01/11 $ 27,340
2,403 0.1% $32.24 12/14/11 $ 5,359
17
(1) All option grants are replenishment options as a result of option
exercises during 2003. Replenishment options, if exercised, may be
replenished, but the new replenishment options will expire on the
expiration date of the original option. Under the replenishment feature,
if the optionee pays the exercise price through the delivery of
previously-owned shares of Regency's common stock that the optionee has
owned for at least six months and the fair market value of the shares
acquired on exercise is at least 20% greater than the option exercise
price, the optionee receives an additional option to purchase the same
number of shares of common stock as the optionee delivered in payment
for such exercise. Replenishment options expire on the same date as the
original options but have an exercise price equal to the fair market
value of the shares surrendered.
All options earn dividend equivalents units (DEUs) that vest at the same
rate as the underlying option. DEU's are credited to the participant's
account annually based upon the current dividend rate of Regency common
stock less the average dividend rate of the S&P 500.
(2) The estimated present value at grant date of each option granted during
2003 has been calculated to be $2.23 using the Black-Scholes option
pricing model. The valuation is based upon the following assumptions:
o estimated time until exercise of 2.4 years
o a risk-free interest rate of 2.2%; a volatility rate of 16.0%
o a dividend yield of 5.5%.
The approach used in developing the assumptions upon which the
Black-Scholes valuation was calculated is consistent with the
requirements of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." The actual value of the
options may be significantly different, and the value actually realized,
if any, will depend upon the excess of the market value of the common
stock over the option exercise price at the time of exercise.
The following table sets forth information concerning the value of
unexercised options as of December 31, 2003 held by the executive officers named
in the summary compensation table above.
AGGREGATED OPTION EXERCISES DURING FISCAL 2003
AND OPTION YEAR-END VALUES TABLE
Number of
Shares Number of Unexercised Value of Unexercised
Acquired Value Options at In-the-Money Options at
Upon Realized December 31, 2003 December 31, 2003
Exercise Upon Exercisable/ Exercisable/
Name Options Exercise Unexercisable Unexercisable
---- ------- -------- ------------- -------------
Martin E. Stein, Jr. 522,806 $ 3,718,540 497,766 (E) / $ 2,977,236 (E) /
35,190 (U) $ 539,831 (U)
Mary Lou Fiala 163,880 $ 1,386,642 178,522 (E) / $ 1,388,088 (E) /
24,776 (U) $ 380,534 (U)
Bruce M. Johnson 231,993 $ 1,588,786 193,174 (E) / $ 908,573 (E) /
12,729 (U) $ 196,151 (U)
18
Severance and Change in Control Agreements. Regency has severance and
change-of-control agreements with each of the executive officers named in the
summary compensation table. In the event of termination, Mr. Stein and Mrs.
Fiala would receive one and a half times their annual compensation and benefits.
Mr. Johnson would receive one times his annual compensation and benefits. In the
event of a change in control and termination within two years after the change
in control, Mr. Stein and Mrs. Fiala would receive three times their annual
compensation and benefits and accelerated vesting of unvested long-term
incentive compensation. Mr. Johnson would receive two times his annual
compensation and benefits along with the same accelerated vesting provisions. As
part of the agreements, the named executives are subject to certain restrictive
covenants and consulting arrangements. The agreements expire on December 31,
2007 and automatically renew for successive additional five-year terms unless
either party gives written notice of non-renewal.
Compensation of Directors. In 2003, Regency paid an annual fee of
$28,000 to each of its non-employee directors, plus $1,500 for each board
meeting attended. Committee chairpersons receive $3,000 annually plus $1,000 for
each board committee meeting attended. Directors' fees are currently paid in
cash or shares of common stock.
Non-employee directors also received stock rights awards of 2,000
shares each immediately following the 2003 annual meeting. The restricted stock
entitles the director to receive dividend equivalent units at the same rate as
dividends paid on the common stock. The restricted stock and dividend equivalent
units vest 25% on each of the first four anniversary dates of the grant.
CERTAIN TRANSACTIONS
The audit committee of the board of directors is responsible for
evaluating the appropriateness of all related-party transactions.
During 2003, insurance services for our properties were provided by
Palmer & Cay, for which we paid premiums of approximately $1,395,800 and
administrative fees of $170,000. Mr. Martin E. Stein's brother is a principal in
Palmer & Cay.
During 2003, the spouse of Mr. Douglas S. Luke provided services to
Regency in connection with preparation of its annual report to shareholders for
which she was paid $34,000.
19
PROPOSAL 2: PROPOSAL TO ELIMINATE CLASSIFICATION OF THE BOARD OF DIRECTORS
Our board of directors has approved, and recommends that shareholders
vote in favor of, an amendment to Article 7.2 of our Restated Articles of
Incorporation to eliminate the classification of our board of directors.
Our Restated Articles of Incorporation currently provide for a
classified board of directors, with the board divided into three classes and one
class standing for election each year for a three-year term.
At the time we originally provided for a classified board, many
companies and their shareholders believed a classified board would increase
continuity and stability in a board's composition and in the policies formulated
by the board. They also believed implementation of a classified board would
discourage abusive hostile takeover tactics by making it difficult for raiders
to obtain control of a company's board quickly through a proxy contest.
Many investors now believe classified boards decrease directors'
accountability to shareholders. Several scholars and companies now are
concluding that despite the benefits of a classified board in promoting
corporate stability and in deterring coercive takeover attempts, stockholders
should have the opportunity to elect the company's directors annually. Our board
of directors agrees with this conclusion.
A copy of the proposed amendment to our Restated Articles of
Incorporation to eliminate the classification of our board of directors is
attached to this proxy statement as Appendix A. If approved by shareholders,
beginning with the first annual meeting of shareholders held after the 2004
annual meeting, all directors would be elected annually for a one-year term.
The affirmative vote of a majority of the total votes cast by
shareholders on this proposal is required to approve the amendment to Article
7.2 of the Articles of Incorporation. Broker non-votes and abstentions will have
no effect on the outcome. Approval of Proposal 2 is not a condition to, and it
not conditioned on, approval of the other proposed amendments to the Articles of
Incorporation discussed elsewhere in this proxy statement.
The board of directors unanimously recommends a vote "For" Proposal 2.
All proxies solicited by the board of directors will be so voted unless
shareholders specify in their proxies a contrary choice.
PROPOSAL 3: PROPOSAL TO INCREASE NUMBER
OF AUTHORIZED SHARES OF PREFERRED STOCK
The board of directors has approved, and recommends that shareholders
vote in favor of, an amendment to Article 4.1(a) of the Restated Articles of
Incorporation increasing the authorized preferred stock from 10 million to 30
million shares. The full text of the amendment is set forth as part of Appendix
B.
Regency presently has outstanding or reserved for issuance the
following series of preferred stock:
20
Aggregate First
Shares Issued Liquidation Distribution exchangeable
Series or Issuable Preference Rate by Unitholder
---------------- ----------------- ------------------- ----------------- ------------------
Series 3 300,000 $ 75,000,000 7.450% N/A
Series B(1) 850,000 85,000,000 8.750% 09/03/09
Series C(1) 400,000 40,000,000 9.000% 09/03/09
Series D(1) 500,000 50,000,000 9.125% 09/29/09
Series E(1) 300,000 30,000,000 8.750% 05/25/10
Series F(1) 240,000 24,000,000 8.750% 09/08/10
------- ----------
2,590,000 $304,000,000
========= ===========
- ------------------
(1) These series of preferred stock generally will be issuable
beginning 10 years after the date of issuance of the
corresponding series of preferred units in our operating
partnership, Regency Centers, L.P., through which we conduct
all our business. Regency may call the underlying series of
preferred units for redemption beginning 5 years after the
date of issuance.
Purpose and Effect of the Amendment
The board of directors has authority to issue shares of authorized
preferred stock in one or more classes or series having such rights and
preferences as may be determined by the board, subject to the limits provided by
Florida law, including dividend rights and rights upon liquidation, and any
conversion, redemption, sinking fund or voting rights. No shareholder approval
is required for the issuance of authorized shares of preferred stock except to
the extent mandated by rules of the New York Stock Exchange or any other
exchange on which the common stock is then listed for trading. All shares of
preferred stock must be senior to all common stock in the payment of dividends
and/or upon liquidation. Holders of preferred stock are not entitled, as a
matter of right, to preemptive rights or rights to subscribe for any other
Regency securities. Prior to the issuance of shares of any class or series,
resolutions of the board establishing the class or series and determining its
relative rights and preferences must be filed with the Florida Department of
State as part of articles of amendment to the Articles of Incorporation.
The ability of the board of directors to issue separate classes or
series of preferred stock provides flexibility to tailor senior securities in
response to terms specifically negotiated by investors. Our board of directors
wishes to preserve maximum flexibility to issue preferred stock in public
offerings, in private transactions with institutional investors or in the
acquisition of income-producing properties when the investor wishes to hold a
senior security. In order to maintain its status as a real estate investment
trust for federal income tax purposes, Regency is required to distribute 90% of
its REIT taxable income. Accordingly, our ability to grow depends on our ability
to access external sources of capital at attractive rates. The board of
directors believes that our ability to raise capital will be enhanced by having
as flexible a capital structure as possible.
21
We issued shares of Series 3 preferred stock in an underwritten public
offering in March 2003 in the form of non-redeemable preferred stock commonly
known "perpetual preferred stock." As a general rule, investors are accustomed
to seeing perpetual preferred stock with a liquidation preference of $25 per
share. However, to preserve flexibility to issue additional shares of preferred
stock in the future, our board of directors chose to use a depositary
arrangement, issuing 300,000 shares of Regency preferred stock having a
liquidation preference of $250 per share, which underly 3 million depositary
shares each representing a 1/10th fractional interest in a share of Series 3
preferred stock. This arrangement is cumbersome and results in additional
expense because of the fees of the depositary. In addition, it makes our capital
structure more complex.
The board of directors would like to have the flexibility to issue
preferred stock in the future with a per share liquidation preference of $25 per
share. If shareholders approve the proposed amendment increasing the number of
authorized shares of preferred stock to 30 million shares, 27,410,000 shares
would be available for future transactions. Using a liquidation preference of
$25 per share, Regency would have the flexibility to raise up to approximately
$685 million in the form of perpetual preferred stock.
The board of directors has no present commitments, plans or proposals
for the issuance of any shares of preferred stock (except for the shares already
reserved for issuance as described above). Issuance of classes or series of
preferred stock could result in one or more of the following detriments:
* The preferred stock will have priority over the common stock
in the payment of dividends and/or liquidating distributions.
* The issuance of preferred stock bearing preferential
dividends, whether at fixed or floating rates, could reduce
Funds from Operations available for distribution to holders of
common stock.
* Conversion of shares of any class or series of preferred stock
that is convertible into common stock could result in diluting
the interests of holders of common stock.
* In addition, class voting rights (whether granted by the
specific terms of the preferred stock or by law) could delay
or prevent a change of control of Regency.
The affirmative vote of a majority of the total votes cast on this
proposal is required for approval of the proposal to increase the number of
authorized shares of preferred stock from 10 million to 30 million. Broker
non-votes and abstentions will have no effect on the outcome. Approval of
Proposal 3 is not a condition to, and it not conditioned on, approval of the
other proposed amendments to the Articles of Incorporation discussed elsewhere
in this proxy statement.
The board of directors unanimously recommends a vote "For" Proposal 3.
All proxies solicited by the board of directors will be so voted unless
shareholders specify in their proxies a contrary choice.
PROPOSAL 4: PROPOSAL TO DELETE SECURITY CAPITAL
OWNERSHIP LIMIT
The board of directors has approved, and recommends that shareholders
vote in favor of, an amendment to Article 5 of the Restated Articles of
Incorporation deleting various references to ownership limits that apply to
Security Capital Group Incorporated, Regency's majority shareholder until June
24, 2003. These provisions are of historical interest only, and
22
the board does not deem their deletion to be material. A summary of the proposed
amendment is set forth below. The full text of the amendment to Article 5 is
attached as part of Appendix C.
Background
Security Capital became a major investor in Regency in 1996. In
connection with that investment, shareholders approved an amendment to Article 5
of our Restated Articles of Incorporation that created a special ownership limit
for Security Capital and its affiliates of 45% of the outstanding shares of
common stock, on a fully diluted basis (the "Special Shareholder Limit") so long
as Security Capital's ownership did not cause us to lose our REIT status. This
amendment was necessary because the Restated Articles of Incorporation contain a
7% ownership limit designed to protect our status as a real estate investment
trust under the Internal Revenue Code.
Security Capital also was a major shareholder of Pacific Retail Trust,
a privately held REIT that merged with Regency in February 1999. Regency
shareholders approved raising the Special Shareholder Limit to 60% on a fully
diluted basis to permit the merger to take place.
In June 2003, Security Capital sold or committed to sell all its
Regency shares in connection with underwritten public offerings, including
entering into forward sale agreements with underwriters that it settled in the
third and fourth quarters of 2003. As a result, Security Capital no longer
beneficially owns any Regency common stock.
Purpose and Effect of the Amendment
In June 2003, Security Capital agreed with Regency that Security
Capital would not transfer the Special Shareholder Limit to any other person and
that the Special Shareholder Limit would be eliminated. However, there is no
provision in the Restated Articles of Incorporation for the Special Shareholder
Limit to be eliminated, absent a vote of the shareholders approving an amendment
to the Restated Articles of Incorporation. Therefore, the board of directors has
proposed that Article 5 be amended to delete various references to the Special
Shareholder Limit.
The elimination of the Special Shareholder Limit will have no effect
other than to make Article 5 more readable by eliminating references to the
Special Shareholder Limit that now are of historical interest only. Because
Security Capital agreed to eliminate the Special Shareholder Limit, amending
Article 5 has no material effect on any other shareholder.
Required Vote
The affirmative vote of a majority of the total votes cast by
shareholders on this proposal is required to approve the amendment to Article 5
of the Restated Articles of Incorporation. Broker non-votes and abstentions will
have no effect on the outcome. Approval of Proposal 4 is not a condition to, and
is not conditioned on, approval of the other proposed amendments to the Restated
Articles of Incorporation discussed elsewhere in this proxy statement.
The board of directors unanimously recommends a vote "For" Proposal 4.
All proxies solicited by the board of directors will be so voted unless
shareholders specify in their proxies a contrary choice.
23
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The board of directors has selected the firm of KPMG LLP to serve as
the independent certified public accountants for Regency for the current fiscal
year ending December 31, 2004. That firm has served as the auditors for Regency
since 1993. Representatives of KPMG LLP are expected to be present at the annual
meeting of shareholders and will be accorded the opportunity to make a
statement, if they so desire, and to respond to appropriate questions.
All decisions regarding selection of independent accounting firms and
approval of accounting services and fees are made by our audit committee in
accordance with the provisions of the Sarbanes-Oxley Act of 2002. There are no
exceptions to the policy of securing pre-approval of the audit committee for any
service provided by our independent accounting firm.
The following table provides information relating to the fees billed to
Regency by KPMG LLP for the years ended December 31, 2003 and 2002:
2003 2002
---- ----
Audit Fees1 $877,986 $600,672
Audit Related Fees2, 3 $123,002 $ 21,000
Tax Fees3, 4 $ 42,150 $ 66,850
All Other Fees $ 0 $ 0
- -------------------------
1 Audit fees include all fees and out-of-pocket expenses for services in
connection with the annual audits and review of quarterly financial
statements for Regency and its operating partnership, Regency Centers,
L.P.
2 Consists primarily of assistance in documenting internal control
policies and procedures over financial reporting and audits of employee
benefit plans.
3 The audit committee discussed these services with KPMG LLP and
determined that their provision would not impair KPMG LLP's
independence.
4 Consists of fees for tax consultation and tax compliance services.
OTHER MATTERS
The board of directors does not know of any other matters to come
before the meeting. However, if any other matters properly come before the
meeting, it is the intention of the persons designated as proxies to vote in
accordance with their best judgment on such matters. If any other matter should
come before the meeting, action on such matter will be approved if the number of
votes cast in favor of the matter exceeds the number opposed.
SHAREHOLDER PROPOSALS AND COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Regulations of the Securities and Exchange Commission require proxy
statements to disclose the date by which shareholder proposals must be received
by the company in order to be included in the company's proxy materials for the
next annual meeting. In accordance with these regulations, shareholders are
hereby notified that if, pursuant to Rule 14a-8, they wish a
24
proposal to be included in Regency's proxy statement and form of proxy relating
to the 2005 annual meeting, a written copy of their proposal must be received at
Regency's principal executive offices no later than November 30, 2004. Proposals
must comply with the proxy rules relating to shareholder proposals in order to
be included in Regency's proxy materials. Notice to Regency of a shareholder
proposal submitted otherwise than pursuant to Rule 14a-8 will be considered
untimely if received by Regency after November 30, 2004. To ensure prompt
receipt by Regency, proposals should be sent certified mail, return receipt
requested.
Shareholders who wish to communicate with the board of directors or
with a particular director may send a letter to the Corporate Secretary at
Regency's address set forth on page 1 of this proxy statement. The mailing
envelope should contain a clear notation indicating that the enclosed letter is
a "Shareholder-Board Communication" or "Shareholder-Director Communication." All
such letters should identify the author as a shareholder and clearly state
whether the intended recipients are all members of the board or just certain
specified individual directors. The Secretary will make copies of all such
letters and circulate them to the appropriate director or directors.
Shareholders may also communicate with the board of directors or with a
particular director by contacting Regency's AlertLine at 1-877-861-6669.
Regency does not have a formal policy requiring directors to attend
annual meetings. However, because the annual meeting generally is held on the
same day as a regular board meeting, Regency anticipates that directors would
attend the annual meeting unless, for some reason, they are unable to attend the
board meeting on the same date. All directors attended the 2003 annual meeting.
ANNUAL REPORT
A copy of Regency's annual report for the year ended December 31, 2003
accompanies this proxy statement. Additional copies may be obtained by writing
to Diane Ortolano, at Regency's principal executive offices, at the address set
forth below.
A copy of Regency's annual report on Form 10-K will be provided, without charge,
upon written request addressed to Ms. Ortolano at Regency's principal executive
offices at 121 West Forsyth Street, Suite 200, Jacksonville, Florida 32202.
Regency's annual report to shareholders and Form 10-K are also
available on our website at www.regencycenters.com.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by Regency. We may
reimburse brokers and other persons holding stock in their names, or in the
names of nominees, for their expenses for sending proxy material to principals
and obtaining their proxies.
Please specify your choices, date, sign and return the enclosed proxy
in the enclosed envelope, postage for which has been provided. Your prompt
response will be appreciated. If submitting your proxy via the internet please
carefully follow the instructions on your proxy card.
* * * * * * * * *
25
The reports of the audit committee and the compensation committee and
the performance graph included elsewhere in this proxy statement do not
constitute soliciting materials and should not be deemed filed or incorporated
by reference into any other filing made by Regency under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that Regency
specifically incorporates these reports or the performance graph by reference in
another filing.
26
Appendix A
PROPOSED AMENDMENT TO ELIMINATE CLASSIFICATION
OF THE BOARD OF DIRECTORS
Article 7.2 of our Restated Articles of Incorporation is proposed to be
amended in its entirety to read as follows:
Section 7.2. Classification. The term of office of each director who
was elected before the 2004 annual meeting of shareholders shall expire at the
2005 annual meeting or until his or her successor is elected and qualifies. The
term of office of each director elected at or after the 2004 annual meeting of
shareholders shall expire at the next annual meeting of shareholders thereafter
or until his or her successor is elected and qualifies.
A-1
Appendix B
PROPOSED AMENDMENT TO INCREASE NUMBER
OF AUTHORIZED SHARES OF PREFERRED STOCK
Article 4.1(a) of our Restated Articles of Incorporation is proposed to
be amended in its entirety to read as follows:
Section 4.1 Authorized Capital. The maximum number of shares of stock
which the Corporation is authorized to have outstanding at any one time is one
hundred ninety million (190,000,000) shares (the "Capital Stock") divided into
classes as follows:
i. Thirty million (30,000,000) shares of preferred stock
having a par value of $0.01 per share (the "Preferred Stock"), and
which may be issued in one or more classes or series as further
described in Section 4.2; and
ii. One hundred fifty million (150,000,000) shares of voting
common stock having a par value of $0.01 per share (the "Common
Stock"); and
iii. Ten million (10,000,000) shares of common stock having a
par value of $0.01 per share (the "Special Common Stock") and which may
be issued in one or more classes or series as further described in
Section 4.4.
B-1
Appendix C
PROPOSED AMENDMENT TO DELETE
SECURITY CAPITAL OWNERSHIP LIMIT
Article 5 of our Restated Articles of Incorporation is proposed to be
amended in its entirety to read as follows:
ARTICLE 5
REIT PROVISIONS
Section 5.1 Definitions. For the purposes of this Article 5, the
following terms shall have the following meanings:
(a) "Acquire" shall mean the acquisition of Beneficial Ownership of
shares of Capital Stock by any means including, without limitation, acquisition
pursuant to the exercise of any option, warrant, pledge or other security
interest or similar right to acquire shares, but shall not include the
acquisition of any such rights, unless, as a result, the acquirer would be
considered a Beneficial Owner as defined below. The term "Acquisition" shall
have the correlative meaning.
(b) "Actual Owner" shall mean, with respect to any Capital Stock,
that Person who is required to include in its gross income any dividends paid
with respect to such Capital Stock.
(c) "Beneficial Ownership" shall mean ownership of Capital Stock by a
Person who would be treated as an owner of such shares of Capital Stock, either
directly or indirectly, under Section 542(a)(2) of the Code, taking into account
for this purpose (i) constructive ownership determined under Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code (except where expressly
provided otherwise); and (ii) any future amendment to the Code which has the
effect of modifying the ownership rules under Section 542(a)(2) of the Code. The
terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
In the event of any future amendments to the Code involving the renumbering of
Code sections, the Board of Directors may, in its sole discretion, determine
that any reference to a Code section herein shall mean the successor Code
section pursuant to such amendment.
(e) "Constructive Ownership" shall mean ownership of Capital Stock by
a Person who would be treated as an owner of such Capital Stock, either directly
or constructively, through the application of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. The terms "Constructive Owner',
"Constructively Owns" and "Constructively Owned" shall have the correlative
meanings.
(f) "Existing Holder" shall mean any of The Regency Group, Inc., MEP,
Ltd., and The Regency Group II, Ltd. (and any Person who is a Beneficial Owner
of Capital Stock as a result of attribution of the Beneficial Ownership from any
of the Persons previously identified)
C-1
who at the opening of business on the date after the Initial Public Offering was
the Beneficial Owner of Capital Stock in excess of the Ownership Limit; and any
Person who Acquires Beneficial Ownership from another Existing Holder, except by
Acquisition on the open market, so long as, but only so long as, such Person
Beneficially Owns Capital Stock in excess of the Ownership Limit.
(g) "Existing Holder Limit" for an Existing Holder shall mean,
initially, the percentage by value of the outstanding Capital Stock Beneficially
Owned by such Existing Holder at the opening of business on the date after the
Initial Public Offering, and after any adjustment pursuant to Section 5.8
hereof, shall mean such percentage of the outstanding Capital Stock as so
adjusted; provided, however, that the Existing Holder Limit shall not be a
percentage which is less than the Ownership Limit or in excess of 9.8%.
Beginning with the date after the Initial Public Offering, the Secretary of the
Corporation shall maintain and, upon request, make available to each Existing
Holder, a schedule which sets forth the then current Existing Holder Limits for
each Existing Holder.
(h) "Initial Public Offering" means the closing of the sale of shares
of Common Stock pursuant to the Corporation's first effective registration
statement for such Common Stock filed under the Securities Act of 1933, as
amended.
(i) [Intentionally omitted.]
(j) "Ownership Limit" shall initially mean 7% by value of the
outstanding Capital Stock of the Corporation, and after any adjustment as set
forth in Section 5.9, shall mean such greater percentage (but not greater than
9.8%) by value of the outstanding Capital Stock as so adjusted.
(k) "Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity, and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; but does not include an underwriter retained by the Company
which participates in a public offering of the Capital Stock for a period of 90
days following the purchase by such underwriter of the Capital Stock, provided
that ownership of Capital Stock by such underwriter would not result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code and would not otherwise result in the Corporation failing to quality as a
REIT.
(l) "REIT" shall mean a real estate investment trust under Section
856 of the Code.
(m) "Redemption Price" shall mean the lower of (i) the price paid by
the transferee from whom shares are being redeemed and (ii) the average of the
last reported sales price, regular way, on the New York Stock Exchange of the
relevant class of Capital Stock on the ten trading days immediately preceding
the date fixed for redemption by the Board of Directors, or if the relevant
class of Capital Stock is not then traded on the New York Stock Exchange, the
average of the last reported sales prices, regular way, of such class of Capital
Stock (or, if sales prices, regular way, are not reported, the average of the
closing bid and asked prices) on the ten trading days immediately preceding the
relevant date as reported on any exchange or quotation system over which the
Capital Stock may be traded, or if such class of Capital Stock is not then
traded over any exchange or quotation system, then the price determined in good
C-2
faith by the Board of Directors of the Corporation as the fair market value of
such class of Capital Stock on the relevant date.
(n) "Related Tenant Owner" shall mean any Constructive Owner who also
owns, directly or indirectly, an interest in a Tenant, which interest is equal
to or greater than (i) 10% of the combined voting power of all classes of stock
of such Tenant, (ii) 10% of the total number of shares of all classes of stock
of such Tenant, or (iii) if such Tenant is not a corporation, 10% of the assets
or net profits of such Tenant.
(o) "Related Tenant Limit" shall mean 9.8% by value of the
outstanding Capital Stock of the Corporation.
(p) "Restriction Termination Date" shall mean the first day after the
date of the Initial Public Offering on which the Corporation determines pursuant
to Section 5.13 that it is no longer in the best interest of the Corporation to
attempt to, or continue to, qualify as a REIT.
(q) [Intentionally omitted.]
(r) [Intentionally omitted.]
(s) [Intentionally omitted.]
(t) [Intentionally omitted.]
(u) "Tenant" shall mean any tenant of (i) the Corporation, (ii) a
subsidiary of the Corporation which is deemed to be a "qualified REIT
subsidiary" under Section 856(i)(2) of the Code, or (iii) a partnership in which
the Corporation or one or more of its qualified REIT subsidiaries is a partner.
(v) "Transfer" shall mean any sale, transfer, gift, assignment,
devise, or other disposition of Capital Stock or the right to vote or receive
dividends on Capital Stock (including (i) the granting of any option or entering
into any agreement for the sale, transfer or other disposition of Capital Stock
or the right to vote or receive dividends on the Capital Stock or (ii) the sale,
transfer, assignment or other disposition or grant of any securities or rights
convertible or exchangeable for Capital Stock), whether voluntarily or
involuntarily, whether of record or Beneficially, and whether by operation of
law or otherwise; provided, however, that any bona fide pledge of Capital Stock
shall not be deemed a Transfer until such time as the pledgee effects an actual
change in ownership of the pledged shares of Capital Stock.
Section 5.2 Restrictions on Transfer. Except as provided in Sections
5.11 and 5.16, during the period commencing at the Initial Public Offering:
(a) No Person (other than an Existing Holder) shall Beneficially Own
Capital Stock in excess of the Ownership Limit, and no Existing Holder shall
Beneficially Own Capital Stock in excess of the Existing Holder Limit for such
Existing Holder.
(b) No Person shall Constructively Own Capital Stock in excess of the
Related Tenant Limit for more than thirty (30) days following the date such
Person becomes a Related Tenant Owner.
C-3
(c) Any Transfer that, if effective, would result in any Person
(other than an Existing Holder) Beneficially Owning Capital Stock in excess of
the Ownership Limit shall be void ab initio as to the Transfer of such Capital
Stock which would be otherwise Beneficially Owned by such Person in excess of
the Ownership Limit, and the intended transferee shall Acquire no rights in such
Capital Stock.
(d) Any Transfer that, if effective, would result in any Existing
Holder Beneficially Owning Capital Stock in excess of the applicable Existing
Holder Limit shall be void ab initio as to the Transfer of such Capital Stock
which would be otherwise Beneficially Owned by such Existing Holder in excess of
the applicable Existing Holder Limit, and such Existing Holder shall Acquire no
rights in such Capital Stock.
(e) [Intentionally omitted.]
(f) Any Transfer that, if effective, would result in any Related
Tenant Owner Constructively Owning Capital Stock in excess of the Related Tenant
Limit shall be void ab initio as to the Transfer of such Capital Stock which
would be otherwise Constructively Owned by such Related Tenant Owner in excess
of the Related Tenant Limit, and the intended transferee shall Acquire no rights
in such Capital Stock.
(g) Any Transfer that, if effective, would result in the Capital
Stock being beneficially owned by less than 100 Persons (within the meaning of
Section 856(a)(5) of the Code) shall be void ab initio as to the Transfer of
such Capital Stock which would be otherwise beneficially owned by the
transferee, and the intended transferee shall Acquire no rights in such Capital
Stock.
(h) Any Transfer that, if effective, would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code shall be
void ab initio as to the portion of any Transfer of the Capital Stock which
would cause the Corporation to be "closely held" within the meaning of Section
856(h) of the Code, and the intended transferee shall Acquire no rights in such
Capital Stock.
(i) Any other Transfer that, if effective, would result in the
disqualification of the Corporation as a REIT by virtue of actual, Beneficial or
Constructive Ownership of Capital Stock shall be void ab initio as to such
portion of the Transfer resulting in the disqualification, and the intended
transferee shall Acquire no rights in such Capital Stock.
Section 5.3 Remedies for Breach.
(a) If the Board of Directors or a committee thereof shall at any
time determine in good faith that a Transfer has taken place that falls within
the scope of Section 5.2 or that a Person intends to Acquire Beneficial
Ownership of any shares of the Corporation that would result in a violation of
Section 5.2 (whether or not such violation is intended), the Board of Directors
or a committee thereof shall take such action as it or they deem advisable to
refuse to give effect to or to prevent such Transfer, including, but not limited
to, refusing to give effect to such Transfer on the books of the Corporation or
instituting proceedings to enjoin such Transfer, subject, however, in all cases
to the provisions of Section 5.16.
(b) Without limitation to Sections 5.2 and 5.16, any purported
transferee of shares Acquired in violation of Section 5.2 and any Person
retaining shares in violation of 5.2(b) shall be deemed to have acted as agent
on behalf of the Corporation in holding those shares
C-4
acquired or retained in violation of Section 5.2 and shall be deemed to hold
such shares in trust on behalf of and for the benefit of the Corporation. Such
shares shall be deemed a separate class of stock until such time as the shares
are sold or redeemed as provided in Section 5.3(c). The holder shall have no
right to receive dividends or other distributions with respect to such shares,
and shall have no right to vote such shares. Such holder shall have no claim,
cause of action or any other recourse whatsoever against any transferor of
shares Acquired in violation of Section 5.2. The holder's sole right with
respect to such shares shall be to receive, at the Corporation's sole and
absolute discretion, either (i) consideration for such shares upon the resale of
the shares as directed by the Corporation pursuant to Section 5.3(c) or (ii) the
Redemption Price pursuant to Section 5.3(c). Any distribution by the Corporation
in respect of such shares Acquired or retained in violation of Section 5.2 shall
be repaid to the Corporation upon demand.
(c) The Board of Directors shall, within six months after receiving
notice of a Transfer or Acquisition that violates Section 5.2 or a retention of
shares in violation of Section 5.2(b), either (in its sole and absolute
discretion, subject to the requirements of Florida law applicable to redemption)
(i) direct the holder of such shares to sell all shares held in trust for the
Corporation pursuant to Section 5.3(b) for cash in such manner as the Board of
Directors directs or (ii) redeem such shares for the Redemption Price in cash on
such date within such six month period as the Board of Directors may determine.
If the Board of Directors directs the holder to sell the shares, the holder
shall receive such proceeds as the trustee for the Corporation and pay the
Corporation out of the proceeds of such sale (i) all expenses incurred by the
Corporation in connection with such sale, plus (ii) any remaining amount of such
proceeds that exceeds the amount paid by the holder for the shares, and the
holder shall be entitled to retain only the amount of such proceeds in excess of
the amount required to be paid to the Corporation.
Section 5.4 Notice of Restricted Transfer. Any Person who Acquires,
attempts or intends to Acquire, or retains shares in violation of Section 5.2
shall immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer, attempted or
intended Transfer, or retention, on the Corporation's status as a REIT.
Section 5.5 Owners Required to Provide Information. From the date of
the Initial Public Offering and prior to the Restriction Termination Date:
(a) Every shareholder of record of more than 5% by value (or such
lower percentage as required by the Code or the regulations promulgated
thereunder) of the outstanding Capital Stock of the Corporation shall, within 30
days after December 31 of each year, give written notice to the Corporation
stating the name and address of such record shareholder, the number and class of
shares of Capital Stock Beneficially Owned by it, and a description of how such
shares are held; provided that a shareholder of record who holds outstanding
Capital Stock of the Corporation as nominee for another Person, which Person is
required to include in its gross income the dividends received on such Capital
Stock (an "Actual Owner"), shall give written notice to the Corporation stating
the name and address of such Actual Owner and the number and class of shares of
such Actual Owner with respect to which the shareholder of record is nominee.
Each such shareholder of record shall provide to the Corporation such additional
information as the Corporation may request in order to determine the effect, if
any, of such Beneficial Ownership on the Corporation's status as a REIT.
C-5
(b) Every Actual Owner of more than 5% by value (or such lower
percentage as required by the Code or Regulations promulgated thereunder) of the
outstanding Capital Stock of the Corporation who is not a shareholder of record
of the Corporation, shall within 30 days after December 31 of each year, give
written notice to the Corporation stating the name and address of such Actual
Owner, the number and class of shares Beneficially Owned, and a description of
how such shares are held.
(c) Each Person who is a Beneficial Owner of Capital Stock and each
Person (including the shareholder of record) who is holding Capital Stock for a
Beneficial Owner shall provide to the Corporation such information as the
Corporation may request, in good faith, in order to determine the Corporation's
status as a REIT.
(d) Nothing in this Section 5.5 or any request pursuant hereto shall
be deemed to waive any limitation in Section 5.2.
Section 5.6 Remedies Not Limited. Except as provided in Section 5.15,
nothing contained in this Article shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable to
protect the Corporation and the interests of its shareholders in preserving the
Corporation's status as a REIT.
Section 5.7 Ambiguity. In the case of an ambiguity in the application
of any of the provisions of this Article 5, including without limitation any
definition contained in Section 5.1 and any determination of Beneficial
Ownership, the Board of Directors in its sole discretion shall have the power to
determine the application of the provisions of this Article 5 with respect to
any situation based on the facts known to it.
Section 5.8 Modification of Existing Holder Limits. Subject to the
provisions of Section 5.10, the Existing Holder Limits may or shall, as provided
below, be modified as follows:
(a) Any Existing Holder may Transfer Capital Stock to another Person,
and, so long as such Transfer is not on the open market, any such Transfer will
decrease the Existing Holder Limit for such transferor (but not below the
Ownership Limit) and increase the Existing Holder Limit for such transferee by
the percentage of the outstanding Capital Stock so transferred. The transferor
Existing Holder shall give the Board of Directors of the Corporation prompt
written notice of any such transfer. Any Transfer by an Existing Holder on the
open market shall neither reduce its Existing Holder Limit nor increase the
Ownership Limit or Existing Holder Limit of the transferee.
(b) Any grant of Capital Stock or a stock option pursuant to any
benefit plan for directors or employees shall increase the Existing Holder Limit
for the affected Existing Holder to the maximum extent possible under Section
5.10 to permit the Beneficial Ownership of the Capital Stock granted or issuable
under such employee benefit plan.
(c) The Board of Directors may reduce the Existing Holder Limit of
any Existing Holder, with the written consent of such Existing Holder, after any
Transfer permitted in this Article 5 by such Existing Holder on the open market.
(d) Any Capital Stock issued to an Existing Holder pursuant to a
dividend reinvestment plan adopted by the Corporation shall increase the
Existing Holder Limit for the Existing Holder to the maximum extent possible
under Section 5.10 to permit the Beneficial Ownership of such Capital Stock.
C-6
(e) Any Capital Stock issued to an Existing Holder in exchange for
the contribution or sale to the Corporation of real property, including Capital
Stock issued pursuant to an "earn-out" provision in connection with any such
sale, shall increase the Existing Holder Limit for the Existing Holder to the
maximum extent possible under Section 5.10 to permit the Beneficial Ownership of
such Capital Stock.
(f) [Intentionally omitted.]
(g) The Board of Directors may reduce the Existing Holder Limit for
any Existing Holder after the lapse (without exercise) of an option described in
Clause (b) of this Section 5.8 by the percentage of Capital Stock that the
option, if exercised, would have represented, but in either case no Existing
Holder Limit shall be reduced to a percentage which is less than the Ownership
Limit.
Section 5.9 Modification of Ownership Limit. Subject to the limitations
provided in Section 5.10, the Board of Directors may from time to time increase
or decrease the Ownership Limit; provided, however, that any decrease may only
be made prospectively as to subsequent holders (other than a decrease as a
result of a retroactive change in existing law that would require a decrease to
retain REIT status, in which case such decrease shall be effective immediately).
Section 5.10 Limitations on Modifications. Notwithstanding any other
provision of this Article 5:
(a) Neither the Ownership Limit nor any Existing Holder Limit may be
increased if, after giving effect to such increase, five Persons who are
considered individuals pursuant to Section 542(a)(2) of the Code (taking into
account all of the then Existing Holders) could Beneficially Own, in the
aggregate, more than 49.5% by value of the outstanding Capital Stock.
(b) Prior to the modification of any Existing Holder Limit or
Ownership Limit pursuant to Sections 5.8 or 5.9, the Board of Directors of the
Corporation may require such opinions of counsel, affidavits, undertakings or
agreements as it may deem necessary or advisable in order to determine or insure
the Corporation's status as a REIT.
(c) No Existing Holder Limit may be a percentage which is less than
the Ownership Limit.
(d) The Ownership Limit may not be increased to a percentage which is
greater than 9.8%.
Section 5.11 Exceptions. The Board of Directors may, upon receipt of
either a certified copy of a ruling of the Internal Revenue Service, an opinion
of counsel satisfactory to the Board of Directors or such other evidence as the
Board of Directors deems appropriate, but shall in no case be required to,
exempt a Person (the "Exempted Holder") from the Ownership Limit, the Existing
Holder Limit or the Related Tenant Limit, as the case may be, if the ruling or
opinion concludes or the other evidence shows (A) that no Person who is an
individual as defined in Section 542(a)(2) of the Code will, as the result of
the ownership of the shares by the Exempted Holder, be considered to have
Beneficial Ownership of an amount of Capital Stock that will violate the
Ownership Limit or the applicable Existing Holder Limit, as the case may be, or
(B) in the case of an exception of a Person from the Related Tenant Limit that
the exemption from the Related Tenant Limit would not cause the Corporation to
fail to qualify as a REIT. The Board of
C-7
Directors may condition its granting of a waiver on the Exempted Holder's
agreeing to such terms and conditions as the Board of Directors determines to be
appropriate in the circumstances.
Section 5.12 Legend. All certificates representing shares of Capital
Stock of the Corporation shall bear a legend referencing the restrictions on
ownership and transfer as set forth in these Articles. The form and content of
such legend shall be determined by the Board of Directors.
Section 5.13 Termination of REIT Status. The Board of Directors may
revoke the Corporation's election of REIT status as provided in Section
856(g)(2) of the Code if, in its discretion, the qualification of the
Corporation as a REIT is no longer in the best interests of the Corporation.
Notwithstanding any such revocation or other termination of REIT status, the
provisions of this Article 5 shall remain in effect unless amended pursuant to
the provisions of Article 10.
Section 5.14 [Intentionally omitted.]
Section 5.15 Severability. If any provision of this Article or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and the application of such provisions shall be
affected only to the extent necessary to comply with the determination of such
court.
Section 5.16 New York Stock Exchange Transactions. Nothing in this
Article 5 shall preclude the settlement of any transaction entered into through
the facilities of the New York Stock Exchange."
C-8
Preliminary Copy
REGENCY CENTERS CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2004
The undersigned, having received the Notice of Annual Meeting
of Shareholders and Proxy Statement, appoints Martin E. Stein, Jr., Mary Lou
Fiala and Bruce M. Johnson, and each or any of them, as proxies, with full power
of substitution and resubstitution, to represent the undersigned and to vote all
shares of common stock of Regency Centers Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
on April 28, 2004, and any and all adjournments thereof, in the manner
specified.
1. Election of directors nominated by the board of directors to serve
in the following Classes:
Class II: (01) Martin E. Stein, Jr. (03) A. R. Carpenter
(02) Raymond L. Bank (04) J. Dix Druce
[_] FOR all nominees listed [_] WITHHOLD AUTHORITY INSTRUCTION: To
withhold authority to vote (except as marked to to vote for all
for any individual nominee, strike through the contrary. See
nominees. that nominee's name. instruction to the right).
2. Amendment to Regency's Restated Articles of Incorporation to
eliminate classification of the board of directors.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Amendment to Regency's Restated Articles of Incorporation to
increase the number of authorized shares of preferred stock.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Amendment to Regency's Restated Articles of Incorporation to delete
matters of historical interest relating to Security Capital's ownership limit.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be SIGNED and dated on the reverse side.)
________________________________________________________________________________
YOU MAY VOTE TOLL-FREE BY TELEPHONE
OR ON THE INTERNET
(OR BY COMPLETING THE PROXY CARD BELOW
AND RETURNING IT BY MAIL)
(Available only until 3:00 pm EDST on April __, 2004)
TO VOTE BY TELEPHONE OR INTERNET,
USE THE CONTROL NUMBER IN THE BOX BELOW
Call Toll-Free To vote by Internet, have this form
on a Touch-Tone Telephone available and follow the directions
24 hours a day, 7 days a week when you visit:
1-888-216-1308 https://www.proxyvotenow.com/reg
Have this form available when you --------------------------------
CALL the toll-free number. Then,
enter your control number and
follow the simple prompts.
CONTROL NUMBER FOR
TELEPHONIC/INTERNET VOTING
[_________________________]
DO NOT RETURN THIS CARD
IF YOU HAVE VOTED BY TELEPHONE OR INTERNET.
FOLD AND DETACH HERE AND READ REVERSE SIDE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Continued from reverse side)
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" EACH PROPOSAL.
Should any other matters requiring a vote of the shareholders
arise, the above named proxies are authorized to vote the same in accordance
with their best judgment in the interest of the Company. The Board of Directors
is not aware of any matter which is to be presented for action at the meeting
other than the matters set forth herein.
Dated:________________, 2004
________________________________(SEAL)
________________________________(SEAL)
(Please sign exactly as name or names appear hereon. Executors, administrators,
trustees or other representatives should so indicate when signing.)