UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
EASTGROUP PROPERTIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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[EASTGROUP PROPERTIES LOGO]
EASTGROUP PROPERTIES, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
April 25, 2005
Dear Stockholder:
You are cordially invited to the 2005 Annual Meeting of stockholders of
EastGroup Properties, Inc. (the "Company"), to be held on June 2, 2005 at 9:00
a.m., Jackson time, at the Company's offices, 300 One Jackson Place, 188 East
Capitol Street, Jackson, Mississippi.
Stockholders will be asked to vote on the election of seven directors of
the Company, to ratify the adoption of the 2005 Directors Equity Incentive Plan
and to transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The proposed transactions are important to you as a stockholder. Therefore,
whether or not you plan to attend the 2005 Annual Meeting, I urge you to give
your immediate attention to voting. Please review the enclosed materials, sign
and date the enclosed proxy card and return it promptly in the enclosed
postage-paid envelope.
Very truly yours,
/s/ Leland R. Speed
LELAND R. SPEED
Chairman of the Board of Directors
[EASTGROUP PROPERTIES LOGO]
EASTGROUP PROPERTIES, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2005
To the Stockholders:
Notice is hereby given that the 2005 Annual Meeting of Stockholders of
EastGroup Properties, Inc. (the "Company") will be held at the Company's
offices, 300 One Jackson Place, 188 East Capitol Street, Jackson, Mississippi,
on Thursday, June 2, 2005 at 9:00 a.m., Jackson time. At this meeting, the
shareholders will be asked to act on the following matters:
1. To elect seven directors of the Company;
2. To ratify the adoption of the 2005 Directors Equity Incentive Plan;
and
3. To transact such other business as may properly come before the
2005 Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 14, 2005 are
entitled to notice of and to vote at the 2005 Annual Meeting and any adjournment
thereof.
The prompt return of your proxy will avoid delay and save the expense
involved in further communication. The proxy may be revoked by you at any time
prior to its exercise, and the giving of your proxy will not affect your right
to vote in person if you wish to attend the 2005 Annual Meeting.
By Order of the Board of Directors
/s/ N. Keith McKey
N. KEITH MCKEY
Executive Vice President, Chief
Financial Officer,
Treasurer and Secretary
DATED: April 25, 2005
THIS IS AN IMPORTANT MEETING. STOCKHOLDERS ARE URGED TO VOTE BY SIGNING,
DATING AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE 2005 ANNUAL MEETING......... 1
Why did I receive this proxy?............................. 1
Who is entitled to vote?.................................. 1
What is the quorum for the Annual Meeting?................ 1
How many votes do I have?................................. 1
How do I vote?............................................ 1
How do I vote my shares that are held by my broker?....... 1
What am I voting on?...................................... 2
Will there be any other items of business on the
agenda?................................................ 2
How many votes are required to act on the proposals?...... 2
How are votes counted?.................................... 2
What happens if I return my proxy card without voting on
all proposals?......................................... 2
Will anyone contact me regarding this vote?............... 2
Who has paid for this proxy solicitation?................. 3
May stockholders ask questions at the Annual Meeting?..... 3
How do I submit a proposal for the 2006 Annual Meeting?... 3
What does it mean if I receive more than one proxy
card?.................................................. 3
When was this proxy statement mailed?..................... 3
Can I find additional information on the Company's
website?............................................... 3
PROPOSAL ONE: ELECTION OF DIRECTORS......................... 3
Nominees for Election as Directors........................ 4
Independent Directors..................................... 5
BOARD COMMITTEES............................................ 5
Audit Committee........................................... 5
Compensation Committee.................................... 5
Nominating and Corporate Governance Committee............. 6
Board Attendance at Meetings.............................. 6
Stockholder Communication With the Board.................. 6
Compensation of Directors................................. 7
Report of the Audit Committee............................. 7
COMPENSATION OF EXECUTIVE OFFICERS.......................... 8
Report of the Compensation Committee...................... 8
Compensation Committee Interlocks......................... 10
Performance Graph......................................... 10
Executive Officers........................................ 11
Executive Compensation.................................... 12
Change in Control Agreements.............................. 13
Equity Compensation Plan Information...................... 14
OWNERSHIP OF COMPANY STOCK.................................. 15
Security Ownership of Certain Beneficial Owners........... 15
Security Ownership of Management.......................... 16
Ownership Guidelines for Directors and Officers........... 17
Section 16(a) Beneficial Ownership Reporting Compliance... 18
CERTAIN TRANSACTIONS AND RELATIONSHIPS...................... 18
PROPOSAL TWO: THE 2005 DIRECTORS EQUITY INCENTIVE PLAN...... 18
PROPOSAL THREE: OTHER MATTERS............................... 19
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... 20
STOCKHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING OF
STOCKHOLDERS.............................................. 20
Proposals for the Company's Proxy Material................ 20
Proposals to be Introduced at the Annual Meeting but not
Intended to be Included in the Company's Proxy
Material............................................... 21
[EASTGROUP PROPERTIES LOGO]
PROXY STATEMENT
QUESTIONS AND ANSWERS
ABOUT THE 2005 ANNUAL MEETING
WHY DID I RECEIVE THIS PROXY?
The Board of Directors of EastGroup Properties, Inc. (the "Company") is
soliciting proxies to be voted at the Annual Meeting of Stockholders. The Annual
Meeting will be held Thursday, June 2, 2005, at 9:00 a.m. Jackson time, at the
Company's offices, 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi. This proxy statement summarizes the information you need to know to
vote by proxy or in person at the Annual Meeting. You do not need to attend the
Annual Meeting in person in order to vote.
WHO IS ENTITLED TO VOTE?
All stockholders of record as of the close of business on Thursday, April
14, 2005 (the "Record Date") are entitled to vote at the Annual Meeting.
WHAT IS THE QUORUM FOR THE ANNUAL MEETING?
A quorum at the Annual Meeting will consist of a majority of the votes
entitled to be cast by the holders of all shares of Common Stock outstanding. No
business may be conducted at the Annual Meeting if a quorum is not present. As
of the Record Date, 21,920,822 shares of Common Stock were issued and
outstanding.
HOW MANY VOTES DO I HAVE?
Each share of Common Stock outstanding on the Record Date is entitled to
one vote on each item submitted to you for consideration.
HOW DO I VOTE?
- By Mail: Vote, sign, date your card and mail it in the postage-paid
envelope
- In Person: At the Annual Meeting
HOW DO I VOTE MY SHARES THAT ARE HELD BY MY BROKER?
If you have shares held by a broker, you may instruct your broker to vote
your shares by following the instructions that the broker provides to you.
WHAT AM I VOTING ON?
You will be voting on the following proposals:
- Proposal One: The election of seven Directors of the Company
- Proposal Two: The ratification of the adoption of the 2005 Directors
Equity Incentive Plan (the "2005 Plan")
WILL THERE BE ANY OTHER ITEMS OF BUSINESS ON THE AGENDA?
We do not expect any other items of business because the deadline for
stockholder proposals and nominations has passed. Nonetheless, in case there is
an unforeseen need, your proxy gives discretionary authority to David H. Hoster
II and N. Keith McKey with respect to any other matters that might be brought
before the Annual Meeting. Those persons intend to vote that proxy in accordance
with their best judgment.
HOW MANY VOTES ARE REQUIRED TO ACT ON THE PROPOSALS?
The holder of each outstanding share of Common Stock is entitled to one
vote for each share of Common Stock on each matter submitted to a vote at a
meeting of stockholders.
Pursuant to the Company's Bylaws, directors will be elected by a plurality
of all the votes cast at the Annual Meeting with each share being voted for as
many individuals as there are directors to be elected and for whose election the
share is entitled to vote.
Ratification of the adoption of the 2005 Plan requires the affirmative vote
of a majority of all the votes cast at the Annual Meeting, provided that the
total vote cast on the proposal represents over 50% in interest of all
securities entitled to vote on the proposal as required by the New York Stock
Exchange listing standards.
HOW ARE VOTES COUNTED?
For purposes of the election of directors, abstentions will not be counted
as votes cast and will have no effect on the result of the vote. For purposes of
the vote on the ratification of the adoption of the 2005 Plan, abstentions will
have the same effect as votes against the proposal and broker non-votes will
have the same effect as votes against the proposal, unless holders of more than
50% in interest of all securities entitled to vote on the proposal cast votes,
in which event broker non-votes will not have any effect on the result of the
vote.
WHAT HAPPENS IF I RETURN MY PROXY CARD WITHOUT VOTING ON ALL PROPOSALS?
When the proxy is properly executed and returned, the shares it represents
will be voted at the Annual Meeting in accordance with your directions. If the
signed card is returned with no direction on a proposal, the proxy will be voted
in favor of (FOR) Proposals One and Two.
WILL ANYONE CONTACT ME REGARDING THIS VOTE?
The Company has retained InvestorCom, Inc. to assist with the solicitation
of proxies and will pay InvestorCom, Inc. a fee of $7,500 plus reimbursement of
out-of-pocket expenses for its services. Such solicitations may be made by mail,
telephone, facsimile, e-mail or personal interviews.
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WHO HAS PAID FOR THIS PROXY SOLICITATION?
The Company has paid the entire expense of this proxy statement and any
additional materials furnished to stockholders.
MAY STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING?
Yes. There will be time allotted at the end of the meeting when Company
representatives will answer questions from the floor.
HOW DO I SUBMIT A PROPOSAL FOR THE 2006 ANNUAL MEETING?
If a stockholder wishes to have a proposal considered for inclusion in the
proxy statement prior to the 2006 Annual Meeting, he or she must submit the
proposal in writing to the Company (Attention: Secretary) so that it is received
by December 27, 2005. Stockholders are also advised to review the Company's
Bylaws, which contain additional advance notice requirements, including
requirements with respect to advance notice of stockholder proposals and
Director nominations.
The Board of Directors of the Company will review any stockholder proposals
that are timely submitted and will determine whether such proposals meet the
criteria for inclusion in the proxy solicitation materials or for consideration
at the 2006 Annual Meeting. In addition, the persons named in the proxies retain
the discretion to vote proxies on matters of which the Company is not properly
notified in accordance with the advance notice provisions contained in the
Company's Bylaws, and also retain such authority under certain other
circumstances.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts at the transfer agent or with
stockbrokers. Please complete and return all proxy cards to ensure that all your
shares are voted.
WHEN WAS THIS PROXY STATEMENT MAILED?
This proxy statement, the enclosed proxy card and the Annual Report were
mailed to stockholders beginning on or about April 25, 2005.
CAN I FIND ADDITIONAL INFORMATION ON THE COMPANY'S WEBSITE?
Yes. Our website is located at www.eastgroup.net. Although the information
contained on our website is not part of this proxy statement, you can view
additional information on the website, such as our code of conduct, corporate
governance guidelines, charters of board committees and reports that we file
with the SEC. A copy of our code of conduct, corporate governance guidelines and
each of the charters of our board committees may be obtained free of charge by
writing to EastGroup Properties, Inc., 300 One Jackson Place, 188 East Capitol
Street, Jackson, Mississippi 39201-2195, Attention: Investor Relations.
PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, the Board of Directors has by
resolution fixed the number of directors to be elected at the Annual Meeting at
seven. Our Board of Directors currently consists of D. Pike Aloian, Alexander G.
Anagnos, H.C. Bailey, Jr., Hayden C. Eaves III, Fredric H. Gould, David M.
Osnos, Leland R. Speed and David H. Hoster II. The terms of office of each of
our directors expire at the Annual Meeting.
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Mr. Anagnos has served as a director since 1994 and has indicated that he will
retire from the Company's Board of Directors prior to the Annual Meeting. Based
on the recommendation of our Nominating and Corporate Governance Committee, the
incumbent directors other than Mr. Anagnos have been nominated for election at
the Annual Meeting as directors for one-year terms, to hold office until the
2006 Annual Meeting and until their successors are elected and qualified.
No security holder that held a beneficial ownership interest in the
Company's stock of 5% or more for at least one year recommended any candidates
to serve on the Board of Directors.
If, at the time of the Annual Meeting, any nominee is unable or declines to
serve, the discretionary authority provided in the proxy may be exercised to
vote for a substitute or substitutes. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be required.
Pursuant to the Company's Bylaws, directors will be elected by a plurality
of all the votes cast at the Annual Meeting with each share being voted for as
many individuals as there are directors to be elected and for whose election the
share is entitled to vote. For purposes of the election of directors,
abstentions will not be counted as votes cast and will have no effect on the
result of the vote.
The Board of Directors unanimously recommends that shareholders vote "FOR"
the election of each of the nominees.
NOMINEES FOR ELECTION AS DIRECTORS
The following provides certain information regarding the nominees for
election to the Company's Board of Directors. Each individual's name, position
with the Company and principal occupation and business experience for the past
five years is provided and, unless otherwise stated, each nominee has held the
position indicated for at least the past five years.
D. PIKE ALOIAN, Age 50 -- Mr. Aloian is a Managing Director of Rothschild
Realty Inc. (real estate advisory and investment management services). He has
served as a Director of the Company since 1999. Mr. Aloian also serves on the
board of directors of CRT Properties, Inc. and Brandywine Realty Trust.
H.C. BAILEY, JR., Age 65 -- Mr. Bailey is Chairman and President of H. C.
Bailey Company (real estate development and investment). He has served as a
Director of the Company since 1980.
HAYDEN C. EAVES III, Age 59 -- Mr. Eaves is President of Hayden Holdings,
Inc. (real estate investment) and Managing Director of Investment Development
Services, Inc. (real estate management). He has served as a Director of the
Company since 2002.
FREDRIC H. GOULD, Age 69 -- Mr. Gould is General Partner of Gould
Investors, L.P., Chairman of BRT Realty Trust and Chairman of One Liberty
Properties, Inc. He has served as a Director of the Company since 1998.
DAVID H. HOSTER II, Age 59 -- Mr. Hoster is the Chief Executive Officer of
the Company and has served in that capacity since 1997. He has served as
President of the Company and as a Director since 1993.
DAVID M. OSNOS, Age 73 -- Mr. Osnos is Of Counsel to (and, until December
31, 2002, partner in) the law firm of Arent Fox PLLC. He has served as a
Director of the Company since 1993. Mr. Osnos also serves on the board of
directors of VSE Corporation and Washington Real Estate Investment Trust.
LELAND R. SPEED, Age 72 -- Mr. Speed has served as the Chairman of the
Board of the Company since 1983 and a Director since 1978. He is also Chairman
of the Board of Parkway Properties, Inc. He served as Chief
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Executive Officer of the Company and Parkway Properties, Inc. until 1997. Mr.
Speed is not involved in the operation of the business of either company on a
day-to-day basis. Rather, he consults with management of both companies on
issues with respect to which such management seeks his advice and input. He
allocates his time between the two companies depending on which company desires
his input at a particular time. Since January 2004, Mr. Speed has served as the
Executive Director of the Mississippi Development Authority, the State of
Mississippi's lead economic development agency.
INDEPENDENT DIRECTORS
Under the enhanced corporate governance standards of the New York Stock
Exchange ("NYSE"), at least a majority of the Company's Directors, and all of
the members of the Company's Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee, must meet the test of
"independence" as defined by the NYSE. The NYSE standards provide that to
qualify as an "independent" director, in addition to satisfying certain
bright-line criteria, the board of directors must affirmatively determine that a
director has no material relationship with the Company (either directly or as a
partner, shareholder or officer of an organization that has a relationship with
the Company). The Board of Directors has determined that each current director,
other than Mr. Speed, the Company's Chairman, and Mr. Hoster, the Company's
President and Chief Executive Officer, satisfies the bright line criteria and
that none has a relationship with the Company that would interfere with such
person's ability to exercise independent judgment as a member of the Company's
Board.
BOARD COMMITTEES
The Board of Directors has three standing committees, with each committee
described below. The members of each committee are also listed below.
AUDIT COMMITTEE
The Audit Committee of the Company's Board of Directors currently consists
of Messrs. Aloian, Gould and Osnos. The Audit Committee met nine times during
the Company's 2004 fiscal year. The charter of the Audit Committee is attached
as Appendix A and is available on the Company's website (www.eastgroup.net)
under "About Us." The Audit Committee oversees the financial reporting of the
Company, including the audit by the Company's independent public accountants.
Each member of the Audit Committee is "independent" as that term is defined in
the New York Stock Exchange listing standards. Mr. Aloian and Mr. Gould have
been designated as the Company's "Audit Committee financial experts" in
accordance with the SEC rules and regulations, and the Board has determined that
they have accounting and related financial management expertise within the
meaning of the listing standards of the New York Stock Exchange. See "Report of
the Audit Committee" below.
COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors currently
consists of Messrs. Anagnos, Bailey and Eaves. All of the members of the
Compensation Committee are "independent" as that term is defined in the New York
Stock Exchange listing standards. Mr. Anagnos has indicated that he will retire
from the Company's Board of Directors prior to the Annual Meeting. At that time,
the Board of Directors, upon the recommendation of the Nominating and Corporate
Governance Committee, will appoint another independent director to the
Compensation Committee. The charter of the Compensation Committee is available
on the Company's website (www.eastgroup.net) under "About Us." The Compensation
Committee's function is to review and recommend to the Board of Directors
appropriate executive compensation policy and compensation of
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the Company's directors and officers. The Compensation Committee also reviews
and makes recommendations with respect to executive and employee benefit plans
and programs. See "Report of the Compensation Committee" below. The Compensation
Committee met two times during the Company's 2004 fiscal year.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee of the Company's Board of
Directors currently consists of Messrs. Aloian, Bailey and Osnos. The Nominating
and Corporate Governance Committee met three times during the Company's 2004
fiscal year. Each of the members of the Nominating and Corporate Governance
Committee is "independent" as defined in the listing standards of the New York
Stock Exchange. As set forth in its charter, the responsibilities of the
Nominating and Corporate Governance Committee include assessing Board membership
needs and identifying, screening, recruiting, and presenting director candidates
to the Board, implementing policies regarding corporate governance matters,
making recommendations regarding committee memberships and evaluation of the
Board and management. The charter of the Nominating and Corporate Governance
Committee is available at www.eastgroup.net under "About Us."
The Board of Directors has adopted Corporate Governance Guidelines. The
guidelines are available at www.eastgroup.net under "About Us." Under the
guidelines, the Nominating and Corporate Governance Committee will take into
account stockholder input with respect to processes and criteria for director
selection; as such, stockholders may influence the composition of the Board.
Under this principle, the Nominating and Corporate Governance Committee will
consider written recommendations for potential nominees suggested by
stockholders. Any such person will be evaluated in the same manner as any other
potential nominee for director. Any suggestion for a nominee for director by a
stockholder should be sent to the Company's Secretary at 300 One Jackson Place,
188 East Capitol Street, Jackson, Mississippi 39201, within the time periods set
forth under "Stockholder Proposals for the 2006 Annual Meeting of Stockholders."
In identifying suitable candidates for nomination as a director, the
Nominating and Corporate Governance Committee will consider the needs of the
Board and the range of skills and characteristics required for effective
functioning of the Board. In evaluating such skills and characteristics, the
Nominating and Corporate Governance Committee may take into consideration such
factors as it deems appropriate, including those included in the Corporate
Governance Guidelines. The Nominating and Corporate Governance Committee will
consider nominees suggested by incumbent Board members, management, stockholders
and, in certain circumstances, outside search firms.
BOARD ATTENDANCE AT MEETINGS
The Board of Directors held five meetings during the Company's 2004 fiscal
year. Each director attended at least 75% of the aggregate of the total number
of meetings of the Board of Directors and meetings held by all committees of the
Board of Directors on which he served. The Company's Corporate Governance
Guidelines provide that all directors are expected to regularly attend all
meetings of the Board and the Board committees on which he serves. In addition,
each director is expected to attend the Annual Meeting of Stockholders. In 2004,
the Annual Meeting of Stockholders was attended by three of the directors.
STOCKHOLDER COMMUNICATION WITH THE BOARD
The Board of Directors has appointed David M. Osnos as "Lead Independent
Director." In that capacity, he presides over the meetings of the non-management
directors of the Company. Stockholders and other parties
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interested in communicating directly with the Lead Independent Director or with
the non-management directors as a group may do so by writing to David M. Osnos,
Lead Independent Director, EastGroup Properties, Inc., 300 One Jackson Place,
188 East Capitol Street, Jackson, Mississippi 39201. Correspondence so addressed
will be forwarded directly to Mr. Osnos.
COMPENSATION OF DIRECTORS
Under the Company's standard compensation arrangements with directors
(except Mr. Speed and Mr. Hoster who are salaried officers), directors are paid
a monthly stipend of $1,875. In addition, they are paid $1,500 plus
reimbursement of expenses for attendance at each meeting of the Board of
Directors and $1,000 plus reimbursement of expenses for each meeting of a
committee established by the Board of Directors.
If the 2005 Directors Equity Incentive Plan is ratified by the
stockholders, a non-employee director will receive an automatic award of shares
of Common Stock annually, on the date of the annual meeting of stockholders,
equal to $10,000 divided by the fair market value of the Company's Common Stock
on such date. Each new non-employee director appointed or elected will receive
an automatic award of restricted shares of Common Stock on the effective date of
election or appointment equal to $20,000 divided by the fair market value of the
Company's Common Stock on such date. These restricted shares vest over a
four-year period upon the performance of future service as a director, subject
to certain exceptions.
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other filing by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934 except to the extent the Company specifically incorporates
this Report by reference therein.
The Audit Committee of the Company is composed of three directors, each of
whom meets the current independence and experience requirements of the NYSE and
the SEC. The Audit Committee operates under a written charter which was amended
and restated on March 15, 2005. A complete copy of the Audit Committee charter
is attached as Appendix A to this Proxy Statement and listed on the Company's
website at www.eastgroup.net. The Board has determined that D. Pike Aloian and
Fredric H. Gould are "Audit Committee financial experts" as defined in the
current rules of the SEC.
Management is primarily responsible for the Company's financial statements
and reporting process. The Company's independent registered public accounting
firm, KPMG LLP, is responsible for performing an independent audit of the
Company's financial statements in accordance with generally accepted accounting
principles in the United States of America ("GAAP") and for issuing a report on
those statements. The Audit Committee oversees the financial reporting process
on behalf of the Board. It is not the duty or the responsibility of the Audit
Committee to conduct auditing or accounting reviews or related procedures.
The Audit Committee meets at least quarterly and at such other times as it
deems necessary or appropriate to carry out its responsibilities. Those meetings
include, whenever appropriate, executive sessions with KPMG without management
being present. The Committee met nine times during 2004, including five
executive sessions with KPMG. In the course of fulfilling its oversight
responsibilities, the Committee met with both management and KPMG to review and
discuss all annual financial statements and quarterly operating results prior to
their issuance. Management advised the Audit Committee that all financial
statements were prepared in accordance with GAAP. The Audit Committee also
discussed with KPMG matters required to be discussed, pursuant to Statement on
Auditing Standards No. 61, Communication with Audit Committees, including the
reasonableness
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of judgments and the clarity and completeness of financial disclosures. In
addition, the Audit Committee discussed with KPMG matters relating to its
independence and has received from KPMG the written disclosures and letter
required by the Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees.
On the basis of the reviews and discussions the Committee has had with KPMG
and management, the Committee recommended to the Board of Directors that the
Board approve the inclusion of the Company's audited financial statements in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2004, for filing with the SEC.
Submitted by:
THE AUDIT COMMITTEE
D. Pike Aloian
Fredric H. Gould
David M. Osnos
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other filing by the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934 except to the extent the Company specifically
incorporates this Report by reference therein.
The Compensation Committee of the Board of Directors for 2004 consisted of
Messrs. Anagnos, Bailey and Eaves.
Compensation Philosophy
The Compensation Committee believes that base compensation to the executive
officers of the Company should be commensurate with salary levels for other real
estate companies and the officer's level of responsibility. The Compensation
Committee has determined that the primary goals of the Company's compensation
policies should be as follows:
- To strengthen the mutuality of interest between management and
stockholders through the use of incentive compensation directly related
to short-term and long-term corporate performance and through the use of
the stock-based incentives that result in increased Common Stock
ownership by executive officers. The Committee measures short-term and
long-term corporate performance based on the achievement of specific
operating and financial objectives, including total stockholder return
and funds from operations ("FFO") per share.
- To provide total compensation opportunities for executive officers which
are competitive with those provided to persons in similar positions with
which the Company competes for employees.
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Compensation Program
The Compensation Committee recently restructured the executive compensation
program. The Compensation Committee, with the help of a compensation consultant,
conducted studies of the compensation policies of comparable companies and also
the unique needs of the Company, its executives and its stockholders. The
revised executive compensation program has four components:
- Base compensation
- Annual cash bonus
- Annual long-term incentive
- Multi-year long-term incentive
Base Compensation. The most important factor in setting base compensation
of the Company's executive officers is the level of compensation paid by other
real estate companies of comparable size.
Annual Cash Bonus. The amount of the annual cash bonus is based upon the
amount of the Company's FFO per share compared to threshold, target and maximum
FFO goals set by the Compensation Committee and a bonus payment objective for
each officer. The Compensation Committee determined the FFO goals for different
levels of bonus payments after an analysis of the Company's internally prepared
estimate of FFO for 2004 and the estimates of 2004 FFO prepared by independent
securities analysts who follow the Company. The Compensation Committee believed
that the achievement of the target FFO goal or more would benefit the Company's
stockholders, and that the Named Officers should be rewarded for the benefit to
stockholders. The Company's 2004 FFO exceeded the target FFO goal set by the
Compensation Committee. Accordingly, the bonus payments set forth in the Summary
Compensation Table were paid to the executive officers of the Company.
Annual Long-Term Incentive. The Compensation Committee also awarded the
executive officers an annual long-term incentive award based upon the Company's
(i) FFO growth as compared to the FFO growth of peer companies and (ii) its
absolute FFO growth. These awards were made in the form of restricted stock
grants that vest one-third each on the date of grant, January 1, 2006 and
January 1, 2007. The Compensation Committee made restricted stock awards to the
executives as set forth in the Summary Compensation Table. The Compensation
Committee believes that a payment of annual long-term incentive compensation in
the form of restricted stock awards further aligns the interest of the Company
and its stockholders by giving the executive officers a greater equity interest
in the Company.
Multi-Year Long-Term Incentive. The Compensation Committee has created a
plan for the grant of future awards of compensation in the form of restricted
stock to the executive officers based upon the Company's average annual total
return to stockholders ("TSR") for the three-year period ending December 31,
2005. If made, these awards will also be in the form of equity grants that will
vest over a three-year period ending in 2008. The awards will be based one-half
on the Company's absolute TSR performance during the three-year period ended
December 31, 2005 and one-half based on the Company's TSR performance relative
to a peer group of real estate investment trusts for such period. As of December
31, 2004, EastGroup was exceeding both the absolute and relative target
performance criteria that the Compensation Committee had under consideration. If
the Company maintains its current absolute and relative performance in 2005, the
Compensation Committee estimates that approximately 77,000 shares will be
awarded to the executive officers as equity grants under this three-year
program. Any grants, however, will be made by the Committee in its sole
discretion. The number of shares included in each equity grant will vary from
officer to officer, but will be based upon a dollar amount
9
divided by $25.50, which was the price of a share of the Company's Common Stock
on January 1, 2003, the beginning of the three-year period.
CEO Compensation
The Compensation Committee considered a number of factors in setting the
base compensation of Mr. Hoster, the Company's Chief Executive Officer, the most
important of which were the level of compensation paid to the chief executive
officers of other real estate companies of comparable size, the success of the
Company's strategy of acquiring, developing and operating industrial properties,
the Company's total return to stockholders and his importance in delineating and
implementing the Company's strategies. Based upon all relevant factors, the
Compensation Committee believes that Mr. Hoster's total compensation is
reasonable.
Compensation Deductibility Policy
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation in excess of $1 million paid to the Company's CEO and to each of
the other four highest paid executive officers, unless the compensation is
performance based and satisfies other conditions. Our policy is to maximize the
deductibility of compensation but does not preclude awards or payments that are
not fully deductible if, in our judgment, such awards and payments are necessary
to achieve our compensation objectives and to protect shareholder interests.
THE COMPENSATION COMMITTEE
Alexander G. Anagnos
H. C. Bailey, Jr.
Hayden C. Eaves III
COMPENSATION COMMITTEE INTERLOCKS
As noted above, the Compensation Committee is comprised of three
independent Directors: Messrs. Anagnos, Bailey and Eaves. No member of the
Compensation Committee is or was formerly an officer or an employee of the
Company. No executive officer of the Company serves as a member of the Board of
Directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors, nor has such
interlocking relationship existed in the past.
PERFORMANCE GRAPH
The following graph compares, over the five years ended December 31, 2004,
the cumulative total shareholder return on the Company's Common Stock with the
cumulative total return of the Standard & Poor's 500 Index ("S&P 500") and the
Equity REIT Index prepared by the National Association of Real Estate Investment
Trusts ("NAREIT Equity").
10
[GRAPH]
FISCAL YEARS ENDED DECEMBER 31,
---------------------------------------------------
1999 2000 2001 2002 2003 2004
------ ------ ------ ------ ------ ------
The Company 100.00 129.90 144.84 172.29 234.02 292.45
S&P 500 100.00 90.90 80.09 62.39 80.29 89.02
NAREIT Equity 100.00 126.37 143.97 149.47 204.98 269.70
* Assumes that the value of the investment in shares of the Company's Common
Stock and each index was $100 on December 31, 1999 and that all dividends were
reinvested.
EXECUTIVE OFFICERS
The following provides certain information regarding the executive officers
of the Company. Each individual's name and position with the Company is
indicated. In addition, the principal occupation and business experience for the
past five years is provided for each officer and, unless otherwise stated, each
person has held the position indicated for at least the past five years. There
are no family relationships between any of the directors or executive officers
of the Company.
LELAND R. SPEED, Age 72 -- Mr. Speed has served as the Chairman of the
Board of the Company since 1983 and a Director since 1978. He is also Chairman
of the Board of Parkway Properties, Inc. He served as Chief Executive Officer of
the Company and Parkway Properties, Inc. until 1997. Mr. Speed is not involved
in the operation of the business of either company on a day-to-day basis.
Rather, he consults with management of both companies on issues with respect to
which such management seeks his advice and input. He allocates his time between
the two companies depending on which company desires his input at a particular
time. Since January 2004, Mr. Speed has served as the Executive Director of the
Mississippi Development Authority, the State of Mississippi's lead economic
development agency.
DAVID H. HOSTER II, Age 59 -- Mr. Hoster is the Chief Executive Officer of
the Company and has served in that capacity since 1997. He has served as
President of the Company and as a Director since 1993.
11
N. KEITH MCKEY, Age 54 -- Mr. McKey has served as the Company's Executive
Vice President since 1993, Chief Financial Officer and Secretary since 1992 and
Treasurer since 1997.
WILLIAM D. PETSAS, Age 47 -- Mr. Petsas has been a Senior Vice President of
the Company since 2000. From 1994 until 2000, he was a Vice President of
ProLogis (an industrial real estate investment trust).
C. BRUCE CORKERN, Age 43 -- Mr. Corkern has served as a Senior Vice
President and Controller of the Company since 2000. From 1990 until 2000, he was
the Vice President of Finance of Time Warner Cable (Jackson/Monroe Division).
JOHN F. COLEMAN, Age 45 -- Mr. Coleman has been a Senior Vice President of
the Company since 2001. From 1999 until 2001, he was a Senior Vice President of
Duke Realty Corporation (an industrial/office real estate investment trust).
BRENT W. WOOD, Age 35 -- Mr. Wood has been a Senior Vice President of the
Company since 2003. He was a Vice President of the Company from 2000 to 2003, a
Senior Asset Manager of the Company from 1997 to 1999 and Assistant Controller
from 1996 to 1997.
EXECUTIVE COMPENSATION
The following table summarizes the compensation awarded, earned by, or paid
to the Chief Executive Officer and the four other most highly compensated
executive officers of the Company (the "Named Officers") during the last three
fiscal years.
LONG TERM
COMPENSATION
------------------------
AWARDS
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND -------------------- STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS COMPENSATION (4)
------------------ ---- -------- -------- ---------- ---------- ----------------
David H. Hoster II....... 2004 $365,000 $296,000 $384,000(2) -0- $18,556
President and 2003 335,000 247,000 222,600(3) -0- 15,806
Chief Executive Officer 2002 325,000 73,125(1) -0- -0- 17,237
N. Keith McKey........... 2004 250,000 164,000 269,000(2) -0- 17,716
Executive Vice
President, 2003 215,000 125,000 157,800(3) -0- 14,966
Chief Financial
Officer, 2002 215,000 37,625(1) -0- -0- 16,424
Treasurer and Secretary
John F. Coleman.......... 2004 215,000 68,000 177,000(2) -0- 17,622
Senior Vice President 2003 200,000 57,000 101,100(3) -0- 16,420
2002 185,000 38,500 -0- -0- 5,900
William D. Petsas........ 2004 215,000 69,000 177,000(2) -0- 17,380
Senior Vice President 2003 200,000 58,500 101,100(3) -0- 16,630
2002 200,000 40,625 -0- -0- 16,123
Brent W. Wood............ 2004 140,000 44,000 108,000(2) -0- 15,673
Senior Vice President 2003 125,000(5) 30,000 -0- -0- 13,250
---------------
(1) This is the amount of incentive compensation payable to the Named Officer
under the 1994 Incentive Plan. In 2002, this amount was paid 60% in cash and
40% in shares of Common Stock.
(2) This represents the value of restricted shares granted to the Named Officer
on March 14, 2005. The restricted shares vest one-third on the date of
grant, one-third on January 1, 2006 and one-third on January 1, 2007.
12
(3) This represents the value of restricted shares granted to the Named Officer
on March 17, 2004. The restricted shares vest one-third on the date of
grant, one-third on January 1, 2005 and one-third on January 1, 2006.
(4) This is the Company's discretionary contribution and matching contribution
to its 401(k) Plan for the Named Officer's benefit and the amount of premium
paid by the Company for group term life insurance on the Named Officer's
life.
(5) Mr. Wood became an executive officer of the Company in 2003.
Option Grants
No options were granted to the Named Officers during the year ended
December 31, 2004.
Option Exercises and Year-End Values
No options were exercised by Messrs. McKey and Wood during 2004. The
following table shows the value realized by Messrs. Hoster, Coleman and Petsas
upon the exercise of options, and the year-end value of unexercised in-the-money
options held by the Named Officers at the fiscal year-end. Year-end values are
based upon the closing price of shares of Common Stock on the New York Stock
Exchange, Inc. on December 31, 2004 ($38.32).
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
SHARES VALUE OF UNEXERCISED
ACQUIRED VALUE NUMBER OF UNEXERCISED IN-THE-MONEY
ON EXERCISE REALIZED OPTIONS AT 12/31/04 (1) OPTIONS AT 12/31/04
----------- -------- ----------------------- --------------------
David H. Hoster II................ 49,814 $936,604 121,605 $2,171,782
President and
Chief Executive Officer
N. Keith McKey.................... N/A N/A 0 $ 0
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
John F. Coleman................... 8,000 108,480 6,000 $ 91,620
Senior Vice President
William D. Petsas................. 7,000 107,664 2,000 $ 35,264
Senior Vice President
Brent W. Wood..................... N/A N/A 8,000 $ 138,685
Senior Vice President
---------------
(1) These options represent options granted to the Named Officer under the 1994
Incentive Plan. All of these options are currently exercisable.
CHANGE IN CONTROL AGREEMENTS
The Company is a party to a Change in Control Agreement with each of
Messrs. Hoster, McKey, Coleman, Petsas, Corkern and Wood (the "Executives").
These agreements provide that, if an Executive is terminated or leaves the
Company's employment for certain reasons during the 36-month period with respect
to Messrs. Hoster
13
and McKey and the 18-month period with respect to Messrs. Coleman, Petsas,
Corkern and Wood, following a Change in Control, the Company will pay the
Executive a lump sum benefit of 2.99 times in the cases of Messrs. Hoster and
McKey and 1.5 times in the cases of Messrs. Coleman, Petsas, Corkern and Wood,
the average of the Executive's salary and accrued bonus for the three calendar
years that ended immediately before (or coincident with) the Change in Control
(the "Average Annual Compensation"). The Change in Control Agreement also gives
the Executive the ability to leave the employment of the Company at any time
during the six-month period following a Change in Control, in which case the
Executive will receive severance payments from the Company for a period of 36
months in the cases of Messrs. Hoster and McKey and 18 months in the cases of
Messrs. Coleman, Petsas, Corkern and Wood equal to one-twelfth of the
Executive's Average Annual Compensation; provided that, if the Executive
receives any remuneration in the form of wages, salary or consulting fees from
another employer or income from self-employment during the 36-month (in the case
of Messrs. Hoster and McKey) or 18-month (in the case of Messrs. Coleman,
Petsas, Corkern and Wood) severance pay period, the Company's obligation under
this sentence shall be reduced by one-half of the amount of such remuneration.
Change in Control is defined in such agreement as (i) any change in control of a
nature that would be required to be reported under the Exchange Act proxy rules;
(ii) any person acquiring beneficial ownership of securities representing 30
percent or more of the combined voting power of the Company's outstanding
securities; (iii) certain changes in the Company's Board of Directors; (iv)
certain mergers; or (v) the approval of a plan of liquidation by the Company.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information, as of December 31, 2004,
relating to equity compensation plans of the Company pursuant to which grants of
options, restricted stock or other rights to acquire shares may be granted from
time to time.
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF OUTSTANDING EXERCISE PRICE OF EQUITY COMPENSATION
OPTIONS, WARRANTS OUTSTANDING OPTIONS, PLANS (EXCLUDING SECURITIES
AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
------------- ----------------------- -------------------- ---------------------------
Equity compensation plans approved
by security holders.............. 378,240 $20.401 1,987,445
Equity compensation plans not
approved by security holders..... -- -- --
------- ------- ---------
Total............................ 378,240 $20.401 1,987,445
======= ======= =========
14
OWNERSHIP OF COMPANY STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) beneficially owned, as of April 14, 2005, more than five
percent of the shares of Common Stock outstanding, except as set forth in the
following table.
AMOUNT OF PERCENT OF
COMMON STOCK COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED STOCK (1)
------------------------------------ ------------------ ----------
T. Rowe Price Associates, Inc. ............................. 2,018,400(2) 9.2%
100 East Pratt Street
Baltimore, Maryland 21202
Neuberger Berman, Inc.
Neuberger Berman, LLC....................................... 1,246,258(3) 5.7%
605 Third Avenue
New York, New York 10158
---------------
(1) Based on the number of shares of Common Stock outstanding as of April 14,
2005 which was 21,920,822 shares of Common Stock.
(2) Based upon an amended Statement on Schedule 13G filed with the SEC on
February 10, 2005 that indicated that T. Rowe Price Associates, Inc. ("Price
Associates") has sole voting power with respect to 228,700 shares of Common
Stock and sole dispositive power with respect to 2,018,400 shares of Common
Stock. For purposes of the reporting requirements of the Exchange Act, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
(3) Based upon a Statement on Schedule 13G filed with the SEC on February 13,
2004 that indicated that Neuberger Berman, Inc. and Neuberger Berman, LLC
share sole voting power with respect to 8,695 shares of Common Stock, shared
voting power with respect to 1,198,858 shares of Common Stock, and shared
dispositive power with respect to 1,246,258 shares of Common Stock. The
1,246,258 shares of Common Stock do not include 1,700 shares of Common Stock
owned by employee(s) of Neuberger Berman, LLC and Neuberger Berman
Management, Inc. as to which Neuberger Berman LLC disclaims beneficial
ownership.
15
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information available to the Company
with respect to shares of Common Stock owned by each director, each nominee for
director, each executive officer and all directors, nominees and executive
officers as a group, as of April 14, 2005:
AMOUNT OF PERCENTAGE OF
COMMON STOCK COMMON
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS BENEFICIALLY OWNED STOCK (1)
------------------------------------------ ------------------ -------------
D. Pike Aloian.............................................. 14,000 (2) *
Alexander G. Anagnos........................................ 27,750 (3) *
H.C. Bailey, Jr. ........................................... 35,102 (4) *
Hayden C. Eaves III......................................... 20,650 (5) *
Fredric H. Gould............................................ 23,250 (6) *
David M. Osnos.............................................. 38,400 (7) *
Leland R. Speed............................................. 287,442 (8) 1.3%
David H. Hoster II.......................................... 300,032 (9) 1.4%
N. Keith McKey.............................................. 112,416(10) *
John F. Coleman............................................. 35,831(11) *
C. Bruce Corkern............................................ 23,635(12) *
William D. Petsas........................................... 36,603(13) *
Brent W. Wood............................................... 18,466(14) *
All directors, nominees and executive officers as a group... 973,577(15) 4.4%
---------------
* Less than 1.0%.
(1) Based on the number of shares of Common Stock outstanding as of April 14,
2005 which was 21,920,822 shares of Common Stock.
(2) Includes 9,000 shares of Common Stock that Mr. Aloian has the right to
acquire under the Company's 2000 Directors' Stock Option Plan (the "2000
Directors' Plan"). Does not include 2,500 shares of Common Stock
beneficially owned by Mr. Aloian's spouse, as to which he disclaims
beneficial ownership.
(3) Includes (i) 15,750 shares of Common Stock that Mr. Anagnos has the right
to acquire under the 2000 Directors' Plan and the Company's 1991 Directors'
Stock Option Plan, as amended (the "1991 Directors' Plan").
(4) Includes (i) 15,750 shares of Common Stock that Mr. Bailey has the right to
acquire under the 2000 Directors' Plan and the 1991 Directors' Plan; (ii)
5,248 shares of Common Stock owned by H.C. Bailey Company, a company of
which Mr. Bailey is Chairman and President; (iii) 3,736 shares of Common
Stock owned by Retsub Partners, L.P., a limited partnership of which Mr.
Bailey is a limited partner; (iv) 2,116 shares of Common Stock owned by
Curtis Partners, L.P., a limited partnership of which Mr. Bailey is
President; and (v) 2,116 shares of Common Stock owned by CJB Partners,
L.P., a limited partnership of which Mr. Bailey is Vice President.
(5) Includes (i) 12,000 shares of Common Stock that Mr. Eaves has the right to
acquire under the 2000 Directors' Plan; (ii) 5,150 shares of Common Stock
owned by Mr. Eaves and his spouse as co-trustees for the Eaves Living
Trust; (iii) 1,000 shares of Common Stock owned by a family foundation of
which Mr. Eaves is President; and (iv) 500 shares of Common Stock owned by
Mr. Eaves as trustee.
16
(6) Includes 4,500 shares of Common Stock owned by a limited partnership of
which Mr. Gould is a general partner and an executive officer and sole
shareholder of the managing general partner (Mr. Gould has shared voting
and dispositive control over these shares). Mr. Gould disclaims beneficial
ownership as to the 4,500 shares of Common Stock owned by the limited
partnership.
(7) Includes 18,000 shares of Common Stock that Mr. Osnos has the right to
acquire under the 2000 Directors' Plan and the 1991 Directors' Plan.
(8) Includes 104,500 shares of Common Stock that Mr. Speed has the right to
acquire pursuant to exercisable options granted under the Company's 1994
Management Incentive Plan, as amended (the "1994 Incentive Plan"), and does
not include 27,288 shares of Common Stock beneficially owned by Mr. Speed's
spouse, as to which he disclaims beneficial ownership.
(9) Includes 121,605 shares of Common Stock that Mr. Hoster has the right to
acquire pursuant to exercisable options granted under the 1994 Incentive
Plan and 50,910 shares of Common Stock granted as incentive restricted
shares under the 1994 Incentive Plan and the Company's 2004 Equity
Incentive Plan (the "2004 Incentive Plan") that have not yet vested. Does
not include 4,680 shares of Common Stock beneficially owned by Mr. Hoster's
wife and daughters, as to which he disclaims beneficial ownership.
(10) Includes 36,264 shares of Common Stock granted to Mr. McKey as incentive
restricted shares under the 1994 Incentive Plan and the 2004 Incentive Plan
that have not yet vested.
(11) Includes 6,000 shares of Common Stock that Mr. Coleman has the right to
acquire pursuant to exercisable options granted under the 1994 Incentive
Plan and 19,089 shares of Common Stock granted as incentive restricted
shares under the 1994 Incentive Plan and the 2004 Incentive Plan that have
not yet vested.
(12) Includes 5,000 shares of Common Stock that Mr. Corkern has the right to
acquire pursuant to exercisable options granted under the 1994 Incentive
Plan, 13,559 shares of Common Stock granted as incentive restricted shares
under the 1994 Incentive Plan and the 2004 Incentive Plan that have not yet
vested and 1,000 shares owned by Mr. Corkern's children.
(13) Includes 2,000 shares of Common Stock that Mr. Petsas has the right to
acquire pursuant to exercisable options granted under the 1994 Incentive
Plan and 19,089 shares of Common Stock granted as incentive restricted
shares under the 1994 Incentive Plan and the 2004 Incentive Plan that have
not yet vested.
(14) Includes 8,000 shares of Common Stock Mr. Wood has the right to acquire
pursuant to exercisable options granted under the 1994 Incentive Plan and
6,894 shares of Common Stock granted as incentive restricted shares under
the 1994 Incentive Plan and the 2004 Incentive Plan that have not yet
vested.
(15) Includes 70,500 shares of Common Stock that directors of the Company have
the right to acquire under the 2000 Directors' Plan and the 1991 Directors'
Plan, 247,105 shares of Common Stock that officers of the Company have the
right to acquire pursuant to exercisable options granted under the 1994
Incentive Plan and 145,805 shares of Common Stock granted to executive
officers as incentive restricted shares under the 1994 Incentive Plan and
the 2004 Incentive Plan that have not yet vested.
OWNERSHIP GUIDELINES FOR DIRECTORS AND OFFICERS
In order to enhance the alignment of the interests of the directors and
management with stockholders, the Company has instituted ownership guidelines
for directors and officers. Each director who has served for at least three
years should own 1,000 shares of Common Stock. Within five years of their
election as an officer or by May 27, 2009 (whichever is later), officers of the
Company are required to own shares of Common Stock having a market value equal
to or greater than the following multiples of their base salary: 1) President
and Chief
17
Executive Officer: five times annual base salary; 2) Executive Vice President:
three times annual base salary; 3) Senior Vice Presidents: two times annual base
salary; and 4) Vice Presidents: one time annual base salary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that directors, officers and
more than 10 percent stockholders of the Company file reports with the SEC to
report a change in ownership within two business days following the day on which
the transaction occurs. During 2004, no officer or director of the Company was
late in filing a report under Section 16(a) except for the following. One Form 4
that was filed for each of Messrs. Coleman, Corkern, Hoster, McKey and Petsas to
report a restricted stock award granted to each of them on March 17, 2004
pursuant to the 1994 Incentive Plan was inadvertently filed late.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Cost Sharing Arrangement with Parkway Properties, Inc. Currently, Parkway
Properties, Inc. and the Company equally share the services and expenses of the
Chairman of the Board of Directors. These services and expenses include rent for
office and storage space, administrative costs, insurance benefits,
entertainment and travel expenses. For the year ended December 31, 2004,
EastGroup's share for these services and expenses totaled approximately $19,000.
Mr. Speed's base compensation is determined by our Compensation Committee which
considers the amount of time Mr. Speed has spent on EastGroup business in the
past and estimates the amount of time Mr. Speed will spend on EastGroup matters
in the future. EastGroup also leases 12,000 square feet of space for its
executive offices in Jackson, Mississippi in a building owned by Parkway.
PROPOSAL TWO: THE 2005 DIRECTORS EQUITY INCENTIVE PLAN
At the Meeting, the stockholders will be asked to vote on a proposal to
ratify the adoption of the 2005 Directors Equity Incentive Plan. The approval of
the 2005 Plan requires the affirmative vote of a majority of votes cast at the
Meeting, provided that the total vote cast on the proposal represents over 50%
in interest of all securities entitled to vote on the proposal as required by
the New York Stock Exchange listing standards. The directors recommend a vote
FOR ratification of the adoption of the 2005 Plan. Unless otherwise instructed,
proxies will be voted FOR ratification of the adoption of the 2005 Plan.
Appendix B to this proxy statement sets forth the text of the 2005 Plan.
The following description of the 2005 Plan contains summaries of certain
provisions of the 2005 Plan and is qualified in its entirety by reference to the
2005 Plan itself.
Background of the 2005 Plan. If the stockholders ratify the adoption of
the 2005 Plan, the 2005 Plan will replace the 2000 Directors' Stock Option Plan,
which would otherwise expire in 2010.
The 2000 Directors' Stock Option Plan provided for automatic option awards
to each non-employee director: an option for 7,500 shares of Common Stock on the
date an individual became a non-employee director, and an option for 2,250
shares on the date of each annual meeting at which the non-employee director was
reelected to the Board of Directors. The Board of Directors has determined that
the Company and its stockholders would be better served by an equity
compensation plan offering different forms of awards. Accordingly, the 2005 Plan
provides for awards in the form of stock and restricted stock.
Shares Available for Awards. The 2005 Plan authorizes the issuance of up
to 50,000 shares of Common Stock pursuant to awards granted to non-employee
directors.
18
Shares of Common Stock issued pursuant to the 2005 Plan may be either newly
issued shares, or, in the Committee's discretion, shares purchased in open
market or privately negotiated transactions from third parties, or a combination
of those sources.
The 2005 Plan authorizes the Committee to adjust the limit described above
in the event that a recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, share exchange, or
other similar corporate transaction or event affects shares of Common Stock.
Eligibility. Only non-employee directors of the Company are eligible for
awards under the 2005 Plan.
Annual Stock Awards. The 2005 Plan provides for an automatic stock award
as of the date of each annual meeting of the Company (starting with the 2005
meeting) to each non-employee director who is elected or reelected to the Board
at that meeting. The annual stock award for a given year shall be for a number
of shares of Common Stock that is equal to $10,000 divided by the fair market
value of a share on the date of the annual meeting for that year.
Initial Award of Restricted Stock. The 2005 Plan provides for an automatic
restricted stock award to each individual who is initially elected as a
non-employee director after May 31, 2005 (provided the individual did not
previously serve as a director who was not a non-employee director). The
restricted stock award shall be for a number of shares of Common Stock that is
equal to $20,000 divided by the fair market value of a share on the date of such
initial election.
A non-employee director's rights to the shares of restricted stock awarded
to him will become vested over time - at the rate of 25 percent on each of the
first four anniversaries of the date of the award. If the director's service as
a director terminates before the fourth anniversary of the date of the award, he
will forfeit those shares in which his rights have not yet vested, unless the
termination is by reason of death or disability.
Upon a change in control, all outstanding restricted shares become fully
vested. The definition of the term "change in control" in the 2005 Plan is the
same as the definition of that term in the Executive Change in Control
Agreements described above under "Compensation of Executive Officers -- Change
in Control Agreements."
The Company will accrue the dividends payable on shares of restricted stock
in which a non-employee director's rights have not yet vested and will pay the
accrued dividends only upon the vesting of the shares to which the dividends are
attributable. A non-employee director may vote shares of restricted stock during
the period before vesting occurs.
Administration. The Board of Directors has designated the Compensation
Committee of the Board as the committee charged with responsibility for
administration of the 2005 Plan. The Committee has the authority to interpret
and specify rules and regulations relating to the 2005 Plan and make all other
determinations necessary for the administration of the 2005 Plan.
Amendment and Termination. The Board of Directors may amend or terminate
the 2005 Plan without further stockholder approval, except that stockholder
approval is required for any amendment that would increase the number of shares
of Common Stock issuable under the Plan.
PROPOSAL THREE: OTHER MATTERS
The management of the Company does not know of any other matters to come
before the 2005 Annual Meeting. However, if any other matters come before the
Annual Meeting, it is the intention of the persons designated as proxies to vote
in accordance with their judgment on such matters.
19
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP served as the independent registered public accounting firm for
the Company for the fiscal year ended December 31, 2004. A representative of
KPMG LLP is expected to be present at the 2005 Annual Meeting and will have an
opportunity to make a statement, if he so desires, and will be available to
respond to appropriate questions. The Audit Committee has not selected the
Company's independent registered public accounting firm for the year ending
December 31, 2005, but intends to do so after the date of this Proxy Statement.
The following table shows the fees paid or accrued by the Company for the
audit and other services provided by KPMG LLP for fiscal years 2004 and 2003.
2004 2003
-------- --------
Audit Fees (1).............................................. $507,100 $255,100
Audit-Related Fees (2)...................................... 8,500 12,250
Tax Fees (3)................................................ 74,300 89,413
All Other Fees.............................................. -- --
-------- --------
Total..................................................... $589,900 $356,763
======== ========
---------------
(1) Audit fees include amounts related to professional services rendered in
connection with the audits of our annual financial statements and reviews of
our quarterly financial statements, the audit of internal control over
financial reporting ($258,000 for 2004) and other services that are normally
provided by the auditor in connection with statutory and regulatory filings
or engagements.
(2) Audit-related fees consisted of accounting consultations. For 2004, this was
primarily for accounting for an unconsolidated investment and a review of
the Company's capitalization policy. For 2003, this was primarily for
accounting for the equity compensation portion of executive bonuses and the
implementation of Financial Accounting Standard 141.
(3) Tax fees principally included fees for tax compliance, tax advice and tax
planning.
The Audit Committee of the Board has considered whether provision of the
non-audit related services described above is compatible with maintaining the
independent accountants' independence and has determined that those services
have not adversely affected KPMG LLP's independence.
STOCKHOLDER PROPOSALS FOR THE
2006 ANNUAL MEETING OF STOCKHOLDERS
PROPOSALS FOR THE COMPANY'S PROXY MATERIAL
Any Company stockholder who wishes to submit a proposal for presentation at
the Company's 2006 Annual Meeting of Stockholders must submit such proposal to
the Company at its office at 300 One Jackson Place, 188 East Capitol Street,
Jackson, Mississippi 39201, Attention: Secretary, no later than December 27,
2005, in order to be considered for inclusion, if appropriate, in the Company's
proxy statement and form of proxy relating to its 2006 Annual Meeting of
Stockholders.
20
PROPOSALS TO BE INTRODUCED AT THE ANNUAL MEETING BUT NOT INTENDED TO BE INCLUDED
IN THE COMPANY'S PROXY MATERIAL
For any stockholder proposal to be presented in connection with the 2006
Annual Meeting of Stockholders, including any proposal relating to the
nomination of a director to be elected to the Board of Directors of the Company,
a stockholder must give timely written notice thereof in writing to the
Secretary of the Company in compliance with the advance notice and eligibility
requirements contained in the Company's Bylaws. To be timely, a stockholder's
notice must be delivered to the Secretary at the principal executive offices of
the Company not less than 60 days and not more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made. The
notice must contain specified information about each nominee or the proposed
business and the stockholder making the nomination or proposal.
In the event that the number of directors to be elected to the Board of
Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Company at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice will be considered
timely, but only with respect to nominees for any new positions created by such
increase, if the notice is delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Company.
Based upon a meeting date of June 1, 2006 for the 2006 Annual Meeting of
Stockholders, a qualified stockholder intending to introduce a proposal or
nominate a director at the 2006 Annual Meeting of Stockholders should give
written notice to the Company's Secretary not later than April 4, 2006 and not
earlier than March 4, 2006.
The advance notice provisions in the Company's Bylaws also provide that, in
the case of a special meeting of stockholders called for the purpose of electing
one or more directors, a stockholder may nominate a person or persons (as the
case may be) for election to such position if the stockholder's notice is
delivered to the Secretary at the principal executive offices of the Company not
earlier than the 90th day prior to the special meeting and not later than the
close of business on the later of the 60th day prior to the special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
The specific requirements of these advance notice and eligibility
provisions are set forth in Article II, Section 12 of the Company's Bylaws, a
copy of which is available upon request.
Such requests and any stockholder proposals should be sent to the Secretary
of the Company at 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi 39201.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ N. Keith McKey
N. KEITH MCKEY
Executive Vice President, Chief
Financial Officer,
Treasurer and Secretary
21
APPENDIX A
EASTGROUP PROPERTIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
(Revised March 15, 2005)
I. PURPOSE
The purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its responsibilities for oversight of the integrity of the
Corporation's financial information that will be provided to the shareholders
and others, the Corporation's compliance with legal and regulatory requirements
relating to audit matters, the performance and selection of independent
accountants, and the performance of the Corporation's internal audit function.
The Audit Committee will fulfill these responsibilities by carrying out the
activities and duties enumerated in this Charter. The Audit Committee shall be
given full and direct access to the Corporation's management, Chairman and
independent accountants as necessary to carry out these responsibilities.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board. Each member must qualify as an independent director
under the listing standards of the New York Stock Exchange and applicable
federal law. Each member shall have a working familiarity with basic finance and
accounting practices and be able to read and understand fundamental financial
statements, including at least one member with accounting or related financial
management expertise. Additionally, the Board shall designate at least one
member as an "audit committee financial expert" as such term is defined in rules
promulgated by the SEC.
If any Committee member simultaneously serves on the audit committee of
more than three public companies, the Board must determine that such
simultaneous services will not impair the ability of such member to effectively
serve on the Corporation's Audit Committee.
The members shall be nominated by the Nominating and Corporate Governance
Committee and appointed annually to one-year terms by the Board. Unless a Chair
is elected by the full Board, the members of the Committee may designate a Chair
by majority vote of the full Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet at least quarterly, or more frequently as
circumstances dictate. The timing of the meetings shall be determined by the
Audit Committee. However, the Audit Committee will meet at any time that the
independent accountants believe communication to the Audit Committee is
required. As part of its job to foster open communication, the Audit Committee
should meet at least quarterly with management and the independent accountants
in separate executive sessions. Minutes shall be kept of each meeting of the
Audit Committee.
IV. EDUCATION
The Corporation is responsible for providing the Committee with educational
resources related to accounting principles and procedures, current accounting
topics pertinent to the company and other material as
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may be requested by the Committee. The Corporation shall assist the Committee in
maintaining appropriate financial literacy.
V. FUNDING
The Committee will determine the appropriate funding to be provided by the
Corporation for payment of compensation to the independent accountants and any
professional consultants or other advisers employed by the Committee as
authorized by this Charter and ordinary administrative expenses of the Committee
that are necessary or appropriate in carrying out its duties.
VI. RESPONSIBILITIES AND DUTIES
The Committee shall have the following duties and responsibilities:
GENERAL RESPONSIBILITIES:
- To report Committee actions to the full Board of Directors and make
appropriate recommendations.
- To inquire as to the independence of the independent public accountant.
As part of this responsibility, the Committee will direct the independent
accountants to submit on a periodic basis to the Committee a formal
written statement delineating all relationships between such accountants
and the Corporation. The Committee is responsible for actively engaging
in a dialogue with the independent accountants with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the independent accountants and for recommending that the
Board of Directors take appropriate action in response to the independent
accountants' report to satisfy itself of the independent accountants'
independence.
- To conduct or authorize investigations into matters within the
Committee's scope of responsibility. The Committee is authorized, with or
without Board approval, to retain independent counsel, accountants or
other advisors as may be necessary or appropriate to assist the Committee
in fulfilling its duties.
- To review and approve, specifically and in advance, any audit or
non-audit services proposed to be provided to the Corporation by its
independent accountants, and to seek to ensure that such services do not
interfere with the independence of such accountants, and do not give rise
to an appearance of impropriety.
- To consider policies and procedures for audit partner rotation on a
five-year cycle, and if required or appropriate, audit firm rotation.
- To establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding accounting auditing or
internal control issues.
- To meet separately and periodically, with management, with internal
auditors and with independent accountants.
- To review and establish hiring policies regulating the hiring by the
Corporation of employees or former employees of the Corporation's
independent accountants.
- To conduct an annual performance evaluation of the Audit Committee.
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RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND REVIEWING INTERNAL
AUDIT FUNCTION:
- To select and evaluate the independent accountants for the annual audit
and quarterly reviews, and to approve any replacement of the independent
accountants if circumstances warrant such action. The Committee's actions
in these areas of responsibility may be subject to ratification by the
Corporation's shareholders. The Audit Committee also will review and
approve fees paid to the independent accountants.
- To confirm and seek to assure the objectivity of the internal audit
function.
RESPONSIBILITIES REGARDING THE ANNUAL EXTERNAL AUDIT, INTERNAL AUDITS AND
QUARTERLY AND ANNUAL FINANCIAL STATEMENTS:
- At least annually, the Audit Committee will obtain and review a report by
the independent accountants describing: the firm's internal
quality-control procedures; any material issues raised by the most recent
internal quality-control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent
audits carried out by the firm, and any steps taken to deal with any such
issues; and (to assess the auditor's independence) all relationships
between the independent accountants and the Corporation.
- The Audit Committee will strive to ensure that the independent accountant
provides the Committee with a timely notification and analysis of
significant financial reporting issues.
- The Audit Committee will discuss with management and the independent
accountant the independent accountant's audit of and report on the
financial statements. The Committee will consider and recommend to the
Board whether the financial statements be included in the Corporation's
annual report on Form 10-K.
- The Audit Committee will have discussions with management and the
independent accountants regarding each quarterly financial report (Form
10-Q) before those interim reports are released to the public or filed
with the SEC or other regulators.
THE AUDIT COMMITTEE WILL DISCUSS THE FOLLOWING WITH THE INDEPENDENT ACCOUNTANT
AND THE INTERNAL AUDITORS:
- The planned arrangements and scope of the annual audit.
- The adequacy of the Corporation's internal controls, including
computerized information systems controls and security.
- Any significant findings and recommendations made by the independent
accountant or internal auditors together with management's response.
THE AUDIT COMMITTEE WILL DISCUSS WITH MANAGEMENT AND THE INDEPENDENT ACCOUNTANT:
- The Corporation's annual financial statements and related notes and
quarterly financial statements, including all of the Corporation's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
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- The independent accountant's qualitative judgment about the quality, not
just the acceptability, of the accounting principles and financial
disclosures.
- The matters required to be discussed by Statement on Auditing Standards
No. 61, as it may be amended, including but not limited to:
- Methods used to account for significant unusual transactions.
- Effect of significant accounting policies in controversial or emerging
areas.
- Process and basis for sensitive accounting estimates.
- Disagreements between independent accountants and management over
accounting or disclosure matters.
- Any serious difficulties or disputes with management encountered during
the course of the audit. The Committee is directly responsible for the
resolution of disagreements between management and the Corporation's
independent accountants regarding financial reporting.
- The Corporation's significant risks and exposures and the steps
management has taken to monitor and control such exposures, including the
Corporation's risk assessment and risk management policies or guidelines,
if any.
PERIODIC RESPONSIBILITIES:
- Review annually the Committee's charter for adequacy and recommend any
changes to the Board.
- Prepare an annual Committee report or other proxy statement disclosure
about the Committee in accordance with Regulations of the Securities and
Exchange Commission and other applicable law.
- Include a copy of the Committee charter as an appendix to the proxy
statement at least once every three years.
- Discuss with management the Corporation's earnings press releases, as
well as financial information and earnings guidance provided to analysts
and rating agencies.
LIMITATION OF AUDIT COMMITTEE'S ROLE:
- Although the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan
or conduct audits or to determine that the Corporation's financial
statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and applicable
rules and regulations. These are the responsibilities of management and
the independent accountants.
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APPENDIX B
EASTGROUP PROPERTIES, INC.
2005 DIRECTORS EQUITY INCENTIVE PLAN
ARTICLE 1
PURPOSE AND DURATION
1.1 Introduction. EastGroup Properties, Inc., (the "Company") establishes
the EastGroup Properties, Inc. 2005 Directors Equity Incentive Plan (the
"Plan"), effective June 1, 2005, subject to the approval of the Company's
stockholders.
1.2 Purpose of the Plan. The purpose of this 2005 Directors Equity
Incentive Plan is to provide incentive for Outside Directors to exert their best
efforts on behalf of the Company and to further the identity of the interests of
Outside Directors with those of the Company's shareholders.
1.3 Form of Incentives. This Plan will provide incentives for Outside
Directors through awards of Shares and Restricted Shares.
1.4 Duration of the Plan. The Plan shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan, until all Shares
subject to the Plan shall have been awarded according to the Plan's provisions.
However, no Shares may be awarded under the Plan after May 31, 2015.
ARTICLE 2
DEFINITIONS
AS USED IN THIS PLAN,
2.1 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.2 "Committee" means a committee designated by the Board to administer the
Plan. The Committee shall consist of at least two directors, and each member of
the Committee shall be a "non-employee director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended.
2.3 "Common Stock" shall mean the common stock, par value $0.0001 per
Share, of the Company.
2.4 "Director" means a member of the Board of Directors of the Company.
2.5 "Disability" means a medically determinable physical or mental
impairment that may be expected to result in death or to last at least a year
and that renders a Director incapable of performing his or her duties as a
Director of the Company. The Committee shall determine whether a Director is
subject to a Disability, in a uniform, nondiscriminatory manner on the basis of
medical evidence.
2.6 "Employee" means any officer or employee who is employed by the Company
or a Subsidiary.
2.7 "Fair Market Value" of a Share on any date means the closing price of a
Share if the Company's Common Stock is listed on an exchange or the mean between
the closing bid and the asked prices for that date if the Common Stock is traded
over-the-counter (or, if no such Shares were publicly traded on that date, the
next preceding date that such Shares were so traded), all as published in The
Wall Street Journal or in any other publication selected by the Committee;
provided, however, that if Shares shall not have been publicly traded for more
than ten days immediately preceding such date, then the Fair Market Value of a
Share shall be determined by the Committee in such manner as it may find
appropriate.
B-1
2.8 "Outside Director" means a Director of the Company who is not an
Employee of the Company or a Subsidiary of the Company.
2.9 "Restricted Period" means the period described in Section 7.1 during
which Restricted Shares are not vested.
2.10 "Restricted Shares" has the meaning given in Article 7.
2.11 "Share" means a share of the Common Stock of the Company.
2.12 "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Company.
ARTICLE 3
ADMINISTRATION
3.1 Authority of the Committee. The Committee shall administer the Plan.
Except as limited by law and subject to the provisions of the Plan, the
Committee shall have full power and discretion to: determine the number of
Shares to be awarded in accordance with Article 6; construe and interpret the
Plan; establish, amend, or waive rules for the Plan's administration; correct
defects, supply omissions, or reconcile inconsistencies in the Plan; and make
all other determinations and take all other action the Committee may find
necessary or advisable for the administration of the Plan. In exercising its
discretion under the Plan the Committee shall not be required to follow past
practices or treat any Director in a manner consistent with the treatment of
other Directors.
3.2 Delegation of Authority. The Committee may delegate to officers of the
Company its duties, power, and authority under the Plan pursuant to such
conditions or limits as the Committee may establish.
3.3 Decisions Binding. All determinations made by the Committee under the
Plan shall be final and binding on all persons.
ARTICLE 4
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares Subject to Awards. 50,000 Shares of Common Stock are
reserved for awards under the Plan.
4.2 Adjustments in Authorized Shares. If a dividend or other distribution,
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, Share exchange, liquidation,
dissolution, or other similar corporate transaction or event affects the Common
Stock of the Company, then the Committee shall, in such manner as it may
determine equitable, substitute or adjust the remaining limit on the number and
kind of Shares available for awards subsequently granted pursuant to the Plan
and the number and kind of Shares subject to an outstanding award of Restricted
Shares.
4.3 Source of Shares. Shares awarded pursuant to the Plan may be either
newly issued Shares, or, at the Committee's discretion, Shares purchased in open
market or privately negotiated transactions from third parties, or a combination
of those sources.
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ARTICLE 5
ELIGIBILITY
5.1 Eligibility. Only Outside Directors are eligible to participate in the
Plan.
ARTICLE 6
ANNUAL AWARD OF SHARES
6.1 Annual Award. As of the date of each annual meeting of shareholders of
the Company during the term of this Plan, the Company shall automatically award
the number of Shares computed under the formula in Section 6.2 to each
individual who is elected or reelected as an Outside Director at that meeting.
The number shall be rounded down to the next whole number.
6.2 Annual Award Formula. The formula for computing the number of Shares to
be awarded to each eligible Outside Director as of the date of an annual meeting
pursuant to Section 6.1 is:
The number of Shares shall be equal to $10,000 divided by the Fair
Market Value of a Share on the date of the annual meeting with respect to
which the award is being made. If the annual meeting is recessed to a later
date, the divisor shall be the Fair Market Value of a Share on the date on
which the meeting is ultimately adjourned.
ARTICLE 7
RESTRICTED SHARES
7.1 Restricted Share. A Restricted Share is a Share awarded to an Outside
Director in which the Director's interest shall become vested only upon the
performance of future service as a Director, subject to Section 7.7(b). The
"Restricted Period" is the period between the date of award of a Restricted
Share and the date as of which the vesting condition with respect to the Share
is satisfied.
The Restricted Period shall lapse as follows:
WITH RESPECT TO: END OF RESTRICTED PERIOD
---------------- ------------------------------
25 percent of the Restricted Shares originally awarded 1st anniversary of award date
The second 25 percent of the Restricted Shares
originally awarded 2nd anniversary of award date
The third 25 percent of the Restricted Shares originally
awarded 3rd anniversary of award date
The final 25 percent of the Restricted Shares originally
awarded 4th anniversary of award date
7.2 Award of Restricted Shares.
(a) The Company shall automatically award Restricted Shares to an
Outside Director as of the date on which he or she is first elected as an
Outside Director, provided that date is after May 31, 2005, and provided
further that he or she did not previously serve as a Director who was not
an Outside Director. The number of Restricted Shares to be awarded shall be
computed under the formula in Section 7.2(b) and rounded down to the next
whole number.
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(b) The formula for computing the number of Restricted Shares to be
awarded to an eligible Outside Director pursuant to Section 7.2(a) is:
The number of Restricted Shares shall be equal to $20,000 divided by the
Fair Market Value of a Share on the date of the specified election.
7.3 Award Agreement; Share Certificate. A Restricted Share award shall be
evidenced by an award agreement that shall specify the number of Shares awarded
and the Restricted Period applicable. The Company shall retain in its possession
the certificates representing Restricted Shares until such time as such Shares
have vested.
7.4 Nontransferability. A Restricted Share may not be sold, transferred,
pledged, assigned, or otherwise alienated before the end of the Restricted
Period applicable to it.
7.5 Voting Rights. A Director may, during the Restricted Period, exercise
full voting rights with respect to Restricted Shares awarded to the Director.
7.6 Dividends and Other Distributions. During the Restricted Period,
dividends and other distributions with respect to Restricted Shares shall be
accrued by the Company as contingent cash obligations, which shall be payable
only as provided in Section 7.8.
7.7 Termination of Service.
(a) Except as provided in Section 7.7(b), upon termination of a
Director's employment with the Company and its Subsidiaries during the
Restricted Period, the Director shall forfeit all Shares subject to the
Restricted Period.
(b) Upon termination of a Director's service as a Director by reason
of death or Disability, the Restricted Period for outstanding Restricted
Shares awarded to the Director shall end and the Director's interest in
those Shares shall become fully vested.
(c) A Director's interest in any amount of dividends and other
distributions accumulated on Restricted Shares and not paid before the
termination of the Director's service as a Director during the Restricted
Period shall be forfeited or become fully vested upon the termination of
the Director's employment, in correspondence with the Director's interest
in the Shares to which the dividends and other distributions are
attributable.
7.8 Action upon Vesting. Upon the vesting of a Director's interest in a
Restricted Share, the vested Share shall no longer be a Restricted Share, and
the Company shall deliver a certificate to the Director for the vested Share and
pay the amount of dividends and other distributions accrued pursuant to Section
7.6 with respect to the vested Share. The Company shall make such delivery and
payment to the Director or, in the case of the Director's death, to the
Director's estate or the person to whom the Director's rights are transferred by
will or the laws of descent and distribution.
ARTICLE 8
CHANGE IN CONTROL
8.1 Definition of Change in Control. For purposes of this Plan, a "Change
in Control" shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is then subject to such reporting
requirements; provided that, without limitation,
B-4
such a Change in Control shall be deemed to have occurred if (a) any "person"
(as such term is used in section 13(d) and 14(d) of the Exchange Act) is or
becomes "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30 percent or
more of the combined voting power of the Company's then outstanding securities;
or (B) during any period of two consecutive years, the following persons (the
"Continuing Directors") cease for any reason to constitute a majority of the
Board: individuals who at the beginning of such period constitute the Board and
new Directors each of whose election to the Board or nomination for election to
the Board by the Company's security holders was approved by a vote of at least
two-thirds of the Directors then still in office who either were Directors at
the beginning of the period or whose election or nomination for election was
previously so approved; or (C) the security holders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(i) a merger or consolidation that would result in the voting securities of the
Company outstanding immediately before the merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of such surviving entity) more than 50 percent of the combined voting
power of the voting securities of the Company or of such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger of
consolidation that is approved by a Board having a majority of its members
persons who are Continuing Directors, of which Continuing Directors not less
than two-thirds have approved the merger or consolidation; or (D) the security
holders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets.
8.2 Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, the Restricted Periods imposed on outstanding Restricted Share awards
shall lapse.
ARTICLE 9
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment and Termination of Plan. The Board of Directors may amend or
terminate the Plan at any time; provided, however, that without the approval of
stockholders, the Board of Directors may not amend the Plan to increase (except
for increases due to adjustments in accordance with Section 4.2) the aggregate
number of Shares that may be awarded pursuant to the Plan.
ARTICLE 10
WITHHOLDING
10.1 Tax Withholding. Subject to Section 10.2, the Company may deduct or
withhold, or require a Director to remit to the Company, an amount (either in
cash or Shares) sufficient to satisfy any obligation the Company may have to
withhold federal, state, and local taxes, with respect to any taxable event
arising under or in connection with Shares and Restricted Shares awarded under
this Plan.
10.2 Share Withholding. With respect to any withholding required upon the
occurrence of any taxable event arising under or in connection with Shares and
Restricted Shares awarded under this Plan, the Company may satisfy its
withholding obligation, in whole or in part, by withholding Shares having a Fair
Market Value (determined on the date the Director recognizes taxable income on
the award) equal to any withholding tax required to be collected on the
transaction. The Director may elect, however, subject to the approval of the
Committee, to deliver the funds, in whole or in part, necessary to satisfy the
withholding obligation to the Company, in which case there shall be no reduction
in the Shares otherwise distributable to the Director.
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ARTICLE 11
MISCELLANEOUS
11.1 Severability. If a provision of the Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
11.2 Unfunded Status of the Plan. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments or deliveries of
Shares not yet made to a Director by the Company, nothing contained in this Plan
shall give any rights that are greater than those of a general creditor of the
Company.
11.3 Governing Law. To the extent not preempted by federal law, the Plan
shall be construed in accordance with and governed by the laws of the State of
Maryland.
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EASTGROUP PROPERTIES, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8588
EDISON,NJ 08818-8588
EASTGROUP PROPERTIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 2, 2005, 9:00 A.M., CDT
CORPORATE OFFICES
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON,MISSISSIPPI
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
-------------------------------------------------------------------------------
| 5997
Please mark |
[X] your vote as in |______________
this example.
This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made,this proxy will be voted FOR the matter indicated in 1 below
and will be voted in the discretion of the Proxies named herein with respect to any matters referred
to in 2 below. You are encouraged to specify your choices by marking the appropriate boxes, but you
need not mark any boxes if you wish to vote in accordance with the Board of Directors' recommendations.
The Proxies cannot vote your shares unless you sign and return this card.
----------------------------------------------------- FOR AGAINST ABSTAIN
EASTGROUP PROPERTIES, INC. 2. Ratification of [ ] [ ] [ ]
----------------------------------------------------- the EastGroup
1. Election of Directors. Nominees: D. Pike Aloian; Properties, Inc.
H. C. Bailey, Jr.; 2005 Directors
FOR WITHHELD Hayden C. Eaves, III; Equity Incentive Plan
FOR WITHHOLD Fredric H. Gould;
ALL [ ] [ ] FROM ALL David H. Hoster II; 3. In their discretion, [ ] [ ] [ ]
NOMINEES NOMINEES David M. Osnos; the Proxies are
and Leland R. Speed. authorized to vote
[ ] _____________________________________ upon such other business as may properly
For all nominees except as written above come before the meeting or any
adjournments thereof.
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON STOCK
CERTIFICATE(S). A corporation is requested to sign its name by
its President or other authorized officer, with the office held so
designated. A partnership should sign in the partnership name by
an authorized person. Executors, trustees, administrators, etc.
are requested to indicate the capacity in which they are signing.
JOINT TENANTS SHOULD BOTH SIGN.
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE.
Signature: Date: Signature: Date:
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EASTGROUP PROPERTIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 2, 2005, 9:00 A.M., CDT
CORPORATE OFFICES
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON,MISSISSIPPI
DETACH HERE
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PROXY
EASTGROUP PROPERTIES, INC.
P 300 ONE JACKSON PLACE, 188 EAST CAPITOL STREET, JACKSON, MISSISSIPPI 39201
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O The undersigned hereby appoints DAVID H. HOSTER II and N. KEITH McKEY, or either of them, Proxies for the
undersigned, each with full power of substitution, and thereby authorizes them to represent and to vote all
X shares of common stock, $0.0001 par value per share, of EastGroup Properties, Inc. (the "Company"), which the
undersigned would be entitled to vote at the Annual Meeting of Stockholders to be held at the Company's offices,
Y 300 One Jackson Place, 188 East Capitol Street, Jackson, Mississippi, on Thursday, June 2, 2005, at 9:00 a.m.,
Jackson time, or any adjournment or postponement thereof, and directs that the shares represented by this Proxy
shall be voted as indicated on the reverse.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
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| PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
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