0000912057-01-537769.txt : 20011119
0000912057-01-537769.hdr.sgml : 20011119
ACCESSION NUMBER: 0000912057-01-537769
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011206
FILED AS OF DATE: 20011106
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PRIME RETAIL INC/BD/
CENTRAL INDEX KEY: 0000911708
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798]
IRS NUMBER: 382559212
STATE OF INCORPORATION: MD
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13301
FILM NUMBER: 1775573
BUSINESS ADDRESS:
STREET 1: 100 E PRATT ST
STREET 2: 1900 FLOOR
CITY: BALTIMORE
STATE: MD
ZIP: 21202
BUSINESS PHONE: 4102340782
MAIL ADDRESS:
STREET 1: 100 EAST PRATT STREET
STREET 2: 1900 FLOOR
CITY: BALTIMORE
STATE: MD
ZIP: 21202
DEF 14A
1
a2062439zdef14a.txt
DEF 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
PRIME RETAIL, INC.
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(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
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[LOGO]
November 6, 2001
Dear Preferred Stockholder:
You are cordially invited to attend the Special Meeting of Preferred
Stockholders of Prime Retail, Inc. (the "Company") to be held at 100 East Pratt
Street, 12th Floor, Baltimore, Maryland, on December 6, 2001, at 11:00 a.m.,
local time. The purpose of the Meeting is to consider and take action (i) to
elect two additional directors to be elected solely by the holders of the 10.5%
Series A Senior Cumulative Preferred Stock and the 8.5% Series B Cumulative
Participating Convertible Preferred Stock (together, the "Preferred Stock"),
voting together as a single class, to serve until the Company's annual meeting
of stockholders in 2003 or until their respective successors are duly elected
and qualified, or, if earlier, the date on which the full dividends accumulated
on all outstanding shares of the Preferred Stock have been paid in full or
declared and a sum of money sufficient for the payment thereof set aside for
payment; and (ii) to transact such other business as may properly come before
the Meeting. Additional information with respect to these matters is set forth
in the enclosed Proxy Statement and the formal notice of Meeting.
Also enclosed is a green Proxy Card to be used to cast votes representing
shares of Series A Preferred Stock and a blue Proxy Card to be used to cast
votes representing shares of Series B Preferred Stock. After reading these
materials, please mark, date, sign, and return the enclosed Proxy Card(s) to
ensure that your vote on the important business matters to be considered at the
Meeting will be recorded. Note that if you hold only Series A Preferred Stock,
you should complete only the green Proxy Card. If you hold only Series B
Preferred Stock, you should complete only the blue Proxy Card. If you hold
shares of both Series of Preferred Stock, you must complete both Proxy Cards. I
appreciate your investment in the Company and am looking forward to this
opportunity to meet you personally. Whether or not you can attend, however, I
greatly appreciate your cooperation in returning the enclosed Proxy Card(s).
Sincerely,
[GLENN D. RESCHKE SIGNATURE]
Glenn D. Reschke
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
PRIME RETAIL, INC.
NOTICE OF SPECIAL MEETING OF PREFERRED STOCKHOLDERS
TO BE HELD ON DECEMBER 6, 2001
To the Preferred Stockholders of Prime Retail, Inc.:
The Special Meeting of Preferred Stockholders of Prime Retail, Inc., a
Maryland corporation (the "Company"), will be held at 100 East Pratt Street,
12th Floor, Baltimore, Maryland, on December 6, 2001 at 11:00 a.m., local time
(the "Meeting"), to consider and vote on the following matters:
(i) To elect two additional directors to be elected solely by the holders of
the 10.5% Series A Senior Cumulative Preferred Stock, $0.01 par value
per share (the "Series A Preferred Stock"), and the 8.5% Series B
Cumulative Participating Convertible Preferred Stock, $0.01 par value
per share (the "Series B Preferred Stock", and together with the
Series A Preferred Stock, the "Preferred Stock"), voting together as a
single class, to serve until the Company's annual meeting of
stockholders in 2003 or until their respective successors are duly
elected and qualified, or, if earlier, the date on which the full
dividends accumulated on all outstanding shares of the Preferred Stock
have been paid in full or declared and a sum of money sufficient for the
payment thereof set aside for payment; and
(ii) To transact such other business as may properly come before the Meeting
or any adjournment(s) or postponement(s) thereof.
Holders of record of the Company's Series A Preferred Stock and Series B
Preferred Stock at the close of business on October 11, 2001 shall be entitled
to notice of, and to vote with respect to all matters to be acted upon at, the
Meeting or any adjournment or postponement thereof.
By Order of the Board of Directors,
[C. ALAN SCHROEDER SIGNATURE]
C. Alan Schroeder
SECRETARY
Baltimore, Maryland
November 6, 2001
PLEASE DATE, SIGN AND RETURN YOUR PROXY CARD(S) PROMPTLY IN THE ENCLOSED,
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
PRIME RETAIL, INC.
100 EAST PRATT STREET
19TH FLOOR
BALTIMORE, MARYLAND 21202
------------------------
PROXY STATEMENT
FOR THE
2001 SPECIAL MEETING OF PREFERRED STOCKHOLDERS
TO BE HELD ON DECEMBER 6, 2001
The enclosed proxy is solicited by and on behalf of the board of directors
(the "Board of Directors" or "Directors") of Prime Retail, Inc., a Maryland
corporation (the "Company"), for use at the Special Meeting of Preferred
Stockholders (the "Meeting") to be held at 100 East Pratt Street, 12th Floor,
Baltimore, Maryland, on Thursday, December 6, 2001 at 11:00 a.m., local time, or
at any adjournment or postponement thereof. This Proxy Statement and
accompanying Proxy Cards are being mailed to preferred stockholders on or about
November 6, 2001.
BACKGROUND
Pursuant to the Amended and Restated Articles of Incorporation of the
Company (the "Charter"), if and whenever dividends payable on the Preferred
Stock shall be in arrears for six or more consecutive quarterly periods, then
the holders of Preferred Stock, voting together as a single class, shall be
entitled at the next annual meeting of stockholders or at any special meeting
called for such purpose, to elect two additional directors (the "Preferred
Directors") to the Company's Board of Directors until the full dividends
accumulated on all outstanding shares of the Preferred Stock have been paid in
full or declared and a sum of money sufficient for the payment thereof set aside
for payment. More than six quarterly dividends remain unpaid with respect to
both series of Preferred Stock, and the Company is presently unable to declare
or pay dividends on the Preferred Stock. Accordingly, the holders of the
Preferred Stock, voting as a class, are entitled to elect two Preferred
Directors.
The Board of Directors presently consists of six members, who are Kenneth A.
Randall, Glenn D. Reschke, Michael W. Reschke, Sharon Sharp, Governor James R.
Thompson and Marvin Traub.
DESCRIPTION OF THE PROXY; PROXY SOLICITATION
If the accompanying Proxy Card(s) are properly signed and returned to the
Company and not revoked, they will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the Proxy Card(s) will vote for the Preferred
Director Nominees in the same proportion as all other properly completed and
executed proxies received by the Company in a timely manner and all votes cast
in person at the meeting. Each proxy executed and returned by a stockholder may
be revoked at any time before it is voted by timely submission of written notice
of revocation or by submission of a duly executed proxy bearing a later date (in
either case directed to the Secretary of the Company) or, if present at the
Meeting, a stockholder may elect to revoke his or her proxy and vote shares
personally. The principal executive offices of the Company are located at 100
East Pratt Street, 19th Floor, Baltimore, Maryland 21202.
The cost of solicitation of proxies will be borne by the Company. The
Company has engaged American Stock Transfer and Trust Company, the Company's
transfer agent, to solicit proxies on behalf of the Company. The fee associated
with this service is approximately $2,500. In addition, the Company may use the
services of its Directors, officers, employees and others to solicit proxies,
personally or by telephone. Arrangements may also be made with brokerage houses
and other custodians, nominees, fiduciaries and stockholders of record to
forward solicitation material to the beneficial owners of stock held of record
by such persons. The Company may reimburse such solicitors for reasonable
out-of-pocket expenses incurred by them in connection with such solicitation. If
any personal interviews
or telephone conversations are used to solicit proxies, delivery of this Proxy
Statement and Proxy Card will precede the interview or telephone conversation.
If as a result of the interview or conversation additional Proxy Cards are
requested or required, they will be forwarded to the registered holder as so
requested or required.
QUORUM AND VOTE REQUIRED
Only holders of record of the Company's 10.5% Series A Senior Cumulative
Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), and
of the Company's 8.5% Series B Cumulative Participating Convertible Preferred
Stock, par value $0.01 per share ("Series B Preferred Stock", and together with
the Series A Preferred Stock, the "Preferred Stock"), on October 11, 2001 (the
"Record Date") will be entitled to vote at the Meeting. As of the Record Date,
the Company had 2,300,000 shares of Series A Preferred Stock and 7,828,125
shares of Series B Preferred Stock outstanding and entitled to vote with respect
to all matters to be acted upon at the Meeting.
Pursuant to the Company's Charter, the votes of holders of Series A
Preferred Stock and Series B Preferred Stock shall be combined, with each series
having a number of votes proportional to the aggregate liquidation preference of
its outstanding shares. The liquidation preference for each series of Preferred
Stock is $25.00 plus accrued but unpaid dividends. Therefore, the liquidation
preference per share of Series A Preferred Stock and Series B Preferred Stock,
up to and including the Record Date, is $30.00 and $29.0479, respectively. As a
result, the holders of Series A Preferred Stock will entitled to one vote per
share and the holders of the Series B Preferred Stock will be entitled to 0.9683
votes per share.
Under Maryland Law, the presence of holders in person or by proxy
representing a majority of all the votes entitled to be cast at the Meeting will
constitute a quorum at the Meeting. Abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Assuming the presence of a quorum, the two Preferred
Director Nominees receiving the largest number of affirmative votes cast by
holders of the Series A Preferred Stock and the Series B Preferred Stock, voting
together as a single class, will be elected to the Board of Directors.
Abstentions and broker non-votes will not be considered votes cast for purposes
of the foregoing and, therefore, will have no effect on the election of
directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of shares of the Company's common stock, par value $0.01 per share
("Common Stock"), common units of limited partnership interests ("Common Units")
in Prime Retail, L.P., a Delaware limited partnership in which the Company is
the sole general partner (the "Operating Partnership"), and the Preferred Stock
as of November 1, 2001 for (a) each stockholder of the Company holding more than
5% of the voting securities of the Company, (b) each named executive officer
listed in the Summary Compensation Table presented below, (c) the Directors of
the Company and Preferred Director Nominees and (d) the Directors and executive
officers of the Company as a group. Unless otherwise indicated in the footnotes,
all of such interests are owned directly, and the indicated person or entity has
sole voting and investment power. The number of shares represents the number of
shares of Common Stock the person holds, the number of shares of Common Stock
the person has the right to acquire upon exercise of certain stock options
("Stock Options") granted pursuant to the Company's 1994 Stock Incentive Plan,
the Company's 1995 Stock Incentive Plan, the Consulting Agreement between the
Operating Partnership and Marvin Traub Associates, Inc. ("MTA"), the Company's
1998 Long-Term Stock Incentive Plan and the Company's Amended and Restated
Nonemployee Director Stock Plan (collectively, the "Stock Incentive Plans"), the
number of shares of Common Stock into which Common Units held by the person are
exchangeable (if, as discussed below, the Company elects to issue shares of
Common Stock rather than pay cash upon such exchange) and the number of shares
of Common
2
Stock into which shares of Series B Preferred Stock held by the person are
convertible. The extent to which a person directly holds Common Stock, Stock
Options, Common Units or Series B Preferred Stock is set forth in the notes. The
Third Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (as amended, the "Operating Partnership Agreement") provides that
Common Units may be exchanged, subject to certain limitations, into Common Stock
or, at the option of the Company, cash equal to the fair market value of a share
of Common Stock at the time of exchange. Holders of Series B Preferred Stock
have the right, subject to ownership and transfer restrictions in the Company's
charter intended to allow the Company to maintain its status as a REIT, to
convert all or any of their Series B Preferred Stock into Common Stock at the
conversion price of $20.90 per share of Common Stock, subject to certain
adjustments.
PERCENTAGE NUMBER OF SHARES
NUMBER OF SHARES OF OF OF
COMMON STOCK/ ALL SHARES OF SERIES A AND PERCENT OF
COMMON UNITS COMMON SERIES B ALL SHARES OF
NAME AND ADDRESS OF BENEFICIALLY OWNED STOCK PREFERRED STOCK SERIES A AND SERIES B
BENEFICIAL OWNER(1) (2) (3) BENEFICIALLY OWNED PREFERRED STOCK
------------------- ------------------- ------------- ------------------ ----------------------
Glenn D. Reschke (4).......... 574,587 1.3% 0 *
Robert A. Brvenik(5).......... 166,660 (24) 0 *
C. Alan Schroeder (6)......... 299,467 (24) 100 (24)
Steven S. Gothelf(7).......... 160,769 (24) 0 *
John A. Mastin(8)............. 127,844 (24) 0 *
Michael W. Reschke(9)......... 8,131,900 15.9% 9,552 (24)
Prime Finance, Inc.(10)....... 5,557,000 11.3% 0 *
Prime Financing Limited
Partnership(11)............. 5,557,000 11.3% 0 *
Kenneth A. Randall(12)........ 13,500 (24) 0 *
Sharon J. Sharp............... 3,000 (24) 0 *
James R. Thompson(13)......... 213,000 (24) 0 *
Marvin S. Traub(14)........... 98,000 (24) 0 *
Directors and executive
officers of the Company as a
group (11 persons).......... 9,788,727 22.5% 9,652 (24)
Maurice A. Halperin(15)....... 4,115,709 9.3% 697,400 6.9%
PREFERRED DIRECTOR NOMINEES
Paul M. Albert, Jr. (16)...... 0 * 0 *
Howard Amster(17)............. 1,830,344 4.2% 1,362,605 13.5%
Dov K. Avni(18)............... 22,739 (24) 200 (24)
Robert H. Kanner (19)......... 0 * 0 *
John B. Newman (20)........... 0 * 0 *
Gary J. Skoien (21)........... 38,745 (24) 29,175 (24)
William M. Stern(22).......... 13,000 (24) 21,500 (24)
Samuel N. Yarmak(23).......... 509,000 1.2% 45,000 (24)
------------------------
Notes:
(1) All of the Directors of the Company and the Named Executives may be
contacted c/o Prime Retail, Inc., 100 East Pratt Street, 19th Floor,
Baltimore, Maryland 21202.
(2) The beneficial ownership of Common Stock and of Preferred Stock reported
herein for all owners other than Preferred Director Nominees is based upon
filings with the Commission and is subject to confirmation by the Company
that such ownership did not violate the ownership restrictions in the
Company's charter. The ownership of Common Units reported herein is derived
from the
3
transfer records maintained by the Operating Partnership based on
information provided by the Operating Partnership's limited partners. The
beneficial ownership of Common Stock and Preferred Stock for each of the
Preferred Director Nominees is based on information provided by such
nominees to the Company for inclusion in this Proxy Statement. The Company
has not independently verified such information. Information presented
includes Common Stock issuable upon exercise of Stock Options which have
vested or will vest within 60 days of November 1, 2001 as follows: Mr. G.
Reschke 255,000; Mr. Brvenik 83,340; Mr. Schroeder 150,340; Mr. Mastin
95,000; Mr. Gothelf 102,000; Mr. M. Reschke 450,000; Mr. Randall 10,000;
Governor Thompson 150,000; and Mr. Traub, including Marvin Traub
Associates, Inc. ("MTA") 55,000. Information presented also includes Common
Stock issued pursuant to a Restricted Stock Award Plan which have vested or
will vest within 60 days of November 1, 2001 as follows: Governor Thompson
63,000; Mr. G. Reschke 15,687; Mr. Brvenik 49,007; Mr. Schroeder, 49,007;
Mr. Gothelf 32,844; and Mr. Mastin 32,844.
(3) Information presented assumes exchange or conversion only of Common Units
and Series B Preferred Stock owned by such beneficial owner for Common
Stock. Information presented also includes Common Stock issuable upon
exercise of Stock Options of such beneficial owner which have vested or
will vest within 60 days of November 1, 2001. In addition, certain of the
Common Units and shares of Common Stock set forth below as being held by or
beneficially owned by each of Mr. M. Reschke, Prime Finance, Inc. and Prime
Financing Limited Partnership have been pledged to certain unaffiliated
third parties to secure certain indebtedness (collectively, the
"Pledgees"). Unless and until the Pledgees foreclose on the pledged Common
Units or Common Stock or have given notice of an event of default under the
operative pledge or loan agreement, such entities will not have the direct
or indirect power to vote or dispose of the Common Units so pledged. The
Pledgees disclaim beneficial ownership of these pledged Common Units
pursuant to Section 13d-4 of the Exchange Act.
(4) Information presented includes 251,300 Common Units which are held by
Reschke I LLC, 68,287 shares of Common Stock owned by Mr. G. Reschke and
255,000 shares of Common Stock which Mr. G. Reschke has the right to
acquire upon the exercise of Stock Options.
(5) Information presented includes 83,320 shares of Common Stock owned by
Mr. Brvenik and 83,340 shares of Common Stock which Mr. Brvenik has the
right to acquire upon exercise of Stock Options.
(6) Information presented includes 149,007 shares of Common Stock owned by
Mr. Schroeder, 120 shares of Common Stock issuable to Mr. Schroeder upon
conversion of the 100 shares of Series B Preferred Stock owned by him and
150,340 shares of Common Stock which Mr. Schroeder has the right to acquire
upon exercise of certain Stock Options.
(7) Information presented includes 58,769 shares of Common Stock owned by
Mr. Gothelf and 102,000 shares of Common Stock which Mr. Gothelf has the
right to acquire upon exercise of Stock Options.
(8) Information presented includes 32,844 shares of Common Stock owned by
Mr. Mastin and 95,000 shares of Common Stock which Mr. Mastin has the right
to acquire upon exercise of Stock Options. Mr. Mastin resigned from his
position as Executive Vice President--Leasing effective as of November 2,
2001. However, information regarding Mr. Mastin's stock ownership is set
forth in this Proxy Statement pursuant to the rules of the Securities and
Exchange Commission.
(9) Information presented includes 251,300 shares of Common Stock held by Prime
Group Limited Partnership ("PGLP"), 5,557,000 Common Units held by Prime
Financing Limited Partnership ("PFLP"), 961,085 Common Units held by Prime
Group II, L.P. ("PGII"), 721,912 Common Units held by Prime Group V, L.P.
("PGV), 104,632 Common Units held by Prime Group VI, L.P. ("PGVI"), 199,548
shares of Common Stock owned by Mr. M. Reschke, 11,424 shares of Common
4
Stock issuable to Mr. M. Reschke upon conversion of the 9,552 shares of
Series B Preferred Stock owned by him, and 324,999 shares of Common Stock
which Mr. M. Reschke has the right to acquire upon exercise of Stock
Options. Mr. M. Reschke is the managing general partner of PGLP, owns a
controlling equity interest in the managing general partner of PFLP and
owns a controlling equity interest in the managing general partner of each
of PGII, PGV, and PGVI. Mr. M. Reschke's address is c/o The Prime
Group, Inc. ("PGI"), 77 West Wacker Drive, Suite 4200, Chicago, Illinois
60601.
(10) Information presented includes 5,557,000 Common Units held by PFLP. Prime
Finance, Inc. is the managing general partner of PFLP. The address of Prime
Finance, Inc. is c/o PGI, 77 West Wacker Drive, Suite 4200, Chicago,
Illinois 60601.
(11) Information presented includes 5,557,000 Common Units directly held by
PFLP. The address of PFLP is c/o PGI, 77 West Wacker Drive, Suite 4200,
Chicago, Illinois 60601.
(12) Information presented includes 3,500 shares of Common Stock, 500 of which
are owned by Mr. Randall's wife, and 10,000 shares of Common Stock which
Mr. Randall has the right to acquire upon exercise of Stock Options.
(13) Information presented includes 63,000 shares of Common Stock owned by
Governor Thompson and 150,000 shares of Common Stock which Governor
Thompson has the right to acquire upon exercise of Stock Options.
(14) Information presented includes 43,000 shares of Common Stock owned by
Mr. Traub, 10,000 shares of Common Stock which Mr. Traub has the right to
acquire upon the exercise of Stock Options, and 45,000 shares of Common
Stock which MTA, an affiliate of Mr. Traub, has the right to acquire upon
exercise of Stock Options.
(15) Information presented is based on a Schedule 13D/A filed with the
Commission on February 15, 2001 by Maurice A. Halperin. The amounts set
forth represent 3,418,309 shares of Common Stock and 697,400 shares of
Series B Preferred Stock currently convertible into 834,229 shares of
Common Stock. Mr. Halperin's business address is 17890 Deauville Lane, Boca
Raton, Florida 33496.
(16) Mr. Albert's business address is 135 Main Street, South Salem, New York
10590-1209.
(17) Information presented includes (i) 335,726 shares of Common Stock
beneficially owned by Mr. Amster's IRAs; (ii) 66,948 shares of Common Stock
beneficially owned by the Amster Trading Company Charitable Remainder
Unitrust (Mr. Amster is the trustee); (iii) 23,632 shares of Common Stock
issuable upon conversion of the 19,760 shares of Series B Preferred Stock
beneficially owned by Gould Trading Company (Mr. Amster's wife owns 100% of
such company); (iv) 1,404,038 shares of Common Stock issuable upon
conversion of (A) 928,025 shares of Series B Preferred Stock beneficially
owned by Mr. Amster's IRAs, (B) 181,000 shares of Series B Preferred Stock
beneficially owned by Ramat Securities Ltd. (Mr. Amster owns 83% of Ramat
Securities Ltd.), (C) 2,750 shares of Series B Preferred Stock beneficially
owned by Amster Limited Partnership (Mr. Amster is the general partner),
(D) 58,000 shares of Series B Preferred Stock beneficially owned by the
Howard M. Amster Charitable Remainder Unitrust (Mr. Amster is the trustee),
(E) 170 shares of Series B Preferred Stock beneficially owned by Pleasant
Lake Apts. Corp. (Mr. Amster owns 100% of the company), and (F) 4,000
shares of Series B Preferred Stock beneficially owned by Pleasant Lake
Apts. Limited Partnership (Pleasant Lake Apts. Corp. is the general
partner); (v) 27,700 shares of Series A Preferred Stock beneficially owned
by Mr. Amster's IRAs; (vi) 104,100 shares of Series A Preferred Stock
beneficially owned by Ramat Securities Ltd.; (vii) 10,000 shares of
Series A Preferred Stock beneficially owned by Pleasant Lake Apts. Limited
Partnership; (viii) 17,100 shares of Series A Preferred Stock beneficially
owned by Mr. Amster's wife; and (ix) 10,000 shares of Series A Preferred
Stock beneficially owned by Gould Trading Company. Mr. Amster disclaims
beneficial ownership of any shares of Common
5
Stock or Preferred Stock beneficially owned by his wife or Gould Trading
Company. Mr. Amster's business address is 23811 Chagrin Blvd. #200,
Beachwood, Ohio 44122-5525.
(18) Information presented includes (i) 2,500 shares of Common Stock held by
Mr. Avni directly (1,000 of which are held in an IRA), (ii) 20,000 shares
of Common Stock held jointly by Mr. Avni's wife and son over which
Mr. Avni has a power of attorney and (iii) 239 shares of Common Stock
issuable upon conversion of the 200 shares of of Series B Preferred Stock
held directly by Mr. Avni. Mr. Avni's address is 150-B Forest Drive,
Jericho, New York 11753.
(19) Mr. Kanner's business address is 3830 Kelley Avenue, Cleveland, Ohio
44114-4590.
(20) Mr. Newman's business address is c/o MBNT Financial Holdings Limited, 70
University Avenue, Suite 400, Toronto, Ontario M5J 2M4.
(21) Information presented includes 3,850 shares of Common Stock beneficially
owned by Mr. Skoien and 34,893 shares of Common Stock issuable upon the
conversion of the 254 shares of Series B Preferred Stock beneficially owned
by Mr. Skoien's IRAs and the 29,175 shares of Series B Preferred Stock
beneficially owned by Mr. Skoien directly. Mr. Skoien's business address is
c/o The Prime Group, Inc., 77 West Wacker Drive, Suite 4200, Chicago,
Illinois 60601.
(22) Information presented includes (i) 2,750 shares of Series A Preferred Stock
held by Mr. Stern directly, (ii) 950 shares of Series A Preferred Stock he
beneficially owns as the trustee of the Berger trust, (iii) 21,500 shares
of Common Stock held by Mr. Stern directly and (iv) 11,122 shares of Common
Stock issuable upon conversion of the 9,300 shares of Series B Preferred
Stock he beneficially owns as the trustee of the estate of Mel Stern and
the Jackie S. Gutman Trust U/ T/A dated 1/26/94. Mr. Stern's business
address is Stern Brothers & Co., 8000 Maryland Avenue, Suite 1020, St.
Louis, Missouri 63105.
(23) Information presented includes (i) 45,000 shares of Series A Preferred
Stock Mr. Yarmak beneficially owns (such shares are owned directly by
Business Exchange Investments Inc. ("BEII") of which Mr. Yarkmak is the
President and Chairman), (ii) 441,000 shares of Common Stock held by BEII,
and (iii) 68,000 shares of Common Stock held by Mr. Yarmak directly.
Mr. Yarmak's business address is 4616 West Sahara, Unit 317, Las Vegas,
Nevada 89102.
(24) Amount represents less than 1%.
PROPOSAL NO. 1
ELECTION OF PREFERRED DIRECTORS
The Preferred Directors will each hold office until the Company's annual
meeting of stockholders in 2003 or until their successors are duly elected and
qualified, or, if earlier, the date on which the full dividends accumulated on
all outstanding shares of the Preferred Stock have been paid in full or declared
and a sum of money sufficient for the payment thereof set aside for payment.
Properly completed and executed proxies will be voted in the manner directed by
the executing stockholder. If no direction is made on an executed proxy by a
stockholder, then the votes such stockholder is entitled to cast shall be cast
for the Preferred Director Nominees in the same proportion as all other properly
completed and executed proxies received by the Company in a timely manner and
all votes cast in person at the meeting. Note that stockholders may only vote
the proxy cards for two directors. If a stockholder votes for more than two
directors on a proxy card, the card will be deemed null and void and such
stockholder's votes will not be counted. The Board of Directors is not aware
that any nominee may be unable or unwilling to serve as a Director.
Set forth below are the names of and certain other information regarding the
nominees for the two additional Preferred Director positions to be elected at
the Meeting and also regarding the Directors whose terms of office will continue
after the Meeting. The information concerning the Preferred Director Nominees
was provided to the Company by the Preferred Director Nominees for
6
inclusion in this Proxy Statement. The Company has not independently verified
such information and does not make any representation as to its accuracy.
NOMINEES FOR ELECTION
-------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION AND STOCKHOLDER NOMINATING THIS
NAME AGE POSITION HELD PREFERRED DIRECTOR NOMINEE
-------------------------------------------------------------------------------------------------------
Paul M. Albert, Jr. 58 Finance and Capital Markets Cede & Co., on behalf of
Consultant, Private Investor Merrill Lynch Global
and Director of EarthWatch Allocation Fund, Inc.
Incorporated
-------------------------------------------------------------------------------------------------------
Howard Amster 53 Securities Principal of Ramat Cede & Co., Nominee of The
Securities Ltd. and Private Depositary Trust Company, on
Investor behalf of Howard Amster
-------------------------------------------------------------------------------------------------------
Dov K. Avni 59 Stock Investor and Investment Richard A. Liotta, a holder of
Consultant 200 shares of Series B
Preferred Stock and 2,500
shares of Common Stock.
-------------------------------------------------------------------------------------------------------
Robert H. Kanner 54 President, Chairman and Chief Cede & Co., Nominee of The
Executive Officer of Pubco Depositary Trust Company, on
Corporation behalf of Howard Amster
-------------------------------------------------------------------------------------------------------
John B. Newman 67 Chairman of MBNT Financial Cede & Co., on behalf of
Holdings Limited Merrill Lynch Global
Allocation Fund, Inc.
-------------------------------------------------------------------------------------------------------
Gary J. Skoien 47 President, Chairman and Chief Cede & Co., Nominee of The
Executive Officer of Horizon Depositary Trust Company, on
Group Properties, Inc. and behalf of Gary Skoien
Executive Vice President and
Chief Operating Officer of The
Prime Group, Inc.
-------------------------------------------------------------------------------------------------------
William M. Stern 56 Senior Vice President of Stern David Eidelman, a holder of
Brothers & Co. 8,700 shares of Series A
Preferred Stock, 3,000 shares
of Series B Preferred Stock
and 100,000 shares of Common
Stock.
-------------------------------------------------------------------------------------------------------
Samuel N. Yarmak 67 President and Chairman of the Samuel N. Yarmak
Board of Directors of Business
Exchange Investments Inc.
-------------------------------------------------------------------------------------------------------
PAUL M. ALBERT, JR. Mr. Albert is a professional corporate director,
finance and capital markets consultant primarily engaged in educating bankers at
global financial institutions, and a private investor. He has been a director of
EarthWatch Incorporated since April 1999 and prior to the sale of the companies
was a director of CAI Wireless from December 1998 to August 1999 and Teletrac
Inc. from December 1999 to April 2001. In his capacity as a corporate director
he has served on audit, compensation, finance, and governance committees,
usually as committee chairman, and is an active member of the National
Association of Corporate Directors. From 1970 to 1996 he was an investment
banker, holding senior officer positions at Morgan Stanley & Co. and Prudential
Securities. He earned
7
degrees at Princeton University and Columbia Business School and has taught at
Columbia and Cornell Business Schools.
HOWARD AMSTER. Since June 2000, Howard Amster has been a securities
principal at Ramat Securities Ltd., a registered NASD securities broker/dealer.
He is also currently the President of Pleasant Lake Apts. Corp., the general
partner of Pleasant Lake Apts. Limited Partnership, a private owner and operator
of apartment properties. From 1992 to June 2000, Mr. Amster was an investment
consultant at First Union Securities Corp., formerly EVEREN Securities, formerly
Kemper Securities Corp. Mr. Amster is currently a director of Maple Leaf
Financial, the private holding company for Geauga Savings Bank, a northern Ohio
savings bank, Horizon Group Properties, Inc. (NasdaqSC:HGPI), a publicly held
real estate investment trust, and Astrex, Inc. (OTC BB: ASXI.OB), a publicly
held value-added distributor of electronic components used in connecting,
controlling, regulating and storing electricity in equipment. From 1992 to 1998,
Mr. Amster was a trustee of CleveTrust Realty Investment Trust, a formerly
publicly traded company that liquidated during 1997-1998.
DOV K. AVNI. Mr. Avni is private investor and investment consultant.
Mr. Avni is an electronic systems engineer (M.S.C. EE.) with a Masters in
Business Administration from LIU. He has had substantial experience in
acquisition, management, leasing and selling of real property from 1987 to the
present. Prior to that time, he has managed large defense programs in Israel
jointly with the United States Air Force.
ROBERT H. KANNER. Since 1983, Robert H. Kanner has been a director and the
President and Chief Executive Officer of Pubco Corp. (NASDAQ:PUBO), a
manufacturer and marketer of computer printer and labeling supplies, labeling
devices and products for construction and related industries. From 1987 until
the present, Mr. Kanner has also been the Chairman of Pubco Corp. From 1992 to
1998, Mr. Kanner was a trustee of CleveTrust Realty Investors, a formerly Nasdaq
traded business trust that liquidated pursuant to a shareholder approved orderly
liquidation plan during 1997-1998. Mr. Kanner was also a director of Riser
Foods, Inc., a formerly American Stock Exchange traded grocery wholesaler and
retailer, from 1988 until its acquisition by Giant Eagle, Inc. in 1997.
JOHN B. NEWMAN. Since his retirement in 1990 as Deputy Chairman of
Prudential Securities (Canada), Mr. Newman has served as Chairman and Chief
Executive Officer of MBNT Financial Holdings Limited, a private investment
vehicle located in Toronto, Ontario, Canada. Mr. Newman also served as Chairman
and Chief Executive Officer of First Plact Tower Inc., the owner of a
2.6 million square foot, 72 story office and retail complex located in Toronto,
from its emergence from bankruptcy in 1995 until its sale in September 1999. He
is currently Chairman of the First Canadian Place Management Committee and is a
director of a number of public and private Canadian corporations and trusts
engaged in real estate, insurance, investment, manufacturing, distribution and
financing. From December 1998 until its sale in August 1999, Mr. Newman was a
director and Chairman of the Finance/Strategic Partner Committee of CAI
Wireless Inc.
GARY J. SKOIEN. From June 1998 to the present, Mr. Skoien has been the
President, Chairman and Chief Executive Officer of Horizon Group
Properties, Inc. (NasdaqSC:HGPI), a publicly held real estate investment trust
and since 1995 has been the Executive Vice President and Chief Operating Officer
of The Prime Group, Inc., a privately held developer, manager and owner of real
estate.
WILLIAM M. STERN. Since September 1999, Mr. Stern has been the Senior Vice
President in charge of sales and trading for Stern Brothers & Co., a broker
dealer with expertise in municipal finance and underwriting. From 1997 to 1999,
Mr. Stern was a Vice President of Mercantile Bank. Mr. Stern was also the
Managing Director of the Bond Department of Mark Twain Capital Markets Group
from 1975 to 1997. He is a member of the board of directors of Westmoreland Coal
Co. Mr. Stern received his Masters in Business Administration from the Wharton
Business School in 1969.
8
SAMUEL N. YARMAK. Since February 2000, Mr. Yarmak has been the President
and Chairman of the Board of Directors of Business Exchange Investments Inc., an
investment company. His responsibilities at such company include overseeing all
investments. From 1999 until April 2001, Mr. Yarmak served as a member of the
Official Committee of Equity Security Holders of Criimi Mae Inc. (CMM) and, in
that capacity participated in the Chapter 11 reorganization of CMM, which
emerged from bankruptcy on April 17, 2001, pursuant to a plan of reorganization
of which the Equity Committee was a proponent. From 1985 through 1998,
Mr. Yarmak was associated with Business Exchange, a Barter Trade Company. From
1991 to 1998, Mr. Yarmak served as the Chairman of their board of directors.
From 1975 until 1984, he worked with National Mortgage Company in the capacity
of REO property management and from 1969 until 1974, he was employed by Title
Insurance and Trust Company as both an auditor and as Assistant Treasurer, where
his duties included cash flow management.
DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER THE MEETING
------------------------------------------------------------------------------------------------------
PRINCIPAL
OCCUPATION AND YEAR TERM OF SERVED AS A
NAMES AGE POSITION HELD OFFICE WILL EXPIRE DIRECTOR SINCE
------------------------------------------------------------------------------------------------------
James R. Thompson 65 Director 2002 1994
------------------------------------------------------------------------------------------------------
Marvin Traub 75 Director 2002 1994
------------------------------------------------------------------------------------------------------
Glenn D. Reschke 50 Chairman of the 2003 1997
Board, Director
------------------------------------------------------------------------------------------------------
Michael W. Reschke 45 Director 2003 1994
------------------------------------------------------------------------------------------------------
Kenneth A. Randall 72 Director 2004 1994
------------------------------------------------------------------------------------------------------
Sharon Sharp 60 Director 2004 1997
------------------------------------------------------------------------------------------------------
GOVERNOR JAMES R. THOMPSON. Governor James R. Thompson, a Director of Prime
Retail, Inc. since its inception in 1994, is the Chairman of the law firm of
Winston & Strawn and has been a partner with the firm since 1991. Prior to
joining Winston & Strawn, Governor Thompson served as the Governor of Illinois
from 1977-1991. Governor Thompson serves on the board of directors of FMC
Corporation, FMC Technologies, Inc., Jefferson Smurfit Group plc, Prime Group
Realty Trust, Navigant Consulting, Inc., Maximus, Inc. and Hollinger
International, Inc. Governor Thompson received his Juris Doctorate degree from
the Northwestern University Law School.
MARVIN S. TRAUB. Marvin S. Traub, a Director of Prime Retail, Inc. since
its inception in 1994, has been President of Marvin Traub & Associates ("MTA")
since 1992. MTA is an international consulting firm with clients in France,
Italy, the United Kingdom and the United States. In addition, Mr. Traub joined
Financo, Inc. in 1994 as Senior Advisor. Prior to establishing MTA, Mr. Traub
was Chairman of Bloomingdales from 1978-1992 and was Vice Chairman of Federated
Department Stores from 1988-1992. Mr. Traub was a director and Chairman of the
Executive Committee of The Conran Stores, Inc. Mr. Traub is Chairman of the Home
Co., in which Prime Retail, Inc. owns an interest, and Chairman of the Executive
Committee of The Museum Company. Mr. Traub received an M.B.A. degree (with
distinction) from Harvard Business School after receiving a B.A. degree (magna
cum laude) from Harvard University.
GLENN D. RESCHKE. Glenn D. Reschke is President, Chief Executive Officer
and Chairman of the Board of Directors of Prime Retail, Inc. Reporting to the
Board of Directors, Mr. G. Reschke is responsible for all aspects of the
Company, its 45 outlet centers and all its employees, including the leasing,
operations, marketing, development, finance and administrative functions. In
addition, Mr. G. Reschke is responsible for developing and implementing the
long-term strategic goals and objectives of
9
the Company as approved by the Board of Directors. Mr. G. Reschke has been a
member of the Board of Directors since 1997. Mr. G. Reschke became President and
Chief Operating Officer of the Company on October 6, 1999; acting Chief
Executive Officer of the Company on February 25, 2000; and Chief Executive
Officer and Chairman of the Board of Directors of the Company on July 19, 2000.
From the inception of the Company in 1994 through October 6, 1999, Mr. G.
Reschke served as Executive Vice President--Development and Acquisitions. Prior
to his employment by the Company, Mr. G. Reschke worked for The Prime
Group, Inc. ("PGI"), which he joined in 1983 and served as Vice President,
Senior Vice President and Executive Vice President. Mr. G. Reschke was
responsible for PGI's multi-family, senior housing, single family and land
development divisions. Mr. G. Reschke received a Masters in Business
Administration from Eastern Michigan University with a specialization in finance
after receiving a Bachelor of Science degree with honors in Chemical Engineering
from Rose Hulman Institute of Technology in Terre Haute, Indiana. Mr. G. Reschke
is the brother of Michael W. Reschke.
MICHAEL W. RESCHKE. Michael W. Reschke has been a Director of Prime
Retail, Inc. since its inception in 1994. Mr. M. Reschke was Chairman of the
Board of Directors of Prime Retail, Inc. from the Company's inception until
July 19, 2000. On April 5, 2000, Mr. M. Reschke relinquished his
responsibilities as an executive officer and became the non-executive Chairman
of the Board of Prime Retail, Inc. Mr. M. Reschke founded The Prime Group, Inc.
("PGI") in 1981 and, since that time, has acted as PGI's Chairman, Chief
Executive Officer, and President. Mr. M. Reschke is Chairman of the Board of
Trustees of Prime Group Realty Trust (NYSE: PGE), Chairman of the Board of
Directors of Prime Outdoor Group, L.L.C., and a member of the Board of Directors
of Horizon Group Properties, Inc. (NasdaqSC: HGPI) and Whiteco Residential,
L.L.C. Mr. M. Reschke received a Juris Doctorate degree (summa cum laude) from
the University of Illinois after having received a B.A. degree (summa cum laude)
in Accounting from Northern Illinois University. Mr. M. Reschke is licensed to
practice law in the State of Illinois and is a certified public accountant.
Mr. M. Reschke is a board member of World Business Chicago, a public-private
partnership organized to attract business to the City of Chicago and to promote
the region, and a member of the National Real Estate Roundtable, the Chicago
Development Council, the Chicago Economic Club and the Urban Land Institute.
Mr. M. Reschke is the brother of Glenn D. Reschke, Chairman of the Board,
President and Chief Executive Officer of Prime Retail, Inc.
KENNETH A. RANDALL. Kenneth A. Randall has been a Director of Prime
Retail, Inc. since its inception in 1994. Mr. Randall is Chairman of the Audit
Committee of the Board of Directors. Mr. Randall was the Chairman of ICL Inc.
from 1980 to 1982, Vice Chairman of Northeast Bancorp, Inc. from 1977 to 1987,
the Chairman and Chief Executive Officer of United Virginia Bankshares
Incorporated from 1970 to 1976 and the Chairman of the FDIC from 1965 to 1970.
Mr. Randall was President and Chief Executive Officer of The Conference
Board, Inc. from 1976 to 1982. Mr. Randall currently serves on the board of
directors of Dominion Resources, Inc. Mr. Randall also serves as trustee of the
New York based Oppenheimer Mutual Funds. Other than serving as a member of
various boards of directors, Mr. Randall has not had any other employment in the
five years preceding the date of this Proxy Statement. Mr. Randall attended
Weber State University and received a B.A. degree and an M.S. degree from
Brigham Young University.
SHARON SHARP. Sharon Sharp, a Director of Prime Retail, Inc. since
November 1997, is a director of the Public Gaming Research Institute ("PGRI"),
where she serves as publisher of Public Gaming International, the leading
magazine of the worldwide lottery industry, and manages their international
career placement service specializing in lottery and gaming personnel.
Ms. Sharp joined PGRI in January 1994. Prior to joining PGRI, Ms. Sharp served
as director of the Illinois and California Lotteries from 1987-1993. Ms. Sharp
attended Holy Cross Central School of Nursing, and received an A.A.S. in
Journalism from Harper College.
10
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established the Audit Committee, the Executive
Committee, the Compensation Committee and the Independent Directors Committee.
The Company does not have a Nominating Committee. During 2000, each director
attended at least 75% of the combined number of meetings of the Board and any
committee of which he or she was a member.
AUDIT COMMITTEE. The functions of the Audit Committee, which currently
consists of Mr. Randall and Ms. Sharp, include making recommendations concerning
the engagement of independent public accountants, reviewing with the independent
accountants the plans and results of the audit engagement, approving
professional services provided by the independent public accountants, reviewing
the independence of the independent public accountants, considering the range of
audit and non-audit fees, and reviewing the adequacy of the Company's internal
accounting controls. Mr. Randall is Chairman of the Audit Committee.
EXECUTIVE COMMITTEE. The Executive Committee, which currently consists of
Messrs. G. Reschke and Governor Thompson, has certain authority to acquire and
dispose of real property and the power to authorize, on behalf of the Board of
Directors, the execution of certain contracts and agreements, including those
related to certain financings by the Company; provided, however, unless
specifically authorized by the Board of Directors, the Executive Committee's
authorization related to any individual matter shall not exceed $3,000,000. All
actions by the Executive Committee are reported at the next meeting of the Board
of Directors.
COMPENSATION COMMITTEE. The Compensation Committee, which currently
consists of Ms. Sharp, has certain responsibilities in connection with
determining the compensation for the Company's executive officers and
implementing and administering the Company's Stock Incentive Plans.
INDEPENDENT DIRECTORS COMMITTEE. The Independent Directors Committee, which
consists of Messrs. Randall, M. Reschke, Traub and Governor Thompson and
Ms. Sharp, has the responsibility to (i) consider and approve any proposed
action or transaction involving the Company and PGI; (ii) consider and take such
actions and make such approvals and recommendations as are required to be
considered, taken or made by the Company's independent directors under either
the Operating Partnership Agreement or corporate governance documents relating
to the Company, or otherwise; and (iii) consider and take such actions and make
such approvals as are appropriate to reduce or eliminate any potential or
apparent conflict of interest which may arise in connection with any proposed
action or transaction involving the Company.
During the fiscal year ended December 31, 2000, the Audit Committee held
five meetings, the Executive Committee held twenty-two meetings, the Independent
Directors Committee held one meeting, the Compensation Committee held four
meetings, and the Board of Directors held eleven meetings.
11
COMPENSATION OF DIRECTORS
Directors who are not employees of, or affiliated with, the Company will
receive a fee for their services as Directors. Such persons will receive annual
compensation of $35,000 plus a fee of $1,000 for attendance in person at each
meeting of the Board of Directors, a fee of $500 for participating by telephone
in each substantial meeting of the Board of Directors or of any committee of the
Board of Directors, a fee of $500 for attending any meeting of any committee of
the Board of Directors, and an annual fee of $1,000 for each committee on which
such member serves. Such persons also will receive reimbursement of all travel
and lodging expenses related to their attendance at both board and committee
meetings. Pursuant to the Prime Retail, Inc. Nonemployee Director Stock Plan
(the "Directors Plan") adopted at the 1999 annual meeting, the Company grants
each outside director of the Company restricted stock awards of 1,000 shares of
Common Stock each year. Such shares of restricted stock fully vest upon the date
of grant.
In consideration for service on the Board of Directors' Executive Committee
in 1999, pursuant to the Directors Plan, the Company granted options to purchase
an aggregate of 60,000 shares of Common Stock to Mr. Norman Perlmutter. Such
options vested immediately and will terminate on July 28, 2009. The exercise
price of such options is $8.50. In consideration for service on the Board of
Directors' Executive Committee in 2000, Governor James R. Thompson and
Messrs. N. Perlmutter and William P. Dickey each received restricted stock
awards of 60,000 shares of Common Stock, which awards were made pursuant to the
Directors Plan and which shares vest on a monthly basis beginning May 1, 2000
and which fully vested on September 1, 2000. As additional consideration for
service on the Board of Director's Executive Committee, pursuant to the Prime
Retail, Inc. 1994 Stock Incentive Plan, the Company granted options to purchase
an aggregate of 420,000 shares of Common Stock to outside directors of the
Company as follows (with the number of shares of Common Stock to be issued upon
exercise thereof indicated parenthetically): Norman Perlmutter (140,000),
William P. Dickey (140,000) and Governor James R. Thompson (140,000). Such
options vest on a monthly basis beginning May 1, 2000 and fully vested on
February 1, 2001 and will terminate upon the earlier to occur of (a) the
expiration of ten years from the date of grant or (b) the expiration of one year
from the date of termination of services of the optionee as a Director of the
Company. The exercise price of such options is $1.6875 per share. Both Mr. N.
Perlmutter and Mr. Dickey resigned from their positions as directors of the
Company effective November 2, 2001. Information regarding compensation paid to
them during the Company's last fiscal year is set forth as required by the rules
of the Securities and Exchange Commission.
12
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The following table sets forth certain information as of November 6, 2001
concerning each of the Company's executive officers and key employees serving in
such capacities:
NAME AGE POSITION
---- -------------------- --------
Glenn D. Reschke....................... 50 President, Chief Executive Officer, Chairman of the
Board of Directors
Robert A. Brvenik...................... 46 Executive Vice President--Chief Financial Officer
and Treasurer
Steven S. Gothelf...................... 41 Executive Vice President--Finance
David G. Phillips...................... 40 Executive Vice President
C. Alan Schroeder...................... 44 Executive Vice President--General Counsel and
Secretary
GLENN D. RESCHKE. Glenn D. Reschke is President, Chief Executive Officer
and Chairman of the Board of Directors of Prime Retail, Inc. Reporting to the
Board of Directors, Mr. G. Reschke is responsible for all aspects of the
Company, its 45 outlet centers and all its employees, including the leasing,
operations, marketing, development, finance and administrative functions. In
addition, Mr. G. Reschke is responsible for developing and implementing the
long-term strategic goals and objectives of the Company as approved by the Board
of Directors. Mr. G. Reschke has been a member of the Board of Directors since
1997. Mr. G. Reschke became President and Chief Operating Officer of the Company
on October 6, 1999; acting Chief Executive Officer of the Company on
February 25, 2000; and Chief Executive Officer and Chairman of the Board of
Directors of the Company on July 19, 2000. From the inception of the Company in
1994 through October 6, 1999, Mr. G. Reschke served as Executive Vice
President--Development and Acquisitions. Prior to his employment by the Company,
Mr. G. Reschke worked for PGI, which he joined in 1983 and served as Vice
President, Senior Vice President and Executive Vice President. Mr. G. Reschke
was responsible for PGI's multi-family, senior housing, single family and land
development divisions. Mr. G. Reschke received a Masters in Business
Administration from Eastern Michigan University with a specialization in finance
after receiving a Bachelor of Science degree with honors in Chemical Engineering
from Rose Hulman Institute of Technology in Terre Haute, Indiana. Mr. G. Reschke
is the brother of Michael W. Reschke.
ROBERT A. BRVENIK. Robert A. Brvenik is Executive Vice President--Chief
Financial Officer and Treasurer of the Company. Mr. Brvenik joined the Company
in 2000. Mr. Brvenik's responsibilities with the Company include capital market
activities, corporate budgeting, financial reporting, investor relations,
accounting, taxation, treasury and management information systems. Prior to
joining the Company, Mr. Brvenik was associated for 13 years with Pyramid
Management Group, Inc. where he served in several key capacities including Chief
Financial Officer, Chief Operating Officer, Director of Development and Senior
Leasing Representative in addition to liason with several large commercial and
investment banks. Mr. Brvenik has also held positions at Arthur Andersen & Co.
and Citicorp. He received his B.S. in Accounting from Utica College of Syracuse
University and is a Certified Public Accountant.
STEVEN S. GOTHELF. Steven S. Gothelf is the Executive Vice
President--Finance of the Company. Mr. Gothelf was Senior Vice
President--Finance of the Company from 1994 to 1999 and has been Executive Vice
President--Finance of the Company since 1999. Mr. Gothelf's responsibilities
with the Company include financing, capital market activities, asset management
and the review and analysis of potential outlet center acquisitions and
dispositions. From 1990 until the Company's initial public offering of stock in
1994, Mr. Gothelf served as Vice President of Asset and Development Management
of PGI. For two years prior to joining PGI, Mr. Gothelf was Vice President of
Finance and Administration of Clarion Development Inc. Before joining Clarion
Development Inc., Mr. Gothelf was
13
a Market Maker for financial futures at the Chicago Board of Trade and prior to
that was a Manager of Real Estate Tax and Consulting for KPMG Peat Marwick LLP.
Mr. Gothelf received his B.S. degree in Accounting from the University of
Illinois and is a certified public accountant.
DAVID G. PHILLIPS. David G. Phillips is President of Prime Retail Europe
and an Executive Vice President of the Company. Mr. Phillips oversees the
Company's development, marketing, leasing and operations efforts in Europe.
Prior to becoming President of Prime Retail Europe in 1999, Mr. Phillips was
Executive Vice President--Leasing of the Company from 1994 to 1996 and then
Executive Vice President--Operations, Marketing and Leasing of the Company from
1996 until 1999. From 1989 to 1994, Mr. Phillips was Vice President--Director of
Leasing of PGI. Prior to joining PGI, Mr. Phillips was a leasing representative
at D.I. Realty, Inc., leasing a variety of retail projects including outlet
centers and traditional and specialty malls. Mr. Phillips received a Masters of
Science degree in Real Estate Development from Johns Hopkins University and a
Bachelor of Science degree in Business Administration from the University of
Vermont. Mr. Phillips is a member of the ICSC with a CLS (Certified Leasing
Specialist) designation from the Urban Land Institute.
C. ALAN SCHROEDER. C. Alan Schroeder is Executive Vice President--General
Counsel and Secretary of the Company. He has been General Counsel since 1994.
From 1990 to 1994, Mr. Schroeder was an Assistant General Counsel of PGI,
responsible for legal matters relating to the retail division. Prior to joining
PGI, Mr. Schroeder was associated with Hopkins & Sutter, a Chicago, Illinois
based law firm now part of Foley & Lardner. Mr. Schroeder received a Juris
Doctorate degree from The University of Chicago Law School and an A.B. degree
from Bowdoin College in Brunswick, Maine. Mr. Schroeder is licensed to practice
law in Illinois.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation for
services in all capacities to the Company for the years ended December 31, 1998,
1999 and 2000 with respect to the Chief Executive Officer of the Company and the
four other persons who were the most highly compensated executive officers of
the Company during 2000, as well as two other persons who performed Chief
Executive Officer-related duties during 2000 (the "Named Executives"). Note that
certain Common Stock and option values set forth below, per the rules of the
Securities and Exchange Commission, are based on the closing price of the
Company's Common Stock on the New York Stock Exchange on December 29, 2000, the
last day of trading in 2000. In September 2001, the Common Stock was delisted
from the New York Stock Exchange and began trading on the OTC Bulletin Board.
14
SUMMARY COMPENSATION TABLE
ANNUAL
COMPENSATION LONG TERM COMPENSATION AWARD
----------------------- -----------------------------------------------
PAYOUTS
---------
RESTRICTED STOCK SECURITIES LTIP
AWARDS UNDERLYING PAYOUTS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) OPTIONS/SARS(#) ($)
------------------------------------------- -------- --------- ----------- ---------------- ---------------- ---------
Glenn D. Reschke........................... 2000 350,707 175,203 -- 300,000(4) --
Chairman of the Board, President and 1999 266,288 -- -- -- --
Chief Executive Officer(3) 1998 225,961 252,500 138,292 50,000(4) --
Robert A. Brvenik(5)....................... 2000 115,588 250,000 -- 200,000(4) --
Executive Vice President -- Chief 1999 -- -- -- -- --
Financial Officer and Treasurer 1998 -- -- -- -- --
C. Alan Schroeder.......................... 2000 237,207 236,703 -- 200,000(4) --
Executive Vice President -- General 1999 239,971 107,000 -- -- --
Counsel and Secretary 1998 200,000 280,000 138,242 50,000(4) --
Steven S. Gothelf.......................... 2000 200,707 200,203 -- 100,000(4) --
Executive Vice President -- Finance 1999 188,572 90,000 -- -- --
1998 148,846 185,000 69,125 25,000(4) --
John S. Mastin (6)......................... 2000 200,707 156,203 -- 100,000(4) --
Executive Vice President -- Leasing 1999 194,668 90,000 -- -- --
1998 156,635 90,000 69,125 25,000(4) --
Michael W. Reschke......................... 2000 86,539 -- -- -- --
Director(7) 1999 259,255 -- -- -- --
1998 259,615 225,000 368,636 300,000(4) --
Abraham Rosenthal(8)....................... 2000 77,569 -- -- -- --
1999 417,904 -- -- -- 628,928(9)
1998 415,384 360,000 -- 300,000(4) 628,925(9)
------------------------
NOTES:
(1) Reflects bonus paid for performance in year indicated.
(2) The total number of shares of restricted Common Stock held by each person
listed above (which number excludes restricted Common Stock awards which
vested prior to December 31, 2000 and includes all unvested restricted
Common Stock awards) and the value of such shares of restricted Common
Stock, based on the closing price ($0.4688) as listed on the New York Stock
Exchange on December 29, 2000 (the last day of trading in 2000), were as
follows:
--------------------------------------------------------------------------------------
NUMBER OF SHARES OF
RESTRICTED COMMON STOCK
HELD AT DECEMBER 31, 2000 VALUE AT DECEMBER 31, 2000
NAME (#) ($)
--------------------------------------------------------------------------------------
Glenn D. Reschke 7,844 3,677
--------------------------------------------------------------------------------------
Robert A. Brvenik 0 0
--------------------------------------------------------------------------------------
C. Alan Schroeder 7,844 3,677
--------------------------------------------------------------------------------------
Steven S. Gothelf 3,922 1,839
--------------------------------------------------------------------------------------
John S. Mastin 3,922 1,839
--------------------------------------------------------------------------------------
Michael W. Reschke 20,915 9,805
--------------------------------------------------------------------------------------
Abraham Rosenthal 0 0
--------------------------------------------------------------------------------------
15
(3) Mr. G. Reschke was promoted to President and Chief Operating Officer on
October 6, 1999, to President and acting Chief Executive Officer on
February 25, 2000, and then to Chairman of the Board, President and Chief
Executive Officer on July 19, 2000. Formerly, Mr. G. Reschke served as
Executive Vice President--Development and Acquisitions.
(4) Options granted pursuant to the 1998 Long-Term Stock Incentive Plan.
(5) Mr. Brvenik joined the Company during June, 2000 and therefore received no
compensation in 1998 and 1999.
(6) Mr. Mastin resigned from his position with the Company on November 2, 2001.
Information regarding his compensation is included in this Proxy Statement
pursuant to the rules of the Securities and Exchange Commission.
(7) On April 5, 2000, Mr. M. Reschke relinquished his responsibilities as an
executive officer and became non-executive Chairman of the Board of
Directors of Prime Retail, Inc. In connection with the relinquishment of his
responsibilities as an executive officer and related termination of his
employment agreement Mr. Reschke received a payment of $389,812 from the
Company on January 29, 2001.
(8) On February 25, 2000, Mr. Rosenthal resigned as Chief Executive Officer of
the Company. For a description of the terms of his severance arrangement,
see "--Employment Agreements and Change of Control Agreements."
(9) As part of his 1998 and 1999 compensation Mr. Rosenthal received special
distributions in the amount of $628,925 and $628,928, respectively, which
were used to repay certain indebtedness owed by an affiliate of
Mr. Rosenthal to the Company. See "Certain Relationships and Related
Transactions--Loan to Mr. Rosenthal."
16
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to options
granted in 2000 to the Named Executives by the Company.
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS/SARS EXERCISE FOR OPTION TERM FROM
UNDERLYING GRANTED TO OR BASE DATE OF GRANT ($)(3)
OPTIONS/SAR EMPLOYEES IN PRICE EXPIRATION ----------------------
GRANTED (#) FISCAL YEAR ($/SH) (2) DATE 5% 5%
------------ ------------- ---------- ---------- -------- --------
(IN THOUSANDS)
Glenn D. Reschke........... 300,000 21.6% $2.00 5/11/10 $377,337 $377,337
Robert A. Brvenik.......... 200,000 14.4 2.00 5/11/10 251,558 251,558
C. Alan Schroeder.......... 200,000 14.4 2.00 5/11/10 251,558 251,558
Steven S. Gothelf.......... 100,000 7.2 2.00 5/3/10 125,779 125,779
John S. Mastin............. 100,000 7.2 2.00 5/3/10 125,779 125,779
Michael W. Reschke......... 0 0 -- -- -- --
Abraham Rosenthal.......... 0 0 -- -- -- --
------------------------
(1) Except as otherwise noted, the exercise price for the options is generally
payable in cash or, in certain circumstances, by the surrender, at the fair
market value on the date on which the option is exercised, of Common Stock.
(2) Reflects the percent of total options to purchase Common Stock granted to
employees in the last fiscal year pursuant to the 1998 Long-Term Stock
Incentive Plan and the Nonemployee Director Stock Plan (together, the
"Plans"). A total of 1,387,600 options were granted to employees during 2000
pursuant to the Plans.
(3) The exercise price for each share is equal to at least one hundred percent
of Fair Market Value of a share on the date the option was granted.
17
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the number of
shares of Common Stock underlying Stock Options held by each of the Named
Executives and the value of such officers' exercisable and unexercisable options
on December 31, 2000. None of the Named Executives exercised any Stock Options
during 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT DECEMBER 31,
DECEMBER 31, 2000 2000 (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Glenn D. Reschke............................ 130,000 250,000 $0.00 $0.00
Robert A. Brvenik........................... 33,320 166,680 0.00 0.00
C. Alan Schroeder........................... 100,320 166,680 0.00 0.00
Steven S. Gothelf........................... 64,500 75,000 0.00 0.00
John A. Mastin.............................. 57,500 75,000 0.00 0.00
Michael W. Reschke.......................... 425,000 0 0.00 0.00
Abraham Rosenthal........................... 343,648 0 0.00 0.00
------------------------
Note:
(1) Based on the market price of $0.4688 per share, which was the closing
selling price per share of Common Stock on the NYSE on December 29, 2000,
the last trading day in 2000, less the option exercise price of unexercised,
in-the-money options held by the Named Executives at December 31, 2000.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with each of Messrs. G. Reschke, Robert A. Brvenik, C. Alan
Schroeder, Steven S. Gothelf and John S. Mastin. The agreements generally
provide that such executive officers shall devote substantially all of their
business time to the operation of the Company. The Employment Agreement for
Mr. G. Reschke provides for a term expiring on July 24, 2003. The Employment
Agreements with Messrs. Brvenik, Schroeder, Gothelf and Mastin provide for terms
expiring on June 11, 2003, May 3, 2003, May 3, 2002 and May 3, 2002,
respectively. In the case of Mr. G. Reschke, such term is automatically extended
for successive one year periods unless either the Company or Mr. G. Reschke
provides the other with prior written notice that such term shall not be
extended. With regard to Messrs. Brvenik, Schroeder, Gothelf and Mastin, the
respective terms, if not affirmatively terminated or extended for a specific
duration by the parties, will continue on a month-to-month basis.
Each of the Employment Agreements set forth the base salary for the
executive and provide that the employees covered thereby are eligible to receive
discretionary bonuses as determined in the sole discretion of the Compensation
Committee of the Board of Directors of the Company. In the case of Mr. G.
Reschke, such bonus may not exceed 100% of his then-current base salary. During
2000 the Company granted options to acquire 300,000 shares of Common Stock to
Glenn D. Reschke. Pursuant to the Employment Agreements with Messrs. Gothelf,
Mastin, Brvenik and Schroeder, the Company granted options to acquire 100,000
shares of Common Stock to each of Mr. Gothelf and Mr. Mastin and options to
acquire 200,000 shares of Common Stock to each of Mr. Brvenik and
Mr. Schroeder.
18
If the Employment Agreements are terminated by the Company "without cause"
or are terminated by the executive after a "change in control" or for "good
reason" (as such terms are defined in the Employment Agreements), the executive
will be entitled to a lump sum payment. With regard to Messrs. Brvenik,
Schroeder, Gothelf and Mastin, such payment in the event of termination by the
Company without cause or by the executive for good reason will be an amount
equal to the product of (x) the number of full and partial years remaining in
the initial term of his Employment Agreement and (y) the sum of (A) his then
current base salary and (B) a bonus equal to 100% of the average bonus paid to
him for the two most recent calendar years, or if no such bonuses were paid, a
bonus equal to 50% of his then current base salary (the amounts in clauses
(A) and (B), together, the "One-Year Pay Equivalent"). If the Company terminates
any of Messrs. Brvenik's, Schroeder's, Gothelf's or Mastin's employment due to
disability, the applicable executive will receive one and one-half times the
One-Year Pay Equivalent if the Company has terminated or materially reduced the
executive's long-term disability coverage as in effect on the date the agreement
became effective. With regard to Mr. G. Reschke such amount for termination
(i) by the Company "without cause" or by the Company upon Mr. G. Reschke's
disability will be equal to the sum of (x) one times the amount of his annual
base salary plus (y) one times the average of the amounts payable to such
executive for the prior two years under the terms of his "performance bonus" (as
such term is defined in Mr. G. Reschke's Employment Agreement) or (ii) by the
executive for "good reason" will be equal to one times the amount of his annual
base salary. In addition, if the Company terminates any of Messrs. G. Reschke,
Brvenik, Schroeder, Gothelf or Mastin without cause or, in the case of
Messrs. Brvenik, Schroeder, Gothelf and Mastin, if the executive resigns for
good reason and within twelve months from such termination or resignation there
is a "change of control" of the Company, the applicable executive will be
entitled to receive the amounts set forth in the first sentence of the following
paragraph if and to the extent such amount exceeds the amount payable to him
pursuant to this paragraph.
The Employment Agreements also provide that if, (x) with respect to
Messrs. Brvenik, Schroeder, Gothelf and Mastin, the executive terminates the
Employment Agreement for any reason simultaneously with a change of control,
(y) with respect to Messrs. Brvenik, Schroeder, Gothelf and Mastin, within six
months following a change of control the executive terminates the Employment
Agreement for any reason, or (z) within twenty-four months following a "change
of control" of the Company, the Company terminates the Employment Agreement
(during its initial term with respect to Messrs. Brvenik, Schroeder, Gothelf and
Mastin and at any time with respect to Mr. G. Reschke) "without cause" or the
executive terminates the Employment Agreement (during its initial term with
respect to Messrs. Brvenik, Schroeder, Gothelf and Mastin and at any time with
respect to Mr. G. Reschke) with "good reason," such executive will be entitled
to receive: (i) any amount of base salary accrued but undistributed; (ii) other
vested benefits through the effective date of the termination and health and
life insurance benefits for a period of two years, plus (iii) in the case of
Mr. G. Reschke, a distribution of $1,600,000, and in the case of
Messrs. Brvenik, Schroeder, Gothelf and Mastin, a distribution equal to the
product of the number of full and partial years remaining in the initial term
(or if greater, two years) times the One-Year Pay Equivalent and health and life
insurance benefits for twenty-four months.
Additionally, if the Employment Agreement with Mr. G. Reschke is so
terminated, certain restrictions on the transfer of stock held by Mr. G. Reschke
(or obtained by Mr. G. Reschke upon exercise of Common Units) may terminate, and
any stock awards under the Company's 1998 Long-Term Stock Incentive Plan will be
vested. Finally, if the Employment Agreement with Mr. G. Reschke is terminated,
Mr. G. Reschke will be fully vested in any amount accrued on his behalf under
any qualified or nonqualified retirement plans of the Company and will also
receive the benefits of a $4,000,000 life insurance policy for a period of two
years.
With regard to Mr. G. Reschke, the Employment Agreement contains certain
non-compete provisions restricting the executive from directly or indirectly
competing with the Company's business,
19
including (i) performing services for a competitor of the Company similar to the
services he provides to the Company, (ii) soliciting or attempting to solicit
any competing business from any entity or person that is a vendor, customer or
tenant that is actively being pursued by the Company and the executive knows it
is being actively pursued, (iii) induce or attempt to persuade any employee or
customer, vendor or tenant of the Company being actively pursued by the Company
to terminate its business relationship with the Company for a period of up to
two years following termination of employment. The Employment Agreement provides
that if the Company terminates the executive's employment without cause or
within two years of a change of control or the executive terminates his
employment with good reason then, so long as the executive is in compliance with
these non-compete provisions, the Company will pay the executive an amount equal
to $66,666.66 per calendar month for a period of two years, beginning with the
first calendar month after termination of the executive's employment; provided
that, either the Company or the executive may elect to limit the non-compete
period, and the $66,666.66 monthly payments, to one year.
With regard to Messrs. Brvenik, Schroeder, Gothelf and Mastin, during and
until the later of the term of his employment or, in the case of
Messrs. Gothelf and Mastin, May 3, 2002, and in the case of Mr. Brvenik,
June 11, 2003, and in the case of Mr. Schroeder, May 3, 2003 (but only if such
executive resigns other than for good reason or is terminated by the Company
with cause), the applicable executive may not hire, cause to be hired, induce or
attempt to induce any officer, employee, agent, consultant, independent
contractor, tenant or customer of the Company to discontinue such affiliation
with the Company or to refrain from entering into new business relationships
with the Company. In addition, during such time, such executives may not perform
or solicit services for certain named entities.
Each of the Employment Agreements also contain a non-disclosure provision
which prohibits each of the executives from disclosing or using any "trade
secret" (as such term is defined in the Employment Agreements).
On April 5, 2000, the Company and Mr. M. Reschke agreed to terminate Mr. M.
Reschke's employment agreement with the Company as a result of Mr. M. Reschke
relinquishing his responsibilities as an executive officer of the Company and
becoming a non-executive Chairman of the Board of Directors of Prime
Retail, Inc. In connection with such termination, the Company agreed to make a
payment to Mr. M. Reschke of $389,812, which payment was made on January 29,
2001.
The Company entered into a separation agreement (the "Separation Agreement")
with Mr. Rosenthal effective as of February 25, 2000. Pursuant to such
Separation Agreement, Mr. Rosenthal resigned as Chief Executive Officer and as a
member of the Company's Board of Directors. Pursuant to his Separation
Agreement, Mr. Rosenthal is entitled to receive separation payments which
include: (i) accrued but undistributed amounts of his Base Distribution (as
defined in his employment agreement) through March 1, 2000; (ii) a special
distribution of $628,927.85 (previously approved by the Board of Directors of
the Company in connection with his 1999 compensation) to be used by
Mr. Rosenthal as payment in full of the remaining outstanding obligations under
a recourse loan of $2.375 million made by the Operating Partnership to
Mr. Rosenthal in connection with the Company's IPO (See "Certain Relationships
and Related Transactions--Loan to Mr. Rosenthal"); and (iii) a severance
distribution in an amount equal to $1,750,000 of which $600,000 was paid in
March 2000 and the balance of which has been paid and is payable, without
interest, in eighteen equal monthly installments of $63,888.89 commencing
March 31, 2000.
Under the terms of the Separation Agreement with Mr. Rosenthal, the Company
provided health and life insurance benefits will be maintained for eighteen
months following the date of the Separation Agreement. Mr. Rosenthal's option
awards under the Company's 1998 Long-Term Stock Incentive Plan became fully
vested.
20
The Separation Agreement with Mr. Rosenthal also included non-competition,
non-solicitation and non-disclosure provisions which generally prohibited
Mr. Rosenthal for a period of one year from the date of the Separation Agreement
from (i) competing with the "business" (as such term is defined in the
Separation Agreement) within a defined geographic area, (ii) soliciting
employees, customers, vendors or tenants to terminate their relationship with
the Company, and (iii) disclosing or using any "trade secret" (as such term is
defined in the Separation Agreement).
Mr. Mastin resigned from his position with the Company on November 2, 2001.
He and the Company are currently negotiating the terms of a separation
agreement.
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors, which is required to
have a majority of outside Directors who are neither employees nor officers of
the Company, is charged with determining compensation for the Company's
executive officers. As of the end of the most recent fiscal year,
Messrs. Dickey and Randall and Ms. Sharp served on the Compensation Committee.
Mr. Dickey resigned as a director of the Company effective November 2, 2001.
Therefore, Mr. Randall and Ms. Sharp currently serve on the Compensation
Committee.
No executive officer of the Company served as a director or member of
(i) the compensation committee of another entity which has an executive officer
who is a Director of the Company or member of the Company's Compensation
Committee, (ii) the Board of Directors of another entity in which one of the
executive officers of such entity served on the Company's Compensation
Committee, or (iii) the compensation committee of any other entity in which one
of the executive officers of such entity served as a member of the Company's
Board of Directors, during the year ended December 31, 2000.
REPORT OF THE COMPENSATION COMMITTEE
(DATED AS OF MARCH 15, 2001)
RESPONSIBILITIES OF THE COMMITTEE
The Compensation Committee consists of three independent, non-employee
directors: Messrs. Dickey and Randall and Ms. Sharp. It is the Compensation
Committee's responsibility to:
- Recommend and report to the Board of Directors concerning matters of
compensation relating to the Company's senior executive officers,
including the Named Executives;
- Administer the Company's executive incentive plans; and
- Monitor the performance and compensation of the Company's senior executive
officers.
THE STRUCTURE AND BASIS OF THE COMPANY'S COMPENSATION PROGRAM
The Company's compensation programs are based on the following guiding
principles:
- Competitiveness--Offering competitive levels of total compensation,
commensurate with performance, to attract critical executive talent.
- Pay for Performance--Fostering a culture that motivates and rewards
high-performing executives and emphasizes incentive based compensation.
- Retention--Retaining exceptional executive talent and promoting management
stability for the long-term benefit of the Company and its shareholders.
- Shareholder Interests--Maintaining a compensation program that rewards the
achievement of strategic objectives that enhance shareholder value.
21
The Company's executive compensation programs consist of the following
components:
BASE SALARY
The Compensation Committee has the discretion (except as otherwise
restricted by any employment agreements) to adjust the salaries of the Named
Executives and other senior executive officers of the Company. The Compensation
of the Named Executives in 2000 is set forth above under the caption entitled
"--Summary Compensation Table."
On February 25, 2000, Mr. G. Reschke was promoted from President and Chief
Operating Officer to President and Chief Executive Officer of the Company. On
July 19, 2000, he was further promoted to Chairman of the Board, President and
Chief Executive Officer. As a result of the increase in Mr. G. Reschke's
responsibilities, his base salary increased from $350,000 per year to $400,000
per year, effective January 1, 2001.
ANNUAL PERFORMANCE BONUS
The annual performance bonus for senior officers is determined by the
Compensation Committee based on a variety of criteria related to individual and
company performance. In reviewing these criteria, the Compensation Committee
noted that although the Company did not achieve certain performance or operating
objectives, key members of the senior management team were instrumental in the
Company's efforts to complete certain financings, financing amendments and sales
transactions that helped stabilize the Company's financial position. In December
of 2000, the Company completed a series of transactions that provided the
Company an aggregate of $174 million net proceeds, including $120 million from
financings and $54 million from the sale of four outlet centers. In addition,
simultaneously with the closing of the financings, certain financing amendments
which allowed the Company to cure defaults were finalized. The Compensation
Committee noted that the financial condition of the Company during 2000 made it
difficult to achieve certain performance and operating objectives. As a result
of Mr. G. Reschke's performance in connection with the operation of the Company
and such refinancings and sales, he received a compensatory bonus in 2000
equivalent to 50% of his then-current base salary. See "--Summary Compensation
Table."
STOCK INCENTIVE PLANS
During 2000, in order to provide greater equity interests to the Company's
Chief Executive Officer and President and other senior executives, the
Compensation Committee, pursuant to the Prime Retail, Inc. 1998 Long-Term Stock
Incentive Plan (the "1998 Stock Incentive Plan"), approved the grant of options
to purchase common shares to the Chief Executive Officer and President, other
senior executives, and other employees of the Company, as set forth above in
"Option Grants in Last Fiscal Year."
LONG TERM COMPENSATION
On February 25, 2000, Mr. Rosenthal resigned his position as Chief Executive
Officer and a director of the Company. The terms of his departure are set forth
in the Separation Agreement (as defined above). The economic terms of the
Separation Agreement generally reflect the severance arrangements contained in
Mr. Rosenthal's prior employment agreement with the Company. Further, on
April 5, 2000, Mr. M. Reschke and the Company terminated Mr. Reschke's
employment agreement with the Company. For a discussion of the terms of the
Separation Agreement and the termination of Mr. M. Reschke's employment with the
Company, see "--Employment Agreements and Change of Control Agreements."
22
POLICY WITH RESPECT TO THE $1 MILLION DOLLAR DEDUCTION LIMIT
One of the factors the Compensation Committee considers when developing
compensation programs is the anticipated tax treatment to the Company and to the
executives of various payments and benefits. Generally, the Compensation
Committee intends to comply with Section 162(m) of the Internal Revenue Code.
Section 162(m) limits the ability of a publicly-held corporation such as the
Company to deduct compensation in excess of $1 million paid to each named
executive officer reported in the Summary Compensation Table, other than
performance-based compensation. The Compensation Committee may, however,
determine that it is necessary to exceed the limit on deductibility under
Section 162(m) to insure executive officers are compensated in a manner
consistent with the Company's best interests and those of its shareholders.
COMPENSATION COMMITTEE
(AS OF MARCH 15, 2001)
William P. Dickey
Kenneth A. Randall
Sharon J. Sharp
23
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative shareholder return of the
Company's Common Stock (formerly NYSE:PRT) to its peer group, the National
Association of Real Estate Investment Trust's Equity Shopping Center Index (the
"Shopping Center Index") and the S&P 500 Index over a five-year period,
beginning December 31, 1995 and ending December 31, 2000. The total shareholder
return assumes an initial investment of $100 at the beginning of the period in
the Company's Common Stock, the Shopping Center Index and the S&P 500 Index. It
also assumes reinvestment of all dividends. Past financial performance should
not be considered to be a reliable indicator of future performance, and
investors should not use historical trends to anticipate results or trends in
future periods. In September 2001, the Company's Common Stock was delisted from
the New York Stock Exchange and began trading on the OTC Bulletin Board.
[GRAPH]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- --------
PRT............................................ 100 116.25 143.83 117.44 77.49 6.46
Shopping Center Index.......................... 100 133.55 162.19 150.85 134.69 155.02
S&P 500 Index.................................. 100 122.96 163.99 210.86 255.20 231.96
24
OTHER INFORMATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CONSULTING AGREEMENTS WITH AFFILIATES OF MR. TRAUB. The Company has entered
into a consulting agreement with MTA, an entity owned and controlled by
Mr. Traub. The consulting agreement provides that for so long as Mr. Traub
remains a Director of the Company, MTA will provide consulting and advisory
services in connection with the Company's merchant relations and MTA will
receive a monthly fee of $8,333 for such services.
LOAN TO MR. ROSENTHAL. In connection with the IPO, the Operating
Partnership made a recourse loan of $2.375 million for the benefit of
Mr. Rosenthal. Mr. Rosenthal used such loan proceeds to acquire 125,000 Common
Units at a price of $19.00 per unit, reflecting the IPO price per share of
Common Stock. Mr. Rosenthal incurred such loan and made such purchases through
the Executive LLC that he controls and which was the borrower under such loan.
The loan was secured by a pledge of 125,000 Common Units acquired with the
proceeds thereof and was guaranteed by Mr. Rosenthal. As a part of the severance
package included in Mr. Rosenthal's Separation Agreement (see "Executive
Compensation--Employment Agreements and Change of Control Agreements"),
Mr. Rosenthal received a special distribution in 2000 in the amount of
$628,927.85 which was used as payment in full of the remaining outstanding
obligations under the loan.
OBLIGATIONS WITH RESPECT TO HORIZON GROUP PROPERTIES, INC. ("HGP") CREDIT
FACILITIES. Currently, the Company is a guarantor or otherwise obligated with
respect to an aggregate of approximately $12.5 million of the indebtedness of
HGP and its affiliates, including a $10 million obligation under HGP's secured
credit facility which bears an annual rate of interest of LIBOR plus 3.95%,
matures in July, 2002 and is collateralized by five properties located
throughout the United States. HGP is a publicly traded company which was formed
in connection with the Company's merger with Horizon in June 1998. Mr. M.
Reschke, Director of the Company, is a member of the board of directors of HGP;
Mr. Amster, a Preferred Director Nominee, is a Director of HGP; and Mr. Skoien,
a Preferred Director Nominee, is the President, Chairman and Chief Executive
Officer of HGP. In the event HGP is unable to make debt service payments under
HGP's secured credit facility, the Company may be required by the lenders to
make payments under such guarantee.
OTHER RELATED TRANSACTIONS WITH RESPECT TO PREFERRED DIRECTOR NOMINEES.
During 2001, Mr. Amster paid $78,555.51 to the Company to satisfy an
obligation under Section 16(b) of the Securities Act of 1934, as amended. See
also "--Obligations with Respect to Horizon Group Properties, Inc. ("HGP")
Credit Facilities."
Mr. Skoien is an Executive Vice President and the Chief Operating Officer of
PGI. PGI and certain of its affiliates beneficially own 251,300 shares of Common
Stock and 7,344,629 Common Units which are currently exchangeable on a
one-for-one basis for Common Stock. See also "--Obligations with Respect to
Horizon Group Properties, Inc. ("HGP") Credit Facilities."
OTHER TRANSACTIONS. Governor James R. Thompson, a Director of the Company,
is Chairman of the law firm of Winston & Strawn, which has provided, and
continues to provide, legal services to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of the ownership and changes in the ownership (Forms 3, 4 and 5) with
the Securities and Exchange Commission (the "Commission"). Officers, directors
and
25
beneficial owners of more than ten percent of the Company's equity securities
are required by Commission regulations to furnish the Company with copies of all
such forms which they file.
Based solely on the Company's review of the copies of Forms 3, 4 and 5 and
the amendments thereto received by it for the year ended December 31, 2000, or
written representations from certain reporting persons that no Forms 3, 4 or 5
were required to be filed by those persons, no transactions were reported late
during the year ended December 31, 2000.
COMMON STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Any holder of the Company's Common Stock who wishes to submit a proposal to
be presented at the Company's 2002 Annual Meeting of Stockholders must forward
such proposal to the Secretary of the Company, 100 East Pratt Street, 19th
Floor, Baltimore, Maryland 21202, a reasonable time before the Company begins to
print and mail its proxy materials in connection with such meeting to be
eligible for inclusion in the Company's Proxy Statement and form of proxy to be
used in connection with such Meeting.
The Company's By-Laws provide that no business may be brought before an
annual meeting unless specified in the notice of meeting, brought before the
meeting by or at the direction of the Board of Directors, or otherwise brought
by a stockholder who has delivered notice to the Company (containing certain
information specified in the By-Laws) not less than 60 or more than 90 days
before the anniversary date of the immediately preceding annual meeting of
stockholders provided that if the annual meeting of stockholders is called for a
date that is not within 30 days before or after such anniversary date, notice
must be delivered not later than 10 days following the date on which notice of
the date of the annual meeting was announced or public disclosure of the date of
the annual meeting was made, whichever is earlier. A copy of the full text of
these By-Law provisions may be obtained by writing to the Secretary of the
Company at the address indicated above.
OTHER BUSINESS
The Board of Directors knows of no business that will be presented for
consideration at the Meeting other than the matters described in this Proxy
Statement. If any other matter should be presented at the Meeting for action,
the persons named in the accompanying proxy card will vote the proxy in their
own discretion.
[C. ALAN SCHROEDER SIGNATURE]
C. Alan Schroeder
SECRETARY
Dated: November 6, 2001
26
FORM OF PROXY FOR HOLDERS OF
SERIES A PREFERRED STOCK
OF
PRIME RETAIL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
MEETING OF STOCKHOLDERS,
DECEMBER 6, 2001
The undersigned hereby appoint Glenn D. Reschke and C. Alan Schroeder, and
each of them, with full power of substitution, the true and lawful attorneys in
fact, agents and proxies of the undersigned to vote at the Meeting (the
"Meeting") of preferred stockholders of Prime Retail, Inc. (the "Company"), to
be held at 100 East Pratt Street, 12th Floor, Baltimore, Maryland, on
December 6, 2001, at 11:00 a.m., local time, and any and all adjournments
thereof, all the shares of Series A Preferred Stock of the Company according to
the number of votes which the undersigned would possess if personally present,
for the purposes of considering and taking action upon the following.
1. To elect two Preferred Directors to the Company's Board of Directors
with terms expiring at the Company's annual meeting of stockholders in 2003 or
until their successors are duly elected and qualified, or, if earlier, the date
on which the full dividends accumulated on all outstanding shares of the
Company's preferred stock have been paid in full or declared and a sum of money
sufficient for the payment thereof set aside for payment.
IMPORTANT NOTE: You may only vote FOR the election of TWO of the nominees
set forth below. IF YOU MARK A VOTE FOR MORE THAN TWO OF THE NOMINEES, THIS
PROXY CARD WILL BE DEEMED INVALID AND YOUR VOTE WILL NOT BE COUNTED.
NOMINEE: PAUL M. ALBERT, JR.
/ / FOR / / WITHHELD
NOMINEE: HOWARD AMSTER
/ / FOR / / WITHHELD
NOMINEE: DOV K. AVNI
/ / FOR / / WITHHELD
NOMINEE: ROBERT H. KANNER
/ / FOR / / WITHHELD
NOMINEE: JOHN B. NEWMAN
/ / FOR / / WITHHELD
NOMINEE: GARY J. SKOIEN
/ / FOR / / WITHHELD
NOMINEE: WILLIAM M. STERN
/ / FOR / / WITHHELD
NOMINEE: SAMUEL N. YARMAK
/ / FOR / / WITHHELD
2. To transact such other business as may properly come before the Meeting
or any adjournment(s) or postponement(s) thereof, including an adjournment to
solicit additional proxies in the event that a quorum is not present at the
meeting or in the event sufficient proxies voted in favor of the approval of the
proposals have not been received.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN HEREIN, THIS PROXY
WILL BE VOTED FOR THE PREFERRED DIRECTOR NOMINEES IN THE SAME PROPORTION AS
OTHER VOTES CAST PURSUANT TO ALL OTHER PROPERLY COMPLETED AND EXECUTED PROXIES
RECEIVED BY THE COMPANY IN A TIMELY MANNER AND ALL VOTES CAST IN PERSON AT THE
MEETING AND IN THE BOARD'S DISCRETION UPON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING.
DATED: ------------------------, 2001
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SIGNATURE
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---------------------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON THIS PROXY
CARD. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD
SIGN. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR,
ADMINISTRATOR, PERSONAL REPRESENTATIVE, TRUSTEE, OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
FORM OF PROXY FOR HOLDERS OF
SERIES B PREFERRED STOCK
OF
PRIME RETAIL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
MEETING OF STOCKHOLDERS,
DECEMBER 6, 2001
The undersigned hereby appoint Glenn D. Reschke and C. Alan Schroeder, and
each of them, with full power of substitution, the true and lawful attorneys in
fact, agents and proxies of the undersigned to vote at the Meeting (the
"Meeting") of preferred stockholders of Prime Retail, Inc. (the "Company"), to
be held at 100 East Pratt Street, 12th Floor, Baltimore, Maryland, on
December 6, 2001, at 11:00 a.m., local time, and any and all adjournments
thereof, all the shares of Series B Preferred Stock of the Company according to
the number of votes which the undersigned would possess if personally present,
for the purposes of considering and taking action upon the following.
1. To elect two Preferred Directors to the Company's Board of Directors
with terms expiring at the Company's annual meeting of stockholders in 2003 or
until their successors are duly elected and qualified, or, if earlier, the date
on which the full dividends accumulated on all outstanding shares of the
Company's preferred stock have been paid in full or declared and a sum of money
sufficient for the payment thereof set aside for payment.
IMPORTANT NOTE: You may only vote FOR the election of TWO of the nominees
set forth below. IF YOU MARK A VOTE FOR MORE THAN TWO OF THE NOMINEES, THIS
PROXY CARD WILL BE DEEMED INVALID AND YOUR VOTE WILL NOT BE COUNTED.
NOMINEE: PAUL M. ALBERT, JR.
/ / FOR / / WITHHELD
NOMINEE: HOWARD AMSTER
/ / FOR / / WITHHELD
NOMINEE: DOV K. AVNI
/ / FOR / / WITHHELD
NOMINEE: ROBERT H. KANNER
/ / FOR / / WITHHELD
NOMINEE: JOHN B. NEWMAN
/ / FOR / / WITHHELD
NOMINEE: GARY J. SKOIEN
/ / FOR / / WITHHELD
NOMINEE: WILLIAM M. STERN
/ / FOR / / WITHHELD
NOMINEE: SAMUEL N. YARMAK
/ / FOR / / WITHHELD
2. To transact such other business as may properly come before the Meeting
or any adjournment(s) or postponement(s) thereof, including an adjournment to
solicit additional proxies in the event that a quorum is not present at the
meeting or in the event sufficient proxies voted in favor of the approval of the
proposals have not been received.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN HEREIN, THIS PROXY
WILL BE VOTED FOR THE PREFERRED DIRECTOR NOMINEES IN THE SAME PROPORTION AS
OTHER VOTES CAST PURSUANT TO ALL OTHER PROPERLY COMPLETED AND EXECUTED PROXIES
RECEIVED BY THE COMPANY IN A TIMELY MANNER AND ALL VOTES CAST IN PERSON AT THE
MEETING AND IN THE BOARD'S DISCRETION UPON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING.
DATED: ------------------------, 2001
---------------------------------------------
---------------------------------------------
---------------------------------------------
SIGNATURE
---------------------------------------------
---------------------------------------------
---------------------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON THIS PROXY
CARD. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD
SIGN. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR,
ADMINISTRATOR, PERSONAL REPRESENTATIVE, TRUSTEE, OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.