WEINGARTEN
REALTY INVESTORS
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
May
3, 2005
To
Our Shareholders:
You are
invited to attend our annual meeting of shareholders that will be held at our
corporate office located at 2600 Citadel Plaza Drive, Houston, Texas, on
Tuesday, May 3, 2005, at 9:00 a.m., Houston time. The purpose of the meeting is
to vote on the following proposals:
|
Proposal
1:
|
To
elect nine trust managers to serve until their successors are elected and
qualified.
|
|
Proposal
2:
|
To
ratify the appointment of Deloitte & Touche LLP as independent
registered public accounting firm for the fiscal year ending December 31,
2005.
|
|
Proposal
3:
|
To
take action upon any other business as may properly come before the
meeting.
|
Shareholders
of record at the close of business on March 7, 2005 are entitled to notice of,
and to vote at, the annual meeting. A proxy card and a copy of our annual report
to shareholders for the fiscal year ended December 31, 2004 are enclosed with
this notice of annual meeting and proxy statement.
Your
vote is important. Accordingly,
you are asked to vote, whether or not you plan to attend the annual meeting. You
may vote by: (i) mail by marking, signing, dating and returning the accompanying
proxy card in the postage-paid envelope we have provided, or returning it to
Weingarten Realty Investors, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717, (ii)
using the Internet at www.proxyvote.com,
(iii) phone by calling 1-800-690-6903, or (iv) attending the annual meeting in
person. If
you plan to attend the annual meeting to vote in person and your shares are
registered with our transfer agent, Mellon Investor Services LLC, in the name of
a broker or bank, you must secure a proxy from the broker or bank assigning
voting rights to you for your shares.
By Order
of the Board of Trust Managers
M.
Candace DuFour
Sr. Vice
President and Secretary
March 23,
2005
Houston,
Texas
|
Page
No. | |
|
|
|
|
2 | |
|
4 | |
|
11 | |
|
13 | |
|
14 | |
|
19 | |
|
23 | |
|
25 | |
|
26 | |
|
26 | |
|
27 | |
|
A-1 |
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
Tuesday,
May 3, 2005
Weingarten
Realty Investors
2600
Citadel Plaza Drive
Houston,
Texas 77008
The board
of trust managers is soliciting proxies to be used at the 2005 annual meeting of
shareholders to be held at our corporate office located at 2600 Citadel Plaza
Drive, Houston, Texas 77008, on Tuesday, May 3, 2005, at 9:00 a.m., Houston
time. This proxy statement, accompanying proxy card and annual report to
shareholders for the fiscal year ended December 31, 2004 are first being
mailed to shareholders on or about March 23, 2005. Although the annual report is
being mailed to shareholders with this proxy statement, it does not constitute
part of this proxy statement.
Who
May Vote
Only
shareholders of record at the close of business on March 7, 2005 are entitled to
notice of, and to vote at, the annual meeting. As of March 7, 2005, we had
89,132,647 common shares of beneficial interest issued and outstanding. Each
common shareholder of record on the record date is entitled to one vote on each
matter properly brought before the annual meeting for each common share
held.
In
accordance with our amended and restated bylaws, a list of shareholders entitled
to vote at the annual meeting will be available at the annual meeting and for 10
days prior to the annual meeting, between the hours of 9:00 a.m. and 4:00 p.m.
local time, at our principal executive offices listed above.
How
You May Vote
You may
vote using any
of the following methods:
| · |
BY
MAIL: Mark,
sign, and date your proxy card and return it in the postage-paid envelope
we have provided, or return it to Weingarten Realty Investors, c/o ADP, 51
Mercedes Way, Edgewood, NY 11717. The named proxies will vote your shares
according to your directions. If you submit a signed proxy card without
indicating your vote, the person voting the proxy will vote your shares in
favor of proposals one and two. |
| · |
BY
INTERNET: Go
to and
use the Internet to transmit your voting instructions and for electronic
delivery of information until 11:59 P.M. Eastern Time on May 2, 2005. Have
your proxy card in hand when you access the Web site and then follow the
instructions. |
| · |
BY
PHONE: Call
1-800-690-6903 and use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on May 2, 2005. Have your
proxy card in hand when you call and then follow the
instructions. |
| · |
BY
ATTENDING THE ANNUAL MEETING IN PERSON: |
You may
revoke your proxy at any time before it is exercised by:
| · |
giving
written notice of revocation to our Secretary, M. Candace DuFour, at
Weingarten Realty Investors, P.O. Box 924133, Houston, Texas,
77292-4133; |
| · |
timely
delivering a properly executed, later-dated proxy; or
|
| · |
voting
in person at the annual meeting. |
Voting by
proxy will in no way limit your right to vote at the annual meeting if you later
decide to attend in person. If you hold common shares through any of our share
purchase or savings plans, you will receive voting instructions. Please sign and
return those instructions promptly to assure that your shares are represented at
the annual meeting. If your shares are held in the name of a bank, broker or
other holder of record, you must obtain a proxy, executed in your favor, to be
able to vote at the annual meeting. If no direction is given and the proxy is
validly executed, the shares represented by the proxy will be voted in favor of
proposals one and two. The persons authorized under the proxies will vote upon
any other business that may properly come before the annual meeting according to
their best judgment to the same extent as the person delivering the proxy would
be entitled to vote. We do not anticipate that any other matters will be raised
at the annual meeting.
The
presence, in person or represented by proxy, of the holders of a majority of the
common shares (45,457,650 shares) entitled to vote at the annual meeting is
necessary to constitute a quorum at the annual meeting. However, if a quorum is
not present at the annual meeting, the shareholders, present in person or
represented by proxy, have the power to adjourn the annual meeting until a
quorum is present or represented. Pursuant to our amended and restated bylaws,
abstentions and broker “non-votes” are counted as present and entitled to vote
for purposes of determining a quorum at the annual meeting. A broker “non-vote”
occurs when a nominee holding common shares for a beneficial owner does not vote
on a particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner.
Required
Vote
The
affirmative vote of the holders of a majority of the common shares (45,457,650)
present in person or represented by proxy is required to re-elect trust
managers. Any trust manager who is currently on the board shall remain on the
board, regardless of the number of votes he receives, unless he is replaced by a
nominee who receives the requisite vote to become a new trust manager. All of
the nominees for trust manager served as our trust managers in 2004. Abstentions
and broker non-votes are not counted for purposes of the election of trust
managers.
The
ratification of the appointment of Deloitte & Touche LLP requires the
affirmative vote of the holders of a majority of the common shares (45,457,650)
represented in person or by proxy at the annual meeting and entitled to vote
thereon in order to be approved.
Cost
of Proxy Solicitation
The cost
of soliciting proxies will be borne by us. Proxies may be solicited on our
behalf by our trust managers, officers, employees or soliciting service in
person, by telephone, facsimile or by other electronic means. In accordance with
SEC regulations and the rules of the New York Stock Exchange (NYSE), we will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
their expenses incurred in mailing proxies and proxy materials and soliciting
proxies from the beneficial owners of our common shares.
ELECTION
OF TRUST MANAGERS
Pursuant
to the Texas Real Estate Investment Trust Act, our amended and restated
declaration of trust, and our amended and restated bylaws, our business,
property and affairs are managed under the direction of the board of trust
managers. At the annual meeting, nine trust managers will be elected by the
shareholders, each to serve until his successor has been duly elected and
qualified, or until the earliest of his death, resignation or retirement.
Regardless of the number of votes each nominee receives, pursuant to the Texas
Real Estate Investment Trust Act, each trust manager will continue to serve
unless another nominee receives the affirmative vote of the holders of 66 2/3%
of our outstanding common shares.
The
persons named in the enclosed proxy will vote your shares as you specify on the
enclosed proxy. If you return your properly executed proxy but fail to specify
how you want your shares voted, the shares will be voted in favor of the
nominees listed below. The board of trust managers has proposed the following
nominees for election as trust managers at the annual meeting. Each of the
nominees is currently a member of the board of trust managers.
Nominees
Stanford
Alexander,
Chairman of the Board of Trust Managers since 2001. Chief Executive Officer from
1993 to December 2000. President and Chief Executive Officer from 1962 to 1993.
Trust manager since 1956 and our employee since 1955. Age: 76
Andrew
M. Alexander, trust
manager since 1983. Chief Executive Officer since January 2001. President since
1997. Executive Vice President/Asset Manager from 1993 to 1996 and President of
Weingarten Realty Management Company since 1993. Senior Vice President/Asset
Manager of Weingarten Realty Management Company from 1991 to 1993, and Vice
President from 1990 to 1991 and, prior to our reorganization in 1984, Vice
President from 1988 to 1990. Mr. Alexander has been our employee since 1978. He
is a director of Academy Sports & Outdoors, Inc. Age: 48
J.
Murry Bowden, trust
manager since April, 2003. Mr. Bowden is Co-Chairman of The Hanover Company and
has been involved in all aspects of apartment development, construction,
management and finance for more than 25 years. Prior to forming The Hanover
Company in 1982, he was an attorney in private practice. Age: 56
James
W. Crownover, trust
manager since 2001. Since 1998, Mr. Crownover has managed his personal
investments. Mr. Crownover completed a 30-year career with McKinsey &
Company, Inc. in 1998 where he was managing director of its southwest practice
and a member of the firm’s board of directors. He currently serves as a director
on the boards of Unocal Corporation (audit committee chairman), Great Lakes
Chemical Corporation and Allied Waste Industries (audit committee member). Age:
61
Robert
J. Cruikshank, trust
manager since 1997. Since 1993, Mr. Cruikshank has managed his personal
investments. Senior partner of Deloitte & Touche LLP from 1989 to 1993.
He currently serves on the boards of Encysive Pharmaceuticals, Inc. (audit
committee chairman), MAXXAM, Inc., (audit committee member), and Kaiser Aluminum
Corp. (audit committee member). Age: 74
Melvin
A. Dow, trust
manager since 1984. Shareholder, Winstead, Sechrest & Minick P. C.
since August 2001. Chairman/Chief Executive Officer of Dow, Cogburn &
Friedman, P.C. (which merged with Winstead, Sechrest & Minick P.C. in 2001)
from 1995 to 2001. Age: 77
Stephen
A. Lasher, trust
manager since 1980. President of The GulfStar Group, Inc. since January 1991.
Age: 57
Douglas
W. Schnitzer, trust
manager since 1984. Chairman/Chief Executive Officer of Senterra Real Estate
Group, L.L.C. since 1994. Age: 48
Marc
J. Shapiro, trust
manager since 1985. Since 2003, Mr. Shapiro has served as a consultant to J. P.
Morgan Chase & Co. as a non-executive Chairman of its Texas operations.
Former Vice Chairman of J. P. Morgan Chase & Co. from 1997 through
September, 2003. Prior to that, he was Chairman and Chief Executive Officer of
Chase Bank of Houston from January 1989 to 1997. He currently serves as Director
of Kimberly-Clark Corporation (audit committee member) and Burlington Northern
Santa Fe Corporation (audit committee member). Age: 57
Andrew M.
Alexander is the son of Stanford Alexander.
The
governance committee will consider trust manager candidates nominated by
shareholders. Recommendations, including the nominee’s name and an explanation
of the nominee’s qualifications should be sent to Candace DuFour, Sr. Vice
President and Secretary, at P.O. Box 924133, Houston, Texas 77292-4133. The
procedure for nominating a person for election as a trust manager is described
under “Shareholder Proposals” on page 26.
The
board of trust managers unanimously recommends that you vote FOR the election of
trust managers as set forth in Proposal One.
Board
Meetings and Committees
During
fiscal 2004, the board of trust managers held four meetings. No trust manager
attended less than 75% of the total number of board and committee meetings on
which the trust manager served that were held while the trust manager was a
member of the board or committee, as applicable. All of our trust managers are
strongly encouraged to attend our annual meeting of shareholders. All of our
trust managers, except Mr. Crownover, attended our 2004 annual meeting of
shareholders. The board’s current standing committees are as
follows:
|
Name |
Governance
Committee |
Audit
Committee |
Management
Development
&
Compensation
Committee |
Executive
Committee |
Pricing
Committee |
|
Employee
Trust Managers: |
|||||
|
Stanford
Alexander |
X |
X | |||
|
Andrew
M. Alexander |
X
(1) |
X
| |||
|
Non-Employee
Trust Managers: |
|||||
|
J.
Murry Bowden |
X |
X |
|||
|
James
W. Crownover |
X |
X
(1) |
|||
|
Robert
J. Cruikshank |
X |
X
(1) |
X |
||
|
Melvin
A. Dow |
X |
||||
|
Stephen
A. Lasher |
X |
X |
X | ||
|
Douglas
Schnitzer |
X |
||||
|
Marc
J. Shapiro |
X
(1) |
X |
___________
(1) Chairman
Governance
Committee
The
governance committee has the responsibility to (1) oversee the nomination of
individuals to the board, including the identification of individuals qualified
to become board members and recommending such nominees; (2) develop and
recommend to the board a set of governance principles; and (3) oversee matters
of governance to insure that the board is appropriately constituted and operated
to meet its fiduciary obligations, including advising the board on matters of
board organization, membership and function and committee structure and
membership. The committee also recommends trust manager compensation and
benefits. The governance committee will consider nominees made by shareholders.
Shareholders should send nominations to the company’s secretary, Candace DuFour.
Any shareholder nominations proposed for consideration by the governance
committee should include the nominee’s name and qualifications for board
membership. See “Shareholder Proposals” on page 26. The governance committee met
three times in 2004.
Audit
Committee
The audit
committee assists the board in fulfilling its responsibilities for general
oversight of: (1) our financial reporting processes and the audit of our
financial statements, including the integrity of our financial statements; (2)
our compliance with ethical policies contained in our code of conduct and
ethics; (3) legal and regulatory requirements; (4) the independence,
qualification and performance of our independent registered public accounting
firm; (5) the performance of our internal audit function; and (6) risk
assessment and risk management. The committee has the responsibility for
selecting our independent registered public accounting firm and pre-approving
audit and non-audit services. Among other things, the audit committee prepares
the audit committee report for inclusion in the annual proxy statement, reviews
the audit committee charter and the committee’s performance; approves the scope
of the annual audit; reviews our disclosure controls and procedures, internal
controls, information security policies, internal audit function, and corporate
policies with respect to financial information and earnings guidance. The
committee also oversees investigations into complaints concerning financial
matters. The audit committee has the authority to obtain advice and assistance
from outside legal, accounting or other advisors as the audit committee deems
necessary to carry out its duties. The audit committee met five times in 2004.
The board of trust managers has determined that Mr. Cruikshank’s simultaneous
service on the audit committees of more than three public companies will not
impair his ability to serve on our audit committee.
Management
Development and Compensation Committee
The
management development and compensation committee (1) discharges the board’s
responsibilities to establish the compensation of our executives; (2) produces
an annual report on executive compensation for inclusion in our annual proxy
statement; (3) provides general oversight for our compensation structure,
including our equity compensation plans and benefits programs; and (4) retains
and approves the terms of the retention of any compensation consultant or other
compensation experts. Other specific duties and responsibilities of the
committee include reviewing the leadership development process; reviewing and
approving objectives relative to executive officer compensation; approving
employment agreements for executive officers; approving and amending our
incentive compensation and share option programs (subject to shareholder
approval if required); and annually evaluating its performance and its charter.
The committee met three times in 2004.
Executive
Committee
The
executive committee has the authority to enter into transactions to acquire and
dispose of real property, execute certain contracts and agreements, including
but not limited to, borrowing money and entering into financial derivative
contracts, leases (as landlord or tenant) and construction contracts valued at
up to $100,000,000. The committee was established by the board to create and
reinforce the approval and decision making process around these significant
transactions. We have a detailed process that is followed for all of these
transactions and the execution of unanimous consents for such transactions is
the final documentation of such process. The executive committee did not meet in
person during 2004, but conducted business by the execution of twenty unanimous
written consents during that year.
Pricing
Committee
The
pricing committee is authorized to exercise all the powers of the board of trust
managers in connection with the offering, issuance and sale of our securities.
The pricing committee held one telephonic meeting during 2004, and executed one
unanimous written consent during that year.
Corporate
Governance
Independence
of Trust Managers and Committee Members. Our
board has determined that each of the following trust managers standing for
re-election has no material relationship with us (either directly or as a
partner, shareholder or officer of an organization that has a relationship with
us) and is independent within the meaning of our trust manager independent’s
standards, which reflect exactly NYSE Director Independence Standards, as
currently in effect: Messrs. Bowden, Crownover, Cruikshank, Lasher, Schnitzer
and Shapiro. The board has determined that Messrs. S. Alexander, A. Alexander
and Dow are not independent trust managers within the meaning of the NYSE
Director Independence Standards. Furthermore, the board has determined that each
of the members of each of the governance, audit and management development and
compensation committees has no material relationship with us (either directly as
a partner, shareholder or officer of an organization that has a relationship
with us) and is independent within the meaning of our trust manager independence
standards.
Audit
Committee Financial Expert. The board
of trust managers has determined that Mr. Cruikshank meets the definition of
audit committee financial expert promulgated by the Securities and Exchange
Commission and is independent, as defined in the New York Stock Exchange Listing
Standards.
Committee
Charters and other Governance Materials. Our
board has adopted: (1) a governance committee charter, a management development
and compensation committee charter and a revised audit committee charter; (2)
standards of independence for our trust managers for fiscal 2004; (3) a code of
conduct and ethics for all trust managers, officers and employees; and (4)
corporate governance guidelines. Our governance committee charter, management
development and compensation committee charter, audit committee charter,
corporate governance guidelines and code of conduct and ethics are available on
our Web site at www.weingarten.com. These
materials are also available in print to any shareholder who requests them by
submitting a written request to Brook Wootton, Director of Investor Relations,
2600 Citadel Plaza Drive, Suite 300, Houston, Texas 77008.
Communications
with the Board.
Individuals may communicate with the board by sending a letter to:
Candace
DuFour
Secretary
to the Board of Trust Managers
2600
Citadel Plaza Drive, Suite 300
Houston,
Texas 77008
All trust
managers have access to this correspondence. Communications that are intended
specifically for non-management trust managers should be sent to the street
address noted above, to the attention of the chair of the Governance Committee.
In accordance with instructions from the board, the secretary to the board
reviews all correspondence, organizes the communications for review by the
board, and posts communications to the full Board or individual trust managers
as appropriate.
Executive
Sessions.
Executive sessions of non-employee trust managers were held at the end of each
board meeting. In accordance with our Governance Policies, our independent trust
managers will meet at least once per year in executive session. The chairman of
the governance committee, currently Marc J. Shapiro, will chair this executive
session. During 2004, our non-employee trust managers met four times in
executive session.
Compensation
of Trust Managers
Employee
trust managers receive no compensation for board service.
During
2004, our non-employee trust managers received the following
compensation:
Annual
retainer fee
|
$
|
15,000
|
||
Fee
for each board meeting attended
|
1,000
|
|||
Audit
committee chairman retainer
|
10,000
|
|||
Audit
committee member retainer
|
5,000
|
|||
Chairman
retainer for other committees
|
6,000
|
|||
Other
committee members retainer
|
4,000
|
Additionally,
each non-employee trust manager received an award of 750 restricted shares.
Members of the executive and pricing committees receive no additional
compensation for their services.
Compensation
Committee Interlocks and Insider Participation
During
fiscal 2004, three of our independent trust managers served on the management
development and compensation committee. The committee members for 2004 were
Messrs. Cruikshank, Lasher and Shapiro. No member of the management development
and compensation committee has any interlocking relationship with any other
company that requires disclosure under this heading.
Certain
Transactions
Messrs.
S. Alexander, A. Alexander, Dow, Lasher, Stephen C. Richter, Schnitzer and
Martin Debrovner were shareholders or officers and/or trust managers of WRI
Holdings, Inc., a Texas corporation. In December 1984, we contributed certain
assets and cash to WRI Holdings in exchange for, among other consideration,
$26.8 million in original principal amount of debt securities and common stock
of WRI Holdings. The assets contributed by us to WRI Holdings included
unimproved land in the Railwood Industrial Park in northeast Houston and all of
the issued and outstanding capital stock of Plaza Construction, Inc. and Leisure
Dynamics, Inc. The debt securities were issued pursuant to three separate trust
indentures (the Holdings Bonds) and originally consisted of $16.7 million in
principal amount of debt securities (the Hospitality Bonds) due
December 28, 2004, $7.0 in million principal amount of debt securities (the
Railwood Bonds) due December 28, 2004, and $3.2 million in principal amount
of debt securities (the Plaza Bonds) due December 28, 1994. The Railwood Bonds
and Hospitality Bonds have been retired. On August 4, 2004, (date of
dissolution), WRI Holdings, Inc. and all of its related subsidiaries were
formally dissolved with the assets of WRI Holdings, Inc. being conveyed to
Weingarten Realty Investors as partial payment of its indebtedness owing to WRI.
WRI considers all remaining outstanding indebtedness as being cancelled and
retired.
The
amount on the Plaza Bonds immediately prior to the date of dissolution was
$.2 million and the accrued interest outstanding which was not recognized
for financial accounting purposes was $7.9 million.
Interest
on the Plaza Bonds accrued at the rate of 16% per annum (the “accrual rate”),
but was due and payable quarterly at the rate of 10% per annum (the “pay rate”).
The difference between the accrual rate and the amount of interest paid by WRI
Holdings at the pay rate on the debt securities was treated as unpaid accrued
interest, which did not accrue any compound interest and was payable with the
principal
at maturity. We recognized as interest income only amounts actually received for
payment under the note. Therefore, we did not carry the difference between the
accrual rate and the pay rate as an asset on our consolidated balance
sheet.
Pursuant
to a loan agreement between WRI Holdings and us, and pursuant to a note dated
December 28, 1984, as amended in October 1987, January 1991 and March 1994, WRI
Holdings could borrow from us the amount necessary, up to a maximum of $40
million, to enable WRI Holdings to pay the interest owing on the Holdings Bonds.
Interest on the note accrued at the highest rate per annum permitted by Texas
law as to a portion of the debt and at the JPMorgan Chase Bank prime rate plus
2% per annum (but not in excess of the maximum legal rate) on the balance of the
debt. At the date of dissolution, $31.4 million was outstanding under the note,
which represented the difference between the amount recognized as interest
income on the Holdings Bonds and the pay rate applicable to the bonds, none of
which has been recognized by us as income.
In
November 1982, we entered into a loan agreement with River Point Venture I, a
joint venture in which Plaza Construction was a joint venture partner. In
October of 1987, Plaza Construction acquired all ownership interests in the
joint venture it did not already own from the other joint venturer.
Additionally, Plaza Construction became the successor of the joint venture under
the River Pointe loan agreement which was amended in December 1991. Under the
terms of the River Pointe loan, we could loan Plaza Construction up to $12
million for construction and development of River Pointe. Interest accrued at
the prime rate plus 1%, but not in excess of the maximum rate permitted by law.
Beginning in 1990, we discontinued the recognition of interest income on this
note for financial statement purposes. At the date of dissolution, the principal
amount outstanding under the River Pointe loan was $2.6 million plus accrued,
but nonrecognized, interest of $20.2 million.
At the
date of dissolution, we had $2.8 million in the Plaza Bonds and the River Pointe
loan. Net of deferred gain of $3.0 million, the estimated fair market value of
the remaining collateral, which was comprised of 9.5 acres of undeveloped land
at a mixed-use development in Conroe, Texas, was conveyed to WRI as partial
payment of the remaining indebtedness.
Mr. Dow
is a shareholder of Winstead, Secrest & Minick P. C., a law firm that had a
relationship with Weingarten during the 2004 fiscal year. Mr. Dow performs a
significant amount of work for WRI. Payments made by WRI to Winstead, Secrest
& Minick P. C. for his work constituted less than 5% of the firm’s total
annual revenue for 2004.
The
following table sets forth certain information regarding the beneficial
ownership of our common shares as of February 18, 2005 by (1) each person known
by us to own beneficially more than 5% of our outstanding common shares, (2)
each current trust manager, (3) each named executive officer, and (4) all
current trust managers and executive officers as a group. The number of shares
beneficially owned by each entity, person, trust manager or executive officer is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares that the
individual has a right to acquire as of April 19, 2005 (60 days after February
18, 2005) through the exercise of any share option or other right. Unless
otherwise indicated, each person has sole voting and investment power (or shares
such powers with his spouse) with respect to the shares set forth in the
following table.
Certain
of the shares listed below are deemed to be owned beneficially by more than one
shareholder under SEC rules.
|
Name |
Amount
and Nature of Beneficial Ownership |
Percent
of Class | |
|
| |||
|
Stanford
Alexander |
5,361,371 |
(1) |
6.0% |
|
Andrew
M. Alexander |
1,555,131 |
(2) |
1.7% |
|
J.
Murry Bowden |
16,592 |
** |
* |
|
James
W. Crownover |
10,142 |
** |
* |
|
Robert
J. Cruikshank |
5,342 |
** |
* |
|
Martin
Debrovner |
406,181 |
(3) |
* |
|
Melvin
A. Dow |
1,136,714 |
(4)** |
1.3% |
|
Stephen
A. Lasher |
649,592 |
(5)** |
* |
|
Douglas
W. Schnitzer |
1,419,897 |
(6)** |
1.6% |
|
Marc
J. Shapiro |
36,617 |
** |
* |
|
Johnny
Hendrix |
42,664 |
(7) |
* |
|
Stephen
C. Richter |
155,593 |
(8) |
* |
|
All
trust managers and executive officers as a group (12 persons) |
9,461,003 |
(9) |
10.6% |
|
Capital
Research and Management Co. |
5,031,000 |
(10) |
5.6% |
___________
|
* |
Beneficial
ownership of less than 1% of the class is omitted. |
|
** |
All
non-employee trust managers were awarded 750 common shares in 2004,
subject to such trust manager’s election to defer receipt from 5 years up
to the completion of his service on the board of trust
managers. |
|
(1) |
Includes
867,618 shares held by various trusts for the benefit of Mr. Alexander’s
children and 667,518 shares for which voting and investment power are
shared with Andrew M. Alexander and Melvin A. Dow, 15,797 shares that may
be purchased by Mr. Alexander upon exercise of share options that are
currently exercisable or that will become exercisable on or before April
19, 2005. Also includes 979,305 shares held by a charitable foundation,
over which shares Mr. Alexander and his wife Joan have voting and
investment power. Mr. Alexander’s address is 2600 Citadel Plaza Drive,
Houston, Texas 77008. |
|
(2) |
Includes
667,518 shares over which Messrs. S. Alexander and Dow have shared voting
and investment power, and 218,960 shares that Mr. A. Alexander may
purchase upon the exercise of share options that will be exercisable on or
before April 19, 2005. Also includes 56,250 shares held by a charitable
foundation, over which shares Mr. A. Alexander and his wife Julie have
voting and investment power. |
|
(3) |
Includes
40,357 shares held in trust for the benefit of Mr. Debrovner’s children,
for which he has voting and investment power, and 32,515 shares that may
be purchased upon the exercise of share options that will be exercisable
on or before April 19, 2005. |
|
(4) |
Includes
667,518 shares over which Messrs. S. Alexander and A. Alexander have
shared voting and investment power. |
|
(5) |
Includes
112,500 shares held by trusts for the benefit of Mr. Lasher’s children,
over which Mr. Lasher exercises voting and investment power.
|
|
(6) |
Mr.
Schnitzer owns 1,704 shares individually. With respect to the remaining
shares beneficially owned, Mr. Schnitzer shares voting and investment
power with Joan Weingarten Schnitzer under trusts for Joan Weingarten
Schnitzer. |
|
(7) |
Includes
2 shares
that may be purchased upon the exercise of share options that will be
exercisable |
|
on
or before April 19, 2005. Mr. Hendrix became an executive officer on
January 1, 2005. |
|
(8) |
Includes
7,818 shares held in trust for the benefit of Mr. Richter’s children, for
which he has voting and investment power, and 37,566 shares that may be
purchased upon the exercise of share options that will be exercisable on
or before April 19, 2005. |
|
(9) |
Includes
and 304,840 shares that may be purchased upon the exercise of share
options that will be exercisable on or before April 19, 2005.
|
|
(10) |
Pursuant
to information contained in a Schedule 13G filed by or on behalf of the
beneficial owners with the SEC on February 9, 2005. The Schedule 13G lists
the address of Capital Research and Management Company as 333 South Hope
Street, Los Angeles, CA 90071. |
We are
pleased to report that management, employees, trust managers and their extended
families own, in the aggregate, 12.7% of our outstanding common shares as of
February 18, 2005, not including any unexercised share options.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our trust managers and
executive officers, and persons who own more than 10% of a registered class of
our equity securities, to file reports of holdings and transactions in our
securities with the SEC and the NYSE. Executive officers, trust managers and
greater than 10% beneficial owners are required by applicable regulations to
furnish us with copies of all Section 16(a) forms they file with the
SEC.
Based
solely upon a review of the reports furnished to us with respect to fiscal 2004,
we believe that all SEC filing requirements applicable to our trust managers and
executive officers were satisfied.
No trust
manager or executive officer was selected as a result of any arrangement or
understanding between the trust manager or executive officer or any other
person. All executive officers are elected annually by, and serve at the
discretion of, the board of trust managers.
Our
executive officers are as follows:
|
Name |
Age |
Position |
Recent
Business Experience |
|
Stanford
Alexander |
76 |
Chairman
of the Board |
See
“Election of Trust Managers” |
|
Martin
Debrovner |
68 |
Vice
Chairman |
1997
to Present - Vice Chairman; 1993 to 1997 - President and Chief
Operating Officer |
|
Andrew
M. Alexander |
48 |
President
and Chief Executive Officer |
See
“Election of Trust Managers” |
|
Johnny
Hendrix |
47 |
Executive
Vice President/
Asset
Manager |
Appointed
Executive Vice President, February 2005; 2001 to 2004 - Senior Vice
President/Director of Leasing; 1998 to 2000 - Vice President/Associate
Director of Leasing |
|
Stephen
C. Richter |
50 |
Executive
Vice President and Chief Financial Officer |
Appointed
Executive Vice President, February 2005; 2000 to 2004 - Senior Vice
President and Chief Financial Officer; 1997 to 2000 - Senior Vice
President and Treasurer |
Compensation
of Executive Officers
The
following table summarizes the compensation paid by us for each of the fiscal
years ended December 31, 2004, 2003 and 2002 to the Chief Executive Officer
and the three other most highly compensated executive officers who received a
total annual salary and bonus in excess of $100,000 in fiscal 2004.
|
Annual
Compensation |
Long-Term
Compensation Awards |
||||||||||||||||||
|
Name
and Principal Position |
Year |
Salary
($) |
Bonus
($) |
Restricted
Share Awards ($) |
Securities
Underlying Options/SARs
(#)
(1). |
All
Other Compensation |
|||||||||||||
|
Stanford
Alexander |
2004 |
$ |
600,000 |
$ |
471,500 |
$ |
279,999
|
(2) |
58,455 |
$ |
9,831
|
(6) | |||||||
|
Chairman |
2003 |
575,000 |
345,000 |
237,519 |
78,991 |
10,820 |
|||||||||||||
|
2002 |
550,000 |
288,750 |
98,701 |
52,084 |
14,387 |
||||||||||||||
|
Andrew
M. Alexander |
2004 |
625,000 |
596,563 |
337,517
|
(3) |
70,459 |
296,336
|
(7) | |||||||||||
|
President
and Chief |
2003 |
575,000 |
345,000 |
275,022 |
91,465 |
170,232 |
|||||||||||||
|
Executive
Officer |
2002 |
550,000 |
288,750 |
61,683 |
97,657 |
145,215 |
|||||||||||||
|
Martin
Debrovner |
2004 |
450,000 |
288,500 |
199,982
|
(4) |
41,754 |
64,082
|
(8) | |||||||||||
|
Vice
Chairman |
2003 |
425,000 |
178,500 |
162,513 |
54,047 |
9,799 |
|||||||||||||
|
2002 |
410,000 |
150,982 |
86,386 |
45,574 |
30,626 |
||||||||||||||
|
Stephen
C. Richter |
2004 |
315,000 |
125,213 |
80,056
|
(5) |
16,712 |
108,579
|
(9) | |||||||||||
|
Executive
Vice |
2003 |
300,000 |
103,500 |
70,628 |
23,486 |
79,784 |
|||||||||||||
|
President
and |
2002 |
275,000 |
86,136 |
45,239 |
23,871 |
66,939 |
|||||||||||||
|
Chief
Financial |
|||||||||||||||||||
|
Officer |
|||||||||||||||||||
|
(1) |
No
SARs were granted during 2002, 2003 or 2004. |
|
(2) |
Of
the 7,044 restricted shares awarded in 2004, 1,409 will vest on each of
December 6, 2005, 2006, 2007, 2008 and 2009. Dividends are payable on
restricted shares. As of December 31, 2004, Mr. S. Alexander held 13,360
restricted shares having a market value on that date of
$535,736. |
|
(3) |
Of
the 8,491 restricted shares awarded in 2004, 1,698 will vest on each of
December 6, 2005, 2006, 2007, 2008 and 2009. Dividends are payable on
restricted shares. As of December 31, 2004, Mr. A. Alexander held 15,804
restricted shares having a market value on that date of
$633,740. |
|
(4) |
Of
the 5,031 restricted shares awarded in 2004, 1,006 will vest on each of
December 6, 2005, 2006, 2007, 2008 and 2009. Dividends are payable on
restricted shares. As of December 31, 2004, Mr. Debrovner held 9,353
restricted shares having a market value on that date of
$375,055. |
|
(5) |
Of
the 2,014 restricted shares awarded in 2004, 403 will vest on each of
December 6, 2005, 2006, 2007, 2008 and 2009. Dividends are payable on
restricted shares. As of December 31, 2004, Mr. Richter held 3,893
restricted shares having a market value on that date of
$156,109. |
|
(6) |
Includes
$6,150 for our contributions to the 401(k) Savings and Investment Plan on
behalf of Mr. S. Alexander. |
|
(7) |
Includes
$6,150 for our contributions to the 401(k) Savings and Investment Plan on
behalf of Mr. A. Alexander and $284,201 contributed to the Supplemental
Retirement Plan. |
|
(8) |
Includes
$6,150 for our contributions to the 401(k) Savings and Investment Plan on
behalf of Mr. Debrovner and $53,641 contributed to the Supplemental
Retirement Plan. |
|
(9) |
Includes
$6,150 for our contributions to the 401(k) Savings and Investment Plan on
behalf of Mr. Richter and $92,661 contributed to the Supplemental
Retirement Plan. |
Option
Grants in 2004
The
following table sets forth information concerning grants of share options during
2004 to each of the executive officers named in the Executive Compensation Table
who were executive officers in 2004 and the potential realizable value of the
options at assumed annual rates of share price appreciation for the option
term.
|
OPTION
GRANTS IN 2004 |
|||||||||||||||||||
|
Individual
Grants (1) |
|||||||||||||||||||
|
%
Of Total |
Potential
Realizable Value |
||||||||||||||||||
|
Number
of |
Options |
at
Assumed Annual Rate |
|||||||||||||||||
|
Securities |
Granted
to |
Exercise |
of
Share Price |
||||||||||||||||
|
Underlying |
Employees |
or
Base |
Appreciation
For Option |
||||||||||||||||
|
Options |
In
Fiscal |
Price |
Expiration |
Term
2 |
|||||||||||||||
|
Name |
Granted
(#) |
Year |
($/Sh) |
Date |
5%
($) |
10%
($) |
|||||||||||||
|
Stanford
Alexander |
58,455 |
15.2 |
$ |
39.75 |
12-6-14 |
$ |
1,452,721 |
$ |
3,689,553 |
||||||||||
|
Andrew
M. Alexander |
70,459 |
18.4 |
39.75 |
12-6-14 |
1,751,044
|
4,447,219 |
|||||||||||||
|
Martin
Debrovner |
41,754 |
10.9
|
39.75 |
12-6-14 |
1,037,669 |
2,635,422 |
|||||||||||||
|
Stephen
C. Richter |
16,712 |
4.4
|
39.75
|
12-6-14 |
415,326 |
1,054,825 |
|||||||||||||
___________
|
(1) |
The
plans governing share option grants provide that the option price per
share shall not be less than 100% of the market value per share of our
common shares at the grant date. The term of any option is no more than 10
years from the date of grant. Options granted in 2004 become exercisable
after one year in five equal annual installments of 20%.
|
|
(2) |
The
dollar amounts under these columns are the result of calculations assuming
annual rates of share price appreciation over the option term at the 5%
and 10% rates set by SEC rules and are not intended to forecast possible
future appreciation, if any, in our common share
price. |
Option
Exercises and Fiscal Year-End Option Values
The
following table sets forth certain information concerning exercises of share
options during 2004 by our named executive officers who were executive officers
in 2004 and the value of the unexercised options as of December 31, 2004, based
on the closing price of $40.10 per share of the company’s common shares on that
date.
|
Name |
Shares
Acquired on Exercise (#) |
Value
Received |
Number
of Unexercised Options Held at
December 31, 2004 |
Value
of Unexercised In-the-Money Options at December 31,
2004 |
|||||||||||||||
|
Exercisable |
Unexercisable |
Exercisable |
Unexercisable |
||||||||||||||||
|
Stanford
Alexander |
21,233 |
$ |
243,434 |
49,531 |
287,437 |
$ |
4,836,156 |
$ |
3,724,339 |
||||||||||
|
Andrew
M. Alexander |
-
|
-
|
218,960 |
403,443 |
4,499,883 |
5,433,938 |
|||||||||||||
|
Martin
Debrovner |
198,393 |
3,536,291 |
32,515 |
220,915 |
540,694 |
2,959,210 |
|||||||||||||
|
Stephen
C. Richter |
12,576 |
197,834 |
37,566 |
99,421 |
747,181 |
1,358,217 |
|||||||||||||
Retirement
Plan
The
following table shows the approximate annual retirement benefits under our
non-contributory retirement plan (before the reduction made for social security
benefits) to eligible grandfathered employees in specified compensation and
years of service categories, assuming retirement occurs at age 65 and that
benefits are payable only during the employee’s lifetime. Benefits are not
actuarially reduced where survivorship benefits are provided.
|
Estimated
Annual Benefits Upon Retirement
Years
of Service |
||||||||||||||||||||
|
Average
Compensation** |
15 |
20 |
25 |
30 |
35 |
40 |
||||||||||||||
|
$ |
200,000 |
$ |
45,000 |
$ |
60,000 |
$ |
75,000 |
$ |
90,000 |
$ |
105,000 |
$ |
120,000 |
|||||||
|
225,000 |
50,625 |
67,500 |
84,375 |
101,250 |
118,125 |
135,000 |
||||||||||||||
|
250,000 |
56,250 |
75,000 |
93,750 |
112,500 |
131,250 |
150,000 |
||||||||||||||
|
300,000 |
67,500 |
90,000 |
112,500 |
135,000 |
157,500 |
180,000 |
* | |||||||||||||
|
400,000 |
90,000 |
120,000 |
150,000 |
180,000 |
210,000 |
* |
240,000 |
* | ||||||||||||
|
450,000 |
101,250 |
135,000 |
168,750 |
* |
202,500 |
* |
236,250 |
* |
270,000 |
* | ||||||||||
|
500,000 |
112,500 |
150,000 |
187,500 |
* |
225,000 |
* |
262,500 |
* |
300,000 |
* | ||||||||||
|
600,000 |
135,000 |
180,000 |
* |
225,000 |
* |
270,000 |
* |
315,000 |
* |
360,000 |
* | |||||||||
|
700,000 |
157,500 |
210,000 |
* |
262,500 |
* |
315,000 |
* |
367,500 |
* |
420,000 |
* | |||||||||
|
800,000 |
180,000 |
* |
240,000 |
* |
300,000 |
* |
360,000 |
* |
420,000 |
* |
480,000 |
* | ||||||||
|
900,000 |
202,500 |
* |
270,000 |
* |
337,500 |
* |
405,000 |
* |
472,500 |
* |
540,000 |
* | ||||||||
|
1,000,000 |
225,000 |
* |
300,000 |
* |
375,000 |
* |
450,000 |
* |
525,000 |
* |
600,000 |
* | ||||||||
___________
|
* |
Currently,
the maximum annual pension benefit which currently may be paid under a
qualified plan is $165,000 subject to certain grandfather rules for
limitation years beginning in 2004. |
|
** |
Compensation
in excess of $200,000 is disregarded with respect to all plan years before
2004 and compensation in excess of $205,000 is disregarded with respect to
the 2004 plan year. Accordingly, the compensation of each named executive
officer included in the Executive Compensation Table, which was covered by
the non-contributory retirement plan was limited to
$205,000. |
The
compensation used in computing average monthly compensation is the total of all
amounts paid by us, plus amounts electively deferred by the employee under our
savings plan, 125 cafeteria plan and nonqualified deferred compensation plan.
Credited years of service for named executive officers as of March 15, 2005 are
as follows: Mr. S. Alexander, 51 years; Mr. Debrovner, 37 years; Mr. A.
Alexander, 27 years; Mr. Hendrix, 19 years and Mr. Richter, 25 years. Mr. S.
Alexander and Mr. Debrovner commenced receiving benefits under the Plan in
January 1996 and June 2001, respectively.
The
non-contributory pension plan converted to a cash balance retirement plan on
April 1, 2002. A grandfathered participant will remain covered by the provisions
of the plan prior to the conversion to the cash balance plan. A grandfathered
participant is any participant born prior to January 1, 1952, was hired prior to
January 1,1997, and was an active employee on April 1, 2002. The retirement plan
pays benefits to grandfathered participants in the event of death, disability,
retirement or other termination of employment after the employee meets certain
vesting requirements (all grandfathered participants are 100% vested). The
amount of the monthly retirement benefit payable beginning at age 65, the normal
retirement age, is equal to (i) 1.5% of average monthly compensation during five
consecutive years, within the last ten years, which would yield the highest
average monthly compensation multiplied by years of service rendered after age
21, minus (ii) 1.5% of the monthly social security benefits in effect on the
date of retirement multiplied by years of service rendered after age 21 and
after July 1, 1976 (not in excess of 33 1/3 years).
Cash
Balance Retirement Plan
The
following table shows the approximate annual retirement benefits under our
non-contributory cash balance retirement plan to eligible employees in specified
compensation and years of service categories, assuming retirement occurs at age
65 and that benefits are payable only during the employee’s lifetime. Benefits
are not actuarially reduced where survivorship benefits are provided. No opening
balance was included in the table.
|
Years
of Service |
||||||||||||||||||||
|
Annual
Compensation** |
15 |
20 |
25 |
30 |
35 |
40 |
||||||||||||||
|
$ |
200,000 |
$ |
11,448 |
$ |
17,856 |
$ |
26,695 |
$ |
37,600 |
$ |
51,054 |
$ |
67,652 |
|||||||
|
225,000 |
12,879 |
20,088 |
30,032 |
42,300 |
57,436 |
76,108 |
||||||||||||||
|
250,000 |
14,310 |
22,320 |
33,369 |
47,000 |
63,817 |
84,565 |
||||||||||||||
|
300,000 |
17,172 |
26,784 |
40,043 |
56,401 |
76,581 |
101,478 |
||||||||||||||
|
350,000 |
20,034 |
31,248 |
46,717 |
64,801 |
89,344 |
118,391 |
||||||||||||||
|
400,000 |
22,896 |
35,712 |
53,391 |
75,201 |
102,108 |
135,304 |
||||||||||||||
|
450,000 |
25,758 |
40,176 |
60,065 |
84,601 |
114,871 |
152,217 |
||||||||||||||
|
500,000 |
28,620 |
44,640 |
66,738 |
94,001 |
127,635 |
169,130 |
* | |||||||||||||
|
600,000 |
34,344 |
53,568 |
80,086 |
112,801 |
153,162 |
202,955 |
* | |||||||||||||
|
700,000 |
40,067 |
62,497 |
93,434 |
131,601 |
178,689 |
* |
236,781 |
* | ||||||||||||
|
800,000 |
45,791 |
71,425 |
106,781 |
150,401 |
204,216 |
* |
270,607 |
* | ||||||||||||
|
900,000 |
51,515 |
80,353 |
120,129 |
169,202 |
* |
229,743 |
* |
304,433 |
* | |||||||||||
|
1,000,000 |
57,239 |
89,281 |
133,477 |
188,002 |
* |
255,270 |
* |
338,259 |
* | |||||||||||
___________
|
* |
Currently,
the maximum annual pension benefit which currently may be paid under a
qualified plan is $165,000 (subject to certain grandfather rules) for
limitation years beginning in 2004. |
|
** |
Compensation
in excess of $200,000 is disregarded with respect to all plan years before
2004 and compensation in excess of $205,000 is disregarded with respect to
the 2004 plan year. Accordingly, the compensation of each named executive
officer included in the Executive Compensation Table which was covered by
the non-contributory retirement plan was limited to
$205,000. |
The
non-contributory cash balance retirement plan covers all employees beginning on
April 1, 2002 with no age or service minimum requirement. However, leased
employees and employees covered by a collective bargaining agreement will not
participate in the plan. The cash balance plan pays benefits in the event of
death (if married), retirement or termination of employment after the
participant meets certain vesting requirements (generally 100% vested after 5
years of service). The amount of the monthly retirement benefit payable
beginning at age 65, the normal retirement age, is equal to the greater of (i)
the monthly benefit that is actuarial equivalent of the cash balance account, or
(ii) the accrued monthly benefit under the prior plan as of January 1, 2002. The
opening balance of a cash balance participant, who was an active participant in
the plan on January 2, 2002 and was an active employee on April 1, 2002, is the
actuarial equivalent present value of his frozen accrued benefit on January 1,
2002. Interest Credits are determined on the last day of each plan years based
on the annual rate of interest on the ten-year US Treasury Bill Constant
Maturities on October 1 of the immediately preceding the Plan Year. A Service
Credit will be credited to the cash balance account of any cash balance
participant who is an active participant at any time during the plan year. The
amount of the Service Credit shall be a percentage of the participant’s earnings
for the plan year based on the years of credited service on the last day of the
prior Plan Year.
|
Years
of Credited Service |
Percentage
of Earnings | |
|
0
through 9.99 |
3% | |
|
10
through 19.99 |
4% | |
|
20
or more |
5% |
Change
In Control Arrangements
Messrs.
S. Alexander, A. Alexander and M. Debrovner have not entered into change in
control arrangements with us.
We have
however, entered into a severance and change in control agreement with each of
Mr. Hendrix and Mr. Richter which becomes operative only upon a change in
control. All other Vice Presidents have also entered into the same change in
control agreement with us. A change in control is deemed to occur upon any one
of five events: (1) we merge, consolidate or reorganize into or with another
corporation or legal entity and we are not the surviving entity; (2) we sell or
otherwise transfer 50% or more of our assets to one entity or in a series of
related transactions; (3) any person or group acquires 25% or more of our then
outstanding voting shares; (4) we file a report or proxy statement with the SEC
disclosing that a change in control has occurred or will occur; or (5) if,
during any 12-month period, trust managers at the beginning of the 12-month
period cease to constitute a majority of the trust managers.
If Mr.
Hendrix, Mr. Richter or any other Vice President is terminated under specified
conditions within one year following a change in control, he will be entitled to
a severance benefit in an amount equal to (1) 2.99 times his annualized base
salary as of the first date constituting a change in control or, if greater, (2)
2.99 times his highest base salary in the five fiscal years preceding the first
event constituting a change in control, plus, in either case, 2.99 times his
targeted bonus for the fiscal year in which the first event constituting a
change in control occurs. In addition, Mr. Hendrix, Mr. Richter or any other
Vice President, as applicable, is entitled to receive an additional payment or
payments to the extent the severance benefit is subject to the excise tax
imposed by Section 4999 of the Code or any similar tax imposed by state or local
law, or any penalties or interest with respect to the tax. Mr. Hendrix and Mr.
Richter will also receive one year of employee benefits coverage substantially
similar to what he received or was entitled to receive prior to the change in
control.
Overview
Our
executive compensation is supervised by the management development and
compensation committee of the board of trust managers which is comprised
entirely of independent trust managers as determined by the board within the
meaning of the applicable NYSE listing standards currently in effect. The board
designates the members and the chairman of the committee on an annual basis.
The
committee is responsible for evaluating and establishing the level of
compensation, including establishing a general compensation philosophy, for our
officers. Additionally the committee is responsible for administering our share
option and deferred compensation plans. Our share option programs are for all of
our associates, including our officers. The specific duties and responsibilities
of the committee are described in the charter of the management development and
compensation committee, which is available on our Web site at www.weingarten.com.
The
committee met three times during fiscal 2004. The meetings generally focus
around long-term management development, compensation policy including both
short-term and long-term forms of compensation, review of best practices in
executive compensation, evaluation of the independent consultants’ report to the
committee on the compensation of the executive officers, and evaluation of the
CEO’s performance. All committee members are actively engaged in the review of
matters presented. The committee has direct access to independent compensation
consultants and other experts for survey data, best practices and other
information as it deems appropriate.
Compensation
Philosophy and Objectives.
The goal
of our compensation program is to attract, motivate and retain the highly
talented individuals needed to operate, acquire, develop and remerchandise our
properties for the long-term. We seek to provide executive compensation that
will support the achievement of our financial and growth goals and objectives.
When our performance is better than the goals and objectives set for the
performance period, our associates should be paid more, and when our performance
does not meet one or more of our financial or other objectives, any incentive
award payment is at the committee’s discretion. In order to achieve our goals
and objectives, we have structured an incentive based compensation system tied
to our financial performance and portfolio growth. We will attempt to maximize
the amount of compensation expense that is tax deductible where consistent with
our compensation philosophy.
Our
committee annually reviews our compensation programs to ensure that pay levels
and incentive opportunities are competitive and reflect our performance. In
general, the proportion of an officer’s total compensation that is dependent on
our performance should increase as the scope and level of the individual’s
business responsibilities increase.
Through
the design of our compensation program, we look to balance the focus of our
officers on achieving strong short-term, or annual, results in a manner that
will ensure our long-term viability and success. Therefore, to reinforce the
importance of balancing these perspectives, our officers are regularly provided
with both annual and long-term incentives. Thus we generally compensate our
officers through a combination of base salary, annual bonus compensation, annual
awards of share options and restricted shares. Our Chairman, Chief Executive
Officer and the Vice Chairman, generally have lower base salaries than
comparable companies, coupled with a leveraged incentive bonus system which will
pay more with good performance and less with performance that is below
expectation. Generally, target bonuses for our executive officers are within 30%
to 75% of the base compensation of the individual, depending on the size of the
incentive bonus awarded.
Base
Salary
Base
salary levels for executive officers are largely derived through an evaluation
of the responsibilities of the position held and the experience of the
particular individuals, both compared to companies of similar size, complexity
and, where comparable, in the same industry. The determination of comparable
companies was based upon selections made by both us, as to comparable companies
in the real estate industry, and by independent compensation consultants, as to
other comparable companies. Not all companies included in the NAREIT All Equity
Index described on page 22 are comparable in size and complexity, and not all
comparable real estate companies are REITs. Actual salaries are based on an
executive officer’s skill and ability to influence our financial performance and
growth in both the short-term and long-term. During 2004, our committee used
compensation information provided by an outside consultant, Holland and Davis,
in establishing base salaries.
Bonus
Compensation
We design
the annual incentive or bonus compensation to align pay with our annual
performance. We establish, at the beginning of each year, the key performance
measures we believe require the special focus of all of our associates,
including our officers, to move the business forward and create value for our
shareholders. All of our officers participate in our bonus program. Each
individual’s eligible bonus is based on a percentage of the individual’s base
salary. This bonus program has been in effect for more than 25 years. The bonus
percentage is also based on a competitive analysis and is reviewed with the
independent consultants.
Again,
the officer’s ability to influence our success is considered in establishing
this percentage. Incentive compensation earned is determined annually on the
basis of performance against the pre-established goals and objectives. Other
than for the Chairman, Vice Chairman and Chief Executive Officer, the eligible
bonus percentage for officers is generally allocated 50% to our goals and 50% to
the individual’s goals. Specific individual goals for each officer are
established at the beginning of the year and are tied to the functional
responsibilities of each executive officer. Individual goals include both
objective financial measures as well as subjective factors such as efficiency in
managing capital resources, successful acquisitions, good investor relations and
the continued development of management. Our goals and objectives are primarily
based on operating performance, as measured by factors such as our funds from
operations, and achieving the appropriate growth objective, relating primarily
to portfolio acquisitions and new development. Other than the allocation between
our goals and the individual, no specific weights are assigned to the individual
goals. The bonuses of the Chairman, Vice Chairman and Chief Executive Officer
are based entirely on our performance. Our performance targets and all
individual goals were exceeded in fiscal 2004 and, consequently, the executive
officers were eligible for full bonus awards.
Share
Incentive Program
Our
committee strongly believes that by providing our officers with an opportunity
to increase their ownership of common shares, the interests of shareholders and
the officers will be closely aligned. Therefore, the long-term incentive
component for our officer’s total compensation program is provided in two forms,
share options and restricted share awards. Recently the committee has altered
the allocation between restricted shares and share options, placing more
emphasis on restricted shares. The committee feels that the use of both forms of
long-term incentive compensation is appropriate. Thus, our officers are eligible
to receive both share awards and options annually, giving them the right to
purchase our common shares. The number of options granted to an executive
officer is based on practices of the same
comparable
companies used to define base salary levels. Share awards and options are a
significant part of our executive compensation system, and these awards and
options are issued on an annual basis.
Because
of our strong belief in aligning our officers with the interest of shareholders
through share ownership, we have provided guidelines for ownership of our shares
over time. Our Chairman, CEO, and Vice Chairman must own shares equal to 5 times
their base compensation, executive vice presidents 3.0 times, senior vice
presidents 2.5 times and vice presidents 1 time. These officers are provided
various ways to become shareholders including the share incentive program, an
employee share purchase program, and our 401(k) savings plan.
Chief
Executive Officer Performance Evaluation
For 2004,
the management development and compensation committee evaluated the Chief
Executive Officer’s performance based on our financial performance and growth in
real estate assets. As we exceeded both our funds from operations and our
acquisition and new development goals, Mr. A. Alexander received
115% of his
potential bonus based on our performance for 2004. Mr. Alexander’s compensation
(i.e. base salary, bonus compensation and the share incentive program) is based
primarily on company-wide performance and is set by the management development
and compensation committee.
Respectfully
Submitted,
Management
Development and Compensation Committee
Robert J.
Cruikshank, 2004 Chairman
Stephen
A. Lasher
Marc J.
Shapiro
Performance
Graph
SEC rules
require the presentation of a line graph comparing, over a period of five years,
the cumulative total shareholder return to a performance indicator of a broad
equity market index and either a nationally recognized industry index or a peer
group index constructed by us.
The graph
below provides an indicator of cumulative total shareholder returns for us as
compared with the S&P Stock Index and the NAREIT All Equity Index, weighted
by market value at each measurement point. The graph assumes that $100 was
invested on December 31, 1999 in our common shares and that all dividends were
reinvested by the shareholder.
Comparison
of Five Year Cumulative Return
|
2000 |
2001 |
2002 |
2003 |
2004 |
||||||||||||
|
WRI |
121.09 |
142.35 |
174.41 |
221.83 |
315.83 |
|||||||||||
|
S&P
500 Index |
90.90 |
80.09 |
62.39 |
80.28 |
89.03 |
|||||||||||
|
The
NAREIT All Equity Index |
126.37 |
143.98 |
149.47 |
204.97 |
269.69 |
|||||||||||
There can
be no assurance that our share performance will continue into the future with
the same or similar trends depicted in the graph above. We will not make or
endorse any predications as to future share performance.
The audit
committee is composed of four independent non-employee trust managers and
operates under a written charter adopted by the board (a copy of which is
available on our Web site and a copy of which is attached hereto as Appendix A).
The board has determined that each committee member is independent within the
meaning of the applicable NYSE listing standards currently in effect.
Management
is responsible for the financial reporting process, including the system of
internal controls, and for the preparation of consolidated financial statements
in accordance with GAAP. Our independent registered public accounting firm is
responsible for auditing those financial statements and expressing an opinion as
to their conformity with GAAP. The committee’s responsibility is to oversee and
review these processes. We are not, however, professionally engaged in the
practice of accounting or auditing, and do not provide any expert or other
special assurance as to such financial statements concerning compliance with the
laws, regulations or GAAP or as to the independence of the registered public
accounting firm. The committee relies, without independent verification, on the
information provided to us and on the representations made by management and the
independent registered public accounting firm. We held five meetings during
fiscal 2004. The meetings were designed, among other things, to facilitate and
encourage communication among the committee, management, the internal audit
function and our independent registered public accounting firm, Deloitte &
Touche LLP. We discussed with Deloitte & Touche the overall scope and plans
for their audit. We met with Deloitte & Touche, with and without management
present, to discuss the results of their examinations and their evaluations of
our internal controls.
We have
reviewed and discussed the audited consolidated financial statements for the
fiscal year ended December 31, 2004 with management and Deloitte & Touche.
We also discussed with management and Deloitte & Touche the process used to
support certifications by our Chief Executive Officer and Chief Financial
Officer that are required by the SEC and the Sarbanes-Oxley Act of 2002 to
accompany our periodic filings with the SEC. In addition, we reviewed and
discussed our progress on complying with Section 404 of the Sarbanes-Oxley Act
of 2002, including the Public Company Accounting Oversight Board’s (PCAOB)
Auditing Standard No. 2 regarding the audit of internal control over financial
reporting.
In
addition, the audit committee obtained from Deloitte & Touche a formal
written statement describing all relationships between Deloitte & Touche and
the company that might bear on Deloitte & Touche’s independence consistent
with Independence Standards Board Standard No. 1, “Independence Discussions with
Audit Committees,” discussed with Deloitte & Touche any relationships that
may impact their objectivity and independence, and satisfied itself as to their
independence. When considering Deloitte & Touche’s independence, we
considered whether their provision of services to the company beyond those
rendered in connection with their audit of our consolidated financial statements
and reviews of our consolidated financial statements, including in its Quarterly
Reports on Form 10-Q, was compatible with maintaining their independence. We
also reviewed, among other things, the audit and non-audit services performed
by, and the amount of fees paid for such services to, Deloitte & Touche. The
audit committee also discussed and reviewed with the independent registered
public accounting firm all communications required by generally accepted
auditing standards, including those described in Statement on Auditing Standards
(SAS) No. 61, as amended, “Communication with Audit Committees,” SAS 99
“Consideration of Fraud in a Financial Statement Audit,” and SEC rules discussed
in Final Release Nos. 33-8183 and 33-8183a.
Based on
our review and these meetings, discussions and reports, and subject to the
limitations on our role and responsibilities referred to above and in the audit
committee charter, we recommended to the board of trust managers (and the board
has approved) that the audited financial statements for the year ended December
31, 2004 be included in the Annual Report on Form 10-K. We have selected
Deloitte & Touche as our independent registered public accounting firm for
the fiscal year ending December 31, 2005, and have presented the selection to
the shareholders for ratification.
The
undersigned members of the audit committee have furnished this report to the
board of trust managers.
Respectfully
Submitted,
Audit
Committee
James W.
Crownover, 2004 Chairman
Robert J.
Cruikshank
J. Murry
Bowden
Douglas
Schnitzer
RATIFICATION
OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The audit
committee has appointed Deloitte & Touche LLP (Deloitte) as independent
registered public accounting firm to audit our financial statements for the
fiscal year ending December 31, 2005. During fiscal 2004, Deloitte served as our
independent registered public accounting firm and also provided certain tax and
other audit related services. Deloitte, or its predecessors, has served as our
independent registered public account firm for more than 30 years and are
familiar with our affairs and financial procedures.
Principal
Accounting Firm Fees
Aggregate
fees billed to us for the fiscal years ended December 31, 2004, and 2003 by
Deloitte.
|
2004 |
2003 |
||||||
|
($
in thousands) | |||||||
|
Audit
Fees (a) |
$ |
1,082.2 |
$ |
487.8 |
|||
|
Audit-Related
Fees (b) |
8.0 |
-- |
|||||
|
Tax
Fees (c) |
312.6 |
354.2 |
|||||
|
All
Other Fees (d) |
-- |
-- |
|||||
|
Total |
$ |
1,402.8 |
$ |
842.0 |
|||
|
(a) |
Fees
for audit services billed in 2004 consisted of: audit of the Company’s
annual financial statements, audit of the Company’s internal control over
financial reporting, reviews of the Company’s quarterly financial
statements, comfort letters, consents and other services related to
Securities and Exchange Commission matters.
|
Fees for
audit services billed in 2003 consisted of: audit of the Company’s annual
financial statements, reviews of the Company’s quarterly financial statements,
comfort letters, statutory and regulatory audits, consents and other services
related to SEC matters.
| (b) |
Fees
for audit-related services billed in 2004 consisted of financial
accounting and reporting consultations. |
|
(c) |
Fees
for tax services billed in 2004 and 2003 consisted of tax compliance and
tax planning and advice. Fees for tax compliance services totaled $279,300
and $300,000 in 2004 and 2003, respectively. Tax compliance services are
services rendered based upon facts already in existence or transactions
that have already occurred to document, compute, and obtain government
approval for amounts to be included in tax filings and consisted of
Federal, state and local income tax return assistance, research for
technical advice regarding technical terminations and disguised sales,
research for technical advice and analysis for the purpose of filing
amended returns and assistance with earnings and profits calculation and
review. |
Fees for
tax planning and advice services totaled $33,300 and $54,200 in 2004 and 2003,
respectively. Tax planning and advice are services rendered with respect to
proposed transactions or that alter a transaction to obtain a particular tax
result. Such services consisted of tax advice related to structuring certain
proposed mergers, acquisitions and disposals, tax advice related to IRC §1031
exchanges and tax advice related to an intra-group restructuring.
|
(d) |
There
were no fees for other services billed in 2004 or 2003.
|
At its
regularly scheduled and special meetings, the audit committee considers and
pre-approves any audit and non-audit services to be performed by our independent
accountants. The audit committee has delegated to its chairman, an independent
member of our board of trust managers, the authority to grant pre-approvals of
non-audit services provided that any such pre-approval by the chairman shall be
reported to the audit committee at its next scheduled meeting. However,
pre-approval of non-audit services is not required if (i) the aggregate amount
of non-audit services is less than 5% of the total amount paid by us to the
auditor during the fiscal year in which the non-audit services are provided;
(ii) such services were not recognized by the company as non-audit services at
the time of the engagement; and (iii) such services are promptly brought to the
attention of the audit committee and, prior to completion of the audit, are
approved by the audit committee or by one or more audit committee members who
have been delegated authority to grant approvals.
The audit
committee has considered whether the provision of these services is compatible
with maintaining the independent accountants’ independence and has determined
that such services have not adversely affected Deloitte’s independence.
Representatives
of Deloitte will be present at the annual meeting and will have an opportunity
to make a statement, if they desire to do so, and to respond to appropriate
questions from shareholders.
The
board of trust managers unanimously recommends that you vote FOR the
ratification of independent registered public accounting firm as set forth in
Proposal Two. Proxies solicited by the board of trust managers will be so voted
unless you specify otherwise in your proxy.
As of the
mailing date of this proxy statement, the board of trust managers knows of no
other matters to be presented at the meeting. Should any other matter requiring
a vote of the shareholders arise at the meeting, the persons named in the proxy
will vote the proxies in accordance with their best judgment.
Any
shareholder who intends to present a proposal at the annual meeting in the year
2006, and who wishes to have the proposal included in our proxy statement for
that meeting, must deliver the proposal to our corporate secretary M. Candace
DuFour, at P.O. Box 924133, Houston, Texas 77292-4133 by November 18, 2005. All
proposals must meet the requirements set forth in the rules and regulations of
the SEC in order to be eligible for inclusion in the proxy statement for that
meeting.
Any
shareholder who intends to bring business to the annual meeting in the year
2006, but not include the proposal in our proxy statement, or to nominate a
person to the board of trust managers, must give written notice to our corporate
secretary, M. Candace DuFour, at P.O. Box 924133, Houston, Texas 77292-4133, by
January 20, 2006.
We have
provided without charge a copy of the annual report to shareholders for fiscal
year 2004 to each person being solicited by this proxy statement. Upon
the written request by any person being solicited by this proxy statement, we
will provide without charge a copy of the annual report on Form 10-K as filed
with the SEC (excluding exhibits, for which a reasonable charge shall be
imposed). All
requests should be directed to: M. Candace DuFour, Sr. Vice President and
Secretary at Weingarten Realty Investors, P.O. Box 924133, Houston, Texas
77292-4133. This information is also available via the Internet at our Web site
(www.weingarten.com) and the
EDGAR version of such report (with exhibits) is available at the SEC’s world
wide Web site (www.sec.gov).
Weingarten
Realty Investors
(Revised
February 23, 2005)
Purpose
The Audit
Committee (the “Audit
Committee” or the
“Committee”) of
Weingarten Realty Investors (the "Company") shall
assist the Board of Trust Managers (the "Board") in
fulfilling its general oversight of: (1) the Company's financial reporting
processes and the audit of the Company's financial statements, including the
integrity of the financial statements of the Company; (2) our compliance
with ethical policies contained in the Company’s Code of Conduct and Ethics; (3)
compliance with the Company's legal and regulatory requirements; (4) the
independence, qualification and performance of the Company’s independent
auditors; (5) the performance of the Company's internal audit function; and
(6) risk assessment and risk management.
The Audit
Committee shall have the authority to retain special legal, accounting or other
consultants to advise the Audit Committee, and the Committee shall receive
appropriate funding, as determined by the Committee, for the payment of fees of
any such lawyers, accountants or consultants. The Audit Committee may request
any officer or employee of the Company or the Company’s outside counsel or
independent auditors to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee.
Organization
This
charter governs the operations of the Audit Committee. The Audit Committee shall
review and reassess the adequacy of this charter annually and recommend any
proposed changes to the charter to the Board for approval. The Company's
Governance Committee shall nominate trust managers for appointment to the Audit
Committee. The Board will appoint Committee members annually. The Board may
remove Committee members at any time with or without cause, by a majority vote.
The Board will fill any vacancy on the Committee. The Audit Committee shall be
comprised of at least three directors, each of whom is independent under the
applicable New York Stock Exchange ("NYSE")
listing standards, as determined by the Board. All members of the Audit
Committee must meet the NYSE financial literacy requirements and at least one
member must meet the NYSE financial expertise requirements.
Responsibilities
and Processes
While the
Audit Committee has the responsibilities and powers set forth in this charter,
it is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Company’s financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. Management is
responsible for preparing the Company’s financial statements and the Company’s
independent auditors are responsible for auditing the annual financial
statements and for reviewing the unaudited interim financial statements. Nor is
it the duty of the Audit Committee to conduct investigations to assure
compliance with laws and regulations and the Company’s Code of Conduct and
Ethics.
The Audit
Committee, in carrying out its responsibilities, believes its policies and
procedures should be reviewed periodically, in order to best react to changing
conditions and circumstances. The Audit Committee should take appropriate
actions to ensure a management environment for quality financial reporting,
sound business risk practices, and ethical behavior. The following shall be the
principal duties
and
responsibilities of the Audit Committee. These are set forth as a guide with the
understanding that the Audit Committee may supplement them as
appropriate.
In
carrying out its responsibilities, the Audit Committee shall:
1. Retain,
subject to shareholder ratification, the independent auditors of the Company to
conduct the examination of the books and records of the Company and its
affiliates, and terminate any such engagement if circumstances warrant. The
independent auditors are ultimately accountable to, and shall report directly
to, the Audit Committee. The Audit Committee shall provide oversight of the work
of the independent auditors, including resolution of disagreements between
management and the independent auditors regarding financial
reporting.
2. Pre-approve
all audit services and, to the extent such pre-approval is required by law, all
non-audit services provided by the independent auditors, as well as the fees and
terms for providing such services. The Audit Committee may delegate pre-approval
authority to a member of the Audit Committee. The decisions of any Audit
Committee member to whom pre-approval authority is delegated must be presented
to the full Audit Committee at its next scheduled meeting.
3. At least
annually, obtain and review a report by the independent auditors describing:
(i) the firm’s internal quality-control procedures; (ii) any material
issues raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting any
independent audits carried out by the firm and any steps taken to deal with any
such items; and (iii) all relationships between the independent auditor and
the Company.
4. Evaluate
the performance of the Company’s independent auditors and lead audit partner,
and report its conclusions to the full Board.
5. Meet with
the Company’s independent auditors and management to review the scope of the
proposed annual audit (and related quarterly reviews), the key audit procedures
to be followed and, at the conclusion of the audit, review the principal audit
findings including any comments or recommendations of the Company’s independent
auditors.
6. Obtain
assurance from the Company’s independent auditors that it has complied with its
obligation to report any fraud identified in connection with its audit of the
financial statements of the Company.
7. Discuss
the Company’s annual audited financial statements and unaudited quarterly
financial statements with management and the independent auditors, including
management’s discussion and analysis of financial condition and results of
operations. Discuss other matters with the Company’s independent auditors as
required by the SEC and, if the financial statements are acceptable, recommend
that the audited financial statements be included in the Company’s Form 10-K.
While the fundamental responsibility for the Company’s financial statements and
disclosures rests with management, the Committee will review: (i) major
issues regarding accounting principles and financial statement presentations,
including any significant changes in the Company’s selection or application of
accounting principles, and major issues as to the adequacy of the Company’s
internal controls and any special audit steps adopted in light of material
control deficiencies; (ii) analyses prepared by management or the
independent auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the financial
statements and the treatment preferred by the independent auditors;
(iii) the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the Company; and
(iv) earnings press releases (paying particular attention to any use of
pro-forma information and non-GAAP information).
8. Approve
the content of the report of the Audit Committee required by the SEC to be
included in the Company’s annual proxy statement, and review and approve all
"related party transactions," as defined in applicable securities.
9. Meet, at
least annually, with management to discuss, as appropriate, significant
accounting accruals, estimates and reserves; litigation matters; management’s
representations to the independent auditors; new or proposed regulatory
accounting and reporting rules; any significant off-balance sheet transactions
and special purpose entities; disclosure controls and procedures; and any
significant financial reporting issues or judgments disputed with the Company’s
independent auditors.
10. At least
annually, receive from and discuss with the independent auditors and management,
separately or together as determined by the Committee, a report on (i) all
critical accounting policies and practices to be used; (ii) all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management of the Company, the
ramifications of the use of such alternative disclosures and treatments, and the
treatment preferred by the independent auditors; and (iii) other material
written communications between the independent auditors and management of the
Company, such as any management letter or schedule of unadjusted audit
differences.
11. Review
quarterly with the Company’s CEO and CFO (i) the adequacy and effectiveness
of the Company's internal controls, including any significant deficiencies
therein, (ii) any material weakness in the Company’s internal controls and
(iii) any fraud, whether or not material, involving management or other
employees who have a significant role in the Company’s internal
controls.
12. Review
annually with management and the independent auditors (i) the internal
control report contained in the Company’s Annual Report on Form 10-K regarding
management’s assessment of the effectiveness of the internal control structure
and procedures of the Company for financial reporting, and (ii) the
attestation and report of the independent auditors regarding management’s
assessment of internal controls.
13. Discuss
with the Company’s independent auditors and management information relating to
the auditors’ judgments about the quality, not just the acceptability, of the
Company’s accounting principles and matters identified by the auditors during
its interim reviews. Also, the Committee shall discuss the results of the annual
audit and any other matters that may be required to be communicated to the Audit
Committee by the Company’s independent auditors under generally accepted
auditing standards.
14. Discuss
with management an outline of press releases regarding results of operations, as
well as general policies on financial information and earnings guidance to be
provided to analysts, rating agencies, and the general public. Review any
relevant items with management and the Company’s independent auditors prior to
release of any such press releases or earnings guidance. The review shall be
with the Chairman of the Audit Committee or the full Audit Committee, as may be
appropriate.
15. At least
quarterly, discuss separately with the Company’s independent auditors and
management the adequacy and effectiveness of the Company’s internal accounting
and financial controls, and elicit any recommendations for
improvement.
16. Review
major changes to the Company’s auditing and accounting principles and practices
as suggested by the independent auditors, internal auditors or
management.
17. Discuss
with management policies with respect to risk assessment and risk management.
While it is the job of the Company’s management to assess and manage the
Company’s exposure to risk, the Committee will discuss guidelines and policies
that govern the process. This discussion may include the Company’s financial
risk exposures and the steps management has taken to monitor and control
exposure.
18. At least
annually, receive and discuss with the independent auditors their annual written
statement regarding all relationships or services between the independent
auditors and the Company or any other relationships or services that may impact
their objectivity and independence.
19. Confirm
that the Company's hiring policies conform to applicable SEC or other external
guidelines for employment by the Company of employees and former employees of
the independent auditors.
20.
Confirm that neither the lead audit partner nor the concurring partner of the
independent auditor has performed audit services for the Company for more than
five consecutive fiscal years, and oversee the rotation of other audit partners
at least once every seven years.
21. Confirm
that none of the Company’s CEO, CFO, Chief Accounting Officer, Controller or
equivalent officers were employed by the independent auditor and participated in
any capacity in the audit of the Company during the one-year period preceding
the initiation of the audit.
22. Receive
from management a summary of findings from completed audits (and management’s
response) and a progress report on the proposed internal audit plan with
explanations for any material deviations from the original plan.
23. Review
periodic reports from management with respect to, and advise the Board regarding
compliance with, the Company’s Code of Conduct and Ethics.
24. Review
with the Company’s counsel legal matters that may have a material impact on the
financial statements.
25. Provide
sufficient opportunity at its meetings to meet separately in executive session
with the Company’s independent auditors and members of management. Among the
items to be discussed with the Company’s independent auditors are (i) the
independent auditors’ evaluation of the Company’s financial and accounting
personnel; (ii) the cooperation that the independent auditors received
during the course of its audit; (iii) any management letter provided by the
independent auditors and management’s response; and (iv) any other matters
the Audit Committee may determine from time to time.
26. Report
regularly to the Board with respect to the Audit Committee's
activities.
27.
Establish procedures for (i) the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal accounting
controls, or auditing matters; and (ii) the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
28. In
consultation with the Governance Committee, conduct an annual evaluation of the
performance and effectiveness of the Audit Committee and report the results of
that evaluation to the Board.
29. As the
Committee determines necessary to carry out its duties, obtain advice and
assistance from outside advisors, including the Company’s legal, accounting or
other advisors.
A-4
