DEF 14A: Definitive proxy statements
Published on April 17, 2001
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-11(c) or Section 240.14a-12
TANGER FACTORY OUTLET CENTERS, INC.
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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:
TANGER FACTORY OUTLET CENTERS, INC.
3200 NORTHLINE AVENUE, SUITE 360
GREENSBORO, NORTH CAROLINA 27408
PHONE: 336-292-3010
E-MAIL: tangermail@tangeroutlet.com
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on May 18, 2001
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend
the 2001 Annual Meeting of Shareholders of Tanger Factory Outlet Centers, Inc.
to be held on Friday, May 18, 2001 at 10 o'clock a.m. at the O. Henry Hotel, 624
Green Valley Road, Greensboro, North Carolina, (336) 854-2000, for the following
purposes:
1. To elect directors to serve for the ensuing year;
2. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Only common shareholders of record at the close of business on March
31, 2001, will be entitled to vote at the meeting or any adjournment(s) thereof.
Information concerning the matters to be considered and voted upon at
the Annual Meeting is set out in the attached Proxy Statement. Our 2000 Annual
Report for the year ended December 31, 2000 is also enclosed.
It is important that your shares be represented at the 2001 Annual
Meeting regardless of the number of shares you hold and whether or not you plan
to attend the meeting in person. Please complete, sign and date the enclosed
proxy card and return it as soon as possible in the accompanying envelope. This
will not prevent you from voting your shares in person if you subsequently
choose to attend the meeting.
Sincerely,
Stanley K. Tanger
Chairman of the Board and
Chief Executive Officer
April 18, 2001
TANGER FACTORY OUTLET CENTERS, INC.
3200 NORTHLINE AVENUE, SUITE 360
GREENSBORO, NORTH CAROLINA 27408
PHONE: 336-292-3010
E-MAIL: tangermail@tangeroutlet.com
------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The Board of Directors of Tanger Factory Outlet Centers, Inc., a
self-administered and self-managed real estate investment trust, referred to as
a REIT, is soliciting your proxy for use at the Annual Meeting of Shareholders
of the Company to be held on Friday, May 18, 2001.
Unless the context indicates otherwise, the term "Company" refers to
Tanger Factory Outlet Centers, Inc., the terms "Board" and "Directors" refer to
our Board of Directors, the term "meeting" refers to the Annual Meeting of
Shareholders of the Company and the term "Operating Partnership" refers to
Tanger Properties Limited Partnership. Our factory outlet centers and other
assets are held by, and all of our operations are conducted by, the Operating
Partnership. Accordingly, the descriptions of our business, employees and
properties are also descriptions of the business, employees and properties of
the Operating Partnership. The terms "we", "our" and "us" refer to the Company
or the Company and the Operating Partnership together, as the text requires.
The proxy materials are being mailed on or about April 18, 2001 to
shareholders of record on March 31, 2001. Any shareholder who does not receive a
copy of the proxy materials may obtain a copy at the meeting or by contacting
Rochelle Simpson, Secretary of our Company. Our principal executive offices are
located at 3200 Northline Avenue, Suite 360, Greensboro, North Carolina 27408.
Date, Time and Place
We will hold the meeting on Friday, May 18, 2001 at 10 o'clock a.m. at
the O. Henry Hotel, 624 Green Valley Road, Greensboro, North Carolina, (336)
854-2000, subject to any adjournments or postponements.
Who Can Vote; Votes per share
All holders of record of the Company's Common Shares (the "Common
Shares") as of the close of business on the record date, March 31, 2001, are
entitled to attend and vote at the meeting. The outstanding Common Shares are
the only class of securities entitled to vote at the meeting. Each Common Share
entitles the holder thereof to one vote. At the close of business on March 30,
2001, there were 7,918,911 Common Shares issued and outstanding.
Quorum and Voting Requirements
Under our By-laws and North Carolina law, shares represented at the
meeting by proxy for any purpose will be deemed present for quorum purposes for
the remainder of the meeting. Directors will be elected by the vote of a
plurality of the votes cast by the shares entitled to vote in the election,
provided that a quorum is present. Accordingly, shares which are present at the
meeting for any other purpose but which are not voted in the election of
directors will not affect the election of the candidates receiving a plurality
of the votes cast by the shares entitled to vote in the election at the meeting.
All other proposals to come before the meeting require a plurality of the votes
cast regarding the proposal. Accordingly, shares which are present at the
meeting for any other purpose but which are not voted on a particular proposal
will not affect the outcome of the vote on the proposal unless the North
Carolina Business Corporation Act requires that the proposal be approved by a
greater number of affirmative votes than a plurality of the votes cast.
2
How to Vote
Shares represented by a properly executed proxy will be voted as
directed on the proxy card. Those who hold their shares in street name should
instruct their broker or bank how to vote on their behalf. Where no
specification is made on the properly executed and returned form of proxy, the
shares will be voted FOR the election of all nominees for director. To be voted,
proxies must be filed with the Secretary of the Company prior to voting.
Revocation of Proxies
You may revoke your proxy at any time before it is voted by filing a
notice of such revocation, by filing a later dated proxy with the Secretary of
the Company or by voting in person at the meeting. You can not revoke your proxy
by merely attending the meeting. If you dissent, you will not have any rights of
appraisal with respect to the matters to be acted upon at the meeting.
Proxy Solicitation
We will bear the costs of soliciting proxies from the holders of our
Common Shares. Proxies will initially be solicited by us by mail, but our
Directors, officers and employees may also solicit proxies by telephone,
telegraph, fax, e-mail or personal interview. We will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy material to shareholders.
PROPOSAL 1
ELECTION OF DIRECTORS
Our By-Laws provide that directors be elected at each Annual Meeting
of Shareholders. Pursuant to such By-Laws, our current Directors have fixed the
number of directors to be elected at five. The persons named as proxies in the
accompanying form of proxy intend to vote in favor of the election of the five
nominees for director designated below, all of whom are presently directors of
the Company, to serve until the next Annual Meeting of Shareholders and until
their successors are elected and shall qualify. It is expected that each of
these nominees will be able to serve, but if any such nominee is unable to serve
for any reason, the proxies reserve discretion to vote or refrain from voting
for a substitute nominee or nominees. All directors of the Company serve terms
of one year or until the election of their respective successors.
Information Regarding Nominees (as of March 30, 2001):
The Board of Directors recommends a vote FOR the nominations set forth above.
Committees of the Board of Directors; Meetings
The Board held five regular and three special meetings during 2000.
Each of the above Directors attended at least 75% of the meetings held during
2000 by the Board and the committees of which he was a member. The Board has not
established a separate nominating committee.
Executive Compensation Committee. The Board has established an
Executive Compensation Committee consisting of a majority of Independent
Directors. Independent Directors are those directors who are not concurrently
serving as officers of the Company and who currently have no relationship to us
that may interfere with the exercise of their independence from management and
the Company. The Executive Compensation Committee is charged with determining
compensation for our executive officers. Mr. Africk, Mr. Benton and Stanley K.
Tanger currently serve on the Executive Compensation Committee, with Mr. Africk
serving as chairman. During 2000, there were three meetings of the Executive
Compensation Committee.
Share and Unit Option Committee. The Board has established a Share and
Unit Option Committee (referred to as the "Option Committee") consisting of
three Independent Directors. The Option Committee administers our Share Option
Plan and the Operating Partnership's Unit Option Plan. Mr. Benton, Mr. Africk
and Mr. Robinson currently serve on the Option Committee, with Mr. Benton
serving as chairman. During 2000, there was one meeting of the Option Committee.
Audit Committee. The Board of Directors has established an Audit
Committee consisting of three Independent Directors. The Audit Committee makes
recommendations concerning the engagement of independent auditors, reviews with
the independent auditors the plans and results of the audit engagement, approves
professional services provided by the independent auditors, reviews the
independence of the independent auditors, considers the range of audit and
non-audit fees and reviews the adequacy of our internal accounting controls. Mr.
Africk, Mr. Benton and Mr. Robinson currently serve on the Audit Committee, with
Mr. Africk serving as chairman. During 2000, there were 5 meetings of the Audit
Committee.
4
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is appointed by the Board to assist the Board in
monitoring the integrity of the Company's financial reporting process and
internal controls and the independence and performance of the independent
auditors. The Audit Committee has three directors, each considered independent
under the New York Stock Exchange's listing standards. The Audit Committee acts
under a written charter adopted by the Board. The Audit Committee Charter is
attached to this proxy statement as Appendix A.
The 2000 financial statements, which were prepared under accounting
principles generally accepted in the United States of America, have been
approved by the Board at the recommendation of the Audit Committee. The Audit
Committee reviews the quarterly and annual financial results with management and
the Company's independent auditors. The Audit Committee has discussed with the
independent auditors and received confirmation from the independent auditors of
their independence as required under applicable standards for auditors of public
companies and has discussed the matters required to be discussed by Statement on
Auditing Standards No. 61. The Audit Committee has recommended to the Board that
the audited financial statements be included in the Company's Annual Report on
Form 10-K. The following is a summary of the fees paid to the independent
auditors for fiscal year 2000:
Annual audit fees.............................................$117,500
Financial Information Systems Design and Implementation fees.. ---
All other fees................................................ 307,785
The Audit Committee has considered and discussed with the independent
auditors the compatibility of the non-audit services with maintaining auditor
independence.
THE AUDIT COMMITTEE
Jack Africk (Chairman)
William G. Benton
Thomas E. Robinson
Compensation of Directors
We pay our Independent Directors an annual compensation fee of $15,000
and a per meeting fee of $750 (for each Board meeting and each Committee meeting
attended).
Pursuant to the Share Option Plan for Directors and Executive and Key
Employees of Tanger Factory Outlet Centers, Inc. (referred to as the "Share
Option Plan"), on the date of his or her initial election to the Board and on
each of the first two anniversaries thereof, each Independent Director received
an option to purchase 3,000 Common Shares at an exercise price equal to the Fair
Market Value (as defined in the Share Option Plan) of a Common Share on the date
of the option grant (except for the initial grant of options to Mr. Africk and
Mr. Benton); 20% of such options become exercisable on each of the first five
anniversaries of the date of grant, subject to the Independent Director's
continued service as such. On June 4, 1993, we granted to Mr. Africk and Mr.
Benton options to purchase 3,000 Common Shares with an exercise price set at
$22.50 per Common Share, the initial public offering price of the Common Shares.
Our employees who are also Directors will not be paid any director fees and will
not receive any options for their services as Directors of the Company.
Upon approval of the entire Board, we may from time to time grant
additional options to purchase Common Shares to the Independent Directors. On
January 6, 1998, January 8, 1999 and March 8, 2000, the Board granted to each
Independent Director options to purchase 5,000 Common Shares at an exercise
price equal to the Fair Market Value as of such dates. On each of the first five
anniversaries of the date of grant, 20% of these options become exercisable
subject to the Independent Director's continued service as such.
5
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 30,
2001, available to us with respect to our Common Shares, $.01 par value per
share, and of units of partnership interests in the Operating Partnership
(referred to as the "Units") (i) held by those persons known by us to be the
beneficial owners (as determined under the rules of the Securities and Exchange
Commission) of more than 5% of such shares, (ii) held individually by the
Directors and our executive officers named elsewhere in this document, and (iii)
held by our Directors and all of our executive officers as a group.
(1) The ownership of Common Shares reported herein is based upon filings
with the Securities and Exchange Commission and is subject to
confirmation by us that such ownership did not violate the ownership
restrictions in our Articles of Incorporation.
(2) Units in the Operating Partnership held by the Tanger Family Limited
Partnership ("TFLP") and Units that may be acquired upon the exercise
of options to purchase Units may be exchanged for our Common Shares on
a one-for-one basis.
(3) Includes 139,031 Common Shares and 3,033,305 Units owned by the TFLP,
of which Stanley K. Tanger is the general partner and may be deemed to
be the beneficial owner. Also includes 17,265 Common Shares and
365,000 presently exercisable options to purchase Units owned by
Stanley K. Tanger individually. Does not include 100,000 options to
purchase Units, which are presently unexercisable, owned by Stanley K.
Tanger individually.
(4) Includes 310,000 presently exercisable options to purchase Units. Does
not include 139,031 Common Shares and 3,033,305 Units owned by the
TFLP, (Steven B. Tanger is a limited partner of the Tanger Investments
Limited Partnership, which is a limited partner of TFLP). Does not
include 70,000 options to purchase Units which are presently
unexercisable. Does not include 17,265 Common Shares actually owned or
139,031 Common Shares which may be deemed beneficially owned by Steven
B. Tanger's father, Stanley K. Tanger.
(5) Includes 15,000 presently exercisable options to purchase our Common
Shares.
(6) Includes 11,400 presently exercisable options to purchase our Common
Shares. Excludes 325 Series A Preferred Depositary Shares which are
convertible into 292 Common Shares.
6
(7) Amounts shown as Units beneficially owned represent presently
exercisable options to purchase Units.
(8) Includes 41,400 presently exercisable options to purchase Common
Shares and 875,100 presently exercisable options to purchase Units.
Does not include 27,000 options to purchase Common Shares and 313,000
options to purchase Units which are presently unexercisable. Excludes
325 Series A Preferred Depositary Shares which are convertible into
292 Common Shares.
Executive Compensation
The following table sets forth the compensation earned for the fiscal
years ended December 31, 2000, 1999, and 1998 with respect to our CEO and our
four (4) most highly compensated executives other than our CEO whose cash
compensation exceeded $100,000 during such year.
(1) A portion of the salaries of Stanley K. Tanger and Steven B. Tanger are
paid by the Company for services to the Company and the remainder are paid
by the Operating Partnership.
(2) Stanley K. Tanger received an annual bonus of $131,611 and a special award
related to the sale of two of our operating properties of $143,475.
(3) Steven B. Tanger received an annual bonus of $126,747 and a special award
related to the sale of two of our operating properties of $47,825.
(4) We reimbursed Stanley K. Tanger $17,150 for premiums paid in 2000, 1999 and
1998 towards a term life insurance policy. In addition, the Company
provided $2,125 during 2000 and $2,000 during 1999 and 1998 as a Company
match under the employee 401(k) plan.
(5) We provide term life insurance to Steven B. Tanger. Annual premiums paid by
us in 2000, 1999, and 1998 were $12,970, $12,970, and 17,150, respectively.
In addition, we provided $2,125 during 2000 and $2,000 during 1999 and 1998
as a Company match under the employee 401(k) plan.
(6) Company match under employee 401(k) plan.
(7) Number of Units in the Operating Partnership under option grant.
7
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in 2000 to
our CEO and our four (4) most highly compensated executives other than our CEO.
(1) Represents options to purchase Units of limited partnership interest in the
Operating Partnership. The options vest ratably over five years, have a
10-year term and an exercise price as indicated in the table. The exercise
price represents the fair market value of the Units at the time of grant,
assuming such Units were exchanged for Common Shares of the Company as
provided for in the partnership agreement of the Operating Partnership.
(2) Assumed annual rates of share price appreciation for illustrative purposes
only. Actual share prices will vary from time to time based upon market
factors and the Company's financial performance. No assurance can be given
that such rates will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information on option exercises in 2000 by our
CEO and our four (4) most highly compensated executives other than our CEO, and
the value of each such officer's unexercised options at December 31, 2000. There
were no options exercised during the fiscal year ended December 31, 2000.
8
Report of the Executive Compensation Committee on Executive Compensation
Except as expressly described below, references to compensation (or
policies with respect thereto) paid by the Company refer to compensation paid by
both the Company and the Operating Partnership.
The Compensation Committee of the Board of Directors (the "Committee")
believes that the Company's success is attributable in large part to the
management and leadership efforts of its executive officers. The Company's
management team has substantial experience in owning, operating, managing,
developing and acquiring interests in factory outlet centers. Stanley K. Tanger,
Chairman of the Board and Chief Executive Officer, and Steven B. Tanger,
President and Chief Operating Officer, provide us with strategic business
direction. Under the guidance of the committee, the Company is committed to
develop and maintain compensation policies, plans and programs which will
provide additional incentives for the enhancement of cash flows, and
consequently real property and shareholder values, by aligning the financial
interests of the Company's senior management with those of its shareholders.
The primary components of the Company's executive compensation program
are: (1) base salaries, (2) performance based annual bonuses and (3) share and
unit options. The Company's business is most competitive and the Committee
believes that it is extremely desirable for the Company to maintain employment
contracts with its senior executives. The Company currently has employment
contracts with each of the named executives on page 7 (See "Employment
Contracts").
Base salaries for each of the named executive officers are approved by
the Committee and are determined after taking into account several factors which
include (1) salaries paid to officers by companies in the Company's select peer
group and other REITS, (2) the nature of the position and (3) the contribution
and experience of the officer. Under their employment agreements, the annual
base salaries of Stanley K. Tanger and Steven B. Tanger are determined annually
by agreement between each of them and the Board; provided however, if the
Company's per share FFO for the previous year equaled or exceeded a targeted
level, the annual base salary will not be less than the annual base salary for
the previous year increased to reflect any increase in the CPI. The employment
agreements of the other three most highly compensated executive officers provide
for annual base salaries in fixed dollar amounts.
The employment contracts for Stanley and Steven Tanger, the Company's
two most senior executives, provide for annual cash bonuses based upon the
Company's performance as measured by Funds From Operations ("FFO") per share.
FFO is a widely accepted financial indicator used by certain investors and
analysts to analyze and compare one equity REIT with another. FFO is generally
defined as net income (loss), computed in accordance with generally accepted
accounting principles, before extraordinary items and gains (losses) on sale of
depreciable operating properties, plus depreciation and amortization uniquely
significant to real estate. The Company may also consider the award of cash
bonuses and awards to any executive officers and key employees if certain
performance criteria are met. The Company made special cash awards to Stanley
and Steven Tanger during 2000.
Share-based compensation is also an important element of the Company's
compensation program. In contrast to bonuses, which are paid for prior year
accomplishments, grants of options to purchase the Company's Common Shares
represent incentives tied to future share appreciation. The Company maintains
the Share Option Plan and the Operating Partnership maintains the Unit Option
Plan (collectively with the Share Option Plan, the "Plans") for the purpose of
attracting and retaining our Directors, executive officers and certain other
employees. The Option Committee of the Board determines in its sole discretion,
subject to the terms and conditions of the Plans, the specific terms of each
option granted to an employee of the Company or Operating Partnership based upon
its subjective assessment of the individual's performance, responsibility and
functions and how this performance may have contributed or may contribute in the
future to the Company's performance. The Compensation Committee believes awards
pursuant to the Plans align the interests of the Directors and management with
those of the Company's shareholders since optionees will benefit under such
options only if shareholders of the Company also benefit. Options granted under
the Plans are generally granted at the Fair Market Value of the Company's Common
Shares on the date of grant and thus will provide value only if the price of the
Common Shares exceeds the exercise price of the options.
9
Under his employment agreement, Stanley K. Tanger, the Company's Chief
Executive Officer, receives an annual base salary and may receive a bonus if the
Company achieves a targeted FFO amount for the fiscal year:
o Mr. Tanger's annual base salary for 2000 was $390,000. His employment
contract provides that the annual base salary will be fixed each
fiscal year by agreement between Mr. Tanger and the Board; provided
however, if the Company's FFO per share for the previous year equaled
or exceeded a targeted level, the annual base salary is not to be less
than Mr. Tanger's annual base salary for that previous year adjusted
to reflect any increase in the CPI. The Company's FFO per share for
1999 exceeded the targeted FFO amount in Mr. Tanger's contract. For
this reason and in view of Mr. Tanger's key contributions to the
Company's continued success in an increasingly competitive
environment, the Committee approved an annual base salary of $390,000
for fiscal 2000.
o Mr. Tanger was paid a $131,611 bonus for 2000. Under his employment
agreement, a bonus from $100,000 to $460,000 was payable for 2000 if
the Company's FFO per share reached targeted levels. No bonus was
payable unless the minimum targeted FFO was achieved. The Company's
FFO for 2000 exceeded the minimum target level at which a bonus was
payable.
During 2000, Mr. Tanger was also paid $143,475 as a special award for
his key contribution to the sale of two of the Company's underperforming
properties.
The Company paid 20% of Mr. Tanger's 2000 annual base salary. The
Operating Partnership paid the remainder of his compensation including the
bonus.
On March 8, 2000, the Option Committee granted Mr. Tanger 50,000
options to purchase Units in the Operating Partnership with an exercise price
equal to the Fair Market Value on the date of grant. The primary basis for the
Committee's determination to grant such options to Mr. Tanger was to provide a
strong incentive for him to continue to increase the value of the Company during
the remainder of his employment.
During 1993, the Internal Revenue Code of 1986 (the "Code") was
amended to add Section 162(m), which denies an income tax deduction to any
publicly held corporation for compensation paid to a "covered employee" (which
is defined as the Chief Executive Officer and each of the Company's other four
most highly compensated officers) to the extent that such compensation in any
taxable year of the employee exceeds $1 million. In addition to salaries,
bonuses payable to the Company's executives under their present employment
contracts and compensation attributable to the exercise of options granted under
the Share Option Plan and Unit Option Plan constitute compensation subject to
the Section 162(m) limitation. It is the Company's policy to take account of the
implications of Section 162(m) among all factors reviewed in making compensation
decisions. The Plans permit the grant of options intended to qualify as
"performance-based compensation" which is exempt from application of the Section
162(m) limitation. The Company expects that it will not be denied any deduction
under Section 162(m) for compensation paid during its taxable year ended
December 31, 2000, although it is possible that in some future year some portion
of the compensation paid to a Company executive will not be tax deductible by
the Company under Section 162(m).
THE COMPENSATION COMMITTEE
Jack Africk (Chairman)
Stanley K. Tanger
William G. Benton
As to that portion of the report which pertains to Stanley K. Tanger's
compensation:
Jack Africk (Chairman)
William G. Benton
10
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee of the Board, which is required
to have a majority of Independent Directors, is charged with determining
compensation for our executive officers. Mr. Africk, Mr. Benton and Stanley K.
Tanger currently serve on the Executive Compensation Committee, with Mr. Africk
serving as chairman.
Stanley K. Tanger is Chief Executive Officer and Chairman of the Board
of Directors of the Company.
Stanley K. Tanger is an investor in certain real estate joint ventures
owning three properties managed by us. See Certain Relationships and Related
Transactions.
Share Price Performance
The following share price performance chart compares our performance
to the S&P 500, the index of equity real estate investment trusts prepared by
the National Association of Real Estate Investment Trusts ("NAREIT") and the
index prepared by SNL Securities LC of other publicly traded factory outlet
REITs ("Tanger Peer Group"). Equity real estate investment trusts are defined as
those which derive more than 75% of their income from equity investments in real
estate assets. The NAREIT equity index includes all tax qualified real estate
investment trusts listed on the New York Stock Exchange, American Stock Exchange
or the NASDAQ National Market System. The Tanger Peer Group consists of Chelsea
GCA Realty, Inc., Prime Retail, Inc., and Horizon Group, Inc. (which during 1998
merged with Prime Retail, Inc.). In 1999, the Tanger Peer Group included Konover
Property Trust ("Konover"). We have decided to exclude Konover from our current
peer group due to that company's significant acquisitions over the past several
years of real estate other than traditional outlet centers and their recent
announcement of their intention to dispose of their outlet properties. Excluding
Konover from the peer group index had the effect of increasing the total value
of a $100 initial investment, as described below, as of December 31, 2000 by
$15.08.
All share price performance assumes an initial investment of $100 at
the beginning of the period and assumes the reinvestment of dividends. Share
price performance, presented for the five years ended December 31, 2000, is not
necessarily indicative of future results.
11
Employment Contracts
Each of Stanley K. Tanger and Steven B. Tanger will receive annual
cash compensation in the form of salary and bonus pursuant to a three year
employment contract. The employment contracts will be automatically extended for
one additional year on January 1 of each year unless the executive's employment
is terminated, or we give written notice to the executive within 180 days prior
to such January 1 that the contract term will not be automatically extended. The
base salary provided for in such contracts may be increased each year. Upon
termination of employment, Stanley K. Tanger has agreed not to compete with us
for the remainder of his life. Steven B. Tanger has agreed not to compete with
us for one year (or three years if severance compensation is received) within a
50 mile radius of the site of any commercial property owned, leased or operated
by us or within a 50 mile radius of any commercial property which we negotiated
to acquire, lease or operate within the six month period prior to termination.
The covenant not to compete mandates that, during the term of the contract and
during the effective period of the covenant, such executives direct their
commercial real estate activities through us, with exceptions for development of
properties which were owned collectively or individually by them, by members of
their families or by any entity in which any of them owned an interest or which
was for the benefit of any of them prior to the initial public offering
(including the three factory outlet centers in which Stanley K. Tanger is a 50%
partner and a single shopping center in Greensboro, North Carolina (the
"Excluded Properties")). In no event will either of the Tangers engage in the
development, construction or management of factory outlet shopping centers or
other competing retail commercial property outside of the Company or the
Operating Partnership during the effective period of the covenant (with the
exception of the Excluded Properties and as described above). See "Certain
Relationships and Related Transactions." In addition, such executives will not
engage in any active or passive investment in property relating to factory
outlet centers or other competing retail commercial property, with the exception
of the ownership of up to one percent of the securities of any publicly traded
company.
The contracts for Stanley K. Tanger and Steven B. Tanger, as amended
effective January 1, 2001, provide for annual bonuses based upon our performance
as measured by FFO per share. The minimum bonus in each calendar year period for
Stanley K. Tanger is $125,000 and for Steven B. Tanger is $115,000. The minimum
bonus will be paid if FFO per share (after payment of such bonuses) equals or
exceeds the annual minimum target for such year. The annual minimum target for
each year is the greater of $1.552 per share, or the average FFO per share for
the five previous calendar years. The Tangers will receive additional bonus
payments based on the percentage by which actual FFO per share exceeds the
annual minimum target. If the employment of either of Tangers terminates without
Cause, as defined in the agreement, or such employment is terminated by the
executive with Good Reason, as defined in the agreement, the terminated
executive shall receive a severance benefit equal to 300% of the sum of (a) his
annual base salary (b) the higher of (i) the prior year's annual bonus or (ii)
the average annual bonus for the preceding three years, and (c) his automobile
allowance for the current year. If employment terminates by reason of death or
disability, the executive or his estate shall receive a lump sum amount equal to
his annual base salary that would have been paid for the remaining contract term
if employment had not terminated, and in addition, will receive an amount equal
to the executive's annual bonus which would have been paid during the year of
termination had the executive not terminated, multiplied by a fraction the
numerator of which is the number of days in the year prior to termination and
the denominator of which is 365.
The employment contracts with Stanley K. Tanger and Steven B. Tanger
also grant them certain registration rights with respect to the Common Shares
that they beneficially own.
Rochelle G. Simpson, Willard A. Chafin and Frank C. Marchisello, Jr.
each have an employment contract expiring December 31, 2001. Ms. Simpson and Mr.
Chafin's contracts may be extended by an additional three year period by mutual
written agreement between the executive and us.
These contracts established base salaries for calendar year 2000 of
$210,000 for Ms. Simpson and Mr. Marchisello and $220,000 for Mr. Chafin. Upon
review of the performance of these key individuals, the Compensation Committee
elected to increase their salaries effective January 1, 2001 to $220,500 for Ms.
Simpson and Mr. Marchisello and $231,000 for Mr. Chafin.
If the employment of Ms. Simpson or Mr. Chafin is terminated by reason
of death or disability or if we materially breach the employment agreement, Ms.
Simpson or Mr. Chafin will be paid as additional compensation an amount equal to
the annual base salary for the contract year in which the termination occurs.
Further, if we elect not to extend the term of employment for Ms. Simpson and
Mr. Chafin for an additional three years, the executive will receive a severance
payment equal to the greater of $125,000, or one-half of the annual base salary
payable for the last contract year of the contract term. If Mr. Marchisello's
employment is terminated by reason of death or
12
disability, by us for no reason or without good cause, or by Mr. Marchisello
because of our material breach of the contract, he will receive as additional
compensation an amount equal to his annual base salary for the contract year in
which the termination occurs.
During the term of employment and for a period of one year thereafter
(six months in the case of Mr. Marchisello), each of Ms. Simpson, Mr. Chafin and
Mr. Marchisello is prohibited from engaging directly or indirectly in any aspect
of the factory outlet business within a radius of 100 miles of, or in the same
state as, any factory outlet center owned or operated by us.
Stanley K. Tanger and Steven B. Tanger are employed and compensated by
both the Operating Partnership and the Company. The Committee believes that the
allocation of such persons' compensation as between the Company and the
Operating Partnership reflects the services provided by such persons with
respect to each entity. The remainder of the employees are employed solely by
the Operating Partnership.
Certain Relationships and Related Transactions
We manage for a fee three factory outlet centers owned by joint
ventures, in which Stanley K. Tanger and a third party each have a fifty percent
interest. As a result, certain conflicts of interest may arise between Mr.
Tanger's duties and responsibilities to us and his duties and responsibilities
to the joint ventures in ensuring the adequate provision of services. In
addition, conflicts of interest may arise over the allocation of management
resources between our properties and the joint venture properties. However, the
arrangement under which we provide services to the joint ventures can be
terminated by either party, with or without cause, upon 30 days' notice. To
minimize potential conflicts of interest, all significant transactions between
us and the joint ventures, including continuing the arrangement for providing
management services, will be approved by a disinterested majority of the Board.
As a general matter, we do not expect to engage in any other transactions with
any member of management in his or her individual capacity. Revenues from
managing the joint ventures accounted for less than one-tenth of one percent of
our revenues in 2000.
In March 2000, we granted to each of our three Independent Directors
5,000 options to purchase our Common Shares and the Operating Partnership
granted 50,000 options to purchase Units to Stanley K. Tanger, 35,000 options to
purchase Units to Mr. Steven B. Tanger and options to acquire a total of 155,200
Units to certain officers and employees of the Operating Partnership.
In May 2000, demand notes receivable totaling $3.4 million from
Stanley K. Tanger were converted into two separate term notes of which $2.5
million is due from Stanley K. Tanger and $845,000 is due from Steven B. Tanger.
The notes amortize evenly over five years with principal and interest at a rate
of 8% per annum due quarterly. The balances of these notes at December 31, 2000
were $2.1 million and $773,000, respectively.
13
General -
Appointment of Independent Auditors. The Board has appointed the firm
of PricewaterhouseCoopers LLP to audit the accounts of the Company with respect
to its operations for the fiscal year ending on December 31, 2001 and to perform
such other services as may be required. Should the firm be unable to perform
these services for any reason, the Board will appoint other independent auditors
to perform these services. PricewaterhouseCoopers LLP served as our independent
auditors for the fiscal year ended December 31, 2000. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the meeting, will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions from shareholders.
Section 16(a) Compliance. Section 16(a) of the Exchange Act requires
our officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, to file reports of the ownership and
changes in the ownership (Forms 3, 4 and 5) with the Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and beneficial
owners of more than ten percent of our shares are required by Securities and
Exchange Commission's regulations to furnish us with copies of all such forms
which they file.
Based solely on our review of the copies of Forms 3, 4 and 5 and the
amendments thereto received by us for the period ended December 31, 2000, or
written representations from certain reporting persons, no Forms 3, 4 or 5 were
filed delinquently by those persons.
Shareholders' Proposals. This Proxy Statement and form of proxy will
be sent to shareholders in an initial mailing on or about April 18, 2001.
Proposals of shareholders intended to be presented at our Annual Meeting of
Shareholders to be held in 2002 must be received by us no later than November
30, 2001. Such proposals must comply with the requirements as to form and
substance established by the Securities and Exchange Commission for such
proposals in order to be included in the proxy statement.
Other Business. All shares represented by the accompanying proxy will
be voted in accordance with the proxy. We know of no other business which will
come before the meeting for action. However, as to any such business, the
persons designated as proxies will have discretionary authority to act in their
best judgment.
14
APPENDIX A
TANGER FACTORY OUTLET CENTERS, INC.
CHARTER of the AUDIT COMMITTEE
on the BOARD OF DIRECTORS
PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing:
o the financial reports and other financial information provided by the
Corporation to any governmental body or the public;
o the Corporations' systems of internal control relating to financial
reporting; compliance with laws, regulations, and Company established
ethical standards; and operational efficiency and effectiveness;
o the Corporation's auditing, accounting and financial reporting
process.
Consistent with this function, the Audit Committee will encourage adherence to
the Corporation's policies, procedures and practices at all levels. The
Committee's primary responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and systems of internal
control.
o Review and evaluate the audit efforts of the Corporation's independent
accountants.
o Provide an open avenue of communication among the independent
accountants, financial management, senior management, and the Board of
Directors.
The Audit Committee will fulfill these responsibilities by carrying out the
duties set forth in this Charter.
COMMITTEE COMPOSITION
The Audit Committee shall be comprised of three or more directors appointed by
the Board, none of whom shall have a relationship with the Corporation that may
interfere with the exercise of his or her independence from management and the
Corporation.
All Committee members shall have a working familiarity with basic finance and
accounting practices, and at least one Committee member shall have accounting or
related financial management expertise.
The Committee members shall be elected by the Board at its annual organizational
meeting. Unless a Chairperson is elected by the full Board, the members of the
Committee may designate a Chair by majority vote of the full Committee
membership.
COMMITTEE MEETINGS
The Committee shall meet at least three times annually, or more frequently as
circumstances dictate. The Committee may ask members of management and others to
attend meetings and provide pertinent information as necessary.
As part of its job to promote open communication, the Committee should meet at
least annually with management and the independent accountants in separate
executive sessions to discuss any matters that the Committee or these groups
believe should be discussed privately. In addition, the Committee or its
Chairperson will meet with the independent accountants and management quarterly
to review the Corporation's financial statements (see IV.4. below).
A-1
COMMITTEE RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Review of Financial Reports and Other Documents
(1) Review and reassess the adequacy of this Charter on an annual basis.
(2) Review and discuss with management the Corporation's audited financial
statements.
(3) Discuss with the independent accountants the matters required to be
discussed by SAS 61 (communications with audit
committees).
(4) Review and discuss with the independent accountants the written
disclosures and the letter from the independent accountants required
by ISB Standard No. 1(relationships between the auditors and the
Company which bear on the auditors' independence).
(5) Based on the review and discussions referred to in Paragraphs 2
through 4, recommend to the Board of Directors whether the financial
statements should be included in the annual report on Form 10-K for
the last fiscal year for filing with the Securities and Exchange
Commission.
(6) Review and discuss with management and the independent accountants the
financial information in Form 10-Q prior to its filing (and preferably
prior to any public announcement of the financial information). The
Chair of the Committee may represent the entire Committee for purposes
of this review and discussion.
(7) Review the independent accountants' letters to management on internal
control and management responses.
(8) Establish regular and separate systems of reporting to the Audit
Committee by management and the independent accountants regarding any
significant judgments made in management's preparation of the
financial statements and the view of each as to appropriateness of
such judgments.
Independent Accountants
(9) Recommend to the Board of Directors the selection of the independent
accountants, and approve the fees and other compensation to be paid to
the independent accountants.
(10) Periodically communicate to the outside auditor that the firm is
ultimately accountable to the Board of Directors and the Audit
Committee as representatives of the Company's shareholders, and that
the Board and the Audit Committee have the ultimate authority and
responsibility to select, evaluate and where appropriate, replace the
independent accountants.
(11) Ensure that the independent auditors perform a SAS 71 Interim
Financial Review each quarter prior to the Company's filing of its
Form 10-Q.
(12) Periodically discuss with the independent accountants, out of the
presence of management, the adequacy of internal controls and the
completeness and accuracy of the organization's published financial
statements.
(13) Following completion of the annual audit, review separately with each
of management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of the work or access to required
information.
(14) Review any significant disagreement among management and the
independent accountants in connection with the preparation of the
financial statements.
(15) Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
(16) Review with the independent accountants and management the extent to
which recommended changes or improvements in financial or accounting
practices or internal controls have been implemented.
A-2
Financial Reporting Processes
(17) In consultation with the independent accountants review the integrity
of the organization's financial reporting process, both internal and
external.
(18) Review management's and the independent accountants' judgments about
the acceptability and quality of the Corporation's accounting
principles and underlying estimates as applied in its financial
reporting.
(19) Consider and approve major changes to the Corporation's accounting
principles and practices suggested by the independent accountants or
management.
Legal, Regulatory, and Ethical Matters
(20) Ensure that management has the proper review system in place to ensure
that Corporation's financial statements, reports and other financial
information disseminated to government organizations and the public
satisfy legal requirements.
(21) Review, with the organization's counsel, any legal compliance matter,
including corporate securities trading policies, that could have a
significant impact on the organization's financial statements.
(22) Review regulatory matters that may have a significant impact on the
financial statements, related Company compliance policies and
programs, and reports received from regulators.
Committee Reporting
(23) Regularly report to the full Board of Directors on the significant
results of its activities.
(24) In accordance with applicable Securities and Exchange Commission
regulations, ensure that a report of the audit committee is included
in the Company's annual proxy statement and complies with said
regulations beginning with the filing in 2001.
Other Matters
The Committee shall perform any other functions consistent with this Charter, or
as assigned by law, the Company's charter or bylaws, or the Board of Directors.
The Committee shall have the power to conduct or authorize investigations into
any matters within the scope of responsibilities, and is empowered to retain
independent counsel, accountants, consultants or others to assist in the conduct
of any investigation.
A-3
[FRONT SIDE OF CARD]
PROXY
TANGER FACTORY OUTLET CENTERS, INC.
Appointment of Proxy for Annual Meeting on May 18, 2001
The undersigned shareholder of TANGER FACTORY OUTLET CENTERS, INC., a
North Carolina corporation, hereby constitutes and appoints Stanley K. Tanger
and Rochelle G. Simpson, and each of them, proxies with full power of
substitution to act for the undersigned and to vote the shares which the
undersigned may be entitled to vote at the Annual Meeting of the Shareholders of
such corporation on May 18, 2001, and at any adjournment or adjournments
thereof, as instructed on the reverse side upon the proposals which are more
fully set forth in the Proxy Statement of Tanger Factory Outlet Centers, Inc.
dated April 18,2001 (receipt of which is acknowledged) and in their discretion
upon any other matters as may properly come before the meeting, including but
not limited to, any proposal to adjourn or postpone the meeting. Any appointment
of proxy heretofore made by the undersigned for such meeting is hereby revoked.
TANGER FACTORY OUTLET CENTERS, INC. RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN
PROPOSAL 1.
(SEE REVERSE SIDE) CONTINUED AND TO BE SIGNED ON REVERSE SIDE (SEE REVERSE SIDE)
[BACK SIDE OF CARD]
DETACH HERE
[X] Please mark votes as
in this example.
The shares represented hereby will be voted in accordance with the directions
given in this appointment of proxy. If not otherwise directed herein, shares
represented by this proxy will be voted FOR Proposal 1.
1. To elect Directors to serve for the ensuing year.
Nominees: (1) Stanley K. Tanger, (2) Steven B. Tanger, (3) Jack Africk,
(4) William G. Benton and (5) Thomas E. Robinson
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ] ______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE
ENCLOSED.
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee or guardian, give full title as such.
If a corporation, sign in full corporate name by president or other
authorized officer. If a partnership, sign in partnership name by
authorized person.
Signature:__________________Date:______Signature:__________________Date:_______