DEF 14A: Definitive proxy statements
Published on April 16, 2002
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
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( ) 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)
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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.
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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
NYSE: SKT
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on May 17, 2002
Dear Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend
the 2002 Annual Meeting of Shareholders of Tanger Factory Outlet Centers, Inc.
to be held on Friday, May 17, 2002 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 April
5, 2002, 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 2001 Annual
Report for the year ended December 31, 2001 is also enclosed.
It is important that your shares be represented at the 2002 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 17, 2002
TANGER FACTORY OUTLET CENTERS, INC.
3200 NORTHLINE AVENUE, SUITE 360
GREENSBORO, NORTH CAROLINA 27408
PHONE: 336-292-3010
E-MAIL: tangermail@tangeroutlet.com
NYSE: SKT
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The Board of Directors of Tanger Factory Outlet Centers, Inc., (NYSE:
SKT) 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 17, 2002.
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 17, 2002 to
shareholders of record on April 5, 2002. 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 (phone number: 336-292-3010, ext
136). 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 17, 2002 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, April 5, 2002, 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 28,
2002, there were 7,998,001 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 cannot 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.
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 five special meetings during 2001.
Each of the above Directors attended at least 75% of the meetings held during
2001 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 Mr.
Robinson currently serve on the Executive Compensation Committee, with Mr.
Africk serving as chairman. During 2001, 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 2001, there were no meetings 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 2001, there were five meetings of the
Audit Committee.
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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 2001 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 2001:
Annual audit fees.....................................................$133,500
Financial Information Systems Design and Implementation fees.......... ---
Tax planning and preparation...........................................182,714
Audit related fees for SEC filings.................................... 106,370
Other audit related fees.............................................. 13,892
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.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 28,
2002, 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 18,315 Common Shares and
404,000 presently exercisable options to purchase Units owned by
Stanley K. Tanger individually. Does not include 60,000 options to
purchase Units, which are presently unexercisable, owned by Stanley K.
Tanger individually.
(4) Includes 338,000 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 42,000 options to purchase Units which are presently
unexercisable. Does not include 17,315 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 18,000 presently exercisable options to purchase our Common
Shares.
(6) Includes 14,400 presently exercisable options to purchase our Common
Shares.
(7) Amounts shown as Units beneficially owned represent presently
exercisable options to purchase Units.
6
(8) Includes 50,400 presently exercisable options to purchase Common
Shares and 955,600 presently exercisable options to purchase Units.
Does not include 18,000 options to purchase Common Shares and 189,060
options to purchase Units which are presently unexercisable.
Executive Compensation
The following table sets forth the compensation earned for the fiscal
years ended December 31, 2001, 2000, and 1999 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 $17,500 in 2001 and 17,150 in 2000 and 1999
for premiums paid towards a term life insurance policy. In addition, the
Company provided $2,125 during 2001 and 2000 and $2,000 during 1999 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 2001, 2000 and 1999 were $ 12,970, $12,970 and $17,150, respectively.
In addition, we provided $2,125 during 2001 and 2000 and $2,000 during 1999
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
There were no options granted to our CEO or our four (4) most highly
compensated executives other than our CEO during 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information on option exercises in 2001 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, 2001.
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 Fund From Operations ("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
8
the Consumer Price Index (the "CPI"). The employment agreements of the other
three most highly compensated executive officers provide for annual base
salaries in fixed dollar amounts through calendar year 2002 and thereafter will
be set by the Executive Compensation Committee in amounts not less than the
salary for 2002.
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 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 or disposal 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.
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.
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 2001 was $409,500. 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 2000
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 $409,500 for fiscal 2001.
o Mr. Tanger was paid a $163,391 bonus for 2001. Under his employment
agreement, a minimum bonus of $125,000 was payable for 2001 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
2001 exceeded the minimum target level at which a bonus was payable.
The Company paid 20% of Mr. Tanger's 2001 annual base salary. The
Operating Partnership paid the remainder of his compensation including the
bonus.
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
9
December 31, 2001, 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)
William G. Benton
Thomas E. Robinson
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 Mr. Robinson
currently serve on the Executive Compensation Committee, with Mr. Africk serving
as chairman. Stanley K. Tanger served on the Executive Compensation Committee
until his resignation from the committee in July 2001. Mr. Robinson was
appointed to the Executive Compensation Committee in July 2001.
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. Mr. Robinson is a Managing Director in
the real estate investment banking group of Legg Mason Wood Walker, Inc. ("Legg
Mason"), a brokerage and an investment banking firm. The fixed income sales and
trading group of Legg Mason provided services to us in connection with the
repurchase of $7.4 million of our outstanding 7.875% senior, unsecured public
notes at par during 2001. (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
Property Group, Inc. (formerly Chelsea GCA Realty, Inc)., Prime Retail, Inc.,
and Horizon Group, Inc. (which during 1998 merged with Prime Retail, Inc.).
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, 2001, is not
necessarily indicative of future results.
10
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, 2004. 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 2002 of
$231,525 for Ms. Simpson and Mr. Marchisello and $242,550 for Mr. Chafin. The
base salaries for subsequent years will be set by the Executive Compensation
Committee in amounts not less than the 2002 salary.
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
11
employment is terminated by reason of death or 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 2001.
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 balance of Stanley K. Tanger's note at December 31,
2001, through accelerated payments, was $797,000. Steven B. Tanger's note was
paid in full during 2001. Additionally in August 2001, the Board of Directors
amended the notes to adjust the interest rate from 8% per annum to 90 day LIBOR
plus 1.75% . We believe the amended interest rate is at arm's length based on
our current unsecured, variable borrowing rate. In the first quarter of 2002,
Stanley K. Tanger made a quarterly payment of $100,000.
Thomas E. Robinson, a director of our Company, is a Managing Director
in the real estate investment banking group of Legg Mason Wood Walker, Inc.
("Legg Mason"), a brokerage and an investment banking firm. The fixed income
sales and trading group of Legg Mason provided services to us in connection with
the repurchase of $7.4 million of our outstanding 7.875% senior, unsecured
public notes at par during 2001. The notes were to originally mature in October
2004.
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, 2002 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, 2001. 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.
12
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, 2001, or
written representations from certain reporting persons, no Forms 3, 4 or 5 were
filed delinquently by those persons, except that Stanley K. Tanger and William
G. Benton each reported two transactions on Form 5 for the period ended December
31, 2001 late.
Shareholders' Proposals. This Proxy Statement and form of proxy will be
sent to shareholders in an initial mailing on or about April 17, 2002. Proposals
of shareholders intended to be presented at our Annual Meeting of Shareholders
to be held in 2003 must be received by us no later than December 18, 2002. 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.
Holders of the our Common Shares are also holders of Rights under a
Rights Agreement dated as of August 20, 1998 (the "Rights Agreement") between
our Company and BankBoston, N.A. as Rights Agent. BankBoston, N.A. has resigned
as the Rights Agent and by an amendment to the Rights Agreement dated as of
October 30, 2001, we have appointed EquiServe Trust Company, N.A. as the
successor Rights Agent. The Rights Agreement requires notice to holders of the
Rights in the event of any resignation and appointment of the Rights Agent and
this shall serve as such notice.
13
[FRONT SIDE OF CARD]
PROXY
TANGER FACTORY OUTLET CENTERS, INC.
Appointment of Proxy for Annual Meeting on May 17, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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 17, 2002, 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 17,2002 (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:_______