UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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WEINGARTEN REALTY INVESTORS
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WEINGARTEN REALTY INVESTORS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 2004
TO OUR SHAREHOLDERS:
You are invited to attend our annual meeting of shareholders that will be
held at our corporate office located at 2600 Citadel Plaza Drive, Houston,
Texas, on Friday, April 23, 2004, at 9:00 a.m., Houston time. The purpose of
the meeting is to vote on the following proposals:
PROPOSAL 1: To elect nine trust managers to serve for a one year
term, and until their successors are elected
and qualified.
PROPOSAL 2: To ratify the appointment of Deloitte & Touche LLP
as independent auditors for the fiscal year ending
December 31, 2004.
PROPOSAL 3: To vote on one shareholder proposal entitled "Performance
and Time-Based Restricted Shares."
PROPOSAL 4: To take action upon any other business as may properly
come before the meeting.
Shareholders of record at the close of business on March 5, 2004 are
entitled to notice of, and to vote at, the annual meeting. A proxy card and a
copy of our annual report to shareholders for the fiscal year ended December 31,
2003 are enclosed with this notice of annual meeting and proxy statement.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO VOTE, WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING. YOU MAY VOTE BY: (I) MAIL BY MARKING,
SIGNING, DATING AND RETURNING THE ACCOMPANYING PROXY CARD IN THE POSTAGE-PAID
ENVELOPE WE HAVE PROVIDED, OR RETURNING IT TO WEINGARTEN REALTY INVESTORS, C/O
ADP, 51 MERCEDES WAY, EDGEWOOD, NY 11717, (II) USING THE INTERNET AT
WWW.PROXYVOTE.COM, (III) PHONE BY CALLING 1-800-690-6903, OR (IV) ATTENDING THE
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ANNUAL MEETING IN PERSON. IF YOU PLAN TO ATTEND THE ANNUAL MEETING TO VOTE IN
PERSON AND YOUR SHARES ARE REGISTERED WITH OUR TRANSFER AGENT, MELLON INVESTOR
SERVICES LLC, IN THE NAME OF A BROKER OR BANK, YOU MUST SECURE A PROXY FROM THE
BROKER OR BANK ASSIGNING VOTING RIGHTS TO YOU FOR YOUR SHARES.
By Order of the Board of Trust Managers
M. Candace DuFour
Sr. Vice President and Secretary
March 17, 2004
Houston, Texas
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, APRIL 23, 2004
WEINGARTEN REALTY INVESTORS
2600 CITADEL PLAZA DRIVE
HOUSTON, TEXAS 77008
The board of trust managers is soliciting proxies to be used at the 2004
annual meeting of shareholders to be held at our corporate office located at
2600 Citadel Plaza Drive, Houston, Texas 77008, on Friday, April 23, 2004, at
9:00 a.m., Houston time. This proxy statement, accompanying proxy card and
annual report to shareholders for the fiscal year ended December 31, 2003 are
first being mailed to shareholders on or about March 17, 2004. Although the
annual report is being mailed to shareholders with this proxy statement, it does
not constitute part of this proxy statement.
WHO MAY VOTE
Only shareholders of record at the close of business on March 5, 2004 are
entitled to notice of, and to vote at, the annual meeting. As of March 5, 2004,
we had 57,052,342 common shares of beneficial interest issued and outstanding.
Each common shareholder of record on the record date is entitled to one vote on
each matter properly brought before the annual meeting for each common share
held.
In accordance with our amended and restated bylaws, a list of shareholders
entitled to vote at the annual meeting will be available at the annual meeting
and for 10 days prior to the annual meeting, between the hours of 9:00 a.m. and
4:00 p.m. local time, at our principal executive offices listed above.
HOW YOU MAY VOTE
You may vote using any of the following methods:
- BY MAIL: Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided, or return it to Weingarten Realty
Investors, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. The named proxies
will vote your shares according to your directions. If you submit a signed
proxy card without indicating your vote, the person voting the proxy will
vote your shares according to the board's recommendation.
- BY INTERNET: Go to WWW.PROXYVOTE.COM and use the Internet to transmit
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your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time on April 22, 2004. Have your proxy card in
hand when you access the web site and then follow the instructions.
PAGE 1
- BY PHONE: Call 1-800-690-6903 and use any touch-tone telephone to transmit
your voting instructions up until 11:59 P.M. Eastern Time on April 22,
2004. Have your proxy card in hand when you call and then follow the
instructions.
- BY ATTENDING THE ANNUAL MEETING IN PERSON.
You may revoke your proxy at any time before it is exercised by:
- giving written notice of revocation to our Secretary, M. Candace
DuFour, at Weingarten Realty Investors, P.O. Box 924133, Houston,
Texas, 77292-4133;
- timely delivering a properly executed, later-dated proxy; or
- voting in person at the annual meeting.
Voting by proxy will in no way limit your right to vote at the annual
meeting if you later decide to attend in person. If you hold common shares
through any of our share purchase or savings plans, you will receive voting
instructions. Please sign and return those instructions promptly to assure that
your shares are represented at the annual meeting. If your shares are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, to be able to vote at the annual meeting. If no
direction is given and the proxy is validly executed, the shares represented by
the proxy will be voted as recommended by the board of trust managers. The
persons authorized under the proxies will vote upon any other business that may
properly come before the annual meeting according to their best judgment to the
same extent as the person delivering the proxy would be entitled to vote. We do
not anticipate that any other matters will be raised at the annual meeting.
QUORUM
The presence, in person or represented by proxy, of the holders of a
majority of the common shares 28,526,172 shares entitled to vote at the annual
meeting is necessary to constitute a quorum at the annual meeting. However, if
a quorum is not present at the annual meeting, the shareholders, present in
person or represented by proxy, have the power to adjourn the annual meeting
until a quorum is present or represented. Pursuant to our amended and restated
bylaws, abstentions and broker "non-votes" are counted as present and entitled
to vote for purposes of determining a quorum at the annual meeting. A broker
"non-vote" occurs when a nominee holding common shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner.
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REQUIRED VOTE
The affirmative vote of the holders of a majority of the common shares
28,526,172 shares present in person or represented by proxy is required to
re-elect trust managers. Any trust manager who is currently on the board shall
remain on the board, regardless of the number of votes he receives, unless he is
replaced by a nominee who receives the requisite vote to become a new trust
manager. All of the nominees for trust manager served as our trust managers in
2003. Abstentions and broker non-votes are not counted for purposes of the
election of trust managers.
The approval of the shareholder proposal requires the affirmative vote of
the holders of a majority of the common shares represented in person or by proxy
at the annual meeting and entitled to vote thereon in order to be approved.
The ratification of the appointment of Deloitte & Touche LLP requires the
affirmative vote of the holders of a majority of the common shares represented
in person or by proxy at the annual meeting and entitled to vote thereon in
order to be approved.
COST OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by us. Proxies may be
solicited on our behalf by our trust managers, officers, employees or soliciting
service in person, by telephone, facsimile or by other electronic means. In
accordance with SEC regulations and the rules of the New York Stock Exchange
(NYSE), we will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their expenses incurred in sending proxies and proxy materials
and soliciting proxies from the beneficial owners of our common shares.
PAGE 3
PROPOSAL ONE
ELECTION OF TRUST MANAGERS
Pursuant to the Texas Real Estate Investment Trust Act, our amended and
restated declaration of trust, and our amended and restated bylaws, our
business, property and affairs are managed under the direction of the board of
trust managers. At the annual meeting, nine trust managers will be elected by
the shareholders, each to serve until his successor has been duly elected and
qualified, or until the earliest of his death, resignation or retirement.
Regardless of the number of votes each nominee receives, pursuant to the Texas
Real Estate Investment Trust Act, each trust manager will continue to serve
unless another nominee receives the affirmative vote of the holders of 66 2/3%
of our outstanding common shares.
The persons named in the enclosed proxy will vote your shares as you
specify on the enclosed proxy. If you return your properly executed proxy but
fail to specify how you want your shares voted, the shares will be voted in
favor of the nominees listed below. The board of trust managers has proposed the
following nominees for election as trust managers at the annual meeting. Each of
the nominees is currently a member of the board of trust managers.
NOMINEES
STANFORD ALEXANDER, Chairman of the Board of Trust Managers. Chief
Executive Officer from 1993 to December 2000. President and Chief Executive
Officer from 1962 to 1993. Trust manager since 1956 and our employee since
1955. Age: 75
ANDREW M. ALEXANDER, trust manager since 1983. Chief Executive Officer
since January 2001. President since 1996. Executive Vice President/Asset Manager
from 1993 to 1996 and President of Weingarten Realty Management Company since
1993. Senior Vice President/Asset Manager of Weingarten Realty Management
Company from 1991 to 1993, and Vice President from 1990 to 1991 and, prior to
our reorganization in 1984, Vice President from 1988 to 1990. Mr. Alexander has
been our employee since 1978. He is a director of Academy Sports & Outdoors,
Inc. Age: 47
J. MURRY BOWDEN, trust manager since April, 2003. Mr. Bowden is Co-Chairman
of The Hanover Company and has been involved in all aspects of apartment
development, construction, management and finance for more than 25 years. Prior
to forming The Hanover Company in 1982, he was an attorney in private practice.
Age: 55
JAMES W. CROWNOVER, trust manager since 2001. Mr. Crownover completed a 30
year career with McKinsey & Company, Inc. in 1998 where he was managing director
of its southwest practice and a member of the firm's board of trust managers. He
currently serves as a director on the boards of Unocal Corporation (audit
committee chairman), Great Lakes Chemical Corporation and Allied Waste
Industries (audit committee member). Age: 60
ROBERT J. CRUIKSHANK, trust manager since 1997. Since 1993, Mr. Cruikshank
has managed his personal investments. Senior partner of Deloitte & Touche LLP
from 1989 to 1993. He currently serves on the boards of Encysive
Pharmaceuticals, Inc. (audit committee chairman), Texas Genco, Incorporated,
(audit committee member), MAXXAM, Inc., (audit committee member), and Kaiser
Aluminum Corp. (audit committee member). Age: 73
MELVIN A. DOW, trust manager since 1984. Shareholder, Winstead, Sechrest &
Minick P. C. since August 2001. Chairman/Chief Executive Officer of Dow, Cogburn
& Friedman, P.C. (which merged with Winstead, Sechrest & Minick P.C. in 2001)
from 1995 to 2001. Age: 76
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STEPHEN A. LASHER, trust manager since 1980. President of The GulfStar
Group, Inc. since January 1991. Age: 56
DOUGLAS W. SCHNITZER, trust manager since 1984. Chairman/Chief Executive
Officer of Senterra Real Estate Group, L.L.C. since 1994. Age: 47
MARC J. SHAPIRO, trust manager since 1985. Former Vice Chairman of J. P.
Morgan Chase & Co. from 1997 through September, 2003. Prior to that, Chairman
and Chief Executive Officer of Chase Bank of Houston from January 1989 to 1997.
Currently he serves as a consultant to J. P. Morgan Chase & Co. as a
non-executive Chairman of its Texas operations. Director of Kimberly-Clark
Corporation and Burlington Northern Santa Fe Corporation. Age: 56
Andrew M. Alexander is the son of Stanford Alexander.
The governance committee is currently conducting a search for additional
qualified independent trust managers. The governance committee will consider
trust manager candidates nominated by shareholders. Recommendations, including
the nominee's name and an explanation of the nominee's qualifications should be
sent to Candace DuFour, Secretary, at P.O. Box 924133, Houston, Texas
77292-4133. The procedure for nominating a person for election as a trust
manager is described under "Shareholder Proposals" on page 27.
THE BOARD OF TRUST MANAGERS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF TRUST MANAGERS AS SET FORTH IN PROPOSAL ONE.
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BOARD MEETINGS AND COMMITTEES
During fiscal 2003, the board of trust managers held four meetings. No
trust manager attended less than 75% of the total number of board and committee
meetings on which the trust manager served that were held while the trust
manager was a member of the board or committee, as applicable. The board's
current standing committees are as follows:
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MANAGEMENT
DEVELOPMENT
&
GOVERNANCE AUDIT COMPENSATION EXECUTIVE PRICING
NAME COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
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EMPLOYEE TRUST MANAGERS:
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Stanford Alexander X X
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Andrew M. Alexander X (1) X (1)
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NON-EMPLOYEE TRUST MANAGERS:
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J. Murry Bowden X X
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James W. Crownover X X (1)
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Robert J. Cruikshank X X (1) X
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Melvin A. Dow X X
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Stephen A. Lasher X X X
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Marc J. Shapiro X (1) X
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(1) Chairman
GOVERNANCE COMMITTEE
The governance committee has the responsibility to (1) oversee the
nomination of individuals to the board, including the identification of
individuals qualified to become board members and recommending such nominees;
(2) develop and recommend to the board a set of governance principles; and (3)
oversee matters of governance to insure that the board is appropriately
constituted and operated to meet its fiduciary obligations, including advising
the board on matters of board organization, membership and function and
committee structure and membership. The committee also recommends trust manager
compensation and benefits. The governance committee will consider nominees made
by shareholders. Shareholders should send nominations to the company's
secretary, Candace DuFour. Any shareholder nominations proposed for
consideration by the governance committee should include the nominee's name and
qualifications for board membership. See "Shareholder Proposals" on page 27.
The governance committee met three times in 2003.
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AUDIT COMMITTEE
The audit committee assists the board in fulfilling its responsibilities
for general oversight of: (1) our financial reporting processes and the audit of
our financial statements, including the integrity of our financial statements;
(2) our compliance with ethical policies contained in our code of conduct and
ethics; (3) legal and regulatory requirements; (4) the independence,
qualification and performance of our independent auditors; and (5) the
performance of our internal audit function; and (6) risk assessment and risk
management. The committee has the responsibility for selecting the company's
independent auditors and pre-approving audit and non-audit services. Among
other things, the audit committee prepares the audit committee report for
inclusion in the annual proxy statement, reviews the audit committee charter and
the committee's performance; approving the scope of the annual audit; reviews
our disclosure controls and procedures, internal controls, information security
policies, internal audit function, and corporate policies with respect to
financial information and earnings guidance. The committee also oversees
investigations into complaints concerning financial matters. The audit
committee has the authority to obtain advice and assistance from outside legal,
accounting or other advisors as the audit committee deems necessary to carry out
its duties. The audit committee met five times in 2003.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The management development and compensation committee (1) discharges the
board's responsibilities to establish the compensation of our executives; (2)
produces an annual report on executive compensation for inclusion in our annual
proxy statement; (3) provides general oversight for our compensation structure,
including our equity compensation plans and benefits programs; and (4) retains
and approves the terms of the retention of any compensation consultant or other
compensation experts. Other specific duties and responsibilities of the
committee include reviewing the leadership development process; reviewing and
approving objectives relative to executive officers compensation; approving
employment agreements for executive officers; approving and amending our
incentive compensation and share option programs (subject to shareholder
approval if required); and annually evaluating its performance and its charter.
The committee met four times in 2003.
EXECUTIVE COMMITTEE
The executive committee has the authority to enter into transactions to
acquire and dispose of real property, execute certain contracts and agreements,
including but not limited to, borrowing money, entering into financial
derivative contracts, leases (as landlord or tenant) and construction contracts
valued at up to $200,000,000. The committee was established by the board to
create and reinforce the approval and decision making process around these
significant transactions. We have a detailed process that is followed for all
of these transactions and the execution of unanimous consents for such
transactions is the final documentation of such process. The executive
committee did not meet in person during 2003, but conducted business by the
execution of 12 unanimous written consents during that year.
PRICING COMMITTEE
The pricing committee is authorized to exercise all the powers of the board
of trust managers in connection with the offering, issuance and sale of our
securities. The pricing committee did not meet in person during 2003, but
conducted business by the execution of three unanimous written consents during
that year.
CORPORATE GOVERNANCE
Our board of trust managers has maintained corporate governance policies
for many years and updated them in 2003. Our board has put into place the
NYSE's newly adopted corporate governance requirements.
PAGE 7
Independence of Trust Managers and Committee Members. Our board has
determined that each of the following trust managers standing for re-election
has no material relationship with us (either directly or as a partner,
shareholder or officer of an organization that has a relationship with us) and
is independent within the meaning of our trust manager independent's standards,
which reflect exactly NYSE Director Independence Standards, as currently in
effect: Messrs. Bowden, Crownover, Cruikshank, Lasher, Schnitzer and Shapiro.
The board has determined that Messrs. S. Alexander, A. Alexander and Dow are not
independent trust managers within the meaning of the NYSE Director Independence
Standards. Furthermore, the board has determined that each of the members of
each of the governance, audit and management development and compensation
committees has no material relationship with us (either directly as a partner,
shareholder or officer of an organization that has a relationship with us) and
is independent within the meaning of our trust manager independence standards.
Audit Committee Financial Expert. The board of trust managers has
determined that Mr. Cruikshank meets the definition of audit committee financial
expert promulgated by the Securities and Exchange Commission and is independent,
as defined in Item 7(d)(3)(iv) of Schedule 14A.
Committee Charters. Our board has adopted: (1) a governance committee
charter, a management development and compensation committee charter and a
revised audit committee charter; (2) a revised and expanded definition of
independence for our trust managers for fiscal 2003; and (3) a code of conduct
and ethics for all trust managers, officers and employees. Our governance
committee charter, management development and compensation committee charter and
our audit committee charter are available on our website at www.weingarten.com.
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Copies of our management development and compensation committee charter and
our revised audit committee charter are attached to this proxy statement as
Appendix A and Appendix B, respectively.
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Communications with the Board. You can send communications to the board of
trust managers by mail to M. Candace DuFour, at our address set forth on the
first page of this proxy statement.
Executive Sessions. Executive sessions of non-employee trust managers,
commencing in 2004, will be held at the end of each board meeting. Commencing
with 2004, our independent trust managers will meet at least once per year in
executive session. The chairman of the governance committee will chair this
executive session. During 2003, our non-employee trust managers met twice in
executive session.
COMPENSATION OF TRUST MANAGERS
Employee trust managers receive no compensation for board service.
During 2003, our non-employee trust managers received the following
compensation:
Annual retainer fee . . . . . . . . . . . . . . . . . . . . . . $15,000
Fee for each board meeting attended. . . . . . . . . . . . . 1,000
Audit committee chairman retainer. . . . . . . . . . . . . . . 10,000
Audit committee member retainer. . . . . . . . . . . . . . . . 5,000
Chairman retainer for other committees. . . . . . . . . . . . 6,000
Other committee members retainer. . . . . . . . . . . . . . . . . 4,000
Additionally, each non-employee trust manager received an award of 500
restricted shares. Members of the executive and pricing committees receive no
additional compensation for their services.
PAGE 8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2003, three of our independent trust managers served on the
management development and compensation committee. The committee members for
2003 were Messrs. Crownover, Lasher and Shapiro. No member of the management
development and compensation committee has any interlocking relationship with
any other company that requires disclosure under this heading.
CERTAIN TRANSACTIONS
Messrs. S. Alexander, A. Alexander, Dow, Lasher, Richter, Schnitzer and
Martin Debrovner are shareholders or officers and/or trust managers of WRI
Holdings, Inc., a Texas corporation. In December 1984, we contributed certain
assets and cash to WRI Holdings in exchange for, among other consideration,
$26.8 million in original principal amount of debt securities and common stock
of WRI Holdings. The assets contributed by us to WRI Holdings included
unimproved land in the Railwood Industrial Park in northeast Houston and all of
the issued and outstanding capital stock of Plaza Construction, Inc. and Leisure
Dynamics, Inc. The debt securities were issued pursuant to three separate trust
indentures (the Holdings Bonds) and originally consisted of $16.7 million in
principal amount of debt securities (the Hospitality Bonds) due December 28,
2004, $7.0 in million principal amount of debt securities (the Railwood Bonds)
due December 28, 2004, and $3.2 million in principal amount of debt securities
(the Plaza Bonds) due December 28, 1994. The Plaza Bonds were extended and are
currently due December 28, 2004. The Railwood Bonds and Hospitality Bonds have
been retired.
The net carrying amount on the Plaza Bonds at December 31, 2003 was $.2
million and the accrued interest outstanding which has not been recognized for
financial accounting purposes was $7.3 million.
Interest on the Plaza Bonds accrues at the rate of 16% per annum (the
"accrual rate"), but is due and payable quarterly at the rate of 10% per annum
(the "pay rate"). The difference between the accrual rate and the amount of
interest paid by WRI Holdings at the pay rate on the debt securities is treated
as unpaid accrued interest, which will not accrue any compound interest and is
payable with the principal at maturity. We recognize as interest income only
amounts actually received for payment under the note. Therefore, we do not carry
the difference between the accrual rate and the pay rate as an asset on our
consolidated balance sheet.
Pursuant to a loan agreement between WRI Holdings and us, and pursuant to a
note dated December 28, 1984, as amended in October 1987, January 1991 and March
1994, WRI Holdings may borrow from us the amount necessary, up to a maximum of
$40 million, to enable WRI Holdings to pay the interest owing on the Holdings
Bonds. Interest on the note accrues at the highest rate per annum permitted by
Texas law as to a portion of the debt and at the JPMorgan Chase Bank prime rate
plus 2% per annum (but not in excess of the maximum legal rate) on the balance
of the debt. The note is payable December 28, 2004. As of December 31, 2003,
$30.0 million was outstanding under the note, which represents the difference
between the amount recognized as interest income on the Holdings Bonds and the
pay rate applicable to the bonds, none of which has been recognized by us as
income.
In November 1982, we entered into a loan agreement with River Point Venture
I, a joint venture in which Plaza Construction was a joint venture partner. In
October of 1987, Plaza Construction acquired all ownership interests in the
joint venture it did not already own from the other joint venturer.
Additionally, Plaza Construction became the successor of the joint venture under
the River Pointe loan agreement ("River Pointe Loan"), which was amended in
December 1991. Under the terms of the River Pointe Loan, we may loan Plaza
Construction up to $12 million for construction and development of River Pointe.
Interest accrues at the prime rate plus 1%, but not in excess of the maximum
rate permitted by law, and payment of the outstanding principal balance is due
December 1, 2004. Beginning in 1990, we discontinued the recognition of interest
PAGE 9
income on this note for financial statement purposes. As of December 31, 2003,
the principal amount outstanding under the River Pointe Loan was $2.6 million
plus accrued, but nonrecognized, interest of $19.4 million.
At December 31, 2003, we had $2.8 million in the Plaza Bonds and the River
Pointe Loan. The estimated fair market value of the remaining collateral, which
is comprised of 9.5 acres of undeveloped land at a mixed-use development in
Conroe, Texas, exceeds our net investment in these bonds and loan.
Mr. Dow is a shareholder of Winstead, Secrest & Minick P. C., a law firm
that had a relationship with Weingarten during the 2003 fiscal year. Mr. Dow
performs a significant amount of work for WRI. Payments made by WRI to Winstead,
Secrest & Minick P. C. for his work constituted less than 5% of the firm's total
annual revenue for 2003.
PAGE 10
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of our common shares as of February 13, 2004 by (1) each person known
by us to own beneficially more than 5% of our outstanding common shares, (2)
each current trust manager, (3) each named executive officer, and (4) all
current trust managers and executive officers as a group. The number of shares
beneficially owned by each entity, person, trust manager or executive officer is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares that the
individual has a right to acquire as of April 13, 2004 (60 days after February
13, 2004) through the exercise of any share option or other right. Unless
otherwise indicated, each person has sole voting and investment power (or shares
such powers with his spouse) with respect to the shares set forth in the
following table.
Certain of the shares listed below are deemed to be owned beneficially by
more than one shareholder under SEC rules.
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP** PERCENT OF CLASS
------------------------------------------ ----------------------- -----------------
Stanford Alexander . . . . . . . . . . . . 3,529,195 (1) 6.4%
Andrew M. Alexander. . . . . . . . . . . . 989,136 (2) 1.8%
J. Murry Bowden. . . . . . . . . . . . . . 519 *** *
James W. Crownover . . . . . . . . . . . . 6,219 *** *
Robert J. Cruikshank . . . . . . . . . . . 3,019 *** *
Martin Debrovner . . . . . . . . . . . . . 339,316 (3) *
Melvin A. Dow. . . . . . . . . . . . . . . 755,935 (4)*** 1.4%
Stephen A. Lasher. . . . . . . . . . . . . 432,519 (5)*** *
Douglas W. Schnitzer . . . . . . . . . . . 945,939 (6)*** 1.7%
Marc J. Shapiro. . . . . . . . . . . . . . 13,869 *** *
Stephen C. Richter . . . . . . . . . . . . 97,247 (7) *
All trust managers and executive officers
As a group (11 persons). . . . . . . . . . 6,222,887 (8) 11.4%
Capital Research and Management Co.. . . . 3,574,000 (9) 6.5%
----------
* Beneficial ownership of less than 1% of the class is omitted.
** Does not reflect 3 for 2 stock split effective March 30, 2004.
*** All non-employee trust managers were awarded 519 shares in 2003, subject to such
trust manager's election to defer receipt from 5 years up to the completion of
his service on the board of trust managers.
PAGE 11
(1) Includes 578,412 shares held by various trusts for the benefit of Mr.
Alexander's children and 445,012 shares for which voting and investment
power are shared with Andrew M. Alexander and Melvin A. Dow, trust
managers, 5,263 shares subject to restrictions on transfer within 60 days
of February 13, 2004 for which Mr. Alexander has the right to vote and
14,155 shares that may be purchased by Mr. Alexander upon exercise of share
options that are currently exercisable or that will become exercisable
within 60 days of February 13, 2004. Also includes 645,370 shares held by a
charitable foundation, over which shares Mr. Alexander and his wife Joan
have voting and investment power. Mr. Alexander's address is 2600 Citadel
Plaza Drive, Houston, Texas 77008.
(2) Includes 445,012 shares over which Messrs. S. Alexander and Dow have
shared voting and investment power, 6,094 shares are subject to
restrictions on transfer within 60 days of February 13, 2004 and 102,950
shares that Mr. A. Alexander may purchase upon the exercise of share
options that will be exercisable within 60 days of February 13, 2004. Also
includes 37,500 shares held by a charitable foundation, over which shares
Mr. A. Alexander and his wife Julie have voting and investment power.
(3) Includes 40,317 shares held in trust for the benefit of Mr. Debrovner's
children, for which he has voting and investment power, 3,601 shares
subject to restriction on transfer within 60 days of February 13, 2004 as
to which Mr. Debrovner votes, 128,743 shares that may be purchased upon the
exercise of share options that will be exercisable within 60 days of
February 13, 2004.
(4) Includes 445,012 shares over which Messrs. S. Alexander and A. Alexander
have shared voting and investment power.
(5) Includes 75,000 shares held by trusts for the benefit of Mr. Lasher's
children, over which Mr. Lasher exercises voting and investment power.
(6) Mr. Schnitzer owns 519 shares individually. With respect to the
remaining shares beneficially owned, Mr. Schnitzer shares voting and
investment power with Joan Weingarten Schnitzer under trusts for Joan
Weingarten Schnitzer.
(7) Includes 5,924 shares held in trust for the benefit of Mr. Richter's
children, for which he has voting and investment power, 3,095 shares
subject to restrictions on transfer within 60 days of February 13, 2004
for which Mr. Richter has the right to vote and 22,557 shares that may be
purchased upon the exercise of share options that will be exercisable
within 60 days of February 13, 2004.
(8) Includes 18,053 shares subject to restrictions on transfer for which
the trust managers and executive officers have the right to vote and
268,405 shares that may be purchased upon the exercise of share options
that will be exercisable within 60 days of February 13, 2004.
(9) Pursuant to information contained in a Schedule 13G filed by or on
behalf of the beneficial owners with the SEC on February 10, 2004. The
Schedule 13G lists the address of Capital Research and Management Company
as 333 South Hope Street, Los Angeles, CA 90071.
We are pleased to report that management, employees, trust managers and
their extended families own, in the aggregate, 13.4% of our outstanding common
shares as of February 13, 2004, not including any unexercised share options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our trust
managers and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file reports of holdings and
transactions in our securities with the SEC and the NYSE. Executive officers,
trust managers and greater than 10% beneficial owners are required by applicable
regulations to furnish us with copies of all Section 16(a) forms they file with
the SEC.
PAGE 12
Based solely upon a review of the reports furnished to us with respect to
fiscal 2003, we believe that all SEC filing requirements applicable to our trust
managers and executive officers were satisfied.
EXECUTIVE OFFICERS
No trust manager or executive officer was selected as a result of any
arrangement or understanding between the trust manager or executive officer or
any other person. All executive officers are elected annually by, and serve at
the discretion of the board of trust managers.
Our executive officers are as follows:
Name Age Position Recent Business Experience
---- --- -------- --------------------------
Stanford Alexander . . . . 75 Chairman of the Board See "Election of Trust Managers."
Martin Debrovner . . . . . 67 Vice Chairman 1997 to Present - Vice Chairman;
1993 to 1997 - President and Chief
Operating Officer.
Andrew M. Alexander. . . . 47 President and Chief Executive See "Election of Trust Managers."
Officer
Stephen C. Richter . . . . 49 Senior Vice President and Chief 2000 to Present - Senior Vice President
Financial Officer and Chief Financial Officer; 1997 to
2000 - Senior Vice President and
Treasurer.
PAGE 13
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation paid by us for each of the
fiscal years ended December 31, 2003, 2002 and 2001 to the Chief Executive
Officer and the three other most highly compensated executive officers who
received a total annual salary and bonus in excess of $100,000 in fiscal 2003.
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Restricted Securities
Share Underlying
Name and Salary Bonus Awards Options/SARs All Other
Principal Position Year ($) ($) ($) (#)(1) Compensation
------------------ ---- ------ --- --- ------ ------------
Stanford Alexander 2003 $ 575,000 $ 345,000 $ 237,519(2) 52,661 $ 10,820(6)
Chairman 2002 550,000 288,750 98,701 34,722 14,387
2001 550,000 278,170 208,328 27,778 19,092
Andrew M. Alexander 2003 575,000 345,000 275,022(3) 60,976 170,232(7)
President and Chief 2002 550,000 288,750 61,683 65,104 145,215
Executive Officer 2001 425,000 276,500 75,196 34,722 83,232
Martin Debrovner 2003 425,000 178,500 162,513(4) 36,031 9,799(8)
Vice Chairman 2002 410,000 150,982 86,386 30,382 30,626
2001 410,000 147,616 141,565 20,822 127,680
Stephen C. Richter 2003 300,000 103,500 70,628(5) 15,657 79,784(9)
Senior Vice President 2002 275,000 86,136 45,239 15,914 66,939
and Chief Financial 2001 250,000 74,523 73,769 11,574 44,669
Officer
--------
(1) No SARs were granted during 2001, 2002 or 2003.
(2) Of the 5,263 restricted shares awarded in 2003, 1,053 will vest on each of December 16, 2004, 2005, 2006,
2007 and 2008. Dividends are payable on restricted shares. As of December 31, 2003, Mr. S. Alexander
held 44,193 restricted shares having a market value on that date of $1,959,960.
(3) Of the 6,094 restricted shares awarded in 2003, 1,219 will vest on each of December 16, 2004, 2005, 2006,
2007 and 2008. Dividends are payable on restricted shares. As of December 31, 2003, Mr. A. Alexander
held 20,348 restricted shares having a market value on that date of $902,434.
(4) Of the 3,601 restricted shares awarded in 2003, 720 will vest on each of December 16, 2004, 2005, 2006,
2007 and 2008. Dividends are payable on restricted shares. As of December 31, 2003, Mr. Debrovner held
29,922 restricted shares having a market value on that date of $1,327,041.
(5) Of the 1,565 restricted shares awarded in 2003, 313 will vest on each of December 16, 2004, 2005, 2006,
2007 and 2008. Dividends are payable on restricted shares. As of December 31, 2003, Mr. Richter held
16,682 restricted shares having a market value on that date of $739,847.
(6) Includes $6,000 for our contributions to the 401(k) Savings and Investment Plan on behalf of Mr. S.
Alexander.
(7) Includes $6,000 for our contributions to the 401(k) Savings and Investment Plan on behalf of Mr. A.
Alexander and $158,555 contributed to the Supplemental Retirement Plan.
(8) Includes $6,000 for our contributions to the 401(k) Savings and Investment Plan on behalf of Mr.
Debrovner.
(9) Includes $6,000 for our contributions to the 401(k) Savings and Investment Plan on behalf of Mr. Richter
and $66,866 contributed to the Supplemental Retirement Plan.
PAGE 14
OPTION GRANTS IN 2003
The following table sets forth information concerning grants of share
options during 2003 to each of the executive officers named in the Summary
Compensation Table and the potential realizable value of the options at assumed
annual rates of share price appreciation for the option term.
OPTION GRANTS IN 2003
-------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS (1)
------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATE
SECURITIES GRANTED TO EXERCISE OF SHARE PRICE
UNDERLYING EMPLOYEES OF BASE APPRECIATION FOR OPTION
OPTIONS IN FISCAL PRICE EXPIRATION TERM (2)
-----------
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10%($)
---- ----------- ---- ------ ---- ------ ------
Stanford Alexander. . . . 52,661 15.78 $ 45.13 12-16-13 $ 1,494,625 $ 3,787,674
Andrew M. Alexander . . . 60,976 18.27 45.13 12-16-13 1,730,622 4,385,735
Martin Debrovner. . . . . 36,031 10.80 45.13 12-16-13 1,022,632 2,591,551
Stephen C. Richter. . . . 15,657 4.69 45.13 12-16-13 444,377 1,126,139
___________
(1) The plans governing share option grants provide that the option price per share shall not be less than 100% of
the market value per share of our common shares at the grant date. The term of any option is no more than 10
years from the date of grant. Options granted in 2003 become exercisable after one year in five equal
annual installments of 20%.
(2) The dollar amounts under these columns are the result of calculations assuming annual rates of share price
appreciation over the option term at the 5% and 10% rates set by SEC rules and are not intended to forecast
possible future appreciation, if any, in our common share price.
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning exercises of
share options during 2003 by our named executive officers and the value of the
unexercised options as of December 31, 2003, based on the closing price of
$44.35 per share of the company's common shares on that date.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003 AND FISCAL 2003 YEAR-END OPTION VALUES
------------------------------------------------------------------------------------------------------
SHARES NUMBER OF VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON VALUE UNEXERCISED OPTIONS HELD MONEY OPTIONS AT
NAME EXERCISE(#) RECEIVED AT DECEMBER 31, 2003 DECEMBER 31, 2003
--------------------- ----------- ------------ ------------------------ ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Stanford Alexander. . 58,374 $ 1,035,899 14,155 185,674 $ 225,489 $ 1,647,436
Andrew M. Alexander . 56,000 1,106,165 102,950 265,011 1,779,226 2,363,688
Martin Debrovner .. 0 0 128,743 144,634 2,236,520 1,339,777
Stephen C. Richter. . 37,527 622,300 15,447 73,119 265,791 725,922
PAGE 15
RETIREMENT PLAN
The following table shows the approximate annual retirement benefits under
our non-contributory retirement plan (before the reduction made for social
security benefits) to eligible grandfathered employees in specified compensation
and years of service categories, assuming retirement occurs at age 65 and that
benefits are payable only during the employee's lifetime. Benefits are not
actuarially reduced where survivorship benefits are provided.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
YEARS OF SERVICE
----------------------------------------------------------------------
AVERAGE
COMPENSATION** 15 20 25 30 35 40
------------------- ---------- ---------- ---------- ---------- ---------- ----------
$ 200,000 . . . . $ 45,000 $ 60,000 $ 75,000 $ 90,000 $ 105,000 $ 120,000
225,000 . . . . 50,625 67,500 84,375 101,250 118,125 135,000
250,000 . . . . 56,250 75,000 93,750 112,500 131,250 150,000
300,000 . . . . 67,500 90,000 112,500 135,000 157,500 180,000*
400,000 . . . . 90,000 120,000 150,000 180,000* 210,000* 240,000*
450,000 . . . . 101,250 135,000 168,750* 202,500* 236,250* 270,000*
500,000 . . . . 112,500 150,000 187,500* 225,000* 262,500* 300,000*
600,000 . . . . 135,000 180,000* 225,000* 270,000* 315,000* 360,000*
700,000 . . . . 157,500 210,000* 262,500* 315,000* 367,500* 420,000*
800,000 . . . . 180,000* 240,000* 300,000* 360,000* 420,000* 480,000*
900,000 . . . . 202,500* 270,000* 337,500* 405,000* 472,500* 540,000*
1,000,000 . . . 225,000* 300,000* 375,000* 450,000* 525,000* 600,000*
___________
* Currently, the maximum annual pension benefit which currently may be paid under a qualified plan is $160,000
subject to certain grandfather rules for limitation years beginning in 2003.
** Compensation in excess of $200,000 is disregarded with respect to all plan years. Accordingly, the
compensation of each named executive officer included in the Summary Compensation Table which was covered
by the non-contributory retirement plan was limited to $200,000.
The compensation used in computing average monthly compensation is the
total of all amounts paid by us, plus amounts electively deferred by the
employee under our savings plan, 125 cafeteria plan and nonqualified deferred
compensation plan. Credited years of service for named executive officers as of
March 15, 2004 are as follows: Mr. S. Alexander, 50 years; Mr. Debrovner, 36
years; Mr. A. Alexander, 26 years; and Mr. Richter, 24 years. Mr. S. Alexander
and Mr. Debrovner commenced receiving benefits under the Plan in January 1996
and June 2001, respectively.
The non-contributory pension plan converted to a cash balance retirement
plan on April 1, 2002. A grandfathered participant will remain covered by the
provisions of the plan prior to the conversion to the cash balance plan. A
grandfathered participant is any participant born prior to January 1, 1952, was
hired prior to January 1,1997, and was an active employee on April 1, 2002. The
retirement plan pays benefits to grandfathered participants in the event of
death, disability, retirement or other termination of employment after the
employee meets certain vesting requirements (all grandfathered participants are
100% vested). The amount of the monthly retirement benefit payable beginning at
age 65, the normal retirement age, is equal to (i) 1.5% of average monthly
compensation during five consecutive years, within the last ten years, which
would yield the highest average monthly compensation multiplied by years of
service rendered after age 21, minus (ii) 1.5% of the monthly social security
PAGE 16
benefits in effect on the date of retirement multiplied by years of service
rendered after age 21 and after July 1, 1976 (not in excess of 33.3 years).
CASH BALANCE RETIREMENT PLAN
The following table shows the approximate annual retirement benefits under
our non-contributory cash balance retirement plan to eligible employees in
specified compensation and years of service categories, assuming retirement
occurs at age 65 and that benefits are payable only during the employee's
lifetime. Benefits are not actuarially reduced where survivorship benefits are
provided no opening balance was included in the table.
YEARS OF SERVICE
--------------------------------------------------------------------
ANNUAL
COMPENSATION** 15 20 25 30 35 40
------------------ ---------- ---------- ---------- ---------- ---------- ----------
$ 200,000 $ 11,171 $ 17,259 $ 25,571 $ 35,655 $ 47,888 $ 62,729
225,000 12,567 19,416 28,767 40,112 53,874 70,570
250,000 13,964 21,574 31,964 44,569 59,860 78,411
300,000 16,757 25,888 38,357 53,482 71,832 94,093
350,000 19,549 30,203 44,749 62,396 83,804 109,776
400,000 22,342 34,518 51,142 71,310 95,776 125,458
450,000 25,135 38,832 57,535 80,224 107,748 141,140
500,000 27,928 43,147 63,928 89,137 119,721 156,822
600,000 33,513 51,777 76,713 106,965 143,665 188,187*
700,000 39,099 60,406 89,499 124,792 167,609* 219,551*
800,000 44,684 69,035 102,284 142,620 191,553* 250,916*
900,000 50,270 77,665 115,070 160,447* 215,497* 282,280*
1,000,000 55,855 86,294 127,855 178,275* 239,441* 313,645*
___________
* Currently, the maximum annual pension benefit which currently may be paid under
a qualified plan is $160,000 subject to certain grandfather rules for limitation
years beginning in 2003.
** Compensation in excess of $200,000 is disregarded with respect to all plan years.
Accordingly, the compensation of each named executive officer included in the
Summary Compensation Table which was covered by the non-contributory retirement
plan was limited to $200,000.
The non-contributory cash balance retirement plan covers all employee
beginning on April 1, 2002 with no age or service minimum requirement. However,
leased employees and employees covered by a collective bargaining agreement will
not participate in the plan. The cash balance plan pays benefits in the event of
death (if married), retirement or termination of employment after the
participant meets certain vesting requirements (generally 100% vested after 5
years of service). The amount of the monthly retirement benefit payable
beginning at age 65, the normal retirement age, is equal to the greater of (i)
the monthly benefit that is actuarial equivalent of the cash balance account, or
(ii) the accrued monthly benefit under the prior plan as of January 1, 2002.
The opening balance of a cash balance participant, who was an active participant
in the plan on January 2, 2002 and was an active employee on April 1, 2002, is
the actuarial equivalent present value of his frozen accrued benefit on January
1, 2002. Interest Credits are determined on the last day of each plan years
based on the annual rate of interest on the ten-year US Treasury Bill Constant
Maturities on October 1 of the immediately preceding the Plan Year. A Service
Credit will be credited to the cash balance account of any cash balance
participant who is an active participant at any time during the plan year. The
PAGE 17
amount of the Service Credit shall be a percentage of the participant's earnings
for the plan year based on the years of credited service on the last day of the
prior Plan Year.
YEARS OF CREDITED SERVICE PERCENTAGE OF EARNINGS
------------------------- -----------------------
0 through 9.99 3%
10 through 19.99 4%
20 or more 5%
CHANGE OF CONTROL ARRANGEMENTS
Messrs. S. Alexander, A. Alexander and M. Debrovner have not entered into
change of control arrangements with us.
We have however, entered into a severance and change in control agreement
with Mr. Richter which becomes operative only upon a change of control. All
other Vice Presidents have also entered into the same change of control
agreement with us. A change of control is deemed to occur upon any one of five
events: (1) we merge, consolidate or reorganize into or with another corporation
or legal entity and we are not the surviving entity; (2) we sell or otherwise
transfer 50% or more of our assets to one entity or in a series of related
transactions; (3) any person or group acquires 25% or more of our then
outstanding voting shares; (4) we file a report or proxy statement with the SEC
disclosing that a change of control has occurred or will occur; or (5) if,
during any 12-month period, trust managers at the beginning of the 12-month
period cease to constitute a majority of the trust managers.
If Mr. Richter or any other Vice President is terminated under specified
conditions within one year following a change of control, he will be entitled to
a severance benefit in an amount equal to (1) 2.99 times his annualized base
salary as of the first date constituting a change of control or, if greater, (2)
2.99 times his highest base salary in the five fiscal years preceding the first
event constituting a change of control, plus, in either case, 2.99 times his
targeted bonus for the fiscal year in which the first event constituting a
change of control occurs. In addition, Mr. Richter or any other Vice President,
as applicable, is entitled to receive an additional payment or payments to the
extent the severance benefit is subject to the excise tax imposed by Section
4999 of the Code or any similar tax imposed by state or local law, or any
penalties or interest with respect to the tax. Mr. Richter will also receive one
year of employee benefits coverage substantially similar to what he received or
was entitled to receive prior to the change in control.
PAGE 18
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
Our executive compensation is supervised by the management development and
compensation committee of the board of trust managers which is comprised
entirely of independent trust managers as determined by the board within the
meaning of the applicable NYSE listing standards currently in effect. The board
designates the members and the chairman of the committee.
The committee is responsible for evaluating and establishing the level of
compensation for executive officers and administering our share option and
deferred compensation plans. The specific duties and responsibilities of the
committee are described in the charter of the management development and
compensation committee charter, which is included as Appendix A hereto and is
----------
also available on our website at www.weingarten.com.
------------------
The committee met four times during fiscal 2003. All committee members are
actively engaged in the review of matters presented. The committee has direct
access to independent compensation consultants and other experts for survey data
and other information as it deems appropriate, and utilized independent
consultants during the year.
The committee has furnished the following report on executive compensation
for fiscal 2003.
Compensation Philosophy and Objectives. We seek to provide executive
compensation that will support the achievement of our financial and growth goals
while attracting and retaining qualified executive officers and rewarding
superior performance. In order to achieve our objectives, we have structured an
incentive based compensation system tied to our financial performance and
portfolio growth. We will attempt to maximize the amount of compensation expense
that is tax deductible where consistent with our compensation philosophy.
Our committee annually reviews our compensation program to ensure that pay
levels and incentive opportunities are competitive and reflect our performance.
In general, we compensate our executive officers through base salary, bonus
compensation, share options and restricted shares. Our annual executive officer
compensation package, including that of the Chairman, Chief Executive Officer
and the Vice Chairman, generally has lower base salaries than comparable
companies, coupled with a leveraged incentive bonus system which will pay more
with good performance and less with performance that is below expectation.
Generally, target bonuses are within 30% to 50% of the base compensation of the
individual, depending on the size of the incentive bonus awarded.
Base Salary. Base salary levels for executive officers are largely derived
through an evaluation of the responsibilities of the position held and the
experience of the particular individuals, both compared to companies of similar
size, complexity and, where comparable, in the same industry. The determination
of comparable companies was based upon selections made by both us, as to
comparable companies in the real estate industry, and by independent
compensation consultants, as to other comparable companies. Not all companies
included in the NAREIT All Equity Index described on page 21 are comparable in
size and complexity, and not all comparable real estate companies are REITs.
Actual salaries are based on an executive officer's skill and ability to
influence our financial performance and growth in both the short-term and
long-term. During 2003, our committee used compensation information provided by
outside consultants in establishing base salaries.
Bonus Compensation. All of our executive officers participate in a bonus
program. Each individual's eligible bonus is based on a percentage of the
individual's base salary. This bonus program has been in effect for more than 25
years. The bonus percentage is also based on a competitive analysis.
PAGE 19
Again, the executive officer's ability to influence our success is
considered in establishing this percentage. Earned bonuses are determined
annually on the basis of performance against pre-established goals. Other than
for the Chairman, Vice Chairman and Chief Executive Officer, the eligible bonus
percentage for executive officers is generally allocated 50% to our goals and
50% to the individual's goals. Specific individual goals for each executive
officer are established at the beginning of the year and are tied to the
functional responsibilities of each executive officer. Individual goals include
both objective financial measures as well as subjective factors such as
efficiency in managing capital resources, successful acquisitions, good investor
relations and the continued development of management. Our goals are primarily
based on operating performance, as measured by factors such as our funds from
operations, and achieving the appropriate growth objective, relating primarily
to portfolio acquisitions and new development. Other than the allocation between
our goals and the individual, no specific weights are assigned to the individual
goals. The bonuses of the Chairman, Vice Chairman and Chief Executive Officer
are based entirely on our performance. Our performance targets and all
individual goals were exceeded in fiscal 2003 and, consequently, the executive
officers were eligible for full bonus awards.
Share Incentive Program. Our committee strongly believes that by providing
our executive officers with an opportunity to increase their ownership of common
shares, the interests of shareholders and the executive officers will be closely
aligned. Therefore, executive officers are eligible to receive share awards and
options annually, giving them the right to purchase our common shares. The
number of options granted to an executive officer is based on practices of the
same comparable companies used to define base salary levels. Share awards and
options are a significant part of our executive compensation system, and these
awards and options are issued on an annual basis.
Chief Executive Officer Performance Evaluation. For 2003, the management
development and compensation committee evaluated the Chief Executive Officer's
performance based on our financial performance and growth in real estate assets.
As we exceeded both our funds from operations and our acquisition and new
development goals, Mr. A. Alexander received 120% of his potential bonus based
on our performance for 2003. Mr. Alexander's compensation (i.e. base salary,
bonus compensation and the share incentive program) is based entirely on
company-wide performance and is set by the management development and
compensation committee.
Respectfully Submitted,
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
Robert J. Cruikshank, 2003 Chairman
Stephen A. Lasher
Marc J. Shapiro
PAGE 20
PERFORMANCE GRAPH
SEC rules require the presentation of a line graph comparing, over a period
of five years, the cumulative total shareholder return to a performance
indicator of a broad equity market index and either a nationally recognized
industry index or a peer group index constructed by us.
The graph below provides an indicator of cumulative total shareholder
returns for us as compared with the S&P Stock Index and the NAREIT All Equity
Index, weighted by market value at each measurement point. The graph assumes
that $100 was invested on December 31, 1998 in our common shares and that all
dividends were reinvested by the shareholder.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
[GRAPHIC OMITED]
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
WRI 149.85 181.46 213.32 261.36 332.42
S&P 500 Index 355.75 323.36 284.93 221.95 285.62
The NAREIT All Equity Index 152.22 192.35 219.16 227.53 312.00
There can be no assurance that our share performance will continue into the
future with the same or similar trends depicted in the graph above. We will not
make or endorse any predications as to future share performance.
PAGE 21
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF TRUST MANAGERS
The audit committee is composed of three independent non-employee trust
managers and operates under a written charter adopted by the board (a copy of
which is available on our website and a copy of which his attached hereto as
Appendix B). The board has determined that each committee member is independent
----------
within the meaning of the applicable NYSE listing standards currently in effect.
Management is responsible for the financial reporting process, including the
system of internal controls, and for the preparation of consolidated financial
statements in accordance with GAAP. The company's independent auditors are
responsible for auditing those financial statements and expressing an opinion as
to their conformity with GAAP. Our responsibility is to oversee and review
these processes. We are not, however, professionally engaged in the practice of
accounting or auditing, and do not provide any expert or other special assurance
as to such financial statements concerning compliance with the laws, regulations
or GAAP or as to auditor independence. We rely, without independent
verification, on the information provided to us and on the representations made
by management and the independent auditors. We held five meetings during fiscal
2003. The meetings were designed, among other things, to facilitate and
encourage communication among the committee, management and the company's
independent auditors, Deloitte & Touche LLP. We discussed with Deloitte &
Touche the overall scope and plans for their audit. We met with Deloitte &
Touche, with and without management present, to discuss the results of their
examinations and their evaluations of the company's internal controls.
We have reviewed and discussed the audited consolidated financial
statements for the fiscal year ended December 31, 2003 with management and
Deloitte & Touche. We also discussed with management and Deloitte & Touche the
process used to support certifications by the company's Chief Executive Officer
and Chief Financial Officer that are required by the SEC and the Sarbanes-Oxley
Act of 2002 to accompany the company's periodic filings with the SEC.
In addition, the audit committee obtained from Deloitte & Touche a formal
written statement describing all relationships between the auditors and the
company that might bear on the auditors' independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," discussed with the auditors any relationships that may impact
their objectivity and independence, and satisfied itself as to the auditors'
independence. When considering Deloitte & Touche's independence, we considered
whether their provision of services to the company beyond those rendered in
connection with their audit of the company's consolidated financial statements
and reviews of the company's consolidated financial statements, including in its
Quarterly Reports on Form 10-Q, was compatible with maintaining their
independence. We also reviewed, among other things, the audit and non-audit
services performed by, and the amount of fees paid for such services to,
Deloitte & Touche. The audit committee also discussed and reviewed with the
independent auditors all communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards (SAS)
No. 61, as amended, "Communication with Audit Committees," SAS 99 "Consideration
of Fraud in a Financial Statement Audit," and SEC rules discussed in Final
Release Nos. 33-8183 and 33-8183a.
Based on our review and these meetings, discussions and reports, and
subject to the limitations on our role and responsibilities referred to above
and in the audit committee charter, we recommended to the board of trust
managers (and the board has approved) that the audited financial statements for
the year ended December 31, 2003 be included in the Annual Report on Form 10-K
for filing with the Securities and Exchange Commission. We have selected
Deloitte & Touche as the company's independent auditors for the fiscal year
ending December 31, 2004, and have presented the selection to the shareholders
for ratification.
The undersigned members of the audit committee have furnished this report
to the board of trust managers.
PAGE 22
Respectfully Submitted,
AUDIT COMMITTEE
James W. Crownover, 2003 Chairman
Robert J. Cruikshank
J. Murry Bowden
PROPOSAL TWO
RATIFICATION OF INDEPENDENT AUDITORS
The audit committee has appointed Deloitte & Touche LLP (Deloitte) as
independent auditors to audit our financial statements for the fiscal year
ending December 31, 2004. During fiscal 2003, Deloitte served as our
independent auditors and also provided certain tax and other audit related
services. Deloitte, or its predecessors, has served as our independent auditors
for more than 30 years and are familiar with our affairs and financial
procedures.
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to us for the fiscal years ended December 31, 2003, and
2002 by Deloitte.
($ in thousands)
2003 2002
-------- --------
Audit Fees (a) $ 487.8 $ 381.5
Audit-Related Fees (b) -- --
Tax Fees (c) 354.2 251.4
All Other Fees (d) -- --
-------- --------
Total $ 842.0 $ 632.9
======== ========
Memo: Ratio of Tax Planning and Advice Fees and All
Other Fees to Audit Fees, Audit-Related Fees and
Tax Compliance Fees 0.07:1 0.08:1
(a) Fees for audit services billed in 2003 and 2002 consisted of audit
of the Company's annual financial statements, reviews of the Company's quarterly
financial statements, comfort letters, consents and other services related to U.
S. Securities and Exchange Commission ("SEC") matters.
(b) There were no fees for audit-related services billed in 2003 or
2002.
(c) Fees for tax services billed in 2003 and 2002 consisted of tax
compliance and tax planning and advice. Fees for tax compliance services totaled
$300,000 and $202,700 in 2003 and 2002, respectively. Tax compliance services
are services rendered based upon facts already in existence or transactions that
have already occurred to document, compute, and obtain government approval for
amounts to be included in tax filings and consisted of Federal, state and local
income tax return assistance, research for technical advice regarding technical
terminations and disguised sales, research for technical advice and analysis for
purpose of filing amended returns, assistance with 704 (c) calculations and
assistance with earnings and profits calculation and review.
Fees for tax planning and advice services totaled $54,200
$48,700 in 2003 and 2002, respectively. Tax planning and advice are services
rendered with respect to proposed transactions or that alter a transaction to
obtain a particular tax result. Such services consisted of tax advice related to
structuring certain proposed mergers, acquisitions and disposals, tax advice
PAGE 23
related to tax incentive financing plans, tax advice related to IRC 1031 reverse
deferred exchanges, tax advice related to an intra-group restructuring, tax
advice related to IRC 858 dividends and tax advice and compliance related to
officers tax returns.
(d) There were no fees for other services billed in 2003 or 2002.
At its regularly scheduled and special meetings, the audit
committee considers and pre-approves any audit and non-audit services to be
performed by our independent accountants. The audit committee has delegated to
its chairman, an independent member of our board of trust managers, the
authority to grant pre-approvals of non-audit services provided that any such
pre-approval by the chairman shall be reported to the audit committee at its
next scheduled meeting. However, pre-approval of non-audit services is not
required if (i) the aggregate amount of non-audit services is less than 5% of
the total amount paid by us to the auditor during the fiscal year in which the
non-audit services are provided; (ii) such services were not recognized by the
company as non-audit services at the time of the engagement; and (iii) such
services are promptly brought to the attention of the audit committee and, prior
to completion of the audit, are approved by the audit committee or by one or
more audit committee members who have been delegated authority to grant
approvals.
The audit committee has considered whether the provision of
services is compatible with maintaining the independent accountants'
independence and has determined that such services have not adversely affected
Deloitte's independence.
Representatives of Deloitte will be present at the annual meeting
and will have an opportunity to make a statement, if they desire to do so, and
to respond to appropriate questions from shareholders.
THE BOARD OF TRUST MANAGERS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THE RATIFICATION OF INDEPENDENT AUDITORS AS SET FORTH IN PROPOSAL TWO.
PROXIES SOLICITED BY THE BOARD OF TRUST MANAGERS WILL BE SO VOTED UNLESS YOU
SPECIFY OTHERWISE IN YOUR PROXY.
PROPOSAL THREE
SHAREHOLDER PROPOSAL
We have received a shareholder proposal from the Massachusetts State
Carpenter's Fund, (MSCF), 350 Fordham Road, Wilmington, Massachusetts 01887.
MSCF has requested that we include the following proposal and supporting
statement in our proxy statement for our 2004 annual meeting of shareholders,
and if properly presented, this proposal will be voted on at the annual meeting.
MSCF beneficially owns approximately 1,000 of our common shares. The
shareholder proposal is quoted verbatim in italics below.
Our board of trust managers disagrees with the adoption of the resolution
proposed below and ask shareholders to read through our board of trust manager's
response, which follows the shareholder proposal.
SHAREHOLDER PROPOSAL: PERFORMANCE AND TIME-BASED RESTRICTED SHARES
This proposal was submitted by the Massachusetts State Carpenters Fund, 350
Fordham Road, Wilmington, Massachusetts 01887, which owns approximately 1,000
shares of our common stock.
PAGE 24
Resolved that the shareholders of Weingarten Realty Investors ("Company")
hereby request that the Board of Trust Managers' Compensation Committee, in
developing future senior executive equity compensation plans, utilize
performance and time-based restricted share programs in lieu of stock options.
Restricted shares issued by the Company should include the following features:
(1) Operational Performance Measures. The restricted share program should
utilize justifiable operational performance criteria combined with challenging
performance benchmarks for each criteria utilized. The performance criteria and
associated performance benchmarks selected by the Compensation Committee should
be clearly disclosed to shareholders.
(2) Time-Based Vesting. A time-based vesting requirement of at least
three years should also be a feature of the restricted shares program. That is,
in addition to the operational performance criteria, no restricted shares should
vest in less than three years from the date of grant.
(3) Dividend Limitation. No dividend or proxy voting rights should be
granted or exercised prior to the vesting of the restricted shares.
(4) Share Retention. In order to link shareholder and management
interests, a retention feature should also be included; that is, all shares
granted pursuant to the restricted share program should be retained by the
senior executives for the duration of their tenure with the Company.
The Board and Compensation Committee should implement this restricted share
program in a manner that does not violate any existing employment agreement or
equity compensation plan.
SUPPORTING STATEMENT: As long-term shareholders of the Company, we support
executive compensation policies and practices that provide challenging
performance objectives and serve to motivate executives to achieve long-term
corporate value creation goals. The Company's executive compensation program
should include a long-term equity compensation component with clearly defined
operational performance criteria and challenging performance benchmarks.
We believe that performance and time-based restricted shares are a
preferred mechanism for providing senior executives long-term equity
compensation. We believe that stock option plans, as generally constituted, all
too often provide extraordinary pay for ordinary performance. In our opinion,
performance and time-based restricted shares provide a better means to tie the
levels of equity compensation to meaningful financial performance beyond stock
price performance and to condition equity compensation on performance above that
of peer companies.
Our proposal recognizes that the Compensation Committee is in the best
position to determine the appropriate performance measures and benchmarks. It is
requested that detailed disclosure of the criteria be made so that shareholders
may assess whether, in their opinion, the equity compensation system provides
challenging targets for senior executives to meet. In addition, the restricted
share program prohibits the receipt of dividends and the exercise of voting
rights until shares vest.
We believe that a performance and time-based restricted share program with
the features described above offers senior executives the opportunity to acquire
significant levels of equity commensurate with their long-term contributions. We
believe such a system best advances the long-term interests of our Company, its
shareholders, employees and other important constituents. We urge shareholders
to support this reform.
PAGE 25
THE BOARD OF TRUST MANAGERS BELIEVES THAT THE PROPOSAL IS CONTRARY TO THE
INTERESTS OF THE COMPANY AND OUR SHAREHOLDERS, AND ACCORDINGLY IS RECOMMENDING
THAT YOU VOTE AGAINST THE PROPOSAL FOR THE FOLLOWING REASONS:
Qualified and capable executive officers are essential to our success and
to building value for our shareholders. In order to attract and retain such
qualified employees, we must provide a competitive level of total compensation.
A generally accepted principle of contemporary executive compensation practice
is that the granting of share options is an effective manner of aligning the
interests of executive officers with those of our other shareholders. Our board
of trust managers and management development and compensation committee strongly
support the concept of performance-based executive compensation arrangements
that are designed to create long-term corporate and shareholder value and are
market competitive. For this reason, the board and the committee have taken into
account many of the features described in the shareholder proposal, including
providing for awards that vest over several years to encourage long-term
equity-holdings by executives. We believe that share options, which have value
only when the price of our common shares appreciates over time, align the
interests of our executive officers with those of our other shareholders. Our
policy governing option grants provides that the option price per share shall
not be less than 100% of the market value per share of our common shares at the
grant date. A holder of a share option, therefore, will not receive any economic
benefit unless and until the value of our shares increases above the exercise
price. Therefore, share options granted by us to our senior executives are
already performance-based and serve to motivate such executives to maximize
long-term value of our shares. Options are subject to vesting requirements, such
that each option becomes exercisable after one year in five equal annual
installments of 20%.
Our management development and compensation committee is comprised of three
independent trust managers. As more fully described in the management
development and compensation committee report on executive compensation on page
19 of this proxy statement, the management development and compensation
committee has determined that the compensation of our executive officers should
be directly and materially related to our short-term and long-term objectives.
The fundamental difference between the board and the management development and
compensation committee's current executive compensation programs and the
shareholder proposal is the lack of flexibility provided by the proposal. The
board and the management development and compensation committee believe that
restricting potential incentive program features would unduly restrict the
management development and compensation committee's choice among performance
based compensation arrangements and would place us at a significant competitive
disadvantage in recruiting and retaining executives. We believe that it is
important to preserve the management development and compensation committee's
ability to choose incentives that in their judgment best enable us to recruit
and retain executive officers, motivate such executives to achieve our long-term
goals, and align such executives' interests with those of our shareholders.
We believe that replacing the granting of shares options with restricted
shares having the terms set forth in the proposal could considerably undermine
our ability to motivate and retain our executive leadership. We generally do not
enter into employment agreements with our executives, and they could seek other
employment if they felt that their future equity compensation opportunities with
us were less attractive than those offered by other companies. The loss of
certain of our executives could make it more difficult for us to meet our goals.
In addition, we are concerned that the share retention feature of the
proposal could have a negative impact on the retention of our executive
officers. The proposal would require the restricted shares to be retained by the
executive officer as long as he is employed by us. This requirement limits the
value of the restricted shares because the officer will not receive any economic
benefit until his or her employment is terminated. We do not want to create an
incentive for an executive officer to terminate his or her employment so that he
PAGE 26
or she can sell their restricted shares. Instead, we believe that an option
plan that has vesting requirements, thereby encouraging retention, but that
provides some compensation while the executive officer is still employed by us
is in our best interest.
THE BOARD OF TRUST MANAGERS UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST
THE SHAREHOLDER PROPOSAL AS SET FORTH IN PROPOSAL THREE. PROXIES SOLICITED BY
THE BOARD OF TRUST MANAGERS WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE IN
YOUR PROXY.
OTHER MATTERS
As of the mailing date of this proxy statement, the board of trust managers
knows of no other matters to be presented at the meeting. Should any other
matter requiring a vote of the shareholders arise at the meeting, the persons
named in the proxy will vote the proxies in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the annual meeting in
the year 2005, and who wishes to have the proposal included in our proxy
statement for that meeting, must deliver the proposal to our corporate secretary
M. Candace DuFour, at P.O. Box 924133, Houston, Texas 77292-4133 by November 19,
2004. All proposals must meet the requirements set forth in the rules and
regulations of the SEC in order to be eligible for inclusion in the proxy
statement for that meeting.
Any shareholder who intends to bring business to the annual meeting in the
year 2005, but not include the proposal in our proxy statement, or to nominate a
person to the board of trust managers, must give written notice to our corporate
secretary, M. Candace DuFour, at P.O. Box 924133, Houston, Texas 77292-4133, by
January 20, 2005.
ANNUAL REPORT
We have provided without charge a copy of the annual report to shareholders
for fiscal year 2003 to each person being solicited by this proxy statement.
UPON THE WRITTEN REQUEST BY ANY PERSON BEING SOLICITED BY THIS PROXY STATEMENT,
WE WILL PROVIDE WITHOUT CHARGE A COPY OF THE ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SEC (EXCLUDING EXHIBITS, FOR WHICH A REASONABLE CHARGE SHALL BE
IMPOSED). All requests should be directed to: M. Candace DuFour, Sr. Vice
President and Secretary at Weingarten Realty Investors, P.O. Box 924133,
Houston, Texas 77292-4133. This information is also available via the Internet
at our website (www.weingarten.com) and the EDGAR version of such report (with
------------------
exhibits) is available at the SEC's world wide web site (www.sec.gov).
-----------
PAGE 27
WEINGARTEN REALTY INVESTORS
MANAGEMENT DEVELOPMENT AND EXECUTIVE COMPENSATION
COMMITTEE OF THE BOARD OF TRUST MANAGERS
CHARTER
(ADOPTED OCTOBER 24, 2003)
A. PURPOSE
The primary functions of the Management Development and Executive
Compensation Committee (the "Committee") of Weingarten Realty Investors (the
---------
"Company") are to establish the compensation of executive officers and
-------
administer management incentive compensation plans. The Committee also will
review the development progress of key members of management.
B. MEMBERS
The Compensation Committee will be comprised of three or more trust
managers as determined by the board of trust managers (the "Board"), each of
-----
whom shall be an independent trust manager (as defined in the listing standards
of the New York Stock Exchange) and free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. Each member will also be: (i)
a "non-employee trust manager" for purposes of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 and (ii) an "outside trust manager" for purposes
of the regulations promulgated under Section 162(m) of the Internal Revenue
Code. The Chairman of the Committee (the "Chairman") is appointed by the Board.
--------
Members will serve at the pleasure of the Board and for such term or terms as
the Board may determine.
C. MEETINGS
The Committee will hold regular meetings as may be necessary and such
special meetings as may be called by the Chairman. A majority of the Committee
members will constitute a quorum for the transaction of business and an act of a
majority of the members present at any meeting at which there is a quorum shall
be the act of the Committee. All meetings may be held telephonically.
The Committee has the authority to delegate any of its responsibilities to
subcommittees as the Committee may deem appropriate in its sole discretion.
D. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Compensation Committee
will:
1. Review and approve corporate goals and objectives relevant to the
Chief Executive Officer's (the "CEO") compensation on at least an
---
annual basis, evaluate the CEO's performance in light of those goals
and objectives and determine the CEO's compensation level based on
this evaluation. In determining the long-term incentive component of
the CEO's compensation, the Committee will consider the Company's
performance and relative shareholder return, the value of similar
incentive awards to CEOs at comparable companies, the awards given to
the Company's CEO in past years and the Committee's assessment of the
CEO's current and expected contribution to the Company's success.
PAGE A-1
2. Approve the compensation of the Company's Chairman of the Board,
Vice Chairman and the CEO (collectively, the "Executive Officers").
------------------
3. Make recommendations to the Board regarding compensation
arrangements for trust managers.
4. Recommend to the Board the creation of any compensation or
employee benefit plan or program for employees, officers or trust
managers of the Company.
5. With respect to the Executive Officers, approve establishment and
modification of executive compensation and benefit programs, such as
salary ranges, deferred compensation, employment agreements and
severance arrangements.
6. Approve awards under restricted share, option and deferred
compensation plans for the officers of the Company that are reporting
persons for purposes of Section 16(a) of the Securities Exchange Act
of 1934, as amended.
7. Administer the restricted share, option and deferred compensation
plans and otherwise perform all duties delegated to the Committee by
the Board or pursuant to such plans.
8. Have the sole authority to retain and terminate any compensation
consultant engaged to assist in the evaluation of trust manager or
Executive Officer compensation, and the sole authority to approve such
firm's fees and other retention terms.
9. Approve the annual committee report on executive compensation for
inclusion in the Company's proxy statement.
10. Oversee the Company's succession and management development
programs and review the development of key employees.
11. Report regularly to the Board any issues that arise with respect
to the Committee's responsibilities.
12. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the Board
deems necessary or appropriate.
13. Conduct an annual performance evaluation of the Committee's
effectiveness.
PAGE A-2
WEINGARTEN REALTY INVESTORS
AUDIT COMMITTEE CHARTER
(AMENDED FEBRUARY 19, 2004)
PURPOSE
The Audit Committee (the "Audit Committee" or the "Committee") of Weingarten
--------------- ---------
Realty Investors (the "Company") shall assist the Board of Trust Managers (the
-------
"Board") in fulfilling its general oversight of: (1) the Company's financial
-----
reporting processes and the audit of the Company's financial statements,
including the integrity of the financial statements of the Company; (2) the
Company's compliance with ethical policies contained in the Company's Code of
Conduct and Ethics; (3) compliance with the Company's legal and regulatory
requirements; (4) the independence, qualification and performance of the
Company's independent auditors; (5) the performance of the Company's internal
audit function; and (6) risk assessment and risk management.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Audit Committee, and the Committee shall
receive appropriate funding, as determined by the Committee, for the payment of
fees of any such lawyers, accountants or consultants. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditors to attend a meeting of the Audit Committee or to meet
with any members of, or consultants to, the Audit Committee.
ORGANIZATION
This charter governs the operations of the Audit Committee. The Audit Committee
shall review and reassess the adequacy of this charter annually and recommend
any proposed changes to the charter to the Board for approval. The Company's
Governance and Nominating Committee shall nominate trust managers for
appointment to the Audit Committee. The Board will appoint Committee members
annually. The Board may remove Committee members at any time with or without
cause, by a majority vote. The Board will fill any vacancy on the Committee.
The Audit Committee shall be comprised of at least three directors, each of whom
is independent under the applicable New York Stock Exchange ("NYSE") listing
----
standards, as determined by the Board. All members of the Audit Committee must
meet the NYSE financial literacy requirements and at least one member must meet
the NYSE financial expertise requirements.
RESPONSIBILITIES AND PROCESSES
While the Audit Committee has the responsibilities and powers set forth in this
charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. Management
is responsible for preparing the Company's financial statements and the
Company's independent auditors are responsible for auditing the annual financial
statements and for reviewing the unaudited interim financial statements. Nor is
it the duty of the Audit Committee to conduct investigations to assure
compliance with laws and regulations and the Company's Code of Conduct and
Ethics.
PAGE B-1
The Audit Committee, in carrying out its responsibilities, believes its policies
and procedures should be reviewed periodically, in order to best react to
changing conditions and circumstances. The Audit Committee should take
appropriate actions to ensure a management environment for quality financial
reporting, sound business risk practices, and ethical behavior. The following
shall be the principal duties and responsibilities of the Audit Committee.
These are set forth as a guide with the understanding that the Audit Committee
may supplement them as appropriate.
In carrying out its responsibilities, the Audit Committee shall:
1. Retain, subject to shareholder ratification, the independent auditors of
the Company to conduct the examination of the books and records of the Company
and its affiliates, and terminate any such engagement if circumstances warrant.
The independent auditors are ultimately accountable to, and shall report
directly to, the Audit Committee. The Audit Committee shall provide oversight
of the work of the independent auditors, including resolution of disagreements
between management and the independent auditors regarding financial reporting.
2. Pre-approve all audit services and, to the extent such pre-approval is
required by law, all non-audit services provided by the independent auditors, as
well as the fees and terms for providing such services. The Audit Committee may
delegate pre-approval authority to a member of the Audit Committee. The
decisions of any Audit Committee member to whom pre-approval authority is
delegated must be presented to the full Audit Committee at its next scheduled
meeting.
3. At least annually, obtain and review a report by the independent auditors
describing: (i) the firm's internal quality-control procedures; (ii) any
material issues raised by the most recent internal quality-control review, or
peer review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting any
independent audits carried out by the firm and any steps taken to deal with any
such items; and (iii) all relationships between the independent auditor and the
Company.
4. Evaluate the performance of the Company's independent auditors and lead
audit partner, and report its conclusions to the full Board.
5. Meet with the Company's independent auditors and management to review the
scope of the proposed annual audit (and related quarterly reviews), the key
audit procedures to be followed and, at the conclusion of the audit, review the
principal audit findings including any comments or recommendations of the
Company's independent auditors.
6. Obtain assurance from the Company's independent auditors that it has
complied with its obligation to report any fraud identified in connection with
its audit of the financial statements of the Company.
7. Discuss the Company's annual audited financial statements and unaudited
quarterly financial statements with management and the independent auditors,
including management's discussion and analysis of financial condition and
results of operations. Discuss other matters with the Company's independent
auditors as required by the SEC and, if the financial statements are acceptable,
recommend that the audited financial statements be included in the Company's
Form 10-K. While the fundamental responsibility for the Company's financial
statements and disclosures rests with management, the Committee will review: (i)
major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company's selection or
application of accounting principles, and major issues as to the adequacy of the
Company's internal controls and any special audit steps adopted in light of
material control deficiencies; (ii) analyses prepared by management or the
independent auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the financial
PAGE B-2
statements and the treatment preferred by the independent auditors; (iii) the
effect of regulatory and accounting initiatives, as well as off-balance sheet
structures, on the financial statements of the Company; and (iv) earnings press
releases (paying particular attention to any use of pro-forma information and
non-GAAP information).
8. Approve the content of the report of the Audit Committee required by the
SEC to be included in the Company's annual proxy statement, and review and
approve all "related party transactions," as defined in applicable securities.
9. Meet, at least annually, with management to discuss, as appropriate,
significant accounting accruals, estimates and reserves; litigation matters;
management's representations to the independent auditors; new or proposed
regulatory accounting and reporting rules; any significant off-balance sheet
transactions and special purpose entities; disclosure controls and procedures;
and any significant financial reporting issues or judgments disputed with the
Company's independent auditors.
10. At least annually, receive from and discuss with the independent
auditors and management, separately or together as determined by the Committee,
a report on (i) all critical accounting policies and practices to be used; (ii)
all alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management of the Company,
the ramifications of the use of such alternative disclosures and treatments, and
the treatment preferred by the independent auditors; and (iii) other material
written communications between the independent auditors and management of the
Company, such as any management letter or schedule of unadjusted audit
differences.
11. Review quarterly with the Company's CEO and CFO (i) the adequacy and
effectiveness of the Company's internal controls, including any significant
deficiencies therein, (ii) any material weakness in the Company's internal
controls and (iii) any fraud, whether or not material, involving management or
other employees who have a significant role in the Company's internal controls.
12. Review annually with management and the independent auditors (i) the
internal control report contained in the Company's Annual Report on Form 10-K
regarding management's assessment of the effectiveness of the internal control
structure and procedures of the Company for financial reporting, and (ii) the
attestation and report of the independent auditors regarding management's
assessment of internal controls.
13. Discuss with the Company's independent auditors and management
information relating to the auditors' judgments about the quality, not just the
acceptability, of the Company's accounting principles and matters identified by
the auditors during its interim reviews. Also, the Committee shall discuss the
results of the annual audit and any other matters that may be required to be
communicated to the Audit Committee by the Company's independent auditors under
generally accepted auditing standards.
14. Discuss with management an outline of press releases regarding results
of operations, as well as general policies on financial information and earnings
guidance to be provided to analysts, rating agencies, and the general public.
Review any relevant items with management and the Company's independent auditors
prior to release of any such press releases or earnings guidance. The review
shall be with the Chairman of the Audit Committee or the full Audit Committee,
as may be appropriate.
15. At least quarterly, discuss separately with the Company's independent
auditors and management the adequacy and effectiveness of the Company's internal
accounting and financial controls, and elicit any recommendations for
improvement.
16. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditors, internal auditors or
management.
PAGE B-3
17. Discuss with management policies with respect to risk assessment and
risk management. While it is the job of the Company's management to assess and
manage the Company's exposure to risk, the Committee will discuss guidelines and
policies that govern the process. This discussion may include the Company's
financial risk exposures and the steps management has taken to monitor and
control exposure.
18. At least annually, receive and discuss with the independent auditors
their annual written statement regarding all relationships or services between
the independent auditors and the Company or any other relationships or services
that may impact their objectivity and independence.
19. Confirm that the Company's hiring policies conform to applicable SEC or
other external guidelines for employment by the Company of employees and former
employees of the independent auditors.
20. Confirm that neither the lead audit partner nor the concurring partner
of the independent auditor has performed audit services for the Company for more
than five consecutive fiscal years, and oversee the rotation of other audit
partners at least once every seven years.
21. Confirm that none of the Company's CEO, CFO, Chief Accounting Officer,
Controller or equivalent officers were employed by the independent auditor and
participated in any capacity in the audit of the Company during the one-year
period preceding the initiation of the audit.
22. Receive from management a summary of findings from completed audits (and
management's response) and a progress report on the proposed internal audit plan
with explanations for any material deviations from the original plan.
23. Review periodic reports from management with respect to, and advise the
Board regarding compliance with, the Company's Code of Conduct and Ethics.
24. Review with the Company's counsel legal matters that may have a material
impact on the financial statements.
25. Provide sufficient opportunity at its meetings to meet separately in
executive session with the Company's independent auditors and members of
management. Among the items to be discussed with the Company's independent
auditors are (i) the independent auditors' evaluation of the Company's financial
and accounting personnel; (ii) the cooperation that the independent auditors
received during the course of its audit; (iii) any management letter provided by
the independent auditors and management's response; and (iv) any other matters
the Audit Committee may determine from time to time.
26. Report regularly to the Board with respect to the Audit Committee's
activities.
27. Establish procedures for (i) the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal accounting
controls, or auditing matters; and (ii) the confidential, anonymous submission
by employees of the Company of concerns regarding questionable accounting or
auditing matters.
28. In consultation with the Governance Committee, conduct an annual
evaluation of the performance and effectiveness of the Audit Committee and
report the results of that evaluation to the Board.
29. As the Committee determines necessary to carry out its duties, obtain
advice and assistance from outside advisors, including the Company's legal,
accounting or other advisors.
PAGE B-4
--------------------------------------------------------------------------------
WEINGARTEN REALTY INVESTORS
---------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUST MANAGERS
The shareholder of Weingarten Realty Investors, a Texas real estate investment
trust, whose name and signature appear on the reverse side of this card hereby
appoints Stanford Alexander, Martin Debrovner and Andrew M. Alexander, or each
of them, the proxies of the shareholder, each with full power of substitution,
to vote at the annual meeting, and at any adjournments of the annual meeting,
all common shares of Weingarten that the shareholder is entitled to vote at the
annual meeting, in the manner shown on the reverse side of this card.
THE COMMON SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE
SHAREHOLDER'S DIRECTIONS ON THE REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS
GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR PROPOSALS 1. AND
2., AGAINST PROPOSAL 3., AND AT THE PROXIES' DISCRETION ON ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF,
SUBJECT TO LIMITATIONS SET FORTH IN APPLICABLE REGULATIONS UNDER THE SECURITIES
EXCHANGE ACT OF 1934.
Please vote this proxy card promptly, using one of the methods described on the
reverse side of this card. Thank you.
SEE REVERSE SIDE
[GRAPHIC OMITTED]
VOTE BY INTERNET - WWW.PROXYVOTE.COM
------------------
Use the internet to transmit your voting
instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting
date. Have your proxy card in hand when you
access the web site and follow the
instructions to obtain your records and to
create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 P.M.
Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand
when you call and then follow the
instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and
return it in the postage-paid envelope we've
provided or return to Weingarten Realty
Investors, c/o ADP,51 Mercedes Way, Edgewood,
NY 11717.
PLEASE VOTE THIS PROXY CARD PROMPTLY, USING
ONE OF THE METHODS DESCRIBED ABOVE.
THANK YOU.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
WEING1 KEEP THIS PORTION FOR YOUR RECORDS
-------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
WEINGARTEN REALTY INVESTORS
THE BOARD OF TRUST MANAGERS RECOMMENDS
--------------------------------------
A VOTE "FOR" PROPOSALS 1. AND 2.
--------------------------------
1. Election of Trust Managers.
FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE, MARK "FOR ALL EXCEPT"
01) Stanford Alexander 06) Melvin A. Dow All All EXCEPT AND WRITE THE NOMINEE'S NUMBER ON THE LINE BELOW.
02) Andrew M. Alexander 07) Stephen A. Lasher
03) J. Murry Bowden 08) Douglas W. Schnitzer [ ] [ ] [ ] ----------------------------------------------------
04) James Crownover 09) Marc J. Shapiro
05) Robert J. Cruikshank
The undersigned hereby revokes any
proxy previously given with respect
to Weingarten's common shares, and
hereby ratifies and confirms all
that the proxies, their substitutes
or any of them may lawfully do by
virtue hereof.
VOTE ON PROPOSALS For Against Abstain
[ ] [ ] [ ]
2. Ratification of Deloitte & Touche LLP as
Weingarten's independent auditors.
Note: Please sign exactly as
name(s) appear(s) on this proxy.
When shares are held jointly, both
should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. When executed
by a corporation or partnership,
please sign in full corporate or
partnership name by a duly
authorized officer or partner,
giving title.
THE BOARD OF TRUST MANAGERS UNANIMOUSLY For Against Abstain
---------------------------------------
RECOMMENDS A VOTE "AGAINST" [ ] [ ] [ ]
---------------------------
PROPOSAL 3.
----------
3. Shareholder proposal entitled
"Performance and Time-Based
Restricted Shares".
PLEASE VOTE THIS PROXY CARD
PROMPTLY, USING ONE OF THE METHODS
DESCRIBED ABOVE, THANK YOU.
In their discretion, the proxies are
authorized to vote upon all other matters
which may properly come before the
annual meeting or any adjournments of the
annual meeting.
YES NO
HOUSEHOLDING ELECTION - Please indicate
---------------------
if you consent to receive certain future
investor communications in a single
package per household [ ] [ ]
---------------------------------- --------- ------------------------ ---------
Signature [PLEASE SIGN WITHIN BOX] Date Signature [JOINT OWNERS] Date