UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Ramco-Gershenson Properties Trust

(Name of Registrant as Specified In Its Charter)

 

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RAMCO-GERSHENSON PROPERTIES TRUST
31500 NORTHWESTERN HIGHWAY, SUITE 300
FARMINGTON HILLS, MICHIGAN 48334

 

Dear Shareholder:

 

We invite you to attend the 2007 Annual Meeting of Shareholders of Ramco-Gershenson Properties Trust. The meeting will be held on Tuesday, June 5, 2007 at The Townsend Hotel, 100 Townsend Street, Birmingham, Michigan 48009 at 10:00 a.m., Eastern time. Your Board of Trustees and management look forward to greeting personally those shareholders who are able to attend.

 

The meeting has been called (1) to elect three Trustees (Class I) for three-year terms expiring in 2010, (2) to ratify the appointment of Grant Thornton LLP as the Trust’s independent registered public accounting firm for the year ending December 31, 2007 and (3) to transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The three Trustee nominees for election listed in the enclosed proxy materials are presently Trustees.

 

Your Board of Trustees recommends a vote FOR each of the listed nominees and FOR the ratification of the appointment of Grant Thornton LLP as the Trust’s independent registered public accounting firm for the year ending December 31, 2007. The accompanying proxy statement contains additional information for your careful review. A copy of the Trust’s annual report for 2006 is also enclosed.

 

It is important that your shares be represented and voted at the annual meeting, whether or not you plan to attend. You may vote in one of four ways: (1) via the telephone, (2) via the internet, (3) by completing and mailing the enclosed proxy card or voting instruction card, or (4) by casting your vote in person at the annual meeting.

 

Your continued interest and participation in the affairs of the Trust are greatly appreciated.

 

Sincerely,

 

Dennis E. Gershenson
Chairman, President and Chief Executive Officer

 

April 30, 2007

RAMCO-GERSHENSON PROPERTIES TRUST

 

NOTICE OF 2007 ANNUAL MEETING OF SHAREHOLDERS

JUNE 5, 2007

 

 

To the Shareholders of Ramco-Gershenson Properties Trust:

 

Notice is hereby given that the 2007 Annual Meeting of Shareholders of Ramco-Gershenson Properties Trust will be held at The Townsend Hotel, 100 Townsend Street, Birmingham, Michigan 48009, on Tuesday, June 5, 2007 at 10:00 a.m., Eastern time, for the following purposes:

 

(1) To elect three Trustees for terms to expire at the annual meeting of shareholders in 2010;

 

(2) To ratify the appointment of Grant Thornton LLP as the Trust’s independent registered public accounting firm for the year ending December 31, 2007; and

 

(3) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

 

Shareholders of record of the Trust’s common shares of beneficial ownership at the close of business on April 9, 2007 are entitled to receive notice of, and to vote at, the annual meeting and any adjournment or postponement thereof. Your vote is important. You may vote in one of four ways: (1) via the telephone, (2) via the internet, (3) by completing and mailing the enclosed proxy card or voting instruction card, or (4) by casting your vote in person at the annual meeting.

 

Shareholders can help the Trust avoid unnecessary expense and delay by promptly voting. The business of the annual meeting cannot be completed unless a majority of the outstanding voting shares of the Trust is represented at the meeting.

 

By Order of the Board of Trustees

 

Richard J. Smith
Chief Financial Officer and Secretary

 

TABLE OF CONTENTS

 

RAMCO-GERSHENSON PROPERTIES TRUST
31500 NORTHWESTERN HIGHWAY, SUITE 300
FARMINGTON HILLS, MICHIGAN 48334

 

 

PROXY STATEMENT

 

 

2007 ANNUAL MEETING OF SHAREHOLDERS

 

 

The accompanying form of proxy is solicited on behalf of the Board of Trustees of Ramco-Gershenson Properties Trust (the “Trust”) for use at the 2007 annual meeting of shareholders of the Trust. The annual meeting will be held at The Townsend Hotel, 100 Townsend Street, Birmingham, Michigan 48009 on Tuesday, June 5, 2007. The Trust expects to first mail these proxy materials on or about April 30, 2007 to shareholders of record of the Trust’s common shares of beneficial interest (the “Shares”). The Trust’s executive offices are located at 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334 (telephone: (248) 350-9900).

 

What is the purpose of the 2007 annual meeting of shareholders?

 

At the 2007 annual meeting, shareholders will act upon the matters outlined in the accompanying Notice of Meeting, including (1) the election of three Trustees to serve until the annual meeting of shareholders in 2010 and (2) the ratification of the appointment of Grant Thornton LLP (“Grant Thornton”) as the Trust’s independent registered public accounting firm for the year ending December 31, 2007.

 

In addition, management will report on the performance of the Trust and will respond to appropriate questions from shareholders. The Trust expects that representatives of Grant Thornton will be present at the annual meeting and will be available to respond to appropriate questions. Such representatives will also have an opportunity to make a statement.

 

Who is entitled to vote?

 

Only record holders of Shares at the close of business on the record date of April 9, 2007 are entitled to receive notice of the annual meeting and to vote the Shares that they held on the record date. Each outstanding Share is entitled to one vote on each matter to be voted upon at the annual meeting. Holders of preferred shares of beneficial interest are not entitled to vote at the annual meeting.

 

What constitutes a quorum?

 

The presence at the annual meeting, in person or by proxy, of the holders of a majority of the Shares outstanding on the record date will constitute a quorum for all purposes. As of the record date, 16,723,758 Shares were outstanding. Broker non-votes (defined below), and proxies marked with abstentions or instructions to withhold votes, will be counted as present in determining whether or not there is a quorum.

 

What is the difference between holding Shares as a shareholder of record and a beneficial owner?

 

Shareholders of Record.  If your Shares are registered directly in your name with the Trust’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those Shares, and these proxy materials (including a proxy card) are being sent directly to you by the Trust. As the shareholder of record, you have the right to grant your voting proxy directly to the Trust through the enclosed proxy card.

 

Beneficial Owners.  Most of the Trust’s shareholders hold their Shares through a broker, trustee, bank or other nominee rather than directly in their own name. If your Shares are so held, you are considered the beneficial owner of Shares, and these proxy materials (including a voting instruction card) are being forwarded to you by your broker, trustee, bank or nominee who is considered the shareholder of record with respect to those Shares. As the beneficial

owner, you have the right to direct your broker, trustee, bank or nominee on how to vote. However, since you are not the shareholder of record, you may not vote these Shares in person at the annual meeting unless you obtain a proxy from your broker, trustee, bank or nominee and bring such proxy to the annual meeting. Your broker, trustee, bank or nominee has enclosed a voting instruction card for you to use in directing the broker, trustee, bank or nominee on how to vote your Shares.

 

How do I vote?

 

You may be able to vote in one of four ways: (1) via the telephone, (2) via the internet, (3) by completing and mailing your proxy card or voting instruction card, or (4) by casting your vote in person at the annual meeting.

 

Via Telephone or Via Internet:  Please refer to the instructions on your proxy card or voting instruction card.

 

By Proxy Card or Voting Instruction Card:  If you complete and properly sign the accompanying proxy card (and return it to the Trust) or the voting instruction card (and return it to the applicable broker, trustee, bank or nominee), it will be voted as you direct.

 

By Vote at Annual Meeting:  If you are a shareholder of record and attend the annual meeting, you may deliver your completed proxy card in person or vote by ballot. If you are a beneficial owner but intend to vote your Shares in person, you must bring to the annual meeting a proxy from such broker, trustee, bank or other nominee confirming that you beneficially own such Shares and gives you the power to vote such Shares.

 

Can I change my vote after I return my proxy card or voting instruction card?

 

Shareholders of Record.  You may change your vote at any time before the proxy is exercised by filing with the Secretary of the Trust either a notice revoking the proxy or a properly signed proxy that is dated later than the proxy card. If you attend the annual meeting, the individuals named as proxy holders in the enclosed proxy card will nevertheless have authority to vote your Shares in accordance with your instructions on the proxy card unless you properly file such notice or new proxy.

 

Beneficial Owners.  If you hold your Shares through a bank, trustee, broker or other nominee, you should contact such person prior to the time such voting instructions are exercised.

 

What if I do not vote for some of the items listed on my proxy card or voting instruction card?

 

Shareholders of Record.  If you return your signed proxy card but do not mark selections, the selections not marked will be voted in accordance with the recommendations of the Board of Trustees. With respect to any other matter that properly comes before the annual meeting, the proxy holders named in the proxy card will vote as the Board recommends or, if the Board gives no recommendation, in their own discretion.

 

Beneficial Owners.  If you hold your Shares in street name through a broker, trustee, bank or other nominee and do not return the proxy card, such nominee will determine if it has the discretionary authority to vote on the particular matter. Under applicable law, brokers have the discretion to vote on routine matters, such as the uncontested election of trustees and the ratification of the appointment of the Trust’s independent registered public accounting firm, but do not have discretion to vote on non-routine matters. If the broker does not have discretionary authority to vote on a particular proposal, the absence of votes on that proposal with respect to your Shares will be considered “broker non-votes” with regard to that matter. Shares subject to broker non-votes will be considered present at the meeting for purposes of determining whether there is a quorum but the broker non-votes will not be considered votes cast with respect to that proposal.

 

What does it mean if I receive more than one proxy card or voting instruction card?

 

If you receive more than one proxy card or voting instruction card, it means that you have multiple accounts with banks, trustees, brokers, other nominees and/or the Trust’s transfer agent. Please sign and deliver each proxy card and voting instruction card that you receive. The Trust recommends that you contact your nominee and/or the transfer agent, as appropriate, to consolidate as many accounts as possible under the same name and address.

 

What are the Board’s recommendations?

 

The Board recommends a vote:

 

Proposal 1 — FOR the election of the nominated slate of Trustees.

 

Proposal 2 — FOR the ratification of Grant Thornton as the Trust’s independent registered public accounting firm for 2007.

 

What vote is required to approve each item?

 

Proposal 1 — Election of Trustees.  Nominees who receive the most votes cast at the annual meeting will be elected as Trustees. The slate of Trustees discussed in this proxy statement consists of three Trustees whose terms are expiring. A properly signed proxy with instructions to withhold authority with respect to the election of one or more Trustees will not be voted for such Trustee(s) so indicated and will have no effect on the outcome of the vote.

 

Proposal 2 — Ratification of Appointment of Independent Registered Public Accounting Firm.  The affirmative vote of a majority of the votes cast at the annual meeting will be necessary to ratify the Audit Committee’s appointment of Grant Thornton as the Trust’s independent registered public accounting firm for 2007. Abstentions are not considered votes cast at the annual meeting. Although shareholder ratification of the appointment is not required by law and is not binding on the Trust, the Audit Committee will take the appointment under advisement if such appointment is not so ratified.

 

Other Matters.  If any other matter is properly submitted to the shareholders at the annual meeting, its adoption will generally require the affirmative vote of a majority of the votes cast at the annual meeting. The Board of Trustees does not propose to conduct any business at the annual meeting other than as stated above.

 

How can I access the Trust’s proxy materials and annual report on Form 10-K?

 

As a holder of Shares, you should have received a copy of the 2006 Annual Report to Shareholders (which includes the Annual Report on Form 10-K) together with this proxy statement. See “Annual Report” and “Householding” for additional information.

 

The “Investor Info” section of the Trust’s website, www.rgpt.com, provides access, free of charge, to Securities and Exchange Commission (“SEC”) reports as soon as reasonably practicable after the Trust electronically files such reports with, or furnishes such reports to, the SEC, including proxy materials, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports. In addition, a copy of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2006, as filed with the SEC, will be sent to any shareholder, without charge, upon written request sent to the Trust’s executive offices: Investor Relations, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, MI 48334.

 

You may also read and copy any materials that the Trust files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including the Trust, at www.sec.gov.

 

The references to the website addresses of the Trust and the SEC in this proxy statement are not intended to function as a hyperlink and, except as specified herein, the information contained on such websites are not part of this proxy statement.

 

How do I find out the voting results?

 

Voting results will be announced at the annual meeting and will be published in the Trust’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2007.

 

The following table sets forth information regarding the beneficial ownership of the Trust’s equity as of April 9, 2007. Shares of the Trust’s preferred shares of beneficial interest held by Trustees or executive officers are specified in the applicable footnotes, but are not included in the table. Unless otherwise indicated in the table, each person’s address is c/o Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334. Further, unless otherwise indicated, each owner has sole voting and investment powers with respect to the Shares listed below.

 

 

 

 

 

The Board of Trustees currently consists of seven Trustees serving three-year staggered terms. Three Class I Trustees are to be elected at the 2007 annual meeting to serve until the annual meeting of shareholders in 2010. Nominees who receive the most votes cast at the annual meeting will be elected as Class I Trustees. The Board recommends that you vote FOR the election of the Class I Trustee nominees set forth below.

 

Each of the nominees has consented to serve a three-year term. If for any reason any of the nominees becomes unavailable for election, the Board may designate a substitute nominee. In such case, the persons named as proxies in the accompanying proxy card will vote for the Board’s substitute nominee.

 

The table below sets forth information regarding the Trustee nominees, all of whom currently serve as Class I Trustees. The years of Trustee service include service for the Trust’s predecessors.

 

 

The remaining Trustees, set forth below, are Class II Trustees (term expires in 2008) or Class III Trustees (term expires in 2009). The years of Trustee service include service for the Trust’s predecessors.

 

 

The following persons are the other executive officers of the Trust. Executive officers serve at the pleasure of the Board.

 

 

During 2006, the Board consisted of seven Trustees and held five meetings. The table below sets forth the membership and meeting information for the four standing committees of the Board in 2006 (1):

 

 

 

 

The Board has determined, after considering all of the relevant facts and circumstances, that each of Messrs. Blank, Goldberg, Meister, Pashcow and Rosenfeld, and therefore a majority of the Trustees, are independent Trustees in accordance with the NYSE listing standards and the Trust’s Corporate Governance Guidelines. To be considered independent, the Board must determine that a Trustee does not have any direct or indirect material relationships with the Trust and must meet categorical and other criteria set forth in the Trust’s Corporate Governance Guidelines. In respect of the independence of Mr. Pashcow, the Board considered the transaction set forth in “Related Person Transactions” and determined that such transaction did not impede his independence. In addition, after considering all of the relevant facts and circumstances, the Board has determined that each member of the Audit Committee of the Board qualifies under the Audit Committee independence standards established by the SEC. The Audit Committee, Compensation Committee, and Nominating and Governance Committee are composed entirely of independent Trustees.

 

Non-management Trustees hold regularly scheduled executive sessions in which non-management Trustees meet without the presence of management. These executive sessions generally occur around regularly scheduled meetings of the Board of Trustees. Mr. Blank serves as Lead Trustee in accordance with the Trust’s Corporate Governance Guidelines and therefore presides at such executive sessions. For information on how you can communicate with the Trust’s non-management Trustees, see “— Communicating with the Board.”

 

Trustees are expected to attend all Board and committee meetings, as well as the Trust’s annual meeting of shareholders. In 2006, all of the Trustees attended at least 75% of the aggregate of the meetings of the Board of Trustees and all committees of the Board on which they served. All of the Trustees attended the 2006 annual meeting of shareholders.

 

Audit Committee.  The Audit Committee is responsible for monitoring the integrity of the Trust’s consolidated financial statements, the Trust’s system of internal controls, the Trust’s risk management, the qualifications, performance and independence of the Trust’s independent registered public accounting firm, the performance of the Trust’s internal audit function and the Trust’s compliance with legal and regulatory requirements. The Audit Committee also has the sole authority and responsibility to appoint, determine the compensation of, evaluate and, when appropriate, replace the Trust’s independent registered public accounting firm. The Board has determined that Messrs. Blank, Rosenfeld and Goldberg are each an audit committee financial expert as defined in the rules and regulations of the SEC and have the accounting or related financial management expertise required by the NYSE listing standards. See “Proposal 1 — Election of Trustees” for a description of their relevant business experience. The Audit Committee’s charter is available on the Trust’s website under “Corporate Profile — Governance” at www.rgpt.com.

 

Compensation Committee.  The Compensation Committee administers the executive compensation program of the Trust. The Compensation Committee’s responsibilities include recommending and overseeing compensation

and benefit plans and policies, approving equity grants and otherwise administering share-based plans, and reviewing annually all compensation decisions relating to the Trust’s executive officers. See “Compensation Discussion and Analysis” for further information. The Compensation Committee’s charter is available on the Trust’s website under “Corporate Profile — Governance” at www.rgpt.com.

 

Nominating and Governance Committee.  The Nominating and Governance Committee is responsible for identifying and nominating individuals qualified to serve as Board members, recommending Trustees for each Board committee and overseeing the Trust’s Corporate Governance Guidelines. The Nominating and Governance Committee also is responsible for the Trust’s Code of Business Conduct and Ethics and considers any requests for waivers from such code. The Nominating and Governance Committee’s charter is available on the Trust’s website under “Corporate Profile — Governance” at www.rgpt.com.

 

Generally, the Nominating and Governance Committee will re-nominate incumbent Trustees who continue to satisfy its criteria for members on the Board and who it believes will continue to make important contributions to the Board. In recommending nominees to the Board, the Nominating and Governance Committee reviews the experience, mix of skills and background, independence and other qualities of a nominee to assure appropriate Board composition after taking into account the current Board members and the specific needs of the Trust and Board.

 

The Nominating and Governance Committee generally relies on multiple sources for identifying and evaluating nominees, including referrals from the Trust’s Board and management. The Nominating and Governance Committee does not solicit Trustee nominations, but will consider nominee recommendations by shareholders with respect to elections to be held at an annual meeting, so long as such recommendations are timely made and otherwise in accordance with the Trust’s Bylaws and applicable law. Such recommendations will be evaluated against the same criteria used to evaluate other nominees. The Trust did not receive any timely nominations by shareholders for the 2007 annual meeting of shareholders. Shareholder recommendations for nominees to be considered by the Nominating and Governance Committee should be submitted to the Chairman of the Nominating and Governance Committee at 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334. See “Additional Information — Shareholder Proposals at 2008 Annual Meeting” for information on making shareholder nominations at the annual meeting.

 

Executive Committee.  The Executive Committee is permitted to exercise all of the powers and authority of the Board of Trustees, except as limited by applicable law and by the Trust’s Bylaws. The Executive Committee’s charter is available on the Trust’s website under “Corporate Profile — Governance” at www.rgpt.com.

 

The Nominating and Corporate Governance Committee annually reviews trustee compensation and makes recommendations to the Board, the body responsible for approving trustee compensation, as appropriate. The Nominating and Corporate Governance Committee and Board believe that trustees should receive a mix of cash and equity. Compensation paid to the non-employee trustees is intended to provide incentives to such persons to continue to serve on the Board of Trustees and to attract new trustees with outstanding qualifications. Trustees who are employees or officers of the Trust or any of its subsidiaries do not receive any compensation for serving on the Board or any committees thereof.

 

Cash Retainer.  In 2006, each non-employee trustee earned $3,750 each quarter (paid in advance). In addition, the chair of the Audit Committee earned an additional annual retainer fee of $10,000 and the other members of the Audit Committee earned an additional annual retainer of $5,000. Further, the lead trustee (Mr. Blank) earned an additional $6,250 each quarter (paid in advance).

 

Equity Retainer.  In 2006, each non-employee trustee was granted (i) 250 common shares of beneficial interest each quarter (paid in advance) and (ii) 2,000 stock options under the Trust’s 2003 Non-Employee Trustee Stock Option Plan on the date of the Trust’s 2006 annual meeting of shareholders.

 

Meeting Fees.  In 2006, each non-employee trustee received $1,500 per meeting attended in person or $500 per meeting attended via telephone.

 

Required Attendance.  Additional retainer fees paid to each Audit Committee member are conditioned upon attendance by such trustee at 75% or more of the meetings of the Audit Committee.

 

Other.  The Trust reimburses all trustees for expenses incurred in attending meetings or performing their duties as trustees. The Trust does not provide any perquisites to trustees.

 

Trustee Compensation Table

 

 

 

 

The Trust has adopted a Code of Business Conduct and Ethics which sets forth basic principles to guide the conduct of Trustees and the Trust’s employees, including its principal executive officer, principal financial officer, principal accounting officer or controller and persons serving similar functions. The code covers numerous topics including illegal or unethical behavior, conflicts of interest, compliance with laws, corporate opportunities and confidentiality. A copy of the Trust’s Code of Business Conduct and Ethics is available on the Trust’s website under “Corporate Profile — Governance” at www.rgpt.com. Any waiver that relates to the Trustees or certain executive officers of the Trust will be publicly disclosed in such subsection on the Trust’s website.

 

The Trust has also adopted Corporate Governance Guidelines, which address, among other things, a Trustee’s responsibilities, qualifications (including independence), compensation and access to management and advisors. The Nominating and Governance Committee is responsible for overseeing and reviewing these guidelines and recommending any changes to the Board. A copy of the Trust’s Corporate Governance Guidelines is available on the Trust’s website under “Corporate Profile — Governance” at www.rgpt.com.

 

The Trust is required to comply with the NYSE listing standards applicable to corporate governance and on July 7, 2006, the Trust timely submitted the NYSE’s Annual CEO Certification pursuant to Section 303A.12 of the NYSE’s listing standards, whereby the CEO of the Trust, Mr. Dennis Gershenson, certified that he is not aware of any violation by the Trust of the NYSE’s corporate governance listing standards as of the date of the certification. In addition, the Trust has filed with the SEC, as exhibits to its Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2006, respectively, and its Annual Report on Form 10-K for the year ended December 31, 2006, certifications by the Trust’s CEO and CFO in accordance with Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

 

A copy of the Trust’s committee charters, Code of Business Conduct and Ethics and Corporate Governance Guidelines will be sent to any shareholder, without charge, upon written request sent to the Trust’s executive offices: Investor Relations, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334.

 

Any shareholder or interested party who desires to communicate with the Board or any specific Trustee(s) may write to the Board at the following address: Board of Trustees (or Lead Trustee), c/o Secretary, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334. All communications received by the Trust’s Secretary which are addressed to the Board of Trustees will be forwarded directly to the members of the Board.

 

Shareholders, Trust employees, officers, Trustees or any other interested persons who have concerns or complaints regarding accounting or auditing matters of the Trust are encouraged to contact, anonymously or otherwise, the Chairman of the Audit Committee (or any Trustee who is a member of the Audit Committee). Such admissions will be treated confidentially.

 

Overview of Compensation Program for Named Executive Officers

 

The Compensation Committee of the Board of Trustees, composed entirely of independent trustees, administers the executive compensation program of the Trust. The Committee’s responsibilities include recommending and overseeing compensation and benefit plans and policies, approving equity grants and otherwise administering share-based plans, and reviewing annually all compensation decisions relating to the Trust’s executive officers, including the Chief Executive Officer and the Chief Financial Officer and the other executive officers named in the “Summary Compensation Table” (the “named executive officers”). The Committee’s charter, which is reviewed at least annually by the Committee, reflects such responsibilities and is available for review in the “Corporate Profile — Governance” section of the Trust’s website (www.rgpt.com). The Committee last reviewed its charter in December 2006.

 

In 2006, the Committee had four meetings. The Committee customarily takes significant direction from the recommendations of Mr. Dennis E. Gershenson, the Trust’s Chairman, President and Chief Executive Officer, as it believes he has the best understanding of the overall effectiveness of the management team and each person’s individual contribution to the Trust’s performance. The Committee regularly meets in executive session to review the performance and determine the compensation of Mr. Gershenson and to discuss compensation issues generally outside the presence of management. With respect to all other executive officers, Mr. Gershenson reviews their performance, reviews compensation data provided by the Committee’s compensation consultants, and makes recommendations to the Committee as to each element of their compensation. The Committee retains discretion to modify Mr. Gershenson’s recommendations and reviews Mr. Gershenson’s compensation recommendations for their reasonableness based on the Committee’s compensation philosophy and related considerations.

 

The Committee has the authority to retain and obtain advice and assistance from internal or external legal, accounting or other advisors. Pursuant to such authority, the Committee customarily utilizes compensation consultants to assess the Trust’s competitive position regarding compensation and assist in the development and implementation of its compensation philosophy. The Committee’s charter provides that the Committee has the sole authority to retain and terminate compensation consultants of the Committee and the sole authority to approve engagement fees and other retention terms. In 2006, the Committee engaged two consultants, FPL Associates Compensation and Mercer Human Resource Consulting, and the Trust negotiated the consultant’s fees at the direction of the Committee. Representatives of Mercer participated in one of the Committee’s meetings in 2006, and FPL and Mercer each provided written analyses used by the Committee and Mr. Gershenson. FPL and Mercer provide additional compensation-related services to the Trust, primarily related to actuarial valuations and financial reporting analyses. The Trust’s legal advisors, human resources department and corporate accounting department support the Committee in its work pursuant to delegated authority to fulfill various functions in administering the compensation plans and programs.

 

In 2007, the Committee’s agenda includes considering change of control agreements for certain executive officers and revising Mr. Gershenson’s employment agreement, as well as taking steps to ensure the independence of the compensation consultants engaged to assist the Committee.

 

Compensation Philosophy and Objectives for Named Executive Officers

 

The Committee believes that the Trust’s executive compensation program should (i) establish and reinforce its pay-for-performance philosophy, (ii) motivate and reward the achievement of specific annual and long-term financial and strategic goals of the Trust, (iii) attract, retain and motivate key executives critical to the Trust’s initiatives, (iv) foster teamwork and individual growth, and (v) be competitive relative to peer companies. In light of these objectives, compensation of the named executive officers generally consists of base salary, an annual cash bonus, long-term incentive compensation and certain other benefits. For each of these elements, the Committee has determined that the Trust should generally pay the market median for the satisfaction of target goals and above-market pay when performance exceeds such targets; however, the Committee also recognizes that compensation targets must be flexible to address all of Committee’s objectives.

 

Tax and Accounting Implications

 

Deductibility of Executive Compensation

 

The Committee has reviewed the Trust’s compensation policies in light of Section 162(m) of the Internal Revenue Code of 1986, as amended (“IRC”), which generally limits deductions for compensation paid to certain executive officers to $1,000,000 per annum, subject to specified exceptions (the most significant of which is performance-based compensation), and has determined that the compensation levels of the Trust’s executive officers were not at a level that would be affected by such provisions. The Committee intends to continue to review the application of Section 162(m) with respect to any future compensation arrangements considered by the Trust.

 

Nonqualified Deferred Compensation

 

On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law, changing the tax rules applicable to nonqualified deferred compensation arrangements. The statutory rules were effective January 1, 2005, and the Committee believes the Trust is operating in good faith compliance with the rules. Final regulations became effective on April 17, 2007, applicable to taxable years beginning on or after January 1, 2008, and the Trust is reviewing such regulations to determine if any further action is required. For further discussion of the Trust’s nonqualified deferred compensation arrangements, see “2006 Compensation Components for Named Executive Officers — Deferred Stock.”

 

Accounting for Stock-Based Compensation

 

Beginning on January 1, 2006, the Trust began accounting for share-based payments in accordance with the requirements of FASB Statement No. 123(R), “Share-Based Payment.”

 

Timing and Pricing of Share-Based Grants

 

The Trust does not coordinate the timing of share-based grants with the release of material non-public information. Annual stock option grants for executive officers and other employees are generally made at the first Committee meeting each year (usually in February or March) with a grant date as of such approval or shortly thereafter. Further, restricted stock awards are subject to three-year performance measures, with the restricted stock granted generally at the first Committee meeting of the year following satisfaction of such performance measures. The Committee generally establishes dates for regularly scheduled meetings at least a year in advance.

 

In accordance with the Trust’s compensation plans, the exercise price of each stock option is the closing price of the Trust’s common shares of beneficial interest (as reported by the NYSE) on the date approved by the Committee to be the date of grant (which date is not earlier than the date the Committee approved such grant). The Committee is prohibited from repricing options, both directly (by lowering the exercise price) and indirectly (by canceling an outstanding option and granting a replacement stock option with a lower exercise price), without shareholder approval.

 

Policy Regarding Retroactive Adjustment

 

The Committee does not have a formal policy regarding whether it will make retroactive adjustments to cash or share-based incentive compensation paid to executive officers in which the payment was predicated upon the achievement of certain financial results that are subsequently the subject of a restatement. The Committee reserves the right to seek to recover any amount determined to have been inappropriately received by the executive officers to the extent permitted by applicable law.

 

Peer Group Analyses

 

In 2006, FPL and Mercer prepared analyses of executive officer compensation for the Committee and Mr. Gershenson. FPL’s analysis was based on information from FPL’s proprietary database (including 2005 proxy data, annual FPL surveys and projects completed by FPL in the real estate and related financial services industries), while Mercer’s study was based solely on 2005 proxy data. The Committee anticipates utilizing similarly focused

surveys every two to three years, and the Committee will review the peer groups at such time to ensure that the appropriate benchmarks are utilized.

 

FPL and Mercer utilized the same two peer groups in their respective 2006 analyses: (i) a group of twelve public REITs with primarily shopping center assets (the “asset-based peer group”), and (ii) a group of fourteen public REITs with market capitalizations similar to the Trust (collectively, the “size-based peer group”). The consultants also combined the two peer groups into a blended peer group (the “blended peer group”) to create a balanced view of the competitive markets. The Trust was ranked in the lower quartile of the asset-based peer group, while it was near the median of the size-based peer group.

 

The companies comprising the asset-based peer group were:

	•	Acadia Realty Trust
	•	Agree Realty Corporation
	•	Developers Diversified Realty Corporation
	•	Equity One, Inc.
	•	Federal Realty Investment Trust
	•	Glimcher Realty Trust

	•	Heritage Property Investment Trust, Inc.*
	•	New Plan Excel Realty Trust, Inc.**
	•	Pan Pacific Retail Properties, Inc.*
	•	Regency Centers Corporation
	•	Saul Centers, Inc.
	•	Weingarten Realty Investors

 

The companies comprising the size-based peer group were:

	•	Acadia Realty Trust
	•	Affordable Residential Communities Inc.
	•	Bedford Property Investors, Inc.*
	•	Boykin Lodging Company*
	•	Capital Lease Funding, Inc.
	•	EastGroup Properties, Inc.
	•	First Potomac Realty Trust

	•	Getty Realty Corp.
	•	Investors Real Estate Trust
	•	MeriStar Hospitality Corporation*
	•	Parkway Properties, Inc.
	•	Saul Centers, Inc.
	•	Tanger Factory Outlet Centers, Inc.
	•	The Town and Country Trust*

 

 

2006 Compensation Components for Named Executive Officers

 

In 2006, the principal components of compensation for the named executive officers were base salary, the annual cash bonus, long-term incentive awards, perquisites, contributions to defined contribution plans and customary benefits provided to all salaried employees. The Trust does not maintain any defined benefit pension plans or defined benefit SERPs for its named executive officers and does not have any severance/change of control arrangements other than pursuant to the employment agreements of Messrs. Gershenson and Litzler and the Trust’s benefit plans.

 

Base Salary

 

Each named executive officer receives a base salary paid in cash. The Trust does not have existing plans that permit the deferral of base salary other than in connection with defined contribution plans.

 

The Committee believes that base salary is a significant factor in attracting and retaining key employees and also serves to preserve an employee’s commitment to the Trust during any downturns. The base salaries of named executive officers are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. Annual merit increases are generally effective January 1^st of the applicable year.

 

Historically, the Committee relies heavily on peer group analyses in determining annual salary increases while also considering the Trust’s overall performance. Mr. Gershenson may also consider the individual’s experience, current performance and potential for advancement in determining his recommendations. Mr. Gershenson’s recommendation as to Mr. Smith’s base salary is guided by the peer group analyses to a greater extent than for the other named executives officers due to the existence of more reliable peer data regarding chief financial officers.

 

In 2006, the Committee approved a base salary increase of approximately 4% for Mr. Gershenson. Further, principally based on Mr. Gershenson’s recommendations which the Committee determined were reasonable, the Committee approved base salary increases of 0% to 10% for the other named executive officers. The competitive market analyses confirmed that such base salary increases were on average near the market median of the blended peer group, although it varied on an individual level.

 

Annual Cash Bonus

 

The Committee believes the Trust’s annual cash bonus provides a meaningful incentive for the achievement of short-term corporate, department and individual goals, while assisting the Trust in retaining, attracting and motivating employees in the near term. The Trust does not have existing plans that permit persons to defer the annual cash bonus.

 

Mr. Gershenson and Mr. Smith.  The annual cash bonuses to Mr. Gershenson and Mr. Smith are primarily determined using the peer group analyses and a review of the Trust’s overall performance. Significant variations from year to year are typically reserved for unusual or nonrecurring events. It should be noted that in accordance with Mr. Gershenson’s employment agreement, Mr. Gershenson’s bonus has a floor based on the following formula:

 

 

However, Mr. Gershenson’s bonus has historically been influenced by the peer group analyses and the Trust’s overall performance, which has resulted in bonuses significantly higher than the minimum requirement.

 

The competitive market analyses confirmed that the cash bonuses earned by Mr. Gershenson and Mr. Smith in 2005 approximated the market median of the blended peer group. In March 2007, the Committee determined to pay Mr. Gershenson the same cash bonus as in the prior year, while Mr. Smith’s cash bonus was increased 12.5%, as set forth in the “Summary Compensation Table.”

 

Other Named Executive Officers.  The annual cash bonus program for other named executive officers and certain other employees of the Trust was established with the assistance of Mercer in 2004 and is based upon the achievement of corporate, department and individual goals. In the fourth quarter preceding the applicable year, in connection with the Trust’s budget forecasting process and primarily based upon the recommendations of Mr. Gershenson, the Committee and the Board review and approve corporate financial goals for the applicable year. Other corporate goals, including strategic and other measures, are generally determined in the discretion of Mr. Gershenson, in consultation with Mr. Smith. Based upon such corporate performance goals, the other named executive officers establish department and individual goals for themselves that are tailored to achieving the corporate goals; these goals are reviewed by senior management to ensure that they are reasonable.

 

Preliminary amounts payable under the program are determined in accordance with a pre-established formula: the corporate, department and individual goals represent 30%, 50% and 20% of the estimated bonus, while the satisfaction of the threshold, target and maximum performance measures for such goals equate to payouts of 20%, 40% and 60% of base salary, respectively. For example, if an eligible employee satisfies the threshold amount of the corporate goal, such person would receive a preliminary bonus of 6% of base salary for such component (corporate weighting (30%) multiplied by threshold payout (20%)); the preliminary bonus is the aggregate amount of the three underlying components. In calculating the preliminary bonus amounts, the Committee does not prorate the amounts between the threshold, target and maximum. However, Mr. Gershenson and the Committee retain discretion to amend the preliminary amounts based upon an individual’s experience, potential for advancement and atypical events.

 

Upon the completion of applicable year, Mr. Gershenson recommends bonuses to the Committee based upon the foregoing. In March 2007, principally based on Mr. Gershenson’s recommendations which the Committee

determined were reasonable, the Committee approved the 2006 bonuses set forth in the “Summary Compensation Table.”

 

Signing Bonus for Mr. Thomas Litzler.  In connection with Mr. Litzler’s employment agreement, he received a $100,000 signing bonus in March 2006. Mr. Litzler’s signing bonus was not taken into account by Mr. Gershenson or the Committee in determining his annual cash bonus for services provided in 2006.

 

Long-Term Incentive Compensation

 

In 2003, Mercer assisted the Committee in designing the shareholder-approved 2003 Long-Term Incentive Plan (“LTIP”) to supplement its historical practice of granting stock options. The Committee believes the LTIP provides the strongest inducement for employees to focus on the Trust’s long-term business goals and strategies by motivating and rewarding the creation of long-term value, thereby improving the Trust’s financial performance and creating long-term value for shareholders. These programs also facilitate teamwork and assist the Trust in maintaining a stable management team.

 

In the first quarter of the applicable year, the Committee approves a long-term incentive dollar target for each named executive officer based upon a percentage of base salary, with such target tailored to the median of the blended peer group (although the Committee may consider other retention or performance considerations). The long-term incentive dollar targets are principally based on recommendations from the compensation consultants and Mr. Gershenson. In 2006, the Committee approved long-term incentive targets of 60% to 120% of base salary for the named executive officers, which is consistent the 2004 and 2005 long-term incentive programs.

 

The long-term incentive dollar target is then divided into three components: stock option grants, cash awards and restricted stock grants. In 2006, the Committee determined that the target award for stock options, cash and restricted stock would be 25%, 25% and 50%, respectively, of the long-term incentive dollar target, which is consistent with the 2004 and 2005 long-term incentive programs. The purpose of the cash award is to allow participants to cover the expected tax liability each year when the restricted stock vests.

 

Stock Options.  Nonqualified stock options are granted on an annual basis with an exercise price equal to the closing price of the Trust’s common shares of beneficial interest on the NYSE on the grant date. The stock options vest one-third per annum beginning on the first anniversary of the grant date. Each stock option represents the right to purchase one common share of beneficial interest of the Trust and has a term of ten years.

 

The grant to each named executive officer is that number of stock options having a present value (as determined using a seven-year stock appreciation estimate) equal to 25% of such person’s long-term incentive dollar target. The Committee has the discretion to vary the number of options above or below the targeted level by 25% based on individual performance considerations, but has not used such discretion to date. Stock option grants made in 2006 are set forth in the “Grants of Plan-Based Awards in 2006” table.

 

Restricted Stock Grants and Cash Award.  The restricted stock and cash are earned based on the achievement of specific performance measures over a period of three calendar years; such measures are established by the Committee at the beginning of the three-year period and thereafter communicated to eligible employees. For awards made in 2004 and 2005, there were three performance measures utilized: adjusted EBITDA return on assets (30%), growth in funds from operations (30%) and relative total shareholder return (40%). In 2006, based upon Mercer’s recommendation, the Committee eliminated total shareholder return as a component due to the significant accounting implications; as such, the first two components were weighted 50% each. The Committee has discretion to adjust the performance measures during the performance period for unusual or nonrecurring events affecting the Trust or its financial statements or changes in applicable laws, regulations or accounting principles.

 

Upon completion of the performance period, the Committee will compare actual performance against the target performance levels. The target cash award is 25% of the long-term incentive dollar target, and the satisfaction of the threshold, target and maximum performance measures result in cash payouts of 50%, 100% and 150% (with pro-ration), respectively, of such dollar target. The restricted stock award equals 50% of the long-term incentive dollar target divided by the closing price of the Trust’s common shares on the grant date of the award. The satisfaction of the threshold, target and maximum performance measures results in actual restricted share grants of 50%, 100% and 150% (with pro-ration), respectively, of the target restricted share grant.

 

The grant date and vesting periods for the awards are as follows: (i) the restricted stock will be granted generally at the first Committee meeting following the end of the performance period and such restricted stock will vest one-third per annum beginning on the first anniversary of the grant date; and (ii) the cash award also will vest one-third per annum beginning on the first anniversary of the restricted stock grant date. Each share of restricted stock represents the right to receive one common share of beneficial interest of the Trust upon vesting. The holder of the restricted stock has all the rights of a holder of common shares (other than free transfer rights), including voting rights and cash dividend rights.

 

With respect to the 2004 awards, one of the three performance measures were satisfied as of December 31, 2006, which equated to restricted stock grants and cash awards of 38% of their respective target award. The cash award earned as of December 31, 2006 is reflected in the “Summary Compensation Table” while the restricted stock grant is reflected in the “Outstanding Equity Awards at December 31, 2006” table. The 2005 awards are reflected in the “Outstanding Equity Awards at December 31, 2006” table, and the 2006 awards are reflected in the “Grants of Plan-Based Awards in 2006” and “Outstanding Equity Awards at December 31, 2006” table. Further, the financial statement expense related to the 2004-2006 restricted stock awards are reflected in the “Summary Compensation Table.”

 

Nonrecurring Restricted Stock Grants.  

 

On June 12, 2006, in connection with Mr. Litzler’s employment agreement, the Trust granted 3,703 shares of restricted stock to Mr. Litzler under the LTIP in consideration of the value of restricted shares and stock options which lapsed due to the termination of his prior employment. The restricted stock vests one-third per annum beginning on the first anniversary of the grant date.

 

On March 8, 2007, the Committee determined to grant Mr. Gershenson an additional 5,000 shares of restricted stock under the LTIP in recognition of his exemplary work on specified joint venture projects. The restricted stock vests one-third per annum beginning on the first anniversary of the grant date. These grants will be reflected in the “Stock Awards” column of the “Summary Compensation Table” in 2007.

 

Perquisites and Other Personal Benefits

 

The Trust historically provides named executive officers with perquisites and other personal benefits that the Committee believe are reasonable and consistent with its overall compensation program to enable the Trust to attract and retain employees for key positions. Mr. Gershenson periodically reviews existing perquisites and other personal benefits provided to named executive officers and recommends material changes, if any, to the Committee for approval. See the “Summary Compensation Table” for a description of certain perquisites provided to named executive officers in 2006.

 

Deferred Stock

 

In December 2003, Messrs. Gershenson, Smith and Zantello entered into deferral agreements with the Trust whereby they irrevocably committed to defer the gain on the exercise of specified stock options. See “Executive Compensation Tables — Potential Payments Upon Termination or Change-in-Control — Trust Share-Based Plans — Deferred Stock” for additional information.

 

In connection with his deferral agreement, Mr. Smith deferred the gain upon the exercise of specified stock options in November 2006. See the “Nonqualified Deferred Compensation in 2006” table for additional information on the deferral program.

 

Contingent Compensation

 

The Trust has entered into employment agreements with Messrs. Gershenson and Litzler which provide for specified severance benefits, including upon a change of control. See “Potential Payments Upon Termination or Change-in-Control” for further information. Other than as provided for in such employment agreements and the Trust’s benefit plans, the Trust does not have any specific contingent pay arrangements with any named executive officer.

 

Customary Benefits

 

The Trust also provides customary benefits such as medical, dental and life insurance and disability coverage to each named executive officer, which is generally provided to all other eligible employees. The Trust also provides vacation and other paid holidays to all employees, including the named executive officers, which are comparable to those provided at similar companies.

 

The Compensation Committee of the Trust has reviewed and discussed the Compensation Discussion and Analysis (CD&A) in this proxy statement with management, including the Chief Executive Officer. Based on such review and discussion, the Compensation Committee recommended to the Board of Trustees that the CD&A be included in the Trust’s annual report on Form 10-K for the year ended December 31, 2006 and the proxy statement for the 2007 annual meeting of shareholders.

 

The Compensation Committee

 

Arthur H. Goldberg (Chairman)
Stephen R. Blank
Robert A. Meister

 

None of the members of the Compensation Committee is or has been an officer or an employee of the Trust. In addition, during 2006, none of the Trust’s executive officers served on the board of directors or compensation committee (or committee performing equivalent functions) of any other company that had one or more executive officers serving on the Trust’s Board of Trustees or Compensation Committee.

 

The table below summarizes the total compensation paid or earned by each of the named executive officers in 2006.

 

 

 

 

 

 

 

 

 

The following table provides information about equity and non-equity awards granted to the named executive officers in 2006.

 

 

 

 

The following table provides information on the current holdings of stock option and stock awards by the named executive officers as of December 31, 2006.

 

 

 

 

 

 

No stock awards vested in 2006. The following table provides information on Mr. Smith’s deferred gain upon the exercise of stock options in accordance with his deferral agreement. See “Compensation Discussion and Analysis — 2006 Compensation Components for Named Executive Officers — Deferred Stock” and the “Nonqualified Deferred Compensation in 2006” table for additional information on such deferral arrangement.

 

 

 

 

The table below provides information on the nonqualified deferred compensation of the named executive officers in 2006.

 

 

 

 

The following section describes potential payments and benefits to the named executive officers under the Trust’s compensation and benefit plans and arrangements upon termination of employment or a change of control of the Trust.

 

Messrs. Gershenson and Litzler are each party to an employment agreement with the Trust. The Trust is not party to any other employment agreement or change of control agreement with the named executive officers. Certain of the Trust’s benefit plans and arrangements contain provisions regarding acceleration of vesting and payment upon specified termination events; see “— Trust Share-Based Plans” below. In addition, the Trust may authorize discretionary severance payments to its named executive officers upon termination.

 

Trust Share-Based Plans

 

2003 Long-Term Incentive Plan

 

Upon a change in control, any nonqualified stock options and restricted stock outstanding as of the change of control will immediately vest in full; notwithstanding the foregoing, (i) the Compensation Committee may set forth alternative change of control terms at the time of the grant and (ii) a vote by three-fourths of the Board may

determine alternative terms at any time, so long as a majority of Trustees then in office are ‘continuing trustees’ as defined therein. Further, during the 60-day period from and after a change of control, the Compensation Committee may grant holders of stock options the right to surrender all or part of such stock options to the Trust, whether or not the stock options are fully exercisable, in exchange for cash per share equal to the fair market value less the exercise price.

 

Other than in connection with a change of control, if an employee is terminated for any reason, any restricted stock will be forfeited; however, the Compensation Committee is authorized to waive such forfeiture in the event of retirement, permanent disability, death or other special circumstances as determined by the Compensation Committee in its sole discretion.

 

Other than in connection with a change of control, if an employee is terminated for cause, such employee’s stock options, even if immediately exercisable, will terminate (although the Committee retains discretion to permit the exercise of such stock options until the earlier of 30 days and the stock option’s expiration date). If an employee is terminated for any reason other than a change of control, death or disability or for cause, then such employee’s stock options may be exercised, to the extent such stock options were exercisable before termination, for the lesser of six months (or longer, at the discretion of the Compensation Committee) or until the stock option’s expiration date. Stock options held by an employee whose employment is terminated due to death or disability will immediately vest in full, and the legal representative or beneficiary may exercise such stock options until the lesser of one year (or longer, at the discretion of the Compensation Committee) or the stock option’s expiration date. The foregoing terms are set forth in the nonqualified stock option agreements covering all outstanding stock options granted under the 2003 Long-Term Incentive Plan as of December 31, 2006.

 

Incentive stock options are subject to different termination and change of control provisions, but no incentive stock options have been granted under the 2003 Long-Term Incentive Plan as of December 31, 2006.

 

Deferred Stock

 

In December 2003, Messrs. Gershenson, Smith and Zantello entered into deferral agreements with the Trust whereby they irrevocably committed to defer the gain on the exercise of specified stock options until the earlier of a period of five years, a termination for cause, or upon a change of control (if followed by termination of employment within six months of such change of control). Such persons may irrevocably elect to extend the deferral period two times, in each case for a period of at least 24-months, subject to specified requirements. The Trust may accelerate the payout of the deferred award in the event of specified circumstances. Persons are fully vested in such deferral accounts. Until the deferred shares are issued, such persons receive distributions in cash when, and in the amount of, cash dividends paid on the Trust’s common shares of beneficial interest. Such persons do not have rights as a shareholder with respect to the deferral accounts.

 

Cash Awards

 

Upon termination or upon a change of control, the Compensation Committee intends to accelerate the vesting of cash awards in the same manner as the restricted stock.

 

Dennis Gershenson’s Employment Agreement

 

The Trust entered into an employment agreement with Mr. Gershenson, the Trust’s President and Chief Executive Officer, which had an initial period of three years commencing on May 10, 1996, subject to automatic one-year extensions thereafter, provided that (i) the Board has considered the extension of such term not more than 90 days nor less than 30 days prior to the expiration of the term and (ii) neither party has given written notice to terminate the agreement at least 20 days prior to the expiration date. The employment agreement has been automatically extended through May 9, 2007.

 

The employment agreement provides for an annual base salary of not less than $100,000, with adjustments to be considered annually by the Committee (provided such base salary will not be reduced below $100,000), as well as other fringe benefits and perquisites as are generally made available to the Trust’s executives. In addition to base salary, Mr. Gershenson shall receive annual and long-term performance-based compensation as determined by the

Committee. See “Compensation Discussion and Analysis — 2006 Compensation Components for Named Executive Officers — Annual Cash Bonus” for a description of the minimum bonus to be paid to Mr. Gershenson upon the satisfaction of specified performance measures.

 

If Mr. Gershenson’s employment is terminated without cause or he terminates such employment for good reason, including a change of control, Mr. Gershenson will receive: (i) accrued base salary through the termination date; (ii) a lump sum severance payment no later than the 30th day following the date of termination equal to the greater of (y) the aggregate of all compensation due to Mr. Gershenson for the remainder of the term of his employment agreement (assuming an annual bonus equal to the average bonus under the employment agreement), or (z) 1.99 times the “base amount”, as defined by Section 280G of the IRC; (iii) an amount equal to Mr. Gershenson’s tax liability, if the severance payment constitutes an excess “parachute payment” as defined in the IRC, and an amount equal to all income tax payable by Mr. Gershenson upon such additional payment; and (iv) fringe benefits and perquisites as are generally made available to the Trust’s executives for the duration of the term of the employment agreement.

 

If Mr. Gershenson’s employment is terminated for cause or he terminates such employment without good reason, Mr. Gershenson will receive the accrued and unpaid portion of his base salary, bonus and benefits through the effective date of termination.

 

If Mr. Gershenson’s employment is terminated due to death or permanent disability, Mr. Gershenson (or his legal representative or beneficiary) will receive severance payments in the amount of his base salary and bonus for a period of 12 months following the termination date. In the case of permanent disability, Mr. Gershenson will also receive fringe benefits during such period.

 

In accordance with such employment agreement, Mr. Gershenson has also entered into a noncompetition agreement with the Trust. The noncompetition agreement provides that, following termination of Mr. Gershenson’s employment, Mr. Gershenson, subject to specified limitations: (i) will not hire any person that is, or was within the prior 12 months, a Trust employee making at least $60,000 per year in base salary, and he will not solicit such person to leave the employ of the Trust; (ii) will not, directly or indirectly, acquire, develop, construct, operate, manage or lease any existing Trust property or project; (iii) will not compete with the Trust within a 200 mile radius of any Trust property or project that existed within the prior 12 months; and (iv) will maintain the confidential and/or proprietary information of the Trust. The provisions in clauses (i) — (iii) will terminate one year after Mr. Gershenson is no longer an officer or trustee of the Trust.

 

Thomas Litzler’s Employment Agreement

 

The Trust entered into an employment agreement with Mr. Litzler, the Trust’s Executive Vice President of Development and New Business Initiatives. Mr. Litzler’s employment agreement provides for a term commencing on February 28, 2006 and expiring on December 31, 2007.

 

The employment agreement provides for an annual base salary of $295,000, as well as an annual cash bonus for which his target bonus is 40% of his base salary. In addition, Mr. Litzler will receive long-term performance-based compensation as determined by the Committee (with an initial target of 90% of base salary under the 2003 Long-Term Incentive Plan), as well as other fringe benefits and perquisites as are generally made available to the Trust’s executives. Further, the Trust provided a $100,000 signing bonus to Mr. Litzler and granted him 3,703 restricted common shares of the Trust which represent the value of restricted stock and stock options which lapsed due to Mr. Litzler’s change of employment.

 

If Mr. Litzler’s employment is terminated without cause and not upon a change of control during the term, Mr. Litzler will receive the greater of (i) his base salary remaining during the balance of the term of the agreement or (ii) one year’s base salary. Further, if the Trust refuses to employ Mr. Litzler for 2008 without cause, or he is employed by the Trust in 2008 and terminated without cause and not upon a change of control, then he will receive one year’s base salary (of at least $295,000).

 

If Mr. Litzler’s employment is terminated without cause and within 12 months of a change in control, Mr. Litzler will receive: (i) the pro-rata portion of his base salary through the date of termination; (ii) two years’ base salary at the rate in effect on the date of termination; (iii) an amount equal to the product of two multiplied by his

most recent bonus; and (iv) the vesting of any stock options or other plan benefits remaining unvested on the date of his termination.

 

If Mr. Litzler’s employment is terminated due to death or disability, Mr. Litzler will received any accrued and unpaid base salary through the termination date.

 

Such employment agreement also includes customary confidentiality and non-solicitation provisions.

 

Change of Control/Severance Payment Table

 

The following table estimates the potential payments and benefits to the named executive officers upon termination of employment or a change of control, assuming such event occurs on December 31, 2006. These estimates do not reflect the actual amounts that would be paid to such persons, which would only be known at the time that they become eligible for payment and would only be payable if the specified event occurs.

 

Items Not Reflected in Table

 

The following items are not reflected in the table set forth below:

 

 

Change of Control Payments — IRC Section 280G valuation

 

IRC Section 280G imposes tax sanctions for payments made by the Trust that are contingent upon a change of control and equal to or greater than three times an executive’s most recent five-year average annual taxable compensation (referred to as the ‘base amount’). If tax sanctions apply, contingent payments, to the extent they exceed an allocable portion of the base amount, become subject to a 20% excise tax (payable by the executive) and are not deductible by the Trust. Key assumptions in this analysis include:

 

 

Other Notes Applicable to Table

 

 

Change of Control and Severance Payments