SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
ST. JOE
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(Name of Registrant as Specified In Its Charter)
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[LOGO] ST. JOE
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 2002
The 2002 Annual Meeting of Shareholders of The St. Joe Company will be
held at the Radisson Riverwalk Hotel, 1515 Prudential Drive, Jacksonville,
Florida on Tuesday, May 21, 2002, at 10:00 a.m. Eastern Daylight Savings Time.
Shareholders will vote on the following matters:
1. Election of nine members to the Board of Directors;
2. Management's proposal to adopt the 2001 Stock Incentive Plan, which
is described in the accompanying Proxy Statement;
3. Ratification of the appointment of KPMG LLP as the Company's
independent accountants for the 2002 fiscal year; and
4. Any other matters properly brought before the meeting.
Shareholders of record as of the close of business on April 5, 2002 are
entitled to vote at the meeting or any continuance of the meeting.
We hope you will attend the meeting in person. We urge you to designate
the proxies named on the enclosed card to vote your shares whether or not you
attend the meeting. This will ensure your shares will be represented at the
meeting. The Proxy Statement describes proxy voting. Please read it carefully.
The Annual Report containing financial data and a summary of operations
for 2001 is enclosed.
We look forward to your participation.
By Order of the Board of Directors.
/s/ ROBERT M. RHODES
Robert M. Rhodes
Dated: April 26, 2002
THE ST. JOE COMPANY
1650 PRUDENTIAL DRIVE, SUITE 400
JACKSONVILLE, FLORIDA 32207
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PROXY STATEMENT
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This Proxy Statement contains information about the Annual Meeting of
Shareholders of The St. Joe Company (the "Meeting").
The Meeting will be held on Tuesday, May 21, 2002, beginning at 10:00
a.m., at the Radisson Riverwalk Hotel, 1515 Prudential Drive, Jacksonville,
Florida.
"We", "Our", "St. Joe" and the "Company" each refers to The St. Joe
Company.
This Proxy Statement is first being sent to our Shareholders on or about
April 29, 2002.
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE? You are entitled to vote your stock if our records show that
you held your shares as of April 5, 2002. At the close of business on April 5,
2002, 80,372,968 shares of Common Stock of the Company (the "Common Stock") were
outstanding and entitled to vote. Each share of Common Stock has one vote. The
enclosed Proxy Card shows the number of shares you are entitled to vote. Your
individual vote is confidential and will not be disclosed to third parties
except as required by law.
MATTERS TO BE CONSIDERED. You will be asked to consider three proposals at
the Meeting. Proposal 1 asks you to elect a Board of Directors, comprised of
nine members, to serve until the next Annual Meeting; Proposal 2 asks you to
approve the adoption of the 2001 Stock Incentive Plan; and Proposal 3 asks you
to ratify the appointment of our independent auditors for the 2002 fiscal year.
VOTING BY PROXIES. If your Common Stock is held by a broker, bank or other
nominee, you will receive instructions from them which you must follow in order
to have your shares voted. If you hold your shares in your own name as a holder
of record, you may instruct the proxies how to vote your Common Stock, by
signing, dating and mailing the Proxy Card in the postage-paid envelope which we
have provided to you. The proxies will vote your shares in accordance with your
instructions. If you sign and return a Proxy Card without giving specific voting
instructions, your shares will be voted as recommended by our Board of
Directors. We are not aware of any other matters to be presented at the meeting
except for those described in this Proxy Statement. If any other matters not
described in this Proxy Statement are properly presented at the Meeting, the
proxies will use their own judgment to determine how to vote your shares. If the
Meeting is continued, your Common Stock may be voted by the proxies at the
continued Meeting as well, unless you revoke your proxy instructions.
HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS. You can revoke your proxy
instructions if you advise the Secretary in writing before your Common Stock is
voted by the proxies at the Meeting, if you deliver later proxy instructions, or
if you attend the Meeting and vote your shares in person.
QUORUM; HOW VOTES ARE COUNTED. The Meeting will be held if a majority of
the outstanding shares of Common Stock is represented at the Meeting. If you
have returned a valid Proxy Card or attend the Meeting in person, your Common
Stock will be counted for the purpose of determining if there is a quorum, even
if you wish to abstain from voting on some or all matters introduced at the
Meeting. If you hold your Common Stock through a broker, bank or other nominee,
the nominee may only vote the Common Stock which it holds for you in accordance
with your instructions. However, if the nominee does not receive your
instructions at least ten days before the Meeting, the nominee may vote only on
matters which the New York Stock Exchange determines to be routine. Proposals 1
and 3 are normally considered to be routine by the New York Stock Exchange. If a
nominee cannot vote on a particular matter because it is not routine, there is a
"Broker Non-Vote" on that matter. We do not count abstentions and Broker
Non-Votes as votes for or against any proposal, however, Broker Non-Votes count
for quorum purposes.
COST OF THIS PROXY SOLICITATION. We will pay the cost of this proxy
solicitation. In addition to soliciting proxies by mail, we expect a number of
our employees to solicit proxies personally and by telephone. None of these
employees will receive any additional or special compensation for doing this. We
will, upon request, reimburse brokers, banks and other nominees for their
reasonable expenses in sending proxy material to their principals and obtaining
their Proxy Cards.
HOUSEHOLDING. If a shareholder and other residents at his or her mailing
address own shares of the Company's Common Stock in "street" name, the
shareholder's broker or bank may have given notice that each household will
receive only one annual report and one proxy statement for each company in which
stock is held through that broker or bank. This practice is known as
"householding". Unless the Shareholder responded to that notice that he or she
did not wish to participate in householding, he or she would be deemed to have
consented to participating, and only one copy of each company's annual report
and proxy statement would be sent to that address (however, each shareholder
would continue to receive a separate proxy card).
Any shareholder who wishes to receive his or her own set of the Company's
future annual reports and proxy statements, or who shares an address with
another shareholder of the Company and together would like to receive only one
set of annual disclosure documents, should contact The St. Joe Company, 1650
Prudential Drive, Suite 400, Jacksonville, Florida 32207, being sure to supply
the names of all shareholders at the same address, the name of the bank or
brokerage firm, and the account number(s). The revocation of a consent to
householding should be effective 30 days after the notice is received.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board of Directors comprised of nine members is to be elected at this
Meeting. Each Director elected shall hold office until the next Annual Meeting
and the election of a successor.
VOTE REQUIRED. Directors must be elected by a plurality of the votes cast
at the Meeting. The nominees receiving the greatest number of votes will be
elected. Votes withheld for any Director will not be counted.
GENERAL INFORMATION ABOUT THE NOMINEES. All of the nominees have served as
Directors since last year's Meeting. John J. Quindlen, a Director since 1995,
advised the Board he is retiring and will not stand for election at this year's
Annual Meeting. Information about the nine nominees for Director is set forth on
the following pages. The age indicated in each nominee's biography is as of
April 5, 2002. We know of no reason why any nominee for Director would be unable
to serve as a Director. If any nominee should for any reason be unable to serve,
the proxies will vote your Common Stock to approve the election of any
substitute nominee proposed by the Board of Directors. Alternatively, the Board
may choose to reduce the number of Directors to eliminate the vacancy.
INFORMATION ABOUT THE NOMINEES
MICHAEL L. AINSLIE
Director since 1998 Age 58 Mr. Ainslie, a private investor, is the
former President, Chief Executive Officer
and a Director of Sotheby's Holdings. He
was Chief Executive Officer of Sotheby's
from 1984 to 1994. From 1980 to 1984 Mr.
Ainslie was President of the National
Trust for Historic Preservation. From 1975
to 1980 he was Chief Operating Officer of
N-Ren Corp., a Cincinnati-based chemical
manufacturer. From 1971 to 1975, he was
President of Palmas Del Mar, a real estate
development company. Mr. Ainslie began his
career as an associate with McKinsey &
Company. He is a Trustee of Vanderbilt
University, serves as a Chairman of the
Posse Foundation and also serves on the
Boards of Lehman Brothers Holdings, Inc.
and Artesia Technologies, a broadband
software provider.
2
HUGH M. DURDEN
Director since 2000 Age 58 Hugh M. Durden retired on December 31,
2000 as an Executive Vice President of
Wachovia Corporation and President of
Wachovia Corporate Services Inc. Mr.
Durden joined Wachovia in 1972. Mr. Durden
is Trustee of the Woodruff Arts Center,
Chairman of the Latin American Association
Capital Campaign, a board member of the
Margaret Mitchell House and Museum,
Chairman of the Georgia Chapter of the
Newcomen Society, a Trustee of the Alfred
I. duPont Testamentary Trust (the "Trust")
and a Director of The Nemours Foundation
(the "Foundation").
JOHN S. LORD
Director since 2000 Age 55 Mr. Lord is a private investor and
business consultant. He retired as
President of Bank of America -- Central
Florida in 2000. Mr. Lord held various
positions with Bank of America and its
predecessor banks for over 15 years. Mr.
Lord served as the corporate Trustee of
the Trust from 1994 to 1997 and was
appointed as an individual Trustee of the
Trust and a Director of the Foundation in
2000, positions he continues to hold.
HERBERT H. PEYTON
Director since 2000 Age 70 Mr. Peyton is the founder of Gate
Petroleum Company and has served as its
President since 1960. He is a member of
the First Union National Bank Advisory
Board. Mr. Peyton is a Trustee of the
Trust, a Director of the Foundation, and a
Director of Florida East Coast Industries,
Inc. ("FLA").
WALTER L. REVELL
Director since 1994 Age 66 Mr. Revell has been Chairman of the Board
and CEO of H. J. Ross Associates, Inc., a
consulting engineering, planning, and
environmental firm in Coral Gables,
Florida, since 1991, and has also been
Chairman of the Board and CEO of Revell
Investments International, Inc. since
1984. Mr. Revell was President, CEO and a
Director of Post, Buckley, Schuh,
Jernigan, Inc. until 1983 after serving as
Secretary of Transportation for the State
of Florida from 1972 to 1975. He is also a
Director of CSR America, Inc. and other
closely-held companies, and is Chairman of
the Greater Miami Foreign Trade Zone, Inc.
PETER S. RUMMELL
Director since 1997 Age 56 Mr. Rummell was appointed Chairman and CEO
of the Company in January 1997. From 1985
until 1996, Mr. Rummell was employed by
The Walt Disney Company and served as
Chairman of Walt Disney Imagineering, the
division responsible for Disney's
worldwide creative design, real estate and
research and development activities. Mr.
Rummell was President of Disney
Development Company, the community
development arm of Walt Disney, from 1992
to 1994 and President of the Arvida Resort
Communities Division during 1985. From
1983 until 1985, Mr. Rummell was Vice
Chairman of the Rockefeller Center
Management Corporation in New York City.
Mr. Rummell was general manager and then
President of Sawgrass, near Jacksonville,
Florida, from 1977 until 1983. Mr. Rummell
also held management positions for the Sea
Pines Company in Hilton Head, South
Carolina, and the Amelia Island Plantation
and spent two years as general manager of
real estate at the Ocean Reef Club in Key
Largo, Florida.
3
FRANK S. SHAW, JR.
Director since 1995 Age 70 Mr. Shaw is Chairman and CEO of Shaw
Securities, Inc., a financial services
company, and of Cherry Bluff, Inc., a
northern Florida development firm based in
Tallahassee, Florida. Mr. Shaw also serves
on the Board of Directors of First South
Bank, Regional Financial Company, The
Southern Scholarship Foundation, Maclay
School Foundation, Leon County Library
Foundation and the James Madison
Institute.
WINFRED L. THORNTON
Director since 1968 Age 73 Mr. Thornton was Chairman of the Board and
CEO of the Company from June 1991 to
January 1997, and was President and Chief
Operating Officer from 1984 to 1991. Mr.
Thornton is a Trustee of the Trust, a
Director of the Foundation, and a Director
of FLA.
JOHN D. UIBLE
Director since 1994 Age 65 Mr. Uible was Chairman of the Board and
CEO of Florida National Bank from 1982 to
1990, when it was acquired by First Union
Corporation. He served as a Director of
First Union Corporation until 1998. Since
1990, Mr. Uible has been a private
investor in financial markets, as well as
smaller closely-held companies and
partnerships. He was Chairman of the Board
and CEO of Jacksonville National Bank of
Florida, Inc. from 1976 to 1982 and was
employed by the Charter Company from 1958
to 1976.
The Board recommends the Shareholders vote FOR management's nominees.
THE BOARD AND ITS COMMITTEES
THE BOARD. The Company is governed by a Board of Directors. The Board met
four times in 2001. Each member of the Board of Directors attended at least 75%
of the Meetings of the Board and Committees on which he served in 2001.
COMMITTEES OF THE BOARD. The Board has three standing Committees. In
addition, the entire Board considers nominees for election to the Board,
including any written recommendation by a shareholder made in accordance with
the Company's By-laws. See "Shareholder Proposals" below.
AUDIT COMMITTEE. The members of the Audit Committee are Walter L. Revell,
Chairman, Frank S. Shaw, Jr. and Winfred L. Thornton. The Audit Committee met
four times in 2001. The functions of the Audit Committee are to recommend
independent accountants to audit the Company's financial statements; review with
the independent accountants any reports or recommendations developed in
connection with the auditing engagement; review any reports or recommendations
with regard to the Company's internal control and regulatory compliance
procedures and practices; review any proposed changes in accounting policies
being considered by the Company; review fees charged by the independent
accountants for audit and non-audit services; require the independent
accountants to prepare and deliver annually a statement as to independence;
consider whether the provision of non-audit services by the independent
accountants is compatible with maintaining the independence of the independent
accountants; consider any reports and recommendations submitted to the Committee
by the independent accountants required by or referred to in SAS 61; and
recommend to the Board whether the audited financial statements are to be
included in the Company's Annual Report on Form 10-K.
COMPENSATION COMMITTEE. The members of the Compensation Committee are John
J. Quindlen, Chairman, John S. Lord, Herbert H. Peyton and John D. Uible. The
Compensation Committee met 13 times in 2001. The functions of the Compensation
Committee are to recommend, subject to full Board approval, compensation and
benefits for the Chairman and Chief Executive Officer, the President, Chief
Operating Officer, and Executive Vice Presidents and Senior Vice Presidents of
the Company; approve annual bonus and merit plans for officers and employees of
the Company; and supervise the administration of all current employee benefit
plans, stock incentive plans and such other plans as may be created from time to
time.
FINANCE COMMITTEE. The members of the Finance Committee are Michael L.
Ainslie, Chairman, Hugh M. Durden, Herbert H. Peyton and John J. Quindlen. The
Finance Committee met four times in 2001. The functions of the
4
Finance Committee are to supervise the Company's investment policies; make
recommendations as to corporate dividends; review the Company's business plan;
review proposals to acquire and sell significant assets; review and approve
acquisitions and investments pursuant to the Company's Capital Approval Policy;
and make recommendations regarding the issuance or purchase of the Company's
securities.
DIRECTORS COMPENSATION
Each non-employee Director receives an annual retainer of $25,000, a Board
or Committee meeting fee of $1,250, and a telephone meeting fee of $500.
Additionally, Directors are reimbursed for transportation and other reasonable
expenses incident to attendance at Board and Committee Meetings.
The Company has a Deferred Compensation Plan for non-employee Directors.
Each year a participating Director may elect to defer all or part of his fees in
cash or stock unit accounts. The accounts are payable in cash or stock at the
Director's election upon retirement from the Board. Mr. Quindlen and Mr. Uible
are currently participating in the Plan.
Each year, each non-employee Director is granted an option under the
Company's Stock Incentive Plans, to purchase 4,000 shares of the Company's
Common Stock on the date of the Company's Annual Meeting. Messrs. Ainslie,
Durden, Lord, Peyton, Revell, Shaw, Thornton and Uible received grants under the
Stock Incentive Plans in 2001. Each option grant vests in equal installments
over 3 years, has a 10 year term, and permits the holder to purchase shares at
their fair market value on the date of the grant. The exercise price of options
granted in 2001 was $25.00.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table sets forth the annual compensation of our Chief
Executive Officer and our four other most highly compensated executive officers
(the "Executive Officers") for the past three years.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS
ANNUAL --------------------------------------
(A) COMPENSATION (E) (F)
NAME AND --------------------- RESTRICTED SECURITIES (G)
COMPENSATION(2) (B) (C) (D) STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY $ BONUS $ AWARD(1)($) OPTIONS (#) $
- ------------------ ---- -------- --------- ----------- ----------- -------
Peter S. Rummell ........ 2001 715,800 1,140,000 0 0 34,198
Chairman of the Board and 2000 685,000 1,400,000 0 0 24,450
Chief Executive Officer 1999 660,000 775,000 0 0 21,435
Kevin M. Twomey ......... 2001 496,400 712,000 0 180,000 37,459
President and Chief 2000 475,000 875,000 0 145,800 47,581
Financial Officer 1999 450,000 398,590 2,250,000 727,779 384,295
Robert M. Rhodes ........ 2001 376,200 420,000 0 115,000 30,286
Executive Vice President 2000 360,000 616,000 0 72,925 120,131
and General Counsel 1999 330,000 294,500 0 0 69,560
Michael N. Regan ........ 2001 230,400 160,000 0 0 22,177
Senior Vice President 2000 220,500 225,000 0 21,878 20,332
Planning and Finance 1999 212,000 140,000 0 0 17,924
Jerry M. Ray ............ 2001 228,900 166,000 0 0 22,155
Senior Vice President, 2000 219,000 200,000 0 0 19,695
Corporate Communications 1999 210,000 124,000 0 36,279 26,444
- ----------
5
(1) The amount disclosed in this column reflects the dollar value of the
Executive Officer's restricted stock on the date of grant. As of December
31, 2001, Mr. Rummell held 58,823 shares of restricted stock with a market
value of $1,632,338 and Mr. Twomey held 87,416 shares of restricted stock
with a market value of $2,425,794.
Dividends on all shares of restricted stock are paid at the same rate as
on all other shares of Common Stock.
The recipients are responsible for the payment of all withholding taxes
resulting from awards of restricted stock. The recipients may satisfy this
liability by surrendering an appropriate number of shares to the Company.
To date, Mr. Rummell has surrendered 82,603 shares of his stock and Mr.
Twomey has surrendered 43,709 shares of his stock to the Company to
satisfy this liability for a portion of their restricted stock.
(2) The amounts disclosed in this column include Company contributions under
the 401(k) Plan and the DCAP (for a description of the "DCAP" see
"Retirement Benefits" below), relocation allowances and benefits and
automobile allowances paid to or on behalf of the individual Executive
Officer in the amounts and in the years indicated:
401(k) DCAP AUTOMOBILE
NAME YEAR (MATCH ONLY) (MATCH ONLY) RELOCATION ALLOWANCE
- ---- ---- ------------ ------------ ---------- ----------
Peter S. Rummell ....... 2001 5,100 29,098 0 0
2000 5,100 19,350 0 0
1999 3,000 13,492 4,943 0
Kevin M. Twomey ........ 2001 5,100 17,959 0 14,400
2000 5,100 10,552 19,929 12,000
1999 0 3,405 370,390 10,500
Robert M. Rhodes ....... 2001 5,100 10,786 0 14,400
2000 5,100 7,267 95,763 12,000
1999 3,000 5,763 48,797 12,000
Michael N. Regan ....... 2001 5,100 3,877 0 13,200
2000 5,100 3,232 0 12,000
1999 3,000 2,274 0 12,650
Jerry M. Ray ........... 2001 5,100 3,855 0 13,200
2000 5,100 2,594 0 12,000
1999 0 1,947 12,497 12,000
6
STOCK OPTIONS
The following table contains information about stock options granted in
2001, including the potential value realizable for each grant assuming the
market value of the Common Stock appreciated from the date of grant to the
expiration of the option at annualized rates of 5% and 10%, compounded annually
over the term of the option. The assumed appreciation rates have been specified
by the Securities and Exchange Commission (the "SEC") for illustrative purposes
only and are not intended to predict future stock prices, which will depend upon
various factors, including market conditions and future performance. There is no
assurance that the values actually realized upon the exercise of these options
will be at or near the values shown in the table.
OPTION GRANTS IN 2001
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF
SECURITIES GRANTED TO APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES EXERCISE OR TERM STOCK PRICE
OPTIONS IN FISCAL BASE PRICE EXPIRATION ------------------------
NAME GRANTED YEAR (%) ($/SH) DATE 5% ($) 10% ($)
- ---- --------- ---------- ----------- ---------- ---------- ---------
Peter S. Rummell .......... -- -- -- -- -- --
Chairman of the Board
and Chief Executive Officer
Kevin M. Twomey ........... 180,000(1) 25.4% 28.29 8/21/2011 3,108,839 8,115,655
President and Chief
Financial Officer
Robert M. Rhodes .......... 115,000(1) 16.2% 28.29 8/21/2011 1,986,203 5,185,002
Executive V. P. and
General Counsel
Michael N. Regan .......... -- -- -- -- -- --
Senior V. P. Finance
and Planning
Jerry M. Ray .............. 20,000 2.8% 23.42 2/19/2011 294,574 746,509
Senior V. P. Corporate
Communications
- ----------
(1) These grants are subject to shareholder approval of the 2001 Stock
Incentive Plan.
7
The following table contains information concerning stock options
exercised in 2001 including "value realized" upon exercise (the difference
between the total purchase price of the options exercised and the market value,
on the date of exercise, of the shares acquired). The table also contains
information about the value of unexercised "in-the-money" options held as of
December 31, 2001 (the difference between the aggregate purchase price of all
options held and the market value of the shares covered by the options as of
December 31, 2001, which was $27.75 per share).
AGGREGATED STOCK OPTIONS/EXERCISES IN 2001 AND
OPTIONS/VALUES AS OF YEAR END 2001
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AS OF IN-THE-MONEY OPTIONS AS OF
SHARES VALUE DECEMBER 31, 2001 DECEMBER 31, 2001 ($)
ACQUIRED ON REALIZED ---------------------------- ---------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ---------- ----------- ------------- ----------- -------------
Peter S. Rummell ... 1,350,000 17,302,682 2,288,552 1,178,784 33,435,745 17,222,034
Kevin M. Twomey .... 200,000 1,880,040 120,281 553,348 1,444,196 6,665,864
Robert M. Rhodes ... 210,000 1,773,202 1,161 107,484 12,891 1,233,002
Michael N. Regan ... 69,275 561,429 75 39,214 628 405,219
Jerry M. Ray ....... -- -- 66,910 54,868 442,945 364,591
EXECUTIVE STOCK INVESTMENT PROGRAM. The Company maintains an executive
stock investment program (the "Program"). The Program is designed to provide
investment opportunity in the Company to certain executives. The Program
provides simple interest loans, with interest due annually, to the executives
for use in purchasing Common Stock of the Company on the open market. The loans
provide for full recourse, and interest rates are set at a published safe harbor
rate. Loans must be repaid in full within 3 years of the date of the loan, with
the option of full or partial prepayment at any time. Loans are due in full upon
the sale of the shares purchased with the loan, or upon termination of the
executive's employment with the Company. The Program is administered by the
Compensation Committee, and any shares purchased under the Program may not be
sold without the approval of the Compensation Committee until the earlier of:
(a) 3 years from the date of purchase or (b) the termination of the executive's
employment. The executives have full rights of ownership of any shares purchased
under the Program with respect to voting and dividends. The maximum loan
exposure of the Company under the Program is $400,000. The Company pays any
Florida state intangible taxes which become due as a result of any loans made
under the Program.
8
RETIREMENT BENEFITS
The Company maintains a cash balance pension plan (the "Pension Plan"), a
Deferred Compensation Plan (the "401(k) Plan") and an Employee Stock Purchase
Plan ("JOEshare"), covering substantially all employees of the Company and its
participating subsidiaries. Such plans do not discriminate in favor of Directors
or executive officers in the nature or level of benefits provided to
participants. In addition, the Company maintains a Supplemental Executive
Retirement Plan ("SERP") and a Deferred Capital Accumulation Plan ("DCAP").
Effective January 1, 2001, the Plan Administrator was given discretion to amend
all Company Plans, so long as the aggregate cost of each amendment to the
Company does not exceed $1 million.
PENSION PLAN. The Company maintains a cash balance pension plan (the
"Pension Plan") which covers all employees of the Company and its participating
subsidiaries who have attained age 21 and completed one year of service during
which they have completed at least 1,000 hours of service. The Pension Plan
provides retirement benefits and a source of funds used to provide retiree
health benefits. The Pension Plan is funded by annual employer contributions.
These contributions are based upon the age and compensation of the participant.
The employer contributions do not discriminate in favor of executive officers.
The benefits are not reduced for social security or other benefits received by
the participant. At the end of each calendar year, an employee's cash balance
account is credited with an amount equal to a percentage of base salary,
commissions, and bonus (except sign-on bonus) earned that year ("Eligible
Compensation").
In August 2001, the Pension Plan was amended effective January 1, 2001, to
permit a special credit to the Pension Plan representing vested SERP benefits.
The amount credited to the Executive Officers' accounts were: Peter S. Rummell,
$97,315; Kevin M. Twomey, $24,617; Robert M. Rhodes, $116,032; Michael N. Regan,
$18,341; and Jerry M. Ray, $13,521.
SERP. The SERP is designed to provide to certain qualified executives
benefits which may be lost due to limitations placed on qualified pension plans
by the Internal Revenue Service. In addition, the SERP provides a higher benefit
than the Pension Plan for certain executives.
For the Executive Officers, the annual amounts credited for the Pension
Plan and SERP depend on age at the beginning of a calendar year:
AMOUNT CREDITED FOR SERP
AS A PERCENTAGE
AGE OF ELIGIBLE COMPENSATION
- --- ------------------------
Under 25 .............................................. 8.00%
25 - 34 ............................................... 9.00
35 - 44 ............................................... 10.00
45 - 54 ............................................... 14.00
55 and over ........................................... 18.25
An employee's cash balance under the Pension Plan and SERP account is also
credited with interest at the end of each calendar year. Interest is based upon
the 30-year US Treasury Bond rate.
If an employee leaves the Company for any reason with 5 or more years of
service, the employee is entitled to his or her full cash balance account from
the Pension Plan. The SERP balance vests in accordance with the following rules:
1. Effective January 1, 2000, the SERP balance vests at the rate of 10%
per year of service;
2. If the participant joined the SERP prior to 2000, the participant's
SERP balance becomes vested in accordance with the schedule
described above, or in accordance with the prior vesting schedule
(0% before age 55 and 100% vesting upon the attainment of age 55),
whichever schedule produces earlier vesting; and
3. SERP benefits become 100% vested at age 62.
All of the Executive Officers joined the SERP prior to 2000. In addition,
in 2001 a transfer was made from the Pension Plan to pay a portion of retiree
medical benefits. As a result, as required by law, all participants were 100%
vested in their cash balance accounts.
9
The following table shows the balances that would be payable under the
Pension Plan and SERP at age 65 for various earnings and years of service. Total
earnings are assumed to remain constant, years of service are assumed to occur
immediately prior to age 65, and interest credited on the account balance is
assumed to be 6% per year.
AGE 65 ACCOUNT BALANCES
YEARS OF SERVICE
---------------------------------------------------------------------------
ELIGIBLE COMPENSATION 5 10 15 20 25
- --------------------- ----------- ----------- ----------- ----------- -----------
$ 300,000 ............. $ 308,631 $ 721,649 $ 1,145,647 $ 1,713,051 $ 2,255,416
$ 400,000 ............. 411,508 962,198 1,527,531 2,284,070 3,007,226
$ 500,000 ............. 514,385 1,202,748 1,909,409 2,855,080 3,759,033
$ 600,000 ............. 617,261 1,443,297 2,291,291 3,426,099 4,510,835
$ 700,000 ............. 720,138 1,683,846 2,673,175 3,997,117 5,262,640
$ 800,000 ............. 823,016 1,924,397 3,055,054 4,568,131 6,014,450
$ 900,000 ............. 925,892 2,164,946 3,436,937 5,139,148 6,766,247
$ 1,000,000 ............. 1,028,769 2,405,495 3,818,820 5,710,169 7,518,064
$ 1,100,000 ............. 1,131,646 2,646,045 4,200,701 6,281,185 8,269,866
$ 1,200,000 ............. 1,234,522 2,886,593 4,582,584 6,852,202 9,021,667
$ 1,300,000 ............. 1,337,401 3,127,145 4,964,465 7,423,216 9,773,476
$ 1,400,000 ............. 1,440,278 3,367,695 5,346,350 7,884,238 10,525,288
$ 1,500,000 ............. 1,543,155 3,608,244 5,728,228 8,565,249 11,277,091
$ 1,600,000 ............. 1,646,031 3,848,793 6,110,112 9,136,267 12,028,893
$ 1,700,000 ............. 1,748,909 4,089,343 6,491,866 9,707,286 12,780,897
$ 1,800,000 ............. 1,851,766 4,329,893 6,873,874 10,278,301 14,532,510
$ 1,900,000 ............. 1,954,662 4,570,442 7,255,758 10,849,319 14,284,307
$ 2,000,000 ............. 2,057,539 4,610,990 7,637,640 11,420,328 16,038,117
401(k) PLAN. The Company maintains a 401(k) Plan which covers all
employees of the Company and its participating subsidiaries who have completed
90 days of employment and elect to have their salary reduced and have that money
contributed into the 401(k) Plan and invested in investment options as directed
by the participant. The eight investment options available are seven mutual
funds and Common Stock of the Company. The Company matches the employee
contribution or the basis of $0.50 for every $1.00, up to 6% of a participant's
Eligible Compensation, but excludes DCAP contributions. The 401(k) Plan allows a
participant to borrow his or her Plan account. Accounts are paid out in a lump
sum or quarterly cash installments in the case of death, termination,
disability, retirement or after attainment of age 59 1/2. In 2001 the Company
contributed the amounts set forth in footnote 2 in the Summary Compensation
Table on behalf of the Executive Officers.
DCAP. The DCAP is designed to provide certain qualified executives with
benefits which may be lost due to limitations placed on 401(k) plans by the
Internal Revenue Service and to provide additional monies at their election.
Pursuant to the DCAP, a qualified individual may elect to defer between 1% and
50% -- in whole percentages -- of his or her compensation, which generally
includes base salary, commissions, and certain deferrals, but which excludes
bonuses. In addition, a qualified individual may elect to defer between 1% and
75% of his or her bonus (except a sign-on bonus) payable in the plan year.
Commencing January 1, 2001, a qualified individual's deferrals began with the
first pay period of the year. Prior to January 1, 2001, a qualified individual's
deferrals did not begin until such individual's Eligible Compensation exceeded
the IRS annual compensation limit under the 401(k) Plan, ($170,000 for 2000).
For every dollar the individual elects to defer, the Company will contribute
$0.25 up to 6% of the individual's total Eligible Compensation in excess of the
IRS annual compensation limit.
EMPLOYEE STOCK PURCHASE PLAN. The Company maintains an employee stock
purchase plan, also known as "JOEshare." JOEshare covers all employees of the
Company and its participating subsidiaries, except employees: (i) who work less
than 20 hours per week; (ii) who have been employed for less than 90 days; or
(iii) who work less than 5 months in any calendar year. The purpose of JOEshare
is to give each eligible employee of the Company and the participating
subsidiaries the opportunity to acquire an ownership interest in the Company.
Through JOEshare, employees may purchase shares of Common Stock for 85% of its
fair market value at the time of the
10
purchase. JOEshare is completely voluntary. JOEshare allows eligible employees
to purchase Common Stock through post-tax payroll deductions which accumulate
each pay period during the month. After the end of the month, the amounts that
have been withheld are used to purchase whole and fractional shares of Common
Stock for each eligible employee's account. Commencing January 1, 2001, (i)
participants may not purchase in any calendar year shares of Common Stock with a
fair market value in excess of $25,000; and (ii) shares of Common Stock cannot
be transferred or pledged for six months after purchase, except with the
Compensation Committee's written approval or upon death, termination or
retirement.
EXECUTIVE OFFICERS
PETER S. RUMMELL was appointed Chairman and Chief Executive Officer of the
Company in January 1997. From 1985 until 1996, Mr. Rummell was employed by The
Walt Disney Company, most recently as Chairman of Walt Disney Imagineering, the
division responsible for Disney's worldwide creative design, real estate and
research and development activities. Mr. Rummell also served as President of
Disney Development Company, the community development arm of Walt Disney, from
1992 to 1994 and as President of the Arvida Resort Communities Division during
1985. From 1983 until 1985, Mr. Rummell was Vice Chairman of the Rockefeller
Center Management Corporation in New York City. Mr. Rummell was general manager
and then President of Sawgrass, near Jacksonville, Florida, from 1977 until
1983. Mr. Rummell also held management positions for the Sea Pines Company in
Hilton Head, South Carolina, and the Amelia Island Plantation and spent two
years as an employee of the Ocean Reef Club in Key Largo, Florida.
KEVIN M. TWOMEY was appointed President and Chief Financial Officer of the
Company in January 1999 and was appointed Chief Operating Officer in February,
2000. Mr. Twomey was Vice Chairman and Chief Financial Officer of H.F. Ahmanson
& Company and its principal subsidiary, Home Savings of America. Prior to
joining Ahmanson in 1993, Mr. Twomey was Chief Financial Officer at First
Gibralter Bank of Dallas, a company held by MacAndrews and Forbes Holdings of
New York. Mr. Twomey also held management positions with MCORP and Bank of
America.
ROBERT M. RHODES was appointed Senior Vice President and General Counsel
in February 1997 and was named Executive Vice President and General Counsel in
February 1999. From 1988 until he joined the Company, Mr. Rhodes was a partner
in the law firm of Steel Hector and Davis L.L.P., specializing in real estate
and land development. From 1985 to 1988 Mr. Rhodes served as Senior Vice
President and General Counsel of Arvida/Disney Corporation and Disney
Development Company. Mr. Rhodes also served in Florida state government as
counsel to the Speaker of the Florida House of Representatives and as Chief of
the Bureau of Land and Water Management, which administers the state's growth
management programs.
MICHAEL N. REGAN joined the Company in July 1997 and was appointed Senior
Vice President, Finance and Planning in February 1999. Prior to joining the
Company, Mr. Regan was a Vice President and Controller for Harrah's
Entertainment, Inc. Mr. Regan joined Harrah's as a Senior Financial Analyst in
Strategic Planning in 1980 and held several management positions in finance.
JERRY M. RAY joined the Company in November 1997 and was appointed Senior
Vice President, Corporate Communications in February 1999. Prior to joining the
Company he was Senior Vice President for Powell Tate, a Washington, DC
communications firm. He was Vice President and Director of Media for Burson
Marsteller in Washington. From 1981 to 1988 he was Press Secretary for U.S.
Senator Howell Heflin and served in several communications positions for
committees of the United States Senate.
EMPLOYMENT ARRANGEMENTS
In January 1997, the Company entered into an Employment Agreement (the
"Rummell Agreement") with Peter S. Rummell, its Chairman of the Board and Chief
Executive Officer. The Rummell Agreement was amended and restated effective
March 3, 1998. The Rummell Agreement had a five-year term, which expired in
January 2002. In August 2001, Mr. Rummell entered into an amended and restated
Severance Agreement (see "Severance Agreements" below).
The Company has also entered into Employment Agreements (the "Executive
Agreements") with each of the other named Executive Officers. The Executive
Agreements provide that each of the Executive Officers is an "at
11
will" employee. The Executive Agreements further provide that each Executive
Officer shall receive (i) a base salary plus car allowance and (ii) a
performance-based annual incentive bonus in an amount equal to a specified
percentage of the Executive Officer's base salary. The Executive Agreements
provide that the amount of each Executive's base salary and the range of his
bonus may be increased but not decreased during his period of employment with
the Company.
The Executive Agreements also provide that each of the Executive Officers
shall receive an option to purchase shares of the Company's Common Stock under
the Company's Stock Incentive Plans. The exercise price of each option is equal
to the closing price of the Company's Common Stock on the day preceding the date
the Executive Officer was granted such option. The exercise price of any
unexercised option shall be adjusted equitably in the event that the Company
makes a partial liquidation distribution to its shareholders. Each of the
options becomes exercisable in equal installments on the first five
anniversaries following the date of grant, or as otherwise provided in the
applicable Stock Incentive Plan. Each of the options expires on the tenth
anniversary following the date of grant.
The Executive Agreement of Mr. Twomey (the "Twomey Agreement") differs
from the other Executive Agreements with respect to certain equity-based
compensation. Under the Twomey Agreement, the options granted to Mr. Twomey
become exercisable if the Company terminates his employment without "cause" (as
defined in the Twomey Agreement), if the Company is subject to a "change in
control" (as defined in Exhibit A to the Twomey Agreement), or upon his death or
disability. The Company has also granted Mr. Twomey restricted shares of its
Common Stock under the Stock Incentive Plan. The restricted shares vest 40% on
the second anniversary of the date of grant, and the remainder in equal
installments on the third, fourth, and fifth anniversaries of the date of grant.
The entire award vests if the Company terminates Mr. Twomey's employment without
"cause" (as defined in the Twomey Agreement), the Company is subject to a
"change in control" (as defined in Exhibit A to the Twomey Agreement), or upon
his death or disability. In the event Mr. Twomey's employment terminates for any
other reason, he forfeits any options or restricted shares that are not
exercisable or vested.
The Executive Agreements further provide that, in the event the Company
terminates the employment of any of the respective Executive Officers for any
reason other than cause or disability, such Executive Officer will receive a
severance payment in a lump sum amount equal to a specified percentage of the
Executive Officer's base salary, plus a specified percentage of the amount of
any bonus awarded to the Executive Officer in the year prior to the termination.
The foregoing descriptions of the Rummell Agreement and the Executive
Agreements do not purport to be complete and are qualified in their entirety by
reference to such agreements, which have been filed with the SEC as exhibits to
the Company's public filings from 1997 to date.
LONG TERM INCENTIVE COMPENSATION
The Company entered into Long Term Incentive Compensation Agreements (the
"LTIC Agreement") with Messrs. Twomey and Rhodes on August 21, 2001.
Under their LTIC Agreements, Messrs. Twomey and Rhodes will be paid
$5,000,000 and $2,500,000 respectively in a lump sum (the "Target LTIC Award")
subject to the adjustments described in the following paragraphs, upon the first
occurrence of any of the following:
a) he remains continuously employed by the Company until December 31,
2005; or
b) he terminates his employment with the Company for Good Reason; or
c) he dies; or
d) he becomes disabled, as defined in the Company's long term
disability plan; or
e) his employment is terminated by the Company for any reason other
than Cause; or
f) the first anniversary of any Change in Control, as defined in the
Severance Agreements (see "Severance Agreements" below) provided he
is employed by the Company on that first anniversary.
The Target LTIC Award will be increased by 2% for every 1% that the price
of the Company's stock on the date the LTIC Award is payable exceeds a
pre-established goal price. Additionally, the LTIC Award will be decreased by 2%
for every 1% that the price of the Company's stock on the date the LTIC Award is
payable is less
12
than the pre-established goal price. The pre-established goal price is $32.50
per share, which is equal to the closing price of the Company's stock on August
20, 2001 plus increases of $1.00 per share, per year. The adjustment to the
Target LTIC Award shall be prorated in the event the LTIC Award becomes payable
prior to December 31, 2005. However, the actual payment cannot be more than
one-third higher than the Target LTIC Award or less than two-thirds of the
Target LTIC Award.
In the event of Messrs. Twomey's or Rhodes' death prior to any payment,
the Target LTIC Award will be payable. The Target LTIC Award is not payable if
Messrs. Twomey or Rhodes voluntarily terminates his employment prior to December
31, 2005 for any reason other than Good Reason or Disability.
The Company has not entered into LTIC Agreements with Mr. Rummell, Mr.
Regan or Mr. Ray.
The foregoing description of the LTIC Agreements does not purport to be
complete and is qualified in its entirety by reference to such Agreements, which
have been filed with the SEC as Exhibits to the Company's public filings from
1997 to date.
SEVERANCE AGREEMENTS
The Company entered into amended and restated Severance Agreements with
Mr. Rummell, Mr. Rhodes, and Mr. Twomey effective August 21, 2001. Such new
Severance Agreements are substantially similar to the prior Severance Agreements
with each of the Executive Officers, pursuant to which each Executive Officer
shall be entitled to severance benefits in the event of a "change in control" of
the Company during the term of his employment. "Change in control" is defined in
the Severance Agreements to mean the occurrence of any of the following events
(except that the Severance Agreements with Mr. Rummell, Mr. Twomey, and Mr.
Rhodes specifically exclude from the definition of "change in control" the
Company's purchase of Common Stock from the Trust):
1. The consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if 50% or
more of the combined voting power, directly or indirectly, of the
continuing or surviving entity's securities outstanding immediately
after such merger, consolidation or other reorganization is owned by
persons who are not stockholders of the Company immediately prior to
such merger, consolidation or other reorganization;
2. The sale, transfer, exchange or other disposition of all or
substantially all of the Company's assets;
3. A change in the composition of the Board, as a result of which fewer
than two-thirds of the incumbent Directors are Directors who either
(i) had been Directors of the Company on the date 24 months prior to
the date of the event that may constitute a change in control (the
"original Directors") or (ii) were elected or nominated for
election, to the Board with the affirmative votes of at least a
majority of the aggregate of the original Directors who were still
in office at the time of the election or nomination and the
Directors whose election or nomination was previously so approved;
4. The liquidation or dissolution of the Company; or
5. Any transaction as a result of which any person is the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended), directly or indirectly, of securities of the
Company representing at least 25% of the total voting power
represented by the Company's then outstanding voting securities. For
purposes of this paragraph 5, the term "person" shall have the same
meaning as when used in sections 13(d) and 14(d) of such Act but
shall exclude (i) a Trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a parent or
subsidiary of the Company, (ii) a corporation owned directly or
indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the Common Stock of the
Company; (iii) the Trust and (iv) the Foundation. A transaction
shall not constitute a change in control if its sole purpose is to
change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same
proportions by the persons who held the Company's securities
immediately before such transaction.
Under the terms of the Severance Agreements, if an Executive Officer who
has entered into a Severance Agreement (i) resigns for any reason during the
last six months of the first year following the date of a change in control,
(ii) resigns for "good reason" (as defined in the Severance Agreements) within
the first 36 months following a change in control, or (iii) is terminated by the
Company within 36 months following the date of a change in control,
13
then the Company is obligated to provide the Executive Officer with certain
payments and benefits. For Mr. Rummell, Mr. Twomey, and Mr. Rhodes, the
termination in (iii) above must be for any reason other than "cause" (as defined
in the Severance Agreements), death or disability. Such payments and benefits
include (a) payment of a lump sum amount equal to the sum of three times the
Executive Officer's annual base salary plus three times the Executive Officer's
bonus (as described in the Severance Agreement) (for Mr. Rummell, Mr. Twomey and
Mr. Rhodes, this cannot be less than annual base salary), (b) payment of a lump
sum supplemental pension benefit amount, (c) payment of a pro-rated bonus for
the year during which such Executive Officer's employment is terminated, (d)
continued participation in the Company's group insurance plans, at the Company's
expense, until the expiration of three years following the change in control (or
the date of the Executive Officer's death, if earlier), (e) Senior Executive
Level Outplacement Services, (f) financial planning benefits for Mr. Rummell,
Mr. Twomey and Mr. Rhodes, and (g) "gross-up" payments, if applicable, in the
amount necessary to satisfy any excise tax incurred by the Executive Officer, if
any, under Section 4999 of the Internal Revenue Code; provided, however, that if
payment of such excise tax could be avoided by reducing total payments under the
Severance Agreement by $50,000 or less (5% or less for Mr. Rummell, Mr. Rhodes
and Mr. Twomey), the total amount of such payments shall be reduced to the level
necessary to ensure that no excise tax shall be paid. In addition, under the
terms of the Severance Agreements, all stock options previously granted to the
Executive Officer shall become fully exercisable upon a change in control, and
shall remain exercisable until the earlier of the first anniversary following
the change in control or the date such options would have otherwise expired by
their terms, and any right of the Company to repurchase shares subject to the
Executive Officer's options shall lapse in full.
The Severance Agreements entered into by the Executive Officers do not
supersede the respective Employment Agreements entered into by such Executive
Officers, except to the extent that severance pay and benefits provided under
the Severance Agreements are greater than under the applicable Employment
Agreement. Likewise, the Severance Agreements do not supersede any Stock Option
Agreements entered into by such Executive Officers, except to the extent that
the applicable Severance Agreement provides for earlier exercise or a longer
post-termination exercise period than under such Stock Option Agreement.
The foregoing description of the Severance Agreements does not purport to
be complete and is qualified in its entirety by reference to such agreements,
which have been filed with the SEC as exhibits to the Company's public filings
from 1997 to date.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for reviewing and approving the
compensation policies and programs for the Company's Executive Officers,
including the officers named in the Summary Compensation Table. The Compensation
Committee consists of members of the Board of Directors who are all independent
non-employee Directors and have no interlocking relationships as defined by the
Securities and Exchange Commission. This report covers the actions of the
Compensation Committee regarding the compensation of the Executive Officers for
2001 and prospectively for 2002.
COMPENSATION PHILOSOPHY
The main tenets of the Company's compensation philosophy are to provide:
(1) base salaries at the median of comparable companies that generate
value from the management of substantial assets;
(2) for a competitive annual incentive based on company and individual
performance; and
(3) stock options in order to align the interests of the Executive
Officers and Shareholders.
14
2001 ANNUAL INCENTIVE COMPENSATION PLAN
In February 2002, the Compensation Committee advised the Board that the
Committee had adopted a formal evaluation process to calculate annual incentives
for 2001. The 2001 Annual Incentive Plan (the "2001 Plan") is split between
quantitative financial measures and qualitative strategic measures. The
Committee considers corporate and individual performance goals together with
trends in appropriate peer group companies in awarding annual incentives.
Quantitative goals consist primarily of corporate earnings and qualitative goals
consist primarily of an assessment of the Executive Officer's role in
implementing the Company's strategic plan. The Committee evaluated the
performance of all eligible employees utilizing these criteria to determine the
amount of annual incentives payable in 2001. Payments to Executive Officers
under the 2001 Plan ranged from approximately 73% to 159% of base salary.
CEO COMPENSATION
Mr. Rummell was appointed Chairman and CEO of the Company in January 1997.
The Compensation Committee applied the compensation philosophy described above
to determine Mr. Rummell's compensation. Based upon these criteria the Committee
recommended, and the Board approved, a 3.5% increase in annual base salary from
$715,800 to $740,853, effective March 1, 2002. Based on the Committee's
assessment of Mr. Rummell's performance as measured against quantitative and
qualitative goals, the Committee recommended, and the Board approved, the
payment of an annual incentive to Mr. Rummell under the 2001 Plan of $1,140,000
for the year ended December 31, 2001.
Mr. Rummell has been granted stock options and restricted stock as
described in this Proxy Statement.
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1,000,000 paid to
the CEO and the four most highly compensated Executive Officers. Certain
performance-based compensation is specifically exempt from the deduction limit.
The Compensation Committee intends to award cash compensation under the
Company's Annual Incentive Plans and grant stock options under the Company's
Stock Incentive Plans to the CEO and Executive Officers based upon the
attainment of pre-established individual and corporate performance goals.
The Compensation Committee may award compensation which may not qualify
for exemption from the deduction limit under Section 162(m) when the Committee,
in its discretion, determines such awards are necessary for competitive business
purposes, such as retaining and attracting employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Committee during the preceding year were John J.
Quindlen, Chairman, John S. Lord, Herbert H. Peyton and John D. Uible. No member
of the Compensation Committee is or ever was an officer or employee of the
Company. No member of the Committee is or was during 2001 an executive officer
of another company whose board has a comparable committee on which one of the
Company's Executive Officers serves.
Submitted by the Compensation Committee.
John J. Quindlen, Chairman
John S. Lord
Herbert H. Peyton
John D. Uible
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Common Stock
beneficially owned as of April 5, 2002 by: (i) persons known by the Company to
be the beneficial owners of more than 5% of its outstanding Common Stock; (ii)
each Nominee for Director; (iii) the Executive Officers; and (iv) all Directors
and Executive Officers as a group.
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ---------------- -------------------- -------------------
Alfred I. duPont Testamentary Trust .. 46,674,300(2) 58.1
1650 Prudential Drive, Suite 300
Jacksonville, Florida 32207
Michael L. Ainslie ................... 18,133(3) *
Hugh M. Durden ....................... 46,675,633(4) 58.1
John S. Lord ......................... 46,677,582(5) 58.1
Herbert H. Peyton .................... 46,677,582(6) 58.1
Jerry M. Ray ......................... 79,592(7) *
Michael N. Regan ..................... 6,014(8) *
Walter L. Revell ..................... 9,133(9) *
Robert M. Rhodes ..................... 66,661(10) *
Peter S. Rummell ..................... 3,099,710(11) 3.9
Frank S. Shaw, Jr. .................. 22,133(12) *
Winfred L. Thornton .................. 46,685,904(13) 58.1
Kevin M. Twomey ...................... 402,610(14) *
John D. Uible ........................ 23,403(15)
==========
Total Directors and Executive Officers 50,489,713(16) 62.8
- ----------
(1) All percentages are rounded to the nearest tenth of one percent.
(2) As of April 5, 2002, the Trust directly and beneficially owned 44,592,192
shares of the Common Stock and the Foundation directly and beneficially
owned 2,082,108 shares of the Common Stock. The Trustees of the Trust are
Hugh M. Durden, John S. Lord, Herbert H. Peyton, John F. Porter, William
T. Thompson and Winfred L. Thornton. The Trustees constitute the entire
Board of Directors of the Foundation. The Trustees, by virtue of their
status as Trustees of the Trust and Directors of the Foundation, have the
power to vote or direct the vote and the power to dispose or direct the
disposition of the shares of Common Stock owned by the Trust and the
Foundation. In addition, Mr. Thompson has the sole power to vote and to
dispose of 1,500 shares of Common Stock and share voting and dispositive
power over 135,000 shares of Common Stock.
(3) Includes 8,133 of Mr. Ainslie's 15,688 options which are vested or will
vest within 60 days following the date of this Proxy Statement.
(4) Includes 47,746,992 shares of the Common Stock owned by the Trust and
2,082,108 shares of the Common Stock owned by the Foundation, and 1,333 of
Mr. Durden's 4,000 options which are vested or will be vested within 60
days following the date of this Proxy Statement.
(5) Includes 44,592,192 shares of the Common Stock owned by the Trust and
2,082,108 shares of the Common Stock owned by the Foundation and 3,282 of
Mr. Lord's 9,849 options which are vested or will vest within 60 days
following the date of this Proxy Statement.
(6) Includes 44,592,192 shares of the Common Stock owned by the Trust and
2,082,108 shares of the Common Stock owned by the Foundation and 3,282 of
Mr. Peyton's 9,849 options which are vested or will vest within 60 days
following the date of this Proxy Statement.
16
(7) Includes 78,166 of Mr. Ray's 121,778 options which are vested or will vest
within 60 days following the date of this Proxy Statement and 688 shares
held in the Company's 401(k) Plan.
(8) Includes 4,451 of Mr. Regan's 39,289 options which are vested or will vest
within 60 days following the date of this Proxy Statement and 831 shares
held in the 401(k) Plan.
(9) Includes 8,133 of Mr. Revell's 15,688 options which are vested or will
vest within 60 days following the date of this Proxy Statement.
(10) Includes 64,890 of Mr. Rhodes' 223,645 options which are vested or will
vest within 60 days following the date of this Proxy Statement and 564
shares held in JOEshare.
(11) Includes 2,958,904 of Mr. Rummell's 2,958,904 options which are vested or
will vest within 60 days following the date of this Proxy Statement.
(12) Includes 8,133 of Mr. Shaw's 15,688 options which are vested or will vest
within 60 days following the date of this Proxy Statement.
(13) Includes 44,592,192 shares of the Common Stock owned by the Trust and
2,082,108 shares of the Common Stock owned by the Foundation and 3,471
shares of the Common Stock owned by Mr. Thornton and 8,133 of Mr.
Thornton's 15,688 options which are vested or will vest within 60 days
following the date of this Proxy Statement.
(14) Includes 14,569 shares of Mr. Twomey's 72,846 shares of restricted stock
which are vested or will vest within 60 days following the date of this
Proxy Statement, 382,422 of Mr. Twomey's 853,629 options which are vested
or will vest within 60 days following the date of this Proxy Statement and
1,021 shares held in the JOEshare.
(15) Includes 8,133 of Mr. Uible's 15,688 options which are vested or will vest
within 60 days following the date of this Proxy Statement.
(16) Includes 68,523 shares of Common Stock held in the Company's 401(k) Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors, Executive Officers and beneficial owners of more than
10% of the Company's Common Stock to file reports with the Securities and
Exchange Commission and the New York Stock Exchange reporting ownership of and
transactions in Common Stock and to furnish copies of the reports to the
Company.
The Company has policies and procedures in place to assist its Directors
and Executive Officers in complying with the filing requirements of Section
16(a).
Based solely on a review of the reports and related information furnished
to the Company during and with respect to 2001, the Company believes all filing
requirements were complied with in a timely manner during and with respect to
2001, except due to a clerical oversight Mr. Rummell had one late report of one
transaction and Mr. Twomey had one late report of four transactions.
17
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative
shareholder returns for the period March 1, 1997 through March 1, 2002, assuming
$100 invested on March 1, 1997, in the Company's Common Stock, in the Russell
1000 Index and in the Wilshire Real Estate Securities Index. The total return
assumes dividends are reinvested. The stock price performance shown on the graph
below is not necessarily indicative of future price performance.
[PERFORMANCE GRAPH]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
3/97 3/98 3/99 3/00 3/01 3/02
---- ---- ---- ---- ---- ----
The St. Joe Company 100 137 98 118 137 180
Russell 1000 Index 100 146 168 200 153 153
Wilshire Real Estate 100 111 83 80 94 107
Source: Bloomberg
CERTAIN TRANSACTIONS
Hugh M. Durden, John S. Lord, Herbert H. Peyton, and Winfred L. Thornton
are Trustees of the Trust and also serve as Directors of the Foundation and the
Company.
John S. Lord is a consultant to the law firm of Foley & Lardner. The firm
provides legal services to the Company in the ordinary course of business and in
accordance with the Company's established policies for the retention of outside
counsel.
18
PROPOSAL NO. 2
APPROVAL OF THE 2001 STOCK INCENTIVE PLAN
VOTE REQUIRED. An affirmative vote of the majority of the votes cast at
the Annual Meeting is required to approve the 2001 Stock Incentive Plan.
HISTORY OF THE PLAN. The Company's 2001 Stock Incentive Plan was adopted
by the Board of Directors on August 21, 2001. It became effective on August 21,
2001, subject to the approval of the shareholders. The Board of Directors may
amend or terminate the 2001 Incentive Plan at any time and for any reason.
Amendments require the approval of the Company's shareholders to the extent
provided by applicable laws, regulations or rules. The key provisions of the
2001 Stock Incentive Plan are summarized below. This summary, however, is not
intended to be a complete description of all terms of the 2001 Stock Incentive
Plan. A copy of the Plan text will be furnished to any shareholder upon request.
Such a request should be directed to Robert M. Rhodes, Secretary, The St. Joe
Company, 1650 Prudential Drive, Suite 400, Jacksonville, Florida 32207.
ADMINISTRATION AND ELIGIBILITY. The 2001 Stock Incentive Plan is
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee also selects the individuals who receive awards,
determines the size of any award and establishes any vesting or other
conditions. Employees and non-employee directors of the Company are eligible to
participate in the 2001 Stock Incentive Plan, although incentive stock options
may be granted only to employees.
FORM OF AWARDS. The 2001 Stock Incentive Plan provides for awards in the
form of restricted shares, stock appreciation rights or options. Each award must
be evidenced by an agreement between the recipient and the Company. No payment
is required upon receipt of an award, except that a recipient of newly issued
restricted shares may be required to pay the par value of such restricted shares
to the Company.
OPTIONS. Options may include non-statutory stock options ("NSOs") as well
as incentive stock options ("ISOs") intended to qualify for special tax
treatment. The term of an option cannot exceed 10 years, and the exercise price
must generally be equal to or greater than the closing price of the Common Stock
on the trading day prior to the date of grant. As of April 5, 2002, the closing
price of the Company's Common Stock on the New York Stock Exchange Composite
Transactions Report was $29.99 per share. The exercise price of an option may be
paid in any lawful form permitted by the Compensation Committee, including
(without limitation) a full-recourse promissory note or the surrender of shares
of Common Stock or restricted shares already owned by the optionee. The
Compensation Committee may likewise permit optionees to satisfy their
withholding tax obligation upon exercise of an NSO by surrendering a portion of
their option shares to the Company. The 2001 Stock Incentive Plan allows the
optionee to pay the exercise price of an option by giving "exercise/sale" or
"exercise/pledge" directions. If exercise/sale directions are given, the
exercised option shares are delivered to a securities broker or other lender
approved by the Company. The broker or other lender sells the shares and
delivers the sale proceeds to the Company to the extent necessary to pay the
exercise price and any withholding taxes. Any excess sale proceeds are paid to
the optionee. If the sale proceeds are insufficient to cover the exercise price
and withholding taxes, the optionee is required to pay the deficiency to the
Company at the time of exercise. The Committee may at any time offer to buy out
an outstanding option for cash or give an optionee the right to surrender his or
her option for cash or new options.
STOCK APPRECIATION RIGHTS. A Stock Appreciation Right entitles the
Recipient, upon exercise, to receive in cash an amount equal to the difference
between the Fair Market Value of a share of Common Stock on the date of grant
("Base Value") and the Fair Market Value of a share of Common Stock on the date
the Stock Appreciation Right is exercised. The Stock Appreciation Rights
Agreement shall also specify the term of the Stock Appreciation Right; provided
that the term of a Stock Appreciation Right shall in no event exceed 10 years
from the date of grant. The Compensation Committee may at any time, at such
terms and conditions as it determines, buy out a Stock Appreciation Right for a
payment in shares of Common Stock (which may or may not include Restricted
Shares), Stock Options and cash for any fractional shares of Common Stock. The
value of such combination of shares of Common Stock, Stock Options, and cash may
not exceed the difference between Base Value and Fair Market Value of a share of
Common Stock on the date of such buy out. The Committee may, at its discretion,
use Options with an Exercise Price below Fair Market Value on date of grant to
buy out Stock Appreciation Rights. If Options are used to buy out Stock
Appreciation Rights, the Exercise Price of these Options will not be lower than
the Exercise Price of the Stock Appreciation Rights that are being bought out.
19
VESTING CONDITIONS. As noted above, the Compensation Committee determines
the number of restricted shares, stock appreciation rights or options to be
included in each award, as well as the vesting and other conditions. The vesting
conditions are set forth in the award agreement and may be based on the length
of the recipient's service, his or her individual performance, the Company's
performance or other appropriate criteria. An award agreement may provide for
accelerated vesting in the event of the recipient's death, disability or
retirement or in the event of a change in control with respect to the Company.
For purposes of the 2001 Stock Incentive Plan, the term "change in control"
means generally that (i) any person or group, other than the Trust and the
Foundation acquires 25% or more of the outstanding voting stock of the Company
and the Trust and the Foundation no longer own more shares of voting stock than
such person or group, (ii) the Company is a party to a merger or similar
transaction as a result of which the Company's shareholders own 50% or less of
the surviving entity's voting securities, or (iii) shareholders other than the
Trust and the Foundation cause a change of 50% or more in the composition of the
Company's outstanding voting stock in a contested election; but in any event no
change in control occurs if the Trust and Foundation own more than 50% of the
Company's outstanding voting stock.
MODIFICATION OF AWARDS. The Compensation Committee is authorized, within
the provisions of the 2001 Stock Incentive Plan, to amend the terms of
outstanding restricted shares, to modify or extend outstanding options, to
exchange new options for outstanding options, including outstanding options with
a higher exercise price than the new options, or to convert outstanding Stock
Appreciation Rights to options.
GRANTS TO NON-EMPLOYEE DIRECTORS. Members of the Company's Board of
Directors who are not employees of the Company may receive option grants under
the 2001 Stock Incentive Plan. The exercise price of all options that may be
granted to non-employee directors is equal to the market value of Common Stock
on the date of grant.
NUMBER OF RESERVED SHARES. The total amount of restricted shares, stock
appreciation rights and options available for grant under the 2001 Stock
Incentive Plan is three million (3,000,000) (subject to anti-dilution
adjustments). If any restricted shares, Stock Appreciation Rights or options are
forfeited, or if options terminate for any other reason prior to exercise, then
they again become available for awards. No individual may receive Stock
Appreciation Rights covering more than 500,000 shares, or options covering more
than 500,000 shares (750,000 in the first year of employment), in any calendar
year (subject to anti-dilution adjustments). Awards under the 2001 Stock
Incentive Plan are discretionary. Therefore, it is not possible to determine the
benefits that will be received in the future by participants in the 2001 Stock
Incentive Plan or the benefits that would have been received by such
participants if the 2001 Stock Incentive Plan had been in effect in 2001. To
date 475,000 NSO's have been approved by the Board of Directors for issuance in
August 2002 under the 2001 Stock Incentive Plan subject to the shareholders'
approval of the Plan.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS. Neither the optionee nor the
Company incurs any federal tax consequences as a result of the grant of an
option. The optionee has no taxable income upon exercising an ISO (except that
the alternative minimum tax may apply), and the Company receives no deduction
when an ISO is exercised. Upon exercising an NSO, the optionee generally must
recognize ordinary income equal to the "spread" between the exercise price and
fair market value of Common Stock on the date of exercise; the Company
ordinarily will be entitled to a deduction for the same amount. In the case of
an employee, the option spread at the time an NSO is exercised is subject to
income tax withholding, but the optionee generally may elect to satisfy the
withholding tax obligation by having shares of Common Stock withheld from those
purchased under the NSO. The tax treatment of a disposition of option shares
acquired under the 2001 Stock Incentive Plan depends on how long the shares have
been held and on whether such shares were acquired by exercising an ISO or by
exercising a NSO. The Company is not entitled to a deduction in connection with
a disposition of option shares, except in the case of a disposition of shares
acquired under an ISO before the applicable ISO holding periods have been
satisfied.
The Board recommends the shareholders vote FOR the approval of the 2001
Stock Incentive Plan.
20
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has appointed
the firm of KPMG LLP to audit the consolidated financial statements for the
Company for the 2002 fiscal year.
VOTE REQUIRED. An affirmative vote of the majority of the votes cast at
the Annual Meeting is required to ratify the appointment of KPMG LLP.
GENERAL INFORMATION ABOUT KPMG. KPMG LLP has been the Company's
independent accountants since 1990. It is expected that a representative of KPMG
LLP will be present at the Annual Meeting to answer shareholders' questions and
will be given an opportunity to make a statement.
AUDIT FEES. The aggregate fees billed by KPMG LLP for professional
services rendered for the audit of the Company's annual financial statements
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 and for the review of the financial statements included in the
Company's Quarterly Reports on Form 10-Q for that fiscal year were $390,250.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The Company
did not pay any fee to KPMG LLP for professional services rendered for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2001.
ALL OTHER FEES. The aggregate fees billed by KPMG LLP for services
rendered to the Company, other than the services described above under "Audit
Fees" and "Financial Information Systems Design and Implementation Fees", for
the fiscal year ended December 31, 2001 were:
1. Subsidiary audits, not allocated to the audit of the
Consolidated Financial Statements ........................... $ 90,500
2. Extended Audit Services ....................................... $ 75,900
3. Audit of Employee Benefit Plans ............................... $ 58,500
4. Employee Benefit Tax Services ................................. $ 14,650
5. Tax Services related to Business Organizations ................ $ 68,500
6. Tax Compliance Services ....................................... $ 246,975
----------
Total ......................................................... $1,171,525
The Board recommends the shareholders vote FOR ratification of KPMG LLP as
the Company's independent accounts for the 2002 fiscal year.
21
AUDIT COMMITTEE REPORT
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the Company's financial reporting process. The Board of Directors,
in its business judgment, has determined that all members of the Committee,
except Winfred L. Thornton, are "independent" as required by applicable listing
standards of the New York Stock Exchange. The Board of Directors has determined,
in its business judgment, that the appointment of Winfred L. Thornton as a
member of the Audit Committee is in the best interest of the Company because he
possesses unique, in-depth knowledge of and experience with many of the
Company's internal operations and financial reporting policies.
The Committee operates pursuant to a Charter that was last amended by the
Board on February 20, 2001 and was attached as an Exhibit to the Company's 2001
Proxy Statement. As set forth in the Charter, management of the Company is
responsible for the preparation, presentation and integrity of the Company's
financial statements, the Company's accounting and financial reporting
principles and internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. The independent
accountants are responsible for auditing the Company's financial statements and
expressing an opinion as to their conformity with generally accepted accounting
principles.
In the performance of its oversight function, the Committee has considered
and discussed the audited financial statements with management and the
independent auditors. The Committee has also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, "Communication with Audit Committees", as currently in effect. The
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standard Board No. 1,
"Independence Discussions with Audit Committees, as currently in effect.
Finally, the Committee has received written confirmation from management with
respect to non-audit services provided by the auditors, has considered whether
the provision of non-audit services by the independent auditors to the Company
is compatible with maintaining the auditor's independence and has discussed with
the auditors the auditor's independence.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not experts in the fields of
accounting or auditing, including auditor independence. Members of the Committee
rely, without independent verification, on the information provided to them and
on the representations made by management and the independent accountants.
Based on the reports and discussions described in this report, and subject
to the limitations on the role and responsibilities of the Committee referred to
above and in the Charter, the Committee recommended to the Board that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2001, filed with the SEC.
Submitted by the Audit Committee.
Walter L. Revell, Chairman
Frank S. Shaw, Jr.
Winfred L. Thornton
22
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action. These proposals must be made in accordance with the rules of the
Securities Exchange Commission and with the Company's Bylaws. A proposal for the
2003 Annual Meeting of Shareholders must be received by the Secretary of the
Company at the address shown on the first page of this Proxy Statement as
follows:
1. Pursuant to the Company's Bylaws, the proposal must be received no
sooner than November 13, 2002 and no later than December 13, 2002 to
be eligible to be presented from the floor for vote at the meeting
(but not included in the Company's 2003 Proxy Statement; or
2. Pursuant to the rules of the Securities Exchange Commission, the
proposal must be received by December 13, 2002 to be eligible for
inclusion in the Company's 2003 Proxy Statement.
OTHER MATTERS
The Board of Directors does not know of any other business to be presented
at the Annual Meeting; however, if any other matters come before the Annual
Meeting, it is the intention of the persons named in the accompanying Proxy Card
to vote pursuant to the proxy in accordance with their judgment in such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert M. Rhodes
EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL
April 26, 2002.
23
THE ST. JOE COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 21, 2002
The undersigned having received Notice of Annual Meeting and Proxy
Statement dated April 26, 2001, appoints Peter S. Rummell as Proxy with full
power of substitution to represent the undersigned and to vote all shares of
common stock of The St. Joe Company, which the undersigned is entitled to vote
at the Annual Meeting of Shareholders, to be held on Tuesday, May 21, 2001, at
10:00 a.m. Eastern Daylight Savings Time, at the Radisson Riverwalk Hotel, 1515
Prudential Drive, Jacksonville, Florida, or at any continuance thereof, with
discretionary authority as provided in the Proxy Statement.
Please mark your vote as indicated in the example. |X|
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE
VOTED "FOR" THE PROPOSALS SET FORTH ON THIS CARD. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
Nominees: Michael L. Ainslie, Hugh M. Durden, John S. Lord,
Herbert H. Peyton, Walter L. Revell, Peter S. Rummell,
Frank S. Shaw, Jr., Winfred L. Thornton, John D. Uible
|_| FOR |_| WITHHELD |_| FOR, EXCEPT VOTE WITHHELD FROM THE
FOLLOWING NOMINEES
------------------------------------
V FOLD AND DETACH HERE V
(CONTINUED FROM OTHER SIDE)
2. APPROVAL OF 2001 STOCK INCENTIVE PLAN
|_| FOR |_| AGAINST |_| ABSTAIN
3. RATIFICATION OF INDEPENDENT ACCOUNTANTS
|_| FOR |_| AGAINST |_| ABSTAIN
X ______________________________________
X ______________________________________
Date ___________________________________
Please sign exactly as your name
appears on shares. Joint owners should
each sign. When signing as a fiduciary
or for an estate, trust, corporation,
or partnership, your title or capacity
should be stated.
