SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
FM Properties Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
PRELIMINARY COPIES
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1998
March 26, 1998
The Annual Meeting of Stockholders of FM Properties Inc. will
be held at , Dallas,
Texas, on Thursday, May 14, 1998, at 1:30 p.m., for the
following purposes:
(1) To elect one of the three directors to hold office for
three years and until his successor is elected and qualified;
(2) To ratify the appointment of Arthur Andersen LLP as the
independent auditors to audit the financial statements of the
corporation and its subsidiaries for the year 1998;
(3) To act upon a proposal to amend the corporation's Amended
and Restated Certificate of Incorporation to change the name of
the corporation from FM Properties Inc. to ;
(4) To act upon a proposal to approve the corporation's 1998
Stock Option Plan; and
(5) To transact such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
March 18, 1998 as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting.
Your vote is important. Whether or not you plan to attend the
meeting, please complete, sign and date the enclosed proxy card
and return it promptly in the enclosed envelope. Your cooperation
will be appreciated.
By Order of the Board of
Directors.
Michael C. Kilanowski, Jr.
Secretary
FM PROPERTIES INC.
98 San Jacinto Boulevard, Suite 220
Austin, Texas 78701
The 1997 Annual Report to Stockholders, including financial
statements, is being mailed to stockholders together with these
proxy materials on or about March 26, 1998.
PROXY STATEMENT
This proxy statement is furnished in connection with a
solicitation of proxies by the Board of Directors (the ''Board of
Directors'' or the ''Board'') of FM Properties Inc. (the
''Company'') for use at its Annual Meeting of Stockholders to be
held on May 14, 1998, and at any adjournments thereof (the
''Meeting'').
Voting Procedures
Stockholders of record at the close of business on March 18,
1998 (the ''Record Date''), will be entitled to vote at the
Meeting. On the Record Date, there were [14,288,270] shares of
common stock (the ''Common Stock'') outstanding.
The holders of a majority of the shares of Common Stock
issued and outstanding and entitled to vote at the Meeting,
present in person or represented by proxy, will constitute a
quorum at the Meeting. The persons appointed by the Company to
act as inspectors of election will treat shares of Common Stock
represented by a properly executed and returned proxy as present
at the Meeting for purposes of determining a quorum. The shares
of Common Stock present at the Meeting that are abstained from
voting or that are the subject of broker non-votes will be
counted as present for purposes of determining a quorum. A
broker non-vote occurs when a nominee holding Common Stock for a
beneficial owner does not vote on a particular matter because the
nominee does not have discretionary voting power with respect to
that item and has not received voting instructions from the
beneficial owner.
Each share of Common Stock will entitle the holder to one
vote at the Meeting, and votes cast will be counted by the
inspectors of election. The Company's directors are elected by a
plurality vote. Adoption of the proposal to amend the Company's
Amended and Restated Certificate of Incorporation to change the
Company's name from FM Properties Inc. to ______________________
(the "Charter Proposal") requires the approval of a majority vote
of the issued and outstanding shares of Common Stock entitled to
vote at the Meeting. Except as otherwise provided by statute,
the Company's Amended and Restated Certificate of Incorporation
or the Company's By-Laws, all other matters coming before the
Meeting, including the proposal to approve the Company's 1998
Stock Option Plan (the "Plan Proposal"), will be decided by the
vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the
Meeting. Abstentions and broker non-votes will have no effect
upon the election of the director but will have the same effect
as votes against the Charter Proposal. Abstentions as to all
other matters to come before the Meeting, including the Plan
Proposal, will have the same effect as votes against those
matters, but broker non-votes as to those matters will not be
deemed to be a part of the voting power present with respect to,
will not count as votes for or against, and will not be included
in calculating the number of votes necessary for approval of
those matters.
The Board of Directors is soliciting a proxy in the enclosed
form to provide you with an opportunity to vote on all matters
scheduled to come before the Meeting, whether or not you attend
in person. If you properly execute and return a proxy in the
enclosed form, your shares will be voted as you specify. If you
make no specifications, the proxy will be voted for the election
of one director, for the ratification of the appointment of
auditors, for the adoption of the Charter Proposal, and for the
adoption of the Plan Proposal. If you submit a proxy, you may
subsequently revoke it or submit a revised proxy at any time
before it is voted. You may also attend the Meeting in person and
vote by ballot, which would cancel any proxy that you previously
gave. Management expects no matters to be presented for action at
the Meeting other than the items described in this Proxy
Statement. If, however, any other matters properly come before
the Meeting, the persons named as proxies in the enclosed form of
proxy intend to vote in accordance with their judgment on the
matters presented.
Proxy Solicitation
The Company will pay all expenses of soliciting proxies for
the Meeting. In addition to solicitations by mail, arrangements
have been made for brokers and nominees to send proxy materials
to their principals, and the Company will reimburse them for
their reasonable expenses in doing so. The Company has retained
Georgeson & Co. Inc., Wall Street Plaza, New York, New York, to
assist it in the solicitation of proxies from brokers and
nominees. It is estimated that the fees for Georgeson's services
will be $_______ plus its reasonable out-of-pocket expenses.
Certain representatives of the Company, who will receive no
compensation for their services, may also solicit proxies by
telephone, telegram, telex, telecopy, or personal interview.
Stockholder Proposals
In order to be considered for inclusion in the Company's
1999 proxy materials, stockholder proposals must be received by
the Company no later than November 26, 1998. In addition, the
Company's By-Laws provide that stockholders intending to nominate
a director or bring any other matter before a stockholders'
meeting must furnish timely written notice containing specified
information concerning, among other things, the matters to be
brought before the meeting and the stockholder proposing the
matters. In general, to be timely a stockholder's notice must be
received by the Company's secretary not less than 60 nor more
than 90 days prior to the stockholders' meeting. If less than 70
days' notice or prior public disclosure of the date of the
stockholders' meeting is made, the secretary must receive the
stockholder's notice within 10 days of the mailing of the meeting
notice or public disclosure of the meeting date. The Company
will be permitted to disregard any nomination or other matter
that fails to comply with these By-Law procedures.
Corporate Governance
The Board of Directors, which held four meetings during
1997, has primary responsibility for directing the management of
the business and affairs of the Company. The Board currently
consists of three members. To provide for effective direction and
management of the Company's business, the Board of Directors has
established committees of the Board, including the Audit
Committee and the Corporate Personnel Committee. The Board has no
standing nominating committee.
The Audit Committee reviews the financial statements of the
Company and exercises general oversight with respect to the
activities of the Company's independent auditors and related
matters. The Audit Committee currently consists of Mr. Madden, as
Chairman, and Messrs. Adkerson and Leslie. The Audit Committee
met four times during 1997.
The Corporate Personnel Committee, which is described
further below, currently consists of Mr. Leslie, as Chairman, and
Mr. Madden. The Corporate Personnel Committee met once during
1997.
ELECTION OF DIRECTOR
At the Meeting one director is to be elected to a three-year
term and to hold office until his successor is elected and
qualified. Richard C. Adkerson has been nominated for election to
the Board of Directors at the Meeting. The Board of Directors
consists of three classes, each of which serves for three years,
with one class being elected each year. The persons named in the
enclosed form of proxy intend to vote your proxy, unless
otherwise directed, for the election of Mr. Adkerson as the
member of the class to serve until the 2001 Annual Meeting of
Stockholders. Mr. Madden is the member of the class to serve
until the 1999 Annual Meeting of Stockholders and Mr. Leslie is
the member of the class to serve until the 2000 Annual Meeting of
Stockholders. If, contrary to present expectation, the nominee
should become unavailable for any reason, votes may be cast
pursuant to the accompanying form of proxy for a substitute
nominee designated by the Board.
Information About Nominee and Directors
The following table provides certain information as of the
Record Date with respect to the nominee and each other director
whose term will continue after the Meeting. Unless otherwise
indicated, each person has been engaged in the principal
occupation shown for the past five years.
Year
Name of Principal Occupations, Other First
Nominee Directorships Elected a
or Director Age and Positions with the Company Director
Richard C. Adkerson 51 Chairman of the Board and Chief 1992
Executive Officer of the Company.
President, Chief Operating Officer
and Chief Financial Officer of
Freeport-McMoRan Copper & Gold
Inc., a mining company. Director
and Vice Chairman of the Board of
Freeport-McMoRan Sulphur Inc., a
sulphur mining company. Director,
Co-Chairman of the Board and Chief
Executive Officer of McMoRan Oil &
Gas Co., an independent oil and
gas company. Vice Chairman of the
Board of Freeport-McMoRan Inc.
("FMI"), a natural resources
company, until 1997. Senior Vice
President and Chief Financial
Officer of FMI until 1995.
James C. Leslie 41 President and Chief Operating 1996
Officer of The Staubach Company, a
commercial real estate services
firm. President of Wolverine
Holding Company, a real estate
holding company. President of
Staubach Financial Services, a
financial real estate services
firm, until March 1996. Director
of Forum Retirement Partners, L.P.
and Wyndham International Inc.
Michael D. Madden 49 Chairman of the Board of Hanover 1992
Capital L.L.C., investment
bankers. Vice Chairman of the
Board of PaineWebber Incorporated,
investment bankers, until December
1995. Executive Vice President and
Chief Origination Officer of
Kidder Peabody Group Inc.,
investment bankers, until December
1994. Executive Managing Director
and Head of Global Business
Development of Kidder Peabody
Group Inc. until September 1994.
Senior Managing Director and Co-
Head of Worldwide Investment
Banking, Lehman Brothers Inc.,
investment bankers, until 1993.
Director of Comforce Corporation
and Gruntal & Co. Incorporated.
Director Compensation
Each director receives a fee of $500 for attending each
Board meeting. Each non-employee and non-officer director also
receives $500 for attending each Board committee meeting as well
as an annual fee consisting of (i) $10,000 for serving on the
Board, (ii) $1,000 for each committee of which he is a member,
and (iii) $1,000 for each committee of which he is the chairman.
Stock Option Plan for Non-Employee Directors
Each non-employee and non-officer director is eligible for
the grant of options under the 1996 Stock Option Plan for Non-
Employee Directors (the "1996 Plan"). On September 1, 1996, each
eligible director was granted an option to purchase 20,000 shares
of Common Stock at 100% of the fair market value of the shares on
the grant date. On September 1 of each subsequent year, each
eligible director will be granted an option to purchase 5,000
shares of Common Stock at 100% of the fair market value of the
shares on the grant date. Each option granted under the 1996
Plan expires ten years after the grant date, and each eligible
director may transfer his options during his lifetime to his
immediate family members or certain entities owned by or for the
benefit of his immediate family members or pursuant to a domestic
relations order. In accordance with the 1996 Plan, on September
1, 1997, each eligible director was granted an option to purchase
5,000 shares of Common Stock at an exercise price of $4.8125.
During 1997 none of the current non-employee and non-officer
directors exercised options granted under the 1996 Plan.
Common Stock Ownership of Directors and Executive Officers
The following table sets forth information regarding the
ownership of the Common Stock by (i) each director and nominee
for director of the Company, (ii) each executive officer for whom
compensation information is disclosed under the heading
''Executive Officer Compensation'' and (iii) all directors and
executive officers of the Company as a group, determined in
accordance with Rule 13d-3 of the Securities and Exchange
Commission (''SEC'') based on information furnished by them. Each
individual holds less than 1% of the outstanding Common Stock.
Unless otherwise indicated, all information is presented as of
December 31, 1997, and all shares indicated as beneficially owned
are held with sole voting and investment power.
Number
of
Shares
Beneficially
Name of Beneficial Owner Owned(1)
Richard C. Adkerson 135,183(2)
William H. Armstrong, III 39,350
James C. Leslie 70,900
Michael D. Madden 5,000
All directors and executive 361,726(3)
officers as a group (5 persons)
(1) Includes shares that could be acquired within sixty days
after December 31, 1997 upon the exercise of options granted
pursuant to Company stock option plans, as follows: Mr.
Adkerson, 75,000 shares; Mr. Armstrong, 31,250 shares; Mr.
Leslie, 5,000 shares; Mr. Madden, 5,000 shares; all directors
and executive officers as a group, 141,250 shares.
(2) Includes 183 shares held in a retirement trust for the
benefit of Mr. Adkerson's spouse.
(3) Includes (a) 9 shares held in a retirement trust for the
benefit of an executive officer's spouse but as to which he
disclaims beneficial ownership, (b) 100 shares held by an
executive officer as custodian but as to which he disclaims
beneficial ownership and (c) 26,201 shares held in trusts with
respect to which an executive officer, as co-trustee, shares
voting and investment power but as to which he disclaims
beneficial ownership. Total represents approximately 2.5% of
the outstanding Common Stock.
Common Stock Ownership of Certain Beneficial Owners
The following table sets forth information regarding the
ownership of the Company's Common Stock by each person known to
the Company to be a beneficial owner of more than five percent of
the outstanding Common Stock, determined in accordance with Rule
13d-3 of the SEC based on information furnished by them. Unless
otherwise indicated, all information is presented as of December
31, 1997, and all shares indicated as beneficially owned are held
with sole voting and investment power.
Number of
Shares Percent
Beneficially of
Name and Address of Person Owned Class
The Goldman Sachs Group,L.P. 764,591(1) 5.4%
85 Broad Street
New York, New York 10004
The Guardian Life 858,000(2) 6.0%
Insurance Company of
America
201 Park Avenue South
New York, New York 10003
Ingalls & Snyder LLC 2,830,842(3) 19.8%
61 Broadway
New York, New York 10006
U.S. Bancorp 740,480(4) 5.2%
111 S.W. Fifth Avenue
Portland, Oregon 97204
(1) Based on the amended Schedule 13G dated February 14, 1998
that The Goldman Sachs Group, L.P. filed with the SEC, The
Goldman Sachs Group, L.P. has shared voting and investment
power with respect to all 764,591 shares.
(2) Based on the Schedule 13G dated February 11, 1998
that The Guardian Life Insurance Company of
America filed with the SEC, The Guardian Life
Insurance Company of America has sole voting and
investment power with respect to 501,000 of those
shares and, through its affiliates, shared voting
and investment power with respect to 357,000 of
those shares.
(3) Based on the Schedule 13G dated February 9, 1998 that
Ingalls & Snyder LLC filed with the SEC, Ingalls & Snyder LLC
has sole voting power with respect to 314,300 of those shares.
(4) Based on the Schedule 13G dated February 11, 1997 that U.S.
Bancorp filed with the SEC, U.S. Bancorp, through its
affiliates, has sole voting power with respect to 740,000
shares.
Executive Officer Compensation
Throughout 1997, Richard C. Adkerson, Chairman of the Board
and Chief Executive Officer, was employed by other entities and
performed his duties for the Company in accordance with a
Services Agreement between the Company and a corporation in which
the Company owns a 10% equity interest (the "Services Company").
In 1997, Mr. Adkerson was compensated by his employers. The
Company paid the Services Company a fixed fee of $524,000 in 1997
for all services under the Services Agreement, which included
executive, technical, administrative, accounting, financial, tax
and other services. The Company and the Services Company
recently amended the Services Agreement to provide that the
amount that the Company will pay to the Services Company for
future services will no longer be a fixed fee but will instead be
on a cost reimbursement basis. Thus, in 1998 the Company will
pay the Services Company for the expenses incurred by the
Services Company in rendering services that are readily
identifiable to the Company, including personnel-related and
facilities-related costs based upon certain allocations, the
costs of goods, services or other items paid by the Services
Company for the Company, and the portion of all other expenses
incurred by the Services Company in connection with providing
services to the Company.
William H. Armstrong, III was the only executive officer
employed by the Company who earned in excess of $100,000 for
services provided to the Company in 1997. The following table
shows compensation that the Company paid to Mr. Armstrong (with
Mr. Adkerson, the ''Named Executive Officers'') for all services
rendered to the Company and its subsidiaries in 1997, 1996 and
1995.
Summary Compensation Table
Long Term
Annual Compensation
Compensation Awards
Other Securities
Annual Underlying All Other
Name and Year Salary Bonus Compensation Options Compensation
Principal
Position
William H. Armstrong, III 1997 $159,167 $150,000 $1,000(1) 65,000 $17,917(2)
President, 1996 150,000 120,000 0 25,000 0
Chief Operating
Officer
and Chief 1995 56,250 80,000 0 50,000 100,100(3)
Financial Officer
(1) Consists of matching gifts under the matching gifts
program.
(2) Consists of Company contributions to defined contribution
plans.
(3) Consists of consulting fees.
The following table sets forth information with respect to the
grant of stock options to each Named Executive Officer during
1997.
Option Grants in 1997
Percent
Number of
of Total Grant
Securities Options Exercise Date
Name Underlying Granted to or Base Expiration Present
Options Employees in Price Date Value(2)
Granted(1) 1997
Richard C. Adkerson 80,000 29.6% $3.50 May 8, 2007 $218,400
William H. Armstrong, III 65,000 24.1% 3.50 May 8, 2007 $177,450
(1) The options will become immediately exercisable in their
entirety if (a) any person or group of persons acquires
beneficial ownership of shares representing 20% or more of the
Company's total voting power or (b) under certain
circumstances, the composition of the Board of Directors is
changed after a tender offer, exchange offer, merger,
consolidation, sale of assets or contested election or any
combination thereof. The options granted to Mr. Adkerson may
be transferred by him during his lifetime to his immediate
family members or certain entities owned by or for the benefit
of his immediate family members or pursuant to a domestic
relations order.
(2) The Black-Scholes option pricing model was used to determine
the grant date present value of the options granted by the
Company to Messrs. Adkerson and Armstrong. Under the Black-
Scholes option pricing model, the grant date present value of
each option referred to in the table was calculated to be
$2.73. The following facts and assumptions were used in making
this calculation: (a) an exercise price for each stock option
of $3.50; (b) a fair market value of $3.50 for one share on
the grant date; (c) a term for options as set forth under the
column labeled ''Expiration Date''; (d) a stock volatility of
64%, based on an analysis of historical weekly closing prices
of the Common Stock over a 104-week period; and (e) an assumed
risk-free interest rate of 6.8%, this rate being equivalent to
the yield on the grant date on a treasury note with a maturity
date comparable to the expiration date of the options. No
other discounts or restrictions related to vesting or the
likelihood of vesting of the options were applied. The
resulting grant date present value for the options was
multiplied by the total number of shares covered by the
options granted to Messrs. Adkerson and Armstrong.
The following table sets forth information with respect to
all outstanding Company stock options held by each Named
Executive Officer as of December 31, 1997. None of them exercised
any Company stock options during 1997.
Option Values at December 31, 1997
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options at Options
December 31, at December 31,
1997 1997
Name Exercisable/Unexercisable Exercisable/Unexercisable
Richard C. Adkerson 37,500/192,500 $138,281/$549,844
William H. Armstrong, III 31,250/108,750 100,391/ 242,109
Corporate Personnel Committee Report on Executive Compensation
The Corporate Personnel Committee is composed of two
directors, neither of whom is an officer or employee of the
Company. The Committee determines the compensation of certain of
the Company's executive officers and administers the Company's
performance incentive awards program and stock option plans.
The Company's executive compensation is comprised of (i) an
annual cash incentive award and (ii) long-term incentive
compensation in the form of stock options. In addition, the
Committee determines the salaries, if any, of the Company's
executive officers.
Richard C. Adkerson, the Chairman of the Board and Chief
Executive Officer of the Company, provided services to the
Company in 1997 pursuant to a Services Agreement between the
Company and the Services Company. Except for Mr. Adkerson's
participation in the Company's stock option plan and receipt of
director fees, Mr. Adkerson received no benefits, salary or other
compensation from the Company in 1997.
The salary of the President and Chief Operating Officer, the
only executive officer of the Company who received a salary in
1997, is based on his level of responsibility and the Committee's
subjective assessment of his performance.
Under the Company's performance incentive awards program,
the Committee determines the amount of annual cash bonuses for
the Company's executive officers. Each person selected under the
program is assigned a target award, expressed as a percentage of
base salary, which serves as a guideline amount that will
generally be paid if Company performance meets expectations set
for the year. When determining the total amount awarded to
executive officers for any year, the Committee considers both
individual and operating or staff unit performance, as well as
the performance of the Company as measured by its operational
accomplishments, including operating results, cash flow and debt
reduction.
For 1997, the Committee considered the Company's operational
accomplishments, including the continued strong sales of
developed homesites and undeveloped commercial and residential
properties, commencing the development of approximately 850 acres
within Barton Creek, the reduction of $21.2 million of debt, the
restructuring of the Company's bank debt to extend the maturity
and provide for staged reductions, and the purchase of FMI's .2%
managing general partnership interest in FM Properties Operating
Co., a Delaware general partnership (the "Partnership"). The
Committee determined that the level of performance achieved
warranted the payment of a cash bonus to the President and Chief
Operating Officer in the amount shown in the Summary Compensation
Table under the heading "Executive Officer Compensation."
The Company also grants long-term incentives to executive
officers in the form of stock options. The stock option award
guidelines are intended to reinforce the relationship between
compensation and increases in the market price of the Company's
common stock and align the executive officers' financial
interests with those of the Company's stockholders. The
Committee establishes guidelines based upon the position of each
participating officer and the Committee's subjective assessment
of each participant's individual performance. The table entitled
"Option Grants in 1997" under the heading "Executive Officer
Compensation" shows the stock options that the Committee granted
in 1997 to two executive officers, including the Chief Executive
Officer, based upon the Committee's guidelines and subjective
assessment.
Section 162(m) of the Internal Revenue Code limits the tax
deduction to $1 million for compensation paid to certain highly
compensated executive officers. Qualified performance-based
compensation is excluded from this deduction limitation if
certain requirements are met. No executive officer of the
Company reached the deductibility limitation for 1997. The
Committee believes that the stock options granted to executive
officers, as discussed above, qualify for the exclusion from the
deduction limitation under Section 162(m). The Committee
anticipates that the remaining components of individual executive
compensation that do not qualify for an exclusion from Section
162(m) should not exceed $1 million in any year and therefore
will continue to qualify for deductibility.
James C. Leslie, Chairman Michael D. Madden
Compensation Committee Interlocks and Insider Participation
The current members of the Company's Corporate Personnel
Committee are Messrs. Leslie and Madden. In 1997, no executive
officer of the Company served as a director or member of the
compensation committee of another entity, where one of the other
entity's executive officers served as a director of the Company
or on the Company's Corporate Personnel Committee.
Performance Graph
The following graph compares the change in the cumulative
total stockholder return on the Common Stock with the cumulative
total return of the Standard & Poor's 500 Stock Index and the Dow
Jones Real Estate Investment Companies Group during 1997, 1996,
1995, 1994 and 1993.
Comparison of Cumulative Total Return*
FM Properties Inc., S&P 500 Index &
Dow Jones Real Estate Investment Companies Group
[GRAPH APPEARS HERE]
December 31,
1992 1993 1994 1995 1996 1997
FM Properties Inc. $100.00 $232.32 $180.69 $ 90.35 $154.88 $267.79
S&P 500 100.00 110.08 111.53 153.45 188.68 251.63
Dow Jones Real
Estate Investement 100.00 98.87 100.99 119.62 161.77 194.75
Companies Group
ASSUMES $100 INVESTED ON DECEMBER 31, 1992 IN FM PROPERTIES INC.
COMMON STOCK, S&P 500 INDEX & DOW JONES REAL ESTATE INVESTMENT
COMPANIES GROUP
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors, executive officers, controller
and beneficial owners of more than 10% of the Common Stock to
file certain beneficial ownership reports with the SEC. Mr.
Madden, a director of the Company, failed to file timely a
statement of changes in beneficial ownership on Form 4 reporting
one transaction in 1995. Mr. Armstrong, an executive officer of
the Company, failed to file timely a statement on Form 4
reporting one transaction in 1996. William J. Blackwell, a
former Vice President and Controller of the Company, failed to
file timely a statement on Form 4 reporting one transaction in
1997.
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors seeks stockholder ratification of the
Board's appointment of Arthur Andersen LLP to act as the
independent auditors of the financial statements of the Company
and its subsidiaries for the year 1998. The Board has not
determined what, if any, action would be taken should the
appointment of Arthur Andersen LLP not be ratified. One or more
representatives of the firm will be available at the Meeting to
respond to appropriate questions, and those representatives will
also have an opportunity to make a statement.
APPROVAL OF THE CHARTER PROPOSAL
The Board of Directors unanimously proposes that the
stockholders approve an amendment to Article FIRST of the Amended
and Restated Certificate of Incorporation (the "Charter") of the
Company to change the Company's name from FM Properties Inc. to
_______________________. The text of Article FIRST of the
Charter as proposed to be amended is as follows:
"FIRST: The name of the Corporation is
__________________________________."
Reasons for the Proposed Amendment
The Company was organized in 1992 by FMI to hold a 99.8%
general partnership interest in Partnership, and the Company
Common Stock was distributed to the FMI stockholders. FMI
retained a .2% managing general partnership interest in the
Partnership, which was formed by FMI to hold, operate and develop
substantially all domestic oil and gas properties of FMI (all of
which the Company subsequently sold) and real estate then held
for development by FMI. The Partnership also assumed
substantially all the liabilities related to those assets, most
all of which were guaranteed by FMI.
In December 1997, FMI merged into IMC Global Inc. ("IGL"),
and, prior to the effectiveness of the merger, FMI sold its .2%
managing general partnership interest in the Partnership to the
Company and a subsidiary of the Company. In connection with the
merger of FMI into IGL, the Company restructured and consolidated
its existing debt and IGL became the guarantor of this
restructured debt in place of FMI.
The restructuring of the Company indebtedness and the
purchase of the managing general partnership interest make the
Company autonomous in its Partnership operations, reduce
restrictions on its business activities, and allow it to pursue
its previously announced objective of establishing a long-term,
self-supporting capital structure. Accordingly, the Board of
Directors has concluded that the present name of the Company,
which signifies its origin and relationship with FMI, is no
longer appropriate. The Board of Directors believes that it is
in the best interests of the Company and its stockholders to
change its name to ____________________________ in recognition of
its new autonomous status and the concentration of its operations
in the development and marketing of real estate.
Effectiveness of the Proposed Amendment
If approved by the holders of the Common Stock, the
amendment to Article FIRST of the Charter will become effective
upon filing a Certificate of Amendment to the Charter with the
Secretary of State of Delaware, which is expected to occur
shortly after the Meeting. Upon effectiveness of the proposed
amendment to the Charter, Company stockholders would not be
required to exchange outstanding stock certificates for new
certificates. If the proposed amendment to the Charter is not
approved by the holders of the Common Stock, the Certificate of
Amendment to the Charter will not be filed.
Vote Required for Approval of the Proposed Amendment
Approval of the proposed amendment to Article FIRST of the
Charter requires the affirmative vote of a majority of the issued
and outstanding shares of Common Stock entitled to vote at the
Meeting.
The Board of Directors unanimously recommends a vote FOR
approval of the proposed amendment to Article FIRST of the
Charter.
APPROVAL OF THE PLAN PROPOSAL
The Board of Directors unanimously proposes that the
stockholders approve the 1998 Stock Option Plan (the "Stock
Plan"), which is summarized below. The summary is qualified in
its entirety by reference to the text of the Stock Plan, which is
attached to this Proxy Statement as Exhibit A.
Reasons for the Proposal
The Company's Board of Directors believes that the growth of
the Company depends significantly upon the efforts of its
officers and key employees and that they are best motivated to
put forth maximum effort on behalf of the Company if they own an
equity interest in the Company. The Company's Stock Option Plan
is currently in effect and stock options and other equity-based
awards may still be granted under that plan with respect to
47,500 shares of Common Stock. In order that the Company may
continue to motivate and reward its key personnel with stock-
based awards at an appropriate level, the Board of Directors
believes that it is important that a new equity-based plan be
adopted at this time.
Summary of the Stock Plan
Administration
Awards under the Stock Plan are made by the Corporate
Personnel Committee (the "Committee"), which currently consists
of two members of the Board, each of whom is a "non-employee
director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") and qualifies as an
"outside director" under Section 162(m) of the Internal Revenue
Code (the "Code"). The Committee has full power and authority to
designate participants, set the terms of awards and to make any
determinations necessary or desirable for the administration of
the Stock Plan.
Eligible Participants
Employees and officers (whether or not employees) of the
Company and its existing or future subsidiaries, employees and
officers (whether or not employees) of any entity with which the
Company has contracted to receive executive, management or legal
services and who provide services to the Company under such
arrangement, consultants, advisers and any person who has agreed
in writing to become a person otherwise eligible to participate
within not more than 30 days, in each case who can make
substantial contributions to the successful performance of the
Company, are eligible to participate in the Stock Plan. The
Committee has delegated to the Chairman of the Board of the
Company the power to make awards to eligible persons who are not
executive officers or directors of the Company, subject to the
limitations established by the Committee. It is anticipated that
the Committee's determinations of which eligible individuals will
be granted awards and the terms thereof will be based on each
individual's present and potential contribution to the success of
the Company and its subsidiaries. It is estimated that
approximately 216 persons will be eligible for awards under the
Stock Plan; however, it is anticipated that only about 15 persons
will be granted awards.
Number of Shares
The maximum number of shares of Common Stock with respect to
which awards payable in shares of Common Stock may be granted
under the Stock Plan is 850,000 plus, to the extent authorized by
the Board, the number of shares of Common Stock reacquired by the
Company in the open market or in private transactions for an
aggregate price no greater than the cash proceeds received by the
Company from the exercise of options granted under the Plan.
Awards that may be paid only in cash are not counted against the
850,000-share limit. However, grants of stock appreciation
rights, limited rights and other stock-based awards not granted
in tandem with options and payable only in cash may relate to no
more than 850,000 shares. No individual may receive in any year
awards under the Stock Plan, whether payable in cash or shares,
that relate to more than 250,000 shares of Common Stock. Shares
subject to awards that are forfeited or cancelled will again be
available for award. In addition, to the extent that shares are
delivered to pay the exercise price of options or are delivered
or withheld by the Company in payment of the withholding taxes
relating to an award under the Stock Plan, the number of shares
withheld or delivered will again be available for grant under the
Stock Plan. The shares to be delivered under the Stock Plan will
be made available from the authorized but unissued shares of
Common Stock or from treasury shares.
On March __, 1998, the closing price of a share of Common
Stock on The Nasdaq Stock Market was $_______.
Types of Awards
Stock options, stock appreciation rights, limited rights and
other stock-based awards may be granted under the Stock Plan in
the discretion of the Committee. Options granted under the Stock
Plan may be either non-qualified or incentive stock options. Only
employees of the Company and its subsidiaries will be eligible to
receive incentive stock options. Stock appreciation rights and
limited rights may be granted in conjunction with or unrelated to
other awards and, if in conjunction with an outstanding option or
other award, may be granted at the time of the award or
thereafter, at the exercise price of the other award. The
Committee has discretion to fix the exercise price of options,
stock appreciation rights and limited rights at a price not less
than 100% of the fair market value of the underlying Common Stock
at the time of grant (or at the time of grant of the related
award in the case of a stock appreciation right or limited right
granted in conjunction with an outstanding award), except that
this limitation on the Committee's discretion does not apply in
the case of awards granted in substitution for outstanding awards
previously granted by an acquired company or a company with which
the Company combines. The Committee has broad discretion as to
the terms and conditions upon which options and stock
appreciation rights are exercisable, but under no circumstances
will an option, a stock appreciation right or a limited right
have a term exceeding ten years.
The option exercise price may be satisfied in cash, or in
the discretion of the Committee, by exchanging Common Stock owned
by the optionee or by a combination of cash and Common Stock. The
ability to pay the option exercise price in Common Stock would
permit an optionee to engage in a series of successive stock-for-
stock exercises of an option (sometimes referred to as
"pyramiding") and thereby fully exercise an option with little or
no cash investment; however, the Committee's policy requires any
stock tendered in payment of the exercise price of an option to
be in certificated form and to have been held by the exercising
optionee for such time as is sufficient to avoid any adverse
accounting consequences to the Company resulting from the
permitting of stock-for-stock exercises.
Upon the exercise of a stock appreciation right with respect
to Common Stock, a participant would be entitled to receive, for
each share subject to the right, the excess of the fair market
value of the shares on the exercise date over the exercise price
of the right. The Committee has the authority to determine
whether the value of a stock appreciation right is paid in cash
or Common Stock or a combination thereof.
Limited rights generally are exercisable only during a
period beginning not earlier than one day and ending not later
than 90 days after the expiration date of any tender offer,
exchange offer or similar transaction that results in any person
or group becoming the beneficial owner of more than 40% of all
classes and series of the Company's stock outstanding, taken as a
whole that have voting rights with respect to the election of
directors of the Company (not including preferred shares which
may be issued in the future that have the right to elect
directors only if the Company fails to pay dividends). Upon the
exercise of a limited right granted under the Stock Plan, a
participant would be entitled to receive, for each share of
Common Stock subject to the right, the excess, if any, of the
highest price paid in or in connection with the transaction over
the grant price of the limited right.
The Stock Plan also authorizes the Committee to grant to
participants awards of Common Stock and other awards that are
denominated in, payable in, valued in whole or in part by
reference to, or are otherwise based on the value of, Common
Stock ("Other Stock-Based Awards"). The Committee has discretion
to determine the participants to whom Other Stock-Based Awards
are to be made, the times at which these awards are to be made,
the size of these awards, the form of payment, and all other
conditions of these awards, including any restrictions, deferral
periods or performance requirements. The terms of the Other Stock-
Based Awards will be subject to rules and regulations as the
Committee determines.
Any award under the Stock Plan may provide that the
participant has the right to receive currently or on a deferred
basis dividends or dividend equivalents or other cash payments in
addition to or in lieu of such awards, all as the Committee
determines.
Transferability
No award granted under the Stock Plan may be transferred,
pledged, assigned, or encumbered except by will, by the laws of
descent and distribution, or, if permitted by the Committee,
pursuant to a domestic relations order, as defined in the Code.
If permitted by the Committee, stock options and limited rights
granted in tandem with stock options under the Stock Plan may
also be transferred or assigned by the grantee to immediate
family members of the grantee or certain entities owned by or for
the benefit of immediate family members of the grantee.
Adjustments
If the Committee determines that any stock split, stock
dividend or other distribution (whether in the form of cash,
securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase or exchange of shares,
issuance of warrants or other rights to purchase shares or other
securities of the Company, or other similar corporate event
affects the Common Stock such that an adjustment is appropriate
in order to preserve or prevent enlargement of the benefits
intended under the Stock Plan, then the Committee has discretion
to (i) make equitable adjustments in (a) the number and kind of
shares that may be the subject of future awards under the Stock
Plan and (b) the number and kind of shares (or other securities
or property) subject to outstanding awards and the respective
grant or exercise prices thereof and (ii) if appropriate, provide
for the payment of cash to a participant.
Amendment or Termination
The Stock Plan may be amended or terminated at any time by
the Board of Directors, except that no amendment may be made
without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including any
approval that is necessary to qualify awards as "performance-
based" compensation under Section 162(m) of the Code, if deemed
advisable by the Committee.
Federal Income Tax Consequences of Stock Options
Generally, the grant of a stock option under the Stock Plan
will not result in any tax consequence to the participant or the
Company. When an optionee exercises a non-qualified option, the
difference between the exercise price and any higher fair market
value of the Common Stock on the date of exercise will be
ordinary income to the optionee (subject to withholding) and,
subject to Section 162(m) of the Code, will generally be allowed
as a deduction at that time for federal income tax purposes to
the Company.
Any gain or loss realized by an optionee on disposition of
the Common Stock acquired upon exercise of a non-qualified option
will generally be capital gain or loss to the optionee, long-term
or short-term depending on the holding period, and will not
result in any additional federal income tax consequences to the
Company. The optionee's basis in the Common Stock for determining
gain or loss on the disposition will be the fair market value of
the Common Stock determined generally at the time of exercise.
When an optionee exercises an incentive stock option while
employed by the Company or a subsidiary or within three months
(one year for disability) after termination of employment, no
ordinary income will be recognized by the optionee at that time,
but the excess (if any) of the fair market value of the Common
Stock acquired upon such exercise over the option price will be
an adjustment to taxable income for purposes of the federal
alternative minimum tax applicable to individuals. If the Common
Stock acquired upon exercise of the incentive stock option is not
disposed of prior to the expiration of one year after the date of
acquisition and two years after the date of grant of the option,
the excess (if any) of the sale proceeds over the aggregate
option exercise price of the Common Stock will be long-term
capital gain, but the Company will not be entitled to any tax
deduction with respect to the gain. Generally, if the Common
Stock is disposed of prior to the expiration of those periods (a
"Disqualifying Disposition"), the excess of the fair market value
of the Common Stock at the time of exercise over the aggregate
option exercise price (but not more than the gain on the
disposition if the disposition is a transaction on which a loss,
if realized, would be recognized) will be ordinary income at the
time of such Disqualifying Disposition (and the Company will
generally be entitled to a federal income tax deduction in a like
amount). Any gain realized by the optionee as the result of a
Disqualifying Disposition that exceeds the amount treated as
ordinary income will be capital in nature, long-term or short-
term depending on the holding period. If an incentive stock
option is exercised more than three months (one year for
disability) after termination of employment, the federal income
tax consequences are the same as described above for non-
qualified stock options.
If the exercise price of an option is paid by the surrender
of previously owned shares, the basis of the previously owned
shares carries over to the shares received in replacement. If the
option is a non-qualified option, the income recognized on
exercise is added to the basis. If the option is an incentive
stock option, the optionee will recognize gain if the shares
surrendered were acquired through the exercise of an incentive
stock option and have not been held for the applicable holding
period. This gain will be added to the basis of the shares
received in replacement of the previously owned shares.
The Company believes that taxable compensation arising in
connection with stock options and stock appreciation rights
granted under the Stock Plan should be fully deductible to the
Company for purposes of Section 162(m). Section 162(m) of the
Code may limit the deductibility of an executive's compensation
in excess of $1,000,000 per year.
Awards under the Stock Plan that are granted, accelerated or
enhanced upon the occurrence of a change of control may give
rise, in whole or in part, to excess parachute payments within
the meaning of Section 280G of the Code to the extent that such
payments, when aggregated with other payments subject to Section
280G, exceed the limitations contained therein. Excess parachute
payments will be nondeductible to the Company and subject the
recipient of the payments to a 20% excise tax.
If permitted by the Committee, at any time that a
participant is required to pay to the Company the amount required
to be withheld under applicable tax laws in connection with the
exercise of a stock option or the issuance of Common Stock under
the Stock Plan, the participant may elect to have the Company
withhold from the shares that the participant would otherwise
receive shares of Common Stock having a value equal to the amount
to be withheld. This election must be made prior to the date on
which the amount of tax to be withheld is determined.
The foregoing discussion summarizes the federal income tax
consequences applicable to stock options granted under the Stock
Plan based on current provisions of the Code, which are subject
to change. This summary does not cover any foreign, state or
local tax consequences or participation in the Stock Plan.
Awards to Be Granted
The grant of awards under the Stock Plan is entirely in the
discretion of the Committee. The Committee has not yet made a
determination as to the awards to be granted under the Stock
Plan, if it is approved by the stockholders.
Vote Required for Approval of the Stock Plan
Approval of the Stock Plan requires the affirmative vote of
a majority of the shares of Common Stock present and entitled to
vote at the Meeting.
The Board of Directors unanimously recommends a vote FOR
approval of the Stock Plan.
EXHIBIT A
Set forth below is the text of the FM Properties Inc. 1998
Stock Option Plan, as proposed to be adopted. If the Charter
Proposal is adopted by the stockholders (see "Approval of the
Charter Proposal" in the Proxy Statement), the name "FM
Properties Inc." wherever it appears in the Stock Plan shall
instead be "___________________" as shown in brackets. The Plan
Proposal is not, however, subject to or contingent on the
adoption of the Charter Proposal.
FM PROPERTIES INC.
[____________________]
1998 STOCK OPTION PLAN
SECTION 1
Purpose. The purpose of the FM Properties Inc.
[___________________] 1998 Stock Option Plan (the "Plan") is to
motivate and reward key employees, consultants and advisers by
giving them a proprietary interest in the Company's continued
success.
SECTION 2
Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right,
Limited Right or Other Stock-Based Award.
"Award Agreement" shall mean any notice of grant, written
agreement, contract or other instrument or document evidencing
any Award, which may, but need not, be executed or acknowledged
by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean a committee of the Board designated
by the Board to administer the Plan and composed of not fewer
than two directors, each of whom, to the extent necessary to
comply with Rule 16b-3 only, is a "non-employee director" within
the meaning of Rule 16b-3 and, to the extent necessary to comply
with Section 162(m) only, is an "outside director" under Section
162(m). Until otherwise determined by the Board, the Committee
shall be the Corporate Personnel Committee of the Board.
"Company" shall mean FM Properties Inc.
[_____________________].
"Designated Beneficiary" shall mean the beneficiary
designated by the Participant, in a manner determined by the
Committee, to receive the benefits due the Participant under the
Plan in the event of the Participant's death. In the absence of
an effective designation by the Participant, Designated
Beneficiary shall mean the Participant's estate.
"Eligible Individual" shall mean (i) any person providing
services as an officer of the Company or a Subsidiary, whether or
not employed by such entity, including any such person who is
also a director of the Company, (ii) any employee of the Company
or a Subsidiary, including any director who is also an employee
of the Company or a Subsidiary, (iii) any officer or employee of
an entity with which the Company has contracted to receive
executive, management or legal services who provides services to
the Company or a Subsidiary through such arrangement, (iv) any
consultant or adviser to the Company, a Subsidiary or to an
entity described in clause (iii) hereof who provides services to
the Company or a Subsidiary through such arrangement and (v) any
person who has agreed in writing to become a person described in
clauses (i), (ii), (iii) or (iv) within not more than 30 days
following the date of grant of such person's first Award under
the Plan.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Incentive Stock Option" shall mean an option granted under
Section 6 of the Plan that is intended to meet the requirements
of Section 422 of the Code or any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8
of the Plan.
"Nonqualified Stock Option" shall mean an option granted
under Section 6 of the Plan that is not intended to be an
Incentive Stock Option.
"Offer" shall mean any tender offer, exchange offer or
series of purchases or other acquisitions, or any combination of
those transactions, as a result of which any person, or any two
or more persons acting as a group, and all affiliates of such
person or persons, shall beneficially own more than 40% of all
classes and series of the Company's stock outstanding, taken as a
whole, that has voting rights with respect to the election of
directors of the Company (not including any series of preferred
stock of the Company that has the right to elect directors only
upon the failure of the Company to pay dividends).
"Offer Price" shall mean the highest price per Share paid in
any Offer that is in effect at any time during the period
beginning on the ninetieth day prior to the date on which a
Limited Right is exercised and ending on and including the date
of exercise of such Limited Right. Any securities or property
that comprise all or a portion of the consideration paid for
Shares in the Offer shall be valued in determining the Offer
Price at the higher of (i) the valuation placed on such
securities or property by the person or persons making such
Offer, or (ii) the valuation, if any, placed on such securities
or property by the Committee or the Board.
"Option" shall mean an Incentive Stock Option or a
Nonqualified Stock Option.
"Other Stock-Based Award" shall mean any right or award
granted under Section 9 of the Plan.
"Participant" shall mean any Eligible Individual granted an
Award under the Plan.
"Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision
thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 under the Exchange Act,
or any successor rule or regulation thereto as in effect from
time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission,
including the staff thereof, or any successor thereto.
"Section 162(m)" shall mean Section 162(m) of the Code and
all regulations promulgated thereunder as in effect from time to
time.
"Shares" shall mean the shares of Common Stock, par value
$0.01 per share, of the Company and such other securities of the
Company or a Subsidiary as the Committee may from time to time
designate.
"Stock Appreciation Right" shall mean any right granted
under Section 7 of the Plan.
"Subsidiary" shall mean (i) any corporation or other entity
in which the Company possesses directly or indirectly equity
interests representing at least 50% of the total ordinary voting
power or at least 50% of the total value of all classes of equity
interests of such corporation or other entity and (ii) any other
entity in which the Company has a direct or indirect economic
interest that is designated as a Subsidiary by the Committee.
SECTION 3
(a) Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law,
and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to an
Eligible Individual; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights or other
matters are to be calculated in connection with, Awards; (iv)
determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, whole Shares, other whole
securities, other Awards, other property or other cash amounts
payable by the Company upon the exercise of that or other Awards,
or canceled, forfeited or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or
suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable by the Company with respect
to an Award shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii)
interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (viii) establish,
amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or
desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive
and binding upon all Persons, including the Company, any
Subsidiary, any Participant, any holder or beneficiary of any
Award, any stockholder of the Company and any Eligible
Individual.
(b) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more
officers of the Company the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards to,
or to cancel, modify or waive rights with respect to, or to
alter, discontinue, suspend, or terminate Awards held by,
Eligible Individuals who are not officers or directors of the
Company for purposes of Section 16 of the Exchange Act, or any
successor section thereto, or who are otherwise not subject to
such Section.
SECTION 4
Eligibility. Any Eligible Individual shall be eligible to
be granted an Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in Section 5(b):
(i) Calculation of Number of Shares Available.
(A) The number of Shares with respect to which
Awards payable in Shares may be granted under the Plan shall be
850,000, plus, to the extent authorized by the Board, the number
of Shares reacquired by the Company in the open market or in
private transactions for an aggregate price no greater than the
cash proceeds received by the Company from the exercise of
options granted under the Plan. Awards that by their terms may
be settled only in cash shall not be counted against the maximum
number of Shares provided herein.
(B) Grants of Stock Appreciation Rights, Limited
Rights and Other Stock-Based Awards not granted in tandem with
Options and payable only in cash may relate to no more than
850,000 Shares.
(C) Any Shares granted under the Plan that are
forfeited because of failure to meet an Award contingency or
condition shall again be available for grant pursuant to new
Awards under the Plan.
(D) To the extent any Shares covered by an Award
are not issued because the Award is forfeited or cancelled or the
Award is settled in cash, such Shares shall again be available
for grant pursuant to new Awards under the Plan.
(E) To the extent that Shares are delivered to
pay the exercise price of an Option or are delivered or withheld
by the Company in payment of the withholding taxes relating to an
Award, the number of Shares so delivered or withheld shall become
Shares with respect to which Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the
Company, any Shares with respect to which Awards are made by the
Company, or any Shares with respect to which the Company becomes
obligated to make Awards, through the assumption of, or in
substitution for, outstanding awards previously granted by an
acquired company or a company with which the Company combines,
shall not be counted against the Shares available for Awards
under the Plan.
(iii) Sources of Shares Deliverable Under Awards.
Any Shares delivered pursuant to an Award may consist of
authorized and unissued Shares or of treasury Shares, including
Shares held by the Company or a Subsidiary and Shares acquired in
the open market or otherwise obtained by the Company or a
Subsidiary.
(iv) Individual Limit. Any provision of the Plan to
the contrary notwithstanding, no individual may receive in any
year Awards under the Plan, whether payable in cash or Shares,
that relate to more than 250,000 Shares.
(b) Adjustments. In the event that the Committee
determines that any dividend or other distribution (whether in
the form of cash, Shares, Subsidiary securities, other securities
or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate to
prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it
may deem equitable, adjust any or all of (i) the number and type
of Shares (or other securities or property) with respect to which
Awards may be granted, (ii) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any Award and,
if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award and, if deemed appropriate, adjust
outstanding Awards to provide the rights contemplated by Section
9(b) hereof; provided, in each case, that with respect to Awards
of Incentive Stock Options no such adjustment shall be authorized
to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code or any successor provision thereto
and, with respect to all Awards under the Plan, no such
adjustment shall be authorized to the extent that such authority
would be inconsistent with the requirements for full
deductibility under Section 162(m); and provided further, that
the number of Shares subject to any Award denominated in Shares
shall always be a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine
the Eligible Individuals to whom Options shall be granted, the
number of Shares to be covered by each Option, the option price
therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority
to grant Incentive Stock Options, Nonqualified Stock Options or
both. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with
such rules as may be required by Section 422 of the Code, as from
time to time amended, and any implementing regulations. Except
in the case of an Option granted in assumption of or substitution
for an outstanding award of a company acquired by the Company or
with which the Company combines, the exercise price of any Option
granted under this Plan shall not be less than 100% of the fair
market value of the underlying Shares on the date of grant.
(b) Exercise. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Committee
may, in its sole discretion, specify in the applicable Award
Agreement or thereafter, provided, however, that in no event may
any Option granted hereunder be exercisable after the expiration
of 10 years after the date of such grant. The Committee may
impose such conditions with respect to the exercise of Options,
including without limitation, any condition relating to the
application of Federal or state securities laws, as it may deem
necessary or advisable.
(c) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price
therefor is received by the Company. Such payment may be made in
cash, or its equivalent, or, if and to the extent permitted by
the Committee, by applying cash amounts payable by the Company
upon the exercise of such Option or other Awards by the holder
thereof or by exchanging whole Shares owned by such holder (which
are not the subject of any pledge or other security interest), or
by a combination of the foregoing, provided that the combined
value of all cash, cash equivalents, cash amounts so payable by
the Company upon exercises of Awards and the fair market value of
any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of
the effective date of such exercise, is at least equal to such
option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions
of the Plan, the Committee shall have sole and complete authority
to determine the Eligible Individuals to whom Stock Appreciation
Rights shall be granted, the number of Shares to be covered by
each Award of Stock Appreciation Rights, the grant price thereof
and the conditions and limitations applicable to the exercise
thereof. Stock Appreciation Rights may be granted in tandem with
another Award, in addition to another Award, or freestanding and
unrelated to any other Award. Stock Appreciation Rights granted
in tandem with or in addition to an Option or other Award may be
granted either at the same time as the Option or other Award or
at a later time. Stock Appreciation Rights shall not be
exercisable after the expiration of 10 years after the date of
grant. Except in the case of a Stock Appreciation Right granted
in assumption of or substitution for an outstanding award of a
company acquired by the Company or with which the Company
combines, the grant price of any Stock Appreciation Right granted
under this Plan shall not be less than 100% of the fair market
value of the Shares covered by such Stock Appreciation Right on
the date of grant or, in the case of a Stock Appreciation Right
granted in tandem with a then outstanding Option or other Award,
on the date of grant of such related Option or Award.
(b) A Stock Appreciation Right shall entitle the holder
thereof to receive upon exercise, for each Share to which the SAR
relates, an amount equal to the excess, if any, of the fair
market value of a Share on the date of exercise of the Stock
Appreciation Right over the grant price. Any Stock Appreciation
Right shall be settled in cash, unless the Committee shall
determine at the time of grant of a Stock Appreciation Right that
it shall or may be settled in cash, Shares or a combination of
cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine
the Eligible Individuals to whom Limited Rights shall be granted,
the number of Shares to be covered by each Award of Limited
Rights, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Limited Rights
may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any Award.
Limited Rights granted in tandem with or in addition to an Award
may be granted either at the same time as the Award or at a later
time. Limited Rights shall not be exercisable after the
expiration of 10 years after the date of grant and shall only be
exercisable during a period determined at the time of grant by
the Committee beginning not earlier than one day and ending not
more than ninety days after the expiration date of an Offer.
Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by
the Company or with which the Company combines, the grant price
of any Limited Right granted under this Plan shall not be less
than 100% of the fair market value of the Shares covered by such
Limited Right on the date of grant or, in the case of a Limited
Right granted in tandem with a then outstanding Option or other
Award, on the date of grant of such related Option or Award.
(b) A Limited Right shall entitle the holder thereof to
receive upon exercise, for each Share to which the Limited Right
relates, an amount equal to the excess, if any, of the Offer
Price on the date of exercise of the Limited Right over the grant
price. Any Limited Right shall be settled in cash, unless the
Committee shall determine at the time of grant of a Limited Right
that it shall or may be settled in cash, Shares or a combination
of cash and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby
authorized to grant to Eligible Individuals an "Other Stock-Based
Award", which shall consist of an Award, the value of which is
based in whole or in part on the value of Shares, that is not an
instrument or Award specified in Sections 6 through 8 of this
Plan. Other Stock-Based Awards may be awards of Shares or may be
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible or
exchangeable into or exercisable for Shares), as deemed by the
Committee consistent with the purposes of the Plan. The
Committee shall determine the terms and conditions of any such
Other Stock-Based Award and may provide that such awards would be
payable in whole or in part in cash. Except in the case of an
Other Stock-Based Award granted in assumption of or in
substitution for an outstanding award of a company acquired by
the Company or with which the Company combines, the price at
which securities may be purchased pursuant to any Other
Stock-Based Award granted under this Plan, or the provision, if
any, of any such Award that is analogous to the purchase or
exercise price, shall not be less than 100% of the fair market
value of the securities to which such Award relates on the date
of grant.
(b) Dividend Equivalents. In the sole and complete
discretion of the Committee, an Award, whether made as an Other
Stock-Based Award under this Section 9 or as an Award granted
pursuant to Sections 6 through 8 hereof, may provide the holder
thereof with dividends or dividend equivalents, payable in cash,
Shares, Subsidiary securities, other securities or other property
on a current or deferred basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend
or terminate the Plan or any portion thereof at any time,
provided that no amendment shall be made without stockholder
approval if such approval is necessary to comply with any tax or
regulatory requirement, including for these purposes any approval
necessary to qualify Awards as "performance based" compensation
under Section 162(m) or any successor provision if such
qualification is deemed necessary or advisable by the Committee.
Notwithstanding anything to the contrary contained herein, the
Committee may amend the Plan in such manner as may be necessary
for the Plan to conform with local rules and regulations in any
jurisdiction outside the United States.
(b) Amendments to Awards. The Committee may amend, modify
or terminate any outstanding Award at any time prior to payment
or exercise in any manner not inconsistent with the terms of the
Plan, including without limitation, to change the date or dates
as of which an Award becomes exercisable. Notwithstanding the
foregoing, no amendment, modification or termination may impair
the rights of a holder of an Award under such Award without the
consent of the holder.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby
authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in Section 5(b) hereof) affecting the Company, or the
financial statements of the Company or any Subsidiary, or of
changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such
adjustments are appropriate to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available
under the Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may
cause any Award granted hereunder to be canceled in consideration
of a cash payment or alternative Award made to the holder of such
canceled Award equal in value to such canceled Award. The
determinations of value under this subparagraph shall be made by
the Committee in its sole discretion.
SECTION 11
(a) Award Agreements. Each Award hereunder shall be
evidenced by a writing delivered to the Participant that shall
specify the terms and conditions thereof and any rules applicable
thereto, including but not limited to the effect on such Award of
the death, retirement or other termination of employment of the
Participant and the effect thereon, if any, of a change in
control of the Company.
(b) Withholding. (i) A Participant may be required to
pay to the Company, and the Company shall have the right to
deduct from all amounts paid to a Participant (whether under the
Plan or otherwise), any taxes required by law to be paid or
withheld in respect of Awards hereunder to such Participant. The
Committee may provide for additional cash payments to holders of
Awards to defray or offset any tax arising from the grant,
vesting, exercise or payment of any Award.
(ii) At any time that a Participant is required to pay
to the Company an amount required to be withheld under the
applicable tax laws in connection with the issuance of shares of
Common Stock under the Plan, the Participant may, if permitted by
the Committee, satisfy this obligation in whole or in part by
electing (the "Election") to have the Company withhold from the
issuance shares of Common Stock having a value equal to the
amount required to be withheld. The value of the shares withheld
shall be based on the fair market value of the Common Stock on
the date that the amount of tax to be withheld shall be
determined in accordance with applicable tax laws (the "Tax
Date").
(iii) Each Election must be made prior to the Tax
Date. The Committee may suspend or terminate the right to make
Elections at any time.
(iv) A Participant may also satisfy his or her total
tax liability related to the Award by delivering Shares owned by
the Participant. The value of the Shares delivered shall be
based on the fair market value of the Shares on the Tax Date.
(c) Transferability. No Awards granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a
Participant except: (i) by will; (ii) by the laws of descent and
distribution; (iii) pursuant to a domestic relations order, as
defined in the Code, if permitted by the Committee and so
provided in the Award Agreement or an amendment thereto; or (iv)
if permitted by the Committee and so provided in the Award
Agreement or an amendment thereto, Options and Limited Rights
granted in tandem therewith may be transferred or assigned (a) to
Immediate Family Members, (b) to a partnership in which Immediate
Family Members, or entities in which Immediate Family Members are
the owners, members or beneficiaries, as appropriate, are the
partners, (c) to a limited liability company in which Immediate
Family Members, or entities in which Immediate Family Members are
the owners, members or beneficiaries, as appropriate, are the
members, or (d) to a trust for the benefit of Immediate Family
Members; provided, however, that no more than a de minimus
beneficial interest in a partnership, limited liability company
or trust described in (b), (c) or (d) above may be owned by a
person who is not an Immediate Family Member or by an entity that
is not beneficially owned solely by Immediate Family Members.
"Immediate Family Members" shall be defined as the spouse and
natural or adopted children or grandchildren of the Participant
and their spouses. To the extent that an Incentive Stock Option
is permitted to be transferred during the lifetime of the
Participant, it shall be treated thereafter as a Nonqualified
Stock Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Awards, or levy of
attachment or similar process upon Awards not specifically
permitted herein, shall be null and void and without effect. The
designation of a Designated Beneficiary shall not be a violation
of this Section 11(c).
(d) Share Certificates. All certificates for Shares or
other securities delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements
of the SEC, any stock exchange upon which such Shares or other
securities are then listed, and any applicable federal or state
laws, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions.
(e) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, which may,
but need not, provide for the grant of options, stock
appreciation rights and other types of Awards provided for
hereunder (subject to stockholder approval of any such
arrangement if approval is required), and such arrangements may
be either generally applicable or applicable only in specific
cases.
(f) No Right to Employment. The grant of an Award shall
not be construed as giving a Participant the right to be retained
in the employ of or as a consultant or adviser to the Company or
any Subsidiary or in the employ of or as a consultant or adviser
to any other entity providing services to the Company. The
Company or any Subsidiary or any such entity may at any time
dismiss a Participant from employment, or terminate any
arrangement pursuant to which the Participant provides services
to the Company or a Subsidiary, free from any liability or any
claim under the Plan, unless otherwise expressly provided in the
Plan or in any Award Agreement. No Eligible Individual or other
person shall have any claim to be granted any Award, and there is
no obligation for uniformity of treatment of Eligible
Individuals, Participants or holders or beneficiaries of Awards.
(g) Governing Law. The validity, construction, and effect
of the Plan, any rules and regulations relating to the Plan and
any Award Agreement shall be determined in accordance with the
laws of the State of Delaware.
(h) Severability. If any provision of the Plan or any
Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Person or Award,
or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any
Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company
and a Participant or any other Person. To the extent that any
Person acquires a right to receive payments from the Company
pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
(j) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional
Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(k) Headings. Headings are given to the subsections of the
Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to
the construction or interpretation of the Plan or any provision
thereof.
SECTION 12
Term of the Plan. Subject to Section 10(a), the Plan shall
remain in effect until all Awards permitted to be granted under
the Plan have either been satisfied, expired or cancelled under
the terms of the Plan and any restrictions imposed on Shares in
connection with their issuance under the Plan have lapsed.
FM PROPERTIES INC.
Proxy Solicited on Behalf of the Board of Directors for Annual
Meeting of Stockholders, May 14, 1998
The undersigned hereby appoints Richard C. Adkerson and
William H. Armstrong, III as proxies, with full power of
substitution, to vote the shares of the undersigned in FM
Properties Inc. at the Annual Meeting of Stockholders to be held
on Thursday, May 14, 1998, at 1:30 p.m., and at any adjournment
thereof, on all matters coming before the meeting. The proxies
will vote: (1) as you specify on the back of this card, (2) as
the Board of Directors recommends where you do not specify your
vote on a matter listed on the back of this card, and (3) as the
proxies decide on any other matter.
If you wish to vote on all matters as the Board of Directors
recommends, please sign, date and return this card. If you wish
to vote on items individually, please also mark the appropriate
boxes on the back of this card.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
(continued on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Please
mark
your
votes
as
indicated
in this
example [X]
The Board of Directors
recommends a vote FOR:
Item 1-Election of the nominee Item FOR WITHHELD Item 2-Ratification of appointment FOR AGAINST ABSTAIN
for director. of Arthur Andersen LLP as
Nominee for director independent auditors.
of FM Properties Inc.
Richard C. Adkerson
FOR, EXCEPT WITHHELD FROM
(Write nominee name(s) in the
space provided above to
withhold authority.)
Item 3-Approval of amendment to
the Amended and Restated
Certificate of Incorporation. FOR AGAINST ABSTAIN
Item 4-Approval of the 1998 Stock
Option Plan. FOR AGAINST ABSTAIN
Signature(s) Dated: 1998
You may specify your votes by marking the
appropriate boxes on this side. You need not
mark any boxes, however, if you wish to vote
all items in accordance with the Board of
Directors' recommendation. If your votes are
not specified, this proxy will be voted FOR
the election of the nominee for director and
FOR Proposals 2, 3 and 4.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
