14.   MACK-CALI REALTY CORPORATION STOCKHOLDERS’ EQUITY 

 

To maintain its qualification as a REIT, not more than 50 percent in value of the outstanding shares of the Company may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any taxable year of the Company, other than its initial taxable year (defined to include certain entities), applying certain constructive ownership rules.  To help ensure that the Company will not fail this test, the Company’s Charter provides, among other things, certain restrictions on the transfer of common stock to prevent further concentration of stock ownership.  Moreover, to evidence compliance with these requirements, the Company must maintain records that disclose the actual ownership of its outstanding common stock and demands written statements each year from the holders of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock.

 

 

PREFERRED STOCK

The Company had 10,000 shares of eight-percent Series C cumulative redeemable perpetual preferred stock issued and outstanding (“Series C Preferred Stock”) in the form of 1,000,000 depositary shares ($25 stated value per depositary share).  Each depositary share represented 1/100^th of a share of Series C Preferred Stock.  The Series C Preferred Stock was essentially on an equivalent basis in priority with the preferred units of the Operating Partnership (See Note 15: Noncontrolling interests in subsidiaries).  On October 28, 2011, the Company redeemed its Series C Preferred Stock, at a price of $2,500 per share, plus accrued and unpaid dividends through the date prior to the redemption date.  The write off of preferred stock issuance costs of $164,000 was included in preferred stock dividends for the year ended December 31, 2011.

 

SHARE REPURCHASE PROGRAM

On September 12, 2007, the Board of Directors authorized an increase to the Company’s repurchase program under which the Company was permitted to purchase up to $150 million of the Company’s outstanding common stock (“Repurchase Program”).  The Company has purchased and retired 2,893,630 shares of its outstanding common stock for an aggregate cost of approximately $104 million through June 30, 2012 under the Repurchase Program (none of which has occurred in 2011 and the six months ended June 30, 2012).  The Company has a remaining authorization to repurchase up to an additional $46 million of its outstanding common stock, which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions.

 

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

The Company has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which 5.5 million shares of the Company’s common stock have been reserved for future issuance.  The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the Company’s shares of common stock.  The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”) for the 5.5 million shares of the Company’s common stock reserved for issuance under the DRIP. 

 

STOCK OPTION PLANS

In May 2004, the Company established the 2004 Incentive Stock Plan under which a total of 2,500,000 shares have been reserved for issuance.  No options have been granted through June 30, 2012 under this plan.  In September 2000, the Company established the 2000 Employee Stock Option Plan (“2000 Employee Plan”) and the Amended and Restated 2000 Director Stock Option Plan (“2000 Director Plan”).  In May 2002, shareholders of the Company approved amendments to both plans to increase the total shares reserved for issuance under both of the 2000 plans from 2,700,000 to 4,350,000 shares of the Company’s common stock (from 2,500,000 to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000 shares under the 2000 Director Plan).  In 1994, and as subsequently amended, the Company established the Mack-Cali Employee Stock Option Plan (“Employee Plan”) and the Mack-Cali Director Stock Option Plan (“Director Plan”) under which a total of 5,380,188 shares (subject to adjustment) of the Company’s common stock had been reserved for issuance (4,980,188 shares under the Employee Plan and 400,000 shares under the Director Plan).  As the Employee Plan and Director Plan expired in 2004, and the 2000 Employee Plan and 2000 Director Plan expired in 2010, stock options may no longer be issued under those plans.  Stock options granted under the Employee Plan in 1994 and 1995 became exercisable over a three-year period.  Stock options granted under the 2000 Employee Plan and those options granted subsequent to 1995 under the Employee Plan became exercisable over a five-year period.  All stock options granted under both the 2000 Director Plan and Director Plan became exercisable in one year.  All options were granted at the fair market value at the dates of grant and have terms of ten years.  As of June 30, 2012 and December 31, 2011, the stock options outstanding, which were all exercisable, had a weighted average remaining contractual life of approximately 0.6 and 1.1 years, respectively.

 

 

 

 

 

 

 

 

 

Information regarding the Company’s stock option plans is summarized below:

	Shares Under Options			Weighted Average Exercise Price		Aggregate Intrinsic Value $(000’s)
Outstanding  as January 1, 2012	183,870		$	29.51		-
Exercised/Cancelled	-			-
Outstanding at June 30, 2012 ($28.47 – $45.47)	183,870		$	29.51		-
Options exercisable at June 30, 2012	183,870
Available for grant at June 30, 2012	2,347,153

 

Cash received from options exercised under all stock option plans was zero and $1,193,000 for the three months ended June 30, 2012 and 2011, respectively, and zero and $1,463,000 for the six months ended June 30, 2012 and 2011, respectively.  The total intrinsic value of options exercised during the three months ended June 30, 2012 and 2011 was zero and $312,000, respectively, and zero and $356,000 for the six months ended June 30, 2012 and 2011, respectively.  The Company has a policy of issuing new shares to satisfy stock option exercises.

 

STOCK COMPENSATION

The Company has issued stock awards (“Restricted Stock Awards”) to officers, certain other employees, and nonemployee members of the Board of Directors of the Company, which allow the holders to each receive a certain amount of shares of the Company’s common stock generally over a one to seven-year vesting period, of which 105,843 unvested shares were outstanding at June 30, 2012.  Of the outstanding Restricted Stock Awards issued to executive officers and senior management, 40,877 are contingent upon the Company meeting certain performance goals to be set by the Executive Compensation and Option Committee of the Board of Directors of the Company each year, with the remaining based on time and service. All Restricted Stock Awards provided to the officers and certain other employees were issued under the 2004 Incentive Stock Plan, 2000 Employee Plan and the Employee Plan. Restricted Stock Awards provided to directors were issued under the 2004 Incentive Stock Plan and the 2000 Director Plan.

 

Information regarding the Restricted Stock Awards is summarized below:

				Weighted-Average
				Grant – Date
	Shares			Fair Value
Outstanding at January 1, 2012	187,447		$	33.82
Vested	(81,604)			34.42
Outstanding at June 30, 2012	105,843		$	33.36

 

DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS

The Amended and Restated Deferred Compensation Plan for Directors, which commenced January 1, 1999, allows non‑employee directors of the Company to elect to defer up to 100 percent of their annual retainer fee into deferred stock units.  The deferred stock units are convertible into an equal number of shares of common stock upon the directors’ termination of service from the Board of Directors or a change in control of the Company, as defined in the plan.  Deferred stock units are credited to each director quarterly using the closing price of the Company’s common stock on the applicable dividend record date for the respective quarter.  Each participating director’s account is also credited for an equivalent amount of deferred stock units based on the dividend rate for each quarter.

 

During the six months ended June 30, 2012 and 2011, 8,392 and 6,385 deferred stock units were earned, respectively.  As of June 30, 2012 and December 31, 2011, there were 106,512 and 98,009 director stock units outstanding, respectively.

 

EARNINGS PER SHARE

Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following information presents the Company’s results for the three months ended June 30, 2012 and 2011 in accordance with ASC 260, Earnings Per Share:  (in thousands, except per share amounts)

			Three Months Ended
			June 30,
Computation of Basic EPS			2012			2011
Income from continuing operations		$	12,727		$	20,102
Add: Noncontrolling interest in consolidated joint ventures			92			102
Deduct:  Noncontrolling interest in Operating Partnership			(1,562)			(2,536)
Deduct:  Preferred stock dividends			-			(500)
Income from continuing operations available to common shareholders			11,257			17,168
Income (loss) from discontinued operations available to common
shareholders			(1,156)			165
Net income available to common shareholders			10,101			17,333
Weighted average common shares			87,817			86,936
Basic EPS:
Income from continuing operations available to common shareholders		$	0.12		$	0.20
Income (loss) from discontinued operations available to common
shareholders			(0.01)			-
Net income available to common shareholders		$	0.11		$	0.20
			Three Months Ended
			June 30,
Computation of Diluted EPS			2012			2011
Income from continuing operations available to common shareholders		$	11,257		$	17,168
Add: Noncontrolling interest in Operating Partnership			1,562			2,536
Income from continuing operations for diluted earnings per share			12,819			19,704
Income (loss) from discontinued operations for diluted earnings
per share			(1,316)			189
Net income available to common shareholders		$	11,503		$	19,893
Weighted average common shares			100,069			99,887
Diluted EPS:
Income from continuing operations available to common shareholders		$	0.12		$	0.20
Income (loss) from discontinued operations available to common
shareholders			(0.01)			-
Net income available to common shareholders		$	0.11		$	0.20

 

 

The following information presents the Company’s results for the six months ended June 30, 2012 and 2011 in accordance with ASC 260, Earnings Per Share:  (in thousands, except per share amounts)

			Six Months Ended
			June 30,
Computation of Basic EPS			2012			2011
Income from continuing operations		$	38,175		$	38,537
Add: Noncontrolling interest in consolidated joint ventures			171			212
Deduct:  Noncontrolling interest in Operating Partnership			(4,675)			(4,973)
Deduct:  Preferred stock dividends			-			(1,000)
Income from continuing operations available to common shareholders			33,671			32,776
Income (loss) from discontinued operations available to common
shareholders			2,197			286
Net income available to common shareholders		$	35,868		$	33,062
Weighted average common shares			87,808			84,953
Basic EPS:
Income from continuing operations available to common shareholders		$	0.38		$	0.39
Income (loss) from discontinued operations available to common
shareholders			0.03			-
Net income available to common shareholders		$	0.41		$	0.39
			Six Months Ended
			June 30,
Computation of Diluted EPS			2012			2011
Income from continuing operations available to common shareholders		$	33,671		$	32,776
Add: Noncontrolling interest in Operating Partnership			4,675			4,973
Income from continuing operations for diluted earnings per share			38,346			37,749
Income (loss) from discontinued operations for diluted earnings
per share			2,503			329
Net income available to common shareholders		$	40,849		$	38,078
Weighted average common shares			100,065			97,963
Diluted EPS:
Income from continuing operations available to common shareholders		$	0.38		$	0.39
Income (loss) from discontinued operations available to common
shareholders			0.03			-
Net income available to common shareholders		$	0.41		$	0.39

 

 

 

The following schedule reconciles the shares used in the basic EPS calculation to the shares used in the diluted EPS calculation: (in thousands)

	Three Months Ended			Six Months Ended
		June 30,			June 30,
	2012	2011		2012	2011
Basic EPS shares	87,817	86,936		87,808	84,953
Add:   Operating Partnership – common units	12,183	12,840		12,188	12,896
Stock options	-	37		-	40
Restricted Stock Awards	69	74		69	74
Diluted EPS Shares	100,069	99,887		100,065	97,963

 

 

Unvested restricted stock outstanding as of June 30, 2012 and 2011 were 105,843 and 157,681, respectively.

 

Dividends declared per common share for each of the three month periods ended June 30, 2012 and 2011 was $0.45 per share.  Dividends declared per common share for each of the six month periods ended June 30, 2012 and 2011 was $0.90 per share.