Quarterly report pursuant to Section 13 or 15(d)

Mack-Cali Realty Corporation Stockholders' Equity

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Mack-Cali Realty Corporation Stockholders' Equity
 9 Months Ended
Sep. 30, 2011
Mack-Cali Realty Corporation Stockholders' Equity [Abstract]  
Mack-Cali Realty Corporation Stockholders' Equity

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 for, 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 has 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 represents 1/100th of a share of Series C Preferred Stock.

The Series C Preferred Stock has preference rights with respect to liquidation and distributions over the common stock. Holders of the Series C Preferred Stock, except under certain limited conditions, will not be entitled to vote on any matters.  In the event of a cumulative arrearage equal to six quarterly dividends, holders of the Series C Preferred Stock will have the right to elect two additional members to serve on the Company's Board of Directors until dividends have been paid in full.  As of September 30, 2011, there were no dividends in arrears.  The Company may issue unlimited additional preferred stock ranking on a parity with the Series C Preferred Stock but may not issue any preferred stock senior to the Series C Preferred Stock without the consent of two-thirds of its holders.  The Series C Preferred Stock is essentially on an equivalent basis in priority with the preferred units of the Operating Partnership (see Note 15: Noncontrolling interests in subsidiaries).
 
On September 27, 2011, the Company provided notice to holders of its Series C Preferred Stock, calling all such shares for redemption on October 28, 2011 at a price of $2,500 per share, plus accrued and unpaid dividends through the date prior to the redemption date.  The redemption value of the Series C Preferred Stock of $25,000,000 is included in accounts payable, accrued expenses and other liabilities as of September 30, 2011, and the write off of preferred stock issuance costs of $164,000 is included in preferred stock dividends for the three and nine months ended September 30, 2011.
 

COMMON STOCK

On February 18, 2011, the Company completed a public offering of 7,187,500 shares of common stock and used the net proceeds, which totaled approximately $227.4 million (after offering costs) primarily to repay borrowings under its unsecured revolving credit facility.

 

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 September 30, 2011 under the Repurchase Program (none of which has occurred in 2010 and the nine months ended September 30, 2011).  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.

 

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 September 30, 2011 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 September 30, 2011 and December 31, 2010, the stock options outstanding, which were all exercisable, had a weighted average remaining contractual life of approximately 1.2 and 1.7 years, respectively.

 

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

   
Weighted
Aggregate
 
Shares
Average
Intrinsic
 
Under
Exercise
Value
 
Options
Price
$(000's)
Outstanding  as January 1, 2011
295,676
$29.05
$1,186
Exercised
(107,806)
$28.27
  
Cancelled
(4,000)
$28.80
  
Outstanding at September 30, 2011 ($28.47 – $45.47)
183,870
$29.51
--
Options exercisable at September 30, 2011
183,870
    
Available for grant at September 30, 2011
2,425,073
    
 
 

Cash received from options exercised under all stock option plans was $1,585,000 and $960,000 for the three months ended September 30, 2011 and 2010, respectively, and $3,048,000 and $1,473,000 for the nine months ended September 30, 2011 and 2010, respectively.  The total intrinsic value of options exercised during the three months ended September 30, 2011 and 2010 was $140,000 and $203,000, respectively, and $496,000 and $344,000 for the nine months ended September 30, 2011 and 2010, 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 157,681 unvested shares were outstanding at September 30, 2011.  Of the outstanding Restricted Stock Awards issued to executive officers and senior management, 98,524 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, 2011

239,759

$35.90

Vested

(82,078)

37.01

Outstanding at September 30, 2011

157,681

$35.32

 

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 nine months ended September 30, 2011 and 2010, 10,620 and 9,411 deferred stock units were earned, respectively.  As of September 30, 2011 and December 31, 2010, there were 93,773 and 84,236 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 September 30, 2011 and 2010 in accordance with ASC 260, Earnings Per Share:  (dollars in thousands)

                 
   
Three Months Ended
  
   
September 30,
  
Computation of Basic EPS
  
2011
    
2010
  
Income from continuing operations
   $ 24,083     $ 15,581  
Add:         Noncontrolling interest in consolidated joint ventures
     96       108  
Deduct:  Noncontrolling interest in operating partnership
     (3,015 )     (2,150 )
Deduct:  Preferred stock dividends
     (664 )     (500 )
Income from continuing operations available to common shareholders
     20,500       13,039  
Income (loss) from discontinued operations available to common
                
   shareholders
     --       --  
Net income available to common shareholders
   $ 20,500     $ 13,039  
                 
Weighted average common shares
     87,019       79,304  
                 
Basic EPS:
                
Income from continuing operations available to common shareholders
   $ 0.24     $ 0.16  
Income (loss) from discontinued operations available to common
                
   shareholders
     --       --  
Net income available to common shareholders
   $ 0.24     $ 0.16  

                 
   
Three Months Ended
  
   
September 30,
  
Computation of Diluted EPS
  
2011
    
2010
  
Income from continuing operations available to common shareholders
   $ 20,500     $ 13,039  
Add:         Noncontrolling interest in operating partnership
     3,015       2,150  
Income from continuing operations for diluted earnings per share
     23,515       15,189  
Income (loss) from discontinued operations for diluted earnings
                
   per share
     --       --  
Net income available to common shareholders
   $ 23,515     $ 15,189  
                 
Weighted average common shares
     99,917       92,464  
                 
Diluted EPS:
                
Income from continuing operations available to common shareholders
   $ 0.24     $ 0.16  
Income (loss) from discontinued operations available to common
                
   shareholders
     --       --  
Net income available to common shareholders
   $ 0.24     $ 0.16  

The following information presents the Company's results for the nine months ended September 30, 2011 and 2010 in accordance with ASC 260, Earnings Per Share:  (dollars in thousands)

                 
   
Nine Months Ended
  
   
September 30,
  
Computation of Basic EPS
  
2011
    
2010
  
Income from continuing operations
   $ 62,949     $ 50,518  
Add:         Noncontrolling interest in consolidated joint ventures
     308       281  
Deduct:  Noncontrolling interest in operating partnership
     (8,031 )     (7,047 )
Deduct:  Preferred stock dividends
     (1,664 )     (1,500 )
Income from continuing operations available to common shareholders
     53,562       42,252  
Income (loss) from discontinued operations available to common
                
   shareholders
     --       4,021  
Net income available to common shareholders
   $ 53,562     $ 46,273  
                 
Weighted average common shares
     85,649       79,161  
                 
Basic EPS:
                
Income from continuing operations available to common shareholders
   $ 0.63     $ 0.53  
Income (loss) from discontinued operations available to common
                
   shareholders
     --       0.05  
Net income available to common shareholders
   $ 0.63     $ 0.58  

                 
   
Nine Months Ended
  
   
September 30,
  
Computation of Diluted EPS
  
2011
    
2010
  
Income from continuing operations available to common shareholders
   $ 53,562     $ 42,252  
Add:         Noncontrolling interest in operating partnership
     8,031       7,047  
Income from continuing operations for diluted earnings per share
     61,593       49,299  
Income (loss) from discontinued operations for diluted earnings
                
   per share
     --       4,689  
Net income available to common shareholders
   $ 61,593     $ 53,988  
                 
Weighted average common shares
     98,631       92,467  
                 
Diluted EPS:
                
Income from continuing operations available to common shareholders
   $ 0.62     $ 0.53  
Income (loss) from discontinued operations available to common
                
   shareholders
     --       0.05  
Net income available to common shareholders
   $ 0.62     $ 0.58  

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

         
 
Three Months Ended
Nine Months Ended
 
September 30,
September 30,
 
2011
2010
2011
2010
Basic EPS shares
87,019
79,304
85,649
79,161
Add:   Operating Partnership – common units
12,799
13,073
12,864
13,196
Stock options
15
32
30
47
Restricted Stock Awards
84
55
88
63
Diluted EPS Shares
99,917
92,464
98,631
92,467

Unvested restricted stock outstanding as of September 30, 2011 and 2010 were 157,681 and 216,802, respectively.
 
Dividends declared per common share for each of the three month periods ended September 30, 2011 and 2010 was $0.45 per share.  Dividends declared per common share for each of the nine month periods ended September 30, 2011 and 2010 was $1.35 per share.