SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ARDEN REALTY, 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 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 Exchance
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.
3) Filing Party:
4) Date Filed:
[Co. logo here]
ARDEN REALTY, INC.
9100 Wilshire Boulevard
Suite 700, East Tower
Beverly Hills, CA 90212
April 30, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 annual meeting of
shareholders of Arden Realty, Inc. to be held on July 8, 1997, at 9:30
a.m. in the Opus 3 Ballroom at The Hotel Sofitel, 8555 Beverly
Boulevard, Los Angeles, California 90048.
Information about the meeting and the various matters on which
the shareholders will act is included in the Notice of Annual Meeting
of Shareholders and Proxy Statement which follow. Also included is a
Proxy Card and postage paid return envelope.
It is important that your shares be represented at the meeting.
Whether or not you plan to attend, we hope that you will complete and
return your Proxy Card in the enclosed envelope as promptly as
possible.
Sincerely,
/s/ Richard S. Ziman
Richard S. Ziman
Chairman and
Chief Executive Officer
ARDEN REALTY, INC.
_________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held July 8, 1997
____________________________________
To the shareholders of Arden Realty, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders
(the "Annual Meeting") of Arden Realty, Inc., a Maryland corporation
(the "Company"), will be held in the Opus 3 Ballroom at the Hotel
Sofitel, 8555 Beverly Boulevard, Los Angeles, California 90048 on July
8, 1997, at 9:30 a.m., local time, for the following purposes:
1. To elect three directors to serve until the annual meeting of
shareholders in the year 2000 and until their successors are duly
elected and qualify.
2. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
The Board of Directors has fixed the close of business on May
29, 1997 as the record date (the "Record Date") for determining the
shareholders entitled to receive notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
and Secretary
April 30, 1997
Beverly Hills, California
[Co. logo here]
ARDEN REALTY, INC.
9100 Wilshire Boulevard
Suite 700, East Tower
Beverly Hills, CA 90212
_________________________
PROXY STATEMENT
Annual Meeting of Shareholders
July 8 , 1997
___________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Arden Realty, Inc., a
Maryland corporation (the "Company"), of proxies from the holders of
the Company's issued and outstanding common shares of stock, $.01 par
value per share (the "Common Shares"), to be exercised at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held on July 8,
1997 in the Opus 3 Ballroom at The Hotel Sofitel, 8555 Beverly
Boulevard, Los Angeles, California 90048 at 9:30 a.m. local time, and
at any adjournment(s) or postponement(s) thereof for the purposes set
forth in the accompanying Notice of Annual Meeting.
This Proxy Statement and enclosed form of proxy are first being
mailed to the shareholders of the Company on or about April 30, 1997.
At the Annual Meeting, the shareholders of the Company will be
asked to consider and vote upon the following proposals (the
"Proposals"):
1. The election of three directors to serve until the annual
meeting of shareholders to be held in the year 2000 and until their
successors are duly elected and qualify, and
2. Such other business as may properly come before the Annual
Meeting.
Only the holders of record of the Common Shares at the close of
business on May 29, 1997 (the "Record Date") are entitled to notice of
and to vote at the Annual Meeting. Each Common Share is entitled to
one vote on all matters. As of the Record Date, 21,692,833 Common
Shares were outstanding.
A majority of the Common Shares outstanding must be represented
at the Annual Meeting in person or by proxy to constitute a quorum for
the transaction of business at the Annual Meeting.
In order to be elected as a director, a nominee must receive a
plurality of all the votes cast at the Annual Meeting at which a
quorum is present. For purposes of calculating votes cast in the
election of the directors, abstentions will not be counted as votes
cast and will have no effect on the result of the vote on the Proposal
regarding the election of the director nominees.
The Common Shares represented by all properly executed proxies
returned to the Company will be voted at the Annual Meeting as
indicated or, if no instruction is given, for each of the nominees for
director. As to any other business which may properly come before the
Annual Meeting, all properly executed proxies will be voted by the
persons named therein in accordance with their discretion. The
Company does not presently know of any other business which may come
before the Annual Meeting. Any person giving a proxy has the right to
revoke it at any time before it is exercised (a) by filing with the
Secretary of the Company a duly signed revocation or a proxy bearing a
later date or (b) by electing to vote in person at the Annual Meeting.
Mere attendance at the Annual Meeting will not revoke a proxy.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT,
AND, IF GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED AND THE DELIVERY OF THIS PROXY STATEMENT SHALL,
UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
___________________________________________
The date of this proxy statement is April 30, 1997.
PROPOSAL I: ELECTION OF DIRECTORS
Pursuant to the Company's charter (the "Charter"), the Company
has seven directors, who are divided into three classes, as nearly
equal in number as possible. Arthur Gilbert, a director who had been
elected to a term expiring in 1998, resigned as a director on April
16, 1997. Accordingly, the Board of Directors is considering
potential replacements for Mr. Gilbert as a director but will not
submit a nominee to replace him at the Annual Meeting. Currently, the
Board of Directors (The "Board") consists of six members. The
directors currently are divided into three classes, consisting of
three members whose terms will expire at this Annual Meeting, one
member whose term will expire at the 1998 annual meeting of
shareholders and two members whose terms will expire at the 1999
annual meeting of shareholders.
Pursuant to the Charter, at each annual meeting the successors to
the class of directors whose terms expire at such meeting shall be
elected to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their
election. Accordingly, at the Annual Meeting, all of the nominees for
election will be elected to hold office for a term of three years until
the annual meeting of shareholders to be held in the year 2000, and
until their respective successors are duly elected and qualified.
Except where otherwise instructed, proxies solicited by this
Proxy Statement will be voted for the election of each of the Board's
nominees listed below. Each such nominee has consented to be named in
this Proxy Statement and to serve as a director if elected.
The information below relating to the nominees for election as
directors and for each of the other directors whose terms of office
continue after the Annual Meeting has been furnished to the Company by
the respective individuals.
The Board recommends a vote "FOR" the election of each of Carl D.
Covitz, Larry S. Flax, and Kenneth B. Roath to serve until the annual
meeting of shareholders to be held in the year 2000 and until their
successors are duly elected and qualify.
Nominees for Director
Carl D. Covitz. Mr. Covitz, 58, has been a member of the Board
of Directors of the Company since its inception as a public company in
October 1996. For 18 of the past 23 years, Mr. Covitz has served as
the owner and President of Landmark Capital, Inc., a national real
estate development and investment company involved in the
construction, financing, ownership and management of commercial,
residential, and warehouse properties. Mr. Covitz has also previously
served, from 1990 to 1993, as Secretary of the Business,
Transportation & Housing agency of the State of California as well as
Under Secretary and Chief Operating Officer of the U. S. Department of
Housing and Urban Development from 1987 to 1989. Mr. Covitz is
currently the Chairman of the Board of Directors of Century Housing
Corporation and is the past Chairman of the Board of several
organizations including the Federal Home Loan Bank of San Francisco
and the Los Angeles City Housing Authority. Mr. Covitz received his
Bachelor's Degree from the Wharton School at the University of
Pennsylvania and his Master of Business Administration from the
Columbia University Graduate School of Business.
Larry S. Flax. Mr. Flax, 54, has been a member of the Board of
Directors of the Company since December 1996. Mr. Flax is Co-Founder
and Co-Chairman of the Board for California Pizza Kitchen. Prior to
becoming a resaurateur in 1985, Mr. Flax served in Los Angeles as
Assistant U.S. Attorney from 1968 to 1972, Chief of Civil Rights from
1970 to 1971 and Assistant Chief of the Criminal Division for the
United States Department of Justice from 1971 to 1972. Mr. Flax attended
the University of Washington as an undergraduate, then received his
Juris Doctor from the University of Southern California Law School in
1967.
Kenneth B. Roath. Mr. Roath, 60, has been a member of the Board
of Directors of the Company since its inception as a public company in
October 1996. Mr. Roath is currently Chairman, President and Chief
Executive Officer of Health Care Property Investors, Inc., a leader in
the health care REIT industry. Prior to joining Health Care Property
Investors, Inc. at its inception in 1985, Mr. Roath was employed for
17 years by Pacific Holding Corporation of Los Angeles, the last four
of which he served as President and Chief Operating Officer. Mr.
Roath is a past Chairman of the National Association of Real Estate
Investment Trusts ("NAREIT") and also serves as a member of the Board
of Governors and Executive Committee of NAREIT. He is a director of
Franchise Finance Corporation of America. Mr. Roath received his
Bachelor's Degree in accounting from San Diego State University.
Other Directors whose Terms of Office Continue after the Annual
Meeting
Information concerning the other directors whose terms do not
expire at the Annual Meeting is set forth below.
Richard S. Ziman. Mr. Ziman, 53, is a founder of the Company and
has served as the Chairman and Chief Executive Officer of the Company
and as a member of the Board of Directors of the Company since its
inception. He has been involved in the real estate industry for over
25 years. In 1990, Mr. Ziman formed Arden Realty Group, Inc., the
predecessor of the Company, and served as its Chairman of the Board
and Chief Executive Officer from its inception until the formation of
the Company. In 1979 he co-founded Pacific Financial Group, a
diversified real estate investment and development firm headquartered
in Beverly Hills, of which he was the Managing General Partner. Mr.
Ziman received his Bachelor's Degree and his Juris Doctor Degree from
the University of Southern California and practiced law as a partner
of the law firm Loeb & Loeb from 1971 to 1980, specializing in
transactional and financing aspects of real estate.
Victor J. Coleman. Mr. Coleman, 36, is a founder of the Company
and has served as the President and Chief Operating Officer of the
Company and as a member of the Board of Directors of the Company since
its inception. He was the President, Chief Operating Officer and co-
founder of Arden Realty Group, Inc. from 1990 to 1996. From 1987 to
1989, Mr. Coleman was Vice President of Los Angeles Realty Services,
Inc., and earlier in his career from 1985 to 1987 was Director of
Marketing/Investment Advisor of Development Systems International and
an associate at Drexel Burnham Lambert specializing in private
placements with institutional and individual investors. Mr. Coleman
received his Bachelor's Degree from the University of California at
Berkeley and received his Master of Business Administration from
Golden Gate University.
Steven C. Good. Mr. Good, 54, has been a member of the Board of
Directors of the Company since its inception as a public company in
October 1996. Mr. Good is the senior partner in the firm of Good
Swartz & Berns, an accountancy corporation founded in 1993 which
evolved from the firm of Block, Good and Gagerman, which he founded in
1976. Prior to 1976, Mr. Good was a partner first at Laventhol &
Horwath, a national accounting firm, and later at Horowitz & Good.
Mr. Good is a founder and past Chairman of CU Bancorp, where he
directed the bank's operations from 1982 through 1989. For the past
seven years he has been a member of the Board of Directors of Opto
Sensors, Incorporated. Mr. Good received his Bachelor of Science in
Business Administration from the University of California at Los
Angeles and attended UCLA's Graduate School.
Board of Directors Meetings and Attendance
During the period from the Company's inception as a public company
on October 9, 1996 to December 31, 1996, the Board held one regular
quarterly meeting and three special telephonic meetings. All
Directors attended at least 75% of the aggregate of (i) the total
number of meetings of the Board while they were on the Board and (ii)
the total number of meetings of the committees of the Board on which
such directors served.
Board Committees
The Board of Directors of the Company has an Audit Committee, and
Executive Committee, an Executive Compensation Committee, and an
Acquisition Committee.
Audit Committee. The Audit Committee consists of Mr. Good, its
Chairman, and Messrs. Covitz and Flax. The Audit Committee makes
recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the scope
and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the
independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the
Company's internal accounting controls. The Audit Committee did not
meet during 1996.
Executive Committee. The Executive Committee consists of Mr.
Ziman, its Chairman, and Mr. Coleman. Subject to the Company's
conflict of interest policies, the Executive Committee has authority
to dispose of real property and the power to authorize on behalf of
the full Board of Directors, the execution of certain contracts and
agreements, including those related to the borrowing of money by the
Company (and, consistent with the Partnership Agreement of Arden
Realty Limited Partnership (the "Operating Partnership"), to cause the
Operating Partnership to take such actions). The Executive Committee
did not meet during 1996.
Compensation Committee. The Compensation Committee consists of
Mr. Roath, its Chairman, and Messrs. Covitz and Good. The function of
the Compensation Committee is to (i) establish, review, modify, and
adopt compensation plans and arrangements for the Company, (ii)
review, determine and establish the compensation (including bonuses)
of the officers of the Company, and (iii) grant bonuses and other
compensation to such officers of the Company.
Acquisitions Committee. The Acquisitions Committee consists of
Mr. Ziman, its Chairman, and Messrs. Coleman, and Covitz. The
Acquisition Committee has the authority to approve the acquisition of
real property with purchase prices up to $20,000,000. Any
acquisitions greater in amount require full Board approval. The
Acquisitions Committee met one time during 1996 with all members in
attendance.
Compensation of Directors
Each of the Company's non-employee directors receive annual
compensation of $18,000 for his services. In addition, each non-
employee director receives $1,000 for each Board of Directors meeting
attended. Each non-employee director attending any committee meetings
receives an additional $1,000 for each committee meeting attended,
unless the committee meeting is held on the day of a meeting of the
Board of Directors. Each non-employee director is also reimbursed for
reasonable expenses incurred to attend director and committee
meetings. Officers of the Company who are directors are not paid any
directors' fees. In addition, under the Company's stock incentive
plan, upon his initial appointment to the Board of Directors, each
non-employee director is automatically granted options to purchase
10,000 Common Shares at the then current market price. These options
vest during the directors' continued services at a rate of 2,500
Common Shares per year. Messrs. Covitz, Good, and Roath held options
to purchase 10,000 Common Shares at an exercise price of $20.00 per
share, of which none are currently exercisable. As of April 30, 1997,
Mr. Flax held options to purchase 10,000 Common Shares at an exercise price
of $27.50, of which none are currently exercisable.
The Board recommends a vote "FOR" the election of each of Carl D.
Covitz, Larry S. Flax, and Kenneth B. Roath to serve until the annual
meeting of shareholders to be held in the year 2000 and until their
successors are duly elected and qualify.
EXECUTIVE OFFICERS
The following is a biographical summary of the experience of the
executive officers of the Company. Michele Byer, who during the
period ended December 31, 1996 served as Chief Accounting Officer of
the Company, resigned as of February 14, 1997.
Richard S. Ziman. Chairman of the Board and Chief Executive
Officers. Biographical information regarding Mr. Ziman is set forth
under "Proposal I: Election of Directors".
Victor J. Coleman. President and Chief Operating Officer.
Biographical information regarding Mr. Coleman is set forth under
"Proposal I: Election of Directors".
Diana M. Laing. Ms. Laing, 42, has served as Chief Financial
Officer and Secretary of the Company since August 1996. Prior to
joining the Company, Ms. Laing served, from 1985 to 1996, as Executive
Vice President and Chief Financial Officer of South West Property
Trust, Inc., a publicly traded apartment properties real estate
investment trust, and its predecessor Southwest Realty, Ltd. Ms.
Laing also served from 1982 to 1985 as Controller, Treasurer and Vice
President-Finance of Southwest Realty, Ltd. From 1981 to 1982, Ms.
Laing was Controller of Crawford Energy, Inc. and served as a member
of the audit staff of Arthur Andersen and Co. from 1978 to 1982. Ms.
Laing is a Certified Public Accountant and a member of the American
Institute of CPAs and the Texas Society of Public Accountants. She
is also a Director of Sterling House Corporation, a publicly traded
operator of assisted living centers. Ms. Laing received her Bachelor
of Science in Accounting from Oklahoma State University.
Andrew J. Sobel. Mr. Sobel, 37, has served as Executive Vice
President and Director of Leasing of the Company since its formation.
From 1992 to 1996 Mr. Sobel served as Director of Leasing for Arden
Realty Group, Inc. Mr. Sobel is an attorney admitted to the State Bar
of California in 1985 with 11 years of experience in the practice of
real estate law. From 1990 to 1992, Mr. Sobel was a sole
practitioner. From 1987 to 1990 he was an attorney with the law firm
of Pircher, Nichols & Meeks specializing in all aspects of its real
estate transactional practice including acquisitions, leases and
financings. Mr. Sobel received his Bachelor's Degree from State
University of New York at Oswego and his Juris Doctor Degree from the
University of California at Berkeley (Boalt Hall).
Brigitta B. Troy. Ms. Troy, 56, has served as Senior Vice
President and Director of Acquisitions of the Company since its
formation. Ms. Troy was Director of Acquisitions for Arden Realty
Group, Inc., from 1993 to 1996 and Director of Acquisitions for
Pacific Financial Group from 1982 to 1989. During the period from
1989 to 1993, she was a principal of Esquire Investment Partners, a
real estate advisory company. A graduate of Radcliffe College, Ms.
Troy received her Juris Doctor Degree from the University of Southern
California Law School and a Master of Business Administration from
UCLA Graduate School of Management. Ms. Troy has over 15 years
experience in the commercial real estate business.
Herbert L. Porter. Mr. Porter, 58, has served as Senior Vice
President and Director of Construction and Capital Improvements of the
Company since its formation. Mr. Porter was Director of Construction
and Capital Improvements for Arden Realty Group, Inc. from 1993 to
1996. From 1973 to 1992, Mr. Porter was a partner/owner in his own
real estate development and property management company specializing
in medium to high-rise commercial office buildings. Mr. Porter's 23
years in commercial office development include planning, financing,
acquisition, entitlements and approvals, design, construction,
marketing, leasing, tenant improvements and outright sale. Mr. Porter
received his Bachelor's Degree from the University of Southern
California.
Daniel S. Bothe. Mr. Bothe, 31, has served as Vice President-
Finance for the Company since December 1996. From 1993 to 1996, Mr.
Bothe was a management consultant with the E&Y Kenneth Leventhal Real
Estate Group of Ernst & Young, LLP From 1988 to 1991, Mr. Bothe
served as a member of the audit staff of KPMG Peat Marwick
specializing in real estate. Mr. Bothe is a Certified Public
Accountant in the state of California and a member of the American
Institute of CPAs. Mr. Bothe received his Bachelor of Science in
Accounting from San Diego State University and his Master of Business
Administration from the University of Southern California.
Robert Peddicord. Mr. Peddicord, 35, has served as Vice
President-Leasing for the Company since December 1996. From 1987 to
1996, Mr. Peddicord was a Managing Director with Julien J. Studley in
the West Los Angeles office, representing landlords and tenants in the
leasing of office space. From 1984 to 1986, Mr. Peddicord served as a
branch Vice President for Great Western Financial Corporation. Mr.
Peddicord received his Bachelor Degree in Economics from the
University of California at Los Angeles.
EXECUTIVE COMPENSATION
Prior to the inception of the Company as a public company on October 9, 1996,
the Company did not pay any compensation to its officers. Accordingly, the
following table, for informational purposes only, sets forth the estimated
annual base salary rates and the actual other compensation paid to the
Company's Chief Executive Officer, each of the Company's four other most highly
compensated executive officers, and the former Chief Accounting Officer (the
"Named Executive Officers").
<TABLE>
Summary Compensation Table
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Annual Compensation Compensation
Name Title 1997 Base 1996 Other Annual Options Granted Stock
Salary Rate($) Bonus ($) Compensation($) in 1996 (#) Bonus(#)
Richard S. Ziman Chairman of the Board and
Chief Executive Officer $300,000 -- -- 400,000 --
Victor J. Coleman President, Chief Operating
Officer and Director 250,000 -- -- 250,000 --
Diana M. Laing Chief Financial Officer and
Secretary 195,000 -- -- 50,000 --
Andrew J. Sobel Executive Vice President and
Director of Leasing 150,000 7,700 -- 40,000 3,750(1)
Herbert L. Porter Senior Vice President and
Director of Construction
and Capital Improvements 130,000 5,100 -- 30,000 1,250 (1)
Michele Byer Chief Accounting Officer (2) 125,000 $3,900 -- 40,000 --
(1) Represents the number of shares for a one-time Common Stock Bonus in 1996.
(2) Ms. Byer resigned as Chief Accounting Officer on February 14, 1997.
Effective February 14, 1997, the Compensation Committee of the Company's
Board of Directors approved the acceleration of the vesting of options
to purchase 13,333 Common Shares. The remaining option to purchase 26,667
Common Shares were automatically terminated.
</TABLE>
Option Grants in Last Fiscal Year
The following table shows certain information relating to options to purchase
Common Shares granted to the Named Executive Officers during 1996.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Individual Grants (1) Potential Realizable
Number of Percent of Value at
Common Shares Total Options Assumed Annual Rates of
Underlying Granted to Exercise Share Price Appreciation
Options Employees in Price Per Expiration for Option Term (2)
Name Granted (#) Fiscal Year Share Date 5% 10%
Richard S. Ziman 400,000 43.0% $20.00 10/04/06 $5,032,000 $12,748,000
Victor J. Coleman 250,000 26.9% 20.00 10/04/06 3,145,000 7,967,500
Diana M. Laing 50,000 5.4% 20.00 10/04/06 629,000 1,593,500
Michele Byer (3) 40,000 4.3% 20.00 10/04/06 503,200 1,274,800
Herbert L. Porter 30,000 3.2% 20.00 10/04/06 377,400 956,100
Andrew J. Sobel 40,000 4.3% 20.00 10/04/06 503,200 1,274,800
(1) All options granted in 1996 become exercisable in three equal installments beginning on the
first anniversary of the date of grant and have a term of ten years subject to earlier
termination in certain events related to termination of employment. The option exercise
price is equal to fair market value of the Common Shares on the date of grant.
(2) Assumed annual rates of stock price appreciation for illustrative purposes only. Actual
stock prices will vary from time to time based upon market factors and the Company's
financial performance. No assurances can be given that these appreciation rates will be
achieved.
(3) Upon the resignation of Ms. Byer as Chief Accounting Officer on February 14, 1997, the
Compensation Committee of the Company's Board of Directors approved the acceleration of the
vesting of options to purchase 13,333 Common Shares. The remaining options to
purchase 26,667 Common Shares were automatically terminated.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning exercised and
unexercised options held by the Named Executive Officers at December 31, 1996.
<TABLE>
<S> <C> <C> <C> <C> <C>
Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired on Value Unexercised Options Options at
Name Exercise (#) Realized($) At December 31, 1996 December 31, 1996
Exercisable Unexercisable Exercisable Unexercisable
Richard S. Ziman -- -- -- 400,000 -- $3,050,000
Victor J. Coleman -- -- -- 250,000 -- 1,906,250
Diana M. Laing -- -- -- 50,000 -- 381,250
Michele Byer (2) -- -- -- 40,000 -- 305,000
Herbert L. Porter -- -- -- 30,000 -- 228,750
Andrew J. Sobel -- -- -- 40,000 -- 305,000
(1) Based on closing price of $27 5/8 per Common Share on December 31, 1996, as reported by the
New York Stock Exchange.
(2) Upon the resignation of Ms. Byer as Chief Accounting Officer on February 14, 1997, the
Compensation Committee of the Company's Board of Directors approved the acceleration of the
vesting of options to purchase 13,333 Common Shares. The remaining options to purchase
26,667 Common Shares were automatically terminated.
</TABLE>
Stock Incentive Plan
The Company has adopted the 1996 Stock Incentive Plan of Arden
Realty, Inc., and Arden Realty Limited Partnership (the "Stock
Incentive Plan") for the purpose of attracting and retaining executive
officers, directors and employees.
The Stock Incentive Plan is qualified under Rule 16b-3 under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act").
The Stock Incentive Plan is administered by the Compensation Committee
and provides for the granting of stock options, stock appreciation
rights or restricted stock with respect to up to 1,500,000 shares of
Common Stock to executive or other key employees of the Company.
Stock options may be granted in the form of "incentive stock options,"
as defined in Section 422 of the Code, or non-statutory stock options
and are exercisable for up to 10 years following the date of grant.
The exercise price of each option is set by the Compensation
Committee; provided, however, that the price per share must be equal
to or greater than the fair market value of the Common Stock on the
grant date.
The Stock Incentive Plan also provides for the issuance of stock
appreciation rights which will generally entitle a holder to receive
cash or stock, as determined by the Compensation Committee, at the
time of exercise equal to the difference between the exercise price
and the fair market value of the Common Stock. In addition, the Stock
Incentive Plan permits the Company to issue shares of restricted stock
to executive or other key employees upon such terms and conditions as
shall be determined by the Compensation Committee.
401(k) Plan
Effective January 1, 1997, the Company established the Arden
Realty 401(k) Plan and Trust (the "401(k) Plan") to cover eligible
employees of the Company and any designated affiliate.
The 401(k) Plan permits eligible employees of the Company to
defer up to 20% of their annual compensation, subject to certain
limitations imposed by the Code. The employees' elective deferrals
are immediately vested and non-forfeitable upon contribution to the
401(k) Plan. Employees are generally eligible to participate in the
401(k) Plan after six months of service. The Company currently makes
matching contribution to the 401(k) Plan equal to 50% of each
participating employee's contribution. Employees vest 25% in the
Company's contributions for each full year of service, vesting 100%
after four full years of service.
The 401(k) Plan qualifies under Section 401 of the Code so that
contributions by employees or by the Company to the 401(k) Plan, and
income earned on plan contributions, are not taxable to employees
until withdrawn from the 401(k) Plan, and so that contributions by the
Company are deductible by the Company when made.
Employment Agreements
Each of Messrs. Ziman and Coleman has entered into an employment
agreement with the Company. The employment agreements of Messrs.
Ziman and Coleman have an initial term of three years and are subject
to automatic one-year extensions following the expiration of the
initial term. For the first year of the term, the employment
agreements of Messrs. Ziman and Coleman provide for an initial annual
base compensation in the amounts set forth in the Executive
Compensation table with the amount of any initial bonus to be
determined by the Compensation Committee. For subsequent years, both
the amount of the base compensation and any bonus will be determined
by the Compensation Committee.
In addition, Ms. Laing entered into an employment agreement with
the Company effective August 1, 1996 which has an initial term of one
year and is subject to automatic one-year extensions following the
expiration of the initial term. Ms. Laing's employment agreement
provides for an initial annual base compensation in the amount set
forth in the Executive Compensation table and entitles her to an
initial cash bonus in an amount to be determined by the Compensation
Committee but not to exceed 20% of her initial annual base
compensation. For any subsequent years in which the employment
agreement is extended beyond the initial term, the amount of Ms.
Laing's base compensation and any bonus will be determined by the
Compensation Committee.
The employment agreements of Messrs. Ziman and Coleman and Ms.
Laing entitle the executives to participate in the Company's Stock
Incentive Plan (each executive has been allocated the number of stock
options set forth in the Executive Compensation table) and to receive
certain other insurance and pension benefits. In addition, in the
event of a termination by the Company without "cause," a termination
by the executive for "good reason," or a termination pursuant to a
"change in control" of the Company (as such terms are defined in the
respective employment agreements), the terminated executive will be
entitled to (i) a single severance payment (the "Severance Amount")
and (ii) continued receipt of certain benefits including medical
insurance, life and disability insurance and participation in all
pension, 401(k) and other employee plans and benefits established by
the Company for its executive employees for a specified period of time
following the date of termination (collectively, the "Severance
Benefits"). The Severance Amount of Messrs. Ziman and Coleman is
equal to the sum of two times the executive's average annual base
compensation and two times the highest annual bonuses received during
the preceding thirty-six month period. The Severance Amount of Ms.
Laing is equal to the executive's annual base compensation for the
preceding 12 month period. Receipt of the Severance Benefits shall
continue for two years commencing on the date of termination in the
case of Messrs. Ziman and Coleman and for one year commencing on the
date of termination in the case of Ms. Laing.
As part of the employment agreements, each of Messrs. Ziman and
Coleman are bound by a non-competition covenant with the Company which
prohibits them from engaging in (i) the acquisition, renovation,
management or leasing of any office properties in the Los Angeles,
Orange and San Diego counties of Southern California and (ii) any
active or passive investment in or reasonably relating to the
acquisition, renovation, management or leasing of office properties in
the Los Angeles, Orange and San Diego counties of Southern California
for a period of one year following the date of such executive's
termination, unless such termination was without cause.
Compensation Committee Interlocks and Insider Participation
There are no Compensation Committee interlocks and no employees
of the Company participate on the Compensation Committee.
Compensation Committee Report on Executive Compensation
Payment of cash compensation to the executive officers of the
Company began in October, 1996. The base salary paid to the Company's
executive officers during 1996 was determined prior to that time by
Messrs. Ziman and Coleman, the then-current directors and officers of
Arden Realty Group, Inc., the predecessor to the Company. In making
these determinations, Messrs. Ziman and Coleman considered job
responsibilities and the salaries paid to such executive officers of
other REITs similar to the Company, as well as the salaries paid to
and past performance of such person in their prior capacities at Arden
Realty Group, Inc. or elsewhere.
For 1997 and future years, the Company's Compensation Committee
plans to build on the traditional compensation policies of Arden
Realty Group, Inc., adapted to the Company's competitive environment
of similar publicly traded REITs. The Company has adopted the Stock
Incentive Plan, which authorizes the Compensation Committee to grant
stock options, stock appreciation rights restricted stock and other
awards to the executive officers and other employees of the Company
(see "Stock Incentive Plan" above). Through these plans and other
means, the Compensation Committee intends to maintain strong links
between executive officers compensation and corporate and individual
performance.
It is the Compensation Committee's intention that, so long as it
is consistent with the Company's overall compensation objectives, all
executive compensation be deductible for federal income tax purposes.
Section 162(m) of the Internal Revenue Code limits the tax deduction
for compensation paid to the Company's Chief Executive Officer and the
additional four most highly compensated officers who are employed at
fiscal year end to $1 million per year, unless certain requirements
are met.
Compensation Committee
Kenneth B. Roath
Carl D. Covitz
Steven C. Good
Date: April 30, 1997
The above report of the Compensation Committee will not be deemed
to be incorporated by reference into any filing by the Company under
the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates the
same by reference.
Performance Graph
As a part of the rules concerning executive compensation
disclosure, the Company is obligated to provide a chart comparing the
yearly percentage change in the cumulative total stockholder return on
the Company's Common Stock over a five year period. However, since
the Company's Common Stock has been publicly traded only since October
4, 1996, such information is provided from this date through December
31, 1996.
The following line graph compares the change in the Company's
cumulative shareholder return on its Common Shares to the cumulative
total return of the Standard & Poor's 500 Stock Index ("S&P 500
Index") and the NAREIT Equity REIT Total Return Index ("NAREIT Index")
from October 3, 1996, the effective date of the Company's initial
public offering, to December 31, 1996. The graph assumes the
investment of $100 in the Company and each of the indices on October
3, 1996 and as required by the Securities and Exchange Commission, the
reinvestment of all distributions. The NAREIT Index for October was
prorated to adjust for the partial month. The return shown on the
graph is not necessarily indicative of future performance.
[Performance graph indicating the following information inserted
at this point]
<TABLE>
<S> <C> <C> <C> <C>
10/4/96 10/31/96 11/30/96 12/31/96
Arden Realty, Inc. $100.00 $113.13 $120.63 $138.13
NAREIT Index 100.00 102.67 107.35 118.51
S&P 500 Index 100.00 102.47 110.25 108.08
</TABLE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock (or Common Stock for which
limited partnership interests in the Operating Partnership ("OP
Units") are exchangeable as of April 23, 1997 for (1) each person
known by the Company to be the beneficial owner of five percent or
more of the Company's outstanding Common Stock (or common stock for
which OP Units are exchangeable), (2) each director and each Named
Executive Officer and (3) the directors and officers of the Company as
a group. Except as indicated below, all of such Common Stock is owned
directly, and the indicated person has sole voting and investment
power.
<TABLE>
<S> <C> <C>
Number of Shares of Percentage of Common
Name and Address (1) Common Stock Stock Outstanding (2)
FMR Corp.
82 Devonshire Street
Boston, MA 02109 2,609,300(3) 12.40%
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404 1,016,960 5.40%
Richard S. Ziman 1,758,306(4) 7.50%
Victor J. Coleman 1,217,766(5) 5.32%
Diana M. Laing 5,000 *
Michele Byer 55,565 *
Andrew J. Sobel 3,750 *
Herbert L. Porter 1,250 *
Carl D. Covitz -- --
Larry S. Flax -- --
Steven C. Good -- --
Kenneth B. Roath -- --
All directors and officers
as a group (10 persons) 3,041,632 12.33%
* Less than one percent.
(1) Unless otherwise indicated, the address for each of the persons
listed is 9100 Wilshire Boulevard, East Tower, Suite 700, Beverly
Hills, CA 90212
(2) For Messrs. Ziman and Coleman, beneficial ownership of Common
Stock is currently held 100% in the form of OP Units. For Ms. Byer,
beneficial ownership of Common Shares is currently held in the form
of 51,032 OP Units and 4,533 Common Shares derived from exercised
options. In addition, amounts for individuals assume that all OP
Units held by the person are exchanged for shares of Common Stock
and that none of the OP Units held by other persons are exchanged
for shares of Common Stock. Amounts for all directors and officers
as a group assume all OP Units are exchanged for shares of Common
Stock.
(3) The person has sole voting power with respect to 145,800 of such
shares and sole dispositive power of all 2,609,300 of such shares.
(4) Includes (a) 775,196 shares held by an entity in which Messrs.
Ziman and Coleman have shared voting and investment power, of which
shares Mr. Ziman disclaims beneficial ownership in the 40% of such
shares in which he has no pecuniary interest, (b) 353,212 shares
owned by entities directly and indirectly owned 100% by Mrs. Ziman,
and (c) 136,674 shares owned by a family partnership of Mr. Ziman,
in which Mr. Ziman has shared voting and investment power and of
which Mr. Ziman is a 20% general partner and disclaims beneficial
ownership of the remaining 80% in which he has no pecuniary
interests.
(5) Includes (a) 775,196 shares held by entities in which Messrs.
Ziman and Coleman have shared voting and investment power, of which
shares Mr. Coleman disclaims beneficial ownership of the 60% of such
shares in which he has no pecuniary interest, (b) 99,458 shares
owned by an entity owned 100% by Mr. Coleman, (c) 1,600 shares owned
of record by the Jessica Lauren Encell Trust of which Mr. Coleman is
the trustee with sole voting and disposition power, and (d) 1,600
shares owned of record by the Tara Elle Coleman Trust of which Mr.
Coleman is the trustee with sole voting and disposition power.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 9, 1996 the Company and Arden Realty Limited
Partnership (the "Operating Partnership"), in which the Company has
an 88.2% general partnership interest, together with the partners and
members of Arden Realty Group, Inc. and a group of affiliated entities
(the "Arden Predecessors"), engaged in certain formation transactions
(the "Formation Transactions") which, among other things, resulted in
the acquisition by the Company and the Operating Partnership of 24
properties. Pursuant to the Formation Transactions certain
participants contributed: (1) interests in certain properties, (2)
the contract rights to purchase two properties, and (3) other related
assets including management contracts relating to certain properties.
In exchange for those contributions Messrs. Ziman and Coleman and Ms.
Byer, directly and through the Arden Predecessors received
approximately, 1,427,851 OP Units, 757,448 OP Units, and 51,032 OP
Units, respectively. Based on the initial public offering price of
$20.00 per Common Share and the fact that each OP Unit economically
corresponds to one Common Share, Messrs. Ziman and Coleman and Ms.
Byer received OP Units with an aggregate value of approximately
$28,557,020, $15,148,960, and $1,020,640, respectively.
The Company's percentage interest in the Operating Partnership
was arrived at by determining the percentage of the estimated adjusted
consolidated cash flows of the Company that would need to be allocated
to the public purchasers of Common Shares in the initial public
offering to raise the required capital and to be able to pay cash
distributions resulting in an annual yield of 8.00%, based upon the
initial public offering price per Common Share of $20.00. The
remaining interest in the Operating Partnership was allocated to the
participants receiving OP Units in the Formation Transactions.
The Company did not obtain appraisals with respect to the market
value of any of the properties or other assets that the Company owned
immediately after consummation of the initial public offering and the
Formation Transactions or an opinion as to the fairness of the
allocation of Common Shares to the purchasers in the initial public
offering. The initial public offering price was not determined based
upon a property-by-property valuation based on historical cost or
current market value because management believes it is appropriate to
value the Company as an ongoing business rather than with a view to
values that could be obtained from a liquidation of the Company or of
individual properties owned by the Company.
COMPLIANCE WITH FEDERAL SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity
securities (collectively, "Insiders"), to file with the Commission
initial reports of ownership and reports of changes in ownership of
the Company's Common Stock and other equity securities of the Company.
Insiders are required by regulation of the Commission to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company or written representations
that no other reports were required, during the year ended December
31, 1996, all Insiders complied with all Section 16(a) filing
requirements applicable to them; however, compliance with such
requirements by the following Insiders was late with respect to the
filing by each of his or her Form 3 by the number of days indicated
parenthetically: Richard S. Ziman (8 days); Victor J. Coleman (8
days); Diana M. Laing (12 days); Steven C. Good (1 day); Carl D.
Covitz (1 day); Kenneth B. Roath (1 day); Herbert L. Porter (8 days);
Brigitta B. Troy (12 days); and Andrew J. Sobel (13 days).
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1998 annual
meeting of shareholders must be received by the Secretary of the
Company at its principal executive offices by December 31, 1997 to be
considered for possible inclusion in the Company's proxy statement and
form of proxy used in connection with such annual meeting.
AUDITORS
Subject to its discretion to appoint alternative auditors if it
deems such action appropriate, the Board of Directors has retained
Ernst & Young, LLP as the Company's auditors for the current fiscal
year. The Board of Directors has been advised that Ernst & Young, LLP
is independent with regard to the Company within the meaning of the
Securities Act and the applicable published rules and regulations
thereunder. Representatives of Ernst & Young, LLP are expected to be
present at the Annual Meeting and will have the opportunity to make
statements if they desire and to respond to appropriate questions from
stockholders.
PROXY SOLICITATION EXPENSE
The cost of soliciting proxies will be borne by the Company. The
Company will also request persons, firms and corporations holding
shares beneficially owned by others to send proxy material to, and
obtain proxies from, the beneficial owners of such shares and will,
upon request, pay the holders' reasonable expenses for doing so.
April 30, 1997
By Order of the Board of Directors
/s/ Diana M.Laing
Diana M. Laing
Chief Financial Officer
and Secretary
[FORM OF PROXY CARD]
ARDEN REALTY, INC.
9100 WILSHIRE BOULEVARD
EAST TOWER, SUITE 700
BEVERLY HILLS, CALIFORNIA 90212
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Arden Realty, Inc. (the "Company")
acknowledges receipt of a copy of the Annual Report and the proxy statement
dated April 30, 1997, and, revoking any proxy heretofore given, hereby appoints
Richard S. Ziman and Victor J. Coleman, and each of them, as proxies for the
undersigned, and hereby authorizes each of them to vote all the
shares of Common Stock of the Company held of record by the
undersigned on May 29,1997, at the Annual Meeting of Stockholders to
be held on July 8, 1997, or any adjournment or postponement thereof,
and otherwise to represent the undersigned at the meeting with all
powers possessed by the undersigned if personally present at the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
MAY BE REVOKED PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS INDICATED, IT WILL BE VOTED FOR THE
NOMINEES FOR DIRECTOR LISTED IN THE PROXY STATEMENT.
1. Election of Directors:
[ ] FOR the nominees listed below [ ] WITHHOLD
AUTHORITY
(except as indicated to the contrary) to vote
for ALL nominees listed below.
Carl D. Covitz, Larry S. Flax, Kenneth B. Roath
(Instruction: To withhold authority to vote for any nominee write the
nominee's name on the space provided below)
___________________________________________________________________
___________________________________________________________________
2. TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED IN THE
DISCRETION OF THE PROXY HOLDER UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
FORM OF PROXY CARD
[REVERSE SIDE]
Proxy Number Account Number Number of Shares
Dated ___________________, 1997
______________________________
(Signature)
_________________________________
(Signature if held jointly)
Please sign exactly as your name
appears hereon.
When signing as attorney, executor,
administrator, trustee, or guardian,
please give full title. If more than
one trustee, all should sign. All
joint owners should sign. If a
corporation, please sign in full
corporate name by President or other
authorized officer.
