<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
Trammell Crow Company
- - --------------------------------------------------------------------------------
(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.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
TRAMMELL CROW COMPANY
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
April 22, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Trammell Crow Company to be held on May 21, 1998, at 2:00 p.m., local time, at
the Dallas Museum of Art, 1717 Harwood Street, Dallas, Texas 75201. Please find
enclosed a notice to stockholders, a Proxy Statement describing the business to
be transacted at the meeting, a Form of Proxy for use in voting at the meeting,
and an Annual Report for Trammell Crow Company.
At the Annual Meeting, you will be asked (i) to elect three directors of the
Company; (ii) to ratify the selection of Ernst & Young LLP as the independent
accountants for the Company for the fiscal year ending December 31, 1998; (iii)
to approve the Trammell Crow Company Employee Stock Purchase Plan, as adopted by
the Board of Directors; and (iv) to act upon such other business as may properly
come before the Annual Meeting or any adjournment thereof.
We hope that you will be able to attend the Annual Meeting, and we urge you
to read the enclosed Proxy Statement before you decide to vote. Even if you do
not plan to attend, please complete, sign, date and return the enclosed Proxy as
promptly as possible. It is important that your shares be represented at the
meeting.
Very truly yours,
George L. Lippe
PRESIDENT AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
complete, sign, date and return the enclosed Proxy as promptly as possible in
the enclosed postage paid envelope. Returning your Proxy will help the Company
assure that a quorum will be present at the meeting and avoid the additional
expense of duplicate proxy solicitations. Any stockholder attending the meeting
may vote in person even if he or she has returned the Proxy.
<PAGE>
TRAMMELL CROW COMPANY
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
------------------------
PLEASE TAKE NOTICE THAT the 1998 Annual Meeting of Stockholders (the "Annual
Meeting") of Trammell Crow Company, a Delaware corporation (the "Company"), will
be held on May 21, 1998, at 2:00 p.m., local time, at the Dallas Museum of Art,
1717 Harwood Street, Dallas, Texas 75201, to consider and vote on the following
matters:
(1) Election of three directors of the Company to serve until the annual
meeting of the Company's stockholders in 2001 and until their respective
successors are elected and qualified or until their earlier death,
resignation or removal from office.
(2) Ratification of the selection of Ernst & Young LLP as independent
accountants of the Company for the fiscal year ending December 31, 1998.
(3) The approval of the Trammell Crow Company Employee Stock Purchase Plan.
(4) Such other business as may properly come before the Annual Meeting or
any postponement or adjournment thereof.
The close of business on April 15, 1998, has been fixed as the record date
for the determination of stockholders entitled to receive notice of, and to vote
at, the Annual Meeting and any adjournment or postponement thereof. Only holders
of record of the Company's Common Stock at the close of business on the record
date are entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection by any stockholder for any purpose germane to the Annual Meeting
during ordinary business hours for the ten days preceding the Annual Meeting at
the Company's offices at the address on this notice and at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please complete, sign,
date and return the enclosed proxy as promptly as possible. You may revoke your
proxy at any time before the shares to which it relates are voted at the Annual
Meeting.
By Order of the Board of Directors,
Derek R. McClain
SECRETARY
Dallas, Texas
<PAGE>
TRAMMELL CROW COMPANY
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
(214) 863-3000
------------------------
PROXY STATEMENT
---------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The Board of Directors of Trammell Crow Company requests your Proxy for use
at the Annual Meeting of Stockholders to be held on May 21, 1998, at 2:00 p.m.,
local time, at the Dallas Museum of Art, 1717 Harwood Street, Dallas, Texas
75201, and at any adjournment or postponement thereof. By signing and returning
the enclosed Proxy, you authorize the persons named on the Proxy to represent
you and to vote your shares at the Annual Meeting. This Proxy Statement and the
form of Proxy were first mailed to stockholders of the Company on or about April
22, 1998.
This solicitation of proxies is made by the Board of Directors of the
Company and will be conducted primarily by mail. Officers, directors and
employees of the Company may solicit proxies personally or by telephone,
telegram or other forms of wire or facsimile communication. The Company may also
request banking institutions, brokerage firms, custodians, nominees and
fiduciaries to forward solicitation material to the beneficial owners of Common
Stock that those companies hold of record. The costs of the solicitation,
including reimbursement of such forwarding expenses, will be paid by the
Company.
If you attend the Annual Meeting, you may vote in person. If you are not
present at the Annual Meeting, your shares can be voted only if you have
returned a properly signed Proxy or are represented by another proxy. You may
revoke the enclosed Proxy at any time before it is exercised at the Annual
Meeting by (a) signing and submitting a later-dated proxy to the Secretary of
the Company, (b) delivering written notice of revocation of the Proxy to the
Secretary of the Company, or (c) voting in person at the Annual Meeting. In the
absence of such revocation, shares represented by the persons named on the
Proxies will be voted at the Annual Meeting.
VOTING AND QUORUM
The only outstanding voting securities of the Company are its shares of
common stock, par value $.01 per share ("Common Stock"). On April 15, 1998, the
record date for the Annual Meeting, there were 33,911,416 shares of Common Stock
outstanding and entitled to be voted at the Annual Meeting.
Each outstanding share of Common Stock is entitled to one vote. The
presence, in person or by proxy, of a majority of the shares of Common Stock
issued and outstanding and entitled to vote as of the record date, shall
constitute a quorum at the Annual Meeting. The chairman of the meeting or the
holders of a majority of the Common Stock entitled to vote who are present or
represented by proxy at the Annual Meeting have the power to adjourn the Annual
Meeting from time to time without notice, other than an announcement at the
Annual Meeting of the time and place of the holding of the adjourned meeting,
until a quorum is present. At any such adjourned meeting at which a quorum is
present, any business may be transacted that may have been transacted at the
Annual Meeting had a quorum originally been present; provided, that if the
adjournment is for more than 30 days or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the adjourned
meeting. Proxies solicited by this Proxy Statement may be used to vote in favor
of any motion to adjourn the Annual Meeting. The persons named on the Proxies
intend to vote in favor of any motion to adjourn the Annual Meeting to a
subsequent day if, prior to the Annual Meeting, such persons have not received
sufficient Proxies to approve the proposals described in this Proxy Statement.
If such a motion is approved but sufficient Proxies are not received by the time
set for the
<PAGE>
resumption of the Annual Meeting, this process will be repeated until sufficient
Proxies to vote in favor of the proposals to be presented to the stockholders at
the Annual Meeting have been received or it appears that sufficient Proxies will
not be received. Abstentions and broker non-votes will count in determining if a
quorum is present at the Annual Meeting. A broker non-vote occurs if a broker or
other nominee does not have discretionary authority and has not received voting
instructions with respect to a particular item.
PROPOSAL ONE--ELECTION OF CLASS I DIRECTORS
The Board of Directors has designated Messrs. George L. Lippe, Rowland T.
Moriarty and Robert E. Sulentic as nominees for election as Class I Directors of
the Company at the Annual Meeting (each, a "Nominee"). If elected, each Nominee
will serve until the expiration of his term at the annual meeting of the
Company's stockholders in 2001 and until his successor is elected and qualified
or until his earlier death, resignation or removal from office. For information
about each Nominee, see "Directors."
The Board of Directors has no reason to believe that any of the Nominees
will be unable or unwilling to serve if elected. If a Nominee becomes unable or
unwilling to serve, your Proxy will be voted for the election of a substitute
nominee recommended by the current Board of Directors, or the number of the
Company's directors will be reduced.
REQUIRED VOTE AND RECOMMENDATION
The election of directors requires the affirmative vote of a plurality of
the shares of Common Stock present or represented by proxy and entitled to vote
at the Annual Meeting. Accordingly, under Delaware law and the Company's
Certificate of Incorporation and Bylaws, abstentions and broker non-votes will
not have any effect on the election of a particular director. Unless otherwise
instructed or unless authority to vote is withheld, the enclosed Proxy will be
voted for the election of each of the Nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THESE NOMINEES.
DIRECTORS
The following tables sets forth certain information regarding the Director
Nominees and continuing Directors of the Company:
<TABLE>
<CAPTION>
DIRECTOR'S
NAME OF NOMINEE AGE TITLE TERM ENDING
- - ------------------------------------ --- ------------------------------------------------------- ---------------
<S> <C> <C> <C>
George L. Lippe..................... 43 Chief Executive Officer, President and Director 1998
Rowland T. Moriarty................. 51 Director 1998
Robert E. Sulentic.................. 41 Executive Vice President, National Director of 1998
Development and Investment and Director
</TABLE>
GEORGE L. LIPPE has been the President, Chief Executive Officer and a
director of the Company since its inception and has served as President and
Chief Executive Officer of Trammell Crow Company, a Texas corporation and the
Company's predecessor (the "Predecessor Company") since January 1996. From 1995
to 1996, Mr. Lippe served as Executive Vice President of Operations of the
Predecessor Company. From 1990 to date, Mr. Lippe has served as President and
Chief Executive Officer of the Predecessor Company's Midwest Region. Mr. Lippe
has served in various other capacities with the Predecessor Company since 1978.
ROWLAND T. MORIARTY has been a director of the Company since December 1997.
Mr. Moriarty has served as Chairman and Chief Executive Officer of Cubex
Corporation, a consulting firm, since 1992. From 1981 to 1992, Mr. Moriarty
served as a professor at the Harvard Business School. Mr. Moriarty is a member
of the Board of Directors of Staples Inc., an office supply retailer.
2
<PAGE>
ROBERT E. SULENTIC has been a director of the Company since December 1997
and has served as the Company's Executive Vice President and National Director
of Development and Investment since July 1997 and President of Trammell Crow NE,
Inc., since 1995. Mr. Sulentic has served on the Predecessor Company's Operating
Committee and as Chairman of its Development Committee since 1994. From 1991 to
1994, Mr. Sulentic served as Managing Director in charge of Trammell Crow
Company's Philadelphia Division. From 1987 to 1990, Mr. Sulentic served as the
Partner in charge of the Predecessor Company's New Jersey Division. Mr. Sulentic
served in Houston as a Marketing Director for the Predecessor Company in 1986
and 1987 and as a Leasing Agent in 1984 and 1985.
<TABLE>
<CAPTION>
DIRECTOR'S
NAME OF CONTINUING DIRECTOR AGE TITLE TERM ENDING
- - ------------------------------------ --- ------------------------------------------------------- ---------------
<S> <C> <C> <C>
James D. Carreker................... 50 Director 1999
William F. Concannon................ 42 President and Chief Executive Officer of Trammell Crow 2000
Corporate Services, Inc. and Director
Harlan R. Crow...................... 48 Director 1999
James R. Erwin...................... 53 Director 2000
Jeffery M. Heller................... 58 Director 1999
J. McDonald Williams................ 56 Chairman of the Board of Directors 2000
</TABLE>
JAMES D. CARREKER has been a director of the Company since December 1997.
Mr. Carreker has served as Chairman of the Board and Chief Executive Officer of
Wyndham International, Inc. and a Director of Patriot American Hospitality, Inc.
since January 1998, Mr. Carreker assumed these positions in connection with the
merger with and into Patriot Hospitality, Inc. of Wyndham Hotel Corporation, for
which he has served as President and Chief Executive Officer since May 1988. He
also served as Chief Executive Officer of the Predecessor Company from August
1994 to December 1995.
WILLIAM F. CONCANNON has been a director of the Company since December 1997
and has served as the President and Chief Executive Officer of Trammell Crow
Corporate Services since July 1991. Mr. Concannon has served as a Member of the
Board of Directors of the Predecessor Company since 1991. He joined the
Predecessor Company as Vice President of National Marketing in 1986 and in 1990
became Director and Partner in charge of Trammell Crow Corporate Services. In
1994 Mr. Concannon established the Company's Canadian Corporate Services
business under the name Primaris Corporate Services, Ltd.
HARLAN R. CROW has been a director of the Company since its inception. Mr.
Crow is the Chief Executive Officer of Trammell Crow Interests Company, d/b/a
Crow Family Holdings, a private investment company managing investments in a
variety of real estate-related and other businesses, a position he has held
since 1986. Mr. Crow currently serves as a Director of Patriot American
Hospitality, Inc. In any given year within the past five years, Mr. Crow has
indirectly owned interests in over 1,000 partnerships (or affiliates of
partnerships) or corporations. In the past five years, Mr. Crow was a general
partner in approximately 23, and an officer or director in approximately 69,
partnerships or corporations, or affiliates of such partnerships or
corporations, that filed for protection under federal bankruptcy laws. In
addition, in the past five years, Mr. Crow was an executive officer or director
in approximately 12 partnerships or corporations, or affiliates of such
partnerships or corporations, that were placed in receivership. Pursuant to a
Stockholders Agreement to which the Company is a party, Crow Family Partnership,
L.P. has been granted the right to nominate a member of the Board of Directors
and each executive officer of the Company has agreed to vote his shares of
Common Stock in favor of such nominee. Mr. Crow is the initial such nominee. See
"Certain Relationships and Related Transactions--Stockholders' Agreement."
JAMES R. ERWIN has been a director of the Company since December 1997. Mr.
Erwin has served as Vice Chairman and Corporate Finance Executive-West of
NationsBank Corp. since January 1994, and was
3
<PAGE>
Executive Vice President, Manager of Operations and Technology for NationsBank
Corp. from October 1991 to January 1994.
JEFFERY M. HELLER has been a director of the Company since December 1997.
Mr. Heller has served as President and Chief Operating Officer of Electronic
Data Systems Corporation ("EDS") since June 1996. From 1987 to June 1996, Mr.
Heller served as Senior Vice President of EDS with responsibilities for
Technical Operations and Asia-Pacific. Mr. Heller is a member of the Board of
Directors of Hitachi Data Systems.
J. MCDONALD WILLIAMS has been the Chairman of the Board of Directors of the
Company since its inception and served as Chairman of the Board of Directors of
the Predecessor Company from August 1994 to December 1997. Mr. Williams served
as President and Chief Executive Officer of the Predecessor Company from 1991 to
1994. From 1977 to 1991, Mr. Williams served as Managing Partner of the
Predecessor Company and from 1973 to 1977 Mr. Williams was Partner, Overseas
Projects for the Predecessor Company. Mr. Williams is a member of the Board of
Directors of A.H. Belo Corporation, Mitchell Energy & Development Corporation
and Blanks Color Imaging, Inc. In any given year within the past five years, Mr.
Williams has indirectly owned interests in over 1,000 partnerships (or
affiliates of partnerships) or corporations. In the past five years, Mr.
Williams was a general partner in approximately 54, and an officer or director
in approximately 16, partnerships or corporations, or affiliates of such
partnerships or corporations, that filed for protection under federal bankruptcy
laws. In addition, in the past five years, Mr. Williams was a general partner in
approximately 14 partnerships or corporations, or affiliates of such
partnerships or corporations, that were placed in receivership.
DIRECTOR COMPENSATION
The Company's employee directors do not receive compensation solely in their
capacity as directors of the Company. The Company's non-employee directors are
paid a retainer of $30,000 for their service on the Board of Directors. In
addition to the retainer, non-employee directors are eligible to receive annual
stock option grants under the Long-Term Incentive Plan. See "Executive
Compensation--Long-Term Incentive Plan." In addition, all directors are
reimbursed for out-of-pocket expenses incurred in connection with their
attendance at Board of Directors and committee meetings.
TERM OF OFFICE
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, designated Class I, Class II and
Class III. Directors serve for staggered terms of three years each. Messrs.
Lippe, Moriarty and Sulentic currently serve as Class I directors, whose terms
expire at the Annual Meeting. Messrs. Crow, Heller and Carreker currently serve
as Class II directors whose terms expire at the Company's Annual Meeting of the
Stockholders in 1999 and Messrs. Williams, Erwin and Concannon currently serve
as Class III directors whose terms expire at the Company's Annual Meeting of
Stockholders in 2000.
MEETINGS AND COMMITTEES OF DIRECTORS
The Company's Board of Directors had one meeting during the Company's fiscal
year ended December 31, 1997, and all of the Company's directors attended such
meeting.
The Board of Directors has three standing committees: the Executive
Committee, the Audit Committee and the Compensation Committee. None of such
committees held any meetings in 1997. The Board of Directors has no nominating
committee or other committee which performs similar functions.
The Executive Committee may, to the maximum extent permitted by the Delaware
General Corporation Law, have and exercise all of the powers of the Board of
Directors. The current members of the Executive Committee are Messrs. Williams,
Lippe and Erwin. If elected to serve on the Board of Directors
4
<PAGE>
at the annual meeting, Mr. Lippe will continue to serve as a member of the
Executive Committee along with Messrs. Williams and Erwin, whose terms on the
Board do not expire until the Company's annual meeting of stockholders in 2000.
Mr. Williams will serve as Chairman of the Executive Committee for the Company's
fiscal ending December 31, 1998.
The Audit Committee was established in December, 1997 and held no meetings
in 1997. The Audit Committee reviews the results and scope of the annual audit
and other services provided by the Company's independent accountants. In
addition, the Audit Committee reviews certain related party transactions. The
current members of the Audit Committee are Messrs. Erwin, Heller and Moriarty.
If elected to serve on the Board of Directors at the Annual Meeting, Mr.
Moriarty will continue to serve as a member of the Audit Committee along with
Messrs. Erwin and Heller, whose terms on the Board do not expire until the
Company's annual meeting of stockholders in 2000 and 1999, respectively. Mr.
Heller will serve as Chairman of the Audit Committee for the Company's fiscal
year ending December 31, 1998.
The Compensation Committee reviews and approves the salaries and other
compensation that the Company pays its executive officers and administers the
Company's Long-Term Incentive Plan. See "Executive Compensation--Long-Term
Incentive Plan." The current members of the Compensation Committee are Messrs.
Erwin, Heller and Moriarty. If elected to serve on the Board of Directors at the
Annual Meeting, Mr. Moriarty will continue to serve as a member of the
Compensation Committee along with Messrs. Erwin and Heller, whose terms on the
Board do not expire until the Company's annual meeting of stockholders in 2000
and 1999, respectively. Mr. Erwin will serve as Chairman of the Compensation
Committee for the Company's fiscal year ending December 31, 1998.
EXECUTIVE OFFICERS
The following table sets forth information regarding the Executive Officers
of the Company and certain of its subsidiaries:
<TABLE>
<CAPTION>
NAME AGE TITLE
- - ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
H. Pryor Blackwell.................. 36 Executive Vice President and Chief Operating Officer of Western
Operations
William F. Concannon................ 42 President and Chief Executive Officer of Trammell Crow Corporate
Services, Inc. and Director
George L. Lippe..................... 43 Chief Executive Officer, President and Director
William C. Maddux................... 43 Executive Vice President and Chief Operating Officer of Eastern
Operations
Asuka Nakahara...................... 42 Executive Vice President and Chief Financial Officer
William Rothacker................... 46 President and Chief Executive Officer of Trammell Crow Retail
Services, Inc.
Robert E. Sulentic.................. 41 Executive Vice President, National Director of Development and
Investment and Director
</TABLE>
The Executive Officers named above were elected by the Board of Directors of
the Company, or, in the case of Messrs. Concannon and Rothacker, the Boards of
Directors of Trammell Crow Corporate Services, Inc. and Trammell Crow Retail
Services, Inc., respectively, to serve in such capacities until the next annual
meeting of such Boards of Directors, or until their respective successors have
been duly elected and have been qualified, or until their earlier death,
resignation or removal from office. Biographical information on Messrs. Lippe,
Sulentic and Concannon is set forth previously in this Proxy Statement.
H. PRYOR BLACKWELL has served as Executive Vice President and Chief
Operating Officer of the Company's Western Operations since July 1997 and
President and Chief Executive Officer of Trammell Crow Dallas/Fort Worth, Inc.
and Trammell Crow Dallas Industrial, Inc. since 1993. Mr. Blackwell has
5
<PAGE>
served on the Board of Directors of the Predecessor Company since 1993 and as a
member of the Board of Directors served on the Operating Committee, Investment
Committee and Audit Committee of the Predecessor Company. From 1991 to 1993, Mr.
Blackwell served as President and Chief Executive Officer of Trammell Crow
Central Office Group, Inc. From 1987 to 1990, Mr. Blackwell served as the
Partner in charge of the Predecessor Company's Downtown (Dallas) Office
Division. Mr. Blackwell served the Predecessor Company as Marketing Principal
from 1986 to 1987 and Leasing Agent from 1984 to 1986.
WILLIAM C. MADDUX has served as Executive Vice President and Chief Operating
Officer of the Company's Eastern Operations since July 1997. Since 1992, Mr.
Maddux has served as the President of Trammell Crow MW, Inc., and has had
responsibility for overseeing the Company's operations in Illinois, Indiana,
Michigan and Wisconsin since that time. Mr. Maddux served the Predecessor
Company in various other capacities from 1985 to 1992, including as Partner in
charge of the Predecessor Company's Carolina division from 1988 to 1992,
Marketing Principal in charge of the Predecessor Company's Oklahoma City
operations from 1987 to 1988 and Leasing Agent in the Predecessor Company's
Oklahoma City office from 1985 to 1987.
ASUKA NAKAHARA has served as Executive Vice President and Chief Financial
Officer of the Company since July 1997 and the Predecessor Company since January
1996. During 1995, Mr. Nakahara served as the Predecessor Company's Executive
Vice President in charge of National Programs. Mr. Nakahara served as President
and Chief Executive Officer of Trammell Crow Northeast, Inc. from 1991 to 1995
and as the Northeast Regional Partner for the Predecessor Company from 1987 to
1991. Mr. Nakahara served the Predecessor Company in various other capacities
from 1980 to 1987, including as the Operating Partner in charge of the
Predecessor Company's Philadelphia division from 1985 to 1987, Finance Associate
and Partner in Houston from 1983 to 1984, and Leasing Agent in Houston from 1980
to 1983.
WILLIAM ROTHACKER has been President and Chief Executive Officer of Trammell
Crow Retail Services since its formation in December 1996. Since 1994, Mr.
Rothacker has been President of Trammell Crow Denver and has had responsibility
for overseeing the Company's operations in New Mexico and Arizona. Mr. Rothacker
has served on the Predecessor Company's Operating Committee and as Chairman of
its Retail Committee since 1994. Mr. Rothacker served as Managing Director in
charge of the Predecessor Company's Denver operations from 1991 to 1994. From
1987 to 1991, Mr. Rothacker served as Partner in charge of the Denver Division.
Mr. Rothacker served as Partner in charge of the Denver Retail division from
1983 to 1986 and as Leasing Agent in Denver from 1980 to 1983.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information for the fiscal years
ended December 31, 1996 and 1997, concerning the cash and non-cash compensation
earned by, or awarded to, the Chief Executive Officer of the Company and each of
the other four most highly compensated executive officers of the Company whose
aggregate remuneration for services rendered to the Company during the year
ended December 31, 1997 exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
AWARDS
-----------------
SHARES OF
ANNUAL COMPENSATION COMMON STOCK PAYOUTS
UNDERLYING ------------
NAME AND ------------------------ OPTIONS GRANTED LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) IN FISCAL YEAR PAYOUTS($)(1) COMPENSATION($)(2)
- - ----------------------------------------- --------- ----------- ----------- ----------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
George L. Lippe.......................... 1997 350,000 175,000 58,529 1,510,838 (112,810)
Chief Executive Officer, Trammell 1996 350,000 175,000 -- 1,323,669 99,036
Crow Company
H. Pryor Blackwell....................... 1997 210,000 180,000 58,529 749,043 8,627
Executive Vice President and Chief 1996 210,000 99,750 -- 924,553 (182,503)
Operating Officer of Western
Operations, Trammell Crow Company
Asuka Nakahara........................... 1997 250,000 125,000 58,529 637,778 930,647
Executive Vice President and Chief 1996 250,000 125,000 -- 742,580 (11,787)
Financial Officer, Trammell Crow
Company
William F. Concannon..................... 1997 210,000 180,000 88,342 1,007,526 (354,607)
Chief Executive Officer of Trammell 1996 210,000 105,000 -- 673,597 42,224
Crow Corporate Services, Inc.
William C. Maddux........................ 1997 200,000 175,000 58,529 293,685 (68,401)
Executive Vice President and Chief 1996 200,000 113,000 -- 441,904 (78,682)
Operating Officer of Eastern
Operations, Trammell Crow Company
</TABLE>
- - ------------------------
(1) Reflects distributions made from the 1995 Profit Sharing Plan in the year
indicated for amounts earned in the year indicated and prior years.
(2) The amounts shown are the dollar amounts of increases (decreases) to the
Profit Sharing Account (as hereinafter defined) for each of the Named
Executive Officers under the 1995 Profit Sharing Plan (as hereinafter
defined) for the years indicated. Payouts of awards under the 1995 Profit
Sharing Plan are subject to certain restrictions.
The following table provides information concerning Common Stock options
granted to the Named Executive Officers in the fiscal year ended December 31,
1997. In addition, the present values of the options on the dates of grant
(computed using a variation of the Black-Scholes option pricing model) are
shown.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OPTIONS
OF SHARES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE GRANT DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED(1) 1997 ($/SH)(2) DATE VALUE($)(3)
- - ----------------------------------------------------- ----------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
George L. Lippe...................................... 58,529 1.2 17.50 11/24/07 513,299
H. Pryor Blackwell................................... 58,529 1.2 17.50 11/24/07 513,299
Asuka Nakahara....................................... 58,529 1.2 17.50 11/24/07 513,299
William F. Concannon................................. 29,813 0.6 3.85 8/1/07 452,561
58,529 1.2 17.50 11/24/07 513,299
William C. Maddox.................................... 58,529 1.2 17.50 11/24/07 513,299
</TABLE>
- - --------------------------
(1) The options listed in this table other than those granted to Mr. Concannon
in August 1997 are subject to a three-year vesting schedule, subject to
certain exceptions, with 33% becoming exercisable on each of November 24,
1998, 1999 and 2000. The options granted to Mr. Concannon in August 1997 are
currently fully vested and exercisable.
(2) On August 1, 1997, there was no public market for the Company's securities,
and consequently there is no way to quantify a market value for Common Stock
underlying the option granted to Mr. Concannon on August 1, 1997. However,
the Company believes the market value of the stock underlying such option on
the date of grant was $17.50 per share. Each of the other options listed in
the table was granted at an exercise price of $17.50, the price per share of
Common Stock received by the Company in its initial public offering, which
was consummated on December 1, 1997.
(3) Present value is based on the Black-Scholes option pricing model adapted for
use in valuing executive stock options. The estimated values under the
Black-Scholes model are based on arbitrary assumptions as to certain
variables. Expected stock price volatility is assumed to be 31.8% and the
risk-free rate of return is assumed to be 6.40% for the options granted to
Mr. Concannon in August 1997 and 5.93% for all other options shown in the
table. The exercise date for the options is assumed to be the eighth
anniversary of the date of grant, and dividend yield is assumed to be 0%.
The actual value, if any, an Executive may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised, so there is no assurance the value realized by an Executive will
be at or near the value estimated by the Black-Scholes model and reflected
in the table.
The following table sets forth, as of December 31, 1997, the number of
Common Stock options and the value of unexercised options held by the Named
Executive Officers. As of December 31, 1997, there had been no stock options
exercised by any Named Executive Officer.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997($)(1)
-------------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------------------------- ----------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C>
George L. Lippe.................... -- 58,529 -- 482,864
H. Pryor Blackwell................. -- 58,529 -- 482,864
Asuka Nakahara..................... -- 58,529 -- 482,864
William F. Concannon............... 29,813 58,529 652,905 482,864
William C. Maddox.................. -- 58,529 -- 482,864
</TABLE>
- - --------------------------
(1) The price per share of Common Stock for the last trade reported by the New
York Stock Exchange on December 31, 1997 was $25.75.
8
<PAGE>
LONG-TERM INCENTIVE PLAN
OVERVIEW. The purpose of the Trammell Crow Company Long-Term Incentive Plan
(the "Long-Term Incentive Plan") is to provide an incentive for employees,
directors and certain consultants and advisors of the Company to remain in the
service of the Company, to extend to those persons the opportunity to acquire a
proprietary interest in the Company so that they will apply their best efforts
for the benefit of the Company and to aid the Company in attracting able persons
to enter the service of the Company. The Company may grant awards under the
Long-Term Incentive Plan to officers, directors, employees and certain
consultants and advisors of the Company or any subsidiary of the Company (as
used for the Long-Term Incentive Plan, a "Participant"). The awards under the
Long-Term Incentive Plan include (i) incentive stock options ("ISOs") qualified
as such under the Internal Revenue Code of 1986, as amended (the "Code"); (ii)
stock options that do not qualify as incentive stock options; (iii) stock
appreciation rights ("SARs"); (iv) restricted stock awards; and (v) performance
units.
SHARE AUTHORIZATION. The number of shares of Common Stock that may be
subject to outstanding awards under the Long-Term Incentive Plan is equal to
5,334,878 shares of Common Stock. The number of shares of Common Stock
authorized under the Long-Term Incentive Plan and the number of shares subject
to an award under the Long-Term Incentive Plan will be adjusted for stock
splits, stock dividends, recapitalizations, mergers and other changes affecting
the capital stock of the Company.
INITIAL AWARDS. Concurrent with the closing of the Offering, the Company
granted options to acquire an aggregate of 2,348,457 shares of Common Stock to
certain employees. The exercise price for such stock options was $17.50 per
share. The stock option grants include grants to each of the executive officers
of the Company of the right to acquire 58,529 shares and a grant to Mr. Williams
of the right to acquire 40,965 shares. Subject to certain exceptions, these
options will vest ratably over a three-year period. See "Certain Relationships
and Related Transactions--Reincorporation Transactions."
ADMINISTRATION. As permitted by the terms of the Long-Term Incentive Plan,
the Board of Directors has delegated all of its duties under the Long-Term
Incentive Plan to the Compensation Committee (as used in this description of the
Long-Term Incentive Plan, the "Committee"). The Committee has broad discretion
to administer the Long-Term Incentive Plan, interpret its provisions, and adopt
policies for implementing the Long-Term Incentive Plan. This discretion includes
the ability to select the recipient of an award, determine the type and amount
of each award, establish the terms of each award, accelerate vesting or
exercisability of an award, extend the exercise period for an award, determine
whether performance conditions have been satisfied, permit the transfer of an
award to family trusts and other persons and otherwise modify or amend any award
under the Long-Term Incentive Plan.
STOCK OPTIONS. The Committee determines the exercise price of each option
granted under the Long-Term Incentive Plan. The exercise price for an ISO must
not be less than the fair market value of the Common Stock on the date of grant,
and the exercise price of non-qualified stock options must not be less than 85%
of the fair market value of the Common Stock on the date of grant. Stock options
may be exercised as the Committee determines, but not later than ten years from
the date of grant in the case of ISOs. At the discretion of the Committee,
holders may use shares of Common Stock to pay the exercise price, including
shares issuable upon exercise of the option.
SARS. A SAR may be awarded in connection with or separate from a stock
option. A SAR is the right to receive an amount in cash or Common Stock (or a
combination of cash and Common Stock) equal to the excess of the fair market
value of a share of the Common Stock on the date of exercise over the exercise
price specified in the agreement governing the SAR (for SARs not granted in
connection with a stock option) or the exercise price of the related stock
option (for SARs granted in connection with a stock option). A SAR granted in
connection with a stock option will require the holder, upon exercise, to
surrender the related stock option or portion thereof relating to the number of
shares for which the SAR is exercised. The surrendered stock option or portion
will then cease to be exercisable. Such a SAR is
9
<PAGE>
exercisable or transferable only to the extent that the related stock option is
exercisable or transferable. A SAR granted independently of a stock option will
be exercisable as the Committee determines. The Committee may limit the amount
payable upon exercise of any SAR. SARs may be paid in cash or stock, as the
Committee provides in the agreement governing the SAR.
RESTRICTED STOCK AWARDS. A restricted stock award is a grant of shares of
Common Stock that are nontransferable or subject to risk of forfeiture until
specific conditions are met. The restrictions will lapse in accordance with a
schedule or other conditions as the Committee determines. During the restriction
period, the holder of a restricted stock award may, in the Committee's
discretion, have certain rights as a stockholder, including the right to vote
the stock and receive dividends and other distributions paid on that stock.
PERFORMANCE UNITS. Performance units are performance-based awards payable
in cash, Common Stock, or a combination of both. The Committee may select any
performance measure or combination of measures as conditions for cash payments
or stock issuances under the Long-Term Incentive Plan.
ASSUMED OPTION PLAN
In connection with the Reincorporation Transactions, the Company agreed to
assume the Trammell Crow Company 1997 Stock Option Plan (the "Assumed Option
Plan" or the "1997 Plan"), which had been adopted by the Predecessor Company.
See "Certain Relationships and Related Transactions-- Reincorporation
Transactions."
ADMINISTRATION. As permitted by the terms of the Assumed Option Plan, the
Board of Directors has delegated all of its duties under the Assumed Option Plan
to a committee of officers of the Company.
ELIGIBILITY. Each employee of the Company or a subsidiary of the Company is
eligible to participate in the Assumed Option Plan. Prior to the Consummation of
the Reincorporation Transactions, the Predecessor Company selected the persons
to be granted awards or options pursuant to the Assumed Option Plan (as used for
the Assumed Option Plan, the "Participants").
SHARE AUTHORIZATION. The maximum number of shares of the Predecessor
Company's common stock that may be subject to outstanding awards under the
Assumed Option Plan is 1,626. The Assumed Option Plan provides that this number
of shares and the number of shares subject to an award under the Assumed Option
Plan will be adjusted for stock splits, stock dividends, recapitalizations,
mergers and other changes affecting the capital stock of the Predecessor
Company.
STOCK OPTIONS. Options granted under the Assumed Option Plan are
nonqualified stock options. A stock option entitles the Participant to purchase
shares of Common Stock from the Company at the exercise price. The exercise
price may be paid in cash, with shares of Common Stock or with a combination of
cash and Common Stock. The options will expire within ten years from the date of
grant. In addition, the committee administering the plan may specify that an
option will terminate prior to the end of its stated term upon termination of
employment, disability or death. If the employment relationship is terminated
for any reason, any options that are not then vested will be forfeited.
INITIAL AWARDS AND ASSUMPTION OF AWARDS. On August 1, 1997, the Predecessor
Company granted to certain of its employees options to acquire an aggregate of
1,626 shares of its common stock, which constitutes all shares authorized under
the Assumed Option Plan. The Company assumed the Predecessor Company's
obligations with respect to all such options, and the Company is obligated to
issue up to an aggregate of 2,423,769 shares of Common Stock at a price of $3.85
per share upon the exercise of such options. All of such options vested upon the
closing of the Offering and became exercisable 30 days thereafter. The
Predecessor Company granted an option to Mr. Concannon, a Named Executive
Officer, which represents the right to acquire 29,813 shares of Common Stock. No
additional options will be granted under the Assumed Option Plan.
10
<PAGE>
PROFIT SHARING PLAN
In connection with the consummation of the Offering, the Company determined
to no longer grant any future awards under its 1995 Profit Sharing Plan (the
"Profit Sharing Plan"). Set forth below is a general discussion of the terms of
the Profit Sharing Plan.
The basic accounting units for purposes of the Profit Sharing Plan are
Business Units and Projects. Business Units are designated based upon
recommendations by profit sharing unit leaders to the Chief Executive Officer
and are generally determined by geography or line-of-business. Similarly, a
Project represents a particular real estate project in which the Company owns an
equity interest. A Profit Sharing Unit generally consists of multiple Business
Units and Projects.
A profit sharing account ("Profit Sharing Account") is maintained for each
participant (for the purposes of this section, a "Participant") within a Profit
Sharing Unit. Each Participant's Profit Sharing Account is adjusted to reflect
the operational results of each constituent Business Unit in which the
Participant has been allocated a percentage economic interest (a "Business Unit
Percentage") and each constituent Project in which the Participant has been
allocated a percentage economic interest (a "Project Percentage"). The Profit
Sharing Accounts do not represent any current right to assets of the Company. In
a profitable year, each of a Participant's Profit Sharing Accounts is increased
by a fraction of the Earnings Before Profit Sharing ("EBPS") of the appropriate
Business Units and Projects. In an unprofitable year, EBPS of a given Business
Unit or Project may be negative, in which case each Participant's Profit Sharing
Account will decrease. In addition, various adjustments to Profit Sharing
Accounts may be made to reflect the profits intended to be shared with the
Participant. Prior to retirement, a Participant may receive distributions which
are deducted from his Profit Sharing Account balances. Distributions will
generally be limited to a portion of the current year's EBPS. Payment of these
distributions may also be limited by liquidity concerns of the Company,
potential negative Profit Sharing Accounts for individuals, and obligations to
pay retired Participants or former stockholders.
DISTRIBUTIONS BEFORE RETIREMENT. Participants have generally received two
kinds of distributions: (i) for each Project, distributions in proportion to
their Project Percentages ("Project Distributions"); and (ii) for each Profit
Sharing Unit, distributions in proportion to their Profit Sharing Account
balances ("Current Distributions"). Current Distributions may not exceed the
available cash of a Profit Sharing Unit after certain priority payments have
been made. Thus, a Participant in a profitable Business Unit may have limited
Current Distributions if current earnings or available cash is reduced by the
results of an unprofitable Business Unit in the same Profit Sharing Unit.
Similarly, Project Distributions generally may not exceed a set percentage of
the current earnings of the Project. Current Distributions or Project
Distributions will be made to a Participant only to the extent that the
Participant's Profit Sharing Account balance is positive after aggregating all
individual Business Units and Projects. Thus, all distributions made from a
positive Profit Sharing Unit will be offset against any Profit Sharing Unit in
which the Participant has a negative account balance if the Participant does not
have a positive net Profit Sharing Account balance. Finally, both Current
Distributions and Project Distributions may be limited by other factors,
including the overall solvency of the applicable Profit Sharing Unit.
RETIRED PARTICIPANTS. Upon termination of employment, death or disability,
a Participant, subject to certain vesting requirements, is entitled to receive
the amounts, subject to the payment restrictions under the Profit Sharing Plan,
then held in such Participant's Profit Sharing Account, which account is
converted into a retirement account (a "Retirement Account"). If a Retirement
Account is established, following the last day of the profit sharing period in
which a Participant's retirement occurs, the Participant will no longer have any
interest in any Business Unit but will continue to have existing Project
interests. A retired Participant may, subject to limitations, receive two types
of payments from his/her Retirement Account, (i) Basic Distributions and (ii)
Project Distributions, if retired before January 1, 1995. The Profit Sharing
Plan vests over a graduated period such that if a Participant retires before the
fifth anniversary of the December 31st first following the date on which he
first becomes a Participant, his/her Retirement
11
<PAGE>
Account and Project Percentage will be reduced as follows: to 1% if he/she
retires before the first anniversary, to 20% if he/she retires before the second
anniversary, to 40% if he/she retires before the third anniversary, to 60% if
he/she retires before the fourth anniversary; and to 80% if he/she retires
before the fifth anniversary.
Retired Participants will receive Basic Distributions equal to (a) the
amount of such Basic Distribution partially accelerated to 10% of such
participant's Retirement Balance as of his/her Retirement Date or (b) the Basic
Distribution otherwise distributable to such participant by reason of a
distribution by the applicable Profit Sharing Unit, whichever is greater,
subject to certain limitations. For participants who retire on or after January
1, 1996 (a "Post '95 Retired Participant"), upon the occurrence of the fifth
anniversary of the Retirement Date, no distributions will be made to other
Participants, except Retired Participants, in that Profit Sharing Unit until
such Retired Participant's Retirement Account is reduced to zero. If more than
one Post '95 Retired Participant has reached the fifth anniversary of his/her
Retirement Date, all such Post '95 Retired Participants will share
proportionately based upon their respective Retirement Account balances. With
respect to any participant who retired prior to January 1, 1996 (a "Pre '96
Retired Participant"), upon the seventh anniversary of his/her Retirement Date,
no Post '95 Retired Participant will receive any Basic Distribution until the
Pre '96 Retired Participant has received his/her balance in full or until the
Post '95 Retired Participant has reached the seventh anniversary of his
Retirement Date (whereupon such Post '95 Retired Participant shall be treated
the same as a Pre '96 Retired Participant), whichever shall first occur.
The accelerated Basic Distributions will be limited to the Available Cash of
the applicable Profit Sharing Unit and other limitations contained in the Profit
Sharing Plan, including a limit on Basic Distributions to Retired Participants
of 24% of Available Cash of the applicable Profit Sharing Unit. In computing
Available Cash, the Chief Executive Officer may, in his sole discretion, adjust
the working capital reserves established by each Profit Sharing Unit in the
manner he deems appropriate.
TERMINATION OF FUTURE AWARDS. The Company will not grant any future awards
under the Profit Sharing Plan. All deferred and accrued earnings associated with
the Profit Sharing Units and Business Units under the Profit Sharing Plan will
be paid to the current Participants during 1998 and 1999, and when all such
amounts have been paid, the Company will have no further obligation to
Participants. With respect to Retired Participants, the Company will continue to
make Project Distributions until the completion of the particular Project.
401(K) PLAN
The Company sponsors a retirement plan called the Trammell Crow Company
Retirement Savings Plan (the "401(k) Plan"). The total assets as of December 31,
1997, held by the 401(k) Plan were valued at approximately $69.9 million. The
trustees for the 401(k) Plan are Vince George and Asuka Nakahara. Employees
(including members of management) are eligible to make voluntary contributions
under the 401(k) Plan up to 15% of their annual compensation, subject to the
applicable limitations in the Internal Revenue Code of 1986. The Company is
permitted to make a discretionary contribution to the 401(k) Plan each fiscal
quarter which will be allocated among participants as a matching contribution
based on their contributions under the 401(k) Plan. The Company's policy is to
match the lesser of (i) 50% of all contributions up to 6% of an employee's
contribution and (ii) $5,000 per year. The 401(k) Plan permits employees to
direct investments of their accounts in Common Stock and among a selection of
mutual funds. The 401(k) Plan is intended to qualify as a profit sharing plan
under 401(a) and 401(k) of the Code.
12
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
currently composed of Messrs. Erwin, Heller and Moriarty. The Committee
determines annual salary, bonuses and long-term incentive awards for the
Company's Chairman of the Board, Chief Executive Officer and the Company's other
executive officers. The Committee also administers the Trammell Crow Company
Long-Term Incentive Plan (the "Long-Term Incentive Plan") and, subject to the
provisions of such plan, determines grants under it for all employees and
consultants, including executive officers.
The following report has been provided by the Committee. The Company's
initial public offering commenced on November 24, 1997. Prior to the Company's
initial public offering, the Board of Directors of the Predecessor Company
approved the terms of compensation for the Company's executive officers.
Thereafter, the Committee was formed. The Committee did not meet or make
recommendations with respect to base salary paid to senior executive officers in
1997 because base salary amounts were set prior to the establishment of the
Committee. Awards of stock options to certain executive officers and key
employees of the Company were made by the full Board of Directors prior to and
at the closing of the initial public offering. Each of Messrs. Erwin, Heller and
Moriarty is a non-employee director of the Company. The Committee held its first
meeting on March 10, 1998, and reviewed the Company's compensation practices and
made awards of stock options to certain executive officers and key employees of
the Company.
PRINCIPLES OF EXECUTIVE COMPENSATION
The Company's executive compensation philosophy is designed to provide
competitive levels of compensation that integrate pay with the Company's annual
and long-term performance goals, reward above-average corporate performance,
recognize individual initiative and achievements, assist the Company in
attracting and retaining talented executives and aligning the interests of
executives with the long-term interests of the Company's stockholders. The
Company believes that the furtherance of these objectives is best accomplished
by providing senior and other executives of the Company with compensation
packages that consist of a combination of base salary, short-term annual
incentive bonus and long-term stock options. The Company's base salary component
is designed to be comparable to median base salaries of real estate services
companies and other service companies comparable in size to the Company. The
Company emphasizes performance-related incentive compensation to reward the
Company's executives for the creation of long-term stockholder value. The
Company believes that this balance reflects each executive's position, tenure
and experience, while providing them with strong financial incentives to achieve
key business and individual performance objectives. The Company also believes
that the resulting compensation package rewards high levels of performance in
excess of other comparable organizations.
The Company takes into account various qualitative and quantitative
indicators of corporate and individual performance in determining the level of
compensation for the senior executives (such as growth in earnings, EBITDA and
the achievement of business unit growth) and may vary its quantitative measures
from employee to employee and from year to year. The Company also recognizes the
importance of individual achievements that may be difficult to quantify, and
accordingly recognizes qualitative factors, such as demonstrated leadership and
overall contributions to the Company.
The Company determines competitive levels of compensation for executive
positions based on information drawn from compensation surveys, proxy statements
for comparator organizations and compensation consultants. The compensation
surveys and proxy statements used are for real estate services companies and
other service companies comparable in size to the Company.
13
<PAGE>
It should be noted that the value of any individual executive's compensation
package will vary significantly based on performance. So while the expected
value of an executive's compensation package may be competitive, actual payments
made to executives in a given year may be higher or lower than competitive
market rates because of performance.
DESCRIPTION OF THE CURRENT EXECUTIVE COMPENSATION PROGRAM
This section describes each of the principle elements of the Company's
executive compensation program with specific reference to the objectives
discussed above.
BASE SALARY PROGRAM
The Company believes that it is crucial to provide competitive salaries in
order to attract and retain talented executive officers. The objective of the
Company's base salary program is to provide executive officers salaries that, in
general, are at the market median. Base salaries for individual executives are
set at levels considered appropriate in light of their position, level of
revenue responsibility within the Company, tenure and performance. Base salaries
are reviewed annually by the Committee and adjusted based on evaluations of the
executive's past and projected contributions to the Company and changes in
competitive pay levels.
ANNUAL CASH BONUS PLAN
The Company's annual cash bonus plan assists the Company in rewarding and
motivating key employees and provides cash compensation opportunities to plan
participants. As a pay-for-performance plan, cash bonus awards are paid annually
based on the achievement of performance objectives established for the Company
and the executive's business unit. Cash bonus award ranges are targeted at
levels which, when combined with the executive's base salary, are at the 75th
percentile for cash compensation paid to executives at comparable companies.
Under the Company's annual cash bonus plan, a target bonus is established
for each level of the Company's officers that results in the payment of a
specified percentage of the officer's salary if his or her annual goals and
objectives are achieved. A minimum performance level must be achieved by the
Company, the officer and/or his or her business unit before any bonus may be
earned. Thereafter, an established progression rewards higher levels of
achievement with greater bonus payments, subject to a predetermined maximum. For
the Company's Chief Executive Officer and senior executives, bonus targets are
measured against each officer's achievement of the goals and objectives outlined
for such officer in the Company's annual business plan. The Company's Chief
Executive Officer is eligible to receive an annual bonus of 0% to 200% of his
annual salary, depending upon his performance as determined by the Committee and
the Board of Directors. As a percentage of salary, bonuses for senior executives
(other than the Chief Executive Officer) range from 0% to 150%, depending upon
performance, as evaluated by the Chief Executive Officer and the Committee.
The specific objectives and standards under the annual cash bonus plan are
reviewed annually by the Company in order to ensure consistency with the
Company's business strategy and prevailing market conditions.
ANNUAL STOCK OPTION GRANTS
The Company believes that its key employees should have an ongoing stake in
the long-term success of the Company's business. The Company also believes that
the key employees should have a considerable portion of their total potential
compensation based upon the performance of the Company's stock, since stock
related compensation is directly tied to enhanced stockholder value.
The Long-Term Incentive Plan authorizes the granting of incentive and
nonqualified stock options and restricted stock awards to key executives and
other key employees and consultants of the Company and its
14
<PAGE>
subsidiaries. To align the interests of senior executives with the interests of
stockholders, the Committee's current policy regarding awards under the
Long-Term Incentive Plan is to grant non-qualified stock options. However, the
Committee reserves the right to grant restricted stock or other awards as it
deems appropriate. The Long-Term Incentive Plan provides a maximum of 5,334,878
shares for awards, which the Company believes will allow it to continue to make
competitive awards to qualified executives and key employees into the year 2000.
Under the Company's annual stock option grant program, the Company determines
the levels of options to be granted to each of its executives based upon such
executive's position, level of revenue responsibility within the Company, tenure
and the achievement of performance objectives established for the Company and
the Executive's business unit. The annual stock option grants have had an
exercise price equal to the fair market value of a share of Common Stock on the
date of grant. To encourage retention, the ability to exercise options granted
under this plan is generally subject to vesting restrictions. The value of
annual stock option awards granted under the Long-Term Incentive Plan (currently
computed using a variation of the Black Scholes option pricing model) are
generally targeted at a level which is at the 75th percentile of the value of
long-term incentives granted to executives of comparable companies.
The compensation of Executive Officers is periodically reviewed to ensure an
appropriate mix of base salary, annual incentive and long-term incentive within
the philosophy of providing competitive total direct compensation opportunities
consistent with the pay philosophy articulated above.
ADDITIONAL STOCK OPTION GRANTS
In addition to options granted under the Company's annual stock option grant
program, executives may be eligible to receive additional stock option awards if
the executive's business unit exceeds certain performance thresholds established
for the business unit.
1997 CHIEF EXECUTIVE OFFICER PAY
The Committee reviews the compensation of the Chief Executive Officer, who
is responsible for the strategic and financial performance of the Company, and
the Committee's recommendation is subject to approval by the Board of Directors.
Based on information available to the Committee, the Committee believes that Mr.
Lippe's base salary and other compensation was consistent with compensation
being paid to other chief executive officers of comparable companies. In
accordance with the Company's option philosophy, Mr. Lippe received one grant of
options on the date of the Company's initial public offering.
$1 MILLION PAY DEDUCTIBILITY CAP
To the extent readily determinable and as one of the factors in considering
compensation matters, the Committee considers the anticipated tax treatment to
the Company and to its executives of various payments and benefits. Some types
of compensation payments and their deductibility (e.g., the spread on exercise
of non-qualified options) depend upon the timing of an executive's vesting or
exercise of previously granted rights. Further, interpretations of and changes
in the tax laws and other factors beyond Committee's control also affect the
deductibility of compensation. For these and other reasons, the Committee will
not necessarily limit executive compensation to that deductible under Section
162(m). The Committee will consider various alternatives to preserving the
deductibility of compensation payments and benefits reasonably practicable and
to the extent consistent with the Company's other compensation objectives.
The 1998 Compensation Committee of the Board of Directors is:
James R. Erwin--Chairman
Jeffery M. Heller
Rowland T. Moriarty
15
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee of the Company was formed in December 1997 and
consists of Messrs. James R. Erwin, Jeffery M. Heller and Rowland T. Moriarty.
Prior to the creation of the Compensation Committee, the Predecessor Company's
Board of Directors approved the terms of compensation for the Company's
executive officers.
In 1997, Mr. Moriarty or affiliates of Mr. Moriarty received an aggregate of
$98,000 for services rendered as a consultant to the Company. Mr. Erwin serves
as Vice-Chairman and Corporate Finance Executive-West of NationsBank Corp. The
Company and an affiliate of NationsBank Corp. are parties to certain
transactions described under "Certain Relationships and Related Transactions."
Certain other directors are parties to transactions with the Company, as
described under the caption "Certain Relationships and Related Transactions."
16
<PAGE>
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
REINCORPORATION TRANSACTIONS
The Company is a Delaware corporation that was formed in August 1997 to
become the successor to Trammell Crow Company, a Texas close corporation (the
"Predecessor Company"). In connection with the Company's initial public offering
of its common stock, par value $.01 per share (the "Common Stock"), in November
1997 (the "Offering"), the Company and TCC Merger Sub, Inc., a wholly owned
subsidiary of the Company ("Merger Sub"), entered into a series of transactions
(the "Reincorporation Transactions") to convert the legal form in which the
Predecessor Company's business and operations were held from a Texas close
corporation to a Delaware corporation. Pursuant to the Reincorporation
Transactions, Merger Sub was merged (the "Reincorporation Merger") with and into
the Predecessor Company. As a result of the Reincorporation Merger, the
Predecessor Company survived as a wholly-owned subsidiary of the Company and the
Predecessor Company's shareholders immediately prior to the effective time of
the Reincorporation Merger (the "Effective Time") received, in the aggregate,
27,799,181 shares of Common Stock, constituting approximately 82.02% of the
outstanding Common Stock after giving effect to the Offering.
On August 1, 1997, the Predecessor Company granted to certain of its
employees options to acquire an aggregate of 1,626 shares of its common stock,
which constitutes all shares authorized under the Assumed Option Plan. At the
Effective Time, the Company assumed the Predecessor Company's obligations with
respect to all such options, and the Company is obligated to issue up to an
aggregate of 2,423,769 shares of Common Stock at a price of $3.85 per share upon
the exercise of such options. All of such options vested upon the closing of the
Offering and became exercisable 30 days thereafter. The Predecessor Company
granted an option to Mr. Concannon, a Named Executive Officer, which represents
the right to acquire 29,813 shares of Common Stock. No additional options will
be granted under the Assumed Option Plan.
Concurrent with the closing of the Offering, the Company granted options
under the Long-Term Incentive Plan to acquire an aggregate of 2,348,457 shares
of Common Stock to certain employees. The exercise price for such stock options
was $17.50 per share. The stock option grants include grants to each of the
executive officers of the Company to acquire 58,529 shares and a grant to Mr.
Williams to acquire 40,965 shares. The options will vest ratably over a
three-year period.
ROYALTY AGREEMENT AND LICENSE AGREEMENT
Pursuant to a Royalty Agreement entered into between Mr. Trammell Crow, as
an individual, and the Company on January 1, 1991, as ultimately assigned to CFH
Trade-Names, L.P. ("CFH"), an affiliate of Crow Family Partnership, L.P. ("Crow
Family"), Mr. Trammell Crow granted to the Company the exclusive right and
license to use any of the Trammell Crow Company business or trade names, or any
acronym or abbreviation thereof, in any business developing, acquiring,
managing, financing, owning or investing in real estate for office, industrial
or retail use in the United States or Canada. In September, 1997, prior to the
assignment of the Royalty Agreement to CFH, the Predecessor Company made a cash
payment in an aggregate amount of approximately $1,405,000 to Crow Family in
partial satisfaction of accrued royalty and consulting expenses. The Royalty
Agreement was terminated immediately prior to the closing of the Offering. The
Predecessor Company agreed that, no later than April 15, 1998, it will pay CFH
and Crow Family all unpaid amounts owed by the Company to CFH and Crow Family
under the Royalty Agreement.
The Company and CFH entered into a License Agreement immediately prior to
the closing of the Offering and upon termination of the Royalty Agreement.
Pursuant to the terms of the License Agreement, and subject to certain quality
standards, the Company was granted the right to use the name "Trammell Crow" in
any business in any region around the world; provided, that the Company agreed
that it will not engage in the residential real estate business under the name
"Trammell Crow." The license
17
<PAGE>
granted pursuant to the License Agreement (the "Trade Name License") is
perpetual, subject to the Company's continued use and compliance with certain
quality standards and termination as a result of certain bankruptcy events. The
Company is not obligated to pay any fees under the License Agreement. However,
in exchange for the grant of the Trade Name License, the Company issued
2,295,217 shares of Common Stock to CFH immediately prior to the closing of the
Offering.
Under the terms of the License Agreement, CFH has reserved the right to use
the names "Crow Family Holdings" and "Crow Investment Trust" (and one approved
substitute for either of such names) and derivations thereof in any business
except the real estate services business. CFH is not required to change the name
of certain of its existing affiliates which currently use names that would
otherwise be prohibited under the License Agreement. However, CFH has agreed to
use its reasonable efforts to prevent any entities from engaging in any new
business activities without the entity changing its name to a permitted name
under the License Agreement. CFH has also agreed not to use the name "Crow" in
combination with the word "Company" or in combination with any word that
connotes a real estate service business, including "Development," "Brokerage,"
"Management," "Property Management," "Services," "Corporate Services,"
"Infrastructure Management," "Leasing" or "Tenant Representation." In addition,
CFH will not use "Crow" in the name of any entity that has securities registered
under the Securities Act or the Securities Exchange Act of 1934; provided,
however, that the names "Trammell Crow Residential Company," "Trammell Crow
Residential" and "TCR" may be used for any public entity pursuant to the terms
of applicable agreements among Trammell Crow Residential Company, CFH or its
affiliates and, if applicable, the Company. CFH can use the name "Crow" in the
name of any privately held entity that is not engaged in the real estate
business if the name also includes a descriptive word (E.G., "Crow Publishing").
CFH has agreed to use its reasonable efforts to assure that other family members
of Mr. Trammell Crow will comply with the License Agreement as if they were
parties to the agreement. In addition, CFH agreed to cause Trammell Crow
International to cease using the name "Trammell Crow" within three years after
the date of the License Agreement, and also to cease to use that name in any
market within 12 months after the Company or any of its subsidiaries opens an
office in that market.
CONSULTING ARRANGEMENTS
In January 1991, the Company entered into consulting arrangements (the
"Consulting Arrangements") with Mr. Williams and an affiliate of Mr. Harlan
Crow. Mr. Crow's interest was subsequently assigned to Crow Family. Pursuant to
the Consulting Arrangements, Mr. Williams and Crow Family received payments
computed by paying them a fixed percentage of earnings of each Project and
Business Unit. The Consulting Arrangements were terminated as of the closing of
the Offering. The Predecessor Company agreed that, no later than April 15, 1998,
it will pay Crow Family all unpaid amounts owed by the Predecessor Company to
Crow Family under its Consulting Arrangements. In connection with the
termination of the Consulting Arrangements, Mr. Williams received a payment of
$1,555,918.
CROW INVESTMENT TRUST AND CERTAIN INVESTMENT FUNDS
Crow Realty Investors, L.P. d/b/a Crow Investment Trust is wholly owned by
Crow Family. Mr. Harlan Crow, a director of the Company, is the chief executive
officer of Crow Family, Inc., the general partner of Crow Family. Since its
inception in 1994, Crow Investment Trust has co-invested with the Company and
various of its subsidiaries in 15 projects in the areas of industrial
development, build-to-suit arrangements, land acquisitions and other real-estate
related projects.
Beginning in 1995, the Company, directly and through its subsidiary Trammell
Crow Capital Company, and certain senior employees of the Company and its
affiliates, through Trammell Crow Investment Fund 1995 L.P., a Delaware limited
partnership ("Fund I"), have co-invested on a side-by-side basis with Crow
Investment Trust and Mr. Williams in six and four real-estate related projects,
respectively. Trammell Crow Investments, Inc., the general partner of Fund I, is
a subsidiary of Trammell Crow Capital Company. No contributions to or
distributions from these projects were made in 1997. The senior employees of the
18
<PAGE>
Company invest in the projects indirectly as limited partners in Fund I. The
following reflects total investments and distributions related to Fund I through
December 31, 1997, for the executive officers of the Company: Mr. Lippe,
$150,000, $131,677; Mr. Nakahara, $25,000, $21,946; Mr. Maddux, $50,000,
$43,892; Mr. Sulentic, $25,000, $21,946; and Mr. Blackwell, $100,000, $87,785;
respectively. No additional capital contributions were made to Fund I during
1997 by the executive officers of the Company.
Beginning in February 1996, the Company, through its subsidiary Trammell
Crow Capital Company II, Inc., and certain directors and senior employees of the
Company and its affiliates have collectively invested in Trammell Crow
Investment Fund II, L.P., a Delaware limited partnership which makes investments
that emphasize real-estate related projects ("Fund II"). Trammell Crow
Investments II, Inc., the general partner of Fund II, is a subsidiary of
Trammell Crow Capital Company II, Inc. The senior employees of the Company
invest as limited partners through Trammell Crow Individual Investment Fund
1996, L.P. in Fund II. Through December 31, 1997, the Company made contributions
to Fund II of approximately $1,707,000 and received distributions from Fund II
of approximately $419,000. The following reflects total investments and
distributions related to Fund II through December 31, 1997, for the executive
officers of the Company: Mr. Lippe, $184,000, $46,906; Mr. Nakahara, $92,000,
$23,453; Mr. Maddux, $46,000, $11,727; Mr. Concannon, $46,000, $11,727; Mr.
Rothacker, $46,000, $11,727; Mr. Sulentic, $23,000, $5,863; and Mr. Blackwell,
$230,000, $58,633, respectively. In addition, an affiliate of Mr. Williams, a
director of the Company, made investments in Fund II of $690,000 and received
distributions of $175,898 through December 31, 1997.
Fund II currently invests in several related limited partnerships that are
all affiliates of Crow Family and are collectively referred to as the "DFW
Fund." The aggregate amount invested in and distributions received from DFW Fund
by Fund II through December 31, 1997, is $470,683 and $102,288, respectively.
Through December 31, 1997, the Company (through direct investment outside of
Fund II) and Crow Investment Trust have invested an aggregate of approximately
$470,683 and $3,282,378, respectively, in DFW Fund and have received
distributions totaling $102,288 and $695,557, respectively. As of December 31,
1997, an affiliate of Mr. Williams has invested $470,683 in DFW Fund and
received distributions of $102,288. Through December 31, 1997, an affiliate of
Mr. Williams contributed approximately $1,450,158 to projects in which DFW Fund
has an interest. Through December 31, 1997, the Company and Crow Investment
Trust contributed approximately $998,731 and $8,929,006, respectively, to
projects in which DFW Fund had an interest, and the Company received
distributions of approximately $252,484. The aggregate amount contributed by
Fund II to projects in which DFW Fund had an interest is $2,350,158 through
December 31, 1997. The Company has also agreed not to invest in certain
investment opportunities in the Dallas/Fort Worth metropolitan area without
first offering the investment opportunity to the DFW Fund.
Crow Investment Trust formerly held a substantial ownership interest in TCC
Retail BTS Limited Partnership ("Retail BTS"), a Texas limited partnership which
has a wholly owned subsidiary of the Company as its general partner. Retail BTS
develops, owns and operates real estate projects leased to national retail
chains. Through December 31, 1997, Crow Investment Trust had invested an
aggregate of $374,000 in Retail BTS, and in 1997 Crow Investment Trust received
approximately $294,000 in payments in 1997. Effective January 1, 1998, Crow
Investment Trust sold its interest in Retail BTS to the Company in exchange for
a cash payment of $275,000.
CROW FAMILY
During 1997, the Company received 7% of its total revenue from a commercial
real estate asset base principally owned by parties related to the partnerships,
corporations and other entities or individuals doing business as Trammell Crow
Company prior to 1991. Crow Family 1991 Limited Partnership (an affiliate of
Crow Family and Mr. Harlan Crow) and Mr. Williams, a director of the Company,
own significant interests in this commercial asset base.
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<PAGE>
CAPITALIZATION DEBT
In connection with its initial capitalization, the Predecessor Company
borrowed $9,020,000 from Mr. Williams and an affiliate of Crow Family. The notes
representing such indebtedness (the "Capitalization Notes") are unsecured and
bear interest at 10.5% per annum, and require principal payments equal to the
amount of cash available for debt repayment under a prescribed formula. In 1993,
Mr. Williams sold a portion of his interest in the Capitalization Notes to a
former shareholder. In 1994, Mr. Williams acquired all of the interests held by
the affiliate of Crow Family in the Capitalization Notes. Aggregate principal
and interest payments of approximately $1,212,000 were made to Mr. Williams
during 1997 in full settlement of the Capitalization Notes.
PURCHASE NOTES
In connection with the private placement of common stock of the Predecessor
Company in August 1996, the Company financed a portion of the purchase price for
the common stock purchased by the Named Executive Officers along with certain
other employees. The individual notes evidencing the amount borrowed from the
Company to pay a portion of the purchase price for the acquired shares (the
"Purchase Notes"), bear interest at the prime rate of interest announced from
time to time by First Tennessee Bank, N.A., plus 0.5% per annum. Each Purchase
Note is payable in five annual installments of principal, plus accrued interest,
due on March 1 of each year, and the first such installment was paid on March 1,
1997. Each Purchase Note is secured by a pledge agreement (the "Pledge
Agreement") between the employee and the Company, granting a security interest
in all Common Stock owned or acquired, directly or indirectly, by the employee.
The aggregate amount financed under the Purchase Notes was $9,394,040. The
aggregate amount of principal and interest outstanding as of December 31, 1997,
was approximately $1,180,000. Set forth below is the amount initially borrowed
for each of the Company's executive officers: Mr. Blackwell, $283,407; Mr.
Concannon, $295,314; Mr. Lippe, $329,511; Mr. Maddux, $68,986; Mr. Nakahara,
$132,842; Mr. Rothacker, $203,765; and Mr. Sulentic, $179,430. Prior to December
31, 1997, all of such executive officers repaid in full all amounts owed under
their respective Purchase Notes.
TAX NOTES
In connection with the private placement of common stock of the Predecessor
Company in August 1996, the Company financed certain income tax liabilities of
the Named Executive Officers and other employees resulting from the application
of the employee's deferred compensation in his/her Profit Sharing Account to
purchase the common stock issued in the private placement. The notes
representing the resulting indebtedness bear interest at 5.88% (the "Tax
Notes"), but if the loan is not repaid by August 26, 1998, the interest rate
will increase to the prime rate of interest announced from time to time by Texas
Commerce Bank, N.A., plus 0.5% per annum until paid. The term of the Tax Notes
is three years and 100% of the after-tax cash distributions to the debtor under
the 1995 Profit Sharing Plan must be applied in payment of such notes until they
are paid in full, first to interest and then to principal. Each loan is fully
recourse to the employee and secured by the remaining deferred compensation
balance in his/her Profit Sharing Account. The aggregate amount financed under
the Tax Notes was $4,734,000. The aggregate amount of principal and interest
outstanding as of December 31, 1997 was approximately $43,000. Set forth below
is the amount initially borrowed for each of the Company's executive officers:
Mr. Blackwell, $184,831; Mr. Concannon, $78,084; Mr. Lippe, $263,821; Mr.
Maddux, $143,631; Mr. Nakahara, $136,438; Mr. Rothacker, $188,529; and Mr.
Sulentic, $99,534. Prior to December 31, 1997, all of such executive officers
repaid in full all amounts owed under their respective Tax Notes.
STOCKHOLDERS' AGREEMENT
Contemporaneously with the consummation of the Reincorporation Transactions,
the Company, Crow Family, CFH and Mr. Williams entered into a Stockholders
Agreement pursuant to which, among other
20
<PAGE>
things, the Company agreed subject to certain limitations and under certain
circumstances, to register for sale shares of Common Stock that are held by the
parties thereto (collectively, the "Registrable Securities"). Of the 28,142,038
shares issued in the Reincorporation Transaction, 9,369,035 are Registrable
Securities. The Stockholders' Agreement provides that Crow Family and Mr.
Williams may, from and after the first anniversary of the Offering, require the
Company upon written notice to register for sale such Registrable Securities (a
"Demand Registration"), provided that the Company has no obligation to effect
more than six underwritten Demand Registrations and shall only be obligated to
effect the sixth underwritten Demand Registration if all remaining Registrable
Securities of Crow Family are to be registered and the total amount of
Registrable Securities to be included in any underwritten Demand Registration
has a market value of at least $25 million. The Company has no obligation to (i)
effect an underwritten Demand Registration within nine months (or file such
Registration Statement within seven months) after the effective date of the
immediately preceding Demand Registration or (ii) effect a shelf Demand
Registration within 12 months (or file such Registration Statement within ten
months) after such effective date. In addition, the Company is only required to
register a number of shares of Common Stock for sale pursuant to a shelf Demand
Registration that is less than or equal to five times the amount limitation
prescribed by Rule 144. The holders of Registrable Securities may request an
unlimited number of shelf Demand Registrations.
Under the terms of the Stockholders' Agreement, the Company granted Crow
Family the right to nominate a member of the Board of Directors. Mr. Harlan Crow
is Crow Family's initial nominee. Each executive officer of the Company has
agreed to vote his shares of Common Stock in favor of the nominee of Crow
Family. Crow Family's right to nominate a director will terminate on the first
date Crow Family's beneficial ownership of Common Stock represents less than the
lesser of (i) 12.5% of the then outstanding Common Stock or (ii) 50% of the
shares of Common Stock owned on the date of execution of the agreement;
provided, however, that in no event will the Company be obligated to nominate a
Crow Family designee beyond the first date on which the beneficial ownership of
shares of Common Stock held by Crow Family represents less than 5% of all then
outstanding shares of such class. For purposes of the Stockholders' Agreement,
Crow Family's beneficial ownership of Common Stock is defined as all shares of
Common Stock owned by Crow Family and those owned by its affiliates (including
CFH Trade-Names, L.P. and CFH Capital Resources, L.P.). In connection with any
private sale of Common Stock by Crow Family, other than to an affiliate, Crow
Family will agree to give the Company 15 days notice prior to effecting such
sale.
Each of Crow Family and the Company has agreed, prior to the fifth
anniversary of the Stockholders' Agreement, not to solicit the other's
officer-level employees concerning potential employment without prior notice to
the other party. In addition, each of Crow Family and the Company has agreed not
to hire any employee that was improperly solicited until the earlier of (i) the
involuntary termination of such officer-level employee by his/her employer and
(ii) the first anniversary of the last incident of solicitation of such employee
in violation of the agreement.
THE KINETIC GROUP
On January 1, 1997, the Company invested in The Kinetic Group Limited
Partnership (the "Kinetic Group"), a Texas limited partnership in which senior
executives of Wyndham International, Inc. and affiliates of Crow Family
(collectively, the "Wyndham Investors") own a substantial interest. The Kinetic
Group operates as an independent third-party contractor to provide certain
management information services, telecommunications, and computer hardware and
software management and maintenance services. The Wyndham Investors and the
Company share equally in all profit distributions of the Kinetic Group. Each of
the Company and a subsidiary of Wyndham International, Inc., has entered into a
management information system agreement for an initial term of five years with
the Kinetic Group to provide these services. As of December 31, 1997, the
Company has paid the Kinetic Group approximately $4,135,000 in fees.
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<PAGE>
RELATIONSHIP WITH DIRECTOR NOMINEES
On December 1, 1997, the Company obtained a $150 million master line of
credit from NationsBank of Texas, N.A., a national banking association (the
"NationsBank Facility"). The Company expects to borrow under the NationsBank
Facility to finance future strategic acquisitions, fund its co-investment
activities and provide the Company with an additional source of working capital.
The NationsBank Facility contains various covenants such as the maintenance of
minimum equity and liquidity and covenants relating to certain key financial
data. The NationsBank facility also includes limitations on payment of cash
dividends or other distributions of assets and certain restrictions on
investments and acquisitions that can be made by the Company. The covenants
contained in the NationsBank Facility and the amount of the Company's other
borrowings and contingent liabilities may have the effect of limiting the credit
available to the Company under the NationsBank Facility to an amount less than
the $150 million commitment. As of December 31, 1997, the Company had not
borrowed against the credit facility and the amount available thereunder was
approximately $92.5 million. As of March 27, 1998, the Company had borrowed
$33.0 million under the NationsBank Facility, including $10.0 million to fund
its co-investment activities and $23.0 million for the acquisition of Tooley.
The shares of certain wholly-owned subsidiaries having 5% or more of the
consolidated assets, revenues or earnings of the Company, and subsidiaries which
are engaged primarily in the business of real estate development and ownership,
whose assets are not subject to any financing, having more than 5% of the
consolidated assets, revenues or earnings of the Company, are pledged as
security for this credit facility. James R. Erwin, a Director, is Vice Chairman
and Corporate Finance Executive-West for NationsBank Corp. and Vice Chairman and
a director of NationsBank of Texas, N.A.
From time to time the Company has engaged Mr. Moriarty or entities
affiliated with Mr. Moriarty to provide certain management consulting services
to the Company and its subsidiaries. The aggregate amount of such payments to
Mr. Moriarty or his affiliates in 1997 was $98,000.
POLICY WITH RESPECT TO RELATED PARTY TRANSACTIONS
The Company has implemented a policy requiring any material transaction (or
series of related transactions) between the Company and related parties to be
approved by a majority of the disinterested directors, upon such Directors'
determination that the terms of the transaction are no less favorable to the
Company than those that could have been obtained from unrelated third parties.
The policy defines a material related party transaction (or series of related
transactions) as one involving a purchase, sale, lease or exchange of property
or assets or the making of any investment with a value to the Company in excess
of $1.0 million or a service agreement (or series of related agreements) with a
value in excess of $1.0 million in any fiscal year. There can be no assurance
that this policy will always successfully eliminate the influence of conflicts
of interest.
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<PAGE>
PERFORMANCE GRAPH
The Performance Graph shown below was prepared by the Company for use in
this Proxy Statement. Note that historic stock price performance is not
necessarily indicative of future stock performance. The graph was prepared based
upon the following assumptions:
1. $100 was invested in the Company's Common Stock, the NYSE Market
Index and the Company's Peer Group (as defined below) on November 25, 1997
(the date the Company's Common Stock was first traded on the New York Stock
Exchange).
2. Peer Group investment is weighted based on the market capitalization
of each individual company within the Peer Group at the beginning of the
comparison period.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's Peer Group for purposes of
stockholder return comparisons are as follows: CB Commercial Real Estate
Services Group, Inc., Grubb & Ellis Company, LaSalle Partners Inc. and Insignia
Financial Group, Inc.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TRAMMELL CROW CO PEER GROUP BROAD MARKET
<S> <C> <C> <C>
11/25/97 $ 100.00 $ 100.00 $ 100.00
12/31/97 $ 118.39 $ 104.33 $ 102.52
</TABLE>
<TABLE>
<CAPTION>
11/25/97 3/31/97
----------- ---------
<S> <C> <C>
Trammell Crow Company..................................................................... $ 100.00 $ 118.39
Peer Group................................................................................ 100.00 104.33
NYSE Market Index......................................................................... 100.00 102.52
</TABLE>
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership as of March 30, 1998, of the Company's Common Stock by (i)
each person known to the Company to be the beneficial owner of 5% or more of the
shares of Common Stock outstanding; (ii) each director; (iii) each Named
Executive Officer; and (iv) directors and executive officers of the Company as a
group. Unless otherwise indicated, to the Company's knowledge, each person has
sole voting (subject to the terms of the Stockholders' Agreement) and
dispositive power over the shares indicated as owned by such person. Unless
otherwise indicated, all stockholders set forth below have the same principal
business address as the Company.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF SHARES
NAME SHARES OWNED BENEFICIALLY OWNED
- - ---------------------------------------------------------------------------- --------------- ----------------------
<S> <C> <C>
Crow Family Partnership, L.P. .............................................. 4,846,830 14.3%
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
CFH Trade-Names, L.P. ...................................................... 2,295,217 6.8
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
CFH Capital Resources, L.P. ................................................ 717,489 2.1
J. McDonald Williams........................................................ 1,509,499 4.5
George L. Lippe............................................................. 858,592 2.5
H. Pryor Blackwell.......................................................... 716,984 2.1
William F. Concannon........................................................ 485,940(1) 1.4
William C. Maddux........................................................... 386,068 1.1
Asuka Nakahara.............................................................. 454,636 1.3
Robert E. Sulentic.......................................................... 380,106 1.1
Harlan R. Crow ............................................................. 7,864,810(2) 23.2
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
James D. Carreker........................................................... 230,391(3) *
James R. Erwin.............................................................. 7,274(3) *
Rowland T. Moriarty......................................................... 7,274(3) *
Jeffery M. Heller........................................................... 5,274(3) *
Directors, director nominees and executive officers as a group
(13 persons)............................................................... 13,506,074 39.8%
</TABLE>
- - ------------------------
* Less than 1%.
(1) Includes 456,127 shares held directly by Mr. Concannon and options to
acquire 29,813 shares granted under the Assumed Option Plan which are
currently exercisable.
(2) Consist of 5,274 shares which may be acquired upon the exercise of options,
4,846,830 shares held by Crow Family Partnership, L.P., 2,295,217 shares
held by CFH Trade-Names, L.P., and 717,489 shares held by CFH Capital
Resources, L.P. Crow Family, Inc. is an affiliate of all such partnerships.
Mr. Crow is a director of Crow Family, Inc. and trustee of certain family
trusts which hold a significant equity interest in each such partnership.
Mr. Crow disclaims beneficial ownership of all such shares held by such
partnerships.
(3) Includes 5,274 shares of Common Stock which may be acquired upon the
exercise of options.
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<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of its shares of Common Stock to file with the
Commission and the New York Stock Exchange initial reports of ownership of
shares of Common Stock and reports of changes in such ownership. The
Commission's rules require such persons to furnish the Company with copies of
all Section 16(a) reports that they file. Based on a review of these reports and
on written representations from the reporting persons that no other reports were
required, the Company believes that the applicable Section 16(a) reporting
requirements were complied with for all transactions which occurred in 1997,
with the exception of: (i) an initial statement of beneficial ownership on Form
3 was filed on behalf of Mr. Erwin in February 1998 due to the election of Mr.
Erwin to the Company's board of directors in December 1997, (ii) an initial
statement of beneficial ownership on Form 3 was filed on behalf of Mr. Moriarty
in February 1998 due to the election of Mr. Moriarty to the Company's board of
directors in December 1997 and (iii) a statement of changes in beneficial
ownership on Form 4 was filed on behalf of Mr. Williams in February 1998 and
disclosed the acquisition by Mr. Williams of 913 shares of Common Stock in
December 1997.
PROPOSAL TWO--SELECTION OF INDEPENDENT ACCOUNTANTS
On March 10, 1998, the Board of Directors ratified the selection of Ernst &
Young LLP ("Ernst & Young") as the Company's independent accountants for the
fiscal year ending December 31, 1998. The Company expects that representatives
of Ernst & Young LLP will be present at the Annual Meeting to respond to
appropriate questions and will have an opportunity to make a statement if they
desire to do so.
If the appointment of Ernst & Young as the Company's independent accountants
is not ratified at the Annual Meeting, the Board of Directors will consider the
appointment of other independent accountants. The Board of Directors may
terminate the appointment of Ernst & Young as independent accountants without
the approval of the Company's stockholders whenever the Board of Directors deems
termination necessary or appropriate.
REQUIRED VOTE AND RECOMMENDATION
Ratification of Ernst & Young as the Company's independent accountants for
the fiscal year ending December 31, 1998, requires the affirmative vote of a
majority of the shares of Common Stock present, in person or by proxy, and
entitled to vote at the Annual Meeting. Under Delaware law and the Company's
Certificate of Incorporation and Bylaws, an abstention will have the same legal
effect as a vote against the ratification of Ernst & Young, and each broker
non-vote will reduce the absolute number, but not the percentage, of affirmative
votes necessary for approval of the ratification. A broker non-vote occurs if a
broker or other nominee does not have discretionary authority and has not
received instructions with respect to a particular item. Unless otherwise
instructed on the proxy or unless authority to vote is withheld, the enclosed
Proxy will be voted for the ratification of Ernst & Young as the Company's
independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
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<PAGE>
PROPOSAL THREE--APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
There will be presented at the Annual Meeting a proposal to approve the
Trammell Crow Company Employee Stock Purchase Plan (the "Plan"). The description
set forth below represents a summary of the principal terms and conditions of
the Plan and does not purport to be complete. Such description is qualified in
its entirety by reference to the Plan, a copy of which is attached hereto as
Exhibit A.
GENERAL
On December 22, 1997, the Company's Board of Directors adopted and approved
The Trammell Crow Company Employee Stock Purchase Plan and directed that it be
submitted for stockholder approval. A total of 1,000,000 shares of Common Stock
are reserved for issuance under the Plan. The purpose of the Plan is to provide
employees of the Company who participate in the Plan with an opportunity to
purchase Common Stock of the Company through payroll deductions. The Plan, and
the right of participants to make purchases thereunder, is intended to qualify
under the provisions of Sections 421 and 423 of the Internal Revenue Code of
1986, as amended (the "Code"). See "Federal Income Tax Consequences" below.
ADMINISTRATION
The Plan will be administered by a committee of the Company's executive
officers (the "Benefits Committee") appointed by the Company's Board of
Directors. All questions of interpretation of the Plan will be determined by the
Committee, whose decisions will be final and binding upon all participants.
ELIGIBILITY
All employees of the Company (or any of its parent or subsidiary
corporations within the meaning of sections 424(e) and (f) of the Code) who have
been continually employed for at least ninety (90) days and who are customarily
employed at least 20 hours per week and at least 5 months per year shall be
eligible to participate in the Plan, subject to certain limitations imposed by
Section 423(b) of the Code. For the initial option period commencing March 1,
1998, an employee need not have been employed for ninety (90) days to be
eligible to participate, provided the employee meets the other eligibility
requirements and was employed by January 31, 1998. At March 31, 1998,
approximately 3,330 employees of the Company and its subsidiaries were eligible
to participate in the Plan.
OFFERING DATES
Under the Plan, the Company will offer to all Eligible Employees the option
to purchase shares of Common Stock. Except as otherwise determined by the
Committee, these options will be granted on the first day of the first payroll
period beginning on or after March 1, 1998 and July 1, 1998, and, thereafter, on
the first day of the first payroll period beginning on or after the first day of
January and July of each subsequent year (each of which dates is herein referred
to as a "date of grant"). The term of each option granted on the first day of
the first payroll period beginning on or after March 1, 1998 shall be for a
period of approximately four (4) months, ending on the last day of the last
payroll period ending on or immediately after June 30, 1998 and the term of each
option granted thereafter shall be for a period of approximately six (6) months,
ending on the last day of the last payroll period ending on or immediately after
June 30 or December 31, as the case may be (each such four (4)-month and six
(6)-month period is herein referred to as an "option period"), which shall begin
on a date of grant.
PURCHASE PRICE
The purchase price per share at which shares of Common Stock will be sold
under the Plan will be an amount equal to the lower of 85% of the market value
of Common Stock on the date of exercise or the date of grant. The market value
of a share of Common Stock on a given date will be the closing sales price
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of the Common Stock on the New York Stock Exchange on such date. The price per
share of Common Stock for the last trade reported by the New York Stock Exchange
on March 31, 1998 was $28.50.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares of Common Stock to be purchased under the
Plan will be accumulated by payroll deductions during each offering period. The
deductions may not exceed: (i) 10% of the participant's eligible compensation
during the offering period (which is defined in the Plan to include all wages,
salary, commissions, overtime and bonuses) from which the deduction is made; or
(ii) an amount which will result in noncompliance with the limitations described
below under "Purchase of Stock; Exercise of Options." Such payroll deductions
will be credited to a book entry account for each participant. An employee may
discontinue participation in the Plan, but may not otherwise increase or
decrease the rate of payroll deductions at any time during the option period.
PURCHASE OF STOCK; EXERCISE OF OPTION
The maximum number of shares placed under option to a participant in the
Plan in any option period will be the lesser of 700 or that number determined by
dividing the amount of the participant's total payroll deductions during the
option period (and any carryover amounts from the preceding offering period) by
the purchase price per share under the Plan. Unless a participant withdraws from
the Plan, the participant's option for the purchase of shares will be exercised
automatically at the end of each offering period for the maximum number of whole
shares at the applicable price. As soon as practicable following the end of each
offering period, the Company will cause a certificate to be issued in each
participant's name representing the total number of whole shares of Common Stock
acquired by the participant through the exercise of the option. Any balance
remaining in a participant's account following the exercise of the participant's
option in an offering period will be carried over to the next offering period.
Notwithstanding the foregoing, no Eligible Employee will be permitted to
subscribe for shares of Common Stock under the Plan if, immediately after the
grant of the option, the employee would own five percent or more of the voting
power or value of all classes of stock of the Company or its subsidiaries, nor
will any Eligible Employee be granted an option which would permit the employee
to buy pursuant to the Plan more than $25,000 worth of stock (determined at the
fair market value of the shares at the time the option is granted) in any
calendar year.
WITHDRAWAL
Any participant may withdraw in whole from the Plan at any time prior to
thirty (30) days before the exercise date relating to a particular option
period. Partial withdrawals shall not be permitted. A participant who wishes to
withdraw from the Plan must timely deliver to the Company a notice of withdrawal
on a form prepared by the Committee. The Company, promptly following the time
when the notice of withdrawal is delivered, shall refund to the participant the
amount of the cash balance in his account under the Plan; and thereupon,
automatically and without any further act on his part, his payroll deduction
authorization and his interest in unexercised options under the Plan shall
terminate.
CAPITAL CHANGES
Whenever any change is made in the Stock, by reason of a stock dividend or
by reason of subdivision, stock split, reverse stock split, recapitalization,
reorganization, combinations, reclassification of shares, or other similar
change, appropriate action will be taken by the Committee to adjust accordingly
the number of shares subject to the Plan, the maximum number of shares that may
be subject to any option, and the number and purchase price of shares subject to
options outstanding under the Plan.
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NONASSIGNABILITY
Each option will be assignable or transferable only by will or by the laws
of descent and distribution and will be exercisable during the optionee's
lifetime only by the optionee. The Company shall not recognize and shall be
under no duty to recognize any assignment or purported assignment by an employee
of his option or of any rights under his option, and any such attempt may be
treated by the Company as an election to withdraw from the Plan.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors, in its discretion, may terminate the Plan at any
time with respect to any shares for which options have not theretofore been
granted. The Committee shall have the right to alter or amend the Plan or any
part thereof from time to time without the approval of the stockholders of the
Company; provided, that no change in any option theretofore granted may be made
which would impair the rights of the participant without the consent of such
participant; and provided, further, that the Committee may not make any
alteration or amendment which would increase the aggregate number of shares
which may be issued pursuant to the provisions of the Plan (other than as a
result of the anti-dilution provisions of the Plan), change the class of
individuals eligible to receive options under the Plan, or cause options issued
under the Plan to fail to meet the requirements for employee stock purchase
plans as defined in Section 423 of the Code without the approval of the
stockholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The Plan, and the right of participants to make purchases thereunder, is
intended to qualify under the provisions of sections 421 and 423 of the Code.
Under these provisions, no income will be taxable to a participant at the time
of grant of the option or purchase of the shares. Upon disposition of the
shares, the participant will generally be subject to tax and the amount of the
tax will depend upon the participant's holding period. If the shares have been
held by the participant for more than two years after the date of the option
grant, the lesser of (a) the excess of the fair market value of the shares at
the time of such disposition over the purchase price or (b) the excess of the
fair market value of the shares at the date of the option grant over the
purchase price will be treated as ordinary income, and any further gain or loss
will be treated as long-term capital gain or loss. If the shares are disposed of
before the expiration of this holding period, the excess of the fair market
value of the shares on the purchase date over the purchase price will be treated
as ordinary income, and any further gain or loss on such disposition will be
long-term or short-term capital gain or loss, depending on the holding period.
The Company is not entitled to a deduction for amounts taxed as ordinary income
or capital gain to a participant except to the extent of ordinary income
reported by participants upon disposition of shares within two years from the
date of grant.
The foregoing brief summary of the effect of federal income taxation upon
the participants and the Company with respect to the purchase of shares under
the Plan does not purport to be complete, and reference should be made to the
applicable provisions of the Code. In addition, this summary does not discuss
tax consequences of a participant's death or the provisions of the income tax
laws of any municipality, state or foreign country in which the participant may
reside.
REQUIRED VOTE AND RECOMMENDATION
Approval of the Employee Stock Purchase Plan requires the affirmative vote
of a majority of the shares of Common Stock, present or represented by proxy,
and entitled to vote at the Annual Meeting. Under Delaware law and the Company's
Certificate of Incorporation and Bylaws, an abstention will have the same legal
effect as a vote against approval of the Plan, and each broker non-vote will
reduce the absolute number, but not the percentage, of affirmative votes
necessary for approval of the Plan. A broker non-vote occurs if a broker or
other nominee does not have discretionary authority and has not received
instructions with respect to a particular item. Unless otherwise instructed on
the proxy or unless authority
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to vote is withheld, the enclosed Proxy will be voted for approval of the
Trammell Crow Company Employee Stock Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVAL OF THE TRAMMELL CROW
COMPANY EMPLOYEE STOCK PURCHASE PLAN.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material and for presentation at the Company's 1999 Annual Meeting of
Stockholders must forward such proposal to the Secretary of the Company at 2001
Ross Avenue, Suite 3400, Dallas, Texas 75201 so that the Secretary receives it
no later than December 22, 1998.
ANNUAL REPORT
The Company's Annual Report to stockholders for the fiscal year ended
December 31, 1997, including financial statements, is being mailed herewith to
all stockholders entitled to vote at the Annual Meeting. The Annual Report does
not constitute a part of the proxy solicitation material.
By Order of the Board of Directors,
Derek R. McClain
SECRETARY
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EXHIBIT A
TRAMMELL CROW COMPANY
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of the TRAMMELL CROW COMPANY Employee Stock
Purchase Plan (the "Plan") is to provide eligible employees with an incentive to
advance the interests of TRAMMELL CROW COMPANY (the "Company") by affording an
opportunity to purchase stock of the Company at a favorable price.
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Benefits Committee of the Company (the "Committee") as appointed by the Board of
Directors of the Company (the "Board"). Subject to the provisions of the Plan,
the Committee shall interpret and construe the Plan and all options granted
under the Plan, shall make such rules as it deems necessary for the proper
administration of the Plan, shall make all other determinations necessary or
advisable for the administration of the Plan, including the determination of
eligibility to participate in the Plan and the amount of a participant's option
under the Plan, and shall correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any option granted under the Plan in the
manner and to the extent that the Committee deems desirable to carry the Plan or
any option into effect. The Committee shall, in its sole discretion exercised in
good faith, make such decisions or determinations and take such actions as it
deems appropriate, and all such decisions, determinations and actions taken or
made by the Committee pursuant to this and the other paragraphs of the Plan
shall be conclusive on all parties. The Committee shall not be liable for any
decision, determination or action taken in good faith in connection with the
administration of the Plan. The Committee may approve the use of a voice
response system through which Eligible Employees and the Committee may act under
the Plan, as an alternative to written forms, notices and elections.
3. PARTICIPATING COMPANIES. Each present and future parent or subsidiary
corporation of the Company (within the meaning of Sections 424(e) and (f) of the
Internal Revenue Code of 1986, as amended (the "Code")) that is eligible by law
to participate in the Plan shall be a "Participating Company" during the period
that such corporation is such a parent or subsidiary corporation; provided,
however, that the Committee may at any time and from time to time, in its sole
discretion, terminate a Participating Company's Plan participation. Any
Participating Company may, by appropriate action of its Board of Directors,
terminate its participation in the Plan. Transfer of employment among the
Company and Participating Companies (and among any other parent or subsidiary
corporation of the Company) shall not be considered a termination of employment
hereunder.
4. ELIGIBILITY. All employees of the Company and the Participating
Companies who have been continually employed by the Company or any Participating
Company (including any predecessor entity) for at least ninety (90) days
(including any authorized leave of absence meeting the requirements of Treasury
Regulation Section 1.421-7(h)(2)) as of the applicable date of grant (defined
below) and who are customarily employed at least 20 hours per week and at least
5 months per year shall be eligible to participate in the Plan; provided,
however, that no option shall be granted to an employee if such employee,
immediately after the option is granted, owns stock possessing five percent or
more of the total combined voting power or value of all classes of stock of the
Company or of its parent or subsidiary corporation (within the meaning of
Sections 423(b)(3) and 424(d) of the Code) ("Eligible Employee"). For the
initial offering period commencing March 1, 1998, an employee need not have been
employed for ninety (90) days to be eligible to participate, provided the
employee meets the other eligibility requirements and was employed by January
31, 1998.
5. STOCK SUBJECT TO THE PLAN. Subject to the provisions of paragraph 12
(relating to adjustment upon changes in stock), the aggregate number of shares
which may be sold pursuant to options granted under the Plan shall not exceed
one million (1,000,000) shares of the authorized $.01 par value common stock of
the Company ("Stock"), which shares may be unissued shares or reacquired shares
or shares bought on the
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market for purposes of the Plan. Should any option granted under the Plan expire
or terminate prior to its exercise in full, the shares theretofore subject to
such option may again be subject to an option granted under the Plan. Any shares
which are not subject to outstanding options upon the termination of the Plan
shall cease to be subject to the Plan.
6. GRANT OF OPTIONS. (a) GENERAL STATEMENT; "DATE OF GRANT"; "OPTION
PERIOD"; "DATE OF EXERCISE". Upon the effective date of the Plan and continuing
while the Plan remains in force, the Company shall offer options under the Plan
to all Eligible Employees to purchase shares of Stock. Except as otherwise
determined by the Committee, these options shall be granted on the first day of
the first payroll period beginning on or after March 1, 1998 and July 1, 1998,
and, thereafter, on the first day of the first payroll period beginning on or
after the first day of January and July of each subsequent year (each of which
dates is herein referred to as a "date of grant"). The term of each option
granted on the first day of the first payroll period beginning on or after March
1, 1998 shall be for a period of approximately four (4) months, ending on the
last day of the last payroll period ending on or immediately after June 30, 1998
and the term of each option granted thereafter shall be for a period of
approximately six (6) months, ending on the last day of the last payroll period
ending on or immediately after June 30 or December 31, as the case may be (each
such four (4)-month and six (6)-month period is herein referred to as an "option
period"), which shall begin on a date of grant. The last day of each option
period is herein referred to as a "date of exercise." The number of shares
subject to each option shall be the quotient of the sum of the payroll
deductions withheld on behalf of each participant in accordance with
subparagraph 6(b) and the payments made by such participant pursuant to
subparagraph 6(f) during the option period and any amount carried forward from
the preceding option period pursuant to subparagraph 7(a), divided by the
"option price" (defined in subparagraph 7(b)) of the Stock, excluding all
fractions; provided, however, that the maximum number of shares that may be
subject to any option may not exceed seven hundred (700) (subject to adjustment
as provided in paragraph 12).
(b) ELECTION TO PARTICIPATE; DEDUCTION AUTHORIZATION. Except as provided
in subparagraph 6(f), an Eligible Employee may participate in the Plan only by
means of payroll deduction. Except as provided in subparagraph 6(g), each
Eligible Employee who elects to participate in the Plan shall deliver to the
Company, within the time period prescribed by the Committee, a written payroll
deduction authorization on a form prepared by the Committee whereby he gives
notice of his election to participate in the Plan as of the next following date
of grant, and whereby he designates an integral percentage or specific amount
(as determined by the Committee) of his "eligible compensation" (as defined in
subparagraph 6(d)) to be deducted from his compensation for each pay period and
credited to a book entry account established in his name. The designated
percentage or specific amount may not result in a deduction during any payroll
period of an amount less than $20.00. The designated percentage or specific
amount may not exceed either of the following: (i) 10% of the amount of eligible
compensation from which the deduction is made; or (ii) an amount which will
result in noncompliance with the limitations stated in subparagraphs 6(a) or
6(e).
(c) CHANGES IN PAYROLL AUTHORIZATION. Except as provided in subparagraph
8(a), the payroll deduction authorization referred to in subparagraph 6(b) may
not be changed during the option period.
(d) "ELIGIBLE COMPENSATION" DEFINED. The term "eligible compensation"
means the gross (before taxes are withheld) total of all wages, salaries,
commissions, overtime and bonuses received during the option period, except that
such term shall include elective contributions made on an employee's behalf by
the Company or a Participating Company that are not includable in income under
Section 125 or Section 402(e)(3) of the Code. Notwithstanding the foregoing,
"eligible compensation" shall not include (i) employer contributions to or
payments from any deferred compensation program, whether such program is
qualified under Section 401(a) of the Code (other than amounts considered as
employer contributions under Section 402(e)(3) of the Code) or nonqualified,
(ii) amounts realized from the receipt or exercise of a stock option that is not
an incentive stock option within the meaning of Section 422 of the Code, (iii)
amounts realized at the time property described in Section 83 of the Code is
freely transferable or no longer subject to a substantial risk of forfeiture,
(iv) amounts realized as a result of an election
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described in Section 83(b) of the Code, and (v) any amount realized as a result
of a disqualifying disposition within the meaning of Section 421(b) of the Code.
(e) $25,000 LIMITATION. No Eligible Employee shall be granted an option
under the Plan to the extent such grant would permit his rights to purchase
Stock under the Plan and under all other employee stock purchase plans of the
Company and its parent and subsidiary corporations (as such terms are defined in
Section 424(e) and (f) of the Code) to accrue at a rate which exceeds $25,000 of
Fair Market Value of Stock (determined at the time the option is granted) for
each calendar year in which any such option granted to such employee is
outstanding at any time (within the meaning of Section 423(b)(8) of the Code).
(f) LEAVES OF ABSENCE. During a paid leave of absence approved by the
Company and meeting the requirements of Treasury Regulation Section
1.421-7(h)(2), a participant's elected payroll deductions shall continue. If a
participant takes an unpaid leave of absence, then such participant may not make
additional contributions under the Plan while on unpaid leave of absence, and
the participant's payroll deductions for the applicable option period shall
remain subject to the Plan and used to exercise options on the next following
date of exercise.
(g) CONTINUING ELECTION. A participant (i) who has elected to participate
in the Plan pursuant to subparagraph 6(b) as of a date of grant and (ii) who
takes no action to change or revoke such election as of the next following date
of grant and/or as of any subsequent date of grant prior to any such respective
date of grant, shall be deemed to have made the same election, including the
same attendant payroll deduction authorization, for such next following and/or
subsequent date(s) of grant as was in effect for the date of grant for which he
made such election to participate. A participant who wants to discontinue
participation in the Plan for a subsequent option period shall deliver to the
Company a notice of withdrawal, on a form prepared by the Committee, at least
thirty (30) days prior to the beginning of the option period.
7. EXERCISE OF OPTIONS. (a) GENERAL STATEMENT. Each Eligible Employee
who is a participant in the Plan, automatically and without any act on his part,
shall be deemed to have exercised his option on each date of exercise to the
extent that the cash balance then in his account under the Plan is sufficient to
purchase at the "option price" (as defined in subparagraph 7(b)) whole shares of
Stock. Any balance remaining in his account after payment of the purchase price
of those whole shares shall be carried forward and used towards the purchase of
whole shares in the next following option period.
(b) "OPTION PRICE" DEFINED. The option price per share of Stock to be paid
by each optionee on each exercise of his option shall be an amount equal to the
lesser of 85% of the Fair Market Value of the Stock on the date of exercise or
on the date of grant. For all purposes under the Plan, the "fair market value"
of a share of Stock means, for a particular day:
(i) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, then the last reported
sale price, regular way, on the composite tape of that exchange on that
business day or, if no such sale takes place on that business day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to unlisted trading privileges on
that securities exchange or, if no such closing prices are available for
that day, the last reported sale price, regular way, on the composite tape
of that exchange on the last business day before the date in question; or
(ii) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in subparagraph (i) and if sales
prices for shares of Stock of the same class in the over-the-counter market
are reported by the National Association of Securities Dealers, Inc.
Automated Quotations, Inc. ("NASDAQ") National Market System at the date of
determining the Fair Market Value, then the last reported sales price so
reported on that business day or, if no such sale takes place on that
business day, the average of the high bid and low asked prices so reported
or, if no such prices
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are available for that day, the last reported sale price so reported on the
last business day before the date in question; or
(iii) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in subparagraph (i) and sales prices
for shares of Stock of the same class are not reported by the NASDAQ
National Market System (or a similar system then in use) as provided in
subparagraph (ii), and if bid and asked prices for shares of Stock of the
same class in the over-the-counter market are reported by NASDAQ (or, if not
so reported, by the National Quotation Bureau Incorporated) at the date of
determining the Fair Market Value, then the average of the high bid and low
asked prices on that business day or, if no such prices are available for
that day, the average of the high bid and low asked prices on the last
business day before the date in question; or
(iv) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in subparagraph (i) and sales prices
or bid and asked prices therefor are not reported by NASDAQ (or the National
Quotation Bureau Incorporated) as provided in subparagraph (ii) or
subparagraph (iii) at the date of determining the Fair Market Value, then
the value determined in good faith by the Committee, which determination
shall be conclusive for all purposes; or
(v) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in subparagraph (i) or sales prices
or bid and asked prices therefor are reported by NASDAQ (or the National
Quotation Bureau Incorporated) as provided in subparagraph (ii) or
subparagraph (iii) at the date of determining the Fair Market Value, but the
volume of trading is so low that the Board of Directors determines in good
faith that such prices are not indicative of the fair value of the Stock,
then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes notwithstanding the
provisions of subparagraphs (i), (ii) or (iii).
(c) DELIVERY OF SHARE CERTIFICATES. As soon as practicable after each date
of exercise, the Company shall issue one or more certificates representing the
total number of whole shares of Stock respecting exercised options in the
aggregate of all of the Eligible Employees hereunder. Any such certificate shall
be held by the Company (or its agent) and may be held in street name. If the
Company issues a certificate representing the shares of more than one Eligible
Employee, the Company shall keep accurate records of the beneficial interests of
each Eligible Employee in each such certificate by means of a Company stock
account. Each Eligible Employee shall be provided with such periodic statements
as may be directed by the Committee reflecting all activity in any such Company
stock account. In the event the Company is required to obtain from any
commission or agency authority to issue any such certificate, the Company shall
seek to obtain such authority. Inability of the Company to obtain from any such
commission or agency authority which counsel for the Company deems necessary for
the lawful issuance of any such certificate shall relieve the Company from
liability to any participant in the Plan except to return to him the amount of
the balance in his account. A participant may, on the form prescribed by the
Committee, request the Company to deliver to such participant a certificate
issued in his name representing all or a part of the aggregate whole number of
shares of Stock then held by the Company on his behalf under the Plan. Further,
upon the termination of an participant's employment with the Company and its
parent or subsidiary corporations for any reason whatsoever, the Company shall
deliver to such employee a certificate issued in his name representing the
aggregate whole number of shares of Stock then held by the Company on his behalf
under the Plan. While shares of Stock are held by the Company (or its agent),
such shares may not be sold, assigned, pledged, exchanged, hypothecated or
otherwise transferred, encumbered or disposed of by the employee who has
purchased such shares; provided, however, that such restriction shall not apply
to the transfer of such shares of Stock pursuant to (i) a plan of reorganization
of the Company, but the stock, securities or other property received in exchange
therefor shall be held by the Company pursuant to the provisions hereof or (ii)
a divorce. The Committee may cause the Stock certificates issued in connection
with the exercise of options under the Plan to bear such legend or legends, and
the Committee may take such other actions, as it deems appropriate in order to
reflect the provisions of this subparagraph 7(c) and
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to assure compliance with applicable securities laws. Neither the Company nor
the Committee shall have any liability with respect to a delay in the delivery
of a Stock certificate pursuant to this subparagraph 7(c).
8. WITHDRAWAL FROM THE PLAN. (a) GENERAL STATEMENT. Any participant may
withdraw in whole from the Plan at any time prior to thirty (30) days before the
exercise date relating to a particular option period. Partial withdrawals shall
not be permitted. A participant who wishes to withdraw from the Plan must timely
deliver to the Company a notice of withdrawal on a form prepared by the
Committee. The Company, promptly following the time when the notice of
withdrawal is delivered, shall refund to the participant the amount of the cash
balance in his account under the Plan; and thereupon, automatically and without
any further act on his part, his payroll deduction authorization and his
interest in unexercised options under the Plan shall terminate.
(b) ELIGIBILITY FOLLOWING WITHDRAWAL. A participant who withdraws from the
Plan shall not be eligible to participate in the Plan during the then current
option period, but shall be eligible to participate again in the Plan in a
subsequent option period (provided that he is otherwise eligible to participate
in the Plan at such time and complies with the enrollment procedures).
9. TERMINATION OF EMPLOYMENT. If the employment of a participant
terminates for any reason whatsoever (including death), his participation in the
Plan automatically and without any act on his part shall terminate as of the
date of the termination of his employment. The Company shall refund to him the
amount of the cash balance in his account under the Plan, and thereupon his
interest in unexercised options under the Plan shall terminate.
10. RESTRICTION UPON ASSIGNMENT OF OPTION. An option granted under the
Plan shall not be transferable otherwise than by will or the laws of descent and
distribution. Each option shall be exercisable, during his lifetime, only by the
employee to whom granted. The Company shall not recognize and shall be under no
duty to recognize any assignment or purported assignment by an employee of his
option or of any rights under his option, and any such attempt may be treated by
the Company as an election to withdraw from the Plan.
11. NO RIGHTS OF STOCKHOLDER UNTIL CERTIFICATE ISSUES. With respect to
shares of Stock subject to an option, a participant shall not be deemed to be a
stockholder, and he shall not have any of the rights or privileges of a
stockholder. A participant shall have the rights and privileges of a stockholder
upon, but not until, a certificate for shares has been issued following exercise
of his option. With respect to a participant's Stock held by the Company (or its
agent) pursuant to subparagraph 7(c), the Company shall, as soon as practicable,
pay the participant any cash dividends attributable thereto and facilitate the
participant's voting rights attributable thereto.
12. CHANGES IN STOCK; ADJUSTMENTS. Whenever any change is made in the
Stock, by reason of a stock dividend or by reason of subdivision, stock split,
reverse stock split, recapitalization, reorganization, combinations,
reclassification of shares, or other similar change, appropriate action will be
taken by the Committee to adjust accordingly the number of shares subject to the
Plan, the maximum number of shares that may be subject to any option, and the
number and option price of shares subject to options outstanding under the Plan.
Upon the occurrence of a Change in Control, unless a surviving corporation
assumes or substitutes new options (within the meaning of Section 424(a) of the
Code) for all options then outstanding or the Committee elects to continue the
options then outstanding without change, the date of exercise for all options
then outstanding shall be accelerated to a date fixed by the Committee prior to
the effective date of such Change in Control.
"Change in Control" means the occurrence of any of the following events:
(i) The agreement to acquire or tender offer for beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange
Act of 1934 ("Exchange Act") by any
A-5
<PAGE>
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person"), of 50% or more of either (x) the
then outstanding shares of Common Stock of the Company (the "Outstanding
Company Common Stock") or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
PROVIDED, HOWEVER, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(D) any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of paragraph (iii) below; or
(ii) Individuals who, as of the date of this Plan, constitute the Board
cease for any reason to constitute at least a majority of the Incumbent
Board, which shall be defined as the individuals who, as of the Effective
Date, constitute the Board and any other individual who becomes a director
of the Company after that date and whose election or appointment by the
Board or nomination for election by the Company's stockholders was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company or an acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company, or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or the corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership of the Company existed prior to the
Business Combination and (C) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
13. USE OF FUNDS; NO INTEREST PAID. All funds received or held by the
Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction, and may be used for any corporate
purpose. No interest shall be paid to any participant or credited to his account
under the Plan.
A-6
<PAGE>
14. TERM OF THE PLAN. The Plan shall be effective as of March 1, 1998,
provided the Plan is approved by the stockholders of the Company within 12
months of the date of adoption by the Board. Notwithstanding any provision in
the Plan, no option granted under the Plan shall be exercisable prior to such
stockholder approval, and, if the stockholders of the Company do not approve the
Plan within 12 months after its adoption by the Board, then the Plan shall
automatically terminate.
15. AMENDMENT OR TERMINATION THE PLAN. The Board in its discretion may
terminate the Plan at any time with respect to any shares for which options have
not theretofore been granted. The Committee shall have the right to alter or
amend the Plan or any part thereof from time to time without the approval of the
stockholders of the Company; provided, that no change in any option theretofore
granted may be made which would impair the rights of the participant without the
consent of such participant; and provided, further, that the Committee may not
make any alteration or amendment which would increase the aggregate number of
shares which may be issued pursuant to the provisions of the Plan (other than as
a result of the anti-dilution provisions of the Plan), change the class of
individuals eligible to receive options under the Plan, or cause options issued
under the Plan to fail to meet the requirements for employee stock purchase
plans as defined in Section 423 of the Code without the approval of the
stockholders of the Company.
16. SECURITIES LAWS. The Company shall not be obligated to issue any Stock
pursuant to any option granted under the Plan at any time when the shares
covered by such option have not been registered under the Securities Act of
1933, as amended, and such other state and federal laws, rules or regulations as
the Company or the Committee deems applicable and, in the opinion of legal
counsel for the Company, there is no exemption from the registration
requirements of such laws, rules or regulations available for the issuance and
sale of such shares. Further, all Stock acquired pursuant to the Plan shall be
subject to the Company's policy or policies, if any, concerning compliance with
securities laws and regulations, as the same may be amended from time to time.
17. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action which is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any award made under the Plan. No employee,
beneficiary or other person shall have any claim against the Company or any
subsidiary as a result of any such action.
EXECUTED this 1st day of March, 1998.
TRAMMELL CROW COMPANY
By:_________/S/_ASUKA NAKAHARA________
Name:__________Asuka Nakahara_________
Title: Executive Vice President and
_____Chief Financial Officer_____
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTOR AND FOR PROPOSALS 2 AND 3.
Please mark
your votes as
indicated in X
this example
1. ELECTION OF DIRECTORS: To elect each of George L. Lippe, Rowland T.
Moriarty and Robert E. Sulentic to serve as Class I directors for a three
year term ending at the Annual Meeting of Stockholders in 2001 and until
their successors are duly elected and qualified or until their earlier
death, resignation or removal from office.
<TABLE>
<S> <C>
FOR ALL NOMINEES WITHHELD FROM MARK HERE
ALL NOMINEES ----------------------------------------- FOR ADDRESS / /
/ / / / For the nominees except as noted above CHANGE AND
NOTE LEFT
2. To ratify the selection of Ernst & Young L.L.P. 3. To approve the Trammell Crow Company
as independent accountants for the Company for Employee Stock Purchase Plan.
the fiscal year ending December 31, 1998.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / /
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|
|
SIGNATURE SIGNATURE DATE
------------------------------- ------------------------------- --------
Please sign this Proxy exactly as your name appears on this card. Joint owners should each sign
personally. If you are signing as a representative of the named stockholder (e.g. as a trustee,
corporate officer or other agent on behalf of a trust, corporation or other entity) you should
indicate your title or the capacity in which you sign.
- - ----------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
</TABLE>
TRAMMEL CROW COMPANY
THIS IS YOUR PROXY
Dear Stockholder:
Your Proxy is being solicited by the Board of Directors of Trammell Crow
Company for the Annual Meeting of Stockholders to be held on May 21, 1998, at
2:00 p.m., local time, at the Dallas Museum of Art, 1717 Harwood Street,
Dallas, Texas 75201.
Enclosed with this Proxy is a Proxy Statement containing important information
about the matters that you are being asked to approve.
Your vote is important. Whether or not you plan to attend the Annual Meeting,
you can be sure your shares are represented at the meeting by promptly
returning your completed Proxy card prior to the Annual Meeting.
Please mark the boxes on the Proxy card above to indicate how your shares are
to be voted, then sign the card, detach it and return your Proxy card in the
enclosed envelope.
Thank you in advance for your prompt consideration of these matters.
<PAGE>
TRAMMELL CROW COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRAMMELL CROW COMPANY FOR THE ANNUAL MEETING TO BE HELD MAY 21, 1998
The undersigned hereby constitutes and appoints each of George L. Lippe
and Asuka Nakahara his or her true and lawful agents and proxies, with full
power of substitution in each, to represent the undersigned, with all the
powers which the undersigned would possess if personally present, and to vote
the Common Stock of Trammell Crow Company held of record by the undersigned
on the record date, at the Annual Meeting of Stockholders of Trammell Crow
Company to be held at the Dallas Museum of Art, 1717 Harwood Street, Dallas,
Texas, on Thursday, May 21, 1998 at 2:00 p.m. local time, and at any
adjournment or postponement thereof, on all matters coming before said
meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR VOTE BY MARKING THE APPROPRIATE BOX ON
THE REVERSE SIDE BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS WHICH ARE FOR THE
ELECTION OF THE NAMED NOMINEES AS DIRECTORS AND FOR PROPOSALS 2 AND 3. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. THIS
PROXY MAY BE REVOKED IN WRITING AT ANY TIME PRIOR TO THE VOTING THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN AND WILL AUTHORIZE THE PROXIES TO TAKE ACTION IN THEIR DISCRETION UPON
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS. PROXIES ARE AUTHORIZED TO VOTE UPON MATTERS INCIDENT TO
THE CONDUCT OF THE MEETING SUCH AS APPROVAL OF ONE OR MORE ADJOURNMENTS OF
THE MEETING FOR THE PURPOSE OF OBTAINING ADDITIONAL STOCKHOLDER VOTES.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-FOLD AND DETACH HERE- -----------
