<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
TRAMMELL CROW COMPANY
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
----------------------------------------------------------
</TABLE>
<PAGE>
TRAMMELL CROW COMPANY
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
April 17, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Trammell Crow Company to be held on May 16, 2000, at 8:30 a.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, 2000; and
(iii) 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 or
grant your proxy by telephone, as described on the enclosed Proxy, as promptly
as possible. It is important that your shares be represented at the meeting.
Very truly yours,
/s/ George L. Lippe
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, in the enclosed postage paid envelope, the
enclosed Proxy or to grant your proxy by telephone, as described on the
enclosed Proxy, as promptly as possible. Returning your Proxy or granting your
proxy by telephone 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 or has granted his or her proxy by
telephone.
<PAGE>
TRAMMELL CROW COMPANY
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2000
------------------------
PLEASE TAKE NOTICE THAT the 2000 Annual Meeting of Stockholders (the "Annual
Meeting") of Trammell Crow Company, a Delaware corporation (the "Company"), will
be held on May 16, 2000, at 8:30 a.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 2003 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, 2000.
(3) Such other business as may properly come before the Annual Meeting or
any postponement or adjournment thereof.
The close of business on April 10, 2000, 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, par value $0.01 per share, 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 or grant your proxy by telephone, as
described on the enclosed Proxy, as promptly as possible. You may revoke your
proxy before the Annual Meeting as described in the Proxy Statement under the
heading "Solicitation and Revocability of Proxies."
By Order of the Board of Directors,
/s/ Derek R. McClain
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 16, 2000, at 8:30 a.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 or granting your proxy by telephone, 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 18, 2000.
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, are represented by another Proxy or have
granted your proxy by telephone. You may revoke your proxy, whether granted by
telephone or by returning 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 addition, if you granted your proxy by telephone, you may revoke
such grant by resubmitting your proxy by telephone at any time prior to
3:00 p.m., local time, on May 15, 2000. In the absence of any 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 10, 2000, the
record date for the Annual Meeting, there were 34,873,773 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
1
<PAGE>
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 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 attending the meeting in person or submitting a proxy does not have
discretionary authority and has not received voting instructions with respect to
a particular item.
PROPOSAL ONE--ELECTION OF CLASS III DIRECTORS
The Board of Directors has designated Messrs. J. McDonald Williams, William
F. Concannon and Henry J. Faison as nominees for election as Class III directors
of the Company at the Annual Meeting (each, a "Nominee"). Each of the Nominees
currently serves as a Class III director. If elected, each Nominee will serve
until the expiration of his term at the Annual Meeting of the Company's
Stockholders in 2003 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 THE NOMINEES.
PROPOSAL TWO--SELECTION OF INDEPENDENT ACCOUNTANTS
On March 30, 2000, 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, 2000. The Company expects that representatives
of Ernst & Young 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, 2000, requires the affirmative vote of a
majority of the shares of Common Stock present or
2
<PAGE>
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 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.
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, 2000.
DIRECTORS
The following tables set forth certain information regarding the Nominees
and the other Directors of the Company:
<TABLE>
<CAPTION>
DIRECTOR'S
NAME OF NOMINEE AGE TITLE TERM ENDING
- --------------- -------- -------- -----------
<S> <C> <C> <C>
William F. Concannon......................... 44 Director 2000
Henry J. Faison.............................. 65 Director 2000
J. McDonald Williams......................... 58 Director 2000
</TABLE>
WILLIAM F. CONCANNON has been a director of the Company since 1991 and has
served as the President and Chief Executive Officer of Trammell Crow Corporate
Services since July 1991. Mr. Concannon joined the Company as Vice President of
National Marketing in 1986 and in 1990 became Director and Partner in charge of
Trammell Crow Corporate Services.
HENRY J. FAISON has served as Executive Vice President and a director of the
Company since July 1998. From 1994 to 1998, Mr. Faison served as Chairman of
Faison Enterprises Inc. ("Faison Enterprises"). From 1988 to 1994, he served as
the Chief Executive Officer of Faison Enterprises.
J. MCDONALD WILLIAMS has been the Chairman of the Board of Directors of the
Company since August 1994. Mr. Williams served as President and Chief Executive
Officer of the Company from 1991 to 1994. From 1977 to 1991, Mr. Williams served
as Managing Partner of the Company and from 1973 to 1977 Mr. Williams was
Managing Partner, International Projects for the Company. Mr. Williams is a
member of the Board of Directors of A.H. Belo Corporation. In any given year
within the past five years, Mr. Williams has indirectly owned interests in
hundreds of partnerships (or affiliates of partnerships) or corporations. In the
past five years, Mr. Williams was an officer of the general partner in 3 and an
officer in 2, 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 an executive officer or
director of 13 partnerships or corporations, or affiliates of such partnerships
or corporations, that were placed in receivership.
<TABLE>
<CAPTION>
DIRECTOR'S
NAME OF DIRECTOR AGE TITLE TERM ENDING
- ---------------- -------- ----------------------------------- -----------
<S> <C> <C> <C>
Harlan R. Crow........ 50 Director 2002
James R. Erwin........ 55 Director 2002
Jeffrey M. Heller..... 60 Director 2002
George L. Lippe....... 45 Chief Executive Officer, President
and Director 2001
Rowland T. Moriarty... 53 Director 2001
Robert E. Sulentic.... 43 Executive Vice President, Chief
Financial Officer and Director 2001
</TABLE>
3
<PAGE>
HARLAN R. CROW has been a director of the Company since 1991. 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.
In any given year within the past five years, Mr. Crow has indirectly owned
interests in hundreds of partnerships (or affiliates of partnerships) or
corporations. In the past five years, Mr. Crow was an officer of the general
partner in 4 partnerships, and was an officer in 2 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 14 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 certain executive officers of
the Company have agreed to vote their 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--Texas and Senior Client
Executive--Southwest of Bank of America, N.A. since October 1998, was Vice
Chairman for Texas and Corporate Finance Executive--West of NationsBank Corp.
from January 1994 to October 1998, and was Executive Vice President, Manager of
Operations and Technology for NationsBank Corp. from October 1991 to
January 1994.
JEFFREY 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 Unigraphics Solutions Inc.
GEORGE L. LIPPE has been a director of the Company since August 1997 and has
served as the Company's President and Chief Executive Officer since
January 1996. From 1995 to 1996, Mr. Lippe served as the Company's Executive
Vice President of Operations. Mr. Lippe has served in various other capacities
with the 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, and
Charles River Associates, an economic research firm based in Boston.
ROBERT E. SULENTIC has served as the Company's Executive Vice President and
Chief Financial Officer since September 1998 and has been a director of the
Company since December 1997. Mr. Sulentic served as the Company's Executive Vice
President and National Director of Development and Investment from
December 1997 through August 1998. Mr. Sulentic has served as President of
Trammell Crow NE, Inc., since 1995 and has served as Chairman of the Company's
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 Company's
New Jersey Division. Mr. Sulentic served in Houston as a Marketing Director for
the Company in 1986 and 1987 and as a Leasing Agent in 1984 and 1985.
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. In 1999, each of the
non-employee directors received 3,345 stock option grants under the Long-Term
Incentive Plan. See "Executive Compensation--
4
<PAGE>
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 of Stockholders in 2001. Messrs. Crow, Erwin
and Heller currently serve as Class II directors whose terms expire at the
Annual Meeting of Stockholders in 2002, and Messrs. Williams, Concannon and
Faison currently serve as Class III directors whose terms expire at the Annual
Meeting.
MEETINGS AND COMMITTEES OF DIRECTORS
The Company's Board of Directors had seven meetings during the Company's
fiscal year ended December 31, 1999. The Board of Directors has four standing
committees: the Executive Committee, the Audit Committee, the Compensation
Committee and the Governance Committee. Each of the directors attended at least
75% of the aggregate of all meetings held by the Board of Directors and, if
applicable, all meetings of committees of the Board of Directors on which such
director served during 1999.
The Executive Committee may, to the maximum extent permitted by the Delaware
General Corporation Law, have and exercise all of the powers and authorities of
the Board in the management of the business and affairs of the Company;
provided, however, that the Executive Committee does not have the power or
authority to amend the certificate of incorporation of the Company, adopt an
agreement of merger or consolidation, recommend to the stockholders the sale,
lease or exchange of all or substantially all of the Company's property and
assets, recommend to the stockholders a dissolution of the Company or a
revocation of a dissolution of the Company, or amend, alter or repeal the bylaws
or adopt new bylaws for the Company, declare a dividend or authorize the
issuance of stock. The current members of the Executive Committee are
Messrs. Williams (Chairman), Lippe and Erwin. Messrs. Williams, if reelected as
a Class III director, Lippe and Erwin will continue to serve on the Executive
Committee following the Annual Meeting. The Executive Committee did not have any
meetings during the Company's fiscal year ended December 31, 1999.
The Audit Committee was established in December, 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. Heller (Chairman), Erwin and Moriarty. Messrs. Heller, Erwin and
Moriarty will continue to serve on the Audit Committee following the Annual
Meeting. The Audit Committee had two meetings during the Company's fiscal year
ended December 31, 1999.
The Compensation Committee reviews and approves the salaries and other
compensation that the Company pays its executive officers, and the Compensation
Committee 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 (Chairman), Heller and Moriarty. Messrs. Erwin,
Heller and Moriarty will continue to serve on the Compensation Committee
following the Annual Meeting. The Compensation Committee had four meetings
during the Company's fiscal year ended December 31, 1999.
The Governance Committee was established in March of 1999. The Governance
Committee is charged with assessing director performance, recruiting new
directors, evaluating Board processes, staffing and rotation of Board committees
and studying management succession issues. The current members of the Governance
Committee are Messrs. Moriarty (Chairman), Crow, Williams and Lippe.
Messrs. Moriarty, Crow, Williams, if reelected as a Class III director, and
Lippe will continue to serve on the Governance Committee following the Annual
Meeting. The Governance Committee had one meeting during the Company's fiscal
year ended December 31, 1999.
5
<PAGE>
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......... 39 Executive Vice President and Chief Operating Officer
William F. Concannon....... 44 President and Chief Executive Officer of Trammell Crow
Corporate Services, Inc. and Director
George L. Lippe............ 45 Chief Executive Officer, President and Director
William Rothacker.......... 49 President and Chief Executive Officer of Trammell Crow
Retail Services, Inc.
Robert E. Sulentic......... 43 Executive Vice President, Chief Financial Officer 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. Concannon, Lippe and Sulentic is set forth previously in this Proxy
Statement.
H. PRYOR BLACKWELL has served as Executive Vice President and Chief
Operating Officer of the Company since September 1998. Mr. Blackwell served as
Executive Vice President and Chief Operating Officer of the Company's Western
Operations from August 1997 through August 1998 and served as President and
Chief Executive Officer of TCDFW, Inc. from 1993 until September 1998.
Mr. Blackwell served on the Board of Directors of the Company from 1993 until
1997, and as a member of the Board of Directors served on the Company's
Investment Committee and Audit Committee. 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 Company's Downtown (Dallas) Office Division. Mr. Blackwell served the
Company as Marketing Principal from 1986 to 1987 and Leasing Agent from 1984 to
1986.
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 served as Managing Director in charge of the 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, 1997, 1998 and 1999, 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, 1999 exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------------------
AWARDS PAYOUTS
------------------ -------------
SHARES OF COMMON
STOCK UNDERLYING
NAME AND OPTIONS GRANTED IN LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS($) FISCAL YEAR PAYOUTS($)(1) COMPENSATION($)(2)
- ------------------ -------- -------- -------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
George L. Lippe........................ 1999 350,000 644,358 52,461 391,827 (391,827)
President and Chief Executive 1998 363,462 700,000 -- 653,044 (653,044)
Officer, Trammell Crow 1997 350,000 175,000 58,529 1,510,838 (112,810)
Company
Robert E. Sulentic..................... 1999 250,000 437,500 48,656 691,038 (691,038)
Executive Vice President and 1998 242,308 370,833 -- 686,151 (686,151)
Chief Financial Officer, 1997 210,000 230,000 58,529 673,722 806,152
Trammell Crow Company
William F. Concannon................... 1999 225,000 435,673 42,198 -- --
President and Chief Executive 1998 233,654 337,500 -- 2,868 (2,868)
Officer ofTrammell Crow 1997 210,000 180,000 88,342 1,007,526 (354,607)
Corporate Services, Inc.
H. Pryor Blackwell..................... 1999 250,000 402,724 39,651 221,220 (221,220)
Executive Vice President and 1998 242,308 370,833 -- 368,700 (368,700)
Chief Operating Officer, 1997 210,000 180,000 58,529 749,043 8,627
Trammell Crow Company
William Rothacker...................... 1999 225,000 310,673 35,323 80,700 (80,700)
President and Chief Executive 1998 233,654 337,500 -- 134,499 (134,499)
Officer of Trammell Crow 1997 190,000 95,000 58,529 705,061 (560,788)
Retail Services, Inc.
</TABLE>
- ------------------------------
(1) Reflects distributions made from the Profit Sharing Plan (as hereinafter
defined) in the year indicated for amounts earned in the year indicated and
prior years.
(2) The amounts shown include the dollar amounts of increases (decreases) to the
Profit Sharing Account (as hereinafter defined) for each of the Named
Executive Officers under the Profit Sharing Plan for the years indicated.
Payouts of awards under the Profit Sharing Plan are subject to certain
restrictions.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning Common Stock options
granted to the Named Executive Officers in the fiscal year ended December 31,
1999. No stock appreciation rights were granted in the fiscal year ended
December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SHARES OPTIONS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE GRANT DATE
OPTIONS EMPLOYEES IN ($/ EXPIRATION PRESENT VALUE
NAME GRANTED FISCAL YEAR SHARE)(3) DATE ($)(4)
- ---- ---------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
George L. Lippe........... 28,058(1) 1.2% 18.06 02/18/09 296,292
24,403(2) 1.1% 17.44 05/05/09 258,428
Robert E. Sulentic........ 21,641(1) 1.0% 18.06 02/18/09 228,529
27,015(2) 1.2% 17.44 05/05/09 286,089
William F. Concannon...... 24,188(1) 1.1% 18.06 02/18/09 255,425
18,010(2) 0.8% 17.44 05/05/09 190,726
H. Pryor Blackwell........ 21,641(1) 1.0% 18.06 02/18/09 228,529
18,010(2) 0.8% 17.44 05/05/09 190,726
William Rothacker......... 17,313(1) 0.8% 18.06 02/18/09 182,825
18,010(2) 0.8% 17.44 05/05/09 190,726
</TABLE>
- ------------------------
(1) The options are subject to a three year vesting schedule, subject to certain
exceptions, with one-third becoming exercisable on each of February 18,
2000, 2001 and 2002.
(2) The options are subject to a four year vesting schedule, subject to certain
exceptions, with one-fourth becoming exercisable on each of May 5, 2000,
2001, 2002 and 2003.
(3) The exercise price is the market price on the date of grant.
(4) The grant date present value was determined by using the Black-Scholes
option pricing model, as adapted for use in valuing stock options. The
estimated values under the Black-Scholes model are based on assumptions as
to certain variables. Expected stock price volatility is assumed to be 50.2%
for options expiring on February 18, 2009 and 52.6% for options expiring on
May 5, 2009 and the risk-free rate of return is assumed to be 5.39% for
options expiring on February 18, 2009 and 5.80% for options expiring on
May 5, 2009 for the options shown in the table. The exercise date for the
options is assumed to be the seventh anniversary of the date of grant, and
dividend yield is assumed to be 0%. The actual value, if any, a Named
Executive Officer 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 that the value realized by a Named Executive Officer will be at or
near the value estimated by the Black-Scholes model reflected in the table.
8
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN THE MONEY OPTIONS
DECEMBER 31, 1999 AT DECEMBER 31, 1999($)(1)
--------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
George L. Lippe................................ 39,019 71,971 N/A N/A
Robert E. Sulentic............................. 39,019 68,166 N/A N/A
William F. Concannon........................... 68,832 61,708 231,945 N/A
H. Pryor Blackwell............................. 39,019 59,161 N/A N/A
William Rothacker.............................. 39,019 54,833 N/A N/A
</TABLE>
- ------------------------
(1) The price per share of Common Stock for the last trade reported by the New
York Stock Exchange on December 31, 1999 was $11.63.
LONG-TERM INCENTIVE PLAN
GENERAL. The purpose of the Long-Term Incentive Plan is to provide an
incentive for employees, directors and certain consultants and advisors of the
Company or its subsidiaries (as used for the Long-Term Incentive Plan, a
"Participant") to remain in the service of the Company or its subsidiaries, to
extend to them 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
or its subsidiaries. To accomplish this purpose, the Long-Term Incentive Plan
offers a proprietary interest in the Company through the distribution of awards
("Awards") including (i) incentive stock options qualified as such under U.S.
federal income tax laws ("INCENTIVE OPTIONS"), (ii) stock options that do not
qualify as incentive stock options ("NONSTATUTORY OPTIONS"), (iii) stock
appreciation rights ("SARS"), (iv) restricted stock awards ("RESTRICTED STOCK
AWARDS"), and (v) performance units ("PERFORMANCE UNITS").
SHARE AUTHORIZATION. he number of shares of Common Stock that may be
subject to outstanding awards under the Long-Term Incentive Plan is equal to
8,634,878 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 awards 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.
ADMINISTRATION. The Board of Directors has appointed the Compensation
Committee (the "Committee") to administer the Long-Term Incentive Plan. 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, waive conditions and provisions of an Award, 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 Company may grant to Participants (i) Incentive Options
(only to eligible employees) and (ii) Nonstatutory Options (collectively,
"Options"). The Committee determines the exercise price of each option granted
under the Long-Term Incentive Plan. The exercise price for an Incentive Option
must not be less than the fair market value of the Common Stock on the date of
grant, and the exercise price of Nonstatutory 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 Incentive Options. At the discretion of the
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<PAGE>
Committee, holders may use shares of Common Stock to pay the exercise price,
including shares issuable upon exercise of the option.
SAR. 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 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 entitle 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
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, stock or a
combination of cash and stock, as the Committee provides in the agreement
governing the SAR.
RESTRICTED STOCK. A Restricted Stock Award is a grant of shares of Common
Stock that are nontransferable and 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 subject
to the award or receive dividends on that stock. Restricted stock may also be
issued upon exercise or settlement of options, SARs or Performance Units.
PERFORMANCE UNITS. Performance Units are performance-based awards payable
in cash, stock or a combination of both. The Committee may select any
performance measure enumerated in the Long-Term Incentive Plan or combination of
measures as conditions for cash payments or stock issuances under the Long-Term
Incentive Plan.
OUTSTANDING AWARDS. As of March 31, 2000, the Company had 136,343 shares of
restricted stock issued and outstanding under the Long-Term Incentive Plan. As
of March 31, 2000, options to acquire an aggregate of 5,736,990 shares of Common
Stock under the Long-Term Incentive Plan were outstanding. The exercise prices
for such stock options range from $11.44 to $36.00.
ASSUMED OPTION PLAN
In connection with the formation of the Company in 1997 as the successor to
Trammell Crow Company, a Texas close corporation (the "Predecessor Company"),
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.
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 incorporation
of the Company, 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 could be subject to outstanding awards under the
Assumed Option Plan was 1,626. The Assumed Option Plan provided that this number
of shares and the number of shares subject to an award under the Assumed Option
Plan would be adjusted for stock splits, stock dividends, recapitalizations,
mergers and other changes affecting the capital stock of the Predecessor
Company.
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<PAGE>
STOCK OPTIONS. Options granted under the Assumed Option Plan were
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.
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. In
connection with the formation of the Company, the Company assumed the
Predecessor Company's obligations with respect to all such options, and the
Company became obligated to issue up to an aggregate of 2,423,769 shares of
Common Stock at a purchase price of $3.85 per share upon the exercise of such
options. All of such options vested upon the closing of the Company's initial
public offering in November 1997 (the "Initial Public Offering") and became
exercisable 30 days thereafter. As of March 31, 2000, 684,198 shares of Common
Stock had been issued upon the exercise of options pursuant to the Assumed
Option Plan and 1,739,571 shares were the subject of outstanding awards under
the Assumed Option Plan. No additional options will be granted under the Assumed
Option Plan.
PROFIT SHARING PLAN
In connection with the consummation of the Initial Public Offering, the
Company determined to no longer grant any future awards under its 1995 Profit
Sharing Plan (the "Profit Sharing Plan"). All unpaid deferred and accrued
earnings associated with the Profit Sharing Units and Business Units under the
Profit Sharing Plan were paid to participants (for the purposes of this section,
a "Participant") in 1999, and the Company has no further obligation to the
Participants. 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 were
Business Units and Projects. Business Units were designated based upon
recommendations by profit sharing unit leaders to the Chief Executive Officer
and were generally determined by geography or line-of-business. Similarly, a
Project represented a particular real estate project in which the Company owns
an equity interest. A Profit Sharing Unit generally consisted of multiple
Business Units and Projects.
A profit sharing account ("Profit Sharing Account") was maintained for each
Participant within a Profit Sharing Unit. Each Participant's Profit Sharing
Account was adjusted to reflect the operational results of each constituent
Business Unit in which the Participant had been allocated a percentage economic
interest (a "Business Unit Percentage") and each constituent Project in which
the Participant had been allocated a percentage economic interest (a "Project
Percentage"). The Profit Sharing Accounts did not represent any current right to
assets of the Company. In a profitable year, each of a Participant's Profit
Sharing Accounts was increased by a fraction of the Earnings Before Profit
Sharing ("EBPS") of the appropriate Business Units and Projects. In an
unprofitable year, if the EBPS of a given Business Unit or Project was negative,
each Participant's Profit Sharing Account decreased. In addition, various
adjustments to Profit Sharing Accounts were made to reflect the profits intended
to be shared with the Participant. Prior to retirement, a Participant could
receive distributions which were deducted from his Profit Sharing Account
balances. Distributions were generally limited to a portion of the current
year's EBPS. Payment of these distributions was also 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 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 could not exceed the available
cash of a Profit Sharing Unit after certain priority payments had been made.
Thus, a Participant in a profitable Business Unit may have had limited Current
Distributions if current earnings or available cash were reduced by the results
of an unprofitable Business Unit in the same Profit Sharing Unit. Similarly,
Project Distributions generally could
11
<PAGE>
not exceed a set percentage of the current earnings of the Project. Current
Distributions or Project Distributions were made to a Participant only to the
extent that the Participant's Profit Sharing Account balance was positive after
aggregating all individual Business Units and Projects. Thus, all distributions
made from a positive Profit Sharing Unit were generally offset against any
Profit Sharing Unit in which the Participant has a negative account balance if
the Participant did not have a positive net Profit Sharing Account balance.
Finally, both Current Distributions and Project Distributions could 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 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 unpaid deferred and accrued earnings
associated with the Profit Sharing Units and Business Units under the Profit
Sharing Plan were paid to Participants in 1999, and the Company has no further
obligation to Participants. With respect to Retired Participants, the Company
will continue to make Project Distributions until the completion of all
Projects.
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<PAGE>
EMPLOYEE STOCK PURCHASE PLAN
On December 22, 1997, the Company's Board of Directors adopted and approved
The Trammell Crow Company Employee Stock Purchase Plan (the "Stock Purchase
Plan"). The Stock Purchase Plan received stockholder approval at the Company's
1998 Annual Meeting of Stockholders. Set forth below is a general discussion of
the terms of the Stock Purchase Plan.
GENERAL. A total of 1,000,000 shares of Common Stock are reserved for
issuance under the Stock Purchase Plan. The purpose of the Stock Purchase Plan
is to provide employees with an opportunity to purchase Common Stock of the
Company through payroll deductions. The Stock Purchase 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").
ADMINISTRATION. The Stock Purchase Plan is 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 Stock
Purchase Plan will be determined by the Benefits 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 sixty (60) 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 Stock Purchase Plan, subject to
certain limitations imposed by Section 423(b) of the Code. The sixty day
eligibility requirement may be waived in the discretion of the Benefits
Committee. At March 31, 2000, approximately 5,377 employees of the Company and
its subsidiaries were eligible to participate in the Stock Purchase Plan.
OFFERING DATES. Under the Stock Purchase Plan, the Company offers to all
eligible employees the option to purchase shares of Common Stock. The term of
each option granted is for a period of six (6) months, ending on June 30 or
December 31, as the case may be (each such six month period is herein referred
to as an "option period"). The first day of each such option period shall be the
date of grant for the applicable option period.
PURCHASE PRICE. The purchase price per share at which shares of Common
Stock will be sold under the Stock Purchase 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 of the Common Stock on the New York Stock Exchange on
such date.
The purchase price of the shares of Common Stock to be purchased under the
Stock Purchase Plan will be accumulated by payroll deductions during each option
period. The deductions may not exceed: (i) 10% of the participant's eligible
compensation during the option period (which is defined in the Stock Purchase
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 Stock Purchase
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 OPTIONS. The maximum number of shares placed
under option to a participant in the Stock Purchase Plan in any option period
will be the lesser of a limit established by the Company 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 option
period) by the purchase price per share under the Stock Purchase Plan. Unless a
participant withdraws from the Stock Purchase Plan, the participant's option for
the purchase of shares will be exercised automatically at the end of each option
period for the maximum number of whole shares at the applicable price. As soon
as practicable
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<PAGE>
following the end of each option period, the Company will cause a certificate to
be issued representing the total number of whole shares of Common Stock acquired
by the participant through the exercise of the option. Unless requested
otherwise by the participant or upon termination of the participant's
employment, such certificate shall be held by the Company. Any balance remaining
in a participant's account following the exercise of the participant's option in
an option period will be carried over to the next option period if such balance
was insufficient to purchase a whole share of Common Stock. If such balance
exceeds the amount required to purchase a whole share of Common Stock, the
balance will be returned to the participant.
Notwithstanding the foregoing, no Eligible Employee will be permitted to
subscribe for shares of Common Stock under the Stock Purchase 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 Stock Purchase 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 Stock Purchase
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 Stock Purchase Plan must timely
deliver to the Company a notice of withdrawal on a form prepared by the Benefits
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 Stock Purchase Plan; and thereupon,
automatically and without any further act on his part, his payroll deduction
authorization and his interest in unexercised options under the Stock Purchase
Plan shall terminate.
CAPITAL CHANGES. Whenever any change is made in the Common Stock, by reason
of a stock dividend or by reason of subdivision, stock split, reverse stock
split, recapitalization, reorganization, combination, reclassification of
shares, or other similar change, appropriate action will be taken by the
Benefits Committee to adjust accordingly the number of shares subject to the
Stock Purchase 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 Stock Purchase Plan.
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 Stock
Purchase Plan.
AMENDMENT AND TERMINATION OF THE STOCK PURCHASE PLAN. The Board of
Directors, in its discretion, may terminate the Stock Purchase Plan at any time
with respect to any shares for which options have not theretofore been granted.
The Benefits Committee shall have the right to alter or amend the Stock Purchase
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 Benefits 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 Stock
Purchase Plan (other than as a result of the anti-dilution provisions of the
Stock Purchase Plan), change the class of individuals eligible to receive
options under the Stock Purchase Plan, or cause options issued under the Stock
Purchase 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.
AWARDS. As of March 31, 2000, 952 eligible employees of the Company and its
subsidiaries had elected to participate in the Stock Purchase Plan. As of
March 31, 2000, such participants had purchased
14
<PAGE>
an aggregate of 464,286 shares of Common Stock under the Stock Purchase Plan at
a weighted average purchase price of $17.32 per share.
401(k) PLAN
The Company sponsors a retirement plan called the Trammell Crow Company
Retirement Savings Plan (the "401(k) Plan"). As of December 31, 1999, the total
assets held by the 401(k) Plan were valued at approximately $119,023,922. CG
Trust Company is the trustee for the assets held under the Company's 401(k) Plan
(other than certain life insurance policies held under the trust for which
William P. Leiser and Asuka Nakahara are the trustees). 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 Code. 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) $5,100 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 Sections 401(a) and 401(k) of the
Code.
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. Each of
Messrs. Erwin, Heller and Moriarty is a non-employee director of the Company.
The Committee determines annual salary, bonuses and long-term incentive awards
for the Company's Chairman of the Board, Chief Executive Officer and other
executive officers. The Committee also administers 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 Committee held four
meetings during the Company's fiscal year ended December 31, 1999. At those
meetings the Committee reviewed the Company's compensation practices and made
awards of stock options and restricted stock grants to certain 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, annual incentive bonus
and long-term stock option and restricted stock grants. The Company's base
salary component is designed to be comparable to median base salaries paid by
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 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.
15
<PAGE>
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 and the
achievement of business unit objectives) 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.
It should be noted that the value of any individual executive's compensation
package will vary significantly based on performance. 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 EXECUTIVE COMPENSATION PROGRAM
This section describes each of the principle elements of the Company's 1999
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 goals and objectives
are achieved for the relevant performance period. 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. 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 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 175%, depending upon performance,
as evaluated by the Chief Executive Officer and the Committee. Although the
amounts of annual performance bonuses are generally
16
<PAGE>
subject to predetermined maximums, for extraordinary performance, the Committee
may award additional bonus amounts to certain senior executives.
The specific objectives and standards under the annual cash bonus plan are
reviewed annually by the Committee 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, stock appreciation rights and restricted stock
awards to executives and other key employees and consultants of the Company and
its subsidiaries. To align the interests of senior executives with the interests
of stockholders, the Committee's current policy regarding such awards is to
grant non-qualified stock options. However, the Committee has, in certain
circumstances, granted restricted stock awards to certain key employees as it
deemed appropriate. 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 at the time of the grant. To encourage retention, the ability to exercise
options granted under this plan is generally subject to vesting restrictions.
The estimated 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) is 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 to
provide competitive total direct compensation opportunities consistent with the
pay philosophy articulated above.
ADDITIONAL LONG-TERM INCENTIVE PLAN AWARDS
In addition to options granted under the Company's annual stock option grant
program, executives may be eligible to receive additional stock option awards or
cash payments under performance unit awards if the performance thresholds
established for the executive are exceeded for a relevant performance period.
The terms of these programs are subject to change annually.
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 in 1999 was consistent with
compensation being paid to other chief executive officers of comparable
companies. Also, as noted before, the Chief Executive Officer is entitled to
receive an annual bonus of 0% to 200% of his annual salary depending on
achievement of goals set forth in the Company's business plan. In 1999, the
Committee and the Board of Directors measured the Chief Executive Officer's
performance against an earnings per share ("EPS") target. The Company's
performance met the EPS target set by the Committee and the Board of Directors
for the performance period ended December 31, 1999, which entitled Mr. Lippe to
a cash bonus of $644,358.
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<PAGE>
$1 MILLION PAY DEDUCTIBILITY CAP
Section 162(m) of the Code generally imposes a $1 million per person annual
limit on the amount the Company may deduct as compensation expense for its Chief
Executive Officer and its four other highest paid officers. 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 the 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) of the Code. Therefore the Committee, subject to the factors provided
above, has the discretion to grant awards which result in non-deductible
compensation. The Committee will consider various alternatives to preserving the
deductibility of compensation payments and benefits to the extent reasonably
practicable and consistent with the Company's other compensation objectives.
The Compensation Committee of the Board of Directors is:
James R. Erwin, Chairman
Jeffrey M. Heller
Rowland T. Moriarty
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee of the Company consists of Messrs. James R.
Erwin, Jeffrey M. Heller and Rowland T. Moriarty.
Mr. Erwin serves as Vice Chairman--Texas and Senior Client
Executive-Southwest of Bank of America, N.A. and was Vice-Chairman for Texas and
Corporate Finance Executive--West of NationsBank Corp., Bank of America's
predecessor. The Company and an affiliate of Bank of America are parties to
certain transactions described under "Certain Relationships and Related
Transactions--Relationship with Bank of America, N.A."
Certain other directors are parties to, or have interests in, transactions
with the Company, as described under the caption "Certain Relationships and
Related Transactions."
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
CERTAIN INVESTMENT ACTIVITIES
Crow Family Partnership, L.P. ("Crow Family") owns approximately 99% of Crow
Realty Investors, L.P. d/b/a Crow Holdings. Mr. Harlan Crow, a director of the
Company, is the chief executive officer and a director of Crow Family's general
partner, Crow Family Inc. Since its inception in 1994, Crow Holdings has
co-invested with the Company and various of its subsidiaries in 17 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
Holdings 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. The company made no contributions
to these projects in 1999. Distributions to the Company from such projects in
1999 were $172,600. Through December 31, 1999, the Company had made total
contributions
18
<PAGE>
of $3,063,645 to, and had received total distributions of $3,892,680 from, these
projects. The senior employees of the Company invest in the projects indirectly
as limited partners in Fund I. The following reflects total investments and
distributions related to such projects through December 31, 1999, for the Named
Executive Officers: Mr. Lippe, $150,000 and $199,161; Mr. Sulentic, $25,000 and
$33,193; and Mr. Blackwell, $100,000 and $132,775; respectively. No additional
capital contributions were made to, nor were any distributions received from,
such projects during 1999 by any of the Named Executive Officers.
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. The Company made no contributions to Fund II in 1999 and
received $268,912 in distributions from Fund II in 1999. Through December 31,
1999, the Company had made total contributions to Fund II of approximately
$1,707,000 and had received total distributions from Fund II of approximately
$1,310,094. The following reflects total investments and distributions related
to Fund II through December 31, 1999, for the Named Executive Officers:
Mr. Lippe, $184,000 and $157,389; Mr. Concannon, $46,000 and $39,348;
Mr. Rothacker, $46,000 and $39,348; Mr. Sulentic, $23,000 and $19,674; and
Mr. Blackwell, $230,000 and $196,737, respectively. No additional capital
contributions were made by the Named Executive Officers to Fund II during 1999.
The following reflects total distributions related to Fund II during 1999 for
the Named Executive Officers: Mr. Lippe, $40,848; Mr. Concannon, $10,212;
Mr. Rothacker, $10,212; Mr. Sulentic, $5,107; and Mr. Blackwell, $51,061,
respectively. In addition, an affiliate of Mr. Williams, a director of the
Company, made no contributions and received $153,185 in distributions in 1999
from Fund II and had invested an aggregate of $690,000 and received aggregate
distributions of $590,210 from Fund II through December 31, 1999.
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." In 1999, Fund II invested $7,653 in, and received distributions of
$51,642 from, the DFW Fund. The aggregate amount invested in and distributions
received from the DFW Fund by Fund II through December 31, 1999, is $499,636 and
$295,698, respectively. In 1999, the Company (through direct investment outside
of Fund II) and Crow Holdings invested $7,653 and $52,039, respectively, in the
DFW Fund and received distributions of $51,642 and $351,169, respectively, from
the DFW Fund. Through December 31, 1999, the Company and Crow Holdings had
invested an aggregate of approximately $499,636 and $3,397,530, respectively, in
the DFW Fund and had received distributions totaling $295,698 and $2,010,747,
respectively. An affiliate of Mr. Williams invested $7,653 in the DFW Fund and
received $51,642 in distributions in 1999 and had invested an aggregate of
$487,617 in the DFW Fund and received distributions totaling $295,698 through
December 31, 1999. The affiliate of Mr. Williams also contributed approximately
$86,251 to projects in which the DFW Fund had an interest and received
distributions from those projects of approximately $2,254 in 1999 and had
contributed an aggregate of $1,536,409, and received total distributions of
$1,243,991 from, such projects through December 31, 1999. In 1999, the Company
made no contributions and Crow Holdings contributed approximately $1,273,000 to
projects in which the DFW Fund had an interest. Neither the Company nor Crow
Holdings received any distributions from such projects in 1999. Through
December 31, 1999, the Company and Crow Holdings had contributed an aggregate of
approximately $998,731 and $9,700,168, respectively, to projects in which the
DFW Fund had an interest and the Company had received aggregate distributions of
approximately $1,012,151 from such projects. In 1999, Fund II contributed
$151,646 to projects in which the DFW Fund had an interest and received
distributions of $860,940 from such projects. Through December 31, 1999, the
aggregate amount contributed by Fund II to projects in which the DFW Fund had an
interest was $2,501,804 and the aggregate amount distributed to Fund II from
such projects was $2,102,677. 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.
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In 1996, in lieu of receiving certain interests under the Profit Sharing
Plan, Mr. Williams and seven other employees of the Company received interests
in Cementville, L.P., of which two subsidiaries of the Company are the general
partner and a limited partner. Cementville L.P. holds an interest in a
development project. In 1999, total partner distributions from Cementville, L.P.
were $13,104,366, of which Mr. Williams received $1,007,039 and the two
subsidiaries of the Company received $2,860,444 in the aggregate.
In 1994, a subsidiary of the Company and an affiliate of Mr. Williams
invested on a side-by-side basis in Spark 94 Associates, Ltd., which holds an
interest in a development project. Total contributions by Mr. Williams and such
subsidiary were $47,093 and $19,942, respectively. In 1999, the affiliate of
Mr. Williams and such subsidiary received distributions of $186,408 and $23,305,
respectively, from Spark 94 Associates, Ltd. Through December 31, 1999, the
affiliate of Mr. Williams and such subsidiary had received total distributions
of $469,486 and $97,074, respectively.
CROW FAMILY
During 1999, the Company received 3.8% 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.
STOCKHOLDERS' AGREEMENT
The Company, Crow Family, CFH and Mr. Williams entered into a Stockholders'
Agreement, pursuant to which the Company agreed, subject to certain limitations
and under certain circumstances, to register for sale shares of Common Stock
that are held by certain parties thereto (collectively, the "Registrable
Securities"). Of the shares of Common Stock issued in connection with the
Company's formation, 9,369,035 were Registrable Securities. The Stockholders'
Agreement provides that Crow Family and Mr. Williams may, from and after the
first anniversary of the Initial Public 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 of the Securities Act. The holders of Registrable Securities may
request an unlimited number of shelf Demand Registrations.
The Stockholders' Agreement also provides that, subject to certain
exceptions, in the event the Company proposes to file a registration statement
with respect to an offering of any class of equity securities, other than
certain types of registrations, the Company will offer the holders of
Registrable Securities the opportunity to register the number of Registrable
Securities they request to include (a "Piggyback Registration"), provided that
the amount of Registrable Securities requested to be registered may be limited
by the underwriters in an underwritten offering based on such underwriters'
determination that inclusion of the total amount of Registrable Securities
requested for registration exceeds the maximum amount that can be marketed at a
price reasonably related to the current market price of the Common Stock or
without materially and adversely affecting the offering. The Company will
generally be required to pay all of the expenses of Demand Registrations and
Piggyback Registrations, other than
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<PAGE>
underwriting discounts and commissions; provided, however, that only 50% of the
expenses of underwritten Demand Registrations will be borne by the Company after
the first three such Demand Registrations and all road show expenses in
connection with any Demand Registration will be borne by the holders of
Registrable Securities.
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 nominee. Certain executive officers of the Company have agreed
to vote their 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 the lesser of (i) less
than 12.5% of the then outstanding Common Stock or (ii) less than 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 both shares of
Common Stock owned by Crow Family and those owned by CFH. 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 fifteen (15) days notice prior to
effecting such sale.
Each of Crow Family and the Company has agreed, prior to the fifth
anniversary of the date 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 "Kinetic 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 Kinetic 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. The Company paid service fees to
the Kinetic Group of approximately $4,978,000 for the year ended December 31,
1999.
FAISON TRANSACTIONS
In July, 1998, the Company acquired a portion of the businesses of Faison &
Associates ("Faison") and Faison Enterprises, which are engaged in the
development, leasing and management of office and retail properties located
primarily in the Midatlantic and Southeast regions of the United States (the
"Faison Acquisition"). In exchange for the acquired businesses, the Company paid
$36.1 million in cash and delivered a $2.0 million promissory note that bears
interest at an annual rate of 6.0%. The note matures on April 30, 2000 and is
payable in eight equal quarterly installments. As of March 31, 2000, the
outstanding principal balance of this note was $250,000. In connection with the
Faison Acquisition, Mr. Henry Faison and Faison Enterprises purchased an
aggregate of 127,828 shares of Common Stock for $4.0 million (at a price of
$31.29 per share). At the closing, Mr. Faison was elected to serve as a
Class III Director on the Company's Board of Directors with a term expiring at
the Annual Meeting.
In connection with the Faison Acquisition, the Company entered into
employment agreements with four key employees, including Mr. Faison, and in
connection with such employment agreements the Company paid an aggregate of $1.0
million in exchange for certain covenants not to compete. The
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<PAGE>
Company granted to employees of the acquired businesses who were retained after
the closing options to purchase an aggregate of 36,504 shares of Common Stock at
an exercise price of $32.875 per share and options to purchase an aggregate of
34,920 shares of Common Stock at an exercise price of $31.50 per share (the fair
market value of the Common Stock on the respective dates of grant). In addition,
in August 1998, the Company authorized the grant of an aggregate of 63,490
restricted shares of its Common Stock to certain employees of the acquired
businesses who were retained after the closing. An aggregate of 60,315 shares
were issued on October 7, 1998 to grantees employed by the Company at that date
and will vest on July 2, 2000 if the grantee has been continuously employed by
the Company from the date of closing. The remaining 3,175 restricted shares were
forfeited prior to issuance, and an additional 11,110 restricted shares have
been forfeited since the date of grant, due to the grantees terminating their
employment with the Company.
In connection with the Faison Acquisition, the Company, Faison Enterprises
and another affiliate of Faison Enterprises entered into a Merchant Build/Right
of First Refusal Agreement pursuant to which Faison Enterprises has acquired a
right of first refusal to invest in, and provide the financing for, certain new
retail real estate projects that are initiated by the Company out of certain
offices formerly operated by Faison Enterprises or with the assistance of
certain former Faison employees prior to January 1, 2001. If Faison Enterprises
elects to exercise its right of first refusal with respect to such a retail
project, the Company is obligated to transfer its rights with respect to such
project to Faison Enterprises. Faison Enterprises will be obligated to use
reasonable commercial efforts to develop, and arrange for the financing of the
development of, such retail project. Subject to the right of Faison Enterprises
to withhold amounts to provide for the payment of operating deficits incurred on
other retail projects, the Company will be entitled to receive 40% of the
distributions that Faison Enterprises or its affiliates receive from each retail
project developed pursuant to the Merchant Build/First Refusal Agreement after
Faison Enterprises has recovered the initial capital it invests in the project
and received a specified rate of return on such investment. Certain matters that
are to be determined under the Merchant Build/First Refusal Agreement, such as
whether a particular expense is to be considered capital that would be the
responsibility of Faison Enterprises or an operating expense shared by the
Company and the amounts that are to be withheld from distributions, may involve
an inherent conflict between the interests of the Company and the interests of
Faison Enterprises. The Company is obligated to pay Faison Enterprises an
additional $500,000 if retail development construction starts funded through
this development program exceed certain levels in 2000.
The Company and Faison Enterprises have also entered into a Real Estate
Services Agreement, which contemplates that the retail projects developed
pursuant to the Merchant Build/Right of First Refusal Agreement, as well as
certain other properties controlled by Faison Enterprises, will be managed by
the Company. In exchange for such management services, the Company will be
entitled to receive a fee that was determined as the result of arms length
negotiations. The term of the Real Estate Services Agreement is five years, but
the agreement may be terminated earlier upon the occurrence of certain events of
default.
During 1999, the Company received 3.7% of its total revenues from the
development and/or management of properties owned or controlled by Mr. Faison or
Faison Enterprises, including but not limited to all revenues received pursuant
to the Merchant Build/Right of First Refusal Agreement and the Real Estate
Services Agreement.
On January 15, 1999, the Company acquired Faison (Chile) S.A. ("Faison
Chile") from Faison Enterprises. Faison Chile is a commercial real estate
services firm operating in Santiago, Chile. In exchange for all of the business
of Faison Chile, the Company paid Faison Enterprises $2.0 million in cash and
agreed to deliver Faison Enterprises up to $2.0 million in additional contingent
payments. These contingent payments are to be paid from 75% of the acquired
business' 2000 and 2001 EBITDA in excess of certain specified thresholds.
In October 1999, Trammell Crow Arrowpoint, Inc. ("Trammell Crow
Arrowpoint"), a subsidiary of the Company, entered into a build-to-suit project
in Charlotte, North Carolina with respect to approximately 19 acres of real
property owned by Arrowpoint Associates Limited Partnership ("Arrowpoint
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<PAGE>
Associates"), an entity of which Mr. Faison is the general partner. In
connection with the project, Trammell Crow Arrowpoint entered into a series of
ground lease agreements with Arrowpoint Associates. The ground lease agreements
have an initial term running through 2040, and the Company has four consecutive
options to extend the agreements for 15 years each. The stated lease payments
under the agreements are $12,500 per acre in 2000, increasing by 3% per year
thereafter.
RELATIONSHIP WITH BANK OF AMERICA, N.A.
On December 1, 1997, the Company obtained a $150 million line of credit
arranged by Bank of America, N.A. as administrative agent (the "Bank of America
Facility"). The Company has borrowed and expects to borrow under the Bank of
America Facility to finance acquisitions, to fund its co-investment activities
and to provide the Company with an additional source of working capital. James
R. Erwin serves as Vice Chairman-Texas and Senior Client Executive-Southwest of
Bank of America and was Vice Chairman of Texas and Corporate Finance
Executive-West for NationsBank Corp., a predecessor of Bank of America. During
1999 the Company paid Bank of America interest and fees relating to the Bank of
America Facility totaling approximately $4,926,784.
Bank of America is also a customer in the ordinary course of the Company's
outsourcing services business. Bank of America was the Company's second largest
outsourcing services customer (in terms of revenue generated) during the fiscal
year ended December 31, 1999. The Company recorded revenues of approximately
$16,598,741 in 1999 from services provided to Bank of America, representing
approximately 2% of the Company's total revenues in 1999.
The portion of the Company's development and investment business that
includes the acquisition and development of real estate is financed by various
sources other than the Bank of America Facility, including project finance
provided by commercial banks. In 1999, the Company paid to Bank of America
approximately $543,652 in interest and fees with respect to such project
financing.
POLICY WITH RESPECT TO RELATED PARTY TRANSACTIONS
The Company has implemented a policy requiring that any material transaction
(or series of related transactions) between the Company and related parties 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 insure that all transactions between the Company and
related parties are on terms that are no less favorable to the Company than
those that could have been obtained from unrelated third parties.
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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 Richard Ellis Services, Inc.,
Grubb & Ellis Company, Jones Lang LaSalle Incorporated and Insignia/ESG
Holdings, Inc. The same companies comprised the Company's Peer Group in the
Company's 1999 Proxy Statement for purposes of stockholder return comparisons.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TRAMMELL CROW PEER GROUP INDEX NYSE MARKET INDEX
<S> <C> <C> <C>
11/25/97 100.00 100.00 100.00
12/31/97 118.39 100.16 102.52
12/31/98 128.74 65.52 122.00
12/31/99 53.45 38.34 133.59
</TABLE>
<TABLE>
<CAPTION>
11/25/97 12/31/97 12/31/98 12/31/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Trammell Crow Company................................... $100.00 $118.39 $128.74 $ 53.45
Peer Group.............................................. 100.00 100.16 65.52 38.34
NYSE Market Index....................................... 100.00 102.52 122.00 133.59
</TABLE>
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<PAGE>
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 31, 2000, 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(1)
- ---- ------------- ---------------------
<S> <C> <C>
Crow Family Partnership, L.P................................ 4,236,829 12.1%
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
CFH Trade-Names, L.P........................................ 855,137 2.5%
CFH Capital Resources, L.P.................................. 1,327,489 3.8%
J. McDonald Williams........................................ 1,596,617(2) 4.6%
George L. Lippe............................................. 738,735(3) 2.1%
H. Pryor Blackwell.......................................... 540,745(4) 1.5%
William F. Concannon........................................ 357,523(5) 1.0%
Robert E. Sulentic.......................................... 263,092(6) *
William R. Rothacker........................................ 521,381(7) 1.5%
Harlan R. Crow.............................................. 6,432,689(8)(9) 18.4%
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
James R. Erwin.............................................. 22,234(8) *
Henry J. Faison............................................. 127,828(10) *
Rowland T. Moriarty......................................... 26,234(11) *
Jeffrey M. Heller........................................... 13,234(12) *
Directors, director nominees and executive officers as a
group (11 persons)........................................ 10,640,312(13) 30.2%
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* Less than one percent.
(1) Based on 34,873,411 shares of Common Stock outstanding on March 31, 2000.
(2) Includes 33,160 shares that may be acquired upon the exercise of options,
2,261 shares held indirectly through the Company's 401(k) Plan and 1,697
shares acquired under the Company's Employee Stock Purchase Plan.
(3) Includes 2,252 shares held in trust for the benefit of Mr. Lippe's minor
children. Mr. Lippe is the trustee of the trust. Also includes 1,970 shares
acquired under the Company's Employee Stock Purchase Plan and 54,472 shares
that may be acquired upon the exercise of options.
(4) Includes 50,735 shares that may be acquired upon the exercise of options.
(5) Includes 81,397 shares that may be acquired upon the exercise of options.
(6) Includes 23,000 shares owned by Mr. Sulentic's wife and 52,987 shares that
may be acquired upon the exercise of options.
(7) Includes 1,397 shares acquired under the Company's Employee Stock Purchase
Plan and 49,292 shares that may be acquired upon the exercise of options.
(8) Includes 13,234 shares that may be acquired upon the exercise of options.
(9) Consists of all shares held by Crow Family Partnership, L.P., all shares
held by CFH Trade-Names, L.P., and all 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.
(10) Includes 63,914 shares held of record by Faison Enterprises, a non-profit
corporation of which Mr. Faison is the sole member. Although Mr. Faison
currently has the right to designate all of the members of the board of
directors of Faison Enterprises, he has no pecuniary interest in such
shares of Common Stock. Mr. Faison disclaims ownership of all shares of
Common Stock held by Faison Enterprises.
(11) Includes 2,000 shares held indirectly through a non-issuer profit sharing
plan, 3,000 shares held indirectly through a non-issuer money purchase plan
and 13,234 shares that may be acquired upon the exercise of options.
(12) Consists solely of 13,234 shares that may be acquired upon the exercise of
options.
(13) Includes 374,979 shares that may be acquired upon the exercise of options
within the next 60 days.
25
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SECTION 16 BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of 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 Securities and Exchange 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 1999.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-4(c)(1) promulgated under the Exchange Act, the
Company's management will have discretionary authority to vote on any matter of
which the Company does not receive notice by March 3, 2001, with respect to
proxies submitted to the 2001 Annual Meeting of the Company's Stockholders. To
be included in the Board of Directors' solicitation of proxies relating to the
2001 Annual Meeting of the Company's Stockholders, a stockholder proposal must
be received by the Secretary of the Company at 2001 Ross Avenue, Suite 3400,
Dallas, Texas 75201, no later than December 17, 2000. Pursuant to the Company's
Certificate of Incorporation, in order to nominate persons for election to the
Board of Directors at the 2001 Annual Meeting of the Company's Stockholders, a
stockholder must deliver notice, in the form specified in the Company's
Certificate of Incorporation, to the principal executive offices of the Company
not less than 60 days nor more than 90 days prior to the scheduled date of the
2001 Annual Meeting of the Company's Stockholders, which has not yet been
determined.
ANNUAL REPORT
The Company's Annual Report to stockholders for the fiscal year ended
December 31, 1999, 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,
/s/ Derek R. McClain
Derek R. McClain
SECRETARY
26
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSAL 2. PLEASE MARK
YOUR VOTES AS /X/
INDICATED IN
THIS EXAMPLE
FOR ALL WITHHELD FROM
NOMINEES ALL NOMINEES
1. ELECTION OF DIRECTORS: To elect each of (01) J. McDonald / / / / 2. To ratify the selection of Ernst & Young LLP
Williams, (02) William F. Concannon and (03) Henry J. as independent accountants for the Company
Faison to serve as Class III directors for a three year for the fiscal year ending December 31,
term ending at the Annual Meeting of Stockholders in 2000.
2003 and until their successors are duly elected and
qualified or until their earlier death, resignation or
removal from office.
FOR AGAINST ABSTAIN
/ / / / / /
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For the nominees except as noted above
I PLAN TO ATTEND THE
MEETING / /
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.
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FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
[GRAPHIC] YOU CAN GRANT YOUR PROXY IN ONE OF TWO WAYS: [GRAPHIC]
====================================================================================================================================
GRANT YOUR PROXY BY PHONE
HAVE YOUR PROXY CARD IN HAND.
Call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week.
There is NO CHARGE to you for this call.
You will be asked to enter your 11-digit Control Number, which is located in the box in the lower right hand corner of this
form. Follow the recorded instructions.
====================================================================================================================================
OR
====================================================================================================================================
GRANT YOUR PROXY BY RETURNING THIS PROXY CARD
Mark, sign and date your proxy card and return promptly in the enclosed envelope.
====================================================================================================================================
NOTE: IF YOU GRANTED YOUR PROXY BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR GRANTING YOUR PROXY.
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TRAMMELL CROW COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRAMMELL CROW COMPANY FOR THE ANNUAL MEETING TO BE HELD MAY 16, 2000
The undersigned hereby constitutes and appoints each of George L. Lippe, Robert E. Sulentic and Derek R.
McClain 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 Tuesday, May 16, 2000, at 8:30 a.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 PROPOSAL 2. THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD OR GRANT YOUR PROXY BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS ON
THE REVERSE SIDE. ANY PROXY MAY BE REVOKED IN WRITING AT ANY TIME PRIOR TO THE VOTING THEREOF.
ANY PROXY, WHEN PROPERLY GRANTED, WILL BE VOTED IN THE MANNER DIRECTED 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, YOUR 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.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
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FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN GRANT YOUR PROXY IN ONE OF TWO WAYS:
1. CALL TOLL FREE 1-800-840-1208 on a Touch-Tone Telephone.
OR
2. By mail - by promptly returning your completed proxy card in the enclosed envelope.
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