<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Rule 14a-11(c) or Rule 14a-12
ALEXANDRIA REAL ESTATE EQUITIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
ALEXANDRIA REAL ESTATE EQUITIES, INC.
135 NORTH LOS ROBLES AVENUE
SUITE 250
PASADENA, CALIFORNIA 91101
Dear Stockholder:
On behalf of our Board of Directors, I cordially invite you to attend
Alexandria's 1999 Annual Meeting of Stockholders to be held on Thursday, April
15, 1999, at the Hilton Pasadena, Monterey Room, 150 South Los Robles Avenue,
Pasadena, California, 91101, at 12:00 p.m. local time.
The attached Proxy Statement describes in detail the matters expected to be
acted upon at the meeting, including electing nine directors, all of whom are
present directors of the Company, and ratifying the selection of Ernst & Young
LLP as the Company's independent public accountants. We will also report on the
Company's progress and respond to questions you may have about the Company's
business.
We sincerely hope that you will be able to attend and participate in the
meeting. Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting. PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU
MAY VOTE IN PERSON EVEN IF YOU PREVIOUSLY HAVE MAILED YOUR PROXY CARD. YOUR
PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE PROXY
STATEMENT.
Sincerely,
[LOGO]
Jerry M. Sudarsky
CHAIRMAN OF THE BOARD
Pasadena, California
March 16, 1999
<PAGE>
ALEXANDRIA REAL ESTATE EQUITIES, INC.
135 NORTH LOS ROBLES AVENUE, SUITE 250
PASADENA, CALIFORNIA 91101
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 15, 1999
------------------------
To the Stockholders of Alexandria Real Estate Equities, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Alexandria Real Estate Equities, Inc., a Maryland corporation (the
"Company"), will be held on Thursday, April 15, 1999, at 12:00 p.m. local time,
at the Hilton Pasadena, Monterey Room, 150 South Los Robles Avenue, Pasadena,
California, 91101, for the following purposes:
1. To elect nine directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualify.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ending December 31,
1999.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors of the Company has fixed the close of business on
March 1, 1999 as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders of record as of the record date will be admitted to the
Annual Meeting upon presentation of identification. Stockholders who own shares
of Common Stock beneficially through a bank, broker or other nominee will be
admitted to the Annual Meeting upon presentation of identification and proof of
ownership or a valid proxy signed by the record holder. A recent brokerage
statement or a letter from a bank or broker are examples of proof of ownership.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
ENSURE YOUR REPRESENTATION AT THE MEETING. EVEN IF YOU HAVE GIVEN YOUR PROXY,
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING. PLEASE NOTE,
HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
By Order of the Board of Directors
[LOGO]
Peter J. Nelson
CHIEF FINANCIAL OFFICER AND SECRETARY
Pasadena, California
March 16, 1999
<PAGE>
ALEXANDRIA REAL ESTATE EQUITIES, INC.
135 NORTH LOS ROBLES AVENUE
SUITE 250
PASADENA, CALIFORNIA 91101
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
APRIL 15, 1999
---------------------
GENERAL
This Proxy Statement is furnished to stockholders of Alexandria Real Estate
Equities, Inc., a Maryland corporation (the "Company"), in connection with the
solicitation of proxies in the form enclosed herewith for use at the Annual
Meeting of Stockholders of the Company to be held on Thursday, April 15, 1999,
at 12:00 p.m. local time, at the Hilton Pasadena, Monterey Room, located at 150
South Los Robles Avenue, Pasadena, California, 91101, and any and all
adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the enclosed form of proxy are being first mailed to stockholders
on or about March 16, 1999.
The stockholders of the Company will consider and vote upon the following
proposals: (i) the election of nine directors to serve until the next annual
meeting of stockholders and until their successors are duly elected and qualify;
(ii) the ratification of the selection of Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1999;
(iii) such other matters as may properly come before the meeting and any and all
adjournments or postponements thereof, including matters proposed by
stockholders. The Board of Directors knows of no matters to come before the
Annual Meeting other than the matters referred to in this Proxy Statement.
SOLICITATION
This solicitation is made by mail on behalf of the Board of Directors of the
Company. Costs of the solicitation will be borne by the Company. Further
solicitation of proxies may be made by telephone, telegraph, fax or personal
interview by the directors, officers and employees of the Company and its
affiliates, who will not receive additional compensation for the solicitation.
In addition, the Company has engaged Corporate Investor Communications, Inc., a
firm specializing in proxy solicitation, to solicit proxies and to assist in the
distribution and collection of proxy material for an estimated fee of
approximately $5,000. The Company will reimburse banks, brokerage firms and
other custodians, nominees and fiduciaries for reasonable expenses incurred by
them in sending proxy materials to their customers or principals who are the
beneficial owners of shares of the Common Stock, par value $.01 per share, of
the Company (the "Common Stock").
VOTING PROCEDURES
Only the holders of record of the Common Stock as of the close of business
on March 1, 1999 (the "Record Date") are entitled to receive notice of, and to
vote at, the Annual Meeting. Each share of Common Stock entitles the holder
thereof to one vote. Stockholders are not permitted to cumulate their shares of
Common Stock for the purpose of electing directors or otherwise. At the close of
business on the Record Date, there were 13,736,263 shares of Common Stock issued
and outstanding.
1
<PAGE>
The presence at the Annual Meeting, in person or by proxy, of stockholders
entitled to cast a majority of all the votes entitled to be cast at the Annual
Meeting will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes will be counted for purposes of
determining the presence of a quorum. A "broker non-vote" results on a matter
when a broker or other record holder in "street" or nominee name returns a duly
executed proxy but does not vote on such matter solely because such record
holder does not have discretionary authority to vote on such matter and has not
received voting instructions from the beneficial holder. Under the rules of The
New York Stock Exchange, Inc. (the "NYSE"), however, such record holders have
discretionary authority to vote on routine matters, regardless of whether they
have received voting instructions. Accordingly, no broker non-votes occur when
voting on routine matters.
Shares represented by proxies in the form enclosed, if the proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares will be voted "FOR" the election of each nominee for director and "FOR"
the ratification of the selection of Ernst & Young LLP to serve as independent
public accountants of the Company. If any other matters properly come before the
Annual Meeting, it is the intention of each of the persons named in the
accompanying proxy to vote such proxies in such person's discretion. To be
voted, proxies must be filed with the Secretary of the Company prior to voting.
Under the Maryland General Corporation Law, holders of shares of the Common
Stock will not be entitled to appraisal rights with respect to such shares in
connection with any of the proposals.
REVOCATION OF PROXIES
Proxies may be revoked at any time before voting by filing a notice of
revocation with the Secretary of the Company, by filing a later dated proxy with
the Secretary of the Company, or by voting in person at the Annual Meeting.
2
<PAGE>
PROPOSAL NUMBER ONE--ELECTION OF DIRECTORS
Pursuant to the Company's Amended and Restated Bylaws (the "Bylaws"), all of
the directors are elected at each annual meeting of stockholders. The Bylaws
currently authorize a Board of Directors consisting of not less than the minimum
number of members required by the Maryland General Corporation Law (which for
the Company is three), nor more than fifteen members. The Bylaws also authorize
the Board of Directors to establish, increase or decrease the number of
directors, and the number has been so fixed at nine directors. Each director
will hold office until the next annual meeting of stockholders and until such
director's successor is duly elected and qualifies.
Stockholders may withhold authority from the proxyholders to vote for the
entire slate as nominated or, by writing the name of an individual nominee in
the space provided on the proxy card, withhold the authority to vote for any one
or more individual nominees. Instructions on the accompanying proxy card to
withhold authority to vote for one or more of the nominees will result in any
such nominee receiving fewer votes. Each person nominated for election has
agreed to serve if elected. If any nominee should become unavailable for
election, an event the Company does not anticipate, such shares will be voted
for the election of such substitute nominee as management may propose.
The following nine persons have been selected by the Board of Directors as
nominees for election to the Board of Directors: Messrs. Jerry M. Sudarsky, Joel
S. Marcus, James H. Richardson, Joseph Elmaleh, Viren Mehta, David M. Petrone,
Anthony M. Solomon, Richard B. Jennings and Alan G. Walton. All of the nominees
are incumbent directors.
CERTAIN INFORMATION REGARDING NOMINEES
See "Board of Directors, Executive Officers and Senior Management" for the
experience and background of each of the other nominees.
VOTE REQUIRED
The affirmative vote of a plurality of all of the votes cast at the Annual
Meeting is required for the election of a director. For purposes of the election
of directors, abstentions will have no effect on the outcome of the vote. The
election of directors is a routine matter on which a broker or other nominee is
empowered to vote. Accordingly, no broker non-votes will result from this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE-NAMED NOMINEES.
3
<PAGE>
BOARD OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND SENIOR MANAGEMENT
The following table sets forth certain information concerning the directors,
executive officers and senior management of the Company as of the Record Date:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Jerry M. Sudarsky.......................... 80 Chairman of the Board
Joel S. Marcus............................. 51 Chief Executive Officer and Director
James H. Richardson........................ 39 President and Director
Peter J. Nelson............................ 41 Chief Financial Officer, Senior Vice
President, Treasurer and Secretary
Lynn A. Shapiro............................ 30 General Counsel and Assistant Secretary
Steven A. Stone............................ 37 Corporate Vice President
Vincent R. Ciruzzi......................... 36 Vice President
Joseph Elmaleh............................. 60 Director
Richard B. Jennings........................ 55 Director
Viren Mehta................................ 49 Director
David M. Petrone........................... 54 Director
Anthony M. Solomon......................... 79 Director
Alan G. Walton............................. 62 Director
</TABLE>
JERRY M. SUDARSKY has served as the Company's Chairman of the Board of
Directors since its inception and previously served as the Company's Chief
Executive Officer from inception until March 1997. Mr. Sudarsky served as Vice
Chairman of Jacobs Engineering Group, Inc., an engineering and construction
firm, from 1986 to 1994. Mr. Sudarsky has had extensive experience in the
design, engineering, construction and operation of commercial properties. In
1967, Mr. Sudarsky founded and became Chairman of Israel Chemicals, where he
served until 1972, and in 1946, he founded Bioferm Corp., a pioneer in the
production of Vitamin B12 and the first commercial bio-insecticide products,
where he served until 1965.
JOEL S. MARCUS has served as Chief Executive Officer of the Company since
March 1997 and has served as a director since inception. Mr. Marcus previously
served as Vice Chairman of the Board and Chief Operating Officer of the Company
from inception until his appointment as Chief Executive Officer in March 1997,
and he served as Secretary from inception until April 1997. Mr. Marcus was a
partner in the law firm of Brobeck, Phleger & Harrison, and a predecessor firm,
from 1986 to 1994, specializing in corporate finance and acquisitions. From 1984
to 1994, he also served as General Counsel and Secretary of Kirin-Amgen, Inc., a
joint venture that financed the development of two genetically engineered
pharmaceuticals. Mr. Marcus has served on the Board of Directors of Ariad
Pharmaceuticals, a publicly traded biotechnology company, since 1995. Mr. Marcus
was formerly a practicing Certified Public Accountant specializing in the
financing and taxation of real estate. He received his undergraduate and Juris
Doctor Degrees from the University of California at Los Angeles and is a member
of the National Association of Real Estate Investment Trusts ("NAREIT").
JAMES H. RICHARDSON has served as President of the Company since August 1998
and as a director since March 1999. Mr. Richardson previously served as
Executive Vice President of the Company from January 1998 until August 1998 and
as Senior Vice President of the Company from August 1997 to December 1997. Prior
to joining the Company, Mr. Richardson held management and brokerage positions
at CB Richard Ellis, Inc. ("CB Richard Ellis"), a full-service provider of
commercial real estate services,
4
<PAGE>
for nearly 15 years. Most recently, from March 1996 until August 1997, Mr.
Richardson served as Senior Vice President, Area Manager, for the San Francisco
peninsula and San Jose offices of CB Richard Ellis, and from December 1982 until
March 1996, he was a top producing professional within the brokerage operations
group. During his tenure at CB Richard Ellis, Mr. Richardson was instrumental in
the creation and development of the biosciences and corporate services practice
groups. Mr. Richardson received his Bachelor of Arts degree in Economics from
Claremont McKenna College.
PETER J. NELSON has served as Chief Financial Officer, Treasurer and
Secretary of the Company since April 1997 and as Senior Vice President of the
Company since May 1998. Prior to joining the Company, from 1995 to 1997, Mr.
Nelson served as Chief Financial Officer of Lennar Partners, Inc., a diversified
real estate company, where he was responsible for the financial management of
the firm's real estate portfolio. From 1990 to 1995, Mr. Nelson was Chief
Financial Officer of Westrec Properties, Inc., a national owner and operator of
boat marinas and resort properties. Mr. Nelson also served as Vice President,
Corporate Financial Planning at Public Storage, Inc. from 1986 to 1990, and as
an Audit Manager at Ernst & Young LLP from 1979 to 1986. Mr. Nelson is a
Certified Public Accountant and a member of the American Institute of CPAs and
the California Society of CPAs, where he has served on the Real Estate
Committee. Mr. Nelson received his Bachelor of Science Degree from California
State University.
LYNN A. SHAPIRO has served as General Counsel and Assistant Secretary of the
Company since May 1998. Prior to joining the Company, from 1996 to 1998 Ms.
Shapiro was a real estate attorney with the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP where she was primarily responsible for the Company's
real-estate related legal work. Ms. Shapiro practiced real estate law with the
law firm of Mayer Brown & Platt from 1995 to 1996 and with the law firm of
Strook & Strook & Lavan from 1994 to 1995. Ms. Shapiro holds a Juris Doctor
Degree and a Bachelor of Science Degree in Business Administration from the
University of Southern California. She is a member of the State Bar of
California and the American Bar Association.
STEVEN A. STONE has served as Corporate Vice President of the Company since
inception. Since 1989, Mr. Stone has served as a partner in GoldStone Real
Estate Finance and Investments, which ceased active operations in January 1994.
Prior to that, Mr. Stone served as Asset Manager for Baldwin Industrial
Properties, Ltd., a commercial real estate developer, from 1986 to 1989, as
Assistant to Vice President Business and Real Estate Development at Grant
General Contractors from 1986 to 1989, and as an Appraiser for Bank of America
from 1983 to 1984. Mr. Stone holds a Bachelor of Science Degree in Business
Administration from San Diego State University.
VINCENT R. CIRUZZI has served as a Vice President of the Company since
September 1996. In 1993, Mr. Ciruzzi founded a real estate consulting business,
which provided consulting services to the Company from September 1995 until his
appointment as Vice President of the Company. From 1986 to 1993, Mr. Ciruzzi
served as Project Manager for Home Capital Development Group, a real estate
development company, where he specialized in project management of master
planned communities as well as real estate development. Mr. Ciruzzi received his
Bachelor of Science Degree in Finance and Real Estate from the University of
Southern California.
JOSEPH ELMALEH has served as a director of the Company since inception. Dr.
Elmaleh is a chemical engineer and international financier, with businesses in
the United States, Europe and the Middle East. He served as Chairman and Chief
Executive Officer of Passport Ltd., an oil and gas and real estate company, from
1989 to 1995 and of J.O.E.L. Ltd., an oil and gas and real estate company, from
1981 to 1995. Dr. Elmaleh also served as Chairman, Chief Executive Officer and a
director of Isramco, Inc., a publicly traded oil and gas exploration company,
from 1981 to 1996. Dr. Elmaleh received his Bachelor of Science Degree in
chemical engineering from the Technion-Israel Institute of Technology and his
Doctorate in Operations Research from the Imperial College of Science and
Technology, London.
RICHARD B. JENNINGS has served as a director of the Company since May 1998.
Mr. Jennings currently serves as President of Realty Capital International Inc.,
a real estate investment banking firm, which he
5
<PAGE>
founded in 1991, and as President of Jennings Securities Corporation, a National
Association of Securities Dealers, Inc. ("NASD") member securities firm, which
he founded in 1995. From 1990 to 1991, Mr. Jennings served as Senior Vice
President of Landauer Real Estate Counselors, and from 1986 to 1989, Mr.
Jennings served as Managing Director--Real Estate Finance at Drexel Burnham
Lambert. From 1969 to 1986, Mr. Jennings oversaw the REIT investment banking
business at Goldman, Sachs & Co. During his tenure at Goldman, Sachs & Co., Mr.
Jennings founded and managed the Mortgage Finance Group from 1979 to 1986. Mr.
Jennings also serves as an outside Director of MBO Properties, Inc. He is a
licensed NASD Principal and a New York Real Estate Broker. Mr. Jennings has a
Bachelor of Arts Degree in Economics, Phi Beta Kappa and Magna Cum Laude, from
Yale University, and a Master of Business Administration Degree from Harvard
Business School.
VIREN MEHTA has served as a director of the Company since January 1995. In
January 1998, Mr. Mehta founded Mehta Partners LLC, a pharmaceutical and
biotechnology industry advisory and investment firm. From 1989 to 1998, Mr.
Mehta was a partner of Mehta and Isaly, also a pharmaceutical and biotechnology
industry advisory and investment firm. Mr. Mehta served as a Vice President at
S.G. Warburg & Co., Inc., a merchant banking firm, from 1987 to 1989. In 1986,
he established the pharmaceutical investment research division in Wood MacKenzie
& Company Inc., New York, of which he became a Vice President and served until
1987. Mr. Mehta also worked with the international division of Merck & Co., a
pharmaceutical manufacturer, from 1983 to 1986. Mr. Mehta received his Doctor of
Pharmacy Degree from the University of Southern California and his Master of
Business Administration from the University of California at Los Angeles.
DAVID M. PETRONE has served as a director of the Company since its
inception. Mr. Petrone has been Chairman of the Board of Housing Capital
Corporation, a real estate finance company, since 1994. From 1986 until 1992,
Mr. Petrone was Vice Chairman of the Board of Wells Fargo and Company. Mr.
Petrone also served as Chief Executive Officer and President of Wells Fargo
Realty Advisors from 1978 to 1981 and of Wells Fargo Mortgage and Equity Trust,
a publicly held REIT, from 1981 to 1988. Mr. Petrone has served as a director of
Jacobs Engineering Group, Inc. since 1986 and of Spieker Properties, a publicly
held REIT, since 1993. He received his Bachelor of Science and Master of
Business Administration Degrees from the University of Oregon.
ANTHONY M. SOLOMON has served as a director of the Company since October
1994. Mr. Solomon is an economist and banker and has served as Chairman of The
Blackstone Alternate Asset Management Advisory Board since 1994. Mr. Solomon
also has served as Chairman of The Europe Fund, a closed end fund investing in
Europe, since 1990 and of The United Kingdom Fund, a closed end fund investing
in the United Kingdom, since 1987. Mr. Solomon has served as an economic advisor
to the Banca Comerciale Italiana since 1985. Mr. Solomon was a director of S.G.
Warburg p.l.c. London from 1985 until 1991 and Chairman of S.G. Warburg USA from
1985 until 1989. Mr. Solomon also served as President and Chief Executive
Officer of the Federal Reserve Bank of New York from 1980 to 1985 and was Under
Secretary of the Treasury from 1977 to 1980. Mr. Solomon received his Bachelor
of Arts Degree in Economics from the University of Chicago and his Masters
Degree in Economics and Public Administration from Harvard University.
ALAN G. WALTON has served as a director of the Company since September 1998.
Dr. Walton has served as a General Partner of Oxford Bioscience Partners, an
investment fund concentrating on investments in the medical, medical services
and biotechnology fields, since 1987. From 1981 to 1987, Dr. Walton was
President and Chief Executive Officer of University Genetics Co., a public
biotechnology company involved in technology transfer and seed investments in
university-related projects. Dr. Walton has served as Chairman of the Board of
Gene Logic Inc. since 1994 and as a director of Collaborative Clinical Research
Inc. since 1994. Dr. Walton received his Doctor of Philosophy degree in
Chemistry and his Doctor of Science degree in Biological Chemistry from
Nottingham University in England.
6
<PAGE>
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four regular meetings and eleven special
meetings during the fiscal year ended December 31, 1998 (the "1998 Fiscal
Year"). During the 1998 Fiscal Year, each member of the Board of Directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and of the Board committees of which he was a member during the period
for which he was a director. The Company has standing Audit and Compensation
Committees. The Company does not have a standing Nominating Committee.
AUDIT COMMITTEE. Messrs. Elmaleh, Mehta and Solomon (all non-employee
directors) currently serve on the Audit Committee of the Board of Directors.
Immediately following the Annual Meeting, Mr. Petrone will replace Mr. Solomon
on the Audit Committee. The Audit Committee held one meeting during the 1998
Fiscal Year and took certain actions by unanimous written consent. Among other
things, the Audit Committee recommends the firm to be appointed as independent
public accountants to audit the Company's financial statements, discusses the
scope and results of the audit with the independent public accountants, reviews
with management and the independent public accountants the Company's interim and
year-end operating results, considers the adequacy of the internal accounting
controls and audit procedures of the Company and reviews the non-audit services
to be performed by the independent public accountants.
COMPENSATION COMMITTEE. The Compensation Committee, which currently
consists of Messrs. Elmaleh, Mehta and Petrone (all non-employee directors),
held four meetings during the 1998 Fiscal Year and took certain actions by
unanimous written consent. Immediately following the Annual Meeting, Messrs.
Jennings, Solomon and Walton will replace Messrs. Elmaleh, Mehta and Petrone on
the Compensation Committee. The Compensation Committee has authority to, among
other things, renew and approve salary arrangements, including annual incentive
awards, for directors, certain officers and certain other employees of the
Company, adopt and amend employment agreements for officers and other employees
of the Company, and administer the Company's option and other incentive plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 1998 Fiscal Year, Messrs. Elmaleh, Mehta and Petrone served on
the Compensation Committee. No member of the Compensation Committee has served
as an officer of the Company or any of its subsidiaries.
COMPENSATION OF THE BOARD OF DIRECTORS
The Company currently pays each of its non-employee directors annual
compensation of $15,000 for their services to the Company. In addition, each
non-employee director receives fees of $1,000 for each meeting of the Board of
Directors or committee thereof attended in person and $500 for attendance at
each telephonic meeting of the Board of Directors or committee thereof, and is
reimbursed for reasonable expenses incurred to attend director and committee
meetings. Non-employee directors also are eligible to receive options to
purchase Common Stock under the Company's 1997 Amended and Restated Stock Award
and Incentive Plan (the "1997 Plan") as compensation for their services as
directors. During 1998, each non-employee director received an option under the
1997 Plan to purchase 7,500 shares of Common Stock, with the exception of Mr.
Sudarsky, who received an option to purchase 12,500 shares of Common Stock.
Officers of the Company who are also directors are not paid any fees for their
services as directors.
EXECUTIVE COMPENSATION
The following table sets forth, in summary form, the compensation paid by
the Company to the individual who served as its Chief Executive Officer, the
four other most highly compensated executive officers of the Company during the
1998 Fiscal Year and the General Counsel, who joined the Company in May 1998
(the "Named Executive Officers") for services rendered to the Company in all
capacities for the year ended December 31, 1998.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------------------------------------------ SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITIONS(1) YEAR SALARY ($) BONUS ($) COMPENSATION(2) ($) OPTIONS (#) COMPENSATION(3) ($)
- ----------------------------- --------- ---------- ---------- ------------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Joel S. Marcus............... 1998 275,000 -- 7,910 -- 12,510
Chief Executive Officer 1997 235,000 417,500(4) 1,088,659 169,140 6,750
James H. Richardson.......... 1998 225,000 -- 245 -- 2,869
President 1997 71,346(5) 60,000(6) -- 80,000 --
Peter J. Nelson.............. 1998 175,000 10,000 211 -- 12,900
Chief Financial Officer, 1997 121,846(5) 55,000 61,940 60,000 --
Senior Vice President,
Treasurer and Secretary
Lynn A. Shapiro.............. 1998 100,308(5) 20,000(7) -- 50,000 4,326
General Counsel and 1997 -- -- -- -- --
Assistant Secretary
Steven A. Stone.............. 1998 135,000 -- 1,481 -- 10,538
Corporate Vice President 1997 105,000 50,000 279,199 64,212 4,750
Vincent R. Ciruzzi........... 1998 105,000 5,000 -- -- 8,000
Vice President 1997 72,000 40,000 83,320 45,000 1,108
</TABLE>
- --------------------------
(1) Mr. Richardson served as Executive Vice President of the Company until
August 1998, at which time he was elected President.
(2) Other Annual Compensation in 1997 includes grants of Common Stock, valued at
$20 per share, effective June 2, 1997, in connection with the Company's
initial public offering. Mr. Marcus was granted 54,160 shares, Mr. Nelson
3,097 shares, Mr. Stone 13,887 shares, and Mr. Ciruzzi 4,166 shares.
(3) All Other Compensation includes the following contributions made by the
Company to employee accounts under the Company's 401(k) plan in 1997 and
1998, respectively: on behalf of Mr. Marcus, $4,750 and $10,000; Mr. Stone,
$4,750 and $9,508; and Mr. Ciruzzi, $1,108 and $8,000; and in 1998 only: on
behalf of Mr. Richardson, $2,869; Mr. Nelson, $10,000; and Ms. Shapiro,
$4,326. In addition, All Other Compensation also includes the following term
life insurance premiums paid by the Company for Mr. Marcus, $2,000 in 1997
and $2,510 in 1998; Mr. Richardson, $650 in 1998; Mr. Nelson, $2,900 in
1998; and Mr. Stone, $1,030 in 1998.
(4) $352,500 was paid in consideration for past services and for amending Mr.
Marcus' employment agreement with the Company.
(5) Mr. Richardson joined the Company in August 1997, Mr. Nelson in April 1997,
and Ms. Shapiro in May 1998.
(6) $25,000 of this amount was paid upon commencement of his employment in
accordance with his employment agreement with the Company.
(7) Paid upon commencement of her employment.
8
<PAGE>
The following tables set forth certain information regarding stock options
granted to the Named Executive Officers during 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
-------------------------------------------------------------- --------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE
OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR (%) ($/SH) DATE 5% ($) 10% ($)
- ------------------------ ----------------- ----------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joel S. Marcus.......... -- -- -- -- -- --
James H. Richardson..... -- -- -- -- -- --
Peter J. Nelson......... -- -- -- -- -- --
Lynn A. Shapiro......... 50,000(2) 21.8% $ 32.0625(3) 05/15/08 1,008,200 2,555,000
Steven A. Stone......... -- -- -- -- -- --
Vincent R. Ciruzzi...... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) No SARs were granted in the 1998 Fiscal Year.
(2) During 1998, Ms. Shapiro received options constituting Incentive Stock
Options to the extent permitted under applicable law to purchase shares of
Common Stock under the 1997 Plan. The options are subject to a three-year
vesting period such that one-third of such options vest on each of the first
three anniversaries of the date of grant. In addition, the vesting and
exercisability of the options will be accelerated in the event of a Change
in Control (as defined in the 1997 Plan). The options have a term of 10
years.
(3) The exercise price is equal to the Fair Market Value (as defined in the 1997
Plan) of the Common Stock on the date of grant.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
VALUE OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED REALIZED YEAR-END (#) FISCAL YEAR-END ($)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------------------------------- ------------------- ------------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
Joel S. Marcus....................... -- -- 46,667/93,333 510,420/1,020,830
James H. Richardson.................. -- -- 26,667/53,333 163,335/326,665
Peter J. Nelson...................... -- -- 20,000/40,000 218,750/437,500
Lynn A. Shapiro...................... -- -- 0/50,000 0/0
Steven A. Stone...................... -- -- 20,000/40,000 218,750/437,500
Vincent R. Ciruzzi................... -- -- 15,000/30,000 164,063/328,125
</TABLE>
- ------------------------
(1) The value of unexercised in-the-money options is calculated by multiplying
(A) the number of securities underlying such options by (B) the difference
between (i) the closing price of the Common Stock on the NYSE at December
31, 1998 and (ii) the option exercise price.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with each of Messrs. Marcus,
Richardson, Nelson and Ciruzzi, and a Severance Agreement with Ms. Shapiro. The
Company is currently renegotiating Mr. Stone's employment agreement. Mr. Marcus'
employment agreement, which was amended as of March 28, 1997, provides that he
will serve as the Company's Chief Executive Officer through December 31, 2000,
with a base salary of $235,000 per year, or such higher amount as may from time
to time be determined by the Company. Mr. Marcus' employment agreement also
provides for automatic one-year extensions until either Mr. Marcus or the
Company notifies the other that such party does not wish to extend the
agreement.
The employment agreements with each of Messrs. Richardson, Nelson and
Ciruzzi became effective on July 31, 1997, January 1, 1998 and April 20, 1998,
respectively. Each of the employment agreements provides for a term ending on
December 31, 1998, in each case with provision for automatic one-year extensions
until either the executive or the Company notifies the other that such party
does not wish to extend the agreement. Pursuant to their respective employment
agreements, Messrs. Richardson, Nelson and Ciruzzi are paid base salaries of
$225,000, $175,000 and $105,000 per year, respectively, or such higher amount as
may from time to time be determined by the Company. In addition, such agreements
provide for discretionary annual bonuses.
The employment agreements with each of Messrs. Marcus, Richardson, Nelson
and Ciruzzi also provide for standard employee benefits, including, without
limitation, participation in the Company's pension, welfare and stock incentive
plans, to the extent the Company maintains any such plans. In addition, the
employment agreements with each of Messrs. Marcus, Richardson and Nelson provide
that the Company will maintain term life insurance on the life of each executive
in the aggregate amount of $1 million.
Each of the employment agreements with Messrs. Marcus, Richardson and Nelson
provides that if the Company terminates the executive's employment without
"cause" or if the executive terminates his employment for "good reason" (each as
defined in the employment agreements), or, in the case of Mr. Marcus, in the
event of his death or permanent disability, then such executive shall be
entitled to receive a severance payment ("Severance Payment") equal to the sum
of his base salary otherwise payable during the remainder of the term of his
agreement (the "Severance Period"), plus, for each full year remaining in the
Severance Period, the average of the annual bonuses earned by the executive in
the two years immediately preceding the date of termination or, if there are
less than two years preceding such
10
<PAGE>
date, the immediately preceding annual bonus earned (the "Average Bonus"). Mr.
Marcus' employment agreement provides for a minimum Average Bonus equal to 50%
of his Base Salary. In the case of Messrs. Richardson and Nelson, the Severance
Payment is payable in a lump sum, and in the case of Mr. Marcus, it is payable
in monthly installments (except that portion of the Severance Payment that
represents the executive's bonus will be payable on the dates such amounts would
have been paid had such executive continued in the Company's employment).
If any of Messrs. Marcus, Richardson or Nelson terminates his employment for
"good reason" following a "change in control" (as defined in the respective
agreement), then such executive shall be entitled to receive a lump sum
Severance Payment equal to three times the sum of his base salary otherwise
payable during the remaining term of the agreement, plus the Average Bonus. In
addition, If Mr. Marcus' employment is terminated in connection with a
dissolution of the Corporation under certain specified circumstances, he is
entitled to receive a Severance Payment equal to his base salary then in effect,
plus his Average Bonus for a period of one year following the date of his
termination.
In the event that any such executive is entitled to any Severance Payment,
he will also be entitled to full and immediate vesting of all awards granted
under any of the Company's stock option or incentive compensation plans and, in
the case of Mr. Marcus, continued participation throughout the Severance Period
in all employee welfare and pension benefits plans. In addition, in the event
that amounts payable to any such executive are subject to the excise tax imposed
under Section 4999 of the Code, the Company will provide such executive with a
tax "gross up" payment in an amount sufficient to offset the effects of such
excise tax.
Mr. Ciruzzi's employment agreement provides that if he is terminated for any
reason other than "cause" (as defined in the agreement), he will receive a
Severance Payment, payable in monthly installments, equal to seven and one-half
months of his base salary. Ms. Shapiro's Severance Agreement, effective January
1, 1999, provides that if she is terminated by the Company other than for
"cause" (as defined in the agreement), she will receive a Severance Payment,
payable in semi-monthly installments, equal to nine months of her base salary;
PROVIDED that if such termination occurs within six months following a "change
in control" (as defined in the agreement), the Severance Payment will be paid in
a lump sum, and Ms. Shapiro will be entitled to full and immediate vesting of
any options to purchase shares of the Common Stock.
The agreements with each of Messrs. Marcus, Richardson, Nelson and Ciruzzi
and Ms. Shapiro also provide that during the term of employment, and the period,
if any, during which such executive is entitled to receive Severance Payments,
such executive will not engage in any activity competitive with the business of
the Company.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving the Company's compensation policies and the compensation
paid to executive officers. The following is the report of the Compensation
Committee to the Board of Directors describing compensation policies and
rationales applicable to the Company's executive officers with respect to
compensation paid to such executive officers for the 1998 Fiscal Year.
COMPENSATION PHILOSOPHY:
The Company's compensation program is designed to offer executive officers
competitive compensation based both on the Company's performance and on the
individual's contribution, performance and leadership. The Company's
compensation policies are intended to motivate, reward and retain highly
qualified executives for long-term strategic management and the enhancement of
stockholder value, to support a performance-oriented environment that rewards
achievement of specific internal Company goals, and to attract and retain
executives whose abilities are critical to the long-term success and
competitiveness of the Company.
The three main components in the Company's executive compensation program
are:
- Base Salary
- Incentive Bonus
- Stock Incentives
BASE SALARY. The salaries of Messrs. Marcus, Richardson, Nelson and Ciruzzi
are fixed pursuant to the terms of their respective employment agreements with
the Company. The salaries of the other executive officers, including Mr. Stone
and Ms. Shapiro, are determined annually by the Compensation Committee with
reference to surveys of salaries paid to executives with similar
responsibilities at comparable companies. The peer group for each executive
officer is composed of executives whose responsibilities are similar in scope
and content. In general, the Company seeks to set executive compensation levels
that are competitive with the average levels of peer group compensation.
INCENTIVE BONUS. Annual incentive bonuses for executive officers, if any,
are intended to reflect the Compensation Committee's belief that a portion of
the annual compensation of each executive officer should be contingent upon the
performance of the Company, as well as the individual contribution of each
officer.
STOCK INCENTIVES. From time to time, the Company uses stock options and
other incentives, as appropriate, as long-term incentives to reward and retain
executive officers. The Compensation Committee, which has responsibility for
making option grants under the 1997 Plan, believes that stock option grants
provide an incentive that focuses the executives' attention on the Company from
the perspective of an owner with an equity stake in the business. Because
options are typically granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant, the Company's stock will provide
value to the recipient only when the price of the Company's stock increases
above the exercise price, that is, only to the extent that stockholders as a
whole have benefitted. Generally, stock options granted to executive officers
vest ratably over a three-year period, and optionees must be employed by the
Company at the time of vesting in order to exercise the options.
EMPLOYMENT CONTRACTS
The Company offers employment contracts to key executives only when it is in
the best interest of the Company and its stockholders to attract and retain such
key executives and to ensure continuity and stability of management.
12
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVES
The Compensation Committee increased Mr. Marcus' salary in 1998 by 17%. The
increase reflected the Compensation Committee's assessment of his performance in
light of the Company's performance in the prior fiscal year and Mr. Marcus'
service to the Company. Salary increases for other senior executives effected
during 1998 ranged from 6.1% to 45.9% and were based on similar considerations,
including individual performance, position, tenure, experience, leadership and
competitive data in compensation surveys of comparable companies.
Mr. Marcus and the other Named Executive Officers in good standing may
receive a discretionary annual bonus as determined by the Compensation
Committee. In determining the amounts of such bonuses, the Compensation
Committee considers the individual performance of each executive and the
performance of the Company. As of the Record Date, the Committee had not yet
determined discretionary bonus amounts, if any, based upon fiscal 1998
performance.
SECTION 162(M) POLICY:
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
provides that publicly held companies may not deduct compensation paid to
certain of its top executive officers to the extent such compensation exceeds $1
million per officer in any year. However, pursuant to regulations issued by the
Treasury Department, certain limited exemptions to Section 162(m) apply with
respect to "qualified performance-based compensation" and to compensation paid
in certain circumstances by companies in the first few years following their
initial public offering of stock. Awards granted under the 1997 Plan constitute
qualified performance-based compensation, and the Company will continue to
monitor the applicability of Section 162(m) to its ongoing compensation
arrangements. Accordingly, the Company does not expect that amounts of
compensation paid to its executive officers will fail to be deductible on
account of Section 162(m).
THE COMPENSATION COMMITTEE REPORT WILL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THE SAME BY REFERENCE.
Respectfully submitted,
COMPENSATION COMMITTEE
Joseph Elmaleh
Viren Mehta
David M. Petrone
13
<PAGE>
PERFORMANCE GRAPH:
The following graph compares the annual cumulative total stockholder return
on the Common Stock from May 28, 1997, the first day the Common Stock was traded
on the NYSE, through December 31, 1998, to the cumulative total return on the
Standard & Poor's 500 Stock Index ("S&P 500 Index") and the Equity REIT Total
Return Index prepared by NAREIT ("NAREIT Index"). The graph assumes an
investment of $100 in the Common Stock and each of the indices on May 28, 1997,
and that all dividends were reinvested. The NAREIT Index for May 1997 was
prorated to adjust for the partial month. The return shown on the graph is not
necessarily indicative of future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ALEXANDRIA REAL ESTATE EQUITIES,
INC. S&P 500 INDEX NAREIT INDEX
<S> <C> <C> <C>
May 28, 1997 $100.0 $100.0 $100.0
December 31, 1997 $158.7 $115.7 $119.6
December 31, 1998 $163.6 $148.8 $98.7
</TABLE>
<TABLE>
<CAPTION>
INDEX MAY 28, 1997 DECEMBER 31, 1997 DECEMBER 31, 1998
- ------------------------------------------------------------- --------------- ------------------- -------------------
<S> <C> <C> <C>
Alexandria Real Estate Equities, Inc......................... 100 158.7 163.6
S&P 500 Index................................................ 100 115.7 148.8
NAREIT Index................................................. 100 119.6 98.7
</TABLE>
THE STOCK PRICE PERFORMANCE GRAPH WILL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THE SAME BY REFERENCE.
14
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each of the Company's
directors, (ii) each of the Named Executive Officers, (iii) all directors and
officers as a group, and (iv) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock. This
table is based on information provided to the Company or filed with the
Securities and Exchange Commission by the Company's directors, executive
officers and principal stockholders. Except as otherwise indicated, the Company
believes that the beneficial owners of the Common Stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT
- -------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Joel S. Marcus(2)......................................................... 130,367 *
James H. Richardson(3).................................................... 26,667 *
Peter J. Nelson(4)........................................................ 23,097 *
Lynn A. Shapiro(5)........................................................ 0 *
Steven A. Stone(6)........................................................ 38,099 *
Vincent R. Ciruzzi(7)..................................................... 19,199 *
Jerry M. Sudarsky(8)...................................................... 32,219 *
Joseph Elmaleh(9)......................................................... 17,393 *
Richard B. Jennings(10)................................................... 7,500 *
Viren Mehta(11)........................................................... 17,393 *
David M. Petrone(12)...................................................... 20,459 *
Anthony M. Solomon(13).................................................... 18,393 *
Alan G. Walton(14)........................................................ 7,500 *
Executive officers and directors as a group (13 persons)(15).............. 358,286 2.6
Health Science Properties Holding Corporation ("Holdings")(16)............ 1,765,923 12.9
FMR Corp.(17)............................................................. 1,381,100 10.1
Franklin Resources, Inc.(18).............................................. 793,454 5.8
Capital Growth Management Limited Partnership(19)......................... 682,400 5.0
PaineWebber Group Inc.(20)................................................ 987,344 7.2
</TABLE>
- ------------------------
* less than 1%.
(1) Unless otherwise indicated, the business address of each beneficial owner
is c/o Alexandria Real Estate Equities, Inc., 135 N. Los Robles Avenue,
Suite 250, Pasadena, CA 91101.
(2) Includes 83,700 shares held by the Joel and Barbara Marcus Family Trust, of
which Mr. Marcus is the trustee, and 46,667 shares subject to currently
exercisable stock options. Excludes 1,765,923 shares owned by Holdings,
which may be deemed to be beneficially owned by Mr. Marcus, and 93,333
shares subject to stock options that are not currently exercisable and will
not become exercisable within 60 days of March 1, 1999. Mr. Marcus
disclaims beneficial ownership of the shares of Common Stock owned by
Holdings.
(3) Includes 26,667 shares subject to currently exercisable stock options and
excludes 53,333 shares subject to stock options that are not currently
exercisable and will not become exercisable within 60 days of March 1,
1999.
15
<PAGE>
(4) Includes 20,000 shares subject to currently exercisable stock options and
excludes 40,000 shares subject to stock options that are not currently
exercisable and will not become exercisable within 60 days of March 1,
1999.
(5) Excludes 50,000 shares subject to stock options that are not currently
exercisable and will not become exercisable within 60 days of March 1,
1999.
(6) Includes 20,000 shares subject to currently exercisable stock options and
excludes 40,000 shares subject to stock options that are not currently
exercisable and will not become exercisable with 60 days of March 1, 1999.
(7) Includes 15,000 shares subject to currently exercisable stock options and
excludes 30,000 shares subject to stock options that are not currently
exercisable and will not become exercisable with 60 days of March 1, 1999.
(8) Includes 9,719 shares held by the Jerry M. and Mildred Sudarsky 1979
Revocable Trust, of which Mr. Sudarsky is the trustee, and 22,500 shares
subject to currently exercisable stock options. Excludes 1,765,923 shares
owned by Holdings, which may be deemed to be beneficially owned by Mr.
Sudarsky. Mr. Sudarsky disclaims beneficial ownership of the shares of
Common Stock owned by Holdings.
(9) Includes 12,500 shares subject to currently exercisable stock options.
Excludes 1,765,923 shares owned by Holdings, which may be deemed to be
beneficially owned by Mr. Elmaleh. Mr. Elmaleh disclaims beneficial
ownership of the shares of Common Stock owned by Holdings.
(10) Includes 7,500 shares subject to currently exercisable stock options.
(11) Includes 12,500 shares subject to currently exercisable stock options.
(12) Includes 33 shares held by Mr. Petrone's spouse, which may be deemed to be
beneficially owned by Mr. Petrone, and 7,500 shares subject to currently
exercisable stock options.
(13) Includes 12,500 shares subject to currently exercisable stock options.
(14) Includes 7,500 shares subject to currently exercisable stock options.
(15) See notes (2) through (14) above.
(16) Each of Messrs. Sudarsky, Marcus and Elmaleh is a member of the board of
directors and is a stockholder of Holdings. As a result, each such
individual may be deemed to be the beneficial owner of the shares of
Common Stock owned by Holdings.
(17) Share amount as reported on Schedule 13G/A filed with the Securities and
Exchange Commission on February 12, 1999. Address: 82 Devonshire Street,
Boston, Massachusetts, 02109. According to such Schedule 13G/A, FMR Corp.
has sole voting power with respect to 209,300 shares and sole dispositive
power with respect to all 1,381,100 shares.
(18) Share amount as reported on Schedule 13G filed with the Securities and
Exchange Commission on January 26, 1999. Address: 777 Mariners Island
Boulevard, San Mateo, California, 94404. According to such Schedule 13G,
Franklin Resources, Inc. does not have any voting or dispositive power
with respect to any of the shares and disclaims any economic interest or
beneficial ownership in any of the shares.
(19) Share amount as reported on Schedule 13G filed with the Securities and
Exchange Commission on February 8, 1999. Address: One International Place,
Boston, Massachusetts, 02110. According to such Schedule 13G, Capital
Growth Management Limited Partnership has sole voting power and shared
dispositive power with respect to all of the shares and disclaims any
beneficial interest in the shares.
16
<PAGE>
(20) Share amount as reported on Schedule 13G filed with the Securities and
Exchange Commission on February 16, 1999. Address: 1285 Avenue of the
Americas, New York, New York, 10019-6028. According to such Schedule 13G,
PaineWebber Group Inc. has sole voting power with respect to 971,897
shares and shared dispositive power with respect to all 987,344 shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Company's Common Stock, to file reports of beneficial ownership of
the Company's Common Stock and changes in such ownership with the Securities and
Exchange Commission, the NYSE and the Company. Specific due dates for these
reports have been established, and the Company is required to disclose in this
Proxy Statement any failure to file these reports on a timely basis. Based
solely on its review of the copies of these reports received or written
representations from these reporting persons that no Forms 5 or other reports
were required for such persons, the Company believes that, during the 1998
Fiscal Year, all of such filing requirements under Section 16(a) were timely
met, except that filings of one report by each of Ms. Shapiro and Mr. Jennings
on Form 3, each relating to a single transaction, were late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Holdings has entered into a Reimbursement Agreement with the Company
pursuant to which Holdings has agreed to reimburse the Company for certain costs
and expenses incurred by it on behalf of Holdings. During 1998, Holdings paid
the Company $270,000 pursuant to such agreement.
In March 1999 the Company and Holdings completed a transaction pursuant to
which Holdings delivered to the Company the 1,765,923 shares of Common Stock
owned by Holdings in exchange for (i) the assumption by the Company of
Holdings's obligations under a loan in the principal amount of approximately
$3.1 million and (ii) the issuance to Holdings of 1,620,527 new shares of Common
Stock (which was computed by subtracting from the shares of Common Stock owned
by Holdings a 2% transaction discount and a number of shares with an aggregate
market value equal to the amount of the $3.1 million loan). In connection with
this transaction, (i) a portion of the new shares will be held in an escrow
account for up to two years to indemnify the Company against certain claims,
(ii) stockholders of Holdings agreed to certain limitations on transfer of any
shares of the Common Stock received by them upon liquidation of Holdings and
(iii) the Holdings shareholders were granted certain registration rights by the
Company.
PROPOSAL NUMBER TWO--RATIFICATION OF
SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee has selected, and the Board of Directors has approved,
Ernst & Young LLP as the Company's independent auditors for the Company's fiscal
year ended December 31, 1999 (the "1999 Fiscal Year"). The Board of Directors
also has directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's consolidated financial statements since 1994.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Bylaws or otherwise.
However, the Board of Directors is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Board of Directors will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board of Directors, in its discretion, may direct the
17
<PAGE>
appointment of a different auditing firm at any time during the 1999 Fiscal Year
if the Board of Directors determines that such a change would be in the best
interests of the Company and its stockholders.
VOTE REQUIRED
The affirmative vote of a majority of all of the votes cast at the Annual
Meeting is required to ratify the selection of Ernst & Young LLP as the
Company's independent accountants for the 1999 Fiscal Year. Abstentions as to
this proposal will have no effect on the outcome of the vote. The ratification
of the Company's independent accountants is a routine matter on which a broker
or other nominee is empowered to vote. Accordingly, no broker non-votes will
result from this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NUMBER TWO.
STOCKHOLDER PROPOSALS
Subject to Securities and Exchange Commission regulations, proposals of
stockholders that are intended to be presented at the Company's 2000 Annual
Meeting of Stockholders must be received by the Company no later than November
17, 1999 in order to be included in the proxy statement and proxy relating to
that Annual Meeting.
By Order of the Board of Directors
[LOGO]
Peter J. Nelson
CHIEF FINANCIAL OFFICER, TREASURER AND
SECRETARY
Pasadena, California
March 16, 1999
18
<PAGE>
- Fold and Detach Here -
ALEXANDRIA REAL ESTATE EQUITIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Alexandria Real Estate Equities, Inc., a
Maryland corporation (the "Company"), hereby appoints Jerry M. Sudarsky and
Joel S. Marcus, and each of them, as proxies for the undersigned, with full
power of substitution in each of them, to attend the Annual Meeting of
Stockholders of the Company to be held on Thursday, April 15, 1999 at 12:00
p.m. local time, at the Hilton Pasadena, Monterey Room, 150 South Los Robles
Avenue, Pasadena, California 91101, and at any adjournment(s) or
postponement(s) thereof, to cast on behalf of the undersigned all votes that
the undersigned is entitled to cast at such meeting and otherwise to
represent the undersigned at the meeting, with the same effect as if the
undersigned were present. The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement
and revokes any proxy previously given with respect to such shares.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
- Fold and Detach Here -
[ ] PLEASE MARK YOUR
VOTES AS INDICATED
IN THIS EXAMPLE
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
WITHHOLD AS
FOR ALL TO ALL
NOMINEES NOMINEES
1. ELECTION OF [ ] [ ]
DIRECTORS
NOMINEES: Jerry M. Sudarsky
Joel S. Marcus
James H. Richardson
Joseph Elmaleh
Richard B. Jennings
Viren Mehta
David M. Petrone
Anthony M. Solomon
Alan G. Walton
FOR ALL NOMINEE(S) (Except as written below):
- -------------------------------------------------------------------------------
2. Ratification of the selection of Ernst & Young LLP to serve as Company's
independent accountants for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) or postponement(s) thereof and as to which
the undersigned hereby confers discretionary authority.
CHECK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN ACCORDANCE
WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION
IS MADE, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR"
THE FOREGOING PROPOSALS AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE
ANNUAL MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
_________________________ _________________________ Dated __________, 1999
Signature Signature if held jointly
IMPORTANT: Please sign exactly as your name appears hereon and date. If the
shares are held jointly, each holder should sign. When signing as an
attorney, executor, administrator, trustee, guardian or as an officer,
signing for a corporation or other entity, please give full title under
signature.
