<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
LaSalle Partners Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N.A.
- --------------------------------------------------------------------------------
(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)(4) 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:
-------------------------------------------------------------------------
Notes:
<PAGE>
LA SALLE PARTNERS
Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
----------------
The annual meeting of stockholders of LaSalle Partners Incorporated will be
held in the Indiana Room on Lower Level 1 of the Amoco Building, 200 East
Randolph Drive, Chicago, Illinois 60601, on Thursday, May 21, 1998, at one
o'clock p.m., Chicago time, for the following purposes:
1. To elect five Directors, four to serve until the 2001 annual meeting of
stockholders and until their successors are elected and qualify, and one
to serve until the 1999 annual meeting of stockholders and until his
successor is elected and qualifies;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998; and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 16, 1998 as
the record date for determining the stockholders entitled to receive notice of
and to vote at the annual meeting.
By Order of the Board of Directors
LOGO
William E. Sullivan
Secretary
Chicago, Illinois
March 31, 1998
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. STOCKHOLDERS
WHO DO NOT INTEND TO BE PRESENT AT THE MEETING IN PERSON ARE REQUESTED TO SIGN
AND DATE THE ENCLOSED PROXY AND TO RETURN IT IN THE ACCOMPANYING ENVELOPE IN
ORDER THAT THE NECESSARY QUORUM MAY BE ASSURED. ANY PROXY MAY BE REVOKED IN
THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE IT
HAS BEEN VOTED AT THE MEETING.
<PAGE>
LA SALLE PARTNERS
Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
----------------
March 31, 1998
Dear Stockholder:
I would like to invite you to attend our 1998 annual meeting of stockholders,
which will be held on Thursday, May 21, 1998, beginning at one o'clock p.m.,
Chicago time, in the Indiana Room on Lower Level 1 of the Amoco Building, 200
East Randolph Drive, Chicago, Illinois 60601.
The formal notice of the annual meeting and the proxy statement can be found
on the following pages. A copy of our 1997 annual report is enclosed for your
review. Also enclosed is a proxy card and a postage-paid return envelope.
To be sure that your shares will be voted at the meeting, please complete and
sign the enclosed proxy card and return it in the enclosed envelope as promptly
as possible. You are encouraged to specify your choices on the matters
indicated. However, it is not necessary to specify your choice on a matter if
you wish to vote in accordance with the recommendation of the Board of
Directors, in which event merely executing and returning the proxy card will be
sufficient.
I hope that you will be able to attend the annual meeting. If you do, you may
vote your shares in person even though you have returned a proxy.
LOGO
Stuart L. Scott
Chairman and Chief Executive Officer
<PAGE>
LA SALLE PARTNERS
Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors (the "Board") of LaSalle
Partners Incorporated, a Maryland corporation (the "Company"), for use at the
annual meeting of the Company's stockholders to be held on Thursday, May 21,
1998, in the Indiana Room on Lower Level 1 of the Amoco Building, 200 East
Randolph Drive, Chicago, Illinois 60601, at one o'clock p.m., Chicago time,
and any adjournments or postponements thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting.
The Company expects to first send this Proxy Statement and the enclosed form
of proxy to stockholders on or about March 31, 1998.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1997,
including financial statements audited by KPMG Peat Marwick LLP, independent
auditors, and their report thereon dated February 16, 1998, is being mailed
together with this Proxy Statement to each of the Company's stockholders of
record at the close of business on March 16, 1998 (the "Record Date"). If you
would like to obtain a copy of the Company's Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission, for the year ended December
31, 1997, you may do so by requesting a copy (which will be provided free of
charge) from LaSalle Partners Incorporated, Attention: Investor Relations
Department, 200 East Randolph Drive, Chicago, Illinois 60601, telephone: (312)
228-2430.
VOTING OF PROXIES
Only stockholders of record of the Company's common stock, $.01 par value
per share (the "Common Stock"), at the close of business on the Record Date
are entitled to notice of and to vote at the Annual Meeting. Each share of
Common Stock is entitled to one vote on all matters voted upon by stockholders
and is entitled to vote for as many persons as there are Directors to be
elected. There were 16,200,000 shares of Common Stock outstanding on the
Record Date.
Each valid proxy returned to the Company will be voted at the Annual Meeting
as indicated on the proxy or, if no indication is made with respect to a
proposal, in accordance with the recommendations of the Board set forth in
this Proxy Statement. The Company does not know of any matters to be presented
at the Annual Meeting other than the proposals referred to on the proxies and
described in this Proxy Statement. However, if any other matters are properly
presented at the Annual Meeting, the persons named on the enclosed form of
proxy intend to vote the shares represented by them in accordance with their
best judgment pursuant to the discretionary authority granted them in the
proxies.
<PAGE>
Any person submitting a proxy may revoke it at any time before it is
exercised by so notifying the Secretary of the Company in writing. In
addition, persons submitting proxies may elect to vote their shares in person
at the Annual Meeting, although mere attendance at the Annual Meeting will not
serve to revoke a proxy.
PROPOSAL 1
ELECTION OF DIRECTORS
Five Directors are to be elected at the Annual Meeting, which constitutes
all of the Class I Directors and one of the Class II Directors. The Class I
Directors will serve for three-year terms until the Company's annual meeting
of stockholders in 2001 and until their respective successors are elected and
qualify, or until their earlier death, resignation, retirement,
disqualification or removal. The Class II Director will serve a one-year term
until the Company's annual meeting of stockholders in 1999 and until his
successor is elected and qualifies, or until his earlier death, resignation,
retirement, disqualification or removal. The Class II Director, John R.
Walter, was initially elected a Director by the Board in September 1997 and,
pursuant to the Company's Articles of Incorporation, as amended, is required
to stand for election by the stockholders at the Annual Meeting. Directors
will be elected by a plurality of the votes cast at the Annual Meeting. There
is no cumulative voting for Directors. For purposes of the election of
Directors, abstentions will not be counted as votes cast and will have no
effect on the result of the vote, although they will count toward the presence
of a quorum.
Each valid proxy returned to the Company will be voted at the Annual Meeting
for the five nominees listed below, unless the proxy specifies otherwise. The
Board recommends that stockholders vote for the election of each of the five
nominees listed below. All of the nominees listed below are members of the
present Board. Messrs. Spoerri, Cummings and Esler have been Directors since
the Company's incorporation. Mr. Hartley-Leonard has been a Director since
July 22, 1997, the date of the closing of the Company's initial public
offering. Mr. Walter has been a Director since September 16, 1997.
Biographical information for each of the nominees is set forth under the
caption "Management."
Nominees
Robert C. Spoerri
Daniel W. Cummings
Charles K. Esler, Jr.
Darryl Hartley-Leonard
John R. Walter
If any nominee should unexpectedly become unavailable for service, proxies
will be voted for another person selected by the Board, unless the proxy
specifies otherwise.
2
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and executive officers of the Company. The Company currently has a
twelve member Board which includes three Directors who are not employed by the
Company and its subsidiaries. Each of the individuals named below as an
officer of the Company accepted that position upon formation of the Company,
except for Lizanne Galbreath who became an officer in April 1997 following the
acquisition by the Company of The Galbreath Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Stuart L. Scott........ 59 Chairman of the Board of Directors, Chief
Executive Officer and Director
Robert C. Spoerri...... 49 President, Chief Operating Officer and Director
William E. Sullivan.... 43 Executive Vice President, Chief Financial Officer,
Secretary and Director
Daniel W. Cummings..... 44 Co-President--LaSalle Advisors Capital Management,
Inc. and Director
Charles K. Esler, Jr. . 51 President and Chief Executive Officer--LaSalle
Partners Management Services, Inc. and Director
Lizanne Galbreath...... 40 Chairman--LaSalle Partners Management Services,
Inc. and Director
M.G. Rose.............. 58 President, Tenant Representation Division--LaSalle
Partners Corporate & Financial Services, Inc. and
Director
Lynn C. Thurber........ 51 Co-President--LaSalle Advisors Capital Management,
Inc. and Director
Earl E. Webb........... 41 Managing Director, Investment Banking Division--
LaSalle Partners Corporate & Financial Services,
Inc. and Director
Darryl Hartley-Leonard. 52 Director
Thomas C. Theobald..... 60 Director
John R. Walter......... 51 Director
</TABLE>
The following is a biographical summary of the experience of the Directors
and executive officers of the Company.
Stuart L. Scott. Mr. Scott has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since its incorporation, and was Chief
Executive Officer and Chairman of the Management Committee of LaSalle Partners
Limited Partnership and LaSalle Partners Management Limited Partnership (the
"Predecessor Partnerships") from December 1992 until 1997. Prior to December
1992, Mr. Scott was President of the Predecessor Partnerships for more than 15
years and Co-Chairman of the Management Committee from January 1990 to
December 1992. Mr. Scott originally joined the Company in 1973. He is a member
of the board of directors of Hartmarx Corporation, a clothing manufacturing
company. He holds a B.A. from Hamilton College and a J.D. from Northwestern
University.
Robert C. Spoerri. Mr. Spoerri has been President, Chief Operating Officer
and a Director of the Company since its incorporation, and was Chief Operating
Officer and Vice-Chairman of the Management Committee of the Predecessor
Partnerships from January 1994 until 1997. Mr. Spoerri was a Co-Director of
the Asset Management Group of the Predecessor Partnerships from January 1990
to December 1993 and the Director of the Property Management and Leasing Group
of the Predecessor Partnerships from January 1980 to December 1989. Mr.
Spoerri originally joined the Company in 1977. He holds a B.S. from Indiana
University and an M.B.A. from Harvard University.
William E. Sullivan. Mr. Sullivan has been Executive Vice President, Chief
Financial Officer, Secretary and a Director of the Company since its
incorporation, and was Executive Vice President and Chief Financial Officer of
the Predecessor Partnerships beginning in February 1997. From September 1995
to February 1997, Mr. Sullivan was a Managing Director of the Special Projects
Group of the Predecessor Partnerships. From January 1992 to September 1995,
Mr. Sullivan was a Senior Vice President of the Special Projects Group. Mr.
Sullivan originally joined the Company in 1984. He holds a B.S.B.A. from
Georgetown University and an M.M. from Northwestern University.
3
<PAGE>
Daniel W. Cummings. Mr. Cummings has been a Director of the Company since
its incorporation, and a Co-President of LaSalle Advisors Capital Management,
Inc., an operating subsidiary of the Company, since April 1997. Mr. Cummings
was a Managing Director and Co-President of LaSalle Advisors Limited
Partnership, a subsidiary of one of the Predecessor Partnerships, from
November 1994 through December 1997. From January 1992 to November 1994, Mr.
Cummings was a Managing Director-Portfolio Management of LaSalle Advisors
Limited Partnership. Mr. Cummings originally joined the Company in 1979. He
holds a B.A. from Dartmouth College and an M.B.A. from the University of
Chicago.
Charles K. Esler, Jr. Mr. Esler has been a Director of the Company since its
incorporation, and President and Chief Executive Officer of LaSalle Partners
Management Services, Inc., an operating subsidiary of the Company, since April
1997. From 1992 through 1997, Mr. Esler served as President of LaSalle
Partners Management Limited Partnership, one of the Predecessor Partnerships.
Mr. Esler originally joined the Company in 1979. He holds a B.S.M.E. from the
University of Michigan and an M.B.A. from Northwestern University.
Lizanne Galbreath. Ms. Galbreath has been Chairman of LaSalle Partners
Management Services, Inc. and a Director of the Company since April 1997, when
The Galbreath Company ("Galbreath") was merged with the Company. Prior to the
merger, Ms. Galbreath was Chairman and Chief Executive Officer of Galbreath
from August 1995 to April 1997. From June 1993 to August 1995, Ms. Galbreath
served as Vice-Chairman of Galbreath, and from June 1992 to May 1993, Ms.
Galbreath was Senior Managing Director in charge of national accounts. Ms.
Galbreath originally joined Galbreath in 1984. Ms. Galbreath holds a B.A. from
Dartmouth College and an M.B.A. from the University of Pennsylvania.
M.G. Rose. Mr. Rose has been a Director of the Company since its
incorporation, and President, Tenant Representation Division of LaSalle
Partners Corporate & Financial Services, Inc., an operating subsidiary of the
Company, since April 1997. Mr. Rose was a Managing Director and President of
the Tenant Representation Group of the Predecessor Partnerships from September
1983 through December 1997. He originally joined the Company in 1978. Mr. Rose
holds a mechanical engineering degree from the University of Cincinnati.
Lynn C. Thurber. Ms. Thurber has been a Director of the Company since its
incorporation, and a Co-President of LaSalle Advisors Capital Management,
Inc., an operating subsidiary of the Company, since April 1997. Ms. Thurber
was a Managing Director and Co-President of LaSalle Advisors Limited
Partnership, a subsidiary of one of the Predecessor Partnerships, from
November 1994 until 1997. Ms. Thurber was Chief Executive Officer of Alex.
Brown Kleinwort Benson Realty Advisors Corporation ("ABKB") from May 1993 to
November 1994, at which time its assets were acquired by the Company. From
July 1992 to May 1993, Ms. Thurber served as Chief Operating Officer and
Director of Acquisitions of ABKB. Prior to that time, Ms. Thurber was a
Principal at Morgan Stanley & Co. Incorporated. She holds an A.B. from
Wellesley College and an M.B.A. from Harvard University.
Earl E. Webb. Mr. Webb has been a Director of the Company since its
incorporation, and Managing Director, Investment Banking Division of LaSalle
Partners Corporate & Financial Services, Inc., an operating subsidiary of the
Company, since April 1997. Mr. Webb was Managing Director of the Investment
Banking Division of the Predecessor Partnerships from January 1995 until 1997.
From January 1992 to January 1995, Mr. Webb was a Senior Vice-President of the
Predecessor Partnerships. Mr. Webb originally joined the Company in 1985. Mr.
Webb is a member of the board of directors of Players International Inc., a
multi-jurisdictional gaming company. He holds a B.S. from the University of
Virginia and an M.M. from Northwestern University.
Darryl Hartley-Leonard. Mr. Hartley-Leonard has been a Director of the
Company since the closing of the initial public offering in July 1997. Mr.
Hartley-Leonard is a private investor. He is Chairman and CEO of PGI, an event
production agency, Chairman and Partner of Metropolitan Hotel Corporation, a
hotel company in the long-term stay/suite hotel business directed at the
upscale market, a founding partner of H-LK Partners, a hotel development and
management company, and Chairman and Partner of Cohabaco Cigar Co., a
nationwide cigar distribution company. Mr. Hartley-Leonard retired as Chairman
of the Board of Hyatt Hotels Corporation ("Hyatt") after a 32 year career with
Hyatt and its diversified affiliates. From 1994 to 1996 he served as
4
<PAGE>
Chairman of the Board of Directors of Hyatt and from 1986 to 1994, he served
as Chief Executive Officer/Chief Operating Officer of Hyatt. Mr. Hartley-
Leonard also serves on the boards of directors of Brookdale Living
Communities, Inc., a provider of senior and assisted living services, The
United States Committee for UNICEF and Evanston Northwestern Healthcare. Mr.
Hartley-Leonard holds a B.A. degree from Blackpool Lancashire College of
Lancaster University and an honorary doctorate of business administration from
Johnson and Wales University.
Thomas C. Theobald. Mr. Theobald has been a Director of the Company since
the closing of the initial public offering in July 1997. Mr. Theobald has
served as a Managing Director at William Blair Capital Partners since
September 1994. From July 1987 to August 1994, Mr. Theobald was Chairman of
Continental Bank Corporation. He currently serves on the boards of directors
of Xerox Corporation, a manufacturer of document processing products and
systems, Anixter International, a supplier of electrical apparatus and
equipment, Stein Roe Funds, an income trust fund and investment trust fund
manager, LaSalle U.S. Realty Income & Growth Fund, Inc., a REIT, and US
Timberlands LLC, an owner of forest lands. He is also a trustee of Mutual of
New York (MONY), a life insurance company. Mr. Theobald holds an A.B. degree
from the College of the Holy Cross and an M.B.A. degree from Harvard
University.
John R. Walter. Mr. Walter has been a Director of the Company since
September 1997. Mr. Walter is the retired President and Chief Operating
Officer of AT&T Corporation (November 1996 through July 1997). Prior thereto,
Mr. Walter worked for R.R. Donnelley & Sons Company for 27 years, serving as
Chairman and Chief Executive Officer from 1989 to October 1996 and as
President from 1987 to 1991. He serves as a director of Abbott Laboratories,
Dayton Hudson Corporation and Deere & Company. Mr. Walter is a member of the
International Advisory Council, Singapore Economic Development Board, and a
trustee of the Orchestral Association and Northwestern University. He holds a
B.S. from Miami University of Ohio.
The Company's Articles of Incorporation, as amended, provide for the Board
to be divided into three classes, as nearly equal in number as possible,
serving staggered terms. The Board currently consists of four Class I
Directors (Messrs. Spoerri, Cummings, Esler and Hartley-Leonard), four Class
II Directors (Messrs. Sullivan, Webb and Walter and Ms. Galbreath) and four
Class III Directors (Messrs. Scott, Rose and Theobald and Ms. Thurber). At
each annual meeting of stockholders, a class of Directors is elected for a
three-year term to succeed the Directors of the same class whose terms are
then expiring. The terms of the initial Class I Directors, Class II Directors
and Class III Directors will expire upon the election and qualification of
successor Directors at the annual meetings of stockholders held during the
calendar years 1998, 1999 and 2000, respectively. Because Mr. Walter was
initially elected a Director by the Board, the Company's Articles of
Incorporation, as amended, require that he stand for election by the
stockholders at the 1998 annual meeting.
The agreement pursuant to which the Company acquired The Galbreath Company
provided Galbreath Holdings, LLC the right to nominate one member to the Board
of Directors of the Company, as long as Galbreath Holdings, LLC was the
beneficial owner of at least ten percent of the Company's outstanding Common
Stock. Lizanne Galbreath was the initial nominee of Galbreath Holdings, LLC.
BOARD COMMITTEES AND MEETINGS
The Company has standing Audit and Compensation Committees of the Board. The
Company does not have a standing nominating committee.
Audit Committee. The Board has established an Audit Committee. Each member
of the Audit Committee is required to be independent of management of the
Company and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of independent judgment. Messrs. Hartley-
Leonard and Walter constitute the Audit Committee. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and results of the
5
<PAGE>
audit engagement, approves other professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, including consideration of the range of audit and non-
audit fees paid to the independent public accountants, and reviews the
adequacy of the Company's internal accounting controls. Because of the timing
of the Company's initial public offering, the Audit Committee did not meet in
1997.
Compensation Committee. The Board has established a Compensation Committee.
Messrs. Theobald and Walter constitute the Compensation Committee, the
composition of which must satisfy the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Compensation Committee reviews and approves the compensation of the Company's
executive officers, administers the Company's 1997 Stock Award and Incentive
Plan, Employee Stock Purchase Plan and Stock Compensation Program and oversees
the Company's compensation programs generally. See "Executive Compensation"
below. The Executive Compensation Committee met once in 1997.
Three meetings of the full Board were held in 1997. Each Director who held
such position in 1997 attended at least 75% in the aggregate of all meetings
of the Board and any committee on which such Director served (during the
period that he served).
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
compensations of Mr. Stuart L. Scott and the other four most highly
compensated executive officers of the Company (the "Named Executive Officers")
during 1997 and 1996. The table includes compensation from all sources for
services rendered to the Company and its subsidiaries during 1997 and 1996.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ --------------------- -------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK UNDERLYING LTIP COMPENSATION
POSITION YEAR SALARY BONUS(2) (3) AWARD(S) OPTIONS PAYOUTS (4)
- ------------------ ---- ------ -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stuart L. Scott 1997 $336,000 $754,589 $11,854 -- 75,000 -- $ 2,675
Chairman of the Board 1996 $336,000 $464,000 $11,653 -- -- -- $ 2,550
of Directors and Chief
Executive Officer
Robert C. Spoerri 1997 $320,000 $702,408 $10,110 -- 75,000 -- $ 2,675
President and Chief 1996 $320,000 $442,000 $11,284 -- -- -- $ 2,550
Operating Officer
Daniel W. Cummings 1997 $260,000 $584,516 $ 8,862 -- 37,500 -- $ 2,675
Co-President--LaSalle 1996 $260,000 $352,000 $ 9,897 -- -- -- $ 2,550
Advisors Capital
Management, Inc.
Lynn C. Thurber 1997 $260,000 $584,516 $ 9,742 -- 37,500 -- $ 2,675
Co-President--LaSalle 1996 $260,000 $352,000 $10,658 -- -- -- $234,842(5)
Advisors Capital
Management, Inc.
M.G. Rose 1997 $270,000 $557,280 $ 7,230 -- 37,500 -- $ 2,200
President, Tenant 1996 $270,000 $541,500 $10,128 -- -- -- $ 2,200
Representation Divi-
sion--
LaSalle Partners Corpo-
rate
& Financial Services,
Inc.
</TABLE>
- --------
6
<PAGE>
(1) Table includes compensation by the Company beginning on July 22, 1997 and
by the Predecessor Partnerships for the indicated periods prior thereto.
(2) Pursuant to the terms of the Stock Compensation Program (as defined and
described below under the caption "Stock Compensation Program"), certain
portions of the Named Executive Officers' bonuses were not paid to them in
cash but rather were credited to their respective accounts under the Stock
Compensation Program. Such credited amounts could be used, at the election
of the officer, to invest in shares of Common Stock on the terms set forth
in the Stock Compensation Program or for other applications made available
by the administrator. Mr. Scott used $146,139, the entire amount credited
to his account under the Stock Compensation Program, to invest in shares
of Common Stock pursuant to the Stock Compensation Program, while the
other Named Executive Officers used the credited amounts to repay
indebtedness to the Employee Partnerships (as defined and described below
under the caption "Stock Compensation Program"). See "Stock Compensation
Program" below.
(3) The amounts in this column with respect to 1997 reflect "tax gross up"
payments made with respect to certain compensation.
(4) The amounts in this column with respect to 1997 reflect premiums paid on
life insurance policies ($300 for each Named Executive Officer) and
contributions by the Company to the Company's Retirement Plan (as defined
and described below under the caption "Retirement Plan") ($2,375 for each
Named Executive Officer other than Mr. Rose, for whom $1,900 was
contributed).
(5) Includes $232,292 with respect to certain relocation expenses.
OPTION GRANTS
The following table sets forth certain information with respect to options
granted under the 1997 Stock Award and Incentive Plan (the "1997 Stock
Incentive Plan") to each of the Named Executive Officers during 1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE(2) 5% 10%
- ---- ---------- ------------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stuart L. Scott......... 75,000 10.3% $23.00 7/16/07 $ 1,084,843 $ 2,749,206
Robert C. Spoerri....... 75,000 10.3% $23.00 7/16/07 $ 1,084,843 $ 2,749,206
Daniel W. Cummings...... 37,500 5.2% $23.00 7/16/07 $ 542,422 $ 1,374,603
Lynn C. Thurber......... 37,500 5.2% $23.00 7/16/07 $ 542,422 $ 1,374,603
M.G. Rose............... 37,500 5.2% $23.00 7/16/07 $ 542,422 $ 1,374,603
</TABLE>
- --------
(1) These options, granted in connection with the initial public offering,
vest in six years. These options are subject to earlier vesting on the
following schedule if, on any day after the first anniversary of the date
of grant, the average closing price of the Company's Common Stock on the
New York Stock Exchange for thirty consecutive days exceeds certain
targeted trading prices: vesting with respect to one-fourth of the shares
if the average stock price exceeds the exercise price by 20%; vesting with
respect to one-half of the shares if the average stock price exceeds the
exercise price by 40%; vesting with respect to three-fourths of the shares
if the average stock price exceeds the exercise price by 60%; and vesting
with respect to all of the shares if the average stock price exceeds the
exercise price by 100%. These options vest immediately upon a change in
control of the Company or death of the grantee.
(2) These options expire upon the termination of the grantees employment with
the Company and its subsidiaries for any reason other than retirement,
permanent total disability or death.
7
<PAGE>
(3) The values in these columns are based upon calculations assuming the 5%
and 10% annual stock price appreciation rate specified by the Securities
and Exchange Commission. These assumed rates are not intended to forecast
future price appreciation of the Common Stock. Actual gains, if any, on
stock option exercises are dependent upon the future market performance of
the Common Stock and the date on which the options are exercised.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning exercises of
options during 1997, and the year-end value of options owned, by each of the
Named Executive Officers.
AGGREGATED OPTION EXERCISES IN 1997 AND
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR- THE-MONEY OPTIONS AT
SHARES END FISCAL YEAR-END(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stuart L. Scott......... -- -- -- 75,000 -- $946,875
Robert C. Spoerri....... -- -- -- 75,000 -- $946,875
Daniel W. Cummings...... -- -- -- 37,500 -- $473,438
Lynn C. Thurber......... -- -- -- 37,500 -- $473,438
M.G. Rose............... -- -- -- 37,500 -- $473,438
</TABLE>
- --------
(1) The price of the Common Stock at the close of trading on the New York
Stock Exchange on December 31, 1997 was $35.625 per share.
INCENTIVE COMPENSATION
Professional and management employees, including executive officers, receive
a portion of their annual compensation in the form of incentive compensation
(i.e., a bonus). Such employees are assigned a target bonus, the payment of
which is based upon an evaluation of performance against specific objective
and subjective standards which vary from employee to employee. Performance
against these standards may lead to receiving more than, or less than, the
target bonus. Additionally, bonus payments may vary in a year when the
Company's results are above or below the year's business plan. Further
information regarding the executive officers' bonuses is set forth below under
the caption "Compensation Committee Report on Executive Compensation."
1997 STOCK AWARD AND INCENTIVE PLAN
The 1997 Stock Incentive Plan provides for the grant of various types of
stock-based compensation to eligible participants. The purpose of the 1997
Stock Incentive Plan is to promote the success of the Company's business in
the best interests of its stockholders by providing incentives to those
individuals who are or will be responsible for such success.
The 1997 Stock Incentive Plan is designed to comply with the requirements of
Regulation G (12 C.F.R. (S)207), the requirements for "performance-based
compensation" under Section 162(m) of the Code and the conditions for
exemption from the short-swing profit recovery rules under Rule 16b-3 of the
Exchange Act. The summary that follows is qualified in its entirety by
reference to the actual terms of the 1997 Stock Incentive Plan.
8
<PAGE>
The 1997 Stock Incentive Plan provides for the granting of stock options
("Options"), including "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Code and non-qualified stock options. Options granted
under the 1997 Stock Incentive Plan may be accompanied by stock appreciation
rights or limited stock appreciation rights, or both ("Rights"). Rights may
also be granted independently of Options. The 1997 Stock Incentive Plan also
provides for the granting of restricted stock and restricted stock units
("Restricted Awards"), dividend equivalents, performance shares and other
stock- and cash-based awards. Pursuant to the 1997 Stock Incentive Plan,
certain Options have been and will be granted to non-employee Directors, as
more fully described below under the caption "Director Compensation." The 1997
Stock Incentive Plan also permits the plan's administrator to make loans to
participants in connection with the grant of awards, on terms and conditions
determined solely by the Plan Administrator. Each award is evidenced by an
agreement (an "Award Agreement") setting forth the terms and conditions
applicable thereto.
The 1997 Stock Incentive Plan is administered by the Compensation Committee
of the Board (sometimes referred to herein as the "Plan Administrator"). Prior
to the initial public offering, the 1997 Stock Incentive Plan was administered
by the Board. Subject to the terms of the 1997 Stock Incentive Plan, the Plan
Administrator has the right to grant awards to eligible recipients and to
determine the terms and conditions of Award Agreements, including the vesting
schedule and exercise price of such awards. The plan provides that, unless
otherwise determined by the Plan Administrator, in the event of a change in
control of the Company (as defined in the 1997 Stock Incentive Plan) awards
under the plan will, among other things, become fully vested and valued as
provided in the plan.
The 2,215,000 shares reserved for issuance under the 1997 Stock Incentive
Plan may be authorized but unissued shares of Common Stock or shares which
have been or may be reacquired by the Company in the open market, in private
transactions or otherwise.
Discretionary grants of Options, Rights, Restricted Awards and dividend
equivalents, performance shares and loans in connection therewith may be made
to any Director (including non-employee Directors), employee or any
independent contractor of the Company or its direct and indirect subsidiaries
and affiliates who is determined by the Plan Administrator to be eligible for
participation in the 1997 Stock Incentive Plan, consistent with the purpose of
such plan; provided that ISOs may only be granted to employees of the Company
and its subsidiaries.
Options vest and become exercisable over the exercise period, at such times
and upon such conditions, including amount and manner of payment of the
exercise price, as the Plan Administrator determines and sets forth in the
Award Agreement. The Plan Administrator may accelerate the exercisability of
any outstanding Option at such time and under such circumstances as it deems
appropriate. Options that are not exercised within 10 years from the date of
grant, however, will expire without value. Options are exercisable during the
optionee's lifetime only by the optionee. The Award Agreements contain
provisions regarding the exercise of Options following termination of
employment with or service to the Company, including terminations due to the
death, disability or retirement of an award recipient, or upon a change in
control of the Company.
During 1997, the Named Executive Officers received Options as set forth in
the option grant table. See "Option Grants" above. Also, the Company's non-
employee Directors received Options in 1997 as described below under the
caption "Director Compensation."
EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "Stock Purchase Plan") is
intended to qualify under Section 423 of the Internal Revenue Code of 1986
(the "Code"). Purchases under the Stock Purchase Plan will occur at the end of
each offering period. The first six-month offering period began on January 1,
1998. Thereafter, each offering period will be a successive six-month period.
9
<PAGE>
The Stock Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions that may not exceed $21,250 per year. The purchase
price of Common Stock available under the Stock Purchase Plan is equal to 85%
of the fair market value of the Common Stock at the beginning or the end of a
purchase period, whichever is lower. Unless terminated sooner, the Stock
Purchase Plan will terminate 10 years from its effective date. The Board has
authority to amend or terminate the Stock Purchase Plan, provided no such
action may adversely affect the rights of any participant. This summary of the
Stock Purchase Plan is qualified in its entirety by reference to the actual
terms of the Stock Purchase Plan.
STOCK COMPENSATION PROGRAM
The Predecessor Partnerships maintained a compensation plan for employees
whose targeted annual compensation exceeded $100,000 (the "Old Plan
Employees"). Under such plan, Old Plan Employees were paid a percentage of
their compensation in the form of limited partnership interests in DEL-LPL
Limited Partnership and DEL-LPAML Limited Partnership (together, the "Employee
Partnerships"), the partnerships through which employees owned their interests
in the Predecessor Partnerships. The Employee Partnerships contributed their
interests in the Predecessor Partnerships to the Company in exchange for
shares of Common Stock immediately prior to the initial public offering. The
Company has adopted a stock compensation program (the "Stock Compensation
Program") designed to continue the equity participation emphasis of the
earlier plan and to facilitate compliance with the Company's stock ownership
guidelines. Under the Stock Compensation Program, each employee of the Company
whose targeted annual compensation equals or exceeds $100,000 (the "New Plan
Employees") must apply a specified percentage of his or her annual
compensation on a tax-deferred basis toward an investment in shares of Common
Stock or, at the election of the employee, for other applications made
available by the administrator. The only other alternatives available with
respect to 1997 compensation were to apply credited amounts under the program
to the exercise of rights to acquire additional interests in, or to repay
indebtedness to, the Employee Partnerships. If a New Plan Employee elects to
be credited with Common Stock, the total amount credited in Common Stock (the
"Allocation") will be increased by a percentage (the "Equity Enhancement")
sufficient to represent a 15% discount from the fair market value of Common
Stock. The number of shares credited in respect of the Allocation and the
Equity Enhancement will be based on the fair market value of Common Stock as
determined by the administrator of the Stock Compensation Program taking into
account the average of the closing prices of the Common Stock on the New York
Stock Exchange for a period of twenty consecutive trading days, with the last
of these trading days to occur not later than March 31 of the year following
the year for which the relevant compensation was earned. Shares credited to
New Plan Employees which are attributable to the Allocation will be fully
vested on the date of grant, and shares attributable to the Equity Enhancement
will vest on the third anniversary of the date the shares are credited under
the Stock Compensation Program. This summary of the Stock Compensation Program
is qualified in its entirety by reference to the actual terms of the Stock
Compensation Program.
EMPLOYEE STOCK OWNERSHIP GUIDELINES
The Company has adopted stock ownership guidelines for its executive
officers and key employees (the "Covered Employees"). These guidelines require
Covered Employees to maintain certain specified levels of stock ownership
based on a multiple of their annual compensation levels. Compliance with such
guidelines is being phased in over two, four or six years, depending on the
position of the Covered Employee. Failure to maintain such ownership will
disqualify the Covered Employee from participating in the Company's option
grant program.
RETIREMENT PLAN
The Company has adopted a retirement plan (the "Retirement Plan") for its
full-time employees who have been employed by the Company for at least a year.
The Retirement Plan is a qualified plan pursuant to Section 401(k) of the
Internal Revenue Code. Participants in the Retirement Plan may elect to
contribute a portion of their compensation to the Retirement Plan. Company
contributions under the Retirement Plan are made through
10
<PAGE>
a combination of matching of employee contributions (at a rate of twenty-five
cents for each dollar contributed by an employee) and annual contributions on
behalf of eligible employees. The Company's total contribution under the
Retirement Plan was approximately $1,652,000 in 1997. The Company's
contributions under the Retirement Plan in 1997 to the Named Executive
Officers were as follows: Mr. Scott, $2,375; Mr. Spoerri, $2,375; Mr.
Cummings, $2,375; Ms. Thurber, $2,375; and Mr. Rose, $1,900.
EMPLOYMENT AGREEMENT
In April 1997, the Company entered into an employment agreement with Ms.
Galbreath (the "Employment Agreement"). The term of the Employment Agreement
was for the period from April 22, 1997 to December 31, 1997. The Employment
Agreement provided for a base salary and target bonus for calendar year 1997
of $200,000 and $300,000, respectively, each to be pro-rated to reflect the
term of the agreement. Pursuant to the Employment Agreement, Ms. Galbreath's
bonus was determined by the Company based on criteria used to determine the
bonuses of other members of management of the Company. The agreement further
provides that, commencing January 1, 1998, Ms. Galbreath's employment with the
Company continued subject to mutual agreement of the Company and Ms. Galbreath
from time to time, provided that the Company shall be obligated to pay to Ms.
Galbreath a separation payment equal to six months of her base salary if her
employment is terminated prior to December 31, 1998 for reasons other than as
set forth in the Employment Agreement.
DIRECTOR COMPENSATION
Each non-employee Director receives an annual retainer of $25,000, plus
$1,000 for attendance at each meeting ($500 for special telephonic meetings)
of the Board, the Audit Committee or the Compensation Committee. Directors who
are also officers or employees of the Company are not paid any Directors'
fees. The Company reimburses all Directors for expenses incurred in attending
meetings.
In connection with the initial public offering, each non-employee Director
who became a Director upon the closing of the initial public offering (i.e.,
Messrs. Hartley-Leonard and Theobald) received an initial grant of options to
purchase 5,000 shares of Common Stock at an exercise price of $23.00 per
share, the initial public offering price. In connection with his election to
the Board in September 1997, Mr. Walter received an initial grant of options
to purchase 5,000 shares of Common Stock at an exercise price of $35.00 per
share, the fair market value on the date of grant. Each non-employee Director
elected to the Board for the first time thereafter will receive upon such
election an initial grant of options to purchase 5,000 shares of Common Stock
at fair market value on the date of grant. In addition, each non-employee
Director will receive an annual grant of options to purchase 1,000 shares for
each year during such Director's term. All of the foregoing options shall have
a 10 year term and shall vest over a 5 year period, with 20% becoming vested
on each anniversary of the date of grant. The foregoing grants of options are
made automatically under the 1997 Stock Incentive Plan. Each non-employee
Director may also elect, under the terms of the 1997 Stock Incentive Plan, to
receive, in lieu of the annual cash retainer, an option for a number of shares
such that the value of the option, based upon the Black-Scholes Option Pricing
Model, is equal to the amount of the annual retainer. Such stock options will
be granted on December 31 of the year in which the retainer is earned, have an
exercise price equal to fair market value on the date of grant and have an
exercise period ending 10 years after the date of grant.
In connection with their agreement to become Directors, the current non-
employee Directors were given an opportunity to purchase shares of Common
Stock of the Company from DEL/LaSalle Finance Company, L.L.C., which is wholly
owned by the Employee Partnerships. The three current non-employee Directors
each purchased 12,077 shares of Common Stock at a price of $20.70 per share.
Additionally, Mr. Theobald was given the opportunity to, and did, purchase
10,870 shares of Common Stock at a price of $23.00 per share. Mr. Theobald was
given this opportunity because, based upon his association with an NASD
affiliated entity, he was not allowed to purchase shares in the initial public
offering.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no Compensation Committee interlocks or insider participation on
the Compensation Committee. Certain executive officers have and will attend
meetings of the Compensation Committee in order to present information and
answer questions of the members of the Compensation Committee.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for the oversight of executive
compensation and the Company's compensation programs, including those with
respect to stock ownership. Prior to the Company's initial public offering,
the Management Committee of the Predecessor Partnerships established and
administered compensation and employee ownership programs, including those
which became applicable upon completion of the initial public offering.
The Company believes that its employee compensation system is unique in the
real estate industry. The system is designed to reward client relationship
building, teamwork and quality performance, as well as to foster employee
commitment and align employee and stockholder interests. Toward this end, the
Company compensates its professionals and managers with salary, bonus and
stock ownership programs, rather than on the commission basis which is typical
in the industry. The Company's traditional compensation philosophy continued
after the initial public offering with the continuation of existing programs,
the adaptation of existing programs to the public company context and the
introduction of new programs.
Annual Compensation. The executive officers, like all of the Company's
professionals and managers, are assigned target annual compensation consisting
of a salary and target bonus. In general, executive officer target bonuses
constitute 60% of target compensation. The executive officers' 1997 salary and
target bonuses were set by the Management Committee of the Predecessor
Partnerships prior to the initial public offering. The executive officers'
1998 target compensation has been set by the Compensation Committee. Salary
and target bonus levels for executive officers are set to provide compensation
levels which are sufficiently competitive to attract and retain high caliber
executives. The Company engaged a compensation consultant to prepare an
analysis of the Company's levels of executive compensation. In preparing such
analysis, the consultant compared the Company's compensation to compensation
by other companies, some of which are included in the industry peer group
index on the performance graph below. The companies used for this comparison
were all publicly traded (because of the availability of information) and were
chosen in an attempt to reflect the mix of the Company's businesses, although
no particular company's mix of businesses is identical to that of the Company.
Because of the limited number of publicly traded real estate services
companies, compensation comparisons are not limited to this group.
As set forth above under the caption "Incentive Compensation," the payment
of an employee's bonus is based upon an evaluation of performance against
specific objective and subjective standards which vary from employee to
employee. For the Chairman and Chief Executive Officer (Mr. Scott), the
President and Chief Operating Officer (Mr. Spoerri) and the Executive Vice
President and Chief Financial Officer (Mr. Sullivan), the standards upon which
they are measured fall into two principal categories, financial performance of
the Company and performance on individual accountabilities. The executive
officers who are heads of business units are also measured on these two
standards, as well as on the performance of their respective business units.
These categories were applied to 1997 target bonuses in the following
percentages established by the Management Committee of the Predecessor
Partnerships and approved by the Compensation Committee for 1997:
<TABLE>
<CAPTION>
FINANCIAL
PERFORMANCE PERFORMANCE ON BUSINESS
OF THE INDIVIDUAL UNIT
COMPANY ACCOUNTABILITIES PERFORMANCE
----------- ---------------- -----------
<S> <C> <C> <C>
Chairman and Chief Executive
Officer........................ 60% 40% n.a.
President and Chief Operating
Officer........................ 60% 40% n.a.
Executive Vice President and
Chief Financial Officer........ 40% 60% n.a.
Executive Officers who are
Business Unit Heads............ 20% 20% 60%
</TABLE>
Based upon an evaluation of performance, a multiplier is set for each category
and applied to the appropriate proportion of the target bonus. A multiplier of
1 is applied to the extent performance meets expectations, with a higher
multiplier to the extent performance exceeds expectations and a lower multiple
to the extent performance
12
<PAGE>
is below expectations. The multiplier with respect to financial performance of
the Company, which is the same for all executive officers, was 1.25 in 1997
based upon strong year to year growth in pro forma EBITDA per share.
Individual accountabilities vary from officer to officer and are intended to
concentrate on key matters upon which the particular officer is to focus in
addition to the general focus on Company and business unit performance. With
respect to business unit performance, multipliers are based upon actual
performance versus the plan for the unit.
Messrs. Scott and Spoerri review the performance of each of the other
executive officers and present their recommendations, along with a summary of
the basis for the recommendations, with respect to the multipliers, including
the financial performance of the Company multiplier, to the Compensation
Committee. The Compensation Committee reviews these recommendations and
approves multipliers as recommended or with such modifications as the
committee deems appropriate. With respect to the multipliers applied to the
target bonuses for Messrs. Scott and Spoerri, the Compensation Committee is
presented with information regarding their performance with respect to each of
the relevant matters involved in their respective individual accountabilities.
Stock Ownership Guidelines and Stock Plans and Programs. As described above
under the caption "Employee Stock Ownership Guidelines," the Company has
adopted stock ownership guidelines with respect to Covered Employees,
including the executive officers. The guidelines are intended to encourage
levels of ownership by key employees which properly align their interests with
those of the Company's stockholders. For the Chairman and Chief Executive
Officer and the President and Chief Operating Officer, the guidelines specify
ownership of stock with a value not less than five times annual compensation,
with 50% achievement and full achievement called for one year and two years,
respectively, from the date of assuming such positions. For the other
executive officers, the guidelines specify ownership of stock with a value not
less than three times annual compensation, with 50% achievement and full
achievement called for two years and four years, respectively, from the date
of assuming such position.
The executive officers are eligible to receive Options and other awards
under the 1997 Stock Incentive Plan. In connection with the initial public
offering, the executive officers were awarded Options with exercise prices
equal to $23.00 per share, the initial public offering price, and the terms
described above under the caption "Option Grants." Ongoing awards under the
1997 Stock Incentive Plan are expected to be made annually to the extent the
Company's financial performance is determined to warrant such awards.
Additionally, awards may be made to new employees as an incentive to join the
Company and to other recipients in special situations. The executive officers
will not be eligible to receive further awards of Options until 1999.
The Employee Purchase Plan and Stock Compensation Program described above
under the captions "Employee Stock Purchase Plan" and "Stock Compensation
Program" also provide executive officers, as well as other employees, a means
for accumulating the Company's Common Stock. The Stock Purchase Plan provides
a means to purchase stock at a 15% discount through regular payroll
deductions. The Stock Compensation Program, which applies to all employees
with targeted annual compensation equal to or in excess of $100,000, requires
that a portion of such employees' annual compensation be used either to
purchase Common Stock (with the enhancement described above under the caption
"Stock Compensation Program") or for other alternatives made available by the
administrator.
Compensation of Chief Executive Officer. As with all the executive officers,
Mr. Scott's 1997 target compensation was established by the Management
Committee of the Predecessor Partnerships prior to the initial public
offering. The 1.25 multiplier described above was applied to the 60% of Mr.
Scott's target bonus linked to the financial performance of the Company. With
respect to the 40% of Mr. Scott's target bonus linked to performance on
individual accountabilities, the Compensation Committee approved a multiplier
of 1.87 based upon, among other things, his leadership with respect to the
continued global expansion of the Company and the successful completion of the
initial public offering, his role in the growth of the Management Services
business through the acquisition of Galbreath and his responsibility for
maintaining the Company's focus on its principles and long-term objectives.
Mr. Scott was awarded Options in connection with the initial public offering
as described above under the caption "Option Grants."
13
<PAGE>
Certain Tax Matters. Tax laws limit the deduction a publicly-held
corporation is allowed for compensation paid to the chief executive officer
and to the four most highly compensated executive officers other than the
chief executive officer. Generally, amounts paid in excess of $1 million to a
covered executive, other than performance compensation, cannot be deducted.
The Company will consider ways to maximize the deductibility of executive
compensation but reserves the right to compensate executive officers in a
manner commensurate with performance and the competitive environment for
executive talent. As a result, some portion of executive compensation paid to
an executive officer whose compensation is subject to the deduction limits
described above may not be deductible by the Company in the future.
Compensation Committee
Thomas C. Theobald
John R. Walter
PERFORMANCE GRAPH
The following line graph compares the Company's cumulative stockholder
return on its Common Stock to the cumulative total return of the Standard &
Poor's 500 Stock Index ("S & P 500 Index") and an industry peer group index
("Custom Industry Index") from July 17, 1997, the first day of trading of the
Company's Common Stock on the New York Stock Exchange, to December 31, 1997.
The Custom Industry Index is composed of the following other publicly traded
real estate services companies: CB Commercial Real Estate Services Group,
Inc., Grubb & Ellis Company and Insignia Financial Group, Inc. The graph
assumes the investment of $100 in the Company and each of the indices on July
17, 1997 and the reinvestment of all dividends. The return shown on the graph
is not necessarily indicative of future performance.
LOGO
MONTH-END PERFORMANCE
<TABLE>
<CAPTION>
17-July-
97 July-97 Aug-97 Sep-97 Oct-97 Nov-97 Dec-97
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LAP $100 $130 $129 $152 $159 $151 $155
S&P 500 $100 $102 $ 96 $102 $ 98 $103 $104
Custom Industry Index $100 $102 $103 $106 $116 $103 $111
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Scott, Spoerri, Rose, Esler and Cummings, as well as an entity
affiliated with Mr. Scott, are limited partners of Diverse Real Estate
Holdings Limited Partnership ("Diverse"). An entity affiliated with Mr.
Spoerri
14
<PAGE>
is a general partner of Diverse. Diverse has an ownership interest in and
operates investment assets, primarily as the managing general partner of real
estate development ventures. Prior to January 1, 1992, the Company earned fees
for providing development advisory services to Diverse as well as fees for the
provision of administrative services. Effective January 1, 1992, the Company
discontinued charging fees to Diverse for these services. At the end of 1997,
the total receivable due from Diverse in connection with such fees and
interest thereon was $1.7 million. In 1992, Diverse began the process of
discontinuing its operations and disposing of its assets. In 1997, Diverse
made a payment of $.8 million to reduce the receivable due to the Company.
Messrs. Scott, Spoerri, Rose, Esler and Cummings directly hold an
approximately 13.4%, 2.5%, 2.8%, .3% and .4% partnership interest in Diverse,
respectively. In addition, the Stuart Scott Trust and Lakewood Equities,
entities affiliated with Messrs. Scott and Spoerri, have a 6.4% and .8%
partnership interest in Diverse, respectively. Diverse did not make
distributions to its partners in 1997.
In addition, the Company provides property management and leasing services
to properties in which Diverse has an ownership interest. At the end of 1997,
the total receivable due from these properties was $.1 million. The Company
earned $.3 million in fees from these properties in 1997. The Company believes
that the services provided to properties in which Diverse has an ownership
interest are on terms no more favorable than those given to unaffiliated
persons.
The Company continues to provide certain administrative services to the
Employee Partnerships for which the Company is not reimbursed. The Company
estimates the value of the services provided to the Employee Partnerships in
1997 at approximately $.3 million.
Through an affiliated entity, Mr. Scott beneficially owns a 4.0% interest in
the Florida Business Environment Company, Inc. ("FBEC"). FBEC is the sole
member of FOPC, L.L.C., the general partner of Florida Office Property
Company, L.P. (the "Florida Fund"), a fund organized by the Company to invest
in real estate in Florida. Mr. Scott's interest in FBEC provides him a 2.7%
indirect interest in the Florida Fund. Mr. Scott is also a director and the
president of FBEC. Since December 1996, the Company has provided and continues
to provide investment management services to the Florida Fund. In 1997, the
Company earned advisory and acquisition fees of $.7 million from the Florida
Fund. The Company believes that the services provided to the Florida Fund are
on terms no more favorable to the fund than those available to unaffiliated
persons.
The Company provides property management and leasing and investment
management services to The Dai-ichi Mutual Life Insurance Company, a
significant beneficial owner (indirectly through various entities) of Common
Stock of the Company, and its affiliates ("Dai-ichi"). The Company earned
$13.3 million in fees from Dai-ichi in 1997 with respect to such services. At
the end of 1997, the Company had receivables of $2.0 million due from Dai-ichi
with respect to such services. The Company believes that the services provided
to Dai-ichi and its affiliates are on terms no more favorable to Dai-ichi than
those available to unaffiliated persons. Prior to the initial public offering,
the Company had outstanding under certain notes (the "Dai-ichi Notes") $37.2
million of subordinated debt owed to Dai-ichi, which was repaid out of the net
proceeds to the Company from the initial public offering. The largest
aggregate indebtedness outstanding under the Dai-ichi Notes during 1997 was
$37.2 million.
In 1997, approximately $2.3 million of the revenues generated by the Company
were derived from real estate properties that were owned, in part, by entities
that Ms. Galbreath and the members of her immediate family control (the
"Galbreath Affiliates"). At the end of 1997, the Company had receivables of
$.6 million due from the Galbreath Affiliates. The Company believes that the
services provided to the Galbreath Affiliates are on terms no more favorable
to the Galbreath Affiliates than those available to unaffiliated persons.
In connection with the transactions pursuant to which the interests in the
Predecessor Partnerships were contributed to the Company and the acquisition
of The Galbreath Company, the Company granted certain registration rights to
certain Dai-ichi affiliates, the Employee Partnerships and Galbreath Holdings,
LLC with respect to the shares of Common Stock issued to them in exchange for
such contributions.
15
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information concerning the beneficial
ownership of the Common Stock, which are the only outstanding voting
securities and equity securities of the Company, as of February 27, 1998
(except where otherwise noted) by: (i) each Director of the Company; (ii) each
of the Named Executive Officers; (iii) the Directors and executive officers of
the Company as a group; and (iv) each person who is known to the Company to
have been the beneficial owner of more than five percent of the Common Stock.
On February 27, 1998, there were 16,200,000 shares of Common Stock
outstanding. Unless otherwise indicated in the footnotes, all of such
interests are owned directly, and the indicated person or entity has sole
voting and dispositive power.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
---------------------------
NAMES (1) NUMBER PERCENT
- --------- ------ -------
<S> <C> <C>
DEL-LPL Limited Partnership, DEL-LPAML Limited
Partnership and
DEL/LaSalle Finance Company, L.L.C. .............. 6,995,020(2) 43.2%
The Dai-ichi Mutual Life Insurance Company........ 2,199,162(5) 13.6%
Galbreath Holdings, LLC........................... 1,440,255(6) 8.9%
Stuart L. Scott................................... (2)(3)
Robert C. Spoerri................................. (2)(3)
William E. Sullivan............................... (2)(3)(4)
Daniel W. Cummings................................ (2)(3)
Charles K. Esler.................................. (2)(3)
Lizanne Galbreath................................. 1,699,276(6) 10.5%
M.G. Rose......................................... (2)(3)
Lynn C. Thurber................................... (2)(3)
Earl E. Webb...................................... (2)(3)
Darryl Hartley-Leonard............................ 17,077(7)
Thomas C. Theobald................................ 22,947(8)
John R. Walter.................................... 24,577(9)
All Directors and executive officers as a group
(12 persons)..................................... (10)
</TABLE>
- --------
(1) Unless otherwise indicated, the address of each person or entity is c/o
LaSalle Partners Incorporated, 200 East Randolph Drive, Chicago, IL
60601.
(2) The 6,995,020 shares of Common Stock reported by DEL-LPL Limited
Partnership ("DEL-LPL"), DEL-LPAML Limited Partnership ("DEL-LPAML") and
DEL/LaSalle Finance Company, L.L.C. ("DEL/LaSalle") are the aggregate of
the shares of Common Stock held by each such entity. Each such entity
holds directly the following number (and percentage) of shares of the
outstanding Common Stock: DEL-LPL, 4,965,644 (30.7%); DEL-LPAML, 876,291
(5.4%); and DEL/LaSalle, 1,153,085 (7.1%). Each partner of DEL-LPL is
also a partner of DEL-LPAML with identical percentage economic interests
in each. DEL-LPL and DEL-LPAML own all of the membership interests in
DEL/LaSalle.
(3) Each of Messrs. Scott, Spoerri, Sullivan, Cummings, Esler, Rose and Webb
and Ms. Thurber is a member of the Management Committee of each of DEL-
LPL and DEL-LPAML. Each of Messrs. Scott, Spoerri, Cummings, Rose and
Webb and Ms. Thurber is, directly or indirectly through a wholly owned
corporation, a general partner of DEL-LPL. Mr. Esler is, indirectly
through a wholly owned corporation, a general partner of DEL-LPAML.
Messrs. Scott, Spoerri, Sullivan, Cummings, Esler, Rose and Webb and Ms.
Thurber owned, as of February 27, 1998, directly or indirectly through
wholly owned corporations, the following percentage interests, on a fully
diluted basis, in each of DEL-LPL and DEL-LPAML: Stuart L. Scott, 10.1%;
Robert C. Spoerri, 7.2%; William E. Sullivan, 1.1%; Daniel W. Cummings,
2.6%; Charles K. Esler, Jr., 2.5%; M.G. Rose, 6.2%, Lynn C. Thurber,
2.0%; and Earl E. Webb, 1.4%. Each of Messrs. Scott, Spoerri, Sullivan,
Cummings, Esler, Rose and Webb and Ms. Thurber disclaims beneficial
ownership of the shares of Common Stock owned by DEL-LPL, DEL-LPAML and
DEL/LaSalle.
16
<PAGE>
(4) Children of Mr. Sullivan own 400 shares of Common Stock. Mr. Sullivan
disclaims beneficial ownership of the shares of Common Stock owned by his
children.
(5) Information with respect to beneficial ownership of The Dai-ichi Mutual
Life Insurance Company is included herein in reliance on a Schedule 13G,
dated February 10, 1998, filed with the Securities and Exchange
Commission reporting ownership as of December 31, 1997. According to the
Schedule 13G, The Dai-ichi Mutual Life Insurance Company owns 100% of the
outstanding shares of capital stock of Dai-ichi Life Property Holdings,
Inc., which in turn owns 100% of the outstanding shares of capital stock
of Dai-ichi Life Investment Properties, Inc., which in turn owns 100% of
the outstanding shares of capital stock of DSA-LSPL, Inc. and DSA-LSAM,
Inc. DSA-LSPL, Inc. owns directly 1,869,288 shares of Common Stock, and
DSA-LSAM, Inc. owns directly 329,874 shares of Common Stock. On December
31, 1997, there were 16,200,000 shares of Common Stock outstanding. The
address of The Dai-ichi Mutual Life Insurance Company is 13-1 Yurakucho,
1-chome, Tokyo, Japan 100.
(6) Ms. Galbreath holds the 259,021 shares of Common Stock directly, and the
1,699,276 shares reported in the table above consist of the aggregate of
the shares of Common Stock she owns directly and the 1,440,255 shares of
Common Stock owned by Galbreath Holdings, LLC. Ms. Galbreath owns, either
directly or through a trust for which she is the sole beneficiary, a 45.0%
interest in, and is the managing member of, Galbreath Holdings, LLC.
Because Ms. Galbreath is the managing member of Galbreath Holdings, LLC,
Ms. Galbreath might be deemed to be the beneficial owner of all shares of
Common Stock owned by Galbreath Holdings, LLC for purposes of Rule 13d-3.
Ms. Galbreath disclaims beneficial ownership of such shares of Common
Stock, except to the extent of her ownership interests. Information
regarding the holdings of Ms. Galbreath and Galbreath Holdings, LLC are as
of February 28, 1998. The address of Galbreath Holdings, LLC is 180 East
Broad Street, Columbus, Ohio 43215.
(7) Mr. Hartley-Leonard holds 5,000 shares of Common Stock directly and
12,077 shares of Common Stock through an IRA trust, constituting in
aggregate less than 1% of the outstanding shares of Common Stock.
(8) Mr. Theobald holds 22,947 shares of Common Stock, constituting less than
1% of the outstanding shares of Common Stock, directly.
(9) Mr. Walter holds 24,577 shares of Common Stock, constituting less than 1%
of the outstanding shares of Common Stock, as trustee of a trust for the
benefit of himself, his spouse and others.
(10) See footnotes (2) through (4) and (6) through (9) above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors, certain
of the Company's officers and beneficial owners of more than 10 percent of the
Company's outstanding Common Stock to file reports of ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission and to send copies of such reports to the Company. Based solely
upon a review of such reports and amendments thereto furnished to the Company
and upon written representations of certain of such persons regarding their
ownership of Common Stock, the Company believes that no such person failed to
file any such report on a timely basis during 1997, except that DEL-LPAML
filed one Form 3, reporting initial ownership, and one Form 4, reporting one
transaction, late.
17
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board, with the recommendation of the Audit Committee, has appointed the
firm of KPMG Peat Marwick LLP as the Company's independent auditors for 1998.
A proposal to ratify this appointment will be presented at the Annual Meeting.
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting will be
necessary to adopt this proposal. For purposes of the vote on this proposal,
abstentions will have the same effect as votes against the proposal and will
be counted toward the presence of a quorum.
Each valid proxy returned to the Company will be voted for the ratification
of the appointment of KPMG Peat Marwick LLP as the Company's independent
auditors for 1998 unless the proxy specifies otherwise. The Board recommends
that stockholders vote for ratification of such appointment. The Board retains
the right to appoint substitute independent auditors at any time during 1998
for any reason whatsoever upon the recommendation of the Audit Committee.
The Company expects that representatives of KPMG Peat Marwick LLP will be
present at the Annual Meeting and will be available to respond to appropriate
questions. Such representatives will have the opportunity to make a statement
at the Annual Meeting if they desire to do so.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 annual meeting of
stockholders must be received by the Company at its principal executive
offices on or before December 1, 1998 for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
PROXY SOLICITATION EXPENSE
The proxies being solicited by this Proxy Statement are being solicited by
the Board of the Company. Proxies may be solicited by officers, Directors and
regular employees of the Company, none of whom will receive any compensation
other than their regular compensation. The Company has retained Morrow & Co.,
Inc. to aid in the solicitation. For these services, the Company will pay
Morrow & Co., Inc. a fee of $3,500 and reimburse it for certain out-of-pocket
disbursements and expenses. Solicitations may be made personally, or by mail,
facsimile, telephone, telegraph or messenger. The Company will, upon request,
pay persons holding shares of Common Stock in their names or the names of
nominees, but not owning such shares beneficially, such as brokerage houses,
banks and other fiduciaries, for the expense of forwarding solicitation
materials to the beneficial owners. All of the costs of the solicitation of
proxies will be paid by the Company.
18
<PAGE>
PROXY PROXY
LA SALLE PARTNERS
Incorporated
Proxy Solicited on Behalf of The Board of Directors
For The Annual Meeting of Stockholders - May 21, 1998
The undersigned hereby appoints Stuart L. Scott, Robert C. Spoerri and
William E. Sullivan, and each of them, with full power of substitution, to
represent the undersigned and as proxies to vote all the Common Stock of LaSalle
Partners Incorporated which the undersigned has power to vote, with all powers
which the undersigned would possess if personally present, at the annual meeting
of stockholders to be held on May 21, 1998, or at any adjournment or
postponement thereof.
This proxy will be voted as specified by the undersigned. If no choice is
specified, this proxy will be voted FOR the election of all the nominees named
and FOR Proposal Number 2.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
LA SALLE PARTNERS INCORPORATED
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [I]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election of Directors-
Nominees: Robert C. Spoerri, Daniel W. Cummings, For Withhold For All
Charles K. Ester, Jr., Darryl Hartley-Leonard and All All Except 3. To vote upon any other matters
John R. Walter. [] [] [] that may properly be presented
at the meeting according to
their judgment and in
their discretion.
___________________________________________________
(Except nominee(s) written above)
For Against Abstain The undersigned acknowledges
2. Ratification of the appointment of KPMG Peat [] [] [] receipt of the Notice of
Marwick LLP as independent auditors for 1998. Annual Meeting of Stockholders
and of the Proxy Statement.
Dated:____________________ 1998
THIS AREA RESERVED FOR ADDRESSING Signature(s)___________________
_______________________________
Please sign exactly as your name
appears. If signing as attorney,
executor, administrator, trustee
or guardian or an officer of a
corporation or other entity,
please give full title. If
shares are held jointly, both
owners must sign.
</TABLE>
_______________________________________________________________________________
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
