<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
PAN PACIFIC RETAIL PROPERTIES, 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] Fee not 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:
------------------------------------------------------------------------
<PAGE> 2
PANPACIFIC
May 13, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Pan Pacific Retail Properties, Inc. to be held at 10:30 a.m., local time, on
June 19, 1998 at the DoubleTree Hotel, in San Diego's Mission Valley, 7450
Hazard Center Drive, San Diego, California.
At the Annual Meeting, you will be asked to consider and vote upon the
election of one director to the Board of Directors of the Company.
The election of the member of the Board of Directors of the Company is more
fully described in the accompanying Proxy Statement. We urge you to review
carefully the Proxy Statement.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEE TO THE BOARD OF DIRECTORS NAMED IN THE ACCOMPANYING PROXY STATEMENT.
YOUR VOTE IS IMPORTANT TO THE COMPANY, WHETHER YOU OWN FEW OR MANY SHARES!
Please complete, date and sign the enclosed proxy card and return it in the
accompanying postage paid envelope, even if you plan to attend the Annual
Meeting. If you attend the Annual Meeting, you may, if you wish, withdraw your
proxy and vote in person.
Sincerely,
PAN PACIFIC RETAIL PROPERTIES, INC.
/s/ STUART A. TANZ
-------------------------------------
Stuart A. Tanz
President and Chief Executive Officer
1631-B.South Melrose Drive - Vista, CA 92083 - Telephone: (760)
727-1002 - Facsimile: (760) 727-1430
http://www.pprp.com
<PAGE> 3
PAN PACIFIC RETAIL PROPERTIES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
Notice is hereby given that the annual meeting of stockholders of Pan
Pacific Retail Properties, Inc., a Maryland corporation (the "Company"), will be
held at the DoubleTree Hotel, in San Diego's Mission Valley, 7450 Hazard Center
Drive, San Diego, California, on Friday, June 19, 1998, at 10:30 a.m., local
time, for the following purposes:
1. To elect one director, to serve a term of three years; and
2. To transact such other business as may properly come before the meeting.
The election of the director is more fully described in the accompanying
Proxy Statement, which forms a part of this Notice.
During the course of the Annual Meeting, management will report on the
current activities of the Company and comment on its future plans. A discussion
period is planned so that stockholders will have an opportunity to ask questions
and present their comments.
The Board of Directors has fixed the close of business on May 13, 1998 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. Only stockholders of record on the Record Date will be
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. A list of such stockholders will be available for
inspection at the offices of the Company at 1631-B South Melrose Drive, Vista,
California, at least ten days prior to the Annual Meeting.
If you plan to be present, please notify the undersigned so that
identification can be prepared for you. Whether or not you plan to attend the
Annual Meeting, please execute, date and return promptly the enclosed proxy. A
return envelope is enclosed for your convenience and requires no postage for
mailing in the United States. If you are present at the Annual Meeting you may,
if you wish, withdraw your proxy and vote in person. Thank you for your interest
and consideration.
By order of the Board of Directors,
/s/ DAVID L. ADLARD
-------------------------------------
David L. Adlard
Secretary
Dated: May 13, 1998
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED
PROXY AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE
<PAGE> 4
PAN PACIFIC RETAIL PROPERTIES, INC.
------------------------
PROXY STATEMENT
This proxy statement is provided in connection with the solicitation of
proxies to be used at the annual meeting of stockholders (the "Annual Meeting")
of Pan Pacific Retail Properties, Inc., a Maryland corporation (the "Company"),
to be held at the DoubleTree Hotel Mission Valley, 7450 Hazard Center Drive, San
Diego, California, on Friday, June 19, 1998, at 10:30 a.m. This proxy will first
be sent to stockholders by mail on or about May 19, 1998.
At the Annual Meeting, holders of record of shares of the Company's Common
Stock will consider and vote upon (i) the election of a member of the Board of
Directors of the Company and (ii) such other business as may properly come
before the Annual Meeting or any adjournment or postponement thereof. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE PERSON NOMINATED TO BE ELECTED TO THE
BOARD OF DIRECTORS. See "PROPOSAL ONE: ELECTION OF DIRECTOR."
On May 13, 1998, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, the Company is expected
to have 16,814,012 shares of common stock, par value $0.01 per share (the
"Common Stock"), outstanding. Each such share of Common Stock is entitled to one
vote on all matters properly brought before the meeting. Stockholders are not
permitted to cumulate their shares of Common Stock for the purpose of electing
directors or otherwise. Presence at the Annual Meeting, in person or by proxy,
of a majority of the outstanding shares of Common Stock will constitute a quorum
for the transaction of business at the Annual Meeting.
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be cast at the Annual Meeting FOR
the election of the person nominated to the Board of Directors. With respect to
any other business which may properly come before the Annual Meeting and be
submitted to a vote of stockholders, proxies received by the Board of Directors
will be cast at the discretion of the designated proxy holders. A stockholder
may revoke his or her proxy at any time before exercise by delivering to the
Secretary of the Company a written notice of such revocation, by filing with the
Secretary of the Company a duly executed proxy bearing a later date, or by
voting in person at the Annual Meeting. Attendance at the Annual Meeting will
not by itself be sufficient to revoke a proxy.
The election inspector will treat shares represented by properly signed and
returned proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum and for
purposes of determining the outcome of any matter submitted to the stockholders
for a vote. Abstentions do not constitute a vote "for" or "against" any matter
and thus will not be counted as votes cast and will have no effect on the result
of the vote.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for any proxies that have theretofore effectively
been revoked or withdrawn).
The Company will bear the cost of soliciting proxies from its stockholders.
In addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies by telephone, telegram or otherwise. Such directors,
officers and employees of the Company will not be additionally compensated for
such solicitation, but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Brokerage firms, fiduciaries and other custodians who
forward soliciting material to the beneficial owners of shares of Common Stock
held of record by them will be reimbursed for their reasonable expenses incurred
in forwarding such material.
<PAGE> 5
No person is authorized to make any representation with respect to the
matters described in this Proxy Statement other that those contained herein and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or any other person.
PROPOSAL ONE: ELECTION OF DIRECTOR
GENERAL
The Company's Board of Directors currently consists of five directors
divided into three classes, designated as Class I, Class II and Class III. Each
class is elected to a three-year term and the election of directors is
staggered, so that only one class of directors is elected at each annual meeting
of stockholders. The Class I director term expires at the 1998 annual meeting of
stockholders. As such, stockholders of record as of the record date, will be
entitled to vote on the election of the Class I director for a three-year term
at the Annual Meeting.
At the Annual Meeting, the Common Stock represented by properly executed
and returned proxies, unless otherwise specified, will be voted for the election
of Melvin S. Adess, as a director, to serve for three years and until his
respective successor is duly elected and qualifies.
If for any reason the nominee is not a candidate (which is not expected)
when the election occurs, it is intended that proxies will be voted for the
election of a substitute nominee designated by the Board of Directors. The
following information is furnished with respect to Melvin S. Adess.
MELVIN S. ADESS. Age 53. Mr. Adess has been a director since August 1997.
Since January 1975, Mr. Adess has been a partner in the Chicago office of the
law firm of Kirkland & Ellis, where he was an associate lawyer from 1969 to
December, 1974. Mr. Adess serves on various of his firm's management committees.
Additionally, he has served on various taxation committees of the American Bar
Association. Mr. Adess received a B.S. degree from Northwestern University and a
J.D. degree from the University of Chicago. He is also an Illinois Certified
Public Accountant.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast at the Annual Meeting, whether in person or by proxy, is required for
approval of the proposal presented above. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of this vote. In no event will the
proxies be voted for more than one nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF MR. MELVIN S.
ADESS AS DIRECTOR OF THE COMPANY.
INCUMBENT DIRECTORS
<TABLE>
<CAPTION>
NAME AGE TITLE CLASS
- ----------------------- --- ---------------------------------------------- -----
<S> <C> <C> <C>
Stuart A. Tanz 39 Director, Chairman, Chief Executive Officer III
and President
Mark J. Riedy 55 Director II
Bernard M. Feldman 48 Director II
Russell E. Tanz 38 Director III
</TABLE>
STUART A. TANZ. Mr. Tanz has served as the Chairman, Chief Executive
Officer and President and as a director of the Company since its formation. He
has been involved in the real estate business for over 17 years. Mr. Tanz served
as Chief Executive Officer of Pan Pacific Development (U.S.) Inc. ("PPD") from
May 1996 to August 1997 and as a director and the President of PPD from April
1992 to August 1997. He served as a director and as the President and Chief
Operating Officer of PPD's parent company, Pan Pacific Development Corporation
("PPDC"), from 1992 to December 1996, when PPDC was amalgamated into Revenue
Properties Company Limited ("Revenue Properties"). He served as a director of
Revenue
2
<PAGE> 6
Properties from 1993 to August 1997 and as Co-Chief Executive Officer of Revenue
Properties from May 1996 to August 1997. From 1985 to 1992, Mr. Tanz served as
President of United Income Properties, Inc. where he developed property in
Southern California. He was involved in land acquisitions for Bramalea Ltd. from
1982 to 1985. Mr. Tanz received his B.S. degree in Business Administration in
1980 from the University of Southern California.
MARK J. RIEDY. Mr. Riedy has served as a member of the Board of Directors
of the Company since its inception as a public company in August 1997. He has
been a professor of real estate finance at the University of San Diego since
1993. From July 1988 to July 1992, he served as President and Chief Executive
Officer of the National Council of Community Bankers. From July 1987 to July
1988, he served as President and Chief Operating Officer of the J.E. Robert
Companies, a real estate workout firm. From January 1985 to July 1986, he served
as President and Chief Operating Officer and a director of the Federal National
Mortgage Association. Mr. Riedy currently serves on the boards of directors of
Continental Savings Bank, AccuBanc Mortgage Corporation, Neighborhood Bancorp
and American Residential Investment Trust. He received a B.A. degree in
Economics from Loras College, an M.B.A. from Washington University and a Ph.D.
in Business Economics from the University of Michigan in Ann Arbor.
BERNARD M. FELDMAN. Mr. Feldman has served as a member of the Board of
Directors of the Company since its inception as a public company in August 1997.
He currently serves as the President and Chief Executive Officer of ICW Group of
insurance companies, a position he has held since 1987. Mr. Feldman has also
served as President and Chief Executive Officer of Western Insurance Holdings
since 1991. From 1987 to present, he served as President and Chief Executive
Officer of Insurance Company of the West. From 1982 to 1985, Mr. Feldman served
as Vice President of Claims for the Insurance Company of the West.
RUSSELL E. TANZ. Mr. Tanz has served as a member of the Board of Directors
of the Company since its inception as a public company in August 1997. He served
as a director of Revenue Properties from 1985 to August 1997. He also served as
President and Co-Chief Executive Officer of Revenue Properties from May 1996 to
August 1997. From 1992 through May 1996, Mr. Tanz was President and Chief
Operating Officer and, from 1991 to 1992, Vice President of Shopping Centers of
Revenue Properties. During his service in these positions, Mr. Tanz gained
extensive experience in the management of the Canadian real estate portfolio of
Revenue Properties which is comprised of retail, residential and
office/commercial properties. He also served as a director of PPD from May 1996
to August 1997. Since August 1997 he has been active with a real estate
consulting practice.
COMMITTEES OF THE BOARD
Audit Committee. The Board of Directors established an audit committee (the
"Audit Committee") to make recommendations concerning the engagement of
independent public accountants, review with the independent public accountants
the scope and results of the audit engagement, approve professional services
provided by the independent public accountants, review the independence of the
independent public accountants, consider the range of audit and non-audit fees
and review the adequacy of the Company's internal accounting controls. The Audit
Committee consists of Messrs. Adess, Feldman and Riedy, who are not employees,
officers or affiliates of the Company or a subsidiary or division thereof, or a
relative of a principal executive officer of the Company, or a member of an
organization acting as advisor, consultant or legal counsel, receiving
compensation on a continuing basis from the Company in addition to director's
fees ("Independent Directors").
Corporate Governance Committee. The Board of Directors established a
corporate governance committee (the "Corporate Governance Committee") consisting
of Independent Directors Messrs. Adess, Feldman and Riedy. The Corporate
Governance Committee is responsible for providing counsel to the Board of
Directors with respect to (i) organization, membership and function of the Board
of Directors, (ii) structure and membership of the committees of the Board of
Directors and (iii) succession planning for the executive management of the
Company.
Compensation Committee. The Board of Directors established an executive
compensation committee (the "Compensation Committee") to establish remuneration
levels for executive officers of the Company and
3
<PAGE> 7
implement the Company's Stock Incentive Plan (described below) and any other
incentive programs. The Compensation Committee consists of Independent Directors
Messrs. Adess, Feldman and Riedy.
During the period ended December 31, 1997, the Board of Directors held six
meetings. Of the incumbent members of the Board of Directors, none of the
members attended less than 75% of the total number of eight meetings of the
Board and meetings of the committees of the Board on which they served.
COMPENSATION OF DIRECTORS
The Board of Directors is entitled to fix its own remuneration from time to
time. Pursuant to such authority, each director other than Mr. Stuart Tanz was
remunerated for his service as a director at the rate of $10,000 per annum. In
addition, these Directors receive a fee of $1,500 for each Board of Directors
meeting attended ($750 for telephonic attendance), a fee of $750 for each
committee meeting attended on a day that does not include a Board of Directors
meeting ($500 for telephonic attendance) and an additional fee of $250 for each
committee meeting chaired by such director whether or not a Board of Directors
meeting occurred on the same day. Directors are also reimbursed for reasonable
expenses incurred to attend director and committee meetings. Officers of the
Company who are directors are not paid any directors' fees. Each Independent
Director also received, upon his initial election to the Board of Directors,
options to purchase 10,000 shares of Common Stock, of which one third vested
immediately and the remaining two thirds vest pro rata in annual installments
over two years following the date of grant. Mr. Russell Tanz received, upon his
initial election to the Board of Directors, an option to purchase 10,000 shares
of Common Stock which vests pro rata in annual installments over three years
following the date of grant. The stock options were issued pursuant to the 1997
Stock Option and Incentive Plan at an exercise price equal to the fair market
value of the Common Stock at the date of grant.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME TITLE AGE
- ----------------- --------------------------------------------------------- ---
<S> <C> <C>
Stuart A. Tanz Chairman, Chief Executive Officer, and President 39
David L. Adlard Executive Vice President, Chief Financial Officer, 41
Secretary and Treasurer
Jeffrey S. Executive Vice President, Chief Operating Officer 37
Stauffer
Laurie A. Sneve Vice President, Corporate Controller 35
Michael B. Haines Vice President, Corporate Accounting 36
</TABLE>
Biographical information with respect to Mr. Tanz is set forth above under
Incumbent Directors.
DAVID L. ADLARD. Mr. Adlard has served as Executive Vice President, Chief
Financial Officer, Treasurer and Secretary of the Company since its formation.
He was the Executive Vice President and Chief Financial Officer and a director
of PPD from January 1995 to August 1997. Prior to joining PPD, Mr. Adlard was a
Director of Real Estate Consulting at Price Waterhouse from 1992 to 1995. He has
previously worked in the areas of acquisitions, research, project financing and
financial management, development, leasing and property management. Mr. Adlard
received his B.S. degree in Business Administration from California State
Polytechnic University and his J.D. degree from Case Western Reserve University.
JEFFREY S. STAUFFER. In March 1998, Mr. Stauffer was named Executive Vice
President and Chief Operating Officer of the Company. From the Company's
formation until such appointment, Mr. Stauffer served as Senior Vice President,
Operations and Development of the Company. He served as Senior Vice President of
Operations for PPD from January 1993 to August 1997. Mr. Stauffer has been
involved in the shopping center industry for 13 years. From 1985 to 1990 he was
the Director of Commercial Property Management for Realty Holding Group in Las
Vegas, Nevada. He was State Director for the International Council of Shopping
Centers from 1990 to 1993 and is also a Certified Shopping Center Manager. Mr.
Stauffer received both his B.A. degree in Economics and his M.A. degree in
Economics from Western Illinois University.
LAURIE A. SNEVE. Ms. Sneve has served as Vice President and Controller of
the Company since its formation. Ms. Sneve is responsible for all corporate and
property accounting, financial and tax reporting and management controls. From
March 1995 to August 1997, Ms. Sneve served as the Vice President and
4
<PAGE> 8
Corporate Controller of PPD. Prior to joining PPD, Ms. Sneve was Controller and
Director of Accounting for The Hahn Company, where she worked for over six
years. Ms. Sneve became licensed as a Certified Public Accountant during her
tenure with Arthur Andersen & Company from 1985 to 1988 where she practiced in
both the Philadelphia and San Diego offices. She graduated from Pennsylvania
State University, earning her B.S. degree in Accounting.
MICHAEL B. HAINES. In September 1997, Mr. Haines was named Vice President,
Corporate Accounting of the Company. Prior to such appointment he served as
Corporate Assistant Controller of the Company and held the same position at PPD
from March 1995 to August 1997. Mr. Haines is responsible for corporate
financial reporting and management controls. Prior to joining PPD, Mr. Haines
was Director of Internal Audit for The Hahn Company from 1990 to 1995. Mr.
Haines became licensed as a Certified Public Accountant after his tenure with
Deloitte & Touche LLP in San Diego from 1989 to 1990. He graduated from San
Diego State University, earning his B.S. degree in Business Administration with
an emphasis in Accounting.
EXECUTIVE COMPENSATION
Prior to the initial public offering which closed on August 13, 1997 (the
"IPO"), the Company did not pay any compensation to its officers. These officers
were formerly employed and compensated by PPD, the Company's predecessor. The
following table below sets forth the base salary and other compensation paid
during the period on and after August 13, 1997 through December 31, 1997 (the
"Initial Period") to the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers whose annualized
compensation in the Initial Period would have exceeded $100,000 (the "Named
Executive Officers"). The Company has entered into employment agreements with
certain of its executive officers as described below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ------------------------------------------
OTHER RESTRICTED SECURITIES
FISCAL ANNUAL STOCK UNDERLYING OTHER
NAME/PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) AWARDS(3) OPTIONS(4) COMPENSATION(5)
- ----------------------- ------ --------- ----- --------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stuart A. Tanz 1997 $108,750 -- $5,250 $1,950,000 225,000 $1,763
President and Chief
Executive Officer
David L. Adlard 1997 $ 53,063 -- $1,750 $ 195,000 100,000 $2,425
Executive Vice
President and Chief
Financial Officer
Jeffrey S. Stauffer 1997 $ 52,178 -- $1,400 $ 195,000 100,000 $2,371
Executive Vice
President, Chief
Operating Officer
Laurie A. Sneve 1997 $ 36,937 -- -- -- 80,000 $1,679
Vice President and
Controller
</TABLE>
- ---------------
(1) Represents amounts earned during 1997 by Messrs. Stuart A. Tanz, David L.
Adlard, Jeffrey S. Stauffer and Ms. Laurie A. Sneve at annual salaries of
$290,000, $141,500, $139,140 and $98,500, respectively. Their employment by
the Company began on or about August 13, 1997 with the completion of the
Company's IPO.
(2) Represents car allowance compensation.
(3) Represents the value of restricted stock awarded at the completion of the
Company's IPO based on the initial public offering price of $19.50 per
share. Messrs. Stuart A. Tanz, David L. Adlard and Jeffrey S. Stauffer were
awarded 100,000, 10,000 and 10,000 shares of restricted stock, respectively.
The restricted stock vests 33 1/3% per year over a three-year period from
the date of grant. Dividends are paid on the restricted stock awards. Based
on the closing price of the Company's common stock of $21.375 at December
31, 1997, the value of the stock awards was $2,137,500, $213,750, and
$213,750, respectively.
5
<PAGE> 9
(4) The Company has not, to date, granted any stock appreciation rights under
the Stock Option and Incentive Plan.
(5) Represents 401(k) contributions by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the awarding of
stock options in 1997 to the Named Executive Officers included in the Summary
Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED GRANT DATE
UNDERLYING TO EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME OPTIONS(1) FISCAL YEAR PRICE DATE VALUE(2)
- -------------------------------------- ---------- ---------------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Stuart A. Tanz 225,000 25.0% $19.50 August, 2004 $594,000
David L. Adlard 100,000 11.1% $19.50 August, 2004 $264,000
Jeffrey S. Stauffer 100,000 11.1% $19.50 August, 2004 $264,000
Laurie S. Sneve 80,000 8.9% $19.50 August, 2004 $211,200
</TABLE>
- ---------------
(1) All options granted in 1997 were granted in connection with the completion
of the IPO in August 1997, become exercisable in three equal installments
beginning on the first anniversary of the date of grant and have a term of 7
years subject to earlier termination in certain events related to
termination of employment.
(2) Based on the Black-Scholes options pricing model adapted for use in valuing
stock options. The following assumptions were used in determining the values
set forth in the table: (i) expected volatility of 22.05% calculated in
accordance with the provisions of SFAS No. 123; (ii) a risk-free rate of
return of 6.5% (which percentage represents the assumed yield on a United
States Government Zero Coupon bond with a 7-year maturity prevailing on or
about the date on which the respective options were granted); (iii) a
dividend yield of 6.75%; and (iv) an expected life of 5 years. No
adjustments were made for nontransferability or risk of forfeiture of the
options. The calculations were made using the option exercise price of
$19.50. The estimated present values in the table are not intended to
provide, nor should they be interpreted as providing, any indication or
assurance concerning future values of the Common Shares.
AGGREGATE OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
The following table sets forth information with respect to the value of
options held by the Named Executive Officers included in the Summary
Compensation Table on December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 1997 IN-THE-MONEY OPTIONS
YEAR-END(1) AT 1997 YEAR-END(2)
SHARES ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXCERCISABLE UNEXERCISABLE
- --------------------------- --------------- -------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Stuart A. Tanz -- -- -- 225,000 -- $421,875
David L. Adlard -- -- -- 100,000 -- $187,500
Jeffrey S. Stauffer -- -- -- 100,000 -- $187,500
Laurie A. Sneve -- -- -- 80,000 -- $150,000
</TABLE>
- ---------------
(1) The options granted in 1997 were granted in connection with the completion
of the IPO in August 1997, become exercisable in three equal installments
beginning on the first anniversary of the date of grant and have a term of 7
years subject to earlier termination in certain events related to
termination of employment.
(2) Based on closing price of $21.375 per share of Common Stock on December 31,
1997, as reported by the New York Stock Exchange.
6
<PAGE> 10
EMPLOYMENT AGREEMENTS
Stuart Tanz, David Adlard, and Jeffrey Stauffer have each entered into
employment agreements with the Company. Stuart Tanz's employment agreement has
an initial term of three years and David Adlard's and Jeffrey Stauffer's
employment agreements each have initial terms of two years. All of these
employment agreements provide for automatic one-year extensions following
expiration of the initial term. The employment agreements require each of these
individuals to be employed full time by the Company and prohibit them from
becoming directors, officers or employees of Revenue Properties or PPD. Laurie
Sneve has also agreed that she will not accept employment with Revenue
Properties or PPD for as long as she is employed by the Company.
For the first year of the initial term, the employment agreements provide
for an initial annual base compensation in the amounts set forth in footnote (1)
to the Summary Compensation table with the amount of any initial bonus to be
determined by the Compensation Committee. For subsequent years, both the amount
of the base compensation and any bonus will be determined by the Compensation
Committee.
The employment agreements entitle the executives to participate in the 1997
Stock Option and Incentive Plan (each executive was initially allocated the
number of stock options set forth in the Summary Compensation table) and to
receive certain other insurance and pension benefits. In addition, in the event
of a termination by the Company without "cause," a termination by the executive
for "good reason," or a termination pursuant to a "change in control" of the
Company (as such terms are defined in the employment agreements) (each, a
"Permitted Severance Event"), Stuart Tanz will be entitled to a single severance
payment equal to the sum of two times his annual base compensation for the most
recent 12 month period plus an amount equal to his most recent bonus. David
Adlard and Jeffrey Stauffer will be entitled to a single severance payment equal
to the sum of their respective annual base compensation for the most recent nine
month period (Mr. Stauffer) and six month period (Mr. Adlard); provided,
however, that for each full year of service with the Company, the number of
months of base compensation in the severance payment shall be increased by one
month (subject to an overall cap of 18 months). Each of Messrs. Tanz (for one
year), Adlard (for six months) and Stauffer (for one year) will be subject to a
non-competition covenant if their employment with the Company ceases for any
reason other than a Permitted Severance Event.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The amount of compensation paid by the Company to Stuart Tanz, David
Adlard, Jeffrey Stauffer and Laurie Sneve in the year ended December 31, 1997,
in the case of base salaries, bonuses, and other compensation, was determined
prior to the completion of the Company's IPO on August 13, 1997. Employment
agreements were entered into with Messrs. Tanz, Adlard and Stauffer at that
time. In 1997, executive compensation consisted solely of base salary and other
compensation, grants of stock options under the Company's Stock Option and
Incentive Plan that vest over time to Messrs. Tanz, Adlard, Stauffer and Ms.
Sneve, and restricted share awards to Messrs. Tanz, Adlard and Stauffer.
Executive Compensation Philosophy. The Compensation Committee believes that
a fundamental goal of the Company's executive compensation program is to provide
incentives to create value for the Company's stockholders. The primary
objectives of the Committee in determining executive compensation for 1998 will
be (i) to provide a competitive total compensation package that enables the
Company to attract and retain qualified executives and align their compensation
with the Company's overall business strategies and (ii) to provide each
executive officer with a significant equity stake in the Company through stock
options and stock ownership. The Compensation Committee will annually consider
the appropriate combination of cash and stock-based compensation and weigh the
competitiveness of the Company's overall compensation arrangements in relation
to comparable real estate investment trusts. From time to time the Compensation
Committee may retain compensation and other management consultants to assist
with, among other things, structuring the Company's various compensation
programs and determining appropriate levels of salary, bonus and other
compensatory awards payable to the Company's executive officers and key
employees, as well as guide the Company in the development of near-term and
long-term individual performance objectives necessary to achieve long-term
profitability.
7
<PAGE> 11
Base Salaries and Other Compensation. The base compensation and other
compensation for the Company's executive officers was established prior to the
completion of the Company's IPO on August 13, 1997 in a manner consistent with
their then existing compensation levels. Base compensation was set to compensate
the officers for the functions they would perform. While no specific formula was
used to determine base compensation levels for the Company's executive officers,
the Compensation Committee believes that the base salaries are generally in line
with those of other publicly held real estate investment trusts the Compensation
Committee has reviewed, some of which entities are included in the National
Association of Real Estate Investment Trusts ("NAREIT") Equity REIT Index. Base
salaries will be reviewed annually and may be changed by the Compensation
Committee in accordance with certain criteria determined primarily on the bases
of growth of revenues and funds from operation per share of Common Stock and on
the basis of certain other factors, which include: (i) individual performance,
(ii) the functions performed by the executive officer, and (iii) changes in the
compensation within the peer group in which the Company competes for executive
talent. The weight given such factors by the Compensation Committee may vary
from individual to individual.
Annual Bonus Compensation. No cash bonuses were paid to executive officers
with respect to the period following the completion of the Company's IPO on
August 13, 1997 and the balance of the year. The Company's policy of awarding
annual bonuses is designed to specifically relate executive pay to Company and
individual performance. As a pay-for-performance program, cash bonuses provide
financial rewards for the achievement of substantive Company and personal
objectives.
Employee Stock Option Plan. The Company's Stock Option and Incentive Plan
relates closely to traditional forms of equity-oriented compensation in the
commercial real estate industry. The purpose of the options grants is to aid in
the Company attracting and retaining quality employees, thereby advancing the
interests of the Company's stockholders by offering employees an incentive to
maximize their efforts to promote the Company's economic performance. In
addition, to assist the Company in retaining employees and encouraging them to
seek long-term appreciation in the value of the Company's stock, options are
generally not exercisable immediately upon grant, but rather vest over a period
of years. Awards granted under the Company's Stock Option and Incentive Plan are
based upon a number of factors, including (i) the executive officer's or key
employee's position in the Company, (ii) his or her performance and
responsibilities, (iii) the extent to which he or she already holds an equity
stake in the Company, (iv) equity participation levels of comparable executives
and key employees at other companies in the compensation peer group, and (v)
individual contribution to the success of the Company. The Stock Option and
Incentive Plan does not provide any formulated method for weighting these
factors, and a decision to grant an award is based primarily upon the
Compensation Committee's evaluation of the past as well as the future
anticipated performance and responsibilities of the individual in question.
During 1997, stock options at an exercise price of $19.50 per share were granted
to Stuart A. Tanz, David L. Adlard, Jeffrey S. Stauffer and Laurie A. Sneve.
Options granted to these executives totaled 225,000, 100,000, 100,000, and
80,000, respectively.
401(k) Plan. The Company established a Section 401(k) Savings/Retirement
Plan (the "Section 401(k) Plan") to cover eligible employees of the Company and
any designated affiliate. The Section 401(k) Plan permits eligible employees of
the Company to defer up to 15% of their annual compensation, subject to certain
limitations imposed by the Code. The employees' elective deferrals are
immediately vested and non-forfeitable upon contribution to the Section 401(k)
Plan. The Company currently makes matching contributions up to 1% of the
eligible employees' annual compensation, which matching contributions vest based
upon the employees' tenure with the Company.
The Section 401(k) Plan is designed to qualify under Section 401 of the
Internal Revenue Code so that contributions by employees or by the Company to
the Section 401(k) Plan, and income earned thereon, are not taxable to employees
until withdrawn from the Section 401(k) Plan, and so that contributions by the
Company, if any, will be deductible by the Company when made.
Chief Executive Officer Compensation. Stuart A. Tanz received a base salary
during 1997, for the initial period prior to the closing of the Company's IPO on
August 13, 1997, at an annual rate of $285,000. The salary for the post IPO
period is pursuant to the employment agreement entered into with him at the time
of
8
<PAGE> 12
the IPO at an annual rate of $290,000. Mr. Tanz also received an option to
purchase 225,000 shares of Common Stock at an exercise price of $19.50 per
share, and an award of 100,000 shares of Restricted Stock under the Company's
Stock Option and Incentive Plan. The Restricted share award vests ratably over a
three year period of time. No bonuses were paid to Mr. Tanz by the Company
during 1997. The Compensation Committee recognizes Mr. Tanz's contributions to
the Company's successful initial public offering, the substantial growth in
revenue and funds from operation per share for the Company, and the successful
operations of the Company. The board and its Compensation Committee feel Mr.
Tanz's compensation is commensurate with the compensation of chief executive
officers of competitive real estate investments trusts, and have deemed Mr.
Tanz's salary, stock option and stock awards and total compensation appropriate
in light of Mr. Tanz's substantial contribution to the Company's growth and
success in 1997.
Rule 162(m). The 1993 Omnibus Budget Reconciliation Act ("OBRA") became law
in August 1993. Under the new law, income tax deductions of publicly-traded
companies in tax years beginning on or after January 1, 1994 may be limited to
the extent total compensation (including base salary, annual bonus, stock option
exercises, and non-qualified benefits) for certain executive officers exceeds $1
million (less the amount of any "excess parachute-payments" as defined in
Section 280G of the Code) in any one year. Under OBRA, the deduction limit does
not apply to payments which qualify as "performance-based". To qualify as
"performance-based", compensation payments must be based solely upon the
achievement of objective performance goals and be made under a plan that is
administered by a committee of outside directors. In addition, the material
terms of the plan must be disclosed to and approved by stockholders, and the
compensation committee must certify that the performance goals were achieved
before payments can be made.
The Compensation Committee has designed the Company's compensation to
conform with the OBRA legislation and related regulations so that total
compensation paid to any employee will not exceed $1 million in any one year,
except for compensation payments which qualify as "performance-based". The
Company may, however, pay compensation which is not deductible in limited
circumstances when sound management of the Company so requires.
Submitted By:
Bernard M. Feldman, Chairman
Mark J. Riedy
Melvin S. Adess
The above report of the Compensation Committee will not be deemed to be
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates the same by reference.
COMPLIANCE WITH FEDERAL SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities (collectively, "Insiders"),
to file with the Commission initial reports of ownership and reports of changes
in ownership of Pan Pacific Retail Properties, Inc. Common Stock and other
equity securities of the Company. Insiders are required by regulation of the
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the Company's review of copies of Forms 3, 4 and 5, and the
amendments thereto, received by the Company for the year ended December 31,
1997, or written representations from certain reporting persons that no Forms 5
were required to be filed by those persons, the Company believes that during the
period ended December 31, 1997, all filing requirements were complied with by
its executive officers, directors and beneficial owners of more than ten percent
of the Company's stock other than the Form 3 filed for each of Mr. Riedy and Mr.
Adess which incorrectly listed the number of shares they owned due to
administrative oversight.
9
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Shares of the Company as of April 29, 1998 (except as
otherwise disclosed in the notes below), by (a) the Company's Directors, (b)
each other person who is known by the Company to own beneficially more than 5%
of the outstanding Common Shares, (c) the Company's Chief Executive Officer and
the Company's Executive Officers, and (d) the Company's Executive Officers and
Directors as a group. Except as otherwise described in the notes below, the
Company believes that the following beneficial owners, based on information
furnished by such owners, have sole voting power and sole investment power with
respect to all Common Shares set forth opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES PERCENTAGE
BENEFICIALLY OWNED OWNERSHIP
----------------------- ----------
<S> <C> <C>
Pan Pacific Development (U.S.), Inc. and subsidiaries
("PPD")................................................... 8,634,012 51.35%
131 Bloor Street, Suite 300
Toronto, Ontario M5S 1R1
The Equitable Companies Incorporated(1)..................... 1,146,300 6.81%
1290 Avenue of the Americas
New York, New York 10104
Stuart A. Tanz.............................................. 100,100 *
1631-B South Melrose Drive
Vista, California 92083
David L. Adlard............................................. 10,100 *
1631-B South Melrose Drive
Vista, California 92083
Jeffrey S. Stauffer......................................... 10,000 *
1631-B South Melrose Drive
Vista, California 92083
Michael B. Haines........................................... 250 *
1631-B South Melrose Drive
Vista, California 92083
Laurie A. Sneve............................................. 100 *
1631-B South Melrose Drive
Vista, California 92083
Russell E. Tanz............................................. -- --
1631-B South Melrose Drive
Vista, California 92083
Mark J. Riedy(2)............................................ 4,333 *
1631-B South Melrose Drive
Vista, California 92083
Bernard M. Feldman(2)....................................... 3,333 *
1631-B South Melrose Drive
Vista, California 92083
Melvin S. Adess(2).......................................... 9,833 *
1631-B South Melrose Drive
Vista, California 92083
All Executive Officers and Directors as a Group (9
persons).................................................. 138,049 *
</TABLE>
- ---------------
* Less than 1%
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<PAGE> 14
(1) According to a Schedule 13G filed with the Securities and Exchange
Commission, the person has shared voting power and sole dispositive power
with respect to 1,145,300 of such shares, and shared dispositive power with
respect to 1,000 of such shares as of December 31, 1997.
(2) Includes one third of the options granted upon initial election to the Board
of Directors which vested immediately.
PERFORMANCE GRAPH
As a part of the rules concerning executive compensation disclosure, the
Company is obligated to provide a chart comparing the yearly percentage change
in the cumulative total stockholder return on the Common Stock over a five-year
period. However, since the Common Stock has been publicly traded only since
August 8, 1997 such information is provided from this date through December 31,
1997.
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in the Common Shares with the cumulative total return of
a hypothetical investment in each of the Standard & Poor's Composite -- 500
Index and the NAREIT Equity REIT Total Return Index based upon the respective
market prices of each such investment on the dates shown below, assuming an
initial investment of $100 on August 8, 1997, and as required by the Commission,
the reinvestment of dividends.
<TABLE>
<CAPTION>
NAREIT Equity
Measurement Period Pan Pacific Retail REIT Total Return
(Fiscal Year Covered) Properties, Inc. S&P 500 Index Index
--------------------- ------------------ ------------- -----------------
<S> <C> <C> <C>
8-Aug-97 100.00 100.00 100.00
31-Dec-97 137.59 107.74 106.70
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and executive officers of the Company (or members of
their immediate families) and persons who hold more than 5% of the outstanding
shares of Common Stock have direct or indirect interests in transactions which
have been consummated by the Company, including the transfer of certain shopping
center properties and entities owning shopping center properties to the Company
by PPD and the repayment of certain indebtedness encumbering the shopping center
properties in connection with the Company's initial public offering of Common
Stock in August 1997 (the "IPO").
Terms of Transfers. The terms of the transfers of the Company's initial
portfolio of properties (or entities owning the properties) to the Company by
PPD in connection with the IPO were not determined through arm's-length
negotiation. PPD had substantial economic interest in the entities transferring
the properties and the entities that were merged into the Company.
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<PAGE> 15
Director Designation. In connection with the IPO, PPD received the right to
nominate two persons for election to the Board of Directors of the Company so
long as PPD and its affiliates collectively beneficially own at least 25% of the
outstanding shares of Common Stock.
Registration Rights. In connection with the IPO, PPD received certain
registration rights with respect to shares of Common Stock issued.
Assignment of Lease. Concurrently with the completion of the IPO, PPD
assigned the Company all of its interest as a tenant in a lease covering the
space currently serving as the headquarters of the Company at Melrose Village
Plaza in Vista, California.
Preemptive Rights. In connection with the IPO, PPD has certain
participation rights in connection with future issuances of Common Stock by the
Company which will enable PPD to maintain its overall percentage ownership of
the Common Stock of the Company.
Non-Competition Agreement. In connection with the IPO, PPD and Revenue
Properties agreed that they will not, without the consent of the Company acting
through its Independent Directors, acquire, develop or manage any shopping
centers in the Western United States and will refer all such opportunities to
the Company. These restrictions will lapse when PPD's common stock ownership of
the Company falls below 15%, calculated on a fully diluted basis.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP served as independent public accountants to the
Company during 1997 and is expected to do so in 1998. A representative of KPMG
Peat Marwick LLP is expected to be present at the Annual Meeting and will have
the opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any stockholder proposals intended to be presented at the Company's 1999
Annual Meeting of Stockholders must be received by the Company at 1631-B South
Melrose Drive, Vista, California, 92083 on or before November 20, 1998, for
inclusion in the Company's Proxy statement and form of proxy relating to the
1999 Annual Meeting of Stockholders.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in respect thereof and in the direction of the proxy holders.
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<PAGE> 16
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE
REPRESENTED. STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
By order of the Board of Directors,
David L. Adlard
Secretary
Dated: May 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PAN PACIFIC RETAIL PROPERTIES, INC.
1631-B SOUTH MELROSE DRIVE
VISTA, CALIFORNIA 92083
The undersigned, a stockholder of Pan Pacific Retail Properties, Inc., a
Maryland corporation, hereby appoints Stuart A. Tanz and Mark J. Riedy
and each or either of them as proxies, with full power of substitution and
resubstitution, to represent the undersigned and to vote all shares of Common
Stock of Pan Pacific Retail Properties, Inc. which the undersigned is entitled
to vote at the Annual Meeting of the Company to be held on June 19, 1998, and
any and all adjournments thereof, in the manner specified.
1. Election of Director nominated by the Board of Directors - Class I
Nominee: Melvin S. Adess
[ ] FOR [ ] WITHHELD
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" PROPOSAL ONE.
Should any other matters requiring a vote of the stockholders arise, the above
named proxies are authorized to vote the same in accordance with their best
judgement in the interest of the Company. The Board of Directors is not aware of
any matter which is to be presented for action at the meeting other than the
matter set forth herein.
Dated: _____________________________________________, 1998
_____________________________________________ (SEAL)
_____________________________________________ (SEAL)
(Please sign exactly as name or names appear hereon. Executors, administrators,
trustees or other representatives should so indicate when signing.)
