<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
WASHINGTON REAL ESTATE INVESTMENT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
10400 Connecticut Avenue
Kensington, Maryland 20895
May 5, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
the Washington Real Estate Investment Trust to be held on Wednesday, June 25,
1997. The formal Notice of the meeting and a Proxy Statement describing the
proposal to be voted on are enclosed.
The meeting is being held to elect two Trustees and to transact such other
business as may properly come before the meeting.
Please read the Proxy Statement, then complete, sign and return your Proxy
in the enclosed envelope. Regardless of the number of shares you own, your vote
is important.
Sincerely,
Arthur A. Birney
Chairman of the Board
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of the Shareholders (the "Annual Meeting") of the
Washington Real Estate Investment Trust (the "Trust") will be held at the Hyatt
Regency Hotel, One Bethesda Metro Center, Bethesda, Maryland on Wednesday, June
25, 1997 at 11:00 a.m., for the following purposes:
1. To elect two Trustees; and
2. To transact such other business as may properly come before the
meeting.
The Trustees have fixed the close of business on April 21, 1997 as the
record date for shares entitled to vote at the Annual Meeting.
The Annual Report of the Trust, Proxy Statement and a Proxy are enclosed
with this Notice.
You are requested, if you cannot be present at the meeting, to sign and
return the Proxy in the enclosed business reply envelope promptly.
BENJAMIN H. DORSEY
Secretary
May 5, 1997.
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
10400 Connecticut Avenue
Kensington, Maryland 20895
PROXY STATEMENT
This Proxy Statement is furnished by the Trust's Board of Trustees (the
"Board") in connection with its solicitation of proxies for use at the Annual
Meeting of Shareholders on June 25, 1997, and at any and all adjournments
thereof. Mailing of this Proxy Statement will commence on or about May 5, 1997.
All proxies will be voted in accordance with the instructions contained therein,
and if no choice is specified, the proxies will be voted in favor of the
proposals set forth in the Notice of Annual Meeting. Abstentions are voted
neither "for" nor "against", but are counted in the determination of a quorum. A
Proxy on the enclosed form may be revoked by the Shareholder at any time prior
to its exercise at the meeting by submitting, to the Secretary of the Trust, a
duly executed Proxy bearing a later date or by attending the Annual Meeting and
orally withdrawing the Proxy.
The voting securities of the Trust consist of shares of beneficial interest,
$.01 per share par value ("Shares"), of which 31,827,844 Shares were issued and
outstanding at the close of business on March 31, 1997. So far as is known to
the Trust, no person holds of record or beneficially as much as 5% of the
outstanding Shares. The Trust has no other class of voting security. Each Share
outstanding on April 21, 1997, will be entitled to one vote. Shareholders do not
have cumulative voting rights.
I.
THE BOARD OF TRUSTEES AND MANAGEMENT
THE BOARD OF TRUSTEES
The Board consists of seven Trustees divided into two classes of two
Trustees each, and one class of three Trustees. The terms of the Trustees
continue until the Annual Meetings to be held in 1997, 1998 and 1999,
respectively, and until their respective successors are elected and qualified.
At each Annual Meeting, two or three Trustees are elected, subject to the
limitations described below, for a term of three years to succeed those Trustees
whose terms expire at such Annual Meeting. The Trust's By-Laws provide that no
Trustee shall be nominated or elected as a Trustee after such person's 72nd
birthday. The By-Laws further provide that any Trustee who is first elected a
Trustee after April 5, 1996 shall tender his resignation as a Trustee on his
72nd birthday.
The Board held 19 meetings in 1996 and acted one time by written consent in
lieu of a meeting. The Nominating Committee, consisting of Messrs. Birney,
Cronin and Osnos, makes recommendations to the Board for nominations of
Trustees. The Nominating Committee met three times in 1996 for this purpose. The
Trustees will consider recommendations for nominations for Trustee received from
shareholders provided that the shareholder submits such recommendation in
writing before April 15, 1998 accompanied by a written statement setting forth
the reasons the Trust would benefit from the election of such nominee. The Audit
Committee, consisting of Messrs. Cafritz and Osnos, meets at least quarterly
with the President and Chief Executive Officer, Chief Financial Officer, and
Chief Accounting Officer to review operating results and other matters. The
Audit Committee reviews management's independent public accountant selection and
makes recommendations to the Board based on that review. The Committee also
questions management and WRIT's independent public accountants on the
application of accounting and reporting standards to WRIT and makes
recommendations to the Board regarding dividend declarations. The Audit
Committee met four times in 1996. A Compensation Committee, composed of Messrs.
Cronin, Snyder and Cafritz, is responsible for making recommendations to the
Board with respect to compensation decisions. The Compensation Committee met two
times during 1996. See "Report on Executive Compensation" below. All members of
the Board attended more than 75% of the total number of meetings held during
1996.
The six non-officer Trustees of the Trust, Messrs. Birney, Cafritz, Dorsey,
Kahn, Osnos and Snyder, are compensated in the form of fees. This amount for
each such Trustee was $33,000 for 1996. Mr. Birney,
<PAGE>
who served as Chairman of the Board, and Mr. Dorsey who served as Secretary of
the Trust, received additional remuneration for such services of $9,500 and
$24,000, respectively. During 1996, the Trust utilized the legal services of the
law firm of Arent Fox Kintner Plotkin & Kahn, of which Trustee David M. Osnos is
a senior partner. The amount of fees paid to Arent Fox did not exceed 5% of that
firm's 1996 gross revenues or 5% of the Trust's 1996 gross revenues.
The following table sets forth the names and certain biographical
information concerning each of the current Trustees.
<TABLE>
<CAPTION>
SERVED AS TERM
NAME PRINCIPAL OCCUPATION(*) TRUSTEE SINCE AGE EXPIRES
- ----------------------------------------- ----------------------------------------- --------------- --- -----------
<S> <C> <C> <C> <C>
Arthur A. Birney......................... Chairman of the Trustees 1961 69 1997
Managing Partner and Chief Executive
Officer, Washington Brick & Terra Cotta
Co.(Real Estate Holding and Development
Company); President, Port Annapolis
Marina; Managing Partner, Queenstown
Harbor Golf Links L.P.
B. Franklin Kahn......................... Chairman Emeritus 1960 72 1997
Edmund B. Cronin, Jr..................... President and Chief Executive Officer 1994 60 1998
Benjamin H. Dorsey....................... Secretary of the Trust 1960 73 1998
Retired General Counsel
David M. Osnos........................... Senior Partner, Arent Fox Kintner Plotkin 1987 65 1998
& Kahn (Legal counsel to the Trust);
Director, VSE Corporation (engineering);
Director, EastGroup Properties (real
estate investment trust)
William N. Cafritz....................... President, William Cafritz Development 1984 71 1999
Corp. (real estate development)
Stanley P. Snyder........................ Chairman, Snyder-Cohn-Collyer-Hamilton & 1968 62 1999
Associates, P.C., formerly Snyder,
Kamerow & Associates, P.C. (Certified
Public Accountants)
</TABLE>
- ------------------------
(*) Each person has held the indicated position for more than the past five
years except Messrs. Birney, Cronin, Dorsey and Kahn.
Mr. Arthur A. Birney, a founding Trustee, is Managing Partner and Chief
Executive Officer of Washington Brick & Terra Cotta Co., a real estate
investment and holding company founded in 1892, President of Port Annapolis
Marina, Inc. and Managing Partner of Queenstown Harbor Golf Links L.P.
Mr. Edmund B. Cronin, Jr. has 36 years of real estate investment,
development, operations and finance experience in the Mid-Atlantic region. From
1977 to 1993, he served as Chairman and Chief Executive Officer of Smithy
Braedon, a full service commercial real estate firm providing leasing, sales,
2
<PAGE>
asset management, finance, consulting, advisory and development services. From
1993 until joining the Trust in June 1994, Mr. Cronin was Chief Executive
Officer of H.G. Smithy Company, a real estate management and advisory service
company.
Mr. Benjamin H. Dorsey retired as General Counsel of the Trust as of
December 31, 1995. Mr. Dorsey had served as Secretary and General Counsel of the
Trust since 1960. Mr. Dorsey continues to serve as Secretary and as a Trustee.
Mr. B. Franklin Kahn retired as Chairman of the Trustees and Chief Executive
Officer of the Trust effective March 9, 1995, a position he had held since 1960.
Mr. Kahn serves as a Trustee until the expiration of his term on June 25, 1997.
OTHER EXECUTIVE OFFICERS
The following table contains information regarding other executive officers
of the Trust. Such officers are elected annually by the Board and serve at the
Board's discretion.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Larry E. Finger...................................... 43 Senior Vice President--Chief Financial Officer
Mary Beth Avedesian.................................. 37 Vice President--Investments
Brian J. Fitzgerald.................................. 35 Vice President--Leasing
Laura M. Franklin.................................... 36 Vice President--Chief Accounting Officer, Asst. Secy.
George F. McKenzie................................... 41 Vice President--Asset Management
Kenneth C. Reed...................................... 44 Vice President--Property Management
Thomas L. Regnell.................................... 40 Vice President--Acquisitions
</TABLE>
Mr. Larry E. Finger, an attorney and CPA, joined the Trust in December 1993
and was elected Senior Vice President, Chief Financial Officer in June 1995.
From 1978 to 1991, Mr. Finger served with Savage/Fogarty Companies, Inc., a real
estate investment, management and development company based in Alexandria,
Virginia, most recently as Chief Operating Officer. During 1992 and until he
joined the Trust, Mr. Finger created and operated a multi-restaurant delivery
business.
Ms. Mary Beth Avedesian joined the Trust as Vice President--Investments in
March 1995. From 1993-1995, Ms. Avedesian was an Assistant Vice President for
Towle Financial Services, where she performed acquisition due diligence and
asset management. Before Towle, Ms. Avedesian was employed for two years as an
Asset Manager and Marketing Manager for AMRESCO, a subsidiary of NationsBank
formed to dispose of bank-owned property; and for four years with Himmel and
Company as a Financial Analyst and Development Manager.
Mr. Brian J. Fitzgerald joined the Trust in January of 1996 as Vice
President--Leasing. From 1984 to 1993, Mr. Fitzgerald served as a commercial
leasing broker with Smithy Braedon Company in Northern Virginia. In 1993, he
became a Vice President of H. G. Smithy Company, with responsibilities for
managing all agency leasing activities. From the date of the merger of H. G.
Smithy Commercial Management Group with Cushman & Wakefield of Washington, D.C.,
Inc. in June of 1994, until joining the Trust, Mr. Fitzgerald managed
institutional agency leasing activities at Cushman & Wakefield, Inc. of
Washington, D.C.
Ms. Laura M. Franklin, a CPA, joined the Trust in 1993. From 1984 to 1993,
Ms. Franklin served with the public accounting firm of Reznick, Fedder and
Silverman, P.C. specializing in audit and tax services for real estate clients.
3
<PAGE>
Mr. George F. McKenzie joined the Trust in September of 1996 as Vice
President--Asset Management. From 1985 to 1996, Mr. McKenzie served with the
Prudential Realty Group, most recently as Vice President, Investment & Sales,
responsible for property dispositions throughout the East Coast. Prior
assignments included mortgage originations and asset management in the
Mid-Atlantic region.
Mr. Kenneth C. Reed joined the Trust as Vice President--Property Management
in June of 1995. Mr. Reed has served as President of CSN Management Corp. since
1988 and continues to serve as CSN President. CSN manages all of WRIT's
properties and only WRIT properties.
Mr. Thomas L. Regnell joined the Trust as Vice President--Acquisitions in
January of 1995. From 1992 to 1994, Mr. Regnell served as an Investment Officer
with Federal Realty Investment Trust in Bethesda, Maryland. Mr. Regnell was
responsible for Federal Realty's real estate acquisitions in the Midwest and
Southeast United States. Prior to joining Federal Realty, Mr. Regnell was a Vice
President with Spaulding & Slye Company, a real estate development, brokerage
and management company in Bethesda, Maryland. Mr. Regnell was associated with
Spaulding & Slye for seven years.
There are no family relationships between any Trustee or executive officer.
OWNERSHIP OF SHARES BY TRUSTEES AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning all Shares
beneficially owned as of April 21, 1997, by each Trustee, by each of the "Named
Officers" (as defined in "Executive Compensation" below) and by all Trustees and
Executive Officers as a group. Unless otherwise indicated, the voting and
investment powers for the Shares listed are held solely by the named holder.
<TABLE>
<CAPTION>
PERCENTAGE
OF
NAME SHARES OWNED TOTAL
- --------------------------------------------------------------- -------------- ------
<S> <C> <C>
Arthur A. Birney............................................... 48,433(1) 0.15%
William N. Cafritz............................................. 18,787 0.06%
Edmund B. Cronin, Jr........................................... 36,545(2) 0.11%
John M. Derrick, Jr.(3)........................................ 0 0.00%
Benjamin H. Dorsey............................................. 83,522(1)(2) 0.26%
Larry E. Finger................................................ 11,827(2) 0.04%
Laura M. Franklin.............................................. 6,004(2) 0.02%
Sandra T. Hunt................................................. 23,043(2) 0.07%
B. Franklin Kahn............................................... 401,444(1)(2) 1.26%
David M. Osnos................................................. 900 0.00%
Thomas L. Regnell.............................................. 3,619(2) 0.01%
Stanley P. Snyder.............................................. 5,062 0.02%
All Trustees and Executive Officers as a group (16 persons).... 651,764(2) 2.05%
</TABLE>
- ------------------------
(1) Includes shares held in a trust.
(2) Includes shares subject to options exercisable within 60 days, as follows:
Mr. Cronin, 25,761; Mr. Dorsey, 23,376; Mr. Finger, 10,003; Ms. Franklin,
6,004; Ms. Hunt, 20,220; Mr. Kahn, 92,216; Mr. Regnell, 3,419 shares; and
all Trustees and Executive Officers as a group, 193,054.
(3) Mr. Derrick is not currently a Trustee, but is nominated for election as a
Trustee at the June 1997 shareholder meeting.
4
<PAGE>
II.
ELECTION OF TRUSTEES
Messrs. Birney and Derrick stand for election as Trustees at the Annual
Meeting, to serve for three years. It is intended that the proxies given to the
persons named in the accompanying Proxy (unless otherwise indicated on such
Proxy) will be voted for the election of Messrs. Birney and Derrick. Mr. Birney
currently serves as Chairman of the Board of Trustees. Mr. Derrick is
President/COO of the Potomac Electric Power Company (PEPCO). He joined the
Company in 1961, and was elected to his present position in December 1992. A
Licensed Professional Engineer in the District of Columbia and Maryland, Mr.
Derrick earned his bachelor's degree in Electrical Engineering from Duke
University in 1961. He belongs to the Institute of Electrical and Electronic
Engineers, the National Society of Professional Engineers, the Washington
Society of Engineers, the Edison Electric Institute, and the Greater Washington
Board of Trade. He is also Treasurer of the United States Energy Association and
a member of the boards of Junior Achievement, the Maryland Chamber of Commerce,
Wesley Theological Seminary, the Accokeek Foundation, the Nature Conservancy
Maryland/District of Columbia Chapters, the Historical Society of Washington,
the University of Maryland Foundation, the Arena Stage and the Board of
Associates at Gallaudet University. He is active in Duke University affairs,
serving on the Dean's Council of the School of Engineering.
If a nominee becomes unable or unwilling to stand for election for any
reason not presently known or contemplated, the persons named in the enclosed
Proxy will have discretionary authority to vote pursuant to the Proxy for a
substitute nominee nominated by the Board. The election of Trustees requires the
affirmative vote of the holders of a majority of the Shares voting at the Annual
Meeting either in person or by proxy.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE
ELECTION OF ARTHUR A. BIRNEY AND JOHN M. DERRICK, JR.
III.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows the compensation awarded, earned or
paid during the past three years to the Trust's Chief Executive Officer and each
of the Trust's four other most highly compensated executive officers (the "Named
Officers") whose compensation exceeded $100,000 for the periods indicated.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION($)(1) GRANTED(#)(2)
- ---------------------------------------------- --------- ---------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Edmund B. Cronin, Jr. President and Chief 1996 $360,000 $ 84,933 26,650
Executive Officer, Trustee 1995 $295,000 20,171
1994 $171,875 15,675
Larry E. Finger Senior Vice President and 1996 $200,000 $ 47,185 14,806
Chief Financial Officer 1995 $150,000 6,838
1994 $125,000 6,584
Laura M. Franklin Vice President and Chief 1996 $82,500 $ 19,464 6,107
Accounting Officer 1995 $60,000 4,103
1994 $47,500 3,128
Sandra T. Hunt Vice President--Leasing 1996 $161,600 $ 9,323
1995 $161,810 $18,646 6,838
1994 $151,700 6,584
Thomas L. Regnell Vice President-- 1996 $125,000 $ 29,491 9,254
Acquisitions 1995 $107,914 6,838
</TABLE>
- ------------------------
(1) Represents accrued vacation paid in cash.
(2) All options reflected in the table were granted under the Washington Real
Estate Investment Trust 1991 Stock Option Plan, as amended (the "Stock
Option Plan"), except 9,091 of Mr. Cronin's 1994 options and 13,333 of Mr.
Cronin's 1995 options, which were granted as non-qualified options pursuant
to his Employment Agreement described below.
The Trust has an Employment Agreement with Edmund B. Cronin, Jr.,
establishing Mr. Cronin's position initially as President and Chief Operating
Officer of the Trust. The Agreement was entered into on May 11, 1994 for a term
of two years and eight months ending on December 31, 1996, unless earlier
terminated by either party. Pursuant to the Employment Agreement, Mr. Cronin
received an annual base salary of $275,000 in his first year of employment,
subject to annual review by the Board. Mr. Cronin received standard insurance,
vacation and sick leave benefits and was eligible to participate in the Trust's
Pension Plan. The Agreement provided for the grant to Mr. Cronin of incentive
stock options in December 1994, 1995 and 1996 to purchase $100,000 worth of
Trust shares each year, based on the then current market price of such shares,
which shall also be the option exercise price. In addition, the Agreement
provided that Mr. Cronin receive non-qualified options in December 1994, 1995
and 1996 for an amount equal to the difference between his then current base
salary and $100,000, based on the then current market price of the Shares,
except for options granted in December 1994 for which the exercise price was
based on the market value of the Shares as of June 1, 1994. The Employment
Agreement further provided that, not later than September 30, 1994, the Board
would consider whether Mr. Cronin should be nominated to a position as Trustee.
He was appointed a Trustee on September 13, 1994 and was elected President and
Chief Executive Officer effective March 9, 1995.
OPTION GRANTS TABLE
The following table shows the specified information with respect to options
granted to the Named Officers in 1996.
6
<PAGE>
1996 OPTION GRANTS TABLE
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF PERCENTAGE PRICE APPRECIATION
SECURITIES OF TOTAL FULL 10-YEAR
UNDERLYING OPTIONS OPTION TERM
OPTIONS GRANTED TO EXERCISE EXPIRATION ----------------------
NAME GRANTED(1) EMPLOYEES PRICE DATE 5% 10%
- ------------------------------------------------ ----------- ------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edmund B. Cronin, Jr............................ 26,650 29.3% $ 16.1875 12/16/2006 $ 271,303 $ 687,536
Larry E. Finger................................. 14,806 16.3% $ 16.1875 12/16/2006 $ 150,729 $ 381,976
Laura M. Franklin............................... 6,107 6.7% $ 16.1875 12/16/2006 $ 62,171 $ 157,553
Sandra T. Hunt.................................. -- N/A N/A N/A N/A N/A
Thomas L. Regnell............................... 9,254 10.2% $ 16.1875 12/16/2006 $ 94,208 $ 238,741
</TABLE>
- ------------------------
(1) Options become exercisable 50% after one year and 100% after two years.
20,473 of Mr. Cronin's options, 8,629 of Mr. Finger's options and 3,077 of
Mr. Regnell's options were granted as non-qualified stock options. See "IV.
Report on Executive Compensation--Executive Compensation Program."
The dollar amounts under the 5% and 10% columns in the table above are the
result of calculations required by the SEC's rules and therefore are not
intended to forecast possible future appreciation in the price of the Shares,
which would benefit all shareholders. For example, in order for the Named
Officers to realize the potential values set forth in the 5% and 10% columns in
the table above, the price per Share of the Shares would have to be
approximately $26-3/8 and $42, respectively, as of the expiration date of the
option. Actual gains, if any, on option exercises and Share holdings are
dependent on the future performance of the Shares and overall stock market
conditions.
AGGREGATED OPTION EXERCISES AND OPTION VALUE TABLE
The following table shows information concerning the exercise of stock
options during 1996 by each of the Named Officers and the year-end value of
unexercised options.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN
OPTIONS AT DECEMBER 31, THE MONEY OPTIONS AT
SHARES 1996 DECEMBER 31, 1996
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edmund B. Cronin, Jr..................... -- -- 25,761 36,736 $ 44,221 $ 63,974
Larry E. Finger.......................... -- -- 10,023 18,225 $ 25,055 $ 29,263
Laura M. Franklin........................ -- -- 6,004 8,159 $ 13,132 $ 13,914
Sandra T. Hunt........................... 35,370 $ 113,416 20,220 3,419 $ 25,055 $ 9,830
Thomas L. Regnell........................ -- -- 3,419 12,673 $ 9,830 $ 21,976
</TABLE>
- ------------------------
(1) Value realized represents the difference between the exercise price of the
options and the closing price of the underlying shares on the date preceding
the exercise date.
7
<PAGE>
PENSION PLAN
The Trust has a non-contributory defined benefit pension plan (the "Pension
Plan") that covers all employees who met certain requirements regarding age and
years of service before December 31, 1995. The Pension Plan was amended on
December 12, 1995 to fix benefits and years of service accruals as of December
31, 1995.
The following table is illustrative of various annual payments that would be
made pursuant to the Pension Plan upon retirement on an individual's 65th
birthday, assuming the indicated five-year average remuneration and years of
service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
REMUNERATION 15 20 25 30 35
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
$125,000.................................................. $ 34,440 $ 45,920 $ 57,400 $ 68,880 $ 71,176
150,000.................................................. 41,565 55,420 69,275 83,130 85,901
175,000.................................................. 48,690 64,920 81,150 97,380 100,626
200,000.................................................. 55,815 74,420 93,025 111,630 115,351
225,000.................................................. 62,940 83,920 104,900 125,880 130,076
250,000.................................................. 70,065 93,420 116,775 140,130 144,801
300,000.................................................. 84,315 112,420 140,525 168,630 174,251
400,000.................................................. 112,815 150,420 188,025 225,630 233,151
450,000.................................................. 127,065 169,420 211,775 254,130 262,601
500,000.................................................. 141,315 188,420 235,525 282,630 292,051
</TABLE>
The Pension Plan provides for retirement upon the participant's 65th
birthday, disability or attainment of age 50 with 10 or more years of service at
an actuarially reduced benefit. The Pension Plan provides both retirement
benefits and death benefits prior to retirement. Retirement benefits are based
on the participant's average salary during the five years of employment which
produces the highest average. Accrued pension benefits are fully vested after
six years of employment. Death benefits are based on the projected monthly
pension benefit.
IV.
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
The Board determined executive compensation for 1996. A Compensation
Committee (the "Compensation Committee") composed of Messrs. Cronin, Cafritz and
Snyder was responsible for making recommendations to the Board with respect to
1996 compensation decisions. Mr. Cronin, the Trust's Chief Executive Officer,
was not involved in the consideration or vote concerning his own compensation.
EXECUTIVE COMPENSATION PRINCIPLES
The Trust's Executive Compensation Program is based on guiding principles
designed to align executive compensation with Trust values and objectives,
business strategy, management initiatives and business financial performance. In
applying these principles the Compensation Committee has established a program
designed to:
- Attract and retain key executives critical to the long-term success of the
Trust.
- Reward executives for long-term strategic management and the enhancement
of shareholder value.
- Support a performance-oriented environment that rewards performance based
upon exceeding Trust operating performance goals.
8
<PAGE>
EXECUTIVE COMPENSATION PROGRAM
For 1996, the Board, upon recommendation of the Compensation Committee,
adopted an Incentive Compensation Plan (the "Plan") to align executive
compensation with shareholder interests through salaries, cash bonuses and
option grants tied to pre-set objective performance goals.
Under the Plan, salaries for the Trust's executive officers were set based
upon (i) a review of the compensation paid to similarly situated executive
officers employed by companies comprising the EREIT Index (see page 11,
Performance Graph for a definition of the EREIT Index); and (ii) a subjective
evaluation of each executive officer's performance throughout the year. See
"Executive Compensation-- Performance Graph" for additional discussion regarding
the EREIT Index. Specific performance goals were not established for the Trust's
executive officers during 1996 regarding salary, but as described below, were
established for bonus and option purposes. In general, the EREIT Index
comparison and the subjective evaluation were weighted equally by the Board when
making individual salary decisions. The Board believes that compensation paid to
the Trust's executive officers is comparable to that paid by the companies
comprising the EREIT Index.
Cash bonuses would be paid only if the Trust's Funds From Operations ("FFO")
per Share grew by at least 5%. If this minimum threshold was achieved, a bonus
pool would be created as follows: 8% of the first 7% of the growth in FFO per
share, plus 15% of the growth in FFO per share in excess of 7% would go into the
bonus pool. Executive Officers of the Trust and selected middle management share
the bonus pool pro-rata based on their salaries.
Long-term incentives are provided through the Stock Option Plan, which
provides for the grant of incentive stock options and non-qualified stock
options. Executive Officers and selected senior management receives option
grants equal to the total of their salary and cash bonus divided by the exercise
price, i.e., the share price on the date of the grant. All option prices are at
fair market value on the date of grant and expire after 10 years.
The Board believes that compensation paid to the Trust's executive officers
is comparable to that paid by the companies comprising the EREIT Index.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Cronin's 1996 compensation consisted of his salary, bonus and options
based upon the Plan described above. Mr. Cronin's salary was determined by the
Board (excluding Mr. Cronin) after a recommendation by the Compensation
Committee (excluding Mr. Cronin) and was based upon (i) a review of the
compensation paid to Chief Executive Officers employed by companies comprising
EREIT Index and (ii) a subjective evaluation of Mr. Cronin's performance
throughout the year. As described above under the Plan, specific performance
goals were not established for Mr. Cronin during 1996 regarding salary but, as
described above, were established for bonus and option purposes. In general, the
EREIT Index comparison and the subjective evaluation were weighted equally by
the Board when making the decision to set Mr. Cronin's 1996 salary at $360,000.
Compensation paid to Mr. Cronin is comparable to compensation paid to the Chief
Executive Officers of the companies comprising the EREIT Index.
THE BOARD OF TRUSTEES
Arthur A. Birney
William N. Cafritz
Edmund B. Cronin, Jr.
Benjamin H. Dorsey
B. Franklin Kahn
David M. Osnos
Stanley P. Snyder
9
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder return
on the Shares with the cumulative total return of companies making up the
Standard & Poor's 500 Stock Index as provided by Standard & Poor's Corporation
and the Equity Real Estate Investment Trust Index (excluding Health Care REITs)
(the "EREIT Index") as provided by the National Association of Real Estate
Investment Trusts. The EREIT Index is a compilation of 172 companies as of
December 31, 1996 which qualify as real estate investment trusts and own real
property and/or equity interests in real property, and has been weighted
according to each individual company's stock market capitalization. The EREIT
Index companies are traded on the New York and American Stock Exchanges and on
the Nasdaq Stock Market. The graph assumes an initial investment of $100 on
December 31, 1991 and the reinvestment of all dividends paid thereafter with
respect to such $100 investment.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WRIT EREIT S&P
<S> <C> <C> <C>
1991 $100 $100 $100
1992 119 121 108
1993 126 143 118
1994 105 148 120
1995 109 168 164
1996 127 230 202
</TABLE>
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
WRIT....................................................................... $ 100 $ 119 $ 126 $ 105 $ 109
EREIT...................................................................... 100 121 143 148 168
S&P........................................................................ 100 108 118 120 164
<CAPTION>
1996
---------
<S> <C>
WRIT....................................................................... $ 127
EREIT...................................................................... 230
S&P........................................................................ 202
</TABLE>
V.
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP served as the Trust's independent public
accountants for 1996, succeeding Price Waterhouse LLP, the Trust's prior
independent accountants. The Board has appointed Arthur Andersen LLP as the
Trust's independent public accountant for 1997. Representatives of Arthur
Andersen LLP are expected to attend the Annual Meeting, will be provided with an
opportunity to make a statement, should they desire to do so, and will be
available to respond to appropriate questions from the stockholders.
10
<PAGE>
SECURITIES REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Trustees and certain officers to file reports of changes in stock ownership with
the SEC and with the American Stock Exchange, with copies to the Trust. Based
solely on a review of such copies, the Trust believes that all such filing
requirements have been met for the year ended December 31, 1996.
EXPENSES AND ADMINISTRATION
The cost of this solicitation of proxies will be borne by the Trust. In
addition to the use of the mails, some of the officers and regular employees of
the Trust may solicit proxies by telephone or telecopier, will request brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
material to the beneficial owners of Shares held of record by such persons and
may also verify the accuracy of marked proxies by contacting record and
beneficial owners of Shares. The Trust will reimburse such persons for expenses
incurred in forwarding such soliciting material.
1998 ANNUAL MEETING
Shareholders may present proposals to be considered for inclusion in the
Proxy Statement relating to the 1998 Annual Meeting, provided they are received
by the Trust no later than December 24, 1997 and are in compliance with
applicable laws and SEC regulations.
Benjamin H. Dorsey Secretary
April 28, 1997.
11
<PAGE>
<TABLE>
<S> <C> <C>
1. Election of two Trustees
Nominees (for the terms stated in the Proxy Statement): Arthur A. Birney and
John M. Derrick, Jr.
For, except vote withheld from the following Nominee: FOR WITHHELD
-------------------------------- / / / /
</TABLE>
2. Such other matters as may come before the meeting, hereby revoking any proxy
or proxies heretofore given.
IF NO CHOICE IS SPECIFIED, THIS PROXY
WILL BE VOTED "FOR" THE NOMINATED
TRUSTEES. PROXIES WILL BE VOTED AS
DIRECTED OR SPECIFIED.
PLEASE vote at once. It is important.
Please mark your choice in black ink.
<TABLE>
<S> <C> <C> <C>
SIGNATURE DATE
---------------------- ---------------
SIGNATURE DATE
---------------------- ---------------
</TABLE>
NOTE: SIGNATURE(S) MUST CORRESPOND EXACTLY WITH NAME(S) AS IMPRINTED HEREON.
When signing as attorney, executor, administrator, trustee or guardian,
please give the full title as such and if the signer is a corporation,
please sign with the full corporate name by a duly authorized officer. If
shares are held in the name of more than one person, all named holders
must sign the proxy.
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS JUNE 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of Washington Real Estate Investment Trust
appoints Benjamin H. Dorsey and Edmund B. Cronin, Jr., and each of them, with
full power of substitution, as proxy to vote all shares of the undersigned in
Washington Real Estate Investment Trust at the Annual Meeting of Shareholders to
be held on June 25, 1997, and at any adjournment thereof, with like effect and
as if the undersigned were personally present and voting, upon the following
matters:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
