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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 [_]
Check the appropriate box:
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
Washington Real Estate Investment Trust
- --------------------------------------------------------------------------------
(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):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
6110 Executive Boulevard, Suite 800
Rockville, Maryland 20852
March 30, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
the Washington Real Estate Investment Trust to be held on Tuesday, May 23,
2000. The formal Notice of the meeting and a Proxy Statement describing the
proposals to be voted upon are enclosed.
Please read the Proxy Statement, then complete, sign and return your proxy
card in the enclosed envelope. Note that you may vote via telephone or the
internet should you prefer. To do so, just follow the instructions on the
enclosed card.
Regardless of the number of shares you own, your vote is important.
Sincerely,
/s/ Arthur A. Birney
----------------------
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 Wash-
ington Real Estate Investment Trust (the "Trust" or "WRIT") will be held at the
Hyatt Regency Hotel, One Bethesda Metro Center, Bethesda, Maryland on Tuesday,
May 23, 2000 at 11:00 a.m., for the following purposes:
1. To elect two Trustees;
2. To vote upon a proposal to amend the Trust's Stock Option Plan to
increase the number of shares available under the plan by 280,000
shares;
3. To vote upon a shareholder proposal regarding executive compensation;
and
4. To transact such other business as may properly come before the meeting.
The Trustees have fixed the close of business on March 27, 2000 as the
record date for shares entitled to vote at the Annual Meeting.
The Annual Report of the Trust, Proxy Statement and a Proxy Card are
enclosed with this Notice.
You are requested, if you cannot be present at the Annual Meeting, to sign
and promptly return the Proxy Card in the enclosed business reply envelope.
Sincerely,
/s/ Laura M. Franklin
----------------------
Laura M. Franklin
Corporate Secretary
March 30, 2000
<PAGE>
WASHINGTON REAL ESTATE INVESTMENT TRUST
6110 Executive Boulevard, Suite 800
Rockville, Maryland 20852
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 May 23, 2000 and at any and all adjournments
thereof. Mailing of this Proxy Statement will commence on or about March 30,
2000. All proxies will be voted in accordance with the instructions contained
therein, and if no instructions are specified, the proxies will be voted in
accordance with the recommendations of the Board. Therefore, if no
instructions are specified, the proxies will be voted FOR the election of the
two Trustee nominees listed, FOR Proposal Two, the amendment to the stock
option plan and AGAINST Proposal Three, the shareholder proposal regarding
executive compensation. Abstentions and broker non-votes (proxies that
indicate that brokers or nominees have not received instructions from the
beneficial owner of shares) are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulating the total number of votes cast on proposals
presented to shareholders, whereas broker non-votes are not counted for
purposes of determining the total number of votes cast. A Proxy on the
enclosed form may be revoked by the shareholder at any time prior to its
exercise at the Annual 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, $0.01 par value ("Shares"), of which 35,733,793 Shares were issued
and outstanding at the close of business on March 27, 2000. 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 March 27, 2000 will be entitled to one vote. Shareholders
do not have cumulative voting rights.
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 2000, 2001 and 2002,
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 December 19, 1995 shall tender his resignation
as a Trustee on his 72nd birthday.
The Board held 13 meetings in 1999. The Nominating Committee, consisting of
Messrs. Birney, Cronin, Derrick, Osnos and Ms. Williams, makes recommendations
to the Board for nomination of Trustees. The Nominating Committee met three
times in 1999 and met one time in 2000. The Trustees will consider
recommendations received from shareholders for nominations for Trustees to be
elected at the 2001 Annual Meeting. Such recommendation must be submitted in
writing before December 22, 2000 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. Derrick, Kendall, McDaniel, Osnos
and Ms. Williams, meets at least quarterly with the President and Chief
Executive Officer, Chief Financial Officer and Chief Accounting Officer,
together and/or individually, 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
Audit Committee also questions management and the Trust's independent public
accountants on the application
<PAGE>
of accounting and reporting standards to the Trust and makes recommendations
to the Board regarding dividend declarations. The Audit Committee met four
times in 1999 and twice in 2000. The Compensation Committee, composed of
Messrs. Birney, Kendall and McDaniel, is responsible for making
recommendations to the Board with respect to compensation decisions. The
Compensation Committee met once during 1999 and once during 2000. See "Report
on Executive Compensation" below. During 1999, each incumbent Trustee attended
more than 75% of the total number of Board and committee meetings he or she
was eligible to attend except Ms. Williams.
The six non-officer Trustees of the Trust receive an annual retainer of
$15,000 plus a $1,000 per meeting fee for attending Board and committee
meetings. In addition, each non-officer Trustee receives an annual grant of
2,000 Share options and 400 unrestricted Shares. The Chairman of the Board
receives additional remuneration of $9,500 for such services.
During 1999, the Trust utilized the legal services of the law firm of Arent
Fox Kintner Plotkin & Kahn PLLC, 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
1999 gross revenues or 5% of the Trust's 1999 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
---- --------------------------- ------------- --- -------
<C> <S> <C> <C> <C>
Arthur A. Birney Managing Partner and Chief Executive Officer,
Washington Brick & Terra Cotta Co. 1960 72 2000
John M. Derrick, Jr. Chairman, President/CEO--Potomac Electric Power
Company 1997 60 2000
Edmund B. Cronin, Jr. President and Chief Executive Officer, WRIT 1994 63 2001
John P. McDaniel Chief Executive Officer-- Medstar Health 1998 57 2001
David M. Osnos Senior partner, Arent Fox Kintner Plotkin & Kahn, PLLC 1987 68 2001
Clifford M. Kendall Director, Affiliated Computer Service, Inc. 1999 68 2002
Susan J. Williams Founding Partner and President, Bracy Williams & Company 1999 59 2002
</TABLE>
Mr. Arthur A. Birney has been Managing Partner and CEO of Washington Brick
and Terra Cotta Company, a real estate development and investment company,
since 1960. He is President of Port Annapolis Marina, Inc. and Managing
Partner, Queenstown Harbor Golf Links LP. He was a founding Trustee of
Washington Real Estate Investment Trust in 1960 and has served as a Trustee of
WRIT since 1960. Mr. Birney has served as WRIT's Chairman since 1995.
Mr. Edmund B. Cronin, Jr. has 38 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,
asset management, finance, consulting, advisory and development services. From
1976 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
holding company. Mr. Cronin is also a director of the Potomac Electric Power
Company.
Mr. John M. Derrick Jr. is Chairman, President/CEO of Potomac Electric
Power Company (PEPCO). He joined PEPCO in 1961 and served as President/CEO
from 1997 until his election to his present position in 1999. From 1992 until
1997, he served as President/COO. Mr. Derrick is a member of the Institute of
Electrical and Electronic Engineers, the National Society of Professional
Engineers, the Washington Society of Engineers and the Edison Electric
Institute. He is a director of the Greater Washington Board of Trade, the
Federal City Council and the Economic Club of Washington and is a past
Chairman of the Maryland Chamber of Commerce.
2
<PAGE>
Mr. Clifford M. Kendall is a director of Affiliated Computer Service, Inc.
(ACS). Before the merger with ACS, Mr. Kendall served as Chairman and CEO of
Computer Data Systems, Inc. (CDSI) from 1971 to 1991 and as Chairman from 1991
to 1998. Prior to joining CDSI, his career included positions with Washington
Gas Light Company, American University, Washington University in St. Louis,
and Booz, Allen & Hamilton, Inc. Mr. Kendall is a past Chairman and continues
to serve on the Board and Executive Committee of the High Technology Council
of Maryland and the Advisory Board for the Montgomery County Technology
Enterprise Center. He is a director of the Montgomery County Community
Foundation and The Lighthouse. Mr. Kendall also serves on the Board of
Trustees of George Washington University and is a member of the Board of
Regents for the University System of Maryland. He is past Chairman of the
Greater Washington Board of Trade, and has served as Chairman of the
Montgomery/Prince Georges County CEO Roundtable.
Mr. John P. McDaniel has served as Chief Executive Officer of Medstar
Health, a multi-institutional, not-for-profit healthcare organization serving
Washington DC, Maryland, Virginia and the mid-Atlantic region since its
inception in 1982. Mr. McDaniel is a past Chair of the Executive Committee of
the Greater Washington Board of Trade, the Executive Committee of the Federal
City Council, the Board of Directors of Lutheran Brotherhood, the Maryland
State Racing Commission, the Board of the Greater Baltimore Committee and a
Fellow of the American College of Healthcare Executives.
Mr. David M. Osnos has been an attorney with Arent Fox Kintner Plotkin &
Kahn, PLLC (legal counsel to the Trust) since 1956. His principal areas of
practice include real estate, tax, securities, corporate, estate planning and
sports law. He is a director or trustee of numerous organizations including
EastGroup Properties (real estate investment trust), VSE Corporation
(engineering) and Washington Wizards Basketball Club.
Ms. Susan J. Williams is Founding Partner and has served as President of
Bracy Williams & Company, government and public affairs consultants since
1982. Ms. Williams' career includes public service as a legislative
professional on Capitol Hill and Assistant Secretary of Transportation. She
also played a founding role in Project Head Start. Ms. Williams is a past
Chair of The Greater Washington Board of Trade. She serves on the Board of
Directors of the Henry L. Stimson Center, the American Institute for Public
Service, the Historical Society of Washington, D.C., the National Aquarium in
Baltimore, and the D.C. Agenda Project. She is also a member of the Board that
is preparing the Washington-Baltimore region's bid to host the 2012 Olympic
Games, the Economic Club of Washington, the Federal City Council, Leadership
Washington and the Advisory Board for George Mason University.
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......... 47 Senior Vice President--Chief Financial Officer
George F. McKenzie...... 44 Senior Vice President--Real Estate
Brian J. Fitzgerald..... 38 Vice President--Leasing
Laura M. Franklin....... 39 Vice President--Chief Accounting Officer, Corporate Secretary
Kenneth C. Reed......... 47 Vice President--Property Management
</TABLE>
Mr. Larry E. Finger 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. Mr. Finger is an attorney and CPA.
Mr. George F. McKenzie joined the Trust in September 1996 and was elected
Senior Vice President--Real Estate in December 1997. From 1985 to 1996, Mr.
McKenzie served with the Prudential Realty Group, a
3
<PAGE>
subsidiary of Prudential Insurance Company of America, most recently as Vice
President, Investment & Sales. Prior assignments included real estate finance
originations and asset management in the Mid-Atlantic region.
Mr. Brian J. Fitzgerald joined the Trust in January 1996 as Vice President
- -- Leasing. From 1984 to 1993, Mr. Fitzgerald served as a commercial leasing
broker with Smithy Braedon Company. 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 1994 until
joining the Trust, Mr. Fitzgerald managed institutional agency leasing
activities at Cushman & Wakefield, Inc. of Washington, D.C.
Ms. Laura M. Franklin, CPA, joined the Trust in 1993 as Assistant Vice
President -- Finance, and is currently Vice President and Chief Accounting
Officer as well as Corporate Secretary to the Trust. 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.
Mr. Kenneth C. Reed joined the Trust as Vice President -- Property
Management in June 1995. Mr. Reed served as President of CSN Management Corp.
from 1988 to 1998. CSN managed WRIT's properties until its assets were
purchased by WRIT in 1998.
There are no family relationships between any Trustee and/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 March 16, 2000 by each Trustee, by the nominees for
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 and/or the holder's spouse.
<TABLE>
<CAPTION>
Percentage
Name Shares owned of total
- ---- ------------ ----------
<S> <C> <C>
Arthur A. Birney.............................................. 47,965(1) 0.13%
Edmund B. Cronin, Jr.......................................... 207,308(2) 0.58%
John M. Derrick, Jr........................................... 4,600 0.01%
Larry E. Finger............................................... 98,042(2) 0.27%
Clifford M. Kendall........................................... 7,400 0.02%
John P. McDaniel.............................................. 4,000 0.01%
George F. McKenzie............................................ 39,242(2) 0.11%
Charles T. Nason.............................................. 6,133 0.02%
David M. Osnos................................................ 4,700 0.01%
Kenneth C. Reed............................................... 56,812(2) 0.16%
Thomas L. Regnell............................................. 50,740(2) 0.14%
Susan J. Williams............................................. 1,900 0.01%
All Trustees and Executive Officers as a group (13 persons)... 603,932(2) 1.69%
</TABLE>
- --------
(1) Includes Shares held in a trust.
(2) Includes Shares subject to options exercisable within 60 days, as
follows: Mr. Cronin, 173,496; Mr. Finger, 91,022; Mr. McKenzie, 36,629;
Mr. Reed, 53,740;Mr. Regnell, 48,229; and all Trustees and Executive
Officers as a group, 474,798.
4
<PAGE>
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 period(s)
indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Cash Long-Term
Compensation Compensation
----------------- -------------------- Other
Name and Principal Annual
Position Year Salary Bonus Granted(1) Granted(2) Compensation(3)
------------------ ---- -------- -------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Edmund B. Cronin, Jr., Trustee,
President and Chief Executive Officer..... 1999 $405,000 $337,500 4,492 100,000 $4,800
1998 $395,000 $309,408 3,368 100,000 $4,800
1997 $395,000 $162,989 3,121 61,000 $9,500
Larry E. Finger, Senior Vice President and
Chief Financial Officer.................... 1999 $235,000 $195,837 2,027 99,206 $4,800
1998 $225,000 $176,245 1,492 75,140 $4,800
1997 $210,000 $ 86,652 1,291 25,224 $9,500
George F. McKenzie, Senior Vice
President-- Real Estate.................... 1999 $200,000 $166,670 1,726 84,431 $4,800
1998 $150,000 $117,497 995 50,094 $4,500
1997 $120,000 $ 49,516 285 11,582 --
Thomas L. Regnell, Vice
President-- Acquisitions................... 1999 $156,000 $130,003 481 52,290 $4,680
1998 $146,000 $114,364 346 39,180 $4,380
1997 $130,000 $ 53,642 285 12,547 $4,583
Kenneth C. Reed, Vice
President--Property Management............. 1999 $141,000 $117,502 434 47,831 $4,230
1998 $138,000 $108,097 327 37,033 $4,059
1997 $130,000 $ 53,642 285 12,547 $8,260
</TABLE>
- --------
(1) Represents Share grants awarded on December 17, 1999, December 15, 1998
and December 16, 1997 in accordance with the Incentive Compensation Plan
approved by the Trustees in 1997. Share grants vest 20% per year on the
anniversary of the grant date.
(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") in accordance with the Incentive Compensation Plan approved
by the Trustees in 1997. Options granted under the Stock Option Plan vest
50% per year on the anniversary of the grant date.
(3) Represents amounts contributed on the officers' behalf by the Trust to
its 401(k) plan.
5
<PAGE>
Option Grants Table
The following table shows the specified information with respect to options
granted to the Named Officers in 1999.
1999 OPTION GRANTS TABLE
<TABLE>
<CAPTION>
Potential Realizable Value
Number of Percentage at Assumed Annual Rates
Shares of Total of Share Price Appreciation
Underlying Options (Full 10-Year 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.... 100,000 20.0% $14.469 12/17/2009 $909,932 $2,305,946
Larry E. Finger......... 99,206 19.8% $14.469 12/17/2009 $902,707 $2,287,637
George F. McKenzie...... 84,431 16.9% $14.469 12/17/2009 $768,265 $1,946,933
Thomas L. Regnell....... 52,920 10.4% $14.469 12/17/2009 $475,803 $1,205,779
Kenneth C. Reed......... 47,831 9.6% $14.469 12/17/2009 $369,906 $1,102,957
</TABLE>
- --------
(1) Options become exercisable 50% after one year and 100% after two years.
93,089 of Mr. Cronin's options, 92,295 of Mr. Finger's options, 77,520 of
Mr. McKenzie's options, 45,379 of Mr. Regnell's options and 40,920 of Mr.
Reed's options were granted as non-qualified stock options. See Report on
Executive Compensation.
The dollar amounts under the 5% and 10% columns in the table above are the
result of calculations required by the rules of the Securities and Exchange
Commission 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 $23.57 and $37.53, 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 options
during 1999 by each of the Named Officers and the year-end value of
unexercised options.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised in
Unexercised Options the Money Options at
Shares at December 31, 1999 December 31, 1999
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edmund B. Cronin, Jr.... -- -- 173,496 150,000 $7,564 $53,120
Larry E. Finger......... -- -- 91,022 136,776 $2,564 $52,698
George F. McKenzie...... -- -- 36,629 109,478 -- $27,857
Thomas L. Regnell....... -- -- 48,229 71,880 $2,564 $27,776
Kenneth C. Reed......... -- -- 53,740 66,348 $2,564 $25,408
</TABLE>
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, participation and years of service accruals
as of December 31, 1995 and was terminated effective December 31,1999.
6
<PAGE>
The following table is illustrative of various annual payments that would
be made pursuant to the Pension Plan and the Supplemental Benefit Plan (as
defined below) 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
--------------------------------------------
Remuneration 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$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.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The Board determined executive compensation for 1999. A Compensation Com-
mittee (the "Compensation Committee"), composed of Messrs. Birney, Kendall and
McDaniel, was responsible for making recommendations to the Board with respect
to 1999 compensation decisions.
REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Principles
The Trust's Executive Compensation Program is based on guiding principles
designed to align executive compensation and management incentives with Trust
values and objectives, business strategy and business financial performance.
In applying these principles, the Compensation Committee, based upon the rec-
ommendations contained in the 1997 Board of Trustees and Executive Compensa-
tion Review prepared by an independent consultant, 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.
Executive Compensation Program
For 1999, the Board, upon recommendation of the Compensation Committee,
adopted an Incentive Compensation Plan (the "Plan") based upon the
recommendations contained in the 1997 Board of Trustees and
7
<PAGE>
Executive Compensation Review prepared by an independent consultant to align
executive compensation with Shareholder interests through salaries, cash
bonuses, Share grants 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; 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.
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: 10% of the first 7% of the growth in
FFO per share times the average shares outstanding for the year, plus 20% of
the growth in FFO per share in excess of 7% times the average shares
outstanding for the year, would go into the bonus pool. Executive officers of
the Trust and selected senior and middle management share the bonus pool pro-
rata based on their salaries.
Long-term incentives are provided through the Stock Option and Share Grant
Plans. Vice Presidents receive option grants with a value equal to 22.5% (36%
for the Chief Executive Officer and 28% for the Senior Vice Presidents) of
their annual salary plus annual bonus ("Cash Compensation"). The option value
is based upon a Black Scholes model calculation. This value is divided into
22.5% of the individual's Cash Compensation (36% for the Chief Executive
Officer and 28% for the Senior Vice Presidents), and the resulting number is
the number of Shares subject to the grant of an option for such year.
Notwithstanding the forgoing, the number of options which may be granted to
any individual is limited to 100,000 in any one year. Certain members of
middle management are also eligible to receive Stock Options under the Stock
Option Plan. Executive officers are also eligible to receive Share grants
through the Share Grant Plan. Under the Share Grant Plan, Vice Presidents
receive an award of Shares with a market value of 2.5% of the individual's
Cash Compensation (9% for the Chief Executive Officer and 7% for Senior Vice
Presidents) at the date of the award. Shares granted under the Share Grant
Plan vest 20% per year over five years and are restricted from transfer for
five years from the date of grant.
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 1999 compensation consisted of his salary, bonus, Share grants
and options based upon the Executive Compensation Program described above. Mr.
Cronin's salary was determined by the Compensation Committee and was based
upon (i) a review of the compensation paid to chief executive officers
employed by companies comprising the 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 1999 as relates to salary but, as described above, were established for
bonus and related Share grant 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 1999 salary at $405,000.
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
Edmund B. Cronin, Jr.
John M. Derrick, Jr.
Clifford M. Kendall
John P. McDaniel
David M. Osnos
Susan J. Williams
8
<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 (the "EREIT
Index") as provided by the National Association of Real Estate Investment
Trusts. The EREIT Index is a compilation of 167 companies as of December 31,
1999 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 National Market. The graph assumes an initial investment of $100 on
December 31, 1994 and the reinvestment of all dividends paid thereafter with
respect to such $100 investment.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[CHART APPEARS HERE]
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
WRIT........... $100 $105 $122 $124 $146 $127
EREIT.......... 100 115 156 188 155 148
S&P............ 100 137 169 225 290 351
9
<PAGE>
PROPOSAL 1:
ELECTION OF TRUSTEES
Messrs. John M. Derrick, Jr. and Charles T. Nason 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.
Derrick and Nason. Mr. Derrick currently serves as a Trustee. Mr. Nason is
nominated for the position being vacated by Mr. Birney. Mr. Birney, in
accordance with the Trust's By-Laws, retires this year.
Mr. Charles T. Nason, age 54, currently serves as Chairman and Chief
Executive Officer of Acacia Life Insurance Company, (Acacia) a Washington
D.C.-based financial services organization with assets under management of
$7.5 billion. Mr. Nason assumed the role of President and CEO of Acacia June
1, 1988 and was elected Chairman of the Board of Directors July 1, 1989. Mr.
Nason began his career with Metropolitan Life in 1971 in their MBA Management
Program after a two-year tour of duty in Korea. After six years with
Metropolitan, Mr. Nason joined Acacia in 1977 as Managing Director of the
Pittsburgh Financial Center, where he served until his appointment as CEO. Mr.
Nason is a member of the Board of Directors of The American Council of Life
Insurance, Insurance Marketplace Standards Association, The Greater Washington
Boys and Girls Clubs, The Greater Washington Research Center, The Greater
Washington Board of Trade, and The Federal City Council. He also is a member
of The Economic Club of Washington, and a member of the Board of Trustees of
Washington and Jefferson College. In addition, he is past Chairman of The
Greater Washington Board of Trade. Mr. Nason received his bachelor's degree
from Washington and Jefferson College in Washington, Pennsylvania in 1968 and
his MBA in 1969 from the University of Pittsburgh's Graduate School of
Business.
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 MESSRS. JOHN M. DERRICK, JR. AND CHARLES T. NASON.
PROPOSAL 2:
AMENDMENT TO THE 1991 STOCK OPTION PLAN
The Trust currently maintains the Washington Real Estate Investment Trust
1991 Stock Option Plan (the "Stock Option Plan"), which provides for the grant
to officers and employees of the Trust of options to purchase up to an
aggregate of 1,515,241.5 Shares (as adjusted for the three-for-two split
effected in 1992). If an option expires without being exercised, the Shares
covered by that option again become available for issuance under new options.
There are currently 1,273,000 options outstanding under the Stock Option Plan.
The purpose of the amendment is to increase by 280,000 Shares the number of
Shares that are available for option grants.
Description of the Stock Option Plan
The Stock Option Plan provides that it may be administered by the Board or
a committee of the Board composed of at least three Trustees (the
"Committee"). The Board (or the Committee) has authority, subject to the
limits of the Stock Option Plan, to designate persons to whom options are
granted, to determine the number of Shares covered by each option and to
determine the terms and provisions of each option. The Board (or the
Committee) also is authorized to designate whether the option is an incentive
stock option ("ISO") or a non-qualified stock option ("NQO") for tax purposes.
Options may be granted only to an employee of the Trust, including any Trustee
or officer who is an employee. Currently, approximately 17 employees are
eligible to receive option grants under the Plan. The Stock Option Plan
requires the grant of options to the Chief Executive Officer, Senior Vice
Presidents and Vice Presidents in accordance with the formulas described in
"Report on Executive Compensation." None of these officers may receive an
option grant for more than 100,000 Shares in any calendar year.
10
<PAGE>
Under the Stock Option Plan, whether the option is an ISO or an NQO, the
option price may not be less than the fair market value of the Shares on the
date the option is granted, and options will expire no later than ten years
from the date of the grant. On March 10, 2000, the closing price for the
Shares on the New York Stock Exchange was $15.125. The option price must be
paid in full at the time an option is exercised, in cash, by check or by
delivery of Shares already owned by the optionee. The Stock Option Plan
provides that an option may be exercisable on grant or in one or more
installments as determined by the Board (or the Committee).
As required by Section 422 of the Internal Revenue Code (the "Code"), the
Stock Option Plan provides that the Trust may grant an optionee an ISO with
respect to Shares with an aggregate fair market value at the time of the grant
in excess of $100,000 during any particular calendar year, provided that such
option does not become first exercisable by the optionee in an amount
exceeding $100,000 per calendar year. This provision does not apply to an
option designated to be an NQO.
Options, whether an ISO or an NQO, are not assignable or transferable by
the optionee except by will or by the laws of descent and distribution. In
case of death, an option will continue in accordance with its terms and may be
exercised thereafter by the persons entitled to do so under the optionee's
will or by his legal representatives. If an optionee's employment is
terminated for any reason other than death, termination for cause or
retirement on or after attaining age 65, the option will terminate three
months after the date of such termination of employment, but in no event later
than the date of expiration of the option. If an optionee's employment is
terminated for cause, the option will terminate as of the date of such
termination of employment. If an optionee ceases to be employed by the Trust
due to retirement on or after attaining age 65, the option will continue in
accordance with its terms; however, the Stock Option Plan provides that the
option will cease to be an ISO upon the expiration of three months from the
date of the optionee's retirement and will thereafter be treated as an NQO.
The Board may terminate the Stock Option Plan at any time and may amend the
Stock Option Plan from time to time. However, the Board may not change the
maximum number of Shares for which options may be granted, the periods during
which options may be granted or exercised or materially increase the benefits
under the Stock Option Plan without shareholder approval. No amendment may
adversely affect an optionee's rights under any issued option without the
optionee's consent.
The Stock Option Plan provides that the number and price of the Shares
covered by each option and the total number of Shares that may be granted
under the Stock Option Plan shall be proportionately adjusted to reflect, as
deemed equitable and appropriate by the Board, any stock dividend, stock split
or share combination of the Shares or recapitalization of the Trust. It also
provides that to the extent deemed equitable and appropriate by the Board, in
any merger, consolidation, reorganization, liquidation or dissolution, any
option granted under the Stock Option Plan shall pertain to the securities and
other property to which a holder of the number of Shares covered by the option
would have been entitled to receive in connection with such event.
Pursuant to the Code, an ISO plan may not have a term longer than ten years
from the earlier of the date the plan is adopted or the date the plan is
approved by the stockholders. Accordingly, the Stock Option Plan will expire
on June 25, 2001 (except as to options outstanding on that date). The Board
anticipates adopting a new stock option plan before the Stock Option Plan's
expiration in 2001 and anticipates submitting the new plan to the Trust's
shareholders for approval at the 2001 annual meeting.
Federal Income Tax Treatment
Generally, the grant of either an ISO or a NQO under the Stock Option Plan
will not cause recognition of income by the optionee or entitle the Trust to
an income tax deduction. Upon exercise of an option, the tax treatment will
generally vary depending on whether the option is an ISO or a NQO. The
exercise of an ISO will generally not cause recognition of income by the
optionee or entitle the Trust to a tax deduction. However, the amount by which
the fair market value of the Shares obtained exceeds the exercise price on the
day of
11
<PAGE>
exercise is an item of tax preference to the optionee for alternative minimum
tax purposes. Upon the sale of such Shares, the optionee generally will
recognize capital gain or loss if the Shares have been held for at least two
years from the date of the option grant and at least one year after the Shares
were purchased. If the applicable holding periods are not satisfied, then any
gain realized in connection with the disposition of such Shares will generally
be taxable as compensation income in the year in which the disposition
occurred, to the extent of the difference between fair market value of such
Shares on the date of exercise and the option exercise price. The balance of
any gain will be characterized as capital gain. The Trust is entitled to a tax
deduction to the extent, and at the time, that the participant realizes
compensation income.
The exercise of a NQO will generally cause the optionee to recognize
taxable income equal to the difference between the exercise price and the fair
market value of the Shares obtained on the date of exercise. The Trust must
then, in most cases, obtain from the optionee funds to meet tax withholding
requirements arising from that income recognition. The exercise of a NQO will
also generally entitle the Trust to an income tax deduction equal to the
amount of the income recognized by the exercising option holder. Upon the
disposal of Shares acquired pursuant to the exercise of a NQO, the optionee's
basis for determining taxable gain or loss will be the sum of the option price
paid for the Shares plus any related compensation income recognized by the
optionee, and such gain or loss will be long-term or short-term capital gain
or loss depending on whether the option holder has held the Shares for more
than one year.
Registration With SEC
The Trust has filed a registration statement with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended,
covering the offering of the Shares under the Stock Option Plan. If the
amendment is approved, the Trust intends to file a similar registration
statement covering the 280,000 additional shares available for issuance under
the Stock Option Plan.
Vote Required
The affirmative vote of the holders of record of a majority of the
outstanding Shares is required for approval of the amendment.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF
THE AMENDMENT TO INCREASE THE SHARES RESERVED
UNDER THE STOCK OPTION PLAN BY 280,000 SHARES.
PROPOSAL 3:
SHAREHOLDER PROPOSAL
The proponent of a shareholder proposal has stated that the proponent
intends to present a proposal at the Annual Meeting. The name, address and
number of shares held by the proponent will be furnished by the Trust upon
request to the Corporate Secretary. The proposal and supporting statement, for
which the Board of Trustees accepts no responsibility, is set forth below. The
Board of Trustees opposes the proposal for the reasons stated after the
proposal.
Proposal
"Resolved, that the shareholders of Washington Real Estate Investment Trust
recommend to the Trustees that bonuses paid to company personnel should not
exceed 10 percent of those individuals' annual salary.
It is much clearer to comprehend executive pay scales when received in the
form of salary, which in itself provides just and understandable
compensation.
In recent years, key executives have been paid bonuses amounting to huge
percentages of salary.
12
<PAGE>
In 1998, Trust President Edmund B. Cronin, Jr., and Senior Vice President
Larry E. Finger each received bonuses amounting to more than 78 percent of
their salaries. In 1997, the bonus for each of these officers amounted to
more than 41 percent of their salaries.
In 1998, the top five highest paid officers of the Trust were awarded bo-
nuses of more than 82 percent of their salaries. The bonuses are in addi-
tion to substantial stock options. Meanwhile, the dividend was increased
less than 4 percent.
In 1998, funds from operations rose 21 percent (13 percent per share), with
net income up 36 percent (28 percent per share).
Efforts toward achievement should be based on regular pay (salaries) and on
pride in Writ. Bonuses have been excessive at a company that under strong
and successful prior management paid no bonuses.
If you think that bonuses have been excessive, please support this resolu-
tion which hopes to benefit the Trust's shareholders by suggesting a limit
on unprecedented bonuses paid to current management."
Board of Trustees Response
In order to attract and retain officers and key employees WRIT must pay a
market rate of total compensation. As described in the Report on Executive
Compensation, bonuses are only one component of WRIT's compensation program.
Arbitrarily limiting bonus amounts would not limit the total amount of compen-
sation paid to officers or other employees because WRIT would have to pay a
market rate of total compensation to attract and retain personnel. WRIT be-
lieves that its compensation program provides a market rate of total compensa-
tion and strongly aligns compensation with shareholder interests. If bonuses
were limited, WRIT would have to increase salaries for officers and key em-
ployees in order to continue to offer a competitive compensation program.
While this would allow WRIT to attract and possibly retain key officers and
employees, as detailed below, compensation would no longer be aligned with
shareholder interests.
The Board believes that compensation composed of a fixed salary and a sub-
stantial "at risk" bonus provides a greater incentive for superior performance
than an arrangement providing for a larger fixed salary and a limited bonus.
The bonus provided under the current compensation program is "at risk" based
upon the Trust exceeding specified performance goals. The following tables
compare the last three years under WRIT's prior Chief Executive Officer, Mr.
B. Franklin Kahn, with the last three years during which Mr. Cronin has been
Chief Executive Officer. The tables make very clear how the current compensa-
tion plan rewards performance consistent with shareholder interests and better
aligns those rewards with shareholder interests than the prior non-bonus based
compensation program.
<TABLE>
<CAPTION>
Average of Last 3 Years
--------------------------------------
FFO Per
Cash Compensation Total Cash Share
Period CEO Structure Salary Bonus Compensation Growth
------ --------------------- ----------------- -------- -------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1992--1994 B. Franklin Kahn Salary Only $578,000 -- $578,000 2.9%
1997--1999 Edmund B. Cronin, Jr. Salary + Bonus $398,000 $270,000 $668,000 11.6%
</TABLE>
<TABLE>
<CAPTION>
Total Cash Compensation as a Percentage of Revenues
---------------------------------------------------
Cash Compensation CEO Plus
Period CEO Structure CEO CEO + CFO Top 4 Executives
------ --------------------- ----------------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
1992--1994 B. Franklin Kahn Salary Only 1.5% 1.9% 2.6%
1997--1999 Edmund B. Cronin, Jr. Salary + Bonus 0.7% 1.0% 1.5%
</TABLE>
During the last three years while Mr. Cronin has been Chief Executive
Officer, the Trust has had in place the incentive compensation plan with cash
bonuses paid based upon Funds From Operations ("FFO") per share growth. FFO
per share is the primary operating performance measure utilized by REIT
industry analysts. FFO is
13
<PAGE>
defined as net income before gains and losses on the sale of real estate and
other extraordinary items, plus real estate depreciation. Bonuses are earned
only in the event that FFO Per Share growth exceeds 5%. Under this plan, had
WRIT, during 1996--1999, produced the same growth as had been produced under
the prior non-bonus based plan's last three years, no bonuses would have been
earned and Mr. Cronin's total cash compensation would have been 31% less than
Mr. Kahn's. In fact, WRIT produced FFO per Share growth four times the growth
produced under the prior program and Mr. Cronin's total cash compensation
averaged only 13.5% higher than Mr. Kahn's.
THE BOARD RECOMMENDS A VOTE AGAINST THE PROPOSAL.
OTHER MATTERS
Independent Public Accountants
The firm of Arthur Andersen LLP served as the Trust's independent public
accountants for 1999. The Board has appointed Arthur Andersen LLP as the
Trust's independent public accountants for 2000. 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 shareholders.
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 New York 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, 1999.
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 facsimile, 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.
2001 Annual Meeting
Shareholders may present proposals to be considered for inclusion in the
Proxy Statement relating to the 2000 Annual Meeting, provided they are
received by the Trust no later than December 22, 2000 and are in compliance
with applicable laws and SEC regulations.
/s/ Laura M. Franklin
-----------------------
Laura M. Franklin
CORPORATE SECRETARY
March 30, 2000.
14
<PAGE>
FRONT OF PROXY CARD
<TABLE>
<S> <C>
FOR WITHHELD
1. Election of two Trustees Nominees (for the terms
stated in the Proxy Statement):
For, Except vote withheld from the following Mr. John M. Derrick, Jr.
Nominee: Mr. Charles T. Nason
2. Proposal to increase shares available for options FOR AGAINST ABSTAIN
3. Shareholder Proposal re executive compensation. FOR AGAINST ABSTAIN
</TABLE>
4. Such other matters as may come before the meeting.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE NOMINATED TRUSTEES
AND PROPOSAL #2 AND "AGAINST" PROPOSAL #3. PROXIES WILL BE VOTED AS DIRECTED OR
SPECIFIED.
PLEASE vote at once. It is important. Please mark your choice in black ink.
SIGNATURE _______________ DATE _________ SIGNATURE _______________ DATE_________
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
stock is held in the name of more than one person, all named holders must
sign the proxy.
<PAGE>
REAR OF PROXY CARD:
WASHINGTON REAL ESTATE INVESTMENT TRUST
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 23, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of Washington Real Estate Investment Trust
appoints Larry E. Finger and Laura M. Franklin, 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 May 23, 2000, 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.)
