<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/XX/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WESTERN INVESTMENT REAL ESTATE 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):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1996
Notice is hereby given that the annual meeting of the shareholders of
Western Investment Real Estate Trust will be held at the Bank of America Center,
Bankers Club of San Francisco, Pacific Room, 52nd Floor, 555 California Street,
San Francisco, California, at 10:00 a.m., on Thursday, May 9, 1996, for the
following purposes:
(1) To elect three trustees to Class II for three-year terms to expire at
the conclusion of the 1999 annual meeting.
(2) To approve the appointment of independent auditors for the Trust.
(3) To transact any other business that may properly come before the
meeting.
All shareholders of record at the close of business on March 14, 1996, are
entitled to vote at the meeting.
A majority of the outstanding shares must be represented at the meeting in
person or by proxy in order to transact business. TO ASSURE A PROPER
REPRESENTATION AT THE MEETING PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
MAIL IT PROMPTLY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. Your proxy will not be
used if you are personally present at the meeting and you indicate a desire to
revoke such proxy or if a subsequently dated proxy of yours is delivered prior
to or at the meeting.
Dated: San Francisco, California
March 27, 1996
BARBARA J. DONHAM
SECRETARY
If your shares are held in the name of a brokerage firm, bank, nominee or other
institution, only it can vote your shares. Please PROMPTLY CONTACT the person
responsible for your account and GIVE INSTRUCTIONS for your shares to be voted.
<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
3450 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94118
PROXY STATEMENT
THIS STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE MANAGEMENT OF WESTERN INVESTMENT REAL ESTATE TRUST, hereinafter called
the Trust, for use at the annual meeting of shareholders to be held on Thursday,
May 9, 1996, at 10:00 a.m., at the Bank of America Center, Bankers Club of San
Francisco, Pacific Room, 52nd Floor, 555 California Street, San Francisco,
California, and at any and all adjournments thereof, for the purposes set forth
in the Notice of Annual Meeting of Shareholders. The cost of soliciting proxies
will be borne by the Trust. In addition to solicitation by mail, proxies may be
solicited personally or by telephone by trustees, officers or other employees of
the Trust.
Only shareholders of record of the Trust at the close of business on March
14, 1996, will be entitled to vote at the annual meeting. The approximate date
on which the proxy statement and form of proxy are first sent or given to
shareholders will be March 29, 1996.
You are requested to sign, date and return the accompanying proxy in the
enclosed envelope. Proxies duly executed and received by the Trust on or before
10:00 a.m. on May 9, 1996, will be voted in accordance with the instructions
thereon. Such proxies may be revoked by executing and delivering to the Trust a
written revocation or by executing and delivering a subsequently dated proxy
before or at the meeting or by voting by ballot at the meeting.
As of the record date, 16,972,496 shares of the Trust's shares of beneficial
interest were issued and outstanding, each of which is entitled to one vote at
the annual meeting. There will be no cumulative voting for the election of
trustees.
ELECTION OF TRUSTEES
NOMINEES
Three members of the Board of Trustees (Class II) are to be elected at the
1996 annual meeting. Under the terms of the Declaration of Trust, the three
trustees who are not up for election this year will continue to serve until they
stand for election as provided in the Declaration of Trust. In 1997, two of such
trustees (Class III) will stand for election for a three-year term. In 1998, the
remaining trustee (Class I) will stand for election for a three-year term. All
proxies received by the Trust will be voted in accordance with the
specifications on the proxy. Unless the proxy specifies otherwise, proxies held
by the trustees will be voted in the manner described below under "Voting" for
the election of the three nominees listed under "Trustees and Executive
Officers," to hold office until the expiration of their three-year term and
until their respective successors shall be elected and qualified. In the
unanticipated event that any of the current nominees declines to or cannot be a
candidate at the annual meeting, all proxies held by the trustees will be voted
in favor of the remaining nominees and for such substitute nominee (if any) as
shall be designated by the trustees.
1
<PAGE>
Each of the three nominees, if elected, will serve for a three-year term to
expire at the conclusion of the 1999 annual meeting of shareholders and until
their respective successors shall be elected and qualified.
VOTING
Each shareholder will be entitled to cast one vote for each share registered
in his or her name on the record date of March 14, 1996, for each of the trustee
positions to be filled. There will be no cumulative voting for the election of
trustees.
All shares represented by proxies solicited by the trustees will be voted in
equal shares for the three nominees named hereafter, unless a proxy specifies
otherwise. The three nominees receiving the greatest number of affirmative votes
shall be elected to the office of trustee. The withholding of a vote for a
nominee will have the practical effect of voting against that nominee.
TRUSTEES AND EXECUTIVE OFFICERS
Information regarding the three Class II trustees nominated for election as
trustees this year for a term of three years expiring at the conclusion of the
1999 annual meeting of shareholders is set forth below:
<TABLE>
<CAPTION>
TRUSTEE
NAME PRINCIPAL OCCUPATION SINCE
- - ---------------------------------- ---------------------------------------------------------- ------------
<S> <C> <C>
O.A. Talmage Mr. Talmage, 72, is the Chairman of the Board of Trustees 1962
and Chief Executive Officer of the Trust. During the past Founder
five years his principal occupation has been officer and
trustee of the Trust. He was a member of the Board of
Directors of Bay View Federal Bank through December 31,
1991.
James L. Stell Mr. Stell, 72, is the retired Vice Chairman of the Board 1985
of Lucky Stores, Inc. During the past five years his
principal occupation has been trustee of the Trust.
William A. Talmage Mr. Talmage, 48, is the President and Chief Operating 1986
Officer of the Trust. During the past five years his
principal occupation has been trustee and officer of the
Trust. He is the son of O.A. Talmage, trustee, Chairman of
the Board and Chief Executive Officer of the Trust.
<CAPTION>
SHARES BENEFICIALLY
OWNED DIRECTLY OR
INDIRECTLY AS OF TERM TO
NAME MARCH 1, 1996((1)) EXPIRE
- - ---------------------------------- ------------------------------- --------------
<S> <C> <C>
O.A. Talmage 168,047(0.99%)((2)) 1996
(Class II)
James L. Stell 19,000(0.11%)((3)) 1996
(Class II)
William A. Talmage 29,298(0.17%)((4)) 1996
(Class II)
</TABLE>
2
<PAGE>
Information regarding the trustees who are not standing for election this
year is set forth below:
<TABLE>
<CAPTION>
TRUSTEE
NAME PRINCIPAL OCCUPATION SINCE
- - ---------------------------------- ---------------------------------------------------------- ------------
<S> <C> <C>
Chester R. MacPhee, Jr. Mr. MacPhee, 62, is the retired Executive Vice President 1971
and Chief Financial Officer of the Trust. During the past
five years his principal occupation has been officer and
trustee of the Trust.
Reginald B. Oliver Mr. Oliver, 57, is a private investor. He was Executive 1984
Vice President of the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation, an investment
banking firm, and continues to be associated with the firm
as a consultant.
Dennis D. Ryan Mr. Ryan, 40, is the Executive Vice President and Chief 1994
Financial Officer of the Trust. Prior to joining the Trust
in 1993, Mr. Ryan was a financial and real estate
consultant to a variety of clients. Prior to 1992, he was
a Vice President and Chief Financial Officer of Reininga
Corporation, a shopping center development, leasing and
property management firm.
All executive officers and trustees (6 persons)((8)).......................................... --
<CAPTION>
SHARES BENEFICIALLY
OWNED DIRECTLY OR
INDIRECTLY AS OF TERM TO
NAME MARCH 1, 1996((1)) EXPIRE
- - ---------------------------------- ------------------------------- --------------
<S> <C> <C>
Chester R. MacPhee, Jr. 248,318(1.46%)((5)) 1997
(Class III)
Reginald B. Oliver 77,750(0.46%)((6)) 1997
(Class III)
Dennis D. Ryan 8,692(0.05%)((7)) 1998
(Class I)
All executive officers and trustee 551,105(3.25%)((9)) --
</TABLE>
- - --------------------------
((1)) The number and percentage of shares shown in this table reflect
beneficial ownership in accordance with Rule 13d-3 of the Securities
Exchange Act of 1934, including shares that are not owned but as to which
options are outstanding and may be exercised within 60 days of the date of
this proxy statement. Shares owned in certain cases reflect the lapse of
stock options that were included in the prior-year proxy.
((2)) Includes beneficial ownership of 37,800 shares that may be acquired
within 60 days pursuant to stock options awarded under the Trust's
Nonqualified Stock Option Plan.
((3)) Includes 4,000 shares held by Mr. Stell as Trustee for family trust. Mr.
Stell disclaims any ownership of such shares.
((4)) Includes beneficial ownership of 11,000 shares that may be acquired
within 60 days pursuant to stock options awarded under the Trust's
Nonqualified Stock Option Plan.
((5)) Includes beneficial ownership of 4,800 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
((6)) Includes 3,000 shares held by Mr. Oliver's wife as custodian for their
minor children. Mr. Oliver disclaims any ownership of such shares.
((7)) Includes beneficial ownership of 7,000 shares that may be acquired within
60 days pursuant to stock options awarded under the Trust's Nonqualified
Stock Option Plan.
((8)) Mr. John R. Beckett, a trustee since 1991, chose to retire in November
1995.
((9)) All executive officers of the Trust are trustees. In addition to the
551,105 shares indicated above, a Trustee Emeritus beneficially owned 96,533
shares as of 3/1/96, which would increase the total held by all executive
officers, trustees and Trustees Emeritus to 647,638, or 3.82% of total
shares outstanding.
3
<PAGE>
BOARD AND COMMITTEE MEETINGS
During 1995, the Board of Trustees held five meetings and the Executive
Committee of the Board of Trustees held 15 meetings. The Executive Committee
presently comprises O.A. Talmage, William A. Talmage, Chester R. MacPhee, Jr.,
and Dennis D. Ryan. The Committee maintains such powers and exercises such
duties of the Board of Trustees in the management of the business of the Trust
as are delegated to it from time to time by the Board of Trustees.
The Trust has no standing nominating committee. It does have an Audit
Committee that meets with the Trust's auditors at least annually to review
accounting and auditing procedures, to report to the Board of Trustees any
recommended changes in auditing procedures and to recommend to the Board of
Trustees at the close of each fiscal year the independent auditing firm to be
selected for the ensuing fiscal year. The Audit Committee presently comprises
James L. Stell, Reginald B. Oliver and Chester R. MacPhee, Jr. The committee
held two meetings in 1995.
The Compensation Committee is responsible for administering and approving
compensation for trustees and officers and certain other employees. The
Compensation Committee held two meetings in 1995. The Committee presently
comprises Reginald B. Oliver, James L. Stell and Chester R. MacPhee, Jr.
Each of the trustees attended at least 75% of the total number of board
meetings and meetings of committees on which they served in 1995:
4
<PAGE>
OWNERSHIP OF SHARES
The Trust has one outstanding class of voting securities, comprising shares
of beneficial interest without par value.
The following table sets forth beneficial ownership of the Trust's shares
with respect to each person known by the Trust to own more than 5% of
outstanding shares as of December 31, 1995:
<TABLE>
<CAPTION>
NAME AND BUSINESS AMOUNT & NATURE OF
ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP PERCENT OF SHARES
- - ----------------------------------------------------------------------- --------------------- ------------------
<S> <C> <C>
Smith Barney Inc. and Smith Barney Holdings, Inc. 1,469,227 8.7%
1345 Avenue of the Americas
New York, NY 10105
and their parent company
Travelers Group Inc.
388 Greenwich Street
New York, NY 10013
LaSalle Advisors Limited Partnership 1,272,550 7.5%
and ABKB/LaSalle Securities Limited Partnership
11 South LaSalle Street
Chicago, IL 60603
The Capital Group Companies, Inc. and 1,202,400((1)) 7.1%
Capital Research and Management Co.
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- - ------------------------
((1)) Capital Research and Management Company, a registered investment adviser,
and an operating subsidiary of The Capital Group Companies, Inc., exercised
as of December 29, 1995, investment discretion with respect to 1,202,400
shares, respectively, or a combined total of 7.1% of outstanding shares of
the Trust. Such shares are beneficially owned by various institutional
investors. Said subsidiary has no power to direct the vote of the above
shares.
Additionally, CEDE, a stock depository for brokers and other nominees, as of
the record date, holds approximately 14,808,211 shares, or 87% of the Trust's
outstanding shares, in its capacity as a stock depository.
COMPENSATION OF TRUSTEES
During 1995, Reginald B. Oliver, James L. Stell, and Chester R. MacPhee,
Jr., each received an annual independent trustee fee of $14,000 and $500 for
each Board meeting or Board committee meeting attended, other than Executive
Committee meetings. Mr. MacPhee was paid $500 per quarter for serving on the
Executive Committee. Mr. John R. Beckett, who retired in November 1995, received
a prorated portion of the annual trustee fee for the portion of the year he
served. Management trustees and officers receive no compensation from the Trust
other than that shown in the Compensation Table set forth hereafter for serving
as trustees or attending meetings.
5
<PAGE>
The independent trustees (other than members of the Compensation Committee)
may be awarded stock options pursuant to the Trust's Nonqualified Stock Option
Plan. No options were granted to any of the independent trustees during 1995.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ending December 31, 1995,
1994 and 1993, certain compensation paid by the Trust to its Chief Executive
Officer and the other most highly compensated executive officers whose
compensation exceeded $100,000 at December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------ AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS COMPENSATION((1))
- - ---------------------------------------- ---- ----------- --------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
O.A. Talmage 1995 $275,000 $30,000 -- -- -- ((2))
CEO & Chairman 1994 275,000 -- -- 51,000 -- ((2))
of the Board 1993 275,000 -- -- 45,000 -- ((2))
William A. Talmage 1995 148,000((3)) 15,000 $909((4)) 5,000 $8,850((5))
President & Chief 1994 135,000((3)) -- 794((4)) 15,000 8,100((5))
Operating Officer 1993 130,000((3)) -- 794((4)) -- 3,900((5))
Dennis D. Ryan 1995 132,500((3)) 15,000 285((4)) 5,000 7,950((5))
Executive Vice President & 1994 115,833((3)) -- 293((4)) 15,000 5,975((5))
Chief Financial Officer 1993 --((6)) -- -- -- --
</TABLE>
- - ------------------------
((1))
None of the named individuals received perquisites that exceeded the lesser
of 10% of annual compensation or $50,000.
((2))
Eligible for Trustee Emeritus Program and Death and Disability Program
described hereinafter.
((3))
Includes amounts earned but deferred under the Trust's 401(k) Plan at the
election of the executive.
((4))
Cost of life insurance paid by the Trust for the benefit of the named
executives.
((5))
Comprises the Trust's employer matching contribution and discretionary
contribution under 401(k) Plan.
((6))
Dennis D. Ryan became an executive officer in 1994. His compensation for
1993 is not required to be disclosed.
COMPENSATION PURSUANT TO PLANS
The Trust has a Trustee Emeritus Program, a Death and Disability Program and
a Nonqualified Stock Option Plan, each of which were approved and adopted by the
shareholders. The Trust also has a Tax Qualified Retirement Plan pursuant to
Section 401(k) of the Internal Revenue Code, which was adopted during 1990. In
addition, in 1995, the Trust established a bonus pool of $96,000 to be available
to certain key executives and managers provided the Trust achieved a target
level of funds from
6
<PAGE>
operations for the year 1995. During 1995, the Trust had no other bonus,
profit-sharing, stock purchase, deferred compensation or other remuneration or
incentive plan in effect or in effect since the date of its organization.
TRUSTEE EMERITUS PROGRAM AND DEATH AND DISABILITY PROGRAM
Three persons, Bernard Etcheverry, O.A. Talmage and Chester R. MacPhee, Jr.
are eligible to participate in the Trust's Trustee Emeritus, and Death and
Disability programs. Bernard Etcheverry, a founder, elected to become a Trustee
Emeritus effective January 1, 1993. Mr. Chester R. MacPhee, Sr., prior to his
death in 1995, qualified for disability benefits under the Death and Disability
Program. Such benefits ceased on his death. These programs were adopted by the
Trust and approved by the shareholders in 1986.
A participant under the Trustee Emeritus program is eligible to become a
trustee emeritus on reaching age 65 and ceasing to be a trustee and officer of
the Trust. A trustee emeritus is required to be available to provide advice and
counsel to the Trust regarding Trust properties and investments. Participants
under the Trust's Death and Disability Program and their present spouses are
eligible for certain benefits in the case of death or disability.
The amount payable to a participant under either program is $60,000 per
annum subject to increase at the discretion of the Board of Trustees. Under the
Death and Disability Program, payments continue until the number of payments
received under both programs equals the number of months the participant served
as a trustee or officer or, if sooner, until the death of the last to survive of
the participant and his eligible spouse.
If the Trust is terminated or an eligible trustee or an eligible trustee
emeritus is removed other than for good cause shown or not reelected as a
trustee, the trustee will be entitled to receive as a lump sum severance payment
an amount equal to the actuarially determined present value of the payments he
would have received under the programs. If an eligible trustee or trustee
emeritus is removed as a result of a change of control in the Trust the
severance payments made under the programs may be subject to provisions of the
Internal Revenue Code, which impose an excise tax payable by the recipient on
certain excess payments and make such payments not deductible by the Trust.
Where such Internal Revenue Code sections are applicable, the severance
payments, or portions thereof, which are subject to such excise tax will be
increased by dividing the amounts subject to excise tax by 25%. Messrs. Talmage,
Etcheverry and MacPhee, Jr. would have been entitled to $547,000, $1,144,000 and
$1,234,000, respectively, had they qualified for increased lump sum severance
payments in connection with a change of control under the programs as of
December 31, 1995. The three persons eligible for benefits under the programs,
as a group, would have been entitled to receive a total of $2,925,000, had they
all qualified for increased lump sum severance payments under the programs as of
December 31, 1995. Compensation under the Trustee Emeritus Program is expensed
as earned by the trustee emeritus. The Death and Disability Program is unfunded;
however, Death and Disability Program costs are accrued. Each of the
participants has satisfied the time in service requirements for the programs.
7
<PAGE>
NONQUALIFIED STOCK OPTION PLAN
Under the Nonqualified Stock Option Plan (the "Plan") for trustees, officers
and employees of the Trust, the Compensation Committee of the Board of Trustees
determines the persons to whom options are granted, the time at which options
are granted to each person, and the terms and conditions of exercise of options.
A maximum of three hundred thousand (300,000) shares of beneficial interest may
be issued under the Plan. The exercise price per share is the fair market value
at the date of the grant. Each option vests and becomes exercisable as to 20% of
the shares covered by each grant at the end of each year for five years. No
option is exercisable after six years from the date of the grant. Options to
purchase shares that have been granted and have not lapsed are as follows:
<TABLE>
<CAPTION>
TOTAL NO.
OF UNEXPIRED
OPTIONS PRICE PER
GRANT DATE GRANTED SHARE
- - ---------- ------------- ---------
<S> <C> <C>
11/18/91 35,300 $ 11.44
11/23/92 15,400 12.63
11/11/93 67,000 13.81
6/28/94 25,000 13.88
11/11/94 81,800 12.31
11/13/95 33,000 11.00
</TABLE>
In each instance, the option price was 100% of the fair market value at the
date of the grant.
STOCK OPTION GRANTS AND EXERCISES
Stock options were granted to the executive officers during 1995 as shown on
the following table:
STOCK OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
OPTIONS SHARE
GRANTED TO PRICE APPRECIATION
EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL OR BASE EXPIRATION --------------------
NAME GRANTED((1)) YEAR PRICE DATE 5% 10%
- - ------------------------------------------- ----------- ----------- ---------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
O.A. Talmage -- -- -- -- -- --
William A. Talmage 5,000 15.0% $ 11.00 11/13/2001 $ 18,700 $ 42,400
Dennis D. Ryan 5,000 15.0% 11.00 11/13/2001 18,700 42,400
</TABLE>
- - ------------------------
((1)) Options are exercisable as to 20% of the shares covered by the grant at
the end of each year for five years. No option is exercisable after six
years from the date of grant. No SARs have been granted.
8
<PAGE>
The number and value of unexercised options at year-end 1995 are shown on
the following table:
FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1995 AT DECEMBER 31, 1995((1))
-------------------------------- --------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - --------------------------------------------------- -------------------------------- --------------------------
<S> <C> <C>
O.A. Talmage 37,800/70,200 $ --/$--
William A. Talmage 11,000/19,000 --/ --
Dennis D. Ryan 7,000/23,000 --/ --
</TABLE>
- - ------------------------
((1))
The fair market value of shares at December 31, 1995 was $10.75. All options
granted are at a price per share higher than $10.75.
TAX QUALIFIED RETIREMENT PLAN PURSUANT TO IRS CODE SECTION 401(K)
The Trust adopted a Tax Qualified Retirement Plan pursuant to Section 401(k)
(the "401(k) Plan") in 1990. Under the 401(k) Plan, the Trust makes
contributions as follows: (a) the total amount of compensation deferred by all
eligible employees through salary-deferral contributions to the 401(k) Plan; (b)
a discretionary matching contribution equal to a percentage of the amount of
employee salary-deferral contributions, which percentage will be determined each
year by the Trust; and (c) a discretionary contribution determined each year by
the Trust. All salaried employees are eligible to become 401(k) Plan
participants on completion of six months of employment and the attainment of age
21; however, under the 401(k) Plan the Trust will not make discretionary
matching contributions or discretionary profit-sharing contributions on behalf
of O.A. Talmage, inasmuch as he is eligible to participate in the Trustee
Emeritus Program and Death and Disability Program. Compensation deferrals and
discretionary matching contributions are fully vested and any discretionary
contributions become vested as follows: 20% at 2 years of service; 40% at 3
years of service; 60% at 4 years of service; 80% at 5 years of service and 100%
at 6 years of service. For the year 1995, the Trust made approximately $96,830
of discretionary contributions for all eligible employees. Inasmuch as the
401(k) Plan is a defined contribution plan, rather than a defined benefit plan,
it is not possible to definitively estimate annual benefits upon retirement.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Trustees ("Committee"), is
responsible for administering and approving salaries for management trustees,
officers and department heads, as well as any employee earning a base salary of
$60,000 or above. In addition, the Committee reviews the general compensation
strategy and approves the percentage-range increases for all staff members. The
review process includes performance evaluation as well as consideration for
promotion and succession. During 1995, the Committee comprised the undersigned
and Mr. John R. Beckett until his retirement in November 1995, all of whom are
non-employee trustees.
9
<PAGE>
COMPENSATION PHILOSOPHY AND OBJECTIVES
It is the philosophy of the Committee and the Trust that in order to meet
the Trust's goal to increase long-term shareholder value, the Trust must develop
and maintain a compensation program that attracts, motivates and retains
qualified executives.
The compensation program includes a base salary, bonus, 401(k) plan and
stock option plan. The Committee reviews the entire program annually. The
Committee consults several sources of information and data related to salary
trends in similar companies and other real estate investment trusts. The
Committee also evaluates the Trust's operating performance, financial position
and the results compared with the industry and real estate in general. The
primary measure of performance reviewed by the Committee is the level of funds
from operations generated and available for distribution to shareholders.
BASE SALARY AND BONUS
Executive salaries are determined through an evaluation of the
responsibilities of the position held and the experience of the individual, and
by reference to salary levels paid in comparable companies for comparable
positions. The Committee monitors on an annual basis certain operating ratios of
other real estate investment trusts, including total administrative expenses as
a percentage of assets.
In 1995, the Committee approved a bonus pool of $96,000 to be available to
certain key executives and managers provided the Trust achieved a target level
of funds from operations for the year 1995. The target level of funds from
operations to be achieved in 1995 was met and the bonus pool was distributed to
twelve employees, including Mr. O.A. Talmage, the Trust's Chief Executive
Officer. Mr. Talmage received a bonus payment of $30,000 in addition to his base
salary of $275,000. Mr. Talmage's base salary of $275,000 remains unchanged
since fiscal year 1990.
STOCK OPTIONS
The Committee believes that the best interests of shareholders and
executives will be closely aligned by providing executives, as well as other key
officers and employees who have substantial responsibility for the management of
the Trust and its assets, an opportunity to increase their ownership in the
Trust. Stock option award levels are based on the recipient's responsibilities,
ability to influence shareholder value and total compensation. Stock options
provide a long-term incentive for the creation of shareholder value because a
stock option provides a benefit only from appreciation in the price of the
Trust's shares of beneficial interest over the term of the option.
During 1995, seventeen employees received stock option grants. The Committee
did not grant stock options to Mr. Talmage, the CEO, during 1995.
Submitted by the Compensation
Committee
Reginald B. Oliver, CHAIRMAN
Chester R. MacPhee, Jr.
James L. Stell
10
<PAGE>
COMPANY PERFORMANCE
PERFORMANCE MEASUREMENT COMPARISON
TOTAL RETURN
WESTERN INVESTMENT REAL ESTATE TRUST
NAREIT EQUITY INDEX AND S&P 500 INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WIRET NAREIT EQUITY INDEX (2) S&P 500 INDEX
<S> <C> <C> <C>
1990 $100.00 $100.00 $100.00
1991 $85.53 $135.70 $130.55
1992 $101.61 $155.49 $140.56
1993 $114.20 $186.06 $154.60
1994 $124.10 $191.95 $156.63
1995 $114.08 $221.26 $215.25
</TABLE>
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((1))
The total return on investment assumes dividends reinvested on dividend
payment dates for each of the periods for the Trust, the NAREIT Equity Index
(peer group) and the S&P 500 Index.
((2))
The NAREIT Equity Index includes 178 tax-qualified REITS (all of which are
listed on either the New York Stock Exchange, American Stock Exchange or the
NASDAQ National Market System). The 178 REITS have a total market
capitalization of $49.9 billion. The NAREIT Equity Index is maintained by
the National Association of Real Estate Investment Trusts, Washington, D.C.
11
<PAGE>
APPOINTMENT OF AUDITORS
KPMG Peat Marwick LLP, Certified Public Accountants, were the auditors for
the Trust for the year ended 1995. The Board of Trustees has appointed KPMG Peat
Marwick LLP as auditors for the year ending December 31, 1996, and recommends to
the shareholders that such appointment be approved. Representatives of KPMG Peat
Marwick LLP are expected to attend the annual meeting with the opportunity to
make a statement if desired and are also expected to be available to respond to
appropriate questions from the shareholders at the annual meeting.
OTHER BUSINESS
The management of the Trust knows of no matters to be brought before the
meeting other than those set forth in the Notice of Annual Meeting of
Shareholders. If, however, any other matters of which management is not now
aware are presented for action, it is the intention of the proxy holders named
in the enclosed proxy to vote in accordance with their discretion on such
matters. The giving of the proxy does not preclude the right to vote in person
should the shareholder giving it so desire, as the proxy may be revoked at any
time prior to its having been exercised.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be submitted for inclusion in proxy-soliciting
material for the 1997 annual shareholder's meeting must be received by the
Secretary of the Trust no later than December 2, 1996.
Dated: San Francisco, California
March 27, 1996
BARBARA J. DONHAM
SECRETARY
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A COPY OF THE TRUST'S 1995 ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS,
SCHEDULES AND EXHIBITS, WILL BE PROVIDED WITHOUT CHARGE TO EACH SHAREHOLDER WHO
SENDS A WRITTEN REQUEST TO INVESTOR RELATIONS, WESTERN INVESTMENT REAL ESTATE
TRUST, AT 3450 CALIFORNIA STREET, SAN FRANCISCO, CALIFORNIA 94118.
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12
<PAGE>
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WESTERN INVESTMENT REAL ESTATE TRUST
ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints O.A. Talmage, Chester R. MacPhee, Jr.,
Reginald B. Oliver, James L. Stell, William A. Talmage and Dennis D. Ryan as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
beneficial interest of Western Investment Real Estate Trust held of record by
the undersigned on March 14, 1996 at the annual meeting of shareholders to be
held on May 9, 1996 or any adjournment thereof.
Should the undersigned be present and choose to vote at the meeting or at any
adjournment or postponements thereof, and after notification to the Secretary of
the Trust at the meeting of the shareholder's decision to terminate this proxy,
then the power of the attorneys or proxies shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by filing a written
notice of revocation with the Secretary of the Trust or by duly executing a
proxy bearing a later date.
IMPORTANT: PLEASE DATE AND SIGN ON REVERSE SIDE.
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* FOLD AND DETACH HERE *
<PAGE>
This proxy will be voted as directed, but if no instructions are specified, this
proxy will be voted FOR each of the propositions stated.
Please mark
your votes as /X/
indicated in
this example
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSITIONS.
FOR VOTE
WITHHELD
1. The election as trustees all nominees / / / /
listed below
(except as marked to the contrary).
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
O.A. TALMAGE, JAMES L. STELL and WILLIAM A. TALMAGE
FOR AGAINST ABSTAIN
2. Ratification of the appointment of KPMG Peat / / / / / /
Marwick LLP as auditors for the fiscal year
ending December 31, 1996.
3. In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting or any adjournment or
postponement thereof.
If any other business is presented at the meeting, this proxy will be voted by
those named in this proxy in their best judgement. At the present time, the
Board of Trustees knows of no other business to be presented at the meeting.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
The undersigned acknowledges receipt from the Trust, prior to the execution of
this proxy, of notice of the Meeting, a Proxy Statement dated March 27, 1996 and
an Annual Report to shareholders.
I plan to attend the meeting. / /
Signature(s) __________________________________ Dated____________, 1996
Please sign exactly as your name(s) appear(s) to the left. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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* FOLD AND DETACH HERE *
