<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
WESTERN INVESTMENT REAL ESTATE TRUST
2200 POWELL STREET, SUITE 600
EMERYVILLE, CALIFORNIA 94608
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 13, 1999
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 13, 1999, for the
following purposes:
(1) To elect three trustees to Class II for three-year terms to expire at
the conclusion of the 2002 annual meeting.
(2) To ratify the appointment of independent auditors for the Company.
(3) To transact any other business that may properly come before the
meeting.
All shareholders of record at the close of business on March 17, 1999, 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: Emeryville, California
March 31, 1999
[SIGNATURE]
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
2200 POWELL STREET, SUITE 600
EMERYVILLE, CALIFORNIA 94608
PROXY STATEMENT
THIS STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE MANAGEMENT OF WESTERN INVESTMENT REAL ESTATE TRUST, hereinafter called
"Western" or "the Company," for use at the annual meeting of shareholders to be
held on Thursday, May 13, 1999, 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 Company. In addition to solicitation by
mail, proxies may be solicited personally or by telephone by trustees, officers
or other employees of the Company.
Only shareholders of record of Western at the close of business on March 17,
1999, 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 31, 1999.
You are requested to sign, date and return the accompanying proxy in the
enclosed envelope. Proxies duly executed and received by the Company on or
before 10:00 a.m. on May 13, 1999, will be voted in accordance with the
instructions thereon. Such proxies may be revoked by executing and delivering to
Western 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, 17,265,813 shares of the Company'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
1999 annual meeting. Under the terms of the Declaration of Trust, the 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 2000, two of such
trustees (Class III) will stand for election for a three-year term. In 2001, the
remaining trustees (Class I) will stand for election for a three-year term. All
proxies received by the Company 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 nominees (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 2002 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 17, 1999, 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
2002 annual meeting of shareholders is set forth below:
<TABLE>
<CAPTION>
TRUSTEE TERM TO
NAME PRINCIPAL OCCUPATION SINCE EXPIRE
- -------------------------- -------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C>
James L. Stell Mr. Stell, 75, is the retired Vice Chairman of the Board of Lucky 1985 1999
Stores, Inc. During the past five years his principal occupation has (Class II)
been trustee of Western.
Bradley N. Blake Mr. Blake, 40, was appointed President, Chief Executive Officer and 1998 1999
trustee of Western in January 1998. Prior to that, he was a Managing (Class II)
Director of Pacific Retail Trust, a private real estate investment
trust, and prior to December 1996, he was Senior Vice President of
Spieker Properties, a public real estate investment trust.
L. Michael Foley Mr. Foley, 60, has been a principal of L. Michael Foley and Associ- 1998 1999
ates, a real estate and corporate consulting firm, since 1996. He (Class II)
also serves as a Director of BRE Property, Inc., a REIT focused
solely on multi-family properties located in the western United
States. He has been a Director of BRE since 1994. He was Senior Vice
President and Chief Financial Officer of Coldwell Banker Corporation
for the period 1995 through 1996. Prior to 1995, he served as
Chairman and Chief Executive Officer of Sears Savings Bank; Senior
Executive Vice President of Coldwell Banker Real Estate Group; and
Executive Vice President of Homart Development Co.
Information regarding the trustees who are not standing for election this year is set forth below:
Reginald B. Oliver Mr. Oliver, 60, is a private investor. He was Executive Vice Presi- 1984 2000
dent of the Pershing Division of Donaldson, Lufkin & Jenrette (Class III)
Securities Corporation, an investment banking firm, and continues to
be associated with the firm as a consultant.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE TERM TO
NAME PRINCIPAL OCCUPATION SINCE EXPIRE
- -------------------------- -------------------------------------------------------------------- --------- -----------
<S> <C> <C> <C>
Joseph P. Colmery Mr. Colmery, 45, has acted in the capacity of consultant to several 1999 2000
companies within the financial services industry since his retire- (Class III)
ment in December 1997. For the period 1996 through December 1997, he
served as President and Chief Executive Officer of U.S. Bank of
California and prior to that he served as President and Chief
Executive Officer of California Bancshares which was acquired by
U.S. Bank of California in 1996.
Dennis D. Ryan Mr. Ryan, 43, is Executive Vice President and Chief Financial 1994 2001
Officer of Western. Prior to joining the Company in 1993, Mr. Ryan (Class I)
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.
Robert J. McLaughlin Mr. McLaughlin, 65, has been the President and owner of The Sutter 1997 2001
Group, a management consulting firm for the past sixteen years. He (Class I)
currently serves on the Board of Directors of Grubb & Ellis Company,
a commercial real estate brokerage and asset management company.
Information regarding the current executive officers of the Company is set forth below:
Josh Smith Mr. Smith, 35, was appointed Senior Vice President, Investments, of
the Company in February 1998. Prior to that, he was Senior Vice
President of Pacific Retail Trust, and prior to December 1996, he
was a Vice President of Spieker Properties.
L. Gerald Hunt Mr. Hunt, 33, was appointed Senior Vice President, Operations, of
the Company in February 1998. Prior to that, he was a Vice Presi-
dent of Pacific Retail Trust, and prior to December 1996, he was a
project director at Spieker Properties.
</TABLE>
BOARD AND COMMITTEE MEETINGS
During 1998, the Board of Trustees held 10 meetings and the Executive
Committee of the Board of Trustees held 6 meetings. The Executive Committee is
presently comprised of Robert J. McLaughlin, James L. Stell, Bradley N. Blake
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 Western as
are delegated to it from time to time by the Board of Trustees.
There was no standing nominating committee during 1998. A Nominating
Committee has been appointed to serve beginning in 1999 for the purpose of
screening and recommending candidates for Board positions and evaluating Board
performance. The committee members are L. Michael Foley, James L. Stell and
Joseph P. Colmery.
The Audit Committee meets with the Company's auditors at least twice
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
3
<PAGE>
independent auditing firm to be selected for the ensuing fiscal year. The
committee held two meetings in 1998. The Audit Committee is presently comprised
of James L. Stell, Reginald B. Oliver and Robert J. McLaughlin.
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 1998. The Committee is presently
comprised of Reginald B. Oliver, L. Michael Foley and Joseph P. Colmery.
During 1998, each of the trustees attended at least 75% of the total number
of board meetings and meetings of committees on which they served for the period
they were in office.
OWNERSHIP OF SHARES
Western currently has one outstanding class of voting securities, comprised
of shares of beneficial interest without par value.
As of December 31, 1998, no person known to the Company was a beneficial
owner of more than 5% of its outstanding shares, based on information publicly
reported to the Securities and Exchange Commission.
CEDE, a stock depository for brokers and other nominees, as of the record
date, holds approximately 15,401,290 shares, or 89% of the Company's outstanding
shares, in its capacity as a stock depository.
The following table sets forth the number of shares of beneficial interest
beneficially owned by each trustee, by each nominee for trustee and by trustees
and executive officers in office, and the percentage of the Company's
outstanding shares represented by such beneficial ownership. Such persons had
sole voting and investment power with respect to the shares listed except as
otherwise noted.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED DIRECTLY OR
INDIRECTLY AS OF
MARCH 15,
NAME OF BENEFICIAL OWNER 1999(1)(2)
- ------------------------------------------------------- -------------------
<S> <C>
James L. Stell 24,000 (0.14%)(3)
Bradley N. Blake 145,200 (0.84%)(2)(4)
L. Michael Foley 10,000 (0.06%)
Reginald B. Oliver 119,750 (0.69%)(5)
Joseph P. Colmery 7,000 (0.04%)
Dennis D. Ryan 75,600 (0.44%)(2)(6)
Robert J. McLaughlin 11,000 (0.06%)(7)
Josh Smith 44,623 (0.26%)(2)(8)
L. Gerald Hunt 37,650 (0.22%)(2)(8)
All nominees, trustees and executive officers (9
persons) 474,823 (2.75%)
</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.
(2) For purposes of calculating percentage of shares owned, total shares
outstanding and shares owned include restricted shares awarded to date
(restricted shares vest over a three-year period).
4
<PAGE>
(3) Includes 4,000 shares held by Mr. Stell as Trustee for a family trust. Mr.
Stell disclaims any ownership of such shares. Includes beneficial ownership
of 2,000 shares that may be acquired within 60 days pursuant to stock option
awards.
(4) Includes beneficial ownership of 50,000 shares that may be acquired within
60 days pursuant to stock option awards.
(5) Includes 6,200 shares held by Mr. Oliver's adult children and 36,550 shares
held by Mr. Oliver as Trustee and Custodian for a minor child under his
custodial care. Mr. Oliver disclaims any ownership of such shares. Includes
beneficial ownership of 2,000 shares that may be acquired within 60 days
pursuant to stock option awards.
(6) Includes beneficial ownership of 37,600 shares that may be acquired within
60 days pursuant to stock option awards.
(7) Includes beneficial ownership of 2,000 shares that may be acquired within
60 Days pursuant to stock option awards.
(8) Includes beneficial ownership of 9,600 shares that may be acquired within
60 days pursuant to stock option awards.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
All executive officers and trustees of the Company timely filed the reports
required under Section 16(a) of the Securities Exchange Act of 1934, as amended,
during 1998; except that, due to administrative oversight, Mr. McLaughlin failed
to file one Form 4 on a timely basis to report a purchase transaction. This
transaction covering 3,000 shares was reported immediately upon discovery of the
oversight.
COMPENSATION OF TRUSTEES
During 1998, Reginald B. Oliver and James L. Stell each received an annual
independent trustee fee of $16,000, $750 for each Board meeting or Board
committee meeting attended and $500 for each telephonic meeting of the Board or
Board committee. L. Michael Foley, who was appointed a trustee effective July 1,
1998, received a pro-rated annual fee and meeting fees as described above.
Chester R. MacPhee who served as acting Chairman through June 30, 1998 received
an additional $18,000 in fees for serving as Chairman. Robert J. McLaughlin
received a pro-rated share of the annual independent trustee fee plus meeting
fees for January 1, 1998 through June 30, 1998 and on his appointment as
Chairman effective July 1, 1998 received a pro-rated annual flat fee of $50,000
with no provision for meeting fees.
Management trustees and officers receive no compensation from the Company
for serving as trustees or attending meetings separate from that shown in the
Summary Compensation Table below.
The independent trustees are eligible for stock option awards pursuant to
the 1998 Equity Incentive Plan. During 1998, options to purchase shares of
beneficial interest were granted by the Board to the independent trustees as
follows: James L. Stell, 5,000; Reginald B. Oliver, 5,000; Chester R. MacPhee,
Jr., 5,000; L. Michael Foley, 10,000; and Robert J. McLaughlin, 15,000.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ending December 31, 1998,
1997 and 1996, certain compensation paid by Western to its Chief Executive
Officer and the other most highly compensated executive officers whose
compensation exceeded $100,000 at December 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
ANNUAL COMPENSATION ----------------------------------------------
---------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION (1) AWARD(S)(2) OPTIONS/SARS COMPENSATION(3)
POSITION YEAR ($) ($) ($) ($) (#) ($)
- --------------------- --------- ----------- ----------- -------------------- ----------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bradley N. Blake(4) 1998 $ 275,000 $ 140,000 $ 100,575 $ 207,189 250,000 $ 4,800
1997 -- -- -- -- -- --
1996 -- -- -- -- -- --
Dennis D. Ryan 1998 $ 197,916 $ 45,000 $ 60,421 $ 110,860 50,000 $ 9,600
1997 175,000 -- 338 -- 3,000 9,500
1996 132,500 15,630 325 -- 5,000 9,000
Josh Smith(4) 1998 $ 147,548 $ 50,000 $ 50,191 $ 110,860 48,000 $ 4,426
1997 -- -- -- -- -- --
1996 -- -- -- -- -- --
L. Gerald Hunt(4) 1998 $ 134,135 $ 40,000 $ 50,172 $ 110,860 48,000 $ 7,798
1997 -- -- -- -- -- --
1996 -- -- -- -- -- --
</TABLE>
- ----------
(1) Comprises life insurance premiums paid for the benefit of the named
executive officers and sums forgiven relative to loans made as follows:
In January and February 1998, Western loaned an aggregate of $1.3 million
to the named executive officers. The loan proceeds were used to fund the
purchase of Company shares of beneficial interest by the named officers. The
loans bear interest at a rate of 5.58% per annum, are recourse and are
secured by a pledge of certain shares of beneficial interest of Western. The
amounts shown include amounts forgiven under these loans in respect of 1998
as follows:
<TABLE>
<CAPTION>
AMOUNT OF LOAN AMOUNT FORGIVEN
---------------- -----------------
<S> <C> <C>
Bradley N. Blake $ 500,000 $ 100,000
Dennis D. Ryan $ 300,000 $ 60,000
Josh Smith $ 250,000 $ 50,000
L. Gerald Hunt $ 250,000 $ 50,000
</TABLE>
(2) The amounts shown represent the dollar value on the date of grant of
restricted stock awards made under Western's 1998 Equity Incentive Plan.
Each of the awards was made in January or February 1998 and vests over three
years in equal installments. Dividends are paid on these shares.
6
<PAGE>
On December 31, 1998, the aggregate value of the restricted stock awards
granted to each of the named executive officers, based on a stock price of
$11 13/16 was as follows:
<TABLE>
<CAPTION>
RESTRICTED STOCK AWARDS
-------------------------
NUMBER OF
DOLLAR VALUE SHARES
------------ -----------
<S> <C> <C>
Bradley N. Blake $ 177,188 $ 15,000
Dennis D. Ryan $ 88,594 $ 7,500
Josh Smith $ 88,594 $ 7,500
L. Gerald Hunt $ 88,594 $ 7,500
</TABLE>
(3) Amounts shown represent employer matching contributions and discretionary
contributions under Western's 401(K) Plan.
(4) Messrs. Blake, Smith and Hunt each became an executive officer of Western
in 1998; salary shown is pro-rated portion of annualized amounts as follows:
Blake $300,000; Smith $165,000; and Hunt $150,000.
7
<PAGE>
COMPENSATION PURSUANT TO PLANS OR ARRANGEMENTS
Western has agreements with three former trustees, Bernard Etcheverry, O.A.
Talmage and Chester R. MacPhee, Jr. (each, a "Recipient") that provide that the
Company pay the Recipient, or his eligible spouse, a monthly stipend of $5,000
until the later of (i) the death of the Recipient or (ii) the death of the
Recipient's eligible spouse. During 1998, each of the three recipients received
a total of $60,000 pursuant to the agreements. The agreements provide that the
Recipient or his eligible spouse, as the case may be, will receive an
accelerated payment of the amounts due under the agreement if the net assets of
the Company fall below $15 million. The accelerated payment will be equal to the
sum of (i) the present value of the total amount the Recipient or his eligible
spouse would have received under the agreement (based on the life expectancy of
the Recipient and his eligible spouse according to an actuarial table and
discounted at a rate of seven percent per annum), and (ii) an amount sufficient
to cover the income tax payable by such Recipient or his eligible spouse on
receipt of the accelerated payment.
STOCK OPTION PLAN AND EQUITY INCENTIVE PLAN
Western's Nonqualified Stock Option Plan adopted in 1988 has been cancelled
and replaced by the 1998 Equity Incentive Plan. Options to purchase shares that
have been granted under the 1988 Plan that have not lapsed are as follows:
<TABLE>
<CAPTION>
TOTAL NO.
OF UNEXPIRED
OPTIONS PRICE PER
GRANT DATE GRANTED SHARE
- ---------- ------------- ---------
<S> <C> <C>
11/11/93 60,000 13.81
6/28/94 25,000 13.88
11/11/94 66,600 12.31
11/13/95 22,800 11.00
11/12/96 26,000 13.31
11/18/97 36,000 13.59
</TABLE>
In each instance, the option price was 100% of the fair market value at the
date of the grant.
In 1998, Western adopted the 1998 Equity Incentive Plan ("1998 Plan"). Under
the 1998 Plan, employees, officers and trustees of Western and its subsidiaries
are eligible to participate in the Plan. The Compensation Committee of the Board
of Trustees administers the Plan and determines the persons to whom awards will
be made, when awards will be granted, the amount of the awards, and other terms
and conditions of the awards. The Plan permits the granting of options to
purchase shares of beneficial interest (ISOs), stock appreciation rights (SARs),
restricted stock and unrestricted stock.
8
<PAGE>
Western may issue up to 850,000 shares of beneficial interest under the Plan.
Options to purchase shares and restricted shares that have been granted through
December 31, 1998 and have not lapsed are as follows:
<TABLE>
<CAPTION>
RESTRICTED
OPTIONS SHARES
---------------- -----------
TOTAL NO. PRICE TOTAL NO. PRICE
GRANT OF UNEXPIRED PER GRANT OF SHARES ON AWARD
DATE OPTIONS GRANTED SHARE(1) DATE GRANTED(2) DATE
- --------------- ---------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1/28/98 250,000 $ 13.81 1/28/98 15,000 $ 13.81
2/9/98 146,000 $ 14.78 2/9/98 22,500 $ 14.78
5/14/98 20,000 $ 14.50 6/18/98 4,000 $ 13.00
6/18/98 106,000 $ 13.00
8/10/98 10,000 $ 12.59
</TABLE>
- ---------
(1) Option price was 100% of the fair market value at the date of grant.
(2) Shares vest over three-year period, 1/3 per year.
STOCK OPTION GRANTS AND EXERCISES
Stock options were granted to the executive officers during 1998 as shown on
the following table:
STOCK OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF SHARE
GRANTED TO PRICE APPRECIATION
EMPLOYEES FOR OPTION TERM
OPTIONS IN FISCAL EXERCISE EXPIRATION ----------------------------
NAME GRANTED(1) YEAR PRICE DATE 5% 10%
- ------------------------------------ ----------- ----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bradley N. Blake 250,000 47.0% $ 13.81 1/28/04 $ 1,174,100 $ 2,659,000
Dennis D. Ryan 50,000 9.4% $ 14.78 2/9/04 251,300 569,100
Josh Smith 48,000 9% $ 14.78 2/9/04 241,200 546,300
L. Gerald Hunt 48,000 9% $ 14.78 2/9/04 241,200 546,300
</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.
The number and value of unexercised options at year-end 1998 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, 1998 AT DECEMBER 31, 1998(1)
-------------------------------- --------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------- -------------------------------- --------------------------
<S> <C> <C>
Bradley N. Blake --/250,000 --/--
Dennis D. Ryan 27,600/60,400 $2,438/$1,625
Josh Smith --/48,000 --/--
L. Gerald Hunt --/48,000 --/--
</TABLE>
- ---------
(1) The fair market value of shares at December 31, 1998 was $11 13/16.
9
<PAGE>
TAX QUALIFIED RETIREMENT PLAN PURSUANT TO IRS CODE SECTION 401(k)
Western adopted a Tax Qualified Retirement Plan pursuant to Section 401(k)
(the "401(k) Plan") in 1990. Under the 401(k) Plan, the Company 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 Company; and (c) a discretionary contribution determined each year
by the Company. All salaried employees are eligible to become 401(k) Plan
participants on completion of three months of employment and the attainment of
age 21. 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 1998, the
Company made approximately $150,000 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 compensation packages for officers
and for employees whose base salary is at or above $100,000 per year. In
addition, the Committee reviews the general compensation strategy and approves
ranges of bonus and increases for the entire employee group. The review process
includes performance evaluation of officers as well as consideration for
promotion and succession. During 1998, the Committee also negotiated the
employment agreements for new executives hired during the year. The Committee
was comprised of non-employee trustees.
COMPENSATION PHILOSOPHY AND OBJECTIVES
It is the philosophy of the Committee and the Company that in order to meet
Western's goal to increase long-term shareholder value, the Company must develop
and maintain a compensation program that attracts, motivates and retains
qualified executives.
The compensation program includes a base salary, bonus, equity incentive
plan and 401(k) Plan. The total compensation package for senior executives may
include other perquisites as deemed appropriate. 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 Company'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.
The Committee believes that the best interest of shareholders and executives
will be closely aligned by providing executives and employees an opportunity to
increase their ownership in Western. The Committee therefore periodically will
grant options, restricted shares and provide loans to executive officers to fund
the purchase of shares of beneficial interest of Western.
10
<PAGE>
1998 COMPENSATION PACKAGES
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 and bonus levels paid in comparable companies for
comparable positions. The Committee monitors on an annual basis certain
operating ratios of other real estate investment trusts as compared to the
Company, including total administrative expenses as a percentage of assets and
revenues.
During 1998, the Committee approved agreements for three executive officers
(the CEO and President and two Senior Vice Presidents) who commenced employment
in January and February 1998, respectively. These agreements included base
salary, a guaranteed bonus to be paid at the completion of twelve months of
employment, stock options, restricted shares and a loan to fund the purchase of
shares of beneficial interest of Western. Additionally, a similar contract was
approved for the CFO who has been with the Company since 1994.
The Committee also approved a discretionary bonus pool available to certain
key employees provided the Company achieved certain target levels of funds from
operations for the year 1998. A total of $100,000 was distributed from this pool
to six officers, including the four executive officers.
During 1998, pursuant to the 1998 Equity Incentive Plan, nearly all of the
Company's employees were awarded options to purchase shares of beneficial
interest. During 1998, a total of 532,000 options were granted under the 1998
Equity Incentive Plan. Additionally, pursuant to the 1998 Equity Incentive Plan,
a total of 41,500 restricted shares of beneficial interest were awarded to the
officers of the Company.
Submitted by the Compensation
Committee
Reginald B. Oliver, Chairman
L. Michael Foley(1)
Joseph P. Colmery(1)
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(1) Appointed to Committee 1999
11
<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>
1993 100 100 100
1994 108.67 103.17 101.31
1995 99.89 118.92 139.23
1996 132.1 160.86 171.19
1997 151.79 193.45 228.32
1998 141.81 159.59 293.57
</TABLE>
- ----------
(1) The total return on investment assumes dividends reinvested on dividend
payment dates for each of the periods for the Company, the NAREIT Equity
Index (peer group) and the S&P 500 Index.
(2) The NAREIT Equity Index includes 173 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 173 REITS have a total market
capitalization of $126.9 billion. The NAREIT Equity Index is maintained by
the National Association of Real Estate Investment Trusts, Washington, D.C.
12
<PAGE>
APPOINTMENT OF AUDITORS
KPMG LLP, Certified Public Accountants, were the auditors for the Company
for the year ended 1998. The Board of Trustees has appointed KPMG LLP as
auditors for the year ending December 31, 1999, and recommends to the
shareholders that such appointment be ratified. Representatives of KPMG 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 Western 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 2000 annual shareholder's meeting must be received by the
Secretary of the Company no later than December 1, 1999.
Dated: Emeryville, California
March 31, 1999
[SIGNATURE]
Barbara J. Donham
Secretary
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A COPY OF THE TRUST'S 1998 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 2200 POWELL STREET, EMERYVILLE, CA 94608.
- --------------------------------------------------------------------------------
13
<PAGE>
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WESTERN INVESTMENT REAL ESTATE TRUST
ANNUAL MEETING OF SHAREHOLDERS
MAY 13, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Reginald B. Oliver, James L. Stell, Dennis
D. Ryan, Robert J. McLaughlin, Bradley N. Blake, L. Michael Foley and Joseph P.
Colmery 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 17, 1999 at the annual meeting of
shareholders to be held on May 13, 1999 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 Company 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
Company 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.
VOTE
FOR 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.
JAMES L. STEEL, BRADLEY N. BLAKE AND L. MICHAEL FOLEY
FOR AGAINST ABSTAIN
2. Ratification of the appointment of KPMG Peat / / / / / /
Marwick LLP as auditors for the fiscal year
ending December 31, 1999.
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 Company, prior to the execution of
this proxy, of notice of the Meeting, a Proxy Statement dated March 25, 1999 and
an Annual Report to shareholders.
I plan to attend the meeting. / /
Signature(s) __________________________________ Dated____________, 1999
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 *
