<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
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 Section 240.14a-11(c) or
Section 240.14a-12
GREAT LAKES REIT
-----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
</TABLE>
APPROXIMATE DATE OF DISTRIBUTION OF THE DEFINITIVE PROXY MATERIAL TO
THE REGISTRANT'S SHAREHOLDERS: APRIL 5, 2000
<TABLE>
<S> <C>
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing fee (check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required
/ / Fee computed on table below per Exchange Act rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
(5) total fee paid:
------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount previously Paid:
------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
April 5, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of Great Lakes REIT, a Maryland real estate investment trust
(the "Company"), which will be held at the University building on the McDonald's
Corporation Office Campus, 2815 Jorie Boulevard, Oak Brook, Illinois on Tuesday,
May 16, 2000 at 10:00 a.m., local time.
At the Annual Meeting, you will be asked to consider and vote upon (i) a
proposal to elect seven trustees for terms expiring at the Annual Meeting to be
held in 2001; and (ii) such other matters as may properly come before the
meeting or any adjournment or postponement thereof.
The accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement contain information about the Annual Meeting, including information
about the proposal to elect seven trustees for terms expiring at the Annual
Meeting to be held in 2001.
After careful consideration, your Board of Trustees recommends that all
shareholders vote "FOR" each of the seven trustees nominated for terms expiring
at the Annual Meeting in 2001.
It is important that your shares be represented at the Annual Meeting.
Therefore, whether or not you plan to attend the meeting, please complete, sign
and date the enclosed proxy card and return it promptly in the enclosed postage
prepaid envelope. If you attend the Annual Meeting, you may vote in person if
you wish, even if you have previously returned your proxy card.
We encourage you to attend the Annual Meeting in person, but whether you
expect to attend the Annual Meeting or not, we urge you to return your proxy
card promptly.
Sincerely yours,
[SIGNATURE]
Richard A. May
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Your vote is important. Please complete, sign and date and return the enclosed
proxy card as soon as possible. Otherwise, your vote cannot be counted.
<PAGE>
GREAT LAKES REIT
823 COMMERCE DRIVE
SUITE 300
OAK BROOK, ILLINOIS 60523
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
---------------------
To the Shareholders of Great Lakes REIT:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Great Lakes REIT, a Maryland real estate investment trust (the
"Company"), will be held at the University building on the McDonald's
Corporation Office Campus, 2815 Jorie Boulevard, Oak Brook, Illinois on Tuesday,
May 16, 2000 at 10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to elect seven trustees for terms
expiring at the Annual Meeting in 2001.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
Only holders of record of the Company's common shares of beneficial interest
at the close of business on March 10, 2000, the record date for the Annual
Meeting (the "Record Date"), are entitled to notice of, and to vote at, the
Annual Meeting and at any adjournment or postponement thereof.
The election to the Company's Board of Trustees of each of the nominees
specified requires the affirmative vote of a plurality of the votes cast at the
Annual Meeting, assuming a quorum is present.
All shareholders are cordially invited to attend the Annual Meeting in
person. Whether or not you plan to attend the Annual Meeting, please complete,
date and sign the enclosed proxy and return it in the enclosed envelope as
promptly as possible. If a proxy is signed but no voting instructions are
indicated thereon, such proxy will be voted "FOR" each of the Trustees nominated
pursuant to the Trustee election proposal. If you attend the Annual Meeting, you
may withdraw the proxy and vote in person.
By Order of the Board of Trustees,
[SIGNATURE]
Richard L. Rasley
SECRETARY
Oak Brook, Illinois
<PAGE>
GREAT LAKES REIT
----------------
PROXY STATEMENT
---------------------
This Proxy Statement is being furnished to the holders of the common shares
of beneficial interest, $.01 par value per share (the "Common Shares"), of Great
Lakes REIT, a Maryland real estate investment trust (the "Company"), in
connection with the solicitation of proxies by the Board of Trustees of the
Company for use at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held at the University building on the McDonald's
Corporation Office Campus, 2815 Jorie Boulevard, Oak Brook, Illinois on May 16,
2000 at 10:00 a.m., local time, and at any adjournments or postponements
thereof.
At the Annual Meeting, shareholders will be asked to consider and vote upon
a proposal to elect seven trustees for terms expiring at the Annual Meeting in
2001.
The Board of Trustees has fixed the close of business on March 10, 2000 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting (the "Record Date"). As of the Record Date,
there were 16,298,329 outstanding Common Shares. See "Voting and Proxies."
This Proxy Statement and the accompanying form of proxy are first being
mailed to shareholders of the Company on or about April 5, 2000.
VOTING OF PROXIES
The proxy accompanying this Proxy Statement is solicited on behalf of the
Company's Board of Trustees for use at the Annual Meeting. Shareholders are
requested to complete, date and sign the accompanying proxy and promptly return
it in the accompanying envelope or otherwise mail it to the Company. If no
instructions are indicated, properly executed proxies will be voted for election
of each of the seven nominees identified in this Proxy Statement. Because the
Company did not receive by March 20, 2000 (the deadline determined under Section
13 of the Company's Bylaws) notice of any matter intended to be raised by a
shareholder at the Annual Meeting, the persons designated as proxy holders in
the proxy card will vote the shares represented thereby, with regard to any
other matter as may properly come before the Annual Meeting, as recommended by
the Board of Trustees or, if no such recommendation is given, in their own
discretion.
VOTE REQUIRED
Under Maryland law and the Company's Bylaws, the affirmative vote of all the
votes cast at a meeting at which a quorum is present is necessary for the
election of a trustee.
QUORUM; ABSTENTIONS AND BROKER NON-VOTES
The holders of a majority of the Common Shares issued and outstanding and
entitled to vote at the Annual Meeting, present in person or by proxy, will
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes will
be counted for purposes of determining the presence of a quorum at the Annual
Meeting.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the inspectors of election appointed for the Annual Meeting, who will determine
whether or not a quorum is present. Votes may be cast for election of each of
the seven nominees. Alternatively, shareholders may choose to withhold authority
to vote as to all nominees or any individual nominee. Broker/dealers who hold
their customers' shares in street name may, under the applicable rules of the
exchange and other self-regulatory organizations of which the broker/dealers are
members, sign and submit proxies for such shares and may vote such shares on
routine matters, which, under such rules, typically include the election of
trustees. Abstentions on the trustee election proposal will have no effect on
the result of the proposal.
<PAGE>
Each shareholder who signs and returns a proxy in the form enclosed with
this Proxy Statement may revoke it at any time prior to its exercise by giving
notice of such revocation to the Company in writing to the Secretary of the
Company, by signing and timely returning a later dated proxy, or by attending
and voting in person at the Annual Meeting.
Unless so revoked, the Common Shares represented by each such proxy will be
voted at the meeting and any adjournment or postponement thereof. Presence at
the meeting of a shareholder who has signed a proxy but does not duly revoke it
or vote in person does not revoke that proxy.
ELECTION OF TRUSTEES
The Board of Trustees of the Company presently consists of seven members.
All trustees hold office for a term of one year and until their successors have
been elected and qualified.
At the Annual Meeting, shareholders will elect seven trustees. Unless
authority to do so is specifically withheld, the persons named in the
accompanying proxy will vote for the election of each of the nominees named
below. Under Maryland law and the Company's Bylaws, the affirmative vote of a
plurality of all the votes cast at the meeting is necessary for the election of
a trustee. All of the nominees currently are trustees of the Company.
The name, age, and current principal position(s), if any, with the Company
of each nominee for trustee is as follows:
<TABLE>
<CAPTION>
NAME TRUSTEE SINCE AGE PRESENT PRINCIPAL POSITION AND OFFICES WITH THE COMPANY
- ---- ------------- -------- -------------------------------------------------------
<S> <C> <C> <C>
Richard A. May 1992 55 Chairman of the Board, Chief Executive Officer and
Trustee
James J. Brinkerhoff 1996 49 Trustee
Patrick R. Hunt 1998 46 President, Chief Operating Officer and Trustee
Daniel E. Josephs 1993 68 Trustee
Daniel P. Kearney 1998 60 Trustee
Edward Lowenthal 1996 55 Trustee
Donald E. Phillips 1992 67 Trustee
</TABLE>
RICHARD A. MAY. Mr. May co-founded the Company in 1992 and has served as
principal executive officer and as Chairman of the Board of Trustees of the
Company since its inception. Mr. May is currently the Chairman of the Board and
Chief Executive Officer of the Company. In 1986, Mr. May co-founded Equity
Partners, Ltd. (the "Advisor") and from 1987 until April 1, 1996, Mr. May was an
officer and shareholder of the Advisor. Mr. May is a licensed real estate broker
in the States of Illinois and Indiana and holds several inactive National
Association of Securities Dealers, Inc. licenses. He is also a member of the
National Association of Real Estate Investment Trusts ("NAREIT"). Mr. May
received his Bachelor's Degree in mechanical engineering from the University of
Illinois and received his MBA degree from The University of Chicago.
JAMES J. BRINKERHOFF. Mr. Brinkerhoff has served as a member of the Board
of Trustees since August 1996. Mr. Brinkerhoff is Executive Vice President of
Fortis Advisers, Inc. ("Fortis Advisers"), the New York-based investment
management affiliate of Fortis, Inc. Prior to joining Fortis Advisers in 1994,
he was Senior Vice President and Portfolio Manager with Aldrich, Eastman &
Waltch, Inc. ("AEW"), a Boston-based pension fund advisor. While at AEW, Mr.
Brinkerhoff was responsible for managing the United States Real Estate Portfolio
of the Church Commissioners for England. From 1983 to 1993, he was an officer
and partner of Chesterton International, a London-based real estate adviser,
where he was responsible for the creation and management of the Church
Commissioners' United States Real Estate Portfolio. Mr. Brinkerhoff received his
MBA degree from the Wharton School, University of Pennsylvania, and received his
Bachelor's Degree from Boston University. He is a full member of the Urban Land
Institute.
PATRICK R. HUNT. Mr. Hunt, President and Chief Operating Officer, joined
the Company in August 1997 and has general supervisory responsibility for the
Company's operating activities. From 1983 until
2
<PAGE>
August 1997, Mr. Hunt was a managing director at Jones Lang LaSalle, Inc.
(formerly LaSalle Partners), a Chicago-based provider of international real
estate services. Mr. Hunt is a member of the Pension Real Estate Association and
NAREIT. He received his Bachelor's Degree from Northwestern University and
received his MBA degree from The University of Chicago.
DANIEL E. JOSEPHS. Mr. Josephs has served as a member of the Board of
Trustees since March 1993. Mr. Josephs is currently an independent business
consultant. From 1985 through 1995, Mr. Josephs served as the President, Chief
Operating Officer and Director of Dominick's Finer Foods of Northlake, Illinois,
a major Chicago-area retail grocery company. Mr. Josephs currently serves on the
Board of Trustees of Options for People, Inc., a Chicago-area non-profit
concern. Mr. Josephs received his Bachelor's Degree from Northwestern University
and received his MBA degree from The University of Chicago.
DANIEL P. KEARNEY. Mr. Kearney has served as a member of the Board of
Trustees since April 1998. Mr. Kearney is currently an independent financial
consultant. From 1990 through February 1998, Mr. Kearney was employed by Aetna
Inc. He most recently served as Executive Vice President and Chief Investment
Officer of Aetna Inc. and as President of Aetna Retirement Services. From 1989
to 1990, Mr. Kearney was President and Chief Executive Officer of the Resolution
Trust Corporation Oversight Board. From 1988 to 1989, Mr. Kearney was a
Principal of AEW. Prior to joining AEW, Mr. Kearney was a Managing Director of
Salomon Brothers Inc. Mr. Kearney currently serves as a member of the Board of
Directors of: MBIA, Inc., a municipal bond financial guarantee company that is
listed on the New York Stock Exchange ("NYSE"); MGIC Investment Corporation, a
holding company listed on the NYSE, that, through a wholly owned subsidiary,
provides private mortgage insurance; and Fiserv, Inc. a company that is a
provider of data processing and information management services and quoted on
the Nasdaq National Market. Mr. Kearney received his Bachelor's Degree and
Master's Degree from Michigan State University and received his JD degree from
The University of Chicago Law School.
EDWARD LOWENTHAL. Mr. Lowenthal has served as a member of the Board of
Trustees since August 1996. Mr. Lowenthal was a Founder, Trustee and President
of Wellsford Residential Property Trust ("WRP"), a NYSE-listed multi-family REIT
that was acquired by Equity Residential Properties Trust ("Equity Residential"),
a publicly traded apartment property REIT, in 1997. Upon completion of Equity
Residential's acquisition of WRP, Mr. Lowenthal (i) joined the Board of Trustees
of Equity Residential and (ii) became President and a director of Wellsford Real
Properties Inc., a real estate company that is listed on the American Stock
Exchange. Mr. Lowenthal is a member of the Board of Governors of NAREIT. In
addition, Mr. Lowenthal currently serves as a member of the Boards of Directors
of Omega Healthcare Investors, Inc., a health-care REIT, and Omega Worldwide,
Inc. He received his Bachelor's Degree from Case Western Reserve University and
received his JD degree from Georgetown University Law Center.
DONALD E. PHILLIPS. Mr. Phillips has served as a member of the Board of
Trustees since September 1992. Mr. Phillips is currently retired. From 1960
until 1980, Mr. Phillips served as a corporate executive in a variety of
capacities for International Minerals & Chemicals Corporation of Northbrook,
Illinois and, from 1976 to 1980, he was Group President & CEO of IMC Industry
Group, Inc. ("IMC"), a chemical and minerals firm. From 1980 until 1988, he
served as Group President and CEO of Pitman Moore, Inc., then a wholly owned
subsidiary of IMC. Mr. Phillips currently serves as Chairman of the Board of
Directors of Synbiotics Corporation of Rancho Bernardo, California, a
manufacturer and distributor of veterinary devices and products. Mr. Phillips is
also a member of the Board of Directors of Potash Corporation of Saskatchewan,
Canada, a miner and distributor of minerals for agricultural application. Mr.
Phillips received his Bachelor's Degree from Mississippi College and received
his MBA degree from the University of Mississippi. He is also a graduate of the
Executive Program in Business Administration in the Graduate School of Business,
Columbia University and he is a recipient of an Honorary Doctor of Laws degree
from Mississippi College.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT ALL SHAREHOLDERS VOTE
"FOR" EACH OF THE NOMINEES FOR TRUSTEE.
3
<PAGE>
COMMITTEES OF THE BOARD OF TRUSTEES
The Company currently has four committees of the Board of Trustees.
AUDIT COMMITTEE. The Audit Committee was established by the Board of
Trustees in 1998 and is responsible for making recommendations concerning the
engagement of independent public accountants, reviewing with the independent
public accountants the plans and results of the audit engagement, approving
professional services provided by the independent public accountants,
considering the range of audit and non-audit professional fees and reviewing
with the independent accountants and management, the adequacy of the Company's
internal accounting controls. The Audit Committee is required to be comprised of
two or more members of the Board of Trustees who are not also employees of the
Company (each, an "Independent Trustee"). The current members of the Audit
Committee are Messrs. Phillips (Chairman), Brinkerhoff and Josephs.
COMPENSATION COMMITTEE. The Compensation Committee was established by the
Board of Trustees in 1998 and is responsible for establishing remuneration
levels for executive officers of the Company and administering the Company's
Equity and Performance Incentive Plan (the "Incentive Plan") and any other
incentive programs. The Compensation Committee is required to be comprised of
three or more Independent Trustees. The Compensation Committee currently
consists of Messrs. Josephs (Chairman), Lowenthal and Phillips.
NOMINATING COMMITTEE. The Nominating Committee was established by the Board
of Trustees in 1998 and is responsible for recommending criteria for membership
on the Board; soliciting potential Board candidates when there is a need to fill
a current or future Board position; proposing to the full Board recommendations
to fill vacant positions on the Board; and considering and recommending to the
full Board the types and functions of Board committees. The Nominating Committee
is required to be comprised of three or more independent Trustees. The
Nominating Committee currently consists of Messrs. Brinkerhoff (Chairman),
Josephs and Kearney. The Committee has adopted the policy that it will consider
nominees recommended by shareholders. Any such nominations should be submitted
to the Committee through a written recommendation addressed to the Secretary of
the Company.
FINANCE COMMITTEE. The Finance Committee was established by the Board of
Trustees in 1998 and is responsible for reviewing management proposals and
making recommendations to the Board regarding matters related to the debt and
equity capitalization of the Company, dividend policy and other finance matters.
The Finance Committee currently consists of Messrs. May (Chairman), Kearney and
Lowenthal.
During 1999, six meetings of the Board of Trustees were held, two meetings
of the Audit Committee were held, five meetings of the Compensation Committee
were held, no meetings of the Nominating Committee were held, and two meetings
of the Finance Committee were held. All trustees attended at least 75%, in the
aggregate, of the number of meetings of the Board of Trustees and the committees
of which they were members during their periods of service as trustees and
committee members during 1999.
4
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's trustees and
executive officers, and holders of 10% or more of the outstanding Common Shares
to file an initial report of ownership (Form 3) and reports of changes of
ownership (Forms 4 and 5) of Common Shares with the Securities and Exchange
Commission. Such persons are required to furnish the Company with copies of all
Section 16(a) forms that they file. Based solely upon a review of these filings
and written representations from the Company's trustees and executive officers
that no other reports were required, the Company notes that the following
Section 16(a) reports related to 1999 were delinquent: Richard A. May, the
Company's Chief Executive Officer, reported on a Form 4 one transaction that
should have been reported on an earlier Form 4.
EXECUTIVE COMPENSATION
COMPENSATION OF TRUSTEES
Members of the Board of Trustees and committees thereof who are Independent
Trustees receive an annual retainer fee of $13,000 plus fees of $1,000 for each
day on which they attend a meeting of the Board of Trustees in person, $500 for
each day on which they attend a meeting of a committee of the Board of Trustees
in person and $250 for each day on which they participate telephonically in a
meeting of the Board of Trustees or a committee thereof. The Company reimburses
each Trustee for expenses incurred in attending meetings. In addition, Trustees
who are not also officers of the Company are currently eligible to be granted
annually options to acquire up to 5,000 Common Shares under the Amended and
Restated Option Plan for Independent Trustees (the "Trustee Plan") at a price
equal to the fair market value of the Company's Common Shares as of the end of
each fiscal year. As compensation for services performed during 1999, each of
Messrs. Brinkerhoff, Josephs, Kearney, Lowenthal and Phillips received an option
to purchase 5,000 Common Shares at an exercise price of $14.425 per share. Such
options were exercisable when granted and will expire on the earlier of December
31, 2009 or six months after a trustee is removed by the shareholders for cause
pursuant to the Company's Declaration of Trust. Mr. Brinkerhoff assigned his
1999 share purchase option to Fortis Benefits Insurance Company ("FBIC"), the
parent company of his employer.
During the period of 30 days after any "change in control," a person
entitled to exercise an option granted under the Trustee Plan may elect to
require the Company to purchase all or any portion of such option at a purchase
price equal to the difference between the fair market value and the option
exercise price. For purposes of the Trustee Plan, a "change in control" means
(i) certain consolidations or mergers of the Company; (ii) certain sales of all
or substantially all of the assets of the Company; (iii) the filing of a
Schedule 13D or Schedule 14D-1 under the Exchange Act disclosing that any person
had become the beneficial owner of 20% or more of the issued and outstanding
shares of voting securities of the Company; (iv) certain filings of reports or
proxy statements with the Commission; or (v) during any period of two
consecutive years, individuals who at the beginning of any such period
constitute the Board of Trustees cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company's shareholders, of each new member of the Board of Trustees was approved
by a vote of at least two-thirds of the members of the Board of Trustees then
still in office at the beginning of any such period.
As cash compensation for their services in 1999, the Independent Trustees
earned the following: Mr. Brinkerhoff, $22,500; Mr. Josephs, $24,250;
Mr. Kearney, $20,000; Mr. Lowenthal, $24,705; and Mr. Phillips, $24,500.
Mr. Brinkerhoff assigned the cash compensation earned for such services to FBIC.
COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth the summary compensation of the Chief Executive
Officer and the four other most highly paid executive officers of the Company
(the "Named Executive Officers") based on the aggregate compensation paid to
such officers in 1999.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------- --------------------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (1) ($) (2)
- -------------------------------------------- -------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Richard A. May 1999 248,063 248,063 34,700 13,026
Chief Executive Officer 1998 236,250 162,422 34,700 11,636
1997 225,000 112,500 320,000 4,152
Patrick R. Hunt 1999 227,115 227,115 31,950 12,804
President (3) 1998 216,300 148,706 31,950 7,968
1997 68,317 32,658 223,000 1,845
Richard L. Rasley 1999 137,813 110,250 19,450 4,709
Executive Vice President 1998 131,250 72,188 19,450 6,700
1997 125,000 50,000 172,000 4,090
Raymond M. Braun 1999 137,813 137,813 19,450 5,753
Chief Investment Officer 1998 131,250 90,234 19,450 7,860
1997 125,000 62,500 149,000 4,328
James Hicks 1999 137,813 110,250 19,450 5,723
Chief Financial Officer 1998 131,250 72,188 19,450 7,896
1997 125,000 43,750 149,000 4,340
</TABLE>
- ------------------------
(1) Options granted during 1999, 1998 and 1997 were issued at exercise prices
greater than or equal to the fair market value of Common Shares on the dates
of grant. Since May 8, 1997, the first day the Common Shares were listed on
the NYSE, fair market value has been determined by reference to the closing
price of the Common Shares on the NYSE Composite Tape on the effective date
of the grant. Prior to May 8, 1997, the fair market value of the Common
Shares was determined by the Board of Trustees. Options granted under the
Incentive Plan expire upon the earliest of (i) ten years following the date
of grant, (ii) one year after the termination of the optionee's employment
due to death or disability or (iii) three months after the termination of
the optionee's employment for any other reason. One-half of the options
granted on February 27, 1997 became exercisable on September 11, 1997 and
the balance of such options became exercisable August 27, 1998. One-half of
the options granted on December 31, 1997 became exercisable on the date of
grant and the balance of such options became exercisable in full on June 30,
1999. One third of the options granted in 1998 became exercisable on
November 18, 1999 and one third of the options granted in 1998 become
exercisable on the anniversary of the grant date, November 18, in each of
the years 2000 and 2001. One third of the options granted in 1999 become
exercisable on the anniversary of the grant date, November 19, in each of
the years 2000, 2001 and 2002. All such options become exercisable in full
upon a "change in control" of the Company (defined substantially the same as
under the Trustee Plan, see "--Compensation of Trustees" herein).
(2) These amounts represent group life and health insurance premiums paid by the
Company (for 1997, 1998 and 1999). In addition, the amounts include payments
made by the Company during 1998 and 1999 for financial planning services.
(3) Mr. Hunt received $118,469 of additional compensation in 1997 in connection
with his accepting employment with the Company.
6
<PAGE>
OPTION/SAR GRANTS IN FISCAL 1999
The following table sets forth certain information regarding share purchase
options granted to and exercised by the Named Executive Officers during 1999 and
the share purchase options held by them as of December 31, 1999. No SARs were
granted by the Company during 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
--------------------------- RATES OF
NUMBER OF % OF TOTAL SHARE PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (2)($)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED (1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ------------ ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard A. May................ 34,700 12.56% 14.94 11/18/09 325,975 826,086
Patrick R. Hunt............... 31,950 11.56% 14.94 11/18/09 300,141 760,618
Richard L. Rasley............. 19,450 7.04% 14.94 11/18/09 182,715 463,036
Raymond M. Braun.............. 19,450 7.04% 14.94 11/18/09 182,715 463,036
James Hicks................... 19,450 7.04% 14.94 11/18/09 182,715 463,036
</TABLE>
- ------------------------
(1) Such options were granted on November 19, 1999 under the Incentive Plan.
Options on one-third of the shares covered thereby become exercisable on the
anniversary of the date of the grant, November 19, in each of the years
2000, 2001 and 2002. Such options expire upon the earliest of:
(i) November 19, 2009, (ii) one year after the termination of the optionee's
employment due to death or disability or (iii) three months after the
termination of the optionee's employment for any other reason. All such
options become exercisable in full upon a "change in control" of the Company
(defined substantially the same as under the Trustee Plan, see
"--Compensation of Trustees" herein).
(2) Based on a ten-year term and annual compounding, the 5% and 10% calculations
are set forth in compliance with Securities and Exchange Commission rules.
The appreciation calculators are not necessarily indicative of future values
of the options or of the Common Shares.
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning all share purchase
options exercised during fiscal 1999 and unexercised share purchase options held
at the end of that fiscal year by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/99 OPTIONS/SARS AT 12/31/99(1)
SHARES ----------------------------- ------------------------------
ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISE (#) REALIZED (# OF SHARES) (# OF SHARES) ($ VALUE) ($ VALUE)
- --------------------------- ------------ -------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. May............. 23,078 $14,667 156,656 57,833 -- --
Patrick R. Hunt............ 32,000 -- 76,650 53,250 -- --
Richard L. Rasley.......... 26,334 12,834 82,483 32,417 -- --
Raymond M. Braun........... 35,000 62,600 155,483 32,417 -- --
James Hicks................ 84,000 5,500 75,483 32,417 -- --
</TABLE>
- --------------------------
(1) Value based on the closing price of a Company Common Share of $14.38 on
December 31, 1999, as reported on the NYSE Composite Tape, minus the
exercise price. At such date, none of the options held by the Named
Executive Officers was in-the-money.
EMPLOYMENT AGREEMENTS
The Company and Messrs. May, Hunt, Rasley, Braun and Hicks (the "Executive
Officers") are parties to certain employment agreements dated July 17, 1998 (the
"Employment Agreements"). Pursuant to the Employment Agreements the Executive
Officers have agreed to serve as executive officers of the Company for a
specified term, which for Messrs. May and Hunt is through June 30, 2002, and for
Messrs. Rasley,
7
<PAGE>
Hicks, and Braun is through June 30, 2001. However, the term of the agreements
for Messrs. May and Hunt are automatically extended for an additional year
commencing on the date two years prior to the termination date of such
agreements. The term of the agreements for Messrs. Rasley, Hicks and Braun are
automatically extended for an additional year commencing on the date one year
prior to the termination date of such agreements. Each of the Executive Officers
has agreed to refrain from engaging in certain defined Competitive Activities
for a one year period following any termination for which he has received a
payment under his Employment Agreement.
Each Employment Agreement provides for compensation to be paid to the
respective Executive Officer under four different scenarios. First, if the
Executive Officer's employment is terminated for any reason other than for
Cause, or his death, or his permanent disability, or if his employment is
terminated by the Executive Officer for "Good Reason" as defined in the
Employment Agreement, the Executive Officer shall be entitled to receive a lump
sum payment equal to two times the sum of: (1) his highest annual Base Pay
during the term of the Employment Agreement and (2) his most recent bonus
percentage multiplied by such annual Base Pay. In addition, for a period of 12
months following the date of his termination the Company will continue to
provide the Executive Officer with employee benefits that are substantially
similar to those he was receiving or entitled to receive prior to such date.
Second, if the Executive Officer's employment is terminated due to his permanent
disability, the Executive Officer shall be entitled to receive a lump sum
payment equal to two times the sum of: (1) his highest annual Base Pay during
the term of the Employment Agreement and (2) his most recent bonus percentage
multiplied by such annual Base Pay. In addition, for a period of 24 months
following his termination date the Company will continue to provide the
Executive Officer with employee benefits that are substantially similar to those
he was receiving or entitled to receive prior to such date. Third, if the
Executive Officer's employment is terminated due to his death, his estate shall
be entitled to receive a lump sum payment equal to two times the sum of:
(1) the Executive Officer's highest annual Base Pay during the term of the
Employment Agreement and (2) his most recent bonus percentage multiplied by such
annual Base Pay. Fourth, in the event there has been a "Change in Control" of
the Company, if the Executive Officer's employment is terminated for any reason
other than for Cause including the Executive Officer's death and the Executive
Officer's permanent disability, during a 12 month Severance Period following any
such Change in Control, each of Messrs. Rasley, Braun and Hicks shall be
entitled to receive a lump sum payment equal to two times, and each of
Messrs. May and Hunt shall be entitled to receive a lump sum payment equal to
three times, the sum of: (1) his respective highest annual Base Pay during the
term of the Agreement and (2) an average of the bonus percentages of the three
then most recently completed fiscal years of the Company multiplied by such
annual Base Pay. In addition, for a period of 12 months following his
termination date the Company will continue to provide the Executive Officer with
employee benefits that are substantially similar to those he was receiving or
entitled to receive prior to the termination date. Any payments made by the
Company pursuant to such Employment Agreements shall be increased or "grossed
up" as required in the event the contractual payments to any of the Executive
Officers become subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended.
"Good Reason," is defined in the Employment Agreements as (i) the
executive's resignation or retirement is requested by the Company other than for
cause; (ii) any significant change in the nature or scope of the executive's
duties or level of authority and responsibility; (iii) any reduction in the
executive's applicable total compensation or benefits other than a reduction in
compensation or benefits applicable to substantially all of the Company's
employees; (iv) a breach by the Company of any other material provision of the
Employment Agreement; or (v) a reasonable determination by the executive that,
as a result of a change in control of the Company and a change in circumstances
thereafter significantly affecting the executive's position, the executive is
unable to exercise the prior level of the executive authority and
responsibility. A "Change in Control" is deemed to occur under the Employment
Agreements if (i) any person becomes the beneficial owner of 50% or more of the
outstanding Company Common Shares, (ii) during any 24-month period, individuals
who at the beginning of such period constitute the Board of Trustees (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Trustees; provided, however, that any individual becoming a trustee
during such period whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the trustees then
comprising the Incumbent Board shall be considered as though such individual
were a
8
<PAGE>
member of the Incumbent Board, but excluding for this purpose any such
individual whose initial assumption of office is in connection with an actual or
threatened contest for the election of trustees (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any
successor rule) or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of Trustees,
(iii) certain consolidations or mergers of the Company occur, (iv) certain
sales, leases, exchanges or other transfers of all, or substantially all, of the
assets of the Company or (v) if the Company files a report or proxy statement
with the Securities and Exchange Commission that a change in control of the
Company has occurred or will occur in the future pursuant to any then-existing
contract or transaction.
LIMITED PURPOSE EMPLOYEE LOAN PROGRAM
The Company has established the Limited Purpose Employee Loan Program (the
"Employee Loan Program") for the purpose of attracting and retaining certain key
employees by facilitating their ability to implement the Company's long term
incentive programs. Under the Employee Loan Program, the Compensation Committee
has authorized the Company to make loans and loan guarantees to, or for the
benefit of any employee of the Company to facilitate the implementation of the
Company's long-term incentive plans. Under the Employee Loan Program, subject to
certain limitations which became effective as of March 1, 1998, employees may
borrow to fund up to 100% of (i) the cost of exercising share purchase options
held by the employee or (ii) individual income tax obligations which may arise
as a result of aspects of the implementation of the Company's long-term
incentive plans. Such loans bear interest payable quarterly at the interest rate
for borrowings under the Company's bank credit facility, are recourse to the
employees and are secured by a pledge of the shares acquired by the employee
through this program. Such loans expire on (i) the earlier of the fifth
anniversary of the loan date and (ii) the date that is 60 days following the
termination of employment. As of December 31, 1999, employees had acquired an
aggregate of approximately 1.1 million Common Shares through this program with
aggregate outstanding loan amounts of $16.3 million due the Company.
Mr. May borrowed $337,247 in 1999 under the Employee Loan Program, all of
which was outstanding at December 31, 1999. The proceeds of Mr. May's loan were
used to pay the purchase price for options covering 23,078 Common Shares. Mr.
Hunt borrowed $539,044 in 1999 under the Employee Loan Program, all of which was
outstanding at December 31, 1999. The proceeds of Mr. Hunt's loan were used to
pay the purchase price for options covering 32,000 Common Shares and withholding
taxes related to the exercise of the share purchase options. Mr. Rasley borrowed
$393,342 in 1999, all of which was outstanding at December 31, 1999. The
proceeds of Mr. Rasley's loan were to pay the exercise price for options
covering 26,334 Common Shares. Mr. Braun borrowed $453,749 in 1999, all of which
was outstanding at December 31, 1999. The proceeds of Mr. Braun's loan were to
pay the exercise price for options covering 35,000 Common Shares and withholding
taxes related to the vesting of certain previously granted restricted shares.
Mr. Hicks borrowed $1,332,000 in 1999, all of which was outstanding at December
31, 1999. The proceeds of Mr. Hicks' loan were used to pay the exercise price
for options covering 84,000 Common Shares.
The following table summarizes the borrowings made by the Named Executive
Officers during 1999.
<TABLE>
<CAPTION>
SHARES
AMOUNT ACQUIRED WITH
TOTAL OUTSTANDING AS OF THE PROCEEDS OF
BORROWINGS DECEMBER 31, THE EMPLOYEE
NAME DURING 1999 1999 LOANS
- --------------------------------------------------- ----------- ----------------- ---------------
<S> <C> <C> <C>
Richard A. May..................................... $ 337,247 $ 337,247 23,078
Patrick R. Hunt.................................... $ 539,044 $ 539,044 32,000
Richard L. Rasley.................................. $ 393,342 $ 393,342 26,334
Raymond M. Braun................................... $ 453,749 $ 453,749 35,000
James Hicks........................................ $1,332,000 $1,332,000 84,000
</TABLE>
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Josephs (Chairman),
Lowenthal and Phillips. None of the members of the Compensation Committee is or
has ever been an officer or employee of the Company or had any other
relationship with the Company, except as a member of the Board of Trustees and
as a shareholder.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1999 the Compensation Committee of the Board of Trustees (the
"Committee") was comprised of Messrs. Josephs (Chairman), Lowenthal and
Phillips. The Board of Trustees has delegated to the Committee the authority to
determine the compensation of the Company's executive officers and other key
management employees. The Committee's primary objective is to ensure that the
Company's compensation policies attract, motivate and retain qualified managers
in a manner consistent with maximization of shareholder value. The Company's
compensation is structured philosophically on a "pay for performance" foundation
and thus recognizes the desirability of compensation directed specifically to
motivate and reward executive managers for achieving both short and long-term
performance objectives. Compensation is comprised of three major components:
base salary, incentive bonus and stock options.
BASE SALARY
Base salaries are determined in the context of an individual's
responsibilities and competitive benchmarking. Base salaries are reviewed
annually and adjusted on the basis of individual performance and competitive
considerations. In making base salary adjustments, the Committee considers an
individual's performance, especially the effective discharge of assigned
responsibilities and the leadership and motivation provided to subordinates. In
making salary decisions for 1999, the Committee considered the effects of
inflation and certain subjective criteria, including the Committee's evaluation
of each executive officer's performance of his duties.
In 1999, the Company offered an annual incentive bonus compensation program
for the executive officers that was designed to motivate short-term performance.
Participants in the program were entitled to an annual incentive bonus based
upon (i) the relationship of the Company's actual funds from operations ("FFO")
compared to budgeted FFO for the 1999 fiscal year; and (ii) the individual's
attainment of personal objectives. Seventy-five percent of each participant's
bonus was to be determined with reference to the FFO component and the remaining
25% of the bonus was to be determined with reference to personal goal
attainment. Personal goals generally specified attainment of particular
objectives or management responsibilities for the participant. The Committee
believes that the relatively heavy weight assigned to attainment of the
Company's budgeted FFO was appropriate in the light of the priority of
maximizing shareholder value and the desirability of emphasizing teamwork in the
management of the Company.
Under the 1999 incentive compensation program, each executive officer was
assigned "threshold," "target" and "maximum" bonuses that were a fixed
percentage of base salary. These percentages were 25%, 50% and 100%,
respectively, for Messrs. May, Hunt and Braun; and 20%, 40% and 80%,
respectively, for Messrs. Rasley and Hicks. Each participant was entitled to
receive at least 75% of the designated bonus percentage based upon the Company's
achievement of certain FFO levels established by the Committee. If the threshold
FFO level was not met, no bonus would be paid; if the threshold FFO level but
not the target FFO level was met, the threshold bonus would be paid; and if the
target FFO level was met or exceeded, the target bonus would be paid and the
bonus would be increased on a linear basis up to the maximum based upon a scale
established by the Committee. In 1999 the Committee determined that based upon
the FFO attained by the Company, the maximum level had been reached. In
addition, the Committee concluded that each of the executive officers had met
their personal objectives. Therefore, the Committee determined that each
participant in the incentive compensation program should receive an amount equal
to his or her respective maximum bonus.
10
<PAGE>
SHARE PURCHASE OPTION GRANTS
The Committee seeks to ensure that the executive officers of the Company
focus attention on long-term objectives, including maximization of value for
shareholders. The Committee believes that share purchase options are an
appropriate compensation tool to motivate and reward executive managers for
long-term performance. The Committee believes that the price of the Common
Shares is an appropriate index of long-term value creation by the management
group. In 1999, the Committee granted an aggregate of 200,000 performance-based
options to purchase Common Shares to executive officers. See "Executive
Compensation--Compensation of Executive Officers--Share Purchase Option Grants
in Fiscal 1999."
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. May's salary compensation as reported under "Executive
Compensation--Summary Compensation Table" for 1999 was $248,063, which was 5%
higher than the corresponding amount reported for 1998. In making such
determination, the Committee considered, among other things, competitive
benchmarking and the Company's performance in the preceding twelve-month period
compared to budgeted performance.
Mr. May participated in the annual incentive bonus compensation program and
his target bonus was 50% of his base salary. Consistent with the approach
described above regarding incentive bonuses for other executive officers, Mr.
May received a bonus payout for 1999 equal to 100% of his base salary. Mr. May
also received performance-based share purchase options covering 34,700 Common
Shares. See "Executive Compensation--Compensation of Executive Officers--Share
Purchase Option Grants in Fiscal 1999."
LIMITATIONS ON DEDUCTIBILITY
In 1993, changes were made to the federal corporate income tax law that
limit the ability of public companies to deduct compensation in excess of $1
million paid annually to each of the chief executive officer and the other four
most highly compensated executive officers. There are exemptions from this
limit, including compensation that is based on the attainment of performance
goals that are established by the Committee and approved by the Company's
shareholders. It is the Committee's policy to seek to qualify executive
compensation for deductibility where practicable and to the extent that such
policy is consistent with the Company's overall objectives in attracting,
motivating and retaining its executives. The Company believes that, based upon
current compensation levels, compensation paid in 1999 should be fully
deductible.
THE COMPENSATION COMMITTEE DURING 1999
Daniel E. Josephs (Chairman)
Edward Lowenthal
Donald E. Phillips
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative return
on the Common Shares with that of the Standard & Poor's 500 Stock Index (the
"S&P 500 Index") and the National Association of Real Estate Investment Trusts
Equity Index (the "NAREIT Equity Index") at May 8, 1997 (the first day the
Common Shares were listed on the NYSE) and the last day of each calendar quarter
subsequent to May 8, 1997. The graph assumes a $100 investment and reinvestment
of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5/8/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
Great Lakes REIT $100.00 $108.00 $126.36 $131.63 $132.28 $121.78 $118.19 $113.57 $107.02 $122.13 $115.40 $110.13
S&P 500 Index $100.00 $107.89 $115.45 $118.50 $134.35 $138.25 $123.99 $149.83 $156.82 $167.35 $156.38 $179.12
NAREIT Equity Index $100.00 $107.94 $120.70 $122.81 $122.24 $116.63 $104.36 $101.31 $96.43 $106.15 $97.62 $96.63
</TABLE>
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Shares as of March 1, 2000 by (i) each trustee, (ii) each of
the Named Executive Officers, (iii) all trustees and executive officers of the
Company as a group and (iv) each other person who is known by the Company to be
the beneficial owner of 5% or more of the Company's outstanding Common Shares.
Unless otherwise indicated in a footnote, all such Common Shares are owned
directly, and the indicated person has sole voting and investment power.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) OWNED
- ------------------------------------ ------------ ------------
<S> <C> <C>
Morgan Stanley Dean Witter & Co. (2)........................ 2,969,249 18.21%
1585 Broadway
New York, NY 10036
Fortis Benefits Insurance Co. (3)........................... 1,020,000 6.25%
One Chase Manhattan Plaza
New York, NY 10005
Raymond M. Braun (4)........................................ 228,654 1.39%
James J. Brinkerhoff........................................ -- *
James Hicks (5)............................................. 193,769 1.18%
Patrick R. Hunt (6)......................................... 233,650 1.43%
Daniel E. Josephs (7)....................................... 74,356 *
Daniel P. Kearney (8)....................................... 11,500 *
Edward Lowenthal (9)........................................ 30,630 *
Richard A. May (10)......................................... 684,219 4.16%
Donald E. Phillips (11)..................................... 58,980 *
Richard L. Rasley (12)...................................... 307,496 1.88%
All trustees and executive officers as a group (13 persons) 2,046,419 12.03%
(13)........................................................
</TABLE>
- ------------------------
- Less than 1%
(1) All share amounts reflect beneficial ownership determined pursuant to Rule
13d-3 under the Exchange Act.
(2) As reported in a Schedule 13G filed with the Commission on February 7, 2000
by Morgan Stanley Dean Witter & Co., an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 ("MSDW"), and Morgan
Stanley Dean Witter Investment Management Inc., an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940
("MSIM"), (i) MSDW has shared voting power as to 2,299,399 Common Shares and
shared dispositive power as to 2,964,249 Common Shares, and (ii) MSIM has
shared voting power as to 2,290,800 Common Shares and shared dispositive
power as to 2,953,000 Common Shares. Also includes options exercisable
within 60 days of March 1, 2000 to purchase 5,000 Common Shares, which
options were granted to a former trustee of the Company as trustee
compensation and assigned by such trustee to MSIM.
(3) Based on the most recent Schedule 13D on file with the Commission. Includes
options exercisable within 60 days of March 1, 2000 to purchase 20,000
Common Shares, which options were granted to Mr. Brinkerhoff as trustee
compensation and assigned by Mr. Brinkerhoff to FBIC.
(4) Includes options exercisable within 60 days of March 1, 2000 to purchase
155,483 Common Shares.
(5) Includes options exercisable within 60 days of March 1, 2000 to purchase
75,483 Common Shares.
(6) Includes options exercisable within 60 days of March 1, 2000 to purchase
76,650 Common Shares.
(7) Includes options exercisable within 60 days of March 1, 2000 to purchase
29,000 Common Shares.
(8) Includes options exercisable within 60 days of March 1, 2000 to purchase
10,000 Common Shares.
13
<PAGE>
(9) Includes options exercisable within 60 days of March 1, 2000 to purchase
20,000 Common Shares.
(10) Includes options exercisable within 60 days of March 1, 2000 to purchase
156,656 Common Shares and 8,824 Indemnification Shares (defined herein under
the caption "Certain Relationships and Related Transactions--Advisor
Relationship") held in escrow pursuant to the terms of the merger of the
Advisor with and into the Company.
(11) Includes options exercisable within 60 days of March 1, 2000 to purchase
23,000 Common Shares.
(12) Includes options exercisable within 60 days of March 1, 2000 to purchase
82,483 Common Shares and 1,765 Indemnification Shares held in escrow
pursuant to the terms of the merger of the Advisor with and into the
Company.
(13) Includes options exercisable within 60 days of March 1, 2000 to purchase an
aggregate of 710,389 Common Shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ADVISOR RELATIONSHIP
From the Company's organization until the completion of the merger of Equity
Partners, Ltd. (the "Advisor") with and into the Company on April 1, 1996, the
Advisor provided various services to the Company pursuant to an Advisory
Agreement dated July 2, 1992, as restated July 1, 1994, relating to the
selection, purchase, financing and operation of the Company's properties, and
pursuant to other agreements regarding property management and offering
administration activities.
In connection with the merger of the Advisor with and into the Company, the
shareholders of the Advisor received 100,000 Common Shares, 15,000 of which were
placed in escrow to secure the indemnification obligations of the shareholders
of the Advisor (the "Indemnification Shares"). Indemnification Shares that are
not applied to indemnifiable damages will be distributed to the shareholders of
the Advisor upon the later of (a) April 1, 2001 or (b) the expiration of the
last applicable statute of limitations within which tax-based claims can be
made. In addition, certain employees of the Advisor received Restricted Shares
as an inducement to accept employment with the Company, including 8,571, 8,571
and 4,286 Restricted Shares issued to Messrs. Rasley, Braun and Hicks,
respectively. The restrictions on one-half of the Restricted Shares lapsed on
April 1, 1997 and May 13, 1997 (the closing date of the Company's public
offering of Common Shares), respectively. In addition, effective May 1, 1996,
Mr. Braun received an additional 10,000 Restricted Shares, one-fourth of which
vested on May 1, 1999 and one-fourth which vest on May 1 of 2000, 2001 and 2002,
respectively, provided that Mr. Braun is then employed by the Company.
MANAGEMENT LOANS
Pursuant to the Employee Loan Program, an aggregate principal amount of
$12,415,413 in loans made to the named executive officers by the Company was
outstanding at December 31, 1999. Such loans bear interest at the interest rate
of borrowings under the Company's bank credit facility and are payable
quarterly. See "Executive Compensation--Limited Purpose Employee Loan Program"
for a description of such loans.
14
<PAGE>
OTHER MATTERS
The Board of Trustees knows of no business that will be presented at the
Annual Meeting other than the election of seven trustees. Because the Company
did not receive by March 20, 2000 notice of any matter intended to be raised by
a shareholder, proxies will be voted in respect of any other matters as may
properly come before the Annual Meeting in accordance with the recommendation of
the Board of Trustees or, if no such recommendation is given, in the discretion
of the person or persons voting the proxies.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's 2001
annual meeting of shareholders (the "2001 Meeting"), which the Company's Bylaws
require be held in May 2001, and to be considered for inclusion in the Company's
proxy and proxy statement related to the 2001 Meeting must be received by the
Secretary of the Company by December 6, 2000. Any shareholder intending to
propose any matter at the 2001 Meeting but not intending for the Company to
include the matter in its proxy statement must notify the Company by March 17,
2001 of such proposal. If the Company does not receive such notice by that date,
the notice will be considered untimely. The Company's proxy for the 2001 Meeting
will grant discretionary authority to the persons named therein to exercise
their voting discretion with respect to any such matter of which the Company
does not receive notice by March 17, 2001.
Any shareholder wishing to submit a proposal at the 2001 Meeting must also
comply with certain provisions of the Company's Declaration of Trust and Bylaws
(collectively, the "Charter Documents"). The Charter Documents require written
notice of any such proposal (and certain other information) to be delivered to
the Secretary of the Company generally not later than 60 days in advance of the
date of the previous year's meeting. The Company will provide (without charge) a
copy of the Charter Documents to any holder of record of Common Shares.
Notices regarding shareholder proposals and requests for copies of the
Charter Documents should be directed to: Secretary, Great Lakes REIT, 823
Commerce Drive, Suite 300, Oak Brook, Illinois 60523.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, ALL
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING FORM
OF PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Trustees,
[SIGNATURE]
Richard L. Rasley,
SECRETARY
15
<PAGE>
GREAT LAKES REIT
PROXY
The undersigned shareholder of Great Lakes REIT, a Maryland real estate
investment trust (the "Company"), hereby appoints Richard A. May and Richard
L. Rasley, or either of them, as proxies for the undersigned, with the full
power of substitution in each of them, to cast on behalf of the undersigned
all votes that the undersigned is entitled to cast at the Company's Annual
Meeting of Shareholders (the "Annual Meeting") to be held on Tuesday, May 16,
2000 at 10:00 a.m., Central Time, at the University building on the
McDonald's Corporation Office Campus, 2815 Jorie Boulevard, Oak Brook,
Illinois, and otherwise to represent the undersigned at the Annual Meeting
with all powers possessed by the undersigned if personally present at the
Annual Meeting, and at any and all adjournments or postponements thereof,
upon the following matters that are more fully described in the accompanying
Proxy Statement. The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to the Annual Meeting. The
votes entitled to be cast by the undersigned will be cast in the manner
directed below. If this proxy is executed but no direction is made, the votes
entitled to be cast by the undersigned will be cast for each of the nominees
for Trustee, and in the discretion of the proxy holder on any other matter
that may properly come before the Annual Meeting or any adjournment or
postponement thereof.
TRIANGLE FOLD AND DETACH HERE TRIANGLE
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY / /
Withhold For All
For As to All Except
1. ELECTION OF TRUSTEES / / / / / /
(Instruction: to withhold authority to vote for
any individual nominee mark the box next to
the nominee's name below and the oval "For All
Except")
/ / Richard A. May / / James J. Brinkerhoff / / Patrick R. Hunt
/ / Daniel E. Josephs / / Daniel P. Kearney / / Edward Lowenthal
/ / Donald E. Philips
2. TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED UPON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF IN THE DISCRETION OF THE PROXY HOLDERS.
Number of Shares:
Name of Shareholder:
Date____________________________________
________________________________________
Signature of Shareholder(s)
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
TRIANGLE FOLD AND DETACH HERE TRIANGLE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
