<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
BEACON CAPITAL PARTNERS, INC.
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
BEACON CAPITAL PARTNERS, INC.
ONE FEDERAL STREET, 26TH FLOOR
BOSTON, MASSACHUSETTS 02110
------------------------
April 10, 2000
Dear Stockholder,
You are cordially invited to attend the annual meeting of stockholders of
Beacon Capital Partners, Inc. to be held on Wednesday, May 10, 2000 at 3:00 p.m.
at the offices of Goodwin, Procter & Hoar LLP, Exchange Place, Boston,
Massachusetts.
The annual meeting has been called for the purpose of ratifying the adoption
of a management incentive plan, electing two Class II Directors for a three-year
term, and ratifying the appointment of Ernst & Young LLP as Beacon's independent
accountants for the fiscal year ending December 31, 2000.
The Board of Directors has fixed the close of business on April 5, 2000 as
the record date for determining the stockholders entitled to receive notice of
and to vote at the annual meeting and at any adjournments or postponements of
the meeting.
The Board of Directors recommends that you vote in favor of the ratification
of the adoption of the management incentive plan, the election of Class II
Directors, and the ratification of the appointment of Ernst & Young LLP as
Beacon's independent accountants.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY ALSO
VOTE BY TELEPHONE OR BY INTERNET PURSUANT TO THE INSTRUCTIONS ON THE PROXY CARD.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
Very truly yours,
Alan M. Leventhal
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
BEACON CAPITAL PARTNERS, INC.
ONE FEDERAL STREET, 26TH FLOOR
BOSTON, MASSACHUSETTS 02110
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
------------------------
The 2000 annual meeting of stockholders of Beacon Capital Partners, Inc.
will be held on Wednesday, May 10, 2000 at 3:00 p.m. at the offices of Goodwin,
Procter & Hoar LLP, Exchange Place, Boston, Massachusetts, for the following
purposes:
1. To ratify the adoption of a management incentive plan.
2. To elect each of Lionel P. Fortin and Stephen T. Clark as a director to
serve until the 2003 annual meeting of stockholders and until their
successors are duly elected and qualified.
3. To ratify the appointment of Ernst & Young LLP as Beacon's independent
accountants for the fiscal year ending December 31, 2000.
4. To transact such other business that may be properly brought before the
annual meeting and at any adjournments or postponements of the meeting.
Any action may be taken on the foregoing matters at the annual meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the annual meeting may be adjourned.
The Board of Directors has fixed the close of business on April 5, 2000 as
the record date for determining the stockholders entitled to receive notice of
and to vote at the annual meeting and at any adjournments or postponements of
the meeting. Only stockholders of record of Beacon's common stock, par value
$0.01 per share at the close of business on that date will be entitled to notice
of and to vote at the annual meeting and at any adjournments or postponements of
the annual meeting.
You are requested to fill in and sign the enclosed Proxy Card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. You may also vote by telephone or by Internet
pursuant to the instructions on the Proxy Card. Any proxy delivered by a holder
of common stock may be revoked by a writing delivered to Beacon stating that the
proxy is revoked or by delivery of a later dated proxy. Stockholders of record
of Beacon's common stock who attend the annual meeting may vote in person, even
if they have previously delivered a signed proxy.
By Order of the Board of Directors
Kathleen M. McCarthy
SECRETARY
Boston, Massachusetts
April 10, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. YOU MAY ALSO VOTE BY TELEPHONE OR BY INTERNET PURSUANT TO THE
INSTRUCTIONS ON THE PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE
YOUR SHARES OF COMMON STOCK IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
<PAGE>
BEACON CAPITAL PARTNERS, INC.
ONE FEDERAL STREET, 26TH FLOOR
BOSTON, MASSACHUSETTS 02110
------------------------
PROXY STATEMENT
------------------------
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
April 10, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Beacon Capital Partners, Inc. ("Beacon")
for use at the 2000 Annual Meeting of Stockholders of Beacon to be held on
Wednesday, May 10, 2000 and at any adjournments or postponements of the meeting
(the "Annual Meeting"). At the Annual Meeting, stockholders will be asked to
ratify the adoption of a management incentive plan, elect two directors of
Beacon, ratify the appointment of Beacon's independent public accountants, and
act upon any other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are first being sent to stockholders on or about April 10, 2000. The Board
of Directors has fixed the close of business on April 5, 2000 as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Annual Meeting (the "Record Date"). Only stockholders of record of
Beacon's common stock, par value $0.01 per share (the "Common Stock"), will be
entitled to receive notice of and to vote at the Annual Meeting. As of the
Record Date, there were 20,973,932 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting. Holders of Common Stock outstanding as
of the close of business on the Record Date will be entitled to one vote for
each share held.
The presence in person or by proxy of stockholders entitled to cast a
majority of all of the votes entitled to be cast at the meeting constitutes a
quorum for the transaction of business at the Annual Meeting. Abstentions and
"broker non-votes" (i.e., shares represented at the Annual Meeting held by
brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote such shares and with respect to
which the broker or nominee does not have discretionary voting power to vote
such shares) will be counted for purposes of determining whether a quorum is
present for the transaction of business at the Annual Meeting. With respect to
the election of directors, a plurality of all the votes cast at the meeting at
which a quorum is present is sufficient to elect a director. Votes may be cast
in favor of or withheld from a nominee. Votes that are withheld will be excluded
entirely from the vote and will have no effect. Broker non-votes will have no
effect on the outcome of the election of the directors. With respect to the
proposal to ratify the adoption of a management incentive plan and the proposal
to ratify the selection of independent accountants, a majority of all the votes
cast at the meeting at which a quorum is present is sufficient to ratify or
approve the proposal. Abstentions and broker non-votes will have the effect of a
vote against Proposal 1 and Proposal 3.
STOCKHOLDERS OF BEACON ARE REQUESTED TO COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. YOU
MAY ALSO VOTE BY TELEPHONE OR BY INTERNET PURSUANT TO THE INSTRUCTIONS ON THE
PROXY CARD. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO
THE VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL
MEETING AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED BUT
NOT MARKED AS TO A PARTICULAR ITEM, THE PROXY WILL BE VOTED FOR PROPOSAL 1, FOR
THE ELECTION OF THE TWO NOMINEES TO THE BOARD OF DIRECTORS OF BEACON NAMED IN
THIS PROXY STATEMENT, AND FOR PROPOSAL 3. IT IS NOT
<PAGE>
ANTICIPATED THAT ANY MATTERS OTHER THAN THE PROPOSALS SET FORTH ABOVE WILL BE
PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES WILL BE
VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS.
A stockholder of record of Common Stock may revoke a proxy at any time
before it has been exercised by filing a written revocation with the Secretary
of Beacon at the address of Beacon set forth above, by filing a duly executed
proxy bearing a later date, or by appearing in person and voting by ballot at
the Annual Meeting. Any stockholder of record of Common Stock as of the Record
Date attending the Annual Meeting may vote in person whether or not a proxy has
been previously given, but the presence (without further action) of a
stockholder at the Annual Meeting will not constitute revocation of a previously
given proxy.
Beacon's 1999 Annual Report on Form 10-K, including financial statements for
the fiscal year ended December 31, 1999, is being mailed to stockholders with
this Proxy Statement. Copies of Beacon's Annual Report may be obtained without
charge by writing to Beacon Capital Partners, Inc., One Federal Street, 26th
Floor, Boston, Massachusetts 02110, Attention: Secretary.
PROPOSAL 1
RATIFICATION OF MANAGEMENT INCENTIVE PLAN
OUR REASONS FOR ADOPTING THE MANAGEMENT INCENTIVE PLAN
Since inception, Beacon and Beacon Capital Partners, L.P. (the "Operating
Partnership," and, with Beacon, the "Company") have sought to generate investor
returns for both stockholders and limited partners by applying management's
expertise in managing, developing, leasing, and operating real estate to make
investments in real estate and real estate-related technology companies. The
Company's Long-Term Incentive Plan and the Stock Incentive Plan (such plans, the
"Prior Plans") were adopted in connection with the formation of the Company and
were originally designed to align management's interests with those of investors
and permit management to achieve liquidity by accessing the public market for
the Common Stock. The ability of the Prior Plans to properly incentivize
management is highly dependent upon the Company completing an initial public
offering. As the following chart illustrates, however, the public market for
real estate securities has been dramatically limited since the Fall of 1998:
1997-1999 EQUITY REIT OFFERINGS
(DOLLARS IN THOUSANDS)
[IN THE PRINTED PROXY STATEMENT, GRAPHIC IS A BAR GRAPH SHOWING THE DOLLAR VALUE
OF REIT EQUITY OFFERINGS FROM 1997 TO 1999]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1997-1999 EQUITY REIT OFFERINGS
<S> <C> <C>
Dollars in Thousands
Secondary IPO
1997 4,874 25,999
1998 1,429 18,969
1999 292 6,235
</TABLE>
2
<PAGE>
Given current market conditions, the Board believes that it is not in the
best interest of the Company to complete an initial public offering in the
foreseeable future. Consequently, the Board believes that the Prior Plans are no
longer effective to align management's interests with those of the Company's
investors. Therefore, the Board has adopted a new management incentive plan (the
"New Plan") of the type typically found in other private real estate investment
management companies. The New Plan will replace both the Long-Term Incentive
Plan and the stock options granted, or that could be granted, to management
under the Stock Incentive Plan.
CURRENT STRATEGY FOR THE COMPANY
The Company expects to generate cash for purposes of making the
distributions described below, or to repurchase Common Stock, by refinancing or
selling its assets. The Board believes that management will be motivated to
efficiently refinance or sell assets upon advantageous terms because they will
not receive any incentive compensation until the hurdle described below has been
paid to investors. The Company intends to continuously evaluate its
opportunities for refinancing or selling assets with the intention of completing
such transactions upon advantageous terms. Upon implementation of the New Plan,
the Company intends to provide a statement of net asset values to investors at
least annually. Currently, management anticipates that approximately 50% of
Invested Capital (as defined below) will be returned to investors, or used to
repurchase Common Stock, during the next two years through refinancings and
sales of assets. Management also anticipates that it will begin receiving
distributions of its incentive compensation under the New Plan within four
years. No assurances can be made, however, that the Company will be able to
complete sales of assets upon favorable terms, if at all.
COMPARISON OF PRIOR PLANS AND NEW PLAN
The Board believes that the New Plan more closely aligns management's
interests with the Company's investors than the Prior Plans because:
- The Company will return all capital and a minimum 10% return from the date
capital was invested to its investors before any incentives are paid to
management.
- If returns are under the 10% hurdle, no incentive will be paid to
management.
- Since the New Plan replaces both the Long-Term Incentive Plan and the
stock options granted, or that could be granted, to management under the
Stock Incentive Plan, investors will not experience dilution from the
issuance of Common Stock upon the exercise of options held by management.
3
<PAGE>
The following table compares the value of the Prior Plans to the value of
the New Plan, assuming a 5%, a 10%, a 15%, and a 20% compounded annual return.
The information presented in the table is not based on actual results to date,
but rather on a hypothetical projection for comparative purposes. The table is
based on the following assumptions:
<TABLE>
<CAPTION>
THE PRIOR PLANS THE NEW PLAN
-------------------------------------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Growth Rate........ 5% 10% 15% 20% 5% 10% 15% 20%
Annual Cash Dividend...... 2% 2% 2% 2% 2% 2% 2% 2%
Total Shares & O.P.
Units................... 23,727,429 23,727,429 23,727,429 23,727,429 23,727,429 23,727,429 23,727,429 23,727,429
Total Options............. 2,796,726 2,796,726 2,796,726 2,796,726 n/a n/a n/a n/a
Management Options........ 2,638,069 2,638,069 2,638,069 2,638,069 n/a n/a n/a n/a
Option Exercise Price..... $20.00 $20.00 $20.00 $20.00 n/a n/a n/a n/a
Projected FFO at Annual
Growth Rate............. $0.66 $2.05 $3.88 $6.25 n/a n/a n/a n/a
Base Return............... $2.72 $2.72 $2.72 $2.72 n/a n/a n/a n/a
Industry Multiple......... 8.0 8.0 8.0 8.0 n/a n/a n/a n/a
</TABLE>
<TABLE>
<CAPTION>
THE PRIOR PLANS THE NEW PLAN
----------------------------------------- -----------------------------------------
ANNUAL GROWTH RATE 5% 10% 15% 20% 5% 10% 15% 20%
- ------------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
End of Year 5 Stock
Value(1).................... $ 23.19 $ 29.39 $ 36.85 $ 45.76 $ 23.19 $ 29.39 $ 36.85 $ 45.76
Less Incentive (& Options).... $ 0.32 $ 0.93 $ 2.79 $ 5.94 $ 0.00 $ 0.00 $ 3.37 $ 5.15
-------- -------- -------- -------- -------- -------- -------- --------
Net Stock Price............... $ 22.87 $ 28.45 $ 34.06 $ 39.81 $ 23.19 $ 29.39 $ 33.48 $ 40.60
Add back Cash Dividends
(2% per year)............... $ 2.34 $ 2.82 $ 3.38 $ 4.01 $ 2.34 $ 2.82 $ 3.38 $ 4.01
-------- -------- -------- -------- -------- -------- -------- --------
Total Return to Investors..... $ 25.21 $ 31.28 $ 37.44 $ 43.82 $ 25.53 $ 32.21 $ 36.86 $ 44.62
Less Initial Stock Price...... $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 20.00 $ 20.00
-------- -------- -------- -------- -------- -------- -------- --------
Total Net Return to
Investors................... $ 5.21 $ 11.28 $ 17.44 $ 23.82 $ 5.53 $ 12.21 $ 16.86 $ 24.62
======== ======== ======== ======== ======== ======== ======== ========
Total Investor Profit
(in thousands).............. $123,592 $267,565 $413,841 $565,221 $131,109 $289,717 $399,983 $584,059
Total Investor Return......... 26.0% 56.4% 87.2% 119.1% 27.6% 61.1% 84.3% 123.1%
Investor IRR(2)............... 4.9% 9.7% 13.9% 17.6% 6.5% 13.0% 17.0% 23.0%
---- ----
-------- -------- -------- -------- -------- --------
-------- --------
Value of Stock Options........ $ 7,517 $ 22,151 $ 39,761 $ 60,780 $ 0 $ 0 $ 0 $ 0
Value of Long Term
Incentive(3)................ $ 0 $ 0 $ 26,336 $ 80,279 $ 0 $ 0 $ 79,955 $122,221
-------- -------- -------- -------- -------- -------- -------- --------
Total......................... $ 7,517 $ 22,151 $ 66,097 $141,059 $ 0 $ 0 $ 79,955 $122,221
------- -------
</TABLE>
- ------------------------------
FOR EXAMPLE, AS THE TABLE ABOVE SHOWS, UNDER THE PRIOR PLANS, THE COMPANY
NEEDED A 20% ANNUAL GROWTH RATE FOR AN INVESTOR TO HAVE REALIZED AN IRR OF
17.6%. UNDER THE NEW PLAN, IF THE COMPANY'S ANNUAL GROWTH RATE WERE 15%, AN
INVESTOR WOULD REALIZE AN IRR OF 17.0%. IN ADDITION, IN THIS SCENARIO, THE
AGGREGATE MANAGEMENT COMPENSATION UNDER THE PRIOR PLANS WOULD HAVE BEEN
$141,059 AND UNDER THE NEW PLAN WOULD BE $79,955.
- --------------------------------------------------------------------------------
(1) The End of Year 5 Stock Value is calculated by growing the initial stock
price by the Annual Growth Rate less the 2% Annual Cash Dividend.
(2) The IRR calculation under the Prior Plan assumes a 2% cash dividend is paid
each year and the End of Year 5 Stock Value is distributed in the fifth
year. The IRR calculation for the New Plan assumes a 2% cash dividend is
paid each year and the End of Year 5 Stock Value is distributed evenly in
years three, four and five.
(3) The information presented in the table above is not based on actual results
to date, but rather on a hypothetical projection for comparative purposes.
The incentive fee under the Prior Plans was based on earnings and growth in
Funds From Operations ("FFO"). The New Plan is based upon total cash
generated from real estate and real estate-related investments. Although the
two plans are different in nature, the assumptions used to determine the
returns under each of the plans were consistently applied.
4
<PAGE>
NEW PLAN COMPARED TO MARKET PRACTICES
The Compensation Committee of the Board engaged FPL Associates Consulting to
review the possibility of revising the Prior Plans. FPL Associates Consulting
examined the structure of the New Plan, as well as the projected payouts under
the New Plan, in order to assess its market competitiveness and concluded that,
overall, the New Plan was appropriate given the current and expected near term
market conditions, as well as the typical practices within private real estate
investment companies.
THE NEW PLAN
The New Plan is designed to permit members of senior management to
participate in the value being created in the underlying portfolio of
investments. Under the New Plan, the partnership agreement of the Operating
Partnership would be amended to provide Beacon Capital Participation Plan, L.P.
("BCPPLP") with incentive distributions from the Operating Partnership after
defined investor return objectives are met. BCPPLP is a partnership, all of the
partners of which are members of the Company's senior management. BCPPLP would
distribute the incentive distributions received by it to its partners.
Implementation of the New Plan requires certain amendments to the terms of the
partnership agreement of the Operating Partnership which may require the
approval of the limited partners of the Operating Partnership.
Under the prior Long-Term Incentive Plan, management would be entitled to
receive incentive payments beginning after December 31, 2001. In contrast, under
the New Plan, BCPPLP would not receive any incentive distributions from the
Operating Partnership until the partners of the Operating Partnership (including
the Company and BCPPLP to the extent of its partnership interests) had received
distributions equal to:
- a cumulative, compounded annual return of 10% (the "Preferred Return") on
the Invested Capital of the Operating Partnership (as defined below)
outstanding from time to time, commencing from the date of the Company's
original offering of Common Stock; and
- a return of 100% of the Invested Capital defined as the aggregate amount
of the capital raised in the Company's original offering of Common Stock
plus any capital contributions made by limited partners to the Operating
Partnership, less all distributions from the Operating Partnership since
the date of the Company's original offering in excess of the Preferred
Return.
Until this hurdle is achieved, all distributions from the Operating
Partnership would be made pro rata to the partners of the Operating
Partnership (including the Company) in accordance with their relative
ownership of partnership interests. Only after this hurdle had been achieved
would BCPPLP receive incentive distributions from the Operating Partnership
as follows:
- first, 50% to the partners of the Operating Partnership (pro rata in
accordance with partnership interests) and 50% to BCPPLP, until BCPPLP had
received 20% of the value of all distributions to date other than
distributions of Invested Capital described above; and
- thereafter, 80% to the partners of the Operating Partnership (pro rata in
accordance with partnership interests) and 20% to BCPPLP.
For purposes of determining the amounts of incentive distributions payable
to BCPPLP, the June 1999 distribution of interests in the voting trust formed to
hold shares of Wyndham International, Inc.'s preferred stock (the "Wyndham
Preferred Stock"), the January 2000 distribution of interests in the voting
trust formed to hold shares of Cypress Communications, Inc.'s preferred stock
and the March 2000 distribution of interests in the voting trust formed to hold
shares of CO Space, Inc.'s preferred stock would NOT be treated as distributions
to the partners of the Operating Partnership. Instead, the shares held by the
voting trusts would be treated as if held by the Operating Partnership until
such
5
<PAGE>
time as those shares were actually distributed to the beneficial holders of the
interests in the voting trusts, at which time all of the partners of the
Operating Partnership would be treated as receiving a pro rata distribution from
the Operating Partnership in the amount of the then value of the shares
distributed from a voting trust (regardless of the extent to which the investors
continue to hold interests in a voting trust). Payment-in-kind dividends of
additional shares of Wyndham Preferred Stock received by the Wyndham voting
trust and retained in the trust in accordance with the terms of the voting trust
agreement also would be treated as distributed pro rata to the partners of the
Operating Partnership in accordance with their partnership interests when
ultimately distributed out of the Wyndham voting trust. Similarly, cash or other
amounts received by a voting trust would be treated as a pro rata distribution
to the partners of the Operating Partnership in accordance with their Units at
such times that such cash or other amounts are distributed out of the voting
trust to the holders of beneficial interest in the voting trust. Similar rules
would apply to any additional voting trust, or similar arrangement established
by the Company. The distributions otherwise payable by the Operating Partnership
to its partners other than BCPPLP would be reduced (and the incentive
distributions otherwise payable to BCPPLP would be increased) so that the actual
incentive distributions paid to BCPPLP by the Operating Partnership equal the
amount of incentive distributions BCPPLP would have received if the Operating
Partnership had made actual distributions (pursuant to the distribution
priorities set forth above) at such times, and in the same amounts, as the
deemed distributions from the voting trusts. Subsequent purchasers of the
Company's Common Stock will, therefore, share disproportionately in the New
Plan. This could have an impact on the liquidity of the Common Stock.
Under the New Plan, participants in BCPPLP will vest in their interests in
two equal installments, 50% on December 31, 2001, and 50% on December 31, 2002.
The Board of Directors may accelerate the vesting under the New Plan in their
discretion if they determine that such acceleration is in the best interests of
the Company and the investors.
As of the date of this proxy, the Operating Partnership had not made any
distributions of Invested Capital, and Invested Capital equaled approximately
$475.3 million. As of the date of the proxy, the Operating Partnership had made
cumulative distributions of approximately $23.3 million (disregarding the voting
trust distributions), all of which would be treated as payments of Preferred
Return under the New Plan. As a result, the accumulated unpaid Preferred Return
as of March 31, 2000 was approximately $75.2 million.
In connection with Beacon's initial offering of Common Stock, BCPPLP
purchased 225,201 units of limited partnership interest of the Operating
Partnership (a "Unit") for $18.65 per Unit. As a limited partner, BCPPLP would
share pro rata in distributions from the Operating Partnership in the same
manner as any other partner.
If the stockholders ratify the New Plan, but the limited partners of the
Operating Partnership do not approve the amendments to the partnership agreement
necessary to implement the New Plan, the Board will have the option to make
incentive compensation payments to members of management to provide the same
economic benefit as would be provided under the New Plan. The limited partners
of the Operating Partnership consist of two investors, one of which is BCPPLP.
BCPPLP intends to approve the amendments to the partnership agreement necessary
to implement the New Plan.
THE PRIOR PLANS
THE LONG-TERM INCENTIVE PLAN
The Long-Term Incentive Plan was designed to reward members of senior
management for growth of the Company's Funds from Operations (as defined below)
in excess of a specified benchmark. If the Company's Funds from Operations
exceeded this benchmark, management would receive an incentive return (the
"Incentive Return"). The Incentive Return is to be calculated at December 31,
2001 (the "Determination Date").
6
<PAGE>
The Incentive Return equals the product of (A) 12% of the dollar amount by
which (i) the Actual Return exceeds (ii) the Base Return; multiplied by (B) the
weighted average of shares of Common Stock and Units of limited partnership
interest in the Operating Partnership outstanding for the twelve months
immediately preceding the Determination Date; multiplied by (C) the Company's
Multiple.
For the purposes of calculating the Incentive Return:
"Actual Return" means the Funds from Operations (before the Incentive
Return) of the Company per share of Common Stock and per Unit for the twelve
months immediately preceding the Determination Date;
"Base Return" means an amount equal to what the Company's Funds from
Operations would have been for the twelve month period immediately preceding
the Determination Date assuming a benchmark cumulative rate of return on the
capital raised in the Company's initial offering of shares of Common Stock
equal to 10% per annum, compounding quarterly, calculated since April 1,
1998.
"Funds from Operations", as defined by the National Association of Real
Estate Investment Trusts ("NAREIT"), means net income (computed in
accordance with generally accepted accounting principles), excluding gains
(or losses) from debt restructurings and sales of property, plus
depreciation and amortization (in each case, only real estate-related
assets), and after adjustments for unconsolidated partnerships and joint
ventures; and
"Multiple" means the price of the Company's Common Stock divided by the
Company's Funds from Operations per share for the fiscal quarter ending on
the Determination Date on an annualized basis. For the purposes of
calculating the Multiple, the price of the Common Stock is calculated as
follows:
(1) where there exists a public market for the Common Stock, the price
of the Common Stock will be the average of the closing bid and asked prices
of the Common Stock quoted in the Over-The-Counter Market Summary or the
last reported sale price of the Common Stock or the closing price quoted on
the NASDAQ System or on any exchange on which the Common Stock is listed,
whichever is applicable, as published in THE WALL STREET JOURNAL for the 90
calendar days prior to the calculation of the Multiple; or
(2) if no public market for the Common Stock exists, the price of the
Common Stock will be determined by a single, independent appraiser to be
selected by a committee composed of independent Directors, which appraiser
shall appraise the fair market value of one share of the Common Stock within
30 days of its selection within such guidelines as shall be determined by
the committee of independent Directors.
The Long-Term Incentive Plan is in the form of a convertible limited
partnership interest of the Operating Partnership which was issued to BCPPLP.
The convertible limited partnership interest is convertible at the Determination
Date (assuming the Incentive Return has in fact been earned) into a certain
number of incentive limited partnership interests in the Operating Partnership
with a fair market value equal to the amount of the Incentive Return. Upon
issuance, the incentive limited partnership interests will share on a pro rata
basis with the other partnership interests in all distributions by the Operating
Partnership.
As equity holders of BCPPLP, members of the Company's senior management are
allocated an interest in (i) the Incentive Return, subject to certain vesting
restrictions, and (ii) the limited partnership interests held by BCPPLP. Fifty
percent of each such equity holders' interests in the Incentive Return vests on
the Determination Date with the remaining 50% vesting on the first anniversary
of the Determination Date. An equity holder of BCPPLP whose employment with the
Company terminates prior to full vesting of his or her interest in the Incentive
Return, automatically forfeits any such unvested interest.
Members of management will relinquish all rights under the Long-Term
Incentive Plan in exchange for the rights under the New Plan.
7
<PAGE>
THE STOCK INCENTIVE PLAN
The Company's Stock Incentive Plan authorizes the grant of options and other
stock-based awards to the Company's executive officers, Directors, employees and
other key persons. The Stock Incentive Plan is intended to provide
performance-based compensation which will incentivize members of the Company's
management to enhance the value of the Common Stock.
PLAN ADMINISTRATION; ELIGIBILITY. The Stock Incentive Plan is administered
by the Compensation Committee of the Board of Directors who has full power to
select the individuals to whom awards will be granted, to make any combination
of awards to participants, and to determine the specific terms of each award.
Generally, those executive officers, independent Directors and employees of the
Company and other key persons who are responsible for or contribute to the
management, growth or profitability of the Company are eligible to participate
in the Stock Incentive Plan.
RESERVED SHARES. Currently, there are 572,669 shares of Common Stock
reserved and available for issuance under the Stock Incentive Plan and options
to purchase 2,224,057 shares of Common Stock are outstanding.
STOCK OPTIONS. The Stock Incentive Plan permits the granting of (i) options
to purchase Common Stock intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended and (ii) options
that do not so qualify (so-called non-qualified options). The option exercise
price of each option is determined by the Compensation Committee. Plan
participants may elect with the consent of the Compensation Committee to receive
discounted non-qualified options in lieu of cash compensation.
The term of each option is fixed by the Compensation Committee who also
determines at what time or times each option may be exercised and, subject to
the provisions of the Stock Incentive Plan, the period of time, if any, after
retirement, death, disability or termination of employment during which options
may be exercised. Options may be made exercisable in installments, and the
exercisability of options may be accelerated by the Compensation Committee.
Members of management will relinquish all rights under the Stock Incentive
Plan in exchange for the rights under the New Plan.
THE RATIFICATION PROCESS
The Board of Directors of the Company has adopted the New Plan. The Company
is not required to submit the ratification of its adoption of the New Plan to a
vote of the stockholders. However, the Board of Directors believes it is sound
policy to do so. If the adoption of the New Plan is not ratified by the
stockholders, the Board of Directors intends to take that action, and the
reasons for it, under consideration in determining incentive compensation for
management.
PROPOSAL 2
ELECTION OF DIRECTORS
The Board of Directors of Beacon is comprised of six members and is divided
into three classes, with the directors in each class serving for a term of three
years and until their successors are duly elected and qualified. As the term of
one class expires, a successor class is elected at each succeeding annual
meeting of stockholders.
At the Annual Meeting, two Class II directors will be elected to serve until
the 2003 Annual Meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Lionel P. Fortin and Stephen T.
Clark for re-election as Class II directors. The Board of Directors anticipates
that Mr. Clark and Mr. Fortin will serve as directors if elected. Mr. Clark and
Mr. Fortin have agreed to stand for re-election and, if elected, to serve as
directors. However, if they
8
<PAGE>
are unable to accept election, the proxies will be voted for the election of
such other persons as the Board of Directors may recommend.
REQUIRED VOTE AND RECOMMENDATION
Only stockholders of record of the Common Stock are entitled to vote on this
proposal. Proxies will be voted for Proposal 2 unless contrary instructions are
set forth on the enclosed Proxy Card. A quorum being present, a nominee shall be
elected by a plurality of all the votes cast at the meeting. Accordingly,
abstentions and broker non-votes will have no effect on this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" MR. CLARK AND MR.
FORTIN.
INFORMATION REGARDING THE DIRECTORS AND THE EXECUTIVE OFFICERS
The following table and biographical information describe the nominees for
election as directors, those directors continuing in office after the Annual
Meeting, and the executive officers of Beacon who are not directors. This
disclosure is based on information furnished to Beacon by these individuals.
Unless otherwise specified, the following information is as of March 10, 2000
and is based upon 20,973,932 shares of Common Stock outstanding at the close of
business on such date.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---- -------- --------
<S> <C> <C>
CLASS I
Alan M. Leventhal........................................... 47 1998
Robert M. Melzer(1)......................................... 59 1999
CLASS II
Lionel P. Fortin*........................................... 56 1998
Stephen T. Clark(1)(2)*..................................... 44 1998
CLASS III
Steven Shulman(1)(2)........................................ 59 1998
Scott M. Sperling(1)(2)..................................... 42 1998
</TABLE>
- ------------------------
* Nominee for re-election.
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Class II Nominees for Election at the 2000 Annual Meeting--For a term expiring
in 2003
LIONEL P. FORTIN. Mr. Fortin is co-founder of the Company and serves as
President, Chief Operating Officer, and a Class II Director. Prior to founding
the Company, he served as Executive Vice President, Chief Operating Officer and
a Director of Beacon Properties Corporation. From May 1994 through February
1995, Mr. Fortin served as Chief Financial Officer of Beacon Properties
Corporation. Mr. Fortin has lectured at the Massachusetts Institute of
Technology Center for Real Estate. Mr. Fortin graduated from Bentley College in
1968 and is a member of the American Institute of Certified Public Accountants
and the Massachusetts Society of Certified Public Accountants.
STEPHEN T. CLARK. Mr. Clark serves as a Class II Director. Since 1995, Mr.
Clark has been President of Cypress Realty, Inc., a real estate investor and
developer based in Houston, Texas. Previously, Mr. Clark served as Managing
Director of Harvard Private Capital Group where he directed the group
responsible for real estate investment and management activities. Prior to
joining Harvard, Mr. Clark was a partner in Clark-Pilgrim Limited Partnership
and in Trammell Crow Company where he directed commercial activities in
Philadelphia and Delaware. He received a Masters in Business Administration
degree from Harvard Business School and received his undergraduate degree from
9
<PAGE>
Duke University. Mr. Clark serves as Chairman of the Board of Abacoa Development
Company and Cypress Senior Living, Inc., and is a director of Wyndham
International, Inc.
Class III Continuing Directors--Term expires in 2001.
STEVEN SHULMAN. Mr. Shulman serves as a Class III Director. He served as a
Director of Beacon Properties Corporation from 1995 to 1997. Since 1984, Mr.
Shulman has been active in investment banking through his wholly owned company,
The Hampton Group, and Latona Associates, Inc. where he serves as a Managing
Director. Currently, Mr. Shulman is a shareholder and director in a diversified
group of companies, including SI Handling Inc., Corinthian Directory, Terrace
Food Group, Inc. and WPI Group, Inc. In addition, he serves as Non-executive
Chairman of Terrace Food Group, Inc. Mr. Shulman is a graduate of Stevens
Institute of Technology where he received a Bachelor's degree in Mechanical
Engineering and a Master's degree in Industrial Management. Mr. Shulman serves
as Vice Chairman of the Board of Stevens Institute of Technology.
SCOTT M. SPERLING. Mr. Sperling serves as a Class III Director. He served
as a Director of Beacon Properties Corporation from 1994 to 1997. Mr. Sperling
is a Managing Director at Thomas H. Lee Company. In this capacity he is or has
been a director of PriCellular Corp., Experian (the former TRW credit and
information business), Safelite Glass Corp., The Learning Company, Fischer
Scientific International, Inc., General Chemical Corp., Wyndham International,
Inc., and a number of private companies. For ten years prior, Mr. Sperling was
Managing Partner of the Aeneas Group, the private capital affiliate of the
Harvard Management Company, Inc. Prior to 1984, Mr. Sperling was a senior
consultant with the Boston Consulting Group, Inc. focusing on business and
corporate strategies. He holds a Master of Business Administration degree from
Harvard University and a Bachelor of Science degree from Purdue University.
Class I Continuing Directors--Term expires in 2002.
ALAN M. LEVENTHAL. Mr. Leventhal is co-founder of the Company and serves as
Chairman, a Class I Director, and Chief Executive Officer. Prior to founding the
Company, Mr. Leventhal served as President and Chief Executive Officer of Beacon
Properties Corporation, one of the largest REITs in the United States. Beacon
Properties' portfolio included 124 office properties nationwide, comprising
approximately 18.8 million square feet. Beacon Properties was merged with Equity
Office Properties Trust in December 1997. Mr. Leventhal received his Bachelor's
degree in Economics from Northwestern University in 1974 and a Master of
Business Administration from the Amos Tuck School of Business Administration at
Dartmouth College in 1976. Mr. Leventhal is a Trustee of Boston University and
the New England Aquarium Corporation and recently served as First Vice Chair of
NAREIT. He is also a member of the Visiting Committee of Northwestern University
and the Board of Overseers of WGBH and Beth Israel Deaconess Medical Center. Mr.
Leventhal has lectured at the Amos Tuck School of Business Administration at
Dartmouth College and the Massachusetts Institute of Technology Center for Real
Estate. Mr. Leventhal has been awarded the Realty Stock Review's "Outstanding
CEO Award" for 1996, 1997 and 1998 and the Commercial Property News' "Office
Property Executive of the Year" Award for 1996.
ROBERT M. MELZER. Mr. Melzer was appointed to the Board of Directors in May
1999 and serves as a Class I Director. From 1992 through early 1999 Mr. Melzer
served as the President and Chief Executive Officer of Property Capital Trust
("Property Capital"), a publicly-traded REIT that recently completed the sale of
its portfolio of properties. Through November 1996, Mr. Melzer was also the
Chief Financial Officer of Property Capital. Mr. Melzer serves as a director of
Genesee & Wyoming Inc., a transportation company; Trustee of MGI Properties, a
publicly-traded REIT; Director of The Cronos Group, a publicly-traded lessor of
intermodal marine containers; and Chairman of the Board of Trustees of Beth
Israel Deaconess Medical Center. From 1997 to 1998, Mr. Melzer served as a
director of Red Lion Properties, Inc., a hotel holding company, and he has
previously served as a member of
10
<PAGE>
the Board of Governors of NAREIT. Mr. Melzer received his Bachelor of Arts
degree in Economics from Cornell University and a Masters in Business
Administration from Harvard Business School.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
WILLIAM A. BONN. Mr. Bonn, age 48, serves as Senior Vice President of, and
General Counsel to, the Company. Mr. Bonn served as General Counsel to Beacon
Properties Corporation prior to joining the Company. From 1987 to 1997, Mr. Bonn
served as General Counsel and Senior Vice President for Property Capital Trust.
From 1978 to 1987, Mr. Bonn held various positions as an attorney with The
Prudential Insurance Company of America. From 1976 to 1978, Mr. Bonn was
involved in the private practice of law in Los Angeles. Mr. Bonn holds a
Bachelor of Science degree from the University of California at San Diego and a
Juris Doctor degree from the University of San Diego. He is admitted to practice
law in Massachusetts, New York and California, and is a member of the American,
California and Boston Bar Associations.
JEREMY B. FLETCHER. Mr. Fletcher, age 51, serves as Senior Vice President
and Chief Executive of Beacon Capital Partners West, a division of the Company.
Prior to joining the Company, Mr. Fletcher served as Senior Vice President and
Chief Executive of Beacon Properties Corporation West and was a Managing
Director of Insignia Commercial Group, Inc. in Los Angeles. From 1983 to July
1996, Mr. Fletcher was with the Paragon Group, Inc., where he served as General
Partner/Senior Vice President of the Southern California/Arizona Region. Mr.
Fletcher received his Bachelor's degree from Albion College. He is a member of
the Urban Land Institute, Real Estate Investment Advisory Council, and National
Association of Industrial and Office Properties and is a licensed real estate
broker in California.
JOHN HALSTED. Mr. Halsted, age 35, serves as Senior Vice President of the
Company and Chief Investment Officer of Beacon Venture Partners, Inc. Prior to
joining the Company, Mr. Halsted was Vice President of Harvard Private Capital
Group. He joined Harvard Private Capital Group in 1993 and was responsible for
the origination and management of investments in specialty finance, retail and
energy companies. From 1991 to 1993, Mr. Halsted was an Associate with Simmons &
Company, an investment banking firm based in Houston, Texas. Mr. Halsted is a
director of Cypress Communications, Inc., a publicly-held telecommunications
company, and CO Space, Inc., a privately-held telecommunications company. Mr.
Halsted earned his Master of Business Administration from the Harvard Business
School and a degree in economics from the University of California at Berkeley.
DOUGLAS S. MITCHELL. Mr. Mitchell, age 57, serves as Senior Vice
President--Development of the Company. Mr. Mitchell served as the Senior Vice
President, Leasing/Management and Development of Beacon Properties Corporation
and as President of the Beacon Properties Management Company from 1994 until
1997. He joined the Beacon Properties organization in 1964 and has extensive
experience in leasing, management and development. He graduated from the
Wentworth Institute in 1962 and is a member of the Greater Boston Real Estate
Board. Mr. Mitchell is also a licensed real estate broker in Massachusetts and
New York.
ERIN R. O'BOYLE. Ms. O'Boyle, age 40, serves as Senior Vice President and
Chief Investment Officer of the Company. Prior to joining the Company, Ms.
O'Boyle served as Vice President, Acquisitions for Beacon Properties
Corporation, where she was responsible for negotiating over $1.8 billion of
investment opportunities. Ms. O'Boyle received her Bachelor of Science degree in
structural engineering from the University of Delaware and her Master of Science
degree in real estate development from the Massachusetts Institute of
Technology. Ms. O'Boyle is the past chair of the Alumni Association for the
Massachusetts Institute of Technology Center for Real Estate, is past president
of the New England Women in Real Estate, and currently is on the board of the
Northeast chapter of the Real Estate Investment Advisory Council.
11
<PAGE>
RANDY J. PARKER. Mr. Parker, age 41, serves as Senior Vice President and
Chief Financial Officer of the Company. Before joining the Company, Mr. Parker
was Vice President, Investor Relations for Beacon Properties Corporation, where
he was responsible for managing the relationships with institutional
stockholders and analysts. Prior to joining Beacon Properties Corporation, Mr.
Parker was Senior Vice President and Portfolio Manager at Aldrich Eastman &
Waltch, where he was responsible for the management of over $400 million of
investment portfolios on behalf of institutional clients and held positions in
asset management and investment origination. Mr. Parker was also previously
associated with JMB/Federated Realty, where he served as Project Manager for
various retail development projects. Mr. Parker holds a Master of Business
Administration degree from the Wharton School, University of Pennsylvania and a
Bachelor of Architecture degree from the University of Kentucky.
THOMAS RAGNO. Mr. Ragno, age 38, serves as Senior Vice
President--Management and Leasing of the Company. Prior to joining the Company,
Mr. Ragno served as Vice President, Property Management of Beacon Properties
Corporation, where he directly supervised property management operations in the
Boston metropolitan region consisting of approximately 8.0 million square feet
and 170 employees. Prior to serving in that position, he was responsible for the
leasing of Beacon Properties Corporation's downtown office portfolio of five
million square feet. Mr. Ragno holds a Master of Science degree in Civil
Engineering from the Massachusetts Institute of Technology and a Bachelor of
Science degree in Civil Engineering and Engineering & Public Policy from
Carnegie-Mellon University. He is a member of the Board of Directors of the
Greater Boston Building Owners and Managers Association. He is a licensed real
estate broker in Massachusetts.
BOARD OF DIRECTORS AND ITS COMMITTEES
BOARD OF DIRECTORS. Beacon is currently managed by a six member Board of
Directors, a majority of whom are independent of the Company's management. The
Board of Directors met five times in person and held four telephonic meetings
during 1999. Each of the directors attended at least 75% of the total number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors that he was eligible to attend.
AUDIT COMMITTEE. The Board of Directors has established an Audit Committee
consisting of Messrs. Clark, Shulman and Sperling. Mr. Shulman serves as
Chairman of the Audit Committee, and Mr. Fortin serves as an EX-OFFICIO member
of the Audit Committee. The Audit Committee makes recommendations concerning the
engagement of independent public accountants, reviews the plans and results of
the audit engagement with the independent public accountants, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The Audit Committee met once during 1999.
COMPENSATION COMMITTEE. Beacon's Board of Directors has established a
Compensation Committee to determine compensation for the Company's executive
officers. The current members of the Compensation Committee are Messrs. Clark,
Melzer, Shulman and Sperling. Mr. Sperling serves as Chairman of the
Compensation Committee, and Mr. Leventhal serves as an EX-OFFICIO member. The
Compensation Committee has authority to grant awards under the New Plan. The
Compensation Committee met once in person and held one telephonic meeting during
1999.
The Board of Directors does not have a standing nominating committee. The
full Board of Directors performs the function of such a committee.
12
<PAGE>
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives an annual
director's fee of $20,000. Each non-employee Director also receives:
- $1,000 for each regular quarterly or special meeting of the Board of
Directors attended;
- $1,000 for each committee meeting attended; and
- $250 for each special telephonic committee meeting or meeting of the Board
of Directors in which the non-employee Director participates.
Non-employee Directors are also reimbursed for reasonable expenses incurred
to attend director and committee meetings. Non-employee Directors may elect in
lieu of cash fees to receive either:
- options to purchase Common Stock at a discount to fair market value; or
- deferred stock units.
These compensation elections must be approved by the Compensation Committee.
Upon their initial election to the Board of Directors, non-employee
Directors also receive an option to purchase 5,000 shares of Common Stock. Each
subsequent year they receive an option to purchase an additional 5,000 shares of
Common Stock. All options granted to non-employee Directors are issued pursuant
to the Stock Incentive Plan and vest on the date of grant. While management will
no longer receive stock options under the Stock Incentive Plan following the
adoption of the New Plan, Directors will continue to receive stock options.
13
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the last two fiscal years, the annual
compensation awarded to the Company's Chief Executive Officer and the other most
highly compensated executive officers (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ----------------
COMPENSATION SECURITIES
------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (SHARES) COMPENSATION($)
- --------------------------- -------- --------- -------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Alan M. Leventhal................... 1999 350,000 350,000 -- 3,848(1)
Chairman of the Board and 1998 200,000(2) 300,000 500,000 3,109(3)
Chief Executive Officer
Lionel P. Fortin.................... 1999 350,000 350,000 -- 6,956(1)
President and Chief Operating 1998 200,000(2) 300,000 500,000 4,640(3)
Officer
Erin R. O'Boyle..................... 1999 200,000 200,000 -- 2,660(1)
Senior Vice President and 1998 125,000(2) 175,000 175,000 2,271(3)
Chief Investment Officer
William A. Bonn..................... 1999 200,000 200,000 -- 3,452(1)
Senior Vice President and 1998 125,000(2) 175,000 150,000 2,737(3)
General Counsel
Randy J. Parker..................... 1999 200,000 200,000 -- 3,891(1)
Senior Vice President and 1998 125,000(2) 175,000 150,000 2,900(3)
Chief Financial Officer
John Halsted........................ 1999 200,000 200,000 -- 4,410(1)
Senior Vice President 1998 125,000 175,000 125,000 1,681(3)
Jeremy Fletcher..................... 1999 175,000 225,000 -- 5,774(1)
Senior Vice President, 1998 125,000 125,000 125,000 3,577(3)
Chief Executive of
Beacon Capital Partners West
</TABLE>
- ------------------------
(1) Includes $2,000 contributed to a 401(k) plan on behalf of each of Messrs.
Leventhal, Fortin and Bonn and Ms. O'Boyle, $3,000 contributed to a 401(k)
plan on behalf of Mr. Parker, and $3,750 contributed to a 401(k) plan on
behalf of each of Messrs. Halsted and Fletcher. The remainder of each amount
represents premiums paid for life insurance on behalf of the Named Executive
Officer.
(2) Salary information is presented on an annualized basis for 1998. The Company
commenced operations January 21, 1998.
(3) Includes $2,000 contributed to a 401(k) plan on behalf of each of Messrs.
Leventhal, Fortin and Bonn and Ms. O'Boyle, and $2,468 contributed to a
401(k) plan on behalf of Mr. Parker. The remainder of each amount represents
premiums paid for life insurance on behalf of the Named Executive Officer.
14
<PAGE>
OPTION GRANTS WITH RESPECT TO FISCAL YEAR 1999
No options were granted with respect to the fiscal year ended December 31,
1999 to the Company's Named Executive Officers.
OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth information concerning the number and value
of unexercised options to purchase Common Stock held by the Named Executive
Officers who held such options at December 31, 1999. No Named Executive Officer
of the Company exercised any options to purchase Common Stock during 1999.
AGGREGATED FISCAL YEAR-END 1999 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999 (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Alan M. Leventhal.............. 333,333 166,667
--- ---
Lionel P. Fortin............... 333,333 166,667
--- ---
Erin R. O'Boyle................ 116,666 58,334
--- ---
William A. Bonn................ 100,000 50,000
--- ---
Randy J. Parker................ 100,000 50,000
--- ---
John Halsted................... 83,333 41,667
--- ---
Jeremy Fletcher................ 83,333 41,667
--- ---
</TABLE>
- ------------------------
(1) Since there is no public trading market for the Common Stock, it is not
possible to accurately estimate the value of outstanding options. Management
believes, based upon the most recent trade in the Common Stock, that the
value of all outstanding options held by the Named Executive Officers was
not above the original exercise price as of December 31, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Clark, Melzer,
Shulman and Sperling. None of these individuals is an executive officer of the
Company. Mr. Leventhal, the Chairman and Chief Executive Officer of the Company,
serves as an EX-OFFICIO member of the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of April 10, 2000, Messrs. Bonn, Fletcher, Halsted, Mitchell, and Parker,
as well as Ms. O'Boyle, each held a 3% interest in the Incentive Return under
the Long-Term Incentive Plan and Ms. Broderick and Mr. Ragno each held a 1%
interest in the Incentive Return. The balance of the Incentive Return is split
equally between the family trusts of Messrs. Leventhal and Fortin. Management
will forego all interests in the Long-Term Incentive Plan in connection with the
adoption of the New Plan.
The Company has entered into Indemnification Agreements with each of its
directors and executive officers, and maintains directors and officers liability
insurance for these individuals.
Concurrently with the Company's purchase of preferred stock in Cypress
Communications, Inc., certain directors of the Company also purchased identical
securities in Cypress.
15
<PAGE>
On October 29, 1999, Alan M. Leventhal, the Chief Executive Officer and a
Director of Beacon, and Lionel P. Fortin, the President and a Director of
Beacon, each contributed a Demand Promissory Note for the principal sum of
$113,349.69 to Beacon Lodging, Inc. ("Beacon Lodging"), an indirect subsidiary
of Beacon. These notes were contributed to Beacon Lodging in connection with a
Contribution Agreement pursuant to which the Operating Partnership agreed to
contribute 244,340 shares of preferred stock of Wyndham International, Inc. to
Beacon Lodging. Mr. Leventhal and Mr. Fortin each agreed to acquire an interest
in Beacon Lodging so that Beacon would comply with certain REIT rules concerning
the ownership of securities of other corporations, and now each of them owns
approximately 0.46% of the equity of Beacon Lodging. The notes payable to Beacon
Lodging were equal to the value of the Wyndham Shares attributable to
Messrs. Leventhal and Fortin following the contribution by the Operating
Partnership. Interest accrues on each of these notes at the prime rate, and, as
of March 31, 2000, the total amount owed under each of these notes was
approximately $118,000.
EMPLOYMENT AGREEMENTS
On March 20, 1998, the Company entered into employment agreements with each
of Mr. Fortin and Mr. Leventhal. These agreements are for a term of three years
and provide for a minimum annual base salary of $200,000. Either the Company or
the executive may terminate the agreement at will on 30 days' notice. Notice by
the Company must be given by a majority vote of all of the members of the Board
of Directors. In the event the executive is terminated for reasons other than
for Cause (as defined) or if the executive terminates his employment for Good
Reason (as defined), the Company is required to pay a lump sum amount to the
executive equal to three times the sum of the executive's base salary and the
highest potential bonus that could be earned by the executive in the year of
termination. In addition, all stock options shall fully vest and the executive
will also be entitled to participate in the Long-Term Incentive Plan as if the
termination had not occurred. If the executive is terminated for Cause or leaves
other than for Good Reason, the Company will be obligated to pay the base salary
through the termination date set forth in the notice of termination. In the
event any payments under the employment agreements would be subject to an excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended,
the executive will be made whole after payment of any taxes or penalties. During
the term of employment and for an additional one year period following
employment if the executive is terminated for Cause or other than Good Reason,
the executives have each agreed not to engage in certain competitive activities
with the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OBJECTIVES OF EXECUTIVE COMPENSATION. The Company's executive compensation
program is intended to attract, retain and reward experienced, highly motivated
executives who are capable of leading the Company effectively and continuing its
growth and profitability. The Company's objective is to utilize a combination of
cash and equity-based compensation to provide appropriate incentives for
executives while aligning their interests with those of the Company's investors.
The Company compensates its executive officers through a combination of
annual base salary, annual cash bonuses and equity-based compensation. The
Company's goal is to provide total compensation to its executive officers that
is competitive with those levels of total compensation paid in the REIT industry
for companies with similar property portfolios and of similar size, makeup and
performance. For purposes of evaluating relative executive compensation amounts,
the Compensation Committee reviewed the total compensation paid by comparable
REITs or private real estate funds that were selected based primarily on
financial performance, property type, geographical location and market
capitalization.
The Company's compensation program has three principal elements: base
salary, cash bonuses, and equity-based compensation.
16
<PAGE>
BASE SALARY. The Company establishes base salary levels for its key
executives relative to base salary levels for key executives of comparable
REITs and private real estate funds. For fiscal year 1999, base salaries of
the Company's President, Chief Operating Officer and Chief Financial Officer
were set at rates that the Company believes were generally lower than the
median base salaries earned by officers holding similar positions within
other comparable REITs. This is consistent with the Company's policy to
place greater emphasis on performance-related incentive compensation, such
as bonuses and equity-based compensation.
CASH BONUSES. Cash bonuses paid to executive officers generally are
earned primarily through the achievement of certain organizational,
strategic and financial goals relative to each officer's responsibilities.
The Compensation Committee has full discretion to determine the amounts, if
any, annually available for bonuses pursuant to any bonus plan or formula
approved by the Board of Directors and to determine specific bonus awards to
executive officers.
NEW PLAN. The Company's equity-based compensation is designed to align
the interests of management with the interests of stockholders. The New Plan
is designed to reward management if net proceeds from operations, dividends
and sales and/or refinancings exceed a specified benchmark. Once the Company
has returned all capital and a minimum 10% return from the date capital was
invested to its investors, management will receive incentive compensation in
the manner described in Proposal 1 above.
COMPENSATION COMMITTEE PROCEDURES. The Compensation Committee administers
the Company's executive compensation program. Final compensation determinations
for each fiscal year are generally made after the end of the fiscal year after
financial statements for such year become available. At that time, bonuses, if
any, are determined for the past year's performance, base salaries for the
following fiscal year are set and grants of equity-based compensation, if any,
are generally made. At a meeting on January 27, 2000, the Compensation Committee
determined annual cash bonuses for its officers and certain key employees, as
described above in the Summary Compensation Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Compensation Committee
considers the Company's financial performance to be the principal determinant in
the overall compensation package of the Chief Executive Officer. In determining
Mr. Leventhal's total compensation, the Compensation Committee noted that, among
other things, in 1999 the Company successfully obtained full entitlements for
all of its development projects, completed in excess of $277 million in
financings on its assets, completed the $150 million Wyndham investment, and
obtained commitments for $245 million for Beacon Capital Strategic Partners.
Based upon its evaluation of these and other factors, the Compensation Committee
makes subjective determinations of base salary and bonus compensation levels.
COMPENSATION OF OTHER EXECUTIVE OFFICERS. The Company's executive
compensation program for other executive officers is based on the same
performance goals applicable to the Chief Executive Officer, although the
corporate and individual performance goals vary depending on the
responsibilities of particular officers. The Compensation Committee seriously
considers the Chief Executive Officer's evaluations and recommendations with
respect to the other executive officers of the Company. In recognition of the
Company's achievements in 1999, the Compensation Committee approved the Named
Executive Officers' incentive bonuses described in the Summary Compensation
Table.
The Securities and Exchange Commission requires that this report comment
upon the Company's policy with respect to Section 162(m) of the Internal Revenue
Code of 1986, as amended, which limits the deductibility on the Company's tax
return of compensation over $1 million to any of the Named Executive Officers of
the Company unless, in general, the compensation is paid pursuant to a plan
which is performance-related, non-discretionary and has been approved by the
Company's stockholders. The Compensation Committee's policy with respect to
Section 162(m) is to make every reasonable
17
<PAGE>
effort to ensure that compensation is deductible to the extent permitted, while
simultaneously providing Company executives with appropriate rewards for their
performance. The Company did not pay any compensation with respect to 1999 that
would be subject to Section 162(m).
SUBMITTED BY THE COMPENSATION
COMMITTEE:
Stephen T. Clark
Robert M. Melzer
Steven Shulman
Scott M. Sperling
STOCK PERFORMANCE GRAPH
The following graph provides a comparison, from the closing of Beacon's
offering in March 1998 through March 2000, of the cumulative total shareholder
return (assuming reinvestment of any dividends) among Beacon, the Russell 2000
Index and the Morgan Stanley REIT Index, an industry index of real estate
investment trusts. Upon written request, Beacon will provide any stockholder
with a list of the REITs included in the Morgan Stanley REIT Index. The
historical information set forth below is not necessarily indicative of future
performance. Data for the Russell 2000 Index and the Morgan Stanley REIT Index
were provided to Beacon by Bank of America Securities.
[In the printed Proxy Statement, graphic is a line graph]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
18
<TABLE>
<CAPTION>
Russel Morgan Beacon
2000 Stanley Capital
Index REIT Index Partners, Inc.
<S> <C> <C> <C>
03/31/98 $100.000 $100.000 $100.000
04/30/98 $100.460 $96.460 $100.625
05/31/98 $94.995 $95.618 $100.625
06/30/98 $95.155 $95.607 $100.625
07/31/98 $87.324 $88.772 $100.625
08/31/98 $70.307 $80.498 $100.625
09/30/98 $75.641 $85.489 $100.625
10/31/98 $78.672 $83.898 $90.000
11/30/98 $82.747 $85.218 $90.000
12/31/98 $87.784 $83.698 $79.375
01/31/99 $88.878 $81.451 $79.584
02/28/99 $81.605 $80.111 $77.125
03/31/99 $82.722 $79.673 $77.125
04/30/99 $90.041 $87.377 $75.875
05/31/99 $91.262 $89.229 $76.875
06/30/99 $95.215 $87.568 $76.875
07/31/99 $92.529 $84.814 $89.200
08/31/99 $89.005 $83.997 $89.200
09/30/99 $88.895 $80.484 $89.200
10/31/99 $89.174 $78.646 $89.200
11/30/99 $94.466 $77.481 $89.200
12/31/99 $105.007 $79.889 $81.800
01/31/00 $103.235 $80.388 $82.050
02/29/00 $120.186 $79.111 $82.050
03/31/00 $112.152 $82.012 $103.125
</TABLE>
<PAGE>
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of Beacon, upon the recommendation of the Audit
Committee, has selected the accounting firm of Ernst & Young LLP to serve as
independent accountants of the Company for the fiscal year ended December 31,
2000. Ernst & Young LLP has served as the Company's independent accountants
since the Company's formation and is considered by management of the Company to
be well qualified. A representative of Ernst & Young LLP will be present at the
Annual Meeting, will be given the opportunity to make a statement if he or she
so desires and will be available to respond to appropriate questions.
Although the Company is not required to submit the ratification of the
selection of its independent accountants to a vote of stockholders, the Board of
Directors believes that it is sound policy to do so. In the event that the
majority of the votes cast are against the selection of Ernst & Young LLP, the
directors will consider the vote and the reasons for it in future decisions on
the selection of independent accountants.
19
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of the Common Stock
as to (i) each person or entity who is known by the Company to have beneficially
owned more than five percent of Common Stock as of March 10, 2000, (ii) each of
Beacon's directors, (iii) each of the Named Executive Officers, and (iv) all
directors and executive officers as a group, based on representations of
officers and directors of the Company as of March 10, 2000 (unless otherwise
indicated) and filings as of March 10, 2000 received by the Company on Schedules
13G under the Securities Exchange Act of 1934, as amended. All such information
was provided by the stockholders listed (unless otherwise indicated) and
reflects their beneficial ownership known by the Company. All percentages have
been calculated as of March 10, 2000.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP (2)
----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT
- ---------------------------------------- --------- ----------------------
<S> <C> <C>
Wellington Management Company.............................. 2,300,000
75 State Street
Boston, MA 02109 10.9%(3)
Southeastern Asset Management.............................. 2,075,000
6410 Poplar Drive
Memphis, TN 38119 9.8%
RREEF Venture Capital Fund LP.............................. 1,650,000
875 N. Michigan Avenue
Chicago, IL 60611 7.8%
Alan M. Leventhal.......................................... 924,645 4.3%(4)
Lionel P. Fortin........................................... 604,373 2.8%(5)
Stephen T. Clark........................................... 16,797 *(6)
Steven Shulman............................................. 22,321 *(7)
Scott M. Sperling.......................................... 16,393 *(8)
Robert M. Melzer........................................... 13,868 *(9)
Erin O'Boyle............................................... 118,666 *(10)
Randy Parker............................................... 101,340 *(11)
William A. Bonn............................................ 101,000 *(11)
John Halsted............................................... 83,333 *(12)
Jeremy Fletcher............................................ 94,056 *(12)
All Directors and Executive Officers
as a Group (11 Persons).................................. 2,096,792 9.5%(4)(5)(6)(7)
(8)(9)(10)(11)(12)
</TABLE>
- ------------------------
(footnotes on following page)
20
<PAGE>
* Less than one percent
(1) All information has been determined as of March 10, 2000. For the purposes
of this table, a person is deemed to have "beneficial ownership" of the
number of shares of Common Stock that person has the right to acquire within
60 days of March 10, 2000 pursuant to the exercise of stock options or
redemption of Operating Partnership Units (assuming the Company elects to
issue Common Stock rather than pay cash upon such redemption) held by such
person or an affiliate of such person. Unless otherwise noted, the address
of each Beneficial Owner is: c/o Beacon Capital Partners, Inc., One Federal
Street, 26th Floor, Boston, MA 02110. As of March 10, 2000, 20,973,932
shares of Common Stock were issued and outstanding.
(2) For the purpose of computing the percentage of outstanding shares of Common
Stock held by each person, any shares of Common Stock which such person has
the right to acquire within 60 days of March 10, 2000 pursuant to the
exercise of a stock option or upon the redemption of Operating Partnership
Units is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percent ownership of any other person.
(3) Includes shares held by two separate stockholders, which the Company
believes to be controlled by Wellington Management Company.
(4) Includes Operating Partnership Units and currently exercisable options to
purchase 333,333 shares of Common Stock held indirectly by a trust, of which
Mr. Leventhal is a beneficiary. Excludes options to purchase 166,667 shares
of Common Stock granted to Mr. Leventhal and subsequently transferred to a
trust, of which Mr. Leventhal is a beneficiary, which options are not
presently exercisable.
(5) Includes Operating Partnership Units and currently exercisable options to
purchase 333,333 shares of Common Stock held indirectly by a trust, of which
Mr. Fortin's wife is a beneficiary. Excludes options to purchase 166,667
shares of Common Stock granted to Mr. Fortin and subsequently transferred to
a trust, of which Mr. Fortin's wife is a beneficiary, which options are not
presently exercisable.
(6) Consists of currently exercisable options to purchase 16,797 shares of
Common Stock.
(7) Includes currently exercisable options to purchase 16,960 shares of Common
Stock.
(8) Includes currently exercisable options to purchase 16,393 shares of Common
Stock.
(9) Includes currently exercisable options to purchase 8,507 shares of Common
Stock.
(10) Includes currently exercisable options to purchase 116,666 shares of Common
Stock and excludes options to purchase 58,334 shares of Common Stock, which
options are not presently exercisable.
(11) Includes currently exercisable options to purchase 100,000 shares of Common
Stock and excludes options to purchase 50,000 shares of Common Stock, which
options are not presently exercisable.
(12) Includes currently exercisable options to purchase 83,333 shares of Common
Stock and excludes options to purchase 41,667 shares of Common Stock, which
options are not presently exercisable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities (collectively, "Insiders"),
to file reports of ownership and changes in ownership with the SEC. Insiders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on a review of
copies of such reports and written representations that no other reports were
required during the fiscal year ended December 31, 1999, all transactions in the
Company's securities that were engaged in by Insiders, and were required to be
disclosed pursuant to Section 16(a) of the Securities Exchange Act of 1934, were
timely reported except that Mr. Melzer filed a Form 3 after the applicable
deadline.
21
<PAGE>
OTHER MATTERS
SOLICITATION OF PROXIES
The Company has engaged CIC to act as proxy solicitor at a cost of
approximately $4,000. The cost of solicitation of its proxies will be paid by
the Company. In addition to the solicitation of proxies by mail, the directors,
officers and employees of the Company may also solicit proxies personally or by
telephone without additional compensation for such activities. The Company will
also request persons, firms and corporations holding shares in their names or in
the names of their nominees, which are beneficially owned by others, to send
proxy materials to and obtain proxies from such beneficial owners. The Company
will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS
Stockholder proposals (including director nominations) submitted pursuant to
the Securities Exchange Act of 1934 Rule 14a-8 for inclusion in the Company's
proxy statement and form of proxy for the 2001 Annual Meeting of Stockholders
must be received by the Company by December 11, 2000. Such a proposal must also
comply with the requirements as to form and substance established by the SEC for
such a proposal to be included in the proxy statement and form of proxy.
For a proposal of a stockholder (including director nominations) to be
presented at Beacon's Annual Meeting of Stockholders, other than a stockholder
proposal submitted pursuant to Rule 14a-8 of the Securities Exchange Act of
1934, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive office of the Company, together with all supporting
documentation required by Beacon's Bylaws, not sooner than January 10, 2001 nor
later than February 24, 2001; provided, however, that in the event the annual
meeting is scheduled to be held on a date more than 30 days before the
anniversary date of the immediately preceding annual meeting (the "Anniversary
Date") or more than 60 days after the Anniversary Date, a stockholder's notice
shall be timely if delivered to, or mailed to and received by, the Company at
its principal executive office not later than the close of business on the later
of (1) the 75th day prior to the scheduled date of such annual meeting or (2)
the 15th day following the day on which public announcement of the date of such
annual meeting is first made by the Company.
Any such proposals should be mailed to: Beacon Capital Partners, Inc., One
Federal Street, 26th Floor, Boston, Massachusetts 02110, Attention: Secretary.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO US.
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD TODAY.
22
<PAGE>
BEACON CAPITAL PARTNERS, INC.
ONE FEDERAL STREET, 26TH FLOOR, BOSTON, MA 02110
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 10, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Alan M. Levanthal and Lionel P.
Fortin, and each of them, as proxies of the undersigned, with full power of
substitution, to vote all shares of Common Stock of Beacon Capital Partners,
Inc. (the "Company") held of record by the undersigned as of the close of
business on April 5, 2000, on behalf of the undersigned at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at Goodwin, Procter & Hoar LLP,
Exchange Place, Boston, Massachusetts, 02109, 3:00 p.m. local time on Wednesday,
May 10, 2000 and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is given, this proxy will be
voted FOR Proposal 1, FOR the Nominees of the Board of Directors listed in
Proposal 2, and FOR Proposal 3. In their discretion, the proxies are each
authorized to vote upon such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof. A stockholder
wishing to vote in accordance with the Board of Directors' recommendations need
only sign and date this proxy and return it in the enclosed envelope.
- ------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------------- ---------------------------------------------
- --------------------------------------------- ---------------------------------------------
- --------------------------------------------- ---------------------------------------------
</TABLE>
<PAGE>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
--------------------------------------------------------
BEACON CAPITAL PARTNERS, INC.
--------------------------------------------------------
Mark box at right if an address change or comment has been / /
noted on the reverse side of this card.
CONTROL NUMBER:
RECORD DATE SHARES:
1. To ratify the adoption of the new management incentive plan.
FOR AGAINST ABSTAIN
/ / / / / /
2. To elect two Class II Directors of the Company to serve until the 2003 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified.
FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
(01) Lionel P. Fortin
(02) Stephen T. Clark / / / / / /
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
3. To ratify the selection of Ernst & Young LLP as the independent accountants
of the Company for the fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
4. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements thereof.
Please be sure to sign and date this Proxy. Date____________________________
- ---------------------------------- ---------------------------------------
Stockholder sign here Co-owner sign here
DETACH CARD DETACH CARD
<PAGE>
<TABLE>
<S> <C>
- ----------------- -----------------
VOTE BY TELEPHONE VOTE BY INTERNET
- ----------------- -----------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
Follow these four easy steps: Follow these four easy steps:
- --------------------------------------------------- ----------------------------------------------------
1. Read the accompanying Proxy Statement/Prospectus 1. Read the accompanying Proxy Statement/Prospectus
and Proxy Card. and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/bepcm.
There is NO CHARGE for this call.
3. Enter your Control Number located on your Proxy
3. Enter your Control Number located on your Proxy Card.
Card.
4. Follow the instructions provided.
4. Follow the recorded instructions.
- ---------------------------------------------------- ----------------------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/bepcm anytime!
</TABLE>
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
