<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BRADLEY REAL ESTATE, INC.
(Name of Registrant as Specified In Its Charter)
NAME OF COMPANY
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
BRADLEY REAL ESTATE, INC.
40 SKOKIE BOULEVARD, SUITE 600
NORTHBROOK, ILLINOIS 60062-1626
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1998
March 31, 1998
To Stockholders of
BRADLEY REAL ESTATE, INC.:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of Bradley
Real Estate, Inc. (the "Company") will be held at 11:00 a.m., local time, on the
57th-floor of The First National Bank of Chicago, One First National Plaza,
Chicago, Illinois on Thursday, May 14, 1998 for the following purposes:
1. To elect two Directors of the Company to serve for three-year terms
until the 2001 Annual Meeting of Stockholders and until their respective
successors have been elected and qualified;
2. To consider and approve certain amendments to the Company's 1993
Stock Option and Incentive Plan;
3. To vote on the stockholder proposal described in the accompanying
Proxy Statement, if such proposal is presented at the Annual Meeting; and
4. To consider and act upon any other matters which may properly be
brought before the Annual Meeting and any adjournments or postponements
thereof.
The close of business on March 18, 1998 has been fixed by the Company's
Board of Directors as the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting or any adjournments or postponements
thereof.
By Order of the Board of Directors:
William B. King, Secretary
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IMPORTANT REMINDER: Please complete, date and sign the enclosed proxy card and
return it in the accompanying postage paid envelope, even if you plan to attend
the Annual Meeting. Stockholders of record may revoke their proxies in writing
or at the Annual Meeting if they wish to vote in person.
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<PAGE> 3
BRADLEY REAL ESTATE, INC.
40 SKOKIE BOULEVARD, SUITE 600
NORTHBROOK, ILLINOIS 60062-1626
PROXY STATEMENT
Proxies in the form of the enclosed proxy card are solicited by the Board
of Directors (the "Board") of Bradley Real Estate, Inc., a Maryland corporation
(the "Company"), for use at the 1998 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held on Thursday, May 14, 1998 on the 57th-
floor of The First National Bank of Chicago, One First National Plaza, Chicago,
Illinois at 11:00 a.m. local time. The Board has fixed the close of business on
March 18, 1998 as the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting (the "Record Date"). Only holders of
record of shares of the common stock, par value $.01 per share, of the Company
(the "Shares") at the close of business on the Record Date will be entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, the Company
had 23,646,959 Shares outstanding, each of which is entitled to one vote with
respect to each matter submitted at the Annual Meeting.
At the Annual Meeting, stockholders will be asked to vote upon the election
of two Directors of the Company and certain amendments to the Company's 1993
Stock Option and Incentive Plan (the "Stock Option and Incentive Plan"). In
addition, a stockholder has advised the Company that he intends to submit a
proposal (the "Stockholder Proposal") which management and the Board of
Directors opposes. The presence, in person or by proxy, of at least a majority
of the outstanding Shares as of the Record Date is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. STOCKHOLDERS ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENVELOPE PROVIDED. Shares represented by properly executed proxies received by
the Company will be voted at the Annual Meeting in accordance with the
instructions contained therein. If no specific voting instructions are indicated
on the proxy, it will be voted in favor of the Directors nominated by the Board,
in favor of approving the amendments to the Company's Stock Option and Incentive
Plan, against the Stockholder Proposal and in the named proxies' discretion as
to any other matters which may properly come before the Annual Meeting. Any
proxy may be revoked by the holder of record at any time before it is voted, by
written notice to the Company, by executing and duly delivering a proxy bearing
a later date or by voting in person at the Annual Meeting. Any stockholder of
record 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 a
revocation of a previously delivered proxy.
The Notice of Annual Meeting, the Proxy Statement and the proxy card,
together with the Company's Annual Report for 1997, are first being mailed to
stockholders on or about March 31, 1998.
<PAGE> 4
I. ELECTION OF DIRECTORS
A. INFORMATION REGARDING NOMINEES AND DIRECTORS
The Company's Charter and Bylaws provide for a staggered board, consisting
of the number of Directors designated from time to time by the Board of
Directors, divided into three classes. The Directors of each class serve for
three-year terms that expire over a three-year period on a revolving basis.
The Board of Directors has nominated PAUL G. KIRK, JR. and W. NICHOLAS
THORNDIKE for election as Directors at the Annual Meeting, to serve for
three-year terms until the 2001 Annual Meeting of Stockholders and until their
respective successors have been elected and qualified, and to serve with the
five Directors whose terms expire in 1999 and 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE DIRECTORS NOMINATED BY THE
BOARD.
There were six meetings of the Board of Directors of the Company in 1997.
All of the Directors attended at least 75% of such board meetings and meetings
of committees of which they were members.
Information regarding the two nominees and the other Directors is set forth
below. This information has been furnished by the individuals named.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE AND OTHER AFFILIATIONS SINCE EXPIRE
---- --- ---------------------- -------- -------
<S> <C> <C> <C> <C>
Paul G. Kirk, Jr............... 60 Mr. Kirk is counsel to, and until 1989 was a 1991 2001*
partner of, the law firm of Sullivan &
Worcester in Boston, Massachusetts. He is
also Chairman and Treasurer of Kirk and
Associates, Inc., a business advisory and
consulting firm. From 1985 to 1989, he
served as Chairman of the Democratic Party
of the United States, and from 1983 to 1985
as its Treasurer. Mr. Kirk is a Director of
Hartford Life Insurance Inc., Hartford
Financial Services Group, Inc. and Rayonier,
Inc. He is a Trustee of Stonehill College
and St. Sebastian's School, Co-Chairman of
the Commission on Presidential Debates,
Chairman of the John F. Kennedy Library
Foundation and Chairman of the National
Democratic Institute for International
Affairs.
W. Nicholas Thorndike.......... 65 Mr. Thorndike serves as a Corporate Director 1980 2001*
or Trustee of a number of organizations,
including Courier Corporation, Eastern
Utility Associates, Data General
Corporation, The Putnam Funds and Cabot
Industrial Trust. He also serves as a
Trustee of Massachusetts General Hospital,
having served as Chairman of the Board from
1987 to 1992 and President from 1992 to
1994. Until December 1988, he was Chairman
and Managing Partner of Wellington
Management Company (an investment advisor).
In February 1994, he was appointed a
successor Trustee of certain private trusts
in which he had no beneficial interest and
concurrently became (until October 1994)
Chairman of two privately-owned corporations
controlled by such trusts. These corpo-
rations filed voluntary petitions under
Chapter 11 of the Federal Bankruptcy Code in
August 1994.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE AND OTHER AFFILIATIONS SINCE EXPIRE
---- --- ---------------------- -------- -------
<S> <C> <C> <C> <C>
Stephen G. Kasnet.............. 52 Mr. Kasnet has served as President of 1986 2000
Pioneer Real Estate Advisors, Inc. and
Pioneer Global Institutional Advisors and
Vice President of The Pioneer Group, Inc.
since January 1996 and as President of
Pioneer Poland Real Estate Fund since
January 1998. He was Managing Director of
First Winthrop Corporation and Winthrop
Financial Associates (real estate
development and management companies) from
1991 to September 1995. He is also Chairman
of the Board of Warren Bancorp, Inc. and
Warren Five Cents Savings Bank in Peabody,
Massachusetts, a Trustee and Vice President
of Pioneer Real Estate Shares and Pioneer
Real Estate Shares (Dublin), and a member of
the Urban Land Institute.
A. Robert Towbin............... 62 Mr. Towbin is a Managing Director of C.E. 1994 2000
Unterberg, Towbin (formerly known as
Unterberg Harris). From January 1994 to
August 1995, he was President and Chief
Executive Officer of the Russian-American
Enterprise Fund and, upon its merger with
the Fund for Large Enterprises in Russia,
Vice Chairman of the resulting U.S. Russia
Investment Fund. From 1987 to 1994, Mr.
Towbin was a Managing Director of Lehman
Brothers. Prior to 1987, he was a Director
and Vice Chairman of L.F.Rothschild,
Unterberg, Towbin Holdings, Inc. Mr. Towbin
serves as a Director of the Columbus New
Millenium Fund (London), Gerber Scientific,
Inc., Globalstar Telecommunications Limited,
Globecomm Systems, Inc. and K&F Industries
Inc.
William L. Brown............... 76 Mr. Brown is retired. He was Chairman of the 1990 1999
Board of Bank of Boston Corporation and The
First National Bank of Boston from 1983 to
1989, Chief Executive Officer from 1983 to
1987 and President from 1971 to 1982. He was
a Director of both Bank of Boston
Corporation and The First National Bank of
Boston until March 1992. He is also a
Director of GC Companies, Inc., Standex
International Corporation and Ionics,
Incorporated.
Thomas P. D'Arcy............... 38 Mr. D'Arcy was elected President, Chief 1996 1999
Executive Officer and a Director of the
Company in February 1996. Mr. D'Arcy
previously served as Executive Vice
President of the Company from September 1995
to February 1996, Senior Vice President of
the Company from June 1992 to September
1995, Vice President of the Company from
October 1991 to June 1992 and Investment
Manager from September 1989 to October 1991.
Mr. D'Arcy is a member of the International
Council of Shopping Centers and the Building
Owners and Managers Association.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE AND OTHER AFFILIATIONS SINCE EXPIRE
---- --- ---------------------- -------- -------
<S> <C> <C> <C> <C>
Joseph E. Hakim................ 49 Mr. Hakim was elected Chairman of the Board 1994 1999
of Directors of the Company in 1996. Mr.
Hakim is President and Chief Executive
Officer of Merchandise Mart Properties, Inc.
in Chicago, Illinois, which manages
approximately 7.5 million square feet of
properties. Mr. Hakim also serves as
Treasurer of the Joseph P. Kennedy, Jr.
Foundation and as a Director of Very Special
Arts.
</TABLE>
- ---------------
* If elected at the Annual Meeting.
The Company has standing Audit, Compensation and Investment Committees.
The Audit Committee makes recommendations to the full Board as to the
selection of the Company's independent public accounting firm, meets with
representatives of such firm on at least an annual basis and reviews
transactions between the Company and any Director, officer or affiliate for
potential conflicts of interest. Messrs. Hakim, Thorndike and Towbin served as
members of the Audit Committee at the one meeting held by such Committee in
1997.
The Compensation Committee, consisting of Messrs. Kirk (as Chairman), Brown
and Towbin, with Mr. Hakim as an ex-officio non-voting member, is responsible
for the oversight of executive compensation and the issuance and administration
of option and other grants under the Company's Stock Option and Incentive Plan.
The Compensation Committee met two times during 1997. For more information
regarding the Compensation Committee's duties, see "Report of the Compensation
Committee" below.
The Investment Committee, consisting of Messrs. D'Arcy, Hakim and Kasnet,
has authority to approve acquisitions of, additions to and dispositions of
properties. The Investment Committee met four times in 1997.
B. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
During 1997, the Company paid its non-employee Directors, other than Mr.
Hakim, annual cash retainers of $12,000, plus a fee of $1,000 for each Board
meeting attended. The chairman of each of the Audit and Compensation Committees
received an additional fee of $1,000, and each other committee member an
additional fee of $750, for each committee meeting attended. Similarly, each
non-employee Director of the Investment Committee received a fee of $750 for
each committee meeting attended. Due to his additional responsibilities as
Chairman, in 1997 the Company paid to Mr. Hakim an annual cash retainer of
$24,000 plus a fee of $2,000 for each Board meeting attended. The Compensation
Committee has determined to continue the same annual cash retainer for 1998 for
Mr. Hakim and to increase the annual cash retainers for each of the other
non-employee Directors of the Company to $15,000. The Compensation Committee has
determined to continue the same meeting fees for 1998 for each of the
non-employee Directors. Pursuant to the Company's Stock Option and Incentive
Plan, each non-employee Director who was serving as a Director of the Company on
the next business day after the adjournment of the 1997 Annual Meeting of
Stockholders automatically received on such day a nonqualified option to
purchase 2,500 Shares. All such options are immediately exercisable in full and
have an exercise price per share equal to the fair market value of the Shares,
as determined by reference to a formula provided in the Stock Option and
Incentive Plan. On February 17, 1998, the Board of Directors and the
Compensation Committee approved, subject to stockholder approval at the Annual
Meeting, amendments to the Stock Option and Incentive Plan which will increase
the annual stock-based compensation paid to non-employee Directors under such
Plan and provide for the grant of a nonqualified option to purchase 5,000 Shares
to each newly-elected non-employee Director on the first day
4
<PAGE> 7
such individual serves as a non-employee Director. See Item II of this Proxy
Statement "Amendments to the Stock Option and Incentive Plan" for more
information regarding the proposed amendments. In addition, all Directors are
reimbursed for travel expenses incurred in attending meetings of the Board and
its committees.
The following sections of this Proxy Statement set forth and discuss the
compensation paid or awarded during the last three fiscal years to (i) the
Company's Chief Executive Officer and (ii) the four other most highly
compensated executive officers who earned in excess of $100,000 as compensation
for their services during 1997 (collectively, the "Named Executives").
Summary Compensation Table
The following table sets forth certain information regarding the cash and
equity-based compensation paid or granted by the Company to or on behalf of the
Named Executives in all capacities as compensation for their services during
each of the three years ended December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
-------------------------------- COMPENSATION
BONUS AWARD
--------------------- -------------
MANAGEMENT SECURITIES
NAME AND CASH ADJUSTMENT UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) OPTIONS(2) COMPENSATION
------------------ ---- -------- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas P. D'Arcy,........... 1997 $250,000 $200,000 $603,257 -- $ 3,342(3)
President and 1996 190,000 100,000 603,257 -- 41,968
Chief Executive Officer 1995 120,000 50,000 -- 25,000 Shares 1,205
Richard L. Heuer,........... 1997 185,000 70,000 241,303 -- 2,387(4)
Executive Vice President 1996 185,000 55,000 241,303 -- 3,399
1995 175,000 35,000 -- 25,000 Shares 3,112
E. Paul Dunn,............... 1997 175,000 70,000 241,303 -- 2,232(5)
Executive Vice President 1996(6) 147,000 40,000 241,303 -- 7,583
Irving E. Lingo, Jr.,....... 1997 168,000 70,000 241,303 -- 2,181(7)
Chief Financial Officer 1996 147,000 55,000 241,303 -- 72,242
1995(8) 41,000 10,000 -- 25,000 Shares 12,767
Steven St. Peter,........... 1997 130,000 70,000 120,652 -- 791(9)
Vice President 1996(10) 34,600 15,000 120,651 -- 68
</TABLE>
- ---------------
(1) Reflects (i) the market value on the date of issuance of "management
adjustment awards" in the form of unrestricted stock issued on February 18,
1998 in connection with the Board of Directors' decision in the fourth
quarter of 1997 to terminate the Company's Superior Performance Incentive
Plan plus a cash payment to cover the related increased income tax
liability, (ii) the Compensation Committee's determination that such
management adjustment awards should be allocated equally to the service of
the Named Executives for the Company during 1996 and 1997, and (iii) the
Compensation Committee's further awareness that no equity-based
compensation was awarded to the Named Executives in 1996 or 1997 and that
there will not be any stock options granted to the Named Executives during
1998. See "Report of the Compensation Committee."
(2) Stock options granted to the Named Executives under the Company's Stock
Option and Incentive Plan, as then in effect. All such options are fully
exercisable.
5
<PAGE> 8
(3) Includes a $222 premium paid by the Company for a term life insurance
policy and Company matching contributions of $3,120 under the Company's
401(k) plan.
(4) Includes a $222 premium paid by the Company for a term life insurance
policy and Company matching contributions of $2,165 under the Company's
401(k) plan.
(5) Includes a $222 premium paid by the Company for a term life insurance
policy and Company matching contributions of $2,010 under the Company's
401(k) plan.
(6) Mr. Dunn joined the Company in March 1996.
(7) Includes a $222 premium paid by the Company for a term life insurance
policy and Company matching contributions of $1,959 under the Company's
401(k) plan.
(8) Mr. Lingo joined the Company in September 1995.
(9) Includes a $222 premium paid by the Company for a term life insurance
policy and Company matching contributions of $569 under the Company's
401(k) plan.
(10) Mr. St. Peter joined the Company in August 1996.
Options Granted in Last Fiscal Year
No options were granted to Named Executives during 1997.
Aggregated Option Exercises in 1997 and 1997 Year-End Option Values
The following table sets forth certain information regarding aggregate
stock options granted to the Named Executives as of December 31, 1997. No Named
Executive exercised options during 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NAME DECEMBER 31, 1997(1) DECEMBER 31, 1997(2)
---- -------------------- ----------------------
<S> <C> <C>
Thomas P. D'Arcy...................................... 40,500 Shares $253,250
Richard L. Heuer...................................... 25,000 Shares 153,125
E. Paul Dunn.......................................... -- --
Irving E. Lingo, Jr. ................................. 25,000 Shares 112,500
Steven St. Peter...................................... -- --
</TABLE>
- ---------------
(1) All of such options were vested and exercisable in full at year-end.
(2) Market value of the Shares underlying the Named Executive's in-the-money
options at year-end (based on a closing market price of $21.00 per Share)
minus the aggregate exercise price.
C. REPORT OF THE COMPENSATION COMMITTEE
Committee Responsibilities. The responsibilities of the Compensation
Committee (the "Committee") include: (i) reviewing the performance of the Chief
Executive Officer and the other executive officers of the Company on at least an
annual basis; (ii) establishing the cash and equity-based compensation and
benefits to be provided to the executive officers of the Company; (iii) issuing
and administering awards under the Stock Option and Incentive Plan; (iv)
informally reviewing, to the extent available, information with respect to the
compensation paid to executive officers of comparable equity real estate
investment trusts ("REITs") and comparing such information with the overall
compensation paid to the Company's executive officers; (v) recommending
compensation for the members of the Board of Directors for their services as
Directors; and (vi) reporting periodically to the full Board with respect to the
foregoing.
6
<PAGE> 9
Compensation Philosophy for Executive Officers. The Committee's executive
compensation philosophy is to align the interests of key executives with the
interests of stockholders by developing appropriate compensation measures for
such executives. The Committee believes that components of the total
compensation package for senior executives should include (i) a base salary,
(ii) an annual cash bonus the amount of which will depend upon the success of
the Company and of the executives' involvement in achieving specified
objectives, and (iii) a long-term performance incentive the value of which will
depend upon an increase in the value of the Company's Shares over an extended
period of time. For 1997, the compensation of the Company's Chief Executive
Officer and other executive officers was comprised of (i) an annual base salary,
(ii) an annual incentive cash bonus, and (iii) a "management adjustment award"
consisting of a grant of unrestricted stock plus a cash payment to cover the
related increased income tax liability of the executives. The "management
adjustment award" was made in lieu of the long-term performance incentive that
the Committee had originally intended would be provided through the Superior
Performance Incentive Plan but that the Committee determined to be impractical
to implement, as described below. Beginning January 1, 1998, the compensation of
the Company's Chief Executive Officer and other executive officers will be
comprised of an annual base salary, an annual incentive cash bonus and a
long-term performance incentive in the form of awards under the Company's Stock
Option and Incentive Plan described below under "Long-Term Incentive Program."
Base Salary. In order to compete for and retain talented executives who
are critical to the Company's long-term success, the Committee has determined
that the base salaries of executive officers should approximate those of
executives of equity REITs which compete with the Company for employees,
investors and tenants while also taking into account the executive officers'
performance and tenure. The Committee reviews base salaries annually and, if
appropriate, modifies such salaries to reflect recent market practices and
performance.
Annual Incentive Bonus. In order to motivate key executives to achieve
annual strategic business goals, the Committee believes executives should
receive annual incentive cash bonuses for their contributions in achieving such
goals. In particular, the Committee seeks to provide key executives with a total
compensation package that is competitive with comparable equity REITs when,
among other things, the Company's per share funds from operations ("FFO") grow
and its total return to stockholders exceeds that of comparable equity REITs.
Beginning with the 1997 fiscal year, the Committee implemented an incentive
award program to compensate senior executive officers in the form of annual
incentive bonuses for achieving the Company's strategic business goals. Pursuant
to this program, at the beginning of each year the Committee, in consultation
with the Chief Executive Officer, establishes for each executive a range of
incentive bonus opportunities, stated as percentages of such executive's base
salary, which the executive is entitled to receive based in part upon such
executive's position to impact the annual success of the Company and in part
upon the level of performance achieved by the Company and the individual
executive for that year. With respect to that portion of the annual incentive
bonus that is based upon the Company's and the individual executive's
performance, sixty-five percent (65%) is tied to the Company's overall
performance level and thirty-five percent (35%) is tied to the individual
executive's performance level.
In accordance with the incentive award program, the Chief Executive Officer
and the Committee set as the corporate performance measures for 1997 (i) growth
in FFO and (ii) achieving greater total stockholder return than its peer group.
In order to achieve the maximum incentive bonus allocated to corporate
performance, the Company's FFO per share had to increase by 9% and its total
stockholder return had to be 5% greater than its peer group. The Company's
actual growth in FFO in 1997 was 9.9% and its total market return was 24.6%
versus 14.4% for its peer group.
7
<PAGE> 10
In assessing the individual performance component of the incentive award
program for each senior executive, the Committee considered the significant
roles played by the various executive officers in achieving the following
strategic initiatives during 1997: (i) maintaining a debt to total market
capitalization ratio under 40%, (ii) achieving investment grade status from both
Standard & Poor's Investment Services and Moody's Investors Service, (iii)
prepaying the $100 million REMIC Note due September 2000, (iv) completing $190
million in new acquisitions, and (v) increasing the Company's total market
capitalization to over $800 million. In addition to these financial factors, the
Committee considered the Company's success in improving its research, analytic
and technological capabilities, its acquisition structure and its lease tracking
system, among other things. Based upon these achievements and the recommendation
of the chief executive officer, the Committee determined each senior executive
was entitled to substantially the maximum incentive bonus allocated to
individual performance.
As a result of the above analysis, and exercising its authority to increase
or decrease amounts determined by formulaic allocation, the Committee, in
consultation with the Chief Executive Officer in the case of all officers other
than himself, awarded to the Named Executives the following cash bonuses for
1997: $200,000 to Mr. D'Arcy and $70,000 to each of Messrs. Heuer, Dunn, Lingo
and St. Peter.
1997 Management Adjustment Awards. In light of the termination (for the
reasons described below) of the Superior Performance Incentive Plan, and the
fact that none of the senior executives was awarded any equity-based
compensation in 1996 or 1997 (a period during which the market price per Share
increased 55% from $13.50 at December 31, 1995 to $21.00 at December 31, 1997)
and the further fact that no stock options will be awarded to such executives in
1998, the Committee suggested, and the Board of Directors approved, a one-time
issuance of unrestricted stock and a cash payment to each of the senior
executives. This issuance was based on the recommendation of FPL Associates, a
consulting firm hired by the Committee to review the Company's compensation
incentives and to recommend a long-term incentive program for the Company's
senior executives ("FPL Associates"), and represents equity-based compensation
for senior executives for both 1996 and 1997 (allocated equally to the service
of each such executive to the Company during 1996 and 1997). It is anticipated
that the cash portion of the award will be used substantially to satisfy each
executive's increased tax liability resulting from the award of such Shares.
The number of Shares awarded to each of the senior executives was
extrapolated according to a formula suggested by FPL Associates which
incorporated the following elements: (i) assumption of the numbers of stock
option awards that might have been granted for 1996 and 1997 in amounts
consistent with compensation awarded had an ongoing incentive stock program,
similar to the program recommended by FPL Associates for 1998 and later years,
been in place in January 1996 and 1997 ("Assumed Options"); (ii) multiplication
of the number of Assumed Options by the difference in an approximated price per
share at the end of 1997 over the stock price in January 1996 and 1997,
respectively; (iii) division of the resulting number by the approximated
year-end 1997 stock price; and (iv) rounding up of the resulting number. The
resulting numbers of Shares included in the management adjustment awards are as
follows:
<TABLE>
<S> <C>
Thomas P. D'Arcy................................... 40,000
Richard L. Heuer................................... 16,000
E. Paul Dunn....................................... 16,000
Irving E. Lingo, Jr................................ 16,000
Steven St. Peter................................... 8,000
Three other senior executives...................... 18,350
-------
TOTAL.............................................. 114,350
</TABLE>
Long-Term Incentive Program. Effective January 1, 1997, the Board of
Directors and the Committee established, and the stockholders approved at the
1997 Annual Meeting of Stockholders, the Superior
8
<PAGE> 11
Performance Incentive Plan whereby senior executives were to receive awards
under the Company's Stock Option and Incentive Plan if the Company's three-year
total return to stockholders exceeded the total return over the same period of
the NAREIT Equity Strip Center Total Return Index. In November 1997, however,
the Board of Directors voted to abolish the plan because administrative
complexities, primarily resulting from the impossibility of accurately
estimating quarterly period costs of a plan whose pay-out, if any, would be
based upon the superior total return to stockholders of the Company in excess of
the Company's peer group over a 3-year period, made implementation of and
accounting for such plan impractical. In lieu of the Superior Performance
Incentive Plan, the Board of Directors has implemented, at the recommendation of
FPL Associates, the Bradley Real Estate, Inc. Long-Term Incentive Program
("Long-Term Incentive Program"). Pursuant to the terms of the program,
nonqualified stock options will be granted under the Company's existing Stock
Option and Incentive Plan at the beginning of each year to senior executives of
the Company for a number of Shares which will vary, depending on the position
and salary of the executive. The first such options under this program will be
granted early in 1999, and the number of such options that will be granted to
each executive will depend upon the Company's success in delivering total
stockholder return for the preceding year (i.e., 1998) that meet threshold,
target or superior returns established by the Committee. For 1998, the Committee
has established these threshold, target and superior total returns at 10%, 12%
and 15%, respectively.
Each option granted pursuant to the program will vest 50% on the third
anniversary of such grant, 75% on the fourth anniversary of such grant, and will
be 100% vested on the fifth anniversary of such grant. The right to exercise any
option granted under the program will expire on the tenth anniversary of such
grant.
Compensation of Chief Executive Officer. In 1997, the Committee
established a base salary for Mr. D'Arcy of $250,000. Mr. D'Arcy received a cash
bonus of $200,000 for 1997 based upon the significant role the Committee
believes he played in the Company's achievement of the strategic initiatives
described above. See "Annual Incentive Bonus."
Federal Tax Regulations. As a result of Section 162(m) of the Internal
Revenue Code (the "Code"), the Company's Federal tax deduction of executive
compensation may be limited to the extent that the Chief Executive Officer or
other executive officers whose compensation is required to be reported in the
summary compensation table in the Company's proxy statement receives
compensation in excess of $1,000,000 in such taxable year of the Company (other
than performance-based compensation that otherwise meets the requirements of
Section 162(m) of the Code). Although the Superior Performance Incentive Plan
was approved by the stockholders, the management adjustment awards which replace
it have not been approved specifically; therefore, all or a portion of such
awards paid in any taxable year to an officer whose total taxable compensation
from the Company exceeds $1,000,000 for such taxable year may not qualify for
deductibility under Section 162(m) of the Code.
Submitted by:
Paul G. Kirk, Jr., Chairman
William L. Brown
A. Robert Towbin
D. COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
The Compensation Committee consists of Messrs. Kirk (as Chairman), Brown
and Towbin. Concurrently with his becoming Chairman of the Board in February
1996, Mr. Hakim was appointed an ex-officio, non-voting member of the
Compensation Committee. No member of the Compensation Committee has ever been an
officer or employee of the Company. In December 1997, the Company paid a normal
underwriting discount to C.E. Unterberg, Towbin (of which Mr. Towbin is a
Managing Director) of approximately $246,000 for its services as underwriter in
the Company's public offering of 300,000 Shares.
9
<PAGE> 12
E. EMPLOYMENT AGREEMENT
At the Board of Directors meeting in February 1998, the Board authorized a
written employment contract with Mr. D'Arcy for a period of three years, with an
automatic one year evergreen extension unless notice is given by either party.
The Board has authorized this employment contract to feature a minimum annual
base salary of $325,000 per year, which amount the Board may increase based on
an annual redetermination. Mr. D'Arcy's base salary for 1998 is $325,000. Under
the employment contract, Mr. D'Arcy will also be entitled to receive an annual
incentive bonus and to participate in the Company's Long-Term Incentive Program.
See "Report of the Compensation Committee."
Although the Board of Directors has authorized this employment contract,
the contract has not yet been executed. The executed contract is expected to
contain a noncompetition provision; it is also expected to contain a change in
control provision pursuant to which Mr. D'Arcy would receive up to three times
his annual cash compensation in the event of a termination of his employment or
a significant alteration of his duties within 18 months of such change in
control. The executed contract may also contain other provisions mutually agreed
upon by the Board and Mr. D'Arcy.
F. SHARE PERFORMANCE GRAPH
The following graph provides a comparison of the five-year cumulative total
stockholder return (assuming reinvestment of dividends) among the Company, the
NAREIT Equity REIT Total Return Index (the "NAREIT Equity Index") and the
Standard & Poor's 500 Index, beginning on December 31, 1992. The NAREIT Equity
Index is an industry index maintained by the National Association of Real Estate
Investment Trusts ("NAREIT") which measures the performance over applicable
periods of time of those publicly-traded qualified REITs whose investments
consist primarily of the ownership of equity interests in income producing real
property. The NAREIT Equity Index includes the Company and, according to NAREIT,
175 other REITs which, in the aggregate, had a market capitalization of $128
billion at December 31, 1997. The historical information set forth below is not
necessarily indicative of future performance.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Bradley Real Estate, Inc. $100.00 $125.54 $111.91 $116.66 $169.09 $210.77
S&P 500 $100.00 $109.99 $111.43 $153.13 $188.29 $251.13
NAREIT Equity REIT Index $100.00 $119.65 $123.45 $142.30 $192.48 $231.47
</TABLE>
10
<PAGE> 13
II. AMENDMENTS TO THE STOCK OPTION AND INCENTIVE PLAN
A. INTRODUCTION
At the recommendation of FPL Associates, on February 17, 1998, the Board of
Directors and the Compensation Committee (the "Committee") adopted, subject to
stockholder approval at the Annual Meeting, the following amendments to the
Company's Stock Option and Incentive Plan (the "Plan"): (i) increasing the
number of Shares for which awards may be granted by 1.1 million Shares
(constituting less than 4.7% of Shares outstanding as of the Record Date); (ii)
fixing the number of Shares for which awards may be made prior to the increase
contemplated in (i) above at five percent of the 23,646,959 Shares outstanding
as of the Record Date while removing the evergreen feature which currently
provides that the number of such Shares may be increased by five percent of the
number of Shares issued additionally from time to time (the combined effect of
(i) and (ii) being that the number of Shares available for grants under the Plan
will be 2,282,348, which amount will include 512,350 Shares previously issued or
issuable pursuant to currently outstanding awards granted under the Plan as of
the Record Date; (iii) providing for the automatic grant of a nonqualified
option for 5,000 Shares to each non-employee Director on the first day such
individual serves as a non-employee Director; and (iv) providing for an increase
in the number of Shares underlying the annual, automatic grant of nonqualified
options to non-employee Directors from 2,500 Shares to 3,500 Shares; provided,
however, that the automatic grant to be made on the next business day after the
adjournment of the 1998 Annual Meeting shall be 8,500 Shares rather than 3,500
Shares. Of such 8,500 Shares, 5,000 Shares are to be granted in substitution of
awards that non-employee Directors may have been entitled to receive under the
Superior Performance Incentive Plan which the Board of Directors terminated
during the fourth quarter of 1997. See "Report of the Compensation Committee."
B. MATERIAL FEATURES OF THE PLAN
The following description of certain features of the Plan, as amended, is
intended to be a summary only. Except for the numbers of Shares subject to the
Plan and the grant of options to non-employee Directors described in paragraphs
1 and 2 below, the amendments for which stockholder approval is sought make no
changes in the Plan as previously in effect.
1. Shares Available Under the Plan.
Subject to approval by the stockholders at the Annual Meeting, the
Committee is authorized to grant options and other stock-based awards for up to
an aggregate of 2,282,348 Shares under the Plan. As of the Record Date, 512,350
Shares had been issued or are issuable pursuant to currently outstanding awards
under the Plan.
2. Non-Employee Director Options.
Subject to approval of the stockholders at the Annual Meeting, each
individual who first joins the Board of Directors as a non-employee Director
shall automatically be granted on the first day such individual serves as a
non-employee Director a nonqualified option to purchase 5,000 Shares. In
addition, each non-employee Director who is serving as a Director of the Company
on the next business day after adjournment of each Annual Meeting of
Stockholders will automatically be granted on such day an option to acquire
3,500 Shares; provided, however, that the automatic grant to be made on the next
business day after the adjournment of the 1998 Annual Meeting shall be 8,500
Shares rather than 3,500 Shares. The exercise price of each such option shall be
the fair market value of the Shares on the date such option is granted which,
unless the Committee otherwise determines, shall be the average closing price of
a Share as reported on the New York Stock
11
<PAGE> 14
Exchange on each of the ten business days immediately preceding such date. Each
such option will be fully vested as of the grant date and exercisable for a term
of ten years, except that upon the optionee ceasing to be a Director for any
reason, such option shall lapse if not exercised within two years from the date
of termination.
3. Other Stock-Based Awards That May be Granted Under the Plans.
The amendments for which stockholder approval is sought make no changes to
the following existing provisions of the Plan.
Options. The Plan authorizes the Committee to grant incentive stock
options (i.e., options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended) to employees of
the Company and its subsidiaries and to grant nonqualified options to officers,
other employees, Directors and consultants of the Company and its subsidiaries.
Because all employees are currently on the payroll of the Company's subsidiary,
Bradley Operating Limited Partnership, and because under the Code incentive
stock options may only be granted to employees of a corporation, the Company
anticipates that any future grants will be of nonqualified options. The exercise
price of each nonqualified option granted under the Plan is determined by the
Committee but, in the case of nonqualified options granted to non-employee
Directors, shall be the fair market value of the Shares on the date such option
is granted. The term of each option is fixed by the Committee but, in the case
of nonqualified options granted to non-employee Directors, shall be ten years,
subject to the limitations set forth above. Except with respect to the automatic
grant of nonqualified options to non-employee Directors, which are to be
exercisable in full on the date of grant, the Committee determines the vesting
schedule of each option granted.
Restricted Stock. The Committee may award Shares to officers, other
employees and consultants, subject to such conditions and restrictions as the
Committee may determine ("Restricted Stock"). These conditions and restrictions
may include the achievement of certain performance goals and/or continued
employment with the Company through a specified restricted period. The purchase
price, if any, of Shares of Restricted Stock will be determined by the
Committee. If the performance goals and other restrictions are not attained, the
grantees will forfeit their awards of Restricted Stock.
Unrestricted Stock. The Committee may also grant any such persons Shares
which are free from any restrictions under the Plan ("Unrestricted Stock").
Unrestricted Stock may be issued in recognition of past services or other valid
consideration, and may be issued in lieu of cash compensation.
Performance Share Awards. The Committee may also grant performance share
awards to employees or other key persons entitling the recipient to receive
Shares or cash upon the achievement of individual or Company performance goals
and such other conditions as the Committee shall determine ("Performance Share
Award").
Dividend Equivalent Rights. The Committee may grant dividend equivalent
rights, which entitle the recipient to receive dividends that would be paid if
the grantee had held specified Shares. Dividend equivalent rights may be granted
as a component of another award or as a freestanding award. Dividend equivalents
credited under the Plan will be paid currently in cash. In certain instances, a
person awarded stock may elect to defer receipt of the Shares, in accordance
with such rules and procedures as may from time to time be established by the
Committee. During the period of deferral, the deferred stock may receive
dividend equivalent rights.
Stock Appreciation Rights. The Committee may award stock appreciation
rights ("SARs") either as a freestanding award or in tandem with a stock option.
Upon exercise of an SAR, the holder will be entitled to
12
<PAGE> 15
receive an amount equal to the excess of the fair market value on the date of
exercise of one Share over the exercise price per share specified in the related
stock option (or, in the case of freestanding SAR, the price per share specified
in such right, which price may not be less than 85% of the fair market value of
the Shares on the date of grant) times the number of Shares with respect to
which the SAR is exercised. This amount may be paid in cash, in Shares, or a
combination thereof, as determined by the Committee. If the SAR is granted in
tandem with a stock option, exercise of the SAR cancels the related option to
the extent of such exercise.
Change of Control Provisions. The Plan provides that in the event of a
"Change of Control" (as defined in the Plan) of the Company, all stock options
and SARs shall automatically become fully exercisable. In addition, at any time
prior to or after a Change of Control, the Committee may accelerate awards and
waive conditions and restrictions on any awards to the extent it may determine
appropriate.
4. Tax Aspects Under the Internal Revenue Code.
The following is a summary of the principal Federal income tax consequences
of certain awards that may be granted under the Plan. It does not describe all
Federal tax consequences under the Plan, nor does it describe state or local tax
consequences.
Nonqualified Options and SARs. There are no Federal income tax
consequences to either the optionee or to the Company on the grant of a
nonqualified option. On the exercise of a nonqualified option, the optionee
(except as described below) has taxable ordinary income equal to the excess of
fair market value of the Shares received on the exercise date over the option
price of the Shares. The optionee's tax basis for the Shares acquired upon
exercise of a nonqualified option is increased by the amount of such taxable
income. The Company will be entitled to a Federal income tax deduction in an
amount equal to such excess. Upon the sale of the Shares acquired by exercise of
a nonqualified option, the optionee will realize long-term, mid-term or
short-term capital gain or loss depending upon his or her holding period for
such Shares. Special rules apply if an optionee surrenders Shares in payment of
the exercise price of a nonqualified option. Similar tax consequences result
upon the exercise of an SAR.
Stock Awards. The award of unrestricted stock to any officer, employee or
consultant will be treated as compensation to the grantee taxable at ordinary
income rates, and deductible as an ordinary expense of the Company, at the time
of and in the amount equal to the then fair market value of the unrestricted
stock awarded. Unless the grantee elects to treat the value of Shares subject to
restricted stock awards or performance share awards as ordinary income at the
time of grant by filing an election under Section 83(b) of the Code, the grantee
will be treated as receiving ordinary income in an amount equal to the fair
market value of the Shares at the time the restrictions lapse. The Company will
be entitled to a deduction in a comparable amount at the time that the grantee
is considered to receive ordinary income.
Capital Gains. The Taxpayer Relief Act of 1997 created three different
types of capital gains for individuals: short-term gains (on assets held for one
year or less) which are taxed at ordinary income rates; mid-term capital gains
(from the sale of assets held more than a year but not more than 18 months)
which are taxed at a maximum rate of 28%; and long-term capital gains (from the
sale of assets held more than 18 months) which are taxed at a maximum rate of
20%.
Parachute Payments. The exercise of any portion of any option that is
accelerated due to the occurrence of a change of control may cause a portion of
the payments with respect to such accelerated options to be treated as
"parachute payments" as defined in the Code. Any such parachute payments may be
non-deductible to the Company, in whole or in part, and may subject the
recipient to a non-deductible 20% Federal excise tax on all or portion of such
payment (in addition to other taxes ordinarily payable).
13
<PAGE> 16
Limitation on Company's Deductions. As a result of Section 162(m) of the
Code, the Company's Federal tax deduction for certain awards (other than stock
options) under the Plan may be limited to the extent that the Chief Executive
Officer or other executive officer whose compensation is required to be reported
in the summary compensation table in the Company's proxy statement receives
compensation (other than performance-based compensation) in excess of $1 million
a year. Options granted under the Plan are intended to qualify as
performance-based compensation with the result that the Company should not lose
the benefit of any tax deductions by reason of Section 162(m) of the Code with
respect to option grants.
C. AWARDS PURSUANT TO THE AMENDMENT
The following table sets forth the number of option Shares expected to be
automatically granted under the Plan during 1998 pursuant to the proposed
amendments. This table does not reflect any options or other awards which may be
granted in the future at the discretion of the Committee.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF GROUP OPTION SHARES
------------- -------------
<S> <C>
All non-employee Directors as a group (6 persons)........... 51,000
All executive officers as a group........................... 0
All employees, excluding executive officers, as a group..... 0
</TABLE>
D. RECOMMENDATION OF THE BOARD
The Board of Directors believes that it is in the best interest of the
Company to align the interests of the executive officers of the Company more
closely with those of the stockholders in order to provide a greater incentive
to such persons to maximize stockholder value. Accordingly, the Board of
Directors proposes to increase the number of Shares currently available for
issuance under the Plan so that it may grant additional incentive awards to such
executives in the form of stock options issuable under the Plan. See "Report of
the Compensation Committee -- Long-Term Incentive Program."
The Board of Directors has adopted a policy that each Director should
ordinarily own, at a minimum, Shares of the Company having a value equal to
twice the Directors' annual compensation as such, and that any Director who does
not currently own such amount of Shares should do so within a two-year period.
The Board also believes that stock options can play an important role in the
success of the Company by encouraging and enabling the Company's non-employee
Directors, upon whose business judgment and guidance the Company depends, to
develop a further increased proprietary interest in the Company, thereby
aligning the interests of the Directors more closely with those of the
stockholders. The Board believes that the proposals to grant nonqualified
options to non-employee Directors upon becoming Directors of the Company and to
increase the number of Shares underlying the automatic yearly grants of stock
options to existing non-employee Directors will help the Company accomplish
these goals and will keep the Company's equity compensation to Directors
competitive with those of its competitors.
Assuming a quorum is present, the amendments must be approved by a majority
of the votes cast on the proposal to be approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENTS TO THE
PLAN.
14
<PAGE> 17
III. STOCKHOLDER PROPOSAL
The Company has been informed by Mr. John Jennings Crapo, Post Office Box
151, Cambridge, MA 02140-0002, who states that he owns 100 Shares, that he plans
to present the Stockholder Proposal at the Annual Meeting. The Stockholder
Proposal, as submitted by Mr. Crapo, is as follows:
"The Stockholders of BRADLEY REAL ESTATE, INC. (the "Business") command the
Board of Directors (the "Board") to publish in the proxy statement of the next
two consecutive shareholder meetings (annual) an appendix concerning the
charitable donations program of the Business for the immediate past fiscal year
of the holding company with the following information:
i. An explanation of at least five hundred words explaining the
standards of the Business governing its donations to INTERNAL REVENUE
SERVICE ("IRS") approved private foundations to include standards of help
rejection.
ii. An enumeration of IRS qualifying charities and IRS approved
foundations which our Board plans to help in the ensuing fiscal year
included with each charity an elucidation of at least twenty-six years
[sic] how it has complied with the standards and procedures enumerated in
i."
Assuming a quorum is present, the Stockholder Proposal must be approved by
a majority of the votes cast on the proposal to be approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL.
IV. BENEFICIAL OWNERSHIP OF SHARES
A. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Information known to the Company with respect to beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange
Act")) of more than 5% of the Company's outstanding Shares as of December 31,
1997 is as follows. Such information is based upon filings received by the
Company under the Exchange Act and the number of shares outstanding as of March
2, 1998.
<TABLE>
<CAPTION>
NO. OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
------------------- ------------- --------
<S> <C> <C>
Public Employees Retirement System of Ohio(1)............... 1,272,646 5.4%
277 East Town Street
Columbus, Ohio 43215-4642
</TABLE>
- ---------------
(1) In a filing on Schedule 13G under the Exchange Act dated January 31, 1997
received by the Company and not subsequently amended, Public Employees
Retirement System of Ohio ("Ohio PERS") reported that it had sole voting
power with respect to all 1,272,646 of such Shares and sole dispositive
power with respect to all 1,272,646 of such Shares.
15
<PAGE> 18
B. SECURITY OWNERSHIP OF MANAGEMENT
Information known to the Company as of March 2, 1998 with respect to
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of the
Company's Shares by (i) each Director of the Company, (ii) each of the Named
Executives and (iii) all Directors and executive officers of the Company as a
group is as follows. Such information is based on filings received by the
Company under the Exchange Act, as supplemented by additional information
provided to the Company. Unless otherwise indicated, the beneficial owner has
sole voting power and sole dispositive power with respect to the Shares
beneficially owned.
<TABLE>
<CAPTION>
NO. OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS(1)
------------------------ ------------------ -----------
<S> <C> <C>
William L. Brown............................................ 6,500(2) *
Thomas P. D'Arcy............................................ 83,912(3) *
Joseph E. Hakim............................................. 13,800(4) *
Stephen G. Kasnet........................................... 15,060(5) *
Paul G. Kirk, Jr............................................ 6,623(6) *
W. Nicholas Thorndike....................................... 17,877(7) *
A. Robert Towbin............................................ 13,300(8) *
Richard L. Heuer............................................ 48,000(9) *
E. Paul Dunn................................................ 18,000(10) *
Irving E. Lingo, Jr......................................... 43,506(11) *
Steven St. Peter............................................ 8,000 *
All Directors and executive officers as a group (13
persons).................................................. 310,928(12) *
</TABLE>
- ---------------
* Less than one percent.
(1) For purposes of computing the percentage of outstanding Shares held by each
person, any Shares which such person has the right to acquire pursuant to
the exercise of a stock option within 60 days following February 28, 1998
is deemed to be outstanding, but is not deemed to be outstanding for the
purposes of computing the percentage ownership of any other person.
(2) Includes 5,000 Shares subject to stock options granted to Mr. Brown under
the Company's Stock Option and Incentive Plan.
(3) Includes 40,500 Shares subject to stock options granted to Mr. D'Arcy under
the Company's Stock Option and Incentive Plan.
(4) Includes 5,000 Shares subject to stock options granted to Mr. Hakim under
the Company's Stock Option and Incentive Plan and 1,000 Shares owned by Mr.
Hakim's spouse, as to which Mr. Hakim does not have any voting or
investment power and as to which Mr. Hakim disclaims any economic interest.
(5) Includes 5,000 Shares subject to stock options granted to Mr. Kasnet under
the Company's Stock Option and Incentive Plan and 8,350 Shares which Mr.
Kasnet and his spouse own jointly. Also includes 1,710 owned by a family
trust of which Mr. Kasnet is trustee; Mr. Kasnet disclaims any economic
interest in such 1,710 Shares. Does not include any Shares which may be
beneficially owned by Pioneer Real Estate Shares, of which Mr. Kasnet
serves as Trustee and Vice President. Mr. Kasnet does not have any voting
or dispositive power with respect to any Shares owned by Pioneer Real
Estate Shares.
(6) Includes 5,000 Shares subject to stock options granted to Mr. Kirk under
the Company's Stock Option and Incentive Plan.
16
<PAGE> 19
(7) Includes 5,000 Shares subject to stock options granted to Mr. Thorndike
under the Company's Stock Option and Incentive Plan.
(8) Includes 5,000 Shares subject to stock options granted to Mr. Towbin under
the Company's Stock Option and Incentive Plan, 300 Shares owned by Mr.
Towbin's son, 1,000 Shares held by a family trust of which Mr. Towbin is
trustee and 2,000 Shares beneficially owned by Global Foundation for the
Humanities, of which Mr. Towbin serves as a Director. Mr. Towbin disclaims
any economic interest in the 300 Shares owned by his son, the 1,000 Shares
owned by the family trust and the 2,000 Shares owned by Global Foundation
for the Humanities. Mr. Towbin does not have any voting or investment power
with respect to the Shares owned by his son. Mr. Towbin has sole investment
power but no voting power with respect to the Shares owned by Global
Foundation for the Humanities.
(9) Includes 25,000 Shares subject to stock options granted to Mr. Heuer under
the Company's Stock Option and Incentive Plan.
(10) Includes 2,000 Shares owned by Mr. Dunn's spouse, as to which Mr. Dunn does
not have any voting or investment power and as to which Mr. Dunn disclaims
any economic interest.
(11) Includes 25,000 Shares subject to stock options granted to Mr. Lingo under
the Company's Stock Option and Incentive Plan.
(12) Includes 139,500 Shares subject to stock options granted to the Directors
and executive officers of the Company under the Company's Stock Option and
Incentive Plan.
V. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
No Director, officer or associate of any such person is or at any time
during 1997 was indebted to the Company, and it has not been the Company's
practice to make loans to Directors, officers or their associates.
In December 1997, the Company paid a normal underwriting discount to C.E.
Unterberg, Towbin (of which Mr. Towbin is a Managing Director) of approximately
$246,000 for its services as underwriter in the Company's public offering of
300,000 Shares.
The law firm of Goodwin, Procter & Hoar LLP, of which a professional
corporation controlled by William B. King, Secretary of the Company, is a
partner, provides legal services to the Company.
VI. INDEPENDENT PUBLIC ACCOUNTANT
KPMG Peat Marwick LLP served as the Company's independent public auditors
for the fiscal year ended December 31, 1997 and has been selected by the Board
to be the Company's independent public auditors for 1998. A representative of
KPMG Peat Marwick LLP is expected to be present at the Annual Meeting with the
opportunity to make a statement, if he or she so desires, and to answer
appropriate questions from stockholders.
VII. SOLICITATION OF PROXIES AND VOTING PROCEDURES
The entire cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, solicitation may also be made by personal
interview, telegram, facsimile transmission or telephone. Directors and officers
of the Company may participate in such solicitation. Banks, brokerage houses,
custodians, nominees and other fiduciaries have been requested to forward proxy
materials to the beneficial owners of the Shares held of record by them and such
custodians will be reimbursed for their expenses.
17
<PAGE> 20
The presence, in person or by proxy, of holders of a majority of the total
number of outstanding Shares entitled to vote is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. Shares held of
record by stockholders or nominees who do not return a signed and dated proxy or
attend the Annual Meeting in person will not be considered present or
represented at the Annual Meeting and will not be counted in determining the
presence of a quorum. Shares that reflect abstentions or "broker nonvotes"
(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 one or more but not
all issues, such brokers or nominees do not have discretionary voting power to
vote such Shares), if any, will be counted as present for purposes of
determining whether a quorum is present.
Directors are elected by a plurality of votes cast if a quorum is present.
With respect to the election of Directors, votes may only be cast in favor of or
withheld from each nominee; votes that are withheld, abstentions and broker
nonvotes will have no impact on the outcome of the election of Directors and
will be excluded entirely from the vote and will have no effect.
To be approved, the amendments to the Stock Option and Incentive Plan must
be approved by a majority of the votes cast on the proposal. Assuming a quorum
is present, broker nonvotes and abstentions will have no impact on the outcome
of the vote on the proposal.
To be approved, the Stockholder Proposal must be approved by a majority of
the votes cast on the proposal. Assuming a quorum is present, broker nonvotes
and abstentions will have no impact on the outcome of the vote on the
Stockholder Proposal.
VIII. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than ten percent of the Company's Shares to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Officers, directors and
greater than ten percent stockholders are required by the Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Section 16(a)
reports were required for those persons, the Company believes that during the
fiscal year ended December 31, 1997, all filing requirements were complied with,
except that A. Robert Towbin, a Director of the Company, inadvertently failed to
file on a timely basis one report relating to one December 1997 transaction.
IX. STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals intended to be presented at the 1999 Annual Meeting
of Stockholders must be received by the Company on or before December 1, 1998 in
order to be considered for inclusion in the Company's Proxy Statement and form
of proxy for that meeting. The Company's By-laws provide that any stockholder of
record wishing to have a stockholder proposal that is not included in the
Company's Proxy Statement considered at an annual meeting must provide written
notice of such proposal and appropriate supporting documentation, as provided in
the Company's Bylaws, to the Secretary of the Company (i) not less than 75 days
nor more than 150 days prior to the anniversary date of the immediately
preceding annual meeting or special meeting in lieu thereof (the "Anniversary
Date") or, (ii) if the Annual Meeting is called for a date more than seven
calendar days prior to the Anniversary Date, not later than the close of
business on (1) the 20th calendar day (or if that day is not a business day for
the Company, the next succeeding business
18
<PAGE> 21
day) following the earlier of (x) the date on which notice of the date of such
meeting was mailed to stockholders, or (y) the date on which the date of such
meeting was publicly disclosed, or (2) if such date of notice or public
disclosure occurs more than 75 calendar days prior to the scheduled date of such
meeting, then the later of (x) the 20th calendar day (or if that day is not a
business day for the Company, the next succeeding business day) following the
date of the first to occur of such notice or public disclosure or (y) the 75th
calendar day prior to such scheduled date of such meeting (or if that day is not
a business day for the Company, the next succeeding business day).
The Directors know of no other business to be presented at the Annual
Meeting. If other matters properly come before the meeting, the persons named as
proxies will vote on such matters in accordance with their best judgment.
You are urged to complete, date, sign and return your proxy promptly to
make certain your Shares will be voted at the Annual Meeting, even if you plan
to attend the meeting in person. For your convenience in returning the proxy
card, a preaddressed and postage paid envelope has been enclosed.
YOUR PROXY IS IMPORTANT
WHETHER YOU OWN FEW OR MANY SHARES.
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD TODAY.
19
<PAGE> 22
1355-PS-98
<PAGE> 23
APPENDIX A
BRE67 3 DETACH HERE
PROXY
BRADLEY REAL ESTATE, INC.
PROXY FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS ON MAY 14, 1998
The undersigned, revoking any proxy heretofore given, hereby appoints
JOSEPH HAKIM and THOMAS P. D'ARCY, and each of them (with full power to act
alone), proxies with power of substitution to act and vote on behalf of the
undersigned, as designated on the reverse side, all shares of Common Stock of
BRADLEY REAL ESTATE, INC. (the "Company") held of record by the undersigned at
the close of business on March 18, 1998, at the 1998 Annual Meeting of
Stockholders of the Company to be held at 11:00 a.m. local time on the 57th
Floor of the First National Bank of Chicago, One First National Plaza, Chicago,
Illinois, on May 14, 1998, or at any adjournment or postponement thereof. The
proxies are further authorized to vote, in their discretion, upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof. The undersigned hereby acknowledges receipt of the Notice
of Annual Meeting of Stockholders and Proxy Statement and the Company's 1997
Annual Report. This proxy may be revoked at any time before it is exercised.
UNLESS OTHERWISE INSTRUCTED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1
AND 2 AND AGAINST PROPOSAL 3.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
- ----------- -----------
<PAGE> 24
BRE67 3 DETACH HERE
<TABLE>
<S> <C>
[X] Please mark
votes as in
this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The Board of Directors recommends a vote "FOR" each of the nominees set forth below and a vote "FOR" Proposal 2. The Board of
Directors recommends a vote "AGAINST" Proposal 3.
FOR AGAINST ABSTAIN
1. Proposal to elect two Directors to hold office until the 2. Proposal to approve certain [ ] [ ] [ ]
2001 Annual Meeting of Stockholders and until their amendments to the Company's 1993
successors are elected and qualified. Stock Option and Incentive Plan.
NOMINEES: Paul G. Kirk, Jr. and W. Nicholas Thorndike THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"AGAINST" PROPOSAL 3.
[ ] FOR [ ] WITHHELD FOR AGAINST ABSTAIN
BOTH FROM BOTH 3. Stockholder proposal with respect [ ] [ ] [ ]
NOMINEES NOMINEES to charitable donations by the
Company.
[ ] _________________________________________
For both nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Sign exactly as name appears hereon. Joint owners should
each sign. (NOTE: When signing as Executor, Administrator,
Custodian, Attorney, Trustee, Guardian, etc., please add
full title.)
Signature: ______________________________ Date:________________ Signature: ______________________________ Date: ________________
</TABLE>
