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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Grubb & Ellis Company
(Name of Registrant as Specified in its Charter)
N/A
(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)(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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[LOGO]
October 9, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Grubb & Ellis Company (the "Company") to be held at 9:00 a.m. on November 20,
1997 in the Willow Room of the Northbrook Hilton Hotel, 2855 North Milwaukee
Avenue, Northbrook, Illinois.
For your consideration at the meeting are the election of ten directors to
the Company's Board of Directors, an amendment to the Company's Restated
Certificate of Incorporation, approval of an employee stock purchase plan and
approval of amendments to a stock option plan. The meeting will also provide an
opportunity to review with you the business of the Company during the 1997
fiscal year and give you a chance to meet your directors.
Your vote is important to the Company. Whether or not you plan to attend
the meeting, please return a completed proxy card in the enclosed envelope. If
you do attend the meeting and wish to vote in person, you may withdraw your
proxy and vote your shares personally.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Neil Young
-----------------------------------
Neil Young
Chairman & Chief Executive Officer
<PAGE>
GRUBB & ELLIS COMPANY
2215 Sanders Road, Suite 400
Northbrook, Illinois 60062
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 20, 1997
The Annual Meeting of Stockholders of Grubb & Ellis Company (the "Company")
will be held in the Willow Room of the Northbrook Hilton Hotel, 2855 North
Milwaukee Avenue, Northbrook, Illinois, on November 20, 1997 at 9:00 a.m. local
time, for the following purposes:
1. To elect ten (10) directors to the Board of Directors to serve for one
year and until their successors are elected and qualified;
2. To act upon an amendment to the Company's Restated Certificate of
Incorporation;
3. To act upon the Grubb & Ellis Employee Stock Purchase Plan;
4. To act upon amendments to the Company's 1990 Amended and Restated Stock
Option Plan; and
5. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
Stockholders of record at the close of business on September 24, 1997 will
receive this Notice and are entitled to vote at the Annual Meeting. PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED REPLY ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Walner
-----------------------------------
Robert J. Walner
October 9, 1997 Corporate Secretary
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GRUBB & ELLIS COMPANY
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
GENERAL INFORMATION
The Board of Directors (the "Board") of Grubb & Ellis Company (the
"Company") is soliciting your proxy for the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Thursday, November 20, 1997.
Information in this proxy statement about the Company's directors or
executive officers is provided only for the periods during which they held such
positions.
RECORD DATE; VOTING RIGHTS
This proxy statement and the enclosed proxy card are being mailed on or
about October 9, 1997 to holders of record of the Company's common stock, $.01
par value per share (the "Common Stock"), at the close of business on September
24, 1997 (the "Record Date"). Holders of the Common Stock on the Record Date
are entitled to notice of and to vote at the Annual Meeting. On such date,
there were 19,583,212 outstanding shares of Common Stock. Each stockholder is
entitled to one vote for each share of Common Stock held. The presence, in
person or by proxy, of a majority of the shares entitled to vote will constitute
a quorum.
PROXIES; REVOCATION OF PROXIES
When you have signed, dated and delivered the enclosed proxy card prior to
the date of the Annual Meeting, your shares will be voted by the persons named
as proxy holders according to your directions. If you return a properly signed
and dated proxy card but do not mark a choice on one or more items, your shares
will be voted in accordance with the recommendations of the Board as set forth
in this proxy statement. You may revoke your proxy at any time prior to voting
at the Annual Meeting by delivering written notice to the Secretary of the
Company, by submitting a subsequently dated proxy card or by attending the
meeting and voting by ballot before the polls are closed.
The Board is not aware of any matters to be presented at the Annual Meeting
other than the items set forth in the above Notice of Annual Meeting of
Stockholders. If any other matters are properly presented, the persons named to
act as proxy holders may vote on such matters in accordance with their
discretion.
The cost of the solicitation of proxies will be borne by the Company. The
Company has engaged Morrow & Co., Inc. to solicit proxies for a fee of
approximately $2,000 plus reasonable out-of-pocket expenses, estimated to be
approximately $3,000. Banks, brokers and other nominees will be reimbursed for
customary expenses incurred in connection with forwarding of the Company's proxy
solicitation materials to beneficial holders. In addition, proxies may be
solicited, without additional compensation, by directors, officers and other
regular employees of the Company by telephone, mail or in person.
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VOTING PROCEDURES AND REQUIRED VOTE
Shares represented by proxies that reflect abstentions, withheld authority
or "broker non-votes" (i.e., shares held by a broker or nominee which are
represented at the Annual Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal or proposals) will be
counted as shares that are present and entitled to vote in order to determine
the presence of a quorum, but are not considered as votes "cast" for the purpose
of determining the outcome of a proposal.
The election of each nominee for director will require the affirmative vote
of a plurality of the shares of Common Stock present in person or by proxy and
entitled to vote at the Annual Meeting. Cumulative voting for the election of
directors is not permitted. Unless authority to vote for any director is
withheld in the proxy, votes will be cast in favor of election of all of the
nominees.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Annual Meeting will be required to adopt
the proposed amendment to the Company's Certificate of Incorporation.
The affirmative vote of the holders of a majority of the shares of Common
Stock, present in person or by proxy and entitled to vote at the Annual Meeting,
is required to ratify the adoption of the Grubb & Ellis Employee Stock Purchase
Plan and to ratify the amendments to the 1990 Amended and Restated Stock Option
Plan.
1. ELECTION OF DIRECTORS
INFORMATION ABOUT THE BOARD
The Board of Directors currently consists of ten directors. C. Michael
Kojaian, Todd A. Williams and Sidney Lapidus were elected by the Board as
additional directors in December 1996, January 1997 and February 1997,
respectively. The Board held ten meetings during the fiscal year ended June 30,
1997. Each director attended at least 75% of the meetings of the Board and any
Board committees on which he served, except that John D. Santoleri attended 70%
of such meetings. The Board has standing Audit and Compensation Committees,
which are described below, and does not have a Nominating Committee.
AUDIT COMMITTEE. The Audit Committee recommends the appointment of
auditors to the Board; approves the scope of the annual audit; reviews the audit
results and compliance with the auditors' recommendations; reviews financial
reports to stockholders; monitors the Company's accounting and the effectiveness
of internal controls; and monitors compliance with certain aspects of the
Company's conflicts-of-interest policy. The current members of the Audit
Committee are R. David Anacker, Chairman, Lawrence S. Bacow and Robert J.
McLaughlin. The Audit Committee met four times during the 1997 fiscal year.
COMPENSATION COMMITTEE. The functions of the Compensation Committee are
the approval of compensation arrangements for the executive officers of the
Company, recommending to the Board the adoption of equity compensation plans
in which directors and officers are eligible to participate and the award of
equity incentives, and administration of the unaffiliated directors' stock
option plan. The
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current members of the Compensation Committee are Reuben S. Leibowitz,
Chairman, and Lawrence S. Bacow. During the 1997 fiscal year, the
Compensation Committee met four times.
INFORMATION ABOUT THE NOMINEES FOR DIRECTOR
The names of the persons who have been nominated by the Board for election
as directors at the Annual Meeting are set forth below. There are no other
nominees. Nominations for director are made by written notice to the Secretary
of the Company, generally at least 14 days prior to the stockholders' meeting at
which directors are to be elected. All nominees have consented to serve as
directors if elected.
If any nominee becomes unable to serve as a director, the proxies will be
voted by the proxy holders for a substitute person nominated by the Board, and
authority to do so is included in the proxy. The Board has no reason to believe
that any of the nominees will be unable to serve as a director of the Company.
VOTING AGREEMENT. Pursuant to an agreement ("Voting Agreement") dated
January 24, 1997, entered into among Warburg, Pincus Investors, L.P.
("Warburg"); C. Michael Kojaian, a director of the Company, Mike Kojaian and
Kenneth J. Kojaian (collectively, the "Kojaian Investors"); and Archon Group,
L.P., a Delaware limited partnership ("Archon"), in connection with certain
financing transactions of the Company which were consummated in 1996 and 1997
(together, the "1997 Financing"), the parties agreed to vote all their shares of
Common Stock in favor of the election to the Board of one nominee designated by
a majority of the Kojaian Investors ("Kojaian Nominee"), one nominee designated
by Archon ("Archon Nominee"), and all nominees designated by Warburg ("Warburg
Nominees"). The Voting Agreement provides that the Kojaian Nominee must be a
Kojaian Investor or an officer or partner of a firm affiliated with the Kojaian
Investors; each Warburg Nominee must be an officer of Warburg or one of its
venture banking affiliates; and the Archon Nominee must be an employee of Archon
or Goldman, Sachs & Co., or an affiliate of either firm. The right to designate
nominees under the Voting Agreement is conditioned upon beneficial ownership of
the following minimum numbers of shares of Common Stock: the Kojaian Investors
or a controlled transferee (1,250,000); Warburg (5,509,169); and Archon
(1,250,000). With respect to the 1997 election of directors, Sidney Lapidus,
Reuben S. Leibowitz and John D. Santoleri have been designated as Warburg
Nominees, C. Michael Kojaian has been designated as the Kojaian Nominee, and
Todd A. Williams has been designated as the Archon Nominee. See also "Security
Ownership of Certain Beneficial Owners and Management."
On December 9, 1996, in connection with the 1997 Financing, described below
under "Compensation Committee Interlocks and Insider Participation - 1997
Financing," Warburg agreed that Warburg representatives on the Board would
nominate Mr. Hanauer for election as a director of the Company at the 1997 and
1998 annual meetings of stockholders, and further agreed to vote all of its
shares of Common Stock in favor of Mr. Hanauer's election as a director.
To the Company's knowledge, Warburg, the Kojaian Investors, Archon and all
of the directors and executive officers of the Company intend to vote all of
their shares of Common Stock in favor of all nominees for director. Together,
they have the power, without the vote of other stockholders, to elect all
nominees to the Board.
The term of office of each nominee who is elected extends until the annual
stockholders' meeting in 1998 and until his successor is elected and qualified.
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NEIL YOUNG, 48, has served as President, Chief Executive Officer, and a
director of the Company since February 1996. He was elected Chairman of the
Board in April 1997. He has also served as a director and/or officer of certain
subsidiaries of the Company, including serving as a director of Grubb & Ellis
Management Services, Inc. ("GEMS"), the subsidiary engaged in property and
facilities management, formerly named Axiom Real Estate Management, Inc., since
September 1994, and as Executive Vice President since May 1997. Other positions
with the Company previously held include President of Commercial Brokerage
Operations (December 1995 to February 1996), President of the Eastern Region
(March 1994 to December 1995), President of the Midwest/Texas Region (January
1993 to January 1995), and Senior Vice President (January 1992 to February
1996). He served prior to 1993 as an Executive Vice President, Regional
Manager, District Manager and Sales Manager of the commercial brokerage division
in the Midwest Region. Mr. Young has been with the Company since 1984.
R. DAVID ANACKER, 62, has been Vice Chairman of Veriflo Corporation, an
industrial equipment manufacturing firm located in Richmond, California, since
November 1991. From November 1959 to November 1991, he was associated with ABM
Industries, Inc. ("ABMI"), a property maintenance service firm located in San
Francisco, California, serving as director from 1979 and as President and Chief
Executive Officer from March 1984 through October 1991. He has also served as a
consultant to ABMI. He served as a director of GEMS from August 1992 to July
1994. Mr. Anacker has served as a director of the Company since May 1994.
LAWRENCE S. BACOW, 46, is a professor at the Massachusetts Institute of
Technology ("M.I.T.") Center for Real Estate and the M.I.T. Department of Urban
Studies and Planning. He served as Chairman of the M.I.T. Faculty from June
1995 through June 1997. He joined the M.I.T. Faculty in 1977 and the M.I.T.
Center for Real Estate in 1983, serving as the director of the Center for Real
Estate from 1990 until 1992. Professor Bacow is also a director of La Salle
Street Fund, a real estate investment trust. From December 1987 to June 1990,
he was also a principal of Artel Associates, a company which provided investment
banking services to real estate companies. Professor Bacow has served as a
director of the Company since January 1993.
JOE F. HANAUER, 60, has been a general partner of Combined Investments,
L.P., an investment management business located in Laguna Beach, California
whose investments include real estate, since December 1988. He served as
Chairman of the Board of the Company from January 1993 to April 1997, as
Executive Chairman from June 1994 to September 1994 and as Chief Executive
Officer from July 1994 to December 1995. Mr. Hanauer served as a director of
GEMS from June 1993 until April 1997, and served as a director and/or officer of
certain other subsidiaries of the Company from February 1993 to December 1995.
From February 1993 until July 1994, Mr. Hanauer, through Combined Investments,
L.P., also provided operational and management services to the Company. From
1977 to December 1988, Mr. Hanauer was associated with Coldwell Banker
Residential Group, Inc., serving as Chairman and Chief Executive Officer from
1984. He is also a director of MAF Bancorp, Real Select, Inc. and Regit, Inc.
Mr. Hanauer has served as a director of the Company since January 1993.
C. MICHAEL KOJAIAN, 35, the Kojaian Nominee, is President, a director and a
shareholder of the Kojaian Companies, a real estate investment firm
headquartered in Southfield, Michigan. He has also been a director, shareholder
and Executive Vice President and Treasurer of Kojaian Management Corporation, a
real estate investment and property management firm affiliated with the Kojaian
Companies, since January 1988. He is also a director of Flagstar Bancorp, Inc.
Mr. Kojaian was first elected as a director of the Company in December 1996 as a
representative of the Kojaian Investors.
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SIDNEY LAPIDUS, 59, a Warburg Nominee, is a Managing Director and member of
E.M. Warburg, Pincus & Co., LLC (and its predecessor) ("Warburg Pincus"), a
venture banking firm located in New York City. Warburg Pincus manages Warburg,
the Company's principal stockholder. Mr. Lapidus is also a general partner of
Warburg, Pincus & Co. ("WP"), a firm which acts as general partner of Warburg.
He has been associated with Warburg Pincus since 1967. Mr. Lapidus was first
elected as a director of the Company in February 1997 as a representative of
Warburg.
REUBEN S. LEIBOWITZ, 50, a Warburg Nominee, is a Managing Director and
member of Warburg Pincus, located in New York City. Mr. Leibowitz is also a
general partner of WP. He has been associated with Warburg Pincus since 1984.
He is also a director of Chelsea GCA Realty, Inc. and Pacific Greystone
Corporation. Mr. Leibowitz was first elected as a director of the Company in
January 1993 as a representative of Warburg.
ROBERT J. MCLAUGHLIN, 64, is President of The Sutter Group, a management
consulting firm located in Larkspur, California which he founded in 1982. Mr.
McLaughlin has served as a director of the Company since September 1994.
JOHN D. SANTOLERI, 34, a Warburg Nominee, has been a Managing Director and
member of Warburg Pincus, located in New York City, since January 1996, and
served as Vice President of Warburg Pincus from January 1995 to January 1996.
He has also been a general partner of WP since January 1996. From January 1992
to January 1995, Mr. Santoleri served as a Vice President of Warburg Pincus
Ventures, Inc., an affiliate of Warburg Pincus. He has been associated with
Warburg Pincus since June 1989. From June 1985 to June 1989, he was associated
with The Harlan Company, a New York-based real estate consulting firm, serving
as Vice President from September 1988 to June 1989. Mr. Santoleri also serves
as a director of Pacific Greystone Corporation. Mr. Santoleri was first elected
as a director of the Company in January 1993 as a representative of Warburg.
TODD A. WILLIAMS, 37, the Archon Nominee, has been Director of Portfolio
Management for Goldman, Sachs & Co. ("GS&Co."), an investment banking firm
located in New York City, since January 1993, and Vice President of GS&Co. since
May 1993. From June 1989 until January 1993, Mr. Williams served as an
associate of the Real Estate Investment Banking Group of GS&Co. He also has
served since September 1996 as a director of Archon, a real estate investment
firm located in Irving, Texas which is a principal stockholder of the Company
and an affiliate of GS&Co. In addition, he has served as Vice President,
Assistant Treasurer and Assistant Secretary of Archon Gen-Par, Inc., the general
partner of Archon, since September 1996. In addition to his role with Archon,
Mr. Williams also serves on the Investment Committee of the Whitehall Street
Real Estate Funds, a series of commingled funds sponsored by GS&Co. Mr.
Williams was elected as a director of the Company in January 1997 as a
representative of Archon.
INFORMATION CONCERNING EXECUTIVE OFFICERS
In addition to Mr. Young, the following are executive officers of the
Company:
DOUGLAS P. FRYE, 37, has served as President of the Company's Institutional
Services Group since July 1997. From March 1995 to July 1997 he served as
Director of the Institutional Services Group. He served as an investment broker
in the Rosemont, Illinois commercial office of the Company from April 1991 to
March 1995. From February 1989 to April 1991, he served as Vice
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President of Acquisitions for The Shidler Group, a real estate services firm
located in Chicago, Illinois. From September 1984 to February 1989, he
served as Investment Specialist in the Chicago commercial brokerage office of
the Company.
MICHAEL P. MCKIERNAN, 42, has served as President, Transaction Services for
the Central Region of the Company since July 1997. From October 1996 to July
1997, he served as President of the Eastern Region of the commercial brokerage
division of the Company. He also serves as an officer of certain subsidiaries
of the Company. Mr. McKiernan joined the Company in January 1989, serving as
Sales Manager of the Rosemont, Illinois commercial office from January 1993 to
October 1996, and as a broker prior to that time.
DONALD D. MORROW, 49, has served as President, Transaction Services for
the Western Region (and predecessor division) of the Company since October
1996. He also serves as an officer of certain subsidiaries of the Company.
Mr. Morrow has been associated with the Company since May 1977, serving as
Sales Manager of the Phoenix commercial office of the Company from June 1994
to October 1996, as District Manager of the San Diego commercial office from
June 1990 to June 1994, and as an investment broker in the Phoenix commercial
office prior to that time. He also served as director of the National
Investment Council of the Company from August 1994 to October 1996.
JOHN G. ORRICO, 41, has served as President, Transaction Services for the
Eastern Region of the Company since July 1997. From July 1994 through June
1997, he served as Senior Vice President and District Manager of the central
and northern New Jersey commercial offices of the Company. From May 1990
through May 1994, Mr. Orrico served as President of the Commercial Real
Estate Division of K. Hovnanian Investment Properties, Inc., a real estate
development firm located in Red Bank, New Jersey, and from September 1982 to
May 1990 he served as Executive Vice President of National Realty &
Development Corp., a real estate development firm located in Purchase, New
York.
BRIAN D. PARKER, 46, has been Senior Vice President and Chief Financial
Officer of the Company since October 1996. He also serves as a director
and/or officer of certain subsidiaries of the Company. From March 1986 to
October 1996, Mr. Parker was associated with The Balcor Company, the real
estate subsidiary of American Express Company, serving as Chief Financial
Officer and Senior Vice President from April 1995 to October 1996, and
serving in various other financial management positions prior to that time.
During his association with The Balcor Company, he also served as director of
several of its subsidiaries.
STEVEN F. POPE, 48, has been a Senior Vice President of the Company since
June 1994. He has also served as President of Grubb & Ellis Affiliates, Inc.,
the Company subsidiary which promotes the affiliation of real estate brokerage
firms with the Company, since December 1996. He was associated with the
Commercial Investment Real Estate Institute, a real estate professional society
and training firm located in Chicago, Illinois, serving as Executive Vice
President from November 1984 to June 1994.
STEVEN D. SCRUGGS, 51, has been President of the Company's Corporate
Services Group since October 1996. From January 1989 to October 1996, he was
associated with Jones Lang Wootton USA ("JLW"), a multi-national real estate
services firm located in New York City, serving as Managing Director and
Chairman of the Corporate and Advisory Services division of JLW from April
1994 to October 1996. He also served as President of JLW Capital Corp., a
broker-dealer subsidiary of JLW, from March 1992 to October 1996. From
October 1985 to December 1988, Mr. Scruggs served as Senior Vice President of
the consulting division of the Edward S. Gordon Company, Inc., a real estate
services firm located in New York City. From August 1981 to October
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1985, he served as Vice President of La Salle Partners, Inc., a real estate
services firm located in New York City.
ROBERT J. WALNER, 50, has been Senior Vice President, General Counsel and
Corporate Secretary of the Company since January 1994. He also serves as a
director and/or officer of certain subsidiaries of the Company, including
serving as a director of GEMS since May 1997 and as Vice President of GEMS since
January 1996. From August 1992 to January 1994, Mr. Walner was engaged in a
private law and consulting practice, and was of counsel to Lawrence Walner &
Associates, Ltd. in Chicago, Illinois, a law firm specializing in state and
federal class action litigation on a national basis. From November 1979 to
August 1992, he was Senior Vice President, General Counsel and Corporate
Secretary of The Balcor Company, the real estate subsidiary of American Express
Company.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION
OF ALL NOMINEES TO THE BOARD OF DIRECTORS.
2. APPROVAL OF AN AMENDMENT TO
THE RESTATED CERTIFICATE OF INCORPORATION
THE PROPOSAL
At the Annual Meeting a vote will be taken on a proposal to authorize an
amendment (the "Amendment") to the Company's Restated Certificate of
Incorporation (the "Charter") to increase the number of shares authorized for
issuance thereunder from 25 million authorized shares of Common Stock to 50
million authorized shares of Common Stock, and to eliminate the existing
designation of preferences on the authorized Preferred Stock, $.01 par value
(the "Preferred Stock").
Preemptive rights will not attach to any of the newly authorized shares of
Common Stock following approval of this proposal.
The text of the proposed Amendment, which restates Article IV of the
Charter, is as follows:
The total number of shares of capital stock which the Corporation shall
have authority to issue is fifty-one million (51,000,000) shares, of which
fifty million (50,000,000) shares with a par value of $0.01 per share shall
be designated Common Stock, and of which one million (1,000,000) shares
with a par value of $0.01 per share shall be designated Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby expressly vested with authority to fix by
resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof (including, without
limitation, the voting powers, if any, the dividend rate, conversion
rights, redemption price, or liquidation preference), of any wholly
unissued series of Preferred Stock, to fix the number of shares
constituting any such series, and to increase or decrease the number of
shares of any such series (but not below the number of shares
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thereof then outstanding). In case the number of shares of any such series
shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution or
resolutions originally fixing the number of shares of such series.
BACKGROUND FOR THE PROPOSAL
INCREASE IN AUTHORIZED COMMON STOCK
The authorized capital of the Company currently consists of 25 million
shares of Common Stock and one million shares of Preferred Stock. At the close
of business on September 30, 1997, there were 19,583,212 outstanding shares of
Common Stock and no outstanding shares of Preferred Stock. In addition to its
outstanding shares, at such date, the Company had reserved 1,685,899 shares of
Common Stock for issuance upon exercise of outstanding warrants, 1,922,560
shares of Common Stock for issuance upon exercise of options granted under its
stock option plans, and 135,762 shares for issuance under the Company's 401(k)
plan. The Company has submitted for stockholder ratification at the Annual
Meeting a new employee stock purchase plan under which 750,000 shares of Common
Stock are to be authorized for purchase, and amendments to a stock option plan
increasing its authorized shares by 500,000 shares (included in the above
reserve for options). As a result, assuming approval of such proposals, the
Company currently has available for issuance, on a fully-diluted basis,
approximately only 922,567 shares of authorized Common Stock which are not
reserved for specific purposes. The Company has not increased the number of
shares of authorized capital stock since 1986.
The Board believes that the current authorized number of common shares is
inadequate for the Company's purposes. The Board believes that it would be
advantageous for the Company to have an increased number of common shares
available in order to raise additional working capital from time to time, to
enhance the Company's ability to attract and retain high-quality employees of
the Company who are in a position to contribute to its success by the issuance
of equity incentives to such employees, and to support the Company's ability to
consummate potential future acquisitions by the use of Common Stock as
consideration for the acquisitions. Other than as set forth above regarding
employee plans, the Board has no present plan or agreement to issue additional
common shares for a specific purpose.
ELIMINATION OF PREFERENCES ON PREFERRED STOCK
In 1993, the Company issued Preferred Stock to Warburg, Mr. Hanauer, and
The Prudential Insurance Company of America, in connection with certain
financing transactions entered into with the Company (the "1993 Financing").
The Charter was amended following stockholder approval of the 1993 Financing to
provide for the designation of preferences on the Preferred Stock issued at that
time. Prior to the 1993 amendment, the Board was authorized to designate
preferences, rights and other features of the Preferred Stock issued from time
to time.
In connection with the 1997 Financing, all outstanding shares of Preferred
Stock were retired following their conversion to Common Stock or acquisition by
the Company. The Board believes that it is in the best interests of the Company
and its stockholders to eliminate the existing designation of preferences in the
Charter and restore the Board's authority to designate the preferences, rights
and other features of any Preferred Stock to be issued in the future. At the
date of this proxy statement, the Board does not anticipate, and has no plans
to, issue any Preferred Stock. Eliminating the existing preferences
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will maximize the Board's flexibility to issue Preferred Stock should such
issuance be advantageous for the Company.
POTENTIAL DILUTION; OTHER EFFECTS
There are certain potential adverse effects which may result from
increasing the Company's authorized capital as proposed.
The issuance of additional shares of Common Stock would result in dilution
of the voting power of the existing stockholders.
Once the Company's authorized capital is increased, the Company's
stockholders will have a very limited ability to vote upon either the manner in
which the additional shares of Common Stock are issued or sold, or to whom those
shares are sold or exchanged, unless stockholder consent is required under
Delaware law (e.g., certain merger transactions) or other regulatory
requirements, or sought by the Board at its discretion.
While the proposed Amendment is not intended to deter or prevent a change
in control of the Company, having a large pool of Common Stock available for
issuance at the discretion of the Board following approval of the Amendment
may render more difficult or discourage (i) an attempt to take control of the
Company through a merger, tender offer, proxy contest or other means, (ii)
the assumption of control by a new holder of a large block of the Company's
shares, or (iii) the removal of incumbent management. The Board's actual or
threatened issuance of large blocks of Common Stock to the Board, its
affiliates or persons "friendly" to the Board could defeat such efforts.
These factors should be considered by the stockholders in voting on the
proposed Amendment.
EFFECTIVE DATE OF THE AMENDMENT
If the Amendment is approved by the stockholders at the Annual Meeting, it
will be promptly filed with the Delaware Secretary of State and will become
effective as of the date of filing.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE AMENDMENT TO THE CHARTER.
3. RATIFICATION OF THE GRUBB & ELLIS EMPLOYEE STOCK PURCHASE PLAN
THE PROPOSAL
A new Grubb & Ellis Employee Stock Purchase Plan (the "Stock Plan") was
adopted by the Board of Directors, subject to stockholder approval, on June 20,
1997. The Stock Plan provides for the purchase of up to 750,000 shares of the
Common Stock ("Shares") by employees of the Company at a discount from market
price. The Stock Plan provides for payments for the stock to be made through
direct payroll deductions.
9
<PAGE>
BACKGROUND FOR THE PROPOSAL
The Company sponsored an employee stock purchase plan from 1987 until June
30, 1997, when the plan expired. Approximately 550,000 shares were purchased
under the plan. The Board believes that having an employee stock purchase plan
is an important element in attracting and retaining high-quality employees for
the Company. Having such a plan is also a significant way to motivate employees
to perform in the best interests of the Company and its stockholders, because it
aligns employees' interests with those of the stockholders and gives employees a
stake in the success of the Company.
DESCRIPTION OF THE STOCK PLAN
The following summary of the Stock Plan is qualified in its entirety by the
complete text of the plan, copies of which have been filed with the Securities
and Exchange Commission and which may also be obtained from the Company by any
stockholder.
All regular employees of the Company and its subsidiaries who work at least
20 hours per week are eligible to participate in the Stock Plan. The Stock Plan
is intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code").
The Stock Plan is administered by the Benefits Committee of the Company
(the "Committee"), which is composed of members of management. The Stock Plan
is implemented by sequential offering periods of three months' duration (each of
which is referred to herein as an "Offering Period"), commencing on the first
day of each of the Company's fiscal quarters; except that the first Offering
Period commenced August 1, 1997 and will extend until December 31, 1997. If the
Stock Plan is not ratified, the employees' contributions to the purchase of
stock will be refunded, and no stock will be purchased on December 31, 1997.
At the beginning of each Offering Period, employees may elect to
participate in the Stock Plan by authorizing payments of up to 15% of their base
pay and commissions. An employee may withdraw from participation at any time.
Withdrawal during an Offering Period is effected by giving notice to the Company
by the 15th day of the last month of such Offering Period. No employee is
entitled to purchase in any year shares of Common Stock having a value of more
than $25,000, and no employee may purchase Shares under the Stock Plan if, after
giving effect to such purchase, such employee would own 5% or more of the
outstanding Common Stock. Shares will be purchased automatically on the last
day of each Offering Period, at 85% of the lower of the fair market value of
such Shares at the first day or the last day of each Offering Period. The fair
market value, as defined in the Stock Plan, is the average of the closing prices
of the Company's Common Stock on the New York Stock Exchange Composite Tape for
the five preceding trading days.
In the event that any right to purchase Shares outstanding under the Stock
Plan expires or is terminated for any reason, the Shares allocated for purchase
under such right will return to the pool of Shares available for purchase under
the Stock Plan. Termination of a participant's employment for any reason,
including retirement, death or disability, terminates the participant's
participation in the Stock Plan. In such event, or in the event that a
participant withdraws from the Stock Plan, the payments credited to the
participant's account will be returned to the participant (or the participant's
personal representative), and the participant's rights under the Stock Plan will
terminate.
The Stock Plan will continue until all shares allocated for the plan have
been issued, or until the earlier termination by the Board. The Board may amend
the Stock Plan, except that any amendment
10
<PAGE>
which would a) change the number of Shares issuable under the plan, b) change
the designation of corporations whose employees may be offered participation
in the Stock Plan, or c) change the plan in a way to disqualify it under
Section 423(b) of the Code, must be approved by stockholders.
ADJUSTMENTS TO THE SHARES SUBJECT TO THE STOCK PLAN
If any change is made in the Common Stock (through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination of
shares, exchange of shares, change in corporate structure or otherwise),
appropriate adjustments will be made as to the maximum number of Shares subject
to the Stock Plan and the number of Shares and price per Share to be purchased
at the end of the Offering Period then in effect.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK PLAN
The Stock Plan is neither a qualified pension, profit sharing or stock
bonus plan under Section 401(a) of the Code, nor an "employee benefit plan"
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The following summary is for general information
only and is limited to a discussion of federal income tax consequences of
participation in the Stock Plan as described, based upon the Code, regulations
thereunder, rulings and decisions now in effect, all of which are subject to
change. The summary does not discuss all aspects of income taxation that may be
relevant to a particular participant in light of his or her personal
circumstances.
No taxable income results to a participant at the time of the "grant of a
plan option" (the beginning of an Offering Period in which an employee is
participating in the Stock Plan) or at the time of purchase of the Shares at
the end of the Offering Period (the "date of exercise"). If the Shares
purchased are not sold during the prescribed holding period (two years from
the date of grant and one year from the date of exercise), the lesser of (1)
the excess of the fair market value of the Shares at the time of sale over
the purchase price or (2) the excess of the fair market value of the Shares
at the time the plan option was granted over the purchase price will be
reportable as ordinary income in the year of sale. This amount of ordinary
income is to be added to a participant's purchase price for the purpose of
determining any additional long-term capital gain on sale. No capital loss
will be realized unless the stock is sold for less than the purchase price.
There will be no corresponding tax deduction to the Company.
If the Shares are sold before the end of the prescribed holding period (a
"disqualifying disposition"), the employee must report as ordinary income in
the year of sale, and the Company may deduct as a business expense, the
excess of the fair market value of the Shares on the date of exercise over
the option price. This amount of ordinary income is to be added to a
participant's purchase price for the purpose of determining any additional
capital gain or loss. The gain or loss will be short-term or long-term,
depending on whether the twelve-month holding period for long-term capital
gain or loss is satisfied. Upon a disqualifying disposition, it is possible
for an employee to have both ordinary income and capital loss. The Code
differentiates between ordinary income tax rates and the tax rates on capital
gains and losses.
OTHER INFORMATION
As of August 12, 1997, approximately 2,900 employees, including all of the
Company's executive officers, were eligible to participate in the Stock Plan,
and 214 employees signed up to participate. Non-employee directors may not
participate in the Stock Plan. Three executive officers have elected to
participate in the Stock Plan commencing with the first Offering Period,
including Mr.
11
<PAGE>
Walner. Because the price of the shares to be purchased will not be
established until the end of the Offering Period, and because benefits to be
received depend upon employees' decisions to participate throughout the
Offering Periods, the benefits to be received under the Stock Plan by the
foregoing persons is not determinable at the date of this proxy statement.
The closing market price of the Common Stock on the New York Stock Exchange
Composite Tape on September 30, 1997 was $14.5625 per share.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF
THE GRUBB & ELLIS EMPLOYEE STOCK PURCHASE PLAN.
4. RATIFICATION OF AMENDMENTS TO THE 1990 AMENDED AND RESTATED STOCK OPTION
PLAN
THE PROPOSAL
The Board has approved and is recommending that stockholders ratify two
amendments to the Company's 1990 Amended and Restated Stock Option Plan (the
"Plan") which would increase the number of shares of Common Stock authorized for
the grant of options.
The amendments to the Plan increase the authorized shares of Common Stock
for issuance under the Plan from 1,500,000 to 2,000,000 shares. The Board
approved one amendment effective February 1, 1997 increasing the authorized
shares for the Plan by 300,000 shares, and the second amendment, effective June
20, 1997, increasing such shares by an additional 200,000 shares (the
"Amendments").
BACKGROUND FOR THE PROPOSAL
The Board believes that stock options provide an important incentive in
attracting and retaining key employees and associates of the Company. Under the
Plan, as of August 12, 1997, options to purchase 42,106 shares had been
exercised, and, subject to stockholder ratification of the Amendments, there
were outstanding options to purchase 1,794,820 shares and 163,074 shares
remained available for the grant of options. The Board believes that the
recipients of options granted under the Plan which are subject to stockholder
ratification of the Amendments are individuals in positions to make significant
contributions to the Company. In addition, the Company believes that the
balance of shares available for the Plan will be an important recruitment tool
for the Company.
DESCRIPTION OF THE PLAN
The following summary of the Plan and the Amendments is qualified in its
entirety by the complete text of the Plan and Amendments, copies of which
have been filed with the Securities and Exchange Commission and which may
also be obtained from the Company by any stockholder.
Under the Plan, "incentive stock options," as defined in the Code, or
non-qualified options, which do not qualify for treatment as incentive stock
options, may be granted to key employees, including executive officers, and
non-management directors who are not members of the Compensation Committee.
The Plan provides that the Company may extend eligibility to independent
contractors
12
<PAGE>
associated with the Company who are not directors under certain conditions, but
the Company has not yet done so. The Plan is administered by the Board, which
may delegate administration to a committee of the Board but has not done so.
The Board is authorized, among other powers, to determine the persons to whom
options will be granted, the number of option shares to be granted, and the
exercise price, term and vesting requirements of options, subject to the terms
of the Plan. Each option has a term no longer than ten years from the date of
grant, except that no incentive stock option granted to an optionee who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company ("Ten-Percent Holder") at the date of grant may be
exercisable more than five years after the date of grant. The exercise price of
each incentive stock option granted must be 100%, and of each non-qualified
option may be from 50% to 100%, of the fair market value per share of the Common
Stock on the date of grant, as set by the Board, subject to the requirement that
the exercise price of incentive stock options granted to a Ten-Percent Holder
must not be less than 110% of the fair market value per share at the date of
grant. The aggregate exercise price is payable in cash, by delivery of Common
Stock, or by a combination of both. Vesting accelerates upon certain conditions
related to changes of control of the Company or at the discretion of the Board.
No incentive stock options may be granted after May 16, 2000 under the Plan. No
option granted under the Plan may be assigned or transferred by the optionee
except upon death. During the lifetime of the optionee, the option may be
exercised only by him or her. The Plan will terminate upon issuance of all
shares reserved for the Plan or earlier upon termination by the Board.
ADJUSTMENTS TO THE SHARES SUBJECT TO THE PLAN
The Plan provides for appropriate adjustments in the number and kind of
shares subject to the Plan and to outstanding options in the event of a stock
split, stock dividend or certain other types of recapitalizations.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
The Plan is neither a qualified pension, profit sharing or stock bonus plan
under Section 401(a) of the Code, nor an "employee benefit plan" subject to the
provisions of ERISA. The following summary is for general information only and
is limited to a discussion of federal income tax consequences of the grant, and
exercise by cash payment, of options granted under the Plan and the sale of
shares upon option exercise, based upon the Code, regulations thereunder,
rulings and decisions now in effect, all of which are subject to change. The
summary does not discuss all aspects of income taxation that may be relevant to
a particular participant in light of his or her personal circumstances.
INCENTIVE STOCK OPTIONS. There is no taxable event to either the Company
or the optionee at the date of grant or exercise of an incentive stock option;
however, the amount by which the fair market value of the shares at the time of
exercise exceeds the option price will be an "item of tax preference" for the
optionee for purposes of alternative minimum tax. The amount realized by an
optionee upon the sale of stock issued on exercise of an incentive stock option
over the aggregate exercise price of the shares is taxable as long-term capital
gain, and no deduction is available to the Company, provided that the sale
occurs at least two years from the date of grant and at least one year from the
date of exercise of the option ("Holding Period"). If an optionee sells the
shares acquired through exercise of the option prior to the end of the Holding
Period, ("disqualifying disposition"), then the optionee will recognize ordinary
income to the extent that the lower of the fair market value of the shares at
the date of exercise or the sales price exceeds the exercise price, and the
Company has a corresponding tax deduction. The Company will be required to
withhold taxes on such ordinary income realized by an optionee who is an
13
<PAGE>
employee in order to be entitled to the tax deduction. Any additional gain
realized upon sale would be taxable as capital gain.
NON-QUALIFIED STOCK OPTIONS. With respect to non-qualified options, there
is no taxable event to either the Company or the optionee at the date of grant.
Upon exercise of an option under the Plan, the optionee will realize ordinary
income based upon the difference between the fair market value of the underlying
Common Stock at the date of exercise and the exercise price, and the Company
will have a corresponding tax deduction. The Company will be required to
withhold taxes on the ordinary income realized by an optionee who is an employee
upon exercise of non-qualified stock options in order to be entitled to a
deduction. An optionee's basis for the stock for purposes of determining his
gain or loss on the subsequent disposition of the shares generally will be the
fair market value of the underlying Common Stock on the date of the exercise of
the option. Such gain or loss upon sale will be treated as short- or long-term
capital gain or loss depending upon the holding period.
The Code differentiates between ordinary income tax rates and the tax rates
on capital gains and losses.
OTHER INFORMATION
Approximately 100 persons would be considered "key employees," including
all of the executive officers of the Company, and therefore eligible for the
grant of options under the Plan, along with seven eligible non-employee
directors. The closing market price of the Common Stock on the New York Stock
Exchange Composite Tape on September 30, 1997 was $14.5625 per share.
NEW PLAN BENEFITS TABLE
The following table shows the determinable benefits that will be received
by each of the designated persons or groups under the Plan if the proposed
Amendments to the Plan set forth in this proxy statement are approved.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1990 AMENDED AND RESTATED STOCK OPTION PLAN
-------------------------------------------
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF UNITS
----------------- ------------------- ---------------
<S> <C> <C>
Neil Young
Chairman and Chief Executive Officer -- --- 0
Michael McKiernan
President, Transaction Services, Central Region --- 0
Donald D. Morrow
President, Transaction Services, Western Region --- 0
Steven Scruggs
President, Corporate Services Group --- 0
Robert J. Walner
Senior Vice President, General Counsel
and Corporate Secretary --- 0
Executive Group $ 5,312.50 50,000(2)
Non-Executive Director Group --- ---
14
<PAGE>
Non-Executive Officer Employee Group $945,612.50 296,546(3)
</TABLE>
- ------------
(1) Based on the closing price per share of the Common Stock on
September 30, 1997 of $14.5625 per share.
(2) On June 20, 1997, an executive officer was granted an option to purchase
50,000 shares of Common Stock at an exercise price of $13.50 per share,
subject to stockholder ratification of the Amendments. The exercise
price represents fair market value of the Common Stock at the date of
grant. The option vests in five, equal annual installments and expires
in eight years from the date of grant.
(3) Options to purchase 325,000 shares of Common Stock were granted to
non-executive employees of the Company during 1997, of which options to
purchase 296,546 shares are subject to stockholder ratification of the
Amendments, due to exhaustion of the previously authorized shares for
the Plan. The dates of grant and exercise prices of the options are as
follows: February 12, 1997 - 100,000 shares at $6.50 per share; June
20, 1997 - 185,000 shares at $13.50 per share; June 30, 1997 - 15,000
shares at $15.25 per share; and July 7, 1997 - 25,000 shares at $16.438
per share. The exercise price of each option granted represents fair
market value of the Common Stock at the date of grant. Each option
vests in five, equal annual installments and expires eight years from
the date of grant, except that options to purchase 15,000 shares granted
on June 20, 1997 vest in three, equal annual installments and expire
five years from the date of grant.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION
OF THE AMENDMENTS TO THE 1990 AMENDED AND RESTATED STOCK OPTION PLAN.
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of August 12, 1997,
concerning beneficial ownership of Common Stock by known beneficial holders
of more than 5% of the outstanding Common Stock, directors, named executive
officers, and all current directors and executive officers as a group.
Unless otherwise noted, the listed persons have sole voting and dispositive
powers with respect to the shares held in their names, subject to community
property laws if applicable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
--------------------- -------------------
<S> <C> <C>
Warburg, Pincus Investors, L.P. 10,443,339(2)(7) 50.1%
466 Lexington Avenue
New York, NY 10017
Archon Group, L.P. 2,505,200(3) 12.8%
600 Las Colinas Blvd., Suite 1980
Irving, TX 75039
Neil Young 141,798(4) *
R. David Anacker 18,000(4) *
Lawrence S. Bacow 10,800(4)(5) *
Joe F. Hanauer 974,040(4)(5)(6)(7) 4.9%
C. Michael Kojaian 883,333(8) 4.5%
Sidney Lapidus 0(2) --
Reuben S. Leibowitz 0(2) --
Michael P. McKiernan 11,533(4) *
Robert J. McLaughlin 13,000(4) *
Donald D. Morrow 11,636(4) *
John D. Santoleri 0(2) --
Steven D. Scruggs 1,000(5) *
Robert J. Walner 85,819(4)(5) *
Todd A. Williams 0(3) *
All current directors and executive
officers as a group (18 persons) 2,201,820(4)(5) 10.9%
</TABLE>
*Does not exceed 1.0%.
- ------------------
(1) The percentage of shares of Common Stock beneficially owned by each
designated person assumes that no other person exercises currently
outstanding warrants, options or convertible securities.
(2) At August 12, 1997, Warburg beneficially owned 10,443,339 shares of
Common Stock through its ownership of (i) 9,105,981 shares of Common
Stock, and (ii) currently exercisable warrants to purchase an aggregate
of 1,337,358 shares of Common Stock. The sole general partner of
Warburg is Warburg, Pincus & Co., a New York general partnership ("WP").
16
<PAGE>
E.M. Warburg, Pincus & Co., LLC, a New York limited liability company
whose members are substantially the same as the general partners of WP
("Warburg Pincus"), manages Warburg. Lionel I. Pincus is the managing
partner of WP and the managing member of Warburg Pincus and may be
deemed to control both of them. WP, as the sole general partner of
Warburg, has a 20% interest in the profits of Warburg. Each of Messrs.
Lapidus, Leibowitz and Santoleri, directors of the Company, is a
Managing Director and member of Warburg Pincus and a general partner of
WP. As such, they may each be deemed to have an indirect pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) in an
indeterminate portion of the shares of Common Stock beneficially owned
by Warburg and WP. Messrs. Lapidus, Leibowitz and Santoleri disclaim
beneficial ownership in these shares.
(3) Shares reported for Archon include 5,200 shares of Common Stock held by
GS&Co. The Goldman Sachs Group, L.P. ("GS Group") is a general partner
of, and owns a 99% interest in, GS&Co. GS Group also owns a 94%
interest in Archon. The general partner of Archon is Archon Gen Par,
Inc. ("AGP"), which is a wholly owned subsidiary of GS Group. Mr.
Williams, an officer of GS&Co., an officer of AGP, and a director of
Archon, disclaims beneficial ownership of shares of Common Stock
beneficially owned by Archon. 5,000 shares of Common Stock held in
discretionary client accounts by GS&Co. are excluded.
(4) Includes options under the Company's stock option plans which are
currently or by October 11, 1997 will be exercisable for the following
numbers of shares: Mr. Young -128,000; Mr. Hanauer - 203,567; Mr.
Anacker - 10,000; Professor Bacow - 10,000; Mr. McKiernan - 10,700;
Mr. McLaughlin - 10,000; Mr. Morrow -10,700; Mr. Walner - 36,000; and
all current directors and executive officers as a group - 436,967.
(5) Includes 1,000 shares held by an immediate family member of Mr. Scruggs.
Includes shares held in trust for the benefit of immediate family
members as follows: Professor Bacow - 800; Mr. Hanauer - 407,435; Mr.
Walner - 35,000.
(6) At August 12, 1997, Mr. Hanauer beneficially owned 974,040 shares of
Common Stock, through his direct ownership of 14,497 shares of Common
Stock and an option granted under a Company stock option plan which is
exercisable for 203,567 shares; and through his ownership of the
following securities held in a trust of which Mr. Hanauer is the trustee
and he, his wife and children are beneficiaries: (i) 407,435 shares of
Common Stock and (ii) currently exercisable warrants to purchase an
aggregate of 348,541 shares of Common Stock.
(7) Pursuant to the rules promulgated under the Exchange Act, Warburg and
Mr. Hanauer may be deemed to be a "group," as defined in Section 13(d)
of such Act. Warburg and Mr. Hanauer do not affirm the existence of such
a group and disclaim beneficial ownership of shares of Common Stock
beneficially owned by any other party.
(8) At August 12, 1997, C. Michael Kojaian beneficially owned 883,333 shares
of Common Stock through his direct ownership of 833,333 shares of Common
Stock and through his joint ownership of 50,000 shares of Common Stock
with Mike Kojaian, his father, and Kenneth J. Kojaian, his brother
(together, the "Kojaian Investors"). Mike Kojaian also owns 833,334
shares of Common Stock, and Kenneth J. Kojaian owns 833,333 shares of
Common stock. Each of the Kojaian Investors is a director, shareholder
and officer of the Kojaian Companies and Kojaian Management Corporation,
Mike Kojaian serving as the President and Kenneth J. Kojaian serving as
the Executive Vice President and Secretary of Kojaian Management
Corporation. Pursuant to the rules promulgated under the Exchange Act,
the Kojaian Investors may be deemed to be a "group," as defined in
17
<PAGE>
Section 13(d) of such Act. Each Kojaian Investor does not affirm the
existence of such a group and disclaims beneficial ownership of shares
of Common Stock solely owned by any other party.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, chief accounting officer and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission and the New York Stock
Exchange reports of ownership and changes in ownership of Common Stock and other
equity securities of the Company. Such persons are required to furnish the
Company with copies of all such forms they file. To the Company's knowledge,
based solely upon review of copies of such reports furnished to the Company and
written representations that no other reports were required, during the year
ended June 30, 1997, such persons complied with all Section 16(a) filing
requirements applicable to them, except that Mr. Young filed a late Form 5 to
report one transaction not filed on a Form 4.
18
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for all persons who served as Chief
Executive Officer in the 1997 fiscal year and for each of the other four most
highly-compensated executive officers of the Company as of June 30, 1997,
compensation earned, including deferred compensation, for services in all
capacities with the Company and its subsidiaries for the fiscal years ended
June 30, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- -------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#)(1) ($)
------------------ ------ ------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Neil Young 1997 400,000 400,000 0 2,000(3)
President and Chief Executive Officer(2) 1996 300,000 0 500,000 2,000(3)
1995 260,000 17,000 40,000 1,000(3)
Michael P. McKiernan 1997 177,000 130,000 50,000 2,000(3)
President, Transaction Services, 1996 52,000 229,000 0 2,000(3)
Central Region(4) 1995 45,000 124,000 1,750 1,000(3)
Donald D. Morrow 1997 163,000 99,000 50,000 2,000(3)
President, Transaction Services, 1996 54,000 172,000 0 2,000(3)
Western Region(5) 1995 101,000 37,000 1,750 1,000(3)
Steven D. Scruggs 1997 146,000 83,000 100,000 100,000(6)
President, Corporate Services Group(6) 1996 -- -- -- --
1995 -- -- -- --
Robert J. Walner 1997 159,000 78,000 40,000 2,000(3)
Senior Vice President, General Counsel 1996 140,000 50,000 0 2,000(3)
and Corporate Secretary 1995 140,000 50,000 40,000 1,000(3)
</TABLE>
- ----------------
(1) The amounts represent options to purchase the designated numbers of
shares of Common Stock.
(2) Mr. Young was appointed President and Chief Executive Officer in
February 1996 and was elected Chairman of the Board in April 1997. He
served as President of Commercial Brokerage Operations of the Company
from December 1995 to February 1996, and prior to that time as Senior
Vice President and President of the Eastern Region of the Company.
(3) Represents Company contributions to the 401(k) plan accounts of the
designated individuals for the 1996, 1995 and 1994 plan years, which are
on a calendar basis.
19
<PAGE>
(4) Mr. McKiernan was appointed President, Transaction Services, Central
Region, in July 1997. From October 1996 to July 1997 he served as
President of the Eastern Region, Commercial Brokerage Operations of the
Company. Prior to that time, he served as Sales Manager of a branch
office of the Company.
(5) Mr. Morrow has served as President, Transaction Services, Western Region
(and predecessor division) of the Company since October 1996. Prior to
that time, he served as Sales Manager of a branch office of the Company.
(6) Mr. Scruggs became employed with the Company in October 1996. "All
Other Compensation" refers to a signing bonus he received when hired.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- -------------------------------------------------------------------------------------- ------------------------
NUMBER OF PERCENT
SECURITIES OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED(2) EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME (#) FISCAL YEAR ($/SH) DATE ($) ($)
- --------------------- ------------ ------------ --------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Neil Young 0 -- -- -- -- --
Michael P. McKiernan(3) 50,000 6.25% $4.00 Oct. 9, 2004 $ 95,491 $228,718
Donald D. Morrow(3) 50,000 6.25% $4.00 Oct. 9, 2004 $ 95,491 $228,718
Steven D. Scruggs(3) 100,000 12.50% $4.25 Oct. 20, 2004 $202,919 $486,025
Robert J. Walner (3) 40,000 5.00% $3.375 July 25, 2004 $ 64,456 $154,384
</TABLE>
(1) The potential realizable value is calculated from the market price per
share on the date of grant, assuming the Common Stock appreciates in
value at the stated percentage rate from the date of grant of an option
to the expiration date. The exercise prices of the options set forth in
the table were equal to the market prices on the dates of grant. Actual
gains, if any, are dependent on the future market price of the Common
Stock. The closing market price of the Common Stock on the New York
Stock Exchange Composite Tape on September 30, 1997 was $14.5625 per
share.
(2) The amounts represent options to purchase the designated numbers of
shares of Common Stock granted, at exercise prices based upon the fair
market value on the dates of grant, under the Plan. Each of the options
vests in five equal, annual installments from the dates of grant, and
expires eight years from the date of grant. Vesting accelerates upon
certain conditions related to changes of control of the Company or at
the discretion of the Board.
(3) The options of Messrs. McKiernan and Morrow were granted on October 10,
1996, Mr. Scruggs' option was granted on October 21, 1996 and Mr.
Walner's option was granted on July 26, 1996.
20
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT
EXERCISE OPTIONS/SARS AT FY-END(#) FY-END($)
NAME (#) VALUE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------- ----------- ----------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Neil Young -- -- 125,000/430,000 $1,604,125/$5,547,750
Michael P. McKiernan -- -- 700/51,050 $9,013/$576,019
Donald D. Morrow -- -- 700/51,050 $9,013/$576,019
Steven D. Scruggs -- -- 0/100,000 $0/$1,100,000
Robert J. Walner -- -- 28,000/72,000 $359,500/$893,000
</TABLE>
- ------------------
(1) The value of the in-the-money options at fiscal year-end was calculated
based on the closing price of the Common Stock as reported on the New
York Stock Exchange on June 30, 1997 ($15.25 per share).
COMPENSATION OF DIRECTORS
Only directors who are not employees of the Company and who are neither
holders of five percent or more of the Common Stock of the Company
("Five-Percent Holders") nor employees or affiliates of entities which are
Five-Percent Holders ("Outside Directors"), receive compensation for serving
on the Board and on its committees. Such compensation currently consists of
an annual retainer fee of $15,000 and a fee of $1,000 for each Board or
committee meeting attended. These fees are set by the Board.
In addition, under the 1993 Stock Option Plan for Outside Directors,
Outside Directors each receive an option to purchase 10,000 shares of Common
Stock upon the date of first election to the Board, with an exercise price
equal to market value on such date. Directors other than members of the
Compensation Committee are also eligible to receive stock options under the
1990 Amended and Restated Stock Option Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
In connection with the appointment of Neil Young as President and Chief
Executive Officer of the Company on February 22, 1996, the Company entered
into an employment agreement with Mr. Young providing for his service in such
capacities for a term expiring in June 1999, with an option to extend the
term for an additional year. Pursuant to the agreement, Mr. Young received
an annual salary of $400,000 through June 30, 1997, which salary thereafter
increased to $425,000 per year. He is eligible to receive incentive
compensation for fiscal years 1997, 1998 and 1999 equal to 50% of his annual
salary, based upon achievement of certain levels of net income of the Company
("Formula"), which incentive compensation may be increased in the discretion
21
<PAGE>
of the Compensation Committee based upon such factors as the Compensation
Committee determines are relevant. Under the agreement, Mr. Young was
awarded an incentive payment of $400,000 for the 1997 fiscal year, one-half
of which was based upon the Formula and one-half of which was based upon the
Compensation Committee's recognition of Mr. Young's contribution to the
Company, including the increase in stockholder value. He also received,
under the agreement, a non-qualified option to purchase 450,000 shares of
Common Stock at an exercise price of $2.375 per share, which was the fair
market value of the Common Stock at the date of grant of the option. The
option expires ten years from the date of grant and vests in five, equal
annual installments, with the first installment vesting on December 31, 1996;
provided, that upon termination of Mr. Young's employment a) after June 29,
2000, or b) upon a material reduction in his responsibilities following an
event which results in a stockholder other than Warburg or its affiliates
owning more than 25% of the outstanding Common Stock, the vesting of any
unvested portion of such option will be accelerated. The agreement also
provides that in the event that the Company terminates the employment of Mr.
Young prior to expiration of the agreement for any reason, he will receive
the equivalent of one year's salary and benefits and a pro-rata share of the
incentive compensation.
Mr. Walner, Senior Vice President, General Counsel and Corporate
Secretary, is entitled to receive severance compensation in an amount equal
to up to nine months' salary and reimbursement of certain out-of-pocket
expenses under certain circumstances relating to the location required for
performance of his services, in the event that he resigns from employment
with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Reuben S. Leibowitz
(Chairman) and Lawrence S. Bacow. Neither of the members of the Compensation
Committee has served as an officer or employee of the Company.
Mr. Leibowitz is a Managing Director and member of Warburg Pincus, and a
general partner of WP, each of which are affiliates of Warburg. See also,
"Information About the Nominees for Director" and "Security Ownership of
Certain Beneficial Owners and Management" above. Warburg, the principal
stockholder of the Company, entered into a number of transactions with the
Company related to the 1997 Financing which are described below.
1997 FINANCING.
In October 1996, Warburg purchased from The Prudential Insurance Company
of America ("Prudential") all of the outstanding promissory notes, 130,233
shares of Junior Convertible Preferred Stock, $.01 par value ("Junior
Preferred Stock") convertible into 2,322,067 shares of Common Stock, and
warrants to purchase 350,000 shares of Common Stock which had been issued by
the Company to Prudential (the "Prudential Securities"), for $23 million plus
accrued and unpaid interest on the notes. The notes consisted of a) $10
million principal amount of 9.90% Senior Notes (the "Senior Notes"); b) $10.9
million principal amount of "payment-in-kind" notes ("PIK Notes"), at an
interest rate of 10.65% per annum; c) $2.2 million principal amount of PIK
Notes at an interest rate of 11.65% per annum; and d) a $5 million revolving
credit note with an interest rate per annum of 2.5% above LIBOR ("Revolving
Note"). Prudential retained 397,549 shares of Common Stock, and 19,767
shares of Junior Preferred Stock, and agreed to convert its Junior Preferred
Stock to Common Stock in the event that Warburg converted shares of Senior
Convertible Preferred Stock, $.01 par value ("Senior Preferred Stock") to
Common Stock.
Concurrently with the sale to Warburg, Warburg granted to the Company an
option, expiring in April 1997, to purchase the Prudential Securities from
Warburg at Warburg's cost, plus interest of 10% per annum, increasing to 12%
per annum in February 1997 ("First Option"). In consideration of the grant
22
<PAGE>
of the First Option, the Company agreed to extend the expiration dates of
warrants to purchase an aggregate of 1,012,358 shares of Common Stock, then
held by Warburg from January 29, 1998 to January 29, 2002.
In December 1996, the Company sold 2.5 million shares of Common Stock to
the Kojaian Investors for a purchase price of $10 million. The proceeds were
used by the Company to purchase from Warburg and then retire the PIK Notes
and the 130,233 shares of Junior Preferred Stock held by Warburg for a price
of $10 million plus accrued interest of approximately $69,000. Warburg and
Mr. Hanauer thereupon converted all Senior Preferred Stock held by them to
4,828,548 shares and 339,629 shares of Common Stock, respectively.
Prudential converted its Junior Preferred Stock to 352,447 shares of Common
Stock. In connection with these transactions, Warburg retained warrants to
purchase an aggregate of 325,000 shares of Common Stock, and Warburg
transferred to Mr. Hanauer warrants to purchase an aggregate of 25,000 shares
of Common Stock, which Warburg had received from Prudential. In addition,
contingent warrants to purchase an aggregate of 38,410 shares of Common Stock
held by Mr. Hanauer's family trust were cancelled, and warrants to purchase
an aggregate of 323,541 shares of Common Stock held by Mr. Hanauer's family
trust were amended to extend the expiration date to January 29, 2002, and to
conform to the anti-dilution provisions in the other outstanding warrants.
Warburg granted to the Company a second option, expiring in April 1997
(subject, under certain circumstances, to extension to June 1997), to
purchase the Senior Notes and the Revolving Note for a purchase price of $13
million plus interest at the same rate as the First Option.
In January 1997, the Company sold 2.5 million shares of Common Stock to
Archon for a purchase price of $11.25 million. The proceeds were used, along
with additional cash, to purchase from Warburg and then retire the remaining
Senior Notes and Revolving Note for $13 million, plus accrued interest of
approximately $96,000.
The largest aggregate indebtedness of the Company to Warburg during the
1997 fiscal year was approximately $28.6 million of principal, which was
retired upon the Company's purchase of the Prudential Securities from Warburg
as described above.
WARBURG'S CURRENT OWNERSHIP OF SECURITIES OF THE COMPANY. Warburg
currently owns 9,105,981 shares of Common Stock. Warburg also owns warrants
to purchase an aggregate of 873,072 shares of Common Stock at an exercise
price of $3.50 per share, and warrants to purchase an aggregate of 464,286
shares of Common Stock at an exercise price of $2.375 per share.
VOTING AGREEMENT. Pursuant to the Voting Agreement described above in
"Information About the Nominees for Director," Warburg, the Kojaian Investors
and Archon agreed to vote all their shares of Common Stock in favor of the
election to the Board of one nominee designated by a majority of the Kojaian
Investors, one nominee designated by Archon, and all nominees designated by
Warburg. Messrs. Lapidus, Leibowitz and Santoleri have been designated as
Warburg Nominees with respect to the 1997 election of directors.
23
<PAGE>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
EXCHANGE ACT, THAT MIGHT INCORPORATE OTHER FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION COMMITTEE REPORT
AND THE SECTION ENTITLED, "STOCK PRICE PERFORMANCE" SHALL NOT BE INCORPORATED
BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on
executive compensation:
The Compensation Committee has developed and implemented compensation
policies, plans and programs which seek to reward achievement of positive
financial results for the Company, and thus enhance stockholder value.
In order to attract and retain outstanding executives with the potential
to contribute significantly to the success of the Company, the Compensation
Committee's policies have sought to compensate executives commensurate with
executives of equivalent-sized firms in terms of revenues and with similar
responsibilities, but not necessarily with reference to companies in the Peer
Group of companies referred to below under "Stock Price Performance."
The Compensation Committee's policies include the objective of assuring,
to the extent deemed appropriate in each case, qualification of each
executive's compensation for deductibility under Section 162(m) of the
Internal Revenue Code, which section generally imposes a $1 million limit on
deductibility for any taxable year of the compensation for each of the chief
executive officer and the other four most highly compensated executive
officers.
The compensation of Mr. Young, Chairman of the Board and Chief Executive
Officer, during the 1997 fiscal year, pursuant to his employment agreement,
consisted of an annual base salary of $400,000 and eligibility for additional
cash incentive compensation equal to 50% of his annual salary, based upon
achievement of certain levels of net income of the Company ("Formula"), which
incentive compensation may be increased in the discretion of the Compensation
Committee based upon such factors as the Compensation Committee determines
are relevant. In approving the compensation terms of his employment
agreement at the time of his appointment, the Compensation Committee took
into consideration its knowledge of competitive compensation programs for
chief executive officers and Mr. Young's level of responsibility and
expectations of future performance. Mr. Young was awarded an incentive
payment of $400,000 for the 1997 fiscal year, one-half of which was based
upon the Formula and one-half of which was based upon the Compensation
Committee's recognition of Mr. Young's contribution to the Company, including
the increase in stockholder value.
During the 1997 fiscal year, executive officers other than Mr. Young were
eligible to receive compensation consisting of three components: base salary,
cash incentive compensation and longer-term equity incentives. The
Compensation Committee reviewed with Mr. Young the compensation of all such
executive officers. Base salaries were approved on the basis of the
Compensation Committee members' knowledge of competitive salaries as
described above and judgments about the executives' individual past
performance, level of responsibilities and expectations of future
performance. In setting base salaries, the level of an executive's
responsibilities was given the greatest consideration. The eligibility to
receive cash incentive compensation was based upon achievement of targeted
24
<PAGE>
levels of total Company-wide, and applicable regional, revenue and
profitability of the Company and attainment of individual performance goals
related to productivity. No one factor was a prerequisite to receiving
incentive compensation. The cash incentive compensation paid was based upon
attainment of annual goals and was earned as a percentage of salary.
Stock options are designed to align the interests of executives with those
of stockholders, and further the growth, development and financial success of
the Company. The Compensation Committee believes that granting equity
incentives to the Company's management helps retain and motivate management. In
recommending grants of stock options by the Board, the Compensation Committee
takes into account the respective scope of responsibility and the anticipated
performance requirements and contributions to the Company of each proposed
optionee. In addition, stock options are awarded from time to time in
connection with hiring or promoting executives. The Compensation Committee's
decision to recommend the award of equity incentives at the time of hiring or
promotion is based upon the circumstances of a particular hiring or promotion,
including the level of responsibility of the executive. Six executive officers
who held office during the 1997 fiscal year received options to purchase Common
Stock of the Company, with exercise prices set at fair market value at the dates
of grant, vesting over five-year periods. The recommended number of shares
underlying the equity incentives provided to each executive was determined by
the Compensation Committee, primarily based upon the executive's level of
responsibility.
THE COMPENSATION COMMITTEE
Lawrence S. Bacow
Reuben S. Leibowitz
STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return on the S&P 500 Stock Index and a peer group of the Company ("Peer
Group"). The comparison assumes $100 was invested on June 30, 1992 in each
of the foregoing and that all dividends, if any, were reinvested.
METHOD OF SELECTION OF PEER GROUP. The Peer Group was formed by
selecting those public companies with the same company-level Standard
Industrial Classification ("SIC") Code as the Company as reported by Media
General Financial Services as of June 30, 1997, excluding firms whose primary
business activity involves ownership of real estate investments -- either
real estate investment trusts ("REIT's") or other entities (collectively,
"real estate investment companies"). The Company's company-level SIC Code is
6531, which relates to real estate agents and managers. The Company believes
that the stock price performance of a real estate investment company will be
typically quite different than that of a real estate services company like
the Company, because the sources of income, nature of assets (i.e., interests
in real property) and other factors are dissimilar. In addition, a REIT must
meet specific requirements regarding organizational structure and ownership,
distributions and other items, and is exempt from regular federal corporate
income taxes. The Peer Group companies so selected, in addition to the
25
<PAGE>
Company, are: CB Commercial Real Estate Services Group, Inc. ("CB
Commercial"); The DeWolfe Companies, Inc.; Kennedy-Wilson, Inc.; NHP
Incorporated ("NHP"); Vacation Break U.S.A., Inc. ("Vacation Break"); and
Westmark Group Holdings, Inc. The initial public offerings of the following
firms were consummated on the dates indicated: CB Commercial - November
1996; NHP - August 1995; and Vacation Break - December 1995. Prime
Management Group, Inc., included in the peer group presentation in the 1996
proxy statement, ceased public trading in its stock in April 1996, and
therefore was not reported by Media General at June 30, 1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Grubb & Ellis Company, S&P 500 and Peer Group
(Performance Results Through June 30, 1997)
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/30/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Grubb & Ellis $100.00 $ 54.55 $ 34.55 $ 30.91 $ 61.82 $249.09
S&P 500 $100.00 $113.65 $115.25 $145.30 $183.08 $246.61
Peer Group $100.00 $ 61.41 $ 32.21 $ 21.53 $ 33.36 $ 44.32
</TABLE>
*Total return assumes reinvestment of dividends on a quarterly basis.
RELATED PARTY TRANSACTIONS
The following are descriptions of certain transactions and business
relationships between the Company and its directors, executive officers, and
principal stockholders. The Company believes that the fees and commissions
paid to the Company as described below were comparable to those which would
have been paid to unaffiliated third parties. See also "Information About
the Nominees for Director" regarding the Voting Agreement and "Compensation
Committee Interlocks and Insider Participation" above.
Archon, a principal stockholder of the Company, is engaged in the
business of managing real estate assets held by partnerships sponsored by
affiliates of Archon. Mr. Williams, a director of the Company, is also a
director of Archon and an officer of Archon Gen-Par, Inc., the general
partner of Archon. During the 1997 fiscal year, Archon and its affiliates
paid the Company and its subsidiaries approximately $82,000 for management of
its portfolio properties, and approximately $330,000 for leasing and other
real estate commissions.
In addition, the Whitehall Street Real Estate Limited Partnerships
("Whitehall"), whose assets are primarily managed by Archon, has engaged the
Company from time to time to perform real estate services with respect to its
portfolio properties in the ordinary course of business. During the 1997
fiscal year, Whitehall paid the Company and its subsidiaries approximately
$73,000 for real estate commissions.
26
<PAGE>
The Kojaian Companies, Kojaian Management Corporation and their affiliates
(collectively, "KMC") are controlled by the Kojaian Investors. C. Michael
Kojaian, a director of the Company, is a director, shareholder and the President
of the Kojaian Companies; and a director, shareholder, and an Executive Vice
President and the Treasurer of Kojaian Management Corporation. KMC is engaged
in the business of investing in and managing real property both for its own
account and for third parties. During the 1997 fiscal year, KMC paid the
Company and its subsidiaries approximately $674,000 for management of its
portfolio properties, including leasing commissions, and was involved as a
purchaser in a transaction in which the Company received a brokerage commission
in the amount of approximately $388,000.
AUDITORS
The firm of Ernst & Young LLP, independent public accountants, served as
auditors of the Company for the 1997 and 1996 fiscal years. Although no
auditors have been appointed for the 1998 fiscal year, it is anticipated that
Ernst & Young LLP will be so selected. Representatives of Ernst & Young LLP
are expected to be present at the Annual Meeting and to be available to
respond to appropriate questions. They will have an opportunity to make a
statement if they desire to do so.
SUBMISSION OF STOCKHOLDER PROPOSALS
The proxy rules adopted by the Securities and Exchange Commission provide
that certain stockholder proposals must be included in the proxy statement
for the Company's annual meeting. The Company anticipates that the proxy
statement for next year's annual meeting will be mailed in October 1998 and
that the annual meeting will be held in November 1998. Therefore, in order
for a stockholder proposal to be considered for inclusion in next year's
proxy statement, it must be received by the Company no later than June 11,
1998.
REPORT TO STOCKHOLDERS
The Company's 1997 Annual Report to Stockholders, containing audited
financial statements for the fiscal year ended June 30, 1997, is being mailed
to stockholders with this proxy statement. STOCKHOLDERS MAY REQUEST A COPY
OF THE ANNUAL REPORT FROM INVESTOR RELATIONS, GRUBB & ELLIS COMPANY, 2215
SANDERS ROAD, SUITE 400, NORTHBROOK, ILLINOIS 60062.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Robert J. Walner
---------------------------
Robert J. Walner
Corporate Secretary
27
<PAGE>
PROXY GRUBB & ELLIS COMPANY PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a stockholder of Grubb & Ellis Company (the
"Company") and having received the Notice of Annual Meeting of Stockholders
dated October 9, 1997 and the accompanying Proxy Statement, appoints Robert
J. Walner and Blake W. Harbaugh and each or any of them as Proxy Holders,
with full power of substitution, to represent and vote all the shares of
Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held at the Northbrook Hilton Hotel, 2855 North
Milwaukee Avenue, Northbrook Illinois, in the Willow Room on Thursday,
November 20, 1997 at 9:00 a.m. or at any and all adjournments thereof, with
all powers which the undersigned would possess if personally present.
The shares represented by this Proxy will be voted in the manner directed
herein by the undersigned. If no direction is made, the Proxy will be voted
"FOR" all nominees listed under the "Election of Directors," all of whom have
been nominated by the Board of Directors, "FOR" the amendment to the Restated
Certificate of Incorporation, "FOR" the employee stock purchase plan, and
"FOR" the amendments to the stock option plan as more fully described in the
Notice of Annual Meeting of Stockholders and the accompanying Proxy
Statement. If any of the nominees listed should become unavailable prior to
the Annual Meeting, the Proxy will be voted for any substitute nominee or
nominees designated by the Board of Directors. The undersigned ratifies and
confirms all that said Proxy Holders or their substitutes may lawfully do by
virtue hereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENVELOPE PROVIDED.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
GRUBB & ELLIS COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board of Directors recommends a vote FOR all nominees for Directors
and FOR Proposals 2, 3 and 4.
1. ELECTION OF DIRECTORS --
NOMINEES: Neil Young, R. David Anacker,
Lawrence S. Bacow, Joe F. Hanauer,
C. Michael Kojaian, Sidney Lapidus,
Reuben S. Leibowitz, Robert J. McLaughlin,
John D. Santoleri, and Todd A. Williams
FOR WITHHOLD FOR ALL (Except Nominees written below)
/ / / / / / _____________________________
2. APPROVAL OF THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
FOR AGAINST ABSTAIN
/ / / / / /
3. RATIFICATION OF THE GRUBB & ELLIS EMPLOYEE STOCK PURCHASE PLAN
FOR AGAINST ABSTAIN
/ / / / / /
4. RATIFICATION OF AMENDMENTS TO THE 1990 AMENDED AND
RESTATED STOCK OPTION PLAN
FOR AGAINST ABSTAIN
/ / / / / /
5. In accordance with the judgments of the Proxy Holders,
upon such other business as may properly come before the
meeting and at any and all adjournments thereof.
[ ] Mark here for address change and indicate.
Signature:________________________Date:_________
Signature:________________________Date:_________
Please date and sign exactly as your name appears hereon. Joint owners
should each sign. The full title or capacity of any person signing for a
corporation, partnership, trust or estate should be indicated.
