<PAGE>
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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF GRUBB & ELLIS(R)]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Grubb & Ellis Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Grubb & Ellis
Company (the "Company") to be held at 10:00 a.m., local time, on Thursday,
November 18, 1999 in the Almond Room of the Northbrook Hilton Hotel, 2855
North Milwaukee Avenue, Northbrook, Illinois.
Stockholders of record at the close of business on September 27, 1999 (the
"Record Date") may vote at the Annual Meeting.
A list of stockholders entitled to vote at the meeting will be available for
inspection by any stockholder for any purpose related to the meeting, during
ordinary business hours, for ten days prior to the Annual Meeting, at the
corporate headquarters.
The purposes of the meeting are:
1. To elect nine (9) directors to the Board of Directors to serve for one
year and until their successors are elected and qualified; and
2. To transact any other business properly brought before the meeting.
The meeting will also provide an opportunity to review with you the business
of the Company during the 1999 fiscal year and give you a chance to meet your
directors.
Your vote is important to the Company. To be sure that your shares are
represented at the meeting whether or not you plan to attend, please complete,
sign and date the enclosed proxy card and mail it as soon as possible in the
enclosed reply 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.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Robert J. Walner
Robert J. Walner
Corporate Secretary
October 14, 1999
<PAGE>
GRUBB & ELLIS COMPANY
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
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<C> <S> <C>
QUESTIONS AND ANSWERS ABOUT VOTING 2
ELECTION OF DIRECTORS 5
A. Information About the Board and its Compensation 5
B. Information About the Nominees for Director 5
STOCK OWNERSHIP INFORMATION 9
A. Stock Ownership Table 9
B. Section 16(a) Beneficial Ownership Reporting Compliance 11
EXECUTIVE OFFICERS 11
A. Information About Executive Officers 11
B. Executive Compensation 14
C. Employment Contracts and Change of Control Arrangements 16
D. Compensation Committee Interlocks and Insider Participation 17
E. Compensation Committee Report on Executive Compensation 17
F. Grubb & Ellis Stock Performance 19
RELATED PARTY TRANSACTIONS 21
</TABLE>
1
<PAGE>
QUESTIONS AND ANSWERS ABOUT VOTING
<TABLE>
<C> <C> <S>
1. Q: What will I be voting on?
A: (1) the election of nine directors; and
(2) any other business properly before the meeting.
2. Q: How are directors nominated?
A: The Company's Bylaws provide that nominations for director are made by
written notice to the Secretary of the Company at least 14 days before
the stockholders' meeting at which directors are to be elected. The
Board of Directors nominated the candidates listed in this proxy
statement at a regular Board meeting, and submitted the required
notice. If someone is nominated and becomes unable to serve, then your
signed proxy card will authorize Robert J. Walner and Blake W.
Harbaugh, officers of the Company who are the proxy holders, to
nominate someone else.
3. Q: What other business will be acted upon at the annual meeting?
A: We know of no other business for the meeting. Your signed proxy card
will authorize the proxy holders to vote on your behalf in their
discretion on any other business that may properly be brought before
the meeting.
4. Q: Who is soliciting my vote and how much does it cost the Company?
A. The Board of Directors of the Company is asking you to vote, and
asking you to vote in favor of the nominees for director who were
selected by the Board and identified in this proxy statement. Morrow &
Co., Inc. was engaged to assist in distribution of the proxy materials
to holders of stock brokerage accounts, at a fee of $2,000 plus
expenses estimated at $2,000. Also, employees of the Company may
solicit proxies as part of their assigned duties, at no extra
compensation. The Company will pay the expenses related to this proxy
solicitation.
5. Q: What information will I receive with this solicitation?
A: You have received a proxy statement and an annual report to
stockholders for the 1999 fiscal year. Stockholders may request
another copy of the annual report from Investor Relations, Grubb &
Ellis Company, 2215 Sanders Road, Suite 400, Northbrook, IL 60062.
6. Q: Who has the right to vote?
A: Stockholders as of the close of business on September 27, 1999 can
vote. On that date, there were 19,941,232 outstanding shares of common
stock of the Company. Each share is entitled to one vote. A majority
of the outstanding shares is a quorum.
7. Q: How do I vote?
A: Mark the boxes that show how you want to vote, sign and date each
proxy card you receive and return it in the prepaid envelope. If you
return your signed proxy card but do not mark the boxes showing how
you wish to vote, your shares will be voted FOR the nominees listed on
the card. You can cancel your vote by:
. sending in another proxy card with a later date;
. attending the meeting and voting by ballot; or
. sending written notice to the Secretary of the Company.
</TABLE>
2
<PAGE>
<TABLE>
<C> <C> <S>
8. Q: What does it mean if I get more than one proxy card?
A: You should vote on each proxy card you receive. If you have an account
"on record" with Harris Trust and Savings Bank, our stock registrar
and transfer agent ("Harris Bank"), you will get a proxy card with a
reply envelope addressed to Harris. If you hold shares in the
Company's Employee Stock Purchase Plan, those shares will be listed
with any others you hold of record with Harris on the same proxy card.
For any accounts held in different ways, such as jointly with another
person or in trust, you will receive separate proxy cards. If you hold
shares in a stock brokerage account, you will receive a proxy card or
information about other methods of voting from your broker, and you
will send your vote to your broker according to the broker's
instructions. For Grubb & Ellis shares held in your 401(k) plan
account, you will receive voting instructions from the plan trustee,
Fidelity Management Trust Company. If you do not vote your 401(k) plan
shares, the trustee will not vote your shares unless required by law.
If you have more than one account at Harris Bank and wish to
consolidate the accounts, please call Shareholder Services at Harris
Bank; Ph. (312) 360-5100.
9. Q: Who will count the votes?
A: Harris Bank will act as inspector of election and tabulate the votes.
10. Q: What vote is needed to elect a director?
A: A vote in favor of a nominee by a plurality of the shares voting at
the meeting is needed to elect a director. Cumulative voting is not
permitted. Where a proxy card has been voted "abstain," "withhold
authority," or "broker non-vote" (shares held by a broker or in
nominee name which are signed and returned but for which the broker
has no authority to vote without instructions from its customer), the
shares are counted for quorum purposes but are not considered cast for
voting on a proposal or an election.
Do any stockholders have agreements about how they will vote their
11. Q: shares?
A: Yes. Here is some information about two voting agreements involving
certain principal stockholders and directors of the Company.
There is an agreement ("1997 Voting Agreement") dated January 24,
1997, among Warburg, Pincus Investors, L.P. ("Warburg"); C. Michael
Kojaian, a director of the Company, and Mike Kojaian (collectively,
the "Kojaian Investors"); and The Goldman Sachs Group, Inc., successor
to The Goldman Sachs Group, L.P. ("GS Group"), which was entered into
in connection with certain financing transactions of the Company in
1996 and 1997. Under this agreement, the parties agreed to vote all of
their shares of common stock for one director nominee designated by
the Kojaian Investors ("Kojaian Nominee"), one nominee designated by
GS Group ("GS Nominee"), and all nominees designated by Warburg
("Warburg Nominees"). The 1997 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 GS Nominee must be an employee of Archon Group,
L.P. or Goldman, Sachs & Co. ("Goldman Sachs"), or an affiliate of
either firm. The right to designate nominees under the 1997 Voting
Agreement is conditioned upon beneficial ownership of the following
minimum numbers of shares of common
</TABLE>
3
<PAGE>
<TABLE>
<C> <C> <S>
stock: the Kojaian Investors or a controlled transferee (1,250,000);
Warburg (5,509,169); and GS Group (1,250,000). For the 1999 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 GS Nominee.
A voting agreement entered into between Warburg and the Company in
December 1997 ("Warburg Voting Agreement") provides that any time a
matter is brought to a vote of the Company's stockholders and Warburg
holds more than 50% of the voting power of the Company's common stock
entitled to vote on the matter, then Warburg will vote its shares up
to 50% of such voting power (the "Limit") in its discretion, subject
to the 1997 Voting Agreement, and any shares in excess of the Limit
will be voted in the same proportion as the shares of common stock are
voted by other stockholders.
See also "Stock Ownership Information."
To the Company's knowledge, Warburg, the Kojaian Investors and GS
Group 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.
12. Q: How can I as a stockholder arrange for a proposal to be included in
next year's Company proxy statement?
A: For your proposal to be considered for inclusion in NEXT YEAR's proxy
statement, you can submit a proposal in writing to the Secretary of
the Company at corporate headquarters by June 17, 2000. If it is an
appropriate proposal under proxy rules of the Securities and Exchange
Commission ("SEC") and the Company's Bylaws, it will be included.
13. Q: Will my proxy confer discretionary authority to vote on shareholder
proposals next year?
A: If we receive notice of a stockholder proposal after June 17, 2000 and
before August 31, 2000, then the proposal need not be included in next
year's proxy statement and, the proxy holders would have discretionary
authority to vote on the matter only under certain circumstances if
the matter is discussed in the proxy statement. If we receive notice
of a stockholder proposal after August 31, 2000, then the proxy
holders can vote on such a proposal in their discretion based upon the
signed proxy cards which have been returned to us, but the matter will
not be discussed in the proxy statement and will not be listed on the
proxy card (because the submission deadline will have been missed).
14. Q: Who are the Company's auditors?
A: Ernst & Young LLP, independent public accountants, served as auditors
of the Company for the 1999 and 1998 fiscal years. It is anticipated
that Ernst & Young will be appointed as the Company's auditors for the
2000 fiscal year as well. Representatives of Ernst & Young are
expected to attend the annual meeting and will be available to answer
questions. They will have an opportunity to make a statement if they
wish.
</TABLE>
4
<PAGE>
ELECTION OF DIRECTORS
A. Information About the Board and its Compensation
The Board of Directors currently consists of eleven directors. Because
Lawrence S. Bacow and Thomas E. Meador have declined to stand for re-election
as directors, the number of directors will be reduced to nine. The Board held
six meetings during the fiscal year ended June 30, 1999. Each incumbent
director attended at least 75% of the meetings of the Board and any Board
committees on which he served, except Sydney Lapidus and Reuben S. Leibowitz.
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; and monitors the Company's accounting and the effectiveness
of internal controls, the internal audit function of the Company, and
compliance with certain aspects of the Company's conflicts-of-interest policy.
The current members of the Audit Committee are R. David Anacker, Chairman, and
Robert J. McLaughlin. The Audit Committee met four times during the 1999
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 certain stock option plans. The
current members of the Compensation Committee have been Reuben S. Leibowitz,
Chairman, and Lawrence S. Bacow. During the 1999 fiscal year, the Compensation
Committee met three times.
Compensation of Directors. Only outside directors (who are unaffiliated with
the Company as officers or representatives of principal stockholders) 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.
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. In addition, each outside director receives options to purchase
8,000 shares of common stock upon successive fourth-year anniversaries of
service. Directors other than members of the Compensation Committee are also
eligible to receive stock options under the 1990 Amended and Restated Stock
Option Plan.
B. 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.
5
<PAGE>
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.
The term of office of each nominee who is elected extends until the annual
stockholders' meeting in 2000 and until his successor is elected and
qualified.
Neil 50, has served as President, Chief Executive Officer,
Young and a director of the Company since February 1996. He
was elected Chairman of the Board in April 1997. He has
also served as Chief Executive Officer of Grubb & Ellis
Management Services, Inc. ("Management Services"), the
Company subsidiary which is engaged in property and
facilities management, since February 1998, Executive
Vice President from May 1997 to February 1998, and as a
director since September 1994. He also serves as a
director and/or officer of certain other subsidiaries of
the Company. 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 64, 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 Management Services from August 1992 to
July 1994. Mr. Anacker has served as a director of the
Company since May 1994.
Joe F. Hanauer 62, 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
Management Services 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
6
<PAGE>
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 and
homestore.com, Inc. Mr. Hanauer has served as a director
of the Company since January 1993.
C. Michael Kojaian 37, 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.
Sidney Lapidus 61, a Warburg Nominee, is a Managing Director and member
of E.M. Warburg, Pincus & Co., LLC (and its predecessor)
("Warburg Pincus"), a private equity investment 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 is also a director of Carbiner
International, Inc., Information Holdings, Inc., Journal
Register Company, Knoll, Inc., Lennar Corporation and
Radio Unica Communications Corp. Mr. Lapidus was first
elected as a director of the Company in February 1997 as
a representative of Warburg.
Reuben S. Leibowitz 52, a Warburg Nominee, is a Managing Director and member
of Warburg Pincus. 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 Lennar Corporation. Mr. Leibowitz was
first elected as a director of the Company in January
1993 as a representative of Warburg.
Robert J. McLaughlin 66, is President of The Sutter Group, a management
consulting firm located in Larkspur, California which he
founded in 1982. He is also Chairman of the Board of
Western Properties Trust. Mr. McLaughlin has served as a
director of the Company since September 1994.
John D. Santoleri 36, a Warburg Nominee, is a Managing Director and member
of Warburg Pincus. He is also a general partner of WP.
He has been associated with Warburg Pincus since June
1989. Prior 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
Radio Unica Communications Corp. Mr. Santoleri was first
elected as a director of the Company in January 1993 as
a representative of Warburg.
7
<PAGE>
Todd A. Williams 39, the GS Nominee, has been a Managing Director since
December 1997 within the Real Estate Principalling
Investment Area ("REPIA") of Goldman Sachs & Co., an
investment banking firm located in New York City which
is an affiliate of a principal stockholder of the
Company ("Goldman Sachs"), and a Vice President prior to
that time. He is responsible for portfolio management,
development/redevelopment and disposition of investments
of Whitehall Street Real Estate Funds, a series of funds
sponsored by Goldman Sachs ("Whitehall"), and the
Goldman Sachs Emerging Markets Fund. Prior to the
formation of REPIA in 1991, Mr. Williams served as an
associate of the Real Estate Investment Banking Group of
Goldman Sachs, in New York and Los Angeles. Mr. Williams
serves on the Whitehall Investment Committee and as a
director of Archon Group, L.P., Archon Financial,
Wellsford Commercial Properties Trust, Troon Golf Corp.,
and Bangkok Capital Alliance Co., Ltd. Mr. Williams was
elected as a director of the Company in January 1997 as
a representative of Goldman Sachs.
The Board unanimously recommends that the stockholders vote FOR
the election of all nominees to the Board of Directors.
8
<PAGE>
STOCK OWNERSHIP INFORMATION
A. Stock Ownership Table
The following shows the share ownership as of August 19, 1999 by known
beneficial holders of more than 5% of the Company's outstanding common stock,
directors, named executive officers, and all current directors and executive
officers as a group. Unless otherwise noted, the persons listed have sole
voting and disposition powers over the shares held in their names, subject to
community property laws if applicable.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Percent of
Beneficial Ownership Class(/1/) Voting Power(/2/)
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<S> <C> <C> <C>
Principal Stockholders:
- ----------------------------------------------------------------------------------
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Warburg, Pincus
Investors, L.P. 10,443,339(/3/) 49.1% 45.7%
The Goldman Sachs Group,
Inc. 2,500,000(/4/) 12.6% 12.6%
C. Michael Kojaian (also
a director) 1,536,855(/5/) 7.8% 7.4%(/5/)
Mike Kojaian 1,536,857(/5/) 7.8% 7.4%(/5/)
Robert Fleming Inc. 1,307,968(/6/) 6.6% 6.6%
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Directors:
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Neil Young (also CEO) 260,372(/7/) 1.3% *
R. David Anacker 8,000 * *
Lawrence S. Bacow 10,800(/8/) * *
Joe F. Hanauer 1,008,323(/7/)(/9/) 4.9% 2.1%
Sidney Lapidus 0(/3/) -- --
Reuben S. Leibowitz 7,000(/3/)(/8/) -- --
Robert J. McLaughlin 13,000(/7/) * --
Thomas E. Meador 3,334 * *
John D. Santoleri 0(/3/) -- --
Todd A. Williams 0(/4/) -- --
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Named Executive
Officers:
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Maureen A. Ehrenberg 34,730(/7/) * *
Douglas P. Frye 61,680(/7/) * *
John G. Orrico 39,102(/7/) * *
Steven D. Scruggs 31,296(/7/) * *
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All Current Directors
and Executive Officers
as a Group (18
persons): 3,153,4677(/7/)(/8/) 15.5% 10.5%
</TABLE>
- ---------------------
* Does not exceed 1.0%.
(1) The percentage of shares of Company common stock shown for each
designated person in this column assumes that such person, and no one
else, exercises currently outstanding warrants, options or convertible
securities.
(2) The percentage of voting power was determined by calculating the
percentage of common stock actually held by each person on August 19,
1999 in relation to the total number of outstanding shares of common
stock held by all stockholders on that date. In this method, no options
or warrants are counted either for that person or others. The Record Date
for purposes of voting at the 1999 Annual Meeting is September 27, 1999.
9
<PAGE>
(3) Warburg, Pincus Investors, L.P., 466 Lexington Avenue, New York, NY
10017. At August 19, 1999, Warburg beneficially owned 10,443,339 shares
of common stock through its ownership of 9,105,981 shares of common stock
and 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"). E.M. Warburg, Pincus
& Co., LLC, a New York limited liability company ("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. 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. Messrs. Lapidus, Leibowitz and Santoleri
disclaim beneficial ownership in these shares.
(4) The Goldman Sachs Group, Inc., 85 Broad Street, New York, NY 10004.
Shares reported for GS Group include 175,000 shares of common stock held
by Archon Group, L.P. ("Archon"). Archon is a majority-owned subsidiary
of GS Group. 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 Goldman Sachs, an officer of AGP, and a director of Archon,
disclaims beneficial ownership of shares of common stock beneficially
owned by Archon. 20 shares of common stock held in discretionary client
accounts by Goldman Sachs are excluded.
(5) C. Michael Kojaian and Mike Kojaian, The Kojaian Companies, 1400 North
Woodward Avenue, Suite 250, Bloomfield Hills, MI 48304. At August 19,
1999, C. Michael Kojaian beneficially owned 1,536,855 shares of common
stock through his direct ownership of 1,393,427 shares of common stock
and through his joint ownership of 143,428 shares of stock with Mike
Kojaian, his father (together, the "Kojaians"). Mike Kojaian beneficially
owned 1,536,857 shares of common stock through his direct ownership of
1,393,429 shares of common stock and through his joint ownership of the
above-referenced 143,428 shares. Pursuant to the rules promulgated under
the Exchange Act, the Kojaians may be deemed to be a "group," as defined
in Section 13(d) of such Act. Each of the Kojaians does not affirm the
existence of such a group and disclaims beneficial ownership of shares of
common stock solely owned by any other party. For purposes of calculating
voting power, the number of shares jointly owned was divided in half
between the two Kojaians.
(6) Robert Fleming Inc., 320 Park Avenue, 11th and 12th Floors, New York, NY
10022.
(7) Includes options under the Company's stock option plans which are
currently or by October 19, 1999 will be exercisable for the following
numbers of shares: Mr. Young - 257,000; Mr. Hanauer - 237,850;
Mr. McLaughlin - 10,000; Ms. Ehrenberg - 31,750; Mr. Frye - 36,250; Mr.
Orrico - 35,500; Mr. Scruggs -29,000; and all current directors and
executive officers as a group - 724,934.
(8) Includes 800 shares held jointly with Professor Bacow's son, but as to
which he disclaims beneficial ownership. Includes 2,000 shares owned by
Mr. Leibowitz' mother-in-law and wife, and 5,000 shares owned by a trust
in which the same relatives are trustees. Mr. Leibowitz disclaims
beneficial ownership of all 7,000 shares.
(9) At August 19, 1999, Mr. Hanauer beneficially owned 1,008,323 shares of
common stock, which consisted of the following: his direct ownership of
14,497 shares of common stock and an option granted under a Company stock
option plan which is exercisable for 237,850 shares; and his indirect
ownership of a) 307,435 shares of common stock and currently exercisable
warrants to purchase an aggregate of 348,541 shares of common stock held
in a trust of which Mr. Hanauer is the trustee and he, his wife and
children are beneficiaries; and b) 100,000 shares held by a charitable
remainder trust of which Mr. Hanauer and his wife are beneficiaries
during their lives, and his daughter is a trustee. Mr. Hanauer disclaims
beneficial ownership of the 100,000 shares held in the charitable
remainder trust, except to the extent of his pecuniary interest in them.
10
<PAGE>
B. Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors, executive
officers, the chief accounting officer and 10% stockholders ("Insiders") to
file with the SEC and the New York Stock Exchange reports showing their
ownership and changes in ownership of Company securities, and to send copies
of these filings to the Company. To our knowledge, based upon review of copies
of such reports we have received and based upon written representations that
no other reports were required, during the year ended June 30, 1999, the
Insiders complied with all Section 16(a) filing requirements applicable to
them, except that C. Michael Kojaian and Mike Kojaian each filed a Form 4
after its due date to report one transaction.
EXECUTIVE OFFICERS
A. Information About Executive Officers
Neil Young 50, 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. See
"Information About the Nominees for Director" above for
more information about his business experience.
Maureen A. Ehrenberg 40, has served as President of Management Services since
February 1998. She also serves as a director and/or
officer of certain subsidiaries of the Company. From
July 1997 to February 1998 she served as Central
Regional President of Management Services. From
September 1991 to June 1997, she was associated with
PREMISYS Real Estate Service Inc. ("PREMISYS"), a
property management firm headquartered in Houston,
Texas, serving as Regional Vice President for the
Midwest from June 1992, and as District Vice President
prior to that time. PREMISYS was acquired by Cushman &
Wakefield in September 1997. From January 1989 to
September 1991, Ms. Ehrenberg served as Regional Vice
President of the Midwest and West Regions of First
Office Management, a subsidiary of The Equity Group
located in Chicago, Illinois. From July 1986 to January
1989, she served as Vice President Asset Management for
Rubloff Inc. in Chicago, and from December 1983 to June
1986 she was associated with The Balcor Company, the
real estate investment subsidiary of American Express
located in Skokie, Illinois, serving, from latest to
earliest, as Director of Financial Training, District
Manager Trainee and Commercial Financial Analyst.
Douglas P. Frye 39, has served as President of the Company's
Institutional Services Group since July 1997 and as
Director of such Group from March 1995 to July 1997. He
served as Director of the Investment Properties Division
in the Rosemont, Illinois office of the Company from
April 1990 to March 1995. From November 1988 to April
1990,
11
<PAGE>
he served as Vice President of Acquisitions for The
Shidler Group, a real estate services firm located in
Chicago, Illinois. From September 1984 to November 1988,
he served as Investment Specialist in the Rosemont
office of the Company.
Steven J. Kaplan 48, has served as Executive Vice President and Chief
Operating Officer of the Company since August 1999. From
June 1994 to August 1999, he was associated with
Landauer Associates, Inc. ("Landauer"), serving as Chief
Executive Officer from January 1996, Chief Operating
Officer from January 1995 to January 1996 and General
Counsel prior to that time. Landauer was a real estate
valuation and consulting firm headquartered in Dallas,
Texas whose business was acquired by the Company in
August 1999. Prior to joining Landauer, Mr. Kaplan was
engaged in the private practice of law, specializing in
real estate transactions.
John G. Orrico 43, has served as President, Transaction Services for
the Company since February 1998, and as President of the
Eastern Region of the Company since July 1997. He also
serves as a director and/or officer of certain
subsidiaries of the Company. 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 48, has been Chief Financial Officer of the Company
since October 1996, has served as Executive Vice
President since February 1999 and as Senior Vice
President prior to that time. 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, a real estate
investment subsidiary of American Express located in
Skokie, Illinois, 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 D. Scruggs 53, has been President of the Company's Corporate
Services Group since October 1996. He also serves as an
officer of a subsidiary of the Company. 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
12
<PAGE>
served as President of JLW Capital Corp., a broker-
dealer subsidiary of JLW, from March 1992 to October
1996. In 1999, JLW combined with LaSalle Partners
Incorporated ("La Salle Partners"), a real estate
services firm located in New York City, to form Jones
Lang LaSalle Incorporated. 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 1985, he served as
Vice President of La Salle Partners.
Robert J. Walner 52, 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 Management
Services, serving as a director since May 1997 and as a
Senior Vice President since October 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 investment
subsidiary of American Express located in Skokie,
Illinois.
13
<PAGE>
B. Executive Compensation
The following table shows compensation earned, including deferred
compensation, for services in all capacities with the Company and its
subsidiaries for the fiscal years ended June 30, 1999, 1998 and 1997 for the
person who served as Chief Executive Officer for the 1999 fiscal year; and for
each of the other four most highly-compensated executive officers of the
Company. The bonuses for the 1999 fiscal year represent payments for the first
six months of the 1999 fiscal year for all persons except Mr. Young, who
received a bonus for the entire fiscal year. These other officers will be
eligible to receive bonuses for the final six months of the 1999 fiscal year,
which are expected to be paid by March 31, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------- ------------
Securities
Underlying All Other
Name and Principal Salary Bonus Options/SARs Compensation
Position(/1/) Year ($) ($) (#)(/2/) ($)(/3/)
----------------------------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Neil Young 1999 425,000 250,000 0 3,000
Chairman and Chief Executive 1998 425,000 270,000 0 3,000
Officer 1997 400,000 400,000 0 2,000
Maureen A. Ehrenberg 1999 250,000 150,000 12,000 3,000
President, Management
Services 1998 246,000 75,000 100,000 2,000
1997 -- -- -- --
Douglas P. Frye 1999 225,000 68,000 25,000 3,000
President, Institutional 1998 200,000 108,000 0 3,000
Services Group 1997 150,000 138,000 50,000 189,000
John G. Orrico 1999 244,000 150,000 12,000 3,000
President, Transaction
Services 1998 219,000 115,000 50,000 3,000
1997 177,000 130,000 50,000 2,000
Steven D. Scruggs 1999 250,000 52,000 0 3,000
President, Corporate 1998 250,000 115,000 0 3,000
Services Group 1997 146,000 83,000 100,000 100,000
</TABLE>
- ---------------------
(1) Ms. Ehrenberg was appointed President, Management Services in February
1998. Prior to that time, she served as Central Regional President of
Management Services. Mr. Orrico was appointed President, Transaction
Services in February 1998. He served as President, Transaction Services,
Eastern Region from July 1997 to February 1998.
(2) The amounts represent options to purchase the numbers of shares of common
stock indicated.
(3) Represents Company contributions made during each calendar year following
the 1998, 1997, and 1996 plan years (calendar years) to the 401(k) plan
accounts of the designated individuals, except as follows: with respect to
the 1997 fiscal year, Mr. Frye's compensation includes $187,000 in
commissions as well as a 401(k) contribution of $2,000, and Mr. Scruggs
received a signing bonus of $100,000 in connection with the commencement
of his employment in October 1996.
14
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price
Appreciation For
Individual Grants Option Term(/1/)
-------------------------------------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options/SARs Exercise
Options/SARs Granted to or Base
Granted(/2/) Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
-------------------- ------------ ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Neil Young 0 -- -- -- -- --
Maureen A. Ehrenberg 12,000 3.60% $8.94 9/17/08 $ 67,449 $170,929
Douglas P. Frye 25,000 7.49% $8.94 9/17/08 $140,519 $356,102
John G. Orrico 12,000 3.60% $8.94 9/17/08 $ 67,449 $170,929
Steven D. Scruggs 0 -- -- -- -- --
</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 on
October 11, 1999 was $5.8125 per share.
(2) The amounts represent options to purchase the specified numbers of shares
of common stock granted under Company stock option plans at exercise
prices based upon the fair market value on the dates of grant. The options
granted to Ms. Ehrenberg and Messrs. Frye and Orrico were granted on
September 17, 1998, and each vests in four equal, annual installments and
expires ten years from the date of grant. Vesting accelerates upon certain
conditions related to changes of control of the Company or at the
discretion of the Board.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs at
Shares Options/SARs at FY-End (#) FY-End ($)
Acquired on Realized -------------------------- ------------------------------
Name Exercise # ($) Exercisable/Unexercisable Exercisable/Unexercisable(/1/)
-------------------- ----------- -------- -------------------------- ------------------------------
<S> <C> <C> <C> <C>
Neil Young 0 -- 257,000/208,000 $687,938/$568,000
Maureen A. Ehrenberg 0 -- 23,750/88,250 $0/$0
Douglas P. Frye 0 -- 20,000/55,000 $8,750/$13,125
John G. Orrico 0 -- 32,500/79,500 $0/$0
Steven D. Scruggs 0 -- 29,000/60,000 $23,563/$48,750
</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, 1999 ($5.0625 per share).
15
<PAGE>
C. Employment Contracts and Change of Control Arrangements
CEO Employment Agreement. When Neil Young was appointed President and Chief
Executive Officer of the Company on February 22, 1996, the Company entered
into an employment agreement with him, 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. The agreement was extended through June 2000. Under
the agreement, Mr. Young received an annual salary of $400,000 for the 1997
fiscal year, $425,000 for each of the 1998 and 1999 fiscal years, and
currently receives an annual salary of $450,000. He has been eligible to
receive bonuses 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"), and the bonuses may be increased in the discretion of the
Compensation Committee based upon such factors as the committee decides are
relevant. Mr. Young was awarded bonuses of $250,000, $270,000 and $400,000 for
the 1999, 1998 and 1997 fiscal years, respectively, representing in each case
50% of his salary based upon the Formula and/or an amount in recognition of
Mr. Young's contribution to the Company. His incentive compensation program
for the 2000 fiscal year is subject to a minimum of $200,000 and is otherwise
based upon Company performance with respect to its EBITDA margin, net income
and revenue. In 1996, 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 as extended for
any reason, he will receive the equivalent of one year's salary and benefits
and a pro-rata share of his bonus, and if the Company does not renew Mr.
Young's employment agreement beyond its expiration in June 2000, he will
receive the equivalent of one year's salary.
Executive Change of Control Plan. Pursuant to a plan approved by our Board of
Directors effective May 10, 1999, our executive officers are eligible to
receive certain compensation and benefits if their employment with the Company
is affected by a change of control of the Company. A change of control, for
purposes of the plan, includes the acquisition of 25% or more of our
outstanding common stock, a change of a majority of directors on the Board, a
merger, a sale or liquidation of the Company, subject to certain exceptions
related to current principal stockholders and directors; or a reduction in the
ownership by current principal stockholders to under 45%. If a change of
control occurs, we have committed to employ each covered executive for two
years, or otherwise to compensate the executive if his or her employment is
terminated without cause during that period. The plan gives each executive
officer the opportunity to terminate employment during a 30-day window period
after six months have elapsed from a change of control, and receive benefits
under the plan. During the two-year employment period, each covered executive
is to receive compensation and benefits commensurate with levels existing
before the change of control. Upon termination of employment within the two-
year period other than for cause, the executive will receive
16
<PAGE>
compensation equal to two years' salary and two years of the highest previous
bonus; provided that if an executive resigns during the window period without
his or her employment having been adversely affected as a result of the change
of control, then he or she will receive the two years' salary and two times
50% of the bonus. In addition, standard benefits and perquisites or their
equivalents are to be provided for two years if the executive's employment is
terminated during the two-year period. The plan is effective for three years,
and will generally be renewed automatically on an annual basis for a three-
year period rolling forward. The plan can only be terminated with respect to
an affected executive by mutual agreement of the executive and the Company.
D. Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Reuben S. Leibowitz (Chairman)
and Lawrence S. Bacow. Neither of them 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 is an affiliate of Warburg. See also,
"Information About the Nominees for Director" and "Stock Ownership
Information" above. Warburg is the principal stockholder 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.
Pursuant to the 1997 Voting Agreement described above in "Questions and
Answers About Voting," Warburg, the Kojaian Investors and GS Group have 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 GS Group, and all nominees designated by Warburg.
Messrs. Lapidus, Leibowitz and Santoleri have been designated as Warburg
Nominees with respect to the 1999 election of directors.
Lennar Corporation (and its affiliates), a firm in which Warburg and its
affiliates have ownership interests, and for which Reuben Leibowitz and Sidney
Lapidus, directors of the Company and Managing Directors of Warburg Pincus,
serve as directors, paid the Company approximately $403,000 in real estate
commissions and other fees during the 1999 fiscal year, for real estate
transactional services; and was involved as a purchaser in a transaction in
which the Company received $400,000 in real estate commissions from the
seller. Chelsea GCA Realty, Inc., a firm for which Mr. Leibowitz serves as a
director, was involved as a purchaser in a transaction in which the Company
received approximately $135,000 in real estate commissions from the seller. We
believe that the fees and commissions paid to the Company as described above
were comparable to those which would have been paid to unaffiliated third
parties.
E. Compensation Committee Report on Executive Compensation
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, "Grubb & Ellis Stock Performance" shall not be incorporated by
reference into any such filings.
17
<PAGE>
We, as a committee, have developed and implemented compensation policies,
plans and programs which seek to reward achievement of positive financial
results for the Company, and in doing so enhance stockholder value.
In order to attract and retain outstanding executives with the potential to
contribute significantly to the success of the Company, our policies have
sought to compensate executives commensurate with executives of equivalent-
sized firms in terms of revenues and with similar responsibilities, but not
necessarily the Peer Group companies referred to below under "Grubb & Ellis
Stock Performance."
Our policies include the objective of assuring the qualification of each
executive's compensation for deductibility under Section 162(m) of the
Internal Revenue Code, if we believe that such qualification is appropriate in
each case. Section 162(m) generally imposes a limit of $1 million per taxable
year on deducting compensation for each of the chief executive officer and the
other four most highly compensated executive officers from taxable income of
the Company.
The compensation of Mr. Young, Chairman of the Board, President and Chief
Executive Officer, during the 1999 fiscal year, pursuant to his employment
agreement, consisted of an annual base salary of $425,000 and eligibility for
a bonus equal to 50% of his annual salary, based upon the Formula (described
above), which may be increased in our discretion based upon factors we deem
relevant. In approving the compensation terms of his employment agreement at
the time of his appointment, we took into consideration our 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 a bonus of $250,000 for the 1999 fiscal year, based upon our
recognition of Mr. Young's contribution to the Company.
During the 1999 fiscal year, executive officers other than Mr. Young were
eligible to receive compensation consisting of three components: base salary,
bonuses and longer-term equity incentives. We reviewed with Mr. Young the
compensation of all such executive officers. Base salaries were approved based
on our knowledge of competitive salaries as described above and our judgment
about the executives' individual past performance, expectations of future
performance, and most importantly, level of responsibilities. Bonuses were
calculated as a designated percentage of salary for each executive, and earned
upon achievement of annual targeted levels of 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 a bonus.
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. We believe that granting equity incentives to the Company's
management helps retain and motivate management. In recommending grants of
stock options by the Board, we take into account the scope of responsibility,
the performance requirements and anticipated 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. Our 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. Five executive officers who held
office during the 1999 fiscal year received options during that
18
<PAGE>
year to purchase common stock, with exercise prices set at fair market value
at the dates of grant. The options vest over four years. We determined the
recommended number of shares for the options given to each executive,
primarily based upon the executive's level of responsibility.
THE COMPENSATION COMMITTEE
Lawrence S. Bacow
Reuben S. Leibowitz
F. Grubb & Ellis Stock Performance
The following graph shows a five-year comparison of cumulative total
stockholder return on our 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, 1994 in each of the foregoing
and that all dividends, if any, were reinvested.
Method of Selection of Peer Group. We believe that the following commercial
real estate firms are our primary, nationwide competitors having publicly-
traded stock: CB Richard Ellis Services, Inc. ("CB"); Insignia Financial
Group, Inc.; Jones Lang LaSalle Incorporated ("LaSalle"); and Trammell Crow
Company. None of these firms has been public long enough to have a five-year
stock price history. Therefore, the Peer Group we have used consists of the
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, 1999, excluding firms whose business is real
estate investment, such as real estate investment trusts. Our company-level
SIC Code is 6531 - real estate agents and managers. They are, in addition to
the Company: Capital Title Group, Inc.; CB; Crescent Operating, Inc.; The
DeWolfe Companies, Inc.; Israel Land Development Company, Ltd.; Kennedy-
Wilson, Inc.; LaSalle; Monmouth Capital Corporation; and Westmark Group
Holdings, Inc. Some of these companies do not have a five-year stock history.
19
<PAGE>
Comparison of Five-Year Cumulative Total Return*
Grubb & Ellis Company, S&P 500 and a Peer Group
(Performance Results Through June 30, 1999)
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Grubb & Ellis $100.00 $ 84.00 $179.00 $721.00 $600.00 $276.00
S&P 500 $100.00 $126.00 $159.00 $214.00 $279.00 $342.00
Peer Group $100.00 $ 57.00 $ 77.00 $192.00 $222.00 $178.00
</TABLE>
* Total return assumes reinvestment of dividends on a quarterly basis. The
figures are rounded to the nearest dollar. The comparisons in this table are
not intended to forecast or to be indicative of possible future performance
of the Company's common stock.
20
<PAGE>
RELATED PARTY TRANSACTIONS
The following are descriptions of certain transactions and business
relationships between the Company and our directors, executive officers, and
principal stockholders. On a quarterly basis, the Audit Committee reviews
information about transactions involving Archon and the Kojaian Companies and
their affiliates, as described below, compared to transactions with other
parties, and makes an independent recommendation to the Board as to the
benefit to stockholders from such transactions. We believe 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 "Questions
and Answers About Voting" regarding the 1997 Voting Agreement and
"Compensation Committee Interlocks and Insider Participation" above.
Archon, an affiliate of GS Group, a principal stockholder of the Company, is
engaged in the asset management business, and Archon performs asset management
services for various parties. 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 1999 fiscal year, Archon, its affiliates and
portfolio property owners paid the Company and its subsidiaries approximately
$2,701,000 in management fees; approximately $3,004,000 in leasing
commissions; and approximately $2,161,000 in real estate sales commissions
related to services rendered to Archon and its portfolio properties. In
addition, Archon and its affiliates were involved in transactions as
purchasers during the 1999 fiscal year, for which the Company received
approximately $307,000 in real estate commissions from the sellers.
The Kojaian Companies, Kojaian Management Corporation and their affiliates
(collectively, "KMC") are controlled by the Kojaians. C. Michael Kojaian, a
director and principal stockholder 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. Mike Kojaian, his father, and also a principal stockholder of the
Company, is also a director, shareholder and officer of the 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 1999
fiscal year, KMC paid the Company and its subsidiaries approximately
$1,158,000 for management and leasing of its portfolio properties, and
approximately $11,000 in commissions for other transactional services.
Mr. Orrico, President of Transaction Services for the Company, received a
short-term loan from the Company in the amount of $330,000 in August 1998, in
connection with the relocation of his residence at our request. The loan,
which was secured by real property owned by him, had an interest rate of 7
percent per annum and was repaid on October 6, 1998.
AMLI Commercial Properties Trust, a real estate investment trust for which Mr.
Meador, a director of the Company, serves as a director, paid the Company
approximately $107,000 in real estate commissions for transactional services
in the 1999 fiscal year.
homestore.com, Inc., for which Mr. Hanauer, a director of the Company, serves
as a director, was involved as a purchaser in certain real estate transactions
for which the Company was paid approximately $222,000 in real estate
commissions by the sellers during the 1999 fiscal year.
**********************
21
<PAGE>
This concludes our proxy statement. We hope that you found it informative and
look forward to seeing you at our annual meeting.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Robert J. Walner
Robert J. Walner
Corporate Secretary
22
<PAGE>
PROXY GRUBB & ELLIS COMPANY PROXY
For the Annual Meeting of Stockholders--November 18, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I am a stockholder of Grubb & Ellis Company (the "Company") and I have received
the Notice of Annual Meeting of Stockholders dated October 14, 1999 and the
accompanying Proxy Statement. I appoint 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 I 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 Almond Room on
Thursday, November 18, 1999 at 10:00 a.m. or at any and all adjournments
thereof, with all powers which I would have if I were personally present at the
meeting.
The shares represented by this Proxy will be voted in the way that I direct. 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. If any of the nominees listed becomes unavailable to serve as a
director prior to the Annual Meeting, the Proxy will be voted for any substitute
nominee or nominees designated by the Board of Directors. I ratify and confirm
all that the above Proxy Holders may legally do in relation to this Proxy.
(Continued and to be signed on reverse side.)
<PAGE>
GRUBB & ELLIS COMPANY
PLEASE MARK VOTE IN THE OVAL IN THE FOLLOWING MANNER
USING DARK INK ONLY.
[ ]
The Board of Directors recommends a vote FOR all nominees for Directors.
1. Election of Directors--
Nominees:
Neil Young, R. David Anacker, 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
All All Except
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Write nominee exception above this line.
2. 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:_________________________________________
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appears on this Proxy Card. Joint owners should
each sign. The full title or capacity of any
person signing for a corporation, partnership,
trust or estate should be indicated.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED POSTMARKED ENVELOPE.
