<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/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 Rule 14a-11(c) or Rule 14a-12
GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
- --------------------------------------------------------------------------------
<PAGE> 2
GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.
Two North Riverside Plaza
Chicago, IL 60606
(312) 648-5656
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 7, 1995
------------------------
To: The Stockholders of GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC., a Delaware corporation (the
"Company"), will be held at One North Franklin, Third Floor, Chicago, Illinois,
on June 7, 1995, at 10:30 A.M. Central Daylight Time, for the following
purposes:
1. To elect ten (10) members of the Board of Directors;
2. To approve an amendment to the Company's Certificate of Incorporation to
reduce the maximum number of shares of Common Stock the Company is
authorized to issue from 40,000,000 shares to 20,000,000 shares and to
reduce the maximum number of shares of Preferred Stock the Company is
authorized to issue from 5,000,000 shares to none; and
3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 14, 1995, are
entitled to notice of and to vote at the Meeting or any adjournment thereof. A
complete list of the stockholders entitled to vote at the Meeting will be
available for examination by any stockholder at the Company's executive offices,
for any purpose germane to such Meeting during ordinary business hours, for a
period of at least ten days prior to the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
SUSAN OBUCHOWSKI, Secretary
DATED: April 28, 1995
THE BOARD OF DIRECTORS EXTENDS A CORDIAL INVITATION TO ALL STOCKHOLDERS TO
ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY IN
THE ACCOMPANYING REPLY ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON.
<PAGE> 3
GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.
Two North Riverside Plaza
Chicago, IL 60606
(312) 648-5656
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the management of Great American Management and Investment, Inc. ("GAMI" or the
"Company") of proxies to be voted at the Annual Meeting of Stockholders (the
"Meeting") to be held on Wednesday, June 7, 1995, and any adjournment thereof,
the cost of which will be borne by the Company. In addition to solicitation by
mail, employees of the Company may solicit proxies by telegraph, telephone,
telecopy and personal interviews. Brokers and other nominees who held stock of
the Company on April 14, 1995, will be asked to contact the beneficial owners of
the shares which they hold. The costs of solicitation, which are borne by the
Company, will be nominal.
This Proxy Statement and accompanying proxy are being mailed to
stockholders commencing on or about April 28, 1995. The proxy, if properly
executed and returned, will be voted according to your instructions, but it may
be revoked at any time before it is exercised by giving notice in writing to the
Secretary of the Company or by voting in person at the Meeting.
Only stockholders of record on April 14, 1995 (the "Record Date"), or their
proxy, will be entitled to vote at the Meeting. On such date 11,187,420 shares
of common stock, par value $.01 ("Common Stock"), were outstanding. Each share
outstanding on the Record Date for the Meeting entitled the holder thereof to
one vote upon each matter to be voted upon at the Meeting. The stockholders of a
majority of the Common Stock, present in person or represented by proxy, shall
constitute a quorum at the Meeting. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. If, however, a quorum is not present or represented at
the Meeting, the stockholders entitled to vote at the Meeting, whether present
in person or represented by proxy, shall only have the power to adjourn the
Meeting until such time as a quorum is present or represented. At such time as a
quorum is present or represented by proxy, the Meeting will reconvene without
notice to stockholders, other than an announcement at the prior adjournment of
the Meeting, unless the adjournment is for more than thirty days or a new record
date has been set.
If a proxy in the form enclosed is duly executed and returned, the shares
of the Company's Common Stock represented thereby will be voted in accordance
with the specifications made thereon by the stockholder. If no such
specifications are made, such proxy will be voted (i) for election of the ten
nominees for directors; (ii) to approve an amendment to the Company's
Certificate of Incorporation to reduce the maximum number of shares of Common
Stock the Company is authorized to issue from 40,000,000 shares to 20,000,000
shares and to reduce the maximum number of shares of Preferred Stock the Company
is authorized to issue from 5,000,000 shares to none; and (iii) at the
discretion of Samuel Zell and Rod F. Dammeyer, the Board of Directors' (the
"Board") designated proxies for the Meeting, with respect to such other business
as may properly come before the Meeting or any adjournment thereof. Abstentions
are counted in tabulations of the votes cast on proposals presented to
stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved. Under applicable Delaware law,
a broker non-vote will have no effect on the outcome of the election of
directors. A proxy is revocable by either a subsequently dated, properly
executed proxy appointment which is received by the Company prior to the time
votes are counted at the Meeting, or by a stockholder giving notice of
revocation to the Company in writing or during the Meeting prior to the time
votes are counted. The mere presence at the Meeting of a stockholder who
appointed a proxy does not itself revoke the appointment.
2
<PAGE> 4
The Company's Certificate of Incorporation provides that cumulative voting
is permitted in the election of directors. Accordingly, the number of votes each
holder may cast in the election of directors is determined by multiplying the
number of shares he holds by the number of directors to be elected. The holder
may cumulate his shares and give one candidate as many votes as the number of
directors to be elected multiplied by the number of his shares, or he may
distribute his cumulated votes among as many of the candidates as he shall
determine. In order to cumulate his votes, the holder must vote at the Meeting
in person or by valid proxy, and prior to the time the vote is taken, the holder
or proxy must notify the person presiding at the Meeting of his intention to
cumulate his votes. Management is not seeking discretionary authority to
cumulate votes in the proxies solicited in the Proxy Statement. Two stockholders
of the Company, Equity Holdings Limited, an Illinois limited partnership
("Equity Holdings"), and Hellman & Friedman Capital Partners ("Capital
Partners"), a California limited partnership, can direct the voting of 88.7% of
the outstanding shares of Common Stock. See "Security Ownership of Certain
Beneficial Owners."
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company recommends the election to the Board of the ten (10) nominees
whose names appear below. The enclosed proxy will be voted for the election of
the ten (10) nominees unless authority is withheld. The affirmative vote of
shares held of record by owners of a majority of the shares of Common Stock
present in person or represented by proxy at the Meeting is required for
election of the nominees. Each director will serve until the next Meeting and
thereafter until a successor has been duly elected and qualified or until his
earlier resignation or removal. In the event that any nominee is unable to serve
(which is not anticipated), the persons designated as proxies will cast votes
for the remaining nominees and for such other person or persons as the Board may
recommend. All of the nominees are presently directors.
The following table sets forth the name of each nominee and, for each, the
period during which the nominee has served as a director, information relating
to the nominee's age, principal occupation and business experience during the
past five years, any other directorships held by the nominee in publicly held
companies, and certain other information. For information concerning membership
on committees of the Board, see "Information Concerning the Board of Directors
and Certain Committees Thereof" below.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A
NAME DIRECTOR OTHER INFORMATION ABOUT NOMINEES
---- ---------- --------------------------------
<S> <C> <C>
Mitchell R. Cohen 1995 Director of the Company. Mr. Cohen has been employed by
Hellman & Friedman ("H&F"), an investment banking firm,
since 1989, serving as a general partner since 1992. Mr.
Cohen is a director of Mobilemedia Corporation and
Western Wireless Corporation. Mr. Cohen is 31 years old.
Rod F. Dammeyer 1992 Director of the Company. Mr. Dammeyer has been President
and Chief Executive Officer of the Company since
February 1994. Mr. Dammeyer is also President, Chief
Executive Officer and a director of Itel Corporation
("Itel"). He is a director of ANTEC Corporation, Capsure
Holdings Corp. ("Capsure"), Falcon Building Products,
Inc. ("Falcon"), Jacor Communications, Inc. ("Jacor"),
Lomas Financial Corporation, Revco D.S., Inc. ("Revco"),
Santa Fe Energy Resources, Inc., and The Vigoro
Corporation ("Vigoro") and Trustee of Van Kampen Merritt
Closed End Mutual Funds and Series Trusts. Mr. Dammeyer
is 54 years old.
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A
NAME DIRECTOR OTHER INFORMATION ABOUT NOMINEES
- ------------------------- ---------- --------------------------------------------------------
<S> <C> <C>
Bradbury Dyer, III 1985 Director of the Company. Mr. Dyer is the founder and
sole general partner of Paragon Associates and Paragon
Associates II, private investment partnerships. He is a
director of Capsure, Falcon and Roosevelt Financial
Group, Inc. Mr. Dyer is 52 years old.
David A. Gardner 1979 Director of the Company. Mr. Gardner is President of
Gardner Capital Corporation, a privately owned real
estate and venture capital investor. Mr. Gardner is a
director of Fred's, Inc. and Memry Corp. Mr. Gardner is
47 years old.
William K. Hall 1994 Director of the Company. Mr. Hall has been President
since 1988 and Chief Executive Officer and a director of
Eagle Industries, Inc. ("Eagle") since 1990. Mr. Hall
has been a director, President and Chief Executive
Officer of Falcon since 1994. Mr. Hall is a director of
A.M. Castle & Co. and Huffy Corporation. Mr. Hall was
previously a Director of the Company from 1990 to 1992.
Mr. Hall is 51 years old.
F. Philip Handy 1987 Director of the Company. Mr. Handy is President of
Winter Park Capital Company, a private investment firm.
Mr. Handy is a director of Itel, Jacor, and Banca
Quadrum, S.A. Mr. Handy was previously a Director of the
Company from 1980 to 1984. Mr. Handy is 50 years old.
John M. Pasquesi 1993 Director of the Company. Mr. Pasquesi has been a general
partner of H&F since January 1989 and prior thereto was
a principal from January 1987 to December 1988. He is a
director of Falcon, Vigoro and Mid Ocean Reinsurance
Company Ltd. Mr. Pasquesi is 35 years old.
Sheli Z. Rosenberg 1984 Director of the Company. Mrs. Rosenberg had been Vice
President and General Counsel of the Company from
October 1985 until March 1995. Mrs. Rosenberg is a
member of the law firm of Rosenberg & Liebentritt, P.C.
Mrs. Rosenberg has been President and Chief Executive
since November 1994 of Equity Group Investments, Inc.
("Equity Group") and Equity Financial and Management
Company ("Equity Financial") and was Executive Vice
President of Equity Group since 1986, and of Equity
Financial since 1980. Both firms are privately owned
affiliated investment management companies. Mrs.
Rosenberg was Chairman of the Board of CFI Industries,
Inc. from January 1994 until September 1994 and
Co-Chairman from September 1994 until March 1995 and is
currently a director. Mrs. Rosenberg is a director of
Equity Group, Equity Financial, Capsure, American
Classic Voyages Co. ("American Classic"), Itel, Falcon,
Jacor and Vigoro, and a trustee of Equity Residential
Properties Trust ("Equity Residential"). Mrs. Rosenberg
was a Vice President of Madison Management Group, Inc.
("Madison") prior to October 4, 1991. Madison filed a
petition under the Federal bankruptcy laws on November
8, 1991. Mrs. Rosenberg has been a Vice President of
First Capital Benefits Administrators, Inc. ("Benefits
Administrators") since 1987. Benefits Administrators
filed for a petition under the Federal bankruptcy laws
on January 3, 1995. Mrs. Rosenberg is 53 years old.
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A
NAME DIRECTOR OTHER INFORMATION ABOUT NOMINEES
---- ---------- --------------------------------
<S> <C> <C>
Joseph P. Sullivan 1991 Director of the Company. Mr. Sullivan has been Chairman
of the Board of Vigoro since March 1991 and was Chief
Executive Officer from March 1991 until September 1994
and President from January 1986 until March 1991. Mr.
Sullivan is 62 years old.
Samuel Zell 1980 Chairman of the Board of Directors. Mr. Zell had been
President from June 1990 until February 1994, and Chief
Executive Officer from 1983 until February 1994 of the
Company. Mr. Zell is Chairman of the Board of Equity
Group and Equity Financial. Mr. Zell was President and
Chief Executive Officer of Equity Group until November
1994. He is also a trustee and beneficiary of a general
partner of Equity Holdings. See "Security Ownership of
Certain Beneficial Owners" for more information about
Equity Holdings. He is Chairman of the Board and Chief
Executive Officer of Capsure and Manufactured Home
Communities, Inc. He is Chairman of the Board of
Broadway Stores, Inc., American Classic, Falcon, Equity
Residential and Itel. He is Co-Chairman of the Board of
Revco. He is a director of Jacor, Sealy Corporation and
Vigoro. Mr. Zell was President of Madison prior to
October 4, 1991. Madison filed a petition under the
Federal bankruptcy laws on November 8, 1991. Mr. Zell is
52 years old.
</TABLE>
The Company's by-laws provide that the number of directors shall not be
less than three nor more than eleven, with the precise number to be determined
by resolution of the Board or the stockholders from time to time. The Board has
fixed the number of directors to be elected at this Meeting at ten.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND
CERTAIN COMMITTEES THEREOF
Meetings: During 1994, the Company's Board held nine (9) meetings. During
1994, each of the present directors attended over 75% of the meetings of the
Board and its committees which he or she was eligible to attend except for
Messrs. Hall and Zell who attended 71% and 70%, respectively, of the meetings
they were eligible to attend. Mr. Hall was elected a director on March 15, 1994,
and Mr. Cohen was elected a director on March 16, 1995.
Compensation Committee: The Compensation Committee of the Board of
Directors is composed of Messrs. Dyer (Chairman), Pasquesi, Zell and Mrs.
Rosenberg. The Compensation Committee reviews and makes recommendations
concerning proposals by management with respect to compensation, bonus,
employment agreements and other benefits and policies respecting such matters
for the executive officers of the Company. During 1994, the Compensation
Committee held one meeting.
Audit Committee: The Audit Committee of the Board of Directors is composed
of Messrs. Gardner (Chairman), Dyer and Pasquesi. The Audit Committee annually
reviews and recommends to the Board the firm to be engaged as independent
auditors for the next fiscal year, reviews with the independent auditors the
plan and results of the auditing engagement, consults with the internal audit
staff and discusses with management the internal audit function and the adequacy
of the Company's internal accounting controls. During 1994, the Audit Committee
held two meetings.
5
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
NAME AND SALARY BONUS OPTIONS/ COMPENSATION
PRINCIPAL POSITION(1) YEAR ($) ($) SARS (#) ($)(2)
- ------------------------------------------- ---- ------- ------ -------- ------------
<S> <C> <C> <C> <C> <C>
Samuel Zell, 1994 400,000 0 0 6,000
Chairman of the Board 1993 400,000 0 5,000 4,497
1992 400,000 0 20,000 0
Rod F. Dammeyer, 1994 0 0 75,000 0
President and Chief Executive Officer 1993 0 0 0 0
1992 0 0 0 0
Arthur A. Greenberg, 1994 200,000 0 0 6,000
Executive Vice President 1993 300,000 0 5,000 4,497
and Chief Financial Officer 1992 300,000 0 10,000 4,303
Norman M. Field, 1994 120,000 18,000 0 5,520
Vice President and Treasurer 1993 115,500 12,000 3,000 2,550
1992 110,000 6,000 5,000 2,257
Richard Trotter, 1994 110,000 16,500 0 5,060
Vice President - Internal Audit 1993 101,000 12,000 3,000 2,260
1992 96,075 6,000 4,000 1,985
</TABLE>
- -------------------------
(1) Positions are as of December 31, 1994. Mr. Zell had been President and Chief
Executive Officer until February 1994. Mr. Dammeyer was elected to such
positions in February 1994. Messrs. Greenberg, Field and Trotter resigned
from their positions with the Company in 1995.
(2) Employer matching and/or profit sharing contributions to the Company's
Advantage Savings Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
GRANTED TO APPRECIATION
OPTIONS EMPLOYEES EXERCISE OR FOR OPTION TERM
GRANTED IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME (#)(1) YEAR ($/SH) DATE 5%($)(2) 10%($)(3)
- ------------------------------ ------- ----------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Samuel Zell 0 0.00 -- -- 0 0
Rod F. Dammeyer 75,000 100.00 33.00 12/01/99 683,797 1,511,012
Arthur A. Greenberg 0 0.00 -- -- 0 0
Norman M. Field 0 0.00 -- -- 0 0
Richard Trotter 0 0.00 -- -- 0 0
</TABLE>
- -------------------------
(1) Options granted during 1994 are exercisable in three equal cumulative annual
installments after the first year of the option term.
(2) Assumes a price of $42.12 at the end of five years.
(3) Assumes a price of $53.15 at the end of five years.
6
<PAGE> 8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FY-END(#) FY-END($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- -------- ------------- --------------
<S> <C> <C> <C> <C>
Samuel Zell 0 0 14,998/10,002 162,482/92,519
Rod F. Dammeyer 0 0 8,332/81,668 85,823/429,178
Arthur A. Greenberg 0 0 8,333/6,668 85,001/54,178
Norman M. Field 4,000 18,000 8,333/3,667 89,663/28,587
Richard Trotter 2,667 20,336 1,000/3,334 4,500/24,675
</TABLE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its subsidiaries receive
an annual fee of $28,000 for serving as directors. Additionally, on the date of
each Meeting all directors receive options to purchase 5,000 shares at the fair
market value of the Common Stock on the date of such Meeting. The options are
exercisable in three equal cumulative annual installments after the first year
and expire at the end of five years.
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company and Mr. Dammeyer have an agreement providing for Mr. Dammeyer's
employment at an annual salary of $280,000, beginning January 1, 1995, annual
incentive awards of 50% to 112.5% of salary, with a target of 75% of salary and
such long-term incentives as the Compensation Committee in its good judgment
shall grant. Since Mr. Dammeyer's activities under the agreement are not
full-time, he will not participate in any benefit plans.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Dyer (Chairman),
Pasquesi, Zell and Mrs. Rosenberg. Mr. Zell excused himself from discussions and
decisions concerning his compensation as Chairman of the Board, Chief Executive
Officer and President. Mr. Zell resigned as Chief Executive Officer and
President in February 1994.
The following relationships existed during 1994:
Messrs. Dammeyer, Zell and Mrs. Rosenberg were officers and directors of
the Company and Mr. Zell and Mrs. Rosenberg were members of the Compensation
Committee of the Company and Mr. Zell and Mrs. Rosenberg were officers and
directors of Capsure and Mr. Dammeyer is a director and member of the
Compensation Committee of Capsure.
Mr. Zell and Mrs. Rosenberg were officers, directors and members of the
Compensation Committee of the Company and Mr. Zell was an officer, trustee and
member of the Compensation Committee of Equity Residential and Mrs. Rosenberg
was a trustee and member of the Compensation Committee of Equity Residential.
Gerald A. Spector was an officer of the Company and was an officer and trustee
of Equity Residential and Mr. Zell was an officer, trustee and member of the
Compensation Committee of Equity Residential.
Messrs. Dammeyer, Zell and Mrs. Rosenberg were officers and directors of
the Company and Mr. Zell and Mrs. Rosenberg were members of the Compensation
Committee of the Company and Messrs. Dammeyer
7
<PAGE> 9
and Zell were officers and directors of Itel and Mrs. Rosenberg was a director
and member of the Compensation Committee of Itel.
Messrs. Dammeyer, Zell and Mrs. Rosenberg were officers and directors of
the Company and Mr. Zell and Mrs. Rosenberg were members of the Compensation
Committee of the Company and Mr. Zell was an officer and director of Falcon and
Mr. Dammeyer and Mrs. Rosenberg were directors of Falcon.
Mr. Zell, Arthur A. Greenberg and Mrs. Rosenberg were officers of the
Company and directors of American Classic and Mr. Zell and Mrs. Rosenberg were
officers of American Classic and a member of the Compensation Committee of the
Company.
Mr. Spector was an officer of the Company and a director of MHC and Mr.
Zell was an officer and director of MHC and a member of the Compensation
Committee of the Company.
Messrs. Dammeyer and Greenberg were officers of the Company and members of
the Compensation Committee of Vigoro and Mr. Sullivan is an officer of Vigoro
and a director of the Company.
Messrs. Zell, Greenberg and Mrs. Rosenberg also served as members of the
board of directors of numerous non-public companies owned in whole or in part by
Mr. Zell or his affiliates, which did not have compensation committees, and in
many cases the executive officers of those companies included Mrs. Rosenberg
and/or Messrs. Zell and Greenberg.
On January 1, 1994, the Company's loan portfolio included a $5.9 million
loan to a general partnership ("Equity Pool") which in turn is owned by two
limited partnerships which are affiliated with Mr. Zell. The loan was
collateralized by partnership units ("Units") which were convertible in January
1995 into approximately 550,000 shares of Equity Residential, a publicly traded
real estate investment trust affiliated with Mr. Zell. During 1994, principal
payments reduced the loan to approximately $5.4 million. On January 3, 1995, all
rights and title in the principal amount of $5.4 million plus an additional $1.6
million, as participation based on the market value of the Units on September
16, 1994, and accrued interest were assigned to Equity Holdings, the Company's
majority stockholder, as part of a dividend to the Company's stockholders.
The Company and certain of its subsidiaries paid or will pay $1,112,900 to
certain affiliates of Equity Holdings for services rendered during 1994. These
services included, but are not limited to, administrative, human resource,
consulting, accounting and tax services, various real estate services, insurance
services (including the payment to third parties for insurance premiums) and
other executive services. These related entity transactions are for a term of
one year and were approved by the independent members of the Board.
The Company and certain of its subsidiaries paid or will pay an affiliate
of Equity Holdings $213,600 for its office space during 1994.
The Company and certain of its subsidiaries paid or will pay an affiliate
of Equity Holdings $133,200 for various leases of computer software and
equipment and computer development services during 1994. The leases range from
three to five years and are at rates comparable to the market place. Payment
also related to a facility sharing agreement between the Company and such
affiliate. Under the agreement, computer development, operations and maintenance
services were provided to the Company and certain of its subsidiaries.
The Company performed services for various affiliates of Equity Holdings.
For 1994, $1,536,900 was incurred by such affiliates for the services performed
and office space provided.
The Company and Equity Holdings have each entered into an agreement with
Capital Partners and Capital Partners BVI (as hereinafter defined) (the "Hellman
Group") which provides that the Hellman Group shall have a right to nominate,
and the Company and Equity Holdings shall each use its best efforts to elect two
(2) directors for every nine (9) directors of the Company. Additionally the
Hellman Group agreed to vote their shares of Common Stock in favor of the
directors nominated by the Company. This agreement shall continue so long as
Equity Holdings owns at least 50% of the Common Stock of the Company and there
has been no change of control of the Hellman Group. Messrs. Cohen and Pasquesi
are the Hellman Group nominees.
8
<PAGE> 10
The Company and Vigoro have each entered into an agreement which provides
that the Hellman Group shall have a right to nominate, and the Company and
Vigoro shall each use its best efforts to elect one (1) director for every
twelve (12) directors of Vigoro. The agreement shall continue so long as the
Hellman Group retains certain minimum direct or indirect holdings of the voting
securities of either the Company or Vigoro. Mr. Pasquesi was the Hellman Group
nominee for election at Vigoro's Annual Meeting of Stockholders held November
10, 1994.
The Company and certain of its subsidiaries paid or will pay Rosenberg &
Liebentritt, P.C., a law firm affiliated with Mrs. Rosenberg, amounts totaling
$137,900 for certain legal services rendered in 1994. Fees are based on
comparable market rates for the services performed. Rates are approved by the
independent members of the Board.
The Company and certain of its subsidiaries paid or will pay Seyfarth Shaw
Fairweather & Geraldson, a law firm in which Mrs. Rosenberg's spouse is a
partner, amounts totaling $153,200 for certain legal services rendered in 1994.
Fees are based on comparable market rates for services performed.
For a description of certain transactions with other Board members, see
"Certain Relationships and Related Transactions."
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this Proxy
Statement, in whole or in part, the Compensation Committee Report presented
below and the Performance Graph following shall not be incorporated by reference
into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board determines the compensation of the
Company's executive officers, including those named in the Summary Compensation
Table. The Compensation Committee believes that the compensation of the
Company's Chief Executive Officer and all of the Company's executive officers
should be both competitive and based on individual and Company performance.
The Company's compensation policy takes into account a review of local and
national peer group salary surveys without limitation to the companies included
in the published industry index used in the Performance Graph. The salary
structure is designed to attract and retain highly qualified executives. This is
accomplished by providing competitive base salaries and meaningful incentives
intended to reward performance. Such performance is measured against
pre-established quantitative goals that are specific to the officer's
performance. The officer's responsibilities, performance evaluations and
expected future contributions are factored into annual increases.
The salary of Mr. Zell, who is Chairman of the Board and was Chief
Executive and President until February 1994, was determined by certain
independent members of the Board in January 1991 to be fair and competitive
based on the amount of time devoted to the business. His salary and his time
commitment to the Company had not changed since that date. He receives no
bonuses that reward short-term performance.
Mr. Dammeyer is employed as President and Chief Executive Officer pursuant
to a contract entered into in 1995. See "Employment Contracts and Terminations
of Employment and Change-In-Control Arrangements" for terms of Mr. Dammeyer's
contract.
The salary of Mr. Greenberg was determined in 1990 to be fair and
competitive based on local and national salary surveys and also on the amount of
time devoted to the Company. At the beginning of 1994, his time commitment to
the Company had decreased. Therefore, his salary was reduced to reflect that
decreased time commitment. He receives no bonuses that reward short-term
performance. In 1995, Mr. Greenberg ceased to be an employee of the Company.
The salaries of all other executive officers are found to be competitive
with other top executives in other companies within the industry. Incentive
compensation in the form of bonuses is tied to performance
9
<PAGE> 11
measured against qualitative and quantitative goals specific to each officer's
performance and is not directly related to the performance of the Company.
The Compensation Committee recognizes that while bonus programs provide
rewards for positive short-term individual and corporate performance, the
interests of stockholders are best served by giving key employees the
opportunity to participate in the appreciation of the Company's Common Stock
through the granting of stock options. The Compensation Committee believes that
over an extended period of time, stock performance will, to a meaningful extent,
reflect executive performance, and that such arrangements further reinforce
management goals and incentives to achieve stockholder objectives. The only
stock options granted in 1994 were to Mr. Dammeyer in connection with his
appointment as the President and Chief Executive Officer of the Company. The
number of stock options was determined subjectively by the Compensation
Committee taking into consideration his responsibilities and his other
compensation.
It is the policy of the Company to structure its compensation in a manner
which will avoid the limitations imposed by the Omnibus Budget Reconciliation
Act of 1993 on the deductibility of executive compensation under Section 162(m)
of the Internal Revenue Code of 1986, as amended, to the extent it can
reasonably do so consistent with its goal of retaining and motivating its
executives in a cost effective manner.
The Compensation Committee believes that the compensation program properly
rewards its executive officers for achieving improvements in the Company's
performance and serving the interest of its stockholders.
Bradbury Dyer, III, Chairman
John M. Pasquesi
Sheli Z. Rosenberg
Samuel Zell
PERFORMANCE GRAPH
Below is a graph comparing total stockholders' return on the Company's
Common Stock over the last five years with a broad market index and a published
industry index as required by the rules of the SEC.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
GAMI 100.00 107.81 107.81 113.74 137.99 167.75
S & P 500 100.00 96.89 126.42 136.05 149.76 151.74
S & P Industrials 100.00 99.11 129.59 136.98 149.35 155.05
</TABLE>
10
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 14, 1995, with
respect to each person who is known by the management of the Company to be the
beneficial owner of more than 5% of the outstanding shares of the Company's
Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- -------------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
Equity Holdings Limited, 8,082,744(3) 72.3%
an Illinois limited partnership(2)
Two North Riverside Plaza
Suite 600
Chicago, IL 60606
Hellman & Friedman Capital Partners, 1,829,189 16.4%
a California limited partnership(4)
One Maritime Plaza
12th Floor
San Francisco, CA 94111
</TABLE>
- -------------------------
(1) The amounts of the Company's Common Stock beneficially owned are reported on
the basis of regulations of the Securities and Exchange Commission ("SEC")
governing the determination of beneficial ownership of securities.
(2) Equity Holdings has two general partners: Samuel Zell, Trustee of the Samuel
Zell Revocable Trust under trust agreement dated January 17, 1990 and Ann
Lurie and Sheli Z. Rosenberg Co-Trustees of the Robert H. and Ann Lurie
Trust. Mmes. Lurie and Rosenberg are trustees of certain trusts which are
indirect limited partners of Equity Holdings. Mr. Zell and Mmes. Lurie and
Rosenberg each disclaim beneficial ownership of the shares owned by Equity
Holdings.
(3) 6,789,889 of these shares are held at eight different financial institutions
as collateral for loans to Equity Holdings. Under the various loan
agreements, the institutions cannot vote or exercise any ownership rights
relating to the pledged shares unless there is an event of default.
(4) Shares are held by Capital Partners. Mitchell R. Cohen and John M. Pasquesi
are principals in H&F, which holds a 1.21% limited partnership interest in
Hellman & Friedman Capital Management, a California Limited Partnership
("H&F Capital"). H&F Capital is the general partner of Capital Partners,
holding a 3.24% capital interest and up to a 20% economic interest in the
profits of Capital Partners. Mr. Pasquesi has a direct .21% capital
interest as a limited partner in H&F Capital. Hellman & Friedman Capital
Management, Inc. ("Capital Management") is the general partner of H&F
Capital and has a 1% capital interest in H&F Capital. Messrs. Cohen and
Pasquesi are officers of Capital Management. F. Warren Hellman and Tully M.
Friedman are officers, directors and each are a 50% beneficial stockholder
of Capital Management.
Additionally 105,115 shares are held by Hellman & Friedman Capital Partners
International (BVI) ("Capital Partners BVI"). H&F holds a 1.44% limited
partnership interest in Hellman & Friedman Capital Management
International, A California Limited Partnership ("Capital Management
International"). Capital Management International is the managing partner
of Capital Partners BVI, holding a 1% capital interest and up to a 20%
economic interest in the profits of Capital Partners BVI. Mr. Pasquesi has
a direct .43% capital interest as a limited partner of Capital Management
International. H&F Capital Management International, Inc. ("H&F
International") is the general partner of Capital Management International
and has a 1% capital interest in Capital Management International. Messrs.
Cohen and Pasquesi are officers of H&F International. Messrs. Hellman and
Friedman are officers, directors and each are a 50% beneficial stockholder
of H&F International.
Additionally, 65,696 shares are held by H&F Redwood Partners, L.P. ("H&F
Redwood"). H&F owns a 1.43% limited partnership interest in H&F Redwood
Investors, L.P. ("Redwood Investors"), which is the general partner of H&F
Redwood. As general partner, Redwood Investors owns a 1% capital interest
and up to a 20% economic interest in the profits of H&F Redwood. Mr.
Pasquesi has a .43% capital interest as a limited partner in Redwood
Investors. H&F Redwood Investors, Inc. is the general partner of Redwood
Investors and has a 1% capital interest in Redwood Investors. Messrs. Cohen
and Pasquesi are officers of Redwood Investors, Inc. Messrs. Hellman and
Friedman are officers, directors and each are a 50% beneficial stockholder
of H&F Redwood Investors, Inc.
Messrs. Cohen, Friedman, Hellman and Pasquesi each disclaim beneficial
ownership of the shares owned by Capital Partners, Capital Partners BVI and
H&F Redwood.
11
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 14, 1995, certain information
with respect to the Common Stock that may be deemed to be beneficially owned by
each director of GAMI, the five executive officers named in the Summary
Compensation Table and by all directors and executive officers as a group,
including persons named in the Summary Compensation Table who are no longer
executive officers.
<TABLE>
<CAPTION>
SHARES OF SHARES UPON PERCENT
NAME OF BENEFICIAL COMMON EXERCISE OF OF
HOLDER STOCK(1) OPTIONS(2) TOTAL(1) CLASS
- ---------------------------------------- ---------- ----------- ---------- -------
<S> <C> <C> <C> <C>
Mitchell R. Cohen 2,000,000(3) 0 2,000,000(3) 17.9%
Rod F. Dammeyer 0 8,332 8,332 *
Bradbury Dyer, III 317,000(4) 18,332 335,332(4) 3.0%
David A. Gardner 66,000 28,332 94,332 *
William K. Hall 22,000 10,000 32,000 *
F. Philip Handy 17,800 28,332 46,132 *
John M. Pasquesi 2,000,000(3) 1,666 2,001,666(3) 17.9%
Sheli Z. Rosenberg 8,127,444(5) 11,666 8,139,110(5) 72.7%
Joseph P. Sullivan 0 18,332 18,332 *
Samuel Zell 8,082,744(6) 18,332 8,101,076(6) 72.3%
Norman M. Field 0 8,333 8,333 *
Arthur A. Greenberg 8,098,744(5) 7,833 8,106,577(5) 72.4%
Richard Trotter 0 1,000 1,000 *
All directors and executive officers as
a group including the above-named
persons 10,566,244 160,490 10,726,734 94.5%
</TABLE>
- -------------------------
* Less than 1%.
(1) The amounts of the Company's Common Stock beneficially owned are reported on
the basis of regulations of the SEC governing the determination of
beneficial ownership of securities.
(2) The amounts shown in this column reflect shares of Common Stock subject to
options granted under the Company's 1991 Amended and Restated Stock Option
Plan which are currently exercisable or exercisable within 60 days of this
table.
(3) Under the regulations of SEC, Messrs. Cohen and Pasquesi may be deemed to be
the beneficial owner of the shares which are beneficially owned by Capital
Partners, Capital Partners BVI and H&F Redwood. For further information,
see "Security Ownership of Certain Beneficial Owners." Messrs. Cohen and
Pasquesi each disclaim beneficial ownership of the shares owned by Capital
Partners, Capital Partners BVI and H&F Redwood.
(4) 317,000 shares are held by Paragon Joint Venture, a joint venture formed by
Paragon Associates and Paragon Associates II, both Texas Limited
Partnerships. Under the terms of the joint venture agreement, Paragon and
Paragon II have beneficial ownership of the shares in proportion to their
respective accounts in the joint venture. Mr. Dyer does not have direct
beneficial ownership in these shares; however, Mr. Dyer, as sole general
partner of Paragon and Paragon II and agent for Paragon Joint Venture, may
be deemed to have indirect ownership of these shares. Mr. Dyer, in his role
as general partner of Paragon and Paragon II and as agent for Paragon Joint
Venture, has sole voting and dispositive powers in regard to these shares.
(5) Includes 8,082,744 shares owned by Equity Holdings. Mrs. Rosenberg and Mr.
Greenberg are trustees of certain trusts which are direct or indirect
partners of Equity Holdings. As a result of this status, Mrs. Rosenberg and
Mr. Greenberg may be deemed to be the beneficial owner of all the shares
which are beneficially owned by Equity Holdings. Mrs. Rosenberg and Mr.
Greenberg each disclaim beneficial ownership of the shares owned by Equity
Holdings.
(6) Under the regulations of the SEC, Mr. Zell may be deemed to be the
beneficial owner of all the shares which are beneficially owned by Equity
Holdings. For further information, see "Security Ownership of Certain
Beneficial Owners." Mr. Zell disclaims beneficial ownership of the shares
owned by Equity Holdings.
12
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During April 1995, the Company anticipates completing the sale of its
subsidiary, Equality Specialties, Inc., to a company affiliated with Mr. Handy,
a director of the Company. The sales price will be $20 million which will
include a $4 million note bearing interest at 3 1/2% over the prime rate and
maturing on April , 2002. Additional consideration will include a 15% equity
interest in the acquiring entity, subject to the ability of the buyer to reduce
that equity interest to 7% by certain prepayments of the aforementioned note.
The Board, Mr. Handy abstaining, approved this transaction.
The Company has in the past entered into agreements or arrangements with
directors or officers of the Company or their affiliates relating to the
acquisition, disposition, financing or refinancing of properties and assets, or
similar types of ventures, and may enter into similar agreements or arrangements
from time to time in the future. Such arrangements may provide for compensation
to be paid to such officers, directors, or affiliates for their services
rendered in finding, structuring or negotiating each transaction, which
compensation could, among other things, take the form of a cash fee or a direct
or indirect equity interest in the transaction. The fairness and reasonableness
of any such arrangements have been and in the future will be passed upon by a
majority of the independent members of the Board or by an independent firm
selected by such Board members, or may be submitted for approval by a majority
of the unaffiliated stockholders of the Company, if the transaction would
otherwise call for stockholder approval.
For a description of related transactions with members of the Compensation
Committee, see "Compensation Committee Interlocks and Insider Participation."
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO REDUCE THE
MAXIMUM NUMBER OF SHARES OF COMMON STOCK THE
COMPANY IS AUTHORIZED TO ISSUE FROM 40,000,000 SHARES
TO 20,000,000 SHARES AND TO REDUCE THE MAXIMUM NUMBER
OF SHARES OF PREFERRED STOCK THE COMPANY IS AUTHORIZED
TO ISSUE FROM 5,000,000 SHARES TO NONE
(PROPOSAL 2)
On March 15, 1995, the Board adopted resolutions approving a proposed
amendment to the Certificate of Incorporation of the Company, and recommended
adoption of the amendment by the stockholders. Exhibit A to this Proxy Statement
contains the proposed amendment to the Certificate of Incorporation. The
following discussion of the proposed amendment is qualified in its entirety by
reference to the text of the proposed amendment set forth in Exhibit A.
Article Fourth of the Company's Certificate of Incorporation currently
provides that the Company is authorized to issue 40,000,000 shares of $.01 par
value per share of Common Stock and 5,000,000 shares of $.01 par value per share
Preferred Stock. If adopted, the proposed amendment to Article Fourth would
reduce the maximum number of shares of Common Stock which the Company is
authorized to issue from 40,000,000 shares to 20,000,000 shares and to reduce
the maximum number of Preferred Stock the Company is authorized to issue from
5,000,000 shares to none.
Of the 40,000,000 shares of Common Stock presently authorized 13,051,761
(33%) were issued and outstanding or reserved for issuance at April 14, 1995. Of
the 5,000,000 shares of Preferred Stock presently authorized, no shares were
issued and outstanding or reserved for issuance at April 14, 1995. If the
proposed amendment is adopted, there will be authorized, unissued and unreserved
6,948,239 shares of Common Stock and no shares of Preferred Stock. Management
believes that it is desirable to decrease the number of shares of Common Stock
and Preferred Stock the Company is authorized to issue to reduce franchise taxes
paid by the Company to various states which base such taxes on the number of
authorized shares. The Company believes that the number of shares which will be
authorized but unissued and unreserved if the proposed amendment is approved
will be sufficient to provide the Company the ability to raise capital, make
acquisitions in the future and pursue other corporate opportunities. No further
action or authorization by the Company's stockholders
13
<PAGE> 15
would be necessary prior to issuance of authorized but unissued shares, except
as may be required for a particular transaction by applicable law or regulating
agencies or by the rules of any stock exchange on which the Company's securities
may then be listed.
Except for the 1991 Amended and Restated Stock Option Plan previously
approved by stockholders, there are presently no negotiations, plans or
commitments regarding the issuance of additional shares of Common Stock or of
any shares of Preferred Stock.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE
STOCKHOLDERS, THE SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICE SPECIFICATION
IS MADE, SHARES WILL BE NOTED "FOR" APPROVAL OF THE AMENDMENT.
EXECUTIVE OFFICERS
Samuel Zell serves as Chairman of the Board of the Company. For further
information about his experience and positions with the Company, see page 5 of
this Proxy Statement. Also see "Security Ownership of Certain Beneficial
Owners."
Rod F. Dammeyer serves as a director, President and Chief Executive Officer
of the Company. For further information about his experience and positions with
the Company, see page 3 of this Proxy Statement.
Gus J. Athas has served as Senior Vice President and General Counsel of the
Company since March 1995. Mr. Athas has been Senior Vice President, General
Counsel and Secretary of Falcon since March 1994. From January 1994 until March
1994, Mr. Athas was Vice President and Secretary of Falcon. Mr. Athas has been
Senior Vice President, General Counsel and Secretary of Eagle since May 1993.
From September 1992 until May 1993, Mr. Athas was Vice President, General
Counsel and Secretary of Eagle. From November 1987 until September 1992, Mr.
Athas was Vice President, General Counsel and Assistant Secretary of Eagle. Mr.
Athas is 58 years old.
Sam A. Cottone has served as Senior Vice President and Chief Financial
Officer of the Company since March 1995. Mr. Cottone has been a director and
Senior Vice President -- Finance and Treasurer of Falcon since January 1994. Mr.
Cottone has been Senior Vice President -- Finance and Chief Financial Officer of
Eagle since May 1993. For more than five years prior thereto, Mr. Cottone had
been a partner with Arthur Andersen LLP. Mr. Cottone is 54 years old.
The Company's executive officers are elected by the Board to serve at the
pleasure of the Board. There are no employment contracts with any present
officer or director of the Company except for Rod F. Dammeyer. See "Employment
Contracts and Termination of Employment and Change-In-Control Arrangements."
AUDITORS
Arthur Andersen LLP served as the Company's auditors for 1994. The Audit
Committee has not yet met to make a future recommendation to the Board
concerning the selection of the Company's auditors for 1995. There have been no
disagreements between the Company and its auditors relating to accounting
procedures, financial statement disclosure, or related items. Representatives of
Arthur Andersen LLP are expected to be available at the Meeting and will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any proposals of stockholders to be presented at the 1996 Meeting must be
received by the Secretary of the Company for inclusion in the Company's Proxy
Statement and form of proxy no later than December 30, 1995.
14
<PAGE> 16
OTHER MATTERS
The Board is not aware of any business which will be presented at the
Meeting other than those matters set forth in the accompanying Notice of Annual
Meeting. If any other matters are properly presented at the Meeting for action,
it is intended that the persons named in the accompanying proxy and acting
thereunder will vote in accordance with their best judgment on such matters.
By Order of the Board of Directors
Susan Obuchowski
Secretary
April 28, 1995
Chicago, Illinois
15
<PAGE> 17
EXHIBIT A
FOURTH
The maximum number of shares of capital stock which the corporation is
authorized to issue or to have outstanding at any time shall be 20,000,000
shares of which 20,000,000 shares shall be Common Stock of $.01 (one cent) par
value.
16
