[OLSHAN GRUNDMAN FROME & ROSENZWEIG]
January 20, 1995
VIA EDGAR FILING
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: MGI Properties (the "Company")
-----------------------------
Dear Sirs:
Enclosed please find a copy of the Company's preliminary Proxy Statement.
The Company would like to mail the Proxy Statement to its shareholders on or
about February 17, 1995. Please be advised that a wire for $125.00 in payment
of the filing fee has been sent to Mellon Bank at the Commission's lock box
number.
Very truly yours,
[Signature of Peter D. Deutsch]
Peter D. Deutsch
PDD: gaj
Enclosures
cc: New York Stock Exchange
Mr. Phillip Vitali
Victor M. Rosenzweig, Esq.
<PAGE>
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
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14(a)-12
MGI PROPERTIES
Name of Registrant as Specified in Charter
PHILLIP C. VITALI
(Name of Person(s) filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii) or 14a-6(i)(1),
14a-6(j)(2).
[ ] $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:(1)
(4) Proposed maximum aggregate value of transaction:
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
[ ] 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>
PRELIMINARY COPY
MGI PROPERTIES
30 Rowes Wharf
Boston, Massachusetts 02110
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 22, 1995
To the Shareholders of
MGI Properties:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders (the "Annual Meeting") of MGI Properties (the
"Trust") will be held at the Boston Harbor Hotel, 70 Rowes
Wharf, Boston, Massachusetts, on March 22, 1995 at 10:00 A.M.
for the following purposes:
1. To elect three Trustees;
2. To approve an increase in the number of the Trust's
authorized Preferred Shares (the "Preferred Shares")
from 2,000,000 Preferred Shares to 6,000,000 Preferred
Shares; and
3. To consider and act upon such other business as may
properly come before the Annual Meeting.
Only shareholders of record at the close of business on
February 7, 1995 will be entitled to vote at the Annual Meeting.
If you do not expect to attend the Annual Meeting, please
sign and promptly mail the enclosed proxy in order that your
shares may be voted for you. A return envelope is provided for
your convenience.
By Order of the Trustees,
W. Pearce Coues
Chairman of the Board of Trustees
Dated: Boston, Massachusetts
February 17, 1995
MGI PROPERTIES is a Massachusetts trust and all persons
dealing with the Trust must look solely to the property of this
Trust for the enforcement of any claims against the Trust.
Neither the Trustees, officers, agents nor shareholders of this
Trust assume any personal liability for obligations entered into
on its behalf.
<PAGE>
PRELIMINARY COPY
MGI PROPERTIES
30 Rowes Wharf
Boston, Massachusetts 02110
ANNUAL MEETING OF SHAREHOLDERS
March 22, 1995
PROXY STATEMENT
This Proxy Statement is being mailed to the shareholders of
MGI Properties (the "Trust") on or about February 17, 1995, in
connection with the solicitation by the Board of Trustees of the
Trust (the "Board of Trustees") of proxies for the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the
Boston Harbor Hotel, 70 Rowes Wharf, Boston, Massachusetts, on
March 22, 1995. The meeting has been called for the following
purposes: (1) to elect three Trustees; (2) to approve an
increase in the number of the Trust's authorized Preferred
Shares (the "Preferred Shares") from 2,000,000 Preferred Shares
to 6,000,000 and (3) to consider and act upon such other
business as may properly come before the Annual Meeting.
PROXIES AND VOTING RIGHTS
The voting securities of the Trust outstanding on February
7, 1995 consisted of 11,479,994 of the Trust's Common Shares
(the "Common Shares") entitling the holders thereof to one vote
per Common Share. Shareholders of record at the close of
business on February 7, 1995 are entitled to notice of and to
vote at the Annual Meeting. A majority of the outstanding
Common Shares is required to be represented to constitute a
quorum for the holding of the Annual Meeting. The affirmative
vote of the holders of Common Shares representing not less than
66-2/3% of the total votes authorized to be cast by shares of
all classes which are present in person or by proxy and entitled to
vote and voting on the election of Trustees (i.e., Proposal No.
1) is required for the election of each of the nominees for
Trustees (i.e., 66-2/3% of the votes cast). In the event that
no nominee for a particular trusteeship receives the requisite
number of votes for election to such trusteeship at the Annual
Meeting, the incumbent Trustee shall remain in office until the
next annual meeting and until a successor is elected and
qualified. At that meeting, such nominee would stand for
election for the remainder of such term, together with the
nominees for the class whose term then expires.
<PAGE>
The affirmative vote of the holders of Common Shares
representing not less than a majority of the total votes
authorized to be cast by shares of all classes which are
entitled to vote on the increase in the number of authorized
Preferred Shares (i.e., Proposal No. 2) is required for the
adoption of such increase.
With regard to the election of Trustees, votes may be cast
in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect. Abstentions may
be specified on all proposals (except on the election of
Trustees) and will be counted as present for purposes of the
item on which the abstention is noted. Since the increase in
the number of Preferred Shares requires the approval of a majority
of the outstanding Common Shares entitled to vote, abstentions
will have the effect of a negative vote. Under the rules of the
New York Stock Exchange, brokers who hold Common Shares in
street name for customers have the authority to vote, under
certain circumstances, on items when they have not received
instructions from beneficial owners. Brokers that do not
receive instructions are entitled to vote only on Proposal 1 and
may not vote on Proposal 2 without specific instructions from
such beneficial owners.
All proxies delivered pursuant to this solicitation may be
revoked by the person executing the same by notice in writing
received at the office of the Trust at any time prior to
exercise. If not revoked, the Common Shares represented thereby
will be voted at the Annual Meeting. All proxies will be voted
in accordance with the instructions specified thereon.
All expenses in connection with the solicitation will be
borne by the Trust. It is expected that the solicitation will
be made primarily by mail, but regular employees or
representatives of the Trust may also solicit proxies by
telephone, telegraph or in person, without additional
compensation. Beacon Hill Partners, Inc., a proxy solicitation
firm, will assist the Trust in soliciting proxies with respect
to Common Shares held of record by brokers or other nominees at
a cost of $3,250 plus reasonable out-of-pocket expenses.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of February 7, 1995, all of the current Trustees and
executive officers as a group owned approximately 5.3% of the
outstanding Common Shares (including Common Shares underlying
presently exercisable options). See "Election of Trustees" for
information on the number of Shares beneficially owned by each
of the Trustees of the Trust (including the nominees for
election as Trustees) and by such Trustees and executive
officers as a group. There was no person who, to the knowledge
of the Trust's management, owned beneficially more than five
percent of the outstanding Common Shares as of February 7, 1995.
-2-
<PAGE>
PROPOSAL NO. 1
ELECTION OF TRUSTEES
The Board of Trustees is divided into three classes. Each
class is elected by the shareholders.
Unless authority is specifically withheld, proxies will be
voted for the election of the nominees named below to serve as
Trustees for the term indicated herein and until their
successors are elected and qualified. The three
nominee-Trustees have consented to serve if elected; however, should any
nominee not be a candidate at the time of the Annual Meeting (a
situation which is not now anticipated), proxies may be voted in
favor of the remaining nominees and may also be voted for a
substitute nominee.
The following table contains certain information regarding
the Trustees, including nominees for election as Trustees:
<TABLE>
<CAPTION>
Name, Age, Principal Occupation for the past Common Shares
five years and Current Public Directorships or Beneficially Owned on
Trusteeships Trustee Since February 7, 1995 Percent of Class
- ----------------------------------------------- ------------- ---------------------- ----------------
Trustee-Nominees
To be elected for a term of three years expiring
on the date of the annual meeting in 1998:
<S> <C> <C> <C>
W. Pearce Coues (54).............................. 1982 258,835 2.2%(1)
Chairman of the Board of Trustees and Chief
Executive Officer of the Trust
Herbert D. Conant (70)............................ 1988 20,500 (2)(3)
Retired Chairman of the Board and Chief Executive
Officer, The Turner Corporation, from 1985 through
February 1989.
George S. Bissell (65)............................ ---- ---- ----
Chairman of the Board and previously Chief
Executive Officer, Keystone Group, Inc.
-3-
<PAGE>
Name, Age, Principal Occupation for the past Common Shares
five years and Current Public Directorships or Beneficially Owned on
Trusteeships Trustee Since February 7, 1995 Percent of Class
- ----------------------------------------------- ------------- ---------------------- ----------------
Trustees Continuing in Office
To continue in office for a term of two years
expiring on the date of the annual meeting in
1997:
Rodger P. Nordblom (67)........................... 1984 20,600 (2)(4)
Chairman of the Board and previously President,
Nordblom Company (a real estate development
and management firm) for more than five years.
Colin C. Hampton (72)............................. 1984 26,000 (2)(4)
Retired Chairman of the Board and Chief Executive
Officer, UNUM Corporation.
To continue in office for a term of one year
on the date of the annual meeting in 1996:
Francis P. Gunning (71)........................... 1971 21,000 (2)(4)
Retired Executive Vice President and General Counsel,
Teachers Insurance And Annuity Association of America
and College Retirement Equities Fund (insurance and
annuity business).
George M. Lovejoy, Jr. (64)....................... 1993 20,300 (2)(4)
President, Fifty Associates (a real estate investment
trust) and Chairman Emeritus, Meredith & Grew, Inc.
(a full service real estate firm); currently Trustee
of the following mutual funds: Scudder Cash Investment
Trust; Scudder GNMA Fund; Scudder Growth & Income Fund;
Scudder Quality Growth Fund; Scudder Income Fund;
Scudder Balanced Fund; Scudder Managed Municipal Bonds;
Scudder High Yield Tax Free Fund and Scudder Tax Free
Money Fund; Director, Latin American Dollar Income Fund.
<FN>
(1) Includes 199,000 presently exercisable options and excludes 25,000 options not presently exercisable, to
purchase an aggregate of 224,000 Common Shares granted pursuant to the 1988 Employee Plan, the 1982
Incentive Plan, the 1982 Trustees' Plan, the 1988 Trustees' Plan and the 1994 Employee Plan. Also
includes 207 Common Shares owned by Mr. Coues' wife, as to which Mr. Coues disclaims beneficial
ownership.
(2) Less than 1% of the outstanding Common Shares.
(3) Includes presently exercisable options to purchase 18,000 Common Shares granted pursuant to the 1982
Trustees' Plan and the 1988 Trustees' Plan.
(4) Includes presently exercisable options to purchase 20,000 Common Shares granted pursuant to the 1982
Trustees' Plan and the 1988 Trustees' Plan.
</FN>
</TABLE>
-4-
<PAGE>
All of the current Trustees and executive officers as a group
(9 persons) owned, or held presently exercisable options to acquire, an
aggregate of 632,075 Common Shares, approximately 5.3% of the outstanding
Common Shares (112,143 Common Shares outstanding plus 519,932 Common Shares
subject to such options) as of February 7, 1995. Except as specified above,
each of the aforementioned Trustees has voting and investment power (directly
or indirectly) with respect to the outstanding Common Shares indicated.
In addition, such executive officers hold options not presently exercisable
to acquire an aggregate of 26,000 Common Shares.
The Board of Trustees held four meetings during the year ended
November 30, 1994. In addition, there is one Committee of the Board of
Trustees, the Administrative-Audit Committee which, in addition to fulfilling
the functions of an audit committee, has supervisory responsibility for
personnel, Trustee nominations, compensation, including stock options, and
Trust administration. The Administrative-Audit Committee, which is comprised
of Messrs. Gunning, who acts as Chairman, Conant and Hampton, met 3 times
during the year ended November 30, 1994. The Administrative-Audit Committee
may also make recommendations to the Board of Trustees and does not have the
power to bind the Trust, except that such Committee is empowered to function
as the Compensation and Stock Option Committee in administering all of the
Trust's stock option plans and in fixing the compensation of executive
officers.
The Trust's policy effective December 1, 1994, is to pay each Trustee
other than Mr. Coues (i) a $12,000 annual fee and (ii) $1,000 per Board of
Trustees or committee meeting attended; provided, however, that the Trustees
receive $500 for each committee meeting attended on the same day a Board
meeting is held. Trustees have been provided with the option to receive
their $12,000 annual retainer, or a portion thereof, in advance for the sole
purpose of making open market purchases of Common Shares as legally permissible.
-5-
<PAGE>
The following table contains certain information regarding additional
executive officers of the Trust:
<TABLE>
<CAPTION>
Executive Officer's
Name Age Principal Occupation
- ----------------------- -------------- ----------------------------------------------------------------------
<S> <C> <C>
Robert Ware............... 56 Executive Vice President since December 1989; Senior Vice
President from April 1986 to December 1989
Phillip C. Vitali......... 44 Executive Vice President since December 1989; Senior Vice
President from January 1987 to December 1989; Treasurer and
Chief Financial Officer since March 1986.
Karl W. Weller............ 37 Senior Vice President from March 1993 to present: for more
than five years prior thereto, Vice President, Aetna Life &
Casualty Company and Managing Director, real estate
investment group.
</TABLE>
EXECUTIVE COMPENSATION
The following table provides information regarding compensation
(including option/SAR grants) of executive officers of the Trust for the
fiscal year ended November 30, 1994.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
Long-Term
Compensation
--------------
Annual Compensation Awards
----------------------------- --------------
All Other
Name and Principal Position Year Salary Bonus(2) Options(3) Compensation(4)
- ---------------------------- ------------ ------------- ------------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
W. Pearce Coues................ 1994 $261,414 $68,125 35,000 $60,137
Chairman of the Board and Chief 1993 $249,084 $80,250 - $56,986
Executive Officer 1992 $245,952 $33,375 25,000 $56,986
Phillip C. Vitali.............. 1994 $154,269 $21,800 8,000 $24,872
Executive Vice President; 1993 $145,950 $29,425 - $21,656
Treasurer and Chief 1992 $144,529 $19,861 12,000 $21,252
Financial Officer
Robert Ware.................... 1994 $147,188 $21,800 8,000 $39,994
Executive Vice President 1993 $139,874 $29,425 - $28,428
1992 $137,695 $25,500 12,000 $27,292
Karl W. Weller(5).............. 1994 $141,794 $20,438 6,000 $21,300
Senior Vice President 1993 $102,363 $24,075 12,000 $8,567
-6-
<PAGE>
<FN>
(1)This Table covers all executive officers receiving compensation of at least $100,000. The Table does not
include columns for Other Annual Compensation, Restricted Stock Awards and Long Term Incentive Plan Payouts as
there was no information to report with respect to these columns.
(2)All of these bonuses were paid in the form of Common Shares (except for a portion of Mr. Vitali's 1993 and 1992
bonuses).
(3)Options awarded under the Trust's 1988 Stock Option and Stock Appreciation Rights Plan for Key Employees may
include a tandem grant of stock appreciation rights ("SARs"). An SAR is exercisable at any time the Option to
which it relates can be exercised, but only upon a showing of "hardship" by the optionee and upon consent of
the Board's Compensation and Stock Option Committee. In addition, an SAR may be exercised only if prior to the
exercise, the Optionee has exercised or exercises an equivalent number of options granted pursuant to the
plan. A Hostile Change in Control, as defined, abrogates the hardship requirement and the prior or
simultaneous option exercise requirement. SARs terminate when the related option is exercised. Mr. Coues was
granted in tandem with stock options, 1,500 SARs in 1994 and 1,826 SARs in 1992. Messrs. Vitali and Ware were
each granted in tandem with stock options, 4,000 SARs in 1994 and 2,825 SARs in 1992. Mr. Weller was granted
in tandem with stock options, 3,000 SARs in 1994 and 6,000 SARs in 1993.
(4)All Other Compensation is comprised of contributions to the respective Simplified Employees Pension Plan (SEPP)
of each individual and amounts accrued by or payments made by the Trust to the accounts of participants in the
Trust's Supplemental Retirement Plan (SERP). The SEPP contribution for Mr. Coues was $25,137 in 1994 and
$30,000 in each of 1993 and 1992. The SERP contribution was $35,000, $26,986 and $26,986 in 1994, 1993 and
1992, respectively. All amounts listed for Mr. Vitali are SEPP contributions. The SEPP contributions for Mr.
Ware were $24,994, $21,472 and $20,336 in 1994, 1993 and 1992, respectively. The SERP contribution for Mr.
Ware was $15,000 in 1994 and $6,956 in each of 1993 and 1992. All amounts listed for Mr. Weller are SERP
contributions.
(5)Mr. Weller's employment commenced on March 1, 1993 and he was appointed an executive officer in December 1993.
</FN>
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants For Option Term(1)
---------------------------------------------------------- ----------------------------
% of Total
Options/SARs
Granted to Exercise
Options Employees in Price Expiration
Name Granted(2) Fiscal Year Per Share Date 5% 10%
- ----------------------- ---------- ------------ --------- ---------- --- ----
<S> <C> <C> <C> <C> <C> <C>
W. Pearce Coues......... 35,000 57.4% $13.50 12/14/03 $297,500 $752,500
Phillip C. Vitali....... 8,000 13.1% $13.50 12/14/03 $ 68,000 $172,000
Robert Ware............. 8,000 13.1% $13.50 12/14/03 $ 68,000 $172,000
Karl W. Weller.......... 6,000 10.2% $13.50 12/14/03 $ 51,000 $129,000
<FN>
__________________
(1) Options will have no actual value unless, and then only to the extent that, the stock
price of the Common Shares appreciates from the grant date to the exercise date.
-7-
<PAGE>
(2) Options awarded under the Trust's 1994 and 1988 Stock Option and Stock
Appreciation Rights Plan for Key Employees may include a tandem grant of SARs. An
SAR is exercisable at any time the option to which it relates can be exercised, but only
upon a showing of "hardship" by the Optionee and upon consent of the Board's
Compensation Committee. In addition, an SAR may be exercised only if prior to the
exercise, the Optionee has exercised or exercises an equivalent number of options
granted pursuant to such plan. SARs granted in tandem with 1994 stock option awards
were 1,500 to Mr. Coues, 4,000 each to Messrs. Vitali and Ware and 3,000 to Mr.
Weller (representing 10.3%, 27.6%, 27.6% and 20.7% of the SARs granted in fiscal 1994).
</FN>
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of
Unexercised Unexercised In-
Options/SARs At the-Money
Common Shares Fiscal Year- Options/SARs At
Name Acquired On Exercise Value Realized($) End(1)(2) Fiscal Year-End(1)
- --------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
W. Pearce Coues............... -- -- 174,000 $276,057
Phillip C. Vitali............. -- -- 89,432 $175,611
Robert Ware................... -- -- 89,500 $165,562
Karl W. Weller................ -- -- 18,000 $ 3,000
<FN>
(1) All options are presently exercisable.
(2) Outstanding SARs, all of which were granted in tandem with stock options, aggregated
at fiscal year-end 39,598 for Mr. Coues, 34,313 for Mr. Vitali, 34,347 for Mr. Ware
and 9,000 for Mr. Weller.
</FN>
</TABLE>
-8-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return
on the Trust's Common Shares to the total returns in the Standard and Poor's
500 Stock Index and the National Association of Real Estate Investment Trusts
("NAREIT") Total Return Indicies for Equity REITS.
[TABULAR REPRESENTATION OF LINE GRAPH]
1989 1990 1991 1992 1993 1994
MGI 1000 628.2 947.0 1151.0 1443.6 1557.7
S&P 500 1000 964.7 1161.2 1375.1 1513.7 1530.0
NAREIT-EQUITY 1000 847.3 1069.8 1290.3 1574.4 1511.3
-9-
<PAGE>
REPORT OF ADMINISTRATIVE-AUDIT COMMITTEE
ON EXECUTIVE COMPENSATION
The Administrative-Audit Committee (the "Committee"), which serves as
the Trust's Compensation and Stock Option Committee, is composed entirely of
independent, non-management Trustees. The Committee is responsible for
adopting, implementing and administering the policies which govern annual
compensation and short-term and long-term incentive programs, including
stock option plans.
The Committee annually evaluates the Trust's operating performance
and financial position, annual salary and incentive compensation and stock
option matters and compares the Trust's overall performance within its own
industry and with real estate companies in general.
The Committee meets without the Chief Executive Officer present for
the purpose of evaluating his performance and reports their deliberations and
determinations to all of the independent Trustees of the Board. The Committee
receives recommendations made by the Chief Executive Officer with respect to
the remaining executive officers and the Committee reviews these
recommendations in light of the factors set forth below. The Committee's
actions (with respect to executive compensation matters) are generally
reported to and ratified by the full Board of Trustees (absent the Chief
Executive Officer who is the sole non-independent Trustee).
In establishing fiscal 1994 compensation levels for executive
officers, including the Chief Executive Officer, the Committee considered
several factors. These factors involved both internal and external
measurements and comparisons bearing upon the overall operating
performance and financial position of the Trust and the successful investment
of the proceeds of a 1993 equity offering. The performance measures reviewed
by the Committee were actual funds from operations as compared to budget,
management's leasing success relative to market occupancy levels and market
rents and relative to the magnitude of scheduled maturities, and property net
operating income versus budget and prior year levels. The Committee also
considers the management of the liability side of the Trust's balance sheet,
including the flexibility attained with respect to available financial
resources and the maintenance of the overall quality levels of tenants
and properties.
From time to time, the Committee also considers the advice of an
outside compensation consultant with respect to comparable REIT and non-REIT
organizations and with respect to executive compensation matters generally.
In setting fiscal 1994 salaries, the Committee also considered the most recent
executive compensation survey by the National Association of Real Estate
Investment Trusts. The Trust has not established a policy with regard to
Section 162(m) of the Internal Revenue Code of 1986, as amended, since the
Trust has not and does not currently anticipate paying compensation in excess
of $1 million per annum to any employee.
-10-
<PAGE>
The Committee determined to make annual share bonus awards to the
executive officers with respect to fiscal 1994 premised upon performance
factors which they believed would serve the short-term and long-term interests
of shareholders. Eligible recipients were determined to be the four executive
officers of the Trust and two other officers. In December 1993, the Committee
voted to continue a discretionary guideline (based in part upon recommendations
of an outside compensation consultant) providing criteria for the award of
short-term incentive share bonuses to these officers. The Committee set two
measurement categories, shareholders' Total Return (i.e., increase in stock
price plus dividends) and Funds from Operations, as the determinants for this
annual stock bonus, of which up to 30% can be taken in cash by a recipient.
Funds from Operations was given 75% weight, and the Total Return element was
given 25% weight. "Minimum," "Budget," "Target" and "Stretch" thresholds for
each measurement category were established.
Based upon the Trust's fiscal 1994 operating results and stock price
performance, short-term share bonuses were awarded in December 1994. The 1994
bonuses reflected 1994 results attaining the "stretch" threshold with respect
to Funds from Operations and attaining the "Minimum" threshold in respect of
Total Return and resulted in stock awards of approximately 22.5% of 1994
salary in the case of the Chief Executive Officer and approximately 15% of
salary to the remaining executive officers. See "Summary Compensation Table."
In the exercise of its discretion as permitted under the guidelines and
taking into consideration the fact that the Chief Executive Officer
requested that his base compensation not be increased in fiscal 1995, the
1994 share bonus awarded to the Chief Executive Officer was increased to
approximately 26% of his 1994 salary.
Stock options were granted by the Committee in December 1994 to all
executive officers under the Trust's 1994 Employee Plan in furtherance of the
Committee's practice and policy of making stock option awards as a means of
reinforcing management's identity of interest with shareholders and creating
long-term incentives for growing Trust asset value. The executives referred to
in the Summary Compensation Table received such options as follows:
W. Pearce Coues, 50,000; Robert Ware, 18,000; Phillip C. Vitali, 18,000
and Karl Weller, 16,000. All of the stock options granted in December 1994
vest as to one-half immediately and the balance upon the first anniversary
thereof in December, 1995.
In December 1993, the Committee also determined, based upon the
advice of its actuarial consultant (KPMG Peat Marwick LLP), the amount of its
SEPP and SERP contributions with respect to the 1994 plan year. In the case
of the SERP, for the plan year 1994, such amounts were fixed at $35,000 for
Mr. Coues and $15,000 for Mr. Ware. Mr.Weller was a participant in the SERP
in fiscal 1994 and fiscal 1993, and a contribution of 15% of his salary
in 1994 and 7.5% of his salary in 1993 was made by the Trust to the SERP
for Mr. Weller's benefit.
FRANCIS P. GUNNING, Chairman
HERBERT D. CONANT
COLIN C. HAMPTON
-11-
<PAGE>
Stock Option Plans
As of February 7, 1995, executive officers and Trustees as a group
(9 persons) held presently exercisable options to purchase a total of 519,932
Common Shares under all of the Trust's stock option plans at exercise prices
ranging from $7.375 to $14.25 per Common Share. In addition, the members of
such group hold options not presently exercisable to acquire an aggregate of
51,000 Common Shares. Of all outstanding options, 62,416 were granted
pursuant to the 1982 Incentive Plan, 228,844 pursuant to the 1988 Employee
Plan, 56,672 under the 1994 Employee Plan, 52,284 pursuant to the 1982
Trustees' Plan and 119,716 pursuant to the 1988 Trustees' Plan.
Severance Compensation Plan
Effective June 11, 1987, and as amended on December 19, 1989, the
Board of Trustees adopted a severance compensation plan for officers in the
event of a "hostile takeover," which includes the following events, if not
approved by two-thirds of the members of the Board of Trustees in office
immediately prior to the occurrence of any such event: the election as
Trustee(s) in any year of one or more persons not nominated by at least
two-thirds of the Board of Trustees in office prior to such election; a
business combination such as a merger; the acquisition of 15% or more of the
voting power of the Trust's securities by any person or entity; or the
failure of the Trust to qualify as a "REIT" for tax purposes by reason of more
than 50% in value of the Shares outstanding being held by five or fewer
individuals.
All full time officers who have completed a minimum of thirty-six
months of continuous employment with the Trust are eligible under the plan.
An eligible officer is entitled to severance benefits if (i) such individual
terminates his or her employment within two years after a hostile takeover for
reasons such as a reduction in compensation, discontinuance of employee
benefit plans, change in duties or status and certain changes in job
location or (ii) if the individual is terminated for reasons other than "just
cause" as defined in the plan. The severance payment is equal to three months
compensation for each twelve months of employment based on the highest total
annual compensation rate earned prior to the Hostile Change in Control
(up to a maximum of 24 months of compensation payable at such rate, but 36
months in the case of Messrs. Coues, Ware and Vitali). Fringe benefits are
also continued for the number of months for which compensation is paid.
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PROPOSAL NO. 2
INCREASE IN AUTHORIZED PREFERRED STOCK
The Board of Trustees has declared advisable and directed that
there by submitted to the shareholders of the Trust at the Annual Meeting a
proposed amendment to Article VI, Section 6.1 of the Trust's Declaration of
Trust (the "Declaration of Trust") which would effect an increase in the
number of authorized Preferred Shares from 2,000,000 shares to 6,000,000.
As of the close of business on February 7, 1995, there were no Preferred Shares
issued or outstanding, albeit 150,000 Series A Participating Preferred Shares
were reserved for issuance under the Trust's Shareholder Rights Plan.
If approved, the increased number of authorized Preferred Shares
will be available for issuance from time to time for such purposes and
consideration as the Board of Trustees may approve and no further vote of
shareholders of the Trust will be required, except as provided under
Massachusetts law or the rules of any national securities exchange on which
Common Shares are at the time listed. The availability of additional
Preferred Shares for issuance, without the delay and expense of obtaining the
approval of shareholders at a special meeting, will afford the Trust greater
financial flexibility than it currently has.
The additional Preferred Shares for which authorization is sought
would be of the same class of Preferred Shares currently authorized, and
would be undesignated as to series. Under the Declaration of Trust, the
Board of Trustees is authorized to designate the terms of any new
series of Preferred Shares, including dividend rates, voting rights,
redemption prices and conversions or other special rights, if any, without
further action by shareholders of the Trust.
The creation of additional Preferred Shares will increase the
Trust's financial flexibility. The Board of Trustees believes that the
complexity of modern business financing and acquisition transactions requires
greater flexibility in the Trust's capital structure than now exists.
Additional Preferred Shares will be available for issuance from time to time
as determined by the Board of Trustees for any proper corporate purpose.
Such purposes could include, without limitation, issuance in public or private
sales for cash as a means of obtaining capital for use in the Trust's business
and operations, issuance as part or all of the consideration required to be
paid by the Trust for acquisitions of other businesses or properties, and
issuance under employee benefit plans.
The Trust does not presently have any plans, agreements,
understandings or arrangements that will or could result in the issuance of
any Preferred Shares.
It is not possible to state the actual effect of the authorization of
additional Preferred Shares upon the rights of holders of Common Shares until
the Board of Trustees determines the respective rights of the holders of one
or more series of Preferred Shares. The effects of such issuance could
include, however: (i) reduction of the amount otherwise available for
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<PAGE>
payments of dividends on Common Shares if dividends are payable on the
Preferred Shares, (ii) restrictions on dividends on Common Shares if dividends
on the Preferred Shares are in arrears, (iii) dilution of the voting power of
Common Shares if the Preferred Shares have voting rights and (iv) restrictions
on the rights of holders of Common Shares to share in the Trust's assets upon
liquidation until satisfaction of any liquidation preference granted to the
holders of Preferred Shares.
The creation of additional Preferred Shares could further discourage
an attempt by a person to acquire control of the Trust by a tender offer or
other means. It could therefore deprive shareholders of benefits that could
result from such an attempt, such as the realization of a premium over the
market price of their shares in a tender offer or the temporary increase
in market price that such an attempt could cause. Moreover, the issuance of
voting Preferred Shares to persons friendly to the Board of Trustees could make
it more difficult to remove incumbent management and Trustees from office even
if such change would be favorable to shareholders generally.
Pursuant to Article 13.1 of the Declaration of Trust, the affirmative
vote of the holders of a majority of the outstanding Common Shares entitled to
vote at the Annual Meeting is required to authorize the proposed increase in
the authorized number of Preferred Shares. If the amendment is authorized,
the text of Article VI, Section 6.1 of the Declaration of Trust (which will
remain unchanged other than changing from 2,000,000 to 6,000,000 the number of
Preferred Shares which the Trust shall have authority to issue) will be as
follows:
"Section 6.1. Description of Shares. The interest of the
Shareholders hereunder shall be divided into shares of beneficial
interest which shall be known collectively as "Shares," all of which
shall be fully paid and no assessment shall ever be made upon
Shareholders. There shall be two classes of Shares; one such class
shall be known as "Common Shares," $1 par value, and the other shall
be known as "Preferred Shares," $1 par value. The number of Common
Shares which the Trust shall have authority to issue is 17,500,000,
and the number of Preferred Shares which the Trust shall have
authority to issue is 6,000,000."
The Board of Trustees recommends that shareholders vote FOR the
proposed increase in authorized Preferred Shares.
INDEPENDENT AUDITORS
It is expected that the accounting firm of KPMG Peat Marwick LLP will
again be selected as the independent auditors for the Trust for the current
fiscal year ending November 30, 1995. A representative of that firm, which
served as the Trust's independent auditors for the fiscal year ended
November 30, 1994, is expected to be present at the Annual Meeting and, if
he so desires, will have the opportunity to make a statement, and in any event
will be available to respond to appropriate questions.
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<PAGE>
SHAREHOLDER PROPOSALS
To the extent required by law, for a shareholder proposal to be included
in the proxy statement for next year's annual shareholders' meeting, it must
be received at the Trust's principal executive offices prior to October 23,
1995.
OTHER MATTERS
So far as now known, there is no business other than that described above
to be presented for action by the shareholders at the Annual Meeting, but it
is intended that the proxies will be voted upon any other matters and proposals
that may legally come before the Annual Meeting or any adjournment thereof, in
accordance with the discretion of the persons named therein.
The Annual Report for the fiscal year ended November 30, 1994 is being
mailed herewith. If, for any reason, you did not receive your copy of the
report, please advise the Trust and another will be sent to you.
By Order of the Trustees,
W. Pearce Coues
Chairman of the Board
Dated: Boston, Massachusetts
February 17, 1995
The Trust will furnish, without charge, a copy of its Annual Report on Form
10-K for the fiscal year ended November 30, 1994 (as filed with the Securities
and Exchange Commission) to shareholders as of February 7, 1995 who make
written request therefor to Ms. Jean M. Harrington, Vice President, MGI
Properties, 30 Rowes Wharf, Boston, Massachusetts 02110.
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<PAGE>
PRELIMINARY COPY
MGI PROPERTIES
Proxy solicited on behalf of the Board of
Trustees for Annual Meeting on March 22, 1995
PROXY
MGI Properties Proxy
Job-1 1/18/95
2 Proposals
The undersigned hereby appoints W. PEARCE COUES and PHILLIP C. VITALI, and
each of them with power in each to vote in the absence of the other,
as the Proxy Agents of the undersigned, with full power of substitution
and with all the powers the undersigned would possess if prsonally present
to vote all the Common Shares of the undersigned in MGI PROPERTIES at the
Annual Meeting of the Shareholders scheduled to be held on March 22, 1995 and
at all adjournments thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example
MGI Properties Proxy
Job-1: 1/18/95
2 Proposals
1. Election of three Trustees as recommended in Management's Proxy Statement:
Nominees: W. Pearce Coues, Herbert D. Conant and George S. Bissell
FOR [ ] WITHHELD [ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), PRINT NAME(S) ABOVE
2. Approval of a proposed amendment to Article VI, Section 6.1 of the Trust's
Declaration of Trust as recommended in Management's Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, upon such other business as may properly come before
the meeting.
Proxies will be voted for the election of Trustees and the approval of the
proposed amendment to the Trust's Declaration of Trust as recommended in
the Proxy Statement unless contrary instructions are hereinabove indicated.
Discretionary authority is granted the Proxy Agents as to other matters that
may come before the meeting. Management knows of no such other matters.
Receipt of the MGI PROPERTIES Proxy Statement is hereby acknowledged. All
proxies heretofore signed by the undersigned are hereby revoked.
Please insert date and sign exactly as name(s) appear herein. When signing
as attorney, custodian, administrator, executor or guardian, please give full
title as such. Corporations are requested to sign their names by their
Position or other authorized officer. All joint owners should sign.
Signature: Date
Signature: Date
