SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNITED DOMINION REALTY TRUST
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
<PAGE>
[UNITED DOMINION LOGO]
April 16, 1998
Fellow Shareholders:
Please accept my personal invitation to attend the Annual Meeting of
Shareholders to be held on Tuesday, May 12, 1998, at 4:00 p.m. at the
Omni Richmond Hotel, 12th and Cary Streets, Richmond, Virginia. The
business to be conducted at the meeting is set forth in the formal
notice that follows. At the meeting, management will review 1997,
report on recent financial results and discuss expectations for the
future. The directors and senior management will be available to answer
any questions from the floor. After the meeting, there will be a
reception and you will have the opportunity to speak informally with
the directors, officers and other management of the Company.
We rely upon all shareholders to execute and return their proxies
promptly in order to avoid costly proxy solicitation. Therefore, to
save the unnecessary expense of further proxy solicitation, even if you
plan to attend the Annual Meeting, please complete, date and promptly
return the enclosed proxy card in the envelope provided. If you attend
the Annual Meeting, as I hope you do, you may withdraw your proxy at
the meeting and vote your shares in person from the floor. Your vote is
important to the Company.
Sincerely,
UNITED DOMINION REALTY TRUST, INC.
/s/ JOHN P. MCCAN
JOHN P. MCCANN
Chairman of the Board and President
10 SOUTH SIXTH STREET, RICHMOND, VIRGINIA 23219-3802 / 804-780-2691
<PAGE>
[UNITED DOMINION LOGO]
April 16, 1998
Notice of Annual Meeting of Shareholders
To Be Held On Tuesday, May 12, 1998
The Annual Meeting of Shareholders (the "Annual Meeting") of United Dominion
Realty Trust, Inc. (the "Company") will be held at the Omni Richmond Hotel,
12th and Cary Streets, Richmond, Virginia, on Tuesday, May 12, 1998 at 4:00
p.m., for the following purposes:
1. To elect twelve directors to serve for the ensuing year.
2. To consider and vote upon amendments of the Company's 1985 Stock Option Plan
(the "Stock Option Plan") which will (i) limit the number of shares of Common
Stock issuable on the exercise of options outstanding at any time to 8% of the
number of shares of Common Stock issued and outstanding at that time, subject
to a maximum aggregate limit of shares that may be issued upon exercise of
options granted under the Stock Option Plan of 10,000,000, and (ii) allow
optionees to pay the exercise price of options in installments.
3. To consider and vote upon an amendment of the Articles of Incorporation (the
"Articles") which will create a new class of equity security ("Classified
Common Stock") ranking junior to the Preferred Stock as to dividends and upon
liquidation, issuable in series, the preferences, limitations and relative
rights of which may be fixed by the Board of Directors.
4. To consider and vote upon an amendment of the Articles which will conform
the voting rights of the 9 1/4% Series A Cumulative Redeemable Preferred Stock
(the "Series A Preferred") to the New York Stock Exchange (the "NYSE") Listed
Company Manual.
5. To consider and vote upon an amendment of the Articles which will conform
the voting rights of the 8.60% Series B Cumulative Redeemable Preferred Stock
(the "Series B Preferred") to the NYSE Listed Company Manual.
6. To transact such other business as may properly come before the meeting.
The holders of shares of Common Stock of record at the close of business on
March 12, 1998 (the "Record Date") are entitled to vote at the Annual Meeting
on all matters described in this Notice. The holders of shares of Series A
Preferred and Series B Preferred at the close of business on the Record Date
are entitled to vote at the Annual Meeting only on the matters described in
paragraphs 4 and 5. The matters described in paragraph 2 will be voted on as a
unit. If you are present at the Annual Meeting, you may vote in person even
though you have previously delivered your proxy.
By Order of the Board of Directors
/s/ Katheryn E. Surface
Katheryn E. Surface
Corporate Secretary
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
United Dominion Realty Trust, Inc.
Proxy Statement
April 16, 1998
General
The enclosed proxy is solicited by the directors of the Company for the
Annual Meeting to be held at the Omni Richmond Hotel, 12th and Cary Streets,
Richmond, Virginia, at 4:00 p.m. on Tuesday, May 12, 1998. The proxy may be
revoked at any time prior to voting thereof by notifying the persons named
therein of intention to revoke or by conduct inconsistent with continued
effectiveness of the proxy, such as delivery of a later dated proxy or
appearance at the Annual Meeting and voting in person the shares to which the
proxy relates. Shares represented by executed proxies will be voted, unless a
different specification is made therein, FOR election as directors of the
persons named therein, FOR approval of the amendments of the Stock Option Plan,
and FOR the amendments of the Articles as each is described herein. This proxy
statement and the enclosed proxy were mailed beginning on or before April 16,
1998 to shareholders of record at the close of business on the Record Date. The
Company has mailed each holder of Common Stock of record as of the Record Date
an Annual Report that includes audited financial statements for the year ended
December 31, 1997.
At the close of business on the Record Date, there were 91,886,256 shares
of Common Stock, 4,200,000 shares of Series A Preferred and 6,000,000 shares of
Series B Preferred outstanding and entitled to vote. Each share of Common Stock
has one vote on all matters including those to be acted upon at the Annual
Meeting. Each share of Series A Preferred and each share of Series B Preferred
has one vote on the amendments of the Articles affecting the voting rights of
the holders of the Series A Preferred and the Series B Preferred. The holders
of a majority of the shares of a class or series present at the Annual Meeting
in person or represented by proxies will constitute a quorum of the holders of
such class or series. If a quorum of the holders of the Common Stock is
present, the affirmative vote of (i) a plurality of the shares of Common Stock
voting at the Annual Meeting is required to elect directors, (ii) a majority of
the shares of Common Stock voting at the Annual Meeting is required to approve
amendment of the Stock Option Plan, provided the total number of shares voted
is a majority of the shares outstanding and entitled to vote, and (iii) a
majority of the shares of Common Stock outstanding and entitled to vote is
required to approve the amendment of the Articles creating the Classified
Common Stock. If quorums of each of the holders of the Common Stock, the
holders of the Series A Preferred and the holders of the Series B Preferred are
present, the affirmative vote of (i) two-thirds of the shares of Series A
Preferred outstanding and entitled to vote, (ii) two-thirds of the shares of
Series B Preferred outstanding and entitled to vote, and (iii) a majority of
the shares of Common Stock outstanding and entitled to vote is required to
approve the amendments of the Articles affecting the voting rights of the
Series A Preferred and the Series B Preferred. If one or more of such quorums
is not present, these amendments will not be submitted to the vote of the
shareholders.
Shareholders who wish to abstain from voting on any matter to be voted on
at the Annual Meeting may do so by specifying that their vote on such matter be
withheld in the manner provided in the enclosed proxy, and the shares otherwise
votable by such shareholders will not be included in determining the number of
shares voted on such matter. The Company will comply with instructions in a
proxy executed by a broker or other nominee shareholder that less than all of
the shares of which such shareholder is the holder of record on the Record Date
are to be voted on a particular matter. All such shares which are not voted
("broker non-votes") will be treated as shares as to which vote has been
withheld.
1
<PAGE>
The mailing address of the Company is 10 South Sixth Street, Richmond,
Virginia 23219-3802. Notices of revocation of proxies should be sent to that
address.
The Company will provide shareholders, without charge, a copy of the
Company's annual report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1997, including financial statements
and schedules thereto, on written request to the mailing address set forth
above, Attention: Investor Services.
Ownership of Equity Securities
"Beneficial ownership" as used herein has been determined in accordance
with the rules and regulations of the Securities and Exchange Commission (the
"Commission") and is not to be construed as an admission that any of such
shares are in fact beneficially owned by any person. As of the Record Date,
there are no shareholders known to the Company who own beneficially 5% or more
of the outstanding shares of Common Stock, Series A Preferred or Series B
Preferred.
Beneficial ownership of shares of Common Stock as of the Record Date by
each director, each Named Executive and all directors and executive officers as
a group of the Company and nominees for election at the Annual Meeting,
including shares deemed owned as a consequence of ownership of stock options
exercisable within 60 days, is indicated in the table below. Except as
otherwise indicated in the footnotes, each person named in the table and
included in the director/officer group has sole voting and investment powers as
to such shares, or shares such powers with his or her spouse and minor
children, if any. No person named in the table or included in the
director/officer group owns any shares of Series A Preferred or Series B
Preferred.
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership (1)
-----------------------------------------
Shares for which
Shares Beneficial Ownership Total
Name of Beneficially can be Acquired Beneficial Percent
Beneficial Owner Owned (1) within 60 Days (2) Ownership of Class
- ------------------------------------ ---------------- ---------------------- ------------ ---------
<S> <C> <C> <C> <C>
Jeff C. Bane ....................... 105,739(3) 10,000 115,739 .1
R. Toms Dalton, Jr. ................ 37,000 8,000 45,000 .1
James Dolphin ...................... 158,354 113,500(7) 271,854 .3
David L. Johnston(4) ............... 43,163 30,000(7) 73,163 .1
Jon A. Grove(5) .................... -- -- -- --
Barry M. Kornblau .................. 267,335 73,221(7) 340,556 .4
John C. Lanford .................... 12,323 10,000 22,323 --
John P. McCann ..................... 383,400(3) 348,124(7) 731,524 .8
H. Franklin Minor .................. 59,700 10,000 69,700 .1
Lynne B. Sagalyn ................... 1,000 9,000 10,000 --
Mark J. Sandler .................... 55,280 2,000 57,280 .1
Robert W. Scharar .................. 33,172 2,000 35,172 --
John S. Schneider .................. 433,937 30,000(7) 463,937 .5
Robert F. Sherman(6) ............... 169,979 30,000(6) 199,979 .2
C. Harmon Williams, Jr. ............ 99,994(3) 10,000 109,994 .1
All directors and Named Executives
as a group (15 persons) ......... 1,785,376 685,845(7) 2,471,221 2.7
All directors and executive officers
as a group (20 persons) ......... 1,998,232 839,406 2,837,638 3.1
All directors, executive officers
and officers as a group
(59 persons) .................... 2,334,792 1,203,353 3,538,145 3.9
</TABLE>
- ----------
(1) Includes shares owned pursuant to the Officers' Stock Purchase and Loan
Plan
(2) Assumes exercise in full of all options exercisable within 60 days.
(3) Includes, in the case of Messrs. McCann, Bane and Williams and all
directors and officers as a group, 37,500 shares owned by Planned Property
Realty Corp., of which Mr. McCann is President and 50% shareholder and of
which Messrs. Bane and Williams are each 25% shareholders.
(4) Effective January 31, 1998, Mr. Johnston was no longer employed by the
Company.
(5) Under the terms of the Company's agreement (the "ASR Merger Agreement") for
the acquisition of ASR Investments Corporation ("ASR"), Mr. Grove, the
former Chairman of the Board, President and Chief Executive Officer of
ASR, was appointed to the Board of Directors at the closing of the
acquisition on March 27, 1998. Shares of Common Stock beneficially owned
by Mr. Grove as reported in the table do not include 196,105 shares of
Common Stock issuable to Mr. Grove pursuant to the ASR Merger Agreement in
exchange for common stock of ASR ("ASR Common Stock") beneficially owned
by him, or 187,223 shares of Common Stock issuable on exercise of ASR
options to purchase ASR Common Stock exercisable within 60 days, which
will be assumed by the Company as options to purchase Common Stock of the
Company pursuant to the ASR Merger Agreement.
(6) Effective January 1, 1998, Mr. Sherman was no longer employed by the
Company.
(7) Does not include 183,224 shares, 57,488 shares, 226,076 shares, 120,000
shares and 995,205 shares issuable upon exercise of options granted to
Messrs. Dolphin, Kornblau, McCann and Schneider and all directors and
executive officers as a group, respectively, which are not exercisable
within 60 days.
3
<PAGE>
Election of Directors
At the Annual Meeting twelve directors are to be elected, each to hold
office until the next Annual Meeting of Shareholders and until his or her
successor is duly elected and qualified, except in the event of death,
resignation or removal. Unless otherwise specified, proxies solicited hereby
will be voted FOR election of the nominees listed below, except that in the
event any of those named should not continue to be available for election,
discretionary authority may be exercised to vote for a substitute. No
circumstances are presently known that would render any nominee named herein
unavailable. All of the nominees, except Mr. Grove, are now members of the
Board of Directors and were elected at the 1997 Annual Meeting of Shareholders.
Mr. Grove was appointed to the Board at the closing of the acquisition of ASR
as required by the ASR Merger Agreement, which also requires that Mr. Grove be
nominated for reelection at the Annual Meeting of Shareholders in 1999. John C.
Lanford, a director of the Company since 1973, will retire from the Board at
the Annual Meeting.
The nominees, their ages, the year of election of each to the Board, their
principal occupations during the past five years or more, and directorships of
each in other companies, are as follows:
Jeff C. Bane, 68, is President of Blake & Bane Inc., Richmond, Virginia,
real estate brokers. He is a director of F&M Bank, Richmond, Virginia. He was
first elected to the Board in 1972.
R. Toms Dalton, Jr., 65, is a partner with Allen & Carwile, Waynesboro,
Virginia, attorneys. He is a director of First Virginia Bank of Augusta,
Waynesboro, Virginia. He was first elected to the Board in 1973.
James Dolphin, 48, is Executive Vice President and Chief Financial Officer
of the Company. He was first elected to the Board in 1988.
Jon A. Grove, 54, was the Chairman of the Board, President and Chief
Executive Officer of ASR since its organization in 1987 until its acquisition
by the Company. He is also a director of American Southwest Holdings, Inc., in
Phoenix, Arizona.
Barry M. Kornblau, 48, is Senior Vice President of the Company and was the
Director of Apartments/East until April 18, 1997. He is also a director of
Community Bankshares, of Richmond, Virginia. He was first elected to the Board
in 1993.
John P. McCann, 53, is Chairman of the Board, President, and Chief
Executive Officer of the Company. He is a director of Crestar Bank, Capitol
Region, Richmond, Virginia, LandAmerica Financial Group, Inc. (formerly Lawyers
Title Insurance Corporation), Richmond, Virginia, and Storage USA, Inc.,
Memphis, Tennessee. He was first elected to the Board in 1978.
H. Franklin Minor, 64, is an attorney-at-law and real estate broker in
Richmond, Virginia. He was first elected to the Board in 1974.
Lynne B. Sagalyn, Ph.D., 50, has been professor and the coordinator of the
Real Estate Program at the Columbia University Graduate School of Business
since 1992. From 1991 to 1992, she was a visiting professor at Columbia. From
1987 to 1991, she was an associate professor of Planning and Real Estate
Development at Massachusetts Institute of Technology. Dr. Sagalyn is a trustee
of Capital Trust, a public real estate company that specializes in real estate
lending, and a director of The Retail Initiative for a Competitive Inner City.
She was first elected to the Board in 1996.
Mark J. Sandler, 55, was a senior managing director of Bear, Stearns &
Co., Inc., an investment banking firm, in charge of its real estate operations
from prior to 1987 until his retirement in October 1988. Since that time, Mr.
Sandler has managed his personal and family investments. Mr. Sandler, a
director of South West Property Trust Inc. ("South West") at the time it was
acquired by the Company, was first elected to the Board of the
4
<PAGE>
Company at the special meeting of shareholders of the Company held December 10,
1996 (the "1996 Special Meeting") at which the acquisition of South West was
approved.
Robert W. Scharar, 49, is President and a director of FCA Corp., a
registered investment advisor which he founded in 1983. He is also president
and a director of FCA Investment Company, a small business investment company,
and serves as a trustee of First Commonwealth Mortgage Trust and of United
Investors Realty Trust, both of which are REITs. Mr. Scharar is also past
president of the American Association of Attorneys -- CPAs. Mr. Scharar, a
director of South West at the time it was acquired by the Company, was first
elected to the Board of the Company at the 1996 Special Meeting.
John S. Schneider, 59, is the Chief Operations Officer and an Executive
Vice President of the Company and the Vice Chairman of the Board. He was the
former Chief Executive Officer and Chairman of the Board of South West or a
predecessor from 1973 through 1996. Mr. Schneider graduated from the Harvard
Business School in 1967 and was employed by the investment banking firm of
Donaldson, Lufkin and Jenrette until 1973, when he cofounded a predecessor firm
to South West. Mr. Schneider was first elected to the Board at the 1996 Special
Meeting.
C. Harmon Williams, Jr., 66, is a real estate broker in Charlottesville,
Virginia. He was first elected to the Board in 1972 and served as Chairman of
the Board from 1977 until 1996.
Committees of the Board
The Board has established a Compensation Committee and an Audit Committee
as its standing committees. The Compensation Committee sets directors' fees,
the compensation of the President and approves the compensation of the
Company's Executive and Senior Vice Presidents, who are in charge of the its
business divisions and/or functions. It also administers the contributions and
awards, if any, under employee benefit plans and management incentive programs,
and other management compensation, if any. Additionally, the Compensation
Committee approves the calculation of incentive/bonus compensation under the
employment agreements described in "Employment Agreements" below. The members
of the Compensation Committee during 1997 are identified below under
"Compensation Committee Interlocks and Insider Participation." The Audit
Committee reviews the financial reporting practices of the Company and the
external audit function. Messrs. Bane, Minor and Scharar and Dr. Sagalyn were
the members of the Audit Committee during 1997.
During 1997, the Board held 12 meetings (including 3 special meetings),
the Compensation Committee held 4 meetings and the Audit Committee held 5
meetings. Each director attended at least 75% of the meetings of the Board and
of the committee to which he or she was assigned.
5
<PAGE>
Compensation Committee Interlocks and Insider Participation
During 1997, the Compensation Committee consisted of Messrs. Dalton,
Lanford, Sandler and Williams. As described under "Compensation Committee
Report on Executive Compensation," Mr. McCann recommends the base and incentive
compensation of the Company's other executive officers.
Indebtedness of Management to the Company
The directors and executive officers of the Company listed in the table
below are indebted to the Company for Common Stock purchased pursuant to the
Company's 1991 Stock Purchase and Loan Plan (the "Stock Purchase Plan"). The
table indicates the largest amount of the indebtedness outstanding since the
beginning of fiscal year 1997 and the amount outstanding at March 31, 1998. As
provided in the Stock Purchase Plan, such indebtedness bears interest at 7% per
annum.
<TABLE>
<CAPTION>
Maximum Indebtedness Maximum
Since January 1, Indebtedness
Name 1997 at March 31, 1998
- ----------------------------------------------- ---------------------- ------------------
<S> <C> <C>
John P. McCann ................................ $1,696,301 $1,657,011
John S. Schneider ............................. 157,304 155,519
James Dolphin ................................. 858,981 841,045
Richard A. Giannotti .......................... 613,993 601,460
Katheryn E. Surface ........................... 343,220 338,199
Robert F. Sherman ............................. 157,304 --
David L. Johnston ............................. -- --
Curtis W. Carter .............................. 527,125 515,748
Robert L. Landis .............................. 187,876 185,767
Walter J. Lamperski ........................... 180,113 177,727
All directors and executive officers as a group
(20 persons) ................................. 5,392,332 5,123,026
</TABLE>
Compensation of Directors
For 1997, directors were paid retainer fees of $13,500 plus $1,000 for
each regular meeting attended. During 1997, the directors as a group (other
than Messrs. McCann, Dolphin, Kornblau and Schneider, who received no
additional compensation for serving as directors) received fees of $183,313.
Each independent director also receives an automatic annual grant of 2,000
stock options. Also, any independent director retiring from the Board after at
least twenty years of service will receive $5,000 per year for the five years
following retirement.
6
<PAGE>
Compensation of Executive Officers
The following table presents information relating to total compensation
during the fiscal years ended December 31, 1997, 1996 and 1995, of the chief
executive officer and the persons who were the four executive officers serving
at the end of fiscal 1997 who were most highly compensated for that year or who
served as executive officers during 1997 and would have been among the four
most highly compensated executive officers serving at 1997 year end if they
were then serving as executive officers (collectively, the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Awards
---------------------- Payouts
Other Restricted Securities --------- All
Name and Base Annual Stock Underlying LTIP Other
Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation (1)
- ---------------------------- ------ ------------ ------------ -------------- -------- ------------ --------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John P. McCann 1997 $ 363,000 $ 119,400 -- -- 160,000 -- $ 805
President and Chief 1996 335,000 53,626 -- -- 65,000 -- 2,590
Executive Officer 1995 320,000 83,904 -- -- 60,000 -- 2,887
John S. Schneider (2) 1997 $ 258,300 $ 107,100 -- -- 150,000 -- $ 805
Executive Vice President 1996 -- -- -- -- -- -- --
and Chief Operating 1995 -- -- -- -- -- -- --
Officer
James Dolphin 1997 $ 223,300 $ 68,000 -- -- 120,000 -- $ 805
Executive Vice President 1996 186,000 35,000 -- -- 32,500 -- 2,590
and Chief Financial 1995 176,000 46,147 -- -- 30,000 -- 2,887
Officer
Barry M. Kornblau (3) 1997 $ 208,300 $ 41,200 -- -- -- -- $ 805
Senior Vice President 1996 186,000 19,850 -- -- 32,500 -- 2,590
1995 176,000 46,147 -- -- 30,000 -- 2,887
Robert F. Sherman (2) 1997 $ 194,300 $ 89,090 -- -- 30,000 -- $ 805
Senior Vice President and 1996 -- -- -- -- -- -- --
Director of Apartment 1995 -- -- -- -- -- -- --
Operations/West
David L. Johnston (2) 1997 $ 194,300 $ 54,100 -- -- 30,000 -- $ 805
Senior Vice President 1996 -- -- -- -- -- -- --
and Director of 1995 -- -- -- -- -- -- --
Acquisitions/West
</TABLE>
- ----------
(1) Represents contributions to the Profit Sharing Plan for each of the Named
Executives. Messrs. McCann and Dolphin were, until June 30, 1997, trustees
of, and are participants in, the Profit Sharing Plan.
(2) Messrs. Schneider, Johnston and Sherman became executive officers of the
Company at the effective time of the acquisition of South West on December
31, 1996.
(3) Mr. Kornblau resigned his position as Director of Operations/East on April
18, 1997, and was not an executive officer at 1997 year end.
7
<PAGE>
Employment Agreements
In October, 1982, the Company entered into employment agreements with
Messrs. McCann and Dolphin. The employment agreements, which expire annually on
December 31 but renew automatically for successive one year periods unless
sooner terminated and are on substantially similar terms except for base
compensation terms, provide annual base salaries for the executives, subject to
increase at the discretion of the Board of Directors. The annual base salaries
for the employees for 1997 are disclosed above in the Summary Compensation
Table. The agreements also provide for annual incentive/bonus compensation, as
described in the "Compensation Committee Report on Executive Compensation"
which was adopted by the Compensation Committee of the Board of Directors for
1997 compensation. Either the Company or the employee may terminate the
agreement by 90 days' notice or in the event that the Company is sold, merged
or otherwise liquidated. The agreements provide that the employee is entitled
to severance pay equal to his then current annual base salary plus a pro-rata
portion of any incentive/bonus compensation payable for that year.
In December of 1996, the Company entered into an employment agreement with
Mr. Schneider. The employment agreement expires annually on December 31 but
renews automatically for successive one year periods unless sooner terminated,
and provides annual base salary, subject to increase at the discretion of the
Board of Directors. Mr. Schneider's base salary for 1997 is disclosed above in
the Summary Compensation Table. The agreement also provides for the payment of
an incentive/bonus based upon individual and corporate performance objectives
and for participation in the Stock Purchase Plan and the Stock Option Plan.
Either the Company or the employee may terminate the agreement if the Company
is merged, sold or consolidated and the Company is not the survivor, the
Company is otherwise liquidated or there is a change of control. The agreement
may also be terminated (i) by the employee by the giving of 90 days prior
notice, or (ii) by the Company prior to October 1 of each year, with the
effective date being December 31 of such year. Mr. Schneider is entitled to
severance compensation equal to (i) 13 weeks of his then current annual base
salary if the termination is prior to January 1, 2000, which increases to 26
weeks on January 1, 2000, and 52 weeks on January 1, 2007, plus (ii) a pro rata
portion of incentive/bonus compensation. The Company may terminate the
agreement at any time for cause, in which event the employee is not entitled to
any severance compensation.
8
<PAGE>
Stock Options
The following tables present information concerning stock options granted
to and exercised by the chief executive officer and the other Named Executives
of the Company during 1997. The Company does not grant stock appreciation
rights.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year (Note 1)
-----------------------------------------------------------------
Individual Grants
Number Of Percent of Total Potential Realizable Value
Securities Options/SAR's at Assumed Annual
Underlying Granted to Rates of Share Price
Options/SAR's Employees in Exercise or Appreciation for Option Term
Granted (#) Fiscal Year Base Price Expiration -----------------------------
Name (1) (2) ($/Share) Date 5% ($) 10% ($)
- ------------------- --------------- ------------------ ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John P. McCann 160,000 8.69% $ 14.250 12/9/07 $1,619,574 $4,225,106
John S. Schneider 120,000 6.52% 14.250 12/9/07 1,214,680 3,168,830
John S. Schneider 30,000 1.63% 15.375 1/2/07 327,644 854,750
James Dolphin 120,000 6.52% 14.250 12/9/07 1,214,680 3,168,830
Barry M. Kornblau -- -- -- -- -- --
David L. Johnston 30,000 1.63% 15.375 1/2/07 327,644 854,750
Robert F. Sherman 30,000 1.63% 15.375 1/2/07 327,644 854,750
</TABLE>
- ----------
(1) Stock options granted to employees on December 9, 1997, were granted at an
exercise price of $14.25, which was the fair market value as of the date of
the grant. One-third of the options vest as of December 31, 1998 and
two-thirds vest as of December 31, 1999. The options may not be exercised
until, at the earliest, January 1, 1999, and expire on December 9, 2007
(the tenth anniversary of the date of grant).
(2) A total of 1,841,000 employee stock options were granted during 1997.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised Options In-the-Money Options
Acquired Value At Fiscal Year End (1) at Fiscal Year End (2)
Name On Exercise Realized (2) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ------------- -------------- -------------------------------- --------------------------
<S> <C> <C> <C> <C>
John P. McCann 14,244 $95,237 289,459/290,633 $463,392/$23,317
John S. Schneider -- -- --/150,000 --/--
James Dolphin 13,444 96,629 78,909/217,815 167,081/30,219
Barry M. Kornblau 4,603 12,969 38,638/92,071 64,182/--
David L. Johnston -- -- --/30,000 --/--
Robert F. Sherman -- -- --/30,000 --/--
</TABLE>
- ----------
(1) Includes unvested options for 160,000 shares, 120,000 shares, 120,000
shares, granted to Messrs. McCann, Schneider and Dolphin, respectively.
(2) These values are calculated based on the difference between the exercise
price(s) and the fair market value of the stock, as determined by reference
to the closing sale prices on the NYSE as of the exercise date(s) or
December 31, 1997, as appropriate.
9
<PAGE>
Compensation Committee Report on Executive Compensation
The Board has delegated to the Compensation Committee responsibility for
developing and applying programs for compensating certain of the Company's
executive officers. During 1997, the Compensation Committee consisted of
Messrs. Dalton, Lanford, Sandler and Williams. In addition, as described below,
John P. McCann, President of the Company, participates by recommending the
compensation of the other executive officers.
The Compensation Committee attempts to design, develop and apply executive
compensation programs that will (i) provide appropriate incentives for the
executives while aligning their interests with those of the Company's
shareholders, (ii) attract and retain management talent, and (iii) to focus key
associates on business objectives and critical issues. The Company's executive
compensation consists of base salary, annual incentives and long term
incentives. Each of the elements and the process is described below.
Base Salary
The President consults with the Compensation Committee as to the amount of
his proposed base salary and that of the other executive officers. After
consulting with the President, and considering the factors discussed below, the
Compensation Committee sets the base salaries. Factors considered by the
Compensation Committee in setting base salaries include salaries paid for
similar positions within the real estate and REIT industry (with emphasis on
the multi-family sector) as published in industry statistical surveys, any
planned change of responsibility for the forthcoming year, and proposed base
salary relative to that of the other executive officers, with no one factor
being given more weight than any of the other factors. In setting the salaries
for the executive officers that joined the Company after the South West Merger,
the base salaries of the executive officers while with South West were also
considered.
Annual Incentives
In October 1996, the Company engaged CEL & Associates, Inc. (the
"Consultant") to assist with creating an annual incentive compensation
structure for key executives with varying responsibilities. The Consultant,
working with the President, assisted in establishing performance measures and
targets for each of the key executives and weighting among Company,
departmental and personal performance objectives depending upon the particular
executive's responsiblities. The targets were used to focus the executive's
attention on key business issues and objectives. The structure was used for the
first time in 1997.
The most important factor, to a maximum of 50% of annual incentive
compensation for each the top three Named Executives, was growth in funds from
operations ("FFO"). The actual amount of this component of the annual incentive
was a function of the rate of FFO per share growth, with none of the executives
receiving this component of annual incentive compensation if FFO growth were
below 4% per share. The remaining targets were focused on individual and
departmental goals for each executive, such as strategic Company objectives and
merger integration for the President, financing objectives for Mr. Dolphin,
property performance growth objectives for Messrs. Schneider and Sherman, and
acquisition and development goals for Mr. Johnston.
Long Term Incentives
The Compensation Committee also awards options and approves loans under
the stock purchase and loan plan. Participants in these plans are all key
employees in addition to the executive officers. These plans are the principal
long term compensation vehicles, and are designed to promote the alignment of
key employeess and the interests of the shareholders. In selecting recipients
and the size of their awards, the Compensation Committee considers their
positions with the Company, their long term potential and prior awards. The
Compensation Committee granted options in 1997 that vest one-third at the end
of 1998 and two-thirds at the end of 1999. The
10
<PAGE>
Committee believes that long-term incentive compensation should vest over a
multi-year period to help bind key associates to the Company. Except in special
situations such as new associates and for promotions, the Committee does not
plan to grant additional options to executive officers in 1998.
Compensation Committee
R. Toms Dalton, Jr. John C. Lanford C. Harmon Williams, Jr.
Mark J. Sandler
President
John P. McCann
Proposed Amendments of Stock Option Plan
The Board has adopted and recommends that the shareholders approve
amendments of the Stock Option Plan, which will (i) limit the number of shares
of Common Stock issuable on exercise of options outstanding at any time to 8%
of the number of shares of Common Stock issued and outstanding at that time,
subject to a maximum aggregate number of shares that may be issued pursuant to
the Plan of 10,000,000, and (ii) authorize the Company to permit any optionee
who is employed by the Company at the date of exercise of options to pay the
option price in installments.
If the amendments are approved by the shareholders, based on the number of
shares of Common Stock outstanding at April 8, 1998 (100,689,450 shares), the
maximum number of optionable shares will be 4,649,617 (8% of the number of
shares outstanding, less the total number of shares currently issuable upon
exercise of outstanding options). If the amendments are approved, any future
issuance of Common Stock for any purpose, including but not limited to
issuances upon exercise of options, will automatically increase the number of
shares available for options. In determining the number of shares of Common
Stock outstanding, no adjustment will be made for reacquisitions of issued
shares by the Company.
In 1996, the shareholders approved an increase in the number of shares of
Common Stock covered by the Stock Option Plan from 2,400,000 to 4,200,000.
Giving effect to that increase, the number of shares of Common Stock available
for options under the Stock Option Plan, was 2,400,000. Since 1996, the net
effect of option grants, exercises and terminations has been to reduce the
number of shares available for future options to only 180,040. Moreover, the
number of optionees has increased from approximately 86 in 1996 to
approximately 129 currently, and it is likely to increase further as the
Company adds multiple properties to its own portfolio through business
combinations and portfolio acquisitions, and potential optionees to its work
force. The Board continues to believe that the Stock Option Plan is an
effective incentive and long term compensation vehicle for key employees which
is critical in motivating and retaining key employees by aligning their
interests with those of the shareholders. Increasing the number of shares
available for options under the Stock Option Plan and providing for automatic
increases in the future is expected to assure an adequate reservation for
annual grant of options to key employees until the Stock Option Plan terminates
in 2002, and to make additional shareholder solicitations unnecessary.
If the amendments are approved, and if the Company permits installment
payment, it will lend the optionee an amount not exceeding 90% of the option
price. The loan will be evidenced by the optionee's promissory note payable in
five equal annual installments or in equal quarterly installments over a period
of five years, depending on the maximum loan value of the shares purchased. The
promissory note will bear interest at a rate determined by the Compensation
Committee, but not less than the minimum rate necessary to avoid imputed
interest or original issue discount under the Internal Revenue Code (currently
5.7%), and will be secured by a
11
<PAGE>
pledge of the purchased shares. So long as there is no default under the loan,
the optionee may receive dividends on and vote the pledged shares.
The Board believes that permitting installment purchases of shares on
exercise of options will facilitate option exercises and thus increase the
attractiveness of options granted under the Stock Option Plan as items of
incentive and long term compensation.
The amendments will be voted on as a unit.
Summary of Stock Option Plan
A summary of the material provisions of the Stock Option Plan as currently
in effect and certain additional information relating to options granted under
the Stock Option Plan are set forth below.
General
The Stock Option Plan reserves a total of 4,200,000 shares of Common Stock
(subject to adjustment pursuant to customary antidilution provisions) for
issuance upon exercise of options granted under the Stock Option Plan. The
Company has issued 614,421 shares upon exercise of options previously granted
and options for 3,405,539 shares (net of terminations of options for 189,140
shares reallocated to the Stock Option Plan as provided therein) are
outstanding, leaving 180,040 shares currently available for options. The market
value of the shares subject to outstanding options and reserved for future
options under the Stock Option Plan was $50,646,303 based on the closing sale
price of the Common Stock on the NYSE on April 8, 1998. Unless sooner
terminated by the Board, the Stock Option Plan will terminate on December 31,
2002.
The Stock Option Plan is intended to assist the Company in recruiting and
retaining directors and key employees with ability and initiative by enabling
directors and employees who contribute significantly to the Company to
participate in its future success and to associate their interests with those
of the Company. The Compensation Committee designates employees, including
employees who are directors, to whom options are to be granted. Non-employee
directors are granted options upon first being elected to the Board and
annually as described under "Options -- Non-employee Directors." Options
granted under the Stock Option Plan may be incentive stock options ("ISOs")
qualifying for favorable federal income tax treatment under Section 422A of the
Internal Revenue Code of 1981, as amended, or nonqualified stock options
("NQOs"), as determined by the Compensation Committee. Only NQOs may be granted
to directors who are not also employees. All options granted under the Stock
Option Plan are evidenced by agreements ("Option Agreements") between the
Company and the Stock Option Plan participants that specify the terms and
conditions of the options consistent with the provisions of the Stock Option
Plan.
Administration
The Compensation Committee administers the Stock Option Plan. Members of
the Compensation Committee, like other members of the Board who are not
employees, will be granted options as described under "Options -- Non-employee
Directors."
Options
Options granted under the Stock Option Plan are not transferable except at
death. Options may be exercised in accordance with the Stock Option Plan and
such other terms and conditions not prescribed by the Stock Option Plan as the
Compensation Committee may prescribe in Option Agreements. No option will be
exercisable after 10 years from the date the option was granted.
12
<PAGE>
Employees. Any employee of the Company, including any executive officer of
the Company and any employee who is a director, who, in the judgment of the
Compensation Committee, has contributed or can be expected to contribute to the
profits or growth of the Company, may be granted one or more options under the
Stock Option Plan. The Compensation Committee determines the number of shares
subject to each option granted by it.
The price per share payable upon exercise of any option granted to an
employee under the Stock Option Plan will be determined by the Compensation
Committee but in the case of an ISO will not be less than the "Fair Market
Value" of the Common Stock on the date of grant, which is the closing sale
price of the Common Stock on the NYSE on such date, or, if the NYSE shall be
closed on such date, or if the Common Stock is not traded on such date, the
next preceding date on which the NYSE shall have been open and the Common Stock
traded thereon. If an ISO is granted to an employee who owns, directly or by
attribution, more than ten percent of the total combined voting power of all
classes of stock of the Company, the option price per share may not be less
than 110% of the per share fair market value of the Common Stock on the date of
grant.
An employee may not be granted ISOs that first become exercisable in a
calendar year for Common Stock with a fair market value (determined as of the
date of grant) that exceeds $100,000.
An employee exercising an option may pay the purchase price in cash or a
cash equivalent acceptable to the Compensation Committee. If the Option
Agreement so provides, payment of all or part of the option price also may be
made by surrendering shares of Common Stock to the Company provided the shares
surrendered have a fair market value that is not less than the option price or
part thereof in payment of which such shares are surrendered.
Non-Employee Directors. Each director who is not an employee of the
Company will be granted options to purchase 2,000 shares of Common Stock on
each date each director is elected or re-elected to the Board. The option price
will in each case be the "Fair Market Value," as defined in the Stock Option
Plan, of the Common Stock on the date of grant, and will be payable only in
cash. Such options will be exercisable for a period of ten years from the date
of grant (subject to earlier termination as described below) and will be
immediately exercisable in whole or from time to time in part.
In addition, on the date of his or her first being elected to the Board, a
non-employee director will be granted options to purchase 5,000 shares of
Common Stock at the Fair Market Value of the Common Stock on the date of grant.
The option price of such options will be payable only in cash; such options
will be exercisable for a period of five years from the date of grant (subject
to earlier termination as described below) and will be immediately exercisable
in whole or from time to time in part. If a director is first elected to the
Board as a result of an acquisition of assets, by merger or otherwise, options
will not be granted upon first being elected but options to purchase 2,000
shares of Common Stock will be granted upon re-election to the Board.
Options granted to a non-employee director will terminate 30 days after
the director resigns or is removed from the Board, or 30 days after the annual
meeting of shareholders at which the director's term expires, if the director
does not stand or is not nominated for re-election or retires at that meeting.
Options held by directors leaving the Board after at least ten years of service
on the Board will terminate upon the earlier to occur of (i) the stated
termination date of the option, or (ii) the second anniversary of termination
of service on the Board
Amendment of the Stock Option Plan
The Board may amend the Stock Option Plan in such respects as it deems
advisable, but the shareholders must approve any amendment that would (i)
increase the aggregate number of shares that may be issued under options, (ii)
change the class of persons eligible to participate in the Stock Option Plan,
or (iii) otherwise materially increase the benefits accruing to participants in
the Stock Option Plan. In addition, without a participant's
13
<PAGE>
consent, no amendment may adversely affect the rights of such participant under
any option outstanding at the time the amendment is made.
Federal Income Tax Consequences
The following discussion summarizes the Company's understanding of the
more significant federal income tax consequences associated with the Stock
Option Plan.
The Company has been advised by counsel that, for federal income tax
purposes, no income will be recognized by a participant when an option is
granted. If an option is exercised, the federal income tax consequences will
depend upon whether the option is an ISO or an NQO.
No income will be recognized by a participant upon the exercise of an ISO
(although the difference between the fair market value of the Common Stock on
the date of exercise and the option price is an adjustment to income for
purposes of determining the participant's alternative minimum taxable income).
A participant will recognize income if and when he disposes of the shares
acquired under the ISO. If the disposition occurs more than two years after the
grant of the ISO and more than one year after the shares were transferred to
him (the "ISO holding period"), the gain realized on such disposition will be
characterized as long-term capital gain. If the disposition occurs prior to
expiration of the ISO holding period, the participant will recognize, as
ordinary income, the difference between the fair market value of the Common
Stock on the date of exercise and the option price.
The Company will not be entitled to a federal income tax deduction with
respect to the grant or exercise of an ISO unless the participant disposes of
Common Stock acquired thereunder prior to the expiration of the ISO holding
period. In that event, the Company generally will be entitled to a deduction
equal to the amount of ordinary income recognized by the participant.
Upon the exercise of an NQO, the participant will recognize, as ordinary
income, the difference between the option price and the fair market value of
the Common Stock on the date the option is exercised. Any gain or loss that a
participant realizes on a subsequent disposition of Common Stock acquired upon
the exercise of an NQO will be treated as long-term or short-term capital gain
or loss, depending on the period during which the participant held such shares.
The exercise of an NQO generally will entitle the Company to claim a federal
income tax deduction equal to the amount of income recognized by the
participant.
A participant's tax basis in Common Stock acquired under an ISO or NQO
will equal the sum of (i) the option price that is paid to acquire such stock
and (ii) any amount that the participant is required to include in income upon
the exercise of such right.
14
<PAGE>
Options Granted Pursuant to the Stock Option Plan
Options have been granted pursuant to the Stock Option Plan since its
inception as follows:
<TABLE>
<CAPTION>
Number
of Shares (1)
--------------
<S> <C>
John P. McCann, President and Chief Executive Officer and Chairman of the Board of
Directors .............................................................................. 675,000
James Dolphin, Executive Vice President, Chief Financial Officer and Director ............ 350,500
Barry M. Kornblau, Senior Vice President and Director .................................... 176,500
John S. Schneider, Executive Vice President, Chief Operating Officer and Vice Chairman of
the Board of Directors ................................................................... 150,000
David L. Johnston, Senior Vice President and Director of Acquisitions/West ............... 30,000
Robert F. Sherman, Senior Vice President and Director of Apartments/West ................. 30,000
All Named Executives as a group .......................................................... 1,412,000
All non-employee directors as a group .................................................... 85,000
All employees as a group ................................................................. 3,744,100
</TABLE>
- ----------
(1) For additional information, see "Ownership of Equity Securities" and "Stock
Options."
Proposed Amendments of Articles of Incorporation
The Board has proposed and is recommending to the shareholders amendments
of the Articles which will (i) create the Classified Common Stock and (ii)
conform the voting rights of the Series A Preferred and the Series B Preferred
to the NYSE Listed Company Manual. The texts of the proposed amendments are set
forth in Appendix A.
Creation of Classified Common Stock
If this amendment is approved by the shareholders, Classified Common Stock
could be issued, without the vote of holders of Common Stock, for any corporate
purpose and for whatever consideration the Board of Directors deems
appropriate, in one or more series having varying voting rights, dividend
rates, redemption and conversion features, distribution (including liquidating
distribution) rights and preferences, and other rights, including rights of
approval of specified transactions, all as determined by the Board of
Directors. The fundamental characteristic of the Classified Common Stock is
that it ranks junior to all series of Preferred Stock in respect of dividends
and upon liquidation. A series of Classified Common Stock could, but need not,
rank senior to the Common Stock in these respects. Such a series could be on a
complete parity with the Common Stock in all respects and could be a nonvoting
security, but it could also be given more than one vote per share, and a series
having preferential dividend and distribution rights could limit Common Stock
dividends and reduce the amount holders of Common Stock would otherwise receive
on dissolution of the Company.
The Board of Directors recommends the amendment because the Board believes
it will provide equity financing and portfolio acquisition capabilities the
Company does not now have. At present, the Board has approved no specific
financing or acquisition plans involving the issuance of Classified Common
Stock and does not propose to fix the characteristics of any series in
anticipation of issuing shares of that series.
Amendment of Voting Rights of Series A and Series B Preferred
Under the current designation of the Series A Preferred in the Articles,
holders of the Series A Preferred (together with the holders of other series of
Preferred Stock of the Company having like voting rights) have the right to
elect two directors to the Company's Board of Directors if dividends on the
Series A Preferred are in
15
<PAGE>
arrears for six consecutive quarterly periods. The NYSE approved the Series A
Preferred for listing notwithstanding a provision in its Listed Company Manual
to the effect that the right of preferred shareholders to elect directors under
such circumstances should accrue regardless of whether defaulted dividends
occurred in consecutive periods. Under the current designation of the Series B
Preferred in the Articles, the holders of the Series B Preferred also currently
have voting rights that are identical to those of holders of the Series A
Preferred. When the Company applied to the NYSE for listing of the Series B
Preferred, its application was granted based on its representation that it
would submit to the shareholders an amendment of the Articles that would
conform the Series B Preferred voting rights provisions to the Listed Company
Manual.
Although the Company made no representation to the NYSE as to the Series A
Preferred, the Board of Directors believes that it is important that the
language of the voting rights provisions of both series of Preferred Stock be
substantially identical, as it is now. Therefore, the Board is recommending
amendments of the designations of the Series A and Series B Preferred in the
Articles that will provide in effect that holders of the Series A Preferred,
holders of the Series B Preferred and holders of other series of Preferred
Stock of the Company having like voting rights shall have the right to elect
two directors to the Company's Board of Directors if dividends on the Series A
Preferred, the Series B Preferred and such other series of Preferred Stock are
in arrears for six quarterly periods, which need not be consecutive.
The amendments of the designations of the Series A and Series B Preferred
will be voted on separately. As stated above under "General," the affirmative
votes of the holders of two-thirds of the Series A Preferred outstanding and
entitled to vote, the holders of two-thirds of the Series B Preferred
outstanding and entitled to vote and the holders of a majority of the Common
Stock outstanding and entitled to vote are required for approval of the
amendments.
The amendments may be considered advantageous to the holders of the Series
A and Series B Preferred because they will eliminate a condition,
consecutiveness, now required in order for dividend defaults to give such
holders a voice in management of the Company. Conversely, the amendments, by
eliminating that condition, increase the possibility of loss by the holders of
the Common Stock of exclusive representation on of the Board, although
notwithstanding any such loss, the holders of the Common Stock will continue to
control the Board. The Board recommends approval of the amendments because (i)
the Company may issue additional series of Preferred Stock to finance its
activities and that such series will be listed on the NYSE, (ii) it is likely
that the NYSE will require as a condition of listing such series that the
voting rights provisions applicable to such series be the same as those
contained in the amendments, and (iii) it will be important for purposes of
marketing such series that the voting rights of the holders of such series and
other similar series (including the Series A Preferred and the Series B
Preferred) be substantially identical.
Independent Public Accountants
The Company from its inception has engaged the firm of Ernst & Young, LLP
or a predecessor as its independent public accountants, and the Board selected
Ernst & Young, LLP as auditors for 1998.
Representatives of Ernst & Young, LLP will be present at the meeting, will
be given the opportunity to make any statement they desire to make and will be
available to respond to questions.
16
<PAGE>
Performance Graph
The following graph indicates appreciation of $100 invested on December
31, 1991, in Company Common Stock ("UDR") and S&P 500 and NAREIT Equity REIT
Total Return Index securities (excluding health care), assuming full
reinvestment of dividends.
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
United Dominion Realty Trust 100 118.59 126.35 140.3 154.86 149.23
NAREIT Equity 100 119.65 123.45 142.3 192.48 231.47
S&P 500 100 110 111.43 153.14 188.35 251.19
</TABLE>
The NAREIT Equity REIT Total Return Index (excluding health care) is
published by the National Association of Real Estate Investment Trusts, Inc.
Index data reflect monthly reinvestment of dividends and are based upon the
monthly closing prices of shares of all tax-qualified equity REITs (real estate
investment trusts at least 75% of whose gross invested assets are invested in
real estate equities, excluding health care), including the Company, listed on
the NYSE and the American Stock Exchange and traded in NASDAQ National Market
System. At December 31, 1997, this Index included 176 equity REITs with a total
market capitalization of $127.8 billion.
Matters to be Presented at the 1999 Annual Meeting of Shareholders
Any qualified shareholder wishing to make a proposal to be acted upon at
the Annual Meeting of Shareholders in 1999 must submit such proposal, to be
considered by the Company for inclusion in the proxy statement, to the Company
at its principal office in Richmond, Virginia, no later than December 11, 1998.
17
<PAGE>
Other Matters
Management knows of no matters other than those stated above likely to be
brought before the Annual Meeting. However, if any matters not now known come
before the Annual Meeting, the persons named in the enclosed proxy are expected
to vote the shares represented by such proxy on such matters in accordance with
their best judgment.
THE COMPANY DEPENDS UPON ALL SHAREHOLDERS PROMPTLY SIGNING AND RETURNING
THE ENCLOSED PROXY TO AVOID COSTLY SOLICITATION. YOU CAN SAVE THE COMPANY
CONSIDERABLE EXPENSE BY SIGNING AND RETURNING YOUR PROXY AT ONCE.
Appendix A
1. Delete the first paragraph of Article 3 of the current Articles of
Incorporation and substitute the following therefor:
The corporation shall have authority to issue 150,000,000 shares of common
stock having a par value of $1.00 per share, 25,000,000 shares of preferred
stock without par value and 25,000,000 shares of classified common stock
without par value, which shall be junior to the preferred stock in respect of
rights to receive dividends and to participate in distributions or payments in
the event of any liquidation, dissolution or winding up of the corporation. The
Board of Directors of the corporation, by adoption of an amendment of these
Articles of Incorporation, may fix in whole or in part the preferences,
limitations and relative rights, within the limits set forth in the Act, of any
series within the preferred stock or the classified common stock before the
issuance of any shares of that series. Stockholders shall not have preemptive
rights to acquire unissued shares of the corporation.
2. Delete paragraph 3(a)(6)(A) of the current Articles of Incorporation and
substitute the following therefor:
(A) Whenever dividends on any shares of Series A Preferred shall be in
arrears for six or more quarterly periods, which need not be consecutive, the
holders of such shares of Series A Preferred (voting separately as a class with
all other series of preferred stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional directors of the corporation at a special meeting called by the
holders of record of at least 10% of the Series A Preferred or the holders of
any other series of preferred stock so in arrears (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of shareholders, and
at each subsequent annual meeting until all dividends accumulated on such shares
of Series A Preferred for the past Dividend Periods and the then current
Dividend Period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment. In such case, the entire Board of
Directors of the corporation will be increased by two directors.
3. Delete paragraph 3(b)(6)(A) of the current Articles of incorporation and
substitute the following therefor:
(A) Whenever dividends on any shares of Series B Preferred shall be in
arrears for six or more quarterly periods, which need not be consecutive, the
holders of such shares of Series B Preferred (voting separately as a class with
all other series of preferred stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional directors of the corporation at a special meeting called by the
holders of record of at least 10% of the Series B Preferred or the holders of
any other series of preferred stock so in arrears (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of shareholders, and
at each subsequent annual meeting until all dividends accumulated on such shares
of Series B Preferred for the past Dividend Periods and the then current
Dividend Period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment. In such case, the entire Board of
Directors of the corporation will be increased by two directors.
18
<PAGE>
Proxy Solicited by the Shares of Common Stock
Board of Directors
United Dominion Realty Trust, Inc.
ANNUAL MEETING OF SHAREHOLDERS
May 12, 1998
The undersigned hereby appoints John P. McCann and John S. Schneider as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote all shares of Common Stock of the undersigned in United
Dominion Realty Trust, Inc. at the Annual Meeting of Shareholders to be held on
May 12, 1998, and at any and all adjournments thereof:
(Please date and sign on the reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR election of all nominees for the Board of Directors who are listed, FOR the
amendments of the 1985 Stock Option Plan, and FOR the amendments of the Articles
of Incorporation, all as described in the Proxy Statement dated April 16, 1998,
receipt of a copy of which is acknowledged by execution of this proxy.
<PAGE>
1. ELECTION OF DIRECTORS
FOR all nominees listed (excepted as written to the contrary) [ ]
Vote withheld for all nominees listed [ ]
Nominees: Jeff C. Bane, R. Toms Dalton, Jr., James Dolphin,
Jon A. Grove, Barry M. Kornblau, John C. Lanford,
John P. McCann, H. Franklin Minor, Lynne B. Sagalyn,
Mark J. Sandler, Robert W. Scharar, John S. Schneider and
C. Harmon Williams, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
2. AMENDMENTS OF 1985 STOCK OPTION PLAN FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE>
3. AMENDMENT OF ARTICLES OF INCORPORATION CREATING CLASSIFIED COMMON STOCK
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. AMENDMENT OF ARTICLES OF INCORPORATION AMENDING VOTING RIGHTS OF SERIES A
PREFERRED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. AMENDMENT OF ARTICLES OF INCORPORATION AMENDING VOTING RIGHTS OF SERIES B
PREFERRED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ___________________________________ , 1998
(Signature)
Please sign exactly as your name(s) appear(s) on this proxy. Only one owner of
jointly owned shares need sign. When signing in a representative capacity,
please give title. PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
<PAGE>
Proxy Solicited by the Shares of 9 1/4% Series A
Board of Directors Cumulative Redeemable
Preferred Stock
United Dominion Realty Trust, Inc.
ANNUAL MEETING OF SHAREHOLDERS
May 12, 1998
The undersigned hereby appoints John P. McCann and John S. Schneider as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote all shares of 9 1/4% Series A Cumulative Redeemable
Preferred Stock of the undersigned in United Dominion Realty Trust, Inc. at the
Annual Meeting of Shareholders to be held on May 12, 1998, and at any and all
adjournments thereof:
(Please date and sign on the reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the amendments of the Articles of Incorporation amending the voting rights
of the Series A Preferred and the Series B Preferred, all as described in the
Proxy Statement dated April 16, 1998, receipt of a copy of which is acknowledged
by execution of this proxy.
<PAGE>
1. AMENDMENT OF ARTICLES OF INCORPORATION AMENDING VOTING RIGHTS OF SERIES A
PREFERRED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. AMENDMENT OF ARTICLES OF INCORPORATION AMENDING VOTING RIGHTS OF SERIES B
PREFERRED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ___________________________________ , 1998
(Signature)
Please sign exactly as your name(s) appear(s) on this proxy. Only one owner of
jointly owned shares need sign. When signing in a representative capacity,
please give title. PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
<PAGE>
Proxy Solicited by the Shares of 8.60% Series B
Board of Directors Cumulative Redeemable
Preferred Stock
United Dominion Realty Trust, Inc.
ANNUAL MEETING OF SHAREHOLDERS
May 12, 1998
The undersigned hereby appoints John P. McCann and John S. Schneider as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote all shares of 8.60% Series B Cumulative Redeemable
Preferred Stock of the undersigned in United Dominion Realty Trust, Inc. at the
Annual Meeting of Shareholders to be held on May 12, 1998, and at any and all
adjournments thereof:
(Please date and sign on the reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
FOR the amendments of the Articles of Incorporation amending the voting rights
of the Series A Preferred and the Series B Preferred, all as described in the
Proxy Statement dated April 16, 1998, receipt of a copy of which is acknowledged
by execution of this proxy.
<PAGE>
1. AMENDMENT OF ARTICLES OF INCORPORATION AMENDING VOTING RIGHTS OF SERIES A
PREFERRED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. AMENDMENT OF ARTICLES OF INCORPORATION AMENDING VOTING RIGHTS OF SERIES B
PREFERRED
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ___________________________________ , 1998
(Signature)
Please sign exactly as your name(s) appear(s) on this proxy. Only one owner of
jointly owned shares need sign. When signing in a representative capacity,
please give title. PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
