<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[UNITED DOMINION LOGO]
April 4, 2000
Dear Fellow Shareholders:
Please accept my personal invitation to attend the Annual
Meeting of Shareholders to be held on Tuesday, May 9, 2000, at
4:00 p.m. at the Omni Richmond Hotel, 12th and Cary Streets,
Richmond, Virginia.
The formal business to be conducted at the meeting will be
the election of directors. We will also review 1999, report on
recent financial results and discuss expectations for the
future. The directors and senior management will be available
to answer your questions during the meeting and afterward when
you will have the opportunity to speak informally with the
directors and officers of the Company.
We rely upon all shareholders to execute and return their
proxies promptly in order to avoid costly proxy solicitation.
This year you may also vote your shares electronically through
the Internet or by telephone. This will eliminate the need to
return your proxy card. Instructions for Internet and
telephone voting are on your proxy card. If you attend the
Annual Meeting, you may withdraw your proxy at the meeting and
vote your shares in person from the floor. Your vote is
important to the Company.
I hope to see you at our meeting on May 9, 2000, at 4:00
p.m.
Thank you.
Sincerely,
UNITED DOMINION REALTY TRUST, INC.
/s/ John P. McCann
-------------------
John P. McCann
Chairman of the Board
United Dominion Realty Trust, Inc.
10 South Sixth Street . Richmond, Virginia 23219-3802 . Tel: 804.780.2691 .
Fax: 804.343.1912
<PAGE>
[UNITED DOMINION LOGO]
April 4, 2000
Notice of Annual Meeting of Shareholders
To Be Held On Tuesday, May 9, 2000 at 4:00 p.m.
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 9, 2000, at
4:00 p.m., for the following purposes:
1. To elect 11 directors to serve for the ensuing year.
2. 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 10, 2000 (the "Record Date") are entitled to vote at the Annual Meeting.
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>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information About
Voting 1
Election of Directors 2
Board of Directors and
Committees 3
Executive Committee 3
Compensation Committee 4
Corporate Governance
Committee 4
Audit Committee 4
Compensation of Directors 5
Ownership of Equity
Securities 5
Indebtedness of
Management to the
Company 7
Compensation of Executive
Officers 8
Long-Term Incentive
Plans-Awards in 1999 9
Aggregate Option
Exercises in 1999 and
1999 Year End Option
Value 9
Compensation Committee
Report on Executive
Compensation 10
Compensation Design and
Philosophy 10
Base Salary 10
Annual Incentives 10
Long-term Incentives 11
Employment Agreements 12
Performance Graph 14
Independent Public
Accountants 14
Matters to be Presented
at the 2001 Annual
Meeting of Shareholders 15
Other Matters 15
</TABLE>
<PAGE>
[UNITED DOMINION LOGO]
Proxy Statement
April 4, 2000
GENERAL INFORMATION ABOUT VOTING
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 9, 2000. You may revoke the
proxy at any time prior to voting by notifying the persons named on the card
of your intention to revoke or by conduct inconsistent with continued
effectiveness of the proxy, such as delivering a later dated proxy or voting
in person at the Annual Meeting. Shares represented by executed proxies will
be voted, unless a different specification is made, FOR election as directors
of all of the persons nominated for directors. This proxy statement and the
enclosed proxy card were mailed beginning April 4, 2000 to common 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,
1999.
At the close of business on the Record Date, there were 103,128,264 shares
of Common Stock 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. The holders of a majority of the Common Stock present at the Annual
Meeting in person or represented by proxies will constitute a quorum. If a
quorum is present, the affirmative vote of a plurality of the shares of Common
Stock voting at the Annual Meeting is required to elect directors.
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 the 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.
Notices of revocation of proxies should be sent to the Company at 10 South
Sixth Street, Richmond, Virginia 23219-3802, Attention: Investor Services.
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, 1999, on written request to the
mailing address on the cover.
1
<PAGE>
ELECTION OF DIRECTORS
Eleven directors are to be elected at the Annual Meeting, 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, other than Mr. Larson, are now members of
the Board of Directors and were elected at the 1999 Annual Meeting of
Shareholders. Mr. Bane, a director of the Company since 1972, 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 public companies, are as follows:
R. Toms Dalton, Jr., 67, is a partner with Allen & Carwile, Waynesboro,
Virginia, attorneys, and is the Commissioner of Accounts for the City of
Waynesboro, Virginia. He is a director of First Virginia Bank of Augusta,
Waynesboro, Virginia. He was first elected to the Board in 1973.
Robert P. Freeman, 55, is Managing Director of Wells Hill Partners, Ltd.,
New York, New York. Previously, Mr. Freeman was a Managing Director of Lazard
Freres & Co. LLC ("Lazard") and President of Lazard Freres Real Estate
Investors, L.L.C. ("LFREI") from 1992 to 1999. He was first elected to the
Board in 1999.
Jon A. Grove, 55, was the Chairman of the Board, President and Chief
Executive Officer of ASR Investments Corporation ("ASR") since its
organization in 1987 until its acquisition by the Company in 1998. He is also
a director of American Southwest Holdings, Inc., in Phoenix, Arizona. He was
first elected to the Board in 1998.
James D. Klingbeil, 64, has been the Chairman and Chief Executive Officer
of American Apartment Communities III ("AAC III"), a privately owned REIT
based in San Francisco, California, since 1997. He was Chairman and Chief
Executive Officer of American Apartment Communities II ("AAC II") from 1995
until the merger (the "AAC Merger") of AAC II with the Company in December of
1998. He is also Chairman and CEO of The Klingbeil Company and Khempco
Building Supply Company. He is a director of Burnham Pacific Properties, Inc.
and numerous private companies. He was appointed to the Board in 1998 in
connection with the AAC Merger and was first elected to the Board in 1999. Mr.
Klingbeil is a nominee, together with Mr. Larson, selected pursuant to
provisions of the AAC Merger agreement giving L. F. Strategic Realty
Investors, L.P. ("LFSRI"), a partnership controlled by LFREI, the right to
select two Board nominees as holder of the shares of Series D Preferred Stock
issued in the AAC Merger.
Barry M. Kornblau, 50, was employed by the Company as Director of
Apartments until April 18, 1997. He is President of Summit Realty Group, Inc.,
and is also a director of Commerce Bank of Virginia. He was first elected to
the Board in 1993.
Robert C. Larson, 66, is managing director of Lazard and chairman of LFREI.
Mr. Larson was employed by Taubman Centers, Inc., a publicly traded REIT
specializing in the development, management and ownership of regional retail
centers from 1974 to 1998, where he served as chairman from 1990 to December
1998 and a director from 1992 until May 2000. He also (i) represents funds
managed by LFREI as a director of AAC III, Brandywine Realty Trust and
Commonwealth Atlantic Properties, Inc., where he is also non-executive chairman,
and (ii) serves as a director of Bass PLC, a London based international group
operating in hotels, leisure retailing and branded drinks. Mr. Larson is a
nominee, together with Mr. Klingbeil, selected pursuant to provisions of the AAC
Merger agreement described in Mr. Klingbeil's biographical data.
2
<PAGE>
John P. McCann, 55, is Chairman of the Board and Chief Executive Officer of
the Company and served as President from 1974 to December, 1998. He is a
director of LandAmerica Financial Group, Inc. (formerly Lawyers Title
Insurance Corporation), Richmond, Virginia, and Storage USA, Inc., a self
storage REIT in Memphis, Tennessee. He was first elected to the Board in 1978.
Lynne B. Sagalyn, Ph.D., 52, is the Earle W. Kazis and Benjamin Schore
Director of the M.B.A. Real Estate Program at Columbia University's Graduate
School of Business and has been a professor in its Finance and Economics
Division since 1992. From 1991 to 1992, she was a visiting professor at
Columbia University. 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 and chair of the Audit Committee of Capital Trust, a
public real estate company that specializes in real estate lending, and a
director of The Retail Initiative. She was first elected to the Board in 1996.
Mark J. Sandler, 58, 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 was a
director of South West Property Trust Inc. ("South West") at the time it was
acquired by the Company in 1996. He was first elected to the Board in 1996.
Robert W. Scharar, 51, 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 and was a director of
South West at the time it was acquired by the Company in 1996. He was first
elected to the Board in 1996.
John S. Schneider, 61, is the President and Chief Operating Officer 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. He was first elected to the Board in 1996.
BOARD OF DIRECTORS AND COMMITTEES
During 1999, the Board held nine meetings (including two telephone
meetings). Each director attended at least 75% of the meetings of the Board
and of the committee or committees to which he or she was assigned. The Board
has established an Executive Committee, a Compensation Committee, a Corporate
Governance Committee and an Audit Committee as its standing committees. The
Company does not have a nominating committee, but, as noted below, the
Corporate Governance Committee performs the functions of a typical nominating
committee.
Executive Committee
Members: Freeman, McCann, Sagalyn, Sandler and Schneider
The Board of Directors reactivated the Executive Committee in 1998. The
members of the Executive Committee are the chairpersons of each of the other
Committees of the Board, and Messrs. McCann and Schneider. The Executive
Committee:
. has, to the extent permitted by law, all powers of the Board of
Directors, except those powers specifically denied by the Board.
. serves as the Board's steering committee and recommends matters for Board
action.
. did not meet in 1999.
3
<PAGE>
Compensation Committee
Members: Freeman (Chair), Dalton, Grove and Sandler.
The Compensation Committee:
. sets the compensation of directors and the Chief Executive Officer and
approves the compensation of the Chief Operating Officer and the Chief
Financial Officer (the "Executive Officers").
. sets annual objectives for and evaluates the Chief Executive Officer,
with input from the full Board, and approves annual objectives for the
Chief Operating Officer and Chief Financial Officer.
. approves employment agreements and the calculation of incentive/bonus
compensation under the employment agreements of the Executive Officers as
described in the "Compensation Committee Report on Executive
Compensation."
. administers the contributions and awards, if any, under the 401(k) and
profit sharing plans and management incentive programs, and other
management compensation, if any, including the Stock Option Plan, the
Stock Purchase Plan, the Shareholder Value Plan and Restricted Stock
Awards Plan.
. monitors succession planning.
. met 5 times in 1999.
Corporate Governance Committee
Members: Sandler (Chair), Grove, Klingbeil, Kornblau and Scharar
The Board of Directors formed the Corporate Governance Committee in 1998.
The Corporate Governance Committee:
. exercises general oversight of Board governance matters.
. reviews the role, composition and structure of the Board and its
committees.
. reviews and evaluates the Board and its members.
. serves as the nominating committee for Board members.
. reviews and updates the Company's Statement on Corporate Governance.
. met 3 times in 1999.
Audit Committee
Members: Sagalyn (Chair), Bane, Klingbeil and Scharar
The Audit Committee:
. reviews the financial reporting practices of the Company and the external
audit function.
. oversees the integrity of the Company's financial records.
. oversees compliance with the Company's policies, plans and procedures, as
well as laws and regulations.
. reviews the performance of and recommends the independent auditor.
. reviews succession planning within the Company's accounting organization.
. met 6 times in 1999.
4
<PAGE>
Compensation of Directors
Beginning in 1999, the Board determined that annual independent director
retainer fees can, at the option of each independent director, be paid in the
form of a grant of options to purchase Common Stock, vesting quarterly and
priced at the closing sale price of the Common Stock on the first business day
of the calendar year. Options valued at $15,000 were granted to each
independent director at $10.8125 per share, the closing sale price on January
4, 1999, and vesting in equal quarterly amounts of 3,750 options on the first
day of each quarter. Each independent director was also paid $1,000 for each
regular meeting attended and $300 for each telephone meeting attended. The
independent directors as a group received cash fees of $81,200 and 142,500
total options, valued at $1.00 per option using the Black-Scholes fair value
pricing model, for total compensation of $223,700.
For 2000, the annual independent director retainer fee was increased to
$17,500, with options being granted to all independent directors, other than
Messrs. Grove and Kornblau, who elected to receive cash, at $9.9375 per share,
the closing sale price on January 3, 2000. Each option vests in equal amounts
of 4,600 options on the first day of each quarter, valued at $.95 per option
using the Black-Scholes fair value pricing model. Meeting fees were unchanged.
Each independent director also receives an automatic annual grant of 2,000
stock options upon reelection.
Any independent director retiring from the Board after at least twenty
years of service receives $5,000 per year for the five years following
retirement.
OWNERSHIP OF EQUITY SECURITIES
Beneficial ownership/1/ 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 (1) shares deemed owned as a consequence of ownership of stock
options exercisable within 60 days; (2) shares the Company may issue on
redemption of units ("OP Units") in United Dominion Realty, L.P. ("UDRLP"),
the Company's operating partnership; and (3) shares issuable on conversion of
Series D Preferred Stock, 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. 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, other
than LFSRI, which owns all outstanding shares of the Series D Preferred Stock
that is convertible into Common Stock as described in the table below.
/1/"Beneficial ownership" has been determined in accordance with
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.
5
<PAGE>
BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
<TABLE>
<CAPTION>
Amount and Nature Total Beneficial
of Beneficial Ownership Ownership
--------------------------------- ------------------
Shares for which Percent
Shares Beneficlal Ownership of
Beneficially can be Acquired Number of Class
Name of Beneficial Owner Owned (1) Within 60 Days (2) Shares (2) (2)
------------------------ ------------ -------------------- ---------- -------
<S> <C> <C> <C> <C>
Jeff C. Bane (3).......... 160,874 32,200 193,074 0.15%
R. Toms Dalton, Jr........ 105,573 36,200 141,773 0.11%
Robert P. Freeman (7)..... 44,345 26,200 70,545 0.06%
Jon A. Grove.............. 451,678 19,000 470,678 0.38%
James D. Klingbeil (4,7).. 1,964,717 26,200 1,990,917 1.59%
Barry M. Komblau.......... 281,035 103,759 384,794 0.31%
Robert C. Larson (6)...... -- -- -- --
Lynne B. Sagalyn.......... 17,500 37,200 54,700 0.04%
Mark J. Sandler........... 137,683 30,200 167,883 0.13%
Robert W. Scharar......... 77,517 30,200 107,717 0.09%
John P. McCann (3,5,7).... 564,633 500,435 1,065,068 0.85%
John S. Schneider (5,7)... 508,000 55,966 563,966 0.45%
Curtis W. Carter (5)...... 113,410 51,520 164,930 0.13%
Richard A. Giannotti (5).. 80,446 104,892 185,338 0.15%
Mark E. Wood (5).......... 29,000 22,778 51,778 0.04%
Katheryn E. Surface....... 40,001 56,031 96,032 0.08%
A. William Hamill......... 25,000 -- 25,000 0.02%
Blake W. Clemens.......... 45,911 17,778 63,689 0.05%
Thomas J. Corcoran........ 35,331 17,667 52,998 0.04%
Patrick S. Gregory........ 5,000 17,778 22,778 0.02%
Walter J. Lamperski....... 52,411 20,595 73,006 0.06%
Robert C. Landis.......... 52,500 25,525 78,025 0.06%
Kevin W. Walsh............ 24,399 11,667 36,066 0.03%
All directors (10
persons)................. 3,240,922 341,159 3,582,081 2.87%
All directors & named
executives (15 persons).. 4,488,911 1,076,750 5,565,611 4.45%
All directors & named
executives (23 persons).. 4,769,464 1,243,791 6,013,255 4.81%
5% Owners--LFSRI.......... -- 12,307,692 12,307,692 9.85%
</TABLE>
- --------
(1) Includes shares purchased pursuant to the 1991 Officers' Stock Purchase
and Loan Plan (the "Stock Purchase Plan").
(2) Assumes (i) conversion of all outstanding Series D Preferred Stock; (ii)
exercise in full of all options exercisable within 60 days; and (iii)
redemption in exchange for Common Stock of all OP Units redeemable within
60 days.
(3) Includes in the case of Messrs. McCann and Bane and all directors and
executive officers as a group 47,500 shares owned by Planned Property
Realty Corp., of which Mr. McCann is President and a 50% shareholder and
of which Mr. Bane is a 25% shareholder.
(4) Mr. Klingbeil owns 1,920,372 OP Units.
(5) Does not include 375,984 shares, 284,034 shares, 80,892 shares, 44,722
shares, 81,534 shares and 1,500,543 shares issuable upon the exercise of
options granted to Messrs. McCann, Schneider, Giannotti, Wood and Carter
and all directors and executive officers as a group, respectively, which
are not exercisable within 60 days.
(6) Does not include shares of Series D Preferred Stock outstanding which are
indirectly beneficially owned by LFSRI. Mr. Larson, a managing director of
Lazard, has disclaimed beneficial ownership of these shares.
6
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
(7) Messrs. Freeman and Klingbeil were late in filing Forms 4 with respect to
the 1999 Board independent director retainer fee, which was taken by them
in stock options, and Messrs. McCann and Schneider were late in filing
Forms 4 with respect to the portion of their 1998 bonus that was taken by
them in stock options. All such filings have been made.
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
Stock Purchase Plan. The table indicates the largest amount of the
indebtedness outstanding since the beginning of fiscal year 1999 and the
amount outstanding at March 31, 2000. As provided in the Stock Purchase Plan,
such indebtedness bears interest at 7% per annum. The table does not include
indebtedness of executive officers and directors to Crestar Bank which the
Company may be obligated to purchase upon the occurrence of certain events.
<TABLE>
<CAPTION>
Maximum Indebtedness
Since January 1, Indebtedness at
1999 March 31, 2000
-------------------- ---------------
<S> <C> <C>
John P. McCann...................... $1,611,876 $1,565,098
John S. Schneider................... $ 156,404 $ 155,490
A. William Hamill................... $ 278,158 $ 271,475
Curtis W. Carter.................... $ 504,019 $ 490,945
Blake W. Clemens.................... $ 84,754 $ 83,838
Thomas J. Corcoran.................. $ 73,469 $ 72,839
Richard A. Giannotti................ $ 592,694 $ 578,686
Patrick S. Gregory.................. $ 73,469 $ 72,839
Walter J. Lamperski................. $ 177,812 $ 175,962
Robert L. Landis.................... $ 186,578 $ 185,140
Katheryn E. Surface................. $ 336,194 $ 328,223
Kevin W. Walsh...................... $ 141,256 $ 139,729
Mark E. Wood........................ $ -- $ --
All Directors and Executive Officers
as a group (13 persons)............ $4,216,683 $4,120,264
</TABLE>
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents information relating to total compensation
during the fiscal years ended December 31, 1999, 1998 and 1997, of the Chief
Executive Officer and the four executive officers serving at the end of fiscal
1999 who were most highly compensated for that year (collectively, the "Named
Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Awards Payouts
--------------------- -------
Other Restricted Securities All Other
Name and Base Annual Stock Underlying LTIP Compensation
Principal Position Year Salary Bonus Compensation (1) Options Payouts (2)
------------------ ---- -------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John P. McCann 1999 $374,000 $ 56,000 -- -- 195,000 -- $1,000
Chief Executive Officer 1998 374,000 56,000(3) -- -- 220,000(3) -- --
1997 363,000 119,400 -- -- 160,000 -- 805
John S. Schneider 1999 $275,000 $ 83,000 -- -- 150,000(3) -- $1,000
Executive Vice
President, 1998 266,000 56,000(3) -- -- 150,000 -- --
President and Chief
Operating 1997 258,300 107,100 -- -- 150,000 -- 805
Officer
Curtis W. Carter 1999 $161,000 $ 48,300 -- $9,625 22,500 -- $1,000
Senior Vice President, 1998 125,000 38,814 -- -- 45,000 -- --
Director of Apartment 1997 108,000 17,579 -- -- 80,000 -- 805
Operations-North
Richard A. Giannotti 1999 $175,000 $ 52,400 -- $9,625 22,500 -- $1,000
Senior Vice President 1998 175,000 52,000 -- -- 33,333 -- --
and Director of 1997 153,300 56,700 -- -- 70,000 -- 805
Development-North and
South
Mark E. Wood 1999 $150,000 $ 75,500 -- $9,625 22,500 -- $1,000
Senior Vice President 1998 138,000 86,775 -- -- 33,333 -- --
and Director of 1997 124,000 8,000 -- -- 20,000 -- 805
Development-West
</TABLE>
- --------
(1) On December 21, 1999, a grant of 1,000 restricted shares of Common Stock,
valued at $9.625, the closing sale price on that date, was made to the
indicated Named Executive under the Company's Restricted Stock Awards
Plan. The grant represents compensation for 2000. The restricted stock
grant vests ratably over a three year period beginning December 31, 2000
and the Named Executive receives dividends paid on the shares of
restricted stock. At December 31, 1999, a total of 46,000 shares of
restricted stock valued at $454,480 in the aggregate, based upon the
closing sale price of the Common Stock at the date of grant, have been
issued under the Restricted Stock Awards Plan.
(2) Represents contributions to the Company's Profit Sharing Plan for each of
the Named Executives.
(3) Messrs. McCann and Schneider each received $30,000 of the 1998 bonus in
the form of a grant of stock options, valued at $1.00 per option using the
Black-Scholes fair value pricing model. The options were granted on
January 27, 1999 at $10.25 per share, the closing sale price of the Common
Stock on that date.
8
<PAGE>
LONG-TERM INCENTIVE PLANS-AWARDS IN 1999
The following table presents information relating to potential cash awards
to the Named Executives under the Company's "Shareholder Value Plan," as
described in the Long-Term Incentive section of the Compensation Committee
Report on Executive Compensation.
<TABLE>
<CAPTION>
Estimated future payouts
under non-stock priced-
based plans
--------------------------
Number of shares, Target
units or Performance Period until Threshold (In Maximum
Name other rights maturation or payout (In $'s) $'s) (In $'s)
- ---- ----------------- ------------------------ --------- ------- --------
<S> <C> <C> <C> <C> <C>
John P. McCann.......... 70 01/01/1999 to 12/31/2001 $35,000 $70,000 $210,000
John S. Schneider....... 60 01/01/1999 to 12/31/2001 $30,000 $60,000 $180,000
Curtis W. Carter........ 20 01/01/1999 to 12/31/2001 $10,000 $20,000 $ 60,000
Richard A. Giannotti.... 10 01/01/1999 to 12/31/2001 $ 5,000 $10,000 $ 30,000
Mark E. Wood............ 10 01/01/1999 to 12/31/2001 $ 5,000 $10,000 $ 30,000
</TABLE>
Under the Shareholder Value Plan, key executives of the Company are granted
Performance Units ("Units") which represent a unit of long-term compensation.
Each of the Units has an initial value of zero dollars and is measured over a
three year period. The value of each Unit is determined by calculating the
Company's total return to shareholders ("TRS") calculated as the sum total of
the yield plus appreciation/depreciation in the price of the Common Stock as a
percentage of TRS of the NAREIT Equity Apartment Index for the same three year
period. In general, each Unit would be valued as follows:
<TABLE>
<CAPTION>
TRS as a % of SVP
Performance Level NAREIT TRS Unit Value
----------------- -------------- ----------
<S> <C> <C>
Less than 100% $ 0
Threshold....................................... 110% $ 500
Target.......................................... 125% $1,000
Maximum......................................... 200% or more $3,000
</TABLE>
AGGREGATE OPTION EXERCISES IN 1999 AND 1999 YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options At In-the-Money Options
Shares Fiscal Year End(1) At Fiscal Year End(2)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John P. McCann 6,114 $15,285 491,171 385,248 $7,537 $44,154
John S. Schneider 30,000 $18,750 48,949 291,051 $-- $30,600
Curtis W. Carter -- -- 44,963 88,091 $-- $ 5,738
Richard A. Giannotti -- -- 998,002 87,782 $-- $ 5,783
Mark E. Wood -- -- 14,251 53,249 $-- $ 5,738
</TABLE>
- --------
(1) Includes unvested options of 30,000, 120,000, 225,000, 34,611 and 67,500
for Messrs. McCann, Schneider, Carter, Giannotti and Wood, 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 of the Common Stock as of the
exercise date(s) or December 31, 1999, as appropriate.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for developing and
administering compensation programs for (i) senior management, including base
salaries, annual incentives and long-term incentive plans; and (ii) long-term
incentive compensation plans for all associates. This Committee also sets
annual objectives for the Chief Executive Officer and approves annual
objectives for the Chief Operating Officer and the Chief Financial Officer
based upon recommendations of the Chief Executive Officer. The Chief Executive
Officer sets the annual objectives for Mr. Giannotti and Mr. Wood, and the
Chief Operating Officer sets annual objectives for Mr. Carter.
Compensation Design and Philosophy
The Company's compensation plan for officers and other key associates is
designed to:
. provide appropriate incentives for the executives while aligning their
interests with those of the Company's shareholders.
. be competitive.
. attract and retain management talent.
. focus executives on current and long-term business objectives and
critical issues.
With respect to executive officer compensation, the Compensation Committee
has adopted the following specific philosophies:
. base salaries should be slightly below industry averages.
. annual incentive compensation, which is tied to meeting Company and
individual objectives, should be approximately equal to industry average
when objectives are met.
. long-term incentive compensation, which aligns the interests of executive
officers with those of long-term shareholders, can be above industry
averages when the long-term performance of the Common Stock is above
average.
The Company's executive compensation consists of base salary, annual
incentives and long-term incentives. Each of the elements and the process are
described below.
Base Salary
The Chief Executive Officer makes recommendations to and consults with the
Compensation Committee as to the amount of proposed base salaries for the
Chief Operating Officer and the Chief Financial Officer. After such
consultation, the Compensation Committee sets the base salaries for the year
for these Executive Officers and approves salary ranges for other executive
officers. 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, the executive's current year and past performance and
Company performance, including total shareholder return both absolute and
versus other apartment REITs, with no one factor being given more weight than
any of the other factors.
Annual Incentives
After the full Board establishes annual Company objectives, the
Compensation Committee establishes performance measures and targets for the
Chief Executive Officer and for the Chief Operating Officer and Chief
Financial Officer after consulting with the Chief Executive Officer. The Chief
Executive Officer establishes performance measures and targets for the other
key executives and weighting among Company, departmental
10
<PAGE>
and personal performance objectives depending upon the particular executive's
responsibilities. The targets are used to focus the executive's attention on
key business issues and objectives. Total potential annual incentive
compensation is generally a percentage of base salary that is determined each
year. For 1999, (i) Mr. McCann had the opportunity to earn up to 60% of his
base salary, at the discretion of the Compensation Committee, if his
objectives were met; (ii) Messrs. Schneider and A. William Hamill, who was
employed as Executive Vice President and Chief Financial Officer on October 1,
1999, each had the opportunity to earn up to 50% of their base salary, at the
discretion of the Compensation Committee, if their objectives were met; (iii)
and Mr. Carter had the opportunity to earn up to 50% of his base salary at the
discretion of the Chief Operating Officer based upon the performance of the
region for which he is responsible. Annual incentives for Messrs. Giannotti
and Wood were based upon quantitative measures associated with property
development and were not measured in terms as a percentage of base salary.
The primary corporate objectives considered in annual incentive
compensation for the Named Executives are (i) growth in funds from operations
per share ("FFO") versus the prior year; (ii) Company total return to common
shareholders versus other apartment REITs as shown on the performance graph in
this proxy statement; and (iii) key Company objectives. For 1999, no Named
Executive received annual incentive compensation under (i) and (ii). Each
Named Executive also has departmental and personal objectives. The specific
objectives for 1999 for the Named Executives were (i) the integration and
performance of the AAC portfolio, the hiring of a new Chief Financial Officer,
disposition objectives and strategic initiatives for Mr. McCann; (ii) net
operating income growth, capital expenditure reduction, water/sewer and other
expense reduction initiatives and various other operating objectives for Mr.
Schneider; (iii) Northern Region property performance versus last year and
budget for Mr. Carter; and (iv) development starts and completions, including
budgets, schedules and quality control for Messrs. Giannotti and Wood. Mr.
Hamill received only a proportionate share of annual incentive compensation
for 1999 based on his employment on October 1 of that year. The Summary
Compensation Table shows the annual incentive compensation for each Named
Executive in 1999.
Long-Term Incentives
During 1999, the components of long-term executive incentive compensation
were the Stock Option Plan and the Shareholder Value Plan. Stock options are
granted every year, and vest over three years, and are intended to bind
officers and other key associates to the Company, and to align long-term
incentives for the officers with stock performance and the shareholders.
Compensation in the Shareholder Value Plan is tied to the total return to
shareholders over a three year period exceeding the National Association of
Real Estate Investment Trust's Equity Apartment REIT Index (the "NAREIT Equity
Apartment Index"). Because there is a new three year performance period each
year, the Shareholder Value Plan also binds the officers to the Company and
aligns this component of long-term incentive compensation to total shareholder
return. During 1999, the total return to shareholders was less than the NAREIT
Equity Apartment Index, so units in the Shareholder Value Plan result in no
compensation for 1999 as shown in Long-Term Incentive Plans--Awards in 1999
Table under "Compensation of Executive Officers" above. The Company also uses
the Stock Purchase Plan for new officers but made no new loans to existing
officers in 1999. Existing indebtedness of executive officers is shown in the
table under "Indebtedness of Management to the Company."
11
<PAGE>
Restricted stock may also be used as long-term incentive compensation for
officers other than the Chief Executive Officer, the Chief Operating Officer
and the Chief Financial Officer. Restricted stock was granted to certain
officers in December, 1999 as compensation for 2000, and will vest over a
three year period. The grantee is entitled to dividends prior to vesting and
forfeits any unvested stock in the event of termination of employment.
The Company does not currently grant stock appreciation rights.
OPTION GRANTS TABLE
<TABLE>
<CAPTION>
Option Grants in 1999(1)
-------------------------------------------------------------
Potential Realizable
Value at Assumed Annual
Number of Securities Individual Grants Rates of Share Price
Underlying Percent of Total Appreciation for Option
Options Options Granted Exercise or Term
Granted (#) to Employees in Base Price Expiration -----------------------
Name (1, 2) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- ---- -------------------- ----------------- ----------- ---------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
John P. McCann 165,000 15.88% $ 9.625 12/21/09 $ 998,763 $ 2,531,062
30,000(3) 2.89% $10.250 1/27/09 $ 193,385 $ 490,076
John S. Schneider 120,000 11.55% $ 9.625 12/21/09 $ 726,373 $ 1,840,773
30,000(3) 2.89% $10.250 1/27/09 $ 193,385 $ 490,076
Richard A. Giannotti 22,500 2.16% $ 9.625 12/21/09 $ 136,195 $ 345,145
Mark E. Wood 22,500 2.16% $ 9.625 12/21/09 $ 136,195 $ 345,145
Curtis W. Carter 22,500 2.16% $ 9.625 12/21/09 $ 136,195 $ 345,145
</TABLE>
- --------
(1) A total of 1,039,333 stock options were granted to employees during 1999.
(2) These options vest ratably over a three year period beginning in 2000.
(3) Messrs. McCann and Schneider each received $30,000 of the 1998 bonus in
the form of a grant of stock options, with each option being valued at
$1.00 using the Black-Scholes fair value pricing model. The options were
granted on January 27, 1999 at a price of $10.25 per share, the closing
sale price on that date.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with each of the Named
Executives, other than Mr. Wood, in December of 1998. The employment
agreements (i) expire annually on December 31 but renew automatically for
successive one year periods unless sooner terminated; (ii) are on
substantially similar terms except for base compensation terms; (iii) provide
annual base salaries for the executives, subject to increase at the discretion
of the Board of Directors or the Chief Executive Officer in the case of
Messrs. Carter and Giannotti, which base salaries are disclosed in the Summary
Compensation Table; and (iv) provide for annual incentive/bonus compensation,
as described above. Other than in the event of a change of control which is
described below, the agreements provide that the executive is entitled to
severance pay equal to (x) one year of annual base salary; (y) incentive/bonus
compensation earned by the executive for that year; and (z) an amount equal to
the sum of annual incentive compensation earned by the executive over the past
two calendar years divided by two. The agreements also contain confidentiality
and non-competition provisions, as well as the agreement of the employee not
to hire other Company employees upon severance. The Company entered into an
employment agreement with A. William Hamill, the Chief Financial Officer of
the Company, on September 30, 1999, containing substantially the same terms as
the agreements with Messrs. McCann and Schneider, at a base salary of
$265,000. Mr. Wood entered into an employment agreement containing terms
substantially similar to those of Mr. Giannotti's agreement, in March of 2000.
12
<PAGE>
The agreements also provide for certain benefits in the event of a change
of control of the Company followed by termination of employment without cause
following the change of control for a period of two years. The benefits are
also paid in the event of termination by the employee for certain reasons,
including the assignment to the executive of duties inconsistent with those
that are currently assigned, greater than a 10% decrease in pay, change in
principal work location or decrease in benefits. In the event of a change of
control, Messrs. McCann, Schneider and Hamill are to receive up to three years
of annual base compensation, incentive compensation and benefits, and Messrs.
Giannotti and Wood are to receive up to two years of annual base compensation,
incentive compensation and benefits. All incentive compensation is based upon
the average annual incentive compensation earned by the executive for the two
calendar years prior to the effective date of termination. The agreements also
provide for all long-term benefits to become fully vested and payable upon the
change of control.
COMPENSATION COMMITTEE
Robert P. Freeman, Chairman
R. Toms Dalton, Jr. Jon A. Grove Mark J. Sandler
13
<PAGE>
PERFORMANCE GRAPH
The following graph indicates appreciation of $100 invested on December 31,
1994, in Common Stock ("UDR"), S&P 500, NAREIT Equity REIT Total Return Index
(the "NAREIT Equity Index") and NAREIT Equity Apartment Index securities,
assuming full reinvestment of dividends.
[GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
United Dominion Realty Trust 100 119.41 129.76 126.84 99.95 106.11
NAREIT Equity REIT Index 100 115.27 155.92 187.51 154.69 147.54
S&P 500 100 137.43 168.98 225.37 289.78 350.72
NAREIT Equity Apartment 100 112.10 138.10 153.60 145.07 155.80
</TABLE>
The NAREIT Equity Apartment Index and NAREIT Equity Index are published by
The National Association of Real Estate Investment Trusts ("NAREIT"). Index
data reflect monthly reinvestment of dividends and are based upon the monthly
closing prices of shares of all tax-qualified equity apartment REITs and equity
REITs, including the Company, listed on the New York Stock Exchange, the
American Stock Exchange and traded in the NASDAQ National Market System. At
December 31, 1999, the NAREIT Equity Index included 167 equity REITs with a
total market capitalization of $133.5 billion, and the NAREIT Equity Apartment
Index included 21 equity apartment REITs with a total market capitalization of
$25.2 billion.
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 Audit Committee
of the Board selected Ernst & Young, LLP as auditors for 2000.
Representatives of Ernst & Young, LLP will be present at the Annual Meeting,
will be given the opportunity to make any statement they desire to make and
will be available to respond to questions.
14
<PAGE>
MATTERS TO BE PRESENTED AT THE 2001 ANNUAL MEETING OF SHAREHOLDERS
Any qualified shareholder wishing to make a proposal to be acted upon at
the Annual Meeting of Shareholders in 2001 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 15,
2000.
OTHER MATTERS
Management knows of no matters other than election of directors 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. YOU MAY ALSO
VOTE ELECTRONICALLY BY THE INTERNET OR BY TELEPHONE AS SHOWN ON THE PROXY
CARD.
15
<PAGE>
<TABLE>
<S> <C>
Please mark
your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS Nominees: 01 - R. Toms Dalton, 2. SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Jr., 02 - Robert P. Freeman,
03 - Jon A. Grove, 04 - James D.
Klingbeil, 05 - Barry M.
Kornblau, 06 - Robert C. Larson,
07 - John P. McCann, 08 - Lynne B.
Sagalyn, 09 - Mark J. Sandler,
10 - Robert W. Scharar and
11 - John S. Schneider
FOR all nominees listed VOTE WITHHELD FOR AGAINST ABSTAIN
(except as written to the for all nominees listed [ ] [ ] [ ]
contrary) [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
_______________________________________________________________________________
If you have Internet access, please consider the following:
"By checking the box to the left, I consent to future access of the Annual
Report, Proxy Statements prospectuses and other communications
electronically via the Internet. I understand that the Company may no
longer distribute printed materials to me from any future shareholder Please mark this box if you plan to
meeting until such consent is revoked. I understand that I may revoke any attend the Annual Meeting.
consent at any time by contacting the Company's transfer agent, ChaseMellon [ ]
Shareholder Services, Ridgefield Park, NJ and that costs normally
associated with electronic access, such as usage and telephone charges,
will be my responsibility."
Dated: ________________, 2000
_____________________________
_____________________________
(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.
___________________________________________________________________________________________________________
FOLD AND DETACH HERE
[graphic] VOTE BY TELEPHONE OR INTERNET [graphic]
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE 1-800-840-1208 ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the CONTROL NUMBER located above your
name and address in the lower right of this form.
OPTION A: To vote as the Board of Directors recommends on ALL items,
press 1.
OPTION B: If you choose to vote on each item separately, press 0. You will
hear these instructions:
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL nominee,
press 0 and listen to the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
When asked, you must confirm your vote by pressing 1.
VOTE BY INTERNET: THE WEB ADDRESS IS http:// www.eproxy.com/udr
THANK YOU FOR VOTING.
Call ** Toll-Free ** On a Touch-Tone Telephone
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
</TABLE>
<PAGE>
[UNITED DOMINION LOGO]
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNITED DOMINION REALTY TRUST, INC.
The undersigned hereby appoints John P. McCann and John S. Schneider and each of
them, with power to act without the other and with power of substitution, as
proxies and attorneys-in-fact and hereby authorizes them to represent and vote,
as provided on the other side, all the shares of United Dominion Realty Trust,
Inc. Common Stock which the undersigned is entitled to vote, and, in their
discretion, to vote upon such other business as may properly come before the
Annual Meeting of Shareholders of the Company to be held May 9, 2000 or any
adjournment thereof, with all powers which the undersigned would possess if
present at the meeting.
(Continued, and to be marked, dated and signed, on the other side)
_______________________________________________________________________________
FOLD AND DETACH HERE
[UNITED DOMINION LOGO]
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. Call toll-free 1-800-840-1208 on a Touch-Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
or
2. Vote by Internet at our Internet Address: http://www.eproxy.com/udr
or
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
PLEASE VOTE
