<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
Commercial Net Lease Realty, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statements, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
COMMERCIAL NET LEASE REALTY, INC.
455 S. ORANGE AVENUE, SUITE 700
ORLANDO, FLORIDA 32801
TEL: 407-265-7348
APRIL 9, 1999
To Our Stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Commercial Net Lease Realty, Inc. (the "Company") on May 18, 1999, at 9:00 a.m.,
at the Citrus Club, 255 S. Orange Avenue, 18th Floor, Orlando, Florida 32801.
The directors and officers of the Company look forward to greeting you
personally. Enclosed for your review are the Proxy, Proxy Statement and Notice
of Meeting for the Annual Meeting of Stockholders, which describe the business
to be conducted at the meeting. We will also report on matters of current
interest to our stockholders.
Whether you own a few or many shares of stock of Commercial Net Lease
Realty, it is important that your shares be represented. If you cannot
personally attend the meeting, we encourage you to make certain you are
represented at the meeting by signing and dating the accompanying proxy card and
promptly returning it in the enclosed envelope. Returning your proxy card will
not prevent you from voting in person, but will assure that your vote will be
counted if you are unable to attend the meeting.
Sincerely,
<TABLE>
<S> <C>
/s/ JAMES M. SENEFF, JR. /s/ KEVIN B. HABICHT
James M. Seneff, Jr. Kevin B. Habicht
Chairman of the Board and Executive Vice President,
Chief Executive Officer Chief Financial Officer and
Secretary/Treasurer
</TABLE>
<PAGE> 3
COMMERCIAL NET LEASE REALTY, INC.
455 S. ORANGE AVENUE, SUITE 700
ORLANDO, FLORIDA 32801
-----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
-----------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
COMMERCIAL NET LEASE REALTY, INC. will be held at 9:00 a.m. local time, on May
18, 1999, at the Citrus Club, 255 S. Orange Avenue, 18th Floor, Orlando,
Florida, for the following purposes:
1. To elect five directors.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MARCH 18, 1999, WILL BE
ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING OR AT ANY ADJOURNMENT
THEREOF.
Stockholders are cordially invited to attend the meeting in person. WHETHER
OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO COMPLETE, DATE, SIGN
AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A POSTAGE PAID RETURN
ENVELOPE IS PROVIDED. If you decide to attend the meeting you may revoke your
Proxy and vote your shares in person. It is important that your shares be voted.
By Order of the Board of Directors,
/s/ KEVIN B. HABICHT
Kevin B. Habicht
Secretary
April 9, 1999
Orlando, Florida
<PAGE> 4
COMMERCIAL NET LEASE REALTY, INC.
455 S. ORANGE AVENUE, SUITE 700
ORLANDO, FLORIDA 32801
TEL: 407-265-7348
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished by the Board of Directors of Commercial
Net Lease Realty, Inc. (the "Company") in connection with the solicitation by
management of proxies to be voted at the annual meeting of stockholders to be
held on May 18, 1999, and at any adjournment thereof, for the purposes set forth
in the accompanying notice of such meeting. All stockholders of record at the
close of business on March 18, 1999 (the "Record Date"), will be entitled to
vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at such meeting in accordance with the directions of the stockholder. If
no directions are specified, the proxy will be voted FOR the election of
directors. Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised. A proxy may be revoked (1) by delivery of a written
statement to the Secretary of the Company stating that the proxy is revoked, (2)
by presentation at the annual meeting of a subsequent proxy executed by the
person executing the prior proxy, or (3) by attendance at the annual meeting and
voting in person.
Votes cast in person or by proxy at the annual meeting will be tabulated
and a determination will be made as to whether or not a quorum is present. The
Company will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence or absence of a quorum, but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders. If a broker submits a proxy indicating that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to such matter.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company may also solicit proxies by telephone or telegram or in
person. All of the expenses of preparing, assembling, printing and mailing the
materials used in the solicitation of proxies will be paid by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting materials, at the expense of the Company,
to the beneficial owners of shares held of record by such persons. It is
anticipated that this Proxy Statement and the enclosed Proxy will be mailed to
stockholders on or about April 9, 1999.
As of the Record Date, 30,033,278 shares of the common stock of the Company
(the "Common Stock") were outstanding. Each share of Common Stock entitles the
holder thereof to one vote on each of the matters to be voted upon at the annual
meeting. As of the Record Date, executive officers and directors of the Company
had the power to vote approximately 3.4% of the outstanding shares of Common
Stock.
1
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PROPOSAL: ELECTION OF DIRECTORS....................................... 3
Nominees.................................................... 3
Compensation of Directors................................... 5
Committees of the Board of Directors........................ 5
Executive Officers.......................................... 6
EXECUTIVE COMPENSATION...................................... 9
Summary Compensation Table.................................. 9
Option Grants for the Year Ended December 31, 1998.......... 9
Option Values at December 31, 1998.......................... 10
Employment Agreements....................................... 10
COMPENSATION COMMITTEE REPORT............................... 11
PERFORMANCE GRAPH........................................... 12
12
SECURITY OWNERSHIP.........................................................
14
Section 16(a) Beneficial Ownership Reporting Compliance...............
14
CERTAIN TRANSACTIONS.......................................................
15
INDEPENDENT AUDITORS.......................................................
15
OTHER MATTERS..............................................................
16
PROPOSALS FOR NEXT ANNUAL MEETING..........................................
</TABLE>
2
<PAGE> 6
PROPOSAL
ELECTION OF DIRECTORS
NOMINEES
The persons named below have been nominated by the Board of Directors of
the Company (the "Board of Directors") for election as directors to serve until
the next annual meeting of stockholders or until their successors shall have
been elected and qualified. Mr. Lanier became a director in 1988 and Mr. Clark
in 1991. Messrs. Bourne and Seneff became directors in 1992. Mr. Hinkle became a
director in June 1993. The table sets forth each nominee's name, age, principal
occupation or employment during at least the last five years, and directorships
in other public corporations.
The Company's officers and directors have advised the Company that they
intend to vote their shares of Common Stock for the election of each of the
nominees. Proxies will be voted FOR the election of the nominees below unless
authority is withheld. Stockholders may withhold authority to vote for any
nominee, in lieu of voting for the entire slate of directors, by lining through
or striking out the name of any nominee listed below the pertinent instruction
on the proxy card.
<TABLE>
<CAPTION>
NAME AND AGE BACKGROUND
------------ ----------
<S> <C>
Robert A. Bourne, 51................. Mr. Bourne has served as Vice Chairman of the Board since
February 1996. Previously, Mr. Bourne served as Secretary
and Treasurer of the Company from February 1996 through
December 31, 1997. Additionally, he has served as a director
of the Company since June 1992. Previously, he served as
Vice Chairman of the Board, Secretary and Treasurer of CNL
Realty Advisors, Inc. (the external advisor of the Company
from July 1992 through December 31, 1997, the "Advisor")
from February 1996 until December 1997, as President of the
Company from July 1992 until February 1996 and as President
and a director of the Advisor from 1991 until February 1996.
On January 1, 1998, the Advisor merged into a wholly owned
subsidiary of the Company which resulted in the Company
becoming a self-administered and self-managed real estate
investment trust. See "Certain Transactions." Mr. Bourne has
also served as Vice Chairman of CNL American Properties
Fund, Inc. since February 1999 and as a director of CNL
American Properties Fund, Inc. from 1994 to 1999. Mr. Bourne
has also served as a director of CNL Hospitality Properties,
Inc. and CNL Health Care Properties, Inc. since 1996 and
1997, respectively. Mr. Bourne also serves as President of
CNL Group, Inc. ("CNL Group"). In addition, Mr. Bourne is
President, a director and a registered principal of CNL
Securities Corp., President and a director of CNL Investment
Company, President of CNL Realty Corp. and President and a
director of CNL Institutional Advisors, Inc., a registered
investment advisor. All of the entities discussed in the
preceding sentence are affiliates of CNL Group, a privately
held, diversified real estate company. Since joining CNL
Group in 1979, Mr. Bourne has been active in the
acquisition, development and management of real estate
projects throughout the United States. Mr. Bourne formerly
was a Certified Public Accountant with Coopers & Lybrand.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND AGE BACKGROUND
------------ ----------
<S> <C>
Edward Clark, 79..................... Mr. Clark currently is a director of two private companies
and a trustee of a private trust. From 1984 until July 1992,
Mr. Clark served as President of the Company. From 1982
through January 1998, he was employed by Investors
Management Corporation, a privately held corporation. While
employed by Investors Management Corporation, Mr. Clark
provided consulting services with respect to tax and
financial matters to Investors Management Corporation,
Golden Corral Corporation, a subsidiary of Investors
Management Corporation, and various other companies. From
1966 to 1980, Mr. Clark, a certified public accountant, was
a partner in the public accounting firm of Peat Marwick
Mitchell & Co.
Clifford R. Hinkle, 50............... Since 1991, Mr. Hinkle has been a director and executive
officer of the Flagler companies, including Flagler Capital
Corporation, which provides financial advisory and
investment consulting services, where he has been the
President since 1991, and Flagler Holdings, Inc., a merchant
banking company, where he has been the Chairman and Chief
Executive Officer since 1996. Additionally, Mr. Hinkle was a
director of MHI Group, Inc., a New York Stock Exchange
company, which owned and operated funeral homes and
cemeteries from November 1993 until November 1995, and was
the Chief Executive Officer of MHI Group, Inc. from April
1995 until November 1995 when it was acquired by a
subsidiary of The Loewen Group. Since 1996, Mr. Hinkle has
been a director of Integrated Orthopaedics, Inc., an
American Stock Exchange company, which owns and operates
orthopaedic physician management practices. From 1987 to
1991, Mr. Hinkle was the Executive Director and Chief
Investment Officer of the State Board of Administration of
Florida and managed over $40 billion in various trust funds.
Ted B. Lanier, 64.................... Mr. Lanier was the Chief Executive Officer of the Triangle
Bank and Trust Company, Raleigh, North Carolina
("Triangle"), from January 1988 until March 1991. Mr. Lanier
also was the Chairman of Triangle from January 1989 until
March 1991 and its President from January 1988 until January
1989. Since his retirement in 1991 as Chairman and Chief
Executive Officer of Triangle, Mr. Lanier has managed his
personal investments and managed investment accounts for
various individuals and trusts.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
NAME AND AGE BACKGROUND
------------ ----------
<S> <C>
James M. Seneff, Jr., 52............. Mr. Seneff has been Chief Executive Officer of the Company
since July 1992 and Chairman of the Board of the Company
since June 1992. Mr. Seneff has served as Chief Executive
Officer, director, and principal stockholder of CNL Group
since its formation in 1973. From 1991 to December 1997, Mr.
Seneff served as Chief Executive Officer and Chairman of the
Board of the Advisor. Mr. Seneff has served as Chairman of
the Board and a director of CNL American Properties Fund,
Inc., CNL Hospitality Properties, Inc. and CNL Health Care
Properties, Inc. since 1994, 1996 and 1997, respectively.
From 1986 to 1994, Mr. Seneff served on the Florida
Investment Advisory Council (the "Council"), which oversees
the $40 billion Florida state retirement plan, and was
Chairman of the Council from 1991 to 1992. Since 1971, Mr.
Seneff has been active in the acquisition, development and
management of real estate projects throughout the United
States. Mr. Seneff is the brother-in-law of Kevin B.
Habicht, Chief Financial Officer of the Company.
</TABLE>
In the event that any nominee(s) should be unable to accept the office of
director, which is not anticipated, it is intended that the persons named in the
Proxy will vote FOR the election of such other person in the place of such
nominee(s) for the office of director as the Board of Directors may recommend.
The affirmative vote of a plurality of the shares of Common Stock present in
person or represented by proxy and entitled to vote is required for the election
of directors. Any director that does not receive an affirmative vote of a
plurality of the shares of Common Stock will not be elected.
A majority of the Company's directors are required to be independent, as
that term is defined in the Company's Bylaws, as amended (the "Bylaws"). Messrs.
Bourne, Clark, Hinkle and Lanier are independent directors (the "Independent
Directors"). Independent Directors are those persons who are not affiliated,
directly or indirectly, with any person, corporation, association, company,
trust, partnership (general or limited) or other organization to whom the Board
of Directors has delegated management duties. In addition, an Independent
Director cannot perform any services for the Company other than as a director.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1998, each director who was a director
for the entire year was paid $12,000 for serving on the Board of Directors. Each
director received $1,000 per quarterly Board of Directors meeting attended and
$750 per committee meeting attended. Since May 1993, however, Mr. Seneff has
waived his director's fees. The Board of Directors believes this compensation
level is comparable to that provided by many other companies in the real estate
investment trust ("REIT") industry.
The Board of Directors met 13 times during the year ended December 31, 1998
and the average attendance by the nominated directors at Board of Directors
meetings was approximately 97%. Each nominated member attended at least 94% of
the total meetings of the Board of Directors and of any committee on which he
served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Audit Committee, the members of which are
selected by the full Board of Directors each year. The current members of the
Audit Committee are Messrs. Clark and Lanier, who have served since June 1992,
and Mr. Hinkle, who has served since June 1998. The Audit Committee makes
recommendations to the Board of Directors as to the independent accountants of
the Company and reviews with such accounting firm the scope of the audit and the
results of the audit upon its completion. Additionally, the Audit Committee
reviews the adequacy of the Company's internal accounting controls. The Audit
Committee met four times during the year ended December 31, 1998.
5
<PAGE> 9
The Company has a standing Compensation Committee, the members of which are
selected by the full Board of Directors each year. The current members of the
Compensation Committee are Messrs. Clark, Hinkle and Lanier. The Compensation
Committee is responsible for establishing and administering executive
compensation programs including administration of the 1992 Commercial Net Lease
Realty, Inc. Stock Option Plan (the "1992 Plan") as well as approval of changes
in directors' fees. The Compensation Committee met once during the year ended
December 31, 1998.
The Company has a standing Nominating Committee. The current members of the
Nominating Committee are Messrs. Bourne, Hinkle, Lanier and Seneff. The
Nominating Committee's primary responsibility is to consider new directors for
the Company. The Nominating Committee did not meet during the year ended
December 31, 1998.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
James M. Seneff, Jr.................. Chief Executive Officer and Chairman of the Board
Gary M. Ralston...................... President and Chief Operating Officer
Kevin B. Habicht..................... Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
</TABLE>
Mr. Ralston, age 48, has served as President and Chief Operating Officer of
the Company since February 1996. From February 1996 until December 1997 he
served as President of the Advisor. From December 1993 until February 1996 he
served as Executive Vice President and Chief Operating Officer of the Company.
Mr. Ralston previously served as Vice President of the Company from July 1992
through December 1993 and as Vice President of the Advisor from its inception in
1991 through December 1993. From 1988 to 1992, he also served as a Senior Vice
President of CNL Properties, Inc., a real estate investment and asset/property
management company affiliated with CNL Group, Inc. From 1983 until 1988, Mr.
Ralston was Vice President of ENCO, a real estate investment and asset/property
management firm located in Lakeland, Florida. Mr. Ralston holds the Certified
Commercial Investment Member and Society of Industrial and Office Realtors
designations and is also a Florida licensed Real Estate Broker, Mortgage Broker
and Certified Building Contractor. Mr. Ralston is a member of the Urban Land
Institute, Vice Chairman of its Small Scale Development Council, a member of the
National Association of Real Estate Investment Trusts, a member of the Governing
Council of the Commercial Investment Real Estate Institute and a member of the
steering committee of the Capital Consortium.
Mr. Habicht, age 40, has been Executive Vice President and Chief Financial
Officer of the Company since December 1993 and has been Secretary and Treasurer
of the Company since January 1, 1998. Mr. Habicht previously served as Assistant
Secretary of the Company from December 1993 through December 1997, as Vice
President of the Company from July 1992 through December 1993, as Assistant
Secretary of the Advisor from December 1993 through December 1997, and as Vice
President of the Advisor from its inception in 1991 through December 1993. From
1990 through December 1997, Mr. Habicht served as Senior Vice President of CNL
Institutional Advisors, Inc. and from 1992 through 1997, Mr. Habicht served as
Treasurer of CNL Investment Company, Senior Vice President of CNL Management
Company and Treasurer of CNL Securities Corp. From 1981 to 1983, Mr. Habicht, a
Certified Public Accountant and a Chartered Financial Analyst, was employed by
Coopers & Lybrand, Certified Public Accountants. Mr. Habicht is the
brother-in-law of James M. Seneff, Jr., Chief Executive Officer and Chairman of
the Board of the Company.
The background of Mr. Seneff is described at "PROPOSAL -- ELECTION OF
DIRECTORS -- Nominees."
6
<PAGE> 10
The Company employs certain other officers who also have extensive
experience in selecting and managing freestanding retail properties. In addition
to the directors and executive officers listed above, the following individuals
are involved in the acquisition, development and management of the Company's
properties:
John K. Awsumb, age 52, has served as Senior Vice President of the Company
since January 1, 1998. From October 1992 to December 1997, Mr. Awsumb served as
Senior Vice President of CNL Development Company, Inc. (the "Development
Company"), which was merged with the Advisor in April 1997. Prior to joining the
Development Company, from 1973 to 1992, Mr. Awsumb was a founding principal of
Vickerey/ Oversat/Awsumb Associates, Inc., a national architecture, planning,
and interior design firm in Orlando, Florida and Chicago, Illinois. Mr. Awsumb
served as vice chairman of that company from 1976 to 1992. From 1975 to 1981,
Mr. Awsumb served as Chairman of the Downtown Development Board of the City of
Orlando. Mr. Awsumb is a member of the American Institute of Architects and from
1987 to 1989 served as president and State director of the mid-Florida chapter.
Mr. Awsumb is currently Vice President of the State Association of the American
Institute of Architects.
Mez R. Birdie, age 49, has served as Senior Vice President of Asset
Management of the Company since April 1998. From January 1, 1998 to April 1998,
Mr. Birdie served as Vice President of Asset Management of the Company. From
December 1993 to December 1997, Mr. Birdie served as Vice President of Asset
Management of the Advisor, from June 1992 to November 1993, Mr. Birdie served as
Director of Retail Management of the Company and from 1987 to 1992, Mr. Birdie
served as Director of Property Management for Charles Wayne Properties, Inc. Mr.
Birdie has received the Certified Property Manager designation awarded by the
Institute of Real Estate Management and the Senior Certified Shopping Center
Manager designation awarded by the International Council of Shopping Centers
(ICSC), and has a total of 14 years experience in the field of commercial and
residential property management.
Joseph A. Ciardiello, age 51, has served as Senior Vice President of
Corporate Acquisitions of the Company since January 1, 1998. From May 1996
through December 1997, Mr. Ciardiello served as Senior Vice President of
Corporate Acquisitions of the Advisor. From 1992 to 1996, he served as Vice
President of Real Estate and Development at Color Tile Inc. Prior to that he
served as Vice President of Real Estate Price Club East Coast and Vice President
of Development at Marriott Corporation. Mr. Ciardiello also served as National
Director of Real Estate at McDonalds Corporation where he developed McDonalds'
first joint venture real estate projects. Mr. Ciardiello holds the Certified
Commercial Investment Member designation and is a member of the National
Association of Corporate Real Estate Executives (NACORE). Mr. Ciardiello has
over 20 years of retail real estate experience.
J. Michael Davis, age 38, has served as a Vice President of the Company
since January 1, 1998. From April 1997 to December 1997, Mr. Davis served as a
Vice President of the Development Company. Prior to joining the Development
Company Mr. Davis was a Vice President of Trammell Crow BTS, Inc. ("Trammell
Crow") from 1994 to 1997. From 1989 to 1993, Mr. Davis served as Marketing
Director -- Retail for Trammell Crow. Mr. Davis is a member of the International
Council of Shopping Centers and the Urban Land Institute.
Alexander M. Dmyterko, age 39, has served as Executive Vice
President -- Build to Suit Chief Operating Officer since January 1, 1998. From
March 1997 to December 1997, Mr. Dmyterko served as Build to Suit Chief
Operating Officer of the Development Company. Before joining the Development
Company, Mr. Dmyterko was a founder, and from 1993 to 1997 served as Executive
Vice President/Managing Director of, Trammell Crow. From 1991 to 1993 Mr.
Dmyterko served as Managing Director -- Retail for Trammell Crow. From 1987 to
1991 Mr. Dmyterko was a Project Manager and Marketing Representative at Trammell
Crow. Mr. Dmyterko is a member of the International Council of Shopping Centers,
the Urban Land Institute and the Chicago Area Shopping Center Owners.
David G. Etter, age 36, has served as Director of Real Estate Acquisitions
of the Company since January 1, 1998. From April 1996 to December 1997, Mr.
Etter served as Director of Real Estate Acquisitions of the Advisor. Previously,
Mr. Etter worked for Rite Aid Corporation from 1994 to 1996 as Director of Real
Estate for the Southeastern United States, and as Real Estate Manager for Taco
Bell Corp. from 1989 to 1994. Mr. Etter holds an M.B.A., is a member of the
National Association of Corporate Real Estate
7
<PAGE> 11
Executives (NACORE) and has 10 years of experience in asset management, real
estate acquisition and real estate development.
Courtney S. Hubbard, age 35, has served as Director of Due Diligence and
Research of the Company since January 1, 1998. From February 1995 to December
1997, Ms. Hubbard served as Director of Due Diligence and Research of the
Advisor. Prior to joining the Advisor, Ms. Hubbard was a senior associate at
Clayton, Roper & Marshall, a real estate appraisal and consulting firm (1991 to
1995) and a senior associate with Kampe Appraisals, Inc. (1989 to 1991). She
holds a Master of Arts Degree in Real Estate from the University of Florida. Ms.
Hubbard is a MAI (Member, Appraisal Institute), a certified general real estate
appraiser in the State of Florida, and a member of the Appraisal Institute's
Admissions and Ethics committees.
Dawn A. Peterson, age 35, has served as Director of Accounting and
Financial Reporting of the Company since January 1, 1998. From July 1994 to
December 1997, Ms. Peterson served as Director of Accounting and Financial
Reporting of the Advisor. From 1991 to 1994, Ms. Peterson was employed by
Coopers & Lybrand as a Certified Public Accountant (CPA). Ms. Peterson earned a
Bachelor of Science degree in Business Administration and a Master of Science
Degree in Accountancy from the University of Central Florida. She is a member of
the American Institute of Certified Public Accountants.
Cynthia C. Shelton, age 45, has served as Vice President of Acquisitions of
the Company since January 1, 1998. From May 1996 to December 1997, Ms. Shelton
served as Director of Acquisitions of the Advisor. Ms. Shelton served from 1995
to 1996 as Vice President of the Ross Realty Group, a real estate brokerage and
property management company that specializes in retail properties, and from 1985
to 1995 as the Real Estate Manager for KinderCare Learning Centers, Inc., the
largest child care company in the United States. Ms. Shelton has 21 years of
experience in commercial brokerage and site selection and she holds the
Certified Commercial Investment Member (CCIM) designation and is a Florida
licensed Real Estate Broker. Ms. Shelton is the 1996 President of the Florida
CCIM Chapter, a national councilor for the Certified Investment Real Estate
Institute (CIREI) and a 1997 Director of the National Association of Realtors.
Dennis E. Tracy, age 49, has served as Senior Vice President the Company
since January 1, 1998. From November 1990 to December 1997, Mr. Tracy served as
Senior Vice President of the Development Company. Prior to joining the
Development Company, Mr. Tracy founded Tracy Homes, Inc., a luxury custom home
building company and served as its president and owner. Mr. Tracy is a Certified
Commercial Investment Manager and a member of the Advisory Board for the Retail
Contractors Association.
8
<PAGE> 12
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLES
The following table shows the annual and long-term compensation paid by the
Company to the Chief Executive Officer and the two other executive officers of
the Company for services rendered in all capacities to the Company during the
fiscal years ended December 31, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) ---------------
-------------------------------- STOCK OPTION ALL OTHER
NAME AND PRINCIPLE POSITION YEAR SALARY BONUS AWARDS (SHARES) COMPENSATION(2)
--------------------------- ---- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
James M. Seneff, Jr.............. 1998 $125,000 $ 62,500 46,000 $4,800
Chief Executive Officer & 1997 0 0 0 0
Chairman of the Board 1996 0 0 120,000 0
Gary M. Ralston.................. 1998 $225,000 $112,500 92,000 $4,800
President and Chief 1997 0 0 0 0
Operating Officer 1996 0 0 75,000 0
Kevin B. Habicht................. 1998 $150,000 $ 75,000 46,000 $4,637
Executive Vice President, 1997 0 0 0 0
Chief Financial Officer, 1996 0 0 60,000 0
Secretary and Treasurer
</TABLE>
- ---------------
(1) No executive officer received a salary or bonus from the Company prior to
January 1, 1998. Until January 1, 1998, the Company's employees and
executive officers were also employees and executive officers of the Advisor
and received compensation from the Advisor. Subsequent to the merger of the
Advisor with the Company, all officers and employees of the Company were
compensated directly by the Company.
(2) Represents Company contributions to the Company's 401(k) Plan.
The following table provides certain information regarding stock options
granted to the named executive officers for the year ended December 31, 1998.
The Company has not granted any SARs.
OPTION GRANTS FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED EXERCISE PRICE APPRECIATION
UNDERLYING TO EMPLOYEES PRICE PER FOR OPTION TERM(1)
OPTIONS IN FISCAL SHARE EXPIRATION ---------------------
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
James M. Seneff, Jr......... 46,000 7.1% 17.375 03/31/2008 193,561 781,636
Gary M. Ralston............. 92,000 14.3% 17.375 03/31/2008 387,123 1,563,272
Kevin B. Habicht............ 46,000 7.1% 17.375 03/31/2008 193,561 781,636
</TABLE>
- ---------------
(1) Based on the closing share price of the Common Stock of $13.25 per share on
December 31, 1998, less the exercise price of the options.
The following table sets forth certain information with respect to
unexercised stock options held by the executive officers of the Company at
December 31, 1998. The executive officers did not exercise any stock options
during the fiscal year ended December 31, 1998.
9
<PAGE> 13
OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1998 AT DECEMBER 31, 1998(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
James M. Seneff, Jr.................... 287,500 46,000 $84,688 0
Gary M. Ralston........................ 149,000 92,000 $44,375 0
Kevin B. Habicht....................... 118,000 46,000 $36,875 0
</TABLE>
- ---------------
(1) Based on the closing price of $13.25 on the New York Stock Exchange on
December 31, 1998.
Under the 1992 Plan, directors, officers, and other key employees and key
persons associated with the Company are eligible to receive options under this
plan. Additionally, the Company has adopted a defined contribution savings plan
(the "401(k) Plan") which covers all employees, including executive officers,
who have completed 12 months of service. Participants can contribute up to 15%
of annual compensation on a pre-tax basis. The Company provides a 50% matching
contribution up to 3% of annual compensation, with a maximum of $4,900. All
participant contributions are fully vested as soon as they are made. Company
contributions are subject to a vesting schedule and are 100% vested after six
years of service.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Messrs.
Seneff, Ralston and Habicht. Each agreement will expire on December 31, 2000,
but is subject to automatic one-year renewals. Each agreement contains a
noncompete provision applicable during the term and provides for salary per year
of $130,000, $275,000 and $175,000, respectively, a bonus and options to
purchase shares of Common Stock. Each agreement also contains severance
provisions that call for payment to the executive of either twice the
executive's annual salary (in the cases of Messrs. Ralston and Habicht) or the
executive's annual salary (in the case of Mr. Seneff) in the event that the
executive is terminated without cause or the executive resigns for good reason
(including material reduction of responsibilities or reduction in salary,
failure of a successor to the Company to assume the agreement or the Company's
material and willful breach of the agreement), in addition to the continuation
of certain fringe benefits and the immediate vesting of options.
THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED INTO ANY FILING BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING ANY SUCH INCORPORATION BY REFERENCE
OF ANY OTHER PORTIONS OF THIS PROXY STATEMENT.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT
The Board of Directors appointed a Compensation Committee comprised of the
undersigned, Messrs. Clark, Hinkle and Lanier. Members of the Compensation
Committee, all of whom must be independent directors of the Company, are
selected each year by the full Board of Directors.
The Compensation Committee believes the Company's degree of success is
largely attributable to the talent and dedication of its associates and to the
management and leadership efforts of its executive officers. The goal of the
Compensation Committee is to establish a compensation program that will attract
and retain talented corporate officers, motive them to perform to their fullest
potential, as well as align their long term interests with the interests of the
Company's stockholders. In evaluating performance, the Compensation Committee
considers quantitative and qualitative improvement in the Company's Funds From
Operations ("FFO"), capital structure, and individual performance and
contribution to corporate goals and objectives.
Upon consummation of the merger of the Company with its former external
advisor on January 1, 1998, all employees of the advisor became employees of the
Company. Accordingly, the Compensation Committee began administration of all
aspects of executive compensation in 1998. The key elements in the Company's
executive compensation program consist of salary, annual bonus and stock
options. In making compensation decisions, the Compensation Committee considers
the compensation practices and financial performance of other REIT industry
participants and from time to time receives assessments and advice regarding
compensation practices from independent compensation consultants. Additionally,
the Compensation Committee makes a subjective assessment of the general
performance of the Company, the officer's contribution to the Company's
performance, the officer's anticipated performance and contribution to the
Company's achievement of its long term goals and the position, level, and scope
of the officer's responsibility.
COMPENSATION COMMITTEE
EDWARD CLARK
CLIFFORD R. HINKLE
TED B. LANIER
11
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends ("NNN"), with the National
Association of Real Estate Investment Trusts Equity Index ("NAREIT") and the S&P
500 Index ("S&P 500") for the five year period commencing January 1, 1994 and
ending December 31, 1998. The graph assumes the investment of $100 on January 1,
1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
'S&P 500' 'NAREIT' 'NNN'
--------- -------- -----
<S> <C> <C> <C>
'12/31/93' 100.00 100.00 100.00
'3/31/94' 96.19 103.40 102.95
'6/30/94' 95.58 105.31 103.17
'9/30/94' 101.33 103.15 94.95
'12/31/94' 101.31 103.17 97.20
'3/31/95' 111.17 103.00 98.51
'6/30/95' 121.72 109.05 108.99
'9/30/95' 131.40 114.19 112.44
'12/31/95' 139.23 118.92 110.65
'3/31/96' 146.70 121.63 117.51
'6/30/96' 153.28 127.04 125.63
'9/30/96' 158.02 135.35 126.08
'12/31/96' 171.19 160.86 149.67
'3/31/97' 175.78 161.98 141.90
'6/30/97' 206.47 170.04 150.19
'9/30/97' 221.94 190.13 159.27
'12/31/97' 228.32 193.45 181.63
'3/31/98' 260.16 192.55 182.13
'6/30/98' 268.77 183.72 170.48
'9/30/98' 242.03 164.39 157.29
'12/31/98' 293.57 159.59 145.84
</TABLE>
SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, the number and
percentage of outstanding shares beneficially owned by all persons known by the
Company to own beneficially more than five percent of the Company's Common
Stock, by each director and nominee, by each of the executive officers named in
"Executive Compensation," above, and by all officers and directors as a group,
based upon information furnished to the Company by such stockholders, officers
and directors. Unless otherwise noted below, the
12
<PAGE> 16
persons named in the table have sole voting and sole investment power with
respect to each of the shares beneficially owned by such person.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OF SHARES
------------------------------------ ------------------ ---------
<S> <C> <C>
Robert A. Bourne(1)....................................... 565,109(2)(3) 1.8%
400 East South Street, Suite 500
Orlando, Florida 32801
Edward Clark(1)........................................... 13,379(4) (5)
5204 Shamrock Drive
Raleigh, North Carolina 27612
Kevin B. Habicht(6)....................................... 138,710(7) (5)
455 South Orange Avenue, Suite 700
Orlando, FL 32801
Clifford R. Hinkle(1)..................................... 47,992(8) (5)
215 South Monroe Street, Suite 500
Tallahassee, Florida 32301
Ted B. Lanier(1).......................................... 24,942(9) (5)
1818 Windmill Drive
Sanford, North Carolina 27330
Gary M. Ralston (6)....................................... 210,995(10) (5)
455 South Orange Avenue, Suite 700
Orlando, Florida 32801
James M. Seneff, Jr.(11).................................. 1,129,930(2)(12) 3.7%
455 South Orange Avenue, Suite 700
Orlando, Florida 32801
ABKB/LaSalle Securities, Inc.(13)......................... 2,543,700 8.5%
100 East Pratt Street
Baltimore, MD 21202
Public Employees Retirement System of Ohio................ 1,643,000 5.5%
277 East Town Street
Columbus, Ohio 43215
All directors and executive officers as a group (7 1,820,358(2)(3)(4)(7)
persons)................................................ (8)(9)(10)(12) 6.1%
</TABLE>
- ---------------
(1) A director of the Company.
(2) Of these shares, 255,696 shares are held by four limited partnerships, of
which Messrs. Bourne and Seneff are general partners and 55,003 shares are
held in a private corporation, of which Messrs. Bourne and Seneff each own
50%. Messrs. Bourne and Seneff disclaim beneficial ownership of these
shares, except to the extent of their respective percentage interests in
each of these entities.
(3) Includes 2,850 shares held by Mr. Bourne as custodian for his minor
children and 196,333 shares subject to currently exercisable options.
(4) Includes 635 shares held by Mr. Clark's spouse and 12,442 shares subject to
currently exercisable options.
(5) Less than 1 percent.
(6) An executive officer of the Company.
(7) Includes 118,000 shares subject to currently exercisable options.
13
<PAGE> 17
(8) Includes 12,442 shares subject to currently exercisable options, 1,150
shares held by Mr. Hinkle's spouse, and 30,000 shares held by Flagler
Holdings, Inc., in which Mr. Hinkle has a 26 percent interest and
dispository and voting authority.
(9) Includes 8,000 shares held by Mr. Lanier's spouse and 12,442 shares subject
to currently exercisable options.
(10) Includes 149,000 shares subject to currently exercisable options.
(11) An executive officer and director of the Company.
(12) Includes 492,021 shares owned by CNL Group, Inc. in which Mr. Seneff and
his spouse own 100% and 287,500 shares subject to currently exercisable
options. In addition, 35,473 of these shares are held by a trust of which
Mr. Seneff serves as trustee. Mr. Seneff disclaims beneficial ownership of
the shares held in trust.
(13) Shares shown are reported on a Schedule 13G, dated February 11, 1999, filed
with the Securities and Exchange Commission by ABKB/LaSalle Securities
Limited Partnership ("ABKB/LaSalle") and LaSalle Advisors Capital
Management, Inc. ("LaSalle"). Each of these entities is a registered
investment advisor with different advisory clients. LaSalle is the limited
partner of ABKB/LaSalle and is the sole stockholder of the general partner
of ABKB/LaSalle.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission (the "SEC") and the New York
Stock Exchange. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Forms
3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, written representations from certain reporting persons that they were
not required to file Forms 5 for the last fiscal year and other information
known to the Company, the Company believes that all its officers, directors, and
greater than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during fiscal 1998.
CERTAIN TRANSACTIONS
On December 18, 1997, the Company's stockholders voted to approve an
agreement and plan of merger with CNL Realty Advisors, Inc. (the "Advisor"),
whereby the stockholders of the Advisor agreed to exchange 100% of the
outstanding shares of common stock of the Advisor for up to 2,200,000 shares
(the "Share Consideration") of the Company's Common Stock (the "Merger"). As a
result, the Company became a fully-integrated, self-administered real estate
investment trust effective January 1, 1998. Ten percent of the Share
Consideration (220,000 shares) was paid January 1, 1998, and the balance (the
"Share Balance") of the Share Consideration is to be paid over time based upon
the Company's completed property acquisitions and completed development projects
in accordance with the merger agreement. The market value of the common shares
issued on January 1, 1998 was $3,933,000.
During the year ended December 31, 1998, the Company issued 57,813 shares
of the Share Balance in connection with the property acquisitions during the
nine months ended September 30, 1998. The market value of the shares at the date
the shares became issuable totaled $809,000. In addition, in connection with the
property acquisitions during the quarter ended December 31, 1998, on January 1,
1999 an additional 371,938 shares of the Share Balance became issuable to the
stockholders of the Advisor. The market value of the shares at the date the
shares became issuable totaled $4,928,000. Pursuant to the agreement and plan of
merger, the Company is required to issue the shares within 90 days after the
shares become issuable. At the time of the Merger, the Advisor was owned 76.8%
by CNL Group, Inc., which is wholly owned by Mr. Seneff
14
<PAGE> 18
and his wife, 8.5% by Mr. Bourne, 8.5% by Mr. Ralston and 3.1% by Mr. Habicht.
The Share Consideration, to the extent paid, is allocated to such persons in
accordance with such percentages.
Upon consummation of the Merger on January 1, 1998, all employees of the
Advisor became employees of the Company, and any obligation to pay fees under
the advisor agreement between the Company and the Advisor was terminated.
During the year ended December 31, 1998, the Company received $2,144,000 in
development fees for providing certain development services for CNL Retail
Development, Inc., which is owned by Mr. Seneff.
On March 16, 1999, the Company completed the sale of 38 restaurant
properties to CNL American Properties Fund, Inc. ("APF"). The Company received
gross proceeds of $36.6 million and expects to report a gain on sale of
approximately $5.3 million in the first quarter of 1999. Mr. Seneff is the
Chairman of the Board of Directors and Chief Executive Officer of APF and Mr.
Bourne is the Vice Chairman of the Board of Directors of APF. This transaction
was negotiated on behalf of the Company by the Independent Directors who engaged
an investment bank to market the portfolio and to provide a valuation of the
subject properties.
INDEPENDENT AUDITORS
Upon recommendation of and approval by the Audit Committee, KPMG LLP has
been selected to act as independent certified public accountants for the Company
during the current fiscal year.
A representative of KPMG LLP will be present at the annual meeting and will
be provided with the opportunity to make a statement if desired. Such
representative will also be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
annual meeting other than those stated above. If any other business should come
before the annual meeting, the person(s) named in the enclosed Proxy will vote
thereon as he or they determine to be in the best interests of the Company.
15
<PAGE> 19
PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the Company's
proxy statement and form of proxy for the annual meeting of stockholders to be
held in 2000 must be received at the Company's office at 455 South Orange
Avenue, Suite 700, Orlando, Florida 32801, no later than December 12, 1999.
Stockholders desiring to make nominations for directors and/or to bring a
proper subject before a meeting should do so by notice delivered to the
Secretary of the Company. The proxy for the 2000 annual meeting will grant
discretionary authority to vote with regard to nominations and proposals unless
(a) notice is received by February 25, 2000 and (b) the conditions set forth in
Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met. The Company requests
that such stockholder notice set forth (a) as to each nominee for director, all
information relating to such nominee that is required to be disclosed in
solicitations of proxies for election of directors under the proxy rules of the
Securities and Exchange Commission; (b) as to any other business, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder; and (c) as to the stockholder, (i) the name
and address of such stockholder, (ii) the class or series and number of shares
of stock of the Company which are owned beneficially and of record by such
stockholder, and (iii) the date(s) upon which the stockholder acquired ownership
of such shares.
By Order of the Board of Directors,
/s/ KEVIN B. HABICHT
Kevin B. Habicht
Secretary
April 9, 1999
Orlando, Florida
16
<PAGE> 20
PROXY
COMMERCIAL NET LEASE REALTY, INC. [NUMERIC]
[BAR CODE]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James M. Seneff, Jr. and Kevin B. Habicht, and
either of them, attorneys and proxies, with full power of substitution and
revocation, to vote, as designated below, all shares of Common Stock that the
undersigned is entitled to vote, with all powers that the undersigned would
possess if personally present at the annual meeting (including all adjournments
thereof) of stockholders of Commercial Net Lease Realty, Inc. (the "Meeting") to
be held on May 18, 1999, at 9:00 a.m. local time, at the Citrus Club, 255 S.
Orange Avenue, 18th Floor, Orlando, Florida, 32801.
PROPOSAL. To elect five Directors to serve until the next annual meeting of
stockholders or until their successors shall have been elected or qualified.
[ ] GRANT AUTHORITY to vote for all nominees listed below (except as marked to
the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
ROBERT A. BOURNE, EDWARD CLARK, CLIFFORD R. HINKLE, TED B. LANIER,
JAMES M. SENEFF, JR.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
[ADDRESS WINDOW] FOR ANY INDIVIDUAL NOMINEE, LINE THROUGH OR
STRIKE OUT ANY NOMINEE LISTED ABOVE.
(continued and to be signed on reverse)
(continued from reverse side)
The shares represented by this Proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If no direction is given,
the shares represented by this Proxy will be voted FOR the Proposal. In
addition, the proxies may vote in their discretion on such other matters as may
properly come before the Meeting.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT OF COMMERCIAL
NET LEASE REALTY, INC.
SIGNATURE(S): _____________________________________________________
TITLE/AUTHORITY: _________________________________________________
DATED: ________________________________ ______, 1999
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, custodian, guardian or
corporate officer, please give your full title as such. If a corporation, please
sign in full corporate name by authorized officer. If a partnership, please sign
in partnership name by authorized person. The proxies are authorized in their
discretion, to vote such shares upon any other business that may properly come
before the Meeting and all adjournments and postponements thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
