<PAGE>
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
LOGO
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
------
NOTICE OF ANNUAL MEETING OF
HOLDERS OF CERTIFICATES OF BENEFICIAL INTEREST
DECEMBER 14, 1995
------
The Annual Meeting of Holders of Certificates of Beneficial Interest
("shareholders") of Pennsylvania Real Estate Investment Trust (the "Trust")
will be held on Thursday, December 14, 1995 at 11:00 a.m. in the board room
located on the 7th floor of the Philadelphia National Bank Building
(accessible using elevators located in the bank), Broad and Chestnut Streets,
Philadelphia, Pennsylvania for the following purposes:
(1) Election of Trustees; and
(2) Transaction of such other business as may properly be brought
before the meeting or any adjournment thereof.
The Trustees have fixed the close of business on November 3, 1995 as the
record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
All shareholders are cordially invited to attend the meeting, but whether
or not you expect to attend the meeting in person, please mark, sign and date
the enclosed proxy and return it promptly in order that your shares may be
voted. If you attend the meeting, you may revoke your proxy and vote in
person.
By Order of the Board of Trustees
JEFFREY A. LINN
Secretary
Fort Washington, Pa.
November 16, 1995
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
455 PENNSYLVANIA AVENUE
SUITE 135
FORT WASHINGTON, PENNSYLVANIA 19034
------
PROXY STATEMENT FOR ANNUAL MEETING
OF HOLDERS OF CERTIFICATES OF BENEFICIAL INTEREST
TO BE HELD ON DECEMBER 14, 1995
This proxy statement and the enclosed proxy are being sent to Holders of
Certificates of Beneficial Interest of the Pennsylvania Real Estate
Investment Trust (the "Trust") on or about November 16, 1995 in connection
with the solicitation of proxies for use at the Annual Meeting of Holders of
Certificates of Beneficial Interest ("shareholders") of the Trust to be held
on Thursday, December 14, 1995 at 11:00 a.m. in the board room located on the
7th floor of the Philadelphia National Bank Building (accessible using
elevators located in the bank), Broad and Chestnut Streets, Philadelphia,
Pennsylvania.
The enclosed proxy is solicited on behalf of the Board of Trustees of the
Trust. The proxy is revocable at any time prior to its use by delivering a
subsequently executed proxy or written notice of revocation to the Secretary
of the Trust. The Annual Report of the Trust, including financial statements,
for the year ended August 31, 1995, on which no action will be requested at
the Annual Meeting, is included herewith. It is not to be regarded as proxy
solicitation material.
As of November 3, 1995, there were 8,676,098 Certificates of Beneficial
Interest in the Trust ("Shares") outstanding, each of which is entitled to
one vote on all matters to be presented at the meeting.
The Trust will bear the cost of preparing and mailing this Notice and
Proxy Statement and the enclosed proxy. Trustees, officers and regular
employees of the Trust may solicit proxies by personal interview, mail,
telephone or telegraph. Such persons will receive no compensation for any
such solicitation activities other than their regular salary but will be
reimbursed for actual expenses in connection therewith. Arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries for
proxy material to be sent to their principals, and the Trust will reimburse
such persons for their expenses in so doing.
ELECTION OF TRUSTEES
The Trustees intend to cause Messrs. Sylvan M. Cohen, Lee H. Javitch and
Jonathan B. Weller, the three Trustees whose terms expire at the 1995 Annual
Meeting, to be nominated for re-election at the 1995 Annual Meeting as Class
A Trustees to serve until the 1998 Annual Meeting and until their respective
successors have been duly elected and have qualified. If any of the foregoing
nominees becomes unable to or declines to serve, the persons named in the
accompanying proxy shall have discretionary authority to vote for a
substitute or substitutes unless the Board of Trustees reduces the number of
Trustees to be elected.
Assuming a quorum is present, the three nominees receiving the highest
number of votes cast at the Annual Meeting will be elected Trustees. For such
purposes, the withholding of authority to vote or the specific direction not
to cast a vote, such as a broker non-vote, will not constitute the casting of
a vote in the election of Trustees.
The following table sets forth certain information concerning the three
(3) nominees for the office of Class A Trustee, the six (6) Trustees to
continue in office after the 1995 Annual Meeting and the executive officers
named in the Summary Compensation Table, including their ages, principal
occupations and the number of Shares of the Trust beneficially owned by them
as of October 1, 1995.
1
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
on October 1, 1995 (1)
Principal Occupation Trustee ------------------------
Name Age and Affiliations Since Number Percent
---- --- -------------------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Nominees for the
Office of Trustee
Class A Trustees; Terms Expire in 1998
Sylvan M. Cohen 81 Chairman and Chief Executive Officer of the Trust. 1960 676,174(2) 7.8%
Presently of counsel to the Philadelphia law firm of
Drinker Biddle & Reath and formerly partner in the
Philadelphia law firm of Cohen, Shapiro, Polisher,
Shiekman and Cohen. Director of FPA Corporation. Trustee
of EQK Realty Investments I and Trustee of Arbor Property
Trust.
Lee H. Javitch 64 Private Investor. Former Chairman and Chief Executive 1985 6,500(3) *
Officer of Giant Food Stores, Inc., an owner and operator
of supermarkets. Director of Dauphin Deposit Corp.
Jonathan B. Weller 47 President and Chief Operating Officer of the Trust. From 1994 36,200(4) *
1988-1993, Executive Vice President and Director of
Eastdil Realty, Inc., a real estate investment banking
firm.
Trustees whose
Terms Continue
Class B Trustees; Terms Expire in 1996
Robert Freedman 66 Of counsel to the Philadelphia law firm of Drinker Biddle 1988 44,727(3)(5) *
& Reath and formerly partner in the Philadelphia law firm
of Cohen, Shapiro, Polisher, Shiekman and Cohen.
Samuel J. Korman 86 Partner in Hyman Korman Company, an owner of real estate 1966 332,565(6) 3.8%
properties.
Jeffrey P. Orleans 49 Chairman of the Board, Chief Executive Officer and 1986 47,547(3)(7) *
Director of FPA Corporation, a residential real estate
developer. Chief Executive Officer of Orleans
Construction Corp., a residential real estate developer,
prior to FPA Corporation's acquisition of such company in 1993.
Class C Trustees; Terms Expire in 1997
William R. Dimeling 54 Partner in Dimeling, Schreiber and Park, a private 1982 5,187(3) *
investment partnership.
Jack Farber 62 Chairman, President and Chief Executive Officer of CSS 1971 59,740(3)(8) *
Industries, Inc., a diversified holding company. Director
of CSS Industries, Inc. and Hunt Manufacturing Company.
Robert G. Rogers 64 Executive Vice President of the Trust 1986 20,781(9) *
Non-Trustee
Executive Officers
Jeffrey A. Linn 46 Senior Vice President-Acquisitions and Secretary of the -- 14,590(10) *
Trust
Dante J. Massimini 62 Senior Vice President-Finance and Treasurer of the Trust -- 7,570(11) *
All Trustees and
executive officers
as a group
(11 persons) -- -- -- 1,170,458(12) 13.4%
</TABLE>
- ------
* Less than one percent
2
<PAGE>
(1) Unless otherwise indicated in the following footnotes, each Trustee and
Non-Trustee executive officer has sole voting and investment power with
respect to all such Shares.
(2) Includes 186,558 Shares owned by Mr. Cohen's wife, 37,056 Shares owned by a
trust of which Mr. Cohen's wife and Mr. Freedman, a Trustee of the Trust,
are co-trustees, 252 Shares owned by a corporation 50% of whose outstanding
shares are owned by Mr. Cohen and the remaining 50% of whose outstanding
shares are owned by Jeffrey P. Orleans, a Trustee of the Trust, 43,815
Shares owned by a charitable remainder unitrust of which Mr. Cohen and Mr.
Farber, a Trustee of the Trust, are two of the three co-trustees, 50,028
Shares owned by several trusts of which Mr. Cohen is a trustee or a
co-trustee and 4,623 Shares subject to options that are currently
exercisable. Mr. Cohen disclaims beneficial ownership of all of the Shares
referred to in this footnote other than Shares owned by trusts of which Mr.
Cohen is a trustee or a co-trustee, Shares owned of record by Mr. Cohen's
wife and the Shares subject to options.
(3) Includes 3,500 Shares subject to options that are currently exercisable.
(4) Includes 25,000 Shares subject to options that are currently exercisable,
and 400 Shares held by Mr. Weller as custodian for his children under the
New York Uniform Gifts to Minors Act.
(5) Includes 37,056 Shares owned by a trust of which Mr. Freedman and Mr.
Cohen's wife are co-trustees. Mr. Freedman disclaims beneficial ownership
of the aforementioned Shares.
(6) Includes 7,500 Shares owned by Mr. Korman's wife, 70,800 Shares owned by
several trusts of which Mr. Korman is a co-trustee, 87,570 Shares owned by
a family foundation of which Mr. Korman is a co-trustee, and 2,750 Shares
subject to options that are currently exercisable. Leonard I. Korman, a
nephew of Mr. Samuel J. Korman, beneficially owns 493,713 Shares (see
"PRINCIPAL SECURITY HOLDERS"), which number includes (i) 87,570 Shares
owned by the family foundation referred to in the preceding sentence of
which Messrs. Samuel J. Korman and Leonard I. Korman are 2 of the 5
co-trustees and (ii) 18,000 Shares owned by several trusts of which Messrs.
Samuel J. Korman and Leonard I. Korman are 2 of the co-trustees. Mr. Samuel
J. Korman disclaims beneficial ownership of the aforementioned Shares other
than the Shares subject to option.
(7) Includes 450 Shares owned by Mr. Orleans' wife, 1,494 Shares for which Mr.
Orleans is custodian for his children under the Pennsylvania Uniform Gifts
to Minors Act, and 252 Shares owned by a corporation 50% of whose shares
are owned by Mr. Orleans and the remaining 50% of whose shares are owned by
Sylvan M. Cohen, a Trustee and Chairman and Chief Executive Officer of the
Trust. Mr. Orleans disclaims beneficial ownership of the Shares owned by
Mr. Orleans' wife and certain Shares for which he serves as custodian under
the Pennsylvania Uniform Gifts to Minors Act.
(8) Includes 43,815 Shares held in the charitable remainder unitrust referred
to in footnote 2 above.
(9) Includes 14,406 Shares subject to options that are currently exercisable.
(10) Includes 6,058 Shares subject to options that are currently exercisable and
500 Shares that are held by Mr. Linn as custodian for his son under the
Pennsylvania Uniform Gifts to Minors Act.
(11) Includes 6,970 Shares subject to options that are currently exercisable.
(12) Includes 77,307 Shares subject to options that are currently exercisable.
In certain instances, two Trustees beneficially own the same Shares because
they share voting or investment power over such Shares. Such Shares have
been counted only once in this total.
3
<PAGE>
ADDITIONAL INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation paid by the Trust during the fiscal years ended August 31, 1995,
1994 and 1993 to the Trust's Chief Executive Officer and the four other most
highly compensated executive officers of the Trust.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards All Other
------------------------------------------- -------------- --------------
Name and Principal Other Annual Compensation
Position Year Salary ($) Bonus ($) Compensation($)(1) Options (#) ($) (2)
----------------------- ------ ----------- --------- ------------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sylvan M. Cohen 1995 $333,000 -- -- 20,000 $9,070
Chairman and Chief 1994 316,023 -- -- 40,000 9,070
Executive Officer 1993 298,068 -- -- 25,000 9,070
and Trustee
Jonathan B. Weller 1995 $281,539 -- $37,463 35,000 32,408
President and Chief 1994 157,596(3) -- 23,120 100,000(4) --
Operating Officer and
Trustee
Robert G. Rogers 1995 $183,269 -- -- 10,000 72,499
Executive Vice 1994 174,933 -- -- 15,000 --
President and Trustee 1993 165,360 -- -- 12,500 --
Dante J. Massimini 1995 $116,538 -- -- 10,000 54,706
Senior Vice President- 1994 106,303 -- -- 15,000 --
Finance and 1993 99,320 -- -- 7,500 --
Treasurer
Jeffrey A. Linn 1995 $116,346 -- -- 15,000 18,021
Senior Vice President- 1994 95,535 -- -- 15,000 --
Acquisitions and 1993 86,226 -- -- 5,000 --
Secretary
</TABLE>
- ------
(1) Amounts shown for Fiscal 1995 include $14,352 for relocation expenses,
$12,378 for reimbursement for taxes resulting from payment of living
expenses on behalf of Mr. Weller in 1994 and $10,733 in respect of a
leased automobile. Amounts for Fiscal 1994 include $14,966 for living
expenses and $8,154 for a leased car.
(2) All amounts for Mr. Cohen represent annual premium payments on life
insurance provided under Mr. Cohen's employment agreement. Amounts for
Mr. Weller include $9,750 of annual premium payments on life insurance
provided under Mr. Weller's employment agreement. All other amounts
represent anticipated contributions by the Trust with respect to Fiscal
1995 under the non- qualified retirement plan approved during Fiscal 1995
in which Messrs. Weller, Rogers, Massimini and Linn are participants.
(3) Mr. Weller was not an employee or executive officer of the Trust prior to
January 31, 1994.
(4) Represents options granted to Mr. Weller in connection with his
acceptance of employment with the Trust.
EMPLOYMENT AGREEMENTS
The Trust entered into an Employment Agreement with Mr. Cohen on July 16,
1982, which was amended and restated on March 14, 1985 and further amended as
of January 1, 1990. The Employment Agreement provides that Mr. Cohen is to
serve as chariman and chief executive officer of the Trust. Pursuant to the 1990
4
<PAGE>
amendment, the employment term is currently on a year-to-year basis, with
automatic calendar year renewals that will continue until written notice of
termination is delivered at least 180 days prior to the end of the then-current
term. The current annual base compensation is $337,000, and the agreement
provides that base compensation cannot be unilaterally decreased by the Trust.
Mr. Cohen was not a participant in the Trust's defined benefit pension plan,
which was terminated during Fiscal 1995, nor is he a participant in the
non-qualified retirement plan which was established during Fiscal 1995 and in
which the other executive officers of the Trust named in the Summary
Compensation Table are participants. Following the termination of Mr. Cohen's
employment for any reason (including expiration of the term) other than
termination for specified cause, the Trust is required to make payments to Mr.
Cohen and, in the event his wife survives him, to Mr. Cohen's widow.
Post-termination payments to Mr. Cohen are to continue for the balance of his
lifetime at a rate equal to, subject to an annual cost-of-living adjustment, 50%
of the rate of Mr. Cohen's highest annual basic compensation during his
employment with the Trust. If Mr. Cohen is survived by his wife, the Trust is to
pay her for the balance of her lifetime at a rate equal to, subject to an annual
cost-of-living adjustment, (i) 25% of the rate of Mr. Cohen's highest annual
basic compensation during Mr. Cohen's employment with the Trust or (ii) if
higher than the rate specified in subclause (i), 50% of the rate of the adjusted
payments to which Mr. Cohen shall have been entitled at the time of his death.
During fiscal 1995, the Trust was not required to accrue on its financial
statements any additional amount in respect of the aforementioned
post-termination payments. As of the end of fiscal 1995, such accrual equals
approximately $1,045,000. The Employment Agreement also requires the Trust to
maintain $150,000 of life insurance coverage on Mr. Cohen's life, payable to
beneficiaries designated by Mr. Cohen.
The Trust entered into an Employment Agreement with Mr. Weller on December
14, 1993. The Employment Agreement provides that Mr. Weller is to serve as
President and Chief Operating Officer of the Trust with responsibility for
the day-to-day management of the Trust. The employment term, which began on
January 31, 1994, is three years, a period that is automatically extended, as
of January 31, 1995 and each January 31 thereafter, for a new three year term
beginning on such January 31 unless the Trust gives Mr. Weller written notice
at least 60 days prior to January 31 in a year that the term is not to be
extended as of such January 31. The agreement further provides for an initial
annual base salary of $275,000 and provides that if the annual salary is
increased, such increased annual salary thereafter constitutes the annual
base salary for purposes of the agreement. Mr. Weller's annual base salary
under the agreement currently is $285,000. In accordance with the Employment
Agreement, on December 14, 1993, the Trust granted Mr. Weller non-qualified
stock options to purchase 100,000 Shares of the Trust at an exercise price
equal to the fair market value of the Shares on such date. See "ADDITIONAL
INFORMATION -- Stock Option Plans" below. The Trust is required to provide
certain employee benefits to Mr. Weller, including $1,500,000 life insurance.
Mr. Weller is required to invest a minimum of $250,000 in Shares of the
Trust. Upon a termination of employment by Mr. Weller for specified good
reason (including delivery by the Trust of written notice that the term of
the agreement is not to be renewed for a new three-year period) or by the
Trust other than for cause, disability or death, Mr. Weller is entitled to
receive a lump-sum cash payment equal to the sum of any unpaid annual base
salary through the date of termination and the amount of annual base salary
that would have been paid during the remaining term of employment, discounted
on a present value basis. The Employment Agreement provides that all options
to purchase Shares granted to Mr. Weller vest and become immediately
exercisable upon a change of control of the Trust or upon a termination of
employment by the Trust without cause or by Mr. Weller for good reason or
upon Mr. Weller's death or disability. The Employment Agreement provides
that, in the event any payments to Mr. Weller result in the imposition on Mr.
Weller of an excise tax under Section 4999 of the Internal Revenue Code, the
Trust shall pay Mr. Weller an additional amount sufficient to reimburse him
for such excise tax.
As of October 1, 1985 the Trust entered into Employment Agreements with
Messrs. Rogers, Massimini and Linn. The Employment Agreements with Messrs.
Rogers and Massimini were amended and restated as of October 1, 1990. Mr.
Massimini currently serves as Senior Vice President-Finance and Treasurer of
the Trust, Mr. Rogers serves as its Executive Vice President and Mr. Linn
serves as its Senior Vice President-Acquisitions and Secretary. The
employment term of Mr. Massimini's Employment Agreement is currently on a
5
<PAGE>
year-to-year basis, with automatic one-year renewals as of September 30 of each
year that will continue until written notice of termination is delivered at
least 180 days prior to the end of the then-current term. The employment term of
Mr. Linn's Employment Agreement is currently on the same basis as Mr.
Massimini's except that written notice of termination need be delivered at least
90 days prior to the end of the then-current term. Mr. Rogers' Employment
Agreement was further amended as of July 12, 1993, extending the employment term
to September 30, 1996 and thereafter on a year-to-year basis comparable to Mr.
Massimini's agreement. The Employment Agreements specify the initial annual
basic compensation and provide that if the annual basic compensation is
subsequently increased, such increased amount will thereafter constitute the
basic compensation thereunder. The current annual basic compensation for Mr.
Rogers, Mr. Massimini and Mr. Linn is $185,000, $120,000 and $125,000,
respectively.
STOCK OPTION TABLES
The following table sets forth certain information with respect to options
to purchase Shares granted to executive officers named in the Summary
Compensation Table during the fiscal year ended August 31, 1995:
OPTIONS GRANTED IN FISCAL 1995
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------- Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Options Granted to Exercise Price Appreciation for
Granted Employees in Price Expiration Option Term (1)
--------------------------
Name (#) Fiscal Year Per Share Date 5% 10%
------------------ ------------ -------------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sylvan M. Cohen 20,000 (2) 20.6% $18.00 12/15/04 $265,708 $ 673,356
Jonathan B. Weller 35,000 (3) 36.1% $18.00 12/15/04 $464,989 $1,178,373
Robert G. Rogers 10,000 (4) 10.3% $18.00 12/15/04 $132,854 $ 336,678
Dante J. Massimini 10,000 (5) 10.3% $18.00 12/15/04 $132,854 $ 336,678
Jeffrey A. Linn 15,000 (6) 15.5% $18.00 12/15/04 $199,281 $ 505,017
</TABLE>
- ------
(1) These amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the end of the option term.
These gains are based on assumed rates of share appreciation of 5% and
10% compounded annually from the date the respective options were granted
to their expiration date. The assumed annual rates of share appreciation
are specified by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation of the Trust's share
price.
(2) Consists of a non-qualified stock option exercisable in four equal and
consecutive annual installments of 5,000 shares each, commencing on
January 9, 1996.
(3) Consists of an incentive stock option for 27,775 shares and a
non-qualified stock option for 7,225 shares. The incentive stock option
is exercisable in five equal and consecutive annual installments of 5,555
shares each, commencing January 1, 1996. The non-qualified stock option
is exercisable in four successive annual installments, three installments
of 1,800 shares each, commencing January 1, 1996, and the fourth
installment of 1,825 on January 1, 1999.
(4) Consists of a non-qualified stock option exercisable in four equal and
consecutive annual installments of 2,500 shares each, commencing on
January 1, 1996.
(5) Consists of an incentive stock option for 7,729 shares and a
non-qualified stock option for 2,271 shares. The incentive stock option
is exercisable in two annual installments, the first on January 1, 1999
for 2,174 shares and the second on January 1, 2000 for 5,555 shares. The
non-qualified stock option is exercisable in three equal and consecutive
annual installments of 757 shares each, commencing January 1, 1996.
(6) Consists of an incentive stock option for 9,700 shares and a
non-qualified stock option for 5,300 shares. The incentive stock option is
6
<PAGE>
exercisable in four consecutive annual installments, the first on January 1,
1997 for 1,415 shares, the second and third installments for 1,365 shares
each and the fourth annual installment on January 1, 2000 for 5,555 shares.
The non-qualified stock option is exercisable in four equal and consecutive
annual installments of 1,325 shares each, commencing January 1, 1996.
The following table sets forth certain information as to the exercise of
options to purchase Shares during the fiscal year ended August 31, 1995 by
the persons named in the Summary Compensation Table and the fiscal year-end
value of unexercised options.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED AUGUST 31, 1995
AND AUGUST 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired August 31, 1995 August 31, 1995(1)
on Value ------------------------------- -------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------ ---------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sylvan M. Cohen 6,250 $29,688 4,623 80,377 $ 3,467 $ 81,250
Jonathan B. Weller -- -- 25,000 110,000 0 $109,375
Robert G. Rogers -- -- 14,406 32,594 $52,367 $ 36,945
Dante J. Massimini -- -- 6,970 27,405 $12,421 $ 34,062
Jeffrey A. Linn -- -- 6,058 30,192 $ 8,281 $ 48,750
</TABLE>
- ------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. All of
the options held by the named executive officers were in-the-money except
for options granted in December 1993. Dollar amounts shown represent the
difference between the option exercise price and the fair market value of
the Shares at August 31, 1995. The closing price of the Shares on August
31, 1995 was $21.25 per Share.
STOCK OPTION PLANS
Pursuant to the Trust's Amended Incentive and Non-Qualified Stock Option
Plan (the "Employee Plan"), incentive stock options designed to qualify under
Section 422A of the Internal Revenue Code and non-qualified stock options to
purchase up to an aggregate of 400,000 of the Trust's Shares may be issued by
the Trust to officers and key employees of the Trust. The Employee Plan is
administered by a committee of the Board, currently the Executive
Compensation and Human Resources Committee, which has authority to determine
the persons to whom options will be granted, the number of option shares, the
exercise price, the date of grant, and the term of options granted under the
Employee Plan. The Employee Plan requires that the exercise price not be less
than 100% of the fair market value of the Shares on the date of grant.
The Company also has a 1990 Option Plan for Non-Employee Trustees (the
"Trustee Plan"). Under the Trustee Plan, non-qualified stock options to
purchase up to an aggregate of 100,000 of the Trust's Shares may be issued by
the Trust to Trustees of the Trust who are not employees of the Trust or any
affiliate of the Trust. Options to purchase 1,000 Shares are granted
automatically to each non- employee Trustee on the last trading day in
January of each of the years 1991 through 1997. In addition, under the
Trustee Plan, a first grant of options to purchase 1,000 Shares was made to
each non- employee Trustee on December 20, 1990. The Trustee Plan requires
that the exercise price of options issued under the plan not be less than
100% of the fair market value of the Shares on the date of grant. The options
issued under the Trustee Plan become exercisable in four equal annual
installments commencing on the first anniversary of the grant date except
that the first installment of the options granted under the plan on December
20, 1990 became exercisable on January 31, 1991. Options granted under the
Trustee Plan expire ten years from the grant date, subject to earlier
termination under certain circumstances specified in the plan.
7
<PAGE>
In accordance with the terms of Mr. Weller's Employment Agreement with the
Trust, the Trust adopted the 1993 Jonathan B. Weller Non Qualified Stock
Option Plan (the "Weller Plan"). Under the Weller Plan, on December 14, 1993
the Trust granted Mr. Weller options to purchase 100,000 Shares at an
exercise price equal to the fair market value of the Shares on such date.
Such options have a term of ten years and become exercisable in four equal
annual installments of 25,000 Shares each, commencing on the first
anniversary of the grant date, subject to earlier vesting and exercisability
under certain specified circumstances.
BENEFIT PLANS
During fiscal 1995, the Trust terminated its defined benefit pension plan,
and the assets in the plan, aggregating $1,881,922, were distributed to the
participants. Of the aggregate amount distributed, Mr. Weller received
$20,849, Mr. Rogers received $900,894, Mr. Massimini received $499,400 and
Mr. Linn received $155,324.
In the place of the defined benefit pension plan, the Trust established a
401(k) profit sharing and retirement savings plan in which substantially all
of the officers and employees are eligible to participate and a non-qualified
plan in which the executive officers named in the Summary Compensation Table
other than Mr. Cohen are participants. Under the non-qualified retirement
plan, the Trust is required to make defined contributions to the plan
annually in amounts equal to amounts that would have been required to be
contributed under the now-terminated defined benefit pension plan in order to
fund the targeted retirement benefit (after taking into account amounts
distributed under the terminated defined benefit pension plan, together with
an assumed rate of return thereon).
TRANSACTIONS WITH MANAGEMENT
During fiscal 1995, the Trust paid or accrued fees and costs to the
Philadelphia law firm of Cohen, Shapiro, Polisher, Shiekman and Cohen,
general counsel for the Trust during the year, for legal services rendered to
the Trust, its subsidiaries and its affiliates, including partnerships and
other ventures in which the Trust is involved. Sylvan M. Cohen, Chairman,
Chief Executive Officer and a Trustee of the Trust, and Robert Freedman, a
Trustee, were partners in such firm during fiscal 1995. Since October 1995
they have served of counsel in the Philadelphia law firm of Drinker Biddle &
Reath. Cohen, Shapiro, Polisher, Shiekman and Cohen had performed legal
services for the Trust since the Trust's inception. It is anticipated that
Drinker Biddle & Reath will perform similar services in the current fiscal
year. During fiscal 1995, the Trust paid Cohen, Shapiro, Polisher, Shiekman
and Cohen $90,000 to reimburse the firm for office and secretarial expenses
for Sylvan M. Cohen, and it is anticipated that the Trust will make a similar
payment to Drinker Biddle & Reath in respect of such expenses during fiscal
1996.
BOARD MATTERS
The Trust has a standing Audit Committee and a standing Executive
Compensation and Human Resources Committee. There is no standing nominating
committee.
The Audit Committee, currently comprised of Messrs. Jack Farber, Lee H.
Javitch and Jeffrey P. Orleans, met two times during the 1995 fiscal year.
The principal duties of the Audit Committee are to recommend independent
public accountants for appointment by the Trust; to review with the
independent accountants the planned scope and results of the annual audit and
their reports and recommendations; and to review with the independent
accountants matters relating to the Trust's system of internal controls.
The Executive Compensation and Human Resources Committee, currently
comprised of Messrs. Jack Farber, William R. Dimeling and Lee H. Javitch, met
one time during the 1995 fiscal year. The principal duties of the Executive
Compensation and Human Resources Committee are to recommend compensation
arrangements for the executive officers of the Trust, and to administer the
Trust's Amended Incentive and Non-Qualified Stock Option Plan.
8
<PAGE>
In addition to the Executive Compensation and Human Resources Committee
and the Audit Committee, the Trust has a standing Property Committee.
In fiscal 1995, the Board of Trustees met five times. Trustees who are not
officers of the Trust receive an annual retainer of $6,000 plus $1,250 per
Board of Trustees meeting attended and $750 per committee meeting attended.
All of the directors other than Messrs. Javitch and Korman attended at least
75% of Board and applicable committee meetings in fiscal 1995.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
During fiscal 1995, Sylvan M. Cohen served on the Compensation Committee
of FPA Corporation, and the Chairman of the Board and Chief Executive Officer
of FPA Corporation, Jeffrey P. Orleans, served as a Trustee of the Trust.
REPORT OF EXECUTIVE COMPENSATION AND HUMAN
RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Trust's compensation for executive officers is the responsibility of
the entire Board of Trustees acting upon the recommendation of the Executive
Compensation and Human Resources Committee (the "Committee"). The Committee
is also responsible for administering the policies that govern the Trust's
Amended Incentive and Non Qualified Stock Option Plan. The Committee consists
of three outside Trustees of the Trust, none of whom has ever been an
employee of the Trust.
It is the Board of Trustees' belief that the Trust's investment goal is to
invest in assets that provide the opportunity for cash flow growth and
capital appreciation in real terms. Accordingly, the Board of Trustees
believes that the Trust's overall performance in any year should be based on
the Trust's performance in all aspects of the Trust's business during that
year, including development, management, acquisition and capital formation,
as well as financial accomplishments.
The members of the Committee believe that the Trust's success is largely
due to the efforts of its employees and, in particular, the leadership
exercised by its officers. Therefore the Committee believes it is important
to:
o Adopt compensation programs that enhance the Trust's ability to attract
and retain qualified officers while providing the financial motivation
necessary to achieve continued high levels of Trust performance.
o Provide equity-based incentives for executives to ensure that they are
motivated over the long term to respond to the Trust's challenges and
opportunities as owners rather than only employees.
o Provide a mix of cash and stock-based compensation programs that are
competitive with a select group of real estate investment trusts that
the members of the Committee believe are comparable to the Trust.
Each executive officer's salary, including that of the Chief Executive
Officer and that of the Chief Operating Officer, is based upon his employment
contract and the competitive market for the executive officer's services,
considering the executive's specific responsibilities, experience and overall
performance. The Committee reviews each executive officer's salary and
adjusts the salary to account for inflation, any change in the executive's
responsibilities and any change in the competitive marketplace. The Committee
believes that the Trust's overall performance is best measured by the
enhancement of long-term shareholder value. The Committee further believes
that, as a result of the nature of the Trust's business, funds from
operations is a better measurement of the Trust's performance as opposed to
its reported net income. This standard has been adopted by the National
Association of Real Estate Investment Trusts. The Committee recommended the
1995 compensation levels of the Trust's executive officers to the Board of
Trustees.
The Committee also periodically awards discretionary stock options to
executive officers. These awards are based upon the performance of the
individual executive, the Trust's financial results and the executive officer's
9
<PAGE>
accomplishments in his area of responsibility. The Committee believes that stock
option awards are an important element in the Trust's compensation structure as
such awards promote alignment of the interests of the employees with the
interests of the shareholders.
Executive Compensation and Human Resources Committee
Jack Farber, Chairman
William R. Dimeling
Lee H. Javitch
PERFORMANCE GRAPH
The graph below compares the Trust's cumulative shareholder return with
the cumulative total return of the S&P 500 and the index of all equity real
estate investment trusts excluding health care real estate investment trusts
as prepared by the National Association of Real Estate Investment Trusts
("NAREIT"). Equity real estate investment trusts are defined as those which
derive more than 75% of their income from equity investments in real estate
assets. The graph assumes that the value of the investment in each of the
three was $100 at August 31, 1990 and that all dividends were reinvested.
(August 31, 1990=100)
225-|--------------------------------------------------------------
|
|
|
|
200-|-------------------------------------------------------------$
|
|
| *
|
175-|-------------------------------------*-----------#*-----------
| # #
| $
|
|
150-|-------------------------------------$------------------------
|
|
|
| $ #$
125-|-------------#-----------*------------------------------------
| *
|
|
|
100-#--------------------------------------------------------------
|
|
|
|
75-|-------------|-----------|-----------|-----------|-----------|
1990 1991 1992 1993 1994 1995
------------------------------------------------------------------------
# = Trust * = Equity w/o Health Care $ = S&P 500
------------------------------------------------------------------------
10
<PAGE>
PRINCIPAL SECURITY HOLDERS
The following table sets forth certain information as of October 1, 1995
concerning beneficial ownership of the Trust's Shares by the only persons
shown by Securities and Exchange Commission records or the Trust's records to
own beneficially more than 5% of the Trust's Shares:
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Name and Address Beneficial Outstanding
Title of Class of Beneficial Owner Ownership Shares
-------------------------- ----------------------- ------------- -------------
<S> <C> <C> <C>
Certificates of Beneficial Sylvan M. Cohen 676,174 (1) 7.8%
Interest 1100 P.N.B. Building
1345 Chestnut Street
Philadelphia, PA 19107
Certificates of Beneficial Leonard I. Korman 493,713 (2) 5.7%
Interest Two Neshaminy Interplex
Trevose, PA 19047
Certificates of Beneficial LaSalle Advisors 437,599 (3) 5.0%
Interest Limited Partnership
11 South LaSalle Street
Chicago, IL 00603
</TABLE>
- ------
(1) See footnote 2 to table appearing under the heading "ELECTION OF
TRUSTEES."
(2) Includes 420 Shares owned by Mr. Korman's wife, 6,000 Shares owned by a
trust of which Mr. Korman's wife is an income beneficiary, 87,570 Shares
owned by a family foundation of which Mr. Korman is a co-trustee, and
156,635 Shares owned by several trusts of which Mr. Korman is a co-
trustee. Mr. Korman disclaims beneficial ownership of the Shares owned by
trusts of which he serves as a fiduciary, except for 10,528 Shares owned
by a trust of which Mr. Korman is a co- trustee and the beneficiary.
Samuel J. Korman, an uncle of Leonard I. Korman, is a Trustee of the
Pennsylvania Real Estate Investment Trust, and the beneficial owner of
332,565 Shares (see footnotes accompanying the table under the heading
"ELECTION OF TRUSTEES"), which number includes (i) 87,570 Shares owned by
a family foundation of which Messrs. Leonard I. Korman and Samuel J.
Korman are 2 of the 5 co-trustees and (ii) 18,000 shares owned in the
aggregate by several trusts of which Messrs. Leonard I. Korman and Samuel
J. Korman are two of the co-trustees.
(3) Lasalle Advisors Limited Partnership reported sole voting power and sole
dispositive power with respect to 124,350 Shares.
OTHER MATTERS
The Trust has selected Arthur Andersen LLP to be its principal independent
public accountants for the current fiscal year. The accounting firm has been
the principal independent public accountants of the Trust for more than
twenty-five years. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting and to be available to respond to appropriate
questions. The representatives of Arthur Andersen LLP will be given an
opportunity to make a statement, if they so desire.
SHAREHOLDERS' PROPOSALS
Under Securities and Exchange Commission rules, certain shareholder
proposals may be included in the Trust's proxy statement. Any shareholder
desiring to have such a proposal included in the Trust's proxy statement for
the Annual Meeting to be held in 1996 must deliver a proposal in full
compliance with Rule 14a-8 under the Securities Exchange Act of 1934 to the
Trust's executive offices not later than July 19, 1996.
By Order of the Board of Trustees
Jeffrey A. Linn
Secretary
November 16, 1995
11
<PAGE>
WITHHOLD
FOR all AUTHORITY to
nominees listed vote for all
except as marked nominees listed
1. Election of
Three (3) | | | |
Class A
Trustees:
Nominees: Sylvan M. Cohen, Lee H. Javitch and Jonathan B. Weller.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME ABOVE.)
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
WITHHOLD
VOTE FOR AUTHORITY
| | | |
THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED AS INSTRUCTED
ABOVE. IF INSTRUCTIONS ARE NOT GIVEN, THEY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1 ABOVE. You are urged to sign and return this proxy
so that you may be sure that your shares will be voted.
Signature----------------------------------- Dated:----------------------, 1995
Please sign exactly as your name appears hereon. When certificate(s) are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned, revoking all prior proxies, hereby appoints SYLVAN M.
COHEN, LEE H. JAVITCH and JEFFREY P. ORLEANS, and each and any of them, as
proxies of the undersigned, with full power of substitution, to vote and act
with respect to all Certificates of Beneficial Interest of Pennsylvania Real
Estate Investment Trust (the "Shares") held of record by the undersigned at
the close of business on November 3, 1995 at the Annual Meeting of Holders of
Certificates of Beneficial Interest to be held on Thursday, December 14, 1995
and at any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE, NO POSTAGE REQUIRED.
(CONTINUED ON REVERSE SIDE)
