<PAGE>
[Logo]
455 EAST ILLINOIS STREET SUITE 565 CHICAGO, ILLINOIS 60611
August 17, 1995
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders which will be
held at 10:00 A.M. Chicago time on Thursday, October 5, 1995, at Navy Pier, 600
East Grand Avenue, Room 329, Chicago, Illinois. Please read the accompanying
Notice of Annual Meeting of Shareholders and Proxy Statement at your earliest
convenience.
Matters scheduled for consideration at this meeting are: (1) election of
nine (9) Trustees; (2) ratification of Arthur Andersen LLP as independent
auditors for fiscal 1996; and (3) transaction of other business as may properly
come before the meeting or any adjournment thereof. The accompanying Notice and
Proxy Statement contain details on these matters.
I look forward to seeing those shareholders who are able to personally
attend the meeting. However, it is important that your shares be represented at
the meeting whether or not you attend in person. Accordingly, please sign, date
and return the enclosed proxy card promptly. If you attend the meeting, you may
revoke your proxy and vote in person.
Please note that Room 329 is on the second floor of the facility adjacent
to Festival Hall and approximately two thirds of the way from the western or
land end of the Pier to the east end. If you are driving to the meeting, you
will be able to park in the "on Pier" garage under Festival Hall and take stairs
or an elevator up to Room 329. If, on the other hand, you are arriving by taxi,
please be sure to have the driver take you onto the Pier using the north side
access and proceed to the Entrance 2 turn around. You will then be as close as
possible to the stairs and elevators up to Room 329. If you simply tell the
taxi driver that you are going to Navy Pier, he may try to let you off at the
western end of the Pier and you will have to walk almost a half mile from that
point to Room 329.
Sincerely,
Charles R. Gardner
President
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 5, 1995
AT NAVY PIER
600 EAST GRAND AVENUE, ROOM 329
CHICAGO, ILLINOIS
August 17, 1995
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of The Chicago Dock and Canal Trust will be
held at 10:00 A.M. Chicago time on Thursday, October 5, 1995, at Navy Pier, 600
East Grand Avenue, Room 329, Chicago, Illinois for the following purposes:
(1) To elect nine (9) Trustees to hold office until the next Annual
Meeting of Shareholders and until their successors are elected and
qualified.
(2) To ratify Arthur Andersen LLP as independent auditors for fiscal
1996.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Trustees has fixed Tuesday, August 18, 1995 at the close of
business, as the record date for the determination of shareholders entitled to
receive notice of and vote at the meeting and any adjournment thereof.
Please sign, date and return the enclosed proxy card as soon as possible to
ensure representation of your shares at the meeting, whether or not you plan to
attend in person. If you attend the meeting, you may revoke your proxy and vote
your shares in person.
By order of the Board of Trustees,
Michael F. Csar
Secretary
<PAGE>
THE CHICAGO DOCK AND CANAL TRUST
455 EAST ILLINOIS STREET
CHICAGO, ILLINOIS 60611
August 17, 1995
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
in the accompanying form on behalf of the Board of Trustees of The Chicago Dock
and Canal Trust (the "Trust") for use at the Annual Meeting of Shareholders to
be held at 10:00 A.M. Chicago time on Thursday, October 5, 1995, at Navy Pier,
600 East Grand Avenue, Room 329, Chicago, Illinois, for the purposes set forth
in the accompanying Notice of such meeting.
The enclosed form of proxy, if executed, may nevertheless be revoked at any
time by the person giving it. A shareholder giving a proxy has the power to
revoke it at any time prior to its exercise by voting in person at the meeting,
by giving written notice to the President of the Trust or by giving a
later-dated proxy. Shares represented by a properly executed proxy will be
voted as directed by the shareholder and in the discretion of the proxies upon
any other matter properly presented to the meeting. In the absence of specific
directions, shares represented by a properly executed proxy will be voted FOR
the election of the nine (9) persons listed herein to the Board of Trustees of
the Trust; FOR the ratification of Arthur Andersen LLP as independent auditors
for fiscal 1996; and on other business that may properly come before the meeting
as the named proxies in their discretion may decide. As of the date of this
proxy statement, the Board of Trustees of the Trust has no knowledge of any
business to be presented for consideration at the Annual Meeting other than as
set forth in the accompanying Notice.
On August 18, 1995, there were 5,783,800 Common Shares of Beneficial
Interest ("shares") of the Trust outstanding and entitled to vote. Each share
is entitled to one (1) vote with respect to each matter to be voted upon.
The Trust's Declaration of Trust provides that a majority of the
outstanding shares of the Trust entitled to vote, represented in person or by
proxy, shall constitute a quorum at any meeting of the shareholders of the
Trust, and that if a quorum is present, the affirmative vote of the majority
of the shares represented at the meeting shall be the act of the
shareholders, unless, as to a particular matter, the affirmative vote of more
than a majority is required by any provision of the Declaration of Trust.
Pursuant to the Trust's Declaration of Trust and as allowed by Illinois law,
shares represented by proxies that reflect abstentions or "broker
non-votes" (i.e. shares held by a broker or nominee which are represented at
the meeting, with respect to which such broker or nominee is empowered to
vote on at least one proposal but not empowered to vote on other proposals)
will be counted as shares that are present for the purposes of determining
the number of shares represented at the meeting and the presence of a quorum.
Each proposal scheduled to come before the Annual Meeting requires the
affirmative vote of a majority of shares present in person or represented by
proxy at the Annual Meeting. Abstentions and broker non-votes (if any) as to
any proposal will have the same effect as votes against such proposal.
The close of business on August 18, 1995 is the date for the determination
of shareholders of record entitled to notice of and to vote at the Annual
Meeting. The Annual Report of the Trust, including balance sheets as of April
30, 1995 and 1994, and statements of income and cash flow for the three fiscal
years ended April 30, 1995, 1994, and 1993, is enclosed with this proxy
statement. This proxy statement and the enclosed form of proxy are first being
sent to shareholders on or about August 22, 1995.
The expense of this solicitation will be borne by the Trust. Trustees,
officers and regular employees of the Trust, in the ordinary course of business
and at nominal expense, may supplement this solicitation by mail, personal call,
telephone, telegraph or letter, for which they will receive no additional
compensation. Brokers, banks, or other persons holding shares in their names or
in the names of their nominees will, upon request, be reimbursed for their
actual expenses in forwarding proxies and proxy material to the beneficial
owners of such shares.
<PAGE>
AGENDA ITEM 1
ELECTION OF TRUSTEES
At the Annual Meeting, nine (9) Trustees are to be elected, to hold office
until the next Annual Meeting of Shareholders and until their successors are
elected and shall have qualified. The persons named in the accompanying proxy
intend to vote FOR the election of the nominees for Trustees named herein unless
votes are withheld in accordance with specific instructions contained in the
proxy. To be elected as a Trustee, a nominee must receive the affirmative
vote of a majority of the shares of the Trust represented and entitled to
vote at the 1995 Annual Meeting. In the event that any nominee is unable or
declines to serve, which is not anticipated, the persons named in the proxy
intend to vote for such substitutes as may be selected by the Board of
Trustees.
NOMINEES
NAME OF NOMINEE/TRUSTEE AGE
PRINCIPAL OCCUPATION
SINCE APRIL 30, 1990
BUSINESS EXPERIENCE TRUSTEE
AND OTHER INFORMATION SINCE
--------------------- -------
Edward McCormick Blair, Jr., 53, Partner
in William Blair & Company . . . . . . . . . . . . . . . . 1987
Peter J.P. Brickfield, 51, Lawyer; Partner
in Brickfield, Burchette and Ritts, PC . . . . . . . . . . 1980
Charles R. Gardner, 50, President and Chief
Executive Officer of the Trust . . . . . . . . . . . . . . 1981
John S. Gates, Jr., 42, President, Centerpoint
Properties Corporation (successor to Capital
and Regional Properties Corporation) . . . . . . . . . . . New Nominee
Ogden McC. Hunnewell, 43, Senior Vice President,
Northland Investment Corporation . . . . . . . . . . . . . 1993
George A. Ranney, Jr., 55, Lawyer; Partner in Mayer,
Brown & Platt. . . . . . . . . . . . . . . . . . . . . . . 1987
Charles N. Seidlitz, 49, President, Bristol
Associate, Inc . . . . . . . . . . . . . . . . . . . . . . 1988
Nancy W. Trowbridge, 54, Lawyer; Law Offices of
Nancy W. Trowbridge. . . . . . . . . . . . . . . . . . . . 1994
Robert E. Wood II, 57, Senior Executive Vice
President, Dean Witter Discover & Co. (successor
to Dean Witter Financial Services Group) . . . . . . . . . 1985
2
<PAGE>
Nominees and Trustees of the Trust also serve as directors of the following
companies: Edward McCormick Blair, Jr.: Research Industries, Inc.; John S.
Gates Jr.: Centerpoint Properties Corporation. Charles R. Gardner serves
as a member of the Board of Directors of the Metropolitan Pier and Exposition
Authority.
There is no family relationship among any of the Trustees or nominees
listed above nor any arrangements or understandings between any such Trustee or
nominee and any other person pursuant to which such Trustee or nominee was
selected as a Trustee or nominee.
MEETINGS AND COMMITTES OF THE BOARD
During fiscal 1995, the Board held five meetings.
The Audit Committee, consisting of Trustees Wood, Chairman, Hunnewell and
Seidlitz, held three meetings in fiscal 1995. The principal functions of the
Audit Committee are to recommend annually to the Board for its approval the
appointment of the Trust's independent auditors, review the results of the
annual audit, monitor the Trust's compliance with the requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), as a real estate
investment trust, review the financial controls of the Trust and consult with
the auditors on matters relating to the accounting systems and financial
statements of the Trust.
The Compensation Committee, consisting of Trustees Axelson, Chairman,
Brickfield and Wood held five meetings in fiscal 1995. The function of the
Compensation Committee is to review and recommend the amount and form of
compensation and benefits paid to executive employees and Trustees of the Trust.
The Nominating Committee, consisting of Trustees Blair, Chairman,
Brickfield and Trowbridge, held one meeting in fiscal 1995. The function of the
Nominating Committee is to recommend to the Board nominees for election as
Officers and Trustees. The Nominating Committee will consider candidates for
nominees as Trustees submitted by shareholders. Any shareholder who wishes to
have the Nominating Committee consider a candidate should submit the name of the
candidate to the Chairman of the Nominating Committee.
The Negotiating Committee consists of Trustees Gardner, Chairman,
Hunnewell, Ranney and Seidlitz. It held three meetings in fiscal 1995. Its
principal functions are to consider major operating decisions and make
recommendations to the Board.
The Stock Option Committee, consisting of all non-employee Trustees, held
one meeting in fiscal 1995 in conjunction with a meeting of the Board. The
functions of the Stock Option Committee are to administer the Trust's Employee
Stock Option Plans and to approve all grants of stock options under the Trust's
Employee Stock Option Plans.
Each of the Trustees attended 75% or more of the aggregate of (1) the total
number of meetings of the Board of Trustees and (2) the total number of meetings
of all Committees of the Board on which he or she served.
3
<PAGE>
AGENDA ITEM 2
APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Trustees has appointed Arthur Andersen LLP as independent
auditors of the Trust for the fiscal year 1996, subject to ratification by the
Shareholders. Arthur Andersen LLP has been serving as the Trust's independent
auditors since its reorganization as a real estate investment trust in 1962. A
representative of Arthur Andersen LLP will be present at the 1995 Annual Meeting
and will have the opportunity to make a statement, if he so desires, and will
also be available to respond to appropriate questions.
The Board of Trustees recommends that you vote FOR the ratification of the
appointment of Arthur Andersen LLP as auditors.
4
<PAGE>
BENEFICIAL OWNERSHIP OF THE TRUST'S SHARES
At August 17, 1995, the Trust had approximately 540 holders of record of
its common shares.
Under rules of the Securities and Exchange Commission, a person is deemed
to be the beneficial owner of shares as to which such person directly or
indirectly has or shares voting or investment power and, accordingly, does not
necessarily indicate an economic interest in the shares. Beneficial ownership
also includes shares as to which the individual has the right to acquire such
voting or investment power within 60 days, for example, through the exercise of
a stock option.
The following table shows the beneficial ownership of the Trust's shares at
August 17, 1995 by (i) each person known to the Trust to be the beneficial
owner of more than 5% of the Trust's outstanding shares; (ii) each person who
was an executive officer with cash compensation in excess of $100,000 during
the year; (iii) each Trustee; (iv) all Trustees and executive officers as a
group; and (v) each nominee for election:
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES
BENEFICIAL (IF 1%
NAME OWNERSHIP(1) OR GREATER)
---- ------------ -----------
<S> <C> <C>
Private Capital Management, Inc. . . . . . . . . . . . . . . 596,100 (2) 10.31%
Bruce Sherman
3003 Tamiami Trail North
Naples, Florida 33940
United Nations Joint Staff Pension Fund. . . . . . . . . . . 566,812 (3) 9.80%
United Nations
New York, New York 10017
Cowen & Company. . . . . . . . . . . . . . . . . . . . . . . 520,200 (4) 8.99%
Cowen Incorporated
Joseph M. Cohen
Financial Square
New York, New York 10005
Fred Eychaner. . . . . . . . . . . . . . . . . . . . . . . . 400,000 (5) 6.92%
c/o Newsweb Corporation
1645 West Fullerton Avenue
Chicago, Illinois 60614
Francis Peter Cundill. . . . . . . . . . . . . . . . . . . . 344,500 (6) 5.96%
Peter Cundill Holdings (Bermuda), Ltd.
Peter Cundill & Associates (Bermuda), Ltd
Clarendon House, Church Street
Hamilton, Bermuda
Kenneth S. Axelson . . . . . . . . . . . . . . . . . . . . . 15,102 (7) -
Edward McCormick Blair, Jr . . . . . . . . . . . . . . . . . 15,102 (7)(8) -
Peter J.P. Brickfield. . . . . . . . . . . . . . . . . . . . 15,102 (7)(9) -
Charles R. Gardner . . . . . . . . . . . . . . . . . . . . . 204,942 (10) 3.43%
John S. Gates, Jr. . . . . . . . . . . . . . . . . . . . . . 1,000 -
Ogden McC. Hunnewell . . . . . . . . . . . . . . . . . . . . 12,002 (11) -
George A. Ranney, Jr . . . . . . . . . . . . . . . . . . . . 13,302 (7) -
Charles N. Seidlitz. . . . . . . . . . . . . . . . . . . . . 112,947 (7)(12) 1.95%
David R. Tinkham . . . . . . . . . . . . . . . . . . . . . . 54,670 (13) -
Nancy W. Trowbridge. . . . . . . . . . . . . . . . . . . . . 145,968 (14) 2.52%
Robert E. Wood II. . . . . . . . . . . . . . . . . . . . . . 13,302 (7) -
All Trustees and Executive Officers as a Group (10 persons) 603,439 (15) 9.87%
5
<PAGE>
<FN>
(1) Unless otherwise indicated, the shares listed are owned directly by the
indicated person and such person has sole voice voting and investment power
as to such shares.
(2) Mr. Sherman is President of Private Capital Management, Inc. ("PCM"). Mr.
Sherman and PCM each have shared dispositive power with respect to
596,100 shares and no voting power with respect to such shares based on
information contained in the Schedule 13D filed June 16, 1995.
Mr. Sherman personally owns no shares. The Trust has entered into a
letter agreement with Mr. Sherman and PCM which provides, among other
things, that neither of them shall acquire shares which would result in
the ownership by them of more than 638,900 shares except in accordance
with the Trust's Declaration of Trust. The letter agreement further
provides that with respect to shares owned by PCM and/or Mr. Sherman, no
one person owns or will own (within the meaning of ownership under the
Internal Revenue Code and Treasury regulations) more than 9.8% of the
Trust's outstanding shares, except in accordance with the provisions of
the Trust's Declaration of Trust.
(3) The Trust has been advised that the United Nations, on behalf of the United
Nations Joint Staff Pension Fund (the "Fund"), beneficially owns and
retains sole legal power to vote and dispose of 566,812 shares. However,
because Fiduciary Trust Company International ("Fiduciary"), the appointed
investment advisor to the Fund, often influences these decisions,
dispositive and voting power over these shares is reported as shared.
Fiduciary Trust renders investment advice or has sole or shared voting or
dispositive power on an additional 129,404 shares.
(4) Cowen & Company, Cowen Incorporated and Joseph M. Cohen jointly filed a
Schedule 13D on June 26, 1995. Cowen Incorporated is the sole general
partner of Cowen & Company. Joseph M.Cohen is a director and the Chief
Executive Officer of Cowen Incorporated. Mr. Cohen serves as the sole
voting trustee of a voting trust, the corpus of which is the voting stock
of Cowen Incorporated, and thereby is the sole controlling person of Cowen
Incorporated. The Schedule 13D indicates that each of the reporting people
has the indicated attributes of beneficial ownership for the following
number of shares:
Sole Voting Power 75,100
Shared Voting Power 225,400
Sole Dispositive Power 75,100
Shared Dispositive Power 445,100
(5) Fred Eychaner ("Eychaner") individually and on behalf of Newsweb
Corporation ("Newsweb"), of which Eychaner is President and Chief Executive
Officer, filed a Schedule 13D most recently amended on August 4, 1995
reporting the indicated attributes of beneficial ownership for the
following number of shares:
EYCHANER NEWSWEB
-------- -------
Sole Voting Power 399,900 0
Shared Voting Power 100 100
Sole Dispositive Power 399,900 0
Shared Dispositive Power 100 100
6
<PAGE>
(6) Francis Peter Cundill ("Cundill"), Peter Cundill Holdings (Bermuda), Ltd.
("Holdings") and Peter Cundill & Associates (Bermuda) Ltd. ("PCB") jointly
filed a Schedule 13D most recently amended on February 10, 1995 reporting
the indicated attributes of beneficial ownership for the following number
of shares:
CUNDILL HOLDINGS PCB
------- -------- -------
Sole Voting Power 35,000 0 19,000
Shared Voting Power 234,500 234,500 215,500
Sole Dispositive Power 0 0 200,500
Shared Dispositive Power 344,500 344,500 144,000
(7) Includes 13,102 shares subject to acquisition within 60 days by exercise of
stock options.
(8) Does not include shares held by William Blair & Company in its trading
inventories, nor 3,900 shares owned by Mr. Blair's children as to which
beneficial ownership is disclaimed.
(9) Includes 2,000 shares held in an Individual Retirement Account for the
benefit of Mr. Brickfield.
(10) Includes 189,142 shares which Mr. Gardner has the right to acquire within
60 days upon exercise of stock options.
(11) Includes 6,602 shares subject to acquisition within 60 days by exercise of
stock options. Does not include 160,735 shares owned by Mr. Hunnewell's
mother, his aunt and their descendents.
(12) Includes 900 shares owned in joint tenancy with his wife.
(13) Includes 54,270 shares which Mr. Tinkham has the right to acquire
within 60 days upon exercise of stock options. Does not include 500
shares held by a trust for his daughter of which his wife is the
trustee, as to which beneficial ownership is disclaimed.
(14) Includes 126,254 shares owned by Ms. Trowbridge's mother-in-law as to which
Ms. Trowbridge and her husband each has the power to vote such shares.
Also includes 13,782 shares owned by Ms. Trowbridge's children. Does not
include 10,594 shares owned by Ms. Trowbridge's husband as to which
beneficial ownership is disclaimed. Also does not include approximately
460,000 shares held by other relatives of Ms. Trowbridge.
(15) Includes 330,964 shares which may be acquired by executive officers and
Trustees within 60 days upon exercise of stock options.
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth cash compensation for services in all
capacities to the Trust during the fiscal years 1993, 1994 and 1995 of each
executive officer of the Trust with cash compensation in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
COMPENSATION COMPENSATION ALL OTHER COMPENSATION
-------------------- -------------------- ----------------------
FISCAL STOCK OPTION AWARDS
YEAR ------------------- DIVIDEND
ENDED NUMBER OF SHARES EQUIVALENT
NAME AND PRINCIPAL POSITION APRIL 30, SALARY BONUS SUBJECT TO OPTION PAYMENTS (1) OTHER (2)
--------------------------- --------- ------ ----- ----------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Gardner, President 1995 $240,000 $50,000 45,000(3) $ 5,007 $9,029
and Chief Executive Officer 1994 $240,000 $ 0 49,588(4) $12,295 $8,709
1993 $300,000 $ 0 52,000(5) $31,476 $3,413
David R. Tinkham, Vice President 1995 $104,000 $15,000 10,000(3) $ 1,181 $4,962
and Chief Financial Officer 1994 $104,000 $ 0 17,288(4) $ 2,979 $4,331
1993 $130,000 $ 0 18,400(5) $ 7,885 $7,031
-------------------------
<FN>
(1) Dividend equivalent payments were made on certain of the vested options
granted pursuant to plans as described in the subsequent discussion of
stock options.
(2) Other compensation represents the cost of term life insurance and company
contributions under the Trust's 401(k) defined contribution plan. Does not
include the value of perquisites which total less than 10% of the stated
salaries.
(3) Excludes options to acquire 20,316 and 8,804 shares issued to Messrs.
Gardner and Tinkham, respectively, on May 2, 1995 as part of base
compensation to be paid in fiscal 1996.
(4) Includes options to acquire 22,588 and 9,788 shares issued to Messrs.
Gardner and Tinkham, respectively, on April 13, 1994 as part of base
compensation paid in fiscal 1995.
(5) Includes options to acquire 24,000 and 10,400 shares issued to Messrs.
Gardner and Tinkham, respectively, on April 14, 1993 as part of base
compensation paid in fiscal 1994.
</TABLE>
8
<PAGE>
EMPLOYEE STOCK OPTIONS
The Trust has stock option plans adopted in 1982, 1986, 1988 and 1991. It
also has option agreements entered into in 1983 and 1985 with executive officers
of the Trust. Incentive Stock Options granted under the plans have terms not
exceeding 10 years and non-qualified options (as defined in the Internal Revenue
Code of 1986) granted under the plans and agreements have terms not exceeding 20
years. The options are exercisable in specified installments over the terms of
the options and entitle the grantees to purchase for cash or previously acquired
shares the number of shares specified in the options at prices equal to the fair
market value of such shares on the dates on which the options were granted. The
plans and agreements also allow for, and all options granted under the plans and
agreements prior to fiscal 1993 provide for, dividend equivalent payments equal
to the product of (i) the number of shares the grantee is eligible to purchase
as of December 31 of each year multiplied by (ii) the dividends per share paid
in the prior twelve month period. None of the options granted during fiscal
1993, 1994 or 1995 provide for dividend equivalent payments.
The Trust also has a stock option plan adopted in 1993 to facilitate the
granting of options to its executive officers in lieu of cash for a portion of
their base compensation. The options granted pursuant to the 1993 Plan are non-
qualified and have terms not exceeding 20 years. The number of shares to be
optioned in any year is calculated by dividing the amount of a participant's
base compensation payable in stock options, as determined each year by the Stock
Option Committee, by 25% of the price of the Trust's common shares on the date
the options are granted. One quarter of the total options granted in each year
become exercisable after the end of each three month period corresponding to the
time period over which the base compensation is earned. The options entitle the
grantees to purchase for cash or previously acquired shares the number of shares
specified in the options at prices equal to the fair market value of such shares
on the dates on which the options were granted.
9
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information covering options granted to each
executive officer with cash compensation in excess of $100,000.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------
Potential Realizable
Value at Assumed Annual
Percent of Rates of Stock Price
Number of Total Options Appreciation for
Shares Granted to Exercise Option Term (1)
Subject Employees in Price ------------------------
Name To Option Fiscal Year Per Share Expiration Date 5% 10%
--------- ------------ --------- --------------- -------- ----------
Grants Pursuant to 1991 Stock Option Plan
<S> <C> <C> <C> <C> <C>, <C>
Charles R. Gardner 45,000 78% $10.47 2/13/2015 $778,951 $2,698,512
David R. Tinkham 10,000 17% $10.47 2/13/2015 $173,100 $599,669
<FN>
(1) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the shares and overall stock market conditions.
</TABLE>
10
<PAGE>
The following table shows, with respect to executive officers with cash
compensation in excess of $100,000 (1) the aggregate number of shares acquired
by exercise of stock options during the fiscal year ended April 30, 1995, (2)
the value realized upon acquisition of those shares, (3) the total number of
shares subject to acquisition by exercise of outstanding options at April 30,
1995 which are (a) currently exercisable and (b) not currently exercisable and
(4) the total value of unexercised in-the-money options outstanding at April 30,
1995 based on share values at that date which are (a) currently exercisable and
(b) not currently exercisable.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Number of Unexercised Value of Unexercised In-The-
Shares Options at 4/30/95 Money Options at 4/30/95
Acquired Value ------------------ ------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Gardner - - 178,416 173,988 $85,663 $181,054
David R. Tinkham - - 49,622 47,370 $36,757 $ 49,098
</TABLE>
11
<PAGE>
EMPLOYMENT AGREEMENTS
The Trust has employment agreements with Mr. Gardner and Mr. Tinkham (the
"Employees"), entered into in April, 1993 which, as amended provide for their
employment through April 30, 1998, at total annual base compensation of not less
than $300,000 and $130,000 respectively. For the period May 1, 1993 to April
30, 1995, 80% of annual base compensation was payable in cash and 20% was
payable in stock options thus resulting in a decrease in net cash compensation
to the Employees of 20% from their prior amounts. During the term of the
contracts, up to 20% of annual base compensation may, at the discretion of the
Trust, be paid in stock options rather than in cash. For the period May 1, 1995
to April 30, 1996, 20% of base compensation will be paid in stock options rather
than cash. The options are issued under the 1993 Employees' Stock Option Plan
and, in accordance with the Plan's terms, are valued at 25% of the fair value of
the Trust's common shares at the dates of grant.
Each employment agreement also provides that, if the Trust terminates the
agreement without cause or if there has been a change in control (as defined)
and the Employee determines that, due to changed circumstances, he is unable to
effectively carry out his duties and responsibilities and thereby resigns, the
Trust is obligated to (i) pay the Employee his base compensation for 36 months
thereafter, (ii) grant him stock options to acquire three times the average
annual number of shares that were subject to options (excluding options granted
as part of base compensation) granted to him during the prior 24 months at an
exercise price per share equal to the then fair market value of shares of the
Trust, (iii) cause to vest immediately all then outstanding stock options and
(iv) continue to provide all other benefits to which the Employee would have
otherwise been entitled during the 36 month period.
Mr. Gardner's and Mr. Tinkham's current employment agreements continued
substantially the same structure and terms as established in Mr. Gardner's prior
employment agreement entered into in 1989 (other than the salary replacement
options implemented in 1993 and the differential in Mr. Tinkham's compensation
level). This past year, rather than having the employment agreements extended
pursuant to their automatic extension provisions for additional one-year
periods, the Board implemented its option to fix the term expiration under each
agreement at the then applicable expiration date of December 31, 1997; however,
the term expiration under each agreement has recently been extended to April 30,
1998 in order to coordinate the executives' compensation years and the Board's
compensation review cycle with the Trust's fiscal year. The Compensation
Committee, in conjunction with management, is currently reviewing the structure
and terms of the executive employment agreements in light of current industry
standards and the challenges and opportunities facing the Trust in a potentially
recovering real estate market.
PENSION PLAN INFORMATION
The Trust adopted two retirement plans in fiscal 1987 (and subsequently
amended): (1) The Chicago Dock and Canal Trust Retirement Plan (the "Qualified
Plan"); and (2) The Chicago Dock and Canal Trust Supplemental Executive
Retirement Plan (the "Supplemental Plan"). The full cost of the Qualified Plan
and the Supplemental Plan is paid by the Trust.
The Qualified Plan is a qualified defined benefit plan pursuant to the
Internal Revenue Code which covers all employees of the Trust with at least
twelve months of continuous service. Full vesting occurs after three years of
service. It provides for monthly pensions payable after age 65 equal to one and
two thirds percent of the participant's highest average monthly compensation
over 60 consecutive months of the last 120 months of service multiplied by his
or her years of service to a maximum of 30 years less one and two thirds percent
of his or her primary social security benefit multiplied by his or her years of
service to a maximum of 30 years. There are currently 8 participants in the
Qualified Plan.
The Supplemental Plan is a non-qualified defined benefit plan which covers
executive officers of the
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<PAGE>
Trust with at least three years of service who have been designated by the
Compensation Committee as participants. It provides for annual pensions payable
at age 65 equal to two percent of the participant's highest annual earnings paid
during the last five plan years of employment multiplied by his years of service
to a maximum of 30 years less amounts paid or payable under the Qualified Plan
and 100% of the participant's Social Security benefit payable at age 65. There
are currently two participants in the Supplemental Plan: Mr. Gardner and Mr.
Tinkham.
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<PAGE>
Compensation covered by the Qualified Plan and the Supplemental Plan
includes salary as shown in the Summary Compensation Table but excludes expense
reimbursements, employer contributions to benefit plans, the value of stock
option grants and dividend equivalent payments. The Supplemental Plan includes
as covered compensation the portion of base compensation paid in stock options
in lieu of cash. As of June 1, 1995, Mr. Gardner had approximately fourteen
years of credited service and Mr. Tinkham approximately thirteen years of
credited service.
The following table presents the estimated total annual benefits payable
upon retirement at age 65 to employees in the listed compensation and years of
service classifications pursuant to the Qualified Plan, the Supplemental Plan
and Social Security. Benefits payable by the Qualified Plan and Supplemental
Plan are computed on the basis of single-life annuity and are reduced by Social
Security benefits as described above.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST
ANNUAL
COMPENSATION YEARS OF SERVICE
IN LAST --------------------------------------------------------
5 YEARS 15 20 25 30
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 50,000 $ 15,000 $ 20,000 $ 25,000 $ 30,000
100,000 30,000 40,000 50,000 60,000
200,000 60,000 80,000 100,000 120,000
300,000 90,000 120,000 150,000 180,000
400,000 120,000 160,000 200,000 240,000
500,000 150,000 200,000 250,000 300,000
</TABLE>
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<PAGE>
COMPENSATION OF TRUSTEES
Non-employee Trustees receive a cash fee of $500 for each Board or
Committee meeting (except meetings of the Stock Option Committee) attended not
to exceed two meetings per day. Trustees are reimbursed for expenses incurred
attending Board and Committee meetings and expenses incurred in contacting
shareholders with respect to matters affecting the Trust. They also receive an
annual retainer fee of $10,000, paid in cash through April 30, 1993. For the
fiscal years starting May 1, 1993 and May 1, 1994, the retainer fee was paid in
stock options rather than cash. The retainer fee for the fiscal year starting
May 1, 1995 is also payable in stock options. The stock options granted in
payment of the annual retainer fees are issued under the Trust's 1993 Trustees'
Stock Option Plan (the "1993 Trustees' Plan"). Non-employee Trustees also
participate in the Trust's 1988 Trustees' Stock Option Plan (the "1988 Trustees'
Plan").
TRUSTEE STOCK OPTIONS
The 1988 Trustees' Plan, which was approved by the Shareholders of the
Trust, provides for the grant of stock options to non-employee Trustees of the
Trust covering an aggregate of 40,000 shares of the Trust. The 1988 Trustees'
Plan provides that each year, as of the date of election or re-election as a
Trustee at the Annual Meeting of Shareholders, each non-employee Trustee will
automatically receive an option to acquire 500 shares of the Trust at the
then-current market value, subject to a maximum of 5,000 shares per Trustee.
The options are not exercisable prior to one year after the date of grant,
except in certain circumstances, including retirement in accordance with the
Trust's policy. The exercise price is equal to the fair market value of a share
on the date the option was granted. It is payable in cash or in previously
acquired shares or a combination thereof. In fiscal 1995, options covering
500 shares, with an exercise price of $9.96 per share, were granted under the
1988 Trustees' Plan to each non-employee Trustee of the Trust (as identified in
Agenda Item 1 plus Mr. Axelson, but excluding new nominee Mr. Gates).
The 1993 Trustees' Plan, which was approved by the Shareholders,
facilitates the granting of options to non-employee Trustees in lieu of cash for
all or a portion of their annual retainer fee. The options granted pursuant to
the 1993 Trustees' Plan are non-qualified and have terms not exceeding 20 years.
The portion of the annual retainer fee to be paid in options rather than cash is
determined each year by the Board; and in accordance with the 1993 Trustees'
Plan, the number of shares to be optioned is calculated by dividing the dollar
amount of the designated portion of the annual retainer fee by one-fourth of the
price of the Trust's common shares on the date the options are granted.
At its meeting of April 12, 1995, the Trustees unanimously voted to pay the
retainer fee for the fiscal year starting May 1, 1995 in stock options rather
than cash. Accordingly, options to acquire 3,676 shares at $10.875 per share
(the average high and low sales price on April 13, 1995, as reported by NASDAQ:
there were no reported trades on April 12, 1995) were granted to each non-
employee Trustee (as identified in Agenda Item 1 plus Mr. Axelson, but excluding
new nominee Mr. Gates) on April 12, 1995. Options with respect to 919 shares
vested (or will vest) and became (or become) exercisable May 1, 1995, August 1,
1995, November 1, 1995 and February 1, 1996 provided that the Trustee is still
serving as such on those dates.
Vesting of the trustee stock options is subject to acceleration in certain
circumstances if there is a change in control, as defined in the option
agreements.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee were Kenneth S. Axelson,
Chairman, Peter J. P. Brickfield and Robert E. Wood II. None of the Committee
members (i) was, during the prior fiscal year, an officer or employee of the
Trust, (ii) was formerly an officer of the Trust or any of its subsidiaries,
(iii) had any transaction or series of transactions with the Trust with value in
excess of $60,000 or (iv) is or ever has been indebted to the Trust.
No executive officer of the Trust served as a member of the Compensation
Committee of another entity employing a member of the Trust's Compensation
Committee.
No executive officer of the Trust served as a director of another entity,
one of whose executive officers served on the Compensation Committee of the
Trust.
No executive officer of the Trust served as a member of the Compensation
Committee of another entity, one of whose executive officers served as a Trustee
of the Trust.
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<PAGE>
COMPENSATION COMMITTEE REPORT
The Board of Trustees and the Compensation Committee believe that an
effective compensation program for executive officers and key employees should
(i) enable the Trust to compete for and to retain qualified executives, (ii)
reward operational success in a timely fashion and (iii) encourage the Trust's
executive officers to focus on increasing shareholder value. The Compensation
Committee believes that ownership of a significant equity position in the Trust
is the best means to obtain the desired focus on shareholder value and that,
over time, the executive officers can most readily be made significant
shareholders in the Trust through the executive compensation program.
With these objectives in mind, the Trust takes a two-pronged approach to
executive officer and key employee compensation: first, it pays a competitive
base salary; and second, it links both short-term and long-term incentive
compensation directly or indirectly to increases in shareholder value. It is
intended that, as their holdings of Trust stock continue to increase, executive
officers in particular will approach their responsibilities more and more like
owners of the Trust. The Trust also provides competitive health, retirement
and savings programs to all its employees.
The Committee's view that aggressive long-term incentive programs utilizing
Trust stock motivate executive performance and focus management's attention on
increasing shareholder value over the long-term is carried over to the
compensation of Board members. The non-employee members of the Board receive a
substantial portion of their compensation in options to acquire Trust stock.
The overall structure and terms of the executives' current employment
agreements were established in Mr. Gardner's prior employment agreement entered
into in 1989. The Compensation Committee, in conjunction with management, is
currently reviewing the structure and terms of the executives' employment
agreements in light of current industry standards and the challenges and
opportunities facing the Trust in a potentially recovering real estate market.
A. CURRENT COMPENSATION. The Trust pays competitive salaries to attract
and retain the highly qualified executive officers needed to manage the Trust.
The Committee each year has reviewed compensation surveys of other real estate
investment trusts to assure that the Trust's salary levels are competitive. The
Compensation Committee then measures executive performance against goals and
objectives established by the Board of Trustees at the beginning of each year.
These goals and objectives specify short-term, mid-term and long-term issues
which must be dealt with in order to maximize the return on Trust assets and,
therefore, the value of the Trust shares. These issues include management
operational matters, planning requirements, and particular development and
transaction opportunities. The Trust has no formal bonus plan although bonuses
have been granted from time to time to recognize outstanding performance. In
fiscal 1995, bonuses were granted to Messrs. Gardner and Tinkham of $50,000 and
$15,000, respectively, in recognition of the completion of the land site
transaction with the Chicago Music and Dance Theater, Inc.
In addition to the evaluation of management's performance in light of the
established goals and objectives, the Trust will suspend or limit annual salary
increases when operating performance of the Trust, whether due to overall market
conditions or otherwise, will not support them. Accordingly, the base salaries
of Mr. Gardner, the CEO, and Mr. Tinkham, the CFO, were not increased for
calendar 1993, 1994 or 1995. Further, their employment contracts were amended
in April of 1993 to provide that, at the option of the Trust, up to 20% of their
base compensation could be payable in stock options ("Salary Replacement
Options") rather than cash to conserve the Trust's cash for use in future
development of the Trust's land.
The Salary Replacement Options are granted pursuant to the Trust's 1993
Employees' Stock Option
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<PAGE>
Plan. The Plan is administered by the Stock Option Committee, which, in
conjunction with the Compensation Committee, annually determines the portion of
an employee's base compensation for any fiscal year, up to 20%, to be paid in
Salary Replacement Options rather than cash. That determination is made
primarily on the basis of current and projected cash needs and resources of the
Trust. Pursuant to the terms of the 1993 Plan, the number of Salary Replacement
Options granted in lieu of cash is equal to the amount of base salary payable in
options divided by one-fourth of the value of a share on the date of grant.
The exercise price of the options shall not be less than 100% of the fair
market value of a share on the date of grant. One quarter of the total options
granted each fiscal year become exercisable at the end of each quarter of the
Trust's fiscal year. If employment terminates for any reason, rights to exercise
any option cease except for those which have become exercisable prior to the
date of termination. All options lapse after 20 years from the date of grant.
For the fiscal years beginning May 1, 1994 and May 1, 1995, 20% of base
salaries were paid (or are payable) in Salary Replacement Options. In April,
1994, for fiscal 1995, option grants covering 22,588 and 9,788 shares were made
to Messrs. Gardner and Tinkham, respectively, in lieu of cash salary of $60,000
and $26,000, respectively. The May, 1995 option grants covering 20,316 and
8,804 shares were made to Messrs. Gardner and Tinkham, respectively, in lieu of
cash salary of $60,000 and $26,000, respectively, to be paid in fiscal 1996.
B. LONG-TERM INCENTIVE COMPENSATION. The Trust uses its other Stock
Option Plans as the foundation for its long-term stock-based incentive
compensation program. Options are granted, and the plans are administered, by
the Stock Option Committee, which consists of all Trustees except Mr. Gardner.
Because all of the Trust's Stock Option Plans require that options be
granted at no less than fair market value, a gain can only result if the Trust's
share price increases from the date of grant. This ties this incentive program
directly to increasing shareholder value. In the Compensation Committee's
view, stock options provide a special acknowledgement for key employees' efforts
to maximize shareholder value to date, a strong incentive to them to continue
those efforts, and, by reason of the 10 year vesting schedule, a significant
incentive for them to remain with the Trust.
In fiscal 1995, Mr. Gardner received options to acquire 45,000 shares
pursuant to the long-term incentive stock option plans (other than Salary
Replacement Options) or 78% of the total options granted pursuant to those
plans. Mr. Tinkham received options to acquire 10,000 shares and two other
Trust employees received the balance of the options (covering 3,000 shares)
granted pursuant to those plans.
The actions of the Compensation Committee are subject to the approval of,
and have been approved by, the full Board of Trustees, excepting Mr. Gardner,
who does not participate in discussions on his own compensation.
Submitted by:
The Compensation Committee of the
Board of Trustees of The Chicago
Dock and Canal Trust
July 19, 1995
Kenneth S. Axelson, Chairman
Peter J. P. Brickfield
Robert E. Wood II
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<PAGE>
STOCK PERFORMANCE GRAPH
The following graph depicts the value of a $100 investment in the Trust and
a similar investment in the Standard & Poor's 500 index and the index of all
real estate investment trusts as compiled by the National Association of Real
Estate Investment Trusts ("NAREIT") on April 30, 1990 and on each April 30 for
the succeeding five years, assuming re-investment of all dividends.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
THE TRUST 100 73 48 56 57 66
NAREIT ALL REITS 100 112 122 154 166 164
S&P 500 100 118 134 146 154 181
</TABLE>
As supplemental information, the following graph depicts the value of a
$100 investment in the Trust and a similar investment in the Standard & Poor's
500 index and the index of all real estate investment trusts as compiled by
NAREIT, on April 30, 1981 and on each April 30 for the succeeding fourteen
years, assuming re-investment of all dividends. Values prior to listing of the
shares on NASDAQ in October, 1986 are based on reported bid prices. Management
believes that real estate is a cyclical industry and thus should also be viewed
over a longer time period than the required five year period. The starting
point of this graph is when current management was hired and began the process
of redeveloping the Trust's property.
<TABLE>
<CAPTION>
COMPARISON OF FOURTEEN YEAR CUMULATIVE RETURN
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THE TRUST 100 227 385 431 485 469 785 646 660 473 347 229 265 270 312
NAREIT ALL REITS 100 98 155 165 199 220 242 236 235 214 239 261 330 357 351
S&P 500 100 93 138 140 165 225 285 266 327 361 425 484 529 557 654
</TABLE>
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<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Trust's
Trustees and executive officers, and persons who own more than ten percent (10%)
of a registered class of the Trust's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers. Such officers, Trustees and ten percent (10%) stockholders are also
required by SEC rules to furnish the Trust with copies of all Section 16(a)
forms that they file.
Based solely on its review of copies of such reports received or written
representations from certain reporting persons, the Trust believes that all
Section 16(a) filing requirements applicable to its officers, Trustees and ten
percent (10%) stockholders during the fiscal year ended April 30, 1995 were
satisfied.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of Shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received by the Trust not later than April 19,
1996 in order to be eligible for inclusion in the proxy statement and form of
proxy for that meeting.
20
