<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DUKE REALTY INVESTMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DUKE REALTY INVESTMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DUKE REALTY INVESTMENTS, INC.
8888 KEYSTONE CROSSING
SUITE 1200
INDIANAPOLIS, INDIANA
(317) 574-3531
March 22, 1995
Dear Shareholder:
The directors and officers of Duke Realty Investments, Inc. join me in
extending to you a cordial invitation to attend the annual meeting of our
shareholders. This meeting will be held on Thursday, April 27, 1995, at 10:00
a.m., at the Radisson Plaza Hotel, Conference Center, Keystone at the Crossing,
Indianapolis, Indiana.
We believe that both the shareholders and management of Duke Realty
Investments, Inc. can gain much through participation at these meetings. Our
objective is to make them as informative and interesting as we can. We hope you
will plan to attend.
The formal notice of this annual meeting and the proxy statement appear on
the following pages. After reading the proxy statement, PLEASE MARK, SIGN, AND
RETURN THE ENCLOSED PROXY CARD TO ENSURE THAT YOUR VOTES ON THE BUSINESS MATTERS
OF THE MEETING WILL BE RECORDED.
We hope that you will attend this meeting. Whether or not you attend, we
urge you to return your proxy promptly in the postpaid envelope provided. After
returning the proxy, you may, of course, vote in person on all matters brought
before the meeting.
We look forward to seeing you on April 27.
Sincerely,
John W. Wynne
CHAIRMAN
<PAGE>
DUKE REALTY INVESTMENTS, INC.
8888 KEYSTONE CROSSING
SUITE 1200
INDIANAPOLIS, INDIANA
(317) 574-3531
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1995
The annual meeting of the shareholders of Duke Realty Investments, Inc. (the
"Company") will be held at the Radisson Plaza Hotel, Conference Center, Keystone
at the Crossing, Indianapolis, Indiana on April 27, 1995, at 10:00 a.m. EST, to
consider and to take action on the following matters:
1. The election of four (4) Directors of the Company.
2. Approval of independent auditors.
3. The transaction of such other business as may properly come before the
meeting and any adjournments thereof.
Only shareholders of record at the close of business on March 7, 1995, are
entitled to notice of and to vote at this meeting and any adjournments thereof.
By order of the Board of Directors,
Dayle M. Eby
SECRETARY
Indianapolis, Indiana
March 22, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE, AND
SIGN YOUR PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER
SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY. RETURNING
THE PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON ON ALL MATTERS BROUGHT
BEFORE THE MEETING.
<PAGE>
DUKE REALTY INVESTMENTS, INC.
8888 KEYSTONE CROSSING
SUITE 1200
INDIANAPOLIS, INDIANA
(317) 574-3531
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1995
The accompanying proxy is solicited by the Board of Directors of Duke Realty
Investments, Inc. (the "Company") for use at the annual meeting of shareholders
to be held April 27, 1995 and any adjournments thereof. Only shareholders of
record as of the close of business on March 7, 1995 will be entitled to vote at
the annual meeting. When the proxy is properly executed and returned, the shares
it represents will be voted at the meeting in accordance with any directions
noted on the proxy. If no direction is indicated, the proxy will be voted in
favor of the proposals set forth in the notice attached to this proxy statement.
The election of each director, as well as any others matters that come
before the meeting, will be determined by the affirmative vote of at least a
majority of the shares present in person or represented by proxy. The holder of
each outstanding share of common stock is entitled to vote for as many persons
as there are directors to be elected. An abstention or broker non vote on any
such matter will not change the number of votes cast for or against the matter.
Any shareholder giving a proxy has the power to revoke it at any time before it
is voted. The approximate date of mailing of this proxy statement is March 22,
1995.
VOTING SECURITIES AND BENEFICIAL OWNERS
The Company has only one class of stock outstanding, its common stock, of
which 20,391,919 shares ("Shares") were outstanding as of the close of business
on March 15, 1995.
The following table shows, as of March 15, 1995, the number and percentage
of Shares and interests ("Units") in Duke Realty Limited Partnership ("DRLP"),
an affiliate of the Company, held by (i) all directors and nominees, (ii) each
person known to the Company who owned beneficially more than five percent of the
issued and outstanding Shares, and (iii) certain executive officers. Each Unit
is convertible into one Share at the option of the holder. The total number of
Shares and Units outstanding as of the close of business on March 15, 1995 was
24,390,744.
<TABLE>
<CAPTION>
EFFECTIVE ECONOMIC
AMOUNT AND NATURE OF PERCENT OF PERCENT OF ALL OWNERSHIP OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP ALL SHARES(1) SHARES/UNITS(2) EXECUTIVE OFFICERS(3)
- --------------------------- -------------------- ------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Thomas L. Hefner 2,129,948(4) 9.58% 8.73% 877,363
Daniel C. Staton 1,776,352(5) 8.14% 7.28% 857,956
Darell E. Zink, Jr. 2,137,913(6) 9.62% 8.76% 847,200
John W. Wynne 2,020,212(7) 9.17% 8.28% 747,091
Geoffrey Button 605,920(8) 2.89% 2.48% N/A
Ngaire E. Cuneo 0 (16) (16) N/A
Howard L. Feinsand 1,300 (16) (16) N/A
John D. Peterson 16,790(9) (16) (16) N/A
Dr. Sydney C. Reagan 4,415 (16) (16) N/A
James E. Rogers 300 (16) (16) N/A
Lee Stanfield 2,681 (16) (16) N/A
Jay J. Strauss 1,671 (16) (16) N/A
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
EFFECTIVE ECONOMIC
AMOUNT AND NATURE OF PERCENT OF PERCENT OF ALL OWNERSHIP OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP ALL SHARES(1) SHARES/UNITS(2) EXECUTIVE OFFICERS(3)
- --------------------------- -------------------- ------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
FMR Corp.
82 Devonshire St.
Boston, MA 1,784,709 8.75% 7.32% N/A
Gary A. Burk 1,338,720(10) 6.19% 5.49% 272,012
David R. Mennel 1,326,950(11) 6.13% 5.44% 260,130
Richard W. Horn 12,050(12) (16) (16) 12,050
Donald J. Hunter 10,876(13) (16) (16) 10,876
William E. Linville 9,772(14) (16) (16) 9,772
Dennis D. Oklak 9,010(15) (16) (16) 9,010
Directors and Executive
Officers as a Group (25
persons) 5,126,469 21.53% 20.91% N/A
<FN>
- ------------------------
(1) Assumes that the only Units exchanged for Shares are those owned by such
beneficial owner.
(2) Assumes exchange of all outstanding Units for Shares.
(3) Reflects Shares and Units held directly by executive officers and members
of their family, as well as their proportionate economic interest in Shares
and Units owned by various entities.
(4) Includes 300,145 Shares owned by Mr. Hefner and members of his family and
stock options exercisable for 14,100 Shares. Also includes the following
Units: (i) 283,579 Units owned directly by Mr. Hefner; (ii) 3,669 Units
owned by Duke Investment Company, a partnership in which Mr. Hefner owns a
26.1% beneficial interest; (iii) 52,421 Units owned by Duke Associates No.
52 Limited Partnership, a partnership in which Mr. Hefner owns a 10%
beneficial interest; (iv) 380,712 Units owned by Park 100 Investors, Inc.,
a corporation in which Mr. Hefner owns 12.2% of the outstanding capital
stock; and (v) 1,095,322 Units owned by DMI Partnership, a partnership in
which Mr. Hefner owns a 20.71% beneficial interest.
(5) Includes 335,225 Shares owned by Mr. Staton and stock options exercisable
for 14,100 Shares. Also includes the following Units: (i) 275,615 Units
owned directly by Mr. Staton; (ii) 3,669 Units owned by Duke Investment
Company, a partnership in which Mr. Staton owns a 26.1% beneficial
interest; (iii) 52,421 Units owned by Duke Associates No. 52 Limited
Partnership, a partnership in which Mr. Staton owns a 10% beneficial
interest; and (iv) 1,095,322 Units owned by DMI Partnership, a partnership
in which Mr. Staton owns a 20.71% beneficial interest.
(6) Includes 317,106 Shares owned by Mr. Zink and members of his family and
stock options exercisable for 14,100 Shares. Also includes the following
Units: (i) 274,583 Units owned directly by Mr. Zink; (ii) 3,669 Units owned
by Duke Investment Company, a partnership in which Mr. Zink owns a 26.1%
beneficial interest; (iii) 52,421 Units owned by Duke Associates No. 52
Limited Partnership, a partnership in which Mr. Zink owns a 10% beneficial
interest; (iv) 380,712 Units owned by Park 100 Investors, Inc., a
corporation in which Mr. Zink owns 2.2% of the outstanding capital stock;
and (v) 1,095,322 Units owned by DMI Partnership, a partnership in which
Mr. Zink owns a 20.71% beneficial interest.
(7) Includes: (i) 280,263 Shares owned by Mr. Wynne and members of his family;
(ii) 98,475 Shares owned as trustee under the Phillip R. Duke Irrevocable
Trust and (iii) stock options exercisable for 14,100 Shares. Also includes
the following Units: (i) 98,919 Units owned directly by Mr. Wynne; (ii)
52,421 Units owned by Duke Associates No. 52 Limited Partnership, a
partnership in which Mr. Wynne owns a 10% beneficial interest; (iii)
380,712 Units owned by Park 100
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Investors, Inc., a corporation in which Mr. Wynne owns 32.0% of the
outstanding capital stock; and (iv) 1,095,322 Units owned by DMI
Partnership, a partnership in which Mr. Wynne owns a 20.71% beneficial
interest.
(8) Includes 300 shares owned by Mr. Button and 605,620 Units owned by
affiliates of Wyndham Investments Limited, a property holding company of
Allied Domecq Pension Funds, of which Mr. Button is Executive Director.
(9) Includes: (i) 6,149 Shares owned by Mr. Peterson and members of his family;
(ii) 3,500 Shares owned by Mr. Peterson as Trustee for the Peterson Family
GST Investment Share Trust; and (iii) 7,141 shares owned for investment
purposes by City Securities Corporation, a firm in which Mr. Peterson
serves as Chairman of the Board and Chief Executive Officer.
(10) Includes 97,764 Shares owned by Mr. Burk and members of his family and
stock options exercisable for 14,100 Shares. Also includes the following
Units: (i) 75,444 Units owned directly by Mr. Burk; (ii) 3,669 Units owned
by Duke Investment Company, a partnership in which Mr. Burk owns a 9.5%
beneficial interest; (iii) 52,421 Units owned by Duke Associates No. 52
Limited Partnership, a partnership in which Mr. Burk owns a 4% beneficial
interest; and (iv) 1,095,322 Units owned by DMI Partnership, a partnership
in which Mr. Burk owns a 7.5% beneficial ownership.
(11) Includes 85,622 Shares owned by Mr. Mennel and members of his family and
stock options exercisable for 14,100 Shares. Also includes the following
Units: (i) 75,816 Units owned directly by Mr. Mennel; (ii) 3,669 Units
owned by Duke Investment Company, a partnership in which Mr. Mennel owns a
9.5% beneficial interest; (iii) 52,421 Units owned by Duke Associates No.
52 Limited Partnership, a partnership in which Mr. Mennel owns a 4%
beneficial interest; and (iv) 1,095,322 Units owned by DMI Partnership, a
partnership in which Mr. Mennel owns a 7.5% beneficial ownership.
(12) Includes 4,403 Shares owned by Mr. Horn and stock options exercisable for
4,700 Shares. Also includes 2,947 Units beneficially owned by Mr. Horn
under an agreement with a partnership owned by certain other executive
officers.
(13) Includes 61 Shares owned by Mr. Hunter and stock options exercisable for
4,700 Shares. Also includes 4,010 Units owned by Mr. Hunter and 2,105 Units
beneficially owned by Mr. Hunter under an agreement with a partnership
owned by certain other executive officers.
(14) Includes 440 Shares owned by Mr. Linville and stock options exercisable for
4,700 Shares. Also includes 4,632 Units beneficially owned by Mr. Linville
under an agreement with a partnership owned by certain other executive
officers.
(15) Includes 521 Shares owned by Mr. Oklak and stock options exercisable for
4,700 Shares. Also includes 3,789 Units beneficially owned by Mr. Oklak
under an agreement with a partnership owned by certain other executive
officers.
(16) Represents less than 1% of the outstanding shares.
</TABLE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Four Directors are to be elected. Geoffrey Button, John D. Peterson, Darell
E. Zink, Jr., and Ngaire E. Cuneo have been nominated for a term of three years
and until their successors are elected and qualified. All nominees except Ms.
Cuneo are members of the present Board of Directors. Ms. Cuneo has been
nominated to fill the directorship held by Dr. Sydney C. Reagan whose term is
expiring and who is retiring from the Board. The other directors listed in the
table below will continue in office until expiration of their terms. If, at the
time of the 1995 annual meeting, any of the nominees is unable or declines to
serve, the discretionary authority provided in the proxy may be exercised to
vote for a substitute or substitutes. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be required.
3
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE ELECTION OF THE FOLLOWING
NOMINEES:
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION(S) AND DIRECTOR
BUSINESS EXPERIENCE DURING PAST 5 YEARS SINCE
- ----------------------------------------------------------------------------------------------------- -----------
<S> <C>
NOMINEES FOR TERMS EXPIRING 1998
Geoffrey Button, Age 46 1993
Executive Director of Wyndham Investments Limited, a property holding company of Allied Domecq
Pension Funds. Director of Major Realty.
Ngaire E. Cuneo, Age 44
Executive Vice President, Corporate Development, Conseco, Inc., an owner, operator and provider of
services to companies in the financial services industry, since 1992. Prior to 1992, Senior Vice
President and corporate officer of General Electric Capital Corp. Director of Conseco, Inc. and
Bankers Life Holding Corporation.
John D. Peterson, Age 61 1985
Chairman and Chief Executive Officer of City Securities Corporation, a securities brokerage firm.
Director of Capital Industries, Inc. and Lilly Industries, Inc.
Darell E. Zink, Jr., Age 48 1993
Executive Vice President, Chief Financial Officer and Assistant Secretary of the Company. Director
of Inland Mortgage Corporation.
DIRECTORS WHOSE TERMS EXPIRE 1996
Thomas L. Hefner, Age 48 1993
President and Chief Executive Officer of the Company.
Lee Stanfield, Age 88 1985
Independent real estate developer, investor and consultant.
John W. Wynne, Age 62 1985
Chairman of the Board of the Company. Retired from Bose McKinney & Evans, attorneys. Director of
First Indiana Corporation.
DIRECTORS WHOSE TERMS EXPIRE 1997
Howard L. Feinsand, Age 47 1988
Senior Vice President, GE Capital Aviation Services, Inc., an aircraft leasing company, since 1994.
Prior to 1994, Senior Vice President of Polaris Aircraft Leasing Corporation.
James E. Rogers, Age 47 1994
Vice Chairman, President and Chief Operating Officer of CINergy, a regional utility holding
company, since 1994. Prior to 1994, Chairman, President and Chief Executive Officer of PSI Energy,
Inc. Director of CINergy Corp., PSI Energy, Inc., NBD Indiana, Inc. and Bankers Life Holding
Corporation.
Daniel C. Staton, Age 42 1993
Executive Vice President and Chief Operating Officer of the Company. Director of Storage Trust
Realty, Inc.
Jay J. Strauss, Age 59 1985
Chairman and Chief Executive Officer of Regent Realty Group, Inc., a general real estate and
mortgage banking firm.
</TABLE>
The Board of Directors of the Company met five times during their last
fiscal year. All directors attended in excess of 75% of the aggregate of (1) the
total number of meetings of the Board of Directors of the Company held during
the time he was a Director and (2) the total number of meetings held by all
Company committees on which he served.
4
<PAGE>
COMMITTEES OF THE BOARDS OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has an Asset Committee, an Audit
Committee, an Executive Compensation Committee, a Finance Committee and a
Nominating Committee.
The function of the Asset Committee is to discuss, review and authorize
business transactions that exceed established guidelines. The members of the
Asset Committee are Messrs. Hefner, Peterson, Reagan and Strauss. Mr. Strauss
served as the committee's chairman. The Committee met six times in 1994.
The function of the Audit Committee is to evaluate audit performance, handle
relations with the Company's independent auditors and evaluate policies and
procedures related to internal accounting controls. The members of the Audit
Committee are Messrs. Button, Feinsand, Reagan and Stanfield. Mr. Feinsand
served as Chairman. The Committee met twice during 1994.
The function of the Executive Compensation Committee is to review and make
recommendations to the Board of Directors with respect to the compensation of
directors, officers, and employees of the Company, to implement the Company's
stock option plan and to make recommendations to the Nominating Committee
regarding individuals qualified to be nominated as unaffiliated directors. The
members of the Executive Compensation Committee are Messrs. Button, Reagan,
Rogers, Stanfield and Strauss. The Committee is chaired by Mr. Button. The
Committee met three times in 1994.
The Finance Committee was established during 1994. The function of the
Finance Committee is to review, recommend and authorize certain debt financing
and equity transactions. The members of the Finance Committee are Messrs.
Button, Feinsand, Rogers, Staton, Strauss and Zink. Mr. Rogers chaired the
committee which met twice during 1994.
The function of the Nominating Committee is to nominate individuals to serve
as unaffiliated directors. The Nominating Committee is comprised of all of the
unaffiliated directors, Messrs. Button, Feinsand, Peterson, Reagan, Rogers,
Stanfield and Strauss. The Committee met once during 1994.
COMPENSATION OF DIRECTORS
The unaffiliated directors annual compensation was changed in 1994 from a
total annual cash payment of $10,000 to an award of 600 Shares annually.
Unaffiliated directors also receive a fee for attendance at meetings of the
Board of Directors which was increased in 1994 from $1,250 to $2,500 per
meeting. In addition, the unaffiliataed directors receive $500 for participation
in telephonic meeting of the Board and for participation in each committee
meeting not held in conjunction with regularly scheduled Board meetings.
Officers of the Company who are also directors receive no additional
compensation for their services as directors.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The primary objectives of the Compensation Committee in determining the
total compensation package for the Company's executive officers for 1994 were to
(i) ensure that compensation was adequate to enable the Company to attract and
retain highly qualified executives and (ii) align the financial interests of the
Company's executive officers directly with those of the Company's shareholders.
These objectives are met through a combination of base salaries and annual
bonuses which provide short-term incentives, coupled with stock option awards
which reinforce the long-term goals of the Company, link the interests of
management with those of the shareholders and promote value creation for the
Company's shareholders. In addition, because Funds From Operations ("FFO") is
considered in the industry to be a primary indicator of the Company's
performance, the Committee has developed a growth sharing plan for FFO growth
beginning in 1994. Individual contributions as well as overall business results
are recognized in the development of the total compensation of each executive.
5
<PAGE>
BASE SALARIES
Base salaries for the executive officers were determined based upon the
related experience, responsibility and performance of each individual while
taking into consideration the competitive marketplace for comparable positions.
Comparisons were made to the total compensation packages of other publicly
traded real estate investment trusts of similar size (based upon market
capitalization), with a comparable number of properties and employees, with
similar types of properties and with third party management, leasing and
construction activities. These comparisons were completed through a careful
review of various public filings by the comparable companies as well as through
a review of the results of the REIT Executive Compensation Survey sponsored by
the National Association of Real Estate Investment Trusts (NAREIT). The
Committee continued its general philosophy of establishing base salaries at a
level below the average paid to executive officers of comparable companies while
supplementing these base salaries with additional incentive compensation
opportunities that are related to individual and Company performance. In light
of the relatively low salaries of the Company's executive officers, the
Committee has not developed a position regarding the Internal Revenue Code
provision limiting deductions for salaries to $1.0 million per person.
ANNUAL BONUSES
Annual bonuses were awarded on a discretionary basis and supplemented by FFO
growth sharing that reflect both Company and individual performance. The
Committee considers numerous qualitative and quantitative factors in determining
these bonus awards, including direct contributions to overall Company profits,
level of participation in achieving Company goals and quality of overall
performance.
The FFO growth sharing component of bonuses was developed during 1994 and
provides that Company employees share in the growth in FFO in excess of
specified levels. The amount of excess FFO shared with employees increases as
the percentage of annual growth in FFO increases. The distribution of this
portion of the annual bonus creates a potential for short-term incentive
compensation directly linked to the profitability of the Company.
STOCK OPTION GRANTS
The Committee utilizes the stock option grants as long-term incentives to
emphasize growth in shareholder value. Under the 1993 Stock Option Plan, the
Committee may grant options to purchase Shares in the Company to the executive
officers and certain other key employees at a price equal to the market value at
the date of grant. The options vest over a five year period and may be exercised
over a ten year term. The executive officers were granted significant options in
the last quarter of 1993 as the Committee sought to implement its overall
philosophy of aligning the financial interests of the executive officers with
those of the shareholders. Because the 1993 option grants occurred late in the
year, there were no additional grants to any Executive Officers during 1994.
CHIEF EXECUTIVE OFFICER AND CERTAIN SENIOR EXECUTIVE OFFICERS COMPENSATION
The base salaries and incentive awards of Mr. Hefner, the Chief Executive
Officer, and Messrs. Wynne, Staton, Zink, Mennel and Burk are determined through
application of the same general philosophies and methodologies as described
above for all other executive officers of the Company. While the current base
salaries for these individuals are less than the average for executive officers
of similar real estate investment trusts and they receive no annual bonuses,
their total compensation is deemed appropriate in view of the stock options held
by each and their significant equity ownership.
Compensation Committee
Geoffrey Button
Sydney C. Reagan
James E. Rogers
Lee Stanfield
Jay J. Strauss
6
<PAGE>
PERFORMANCE GRAPH
The following graph compares, over the last five years, the yearly
percentage change in the cumulative total shareholder return on the Company's
common stock with the cumulative total return of the S&P 500 Index, and the
cumulative total return of the NAREIT Equity REIT Total Return Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
COMPANY COMMON STOCK, S&P 500 INDEX,
AND NAREIT EQUITY REIT TOTAL RETURN INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DUKE REALTY NAREIT S&P
<S> <C> <C> <C>
Dec-89 100.00 100.00 100.00
Dec-90 69.65 84.65 114.87
Dec-91 88.44 114.87 126.41
Dec-92 112.93 131.62 136.10
Dec-93 172.55 157.50 149.70
Dec-94 235.57 162.49 151.66
</TABLE>
* Assumes that the value of the investment in the Company's stock and each index
was $100 on December 31, 1989 and that all dividends were reinvested.
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by, or
paid to Thomas L. Hefner (the Company's chief executive officer), the five other
most senior executive officers and the Company's four most highly compensated
executive officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION(2) SECURITIES
----------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION(3)
- ----------------------------------------------- ----------- ----------- --------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Thomas L. Hefner 1994 $ 150,000 $ -- $ -- $ 4,500
President and Chief Executive Officer 1993 40,385 -- 70,500 2,287
John W. Wynne 1994 150,000 -- -- 4,500
Chairman of the Board 1993 40,385 -- 70,500 508
Daniel C. Staton 1994 150,000 -- -- 4,500
Executive Vice President and Chief Operating 1993 40,385 -- 70,500 2,287
Officer
Darell E. Zink, Jr. 1994 150,000 -- -- 4,500
Executive Vice President, Chief Financial 1993 40,385 -- 70,500 2,287
Officer and Assistant Secretary
David R. Mennel 1994 150,000 -- -- 4,500
General Manager of Services Operations and 1993 40,385 -- 70,500 2,287
President, Duke Services, Inc.
Gary A. Burk 1994 150,000 -- -- 4,500
President of Construction Services 1993 40,385 -- 70,500 2,287
William E. Linville 1994 110,000 85,000 -- 4,100
Vice President Indiana Industrial Group 1993 26,923 13,462 23,500 1,955
Donald J. Hunter 1994 105,000 85,000 -- 4,100
Vice President Columbus Group 1993 22,885 -- 23,500 1,710
Dennis D. Oklak 1994 120,000 45,000 -- 4,200
Vice President and Treasurer 1993 28,215 9,423 23,500 1,839
Richard W. Horn 1994 105,000 47,500 -- 4,100
Vice President of Acquisitions 1993 26,923 8,077 23,500 1,858
<FN>
- ------------------------
(1) Prior to the Company's reorganization on October 4, 1993, the Company had
only two employees, each of whom received total annual compensation of less
than $100,000.
(2) The compensation for 1993 reflects only compensation earned subsequent to
the time the officers became employees of the Company on October 4, 1993.
(3) Represents allocable contributions to the Company's Profit Sharing and
Salary Deferral Plan.
</TABLE>
STOCK OPTIONS
There were no grants of stock options made during 1994 to any of the
executive officers. The following table sets forth certain information with
respect to the value of unexercised options held by the executive officers of
the Company as of December 31, 1994.
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AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas L. Hefner 14,100 56,400 $ 63,450 $ 253,800
John W. Wynne 14,100 56,400 63,450 253,800
Daniel C. Staton 14,100 56,400 63,450 253,800
Darell E. Zink, Jr. 14,100 56,400 63,450 253,800
David R. Mennel 14,100 56,400 63,450 253,800
Gary A. Burk 14,100 56,400 63,450 253,800
William E. Linville 4,700 18,800 21,150 84,600
Donald J. Hunter 4,700 18,800 21,150 84,600
Dennis D. Oklak 4,700 18,800 21,150 84,600
Richard W. Horn 4,700 18,800 21,150 84,600
</TABLE>
CERTAIN TRANSACTIONS
A wholly-owned subsidiary of the Company is the sole general partner of Duke
Realty Services Limited Partnership ("DRSLP"), which is in turn the sole general
partner of Duke Construction Limited Partnership ("DCLP"). The operations of
these entities are included in the consolidated financial statements of the
Company. DRSLP provides third party property management, leasing and development
services and DCLP provides third party construction services. Certain of the
executive officers own limited partnership interests in these entities. Messrs.
Hefner, Staton, Zink, Wynne, Burk and Mennel indirectly own ninety percent of
the capital interests in DRSLP and profit's interests which vary from 10% to
90%. The share of net income of DRSLP for 1994 allocated to these executive
officers was $918,650. The executive officers' share of income from DRSLP is
included in minority interest in the Company's financial statements. The Company
has an option to acquire these executive officers' limited partnership interests
in exchange for 416,666 Units. These same executive officers own a ninety-five
percent limited partnership interest in DCLP which the Company has the option to
purchase for $1,000. DCLP incurred a net loss in 1994, thus there was no
allocation to the executive officers.
DRSLP and DCLP provide property management, leasing, construction and other
tenant related services to properties in which Messrs. Hefner, Staton, Zink,
Wynne, Burk and Mennel have ownership interests. The Company has an option to
acquire these executive officers' interests in these properties (the "Option
Properties"). In 1994, DRSLP and DCLP received fees of $1,910,000 and $361,000,
respectively, for services provided to the Option Properties. The fees charged
by DRSLP and DCLP for such services are equivalent to those charged to other
third party owners for similar services. Also, the Company leased operating
facilities in certain of the Option Properties. In 1994, the aggregate rent
under such leases was approximately $507,000. The rental amount paid is
comparable to similar space in the area.
DRLP has a $20.0 million loan to DRSLP which requires interest only payments
at 12% through September, 2003. The loan then amortizes over a 15 year period
with interest at 12% until final maturity in September, 2018. The loan is
guaranteed by an entity owned indirectly by Messrs. Hefner, Staton, Zink, Wynne,
Burk and Mennel.
Messrs. Hefner, Staton, Zink, Wynne, Burk and Mennel have personal
guarantees for $59.6 million of the Company's debt. DRLP has indemnified them
from any liability with respect to such debt.
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The Company contracts with Steel Frame Erectors, Inc. ("SFE"), an entity
owned by Messrs. Hefner, Staton, Zink, Wynne, Burk and Mennel, for certain
construction related services. During 1994, the total costs under these
contracts for Company related projects was $1,662,000. The net income of SFE for
1994 was $12,000.
The Company retained the law firm of Bose McKinney & Evans, of which Philip
A. Nicely (a former director of the Company) is a partner, to render general
legal services and paid such firm fees of approximately $806,000 in 1994.
In September 1994, the Company exercised an option to purchase a mortgage
loan to a consolidated subsidiary of the Company from ITI-Duke Joint Venture, a
business partially owned by Messrs. Hefner, Staton, Zink, Wynne, Burk and
Mennel. The exercise of this option was approved by the Company's unaffiliated
directors. As a result of the exercise of this option, the Company recognized an
approximate $2 million gain.
In 1994, a mortgage lender on one of the Option Properties exercised a
conversion option included in its loan and obtained ownership of the property.
The Company's unaffiliated directors approved the termination of the Company's
option agreement on this property. The Company retained the property management
and leasing services for this property and will continue to provide construction
related services as needed.
Also in 1994, the Company entered into an agreement to acquire one of the
Option Properties in which Messrs. Hefner, Zink and Wynne collectively own a 46%
interest. The acquisition will be completed by assuming $1,560,000 of third
party debt and issuing Units valued at $156,000 to the contributing entity. This
transaction was approved by the Company's unaffiliated directors.
PROPOSAL NO. 2: APPROVAL OF APPOINTMENT OF AUDITORS
The appointment of the Company's independent auditors is being submitted for
approval by a vote of the shareholders.
The Company's financial statements for the fiscal year ended December 31,
1994, were audited by KPMG Peat Marwick LLP ("KPMG"). The Company has selected
KPMG as its independent auditors for the fiscal year ending December 31, 1995,
and recommends that the shareholders approve such selection.
Representatives of KPMG are expected to be present at the annual meeting,
with the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions. If shareholders do not approve
the selection of KPMG, then the selection of independent auditors will be
reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Any shareholder of the Company wishing to have a proposal considered for
inclusion in the Company's 1996 proxy solicitation materials must set forth such
proposal in writing and file it with the Secretary of the Company on or before
November 23, 1995. The Board of Directors of the Company will review any
shareholder proposals that are filed as required, and will determine whether
such proposals meet applicable criteria for inclusion in its 1996 proxy
solicitation materials or consideration at the 1996 annual meeting.
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COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% shareholders are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based on review of the copies of such forms furnished to the Company, the
Company believes that during 1994 all of its officers, directors and greater
than 10% beneficial owners timely filed the forms required under Section 16(a),
except the following: (i) Mr. Zink and Mr. Wynne each failed to timely report a
transfer of Shares between themselves, (ii) Mr. Mennel failed to timely file two
year-end reports invloving annual dividend reinvestment and employee benefit
plan transactions and a distribution of Units from a partnership to its
partners, (iii) Mr. Hefner and Mr. Mennel each filed one report to correct
certain computational errors in a previously filed report, and (iv) Mr. Button
filed an amendment to correct errors in a previously filed report.
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 31, 1994
has been provided to all shareholders as of the record date. The Annual Report
is not to be considered as proxy solicitation material.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before this
annual meeting. However, if other matters should come before the meeting, it is
the intention of each person named in the proxy to vote such proxy in accordance
with his or her judgment on such matters.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the proxy
form and the material used in the solicitation of proxies will be paid by the
Company. The Company does not expect that the solicitation will be made by
specially engaged employees or paid solicitors. Although the Company might use
such employees or solicitors if it deems them necessary, no arrangements or
contracts have been made with any such employees or solicitors as of the date of
this statement. In addition to the use of the mails, solicitation may be made by
telephone, telegraph, cable or personal interview. The Company will request
record holders of shares beneficially owned by others to forward this proxy
statement and related materials to the beneficial owners of such shares, and
will reimburse such record holders for their reasonable expenses incurred in
doing so.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. Whether or not you attend
the meeting, you are urged to execute and return the proxy.
For the Board of Directors,
John W. Wynne
CHAIRMAN
March 22, 1995
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