<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (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 Rule 14a-11(c) or Rule 14a-12
BRANDYWINE REALTY TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Shares of Beneficial Interest
- --------------------------------------------------------------------------------
(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.
<PAGE>
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
Brandywine Realty Trust
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(4) Date Filed:
April 16, 1999
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<PAGE>
BRANDYWINE REALTY TRUST
14 Campus Boulevard
Newtown Square, PA 19073
(610) 325-5600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 18, 1999
To our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
Brandywine Realty Trust, a Maryland real estate investment trust (the
"Company"), will be held at The Four Seasons Hotel, One Logan Square,
Philadelphia, Pennsylvania on Tuesday, May 18, 1999, at 11:00 a.m., local time
(the "Meeting"), to consider and take action on:
1. The election of seven Trustees to serve as members of the Board of Trustees
until the next annual meeting of shareholders and until their successors are
elected and qualify.
2. The transaction of such other business as may properly come before the
Meeting or any postponement or adjournment thereof.
The Board of Trustees of the Company has fixed the close of business on
April 6, 1999 as the record date for determination of the shareholders of the
Company entitled to notice of, and to vote at, the Meeting and any postponement
or adjournment thereof.
By order of the Board of Trustees,
Brad A. Molotsky, Secretary
April 13, 1999
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, BUT WILL HELP ASSURE A QUORUM IF YOU DO NOT ATTEND.
<PAGE>
Brandywine Realty Trust
14 Campus Boulevard
Newtown Square, PA 19073
(610) 325-5600
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
To be held on May 18, 1999
Introduction:
The enclosed proxy is solicited by and on behalf of the Board of
Trustees (the "Board of Trustees" or the "Board") of Brandywine Realty Trust
(the "Company") for use at the Annual Meeting of Shareholders to be held on
Tuesday, May 18, 1999 at 11:00 a.m., local time, and at any postponement or
adjournment thereof (the "Meeting"). This Proxy Statement and the enclosed form
of proxy are first being mailed to shareholders of the Company on or about April
16, 1999.
At the Meeting, the shareholders will be asked to consider and take
action on:
1. The election of seven Trustees to serve as members of the Board of
Trustees until the next annual meeting of shareholders and until their
successors are elected and qualify.
2. The transaction of such other business as may properly come before
the Meeting or any postponement or adjournment thereof.
The Board of Trustees has unanimously approved each of the nominees for
election to the Board and recommends that the shareholders vote for the election
of each nominee at the Meeting.
The Board of Trustees knows of no business that will be presented for
consideration at the Meeting other than the matters described in this Proxy
Statement. If any other matter should be presented at the Meeting for action,
the persons named in the accompanying proxy card will vote the proxy in
accordance with their best judgment on such matter.
A shareholder may revoke his or her proxy at any time by executing and
returning another proxy of a later date, by written notice to the Company
(attention: Brad A. Molotsky, Secretary) at its address above, or by attending
the Meeting and voting in person. Attendance at the Meeting will not by itself
constitute revocation of a proxy.
The delivery of this Proxy Statement shall not, under any
circumstances, create any implication that the information contained herein is
correct after the date hereof, April 13, 1999.
<PAGE>
Record Date, Quorum and Vote Required:
The record date for the determination of shareholders entitled to
notice of and to vote at the Meeting is the close of business on April 6, 1999.
The presence, in person or by proxy, of holders of Common Shares representing a
majority of all votes entitled to be cast at the Meeting will constitute a
quorum for the transaction of business at the Meeting. All valid proxies
returned will be included in the determination of whether a quorum is present at
the Meeting. As of the Record Date, 38,011,655 Common Shares were issued and
outstanding. Each Common Share is entitled to one vote on each matter to be
voted on at the Meeting. Shareholders have no cumulative voting rights.
Assuming that a quorum is present, election of Trustees nominated for
election at the Meeting requires the vote of a plurality of all votes cast.
Common Shares represented by Proxies marked "For" such proposal will be counted
in favor of all nominees, except to the extent the Proxy withholds authority to
vote for, or indicates a vote against, a specified nominee. Common Shares
represented by Proxies marked "Abstain" or withholding authority to vote will
not be counted in favor of any nominee. However, because Trustees elected by
shareholders are elected by a plurality vote, abstentions will not affect the
election of the candidates receiving the most votes. IN THE ABSENCE OF SPECIFIC
DIRECTION, COMMON SHARES REPRESENTED BY A PROXY WILL BE VOTED "FOR" THE ELECTION
OF ALL NOMINEES.
-2-
<PAGE>
ELECTION OF TRUSTEES
The Board of Trustees has nominated the following individuals for
election as Trustees at the Meeting: Anthony A. Nichols, Sr., Gerard H. Sweeney,
Donald E. Axinn, Walter D'Alessio, Warren V. Musser, Charles P. Pizzi and
Matthew J. Lustig. Mr. Sweeney was first elected as a Trustee on February 9,
1996. Messrs. Nichols, Musser, D'Alessio and Pizzi were first elected as
Trustees on August 22, 1996. Mr. Axinn was first elected a Trustee on October 6,
1998 and Mr. Lustig was first elected a Trustee on April 12, 1999. The Trustees
have no reason to believe that any of the foregoing nominees will be unable or
unwilling to be a candidate for election at the time of the Meeting. If any
nominee is unable or unwilling to serve, the persons named in the proxy will use
their best judgment in selecting and voting for a substitute candidate.
Each individual elected as a Trustee at the Meeting will serve until
the next annual meeting of shareholders and until his successor is duly elected
and qualified.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES AS TRUSTEES.
Trustees of the Company
The following table sets forth certain information with respect to the
individuals nominated for election as Trustees of the Company at the Meeting,
each of whom has previously been elected to serve for a term expiring at the
1999 annual meeting of shareholders and until his successor is duly elected and
qualified:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Anthony A. Nichols, Sr 59 Chairman of the Board and Trustee
Gerard H. Sweeney..... 42 President, Chief Executive Officer and Trustee
Donald E. Axinn....... 69 Trustee
Walter D'Alessio...... 65 Trustee
Warren V. Musser...... 72 Trustee
Charles P. Pizzi...... 48 Trustee
Matthew J. Lustig..... 38 Trustee
</TABLE>
The following are biographical summaries of the individuals nominated
for election as Trustees of the Company at the Meeting:
Anthony A. Nichols, Sr., Chairman of the Board and Trustee. Mr. Nichols
was first elected Chairman of the Board on August 22, 1996. Mr. Nichols founded
The Nichols Company ("TNC"), a private real estate development company, through
a corporate joint venture with Safeguard Scientifics, Inc. ("SSI") and was
President and Chief Executive Officer from 1982 through August 22, 1996. From
1968 to 1982, Mr. Nichols was Senior Vice President of Colonial Mortgage Service
Company (now GMAC Mortgage Corporation), a subsidiary of CoreStates Bank, N.A.
Mr. Nichols has been a member of the National Association of Real Estate
Investment Trusts ("NAREIT"), a member of the Board of Governors of the Mortgage
Banking Association and Chairman of the Income Loan Committee of the regional
Mortgage Bankers Association. Mr. Nichols also serves on the Board of Directors
of CenterCore Inc. and is a member of the National Association of Industrial and
Office Parks ("NAIOP"), the Philadelphia Board of Realtors and the Urban Land
Institute ("ULI").
-3-
<PAGE>
Gerard H. Sweeney, President, Chief Executive Officer and Trustee. Mr.
Sweeney was first elected a Trustee on February 9, 1996. Mr. Sweeney has served
as President and Chief Executive Officer of the Company since August 8, 1994 and
as President since November 9, 1989. Prior to August 8, 1994, Mr. Sweeney served
as Vice President of LCOR, Incorporated ("LCOR"), a real estate development
firm. Mr. Sweeney was employed by The Linpro Company (a predecessor of LCOR)
from 1983 to 1994 and served in several capacities, including Financial Vice
President and General Partner. Mr. Sweeney is a member of NAREIT, the ULI, the
American Institute of Certified Public Accountants ("AICPA") and the
Pennsylvania Institute of Certified Public Accountants ("PICPA").
Donald E. Axinn, Trustee. Mr. Axinn was elected a Trustee on October 6,
1998. Mr. Axinn is the founder and chairman of the Donald E. Axinn Companies, an
investment firm and developer of office and industrial parks throughout the New
York metropolitan area. He has published two novels and six books of poetry,
serves on the board of The American Academy of Poets, the advisory board for the
Poet Laureate, and is Chairman of The Nature Conservancy, L.I. Chapter. A
graduate of Middlebury College and holder of a master's degree in Humanities, he
has also been awarded four honorary doctorates. He also served as an Associate
Dean of Arts and Sciences at Hofstra University. In 1983, he founded with others
the Interfaith Nutrition Network, shelters and kitchens for the homeless and
hungry on Long Island.
Walter D'Alessio, Trustee. Mr. D'Alessio was first elected a Trustee on
August 22, 1996. He has served as President and Chief Executive Officer of Legg
Mason Real Estate Services, Inc., a mortgage banking firm headquartered in
Philadelphia, Pennsylvania since 1982. Previously, Mr. D'Alessio served as
Executive Vice President of the Philadelphia Industrial Development Corporation
and Executive Director of the Philadelphia Redevelopment Authority. He also
serves on the Board of Directors of PECO Energy Company, Pennsylvania Blue
Shield and Independence Blue Cross, Philadelphia Beltline Railroad, the
Philadelphia Private Industry Council and the Greater Philadelphia Chamber of
Commerce.
Warren V. Musser, Trustee. Mr. Musser was first elected a Trustee on
August 22, 1996. He has served as Chairman and Chief Executive Officer of SSI
since 1953. Mr. Musser also serves as the Chairman of the Board of Directors of
Cambridge Technology Partners (Massachusetts), Inc. and CompuCom Systems, Inc.
He is also a Director of DocuCorp International, Inc. and Sanchez Computer
Associates, Inc. Mr. Musser also serves on a variety of civic, educational, and
charitable Boards of Directors and serves as Vice President/Development, Cradle
of Liberty Council, Boy Scouts of America, vice chairman of the Eastern
Technology Council and Chairman of the Pennsylvania Partnership on Economic
Education.
Charles P. Pizzi, Trustee. Mr. Pizzi was first elected a Trustee on
August 22, 1996. Mr. Pizzi has served as President of the Greater Philadelphia
Chamber of Commerce since 1989. Mr. Pizzi is a director of Vestaur Securities,
Inc. and serves on a variety of civic, educational and charitable Boards of
Directors, including Drexel University, Private Industry Council, Highmark,
Inc., Independence Blue Cross, Opera Company of Philadelphia, Pennsylvania
Academy of the Fine Arts, Philadelphia Convention & Visitors Bureau,
Philadelphia Industrial Development Corporation and United Way of Southeastern
Pennsylvania. Mr. Pizzi also serves on the Board of Advisors at Day & Zimmerman.
Matthew J. Lustig, Trustee. Mr Lustig is a Managing Director of Lazard
Freres & Co. LLC, responsible for its real estate investment banking and
strategic advisory activities. He is also a member of Lazard's Banking
Committee. Mr. Lustig has been involved in numerous strategic business
combinations and public and private capital raising activities for clients of
Lazard Freres & Co. LLC. Prior to joining Lazard in 1989, Mr. Lustig was a First
Vice President in the Real Estate Group at Drexel Burnham Lambert. He was
previously a lending officer with Chase Manhattan Bank, specializing in
construction and real estate finance. Mr. Lustig received his B.S. from the
School of Foreign Service at Georgetown University. He is also a member of the
Real Estate Board of New York and the ULI.
Messrs. Nichols, Musser and D'Alessio were initially elected to the
Board of Trustees as nominees of SSI and TNC in connection with the Company's
acquisition of properties from SSI and TNC in August 1996, and Mr. Pizzi was
initially elected to the Board of Trustees as the joint nominee of SSI, TNC and
the Company in connection with such transaction. Mr. Lustig was initially
elected to the Board of Trustees on April 12, 1999 by the Board to replace the
-4-
<PAGE>
position held by Murry N. Gunty. Mr. Gunty was initially elected to the Board in
September 1998 in connection with the Company's acquisition of properties from
affiliates of LF Strategic Realty Investors L.P. ("LFSRI") in September 1998.
LFSRI has a contractual right to designate a nominee to serve on the Board, and
the Company has agreed to use reasonable efforts to cause the nominee to be
elected to the Board. Mr. Axinn was initially elected to the Board of Trustees
in October 1998 in connection with the Company's acquisition of properties from
Mr. Axinn and affiliates.
Committees of the Board of Trustees
Audit Committee. The audit committee of the Board of Trustees (the
"Audit Committee") currently consists of Messrs. D'Alessio, Pizzi and Axinn,
none of whom is an employee of the Company. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and results of the
audit engagement, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls.
Compensation Committee. The compensation committee of the Board of
Trustees (the "Compensation Committee") currently consists of Messrs. D'Alessio
and Pizzi, neither of whom is an employee of the Company. Mr. Gunty served as a
member of the Compensation Committee while a member of the Board, commencing in
March 1999. The Compensation Committee is authorized to determine compensation
for the Company's executive officers, although formal action on compensation
matters during 1998 was taken by the full Board (with interested members of the
Board abstaining).
Executive Committee. The executive committee of the Board of Trustees
(the "Executive Committee") currently consists of Messrs. Nichols, Musser,
Sweeney and D'Alessio. The Executive Committee has been delegated all powers of
the Board of Trustees except the power to: (i) declare dividends on shares of
beneficial interest; (ii) issue shares of beneficial interest (other than as
permitted by the By-Laws as in effect from time to time); (iii) recommend to
shareholders any action that requires shareholder approval; (iv) amend the
Bylaws of the Company; and (v) approve any merger or share exchange which does
not require shareholder approval.
Meetings of Trustees
The Trustees held seven meetings in 1998. Each incumbent Trustee who
served on the Board in 1998 (other than Mr. Musser) attended at least 75% of the
meetings of the Board of Trustees and meetings held by all committees on which
such Trustee served. Mr. Musser attended four of the seven meetings of the Board
of Trustees in 1998. One meeting of the Audit Committee was held in 1998, and
another meeting was held in 1999, to discuss the 1998 audit with Arthur Andersen
LLP, the Company's independent public accountants. Three meetings of the
Compensation Committee were held in 1998 to discuss compensation of the
Company's executive officers.
Compensation of Trustees
During 1998, the Company paid its Trustees who are not officers of the
Company fees for their services as Trustees. These non-employee Trustees
received annual compensation of $20,000 (of which one-half was paid in Common
Shares and one-half was paid in cash) and a fee of $1,000 for attendance at each
meeting of the Board of Trustees and $500 for participation in each meeting of a
committee of the Board of Trustees. Trustees who are employees of the Company
receive no separate compensation for services as a trustee or committee member.
Company Officers and Significant Employees
The following are biographical summaries of the officers and
significant employees of the Company who are not Trustees of the Company:
-5-
<PAGE>
Jeffrey F. Rogatz, Senior Vice President and Chief Financial Officer.
Mr. Rogatz became Senior Vice President and Chief Financial Officer of the
Company on January 19, 1999. Mr. Rogatz was employed for over 11 years as an
investment banker with Legg Mason Wood Walker, Inc. ("Legg Mason") and most
recently served as a managing director in the corporate finance group. Mr.
Rogatz served as the lead investment banker from Legg Mason in advising the
Company on capital markets transactions, including seven public offerings which
raised in excess of $650 million. Mr. Rogatz is a member of NAREIT, the
International Council of Shopping Centers and the ULI, and currently serves on
the Board of Governors at Goodwill Industries of the Chesapeake.
Anthony S. Rimikis, Senior Vice President--Development & Construction.
Mr. Rimikis became an executive of the Company on October 13, 1997. From January
1994 until October 1997, Mr. Rimikis served as Vice President of Emmes Realty
Services, Inc., a New York based real estate services company where he managed
the company's construction and development activities in New Jersey and
Maryland. Prior to joining Emmes, he served as Vice President of Development for
DKM Properties Corp. from 1988 to 1994. Mr. Rimikis is a certified Commercial
Investment Member of the Realtors National Marketing Institute.
John M. Adderly, Jr., Senior Vice President--Operations. Mr. Adderly
has served as an officer of the Company since January 1995. Mr. Adderly was
employed by the Rodin Group, a Philadelphia-based real estate development,
management and brokerage firm from 1982 until 1995, where he served as Vice
President and Chief Financial Officer from 1986 until 1995, and as Corporate
Controller from 1982 until 1986. Mr. Adderly serves on the Jefferson Bank
Advisory Council and is a member of the Board of Directors of Businesses
Committed to Burlington County and a member of the Board of NAIOP (New Jersey
Chapter).
Anthony A. Nichols, Jr., Vice President--Operations. Mr. Nichols became
an officer of the Company on August 22, 1996. Previously Mr. Nichols was
employed at TNC, which he joined in 1989 as a marketing representative. In 1992
Mr. Nichols became an Assistant Vice President--Property Management of TNC and
in 1995 he became Vice President--Marketing. Mr. Nichols is a member of the
Board of Directors for the Eastern Pennsylvania Region of the NAIOP. Mr. Nichols
is the son of Anthony A. Nichols, Sr., the Company's Chairman of the Board.
H. Jeffrey DeVuono, Vice President--Operations. Mr. DeVuono became an
officer of the Company on January 15, 1997. From January 1993 until January
1997, he was employed in several capacities by LCOR, Incorporated, a real estate
development firm.
Brad A. Molotsky, General Counsel and Secretary. Mr. Molotsky became
General Counsel of the Company on October 27, 1997 and Secretary of the Company
on November 18, 1997. Prior to joining the Company he was an associate at Pepper
Hamilton LLP, Philadelphia, Pennsylvania where he had practiced law since
September 1989. Mr. Molotsky is a member of NAIOP, NAREIT, the American Society
of Corporate Secretaries, the American Bar Association, the New Jersey Bar
Association and the Pennsylvania Bar Association. He also serves on the Board of
Directors of Philadelphia Volunteer Lawyers for the Arts, Triple Threat
Productions, Inc. and Businesses Committed to Burlington County.
Barbara L. Yamarick, Vice President. Ms. Yamarick joined the Company on
October 20, 1997. Prior to joining the Company she was a Regional Vice President
of Premisys Real Estate Services, Inc., a subsidiary of Prudential Insurance
Company engaged in the management and leasing of real estate, which she joined
in 1991.
Mark W. Hamer, Vice President--Operations. Mr. Hamer became an officer
of the Company on October 6, 1998. Prior to joining the Company, he was
President and Chief Operating Officer of Donald E. Axinn Companies, developers
of office and industrial parks throughout the New York metropolitan area. Mr.
Hamer also serves as a trustee of the Nature Conservancy--Long Island Chapter.
George D. Sowa, Vice President--Operations. Mr. Sowa became an officer
of the Company on April 13, 1998. Mr. Sowa was employed by Keating Development
Company from 1997 to 1998 as a Development Manager where he was responsible for
-6-
<PAGE>
development and financing activities. Mr. Sowa was employed by LCOR,
Incorporated as Director of Development/Operations from 1989 to 1997. At LCOR,
Mr. Sowa was responsible for development, leasing and operations of LCOR's
Central New Jersey office retail portfolio. Mr. Sowa is a member of the Society
of College and University Planners, NAIOP and the Middlesex Somerset Mercer
(MSM) Regional Council.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, Trustees and persons who own more than 10% of the Common
Shares to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Officers, Trustees and greater than 10% shareholders
are required by regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no Annual Statements
of Beneficial Ownership of Securities on Form 5 were required to be filed, the
Company believes that during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, Trustees and
greater than 10% shareholders were complied with.
Cash and Non-Cash Compensation Paid to Executive Officers
The following table sets forth certain information concerning the
compensation paid for the years ended December 31, 1998, 1997 and 1996: (i) to
the Company's President and Chief Executive Officer and (ii) to each of the four
other most highly compensated executive officers (the "Named Executive
Officers") of the Company having a combined salary and bonus during the year
ended December 31, 1998 exceeding $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------- -----------------------------------------
Restricted Securities
Share Underlying
Name and Principal Position Year Salary Bonus(4) Awards(9) Options/SARs(#)(10)
- --------------------------- ---- ------ ----- ------ ---------------
<S> <C> <C> <C> <C> <C>
Anthony A. Nichols, Sr. 1998 $250,000 $228,313(5) $4,000,000 678,958
Chairman of the Board 1997 $200,000 $250,000 --- ---
1996(1) $ 49,000 $30,000 --- 40,000
Gerard H. Sweeney 1998 $300,000 $273,976(6) $6,000,000 1,018,489
President and Chief Executive Officer 1997 $200,000 $250,000 --- ---
1996 $134,000 $30,000 --- 100,000
John M. Adderly, Jr. 1998 $125,000 $ 65,000(7) $ 533,000 90,644
Senior Vice President - Operations 1997 $102,885 $ 35,000 --- ---
1996 $ 66,100 $ 15,000 --- 10,000
Anthony S. Rimikis 1998 $100,000 $ 50,000(8) --- 25,000
Senior Vice President - 1997(2) --- --- --- ---
Development & Construction 1996 --- --- --- ---
Mark S. Kripke 1998 $150,000 $ --- $ 133,400 22,609
Chief Financial Officer 1997(3) $ 98,654 $ 40,000 --- ---
1996 --- --- --- ---
</TABLE>
-7-
<PAGE>
(1) Mr. Nichols, Sr. became an employee of the Company on August 22, 1996. See
"Employment Agreements" below.
(2) Mr. Rimikis became an employee of the Company on October 13, 1997.
(3) Mr. Kripke became an employee of the Company on April 7, 1997. Mr. Kripke
resigned from his position with the Company effective December 31, 1998.
(4) 1998 bonus amounts, which were approved by the Board of Trustees in
accordance with the Company's executive compensation guidelines, were paid
as follows: (i) 25% in Common Shares valued at $17.88 per share (the
closing price of a Common Share on December 31, 1998) and (ii) 75%, at the
election of the applicable executive officer, in any combination of cash
and Common Shares valued at $15.19 per share (85% of the closing price of a
Common Share on December 31, 1998). Of the Common Shares elected to be
received in satisfaction of the 75% portion of the bonus ("Bonus Shares"),
the portion of such Common Shares received as a result of the discounted
purchase price is subject to certain transfer restrictions until December
31, 2000. All Common Shares issued to the recipients were acquired by the
Company through open market purchases.
(5) Paid as follows: (a) 25% portion, 2,332 Common Shares and (b) 75% portion
$144,928 in cash and 2,745 Bonus Shares. The bonus amount shown above
excludes an additional $50,000 bonus awarded in March 1999 on account of
1998 performance.
(6) Paid as follows: (a) 25% portion, 2,799 Common Shares and (b) 75% portion,
$173,901 in cash and 3,294 Bonus Shares. The bonus amount shown above
excludes an additional $80,000 bonus awarded in March 1999 on account of
1998 performance.
(7) Paid as follows: (a) 25% portion, 909 Common Shares and (b) 75% portion,
$32,500 in cash and 1,070 Bonus Shares.
(8) Paid as follows: (a) 25% portion, 699 Common Shares and (b) 75% portion,
2,469 Bonus Shares.
(9) The number of restricted shares awarded to each of the executives was equal
to the dollar value specified above divided by the closing price of the
Common Shares on January 2, 1998 ($25.25).
(10) The options awarded in 1996 are evidenced by certificates denominated as
"warrants" and were vested and exercisable on the date of grant. The
options awarded in 1998 vest ratably over five years.
Stock Options Granted to Executive Officers During Last Fiscal Year
Summarized in the following table is information concerning options
awarded to the President and Chief Executive Officer and each of the other Named
Executive Officers of the Company for the year ended December 31, 1998.
-8-
<PAGE>
Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of % of Total
Common Shares Options/SARs
Underlying Granted to Grant Date
Option Granted Employees in Exercise Expiration Present
Name (#) (1) Fiscal Year Price ($/sh) Date Value ($)(2)
- ---- ------- ----------- ------------ ---- ------------
<S> <C> <C> <C> <C> <C>
Anthony A. Nichols, Sr. 197,923 $ 25.25 1/2/08 $ 526,673
Chairman of the Board 231,597 $ 27.78 1/2/08 $ 495,618
249,438 33.2% $ 29.04 1/2/08 $ 483,411
Gerard H. Sweeney 296,736 $ 25.25 1/2/08 $ 789,318
President and Chief Executive 347,222 $ 27.78 1/2/08 $ 743,055
Officer 374,531 49.8% $ 29.04 1/2/08 $ 725,841
John M. Adderly, Jr. 26,409 $ 25.25 1/2/08 $ 70,274
Senior Vice President - Operations 30,902 $ 27.78 1/2/08 $ 66,130
33,333 4.4% $ 29.04 1/2/08 $ 64,599
Anthony S. Rimikis 12,500 $ 27.78 1/2/08 $ 26,750
Senior Vice President - 12,500 1.2% $ 29.04 1/2/08 $ 24,225
Development & Construction
Mark S. Kripke 6,587 $ 25.25 1/2/08 $ 17,528
Chief Financial Officer(3) 7,708 $ 27.78 1/2/08 $ 16,495
8,314 1.1% $ 29.04 1/2/08 $ 16,113
</TABLE>
(1) Options vest ratably over five years, subject to acceleration of vesting
under certain circumstances, such as upon a change in control of the
Company. Upon a change of control, unexercised options convert to 79,208,
118,812 and 10,575 Common Shares for Mr. Nichols, Mr. Sweeney and Mr.
Adderly, respectively. The number of Common Shares issuable upon a change of
control is subject to a proportional reduction in the event of any prior
option exercise.
(2) The grant date present values for the options are determined using the
Black-Scholes option pricing model. The assumptions used in calculating the
Black-Scholes present values for the option grants were as follows: (a) a
risk-free interest rate of 5.81% (based on the yield on a U.S. Treasury
security with a maturity of 10 years (the life of the option)); (b) a
dividend yield of 6.785%; (c) volatility of the Common Shares of 18.7%
(based on the daily Common Share price for one year prior to the option
grant); and (d) an option term of ten years. The Black-Scholes option
pricing model was developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable. The
amount realized from an employee stock option ultimately depends on the
market value of the Common Shares on the date of exercise.
(3) Mr. Kripke's options terminated by their terms on March 31, 1999, the
ninetieth day following termination of his employment.
With respect to the options granted to John M. Adderly, Jr., 72,933 of
such options will qualify as performance-based compensation under Section 162(m)
of the Code since the shares subject to these options have previously been
approved for awards by the Company's shareholders. The balance of the options
granted to Mr. Adderly will not qualify as performance-based compensation under
Section 162(m).
With respect to the options granted to Anthony A. Nichols, Sr. and
Gerard H. Sweeney, none of such options will qualify as performance-based
compensation under Section 162(m) of the Code, and the taxable income recognized
in any year with respect to these awards will count toward the $1.0 million
limit on compensation deductible by the Company for compensation to each of Mr.
Nichols, Sr. and Sweeney for such year.
-9-
<PAGE>
Stock Options Held by Executive Officers at December 31, 1998
The following table sets forth certain information regarding options
for the purchase of Common Shares that were held by: (a) the Company's President
and Chief Executive Officer and (b) each of the other Named Executive Officers
of the Company at December 31, 1998. No options for the purchase of Common
Shares were exercised by such persons during the fiscal year ended December 31,
1998.
Aggregated Options/SAR Exercises in Last Fiscal Year
And Fiscal Year End Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Shares Options/SAR at Options at FY
Acquired FY-End(#) End ($)
on Exercise Value Exercisable/ Exercisable/
Name (#) Realized($) Unexercisable Unexercisable
- ------------------------------------------ ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Anthony A. Nichols, Sr.
Chairman of the Board N/A N/A 124,870 / 594,088 $0 / $0
Gerard H. Sweeney
President and Chief Executive Officer N/A N/A 273,978 / 891,178 $274,364 / $0
John M. Adderly, Jr.
Senior Vice President - Operations N/A N/A 28,129 / 100,644 $0 / $0
Anthony S. Rimikis
Senior Vice President - N/A N/A 5,000 / 20,000 $0 / $0
Development & Construction
Mark S. Kripke
Chief Financial Officer N/A N/A 4,522 / 18,087 $0 / $0
</TABLE>
Employment Agreements
On January 2, 1998, each of Messrs. Nichols, Sr. and Sweeney entered
into a five-year employment agreement with the Company. In December 1998, the
Company extended the term of each such agreement for an additional one year. The
employment agreements established annual base salaries for each of Messrs.
Nichols, Sr. and Sweeney of $250,000 and $300,000, respectively, which
compensation may be increased by the Board of Trustees in its discretion. The
employment agreements include a provision entitling the applicable executive to
a payment equal to three times the sum of his annual salary and bonus: (i) upon
termination of the executive's employment without cause, (ii) upon resignation
by the executive "for good reason" or (iii) upon his death. Resignation by the
executive within six months following a reduction in the executive's salary, an
adverse change in his status or responsibilities, certain changes in the
location of the Company's headquarters or a change in control of the Company
would each constitute a resignation "for good reason."
-10-
<PAGE>
Severance Agreements
On December 17, 1998, each of John M. Adderly, Jr. and Anthony S.
Rimikis entered into severance agreements with the Company. These agreements
provide that, if such executive's employment is terminated (or constructively
terminated) within one year following the effective date of a change of control
of the Company, such executive will be entitled to salary continuation for a
period of one and a half years, with respect to Mr. Adderly, and one year, with
respect to Mr. Rimikis, from the effective date of such executive's termination.
The Company has entered into a similar agreement with Jeffrey F. Rogatz, who
became a Senior Vice President and Chief Financial Officer of the Company in
January 1999, and has entered into similar agreements with five other
non-executive officers of the Company.
401(k) Plan
The Company maintains a Section 401(k) and Profit Sharing Plan (the
"401(k) Plan") covering its eligible employees and other designated affiliates.
The 401(k) Plan permits eligible employees to defer up to a designated
percentage of their annual compensation, subject to certain limitations imposed
by the Internal Revenue Code. The employees' elective deferrals are immediately
vested and non-forfeitable upon contribution to the 401(k) Plan. The Company
reserves the right to make matching contributions or discretionary profit
sharing contributions. The 401(k) Plan is designed to qualify under Section 401
of the Code so that contributions by employees or the Company to the 401(k)
Plan, and income earned on plan contributions, are not taxable to employees
until withdrawn from the 401(k) Plan, and so that contributions by the Company,
if any, will be deductible by them when made.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Trustees is currently
comprised of Charles P. Pizzi and Walter D'Alessio. Murry N. Gunty served as a
member of the Compensation Committee while a member of the Board, commencing in
March 1999. No executive officer of the Company serves on the Compensation
Committee.
Walter D'Alessio, a member of the Company's Board of Trustees and
Compensation Committee, is President of Legg Mason Real Estate Services, Inc., a
mortgage banking firm and a subsidiary of Legg Mason, Inc. Legg Mason, Inc. is
the parent of Legg Mason Wood Walker, Incorporated, which was an underwriter in
three of the four public offerings of Common Shares consummated by the Company
between January 1, 1998 and the date of this Proxy Statement.
On December 31, 1997, the Company acquired an office property in Valley
Forge, Montgomery County, Pennsylvania (the "PECO Building") from PECO Energy
Company for a purchase price of $9.5 million. Mr. D'Alessio is a director of
PECO Energy Company. A committee of the Board of Trustees, of which Mr.
D'Alessio was not a participant, made the decision to purchase the PECO Building
and negotiated the terms of the transaction.
On September 28, 1998, the Company consummated a transaction (the
"Lazard Transaction") in which it acquired a portfolio of 67 office, industrial
and mixed use properties from affiliates of LFSRI. Murry N. Gunty, then one of
the principals of Lazard Freres Real Estate Investors LLC ("LFREI"), the general
partner of LFSRI, became a member of the Board of Trustees on September 28,
1998. Mr. Gunty's employment with LFREI terminated in April 1999, and Mr. Lustig
was elected by the Board to replace the position held by Mr. Gunty. In
connection with the Lazard Transaction, the Company agreed to acquire an
additional office property known as 8260 Greensboro Drive, McLean, Virginia for
$20.0 million payable through the issuance of Series B Preferred Units of
Brandywine Operating Partnership, L.P. (the "Operating Partnership"). In
connection with the Lazard Transaction, the Company also obtained an option to
acquire an office property known as 1676 International Drive, McLean, Virginia
for $68 million in cash. In the Lazard Transaction, an LFSRI affiliate acquired
Series B Preferred Units having a stated value of $3.0 million in exchange for a
$3.0 million promissory note that bears interest at 7.25% and matures on
September 30, 1999.
-11-
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 15, 1999
(except as indicated in Note 3) regarding the beneficial ownership of Common
Shares (and Common Shares for which Class A Units of the Operating Partnership
may be exchanged) by each Trustee, by each executive officer, by all Trustees
and executive officers as a group, and by each person known to the Company to be
the beneficial owner of 5% or more of the outstanding Common Shares. Except as
indicted below, to the Company's knowledge, all of such Common Shares are owned
directly, and the indicated person has sole voting and investment power.
<TABLE>
<CAPTION>
Number of
Common Percentage of
Name and Business Address of Beneficial Owner (1) Shares Common Shares (2)
- ------------------------------------------------- ------- -----------------
<S> <C> <C>
Morgan Stanley Dean Witter & Co. (3) 2,478,755 6.5%
Matthew J. Lustig (4) 1,339,285 3.4%
Gerard H. Sweeney (5) 633,840 1.6%
Anthony A. Nichols, Sr. (6) 505,978 1.3%
Donald E. Axinn (7) 101,000 *
John M. Adderly, Jr. (8) 66,618 *
Mark S. Kripke (9) 1,500 *
Anthony S. Rimikis (10) 11,507 *
Warren V. Musser (11) 5,545 *
Walter D'Alessio (12) 972 *
Charles P. Pizzi (13) 672 *
All Trustees and Executive Officers as a Group (10 persons) (14) 2,666,214 6.7%
</TABLE>
*Less than one percent.
(1) Unless indicated otherwise, the business address of each person listed is
14 Campus Boulevard, Suite 100, Newtown Square, Pennsylvania 19073.
(2) Assumes that all Class A Units eligible for redemption held by each named
person or entity are redeemed for Common Shares. The total number of Common
Shares outstanding used in calculating the percentage of Common Shares
assumes that none of the Class A Units eligible for redemption held by other
named persons or entities are redeemed for Common Shares.
(3) Based on a Schedule 13G dated February 9, 1998, and filed for the year
ended December 31, 1998. Morgan Stanley Dean Witter & Co. has a business
address at 1585 Broadway, New York, New York 10036. Accounts managed by
Morgan Stanley Dean Witter & Co. have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
certain of such Common Shares.
(4) Represents Common Shares issuable upon conversion, at $28.00 per Common
Share, of 750,000 issued and outstanding Series A Preferred Shares having
an aggregate stated value of $37.5 million which are held by Prometheus
AAPT Holdings, L.L.C ("Prometheus"). Excludes an aggregate of 3,482,142
Common Shares issuable upon redemption of Class A Units (issuable upon
redemption or conversion of Series B Preferred Units held by entities
controlled by LFREI) which are generally not subject to redemption until
September 28, 1999. Mr. Lustig is a Managing Director of Lazard Freres &
Co. LLC, which indirectly controls Prometheus. Mr. Lustig disclaims
beneficial ownership of all such Common Shares, except to the extent of his
pecuniary interest, if any, in such Common Shares. Mr. Lustig has a
business address at 30 Rockefeller Plaza, 63rd Floor, New York, New York
10020.
-12-
<PAGE>
(5) Includes (a) 283,477 Common Shares and (b) 350,363 Common Shares issuable
upon the exercise of options and warrants that are currently exercisable or
that become exercisable within 60 days of March 15, 1999.
(6) Includes (a) 269,596 Common Shares, (b) 192,564 Common Shares issuable upon
exercise of options and warrants that are currently exercisable or that
become exercisable within 60 days of March 15, 1999, and (c) 43,818 Common
Shares issuable upon conversion of Class A Units beneficially owned by TNC
or issuable to TNC on or before September 1, 1999. Mr. Nichols shares
investment and voting power over the Common Shares beneficially owned by
TNC.
(7) Includes (a) 1,000 Common Shares and (b) 100,000 Common shares issuable
upon the exercise of options that are currently exercisable. Excludes an
aggregate of 928,651 Common Shares issuable upon redemption of Class A
Units which are generally not subject to redemption until October 6, 1999.
Mr. Axinn has a business address at 131 Jericho Turnpike, Jericho, NY
11743.
(8) Includes (a) 38,490 Common Shares and (b) 28,128 Common Shares issuable
upon the exercise of options and warrants that are currently exercisable or
that become exercisable within 60 days of March 15, 1999.
(9) Excludes 4,521 Common Shares that were issuable upon exercise of options
that terminated on March 31, 1999. Mr. Kripke resigned from his position
within the Company effective December 31, 1998.
(10) Includes (a) 6,507 Common Shares and (b) 5,000 Common Shares issuable upon
the exercise of options that become exercisable within 60 days of March 15,
1999.
(11) Mr. Musser has a business address at 800 The Safeguard Building, 435 Devon
Park Drive, Wayne, Pennsylvania 19087.
(12) Mr. D'Alessio has a business address at 1735 Market Street, Philadelphia,
Pennsylvania 19103.
(13) Mr. Pizzi has a business address at 200 South Broad, Philadelphia,
Pennsylvania 19103
(14) Includes 1,339,285 Common Shares beneficially owned by Prometheus.
Certain Relationships and Related Transactions
August 22, 1996 Transaction
On August 22, 1996, the Company consummated a transaction (the "SSI/TNC
Transaction") in which the Company acquired, through the Operating Partnership,
substantially all of the real estate holdings of SSI and SSI's real estate
affiliate, TNC, then a private real estate development and management services
company. The then President of TNC, Anthony A. Nichols, Sr. and the Chairman and
Chief Executive Officer of SSI, Warren V. Musser, became members of the Board of
Trustees on August 22, 1996. In addition to the 495,837 Units issued by the
Operating Partnership to SSI, TNC and the other persons that became limited
partners in the Operating Partnership as part of the SSI/TNC Transaction
(collectively, the "Original Limited Partners") on August 22, 1996, the
Operating Partnership will be required to issue to certain of the Original
Limited Partners 44,322 Units by September 1, 1999 to acquire residual interests
retained by them in certain of the Properties contributed to the Operating
Partnership on August 22, 1996. The Partnership Agreement of the Operating
Partnership gives the Original Limited Partners the right to cause the Company
to redeem their Class A Units for cash, at a per Class A Unit price based on the
average closing price of the Common Shares for the five consecutive trading days
prior to such determination (or, at the option of the Company, Common Shares on
a one Common Share per Unit basis, subject to customary antidilution
adjustments).
-13-
<PAGE>
Option Properties
At the closing of the SSI/TNC Transaction, the Operating Partnership
acquired an option from an affiliate of TNC entitling it to acquire, in the
Operating Partnership's discretion, four properties containing an aggregate of
approximately 159,000 net rentable square feet (collectively, the "Option
Properties") at any time during the two-year period ending August 22, 1998
(subject to two extensions of one year each). The Operating Partnership
exercised the first of the two extensions resulting in a one year extension to
August 22, 1999. The parties have agreed that the purchase price payable by the
Operating Partnership upon exercise of its option will consist of $10.00 in
excess of the mortgage debt encumbering the Option Properties at the time of
exercise (which as of December 31, 1998 aggregated $21.2 million). Exercise of
the option is subject to a right of first refusal in favor of, and the consent
of, the holder of the mortgage encumbering the Option Properties. There can be
no assurance that the Company will exercise its option or that the holder of
such mortgage will consent to the exercise of the option.
Environmental Indemnity
SSI has agreed to indemnify the Operating Partnership against the cost
of remediation that may be required to be undertaken on account of certain
environmental conditions at one of the properties acquired in the SSI/TNC
Transaction subject to an aggregate maximum liability of approximately $2.0
million. The term of the SSI indemnity agreement expires on August 22, 2001.
Repayment of Certain Obligations
On August 21, 1997, the Company paid an aggregate of approximately
$594,384 (the "Payment Amount") to satisfy obligations of TNC (a company
controlled by Mr. Nichols, Sr.) on account of brokerage commissions and tenant
improvements. In exchange for the payment, TNC transferred to the Company 28,994
Class A Units. The number of Class A Units transferred to the Company equaled
the Payment Amount divided by the then market value of the number of Common
Shares into which such transferred Class A Units were then redeemable.
Involvement of Legg Mason
Walter D'Alessio, a member of the Company's Board of Trustees and
Compensation Committee, is President of Legg Mason Real Estate Services, Inc., a
mortgage banking firm and a subsidiary of Legg Mason, Inc. Legg Mason, Inc. is
the parent of Legg Mason Wood Walker, Incorporated, which was an underwriter in
three of the four public offerings of Common Shares consummated by the Company
between January 1, 1998 and the date of this Proxy Statement.
Interests in Sellers
On March 7, 1997, the Company acquired a 6.763 acre parcel of
undeveloped land located in Horsham Township, Montgomery County, Pennsylvania
for approximately $1.0 million. The seller was Horsham Valley, Inc. The purchase
price was paid through a combination of approximately $645,000 in cash and a
non-interest bearing promissory note for $369,166 that was paid on February 27,
1998. The purchase price for the property was determined by negotiation between
the Company and the seller. Mr. Nichols, Sr., the Company's Chairman, holds an
approximately 25% interest in the seller.
On December 17, 1997, the Company acquired an office property in Valley
Forge, Montgomery County, Pennsylvania (the "PECO Building") from PECO Energy
Company for a purchase price of $9.5 million. Mr. D'Alessio is a director of
PECO Energy Company. A committee of the Board of Trustees, of which Mr.
D'Alessio was not a participant, made the decision to purchase the PECO Building
and negotiated the terms of the transaction.
On July 29, 1998, the Company acquired approximately 23 acres of
undeveloped land in Horsham Township, Montgomery County, Pennsylvania for
approximately $3.5 million. The seller was LC/N Keith Valley Partnership II. The
purchase price was paid in cash. The purchase price for the property was
determined by negotiation between the Company and the seller. Mr. Nichols, Sr.,
the Company's Chairman, holds an approximately 25% interest in the seller.
-14-
<PAGE>
Lazard Transaction
On September 28, 1998, the Company consummated the Lazard Transaction
in which it acquired a portfolio of 67 office, industrial and mixed use
properties from LFSRI and its affiliates. Murry N. Gunty, then one of the
principals of LFREI, the general partner of LFSRI, became a member of the Board
of Trustees on September 28, 1998. Mr. Gunty's employment with LFREI terminated
in April 1999, and Mr. Lustig was elected by the Board to replace the position
held by Mr. Gunty. In connection with the Lazard Transaction, the Company agreed
to acquire an additional office property known as 8260 Greensboro Drive, McLean,
Virginia for $20.0 million payable through the issuance of Series B Preferred
Units of the Operating Partnership. In connection with the Lazard Transaction,
the Company also obtained an option to acquire an office property known as 1676
International Drive, McLean, Virginia for $68 million in cash. In the Lazard
Transaction, an LFSRI affiliate acquired Series B Preferred Units having a
stated value of $3.0 million in exchange for a $3.0 million promissory note that
bears interest at 7.25% and matures on September 30, 1999.
Axinn Transaction
On October 6, 1998, the Company consummated a transaction (the "Axinn
Transaction") in which it acquired a portfolio of 22 office and industrial
properties from the Donald E. Axinn Companies and affiliates. Mr. Axinn became a
member of the Board of Trustees on October 6, 1998. In connection with the Axinn
Transaction, the Company agreed to acquire an additional six office properties
containing an aggregate of approximately 983,053 net rentable square feet for an
aggregate purchase price of $63.1 million, upon satisfaction of certain
conditions. On December 28, 1998, the Company acquired one of these properties,
known as 3 Paragon Drive, Montvale, New Jersey, for $11.0 million in cash.
Share Purchase Loans
On October 20, 1998, following Board authorization of Company loans
aggregating up to $5.0 million to enable employees of the Company to purchase
Common Shares on the open market, the Company loaned executive officers an
aggregate of $1,399,792, as follows: Mr. Nichols, Sr. ($499,995), Mr. Sweeney
($599,786), Mr. Adderly ($250,006), and Mr. Rimikis ($50,005). Proceeds of these
loans were used to enable these executive officers to purchase Common Shares.
The loans have a five-year term, are full recourse and are secured by the Common
Shares purchased. Interest accrues on the loans at the lower of the interest
rate borne on borrowings under the Company's revolving credit facility (6.49% as
of February 16, 1999) and a rate based on the dividend payments on the Common
Shares (8.6 % based on the $0.39 fourth quarter 1998 dividend) and is payable
quarterly. The principal of the loans is payable at the earlier of October 20,
2001 and 90 days following termination of the applicable executive's employment
with the Company. In connection with the hiring by the Company of Mr. Rogatz as
Senior Vice President and Chief Financial Officer of the Company, the Company
agreed to loan Mr. Rogatz up to $200,000 to acquire Common Shares on the same
terms as the foregoing loans. In January 1999, the Operating Partnership agreed
to loan executive officers of the Company an aggregate of $81,107, as follows:
Mr. Nichols, Sr. ($26,897), Mr. Sweeney ($32,276), Mr. Adderly ($11,521) and Mr.
Rimikis ($10,413). Proceeds of these loans funded tax withholding payments due
in connection with certain year-end bonuses. These loans mature on December 31,
1999, are full recourse and accrue interest at the short-term applicable federal
rate as of January 1, 1999 (4.5%).
Share Performance Graph
The Securities and Exchange Commission requires the Company to present
a chart comparing the cumulative total shareholder return on the Common Shares
with the cumulative total shareholder return of (i) a broad equity index and
(ii) a published industry or peer group index. The following chart compares the
cumulative total shareholder return for the Common Shares with the cumulative
shareholder return of companies on (i) the S&P 500 Index and (ii) the NAREIT
ALL-REIT Total Return Index as provided by NAREIT for the period beginning
December 31, 1993 and ending December 31, 1998.
-15-
<PAGE>
COMPARISON OF CUMULATIVE SHAREHOLDERS' RETURN
The Company, S&P 500 Index and NAREIT All-REIT Index
<TABLE>
<CAPTION>
Dec. 93 Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98
<S> <C> <C> <C> <C> <C> <C>
The Company 100.00 260.84 288.78 558.79 768.76 588.65
S&P 500 Index 100.00 101.32 139.40 171.40 228.59 293.91
NAREIT All-REIT Index 100.00 100.81 119.27 161.91 192.44 156.22
</TABLE>
<PAGE>
Report of Non-Employee Trustees on Executive Compensation
The Compensation Committee's compensation policies with respect to the
Company's executive officers are based on the principles that compensation
should, to a significant extent, be reflective of the financial performance of
the Company, and that a significant portion of executive officers' compensation
should provide long-term incentives. The Compensation Committee seeks to set
executive compensation at levels that are sufficiently competitive so that the
Company may attract, retain and motivate high quality executives to contribute
to the Company's financial success. In establishing overall compensation for
executive officers, the Committee considers the Company's financial performance
and industry position, industry data generally and the recommendations of
third-party consultants. The President and Chief Executive Officer of the
Company establishes the base salaries for executives of the Company other than
for the Chairman of the Board and himself. The Committee exercises judgment and
discretion in the information it analyzes and considers. All actions taken by
the Compensation Committee relating to 1998 compensation were ratified and
approved by the entire Board (with interested members abstaining).
At meetings held on June 30, 1998, December 17, 1998 and December 22,
1998, the Compensation Committee met to discuss compensation of the President
and Chief Executive Officer and the Chairman of the Board. At these meetings,
the Compensation Committee reviewed a third party report on executive
compensation. The Compensation Committee adopted guidelines for determining 1998
year-end bonuses to the President and Chief Executive Officer, the Chairman of
the Board and other senior executives of the Company. Specifically, the
guidelines established targeted bonus amounts. The 1998 targeted bonus amounts
were 80% of base salary, in the case of the Chairman of the Board and the
President and Chief Executive Officer, 70% of base salary, in the case of the
Chief Financial Officer, and 50% of base salary for other Company executives.
The guidelines provided that the actual 1998 bonus amounts would be based on a
combination of Company performance measures and, in the case of executives other
than the Chairman of the Board and President and Chief Executive Officer,
divisional performance measures. In the case of the Chairman of the Board and
the President and Chief Executive Officer, these measures and their weightings
for 1998 were: total shareholder return relative to a peer group of companies
(40%), growth in per share funds from operations relative to a targeted level
(30%) and acquisition and development activity relative to a targeted level
(30%). The 1998 unweighted achievements relative to the target levels or peer
group, as applicable, for these two executives were: total shareholder return
(62.9%), growth in per share funds from operations (163.6%) and acquisition and
development activity (133%), representing a total weighted achievement of
approximately 114% of the performance measures. In addition, the guidelines
allowed for a discretionary bonus award. The guidelines provided that a minimum
of 25% of the non-discretionary portion of the year-end bonus for each executive
must be taken in Common Shares. Additionally, executives had the ability to take
all or a portion of the balance in Common Shares at a 15% discount to the
year-end market price of the Common Shares. The Company funded the 1998 Common
Share component of the year-end bonuses through open market purchases of Common
Shares, not through newly issued Common Shares.
At the December 17 meeting, the Compensation Committee approved: (i) an
extension of the five-year employment agreements of each of Messrs. Nichols, Sr.
and Sweeney for an additional year; (ii) a provision covering the excise tax
that could be payable by Messrs. Nichols, Sr. and Sweeney upon a change of
control of the Company; and (iii) preliminary year-end bonuses for Messrs.
Nichols, Sr. and Sweeney and final year-end bonuses for other executives of the
Company. At this meeting, the Compensation Committee also approved an amendment
to the options awarded in January 1998 to Messrs. Nichols, Sr. and Sweeney as
well as to three other officers of the Company. These options, together with
"restricted" Common Shares, had been awarded to these executives in recognition
of their contribution to the Company. The sole change made by the amendment is
that upon a change of control of the Company, the options which are then
outstanding convert into a fixed number of Common Shares, adjusted
proportionately in the event of any prior option exercises. The equity awards
granted to senior executives on January 2, 1998 in the form of "restricted"
Common Shares and options was predicated upon a specific dollar amount for each
executive. Two-thirds of this dollar amount was allocated to restricted Common
Shares, and one-third was allocated to options. The number of Common Shares into
which the options convert, assuming no prior exercises, are as follows: Mr.
Nichols, Sr. (79,208), Mr. Sweeney (118,812), Mr. Adderly (10,575), Mr. Nichols,
Jr. (7,921) and Mr. DeVuono (2,638). The number of shares into which options
convert was derived from the value of the options (computed based on a Black
Scholes valuation) at their grant date divided by the market price of the Common
Shares at the grant date ($25.25).
-17-
<PAGE>
At a meeting held on March 5, 1999, the Compensation Committee,
following its review of year-end financial results and performance measures of
the Company and peer group data, approved the final 1998 bonuses for Messrs.
Nichols, Sr. and Sweeney. The final total bonuses awarded to Messrs. Nichols,
Sr. and Sweeney were $278,000 and $354,000, respectively. The bonus amounts
reflect a total weighted achievement by these executives of approximately 114%
of the performance measures or approximately $228,000 and $274,000,
respectively. The discretionary portion of these bonuses under the guidelines
was $50,000 and $80,000 for Messrs. Nichols and Sweeney, respectively.
Although the Compensation Committee evaluated possible additional
equity awards to management, given that the market price of the Common Shares
has been below the per share net asset value of the Company, and taking into
account the recommendation of senior management, the Compensation Committee
determined not to make any such awards in 1998.
This report is made by the undersigned Trustees, none of whom is an
officer or employee of the Company. This Report constitutes the Report of all
such members.
Charles P. Pizzi
Walter D'Alessio
Warren V. Musser
Donald E. Axinn
OTHER INFORMATION
Independent Public Accountants
The Trustees have appointed Arthur Andersen LLP to serve as the
Company's independent public accountants for 1999 and to audit the Company's
financial statements for 1999. The shareholders will not be asked to approve
this appointment at the Meeting. A representative of Arthur Andersen LLP will be
present at the Meeting, will be available to respond to appropriate questions,
and will have an opportunity to make a statement.
Other Business
The Company knows of no business which will be presented at the Meeting
other than as set forth in this Proxy Statement. However, if other matters
should properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment on
such matters.
Expenses of Solicitation
The expense of solicitation of proxies on behalf of the Trustees,
including printing and postage, will be paid by the Company. Request will be
made of brokerage houses and other custodians, nominees and fiduciaries to
forward the solicitation material, at the expense of the Company, to the
beneficial owners of Common Shares held of record by such persons. In addition
to being solicited through the mails, proxies may also be solicited personally
or by telephone by Trustees and officers of the Company. In addition, the
Company has employed Beacon Hill Partners, Inc. to solicit proxies for the
Meeting. The Company has agreed to pay $3,000, plus out-of-pocket expenses of
Beacon Hill Partners, Inc., for these services.
-18-
<PAGE>
Shareholder Proposals for the 2000 Annual Meeting of Shareholders
Under the rules and regulations of the Securities and Exchange
Commission, proposals by shareholders intended to be presented at the next
annual meeting of shareholders of the Company must be received by the Company at
its offices at 14 Campus Boulevard, Newtown Square, Pennsylvania 19073 on or
before December 17, 1999 to be included in the Company's proxy statement and
form of proxy for the Year 2000 annual meeting.
The execution of a proxy solicited by the Company in connection with
its 2000 Annual Meeting of Shareholders shall confer on the designated
proxyholder discretionary voting authority to vote on any matter for which the
Company has not received notice on or prior to March 2, 2000.
-19-
<PAGE>
[ ]
PROPOSAL 1. (Election of Trustees):
FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ *EXCEPTIONS /X/
listed below for all nominees listed below
Nominees: Anthony A. Nichols, Sr., Gerard H. Sweeney, Warren V. Musser, Walter
D'Alessio, Charles P. Pizzi, Matthew J. Lustig and Donald E. Axinn
(INSTRUCTIONS: To withhold authority to vote for any nominee, mark the
"Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions
--------------------------------------------------------------------
Change of Address and
or Comments Mark Here /X/
Note: Please sign this proxy exactly as
name(s) appear on your stock
certificate. When signing as
attorney-in-fact, executor,
administrator, trustee or guardian,
please add your title as such, and if
signer is a corporation, please sign
with full corporate name by a duly
authorized officer or officers and affix
the corporate seal. Where stock is
issued in the name of two (2) or more
persons, all such persons should sign.
Date: , 1999
----------------------------
---------------------------------------
Signature of Shareholder
---------------------------------------
Signature of Shareholder
Votes must be indicated
(x) in Black or Blue ink. / /
Please date and sign your Proxy on this side and return it promptly.
BRANDYWINE REALTY TRUST
Proxy Solicited On Behalf Of The Board of Trustees
The undersigned shareholder of Brandywine Realty Trust, a Maryland real
estate investment trust (the "Company"), hereby appoints Anthony A. Nichols, Sr.
and Gerard H. Sweeney, and each of them acting individually, as proxies for the
undersigned, with full power of substitution in each of them, to attend the
Annual Meeting of the Shareholders of Brandywine Realty Trust to be held at
11:00 a.m. on May 18, 1999, and at any postponement or adjournment thereof, to
cast on behalf of the undersigned all votes that the undersigned is entitled to
vote at such meeting and otherwise to represent the undersigned at the meeting
with all powers possessed by the undersigned if personally present at the
meeting.
This Proxy is solicited on behalf of the Board of Trustees. When properly
executed, this Proxy will be voted in the manner directed by the undersigned
shereholder. If this Proxy is executed but no direction is made, this Proxy will
be voted "FOR" the election of the nominees for Trustee listed on the reverse
side hereof. This Proxy also delegates discretionary authority with respect to
any other business which may properly come before the meeting or any
postponement or adjournment thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and of the accompanying Proxy Statement and revokes any Proxy
previously submitted with respect to the meeting.
BRANDYWINE REALTY TRUST
P.O. BOX 11354
NEW YORK, N.Y. 10203-0354
