SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant ( )
Filed by a Party other than the Registrant ( x )
Check the appropriate box:
( ) Preliminary Proxy Statement
( x ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to section240.11(c) or
section240.14a-12
BANYAN STRATEGIC REALTY TRUST
(Name of Registrant as Specified in its Charter)
ROGER L. BAKER
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
( x ) $125 per Exchange Act Rules 0-11(c)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange
Act Rule 141-6(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:
Shares of Beneficial Interest
2) Aggregate number of securities to which transaction applies:
10,471,102
3) Per unit price or other underlying value of transaction computed
to Exchange Act Rule 0-11: N/A
4) Proposed maximum aggregate value of transaction: N/A
( ) 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:
.................................................................
FORM OF PROXY
BANYAN STRATEGIC REALTY TRUST
150 SOUTH WACKER DRIVE
SUITE 2900
CHICAGO, ILLINOIS 60606
This Proxy is solicited on behalf of the Board of Trustees
The undersigned hereby appoints Leonard G. Levine and Robert G. Higgins,
and each of them, as Proxies, with the power to appoint their substitutes,
and hereby authorizes them to represent and to vote, as designated below,
all the Shares of Beneficial Interest of Banyan Strategic Realty Trust (the
"Trust") held of record by the undersigned on May 10, 1996, at the Annual
Meeting of Shareholders when convened on June 27, 1996, or any adjournment
thereof.
Continued on the reverse side.
This proxy, when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR Proposals 1 and 2.
1. PROPOSAL to elect three Class A Trustees to hold office until the next
Annual Meeting of Shareholders, or otherwise as provided in the
Trust's Amended and Restated Declaration of Trust. (check one box):
FOR AGAINST
WALTER E. AUCH, SR. ( ) ( )
NORMAN M. GOLD ( ) ( )
MARVIN A. SOTOLOFF ( ) ( )
For: except vote withheld from the following nominee(s):
_________________________________________________________
2. PROPOSAL to concur in the selection of
Ernst & Young LLP as the Trust's
independent auditor for the fiscal year
ending December 31, 1995. (check one
box):
FOR AGAINST ABSTAIN
( ) ( ) ( )
3. In their discretion, the Proxies are authorized to transact any
other business as may properly come before the Meeting, or any
adjournment thereof.
DATED:_________________________, 1996
_____________________________________
Signature
_____________________________________
Signature if held jointly
Sign exactly as name appears at left. If
joint tenant, both should sign. If
attorney, executor, administrator,
trustee or guardian, give full title as
such. If a corporation, please sign
corporate name by President or
authorized officer. If partnership, sign
in full partnership name by authorized
person.
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN THIS CARD USING THE ENCLOSED
ENVELOPE. PLEASE CONTACT THE TRUST'S PROXY SOLICITOR, CHEMICAL BANK AT
(800) 667-6589, WITH ANY QUESTIONS REGARDING THE ABOVE.
BANYAN STRATEGIC REALTY TRUST
150 SOUTH WACKER DRIVE, SUITE 2900
CHICAGO, ILLINOIS 60606
312-683-3671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Banyan Strategic Realty Trust:
Notice is hereby given that the annual meeting of shareholders (the
"Meeting" or the "Annual Meeting") of Banyan Strategic Realty Trust, a
Massachusetts business trust (the "Trust" or the "Fund"), will be convened
at The Metropolitan Club, 233 S. Wacker Drive, Chicago, Illinois, on
June 27, 1996, at 10:00 a.m. Central Time (the "Meeting Date"). All
shareholders of the Trust are entitled to attend the Meeting. The Annual
Meeting of Shareholders will be held for the following purposes:
(1) To elect three Class A trustees to hold office until the next
Annual Meeting of Shareholders or otherwise as provided in the
Trust's Amended and Restated Declaration of Trust (the
"Declaration");
(2) To concur in the selection of Ernst & Young LLP as the Trust's
independent auditor for the fiscal year ending December 31,
1996;
(3) To transact any other business as may properly come before the
Meeting, or any adjournment thereof.
Only shareholders of record at the close of business on May 10, 1996
are entitled to receive notice of and to vote at the Meeting or any
adjournment thereof (the "Eligible Holders"). A complete list of Eligible
Holders will be available for inspection at the Trust's offices for at least
10 days prior to the Meeting.
A PROXY STATEMENT AND FORM OF PROXY ARE ENCLOSED. WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT
THAT YOU PROMPTLY FILL IN, SIGN, DATE AND MAIL THE PROXY IN THE
ENCLOSED ENVELOPE SO THAT YOUR SHARES MAY BE VOTED FOR YOU.
By order of the Board of
Trustees:
Robert G. Higgins
Secretary
The Trust's 1995 Annual Report is enclosed with this notice.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS OF
BANYAN STRATEGIC REALTY TRUST
JUNE 27, 1996
This proxy statement is furnished to the holders of shares ("the
Shareholders") of beneficial interest, no par value (the "Shares"), of
Banyan Strategic Realty Trust, a Massachusetts business trust (the "Trust"
or the "Fund"), in connection with the solicitation of proxies by the
Trust's board of trustees (the "Trustees" or the "Board") for use at the
annual meeting of Shareholders. The Trust's Amended and Restated
Declaration of Trust (the "Declaration") requires the Trustees to call and
hold an annual meeting of Shareholders not less than thirty days after
delivery of the Trust's Annual Report and within six months after the end of
each fiscal year. The Trust's 1995 annual meeting of Shareholders will be
convened on June 27, 1996, at approximately 10:00 a.m. Central Time, and any
adjournment thereof (the "Annual Meeting" or the "Meeting"). Copies of this
Proxy Statement, the attached notice, and the enclosed form of proxy were
first sent or given to Shareholders on or about May 17, 1996. Shareholders
who wish to attend the Annual Meeting should contact the Trust at 312-683-
3671 so that arrangements can be made.
The Trust will bear all costs in connection with the solicitation of
proxies, including the cost of preparing, printing and mailing this Proxy
Statement. In addition to the use of the mails, proxies may be solicited by
the Trustees, the Trust's officers or by employees of Banyan Management
Corp., which provides administrative services to the Trust. None of these
individuals will be compensated for proxy solicitation services, but they
may be reimbursed for out-of-pocket expenses in connection with the
solicitation. For further information regarding Banyan Management Corp.,
see "Certain Relationships and Related Transactions." Arrangements will
also be made with brokerage houses, banks and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial
owners of the Shares held of record by those persons, and the Trust may
reimburse these custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses incurred in connection therewith. Further, the Trust
has retained the services of a proxy solicitor to assist in the solicitation
of proxies for the Annual Meeting at a fee payable by the Trust of $4,750
plus out-of-pocket expenses.
Shares represented by properly executed proxies in the accompanying
form received by the Board prior to the Annual Meeting will be voted at the
Annual Meeting. Shares not represented by properly executed proxies will
not be voted. If a Shareholder specifies a choice with respect to any
matter to be acted upon, the Shares represented by that proxy will be voted
as specified. If the Shareholder does not specify a choice, in an otherwise
properly executed proxy, with respect to any proposal referred to therein,
the Shares represented by that proxy will be voted with respect to that
proposal in accordance with the recommendations of the Board described
herein. A Shareholder who signs and returns a proxy in the accompanying
form may revoke it by: (i) giving written notice of revocation to the Trust
before the proxy is voted at the Annual Meeting; (ii) executing and
delivering a later-dated proxy prior to or at the Annual Meeting; or (iii)
attending the Annual Meeting and voting the Shares in person.
The close of business on May 10, 1995 has been fixed as the date for
determining those Shareholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). On the Record Date, the Trust had
10,477,138 shares outstanding, each of which entitles the holder thereof to
one vote at the Annual Meeting. Only Shareholders of record as of the
Record Date will be entitled to vote at the Annual Meeting. The presence of
a majority of the outstanding shares of beneficial interest, represented in
person or by proxy at the Annual Meeting, will constitute a quorum. The
three nominees receiving the highest vote totals will be elected as Trustees
of the Trust. Accordingly, abstentions and broker non-votes will not affect
the outcome of the election. All other matters to be voted on will be
decided by the affirmative vote of a majority of the Shares present or
represented at the meeting and entitled to vote. On any such matter, an
abstention will have the same effect as a negative vote but, because Shares
held by brokers will not be considered entitled to vote on matters as to
which the brokers withhold authority, a broker non-vote will have no effect
on the vote.
The mailing address of the principal executive offices of the Trust is
150 South Wacker Drive, Suite 2900, Chicago, Illinois 60606.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following entities are the only entities known to the Trust to be
the beneficial owners of more than five percent (5%) of the outstanding
shares as of May 1, 1996:
<TABLE>
<CAPTION>
Name and Address of Amount of Beneficial
Title of Class Beneficial Owner Ownership Percent of Class
<S> <C> <C> <C>
Shares of Beneficial Fidelity Management 1,150,550 10.98%
Interest and Research Corp.
82 Devonshire Street
Boston, MA 02109
Shares of Beneficial Magten Asset 1,232,000 11.76%
Interest Management Corp.
35 East 21st Street
New York, NY 10010
</TABLE>
The following table sets forth the number of Shares owned by all
Trustees and Officers owning Shares, and all Trustees and Officers as a
group as of May 1, 1996:
AMOUNT & NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
Leonard G. Levine, President 15,036 shares Less than 1%
Neil D. Hansen, First Vice
President 4,373 shares Less than 1%
Jay E. Schmidt, Vice 2,000 shares Less than 1%
President
All Trustees and Officers of
the Trust, as a group (eight 21,409 shares Less than 1%
persons)
The Trust is not aware of any arrangements, the operation of which may
at a subsequent date result in a change of control of the Trust.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Trust's officers and trustees, and persons who own more than
ten percent of a registered class of the Trust's equity securities, to file
initial statements of beneficial ownership (Form 3), and statements of
changes in beneficial ownership (Forms 4 or 5), of beneficial interest and
other equity securities of the Trust with the Securities and Exchange
Commission (the "SEC") and the National Association of Securities Dealers,
Inc. (the "NASD"). The SEC requires officers, trustees and greater than
ten percent shareholders to furnish the Trust with copies of all these forms
filed with the SEC or the NASD.
To the Trust's knowledge, based solely on its review of the copies of
these forms received by it, or written representations from certain
reporting persons that no additional forms were required for those persons,
the Trust believes that all filing requirements applicable to its officers,
trustees, and greater than ten percent beneficial owners were complied with
during 1995.
MATTERS TO BE CONSIDERED BY SHAREHOLDERS
1. ELECTION OF TRUSTEES
Three individuals will be elected at the Annual Meeting to serve as
Class A Trustees of the Trust until the next annual meeting of Shareholders
or otherwise as provided in the Declaration. Unless instructions to the
contrary are given, the persons named as proxy voters in the accompanying
proxy, or their substitutes, will vote for the following nominees for Class
A Trustees with respect to all proxies received by the Trust. If any
nominee should become unavailable for any reason, the votes will be cast for
a substitute nominee designated by the Board. The Trustees have no reason
to believe that the nominees named will be unable to serve if elected.
The nominees for Class A Trustee are as follows:
PRINCIPAL OCCUPATION(S) DURING TRUSTEE
NAME AGE PAST FIVE YEARS SINCE
Walter E. Auch, Sr. 74 Prior to retiring, Mr. Auch was 1986
the Chairman and Chief Executive
Officer of the Chicago Board of
Options Exchange. Prior to that
time, Mr. Auch was Executive Vice
President, Director and a member
of the executive committee of
PaineWebber. Mr. Auch is a
Director of Pimco L.P., Geotek
Industries, Smith Barney Concert
Series Funds, Smith Barney Trak
Fund, Nicholas Applegate Funds and
Fort Dearborn Fund and a Trustee
of Hillsdale College and the
Arizona Heart Institute. Mr. Auch
is also a Director of Banyan
Strategic Land Fund II, Banyan
Mortgage Investment Fund and
Banyan Management Corp.
Norman M. Gold 65 Senior Partner in the law firm of 1986
Altheimer & Gray; Mr. Gold has
practiced law for over 40 years,
specializing in tax, corporate and
real estate law. Mr. Gold is a
Trustee of New Plan Realty Trust
and Banyan Short Term Income
Trust; Director of Banyan
Management Corp.; Certified Public
Accountant; and member of Chicago
and American Bar Associations.
Marvin A. Sotoloff 52 Regional Vice President of 1986
Premisys Marketing Services, Inc.,
a division of Premisys Real Estate
Services, Inc., a real estate
services firm involved in the
leasing and management of office,
retail and industrial properties,
Mr. Sotoloff served as the
Executive Vice President of The
Palmer Group, Ltd. from 1979 to
1993. A licensed real estate
broker, Mr. Sotoloff is a Trustee
of Banyan Short Term Income Trust;
Director of Banyan Management
Corp.; He is also an attorney and
a member of the Illinois and
Pennsylvania Bar Associations.
The Board is required to meet at least four times per year, either in
person or by telephonic conference. The Board met nine times in 1995,
including two times as the Audit Committee. The Trustees did not establish
any nominating, compensation or other committees or other groups performing
similar functions during 1995, other than the Audit Committee which is
comprised of all of the Trustees.
RECOMMENDATION OF THE BOARD: The Board hereby recommends and nominates
Messrs. Auch, Gold and Sotoloff for election as Class A Trustees of the
Trust by the Shareholders at the Annual Meeting to serve until the next
annual meeting of Shareholders or as otherwise provided in the Declaration.
The three nominees receiving the highest vote total will be elected as
Trustees of the Trust.
2. SELECTION OF INDEPENDENT AUDITOR
The Trust's financial statements, including those for the fiscal year
ended December 31, 1995, are included in the Annual Report furnished to all
Shareholders. The year-end statements have been audited by the independent
firm of Ernst & Young LLP which has served as the Fund's independent auditor
since the fiscal year ended December 31, 1989. The total fees paid or
accrued to Ernst & Young LLP in connection with the 1995 audit is
approximately $75,000. The Board believes that Ernst & Young LLP is
knowledgeable about the Trust's operations and accounting practices and is
well qualified to act in the capacity of independent auditor. Therefore,
the Board has selected Ernst & Young LLP as the Trust's independent auditor
to examine its financial statements for the fiscal year ended December 31,
1996. Although the selection of an auditor does not require a Shareholder
vote, the Board believes it is desirable to obtain the concurrence of the
Shareholders to this selection. Due to the difficulty and expense involved
in retaining another independent firm on short notice, the Board does not
contemplate appointing another firm to act as the Trust's independent
auditor for fiscal year 1996 if the Shareholders do not concur in the
appointment of Ernst & Young LLP. Instead, the Board will consider the vote
as advice in making their selection of an independent auditor for the
following year.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD: That the Shareholders concur in the
following resolution which will be presented for a vote of the Shareholders
at the Annual Meeting:
RESOLVED, that the Shareholders concur in the appointment by the
Board of Ernst & Young LLP to serve as the Trust's independent auditor for
the fiscal year ended December 31, 1996.
The affirmative vote of a majority of the votes cast by Shareholders
present in person or by proxy and eligible to vote at the Annual Meeting, a
quorum being present, is required to adopt the foregoing resolution.
EXECUTIVE OFFICERS
The following table sets forth information with respect to the Trust's
executive officers. Each officer is elected by the Trustees and serves
until his successor is elected and qualified or until his death, resignation
or removal by the Trustees:
OFFICE & YEAR
OTHER PRINCIPAL OCCUPATION(S) DURING FIRST ELECTED
NAME AGE PAST FIVE YEARS
Leonard G. Levine 49 Mr. Levine has been President of President,
the Trust since 1990. He also 1990
serves as President of Banyan
Mortgage Investment Fund, Banyan
Short Term Income Trust and Banyan
Strategic Land Fund II
(collectively, with the Trust, these
entities are called the "Banyan
Funds"). Mr. Levine is also a
Director of Banyan Management Corp.
Neil D. Hansen 49 Mr. Hansen has been First Vice First Vice
President of the Trust since 1991. President,
He also serves as First Vice 1991
President of each of the other
Banyan Funds and Banyan Management
Corp. Mr. Hansen is also a
certified public accountant.
Robert G. Higgins 44 From 1990 to 1992, Mr. Higgins was Vice
contract partner at the law firm of President and
Chapman and Cutler. He is admitted General
to the bar in the States of Counsel,
Illinois, Minnesota and Texas. Mr. 1992;
Higgins also serves as Vice Secretary,
President, General Counsel and 1995
Secretary of each of the other
Banyan Funds and Banyan Management
Corp.
Joel L. Teglia 34 From 1991 to 1994, Mr. Teglia was Vice
the Controller for Banyan President and
Management Corp. Mr. Teglia also Chief
serves as Vice President and Chief Financial
Financial Officer of each of the Officer, 1994
Banyan Funds and Banyan Management
Corp. He is a certified public
accountant.
Jay E. Schmidt 44 From 1992 to 1995 Mr. Schmidt served Vice
as Vice President of Acquisitions President-
for Banyan Management Corp. He was Aquisitions,
appointed Vice President of the 1995
Trust in 1995. Prior to 1992, Mr.
Schmidt was an independent real
estate consultant and broker. He is
also an attorney and is admitted to
the bar in the State of Wisconsin
and is a licensed real estate
broker.
COMPENSATION OF TRUSTEES AND EXECUTIVE OFFICERS
A. TRUSTEE COMPENSATION
The Trustees are paid an annual fee of $15,000, payable quarterly,
plus $875 for each Board meeting, including meetings of the audit committee,
attended in person and $250 an hour for each Board meeting, including
meetings of the audit committee, attended via telephonic conference call.
In addition, each Trustee is reimbursed for out-of-pocket expenses incurred
in attending meetings of the Board.
B. EXECUTIVE COMPENSATION
Compensation paid to executive officers of the Trust for the years
ended December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Year Salary Bonus(2) sation Award(s) SARs (#) Payouts sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonard G. Levine 1995 $184,812 $111,739 n/a 24,899(2) n/a n/a n/a
President and Chief 1994 $179,900 n/a n/a n/a n/a n/a n/a
Executive Officer(1)
1993 $175,00 n/a n/a n/a n/a n/a n/a
Jay E. Schmidt(3)
Vice President,
Acquisitions
1995 $148,136 $27,000 n/a n/a n/a n/a n/a
1994 n/a n/a n/a n/a n/a n/a n/a
1993 n/a n/a n/a n/a n/a n/a n/a
<FN>
(1) Compensation for the all other executives, with the exception of Mr.
Schmidt, of the Trust for 1995, 1994 and 1993 was less than $100,000
per individual.
(2) See incentive compensation program disclosure below.
(3) Mr. Schmidt's 1995 bonus was discretionary and based upon job
performance pursuant to an annual review by Mr. Levine and the Board of
Trustees. Mr. Schmidt was not awarded any other compensation by the Trust
or Banyan Management Corp.
</TABLE>
Mr. Levine serves as Chief Executive Officer of the Trust pursuant to
an employment agreement (the "Agreement") entered into with the Trust by Mr.
Levine on January 1, 1990 and amended on October 1, 1992. The Agreement
expires on December 31, 1997. Under the contract, Mr. Levine is paid a
salary equal to $184,812 per year. His base salary is adjusted on January 1
of each year based on increases in the "consumer price index."
Mr. Levine is eligible to receive compensation under an incentive
program included in his contract. Effective January 1,1993, Mr. Levine earns
incentive compensation based on the recovery on foreclosed real estate
assets owned by the Trust as of December 31, 1992 and on the performance of
the Trust's reinvestment activities. In particular, Mr. Levine will earn
incentive compensation on foreclosed real estate assets equal to : (i) 1% of
the amount of the Trust's secured claims which are converted to cash, and
(ii) 3% of the Trust's unsecured claims which are converted to cash. Mr.
Levine is paid incentive compensation earned on the Trust's foreclosed
activities as soon as practical after the end of each calendar year without
regard to whether he is employed by the Trust on the date of payment. Mr.
Levine's annual incentive compensation earnings from reinvestment activities
are based on reinvestment returns, adjusted for unrealized losses, to the
Trust in excess of a set index, based on the annual yield of five-year
Treasury Notes plus 100 basis points ("investment hurdle") as of January 1
of each year, according to the following: (i) $500 for each basis point by
which the Trust's rate of return from reinvestment activities exceeds the
investment hurdle up to 500 basis points; and (ii) $250 per each basis point
by which the rate of return from reinvestment activities exceeds the
investment hurdle plus 500 basis points. The investment hurdle for the year
ended December 31, 1995 was 8.88%.
Incentive compensation earned on reinvestment activities is paid
80% in cash and 20% in shares ("Award Shares") of the Trust on March 15 of
the year following the period for which the incentive was earned. The
Award Shares are subject to forfeiture and certificates representing the
Award Shares are held by the Trust pending satisfaction of the vesting
requirements, for the benefit of Mr. Levine until the earlier of: (i)
December 31, 1997; (ii) the termination of Mr. Levine's employment by the
Trust without just cause; or (iii) the permanent disability or death of Mr.
Levine. For the year ended December 31, 1995, Mr. Levine's incentive
compensation earned on recovery of foreclosed activities and returns on
reinvestment activities was $36,185 and $38,500, respectively. The $36,185
in incentive compensation earned by Mr. Levine during 1995 on recovery of
foreclosed assets is broken down as follows: $19,315 which is equal to 1% of
the amount of the Trust's secured claims converted to cash, and $16,870
equal to 3% of the Trust's unsecured claims converted to cash. In 1996,
Mr. Levine was paid $66,985 representing 80% of his 1995 incentive in cash
and 1,833 Award Shares valued at $4.20 per share or $7,700 representing 20%
in Award Shares of the Trust. For the year ended December 31, 1994, Mr.
Levine's incentive compensation earned on recovery of foreclosed activities
and return on reinvestment activities was $12,139 and $124,500,
respectively. Payment of Mr. Levine's 1994 incentive compensation
occurred during the second quarter of 1995 with the payment of $111,740,
representing 80% of his incentive, in cash and 6,036 Award Shares valued at
$4.125 per share or $24,899 representing 20% in Award Shares of the Trust.
The total Award Shares held by the Trust on behalf of Mr. Levine are 7,869.
For the year ended December 31, 1993, Mr. Levine did not earn any incentive
compensation from foreclosed activities or reinvestment activities.
Either Mr. Levine or the Trust can terminate the employment agreement
at any time upon 90 days written notice. If the Trust terminates the
agreement for cause, or Mr. Levine voluntarily terminates, the Trust will
pay all salary and incentive compensation earned through the date of
termination. In the event of Mr. Levine's death or permanent disability, he
is entitled to all incentive compensation earned through the date of his
disability or death plus any disability or life insurance proceeds in the
amount of two times his annual salary which is consistent with standard
insurance benefits of all Banyan Management Corp. personnel, but he is not
entitled to any other severance payments. If his employment is terminated
without cause following a change of control (as defined in the employment
agreement) the Trust is obligated to pay Mr. Levine's salary during the
remainder of the employment period and must pay him all incentive
compensation which he would have earned if all the Trust's assets had been
converted into cash and all proceeds were distributed. If Mr. Levine is
terminated without cause but no change of control has occurred, he will
receive a severance payment equal to one year's salary plus all incentive
compensation earned through the date of his termination (including incentive
compensation based upon assets converted into cash within one year following
his termination of the Trust had he received an "expression of interest"
prior to Mr. Levine's termination), plus an amount equal to the full cost of
continuing Mr. Levine's health benefits for one year.
BOARD OF TRUSTEES REPORT ON EXECUTIVE COMPENSATION
This report was prepared by the members of the Trust's board of
trustees (the "Board"), all of whom are independent. The Board does not
have a separate compensation committee. Instead, the Board as a whole
establishes and administers compensation policies for the Trust's principal
executive officers.
The Board is guided by the following principles in establishing
executive compensation: (1) attracting and retaining outstanding executive
officers familiar with the Trust's business; and (2) ensuring that a
substantial portion of executive compensation is variable and tied to
quantifiable measures of the Trust's performance. These principles are
discussed in more detail below.
Chief Executive Compensation
In early 1990, the Board suspended the Trust's advisory relationship
with VMS Realty Partners which was subsequently terminated and hired Leonard
G. Levine to serve as the Trust's president and chief executive officer.
Since the focal point of the Trust's business plan at that time was to gain
control of the assets securing mortgage loans made by the Trust which were
in default, a substantial portion of Mr. Levine's compensation was tied to
the Trust's recovery of both secured and unsecured claims.
In mid-1992, the Board authorized investment of the cash recovered on
the secured and unsecured claims (the "Investible Cash") and subsequently
amended Mr. Levine's contract effective as of October 1, 1992. Under this
amended contract, which expires December 31, 1997, Mr. Levine receives a
base salary of $184,812 per year plus incentive compensation tied in part to
recoveries on the remaining secured and unsecured claims converted into cash
on or after January 1, 1993 and in part to the returns earned on the
Investible Cash which is invested in new real estate assets. The base
salary is subject to annual adjustments tied to increases in the Consumer
Price Index.
In establishing Mr. Levine's compensation package, the Board reviewed
industry compensation studies compiled by independent consultants and
considered Mr. Levine's experience and knowledge of the real estate market
in general and the Trust asset base in particular. In an effort to (i)
create a compensation package which would be attractive to a highly
talented executive; (ii) encourage the liquification of the assets of the
Trust which had been obtained through foreclosure and workout proceedings;
and (iii) create an inducement to improve the Trust's overall performance,
the Board designed a program under which Mr. Levine earns incentive
compensation based on recoveries of secured and unsecured claims equal to:
(i) 1% of the amount of the secured claims existing as of January 1, 1990,
converted to cash on or after January 1, 1993 and prior to the end of Mr.
Levine's employment; and (ii) 3% of the unsecured claims existing as of
January 1, 1990, converted to cash on or after January 1, 1993 and prior to
the end of Mr. Levine's employment. Mr. Levine also earns incentive
compensation based on the returns achieved, over a "hurdle rate," on the
Investible Cash. The Board has set a "hurdle" rate for each calendar year
equal to the yield on a five-year Treasury Note as of January 1 of each
calendar year plus 100 basis points (the "Index"). Mr. Levine earns
incentive compensation equal to: (i) $500 for each basis point by which the
Trust's rate of return on the Investible Cash exceeds the Index up to the
Index plus 500 basis points; and (ii) $250 for each basis point by which the
rate of return on the Investible Cash exceeds the Index plus 500 basis
points. None of Mr. Levine's incentive compensation is tied to the Trust's
stock performance since the Board believes that the Trust's share price is
not the best measure of management performance. Instead, the Board has tied
Mr. Levine's incentive compensation to performance of the Trust's portfolio,
which, in the Board's view, is a more accurate barometer of the strength of
the Trust's management. The hurdle rate for the year ended December 31,
1995 was 8.88%.
Twenty percent of the incentive compensation Mr. Levine earns from the
return on the Investible Cash is paid in the form of shares of common stock
in the Trust (the "Award Shares") which are subject to forfeiture under
certain circumstances. The incentive compensation earned in respect to the
Trust's reinvestment activities is calculated on a cumulative basis from
January 1, 1993 through the earlier of December 31, 1997 or Mr. Levine's
termination. If such cumulative incentive compensation for reinvestment
activities results in an amount which is less than the annual incentive
compensation from reinvestment activities previously paid, all or a portion
of the Award Shares previously issued shall be forfeited and returned to the
Trust in order to reconcile the overpayment.
In respect of fringe benefits, the Board has elected to grant to Mr.
Levine such fringe benefits as are available to other employees of the Trust
and Banyan Management Corp. These include life insurance in an amount not
less than twice his base salary. If Mr. Levine becomes disabled during the
employment period, he is to be paid 100% of his salary for six months
following his disability. He is also entitled to any other benefits which
the Trust or Banyan Management Corp. may provide for their other salaried
employees. This package of fringe benefits is, in the Board's view, in
keeping with industry standards.
Other Executive Compensation
The Trust does not have any other principal executive officers who
earn base salaries and bonus in excess of $100,000, other than Jay E.
Schmidt, as described above under Executive Compensation. The Board has
not established any long-term incentive plans for Mr. Schmidt or any other
person. Instead, Mr. Levine makes recommendations to the Board regarding
each executive officer's base salary and bonus after considering each
executive's job function and performance. With respect to Mr. Schmidt, his
salary and bonus are adjusted annually based upon (i) the performance of the
Trust's reinvestment portfolio; (ii) a subjective evaluation of Mr.
Schmidt's performance in acquiring appropriate properties for the Trust's
portfolio at the best possible price; and (iii) his overall contribution to
the success of the Trust.
The Board believes its executive compensation policies enable the
Trust to attract, motivate and retain senior management by providing a
competitive total compensation opportunity based upon performance.
Competitive based salaries that reflect the individual's level of
responsibility and annual, variable performance-based cash incentive awards
are important elements of the Trust's cash compensation philosophy. The
Board believes that the program strikes an appropriate balance between short
and long-term performance objectives.
BOARD OF TRUSTEES,
WALTER E. AUCH, SR.
NORMAN M. GOLD
MARVIN A. SOTOLOFF
PERFORMANCE GRAPH
The graph below compares the cumulative total Shareholder return on the
Shares of the Trust for the last five fiscal years with the cumulative total
return on the Standard & Poor's 500 Index and the National Association of
Real Estate Investment Trusts, Inc. ("NAREIT") Equity REIT Total Return
Index for all equity REITs over the same period (assuming the investment of
$100 in the Trust's Shares, the S&P 500 Total Return Index and the NAREIT
Equity REIT Total Return Index on December 31, 1990, and the reinvestment of
all dividends). In the performance graph provided for the Stockholder Proxy
Statement for the year ended December 31, 1994, the Trust utilized the
NAREIT Equity Index for comparison to industry or peer performance. Pursuant
to NAREIT's 1995 inaugural compilation of a Equity REIT Total Return
Index, which excludes REITs operating Health Care Facilities, management of
the Trust has elected to use the NAREIT Equity REIT Total Return Index,
excluding Health Care REITs, for comparison to industry or peer performance,
and believes that it provides a more meaningful comparison in assessing the
Trust's performance for 1995 based on property type.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE TRUST, THE S&P 500 TOTAL RETURN INDEX AND
THE NAREIT EQUITY REIT TOTAL RETURN INDEX
<TABLE>
<CAPTION>
YEAR-END DATA 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
BSRT 100.00 135.39 129.27 162.32 177.39 200.67
S&P 500 INDEX 100.00 130.55 140.56 154.60 156.63 215.25
NAREIT EQUITY 100.00 129.42 156.16 185.37 190.91 218.04
INDEX
(WITHOUT
HEALTH CARE)
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Administrative costs, primarily salaries and general and
administrative expenses, are reimbursed by the Trust to Banyan Management
Corp. ("BMC"). BMC is owned by the Trust, Banyan Strategic Land Fund II,
Banyan Mortgage Investment Fund and Banyan Short Term Income Trust. Mr.
Levine is the president of BMC for which he receives no additional
compensation for these services. Messrs. Teglia, Hansen, Higgins and
Schmidt are employees of the Trust but are actually paid by BMC for these
services. The portion of their time which is allocable to the Trust is
included in the administrative costs for which BMC is reimbursed by the
Trust. The directors/trustees of all Banyan Funds serve as directors of
BMC but receive no additional compensation for these services. All costs
incurred on behalf of BMC for the Trust are allocable to the Trust and other
Banyan Funds to which BMC provides administrative services based on the
ratio of the actual number of hours spent by BMC personnel related to that
particular entity. The Trust's allocated share of costs for the years ended
December 31, 1995, 1994 and 1993, aggregated $1,443,434, $1,185,409 and
$783,922, respectively. As one of its administrative services, BMC serves
as the paying agent for general and administrative costs of the Trust. As
part of providing this payment service, BMC maintains a bank account on
behalf of the Trust. As of December 31, 1995, the Trust had a net payable
due to BMC of $176,527.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders must
be received by the Trust at its executive office in Chicago, Illinois, on or
prior to January 20, 1997 for inclusion in the Trust's proxy statement for
that meeting. Any Shareholder proposal must meet the requirements set forth
in the rules of the Securities and Exchange Commission relating to
Shareholder proposals.
OTHER MATTERS
As of the date of this Proxy Statement, no business other than that
discussed above is to be acted upon at the Meeting. If other matters
not known to the Board should, however, properly come before the Meeting,
the persons appointed by the signed proxy intend to vote it in accordance
with their best judgment.
Banyan Strategic Realty Trust
By the order of the Board of Trustees,
Leonard G. Levine
President
Chicago, Illinois
May 17, 1996
A COPY OF THE BANYAN STRATEGIC REALTY TRUST 1995 ANNUAL REPORT ON FORM
10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE SUPPLIED TO
SHAREHOLDERS WITHOUT CHARGE. REQUESTS FOR THE REPORT SHOULD BE DIRECTED TO:
BANYAN STRATEGIC REALTY TRUST
c/o Investor Relations Department
150 S. Wacker Drive, Suite 2900
Chicago, IL 60606
(312) 683-3671
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN OF PROXIES WILL SAVE THE
TRUST THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. PLEASE PROMPTLY MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE.
