<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BURNHAM PACIFIC PROPERTIES,INC.
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
610 West Ash Street
San Diego CA 92101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 4, 1995
TO THE SHAREHOLDERS OF BURNHAM PACIFIC PROPERTIES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Burnham
Pacific Properties, Inc. ("the Corporation") will be held at the Holiday Inn
at the Embarcadero, 1355 North Harbor Drive, San Diego, California 92101 on
Thursday, May 4, 1995 at 10:00 a.m. for the following purposes:
1. To elect six Directors for the ensuing year; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting. The Board of Directors has determined that shareholders of record at
the close of business on March 15, 1995 are entitled to notice of and to vote
at the Annual Meeting and any adjournments thereof.
March 20, 1995 By order of the Board of Directors
BURNHAM PACIFIC PROPERTIES, INC.
Nina Galloway,
Secretary
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
YOU ARE URGED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
610 WEST ASH STREET
SAN DIEGO, CA 92101
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1995
This Proxy Statement is furnished to the shareholders of Burnham Pacific
Properties, Inc., a California corporation ("the Corporation"), in connection
with the solicitation of proxies by and on behalf of the Board of Directors
for the Annual Meeting of Shareholders of the Corporation to be held at the
Holiday Inn at the Embarcadero, 1355 North Harbor Drive, San Diego, California
92101, on Thursday, May 4, 1995 at 10:00 a.m. and any adjournment thereof
("the Annual Meeting"). The mailing date of this Proxy Statement is March 20,
1995.
As more fully described in this Proxy Statement, the shareholders will be
asked to consider and act upon the annual election of Directors and any other
matters that may properly come before the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 15, 1995 are
entitled to notice of and to vote at such meeting. On such date, there were
16,905,644 shares of the Corporation's no par value common stock issued and
outstanding. A majority of the shares entitled to vote represented in person
or by proxy constitutes a quorum for the meeting. If a quorum is not present,
the Annual Meeting may be adjourned to a later date at which a quorum is
present, and shares represented by proxies may be voted for such adjournment.
A shareholder may revoke a proxy given with respect to the meeting at any
time prior to the exercise thereof at the Annual Meeting by filing with the
Corporation a written revocation or a duly executed proxy bearing a later date
or, if such shareholder is present, indicating his or her intention to vote in
person at the Annual Meeting.
ELECTION OF DIRECTORS
The Corporation's Bylaws currently provide that the number of Directors
shall be not less than five, nor more than nine. The Board of Directors has
fixed the number of Directors to be elected at the Annual Meeting at six, each
to hold office for the term of one year or until his successor is elected.
As no nominations for other than the incumbent Directors were received prior
to December 31, 1994, as required by the Bylaws, voting will be non-
cumulative. Assuming the presence of a quorum, the six candidates receiving
the highest number of affirmative votes of the shares entitled to be voted
will be elected. Votes against any Director and votes withheld will have no
legal effect.
The Directors and principal officers of the Corporation have indicated that
they intend to vote all shares of the Corporation's common stock which they
are entitled to vote FOR the election of each of the incumbent Directors. On
March 15, 1995, the Directors and executive officers of the Corporation in the
aggregate had the right to vote 272,045 shares of the Corporation's common
stock, representing approximately 1.6% of the Corporation's outstanding common
stock as of such date.
<PAGE>
It is intended that the proxies received by management will be voted FOR the
election of the nominees for Directors described below, unless authority to do
so is withheld. It is not contemplated that any of the nominees will be unable
to serve as a Director, but if that contingency should occur prior to the
Annual Meeting, the holders of proxies reserve the right to substitute and
vote for another person of their choice. The following persons are nominees
for Directors:
MALIN BURNHAM, age 67, has been Chairman of the Board of Directors since
1986 and was appointed interim President and Chief Executive Officer on
October 24, 1994. For more than the past five years he has been a private
investor, and has served as Chairman of the Board of Directors of John Burnham
& Company and of First National Bank of San Diego. He is also a Trustee of
Stanford University.
PHILIP L. GILDRED, JR., age 58, has been a Director since 1986. For more
than the past five years he has been a Director and President of Gildred
Development Company and Secretary-Treasurer of Gildred Building Company. Both
of these companies are engaged in the ownership and development of Southern
California real estate. Mr. Gildred is also a Director of the San Diego
Automotive Museum, and a Director and Founding Chairman of the Sharp Hospital
Foundation.
ROBERT J. LAUER, age 54, has been a Director since 1992. For more than the
past five years he has been the principal shareholder in Lauer & Georgatos
A.P.C., a tax specialty accounting firm. Mr. Lauer is a licensed certified
public accountant and is admitted to the bar in the State of New York. Mr.
Lauer is also a Director of the Marine Corps Recruit Depot Museum Historical
Society.
THOMAS A. PAGE, age 61, has been a Director since 1992. For more than the
past five years he has been Chairman of the Board and Chief Executive Officer
of San Diego Gas & Electric Company. Mr. Page is also a Member of the
California Business Roundtable, a Member of the Board of Overseers of the
University of California at San Diego, and a Trustee of the La Jolla Cancer
Research Foundation. He is a certified public accountant and a professional
engineer.
HENRY RASMUSSEN, JR., age 78, has been a Director since 1986, and has been a
private investor since his retirement as an Executive Vice President of John
Burnham & Company in 1976. Mr. Rasmussen is a Director of the Lundy and
Crawford Real Estate Educational Foundation, Director Emeritus of the San
Diego Better Business Bureau, Director Emeritus of Villa View Community
Hospital, past President of the California and San Diego Mortgage Bankers
Association, and past President of the San Diego Chapter of Lambda Alpha, an
honorary land economics society.
RICHARD R. TARTRE, age 56, has been a Director since 1986. He is a Founder
and for more than the past five years has served as Managing Director of Eden
Financial Group, Inc., a marketer of insurance and investment products through
securities firms. Mr. Tartre is a licensed securities principal, and also
serves as Chairman of the Board of Bio Safety Systems, Inc., and as a Director
of Mission West Properties and Triton Group, Ltd.
2
<PAGE>
MANAGEMENT
The following persons are executive officers of the Corporation:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Malin Burnham President, Chief Executive Officer
Michael L. Rubin Executive Vice President, Chief Operating Officer
Kim S. Kundrak Senior Vice President, Finance (Principal Financial Officer)
</TABLE>
MR. BURNHAM, age 67, was appointed interim President and Chief Executive
Officer on October 24, 1994 following the resignation of Louis J. Garday.
MR. RUBIN, age 49, has been a Vice President of the Corporation since 1986
and became Executive Vice President in 1992 and Chief Operating officer in
1993. Through 1991, he was concurrently an officer of John Burnham & Company.
Mr. Rubin is a Certified Property Manager and a licensed real estate broker.
MR. KUNDRAK, age 38, has been an officer of the Corporation since 1988 and
became Senior Vice President, Finance in 1993. Through 1991, he was
concurrently an officer of Burnham Investment Group, Inc. ("BIGI"), which
provided management and advisory services to the Corporation until the
Corporation's acquisition of BIGI. Mr. Kundrak is a Certified Shopping Center
Manager, a Certified Property Manager and a licensed real estate salesperson.
BENEFICIAL OWNERSHIP
At March 15, 1995, the Corporation had 16,905,644 shares outstanding. The
following table sets forth the beneficial ownership of the Corporation's
common stock with respect to each person known by the Corporation to be the
beneficial owner of more than five percent of the Corporation's outstanding
common stock, as well as the ownership of shares by the Directors of the
Corporation on that date.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial Ownership of Class
---- ----------------------- --------
<S> <C> <C>
Public Employees Retire-
ment System of Ohio 1,325,000(1) 7.8%
Malin Burnham 162,552(2) *
Philip L. Gildred, Jr. 25,528(2) *
Robert J. Lauer 13,326(2) *
Thomas A. Page 20,740(2) *
Henry Rasmussen, Jr. 106,865(2) *
Richard R. Tartre 40,123(2) *
All Directors and execu-
tive officers of the
Corporation as a group (9) 442,185(2) 2.6%
</TABLE>
- --------
* less than 1%
(1) Public Employees Retirement System of Ohio, 277 East Town Street,
Columbus, Ohio 43215, has filed with the Securities and Exchange
Commission a Schedule 13G dated January 19, 1995 in which it reported that
the aggregate number of shares of the Corporation's common stock
beneficially owned by it is 1,325,000 shares (7.8% of shares outstanding
on December 31, 1994) and that it has sole voting power and sole
dispositive power with respect to 1,325,000 shares (7.8%).
3
<PAGE>
(2) Based upon information provided by the Directors and executive officers to
the Corporation, the Directors and executive officers have the direct
right to vote and dispose of all such shares, except for the following
number of shares included in the table which are not yet outstanding which
the following persons have the right presently to acquire under
outstanding options that are vested or will vest within 60 days: Messrs.
Burnham 41,500, Gildred 22,000, Lauer 10,500, Page 10,000, Rasmussen
19,750, Tartre 14,240, all Directors and executive officers as a group
170,140.
DIRECTORS' AND COMMITTEE MEETINGS
During 1994, the Board of Directors met 14 times. Each of the Directors
attended at least 75% of the total number of Board meetings and the total
number of meetings of Board committees on which he served. The Corporation has
standing Audit, Compensation, and Indenture/Stock Review Committees. There is
no separate Nominating Committee.
AUDIT COMMITTEE. The members of this committee are Messrs. Page (Chairman),
Rasmussen and Tartre. This committee advises and assists the Corporation's
principal financial officer in making periodic overall reviews of the
Corporation's internal controls and financial statements, meets periodically
with the Corporation's independent auditors to discuss their audit, appoints
the auditor for the Corporation's annual audit, and advises and provides
oversight of the Corporation's internal audit activities. The committee held
two meetings in 1994.
COMPENSATION COMMITTEE. The members of this committee are Messrs. Lauer
(Chairman), Gildred, Rasmussen and Tartre. This committee held five meetings
in 1994. See "Report of the Compensation Committee".
INDENTURE/STOCK REVIEW COMMITTEE. Members of this committee are Messrs.
Tartre (Chairman), Burnham, and Page. This committee has the duty to establish
the price of any securities sold by the Corporation in a public offering. The
committee did not meet in 1994.
COMPENSATION
DIRECTORS. During 1994, the Corporation paid Directors Gildred, Lauer, Page,
Rasmussen and Tartre an annual retainer fee of $12,000, plus $750 for each
board or committee meeting attended and $500 for each telephonic meeting. In
addition, these Directors received a grant of options to purchase 5,000 shares
when they were elected Directors on May 3, 1994. Mr. Burnham received a
retainer of $9,000 plus $750 for each of five meetings attended prior to the
date of his appointment as interim President and CEO, and received a grant of
options to purchase 5,000 shares when he was elected a Director on May 3,
1994. The former President, Louis J. Garday received no compensation for his
services as a Director in addition to his compensation as President and Chief
Executive Officer. This policy will be continued by the current President and
Chief Executive Officer, Malin Burnham. All Directors, except Mr. Burnham,
will continue to receive an annual retainer of $12,000, plus $750 for each
board or committee meeting attended and $500 for each telephonic meeting. In
addition, the Directors who chair the Audit Committee and the Compensation
Committee receive an additional $500 per quarter.
4
<PAGE>
OFFICERS. Compensation paid to the Chief Executive Officer and each other
officer whose total compensation for 1994 was $100,000 or more is summarized
in the following table. Also see "Report of the Compensation Committee."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
- ------------------------------------------------------------------- -----------------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Options(#) Compensation
- --------------------------- ---- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Malin Burnham........... 1994 $ 12,750(1) $ -0- $ -0-- 5,000 $ -0-
President/CEO
Louis J. Garday......... 1994 $208,333(2) $ -0- $302,890(5) -0- $3,780(4)
President/CEO........... 1993 $340,000 $120,000 (3) 15,000 4,362(4)
1992 $340,000 $ -0- (3) 10,000 1,454(4)
Michael L. Rubin........ 1994 $160,000 $ 25,000 (3) -0- $3,200(4)
Executive VP/COO........ 1993 $149,000 $ 30,000 (3) 10,000 2,981(4)
1992 $135,000 $ 35,000 (3) 7,000 902(4)
Kim S. Kundrak.......... 1994 $110,000 $ 25,000 (3) -0- $2,200(4)
Senior VP/Finance....... 1993 $ 99,000 $ 30,000 (3) 8,000 1,981(4)
1992 $ 85,000 $ 15,000 (3) 5,000 577(4)
</TABLE>
- --------
(1) Mr. Burnham was appointed interim President and Chief Executive Officer on
October 24, 1994 and has served in that capacity without compensation. The
amounts shown reflect compensation to Mr. Burnham during 1994 in his
capacity as a Non-employee Director. Mr. Burnham does not spend full time
in his capacity as President and anticipates resigning this position upon
the selection of a new President.
(2) Mr. Garday resigned as President and Chief Executive Officer on October
24, 1994.
(3) Other compensation paid to Messrs. Garday, Rubin and Kundrak is less than
10% of their salary and bonus.
(4) Corporation's matching contributions to employee's 401(k) plan.
(5) This amount represents severance benefits to Mr. Garday. See "Report of
the Compensation Committee--Resignation of Chief Executive Officer."
STOCK OPTIONS
The Corporation adopted a stock option plan in November 1987, which was
amended in 1992 and 1993. The plan is administered by the Compensation
Committee. The plan provides for options, which may be either "incentive stock
options" as defined by the Internal Revenue Code or "non-qualified options",
for up to 1,000,000 shares of common stock. Each grant must provide an
exercise price of at least 100% of the fair market value on the date the
options are granted as determined by the Committee. All options expire 10
years from the date of grant, although the Committee has authority to
establish an earlier expiration date at the time of granting any options.
5
<PAGE>
In addition to options granted at the discretion of the Committee, the plan
also provides annual grants of non-qualified options to purchase 5,000 shares
of common stock to each of the Non-employee Directors upon election or re-
election at each Annual Meeting. The per share option exercise price will be
equal to the average closing price on the New York Stock Exchange of the
Corporation's shares for the 10 trading days ending on the date of the
meeting. The exercise price of the options granted to the Non-employee
Directors elected at the 1994 Annual Meeting was $17.588 per share. The
Corporation expects to issue 5,000 options to each non-employee Director upon
election at the 1995 Annual Meeting.
OPTION GRANTS IN LAST FISCAL YEAR
No options were awarded to the officers in 1994. Options granted to the Non-
employee Directors of the Corporation during 1994 are summarized in the
following table.
<TABLE>
<CAPTION>
Individual Grants
---------------------- Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Granted to Exercise Price Appreciation
Employees or Base For Option Term
Options in Fiscal Price Per Expiration ----------------------
Name Granted(#) Year Share Date 5%(3) 10%(4)
---- ---------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Malin Burnham, 5,000(1) -- (2) $17.588 5/3/2004 $ 55,305 $ 140,154
Non-employee Director
prior to October 1994,
President & CEO there-
after
Philip L. Gildred, Jr., 5,000(1) -- (2) $17.588 5/3/2004 $ 55,305 $ 140,154
Non-employee Director
Robert J. Lauer, 5,000(1) -- (2) $17.588 5/3/2004 $ 55,305 $ 140,154
Non-employee Director
Thomas A. Page, 5,000(1) -- (2) $17.588 5/3/2004 $ 55,305 $ 140,154
Non-employee Director
Henry Rasmussen, Jr., 5,000(1) -- (2) $17.588 5/3/2004 $ 55,305 $ 140,154
Non-employee Director
Richard R. Tartre, 5,000(1) -- (2) $17.588 5/3/2004 $ 55,305 $ 140,154
Non-employee Director
</TABLE>
- --------
(1) Options are non-qualified stock options and are vested and fully
exercisable from the date of grant.
(2) The Corporation granted no options to employees.
(3) Assumes a 5% per annum cumulative increase in price for 10 years.
(4) Assumes a 10% per annum cumulative increase in price for 10 years.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUE
The following table sets forth information with respect to options exercised
during 1994 and unexercised options at the end of the year.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End(#) FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
---- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Michael L. Rubin -0- -0- 33,700/0 -0-/0
Executive VP/COO
Kim S. Kundrak -0- -0- 18,450/0 -0-/0
Senior VP/Finance
Malin Burnham -0- -0- 41,500/0 -0-/0
Non-employee Director
prior to October 1994,
Pres./CEO thereafter
Philip L. Gildred -0- -0- 22,000/0 -0-/0
Non-employee Director
Robert J. Lauer -0- -0- 10,500/0 -0-/0
Non-employee Director
Thomas A. Page -0- -0- 10,000/0 -0-/0
Non-employee Director
Henry Rasmussen, Jr. 2,250 3,331 19,750/0 -0-/0
Non-employee Director
Richard R. Tartre -0- -0- 14,240/0 -0-/0
Non-employee Director
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has the responsibility
to evaluate the performance of the Corporation's executives and to establish
standards by which the compensation of the executives will be determined.
EXECUTIVE COMPENSATION
Prior to 1992 the Corporation was managed by an independent Advisor, Burnham
Investment Group, Inc. ("BIGI"), a subsidiary of John Burnham & Company.
Effective January 1, 1992 the Corporation converted to a self advised form of
management and entered into direct employment relationships with the former
executives and support staff of the Advisor.
In connection with this conversion the Corporation entered into an
employment contract with Louis Garday as President and Chief Executive
Officer. This contract (the terms of which were disclosed in the proxy
statement for the Special Meeting of
7
<PAGE>
Shareholders of the Corporation held on January 27, 1992 that approved the
merger agreement with BIGI pursuant to which self administration was
implemented) was for a term extending through March 31, 1995. The contract
called for a base annual salary of $250,000 and deferred compensation of
$90,000 per annum, payable in January, 1995, provided Mr. Garday did not
voluntarily terminate his employment with the Corporation. The Board of
Directors also had the right to terminate the contract on 90 days notice at
any time upon payment of severance pay equal to 90 days base salary plus
accrued deferred compensation.
In connection with determining the amount of compensation payable to Mr.
Garday under the contract, the Corporation considered its understanding of
compensation packages offered to other executive officers of equity real
estate investment trusts that it believed had characteristics similar to that
of the Corporation, setting Mr. Garday's fixed compensation at a rate which it
believed to be at the low end of a possible range of compensation in view of
the fact that the Corporation was converting to a self advised form of
management at that time. The Subcommittee applied the same standard for
determining the annual compensation for executives other than Mr. Garday.
OPTIONS
Prior to 1992, the Corporation automatically granted to its employees
options that in the aggregate equaled 2-1/2% of all newly issued shares. The
shareholder approved agreement, pursuant to which the Corporation became self
administered in 1992, amended the Stock Option Plan to provide that future
option grants would be at the sole and exclusive discretion of the Board.
COMMITTEES
Prior to March, 1993 a subcommittee of the Board (the "Salary Committee")
determined the compensation of the executives of the Corporation and a
separate subcommittee (the "Option Committee") was responsible for the
granting of options to acquire stock of the Corporation. On March 2, 1993 the
Board of Directors formally combined the functions of the Salary Committee
with those of the Option Committee and renamed the combined committee the
Compensation Committee (the "Committee"), with all members of both former
committees becoming the initial members of the Compensation Committee. The
Committee identified as one of its primary responsibilities the periodic
reevaluation of compensation to be paid to the Chief Executive Officer, as
well as the compensation to be paid to certain other executives of the
Corporation. In addition the Committee determines when and under what
circumstances to grant to individual officers and employees of the Corporation
options to acquire additional shares of stock, which options shall be granted
at market prices prevailing at the time of the option grant.
STANDARDS FOR MEASURING PERFORMANCE
In 1993, the Committee established standards for measuring the performance
of the Chief Executive Officer of the Corporation. Those standards include the
success of the Corporation in (i) raising capital, giving due consideration to
conditions existing in the
8
<PAGE>
capital markets, (ii) reinvesting such capital in properties at rents which
will produce positive returns for the benefit of the Corporation and its
shareholders over both the short and long term, and (iii) assembling and
managing a portfolio that provides both (a) opportunities for long term growth
in per share distributions and value, and (b) downside protection to limit the
effect on the Corporation from either adverse market forces generally or the
financial difficulty of any particular tenant.
With respect to other officers of the Corporation, the standard for
determining compensation is the effective management of the Corporation's
properties and the achievement of individual performance goals assigned to
each executive by the Chief Executive Officer.
RESIGNATION OF CHIEF EXECUTIVE OFFICER
In October, 1994, Louis Garday resigned as Chief Executive Officer of the
Corporation. At the time of his resignation Mr. Garday was compensated under
the terms of the employment contract described above, which contract was due
to expire in March, 1995. Under the terms of that contract, Mr. Garday
received a base annual salary of $250,000, deferred compensation of $90,000
and in 1993 was awarded supplemental compensation in the amount of $120,000.
In addition, the Corporation had previously loaned Mr. Garday the sum of
$900,000 secured by 70,667 shares of the Corporation's common stock. In
connection with his resignation, the Committee negotiated a severance package
with Mr. Garday under the terms of which Mr. Garday (1) received his base
annual compensation through March, 31, 1995, (2) earned his deferred
compensation for calendar year 1994, (3) applied the full amount of his
deferred compensation, net of applicable withholding taxes, to the partial
satisfaction of his note payable to the company and, (4) had his note payable
restructured to eliminate the interest on said note from January, 1994 through
March, 1995, and to provide for a complete payment of this obligation to the
Corporation by March 31, 1996 at which time the 70,667 shares of common stock
pledged as collateral will be returned. In addition, the Corporation agreed to
continue certain fringe benefits through March, 1995 and transfer title of the
automobile used by Mr. Garday to him in January, 1995. The Corporation did not
award any supplemental compensation to Mr. Garday for 1994.
INTERIM CHIEF EXECUTIVE OFFICER
Effective upon the resignation of Mr. Garday, Malin Burnham, Chairman of the
Board of Directors, assumed the responsibilities of President and Chief
Executive Officer on an interim basis until such time as a permanent President
and Chief Executive Officer is identified and hired. Mr. Burnham has served as
Chairman of the Board of Directors since the inception of the Corporation. Mr.
Burnham has offered to serve as Chief Executive Officer without compensation.
The Committee has accepted that offer and accordingly, Mr. Burnham will not
receive base annual compensation or supplemental compensation for 1994. The
Committee reserves the right to award Mr. Burnham supplemental compensation at
some future date.
9
<PAGE>
EXECUTIVE COMPENSATION FOR THE YEAR
The base annual compensation and deferred compensation of Mr. Garday in his
capacity as former Chief Executive Officer was determined by reference to his
employment contract with the Corporation. It has been the practice of the
Corporation to evaluate the base annual salary of other executives of the
Corporation biannually after consultation with the Chief Executive Officer.
The base annual compensation of Vice Presidents Messrs. Rubin and Kundrak was
scheduled for reevaluation in May, 1995.
In late 1994, the Committee determined that the base annual compensation of
the Corporation's executives should be more closely related to the performance
of those executives measured on an annual rather than a biannual basis, and
further that the annual measurement date should coincide with the fiscal
reporting period of the Corporation. Accordingly, the Committee decided to
adopt the practice of evaluating the performance of the Corporation's
executives annually on the basis of a calendar year, commencing with the
calendar year 1994, with respect to base annual compensation for the calendar
year 1995.
In December 1994, the Committee met to consider an adjustment in the base
compensation of Messrs. Rubin and Kundrak and to determine whether
supplemental bonus compensation should be awarded to any of the Corporation's
executive officers. With respect to Mr. Rubin, the Committee recognized that
the number of properties under management has increased significantly since
the last evaluation of Mr. Rubin's performance in May, 1993. Further, the
Committee was aware that the leasing environment in southern California
continues to be very competitive and that maintaining high levels of occupancy
at market rents requires and will continue to require considerable time and
effort. In recognition of these factors, the Committee increased Mr. Rubin's
base compensation from $160,000 for 1994 to $175,000 for 1995. This level of
base compensation is commensurate with the responsibilities assigned to Mr.
Rubin and the Committee believes it is within the range of compensation paid
to persons holding similar positions in equity REITs having characteristics
similar to those of the Corporation.
With respect to Mr. Kundrak, the Committee took notice of the fact that the
investment and financial environment facing the REIT community in 1995 will
present unique challenges. Capital formation will be difficult as a result of
the significant increase in the number and size of equity REITs that have
entered the public market in recent years. Debt financing is and will be more
difficult as short term rates continue to escalate. The Corporation's
relationships with its investment bankers, lenders and shareholders will be
affected by this environment. In recognition of these factors, the Committee
decided to increase Mr. Kundrak's base compensation from $110,000 for 1994 to
$140,000 for 1995. This level of base compensation is commensurate with the
responsibilities assigned to Mr. Kundrak and is believed by the Committee to
be within the range of compensation paid to persons holding similar positions
in equity REITs having characteristics similar to those of the Corporation.
The Committee has heretofore not reviewed the base annual compensation or
supplemental compensation of its Chief Financial Officer. Mr. Kundrak assumed
the
10
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responsibilities of Chief Financial Officer upon the resignation of the former
Chief Financial Officer in 1993. The Committee has historically reviewed the
base and supplemental compensation of Mr. Kundrak in his capacity as Senior
Vice President and for the years 1993 and 1994 included in its consideration
his responsibilities as Chief Financial Officer. During 1993, the Corporation
hired Jeffrey R. Fisher as its Vice President, Finance. Mr. Kundrak continues
to function as Chief Financial Officer. The Committee determined that it was
appropriate to review the base annual and supplemental compensation of Mr.
Fisher. Since becoming the Corporation's Vice President, Finance, Mr. Fisher
has enthusiastically assumed responsibility for the accounting and reporting
functions of the Corporation and in addition has assumed various other
responsibilities assigned to him. The Committee increased Mr. Fisher's base
annual compensation from $77,500 for 1994 to $87,500 for 1995.
Supplemental or bonus compensation is awarded to executive officers of the
Corporation at the discretion of the Committee, which meets from time to time
to consider such awards. The Committee will continue the practice of
determining on an annual basis whether supplemental compensation should be
awarded to its executive officers.
The Committee decided to award supplemental compensation for 1994 to Messrs.
Rubin, Kundrak and Fisher. With respect to Mr. Rubin, the Committee measured
his performance primarily by reference to the occupancy levels in the
Corporation's properties as well as his acceptance of additional management
responsibilities following the resignation of Mr. Garday as Chief Executive
Officer. In prior years Mr. Rubin's performance had also been measured by his
participation in the acquisition of properties. Primarily as the result of the
economic environment prevailing during 1994, the Corporation did not make any
property acquisitions during the year. Mr. Rubin has responsibility for lease
negotiations and tenant relations. In his report to the Committee, Mr.
Burnham, in his capacity as interim Chief Executive Officer, indicated that
Mr. Rubin's performance had equaled or exceeded the standards established for
tenant occupancy for the year established by the former Chief Executive
Officer. The Corporation was able to maintain a 94% occupancy percentage in
its properties at year end, notwithstanding continuing stagnation of the
California economy and a difficult leasing environment. Based on the
evaluation of Mr. Rubin's performance by Mr. Garday prior to his resignation
as Chief Executive Officer and Mr. Burnham's evaluation of his performance
with respect to occupancy and tenant relations, as well as handling other
administrative duties during the last several months of the year, the
Committee awarded Mr. Rubin bonus compensation of $25,000 for 1994.
In prior years Mr. Kundrak's performance was measured by three standards,
(1) his supervision of the due diligence and acquisition process for all
properties considered for acquisition as well as those actually acquired
during the year, (2) his performance in the field of shareholder and investor
relationships and (3) certain objectives assigned to him by the Chief
Executive Officer in connection with loan restructurings, banking relations,
and items such as the upgrade in the Standard & Poor's rating on the
Corporation's convertible debt securities. For calendar year 1994 Mr. Garday
had assigned certain responsibilities to
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Mr. Kundrak. Those responsibilities included (1) the disposition of certain
properties, (2) increasing analysts' coverage of the Corporation, and (3)
renegotiating the Corporation's working capital lines of credit. Mr. Burnham,
in his capacity as interim Chief Executive Officer, reported to the Committee
that most of the objectives assigned to Mr. Kundrak had been accomplished.
Certain of the objectives assigned to Mr. Kundrak could not be accomplished
due to circumstances related to the state of the economy in southern
California or changes in corporate strategy decided on subsequent to the
assignment of the objectives. In addition to the objectives assigned to Mr.
Kundrak, the resignation of the Chief Executive Officer resulted in Mr.
Kundrak being assigned additional management and administrative
responsibilities. Based on the evaluation of the performance of Mr. Kundrak by
the interim Chief Executive Officer and his demonstrated ability to accomplish
a wide variety of tasks assigned to him, the Committee awarded Mr. Kundrak
bonus compensation of $25,000 for 1994.
With respect to Mr. Fisher, the Committee decided to award bonus
compensation in the amount of $12,500 primarily in recognition of his
enthusiastic and effective assumption of accounting and reporting
responsibilities, and his participation in credit line negotiations and
various other tasks.
STOCK OPTIONS
The Committee believes that the Chief Executive Officer and the other
executive officers should have an equity interest in the Corporation, and that
options to acquire increased stakes in the Corporation are an appropriate
component of an overall compensation program. However, the Committee does not
view such options as a significant component of current compensation in view
of the fact that the opportunities for substantial share appreciation are
moderated when compared with opportunities in the shares of companies in other
industries, by the current distribution requirements for REITs. Although the
stock option plan is the only present long term incentive compensation plan of
the Corporation, for similar reasons the Committee does not view such options
as a significant component of the total compensation of the Corporation's
officers or employees.
It has been the practice of the Committee to award stock options at such
times as the Corporation offers common stock for sale in a public offering.
The Corporation did not offer stock for sale to the public during 1994.
Accordingly, the Committee has not awarded any stock options to its executives
or employees in 1994. The Committee may reconsider the Corporation's practice
of awarding stock options only in connection with public stock offerings.
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COMMITTEE MEMBERSHIP AND INDEPENDENCE
No member of the Committee is an officer or employee of the Corporation.
However, Mr. Lauer, who is the chairman of the Committee, is a principal of
the accounting form of Lauer & Georgatos, which provides tax planning and tax
return preparation services to the Corporation. In 1994, the Corporation paid
fees to Lauer & Georgatos totaling $35,645 for such services.
Robert J. Lauer, Chairman
Philip L. Gildred, Jr.
Henry Rasmussen, Jr.
Richard R. Tartre
STOCK PERFORMANCE
The following graph compares the Corporation's stock price for the past five
years with the Standard and Poor's 500 Index and the Equity REIT Index
prepared by the National Association of Real Estate Investment Trusts
("NAREIT"). The graph assumes all dividends were reinvested at the market
price on the day the dividend was paid.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG BURNHAM PACIFIC PROPERTIES, NAREIT/EQUITY INDEX AND S&P 500 INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
BURNHAM NAREIT/
Measurement Period PACIFIC EQUITY S&P 500
(Fiscal Year Covered) PROPERTIES INDEX INDEX
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/89 $100 $100 $100
FYE 3/30/90 $ 89.94 $ 96.13 $ 96.98
FYE 6/30/90 $ 85.78 $ 96.01 $103.08
FYE 9/30/90 $ 72.80 $ 82.04 $ 88.87
FYE 12/31/90 $ 63.56 $ 84.65 $ 96.83
FYE 3/30/91 $ 90.74 $103.90 $110.93
FYE 6/30/91 $ 91.06 $104.71 $110.70
FYE 9/30/91 $ 89.14 $108.99 $116.65
FYE 12/31/91 $ 90.89 $114.86 $126.41
FYE 3/30/92 $ 99.52 $115.63 $123.18
FYE 6/30/92 $101.28 $118.68 $125.60
FYE 9/30/92 $ 96.70 $126.77 $129.50
FYE 12/31/92 $104.10 $131.62 $136.10
FYE 3/30/93 $132.90 $160.11 $141.94
FYE 6/30/93 $131.39 $155.51 $142.67
FYE 9/30/93 $131.51 $170.05 $146.31
FYE 12/31/93 $118.80 $157.49 $149.70
FYE 3/30/94 $127.54 $162.85 $143.99
FYE 6/30/94 $121.43 $165.85 $144.58
FYE 9/30/94 $116.12 $162.46 $151.70
FYE 12/31/94 $ 94.39 $162.49 $151.66
</TABLE>
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AUDITORS
The Corporation's financial statements for the year ended December 31, 1994
were audited by Deloitte & Touche LLP which has audited the Corporation's
books and records since 1986.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of shareholders (including nominations for Directors) intended to
be presented at the next Annual Meeting must be received by the Secretary of
Burnham Pacific Properties, 610 West Ash Street, Suite 1600, San Diego,
California, no later than December 31, 1995.
OTHER MATTERS
All shareholders of record at the close of business on March 15, 1995, the
record date for the determination of shareholders entitled to vote at the
Annual Meeting, are concurrently being sent a copy of the Corporation's Annual
Report, including financial statements for the fiscal year ended December 31,
1994.
The expense of preparing, printing and mailing the Notice of Meeting and
proxy material, and all other expenses of soliciting proxies will be borne by
the Corporation. Officers or other employees of the Corporation may, without
additional compensation therefor, solicit proxies in person, by telephone,
facsimile or mail. The Corporation may also reimburse brokerage firms, banks,
trustees, nominees and other persons for their expenses in forwarding proxy
material to the beneficial owners of shares held by them of record.
Management knows of no business which will be presented for consideration at
the Annual Meeting other than that stated in the Notice of Meeting. However,
if any such matter shall properly come before the meeting, the person named in
the enclosed proxy form will vote the same in accordance with their best
judgment.
By Order of the Board of Directors
BURNHAM PACIFIC PROPERTIES, INC.
Nina Galloway
Secretary
San Diego, California
March 20, 1995
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- -------------------------------------------------------------------------------
PROXY
SOLICITED ON
BEHALF OF THE
BOARD OF DIRECTORS
___________________
BURNHAM PACIFIC
PROPERTIES, INC.
POST OFFICE BOX 1551
SAN DIEGO, CA 92112
___________________
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS--MAY 4, 1995
The undersigned hereby constitutes and appoints, MALIN BURNHAM and RONALD R.
HRUSOFF, or either of these with full power of substitution, attorneys and
proxies of the undersigned, to represent the undersigned and vote all shares of
Common Stock, no par value, of BURNHAM PACIFIC PROPERTIES, INC., which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held at the Holiday Inn at the Embarcadero, 1355
North Harbor Drive, San Diego, California 92101 on Thursday, May 4, 1995 at
10:00 a.m., and at any adjournment thereof, in the following manner.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR 1.
1. Election of Directors.
Nominees are: Malin Burnham, Philip L. Gildred, Jr., Robert J. Lauer, Thomas
A. Page, Henry Rasmussen, Jr. and Richard R. Tartre.
[_] FOR all nominees listed above, except vote is withheld from the following
nominee(s):
-----------------------------------------------------------------------------
[_] WITHHELD from all nominees
If properly executed, the shares represented by this proxy will be voted
in the manner directed. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES. To vote in accordance with the
Board's recommendations, just sign the reverse side of this card; no
box needs to be checked.
-----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement relating to such meeting. (If your account
is registered in more than one name, all joint owners should sign. Trustees and
others acting in representative capacities should indicate the capacity in
which they are signing. If a corporation, sign in full corporate name by
authorized officer. If a partnership, sign in partnership name by authorized
person.)
Dated: __________________
-------------------------
Signature
-------------------------
Signature if held
jointly
Please mark, date and
- - - sign this proxy and
return it promptly
whether or not you plan
to attend the Annual
- - - Meeting. If you do
attend, you may still
vote in person if you
desire.
CHECK HERE IF YOU
PLAN TO ATTEND THE
MEETING
[_]
IMPORTANT: PLEASE COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY.
A SELF-ADDRESSED STAMPED ENVELOPE IS ENCLOSED.
- --------------------------------------------------------------------------------
