<PAGE>
SCHEDULE 14 A
(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
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
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/ No fee required.
/ / Fee computer on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previous paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
610 WEST ASH STREET
SAN DIEGO, CA 92101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Tuesday, May 11, 1999
TO THE STOCKHOLDERS OF BURNHAM PACIFIC PROPERTIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of Burnham
Pacific Properties, Inc. (the "Corporation") will be held at the San Francisco
World Trade Club, 300 World Trade Center, San Francisco, California, on Tuesday,
May 11, 1999 at 10:30 a.m. for the following purposes:
1. To elect eight Directors.
2. To transact such other business as may properly come before the meeting
or any adjournment.
The transfer books of the Corporation will not be closed prior to the
meeting. The Board of Directors has determined that stockholders of record at
the close of business on March 16, 1999 are entitled to notice of and to vote at
the Annual Meeting and any adjournment or postponement thereof.
<TABLE>
<S> <C>
By order of the Board of Directors
March 26, 1999 BURNHAM PACIFIC PROPERTIES, INC.
Scott C. Verges,
Secretary
</TABLE>
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 OR
TO VOTE BY TELEPHONE OR OVER THE INTERNET
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
610 WEST ASH STREET
SAN DIEGO, CA 92101
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
This Proxy Statement is furnished to the stockholders of Burnham Pacific
Properties, Inc., a Maryland corporation (the "Corporation"), in connection with
the solicitation of proxies by and on behalf of the Board of Directors of the
Corporation (the "Board of Directors") for the Annual Meeting of Stockholders of
the Corporation to be held at the San Francisco World Trade Club, 300 World
Trade Center, San Francisco, California, on Tuesday, May 11, 1999 at 10:30 a.m.,
and any adjournment or postponement thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying Notice of Annual Meeting of Stockholders and
Proxy Card are first being mailed to stockholders on or about March 26, 1999.
As more fully described in this Proxy Statement, the stockholders will be
asked to consider and act upon:
(1) the election of eight Directors; and
(2) such other business as may properly come before the meeting or any
adjournment thereof.
Stockholders of record at the close of business on March 16, 1999 are
entitled to notice of and to vote at such meeting. On such date, there were
issued and outstanding 31,954,008 shares of Common Stock, par value $.01 per
share, (the "Common Stock") of the Corporation. On such date, there were also
issued and outstanding 2,800,000 shares of Series 1997-A Convertible Preferred
Stock, par value $.01 per share, ("Series A Preferred Stock") of the
Corporation, each share of which is entitled to vote with the Common Stock as if
fully converted into Common Stock. Each share of Series A Preferred Stock is
currently convertible into approximately 1.626 shares of Common Stock, resulting
in the Series A Preferred Stock being convertible into an aggregate of 4,552,846
shares of Common Stock. Accordingly, shares having an aggregate of 36,506,854
votes are entitled to vote at the Annual Meeting. A majority of the votes
entitled to be cast 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. Shares present but abstaining or not being voted
by brokers (broker non-votes) are included in the number of shares present at
the Annual Meeting for purposes of establishing a quorum.
Assuming that a quorum is present (including shares of Series A Preferred
Stock in determining the presence of a quorum), the affirmative vote of a
plurality of all the votes cast at the Annual Meeting is required for the
election of Directors.
Stockholders of record may cast their vote by using the toll-free telephone
number listed on the proxy solicitation/voting instruction card, using the
Internet and voting at the web site listed on the proxy card, or by signing,
dating and mailing the proxy card in the enclosed postage paid envelope.
The telephone and Internet voting procedures are designed to authenticate
votes cast by use of a personal identification number. The procedure allows
stockholders to appoint a proxy to vote their shares and to confirm that their
instructions have been properly recorded. Specific instructions to be followed
are set forth on the enclosed proxy solicitation/voting instruction card.
Stockholders who vote by returning the enclosed proxy card are urged to
specify their choices by marking the appropriate boxes on the card. If a proxy
card is dated, signed and returned without specifying choices, the shares will
be voted as recommended by the Directors.
A stockholder may revoke a proxy given with respect to the Annual Meeting at
any time prior to the exercise thereof at the Annual Meeting by filing with the
Secretary of the Corporation a written revocation or a duly executed proxy
bearing a later date or, if such stockholder is present, indicating his or her
intention to vote in person at the Annual Meeting.
<PAGE>
PROPOSAL
ELECTION OF DIRECTORS
The Burnham Pacific Properties, Inc. Bylaws (the "Bylaws") currently provide
that the number of Directors shall be not less than the minimum number required
by Maryland General Corporation Law, nor more than eleven. The Board of
Directors has fixed the number of Directors to be elected at the Annual Meeting
at eight, each to hold office for the term of one year or until his or her
successor is elected and qualified. The Board of Directors has nominated the
persons named below for election. The holders of the Series A Preferred Stock
have the right to suggest one person for nomination and election, and Nina B.
Matis is the nominee so suggested.
The Bylaws provide that every stockholder entitled to vote in the election
of Directors may vote each of his or her shares for as many individuals as there
are directors to be elected and for whose election the share is entitled to be
voted. Assuming the presence of a quorum, the eight candidates receiving the
highest number of affirmative votes of the shares entitled to be voted will be
elected, and abstentions will have no legal effect.
The nominees for Director and the principal officers of the Corporation have
indicated that they intend to vote all shares of Common Stock which they are
entitled to vote FOR the election of each of the nominees for Director. As of
March 16, 1999, the current Directors and executive officers of the Corporation
in the aggregate had the right to vote 384,981 shares of Common Stock,
representing approximately 1.20% of the outstanding Common Stock as of such
date.
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. The Board of Directors anticipates that each of the nominees for
Director will serve as a director if elected. However, if any person nominated
by the Board of Directors is unable to accept election, the proxies will be
voted for the election of such other person or persons as the Board of Directors
may recommend.
NOMINEES FOR DIRECTOR
The following persons are the nominees for election to the Board of
Directors:
MALIN BURNHAM, age 71, has been Chairman of the Board of Directors since
1985 and served as interim President and Chief Executive Officer from October
1994 to September 1995. Mr. Burnham is a private investor. He is also Chairman
of John Burnham & Company and of First National Bank (San Diego) and a Trustee
of The Burnham Institute.
JAMES D. HARPER, JR., age 65, has been a Director since 1997. Mr. Harper has
been President of JDH Realty Co. in Miami, Florida since 1982 and is the
principal partner in AH Development, S.E. and AH HA Investments, S.E., both of
which are partnerships developing land in Puerto Rico. From 1971 until 1975, Mr.
Harper worked for Continental Illinois Corporation, serving as its Executive
Vice President in charge of all domestic and international real estate services
beginning in 1974. From 1969 until its acquisition by Continental Illinois
Corporation in 1971, Mr. Harper served as President and Chief Executive Officer
of Group Counselor's Inc., a privately held REIT management company. He is a
Director of Equity Residential Properties Trust, Equity Office Properties Trust,
American Health Properties, Inc. and JDH Realty Co.
JAMES D. KLINGBEIL, age 63, has been a Director since 1996. He is Chairman,
President and Chief Executive Officer of American Apartment Communities, Inc. He
is Trustee and former President of the Urban Land Institute, and a member of the
Chief Executives Organization and World Business Council, and serves on the
Policy Advisory Board for the Center for Real Estate and Urban Economics,
University of California. He has also served as Public Interest Director of
Federal Home Loan Bank of Cincinnati and as a member of the Young Presidents'
Organization and the Federal Home Loan Mortgage Corporation Advisory Board. Mr.
Klingbeil is a Director of United Dominion Realty Trust and The Fortress Group.
2
<PAGE>
J. DAVID MARTIN, age 43, became President, Chief Executive Officer and a
Director of the Corporation on October 1, 1995. From 1984 until joining the
Corporation, Mr. Martin was the Founder, Chairman and Chief Executive Officer of
The Martin Group of Companies, Inc. (the "Martin Group"), a full-service real
estate development and management company of which Mr. Martin still retains the
title of Chairman. Mr. Martin is a Trustee of Golden Gate University and a
member of the Policy Advisory Board for the Center for Real Estate and Urban
Economics at the University of California. Mr. Martin is a member of the Young
Presidents' Organization and serves on its international board. He is also a
member of the Urban Land Institute, International Council of Shopping Centers
and the National Association of Real Estate Investment Trusts.
NINA B. MATIS, age 51, has been a Director since 1998. She is a partner in
and member of the Executive Committee of the law firm of Katten Muchin & Zavis,
in Chicago, Illinois. She became a partner in the firm in September 1976. During
1984 through 1987, she was Adjunct Professor of Northwestern University School
of Law where she taught Real Estate Transactions. She is a member of the
American College of Real Estate Lawyers, Ely Chapter of Lambda Alpha
International, Chicago Finance Exchange, Urban Land Institute, REFF, Chicago
Real Estate Executive Woman, The Chicago Network and The Economic Club of
Chicago.
DONNE P. MOEN, age 63, has been a Director since 1996. He is the retired
President and Vice President of Union Bank in California, where he served in a
variety of executive positions from 1963 until 1992. Mr. Moen is also a member
of the board of a number of civic and nonprofit organizations including The Los
Angeles Library Foundation, Los Angeles Educational Partnership, Toberman
Settlement House, and Chadwick School.
PHILIP S. SCHLEIN, age 64, has been a Director since 1996. He has been a
partner in U.S. Venture Partners, a California based venture capital company,
since 1985. Prior to that time, he had a 28-year career in the retailing
industry, including serving as President and Chief Executive Officer of Macy's
California from 1974 to 1985. He currently serves as a Director of Ross Stores,
Inc., ReSound Corporation, Quick Response Services, BEBE, XOOM.com and a number
of private companies.
ROBIN WOLANER, age 44, has been a Director since 1997. Ms. Wolaner is
Executive Vice President of
C/Net Inc., an internet media company, and a Director of Online Partners.com,
Inc. and HealthCentral.com Inc., both Internet companies. From 1992 to 1995, she
was President and Chief Executive Officer of Sunset Publishing Corporation. In
1986, Ms. Wolaner founded Parenting Magazine, later serving as its President and
Chief Executive Officer from 1990 to 1992. Ms. Wolaner also served as the Vice
President in charge of Development of Time Publishing Ventures from 1990 to
1992.
EXECUTIVE OFFICERS
The following persons are executive officers of the Corporation:
<TABLE>
<CAPTION>
NAME POSITIONS
- - --------------------------- --------------------------------------------------------------------------
<S> <C>
J. David Martin President, Chief Executive Officer
Daniel B. Platt Executive Vice President, Chief Financial Officer, Chief Administrative
Officer
Joseph Wm. Byrne Executive Vice President, Chief Operating Officer
James W. Gaube Executive Vice President, Chief Investment Officer
Scott C. Verges Secretary and General Counsel
</TABLE>
MR. MARTIN'S biography is set forth above.
3
<PAGE>
MR. PLATT, age 52, has been the Chief Financial Officer and Chief
Administrative Officer of the Corporation since October 1995. Until 1994, Mr.
Platt was Group Executive Vice President of Bank of America with responsibility
for merging the real estate lending activities of the two banks upon Bank of
America's acquisition of Security Pacific Bank in 1992. Mr. Platt joined
Security Pacific Bank in 1990 as Executive Vice President responsible for
creating a new real estate workout group and in 1991 was made Vice Chairman of
the Real Estate Industries Group, where he assumed additional corporate
management responsibilities for all real estate activities. Prior to joining
Security Pacific Bank, Mr. Platt spent 20 years with Union Bank, where he was
responsible for all real estate and commercial banking activities.
MR. BYRNE, age 57, became an officer of the Corporation in April 1998. Prior
to joining the Corporation, he served as President of Property Development
Associates (PDA), a retail real estate operating company owning over 225
properties nationally and managing an additional 100 properties on behalf of
others with gross leasable area totaling over 10 million square feet. Prior to
PDA, he served as President of Glickman, Byrne & Associates of Beverly Hills,
where he managed the day-to-day operations of the company's development,
construction, leasing and management activities. He is the immediate past
Chairman of the Board of Directors for California Business Properties Associates
of Sacramento, is on the Board of Trustees for the National Institute for
Community Empowerment of Atlanta, Georgia, and is the State Government Affairs
Chairman for the International Council of Shopping Centers.
MR. GAUBE, age 49, joined the Corporation in February 1997 to start up the
Corporation's operations in the Pacific Northwest. He assumed his present title
in January 1999. From June 1995 until joining the Corporation, Mr. Gaube served
as Senior Vice President of Real Estate, Design & Construction of Thrifty
Payless, Inc. From July 1994 through May 1995, he served as Western Regional
Director of Real Estate for Home Depot and from 1986 through 1994, Mr. Gaube
served as Senior Vice President of Real Estate & Construction for Payless Drug
Stores Northwest, Inc. Beginning in 1966, Mr. Gaube enjoyed a twenty year career
at Safeway Stores, Inc. where he served as Regional Real Estate Director prior
to leaving.
MR. VERGES, age 45, became General Counsel of the Corporation in January,
1999, and became Corporate Secretary in March, 1999. Prior to joining the
Corporation, he was associated with the law firm of Mandel Buder & Verges. Prior
to Mandel Buder & Verges, Mr. Verges co-founded the law firm of Cassidy &
Verges. Mr. Verges received his J.D. in 1980 from Boalt Hall School of Law at
the University of California, Berkeley, where he was an Associate Editor of THE
CALIFORNIA LAW REVIEW. Mr. Verges is a former Chair of the Real Estate Finance
Subsection of the State Bar of California and the former Associate Editor of the
CALIFORNIA REAL PROPERTY JOURNAL. Mr. Verges is the author of the books HANDLING
REAL PROPERTY SALES TRANSACTIONS and the 1998 edition of CALIFORNIA REAL
PROPERTY FINANCING, both published by the University of California, as well as
numerous articles. He is a frequent lecturer for the California Continuing
Education of the Bar and other forums on a variety of real estate issues.
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of Common Stock as of March 16, 1999
by (i) each Director and nominee for Director, (ii) the Corporation's Chief
Executive Officer and the four other most highly compensated executive officers
whose total salary and bonus exceeded $100,000 during 1998, and (iii) all
Directors and executive officers of the Corporation as a group. None of such
individuals has any beneficial ownership of the Corporation's Series A Preferred
Stock.
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS
- - ------------------------------------------------------------------------ ------------------------------ -----------
<S> <C> <C>
Malin Burnham........................................................... 343,003(1)(2) 1.0%
Joseph Wm. Byrne........................................................ 2,000 *
James W. Gaube.......................................................... 11,000(1)(3) *
James D. Harper, Jr..................................................... 5,227 *
James M. Kessler........................................................ 50,957(1)(4)(6) *
James D. Klingbeil...................................................... 34,808(5) *
J. David Martin......................................................... 600,000(1)(4) 1.7%
Nina B. Matis........................................................... 1,925 *
Donne P. Moen........................................................... 18,875(7) *
Thomas A. Page.......................................................... 47,901(1) *
Daniel B. Platt......................................................... 326,281(1)(6)(8) *
Philip S. Schlein....................................................... 10,617 *
Robin Wolaner........................................................... 5,677 *
- - ------------------------
All Director nominees and executive officers of the Corporation as a
group (14 persons).................................................... 1,460,271 4.1%
</TABLE>
- - ------------------------
* less than 1%
(1) Based upon information provided by the individuals listed above, such
persons have the direct right to vote and dispose of all such shares except
for (i) 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 141,000, Gaube 10,000, Martin 550,000, Page 15,000,
Platt 308,333 and Kessler 50,000, all Director nominees and executive
officers as a group 1,074,333, and (ii) as set forth in the following notes.
(2) Includes (i) 8,580 shares of Common Stock held by Mr. Burnham as trustee,
(ii) 6,487 shares of Common Stock beneficially owned by Mr. Burnham's
spouse, and (iii) 320 shares of Common Stock beneficially owned by the
Burnham Foundation, of which Mr. Burnham is a trustee, as to which Mr.
Burnham disclaims beneficial ownership.
(3) Includes 1,000 shares of Common Stock as to which Mr. Gaube shares the power
to vote and dispose.
(4) Mr. Martin also holds 62,537 limited partnership units in two partnerships
of which the Corporation (through Burnham Pacific Operating Partnership,
L.P.) is general partner. Such partnerships own two completed retail centers
acquired from Mr. Martin and other affiliates of the Martin Group. Each such
unit may under certain circumstances be exchangeable on a 1-for-1 basis for
a share of the Corporation's Common Stock. Mr. Kessler holds 15,525 of such
exchangeable limited partnership units.
(5) Includes 2,200 shares of Common Stock held by Mr. Klingbeil as trustee of a
trust in which Mr. Klingbeil disclaims any economic interest.
(6) Based upon information provided by the Director nominees and executive
officers, the following persons beneficially own the following number of
shares of Common Stock included in the table which are held in 401(k) plans:
Messrs. Platt 2,248 and Kessler 957.
(7) Includes 11,000 shares of Common Stock as to which Mr. Moen shares the power
to vote and dispose.
(8) Includes (i) 2,500 shares of Common Stock held in an IRA for Mr. Platt's
wife and (ii) 13,200 shares of Common Stock beneficially owned by a trust in
which Mr. Platt has a beneficial interest.
5
<PAGE>
BENEFICIAL OWNERSHIP OF CERTAIN OTHERS
Information known to the Corporation with respect to beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) of more than 5% of each class
of the Corporation's voting securities as of March 16, 1999 is as follows. Such
information is based upon filings received by the Corporation under the Exchange
Act, with respect to the Common Stock, and the terms of the Stock Purchase
Agreement by and among Westbrook Burnham Holdings, L.L.C., Westbrook Burnham
Co-Holdings, L.L.C., Burnham Pacific Properties, Inc. and Burnham Pacific
Operating Partnership, L.P. dated as of December 5, 1997 (the "Stock Purchase
Agreement"), with respect to the Series A Preferred Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF BENEFICIAL
OWNERSHIP PERCENT
NAME AND ADDRESS OF COMMON STOCK OF CLASS
- - -------------------------------------------------------------------------- ---------------------------- -----------
<S> <C> <C>
Morgan Stanley, Dean Witter & Co.(1)...................................... 3,989,600 11.2%
1585 Broadway
New York, NY 10036
J.P. Morgan & Co. Incorporated (2)........................................ 2,036,500 5.7%
60 Wall Street
New York, NY 10250
Westbrook Burnham Holdings, L.L.C. and Westbrook Burnham
Co-Holdings, L.L.C.(3).................................................. 2,276,422 6.4%
11150 Santa Monica Blvd., Suite 1450
Los Angeles, CA 90025
</TABLE>
- - ------------------------
(1) In an amended filing on Schedule 13G under the Exchange Act, Morgan Stanley
Dean Witter & Co. and its wholly-owned subsidiary, Morgan Stanley Dean
Witter Investment Management Inc., reported that as of December 31, 1998 the
former had shared voting and dispositive power with respect to 3,058,200 and
3,989,600 of such shares of Common Stock, respectively, and the latter had
shared voting and dispositive power with respect to 2,044,200 and 2,975,600
of such shares of Common Stock, respectively.
(2) In a filing on Schedule 13G under the Exchange Act, J.P. Morgan & Co.
Incorporated reported that as of December 31, 1998 it had sole voting and
dispositive power with respect to 1,738,600 and 2,036,500 of such shares of
Common Stock, respectively.
(3) Westbrook Burnham Holdings, L.L.C. and Westbrook Burnham Co-Holdings, L.L.C.
own in the aggregate 2,799,990 shares of Series A Preferred Stock,
representing 100% of the outstanding shares of this class. The Series A
Preferred Stock votes with the Common Stock as if fully converted into
Common Stock. 25% of the Series A Preferred Stock is convertible into Common
Stock after each of December 31, 1998, March 31, 1999, June 30, 1999 and
September 30, 1999. If such shares were fully converted, such holders would
be the beneficial owners of approximately 4,552,846 shares of Common Stock
representing 12.47% of the outstanding number of shares of Common Stock
after giving effect to such conversion but not to the issuance of any other
shares of Common Stock not actually outstanding at the present time. In a
filing on Schedule 13G under the Exchange Act, Westbrook Burnham Holdings,
L.L.C. and Westbrook Burnham Co-Holdings, L.L.C. and certain of their
affiliates reported that as of January 29, 1999 in the aggregate they were
"beneficial owners" of 2,276,422 shares of Common Stock (being the number of
shares of Common Stock into which the right to convert the Series A
Preferred Stock was vested or would vest within 60 days).
6
<PAGE>
DIRECTORS' AND COMMITTEE MEETINGS
During 1998, the Board of Directors met 12 times. Each of the Directors
attended at least 75% of the total number of Board of Director meetings. Each of
the Directors attended at least 75% of the total number of meetings of Board
committees on which he or she served. The Corporation has standing Audit and
Compensation Committees. The Compensation Committee also acts as the Nominating
Committee.
AUDIT COMMITTEE. The members of this committee from January 1, 1998 until
the 1998 Annual Meeting held on May 11, 1998, were Messrs. Moen (Chairman) and
Richard R. Tartre and Ms. Wolaner. The members of this committee for the
remainder of 1998 were Mr. Moen and Mmes. Matis and Wolaner. 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, appoints the Corporation's independent auditors for the
Corporation's annual audit, meets periodically with the auditors to discuss
their audit, and advises and provides oversight of the Corporation's internal
audit activities. This committee held two meetings in 1998, one before and one
after the 1998 Annual Meeting.
COMPENSATION COMMITTEE. The members of this committee during 1998 were
Messrs. Thomas A. Page (Chairman), Harper, Klingbeil and Schlein. This committee
held one meeting during 1998 and one during 1999 with respect to compensation
for 1998. See "Report of the Compensation Committee" for additional information.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and directors, and persons who are beneficial owners of more than 10%
of a registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than 10% beneficial owners are required
by SEC regulations to furnish the Corporation with copies of all Section 16(a)
forms they file. To the Corporation's knowledge, based solely on review of the
copies of such reports furnished to the Corporation, and written representations
that no other reports were required during the fiscal year ended December 31,
1998, all Section 16(a) filing requirements applicable to such persons were
satisfied.
EXECUTIVE COMPENSATION
DIRECTORS
The Corporation awarded to each Director, with the exception of Messrs.
Martin and Tartre and Ms. Matis, 750 Director Restricted Shares on March 31,
1998, June 30, 1998, September 30, 1998 and December 31, 1998 for their services
as Directors. The Corporation awarded to Mr. Tartre 750 Director Restricted
Shares on March 31, 1998 and 325 Director Restricted Shares on June 30, 1998.
The Corporation awarded to Ms. Matis 425 Director Restricted Shares on June 30,
1998 and 750 Director Restricted Shares on September 30, 1998 and December 31,
1998. Mr. Martin receives no compensation for his services as a Director in
addition to his compensation as President and Chief Executive Officer.
EXECUTIVE OFFICERS
Compensation paid to each person serving as Chief Executive Officer and each
of the four most highly compensated other officers whose total compensation for
1998 equaled or exceeded $100,000 is summarized in the following table. Also see
below under "Report of the Compensation Committee."
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- AWARDS
NAME AND OTHER ----------------------------
PRINCIPAL ANNUAL OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (# SHARES)(1) COMPENSATION
- - --------------------------------------------- --------- ---------- ---------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. David Martin.............................. 1998 $ 387,500 $ -0- (2) 250,000 $ -0-
President/Chief 1997 $ 250,000 $ 350,000 (2) 300,000 $ -0-
Executive Officer 1996 $ 250,000 $ -0- (2) 300,000 $ -0-
Daniel B. Platt.............................. 1998 $ 245,833 $ -0- (2) 50,000 $ 4,917(3)
Executive Vice President, 1997 $ 200,000 $ 175,000 (2) 150,000 $ 4,000(3)
Chief Financial Officer, 1996 $ 200,000 $ -0- (2) 125,000 $ 2,000(3)
Chief Administrative Officer
James M. Kessler............................. 1998 $ 197,917 $ -0- (2) -0- $ 3,958(3)
Senior Vice President, 1997 $ 175,000 $ 100,000 (2) -0- $ 3,500(3)
Chief Development Officer 1996 $ 175,000 $ -0- (2) 30,000 $ 1,750(3)
Joseph Wm. Byrne(4).......................... 1998 $ 175,189 $ -0- (2) 100,000 $ -0-
Executive Vice President,
Chief Operating Officer
James W. Gaube(5)............................ 1998 $ 183,333 $ -0- (2) 70,000 $ 1,333(3)
Executive Vice President, 1997 $ 160,417 $ 100,000 (2) 30,000 -0-
Chief Investment Officer
</TABLE>
- - ------------------------
(1) Options granted after the close of the year indicated reflecting
compensation for optionee's performance in the year indicated. All options
are under the Corporation's Stock Option and Incentive Plan and are for
shares of the Corporation's Common Stock.
(2) Other annual compensation, if any, constituted less than 10% of such
person's salary and bonus.
(3) Corporation's matching contributions to employee's 401(k) plan.
(4) Mr. Byrne joined the Corporation effective April 1998.
(5) Mr. Gaube joined the Corporation effective February 1997.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Options for shares of Common Stock were granted under the Corporation's
Stock Option and Incentive Plan to certain of the officers listed in the Summary
Compensation Table above during 1998 as summarized in the following table. Such
options are considered a part of the officers' compensation with respect to
1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE GRANT DATE
GRANTED IN FISCAL PRICE PER EXPIRATION PRESENT
NAME (# SHARES) YEAR SHARE(1) DATE VALUE(2)
- - --------------------------------------------- ------------ ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
J. David Martin.............................. 300,000(3) 44.15% $ 12.50 1/14/2008 $ 699,000
President/CEO
Daniel B. Platt.............................. 150,000(3) 22.08% $ 12.50 1/14/2008 $ 349,500
Executive VP/CFO
James W. Gaube............................... 30,000(3) 4.42% $ 12.50 1/14/2008 $ 69,900
Executive VP/CIO
</TABLE>
- - ------------------------
(1) Equal to the closing market price of the Common Stock on the grant date.
(2) The option values presented are based on the Black-Scholes option-pricing
model adapted for use in valuing stock options. The Black-Scholes model
relies on several key assumptions to estimate the present value of options,
including the volatility of and dividend yield on the security underlying
the option, a risk-free rate of return on the date of grant, and the term of
the option. In calculating the grant date present values set forth in the
table, the Black-Scholes option-pricing model used the following
weighted-average assumptions: 8.0% dividend yield, expected volatility of
25%, risk-free rate of return of 6.0% and expected lives of 5 years. There
is no assurance that these assumptions will prove to be true in the future.
Consequently, the grant date present values set forth in the table are only
theoretical values and may not accurately determine present value. The
actual value, if any, that may be realized by each individual will depend on
the market price of Common Stock on the date of exercise.
(3) These options were granted in 1998 as compensation for fiscal year 1997
following receipt of stockholder approval at the 1998 Annual Meeting of
Stockholders. They are nonqualified stock options, one third of which were
fully vested on January 14, 1999, one third of which will vest on January
14, 2000, and one third of which will vest on January 14, 2001.
9
<PAGE>
AGGREGATED OPTIONS EXERCISED IN LAST
FISCAL YEAR AND YEAR-END OPTION VALUE
The following table sets forth information with respect to options exercised
during 1998 and unexercised options at the end of the year.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN
OPTIONS AT OPTIONS AT
FY FY
(#) ($)
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- - ---------------------------------------------------- --------------------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C>
J. David Martin..................................... 0 -- 450,000/400,000 $ 0/$0
President, Chief Executive Officer
Daniel B. Platt..................................... 0 -- 258,333/191,667 $ 0/$0
Executive Vice President,
Chief Financial Officer,
Chief Administrative Officer
Joseph Wm. Byrne.................................... 0 -- -- $ 0/$0
Executive Vice President,
Chief Operating Officer
James W. Gaube...................................... 0 -- 0/30,000 $ 0/$0
Executive Vice President,
Chief Investment Officer
James M. Kessler.................................... 0 -- 50,000/10,000 $ 0/$0
Senior Vice President,
Chief Development Officer
</TABLE>
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
GENERAL
The Compensation Committee of the Board of Directors consists of four
members, all of whom are independent directors of other companies. Three members
of the Committee have extensive experience as directors and chief executive
officers of public companies or major operating divisions of public companies,
and the fourth has extensive experience as a director of a public company and
chief executive officer of a private company. No member of the Committee was or
is an officer or employee of the Corporation.
The Corporation has retained the same compensation consultant which has
advised the Committee and senior management since 1995. During 1998 the
Committee worked with the compensation consultant with the goal of assessing the
competitiveness of the Corporation's compensation and benefits program and of
enhancing the program and maintaining its competitiveness by incorporating
incentive-based compensation strategies.
Following a review of industry background and appropriate comparatives, the
compensation consultant provided recommendations to the Committee regarding both
compensation structure in general and specific compensation for various
positions. Based on these recommendations and discussions at meetings held in
January 1998 and February 1999, the Committee continued its policy that the
total compensation for the Chief Executive Officer and the other executive
officers should be consistent with a subset of the REIT industry that reflects
similar business characteristics as the Corporation.
The Committee reaffirmed the compensation philosophies which it adopted in
1996 to guide it in establishing executive compensation. In an effort to align
employee and owner interests in the Corporation, the Committee decided to
continue its previously adopted philosophy that executive compensation should be
heavily weighted toward incentives, which will take the form of largely
stock-based incentives with respect to employees at the officer level and
largely cash-based incentives below the officer level.
The Committee also reaffirmed its philosophy that the compensation policy
and the structure of compensation should be closely monitored to assure that the
Corporation's compensation program remains competitive and consistent with the
industry. To assist in achieving this objective, the Committee decided to
continue to retain the consultant to provide recommendations as to reasonable
comparatives and compensation components and levels on an ongoing basis.
SALARY AND BONUS
At its meeting in January 1998, after considering the data furnished by the
consultant and evaluating the performance of Mr. Martin, the Committee voted to
increase Mr. Martin's base annual salary to $400,000 effective February 1, 1998.
The Committee also voted to increase Mr. Platt's salary to $250,000 and to
establish the salary of Mr. Gaube at $200,000, effective for 1998.
Supplemental or bonus compensation is awarded to the Chief Executive Officer
and the executive officers of the Corporation at the discretion of the
Committee. At its meeting in January 1998, the Committee voted to grant the
options described in the "Option Grants in Last Fiscal Year" table to the named
officers and certain other individuals, subject to approval by the stockholders
at the 1998 Annual Meeting of an increase in the number of shares of Common
Stock for which awards may be made under the Corporation's Stock Option and
Incentive Plan. At its meeting in February 1999, the Committee determined that
the Corporation's results for 1998 did not justify the award of cash bonuses for
that year.
STOCK OPTIONS
The Committee believes that the Chief Executive Officer and the other
executive officers should have the opportunity to acquire a significant equity
interest in the Corporation, and that options to acquire increased stakes in the
Corporation are an appropriate component of an overall compensation program. As
noted above, at its meeting in February 1999, the Committee reiterated its
compensation philosophy of aligning employee and owner interests. Incorporating
this philosophy with the desire to provide long-term
11
<PAGE>
incentive compensation consistent with officer compensation of other REITs with
similar business characteristics, and taking into consideration individual
performance during 1998, the Committee awarded further options under the Stock
Option and Incentive Plan to Mr. Martin for 250,000 shares, Mr. Platt for 50,000
shares, Mr. Byrne for 100,000 shares and Mr. Gaube for 70,000 shares for their
performance during 1998.
Thomas A. Page, Chairman
James D. Harper, Jr.
James D. Klingbeil
Philip S. Schlein
STOCK PERFORMANCE
The following graph compares the Corporation's stock price for the past five
years with the Standard & 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INDEX (12/31/93 -
100)
<S> <C> <C> <C>
ALL EQUITY
S&P 500 REITs(1) BPP
Dec-93 100.0000 100.0000 100.0000
Dec-94 98.4607 103.7004 81.3113
Dec-95 132.0463 119.4829 68.5543
Dec-96 158.8037 164.0446 116.2002
Dec-97 208.0459 198.7477 127.2509
Dec-98 263.5288 165.7124 108.4435
</TABLE>
- - ------------------------
(1) Source: NAREIT Total Return Index
CERTAIN TRANSACTIONS WITH MANAGEMENT
TRANSACTIONS INVOLVING MR. MARTIN
Pursuant to the agreement entered into concurrently with Mr. Martin's
employment by the Corporation on October 1, 1995, the Corporation acquired on
January 1, 1998 a recently completed development project, Gateway Center in
Marin City, California, for consideration that included the issuance of limited
partnership units of a subsidiary partnership of the Corporation which units are
ultimately exchangeable for 90,000 shares of Common Stock of the Corporation.
Such units were issued to the original developer of the property, Gateway Retail
Partners, in which Mr. Martin holds a 41.75% interest.
Also concurrent with Mr. Martin's employment by the Corporation in October
1995, the Corporation acquired the right to redevelop the historic 1000 Van Ness
property in downtown San Francisco, with the intention that, upon completion of
redevelopment, the Corporation would retain ownership of the retail and
entertainment portions of the redeveloped property and Holliday/Van Ness, L.P.
("Holliday") would become the owner of the residential portion of the
redeveloped property. The Corporation through a subsidiary entered into a
purchase and sale agreement with Holliday whereby Holliday would reimburse the
Corporation for all of the Corporation's costs and expenses incurred at the
direction of Holliday in connection with the acquisition and construction of the
residential portion. Pursuant to the purchase and sale agreement, the costs,
which were approximately $18,000,000, were paid by Holliday to the Corporation
12
<PAGE>
in a series of transactions during 1998 and early 1999 coinciding with the sale
of the residential units to third parties. Upon receipt of the final payment,
the Corporation conveyed all of the unsold residential units to Holliday. Mr.
Martin has approximately a 35% interest in Holliday.
In December 1998, the Corporation entered into an operating lease for a
corporate office in Emeryville, California. The landlord is a partnership in
which Mr. Martin has an economic interest. The lease commenced on January 1,
1999 with a five year term. Monthly lease payments are approximately $11,460,
with a three percent annual increase.
OTHER TRANSACTIONS
During 1998, the Corporation acquired leasehold interests in three former
Ernst Home Improvement Stores, aggregating approximately 134,000 square feet of
retail space for approximately $5.2 million. The Corporation had options to
acquire three additional leasehold interests in former locations of the Ernst
Home Improvement chain which expired on December 31, 1998. The Corporation
acquired its existing stores and its options from the purchaser of the leasehold
interest in bankruptcy proceedings involving the Ernst Home Improvement chain.
One of the principals of such purchaser is Donald Gaube, a brother of James W.
Gaube, Executive Vice President and Chief Investment Officer of the Corporation.
James W. Gaube disclaims any personal interest in his brother's interest in the
purchaser and has no personal interest in any proceeds that the purchaser
received in connection with the above referenced leasehold interests.
AUDITORS
The Corporation's financial statements for the year ended December 31, 1998
were audited by Deloitte & Touche LLP, which has audited the Corporation's books
and records since 1986. A representative of Deloitte & Touche LLP will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he or she so desires and will be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Proposals of stockholders (including nominations for Directors) intended to
be presented at the next Annual Meeting must be received by the Secretary of
Burnham Pacific Properties, Inc., 610 West Ash Street, Suite 1600, San Diego,
California 92101, no later than November 25, 1999.
OTHER MATTERS
All stockholders of record at the close of business on March 16, 1999, the
record date for the determination of stockholders 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, 1998.
The expense of preparing, printing and mailing the Notice of Annual Meeting
of stockholders and proxy material, and all other expenses of soliciting proxies
will be borne by the Corporation. The Corporation has retained Beacon Hill
Partners as agent for soliciting proxies. Officers or other employees of the
Corporation may, without additional compensation therefor, solicit proxies in
person, by telephone, facsimile, mail or the Internet. 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 persons named as
proxies will vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
BURNHAM PACIFIC PROPERTIES, INC.
Scott C. Verges,
Secretary
San Diego, California
March 26, 1999
13
<PAGE>
/X/ Please mark your
votes as in this example
- - ------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors. The Board of
Directors recommends a vote FOR proposal 1.
- - ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
FOR WITHHELD Nominations are: 1. Malin Burnham, 2. James D. Harper, Jr.,
1. Election of / / / / 3. James D. Klingbeil, 4. J. David Martin, 5. Nina B. Matis,
Directors 6. Donna P. Moen, 7. Philip S. Schlein, 8. Robin Wolaner.
For, except vote withheld from the following nominee :
- - --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
2. In their discretion, the Proxies are each authorized to vote upon CHECK HERE IF YOU / /
such other business as may properly come before the Annual PLAN TO ATTEND
Meeting and any adjournment or postponements thereof. THE MEETING.
</TABLE>
- - -------------------------------------------------------------------------------
The undersigned acknowledges receipt of the Corporation's 1998
Annual Report and the Notice of Annual Meeting of Stockholders 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 officers. If a partnership, sign in partnership name by
authorized person.)
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.
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SIGNATURE(S) DATE
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
BURNHAM PACIFIC PROPERTIES, INC.
Burnham Pacific Properties, Inc. encourages you to take advantage of new
and convenient ways by which you can vote your shares. You can vote your
shares electronically through the Internet or the telephone. This eliminates
the need to return the proxy card. If you choose to do so, you must vote
prior to 11:00 a.m. Pacific Time on May 11, 1999, the date of the Annual
Meeting.
To vote your shares electronically you must use the control number
printed in the box above, just below the perforation. The series of numbers
that appear in the box above must be used to access the system.
1. To vote over the Internet:
-- Log on to the Internet and go to the web site
http://www.vote-by-net.com
2. To vote over the telephone:
-- On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683) 24
hours a day 7 days a week.
Your electronic vote authorizes the named proxies in the same manner
as if you marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for
you to mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
P PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
R
The undersigned hereby constitutes and appoints J. David Martin and
O Daniel B. Platt, or either of them, with full power of substitution,
attorneys and proxies of the undersigned, to represent the undersigned
X and vote all shares of Common Stock, par value $.01 per share, and
Series 1997-A Convertible Preferred Stock, par value $.01 per share, of
Y BURNHAM PACIFIC PROPERTIES, INC., which the undersigned would be
entitled to vote if personally present at the Annual Meeting of
Stockholders to be held at the San Francisco World Trade Club, 300
World Trade Center, San Francisco, California on May 11, 1999 at 10:30
a.m., and at any adjournment or postponement thereof.
The Board of Directors recommends a vote FOR all of the matters
proposed.
If properly executed, the shares represented by this proxy will be
voted in the manner directed. IF NO DIRECTION IS GIVEN, THE SHARES OF
COMMON STOCK AND SERIES 1997-A CONVERTIBLE PREFERRED STOCK WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES and in the discretion of the persons
named as proxies as to such other business as may properly come before
the meeting and any adjournments or postponements thereof. To vote in
accordance with the Board's recommendations, just sign the reverse side
of this card, no box needs to be checked.
IMPORTANT: PLEASE COMPLETE, SIGN AND -----------
RETURN THIS PROXY PROMPTLY. SEE REVERSE
A SELF-ADDRESSED STAMPED ENVELOPE SIDE
IS ENCLOSED. -----------
- - ------------------------------------------------------------------------------
FOLD AND DETACH HERE
