<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 Section240.14a-11(c) or
Section240.14a-12
KOLL REAL ESTATE GROUP, 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 computed 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:
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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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<PAGE>
KOLL REAL ESTATE GROUP, INC.
4343 VON KARMAN AVENUE
NEWPORT BEACH, CALIFORNIA 92660
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1998
---------------------
The annual meeting of stockholders (the "Annual Meeting") of Koll Real
Estate Group, Inc., a Delaware corporation (the "Company") will be held at the
Mellon Bank Building, 8 Loockerman Street, Dover, Delaware, on May 28, 1998,
commencing at 9:30 a.m. local time, to consider and act upon the following:
(1) To elect five directors of the Company, each for a term of one year.
(2) To consider and vote upon the ratification of the appointment of
Deloitte & Touche LLP as independent auditors of the Company.
(3) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of record of the Company's Common Stock at the close of business on
April 20, 1998 will be entitled to receive notice of, and to vote at the Annual
Meeting, or any adjournment or postponement thereof.
By Order of the Board of Directors,
[LOGO]
Raymond J. Pacini
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND SECRETARY
Newport Beach, California
April 20, 1998
THE BOARD OF DIRECTORS OF KOLL REAL ESTATE GROUP, INC. RECOMMENDS THAT YOU
VOTE FOR THE FOREGOING PROPOSALS.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY, IF YOU WISH,
REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
KOLL REAL ESTATE GROUP, INC.
4343 VON KARMAN AVENUE
NEWPORT BEACH, CALIFORNIA 92660
---------------------
PROXY STATEMENT
---------------------
April 20, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Koll Real Estate Group, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held at the Mellon Bank Building, 8
Loockerman Street, Dover, Delaware on May 28, 1998, at 9:30 a.m., local time,
and at any adjournment thereof. This Proxy Statement and the related proxy card
are first being sent to the Company's stockholders on or about April 20, 1998.
ACTION TO BE TAKEN UNDER THE PROXY
At the Annual Meeting, the holders of shares of the Company's Common Stock,
par value $.05 per share (the "Common Stock") will be asked to consider and vote
upon (i) the election of Messrs. Burnaman, Gagalis, Pacini, Sabin and Talbot to
the Board and (ii) the ratification of the appointment of Deloitte & Touche LLP
as independent auditors for the Company for the fiscal year ending December 31,
1998.
All proxies in the enclosed form that are properly executed and returned to
the Company will be voted at the Annual Meeting or any adjournments thereof in
accordance with any specifications thereon, or, if no specifications are made,
will be voted FOR approval of the proposals set forth in the Notice of Annual
Meeting of Stockholders. Any proxy may be revoked by any stockholder who attends
the meeting and gives oral notice of his or her intention to vote in person,
without compliance with any other formalities. In addition, any proxy given
pursuant to this solicitation may be revoked prior to the Annual Meeting by
delivering an instrument revoking it or a duly executed proxy bearing a later
date to the Secretary of the Company.
Management does not know of any matters other than those set forth herein
which may come before the Annual Meeting. If any other matters are properly
presented to the meeting for action, it is intended that the persons named in
the enclosed form of proxy and acting thereunder will vote in accordance with
their best judgment on such matters.
PROXY SOLICITATION
The expense of preparing, printing and mailing this Proxy Statement and the
proxies solicited hereby will be borne by the Company. In addition to the use of
the mails, proxies may be solicited by officers and directors and regular
employees of the Company, without additional remuneration, by personal
interviews, telephone, telegraph or otherwise. The Company will also request
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record and will provide reimbursement
for the cost of forwarding the material in accordance with customary charges.
The Company has retained Reinhard Associates to aid in the solicitation of
proxies, including soliciting proxies from brokerage firms, banks, nominees,
custodians and fiduciaries. The fees of such firm will aggregate approximately
$3,500 plus out-of-pocket costs and expenses.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of the Company's Common Stock at the close of business on
April 20, 1998 (the "Record Date") are entitled to notice of and to vote at the
Annual Meeting with respect to all matters properly presented at the Annual
Meeting. Holders of the Common Stock are entitled to one vote for each share
held on each such matter at the Annual Meeting. A stockholders' list will be
available for examination by stockholders at the Annual Meeting.
At the Record Date, there were 11,906,378 shares of Common Stock issued and
outstanding, including the shares to be delivered to former debenture holders
upon surrender of their debenture certificates. The holders of a majority of the
shares entitled to vote, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. A
plurality of the votes cast is required to elect the directors and the
affirmative vote of a majority of the shares of the Common Stock, present in
person or by proxy and entitled to vote at the Annual Meeting, is necessary to
ratify the appointment of Deloitte & Touche as independent auditors for the
Company for its fiscal year ending December 31, 1998.
A proxy submitted by a stockholder may indicate that all or a portion of the
shares of Common Stock represented by such proxy are not being voted by such
stockholder with respect to a particular matter. This could occur, for example,
when a broker is not permitted to vote stock held in street name on certain
matters in the absence of instructions from the beneficial owner of the stock.
The shares subject to any such proxy which are not being voted with respect to a
particular matter (the "non-voted shares") will be considered shares not present
and entitled to vote on such matter, although such non-voted shares will count
for purposes of determining the presence of a quorum.
The following table sets forth, as of April 15, 1998, the name and address
of each person believed to be a beneficial interest holder of more than 5% of
the Common Stock, the number of shares beneficially owned and the percentage so
owned. Except as set forth below, management knows of no person who, as of April
15, 1998, owned beneficially more than 5% of the Company's outstanding Common
Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL INTEREST HOLDER BENEFICIAL OWNERSHIP CLASS
- ----------------- ----------------------------------------------------------- --------------------- -----------
<S> <C> <C> <C>
Common Stock ING Baring (U.S.) Capital Corporation 1,666,943 shares(1) 14.0%
667 Madison Ave.
New York, NY 10021
Common Stock Waste Management, Inc. 1,226,607 shares(2) 10.3%
3003 Butterfield Road
Oak Brook, Illinois 60523
Common Stock Merrill Lynch & Co., Inc. 1,038,259 shares(3) 8.7%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
Common Stock Halcyon/Alan B. Slifka Management Co., LLC 976,505 shares(4) 8.2%
477 Madison Ave., 8th Floor
New York, NY 10022
Common Stock Credit Suisse First Boston 918,761 shares(5) 7.7%
Uetlibergstrasse 231
P.O. Box 900
CH-8045 Zurich, Switzerland
</TABLE>
- ------------------------
(1) According to Schedule 13D dated September 12, 1997, ING Baring (U.S.)
Capital Corporation is the beneficial owner of 1,666,943 shares.
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(2) According to reports filed on Form 3 dated September 10, 1997, by Waste
Management, Inc. ("WMI") and Wheelabrator Technologies Inc. ("WTI"), WMI is
the beneficial owner of 1,226,607 shares, 473,132 of which are directly
owned by its WTI subsidiary and the remaining 753,475 of which are directly
owned by other unnamed subsidiaries.
(3) According to Schedule 13G, Amendment No. 3 dated February 17, 1998, Merrill
Lynch & Co., Inc. is the beneficial owner of 1,038,259 shares.
(4) According to Schedule 13G dated February 17, 1998, Halcyon/Alan B. Slifka
Management Co., LLC is the beneficial owner of 976,505 shares.
(5) According to Schedule 13G dated February 13, 1998, Credit Suisse First
Boston is the beneficial owner of 918,761 shares.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of Donald M. Koll
(Chairman), Phillip R. Burnaman II, James J. Gaffney, Robert J. Gagalis, Thomas
W. Sabin, Jr., J. Thomas Talbot, Marco F. Vitulli, P. John Wickser II, Ray
Wirta, and Paul M. Zeller. In accordance with the Amended and Restated
Certificate of Incorporation and the Amended and Restated Bylaws of the Company,
the current members of the Board of Directors have each been elected for one
year; and the directors to be elected at the 1998 Annual Meeting will be elected
for a one-year term expiring in 1999.
Upon recommendation of the Nominating Committee, the Board of Directors has
determined to reduce the size of the Board from ten to five members effective
upon the date of the 1998 Annual Meeting, and has nominated Messrs. Burnaman,
Gagalis, Sabin and Talbot, whose current terms expire at the 1998 Annual Meeting
together with Mr. Pacini, for election as directors. If any nominee should be
unavailable for election at the Annual Meeting, the proxies will be voted for
the election of such other person as may be recommended by the Board of
Directors in place of such nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AS
DIRECTORS.
Information about the nominees for election as directors and the incumbent
directors, including biographical and employment information, is set forth
below:
NOMINEES FOR ELECTION AS DIRECTORS
Phillip R. Burnaman II, 38, has been a director of the Company since
September 1997. Mr. Burnaman has also been Managing Director and head of the New
York Proprietary Trading Desk of ING Baring (U.S.) Capital Corp., which is a
subsidiary of the ING Group, an Amsterdam-based banking, investment banking and
insurance institution since 1994. Mr. Burnaman was also a Vice President and
whole loan commercial mortgage trader of Citicorp Securities from prior to 1993
until 1994.
Robert J. Gagalis, 43, has been a director of the Company since September
1997. Mr. Gagalis has also been Vice President, Chief Financial Officer and
Treasurer of Wheelabrator Technologies Inc., an environmental services company
since January 1997 and formerly served Wheelabrator Technologies as
Vice--President Finance, Director of Corporate Development and Staff Vice
President of Corporate Development from 1993 until 1997.
Raymond J. Pacini, 42, has been appointed, effective upon completion of the
sale of the commercial development business described below in "Certain
Transactions", as the Company's President and Chief Executive Officer. Mr.
Pacini has been Executive Vice President and Secretary of the Company since 1993
and has been Chief Financial Officer and Treasurer of the Company since prior to
1993. Mr. Pacini was
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also Executive Vice President and Chief Financial Officer of Koll Management
Services, Inc. subsequently known as Koll Real Estate Services ("KRES") from
March to November 1993.
Thomas W. Sabin, Jr., 40, has been a director of the Company since September
1997. Mr. Sabin is also President of Thomas Sabin, Inc. Manager and Vice
President of GSSW-REO, L.L.C., a real estate limited liability company. From
prior to 1993 until 1996, Mr. Sabin formed and operated GSSW, L.P., a limited
partnership, the purpose of which was to acquire real estate assets from the
Resolution Trust Corporation. Mr. Sabin is also former President of Southmark
Equities Corporation.
J. Thomas Talbot, 62, has been a director of the Company since August 1993.
Mr. Talbot has also been owner of The Talbot Company, an investment and asset
management company since prior to 1993. Mr. Talbot was also Chief Executive
Officer of HAL, Inc., the parent company of Hawaiian Airlines prior to 1993 and
is a director of The Hallwood Group, Inc., a corporate rescue firm; and Fidelity
National Financial, Inc., a title company.
INCUMBENT DIRECTORS
Donald M. Koll, 65, has been Chairman of the Company's Board of Directors
since March 1993 and Chief Executive Officer since October 1996 and was Managing
Director--President and a Director of the Company since prior to 1993. Mr. Koll
has also been Chairman of the Board and Chief Executive Officer of The Koll
Company ("Koll"), (a general contracting and international real estate
development company since prior to 1993) and is a director of CB Commercial Real
Estate Services Group, Inc. ("CB") which acquired KRES (real estate management)
in August 1997. Mr. Koll has also been a Director of Fidelity National
Financial, Inc. since March 1995. Mr. Koll has indicated that he will resign
from the Board upon completion of the Company's sale of the commercial
development business to a company affiliated with Mr. Koll as described below in
"Certain Transactions".
James J. Gaffney, 57, has been a director of the Company since September
1997. Mr. Gaffney is also Chairman of the Board of Main Investments, a large
diversified holding company located in New Zealand, and a Director of Insilco
Corp. and Advantica. Mr. Gaffney is also former Chief Executive officer or
Chairman of the following: General Aquatics, Inc. (formerly known as KDI Corp.),
International Tropic-Cal, Ayers/Chairmakers, Inc., Brown Jordan Company and
Washington Industries.
Marco F. Vitulli, 64, has been a director of the Company since March 1993.
Mr. Vitulli has also been President of Vitulli Ventures, Ltd., a real estate
development, investment management and consulting services company since prior
to 1993. Mr. Vitulli is also Chairman of Elk River Enterprises, a lumber
company, and a director of Pope Resources, a land, timber, mineral and
recreational properties company.
P. John Wickser II, 44, has been a director of the Company since September
1997. Mr. Wickser has also been Managing Principal of ING Realty Partners, a
private limited partnership for real estate investment in the United States and
Canada, since January 1998. Mr. Wickser was Managing Director of ING
Barings--ING Real Estate Finance, Inc., which is a subsidiary of the ING Group,
an Amsterdam-based banking, investment banking and insurance institution, from
1993 until January 1998. Mr. Wickser was also a real estate investment banker at
Citicorp based in London, England prior to 1993.
Ray Wirta, 54, has been a director of the Company since March 1993 and was
Chief Executive Officer of the Company from March 1993 until October 1996. Mr.
Wirta has been President--Financial Services Division of CB since September
1997. Mr. Wirta has also been President and Chief Operating Officer of Koll
since prior to 1993 and Vice Chairman of the Board and Chief Executive Officer
of KRES since prior to 1993 until September 1997. Mr. Wirta has indicated that
he will resign from the Board upon completion of the Company's sale of the
commercial development business to a company affiliated with Mr. Koll as
described below in "Certain Transactions".
Paul M. Zeller, 48, has been a director of the Company since September 1997.
Mr. Zeller has also been President of Zeller Realty Corporation since 1988 and
is former General Partner of The Buck
4
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Company, a commercial real estate development firm. Mr. Zeller is also the
founding stockholder and a former director of Buck Investment Company and in
1988, he founded Asian Capital Corporation, a merchant banking and investment
firm specializing in real property secured debt and equity placements and
merchant banking, which maintains offices in Chicago, New York and Tokyo.
Information about the beneficial ownership of the Common Stock as of April
15, 1998 by each nominee, director, executive officer named in the Summary
Compensation Table, and all directors and executive officers of the Company as a
group is set forth below:
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND BENEFICIAL INTEREST HOLDER COMMON STOCK(1) CLASS(2)
- ---------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Donald M. Koll.................................................. 0 *
Phillip R. Burnaman II.......................................... 0 *
James J. Gaffney................................................ 0 *
Robert J. Gagalis............................................... 0 *
Thomas W. Sabin, Jr............................................. 0 *
J. Thomas Talbot................................................ 20 *
Marco F. Vitulli................................................ 1,210 *
Ray Wirta....................................................... 0 *
P. John Wickser II.............................................. 0 *
Paul M. Zeller.................................................. 0 *
Richard Ortwein................................................. 2,573 *
Raymond J. Pacini (3)........................................... 78,732 *
------
Directors and Executive Officers as a group (12 persons
including the above named).................................... 82,535 *
------
------
</TABLE>
- ------------------------
(1) Except as otherwise indicated in the notes below, the persons indicated have
sole voting and investment power with respect to shares listed. In addition
to the specific shares indicated in the following footnotes, this column
includes shares held directly and shares subject to stock options which are
exercisable and not subject to termination within 60 days.
(2) These percentages are calculated assuming the conversion of all securities
convertible within 60 days into Common Stock, which are held by the
executive officer or director listed above but not those held by others.
Asterisks indicate beneficial ownership of 1% or less of the class.
(3) Includes options to purchase 75,998 shares (40% of 189,996 total shares
subject to options) of Common Stock granted pursuant to the Company's 1993
Stock Option/Stock Issuance Plan, which options will vest on April 28, 1998
and are subject to certain restrictions on disposition.
BOARD AND COMMITTEE MEETINGS
The Company's Board of Directors met eight times during 1997. All of the
then incumbent directors attended at least 75% of the meetings of the Board and
committees of the Board during the periods that they served. The Board has three
standing committees: the Audit Committee, the Compensation Committee and the
Nominating Committee. During 1997, one meeting was held by each of the Audit
Committee, the Compensation Committee and the Nominating Committee.
Prior to completion of the Company's recapitalization in September 1997 (the
"Recapitalization"), the Audit Committee consisted of Messrs. Talbot and
Vitulli, and former directors Harold A. Ellis, Jr. and Paul C. Hegness.
Following the Recapitalization the Audit Committee consisted of Messrs. Gaffney,
Gagalis, Sabin, Wickser and Talbot, with Mr. Gaffney serving as Chairman. It is
responsible for recommending the firm to be appointed as independent accountants
to audit the Company's financial statements and to perform services related to
the audit; reviewing the scope and results of the audit with the
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<PAGE>
independent accountants; reviewing with management and the independent
accountants the Company's year-end operating results; considering the adequacy
of the internal accounting control procedures of the Company; reviewing the
non-audit services to be performed by the independent accountants and
considering the effect of such performance on the accountants' independence.
Prior to the Recapitalization the Compensation Committee consisted of
Messrs. Talbot and Vitulli, and former directors Harold A. Ellis, Jr. and Paul
C. Hegness. Following the Recapitalization the Compensation Committee consists
of Messrs. Talbot, Burnaman, Gaffney, Zeller and Vitulli, with Mr. Talbot
serving as Chairman. It is responsible for the review, recommendation and
approval of compensation arrangements for directors and executive officers, for
the approval of such arrangements for other senior level employees, and for the
administration of certain benefit and compensation plans and arrangements of the
Company and its subsidiaries.
Prior to the Recapitalization the Nominating Committee consisted of all of
the then incumbent directors of the Company. Following the Recapitalization the
Nominating Committee consists of Messrs. Burnaman, Gagalis, Sabin, Wickser and
Vitulli, with Mr. Burnaman serving as Chairman. It is responsible for the
nomination of persons for election to the Board of Directors. The Nominating
Committee will consider nominees recommended by stockholders. Stockholder
recommendations may be sent to the Nominating Committee, Attention: Secretary,
Koll Real Estate Group, Inc., 4343 Von Karman Avenue, Newport Beach, California
92660.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board of Directors, the
Board of Directors has appointed Deloitte & Touche LLP as independent auditors
for the 1998 fiscal year and hereby requests stockholders to ratify such
appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
The non-employee directors of the Company are entitled to receive cash
compensation and compensation pursuant to the plans described below.
CASH COMPENSATION. Non-employee directors of the Company are entitled to
receive compensation of $30,000 per year, with no additional fees for attendance
at Board or committee meetings, except for compensation of $10,000 for service
on the Special Committee formed in September 1997 to consider Mr. Koll's
proposal to acquire the commercial development business described below in
"Certain Transactions". Mr. Burnaman declined such compensation during 1997.
Employee directors are not paid any fees or additional compensation for service
as members of the Board or any of its committees. All directors are reimbursed
for expenses incurred in attending Board and committee meetings. Pursuant to the
Deferred Compensation Plan for Non-Employee Directors, a non-employee director
may elect, generally prior to the commencement of any calendar year, to have all
or any portion of the director's compensation for such calendar year credited to
a deferred compensation account. Amounts credited to the director's account will
accrue interest based upon the average quoted rate for ten-year U.S. Treasury
Notes. Deferred amounts will be paid in a lump sum or in installments commencing
on the first business day of the calendar year following the year in which the
director ceases to serve on the Board, or of a later calendar year specified by
the director.
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1993 STOCK OPTION/STOCK ISSUANCE PLAN. The Company's 1993 Stock
Option/Stock Issuance Plan (the "1993 Plan") contains two separate equity
incentive programs in which members of the Board may be eligible to participate:
(i) a Discretionary Option Grant Program, under which eligible non-employee
members of the Board, along with officers, key employees and consultants, may be
granted options to purchase shares of Common Stock, and (ii) a Director Fee
Program, under which each non-employee member of the Board may elect to apply
all or any portion of his or her annual retainer fee (currently $30,000) to the
acquisition of unvested shares of Common Stock.
Options granted under the Discretionary Option Grant Program may be either
incentive stock options designed to meet the requirements of Section 422 of the
Internal Revenue Code or non-statutory options not intended to satisfy such
requirements.
PLAN ADMINISTRATION. The Discretionary Option Grant Program is administered
by the Compensation Committee of the Board, which is comprised of two or more
non-employee Board members appointed by the Board. The Compensation Committee,
as "Plan Administrator," has complete discretion (subject to the express
provisions of the 1993 Plan) to authorize stock option grants. All grants under
the Director Fee Program are made in strict compliance with the express
provisions of the program, and no administrative discretion is exercised by the
Plan Administrator with respect to the grants or stock issuances made under that
program.
DISCRETIONARY OPTION GRANT PROGRAM. The principal features of the
Discretionary Option Grant Program may be summarized as follows:
The exercise price per share of the Common Stock subject to a stock option
will not be less than 100% of the fair market value per share of that security
on the grant date. No option will have a maximum term in excess of ten years
measured from the grant date. The Plan Administrator has complete discretion to
grant options (i) which are immediately exercisable for vested shares, (ii)
which are immediately exercisable for unvested shares subject to the Company's
repurchase rights, or (iii) which become exercisable in installments for vested
shares over the optionee's period of service. Non-employee members of the Board
who serve as Plan Administrator are not eligible to participate in the
Discretionary Option Grant Program.
The exercise price may be paid in cash or in shares of Common Stock valued
at fair market value on the exercise date. The option may also be exercised for
vested shares through a same-day sale program pursuant to which the purchased
shares are to be sold immediately and a portion of the sale proceeds applied to
the payment of the exercise price for those shares on the settlement date.
Any option held by the optionee at the time of cessation of service will
normally not remain exercisable beyond the limited period designated by the Plan
Administrator (not to exceed 36 months) at the time of the option grant. During
that period, the option will generally be exercisable only for the number of
shares in which the optionee is vested at the time of cessation of service. For
purposes of the 1993 Plan, an individual will be deemed to continue in service
for so long as that person performs services on a periodic basis for the Company
or any parent or subsidiary corporations, whether as an employee, a non-employee
member of the Board or an independent consultant or advisor.
The Plan Administrator has complete discretion to extend the period
following the optionee's cessation of service during which his or her
outstanding options may be exercised and/or to accelerate the exercisability of
such options in whole or in part. Such discretion may be exercised at any time
while the options remain outstanding, whether before or after the optionee's
actual cessation of service.
Any unvested shares of Common Stock are subject to repurchase by the
Company, at the original exercise price paid per share, upon the optionee's
cessation of service prior to vesting in those shares. The Plan Administrator
has complete discretion in establishing the vesting schedule for any such
unvested shares and has full authority to cancel the Company's outstanding
repurchase rights with respect to those shares in whole or in part at any time.
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<PAGE>
The optionee is not to have any stockholder rights with respect to the
option shares until the option is exercised and the exercise price is paid for
the purchased shares. Options are not assignable or transferable other than by
will or by the laws of inheritance following the optionee's death, and the
option may, during the optionee's lifetime, be exercised only by the optionee.
The Plan Administrator may grant options with stock appreciation rights.
Stock appreciation rights provide the holders with the right to surrender their
options for an appreciation distribution from the Company equal in amount to the
excess of (i) the fair market value of the vested shares of Common Stock subject
to the surrendered option over (ii) the aggregate exercise price payable for
such vested shares. Such appreciation distribution may, in the discretion of the
Plan Administrator, be made in cash or in shares of Common Stock.
DIRECTOR FEE PROGRAM. Under the Director Fee Program, each individual
serving as a non-employee Board member is eligible to elect to apply all or any
portion of the annual retainer fee otherwise payable in cash to such individual
(currently $30,000) to the acquisition of unvested shares of Common Stock. The
non-employee Board member must make the stock election prior to the start of the
calendar year for which the election is to be in effect. On the first trading
day in January of the calendar year for which the election is in effect, the
portion of the retainer fee subject to such election will be applied to the
acquisition of the selected shares of Common Stock by dividing the elected
dollar amount by the closing selling price per share of Common Stock on that
trading day. The issued shares will be held in escrow by the Company until the
individual vests in those shares. The non-employee Board member will have full
stockholder rights, including voting and dividend rights, with respect to all
issued shares held in escrow on his or her behalf.
Upon completion of each calendar quarter of Board service during the year
for which the election is in effect, the non-employee Board member will vest in
one-fourth of the issued shares, and the stock certificate for those shares will
be released from escrow. Immediate vesting in all the issued shares will occur
in the event the individual dies or becomes disabled during his or her period of
Board service or certain changes in control or ownership of the Company are
effected during such period. Should the Board member cease service prior to
vesting in one or more quarterly installments of the issued shares, then those
installments will be forfeited, and the individual will not be entitled to any
cash payment from the Company with respect to the forfeited shares.
In 1997 no shares were received in lieu of the cash retainer fee.
FINANCIAL ASSISTANCE. The Plan Administrator may institute a loan program
in order to assist one or more optionees in financing their exercise of
outstanding options under the Discretionary Option Grant Program. The form in
which such assistance is to be made available (including loans or installment
payments) and the terms upon which such assistance is to be provided will be
determined by the Plan Administrator. However, the maximum amount of financing
provided any individual may not exceed the amount of cash consideration payable
for the issued shares plus all applicable Federal, state and local income and
employment taxes incurred in connection with the acquisition of the shares. Any
such financing may be subject to forgiveness in whole or in part, at the
discretion of the Plan Administrator, over the individual's period of service.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table summarizes the compensation
paid during the previous three fiscal years to the Chief Executive Officer and
the Company's other executive officers whose salary and bonus during 1997
exceeded $100,000 (the "Named Executives") for services in all capacities to the
Company.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
ANNUAL ------------------------------------------
COMPENSATION OTHER RESTRICTED 1993 ALL
---------------- ANNUAL STOCK PLAN OTHER
SALARY BONUS COMPENSATION AWARD OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION ($)(1) ($) ($) ($) (# OF SHARES) ($)
- ----------------------------------------------- ------- ------- ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald M. Koll................................. 1997 334,600 275,000(3) -- -- 316,660(7) --
Chairman of the Board and 1996 330,200 275,000(4) -- -- -- --
Chief Executive Officer 1995 325,000 -- -- -- -- --
Ray Wirta...................................... 1997 -- (2) 125,000(3) -- -- 63,332(7) --
Former Chief Executive 1996 103,750(2) 125,000(4) -- -- -- --
Officer 1995 225,000 -- -- -- -- --
Richard Ortwein................................ 1997 359,600 100,000(3) 177,700(6) -- 189,996(7) --
President 1996 359,600 250,000(4) 13,841(6) -- -- --
1995 359,600 -- -- -- -- --
Raymond J. Pacini.............................. 1997 268,000 250,000(3) -- -- 189,996 --
Executive Vice President 1996 268,000 100,000(4) -- -- -- 76,725(8)
and Chief Financial 1995 268,000 200,000(5) -- -- -- --
Officer
Sandra G. Sciutto.............................. 1997 124,100 20,640(3) -- -- -- --
Senior Vice President 1996 105,329 60,000(4) -- -- -- --
and Controller 1995 87,600 -- -- -- -- --
</TABLE>
- ------------------------
(1) Includes auto allowance and amounts electively deferred by each Named
Executive under the Company's 401(k) Savings and Profit Sharing Plan. Mr.
Koll and Mr. Wirta are also executive officers of The Koll Company and its
affiliates and accordingly have devoted less than all of their working time
to the Company's business matters.
(2) Reduced to $95,000 per year effective April 1, 1996 and to $0 effective
October 1, 1996 to reflect a reduction in his day-to-day involvement with
the Company in view of his commitment to devote a greater percentage of his
time to the business of an affiliate of the Company. Effective October 1,
1996, Mr. Wirta also receives a consulting fee equivalent to $50,000 per
year, which will terminate upon completion of the sale of the commercial
development business described below in "Certain Transactions".
(3) Bonuses for 1997 were paid in connection with completion of the Company's
Recapitalization in September 1997.
(4) Bonuses for 1996 were paid following the closing of the Bolsa Chica lowlands
sale in February 1997.
(5) In the first quarter of 1996, Mr. Pacini voluntarily elected to defer
consideration of his 1995 bonus given the Company's liquidity situation. In
September 1996, the Compensation Committee of the Company's Board of
Directors approved Mr. Pacini's bonus for accomplishments during 1995, which
was paid following the closing of the Bolsa Chica lowlands sale in February
1997.
(6) Partnership distributions. See "Certain Transactions--Other Transactions."
(7) The options granted to Messrs. Koll, Wirta and Ortwein are scheduled to be
cancelled upon completion of the sale of the commercial development business
described below in "Certain Transactions".
(8) Reflects a one-time payment representing Mr. Pacini's pro-rata share of
assets distributed from a trust in connection with termination of the
Company's Supplemental Plan described below in "Executive Retirement and
Savings Program".
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUE. The following table sets forth information for each Named
Executive with regard to the aggregate stock options exercised during the 1997
fiscal year, and stock options held as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
VALUE AT FY-END(2) AT FY-END($)(2)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald M. Koll........................... -- -- -- 316,660(3) -- $121,914(3)
Ray Wirta................................ -- -- -- 63,332(3) -- $ 24,383(3)
Richard Ortwein.......................... -- -- -- 189,996(3) -- $ 73,148(3)
Raymond J. Pacini........................ -- -- -- 189,996 -- $ 73,148
</TABLE>
- ------------------------
(1) Market value of underlying securities on exercise date, minus the exercise
price.
(2) Based upon market value of $12.375 for the Common Stock as of December 31,
1997 less the aggregate exercise price payable for such shares. On December
31, 1997, no options granted to Messrs. Koll, Wirta, Ortwein and Pacini were
exercisable, nor did such individuals hold any stock appreciation rights at
the end of such fiscal year.
(3) The options granted to Messrs. Koll, Wirta and Ortwein are scheduled to be
cancelled upon completion of the sale of the commercial development business
described below in "Certain Transactions".
EXECUTIVE RETIREMENT AND SAVINGS PROGRAM
The Company maintains a tax-qualified defined benefit pension plan, which
was available generally to all employees prior to September 30, 1993 who had
completed one year of continuous employment (the "Pension Plan"). As of December
31, 1993, all benefits under the Pension Plan were frozen, and no further
compensation or years of service will be taken into account for additional
benefit accrual purposes, under the Pension Plan. In addition, the Company
maintained the Retirement and Savings Program, terminated in 1996, which was a
non-qualified supplemental benefit plan pursuant to which retirement benefits
were provided to executive officers and other eligible key management employees
who were designated by the Compensation Committee, which determined the service
recognized under the program in calculating a participant's vested interest and
retirement income (the "Supplemental Plan" and, together with the Pension Plan
the "Retirement Program"). The Supplemental Plan was terminated effective
November 15, 1996 through the distribution of assets held in trust to the
beneficiaries of the Supplemental Plan in exchange for the beneficiaries release
of all claims to any future benefits under the Supplemental Plan.
The following table shows as of the date the Pension Plan was frozen the
total estimated annual benefits payable under the Retirement Program in the form
of a 50% joint and survivor annuity to hypothetical participants upon retirement
at normal retirement age, in the compensation and years-of-service categories
indicated in the table.
<TABLE>
<CAPTION>
ANNUALIZED
AVERAGE 10 YEARS 20 YEARS 30 YEARS 40 YEARS
EARNINGS OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 100,000 $ 15,000 $ 30,000 $ 45,000 $ 60,000
200,000 30,000 60,000 90,000 120,000
400,000 60,000 120,000 180,000 240,000
</TABLE>
The years of service recognized under the Retirement Program generally
included all service with the Company and its subsidiaries and their
predecessors. The only credited years of service to the Named Executives as of
the date the Pension Plan was frozen were seven years to Mr. Pacini.
Compensation recognized under the Retirement Program generally included a
participant's base salary (including any portion deferred) and annual bonus
compensation.
10
<PAGE>
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, and its members are named below. No member of
the Compensation Committee was at any time during the 1997 fiscal year or at any
other time an officer or employee of the Company. No executive officer of the
Company serves as a member of the board of directors or compensation committee
of any entity which has one or more executive officers serving as a member of
the Company's Board of Directors or Compensation Committee.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND STOCK PRICE
PERFORMANCE COMPARISON GRAPH SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL AND
SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AND SHALL
NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE
The overall objectives of the Company compensation program are to attract
and retain the best possible executive talent, to motivate these executives to
achieve the goals inherent in the Company's business strategy, to maximize the
link between executive and stockholder interests through an equity based plan
and to recognize individual contributions as well as overall business results.
The key elements of the Company's executive compensation program consist of
fixed compensation in the form of base salary, and variable compensation in the
forms of annual incentive compensation and stock options. An executive officer's
annual base salary represents the fixed component of his total compensation;
however, variable compensation is intended to comprise a substantial portion of
an executive's total annual compensation. The Compensation Committee also takes
into account the fact that executives may also provide services to, and receive
compensation from, other entities. In addition, while the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual, including any pension benefits, supplemental
retirement benefits, insurance and other benefits, as well as the programs
described below.
BASE SALARIES. Base salaries for executive officers are determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for executive talent
including, where appropriate, a comparison to base salaries for comparable
positions at other companies, and to historical levels of salary paid by the
Company and its predecessors. Current base salaries for the Company's executive
officers are at or below the 75th percentile of the compensation data surveyed
during the first quarter of 1994. Since then, the only executive officer salary
increase granted was to Mr. Ortwein in order to bring his salary closer to
comparable levels.
Salary adjustments are based on a periodic evaluation of the performance of
the Company and of each executive officer, and also take into account new
responsibilities as well as changes in the competitive market place. The
Compensation Committee, where appropriate, also considers non-financial
performance measures.
ANNUAL INCENTIVE COMPENSATION AWARDS. The variable compensation payable
annually to executive officers is intended to consist principally of annual
incentive compensation awards, based on various factors, including both
corporate and individual performance, established by the Compensation Committee
each fiscal year. The executive officer bonuses for 1997 were paid upon
completion of the Company's Recapitalization.
OTHER INCENTIVE COMPENSATION. Participation of executives in equity-based
compensation programs is reviewed annually, and awards under such programs,
primarily in the form of stock option grants under the Company's 1993 Stock
Option/Stock Issuance Plan, are made periodically to the executives. Each option
grant is designed to align the interests of the executive with those of the
stockholders and provide each
11
<PAGE>
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. The number of
shares subject to each option grant is based upon the executive's tenure, level
of responsibility and relative position in the Company. The Compensation
Committee has established certain general guidelines in making option grants to
the executives in an attempt to target a fixed number of option shares based
upon the individual's position with the Company and his existing holdings of
options. However, the Company does not adhere strictly to these guidelines and
will vary the size of the option grant made to each executive officer as it
feels the circumstances warrant. In April 1997, in connection with the
Recapitalization, the Compensation Committee approved the grant of options
effective upon the consummation of the Recapitalization equivalent to 2.5%, .5%,
1.5% and 1.5% of the Company's fully diluted equity to Messrs. Koll, Wirta,
Ortwein and Pacini, respectively. The price of such options was determined to be
$11.99 by the 20-day average closing price following completion of the
Recapitalization. Each grant allows the executive to acquire shares of the
Company's stock at a fixed price per share (the market price on the grant date)
over a specified period of time (up to 10 years). The options vest in periodic
installments over a three-year period, generally contingent upon the executive
officer's continued employment with the Company, provided, that if the executive
is terminated without cause, such options shall immediately become 100% vested.
Accordingly, the option will generally provide a return to the executive only if
he remains in the Company's employ and the market price of the Common Stock
appreciates over the option term. In connection with the pending sale of the
commercial development business, described below in "Certain Transactions", the
options held by Messrs. Koll, Wirta and Ortwein will be cancelled.
CEO COMPENSATION. The base salary established for the Company's current and
former Chief Executive Officer, Messrs. Koll and Wirta, respectively, reflects
the Committee's policy to maintain a relative level of stability and certainty
with respect to the CEO's base salary from year to year. In setting the CEO's
base salary, the Committee sought to accomplish three objectives: provide a
level of base salary competitive to that paid to other chief executive officers
in the industry (recognizing that Messrs. Koll and Wirta are each an executive
officer of affiliate companies and accordingly devote less than all of their
working time to the Company's business matters), maintain internal comparability
and have their base salary play a less central role in their overall
compensation package by reason of the option grants made to them in lieu of a
more substantial increase in their level of base salary. The CEO's current base
salary is below the average of the surveyed compensation data for similarly
situated chief executive officers in the industry. The CEO's bonus for 1997 was
paid upon completion of the Recapitalization.
TAX LIMITATION. The cash compensation to be paid to each of the Company's
executive officers for the 1998 fiscal year is not expected to exceed the
$1,000,000 limit on the tax deductibility of such compensation imposed under
federal tax legislation. Any compensation deemed paid to an executive officer
upon the exercise of an outstanding option under the 1993 Plan will qualify as
performance-based compensation which will not be subject to the $1,000,000
limitation.
The Compensation Committee
of the Board of Directors:
J. Thomas Talbot, Chairman
Phillip R. Burnaman II
James J. Gaffney
Paul M. Zeller
Marco F. Vitulli
12
<PAGE>
STOCK PRICE PERFORMANCE COMPARISON
The following graph illustrates the return during the past five years that
would have been realized on December 31 of each year (assuming reinvestment of
dividends) by an investor who invested $100 on December 31, 1992 in each of (i)
the Company's Common Stock, (ii) the Media General Composite Market Value Index
("Media General Index"), and (iii) the Wilshire Real Estate Securities Index of
Real Estate Operating Companies ("Real Estate Index") which consists of 12 real
estate operating and development companies.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
THE COMPANY, REAL ESTATE INDEX AND MEDIA GENERAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REAL ESTATE MEDIA GENERAL
<S> <C> <C> <C>
The Company Index Index
1992 $100.00 $100.00 $100.00
1993 $175.03 $119.37 $114.79
1994 $187.40 $112.68 $113.84
1995 $125.00 $138.33 $147.60
1996 $50.00 $189.33 $178.25
1997 $49.52 $225.19 $231.46
</TABLE>
CERTAIN TRANSACTIONS
SALE OF COMMERCIAL DEVELOPMENT BUSINESS
On March 30, 1998 the Company executed a definitive stock purchase agreement
with Koll Development Company LLC ("KDC") and an affiliated company regarding
the sale of the Company's commercial development business for (1) $30 million in
cash plus adjustments for 1998 activity; and (2) the assumption by KDC of all
liabilities related to the business other than those specifically retained by
the Company, which relate to certain tax and ERISA matters. KDC is a newly
formed limited liability company, whose members include the Company's current
Chairman and Chief Executive Officer, Donald M. Koll and its President, Richard
M. Ortwein. Upon completion of the transaction Messrs. Koll and Ortwein will
resign from their current positions with the Company, and the Company will
change its name to discontinue use of the "Koll" name. Effective upon completion
of the transaction, Raymond J. Pacini, the Company's Chief Financial Officer
since 1992, has been appointed as the Company's new President and Chief
Executive Officer.
13
<PAGE>
The Company received a deposit of $1 million from KDC upon execution of the
stock purchase agreement, which is nonrefundable except under limited
circumstances, including if a higher offer for the commercial development
business ultimately is accepted by the Company, in which case KDC also would be
paid a break-up fee of $2 million plus up to $500,000 for legal and other
advisory fees. The transaction is scheduled to close, subject to various
conditions, on April 30, 1998, unless extended by agreement of the parties. The
Company expects to realize a gain on this transaction of approximately $9.5
million; however, there can be no assurance that the transaction with KDC will
ultimately be completed or close on schedule.
CONSTRUCTION MANAGEMENT AND GENERAL CONTRACTOR AGREEMENTS
In 1995, the Company entered into a construction management agreement with
Koll Construction for infrastructure construction at Rancho San Pasqual. In 1996
and 1997, the Company also entered into general contractor agreements with Koll
Construction in conjunction with a build-to-suit project for a third-party
corporate office building in Nevada and four build-to-suit projects in
California owned by the Company. During the year ended December 31, 1997 the
Company incurred fees aggregating approximately $14.8 million to Koll
Construction in consideration for these services and related reimbursements.
SERVICE AGREEMENTS
In September 1993, the Company entered into a Management Information Systems
and Human Resources Services Agreement with KRES. Under this agreement, KRES
provides computer programming, data processing organization and retention, other
related services until such time as 30 days' prior written notice of termination
is delivered by either party. Also under this agreement, KRES provided payroll,
human resources and other related services through August 31, 1997. Aggregate
fees and related reimbursements incurred under these service agreements were
approximately $200,000 for the year ended December 31, 1997.
SUBLEASE AGREEMENT
In September 1993, the Company entered into an annual Sublease Agreement
with The Koll Company to sublease a portion of The Koll Company affiliate's
office building located in Newport Beach, California. Costs incurred under this
lease were approximately $400,000 for the year ended December 31, 1997.
DEVELOPMENT FEES
For the year ended December 31, 1997, the Company earned fees of
approximately $5.4 million for real estate development and disposition services
provided to partnerships in which The Koll Company and certain directors and
officers of the Company have an ownership interest.
OTHER TRANSACTIONS
Mr. Ortwein is a partner in various partnerships with a subsidiary of the
Company relating to certain development projects, which entitles him to profit
participation after the Company's subsidiary has been reimbursed for all costs
and expenses incurred prior to profit realization. See "Compensation of
Directors and Executive Officers--Compensation of Executive Officers."
OTHER MATTERS
SUBMISSION OF PROPOSALS FOR 1999 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meetings, consistent and regulations adopted by
the Securities and Exchange Commission and the By-Laws of the Company. Proposals
to be considered for inclusion in the proxy statement for the 1999
14
<PAGE>
annual meeting must be received by the Company at its principal executive office
no later than December 18, 1998. Proposals should be directed to the attention
of the Secretary, Koll Real Estate Group, Inc., 4343 Von Karman Avenue, Newport
Beach, California 92660.
COMPLIANCE WITH SECTION 16(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities and Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file various reports
with the Securities and Exchange Commission concerning their holdings of, and
transactions in, securities of the Company. Copies of these filings must be
furnished to the Company.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that there was compliance for the fiscal year
ended December 31, 1997 with all Section 16(a) filing requirements applicable to
the Company's officers, directors and greater than 10% beneficial owners.
ANNUAL REPORT
The Company's 1997 Annual Report to Stockholders, together with this Proxy
Statement, is being mailed to all stockholders of the Company of record on April
20, 1998, the record date for voting at the Annual Meeting.
By Order of the Board of Directors,
[LOGO]
RAYMOND J. PACINI
EXECUTIVE VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND SECRETARY
15
<PAGE>
Please mark
your votes as /X/
indicated in
this example
A vote FOR Proposals 1 and 2 is recommended by the Board of Directors
1. Election of Directors with terms expiring at the Annual Meeting in 1999.
FOR WITHHOLD
each AUTHORITY
nominee to vote for each
listed nominee listed
/ / / /
NOMINEES: Phillip R. Burnaman II, Robert J. Gagabs, Raymond J. Pacini,
Thomas W. Sabin, and J. Thomas Talbot
(Instructions: To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.)
____________________________________________
2. Ratify the appointment of Deloitte & Touche
LLP as independent auditors for the fiscal
year ending December 31, 1998.
FOR AGAINST ABSTAIN
/ / / / / /
This Proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder(s). If
no direction is made, this Proxy will be voted for proposals
1 and 2 above and will be voted as recommended by the
Proxy holders listed on the reverse side hereof as to any
other matters which may properly come before the meeting.
3. To transact such other business as may
properly come before the meeting or any
adjournment or postponement thereof.
Signatures of Stockholder(s)--please sign name below exactly as
imprinted (do not print). Please indicate any change of address.
NOTE: Executor's, administrators, trustees and others signing in
a representative capacity should indicate the capacity in which
they sign. If shares are held jointly, EACH holder should sign.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY.
SIGNATURE(S)_____________________________________
SIGNATURE(S)_____________________________________
DATE_________________________, 1998
<PAGE>
KOLL REAL ESTATE GROUP, INC.
ANNUAL MEETING MAY 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Raymond J.Pacini and Christopher J. Reinhard, each with the power of
substitution, are hereby authorized to vote all shares of Common Stock of
Koll Real Estate Group, Inc. which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders of Koll Real
Estate Group, Inc. to be held on Thursday, May 28, 1998 and at any
adjournments, as specified on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE
REVERSE SIDE HEREOF AND RETURN IT IN THE ENCLOSED ENVELOPE.)
