<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CB COMMERCIAL REAL ESTATE SERVICES 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)(4) 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 Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF CB COMMERCIAL]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
You are invited to attend the Annual Meeting of Stockholders of CB
COMMERCIAL REAL ESTATE SERVICES GROUP, INC., a Delaware corporation (the
"Company"), to be held on Tuesday, May 19, 1998, at 8:00 A.M., local time, at
The Los Angeles Marriott Downtown Hotel, 333 South Figueroa Street, Los
Angeles, California, to consider and act upon the following matters:
1. To elect thirteen (13) Directors to serve as such until the next Annual
Meeting of Stockholders and until their successors are elected and
qualified;
2. To approve the Company's change of name to "CB Richard Ellis Services,
Inc." and the amendment and restatement to the Company's Fourth Restated
Certificate of Incorporation;
3. To ratify the appointment of Arthur Andersen LLP as independent
accountants for the Company for 1998; and
4. To consider and act upon such other matters as may properly come before
the meeting.
Only stockholders of record at the close of business on March 20, 1998 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO THE EXERCISE THEREOF BY
WRITTEN NOTICE TO THE COMPANY, AND STOCKHOLDERS WHO ATTEND THE MEETING MAY
WITHDRAW THEIR PROXIES PRIOR TO THE EXERCISE THEREOF AND VOTE THEIR SHARES
PERSONALLY IF THEY SO DESIRE.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES J. DIDION
Chairman of the Board
Los Angeles, California
March 31, 1998
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
533 SOUTH FREMONT AVENUE
LOS ANGELES, CALIFORNIA 90071-1712
PROXY STATEMENT
This Proxy Statement ("Proxy Statement") is furnished to holders of Common
Stock ("Common Stock") of CB Commercial Real Estate Services Group, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation by
the Company's Board of Directors of proxies to be voted at the Annual Meeting
of Stockholders to be held on May 19, 1998 (the "Annual Meeting"), or at any
adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Stockholders of record
on March 20, 1998, the record date, will be entitled to vote at the Annual
Meeting. At the close of business on the record date, the Company had
18,896,470 shares of Common Stock outstanding and entitled to vote.
Stockholders are entitled to one vote for each share of Common Stock held. The
Annual Meeting will be held at 8:00 A.M., local time, at The Los Angeles
Marriott Downtown Hotel, 333 South Figueroa Street, Los Angeles, California.
The Company's Proxy Statement and form of proxy are being mailed or delivered
to stockholders on approximately March 31, 1998. For purposes of this Proxy
Statement, "CB Commercial" refers to the Company's wholly-owned subsidiary, CB
Commercial Real Estate Group, Inc.
Shares represented by proxies in the form enclosed, if the proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares (other than shares held within the Company's Capital Accumulation Plan
(the "Cap Plan")) will be voted FOR the election of all nominees for Director,
FOR the approval of the Company's name change to "CB Richard Ellis Services,
Inc." and the amendment and restatement of the Company's Fourth Restated
Certificate of Incorporation, and FOR the ratification of the selection of
Arthur Andersen LLP to serve as independent accountants for the Company for
1998. T. Rowe Price Trust Company is the trustee (the "Trustee") for the Cap
Plan and will vote the shares of Common Stock held within the Cap Plan ("Cap
Plan Shares") as directed on the enclosed proxy card by each plan participant
to whose account shares have been credited. The Trustee will vote any Cap Plan
Shares for which participant directions are not received with respect to
proposals 1, 2, and 3 (election of Directors, approval of the Company's name
change, and ratification of appointment of independent accountants) in the
same proportion as the shares of Common Stock for which the Trustee did
receive participant directions. On March 20, 1998, there were 2,217,429 shares
of Common Stock held within the Cap Plan.
Proxies may be revoked at any time before voting by filing a notice of
revocation with the Secretary of the Company, by filing a later dated proxy
with the Secretary of the Company or by voting in person at the Annual
Meeting. Shares represented by proxies that reflect abstentions or "broker
non-votes" (i.e., shares held by a broker or nominee which are represented at
the Annual Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum.
The Board of Directors knows of no matters to come before the Annual Meeting
other than the matters referred to in this Proxy Statement. If, however, any
matters properly come before the Annual Meeting, it is the intention of each
of the persons named in the accompanying proxy to vote such proxies in
accordance with such person's discretionary authority to act in such person's
best judgment.
The expense of soliciting proxies will be borne by the Company. The
principal solicitation of proxies is being made by mail and personal delivery;
however, additional solicitation may be made by telephone, telegram or other
means by Directors, officers, employees or agents of the Company. No
additional compensation will be paid to these individuals for any such
services.
<PAGE>
PROPOSAL NO. 1
NOMINATION AND ELECTION OF DIRECTORS
Shares represented by the enclosed proxy are intended to be voted, unless
authority is withheld, for the election of the 13 Director nominees named
below. Directors are elected annually by a plurality of the votes of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of Directors provided a quorum is present. In
accordance with the Company's By-laws, the Board of Directors adopted a
resolution at its February 24, 1998 meeting reducing the number of Directors
to thirteen, effective at the Annual Meeting. Proxies cannot be voted for a
greater number of persons than the number of nominees named.
Stanton D. Anderson
Gary J. Beban
Richard C. Blum
James J. Didion
Bradford M. Freeman
Donald M. Koll
Paul C. Leach
Frederic V. Malek
Peter V. Ueberroth
Ray Elizabeth Uttenhove
W. Brett White
Gary L. Wilson
Raymond E. Wirta
DIRECTORS AND NOMINEES FOR DIRECTORS
The following is a description of the positions with the Company presently
held by and the business experience for the past five years for each nominee
for Director of the Company.
Stanton D. Anderson, age 57. Mr. Anderson has been a Director of the Company
since 1989. From 1995 to 1997, he served as counsel to the law firm of
McDermott, Will & Emery and became partner of the firm in 1998. Prior to 1995,
Mr. Anderson was founding partner in the law firm of Anderson, Hibey & Blair.
He is also a founder of Global USA, Inc., an international consulting company,
where he serves as Chairman. He served as Deputy Director of the Republican
Convention in 1980, 1984 and 1988, as counsel to the Reagan-Bush Campaign in
1980 and as a Director of the 1980 Presidential Transition. Mr. Anderson
serves on the Board of Directors of International Management & Development
Group, Ltd. Mr. Anderson holds a B.A. degree from Westmont College and a J.D.
degree from Willamette University School of Law.
Gary J. Beban, age 51. Mr. Beban has been President--Corporate Services
since 1997 and a Director since 1989. He joined the Company's Los Angeles
office in 1970 as an industrial and investment properties specialist and
thereafter served in several management positions in Chicago. Mr. Beban was
President--Brokerage Services from 1987 to 1997. He is a member of the
Industrial Development Research Council and the National Realty Committee. Mr.
Beban serves on the Board of Directors of The First American Financial
Corporation and its wholly-owned subsidiary, First American Title Insurance,
Inc. Mr. Beban holds a B.A. degree from the University of California, Los
Angeles.
Richard C. Blum, age 62. Mr. Blum has been a Director of the Company since
1993. He is the Chairman and President of Richard C. Blum & Associates, Inc.,
a merchant banking firm he founded in 1975. Mr. Blum is a member of the Board
of Directors of Northwest Airlines Corporation; Glenborough Realty; and
URS Corporation. Mr. Blum also serves as Vice Chairman of URS Corporation. Mr.
Blum holds a B.A. degree from the University of California, Berkeley, a
graduate degree from the University of Vienna and an M.B.A. degree from the
University of California, Berkeley.
2
<PAGE>
James J. Didion, age 58. Mr. Didion has been Chairman and Chief Executive
Officer of the Company since January 1987 and a Director since the Company's
incorporation. Previously, he served as President of the Company following a
career of almost 24 years in sales and management positions in the commercial
brokerage operations of CB Commercial. Mr. Didion is a member and current
trustee of the Urban Land Institute. He is also a member of the National
Realty Committee and was Chairman of the National Realty Committee from 1993
through June 1996. Mr. Didion holds an A.B. degree from the University of
California, Berkeley and serves on the University's Advisory Board for the
Haas School of Business.
Bradford M. Freeman, age 56. Mr. Freeman has been a Director of the Company
since August 1997. Mr. Freeman was a director of Koll Real Estate Services and
Koll Management Services, Inc. from November 1994 to August 1997. Mr. Freeman
is a founding partner of Freeman Spogli & Co. Incorporated, a private
investment company, and its affiliated investment partnerships or companies,
founded in 1983. Mr. Freeman is also a member of the Board of Directors of RDO
Equipment Company, an agricultural and industrial equipment distributor. Mr.
Freeman holds a B.A. degree from Stanford University and an M.B.A. degree from
Harvard University.
Donald M. Koll, age 64. Mr. Koll has been a Director of the Company since
August 1997. Mr. Koll was a director of Koll Real Estate Services from
November 1994 to August 1997 and Chairman from August 1996 to August 1997. He
also served as Chairman and as a director of Koll Management Services, Inc.
from June 1988 to August 1997, and served as the Chief Executive Officer of
Koll Management Services, Inc. from June 1988 to May 1991. Mr. Koll founded
The Koll Company in 1962 and has served as Chairman and Chief Executive
Officer of The Koll Company since that time. Since June 1992, Mr. Koll has
been a director and has served as an executive officer of Koll Real Estate
Group, Inc., a real estate services company, which filed for Chapter 11
bankruptcy protection on July 14, 1997 with a reorganization plan preapproved
by its bondholders. Mr. Koll is also a director of The Irvine Company and
Fidelity National Financial, Inc., a title company. He holds a B.A. degree
from Stanford University.
Paul C. Leach, age 52. Mr. Leach has been a Director of the Company since
August 1996. Since its founding in 1991, Mr. Leach has served as President of
Paul Leach & Company, a private investment banking firm in San Francisco that
specializes in international and domestic acquisitions and investments. He has
also been Managing Director of The Lone Cypress Company, the owner of Pebble
Beach Company, since 1992. From 1988 through 1991, Mr. Leach was a senior
manager and partner in the international merger and acquisition group at
Deloitte & Touche. Prior to 1988, he held several positions in San Francisco,
including serving as a partner with both Osterweis Capital Management and
Centennial Petroleum Company and manager of corporate development for Natomas
Company. From 1975 through 1977, Mr. Leach served as associate director of the
Domestic Council Staff at the White House during the Ford Administration. Mr.
Leach holds an A.B. degree from Dartmouth College and M.B.A. and J.D. degrees
from Stanford Graduate School of Business and Stanford Law School,
respectively.
Frederic V. Malek, age 61. Mr. Malek has been a Director of the Company
since 1989 and served as Co-Chairman from April 1989 to November 1996. He has
served as Chairman of Thayer Capital Partners, a merchant banking firm he
founded, since 1993. He was President of Marriott Hotels and Resorts from 1981
through 1988 and was Executive Vice President of Marriott Corp. from 1978
through 1988. He was Senior Advisor to the Carlyle Group, L.P., a merchant
banking firm, from November 1988 through December 1991. From September 1989
through June 1990, he was President of Northwest Airlines and, from June 1990
through December 1991, he served as Vice Chairman of Northwest Airlines. From
December 1991 through November 1992, Mr. Malek served as Campaign Manager for
the 1992 Bush/Quayle presidential campaign. He also serves on the Board of
Directors of American Management Systems, Inc.; Automatic Data Processing
Corp.; Choice Hotels, Inc.; FPL Group, Inc.; Manor Care, Inc.; Northwest
Airlines Corporation; Paine Webber Funds; and Sunburst Hospitality Corp. Mr.
Malek holds a B.S. degree from the United States Military Academy at West
Point and an M.B.A. degree from the Harvard University Graduate School of
Business.
3
<PAGE>
Peter V. Ueberroth, age 60. Mr. Ueberroth has been a Director of the Company
since 1989. Since 1989, he has been an investor and Managing Director of
Contrarian Group, Inc., a business management company. From 1984 through 1989,
he was the Commissioner of Major League Baseball in the United States.
Mr. Ueberroth is a member of the Board of Directors of The Coca Cola Company;
Ambassadors International, Inc.; Promus Hotel Corporation; and Transamerica
Corporation.
Ray Elizabeth Uttenhove, age 50. Ms. Uttenhove has been a Director of the
Company since August 1997 and Senior Vice President of the Company since
September 1997. Ms. Uttenhove also served as First Vice President of Retail
Tenant Services of the Company from August 1995 to September 1997. Ms.
Uttenhove joined the Company in March 1981. She has been named to the
Company's Colbert Coldwell Circle (representing the top three percent of the
Company's sales force) for 1995 and 1996. In 1995 she was awarded the William
H. McCarthy Award, the highest honor awarded producing professionals within
the Company. Ms. Uttenhove holds a B.A. degree from Mary Baldwin College and
M.A. and M. Ed. degrees from Georgia State University.
W. Brett White, age 38. Mr. White has been President--Brokerage Services
since August 1997. Previously, he was Executive Vice President of CB
Commercial from March 1994 to July 1997, and Managing Officer of the CB
Commercial Newport Beach, California office from 1992 to March 1994. Mr. White
holds a B.A. degree from the University of California, Santa Barbara.
Gary L. Wilson, age 58. Mr. Wilson has been a Director of the Company since
1989. Since April 1997, Mr. Wilson has been Chairman of Northwest Airlines
Corporation, for which he served as Co-Chairman from January 1991 to April
1997. From 1985 until January 1990, Mr. Wilson was an Executive Vice
President, Chief Financial Officer and Director for The Walt Disney Company
and remains a Director of The Walt Disney Company. Mr. Wilson also serves on
the Board of Directors of On Command Corporation and Veritas Holdings GmbH.
From 1974 until 1985, he was Executive Vice President and Chief Financial
Officer of Marriott Corporation. Mr. Wilson holds a B.A. degree from Duke
University and an M.B.A. degree from the Wharton Graduate School of Business
and Commerce at the University of Pennsylvania.
Raymond E. Wirta, age 54. Mr. Wirta has been a Director and President--
Financial Services of the Company since August 1997 and acting Chief Operating
Officer of the Company since March 1998. Mr. Wirta is expected to be appointed
Chief Operating Officer of the Company by the Board of Directors at its
meeting on May 19, 1998. Mr. Wirta was Chief Executive Officer of Koll Real
Estate Services from November 1994 to August 1997, and Chief Executive Officer
of Koll Management Services, Inc. from May 1991 to August 1997. He was also a
Director of Koll Real Estate Services from November 1994 to August 1997 and of
Koll Management Services, Inc. from June 1988 to August 1997. Prior to that
time, Mr. Wirta held various management positions with Koll Management
Services, Inc. since 1981. Mr. Wirta is a member of the Board of Directors and
served as Chief Executive Officer from June 1992 to November 1996 to Koll Real
Estate Group, Inc., which filed for Chapter 11 bankruptcy protection on July
14, 1997 with a reorganization plan preapproved by its bondholders. Mr. Wirta
is a Certified Property Manager and holds a B.A. degree from California State
University, Long Beach and an M.B.A. degree in International Management from
Golden Gate University.
4
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's voting capital stock as of February 28, 1998 by:
(i) each person who is known by the Company to own beneficially more than five
percent of each class of the Company's voting stock; (ii) each of the
Company's directors and nominees for directors; (iii) each of the Company's
executive officers named under "Executive Compensation--Summary Compensation
Table;" and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
TITLE
OF
CLASS NUMBER OF SHARES PERCENT
------ ---------------- -------
<S> <C> <C> <C>
The Capital Group Companies, Inc. (1).... Common 1,618,000 8.56%
333 South Hope Street
Los Angeles, California 90071
FS Equity Partners III, L.P. (2)......... Common 3,402,463 18.00%
FS Equity Partners International, L.P.
11100 Santa Monica Blvd.
Suite 1900
Los Angeles, California 90025
Stanton D. Anderson (3).................. Common 27,351 *
Gary J. Beban (3)........................ Common 190,491 1.00%
Richard C. Blum (3)(4)................... Common 465,167 2.46%
Richard C. Clotfelter (3)(5)............. Common 118,835 *
Daniel A. D'Aniello (3)(6)............... Common 4,235 *
James J. Didion (3)(5)(7)................ Common 477,056 2.50%
Bradford M. Freeman (2).................. -- -- --
John C. Haeckel (3)...................... Common 43,000 *
Hiroaki Hoshino.......................... -- -- --
Thaddeus W. Jones (3).................... Common 82,233 *
George J. Kallis (3)(5).................. Common 114,934 *
Ricardo Koenigsberger (8)................ Common 512,839 2.71%
Takayuki Kohri........................... -- -- --
Donald M. Koll (3)(9).................... Common 1,042,503 5.43%
Paul C. Leach............................ -- -- --
Frederic V. Malek (3).................... Common 318,808 1.69%
Lawrence J. Melody (3)(5)................ Common 10,796 *
Walter V. Stafford (5)................... Common 62,576 *
Peter V. Ueberroth (3)................... Common 14,167 *
Ray E. Uttenhove (5)(10)................. Common 3,559 *
W. Brett White (3)....................... Common 13,538 *
Gary L. Wilson (3)....................... Common 4,167 *
Raymond E. Wirta (3)..................... Common 526,589 2.71%
All directors and executive officers as a
group (27 persons) (11)................. Common 7,075,218 35.94%
</TABLE>
- --------
* Less than 1%.
(1) Based upon Amendment No. 1 to Schedule 13G dated February 10, 1998. The
Capital Group Companies, Inc. is a parent holding company of a group of
investment companies that hold investment power and, in some cases, voting
power over the securities represented herein. The investment management
companies, which include a "bank" as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934 (the "Act") and several investment
advisers registered under Section 203 of the Investment Advisers Act of
1940, provide investment advisory and management services for their
respective clients which include registered investment companies and
institutional accounts. The Capital Group Companies, Inc. does not have
investment power or voting power over any of the securities represented
herein; however, The Capital Group Companies, Inc. may be deemed to
"beneficially own" such securities by virtue of Rule 13d-3 under the Act.
5
<PAGE>
(2) Based upon a Schedule 13D dated August 28, 1997. Includes 3,278,448
shares of Common Stock, and does not include 351,585 warrants to purchase
Common Stock, held by FS Equity Partners III, L.P., of which FS Capital
Partners, L.P. is the general partner. Bradford M. Freeman, a Company
Director, is a stockholder of FS Holdings, Inc., the general partner of
FS Capital Partners, L.P. Also includes 124,015 shares of Common Stock,
but not 13,299 warrants, held by FS Equity Partners International, L.P.,
of which FS&Co. International, L.P. is the general partner. Mr. Freeman
is a stockholder of FS International Holdings Limited, the general
partner of FS&Co. International, L.P. Mr. Freeman has shared investment
power over the securities and disclaims ownership of the shares and
warrants except to the extent of his pecuniary interest.
(3) Represents number of shares of Common Stock which the named individual
beneficially owns as well as those which the individual has options to
acquire that are exercisable on or before May 30, 1998, which options
have not been exercised. The respective numbers shown in the table
include the following number of option shares for the following
individuals: Anderson--4,235; Beban--67,500; Blum--4,167; Clotfelter--
5,000; D'Aniello--4,235 (options issued to the Carlyle Group, L.P.);
Didion--152,419; Haeckel--8,000; Jones--35,000; Kallis--40,000; Koll--
308,213; Malek--5,934; Melody--10,588; Ueberroth--4,167; Wirta--521,589
(options include an option to purchase 521,589 shares of Common Stock
from The Koll Holding Company); and Wilson--4,167.
(4) Includes 461,000 shares held by BK Capital Partners I, L.P., BK Capital
Partners II, L.P., BK Capital Partners IV, L.P., Stinson Capital
Partners, L.P. and Stinson Capital Partners II, L.P. for which Richard C.
Blum & Associates, L.P. is the general partner and a managed account of
which Richard C. Blum & Associates, L.P. is investment manager. Mr. Blum
is a controlling person and Chairman of Richard C. Blum & Associates,
Inc., the general partner of Richard C. Blum & Associates, L.P. and he is
also a limited partner of Richard C. Blum & Associates, L.P. Mr. Blum
disclaims beneficial ownership of these securities except to the extent
of his pecuniary interest therein.
(5) Does not include shares of Common Stock issued in the name of the Company
in respect of Common Stock units credited to the following persons in the
following amounts under the Company's Deferred Compensation Plan but
which are not beneficially owned by such persons: Clotfelter--1,895;
Didion--121,970; Kallis--10,991; Melody--982; Stafford--13,805; and
Uttenhove--598. The foregoing amounts do not include any Common Stock
units credited in respect of the deferred portion, if any, of bonuses
payable for 1997.
(6) Represents 4,235 shares of Common Stock subject to outstanding options
issued in the name of the Carlyle Group, L.P., which, by virtue of Mr.
D'Aniello's interest in the general partner of the Carlyle Group, L.P.
and investment control over such securities, may be deemed to be
beneficially owned by Mr. D'Aniello.
(7) Includes 6,000 shares held by a trust for the benefit of three members of
Mr. Didion's immediate family.
(8) Includes 216,864 shares of Common Stock (but does not include 23,256
warrants) held by AP KMS II, LLC, whose sole member is Apollo Real Estate
Investment Fund II, L.P., an affiliate of which employs
Mr. Koenigsberger. Also includes 295,975 shares of Common Stock (but does
not include 68,631 warrants) held by AP KMS Partners, L.P., which is the
general partner of APGP KMS Partners, L.P., which is the general partner
of AP KMS Acquisition Corporation, of which Mr. Koenigsberger is an
officer. Mr. Koenigsberger disclaims beneficial ownership of the shares
and warrants except to the extent of his pecuniary interest therein.
(9) Represents number of shares of Common Stock held by The Koll Holding
Company, which is wholly-owned by The Koll Company, which in turn is
wholly-owned by The Koll Company Stock Trust, of which Mr. Koll is the
trustee and co-beneficiary. Does not include 78,746 warrants to purchase
Common Stock. Includes shares that are subject to the options held by
Mr. Wirta (521,589 shares) and Mr. William S. Rothe (78,238 shares).
(10) Includes 103 shares for which Ms. Uttenhove shares investment and voting
power with her husband.
(11) Includes 789,585 shares of Common Stock subject to outstanding options
exercisable on or before May 30, 1998 (not including Mr. Wirta's option
to purchase 521,589 shares, and Mr. Rothe's option to purchase 78,288
shares, from The Koll Holding Company).
6
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during calendar year 1997. Mr.
Kohri was absent from two of the Board of Directors meetings.
The Executive Committee is composed of five members and met five times in
1997. The members of the Executive Committee are Messrs. Didion, Beban, Wirta,
Haeckel and Stafford, however, only three members of such Committee vote,
Messrs. Didion, Beban and Wirta. The Executive Committee acts on behalf of the
Board of Directors when the Board of Directors is not in session.
The Compensation Committee is composed of four members and met two times in
1997. The members of the Compensation Committee are Messrs. Blum, Freeman,
Koll and Ueberroth. The Compensation Committee is authorized to determine the
salaries of the Company's Chairman and Chief Executive Officer and, upon the
recommendation of the Chief Executive Officer, the salaries and incentive
compensation of the President and Chief Financial Officer. The Compensation
Committee also authorizes the adoption of employee benefit plans (other than
plans which involve more than 250,000 shares of Common Stock) and makes grants
of stock options, restricted stock awards and all other stock related
incentive compensation awards to employees and directors pursuant to plans
adopted by the Company. Outside directors compromise all of the members of the
Compensation Committee.
The Audit Committee is composed of three members and met two times in 1997.
The members of the Audit Committee are Messrs. Anderson, D'Aniello, and Leach,
who are outside directors of the Company. The purpose of the Audit Committee
is to recommend a firm of independent public accountants to be appointed by
the Board of Directors subject to stockholder ratification, review the
Company's annual consolidated financial statements and consult with the
representatives of the independent public accountants and the Chief Financial
Officer and Principal Accounting Officer with regard to the adequacy of
internal controls.
The Acquisition/Investment Committee is composed of five members and met two
times in 1997. The members of the Acquisition/Investment Committee are Messrs.
Blum, Didion, Malek, Ueberroth and Wilson. The purpose of the
Acquisition/Investment Committee is to authorize the undertaking by the
Company of definitive negotiations with respect to any acquisition or
investment that contemplates the issuance of any class of the Company's stock
up to $25 million or the aggregate cost of which is likely to exceed $10
million but not more than $25 million. Acquisitions with a cost of over $25
million require approval of the Board of Directors. Cost includes the purchase
price of the acquisition plus any long-term indebtedness assumed.
The Corporate Governance Committee is composed of three members and met one
time in 1997. The members of the Corporate Governance Committee are Messrs.
Anderson, Leach and Malek. The purpose of the Corporate Governance Committee
is to oversee matters related to corporate governance, including the process
of nominating directors for election, and to nominate directors for election.
The Corporate Governance Committee considers nominees recommended by
stockholders and recommends nominees to the Board of Directors. The Corporate
Governance Committee has not yet established procedures for stockholders to
follow in submitting recommendations.
Mr. Kohri attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors during fiscal 1997. Mr. Kohri did not serve
on any committee during fiscal 1997.
DIRECTORS FEES
Each of the Directors of the Company who is not also an executive officer is
entitled to receive a fee of $2,500 for attendance at each meeting of the
Board of Directors, $2,500 for attendance at each meeting of a board committee
which does not coincide with a Board of Directors meeting and an annual
retainer of $15,000. No Director received compensation from the Company for
services as a Director in 1997 in excess of $27,500. Non-employee Directors
are reimbursed for their expenses for each meeting attended.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth information
concerning the compensation of the Company's Chief Executive Officer and the
Company's four most highly compensated executive officers for the three years
ended December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------ ----------------------
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS OPTIONS COMPENSATION(3)
- --------------------------- ---- -------- -------- --------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James J. Didion 1997 $500,000 $800,000 $131,718 -- 200,000 $1,846
Chairman of the Board 1996 400,000 574,678 58,224 (4) -- 1,262
and Chief Executive 1995 390,000 279,160 51,212 -- -- 1,520
Officer
Gary J. Beban 1997 $325,000 $739,273 -- -- 60,000 $1,846
President 1996 325,000 503,156 -- (4) -- 1,262
1995 300,000 190,527 -- -- -- 1,520
Walter V. Stafford 1997 $300,000 $502,591 $ 60,395 -- -- --
Senior Executive Vice 1996 300,000 359,798 -- (4) -- --
President 1995(5) 114,646 116,998 -- $ 167,000(6) -- --
and General Counsel
John C. Haeckel 1997(7) $206,250 $450,749(8) -- (9) 40,000 --
Senior Executive Vice 1996 -- -- -- -- -- --
President and Chief 1995 -- -- -- -- -- --
Financial Officer
Thaddeus W. Jones 1997 $220,000 $428,798 -- -- -- --
Senior Executive Vice 1996 210,000 309,826 -- -- -- --
President 1995 210,000 173,079 -- -- -- --
</TABLE>
- --------
(1) Bonus for each year is paid in the first quarter of the following year.
(2) (a) With respect to bonuses payable for 1995, under the Company's Deferred
Compensation Plan, an individual who elected to defer any of such bonus
for investment in shares of Common Stock was credited with such shares
based on the appraised value of the shares at the time the election to
defer was made. The amount shown represents the difference between the
aggregate appraised value of such shares at the time the bonus was paid
and the aggregate appraised value of such shares at the time the election
to defer was made. The amount shown relates to the bonus payable in the
first quarter of the following year.
(b) With respect to Other Annual Compensation paid in 1996 and 1997, the
amounts listed include $12,000 automobile allowance and the interest
accrued in 1996 and forgiven in 1997, and the interest accrued in 1997 and
forgiven in 1998, under the promissory notes delivered by Messrs. Didion
and Stafford pursuant to the Company's Equity Incentive Plan (See note 4).
(3) Consists of each individual's allocable share of profit sharing
contributions in the form of shares of Common Stock made by the Company to
the Company's Cap Plan, based on the value of the stock at the time of
contribution based on the appraised or market value of Common Stock.
(4) Pursuant to the Company's Equity Incentive Plan in 1996 shares of Common
Stock were purchased by such individual for a purchase price of $10 per
share (the appraised value of the Common Stock at the time of such
purchase), which was paid by delivery of a full recourse promissory note.
The notes bear interest at the rate of 6.84% per annum which may be
forgiven if the executive's performance produces a high enough level of
bonus (approximately $7,500 in interest is forgiven for each $10,000
bonus). The aggregate number and value of such shares held by the
individuals named above as of December 31, 1997 and net of the purchase
price of such shares was as follows: Mr. Didion--175,027 ($3,883,412); Mr.
Beban--53,910 ($1,196,128); and Mr. Stafford--58,369 ($1,295,062). The
shares vest at the rate of 5 percent per quarter commencing December 31,
1995. As a result of bonuses paid in 1997 and in 1998, all interests on
the various promissory notes for 1996 and 1997, respectively, were
forgiven.
(5) Mr. Stafford's employment by the Company commenced in July 1995.
(6) Represents the appraised value of a restricted stock award at the date of
grant. The aggregate number of shares and value of restricted stock
(excluding stock issued pursuant to the Company's Equity Incentive Plan)
held by Mr. Stafford as of December 31 ,1997 was 13,750 shares having a
then current market value
8
<PAGE>
of $442,578. The shares awarded to Mr. Stafford vest at the rate of 20
percent per year. The holders of shares of restricted stock are entitled to
receive dividends on such shares to the extent dividends are paid on the
Common Stock.
(7) Mr. Haeckel's employment by the Company commenced in April 1997.
(8) Includes a bonus of $75,000 paid in the second quarter of 1997. A pro rata
portion is repayable to the Company if Mr. Haeckel resigns or is
terminated for cause prior to April 1, 1998.
(9) Pursuant to the Company's Equity Incentive Plan, Mr. Haeckel purchased
35,000 shares of Common Stock for a purchase price of $23.50 per share
(the market value of the Common Stock at the time of such purchase), which
was paid by delivery of a full recourse promissory note. The note bears
interest at a rate of 6.8% per annum which may be forgiven if the
executive's performance produces a high enough level of bonus
(approximately $7,500 in interest is forgiven for each $10,000 bonus). Mr.
Haeckel held a total of 35,000 shares as of December 31, 1997, valued at
$304,063, net of purchase price of the shares.
At a meeting of the Board of Directors held on May 20, 1997, the Board of
Directors authorized the Compensation Committee to negotiate an employment
agreement containing a compensation program for Mr. Didion effective January
1, 1997 which includes (i) a salary increase of $100,000 to $500,000, (ii) an
annual bonus of between 0 and 200% of salary based upon the Company's
achieving the EBITDA target designated by the Compensation Committee which for
1997 was $68.1 million (with the bonus subject to a reduction of up to 25%
based upon an individual performance assessment by the Compensation Committee)
and (iii) an option grant for 200,000 shares of Common Stock at their fair
market value on the day of grant. Subsequent to such board meeting, the
Compensation Committee granted Mr. Didion a stock option for 200,000 shares
which vests at the rate of approximately 3.23% per month. The option price is
$21.50, the fair value on the date of grant. On May 23, 1997, the Company and
Mr. Didion entered into an employment agreement containing the compensation
program described above. In addition, the employment agreement provides that
if Mr. Didion is terminated without cause, his 200,000 share stock option
fully vests and he is entitled to a lump sum payment equal to approximately
2.7 times his annual salary. If such a termination occurs during the twelve
month period following a change of control of the Company, the severance
amount is subject to reduction for any amounts Mr. Didion earns for services
rendered to the Company during the two years following such termination and
also is subject to reduction to the level necessary to avoid the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code").
OPTION GRANTS TABLE. The following table sets forth information concerning
grants of stock options during the year ended December 31, 1997 to the persons
named in the preceding table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENTAGE VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERM
UNDERLYING EMPLOYEES PRICE EXPIRATION ---------------------
NAME OPTION GRANTED IN 1997 PER SHARE DATE 5% ($) 10% ($)
---- -------------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James J. Didion 200,000(1) 11.16% $21.50 5/21/07 $2,704,247 $6,853,093
Gary J. Beban 60,000(2) 3.35% $31.00 9/22/07 $1,169,744 $2,964,361
John C. Haeckel 40,000(3) 2.23% $23.75 3/30/07 $ 597,450 $1,514,055
</TABLE>
- --------
(1) 3.22581% of the options granted may be exercised on each one-month
anniversary beginning June 22, 1997.
(2) One-fifth of the options granted may be exercised on each of September 30,
1998, 1999, 2000, 2001 and 2002.
(3) 5% of the options granted may be exercised at the end of each calendar
quarter beginning June 30, 1997.
9
<PAGE>
AGGREGATED OPTIONS TABLE. The following table sets forth information
concerning unexercised options held as of December 31, 1997 by the persons
named in the table under "Summary Compensation Table" above. As of February
28, 1998, no options have been exercised by any of such persons.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT DECEMBER 31, 1997 OPTIONS AT DECEMBER 31, 1997
-------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
James J. Didion 120,161 154,839 $ 2,146,721 $1,654,842
Gary J. Beban 67,500 62,500 $ 1,497,656 $ 126,719
Walter V. Stafford -- 0 -- -- 0 -- -- --
John C. Haeckel 8,000 32,000 $ 67,500 $ 270,000
Thaddeus W. Jones 35,000 5,000 $ 776,563 $ 110,938
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS. The members of the Compensation Committee of the Board of
Directors, who are appointed by the Board of Directors, are Messrs. Blum,
Freeman, Koll and Ueberroth.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Company's policies relating to compensation of its executive officers
and other senior executives are intended to provide incentives to attract,
retain and reward executives in order to enhance the Company's profitability
and performance. This goal is achieved in part by materially linking each
individual executive's compensation with the results achieved by such
executive.
Compensation of each of the named executive officers as well as other senior
executives consists of a base salary and annual incentive compensation. Base
salaries are generally below competitive levels as the Company relies
significantly on annual and longer term incentive compensation to attract,
retain and motivate senior managers.
Annual incentive compensation, which generally is paid in cash, is tied to
the Company's financial performance and the results achieved by each
individual executive in the preceding fiscal year. The annual incentive
compensation actually paid to each executive is based on the Company's level
of financial performance and the executive's achievement of individual
performance goals established at the beginning of the year. Performance goals
range from specific financial goals (such as sales growth, margin improvement
or cost reductions) to strategic goals (such as increased market share, new
product development and innovation and cross-selling) to management goals
(such as productivity and quality improvement and personnel matters). Specific
weighting is assigned to each identified goal. At the end of the year,
performance of these goals is determined on an arithmetic scale with the pre-
established weighting.
The Chief Executive Officer's annual incentive compensation, like that of
other executives, is tied to the Company's financial performance and the
results achieved by the Chief Executive Officer as evaluated by the
Compensation Committee. The Chief Executive Officer's annual incentive
compensation for 1997 was based on the significant improvement in the
Company's operating results in 1997 over 1996. Income before interest, taxes,
depreciation and amortization increased to $90.1 million from $62.0 million in
1996. The Chief Executive Officer's annual incentive compensation is dependent
upon achieving an EBITDA target agreed upon for each year as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF INCENTIVE AS
EBITDA TARGET A PERCENTAGE
ACHIEVED OF SALARY
------------- ------------
<S> <C>
Less than 90% 0
90% 25%
100% 75%
110% 100%
120% 125%
130% 150%
140% 200%
</TABLE>
10
<PAGE>
The Chief Executive Officer's annual incentive for any year may be reduced
by the Compensation Committee by up to 25% if he fails to meet specific
personal goals established by the Committee for that year.
Executive officers and other senior officers are also provided longer term
incentive compensation through grants of restricted stock awards and stock
options which vest over time. The Compensation Committee believes that stock
option grants provide an incentive to senior management to view the Company
from the perspective of equity shareholders because such options provide value
to the recipient only when the value of the Company's stock increases above
the grant price of the options. Grants of restricted stock provide a similar
incentive. In determining the grants of and recommendations of grants of
restricted stock and stock options to individual executives (other than to the
Chief Executive Officer), the Chief Executive Officer considers, among other
things, the level of responsibility and contribution and anticipated
performance requirements of each individual. During 1997, the Compensation
Committee commissioned a study by an independent third party as to whether the
level of long-term incentive compensation provided to executive officers was
adequate and competitive. The study concluded that generally the levels were
correct but that two officers were well below appropriate levels. Each was
granted a 60,000 share option at market value.
In 1996 the Compensation Committee of the Board of Directors adopted the
1996 Equity Incentive Plan (the "Equity Incentive Plan") and the Board of
Directors reserved 550,000 shares of Common Stock for issuance thereunder. The
purpose of the plan is to offer selected senior executives an opportunity to
acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing shares of the Company's Common Stock. In 1996, an
aggregate of 510,906 shares were sold to senior executives for a purchase
price equal to $10 per share, and in 1997, 35,000 shares were sold to a senior
executive for a purchase price of $23.50. See Note 4 to "Executive
Compensation--Summary Compensation Table" above.
In 1993 the Code was amended to eliminate the deduction for compensation in
excess of $1 million per year paid to the chief executive officer and the four
top-paid executive officers of public reporting companies. The Company
currently does not intend to limit compensation to its executive officers
because of limits on deductions under the Code.
The Compensation Committee believes that its actions are, and have been,
consistent with the Company's policies as noted above and in the best
interests of the Company's stockholders.
The foregoing report has been furnished by Messrs. Blum, Freeman, Koll, and
Ueberroth. The Compensation Committee is appointed by the Board of Directors
and consists of outside, independent directors.
11
<PAGE>
STOCK PERFORMANCE GRAPH. Set forth below is a graph comparing the yearly
percentage change in the cumulative total stockholder return on the Company's
Common Stock with the cumulative total stockholder return of (i) the NASDAQ
Market Index; (ii) the NYSE Market Index (the Company moved to, and commenced
trading on, the New York Stock Exchange on November 7, 1997); and (iii) a peer
group index consisting of the common stock of Grubb & Ellis Co., a commercial
real estate brokerage company traded on the New York Stock Exchange, for the
period from December 31, 1992 through December 31, 1997. Cumulative total
stockholder return consists of change in stock price and cumulative dividends,
assuming dividend reinvestment. The amount used for the stock price of the
Company's Common Stock for periods prior to November 26, 1996 (when the Common
Stock commenced trading on The Nasdaq National Market) is the appraised value
for purposes of the Company's Capital Accumulation Plan of the Company's Class
B-2 Common Stock (which converted into Common Stock on a one-for-one basis on
December 2, 1996). The appraised value reflected a discount applied by the
outside appraisal firm due to the Company's stock not being publicly traded and
being subject to numerous restrictions on transfer. The comparisons in this
table are required by the Securities and Exchange Commission and are not
intended to forecast or be indicative of possible future performance of the
Company's stock.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
NYSE NASDAQ
Measurement Period CB COMMERCIAL PEER MARKET MARKET
(Fiscal Year Covered) REAL ESTATE GROUP INDEX INDEX
- ----------------------- ------------- ------- ------- -------
<S> <C> <C> <C> <C>
Measurement Pt-FYE 1992 $100.00 $100.00 $100.00 $100.00
FYE 1993 $108.33 $ 62.50 $113.54 $119.95
FYE 1994 $139.17 $ 40.00 $111.33 $125.94
FYE 1995 $165.67 $ 40.00 $144.36 $163.35
FYE 1996 $333.33 $ 90.00 $173.90 $202.99
FYE 1997 $536.50 $273.75 $228.78 $248.30
</TABLE>
MANAGEMENT
The following persons are executive officers in addition to the executive
officers included under "Directors and Nominees for Directors." All executive
officers hold their office at the pleasure of the Board of Directors:
John C. Haeckel, age 39. On April 1, 1997, Mr. Haeckel joined the Company as
Chief Financial Officer and Senior Executive Vice President. From January 1996
to March 1997, Mr. Haeckel was President of Perdix Group, LLC, a management
consulting firm that he founded. From October 1993 to November 1995, he was
Chief Financial Officer and from April 1994 to November 1995 he was Executive
Vice President of Broadway Stores, Inc. From 1987 to 1994 he was a General
Partner and from 1984 to 1986 he was an Associate with Chilmark Partners, a
merchant banking firm. Mr. Haeckel holds a B.A. degree and a Masters of
Business and Public Management degree from Rice University.
12
<PAGE>
Thaddeus W. Jones, age 55. Mr. Jones has been Senior Executive Vice
President of the Company since April 1994. Mr. Jones served as Senior
Executive Director of CBC/Madison Advisory Group from April 1994 to April
1997, after having served as Executive Director of CBC/Madison Advisory Group
from 1992 to 1994. From 1986 to 1992 Mr. Jones was President of CB Commercial
Realty Advisors and from 1984 to 1986 he was a Senior Vice President, after
having served in various management positions in the Company's brokerage
business. Mr. Jones rejoined CB Commercial in 1982 after leaving in 1979. Mr.
Jones holds a B.S. degree from the University of California, Los Angeles.
Ronald J. Platisha, age 51. Mr. Platisha has been the Company's Executive
Vice President and Principal Accounting Officer since 1992. Mr. Platisha was
promoted to Senior Vice President in 1991, after service as First Vice
President and Controller from 1982 to 1991. Mr. Platisha joined the Company in
1976. Mr. Platisha holds a B.S. degree from California State University, Long
Beach.
William S. Rothe, age 52. Mr. Rothe has been Senior Executive Vice President
of the Company since August 1997. Mr. Rothe was President of Koll Real Estate
Services from November 1994 to August 1997. He also served as Chief Operating
Officer of Koll Management Services, Inc. from May 1991 to August 1997, as
President of Koll Management Services, Inc. from May 1991 to November 1995, as
Chief Financial Officer of Koll Management Services, Inc. from December 1993
to April 1995 and as a director of Koll Management Services, Inc. from May
1991 to November 1994. From 1985 to 1991, Mr. Rothe held various management
positions with Koll Real Estate Services. Mr. Rothe is a Certified Property
Manager and holds a Bachelor of Arts Degree from Hanover College, a Master's
Degree in Business Economics from The Claremont Graduate School and a law
degree from the University of San Francisco.
Walter V. Stafford, age 57. Mr. Stafford has served as Senior Executive Vice
President and General Counsel of the Company since 1995. Mr. Stafford was a
partner at the law firm Pillsbury Madison & Sutro LLP from 1988 to 1995 and
from 1973 to 1982. From 1982 to 1988 he was Senior Vice President and General
Counsel at Diasonics, Inc., a medical device manufacturer, and from 1982 to
1994 he was a director of that company. Mr. Stafford holds a B.A. degree from
the University of California, Berkeley and an L.L.B. degree from Boalt Hall.
Jana L. Turner, age 42. Ms. Turner has been the Company's President--
Institutional Management Services since February 1998, after service as
Executive Vice President and Manager of the Western Division of CB Commercial
from August 1997 to February 1998. Prior to joining the Company in August
1997, Ms. Turner was President--Pacific Southwest Region of Koll Real Estate
Services and, prior to joining Koll Real Estate Services in 1990, Ms. Turner
was a Senior Vice President of Leasing of IDM Corp. Ms. Turner is a Certified
Property Manager and a Certified Commercial Investment Member candidate and
holds a B.A. degree from Northern Arizona University.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 23, 1997, the Company and Mr. Didion entered into an employment
agreement which provides for (i) an annual salary of $500,000, (ii) an annual
bonus of between 0 and 200% of such salary based on the Company's achieving
the EBITDA target designated by the Compensation Committee, which for 1997 was
$68.1 million (with the bonus subject to a reduction of up to 25% based upon
an individual performance assessment by the Compensation Committee) and (iii)
an option grant for 200,000 shares of the Common Stock at an exercise price of
$21.50 (the fair market value on the date of grant), which vests at the rate
of approximately 3.23% per month. In addition, the employment agreement
provides that if Mr. Didion is terminated without cause, his 200,000 share
stock option fully vests and he is entitled to a lump sum payment equal to
approximately 2.7 times his annual salary. If such a termination occurs during
the twelve month period following a change of control of the Company, the
severance amount is subject to reduction for any amounts Mr. Didion earns for
services rendered to the Company during the two year period following such
termination and also is subject to reduction to the level necessary to avoid
the excise tax imposed by Section 4999 of the Code.
In February 1995 the Company retained the law firm of McDermott, Will &
Emery, to which Mr. Anderson is counsel, to provide services to the Company
consisting of legal counsel in connection with the Company's activities with
certain Federal agencies.
The Company's management has discussed the possibility of retaining Mr.
Anderson on a consulting basis relating to government services outsourcing.
In connection with the Company's acquisition of Koll Real Estate Services
through a merger on August 28, 1997, the Company entered into an employment
agreement, dated May 14, 1997, with Mr. Rothe (the "Rothe Employment
Agreement"), and into a consulting agreement, dated July 16, 1997, with Mr.
Koll (the "Koll Consulting Agreement"), both which became effective as of
August 28, 1997. Pursuant to the Rothe Employment Agreement, the Company
agreed to employ Mr. Rothe as Senior Executive Vice President of the Company.
Pursuant to such employment agreement, Mr. Rothe is entitled to receive (i) a
base annual salary in the amount of $325,000 which will be reviewed from time
to time by the Company but will not be made less than $325,000, (ii)
participation in an annual incentive compensation program which may entitle
him to an annual bonus equal to, less than or greater than one hundred percent
of his salary (with a $175,000 guaranteed bonus during the first year of the
employment agreement) and (iii) a grant of a ten year stock option for
100,000 shares of Common Stock at an exercise price of $22.75 per share. The
option vests as to one-third of the shares on August 28, 2000, as to two-
thirds on August 28, 2001, and as to all of the shares on August 28, 2002.
Upon any termination of employment, Mr. Rothe will forfeit all unvested
shares. Mr. Rothe's employment agreement has a term of two years. In addition
options on identical terms to Mr. Rothe's were granted to Mr. Wirta (100,000
shares) and to Mr. Richard S. Abraham (50,000 shares) in connection with their
retention as employees of the Company. Mr. Abraham has resigned from the
Company effective March 31, 1998 and has forfeited such option.
Pursuant to the Koll Consulting Agreement, Mr. Koll agreed to serve as a
consultant to the Company as an independent contractor. Mr. Koll is entitled
to receive (i) a base salary of $12,500 per month and (ii) the grant of a
stock option to purchase 250,000 shares of Common Stock for an exercise price
of $36.75 per share which is fully vested but will terminate one year after
such consulting agreement is terminated. The Koll Consulting Agreement has a
term of one year which began on August 28, 1997.
In January 1998, the Company repurchased all of the 4,000,000 shares of
Preferred Stock of the Company then outstanding, of which Kajima U.S.A., Inc.
owned 1,000,000 shares of Series A-1 Preferred Stock and S.R.E.S.--Fifth
Avenue, Inc. owned 1,000,000 shares of Series A-2 Preferred Stock. Mr. Hoshino
is Chief Operating Officer, Executive Vice President and a Director of Kajima
U.S.A., Inc. and Mr. Kohri is Secretary of S.R.E.S.--Fifth Avenue, Inc.
Pursuant to the Company's Equity Incentive Plan, a restricted stock purchase
plan, in 1996 shares of Common Stock were purchased by the executive officers
and Directors named below for a purchase price of
14
<PAGE>
$10 per share (the appraised value of the Common Stock at the time of such
purchase), which was paid by delivery of a full recourse promissory note. The
notes bear interest at the rate of 6.84% per annum which may be forgiven if
the executive's performance produces a high enough level of bonus
(approximately $7,500 in interest is forgiven for each $10,000 bonus). The
aggregate number and value of such shares held by the individuals named above
as of December 31, 1997 and net of the purchase price of such shares was as
follows: Mr. Didion--175,027 ($3,883,412); Mr. Beban--53,910 ($1,196,128); Mr.
Stafford--58,369 ($1,295,062); Mr. Kallis--42,750 ($948,516); and Mr.
Sandstad--44,586 ($989,252). The shares vest at the rate of 5 percent per
quarter commencing December 31, 1995. As a result of bonuses paid in 1998 for
1997, all interests on the various promissory notes for 1997 were forgiven. In
1997, Mr. Haeckel purchased 35,000 shares of Common Stock for a purchase price
of $23.50 per share (the market value of the Common Stock on the date of the
purchase), which was paid by the delivery of a promissory note. The note bears
interest at a rate of 6.8% per annum, which may be forgiven as previously
described. As of December 31, 1997, Mr. Haeckel held 35,000 shares valued at,
net of purchase price, $304,063. The shares vest at a rate of 5% per quarter
commencing June 30, 1997. As a result of the bonus paid in 1998, interest on
the promissory note for 1997 was forgiven.
Richard C. Blum & Associates, L.P., of which Mr. Blum is President, proposed
to enter into a joint venture with the Company and Westmark Realty Advisors
L.L.C., a wholly-owned subsidiary of the Company, to propose to acquire the
assets or stock of Triad Park, L.L.C. Richard C. Blum & Associates, L.P. and
Westmark Realty Advisors L.L.C. recently agreed not to proceed with the
proposed joint venture.
The Company and CB Commercial have entered into Indemnity Agreements with
each of their present directors, some of whom are also officers of the
Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the regulations of
the Securities and Exchange Commission (the "Commission") thereunder require
the Company's executive officers and directors to file reports of ownership
and changes in ownership of the Company's securities with the Commission and
to furnish the Company with copies of all such reports they file. Based on its
review of such reports received by it and written representations from certain
reporting persons, the Company believes that during 1997 all filing
requirements applicable to its executive officers and directors were met
except as follows. With respect to sales of shares of Common Stock owned by
the Carlyle Group, L.P., Mr. D'Aniello filed the Form 4 reporting such sales
after the applicable deadline. With respect to sales of shares of Common Stock
owned by AP KMS Partners, L.P., Mr. Koenigsberger failed to file the Form 4
reporting such sales.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S FOURTH
RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors is soliciting the approval of its stockholders to
change the Company's name from "CB Commercial Real Estate Services Group,
Inc." to "CB Richard Ellis Services, Inc." and to amend and restate the
Company's Fourth Restated Certificate of Incorporation (the "Existing
Certificate") to provide for such name change in substantially the form set
forth in the Fifth Restated Certificate of Incorporation attached hereto as
Exhibit A. This name change reflects the combination of the Company's current
name and Richard Ellis, pursuant to the anticipated acquisition of all or
substantially all of the outstanding shares of stock of REI Ltd., which
operates under the name of "Richard Ellis" (outside of the United Kingdom).
Such name change would give the Company name recognition globally.
REQUIRED VOTE
The ratification of the amendment of the Existing Certificate as described
above requires the affirmative vote of the holders of a majority of the shares
of Common Stock present in person or represented by proxy and entitled to vote
at the Annual Meeting.
15
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP,
Certified Public Accountants ("AA"), who examined the Company's consolidated
financial statements for calendar year 1997, as independent accountants to
examine the consolidated financial statements of the Company for calendar year
1998. The selection is being presented to the stockholders for ratification at
this meeting. If the stockholders do not ratify the employment of AA, the
selection of independent accountants will be reconsidered by the Board of
Directors. Representatives from the firm of AA will be present at the Annual
Meeting. They will be provided the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
OTHER MATTERS
Management knows of no other business to be presented at the meeting. If
other matters do properly come before the meeting, persons acting pursuant to
the proxy will vote on them in their discretion.
Proposals to be submitted for the 1999 Annual Meeting of Stockholders must
be received by the Company no later than December 1, 1998.
ANNUAL REPORT
The 1997 Annual Report to Stockholders, including consolidated financial
statements for the fiscal year ended December 31, 1997, which includes the
Company's annual report on Form 10-K (without exhibits thereto), has been
mailed with this Proxy Statement. The Company will provide copies of exhibits
to the Annual Report on Form 10-K, but will charge a reasonable fee per page
to any requesting stockholder. Stockholders may make such request in writing
to Investor Relations, 533 South Fremont Avenue, Los Angeles, California
90071-1712.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any other filing by the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, the sections of this Proxy Statement entitled "Compensation Committee
Report on Executive Compensation" and "Stock Performance Graph" shall not be
deemed to be so incorporated, unless specifically otherwise provided in such
filing.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES J. DIDION
Chairman of the Board
Los Angeles, California
March 31, 1998
16
<PAGE>
EXHIBIT A
PROPOSED FIFTH RESTATED CERTIFICATE OF INCORPORATION
OF CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
<PAGE>
FIFTH RESTATED
CERTIFICATE OF INCORPORATION
OF
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
CB Commercial Real Estate Services Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: The original name under which the Corporation was incorporated in the
State of Delaware is CB Acquisition Corp.
SECOND: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on March 9, 1989; the Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on March 15, 1989; the Second Restated Certificate of Incorporation was filed
with the Secretary of State of Delaware on April 17, 1989; the Third Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on September 18, 1989; and the Fourth Restated Certificate of Incorporation
was filed with the Secretary of State of Delaware on December 2, 1996.
THIRD: The Fifth Restated Certificate of Incorporation of the Corporation in
the form attached hereto as Exhibit A has been duly adopted in accordance with
the provisions of Sections 245 and 242 of the General Corporation Law of the
State of Delaware by the directors and stockholders of the Corporation.
FOURTH: The Fifth Restated Certificate of Incorporation so adopted reads in
full as set forth in Exhibit A attached hereto and is hereby incorporated
herein by this reference.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed
by the Chief Executive Officer and the Secretary this day of ,
1998.
CB COMMERCIAL REAL ESTATE SERVICES
GROUP, INC.
By
___________________________________
James J. Didion
Chief Executive Officer
ATTEST:
By
_____________________________________
Trude A. Tsujimoto
Secretary
<PAGE>
EXHIBIT A
FIFTH RESTATED
CERTIFICATE OF INCORPORATION
OF
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
FIRST: The name of the corporation is:
-----
CB Richard Ellis Services, Inc.
SECOND: The registered office of the corporation in the State of Delaware is
------
located at 1013 Centre Road, City of Wilmington, County of New Castle. The
name of the registered agent of the corporation at such address is CSC The
United States Corporation Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
-----
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as the same exists or may hereafter
be amended.
FOURTH:
------
A. The total number of shares of all classes of capital stock that the
corporation is authorized to issue is 108,000,000, of which 8,000,000 shall be
Preferred Stock ("Preferred Stock") and 100,000,000 shall be Common Stock
("Common Stock"). Both the Preferred Stock and Common Stock shall have a par
value of $.01 per share.
B. The Common Stock shall consist of a single class of 100,000,000 shares,
each of which shall be identical. There shall be no cumulative voting.
C. The Preferred Stock shall consist of a single class of 8,000,000 shares
and may be issued from time to time in one or more series. The Board of
Directors of the corporation (the "Board of Directors") is expressly
authorized to provide for the issue of all or any of the Preferred Stock in
one or more series, to fix the designation and number of shares thereof and to
determine or alter for each such series, such voting powers, full or limited,
or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of such stock and as may be permitted by the General Corporation Law
of the State of Delaware. The Board of Directors is also expressly authorized
to increase or decrease (but not below the number of shares of such series
then outstanding, plus the number of shares of such series issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the corporation) the number of shares of any
series. If the number of shares of any such series shall be so decreased, the
shares constituting such decrease shall resume the status that they had prior
to the adoption of the resolution originally fixing the number of shares of
such series.
FIFTH: A director of the corporation shall not be liable to the corporation
-----
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended. Any repeal or
modification of the foregoing sentence shall not adversely affect any right or
protection of a director of the corporation existing hereunder with respect to
any act or omission occurring prior to such repeal or modification.
<PAGE>
SIXTH:
-----
A. The corporation shall indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to be made a party or
is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding") by reason of the
fact that he, or a person for whom he is the legal representative, is or was a
director or officer of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit plans (an
"Indemnitee"), against all liability and loss suffered and expenses (including
attorneys' fees) reasonably incurred by such person. The corporation shall not
be required to indemnify and hold harmless a person in connection with a
Proceeding (or part thereof) initiated by such person unless the Proceeding
(or the part thereof initiated by such person) was authorized by the Board of
Directors.
B. The right to indemnification conferred by this Article SIXTH shall be
presumed to have been relied upon by the Indemnitee and shall be enforceable
as a contract right. The corporation may enter into contracts to provide
individual Indemnitees with specific rights of indemnification to the fullest
extent permitted by applicable law and may create trust funds, grant security
interests, obtain letters of credit or use other means to ensure the payment
of such amounts as may be necessary to effect the rights provided in this
Article SIXTH or in any such contract.
C. Except for any Proceeding described in the last sentence of Section A of
Article SIXTH, upon making a request for indemnification, the Indemnitee shall
be presumed to be entitled to indemnification under this Article SIXTH and the
corporation shall have the burden of proof to overcome that presumption in
reaching any contrary determination. Such indemnification shall include the
right to receive payment in advance of any reasonable expenses incurred by the
Indemnitee in connection with any Proceeding (other than a Proceeding
described in the last sentence of Section A of Article Sixth) consistent with
the provisions of applicable law.
D. Any repeal or modification of the foregoing provisions of this Article
SIXTH shall not adversely affect any right or protection of any Indemnitee
existing at the time of such repeal or modification.
SEVENTH: The Board of Directors is authorized to adopt, amend or repeal the
-------
By-laws of the corporation, without any action on the part of the
stockholders, solely by the affirmative vote of at least a majority of the
directors of the corporation then in office.
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
COMMON STOCK PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James J. Didion and Walter V. Stafford as
proxies (each with the power to appoint his substitute and with power to act
alone) of the undersigned to vote all the shares of Common Stock of CB
Commercial Real Estate Services Group, Inc. (the "Company") which the
undersigned would be entitled to vote as designated on the reverse side at the
Annual Meeting of Stockholders of the Company, to be held on May 19, 1998, and
any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS LISTED IN PROPOSAL 1 AND
FOR PROPOSALS 2, 3 AND 4.
If you are a participant in the Capital Accumulation Plan this proxy
constitutes your authorization and direction to T. Rowe Price, the trustee of
the CAP Plan, to vote all shares held in your behalf pursuant to the CAP Plan as
specified herein. IF YOU FAIL
TO PROVIDE AUTHORIZATION AND DIRECTION THIS
PROXY WILL BE VOTED IN THE SAME PROPORTION AS CB Commercial Real Estate
SHARES OF COMMON STOCK FOR WHICH THE Services Group, Inc.
TRUSTEE DID RECEIVE DIRECTIONS FOR PROPOSALS 1, P.O. Box 11277
2, 3 AND 4. New York, N.Y. 10203-0277
(Continued, and to be dated and signed, on other side)
1. To Elect Directors-Thirteen
FOR all nominees [_] WITHHOLD AUTHORITY to [_] EXCEPTIONS [_]
listed below vote for all nominees listed
below
Nominees: Stanton D. Anderson, Gary J. Beban, Richard C. Blum, James J.
Didion, Bradford M. Freeman, Donald M. Koll, Paul C. Leach, Frederic V.
Malek, Peter V. Ueberroth, Ray Elizabeth Uttenhove, Gary L. Wilson, W. Brett
White, Raymond E. Wirta.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTION" BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME.)
2. To approve the change of the Company's name and the amendment and
restatement of the Company's Certificate of Incorporation.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To ratify the appointment of Arthur Andersen LLP as the Independent
Accountants for the Company.
FOR [_] AGAINST [_] ABSTAIN [_]
4. To consider and act upon such other matters as may properly come before
the meeting.
FOR [_] AGAINST [_] ABSTAIN [_]
Change of Address and
or Comments Mark Here [_]
Please sign exactly as name(s) appear on the
proxy. If signing for estates, trusts or
corporations, your title and capacity should be
stated. If shares are held jointly, each holder
should sign.
Dated ___________________________________, 1998
_____________________________________________
Signature
_____________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND Votes must be indicated [_]
RETURN THE PROXY CARD PROMPTLY (X) in Black or Blue ink.
USING THE ENCLOSED ENVELOPE.
