<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 Richard Ellis Services, Inc.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF CB RICHARD ELLIS]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
You are invited to attend the Annual Meeting of Stockholders of CB RICHARD
ELLIS SERVICES, INC., a Delaware corporation (the "Company"), to be held on
Tuesday, May 16, 2000, at 8:00 a.m., local time, at The Sheraton Gateway
Hotel, 6101 West Century Boulevard, 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 an amendment to the Company's Deferred Compensation Plan to
increase the authorized shares of newly issued Common Stock, par value
$0.01, from 500,000 to 1,650,000;
3. To ratify the appointment of Arthur Andersen LLP as independent
accountants for the Company for 2000; 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 23, 2000 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
/s/ JAMES J. DIDION
JAMES J. DIDION
Chairman of the Board
El Segundo, California
March 31, 2000
<PAGE>
CB RICHARD ELLIS SERVICES, INC.
200 North Sepulveda Boulevard
El Segundo, California 90245-4380
PROXY STATEMENT
This Proxy Statement ("Proxy Statement") is furnished to holders of Common
Stock ("Common Stock") of CB Richard Ellis Services, 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 16, 2000 (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 23, 2000, the record date, will be entitled to vote at the Annual
Meeting. At the close of business on the record date, the Company had
20,434,305 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 Sheraton Gateway
Hotel, 6101 West Century Boulevard, Los Angeles, California. The Company's
Proxy Statement and form of proxy are being mailed or delivered to
stockholders on approximately April 5, 2000. For purposes of this Proxy
Statement, "CBRE" refers to the Company's wholly owned subsidiary, CB Richard
Ellis, 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 amendments to the Company's Deferred Compensation Plan
increasing the authorized shares from 500,000 to 1,650,000 and FOR the
ratification of the selection of Arthur Andersen LLP to serve as independent
accountants for the Company for 2000. Vanguard Fiduciary 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 amendment to the Deferred Compensation Plan 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 23, 2000, there were 2,009,838 shares of Common Stock
held within the Cap Plan.
The presence in person or by proxy of the holders of a majority of the
Company's outstanding shares constitutes a quorum for the transaction of
business at the Annual Meeting. Directors are elected by a plurality vote. All
other matters submitted for stockholder approval at the Annual Meeting will be
decided by the affirmative vote of the majority of the shares represented in
person or by proxy and entitled to vote on each such matter. Abstentions with
respect to any matter are treated as shares present or represented and
entitled to vote on that matter and thus have the same effect as negative
votes.
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.
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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.
PROPOSAL NO. 1
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors proposes the election of thirteen Directors of the
Company to serve until the next annual meeting of stockholders and thereafter
until their successors are elected and qualified. If any nominee is unable or
declines to serve as director at the time of the Annual Meeting, an event not
now anticipated, proxies will be voted for any nominee designated by the Board
of Directors to fill the vacancy.
Stanton D. Anderson
Gary J. Beban
Richard C. Blum
James J. Didion
Bradford M. Freeman
Donald M. Koll
Paul C. Leach
David R. Lind
Frederic V. Malek
Ray Elizabeth Uttenhove
W. Brett White
Gary L. Wilson
Raymond E. Wirta
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as Directors. Nominations of persons for
election to the Board at the annual meeting, by or at the direction of the
Board, may be made by any nominating committee or person appointed by the
Board; nominations may also be made by any stockholder of record of the
Company entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth below. Such nominations, other
than those made by or at the direction of the Board, shall be made pursuant to
timely notice in writing to the Secretary of the Company. To be timely, a
stockholder's notice shall be delivered personally or deposited in the United
States mail, or delivered to a common carrier for transmission to the
recipient or actually transmitted by the person giving the notice by
electronic means to the recipient or sent by other means of written
communication, postage or delivery charges prepaid in all such cases, and
received at the principal executive offices of the Company addressed to the
attention of the Secretary of the Company not less than one hundred twenty
(120) days prior to the scheduled date of the meeting (regardless of any
postponements, deferrals or adjournments of that meeting to a later date);
provided, however, that, in the case of an annual meeting and in the event
that less than one hundred (100) days' notice or prior public disclosure of
the date of the scheduled meeting is given or made to stockholders, notice by
the stockholder to be timely must be so received not later than the close of
business on the 7th day following the day on which such notice of the date of
the scheduled meeting was mailed or such public disclosure was made, whichever
first occurs. Such stockholder's notice to the Secretary shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
reelection as a Director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class, series and number of shares of capital stock of the
Company that are owned beneficially by the person, (iv) a statement as to the
person's citizenship, and (v) any other information relating to the person
that is required to be disclosed in solicitations for proxies for election of
Directors pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder; and (b) as to
the stockholder giving the notice, (i) the name and record address of the
stockholder and (ii) the class, series and number of shares of
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capital stock of the Company that are owned beneficially by the stockholder.
The Company may require any proposed nominee to furnish such other information
as may be reasonably be required by the Company to determine the eligibility
of such proposed nominee to serve as Director of the Company. No person shall
be eligible for election as a Director of the Company unless nominated in
accordance with the procedures set forth herein.
In connection with any annual meeting, the Chairman of the Board (or such
other person presiding at such meeting in accordance with the Company's by-
laws) shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
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 59. 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 and head of the
Legislative Practice department 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., and
Center for International Private Enterprise. He is a member of the Board of
Advisors of Westmont College. 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 53. Mr. Beban has been President--Corporate Services
since 1997 and a Director since 1989. Mr. Beban has been Senior Executive
Managing Director--Global Corporate Advisory Group since 1998. 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 1989 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 64. 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; URS
Corporation and Playtex Products, Inc. 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.
James J. Didion, age 60. Mr. Didion has been Chairman of the Company since
January 1989 and a Director since the Company's incorporation. From 1989 to
May of 1999 he served as Chief Executive Officer. Prior to 1989 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 CBRE. 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.
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Bradford M. Freeman, age 58. 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 66. 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 pre-approved
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 54. 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 was
Managing Director of The Lone Cypress Company, the then owner of Pebble Beach
Company, from 1992 to 1999. 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.
David R. Lind, age 50. Mr. Lind is a Senior Vice President of the Company
and has been a real estate salesperson with the Company since November 1977.
Mr. Lind participated in the PGA Tour from 1975 to 1977. Mr. Lind holds a B.A.
degree from Duke University.
Frederic V. Malek, age 63. 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.; FPL Group, Inc.; Manor Care, Inc.; Northwest Airlines Corporation;
Paine Webber Funds; Sega Systems, Inc. and Global Vacation Group, and Aegis
Communications Co., Inc. 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.
Ray Elizabeth Uttenhove, age 52. 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.
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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 40. Mr. White has been Chairman--The Americas since May
of 1999 and was President--Brokerage Services from August 1997 to May 2000.
Previously, he was Executive Vice President of CBRE from March 1994 to July
1997, and Managing Officer of the CBRE Newport Beach, California office from
1992 to March 1994. Mr. White attended the University of California, Santa
Barbara from 1979-1984.
Gary L. Wilson, age 60. 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 56. Mr. Wirta has been Chief Executive Officer of the
Company since May 1999 and a Director since August 1997. He served as Chief
Operating Officer from May 1998 to May 1999. Mr. Wirta was Chief Executive
Officer and a Director of Koll Real Estate Services from November 1994 to
August 1997. Prior to that, Mr. Wirta held various management positions with
Koll Management Services, Inc. since 1981. Mr. Wirta was 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 pre-approved by its
bondholders. Mr. Wirta holds a B.A. degree from California State University,
Long Beach and an M.B.A. degree in International Management from Golden Gate
University.
The Board of Directors recommends a vote "FOR" election of the nominees for
Director.
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Principal Stockholders
The following table sets forth certain information regarding beneficial
ownership of the Company's voting capital stock as of March 23, 2000 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 Number of
Class Shares Percent
------ --------- -------
<S> <C> <C> <C>
Capital Guardian Trust Company.................. Common 1,733,000 8.48%
11100 Santa Monica Blvd. (1)
Los Angeles, California 90025
FS Equity Partners III, L.P. (2)................ Common 3,402,463 16.65%
FS Equity Partners International, L.P. .........
466 Lexington Avenue
New York, New York 10017
Blum Capital Partners, L.P. (3)................. Common 3,265,810 15.98%
909 Montgomery Street
San Francisco, California 94183
Stanton D. Anderson (4)......................... *
Gary J. Beban (4)............................... *
Richard C. Blum (3)(4)(5).......................
James J. Didion (4)(6)(7)....................... 633,116 3.10%
Bradford M. Freeman (2)(4)......................
John C. Haeckel (4)............................. *
Donald M. Koll (4)(8)........................... 795,316 3.39%
Paul C. Leach (4)............................... *
David R. Lind (4)............................... *
Frederic V. Malek (4)(9)........................ 406,877 1.99%
Walter V. Stafford (4)(6)....................... *
Ray E. Uttenhove (4)(10)........................ *
W. Brett White (4).............................. *
Gary L. Wilson (4).............................. *
Raymond E. Wirta (4)............................ *
All Directors and executive officers as a group
(15 persons) (11).............................. 8,976,362 43.93%
</TABLE>
- --------
* Less than 1%.
(1) Based upon a Schedule 13G dated February 10, 2000, Capital Guardian Trust
Company is a bank within the meaning of Section 3(a)(6) of the Securities
Exchange of 1934 and is deemed to be the beneficial owner of, with sole
dispositive power for 1,233,000 shares and sole voting power for
1,303,4000 shares as a result of serving as an investment manager for
various institutional accounts.
(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 beneficial ownership of the
shares and warrants except to the extent of his pecuniary interest.
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(3) Includes 85,400 shares owned directly by Benefits Connection Group
Pension Plan, Common Fund for Non-Profit Organizations, United
Brotherhood of Carpenters Pension Plan and Stinson Capital Fund (Cayman)
Ltd. as to which Blum Capital Partners, L.P. is the investment manager
with voting and investment discretion. Includes 981,033 shares owned by
BK Capital Partners II, L.P., BK Capital Partners IV, L.P., Stinson
Capital Partners, L.P., Stinson Capital Partners II, L.P. and Stinson
Capital Partners III, L.P. limited partnerships as to which Blum Capital
Partners, L.P. is the general partner. Includes 2,198,800 shares owned by
RCBA Strategic Partners, L.P. Richard C. Blum & Associates, Inc. is the
general partner of Blum Capital Partners, L.P. Richard C. Blum is (i) a
significant shareholder of Richard C. Blum & Associates (ii) the managing
member of RCBA G.P.L.L.C., the general partner of RCBA Strategic
Partners, and (iii) a director of the Company. Except as to any pecuniary
interest Mr. Blum disclaims beneficial interest of all of the shares
other than those owned by RCBA Strategic Partners.
(4) 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 21, 2000, 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--7,024; Beban--9,600; Blum--12,443; Didion--
200,000; Haeckel--20,000; Koll--61,026; Leach--2,970; Lind--1,810;
Malek--8,970; Uttenhove--2,058; White--9,600; Wirta--537,589 (options do
not include an option to purchase 521,589 shares of Common Stock from The
Koll Holding Company which shares are controlled by Donald Koll with the
actual shares being reported by Mr. Koll); and Wilson--12,692.
(5) Except for any pecuniary interest, Mr. Blum disclaims any beneficial
ownership as to the shares owned by Benefits Connection Group Pension
Plan, Common Fund for Non-Profit Organizations United Brotherhood of
Carpenters Pension Plan, Stinson Capital Fund (Cayman) Ltd., Stinson
Capital Partners, L.P., Stinson Capital Partners II, L.P., Stinson
Capital Partners IV, L.P., BK Capital Partners II, L.P. and BK Capital
Partners IV, L.P. As to each of these entities, Blum Capital Partners,
L.P. is either the investment manager (with voting and investment
discretion) or the general partner. Includes 2,198,800 shares owned by
RCBA Strategic Partners, L.P. whose general partner is RCBA GP, L.L.C.
Richard Blum is the managing member of RCBA GP.
(6) Includes shares to which the named individual will be entitled pursuant
to the CB Richard Ellis Deferred Compensation Plan upon termination of
employment with the Company; James Didion 121,970 and Ray Elizabeth
Uttenhove 827.
(7) Includes 7,000 shares held in trust for the benefit of three members of
Mr. Didion's immediate family.
(8) Includes 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).
(9) Includes 98,000 shares owned by a trust for which Mr. Malek is the
trustee.
(10) Includes 103 shares for which Ms. Uttenhove shares investment and voting
power with her husband.
(11) Includes 345,193 shares of Common Stock subject to options exercisable on
or before May 23, 2000 (not including Mr. Wirta's option to purchase
521,589 shares).
Committees and Meetings of the Board of Directors
The Board of Directors held four meetings during calendar year 1999.
The Executive Committee is composed of two members and met eight times in
1999. The members of the Executive Committee through May 21, 1999 were Messrs.
Didion, Wirta, Haeckel and Stafford; thereafter the members were Messrs Wirta
and White. The Executive Committee acts on behalf of the Board of Directors
when the Board of Directors is not in session. The Executive Committee has no
authority with respect to any matter as to which any other board committee has
authority.
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The Compensation Committee is composed of three members and met three times
in 1999. The members of the Compensation Committee are Messrs. Blum, Freeman
and Koll. The Compensation Committee is authorized to determine the
compensation of the Company's Chairman and its Chief Executive Officer and,
upon the recommendation of the Chief Executive Officer, the compensation of
the President, if any, 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 comprise all of the members of the Compensation
Committee.
The Audit Committee is composed of three members and met three times in
1999. The members of the Audit Committee are Messrs. Anderson, Malek, and
Leach, all of whom 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, the Company's
internal auditors and the Chief Financial Officer and Principal Accounting
Officer with regard to the adequacy of internal controls. Outside directors
comprise all of the members of the Audit Committee.
The Acquisition/Investment Committee is composed of five members and met
once in 1999. The members of the Acquisition/Investment Committee are Messrs.
Blum, Wirta, Malek, Freeman 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 indebtedness (other than payables) assumed.
The Corporate Governance Committee is composed of three members and met once
in 1999. 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. Outside
directors comprise all of the members of the Corporate Governance Committee.
Director Blum attended fewer than 75% of the aggregate of the total number
of meetings of the Board of Directors during fiscal 1999.
Directors Fees
Each of the Directors of the Company who is not also a salaried employee is
entitled to receive a fee of $2,000 for attendance at each meeting of the
Board of Directors and at each meeting of a Board committee, and an annual
retainer of $20,000 payable quarterly (Directors Lind and Uttenhove are paid
no salary and receive only commissions and are therefore entitled to these
fees). A Director may elect to receive all or any portion of his or her fees
and retainer as options to purchase shares of Common Stock with an exercise
price of $1. For 1999 eight Directors elected to receive options for 12,262
shares in lieu of cash fees. Beginning in 1999, each Director who was not a
salaried employee received an initial option to purchase 5,000 shares of
Common Stock at its fair market value on the first trading day of 1999. After
1999 each new director who is not a salaried employee will receive an option
for 5,000 shares of stock. All Directors other than salaried directors will
receive annual options for 1,000 shares for each year after the year in which
the 5,000 share option is granted. The exercise price in all cases will be
fair market value of the Company's common stock on the first trading day of
the year in which the option is granted. No Director received compensation
from the Company for services as a Director in 1999 in excess of $35,000.
Directors are reimbursed for their expenses for each meeting attended.
8
<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 three other executive officers for the three years ended December
31, 1999.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------ ------------------------
Securities
Other Restricted Underlying
Name and Principal Annual Stock Stock All Other
Position Year Salary Bonus(1) Compensation(2) Awards Options Compensation(3)
- ------------------------ ---- -------- -------- --------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond E. Wirta........ 1999 $412,523 $300,000 $ 12,000 0 -- 0
Chief Executive Officer 1998 $384,387 $395,920 $ 12,000 0 80,000(5) 0
1997 $108,429 $ 50,000 $ 4,000 0 80,000(5) 0
James J. Didion......... 1999 $412,523 0 $131,718(4) 0 0 0
Chairman of the Board 1998 $500,000 $537,500 $131,718(4) 0 0 0
1997 $500,000 $800,000 $131,718(4) 0 200,000 $1,846
W. Brett White.......... 1999 $331,846 $225,000 $ 45,342(6) 0 52,000 0
Chief Operating Officer 1998 $281,250 $318,908 $ 45,342(6) 25,000 0 0
1997 $178,125 $432,167 $ 12,000 0 48,000(5) $1,846
John C. Haeckel......... 1999 $298,077 $131,000 $ 77,908(9) 0 0 0
Senior Executive
Vice President 1998 $300,000 $260,580 $ 67,908(9) 0 0 0
and Chief Financial
Officer 1997(7) $206,250 $450,749(8) $ 40,991(9) 35,000 40,000 0
Walter V. Stafford...... 1999 $298,077 $120,000 $ 58,406(4) 0 20,000 0
Senior Executive Vice
President. 1998 $300,000 $257,550 $ 58,001(4) 0 0 0
Secretary and General
Counsel 1997 $300,000 $502,591 $ 60,395(4) 0 0 $1,846
</TABLE>
- --------
(1) Bonus for each year is paid pursuant to the Annual Management Bonus Plan
in the first quarter of the following year.
(2) With respect to Other Annual Compensation paid in 1997, 1998 and 1999 the
amounts listed include $12,000 automobile allowance (with the exception of
Mr. Wirta, who in 1997 received a $4,000 automobile allowance) and the
interest accrued in 1997 and forgiven in 1998, the interest accrued in
1998 and forgiven in 1999, and the interest accrued in 1999 and forgiven
in 2000, under the promissory notes delivered by Messrs. Didion, Haeckel
and Stafford pursuant to the Company's 1996 Equity Incentive Plan (the
"EIP"). Includes interest accrued in 1998 and forgiven in 1999 and
interest accrued in 1999 and forgiven in 2000 under the promissory note
delivered by Mr. White pursuant to the EIP. (See notes 4, 6 and 9.)
(3) Consists of each individual's allocable share of profit sharing
contributions made by the Company to the Company's Cap Plan.
(4) Pursuant to the Company's Equity Incentive Plan, shares of Common Stock
were purchased by such individual in 1996 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, 1999 net of the purchase price
of such shares was as follows: Mr. Didion--175,027 ($415,689); and
Mr. Stafford--48,640 ($115,520). The shares vest at the rate of 5 percent
per quarter commencing December 31, 1995. As a result of bonuses paid in
1998, 1999 and in 2000 all interest on Mr. Stafford's promissory notes for
1997, 1998 and 1999 was forgiven. As a result of bonuses paid in 1998 and
1999 all interest on Mr. Didion's promissory note for 1997 and 1998 was
forgiven. As a result of the decision of the Compensation Committee in
February of 2000, Mr. Didion's interest for 1999 was also forgiven.
9
<PAGE>
(5) In 1998, Mr. Wirta received options to purchase 100,000 shares of Common
Stock, which were amended on December 15, 1998. Pursuant to the amendment,
the options were repriced and the number of shares underlying such options
was reduced by 20% to 80,000 shares. Mr. Wirta also had an option for
100,000 shares, granted in 1997, amended on December 15, 1998 and reduced
to options to purchase 80,000 shares of Common Stock. In 1998, Mr. White
had an option to purchase 60,000 shares of Common Stock amended and
repriced on December 15, 1998, pursuant to which the shares underlying
such options were reduced to 48,000 shares of Common Stock each.
(6) Pursuant to the Company's 1996 Equity Incentive Plan, in 1998 Mr. White
purchased 25,000 shares of Common Stock for a purchase price of $38.50 per
share (the fair market value of the Common Stock at the time of the
purchase) which was paid by a full recourse promissory note. The note
bears interest at a rate of 5.94% 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). As
a result of bonuses paid in 1999 for 1998 and in 2000 for 1999 all
interest on Mr. White's note for 1998 and 1999 was forgiven. Mr. White
held a total of 25,000 shares as of December 31, 1999, which, net of the
purchase price, had a negative value. A First Amendment to the Promissory
Note dated June 1, 1998 provides that the portion of the then outstanding
principal in excess of the fair market value of the shares shall be
forgiven in the event that Mr. White is an employee of the Company or its
subsidiaries on November 16, 2002 and the fair market value of a share of
the Company's Common Stock is less than $38.50 on November 16, 2002. In
the event of any such principal forgiveness the Company shall pay to Mr.
White an amount equal to any federal, state or local income tax liability
resulting from such principal forgiveness.
(7) Mr. Haeckel's employment by the Company commenced in April 1997 and
terminated February 25, 2000.
(8) Includes a bonus of $75,000 paid in the second quarter of 1997.
(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). As
a result of bonuses paid in 1998 for 1997, 1999 for 1998 and 2000 for 1999
all interest on Mr. Haeckel's note for 1997, 1998 and 1999 was forgiven.
Mr. Haeckel held a total of 35,000 shares as of December 31, 1998, which,
net of the purchase price, had a negative value. A Second Amendment to the
Promissory Note effective as of February 25, 2000 (the date Mr. Haeckel's
employment with the Company terminated) extends the term of the note to
February 25, 2005 and provides for the forgiveness of interest so long as
Mr. Haeckel does not perform services for certain identified competitors
of the Company. Mr. Haeckel is obligated to sell the shares if their price
for 30 consecutive trading days exceeds $23.75 per share at any time prior
to February 25, 2005.
As part of the senior management succession planning which began in early
1998, upon election by the Board of Directors at the 1999 Annual Meeting Ray
Wirta succeeded James Didion as the Company's CEO. Mr. Didion will continue as
Chairman at the pleasure of the Board. As part of this change, the Company and
Mr. Didion have entered into an amended and restated ten-year employment
agreement which provides for an annual salary of $500,000 with no incentive
compensation or bonus anticipated. In the event of a change-of- control any
successor entity is obligated to assume Mr. Didion's agreement. In the event
of a change of control any successors entity is obligated to assume Mr.
Didion's agreement. Mr. Didion will act as a Senior Adviser to the Company
during the term of his employment. For so long as he is employed, the Company
will provide Mr. Didion with medical and other benefits generally made
available to senior officers and an office, a secretary and clerical help. The
amended agreement is terminable by the Company for cause. Cause includes
conviction of a felony, fraud and willful and substantial failure to render
services. If the agreement is terminated without cause or in the event of his
death or total disability, Mr. Didion (or his estate) will continue to be
entitled to the salary and will be fully vested in any unvested stock options
or stock purchase rights. In 1999 the agreement was amended to add a cost-of-
living adjustment.
10
<PAGE>
Option Grants Table. The following table sets forth information concerning
grants of stock options during the year ended December 31, 1998 to the persons
named in the preceding table.
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed
Percentage Annual Rates of
Number of of Total Stock Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term
Option Employees Price Expiration -------------------
Name Granted in 1999 Per Share Date 5% ($) 10% ($)
---- ---------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. Brett White.......... 52,000(1) 8.9% $14.25 9/30/09 $466,011 $1,180,931
Walter V. Stafford...... 20,000(1) 3.4% $14.25 9/30/09 $179,235 $ 454,216
</TABLE>
- --------
(1) The options vest 20% per year beginning September 30, 2000.
Aggregated Options Table. The following table sets forth information
concerning unexercised options held as of December 31, 1999 by the persons
named in the table under "Summary Compensation Table" above. As of February
28, 2000, no options had been exercised by any of such persons.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Value December 31, 1999 December 31, 1999
Shares Acquired Realized ------------------------- -------------------------
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James J. Didion......... -- -- 200,000 $ 0 $ 0
Raymond E. Wirta........ -- -- 16,000 144,000 $ 0 $ 0
W. Brett White.......... -- -- 9,600 90,400 $ 0 $ 0
John C. Haeckel......... -- -- 20,000 20,000 $ 0 $ 0
Walter V. Stafford...... -- -- 0 20,000 $ 0 $ 0
</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 and Koll.
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
pursuant to the Annual Management Bonus Plan.
Annual incentive compensation, which generally is paid in cash, is tied to
the Company's financial performance, the performance of certain units within
the Company 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, the level
of performance of the business unit for which the executive is responsible 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.
11
<PAGE>
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. For 1999 the Chief Executive Officer was entitled to
no bonus under the terms of the Annual Management Bonus Plan because the
Company failed to achieve the minimum required results. In light of the
significant efforts and success of Mr. Wirta in reducing expenses and back
office overhead during the fourth quarter the Compensation Committee decided
to pay the Chief Executive Officer a special bonus of $300,000.
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 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.
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 at fair market value shares of the Company's
Common Stock. In 1997, 35,000 shares were sold to a senior executive for a
purchase price of $23.50 and in 1998, 25,000 shares were sold to a senior
executive for a purchase price of $38.50 per share. See Notes 4, 6 and 9 to
"Executive Compensation--Summary Compensation Table" above.
The Committee believes that stock options are a critical component of the
compensation offered by the Company to promote long-term retention of key
employees, motivate high levels of performance and recognize employee
contributions to the success of the Company.
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 and Koll.
The Compensation Committee is appointed by the Board of Directors and consists
of outside, independent Directors.
12
<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, 1993 through December 31, 1999. 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.
STOCK PRICE PERFORMANCE GRAPH
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period CB Richard Ellis Nasdaq NYSE Peer
(Fiscal year covered) Services, Inc. Market Index Market Index Group
--------------------- ---------------- ------------ ------------ -------
<S> <C> <C> <C> <C>
Measurement Pt-12/30/94. $100.00 $100.00 $100.00 $100.00
FYE 12/29/95............ $119.16 $129.71 $129.66 $100.00
FYE 12/31/96............ $239.52 $161.18 $156.20 $225.00
FYE 12/31/97............ $385.51 $197.16 $205.49 $684.38
FYE 12/31/98............ $217.13 $278.08 $244.52 $403.13
FYE 12/31/99............ $217.13 $490.46 $267.75 $234.38
</TABLE>
13
<PAGE>
Management
In addition to Messrs. Didion, White and Wirta, whose biographical
information is included under "Directors and Nominees for Directors," the
following persons are executive officers of the Company. All executive
officers hold their office at the pleasure of the Board of Directors:
John C. Haeckel, age 40. On April 1, 1997, Mr. Haeckel joined the Company as
Chief Financial Officer and Senior Executive Vice President. Mr. Haeckel
resigned from the Company effective February 25, 2000. 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.
Walter V. Stafford, age 59. Mr. Stafford has served as Senior Executive Vice
President and General Counsel of the Company since 1995 and as Secretary since
1999. 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.
Employment Contracts, Termination of Employment
As part of the senior management succession planning which began in early
1998, Ray Wirta succeeded James Didion as the Company's CEO effective with the
1999 Annual Meeting. Mr. Didion continues as Chairman. As part of this change,
the Company and Mr. Didion entered into an amended and restated ten-year
employment agreement which provides for an annual salary of $500,000 with no
incentive compensation or bonus anticipated other than the possible
forgiveness of interest on a promissory note used to purchase stock pursuant
to the 1996 Equity Incentive Plan. Mr. Didion will act as a Senior Adviser to
the Company during the term of his employment. For so long as he is employed,
the Company will provide Mr. Didion with medical and other benefits generally
made available to senior officers and an office, a secretary and clerical
help. The amended agreement is terminable by the Company for cause. Cause
includes conviction of a felony, fraud and willful and substantial failure to
render services. If the agreement is terminated without cause or in the event
of his death or total disability, Mr. Didion (or his estate) will continue to
be entitled to the salary and will be fully vested in any unvested stock
options or stock purchase rights. In the event of a change in control of the
Company (which is very broadly defined) the Company or its successors must
specifically agree to be bound by Mr. Didion's employment agreement. On
September 1, 1999, the Company and Mr. Didion entered into a second amendment
to this employment agreement which provides that Mr. Didion's salary will be
subject to adjustment to reflect changes in the cost of living.
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 the Annual Management Bonus Plan which may entitle him to an
annual bonus equal to, less than or greater than one hundred percent of his
salary 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 expires August 27, 1999. 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
14
<PAGE>
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 had a
term of one year which ended on August 27, 1998. The option terminated August
27, 1999.
Certain Relationships and Related Transactions
In February 1995 the Company retained the law firm of McDermott, Will &
Emery, of which Mr. Anderson is now a partner and was then counsel, to provide
services to the Company consisting of legal counsel in connection with the
Company's activities with certain Federal agencies.
Pursuant to the Company's Equity Incentive Plan, a restricted stock purchase
plan, shares of Common Stock were purchased in 1996 by the executive officers
and Directors named below 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, purchase price, value
and net value of such shares held by the individuals named above as of
December 31, 1999 was as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate
No. of Purchase Value of
Shares Price Shares Net Value
------- ---------- --------- ---------
<S> <C> <C> <C> <C>
James J. Didion...................... 175,027 $1,750,270 2,165,959 $ 415,689
Walter V. Stafford................... 48,640 $ 486,400 601,920 $ 115,500
W. Brett White....................... 35,000 $ 962,500 433,125 $(529,375)
John C. Haeckel...................... 25,000 $ 587,500 309,375 $(278,125)
</TABLE>
The shares vest at the rate of 5 percent per quarter commencing on the
purchase date. As a result of bonuses paid in 2000, all interest on Mr.
Stafford's promissory note for 1999 was forgiven. Interest on Mr. Didion's
promissory note was forgiven by the Compensation Committee. 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, 1999, Mr. Haeckel held 35,000 shares which, net of the
purchase price, had a negative value. The shares vest at a rate of 5% per
quarter commencing June 30, 1997. As a result of the bonus paid in 2000,
interest on the promissory note for 1999 was forgiven. A Section 1 Amendment
to the Promissory Note effective as of February 25, 2000 provides that the
term of the note is extended to February 25, 2005 and provides for the
forgiveness of interest so long as Mr. Haeckel does not work for certain
identified competitors of the Company. Mr. Haeckel is obligated to sell the
shares if their closing price for 30 consecutive trading days exceeds $23.75
per share. In 1998, Brett White purchased 25,000 shares of Common Stock for a
purchase price of $38.50 per shares (the market value of the Common Stock on
the date of purchase), which was paid for by the delivery of a promissory
note. The note bears interest at a rate of 5.94% per annum, which may be
forgiven as previously described. As of December 31, 1999, Mr. White held
25,000 shares which, net of the purchase price, had a negative value. The
shares are subject to a right of repurchase by the Company, which terminates
with respect to 5% of the total number of shares each quarter commencing March
31, 1998. A First Amendment to the Promissory Note dated June 1, 1998 provides
that the portion of the then outstanding principal in excess of the fair
market value of the shares shall be forgiven in the event that Mr. White is an
employee of the Company or its subsidiaries on November 16, 2002 and the fair
market value of a share of the Company's Common Stock is less than $38.50 on
November 16, 2002. In the event of any such principal forgiveness the Company
shall pay to Mr. White an amount equal to any federal, state or local income
tax liability resulting from such principal forgiveness.
15
<PAGE>
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. agreed not to proceed with the proposed joint
venture in February 1998.
The Company and CBRE 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 1999 all filing
requirements applicable to its executive officers and Directors were met.
PROPOSAL NO. 2
PROPOSAL TO APPROVE AN AMENDMENT TO THE CB RICHARD ELLIS SERVICES, INC.
DEFERRED COMPENSATION PLAN INCREASING THE AUTHORIZED SHARES TO 1,650,000
In 1994 the Company adopted the CB Richard Ellis Services, Inc. Deferred
Compensation Plan (the "DCP") and reserved for issuance thereunder 500,000
shares of common stock par value $0.01 (increased by the Board of Directors to
650,000 shares in September 1999 and 1,650,000 shares in February 2000 subject
to shareholders approval). Under the Deferred Compensation Plan prior to the
Company Match and the Retention and Hire amendments described below any member
of senior management and any highly compensated employee could elect to defer
some or all of his or her cash compensation and have it invested in one of
three areas:
. Company Stock (money deferred pursuant to this option is retained by the
Company and the Company has an obligation to distribute a number of
shares of stock determined by dividing the deferral amount by the price
of the stock at the time of the deferral). Effective May 1, 2000 all
deferrals of employees which are to be invested in common stock will be
used to purchase such stock in the market on a contemporaneous basis.
. Interest Index Fund (money deferred pursuant to this option is retained
by the Company and the Company has an obligation to pay back the amount
of the deferral plus interest at the rate in effect from time-to-time
under the Company's Revolving Credit Agreement).
. Insurance Fund (money deferred pursuant to this option (which was added
in May of 1999) is invested in an insurance product which holds mutual
funds. The employee can choose which of these mutual funds will be used
to measure gain or loss of the amount deferred. Because the Company
actually makes the investment in the form of a premium payment it has an
asset equal to its liability to the employee (except for a small amount
used to pay for term life insurance, premium tax, insurance company
profit and commission).
At December 31, 1999 the Company had an obligation to issue 746,000 shares
of common stock pursuant to the Deferred Compensation Plan (an administrative
error resulted in the number of shares of stock credited under the Plan
exceeding the authorized stock available, an error which will be corrected in
the future by using treasury stock previously purchased by the Company), an
obligation to pay $18,455,000 pursuant to the Interest Index Fund and an
obligation to pay $20,798,000 pursuant to the Insurance Fund. The cash
surrender value of the Insurance Fund (the value of the mutual funds) was less
than the obligation to pay so that the Company had an unfunded liability of
less than $1,000,000 relating to the Insurance Fund.
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Company Match
Effective for 1999 the Company amended the DCP to add the "Company Match."
The Company Match applies only to sales people who generate $1 million or more
in gross commissions in any given year and who actively participate in the DCP
during that year. For these high-producing employees the Company will match
the amount the employee has deferred up to a maximum of the lesser of $100,000
or 10% of the employee's gross commissions. The Company Match is subject to
two conditions: (a) the employee must sign a five year covenant not to compete
(which runs from the date his or her employment terminates) and (b) if the
Company so determines, the employee can be required to move from his or her
Interest Index Fund account or Insurance Fund account into the Stock Fund an
amount equal to one half the Company Match. For this purpose, an employee
receives credit for any amount he or she voluntarily allocated to purchase
Common Stock pursuant to the DCP during the year. These employee funds will be
used to purchase stock in the market on a contemporaneous basis.
The Company Match concept was added to the DCP because the Company's
competitors have enticed a number of its high producing sales people away with
large cash payments (as much as $1 million). These payments are sometimes made
in the form of a loan which is forgiven over a three to five year period so
long as the individual continues to work for the competitor. The loss of key
sales people, were it to continue, could seriously damage the Company's
ability to generate revenue. The Company Match has been received by the sales
force with real enthusiasm. For 1999 the Company Match will require
approximately 510,000 shares all of which will be subject to forfeiture
(employees vest in the Company Match at the rate of 20% per with the first
vesting increment occurring December 31, 2000). The Company believes that the
Company Match will have a substantial effect in stabilizing the Company's high
producing sales professionals particularly as the price of the Company's
Common Stock increases. For 1999 the Company will not require employees to
transfer into company stock from other accounts one half of the Company Match.
Retention and Hire Program
The Company Match over several years will, in the Company's view, provide a
strong inducement or "golden handcuff" to stay with the Company. However,
until at least two Company Matches have occurred the Company is concerned that
the Company Match is not large enough to retain its top sales professionals
many of whom earn more than a million dollars a year. To help solve this
retention issue the Board of Directors amended the DCP in 2000 on a one time
basis (2000 only) to permit grants to its highest producing sales
professionals.
These share awards--which will be made in the form of a credit to the
individuals Deferred Compensation Plan Stock Account--will vest only if the
employee remains employed through December 31, 2003, i.e., four year cliff
vesting. The exact amount of the awards has not yet been determined.
The Company also wishes over the next several years to add several hundred
new sales professionals partly out of college and partly from people who have
sales experience although not necessarily in the commercial real estate area.
On an ongoing basis, it is expected that each year for the next two or three
years approximately 50 sales people who have sales experience will be hired
and be awarded up to a $50,000 allocation under the DCP which will be
converted into a number of shares of common stock by dividing the amount of
the award by the stock price on the date of the award. The stock allocation
will vest only if the employee stays with the Company for four years (four
year cliff vesting) and signs a five year covenant not to compete.
Based upon estimated employee turnover approximately 20-30% of the Company
Match and one-time Retention grants will be forfeited and approximately 50% of
the Hire awards will be forfeited. There is, of course, no way to know with
certainty what the employee turnover will be. Any forfeited shares will be
available for reissue.
The Company is asking its shareholders to increase the number of newly
issued shares of Common Stock, par value $0.01, which it can issue pursuant to
the Deferred Compensation Plan from 500,000 to 1,650,000 with the increased
shares to be used primarily for the Company Match program and the Retention
and Hire program described above. Neither executive officers nor directors may
be allocated any shares under either of those programs except that employee
directors who are compensated solely by commissions and other incentive
compensation may receive allocations.
17
<PAGE>
The following are the resolutions the shareholders are being asked to vote
for in order to accomplish the foregoing:
RESOLVED that primarily for use in connection with the Deferred Compensation
Plan programs known as the "Company Match" program and the "Retention and
Hire" program there are hereby reserved and authorized for issuance an
additional 1,150,000 shares of Common Stock, par value $0.01 (for a total of
1,650,000 such shares) subject to no shares allocated pursuant to the Company
Match program or the Retention and Hire program being allocated to or
otherwise being made available for any executive officer or any director of
the Company other than an employee director whose compensation as an employee
is solely derived from commissions and other forms of incentive compensation;
and be it further.
RESOLVED that the Board of Directors of this Corporation and the officers of
this Corporation be and the same hereby are authorized and directed to take
such actions as they deem necessary or desirable to carry out the foregoing
resolution.
The Board of Directors recommends a vote "FOR" approval of an amendment to the
Deferred Compensation Plan to increase its authorized shares to 1,650,000
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 1999, as independent accountants to
examine the consolidated financial statements of the Company for calendar year
2000. 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.
The Board of Directors recommends a vote "FOR" the ratification of Arthur
Andersen LLP
as the Company's Independent Accountants
The 1999 Annual Report to Stockholders, including consolidated financial
statements for the fiscal year ended December 31, 1999, 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, 200 North Sepulveda Boulevard, Suite 300, El Segundo,
California 90245.
18
<PAGE>
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.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals to be submitted for the 2001 Annual Meeting of Stockholders must
be received by the Company no later than December 1, 2000 in order that they
may be included in the Company's proxy statement and form of proxy relating to
that meeting.
A stockholder proposal not included in the Company's proxy statement for the
2001 Annual Meeting will be ineligible for presentation at the meeting unless
the stockholder gives timely notice of the proposal in writing to the
Secretary of the Company at the principal executive offices of the Company and
otherwise complies with the provisions of the Company's Bylaws. To be timely,
the Company's Bylaws provide that the Company must have received the
stockholder's notice not less than 50 days nor more than 75 days prior to the
scheduled date of such meeting. However, if notice or prior public disclosure
of the date of the annual meeting is given or made to stockholders less than
65 days prior to the meeting date, the Company must receive the stockholder's
notice by the earlier of (i) the close of business on the 15th day after the
earlier of the day the Company mailed notice of the annual meeting date or
provided such public disclosure of the meeting date and (ii) two days prior to
the scheduled date of the annual meeting.
Annual Report
The 1999 Annual Report to Stockholders, including consolidated financial
statements for the fiscal year ended December 31, 1999, 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, 200 North Sepulveda Boulevard, Suite 300, El Segundo,
California 90245.
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
/s/ JAMES DIDION
JAMES J. DIDION
Chairman of the Board
El Segundo, California
March 31, 2000
19
<PAGE>
CB RICHARD ELLIS SERVICES, INC.
Common Stock Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Raymond E. Wirta 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 Richard
Ellis Services, Inc. (the "Company") which the undersigned would be entitled to
vote as designated on the reverse side of the Annual Meeting of Stockholders of
the Company, to be held on May 16, 2000, 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 Vanguard Fiduciary Trust
Company, the trustee of the CAP Plan, to vote all shares held on 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
SHARES OF COMMON STOCK FOR WHICH THE TRUSTEE DID RECEIVE DIRECTIONS FOR
PROPOSALS 1, 2, 3 AND 4.
CB RICHARD ELLIS SERVICES, INC.
P.O. BOX 11277
NEW YORK, NY 10203-0277
(Continued, and to be dated and signed, on the other side)
PLEASE DETACH PROXY CARD HERE
<PAGE>
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: [X] IN BLUE OR BLACK INK.
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
For all nominees WITHHOLD AUTHORITY
listed below [ ] for all nominees listed [ ]
Nominees: Stanton D. Anderson, Gary J. Beban, Richard C. Blum, James J. Didion,
Bradford M. Freeman, Donald M. Koll, Paul C. Leach, David R. Lind, Frederic V.
Malek, Ray Elizabeth Uttenhove, W. Brett White, Gary L. Wilson, Raymond E. Wirta
(INSTRUCTIONS: To withhold authority to vote for any individual, mark the
"Exceptions" box and that Nominee's name in the space provided below).
[ ] Exceptions
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To approve an amendment to the Company's [ ] [ ] [ ]
Deferred Compensation Plan to increase the
authorized shares of newly issued
Common Stock, par value $0.01, from
500,000 to 1,650,000
FOR AGAINST ABSTAIN
3. To ratify the appointment of Arthur [ ] [ ] [ ]
Anderson LLP as independent accountants
for the Company for 2000
</TABLE>
4. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name (s) appear on this 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:
- -------------------------------- ----------------------
Signature
- --------------------------------
Signature if held jointly
PLEASE MAKE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please detach here
Your Must Detach This Portion of the Proxy Card
Before Returning It in the Enclosed Envelope
