<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CATELLUS DEVELOPMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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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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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[CATELLUS LETTERHEAD]
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Catellus Development Corporation which will be held at the Bank of America,
Giannini Auditorium, 555 California Street, San Francisco, California on
Wednesday, May 31, 1995, at 10:00 a.m. (local time).
At the Annual Meeting, stockholders will be asked to elect eleven
directors. Information about this matter is contained in the attached Proxy
Statement.
The Company's management would greatly appreciate your attendance at the
Annual Meeting. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS MOST IMPORTANT THAT YOUR SHARES BE REPRESENTED. Accordingly, please sign,
date and return the enclosed proxy card which will indicate your vote upon the
matters to be considered. If you do attend the meeting and desire to vote in
person, you may do so by withdrawing your proxy at that time.
I sincerely hope you will be able to attend the Annual Meeting and look
forward to seeing you on May 31, 1995.
Sincerely,
/s/ NELSON C. RISING
Nelson C. Rising
President and Chief Executive Officer
April 5, 1995
<PAGE> 3
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 31, 1995
The Annual Meeting of Stockholders of Catellus Development Corporation (the
"Company") will be held on Wednesday, May 31, 1995, at 10:00 a.m. (local time)
at the Bank of America, Giannini Auditorium, 555 California Street, San
Francisco, California for the following purposes:
(1) To elect eleven directors; and
(2) To transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record at the close of business on April 3, 1995 will
be entitled to notice of, and to vote at, the Annual Meeting or at any
adjournment thereof. Each stockholder, even though he or she may presently
intend to attend the Annual Meeting, is requested to sign and date the enclosed
proxy card and return it without delay in the enclosed postage-paid envelope.
Any stockholder present at the Annual Meeting may withdraw his or her proxy card
and vote in person on each matter properly brought before the Annual Meeting.
Please sign, date and mail the enclosed proxy card promptly in the enclosed
envelope, so that your shares of stock may be represented at the meeting.
By Order of the Board of Directors,
/s/ MAUREEN SULLIVAN
Maureen Sullivan
Secretary
April 5, 1995
San Francisco, California
<PAGE> 4
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to the stockholders of Catellus
Development Corporation (the "Company") in connection with the solicitation of
proxies for use at the Company's Annual Meeting of Stockholders to be held on
Wednesday, May 31, 1995, at 10:00 a.m. (local time) and at any adjournment
thereof. The Annual Meeting of Stockholders will be held at the Bank of America,
Giannini Auditorium, 555 California Street, San Francisco, California.
This solicitation is being made on behalf of the Board of Directors of the
Company, whose principal executive offices are located at 201 Mission Street,
San Francisco, California 94105, telephone (415) 974-4500. This Proxy Statement,
proxy card and Notice of Annual Meeting of Stockholders and the Company's 1994
Annual Report are being mailed to stockholders on or about April 5, 1995.
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Annual
Meeting, will be voted in accordance with the specifications made thereon.
Proxies on which no specification has been made by the stockholder will be voted
in favor of the nominees to the Board of Directors listed in this Proxy
Statement.
Any stockholder may revoke his or her proxy at any time before it is voted
at the Annual Meeting by giving written notice of such revocation to the
Secretary of the Company at the address of the Company indicated above, which
notice may be given by the filing of a duly elected proxy bearing a later date,
or by attending the Annual Meeting and voting in person.
Stockholders of record at the close of business on April 3, 1995 are
entitled to notice of and to vote at the Annual Meeting. On April 3, 1995, the
issued and outstanding voting securities of the Company consisted of 72,967,236
shares of Common Stock, each of which is entitled to one vote in the election of
directors and on any other matters which may properly come before the Annual
Meeting or any adjournment thereof and may properly be voted upon.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum for the transaction of any business. Assuming the presence
of a quorum, the election of directors will require the affirmative vote of a
plurality of the votes cast in person or by proxy at the Annual Meeting.
The inspector of elections appointed by the Company will count all votes
cast in person or by proxy at the Annual Meeting. Abstentions will be treated as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum, but will not be treated as votes cast for purposes of
determining the approval of any matter submitted for a vote of the stockholders.
If a broker or nominee indicates on its proxy that it does not have
discretionary authority to vote on a particular matter as to certain shares,
those shares will be counted for general quorum purposes but will not be
considered as present and entitled to vote with respect to that matter.
The cost of this proxy solicitation will be borne by the Company. Brokers
and nominees should forward soliciting materials to the beneficial owners of the
stock held of record by such persons. The Company will reimburse such persons
for their reasonable forwarding expenses. In addition to the use of the mails,
proxies may be solicited by directors, officers and regular employees of the
Company, who will not receive additional compensation therefor, by personal
contact or by telephone or other means of communication.
<PAGE> 5
ELECTION OF DIRECTORS
Eleven directors are to be elected to serve until the Company's next Annual
Meeting of Stockholders and until their respective successors are elected and
qualified. The following table presents information regarding each nominee to be
presented by the Board of Directors for election as a director of the Company at
the Annual Meeting. Each nominee has indicated his or her willingness to serve
if elected, but if any nominee should become unable to serve, the proxies
solicited hereby will be voted for the election of such other person or persons
as the Board of Directors, acting in accordance with the BAREIA Agreement
described below (see "Arrangements Regarding Nominees"), shall select. The
information below concerning each nominee has been furnished to the Company by
such nominee.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED A
NAME OF NOMINEE BUSINESS EXPERIENCE AGE DIRECTOR
- ----------------------- ------------------------------------------------- --- ---------
<S> <C> <C> <C>
Joseph F. Alibrandi Chairman since 1985, President from 1970 to 1985,
and Chief Executive Officer from 1974 to 1994, of
Whittaker Corporation (a diversified company with
business activities in the aerospace field); and
Chairman since October 1991, and Chief Executive
Officer from October 1991 to October 1992, of
BioWhittaker, Inc. (a diversified company with
business activities in the biotechnology field).
Director of Whittaker Corporation, BioWhittaker,
Inc., Jacobs Engineering Group, Santa Fe Pacific
Corporation, Bank of America NT & SA and
BankAmerica Corporation. 66 1989
Daryl J. Carter Co-Chairman, Carter Primo Chesterton, L.P. (a
real estate investment management company) since
1992. From 1990 to 1992, President, Carter
Property Company (a real estate asset management
company). From 1985 to 1990, Vice President,
Westinghouse Credit Corporation (real estate
investment). 39 (1)
Darla Totusek Flanagan General Partner, Fowlershore & Flanagan (a real
estate investment company), and Managing Director
of Realty Managers, Inc. (a real estate
investment management firm associated with JMB
Realty Corporation) since 1994. From 1991 to
1994, Managing Director, JMB Institutional Realty
Advisors, Inc. (a real estate investment
company). From 1987 to 1991, Senior Vice
President of JMB Realty Corporation (a real
estate manager and owner). 37 1989
Christine Garvey Executive Vice President, Corporate Real Estate,
OREO Sales and Property Management, of Bank of
America since 1992. Senior Vice President (OREO
Division) of Security Pacific Bank from 1991 to
1992. Senior Vice President (Manager, Corporate
Real Estate Department) of Wells Fargo Bank from
1986 to 1991. 49 (1)
Judd D. Malkin Chairman of JMB Realty Corporation (a real estate
manager and owner) since 1971. Director of Urban
Shopping Centers, Inc. 57 1990
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED A
NAME OF NOMINEE BUSINESS EXPERIENCE AGE DIRECTOR
- ----------------------- ------------------------------------------------- --- ---------
<S> <C> <C> <C>
Nelson C. Rising President and Chief Executive Officer of the
Company since September 15, 1994. From 1984 to
September 1994, Senior Partner of Maguire Thomas
Partners, Inc. (a commercial real estate
developer). 53 1994
Joseph R. Seiger Chairman of the Board of Directors of the Company
since July, 1994. Since 1973, Founding Partner,
Vintage Properties (a residential and commercial
real estate developer). 52 1993
Jacqueline R. Slater Managing Director, Portfolio Disposition,
Structured Finance, Commercial Mortgage and
Securitization, Chemical Bank Real Estate Finance
since 1990. Senior Vice President, Corporate
Finance, of Chemical Bank since 1983. 42 1993
Thomas M. Steinberg Manager and supervisor of various investments for
members of the Laurence A. Tisch and Preston R.
Tisch families since September 1991. From June
1989 to August 1991, acted as a real estate
investor. 38 1994
Tom C. Stickel Founder/Chairman of American Partners Capital
Group (a corporation specializing in pension fund
investments design and development) since 1994.
Founder and, from 1992 to 1994, Chairman of
American Partners (a corporation specializing in
Latin American business development). From 1983
to 1992, Chairman and Chief Executive Officer of
TCS Enterprises, Inc. (a financial holding
company). Director of San Diego Gas and Electric
Company, O'Connor Group/RPT Trust and Del Mar
Thoroughbred Club. 46 1993
Beverly Benedict Thomas Partner, UT Strategies (a public affairs firm).
From 1991 to 1995, Assistant Treasurer, State of
California. From 1984 to 1992, Partner, Unger
Thomas (a political consulting firm). 52 (1)
</TABLE>
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(1) First year nominated for election to the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES LISTED ABOVE.
ARRANGEMENTS REGARDING NOMINEES
Bay Area Real Estate Investment Associates L.P. ("BAREIA") and the Company
are parties to an agreement dated as of January 14, 1993 (as amended February 4,
1993, the "BAREIA Agreement") pursuant to which BAREIA converted the Company's
13.5% Convertible Debenture due 1994 (the "Debenture") into 18,989,899 shares of
Common Stock. Concurrently with the conversion, BAREIA purchased, in a private
placement, 1,405,702 shares of the Company's $3.75 Series A Cumulative
Convertible Preferred Stock ("Series A Preferred Stock"). An additional
2,044,297 shares of Series A Preferred Stock were sold concurrently by the
Company in a public offering. The conversion and concurrent Series A Preferred
Stock issuance were effected in February 1993.
Until February 2003 (provided that the Company is publicly held and that
BAREIA owns at least 5% of the outstanding Common Stock), the BAREIA Agreement
entitles BAREIA to designate such number of directors (and requires BAREIA to
vote its Common Stock) so that the proportion of affiliates of BAREIA
3
<PAGE> 7
serving as members of the Board of Directors (including nominees to the Board
designated by BAREIA and proposed by the Nominating Committee) is approximately
equal to BAREIA's percentage Common Stock ownership. However, if BAREIA owns 50%
or more of the outstanding Common Stock, its nominees may include one-half of
the total number of directors plus one; and if that percentage is less than 10%
but at least 5%, BAREIA will be entitled to designate at least one director.
During this ten-year period, BAREIA is also required under the BAREIA Agreement
to vote its Common Stock to elect to the Board of Directors the Chief Executive
Officer of the Company and at least two individuals selected by the Nominating
Committee who are not employees of the Company or affiliates of BAREIA, Olympia
& York SF Holdings Corporation or Itel Corporation. The BAREIA nominees for
election as directors at the Annual Meeting include Ms. Flanagan, Mr. Malkin,
Mr. Seiger, Ms. Slater and Mr. Stickel. If, prior to his or her election to the
Board of Directors, a BAREIA nominee shall be unable or unwilling to serve as a
director, or if a BAREIA nominee shall resign or be removed or be unable to
serve for any reason prior to the expiration of his or her term, BAREIA is
entitled under the BAREIA Agreement to name a replacement nominee and is
required to vote its shares in favor of the election of such nominee as a
director of the Company.
The proportion of BAREIA nominees on the Nominating Committee may not
exceed BAREIA's percentage Common Stock ownership, except that one-half of the
Nominating Committee is required to consist of nominees designated by BAREIA so
long as BAREIA retains at least 35% of the outstanding Common Stock (and has not
transferred beneficial ownership of any shares owned by it on February 11, 1993
after giving effect to the conversion of the Debenture and BAREIA's concurrent
Series A Preferred Stock purchase).
The BAREIA Agreement also provides that, as long as BAREIA owns at least
10% of the outstanding Common Stock, it will have the right to purchase a
portion of any private equity offering of the Company equal to its then
percentage Common Stock ownership.
Under the terms of Mr. Rising's employment agreement with the Company, the
Board of Directors is required, through December 31, 1997, to use its best
efforts to cause Mr. Rising to continue to be elected as a member of the Board
of Directors. See "EMPLOYMENT AND SEVERANCE AGREEMENTS -- Agreement with Mr.
Rising."
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual fee of
$15,000, a fee of $1,250 for each meeting of the Board of Directors attended
(not including actions taken by written consent or, generally, special meetings
held by telephone conference call), and an annual fee of $1,000 for each
Committee of which the director is a member. Directors are also reimbursed for
their out-of-pocket expenses for each Board or Committee meeting attended.
Pursuant to the Company's Amended and Restated Executive Stock Option Plan
(the "Executive Stock Option Plan"), each non-employee director receives an
option to purchase 5,000 shares of Common Stock upon his or her initial
appointment or election to the Board. Each option is exercisable in installments
on a cumulative basis at a rate of 20% each year beginning on the first
anniversary of the date of grant at an exercise price of 127.63% of the fair
market value of the Common Stock on the grant date, increasing 5% on each
anniversary of the date of grant commencing on the sixth anniversary of the
grant date, and may be exercised until the tenth anniversary of the date of
grant.
On July 27, 1994, Mr. Seiger was elected Chairman of the Board to serve
through December 31, 1995. As compensation for serving in this position, he will
receive, in addition to the annual fee and meetings fees described above, a base
salary of $150,000 per year, and, in the sole discretion of the Compensation and
Benefits Committee and the Board of Directors, a bonus (payable after the end of
his term as Chairman) to be determined on the basis of such Committee's and the
Board's subjective evaluation of his performance as Chairman of the Board
through December 31, 1995. Mr. Seiger also received an option to purchase
100,000 shares of Common Stock (subject to a condition which was satisfied in
February 1995). The option is exercisable in full on July 27, 1995 at an
exercise price of $6.975 per share (increasing by 5% on each anniversary of the
date of grant commencing July 27, 1996) and expires on July 27, 2004. In
addition,
4
<PAGE> 8
Mr. Seiger served as the interim Chief Executive Officer of the Company from
July 1, 1994 through September 15, 1994 and received a salary in the amount of
$125,000 for his services in that position.
BOARD OF DIRECTORS MEETINGS
The Board of Directors held nine meetings during the Company's last full
fiscal year. In 1994, each director attended at least 75% of the aggregate
number of meetings of the Board and of each Committee of which such director was
a member, other than Mr. Robert D. Krebs, who attended over 68% of such
meetings.
BOARD COMMITTEES
The Board of Directors has established a Policy Committee, an Audit
Committee, a Compensation and Benefits Committee, a Finance Committee and a
Nominating Committee. No member of these Committees, other than the Policy
Committee and the Finance Committee, may be an employee of the Company.
The Policy Committee is presently composed of Messrs. Malkin and Seiger,
Ms. Slater and Mr. Robert D. Krebs (who is not standing for re-election as a
director of the Company at the Annual Meeting). The function of the Policy
Committee is to discuss major issues confronting the Company and, during the
period from February 1994 to September 1994, was also to search for a new Chief
Executive Officer for the Company. The Policy Committee was formed in February
1994 and is chaired by Mr. Malkin. The Policy Committee met six times in 1994.
The Audit Committee is presently composed of Ms. Flanagan, Messrs.
Steinberg and Stickel and Mr. Gary M. Goodman (who is not standing for
re-election as a director of the Company at the Annual Meeting). The functions
of the Audit Committee are to recommend to the Board the independent public
accountants to be engaged by the Company, and to review the Company's general
policies and procedures with respect to audits and accounting and financial
controls, the scope and results of the auditing engagement, and the extent to
which the Company has implemented changes suggested by the internal audit staff
and the independent public accountants. The Audit Committee met two times in
1994. The Audit Committee is chaired by Ms. Flanagan.
The Compensation and Benefits Committee is presently composed of Messrs.
Alibrandi, Steinberg and Stickel and Mr. John E. Zuccotti (who is not standing
for re-election as a director of the Company at the Annual Meeting). The
functions of the Compensation and Benefits Committee are to make recommendations
to the Board with respect to compensation of officers of the Company who are
also members of the Board (the Board has the sole power to set compensation
levels for such officers), to exercise general review authority over
compensation levels of all other corporate officers and key management
personnel, to review, approve and recommend to the Board the terms and
conditions of proposed incentive bonus plans applicable to such persons, to
review annually compensation practices and salary administration procedures and
generally to review and approve changes in existing employee benefit programs
and adopt new programs. The Compensation and Benefits Committee met six times in
1994. The Compensation and Benefits Committee is chaired by Mr. Alibrandi.
The Finance Committee is presently composed of Messrs. Goodman, Krebs and
Steinberg and Ms. Slater. The function of the Finance Committee is to review
financing arrangements and related matters that must be considered between
regularly scheduled Board meetings. The Finance Committee met one time in 1994.
The Finance Committee is chaired by Ms. Slater.
The Nominating Committee is presently composed of Ms. Flanagan and Messrs.
Alibrandi, Goodman, Krebs, Malkin and Stickel. The function of the Nominating
Committee is to nominate persons for election or re-election to the Board. The
Nominating Committee met twice in 1994. Ms. Flanagan and Messrs. Malkin and
Stickel are designees of BAREIA to the Nominating Committee. See "ELECTION OF
DIRECTORS -- Arrangements Regarding Nominees." The Nominating Committee is
presently chaired by Mr. Krebs.
The Nominating Committee will consider stockholder suggestions of persons
to be considered as nominees to fill future vacancies on the Board. Such
suggestions should be sent in writing to the Secretary at
5
<PAGE> 9
the Company's address and must be accompanied by detailed biographical and
occupational data on the prospective nominee, along with the written consent of
the prospective nominee for consideration of his or her name by the Committee.
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1995, information with
respect to the number of outstanding shares of Common Stock of the Company
beneficially owned by each director of the Company, each nominee for director,
each of the named executive officers and all directors and executive officers of
the Company as a group. Unless otherwise indicated, and except as such powers
may be shared with their spouses under applicable law, the persons indicated
below have sole voting power and investment power with respect to the shares of
Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
(C)
(A) NUMBER OF
NUMBER OF SHARES OF
SHARES OF COMMON STOCK
COMMON UNDERLYING
STOCK (B) UNEXERCISABLE
BENEFICIALLY PERCENT OPTIONS AND
BENEFICIAL OWNER OWNED(1) OF CLASS(2) RIGHTS(3)
--------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Directors and Nominees
Joseph F. Alibrandi.................... 3,384(4) (5) 2,000
Daryl J. Carter........................ 0 0% 0(6)
Darla Totusek Flanagan................. 3,000(4) (5) 2,000
Christine Garvey....................... 0 0% 0(6)
Gary M. Goodman........................ 3,000(4) (5) 2,000
Robert D. Krebs........................ 34,664(4) (5) 2,000
Judd D. Malkin......................... 37,760,342(4)(7) 46.8% 2,000
Nelson C. Rising....................... 0 0% 700,000
Joseph R. Seiger....................... 2,000(8) (5) 103,000(9)
Jacqueline R. Slater................... 2,000(8) (5) 3,000
Thomas M. Steinberg.................... 3,432(10) (5) 5,000
Tom C. Stickel......................... 2,000(8) (5) 3,000
Beverly Benedict Thomas................ 0 0% 0(6)
John E. Zuccotti....................... 3,000(4) (5) 2,000
Named Current Executive Officers
Jeffrey K. Gwin........................ 63,715(11) (5) 158,500
Douglas B. Stimpson.................... 2,987(12) (5) 77,500
Named Former Executive Officers
James W. Augustino..................... 3,333(13) (5) 0
Thomas W. Gille(14).................... 0 0% 0
James G. O'Gara........................ 4,461(15) (5) 0
Vernon B. Schwartz(16)................. 5,015 (5) 0
All current Directors and Executive
Officers as a group (19 persons)..... 37,933,993(7)(10)(17) 47.0% 1,676,500
</TABLE>
- ---------------
(1) Reflects shares of Common Stock with respect to which the named individuals
or members of the specified group are deemed to be the beneficial owners as
of the date indicated under rules promulgated by the Securities and
Exchange Commission ("SEC").
(2) Percentage ownership is determined in accordance with applicable SEC rules
and does not take into account shares of Common Stock reported in column
(c) above.
6
<PAGE> 10
(3) Reflects shares of Common Stock with respect to which the rights of the
named individuals or members of the specified group to acquire beneficial
ownership (i.e., through the exercise of an option or other right, the
conversion of a security, the revocation or termination of a trust, or
otherwise) first arise more than sixty days after the date indicated.
Except as otherwise noted, column (c) reflects shares of Common Stock that
may be acquired upon the exercise of stock options granted pursuant to the
Incentive Stock Compensation Plan or the Executive Stock Option Plan.
(4) Includes 3,000 shares of Common Stock which may be acquired upon the
exercise of options granted to non-employee directors in February 1992
pursuant to the Executive Stock Option Plan.
(5) Except as otherwise described in these notes, each person has beneficial
ownership of less than 1% of the outstanding Common Stock.
(6) If elected as a director at the Annual Meeting, the nominee will receive an
option to purchase 5,000 shares of Common Stock pursuant to the Executive
Stock Option Plan. See "ELECTION OF DIRECTORS -- Director's Compensation."
(7) Includes 29,999,605 shares of Common Stock and 7,757,737 shares of Common
Stock issuable upon conversion of shares of Series A Preferred Stock owned
beneficially by BAREIA, as to which Mr. Malkin disclaims beneficial
ownership. Mr. Malkin might be considered a controlling person of an
affiliate of the general partner of BAREIA. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS" at Note 2.
(8) Includes 2,000 shares of Common Stock which may be acquired upon the
exercise of options granted to non-employee directors in February 1993
pursuant to the Executive Stock Option Plan.
(9) Includes 3,000 shares of Common Stock which may be acquired upon the
exercise of options granted to Mr. Seiger pursuant to the Executive Stock
Option Plan and 100,000 shares of Common Stock which may be acquired upon
the exercise of options granted to Mr. Seiger as compensation for serving
as Chairman of the Board. See "ELECTION OF DIRECTORS -- Director's
Compensation."
(10) Includes 1,932 shares of Common Stock issuable upon conversion of 350
shares of Series A Preferred Stock owned beneficially by Mr. Steinberg.
(11) Includes 59,034 shares of Common Stock which may be acquired upon the
exercise of options granted pursuant to the Incentive Stock Compensation
Plan.
(12) Includes 1,995 shares of Common Stock which may be acquired upon the
exercise of options granted pursuant to the Executive Stock Option Plan and
992 shares of Common Stock held for the benefit of Mr. Stimpson by the
Trustee of the Profit Sharing & Savings Plan and Trust.
(13) All shares in column (a) are shares which may be acquired upon the exercise
of options granted to Mr. Augustino pursuant to the Incentive Stock
Compensation Plan. Mr. Augustino resigned as an executive officer effective
December 31, 1994 and as an employee of the Company effective January 1,
1995.
(14) Mr. Gille resigned as an executive officer on December 23, 1994 and as an
employee of the Company effective January 1, 1995.
(15) All shares in column (a) are shares which may be acquired upon the exercise
of options granted to Mr. O'Gara pursuant to the Incentive Stock
Compensation Plan. Mr. O'Gara resigned as an executive officer and as an
employee of the Company effective January 1, 1995.
(16) Mr. Schwartz resigned as an executive officer and as an employee of the
Company effective June 30, 1994.
(17) Includes (i) 5,327 shares of Common Stock which are held for the benefit of
the executive officers by the Trustee of the Profit Sharing & Savings Plan
and Trust, and (ii) 128,837 shares which may be acquired by directors and
executive officers upon the exercise of options granted pursuant to the
Incentive Stock Compensation Plan, the Stock Option Plan or the Executive
Stock Option Plan.
7
<PAGE> 11
Except as described below, as of March 1, 1995, no director, nominee for
director or executive officer of the Company beneficially owned shares of the
Company's Series A Preferred Stock or Series B Preferred Stock. As of March 1,
1995, Mr. Steinberg beneficially owned 350 shares (representing less than 1% of
the outstanding shares) of the Company's Series A Preferred Stock. Mr. Steinberg
has sole voting and investment power with respect to these shares. In addition,
as of March 1, 1995, BAREIA owned 1,405,702 shares (representing 40.7% of the
outstanding shares) of the Company's Series A Preferred Stock. Mr. Malkin may be
considered a controlling person of an affiliate of the general partner of
BAREIA. Mr. Malkin has disclaimed beneficial ownership of these shares. See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" at Note 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following is the only person or entity known to the Company to be the
beneficial owner of more than five percent of the Common Stock. Except as
indicated below, all information presented is as of March 15, 1995.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED(1) OF CLASS(1)
--------------------------------------------------- ------------ -----------
<S> <C> <C>
Bay Area Real Estate Investment Associates L.P..... 37,757,342(2) 46.8%(2)
Mr. Judd D. Malkin
Mr. Neil G. Bluhm
c/o JMB Realty Corporation
100 Bush Street
San Francisco, California 94101
</TABLE>
- ---------------
(1) Beneficial and percentage ownership are determined in accordance with
applicable SEC rules.
(2) Includes 7,757,737 shares of Common Stock issuable to BAREIA upon conversion
of the Series A Preferred Stock held by it. The Series A Preferred Stock is
convertible at any time at a conversion price of $9.06 per share of Common
Stock.
JMB/Bay Area Partners, an Illinois general partnership, is the sole general
partner, and the California Public Employees' Retirement System, a unit of
an agency of the State of California ("CalPERS"), is the sole limited
partner, with a 99.8% interest, of BAREIA. Messrs. Malkin and Bluhm are the
Chairman and President, respectively, of the managing partner of JMB/Bay
Area Partners. Messrs. Malkin and Bluhm might be considered to be
controlling persons of JMB Realty Corporation, an affiliate of JMB/Bay Area
Partners and its managing general partner.
REGISTRATION RIGHTS AGREEMENT
The Company, BAREIA, Olympia and York SF Holdings Corporation ("O&Y
Holdings") and Itel Corporation are parties to a Registration Rights Agreement
(as amended, the "Registration Rights Agreement"). The Registration Rights
Agreement generally permits any person (a "Holder") owning Registrable
Securities (as defined below) to require the Company to file a registration
statement under the Securities Act, at the Company's expense, covering not less
than 20% of the Registrable Securities of such Holder (or a lesser percentage if
the aggregate offering price after subtraction of underwriting discounts and
commissions would exceed $40 million).
Each Holder may demand two such registrations (four in the case of BAREIA),
and may participate in registrations requested by any other Holder, subject to
certain volume limitations. In addition, if at any time the Company proposes to
register any Common Stock or other Company securities under the Securities Act
in connection with a public offering of such securities solely for cash, each
Holder has the right to request that any of its Registrable Securities be
included in such registration statement, subject to certain volume limitations.
8
<PAGE> 12
The term "Registrable Securities" includes shares of Common Stock issued to
BAREIA in December 1989 and shares of Common Stock issued to O&Y Holdings in
1990 in connection with the distribution by Santa Fe Pacific Corporation ("SFP")
to its stockholders of the Common Stock held by SFP (the "Distribution"). The
term also includes the Common Stock issued upon conversion of the Debenture
formerly held by BAREIA, any Common Stock issued as a dividend or other
distribution in connection with the foregoing holdings of Common Stock, and any
equity securities purchased by BAREIA pursuant to the BAREIA Agreement
(including shares of the Series A Preferred Stock (and shares of the Common
Stock issued upon conversion thereof), but excluding shares of any class of
capital stock purchased pursuant to a private placement (or acquired upon
conversion) if that class of stock is not publicly traded at the time
registration is requested). Shares of Common Stock cease to be classified as
Registrable Securities once such shares have been registered under the
Securities Act, distributed pursuant to Rule 144 or otherwise transferred
without restriction upon subsequent transfer, or if such shares cease to be
outstanding.
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") is responsible for administering the Company's executive
compensation program. The Committee is composed of the non-employee directors
whose names appear at the end of this report.
The Committee has general review authority over compensation levels of all
corporate officers and key management personnel, administers employee benefit
and incentive compensation programs, and considers and recommends new benefit
programs to the Board. In addition, the Committee is responsible for reviewing
and recommending to the Board the compensation of Mr. Rising, who is the only
Company officer who is also a member of the Board. The Board has the sole
authority to set Mr. Rising's compensation. The Committee also reviews the
individual performance of the other executives whose compensation is detailed in
this Proxy Statement. The Committee takes into account the observations and
subjective evaluations of Mr. Rising and, in general, confirms the
recommendations for salary adjustments proposed by Mr. Rising.
Set forth below is a report of the Committee addressing the Company's
compensation policies for 1994 as they affected Mr. Rising, the Company's Chief
Executive Officer, and Messrs. Stimpson, Gwin, Augustino, O'Gara and Gille, the
five executive officers (together with Mr. Rising, the "Named Executives") who
for 1994, were, in addition to Mr. Rising, the Company's six most highly paid
executive officers. Also included in the report are comments concerning Vernon
B. Schwartz, the former Chief Executive Officer of the Company until June 30,
1994, and Joseph R. Seiger, who served as Acting Chief Executive Officer from
July 1, 1994 through September 14, 1994. Ordinarily, the SEC's proxy rules
require disclosure of compensation paid only to a company's Chief Executive
Officer and up to the next four highest paid executive officers of the company.
However, due to the Company's management changes occurring in 1994, compensation
information is also required to be disclosed for an additional senior officer of
the Company (who has since left the Company), as well as for Messrs. Schwartz
and Seiger, each of whom served as Chief Executive Officer during the year.
OVERALL POLICY
The key elements of the Company's executive compensation program consist of
base salary, annual bonus and long-term incentive opportunities. The program is
intended to enable the Company to attract, motivate and retain senior management
by providing a fully competitive total compensation package based on both
individual and corporate performance, taking into account both annual and
long-term performance goals, and recognizing individual initiative and
achievements. It includes what the Committee believes are competitive base
salaries which reflect individual performance; annual variable performance
incentive opportunities
- ---------------
* The Compensation and Benefits Committee Report shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filings of the Company pursuant to the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended,
except to the extent the Company specifically incorporates this Report by
reference therein, and shall not be deemed soliciting material or otherwise
deemed filed under either of such Acts.
9
<PAGE> 13
payable in cash; and programs contingent on the Company's long-term performance.
The Committee endorses the position that stock ownership by management and
stock-based performance compensation arrangements aid in aligning management's
and stockholders' interests in the enhancement of stockholder value.
Accordingly, these elements play an important role in the total compensation
packages for the Company's executive officers.
The compensation policy of the Company is that a portion of the annual
compensation of each officer relates to and must be contingent upon the
performance of the Company, as well as the individual contribution by each
officer. As a result, much of an executive officer's annual compensation is
variable and is based on corporate and individual performance.
ANNUAL COMPENSATION PROGRAM
Annual total cash compensation for senior management consists of base
salary and, through December 31, 1994, awards under the Company's Annual
Performance Bonus Program (the "Performance Bonus Program"). The Performance
Bonus Program provided for the establishment of various annual performance goals
which, if achieved, resulted in the payment of additional cash compensation to
participants for that year. As of December 31, 1994, the Performance Bonus
Program was terminated.
Base salaries for new executive officers are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for executives,
including a comparison to base salaries for comparable positions at other real
estate holding and development companies. Annual salary adjustments are
determined by evaluating the financial performance of the Company and by
subjectively evaluating the performance of each executive officer, and also by
taking into account changing responsibilities. Where appropriate, the Committee
considers non-financial performance measures, including such elements as the
productivity of the relevant working group or business unit, contribution to
corporate goals regarding employee morale and team-building, efficient use of
corporate resources, promotion of favorable public opinion of the Company and
its corporate image, employee retention and leadership development, and
successful tenant and vendor relations. The Committee, however, does not apply
any specific quantitative formula in making compensation decisions.
Goals under the Performance Bonus Program for 1994 generally included
corporate performance objectives (including cash flow objectives) and individual
performance objectives. In 1994, corporate performance objectives were not met.
Achievement of individual objectives, which accounted for 80% of the Performance
Bonus Program payout potential, was evaluated on a subjective basis by Mr.
Rising. Remaining officers and employees received, on average, approximately 20%
of the maximum payout under the Performance Bonus Program. Certain persons
received higher annual bonuses for extraordinary performance in the
restructuring effort. Individual goals were established annually by senior
management and approved by the Chief Executive Officer.
For 1995, the Board has authorized an Annual Bonus Program (the "1995
Program"). Under the 1995 Program, individual performance goals are being set by
the Chief Executive Officer for each participant and final bonuses, if any, will
be based upon a review of the fulfillment of the selected objectives.
The salary and bonus paid during 1994 to Mr. Rising were based on the terms
of his employment agreement with the Company. See "EMPLOYMENT AND SEVERANCE
AGREEMENTS -- Agreement with Mr. Rising."
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program for senior management has consisted of two
types of awards, cash bonuses and stock options. All of the senior executive
officers participated in this long-term program. The primary purpose of the
program has been to offer an incentive for long term performance of the Company.
The Long-Term Incentive Compensation Plan ("LICP") provided for a bonus
based on the compound annual growth of the Company's stockholders' equity (on a
current value basis) for the five-year period from January 1, 1992 through
December 31, 1996. No awards would be payable to senior executive officers
unless
10
<PAGE> 14
the annual compound growth in current value stockholders' equity over the period
exceeded goals established by the Committee. To date, that growth has not been
achieved. In any event, following approval by stockholders of an amendment to
the original Executive Stock Option Plan at the 1994 Annual Meeting, the LICP
and all awards to be made thereunder have been terminated.
The Executive Stock Option Plan is intended to create a long term incentive
to create growth in stockholder value. Options may be granted under the
Executive Stock Option Plan to senior managers of the Company at the discretion
of the Committee. Unless otherwise provided for by the Committee, the exercise
price for all options granted to senior managers is the fair market value on the
date of the grant, increasing 5% on each anniversary of the grant date. These
"premium priced" options will have no realizable value to the optionees unless
the market price of the Common Stock increases more than 5% a year, compounded
annually, over the five-year period. The Committee does not apply any specific
quantitative formula in determining the size of option grants under the
Executive Stock Option Plan.
The Committee concluded that the new options under the Executive Stock
Option Plan, coupled with the termination of awards under the LICP, would more
closely align management's long-term incentive compensation with increased
stockholder value, as reflected in stock performance. The Committee also
concluded that the vesting of the options based on increased Common Stock price,
together with the "front loading" of the options to senior managers (i.e., the
grant of a higher number of stock options with a longer vesting period (unless
common stock target prices are met) than a normal grant), would better align
management's interests with stockholder focus and the long-term horizons of a
real estate company.
Pursuant to the terms of his employment agreement with the Company, Mr.
Rising received an option grant under the Executive Stock Option Plan in July
1994 as part of his compensation for 1994. See "EMPLOYMENT AND SEVERANCE
AGREEMENTS -- Agreement with Mr. Rising." All of the executive officers named in
the Summary Compensation Table also received grants in 1994 except for Mr.
Schwartz.
AGREEMENT WITH MR. SCHWARTZ
Vernon B. Schwartz resigned as Chief Executive Officer of the Company
effective June 30, 1994. The material terms of Mr. Schwartz's severance
agreement with the Company are summarized under "EMPLOYMENT AND SEVERANCE
AGREEMENTS -- Agreement with Mr. Schwartz."
At the request of the Committee, the Policy Committee negotiated Mr.
Schwartz' severance compensation. The Policy Committee recommended its final
approval to the Board on the basis of Mr. Schwartz' agreement to assist the
Company in effecting an orderly management transition, and that Mr. Schwartz
would not be eligible to participate in the Performance Bonus Program or to
receive any long-term incentive compensation potential for his services to the
Company in 1994.
TAX MATTERS
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the deductibility for federal income tax purposes of certain
compensation paid to "covered employees," which term ordinarily includes at
least the Chief Executive Officer and the four other most highly compensated
officers of the Company, as of the end of a performance year. The Company
intends to take the necessary steps to conform its compensation to comply with
the limitations or, if this is not feasible in any given circumstance, to
mitigate the negative impact of this Code provision on stockholders.
<TABLE>
<S> <C>
Joseph F. Alibrandi Tom C. Stickel
Thomas M. Steinberg John E. Zuccotti
</TABLE>
11
<PAGE> 15
EMPLOYMENT AND SEVERANCE AGREEMENTS
AGREEMENT WITH MR. RISING
The Company and Mr. Rising entered into an Employment Agreement dated as of
July 27, 1994 and pursuant to which Mr. Rising serves as President and Chief
Executive Officer of the Company. The Employment Agreement also requires the
Board of Directors, through December 31, 1997, to use its best efforts to cause
Mr. Rising to be elected as a member of the Board of Directors.
The Employment Agreement with Mr. Rising provides for a minimum base salary
of $350,000 per year and for an annual target bonus of between 50% and 75% of
base salary through December 31, 1995; provided, however, that for the period
from September 15, 1994 through December 31, 1994, Mr. Rising would receive a
guaranteed bonus of $51,000, and for 1995, Mr. Rising would receive a guaranteed
bonus of $175,000 (subject to increase to $262,000 if he meets certain maximum
qualitative performance standards established by the Board). While no bonuses
are guaranteed under the Employment Agreement for 1996 or 1997, Mr. Rising's
target bonus for each of such years is equal to 50% of his base salary, with a
maximum annual bonus opportunity of 100% of base salary (subject to attainment
of certain individual and corporate objectives to be determined by the Board of
Directors prior to November 30 of the preceding year). In addition to Mr.
Rising's salary and bonus, the Company paid Mr. Rising $175,000 in 1994 in lieu
of reimbursement of certain relocation expenses, and also paid approximately
$20,000 of legal and consultant's fees incurred by Mr. Rising in connection with
the negotiation and preparation of the Employment Agreement. Mr. Rising is also
entitled under the Employment Agreement to receive four weeks of paid vacation
each year, payment of disability insurance premiums and such other benefits and
perquisites as are made available by the Company from time to time to other
members of the Company's senior management.
The Employment Agreement also provides for the grant to Mr. Rising of
options to purchase an aggregate of 700,000 shares of Common Stock pursuant to
the Executive Stock Option Plan. The first option has a term of 10 years and the
second option has a term of 7 years. Each of the options is for 350,000 shares
and becomes exercisable in three equal annual installments beginning January 1,
1996, with full vesting occurring on January 1, 1998, subject to accelerated
vesting upon certain events relating to termination of Mr. Rising's employment
as described below. Each of the options also has an initial exercise price of
$6.975 per share, which increases by 5% each January 1 (commencing January 1,
1996) for the term of the option.
The Employment Agreement expires on December 31, 1997 (the "Expiration
Date") unless earlier terminated as described below. The Company may
unilaterally elect to terminate the Employment Agreement prior to such date only
on account of Mr. Rising's death, "permanent disability" (as defined in the
Employment Agreement) or otherwise for "cause" (defined in the Employment
Agreement to include the willful and continued failure by Mr. Rising to perform
his material duties or the engaging by Mr. Rising in egregious misconduct
involving serious moral turpitude). Mr. Rising may elect to terminate the
Employment Agreement upon thirty (30) days advance written notice to the
Company. In the event of any termination of Mr. Rising's employment prior to the
Expiration Date, Mr. Rising is entitled to receive his salary through the date
of termination, an amount in respect of any unused vacation days (as determined
in accordance with effective Company policy) and any other amounts or benefits
payable under the Company's employee benefit plans. In all cases other than a
termination for cause or on account of Mr. Rising's resignation, Mr. Rising is
also entitled to receive a pro rata share of his target bonus payment for the
year in which the termination occurs. If the Company terminates Mr. Rising's
employment without cause, or if Mr. Rising is "constructively discharged"
(defined in the Employment Agreement to include (among other things) the
assignment of duties inconsistent with the position of President and Chief
Executive Officer, the failure to be elected to such offices or as a member of
the Board of Directors, a reduction in salary or certain geographic
relocations), then in addition to the amounts described above, Mr. Rising will
also be entitled to receive his base salary through the Expiration Date (up to a
maximum of two years) and his stock options will become immediately exercisable
in full.
In the event Mr. Rising is constructively discharged or terminated without
cause within twelve months after the occurrence of a "change in control" of the
Company, then in lieu of the benefits described above, Mr. Rising shall be
entitled to receive a lump sum payment in an amount which is equal to three
times the
12
<PAGE> 16
"base amount" as such term is defined in Section 280G of the Internal Revenue
Code of 1986, as amended (subject to certain limitations contained in such
section). In addition, the stock options granted to Mr. Rising shall become
immediately exercisable in full. For purposes of the Employment Agreement, a
"change in control" is defined generally to include the following: (i) certain
acquisitions of 25% or more of the combined voting power of the then outstanding
shares of Common Stock and any other securities of the Company entitled to vote
generally in the election of directors, or (ii) the failure of persons currently
serving on the Board of Directors, together with persons nominated by at least a
majority vote of the continuing directors, to constitute at least a majority of
the Board, or (iii) approval by the Company's stockholders of any
reorganization, merger or consolidation of the Company in which the beneficial
owners of the Common Stock and other voting securities of the Company
immediately prior to such transaction fail to beneficially own at least 50% of
the combined voting power of all securities entitled to vote generally in the
election of directors following any such transaction, or (iv) approval by the
Company's stockholders of any complete liquidation or dissolution of the
Company, or of any sale or other disposition of all or substantially all of the
Company's assets.
AGREEMENT WITH MR. SCHWARTZ
Vernon B. Schwartz resigned as Chief Executive Officer of the Company
effective June 30, 1994. Pursuant to an agreement between the Company and Mr.
Schwartz dated February 22, 1994, Mr. Schwartz agreed to remain in the employ of
the Company until June 30, 1994. Mr. Schwartz was paid $225,000 through June 30,
1994, and was paid $654,375 upon termination of his employment. In addition, the
Company accelerated the vesting of certain stock options that previously had
been granted to Mr. Schwartz in March 1993.
13
<PAGE> 17
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation
paid by the Company for services rendered during the fiscal years ended December
31, 1994, December 31, 1993 and December 31, 1992 to the Named Executives
indicated below.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/SARS COMPENSATION
YEAR SALARY($) BONUS($)(1) ($)(2) (#) ($)(3)
---- --------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Current and Interim Executive
Officers
Nelson C. Rising 1994 134,857 77,576 197,422(4) 700,000 --
Chief Executive Officer
(9/15/94-present)
Joseph R. Seiger 1994 168,750(5) -- -- 100,000 24,917(6)
Chairman of the Board
(7/1/94-present)
Interim Chief Executive Officer
(7/1/94-9/14/94)
Douglas B. Stimpson 1994 124,167 91,250(7) -- 67,500 7,115
Vice President Finance 1993 113,750 32,200 -- -- 6,784
1992 99,533 40,000 -- 10,000 5,972
Jeffrey K. Gwin 1994 150,000 51,000(7) -- 68,500 7,632
Vice President 1993 150,000 22,500 -- -- 7,509
Development 1992 150,000 31,500 -- 90,000 7,375
Former Executive Officers
Vernon B. Schwartz 1994 225,000 -- -- -- 659,007(8)
Chairman of the Board, 1993 450,000 320,625 -- -- 9,226
Chief Executive Officer 1992 450,000 408,500 -- 418,000 8,952
and President (through 6/30/94)
James G. O'Gara 1994 150,000 22,500 101,500 112,390(9)
Senior Vice President 1993 150,000 54,000 -- -- 7,509
1992 150,000 80,700 -- 90,000 7,375
Thomas W. Gille 1994 150,000 55,038 110,000 39,913(10)
Vice President 1993 150,000 81,000 -- -- 7,509
Asset Management 1992 150,000 58,125 -- 50,000 7,375
James W. Augustino 1994 135,000 16,200 -- 85,000 98,197(11)
Vice President 1993 135,000 28,350 -- -- 7,209
Development 1992 135,000 56,700 -- 90,000 7,075
</TABLE>
- ---------------
(1) Unless otherwise noted, bonus amount for any year represents the amount
earned for that fiscal year pursuant to the Performance Bonus Program. This
amount is paid in the following fiscal year, and is excluded from the year
of payment.
(2) Except in the case of Mr. Rising (see note 4 below), Other Annual
Compensation in the form of the value of certain perquisites and other
personal benefits did not, in the aggregate, exceed the lower of $50,000 or
10% of the aggregate salary and bonus compensation earned by any of the
Named Executives during any of the applicable reporting periods.
(3) Unless otherwise noted, represents the amount of the Company's
contributions for the year pursuant to the Profit Sharing & Savings Plan
and Trust.
(4) Includes payment to Mr. Rising of $175,000 in lieu of relocation benefits
and payment of $19,797 for legal and compensation consulting services
rendered to Mr. Rising in connection with the negotiation and preparation
of his employment agreement with the Company. The Company also provided
14
<PAGE> 18
Mr. Rising with an automobile allowance of $2,625. See "EMPLOYMENT AND
SEVERANCE AGREEMENTS -- Agreement with Mr. Rising."
(5) Includes $43,750 paid to Mr. Seiger in his capacity as Chairman of the
Board. See "ELECTION OF DIRECTORS -- Directors' Compensation."
(6) Amount represents annual director and meeting fees paid to Mr. Seiger. See
"ELECTION OF DIRECTORS -- Directors' Compensation."
(7) Includes special bonuses payable to Messrs. Stimpson and Gwin in the amount
of $31,250 and $15,000, respectively, for their roles in the Company's
restructuring program.
(8) Mr. Schwartz resigned as an executive officer and employee of the Company
effective June 30, 1994. Amount of Other Compensation includes $4,632
representing the amount of the Company's contribution for the year pursuant
to the Profit Sharing & Savings Plan and Trust; and $654,375 as severance
paid upon termination of Mr. Schwartz' employment with the Company. See
"EMPLOYMENT AND SEVERANCE AGREEMENTS -- Agreement with Mr. Schwartz."
(9) Mr. O'Gara resigned as an executive officer and employee of the Company
effective January 1, 1995. Amount of Other Compensation for 1994 includes
$7,632 representing the amount of the Company's contribution for the year
pursuant to the Profit Sharing & Savings Plan and Trust; $75,000 as
severance paid upon termination of Mr. O'Gara's employment with the
Company; and $29,758 as payment in lieu of unused vacation and sick leave.
(10) Mr. Gille resigned as an executive officer of the Company on December 23,
1994 and as an employee of the Company effective January 1, 1995. Amount of
Other Compensation for 1994 includes $7,632 representing the amount of the
Company's contribution for the year pursuant to the Profit Sharing &
Savings Plan and Trust; $25,962 as severance paid upon termination of Mr.
Gille's employment with the Company; and $6,319 as payment in lieu of
unused vacation and sick leave.
(11) Mr. Augustino resigned as an executive officer of the Company effective
December 31, 1994 and as an employee of the Company effective January 1,
1995. Amount of Other Compensation for 1994 includes $7,342 representing
the amount of the Company's contribution for the year pursuant to the
Profit Sharing & Savings Plan and Trust; $36,346 as severance paid upon
termination of Mr. Augustino's employment with the Company; $35,000 as a
special termination bonus; and $19,509 as payment in lieu of unused
vacation and sick leave.
15
<PAGE> 19
STOCK OPTIONS
The following table presents information concerning the options granted to
each of the Named Executives during 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS EXERCISE GRANT
OPTIONS GRANTED TO OR BASE DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SH) DATE(2) VALUE(3)
- -------------------------------- ---------- ---------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current and Interim Executive
Officers
Nelson C. Rising................ 350,000(4) 16.8% 6.975 01/26/01 $1,116,500
350,000(4) 16.8% 6.975 01/26/04 934,500
Joseph R. Seiger................ 100,000(5) 4.8% 6.975 07/27/04 424,000
Douglas B. Stimpson............. 67,500(6) 3.2% 7.775 01/31/04 305,100
Jeffrey K. Gwin................. 68,500(6) 3.3% 7.775 01/31/04 309,620
Former Executive Officers
Vernon B. Schwartz(7)........... 0 0% -- -- --
James G. O'Gara(8).............. 101,500(6) 4.9% 7.775 01/31/04 458,780
Thomas W. Gille(9).............. 110,000(6) 5.3% 7.775 01/31/04 497,200
James W. Augustino(10).......... 85,000(6) 4.0% 7.775 01/31/04 384,200
</TABLE>
- ---------------
(1) Except in the case of options granted to Mr. Seiger, all options reflected
in the table were granted pursuant to the terms of the Executive Stock
Option Plan. The Executive Stock Option Plan is administered by the
Committee, which has full power to adopt and amend rules to implement the
terms of the Executive Stock Option Plan. Options granted under the
Executive Stock Option Plan are exercisable for cash or any other property
(including already owned shares of Common Stock) deemed acceptable by the
Committee.
(2) Options are subject to earlier termination in certain events following
termination of employment. To the extent that stock options awarded to an
executive officer under the Executive Stock Option Plan have become
exercisable prior to the officer's resignation or termination of employment
with the Company (other than for cause or in the event of death or
disability), such options remain exercisable in accordance with their terms
for up to three months following the officer's termination date. However,
if such officer engages in activity in competition with the Company,
divulges confidential information or otherwise is terminated for cause,
such unexercised options are immediately forfeited. All options which have
not yet become exercisable prior to the officer's termination date
automatically terminate on such date. In the event employment is terminated
by reason of death, any unexercised portion of the option that is or
becomes vested upon death will remain exercisable for a period of one year
following the date of death. If the officer retires at or after age 65,
ceases to be an employee due to disability or in the event of death prior
to the vesting date, the number of shares deemed vested shall equal the
greater of (i) one fifth times the number of option shares for each full
year of service up to five years, or (ii) the number of shares vested as of
the date of termination of employment. All options reported in column (b)
for Messrs. O'Gara, Gille and Augustino expired on or before April 1, 1995.
(3) As permitted under SEC rules, the Black-Scholes option pricing model was
chosen to estimate the grant date present value of the options set forth in
this table. The Company's use of this model should not be construed as an
endorsement of its accuracy at valuing options. All stock option valuation
models, including the Black-Scholes model, require a prediction about the
future movement of the stock price. Each of the values reported in the table
is calculated on the assumption that the option is exercised at the end of
the option term. The following additional assumptions have been made for
purposes of calculating
16
<PAGE> 20
the grant date present value for all options shown in the table other than
those for Mr. Rising: for the options granted to Mr. Seiger, the
assumptions are volatility at .3276, dividend yield at 0% and risk-free
rate of return at 7.56%; for options granted to the other executive
officers, the assumptions are volatility at .3272, dividend yield at
0% and risk-free rate of return at 5.87%. At the time of grant of the
stock options to Mr. Rising, the Policy Committee of the Board retained an
independent compensation consulting firm to assist it in valuing such
options. The following Black-Scholes assumptions have been made
for purposes of calculating the grant date present value of the options
granted to Mr. Rising: volatility at .3203, dividend yield at 0% and
risk-free rate of return at 7.35%. In all cases, the calculation of the
grant date present value does not include any adjustments for
non-transferability of the options or for risk of forfeiture.
(4) Options were granted to Mr. Rising pursuant to his Employment Agreement
with the Company. For a description of the material terms of each grant,
see "EMPLOYMENT AND SEVERANCE AGREEMENTS -- Agreement with Mr. Rising."
(5) The option granted to Mr. Seiger is exercisable in full on July 27, 1995 at
a price of $6.975 per share, which shall increase by 5% compounded
annually, on January 1 of each year, commencing January 1, 1996. In the
event of termination of Mr. Seiger's service as a director, the vested but
unexercised portion of the option shall be exercisable for a period of
three months. In the event Mr. Seiger ceases to be a director because of
death, and the option has vested, the unexercised portion of the option
shall be exercisable for one year after such death. If Mr. Seiger ceases to
be a director by reason of disability or death and the option has not
vested, a fraction of the option shall vest equal to the number of months
elapsed from the date of grant to the date of such termination divided by
12. In addition, the option is immediately exercisable in the event of a
"change of control" (defined in the option agreement in substantially the
same manner as is set forth in Mr. Rising's Employment Agreement).
(6) Options become exercisable on the date which is nine years and nine months
from the grant date; provided, however, that such options become
exercisable in installments, commencing three years from the date of grant,
when the fair market value of a share of Common Stock reaches the specified
sales price for any ten consecutive trading days: (i) as to one-third of
the option shares, $12.00; (ii) as to two-thirds of the option shares,
$15.00; and (iii) as to the entire award, $20.00. In the event of a change
in control, the options are exercisable as set forth in the preceding
sentence without regard for the period of time elapsed from the date of the
grant. Under the applicable option agreement, a "change in control" is
defined as any acquisition of voting securities of the Company by any
person or group (other than the Company and certain existing 5%
shareholders) immediately after which such person or group beneficially
owns more than 50% of the combined voting power of the Company's then
outstanding voting securities.
(7) Mr. Schwartz resigned as an executive officer and employee of the Company
effective June 30, 1994.
(8) Mr. O'Gara resigned as an executive officer and employee of the Company
effective January 1, 1995.
(9) Mr. Gille resigned as an executive officer of the Company on December 23,
1994 and as an employee of the Company effective January 1, 1995.
(10) Mr. Augustino resigned as an executive officer of the Company on December
31, 1994 and as an employee of the Company effective January 1, 1995.
17
<PAGE> 21
None of the Named Executives exercised options during 1994 or held
"in-the-money" options at the end of the 1994 fiscal year. The following table
sets forth the number of unexercised options held as of December 31, 1994
(divided between exercisable and unexercisable options).
FISCAL YEAR-END OPTION HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT DECEMBER 31, 1994
---------------------------------
NAME EXERCISABLE UNEXERCISABLE
---------------------------------------- ----------- -------------
<S> <C> <C>
Current and Interim Executive Officers
Nelson C. Rising........................ 0 700,000
Joseph R. Seiger........................ 2,000 103,000
Douglas B. Stimpson..................... 1,995 77,500
Jeffrey K. Gwin......................... 59,034 158,500
Former Executive Officers(1)
Vernon B. Schwartz(2)................... 0 0
James G. O'Gara(3)...................... 4,461 191,500
Thomas W. Gille(4)...................... 0 160,000
James W. Augustino(5)................... 3,333 175,000
</TABLE>
- ---------------
(1) All options reported for former executive officers expired on or before
April 1, 1995.
(2) Mr. Schwartz resigned as an executive officer and employee of the Company
effective June 30, 1994.
(3) Mr. O'Gara resigned as an executive officer and employee of the Company
effective January 1, 1995.
(4) Mr. Gille resigned as an executive officer of the Company on December 23,
1994 and as an employee of the Company effective January 1, 1995.
(5) Mr. Augustino resigned as an executive officer of the Company effective
December 31, 1994 and as an employee of the Company effective January 1,
1995.
18
<PAGE> 22
COMPARISON OF CUMULATIVE TOTAL RETURNS*
The following is a comparison of the cumulative total stockholder return on
a $100 investment in the Company's Common Stock with the cumulative total
return, including reinvestment of dividends, of a $100 investment in the
Standard & Poor's 500 Composite Stock Index and in a peer group index for the
period from December 4, 1990 (the day the Common Stock commenced trading). The
total return on the Company's Common Stock is measured by dividing the
difference between the Common Stock price at the end and the beginning of the
measurement period by the Common Stock price at the beginning of the measurement
period.
CATELLUS DEVELOPMENT CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN
DECEMBER 4, 1990 TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
SELECTED
CATELLUS REAL ESTATE
MEASUREMENT PERIOD DEVELOPMENT OPERATING
(FISCAL YEAR COVERED) CORPORATION S&P 500 COMPANIES(1)
<S> <C> <C> <C>
12/4/90 100 100 100
12/31/90 98 125 118
12/31/91 68 131 105
12/31/92 78 140 121
12/31/93 59 138 111
12/31/94 58 146 118
</TABLE>
Note: (1) The peer group index includes the following companies: American Real
Estate Partners L.P., The Arlen Corp., Bradley Real Estate Trust SBI,
Catellus Development Corporation, Arbor Property Trust, Forest City
Enterprises, Inc., First Union Real Estate Equity & Mortgage
Investments SBI, Koger Equity, National Realty, L.P., The Newhall
Land and Farming Company, Presidential Realty Corp., and the Rouse
Company.
- ---------------
* This section of the Proxy Statement shall not be deemed to be incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filings of the Company pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934, as amended, except to the
extent the Company specifically incorporates the section by reference
therein, and shall not be deemed soliciting material or otherwise deemed
filed under either of such Acts.
19
<PAGE> 23
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission") and the New York Stock Exchange. These persons are required
by regulation of the Commission to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the fiscal year
ended December 31, 1994, except as described in the following sentences, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements. Mr. Steinberg
failed to timely file a Form 4 to report the purchase of 1,500 shares of Common
Stock. The Company had agreed with Mr. Steinberg to arrange for the filing of
the Form 4 on his behalf. Although Mr. Steinberg provided the Form 4 to the
Company sufficiently in advance of the required filing date, the Company did not
forward it to the Commission in a timely manner.
CERTAIN TRANSACTIONS
TRANSACTIONS WITH SFP AND ITS AFFILIATES
Mr. Krebs, who presently serves as a director of the Company, is also
Chairman, President and Chief Executive Officer of SFP and Chairman and Chief
Executive Officer of the Atchison, Topeka and Santa Fe Railway Company ("ATSF").
Prior to the Distribution, the Company, SFP, ATSF and their affiliates had from
time to time entered into intercompany transactions and agreements incident to
their respective businesses. Substantially all such intercompany transactions
were terminated in December 1989 upon the sale of Common Stock to BAREIA. The
Company entered into several other agreements with SFP, ATSF or their affiliates
described below at the time of the sale of Common Stock to BAREIA.
SFP LEASE. SFP leases approximately 250,000 feet of office space in Chicago
from the Company for an annual rental of approximately $7 million for 1992
through 1994. SFP may terminate the lease after April 1, 1995; however, over 90%
of SFP's space has been leased to tenants who currently pay rent at the rate of
approximately $5 million per year. Any leases of SFP's space existing at the
time of SFP's lease termination would remain in place.
PROPERTY MANAGEMENT AGREEMENT. In November 1989, the Company entered into a
Management Agreement with ATSF pursuant to which the Company agreed to act as
exclusive management and selling agent for ATSF's non-operating railroad
property located in Arizona, California, Colorado, Illinois, Iowa, Kansas,
Louisiana, Missouri, Nebraska, New Mexico, Oklahoma and Texas. The Management
Agreement was negotiated and extended in 1994, and is subject to termination by
either party on 180 days prior written notice to the other party. The earliest
possible termination date is December 31, 1995. ATSF has agreed to pay certain
management fees and sales commissions to the Company with respect to the managed
properties and fees for consulting services. The Company earned $4.2 million in
1994 for fees and commissions under the Management Agreement.
EXPLORATION AGREEMENT WITH SANTA FE PACIFIC GOLD CORPORATION. In 1989, the
Company entered into an Exploration Agreement and Option to Lease (the
"Exploration Agreement") with Santa Fe Pacific Minerals Corporation (now known
as Santa Fe Pacific Gold Corporation ("SFP Gold")), which until September 30,
1994 was a wholly owned subsidiary of SFP. Under the Exploration Agreement, the
Company granted to SFP Gold the exclusive use of any and all rights the Company
may have to conduct all activities relating to the discovery and evaluation of
minerals on the Company's mountain and desert property in Utah and Nevada and
certain desert property in California (the "Subject Lands"). The Company has the
right to terminate the Exploration Agreement as to any Subject Lands at the time
it sells or exchanges such land, subject to SFP Gold's right of first refusal to
purchase any Subject Lands on the same terms and conditions as are contained
20
<PAGE> 24
in a third party offer. SFP Gold is obligated to spend one dollar per acre per
year on exploration activities on the Subject Lands. The Company also granted to
SFP Gold an exclusive continuing option to acquire mining leases as to all or
any portions of the Subject Lands, pursuant to which SFP Gold would pay a flat
royalty and, if any minerals are mined and marketed, a production royalty to the
Company. These leases can be acquired on SFP Gold's own behalf or on behalf of
an unaffiliated third party, provided that SFP Gold remains fully liable to the
Company for all obligations under the leases. The Exploration Agreement
continues through December 31, 2014. As of December 31, 1994, 20,000 acres of
the Company's land were subject to the Exploration Agreement. No payments were
made to the Company by SFP Gold under the Exploration Agreement in 1994 as SFP
Gold reduced the acreage subject to the Exploration Agreement in lieu of
payments otherwise owed under the Exploration Agreement.
TRANSACTIONS WITH AFFILIATES OF BAREIA
Mr. Malkin, who is a director of the Company, is also Chairman of the
managing general partner of JMB/Bay Area Partners, which is the sole general
partner (with less than a 1% interest) of BAREIA. Mr. Malkin may also be
considered to be a controlling person of JMB Realty Corporation, an affiliate of
JMB/Bay Area Partners and its managing general partner. In 1989, the Company
entered into a joint venture with an affiliate of the general partner of BAREIA
to own, develop and operate a 387-unit apartment complex in San Diego,
California. Prior to the formation of the joint venture, the Company sold a 50%
undivided interest in a parcel of land to the affiliate. Both parties
subsequently contributed their respective 50% interests in this parcel of land
to the joint venture for 50% equity interests in the joint venture. An affiliate
of the general partner performed leasing and property management services for
the apartment complex until December 1994. The total amount paid to the
affiliate of the general partner for property management services during 1994
was $130,816.00.
In addition, JMB Insurance Agency, Inc., a corporation beneficially owned
in part by Mr. Malkin and members of his family, functioned as a broker to place
the Company's property and fidelity insurance for 1994 and was paid commissions
of approximately $89,228 in 1994 for its services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Messrs. Alibrandi, Steinberg,
Stickel and Zuccotti served as members of the Company's Compensation and
Benefits Committee. None of these members is an employee or officer of the
Company.
Mr. Alibrandi is a director and a member of the compensation committee of
BankAmerica Corporation, the holding company of Bank of America NT & SA ("Bank
of America"). Mr. Alibrandi is also a director of Bank of America. During 1994,
the Company and its subsidiaries had banking relationships with Bank of America.
Such relationships, pursuant to which funds are deposited with and borrowed from
Bank of America on terms which the Company believes are competitive, reasonable
and customary, may continue in 1995. The total amount paid by the Company and
its subsidiaries to Bank of America during 1994 pursuant to such arrangements
was approximately $6.8 million. Such amount includes interest, commitment fees
and other banking fees paid to Bank of America as principal and/or in its
capacity as agent for other lenders participating in the syndicate, together
with certain third-party expenses incurred by Bank of America which were
reimbursed by the Company. Mr. Alibrandi has abstained from all votes of the
Board of Directors with respect to matters involving Bank of America.
Ms. Christine Garvey, a nominee for election to the Company's Board of
Directors, is an executive officer of Bank of America.
21
<PAGE> 25
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the fiscal year ended December 31, 1994,
including financial statements, is being sent to stockholders of record as of
the close of business on April 3, 1995 together with this Proxy Statement. The
Company will furnish, without charge, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 as filed with the Commission to any
stockholder who submits a written request to Corporate Communications, at the
Company's offices, 201 Mission Street, San Francisco, California 94105.
INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP ("Price Waterhouse"), the Company's independent public
accountants, has examined the Company's financial statements for the fiscal year
ended December 31, 1994. The Company expects representatives of Price Waterhouse
to be present at the Annual Meeting and to be available to respond to
appropriate questions from stockholders. The Price Waterhouse representatives
will be given an opportunity to make a statement if they desire.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices not later than December 7, 1995 for inclusion in the Company's
proxy statement and form of proxy relating to the meeting.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for action by
the stockholders at the Annual Meeting other than those described in this Proxy
Statement. Unless otherwise indicated, if any other matter is properly brought
before the meeting and may be properly acted upon, the persons named in the
accompanying form of proxy will be authorized by such proxy to vote the proxies
thereon in accordance with their best judgment.
22
<PAGE> 26
CATELLUS DEVELOPMENT CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Nelson C. Rising, Douglas B. Stimpson and
Maureen Sullivan or any of them, with full power of substitution, as proxies to
vote at the Annual Meeting of Stockholders of Catellus Development Corporation
(the "Company") to be held on May 31, 1995 at 10:00 a.m., local time, and at any
adjournment or adjournments thereof, hereby revoking any proxies heretofore
given, to vote all shares of common stock of the Company held or owned by the
undersigned as directed on the reverse side hereof, and in their discretion upon
such other matters as may come before the meeting.
(To be Signed on Reverse Side)
See Reverse
Side
Please mark your
votes as in this
example X
The shares represented hereby will be voted in accordance with the
directions given by the stockholder. IF NOT OTHERWISE DIRECTED, THE SHARES
REPRESENTED BY THE PROXY WILL BE VOTED FOR THE MATTERS DESCRIBED BELOW.
Election of Directors FOR / / WITHHOLD / /
Nominees:
Joseph F. Alibrandi, Daryl J. Carter, Darla Totusek Flanagan, Christine
Garvey, Judd D. Malkin, Nelson C. Rising, Joseph R. Seiger, Jacqueline R.
Slater, Thomas M. Steinberg, Tom C. Stickel and Beverly Benedict Thomas.
FOR, except vote withheld from the following nominee(s): _________________
__________________________________________________________________________
The undersigned hereby
acknowledges receipt of
the accompanying Notice
of Meeting and Proxy
Statement and hereby
revokes any proxy or
proxies heretofore
Please sign exactly as
name(s) appear hereon.
Joint owners should each
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give
full title as such.
-------------------------
SIGNATURE(S)
-------------------------
DATE
