<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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] 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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF CATELLUS DEVELOPMENT CORPORATION]
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
Thursday, May 29, 1997 at 10:00 A.M. (local time).
At the Annual Meeting, stockholders will be asked to elect twelve 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 29, 1997.
Sincerely,
/s/ Nelson C. Rising
-------------------------------------
Nelson C. Rising
President and Chief Executive Officer
April 10, 1997
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1997
The Annual Meeting of Stockholders of Catellus Development Corporation (the
"Company") will be held on Thursday, May 29, 1997 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 twelve 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 1, 1997 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/ Kathleen Smalley
-----------------------------------
Kathleen Smalley
Secretary
April 10, 1997
San Francisco, California
<PAGE>
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
Thursday, May 29, 1997, 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 1996 Annual Report are being mailed to stockholders on or about
April 10, 1997.
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company before or at the Annual
Meeting, will be voted in accordance with the specifications made thereon.
Proxies received by the Company 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 executed 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 1, 1997 are
entitled to notice of and to vote at the Annual Meeting. On April 1, 1997 the
issued and outstanding voting securities of the Company consisted of
89,545,468 shares of Common Stock, each of which is entitled to one vote with
respect to the election of directors and on any other matters which may
properly come before the Annual Meeting or any adjournment thereof.
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 at the Annual Meeting.
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.
1
<PAGE>
ELECTION OF DIRECTORS
Twelve 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 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
--------------- ------------------- --- ---------
<C> <S> <C> <C>
Joseph F. Alibrandi Chairman since 1985, President from 1970 68 1989
to 1985 and from 1996 to present, and
Chief Executive Officer from 1974 to 1994
and from 1996 to present, of Whittaker
Corporation (a diversified company with
business activities in the aerospace and
communications 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, Burlington
Northern Santa Fe Corporation, Bank of
America NT & SA, BankAmerica Corporation,
and NewMed Corporation.
Daryl J. Carter Co-Chairman of Carter Primo Chesterton, 41 1995
L.P. (a real estate investment management
company) since 1992. From 1990 to 1992,
President of Carter Property Company (a
real estate asset management company).
From 1985 to 1990, Vice President of
Westinghouse Credit Corporation (a real
estate investment company).
Richard D. Farman President and Chief Operating Officer of 61 --
Pacific Enterprises (a utility holding
company) since January 1995. From 1993 to
1995, Chief Executive Officer of Southern
California Gas Company (a natural gas
distribution utility) and President and
Chief Operating Officer of Pacific
Enterprises. From 1989 to 1993, Chairman
and Chief Executive Officer of Southern
California Gas Company.
Christine Garvey Executive Vice President, Corporate Real 51 1995
Estate, OREO Sales and Property Management
of Bank of America NT & SA since 1992.
Senior Vice President (OREO Division) of
Security Pacific National Bank from 1991
to 1992. Senior Vice President (Manager,
Corporate Real Estate Department) of Wells
Fargo Bank from 1986 to 1991.
William M. Kahane Managing Partner of Milestone Partners 48 --
Limited (an investment banking and
financial advisory company) and Chief
Investment Officer of Robert H. Burns
Holding Ltd. (a private investment
company) since 1992. Director (Advisory)
of Yue-Sai Kan Cosmetics. Director of
Robert H. Burns Holdings Ltd. and Robert
H. Burns Ventures Ltd.
Donald J. McNamara Founder and Chairman of The Hampstead 44 --
Group (an investment company) since 1988.
Chairman of Bristol Hotel Company and
Director of Felcor Suite Hotels and
Mountaisa Entertainment International,
Inc.
Leslie D. Michelson Chairman of the Board of Directors and 46 --
Chief Executive Officer of Value Health
Sciences, Inc. (an applied health services
research firm) since 1992. Director of G&L
Realty, Inc.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED A
NAME OF NOMINEE BUSINESS EXPERIENCE AGE DIRECTOR
--------------- ------------------- --- ---------
<C> <S> <C> <C>
Nelson C. Rising President and Chief Executive Officer 55 1994
of the Company since September 15,
1994. From 1984 to September 1994,
Senior Partner of Maguire Thomas
Partners, Inc. (a commercial real
estate developer).
Joseph R. Seiger Chairman of the Board of Directors of 54 1993
the Company since July 1994. Since
1973, President of Vintage Properties
(a residential and commercial real
estate developer).
Jacqueline R. Slater Managing Director, Chase Manhattan 44 1993
Bank and President, Chase Commercial
Mortgage Securities Corp since 1997.
From 1990 to 1997, Managing Director,
Portfolio Disposition, Structured
Finance, Commercial Mortgage and
Securitization of Chemical Bank Real
Estate Finance.
Thomas M. Steinberg President of Tisch Family Interests 40 1994
(manages and supervises various
investments for members of the
Laurence A. Tisch and Preston R. Tisch
families) since 1997; Managing
Director of Tisch Family Interests
from 1991 until 1997.
Beverly Benedict Thomas Vice-President of UT Strategies Inc. 54 1995
(a public affairs firm). From 1991 to
1995, Assistant Treasurer of State of
California. From 1984 to 1991, Partner
of Unger Thomas (a development
consulting firm).
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES LISTED ABOVE. PROXIES RECEIVED BY THE COMPANY WILL BE SO VOTED
UNLESS A CONTRARY CHOICE IS INDICATED.
ARRANGEMENTS REGARDING NOMINEES
Under the terms of Mr. Rising's employment agreement with the Company, the
Board of Directors is required, through December 31, 2000, to use its best
efforts to cause Mr. Rising to continue to be elected as a member of the Board
of Directors. See "EMPLOYMENT AGREEMENTS--Agreement with Mr. Rising."
In 1996, the Board of Directors of the Company determined that three new
directors should be added to the Board and be nominated for election by
stockholders at the 1997 Annual Meeting of Stockholders. One director would
fill a vacancy created by a resignation which occurred in the early fall of
1996, and two directors would represent additions to the Board, thereby
expanding the size of the Board from nine to eleven.
The Board appointed a Special Committee, consisting of two directors, Joseph
R. Seiger and Beverly B. Thomas, to manage the recruitment process once the
candidates were identified. The Board and the Special Committee conferred with
a number of parties, including representatives of California Public Employees
Retirement System ("CalPERS"), a holder of more than 40% of the equity of the
Company, concerning the process of selection of nominees. A number of the
suggestions of CalPERS as to the process and identification of candidates were
ultimately adopted by the Special Committee after its own investigations were
complete.
Lamalie Amrop International, a firm specializing in the recruitment of
officers and directors, was retained by the Nominating Committee (the
"Committee") of the Board to assist the Committee in the selection process.
The firm provided a list of prospective directors to the Committee. The
Committee reviewed the list, added and deleted candidates, and identified
thirteen candidates for consideration. Two candidates were unable to serve or
to participate in the selection process.
The remaining eleven candidates were then each invited to meet with the
Special Committee. In addition, David Gilbert, Senior Real Estate Investment
Officer of CalPERS, was invited to join the meetings. The candidates were also
invited to meet separately with the Company's Chief Executive Officer, Mr.
Rising. In the
3
<PAGE>
course of the meetings, the participants decided to recommend the selection of
four, rather than three, new directors.
After the meetings were concluded and after discussions with Mr. Rising and
representatives of CalPERS, the Special Committee made a recommendation to the
Nominating Committee, which accepted the recommendation and, in turn, made a
recommendation to the Board of Directors with respect to which candidates
should be nominated, and those recommendations were accepted. As a result,
Messrs. Farman, Kahane, McNamara, and Michelson, along with eight incumbent
directors, have been nominated for stockholder consideration at the annual
meeting.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual retainer
fee of $30,000, a fee of $1,250 for each meeting of the Board of Directors
attended and a fee of $1,000 for each Board committee meeting attended. The
chair of each committee receives an annual fee of $3,000. 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 of the current non-employee
directors received an option to purchase 5,000 shares of Common Stock upon his
or her initial appointment or election to the Board of Directors. Each such
option is exercisable in installments on a cumulative basis at a rate of 20%
each year, commencing on the first anniversary of the date of grant and
expires on the tenth anniversary of the date of grant. Each such option has an
exercise price of 127.63% of the Fair Market Value (as defined in the
Executive Stock Option Plan) of the Common Stock on the grant date, which
increases by 5%, compounded annually, on each anniversary of the date of
grant, commencing on the sixth anniversary of the grant date.
Pursuant to the 1996 Plan, each non-employee director who is first elected
or appointed to the Board of Directors after the 1996 Annual Meeting of
Stockholders received an option to purchase 5,000 shares of Common Stock upon
his or her election or appointment. In addition, promptly following the date
of each Annual Meeting of Stockholders, each non-employee director elected by
the stockholders will receive an automatic grant of an option to purchase
5,000 shares of Common Stock; provided, however, that no non-employee director
will receive more than one such automatic grant in any calendar year. Each
such option has an exercise price of 100% of the Fair Market Value (as defined
in the 1996 Plan) of the Common Stock on the grant date and expires on the
tenth anniversary of the date of grant. Each such option becomes exercisable
in accordance with a schedule based upon the achievement of certain price
levels for the Common Stock as follows: if the average price of the Common
Stock (calculated on an average price basis over 30 consecutive trading days)
is (a) 125% or more of the exercise price, then the option shall be
exercisable as to 25% of the option shares; (b) 150% or more of the exercise
price, 50% of such shares; (c) 175% or more of the exercise price, 75% of such
shares; and (d) 200% or more of the exercise price, 100% of such shares.
Notwithstanding the foregoing, each such option will vest on the eighth
anniversary of the grant date as to the entire number of shares without regard
to the price of the Common Stock.
Mr. Seiger serves as Chairman of the Board. In addition to the annual
retainer fee and meeting fees described above, during 1996 Mr. Seiger chose to
receive an option to purchase 47,319 shares of Common Stock pursuant to the
Executive Stock Option Plan in lieu of cash compensation for serving as
Chairman of the Board. The option has a term of ten years and an exercise
price equal to $5.875, the Fair Market Value (as defined in the Executive
Stock Option Plan) on the date of grant. The option becomes exercisable in
accordance with a schedule based upon the achievement of certain price levels
for the Common Stock (the "Initial Pricing Schedule"), limited by the
expiration of various time periods. The Initial Pricing Schedule operates as
follows: if the average price of the Common Stock (calculated on an average
price basis over 30 consecutive trading days) is (a) $8.50 or more, then the
option will be exercisable as to 25% of the option shares; (b) $10.50 or more,
50% of such shares; (c) $12.50 or more, 75% of such shares; and (d) $15.00 or
more, 100% of such shares. No portion of the option may vest before to January
1, 1997. Assuming the conditions of the Initial Pricing Schedule are met, one-
fourth of the option will vest on January 1, 1997, an additional one-fourth of
the option will vest on
4
<PAGE>
January 1, 1998, an additional one-fourth of the option will vest on January
1, 1999 and the entire option will vest on January 1, 2000. Notwithstanding
the foregoing, the option will vest on January 1, 2004 as to the entire number
of shares without reference to the Initial Pricing Schedule. The option is
subject to accelerated vesting in the event of Mr. Seiger's termination of
service as a director in certain circumstances, including a "change of
control." For purposes of the award agreement, "change of control" has the
same meaning as in Mr. Rising's amended and restated employment agreement. For
a description of the definition of "change of control," see "EMPLOYMENT
AGREEMENTS--Agreement with Mr. Rising." During 1997, Mr. Seiger will receive
compensation at the annual rate of $50,000 for serving as Chairman of the
Board.
BOARD OF DIRECTORS MEETINGS
The Board of Directors held six meetings during the Company's last full
fiscal year. In 1996, 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.
BOARD COMMITTEES
The Board of Directors has established an Audit Committee, a Compensation
and Benefits Committee (the "Compensation Committee"), a Finance Committee,
and a Nominating Committee. No member of these Committees, other than the
Finance Committee, may be an employee of the Company.
The Audit Committee is presently composed of Ms. Garvey and Messrs.
Alibrandi, Carter, and Seiger. 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, 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 independent public accountants. The Audit Committee
met four times in 1996. The Audit Committee is chaired by Ms. Garvey.
The Compensation Committee is presently composed of Messrs. Alibrandi and
Carter and Mmes. Slater and Garvey. The functions of the Compensation
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
approve the compensation of executives reporting directly to the Chief
Executive Officer, 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 Committee met eight times in 1996. The Compensation
Committee is chaired by Mr. Alibrandi.
The Finance Committee is presently composed of Messrs. Rising and Steinberg
and Mmes. Garvey, Slater and Thomas. 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 two
times in 1996. The Finance Committee is chaired by Ms. Slater.
The Nominating Committee is presently composed of Mmes. Slater and Thomas
and Messrs. Alibrandi and Steinberg. The function of the Nominating Committee
is to nominate persons for election or re-election to the Board. The
Nominating Committee met seven times in 1996. The Nominating Committee is
chaired by Ms. Thomas.
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 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 Nominating Committee.
5
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 31, 1997, 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 (B) UNDERLYING
STOCK PERCENT UNEXERCISABLE
BENEFICIALLY OF OPTIONS AND
OWNED (1) CLASS(2) RIGHTS (3)
BENEFICIAL OWNER ------------ -------- -------------
<S> <C> <C> <C>
Directors and Nominees
Joseph F. Alibrandi....................... 7,884(4) (5) 2,500
Daryl J. Carter........................... 4,500(6) (5) 5,500
Richard D. Farman......................... 0(7) 0 0
Christine Garvey.......................... 4,500(6) (5) 5,500
William M. Kahane......................... 0(7) 0 0
Donald J. McNamara........................ 0(7) 0 0
Leslie D. Michelson....................... 0(7) 0 0
Nelson C. Rising.......................... 546,763(8) (5) 1,458,334
Joseph R. Seiger.......................... 118,329(9) (5) 38,990
Jacqueline R. Slater...................... 6,900(10) (5) 3,500
Thomas M. Steinberg....................... 34,915(11) (5) 3,500
Beverly Benedict Thomas................... 3,500(12) (5) 6,500
Named Current Executive Officers
Stephen P. Wallace........................ 154,858(13) (5) 847,500
Timothy J. Beaudin........................ 108,532(14) (5) 395,834
Ira Yellin................................ 75,000(15) (5) 325,000
David Friedman............................ 25,000(16) (5) 275,000
All current Directors and Executive
Officers as a group (16 persons)......... 1,256,557(17) (5) 3,553,564
</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) Beneficial and percentage ownership are determined in accordance with
applicable SEC rules and do not take into account shares of Common Stock
reported in column (c) above.
(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 March 31, 1997. 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
Executive Stock Option Plan or the 1996 Plan.
(4) Includes (i) 384 shares of Common Stock beneficially owned by Mr.
Alibrandi, (ii) 5,000 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, and (iii) 2,500 shares of
Common Stock which may be acquired upon the exercise of options granted to
non-employee directors in May 1996 pursuant to the 1996 Plan.
(5) Each person or group of persons has beneficial ownership of less than 1%
of the outstanding Common Stock.
6
<PAGE>
(6) Includes (i) 2,000 shares of Common Stock which may be acquired upon
exercise of options granted to non-employee directors in March 1995
pursuant to the Executive Stock Option Plan and (ii) 2,500 shares of
Common Stock which may be acquired upon exercise of options granted to
non-employee directors in May 1996 pursuant to the 1996 Plan.
(7) The four new nominees for director were notified of their respective
nominations in late March 1997 and therefore did not have an opportunity
to purchase shares of Common Stock. Assuming, however, that each of the
new nominees is elected as a director on May 29, 1997, at that time, each
such new director will receive an option grant covering 5,000 shares of
Common Stock.
(8) Includes (i) 466,666 shares of Common Stock and 75,000 shares of Common
Stock that may be acquired upon exercise of options granted in 1994 and
1995, respectively, pursuant to the Executive Stock Option Plan and (ii)
5,097 shares of Common Stock held for the benefit of Mr. Rising by the
Trustee of the Profit Sharing & Savings Plan and Trust.
(9) Includes (i) 4,000 shares of Common Stock which may be acquired upon
exercise of options granted to non-employee directors in February 1993
pursuant to the Executive Stock Option Plan, (ii) 2,500 shares of Common
Stock which may be acquired upon exercise of options granted to non-
employee directors in May 1996 pursuant to the 1996 Plan, (iii) 100,000
shares of Common Stock which may be acquired upon exercise of options
granted in July 1994 and (iv) 11,829 shares of Common Stock which may be
acquired upon exercise of options granted in January 1996 under the
Executive Stock Option Plan.
(10) Includes (i) 5,650 shares of Common Stock beneficially owned by Ms.
Slater and (ii) 1,250 shares of Common Stock which may be acquired upon
the exercise of options granted to non-employee directors and in May 1996
pursuant to the 1996 Plan.
(11) Includes (i) 2,272 shares of Common Stock beneficially owned by Mr.
Steinberg, (ii) 3,901 shares of Common Stock held by and for a charitable
remainder unitrust of which Mr. Steinberg is the trustee, (iii) 1,754
shares of Common Stock held in a joint account by Mr. Steinberg, (iv)
2,726 shares of Common Stock issuable upon conversion of 494 shares of
the Company's Series A Cumulative Convertible Preferred Stock ("Series A
Preferred Stock") beneficially owned by Mr. Steinberg, (v) 13,554 shares
of Common Stock issuable upon conversion of 2,456 shares of Series A
Preferred Stock held by and for a charitable remainder unitrust of which
Mr. Steinberg is the trustee, (vi) 6,208 shares of Common Stock issuable
upon conversion of 1,125 shares of Series A Preferred Stock held in a
joint account by Mr. Steinberg, (vii) 2,000 shares of Common Stock which
may be acquired upon the exercise of options granted to non-employee
directors in June 1994 pursuant to the Executive Stock Option Plan, and
(viii) 2,500 shares of Common Stock which may be acquired upon the
exercise of options granted to non-employee directors in May 1996
pursuant to the 1996 Plan. Mr. Steinberg disclaims beneficial ownership
of the 3,901 shares of Common Stock held by the trust, the 1,754 shares
of Common Stock held in the joint account, the 2,456 shares of Series A
Preferred Stock held by the trust and the 1,125 shares of Series A
Preferred Stock held in the joint account.
(12) Includes (i) 1,000 shares of Common Stock which may be acquired upon the
exercise of options granted to non-employee directors in May 1995
pursuant to the Executive Stock Option Plan and (ii) 2,500 shares of
Common Stock which may be acquired upon the exercise of options granted
to non-employee directors in May 1996 pursuant to the 1996 Plan,
respectively.
(13) Includes (i) 110,000 shares of Common Stock and 42,500 shares of Common
Stock which may be acquired upon exercise of options granted in 1995 and
1996, respectively, pursuant to the Executive Stock Option Plan and (ii)
2,358 shares of Common Stock held for the benefit of Mr. Wallace by the
Trustee of the Profit Sharing & Savings Plan and Trust.
(14) Includes (i) 66,666 shares of Common Stock and 37,500 shares of Common
Stock which may be acquired upon exercise of options granted in 1995 and
1996, respectively, pursuant to the Executive Stock Option Plan and (ii)
4,366 shares of Common Stock held for the benefit of Mr. Beaudin by the
Trustee of the Profit Sharing & Savings Plan and Trust.
(15) Includes 75,000 shares of Common Stock which may be acquired upon the
exercise of options granted in 1996 pursuant to the Executive Stock
Option Plan.
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<PAGE>
(16) Includes 25,000 shares of Common Stock which may be acquired upon the
exercise of options granted in 1996 pursuant to the Executive Stock
Option Plan.
(17) Includes 1,213,937 shares of Common Stock which may be acquired upon the
exercise of options granted in 1991, 1992, 1994, 1995 and 1996 pursuant
to the Executive Stock Option Plan and the 1996 Plan and 11,821 shares of
Common Stock held by the Trustee of the Profit Sharing & Savings Plan and
Trust.
Except as described below, as of March 31, 1997, no 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 31, 1997, Mr.
Steinberg beneficially owned 4,075 shares (representing less than 1% of the
outstanding shares) of the Series A Preferred Stock. As set forth above, Mr.
Steinberg has sole voting and investment power with respect to 494 of the
shares, holds 1,125 of the shares in a joint account and acts as trustee for
the benefit of a charitable remainder unitrust with respect to 2,456 of the
shares. Mr. Steinberg disclaims beneficial ownership of the 2,456 shares held
by the trust and the 1,125 shares held in the joint account.
8
<PAGE>
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 5% of the Common Stock. All information
presented is as of March 31, 1997.
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED(1) CLASS(1)
---------------- ------------ ----------
<S> <C> <C>
California Public Employees' Retirement System ..... 37,757,250(2) 41.89%(2)
Lincoln Plaza, 400 P Street
Sacramento, California 95814
</TABLE>
- --------
(1) Beneficial and percentage ownership are determined in accordance with
applicable SEC rules.
(2) Includes 614,474 shares of Common Stock issuable to CalPERS upon
conversion of 111,344 shares of the Company's Series A Preferred Stock.
The Series A Preferred Stock is convertible at any time at a conversion
price of $9.06 per share of Common Stock.
REGISTRATION RIGHTS AGREEMENT
The Company, the predecessor in interest of CalPERS, and other parties who
no longer own Registrable Securities (as defined below), were parties to a
Registration Rights Agreement (as amended, the "Registration Rights
Agreement"). CalPERS and the Company executed a letter agreement dated
November 14, 1995, which confirmed that CalPERS is the owner of the
Registrable Securities and is entitled to the benefits of the Registration
Rights Agreement. The Registration Rights Agreement generally permits CalPERS
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 CalPERS (or a lesser percentage if the aggregate offering price
after subtraction of underwriting discounts and commissions would exceed $40
million).
CalPERS may demand four such registrations, 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, CalPERS
has the right to request that any of its Registrable Securities be included in
such registration statement, subject to certain volume limitations.
The term "Registrable Securities" includes shares of Common Stock issued to
the predecessor in interest of CalPERS in December 1989. The term also
includes the Common Stock issued upon conversion of a debenture formerly held
by the predecessor in interest of CalPERS, any Common Stock issued as a
dividend or other distribution in connection with the foregoing holdings of
Common Stock, and any other shares purchased by CalPERS (including shares of
the Company's 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.
9
<PAGE>
COMPENSATION AND BENEFITS COMMITTEE REPORT
ON EXECUTIVE COMPENSATION*
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") has general review authority over compensation levels of all
corporate officers and key management personnel, oversees benefit and
compensation programs, and, from time to time, considers and recommends new
programs to the Board.
The Committee is responsible for reviewing the performance of, and
recommending to the Board of Directors (the "Board") the compensation of, Mr.
Nelson C. Rising, the Company's Chief Executive Officer, who is the only
Company officer who is also a member of the Board. The Board has the final
authority to set Mr. Rising's compensation.
The Committee also reviews the individual performance level for the other
senior executives whose compensation is detailed in this Proxy Statement and
takes into account the observations and evaluations presented by Mr. Rising.
The Committee has final authority to approve or modify the recommendations by
Mr. Rising for salary adjustments and incentive compensation for these senior
executives.
The Committee is composed of the four non-employee directors whose names
appear at the end of this report. The Committee has retained Towers Perrin, an
independent compensation consulting firm, to review senior executive
compensation for the Company in the context of compensation practices of
comparable publicly traded and private companies in the real estate industry.
In addition, the Committee has reviewed published compensation studies for
real estate executives below the senior executive level.
The Committee believes that the Company's executive compensation program has
been a significant influence on improving stockholder returns because it is
demanding and is aligned with stockholder interests.
Set forth below is a report of the Committee addressing the Company's
compensation policies for 1996 as they affected Messrs. Rising, Wallace,
Beaudin, Yellin and Friedman, the five executive officers (the "Named
Executives") who for 1996 were the Company's five most highly paid executive
officers.
OVERALL POLICY
The key elements of the Company's senior executive compensation program
consist of base salary, cash bonuses and a long-term incentive opportunity.
The program is intended to enable the Company to attract, motivate, and retain
senior executives, 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. In the view of the Committee, the program fully satisfied
those goals in 1996.
The program employs cash incentives based upon performance and stock options
with both time- and price-vesting provisions. The Committee endorses the view
that performance-based annual cash compensation and stock-based long-term
incentives aid in aligning management's and stockholders' interests and
enhance value to stockholders. Accordingly, these elements play an important
role in the total compensation packages for the Company's executive officers.
- --------
* 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.
10
<PAGE>
ANNUAL COMPENSATION PROGRAM
Annual total cash compensation for senior executives consists of base salary
and an incentive plan of cash bonuses.
Base salaries for executive officers are determined by evaluating the
responsibilities associated with 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 companies.
In the main, base salaries for Company's senior executives are set below the
50th percentile of the comparator group identified by Towers Perrin of
companies in the same industry. It is the intent of the Company's compensation
plan to provided a significant portion of the senior executive's compensation
in the form of cash bonuses and stock options to place a large portion of
their compensation "at risk." Such compensation programs, in the view of the
Committee, have provided and continue to provide excellent incentives to
senior executives and align the interests of management with the interests of
stockholders.
The Senior Executive Compensation Plan for 1996 permits a payment of up to
200% of the base compensation of senior executives. The amount of the bonus
awards are determined by evaluating the performance of the senior executive as
compared against predetermined goals and objectives. Some of the goals are
judged by objective standards, and some can be achieved based upon the
successful completion of goals which require subjective evaluation. To achieve
the maximum bonus potential the senior executive must achieve objective goals,
the accomplishment of which shall lead to results in excess of expected
performance and add tangible value to the Company beyond that anticipated in
the Company's 1996 Business Plan.
For 1996, Mr. Rising received $735,000, the maximum annual bonus award under
the Bonus Program, or 200% of his annual base salary. The bonus award to Mr.
Rising for 1996 was made in recognition of the extraordinary quality and
results of the major restructuring of the Company's operation, including the
following: the reorganization of the Company's operations, including the
recruitment of a new team of senior executives; the creation and successful
implementation of a program to dispose of non-strategic land assets; the
turnaround in operating results; strengthening of the Company's financial
position; an increase in development activity, including the re-entitlement of
several significant assets; and representation of the Company to the
investment community.
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program for the senior executives consists solely of
the use of stock options. All of the senior executives participate in the
long-term program and received stock options in 1996. The primary purpose of
the program is to offer an incentive for the improvement of the long-term
performance of the Company and promote growth in stockholder value.
The Committee has concluded that the "front-loading" of stock options to
senior executives with both time- and price-vesting features aligns
management's interests with those of stockholders.
Options may be granted under the stock option program to senior executives
of the Company at the discretion of the Committee. The exercise price for all
option shares granted to senior executives is the fair market value on the
date of the grant. (Under the option program, fair market value is deemed to
be the average of the closing prices of the Common Stock for the five trading
days immediately preceding the applicable date of grant.)
Each of the stock options granted to senior executives in December 1996 has
an exercise price of $10.075 per share and becomes exercisable only upon (1)
the achievement of a schedule of certain escalating stock price levels for the
Common Stock (the "Price-Vesting Schedule") and (2) the expiration of various
time periods.
The Price-Vesting Schedule operates in the following manner: if the average
price of the Common Stock (calculated over 30 consecutive trading days) is (a)
$12.09 or more, then the option shall be exercisable, subject
11
<PAGE>
also to time-period vesting, as to one-fourth of the option shares; (b) $14.51
or more, subject also to time-period vesting, as to an additional one-fourth;
(c) $17.41 or more, subject also to time-period vesting, as to an additional
one-fourth of such shares; and (d) $20.89 or more, subject also to time-period
vesting, as to the remainder of the option shares. Thus the Price-Vesting
Schedule requires for full vesting more than a doubling of the market value of
the stock from the time of grant. Earlier 1996 grants had different exercise
prices but had a similarly structured price-vesting schedule.
Notwithstanding the fulfillment of the conditions of the Price-Vesting
Schedule, however, no portion of the option may vest before December 3, 1997.
Thereafter, assuming conditions of the Price-Vesting Schedule are met with
respect to that fraction of the options, one-fourth of the option shares shall
vest on December 3, 1997; an additional one-fourth on December 3, 1998; an
additional one-fourth on December 3, 1999; and the last one-fourth of the
option shares on December 3, 2000. Even if the Price-Vesting Schedule vesting
conditions have not been fulfilled, in any event, the entire number of option
shares will vest on December 3, 2004 if the senior executive is still an
employee of the Company at that time.
All of the senior executive officers named in the Summary Compensation Table
received stock option grants in December 1996 under this plan as follows:
Nelson C. Rising, 1,000,000 shares; Stephen P. Wallace, 500,000 shares; Ira
Yellin, 100,000 shares; Timothy Beaudin, 250,000 shares; and David Friedman,
200,000 shares. In addition, 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. He
also received options in 1995 (See "EMPLOYMENT AGREEMENTS--Agreement with Mr.
Rising" and "COMPENSATION OF EXECUTIVE OFFICERS"). The other senior executive
officers received earlier grants as well (see "EMPLOYMENT AGREEMENTS--
Agreement with Mr. Wallace", "EMPLOYMENT AGREEMENTS--Agreement with Mr.
Beaudin", "EMPLOYMENT AGREEMENTS--Agreement with Mr. Yellin", "EMPLOYMENT
AGREEMENTS--Agreement with Dr. Friedman" and "COMPENSATION OF EXECUTIVE
OFFICERS").
TAX MATTERS
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, Chair Christine Garvey
Daryl J. Carter Jacqueline R. Slater
</TABLE>
12
<PAGE>
EMPLOYMENT AGREEMENTS
AGREEMENT WITH MR. RISING
The Company and Mr. Rising entered into an Amended and Restated Employment
Agreement (the "Rising Agreement") dated as of November 29, 1995, pursuant to
which Mr. Rising extended his agreement to serve as President and Chief
Executive Officer of the Company through December 31, 2000. The Rising
Agreement supersedes the Employment Agreement dated July 27, 1994 between Mr.
Rising and the Company. The Rising Agreement requires the Board of Directors,
through December 31, 2000, to use its best efforts to cause Mr. Rising to be
elected as a member of the Board of Directors.
The Rising Agreement provides for a minimum base salary of $350,000 per
year, to be increased by 5% in 1996 and by an additional 5% each year
thereafter (compounded annually), as well as an annual maximum bonus of 200%
of his then salary. Mr. Rising is also entitled under the Rising Agreement to
receive four weeks of paid vacation each year and payment of life insurance
premiums. In addition, Mr. Rising will receive employment benefits (including
but not limited to pension, medical insurance and disability benefits) and
perquisites on terms no less favorable than those made available by the
Company from time to time to other members of the Company's senior management.
The Rising Agreement provides for the grant to Mr. Rising of an option to
purchase 300,000 shares of Common Stock (the "1995 Grant") pursuant to the
Executive Stock Option Plan (in addition to the options covering 700,000
shares previously granted to Mr. Rising in 1994) on terms and conditions
specified in the Rising Agreement. The Rising Agreement also provides for the
amendment of the terms of Mr. Rising's existing options to purchase an
aggregate of 700,000 shares of Common Stock on terms and conditions specified
in the Rising Agreement. The Company and Mr. Rising entered into amended and
restated award agreements, each dated March 22, 1996, which modify the terms
and conditions of such options.
The Rising Agreement expires on December 31, 2000 (the "Expiration Date")
unless earlier terminated as described below. The Company may unilaterally
elect to terminate the Rising Agreement before that date, without financial
obligations to Mr. Rising, only on account of Mr. Rising's death, "permanent
disability" (as defined in the Rising Agreement) or otherwise for "cause" (as
defined in the Rising Agreement). Mr. Rising may elect to terminate the Rising
Agreement upon 30 days advance written notice to the Company. In the event of
any termination of Mr. Rising's employment before 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 Rising 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 bonus potential or certain
geographic relocations), then in addition to the amounts described above, Mr.
Rising will also be entitled to receive an amount equal to the product
obtained by multiplying the average of Mr. Rising's annual salary and annual
bonus for the prior two years times two and his stock option will become
immediately exercisable in full.
If Mr. Rising is constructively discharged or terminated without cause
within 12 months after the occurrence of a "change of 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
"base amount" as such term is defined in Section 280G of the Code (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 Rising Agreement, a "change of 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
13
<PAGE>
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 before the transaction fail to own beneficially 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. WALLACE
The Company and Mr. Wallace entered into an Employment Agreement dated as of
July 24, 1995, as amended by a Letter Agreement between the Company and Mr.
Wallace dated as of November 16, 1996, pursuant to which Mr. Wallace serves as
Senior Vice President and Chief Financial Officer of the Company. The
Employment Agreement provides for a minimum base salary of $285,000 for fiscal
year 1995, subject to annual review, as well as an annual target bonus of
between 30% and 60% of base salary. Effective 1996, the Compensation Committee
increased the maximum annual cash bonus awards for which executives (including
Mr. Wallace) may be eligible under the Bonus Program to up to 200% of an
individual's base salary. See "COMPENSATION AND BENEFITS COMMITTEE REPORT ON
EXECUTIVE COMPENSATION." The Letter Agreement amended the bonus section of the
Employment Agreement to reflect this increase. The Company agreed to pay up to
$10,000 of legal fees incurred by Mr. Wallace in connection with the
negotiation and preparation of his Employment Agreement. The Employment
Agreement provides that Mr. Wallace will receive employment benefits
(including but not limited to pension, medical insurance and disability
benefits) and perquisites appropriate for executives with comparable duties.
Mr. Wallace is also entitled under the Employment Agreement to receive three
weeks of paid vacation each year, provided that for the period from July 21,
1995 through June 30, 1996, Mr. Wallace is entitled to five weeks of paid
vacation. The Employment Agreement also provides for the grant to Mr. Wallace
of an option to purchase 330,000 shares of Common Stock pursuant to the
Executive Stock Option Plan on terms and conditions specified in the
Employment Agreement. On March 22, 1996, the Company and Mr. Wallace entered
into an amended and restated award agreement which modifies the vesting
features of these options.
The Employment Agreement, as amended, expires on December 31, 2000 unless
earlier terminated as described below; provided, however, that unless the
Company gives notice of termination to Mr. Wallace by June 30, 1997, the term
of the Employment Agreement shall automatically extend for an additional 12
months. The Company may unilaterally elect to terminate the Employment
Agreement before that date only on account of Mr. Wallace's death,
"disability" (as defined in the Employment Agreement) or otherwise for "cause"
(as defined in the Employment Agreement); provided that before terminating Mr.
Wallace for "cause" the Company must provide Mr. Wallace with a notice of the
proposed termination, including a written explanation of the grounds, an
opportunity to confer with the Chief Executive Officer of the Company and 60
days after receipt of such notice to cure any alleged non-performance of his
duties. If the Company terminates Mr. Wallace's employment without cause or if
Mr. Wallace terminates his employment with the Company for "good reason" (as
defined in the Employment Agreement), he is entitled to receive benefits equal
to (a) unpaid accrued salary as of the date of termination, (b) the number of
full months remaining in the Employment Agreement, but not to exceed 24,
multiplied by Mr. Wallace's average monthly base salary (determined without
regard to amounts payable under any bonus program or other forms of
extraordinary compensation) for the immediately proceeding 2-year period or,
if Mr. Wallace has not served the Company for 24 months, then the average
monthly base salary (determined without regard to amounts payable under any
bonus program or other forms of extraordinary compensation) for such shorter
period, (c) the number of full or partial months remaining in the period
commencing on the first day following the most recent period in respect of
which the base bonus has been paid and ending on December 31, 2000, but not to
exceed 24, multiplied by the average monthly base bonus and additional bonus
for the immediately proceeding two year period or, if Mr. Wallace has not
served the Company for 24 months, then the average monthly base bonus and
additional bonus for such shorter period,
14
<PAGE>
and (d) unpaid salary with respect to any vacation days accrued but not taken
as of the date of termination provided that the amount of such benefits shall
be reduced by any other benefits provided upon termination of employment to
which Mr. Wallace may be entitled under any severance agreement with the
Company.
If Mr. Wallace is terminated by the Company without cause within 12 months
after the occurrence of a "change of control" of the Company or following the
execution of an agreement providing for a "change of control" of the Company,
he will be entitled to receive a lump sum payment in an amount which is equal
to three times the base amount as that term is defined in Section 280(g) of
the Code (subject to certain limitations contained in Section 280(g)). In
addition, Mr. Wallace's options will become immediately exercisable in full.
For purposes of Mr. Wallace's Employment Agreement, "change of control" has
the same meaning as in Mr. Rising's employment agreement. See "Agreement with
Mr. Rising" above.
AGREEMENT WITH MR. BEAUDIN
The Company and Mr. Beaudin entered into an Employment Agreement dated as of
February 10, 1995, as amended by a Letter Agreement between the Company and
Mr. Beaudin dated as of November 16, 1996, pursuant to which Mr. Beaudin
initially served as Vice President, Property Operations of the Company. On
January 30, 1996, Mr. Beaudin was appointed Senior Vice President, Property
Operations of the Company.
The Employment Agreement provides for a minimum base salary of $185,000 for
fiscal year 1995, subject to annual review, as well as an annual target bonus
of between 30% and 60% of base salary through December 31, 1995; provided,
however, that for the period of service from February 10, 1995 through
December 31, 1995, Mr. Beaudin would receive a guaranteed bonus of $50,000.
Though no bonuses are guaranteed for 1996 or 1997, Mr. Beaudin's target bonus
for such years is 30% of his base salary, with a maximum annual bonus of 60%
of the base salary. Effective 1996, the Compensation Committee increased the
maximum annual cash bonus awards for which executives (including Mr. Beaudin)
may be eligible under the Bonus Program to up to 200% of an individual's base
salary. See "COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE
COMPENSATION." The Letter Agreement amended the bonus section of the
Employment Agreement to reflect this increase. Mr. Beaudin is entitled under
the Employment Agreement to receive employment benefits (including but not
limited to pension, medical, insurance and disability benefits) and
perquisites appropriate for executives with comparable duties and three weeks
of paid vacation per year. The Employment Agreement also provides for the
grant to Mr. Beaudin of options to purchase an aggregate of 100,000 shares of
Common Stock pursuant to the Executive Stock Option Plan on terms and
conditions specified in the Employment Agreement. On March 22, 1996, the
Company and Mr. Beaudin entered into amended and restated award agreements
which modify the vesting features of these options.
The Employment Agreement, as amended, expires on December 31, 2000 (the
"Expiration Date") unless earlier terminated as described below. The Company
may unilaterally elect to terminate the Employment Agreement before the
Expiration Date on the same terms and conditions as provided for in Mr.
Wallace's employment agreement except the Company is not required to give a
written notice and opportunity to cure. If the Company terminates Mr.
Beaudin's employment without cause or if Mr. Beaudin terminates his employment
with the Company for "good reason" (as defined in the Employment Agreement),
he is entitled to receive the same benefits as set forth in Mr. Wallace's
employment agreement, as amended. In the event of any termination of Mr.
Beaudin's employment before the Expiration Date, Mr. Beaudin shall continue to
be treated as an employee for purposes of the Company's group health and
dental programs and shall receive benefits substantially comparable to those
in effect on the day before the date of termination. In addition, if Mr.
Beaudin terminates his employment with the Company for "good reason" or if the
Company terminates Mr. Beaudin's employment without "cause" or if Mr. Beaudin
is terminated without cause within 12 months following a "change of control",
Mr. Beaudin's options will become immediately exercisable in full. For
purposes of Mr. Beaudin's award agreements, "change of control" has the same
meaning as in Mr. Rising's employment agreement. See "Agreement with Mr.
Rising" above.
15
<PAGE>
AGREEMENT WITH MR. YELLIN
The Company and Mr. Yellin entered into an Employment Agreement dated as of
February 1, 1996, pursuant to which Mr. Yellin serves as Senior Vice President,
Southern California Development, of the Company and is responsible for all of
the Company's development in Southern California other than residential and
industrial development activities.
The Employment Agreement provides for a minimum base salary of $260,000 for
fiscal year 1996, subject to annual review. It also provides for a maximum
annual base bonus equal to up to 100% of base salary and a maximum annual
additional bonus of the same amount; provided, however, that for the year ended
December 31, 1996, Mr. Yellin would receive a minimum base bonus of $130,000,
payable in monthly installments. The Company reimbursed Mr. Yellin for legal
and accountant fees of up to $15,000 incurred by Mr. Yellin in connection with
the review and negotiation of this Employment Agreement and also agreed to pay
for club membership dues. Mr. Yellin is entitled under the Employment Agreement
to receive employment benefits (including but not limited to pension, medical
insurance and disability benefits) and perquisites appropriate for executives
with comparable duties and three weeks of paid vacation per year. The
Employment Agreement also allows Mr. Yellin to devote a portion of his time to
the activities of The Yellin Company in connection with the pre-existing
Cathedral Square Agreement (as defined in the Employment Agreement) and to
receive a portion of the income from such Agreement; if the Cathedral Square
Agreement is terminated, to engage in other activities which provide
compensation approximately equal to that which the Cathedral Square Agreement
would have provided; and to devote a portion of his time to the activities of
The Yellin Company in connection with other agreements (as listed in the
Employment Agreement), so long as all such time commitments do not conflict
with Mr. Yellin's duties to the Company.
The Employment Agreement grants Mr. Yellin a lump sum payment of $100,000 for
the Company's purchase of certain work in progress and Mr. Yellin's interests
in certain development projects. Under certain circumstances specified in the
Employment Agreement, upon termination of the Employment Agreement, the work in
progress would be reconveyed to Mr. Yellin by the Company without
consideration.
The Employment Agreement provides for the grant to Mr. Yellin of an option to
purchase an aggregate of 300,000 shares of Common Stock pursuant to the Amended
and Restated Executive Stock Option Plan. The option has a term of 10 years and
becomes exercisable subject to certain price- and time-vesting terms as set
forth in Mr. Yellin's award agreement. The option is also subject to
accelerated vesting upon certain events relating to termination of Mr. Yellin's
employment as described below. The option had an initial exercise price of
$7.00 per share.
The Employment Agreement expires on December 31, 2000 (the "Expiration Date")
unless earlier terminated as described below. If the Company terminates Mr.
Yellin's employment without cause or if Mr. Yellin terminates his employment
for "good reason" (as defined in the Employment Agreement), he is entitled to
receive certain compensation and benefits. Mr. Yellin is entitled to terminate
his employment at any time by giving the Company prior written notice no less
than 30 days before the date his resignation shall become effective.
In the event that Mr. Yellin is terminated without cause within 12 months
after the occurrence of a "change of control" of the Company, he will be
entitled to receive a lump sum payment in an amount which is equal to three
times the "base amount," as defined in Section 280G of the Code. In addition,
Mr. Yellin's stock option shall become fully vested. For purposes of Mr.
Yellin's Employment Agreement, "change of control" has the same meaning as in
Mr. Rising's employment agreement. See "Agreement with Mr. Rising" above.
The Company and Mr. Yellin have also entered into a Letter Agreement dated as
of February 1, 1996, identifying certain benefits and reimbursable expenses
that Mr. Yellin is entitled to pursuant to the Employment Agreement.
16
<PAGE>
AGREEMENT WITH DR. FRIEDMAN
The Company and Dr. Friedman entered into an Employment Agreement dated as
of February 1, 1996, for a term of five years, pursuant to which Dr. Friedman
serves as Vice President of the Company and President of Catellus Resources
Group, a division of the Company.
The Employment Agreement provides for a minimum base salary of $175,000 for
fiscal year 1996, subject to annual review. It also provides for a maximum
annual base bonus of 100% of the then-effective base salary and a maximum
annual additional bonus of the same amount; provided, however, that for the
calendar year ending December 31, 1996, Dr. Friedman would receive a minimum
base bonus of $87,500. The Company agreed to cover certain of Dr. Friedman's
transition expenses and legal fees incurred by Dr. Friedman in connection with
the negotiation of his Employment Agreement. Dr. Friedman is entitled under
the Employment Agreement to receive employment benefits (including but not
limited to pension, medical insurance and disability benefits), perquisites
appropriate for executives with comparable duties and three weeks of paid
vacation per year.
The Employment Agreement provides for the grant to Dr. Friedman of an option
to purchase 100,000 shares of Common Stock pursuant to the Amended and
Restated Executive Stock Option Plan. The option has a term of 10 years and
becomes exercisable subject to certain price- and time-vesting terms as set
forth in Dr. Friedman's award agreement. The option is also subject to
accelerated vesting upon certain events relating to termination of Dr.
Friedman's employment as described below. The option had an initial exercise
price of $7.00 per share.
The Employment Agreement expires on January 31, 2001 (the "Expiration Date")
unless earlier terminated as described below; provided, however, that unless
the Company gives notice of termination to Dr. Friedman at least 90 days prior
to the Expiration Date, the term of the Employment Agreement shall
automatically extend for an additional 12 months. The Company may unilaterally
elect to terminate the Employment Agreement before the Expiration Date only on
account of Dr. Friedman's death, "permanent disability" (as defined in the
Employment Agreement) or otherwise for "cause" (defined in the Employment
Agreement.) Dr. Friedman is entitled to resign from his employment at any time
by giving the Company written notice no less than 30 days prior to the date
his resignation shall become effective.
If Dr. Friedman is terminated without cause within 12 months after the
occurrence of a "change in control" of the Company, he will be entitled to
receive a lump sum payment in an amount which is equal to three times the
"base amount," as such term is defined in Section 280G of the Code. In
addition, Dr. Friedman's stock options will become fully vested. For purposes
of Dr. Friedman's Employment Agreement, "change of control" has the same
meaning as in Mr. Rising's employment agreement. See "Agreement with Mr.
Rising" above.
17
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation
paid by the Company for services rendered during the fiscal years ended
December 31, 1996, December 31, 1995 and December 31, 1994 to the Named
Executives indicated below.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
YEAR ($) ($)(2) ($)(3) (#) ($)(4)
---- ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Current Executive
Officers(1)
Nelson C. Rising........ 1996 367,512 735,000 70,388(5) 1,000,000 7,763
Chief Executive Officer
1995 350,000 350,000 -- 300,000 7,632
1994 134,857 77,576 197,422(6) 700,000 --
Stephen P. Wallace...... 1996 299,256 583,538 -- 670,000 7,763
Senior Vice President
and Chief Financial
Officer
1995 124,231 148,000 61,096(7) 330,000 17,960(8)
Timothy J. Beaudin ..... 1996 220,000 429,000 -- 400,000 7,763
Senior Vice President
Property Operations
1995 164,721 185,000 46,223(9) 100,000 5,550
Ira Yellin ............. 1996 238,348 364,000 -- 400,000 7,363
Senior Vice President
David Friedman ......... 1996 160,417 280,000 -- 300,000 5,250
Vice President and
President,
Catellus Resources
Group
</TABLE>
- --------
(1) Mr. Rising commenced employment with the Company in September 1994, Mr.
Beaudin commenced employment with the Company in February 1995, Mr.
Wallace commenced employment with the Company in July 1995, and Dr.
Friedman and Mr. Yellin commenced employment with the Company in February
1996.
(2) Unless otherwise noted, the amount for any year represents the amount
earned for that fiscal year pursuant to the Bonus Program.
(3) Except in the case of Messrs. Rising, Wallace and Beaudin (see notes 5, 6,
7 and 9 below), Other 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.
(4) Unless otherwise noted, the amounts listed represent the amount of the
Company's contributions for the year pursuant to the Profit Sharing &
Savings Plan and Trust.
(5) Includes payment of $51,970 for insurance for Mr. Rising and payment of
$420 for parking. The Company also provided Mr. Rising with an allowance
for automobiles of $17,998. See "EMPLOYMENT AGREEMENTS -- Agreement with
Mr. Rising."
18
<PAGE>
(6) 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
Mr. Rising with an automobile allowance of $2,625. See "EMPLOYMENT
AGREEMENTS--Agreement with Mr. Rising."
(7) Includes payment to Mr. Wallace of $47,000 for relocation expenses and
$10,000 in legal fees. The Company also provided Mr. Wallace with an
automobile allowance of $4,096. See "EMPLOYMENT AGREEMENTS--Agreement with
Mr. Wallace."
(8) Includes payment to Mr. Wallace of $17,960 (exclusive of ordinary expenses
reimbursable to Mr. Wallace) in connection with a consulting agreement
between the Company and Mr. Wallace before Mr. Wallace's employment with
the Company.
(9) Includes payment to Mr. Beaudin of $25,000 for relocation expenses and
payment of $12,974 for living expenses. The Company also provided Mr.
Beaudin with an automobile allowance of $8,249. See "EMPLOYMENT
AGREEMENTS--Agreement with Mr. Beaudin."
STOCK OPTIONS
The following table presents information concerning the options granted to
each of the Named Executives during 1996. SEC rules require the Company to
include a value for each grant of options as set forth below in column (f).
These valuations are calculated in accordance with the methodology described
in footnote (3) to this table; however, the Company's use of such methodology
should not be construed as an endorsement of its accuracy for valuing options,
particularly in the light of the restrictions on the exercise and
transferability of the options.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(B)
NUMBER OF
SECURITIES (C)
UNDERLYING PERCENT OF TOTAL (D) (E) (F)
OPTIONS OPTIONS GRANTED EXERCISE OR EXPIRATION GRANT DATE
(A) GRANTED TO EMPLOYEES IN BASE PRICE DATE PRESENT
NAME (#)(1) FISCAL YEAR ($/SH) ($/SH)(2) VALUE ($)(3)
---- ---------- ---------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Current Executive
Officers
Nelson C. Rising........ 1,000,000(4) 23.8 10.075 12/04/06 3,540,000
Stephen P. Wallace...... 170,000(5) 4.0 6.725 01/30/06 413,100
500,000(6) 11.9 10.075 12/04/06 1,770,000
Timothy J. Beaudin...... 150,000(7) 3.5 6.725 01/30/06 364,500
250,000(8) 5.9 10.075 12/04/06 885,000
Ira Yellin.............. 300,000(7) 7.1 7.00 02/01/06 756,000
100,000(8) 2.3 10.075 12/04/06 354,000
David Friedman.......... 100,000(7) 2.3 7.00 02/01/06 252,000
200,000(8) 4.7 10.075 12/04/06 708,000
</TABLE>
- --------
(1) All options reflected in the table were granted pursuant to the terms of
the Executive Stock Option Plan or the 1996 Plan. The Executive Stock
Option Plan and the 1996 Plan are administered by the Compensation
Committee, which has full power to adopt and amend rules to implement the
terms of the Executive Stock Option Plan and the 1996 Plan, including the
power to reprice options. Options granted under the Executive Stock Option
Plan and the 1996 Plan are exercisable for cash or any other property
(including shares of Common Stock already owned) deemed acceptable by the
Compensation Committee.
(2) Options are subject to earlier termination in certain events either upon
or following termination of employment. To the extent that stock options
awarded to an executive officer under the Executive Stock
19
<PAGE>
Option Plan or the 1996 Plan have become exercisable before 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 the 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 before the
officer's termination date automatically terminate on that date. If
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, or ceases to be an employee because of disability or in
the event of death before the vesting date, the number of shares deemed
vested shall equal the number of option shares multiplied by a fraction,
the numerator of which is the number of months elapsed from the date of
grant and the denominator of which is the number of months from the date of
grant to the final vesting date.
(3) The Company is required under SEC rules to establish a valuation for each
grant of options; the Black-Scholes option pricing model was used to
estimate the present value as of the grant date of the options set forth
in the table. The Company's use of this model should not be construed as
an endorsement of its accuracy for valuing options, particularly in the
light of the restrictions on the exercise and transferability of the
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
Consistent with the Company-wide method of valuing employee stock options,
each of the values reported in the table is calculated on the assumption
that the option is exercised at the end of five years. The approach used
in developing the Black-Scholes calculations is consistent with the
requirements of Statement of Financial Accounting Standards No. 123
"Accounting For Stock-Based Compensation." The following additional
assumptions have been made for purposes of calculating the grant date
present value for the options shown in the table: (i) with respect to
options expiring 1/30/06, volatility at 29.38% and a risk-free rate of
return at 5.33%; (ii) with respect to options expiring 2/01/06, volatility
at 29.38% and a risk-free rate of return at 5.26%; and (iii) with respect
to options expiring 12/04/06, volatility at 26.01% and a risk-free rate of
return at 5.88%. A dividend yield at 0% was assumed for all options.
(4) The option is exercisable in accordance with a schedule based upon the
achievement of certain price levels for the Common Stock (the "Subsequent
Pricing Schedule"), limited by the expiration of various time periods. The
Subsequent Pricing Schedule operates as follows: if the average price of
the Common Stock (calculated on an average price basis over 30 consecutive
trading days) is (a) $12.00 or more, then the option shall be exercisable
as to 25% of the option shares; (b) $14.40 or more, 50% of such shares;
(c) $17.30 or more, 75% of such shares; and (d) $20.75 or more, 100% of
such shares. If Mr. Rising is "constructively discharged" (as defined in
the Rising Agreement) or terminated without cause or within 12 months
following a "change of control" (as defined in the Rising Agreement), the
option will vest as to the entire number of shares. See "EMPLOYMENT
AGREEMENTS--Agreement with Mr. Rising."
(5) The option is exercisable in accordance with the Initial Pricing Schedule
described above. See "EMPLOYMENT AGREEMENTS--Agreement with Mr. Wallace."
If Mr. Wallace terminates his employment for "good reason" (as defined in
his employment agreement), or involuntarily ceases to be an employee for
any reason other than as a result of retirement, death, disability or for
"cause" or is terminated at any time within 12 months following a "change
of control," the option will vest as to the entire number of shares. In
addition, Mr. Wallace's award agreement provides that if Mr. Wallace's
employment is terminated following the execution of an agreement providing
for a "change of control" the option will vest as to the entire number of
shares. For purposes of the option, "change of control" has the same
meaning as in the Rising Agreement. See "EMPLOYMENT AGREEMENTS--Agreement
with Mr. Rising."
(6) The option is exercisable in accordance with the Subsequent Pricing
Schedule described in footnote (4). If Mr. Wallace terminates his
employment for "good reason" (as defined in his employment agreement), or
involuntarily ceases to be an employee for any reason other than as a
result of retirement, death, disability or for "cause" or is terminated at
any time within 12 months following a "change of control," the option will
vest as to the entire number of shares. In addition, Mr. Wallace's award
agreement provides that if Mr. Wallace's employment is terminated
following the execution of an agreement providing for a "change
20
<PAGE>
of control" the option will vest as to the entire number of shares. For
purposes of the option, "change of control" has the same meaning as in the
Rising Agreement. See "EMPLOYMENT AGREEMENTS--Agreement with Mr. Rising."
(7) The option is exercisable in accordance with the Initial Pricing Schedule
described above. See "EMPLOYMENT AGREEMENTS--Agreement with Mr. Rising." If
the executive terminates his employment for "good reason" (as defined in
his employment agreement), or involuntarily ceases to be an employee for
any reason other than as a result of retirement, death, disability or for
"cause" or is terminated at any time within 12 months following a "change
of control," the option will vest as to the entire number of shares. For
purposes of the option, "change of control" has the same meaning as in the
Rising Agreement. See "EMPLOYMENT AGREEMENTS--Agreement with Mr. Rising."
(8) The option is exercisable in accordance with the Subsequent Pricing
Schedule described in footnote (4). If the executive terminates his
employment for "good reason" (as defined in his employment agreement), or
involuntarily ceases to be an employee for any reason other than as a
result of retirement, death, disability or for "cause" or is terminated at
any time within 12 months following a "change of control," the option will
vest as to the entire number of shares. For purposes of the option, "change
of control" has the same meaning as in the Rising Agreement. See
"EMPLOYMENT AGREEMENTS--Agreement with Mr. Rising."
None of the Named Executives exercised options during 1996. The following
table sets forth the number of unexercised options and in-the-money options
(divided between exercisable and unexercisable options) held by the Named
Executives as of December 31, 1996.
FISCAL YEAR-END OPTION HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996($)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Current Executive Officers
Nelson C. Rising........... 308,332 1,691,668 1,399,577 4,012,922
Stephen P. Wallace......... 110,000 890,000 519,750 2,262,250
Timothy J. Beaudin......... 25,000 475,000 132,500 1,290,000
Ira Yellin................. 0 400,000 0 1,312,500
David Friedman............. 0 300,000 0 600,000
</TABLE>
21
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS*
The following is a comparison of the cumulative total stockholder return on
a $100 investment in the 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 31, 1991. The total return on the 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.
The Company's peer group index includes the following companies: Atlantic
Gulf Communities, Duke Realty Investments, First Industrial Realty Trust,
First Union Real Estate Equity & Mortgage Investments SBI, Forest City
Enterprises, Inc, The Newhall Land and Farming Company, L.P., Rouse Company,
Security Capital Industrial Trust, Spieker Properties, Standard Pacific Corp.
and Washington REIT.
The peer group index is intended to provide a relevant comparison of total
annual return. The peer group includes companies involved in diversified real
estate operations such as industrial, retail and office as well as companies
involved in fee management services and residential real estate.
CATELLUS DEVELOPMENT CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN
DECEMBER 31, 1991 TO DECEMBER 31, 1996
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CATELLUS PEER
Measurement Period DEVELOPMENT S&P 500 GROUP
(Fiscal Year Covered) CORP. INDEX INDEX
- --------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/91 $100.00 $100.00 $100.00
FYE 12/31/92 $ 69.00 $107.62 $ 97.60
FYE 12/31/93 $ 79.35 $118.47 $112.80
FYE 12/31/94 $ 60.17 $120.03 $107.20
FYE 12/31/95 $ 60.17 $165.13 $124.00
FYE 12/31/96 $116.73 $202.89 $178.40
</TABLE>
* 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.
22
<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and the New York Stock Exchange. These persons are
required by regulation of the SEC 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, 1996, the Company's officers, directors and greater than
10% beneficial owners complied with all applicable Section 16(a) filing
requirements.
CERTAIN TRANSACTIONS
AGREEMENTS WITH MR. YELLIN
The Company and Mr. Yellin are parties to an Employment Agreement dated as
of February 1, 1996, pursuant to which Mr. Yellin has transferred to the
Company certain work in progress. See "EMPLOYMENT AGREEMENTS --Agreement with
Mr. Yellin."
In addition, the Company leases 21,425 square feet of space in the Bradbury
Building in downtown Los Angeles pursuant to an Office Lease dated November
22, 1996 ("Lease"). The Bradbury Building is owned by Bradbury Associates,
L.P., a limited partnership, of which Mr. Yellin, through The Yellin Company,
indirectly owns 9.8%. The Company moved its Southern California headquarters
to that site in March 1997. The Company believes that, notwithstanding the
involvement of an insider, the Lease was entered into on terms which are
commercially reasonable, fair to the Company, and comparable to the terms of
leases of other properties which would have been available to the Company. The
Lease has been unanimously approved by the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Messrs. Alibrandi, Carter and Mmes.
Garvey and Slater served as members of the Compensation Committee. None of
these members is an employee or officer of the Company.
Ms. Garvey is an executive officer of Bank of America NT & SA ("Bank of
America"). During 1996, 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
1997. The total amount paid by the Company and its subsidiaries to Bank of
America during 1996 pursuant to such arrangements was approximately
$6,607,545. 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 is a director of Bank of America and a director and
member of the compensation committee of BankAmerica Corporation, the holding
company of Bank of America. Mr. Alibrandi and Ms. Garvey have abstained from
all votes of the Board of Directors with respect to matters involving Bank of
America.
Mr. Alibrandi is a director of Burlington Northern Santa Fe Corporation
("BNSF"). The Company, BNSF and BNSF's subsidiaries Santa Fe Pacific
Corporation ("SFP") and The Atchison, Topeka and Santa Fe Railway Company
("ATSF") and their respective affiliates have entered into agreements from
time to time as described below:
Leases. ATSF leases approximately 1,080 square feet of office space from
the Company for which it paid the Company $28,063 in 1996. SFP and ATSF
also previously leased approximately 250,000 square
23
<PAGE>
feet of office space in Chicago from the Company under a lease which
expired in April 1995. In 1996, the Company performed its annual final
reconciliation of the estimated and actual common area maintenance billings
for 1995. Following that reconciliation, the Company credited SFP and ATSF
$177,348 relating to these billings.
Property Management Agreements. In December 1995, Catellus Management
Corporation ("CMC"), a wholly owned subsidiary of the Company, entered into
a Management Agreement with BNSF in which CMC agreed to act as exclusive
management and selling agent for BNSF's non-railroad property located in 27
states and two Canadian provinces. The BNSF Management Agreement terminates
on December 31, 2000, subject to cancellation by BNSF with 90 days prior
written notice and the payment of a termination fee. In 1996, CMC earned
$6,547,288 for fees and commissions under the BNSF Management Agreement. In
November 1996, CMC entered into a contract with a term of four years and
two months to manage BNSF's existing portfolio of approximately 100,000
permits and to handle BNSF's issuance of new permits. The Company earned
$125,000 under the BNSF Permit Management Agreement in 1996.
Ms. Slater is an executive officer of The Chase Manhattan Bank, N.A. ("Chase
Manhattan"). During 1996, the Company and its subsidiaries had banking
relationships with Chase Manhattan. Such relationships, pursuant to which
funds were deposited with, and borrowed from, Chase Manhattan on terms which
the Company believes were competitive, reasonable and customary, terminated on
October 28, 1996. The total amount paid by the Company and its subsidiaries to
Chase Manhattan in interest and fees during 1996 pursuant to such arrangements
was approximately $367,534. The Company also repaid approximately $50,000,000
in principal during 1996. No matters involving Chase Manhattan were presented
to the Board or the Finance Committee during 1996.
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the fiscal year ended December 31, 1996,
including financial statements, is being sent to stockholders of record as of
the close of business on April 1, 1997 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, 1996 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
accountant, has examined the Company's financial statements for the fiscal
year ended December 31, 1996. 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 1998 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices not later than December 5, 1997 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.
24
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Nelson C. Rising, Stephen P. Wallace and
Kathleen Smalley 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 29, 1997 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 |
-----------
<PAGE>
[X] Please mark your
votes as in this
example.
The shares represented hereby will be voted in accordance with the
directions given by the stockholder. If not otherwise directed, the shares
represented by this proxy will be voted FOR the matters described below.
FOR WITHHELD Nominees:
1. Election of [ ] [ ] Joseph F. Alibrandi, Daryl J. Carter,
Officers Richard D. Farman, Christine Garvey,
William M. Kahane, Donald J. McNamara,
Leslie D. Michelson, Nelson C. Rising,
Joseph R. Seiger, Jacqueline R. Slater,
Thomas M. Steinberg, Beverly Benedict
Thomas
For, except vote withheld for 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 given.
Please sign exactly as name(s) appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
________________________________________
________________________________________
SIGNATURE(S) DATE
