<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 240.14a-11(c) or 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
CATELLUS
LOGO
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
Dear Catellus Stockholder:
I am pleased to invite you to attend the 1999 Annual Meeting of
Stockholders of Catellus Development Corporation on Thursday, April 29, 1999 at
10:00 a.m. We will hold this year's meeting at a new location:
San Francisco Museum of Modern Art
Phyllis Wattis Theater
151 Third Street
San Francisco, California.
At this meeting, stockholders will elect eleven directors. Information
about the nominees is contained in the attached Proxy Statement.
We would 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 ARE REPRESENTED. Accordingly, please mark your vote on the enclosed proxy
card, then sign, date and return it to us. 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 April 29, 1999.
Sincerely,
/s/ Nelson C. Rising
--------------------
Nelson C. Rising
President and Chief Executive Officer
March 19, 1999
<PAGE> 3
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1999
Catellus Development Corporation will hold its 1999 Annual Meeting of
Stockholders on Thursday, April 29, 1999, at 10:00 a.m. at the San Francisco
Museum of Modern Art, Phyllis Wattis Theater, 151 Third Street, San Francisco,
California for the following purposes:
(1) To elect eleven Directors; and
(2) To transact any other business that is properly brought before the
Annual Meeting.
If you were a stockholder of record at the close of business on March 1,
1999, you are entitled to notice of, and to vote at, the Annual Meeting
(including any adjournment of the meeting). For at least ten days before the
meeting, we will make a list of our stockholders available at our offices at 201
Mission Street, San Francisco, California. Even if you plan to attend the
meeting, we request that you sign and date the enclosed proxy card and return it
without delay in the enclosed postage-paid envelope. If you attend the meeting,
you may withdraw your proxy card and vote in person on any matter properly
brought before the meeting.
Please sign, date, and mail the enclosed proxy card promptly in the
enclosed envelope, so that your shares of stock will be represented at the
meeting.
By Order of the Board of Directors,
/s/ Brian J. Beckon
---------------
Brian J. Beckon
Secretary
March 19, 1999
San Francisco, California
<PAGE> 4
CATELLUS DEVELOPMENT CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
------------------------
PROXY STATEMENT
------------------------
INFORMATION ABOUT THE 1999 ANNUAL MEETING
On behalf of our Board of Directors, we are soliciting proxies for use at
our 1999 Annual Meeting of Stockholders. This year's meeting will be held on
Thursday, April 29, 1999, at 10:00 a.m., at the San Francisco Museum of Modern
Art, Phyllis Wattis Theater, 151 Third Street, San Francisco, California. We are
providing this Proxy Statement to you, the stockholders of Catellus Development
Corporation, in connection with our solicitation of proxies.
If you were a stockholder of record at the close of business on March 1,
1999, you are entitled to notice of, and to vote at, the Annual Meeting. On
March 1, 1999, our issued and outstanding voting securities consisted of
106,852,493 shares of common stock. Each share has one vote on the election of
directors and on any other matter properly brought before the meeting (including
any adjournment of the meeting).
Our principal executive offices are located at 201 Mission Street, San
Francisco, California 94105, and our main telephone number is (415) 974-4500.
This Proxy Statement, along with the Notice of Annual Meeting of Stockholders, a
proxy card, and our 1998 Annual Report to Stockholders, are being mailed to you
on or about March 31, 1999. The 1998 Annual Report to Stockholders includes our
audited financial statements. You may also obtain, without charge, a copy of our
1998 Annual Report on Form 10-K (a form filed with the Securities and Exchange
Commission) by sending a written request to Investor Relations at our address
above.
If you sign and return the proxy card at or before the meeting, your shares
will be voted as you specify on the proxy card. If you do not specify a vote on
the nominees to the Board of Directors, your shares will be voted for each of
the nominees listed on the proxy card. You may revoke your proxy at any time
before the vote at the meeting by giving written notice to our corporate
Secretary at our address above. You may also revoke your proxy by filing another
proxy with a later date or by attending the meeting and voting in person.
We must have a quorum at the Annual Meeting to transact any business. This
means that a majority of the outstanding shares of common stock must be
represented in person or by proxy. If there is a quorum, the eleven nominees who
receive the greatest number of "for" votes will be elected as Directors.
We will appoint an inspector of elections to count the votes cast in person
or by proxy at the meeting. If you abstain from voting on any matter, your
shares will be counted for purposes of determining whether there is a quorum but
will not be voted on that matter. Similarly, 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 purposes of
determining if there is a quorum but will not be voted (and will not be treated
as present and entitled to vote) on that matter.
We will bear the cost of this proxy solicitation. Brokers and nominees
should forward soliciting materials to the beneficial owners of the stock that
they hold of record. We will reimburse brokers and nominees for their reasonable
forwarding expenses. Our Directors, officers and regular employees may also
solicit proxies in person or by telephone or other means. These individuals will
not receive additional compensation for these efforts.
We are not aware of any matter that will be brought before the Annual
Meeting other than those described in this Proxy Statement. If any other matter
is properly brought before the meeting, the persons named as your proxy will be
authorized by the proxy card to vote the shares represented by that proxy card
in accordance with their best judgment.
1
<PAGE> 5
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has been selected as our independent public
accountants and has audited our financial statements for 1998. A representative
of PricewaterhouseCoopers will be present at our 1999 Annual Meeting and will be
available to answer questions. The representative will have an opportunity to
make a statement if the representative so desires.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
If you wish to submit a proposal for consideration at our annual meeting in
the year 2000, we must receive it at our offices at 201 Mission Street, San
Francisco, California 94105, attn: Corporate Secretary, by November 6, 1999, in
order to include it in our proxy statement and form of proxy for that meeting.
ELECTION OF DIRECTORS
There are eleven nominees for election to our Board of Directors. All
Directors are elected annually to serve until our next annual meeting and until
their respective successors are elected and qualified. Information about the
business experience of each nominee is presented below. Each nominee has
indicated a willingness to serve if elected, but if any nominee should become
unable to serve, the proxies that we are soliciting will be voted for the
election of a replacement chosen by the Board of Directors.
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED A
NAME OF NOMINEE BUSINESS EXPERIENCE AGE DIRECTOR
--------------- ------------------- --- ---------
<S> <C> <C> <C>
Joseph F. Alibrandi...... Mr. Alibrandi has served as a Director since 70 1989
May 1989. From 1985 to the present, Mr.
Alibrandi has served as Chairman of Whittaker
Corporation, a diversified company with
business activities in the aerospace and
communications field. From 1974 to 1994 and
from 1996 to the present, he has also served as
Chief Executive Officer of Whittaker
Corporation. Mr. Alibrandi is currently a
Director of Whittaker Corporation, Jacobs
Engineering Group, and Burlington Northern
Santa Fe Corporation.
Stephen F. Bollenbach.... Mr. Bollenbach has served as Chairman and Chief 56 --
Executive Officer of Hilton Hotels Corporation
since 1996. He is also Chairman of Park Place
Entertainment Corporation, a gaming spin-off
from Hilton. From 1995 to 1996, Mr. Bollenbach
was Executive Vice President and Chief
Financial Officer of The Walt Disney Company.
From 1993 to 1995, he was President and Chief
Executive Officer of Host Marriott Corporation.
Mr. Bollenbach is also a director of Ladbroke
Group PLC, Time Warner Inc., Kmart, Inc. and
Spring Group PLC.
Daryl J. Carter.......... Mr. Carter has served as a Director since May 43 1995
1995. From 1992 to the present, Mr. Carter has
served as Co-Chairman of Capri Capital, L.P.
(or its predecessor), a real estate investment
management company. Mr. Carter is also a
Director of Acacia Bank.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED A
NAME OF NOMINEE BUSINESS EXPERIENCE AGE DIRECTOR
--------------- ------------------- --- ---------
<S> <C> <C> <C>
Richard D. Farman........ Mr. Farman has served as a Director since May 63 1997
1997. He has been Chairman and Chief Executive
Officer of Sempra Energy, an energy services
holding company, since its formation in June
1998. From 1993 to 1998, he served as
President, Chief Operating Officer and Director
of Pacific Enterprises. Mr. Farman is currently
a Director of Sentinel Group Funds, Inc. and
Union Bank of California.
Christine Garvey......... Ms. Garvey has served as a Director since May 53 1995
1995. From December 1998 to January 1999, she
served as President of Cadspec, a software firm
in Novato, California. From April 1997 to
October 1998, Ms. Garvey served as Group
Executive Vice President, Commercial Real
Estate Services Group of Bank of America NT&SA.
From 1992 to March 1997, Ms. Garvey served as
Executive Vice President, Corporate Real
Estate, Other Real Estate Owned ("OREO"), Sales
and Property Management of Bank of America NT &
SA. Ms. Garvey is currently a Director of
Pacific Gulf REIT and of Timberland Growth
Corporation.
William M. Kahane........ Mr. Kahane has served as a Director since May 50 1997
1997 and as the Chair of the Board of Directors
since May 1998. From 1992 to the present, Mr.
Kahane has served as Managing Partner of
Milestone Partners Limited, an investment
banking and financial advisory company, and
Chief Investment Officer of Robert H. Burns
Holdings Ltd., a private investment company.
Until January 1999, Mr. Kahane was a director
(advisory) of Yue-Sai Kan Cosmetics. He is
currently a Director of Robert H. Burns
Holdings Ltd. and of Robert H. Burns Ventures
Ltd.
Leslie D. Michelson...... Mr. Michelson has served as a Director since 48 1997
May 1997. From March 1999 to the present, Mr.
Michelson has served as Managing Director of
Saybrook Capital, LLC, an investment bank
specializing in the provision of strategic and
financial advisory services to the real estate
and health care industries. From June 1998 to
the February 1999, he served as Chairman and
Co-Chief Executive Officer of Protocare. From
1988 to 1998, Mr. Michelson served as Chairman
and Chief Executive Officer of Value Health
Sciences, Inc. He is also a Director of G&L
Realty, Inc.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
YEAR
FIRST
ELECTED A
NAME OF NOMINEE BUSINESS EXPERIENCE AGE DIRECTOR
--------------- ------------------- --- ---------
<S> <C> <C> <C>
Nelson C. Rising......... Mr. Rising has served as our President and 57 1994
Chief Executive Officer and as a Director since
September 1994. From 1984 to 1994, Mr. Rising
was a Senior Partner with Maguire Thomas
Partners, a Los Angeles-based commercial
developer. He is currently Deputy Chairman of
the Federal Reserve Bank of San Francisco.
Jacqueline R. Slater..... Ms. Slater has served as a Director since 46 1993
February 1993 and was Chair of the Board of
Directors from May 1997 to May 1998. Ms. Slater
is currently Founder and President of The
Slater Foundation. From 1995 to June 1998, Ms.
Slater served as Managing Director of Chase
Manhattan Bank, and as President of Chase
Commercial Mortgage Securities Corp.,
responsible for commercial real estate
securitization. From 1990 to 1995, she was
Managing Director of Chase Manhattan,
responsible successively for commercial real
estate loan restructurings and the sale of
commercial real estate properties and loans.
Thomas M. Steinberg...... Mr. Steinberg has served as a Director since 42 1994
June 1994. From 1997 to the present, Mr.
Steinberg has served as President of Tisch
Family Interests. In this capacity, he manages
and supervises investments for members of the
Laurence A. Tisch and Preston R. Tisch
families. From 1991 until 1997, he served as
Managing Director of Tisch Family Interests.
Beverly Benedict Ms. Thomas has served as a Director since May 56 1995
Thomas................. 1995. Ms. Thomas currently heads her own public
affairs consulting firm, BBT Strategies. From
1995 to 1997, Ms. Thomas served as Vice
President of UT Strategies Inc., a public
affairs firm. From 1991 to 1995, she was
Assistant Treasurer of the State of California.
She is currently a Commissioner of the Los
Angeles City Employees Retirement System and a
Director of Apria Healthcare Corporation.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
THE NOMINEES LISTED ABOVE. YOUR PROXY WILL BE SO VOTED UNLESS YOU INDICATE
OTHERWISE.
ARRANGEMENTS REGARDING NOMINEES
Under the terms of Mr. Rising's employment agreement, 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."
DIRECTORS' COMPENSATION
Each Director who is not an employee of Catellus receives an annual
retainer of $30,000, a fee of $1,250 for attendance at each meeting of the Board
of Directors, and a fee of $1,000 for attendance at each meeting of a Board
committee of which that Director is a member. The chair of each committee
receives an annual
4
<PAGE> 8
retainer of $3,000, and the Chair of the Board receives an annual retainer of
$100,000. Directors are also reimbursed for their out-of-pocket expenses for
each Board or committee meeting attended.
Under our Amended and Restated 1996 Performance Award Plan, each
non-employee Director receives an automatic grant of an option to purchase 5,000
shares of common stock following each annual meeting of stockholders. The
exercise price of each option is the closing stock price on the date of grant.
Each option has a ten-year term and becomes exercisable when the following price
levels are achieved: if the average closing price of our common stock for 30
consecutive trading days is or exceeds (a) 125% of the exercise price, then the
option is exercisable as to 25% of the option shares; (b) 150% of the exercise
price, 50% of the option shares; (c) 175% of the exercise price, 75% of the
option shares; and (d) 200% of the exercise price, 100% of the option shares.
Each option vests in full on the eighth anniversary of the date of grant
regardless of the stock price.
In addition, under our Amended and Restated 1996 Performance Award Plan,
each non-employee Director may irrevocably elect to defer any retainers or fees
and instead receive Director Stock Units. A Director Stock Unit is non-voting
and, for record-keeping purposes, is considered equivalent to one share of
stock. An election to defer may be made in 25% increments and must be made
before the beginning of each calendar year. The number of Director Stock Units
to be credited to a Director is calculated by dividing the amount of the
deferred compensation by 90% of the closing price of our common stock on the
date of the credit. Director Stock Units are credited on January 1 of each year
for any deferred retainers, and they vest on a per diem basis over the course of
the year. Director Stock Units are credited on December 31 of each year for any
deferred meeting fees and are immediately vested. If a Director dies or becomes
disabled, any unvested Director Stock Units vest immediately. Each Director will
receive a distribution of the vested Director Stock Units on a date previously
selected by the Director (which may not be less than three years after the
election is made). We will distribute the Director Stock Units by issuing to the
Director an equivalent number of shares of our common stock, either in a lump
sum or in a specified number of annual installments, as previously selected by
the Director.
BOARD OF DIRECTORS MEETINGS
The Board of Directors held seven meetings in 1998. Each Director attended
at least 75% of the aggregate number of meetings in 1998 of the Board and of
each committee of which that Director was a member.
5
<PAGE> 9
BOARD COMMITTEES
The Board of Directors has established an Audit Committee, a Compensation
and Benefits Committee, a Compensation Review Committee,((1)) a Corporate
Governance Committee (formerly called the Board Affairs Committee), and a
Finance Committee. No member of these Committees, other than the Finance
Committee, may be an employee of Catellus or any subsidiary. The current
membership of each Committee and the number of meetings each Committee held in
1998 are as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
CORPORATE COMPENSATION COMPENSATION
NAME OF DIRECTOR AUDIT GOVERNANCE AND BENEFITS REVIEW FINANCE
- --------------------------------------------------------------------------------------------------------------------
Joseph Alibrandi Member Member Member
- --------------------------------------------------------------------------------------------------------------------
Daryl Carter Chair Member Member
- --------------------------------------------------------------------------------------------------------------------
Richard Farman Chair Member Member
- --------------------------------------------------------------------------------------------------------------------
Christine Garvey Member Member Member
- --------------------------------------------------------------------------------------------------------------------
William Kahane Member(2) Member(2) Member(2) Chair Chair(3)
- --------------------------------------------------------------------------------------------------------------------
Leslie Michelson Member Chair Member
- --------------------------------------------------------------------------------------------------------------------
Nelson Rising Member
- --------------------------------------------------------------------------------------------------------------------
Jacqueline Slater Member Member Member
- --------------------------------------------------------------------------------------------------------------------
Thomas Steinberg Member Member Member
- --------------------------------------------------------------------------------------------------------------------
Beverly Thomas Member Member Member
- --------------------------------------------------------------------------------------------------------------------
Number of meetings in 1998 3 5 9 3 5
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Audit Committee:
- Recommends to the Board the independent public accountants that we
engage.
- Reviews our general policies and procedures regarding audits, accounting
and financial controls, the scope and results of the auditing engagement,
and the extent to which we have implemented changes suggested by our
independent public accountants.
The Compensation and Benefits Committee:((4))
- Recommends to the Compensation Review Committee the compensation of the
Chief Executive Officer.
- Recommends to the Compensation Review Committee the compensation of our
senior management reporting directly to the office of the Chief Executive
Officer.
- Exercises general review authority over compensation levels of all other
corporate officers and key management personnel.
- Reviews annually our compensation practices and salary administration
procedures.
- Reviews and approves changes in existing employee benefit programs and
adopts new programs.
- ---------------
(1) In an effort to improve the efficiency of the committee structure, the Board
of Directors is currently taking steps to eliminate the Compensation Review
Committee and allocate its authority and responsibilities to the
Compensation and Benefits Committee.
<TABLE>
<S> <C> <C> <C> <C> <C>
(2) Although he was not expressly appointed a member of this Committee, Mr. Kahane is an ex officio member by virtue
of being Chair of the Board.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
(3) Mr. Kahane is serving as Interim Chair of the Finance Committee to replace Donald McNamara, its former Chair,
who resigned from the Board effective January 1, 1999.
</TABLE>
(4) As noted above, the Board of Directors is currently taking steps to augment
these powers in connection with the elimination of the Compensation Review
Committee
6
<PAGE> 10
The Compensation Review Committee:((5))
- Reviews and acts on recommendations of the Compensation and Benefits
Committee regarding the compensation of the Chief Executive Officer and
senior management reporting directly to the office of the Chief Executive
Officer.
The Finance Committee:
- Reviews and approves financing arrangements and other transactions within
a specified size range.
- Recommends to the Board larger financing arrangements and other
transactions.
The Corporate Governance Committee:
- Considers matters relating to the governance of the Board, including
Director nominations.
The Corporate Governance Committee welcomes your suggestions of potential
candidates to fill future vacancies on the Board. You should send your
suggestions in writing to our corporate Secretary at our executive offices. Any
suggestions must include detailed biographical and occupational data on the
candidate, along with the candidate's written consent to consideration by the
Corporate Governance Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ms. Garvey, a Director, was an executive officer of Bank of America NT & SA
before its acquisition by NationsBank in September 1998. We have continuing
banking relationships with Bank of America in which funds are deposited with and
borrowed from Bank of America on terms that we believe are competitive,
reasonable, and customary. During 1998, we paid to Bank of America a total of
approximately $19,086,000. This amount includes interest, commitment fees, and
other banking fees paid to Bank of America for its own benefit or for the
benefit of other lenders participating in a syndicate, together with expenses
that we have reimbursed. At December 31, 1998, our debt to Bank of America
totaled $202,913,000. Mr. Alibrandi, also a Director, was a director of Bank of
America NT & SA and of its holding company BankAmerica Corporation before its
acquisition. He was also a member of the compensation committee of BankAmerica
Corporation. Both Mr. Alibrandi and Ms. Garvey resigned their respective
positions with Bank of America following its acquisition by NationsBank. Both
Ms. Garvey and Mr. Alibrandi abstained from all votes of the Board of Directors
involving Bank of America in 1998.
Mr. Bollenbach, a nominee for election to the Board, is President and Chief
Executive Officer of Hilton Hotels Corporation, which is our partner in three
different Louisiana partnerships. International Rivercenter, a general
partnership in which we own 25.2% and Hilton 67.4%, owns the New Orleans
Riverside Hilton Hotel; Hilton Hotels Corporation manages that hotel under a
management contract with the partnership. New Orleans International Hotel, a
limited partnership in which we own 15.9% and Hilton 29.5%, owns a 22.5%
interest in New Orleans Rivercenter, a general partnership in which we and
Hilton each also own 38.75% and which owns an eight acre parcel of land adjacent
to the New Orleans Riverside Hilton Hotel. Our partnership distributions from
these three entities in 1998 totalled approximately $6,565,000.
Mr. Yellin, an executive officer in 1998, indirectly owns (through The
Yellin Company) 9.8% of Bradbury Associates, L.P., a limited partnership that
owns the Bradbury Building in downtown Los Angeles. We currently lease 21,425
square feet of space in the Bradbury Building under a lease signed in November
1996, and we moved our Southern California offices to that site in March 1997.
We believe that, notwithstanding the involvement of an insider, this lease is
commercially reasonable, fair to us, and comparable in its terms to other leases
that would have been available to us. This lease was unanimously approved by our
Board of Directors. In 1998, we paid to Bradbury Associates, L.P. approximately
$360,000.
In October 1997, we made an interest-free loan of $400,000 to Ms. Smalley,
an executive officer, for the purchase of a new residence in the San Francisco
area. The full original amount of this loan remains outstanding as of March 1,
1999.
- ---------------
(5) As noted above, the Board of Directors is currently taking steps to
eliminate the Compensation Review Committee and allocate its authority and
responsibilities to the Compensation and Benefits Committee.
7
<PAGE> 11
As of the date of this Proxy Statement, the Compensation and Benefits
Committee of our Board of Directors has approved a proposal by management to
make a secured, interest-free loan to Mr. Beaudin, an executive officer in 1998,
of $500,000 for the construction of a residence. Repayment of principal will be
due in three equal annual installments of $166,667 in January of 2002, 2003 and
2004.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, Messrs. Alibrandi, Carter, Farman, Kahane, Michelson and
Steinberg and Ms. Slater served as members of the Compensation and Benefits
Committee. During 1998, Messrs. Alibrandi, Carter, Farman, Kahane, McNamara,
Michelson, and Steinberg and Mmes. Garvey, Slater and Thomas served as members
of the Compensation Review Committee. None of the members of either committee
was, in 1998, or has ever been an employee or officer of Catellus. However, Mr.
Alibrandi was a director of Bank of America, with whom we have banking
relationships, until September 1998, and Ms. Garvey was an executive officer of
Bank of America until October 1998. For more information, see "Certain
Relationships and Related Transactions."
8
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides information about shareholders that
beneficially own more than 5% of our common stock, based on documents filed as
of March 1, 1999, under Sections 13(d) and 13(g) of the Securities Exchange Act
of 1934.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED CLASS
---------------- ------------ ----------
<S> <C> <C>
Southeastern Asset Management, Inc.......................... 20,812,300 19.5%
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
California Public Employees' Retirement System.............. 18,782,250 17.6%
Lincoln Plaza, 400 P Street
Sacramento, California 95814
Harris Associates, L.P...................................... 10,892,856 10.2%
2 North LaSalle Street, Suite 500
Chicago, Illinois 60602
</TABLE>
REGISTRATION RIGHTS AGREEMENT WITH CALPERS
In 1989, we signed a Registration Rights Agreement with several large
shareholders, including the predecessor in interest of California Public
Employees' Retirement System ("CalPERS"). Of those shareholders, only CalPERS
remains a shareholder and a party to the agreement.
Under the Registration Rights Agreement, CalPERS has the following rights:
- DEMAND REGISTRATION: CalPERS may request, up to four times (three,
following a registration completed in 1997), that we use our best efforts
to register the sale of CalPERS' shares within 90 days. The minimum
number of shares as to which CalPERS may request registration at one time
is the lesser of 20% of its stock, or stock with an aggregate offering
price (after subtracting discounts and commissions) of over $40 million.
We will bear the costs of the registration, including CalPERS' legal
fees, but excluding underwriting discounts and commissions for CalPERS'
shares. CalPERS may also request a Form S-3 registration (a simplified
registration process) if the aggregate offering price is at least $25
million, and these registrations do not count toward the number of
registrations they may request.
- PIGGYBACK REGISTRATION: Any time we propose to file a registration
statement in connection with a public offering of stock solely for cash,
CalPERS may request to include its shares in the registration statement
to the extent that the inclusion of CalPERS' shares will not jeopardize
the success of the offering.
CalPERS may no longer exercise any rights under the agreement when all of
its shares can be freely sold to the public under an exemption from
registration.
9
<PAGE> 13
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows how much of our common stock each Director,
nominee, and named executive officer beneficially owned as of March 1, 1999, and
the amount owned by all Directors and executive officers as a group. Each person
has sole voting and investment power over the shares shown unless otherwise
indicated, and except as those powers may be shared with the person's spouse
under applicable law.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY COMMON STOCK
BENEFICIAL OWNER OWNED(1) OWNED
---------------- ------------ ------------
<S> <C> <C>
Joseph F. Alibrandi(2).................................. 16,491 *
Stephen F. Bollenbach................................... 0 *
Daryl J. Carter(3)...................................... 13,372 *
Richard D. Farman(4).................................... 5,556 *
Christine Garvey(5)..................................... 14,341 *
William M. Kahane(6).................................... 7,015 *
Leslie D. Michelson(7).................................. 3,132 *
Nelson C. Rising(8)..................................... 1,435,847 1.3%
Jacqueline R. Slater(9)................................. 23,690 *
Thomas M. Steinberg(10)................................. 41,937 *
Beverly Benedict Thomas(11)............................. 11,757 *
Stephen P. Wallace(12).................................. 712,407 *
Timothy J. Beaudin(13).................................. 343,530 *
Douglas J. Gardner...................................... 0 *
Kathleen Smalley(14).................................... 76,896 *
All current Directors and Executive Officers as a group
(17 persons).......................................... 3,008,609 2.7%
</TABLE>
- ---------------
* Less than one percent.
(1) The number of shares shown as beneficially owned includes Director Stock
Units, described under "Director's Compensation." Director Stock Units do
not have voting power or investment power, but Directors bear an economic
risk and benefit equivalent to stock ownership because Director Stock Units
convert on a one-for-one basis to common stock at a future date.
(2) Includes 6,107 Director Stock Units and 10,000 shares subject to options
that are exercisable within 60 days of March 1, 1999.
(3) Includes 4,372 Director Stock Units and 9,000 shares subject to options
that are exercisable within 60 days of March 1, 1999.
(4) Includes 5,556 Director Stock Units.
(5) Includes 5,341 Director Stock Units and 9,000 shares subject to options
that are exercisable within 60 days of March 1, 1999.
(6) Includes 7,015 Director Stock Units.
(7) Includes 3,132 Director Stock Units.
(8) Includes 1,425,000 shares subject to options that are exercisable within 60
days of March 1, 1999, and 4,375 shares held by Mr. Rising's son
Christopher Rising as trustee of The Rising 1990 Trust Number 2. Mr. Rising
has neither voting nor investment power over the shares held by his son,
and he disclaims beneficial ownership of those shares.
(9) Includes 13,290 Director Stock Units and 4,750 shares subject to options
that are exercisable within 60 days of March 1, 1999.
(10) Includes 3,524 Director Stock Units; 9,000 shares subject to options that
are exercisable within 60 days of March 1, 1999; 17,454 shares held in a
charitable remainder unitrust of which Mr. Steinberg is the
10
<PAGE> 14
trustee; and 6,961 shares held by his sister in an account on which he has
signatory power, which Mr. Steinberg exercises at the direction and for the
convenience of his sister. Mr. Steinberg may be deemed to have shared
investment power over the shares held in his sister's account but has no
pecuniary interest in the shares. Mr. Steinberg disclaims beneficial
ownership of those shares and of the shares held by the charitable
remainder unitrust.
(11) Includes 2,757 Director Stock Units and 9,000 shares subject to options
that are exercisable within 60 days of March 1, 1999.
(12) Includes 707,500 shares subject to options that are exercisable within 60
days of March 1, 1999.
(13) Includes 337,500 shares subject to options that are exercisable within 60
days of March 1, 1999.
(14) Includes 75,000 shares subject to options that are exercisable within 60
days of March 1, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Securities Exchange Act requires our executive
officers, directors, and shareholders that own more than 10% of our stock to
file reports of ownership and any changes in ownership with the SEC. Based on
our review of copies of these reports, and on written statements from our
executive officers and directors, we believe that everyone who was subject to
Section 16(a) filed all required reports on time in 1998.
11
<PAGE> 15
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENT WITH MR. RISING
Our employment agreement with Mr. Rising provides that he will serve as
President and Chief Executive Officer and as a Director through December 31,
2000. The agreement provides for a minimum base salary of $350,000 per year
starting in 1995, to be increased by 5% each year, as well as an annual maximum
bonus of 200% of each year's annual salary. It also provides for the grant to
Mr. Rising of stock options as reflected in this Proxy Statement.
If Mr. Rising's agreement is cancelled for any reason, he will receive a
pro rata share of that year's target bonus payment. Mr. Rising may elect to
cancel his agreement on 30 days notice. In addition, if we cancel the agreement
for any reason other than his death or disability, or for cause, or if he is
"constructively discharged" (if, for example, he is not elected as Director or
if his salary is reduced), then he will receive double his average annual salary
and bonus for the two preceding years, and all of his stock options will become
immediately exercisable.
If, however, Mr. Rising is constructively discharged or terminated without
cause within 12 months after a change of control, then he will, instead, receive
three times the "base amount" as defined in Section 280G of the Internal Revenue
Code. In addition, all of his stock options will become immediately exercisable.
For these purposes, a change of control includes:
- acquisitions of 25% or more of our voting stock (but not including
acquisitions by CalPERS);
- changes in membership on our Board of Directors such that Directors who
are currently on the Board, and those nominated by the current Directors,
are no longer a majority of the Board;
- approval by our stockholders of any reorganization in which our
stockholders before the reorganization do not own at least 50% of the
voting stock after the reorganization; or
- approval by our stockholders of any complete liquidation or dissolution
of Catellus, or of any sale of substantially all of our assets.
AGREEMENT WITH MR. WALLACE
Our employment agreement with Mr. Wallace provides that he will serve as
Senior Vice President and Chief Financial Officer through December 31,
2000.((6)) The agreement provides for a minimum base salary subject to annual
review, as well as an annual target bonus. For 1998, his base salary was
$299,256, and Mr. Wallace was eligible for a bonus of 200% of his base salary.
The agreement also provides for the grant to Mr. Wallace of stock options as
reflected in this Proxy Statement.
We may cancel Mr. Wallace's agreement early only if he dies or becomes
disabled, or for cause. However, we may not cancel the agreement for cause
unless we first provide Mr. Wallace an opportunity to cure any non-performance
of his duties. If we cancel his agreement for any reason other than his death or
disability, or for cause, or if he leaves for "good reason" (such as reduction
in his salary), Mr. Wallace will receive his full annual salary and target bonus
(based on the two-year average monthly target bonus) for the remaining term of
the agreement.
If, however, Mr. Wallace is terminated without cause within 12 months after
a change of control, then he will, instead, receive three times the "base
amount" as defined in Section 280(g) of the Internal Revenue Code. In addition,
all of his stock options will become immediately exercisable. A change of
control here has the same meaning as in Mr. Rising's employment agreement,
described above.
- ---------------
(6) Since the date of his employment agreement, Mr. Wallace has been promoted to
Executive Vice President and Chief Operating Officer. He holds the office of
Chief Financial Officer on an interim basis while we search for a
replacement.
12
<PAGE> 16
AGREEMENT WITH MR. BEAUDIN
Our employment agreement with Mr. Beaudin provides that he will serve as
Senior Vice President, Property Operations through December 31, 2000.((7)) The
agreement provides for a minimum base salary subject to annual review, as well
as an annual target bonus. For 1998, his base salary was $260,012, and Mr.
Beaudin was eligible for a bonus of 200% of his base salary. The agreement also
provides for the grant to Mr. Beaudin of stock options as reflected in this
Proxy Statement. We are currently proposing to amend Mr. Beaudin's agreement to
provide for three additional bonuses in the amount of $166,667 in each of 2002,
2003 and 2004, subject to certain conditions.
We may cancel Mr. Beaudin's agreement early only if he dies or becomes
disabled, or for cause. If we cancel his agreement for any reason other than his
death or disability, or for cause, or if he leaves for "good reason" (such as
reduction in his salary), Mr. Beaudin is entitled to receive his full annual
salary and target bonus for the remaining term of the agreement, and all of his
stock options will become immediately exercisable. In addition, if Mr. Beaudin's
employment is terminated without cause within 12 months following a "change of
control," his 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, described above.
AGREEMENT WITH MS. SMALLEY
Our employment agreement with Ms. Smalley provides that she will serve as
Senior Vice President and General Counsel through December 31, 1999, with
automatic extensions for successive one-year terms unless we give notice that
the agreement will not be extended. The agreement provides for a minimum base
salary subject to annual review, as well as an annual target bonus. For 1998,
her base salary was $231,000, and Ms. Smalley was eligible for a bonus of 200%
of her base salary. The agreement also provides for the grant to Ms. Smalley of
stock options as reflected in this Proxy Statement. In addition, the agreement
provides an interest-free loan to her of $400,000 to buy a residence.
We may cancel Ms. Smalley's agreement early only if she dies or becomes
disabled, or for cause. However, we may not cancel the agreement for cause
unless we first provide Ms. Smalley an opportunity to cure any non-performance
of her duties. If we cancel her agreement for any reason other than her death or
disability, or for cause, or if she leaves for "good reason" (such as reduction
in her salary), Ms. Smalley is entitled to receive her full annual salary and
target bonus (based on the two-year average monthly target bonus) for the
remaining term of the agreement.
If, however, Ms. Smalley is terminated without cause within 12 months after
a change of control, then she will, instead, receive three times the "base
amount" as defined in Section 280(g) of the Internal Revenue Code. In addition,
all of her stock options will become immediately exercisable. A change of
control here has the same meaning as in Mr. Rising's employment agreement,
described above.
MEMORANDUM OF UNDERSTANDING WITH MR. GARDNER
Our memorandum of understanding with Mr. Gardner regarding his employment
provides that he will serve as Vice President.((8)) The memorandum provides for
a base salary subject to annual review, as well as an annual target bonus. For
1998, his base salary was $202,750, and Mr. Gardner was eligible for a bonus of
200% of his base salary. The memorandum also provides for the grant to Mr.
Gardner of stock options as reflected in this Proxy Statement.
- ---------------
(7) As of January 1, 1999, Mr. Beaudin was appointed President of Catellus
Commercial Group, LLC, a Catellus subsidiary. Although he is no longer a
Senior Vice President of Catellus Development Corporation, all of the
remaining provisions of his employment agreement remain in effect.
(8) In 1998, Mr. Gardner was promoted to Senior Vice President. Then, as of
January 1, 1999, Mr. Gardner was appointed President of Catellus Mixed Use
Group, LLC, a Catellus subsidiary. Although as a result of this appointment
he is no longer a Senior Vice President of Catellus Development Corporation,
all of the remaining provisions of the memorandum of understanding remain in
effect.
13
<PAGE> 17
While Mr. Gardner's employment is at-will, the memorandum provides that if
his employment is terminated without cause before December 31, 1999, he is
entitled to one year's salary and bonus, and all of his stock options will vest
immediately.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
AND THE COMPENSATION REVIEW COMMITTEE
ON EXECUTIVE COMPENSATION
This report is presented jointly by the Compensation and Benefits Committee
(the "Compensation Committee") and the Compensation Review Committee((9)) (the
"Review Committee") of our Board of Directors. In this report, we will describe:
- The process for setting compensation policy
- Our overall compensation policy
- Our compensation policy for senior executives
- Annual cash compensation program for senior executives
- Our long-term incentive program, including anticipated changes in the
program
- Compensation of our Chief Executive Officer for 1998
- Certain tax matters
PROCESS FOR SETTING COMPENSATION POLICY
Our compensation policy is set by the Compensation Committee and the Review
Committee (together, the "Committees"). The Compensation Committee reviews and
approves policies that apply to all employees and makes recommendations to the
Review Committee about the compensation of the Chief Executive Officer. Also,
based on the recommendations of the Chief Executive Officer, the Compensation
Committee makes recommendations to the Review Committee about the compensation
of senior executives who report directly to the office of the Chief Executive
Officer. The Review Committee reviews and acts on the recommendations of the
Compensation Committee.((10)) Both Committees are composed entirely of
independent outside Directors.
The Compensation Committee has retained SCA Consulting, L.L.C. ("SCA") to
advise it on the development of incentive compensation programs and to undertake
a study of compensation practices of comparable real estate companies. As part
of the study, SCA has considered a composite of companies that reflect the
unusual breadth of our activities within the real estate industry and has
examined our ability to attract and retain outstanding employees, in light of
their alternative opportunities.
The Compensation Committee has also integrated our compensation policy with
our business plan and goals. The Committees both believe that our compensation
program has contributed materially to stockholder value, because it has made the
compensation of key executives substantially dependent on the accomplishment of
our goals to enhance shareholder value. The Committees have, based on the work
commissioned from SCA, modified our compensation program for 1999. The
Committees believe that these modifications will increase the objectivity of the
administration of the program and further enhance stockholder value.
- ---------------
(9) In an effort to improve the efficiency of the committee structure, the Board
of Directors is currently taking steps to eliminate the Compensation Review
Committee and allocate its authority and responsibilities to the
Compensation and Benefits Committee.
(10) Following the planned elimination of the Compensation Review Committee, the
Compensation and Benefits Committee will make these decision.
14
<PAGE> 18
OVERALL COMPENSATION POLICY
The Committees seek to establish compensation programs that:
- Emphasize achievement of important financial, operational and strategic
objectives.
- Link pay to performance by establishing meaningful performance objectives
tied to our annual operating plan.
- Align the interests of employees, especially senior management, with
those of stockholders by including equity in the total compensation
package.
- Provide a competitive total compensation package to attract, retain and
motivate highly talented employees.
Our compensation programs consist of annual cash compensation and a
long-term incentive program based on stock options. The annual cash compensation
in turn consists of two elements: base salary and annual cash bonus. All
employees are eligible for cash bonuses, depending entirely on individual
performance. In 1998, all employees were also eligible for grants of stock
options. Beginning in 1999, however, in order to target equity ownership to
those most able to affect our direction and success, the Committees have decided
to limit further equity-based compensation to management-level employees and
other key employees.((11)) In 1998, we granted options for 1,432,655 shares in
recognition of performance or upon hiring management and other key employees;
and options for 113,927 shares under our program for all other employees.
COMPENSATION POLICY FOR SENIOR EXECUTIVES
Our compensation program for senior executives consists of base salary,
cash bonuses, and long-term incentive compensation. The program is designed to
enable us to attract, motivate, and retain outstanding 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 Compensation Committee and the Review
Committee, the program fully satisfied those goals in 1998. As we move into a
new phase of our strategic plan, the Committees believe that performance and
goals can become increasingly objective and have taken steps to implement that
approach in 1999.
The Committees believe that performance-based annual cash compensation and
stock-based long-term incentives align management's interests with those of
stockholders and enhance value to stockholders. Accordingly, as described below,
our compensation program for senior executives employs each of these elements in
the compensation package.
ANNUAL CASH COMPENSATION PROGRAM FOR SENIOR EXECUTIVES
The annual cash compensation for senior executives consists of base salary
and cash bonuses. Base salaries for senior executives are determined by
evaluating the executive's responsibilities, experience, and skills and by
reference to the competitive marketplace for executives, including a comparison
to base salaries for comparable positions at comparable businesses.
Base salaries of our senior executives typically fall at or below the 50th
percentile of base salaries of executives with similar responsibilities at
comparable businesses, as identified by SCA. The intent of our compensation plan
is to provide a significant portion of each senior executive's compensation in
the form of cash bonuses and stock options, in order to place a large part of
his or her compensation at risk for individual and corporate performance. This
design, in the opinion of the Committees, provides effective incentives to
senior executives and aligns the interests of management with those of
stockholders.
- ---------------
(11) Many non-management employees continue to have an equity stake in Catellus
arising from past broad-based incentive programs that were in effect until
February 15, 1999.
15
<PAGE> 19
At the beginning of 1998, each senior executive agreed to a set of goals
that were required to be met to attain various target levels of bonus, up to
200% of base salary. The Committees set the actual award amount for each
executive by evaluating the performance of the executive in comparison to these
goals. Included among the goals for every senior executive is our earnings
before depreciation and deferred taxes. A portion of senior executives'
compensation, therefore, is tied to objective financial indicators.
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program for senior executives consists solely of
stock options. All of our senior executives participate in the stock option
program. This component of our compensation plan, as applied in 1998, was
designed in 1995 with the goal of providing a competitive overall compensation
program. At the same time, this component of the compensation plan offers an
incentive to improve our long-term performance and promotes growth in
stockholder value, thus aligning our executive's interests with those of our
stockholders.
The exercise price for all options granted to senior executives is the
closing price of our common stock on the date of the grant. As the program was
designed in 1995, stock options granted to senior executives vest and become
exercisable in annual installments ("time-vesting"), but only if a schedule of
escalating stock price levels is achieved ("price-vesting"). The price-vesting
feature was adopted in recognition of the "turnaround" nature of Catellus in
1995. However, in the light of our current performance, the Committees have
eliminated price-vesting for all stock option grants beginning in December 1998.
The time-vesting feature will continue to apply.
As the composition of the management team changes, as employment agreements
with much of the senior management team expire in 2000, as the options of the
senior management team vest largely in 2000, and as the challenges facing us
change, the Committees perceive a need to change our approach to equity
compensation. The Committees retained SCA to assist in designing a new program
that will address our current circumstances. As a result, we expect to change
our approach to long-term incentive compensation.
Beginning in 2000, based on the advice of SCA, we plan to implement a
program of regular annual grants of stock options. The size of a grant to a
particular executive will be based on the performance of the executive, within a
range specified in light of the executive's position and responsibilities. The
exercise price of options will be the closing price of our stock on the date of
the grant, and awards will vest in equal annual installments over four years.
Options will expire at the end of ten years. The Committees believe that the new
program will be particularly effective in retaining employees, because senior
executives will typically have unvested options at any given time.
Of the senior executive officers named in the Summary Compensation Table,
only Ms. Smalley and Mr. Gardner were granted stock options in 1998. The other
senior executives received grants of stock options in earlier years. See
"Summary Compensation Table" below.
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR 1998
Our employment agreement with Nelson Rising, who has been our President and
Chief Executive Officer since 1994, provided for a base annual salary in 1998 of
$405,191 and calls for a maximum bonus of 200% of his base salary. For 1998, the
Committees awarded Mr. Rising a cash bonus of $788,231, which represents 97.3%
of his maximum bonus potential. This bonus award was made in recognition of his
effective leadership, as demonstrated by:
- Outstanding results of our operations in 1998, with earnings before
depreciation and deferred taxes at $0.94 per share, representing an
increase of 52% over 1997.
- Development and implementation of a strategic plan to build on the
successful turnaround of our financial results since 1994.
- A successful entitlements package for our Mission Bay project.
- The favorable refinancing of our long-term debt.
16
<PAGE> 20
- An increase of 224% in earnings from our residential division.
- Capable representation of Catellus to the investment community.
- Identification and closing of acquisition opportunities.
In the light of previous stock option grants to Mr. Rising, the Committees
did not grant any stock options to him in 1998 and do not expect to grant any in
1999.
TAX MATTERS
U.S. tax law limits the deductibility for federal income tax purposes of
certain compensation paid to the Chief Executive Officer or any of our four
other most highly compensated officers. We intend to structure our compensation
program to avoid these deductibility limitations to the extent feasible.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE: REVIEW COMMITTEE:
Leslie D. Michelson, Chairman William M. Kahane, Chairman
Joseph F. Alibrandi Joseph F. Alibrandi
Richard D. Farman Daryl J. Carter
Jacqueline R. Slater Richard D. Farman
Thomas M. Steinberg Christine Garvey
Leslie D. Michelson
Jacqueline R. Slater
Thomas M. Steinberg
Beverly B. Thomas
</TABLE>
17
<PAGE> 21
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
ANNUAL ANNUAL OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) AWARDS ($)(3)
--------------------------- ---- ------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Nelson C. Rising............... 1998 405,191 788,231 76,443(4) -- 8,013
President, Chief Executive 1997 385,872 733,163 70,328(4) -- 7,763
Officer and Director 1996 367,512 735,000 70,388(4) 1,000,000 7,763
Stephen P. Wallace............. 1998 299,256 575,575 -- -- 10,412(5)
Executive Vice President and 1997 299,256 568,575 -- -- 10,092(6)
Chief Operating Officer 1996 299,256 583,538 -- 670,000 7,763
Timothy J. Beaudin............. 1998 260,012 500,500 -- -- 16,204(8)
Senior Vice President, 1997 220,000 418,000 -- -- 11,115(9)
Property Operations(7) 1996 220,000 429,000 -- 400,000 7,763
Kathleen Smalley............... 1998 231,000 451,027 -- 163,946 8,013
Senior Vice President, 1997 231,000 277,200 96,607(11) 150,000(12) 7,763
Corporate Operations and 1996 -- -- -- -- --
General Counsel(10)
Douglas J. Gardner............. 1998 202,750 364,665 -- 235,754 8,013
Senior Vice President(13) 1997 53,193 82,250 -- 100,000 --
1996 -- -- -- -- --
</TABLE>
- ---------------
(1) Unless otherwise noted, the amount for any year represents the amount
earned in that year, whether or not paid in a subsequent year.
(2) Unless otherwise noted, Other Annual Compensation did not, in the
aggregate, exceed the lesser of $50,000 or 10% of the total of salary and
bonus.
(3) Unless otherwise noted, the amounts listed represent the amount of the our
contributions to the Profit Sharing & Savings Plan and Trust.
(4) For each of 1996, 1997 and 1998, this amount includes $51,970 for life
insurance and an automobile allowance of $17,998.
(5) Includes $2,399 of aggregate notional earnings in 1998 in excess of 120% of
the applicable federal rate on amounts deferred by Mr. Wallace under the
Deferred Compensation Program (as described below). Each of the named
executives is eligible to participate in a non-qualified, unfunded deferred
compensation program (the "Deferred Compensation Program"). Under this
program, an executive may elect to defer a portion of his or her base
salary, and a portion or all of his or her bonus. Amounts deferred are
credited to a bookkeeping account for the executive, together with the
investment returns (or losses) that would have accrued to the account if it
were invested in various investment options selected by the executive. An
executive who retires at age 59 1/2 or who has more than ten years of
service will be vested in an additional 25% of earnings. Amounts deferred
under the program are subject to fluctuations in value, depending on the
performance of the simulated financial investments selected by the
executive.
(6) Includes $2,329 of aggregate notional earnings in 1997 in excess of 120% of
the applicable federal rate on amounts deferred by Mr. Wallace under the
Deferred Compensation Program.
(7) As of January 1, 1999, Mr. Beaudin was appointed President of Catellus
Commercial Group, LLC and, as a result, is no longer a Senior Vice
President of Catellus Development Corporation.
(8) Includes $8,191 of aggregate notional earnings in 1998 in excess of 120% of
the applicable federal rate on amounts deferred by Mr. Beaudin under the
Deferred Compensation Program.
(9) Includes $3,352 of aggregate notional earnings in 1997 in excess of 120% of
the applicable federal rate on amounts deferred by Mr. Beaudin under the
Deferred Compensation Program.
(10) Ms. Smalley began her employment with us in January 1997.
18
<PAGE> 22
(11) Includes reimbursement of $74,888 for temporary living expenses.
(12) Includes an option for 75,000 shares that, while granted in January 1998,
was in satisfaction of the requirement in Ms. Smalley's employment
agreement for a grant in 1997 and was in recognition of her performance in
1997.
(13) Mr. Gardner began his employment with us in October 1997. As of January 1,
1999, Mr. Gardner was appointed President of Catellus Mixed Use Group, LLC
and, as a result, is no longer a Senior Vice President of Catellus
Development Corporation.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES BASE PRICE EXPIRATION PRESENT
NAME GRANTED IN 1998 ($/SHARE) DATE VALUE($)(1)
---- ---------- ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Nelson C. Rising....................... -- -- -- -- --
Stephen P. Wallace..................... -- -- -- -- --
Timothy J. Beaudin..................... -- -- -- -- --
Kathleen Smalley(2).................... 100,000(3) 7.2 19.00 04/15/08 1,024,910
63,946(4) 4.6 14.75 12/18/03 508,789
Douglas J. Gardner..................... 150,000(5) 10.7 19.00 04/15/08 1,537,365
85,754(4) 6.1 14.75 12/18/03 682,305
</TABLE>
- ---------------
(1) SEC rules require us to value each grant of options as of the grant date. We
used the Black-Scholes option pricing model for this purpose. However, we do
not endorse its accuracy for valuing options. Any stock option valuation
model, including the Black-Scholes model, requires a prediction about the
future movement of the stock price. We have assumed that each option is
exercised at the end of five years. For options granted in 1998, we have
assumed a weighted average volatility of 31.4% and a weighted average
risk-free rate of return of 5.10%.
(2) In addition to the grants reported in this table, Ms. Smalley received a
stock option grant for 75,000 shares in January 1998 that was previously
reported for 1997 because it was made in satisfaction of requirements in her
employment agreement for a grant in 1997 and was made in recognition of her
performance in 1997.
(3) This option vests in four equal annual installments on January 1 of 1998,
1999, 2000, and 2001, provided that the following stock price levels are
achieved: For the first 25% of the option to vest, the average closing price
of our common stock for 30 consecutive trading days must be $22.80; for the
next 25%, $27.36; for the next 25%, $32.83; and for the last 25%, $39.40.
The entire option will vest on the eighth anniversary of the grant
regardless of the stock price.
(4) This option vests in three equal annual installments on the first three
anniversaries of the grant.
(5) This option vests in four equal annual installments on April 15 of 1999,
2000, 2001 and 2002, provided that the following stock price levels are
achieved: For the first 25% of the option to vest, the average closing price
of our common stock for 30 consecutive trading days must be $22.80; for the
next 25%, $27.36; for the next 25%, $32.83; and for the last 25%, $39.40.
The entire option will vest on the eighth anniversary of the grant
regardless of the stock price.
19
<PAGE> 23
FISCAL YEAR-END OPTION HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1998 (1) DECEMBER 31, 1998($)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Nelson C. Rising........................... 1,425,000 575,000 9,125,313 2,742,188
Stephen P. Wallace......................... 665,000 335,000 4,340,188 1,704,313
Timothy J. Beaudin......................... 300,000 200,000 1,955,000 1,098,750
Kathleen Smalley........................... 37,500 276,446 61,125 183,375
Douglas J. Gardner......................... 0 335,754 0 0
</TABLE>
- ---------------
(1) None of the named executives exercised options in 1998.
20
<PAGE> 24
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following table compares the five-year return on a $100 investment in
our common stock with the return on a similar investment in the Standard &
Poor's 500 Composite Stock Index and in a peer group index, assuming
reinvestment of dividends. Our peer group index includes:
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
Prologis Trust (formerly Security Capital Industrial Trust)
Spieker Properties
Standard Pacific Corp.
Washington REIT
[PERFORMANCE GRAPH]
TOTAL RETURN ANALYSIS
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Catellus Development Corp............ $100 $ 76 $ 76 $147 $258 $184
Peer Group Index..................... $100 $ 95 $109 $158 $204 $193
S&P 500.............................. $100 $101 $139 $170 $227 $291
</TABLE>
21
<PAGE> 25
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 April 29, 1999 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> 26
[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 all Nominees.
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Election of
Directors [ ] [ ]
</TABLE>
For, except vote withheld from the following Nominee(s):
Nominees: Joseph F. Alibrandi
Stephen F. Bollenbach
Daryl J.Carter
Richard D. Farman
Christine Garvey
William M. Kahane
Leslie D. Michelson
Nelson C. Rising
Jacqueline R. Slater
Thomas M. Steinberg
Beverly Benedict Thomas
The undersigned hereby acknowledges receipt of the accompanying Notice of
Meeting and Proxy Statement and hereby revokes any proxy or proxies heretofore
given.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
SIGNATURE(S): DATE:
---------------------------------------- ----------------
NOTE: Please sign exactly as names(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
