<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
THE PRICE REIT, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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[ ] 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
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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<PAGE> 2
THE PRICE REIT, INC.
7979 IVANHOE AVENUE, SUITE 524
LA JOLLA, CA 92037
(619) 551-2320
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1997
TO THE STOCKHOLDERS OF THE PRICE REIT, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of THE PRICE
REIT, INC., a Maryland corporation (the "Company"), will be held on Wednesday,
May 28, 1997 at 10:00 a.m., Pacific Daylight Time, at the San Diego Hilton Beach
and Tennis Resort, 1775 E. Mission Bay Drive, San Diego, California, for the
following purposes:
1. To elect directors for the ensuing year to serve until the next Annual
Meeting of Stockholders and until their successors are elected and
qualified. The Nominating Committee of the Board of Directors has
selected and the present Board of Directors of the Company has approved
for nomination and recommends for election as directors the following
seven persons:
<TABLE>
<S> <C>
Raymond E. Peet William D. Jones
Joseph K. Kornwasser Walter Weisman
George M. Jezek Keene Wolcott
Roy P. Drachman
</TABLE>
2. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 31, 1997 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the Annual Meeting. Accordingly, only stockholders of record at the
close of business on that date will be entitled to vote at the Annual Meeting
and any adjournment and postponement thereof.
We hope that you can attend the Annual Meeting in person. WHETHER OR NOT
YOU CAN ATTEND, WE URGE THAT YOU COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE BUSINESS REPLY ENVELOPE ENCLOSED.
By Order of the Board of Directors
/s/ RAYMOND E. PEET
-----------------------
Raymond E. Peet
Chairman
La Jolla, California
April 7, 1997
<PAGE> 3
THE PRICE REIT, INC.
7979 IVANHOE AVENUE, SUITE 524
LA JOLLA, CA 92037
(619) 551-2320
------------------------
PROXY STATEMENT
------------------------
Your proxy in the enclosed form is solicited by the Board of Directors of
The Price REIT, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held on May 28,
1997 (the "Annual Meeting") at the time and place set forth in the attached
Notice of Annual Meeting and at any adjournment or postponement of that meeting.
Any stockholder giving a proxy pursuant to this solicitation may revoke it
at any time before it is exercised at the Annual Meeting by filing with the
Secretary of the Company a notice in writing revoking it, by properly executing
and delivering a later dated proxy or by attending the Annual Meeting and voting
in person.
Unless the accompanying proxy has been previously revoked, the shares
represented by proxy will, unless otherwise directed, be voted at the Annual
Meeting for the nominees named below for election as Directors and for all other
matters as described in the Proxy Statement. Votes cast by proxy or in person at
the Annual Meeting will be counted by the person appointed by the Company to act
as Inspector of Election for the Annual Meeting. The Inspector of Election will
treat shares represented by the proxies that reflect abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. Any unmarked proxies, including those submitted by brokers or nominees,
will be voted "for" each of the nominees of the Board of Directors, as indicated
in the accompanying proxy. In the election of directors, stockholders are
entitled to cumulate their votes as described under "Election of Directors"
below.
The presence at the Annual Meeting, either in person or by proxy, of
holders of record of a majority of the combined outstanding shares of the
Company's Common Stock will constitute a quorum for the transaction of business
at the Annual Meeting. Only holders of record of the Common Stock at the close
of business on March 31, 1997 (the "Record Date") are entitled to notice of and
to vote at the Annual Meeting. There were 10,671,260 shares of Common Stock
outstanding on March 27, 1997, each of which is entitled to one vote on each of
the matters to be presented to the stockholders at the Annual Meeting.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven directors. The
Board of Directors of the Company has nominated, and recommends for election as
directors, the seven persons named below, all seven of whom are currently
serving as directors of the Company, each to hold office until the next Annual
Meeting and until such director's successor is duly elected and qualified.
Unless authority is withheld or any nominee is unwilling or unable to serve,
which the Board of Directors does not expect, the persons named in the enclosed
form of proxy will vote such proxy for the election of the nominees listed
below. The Board of Directors has no reason to believe that any nominee will be
unable to serve. The seven nominees receiving the highest number of votes will
be elected. For purposes of the election of directors, abstentions will not be
counted as votes cast and will have no effect on the result of the vote.
A stockholder of the Company is entitled to cumulate votes if such
stockholder gives notice, prior to the voting, of an intention to do so. If such
a notice is given, every stockholder may cumulate votes. Under cumulative
voting, such stockholder is entitled in the election of directors to cast one
vote for each share held
<PAGE> 4
by such stockholder multiplied by the number of directors to be elected, and
such stockholder may cast all such votes for a single nominee for director or
may distribute them among any two or more nominees as such stockholder sees fit.
If no notice is given, there will be no cumulative voting. In the absence of
cumulative voting, each stockholder may cast one vote for each share held by
such stockholder multiplied by the number of directors to be elected, but may
not cast more votes than the number of shares owned for any candidate. Under
either form of voting, the nominees receiving the highest number of votes, up to
the number of directors to be elected, will be elected. In the event of
cumulative voting, the proxy solicited by the Board of Directors confers
discretionary authority on the holders of the proxies to cumulate votes so as to
elect the maximum number of the nominees. The proxy may not be voted for more
than seven persons.
Any stockholder executing the form of proxy enclosed herewith may withhold
authority to vote for any one or more nominees by so indicating in the manner
prescribed on the form of proxy. However, the number of votes authorized by the
proxy will not be affected.
INFORMATION REGARDING DIRECTOR NOMINEES
The information set forth below is submitted with respect to the nominees
of the Board of Directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRESENT POSITION WITH THE COMPANY SINCE
- ----------------------------------- --- --------------------------------------------------- --------
<S> <C> <C> <C>
Raymond E. Peet 76 Chairman of the Board 1991
Joseph K. Kornwasser 49 President, Chief Executive Officer, Director 1993
George M. Jezek 67 Executive Vice President, Chief Financial Officer, 1991
Secretary, Treasurer, Director
Roy P. Drachman 90 Director 1991
William D. Jones 41 Director 1991
Walter Weisman 61 Director 1995
Keene Wolcott 66 Director 1995
</TABLE>
Raymond E. Peet has been Chairman of the Board since May 25, 1995 and has
been a director of the Company since 1991. He retired in 1974 from the United
States Navy with the rank of Vice Admiral. Admiral Peet served as Vice
President, International of Teledyne Ryan Aeronautical from 1974 to 1982 and is
currently a director of Cubic Corporation. He was previously a director of
American Heavy Lift Shipping Co. and Energy Factors, Inc. He is currently a
member of the Board of Consultants to The Comptroller General of the United
States and is past President of the University of California, San Diego Board of
Overseers.
Joseph K. Kornwasser has served as President, Chief Executive Officer and a
director of the Company since August 1993. From 1984 until 1994, he was Managing
General Partner of Kornwasser & Friedman Shopping Center Properties, a
commercial real estate development company that acquired, developed or leased
shopping centers and other commercial properties, including most of the
Company's properties. From 1976 until 1993, he was the managing general partner
of K&F Commercial Properties, a property management company that managed
shopping centers and other commercial properties and that was acquired by the
Company. Mr. Kornwasser serves as Chairman of the Board of the National Bank of
California, a federally chartered banking institution. Mr. Kornwasser has served
on the City of Los Angeles Economic Council and is active in numerous community
and charity organizations.
George M. Jezek has been a director of the Company since 1991. He has
served as Executive Vice President, Chief Financial Officer and Secretary of the
Company since August 1992 and Treasurer since May 1993. From 1974 through 1994,
he was also General Manager and a trustee of Security First Real Estate
Investment Trust. He was affiliated with that trust since its inception in 1969.
In addition, Mr. Jezek was previously Secretary and a Director of FedMart
Corporation.
Roy P. Drachman has been a director of the Company since 1991. He has been
a co-owner of Roy Drachman Realty Company since 1946. He has also been a
co-developer with Del Webb Company of numerous shopping centers in Arizona and
California and has served on the boards of directors of several real estate
investment trusts, including Brooks Harvey Real Estate Investment Trust (New
York City), Pacific-
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<PAGE> 5
Southern REIT (San Diego, California) and the Monumental Properties REIT
(Baltimore, Maryland). Mr. Drachman is also past president of three national
real estate organizations -- Urban Land Institute, International Council of
Shopping Centers and American Society of Real Estate Counselors.
William D. Jones has been a director of the Company since 1991. Since
October 1993, Mr. Jones has been President/Chief Executive Officer of CityLink
Investment Corporation, a private company that acquires, develops and
rehabilitates real estate properties in economically neglected areas. Prior to
that time, he worked for The Prudential Realty Group as General Manager of a
commercial real estate portfolio in the Northwestern United States from January
1992 and as an Investment Manager from July 1990. He joined The Prudential
Realty Group in Newark, New Jersey, in July 1989 as an Investment Manager and
Assistant to the Chairman. Prior to such time, he served as an elected official
in San Diego, California, from December 1982 to September 1987. Mr. Jones is
presently a trustee of The University of San Diego and a director of the Enova
Corporation.
Walter Weisman has been a director of the Company since May 1995. He is a
past Chairman and Chief Executive Officer of American Medical International,
Inc. ("AMI"), an owner and operator of acute care hospitals and related health
care activities in the United States and in foreign countries. He served nearly
20 years with AMI, the last three years of which he was its Chief Executive
Officer. Mr. Weisman is a trustee of the Los Angeles County Museum of Art, the
California Institute of Technology, Harvey Mudd College, the Kress Foundation
and the Sundance Institute. He is also a director of Fresenius Medical Care and
Clinical Micro Sensors, Inc.
Keene Wolcott has been a director of the Company since January 1995. Mr.
Wolcott has served as President of Wolcott Investments, Inc., a private
investment company, since 1975 and is currently a director of Prusser's of the
West Indies Ltd. From 1969 to 1973, Mr. Wolcott served as Chief Executive
Officer of the Colorado Corporation, which managed investor funds in oil and gas
exploration. Prior to 1969 he served as Senior Vice President of Hayden, Stone
and Company, a securities brokerage firm.
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS; COMPENSATION
As required by the Company's Bylaws, a majority of the directors are
Independent Directors. Independent Directors are defined in the Bylaws as
directors who are unaffiliated with and who do not receive compensation from
(other than as a result of their status as directors of the Company) the
Company, any advisor of the Company or any subsidiary thereof. In 1996, the
Independent Directors were Messrs. Peet, Drachman, Jones, Weisman and Wolcott.
The Company's directors serve for annual terms and meet as needed to
approve investments of the Company. All directors are responsible for
considering and approving, by majority vote, the policies of the Company and
meet as often and devote such time to the business of the Company as their
oversight duties may require.
Audit Committee. The Board-appointed Audit Committee assists the Board in
matters relating to accounting. The Audit Committee receives from, and reviews
with, the Company's independent accountants the annual reports of such auditors;
reviews with the independent auditors the scope of the succeeding annual audit;
nominates the independent auditors to be selected each year by the Board;
reviews consulting services rendered by the Company's independent auditors and
evaluates the possible effect on the auditors' independence of performing such
services; ascertains the existence of adequate internal accounting and control
systems; and reviews with management and the Company's independent auditors
current and emerging accounting and financial reporting requirements and
practices affecting the Company. During 1996, the members of the Audit Committee
were Messrs. Peet, Weisman and Wolcott. The Audit Committee met one time during
1996.
Executive Committee. The Board-appointed Executive Committee has been
granted the authority to enter into transactions in the ordinary course of
business of the Company, subject to the duties of the Independent Directors, the
Company's conflict of interest policies and other restrictions contained in the
Company's Bylaws, and is responsible for supervising those corporate affairs
which are ministerial, current,
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<PAGE> 6
ordinary and routine. During 1996, the members of the Executive Committee were
Messrs. Peet, Jezek, Kornwasser and Wolcott. The Executive Committee met two
times during 1996.
Compensation and Stock Option Committee. The Board-appointed Compensation
and Stock Option Committee is responsible for authorizing the granting of stock
options and otherwise administering the Company's stock option plans and
reviewing and approving the Company's executive compensation policies. During
1996, the members of the Compensation and Stock Option Committee were Messrs.
Peet, Jones, Weisman and Wolcott. The Compensation and Stock Option Committee
met two times during 1996.
Nominating Committee. The Board-appointed Nominating Committee is
responsible for reviewing and recommending qualified candidates for election as
directors to the Board of Directors. The Nominating Committee does not accept
nominations from shareholders. During 1996, the members of the Nominating
Committee were Messrs. Peet, Drachman and Wolcott. The Nominating Committee met
one time during 1996.
During 1996, the Board of Directors held nine meetings. Each director
attended at least 75% of the Board and committee meetings that he was eligible
to attend. Directors who are not employees of the Company received an annual
director's fee of $24,000 for services rendered during 1996, except for the
Chairman of the Board, who received $30,000 for such services. In addition, each
non-employee director of the Company received options to purchase an aggregate
of 5,000 shares of Common Stock pursuant to the 1996 Directors' Stock Option
Plan. Directors also receive reimbursement for travel expenses incurred in
connection with their duties as directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
EACH OF THE NOMINEES SET FORTH ABOVE. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THE
ACCOMPANYING PROXY.
4
<PAGE> 7
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the shares of the
Company's Common Stock beneficially owned as of the Record Date by (i) each of
the Company's directors, (ii) the Chief Executive Officer and three of the most
highly compensated executive officers of the Company whose cash compensation
exceeded $100,000 for the fiscal year ended December 31, 1996 and (iii) the
Company's executive officers and directors as a group. There are no persons
known by the Company to be the beneficial owner of more than five percent of any
class of the Company's voting securities. There were 10,671,260 shares of Common
Stock outstanding as of March 27, 1997. The business address for each of the
officers and directors listed below is c/o The Price REIT, Inc., 7979 Ivanhoe
Avenue, Suite 524, La Jolla, CA 92037.
<TABLE>
<CAPTION>
NUMBER OF % OF
SHARES OF COMMON
COMMON STOCK
NAME STOCK OUTSTANDING
------------------------------------------------------ --------- -----------
<S> <C> <C>
Officers and Directors
Raymond E. Peet....................................... 12,095(1) *
Chairman, Director
Joseph K. Kornwasser.................................. 423,468(2) 3.9%
President, Chief Executive Officer, Director
Jerald Friedman(3).................................... 172,800(4) 1.6%
Senior Executive Vice President, Chief Operating
Officer
George M. Jezek....................................... 61,780(5) *
Executive Vice President, Chief Financial Officer,
Treasurer, Secretary, Director
Lawrence M. Kronenberg(3)............................. 21,300(6) *
Executive Vice President, Finance
Roy P. Drachman....................................... 22,053(1) *
Director
William D. Jones...................................... 5,500(1) *
Director
Walter Weisman........................................ 5,500(1) *
Director
Keene Wolcott......................................... 8,000(1) *
Director
Officers and Directors as a group (13 persons)........ 748,598(7) 6.7%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Includes 5,000 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of the Record Date.
(2) Includes 250,300 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of the Record Date.
(3) Effective January 1, 1997, the Company acquired the assets and assumed the
liabilities of K&F Development Company and elected certain of the officers
of K&F Development Company, including Mr. Friedman and Mr. Kronenberg, to
serve as officers of the Company. See "Certain Relationships and Related
Transactions."
(4) Includes 122,800 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of the Record Date.
(5) Includes 15,000 shares held by the Mandell Weiss Charitable Trust, of which
Mr. Jezek is trustee. Mr. Jezek disclaims any beneficial ownership in such
shares. Also includes 44,000 shares that may be purchased upon the exercise
of options that are currently exercisable or that will become exercisable
within 60 days of the Record Date.
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<PAGE> 8
(6) Includes 20,000 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of the Record Date.
(7) Includes 468,900 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of the Record Date.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1994,
1995 and 1996, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to the Chief Executive
Officer and the only other executive officer of the Company whose compensation
in 1996 exceeded $100,000 (together, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ---------------------
NAME AND ---------------------- SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) UNDERLYING OPTIONS(#) COMPENSATION($)(2)
- ------------------------------ ---- --------- -------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Joseph K. Kornwasser 1996 $ 274,575(3) $125,425 0 $ 12,484
President and Chief
Executive 1995 $ 261,500 $138,500 147,000 $ 7,438
Officer 1994 $ 260,000 $184,038(4) 0 $ 7,694
George M. Jezek 1996 $ 100,000 $ 21,667 10,000 $ 8,715
Executive Vice President, 1995 $ 85,667 $ 7,000 0 $ 7,365
Chief Financial Officer, 1994 $ 75,000 $ 4,000 0 $ 2,294
Treasurer, Secretary
</TABLE>
- ---------------
(1) Other than salary, bonus and the compensation described in footnote (2), the
Company did not pay Mr. Kornwasser or Mr. Jezek any compensation, including
incidental personal benefits, in excess of 10 percent of his salary.
(2) Represents premiums paid by the Company for medical, dental, life and
disability insurance coverage and Company contributions to the Company's
401(k) plan.
(3) Salary includes amounts deferred by Mr. Kornwasser pursuant to the Company's
401(k) plan.
(4) Includes a non-refundable bonus of $50,000 that was paid in 1994 and was to
be offset against any bonus for 1995 performance. In connection with the
renegotiation of Mr. Kornwasser's employment agreement, the bonus paid for
1995 performance was not offset by such amount.
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<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options for fiscal year 1996 to the Named Executive Officers, except Mr.
Kornwasser who did not receive a grant of stock options for fiscal year 1996.
The table also lists potential realizable values of such options on the basis of
assumed annual compounded stock appreciation rights of 5% and 10% over the life
of the options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
---------------------------------------------------- REALIZABLE
PERCENTAGE VALUE AT ASSUMED
OF TOTAL ANNUAL
OPTIONS RATE OF STOCK PRICE
NUMBER OF GRANTED TO APPRECIATION FOR
SECURITIES EMPLOYEES OPTION
UNDERLYING IN EXERCISE OR TERM(1)
OPTIONS FISCAL BASE PRICE EXPIRATION -------------------
NAME AND POSITION GRANTED(#) YEAR ($/SH) DATE 5% 10%
- ---------------------------------- ----------- ----------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
George M. Jezek 10,000 8.1% $ 29.50 1/29/06 $185,850 $469,050
Executive Vice President, Chief
Financial Officer, Treasurer,
Secretary
</TABLE>
- ---------------
(1) The "potential realizable value" shown represents the potential gains based
on annual compound stock price appreciation of 5 percent and 10 percent from
the date of grant through the full 10-year option term, net of exercise
price, but before taxes associated with exercise. The amounts represent
certain assumed rates of appreciation only based on the Securities and
Exchange Commission rules. Actual gains, if any, on stock option exercises
are dependent on the future performance of the Common Stock, overall market
conditions and the option holders' continued employment through the vesting
period. The amounts reflected in this table may not necessarily be achieved
and do not reflect the Company's estimate of future stock price growth.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1996, the members of the Compensation and Stock Option Committee were
Messrs. Peet, Jones, Weisman and Wolcott. None of such individuals was, or is,
an officer or employee of the Company. No interlocking relationships exist
between any member of the Compensation and Stock Option Committee and any member
of the Board of Directors or compensation committee of any other corporation.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following Compensation
Committee Report and the Stock Price Performance Graphs which follow shall not
be deemed to be incorporated by reference into any such filings.
GENERAL
Administration. The Compensation and Stock Option Committee of the Board of
Directors (the "Committee") consists of Messrs. Peet, Jones, Weisman and
Wolcott, all of whom are Independent Directors. The Committee is responsible for
administering the stock option plans and reviewing and approving the Company's
executive compensation policies.
Compensation Philosophy. The Committee believes that the overall objective
of the Company's compensation program should be related to creating stockholder
value. The primary goals for executive compensation are to attract and retain
executive talent that contributes to the Company's long-term success, to reward
the achievement of the Company's short-term and long-term strategic goals and to
align the interests of executive officers with those of the stockholders.
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<PAGE> 10
EXECUTIVE COMPENSATION PROGRAM
Currently, executive compensation consists of three components designed to
meet the primary goals of the executive compensation program: salary, bonus and
stock options.
Salary. Salaries for the Company's executive officers are determined
primarily on the basis of the executive officer's responsibility, salary
practices of peer companies and the officer's individual qualifications and
experience. The base salaries are reviewed annually and may be adjusted by the
Committee in accordance with certain criteria which include (i) individual
performance, (ii) the functions performed by the executive officer, (iii) the
scope of the executive officer's on-going duties, (iv) changes in the
compensation peer group in which the Company competes for executive talent and
(v) the Company's financial performance generally. The weight given such factors
by the Committee may vary from individual to individual.
Bonus. In order to increase incentives for outstanding performance, a
substantial portion of each executive officer's compensation may be paid in the
form of contingent cash bonuses. The bonus amounts for executive officers are
dependent in part on the Company's overall performance, as well as
individualized criteria such as achievement of specified goals and satisfactory
completion of special projects supervised by the executive officer.
Stock Options. Stock options serve to further align the interests of
management and the Company's stockholders by providing executive officers with
an opportunity to benefit from stock price appreciation that can be expected to
accompany improved financial performance. Stock options also enhance the
Company's ability to attract and retain executives. The number of option shares
granted and the other option terms, such as vesting, are determined by the
Committee, based on recommendations of management in light of, among other
factors, each officer's level of responsibility, prior performance and other
compensation. However, there is no quantitative method for weighing these
factors, and a decision to grant an award is primarily based upon an evaluation
of the past as well as the future anticipated performance and responsibilities
of the individual in question.
The Committee believes that the Company's compensation package, consisting,
as it does, of competitive base salary, bonuses which are granted when the
Company meets certain goals, and stock options which have value only when the
Company's stock value increases, aligns executives' interests with those of
stockholders.
CHIEF EXECUTIVE OFFICER
The Company hired its present chief executive officer, Mr. Kornwasser, in
August 1993 and entered into an employment agreement with him at that time. The
agreement provided for an initial four-year term extending until December 31,
1997. Pursuant to the agreement, Mr. Kornwasser is required to devote
substantially all of his business time to Company-related matters, and he is
prohibited from involvement in certain businesses which are engaged in the
acquisition, development, management or operation of commercial real estate
which competes with the Company. The agreement initially provided for an annual
base salary of $250,000. The agreement was amended in January 1995 to provide
that Mr. Kornwasser be eligible for an annual bonus calculated as of the end of
the Company's fiscal year and equal to 25% of preferred stock dividends (less
return on capital) paid to the Company by K&F Development Company. In December
1995, the agreement was further amended to eliminate the formula component of
the bonus and to set Mr. Kornwasser's compensation (salary and bonus) for 1995
at $400,000. For services provided in 1996, Mr. Kornwasser received $278,217 in
salary and $125,425 in bonuses. The option to purchase 147,500 shares of Common
Stock granted to Mr. Kornwasser in 1995 may only be exercised after the exercise
of an option grant to purchase 266,000 shares of Common Stock he received in
1993. The 1995 option grant has an exercise price of $28.63 per share and the
1993 option grant has an exercise price of $32.50 per share. The 1995 salary and
bonus amounts and the 1995 option grant were the result of negotiations between
the Company and Mr. Kornwasser relating to the December 1995 amendments to his
employment agreement. Also, in 1994 Mr. Kornwasser received an advance bonus of
$50,000 which was to be offset by any bonuses received in 1995. As part of the
December 1995 amendment to his employment agreement, the offset was not
effected.
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<PAGE> 11
COMPENSATION POLICY REGARDING DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code denies a deduction for
compensation in excess of $1 million paid to executive officers, unless certain
performance, disclosure and stockholder approval requirements are met. The
Committee believes that a substantial portion of the compensation program would
be exempted from the $1 million deduction limitation.
COMPENSATION AND STOCK OPTION
COMMITTEE
Raymond E. Peet
William D. Jones
Walter Weisman
Keene Wolcott
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<PAGE> 12
STOCK PRICE PERFORMANCE GRAPH
The Company's initial public offering of shares of Series A Common Stock
occurred in December 1991. In August 1993, the Company completed a public
offering of shares of Common Stock, which at that time was designated as "Series
B Common Stock" (which subsequently became Common Stock). After such offering,
the holders of Series A Common Stock had the right to convert their shares into
shares of Common Stock. By the end of 1993, most of the Series A Common Stock
had been converted into Common Stock and, as of March 25, 1996, there were only
approximately 38,266 shares of Series A Common Stock that remained outstanding.
At the Company's Annual Meeting held on May 23, 1996, stockholders approved
an amendment to the Company's charter to provide that all outstanding shares of
Series A Common Stock be changed into shares of Common Stock and change the name
of its "Series A Common Stock" to "Common Stock." There were approximately
38,266 outstanding shares of Series A Common Stock, which were converted on a
one-for-one basis into shares of Common Stock.
The following graph sets forth the cumulative total stockholder return on
the Common Stock from December 31, 1991 through the end of 1996. The period on
the graph from December 31, 1991 through August 31, 1993 represents the
Company's Series A Common Stock. The period from August 31, 1993 through
December 31, 1996 represents the Common Stock. After 1993, due to the limited
number of outstanding shares of Series A Common Stock and the limited trading
volume of such shares, Series A Common Stock price data is difficult to
determine and may not be meaningful. The graph compares stockholder returns
against the cumulative total return of the S&P 500 Index and the NAREIT Equity
Index. The NAREIT Equity Index is presently comprised of 166 stock
exchange-listed companies identified as real estate investment trusts ("REITs"),
with a total capitalization of approximately $78 billion.
<TABLE>
<CAPTION>
Measurement Period NAREIT Equity
(Fiscal Year Covered) The Price REIT S&P 500 REIT
<S> <C> <C> <C>
12/31/91 100 100 100
12/31/92 116 108 115
12/31/93 127 118 137
12/31/94 142 120 141
12/31/95 142 165 163
12/31/96 202 203 221
</TABLE>
10
<PAGE> 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with its 1993 offering of Common Stock, the Company acquired
the property management business of its property manager, K&F Commercial
Properties ("K&F"). In August 1993, the two principals of K&F became executive
officers of the Company; Joseph Kornwasser became President, Chief Executive
Officer and a Director of the Company and Jerald Friedman became a Senior Vice
President and Chief Operations Officer. Also concurrent with its 1993 offering,
the Company acquired 100% of the non-voting preferred stock of K&F Development
Company (the "Development Company"), a newly created California corporation that
has property development capabilities. In March 1994, Mr. Friedman resigned his
position at the Company and became Chairman and Chief Executive Officer of the
Development Company. Effective January 1, 1997, the Company acquired the assets
and assumed the liabilities of the Development Company and elected certain of
the officers of the Development Company, including Mr. Friedman, to serve as
officers of the Company. The Company acquired the assets pursuant to a
distribution to the Company as owner of 100% of the non-voting preferred stock
of the Development Company.
During 1996, the Company paid to the Development Company development fees
of approximately $142,000 and leasing commissions of approximately $250,000.
In May 1995, the Development Company formed a joint venture with King
Kullen Grocery Co., Inc. ("King Kullen"), a major Long Island, New York grocery
chain, to develop a power center in the Commack area of Long Island, New York.
The Development Company held approximately an 80% ownership interest in the
joint venture and King Kullen holds the remaining 20% interest. On October 2,
1996, the Company purchased the Development Company's approximate 80% ownership
interest in the joint venture for $250,000.
In January 1996, the Company leased administrative offices from a general
partnership ("General Partnership") affiliated with Messrs. Kornwasser and
Friedman. The Company's lease payments on the office space to such partnership
were approximately $9,459 for that month. The Development Company also paid
approximately $4,054 in lease payments to such partnership in January 1996. On
January 31, 1996, the General Partnership sold the property to an unrelated
party. As negotiated in the sale, the Company and the Development Company
entered into a new five-year lease with the purchaser effective January 1, 1996
which resulted in a slight reduction of the base rent. However, the rental rate
is fixed for the initial five-year term.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
directors, officers and beneficial owners of ten percent or more of the
Company's Common Stock ("Reporting Persons") are required to report to the
Securities and Exchange Commission on a timely basis the initiation of their
status as a Reporting Person and any changes with respect to their beneficial
ownership of the Company's Common Stock. Based solely on its review of such
forms received by it and the written representations of its Reporting Persons,
the Company is unaware of any instances of noncompliance with such filing
requirements during the fiscal year ended December 31, 1996 by its executive
officers, directors and beneficial owners of more than ten percent of the
Company's Common Stock.
OTHER BUSINESS
The Board of Directors is not aware of any matter to be presented for
action at the Annual Meeting other than as set forth in Proposal 1 of this Proxy
Statement. If other matters should properly come before the Annual Meeting or
any postponement or adjournment thereof, however, the persons named in the
accompanying Proxy will vote all Proxies in accordance with their best judgment.
STOCKHOLDER PROPOSALS
In order for stockholder proposals for the annual stockholders' meeting to
be held in 1998 to be eligible for inclusion in the Company's proxy statement
and form of proxy for that meeting, they must be received by the Company at its
principal office at 7979 Ivanhoe Avenue, Suite 524, La Jolla, California 92037
prior to December 8, 1997 and must comply with all legal requirements for
inclusion of such proposals.
11
<PAGE> 14
GENERAL
Financial statements are not made part of this Proxy Statement. However,
financial statements reported upon by Ernst & Young LLP are included in the
Company's Annual Report to Stockholders, enclosed with this Proxy Statement or
previously mailed to stockholders. The Company's Annual Report is not to be
regarded as proxy soliciting material or as a communication by means of which
any solicitation is made.
Ernst & Young LLP audited the Company's financial statements for the year
ended December 31, 1996 and has been selected by the Board of Directors to audit
the Company's financial statements for the year ended December 31, 1997. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting to respond to appropriate questions.
The Company will bear all costs incurred in the solicitation of proxies. In
addition to mailing copies of this material to all stockholders, the Company has
requested banks and brokers to forward copies of such material to persons for
whom they hold stock of the Company and to request authority for execution of
the proxies. The Company will reimburse such banks and brokers for their
reasonable out-of-pocket expenses incurred in connection therewith. Officers and
regular employees of the Company may, without being additionally compensated
therefor, solicit proxies by mail, telephone, telegram or personal contact.
ADDITIONAL COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL
YEAR 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
PROVIDED WITHOUT CHARGE TO ANY STOCKHOLDER WHO REQUESTS IT BY WRITING TO THE
SECRETARY, THE PRICE REIT, INC., 7979 IVANHOE AVENUE, SUITE 524, LA JOLLA, CA
92037. THE EXHIBITS TO THAT REPORT WILL ALSO BE PROVIDED UPON REQUEST AND
PAYMENT OF COSTS OF REPRODUCTION.
It is important that all proxies be forwarded promptly in order that a
quorum may be present at the Annual Meeting.
We respectfully request you to complete, sign, date and return the
accompanying proxy at your earliest convenience in the business reply envelope
enclosed.
By Order of the Board of Directors
/s/ RAYMOND E. PEET
--------------------------
Raymond E. Peet
Chairman
12
<PAGE> 15
PROXY
THE PRICE REIT, INC.
7979 Ivanhoe Ave., Suite 524
La Jolla, CA 92037
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 28, 1997
The undersigned stockholder of The Price REIT, Inc., a Maryland
corporation (the "Company"), hereby appoints Raymond E. Peet and George M.
Jezek (the "Proxies"), or either of them, each with the power of substitution,
as proxies to the undersigned, to attend the Annual Meeting of Stockholders of
the Company, to be held on Wednesday, May 28, 1997, and at any adjournment or
postponement thereof, to cast on behalf of the undersigned all votes that the
undersigned is entitled to cast at such meeting and otherwise to represent the
undersigned at the meeting with all powers possessed by the undersigned if
personally present at the meeting. The undersigned hereby acknowledges receipt
of the Notice of the Annual Meeting of Stockholders and of the accompanying
Proxy Statement and revokes any proxy heretofore given with respect to such
meeting.
Election of seven directors (or if any nominee is not available for
election, such substitute as the Board of Directors or the proxy holders may
designate). Nominees: RAYMOND E. PEET, JOSEPH K. KORNWASSER, GEORGE M. JEZEK,
ROY P. DRACHMAN, WILLIAM D. JONES, WALTER WEISMAN AND KEENE WOLCOTT.
SEE REVERSE SIDE: If you wish to vote in accordance with the Board of
Directors' recommendations, just sign and date on the reverse side. You need
not mark any boxes.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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- FOLD AND DETACH HERE -
<PAGE> 16
Please mark ___
your votes as
indicated in X
this example. ___
The Board of Directors recommends a vote FOR the election of Directors
FOR WITHHELD
Election of the nominees for Director listed on --- ---
the REVERSE:
--- ---
FOR, except vote withheld from the following
nominee(s):
- --------------------------------------------
- --------------------------------------------
MARK HERE --- Address _____________________________________
FOR ADDRESS
CHANGE AND --- _____________________________________________
NOTE AT RIGHT
_____________________________________________
Shares represented by this proxy will be voted as directed by the
stockholder. If no such directions are indicated, the Proxies will
vote FOR the election of all directors. In their discretion, the
Proxies are authorized to vote upon such other business as may
properly come before the Annual Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
Signature(s) ________________________________________________ Date ___________
Please sign exactly as your name appears herein. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
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- FOLD AND DETACH HERE -
