<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
KENNEDY-WILSON, 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
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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.
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<PAGE> 2
KENNEDY-WILSON, INC.
530 WILSHIRE BOULEVARD, SUITE 101
SANTA MONICA, CALIFORNIA 90401
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 28, 1997
---------------
The Annual Meeting of Stockholders of Kennedy-Wilson, Inc., a Delaware
corporation ("Kennedy-Wilson"), will be held at The Biltmore Hotel, 506 S. Grand
(between 5th & 6th), Los Angeles, California on Monday, April 28, 1997 at 9:00
a.m., Pacific Daylight Time, for the following purposes:
1. To elect two (2) Class II directors to serve until the 2000 Annual
Meeting of Stockholders and until their successors are elected and qualified;
2. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, March
7, 1997 as the record date for determining stockholders of Kennedy-Wilson
entitled to notice of and to vote at the meeting.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO INSURE
YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE AND PROMPTLY MAIL YOUR PROXY
IN THE ENVELOPE PROVIDED. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON,
SHOULD YOU SO DESIRE.
By Order of the Board of Directors
FREEMAN A. LYLE
Executive Vice President
Chief Financial Officer
and Secretary
Santa Monica, California
March 28, 1997
<PAGE> 3
KENNEDY-WILSON, INC.
530 WILSHIRE BOULEVARD, SUITE 101
SANTA MONICA, CALIFORNIA 90401
_____________ MARCH 28, 1997
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1997
_____________
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Kennedy-Wilson, Inc., a Delaware
corporation ("Kennedy-Wilson" or the "Company"), for use at the Annual Meeting
of Stockholders of the Company (the "Meeting") to be held at The Biltmore Hotel,
506 S. Grand, Los Angeles, California on Monday, April 28, 1997 at 9:00 a.m.,
Pacific Daylight Time, and all adjournments and postponements thereof. This
Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on or about March 28, 1997.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting of Stockholders, Proxy Statement and form of proxy and the solicitation
of proxies will be paid by Kennedy-Wilson. Proxies may be solicited by
directors, officers and other regular employees of Kennedy-Wilson, none of whom
will receive any additional compensation for such solicitation. Proxies may be
solicited in person or by telephone or telegraph. Kennedy-Wilson will pay
brokers or other persons holding stock in their names or the names of their
nominees for the expenses of forwarding soliciting material to their principals.
VOTING
The close of business on March 7, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting. On March 7, 1997 there were outstanding 1,146,272 shares of
Kennedy-Wilson Common Stock, $.01 par value ("Common Stock"). A majority of the
shares entitled to vote, present in person or represented by proxy, will
constitute a quorum at the Meeting. The affirmative vote of the majority of
shares present in person or represented by proxy at the Meeting and entitled to
vote on the subject matter will be the act of the stockholders, except with
respect to the election of two directors as to which the two nominees receiving
the highest number of votes will be elected. Abstentions and broker non-votes
(which occur if a broker or other nominee does not have discretionary authority
and has not received voting instructions from the beneficial owners with respect
to the particular item) will be counted for the purposes of determining the
presence or absence of a quorum for the transaction of business. For the
purposes of determining whether the directors have been elected, abstentions and
broker non-votes will have no effect. As to all other matters that may come
before the Meeting, abstentions will have the effect of a negative vote. Broker
non-votes are not taken into account for the purpose of determining whether a
proposal has been approved by the requisite stockholder vote.
Proxies will be voted in accordance with the instructions thereon. In
the absence of such instructions, proxies will be voted for management's
nominees for election as directors. As of the date hereof, the Board of
Directors of Kennedy-Wilson was not aware of any matters which would be
presented for action at the Annual Meeting other than those specifically
identified in the Notice of Annual Meeting accompanying this Proxy Statement.
However, should any other matters come before the meeting, proxies will be voted
in the discretion of the persons
<PAGE> 4
named as proxies thereon as to any other business that may properly come before
the Meeting or any adjournment(s) thereof.
Any stockholder has the power to revoke his or her proxy at any time
before it is voted at the Meeting by submitting written notice of revocation to
the Secretary of Kennedy-Wilson, or by filing a duly executed proxy bearing a
later date. A proxy will not be voted if the stockholder who executed it is
present at the Meeting and elects to vote the shares represented thereby in
person.
ELECTION OF DIRECTORS
The Company has a three-tiered, classified Board of Directors with
staggered terms of office. The term of Class II directors expires at the 1997
Annual Meeting, the term of Class III directors will expire at the 1998 Annual
Meeting and the term of Class I directors expires at the 1999 Annual Meeting.
The nominees of management for election as Class II directors (all of whom are
presently directors) are set forth below along with certain information
regarding these nominees. See "Management." Should any nominee become
unavailable to serve as a director before the election (which event is not
anticipated), the proxies may be voted for a substitute nominee selected by the
Board of Directors or the authorized number of directors may be reduced. If for
any reason the authorized number of directors is reduced, the proxies will be
voted, in the absence of instructions to the contrary, for the election of the
remaining nominees named in this Proxy Statement. To the best of
Kennedy-Wilson's knowledge, all nominees are and will be available to serve.
<TABLE>
<CAPTION>
NAME AGE PRESENT TITLE WITH COMPANY
---- --- --------------------------
<S> <C> <C>
Richard A. Mandel 34 Managing Director, President Commercial Brokerage
Division and Director
Donald F. Kennedy 66 Co-Founder, Auctioneer, and Director
</TABLE>
Messrs. Mandel and Kennedy have been directors of the Company since 1995 and
1990, respectively. Neither of the proposed nominees is related by blood or
marriage to one another or to an executive officer of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
NOMINEES NAMED ABOVE.
3
<PAGE> 5
MANAGEMENT
The Directors (including the nominees for reelection) and the executive
officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE PRESENT TITLE
---- --- -------------
<S> <C> <C>
William J. McMorrow 49 Chairman of the Board of Directors,
Chief Executive Officer and Director
(Class III)
Freeman A. Lyle 43 Executive Vice President, Chief Financial Officer
and Secretary
Lewis A. Halpert 45 Executive Managing Director, President K-W Properties
and Director (Class I)
Richard Mandel 34 Managing Director, President Commercial Brokerage
Division and Director (Class II)
Goodwin Gaw 28 Managing Director and Director (Class I)
Donald F. Kennedy 66 Co-Founder, Auctioneer and Director (Class II)
William H. Elliott 64 Director (Class III), and Chairman of the Audit
Committee
Donald B. Prell 72 Director (Class III)
Kent Y. Mouton 43 Director (Class I), and Chairman of the Compensation
Committee
</TABLE>
William J. McMorrow has served as Chairman of the Board of Directors,
Chief Executive Officer and Director of the Company and its predecessor since
1987.
Freeman A. Lyle has served as Executive Vice President, Chief Financial
Officer and Secretary since joining the Company in April, 1996. Previously Mr.
Lyle was President of Lyle Realty Group Inc., a real estate investment brokerage
and consulting firm, since January, 1994. From June, 1981 to December, 1993, Mr.
Lyle was an executive with R & B Realty Group, an international investment and
management company and served as Vice President-Finance and Vice President-Asset
Management.
Lewis A. Halpert has served as Executive Managing Director since
January 1997, as Managing Director and President of K-W Properties, Inc. since
March 1992 and as a Director since joining the Company in December, 1987. From
December, 1987 to March, 1992, Mr. Halpert was an Executive Vice President of
the Company.
Richard A. Mandel has served as a Managing Director since October,
1993, and as a Director since December, 1995. In February, 1997, he was promoted
to President of the Commercial Brokerage Division. Previously he served as
Managing Director of Kennedy-Wilson Hong Kong Ltd., and Kennedy-Wilson Japan
K.K. since October, 1993. Prior to joining Kennedy-Wilson, Mr. Mandel was a
partner of Jones Lang Wooten USA, a commercial real estate firm, since 1990.
Goodwin Gaw has served as a Managing Director since February, 1996 and
as a Director since July, 1996.
4
<PAGE> 6
From 1992 to 1995 he was the General Manager of Pioneer Estates in Hong Kong,
directing all aspects of real estate investment in the United States. Mr. Gaw is
also President of Fortune Far East, Ltd., a Hong Kong based investment company.
Donald F. Kennedy co-founded the Company's predecessor in 1977 and has
served as a Director during the period 1979 to November, 1989, and since
December, 1990. He has served as the Company's Auctioneer since 1977 and
currently holds an auctioneer's license in six states.
William H. Elliott has been a Director of the Company since March,
1992. Since March, 1995, Mr. Elliott has been engaged primarily as a principal
in WHE Associates, Inc., a real estate and securities investment company. Mr.
Elliott served as Angeles Corporation's Chief Executive Officer for more than 10
years until February, 1993 and its Chairman until March, 1993. Angeles
Corporation, a diversified real estate and financial services company, filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in May, 1993.
Donald B. Prell has been a Director of the Company since March, 1992.
From 1980 to 1990, Mr. Prell was employed by Imperial Bancorp, a bank holding
company, in various positions, most recently as Chief Credit Officer of Imperial
Bancorp and President of Imperial International Bank.
Kent Y. Mouton has been a Director of the Company since December, 1995.
Mr. Mouton has been a partner in the law firm of Kulik, Gottesman & Mouton, LLP
in Los Angeles, California since 1991.
None of the Directors or executive officers of the Company are related
to one another by blood or marriage.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company maintains an Audit Committee and a Compensation Committee.
The Audit Committee is composed of William H. Elliott (Chairman),
Donald B. Prell and Kent Y. Mouton. The Audit Committee held one meeting in
1996. The Audit Committee is responsible for reviewing the Company's financial
policies and objectives, monitoring the Company's financial condition and its
requirements for funds in conjunction with management, and meeting with the
Company's independent auditors to understand their audit report and any
recommendations.
The Compensation Committee is composed of Kent Y. Mouton (Chairman),
Donald B. Prell and William H. Elliott. The Compensation Committee held five
meetings in 1996. The Compensation Committee establishes the general
compensation policies of the Company and determines the compensation levels for
the CEO and other Company officers. The Compensation Committee also has
oversight responsibility for administering the Company's 1992 Incentive and
Nonstatutory Stock Option Plan.
In 1996, the Board of Directors held eight meetings. Each director
attended at least 75 percent of the meetings of the Board of Directors and the
committees of the Board on which the director served in 1996.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who beneficially own more than
10% of the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Such directors,
officers and stockholders must furnish the Company with copies of all Section
16(a) reports that they file with the SEC.
5
<PAGE> 7
Based solely on a review of copies of such reports and written
representations from the reporting persons, the Company believes that, during
the period from January 1, 1996 through December 31, 1996, its executive
officers, directors and greater than 10% stockholders have filed on a timely
basis all reports required under Section 16(a) except that Goodwin Gaw, Managing
Director and a director filed a late Initial Statement of Beneficial Ownership
on Form 3 and Richard Mandel, Managing Director and a director, and William H.
Elliott, a director, each filed a late Statement of Changes of Beneficial
Ownership on Form 4 with respect to a stock purchase and a stock sale,
respectively.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued
by the Company to the Chief Executive Officer and the four most highly
compensated executive officers of the Company who served in such capacities
during fiscal 1996 (the "Named Executive Officers") for services rendered during
each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
- ---------------------------------------------------------------------------------------------------------
NAME AND POSITION YEAR SALARY BONUS OTHER OPTIONS/ ALL OTHER
- ----------------- ---- ------ ----- ----- -------- ---------
ANNUAL SAR (# OF COMPENSATION
------ ---------- ------------
COMPENSATION(1) SHARES)
--------------- -------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. McMorrow 1996 300,000 450,000 0 0 0
Chairman of the Board
Chief Executive Officer 1995 400,000 0 0 0 0
1994 400,000 260,000 0 0 0
- ---------------------------------------------------------------------------------------------------------
Lewis Halpert 1996 125,000 325,000 0 0 0
Managing Director 1995 200,000 0 0 0 0
1994 205,000 0 0 0 0
- ---------------------------------------------------------------------------------------------------------
Richard Mandel 1996 188,000 100,000 89,000 10,000 0
Managing Director
1995 175,000 50,000 93,000 10,000 0
1994 150,000 0 73,000 0 0
- ---------------------------------------------------------------------------------------------------------
Goodwin Gaw 1996 137,000 0 0 5,000 0
Managing Director (2)
- ---------------------------------------------------------------------------------------------------------
Freeman A. Lyle 1996 94,000 25,000 0 5,000 0
Executive V.P.,
Chief Financial Officer
and Secretary (3)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------
(1) Excludes compensation in the form of other personal benefits which, for
each of the Named Executive Officers, other than Mr. Mandel, did not
exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for each year. Mr. Mandel received a foreign cost of
living and housing allowance while based in Hong Kong and then Tokyo.
6
<PAGE> 8
(2) Mr. Gaw joined the Company in February, 1996.
(3) Mr. Lyle joined the Company in April, 1996.
EMPLOYMENT AGREEMENTS
Each of the Named Executive Officers has entered into an employment
contract for 1997 with the Company. Mr. McMorrow's contract, as amended,
provides for a base salary of $300,000 per annum, plus a bonus advance of
$100,000, payable against his annual incentive bonus of 0% to 20% of year end
profits. Mr. Halpert's contract provides for a base salary of $150,000 per annum
plus an advance of $175,000, payable against an annual incentive bonus of 0% to
25% of the net profit of K-W Properties. Mr. Mandel's contract provides for a
base salary of $225,000 plus an incentive bonus of 0% to 20% of the profits of
the Commercial Brokerage Division. Mr. Gaw's contract provides for a base salary
of $150,000 plus an incentive bonus for additional service fees earned by the
Company. Mr. Lyle's contract, as amended, provides for a base salary of $150,000
plus a performance bonus of 0% to 40% of base salary, plus an incentive bonus
for debt and equity capital formation.
In addition to compensation as noted above, each contract sets forth
the employee services provided to the Company; benefits and expense
reimbursements, if applicable, provided to the employee; a non-competition
covenant and confidentiality agreement; and terms for termination. None of the
contracts provide for any severance, change-in-control or related payments upon
termination of the agreement, except for Mr. McMorrow's. Mr. McMorrow's
employment agreement provides for a severance payment equal to one year's base
salary in the event his agreement is not renewed in 1998.
STOCK OPTIONS
The following table provides information with respect to stock option
grants made to each of the Named Executive Officers in fiscal 1996.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of % of Total Assumed Annual Rates of Stock
Securities Options Exercise Price Appreciation for Option
Underlying Granted to or Base Term
Options Employees Price Expiration ----
Granted (#) in FY ($/sh) Date 5% ($) 10% ($)
----------- ----- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
NAME
W.McMorrow --- --- --- --- --- ---
L. Halpert --- --- --- --- --- ---
R. Mandel 10,000 33.33 5.375 01/02/01 14,851 32,814
G. Gaw 5,000 16.67 5.125 02/01/01 7,080 15,644
F. Lyle 5,000 16.67 5.125 04/01/01 7,080 15,644
</TABLE>
The following table furnishes information with respect to stock options
held by the Named Executive
7
<PAGE> 9
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End
------------------------------- -----------------------------
NAME Shares Acquired Value
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------- -------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
William J. McMorrow ----- ----- ----- ----- ----- -----
Lewis Halpert ----- ----- ----- ----- ----- -----
R. Mandel ----- ----- 3,333 16,667 13,332 72,918
Goodwin Gaw ----- ----- ----- 5,000 ----- 23,125
Freeman Lyle ----- ----- ----- 5,000 ----- 23,125
</TABLE>
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives a
quarterly retainer of $4,000 plus a fee of $1,000 for each board meeting
attended and $500 for each Board Committee meeting attended. In addition, the
Company maintains a non-Employee Director Stock Option Plan, which is designed
to provide non-employee directors with the opportunity to obtain equity
ownership interest in the Company through the exercise of stock options. Company
executive officers who also are directors receive no additional compensation for
services as members of the Board of Directors or any Board Committee. See also
"Certain Transactions."
COMPENSATION COMMITTEE REPORT
The Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such act.
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company, determines the compensation levels
for the Chief Executive Officer ("CEO") and other senior Company officers, and
administers and/or provides oversight on all short-term (annual) incentive
plans, all long-term incentive plans, including the Incentive and Non-Statutory
Stock Option Plan, and approves any grants of stock options, stock and/or stock
warrants to Company officers.
The Compensation Committee is comprised of non-employee directors who
have no interlocking relationships as defined by the Securities and Exchange
Commission. The Committee has available to it an external compensation
consultant and access to independent compensation data.
The Company applies a consistent philosophy to compensation for all
employees, including the officers. This philosophy is based upon the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common, defined objectives. The Company strives to
attain these objectives
8
<PAGE> 10
through team work that is focused upon meeting the expectations of customers and
stockholders.
COMPENSATION POLICY
The Company's compensation policy is to ensure that a substantial
portion of potential aggregate annual compensation be contingent upon the
performance of the Company. The goals of the compensation programs are to align
compensation with performance and to enable the Company to attract, retain and
reward personnel who contribute to the success of the Company. The Company's
compensation program for officers is based on the same guidelines that apply to
all Company employees.
The Company is committed to providing sales commission and/or incentive
opportunities that, together with base salaries (where appropriate), provide for
competitive and equitable total cash compensation opportunities. Aggregate base
salaries, where appropriate, are set relative to average market pay practices,
while target incentives opportunities are set somewhat above average market pay
practices. Additionally, future base salary increases and commission or
incentive pay opportunities are directly linked to the achievement of key
financial objectives.
The variable compensation plans focus respective employees on the
immediate objectives of the business and their job; encourage employees to work
together as a team to achieve Company success; and, recognize and reward the
sustained contribution of outstanding performers within the Company.
COMPONENTS OF COMPENSATION
The Company has compensation programs that include both cash and equity
components. The Compensation Committee has established base salary, short and
long-term incentive compensation mix targets for each officer and for all
employees, where applicable, of the Company. The compensation mix targets,
define the desired percentage for each component of total compensation.
With respect to cash compensation for officers, the Company sets base
salaries and target incentive opportunities for each officer by reviewing the
cash compensation provided to comparable positions and through assessing the
internal equity of cash compensation opportunities based on position
responsibilities, the performance of each incumbent, and overall levels of
contribution to the Company. When considering competitive pay practices, the
Committee reviews compensation levels in both the real estate industry and
general industry at firms comparable in size and revenue to the Company. For
1997, target incentive compensation opportunities will be funded as stipulated
levels of net profit are achieved. Some officers with defined divisional
business development responsibilities also receive a temporary salary draw, with
additional opportunity to earn a proportionate share of their responsible net
profits or revenue.
With regard to equity-based compensation for officers, the Company
considered and granted stock options for the reported year, excluding those
officers who already have a substantial equity stake in the Company. Stock
option grants were based on relative position responsibilities and/or historical
and expected contribution to the Company, including grants to recruit officers
to join the Company.
9
<PAGE> 11
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. McMorrow has been CEO of the Company and its predecessor since
1987. Based on a thorough review, it was determined that Mr. McMorrow's base
salary was within a competitive range of pay, as compared with companies of
similar size and scope as Kennedy-Wilson. Incentive compensation has been linked
to Company performance. In determining Mr. McMorrow's incentive compensation for
1996, the Compensation Committee considered various factors particularly Mr.
McMorrow's guidance in the Company's acquisition and disposition of real estate.
For 1997, the Compensation Committee has determined Mr. McMorrow's compensation
will be based upon a potential target compensation mix whereby approximately,
one third of his total compensation will be in the form of base salary, derived
in part from competitive pay practices, and approximately two-thirds of his
compensation will be in the form of incentives, based upon attainment of net
profits and other business factors.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
KENT Y. MOUTON, CHAIRMAN
WILLIAM H. ELLIOTT
DONALD B. PRELL
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors was,
during the fiscal year, or formerly, an officer or employee of the Company or
any of its subsidiaries.
10
<PAGE> 12
PERFORMANCE GRAPH (1)(2)
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG KENNEDY-WILSON, INC., THE NASDAQ STOCK MARKET INDEX
AND A PEER GROUP INDEX (3)
* At December 31st.
(1) The stock performance graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
acts.
(2) Assumes $100 invested on August 7, 1992, the Initial Public Offering date,
in Kennedy-Wilson, Inc. Common Stock, or July 31, 1992 for the NASDAQ Market
Index and a Peer Group Index, and assumes that all dividends were reinvested.
Stockholder returns over the indicated period are not necessarily indicative of
future returns.
(3) Peer Group Index includes: Catalina Marketing Corp.; Grubb & Ellis Co.,
Insurance Auto Auctions, Rouse Co., Sotheby's Holding Corp.; Standard Pacific
Corp.; and Del Webb Corp. The peer group was selected based on similar companies
as determined by NASDAQ industry grouping.
11
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables sets forth as of March 7, 1997 the total number of
shares beneficially owned and the percentage of the outstanding shares so owned
by (i) each beneficial owner known to the Company of more than five percent (5%)
of the outstanding shares of Common Stock, (ii) each director, (iii) the
executive officers, and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED (*) CLASS (**)
---------------------- ----------
<S> <C> <C>
William J. McMorrow 249,345(1) 21.8%
Lewis A. Halpert 239,580(2) 20.9%
Richard A. Mandel 8,857(3) ____
Goodwin Gaw 100,816(4) 8.8%
Freeman A. Lyle 1,666(5) ____
Donald F. Kennedy 2,166(6) ____
William H. Elliott 2,600(7) ____
Donald B. Prell 2,700(8) ____
Kent Y. Mouton 2,600(9) ____
All executive officers and
directors as a group
(9 persons) 610,330 52.3%
Kenneth V. Stevens 189,580(10) 16.5%
Fortune Far East Ltd. 99,150(11) 8.6%
FMR Corp. 93,500(12) 8.2%
</TABLE>
- --------------------------
(*) Except as otherwise indicated in the following notes, such person or
persons are the beneficial owner of such shares with sole voting and
investment power over such shares.
(**) Percentage information is omitted for those individuals whose holdings
represent less than one percent of the outstanding Common Stock.
(1) Includes approximately 775 shares held for Mr. McMorrow's account as
well as approximately 51 shares held for the account of Mr. McMorrow's
spouse in the Company's 401(k) Profit Sharing Plan and trust and 390
12
<PAGE> 14
shares which may be acquired by Mr. McMorrow's spouse pursuant to exercise of
outstanding options that are presently exercisable. Mr. McMorrow expressly
disclaims beneficial ownership of such shares.
(2) Includes approximately 252 shares held for Mr. Halpert's account in the
Company's 401(k) Profit Sharing Plan and Trust.
(3) Includes approximately 78 shares held for Mr. Mandel's account in the
Company's 401(k) Profit Sharing Plan and Trust. Also includes beneficial
ownership of 6,666 shares which may be acquired pursuant to exercise of
outstanding stock options that are presently exercisable.
(4) Includes 99,150 shares owned by Fortune Far East, Ltd. for which corporation
Mr. Gaw serves as President and a Director, and thereby shares voting and
investment power. Also includes beneficial ownership of 1,666 shares which may
be acquired pursuant to exercise of outstanding stock options that are presently
exercisable.
(5) Beneficial ownership of 1,666 shares may be acquired pursuant to exercise of
outstanding stock options that are exercisable within 60 days.
(6) Includes beneficial ownership of 1,666 shares which may be acquired pursuant
to exercise of outstanding stock options that are presently exercisable.
(7) Beneficial ownership of 2,600 shares may be acquired pursuant to exercise of
outstanding stock options that are presently exercisable.
(8) Beneficial ownership of 2,600 shares may be acquired pursuant to exercise of
outstanding stock options that are presently exercisable.
(9) Includes beneficial ownership of 2,500 shares which may be acquired pursuant
to exercise of outstanding stock options that are presently exercisable and
includes 100 shares which may be acquired pursuant to exercise of outstanding
stock options that are exercisable within 60 days.
(10) Includes approximately 252 shares held for Mr. Stevens' account in the
Company's 401(k) Profit Sharing Plan and Trust. The Company has an option to
purchase 25,000 shares from Mr. Stevens at $6.50 per share which expires on May
20, 1997. The Company also has the right of first refusal to acquire the
remainder of Mr. Stevens' shares, and management has the right to vote all of
his shares.
(11) Based solely on information contained in Schedule 13D filed with the
Securities and Exchange Commission in April, 1996. The address of such entity,
as indicated in the Schedule 13D, is 7000 Hollywood Boulevard, Los Angeles,
California 90028. Goodwin Gaw, an executive officer and director of the Company
is also President of Fortune Far East Ltd.
(12) Based solely on information contained in Schedule 13G filed with the
Securities and Exchange Commission in February 1996. The address of such entity,
as indicated in the Schedule 13G is 82 Devonshire Street, Boston, Massachusetts
02109-3614.
The address of each 5% stockholder, other than Fortune Far East Ltd.,
and FMR Corp. is in care of the Company, 530 Wilshire Boulevard, Suite 101,
Santa Monica, California 90401.
13
<PAGE> 15
CERTAIN TRANSACTIONS
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
The Company has in the past been retained, and anticipates that from
time to time in the future it will be retained, to perform auction or brokerage
services for entities controlled by certain of its executive officers and/or
directors. The Company believes that the terms of such transactions have been
substantially comparable to those that would have been obtainable in similar
transactions with unaffiliated parties. For the year ended December 31, 1996,
there were no such transactions.
Zachary Penn & Associates ("Zachary Penn"), a sole proprietorship owned
by the spouse of Mr. Stevens, a greater than 5% stockholder and former executive
officer and director of the Company, has from time to time performed certain
graphic design services in connection with the Company's sales catalogues and
brochures. Payments to Zachary Penn totaled approximately $17,000 during 1996.
The Company uses the services of Zachary Penn only to the extent that such
services are competitive with those that can be obtained from independent
sources.
OTHER TRANSACTIONS
In November 1996, the Company entered into two joint ventures with
related parties who are affiliated with Goodwin Gaw, one of the Company's
Managing Directors, a member of the Board of Directors, and a significant
stockholder. The Company acquired a 25% interest for $2,570,000 in a joint
venture ("Downtown Properties, LLC"), that purchased two commercial properties
with 515,000 square feet of rental space located in downtown Los Angeles for
$28.5 million. The Company also acquired a 25% interest for $440,000 in a joint
venture ("Ski Monarch, LLC") that purchased a ski resort and hotel located near
Crested Butte, Colorado for $7.0 million.
In 1996, the firm of Kulik, Gottesman & Mouton was paid a total of
$277,000 in attorney fees. In addition, Kent Y. Mouton, a partner in the firm
and a member of the Company's Board of directors, was paid a total of $25,000 in
directors' fees for 1996.
In August 1995, the Company borrowed $250,000 from William J. McMorrow,
Lewis A. Halpert and Kenneth V. Stevens (the "K-W Principals"), all of whom were
then executive officers and directors of the Company. Proceeds from such loan
were used to purchase, Kiowa Gardens Condominiums, a 9-unit condominium project
in Brentwood, California for $2,000,000. The note payable required the Company
to pay a participation of up to 50% of the project's profits and related third
party loan fees and costs. This note payable was repaid in 1996 from proceeds
from sales of condominium units after the required payments on the construction
loan. This borrowing was reviewed and approved by disinterested members of the
Company's Board of Directors. A profit participation of $209,000 was paid under
this agreement in 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee,
reappointed the firm of Deloitte & Touche LLP ("Deloitte & Touche") to serve as
the Company's independent certified public accountants for 1996. Representatives
of Deloitte & Touche are expected to be present at the Annual Meeting of
Stockholders to make a statement should they desire to do so and will be
available to respond to appropriate questions that may be asked by stockholders.
14
<PAGE> 16
ANNUAL REPORT
The Company's 1996 Annual Report to Stockholders has been mailed to all
stockholders. Any stockholder who has not received a copy may obtain one by
writing to the Company at 530 Wilshire Blvd., Suite 101, Santa Monica,
California 90401, Attention: Investor Relations Department.
STOCKHOLDER PROPOSALS
FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Any eligible stockholder of Kennedy-Wilson wishing to have a proposal
considered for inclusion in Kennedy-Wilson's 1998 proxy solicitation materials
must set forth such proposal in writing and file it with the Secretary of
Kennedy-Wilson on or before November 26, 1997. The Board of Directors of
Kennedy-Wilson will review new proposals received from eligible stockholders by
that date and will determine whether such proposals will be included in its 1998
proxy solicitation materials. Generally, a stockholder is eligible to present
proposals if he or she has been for at least one year the record of beneficial
owner of at least one percent or $1,000 in market value of securities entitled
to be voted at the 1997 Annual Meeting of Stockholders and he or she continues
to own such securities through the date on which the meeting is held.
OTHER MATTERS
Management of the Company does not intend to bring any other matters
before the meeting and knows of no other matters which are likely to come before
the meeting. In the event any other matters property come before the meeting,
the persons named in the accompanying Proxy will vote the shares represented by
such Proxy in accordance with their best judgment on such matters.
YOU ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING RETURN ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU
PRESENTLY PLAN TO ATTEND THE MEETING IN PERSON.
By Order of the Board of Directors,
FREEMAN A. LYLE
Executive Vice President
Chief Financial Officer
and Secretary
Santa Monica, California
March 28, 1997
15
<PAGE> 17
PROXY
KENNEDY-WILSON, INC.
530 Wilshire Boulevard, Suite 101
Santa Monica, California 90401
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
KENNEDY-WILSON, INC.
The undersigned hereby appoints William J. McMorrow and Freeman A. Lyle,
and each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and to vote as designated below, all
the shares of Common Stock of Kennedy-Wilson, Inc. held of record by the
undersigned on March 7, 1997 at the Annual Meeting of Stockholders to be held on
April 28, 1997 at the Biltmore Hotel, 506 S. Grand (between 5th and 6th
Streets), Los Angeles, California, and any postponements or adjournments
thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING
ENVELOPE. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
INDICATED. HOWEVER, IF NO INSTRUCTIONS ARE GIVEN, THE PROXIES WILL VOTE THE
SHARES IN FAVOR OF THE NOMINEES FOR DIRECTOR AND IN THEIR DISCRETION ON MATTERS
DESCRIBED IN ITEM 2.
(continued on reverse side)
FOLD AND DETACH HERE
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C>
Please mark
your votes as
indicated in / X /
this example.
FOR
ALL NOMINEES WITHHOLD
LISTED BELOW AUTHORITY
(EXCEPT AS TO VOTE FOR
MARKED TO THE ALL NOMINEES
CONTRARY BELOW). LISTED BELOW.
1. ELECTION OF DIRECTORS 2. In their discretion, the Proxies are authorized
INSTRUCTION: TO WITHHOLD AUTHORITY to vote upon such other business as may properly
TO VOTE FOR ANY INDIVIDUAL NOMINEE, / / / / come before such meeting and any and all post-
STRIKE A LINE THROUGH THE NOMINEE'S ponements or adjournments thereof.
NAME IN THE LIST BELOW. YES NO
Do you plan to attend the meeting? / / / /
Nominees: Richard Mandel David F. Kennedy
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
____ THIS PROXY when properly executed will be
| voted in the manner directed herein by the
| undersigned shareholder. If no direction
is made, this proxy will be voted for the
nominees listed above and in their discretion
on matters described in Item 2.
Signature(s) Dated: , 1997
-------------------------------------------------------------------------------------- -------------------
Please sign exactly as your name appears on the stock certificate(s). When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by the president or other authorized officer. If a partnership, please sign in the partnership's
name by an authorized person.
FOLD AND DETACH HERE
</TABLE>
