<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
the Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Kennedy-Wilson, Inc.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of shares to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing fee for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
KENNEDY-WILSON, INC.
9601 Wilshire Boulevard
Suite 220
Beverly Hills, California 90210-5205
-----------------------
NOTICE OF ANNUAL MEETING
To be Held on June 15, 2000
-----------------------
We invite you to attend the Annual Meeting of Kennedy-Wilson, Inc., a
Delaware corporation, to be held at the Hotel Intercontinental Los Angeles,
located at 251 South Olive Street, Los Angeles, California 90012, in the Olvera
Room on June 15, 2000 at 9:00 a.m. Pacific Time, and at any adjournments
thereof, for the following purposes:
1. To elect two (2) directors to serve on our board of directors until
our 2002 Annual Meeting or such later time as their successors may be
elected and are qualified.
2. To transact such other business as may properly come before the
meeting.
Our Board of Directors has fixed the close of business on April 25, 2000 as
the record date for determining the Stockholders entitled to notice of the
meeting, as well as for determining the Stockholders entitled to vote at the
meeting.
It is important that your shares be represented whether or not you are able
to attend in person. We urge you to read the accompanying Proxy Statement and
specify your choices on the matters presented by filling in the appropriate
boxes on the enclosed Proxy Card and returning it promptly. If you attend the
meeting and prefer to vote in person, you may do so even if you have returned a
completed Proxy Card. You may also revoke a proxy at any time before it is
exercised by following the directions in the Proxy Statement.
Thank you for your continued support and interest in Kennedy-Wilson, Inc.
KENNEDY-WILSON, INC.
/s/ FREEMAN A. LYLE
Executive Vice President,
Chief Financial Officer and Secretary
Beverly Hills, California
Tuesday, May 2, 2000
<PAGE> 3
KENNEDY-WILSON, INC.
9601 Wilshire Boulevard
Suite 220
Beverly Hills, California 90210-5205
----------------------------
PROXY STATEMENT
Annual Meeting
June 15, 2000
----------------------------
The Board of Directors (the "Board") of Kennedy-Wilson, Inc., a Delaware
corporation (the "Company"), is soliciting proxies for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Hotel Intercontinental
Los Angeles, located at 251 South Olive Street, Los Angeles, California 90012,
in the Olvera Room on June 15, 2000 at 9:00 a.m. Pacific Time, and at any
adjournments thereof. On or about May 2, 2000, the Company began sending the
attached Notice of Annual Meeting, this Proxy Statement, and the enclosed Proxy
Card to all Stockholders of record entitled to vote.
VOTING
The purpose of the Annual Meeting is to elect two directors and to transact
any other business that may properly be presented. THE BOARD RECOMMENDS THAT YOU
AND YOUR FELLOW STOCKHOLDERS VOTE "FOR" THE NOMINEES FOR DIRECTOR SELECTED BY
THE BOARD. The enclosed Proxy Card represents the shares that you are eligible
to vote at the meeting. Shares represented by a properly executed and returned
proxy will be voted at the meeting in accordance with the directions noted
thereon or, if no directions are indicated, they will be voted in favor of the
nominees for director recommended by the Board and at the discretion of the
proxies on any proposals acted upon. A Stockholder giving a proxy has the power
to revoke it by attending the meeting and electing to vote in person, or by
filing with the Secretary of the Company, prior to the meeting, a written
revocation or a duly executed proxy bearing a later date.
WHO CAN VOTE
Stockholders of record at the close of business on April 25, 2000 (the
"Record Date") are eligible to vote at the Annual Meeting. The only outstanding
class of stock of the Company is its common stock, par value $0.01 per share
("Common Stock"). On the Record Date, there were 9,100,162 shares of Common
Stock issued and outstanding.
<PAGE> 4
VOTING RIGHTS OF COMMON STOCK
Each holder of Common Stock (or her proxy) shall be entitled to one vote
per share of Common Stock held as of the Record Date for each item voted on at
the Annual Meeting.
HOW TO VOTE
You can vote on matters that come before the meeting in one of two ways:
o You can come to the Annual Meeting and vote in person; or
o You can vote by filling out, signing and returning the enclosed Proxy
Card prior to the date of the Annual Meeting. If you do so, the
individuals named on the card as proxies (the "Appointees") will vote
your shares as directed in the Proxy Card.
IF YOU SIGN AND RETURN THE PROXY CARD BUT DO NOT MAKE SPECIFIC CHOICES, THE
APPOINTEES WILL VOTE YOUR SHARES "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR
RECOMMENDED BY THE BOARD AND LISTED ON THE PROXY CARD. If any other matters are
presented for action at the meeting, the Appointees will vote your shares
according to their best judgment. At the time this Proxy Statement was printed,
the Company knew of no matters to be voted on at the Annual Meeting other than
those discussed in this Proxy Statement.
William McMorrow and Freeman Lyle have agreed to represent Stockholders
submitting properly executed Proxy Cards as the Appointees and to vote for the
election of the nominees listed herein, unless otherwise directed by the
authority granted or withheld on the Proxy Cards. Mr. McMorrow is the Chairman
of the Board of Directors and Chief Executive Officer of the Company and Mr.
Lyle is Executive Vice President, Chief Financial Officer and Secretary of the
Company.
You may revoke your proxy after you have signed and returned it at any time
before the proxy is voted at the meeting. There are three ways to revoke your
proxy:
o You may complete another Proxy Card with a later date and return it
prior to the date of the Annual Meeting;
o You may notify the Secretary of the Company in writing before the
Annual Meeting that you have revoked your proxy; or
o You may vote in person at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting in person, please fill
in and sign the enclosed Proxy Card and return it promptly. If you do attend the
Annual Meeting, you may vote your shares even though you have sent in your Proxy
Card. However, simply attending the meeting will not revoke your proxy if you do
not vote at the meeting.
QUORUM
A quorum of Stockholders is necessary to hold a valid meeting. A majority
of the outstanding shares of Common Stock on the Record Date (except treasury
shares) present in person or represented by proxy at the beginning of the Annual
Meeting, constitutes a quorum. If you have returned a properly signed Proxy
Card, you will be considered present at the meeting and counted in determining
the presence of a quorum. Shares represented by proxies that withhold authority
to vote for a nominee for election as a director or that reflect abstentions or
"broker non-votes" (i.e., shares represented at the meeting held by brokers or
nominees and to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the broker or nominee
does not have the discretionary voting power on a particular matter) will be
treated as shares that are present for purposes of determining the presence of a
quorum. Abstentions and broker non-votes will not otherwise affect the voting.
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<PAGE> 5
Votes at the Annual Meeting will be tabulated by the inspector of election,
who shall be appointed by the Chairman of the meeting. The inspector of
election's duties include determining the number of shares represented at the
meeting and entitled to vote, determining the qualification of voters,
conducting and accepting the votes, and, when the voting is completed,
ascertaining and reporting the number of shares voted, or abstaining from
voting, for the election of directors.
NO APPRAISAL RIGHTS
Under the Delaware General Corporation Law, you will not have any appraisal
rights in connection with the actions to be taken at the Annual Meeting.
PROPOSAL I -- ELECTION OF DIRECTORS
The Company has a three-tiered, classified Board of Directors with
staggered terms of office for each class. Each class serves a three-year term.
The term for Class I directors expires at the annual meeting to be held in 2002,
the term for Class II directors expires at the annual meeting and the term for
Class III directors expires at the annual meeting to be held in 2001 or as soon
after each such meetings as the successor directors for each class have been
elected and qualified.
The persons listed below have been designated by the Board as candidates
for election as Class II directors. Each is currently serving as a Class II
director. UNLESS OTHERWISE SPECIFIED IN THE PROXY CARD, THE PROXIES SOLICITED BY
THE BOARD WILL BE VOTED "FOR" THE ELECTION OF THESE CANDIDATES. There are no
family relationships among any of the nominees for director or any of the
executive officers of the Company. In case any of these candidates becomes
unavailable to stand for election to the Board, an event which is not
anticipated, the Appointees, or their substitutes, shall have full discretion
and authority to vote or refrain from voting for any substitute nominee in
accordance with their judgment.
The terms of directors elected at the Annual Meeting expire at the annual
meeting to be held in 2003 or as soon thereafter as their successors are duly
elected and qualified. The Board has no reason to believe that any of the
nominees will be unable or unwilling to serve as a director if elected.
Directors are elected by a plurality vote of shares present at the meeting,
meaning that the nominee with the most affirmative votes for a particular seat
is elected for that seat. If you do not vote for a particular nominee, or if you
indicate "withhold authority to vote" for a particular nominee on your Proxy
Card, your vote will not count either "for" or "against" the nominee.
-3-
<PAGE> 6
NOMINEES
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE TITLE SINCE
- ---- --- ------------------------------------------- --------
<S> <C> <C> <C>
Richard Mandel...................... 37 Director and Managing Director, President of 1995
Kennedy-Wilson Commercial Group
Barry Schlesinger(1)................ 59 Director and President of Kennedy-Wilson 1998
Properties, Ltd.
</TABLE>
- ----------------
(1) Mr. Schlesinger was appointed to the Board in July 1998 in connection with
his entering into an Executive Services Agreement, pursuant to which
Mr. Schlesinger's services are purchased from another Company.
RECOMMENDATION OF THE BOARD:
The Board recommends a vote "FOR" the election of each nominee listed
above.
-4-
<PAGE> 7
DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers are listed below:
<TABLE>
<CAPTION>
BOARD TERM
NAME AGE TITLE EXPIRES
- ---- --- -------------------------------------------- ----------
<S> <C> <C> <C>
William McMorrow.................... 53 Chairman of the Board of Directors and Chief 2001
Executive Officer
Lewis Halpert....................... 48 Director and Executive Managing Director, 2002
President of Kennedy-Wilson Residential
and Notes Group
Richard Mandel...................... 37 Director and Managing Director, President of 2000
Kennedy-Wilson Commercial Group
Barry Schlesinger................... 59 Director and President of Kennedy-Wilson 2000
Properties Ltd.
Donald Prell........................ 76 Director and Chairman of the Audit Committee 2001
Kent Mouton......................... 47 Director and Chairman of the Compensation 2002
Committee
Thomas Barrack, Jr.................. 53 Director 2002
Freeman Lyle........................ 46 Executive Vice President, Chief Financial not applicable
Officer and Secretary
</TABLE>
WILLIAM MCMORROW has been Chairman of the Board and Chief Executive Officer
since joining the Company's predecessor company in 1988. From that time, he has
been instrumental to the Company's growth into a diversified real estate
services and investment company. Prior to 1988, Mr. McMorrow had more than 17
years of finance experience specializing in problem real estate held by
financial institutions and insurance companies. For five years, he was the
Executive Vice President and Chairman of the Credit Policy Committee at Imperial
Bank, a subsidiary of a publicly traded company headquartered in Southern
California. During his tenure with the Bank, he was responsible for
restructuring a significant portion of the Bank's assets, as well as the
marketing and disposition of properties it owned. Additionally, Mr. McMorrow has
held senior positions with various other financial services firms including
Fidelity Bank in Pennsylvania, where he was Senior Vice President for eight
years. Mr. McMorrow holds a Bachelor of Science Degree and Master of Business
Administration from the University of Southern California. He is also a member
of the Executive Board of the Lusk Center for Real Estate at the University of
Southern California.
LEWIS HALPERT has been a member of the Board since joining the Company's
predecessor company at the same time as Mr. McMorrow in 1988, and is Executive
Managing Director and President of the Company's Residential and Notes Group. In
these positions, he is actively involved in developing new business
opportunities and is currently overseeing all residential and notes investments.
Mr. Halpert has over 20 years experience in all facets of real estate, including
investments and development, brokerage, management and marketing. Prior to
joining the Company, he operated his own independent investment brokerage firm
in Southern California. Mr. Halpert holds a Bachelor of Arts Degree from
California State University at Sonoma.
-5-
<PAGE> 8
RICHARD MANDEL has been a member of the Board since December 1995. He is
President of the Company's Commercial Group, responsible for all commercial
brokerage operations in the U.S. and Asia. Since joining the Company in 1993,
Mr. Mandel has established the Company's office in Tokyo and has been
instrumental in developing Japan-based relationships for the Company. Mr. Mandel
was previously a director at Jones Lang Wootton, a predecessor company of Jones
Lang LaSalle, Inc., where he was involved with real estate investment banking
including the disposition, analysis, marketing, negotiations and closings
relating to real estate assets and with creating stronger ties to the investment
community in Hong Kong, Singapore, Indonesia and Taiwan. Mr. Mandel holds a
Bachelor of Arts Degree from Washington University in St. Louis, Missouri and a
Master of Business Administration from the JL Kellogg School of Management at
Northwestern University.
BARRY SCHLESINGER has served since July 1998 as a member of the Board and
President of Kennedy-Wilson Properties Ltd., the Company's wholly owned property
management and leasing subsidiary. Mr. Schlesinger serves as President of
Kennedy-Wilson Properties Ltd. through an Executive Services Agreement dated
July 17, 1998. From 1990 to July 1998, he served as Chairman of the Board of
Directors and Chief Executive Officer of Heitman Properties, Ltd., which the
Company purchased in July 1998 and renamed Kennedy-Wilson Properties Ltd. Mr.
Schlesinger was appointed to the Board in accordance with the Executive Services
Agreement. The Executive Services Agreement is discussed in more detail in
"Certain Transactions-Executive Services Agreement." Prior to joining Heitman
Properties, Ltd. in 1971, Mr. Schlesinger was responsible for project planning
and scheduling for Tishman Realty and Construction Company. He has 36 years of
real estate experience. Mr. Schlesinger holds a Bachelor of Science Degree from
the New York University College of Engineering.
DONALD PRELL has served as a member of the Board since March 1992. For the
past ten years, Mr. Prell has been a business consultant and private investor.
From 1980 to 1990, he was the Chief Credit Officer of Imperial Bancorp, where he
also served as President of three of its wholly owned subsidiaries: Imperial
International Bank, Imperial Creditcorp and Imperial Ventures. He is a member of
the Board of Councilors of the UCLA Foundation. Mr. Prell holds a C.Phil. from
the University of London and a Bachelor of Arts Degree from UCLA.
KENT MOUTON has served as a member of the Board since December 1995. Mr.
Mouton has been a partner in the law firm of Kulik, Gottesman & Mouton, LLP in
Los Angeles, California since 1991. He specializes in the practice of real
estate transactions. Mr. Mouton holds a Bachelor of Arts Degree and a Juris
Doctor Degree from UCLA.
THOMAS BARRACK, JR. has served as a member of the Board since July 1998. He
is the Chairman and Chief Executive Officer of Colony Capital, Inc., a company
that manages in excess of $1.0 billion in domestic and international real estate
assets. Colony Capital, Inc. purchased a 10% equity interest in the Company in
July 1998. Mr. Barrack founded Colony Capital, Inc. in 1991. Prior to forming
Colony Capital, Inc., he was a principal with Robert M. Bass Group, Inc., the
principal investment vehicle of the Fort Worth, Texas billionaire Robert M.
Bass. Mr. Barrack also served as Deputy Under Secretary at the Department of
Interior in Washington, D.C. for a period during the Reagan Administration. Mr.
Barrack serves as a member of the boards of directors of public companies
Continental Airlines Corporation, Public Storage, Inc., and Harveys Casino
Resorts. Mr. Barrack holds a Bachelor of Arts Degree form the University of San
Diego and a Juris Doctor Degree from the University of Southern California.
FREEMAN LYLE has been the Company's Chief Financial Officer, Executive Vice
President and Secretary since joining the Company in April of 1996. He is
responsible for all of the Company's financial matters including overseeing
capital structure and arranging and maintaining credit facilities. Prior to
joining the Company, Mr. Lyle was the President of Lyle Realty Group, Inc.,
which provided investment, financing and consulting services to real estate
owners and lenders. From 1980 to 1994, Mr. Lyle served as Vice President of
Finance at R&B Realty Group, an international real estate firm. During his
tenure, he was responsible for the performance of a diversified real estate and
loan portfolio. Prior to that, he was a senior auditor at Ernst & Young LLP. Mr.
Lyle holds a Master of Business Administration from the University of Southern
California, and a Bachelor of Science degree in Accounting from California State
University, Northridge.
-6-
<PAGE> 9
COMMITTEES OF THE BOARD OF DIRECTORS
The Board currently has two committees: an Audit Committee and a
Compensation Committee.
The Audit Committee is composed of Donald Prell (Chairman) and Kent Mouton.
This committee is responsible for reviewing the Company's financial policies and
objectives, and monitoring the Company's financial condition and requirements
for funds in conjunction with management. In addition, the Audit Committee meets
with the Company's independent auditors to review their audit report and
consider any recommendations. The Audit Committee held one meeting in 1999.
The Compensation Committee is composed of Kent Mouton (Chairman) and Donald
Prell. This committee establishes the Company's general compensation policies
and determines the compensation levels for the Chief Executive Officer and each
employee that receives annual compensation in excess of $100,000. The
Compensation Committee also has oversight responsibility for administering the
Company's stock option plans (other than Plan C for non-employee director stock
options, pursuant to which options are granted automatically upon the initial
election of a non-employee director and upon each subsequent re-election). The
Compensation Committee held ten meetings in 1999.
The Board held seven meetings in 1999. Each director attended 75% or more
of the meetings of the Board and the Committees of the Board on which the
director served, if any. From time to time, the members of the Board and the
Committees of the Board act by unanimous written consent as permitted by the
laws of the State of Delaware.
-7-
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company during each of the last three fiscal years to the Chief Executive
Officer of the Company and the four most highly compensated executive officers
of the Company who served in either of those capacities during fiscal 1999
(collectively, the "Named Executive Officers") for services rendered:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2)
- ----------------- ---- ------ ----- --------------- ----------
<S> <C> <C> <C> <C> <C>
William McMorrow,....................... 1999 $ 300,000 $ 2,973,083 $ 464,747 --
Chairman of the Board of Directors 1998 300,000 2,219,222 501,844 37,500
and CEO 1997 300,000 1,270,734 120,607 90,000
Lewis Halpert,.......................... 1999 $ 150,000 $ 357,410 $74,478 --
Executive Managing Director 1998 150,000 623,805 101,133 --
1997 150,000 396,800 31,083 45,000
Richard Mandel,......................... 1999 $ 250,000 $ 1,600,095 $ 251,713 --
Managing Director 1998 250,000 315,318 116,064 37,500
1997 225,000 284,267 35,917 243,000
Barry Schlesinger,(3)................... 1999 $ 400,000 $ 236,444 $ 84,011 100,000
Chairman of the Board of Directors 1998 169,231 270,000 -- 75,000
of Kennedy-Wilson Properties Ltd. 1997 -- -- -- --
Freeman Lyle,........................... 1999 $ 200,000 $ 150,000 $ 47,700 10,000
Executive Vice-President, Chief 1998 161,625 140,000 60,325 45,000
Financial Officer and Secretary 1997 150,000 100,000 15,020 --
</TABLE>
- --------------------
(1) "Other annual compensation" includes, among other things, deferred
compensation contributions and car allowance contributions.
(2) Adjusted for a 20% stock dividend paid October 27,1997, a 200% stock
dividend paid April 10, 1998, and a 50% stock dividend paid December 15,
1998.
(3) Mr. Schlesinger is employed by KW-A, LLC. An Executive Services Agreement
between the Company and KW-A, LLC requires the Company to pay to KW-A, LLC
all amounts due Mr. Schlesinger under his employment contract with KW-A,
LLC.
DEFERRED COMPENSATION PLAN
In 1997, the Company established a nonqualified deferred compensation plan
(the "Plan") to provide specific benefits to a select group of management,
highly compensated employees or directors who contribute materially to the
Company's continued growth, development and future business success. Under the
Plan, participants are able to defer up to 100% of their annual total
compensation including their bonuses. The Company is authorized to make
discretionary matching contributions in varying degrees based on the Company's
performance. In the fiscal year ended December 31, 1999, the Company contributed
approximately $1.0 million to
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<PAGE> 11
the Plan. This amount includes the amounts disclosed in the Summary Compensation
Table, as applicable, for the Named Executive Officers in the column labeled
"Other Annual Compensation."
EMPLOYEE PROFIT SHARING AND 401(K) PLANS
The Company maintains a profit sharing plan (the "Profit Sharing Plan")
covering all full-time employees meeting certain minimum age and service
requirements. Contributions to the Profit Sharing Plan are made solely at the
discretion of the Board. No contributions were made for the years-ended December
31,1997 1998 and 1999.
The Company also has a qualified profit sharing plan under the provisions
of Section 401(k) of the Internal Revenue Code (the "401(k) Plan"). Employees
who are 21 or older who have completed six months of service prior to January 1,
April 1, July 1 and September 1 of each year are eligible to participate. Under
this plan, participants are able to reduce their current compensation from 1% up
to the lesser of 15% or the statutorily prescribed annual limit allowable under
Internal Revenue Service Regulations and have that amount contributed to the
401(k) Plan. The 401(k) plan also includes provisions, which authorize the
Company to make discretionary contributions. During 1999 the Company made
$39,000 in matching contributions to this plan. During 1998 the Company made
$27,000 in matching contributions to this plan. During 1997 the Company made
$24,000 in matching contributions.
NAMED EXECUTIVE OFFICER STOCK OPTIONS
The following table provides information about stock option grants made to
each of the Named Executive Officers during 1999.
STOCK OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
Potential Realizable
Value of Assumed
Number of Percentage of Annual Rates of Stock
Securities Total Options Price Appreciation of
Underlying Granted to Exercise Option Terms(1)
Options Employees in Price per Expiration ----------------------
Name of Executive Officer Granted 1999 Share Date 5% 10%
- ------------------------- ----------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William McMorrow.............. 0 n/a n/a n/a n/a n/a
Lewis Halpert................. 0 n/a n/a n/a n/a n/a
Richard Mandel................ 0 n/a n/a n/a n/a n/a
Barry Schlesinger(2).......... 100,000 19.04% $7.38 01/04/04 $203,758 $450,251
Freeman Lyle(3)............... 10,000 11.42% $8.88 06/23/04 $24,534 $ 54,213
</TABLE>
- ----------------
(1) The potential realized value figures assume that the stock price at the
time each option is granted will appreciate at an annual rate of 5% or 10%
based on the closing price of the Company's Common Stock on April 25, 2000.
(2) Options vest in equal installments over a five year period beginning on the
one year anniversary of the grant.
(3) Options vest in equal installments over a three year period beginning on
the one year anniversary of the grant.
-9-
<PAGE> 12
The following table provides information about stock options held by the Named
Executive Officers as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN 1999
AND OPTION VALUES AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Options on In-The-Money Options
Shares December 31, 1999 on December 31, 1999
Acquired on Value --------------------------- --------------------------
Name of Executive Officer Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William McMorrow.............. 0 n/a 72,500 55,000 $ 310,820 $286,660
Lewis Halpert................. 0 n/a 30,000 15,000 $ 111,660 $ 55,830
Richard Mandel................ 0 n/a 264,500 106,000 $ 512,966 $341,698
Barry Schlesinger............. 0 n/a 25,000 150,000 n/a $737,500
Freeman Lyle.................. 0 n/a 42,000 40,000 $ 96,054 $110,010
</TABLE>
EMPLOYMENT CONTRACTS
The employment agreements of the Named Executive Officers are described
below:
o MR. MCMORROW'S contract was renewed and revised in order to reduce the
cash component of his compensation. The revision reflects a 50%
reduction in his profit participation from 20% of profits (as defined)
to 10% of profits. Mr. McMorrow's contract provides for a term
expiring on December 31, 2002, a base salary of $400,000 per annum and
in return for the reduction in cash compensation, a one-time grant of
restricted stock of 700,000 shares of Kennedy-Wilson, Inc. common
stock effective January 1, 2000, vesting equally over three years, and
a one-time contribution of $1.25 million, payable February 29, 2000
and June 30, 2000. "Profits" is defined as pre-tax, pre-reserves and
prior to payment of bonuses to other employees and the Company's
contributions to the Company's deferred compensation plan.
o MR. HALPERT'S contract provided for a term expiring on December 31,
1999, a base salary of $150,000 per annum plus a non-repayable advance
of $150,000, payable against an annual incentive bonus of 15% to 25%
of the net profit earned by the Residential Properties Group. The
Compensation Committee is in the process of extending Mr. Halpert's
contract.
o MR. MANDEL'S contract provides for a term expiring on December 31,
2001, a base salary of $300,000 plus an incentive bonus of 12.5% to
20% of the profits earned by the Company's Commercial Group.
o MR. SCHLESINGER'S employment contract is with KW-A, LLC and provides
for a term expiring on December 31, 2000. KW-A, LLC is a limited
liability company, of which Mr. Schlesinger is a member, that provides
executive management services to the Company. Mr. Schlesinger's
employment contract provides for an annual base salary of $400,000
plus (i) an annual incentive bonus of 7.06% of the first $1,700,000 of
net profits of Kennedy-Wilson Properties, Ltd. in excess of
$3,333,000, and a discretionary bonus in respect of the net profits of
Kennedy-Wilson Properties in excess of $5,033,000 and (ii) an "add-on
bonus" in 1999 of $270,000. Under the Executive Services Agreement
dated as of July 17, 1998 with KW-A, LLC the Company has agreed to pay
KW-A, LLC an amount equal to all sums payable to Mr. Schlesinger under
the terms of his employment agreement. In return, KW-A, LLC is
obligated
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<PAGE> 13
to furnish the Company with executive management services. The
Executive Services Agreement is discussed in more detail in "Certain
Transactions-Executive Services Agreement."
o MR. LYLE'S contract, which expired on March 31, 2000, had a base
salary of $200,000 plus a discretionary performance bonus of 0% to
100% of base salary. The Compensation Committee is in the process of
extending Mr. Lyle's contract.
In addition to compensation as noted above, each contract sets forth the
services the Named Executive Officer is to provide to the Company, his benefits
and expenses reimbursement rights and obligations, if any, a non-competition
covenant, a confidentiality agreement and terms for termination. Other than the
employment contract for Mr. McMorrow and Mr. Mandel, none of these employment
contracts provide for any severance, change-in-control or related payments to be
paid to the Named Executive Officer upon termination of the employment contract.
Mr. McMorrow's and Mr. Mandel's employment contracts provides for a severance
payment equal to two times their annual compensation as determined by the
arithmetic average of their salaries and bonuses for the prior three years in
the event their employment contracts are not renewed other than for cause or
there is a change in control of the Company.
DIRECTOR COMPENSATION
Each director who is not also 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 the Non-employee Director Stock Option Plan which provides for
automatic grants to non-employee directors of 13,500 share of Common Stock upon
election, and 540 shares of Common Stock upon re-election. Employees of the
Company who also are directors receive no additional compensation for their
service on the Board or on any Board Committee.
-11-
<PAGE> 14
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 25, 2000 the total number of
shares of Common Stock beneficially owned and the percentage of the outstanding
shares so owned by (i) each director, (ii) each Named Executive Officer, (iii)
all executive officers and directors as a group and (iv) each beneficial owner
of more than five percent (5%) of the outstanding shares of Common Stock known
to the Company. Except as otherwise indicated in the notes following the table,
the Stockholders listed in the table are the beneficial owners of the shares
listed with sole voting and investment power over those shares. Shares subject
to options exercisable within 60 days are treated as outstanding when
determining the amount and percentage beneficially owned by a person or entity.
<TABLE>
<CAPTION>
Number of shares
Name beneficially owned Percent of class
- ---- ------------------ ----------------
<S> <C> <C>
William McMorrow(1)........................................... 1,572,321 14.3
Lewis Halpert(2).............................................. 1,399,047 12.7
Richard Mandel(3)............................................. 376,000 3.4
Barry Schlesinger(4).......................................... 62,499 *
Donald Prell(5)............................................... 14,580 *
Kent Mouton(5)................................................ 14,580 *
Thomas Barrack, Jr.(6)........................................ 858,167 7.8
Freeman Lyle(7)............................................... 158,826 1.4
All Executive Officers and Directors as a Group............... 4,456,560 40.6
Colony Investors, III, L.P.(6)................................ 858,167 7.8
Kenneth Stevens............................................... 780,200 7.1
Cahill, Warnock Strategic Partners Fund, L.P.(8).............. 750,000 6.8
Lone Pine Capital, LLC.(9).................................... 777,900 7.1
</TABLE>
- -------------
* Less than 1.0%.
Except as otherwise indicated in the following notes, the address for each
individual, company, or named group is in care of Kennedy-Wilson, Inc.,
9601 Wilshire Boulevard, Suite 220, Beverly Hills, California 90210.
(1) Includes approximately 4,190 shares held for Mr. McMorrow's account as well
as approximately 275 shares held for the account of Mr. McMorrow's spouse
in the Company's 401(k) Profit Sharing Plan and Trust of which Mr. McMorrow
expressly disclaims beneficial ownership, and 85,000 shares which may be
acquired pursuant to exercise of outstanding stock options that are
presently exercisable or exercisable within 60 days.
(2) Includes approximately 1,368 shares held for Mr. Halpert's account in the
Company's 401(k) Profit Sharing Plan and Trust, and 30,000 shares which may
be acquired pursuant to exercise of outstanding stock options that are
presently exercisable or exercisable within 60 days.
(3) Includes beneficial ownership of 358,000 shares, which may be acquired
pursuant to exercise of outstanding stock options that are presently
exercisable or exercisable within 60 days.
(4) Includes beneficial ownership of 45,000 shares, which may be acquired
pursuant to exercise of outstanding stock options that are presently
exercisable or exercisable within 60 days.
-12-
<PAGE> 15
(5) Includes beneficial ownership of 14,580 shares, which may be acquired
pursuant to exercise of outstanding stock options that are presently
exercisable.
(6) As reported in a Schedule 13D dated July 24, 1998 filed with the Securities
and Exchange Commission (the "SEC"), Colony Investors III, L.P., a Delaware
limited partnership, holds of record 660,127 shares of Common Stock and a
warrant to acquire 198,039 shares of Common Stock that is now exercisable.
The sole general partner of Colony Investors III, L.P. is Colony GP III,
Inc., a Delaware corporation. Mr. Barrack holds a 60% interest in Colony GP
III, Inc. Mr. Barrack and Colony Investors III, L.P. have shared voting and
investment power with respect to those shares. The mailing address of
Colony Investors III, L.P. and Thomas Barrack, Jr., as indicated in the
Schedule 13D, is 1999 Avenue of the Stars, Suite 1200, Los Angeles,
California 90067.
(7) Includes beneficial ownership of 60,333 shares, which may be acquired
pursuant to exercise of outstanding stock options that are presently
exercisable or exercisable within 60 days.
(8) As reported in a Schedule 13G dated April 26, 1999 filed with the SEC,
Edward Cahill; David Warnock; Cahill, Warnock Strategic Partners, L.P.;
Cahill Warnock Strategic Partners Fund, L.P.; Cahill, Warnock & Company,
LLC and Strategic Associates, L.P. beneficially own 750,000 shares which
may be acquired pursuant to conversion of debentures in the aggregate
principal amount of $7,500,000 at the current exercise price of $10.00 per
share. The debentures are convertible at any time by the holders. According
to the Schedule 13G, the principal business address of the beneficial
owners is One South Street, Suite 2150, Baltimore, MD 21202.
(9) As reported in a Schedule 13G dated December 31, 1999 filed with the SEC.
The amended Schedule 13G was filed jointly by Lone Spruce, L.P. as to
24,767 shares, Lone Balsam, L.P. as to 63,411 shares, Lone Sequoia, L.P. as
to 54,721 shares, Lone Pine Associates LLC as to 142,899 shares, Lone Pine
Capital LLC as to 635,001 shares and Stephen F. Mandel as to 777,900
shares. The mailing address of Loan Pine Capital, LLC as indicated in the
Schedule 13G, is Two Greenwhich Plaza, Greenwhich, Connecticut 06830.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
The following are brief descriptions of transactions between the Company or
one or more of its subsidiaries and any of the Company's directors, executive
officers or Stockholders known to the Company to own beneficially more than 5%
of Common Stock, or any member of the immediate family of any of those persons
during the fiscal year ended December 31, 1999 where the amount involved
exceeded $60,000.
COLONY AGREEMENTS
Thomas Barrack, Jr., a member of the Board and a beneficial owner of more
than 5% of Common Stock, holds a 60% interest in Colony GP III, Inc. Colony GP
III, Inc. is the sole general partner of Colony Investors III, L.P. Colony
Investors III, L.P. is the sole member of Colony K-W, LLC.
Colony Investors III, L.P. is also the general partner of Colony-K-W Genpar
Ltd. and Colony K-W Genpar Ltd. is the general partner of Colony K-W Partners,
L.P. Colony K-W, L.P., K-W Japan Investments, Inc. and EBISU Investors I, LLC
are limited partners in Colony K-W Partners, L.P. K-W Japan Investments, Inc. is
a wholly owned subsidiary of the Company. EBISU Investors was set up so that
employees of the Company would have an investment in the Colony-KW joint
ventures. EBISU Investors I, LLC is owned in part by William McMorrow (26.32%),
Richard Mandel (26.32%) and Lewis Halpert (10.52%), current directors and
executive officers of the Company, and Ryosuke Homma (15.79%), President of
Kennedy-Wilson Japan K.K. The remainder is owned by some of the employees in the
Tokyo office of Kennedy-Wilson Japan K.K. Colony-K-W Genpar Ltd. and Colony K-W
together have a 97.5% interest in Colony-K-W Partners, L.P., K-W Japan
Investments has a 2.0% interest and EBISU Investors I, LLC has a 0.5% interest.
The Colony K-W Partners, L.P. partnership acquired a pool of distressed notes
from a Japanese Bank in September 1998 and a building in Kawasaki, Japan in
February 1999. In January 2000, EBISU Investors II, LLC was created for similar
investment activities. The new entity is owned in part by William McMorrow
(30%), Richard Mandel (30%), Freeman Lyle (10%) and other executives of the
Company.
-13-
<PAGE> 16
MUROMACHI BUILDING MANAGEMENT K.K.
In March 1999, the Company entered into a Japanese partnership agreement
with Meguro Investors, LLC. Meguro Investors, LLC is owned in part by William
McMorrow (50%) and Richard Mandel (50%). The Meguro partnership purchased an
insolvent Japanese real estate holding company called Muromachi Building
Management K.K. The purchase price was $83,000. Under the terms of the
partnership agreement, Meguro Investors LLC is the beneficial owner of the
holding company acquired and the Company is the legal owner. After
consideration, the Company did not acquire Muromachi Building Management K.K.
because the purchase would have added a significant loss to the Company's
consolidated financial statements. However, the Company receives the majority of
the brokerage commissions generated by the partnership. The Company does not
have an interest nor did it make any contribution to this partnership.
CAMDEN INVESTMENT GROUP INC.
In December 1999, the Company transferred to Camden Investment Property
Group Inc., ("Camden") whose shareholders are Freeman Lyle (50%) and Barry
Schlesinger (50%), all of the common stock of the single purpose entities which
were formed to acquire the commercial properties located at 1055 Wilshire Blvd.,
6380 Wilshire Blvd., 5900 Sepulveda Blvd., and 7080 Hollywood Blvd. in exchange
for cash of $200,000 and 4,000 shares of preferred stock in these entities. The
terms of the preferred shares provide for the Company to receive an annual
cumulative dividend of $392.50 per share. In addition, the preferred shares bear
the right to receive a liquidation dividend of $3,925 per share. The Company
retains the right of first refusal on any proposed sale. The Company also
transferred 40% of its membership interest in 301 South Fair Oaks, LLC, the
owner of 301 S. Fair Oaks, to Camden in exchange for $50,000. The agreement
between the Company and Camden provides that any distributions made by Camden
shall first be distributed to the Company until the Company has received $1.0
million.
LEGAL FEES
In 1999, the Company paid the law firm of Kulik, Gottesman & Mouton a total
of approximately $382,000 in legal fees. Kent Mouton is a partner in that firm
and a member of the Board. In 1998, the firm was paid $470,000 in legal fees.
EXECUTIVE SERVICES AGREEMENT
On July 17, 1998, the Company entered into an agreement with KW-A, LLC to
purchase executive management services. Barry Schlesinger, a member of the Board
and Chairman of Kennedy-Wilson Properties, Ltd., is a member in KW-A, LLC. The
Company pays KW-A, LLC an amount equal to the sum payable by KW-A, LLC to Mr.
Schlesinger under his respective employment agreement. The amount received in
1999 by Mr. Schlesinger under this arrangement is described in the "Employment
Contract" section. The terms of the Company's agreement with KW-A, LLC expire
the earlier of the termination of employment by KW-A, LLC or December 31, 2000.
LOANS TO EXECUTIVE OFFICERS
In December 1997, the Company loaned an aggregate of $1,319,652 to 18 key
employees. The Company made the loans to enable those employees to acquire in a
private, unsolicited transaction approximately 73,314 shares of Common Stock
from an institutional investor. Each loan is personally guaranteed, bears
interest at the prime rate of Bank of America plus 1%, payable semiannually on
August 31 and January 31 and matures on December 31, 2000. The outstanding
balance as of April 25, 2000 was $182,000 of which $110,000 was owed by Mr.
Lyle, Executive Vice President, Chief Financial Officer and Secretary.
BROKERAGE ENGAGEMENTS
In the past the Company has been retained, and the Company 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 the Company's executive
officers and/or directors. The Company believes that the terms of these
brokerage transactions in the past have been substantially comparable to those
that would have been obtainable in similar transactions with unaffiliated
parties, and that they will have no material effect on the Company.
-14-
<PAGE> 17
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
as amended, requires the Company's directors and certain of its officers, as
well as persons who own ten percent or more of the Company's outstanding Common
Stock ("Insiders"), to file an initial report of beneficial ownership of stock
of the Company and reports of changes in beneficial ownership thereafter with
the SEC. Section 16(a) requires Insiders to deliver copies of all reports filed
under Section 16(a) to the Company. Based solely on a review of these copies
received, the Company believes that Insiders have complied with all applicable
Section 16(a) filing requirements for fiscal 1999.
Pursuant to Item 402(a)(9) of Regulation S-K, promulgated by the SEC under
the Exchange Act, the following Performance Graph and Report of the Compensation
Committee of the Board of Directors on Executive Compensation shall not be
deemed to be incorporated by reference into any previous filing by the Company
under either the Securities Act of 1933 (the "Securities Act") or the Exchange
Act that incorporates future Securities Act or Exchange Act filings in whole or
in part by reference.
-15-
<PAGE> 18
PERFORMANCE GRAPH
Set forth below is a line graph comparing yearly change in the
cumulative total Stockholder return on the Company's Common Stock to the
cumulative total Stockholder return on The Nasdaq National Market Index ("Nasdaq
Market Index") and an index of publicly traded companies with one or more
business lines similar to those of the Company ("Peer Group Index").
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
--------------------------------------------------------------------------
COMPANY INDEX/MARKET 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Kennedy-Wilson, Inc. 100.00 36.36 70.91 139.69 275.16 314.47
Peer Group Index(1) 100.00 100.00 225.00 402.31 347.86 170.98
NASDAQ Market Index 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>
- ---------------------------------------
(1) The Peer Group Index is made up of the following securities:
CB Richard Ellis Services, Inc.
Grubb & Ellis Co.
Insignia Financial Group
Jones Lang Lasalle Inc.
Trammell Crow Co.
-16-
<PAGE> 19
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board (the "Committee") establishes the
general compensation policies of the Company, determines the compensation levels
for the Chief Executive Officer and other senior officers of the Company and
administers and/or provides oversight on all incentive plans, including the
Kennedy-Wilson, Inc. 1992 Incentive and Non-Statutory Stock Option Plan and the
approval of any grants of stock options thereunder.
The Company applies a consistent philosophy to compensation for all
employees, including 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 through teamwork that is focused upon meeting the
expectations of customers and Stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the Committee was comprised of Kent Mouton and Donald Prell,
both of whom are non-employee directors. Neither Mr. Mouton nor Mr. Prell was an
officer or employee of the Company during the fiscal year ended December 31,
1999, nor have either of them been an officer of the Company at any time. Mr.
Mouton is a partner in the law firm of Kulik, Gottesman & Mouton. During fiscal
year 1999, the Company paid Kulik, Gottesman & Mouton a total of approximately
$382,000 in legal fees, compared to $470,000 in 1998.
COMPENSATION POLICY
The Committee believes that the Company is engaged in highly competitive
businesses and must attract and retain qualified executives in order to be
successful. Accordingly, the compensation policy for executive officers is
designed to (i) provide a total compensation package for officers that is
competitive and enables the Company to attract and retain key executive and
employee talent needed to accomplish its business objectives and (ii) to
directly link compensation to improvements in performance and increase in
Stockholder value. As a result, executive compensation generally includes base
salary, cash incentive bonus, and the discretionary award of stock options by
the Committee.
The Company's executive compensation policy is to ensure that a substantial
portion of potential aggregate annual compensation be contingent upon the
performance of the Company. 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 executive officers on the
immediate objectives of the business and their job, encourage executives 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 Committee has established base salary, as well as short and
long-term incentive compensation targets for certain officers of the Company.
The compensation targets define the percentage for each component of total
compensation.
With respect to cash compensation for officers, the Company sets base
salaries and target incentive bonus opportunities for each officer by reviewing
the cash compensation provided to comparable
-17-
<PAGE> 20
positions and assessing the internal equity of cash compensation opportunities
based on position responsibilities, the performance of each officer, 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. Target incentive compensation opportunities are typically funded as
stipulated levels of net profit are achieved. Some officers with defined
divisional business development responsibilities also receive a salary draw,
with additional opportunity to earn a proportionate share of the net profits or
revenue of the relevant division.
The Company provides for long-term equity compensation through stock
options as a means to compensate and provide long-term incentives for its
executive officers. Option exercise prices for officers are set at the stock's
fair market value on the date of grant, unless the optionee holds 10% or more of
Common Stock, in which case the exercise price is set at 110% of fair market
value on the date of the grant. Thus, the value of the Stockholders' investment
in the Company must generally appreciate before an optionee receives any
financial benefit from the option. Options granted to executive officers
generally provide that they are exercisable over a period of three to five years
after the date of grant. In determining the size of the stock option grants, the
Committee considers various subjective factors primarily relating to the
responsibilities of the individual officers, and also to their respective
expected future contributions.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
William J. McMorrow has been Chairman of the Board and Chief Executive
Officer of the Company since joining its predecessor company in 1988. The
Committee believes that Mr. McMorrow's base salary is within a competitive range
of pay, as compared with companies of similar size and scope as the Company.
Incentive compensation has been linked to the Company's overall performance. In
determining Mr. McMorrow's incentive compensation for 1999, the Committee
considered various factors, including, but not limited to, Mr. McMorrow's
guidance in the Company's financing, acquisition and disposition of real estate
assets, the acquisition of the Company's property management and leasing
operations, and the integration of all business lines into the Company's
operations.
By the Compensation Committee of the Board of
Directors
Kent Y. Mouton, Chairman
Donald B. Prell
-18-
<PAGE> 21
GENERAL INFORMATION
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Deloitte & Touche LLP has been selected by the Board, upon the
recommendation of the Audit Committee of the Board, as independent accountants
to audit the books and accounts of the Company and its subsidiaries for the
fiscal year ending December 31, 1999. This firm has served as independent
accountants for the Company since 1991. A representative of Deloitte & Touche
LLP will be present at the Annual Meeting and will have an opportunity to make
any desired statement and to answer any appropriate questions by Stockholders.
STOCKHOLDER PROPOSALS
In order for a proposal by a Stockholder be included in the proxy statement
and proxy card for the 2000 Annual Meeting, such proposal must be received by
the Company no later than February 2, 2000, assuming that the date of the 2000
Annual Meeting is not changed by more than 30 calendar days from the date of the
Annual Meeting. In such event, the Company will provide notice of the date by
which such proposals must be received in order to be included.
Pursuant to the rules and regulations promulgated by the SEC, any
Stockholder who intends to present a proposal at the 2000 Annual Meeting of the
Company without requesting the Company to include such proposal in the Company's
proxy statement should be aware that he must notify the Company not later than
April 18, 2000 of his intention to present the proposal. Otherwise, the Company
may exercise discretionary voting with respect to such shareholder proposal
pursuant to authority conferred on the Company by proxies to be solicited by the
Board and delivered to the Company in connection with the meeting.
Under Section 2.9 of the Company's By-Laws, Stockholder (i) proposals
submitted for inclusion at any special meeting of Stockholders and (ii)
nominations for election of directors must comply with additional procedures.
With respect to any Stockholder proposal to be made at a special meeting, the
Stockholder must have given notice of such proposal in writing to the Secretary
of the Company not less than 90 days in advance of such meeting or, if later,
the seventh day following the first public announcement of the date of such
meeting. A Stockholder's notice to the Secretary shall set forth as to each
matter the Stockholder proposes to bring before the meeting (1) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (2) the name and address,
as they appear on the Company's books, of the Stockholder proposing such
business, (3) the class and number of shares of the Company that are
beneficially owned by the Stockholder, and (4) any material interest of the
Stockholder in such business. In addition, the Stockholder making such proposal
shall promptly provide any other information reasonably requested by the
Company.
With respect to Stockholder nominations for the election of directors, any
Stockholder entitled to vote in the election of directors may nominate a person
for election as a director at a meeting of Stockholders only if written notice
of such Stockholder's intent to make such nomination has been given to the
Secretary of the Company not later than 90 days in advance of such meeting or,
if later, the seventh day following the first public announcement of the date of
such meeting. Each such notice shall set forth (i) the name and address of the
Stockholder who intends to make the nomination and of the person or persons to
be nominated, (ii) a representation that the Stockholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting and nominate the person or persons
specified in the notice, (iii) a description of all arrangements or
understandings between the Stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the Stockholder, (iv) such other information
regarding each nominee proposed by such Stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC had
the nominee been nominated, or intended to be nominated, by the Board and (v)
the consent of each nominee to serve as a director of the Company if so elected.
In addition, the Stockholder making such nomination shall promptly provide any
other information reasonably requested by the Company.
-19-
<PAGE> 22
ANNUAL REPORT
All Stockholders of record as of the Record Date have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report for the
fiscal year ended December 31, 1999. Such report contains certified consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ended December 31, 1999.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, the Board is not aware of any
matters to come before the Annual Meeting other than those set forth on the
Notice accompanying this Proxy Statement. If any other matters come before the
Annual Meeting, the Proxy Card, if executed and returned, gives discretionary
authority to the Appointees with respect to such matters.
ADDITIONAL INFORMATION
The Company will pay the cost of preparing, assembling and mailing the
Notice of the Annual Meeting, this Proxy Statement, the enclosed Proxy Card, and
the solicitation of the proxies. Directors, officers and other regular employees
of the Company may solicit proxies. None of them will receive any additional
compensation for such solicitation. People soliciting proxies may contact you in
person, by telephone or by facsimile. The Company will pay brokers or other
persons holding stock in their names or the names of their nominees for the
expenses of forwarding solicited material to their principals.
THE COMPANY WILL, UPON THE WRITTEN REQUEST OF ANY PERSON WHO IS A
BENEFICIAL OWNER OF ITS SHARES ON THE RECORD DATE FOR THE ANNUAL MEETING,
FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT TO THE SEC ON FORM 10-K FOR
THE YEAR 1999 AND WILL FURNISH, AT A CHARGE OF $10, A COPY OF THE EXHIBITS
THERETO. SUCH REQUEST SHOULD CONTAIN A REPRESENTATION THAT THE PERSON REQUESTING
THIS MATERIAL WAS A BENEFICIAL OWNER OF THE COMMON STOCK ON THE RECORD DATE AND
BE SENT TO THE SECRETARY OF THE COMPANY AT THE ADDRESS INDICATED ON THE FIRST
PAGE OF THIS PROXY STATEMENT.
By Order of the Board of Directors
/s/ Freeman A. Lyle
Executive Vice President, Chief
Financial Officer, and Secretary
Beverly Hills, California
May 2, 2000
-20-
<PAGE> 23
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KENNEDY-WILSON, INC.
The undersigned hereby appoints William J. McMorrow and Freeman A. Lyle, as
proxies, with power to act without the other and with power of substitution,and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of stock of Kennedy-Wilson, Inc. standing in the name of the
undersigned with all powers which the undesigned would possess if present at the
Annual Meeting of Stockholders of the Company to be held June 15, 2000 or any
adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
(FOLD AND DETACH HERE)
<PAGE> 24
<TABLE>
<S> <C> <C> <C>
Please mark
your votes as [X]
indicated in
this example.
WITHHOLD FOR
FOR AUTHORITY all nominees
all nominees to vote for all except as
1. ELECTION OF DIRECTORS listed. nominees listed. listed below.
The Board of Directors recommends a vote "FOR"
the nominees listed below. [ ] [ ] [ ]
(Instruction: To withhold authority to vote for
any individual nominee, strike that nominee's
name below.)
Nominees: Richard Mandel
Barry Schlesinger
This proxy, when properly dated and executed,
will be voted in the manner directed herein by the
undersigned Stockholder. If no direction is made,
the shares represented by this proxy will be voted
FOR all of the nominees for director named above.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature(s)__________________________________________________________________________Dated______________________, 2000.
When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give the full title as such. If a corporation, please sign in full corporate name by the President or
other authorized officer. If a partnership or limited liability company, please sign in partnership or applicable entity
name by the authorized person.
- -------------------------------------------------------------------------------------------------------------------------
(FOLD AND DETACH HERE)
</TABLE>
