<PAGE>
SCHEDULE 14A
(RULE 14A-101)
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 the registrant [ ]
Check the approriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
Kranzco Realty Trust
- ---------------------
(Name of Registrant as Specified in Its Charter)
Robert Dennis
- ---------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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:
(2) Aggregate number of securities to which trasaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
(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 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:
- --------------------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
KRANZCO REALTY TRUST
128 Fayette Street
Conshohocken, Pennsylvania 19428
March 31, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 annual meeting of shareholders
which will be held on Wednesday, June 4, 1997, beginning at 9:30 a.m. at the
Philadelphia Marriott West, Matson Ford Road and Route 23, West Conshohocken,
Pennsylvania 19428.
Information about the meeting and the various matters on which the shareholders
will act is included in the Notice of Annual Meeting of Shareholders and Proxy
Statement which follow. Also included is a Proxy Card and postage paid return
envelope.
It is important that your shares be represented at the meeting. Whether or not
you plan to attend, we hope that you will complete and return your Proxy Card in
the enclosed envelope as promptly as possible.
Sincerely,
By: /s/ Norman M. Kranzdorf
Norman M. Kranzdorf
President and Chief Executive Officer
<PAGE>
KRANZCO REALTY TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 4, 1997
The annual meeting of shareholders of Kranzco Realty Trust (the "Company") will
be held at the Philadelphia Marriott West, Matson Ford Road and Route 23, West
Conshohocken, Pennsylvania 19428, on Wednesday, June 4, 1997 at 9:30 a.m. local
time, for the following purposes:
1.To elect two trustees to serve until the 2000 annual meeting of shareholders
and until their successors are elected and qualify.
2.To ratify the appointment of Arthur Andersen LLP as the Company's independent
public accountants for the fiscal year ending December 31, 1997.
3.To approve an amendment to the Trust's Declaration of Trust to increase the
required vote of the holders of the Trust's Series B-1 and Series B-2 Cumulative
Convertible Preferred Shares for certain amendments to the Trust's Declaration
of Trust which would adversely affect the Series B Preferred Shares from a
majority vote to a two-thirds vote.
4.To transact such other business as may properly come before the meeting or
any
adjournment(s) or postponement(s) thereof.
The Board of Trustees has fixed March 21, 1997 as the record date for
determining the shareholders entitled to receive notice of and to vote at the
meeting.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING.
By Order of the Board of Trustees
By: /s/ Hermina Kranzdorf
Hermina Kranzdorf
Secretary
March 31, 1997
Conshohocken, Pennsylvania
<PAGE>
KRANZCO REALTY TRUST
128 Fayette Street
Conshohocken, Pennsylvania 19428
PROXY STATEMENT
Annual Meeting of Shareholders
June 4, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Trustees of Kranzco Realty Trust, a Maryland real estate investment
trust (the "Company"), of proxies from the holders of the Company's issued and
outstanding common shares of beneficial interest, $.01 par value per share (the
"Common Shares"), to be used at the Annual Meeting of Shareholders to be held on
Wednesday, June 4, 1997 at the Philadelphia Marriott West, Matson Ford Road and
Route 23, West Conshohocken, Pennsylvania 19428, at 9:30 a.m. local time, and
any adjournment(s) or postponement(s) of such meeting (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Annual Meeting.
This Proxy Statement and enclosed form of proxy are first being mailed to the
shareholders of the Company on or about March 31, 1997.
At the Annual Meeting, the shareholders of the Company will be asked to consider
and vote upon the following proposals (the "Proposals"):
1.The election of two trustees to serve until the 2000 annual meeting of
shareholders and until their successors are elected and qualify;
2. The ratification of the appointment of Arthur Andersen LLP as independent
public accountants for the fiscal year ending December 31, 1997;
3.To approve an amendment to the Trust's Declaration of Trust to increase the
required vote of the holders of the Trust's Series B-1 and Series B-2 Cumulative
Convertible Preferred Shares for certain amendments to the Trust's Declaration
of Trust which would adversely affect the Series B Preferred Shares from a
majority vote to a two-thirds vote; and
4.Such other business as may properly come before the Annual Meeting.
Only the holders of record of the Common Shares at the close of business on
March 21, 1997 (the "Record Date") are entitled to notice of and to vote at the
Annual Meeting. Each Common Share is entitled to one vote on all matters. As of
the Record Date, 10,333,914 Common Shares were outstanding.
<PAGE>
A majority of the Common Shares outstanding must be represented at the Annual
Meeting in person or by proxy to constitute a quorum for the transaction of
business at the Annual Meeting.
In order to be elected as a trustee, a nominee must receive a plurality of all
the votes cast at the Annual Meeting (Proposal 1). The affirmative vote of the
holders of at least a majority of the votes cast at the Annual Meeting is
required to ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants (Proposal 2). For purposes of calculating votes
cast with respect to each Proposal, abstentions and broker non-votes will not be
counted as cast and will have no effect on the result of the vote on either
Proposal. Approval of the proposed amendment to the Trust's Amended and Restated
Declaration of Trust, as amended (the "Declaration of Trust"), as described in
Proposal 3 herein, will require the affirmative vote of the holders of at least
a majority of all Common Shares outstanding. For purposes of voting on the
amendment, abstensions and broker non-votes will not be counted as votes cast
for the amendment, and, therefore, will have the same effect as votes cast
against the amendment.
The Common Shares represented by all properly executed proxies returned to the
Company will be voted at the Annual Meeting as indicated or, if no instruction
is given, in favor of all Proposals. As to any other business which may properly
come before the Annual Meeting, all properly executed proxies will be voted by
the persons named therein in accordance with their best judgment. The Company
does not presently know of any other business which will come before the Annual
Meeting. Any person giving a proxy has the right to revoke it at any time before
it is exercised (a) by filing with the Secretary of the Company a duly signed
revocation or a proxy bearing a later date or (b) by electing to vote in person
at the Annual Meeting. Mere attendance at the Annual Meeting will not serve to
revoke a proxy. If a shareholder is a participant in the Company's Dividend
Reinvestment Plan, the accompanying Proxy Card should include the number of
Common Shares registered in the participant's name under the plan.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH
INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED AND THE DELIVERY
OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
PROPOSAL 1
ELECTION OF TRUSTEES
The Company's Board of Trustees (the "Board") currently consists of six members
who hold office until their terms of office expire and, in each case, until
their respective successors are duly elected and qualify. The trustees are
divided into three classes, consisting of two members (the "Class I Trustees")
whose terms will expire at this Annual Meeting of shareholders, three members
(the "Class II Trustees") whose terms will expire at the 1998 annual meeting of
shareholders, and one member (the "Class III Trustee") whose term will expire at
the 1999 annual meeting. In addition, until his death in February 1997, Irvin
Maizlish served as a Class III Trustee since November 1992. This vacancy in the
Board has not yet been filled.
<PAGE>
EXCEPT WHERE OTHERWISE INSTRUCTED, PROXIES SOLICITED BY THIS PROXY STATEMENT
WILL BE VOTED FOR THE ELECTION OF EACH OF THE BOARD'S NOMINEES LISTED BELOW.
Each such nominee has consented to be named in this Proxy Statement and to serve
as a trustee if elected.
The information below relating to the nominees for election as trustees and for
each of the other trustees whose terms of office continue after the Annual
Meeting has been furnished to the Company by the respective individuals.
NOMINEES FOR ELECTION AS CLASS I TRUSTEES
Dr. Peter D. Linneman, 46, has been a trustee of the Company since November
1992. Dr. Linneman has been a Professor of Finance and Public Policy at the
Wharton School of the University of Pennsylvania since 1979, the Albert Sussman
Professor of Real Estate at the Wharton School since 1989 and a director of the
Wharton Real Estate Center since 1986. In addition, he is an Urban Land
Institute Research Fellow and a member of the National
Association of Real Estate Investment Trusts. Dr. Linneman is a trustee of
Universal Health Realty Trust and trustee of Gables Residential Properties
Trust. Dr. Linneman was formerly Chairman and trustee of Rockefeller Center
Properties Trust. Dr. Linneman is a member of the Board's Audit Committee and
Incentive Plan Committee.
E. Donald Shapiro, 65, has been a trustee of the Company since June 1994. Mr.
Shapiro has been The Joseph Solomon Distinguished Professor of Law at New York
Law School since 1983, a Supernumerary Fellow of St. Cross College at Oxford
University since 1985, a Voting Member of the Congregation of Oxford University
since 1990 and a Visiting Distinguished Professor at Bar-Ilan University,
Tel-Aviv, Israel, 1986. Mr. Shapiro also serves as a director of each of the
following entities: Loral Space and Communications (formerly Loral Corporation)
(since 1973); Bank Leumi (since 1980); Vasomedical, Inc. (formerly Future
Medical Products, Inc.) (since 1992); Vion, Inc. (formerly Mela Rx) (since
1992); Eyecare Products PLC (since 1994); Premier Laser Systems (since 1994);
Cafe USA (since 1995); United Industrial Corporation (since 1996); and Telepad
Corporation (since 1996). Mr. Shapiro is a member of the Board's Audit
Committee, Executive Committee and Executive Compensation Committee.
OTHER TRUSTEES WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
Information concerning the other trustees whose terms do not expire at the
Annual Meeting is set forth below.
Norman M. Kranzdorf, 66, a co-founder of the Company, has been a trustee of the
Company since its organization in June 1992. Mr. Kranzdorf was the President of
Kranzco Realty, Inc., a general commercial real estate management and brokerage
company ("Kranzco Realty"), from 1979, when he founded it, to 1992. He served as
President of Amterre Development Inc ("Amterre") from 1972 to 1981. Amterre,
the successor to Food Fair Properties, Inc., owned and operated over 50 shopping
centers, as well as other single-tenant retail properties, on the Eastern
seaboard. Mr. Kranzdorf was also an officer and director of Kranzco Management,
Inc., a general commerical real estate management and brokerage company and
wholly-owned subsidiary of Kranzco Realty, from 1980, when it was founded, to
1992. He is a former trustee of the International Council of Shopping Centers
and a member of the Board of Governors of the National Association of Real
Estate Investment Trusts. Mr. Kranzdorf is a member of the Board's Executive
Committee and Executive Compensation Committee. Mr. Kranzdorf is a Class III
Trustee.
<PAGE>
Edmund Barrett, 63, has been a trustee of the Company since June 1995, the Chief
Operating Officer of the Company since December 1994, and the Director of
Leasing and Executive Vice President of the Company since 1992. Previously, he
was the Assistant Director of Development of Kranzco Realty from 1987 to 1988
and a Vice President of Kranzco Realty from 1988 to 1992. Mr. Barrett is a Class
II Trustee.
Robert H. Dennis, 50, has been a trustee of the Company since 1994 and Vice
President, Chief Financial Officer and Treasurer of the Company since its
organization in June 1992. Prior thereto he was the Chief Financial Officer and
Assistant Secretary of Kranzco Realty from 1981 to 1992. Mr. Dennis' other
positions have included Staff Accountant and Data Processing Manager for Amterre
from 1971 to 1981. Mr Dennis is a Class II Trustee.
James B. Selonick, 71, has been a trustee of the Company since November 1992.
Mr. Selonick has been a real estate consultant since 1987. Prior thereto and
since 1970, Mr. Selonick served first as Vice President for Property
Development and later as Senior Vice President of Federated Department Stores,
Inc. Mr. Selonick also served as a trustee of the International Council of
Shopping Centers (1972 - 1978 and 1980 - 1986; member of Executive Committee
1981 - 1985) and the Urban Land Institute (1983 - 1989). Mr. Selonick is a
member of the Board's Audit Committee, Incentive Plan Committee and Executive
Compensation Committee. Mr. Selonick is a Class II Trustee.
BOARD OF TRUSTEES' MEETINGS
During the Company's fiscal year ended December 31, 1996, the Board held four
regular meetings and two special meetings.
BOARD COMMITTEES
The Board has an Audit Committee, an Executive Committee, an Executive
Compensation Committee, a committee which administers the Company's 1992
Employee Share Option Plan (the "Employee Plan") and the 1992 Trustee Share
Option Plan (the "Trustee Plan" and, together with the Employee Plan, the
"Option Plans"), and a committee which administers the Company's 1995 Incentive
Plan (the "Incentive Plan Committee") adopted at the 1995 annual meeting of
shareholders (the "Incentive Plan"). The Board does not have a nominating
committee or a committee performing the functions of a nominating committee; the
Board performs the functions of that committee. Mr. Irvin Maizlish was a member
of the Audit Committee, the Executive Committee and the Executive Compensation
Committee until his death in February 1997. The vacancy created by his death on
each of these committees has not yet been filled.
The Audit Committee is composed of Messrs. Linneman, Shapiro and Selonick. The
function of the Audit Committee is to review the results and scope of the audit
and other services provided by the Company's independent public accountants. The
Audit Committee also reviews related party transactions. No member of the Audit
Committee is an employee of the Company. The Audit Committee met twice during
the fiscal year ended December 31, 1996.
The Executive Committee is composed of Messrs. Kranzdorf and Shapiro. The
function of the Executive Committee is to approve the acquisition, financing and
disposition of investments for the Company and to execute certain contracts and
agreements, including those related to the borrowing of money by the Company,
and generally exercise all other powers of the Board except for those which
require action by all trustees or the independent trustees under the Declaration
of Trust or the Bylaws of the Company or under applicable law. The Executive
Committee met twice during the fiscal year ended December 31, 1996.
<PAGE>
The Executive Compensation Committee is composed of Messrs. Kranzdorf, Selonick
and Shapiro. The function of the Executive Compensation Committee is to review
and make recommendations regarding compensation for the Company's executive
officers. No member of the Executive Compensation Committee, other than Mr.
Kranzdorf, is an employee of the Company. The Executive Compensation Committee
met twice during the fiscal year ended December 31, 1996.
The Option Plans Committee is composed of Messrs. Kranzdorf and Barrett. The
function of the Option Plans Committee is to administer the Option Plans. The
purpose of the Option Plans is to attract, retain and motivate key employees of
the Company by granting such employees incentive qualified and non-qualified
options to purchase Common Shares. The Option Plans Committee did not meet
during the fiscal year ended December 31, 1996.
The Incentive Plan Committee is composed of Messrs. Linneman and Selonick. The
function of the Incentive Plan Committee is to determine awards granted pursuant
to the Incentive Plan to employees and trustees which align the interests of the
Company's trustees, executive officers, key employees, advisors and consultants
with those of the shareholders and to enable the Company to attract, compensate
and retain trustees, executive officers, key employees, advisors and consultants
and provide them with appropriate incentives and rewards for performance. The
Incentive Plan Committee met once during the fiscal year ended December 31,
1996.
TRUSTEES' COMPENSATION
Each non-employee trustee of the Company receives an annual fee of $12,000 and a
fee of $1,000 for each quarterly meeting attended. In December 1995, the
trustees agreed to receive these fees in the form of Common Shares beginning in
1996. The shares are awarded quarterly on the last business day of the fiscal
quarter and are valued based on the closing price of the Common Shares on the
New York Stock Exchange on the last business day of such quarter. Each trustee
is entitled to cash payments of $500 for each separate committee meeting
attended, $1,000 for each trip to visit properties which are the subject of
possible acquisition by the Company, and is entitled, pursuant to the provisions
of the Trustee Plan, to grants of options to purchase Common Shares. Employees
of the Company who are also trustees are not paid any trustees' fees. In
addition, the Company reimburses the trustees for travel expenses incurred in
connection with their activities on behalf of the Company. During the fiscal
year ended December 31, 1996, Mr. Kranzdorf and Mr. Dennis were each issued
3,000 options pursuant to the Incentive Plan.
Under the terms of the Incentive Plan each non-employee trustee of the Company
is granted options each year to purchase 1,500 Common Shares at a price equal to
the then fair market value of Common Shares on the date of grant. Additionally,
each non-employee trustee shall be granted options each year to purchase an
additional 1,500 Common Shares at a price equal to the then fair market value of
Common Shares on the date of grant, provided that the Company's funds from
operations per Common Share have increased at least 4% over the prior year's
funds from operations per common share. In accordance with the terms of the
Incentive Plan, on March 10, 1997 the Company awarded 1,500 options to purchase
Common Shares to each of the Company's non-employee trustees at an exercise
price of $16.25 per Common Share.
No additional options were granted to the non-employee trustees since the
Company's funds from operations per Common Share in 1996 did not increase as
compared to the Company's funds from operations per Common Share in 1995.
<PAGE>
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF MESSRS. LINNEMAN AND
SHAPIRO TO SERVE UNTIL THE 2000 ANNUAL MEETING OF SHAREHOLDERS AND UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFY.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board and the Audit Committee have appointed the firm of Arthur Andersen
LLP, which firm was engaged as independent public accountants for the fiscal
year ended December 31, 1996, to audit the financial statements of the Company
for the fiscal year ended December 31, 1997. A proposal to ratify this
appointment is being presented to the shareholders at the Annual Meeting. A
representative of Arthur Andersen LLP is expected to be present at the meeting
and available to respond to appropriate questions and, although the firm has
indicated that no statement will be made, an opportunity for a statement will be
provided.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSED RATIFICATION OF APPOINTMENT
OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1997.
PROPOSAL 3
AMENDMENT TO THE TRUST'S DECLARATION OF TRUST RELATING TO
VOTING REQUIREMENTS OF THE SERIES B PREFERRED SHARES
General
In consideration for the recently completed merger (the "Merger") of Union
Property Investors, Inc. ("UPI") with a wholly-owned subsidiary of the Trust,
the Trust issued Series B-1 (the "Series B-1 Preferred Shares") and Series B-2
(the "Series B-2 Preferred Shares") Cumulative Convertible Preferred Shares of
Beneficial Interest of the Trust (collectively referred to as the "Series B
Preferred Shares") to the holders of common stock of UPI. In connection with the
Merger, the Trust filed a supplemental listing application with the New York
Stock Exchange (the "NYSE") to have the Series B-1 Preferred Shares listed for
trading on the NYSE. As a condition subsequent to the listing of the Series B-1
Preferred Shares on the NYSE, the Trust has provided the NYSE with an
undertaking to seek the approval of the shareholders of the Trust at this Annual
Meeting to amend the Trust's Declaration of Trust to increase the percentage of
the total number of outstanding Series B Preferred Shares, voting as a separate
class, required to approve certain actions by the Trust, as set forth below,
which would adversely affect the Series B Preferred Shares from a majority vote
to a two-thirds vote. The holders of in excess of two-thirds of the Series B
Preferred Shares have previously consented to the proposed amendment.
The Board believes that it would be beneficial to the Trust and its shareholders
to have the Series B-1 Preferred Shares listed for trading on the NYSE, and
recommends that you approve the amendment even though the amendment may make it
more difficult to take the actions described below. If the amendment to the
Declaration of Trust is not approved by at least a majority vote of the holders
of Common Shares, the NYSE has reserved the right to delist the Series B-1
Preferred Shares from trading on the NYSE.
<PAGE>
CURRENT APPLICABLE DECLARATION OF TRUST PROVISIONS
The Articles Supplementary to the Declaration of Trust pursuant to which the
Series B Preferred Shares were authorized currently provide that the Trust may
not, without the affirmative vote of the holders of at least a majority of the
total number of outstanding Series B Preferred Shares, voting together as a
separate class, take any of the following actions (collectively, the "Subject
Actions"): (i) issue shares ranking senior to the Series B Preferred Shares
("Senior Shares"), or reclassify any shares into any such Senior Shares or
reclassify shares ranking junior to the Series B Preferred Shares into shares
ranking on a parity with the Series B Preferred Shares; (ii) amend any of the
provisions of the Declaration of Trust so as to adversely affect the
preferences, conversion price, adjustment and rights, distribution and
liquidation rights, voting powers or rights, redemption rights or priveleges, or
notice rights of the Series B-1 Preferred Shares or the Series B-2 Preferred
Shares; or (iii) modify an express contract right of the Series B-1 Preferred
Shares or the Series B-2 Preferred Shares.
PROPOSED CHANGE TO THE DECLARATION OF TRUST
The amendment to the Declaration of Trust will increase the percentage of the
total number of oustanding Series B Preferred Shares required to approve, voting
together as a separate class, the Trust's taking of any of the Subject Actions
from a majority vote of the holders of the Series B Preferred Shares to a
two-thirds vote of the holders of the Series B Preferred Shares. The amendment
will not modify the rights of holders of Common Shares to approve amendments to
the Declaration of Trust.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT.
EXECUTIVE OFFICERS
The following is provided with respect to the executive officers of the Company.
Other than Norman M. Kranzdorf and Hermina G. Kranzdorf, who are husband and
wife, none of the executive officers of the Company are related to each other.
Executive officers are chosen by and serve at the discretion of the Board.
Norman M. Kranzdorf, 66, President and Chief Executive Officer. Biographical
information regarding Mr. Kranzdorf is set forth under "Proposal 1 - Election of
Trustees."
Robert H. Dennis, 50, Vice President, Chief Financial Officer and Treasurer.
Biographical information regarding Mr. Dennis is set forth under "Proposal 1 -
Election of Trustees."
Edmund Barrett, 63, Chief Operating Officer, Director of Leasing and Executive
Vice President. Biographical information regarding Mr. Barrett is set forth
under "Proposal 1 - Election of Trustees."
<PAGE>
Hermina G. Kranzdorf, 61, has been the Director of Communications and the
Secretary of the Company since 1992. From 1986 to 1992, she was the Director
of Communications and Secretary of Kranzco Realty. Ms. Kranzdorf is a member of
the International Council of Shopping Centers and presently serves as a member
of the Council's Community Service Committee.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the cash and
other compensation paid or accrued by the Company for services rendered by
Norman M. Kranzdorf, the Company's Chief Executive Officer and President, Robert
H. Dennis, the Company's Vice President, Chief Financial Officer and Treasurer,
and Edmund Barrett, the Company's Chief Operating Officer and Executive Vice
President (collectively, the "Named Executives"), during the fiscal years ended
December 31, 1996, 1995 and 1994. Other than the Named Executives, no executive
officer of the Company earned a total salary and bonus exceeding $100,000 during
the fiscal year ended December 31, 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation
- ---------------------------------------------------------------------- ------------ ------------
Other Annual Underlying
Name & Principal Position Year Salary Bonus Compensation Options
<S> <C> <C> <C> <C> <C> <C>
Norman M. Kranzdorf 1996 $230,769 $10,618 <F1><F2> 3,000 $5,394
President and Chief 1995 $200,000 $13,842 <F1><F2> - - $6,568
Executive Officer 1994 $200,000 $ 3,846 <F1><F2> 3,000 $6,549
Robert H. Dennis 1996 $119,231 $ 5,530 <F1><F2> 3,000 $5,952
Vice President, Chief 1995 $100,000 $ 6,921 <F1><F2> - - $5,456
Financial Officer and 1994 $100,000 $ 1,923 <F1><F2> 3,000 $5,291
Treasurer3
Edmund Barrett 1996 $106,010 $ 4,658 <F1><F2> - - $3,302
Executive Vice President 1995 $ 87,109 $ 5,676 <F1><F2> 3,000 $3,665
and Chief Operating Officer
<FN>
<F1>
Excludes certain personal benefits, the total value of which was less than
10% of the total annual salary paid or accrued by the Company for services
rendered by him during the fiscal years ended December 31, 1996, 1995 and 1994.
<F2>
The following table sets forth certain information concerning additional
compensation in the form of restricted common shares issued under the Incentive
Plan during the fiscal year ended December 31, 1996 to the Named Executives.
The shares issued vest one-third per year, commencing on the date of grant, and
entitle the holder to any current dividends:
</FN>
</TABLE>
<TABLE>
Restricted Common Shares Issued in Last Fiscal Year
<CAPTION>
Percent of Total Restricted
Number of Shares to Employees Price at Value at
Name Shares Issued In Fiscal Year Date of Issue Date of Grant
- ------------------- ------------- ----------------------- ------------- -------------
<S> <C> <C> <C> <C>
Norman M. Kranzdorf 1,655 26% $14.50 $23,998
Robert H. Dennis 862 13% $14.50 $12,499
Edmund Barrett 690 11% $14.50 $10,005
</TABLE>
<PAGE>
The following table sets forth certain information concerning options granted
during the fiscal year ended December 31, 1996 to the Named Executives. The
Company did not grant any share appreciation rights during 1996.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
Number of Percent of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise of Expiration Grant Date
Name Granted <F1> Fiscal Year Base Price Date Present Value <F2>
- ----------- ----------- ------------ ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Norman M. Kranzdorf 3,000 100% $15.125 11-19-06 $3,510.00
Robert H. Dennis 3,000 100% $15.50 06-02-06 $3,930.00
Edmund Barrett - - - - -
<FN>
<F1>
Options granted to Mr. Kranzdorf and Mr. Dennis in the fiscal year ended
December 31, 1996 vested and became exercisable on the date of grant.
<F2>
Based upon the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, that the Named Executive
receives will depend on the excess of the stock price at the time of exercise
over the exercise or base price on the date the option is exercised. There is
no assurance that the value realized by the Named Executive will be at or near
the value estimated by the Black-Scholes model. The estimated values under the
model are based on arbitrary assumptions such as interest rates, stock price
volatility and future dividends yields.
</FN>
</TABLE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
END AND FISCAL YEAR END OPTION VALUES
During the fiscal year ended December 31, 1996, none of the Named Executives
exercised any options granted to any of them. The following table sets forth
certain information with respect to the unexercised options held as of the end
of such fiscal year by the Named Executives.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Name Held at December 31, 1995 at December 31, 1995<F1>
- --------------- ------------------------------ ------------------------
Exercisable / Unexercisable Exercisable / Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Norman M. Kranzdorf 355,800 0 $5,250 $0
Robert H. Dennis 57,000 0 $4,125 $0
Edmund Barrett 21,000 0 $0 $0
<FN>
<F1>
The fair market value on December 31, 1996 of the Common Shares underlying
the options was $16.875 per Common Share.
</FN>
</TABLE>
<PAGE>
TRUSTEE PLAN AND EMPLOYEE PLAN
Prior to the Company's initial public offering in November 1992, the Option
Plans were adopted by the Board and all of the then current shareholders. The
Option Plans are administered by the Option Plans Committee established for such
purpose. The current members of such committee are Messrs. Kranzdorf and
Barrett (the "Administrators").
The Option Plans provide for the grant of options to purchase Common Shares to
eligible participants. The persons entitled to participate in the Trustee Plan
are those trustees of the Company or trustees or directors of any of the
Company's subsidiaries or affiliates as the Administrators of the Option Plans
shall select from time to time. Eligible participants of the Employee Plan
consist of those key employees (other than trustees or directors) of the
Company, or any of its subsidiaries or affiliates, as the Administrators shall
select from time to time. Options are granted by the Administrators based upon
such factors as the Administrators may deem proper and relevant. The Option
Plans were designed to attract, retain and motivate key employees by granting
them options to purchase Common Shares. The Option Plans provide for the grant
of a maximum of 700,000 Common Shares under the Trustee Plan and 300,000 Common
Shares under the Employee Plan, and permit the granting of share options to
employees which are either Incentive Options or Non-Qualified Options.
Subject to the terms of Option Plans, the Administrators determine the
recipients of options and the number of options to be granted under the Option
Plans. As of December 31, 1996 options to purchase 381,800 and 133,200 Common
Shares were outstanding under the Trustee Plan and Employee Plan, respectively,
all of which were exercisable as of December 31, 1996.
1995 INCENTIVE PLAN
The Incentive Plan was approved by the shareholders of the Company at the
Company's 1995 annual meeting of shareholders held in June 1995. The Incentive
Plan is administered by the Incentive Plan Committee which consists of Messrs.
Linneman and Selonick. In general, it is intended that members of the Incentive
Plan Committee will not be employees of the Company.
The purpose of the Incentive Plan is to align the interests of the Company's
trustees, executive officers, key employees, advisors and consultants with those
of the shareholders and to enable the Company to attract, compensate and retain
trustees, executive officers, key employees, advisors and consultants and
provide them with appropriate incentives and rewards for their performance.
Awards to trustees, executive officers, key employees and other individuals
under the Incentive Plan may take the form of options to purchase Common Shares,
including corresponding share appreciation rights and reload options, and in the
case of employees, restricted share awards and share purchase awards.
All employees, trustees, and certain other key individuals are currently
eligible to participate in the Incentive Plan subject to certain restrictions
that apply to members of the Incentive Plan Committee. Awards under the
Incentive Plan may be granted in combination with other awards, including
options granted under the Option Plans. The maximum number of Common Shares
that may be the subject of awards under the Incentive Plan is 1,000,000 Common
Shares. The Incentive Plan provides that in any given year, the maximum number
of Common Shares with respect to which Options or share appreciation rights may
be granted to any employee is 100,000 Common Shares. As of December 31, 1996,
options to purchase 303,000 Common Shares were outstanding under the Incentive
Plan. During the fiscal year ended December 31, 1996, 3,000 options were issued
to each of Messrs. Dennis, Kranzdorf, Linneman, Maizlish, Selonick and Shapiro,
in accordance with the Incentive Plan.
<PAGE>
BOARD AND EXECUTIVE COMPENSATION COMMITTEE REPORT
Executive compensation is paid by the Company in the form of cash or through
grants of awards under the Options Plans or the Incentive Plan. All final
decisions regarding the cash component of executive compensation are made by the
Board which, in making such determinations, takes into consideration the
recommendations of the Executive Compensation Committee as well as the matters
considered by, and the philosophy applied by such committee as set forth below.
All final decisions regarding grants of awards under the Options Plans and
Incentive Plan are made by the plans' respective administrators (the "Plan
Administrators") who, in making such compensation decisions, take into
consideration recommendations made by the Board and/or its Executive
Compensation Committee. In making its recommendations to the Board or the Plan
Administrators, as the case may be, the Executive Compensation Committee reviews
compensation plans, programs and policies and monitors the performance and
compensation of executive officers.
The key elements of the Company's executive compensation package are base
salary, annual bonus and long-term incentives. The policies with respect to
each of these elements, as well as the compensation paid to the executive
officers of the Company during the fiscal year ended December 31, 1996, are
discussed below.
Base Salaries
Base salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for executive talents, including a
comparison to base salaries for comparable positions at other real estate
investment trusts ("REITs") in the comparison peer group. The
base salaries currently are intended to be fixed at the average level of the
base salaries paid to executive officers with comparable qualifications,
experience and responsibilities at other REITs in the comparison peer group.
Increases in the base salaries of certain of the Company's executive officers
were recommended by the Executive Compensation Committee and approved by the
Board, effective as of April 1, 1996 (for Mr Kranzdorf and Mr. Dennis) and July
1, 1996 (for Mr. Barrett). Annual salary adjustments are determined based on an
evaluation of executive officers' responsibilities and performance, as well as a
review of the amount of base salaries paid to executive officers with comparable
qualifications, experience and responsibilities by other REITs that would
compete in the Company's shopping center business and the performance of the
Company.
Annual Bonus
In 1994, the Executive Compensation Committee proposed, and the Board approved,
an incentive compensation plan effective for the 1994 fiscal year, setting forth
guidelines pursuant to which each executive officer would be entitled, at the
sole discretion of the Board, to receive incentive compensation consisting of
an annual bonus equal to a percentage of each executive officer's base salary
for the applicable year so long as the Company achieved certain increases in
funds from operations per Common Share for the prior calendar year. The table
below sets forth the percentage increases in funds from operations per Common
Share necessary to trigger the incentive payments. The incentive payments may
be less than the applicable percentage but may not exceed it.
<PAGE>
<TABLE>
<CAPTION>
Percentage Increases Maximum
In Funds From Operations Percentage of Incentive
Per Common Share From Prior Year Compensation Payable
-------------------------------- -----------------------
<C> <C>
5% or more 100.00%
4 to 4.99% 33.33%
3 to 3.99% 16.66%
Below 2.99% 0.00%
</TABLE>
The Executive Compensation Committee, in recommending the amount of annual
bonuses, if any, to be paid to executive officers pursuant to the incentive
compensation plan or otherwise with respect to a fiscal year, reviews the
performance of the Company and, if appropriate, the Common Shares during such
fiscal year, and non-financial performance measures such as the respective
executive's performance, effort and role in promoting the long-term strategic
growth of the Company, as well as such other matters as the Executive
Compensation Committee may deem appropriate.
With respect to the fiscal year 1996, the Company paid to each of its executive
officers a bonus of approximately 2% of such officer's base salary plus an
additional bonus equal to 12.5% of such officer's base salary, payable one-fifth
in cash and the balance in the form of restricted Common Shares which vest over
a three-year period. The restricted Common Shares were granted under the
Incentive Plan. Although such bonuses were not paid to the executive officers
pursuant to the Company's incentive compensation plan adopted in 1994, the
Executive Compensation Committee, in recommending such bonuses, applied the
criteria set forth in the preceding paragraph.
Long-Term Incentives
Long-term incentives are designed to align the interests of the Company's
employees, trustees and other key individuals with those of the Company's
shareholders. In (i) awarding options and share appreciation rights under the
Incentive Plan to its employees, trustees and other key individuals, (ii) making
grants of restricted Common Shares, and (iii) making loans to employees for the
purchase of Common Shares in connection with a share purchase award,
consideration is given to the amount of options previously granted to them and
whether any long-term incentives have previously been awarded.
Share options and related share appreciation rights are generally granted with
an exercise price equal to the market price of the Common Shares on the date of
grant and vest and become exercisable over a period of years based upon
continued employment. This creates shareholder value over the long term since
the full benefit of the compensation package cannot be realized unless share
price appreciation occurs over a number of years.
Grants of restricted Common Shares to employees also form a part of the
Company's long-term incentive package. Typically some portion of such grants
vest annually over a period of several years, so long as the executive officer
remains employed by the Company. In making grants of restricted Common Shares,
the Incentive Plan Committee considers and gives approximately equal weight to
an individual's scope of responsibilities, experience, past contributions to the
Company and anticipated contributions to the Company's long-term success.
Another component of the Company's long-term incentive package may include
making loans to employees for the purchase of Common Shares in connection with a
share purchase award under the Incentive Plan. These loans typically will be
secured by the Common Shares purchased and otherwise will be non-recourse. The
loans may be interest-free and may be forgiven in part over time provided that
the executive officer has not resigned as an employee of the Company and may be
forgiven in full in the event employment terminates by reason of death,
disability, termination with "cause" or a "change of control." In making such
loans, the Incentive Plan Committee will consider the same factors it considers
in making grants of restricted Common Shares.
<PAGE>
The Executive Compensation Committee believes that share options, share
appreciation rights, grants of restricted shares and loans to purchase shares
promote loyalty to the Company and encourage recipients to coordinate their
interests with those of the shareholders. The Executive Compensation Committee
may consider additional types of long-term incentives in the future.
Compensation of Chief Executive Officer
Mr. Kranzdorf's compensation is determined after consideration of his long term
qualifications, responsibilities and experience in the real estate industry, and
the compensation package awarded to chief executive officers of other comparable
REITs. The Company believes that Mr. Kranzdorf's base salary is less than the
average base salary for chief executive officers of such other similar REITs
based on the NAREIT survey and other sources.
In 1996, Mr. Kranzdorf received a base salary of $230,769 and an annual cash
bonus of $10,618. Mr. Kranzdorf's bonus was based on a study of the salary and
bonus paid to other chief executive officers by similar size and type real
estate investment trusts. The results of various studies from leading
compensation firms, NAREIT and the Company's auditors were considered by the
Executive Compensation Committee. After such study, it was determined that Mr.
Kranzdorf's base salary and bonus were less than industry benchmarks.
For the long-term incentive component of Mr. Kranzdorf's compensation, in 1996
the Incentive Plan Committee granted to Mr. Kranzdorf 1,655 restricted Common
Shares under the Incentive Plan. Such shares vest over a three-year period
commencing on the date of grant. See the table above captioned "Summary
Compensation Table." Mr. Kranzdorf's long-term incentive compensation was based
on the same factors and considerations as those of the Company's other executive
officers, namely the desire to properly compensate its executives and to promote
loyalty to the Company. His long-term incentive compensation reflects the
Executive Compensation Committee's desire to create incentives for him and focus
him on maximizing shareholder value, and the practice of the Company's primary
competitors for executive talent (particularly REITs) of making long-term
incentive grants to chief executive officers.
Omnibus Budget Reconciliation Act Implications for Executive Compensation
It is the responsibility of the Executive Compensation Committee to address the
issues raised by the provisions in the tax laws which make certain
non-performance-based compensation to executives of public companies in excess
of $1,000,000 non-deductible to the Company beginning in 1994. In this regard,
the Executive Compensation Committee considers whether any actions with respect
to this limit should be taken by the Company. No executive officer of the
Company received any such compensation in excess of this limit during 1996. The
Incentive Plan has been designed in a manner to allow certain grants of options
and share appreciation rights to be treated as performance based and, therefore,
not subject to the $1,000,000 limitation. The Executive Compensation Committee
will continue to monitor the $1,000,000 limitation and will make necessary
recommendations if it is warranted in the future.
<PAGE>
Conclusion
The Executive Compensation Committee's goal is to enhance the profitability of
the Company and, thus, shareholder value, by aligning closely the financial
interests of the Company's key executives with those of its shareholders.
Specifically, the Executive Compensation Committee has sought, and will continue
to seek, to enhance the Company's ability to attract and retain qualified
executive officers, to motivate such executives and to achieve the goals
inherent in the Company's business strategy and to emphasize share ownership by
such executives and, thereby, tie long-term compensation to increases in
shareholder value.
To permit ongoing evaluation of the link between the Company's performance and
its executive compensation, the Executive Compensation Committee intends to
conduct a full review of the Company's executive compensation program each year.
This review will include a review of such executive's responsibilities and
efforts and a comparison of the Company's executive compensation, Company
performance, share appreciation and total return to shareholders primarily to
other retail shopping center-oriented REITs that represent the Company's most
direct competitors for executive talents. The Executive Compensation Committee
will also continually review the selection of peer companies used for
compensation analysis. Since the peer group index in the Performance Graph
included in this Proxy Statement includes all equity REITs and not just those
which are retail shopping center oriented, the peer group used for compensation
analysis will consist only of certain of the REITs included in the peer group
index in the Performance Graph.
In addition, while the elements of compensation described above will be
considered separately, the Executive Compensation Committee will take into
account the full compensation package afforded by the Company to the individual,
including pension benefits, supplemental retirement benefits, severance plans,
insurance and other benefits. In this regard, it should be noted that the
Company has implemented a 401(k) retirement plan covering substantially all
officers and employees of the Company. The 401(k) plan permits participants to
defer up to a maximum of 10% of their compensation, which deferrals may, in the
Company's sole discretion, be matched by the Company in an amount equal to 50%
of the first 5% of the employee's salary. Under the terms of the 401(k) plan,
the Company may also, in its sole discretion, make additional profit sharing
contributions to such plan. For the year 1996, the Company made total
contributions of $67,000 to the 401(k) plan.
Through the programs described above, a very significant portion of the
Company's executive compensation is linked to individual and corporate
performance.
The foregoing report has been furnished by the Board and the Executive
Compensation Committee.
March 31, 1997
Edmund Barrett
Robert H. Dennis
Norman M. Kranzdorf
Dr. Peter D. Linneman
James B. Selonick
E. Donald Shapiro
<PAGE>
<TABLE>
SHARE PRICE PERFORMANCE GRAPH
The following table (which can be plotted as a performance graph) compares the
cumulative total shareholder return on the Common Shares for the period
commencing November 19, 1992 through December 31, 1996 with the cumulative total
return on the Standard & Poor's 500 Stock Index ("S&P 500") and the NAREIT
Equity REIT Total Return Index ("NAREIT Index") over the same period. Total
return values for the S&P 500, the NAREIT Index and the Common Shares were
calculated based on cumulative total return assuming the investment of $100 in
the S&P 500 and the NAREIT Index on November 1, 1992, and in the Common Shares
on November 19, 1992, and assuming reinvestment of dividends. The shareholder
return shown on the graph below is not necessarily indicative of future
performance.
<CAPTION>
Total Return
Date NAREIT Equity Index S & P 500 Common Shares
- --------------------------------------------------------------------------
<S> <C> <C> <C>
11/01/92 $100.00 $100.00
11/19/92 $100.00
12/31/92 103.96 102.86 107.98
12/31/93 121.81 111.42 113.37
12/31/94 125.67 112.89 109.02
12/31/95 144.86 155.14 94.49
12/31/96 192.77 184.48 115.43
<FN>
<F1>
Since the Company did not commence operation until November 19, 1992, which is
the date the Company's initial public offering was completed, no data prior
thereto is available.
<F2>
The NAREIT Equity REIT Total Return Index (consisting of 166 companies with a
total market capitalization of $78.3 billion) is maintained by the National
Association of Real Estate Investment Trusts, Inc.
</FN>
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases from Norman and Hermina Kranzdorf a three-story building
containing approximately 20,000 square feet located at 128 Fayette Street,
Conshohocken, Pennsylvania, which serves as the Company's headquarters. The
lease for the Company's headquarters expires on January 15, 1999 and provides
that the Company will pay a rental of $153,720 per annum. The lease also
provides that the Company will pay for all real estate taxes, utilities, repairs
and other costs and expenses in connection with the use and occupancy of the
building. The Company subleases a portion of the building to Scotmar Property
Associates, Inc., a real estate brokerage company,which occupies 2,700 square
feet at a per annum rental equal to 40% of the net commissions received by such
entity for leases obtained for the Company. During the period from January 1,
1996 to June 30, 1996, the Company was paid an aggregate rental amount of
$23,568 in connection with this sublease. For the period July 1, 1996 to June
30, 1997, the Company is entitled to receive a minimum rental of $33,000 under
the terms of the related lease which originally expired June 30, 1995 but was
renewed by the Company in June 1995 for an additional two years.
On March 19, 1997 the Company entered into Severance Benefits Agreements with
Norman M. Kranzdorf, Robert Dennis, Edmund Barrett, Bengt Danielsson, Michael
Warrington and Michael Kranzdorf pursuant to which such individuals are entitled
to, among other things, certain compensation upon a change in control of the
Company. Each agreement provides that upon a change in control and so long as
such individual is an employee of the Company immediately prior to such a change
in control, (a) the executive officer shall receive a lump sum severance payment
equal to a multiple of the executive officer's annual compensation during the
calendar year preceding the calendar year during which the change in control has
occurred; the multiple is three, two and one, with respect to (i) Norman M.
Kranzdorf, (ii) Robert Dennis and Edmund Barrett, and (iii) Bengt Danielsson,
Michael Warrington and Michael Kranzdorf, respectively, (b) all restricted
Common Shares then owned by the executive officer shall immediately vest and no
longer be subject to repurchase or other forfeiture restrictions, (c) the
Company will continue to provide life, accident, medical and dental insurance to
the executive officer for a period of 18 months after the change in control, and
(d) in the event the executive officer holds any options to purchase Common
Shares on the date of the change in control, such individual shall be entitled
to receive an amount equal to, generally, the number of options to purchase
Common Shares then owned by the executive officer multiplied by the amount, if
any, that (i) the exercise price of the options or the closing price of the
Common Shares on the date of the change in control, whichever is less, exceeds
the closing price of the Common Shares six months prior to the date of the
change in control. In addition, Norman M. Kranzdorf is entitled to receive an
additional sum to cover certain resulting income and excise tax liabilities that
may be incurred on all of the foregoing. Furthermore, the Severance Benefits
Agreement of each executive officer other than Norman M. Kranzdorf provides
that, to the extent that any of the foregoing benefits granted to such
individual would cause him to be liable for excise tax liabilities, the benefits
available to him shall be reduced to an amount which would not require the
payment of any such excise tax, but only if doing so yields a greater after tax
amount to such individual.
In addition, on March 19, 1997, the Company entered into Severance Benefits
Agreements with Peter Linneman, E. Donald Shapiro and James Selonick, trustees
of the Company, pursuant to which such individuals are entitled to, among other
things, certain compensation upon a change in control of the Company. Each
agreement provides that so long as such individual is a trustee immediately
prior to a change in control, upon such a change in control and, in the event
the trustee holds any options to purchase Common Shares on the date of the
change in control, such individual shall be entitled to receive an amount based
on the formula described in clause (d) of the preceding paragraph. Finally, the
Severance Benefits Agreement of each trustee provides that, to the extent that
the foregoing benefits granted to such trustee would cause him to be liable for
excise tax liabilities, the benefits available to him shall be reduced to an
amount which would not require the payment of any such excise tax, but only if
doing so yields a greater after tax amount to such trustee.
<PAGE>
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On April 20, 1993, the Board established an Executive Compensation Committee,
the function of which is to determine compensation for the executive officers of
the Company. The Executive Compensation Committee consists of Messrs. Kranzdorf,
Selonick and Shapiro. Other than Mr. Kranzdorf, who is the President and Chief
Executive Officer of the Company, none of the members of the Executive
Compensation Committee are employees of the Company.
Prior to the Company's initial public offering in November 1992, the Option
Plans were adopted by the Board and all of the then current shareholders of the
Company. In connection with the creation of the Option Plans, the Board
established the Option Plans Committee to administer the Option Plans. The
Option Plans Committee, which determines those key employees entitled to grants
of options under the Option Plans, is composed of Messrs. Kranzdorf and Barrett,
each of whom is an employee of the Company.
On June 6, 1995, the shareholders approved the Incentive Plan. The Board then
established the Incentive Plan Committee to administer the plan. The Incentive
Plan Committee, the function of which is to determine the trustees, executive
officers, key employees and other individuals who will be eligible for awards
under the plan, consists of Messrs. Linneman and Selonick, neither of whom are
employees of the Company.
To the Company's knowledge, there were no other interrelationships involving the
trustees of the Company and compensation decisions requiring disclosure in this
Proxy Statement.
<PAGE>
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership
of the Common Shares, including Common Shares as to which a right to acquire
ownership exists (for example, through the exercise of stock options) within the
meaning of rule 13d-3(d)<F1> under the Securities Exchange Act, as amended, by
each person known by the Company to own beneficially more than 5% of the Common
Shares, each trustee and Named Executive, and all trustees and executive
officers as a group as of March 1, 1997 (unless otherwise indicated). As
permitted by applicable Securities and Exchange Commission rules, no separate
information with respect to the Common Shares beneficially owned by each of the
other executive officers of the Company is given because no such officer earned
$100,000 or more in compensation in the fiscal year ended December 31,1996.
<CAPTION>
Amount Percent
Name and Address Beneficially of
of Beneficial Owner<F1> Owned Class<F2>
- ---------------------- ------------ ---------
<S> <C> <C>
Norman M. Kranzdorf 589,190<F3> 5.4%
Edmund Barrett 27,474<F4> <F11>
Robert H. Dennis 76,288<F5> <F11>
Dr. Peter D. Linneman 10,172<F6> <F11>
University of Pennsylvania
Wharton School of Business
Philadelphia, PA 19104
Irvin B. Maizlish 11,192<F7> <F11>
4601 Gulfshore Blvd. North
Naples, FL 33940
James B. Selonick 10,172<F8> <F11>
11 Corbin Drive
Cincinnati, OH 45208
E. Donald Shapiro 20,172<F9> <F11>
1 Princeton Terrace
Short Hills, NJ 07078
First Union Corporation 799,700<F10> 7.74%
One First Union Center
Charlotte, NC 28288
All trustees and executive
officers as a group (8 persons) 744,660 6.9%
<FN>
<F1>
Unless otherwise indicated, the address for each individual is 128 Fayette
Street, Conshohocken, PA 19428.
<F2>
Calculated based on 10,333,914 Common Shares outstanding and assuming, with
respect to each of the individuals listed above, the exercise of all currently
exercisable options to purchase Common Shares held by such individual.
<F3>
Includes (a) 13,898 shares owned directly by Mr. Kranzdorf's wife, (b) 36,000
shares owned by her as trustee for the benefit of Michael Kranzdorf and Betty
Kranzdorf, (c) options to purchase 355,800 shares granted to him under the
Trustee Plan, (d) options to purchase 3,000 shares granted to him under the
Incentive Plan, and (e) options to purchase 18,000 shares granted to Mrs.
Kranzdorf under the Employee Plan. All options were granted under either the
Employee Plan or the Trustee Plan and were exercisable immediately.
<F4>
Includes (a) options to purchase 18,000 Common Shares granted to him under
the Employee Plan, (b) options to purchase 3,000 Common Shares granted to him
under the Trustee Plan, and (c) 3,642 Common Shares owned directly by Mr.
Barrett's spouse.
<F5>
Includes (a) options to purchase 54,000 Common Shares granted to him under
the Employee Plan, (b) options to purchase 3,000 Common Shares granted to him
under the Trustee Plan, (c) options to purchase 3,000 Common Shares granted to
him under the Incentive Plan, (d) 136 Common Shares owned directly by Mr.
Dennis's spouse, and (e) options to purchase 600 Common Shares granted to her
under the Employee Plan.
<F6>
Includes (a) options to purchase 6,000 Common Shares granted to him under the
Trustee Plan, (b) options to purchase 3,000 Common Shares granted to him under
the Incentive Plan, and (c) 400 Common Shares owned solely by his spouse.
<F7>
Includes (a) options to purchase 6,000 Common Shares granted to him under the
Trustee Plan, (b) options to purchase 3,000 Common Shares granted to him under
the Incentive Plan, and (c) 1,024 Common Shares owned solely by his spouse.
<F8>
Includes options to purchase 5,000 Common Shares granted to him under the
Trustee Plan and options to purchase 3,000 Common Shares granted to him under
the Incentive Plan.
<F9>
Includes (a) options to purchase 3,000 Common Shares granted to him under the
Trustee Plan, (b) options to purchase 3,000 Common Shares granted to him under
the Incentive Plan and (c) 10,000 shares owned directly by Mr. Shapiro's spouse.
<F10>
Reflects information as of December 31, 1996, obtained by the Company from
a Schedule 13G Statement dated February 13, 1997, filed by First Union
Corporation with the Securities and Exchange Commission pursuant to Section
13(g) of the Securities Exchange Act of 1934, as amended. First Union
Corporation is a parent holding company of Evergreen Asset Management Group and
Lieber and Company. First Union Corporation has sole voting and dispositive
power with respect to 754,700 of such Common Shares and shared voting and
dispositive power with respect to 45,000 of such Common Shares.
<F11>
Less than 0.1 percent.
</FN>
</TABLE>
<PAGE>
SECTION 16(a)
BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's trustees, executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. Trustees, executive officers and greater
than 10% beneficial owners are required by regulation of the Securities and
Exchange Commission to furnish the Company with copies of all Section 16(a)
Forms 3, 4 and 5 they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that all filing requirements
with respect to transactions during 1996 for all of its trustees, executive
officers, and greater than 10% beneficial owners were complied with.
SHAREHOLDERS PROPOSALS
Proposals of shareholders intended to be presented at the 1998 Annual Meeting of
Shareholders must be received by the Company at its principal executive offices
not later than December 1, 1997 for inclusion in the Company's proxy statement
and form of proxy relating to that meeting.
In addition, the Bylaws of the Company provide that in order for a shareholder
to nominate a candidate for election as a trustee at an annual meeting of
shareholders or propose business for consideration at such a meeting, notice
must be given to the secretary of the Company no more than 90 days nor less than
60 days prior to the first anniversary of the preceding year's annual meeting.
The fact that the Company may not insist upon compliance with these requirements
should not be construed as a waiver by the Company of its right to do so at any
time in the future.
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the fiscal year ended December 31, 1996,
including financial statements, was previously sent to shareholders. The Annual
Report is not a part of the proxy solicitation materials.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Brokers and
nominees should forward soliciting materials to the beneficial owners of the
Common Shares held of record by such persons, and the Company will reimburse
them for their reasonable forwarding expenses. In addition to the use of the
mails, proxies may be solicited by trustees, officers and regular employees of
the Company, who will not be specially compensated for such services, by means
of personal calls upon, or telephonic or telegraphic communications with
shareholders or their personal representatives.
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OTHER MATTERS
The Board knows of no matters other than those described in this Proxy Statement
which are likely to come before the Annual Meeting. If any other matters
properly come before the Annual Meeting, the persons named in the accompanying
form of proxy intend to vote the proxies in accordance with their best judgment.
