<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
TriNet Corporate Realty Trust, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities 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 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
Trinet Logo
March 31, 1998
Dear Fellow Stockholder:
On behalf of your Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of TriNet Corporate Realty Trust, Inc. scheduled
to be held on Wednesday, May 27, 1998 at 9:00 a.m., at the Park Hyatt Hotel,
Consortium Room, 333 Battery Street, San Francisco, California. Your Board of
Directors and management look forward to greeting personally those stockholders
able to attend.
At the meeting, stockholders will be asked to: Elect three directors;
approve a proposal to amend the Company's Articles of Incorporation to increase
the authorized capital stock of the Company; approve a proposal to amend the
Company's Articles of Incorporation to modify the provision relating to
liability of Directors and officers of the Company; and ratify the selection of
Coopers & Lybrand L.L.P. as the Company's independent auditors for the current
fiscal year. Information regarding these matters is set forth in the
accompanying Notice and Proxy Statement to which you are urged to give your
prompt attention. The Board of Directors unanimously recommends a vote for all
of the proposals.
It is important that your shares be represented and voted at the meeting.
Whether or not you plan to attend, please take a moment to sign, date and
promptly mail your proxy in the enclosed prepaid envelope. This will not limit
your right to vote in person should you attend the meeting.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
LOGO
Mark S. Whiting
President and
Chief Executive Officer
TRINET CORPORATE REALTY TRUST, INC.
One Embarcadero Center - 33(rd) Floor - San Francisco - California
94111-3722 - Tel: 415.391.4300 - Fax: 415.391.6259 - www.tricorp.com
<PAGE> 3
TRINET CORPORATE REALTY TRUST, INC.
ONE EMBARCADERO CENTER, 33RD FLOOR
SAN FRANCISCO, CALIFORNIA 94111
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
------------------------
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of TriNet Corporate Realty Trust, Inc. (the "Company") will be
held on Wednesday, May 27, 1998 at 9:00 a.m. at the Park Hyatt Hotel, Consortium
Room, 333 Battery Street, San Francisco, California, for the following purposes:
1. To elect one Class III Director to serve until the 1999 Annual
Meeting of Stockholders and two Class II Directors of the Company to serve
until the 2001 Annual Meeting of Stockholders, and until their respective
successors are duly elected and qualified;
2. To consider and act upon a proposal to approve an amendment to the
Company's Articles of Incorporation to increase the authorized capital
stock of the Company;
3. To consider and act upon a proposal to approve an amendment to the
Company's Articles of Incorporation to modify the provision relating to
liability of the Directors and officers of the Company;
4. To ratify the Board of Directors' selection of Coopers & Lybrand
L.L.P. as the Company's independent auditors for the current fiscal year;
and
5. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on March 16, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, $.01 par value per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.
You are requested to sign, date and promptly mail the enclosed Proxy Card,
which is being solicited by the Board of Directors, in the enclosed
postage-prepaid envelope. Any proxy may be revoked by delivery of a later dated
proxy. Stockholders of record who attend the Annual Meeting may vote in person,
even if they have previously delivered a signed proxy.
By Order of the Board of Directors
A. William Stein
Secretary
San Francisco, California
March 31, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND
PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PROVIDED.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 4
TRINET CORPORATE REALTY TRUST, INC.
ONE EMBARCADERO CENTER, 33RD FLOOR
SAN FRANCISCO, CALIFORNIA 94111
------------------------
PROXY STATEMENT
------------------------
FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 27, 1998
March 31, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of TriNet Corporate Realty Trust, Inc. (the
"Company") for use at the 1998 Annual Meeting of Stockholders of the Company to
be held at 9:00 a.m. on Wednesday, May 27, 1998, and at any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
stockholders will be asked to vote on the election of one Class III Director and
two Class II Directors of the Company, to approve certain amendments to the
Company's Articles of Incorporation, to ratify the Board of Directors' selection
of Coopers & Lybrand L.L.P. as the Company's independent auditors for the
current fiscal year, and to act on any other matters properly brought before
them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about March 31, 1998. The
Board of Directors has fixed the close of business on March 16, 1998 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 23,930,204 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held by them.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of two-thirds of all outstanding
shares of Common Stock is required for the approval of the proposed amendments
to the Articles of Incorporation of the Company. The affirmative vote of the
holders of a majority of the votes cast with a quorum present at the Annual
Meeting is required for the election of Class II and Class II Directors, the
ratification of the selection of the Company's auditors and the approval of any
other matters properly presented at the Annual Meeting for stockholder approval.
Under Maryland law, abstentions do not constitute a vote "for" or "against" a
matter and will be disregarded in determining the "votes cast" for purposes of
electing Directors and ratifying the selection of the Company's auditors. For
purposes of the vote on the amendments of the Company's Articles of
Incorporation, abstentions will have the same effect as votes against the
proposal. Broker "non-votes," or proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owners or
other persons entitled to vote such shares on a particular matter with respect
to which the broker or nominee does not have discretionary voting power, will be
treated in the same manner as abstentions. Both abstentions and broker non-votes
will be counted in determining the presence of a quorum at the Annual Meeting.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO SIGN, DATE AND PROMPTLY MAIL
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. SHARES
REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE VOTE AT THE
ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING AS DIRECTED
ON THE PROXY CARD. IF A PROPERLY EXECUTED PROXY CARD IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE SHARES OF COMMON STOCK REPRESENTED BY THAT PROXY
WILL BE VOTED FOR THE ELECTION OF ONE NOMINEE FOR CLASS III DIRECTOR AND TWO
NOMINEES FOR CLASS II DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT,
FOR APPROVAL OF THE AMENDMENTS TO THE ARTICLES OF INCORPORATION AND FOR
RATIFICATION OF THE BOARD OF DIRECTORS'
<PAGE> 5
SELECTION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE CURRENT FISCAL YEAR. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE
SET FORTH IN THIS PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING. IF
OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The Company's 1997 Annual Report, including financial statements for the
fiscal year ended December 31, 1997, is being mailed to stockholders
concurrently with this Proxy Statement. The 1997 Annual Report, however, is not
part of the proxy solicitation material. A copy of the Company's annual report
to the Securities and Exchange Commission ("SEC") on Form 10-K may be obtained
by writing to the Secretary.
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members and is
divided into three classes, with the Directors in each class serving for a term
of three years and until their successors are duly elected and qualified. The
term of one class expires at each annual meeting of stockholders.
At the Annual Meeting, stockholders are being asked to vote on the election
of one Class III Director to serve until the 1999 Annual Meeting and two Class
II Directors to serve until the 2001 Annual Meeting, and until their successors
are duly elected and qualified. The Board of Directors has nominated George R.
Puskar to serve as a Class III Director and Robert W. Holman, Jr. and John G.
McDonald to serve as Class II Directors (the "Nominees").
Each of the Nominees is currently serving as a Director of the Company. Mr.
Holman and Mr. McDonald currently serve as Class II Directors and their regular
terms expire at the Annual Meeting. Mr. Puskar currently serves as a Class III
Director and was elected by the Directors effective January 1, 1998 to fill the
vacancy on the Board resulting from the resignation of Mr. Jay H. Shidler on
December 31, 1997. Mr. Shidler's regular term would have expired at the 1999
annual meeting of the stockholders. As a Class III Director, Mr. Puskar
typically would be nominated for re-election at the 1999 annual meeting.
However, pursuant to Maryland law, a Director who is elected by the Board to
fill a vacancy serves until the next annual meeting of stockholders and until
his successor is elected and qualified.
The Board of Directors anticipates that each of the Nominees will serve, if
elected, as a Director. However, if any person nominated by the Board of
Directors is unable to accept election, the proxies will be voted for the
election of such other person or persons as the Board of Directors may
recommend.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES.
2
<PAGE> 6
INFORMATION REGARDING NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth certain
information with respect to the three Nominees for election as Directors at the
Annual Meeting, the continuing Directors whose terms expire at the annual
meetings of stockholders in 1999 and 2000, and the executive officers who are
not Directors, based on information furnished to the Company by each Director
and executive officer. The following information is as of March 16, 1998, unless
otherwise specified.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
DIRECTOR BENEFICIAL OWNERSHIP PERCENT
NAME AGE SINCE OF COMMON STOCK OF CLASS
---- --- -------- -------------------- --------
<S> <C> <C> <C> <C>
CLASS III NOMINEE FOR ELECTION AT 1998 ANNUAL MEETING
(TERM TO EXPIRE IN 1999)
George R. Puskar 54 1998 1,000 *
CLASS II NOMINEES FOR ELECTION AT 1998 ANNUAL MEETING
(TERM TO EXPIRE IN 2001)
Robert W. Holman, Jr. 54 1993 360,862(1) 1.5%
John G. McDonald 60 1993 29,000(2) *
CLASS III CONTINUING DIRECTORS
(TERM TO EXPIRE IN 1999)
Willis Andersen, Jr. 66 1993 30,082(3) *
Stephen B. Oresman 65 1993 25,000(2) *
CLASS I CONTINUING DIRECTORS
(TERM TO EXPIRE IN 2000)
Robert S. Morris 43 1993 26,000(2) *
Mark S. Whiting 41 1993 255,059(4) 1.1%
</TABLE>
- ---------------
* Less than one percent.
(1) Includes 189,735 shares beneficially owned by Mr. Holman which are held by
Quantum Group, L.P., an Oregon limited partnership owned by Mr. Holman and
his wife, 7,000 shares owned by Mr. Holman's wife, and options to purchase
up to 157,000 shares of Common Stock, which are currently exercisable.
(2) Includes options to purchase up to 24,000 shares of Common Stock, which are
currently exercisable.
(3) Includes 500 shares held by the Madeleine M. Andersen Trust, of which Mr.
Andersen is a trustee, and options to purchase up to 18,000 shares of Common
Stock, which are currently exercisable.
(4) Includes 1,000 shares held by Mr. Whiting's wife and options to purchase up
to 175,000 shares of Common Stock, which are currently exercisable.
CLASS III NOMINEE FOR ELECTION AT 1998 ANNUAL MEETING -- TERM TO EXPIRE IN 1999
GEORGE R. PUSKAR. Mr. Puskar became a Director of the Company on January 1,
1998 when he was elected by the Board of Directors to fill the vacancy resulting
from the resignation of Mr. Jay H. Shidler effective December 31, 1997. Since
June 1997, Mr. Puskar has served as Chairman of the Board of ERE Yarmouth, the
U.S. real estate unit of Lend Lease Corporation, an international financial
services and real estate company based in Sydney, Australia. From 1988 until
June 1997, Mr. Puskar was Chairman and Chief Executive Officer of Equitable Real
Estate Investment Management, Inc., where he was responsible for directing the
business operations of a full service commercial real estate investment
management company with approximately $30 billion in assets under management.
Prior to its acquisition by Lend Lease Corporation in June 1997, Equitable Real
Estate Investment Management, Inc. operated as a subsidiary of The Equitable
Life Assurance Society of the United States. Mr. Puskar has served as a member
of the Board of Directors of Carr Real Estate Investment Trust, a New York Stock
Exchange ("NYSE") listed real estate investment trust ("REIT"), from 1993 to
1997, and currently holds advisory board assignments at Georgia State University
and the Wharton School's Real Estate Center. Mr. Puskar has also served on the
Boards of the Urban Land Institute, the International Council of Shopping
Centers, the National Council of Real Estate Fiduciaries and the National Realty
Committee, and as chairman of a campaign to endow a real estate chair at Clark
Atlanta University/ Morehouse College.
3
<PAGE> 7
CLASS II NOMINEES FOR ELECTION AT 1998 ANNUAL MEETING -- TERM TO EXPIRE IN 2001
ROBERT W. HOLMAN, JR. Mr. Holman was Co-Chairman of the Board of Directors
and Chief Executive Officer of the Company from its formation until May 22,
1996, when he became Chairman of the Board. He was a co-founder and the Chairman
and Chief Executive Officer of the Company's predecessor, Holman/Shidler
Corporate Capital, Inc. ("HSCC"). Prior to founding HSCC, Mr. Holman acquired
and managed an investment portfolio of real estate and corporate assets in
Hawaii. For over 14 years, he managed the U.S. real estate portfolio of
Australia's largest merchant bank, Partnership Pacific Bank, owned by Bank of
Tokyo, Bank of America and Westpac, and was corporate treasurer and a director
of Watkins Pacific, Inc., a public company. He also directed the State of
Hawaii's revitalization of the Honolulu waterfront. An Economics graduate of the
University of California at Berkeley, Mr. Holman received his M.A. degree in
Economics and Planning from Lancaster University in England and was a Loeb
Fellow at Harvard University.
JOHN G. MCDONALD. Professor McDonald became a Director of the Company on
June 7, 1993. He is a Professor of Finance in the Graduate School of Business at
Stanford University, where he has taught since 1968. Professor McDonald has
taught MBA courses and executive programs in two broad subject areas, investment
management and corporate financial management, both with a global perspective.
He currently serves on the Board of Directors of Scholastic Corporation, Varian
Associates, Inc., Emerging Markets Growth Fund, Inc. and The American Funds
(seven funds).
CLASS III CONTINUING DIRECTORS -- TERM TO EXPIRE IN 1999
WILLIS ANDERSEN, JR., CRE. Mr. Andersen became a Director of the Company on
June 7, 1993. He is a real estate and REIT industry consultant with over 35
years of experience as an advisor, financial consultant and principal in the
real estate industry. Mr. Andersen currently specializes in advisory work for
publicly traded real estate companies, focusing specifically on REITs. Mr.
Andersen's real estate career has involved work with Allied Properties Inc. of
San Francisco; Bankoh Advisory Corp. of Honolulu; RAMPAC and ICM Property
Investors, Inc., which formerly were NYSE-listed REITs; and Bedford Properties,
Inc., a commercial property investment and development firm. He is an active
member of the American Society of Real Estate Counselors and the National
Association of Real Estate Investment Trusts, Inc. ("NAREIT"), and is a former
Governor and past President (1980-81) of NAREIT.
STEPHEN B. ORESMAN. Mr. Oresman became a Director of the Company on June 7,
1993. He has been the owner and President of Saltash, Ltd., a management
consulting firm, since 1991. He was a partner and Vice President of The Canaan
Group consulting firm from 1988 to 1991. Mr. Oresman's early career included ten
years in the manufacturing sector, first with Bausch & Lomb, Inc. in Rochester,
New York, and later with Interlake Steel Corp. in Chicago. Subsequently, Mr.
Oresman joined Booz Allen & Hamilton Inc., where he spent 19 years, including 10
years as managing officer of the firm's Eastern Region and five years as
Chairman of Booz Allen & Hamilton International, guiding the firm's activities
outside of the U.S. Mr. Oresman later joined the advertising agency BBDO
International, as President of the firm's independent marketing companies. Mr.
Oresman is a member of the Boards of Directors of Cleveland Cliffs, Inc.,
Gryphon Pharmaceuticals, Inc. and Technology Solutions Company. Mr. Oresman is a
graduate of Amherst College and the Harvard Business School.
CLASS I CONTINUING DIRECTORS -- TERM TO EXPIRE IN 2000
ROBERT S. MORRIS. Mr. Morris became a Director of the Company on June 7,
1993. He is the founder and managing partner of Olympus Private Placement Fund
L.P., Olympus Growth Fund II, L.P. and Olympus Growth Fund III, L.P., and these
funds currently manage approximately $1 billion of private equity investments.
Mr. Morris is currently a Director of Entrust Technologies, Inc., Supermarket
Holdings, L.P., AMN Healthcare, Inc., Candlewood Hotel Company and Mark III
Industries. Prior to founding Olympus Private Placement Fund, L.P. in 1988, Mr.
Morris was Senior Vice President of General Electric Investment Corporation
where he established that company's Private Placements division in 1983 and
subsequently managed and enlarged the portfolio to over $1.8 billion. From 1977
to 1982, Mr. Morris held management positions in various General Electric
manufacturing and financial services businesses.
4
<PAGE> 8
MARK S. WHITING. Mr. Whiting has been President of the Company since its
formation and has been a Director since May 1993. Mr. Whiting became Chief
Executive Officer of the Company on May 22, 1996. Prior thereto, Mr. Whiting was
the Company's Chief Operating Officer. He joined The Shidler Group and HSCC in
1987, where he directed its acquisition activities and managed the operation of
over 250 commercial properties in 40 states and in Canada. Prior to joining HSCC
and The Shidler Group, Mr. Whiting was Manager/Resort Development for Wailea
Development Company, Inc., a wholly-owned subsidiary of Alexander & Baldwin,
Inc., in Hawaii. Prior to that, Mr. Whiting served as a Corporate Financial and
Operations Analyst for Alexander & Baldwin in Hawaii. Before that, he was a Vice
President of Trans-Pacific Realty, Inc., a real estate brokerage and investment
firm located in Hawaii. Mr. Whiting holds a Bachelor of Arts degree from
Stanford University and an M.B.A. from the Stanford University Graduate School
of Business.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
A. WILLIAM STEIN. Mr. Stein, 44, has been Executive Vice President and
Chief Financial Officer and Secretary of the Company since April 1996. He is
responsible for the Company's financial management and policies, corporate
development, compliance, credit policy, the general counsel function, human
resources, information systems and general administration. Between October 1995
and April 1996, Mr. Stein was Senior Vice President, Capital Markets of the
Company. Prior to joining the Company, Mr. Stein held a number of positions with
Westinghouse Electric Corporation in Pittsburgh, Pennsylvania, including
Assistant Treasurer and Director - Banking. In addition, Mr. Stein was a Vice
President at Westinghouse Financial Services, with responsibilities for
structured finance, capital markets and real estate sale/leaseback investments.
Previously, he was Treasurer of Duquesne Light Company in Pittsburgh and
practiced law both as a securities and finance lawyer and as a trial lawyer. Mr.
Stein holds a Bachelor of Arts degree in Classics from Princeton University, a
J.D. from the University of Pittsburgh and an M.S. in Industrial Administration
from Carnegie Mellon University. Mr. Stein is a member of the Pennsylvania Bar
and the Florida Bar.
GARY P. LYON. Mr. Lyon, 37, has been Executive Vice President and Chief
Acquisitions Officer of the Company since April 1996. Mr. Lyon's
responsibilities include directing all of the Company's real estate acquisition
functions nationwide. Between June 1993 and April 1996, Mr. Lyon served as a
Senior Vice President of the Company with responsibility for acquisitions within
the Midwest and the Northeast. Prior to joining The Shidler Group and HSCC in
1987, Mr. Lyon held positions with J.P. Morgan & Co., Inc. and Goldman, Sachs &
Co. Mr. Lyon received a Bachelor of Arts degree in Economics from Duke
University and an M.B.A in International Business from The Wharton School.
JO ANN CHITTY. Ms. Chitty, 37, has been Senior Vice President, Asset
Management of the Company since its formation. She is responsible for asset
management functions, including property dispositions, lease compliance and
acquisition underwriting. Ms. Chitty also serves as President of TriNet Property
Management, Inc., a wholly-owned subsidiary of the Company formed in May 1997.
Prior to her employment with the Company, Ms. Chitty was the Vice President,
Asset Management for HSCC. Ms. Chitty holds an M.B.A. from Jacksonville
University.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
The Company is managed by a seven member Board of Directors, a majority of
whom are independent of the Company's management. Pursuant to the terms of the
Company's Articles of Incorporation, the Directors are divided into three
classes. Each Director holds office for the term to which he is elected and
until his successor is duly elected and qualified. Class II Directors currently
hold office for terms expiring at the Annual Meeting. Mr. George R. Puskar, a
Class III Director who was elected effective January 1, 1998 to fill the vacancy
on the Board of Directors resulting from the resignation of Mr. Jay H. Shidler,
also holds office for a term expiring at the Annual Meeting. The other Class III
Directors currently hold office for terms expiring at the annual meeting of
stockholders to be held in 1999. Class I Directors currently hold office for
terms expiring at the annual meeting of stockholders to be held in 2000.
5
<PAGE> 9
At each annual meeting of the stockholders of the Company, the successors
to the class of Directors whose terms expire at that meeting are elected to hold
office for terms continuing until the annual meeting of stockholders held in the
third year following the year of their election and until their successors are
elected and qualified.
The Board of Directors held five meetings during fiscal year 1997. Each of
the Directors attended at least 75% of the total number of meetings of the Board
of Directors and of the committees of the Company of which he was a member.
In order to assist it in discharging its responsibilities, the Board of
Directors has appointed an Audit Committee, a Compensation Committee, an
Investment Committee and a Nominating Committee.
Audit Committee. The Audit Committee, which consists of Messrs. Andersen,
McDonald (Chairman) and Puskar (all non-employee Directors of the Company),
makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagement, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
met three times in 1997.
Compensation Committee. The Compensation Committee, which consists of
Messrs. Morris and Oresman (Chairman) (all non-employee Directors of the
Company), makes recommendations and approves matters, subject to ratification by
the Board of Directors, relating to compensation of the Company's officers and
Directors, including incentive compensation and benefit plans. The Compensation
Committee administers the Company's Amended and Restated 1993 Stock Incentive
Plan (the "1993 Stock Plan"), the 1995 Stock Incentive Plan (the "1995 Stock
Plan") and the 1997 Stock Incentive Plan (the "1997 Stock Plan") (the 1993 Stock
Plan, the 1995 Stock Plan and the 1997 Stock Plan are collectively referred to
herein as the "Stock Plans"), and determines awards under the Stock Plans to
participants. The Compensation Committee also administers and has authority to
grant awards under the Company's 1993-1994 Performance-Based Management
Incentive Plan (the "Incentive Plan"). The Compensation Committee met formally
three times in 1997 and discussed compensation matters informally and at regular
Board of Directors meetings.
Investment Committee. The Investment Committee, which consists of Messrs.
Andersen (Chairman), Holman and Puskar, considers and acts upon proposed
acquisitions and dispositions of properties by the Company. The Investment
Committee has authority to approve transactions valued at less than $25 million
and makes recommendations to the Board of Directors with respect to transactions
that are valued at $25 million or more. The Investment Committee met formally
six times in 1997.
Nominating Committee. The Nominating Committee, which consists of Messrs.
Andersen, McDonald, Morris (Chairman) and Oresman (all non-employee Directors of
the Company), is responsible for recommending to the stockholders and the Board
of Directors individuals to serve as Directors and officers of the Company, when
called upon to do so by the Board of Directors. The Nominating Committee did not
formally meet in 1997, although all Committee members discussed and supported
the nomination of Mr. Puskar to fill the vacancy on the Board created by Mr.
Shidler's resignation. The Nominating Committee will consider nominees
recommended by stockholders for election as Directors if such recommendations
are made in accordance with the procedures described below under "OTHER
MATTERS -- Stockholder Proposals."
DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as a Director. Each Director of the Company who
is not an employee of the Company (an "Independent Director") receives an annual
fee of $20,000. Each Independent Director also receives $2,000 for each regular
quarterly meeting of the Board of Directors attended, $2,000 for each special
meeting of the Board attended and $1,000 for each telephonic Board meeting in
which the Independent Director participates. Committee Chairmen receive $1,500
for each Committee meeting attended and other Committee members receive $750 for
each Committee meeting attended. Under the 1997 Stock Plan, following each
annual meeting of stockholders, each of the Company's Independent Directors is
granted an option to purchase 4,000 shares of
6
<PAGE> 10
Common Stock at a price equal to the market price of the shares on the date of
grant, and is also granted a dividend equivalent right ("DER") award for an
equivalent number of shares. (See discussion of DER awards below under "Report
of the Compensation Committee -- Stock Plan Awards.") All options granted to
Independent Directors under the 1997 Stock Plan vest one year after the date of
grant.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the aggregate
compensation paid by the Company with respect to the fiscal years ended December
31, 1997, 1996 and 1995 to the Company's Chief Executive Officer and each of the
other named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- -------------
OTHER ANNUAL SHARES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS(#)(2) ($)(3)
----------------- ---- ---------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Whiting............... 1997 295,000 705,000 30,713 45,000 6,322
President and Chief 1996 262,500 450,000 -- 70,000 6,362
Executive Officer 1995 225,000 270,000 -- 75,000 5,479
A. William Stein.............. 1997 195,000 380,000 26,665 30,000 6,324
Executive Vice President 1996 162,500 240,000 -- 50,000 6,351
and Chief Financial Officer 1995(4) 36,635 25,000 -- 30,000 394
Gary P. Lyon.................. 1997 170,000 430,000 29,006 25,000 6,295
Executive Vice President 1996 143,750 310,000 -- 40,000 6,279
1995 112,500 210,000 -- 18,000 5,349
Jo Ann Chitty................. 1997 117,500 185,000 2,361 12,500 6,028
Senior Vice President 1996 105,000 135,000 -- 25,000 5,998
1995 83,260 95,000 -- 16,000 5,245
</TABLE>
- ---------------
(1) Amounts include, with respect to 1997 only, taxable income attributable to
shares of Common Stock issued in March 1997 pursuant to awards granted under
the 1997 Stock Plan and purchased by the named officer at a discount under
the Company's Management Stock Purchase Program ("MSPP") which is a
component of the 1997 Stock Plan (see "Report of the Compensation
Committee -- Stock Plan Awards").
(2) Options granted in 1997 were paired with DER awards under the Company's 1997
Stock Plan which entitle the recipient to receive annual cash payments on
vested shares equal to the dividends that would otherwise be payable if the
recipient held shares of Common Stock underlying the options with which the
DER awards are paired (see "Report of the Compensation Committee -- Stock
Plan Awards"). Options granted in prior years were not paired with DER
awards.
(3) Amounts include (a) contributions made by the Company to the named officer's
account under the Company's Savings and Retirement Plan ("401(k) Plan"), (b)
additional payments to compensate for certain disability insurance premiums
paid by such officer and (c) additional compensation attributable to certain
life insurance premiums paid by the Company.
(4) Mr. Stein's 1995 compensation represents compensation received for the
period from October 1995, when Mr. Stein joined the Company as an employee,
through December 1995.
7
<PAGE> 11
Option Grants in Fiscal Year 1997. The following table sets forth the
options granted with respect to the fiscal year ended December 31, 1997 to the
Company's Chief Executive Officer and each of the other named executive
officers.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SHARES TOTAL OPTIONS VALUE AT ASSUMED RATES
UNDERLYING GRANTED TO OF STOCK APPRECIATION
OPTIONS EMPLOYEES EXERCISE OR FOR OPTION TERM(2)
GRANTED(1) IN FISCAL BASE PRICE EXPIRATION ----------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Whiting........ 45,000 24.8% 32.625 5/28/02 405,616 896,305
A. William Stein....... 30,000 16.5% 32.625 5/28/02 270,411 597,537
Gary P. Lyon........... 25,000 13.8% 32.625 5/28/02 225,342 497,947
Jo Ann Chitty.......... 12,500 6.9% 32.625 5/28/02 112,671 298,974
</TABLE>
- ---------------
(1) These options will vest in four equal installments on May 28, 1998, May 28,
1999, May 28, 2000 and May 28, 2001. These options have five-year terms and
are paired with DER awards which entitle the recipient to receive annual
cash payments on vested shares equal to the dividends that would otherwise
be payable if the recipient held shares of Common Stock underlying the
options with which the DER awards are paired (see "Report of the
Compensation Committee -- Stock Plan Awards"). Options granted in prior
years have 10-year terms and are not paired with DER awards.
(2) The dollar amount in these columns are the result of calculations at the
assumed annual rates of appreciation of 5% and 10% over the five-year term
of the options and are not intended to forecast actual future appreciation,
if any, in the price of the Company's Common Stock. The Company does not
elect to provide grant date present value as an alternative to disclosing
potential realizable value.
Option Exercises and Year-End Holdings. The following table sets forth
stock options exercised during fiscal year 1997 and the value of options held on
December 31, 1997 by the Company's Chief Executive Officer and each of the other
named executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END(#) FISCAL YEAR-END($)
SHARES ------------------------- -------------------------
NAME EXERCISED(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Mark S. Whiting......... 0 0 175,000/150,000 2,027,187/1,348,125
A. William Stein........ 11,024 78,907 16,476/ 82,500 171,471/ 727,969
Gary P. Lyon............ 0 0 60,333/ 70,000 680,308/ 610,000
Jo Ann Chitty........... 0 0 26,250/ 43,250 246,484/ 390,234
</TABLE>
8
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return for the period from the Company's initial public offering in
June 1993 to December 31, 1997 (assuming reinvestment of any dividends) among
the Company, the Standard & Poor's ("S&P") 500 Index and the NAREIT Total Return
Equity Index (the "Index"), an industry index of 166 REITs (including the
Company). The Index includes REITs with 75% or more of their gross invested book
assets invested directly or indirectly in the equity ownership of real estate.
Upon written request, the Company will provide stockholders with a list of the
REITs included in the Index. The historical information set forth below is not
necessarily indicative of future performance.
TRINET CORPORATE REALTY TRUST, INC.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TRINET CORPORATE NAREIT ALL
(FISCAL YEAR COVERED) REALTY S&P 500 EQUITY
<S> <C> <C> <C>
5/28/93 100.00 100.00 100.00
12/31/93 121.48 105.27 104.39
12/31/94 139.78 106.66 107.47
12/31/95 142.23 146.74 123.73
12/31/96 200.69 180.29 167.93
12/31/97 235.12 240.45 201.95
</TABLE>
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
Objectives of Executive Compensation. The Company has adopted a
compensation structure that is designed to attract and retain experienced and
highly motivated officers who will contribute to the Company's growth and
profitability. The Company combines competitive base salaries with
performance-based cash bonuses and equity awards to reward its officers and
employees for exceptional performance and to align their interests with those of
the Company's stockholders.
The Company's compensation program has three principal elements: Base
salary, performance incentive bonuses, and awards under the Company's Stock
Plans. For compensation purposes, the Company, with the assistance of its
independent compensation consultants, has evaluated compensation benchmarks for
senior officers relative to a peer group of selected REITs. This peer group is
selected taking into consideration, among other factors, investment strategy,
type of real estate owned, market capitalization and number of years in
operation. This REIT peer group is reviewed annually by the Compensation
Committee and has remained relatively stable over the years.
Base Salary. The Company establishes base salary levels for its key
executives relative to the mid-range of base salary levels for key executives of
the selected REIT peer group. In establishing an executive's base salary,
consideration is given to the executive's position and responsibility,
experience, length of service with the Company, and overall performance.
Performance Incentive Bonuses. Under the Company's Incentive Plan, the
Company's Compensation Committee, which is composed of the Independent Directors
whose names appear below this report, makes recommendations to the Board of
Directors on the amounts of cash bonuses to be paid to executive officers and
certain other members of management for the achievement of specified,
pre-established, annual performance goals for the Company and the individual.
The Incentive Plan is intended to reward executives for their performance during
the past fiscal year and incent their performance in future years. It is based
on quantitative measures of enhanced stockholder value, such as per share growth
in Funds from Operations ("FFO") and total annual and cumulative stockholder
return, as well as officer-specific performance objectives, such as the quantity
and quality of property acquisitions structured and completed, contributions to
capital markets activities and results, property management activities involving
lease extensions and/or asset dispositions, and organizational development and
personnel administration. The Company establishes five general performance
objectives, one of which (total stockholder return) is targeted to put the
Company at or above the 85th percentile of performance relative to the NAREIT
Equity Index. Total officer compensation is targeted to be at approximately the
85th percentile of the selected REIT peer group if such performance objectives
are met. Based on achievements relative to these performance objectives, the
Compensation Committee establishes an annual bonus pool. The Company's Chief
Executive Officer then recommends to the Compensation Committee specific
individual bonuses for members of management out of the funds made available in
the bonus pool.
Stock Plan Awards. While a number of alternative types of stock awards are
available to be granted by the Company under the Stock Plans, the Company has
primarily awarded stock options as the equity component of its compensation
program. Stock options granted under the Stock Plans are designed to provide
long-term performance incentives and rewards tied to the price of the Company's
Common Stock and, generally, will vest over a period of four years. Stock
options are granted in accordance with the same performance criteria established
for granting cash incentive bonuses under the Incentive Plan and in accordance
with the expected long-term contribution of each executive. Because the value of
stock options is directly tied to appreciation in the Company's stock price, the
Compensation Committee views stock options as a means of aligning management and
stockholder interests and expanding management's long-term perspective. In
considering stock option awards, the Compensation Committee has established
guidelines that currently limit the total number of outstanding and unexercised
options granted to no more than 10% of the Company's total outstanding shares of
Common Stock. While there is no intention to regularly award any specific number
of options in the future, since this will be determined by individual executive
and overall Company performance, the purpose of these guidelines is to establish
a limit on potential stockholder dilution. On the Record Date, unexercised
options to acquire 1,098,809 shares of Common Stock were outstanding
10
<PAGE> 14
(vested and unvested), which number represents 4.6% of the Company's total
outstanding shares of Common Stock on such date.
The 1997 Stock Plan which was approved by the Company's stockholders in
1997 authorizes the Company, among other types of awards, to grant DERs as part
of its long-term incentive plans. DERs entitle the recipient to receive payments
in cash or, alternatively, upon approval of the Compensation Committee, to
direct that such payments be applied to purchase shares of the Company's Common
Stock as an award under the 1997 Stock Plan under the terms of the Company's
MSPP (described below). DERs vest over a period of four years from the date of
the award and are paid annually. The amounts of DER payments are equal to the
dividends on vested shares that would otherwise have been paid if the recipient
held the number of vested shares of Common Stock. The Company intends, from time
to time, to grant DERs in conjunction with grants of options under the Stock
Plans. As in the case of all REITs, which are required to distribute most of
their net income to stockholders, dividends represent a significant portion of
the Company's total stockholder return, and DERs are designed to recognize this
component of total stockholder return. As a form of long-term incentive
compensation, stock options capture the portion of total stockholder return
reflected in increased stock prices, but only provide recipients the opportunity
to share in the dividend income generated by the Company's Common Stock once the
option has been exercised. DERs, when awarded in tandem with stock options,
provide better alignment between management incentives and total stockholder
return by giving recipients the opportunity to share in the value created
through dividend payments as well as stock price growth. Since DERs increase the
value of the underlying options with which they are paired, options granted in
1997 in tandem with DERs were smaller than options which have been granted
previously without DERs.
Under the MSPP, which is a component of the 1997 Stock Plan, the Company's
officers and Directors may, upon approval of the Compensation Committee,
purchase shares of the Company's Common Stock issued as awards under the 1997
Stock Plan at a price equal to 90% of the market price of the shares. This
percentage discount was established, in part, based on the Company's cost of
raising equity. Shares of Common Stock issued as awards under the 1997 Stock
Plan may be purchased under the MSPP at two times during the year: At the time
annual incentive bonuses are paid (typically during the first quarter of each
year), and at the time annual DER payments are made (typically during the second
quarter of each year, on the anniversary date of the original DER award).
Purchases may be made using funds from three sources: (1) By using all or a
portion of the individual's annual incentive bonus, (2) by using all or a
portion of the DER payments which a participant receives in connection with his
or her DER awards, and/or (3) by using other funds, provided that an
individual's purchases under the MSPP in any year cannot exceed the sum of the
individual's current annualized base salary and current annual bonus, if any,
received from the Company in such year, plus the total amount of DER payments
received in such year.
In 1997, the Board of Directors also established Stock Ownership Guidelines
("Guidelines") for its officers designed to encourage the acquisition and
retention of significant amounts of Common Stock by management. The Guidelines
are expressed as a multiple of the officer's base salary and range from five
times salary for the Chief Executive Officer to one times salary for Vice
Presidents. Under the Guidelines, officers have a period of five years
commencing in 1997 (or from their date of employment, whichever is later) in
which to achieve ownership of Common Stock in accordance with the Guideline
amounts. Since the Guidelines were established, significant progress has been
made by the officers in achieving the Guideline amounts and increasing stock
ownership by Company officers.
Compensation Committee Procedures. The Compensation Committee administers
the Company's executive compensation program. Generally the Compensation
Committee will meet at the beginning of each year, after the audited financial
statements become available, to determine performance targets for the upcoming
year, individual executive officer performance objectives for the upcoming year,
and performance incentive bonuses for the preceding year. Base salaries and
awards under the Stock Plans are typically evaluated and determined at a
mid-year meeting of the Compensation Committee. The Compensation Committee also
meets during the year to evaluate the peer group of REITs selected for purposes
of comparison in considering compensation matters, to consider new data on other
companies available from sources such as proxy statements, and to review
individual executive officer performance against objectives.
11
<PAGE> 15
The Compensation Committee reports to the entire Board of Directors with respect
to executive compensation matters and makes recommendations for approval by the
full Board.
Compensation of the Chief Executive Officer. The Compensation Committee
meets without the Chief Executive Officer present for the purpose of evaluating
his performance and reports the Committee's deliberations and determinations to
the Independent Directors. In determining the overall compensation of Mr.
Whiting, the Compensation Committee considers the five general performance
criteria used in the determination of performance incentive bonuses (described
above), including quantitative measures of enhanced stockholder value, such as
per share growth in FFO and total annual cumulative stockholder return, and
other specific performance objectives. The Company met or surpassed its targeted
objectives in four of the five categories established by the Compensation
Committee and it is the Compensation Committee's view that, on balance, the
Company had an outstanding year in 1997. Along with the Company's corporate
performance, the Compensation Committee also considered Mr. Whiting's individual
contributions in connection with the volume and quality of the Company's
completed acquisitions; the Company's successful capital markets activities in
raising capital and lowering the borrowing rates on the Company's $200 million
revolving credit facility; successful asset management activities, including
establishment of a profitable property management subsidiary and disposition of
certain assets; continued development of the Company's strategic planning
processes; and expansion of the Company's management team, including recruitment
of new key executives.
The Compensation Committee established Mr. Whiting's aggregate
compensation, including incentive compensation, based on his and the Company's
performance and believes it is consistent with REIT industry practices. In
recognition of the Company's achievements described above, the Compensation
Committee approved Mr. Whiting's incentive bonus for the Company's fiscal year
1997 pursuant to the Company's Incentive Plan.
Compensation of Other Executive Officers. In addition to the factors
considered with respect to the Chief Executive Officer, the Company uses
additional performance factors in determining the compensation of the Company's
other executive officers. Each executive officer's compensation is based upon
the achievement of specific individual goals and overall Company performance
goals. All cash incentive bonuses paid to executive officers were determined by
guidelines established under the Incentive Plan. The incentive bonus award for
Mr. Stein was based on overall Company performance measures and on his
contribution to capital markets activities, which included raising additional
equity and debt capital, extending average debt maturities, and lowering the
borrowing rates on the Company's revolving credit facility. Mr. Lyon's bonus was
based predominantly on factors relating to completed property acquisitions, such
as the quality and quantity of property acquisitions, lease terms and tenant
credit, as well as overall Company performance. Ms. Chitty's bonus was based
predominantly on factors relating to her contribution to asset management
matters, lease compliance, acquisition underwriting and completed property
dispositions, as well as the formation of the Company's new property management
subsidiary and the Company's overall performance.
For all executive officers, the Compensation Committee relies upon stock
options and other forms of awards under the Stock Plans as a long-term incentive
component of the compensation mix. The Compensation Committee determines
incentive awards, including option grants, based on the officer's annual
performance and a review of that individual's overall compensation relative to
industry comparables. The Compensation Committee determines appropriate
incentive awards that are designed to reward the executive officers for
individual and Company performance and align their long-term interests with the
Company's stockholders. As mentioned, the Compensation Committee also considered
the total number of outstanding and unexercised stock options as a percentage of
total shares outstanding as a framework for awarding additional options.
The SEC requires that this report comment upon the Company's policy with
respect to Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), which limits the deductibility on the Company's tax return of
compensation over $1,000,000 to any of the named executive officers of the
Company unless, in general, the compensation is paid pursuant to a plan which is
performance-related, non-discretionary and has been approved by the Company's
stockholders. The Compensation Committee's policy
12
<PAGE> 16
with respect to Section 162(m) is to establish and implement an overall
compensation program that determines compensation, including salary, incentive
bonus and equity awards, based on factors related to the performance of the
Company and the individual, and which is reasonable relative to other comparable
REITs. The Committee intends to make every reasonable effort to ensure that
compensation paid to the Company's executive officers is deductible to the
extent permitted while simultaneously providing Company executives with
appropriate rewards for their performance. The Company did not pay any
compensation during 1997 that is not deductible on the Company's tax return by
virtue of Section 162(m) of the Code.
Submitted by the Compensation Committee:
Stephen B. Oresman (Chairman)
Robert S. Morris
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Morris and Oresman, neither
of whom has served as an officer of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information as to the beneficial ownership of
the Company's Common Stock by (a) persons or entities known to the Company to be
beneficial owners of more than 5% of the Company's Common Stock as of the
date(s) indicated, based on filings received by the Company on Schedules 13D and
13G or Form 13F under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (b) all of the Directors and executive officers of the
Company as of the Record Date, based on the representations of such individuals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND BUSINESS ADDRESS OF COMMON STOCK OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
------------------------- ------------------ ----------------
<S> <C> <C>
Cohen & Steers Capital Management,
Inc................................... 3,306,700 14.19%
757 Third Avenue (as of 2/10/98) (as of 2/10/98)
New York, NY 10017
Smith Barney Inc.(1).................... 1,489,276 7.1%
Salomon Smith Barney Holdings Inc.(1)... 1,781,731 8.5%
Travelers Group, Inc.(1)................ 1,781,731 8.5%
388 Greenwich Street (as of 12/31/97) (as of 12/31/97)
New York, NY 10013
</TABLE>
- ---------------
(1) According to information reported on Schedule 13G dated January 28, 1998,
Salomon Smith Barney Holdings, Inc. ("SSB Holdings") is the sole common
stockholder of Smith Barney Inc. ("SB"), and Travelers Group, Inc. ("TRV")
is the sole stockholder of SSB Holdings. SSB Holdings and TRV have reported
that they have shared voting power and shared dispositive power with respect
to 1,781,731 shares of Common Stock and SSB Holdings, TRV and SB have
reported that they have shared voting power and shared dispositive power
with respect to 1,489,276 shares of Common Stock. Each entity disclaims
beneficial ownership of the shares set forth above.
13
<PAGE> 17
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
OF COMMON STOCK OF
BENEFICIALLY OWNED CLASS
NAME OF BENEFICIAL OWNER (3/16/98) (3/16/98)
------------------------ ------------------ ---------
<S> <C> <C>
Willis Andersen, Jr............................ 30,082(1) *
Robert W. Holman, Jr........................... 360,862(2) 1.5%
John G. McDonald............................... 29,000(3) *
Robert S. Morris............................... 26,000(3) *
Stephen B. Oresman............................. 25,000(3) *
George R. Puskar............................... 1,000 *
Mark S. Whiting................................ 255,059(4) 1.1%
A. William Stein............................... 43,314(5) *
Gary P. Lyon................................... 105,333(6) *
Jo Ann Chitty.................................. 29,918(7) *
All Directors and executive officers
as a group (10 persons)...................... 905,568(8) 3.3%
</TABLE>
- ---------------
* Less than one percent
(1) Includes 500 shares held by the Madeleine M. Andersen Trust, of which Mr.
Andersen is a trustee, and options to purchase up to 18,000 shares of Common
Stock, which are currently exercisable.
(2) Includes 189,735 shares beneficially owned by Mr. Holman which are held by
Quantum Group, L.P., an Oregon limited partnership owned by Mr. Holman and
his wife, 7,000 shares owned by Mr. Holman's wife, and options to purchase
up to 157,000 shares of Common Stock, which are currently exercisable.
(3) Includes options to purchase up to 24,000 shares of Common Stock, which are
currently exercisable.
(4) Includes 1,000 shares held by Mr. Whiting's wife and options to purchase up
to 175,000 shares of Common Stock, which are currently exercisable.
(5) Includes options to purchase 16,476 shares of Common Stock, which are
currently exercisable.
(6) Includes options to purchase 60,333 shares of Common Stock, which are
currently exercisable.
(7) Includes options to purchase 26,250 shares of Common Stock, which are
currently exercisable.
(8) Includes aggregate options to purchase 517,559 shares of Common Stock, which
are currently exercisable.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Management employees purchasing shares under the MSPP may elect not to have
the Company withhold cash from their performance incentive bonuses to cover tax
withholding obligations, and employees who make such an election are obligated
to reimburse the Company within 30 days in the full amount of such tax
obligations plus interest at an annual rate of 6%. With respect to the
performance incentive bonus paid for services in 1997, the Company made an
advance in February 1998 on behalf of Mr. Lyon in the amount of $125,976 which
was repaid in full with interest within 30 days.
AGREEMENTS WITH EXECUTIVE OFFICERS
In December 1997, the Board of Directors approved the terms of agreements
between the Company and Messrs. Whiting, Stein and Lyon and Ms. Chitty which
entitle such executive officers to certain payments and other benefits in the
event the officer's employment is terminated following a change in control of
the Company. These agreements generally provide that, in the event of
termination following a change in control, the officer would receive the
following: (a) An amount equal to his or her greatest amount of annual
compensation (salary and bonus) over the previous five years, multiplied by two
(in the case of Mr. Whiting) and by one (in the case of Messrs. Stein and Lyon
and Ms. Chitty); (b) a prorated amount of unpaid incentive bonus for the year in
which termination occurs; (c) continuation of employee group benefits
14
<PAGE> 18
coverage for a period equal to two years (in the case of Mr. Whiting) and one
year (in the case of Messrs. Stein and Lyon and Ms. Chitty); (d) at the
officer's election, accelerated payment of outstanding DER awards, at the
Company's then-current dividend rate; (e) immediate vesting of outstanding stock
options and DER awards; (f) an amount equal to the Company's maximum
contributions under the 401(k) Plan for a period equal to two years (in the case
of Mr. Whiting) and one year (in the case of Messrs. Stein and Lyon and Ms.
Chitty); and (g) immediate vesting of contributions previously made by the
Company to the individual's account under the 401(k) Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's outstanding equity securities, to file reports of ownership and
changes in ownership with the SEC and the NYSE. Directors, executive officers
and greater than 10% stockholders are required by applicable SEC regulations to
furnish the Company with copies of all reports filed by such persons pursuant to
Section 16(a) of the Exchange Act and the rules and regulations promulgated
thereunder. To the Company's knowledge, based solely on its review of the copies
of such reports received by it, or written representations from certain
reporting persons that no Section 16(a) reports were required for those persons,
the Company believes that during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its Directors, executive
officers and greater than 10% stockholders were satisified.
PROPOSAL II
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED
CAPITAL STOCK
At its meeting held on February 25, 1998, the Board of Directors
unanimously approved a proposed amendment to the Company's Articles of
Incorporation which, if approved by the stockholders, would increase the
authorized capital stock of the Company. The text of this proposed amendment to
the Articles of Incorporation is set forth in Exhibit A, which is incorporated
herein. The Board of Directors believes the proposed amendment is in the best
interests of the Company and its stockholders and, for the reasons described
below, the Board of Directors recommends that the stockholders approve this
proposed amendment.
The proposed amendment would amend Article VII to increase the authorized
capital stock of the Company from 75,000,000 shares to 150,000,000 shares,
consisting of 80,000,000 shares of Common Stock, 20,000,000 shares of Preferred
Stock and 50,000,000 shares of Excess Stock. As of March 16, 1998, there are
40,000,000 authorized shares of Common Stock, with 23,349,504 shares issued and
outstanding; 10,000,000 shares of Preferred Stock authorized, with 7,300,000
shares issued and outstanding; and 25,000,000 authorized shares of Excess Stock,
none of which is issued and outstanding. The Board believes it is advisable to
authorize these additional shares to have them available for, among other
things, possible issuance in connection with public or private offerings of
shares for cash, potential acquisitions of properties, potential business
combinations, financings, stock dividends, stock splits, employee benefit plans
and other general corporate purposes. The Company has no present commitments,
arrangements or plans which would require the issuance of such additional shares
in connection with an equity offering, merger or acquisition.
The Board of Directors believes that the proposed increase in the
authorized capital stock of the Company at this time will add flexibility to the
Company's financing programs. No additional action or authorization by the
Company's stockholders would be necessary prior to the issuance of such
additional shares of capital stock unless required for a particular transaction
under applicable law or regulation or by the rules of any stock exchange on
which the Company's capital stock may then be listed. The Company's Common Stock
and Preferred Stock are currently listed on the NYSE.
The authorized but unissued shares of the Company's capital stock could be
used in an attempt to prevent a change of control of the Company, by issuing
shares: (a) Pursuant to the terms of Rights distributed to existing stockholders
under a Rights Plan approved by the Company in February 1998; and/or (b) to
15
<PAGE> 19
purchasers who support the Board of Directors in opposing a takeover bid if the
Board has determined that the bid is not in the best interests of the Company
and its stockholders. The Company is not aware of any pending or threatened
change of control or takeover transaction, however, and has no present intention
to issue additional shares of capital stock for any anti-takeover purpose.
The affirmative vote of two-thirds (66 2/3%) of the outstanding shares of
Common Stock is required for the approval of this proposed amendment to the
Articles of Incorporation of the Company. If the proposed amendment is approved
by stockholders, it will become effective on the date Articles of Amendment are
filed with the Department of Assessments and Taxation of the State of Maryland,
the Company's state of incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
PROPOSAL III
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO
MODIFY PROVISIONS RELATING TO LIABILITY OF DIRECTORS AND OFFICERS
At its meeting held on February 25, 1998, the Board of Directors also
unanimously approved a proposed amendment to the Company's Articles of
Incorporation which, if approved by the stockholders, would modify the
provisions relating to liability of the Directors and officers of the Company.
The text of this proposed amendment to the Articles of Incorporation is also set
forth in Exhibit A, which is incorporated herein. The Board of Directors
believes this proposed amendment is in the best interests of the Company and its
stockholders and, for the reasons described below, the Board of Directors
recommends that the stockholders approve this proposed amendment.
This proposed amendment would amend Article XII pertaining to the liability
of Directors and officers of the Company. Article XII presently provides that,
to the fullest extent permitted under Maryland law, no Director or officer shall
be liable to the Company for money damages for any breach of any duty owed by
such Director or officer to the Company. It is proposed that Article XII be
amended to provide that this limitation of liability applies to a Director's or
officer's liability to the Company and to its stockholders. Many other
corporations formed under the laws of Maryland and other jurisdictions which
permit such provisions have included similar provisions in their charters which
limit the liability of Directors and officers in the manner of Article XII, as
proposed to be amended. The Board of Directors believes that, in order to
attract and retain responsible, competent and otherwise qualified individuals to
serve as Directors or officers of the Company, it is necessary and desirable to
assure such persons that, under appropriate circumstances, they will be relieved
of the burden of liability and litigation expenses arising out of their services
to the Company rendered in good faith. Accordingly, the Board of Directors
believes that this proposed amendment is in the best interests of the Company
and its stockholders.
The affirmative vote of two-thirds (66 2/3%) of the outstanding shares of
Common Stock is required for the approval of this proposed amendment to the
Articles of Incorporation of the Company. If the proposed amendment is approved
by stockholders, it will become effective on the date Articles of Amendments are
filed with the Department of Assessments and Taxation of the State of Maryland,
the Company's state of incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3.
PROPOSAL IV
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of Coopers & Lybrand L.L.P. has served as the Company's
independent auditors since the Company's formation in March 1993. On February
25, 1998, the Board of Directors voted to appoint Coopers & Lybrand L.L.P. as
the Company's independent auditors for the current fiscal year. The Board of
Directors recommends that this selection be ratified by the stockholders. A
representative of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting, will be given the opportunity to make a statement if he or she so
desires and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE SELECTION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 1998.
16
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OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by mail, the Directors, officers and
employees of the Company may also solicit proxies personally or by telephone,
telegram or electronic transmission without additional compensation for such
activities. The Company will also request persons, firms and corporations
holding shares in their names or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
such beneficial owners. The Company will reimburse such holders for their
reasonable expenses.
The Company has also retained D.F. King & Co., Inc. ("D.F. King") to assist
it in the solicitation of proxies. The Company has agreed to pay D.F. King a fee
of $7,500, plus reimbursement of expenses.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be considered for inclusion in the
Company's proxy solicitation materials in connection with the 1999 annual
meeting of stockholders, other than a stockholder proposal submitted pursuant to
Exchange Act Rule 14a-8, it must be received at the principal executive offices
of the Company on or after November 28, 1998 but before March 12, 1999, unless
the 1999 annual meeting of stockholders is scheduled to take place before May
20, 1999. If the 1999 annual meeting of stockholders is scheduled to take place
before May 20, 1999, the required date for submitting a stockholder proposal is
determined in accordance with the Company's Bylaws, as described below. The
Company's Bylaws provide that any stockholder wishing to nominate a director or
have a stockholder proposal, other than a stockholder proposal submitted
pursuant to Exchange Act Rule 14a-8, considered at an annual meeting must
provide written notice of such nomination or proposal and appropriate supporting
documentation, as set forth in the Bylaws, to the Company at its principal
executive offices not less than 75 days nor more than 180 days prior to the
anniversary of the immediately preceding annual meeting of stockholders (the
"Anniversary Date"). However, in the event that the annual meeting is scheduled
to be held more than seven calendar days prior to the Anniversary Date, such
nominations or proposals must be delivered to the Company not later than (i) the
first to occur of 75 days prior to such scheduled meeting date or 20 days after
the date on which notice of the meeting was mailed or public disclosure of the
meeting date was made (if the Company has given 75 days prior notice or public
disclosure of the scheduled date) or (ii) 20 calendar days after the earlier of
the date on which notice of the meeting was mailed or the date on which public
disclosure is made (if the Company has not given 75 days prior notice or public
disclosure of the scheduled date). Any such proposal should be mailed to: TriNet
Corporate Realty Trust, Inc., One Embarcadero Center, 33rd Floor, San Francisco,
California 94111, Attention: Secretary.
A stockholder proposal submitted pursuant to Exchange Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 1999 annual
meeting of stockholders must be received by the Company by December 1, 1998.
Such a proposal must also comply with the requirements as to form and substance
established by the SEC for such a proposal to be included in the proxy statement
and form of proxy. Any such proposal should be mailed to: TriNet Corporate
Realty Trust, Inc., One Embarcadero Center, 33rd Floor, San Francisco,
California 94111, Attention: Secretary.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
YOUR VOTE IS IMPORTANT TO THE COMPANY,
REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED PROXY CARD.
17
<PAGE> 21
EXHIBIT A
TRINET CORPORATE REALTY TRUST, INC.
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The charter of TriNet Corporate Realty Trust, Inc., a Maryland
corporation (the "Corporation"), is hereby amended by (i) deleting existing
Section 7.1 in its entirety and substituting in lieu thereof a new Section 7.1
as set forth below, and (ii) deleting existing Article XII in its entirety and
substituting in lieu thereof a new Article XII as set forth below:
"7.1 Authorized Capital Stock. The total number of shares of stock
which the Corporation has authority to issue (the "Stock") is one hundred
fifty million (150,000,000) shares, consisting of (i) twenty million
(20,000,000) shares of preferred stock, par value $.01 per share
("Preferred Stock"); (ii) eighty million (80,000,000) shares of common
stock, par value $.01 per share ("Common Stock"); and (iii) fifty million
(50,000,000) shares of excess stock, par value $.01 per share ("Excess
Stock"). The aggregate par value of all the shares of all classes of stock
is $1,500,000. If shares of one class of stock are classified or
reclassified into shares of another class of stock pursuant to this Article
VII, the number of authorized shares of the former class shall be
automatically decreased and the number of shares of the latter class shall
be automatically increased, in each case by the number of shares so
classified or reclassified, so that the aggregate number of shares of stock
of all classes that the Corporation has authority to issue shall not be
more than the total number of shares of stock set forth in the first
sentence of this paragraph."
"ARTICLE XII
LIMITATION OF LIABILITY
To the full extent permitted under the Maryland General Corporation
Law as in effect on the date of filing these Articles of Incorporation or
as the Maryland General Corporation Law is thereafter amended from time to
time, no Director or officer shall be liable to the Corporation or its
stockholders for money damages. Neither the amendment or repeal of this
Article, nor the adoption of any other provision in this charter
inconsistent with this Article, shall eliminate or reduce the protection
afforded by this Article to a Director or officer of the Corporation with
respect to any matter which occurred, or any cause of action, suit or claim
which but for this Article would have accrued or arisen, prior to such
amendment, repeal or adoption."
SECOND: The total number of shares of stock which the Corporation had
authority to issue immediately prior to these amendments was 75,000,000 shares,
consisting of (i) 10,000,000 shares of preferred stock, $0.01 par value per
share, (ii) 40,000,000 shares of common stock, $0.01 par value per share, and
(iii) 25,000,000 shares of excess stock, $0.01 par value per share. The
aggregate par value of all shares of stock having par value was $750,000.
THIRD: The total number of shares of stock which the Corporation has
authority to issue pursuant to the foregoing amendments of the charter is
150,000,000 shares, consisting of (i) 20,000,000 shares of preferred stock,
$0.01 par value per share, (ii) 80,000,000 shares of common stock, $0.01 par
value per share, and (iii) 50,000,000 shares of excess stock, $0.01 par value
per share. The aggregate par value of all the shares of stock having par value
is $1,750,000.
FOURTH: The information required by Section 2-607 (b) of the Maryland
General Corporation Law is not changed by these Articles of Amendment.
FIFTH: The amendments to the charter of the Corporation as set forth above
have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation as required by law.
A-1
<PAGE> 22
SIXTH: The undersigned President acknowledges these Articles of Amendment
to be the corporate act of the Corporation and, as to all matters or facts
required to be verified under oath, the undersigned President acknowledges that
to the best of his knowledge, information and belief, these matters and facts
are true in all material respects and that this statement is made under the
penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be signed
in its name and on its behalf by its President and attested to by its Secretary
on this day of , 1998.
ATTEST: TRINET CORPORATE REALTY TRUST, INC.
- ---------------------------------------------
By:
--------------------------------------(Seal)
Secretary President
A-2
<PAGE> 23
PROXY PROXY
TRINET CORPORATE REALTY TRUST, INC.
ONE EMBARCADERO CENTER, 33rd FLOOR, SAN FRANCISCO, CALIFORNIA 94111
PROXY FOR COMMON STOCK
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned appoints Robert W. Holman, Jr., Mark S. Whiting and A.
William Stein, and each of them, proxies with full power of substitution to vote
for and on behalf of the undersigned at the Annual Meeting of Stockholders of
TriNet Corporate Realty Trust, Inc., to be held at the Park Hyatt Hotel, San
Francisco, California, on Wednesday, May 27, 1998 at 9:00 a.m. and at any
adjournments thereof, hereby granting full power and authority to act on behalf
of the undersigned at said meeting or any adjournments thereof. The undersigned
hereby revokes any proxy previously given in connection with such meeting and
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement and the 1997 Annual Report to Stockholders.
(Continued and to be signed on reverse side.)
-FOLD AND DETACH HERE-
<PAGE> 24
TRINET CORPORATE REALTY TRUST, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For Withheld For All
All All Except nominee(s) written below
1. Election of Directors: / / / / / /
Nominees: George R. Puskar (Class III),
Robert W. Holman, Jr. (Class II),
John G. McDonald (Class II)
- ------------------------------------------------------------------
To elect one Class III Director to hold office until the 1999
Annual meeting of Stockholders, and two Class II Directors to
hold office until the 2001 Annual Meeting of Stockholders, and
until their respective successors are duly elected and qualified.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To approve the proposed amendments to the TriNet / / / / / /
Corporate Realty Trust, Inc. Articles of Incorporation:
to increase the authorized capital stock:
3. To approve the proposed amendment of the TriNet FOR AGAINST ABSTAIN
Corporate Realty Trust, Inc. Articles of Incorporation / / / / / /
to modify the provision relating to liability of
Directors and officers:
4. To ratify the selection of Coopers & Lybrand, L.L.P. FOR AGAINST ABSTAIN
as the independent auditors of the Company for the / / / / / /
fiscal year ending December 31, 1998:
</TABLE>
5. To consider and act upon any matters incidental to the foregoing or any
other matters which may properly come before the meeting or any
adjournments thereof.
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
SIGNATURE(S)_______________________________________
SIGNATURE(S)_______________________________________
DATE__________________
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTION IS INDICATED WITH RESPECT TO
ITEMS 1, 2 3 AND 4, THE UNDERSIGNED'S VOTES WILL BE CAST IN FAVOR OF SUCH
MATTERS. PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
