<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
[LOGO]
April 5, 1999
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 26, 1999 at 9:00 a.m., at the Company's
headquarters, One Embarcadero Center, 33rd Floor, 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 preferred stock of the Company; and ratify the selection of
PricewaterhouseCoopers LLP 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,
/s/ A. WILLIAM STEIN
A. William Stein
President and
Chief Operating Officer
TRINET CORPORATE REALTY TRUST, INC.
ONE EMBARCADERO CENTER - 33RD 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 26, 1999
------------------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of TriNet Corporate Realty Trust, Inc. (the "Company") will be
held on Wednesday, May 26, 1999 at 9:00 a.m. at the Company's headquarters, One
Embarcadero Center, 33rd Floor, San Francisco, California, for the following
purposes:
1. To elect a total of three Directors, two Class III Directors to
serve until the 2002 Annual Meeting of Stockholders and one Class I
Director to serve until the 2000 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 preferred
stock of the Company;
3. To ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the
current fiscal year; and
4. 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 15, 1999 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
Geoffrey M. Dugan
Secretary
San Francisco, California
April 5, 1999
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 THE 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 26, 1999
April 5, 1999
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 1999 Annual Meeting of Stockholders of the Company to
be held at 9:00 a.m. on Wednesday, May 26, 1999, and at any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
stockholders will be asked to vote on the election of two Class III Directors
and one Class I Director of the Company, to approve an amendment to the
Company's Articles of Incorporation to increase the authorized number of
preferred shares, to ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP 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 April 5, 1999. The
Board of Directors has fixed the close of business on March 15, 1999 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 24,872,429 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 amendment 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 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 amendment 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 TWO NOMINEES FOR CLASS III DIRECTORS AND ONE
NOMINEE FOR CLASS I DIRECTOR OF THE COMPANY NAMED IN THIS PROXY STATEMENT, FOR
APPROVAL OF THE AMENDMENT TO THE ARTICLES OF INCORPORATION AND FOR RATIFICATION
OF THE BOARD OF DIRECTORS' SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL
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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 1998 Annual Report, including financial statements for the
fiscal year ended December 31, 1998, is being mailed to stockholders
concurrently with this Proxy Statement. The 1998 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. There is
currently one vacancy on the Board of Directors as a result of the resignation
of Mr. Mark S. Whiting as a Class I Director on September 3, 1998.
At the Annual Meeting, stockholders are being asked to vote on the election
of two Class III Directors to serve until the 2002 Annual Meeting and one Class
I Director to serve until the 2000 Annual Meeting, and until their successors
are duly elected and qualified. The Board of Directors has nominated Willis
Andersen, Jr. and Stephen B. Oresman to serve as Class III Directors and George
R. Puskar to serve as a Class I Director (the "Nominees").
Each of the Nominees is currently serving as a Director of the Company. Mr.
Andersen, Mr. Oresman and Mr. Puskar currently serve as Class III Directors and
their regular terms expire at the Annual Meeting. Mr. Puskar is being
reclassified as a Class I Director in order to make each class consist of
one-third of the Directors. Due to the vacancy on the Board resulting from the
resignation of Mr. Whiting, the three classes of Directors currently have an
uneven number of members. By reclassifying Mr. Puskar as a Class I Director,
each class will consist of two Directors, in accordance with the Company's
Articles of Incorporation.
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.
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 2000 and 2001, and the executive officers who are
not Directors, based on
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information furnished to the Company by each Director and executive officer. The
following information is as of March 15, 1999, 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 I NOMINEE FOR ELECTION AT 1999
ANNUAL MEETING (TERM TO EXPIRE IN 2000)
George R. Puskar........................ 55 1998 12,000(1) *
CLASS III NOMINEES FOR ELECTION AT 1999
ANNUAL MEETING (TERM TO EXPIRE IN 2002)
Willis Andersen, Jr..................... 67 1993 34,432(2) *
Stephen B. Oresman...................... 66 1993 29,300(3) *
CLASS I CONTINUING DIRECTOR
(TERM TO EXPIRE IN 2000)
Robert S. Morris........................ 44 1993 30,000(3) *
CLASS II CONTINUING DIRECTORS
(TERM TO EXPIRE IN 2001)
Robert W. Holman, Jr. .................. 55 1993 401,362(4) 1.6%
John G. McDonald........................ 61 1993 36,000(3) *
</TABLE>
- ---------------
* Less than one percent.
(1) Includes 1,000 shares held by Marleen Puskar, Mr. Puskar's wife, and options
to purchase up to 4,000 shares of Common Stock which are currently
exercisable.
(2) Includes 500 shares held by the Madeleine M. Andersen Trust, of which Mr.
Andersen is a trustee, and options to purchase up to 22,000 shares of Common
Stock which are currently exercisable.
(3) Includes options to purchase up to 28,000 shares of Common Stock which are
currently exercisable.
(4) Includes 196,862 shares beneficially owned by Mr. Holman which are held by
Quantum Group, L.P., an Oregon limited partnership owned by Mr. Holman and
Molly Holman, his wife, 7,000 shares owned by Mrs. Holman, and options to
purchase up to 197,500 shares of Common Stock which are currently
exercisable.
CLASS I NOMINEE FOR ELECTION AT 1999 ANNUAL MEETING -- TERM TO EXPIRE IN 2000
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. Mr. Puskar was re-elected at the
1998 Annual Meeting. Since June 1997, Mr. Puskar has served as Chairman of the
Board of Lend Lease Real Estate Investments (formerly known as 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 is a member of the
Counselors of Real Estate ("CRE"). 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 serves on an advisory board at Georgia State University. 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.
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<PAGE> 7
CLASS III NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING -- TERM TO EXPIRE IN 2002
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.,
Angram, Inc. and Technology Solutions Company. Mr. Oresman is a graduate and
Trustee Emeritus of Amherst College and a graduate of the Harvard Business
School.
CLASS I CONTINUING DIRECTOR -- 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. These funds
currently manage approximately $1 billion of private equity investments. Mr.
Morris is currently a Director of Entrust Technologies, Inc., AMN Healthcare,
Inc., Candlewood Hotel Company, Shemin Nurseries, Inc. 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.
CLASS II CONTINUING DIRECTORS-- 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. Mr. Holman was again named Chief
Executive Officer of the Company on September 3, 1998 following the resignation
of Mr. Mark Whiting as President and Chief Executive Officer of the Company. Mr.
Holman 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
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serves on the Board of Directors of Scholastic Corporation, Varian, Inc., Golden
State Vintners, Inc. and eight investment companies managed by Capital Research
& Management Company and affiliates.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
A. WILLIAM STEIN. Mr. Stein, 45, was named President and Chief Operating
Officer of the Company effective December 1, 1998. He previously served as
Executive Vice President and Chief Financial Officer and Secretary of the
Company since April 1996, in which capacity he was 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.
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.
ELISA F. DITOMMASO. Ms. DiTommaso, 36, was named Senior Vice President,
Finance and Chief Financial Officer effective December 1, 1998. Prior to this
appointment, Ms. DiTommaso had been TriNet's Senior Vice President, Capital
Markets since June 1998, Treasurer since February 1997, and Vice President,
Capital Markets since June 1996. She is responsible for financial management and
policies, corporate development, compliance, credit policy, investor relations,
and information systems. Prior to joining TriNet, Ms. DiTommaso was responsible
for certain capital markets activities for Westinghouse Electric Corporation and
held several positions with Westinghouse Financial Services in real estate,
capital markets, and structured finance. Ms. DiTommaso also has five years
experience with the accounting firm of Price Waterhouse and is a C.P.A. She
received her Bachelor of Science degree from The Pennsylvania State University.
JAMES H. IDA. Mr. Ida, 53, has served as Senior Vice President,
Acquisitions of the Company since April 1996. He was named the Company's Chief
Acquisitions Officer in September 1998. He oversees the evaluation, structuring
and closing of the Company's acquisitions nationwide and has direct
responsibility for the Western United States. Prior to joining TriNet, Mr. Ida
was a director in GE Capital Investment Advisors' investment group and was
responsible for originating, negotiating and underwriting real estate equity and
debt investments on behalf of pension fund clients throughout the United States.
Mr. Ida also served with the three predecessor companies of GE Capital:
MacFarlane Partners, Mellon/McMahan Real Estate Advisors and McMahan Real Estate
Advisors. Before that, Mr. Ida was Senior Vice President for Krupp Realty and
Development, Senior Vice President of Acquisitions for Essex Property
Corporation and Managing Director and Director of Acquisitions for Landsing
Property Corporation. Mr. Ida holds a Bachelor of Science degree in economics
and an M.B.A., with an emphasis in finance and real estate, both from the
University of California at Berkeley.
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<PAGE> 9
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
The Company is managed by a six member Board of Directors, a majority of
whom are independent of the Company's management. There is currently one vacancy
on the Board as a result of the resignation of Mr. Mark Whiting as a Director on
September 3, 1998. Pursuant to the terms of the Company's Articles of
Incorporation, the Directors are divided into three classes. Presently, there is
one (1) Class I Director, two (2) Class II Directors and three (3) Class III
Directors. As noted above, Mr. George Puskar, a Class III Director, is being
nominated for election as a Class I Director in order to equalize the number of
Directors in each class. By reclassifying Mr. Puskar as a Class I Director, each
class will consist of two Directors, in accordance with the Company's Articles
of Incorporation. Each Director holds office for the term to which he is elected
and until his successor is duly elected and qualified. The Class III Directors
currently hold office for terms expiring at the Annual Meeting. Class I
Directors currently hold office for terms expiring at the annual meeting of
stockholders to be held in 2000. Class II Directors currently hold office for
terms expiring at the annual meeting of stockholders to be held in 2001.
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 17 meetings during fiscal year 1998. 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 Board 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 1998.
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
five times in 1998 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
four times in 1998.
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
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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 1998; all the
members of the Committee supported the nomination of the Nominees for election
as Directors at the Annual Meeting. 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
Mr. Holman, the Company's Chairman and Chief Executive Officer, receives an
annual retainer of $100,000 for his services as Chairman of the Board of
Directors. 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 $750 for each Committee meeting
attended. Under the 1997 Stock Plan, following each annual meeting of
stockholders, each of the Company's Independent Directors is granted an option
to purchase 4,000 shares of Common Stock at a price equal to the market price of
the shares on the date of grant, and is also granted a dividend equivalent right
("DER") award for an equivalent number of shares. (See discussion of DER awards
below under "Compensation Committee Report on Executive Compensation -- Stock
Plan Awards.") All options granted to Independent Directors under the 1997 Stock
Plan vest one year after the date of grant.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the aggregate
compensation paid by the Company with respect to the fiscal years ended December
31, 1998, 1997 and 1996 to the Company's Chief Executive Officer and each of the
other named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ -------------
OTHER ANNUAL SHARES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)(2) ($)(3)
----------------- ---- --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Holman, Jr............. 1998 207,500 -0- 56,350(4) 10,000 10,040(5)
Chairman and Chief 1997 175,000 -0- -0- 10,000 6,649
Executive Officer(6) 1996 175,000 100,000 -0- 36,000 5,978
A. William Stein................. 1998 230,417 300,000 30,769 160,000(7) 8,360
President and Chief 1997 195,000 380,000 26,665 30,000 6,324
Operating Officer(8) 1996 162,500 240,000 -0- 50,000 6,351
Elisa F. DiTommaso............... 1998 141,354 175,000 6,350 50,000 7,604
Senior Vice President, 1997 110,000 150,000 3,331 10,000 5,837
Chief Financial Officer 1996 42,500 100,000 -0- 12,000 432
and Treasurer(9)
Jo Ann Chitty.................... 1998 140,000 160,000 7,938 25,000 56,030(10)
Senior Vice President, 1997 117,500 185,000 2,361 12,500 6,028
Asset Management 1996 105,000 35,000 -0- 25,000 5,998
James H. Ida..................... 1998 145,000 110,000 15,770 20,000 9,158
Senior Vice President, 1997 130,000 170,000 1,706 10,000 5,254
Acquisitions 1996 93,750 100,000 -0- -0- 712
Mark S. Whiting.................. 1998 265,193 -0- 67,638 100,000 94,618(12)
President and Chief 1997 295,000 705,000 30,713 45,000 6,322
Executive Officer 1996 262,500 450,000 -0- 70,000 6,362
(until September 1998)(11)
</TABLE>
7
<PAGE> 11
- ---------------
(1) Amounts include (a) with respect to 1998 and 1997 only, taxable income
attributable to shares of Common Stock issued pursuant to awards granted
under the Company's Management Stock Purchase Program which is a component
of 1997 Stock Plan and purchased by the named officer at a discount, and
(b) with respect to 1998 only, DER payments received by the named officer
(see "Compensation Committee Report on Executive Compensation -- Stock Plan
Awards").
(2) Generally, options granted in 1998 and 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
"Compensation Committee Report on Executive Compensation -- 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
executive 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, (c) additional
compensation attributable to certain life insurance premiums paid by the
Company, and (d) additional compensation attributable to certain parking
expense reimbursements made by the Company to certain of the named
executive officers.
(4) Amount also includes retainer payments made to Mr. Holman in his capacity
as Chairman of the Board of Directors.
(5) Amount also includes, for Mr. Holman, income attributable to Mr. Holman's
use during 1998 of a studio apartment maintained by the Company in San
Francisco.
(6) Mr. Holman, who served as Chairman throughout 1998, was named Chief
Executive Officer of the Company in September 1998 upon the resignation of
Mr. Mark Whiting as President and Chief Executive Officer.
(7) Mr. Stein and Ms. DiTommaso were granted options upon their promotions to
their current positions in December 1998 in the amounts of 100,000 shares
and 30,000 shares, respectively.
(8) Mr. Stein was named President and Chief Operating Officer of the Company
effective December 1, 1998. He previously served as Executive Vice
President, Chief Financial Officer and Secretary of the Company.
(9) Ms. DiTommaso was named Chief Financial Officer of the Company effective
December 1, 1998. She previously served as Senior Vice President, Capital
Markets and Treasurer of the Company.
(10) Amount includes income attributable to Ms. Chitty in connection the
Company's reimbursement of certain expenses incurred in her relocation from
Jacksonville, Florida to Alpharetta, Georgia.
(11) Mr. Whiting served as President and Chief Executive Officer of the Company
until his resignation in September 1998.
(12) Amount includes payments to Mr. Whiting for consulting services following
his resignation from the Company.
8
<PAGE> 12
Option Grants in Fiscal Year 1998. The following table sets forth the options
granted with respect to the fiscal year ended December 31, 1998 to the Company's
Chief Executive Officer and each of the other named executive officers.
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED(1) IN FISCAL BASE PRICE EXPIRATION GRANT DATE
NAME (#) YEAR ($/SH) DATE PRESENT VALUE $(2)
---- ---------- ------------- ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Robert W. Holman, Jr. ...... 10,000 1.7% 34.875 5/27/03 $ 32,912
A. William Stein............ 60,000 34.875 5/27/03 197,472
100,000(3) 27.0% 25.8125 12/1/08 216,760(4)
Elisa F. DiTommaso.......... 20,000 34.875 5/27/03 65,824
30,000(3) 8.4% 25.8125 12/1/08 65,028(4)
Jo Ann Chitty............... 25,000 4.2% 34.875 5/27/03 82,280
James H. Ida................ 20,000 3.4% 34.875 5/27/03 65,824
Mark S. Whiting(5).......... 100,000 16.9% 34.875 5/27/03 237,951
</TABLE>
- ---------------
(1) These options will vest in four equal installments on May 27, 1999, May 27,
2000, May 27, 2001 and May 27, 2002. Except as noted in Note (3) below,
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 which are not paired with DER awards have 10-year terms.
(2) Except as noted in Note (4) below, option grant date valuations were
calculated as of May 27, 1998 using the Black-Scholes pricing model with the
following assumptions: a dividend yield of 7.50%, volatility of 20%, a
risk-free interest rate of 5.50% and an expected life of five years.
(3) Mr. Stein and Ms. DiTommaso were granted options upon their promotions to
their current positions in December 1998 in the amounts of 100,000 shares
and 30,000 shares, respectively. These options will vest in four equal
installments on December 1, 2000, December 1, 2001, December 1, 2002 and
December 1, 2003. These options have 10-year terms and are not paired with
DER awards.
(4) Option grant date valuations were calculated as of December 1, 1998 using
the Black-Scholes pricing model with the following assumptions: a dividend
yield of 7.50%, volatility of 20%, a risk-free interest rate of 4.59% and an
expected life of five years.
(5) Upon Mr. Whiting's resignation in September 1998, 8,333 of options granted
in 1998 became vested and the balance expired. The vested portion of such
option (as well as all other vested options held by Mr. Whiting) will expire
June 30, 1999, unless exercised prior to that date.
9
<PAGE> 13
Option Exercises and Year-End Holdings. The following table sets forth
stock options exercised during fiscal year 1998 and the value of options held on
December 31, 1998 by the Company's Chief Executive Officer and each of the other
named executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) FISCAL YEAR-END($)
NAME EXERCISED(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert W. Holman,
Jr. .................. 0 0 197,500/ 49,500 $187,500/ 0
A. William Stein........ 0 0 43,976/215,000 0/93,750
Elisa F. DiTommaso...... 0 0 8,500/ 63,500 0/28,125
Jo Ann Chitty........... 0 0 43,625/ 50,875 0/ 0
James H. Ida............ 0 0 2,500/ 27,500 0/ 0
Mark S. Whiting......... 0 0 261,666/ 0 187,500/ 0
</TABLE>
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return for the period from December 31, 1993 to December 31, 1998
(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 173 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.
<TABLE>
<CAPTION>
TRINET CORPORATE REALTY NAREIT ALL EQUITY REIT
TRUST, INC S&P 500 INDEX
----------------------- ------- ----------------------
<S> <C> <C> <C>
'12/31/93' 100.00 100.00 100.00
'12/31/94' 115.06 101.32 103.70
'12/31/95' 117.08 139.39 119.48
'12/31/96' 165.20 171.26 164.04
'12/31/97' 193.54 228.42 198.75
'12/31/98' 144.89 293.69 165.71
</TABLE>
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee of the Board of Directors administers
the Company's executive compensation program. The Compensation Committee is
composed of two outside Directors, whose names appear at the end of this report.
Objectives of Executive Compensation. The Company's executive compensation
program is designed to attract, retain and motivate key executives who will
contribute to the Company's growth and profitability. The Company's compensation
program combines competitive base salaries with performance-based cash bonuses
and equity awards to reward its officers and employees for achieving Company and
individual performance goals 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, evaluates 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
Compensation Committee makes recommendations to the Board of Directors on annual
cash bonus awards to be paid to executive officers and certain other members of
management based on the achievement of specific predetermined annual performance
goals for the Company and more subjective determinations of individual
performance. The Incentive Plan is intended to reward executives for their
performance during the past fiscal year and incent their performance in future
years. The Compensation Committee establishes general Company performance
objectives, including quantitative measures of enhanced stockholder value, such
as per share growth in Funds from Operations ("FFO") and total annual and
cumulative stockholder return relative to the NAREIT Equity Index, and other
performance measures relating to acquisitions, asset management, finance and
overall management and strategic matters. 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
Company performance objectives, the Compensation Committee recommends to the
Board of Directors the establishment of a total annual bonus pool. The Company's
senior management then develops individual bonus recommendations for officers
and other eligible employees. Based on management's recommendations, the
Compensation Committee then recommends to the Board of Directors for approval
specific individual bonuses for officers and other eligible employees, which are
paid 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
considers stock options to be the primary 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 contributions 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 the
interests of management and stockholders 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
11
<PAGE> 15
Company performance, the purpose of these guidelines is to establish a limit on
potential stockholder dilution. On the Record Date, unexercised options to
acquire 1,219,725 shares of Common Stock were outstanding (vested and unvested),
which number represents 4.9% of the Company's total outstanding shares of Common
Stock on such date.
The 1997 Stock Plan 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 cash payments equal to the dividends that would otherwise have been
paid on vested shares of Common Stock if the recipient owned the specified
number of shares directly. DERs vest in equal annual installments over a period
of four years from the date of the award and are paid annually. 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. The Company considers the value of DERs along with stock options when
determining the size of option awards to be made to individuals. Since DERs
increase the value of the underlying options with which they are paired, the
size of option awards granted in tandem with DERs has been smaller than options
which have been granted without DERs.
Under the Management Stock Incentive Program ("MSPP"), which is a component
of the 1997 Stock Plan, the Company's officers and Directors may 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
may be purchased under the MSPP at two times during the year: at the time annual
performance 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).
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 Company performance targets for the
upcoming year, individual performance objectives for executive officers 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. 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.
12
<PAGE> 16
Compensation of the Chief Executive Officer. Prior to Mr. Holman's
appointment as Chief Executive Officer in September 1998, he served in the
capacity as Chairman and received a salary for the period January 1 - June 30,
1998 and retainer payments for the period July 1 - August 30, 1998. Upon his
appointment as Chairman and Chief Executive Officer, Mr. Holman's compensation
package was revised to consist of an annual retainer for his services as
Chairman and an annual base salary for his services as Chief Executive Officer.
The Compensation Committee reviews the overall compensation of the Chief
Executive Officer on an annual basis. In evaluating the Chief Executive
Officer's compensation, the Compensation Committee considers the 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 and cumulative
stockholder return, and other specific performance objectives relating to
acquisitions, asset management, finance and overall management and strategic
matters, together with the Chief Executive Officer's individual contributions to
the Company's performance.
Section 162(m). 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 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 1998 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.
13
<PAGE> 17
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, 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. ............. 1,520,100 6.11%
757 Third Avenue
New York, NY 10017
Massachusetts Financial Services Company............. 1,258,496 5.1%
500 Boylston Street
Boston, MA 02116
Salomon Smith Barney Holdings Inc.(1)................ 1,389,670 5.6%
Citigroup Inc.(1)
388 Greenwich Street
New York, NY 10013
</TABLE>
- ---------------
(1) According to information reported on Schedule 13G dated January 25, 1999,
Citigroup Inc. is the sole stockholder of Salomon Smith Barney Holdings,
Inc. ("SSB Holdings"). SSB Holdings and Citigroup Inc. have reported that
they have shared voting power and shared dispositive power with respect to
1,389,670 shares of Common Stock. Each entity disclaims beneficial ownership
of the shares set forth above.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
OF COMMON STOCK OF
BENEFICIALLY OWNED CLASS
NAME OF BENEFICIAL OWNER (3/15/99) (3/15/99)
------------------------ ------------------ ---------
<S> <C> <C>
Willis Andersen, Jr., Director................... 34,432(1) *
Robert W. Holman, Jr., Chairman and Chief
Executive Officer.............................. 401,372(2) 1.6%
John G. McDonald, Director....................... 36,000(3) *
Robert S. Morris, Director....................... 30,000(3) *
Stephen B. Oresman, Director..................... 29,300(3) *
George R. Puskar, Director....................... 9,000(4) *
A. William Stein, President and Chief Operating
Officer........................................ 70,814(5) *
Jo Ann Chitty, Senior Vice President, Asset
Management..................................... 47,293(6) *
Elisa F. DiTommaso, Senior Vice President,
Finance and Chief Financial Officer............ 10,851(7) *
James H. Ida, Senior Vice President,
Acquisitions................................... 5,425(8) *
All Directors and executive officers as a group
(10 persons)................................... 674,487 2.7%
</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 22,000 shares of Common
Stock which are currently exercisable.
(2) Includes 196,862 shares beneficially owned by Mr. Holman which are held by
Quantum Group, L.P., an Oregon limited partnership owned by Mr. Holman and
Molly Holman, his wife, 7,000 shares owned by
14
<PAGE> 18
Mrs. Holman, and options to purchase up to 197,500 shares of Common Stock
which are currently exercisable.
(3) Includes options to purchase up to 28,000 shares of Common Stock which are
currently exercisable.
(4) Includes 1,000 shares held by Marleen Puskar, Mr. Puskar's wife, and options
to purchase up to 4,000 shares of Common Stock which are currently
exercisable.
(5) Includes options to purchase 43,976 shares of Common Stock which are
currently exercisable.
(6) Includes options to purchase 43,625 shares of Common Stock which are
currently exercisable.
(7) Includes options to purchase 8,500 shares of Common Stock which are
currently exercisable.
(8) Includes options to purchase 2,500 shares of Common Stock which are
currently exercisable.
AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into agreements with Mr. Stein, Mr. Ida, Ms. Chitty
and Ms. DiTommaso 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. Stein) or by one (in the case of Mr. Ida, Ms. Chitty
and Ms. DiTommaso); (b) a prorated amount of unpaid incentive bonus for the year
in which termination occurs; (c) continuation of employee group benefits
coverage for a period equal to two years (in the case of Mr. Stein) or one year
(in the case of Mr. Ida, Ms. Chitty and Ms. DiTommaso); (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. Stein) and
one year (in the case of Mr. Ida, Ms. Chitty and Ms. DiTommaso); 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, 1998, all
Section 16(a) filing requirements applicable to its Directors, executive
officers and greater than 10% stockholders were satisfied.
PROPOSAL II
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE
THE AUTHORIZED PREFERRED STOCK
At its meeting held on February 24, 1999, 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 preferred 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.
15
<PAGE> 19
The proposed amendment would amend Article VII to increase the authorized
preferred stock of the Company from 10,000,000 shares to 15,000,000 shares. As
of March 15, 1999, there are 40,000,000 authorized shares of Common Stock, with
24,872,429 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 of Directors believes that the proposed increase in the
authorized preferred stock of the Company at this time will add flexibility to
the Company's financing programs. The Board believes it is advisable to
authorize additional shares of preferred stock to have them available for, among
other things, possible issuance in connection with public or private offerings
of shares for cash, financings, potential acquisitions of properties, potential
business combinations, 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 terms of the shares of preferred stock to be authorized, including
dividend or interest rates, conversion prices, voting rights, redemption prices,
maturity dates and similar matters, will be determined by the Board of Directors
No additional action or authorization by the Company's stockholders would
be necessary prior to the issuance of such additional shares of preferred 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 Company does not intend to issue any shares of preferred stock proposed
to be authorized by this amendment 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
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of PricewaterhouseCoopers LLP (which is the successor
to the predecessor firms of Price Waterhouse LLP and Coopers & Lybrand LLP) has
served as the Company's independent auditors since the Company's formation in
March 1993. On February 24, 1999, the Board of Directors voted to appoint
PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers LLP 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 PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 1999.
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
16
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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 Innisfree M&A Incorporated ("Innisfree") to
assist it in the solicitation of proxies. The Company has agreed to pay
Innisfree a fee of $ , plus reimbursement of expenses.
STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at the 2000 annual meeting
of stockholders must be received by the Company by December 1, 1999 if the
stockholder making the proposal desires that such proposal be considered for
inclusion in the Company's proxy statement and form of proxy relating to such
meeting. 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.
The Company's Bylaws provide that any stockholder wishing to nominate a
director or have a stockholder proposal, other than a stockholder proposal
submitted for inclusion in the Company's proxy statement, considered at an
annual meeting must fulfill certain requirements, including providing 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. In order to be timely for
next year's annual meeting, such notice must be delivered between November 26,
1999 and March 17, 2000. If timely notice of a stockholder proposal is not given
or if the other requirements are not satisfied, the proposal may not be brought
before the annual meeting. If timely notice is given and the other requirements
are satisfied, the ability of the Board of Directors to exercise discretionary
voting authority with respect to such proposal is subject to SEC rules governing
the exercise of such authority. Any such proposal is subject to SEC rules
governing the exercise of such authority. 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.
INCORPORATION BY REFERENCE
The Company incorporates by reference the financial and other information
required under Item 13(a) of Schedule 14A included in its annual report on Form
10-K.
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 deleting existing Section
7.1 in its entirety and substituting in lieu thereof a new Section 7.1 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 eighty
million (80,000,000) shares, consisting of (i) fifteen million (15,000,000)
shares of preferred stock, par value $.01 per share ("Preferred Stock");
(ii) forty million (40,000,000) shares of common stock, par value $.01 per
share ("Common Stock"); and (iii) twenty-five million (25,000,000) 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 $800,000. 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."
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
80,000,000 shares, consisting of (i) 15,000,000 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 the shares of stock having par value is $800,000.
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.
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 , 1999.
<TABLE>
<S> <C>
ATTEST: TRINET CORPORATE REALTY TRUST, INC.
- -------------------------------------------- By:
Secretary --------------------------------------------
President
</TABLE>
A-1
<PAGE> 22
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., A. William Stein and
Geoffrey M. Dugan, 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 One Embarcadero Center,
33rd Floor, San Francisco, California, on Wednesday, May 26, 1999 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 for any adjournments thereof. The
undersigned hereby revokes any proxy previously given in connection with such
meeting and acknowledge receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement and the 1999 Annual Report to Stockholders.
(Continued and to be signed on reverse side.)
-FOLD AND DETACH HERE-
<PAGE> 23
TRINET CORPORATE REALTY TRUST, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
For Withheld For All
All All Except nominee(s) written below
1. Election of Directors: [ ] [ ] [ ]
Nominees: George R. Puskar (Class I)
Willis Andersen, Jr. (Class III),
Stephen B. Oresman (Class III)
- -------------------------------------------------------------------------------
To elect one Class I Director to hold office until the 2000 Annual Meeting of
Stockholders, and two Class III Directors to hold office until the 2002 Annual
Meeting of Stockholders, and until their respective successors are duly elected
and qualified.
2. To approve the proposed amendment to the TriNet Corporate Realty Trust,
Inc. Articles of Incorporation to increase the authorized preferred stock:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the selection of PricewaterhouseCoopers LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1999:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To consider and act upon any matters incidental to the foregoing or any
other matters which may properly come before the meeting of any
adjournments thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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, AND 3, THE UNDERSIGNED'S VOTES WILL BE CAST IN FAVOR OF SUCH
MATTERS. PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
