<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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
VORNADO REALTY TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
VORNADO REALTY TRUST
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
VORNADO REALTY TRUST
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
------------
------------
1 9 9 5
<PAGE> 3
VORNADO REALTY TRUST
PARK 80 WEST, PLAZA II
SADDLE BROOK, NEW JERSEY 07663
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 31, 1995
------------------------
To the Holders of Common Shares of Beneficial Interest:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Vornado
Realty Trust (the "Company") will be held at the Marriott Hotel, Interstate 80
and the Garden State Parkway, Saddle Brook, New Jersey 07663 on Wednesday,
May 31, 1995, at 10:00 in the forenoon, local time, for the following purposes:
(1) The election of two persons to the Board of Trustees of the Company for
a term of three years; and
(2) The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Pursuant to the Bylaws of the Company, the Board of Trustees of the Company
has fixed the close of business on March 24, 1995, as the record date for
determination of shareholders entitled to notice of and to vote at the meeting.
Your attention is called to the attached proxy statement. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE TO WHICH NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING IN PERSON, YOU
MAY WITHDRAW YOUR PROXY AND VOTE YOUR OWN SHARES.
By Order of the Board of Trustees
Susan D. Schmider
Secretary
<PAGE> 4
VORNADO REALTY TRUST
PARK 80 WEST, PLAZA II
SADDLE BROOK, NEW JERSEY 07663
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 31, 1995
------------------------
The enclosed proxy is being solicited by the Board of Trustees of Vornado
Realty Trust (the "Company") for use at the Annual Meeting of Shareholders of
the Company to be held on Wednesday, May 31, 1995 ("Annual Meeting"). The proxy
may be revoked by the shareholder at any time prior to its exercise at the
Annual Meeting. The cost of soliciting proxies has been or will be borne by the
Company. MacKenzie Partners, Inc. has been engaged by the Company to solicit
proxies, at an estimated fee not to exceed $5,500. In addition to solicitation
by mail and by telephone calls, arrangements may be made with brokerage houses
and other custodians, nominees and fiduciaries to send proxies and proxy
material to their principals and the Company may reimburse them for their
expenses in so doing.
Only shareholders of record at the close of business on March 24, 1995 are
entitled to notice of and to vote at the Annual Meeting. There were on such date
21,722,444 Common Shares of Beneficial Interest ("Shares") outstanding, each
entitled to one vote at the Annual Meeting.
The principal executive office of the Company is located at Park 80 West,
Plaza II, Saddle Brook, New Jersey 07663. This notice of meeting and proxy
statement and enclosed proxy will be mailed on or about May 10, 1995 to the
Company's shareholders of record as of the close of business on March 24, 1995.
<PAGE> 5
ELECTION OF TRUSTEES
The Declaration of Trust of the Company, as amended ("Declaration of
Trust"), provides that the Board shall be divided into three classes, as nearly
equal in number as possible. One class of two trustees is elected at each annual
meeting of shareholders to hold office for a term of three years and until their
successors are duly elected and qualify.
Unless otherwise directed in the proxy, the person named in the enclosed
proxy, or his substitute, will vote such proxy for the election of the two
nominees listed below as trustees for a three year term and until their
respective successors are elected and qualify. If any nominee at the time of
election is unavailable to serve, it is intended that the person named in the
proxy, or his substitute, will vote for an alternative nominee who will be
designated by the Board. Proxies may be voted only for the two nominees named or
such alternates. However, the Board has no reason to anticipate that any of the
nominees hereafter named will not be available to serve.
Under the Bylaws, the affirmative vote of a plurality of all the votes cast
at the Meeting, assuming a quorum is present, is sufficient to elect a trustee.
Under Maryland law, the Declaration of Trust and the Bylaws of the Company,
proxies marked "withhold authority" will be counted for the purpose of
determining the presence of a quorum but such proxies and failures to vote
(including proxies from brokers or other nominees indicating that such persons
do not have discretionary power to vote Shares in the election of trustees) will
not be counted as votes cast in the election of trustees and thus will have no
effect on the result of the vote.
The following table sets forth the nominees (both of whom are presently
members of the Board of the Company) and the other present members of the Board
of the Company. With respect to each such person, the table sets forth the age,
principal occupation, position presently held with the Company, and the year in
which the person first became a director of Vornado.
2
<PAGE> 6
<TABLE>
<CAPTION>
YEAR
PRINCIPAL OCCUPATION TERM
AND PRESENT POSITION WILL INITIAL
NAME AGE WITH THE COMPANY EXPIRE ELECTION
- ----------------- --- ---------------------- ------ --------
<S> <C> <C> <C> <C>
NOMINEES FOR ELECTION TO SERVE UNTIL
THE ANNUAL MEETING IN 1998
- ---------------------------------------------
DAVID MANDELBAUM* 59 A member of the law 1998 1979
firm of Mandelbaum &
Mandelbaum, P.C.; a
general partner of
Interstate Properties
("Interstate")
RICHARD WEST 57 Professor, Leonard N. 1998 1982
Stern School of
Business, New York
University
PRESENT TRUSTEES ELECTED TO SERVE UNTIL
THE ANNUAL MEETING IN 1996
- ---------------------------------------------
STANLEY SIMON* 77 Owner of Stanley Simon 1996 1960
and Associates,
management and
financial consultants
RONALD TARGAN 68 A member of the law 1996 1980
firm of Schechner and
Targan, P.A.;
President of Malt
Products Corporation
of New Jersey, a
producer of malt syrup
PRESENT TRUSTEES ELECTED TO SERVE UNTIL
THE ANNUAL MEETING IN 1997
- ---------------------------------------------
STEVEN ROTH* 53 Chairman of the Board 1997 1979
and Chief Executive
Officer of the
Company; managing
general partner of
Interstate
RUSSELL WIGHT,
JR.* 56 A general partner of 1997 1979
Interstate
</TABLE>
- ------------
* Member of Executive Committee of the Board of the Company.
3
<PAGE> 7
Mr. Mandelbaum has been a member of Mandelbaum & Mandelbaum, P.C. since
1967. Since 1968, he has been a general partner of Interstate. Mr. Mandelbaum is
also a director of Alexander's, Inc.
Mr. West has been a professor at the Leonard N. Stern School of Business,
New York University since September 1984. He was also Dean from September 1984
until August 1993. From July 1976 through August 1984, he was a faculty member
of the Amos Tuck School of Business Administration of Dartmouth College. From
July 1976 until 1983, Mr. West was also Dean of the Amos Tuck School. Mr. West
is also a director or a trustee of Alexander's, Inc., Smith-Corona, Inc., Bowne
& Co., Inc., Re Capital Corporation and various investment companies managed by
Merrill Lynch Assets Management, Inc.
Mr. Simon has been the owner of Stanley Simon and Associates since 1958.
Mr. Simon is also a director of General Microwave Corporation, Gerber Scientific
Inc. and J. Baker, Inc.
Mr. Targan has been President of Malt Products Corporation of New Jersey
since 1962. Since 1964, he has been a member of the law firm of Schechner and
Targan, P.A.
Mr. Roth has been Chairman of the Board and Chief Executive Officer of the
Company since May 1989 and Chairman of the Executive Committee of the Board of
the Company since April 1980. Since 1968, he has been a general partner of
Interstate and, more recently, he has been managing general partner. On March 3,
1995, he also became Chief Executive Officer of Alexander's, Inc. Mr. Roth is
also a director of Alexander's, Inc. and Insituform Technologies, Inc.
Mr. Wight has been a general partner of Interstate since 1968. Mr. Wight is
also a director of Alexander's, Inc. and Insituform Technologies, Inc.
Interstate is a New Jersey partnership formed in 1968 to engage in the
development and operation of shopping centers. Messrs. Roth, Wight and
Mandelbaum have at all times been the general partners of Interstate. Interstate
develops,
4
<PAGE> 8
owns and operates strip and regional type shopping centers and is an investor in
securities and partnerships.
The Company is not aware of any family relationships between any trustee or
executive officer of the Company or person nominated or chosen by the Company to
become a trustee or executive officer. Messrs. Roth, Wight and Mandelbaum are
affiliated with each other as general partners of Interstate and in other
businesses. Messrs. Mandelbaum and Targan are affiliated with each other in
businesses and in the practice of law.
The Board has an Audit Committee and a Compensation Committee. The Audit
Committee's functions include reviewing annual and quarterly reports and proxy
statements sent to shareholders and filed with the Securities and Exchange
Commission, recommending to the Board the engaging of the independent auditors,
reviewing with the independent auditors the plan and results of the auditors'
engagement and other matters of interest to the Committee and reviewing with the
Company's financial officers and internal auditors matters of interest to the
Committee, including the effectiveness of the Company's internal controls and
the results of its operations. The Audit Committee, which held five meetings
during the Company's last fiscal year, consists of three members, Messrs. West,
Mandelbaum and Simon. Mr. West is the Chairman of the Audit Committee.
The Compensation Committee is responsible for establishing the terms of the
compensation of the executive officers and the granting of awards under the
Company's Omnibus Share Plan. The Committee consists of three members, Messrs.
Simon, Targan and West. Mr. Simon is the Chairman of the Compensation Committee.
The Board held six meetings during the Company's last fiscal year. Each
trustee of the Company attended at least 75% of the combined total of meetings
of the Board and the meetings held by all committees on which he served during
that period.
5
<PAGE> 9
COMPENSATION COMMITTEE
OF THE BOARD OF TRUSTEES
REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee (the "Committee") is responsible for
establishing the terms of the compensation of the executive officers.
Each of the executive officers receives a base salary. The Committee
periodically reviews and adjusts Mr. Roth's base salary. Mr. Roth's current base
salary of $625,000 was established in November 1991. The base salaries of Mr.
Macnow and Mr. Rowan are $354,000 each in accordance with the employment
agreements which were entered into on January 1, 1995 (see "Employment
Contracts"). Such employment agreements provide for an annual adjustment of
their base salary equal to 125% of the percentage increase in the prior year's
consumer price index.
The primary objective of the Committee in establishing the terms of the
executive officers' compensation has been to provide strong financial incentives
for the executive officers to maximize shareholder value. The Committee believes
that the best way to accomplish this objective is to grant substantial share
options on a fixed share basis without adjusting the number of shares granted to
offset changes in the Company's share price.
The employment agreements of Joseph Macnow, Vice President -- Chief
Financial Officer, and Richard Rowan, Vice President -- Real Estate, provide an
undertaking to use best efforts annually to cause the Compensation Committee of
the Board to grant each of them options to purchase 37,500 Shares at a purchase
price equal to the fair market value of the Shares on the dates the options are
granted. In each of the last five years (including a December 1993 grant for the
1994 year), Mr. Macnow and Mr. Rowan have each received an option on 37,500
Shares exercisable at the current market price pursuant to their employment
agreements.
6
<PAGE> 10
Section 162(m) of the Internal Revenue Code, which was adopted in 1993,
provides that, in general, publicly traded companies may not deduct, in any
taxable year, compensation in excess of $1,000,000 paid to any individual named
in the Summary Compensation Table which is not "performance based", as defined
in Section 162(m). The Committee is studying the effect of Section 162(m) and
the proposed regulations, including transitional rules, on the Company as a
REIT, but has not taken any position at this time.
Stanley Simon
Ronald Targan
Richard West
7
<PAGE> 11
PERFORMANCE GRAPH
The following performance graph compares the Company's share price
performance to the S&P 500 and to the published National Association of Real
Estate Investment Trusts (NAREIT) All Equity Index (excluding Health Care
REITs). Share price performance for the past five years is not necessarily
indicative of future results. The cumulative return includes the reinvestment of
dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
THE NAREIT
MEASUREMENT PERIOD S&P 500 ALL EQUITY
(FISCAL YEAR COVERED) VORNADO INDEX INDEX(1)
<S> <C> <C> <C>
1989 100 100 100
1990 95 97 85
1991 127 126 115
1992 203 136 132
1993 278(2) 150 157
1994 310 152 162
</TABLE>
(1) Excluding Health Care REITs.
(2) Includes a special dividend of $3.36 per share.
8
<PAGE> 12
PRINCIPAL SHAREHOLDERS AND SECURITY
OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Shares as of April 21, 1995, by (i) each trustee of
the Company, (ii) each person known by the Company to be the beneficial owner of
more than five percent of the Company's outstanding Shares and (iii) all
trustees, nominees and executive officers as a group. Except as otherwise
indicated, the Company believes that the beneficial owners of the Shares listed
below, based on information furnished by such owners, have sole investment and
voting power with respect to such shares. Unless otherwise noted, the address of
all such persons is c/o Vornado Realty Trust, Park 80 West, Plaza II,
Saddle Brook, New Jersey 07663.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NAME AND ADDRESS OF NATURE OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- ------------------------------------------------------- --------
<S> <C> <C>
Steven Roth 7,618,750(3)(4) 35.1%
Russell Wight, Jr. 6,884,000(3)(5) 31.7%
278 S. Maya Palm Drive
Boca Raton, Florida 33432
David Mandelbaum 6,884,000(3) 31.7%
Mandelbaum & Mandelbaum, P.C.
80 Main Street
West Orange, New Jersey 07052
Ronald Targan 375,000 1.7%
Schechner and Targan, P.A.
80 Main Street
West Orange, New Jersey 07052
Stanley Simon 37,500 *
Stanley Simon and Associates
70 Pine Street
New York, New York 10270
Richard West 10,500(6) *
482 Tepi Drive
Southbury, Connecticut 06488
Richard Rowan 148,060 * (8)
Joseph Macnow 272,577 1.2%(8)
All officers and trustees as a 8,787,387(7) 39.9%(8)
group (the 8 persons listed
above)
</TABLE>
(table continued on next page)
9
<PAGE> 13
(table continued from previous page)
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NAME AND ADDRESS OF NATURE OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- ------------------------------------------------------- --------
<S> <C> <C>
Interstate Properties 6,721,500(3) 30.9%
Frederick Zissu 1,832,615(9) 8.4%
30 Hamilton Drive West
No. Caldwell, New Jersey 07006
Group consisting of members of the 1,167,000(10) 5.4%
Wilf family and related entities
c/o Leonard Wilf
820 Morris Turnpike
Short Hills, New Jersey 07078
Cohen & Steers Capital 1,369,600(11) 6.3%
Management, Inc.
757 Third Avenue
New York, New York 10017
* Under 1%.
</TABLE>
- ---------------
(1) Unless otherwise indicated, each person is the direct owner of and has sole
voting power and sole investment power with respect to such Shares.
(2) Based on 21,722,444 Shares outstanding as of April 21, 1995.
(3) Interstate, a partnership of which Messrs. Roth, Wight and Mandelbaum are
the general partners, owns 6,721,500 Shares. These Shares are included in
the total Shares and the percentage of class for Interstate, Mr. Roth,
Mr. Wight and Mr. Mandelbaum. Messrs. Roth, Wight and Mandelbaum share
voting power and investment power with respect to these Shares.
(4) Includes 123,000 Shares owned by the Daryl and Steven Roth Foundation, over
which Mr. Roth holds sole voting power and investment power. Does not
include 18,000 Shares owned by Mr. Roth's wife, as to which Mr. Roth
disclaims any beneficial interest.
(5) Includes 130,000 Shares owned by the Wight Foundation, over which Mr. Wight
holds sole voting power and investment power.
(footnotes continued on next page)
10
<PAGE> 14
(footnotes continued from previous page)
(6) Mr. West and his wife own 1,500 of these Shares jointly. Mr. West holds
9,000 of these Shares in self-directed Keogh accounts.
(7) Includes 275,060 Shares which could be acquired within 60 days upon
exercise of Share options.
(8) Based on 21,997,504 Shares. This number was arrived at by adding to the
total number of Shares outstanding as of April 21, 1995, the number of
Shares which could have been acquired within 60 days upon exercise of Share
options by persons included in the officers and trustees group.
(9) Based on a Schedule 13D filed on May 14, 1993 by Frederick Zissu, he owns
1,861,912 Shares. According to the Company's records, he presently owns
1,832,615 shares. Does not include 23,385 Shares owned by Mr. Zissu's wife,
as to which Mr. Zissu disclaims any beneficial interest.
(10) Based on Schedule 13D dated April 10, 1987 (as adjusted for stock splits),
filed by a group consisting of members of the Wilf family and related
entities, Harry and Joseph Wilf have shared voting and investment power
with respect to 743,250 Shares which they jointly own. Judith Wilf, Leonard
Wilf, Zygmunt Wilf, and JHW Construction Corp. each own and have sole
voting and investment power with respect to 104,250, 45,000, 30,000, and
52,500 Shares, respectively. The Wilf Family Foundation owns the other
112,500 Shares and its trustees, Harry, Joseph, Leonard and Zygmunt Wilf
share voting and investment power with respect to such Shares. According to
the Company's shareholder records, the Wilf group presently owns Shares as
follows: Harry and Joseph Wilf -- 403,500 Shares; Judith Wilf -- 125,250
Shares; Leonard Wilf -- 88,500 Shares; Zygmunt Wilf -- 127,500 Shares; JHW
Construction Corp. -- 52,500 Shares; Mark Wilf -- 7,500 Shares; and the
Wilf Family Foundation -- 362,250 Shares. The Company has been advised that
Harry Wilf is deceased.
11
<PAGE> 15
(footnotes continued from previous page)
(11) Based on Schedule 13G dated January 18, 1995, Cohen & Steers Capital
Management, Inc. has the sole power to vote or to direct the vote of
1,237,800 shares and has the sole power to dispose or to direct the
disposition of 1,369,600 shares.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or accrued during
the past three fiscal years for each of the highest paid executive officers of
the Company whose total compensation aggregated $100,000 or more in 1994
("Covered Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND ---------------------- ------------
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- ---------------------------- ---- -------- ------ ------------
<S> <C> <C> <C> <C>
Steven Roth 1994 $665,503 $ 0 0
Chairman and Chief 1993 662,044 0 0
Executive Officer 1992 658,607 0 0
Richard Rowan(1) 1994 $357,685 $ 0 0
Vice President -- Real 1993 346,686 0 79,916(2)
Estate 1992 333,923 7,500 37,500
Joseph Macnow(1) 1994 $357,939 $ 0 0
Vice President -- Chief 1993 346,888 0 79,916(2)
Financial Officer 1992 334,075 0 37,500
</TABLE>
- ---------------
(1) Options are exercisable 25% nine months after grant, and 25% after each of
the following six month periods.
(2) In January 1993, 42,416 share options (adjusted pursuant to the plan's
antidilution provisions for the $3.36 extraordinary dividend in June 1993)
were granted for the 1993 year and in December 1993, 37,500 share options
were granted for the 1994 year each to Messrs. Rowan and Macnow.
12
<PAGE> 16
The following table summarizes all exercises of options during 1994, and
the options held at December 31, 1994, by the Covered Executives.
AGGREGATED OPTION EXERCISES IN 1994 AND 1994-YEAR END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED 12/31/94 12/31/94
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------- -------- -------- -------------- ---------------------
<S> <C> <C> <C> <C>
Steven Roth 0 $ 0 0/0 $ 0/0
Richard Rowan 5,041 $ 83,635 139,145/38,727 $2,453,658/$183,929
Joseph Macnow 19,658 $450,011 156,540/38,727 $2,849,236/$183,929
</TABLE>
EMPLOYEE RETIREMENT PLAN
The Company's employee retirement plan provides retirement benefits to
full-time employees of the Company. Benefits under the plan vest upon the
completion of five years of service. Annual retirement benefits are equal to 1%
of the participant's base salary for each year of service. However, the portion
of retirement benefits payable for service prior to plan participation is equal
to 1% of the participant's base salary as of December 31 of the year before the
participant began to participate in the plan for each year of the participant's
past service. The amount of base salary which may be taken into account for
benefit accrual purposes is limited to $150,000 in 1994 (adjusted in future
years to reflect increases in the cost of living) pursuant to the requirements
of the Internal Revenue Code.
The amounts shown below are the estimated annual benefits (payable in the
form of a life annuity) for each of the Covered Executives payable upon normal
retirement at age 65. This amount assumes a maximum base salary for benefit
accrual purposes of $150,000 for 1994 and forward, and that the Covered
Executive's service is continued until age 65. Such estimated annual benefit
payable to Mr. Roth is $60,691; to Mr. Rowan, $53,115; and to Mr. Macnow,
$50,691.
13
<PAGE> 17
EMPLOYMENT CONTRACTS
Mr. Rowan and Mr. Macnow each have employment agreements expiring
December 31, 1997 with the Company. The terms and conditions of these
agreements, entered into on January 1, 1995, are the same as the terms and
conditions of the employment agreements that expired on December 31, 1994. The
agreements provide to each of Messrs. Rowan and Macnow an initial annual salary
of $354,000, subject to increases in the second and third years by a factor
equal to 125% of the percentage increase in the prior year's consumer price
index; use of a corporate automobile, and an undertaking to use best efforts to
cause the Compensation Committee of the Board to grant each of them options to
purchase 37,500 Shares during each of the three years at a purchase price equal
to the fair market value of the stock on the dates the options are granted. The
agreements also provide that, if the Company should terminate Mr. Rowan's or
Mr. Macnow's employment other than for just cause, payment of salary shall
continue until the earlier of two years after the date of termination or the
employee's becoming self-employed or employed with another company. The
agreements further provide that if either Mr. Rowan or Mr. Macnow should
terminate employment for just cause (defined as change of the employee's
responsibility, change in control of the Company or relocation of the Company),
such employee will be paid 2.99 times his annual salary and his unvested stock
options will vest.
COMPENSATION OF TRUSTEES
The Company compensated Messrs. Wight, Mandelbaum and Targan at a rate of
$15,000 per year for serving as trustees plus $750 for each meeting of the Board
or of any committee of the Board which the particular trustee attends. The
Company compensated Stanley Simon and Associates, of which Stanley Simon is the
owner, at a rate of $30,000 per year and Richard West at a rate of $40,000 per
year in addition to $750 for each meeting. Mr. Roth receives no compensation as
a trustee.
14
<PAGE> 18
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Company has a Compensation Committee, consisting of Messrs. Simon,
Targan and West, which grants awards under the Company's Omnibus Share Plan and
makes all other executive compensation determinations. Mr. Roth is the only
officer of the Company who is a member of the Board. There are no interlocking
relationships involving the Company's Board which require disclosure under the
executive compensation rules of the Securities and Exchange Commission.
CERTAIN TRANSACTIONS
During 1994, the Company paid (i) $108,600 for legal services to the firm
of Mandelbaum & Mandelbaum, P.C., of which David Mandelbaum is a member; and
(ii) $71,155 for legal services to the firm of Schechner and Targan, P.A. of
which Ronald Targan is a member.
The Company currently manages and leases the six shopping centers of
Interstate Properties pursuant to a Management Agreement for which the Company
receives a quarterly fee equal to 4% of base rent and percentage rent and other
commissions. The Management Agreement has a term of one year and is
automatically renewable unless terminated by either of the parties on sixty
days' notice at the end of the term. Although the Management Agreement was not
negotiated at arms' length, the Company believes based upon comparable fees
charged by other real estate companies, that its terms are fair to the Company.
For the years ended December 31, 1994 and December 31, 1993 and the period from
July 13, 1992 through December 31, 1992, $894,000, $913,000 and $367,000 of
management fees were earned by the Company pursuant to the Management Agreement.
At December 31, 1994, the Company owned 113,100 shares or 2.3% of
Alexander's, Inc. common stock. On March 2, 1995, the Company purchased all of
the 1,353,468 shares, or 27.1%, of the common stock of Alexander's owned by
Citibank, N.A. Interstate owns 1,354,568 shares,
15
<PAGE> 19
or 27.1%, of the common stock of Alexander's and Mr. Roth
is a director and the Chief Executive Officer of Alexander's.
The Company and Interstate now own 56.4% of the outstanding common stock of
Alexander's. The Company and Interstate are restricted for three years from
owning in excess of two-thirds of Alexander's common stock or entering into
certain other transactions with Alexander's, without the approval of the
independent directors of Alexander's.
Interstate, Mr. Roth and the Company, have filed as a "group" with the
Securities and Exchange Commission in connection with their respective holdings
in Alexander's.
In July 1992, the Company was retained by Alexander's Inc. to act as a
special real estate consultant with respect to the leasing or sale of certain
assets in connection with Alexander's reorganization proceedings under Chapter
11 of the federal Bankruptcy Code.
The terms of the leasing agreement provided the Company with exclusive
rights to sell and/or lease the assets of Alexander's through September 21, 1994
and thereafter, shall automatically renew on a year-to-year basis, and is
terminable by either party at the end of each year on not less than 60 days
prior notice. As of March 2, 1995 the agreement was extended until 1998 to be
coterminus with the Management Agreement discussed below. The agreement provides
for the Company to generally receive fees based on a percentage of sales
proceeds or lease rents, as the case may be.
Subject to the payment of rents by underlying tenants pursuant to leases
and to the prior satisfaction of all payments to which certain creditors of
Alexander's are entitled under a plan of reorganization (approved by the
Bankruptcy Court in September 1993), the Company is due approximately $12.4
million for transactions completed to date. Of this amount, the Company was due
to receive $500,000 on July 1, 1994; which was received in March 1995. The
balance of $11.9 million will be payable over a seven year period in an amount
not to exceed $2,500,000 in any calendar year until the present value of such
installments (calcu-
16
<PAGE> 20
lated at a discount rate of 9% per annum) equals the amount that would have been
paid had it been paid on September 21, 1993 or at the time the transactions
which gave rise to the commissions occurred, if later.
The Company and Alexander's have entered into a three-year management and
development agreement (the "Management Agreement") under which the Company will
manage all of Alexander's business affairs and manage and develop Alexander's
properties. The annual fee to the Company is $3,000,000, plus 6% of development
costs with a minimum guaranteed fee for the development portion of $1,650,000 in
the first year and $750,000 in each of the second and third years. Pursuant to
the Management Agreement, Mr. Roth, the Company's Chairman and Chief Executive
Officer, also became Chief Executive Officer of Alexander's.
The fee pursuant to the Management Agreement is in addition to the leasing
fee the Company receives from Alexander's under the leasing agreement which has
been in effect since 1992. The term of the leasing agreement has been extended
to be coterminus with the term of the Management Agreement.
On March 15, 1995, the Company lent Alexander's $45 million, the
subordinated tranche of a $75 million secured financing. The balance was funded
by a bank. The Company's loan has a three-year term and bears interest at 16.43%
per annum for the first two years and at a fixed rate for the third year of 992
basis points over the one-year Treasury bill rate. In addition, Vornado received
a loan origination fee of $1,500,000 from Alexander's.
On December 29, 1992, Mr. Roth exercised a stock option granted to him on
October 4, 1985, for 1,500,000 shares of the Company's stock, in order to
entitle the Company to a $10.8 million cash reduction in income taxes, the value
of which would have been substantially, if not totally, eliminated if the option
were exercised once the Company became a REIT. In connection with the exercise,
the Company lent Mr. Roth $15,245,000 in 1992 ($9,410,000 of the exercise price
of $9,450,000 and $5,835,000 for
17
<PAGE> 21
withholding taxes which were immediately payable by him) and $7,000,00 in 1993
for additional taxes payable. In addition, the Company granted him registration
rights with respect to such shares. The loan bears interest, payable quarterly,
at a rate equal to the broker call rate (7.25% at December 31, 1994) but not
less than the minimum applicable federal rate provided under the Internal
Revenue Code and is due on December 29, 1997.
On February 4, 1993, the Company repurchased 750,000 shares of this stock
from Mr. Roth at $27.17 per share, the closing price on February 3, 1993. As of
December 31, 1992, the Company recorded an expense of $15,650,000, representing
the difference between the repurchase price and the option price. In connection
with the repurchase, Mr. Roth repaid $9,122,500 of the loan, including
$1,500,000 of the amount he borrowed in 1993.
At December 31, 1994, the loan due from Mr. Roth was $13,122,500.
In 1993, the Company lent Messrs. Rowan and Macnow $253,000 and $227,000,
respectively, representing amounts owed by such persons in connection with their
option exercises. The loans accrue interest at a rate equal to the broker call
rate (7.25% at December 31, 1994) but not less than the minimum applicable
federal rate provided under the Internal Revenue Code and are due December 31,
1995.
INFORMATION RESPECTING THE COMPANY'S INDEPENDENT AUDITORS
The Board has retained Deloitte & Touche LLP to act as independent auditors
for the fiscal year ending December 31, 1995. The firm of Deloitte & Touche was
engaged as independent auditors for the 1994 fiscal year and representatives of
Deloitte & Touche are expected to be present at the Annual Meeting. They will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
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<PAGE> 22
ADDITIONAL MATTERS TO COME BEFORE THE MEETING
The Board does not intend to present any other matters, nor does it have
any other information that any other matters will be brought before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
it is the intention of the person named in the enclosed proxy to vote said proxy
in accordance with his judgment on such matters.
ADVANCE NOTICE BYLAW
The Bylaws of the Company provide that in order for a shareholder to
nominate a candidate for election as a trustee at an annual meeting of
shareholders or propose business for consideration at such meeting, notice must
be given to the Secretary of the Company no more than 90 days nor less than 60
days prior to the first anniversary of the preceding year's annual meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders of the
Company must be received at the principal executive office of the Company, Park
80 West, Plaza II, Saddle Brook, New Jersey 07663, Attention: Secretary, not
later than November 30, 1995, for inclusion in the 1996 proxy statement and form
of proxy.
By Order of the Board of Trustees,
Susan D. Schmider
Secretary
May 10, 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE
URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED
ENVELOPE.
19
<PAGE> 23
Vornado Realty Trust
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
<PAGE> 24
P VORNADO REALTY TRUST
R The undersigned, revoking all prior proxies, hereby appoints STEVEN
ROTH proxy, with full power of substitution, to attend, and to vote all
O shares the undersigned is entitled to vote, at the Annual Meeting of
Shareholders of Vornado Realty Trust ("Company") to be held at the
X Marriott Hotel, Interstate 80 and the Garden State Parkway, Saddle Brook,
New Jersey 07663 on Wednesday, May 31, 1995 at 10:00 in the forenoon,
Y local time, upon any and all business as may properly come before the
meeting and all adjournments thereof. Said proxy is authorized to vote as
directed on the reverse side hereof upon the proposal which is more fully
set forth in the Proxy Statement and otherwise in his discretion upon such
other business as may properly come before the meeting and all
adjournments thereof, all as more fully set forth in the Notice of Meeting
and Proxy Statement, receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES. WHEN PROPERLY
EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF THIS PROXY IS EXECUTED BUT NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF TRUSTEES.
(Continued and to be Executed, on Reverse Side)
VORNADO REALTY TRUST
P.O. BOX 11325
NEW YORK, N.Y. 10203-0325
<PAGE> 25
The Board of Trustees
Recommends a Vote "FOR" Election of Trustees
1. Election of Trustees:
FOR all nominees / / WITHHOLD Authority / / *EXCEPTIONS / /
listed below --- to vote --- ---
David Mandelbaum
Richard West
(INSTRUCTIONS:To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
---------------------------------------------------------------------
Address Change Please date and sign as your name or
and/or Comments / / names appear hereon. Each joint owner
--- must sign. (Officers, Executors,
Administrators, Trustees, etc., will
kindly so indicate when signing.)
Dated , 1995
-------------------------
-------------------------------------
-------------------------------------
(Signature(s) of shareholder(s))
Votes must be indicated X in Black or Blue ink.
Please Vote, Date, and Sign and Return Promptly in the Enclosed Envelope.
