<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:
/X/ Preliminary proxy statement
/ / 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 transaction 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 LOGO]
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
------------
------------
1 9 9 6
<PAGE> 3
[VORNADO REALTY TRUST LOGO]
PARK 80 WEST, PLAZA II
SADDLE BROOK, NEW JERSEY 07663
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1996
------------------------
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
22, 1996, at 10:00 A.M., 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) An Amendment to the Amended and Restated Declaration of Trust of the
Company to permit the Board of Trustees to amend the Declaration of Trust from
time to time to increase or decrease the aggregate number of shares of
beneficial interest of the Company or the number of shares of beneficial
interest of any class the Company is authorized to issue; and
(3) Amendments to the Company's Omnibus Share Plan; and
(4) 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
<PAGE> 4
March 20, 1996, 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> 5
[VORNADO REALTY TRUST LOGO]
PARK 80 WEST, PLAZA II
SADDLE BROOK, NEW JERSEY 07663
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1996
------------------------
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 22, 1996 ("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 will be borne by the Company.
MacKenzie Partners, Inc. has been engaged by the Company to solicit proxies, at
a fee not to exceed $5,000. 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 20, 1996 are
entitled to notice of and to vote at the Annual Meeting. There were on such date
24,285,038 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 April 22, 1996 to the
Company's shareholders of record as of the close of business on March 20, 1996.
<PAGE> 6
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 duly elected and qualify. If any nominee at the time
of election is unavailable to serve, a contingency not presently anticipated, it
is intended that the person named in the proxy, or his substitute, will vote for
an alternate nominee who will be designated by the Board. Proxies may be voted
only for the two nominees named or such alternates.
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> 7
<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 1999
- ---------------------------------------------
STANLEY SIMON* 78 Owner of Stanley Simon 1996 1960
and Associates,
management and
financial consultants
RONALD TARGAN 69 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* 54 Chairman of the Board 1997 1979
and Chief Executive
Officer of the
Company; managing
general partner of
Interstate Properties
("Interstate")
RUSSELL
WIGHT, JR.* 56 A general partner of 1997 1979
Interstate
PRESENT TRUSTEES ELECTED TO SERVE UNTIL
THE ANNUAL MEETING IN 1998
- ---------------------------------------------
DAVID MANDELBAUM* 60 A member of the law 1998 1979
firm of Mandelbaum &
Mandelbaum, P.C.; a
general partner of
Interstate
RICHARD WEST 58 Dean Emeritus, Leonard 1998 1982
N. Stern School of
Business, New York
University
</TABLE>
- ---------------
* Member of Executive Committee of the Board of the Company.
3
<PAGE> 8
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.
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 is Dean Emeritus at the Leonard N. Stern School of Business, New
York University. He was a professor there from September 1984 until September
1995. He was also Dean from September 1984 until August 1993. Mr. West is also a
director or a trustee of Alexander's, Inc., Smith-Corona, Inc., Bowne & Co.,
Inc., and various investment companies managed by Merrill Lynch Assets
Management, 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, owns and operates strip and regional-type shopping centers and is an
investor in securities and partnerships.
4
<PAGE> 9
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 four 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, which held one meeting during the
Company's last fiscal year, consists of three members, Messrs. Simon, Targan and
West. Mr. Simon is the Chairman of the Compensation Committee.
The Board held seven 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 all committees on which he served during that period.
5
<PAGE> 10
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 common 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 common shares exercisable at the current market price pursuant to
their employment agreements.
6
<PAGE> 11
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). Options granted under the Company's Omnibus Share Plan to
date satisfy the performance based requirements under the transitional rules.
See also the proposal to amend the Omnibus Share Plan on page 22. The Committee
is studying the effect of Section 162(m) and the regulations thereunder,
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> 12
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>
1990 100 100 100
1991 134 131 129
1992 213 141 156
1993 292(2) 155 185
1994 326 157 191
1995 356 215 218
</TABLE>
(1) Excluding Health Care REITs.
(2) Includes a special dividend of $3.36 per share.
8
<PAGE> 13
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 March 20, 1996, 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 7,516,950(3)(4) 31.0%
Russell Wight, Jr. 6,817,400(3)(5) 28.1%
278 S. Maya Palm Drive
Boca Raton, Florida 33432
David Mandelbaum 6,884,000(3) 28.3%
Mandelbaum & Mandelbaum, P.C.
80 Main Street
West Orange, New Jersey 07052
Ronald Targan 375,000 1.5%
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) *
Box 604
287 Genoa Springs Drive
Genoa, Nevada 89411
Richard Rowan 166,184 *(7)(8)
Joseph Macnow 271,701 1.1%(7)(8)
</TABLE>
(table continued on next page)
9
<PAGE> 14
(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>
All officers and trustees as a 8,636,235(7) 35.1%(8)
group (the 8 persons listed
above)
Interstate Properties 6,721,500(3) 27.7%
Frederick Zissu 1,832,615(9) 7.5%
30 Hamilton Drive West
No. Caldwell, New Jersey 07006
Cohen & Steers Capital Management, 2,142,900(11) 8.8%
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 24,285,038 Shares outstanding as of March 20, 1996.
(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 21,200 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 63,400 Shares owned by the Wight Foundation, over which Mr. Wight
holds sole voting power and investment power.
(footnotes continued on next page)
10
<PAGE> 15
(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 122,796 and 202,866 Shares which could be acquired by Messrs.
Rowan and Macnow, respectively, within 60 days upon exercise of Share
options.
(8) Based on 24,610,700 Shares. This number was arrived at by adding to the
total number of Shares outstanding as of March 20, 1996, 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 13G dated January 26, 1996, Cohen & Steers Capital
Management, Inc. has the sole power to vote or to direct the vote of
1,824,000 shares and has the sole power to dispose or to direct the
disposition of 2,142,900 shares.
11
<PAGE> 16
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 1995
("Covered Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND -------------------------- ------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(3)
- --------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Steven Roth 1995 $625,000 0 0 $53,537
Chairman and Chief 1994 625,000 0 0 33,536
Executive Officer 1993 625,000 0 0 30,077
Richard Rowan(1) 1995 $354,000 $250,000 37,500 $16,848
Vice President -- 1994 343,500 0 0 10,214
Real Estate 1993 333,500 0 79,916(2) 9,285
Joseph Macnow(1) 1995 $354,000 0 37,500 $16,100
Vice President -- 1994 343,500 0 0 10,468
Chief Financial 1993 333,500 0 79,916(2) 9,488
Officer
</TABLE>
- ---------------
(1) Options are exercisable 25% nine months after grant, and 25% after each of
the following three 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.
(3) Represents premiums paid by the Company for whole life insurance policies
for the Covered Executives. These policies provide coverage in an amount
equal to the excess of the amount covered under the Company's
non-discriminatory group term life insurance benefit for all full time
employees (i.e., two times salary) over the benefit cap imposed by the term
insurance carrier.
12
<PAGE> 17
The following table lists all grants of share options and share
appreciation rights to the Covered Executives made in 1995 and their potential
realizable values, assuming annualized rates of share price appreciation of 5%
and 10% over the term of the grant. The Company has not, to date, granted any
share appreciation rights.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL
INDIVIDUAL GRANTS RATES OF
------------------------------------------- SHARE PRICE
% OF TOTAL
OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN OR BASE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
- ----------------- ------- ------------ -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven Roth 0 0% N/A N/A N/A N/A
Richard Rowan 37,500 50% $35.50 3/8/2005 $837,216 $2,121,670
Joseph Macnow 37,500 50% $35.50 3/8/2005 $837,216 $2,121,670
</TABLE>
The following table summarizes all exercises of options during 1995, and
the options held at December 31, 1995, by the Covered Executives.
AGGREGATED OPTION EXERCISES IN 1995 AND 1995-YEAR END
OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED 12/31/95 12/31/95
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ----------------- -------- ---------- -------------- ---------------------
<S> <C> <C> <C> <C>
Steven Roth 0 $ 0 0/0 $ 0/0
Richard Rowan 64,451 $1,320,592 113,421/37,500 $1,421,532/$86,710
Joseph Macnow 1,776 $45,401 193,491/37,500 $3,297,540/$86,710
</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.
13
<PAGE> 18
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 1995
(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 1995 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.
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
company 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 an-
14
<PAGE> 19
other 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 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.
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 1995, the Company paid $151,241 for legal services, in connection
with certiorari proceedings at its shopping centers, to the firm of Mandelbaum &
Mandelbaum, P.C., of which David Mandelbaum is a member, all or substantially
all of which is expected to be reimbursed to the Company by its tenants. In
addition, during 1995, the Company paid $98,277 for legal services to the firm
of Schechner and Targan, P.A., of which Ronald Targan is a member.
15
<PAGE> 20
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, 1995, 1994 and 1993, $1,150,000, $894,000, and
$913,000 of management fees were earned by the Company pursuant to the
Management Agreement.
In March 1995, the Company purchased all of the 1,353,468 shares of common
stock of Alexander's owned by Citibank, N.A. ("Citibank"), representing 27.1% of
the then outstanding shares of common stock of Alexander's. At December 31,
1994, the Company owned 113,100 shares of Alexander's common stock. As a result
of the acquisition, the Company owns 29.3% of the common stock of Alexander's.
Also, in March 1995, the Company lent Alexander's $45 million, the
subordinated tranche of a $75 million secured financing, the balance of which
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, the Company received a loan origination fee of $1,500,000 from
Alexander's.
In March 1995, the Company and Alexander's entered into a three-year
management and development agreement (the "Management Agreement"). The annual
management fee payable to the Company by Alexander's 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.
On July 6, 1995, the Company assigned its Management Agree-
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ment with Alexander's to Vornado Management Corp. ("VMC"), a newly formed New
Jersey corporation. In exchange, the Company received 100% of the preferred
stock of VMC, which entitles it to 95% of net operating cash flow distributed by
VMC to its shareholders. Steven Roth and Richard West, Trustees of the Company,
own the common stock of VMC. In addition, the Company lent $5,000,000 to VMC for
working capital purposes under a three-year term loan bearing interest at the
prime rate plus 2%. VMC is responsible for its pro-rata share of compensation
and fringe benefits of common employees and 30% of other common expenses.
The fee pursuant to the Management Agreement is in addition to the leasing
fee the Company receives from Alexander's under the leasing agreement (the
"Leasing Agreement") which has been in effect since 1992 and has been extended
to be coterminous with the term of the Management Agreement. The Company
recognized $1,448,000 of leasing fee income in 1995. Subject to the payment of
rents by Alexander's tenants, the Company is due $7,868,000. Such amount is
receivable annually in an amount not to exceed $2,500,000 until the present
value of such installments (calculated 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. Two leases which the Company had previously negotiated on
behalf of Alexander's for its Paramus property were terminated in the second
quarter of 1995 because governmental approvals to begin construction on a timely
basis could not be obtained as a result of a pending condemnation, resulting in
$2,424,000 of previously recorded leasing fees receivable being reversed.
As of December 31, 1995, Interstate Properties owned 27.4% of the common
shares of the Company and 27.1% of Alexander's common stock. Steven Roth is the
Chairman of the Board and Chief Executive Officer of the Company, the managing
general partner of Interstate Properties and the Chief Executive Officer and a
director of Alexander's. Effective March 2, 1995, for a three-year period, the
Company
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and Interstate agreed not to own in excess of two-thirds of Alexander's common
stock or to enter into certain other transaction with Alexander's, other than
the transactions described above, without the consent of Alexander's independent
directors.
At December 31, 1995, the loans due from Mr. Roth ($13,122,500), Mr. Rowan
($253,000) and Mr. Macnow ($227,000) in connection with their option exercises
in prior years aggregated $13,602,500. The loans bear interest at a rate equal
to the broker call rate (7.25% at December 31,1995) but not less than the
minimum applicable federal rate provided under the Internal Revenue Code.
Interest on the loan to Mr. Roth is payable quarterly. Mr. Roth's loan is due on
December 29, 1997. The Company has agreed to forgive one-fifth of Mr. Rowan's
loan and Mr. Macnow's loan on January 1 of each year, commencing January 1,
1997, provided that such employee remains an employee of the Company on such
date.
APPROVAL OF PROPOSAL TO AMEND THE DECLARATION OF TRUST OF THE COMPANY TO PERMIT
THE BOARD OF TRUSTEES TO ALTER THE NUMBER
OF AUTHORIZED SHARES OF BENEFICIAL INTEREST OF THE COMPANY
In 1995, the General Assembly of Maryland approved an amendment to Title 8
of the Corporations and Associations Article of the Annotated Code of Maryland
("Title 8"), the statute under which the Company is formed, permitting the board
of trustees of a Maryland real estate investment trust formed as a trust
("REIT"), such as the Company, to include in its declaration of trust a
provision permitting the board of trustees to amend the declaration of trust to
increase or decrease the aggregate number of shares or the number of shares of
any class of beneficial interest that the trust has authority to issue. This new
law became effective on October 1, 1995.
Under Maryland law as in effect prior to October 1, 1995, a Maryland REIT
such as the Company was required to obtain the approval of its shareholders each
time it
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<PAGE> 23
proposed to amend its declaration of trust to increase or decrease its number of
authorized shares of beneficial interest. This process is expensive and
time-consuming. Adopting the proposed amendment to the Declaration of Trust, as
authorized by the new Maryland law, will enable the Board of Trustees alone to
amend the Declaration of Trust of the Company to increase or decrease the number
of authorized shares. Adding the provision authorized by the new law to the
Declaration of Trust requires the approval of the shareholders of the Company.
Accordingly, the Board of Trustees has unanimously adopted a resolution
declaring that it is advisable and in the best interests of the Company to add
to Article IX, Section 9.1(b) of the Declaration of Trust the following
sentence: "The Board of Trustees, without any action by the shareholders of the
Company, may amend the Amended and Restated Declaration of Trust from time to
time to increase or decrease the aggregate number of shares of beneficial
interest or the number of shares of beneficial interest of any class that the
Company is authorized to issue." The effect of this amendment will be to permit
the Board of Trustees, without shareholder action, to increase or decrease (a)
the total number of authorized shares of beneficial interest of the Company
and/or (b) the number of authorized shares of beneficial interest of any one or
more classes. Maryland law permits a REIT to have shares of beneficial interest
that are assigned to a particular class as well as shares that are not assigned
to a particular class but are available to be classified by the board of
trustees at a later time. Thus, the total number of authorized shares of
beneficial interest may exceed the total number of authorized shares of all
classes. Currently, all of the authorized shares of beneficial interest of the
Company are assigned to one of three classes.
At present, the Company is authorized to issue 102,000,000 shares, of which
50,000,000 shares are common shares of beneficial interest, 1,000,000 shares are
preferred shares and 51,000,000 are excess shares. Of the 50,000,000 authorized
common shares, there are already issued and outstanding over 24,200,000 shares.
The 51,000,000 excess shares are reserved for issuance, if
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<PAGE> 24
necessary, in connection with certain provisions of the Declaration of Trust
relating to the exchange of shares if certain events occur that could jeopardize
the Company's qualification as a REIT under the Code.
The Board of Trustees believes that it is in the best interests of the
Company and its shareholders to permit the Board of Trustees, without the
necessity of shareholder approval, to increase or decrease either the aggregate
number of shares of beneficial interest or the number of shares of any class of
beneficial interest that the Company has authority to issue in order to provide
the Company with maximum flexibility to meet a variety of business needs as they
may arise and to enhance the Company's flexibility in connection with possible
future opportunities. These business needs and opportunities may include share
dividends, share splits, retirement of indebtedness, employee benefit programs,
business combinations, acquisitions of property and raising cash for general
purposes. Responding to such needs or opportunities often requires quick action
and the process of obtaining shareholder approval to amend the Declaration of
Trust is both time-consuming and expensive. The Board of Trustees currently does
not have any plans to increase the aggregate number of authorized shares or the
number of shares of any class of beneficial interest or to issue any significant
number of shares.
If the proposed amendment is adopted, authorized shares of beneficial
interest of the Company as established from time to time by the Board of
Trustees in excess of those issued from time to time will be available for
issuance at such times and for such purposes as the Board of Trustees may deem
advisable without further action by the Company's shareholders, unless such
action is otherwise required by applicable law or the rules of the New York
Stock Exchange.
As discussed above, the advantages to the Company's shareholders of the
proposed amendment include the flexibility it would give the Company in raising
capital and acquiring property and the avoidance of delay and expense. However,
even if the proposed amendment is adopted,
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shareholder approval would continue to be required under the rules of the New
York Stock Exchange for any transaction or series of related transactions (other
than a public offering for cash) in which common shares or securities
convertible into or exercisable for common shares are to be issued if (i) the
newly issued common shares have voting power equal to or in excess of 20% of the
voting power of the outstanding common shares prior to such transaction, (ii)
the number of newly issued common shares is equal to or in excess of 20% of the
number of outstanding common shares before such transaction (other than stock
splits or stock dividends) or (iii) the issuance would result in a change of
control of the Company.
The Board of Trustees does not intend to increase the aggregate number of
authorized shares or the number of shares of any class of beneficial interest or
to issue any shares of beneficial interest except on terms or for reasons that
the Board deems to be in the best interest of the Company. Because the holders
of common shares of the Company do not have preemptive rights, the issuance of
additional common shares (other than on a pro rata basis to all current
shareholders) would reduce current shareholders' proportionate interest.
However, in any such event, shareholders wishing to maintain their interests may
be able to do so through normal market purchases. Any future issuance of common
shares will be subject to the rights of holders of outstanding preferred shares,
if any, which the Company may issue in the future. While the issuance of shares
by certain entities in certain instances may have the effect of delaying,
deferring or preventing a hostile takeover, the Board of Trustees does not
believe that the authority to increase or decrease the authorized shares of
beneficial interest is likely to have a significant anti-takeover effect because
of existing provisions in the Company's Declaration of Trust restricting the
concentration of ownership of the outstanding shares of the Company in order to
maintain the Company's qualification as a REIT under the Internal Revenue Code.
Moreover, the Board believes that the significant ownership positions in shares
of the Company by members of the Board and executive officers of the Company
(and
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their affiliates) further reduce the likelihood of an attempt to change control
of the Company without the approval of the Board.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND ARTICLE IX, SECTION 9.1(b) OF THE COMPANY'S DECLARATION OF TRUST TO PERMIT
THE BOARD OF TRUSTEES TO AMEND THE DECLARATION OF TRUST TO INCREASE OR DECREASE
THE AGGREGATE NUMBER OF SHARES OR THE NUMBER OF SHARES OF ANY CLASS OF
BENEFICIAL INTEREST THAT THE COMPANY IS AUTHORIZED TO ISSUE. Proxies will be so
voted unless specified otherwise in their proxies. The affirmative vote of
holders of the majority of the outstanding common shares is required for
approval of this proposal. Consequently, any shares not voted (whether by
abstentions, broker non-votes or otherwise) will have the same effect as votes
against the proposed amendment to the Company's Declaration of Trust. If this
proposal is approved by the shareholders, it will become effective upon the
filing of Articles of Amendment with the State Department of Assessments and
Taxation of Maryland, which will occur as soon is reasonably practicable after
approval.
APPROVAL OF PROPOSAL TO AMEND
THE COMPANY'S OMNIBUS SHARE PLAN
The Board of Trustees is asking the shareholders to approve amendments to
the 1993 Omnibus Share Plan of Vornado Realty Trust (the "Omnibus Share Plan" or
the "Plan") which would authorize the allocation of an additional 1,500,000
common shares of beneficial interest to be reserved for issuance and sale under
the Plan and amend the Plan to continue its compliance with the requirements of
Section 162(m) of the Internal Revenue Code. The Omnibus Share Plan was first
approved by the shareholders of the Company on May 6, 1993. Of the 2,250,000
shares originally authorized under the Plan, 1,252,816 shares were available for
issuance as of December 31, 1995.
The purpose of the Omnibus Share Plan is to promote the financial interests
of the Company by encouraging its employees and the employees of its
subsidiaries to acquire
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<PAGE> 27
an ownership position in the Company, enhancing its ability
to attract and retain employees of outstanding ability and providing such
employees with a way to acquire or increase their proprietary interest in the
Company's success. The Trustees and the Compensation Committee of the Board of
Trustees have determined that it is in the best interest of the Company and the
shareholders to add an additional 1,500,000 common shares of beneficial interest
to the Plan to further promote the Plan's objectives.
Under Section 162(m) of the Internal Revenue Code, the Company's deductions
for compensation paid to the Chief Executive Officer or any of the four most
highly compensated executive officers, other than the Chief Executive Officer,
are limited to $1 million in any year unless certain requirements related to
performance-based compensation are satisfied. In order for awards of stock
options and stock appreciation rights to satisfy the requirements of
performance-based compensation after increasing the number of common shares
which may be issued pursuant to the Plan, it is necessary to specify an
aggregate number of common shares which can be subject to stock options and
stock appreciation rights granted to any participant. The amendment adopted by
the Board of Trustees, subject to shareholder approval, provides that a
participant may not be granted stock options and stock appreciation rights with
respect to more than an aggregate of 2,500,000 common shares.
The Board of Trustees believes it is in the best interests of the Company
and its shareholders to continue to be able to deduct for federal income tax
purposes the compensation relating to grants of stock options and stock
appreciation rights. The proposed limit will afford the Compensation Committee
appropriate flexibility in making awards under the Plan.
The amendments provide for the grant of "reload stock options", at the
discretion of the Committee, to a participant who uses common shares owned by
the participant to pay all or a part of the exercise price of a stock option
(including a reload stock option). A reload stock option will cover the
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<PAGE> 28
number of shares tendered in payment of the exercise price and will have a per
share exercise price not less than the fair market value of the common shares on
the date of grant of the reload stock option.
The use of common shares owned by the participant to pay the exercise price
makes it easier for a participant to exercise a stock option. The reload stock
option feature is consistent with one of the purposes of the Plan, which is to
provide employees with a way to increase their ownership interest in the Trust
and thus share in the Trust's success. The shares subject to the reload stock
option permit a participant who pays an exercise price with common shares to
increase the participant's total stock ownership in the Trust by the number of
common shares for which a stock option is exercised.
The following summary of the Plan is qualified by the full text of the
proposed Amended and Restated 1993 Omnibus Share Plan attached to this Proxy
Statement as Exhibit A. For additional information regarding options granted to
executive officers, see "Executive Compensation" above.
TERMS OF THE OMNIBUS SHARE PLAN
Under the Omnibus Share Plan, employees of the Company may be granted
awards of stock options, stock appreciation rights, performance shares and
restricted stock. The Omnibus Share Plan is administered by the Compensation
Committee of the Board of Trustees which is authorized to select employees of
the Company to receive awards, determine the type of awards to be made,
determine the number of common shares or share units subject to any award and
the other terms and conditions of such awards. All employees of the Company and
its subsidiaries who have demonstrated significant management potential or who
have the capacity for contributing in a substantial measure to the successful
performance of the Company, as determined by the Compensation Committee, are
eligible to receive awards under the Plan. As such criteria are subjective in
nature, the Company cannot accurately estimate the number of persons who may be
included in such class from time to time. Each
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<PAGE> 29
officer of Vornado can be granted awards under the Omnibus Share Plan.
The awards are not assignable or transferable except by will or the laws of
descent and distribution and no right or interest of any participant may be
subject to any lien, obligation or liability of the holder.
Stock Options
Stock options entitle the holder to purchase the Company's shares at a per
share price determined by the Compensation Committee which in no event may be
less than the fair market value of the shares on the date of grant. Options may
be either "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code or "non-qualified" stock options. Stock options are
exercisable for such period as is determined by the Compensation Committee, but
in no event may options be exercisable after 10 years from the date of grant.
The option price for shares purchased upon the exercise of an option must be
paid in full at the time of exercise and may be paid in cash, by tender of
common shares, by such other consideration as the Compensation Committee deems
appropriate or by a combination of cash, common shares and such other
consideration.
Upon the grant or exercise of an incentive stock option, no income will be
recognized by the optionee for Federal income tax purposes, and the Company will
not be entitled to any deduction. If the shares acquired upon exercise are not
disposed of within the one-year period beginning on the date of the transfer of
the shares to the optionee, nor within the two-year period beginning on the date
of the grant of the option, any gain or loss realized by the optionee upon the
disposition of such shares will be taxed as long-term capital gain or loss. In
such event, no deduction will be allowed to the Company. If such shares are
disposed of within the one-year or two-year periods referred to above, the
excess of the fair market value of the shares on the date of exercise (or, if
less, the fair market value on the date of disposition) over the exercise price
will be taxable as ordinary income to
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the optionee at the time of disposition, and the Company will be entitled to a
corresponding deduction. The amount by which the fair market value of the shares
at the time of exercise of an incentive stock option exceeds the option price
will constitute an item of tax preference which could subject the optionee to
the alternative minimum tax. Whether the optionee will be subject to such tax
depends on the facts and circumstances applicable to the individual.
Upon the grant of a non-qualified option, no income will be realized by the
optionee, and the Company will not be entitled to any deduction. Upon the
exercise of such an option, the amount by which the fair market value of the
shares at the time of exercise exceeds the exercise price will be taxed as
ordinary income to the optionee and the Company will be entitled to a
corresponding deduction.
Stock Appreciation Rights
Stock appreciation rights entitle the holder to receive from the Company an
amount equal to the amount by which the fair market value of a share on the date
of exercise exceeds the grant price. Stock appreciation rights may be granted in
tandem with a stock option, in addition to a stock option or may be freestanding
and unrelated to a stock option and may not be exercised earlier than six months
after grant except in the event of the holder's death or disability. The
Compensation Committee is authorized to determine whether a stock appreciation
right will be settled in cash, shares or a combination thereof.
Performance Shares
Performance share awards consist of a grant of actual shares or share units
having a value equal to an identical number of the Company's shares in amounts
determined by the Compensation Committee at the time of grant. Performance share
awards consisting of actual shares entitle the holder to receive shares in an
amount based upon performance conditions of the Company over a performance
period as determined by the Compensation Committee at the time of grant. Such
performance share awards may provide the
26
<PAGE> 31
holder with dividends and voting rights prior to vesting. Performance share
awards consisting of share units entitle the holder to receive the value of such
units in cash, shares or a combination thereof based upon performance conditions
and over a performance period as determined by the Compensation Committee at the
time of grant. Such performance share awards may provide the holder with
dividend equivalents prior to vesting.
Restricted Stock
Restricted stock awards consist of a grant of actual shares or share units
having a value equal to an identical number of shares of the Company. Restricted
stock awards consisting of actual shares entitle the holder to receive shares of
the Company. Such restricted stock awards may provide the holder with dividends
and voting rights prior to vesting. Restricted stock awards consisting of share
units entitle the holder to receive the value of such units in cash, shares or a
combination thereof as determined by the Compensation Committee. Such restricted
stock awards may provide the holder with dividend equivalents prior to vesting.
The employment conditions and the length of the period for vesting of restricted
stock awards are established by the Compensation Committee at time of grant.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE COMPANY'S OMNIBUS SHARE PLAN. Proxies will be so voted unless
specified otherwise in their proxies. The affirmative vote of holders of the
majority of the outstanding common shares present, or represented, or entitled
to vote is required for approval of this proposal. Consequently, abstentions
will have the same effect as votes against the proposal and broker non-votes
will not be counted as shares entitled to vote on the matter and will have no
effect on the result of the vote.
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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, 1996. The firm of Deloitte & Touche was
engaged as independent auditors for the 1995 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.
ADDITIONAL MATTERS TO COME BEFORE THE MEETING
The Board does not intend to present any other matter, nor does it have any
information that any other matter will be brought before the Annual Meeting.
However, if any other matter properly comes 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.
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<PAGE> 33
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1997 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 December 22, 1996, for inclusion in the 1997 proxy statement and form
of proxy.
By Order of the Board of Trustees,
SUSAN D. SCHMIDER
Secretary
April 22, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE
URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ENVELOPE.
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<PAGE> 34
EXHIBIT A
VORNADO REALTY TRUST
1993 OMNIBUS SHARE PLAN
1. PURPOSE. The purpose of the 1993 Omnibus Share Plan of Vornado Realty
Trust (the "Plan") is to promote the financial interests of Vornado Realty Trust
(the "Trust"), including its growth and performance, by encouraging employees of
the Trust and its subsidiaries to acquire an ownership position in the Trust,
enhancing the ability of the Trust and its subsidiaries to attract and retain
employees of outstanding ability, and providing employees with a way to acquire
or increase their proprietary interest in the Trust's success.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in
Section 14, the number of common shares, par value $.04, of beneficial interest
in the Trust (the "Shares") which shall be available for the grant of awards
under the Plan shall not exceed 3,750,000. No Participant (as defined in Section
3) shall be granted stock options and stock appreciation rights with respect to
more than an aggregate number of 2,500,000 Shares, subject to adjustment as
provided in Article 14. The Shares issued under the Plan may be authorized and
unissued Shares or treasury Shares, as the Trust may from time to time
determine.
Shares subject to an award that expires unexercised, that is forfeited,
terminated or cancelled, in whole or in part, or is paid in cash in lieu of
Shares, shall thereafter again be available for grant under the Plan, provided
that if such award was granted to an officer subject to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act") who
received benefits of ownership of such Shares for purposes of Section 16(b) of
the Exchange Act, such Shares shall not thereafter be available for grant under
the Plan to officers subject to the provisions of Section 16(b) of the Exchange
Act.
3. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee (the "Committee") of the
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Trustees of the Trust. A majority of the Committee shall constitute a quorum,
and the acts of a majority shall be the acts of the Committee.
Subject to the provisions of the Plan, the Committee (i) shall select the
employees of the Trust and its subsidiaries who will be participants in the Plan
(the "Participants"), determine the type of awards to be made to Participants,
determine the Shares or share units subject to awards, and (ii) shall have the
authority to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements entered into hereunder, and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any award in the manner and to the extent it shall deem desirable to
carry it into effect. The determinations of the Committee in the administration
of the Plan, as described herein, shall be final and conclusive.
4. ELIGIBILITY. All employees of the Trust and its subsidiaries who have
demonstrated significant management potential or who have the capacity for
contributing in a substantial measure to the successful performance of the
Trust, as determined by the Committee, are eligible to be Participants in the
Plan.
5. AWARDS. Awards under the Plan may consist of the following: stock
options (either incentive stock options within the meaning of Section 422 of the
Internal Revenue Code or non-qualified stock options), stock appreciation
rights, performance shares, or grants of restricted stock. Awards of performance
shares and restricted stock may provide the Participant with dividends or
dividend equivalents and voting rights prior to vesting (whether based on a
period of time or based on attainment of specified performance conditions).
6. STOCK OPTIONS. The Committee shall establish the option price at the
time each stock option is granted, which price shall not be less than 100% of
the fair market value of the Shares on the date of grant. Stock options shall
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<PAGE> 36
be exercisable for such period as specified by the
Committee, but in no event may options be exercisable more than ten years after
their date of grant. The option price of each Share as to which a stock option
is exercised shall be paid in full at the time of such exercise. Such payment
shall be made in cash, by tender of Shares owned by the Participant valued at
fair market value as of the date of exercise, in such other consideration as the
Committee deems appropriate, or
by a combination of cash, Shares and such other
consideration.
If determined by the Committee at or subsequent to the date of grant of a
stock option, in the event a Participant pays the exercise price of such stock
option (in whole or in part) by tendering Shares owned by the Participant, such
Participant shall automatically be granted a reload stock option for the number
of Shares used to pay the exercise price. The reload stock option shall have
terms and conditions determined by the Committee consistent with this Section.
If a reload stock option is granted as set forth above, one or more successive
reload stock options shall automatically be granted, unless otherwise determined
by the Committee, to a Participant who pays all or part of the exercise price of
any such reload stock option by tendering Shares owned by the Participant.
Notwithstanding any other term of the Plan, upon the effectiveness of the
merger of Vornado, Inc. ("Vornado") into the Trust, pursuant to the Agreement
and Plan of Merger, dated April , 1993 (the "Merger Agreement"), all
outstanding options granted under the 1985 Stock Option Plan, as amended May 6,
1992, of Vornado, Inc. (the "1985 Plan"), pursuant to the Merger Agreement, will
be assumed and governed under the Plan, be converted into and become a right to
purchase the same number of Shares at the same price per Share and upon the same
terms and subject to the same conditions as applicable to such options or other
rights immediately prior to the effectiveness of the merger.
7. STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted in
tandem with a stock option, in addition to a stock option, or may be
freestanding and
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unrelated to a stock option. Stock appreciation rights granted in tandem with or
in addition to a stock option may be granted either at the same time as the
stock option or at a later time. No stock appreciation right shall be
exercisable earlier than six months after grant, except in the event of the
Participant's death or disability. A stock appreciation right shall entitle the
Participant to receive from the Trust an amount equal to the increase of the
fair market value of the Share on the exercise of the stock appreciation right
over the grant price. The Committee, in its sole discretion, shall determine
whether the stock appreciation right shall be settled in cash, Shares or a
combination of cash and Shares.
8. PERFORMANCE SHARES. Performance shares may be granted in the form of
actual Shares or share units having a value equal to an identical number of
Shares. In the event that a certificate is issued in respect of Shares subject
to a grant of performance shares, such certificate shall be registered in the
name of the Participant but shall be held by the Trust until the time the Shares
subject to the grant of performance shares are earned. The performance
conditions and the length of the performance period shall be determined by the
Committee. The Committee, in its sole discretion, shall determine whether
performance shares granted in the form of share units shall be paid in cash,
Shares, or a combination of cash and Shares.
9. RESTRICTED STOCK. Restricted stock may be granted in the form of
actual Shares or share units having a value equal to an identical number of
Shares. In the event that a certificate is issued in respect of Shares subject
to a grant of restricted stock, such certificate shall be registered in the name
of the Participant but shall be held by the Trust until the end of the
restricted period. The employment conditions and the length of the period for
vesting of restricted stock shall be established by the Committee at time of
grant. The Committee, in its sole discretion, shall determine whether restricted
stock granted in the form of share units shall be paid in cash, Shares, or a
combination of cash and Shares.
A-4
<PAGE> 38
10. AWARD AGREEMENTS. Each award under the Plan shall be evidenced by an
agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such award, in addition to the terms and
conditions specified in the Plan.
11. WITHHOLDING. The Trust shall have the right to deduct from any payment
to be made pursuant to the Plan, or to require prior to the issuance or delivery
of any Shares or the payment of cash under the Plan, any taxes required by law
to be withheld therefrom. The Committee, in its sole discretion, may permit a
participant to elect to satisfy such withholding obligation by having the Trust
retain the number of Shares whose fair market value equals the amount required
to be withheld. Any fraction of a Share required to satisfy such obligation
shall be disregarded and the amount due shall instead be paid in cash to the
Participant.
12. NONTRANSFERABILITY. No award shall be assignable or transferable, and
no right or interest of any Participant shall be subject to any lien, obligation
or liability of the Participant, except by will or the laws of descent and
distribution.
13. NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an award, and the grant of an award shall not be construed as giving a
Participant the right to be retained in the employ of the Trust or its
subsidiaries. Further, the Trust and its subsidiaries expressly reserve the
right at any time to dismiss a Participant free from any liability, or any claim
under the Plan, except as provided herein or in any agreement entered into
hereunder.
14. ADJUSTMENT OF AND CHANGES IN SHARES. In the event of any change in the
outstanding Shares by reason of any share dividend or split, recapitalization,
merger, consolidation, spinoff, combination or exchange of Shares or other
corporate change, or any distributions to common shareholders other than regular
cash dividends, the Committee may make such substitution or adjustment, if any,
as it deems to be equitable, as to the number or kind of Shares or other
securities issued or reserved for issuance pursuant to the Plan and to
outstanding awards.
A-5
<PAGE> 39
15. AMENDMENT. The Trustees may amend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without
shareholder approval if such approval is necessary in order for the Plan to
continue to comply with Rule 16b-3 under the Exchange Act.
16. EFFECTIVE DATE. The Plan shall be effective as of the effectiveness of
the merger of Vornado, Inc. into Vornado Realty Trust. Subject to earlier
termination pursuant to Section 15, the Plan shall have a term of ten years from
its effective date.
A-6
<PAGE> 40
[VORNADO REALTY TRUST LOGO]
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
<PAGE> 41
VORNADO REALTY TRUST
PROXY
The undersigned, revoking all prior proxies, hereby appoints Steven Roth
proxy, with full power of substitution, to attend, and to vote all shares the
undersigned is entitled to vote, at the Annual Meeting of Shareholders of
Vornado Realty Trust (the "Company") to be held at the Marriott Hotel,
Interstate 80 and the Garden State Parkway, Saddle Brook, New Jersey 07663 on
Wednesday, May 22, 1996 at 10:00 A.M., 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 proposals
which are 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 AND "FOR" EACH OF THE OTHER PROPOSALS AS SET
FORTH IN THE PROXY STATEMENT AND OTHERWISE IN THE DISCRETION OF THE PROXY.
(Continued and to be Executed, on Reverse side)
<PAGE> 42
1. ELECTION OF TRUSTEES:
The Board of Trustees recommends a Vote "FOR" Election of Trustees.
FOR all nominees / / WITHHOLD AUTHORITY to vote / /
listed below for all nominees listed
below
Nominees: Stanley Simon, Ronald Targan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
2. APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED DECLARATION OF TRUST OF
THE COMPANY:
The Board of Trustees recommends a Vote "FOR"
Approval of the Amendment to the Amended and Restated Declaration of Trust.
FOR / / AGAINST / / ABSTAIN / /
3. APPROVE THE AMENDMENTS TO THE COMPANY'S OMNIBUS SHARE PLAN:
The Board of Trustees recommends a Vote "FOR"
Approval of the Amendments to the Omnibus Share Plan.
FOR / / AGAINST / / ABSTAIN / /
Address Change / /
and/or Comments
Please date and sign as your name or
names appear hereon. Each joint owner
must sign. (Officers, Executors,
Administrators, Trustees, etc., will
kindly to indicate when signing.)
Dated , 1996
--------------------------------------
--------------------------------------
(Signature(s) of Shareholder(s))
VOTES MUST BE INDICATED /X/
(X) IN BLACK OR BLUE INK.
PLEASE VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
