<PAGE>
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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SAUL CENTERS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
SAUL CENTERS, INC.
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
(301) 986-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 17, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of SAUL
CENTERS, INC., a Maryland corporation, will be held at 11:00 a.m. local time, on
April 17, 1998, at the Embassy Suites Chevy Chase Pavilion, 4300 Military Road,
N.W., Washington, D.C. (at the intersection of Western and Wisconsin Avenues,
adjacent to Friendship Heights Metro Stop on the Metro Red Line), for the
following purposes.
1. To elect four directors to serve until the annual meeting of stockholders
in 2001, or until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Stockholders of record at the close of business on February 20, 1998 will be
entitled to notice of and to vote at the annual meeting or at any adjournment
thereof.
Stockholders are cordially invited to attend the meeting in person. WHETHER
OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO COMPLETE, DATE, SIGN
AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A POSTAGE PAID RETURN
ENVELOPE IS PROVIDED. If you decide to attend the meeting, you may revoke your
proxy and vote your shares in person. It is important that your shares be voted.
By Order of the Board of Directors
Scott V. Schneider
Chief Financial Officer and Secretary
March 13, 1998
Chevy Chase, Maryland
<PAGE>
SAUL CENTERS, INC.
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
(301) 986-6000
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1998
--------------------------
GENERAL
This Proxy Statement is furnished by the Board of Directors of Saul Centers,
Inc. (the "Company" in connection with the solicitation by the Board of
Directors of proxies to be voted at the annual meeting of stockholders to be
held on April 17, 1998, and at any adjournment or adjournments thereof, for the
purposes set forth in the accompanying notice of such meeting. All stockholders
of record at the close of business on February 20, 1998 will be entitled to
vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at such meeting in accordance with the directions of the stockholder. If
no directions are specified, the proxy will be voted for the Proposal set forth
in this Proxy Statement. Any stockholder giving a proxy has the power to revoke
it at any time before it is exercised. A proxy may be revoked (i) by delivery of
a written statement to the Secretary of the Company stating that the proxy is
revoked, (ii) by presentation at the annual meeting of a subsequent proxy
executed by the person executing the prior proxy, or (iii) by attendance at the
annual meeting and voting in person.
Votes cast in person or by proxy at the annual meeting will be tabulated and
a determination will be made as to whether or not a quorum is present. The
Company will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence or absence of a quorum, but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders. If a broker submits a proxy indicating that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to such matter.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company also may solicit proxies by telephone or telegram or in
person. The Company has retained Corporate Investor Communications, Inc. to
assist with distribution of soliciting materials and solicitation of proxies.
Corporate Investor Communications, Inc. will be paid a fee of $4,500 for its
services, plus reasonable and customary expenses. All of the expenses of
preparing, assembling, printing and mailing the materials used in the
solicitation of proxies will be paid by the Company. Arrangements may be made
with brokering houses and other custodians, nominees and fiduciaries to forward
soliciting materials, at the expense of the Company, to the beneficial owners of
shares held of record by such persons. It is anticipated that this Proxy
Statement and the enclosed proxy card first will be mailed to stockholders on or
about March 13, 1998.
2
<PAGE>
As of February 20, 1998, 12,483,842 shares of Common Stock of the Company,
$0.01 par value per share ("Common Stock"), were outstanding. Each share of
Common Stock entitles the holder thereof to one vote on each of the matters to
be voted upon at the annual meeting. As of the record date, officers and
directors of the Company had the power to vote approximately 22.5 percent of the
outstanding shares of Common Stock, excluding 6.1 percent of the outstanding
Common Stock held by the B. F. Saul Company Employees' Profit Sharing Retirement
Trust, two of five trustees of which, are officers and directors of the Company.
The Company's officers and directors have advised the Company that they intend
to vote their shares of Common Stock in favor of the Proposal set forth in this
Proxy Statement.
ELECTION OF DIRECTORS
Nominees and Directors
The First Amended and Restated Articles of Incorporation and the Amended and
Restated Bylaws of the Company provide that there shall be no fewer than three,
nor more than fifteen directors, as determined from time to time by the
directors in office. From June 1993 until June 1997, the Board of Directors was
composed of nine directors, and in June 1997 two additional directors were
elected. The Board of Directors is divided into three classes with staggered
three-year terms. The term of each class expires at the annual meeting of
stockholders, which is expected to be held in April of each year. The directors
elected at the annual meeting of stockholders in 1998 will serve until the
annual meeting of stockholders in 2001. Under the Company's First Amended and
Restated Articles of Incorporation, a majority of the directors must be
independent directors, who are directors unaffiliated with B. F. Saul Real
Estate Investment Trust (the "Saul Trust"), Chevy Chase Bank, F.S.B., B. F. Saul
Company (the "Saul Company") and certain affiliated entities (collectively, "The
Saul Organization"). Messrs. Jackson, Kelley, Longsworth, Noonan, Sullivan and
Symington are independent directors.
The Company's officers and directors have advised the Company that they
intend to vote their shares of Common Stock for the election of each of the
nominees. Proxies will be voted FOR the election of the nominees listed below
unless authority is withheld.
The following list sets forth the name, age, position with the Company,
present principal occupation or employment and material occupations, positions,
offices or employment during the past five years of each nominee and director of
the Company. Nominees Kelley, Longsworth and Noonan are presently directors of
the Company and have served as such since June 1993. Nominee Saul III is
presently a director of the Company and has served as such since June 1997. All
shall, if elected, continue to serve as a director until his successor has been
duly elected and qualified.
Class Two Directors-Term Ends at 2001 Annual Meeting (If Elected)
Principal Occupation and
Name Age Current Directorships
- ------ ----- --------------------------
General Paul X. Kelley 69 Director of the Company. Partner of J.F. Lehman
& Company since 1998. Vice Chairman of Cassidy &
Associates from 1989 to 1998. Commandant of the
Marine Corps and member of the Joint Chiefs of
Staff from 1983 to 1987. Director of Allied
Signal Inc., GenCorp. Inc., Sturm Ruger &
Company Inc., UST, Inc., and The Wackenhut
Corporation.
3
<PAGE>
Charles R. Longsworth 68 Director of the Company. Chairman Emeritus of
Colonial Williamsburg Foundation. Chairman and
Trustee of Colonial Williamsburg Foundation
from 1977 through 1994. Chairman, Trustees of
Amherst College. Director of Crestar Financial
Corporation, Houghton Mifflin, Inc., and
Virginia Eastern Shore Economic Development
Corp.
Patrick F. Noonan 55 Director of the Company. Chairman of The
Conservation Fund since 1985. Trustee of the
National Geographic Society. On the Board of
Advisors of Duke University School of the
Environment. Director of Ashland, International
Paper, American Gas Index Fund and Rushmore
Funds.
B. Francis Saul III 36 Vice President and a Director of the
Company. Vice President and a Trustee of the B.
F. Saul Real Estate Investment Trust. Director
of Chevy Chase Bank, F.S.B., Senior Vice
President of the B. F. Saul Company since 1991.
Director of the Greater Washington Boys & Girls
Club and The Heights School.
Class Three Directors-Term Ends at 1999 Annual Meeting
Principal Occupation and
Name Age Current Directorships
- ------ ----- -------------------------
B. Francis Saul II 65 Chairman and Chief Executive Officer of the
Company. Chairman of the Board of Trustees of
the Saul Trust since 1969 and a Trustee since
1964. President and Chairman of the Board of
Directors of the Saul Company since 1969.
Chairman of the Board and Chief Executive
Officer of Chevy Chase Bank, F.S.B. since
1969. Member of National Gallery of Art
Trustees Council. Trustee of the National
Geographic Society and the Brookings
Institution. Director of Board of Visitors &
Governors of Washington College.
Mark Sullivan III 56 Director of the Company. President since 1996
and Co-founder of the Small Business Funding
Corporation, a company providing a secondary
market facility for the purchase and
securitization of small business loans.
Practiced law in Washington, D.C., advising
senior management of financial institutions on
legal and policy matters from 1989 to 1996.
Director of Bank Plus Corporation (a unitary
thrift holding company).
4
<PAGE>
James W. Symington 70 Director of the Company. Partner in the law
firm of O'Connor & Hannan since 1986. Member
of Congress from 1969 to 1977. Chairman
Emeritus of National Rehabilitation Hospital.
John R. Whitmore 64 Director of the Company. President and Chief
Executive Officer of the Bessemer Group, Inc.
and its Bessemer Trust Company subsidiaries (a
financial management and banking group), with
which he has been associated since 1975.
Director of Bessemer Securities Corporation,
the Saul Company and Chevy Chase Property
Company. Trustee of the Saul Trust.
Class One Directors-Term Ends at 2000 Annual Meeting
Principal Occupation and
Name Age Current Directorships
- ------ ----- -------------------------
Philip D. Caraci 59 President and a Director of the Company. Senior
Vice President and Secretary of the Saul Trust
since 1987. Executive Vice President of the Saul
Company with which he has been associated since
1972. President of Franklin Property Company
("Franklin") since 1986.
Gilbert M. Grosvenor 66 Director of the Company. President (1980 through
1996) and Chairman of the Board of Trustees
since 1987 of the National Geographic Society,
with which he has been associated since 1954.
Director of Chevy Chase Bank, F.S.B., Marriott
International Corporation, Ethyl Corp., and a
Trustee of the Saul Trust.
Philip C. Jackson, Jr. 69 Director of the Company. Adjunct Professor at
Birmingham-Southern College since 1989. Member
of the Thrift Depositors' Protection Oversight
Board from 1990 until 1993. Vice Chairman and a
Director of Central Bancshares of the South from
1980 to 1989. Member of the Board of Governors
of the Federal Reserve System from 1975 to 1978.
Director of USG Corporation, International
Realty Corporation and Jackson Insurance Agency.
In the event that any nominee(s) should be unable to accept the office of
director, which is not anticipated, it is intended that the persons named in the
proxy will vote for the election of such other person in the place of such
nominee(s) for the office of director as the Board of Directors may recommend.
The affirmative vote of a plurality of the shares of Common Stock present is
required for the election of directors.
The Board of Directors met five times during 1997. Each member of the Board
attended at least 87 percent of the aggregate of the meetings of the Board and
of the Committees of the Board on which he served.
5
<PAGE>
Compensation of Directors
Directors of the Company are currently paid an annual retainer of $18,000
and a fee of $1,000 for each Board or Committee meeting attended. Directors from
outside the Washington, D.C. area also are reimbursed for out-of-pocket expenses
in connection with their attendance at meetings. For the year ended December 31,
1997, the Company paid its directors total compensation of $241,000, of which
$96,500 was paid in cash and $144,500 was paid in deferred stock compensation
(as described below).
In addition, directors may elect to participate in the Deferred Compensation
Plan discussed below. For the year ended December 31, 1997, 11,541 shares were
credited to the directors' deferred fee accounts.
Committees of the Board of Directors
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Executive Committee.
The Audit Committee is composed of Messrs. Kelley, Longsworth, Noonan and
Symington. It makes recommendations concerning the engagement of independent
public accountants, reviews with the independent public accountants the plans
and results of each audit engagement, approves professional services provided by
the independent public accountants, considers the range of audit and non-audit
fees, reviews the Company's financial statements, evaluates the performance of
the independent public accountants and the Company's financial and accounting
personnel, and reviews the adequacy of the Company's internal accounting
controls. This Committee met three times during 1997.
The Compensation Committee is composed of Messrs. Grosvenor and Whitmore. It
determines compensation for the Company's executive officers and administers any
stock, incentive or other compensation plans adopted by the Company, including
the Company's 1993 Stock Option Plan (the "Stock Option Plan"). This Committee
met once during 1997.
The Executive Committee is composed of Messrs. Caraci, Jackson and Saul II.
It has such authority as is delegated to it by the Board of Directors and
advises the Board of Directors from time to time with respect to such matters as
the Board of Directors directs. This Committee did not meet during 1997.
The Company does not have a nominating committee.
Compensation Committee Interlocks and Insider Participation
B. Francis Saul II, Chairman of the Board and Chief Executive Officer of the
Company, served on the Board of Trustees and the Compensation Committee of the
National Geographic Society during 1997. Gilbert M. Grosvenor, a director of the
Company and a member of the Company's Compensation Committee during 1997, serves
as Chairman of the Board of Trustees of the National Geographic Society.
Executive Officers Who Are Not Directors
The following list sets forth the name, age, position with the Company,
present principal occupation or employment and material occupations, positions,
offices or employment during the past five years of each executive officer who
is not a director of the Company. Each listed individual has held an office with
the Company since its inception in June 1993.
6
<PAGE>
Name Age Position and Background
- ----- ----- -----------------------
Christopher H. Netter 43 Vice President - Leasing. Vice President of
the Saul Company and Franklin and Assistant
Vice President of the Saul Trust from 1987 to
1993.
Scott V. Schneider 40 Vice President - Chief Financial Officer,
Treasurer and Secretary. Vice President of
the Saul Company and Franklin and Assistant
Vice President of the Saul Trust from 1985 to
1993.
Charles W. Sherren, Jr. 44 Vice President - Management. Vice President
of the Saul Company and Franklin and
Assistant Vice President of the Saul Trust
from 1981 to 1993.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than 10 percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission (the "SEC") and the New York
Stock Exchange. Officers, directors and greater than 10 percent stockholders are
required by SEC regulations to furnish the Company with copies of all Forms 3, 4
and 5 which they file.
To the best of the Company's knowledge, based upon copies of forms furnished
to it and written representations from officers, directors and 10 percent
beneficial holders, no person was late filing SEC Forms 3, 4 or 5 during the
period January 1, 1997 through December 31, 1997.
Deferred Compensation Plan
A Deferred Compensation Plan was established by the Company, effective
January 1, 1994, for the benefit of its directors and their beneficiaries.
Before the beginning of any calendar year, a director may elect to defer all or
part of his or her director's fees to be earned in that year and the following
years. A director has the option to have deferred fees paid in cash, in shares
of Common Stock or in a combination of cash and Common Stock. If the director
elects to have the deferred fees paid in stock, the number of shares allocated
to the director is determined based on the market value of the Common Stock on
the day the deferred director's fees were earned.
In connection with the Company's initial public offering of its Common Stock
in 1993, 20,000 shares of Common Stock were authorized for a deferred
compensation plan and were reserved for listing with the New York Stock Exchange
upon issuance. In 1996, the Company reserved for listing with the New York Stock
Exchange an additional 50,000 shares of Common Stock in connection with the
Deferred Compensation Plan. Through December 31, 1997, 38,607 of these 70,000
shares have been credited to the directors' deferred fee accounts.
7
<PAGE>
EXECUTIVE COMPENSATION
Annual Compensation
The Company pays compensation to its executive officers for their
services in such capacity. The following Summary Compensation Table sets forth
the annual and long-term compensation paid by the Company to the executive
officers for, or with respect to, the fiscal periods ended December 31, 1997,
1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
-------------------- Compensation
------------ All
Stock Option Other
Name and Principal Position Year Salary Bonus Awards (Shs) Compensation (1)
---- -------- ------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
B. Francis Saul II 1997 $125,000 $10,000 -- --
Chairman and 1996 125,000 10,000 -- --
Chief Executive Officer 1995 125,000 10,000 -- --
Philip D. Caraci 1997 238,333 19,600 -- --
President 1996 218,333 18,000 -- --
1995 198,333 16,400 -- --
Christopher H. Netter 1997 149,028 10,850 $10,921
Vice President 1996 140,084 9,905 -- 10,338
Leasing 1995 135,769 9,625 -- 10,817
Scott V. Schneider 1997 150,584 10,850 11,013
Vice President 1996 141,151 10,115 -- 10,349
Chief Financial Officer 1995 129,835 9,450 -- 10,345
Charles W. Sherren, Jr. 1997 115,610 8,260 8,462
Vice President 1996 110,596 7,875 -- 8,165
Management 1995 104,619 7,490 -- 8,308
</TABLE>
(1) Amounts paid represent Company's contribution to Employees' Profit Sharing
Retirement Trust and Company's payment of life insurance premiums for the
benefit of the named executive officers.
8
<PAGE>
Options Exercised and Fiscal Year-End Values
The following table sets forth certain information with respect to
unexercised stock options held by the Chief Executive Officer and the named
executive officers at December 31, 1997. None of such officers exercised any
stock options during the year ended December 31, 1997.
VALUE OF UNEXERCISED OPTIONS (1)
Number of
Unexercised Options
at December 31, 1997(2)
---------------------------------
Name and Principal Position Exercisable Unexercisable
----------- -------------
B. Francis Saul II -- --
Vice President
Philip D. Caraci 100,000 --
President
Christopher H. Netter 25,000 --
Vice President
Leasing
Scott V. Schneider 25,000 --
Vice President
Chief Financial Officer
Charles W. Sherren, Jr. 20,000 --
Vice President
Management
(1) No options were in-the-money at December 31, 1997.
(2) All unexercised options are fully vested, have an exercise price of $20 per
share and expire on September 23, 2003, with earlier expiration to occur at
employment termination.
9
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised of Messrs. Grosvenor and Whitmore.
Members of the Compensation Committee are selected each year by the full Board
of Directors. All members of the Compensation Committee must be "outside
directors," who are not (i) officers or former officers of the Company; (ii)
employees of the Company or any of its subsidiaries; (iii) relatives of the
Chief Executive Officer; (iv) holders of more than 5 percent of the Company's
voting stock; (v) members of an organization acting as an advisor, legal counsel
or in similar capacity with respect to the Company and receiving compensation
therefor on an ongoing basis from the Company, in addition to director's fees;
or (vi) with reference to a particular transaction, interested directors within
the meaning of Section 2-419 of the Maryland General Corporation Law.
The Compensation Committee determines compensation for the Company's
executive officers and administers any stock incentive or other compensation
plans adopted by the Company, including the Stock Option Plan. The Compensation
Committee believes that the Company's compensation package must be structured in
a manner that will help the Company attract and retain qualified executives and
will align compensation of such executives with the interests of stockholders.
The compensation package currently consists of salary, bonus and long-term
compensation in the form of stock options issued pursuant to the Stock Option
Plan.
Salary and Bonus
Salary and bonus are determined by the Compensation Committee using a
subjective evaluation process. In making determinations of salary and bonus for
particular officers, including the Chief Executive Officer, the Compensation
Committee considers the general performance of the Company, the officer's
position, level and scope of responsibility, the officer's anticipated
performance and contributions to the Company's achievement of its long-term
goals, and the salary and bonus for the officer recommended by management.
Stock Option Grants
The Compensation Committee is responsible for administering the Stock Option
Plan, which includes determining the individuals to be granted stock option
awards and defining the terms of such awards, including the number of shares
subject to each option, exercise price, vesting schedule and expiration date.
The purpose of the Stock Option Plan is to provide compensation to persons
whose services are considered essential to the Company. By linking this
compensation to the market performance of the Company's Common Stock, the
Company intends to provide additional incentive for officers and key employees
to enhance the value and success of the Company and align the long-term
interests of the officers and key employees with the interests of the Company.
Under the terms of the Stock Option Plan, Mr. Saul II is not eligible to
participate in the plan.
10
<PAGE>
The Compensation Committee uses a subjective evaluation process to determine
whether an officer or key employee should receive an option grant and the number
of shares subject to stock options granted to such officer or key employee, and
has not set specific objective goals or standards that an officer or key
employee must meet to receive a stock option grant. The factors considered by
the Compensation Committee include the general performance of the company, the
position, level and scope of responsibility of the respective officer or key
employee and the officer's or key employee's anticipated performance and
contributions to the Company's achievement of its long-term goals.
During 1997, the Compensation Committee did not grant any options.
Gilbert M. Grosvenor
John R. Whitmore
PERFORMANCE GRAPH
Rules promulgated under the Exchange Act require the Company to present a
graph comparing the cumulative total stockholder return on its Common Stock with
the cumulative total stockholder return of (i) a broad equity market index, and
(ii) a published industry index or peer group. Although the graph would normally
be for a five-year period, the Common Stock has been publicly traded only since
August 27, 1993, and as a result, the following graph commences as of August 31,
1993. The graph compares the cumulative total stockholder return of the
Company's Common Stock ("BFS"), based on the market price of the Common Stock
and assuming reinvestment of dividends, with the National Association of Real
Estate Investment Trust Equity Index ("NAREIT") and the S&P 500 Index
("S&P500"). The graph assumes the investment of $100 on August 31, 1993.
Comparison of Total Return
[LINE GRAPH APPEARS HERE]
Total
Return
$100 Invested
-----------------------------------------
BFS S&P NAREIT
Index 500 Equity
-----------------------------------------
Aug-1993 100.000 100.000 100.000
Sep-1993 96.894 99.262 104.881
Oct-1993 98.261 101.278 102.883
Nov-1993 90.807 100.326 97.308
Dec-1993 96.398 101.561 97.138
Jan-1994 96.487 104.957 99.965
Feb-1994 95.866 102.127 104.307
Mar-1994 93.381 97.685 100.446
Apr-1994 100.343 98.954 102.154
May-1994 94.753 100.566 104.428
Jun-1994 92.269 98.079 102.295
Jul-1994 91.818 101.329 101.792
Aug-1994 94.302 105.454 102.097
Sep-1994 90.575 102.907 100.205
Oct-1994 83.960 105.265 96.727
Nov-1994 80.854 101.406 93.404
Dec-1994 82.096 102.881 100.220
Jan-1995 90.441 105.557 98.030
Feb-1995 88.577 109.656 100.453
Mar-1995 92.925 112.898 100.050
Apr-1995 96.974 116.191 100.021
May-1995 88.899 120.779 104.272
Jun-1995 92.626 123.617 105.930
Jul-1995 93.620 127.733 107.758
Aug-1995 94.862 128.076 109.054
Sep-1995 92.377 133.445 110.925
Oct-1995 89.079 132.973 108.544
Nov-1995 86.594 138.830 109.536
Dec-1995 85.352 141.394 115.522
Jan-1996 92.674 146.205 117.421
Feb-1996 93.917 147.560 118.796
Mar-1996 93.295 148.984 118.144
Apr-1996 93.848 151.179 118.746
May-1996 90.121 155.081 121.814
Jun-1996 91.364 155.673 123.401
Jul-1996 89.498 148.795 124.336
Aug-1996 88.876 151.934 129.224
Sep-1996 91.982 160.484 131.477
Oct-1996 100.128 164.909 135.381
Nov-1996 103.234 177.369 141.552
Dec-1996 106.339 173.862 156.259
Jan-1997 112.069 184.720 158.010
Feb-1997 114.554 186.170 157.690
Mar-1997 107.100 178.520 157.360
Apr-1997 110.408 189.180 153.030
May-1997 114.135 200.690 157.530
Jun-1997 118.482 209.680 165.190
Jul-1997 122.478 226.370 170.290
Aug-1997 122.478 213.690 169.880
Sep-1997 130.553 225.400 184.710
Oct-1997 125.914 217.870 179.730
Nov-1997 125.914 227.950 183.610
Dec-1997 128.709 231.870 187.940
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 20,
1998, concerning shares of Common Stock beneficially owned by all persons (if
any) known by the Company to own more than 5 percent of the Company's
outstanding Common Stock, by each director and nominee, by each executive
officer named in "Executive Compensation" above, and by all directors and
executive officers as a group, according to information provided to the Company
by each such person. Unless otherwise noted, each person named has sole voting
and sole investment power with respect to all shares beneficially owned by such
person.
Aggregate
Number of
Shares Percent
Name of Beneficially of
Beneficial Owner Owned (1) Class (1)
- ------------------ -------------- -----------
B. Francis Saul II 2,557,172 (2) 20.5%
Philip D. Caraci 126,115 (3) 1.0%
Philip C. Jackson, Jr. 24,500 (4) *
Paul X. Kelley 3,000 *
Charles R. Longsworth 1,700 *
Patrick F. Noonan 5,000 (5) *
B. Francis Saul III 12,000 *
Mark Sullivan 5,000 *
James W. Symington 200 *
John R. Whitmore 2,500 (6) *
Scott V. Schneider 25,386 (7) *
Christopher H. Netter 25,000 (8) *
Charles W. Sherren, Jr. 20,000 (9) *
All directors and officers as
a group (19 persons) 2,808,199 22.5%
* Less than 1 percent
(1) Beneficial ownership and percent of class are calculated pursuant to Rule
13d-3 under the Securities Exchange Act of 1934, as amended.
(2) Includes 1,996,676 shares owned by the B. F. Saul Real Estate Investment
Trust, 132,290 shares owned by Franklin Property Co., 374,030 shares owned
by Westminster Investing Corporation, 63 shares owned by Van Ness Square
Corp., 17,898 shares owned by various family trusts and as custodian for a
child, and 36,215 shares owned by Mr. Saul II's spouse. Mr. Saul II
disclaims beneficial ownership of 36,215 shares owned by his spouse.
Pursuant to Rule 13d-3, the Common Stock described above is considered to be
beneficially owned by Mr. Saul II because he has or may be deemed to have
sole or shared voting and/or investment power in respect thereof. Excludes
755,800 shares owned by the B. F. Saul Company Employees' Profit Sharing
Retirement Trust, (the "Employee Trust"). Mr. Saul II is one of five
Trustees for the Employee Trust and has a pecuniary interest in the Employee
Trust as one of the participating employees.
(3) Includes 17,218 shares owned jointly by Mr. Caraci and his spouse, 2,888
shares owned by Mr. Caraci's spouse, and 100,000 shares subject to currently
exercisable options held by Mr. Caraci. Mr. Caraci disclaims beneficial
ownership of 2,888 shares owned by his spouse. Excludes 755,800 shares owned
by the Employee Trust. Mr. Caraci is one of five Trustees for the Employee
Trust and has a pecuniary interest in the Employee Trust as one of the
participating employees.
(4) Mr. Jackson disclaims beneficial ownership of 1,500 shares owned by his
spouse.
(5) Mr. Noonan disclaims beneficial ownership of 2,500 shares owned by his
spouse.
(6) Mr. Whitmore disclaims beneficial ownership of 1,500 shares owned by a
trust, of which he serves as trustee, for the benefit of his mother.
(7) Includes 25,000 shares subject to currently exercisable options held by Mr.
Schneider and 386 shares owned by Mr. Schneider's children. Mr. Schneider
disclaims beneficial ownership of 386 shares owned by his children.
(8) Represents 25,000 shares subject to currently exercisable options held by
Mr. Netter.
(9) Represents 20,000 shares subject to currently exercisable options held by
Mr. Sherren.
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company began operations in August 1993. On August 26, 1993, The Saul
Organization transferred to Saul Holdings Limited Partnership, a Maryland
limited partnership (the "Operating Partnership") and two newly formed
subsidiary limited partnerships (the "Subsidiary Partnerships," and collectively
with the Operating Partnership, the "Partnerships"), 26 shopping center
properties, one office property, one research park and one office/retail
property (collectively, the "Portfolio Properties"), located primarily in the
Washington, D.C./Baltimore metropolitan area and the Mid-Atlantic region of the
United States, and the management functions related to the Portfolio Properties
(the "Management Functions").
Certain relationships exist among the Company and its subsidiaries, the
members of The Saul Organization and the Partnerships and are discussed below.
Management of the Current Portfolio Properties. The Company and its
subsidiaries share with The Saul Organization certain ancillary functions, such
as computer and payroll services, benefits administration and in-house legal
services. The Saul Organization also subleases office space to the Company. The
terms of all sharing arrangements, including payments related thereto, are
reviewed periodically by the independent directors of the Company, who
constitute six of the eleven members of the Board of Directors. Included in
general and administrative expenses for the year ended December 31, 1997 are
charges totalling $1,624,000 related to such shared services, of which
$1,436,000 was paid prior to December 31, 1997. The Company believes that the
amounts allocated to it for such shared services represent a fair allocation
between The Saul Organization and the Company and it subsidiaries. The Company
believes that sharing these expenses with The Saul Organization results in a
savings from the expenses that would be incurred if such services were obtained
from independent third parties.
Related Party Rents. Chevy Chase Bank, F.S.B. leases space in several of the
shopping centers owned by the Company and its subsidiaries. The total rental
income from Chevy Chase Bank, F.S.B. from January 1, 1997 through December 31,
1997 was $1,181,000. The Company believes that all of the leases with Chevy
Chase Bank, F.S.B. have comparable terms to leases that would have been obtained
from unrelated third parties.
Management Personnel. The Chairman and Chief Executive Officer as well as the
President and a Vice President (Mr. Saul III) of the Company remain officers of
various members of The Saul Organization, but devote a substantial amount of
time to the management of the Company. The annual compensation for these
officers is fixed by the Compensation Committee of the Board of Directors each
year.
Exclusivity Agreement and Right of First Refusal. The Company has entered into
an Exclusivity Agreement (the "Exclusivity Agreement") with, and has been
granted a right of first refusal (the "Right of First Refusal") by, The Saul
Organization. The purpose of these agreements is to minimize potential conflicts
of interest between The Saul Organization and the Company and it subsidiaries.
The Exclusivity Agreement and Right of First Refusal generally require The Saul
Organization to conduct its shopping center business exclusively through the
Company and its subsidiaries and to grant the Company a right of first refusal
to purchase commercial properties and development sites that become available to
The Saul Organization in the District of Columbia or adjacent suburban Maryland.
Reimbursement Agreement. Pursuant to a reimbursement agreement among the
partners in the Partnerships, The Saul Organization and those of its
subsidiaries that are partners in the Partnerships have agreed to reimburse the
Company and the other partners in the event the Partnerships fail to make
payments with respect to certain portions of the Partnerships' debt obligations
and the Company or any such other partners personally make payments with respect
to such debt obligations. As of December 31, 1997, the maximum potential
obligation of The Saul Organization and its subsidiaries under the agreement was
$209.1 million. The Company believes that the Partnerships will be able to make
all payments due with respect to their debt obligations.
13
<PAGE>
INDEPENDENT AUDITORS
Upon recommendation of and approval by the Audit Committee, Arthur Andersen
LLP has been selected to act as independent certified public accountants for the
Company during the current fiscal year.
A representative of Arthur Andersen LLP will be present at the annual meeting
and will be provided with the opportunity to make a statement if desired. Such
representative also will be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
annual meeting other than those stated above. If any other business should come
before the annual meeting, the persons named in the enclosed proxy will vote
thereon as they determine to be in the best interests of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
It is presently contemplated that the 1999 annual meeting of stockholders will
be held in mid-April 1999. Any stockholder proposal to be considered for
inclusion in the Company's proxy statement and form of proxy for the annual
meeting of stockholders to be held in 1999 must be received at the Company's
office at 8401 Connecticut Avenue, Chevy Chase, Maryland 20815, no later than
November 6, 1998.
14
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ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1997 accompanies this Proxy Statement.
By order of the Board of Directors
Scott V. Schneider
Chief Financial Officer and Secretary
March 13, 1998
Chevy Chase, Maryland
15
<PAGE>
SAUL CENTERS, INC.
A Proxy for Annual Meeting of Stockholders
April 17, 1998
This Proxy is solicited by the Board of Directors
The undersigned hereby appoints B. Francis Saul II and Philip D. Caraci, and
each of them, as proxies, with full power of substitution in each, to vote all
shares of the common stock of Saul Centers, Inc. (the "Company") which the
undersigned is entitled to vote, at the Annual Meeting of Stockholders of the
Company to be held on April 17, 1998, at 11:00 a.m. local time, and at any
adjournment thereof, on all matters set forth in the Notice of Meeting and Proxy
Statement, dated March 13, 1998, a copy of which has been received by the
undersigned as follows:
1. TO ELECT FOUR DIRECTORS TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS IN 2001
[_] GRANT AUTHORITY to vote for all nominees listed below.
[_] WITHHOLD AUTHORITY to vote for all nominees listed below.
General Paul X. Kelley; Charles R. Longsworth; Patrick F. Noonan;
B. Francis Saul III
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
(Please sign on reverse side)
<PAGE>
2. OTHER MATTERS.
GRANT AUTHORITY upon such other matters as may come before the meeting as
they determine to be in the best interest of the Company,
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR,
IF NO DIRECTION IS GIVEN, WILL BE VOTED
"FOR" THE MATTERS STATED.
Dated: ,1998
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Signature(s) of Stockholders(s)
IMPORTANT: Please mark this Proxy, date it, sign it exactly as your name(s)
appear(s) and return it in the enclosed postage paid envelope. Joint owners
should each sign personally. Trustees and others signing in a representative or
fiduciary capacity should indicate their full titles in such capacity.
