<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 Section240.14a-11(c) or
Section240.14a-12
COMMERCIAL ASSETS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
April 14, 1997
To Our Shareowners:
You cordially are invited to the 1997 Annual Meeting of Shareowners (the
"Meeting") of Commercial Assets, Inc. (the "Company") to be held at 1873 S.
Bellaire Street., Suite 1700, Denver, Colorado on Tuesday, May 20, 1997, at 8:00
a.m., local time.
The formal notice of the Meeting and a proxy statement describing the
matters to be acted upon at the Meeting are contained in the following pages.
Enclosed is a proxy that enables you to vote your shares on the matter to be
considered at the Meeting even if you are unable to attend the Meeting. Please
mark the proxy to indicate your vote, date and sign the proxy and return it in
the enclosed postage-paid envelope as soon as possible for receipt prior to the
Meeting. Shareowners also are entitled to vote on any other matter that properly
comes before the Meeting.
WHETHER YOU OWN FEW OR MANY SHARES OF STOCK, PLEASE BE SURE YOU ARE
REPRESENTED AT THE MEETING BY ATTENDING IN PERSON OR BY RETURNING YOUR PROXY AS
SOON AS POSSIBLE.
Sincerely,
/s/ TERRY CONSIDINE
TERRY CONSIDINE
CO-CHAIRMAN OF THE BOARD
/s/ THOMAS L. RHODES
THOMAS L. RHODES
CO-CHAIRMAN OF THE BOARD
<PAGE>
COMMERCIAL ASSETS, INC.
3600 SOUTH YOSEMITE STREET
DENVER, COLORADO 80237
(303) 773-1221
------------------------
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
---------------------
To Our Shareowners:
The 1997 Annual Meeting of Shareowners (the "Meeting") of Commercial Assets,
Inc. (the "Company") will be held at 1873 S. Bellaire Street., Suite 1700,
Denver, Colorado, on Tuesday, May 20, 1997, at 8:00 a.m., local time, to
consider and act upon the following matters:
1. election of Messrs. Thomas L. Rhodes, Raymond T. Baker and Thomas C.
Fries, three Class I Directors, to terms expiring in 2000; Mr. Terry
Considine as a Class III Director to a term expiring in 1999; and Bruce
D. Benson as a Class II Director to a term expiring in 1998;
2. such other business as properly may come before the Meeting and any
adjournments or postponements thereof.
Only shareowners of record at the close of business on April 9, 1997, the
record date, will be entitled to vote at the Meeting.
The Board of Directors of the Company desires to have maximum representation
at the Meeting and requests that you mark, date, sign and timely return the
enclosed proxy in the postage-paid envelope provided.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ JOHN C. SINGER
JOHN C. SINGER
SECRETARY
April 14, 1997
<PAGE>
COMMERCIAL ASSETS, INC.
3600 SOUTH YOSEMITE STREET
DENVER, COLORADO 80237
(303) 773-1221
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREOWNERS
MAY 20, 1997
------------------------
To Our Shareowners:
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation by the Board of Directors of Commercial Assets, Inc. (the
"Company") of proxies to be used at the 1997 Annual Meeting of Shareowners of
the Company (the "Meeting") and at any adjournments or postponements thereof.
The Meeting will be held at 1873 S. Bellaire Street., Suite 1700, Denver,
Colorado, on Tuesday, May 20, 1997, at 8:00 a.m., local time. The Meeting is
being held for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareowners. This Proxy Statement, the accompanying proxy card and
the Notice of Annual Meeting (the "Proxy Materials") are first being provided to
shareowners beginning on or about April 14, 1997.
GENERAL INFORMATION
SOLICITATION
The enclosed proxy is being solicited by the Board of Directors of the
Company. In addition to solicitations by mail, solicitations may be made by
personal interview, telephone and telegram by Directors and officers of the
Company. No compensation will be paid to the Directors and officers of the
Company for the solicitation of proxies. The cost of solicitation will be paid
solely by the Company. The Company will reimburse banks, brokers and others
holding shares in their names or the names of nominees or otherwise for
reasonable out-of-pocket expenses incurred in sending proxies and proxy
materials to the beneficial owners of such shares.
VOTING RIGHTS AND VOTES REQUIRED
Holders of shares of Commercial Assets, Inc. common stock, par value $.01
per share (the "Common Stock") at the close of business on April 9, 1997, (the
"Record Date") are entitled to notice of, and to vote at, the Meeting. On the
Record Date, 10,315,809 shares of Common Stock were outstanding. The presence,
in person or by proxy, of holders of a majority of the shares of Common Stock
entitled to vote at the Meeting constitutes a quorum for the transaction of
business at the Meeting.
Each share of Common Stock outstanding on the Record Date is entitled to one
vote on each matter presented at the Meeting. The affirmative vote of a majority
of the votes cast at the Meeting by shareowners present or represented and
entitled to vote on each proposal is required for the election of Directors.
Abstentions will be treated as shares present and entitled to vote for purposes
of determining the presence of a quorum but will not be considered as votes cast
in determining whether a matter has been approved by the shareowners. If a
broker or other record holder or nominee indicates on a proxy that it does not
have 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 that
matter.
<PAGE>
VOTING OF PROXIES
Shares of Common Stock represented by all properly executed proxies received
in time for the Meeting will be voted as specified in the proxy. Unless contrary
instructions are indicated on the proxy, the shares of Common Stock represented
by such proxy will be voted "FOR" the election of Thomas L. Rhodes, Raymond T.
Baker, Thomas C. Fries, Terry Considine and Bruce D. Benson as Directors of the
Company. Management and the Board of Directors of the Company know of no other
business to be brought before the Meeting other than as described herein. If any
other matters are presented properly to the shareowners for action at the
Meeting and any adjournments or postponements thereof, the proxy holders named
in the enclosed proxy intend to vote in their discretion on all matters on which
the shares of Common Stock represented by such proxy are entitled to vote.
REVOCABILITY OF PROXY
The giving of the enclosed proxy does not preclude the right to vote in
person should the shareowner giving the proxy so desire. A proxy may be revoked
at any time prior to its exercise by notice in writing sent to the Secretary of
the Company that the proxy is revoked, by presenting to the Company a
later-dated proxy or by attending the Meeting and voting in person.
ANNUAL REPORT
The Company's 1996 Annual Report to Shareowners, including a copy of the
Company's 1996 Annual Report on Form 10-K (collectively, the "Annual Report")
contains financial and other information about the activities of the Company
including financial statements for the year ended December 31, 1996. An Annual
Report is being mailed with this Proxy Statement to all holders of record on
April 9, 1997. Neither the Company's 1996 Form 10-K nor the 1996 Annual Report
to Shareowners is incorporated into this Proxy Statement by reference nor is it
a part of the Proxy Materials.
Upon written request addressed to the Secretary of the Company at the
address listed above, the Company will provide a copy of the Annual Report and
1996 Form 10-K to anyone whose proxy is being solicited in connection with this
Proxy Statement.
ELECTION OF DIRECTORS
The charter of the Company provides for three classes of Directors with
staggered terms of office. Nominees for each class serve for terms of three
years and until the election and qualification of their successors or until
their earlier resignation, death, disqualification or removal from office. The
Board of Directors currently consists of seven members, including three Class I
Directors whose terms expire in 1997, two Class II Directors whose terms expires
in 1998 and two Class III Directors whose terms expire in 1999. The By-laws of
the Company require that at least three of the seven of the Board of Directors
of the Company and each committee thereof be comprised of persons who are
Independent Directors of the Company.
An Independent Director is defined in the Company's By-laws as a person "who
is not affiliated, directly or indirectly, with the person or entity responsible
for directing or performing the day-to-day business affairs of the corporation
(the advisor), including a person or entity to which the advisor subcontracts
substantially all of such functions, whether by ownership of, ownership interest
in, employment by, any material business or professional relationship with, or
by serving as an officer or Director of, the advisor or an affiliated business
entity of the advisor." The Independent Directors of the Company are Messrs.
Baker, Kortz, Malone and Fries.
Vacancies on the Board of Directors may be filled by a majority of the
remaining members; provided, however, that the Independent Directors must
nominate the replacements for vacancies among the Independent Directors. Each
Director elected by the Board of Directors to fill a vacancy shall hold office
2
<PAGE>
until the next annual meeting of the shareowners at which time the shareowners
shall elect a Director to serve the remaining term of the class into which such
Director is elected.
At the Meeting, three Class I Directors will be elected to a term expiring
in 2000, a Class II Director will be elected to a term filled as a vacancy and
expiring in 1998, and a Class III Director will be elected to a term filled as a
vacancy and expiring in 1999. Unless otherwise specified, the enclosed proxy
will be voted "FOR" the election of the Board of Directors' nominees, Messrs.
Rhodes, Baker and Fries, as the Class I Directors of the Company, Mr. Considine
as a Class III Director of the Company and Mr. Benson as a Class II Director of
the Company. Neither management nor the Board of Directors of the Company knows
of any reason why Messrs. Rhodes, Baker, Fries, Considine or Benson would be
unavailable to serve as a Director. Discretionary authority may be exercised by
the proxy holders named in the enclosed proxy to vote for a nominee proposed by
the Board of Directors if any of Messrs. Rhodes, Baker, Fries, Considine or
Benson become unavailable for election.
The Board of Directors held 12 meetings in 1996. During 1996, no Director
attended fewer than 75% of the aggregate number of meetings of the Board of
Directors and any committee thereof on which he served.
The Audit Committee of the Board of Directors (the "Audit Committee") held
five meetings in 1996. Messrs. Baker, Kortz, Malone and Fries are the current
members of this committee. Among other things, the Audit Committee reviews and
approves the scope of the annual audit undertaken by the Company's independent
certified public accountants and meets with them as considered necessary to
review the progress and results of their work as well as their recommendations.
The Audit Committee also reviews internal audit procedures and reporting systems
of the Company.
The Compensation Committee of the Board of Directors (the "Compensation
Committee"), which held one meeting in 1996, is made up of the Independent
Directors. The Compensation Committee was formed to, among other things,
administer the Company's Stock Option Plan (the "Plan").
The Company does not have a Nominating Committee or any other committee
performing a similar function. Procedures for nominating persons to the Board of
Directors are contained in the Company's By-laws.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MESSRS.
RHODES, BAKER, FRIES, CONSIDINE AND BENSON TO THE BOARD OF DIRECTORS OF THE
COMPANY.
Certain information with respect to the nominees for election as Directors,
the continuing Directors and the executive officers of the Company, as of April
9, 1997, appears below and was furnished in part by each such person.
Each executive officer of the Company serves for a term of one year and
until his or her successor has been elected and qualified or until his or her
earlier resignation or removal by the Board of Directors. There are no family
relationships among any of the Directors and executive officers of the Company.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD WITH THE COMPANY
- --------------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
Terry Considine............ 49 Co-Chairman of the Board of Directors (Class III) and Co-Chief Executive
Officer
Thomas L. Rhodes........... 57 Co-Chairman of the Board of Directors (Class I) and Co-Chief Executive
Officer
Leslie B. Fox.............. 38 President and Chief Operating Officer
Kevin J. Nystrom........... 37 Senior Vice President and Chief Financial Officer
Donald L. Kortz............ 56 Independent Director (Class II) and Member of the Audit and Compensation
Committees
Raymond T. Baker........... 46 Independent Director (Class I) and Member of the Audit and Compensation
Committees
Robert J. Malone........... 52 Independent Director (Class III) and Member of the Audit and Compensation
Committees
Bruce D. Benson............ 58 Director (Class II)
Thomas C. Fries............ 52 Independent Director (Class I) and Member of the Audit and Compensation
Committees
</TABLE>
TERRY CONSIDINE was elected Co-Chairman of the Board and Co-Chief Executive
Officer of the Company and of Asset Investors Corporation ("AIC") on October 1,
1996. Since July 1994, Mr. Considine has also been Chairman of the Board of
Directors, President and Chief Executive Officer of Apartment Investment and
Management Company, a REIT that owns and manages multi-family housing complexes.
He is the sole owner of Considine Investment Co. and prior to July 1994 was
owner of approximately 75% of Property Asset Management, L.L.C., a Colorado
limited liability company, and its related entities (collectively, "PAM"), one
of the AIMCO predecessors. Mr. Considine also became an owner and Director of
Financial Asset Management LLC (the "Manager"), on October 1, 1996. He served as
a Colorado State Senator from 1987-1992 and in 1992 was the Republican nominee
for election to the United States Senate from Colorado.
THOMAS L. RHODES was elected Co-Chairman of the Board and Co-Chief Executive
Officer of the Company and of AIC on October 1, 1996. Mr. Rhodes has also been a
Director of Apartment Investment and Management Company since July 1994. Mr.
Rhodes also became an owner and Director of the Manager on October 1, 1996. Mr.
Rhodes has served as the President and a Director of NATIONAL REVIEW magazine
since 1992. From 1976 to 1992, he held various positions at Goldman, Sachs & Co.
and was elected a General Partner in 1986. He also served as a Director of
Underwriters Reinsurance Corporation from 1987 to 1993 and was a member of the
Advisory Board of TransTerra Co. during 1993. He currently serves as a Director
of Delphi Financial Group, Inc. and its subsidiaries, The Lynde and Harry
Bradley Foundation and the Reserve Special Portfolio Trusts. Mr. Rhodes is
Chairman of the Empire Foundation for Policy Research, a Trustee of The Heritage
Foundation, a Trustee of The Manhattan Institute, a Board Member of the National
Center for Neighborhood Enterprise and a Member of the Council on Foreign
Relations.
LESLIE B. FOX has served as President and Chief Operating Officer of the
Company and of AIC since October 1996, served as Executive Vice President and
Chief Operating Officer of the Company and AIC from February 1995 through
September 1996 and served as a Vice President of AIC from November 1993 until
February 1995. From November 1993 until February 1995, she was an Executive Vice
President, Chief Investment Officer and Assistant Secretary of the Company. Ms.
Fox has been employed by the Manager since November 1993 and served as a Vice
President of the Manager from February 1995 through September 1996 and as
president since October 1, 1996. From 1991 to 1993, Ms. Fox was Senior Vice
4
<PAGE>
President of NHP Capital Corp. in Washington, D.C., a subsidiary of NHP, Inc.
From 1987 to 1991, Ms. Fox was Vice President of Finance/MIS at NHP Property
Management Inc., also a subsidiary of NHP, Inc.
KEVIN J. NYSTROM has served as Senior Vice President and Chief Financial
Officer of the Company and AIC since October 1996, and served as Vice President
and Chief Accounting Officer of the Company from its organization through
September 1996 and of AIC from January 1993 through September 1996. He has been
employed by the Manager since September 1992. Prior to joining the Manager, Mr.
Nystrom held a series of positions, most recently as a Senior Manager, with
Deloitte & Touche from January 1985 to August 1992.
DONALD L. KORTZ has served as a Director of the Company and a member of its
Audit and Compensation Committees since its organization in 1993. He served as a
Director of AIC from June 1988 until August 1993. Mr. Kortz served as President
and Chief Executive Officer of Fuller & Company, a Denver-based commercial real
estate broker, from April 1987 until October 1995, when he was appointed
President and Chief Executive Officer of Rose Community Foundation. Previously,
Mr. Kortz served as Chairman of the Board of Trustees of the Rose Health Care
Systems, the holding company of Rose Medical Center, Denver, Colorado and as a
member of the Denver Board of Water Commissioners. Mr. Kortz also is a member of
the Society of Fellows of the University of Denver and is a member of local,
state and federal bar associations and Realtors' associations.
RAYMOND T. BAKER has served as a Director of the Company, as a member of its
Compensation Committee and as Chairman of its Audit Committee since the Company
was organized in 1993. He served as a Director of AIC from December 1991 until
August 1993. He has been a partner of Gold Crown Management Co., a Denver-based
property management company, since 1974. Mr. Baker was a member of the Colorado
Economic Development Commission Advisory Board, was a member and Chairman of the
Colorado Economic Development Commission, is Chairman of the Metropolitan
Football Stadium District, is a member and Chairman of the Denver Metropolitan
Major League Baseball District, and is a member of the newly formed Key Bank,
NA, District of Colorado, Advisory Board.
ROBERT J. MALONE has served as a Director of the Company and a member of the
Audit and Compensation Committees since the Company was organized in 1993. He
served as a Director of AIC from February 1992 until August 1993. Mr. Malone is
Chairman of the Board of Colorado National Bank in Denver, Colorado. From 1969
to 1993, Mr. Malone served in various capacities, including chief executive and
senior executive capacities, with Central Banks/Bank Western, Western Capital
Investment Corporation, First Interstate Bank of Denver, First Interstate Bank
of Idaho and Bank of America, Los Angeles, California. He also serves on the
boards of numerous civic and charitable organizations including Chairman of the
Board of Directors of Colorado's Ocean Journey, Trustee and member of the
Executive Committee of the Denver Art Museum, Director of Colorado UpLIFT,
Trustee of the Denver Area Council Boy Scouts of America and Trustee and
Chairman of the Nominating Committee of the Denver Zoological Foundation.
BRUCE D. BENSON has served as a Director of the Company and AIC since
October 1996 and previously served as a Director of AIC and a member of its
Nominating Committee from February 1992 through November 1993. Effective October
1, 1996, Mr. Benson became an Owner of the Manager. For the past 28 years, he
has been President and Owner of Benson Mineral Group, Inc., a domestic oil and
gas production company located in Denver, Colorado. He serves on numerous Boards
of Trustees and Boards of Directors, including President Denver Zoological
Foundation; Chairman and Past President, Boy Scouts of America, Denver Area
Council; Past President and the Board of Trustees, Berkshire School, Sheffield,
Massachusetts; Past Trustee, Smith College, Northampton, Massachusetts; Past
Chairman, Colorado Commission on Higher Education; and past member, Board of
Directors, Colorado University Foundation. In 1994, he was the Republican
nominee for the Governor of Colorado.
5
<PAGE>
THOMAS C. FRIES has served as a Director of the Company since December 1996.
Since 1986, Mr. Fries has been the President and Owner of CP Company, a regional
distributor and lessor of refrigeration equipment located in Denver, Colorado.
From 1980 to 1995, Mr. Fries served as President and Owner of Cummins Power,
Inc., the Rocky Mountain area distributor for Cummins Engine Company, Inc. He
has served as Board Chairman of Colorado Outward Bound School and Junior
Achievement. He is a Board member of Mountain States Employers Council, Colorado
Outward Bound School and is a member of the American Alpine Club.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company's executive officers and Directors are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes in
ownership of securities of the Company with the Securities and Exchange
Commission (the "SEC") and the American Stock Exchange, Inc. Copies of those
reports also must be furnished to the Company. Based solely upon a review of the
copies of reports furnished to the Company and written representations that no
other reports were required, the Company believes that for the year ended
December 31, 1996, all required reports were filed on a timely basis.
COMPENSATION
SUMMARY COMPENSATION TABLE
The Company does not pay a salary, bonus or any other compensation to its
executive officers, other than stock options which may be granted to them from
time to time under the Plan, nor does it have any long-term incentive programs.
The Manager, at its expense, provides all personnel necessary to conduct the
regular business of the Company. The Manager receives various fees for advisory
and other services performed under the Management Agreement between the Company
and the Manager. All salaries, bonuses and other compensation (other than
dividend equivalent rights ("DERs") and options received by the executive
officers of the Company) are paid by the Manager. The Manager has not allocated
any portion of the compensation paid by it to the Company's executive officers
specifically for their services to the Company. A description of the Management
Agreement between the Company and the Manager and the fees paid by the Company
thereunder is included below under the caption "The Management Agreement."
The following table sets forth information regarding compensation paid to
the Company's Chief Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
AWARDS OF OPTIONS
(SHARES) LONG-TERM
NAME AND PRINCIPAL POSITIONS YEAR COMPENSATION(1)
- ------------------------------------------------------------------------------- --------- -------------------------
<S> <C> <C>
Spencer I. Browne, President and Chief Executive Officer, through September 30,
1996......................................................................... 1996 30,000
1995 30,000
1994 60,000
Terry Considine, Co-Chief Executive Officer, effective October 1, 1996......... 1996 --
Thomas L. Rhodes, Co-Chief Executive Officer, effective October 1, 1996........ 1996 --
</TABLE>
- ------------------------
(1) Does not reflect 5,498, 20,981 and 11,729 shares of Common Stock related to
DERs that accrued during 1996, 1995 and 1994, respectively, for the benefit
of Mr. Browne with respect to all stock options owned by him, all of which
DERs had been distributed as of April 9, 1997. Additionally, on
6
<PAGE>
May 30, 1996, Mr. Browne received 54,222 shares of Common Stock in exchange
for the elimination of the accrual of DERs on stock options held by him.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options granted during
1996 to the named executive officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
- -------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES AT STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED 1996(1) ($/SHARE)(2) DATE 5% 10%
- ------------------------------------- ----------- --------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Spencer I. Browne.................... 30,000 50.00% $ 5.8125 04/10/01 $ 48,177 $ 106,458
Terry Considine...................... -- -- -- -- -- --
Thomas L. Rhodes..................... -- -- -- -- -- --
</TABLE>
There were no Stock Appreciation Rights ("SARs") granted by the Company
during the year ended December 31, 1996.
- ------------------------
(1) The Company has no employees. The percentage reflected relates to all
options granted to employees of the Manager who are officers of the Company
or to employees of the Manager whose time is devoted substantially to the
Company. See "Summary Compensation Table" above and "The Management
Agreement" below.
(2) These options were granted under the Plan at an exercise price equal to the
market price of the Common Stock on the date of grant and currently are all
exercisable.
AGGREGATE OPTION EXERCISES DURING 1996 AND FISCAL YEAR-END OPTION VALUES TABLE
The Company's Chief Executive Officers held no stock options as of December
31, 1996, and did not exercise any options during 1996.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OF THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES EXCHANGE ACT OF 1934, THE FOLLOWING COMPENSATION
COMMITTEE REPORT AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED INTO ANY
FUTURE FILINGS WITH THE COMMISSION.
7
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company is responsible for determining
grants of stock options under the Plan. The Committee believes that stock
options serve to link management and shareowner interests and motivate
executives to make long-term decisions and investments that will serve to
increase the long-term total return to shareowners. Grants of stock options to
the Company's executive officers are intended to be consistent with competitive
practices within the industry.
The Committee awarded stock options to the executive officers of the Company
during 1996 as incentive for the executive officers with respect to, among other
things, implementation of the Company's business plan and as compensation for
attaining performance goals as determined by the Committee. During 1996, the
Committee considered the following factors in determining compensation to the
executive officers: (i) the increase in the Company's stock price over the year
and the total return to shareowners over the year compared with the performance
of the peer group demonstrated in the performance graph below; (ii) the
Company's improved earnings per share and resulting improved dividends per share
during 1996 compared to all prior years; and (iii) the performance of the
Company's portfolio of CMBS bonds during 1996.
With respect to salaries, bonuses and other annual compensation, the
Committee has no role in setting the compensation policies of, or the levels of
compensation to, the Company's executive officers. Pursuant to the Management
Agreement, such compensation is paid by the Manager. See "Summary Compensation
Table" above and "The Management Agreement" below.
COMPENSATION COMMITTEE
DONALD L. KORTZ
RAYMOND T. BAKER
ROBERT J. MALONE
THOMAS C. FRIES
8
<PAGE>
COMPENSATION PAID TO DIRECTORS
During 1996, each Independent Director of the Company received a fee of
$2,500 a month plus $300 for each meeting of the Board of Directors or Committee
thereof attended. In addition, all Directors are reimbursed for expenses related
to attending Board of Directors and Committee meetings.
The Independent Directors of the Company also are eligible to receive grants
of stock options under the Plan. During the year ended December 31, 1996,
Messrs. Baker, Kortz and Malone each was granted non-qualified stock options to
purchase up to 7,500 shares of Common Stock for $6.00 per share.
On April 10, 1996, the then Chairman of the Board was granted five-year,
non-qualified stock options under the Plan to purchase up to 30,000 shares of
Common Stock for $5.8125 per share.
PERFORMANCE GRAPH
The following graph compares the change in the cumulative total return of
the Common Stock for the period from October 13, 1993 (the first day of trading
of the Common Stock on the American Stock Exchange) to December 31, 1996, with
(i) the cumulative total return of the Standard & Poor's 500 Stock Index; and
(ii) a peer group. The companies comprising the peer group are BRT Realty Trust,
Continental Mortgage and Equity Trust and PIMCO Commercial Mortgage Securities,
Inc.
The graph was prepared based on the following assumptions: (a) $100 was
invested in (i) the Common Stock on October 13, 1993 (the first day of trading
of the Common Stock on the American Stock Exchange) at the close of business;
(ii) stock of the companies in the Standard & Poor's 500 Index on September 30,
1993 at the close of business; and (iii) stock of the peer group companies on
October 13, 1993 (the first date of trading of the Common Stock on the American
Stock Exchange) at the close of business; and (b) all dividends received were
reinvested in the shares of Common Stock in the month in which they were
received.
THE STOCK PRICE PERFORMANCE SHOWN ON THE GRAPH IS NOT NECESSARILY INDICATIVE
OF FUTURE PRICE PERFORMANCE.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAX PEER GROUP S & P 500
<S> <C> <C> <C>
10/13/93 $100.00 $100.00 $100.00
12/31/93 99.00 91.00 102.00
12/31/94 96.00 93.00 104.00
12/31/95 109.00 103.00 142.00
12/31/96 147.00 140.00 175.00
</TABLE>
9
<PAGE>
THE MANAGEMENT AGREEMENT
The Company entered into a management agreement (the "Management Agreement")
with Financial Asset Management LLC (the "Manager") on August 20, 1993, pursuant
to which the Manager performs the services and activities described below, among
others, relating to the assets and operations of the Company. The Management
Agreement provided for an initial term of one year, subject to extension by
agreement between the Company and the Manager. The Management Agreement has been
amended and extended through December 31, 1997. The terms appearing below in
quotes not defined herein are defined in the Management Agreement and have the
meanings ascribed to them therein.
The Manager advises the Company on its business and oversees the Company's
day-to-day operations, subject to the supervision of the Board of Directors of
the Company. The Manager also is obligated to present to the Company asset
acquisition opportunities consistent with the policies and objectives of the
Company and to furnish the Board of Directors of the Company with information
concerning the acquisition, holding and disposition of portfolio assets.
The Management Agreement is approved annually by the Independent Directors.
It may be terminated by either party with or without cause at any time upon 60
days' written notice. In addition, the Company has the right to terminate the
Management Agreement upon the occurrence of certain specified events including,
among other things, a breach by the Manager of any material provision which
breach remains uncured for 30 days or the bankruptcy of the Manager. The
Management Agreement also may be terminated at any time by a majority vote of
the Independent Directors or holders of the Common Stock of the Company. The
Manager is entitled to certain termination payments in the event of an
acquisition of the Company which results in the termination of the Management
Agreement.
The Manager receives various fees for the advisory and other services
performed in connection with the Management Agreement. The Manager, at its
expense, provides all personnel and certain overhead items necessary to conduct
the regular business of the Company.
The Company has agreed to indemnify the Manager and its affiliates with
respect to all expenses, losses, damages, liabilities, demands, charges or
claims of any nature in respect of acts or omissions of the Manager made in good
faith and in accordance with the standards set forth in the Management
Agreement.
Under the Management Agreement, the Manager may receive a base fee, an
incentive fee, an acquisition fee and an administrative fee. The base fee,
payable quarterly, is 1% of the "average invested assets" of the Company for
such year.
The incentive fee is based on the Company's profitability. The Manager is
entitled to the incentive fee only after the Company's REIT income exceeds a
return on the Company's "Average Net Worth" equal to the "Ten-Year U.S. Treasury
Rate" plus 1%. Twenty percent of the Company's REIT income in excess of this
amount is paid to the Manager as the incentive fee.
The acquisition fee equals 1/2 of 1% of the initial cost of each portfolio
asset which the Manager assists the Company to acquire. The purpose of the
acquisition fee is to reimburse the Manager for its employee costs related to
the due diligence procedures it performs in connection with the Company's
acquisition of portfolio assets.
The Manager also performs certain bond administration and other related
services for the Company pursuant to the Management Agreement and receives an
administrative fee for such services in relation to the complexity of the
transaction and the services required.
The Company declared an aggregate of $7,398,000 in dividends to its
shareowners for the year ended December 31, 1996. For the same period, the
Manager earned base fees of $654,000, administrative fees of $58,000 and
incentive fees of $713,000, respectively. The Manager did not receive any
acquisition fees during 1996.
10
<PAGE>
Prior to April 1, 1996, the Company was managed by Financial Asset
Management Corporation, a wholly owned subsidiary of MDC Holdings, Inc. ("MDC").
Effective April 1, 1996, Financial Asset Management LLC assumed the Management
Agreement. From April 1, 1996, through September 30, 1996, the Manager was 80%
owned by two wholly owned subsidiaries of MDC and 20% owned by Spencer I. Browne
who was at the time the President, Chief Executive Officer and a Director of the
Company. On September 30, 1996, MDC acquired Mr. Browne's 20% interest in the
Manager and then sold 100% of the Manager to an investor group led by Terry
Considine and Thomas L. Rhodes. MDC received sales proceeds of $11,450,000,
including $6,000,000 of cash and $5,450,000 of subordinated convertible notes.
The notes are payable at specified dates during the next ten years and are
convertible, under certain circumstances, into as much as a 47.6% ownership
interest in the Manager.
In connection with the sale, Larry A. Mizel resigned as Chairman of the
Board of Directors and Mr. Browne resigned as President, Chief Executive Officer
and a Director of the Company. Terry Considine was elected as Co-Chairman of the
Board of Directors and Co-Chief Executive Officer, Thomas L. Rhodes was elected
as Co-Chairman of the Board and Co-Chief Executive Officer and Leslie B. Fox was
elected as President of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of April 9, 1997, the number of shares of
Common Stock beneficially owned by (i) each person known to the Company to be a
beneficial owner of more than 5% of its Common Stock; (ii) all Directors,
individually, and each executive officer of the Company named in the Summary
Compensation Table, individually; and (iii) all of the Company's Directors and
executive officers as a group, which information was furnished in part by each
such person.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS(4)
- ---------------------------------------------------------------------------------- ------------------ -------------
<S> <C> <C>
Asset Investors Corporation....................................................... 2,761,126 26.8
3600 South Yosemite Street
Suite 350
Denver, Colorado 80237
Terry Considine................................................................... -- *
Thomas L. Rhodes.................................................................. -- *
Donald L. Kortz................................................................... 86,437 *
Raymond T. Baker.................................................................. 77,810 *
Robert J. Malone.................................................................. 84,703 *
Bruce D. Benson................................................................... 22,703 *
Thomas C. Fries................................................................... -- *
All Directors and executive officers as a group (nine persons)(3)................. 313,285 3.0
</TABLE>
- ------------------------
* Denotes ownership of less than 1% of the outstanding shares of Common Stock.
(1) Includes, where applicable, shares of Common Stock owned by such person's
minor children and spouse and by other related individuals and entities.
Unless otherwise indicated, such person has sole voting and investment power
as to the shares listed.
(2) Includes the following shares of Common Stock which such persons had the
right to acquire within 60 days after April 9, 1997, through the exercise of
stock options granted under the Plan: Donald L. Kortz--45,625 shares;
Raymond T. Baker--45,625 shares; Robert J. Malone--45,625 shares; and all
Directors and executive officers as a group--164,375 shares.
(3) Does not include 2,761,126 shares of Common Stock owned beneficially by AIC.
Messrs. Considine and Rhodes are Co-Chairmen of the Board of Directors and
Co-Chief Executive Officers of AIC.
11
<PAGE>
(4) All shares of Common Stock which a person had the right to acquire within 60
days after April 9, 1997, were deemed to be outstanding for the purpose of
computing the "Percent of Class" owned by such person but were not deemed to
be outstanding for the purpose of computing the "Percent of Class" owned by
any other person. At April 9, 1997, 10,315,809 shares of Common Stock were
outstanding.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was formed in August 1993 as a wholly owned subsidiary of AIC.
In October 1993, AIC distributed approximately 70% of the outstanding shares of
Common Stock of the Company to the shareowners of AIC (the "Distribution"). At
the time of the Distribution, the Company was approved for listing on the
American Stock Exchange, Inc. and, thereafter, commenced its operations. As
reflected in the table under "Security Ownership of Certain Beneficial Owners
and Management," AIC currently owns approximately 27% of the Common Stock of the
Company. The Directors, other than the Independent Directors, and the officers
of the Company are Directors and the officers of Asset Investors Corporation,
respectively. The Company's day-to-day operations are performed by the Manager.
See "The Management Agreement" above.
In connection with the Company's formation, AIC and the Company entered into
a Contribution Agreement pursuant to which, among other things, AIC contributed
$74,800,000 to the capital of the Company plus interest in the amount of
$791,000. The Contribution Agreement also provided that neither AIC nor the
Company assumed any liability or obligation of the other. Each party agreed to
indemnify the other against any such liability or obligation.
The Contribution Agreement also provides that the Company will not acquire
interests in single-family (one to four-unit) residential mortgage loan
securitizations and that AIC will not acquire interests in commercial mortgage
loan securitizations, including securitizations of mortgage loans backed by
multi-family residential properties.
The Company has determined that AIC's ownership of its Common Stock does not
jeopardize the qualification of the Company as a REIT, and has exempted AIC from
any restrictions on ownership of Common Stock which may be adopted by the
Company, unless there is a change in law or regulation that causes AIC's
ownership of the Common Stock to jeopardize the Company's status as a REIT. If
such a change in law or regulation should occur, the Company may adopt such
provisions as are necessary to maintain its status as a REIT, provided that such
provisions, and the enforcement of such provisions, shall be in such a manner as
to cause the least interference with AIC's ownership of securities of the
Company and shall provide for the payment to AIC of an amount at least equal to:
(i) the closing price of the Common Stock on the last business day prior to the
redemption date on the principal national securities exchange on which the
Common Stock is listed or admitted to trading; or (ii) if not so listed or
admitted to trading, the closing bid price on such last business day as reported
on the NASDAQ System, if quoted thereon; or (iii) if not determinable as
aforesaid, the net asset value of the Common Stock redeemed, as determined in
good faith by the Board of Directors of the Company for any such securities to
be redeemed. Notwithstanding the foregoing, in no event may the redemption price
of the Common Stock be greater than the net asset value of the Common Stock
redeemed, as determined in good faith by the Board of Directors.
In connection with the Distribution, the Company and AIC entered into a
Registration Rights Agreement which, among other things, provides that upon the
request of AIC, the Company will use its best efforts to register under the
Securities Act of 1933 any of the shares of Common Stock currently held or
hereafter acquired by AIC for sale in accordance with AIC's intended method of
disposition thereof and will take such other actions necessary to permit the
sale thereof in other jurisdictions. AIC has the right to request three such
registrations. Each of AIC and the Company has agreed to pay one half of all
costs and expenses in connection with each such registration. AIC also has the
right, which it may exercise at any time and from time to time in the future, to
include the shares of Common Stock held by it in certain other
12
<PAGE>
registrations of securities initiated by the Company on its own behalf or on
behalf of its shareowners. The rights of AIC under the Registration Rights
Agreement are, under certain circumstances, transferable by AIC.
Messrs. Considine and Rhodes each serve as an executive officer and Director
of the Company and Mr. Benson serves as a Director of the Company. Additionally,
Messrs. Considine, Rhodes and Benson combined have an 82% ownership interest in
the Manager. The Manager receives management fees from the Company under the
Management Agreement. Messrs. Considine, Rhodes and Benson may be deemed to have
an interest in the Management Agreement, even though the Management Agreement
has been approved by the Independent Directors. For a description of the
Management Agreement between the Company and the Manager and the fees paid by
the Company thereunder, see "Management Agreement" above.
From time to time, the Company engages PageWorks + Tri-Design ("PageWorks"),
a marketing and communications firm owned by the brother-in-law of the former
Chairman of the Board, Mr. Mizel, for graphic design, artwork and other services
related to the Company's shareowner reports. During 1996, the Company paid
PageWorks approximately $16,000.
COMPANY'S RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors of the Company appointed the firm of Ernst & Young
LLP to audit the financial statements of the Company through December 31, 1996.
A representative of Ernst & Young LLP is expected to be present at the Meeting
and available to respond to appropriate questions. Ernst & Young LLP has
indicated that it will not make a statement, although an opportunity for a
statement will be provided. Shareowners are not being requested to ratify this
appointment.
OTHER MATTERS
Management and the Board of Directors of the Company know of no matters to
be brought before the Meeting other than as set forth herein. However, if any
such other matters properly are presented to the shareowners for action at the
Meeting and any adjournments or postponements thereof, it is the intention of
the proxy holders named in the enclosed proxy to vote in their discretion on all
matters on which the shares represented by such proxy are entitled to vote.
SHAREOWNER PROPOSALS TO BE INCLUDED IN THE 1998 PROXY STATEMENT
Shareowner proposals to be considered for inclusion in the proxy statement
for the 1998 Annual Meeting of Shareowners must be received by the Company on or
before November 19, 1997.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ TERRY CONSIDINE
TERRY CONSIDINE
CO-CHAIRMAN OF THE BOARD
/s/ THOMAS L. RHODES
THOMAS L. RHODES
CO-CHAIRMAN OF THE BOARD
April 14, 1997
13
<PAGE>
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ITEM 1.
- -------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Item 1
Item 1. Election of directors
__ Nominees to Class I: (A) Thomas L. Rhodes (B) Raymond T. Baker
(C) Thomas C. Fries
__ Nominees to Class II: (D) Bruce D. Benson
__ Nominees to Class III: (E) Terry Considine
/ / Vote FOR all nominees
/ / Vote WITHHELD from all nominees
/ / Vote FOR ALL EXCEPT
(use letter before nominee's name to indicate exceptions): ____
- -------------------------------------------------------------------------------
Item 2. In their discretion, to vote upon other matters properly coming
before the meeting.
----------------------------------------
Signature
----------------------------------------
Signature
----------------------------------------
Date
Please sign, exactly as your name(s)
appear above. If held in joint tenancy,
all persons must sign. Trustees,
administrators, etc. should include title
and authority. Corporations should provide
full name of corporation and title of
authorized officer signing the proxy.
<PAGE>
COMMERCIAL ASSETS, INCORPORATED
3600 SOUTH YOSEMITE STREET SUITE 350
DENVER, COLORADO 80237 PROXY
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL
MEETING ON TUESDAY, MAY 20, 1997.
The undersigned hereby appoints Terry Considine, Thomas L. Rhodes, Leslie B.
Fox, John C. Singer or any one of them, as proxies or proxy for the
undersigned, each with full power of substitution and resubstitution, to
attend the 1997 Annual Meeting of Shareowners and any adjournments or
postponements thereof and to vote as designated on the reverse side hereof,
all the shares of Common Stock of Commercial Assets, Inc. held of record by
the undersigned on April 9, 1997. In their discretion, the proxies are hereby
authorized to vote upon such other business as may properly come before the
Meeting and any adjournments or postponements thereof.
PLEASE COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THIS CARD.
(CONTINUED, AND TO BE SIGNED ON THE OTHER SIDE)
