<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 Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[x] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
SPIEKER PROPERTIES, 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[SPIEKER PROPERTIES, INC. LETTERHEAD]
April 16, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Spieker Properties, Inc., a Maryland corporation (the "Company"), to be held
at the Doubletree Hotel, 2050 Gateway Place, San Jose, California, on June 10,
1998, at 10:30 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
matters expected to be acted upon at the meeting. We urge you to review these
materials carefully. Please use this opportunity to take part in the Company's
affairs by voting on the business to be presented at the meeting. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE, AND RETURN THE
ACCOMPANYING PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU
MAY VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY MAILED YOUR PROXY CARD.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Warren E. Spieker, Jr.
WARREN E. SPIEKER, JR.
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
SPIEKER PROPERTIES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
------------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of Spieker
Properties, Inc., a Maryland corporation (the "Company"), will be held at the
Doubletree Hotel, 2050 Gateway Place, San Jose, California, on June 10, 1998, at
10:30 a.m., local time, to consider and vote upon the following proposals:
1. To elect two directors of the Company to serve until the 2001 Annual
Meeting of Stockholders and until their respective successors are
elected and qualified: David M. Petrone and Dennis E. Singleton as Class
II directors for a three-year term.
2. To ratify the retention of Arthur Andersen LLP as the independent
auditors for the Company for the year ending December 31, 1998.
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors, are
more fully described in the Proxy Statement which is attached and made a part of
this Notice.
The Board of Directors has fixed the close of business on April 3, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE TO ENSURE YOUR REPRESENTATION
AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU SEND IN YOUR PROXY
CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES IN PERSON,
YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES
SET FORTH IN THE PROXY STATEMENT.
By Order of the Board of Directors,
/s/ Warren E. Spieker, Jr.
WARREN E. SPIEKER, JR.
Chairman of the Board and
Chief Executive Officer
Menlo Park, California
April 16, 1998
<PAGE> 4
MAILED TO STOCKHOLDERS ON OR ABOUT APRIL 16, 1998
SPIEKER PROPERTIES, INC.
2180 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
-------------------------------
PROXY STATEMENT
-------------------------------
This Proxy Statement is furnished to stockholders of Spieker Properties,
Inc., a Maryland corporation (the "Company"), in connection with the
solicitation by the Company's Board of Directors (the "Board") of proxies in the
accompanying form for use in voting at the Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held on June 10, 1998, at 10:30 a.m., local
time, at the Doubletree Hotel, 2050 Gateway Place, San Jose, California, and any
adjournment or postponement thereof.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by delivering to the Company (to
the attention of Ms. Sara H. Reynolds, the Company's Secretary) a written notice
of revocation or a properly executed proxy bearing a later date, or by attending
the Annual Meeting and voting in person.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail and the Company will
bear all attendant costs. These costs will include the expense of preparing and
mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock, par value $0.0001 per share (the "Common Stock"). The
Company may use the services of D.F. King & Co., Inc., 77 Water Street, 20th
Floor, New York, New York 10005 to assist in soliciting proxies and, in such
event, the Company expects to pay approximately $10,000 for such services. The
Company may conduct further solicitation personally, telephonically or by
facsimile through its officers, directors, and regular employees, none of whom
will receive additional compensation for assisting with the solicitation.
The presence at the Annual Meeting, either in person or by proxy, of
stockholders entitled to cast a majority of all the votes entitled to be cast at
the Annual Meeting will constitute a quorum for the transaction of business at
the Annual Meeting. Holders of the Company's Common Stock and Series A Preferred
Stock, par value $0.0001 per share (the "Series A Preferred Stock"), are
entitled to vote at the Annual Meeting. The close of business on April 3, 1998
(the "Record Date") has been fixed as the record date for determining the
holders of shares of Common Stock and Series A Preferred Stock entitled to
notice of and to vote at the Annual Meeting. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on all matters. As of the
Record Date, there were 57,558,803 shares of Common Stock outstanding. The
holders of the Series A Preferred Stock have the right to one vote for each
share of Common Stock into which such Series A Preferred Stock can be converted
and are entitled to vote, together with holders of Common Stock, with respect to
any question upon which holders of Common Stock have the right to vote. As of
the Record Date, there were 1,000,000 shares of Series A Preferred Stock
outstanding, which are convertible into 1,219,512 shares of Common Stock.
Stockholder votes will be tabulated by the persons appointed by the Board
to act as inspectors of election for the Annual Meeting. The New York Stock
Exchange permits member organizations to give proxies, whether or not
instructions have been received from beneficial owners, to vote as to the
election of directors and also on the matters of the type contained in Proposal
No. 2. Shares represented by a properly executed and delivered proxy will be
voted at the Annual Meeting and, when instructions have been given by the
<PAGE> 5
stockholder, will be voted in accordance with those instructions. If no
instructions are given, the shares will be voted FOR the election of each of the
two nominees for director named below and FOR Proposal No. 2.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth the beneficial ownership of shares of Common
Stock as of the Record Date for (i) each director and each of the executive
officers named in the Summary Compensation Table below, (ii) all directors and
such executive officers of the Company as a group, and (iii) each person known
by the Company to hold more than 5% of the outstanding shares of the Company's
Common Stock. Except as otherwise noted below, all shares of Common Stock are
owned beneficially by the individual listed with sole voting and/or investment
power.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
PERCENTAGE OF OUTSTANDING
PERCENTAGE OF SHARES ASSUMING
SHARES OUTSTANDING CONVERSION OF
OUTSTANDING ASSUMING OPERATING
AMOUNT AND ASSUMING CONVERSION OF PARTNERSHIP UNITS
NATURE OF PERCENTAGE OF CONVERSION OF OPERATING AND SERIES A
NAME AND BUSINESS ADDRESS OF BENEFICIAL SHARES SERIES A PREFERRED PARTNERSHIP PREFERRED
BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING(2) STOCK(3) UNITS(4) STOCK(5)
---------------------------- ------------ -------------- ------------------ ------------- -----------------
<S> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr.(6)(7).... 2,820,579 4.9 4.8 4.3 4.2
Dennis E. Singleton(6)(8)....... 857,513 1.5 1.5 1.3 1.3
John K. French(6)(9)............ 671,563 1.2 1.1 1.0 1.0
John A. Foster(6)(10)........... 258,626 * * * *
Craig G. Vought(6)(11).......... 251,108 * * * *
Richard J. Bertero(6)(12)....... 6,125 * * * *
Harold M. Messmer, Jr.(6)(13)... 90,525 * * * *
David M. Petrone(6)(14)......... 9,125 * * * *
William S. Thompson,
Jr.(6)(15).................... 8,625 * * * *
All directors and executive
officers as a group (nine
persons)(16).................. 4,963,332 8.6 8.4 7.6 7.4
Cohen & Steers Capital
Management, Inc.(17).......... 4,704,500 8.2 8.0 7.2 7.1
The Equitable Companies
Incorporated(18).............. 3,435,959 6.0 5.8 5.3 5.2
FMR Corp.(19)................... 3,278,600 5.7 5.6 5.0 4.9
</TABLE>
- ---------------
* Less than 1%
(1) In consideration of the contributions of their interests in the Company's
original properties as part of the formation of the Company in 1993, Mr.
Spieker, certain officers of the Company and one other individual retained
beneficial ownership of limited partnership interests in Spieker
Properties, L.P., a California limited partnership (the "Operating
Partnership") in which the Company has a general partnership and a limited
partnership interest. The limited partners of the Operating Partnership
share with the Company, as general partner, in the net income or loss and
any distributions of the Operating Partnership. Pursuant to the Second
Amended and Restated Agreement of Limited Partnership of Spieker
Properties, L.P., which was adopted on October 13, 1997 by the Company as
general partner and by the limited partners of the Operating Partnership,
the partnership interests are expressed as partnership units based upon an
exchange ratio of one partnership unit for one share of the Company's
Common Stock, which exchange ratio is subject to modification based upon
certain events.
(2) Assumes conversion of only the partnership units in the Operating
Partnership or shares of Series A Preferred Stock owned by such person into
shares of Common Stock and includes only shares of
2
<PAGE> 6
Common Stock subject to options held by such person that are exercisable
within 60 days of the Record Date. The total number of shares outstanding
used in calculating this percentage assumes that none of the partnership
units or Series A Preferred Stock held by other persons are converted into
shares of Common Stock. The total number of shares outstanding used in
calculating this percentage excludes the number of shares of Common Stock
subject to options held by other persons that are exercisable within 60
days of the Record Date.
(3) Assumes conversion of all outstanding shares of Series A Preferred Stock
into shares of Common Stock and includes only shares of Common Stock
subject to options held by such person that are exercisable within 60 days
of the Record Date. The total number of shares outstanding used in
calculating this percentage excludes the number of shares of Common Stock
subject to options held by other persons that are exercisable within 60
days of the Record Date and excludes the number of shares of Common Stock
issuable upon conversion of partnership units in the Operating Partnership
held by other persons.
(4) Assumes conversion of all outstanding partnership units in the Operating
Partnership (other than partnership units held by the Company) into shares
of Common Stock and includes only shares of Common Stock subject to options
held by such person that are exercisable within 60 days of the Record Date.
The total number of shares outstanding used in calculating this percentage
excludes the number of shares of Common Stock subject to options held by
other persons that are exercisable within 60 days of the Record Date and
excludes shares of Common Stock issuable upon conversion of shares of
Series A Preferred Stock held by other persons.
(5) Assumes conversion of all outstanding shares of Series A Preferred Stock
and all outstanding partnership units in the Operating Partnership (other
than partnership units held by the Company) into shares of Common Stock and
includes only shares of Common Stock subject to options held by such person
that are exercisable within 60 days of the Record Date. The total number of
shares outstanding used in calculating this percentage excludes the number
of shares of Common Stock subject to options held by other persons that are
exercisable within 60 days of the Record Date.
(6) The business address of such person is 2180 Sand Hill Road, Menlo Park,
California 94025.
(7) Includes 2,462,502 shares of Common Stock that may be issued upon the
conversion of all of Mr. Spieker's partnership units in the Operating
Partnership, 100,000 shares of Common Stock held directly, 22,127 shares of
restricted Common Stock, 234,500 shares of Common Stock subject to options
that are exercisable within 60 days of the Record Date and 1,450 shares of
Common Stock owned by Mr. Spieker's wife and children and deemed
beneficially owned by Mr. Spieker. In March 1997, Mr. Spieker donated
approximately $1.4 million in value of Common Stock owned by him to
charitable organizations and schools and he intends to donate up to $1.5
million in value of Common Stock owned by him each year for the next three
years to charitable organizations. In December 1997, Mr. Spieker also
donated approximately $1.8 million in value of Common Stock owned by him to
charitable organizations.
(8) Includes 692,945 shares of Common Stock that may be issued upon the
conversion of all of Mr. Singleton's partnership units in the Operating
Partnership, 9,500 shares of Common Stock held directly, 9,668 shares of
restricted Common Stock, 144,500 shares of Common Stock subject to options
that are exercisable within 60 days of the Record Date and 900 shares of
Common Stock held by Mr. Singleton as custodian for his children. Mr.
Singleton may be deemed to have beneficial ownership of such 900 shares.
(9) Includes 527,195 shares of Common Stock that may be issued upon conversion
of all of Mr. French's partnership units in the Operating Partnership,
4,700 shares of Common Stock held directly, 9,668 shares of restricted
Common Stock and 130,000 shares of Common Stock subject to options that are
exercisable within 60 days of the Record Date.
(10) Includes 144,475 shares of Common Stock that may be issued upon the
conversion of all of Mr. Foster's partnership units in the Operating
Partnership, 89,400 shares of Common Stock subject to options that are
exercisable within 60 days of the Record Date and 24,751 shares of
restricted Common Stock.
3
<PAGE> 7
(11) Includes 105,440 shares of Common Stock that may be issued upon the
conversion of all of Mr. Vought's partnership units in the Operating
Partnership, 133,000 shares of Common Stock subject to options that are
exercisable within 60 days of the Record Date and 12,668 shares of
restricted Common Stock.
(12) Includes 2,000 shares of Common Stock held directly and 4,125 shares of
Common Stock subject to options that are exercisable within 60 days of the
Record Date.
(13) Includes 85,225 shares of Common Stock held directly and 5,300 shares of
Common Stock held by Mr. Messmer, as custodian for his children. Mr.
Messmer disclaims beneficial ownership of such 5,300 shares.
(14) Includes 5,000 shares of Common Stock held directly and 4,125 shares of
Common Stock subject to options that are exercisable within 60 days of the
Record Date.
(15) Includes 3,000 shares of Common Stock, 4,125 shares of Common Stock subject
to options that are exercisable within 60 days of the Record Date and 1,500
shares of Common Stock held by Mr. Thompson for his children. Mr. Thompson
disclaims beneficial ownership of such 1,500 shares.
(16) Includes 3,933,267 shares of Common Stock that may be issued upon the
conversion of partnership units in the Operating Partnership owned by
Messrs. Spieker, Singleton, French, Foster and Vought and 743,275 shares of
Common Stock subject to options that are exercisable in the aggregate by
all the directors and executive officers within 60 days of the Record Date.
(17) Share amounts as reported on Schedule 13G filed with the Securities and
Exchange Commission on February 12, 1998. Address: 757 Third Avenue, New
York, New York 10017. Cohen & Steers Capital Management, Inc., an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940 (the "Investment Act"), has the sole power to vote or direct
the vote of 4,073,200 of such shares and sole power to dispose of 4,704,500
shares of Common Stock.
(18) Share amount as reported on Schedule 13G filed with the Securities and
Exchange Commission on February 17, 1998. Address: 1290 Avenue of the
Americas, New York, New York 10104. Includes (i) 6,000 shares owned by The
Equitable Life Assurance Society of the United States, a majority owned
subsidiary of The Equitable Companies Incorporated, which is deemed to have
the shared power to vote all of such shares and the sole power to dispose
of all such shares, (ii) 3,237,700 owned by Alliance Capital Management,
L.P., a subsidiary of The Equitable Companies Incorporated, which holds
such shares for investment advisory clients and is deemed to have the sole
power to vote 265,000 shares and the sole power to dispose of all such
shares, (iii) 191,180 shares owned by Donaldson, Lufkin & Jenrette
Securities Corporation, a subsidiary of The Equitable Companies
Incorporated, which holds such shares for investment advisory clients and
is deemed to have the shared power to dispose of all such shares, and (iv)
1,079 shares owned by Wood, Struthers & Winthrop Management Corp., a
subsidiary of The Equitable Companies Incorporated, which holds such shares
for investment advisory clients and is deemed to have the sole power to
dispose of all such shares. Five French mutual insurance companies, AXA
Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle, and AXA Courtage Assurance Mutuelle, as a group,
and AXA-UAP, a French corporation, may each be deemed to be a parent
company of The Equitable Companies Incorporated, and may also be deemed to
beneficially own such shares.
(19) Share amount as reported on Schedule 13G filed with the Securities and
Exchange Commission on February 11, 1998. Address: 82 Devonshire Street,
Boston, Masssachusetts 02109. Includes (i) 2,996,600 shares owned by
Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., which holds such shares for investment advisory
clients, (ii) 2,996,600 shares owned by Edward C. Johnson III, Chairman of
FMR Corp., and FMR Corp., through its control of Fidelity, and each is
deemed to have sole power to dispose of such shares, (iii) 282,000 shares
owned by Fidelity Management Trust Company ("Fidelity Management"), a
wholly-owned subsidiary of FMR Corp., which holds such shares as investment
manager of certain institutional accounts, and (iv) 282,000 shares owned by
Mr. Johnson and FMR Corp., through its control of Fidelity Management, each
is deemed to have sole voting and dispositive power over such shares.
Neither FMR Corp. nor Mr. Johnson has the sole power to vote or direct the
voting of the shares owned directly by the
4
<PAGE> 8
Fidelity funds, which power resides with such funds' Board of Trustees and
Fidelity carries out the voting of the shares under guidelines established
by such Board of Trustees.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divides the Company's Board of
Directors into three classes. The members of each class of directors serve
staggered three-year terms and continue in office until their respective terms
expire and until their successors are duly elected and qualified.
At the Annual Meeting, the stockholders will elect nominees David M.
Petrone and Dennis E. Singleton to serve as Class II directors. The Class II
directors will serve until the Annual Meeting of Stockholders to be held in 2001
and until such directors' respective successors are elected or appointed and
qualified or until any such director's earlier resignation or removal. The Board
believes that each such nominee will stand for election and will serve if
elected as a director. However, in the event any nominee is unable or unwilling
to serve as a director at the time of the Annual Meeting, the proxies may be
voted for the balance of those nominees named and for any substitute nominee
designated by the present Board or the proxy holders to fill such vacancy, or
for the balance of those nominees named without nomination of a substitute, or
the Board may be reduced in accordance with the Bylaws of the Company.
The affirmative vote of a plurality of all the votes cast at the Annual
Meeting, assuming a quorum is present, is necessary for the election of a
director. For purposes of the election of directors, abstentions and other
shares not voted will not be counted as votes cast and will have no effect on
the result of the vote.
Certain information about such nominees is furnished below.
David M. Petrone. Mr. Petrone has served as a Director of the Company since
December 1993. Mr. Petrone is Chairman of Housing Capital Company. Until 1992,
Mr. Petrone was Vice Chairman of Wells Fargo and Company. Mr. Petrone was
previously President and CEO of Wells Fargo Realty Advisors as well as President
and CEO of Wells Fargo Mortgage and Equity Trust, a publicly held REIT ("Real
Estate Investment Trust") with assets of $500,000,000. During his tenure with
Wells Fargo he also became head of wholesale banking as well as its senior
lending officer. Mr. Petrone serves on the Board of Directors of Jacobs
Engineering and Alexandria Real Estate Equities, Inc. He received a Bachelor of
Science and a Masters in Business Administration from the University of Oregon,
where he serves as a trustee.
Dennis E. Singleton. Mr. Singleton has served as a Director of the Company
since August 1993. Mr. Singleton is Vice Chairman of the Board of Directors and
is responsible for leading the Company's efforts to build a brand identity, as
well as for increasing the value-added services the Company provides to its
tenants. Additionally, Mr. Singleton is involved with identifying and analyzing
strategic portfolio acquisition and operating opportunities for the Company.
Since joining the Company's predecessor in 1972, Mr. Singleton has overseen the
development and acquisition of more than 28,000,000 square feet of commercial
properties representing an investment of over $3 billion. Mr. Singleton received
a Bachelor of Science from Lehigh University and a Masters in Business
Administration from Harvard Graduate School of Business Administration.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE
5
<PAGE> 9
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and the executive officers as of the mailing date of this Proxy
Statement, including their ages.
<TABLE>
<CAPTION>
DIRECTOR TERM
------------------
NAME AGE POSITION ELECTED EXPIRES
---- --- -------- ------- -------
<S> <C> <C> <C> <C>
Warren E. Spieker, Jr. 53 Director, Chairman of the Board 1997 2000
and Chief Executive Officer
Dennis E. Singleton 53 Director and Vice Chairman of the 1995 1998
Board
John K. French 53 Director, Executive Vice 1996 1999
President and Chief Operating
Officer
John A. Foster 39 Executive Vice President and -- --
Chief Investment Officer
Craig G. Vought 38 Executive Vice President and -- --
Chief Financial Officer
Richard J. Bertero 58 Director 1997 2000
Harold M. Messmer, Jr. 52 Director 1997 2000
David M. Petrone 53 Director 1995 1998
William S. Thompson, Jr. 52 Director 1996 1999
</TABLE>
Biographical information concerning the director nominees is set forth
above under the caption "Proposal No. 1 Election of Directors." Biographical
information concerning the remaining directors and executive officers is set
forth below.
Richard J. Bertero. Mr. Bertero has served as a Director of the Company
since December 1993. Mr. Bertero is a partner in Hogland, Bogart and Bertero, a
San Francisco Bay Area real estate firm. Mr. Bertero was associated with the
RREEF Funds as a founding partner from 1975 until his retirement in 1992. At
RREEF, he was instrumental in many aspects of RREEF's development over the
years, including the acquisition and disposition of commercial properties and
portfolio management. He served on RREEF's policy committee as well as on the
investment committee. Prior to his employment at RREEF, Mr. Bertero had been
associated with Coldwell Banker for ten years. He is a graduate of the
University of California at Berkeley.
John A. Foster, Executive Vice President and Chief Investment Officer of
the Company, is responsible for the overall management and control of the
Company's acquisition, development, and divestment activities, including the
development and implementation of the Company's strategic growth plans. Prior to
January 1, 1998, as Regional Senior Vice President, Mr. Foster was responsible
for the firm's operations in the Silicon Valley area of Northern California,
including new development, acquisitions and property management. Mr. Foster is a
past president of NAIOP (National Association of Industrial and Office
Parks) -- Silicon Valley Chapter. Prior to joining the Company, he was employed
by AT&T and Bain & Co. Mr. Foster received a Bachelor of Arts from Kalamazoo
College and a Masters in Business Administration from Stanford University.
John K. French, Director, Executive Vice President and Chief Operating
Officer of the Company, is responsible for the Company's day-to-day operations
including the leasing, marketing and management of the Company's properties. In
his capacity as Chief Operating Officer, Mr. French is responsible for the
operating results of properties representing approximately 35,000,000 square
feet. Mr. French has extensive experience in all aspects of development
activities including land acquisition, entitlement process, design, construction
and marketing, as well as the management of teams of people involved in the
development process. Since joining the Company's predecessor in 1974, Mr. French
has overseen the development and acquisition of more than 70 properties
representing over 8,000,000 square feet of commercial property in Northern
California and Idaho. Prior to graduate school, Mr. French served as a Captain
and Naval Aviator in the U.S. Marine Corps. He received a Bachelor of Arts from
Harvard College and a Masters in Business Administration from Harvard Graduate
School of Business Administration.
6
<PAGE> 10
Harold M. Messmer, Jr. Mr. Messmer has served as a Director of the Company
since December 1993. Mr. Messmer is Chairman and Chief Executive Officer of
Robert Half International, Inc. ("Robert Half"), the world's largest staffing
services firm specializing in professional personnel. Prior to joining Robert
Half in 1985, Mr. Messmer was Chief Executive Officer of Cannon Mills Company, a
member of the Office of the Chairman of Castle & Cooke, Inc. and served on the
Castle & Cooke Board of Directors. He was formerly a partner of the law firm of
O'Melveny & Myers. He currently serves on the Board of Directors of Airborne
Freight Corporation and Health Care Property Investors, Inc. He is a graduate of
Loyola University and the New York University School of Law.
Warren E. "Ned" Spieker, Jr., Chairman of the Board of Directors, Chief
Executive Officer and President of the Company, oversees all of the Company's
acquisition, development and financing activities, establishes corporate policy
and provides overall strategic direction for the Company. He began his career in
the real estate industry in 1967 and joined Trammell Crow Company in 1970 as the
managing partner of the Northwest region. Mr. Spieker has overseen the
development of property in virtually all product categories including industrial
buildings, suburban mid-rise and downtown high-rise office buildings, retail
centers, residential lots, trade marts, elderly care facilities, apartments,
condominiums and hotels. During his partnership with Trammell Crow, Mr. Spieker
oversaw or was responsible for the development or acquisition of 18,000,000
square feet of commercial space, and since that time has directed the growth of
Spieker Properties to approximately 35,000,000 square feet. Mr. Spieker received
a Bachelor of Arts from the University of California at Berkeley. Mr. Spieker is
a member of the Board of Governors and the Executive Committee of the National
Association of Real Estate Investment Trusts, Inc. ("NAREIT").
William S. Thompson, Jr. Mr. Thompson has served as a Director of the
Company since December 1993. Mr. Thompson is a Managing Director and Chief
Executive Officer of Pacific Investment Management Company ("PIMCO"). In
addition, he serves as a member of the Board of Directors and Chairman of the
Executive Committee of PIMCO Advisors L.P., a NYSE listed master limited
partnership. Mr. Thompson joined the firm in April 1993 after 18 years with
Salomon Brothers where he was a Managing Director with assignments in Chicago,
San Francisco and Tokyo. A native of St. Louis, Missouri, Mr. Thompson graduated
from the University of Missouri with a Bachelor of Science in Civil Engineering
and from Harvard Business School with a Masters in Business Administration.
Subsequently, he attained the rank of Captain in the U.S. Army Reserves.
Craig G. Vought, Executive Vice President and Chief Financial Officer of
the Company, is responsible for the overall management and control of the
Company's financial matters and capital market activities. In this capacity, he
has been responsible for raising over $3.0 billion of capital for the Company in
various public and private markets. He is also responsible for investor
relations, legal affairs, human resources and MIS. Mr. Vought joined the
Company's predecessor in 1986. In addition to his financial experience, Mr.
Vought has been responsible for the development of nearly 1,000,000 square feet
of commercial property. Previously he held positions at Chase Manhattan Bank and
E.F. Hutton & Co. Mr. Vought received a Bachelor of Arts from Trinity College
and a Masters in Business Administration from The Wharton School of Business.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1997, there were seven meetings of the Board and two unanimous
written consents of the Board. Each director attended greater than 75% of the
meetings of the Board (whether in person or telephonically or by written consent
in lieu of a meeting) and meetings of committees of the Board on which he
served, held during the period of time he served as director during 1997.
The Board has standing Audit, Compensation, Non-Executive Stock Incentive
Plan and Stock Incentive Plan Committees. The Board does not have a nominating
committee or a committee performing the functions of a nominating committee.
Although there are no formal procedures for stockholders to recommend
nominations, the Board will consider recommendations from stockholders, which
should be addressed to Sara H. Reynolds, the Company's Secretary, at the
Company's address set forth above.
The Audit Committee consists of David M. Petrone and William S. Thompson,
Jr. The Audit Committee recommends the appointment of the firm of certified
public accountants to audit the financial
7
<PAGE> 11
statements of the Company for the fiscal year for which they are appointed,
reviews audit reports, takes such action as may be deemed appropriate with
respect to such audit reports, and monitors the effectiveness of the audit
effort, the Company's financial and accounting organization and its system of
internal accounting controls. The Audit Committee met 3 times during 1997.
The Compensation Committee consists of Richard J. Bertero, Harold M.
Messmer, Jr. and Warren E. Spieker, Jr. The Compensation Committee establishes
and reviews annually the Company's general compensation policies applicable to
the Company's executive officers, reviews and approves the level of compensation
of the Chief Executive Officer and other executive officers of the Company,
reviews and advises the Board concerning the performance of the Chief Executive
Officer and other employees whose compensation is within the review jurisdiction
of the Compensation Committee, reviews and advises the Board concerning regional
and industry-wide compensation practices and trends, and recommends benefit
plans from time to time. The Compensation Committee met 3 times during 1997.
The Stock Incentive Plan Committee consists of Richard J. Bertero and
Harold M. Messmer, Jr. The Stock Incentive Plan Committee administers the
Spieker Properties, Inc. Amended and Restated 1993 Stock Incentive Plan as it
pertains to executive officers and reports to the Board of Directors regarding
that plan from time to time, or whenever called upon to do so. The Stock
Incentive Plan Committee met 3 times during 1997.
The Non-Executive Stock Incentive Plan Committee consists of Dennis E.
Singleton and Warren E. Spieker, Jr. The Non-Executive Stock Incentive Plan
Committee administers the Spieker Properties, Inc. Amended and Restated 1993
Stock Incentive Plan as it pertains to non-executive officers and reports to the
Board of Directors regarding the plan from time to time, or whenever called upon
to do so. The Non-Executive Stock Incentive Plan Committee conducted 3 meetings
by written consent in lieu of a meeting during 1997.
COMPENSATION OF DIRECTORS
Each of the independent directors receives an annual fee of $18,000, a
meeting fee of $1,000 for each Board of Directors meeting attended, and
reimbursement of expenses incurred in attending meetings. Directors who also are
officers or employees of the Company do not receive any such director fees.
Pursuant to the Spieker Properties, Inc. Amended and Restated 1993
Directors' Stock Option Plan, each independent director, upon joining the Board,
receives an initial grant of options to purchase 2,500 shares of Common Stock at
an exercise price equal to 100% of the fair market value of the Common Stock at
the date of the grant of such options. Each such director who is serving as such
on December 31 of each calendar year thereafter, and who has served as such for
more than one year, will automatically receive an annual grant of options to
purchase 4,000 shares of Common Stock at an exercise price equal to 100% of the
fair market value of the Common Stock at the date of the grant of such options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee and Stock Incentive Plan Committee
were formed in December 1993. The members of the Company's Compensation
Committee are Messrs. Bertero, Messmer, and Spieker. The members of the Stock
Incentive Plan Committee are Messrs. Bertero and Messmer. No interlocking
relationship existed in 1997 or presently exists between any member of the
Company's Compensation Committee or its Stock Incentive Plan Committee and any
member of the Board of Directors or compensation committee of any other
corporation. Certain transactions and relationships between the Company and
certain of its officers and directors are set forth below in the section
entitled "Certain Relationships and Related Transactions."
RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS
There are no family relationships among any of the directors or executive
officers of the Company.
8
<PAGE> 12
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION
The following table sets forth certain information concerning compensation
of the Company's Chief Executive Officer and each of the other executive
officers of the Company (collectively, the "Named Executive Officers") as of
December 31, 1997 for the periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------- ------------------------------
RESTRICTED STOCK STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- --------- ---------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr. 1997 $225,000 -- $777,195(1) 80,000(2) $5,000(3)
Chairman of the Board and 1996 225,000 -- -- 380,000(4) 5,000(3)
Chief Executive Officer 1995 225,000 -- 100,000(5) 80,000(6) 6,350(7)
John K. French 1997 225,000 $250,000 414,515(8) 45,000(2) 5,000(3)
Director, Executive Vice 1996 225,000 175,000 -- 245,000(4) 5,000(3)
President and Chief 1995 200,000 100,000 -- 40,000(6) 6,350(7)
Operating Officer
Dennis E. Singleton 1997 200,000 150,000 414,515(8) 30,000(2) 5,000(3)
Director, Executive Vice 1996 200,000 100,000 -- 130,000(4) 5,000(3)
President and Chief 1995 200,000 75,000 -- 20,000(6) 6,350(7)
Investment Officer
Craig G. Vought 1997 200,000 225,000 414,515(8) 45,000(2) 5,000(3)
Executive Vice President 1996 200,000 150,000 -- 245,000(4) 5,000(3)
and Chief Financial 1995 130,000(9) 150,000 75,000(10) 20,000(6) 6,350(7)
Officer
</TABLE>
- ---------------
(1) Represents the fair market value of 18,127 shares of restricted Common
Stock on the date of grant (December 31, 1997), based upon the closing
price on that date of the Company's Common Stock of $42.875. Twenty-five
percent of restricted Common Stock vests one year after grant and an
additional 25% vests each year thereafter.
(2) Nonqualified stock options to acquire shares of Common Stock were granted
on June 30, 1997 at an exercise price equal $35.19. The fair market value
on the date of grant of was $35.1875 per share.
(3) Amounts represent the Company's contributions to the Company's 401(k)
Retirement Plan. As of October 1, 1996, officers are excluded from
participation in the profit sharing contribution by the Company.
(4) Nonqualified stock options to acquire shares of Common Stock were granted
in October 1996 and December 1996 at an exercise price equal to the fair
market value on the date of grant of $29.25 per share and $31.625 per
share, respectively.
(5) Represents the fair market value of 4,000 shares of restricted Common Stock
on the date of grant (January 26, 1996), based upon the closing price on
that date of the Company's Common Stock of $25.00. As of December 31, 1997,
the fair market value of the 4,000 shares of restricted stock was $171,500,
based upon the closing price on that date of the Company's Common Stock of
$42.875 per share. Twenty-five percent of restricted Common Stock vests one
year after grant and an additional 25% vests each year thereafter.
(6) Nonqualified stock options to acquire shares of Common Stock were granted
in January 1996 at an exercise price equal to the fair market value on the
date of grant of $25.00 per share for services performed during 1995.
(7) Amounts represent the Company's contributions to the Company's 401(k)
Retirement Plan of $5,000 and profit sharing contributions of $1,350.
(8) Represents the fair market value of 9,668 shares of restricted Common Stock
on the date of grant (December 31, 1997), based upon the closing price on
that date of the Company's Common Stock of
9
<PAGE> 13
$42.875. Twenty-five percent of restricted Common Stock vests one year
after grant and an additional 25% vests each year thereafter.
(9) Mr. Vought became Chief Financial Officer of the Company in July 1995. The
amount represents salary paid to Mr. Vought during the entire fiscal year.
(10) Represents the fair market value of 3,000 shares of restricted Common Stock
on the date of grant (January 26, 1996), based upon the closing price on
that date of the Company's Common Stock of $25.00. As of December 31, 1997,
the fair market value of the 3,000 shares of restricted stock was $128,625,
based upon the closing price on that date of the Company's Common Stock of
$42.875 per share. Twenty-five percent of restricted Common Stock vests one
year after grant and an additional 25% vests each year thereafter.
OPTION GRANTS FOR LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted by the Company during 1997 to each of the Named Executive
Officers under the Spieker Properties, Inc. Amended and Restated 1993 Stock
Incentive Plan.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS
-----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO PRICE PER
OPTIONS/SARS EMPLOYEES IN SHARE EXPIRATION GRANT DATE
NAME AND PRINCIPAL POSITION GRANT DATE GRANTED (#) FISCAL YEAR ($/SH)(1) DATE VALUATION(2)
- --------------------------- ---------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr. ..... 06/30/97 80,000(3) 6.4% $35.19 06/30/07 $488,769
Chairman of the Board and
Chief Executive Officer
John K. French.............. 06/30/97 45,000(3) 3.6% $35.19 06/30/07 $274,933
Director, Executive Vice
President and Chief
Operating Officer
Dennis E. Singleton......... 06/30/97 30,000(3) 2.4% $35.19 06/30/07 $183,289
Director, Executive Vice
President and Chief
Investment Officer
Craig G. Vought............. 06/30/97 45,000(3) 3.6% $35.19 06/30/07 $274,933
Executive Vice President
and Chief Financial
Officer
</TABLE>
- ---------------
(1) Closing price of the Common Stock on the date of grant was $35.1875.
(2) Calculated using the binomial pricing model. The assumptions used in
determining the present value of the option grant using this methodology are
as follows: option term of 10 years; risk-free rate of 6.4%; 0.1829
volatility since the initial public offering; 5.3% dividend yield; exercise
price of $35.19; Closing price of Common Stock on date of grant of $35.1875;
and a 3% reduction factor for the risk of forfeiture due to vesting
restrictions. The actual value, if any, that an executive officer may
realize will depend on the continued employment of the executive officer
holding the option through its vesting period, and the excess of the market
price over the exercise price on the date the option is exercised so that
there is no assurance that the value realized by an executive officer will
be at or near the value estimated by the binomial pricing model, which is
based on assumptions as to the variables of stock price volatility, future
dividend yield, interest rates, etc.
(3) Twenty percent of such options become exercisable one year after grant and
an additional 20% becomes exercisable each year thereafter.
10
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
During the year ended December 31, 1997, other than John K. French who
exercised 50,500 shares of his stock options, the Company's Chief Executive
Officer and the other Named Executive Officers did not exercise any of their
stock options. The following table sets forth the number of shares of Common
Stock covered by the stock options held by the Company's Chief Executive Officer
and the other Named Executive Officers as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END(#) OPTIONS AT YEAR-END(1)
--------------------------- ---------------------------
NAME AND PRINCIPAL POSITION EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Warren E. Spieker, Jr........................... 178,500 484,000 $3,090,437 $6,154,300
Chairman of the Board and Chief Executive
Officer
John K. French.................................. 91,000 311,000 1,467,375 4,067,575
Director, Executive Vice President and Chief
Operating Officer
Dennis E. Singleton............................. 113,500 189,000 2,242,062 2,620,675
Director, Executive Vice President and Chief
Investment Officer
Craig G. Vought................................. 111,500 271,000 1,948,562 3,240,075
Executive Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) Based on the closing price of the Company's Common Stock as reported on the
New York Stock Exchange on December 31, 1997 of $42.875 minus the exercise
price, multiplied by the number of shares underlying the options.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph which follows shall not be deemed to be incorporated by
reference into any such filings.
For services performed in 1997, executive compensation consisted of base
salary, bonuses, grants of stock options, and grants of restricted stock under
the Company's Amended and Restated 1993 Stock Incentive Plan.
In December 1993, the Board of Directors established the Compensation and
Stock Incentive Plan Committees of the Board of Directors (the "Committees").
The Compensation Committee has responsibility for developing, administering and
monitoring the compensation policies applicable to the Company's executive
officers. The Stock Incentive Plan Committee has responsibility for
administering the Company's Amended and Restated 1993 Stock Incentive Plan,
under which grants may be made to executive officers and other key employees.
The Committees have retained the services of an independent compensation
consultant to assist the Committees in their evaluation of the key elements of
the Company's compensation program. The compensation consultant provides advice
to the Committees with respect to competitive practices and the reasonableness
of compensation paid to the executives of the Company. The Committees review
surveys and other data supplied by the consultant in the course of their
deliberations relating to compensation proposals. The Committees believe that
the Company's most direct competitors for executive talent are not necessarily
all of the companies that would be included in the NAREIT Equity Index in the
Stock Price Performance chart that compares stockholder returns. Some, but not
all, of the companies included in the Stock Price Performance chart are included
in the compensation surveys. The Committees review the available
11
<PAGE> 15
competitive data, evaluate the particular needs of the Company, and evaluate
each executive's performance to arrive at a decision regarding compensation
programs.
Executive Compensation Philosophy. The Committees believe that a
fundamental goal of the Company's executive compensation program should be to
provide incentives to create value for the Company's stockholders. In addition,
the Committees believe that the executive compensation program should attract,
retain, and motivate a quality, performance-oriented management team. It should
create a strong and direct link between Company stock performance and executive
compensation. Executive total compensation levels should be positioned between
the middle and upper quartiles of real estate development and REIT organizations
of comparable size and organizational structure. Compensation should be weighted
more on the variable components to allow for premium pay for superior financial
results and below-average pay for below-average financial results. The program
should create a significant and meaningful long-term incentive tied to the
Company's long-term growth, financial success, and increasing stockholder value.
For 1997, the Committees have placed a significant emphasis on the variable
components resulting in 85% to 90% of the executive officers' total compensation
derived solely on performance.
Section 162(m) of the Internal Revenue Code denies a deduction for
compensation in excess of $1 million paid to certain executive officers, unless
certain performance, disclosure, and stockholder approval requirements are met.
Option grants under the Company's Amended and Restated 1993 Stock Incentive Plan
are intended to qualify as "performance-based" compensation not subject to the
Section 162(m) deduction limitation. In addition, the Committee believes that a
substantial portion of the compensation program would be exempted from the $1
million deduction limitation. The Committees' present intention is to qualify,
to the extent reasonable, the substantial portion of the executive officers'
compensation for deductibility under applicable tax laws. However, the Committee
reserves the right to design programs that recognize a full range of performance
criteria important to the Company's success, even where compensation payable
under such programs may not be deductible.
Base Salaries. Base salaries for all of the executive officers are reviewed
annually and may be increased by the Compensation Committee in accordance with
certain criteria determined primarily on the basis of growth in revenues, funds
from operations ("FFO") per share of Common Stock, new acquisitions, and on the
basis of certain other factors, which include (i) individual performance, (ii)
execution of the strategic plan, (iii) the functions performed by the executive
officer, and (iv) changes in the compensation peer group in which the Company
competes for executive talent. The weight given such factors by the Compensation
Committee may vary from individual to individual. The Compensation Committee,
however, intends to reward executive officers for their achievements primarily
through the short-term and long-term incentive compensation awards discussed
below. With respect to base salaries, the Compensation Committee generally
intends to target base salary levels at or below the 50th percentile of real
estate development and REIT organizations of comparable size and organization
structure. Actual base salary levels for 1997 for the executive officers fall
considerably below the 50th percentile.
Short-Term Incentive Compensation Awards. All the Company's officers,
including the executive officers, are eligible to participate in the short-term
incentive plan. Each year, the Compensation Committee establishes a pool from
which short-term incentive payments are made. In 1997, a maximum of $1,200,000
was reserved for the pool of executive officers, assuming stretch goals were
achieved. Annual incentive awards are paid after assessing Company,
division/unit, department, and individual performance. Payments for each
individual is weighted differently among Company, division/unit, department and
individual performance objectives, depending on the position. The Chief
Executive Officer's weighting is 100% on Company performance. The Executive Vice
Presidents' weighting is 75% on Company performance and 25% on division or
department performance. Company performance is measured on the basis of
achieving targeted FFO objectives, which are reviewed and approved by the
Committee. Division/unit performance is measured on stabilized contributions to
FFO from new acquisitions and developments and the performance of existing
property portfolio net rental income with consideration of individual market
factors, capital expenditures, overhead costs and other factors that may affect
performance in any given year. Department performance measures are based on the
achievement of specific strategic objectives of the Company. Individual
performance measures are assessed in a subjective manner and may include Company
leadership, tenant
12
<PAGE> 16
satisfaction, contributions to the Company as a whole and community involvement.
The Compensation Committee believes that a fixed compensation formula may not
adequately reflect all aspects of the performance of the Company and of an
individual executive officer. Therefore, the Committee has retained a high
degree of flexibility in structuring the short-term incentive compensation plan
to ensure that the longer-term interests of stockholders are considered. This
allows the Committee annually to evaluate subjectively each executive officer's
individual performance and contribution to the Company's overall financial and
operational success. Minimum objectives are established for Company performance
and such objectives basically represent a net FFO growth and cash dividend that
will ensure a satisfactory return to stockholders. Generally, the Company
portion of an award is not paid if such objectives are not achieved.
The Compensation Committee determines the award for the Chief Executive
Officer and approves the awards for other participants. The Chief Executive
Officer, with the assistance of an internal committee, determines the awards for
all other participants on the basis of their achievement of specific objectives
and a subjective assessment of the individual's contributions. The target
performance objectives and the pool were approved by the Compensation Committee.
For 1997, approximately 50% of the executive officer formula pool was
distributed. Bonus awards to executive officers for 1997 reflect excellent
performance results during the year. Actual 1997 FFO growth substantially
exceeded preestablished target objectives and represented the upper quartile
performance of other equity REITs and other office/industrial sector equity
REITs.
Long-Term Incentive Compensation Awards. The Amended and Restated 1993
Stock Incentive Plan, which was approved by stockholders, is administered by the
Stock Incentive Plan Committee. The Amended and Restated 1993 Stock Incentive
Plan provides for grants of nonqualified stock options, incentive stock options,
restricted shares, dividend equivalents, performance shares and performance
units to key executives and employees of the Company. The Stock Incentive Plan
Committee may make grants under the Amended and Restated 1993 Stock Incentive
Plan based on a number of factors, including: (i) Company performance, (ii) the
executive officer's or key employee's position in the Company, (iii) his or her
performance and responsibilities, (iv) the extent to which he or she already
holds an equity stake in the Company, (v) equity participation levels of
comparable executives and key employees at other companies in the compensation
peer group, (vi) total compensation levels of comparable executives and key
employees at other companies in the compensation peer group, and (vii)
individual contribution to the success of the Company's financial performance.
In addition, the size, frequency, and type of long-term incentive grants will be
determined on the basis of past granting practices, fair market value of the
Company's stock, tax consequences of the grant to the individual and the
Company, accounting impact, and the number of shares available for issuance.
However, the plan does not provide any formulaic method for weighing these
factors, and a decision to grant an award is based primarily upon the
Committee's evaluation of the past as well as the future anticipated performance
and responsibilities of each individual. Stock options generally are granted on
an annual basis at 100% of current fair market value of the Company's stock and
will only be of value to the executive officer or key employee if the stock
price increases over time. The 1997 stock option grants reflect superior Company
and individual performance. They also reflect the Company's compensation
philosophy to place greater emphasis on the variable components of the
compensation program. In 1997, the Company ranked in the upper quartile of all
equity REITs with a total return to stockholders of 24.6%. Since the initial
public offering in 1993 Company performance has resulted in an average annual
total return to stockholders of about 30%, as compared to approximately 24% for
the Standard & Poor's 500 and 18.5% for all equity REITs. The 1997 grants of
options vest ratably at 20% per year after one year from the date of grant.
Executive officers were also granted restricted stock during 1997 in recognition
of superior performance, below market cash compensation levels, and the need to
retain exceptional executive talent. Restricted shares vest ratably at 25% per
year after one year from the date of grant. Restricted stock grants are not
typically made on an annual basis, but are reviewed from year to year by the
Stock Incentive Plan Committee. In the event of a Change in Control, Corporate
Transaction, or Subsidiary Disposition (each as defined by the Plan), all
outstanding options and restricted shares become fully vested.
Chief Executive Officer Compensation. The compensation of Warren E.
Spieker, Jr. for fiscal 1997 was determined on the same general basis as
discussed above for the executive officers. In 1997, Mr. Spieker received a base
salary of $225,000, which falls in the first (lowest) quartile of the
compensation paid to chief
13
<PAGE> 17
executive officers of real estate development and REIT organizations of
comparable size and organizational structure. In addition, Mr. Spieker chose to
waive any short-term incentive for 1997. Based on the Stock Incentive Plan
Committee's criteria and the Company's excellent performance as described above,
Mr. Spieker was awarded options to purchase 80,000 shares of Common Stock and
18,127 shares of restricted stock for 1997 performance. Mr. Spieker's
compensation in 1997 was leveraged 90% toward incentives directly tied to
shareholder value creation. Mr. Spieker's base salary and award levels under the
Amended and Restated 1993 Stock Incentive Plan and the short-term incentive plan
are reviewed annually. In 1997, the Company contributed $5,000 to Mr. Spieker's
401(k) account under the terms and conditions of that plan and made no profit
sharing contributions in accordance with the provisions of that plan. Mr.
Spieker does not participate in or otherwise influence deliberations of the
Compensation Committee or Stock Incentive Plan Committee relating to his
compensation.
Section 401(k) Plan. In 1994, the Company adopted a tax-qualified cash and
deferred profit-sharing plan (the "401(k) Plan"). Under the 401(k) Plan, which
covers all Company employees after they have completed 12 months of service,
employees may reduce their current compensation by up to 15% of their total
salary plus bonus, up to a maximum of $9,500 for the 1997 calendar year, and
have the amount of the reduction contributed to the 401(k) Plan. The Company
also contributes to the 401(k) Plan an additional amount equal to 5% of such
employee's compensation or the maximum contribution allowable by law. In
addition, the Company may make profit sharing and discretionary contributions at
the end of each year. As of October 1, 1996, Officers are excluded from
participation in the profit sharing contribution by the Company. The employee's
right to retain the Company's contributions vests at a rate of 20% per year
beginning after twelve months of service. For fiscal year 1997, the Company made
contributions to the 401(k) Plan of a total of $20,000 to the Chief Executive
Officer and the other Named Executive Officers.
<TABLE>
<S> <C>
STOCK INCENTIVE PLAN COMMITTEE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF THE BOARD OF DIRECTORS
Richard J. Bertero Richard J. Bertero
Harold M. Messmer, Jr. Harold M. Messmer, Jr.
Warren E. Spieker, Jr.
</TABLE>
14
<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Company's Common Stock from November 30, 1993 through December 31, 1997 to the
cumulative total return on the Standard & Poor's 500 Stock Index ("S&P 500") and
the Equity REIT Total Return Index prepared by NAREIT. The line graph starts at
November 30, 1993 because the Equity REIT Total Return Index uses end-of-month
values. The graph assumes that the value of the investment in the Company's
Common Stock was $100 at November 30, 1993 and that all dividends were
reinvested. The Common Stock's price on November 30, 1993 (on which the graph is
based) was $19.50; the initial public offering price of the Common Stock on
November 12, 1993 was $20.50. All of the information relating to the graph below
was prepared by NAREIT.
THE STOCKHOLDER RETURN SHOWN ON THE FOLLOWING GRAPH IS NOT NECESSARILY
INDICATIVE OF FUTURE PERFORMANCE. TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
BEFORE CONSIDERATION OF INCOME TAXES.
<TABLE>
<CAPTION>
Measurement Period 'Spieker Properties, NAREIT Equity
(Fiscal Year Covered) Inc.' Index S&P 500
<S> <C> <C> <C>
11/30/93 100.00 100.00 100.00
12/31/94 111.66 103.00 102.55
12/31/95 148.62 118.72 140.94
12/31/96 226.55 160.59 173.34
12/31/97 282.28 193.13 231.17
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has no employment agreement with any of its executive officers
and directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company owns 95% of the non-voting preferred stock of Spieker
Northwest, Inc. ("Spieker Northwest"), which provides fee management and other
services for properties not owned by the Company, including certain properties
in which Messrs. Spieker, French, and Singleton have ownership interests. The
fees charged by Spieker Northwest for managing properties are comparable to the
fees it charges for managing other properties. Messrs. Spieker, French,
Singleton and Bruce E. Hosford own 100% of the voting stock of Spieker Northwest
and the remaining 5% of the non-voting preferred stock. For the year ended
December 31, 1997, Spieker Northwest had revenues of $6.7 million, which were
mainly offset by operating expenses, and it did not pay any dividends on its
common or preferred stock.
15
<PAGE> 19
At the time of the Company's 1993 initial public offering, the Company
entered into land holding agreements ("Land Holding Agreements") with certain of
its executive officers with respect to vacant land parcels in which such
executive officers hold ownership interest. The Land Holding Agreements
generally provide the Company with the option to purchase the land subject to
the agreement for the lesser of a fixed price set forth in the Land Holding
Agreement or the fair market value as determined by appraisal.
During the fourth quarter of 1997, the Company acquired a land parcel
pursuant to a Land Holding Agreement. A 10.18 acre parcel of land located in
Monterey, California in which Messrs. Spieker, French, and Foster held ownership
interests was acquired for a negotiated price of approximately $1.5 million,
which was less than the fixed price set forth in the Land Holding Agreement. The
Company acquired the land for the purpose of developing two office buildings
totaling 63,895 square feet, at an estimated total cost of approximately $9.2
million. Construction of this development began during the fourth quarter of
1997.
On October 1, 1997, the Company acquired all of the ownership interest in a
119,152 square-foot office building located in San Mateo, California (the "San
Mateo Property") valued at approximately $24.8 million, through the purchase of
partnership interests in an entity in which Messrs. Spieker and Singleton held a
general partnership interest. The San Mateo Property had not been contributed to
the Operating Partnership at the time of the IPO because a satisfactory
arrangement could not be made with the unaffiliated partners in the partnership.
The partners were subsequently able to reach an agreement with the unaffiliated
partners, and the Company exercised its option to acquire the interests of the
unaffiliated partners. The Company paid approximately $5.8 million to the
unaffiliated partners and issued partnership units with an aggregate value of
$7.5 million to Messrs. Spieker and Singleton in exchange for the beneficial
ownership. A mortgage of $11.0 million was assumed in connection with the
purchase. The monetary value of the Operating Partnership units issued to
Messrs. Spieker and Singleton of the Company was based upon the negotiated value
paid to the unaffiliated partners. The number of Operating Partnership units
issued was calculated by dividing such monetary value by the stock price of the
Company's Common Stock (into which such units are convertible) at the close of
the day prior to acquisition.
PROPOSAL NO. 2
RATIFICATION OF RETENTION OF INDEPENDENT AUDITORS
Arthur Andersen LLP has served as the Company's independent auditors since
the Company's initial public offering in 1993 and has been appointed by the
Board to continue as the Company's independent auditors for the fiscal year
ending December 31, 1998. In the event that ratification of this retention of
auditors is not approved by the affirmative vote of a majority of the votes cast
on the matter, then the appointment of independent auditors will be reconsidered
by the Board of Directors. Unless marked to the contrary, proxies received will
be voted FOR ratification of the retention of Arthur Andersen LLP as the
independent auditors for the fiscal year ending December 31, 1998.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting. The representative will have an opportunity to make a statement
and will be able to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE RETENTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Exchange Act requires the Company's directors, executive officers and
persons who beneficially own more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Securities and Exchange
Commission ("SEC") and New York Stock Exchange initial reports of ownership and
changes in ownership
16
<PAGE> 20
of the Company's Common Stock. Reporting Persons are required by SEC regulations
to furnish the Company with copies of all Section 16(a) reports they file. To
the Company's knowledge, based solely on its review of the copies of such
reports received, the Company believes that during its fiscal year ended
December 31, 1997, all Reporting Persons complied with all applicable filing
requirements, except that Messrs. Spieker and Vought each filed a Form 5 report
late and Mr. Foster filed a Form 3 late.
Stockholder Proposals. To be considered for presentation at the annual
meeting of the Company's stockholders to be held in 1999, a stockholder proposal
must be received by Sara H. Reynolds, Secretary, Spieker Properties, Inc., 2180
Sand Hill Road, Suite 200, Menlo Park, California 94025, no earlier than March
12, 1999 and no later than April 11, 1999.
Other Matters. The Board of Directors is not aware of any other matters to
be presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, the persons named in the enclosed proxy will act
thereon according to their best judgment.
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute, and promptly
return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ WARREN E. SPIEKER, JR.
--------------------------------------
WARREN E. SPIEKER, JR.
Chairman of the Board and
Chief Executive Officer
April 16, 1998
Menlo Park, California
17
<PAGE> 21
SPIEKER PROPERTIES, INC.
2180 Sand Hill Road
Menlo Park, CA 94025
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON JUNE 10, 1998.
Warren E. Spieker, Jr., Dennis E. Singleton and Sara H. Reynolds (the
"Proxies"), or any of them, each with the power of substitution, are hereby
authorized to represent and vote the shares of the undersigned, with all the
powers which the undersigned would possess if personally present, at the Annual
Meeting of Spieker Properties, Inc., (the "Company"), to be held on Wednesday,
June 10, 1998, and at any adjournments or postponements thereof.
Election of two directors (or if any nominee is not available for
election, such substitute as the Board of Directors or the proxy holders may
designate).
Shares represented by this proxy will be voted as directed by the
stockholder. If no such directions are indicated, the Proxies will have
authority to vote FOR the election of all directors and FOR ratification of the
retention of Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending December 31, 1998. In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
Annual Meeting.
BOARD OF DIRECTORS' RECOMMENDATIONS: THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF ALL DIRECTORS AND FOR RATIFICATION OF THE RETENTION OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1998. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS YOU NEED NOT MARK ANY BOXES, JUST SIGN AND DATE ON
THE REVERSE SIDE.
SPIEKER PROPERTIES, INC.
P.O. BOX 11391
NEW YORK, N.Y. 10203-0391
(Continued and to be dated and signed on the reverse side.)
<PAGE> 22
[ ]
1. Election of Directors
FOR all nominees listed below [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
*EXCEPTIONS [ ]
Nominees: David M. Petrone and Dennis E. Singleton
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
Exceptions
------------------------------------------------------------------
2. To ratify the retention of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
[ ] Change of Address and
or Comments Mark Here
Please sign exactly as your name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Dated: , 1998
----------------------------------
------------------------------------------------
Signature
------------------------------------------------
Signature
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
