<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 by
[ ] Definitive Additional Materials 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.
2180 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
April 8, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 annual meeting of stockholders
of Spieker Properties, Inc., to be held at the Doubletree Hotel, 2050 Gateway
Place, San Jose, California, on June 9, 1999, at 10:30 a.m., local time.
The attached proxy statement describes 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.
YOUR VOTE IS IMPORTANT. Because many shareholders cannot attend the meeting
in person, it is necessary that a large number be represented by proxy. 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 9, 1999
The annual meeting of stockholders of Spieker Properties, Inc., will be
held at the Doubletree Hotel, 2050 Gateway Place, San Jose, California, on June
9, 1999, at 10:30 a.m., local time. At the meeting, stockholders will vote upon
the following proposals:
1. To elect two directors to serve 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, 1999.
3. To transact any other business that properly comes before the annual
meeting.
Stockholders of record at the close of business on March 19, 1999 are
entitled to vote at the annual meeting.
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 8, 1999
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
ABOUT THE MEETING........................................... 1
What is the purpose of the annual meeting?................ 1
Who is entitled to vote?.................................. 1
Who can attend the meeting?............................... 1
What constitutes a quorum?................................ 1
How do I vote?............................................ 1
Can I vote by telephone or through the internet?.......... 2
Can I change my vote after I return my proxy card?........ 2
What are the board's recommendations?..................... 2
What vote is required to approve each item?............... 2
VOTING SECURITIES AND PRINCIPAL HOLDERS..................... 3
PROPOSAL 1: ELECTION OF DIRECTORS........................... 4
Directors and Executive Officers.......................... 5
Meetings and Committees of the Board of Directors......... 7
Compensation of Directors................................. 7
Compensation Committee Interlocks and Insider
Participation.......................................... 8
Relationships among Directors or Executive Officers....... 8
PROPOSAL 2: RATIFICATION OF RETENTION OF INDEPENDENT
AUDITORS.................................................. 8
EXECUTIVE COMPENSATION AND OTHER INFORMATION................ 9
Option Grants for Last Fiscal Year........................ 10
Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values.......................................... 11
Compensation Committee Report on Executive Compensation... 11
Employment Agreements and Change of Control Policy........ 15
STOCK PRICE PERFORMANCE GRAPH............................... 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 16
OTHER MATTERS............................................... 17
</TABLE>
i
<PAGE> 5
MAILED TO STOCKHOLDERS ON OR ABOUT APRIL 8, 1999
SPIEKER PROPERTIES, INC.
2180 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
------------------------
PROXY STATEMENT
------------------------
This proxy statement contains information relating to the annual meeting of
stockholders of Spieker Properties, Inc. to be held on June 9, 1999, at 10:30
a.m., local time, at the Doubletree Hotel, 2050 Gateway Place, San Jose,
California, and any adjournment or postponement. The board of directors of the
company is soliciting proxies for use at the annual meeting.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, stockholders will elect directors, ratify the
company's independent auditors and transact any other business that properly
comes before the meeting. In addition, the company's management will report on
the performance of the company during fiscal 1998 and respond to questions from
stockholders.
WHO IS ENTITLED TO VOTE?
Only holders of record at the close of business on the record date, March
19, 1999, of the company's common stock and Series A preferred stock are
entitled to vote. Holders of the company's common stock are entitled to cast one
vote per share on each matter to be voted upon. The holder of the company's
Series A preferred stock is entitled to cast 1.2195 votes per share on each
matter to be voted upon.
WHO CAN ATTEND THE MEETING?
All stockholders as of the record date, or their duly appointed proxies,
may attend the meeting. Each stockholder may be asked to present valid picture
identification, such as a driver's license or passport.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders entitled
to cast a majority of all votes at the annual meeting will constitute a quorum,
permitting the meeting to conduct its business. As of the record date,
63,259,366 shares of the company's common stock and 1,000,000 shares of the
company's Series A preferred stock were outstanding. Proxies received but marked
as abstentions and broker non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to the company, it will be voted as you direct. However, if no instructions are
given on the returned proxy, the shares will be voted FOR the election of each
of the two nominees for director named below and FOR Proposal No. 2. Stockholder
votes will be tabulated by the persons appointed by the board of directors to
act as inspectors of election for the annual meeting.
If you are a registered stockholder and attend the meeting, you may deliver
your completed proxy card in person. "Street name" stockholders who wish to vote
at the meeting will need to obtain a proxy form from the institution that holds
their shares.
<PAGE> 6
CAN I VOTE BY TELEPHONE OR THROUGH THE INTERNET?
If you are a registered stockholder (that is, if you hold your stock in
your own name), you may vote by telephone or through the internet by following
the instructions included with your proxy card.
If your shares are held in "street name," you will need to contact your
broker or other nominee to determine whether you will be able to vote by
telephone or electronically.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of the
company either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not by
itself revoke a previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the board of directors. The board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the board
recommends a vote:
- FOR election of the nominated slate of directors; and
- FOR ratification of the appointment of Arthur Andersen LLP as the
company's independent auditors.
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the board of directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A properly
executed proxy marked "Withhold All" or "Exceptions" with respect to the
election of one or more directors will not be voted with respect to the director
or directors indicated, although it will be counted for purposes of determining
whether there is a quorum.
OTHER ITEMS. For each other item, the affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote on
the item will be required for approval. A properly executed proxy marked
"Abstain" with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Accordingly, an
abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
2
<PAGE> 7
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table shows the amount of the company's common stock
beneficially owned as of the record date for each director and each of the
executive officers, all directors and such executive officers of the company as
a group, and each person known by the company to hold more than 5% of the
outstanding shares of the company's common stock.
Beneficial ownership includes shares that are individually or jointly
owned, as well as shares which the individual has sole or shared investment or
voting authority. Beneficial ownership also includes shares which could be
purchased by the exercise of options at or within 60 days of the record date, as
well as units of limited partnership interests in Spieker Properties, L.P.,
which are exchangeable into one share of the company's common stock.
The percentage of shares outstanding is calculated assuming that none of
the partnership units or stock options held by any other person is exchanged or
exercised for common stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENTAGE OF
BENEFICIAL SHARES
NAME OWNERSHIP OUTSTANDING
---- ---------- -------------
<S> <C> <C>
Warren E. Spieker, Jr.(1)........................... 2,912,379 4.41%
John K. French(2)................................... 758,202 1.18
John A. Foster(3)................................... 281,562 *
Dennis E. Singleton(4).............................. 913,912 1.42
Craig G. Vought(5).................................. 323,791 *
Richard J. Bertero(6)............................... 8,375 *
Harold M. Messmer, Jr.(7)........................... 114,775 *
David M. Petrone(8)................................. 13,250 *
William S. Thompson, Jr.(9)......................... 10,875 *
All directors and executive officers as a group
(nine persons)(10)................................ 5,337,121 7.83
Cohen & Steers Capital Management, Inc.(11)......... 4,300,200 6.80
LaSalle Advisors Capital, Inc. and ABKB/LaSalle
Securities Limited Partnership(12)................ 3,903,869 6.17
Wellington Management Company, LLP(13).............. 4,329,550 6.84
</TABLE>
- ---------------
* Less than 1%
(1) Includes 2,421,695 shares of common stock that may be issued upon the
conversion of all of Mr. Spieker's partnership units, 100,000 shares of
common stock held directly, 38,734 shares of restricted common stock,
350,500 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.
(2) Includes 523,281 shares of common stock that may be issued upon conversion
of all of Mr. French's partnership units, 4,700 shares of common stock held
directly, 21,221 shares of restricted common stock and 209,000 shares of
common stock subject to options that are exercisable within 60 days of the
record date.
(3) Includes 143,958 shares of common stock that may be issued upon the
conversion of all of Mr. Foster's partnership units, 101,300 shares of
common stock subject to options that are exercisable within 60 days of the
record date and 36,304 shares of restricted common stock.
(4) Includes 683,123 shares of common stock that may be issued upon the
conversion of all of Mr. Singleton's partnership units, 17,500 shares of
common stock held directly, 16,889 shares of restricted common stock,
195,500 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.
3
<PAGE> 8
(5) Includes 105,070 shares of common stock that may be issued upon the
conversion of all of Mr. Vought's partnership units, 194,500 shares of
common stock subject to options that are exercisable within 60 days of the
record date and 24,221 shares of restricted common stock.
(6) Includes 2,000 shares of common stock held directly and 6,375 shares of
common stock subject to options that are exercisable within 60 days of the
record date.
(7) Includes 105,225 shares of common stock held directly, 7,300 shares of
common stock held by Mr. Messmer's son and 2,250 shares subject to options
that are exercisable within 60 days of the record date. Mr. Messmer
disclaims beneficial ownership of such 7,300 shares.
(8) Includes 10,000 shares of common stock held directly and 3,250 shares of
common stock subject to options that are exercisable within 60 days of the
record date.
(9) Includes 3,000 shares of common stock held directly, 6,375 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.
(10) Includes 3,877,127 shares of common stock that may be issued upon the
conversion of partnership units and 1,069,050 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.
(11) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 9, 1999. Address: 757 Third Avenue, New York, New
York 10017.
(12) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 9, 1999. Address for each entity is 200 East
Randolph Drive, Chicago, Illinois 60601. Includes 1,355,440 shares of
common stock beneficially owned by LaSalle Advisors Capital, Inc. and
2,548,429 shares beneficially owned by ABKB/LaSalle Securities Limited
Partnership. LaSalle Advisors Capital, Inc. is the limited partner as well
as the sole shareholder of the general partner of ABKB/LaSalle Securities
Limited Partnership.
(13) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 9, 1999. Address: 75 State Street, Boston,
Massachusetts 02109.
The company also has outstanding 1,000,000 shares of Series A preferred
stock, which is convertible into 1,219,512 shares of common stock. All of the
outstanding shares of Series A preferred stock are owned by the Annenberg Trust
and held by Walter H. Annenberg, as trustee.
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 two individuals as Class
III directors. Each of the nominees has consented to serve as director if
elected. However, if any of them becomes unavailable to serve, the board may
designate a substitute nominee or reduce the number of members on the board of
directors 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.
The persons standing for election as director are:
JOHN K. FRENCH
Mr. French is Director, Executive Vice President and Chief Operating
Officer of the company. He is responsible for the company's day-to-day
operations including the leasing, marketing and management of the
4
<PAGE> 9
company's properties. In his capacity as chief operating officer, Mr. French is
responsible for the operating results of properties representing approximately
40,000,000 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.
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 PIMCO 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED ABOVE.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning 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. 54 Director, Chairman of the Board and 1997 2000
Chief Executive Officer
John K. French 54 Director, Executive Vice President 1996 1999
and Chief Operating Officer
John A. Foster 40 Executive Vice President and Chief -- --
Investment Officer
Dennis E. Singleton 54 Vice Chairman of the Board 1998 2001
Craig G. Vought 38 Executive Vice President and Chief -- --
Financial Officer
Richard J. Bertero 59 Director 1997 2000
Harold M. Messmer, Jr. 53 Director 1997 2000
David M. Petrone 54 Director 1998 2001
William S. Thompson, Jr. 53 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 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.
5
<PAGE> 10
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.
Previously, 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.
HAROLD M. MESSMER, JR. 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 a member of 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.
DAVID M. 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 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, Alexandria Real Estate Equities,
Inc. and Finelite, Inc. He received a Bachelor of Science and a Masters in
Business Administration from the University of Oregon, where he serves as a
trustee.
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 by an additional 30,000,000 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.
DENNIS E. SINGLETON, Vice Chairman of the company, 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.
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 information technology. 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
6
<PAGE> 11
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 1998, there were four meetings of the board of directors and no
unanimous written consents. Each director attended all of the meetings of the
board (whether in person or telephonically) and meetings of committees of the
Board on which he served during 1998.
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 R. Steppe, the company's Secretary, at the company's
address set forth on the front cover.
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 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 two times during 1998.
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 four times during 1998.
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 three times during 1998.
The non-executive stock incentive plan committee consists of Dennis E.
Singleton, John K. French 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 six meetings by written consent during 1998.
COMPENSATION OF DIRECTORS
Each of the independent directors receives an annual fee of $22,000, a
meeting fee of $1,000 for each board of directors meeting attended and for each
committee meeting which is scheduled separately from a regular board meeting,
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. 1993 Amended and Restated
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 on
December 31 of each calendar year thereafter, and who has served for more than
one year, will automatically receive an annual grant of options to purchase
7
<PAGE> 12
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 each formed in December 1993. No interlocking relationship existed in 1998
or presently exists between any member of the compensation committee or stock
incentive plan committee and any member of the board of directors or
compensation committee of any other corporation. Significant transactions and
relationships between the company and certain of its officers and directors are
set forth below in the section entitled "Related Transactions."
RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS
There are no family relationships among any of the directors or executive
officers of the company.
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, 1999. 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, 1999.
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, 1999.
8
<PAGE> 13
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following tables set forth information concerning compensation of the
company's chief executive officer and each of the other executive officers of
the company a for the fiscal years indicated. All stock options were granted at
an exercise price equal to at least the fair market value on the date of grant.
Amounts listed in the "all other compensation" column reflect the company's
contributions to the 401(k) Retirement Plan.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL CASH COMPENSATION -----------------------------
-------------------------------------- RESTRICTED STOCK STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) TOTAL($) AWARDS($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- -------- ---------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr. 1998 $225,000 -- $225,000 $575,017 60,000 $5,000
Chairman of the Board and 1997 225,000 -- 225,000 777,195 80,000 5,000
Chief Executive Officer 1996 225,000 -- 225,000 -- 380,000 5,000
John K. French 1998 250,000 $150,000 400,000 400,023 60,000 5,000
Director, Executive Vice 1997 225,000 250,000 475,000 414,515 45,000 5,000
President and Chief 1996 225,000 175,000 400,000 -- 245,000 5,000
Operating Officer
John A. Foster 1998 200,000 200,000 400,000 400,023 60,000 5,000
Executive Vice President 1997 165,000 20,757 185,757 591,204 100,000 5,000
and Chief Investment 1996 145,000 286,853 431,853 304,357 22,000 5,000
Officer
Dennis E. Singleton 1998 200,000 100,000 300,000 250,027 60,000 5,000
Vice Chairman of the 1997 200,000 150,000 350,000 414,515 30,000 5,000
Board 1996 200,000 100,000 300,000 -- 130,000 5,000
Craig G. Vought 1998 225,000 175,000 400,000 400,023 60,000 5,000
Executive Vice President 1997 200,000 225,000 425,000 414,515 45,000 5,000
and Chief Financial
Officer 1996 200,000 150,000 350,000 -- 245,000 5,000
</TABLE>
Restricted stock may be granted under the company's Amended and Restated
1993 Stock Incentive Plan or by the board. Restricted stock awards reflect the
fair market value of the award on the date of grant based on the closing price
on that date of the company's common stock. Shares of restricted stock vest in
equal installments over four years beginning one year after the date of grant.
Dividends are payable on the restricted shares to the extent and on the same
date as dividends are paid on the company's common stock. The number of shares
underlying the restricted stock grants over the last three fiscal years, along
with total unvested restricted stock holdings as of January 1, 1999 and their
fair market value based on the per share closing price of $34.625 on December
31, 1998 were as follows. The values do no reflect diminution of value
attributable to the restrictions on such stock.
RESTRICTED STOCK GRANTS
<TABLE>
<CAPTION>
SHARES OF RESTRICTED STOCK
GRANTED/EARNED IN TOTAL UNVESTED
-------------------------- RESTRICTED SHARES HELD TOTAL VALUE ON
NAME 1998(1) 1997 1996 AS OF JANUARY 1, 1999 JANUARY 1, 1999
---- ------- ------ ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr. ........ 16,607 18,127 0 30,202 $1,045,744
John K. French................. 11,553 9,668 0 18,804 651,089
John A. Foster................. 11,553 14,493(2) 9,258(3) 32,481 1,124,655
Dennis E. Singleton............ 7,221 9,668 0 14,472 501,093
Craig G. Vought................ 11,553 9,668 0 20,304 703,026
</TABLE>
- ---------------
(1) Consists of restricted stock granted on January 1, 1999 for services
performed in 1998.
(2) Consists of 4,036 shares of restricted stock granted on October 1, 1997 and
10,457 shares granted on April 4, 1998 for services performed in 1997.
(3) Consists of restricted stock granted on March 3, 1997 for services performed
in 1996.
9
<PAGE> 14
OPTION GRANTS FOR LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted by the company during 1998 to each of the executive officers
under the Spieker Properties, Inc. Amended and Restated 1993 Stock Incentive
Plan. The closing price of the common stock on the date of the grant was $38.75.
Twenty percent of these options becomes exercisable one year after grant and an
additional 20% becomes exercisable each year thereafter.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS
----------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
GRANT OPTIONS EMPLOYEES IN PRICE PER EXPIRATION GRANT DATE
NAME AND PRINCIPAL POSITION DATE GRANTED FISCAL YEAR SHARE DATE VALUATION(1)
--------------------------- -------- ---------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr.......... 06/30/98 60,000 4.2% $38.75 06/30/08 $338,262
Chairman of the Board and
Chief Executive Officer
John K. French................. 06/30/98 60,000 4.2% $38.75 06/30/08 $338,262
Director, Executive Vice
President and Chief Operating
Officer
John A. Foster................. 06/30/98 60,000 4.2% $38.75 06/30/08 $338,262
Executive Vice President and
Chief Investment Officer
Dennis E. Singleton............ 06/30/98 40,000 2.8% $38.75 06/30/08 $258,841
Vice Chairman of the Board
Craig G. Vought................ 06/30/98 60,000 4.2% $38.75 06/30/08 $338,262
Executive Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) 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 5.43%; 0.18136
volatility since the initial public offering; 5.63% dividend yield; exercise
price of $38.75; closing price of common stock on date of grant of $38.75;
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.
10
<PAGE> 15
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
None of the executive officers exercised any of their stock options during
the year ended December 31, 1998. 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,
1998. The value of unexercised in-the-money options is based on the closing
price of the company's common stock as reported on the New York Stock Exchange
on December 31, 1998 of $34.625 minus the exercise price, multiplied by the
number of shares underlying the options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END OPTIONS AT YEAR-END
---------------------------- ----------------------------
NAME AND PRINCIPAL POSITION EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Warren E. Spieker, Jr..................... 350,500 372,000 $2,839,813 $990,500
Chairman of the Board and
Chief Executive Officer
John K. French............................ 209,000 253,000 $1,642,500 $601,375
Director, Executive Vice President and
Chief Operating Officer
John Foster............................... 101,000 153,500 $1,069,750 $ 72,563
Executive Vice President and
Chief Investment Officer
Dennis E. Singleton....................... 195,000 147,000 $2,059,188 $324,875
Vice Chairman of the Board
Craig G. Vought........................... 194,500 248,000 $1,505,188 $553,250
Executive Vice President and
Chief Financial Officer
</TABLE>
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 or the Securities Exchange Act
of 1934 that might incorporate future filings or this proxy statement, 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 1998, executive compensation consisted of four
key elements:
- Base salary,
- Bonuses,
- Grants of stock options under the company's Amended and Restated 1993
Stock Incentive Plan, and
- Grants of restricted stock under the company's Amended and Restated
1993 Stock Incentive Plan or by the board.
In December 1993, the board of directors established the compensation
committee and the stock incentive plan committees of the board of directors
(together, 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.
11
<PAGE> 16
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 National Association of Real
Estate Investment Trusts, Inc. ("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 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 1998, the Committees placed 65% to 80% of the executive officers' total
compensation on stock-based awards. About 80% of the executive officers' total
compensation is based on the combination of short-term and long-term incentive
compensation awards.
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 Committees believe 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
Committees reserve 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 individual performance, execution
of the strategic plan, the functions performed by the executive officer, and
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. Consistent
with this philosophy, actual base salary levels for 1998 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 1998, a maximum of $1,200,000
was reserved for the pool of executive officers, assuming stretch goals were
achieved.
12
<PAGE> 17
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 compensation 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 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
compensation 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 compensation 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.
Bonus awards to executive officers for 1998 reflect performance results during
the year. Actual 1998 FFO growth fell below preestablished target objectives due
to changes in the property acquisition market and capital markets; however, FFO
growth represented the upper quartile performance of other equity REITs and the
50th percentile for the office/industrial/mixed-use 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 board may also issue
restricted stock to key executive 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:
- Company performance,
- The executive officer's or key employee's position in the company,
- His or her performance and responsibilities,
- The extent to which he or she already holds an equity stake in the
company,
- Equity participation levels of comparable executives and key employees
at other companies in the compensation peer group,
- Total compensation levels of comparable executives and key employees
at other companies in the compensation peer group, and
- Individual contribution to the success of the company's financial
performance.
13
<PAGE> 18
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 stock
incentive plan 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 common stock and will only be of value to the
executive officer or key employee if the stock price increases over time. The
1998 stock option grants reflect the company's compensation philosophy to place
greater emphasis on the variable components of the compensation program. In
1998, the company ranked at about average as compared to all equity REITs in the
office/industrial/mixed-use sector. The 1998 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 1998 in recognition of below market cash
compensation levels, to place greater emphasis on stock-based incentives, and to
retain exceptional executive talent. Restricted shares vest ratably at 25% per
year after one year from the date of grant. 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 1998 was determined on the same general basis as
discussed above for the executive officers. In 1998, Mr. Spieker received a base
salary of $225,000, which falls in the lowest quartile of the compensation paid
to chief 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 1998. Based on the stock incentive plan
committee's criteria, the company's performance as described above, and in
recognition of cash compensation that is significantly below competitive levels,
Mr. Spieker was awarded options to purchase 60,000 shares of common stock and
16,607 shares of restricted stock for 1998 performance. Mr. Spieker's
compensation in 1998 was leveraged 80% 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 1998, 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
Committees 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 1998 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 1998, the company made
contributions to the 401(k) Plan of $25,000 to the chief executive officer and
the other 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> 19
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL POLICY
The company has no employment agreement with any of its executive officers
and directors. The company has adopted a special severance policy which provides
that if the employment of any participant is terminated for any reason after a
change in control (except for a termination for cause or a voluntary resignation
by the participant without a good reason), then the company will pay the
participant a lump sum severance payment equal to two years to three years
compensation, depending on the participant's position. Compensation includes:
- The participant's highest annual rate of base salary, plus
- Average annual bonus earned by the participant during the last two
completed fiscal years, plus
- The average of the fair market value of the shares of restricted stock
granted to the participant during the past two completed fiscal years,
plus
- Medical, dental, disability, and life insurance plan coverage.
Medical, dental, disability and life insurance benefits may be offset by
new employment. The company will automatically reimburse a participant for any
excise tax payments under the policy that are imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended. Excise tax reimbursement payments
will not be paid if a reduction of up to 10% of the participant's payments under
the policy would avoid an excise tax to be levied. In that case, the
participant's payments would be reduced by up to 10% and no excise tax
reimbursement will be paid. Messrs. Spieker, French, Singleton, Vought, Foster
have been designated as plan participants as well as other senior executives.
15
<PAGE> 20
STOCK PRICE PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
company's common stock from December 31, 1993 through December 31, 1998 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 graph assumes that
the value of the investment in the company's common stock was $100 at December
31, 1993 and that all dividends were reinvested. The common stock's price on
December 31, 1993 was $18.625. All of the information relating to the graph
below was provided 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.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, S&P 500 INDEX & NAREIT EQUITY REIT INDEX**
<TABLE>
<CAPTION>
SPIEKER PROPERTIES, INC. S&P 500 NAREIT EQUITY INDEX
------------------------ ------- -------------------
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
12/31/94 109.40 98.46 103.70
12/31/95 134.90 132.05 119.48
12/31/96 193.29 158.80 164.04
12/31/97 230.20 208.05 198.75
12/31/98 185.91 263.53 165.71
</TABLE>
* Assumes $100 invested on 12/31/1993 in Spieker Properties Common
Stock, S&P 500 Index and NAREIT Equity REIT Index
** Fiscal year ending December 31
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, 1998, Spieker Northwest had revenues of $313 million, which were
mainly offset by operating expenses, and it did not pay any dividends on its
common or preferred stock.
At the time of the company's 1993 initial public offering, the company
entered into land holding agreements with some of its executive officers with
respect to vacant land parcels in which these 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.
16
<PAGE> 21
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act requires the company's directors, executive officers
and persons who beneficially own more than 10% of the company's common stock to
file with the Securities and Exchange Commission ("SEC") and New York Stock
Exchange initial reports of ownership and changes in ownership of the company's
common stock. These 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, 1998, all
reporting persons complied with all applicable filing requirements, except that
Elke Strunke filed a Form 4 report late.
Proxy Solicitation Costs. 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 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. The company will use the services of ADP, 51 Mercedes
Way, Edgewood, New York 11717 to assist in soliciting proxies and expects to pay
approximately $10,000 for these 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.
Stockholder Proposals. To be considered for presentation at the next annual
meeting of the company's stockholders to be held in 2000, a stockholder proposal
pursuant to Rule 14A-8 of the Securities Exchange Act, must be received by Sara
R. Steppe, Secretary, Spieker Properties, Inc., 2180 Sand Hill Road, Menlo Park,
California 94025, no later than December 15, 1999. All other stockholder
proposals must be received no later than April 10, 2000 and no earlier than
March 10, 2000.
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 8, 1999
Menlo Park, California
17
<PAGE> 22
[SPIEKER PROPERTIES LOGO]
SPIEKER PROPERTIES, INC.
P.O. BOX 9079
FARMINGDALE, NY 11738
VOTE BY PHONE - 800-890-8903 (in the US and Canada).
Use a touch-tone telephone to vote your proxy 24 hours a day, 7 days a week.
Have your proxy card in hand when you call. You will be prompted to enter your
individual 12-digit Control Number that appears in the box below. Then follow
the simple instructions you will hear.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have your
proxy card in hand when you access the web site. You will be prompted to enter
your individual 12-digit Control Number that appears in the box below. Then
follow the simple instructions on the screen.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope or return to: Spieker Properties, Proxy Services, P.O. Box 9079,
Farmingdale, NY 11735-9547.
CONTROL NUMBER
ACCOUNT NUMBER
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X SPIEK2
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SPIEKER PROPERTIES, INC.
For address changes and/or comments, please check [ ]
this box and write them on the back.
<TABLE>
<S> <C> <C>
VOTE ON DIRECTORS For Withhold Exceptions To withhold authority to vote,
All All mark "Exceptions" and write the
1. Election of Directors [ ] [ ] [ ] nominee's number on the line below.
-----------------------------------
</TABLE>
Nominees: 01) John K. French and
02) William S. Thompson, Jr.
VOTE ON PROPOSALS
For Against Abstain
2. To ratify the retention of Arthur Anderson LLP [ ] [ ] [ ]
as the Company's independent auditors for the
fiscal year ending December 31, 1999.
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.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ----------------------------------------- ---------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
<PAGE> 23
SPIEKB
- --------------------------------------------------------------------------------
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 9, 1999.
Warren E. Spieker, Jr., Dennis E. Singleton and Sara R. Sloppe (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 9, 1999, and at any adjournments or postponements thereof.
Shares represented by this proxy will be voted as directed by the
shareholder, 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, 1999. In their discretion, the Proxies are
authorized is 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 the nominated directors and FOR ratification of the
retention of Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999. If you wish to vote in accordance with
the Board of Director's recommendations you need not mark any boxes, just sign
and date on the reverse side.
SPIEKER PROPERTIES, INC.
P.O. BOX 9079
FARMINGDALE, N.Y. 11735
(Continued and to be dated and signed on the reverse side.)
