<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.
2180 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
April 10, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 annual meeting of stockholders
of Spieker Properties, Inc., to be held at the Doubletree Hotel, 2050 Gateway
Place, San Jose, California, on June 7, 2000, 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 our 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
<PAGE> 3
SPIEKER PROPERTIES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 2000
------------------------
The annual meeting of stockholders of Spieker Properties, Inc., will be
held at the Doubletree Hotel, 2050 Gateway Place, San Jose, California, on June
7, 2000, at 10:30 a.m., local time. At the meeting, stockholders will vote upon
the following proposals:
1. To elect three directors to serve for a three-year term.
2. To ratify the retention of Arthur Andersen LLP as our independent
auditors for the year ending December 31, 2000.
3. To transact any other business that properly comes before the annual
meeting.
Stockholders of record at the close of business on March 17, 2000 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
Menlo Park, California
April 10, 2000
<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
ELECTION OF DIRECTORS....................................... 5
Directors and Executive Officers.......................... 6
Meetings and Committees of the Board of Directors......... 8
Compensation of Directors................................. 9
Compensation Committee Interlocks and Insider
Participation.......................................... 9
Relationships among Directors or Executive Officers....... 10
RATIFICATION OF RETENTION OF INDEPENDENT AUDITORS........... 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION................ 11
Option Grants for Last Fiscal Year.......................... 13
Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values............................................. 14
Compensation Committee Report on Executive Compensation..... 14
Employment Agreements and Change of Control Policy.......... 18
STOCK PRICE PERFORMANCE GRAPH............................... 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 19
OTHER MATTERS............................................... 20
</TABLE>
i
<PAGE> 5
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 7, 2000, at 10:30
a.m., local time, at the Doubletree Hotel, 2050 Gateway Place, San Jose,
California, and any adjournment or postponement. Our board of directors are
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 our
independent auditors and transact any other business that properly comes before
the meeting. In addition, our management will report on our performance during
1999 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
17, 2000, of our common stock and Series A preferred stock are entitled to vote.
Holders of our common stock are entitled to cast one vote per share on each
matter to be voted upon. The holder of our 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,
65,038,927 shares of our common stock and 1,000,000 shares of our 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 us, 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
three 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.
1
<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 our Secretary 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 OUR 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 our board of directors. Our board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, our board
recommends a vote:
- FOR election of the nominated slate of directors; and
- FOR ratification of the appointment of Arthur Andersen LLP as our
independent auditors.
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by our 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 "For All Except" 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 our common stock beneficially owned
as of the record date for each director and each of our Named Executive
Officers, all directors and such executive officers as a group, and each person
known by us to hold more than 5% of the outstanding shares of our 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 our 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)........................... 2,992,147 4.60%
John K. French(2)................................... 825,926 1.27
Dennis E. Singleton(3).............................. 966,804 1.49
John A. Foster(4)................................... 328,123 *
Craig G. Vought(5).................................. 409,192 *
Joseph D. Russell, Jr.(6)........................... 60,480 *
John G. Davenport(7)................................ 314,719 *
Peter H. Schnugg(8)................................. 198,173 *
James C. Eddy(9).................................... 242,808 *
Richard J. Bertero(10).............................. 11,500 *
Harold M. Messmer, Jr.(11).......................... 118,275 *
David M. Petrone(12)................................ 16,375 *
William S. Thompson, Jr.(13)........................ 14,000 *
All directors and executive officers as a group
(sixteen persons)(14)............................. 6,576,758 10.11
Cohen & Steers Capital Management, Inc.(15)......... 4,773,500 7.34
LaSalle Investment Management, Inc. and LaSalle
Investment Management (Securities), L.P.(16)...... 3,338,118 5.13
Wellington Management Company, LLP(17).............. 3,786,800 5.82
</TABLE>
- ---------------
* Less than 1%
(1) Includes 2,364,863 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, 51,334 shares of restricted common stock,
474,500 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 512,772 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, 29,454 shares of restricted common stock and 279,000 shares of
common stock subject to options that are exercisable within 60 days of the
record date.
(3) Includes 679,526 shares of common stock that may be issued upon the
conversion of all of Mr. Singleton's partnership units, 23,500 shares of
common stock held directly, 22,378 shares of restricted common stock,
240,500 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
(4) Includes 143,141 shares of common stock that may be issued upon the
conversion of all of Mr. Foster's partnership units, 137,700 shares of
common stock subject to options that are exercisable within 60 days of the
record date and 47,282 shares of restricted common stock.
(5) Includes 104,493 shares of common stock that may be issued upon the
conversion of all of Mr. Vought's partnership units, 269,500 shares of
common stock subject to options that are exercisable within 60 days of the
record date and 35,199 shares of restricted common stock.
(6) Includes 14,924 shares of common stock that may be issued upon conversion
of all of Mr. Russell's partnership units, 250 shares of common stock held
directly in a 401k account, 24,906 shares of restricted common stock and
20,400 shares of common stock subject to options that are exercisable
within 60 days of the record date.
(7) Includes 151,925 shares of common stock that may be issued upon conversion
of all of Mr. Davenport's partnership units, 28,294 shares of restricted
common stock and 134,500 shares of common stock subject to options that are
exercisable within 60 days of the record date.
(8) Includes 101,227 shares of common stock that may be issued upon conversion
of all of Mr. Schnugg's partnership units, 23,397 shares of restricted
common stock and 73,549 shares of common stock subject to options that are
exercisable within 60 days of the record date.
(9) Includes 145,532 shares of common stock that may be issued upon conversion
of all of Mr. Eddy's partnership units, 5,176 shares of restricted common
stock and 92,100 shares of common stock subject to options that are
exercisable within 60 days of the record date.
(10) Includes 2,000 shares of common stock held directly and 9,500 shares of
common stock subject to options that are exercisable within 60 days of the
record date.
(11) Includes 105,600 shares of common stock held directly, 7,300 shares of
common stock held by Mr. Messmer's sons and 5,375 shares subject to options
that are exercisable within 60 days of the record date. Mr. Messmer
disclaims beneficial ownership of such 7,300 shares.
(12) Includes 10,000 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.
(13) Includes 3,000 shares of common stock held directly, 9,500 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.
(14) Includes 4,235,839 shares of common stock that may be issued upon the
conversion of partnership units and 1,488,350 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.
(15) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 10, 2000. Address: 757 Third Avenue, New York, New
York 10017.
(16) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 10, 2000. Address for each entity is 200 East
Randolph Drive, Chicago, Illinois 60601. Includes 975,770 shares of common
stock beneficially owned by LaSalle Investment Management, Inc. and
2,362,348 shares beneficially owned by LaSalle Investment Management
(Securities), L.P. LaSalle Investment Management, Inc. is the limited
partner as well as the sole shareholder of the general partner of LaSalle
Investment Management (Securities), L.P.
(17) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 11, 2000. Address: 75 State Street, Boston,
Massachusetts 02109.
We also have 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.
4
<PAGE> 9
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our articles of incorporation divides our 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 three individuals as
Class I 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 our bylaws.
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:
WARREN E. "NED" SPIEKER, JR.
Mr. Spieker has served as Chairman of the Board of Directors since August
1993, and Chief Executive Officer from August 1993 to September 1999, and
oversees all of our acquisition, development and financing activities,
establishes corporate policy and provides overall strategic direction. He began
his career in the real estate industry in 1967 and joined Trammell Crow Company
in 1970 and served as a board member and the managing partner of the Northwest
region. 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 Science in Business Administration 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.
RICHARD J. BERTERO
Mr. Bertero has served as a Director 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.
HAROLD M. MESSMER, JR.
Mr. Messmer has served as a Director since December 1993. Mr. Messmer is
Chairman and Chief Executive Officer of Robert Half International, Inc., 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.
OUR BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED ABOVE.
5
<PAGE> 10
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. 55 Chairman of the Board 1997 2000
John K. French 55 Vice Chairman of the Board 1996 2002
Dennis E. Singleton 55 Vice Chairman of the Board 1998 2001
John A. Foster 41 Co-Chief Executive Officer -- --
Craig G. Vought 39 Co-Chief Executive Officer -- --
Stuart A. Rothstein 34 Chief Financial Officer -- --
Joseph D. Russell, Jr. 40 President, Silicon Valley Region -- --
John G. Davenport 43 President, Southern California -- --
Region
Peter H. Schnugg 48 President, East Bay/Sacramento -- --
Region
James C. Eddy 49 President, Pacific Northwest Region -- --
Frank Alexander 42 President, Peninsula/North Bay -- --
Region
Elke E. Strunka 57 Vice President, Principal Accounting -- --
Officer
Richard J. Bertero 60 Director 1997 2000
Harold M. Messmer, Jr. 54 Director 1997 2000
David M. Petrone 55 Director 1998 2001
William S. Thompson, Jr. 54 Director 1996 2002
</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.
FRANK A. ALEXANDER, President, Peninsula/North Bay Region, is responsible
for overseeing the acquisition, development, and management activities of the
company's San Francisco Peninsula and North Bay region. Prior to his current
role, Mr. Alexander served as Senior Vice President of the North Bay region and
was responsible for developing office and industrial projects totaling
approximately 1,500,000 square feet and acquiring over 2,300,000 square feet of
properties included in the company's current core portfolio. Prior to joining
our predecessor in 1987, Mr. Alexander began his real estate career with the
Trammell Crow Company in 1986. Mr. Alexander received a Bachelor of Science in
Engineering from Brown University and a Masters in Business Administration from
The Wharton School of Business.
JOHN G. DAVENPORT, President, Southern California Region, is responsible
for overseeing the acquisition, development and management activities of the
company's Southern California region. Prior to his current role, Mr. Davenport
served as Regional Senior Vice President of the Southern California region. Mr.
Davenport has developed office, industrial, and R&D projects totaling
approximately 3,000,000 square feet and has acquired over 11,000,000 square feet
of properties included in the company's core portfolio in both Northern and
Southern California. He was one of the founding partners with our predecessor
during its formation in 1987 and began his career in real estate with the
Trammell Crow Company in 1983. Mr. Davenport received a Bachelor of Science in
Mechanical Engineering from the University of California at Berkeley and a
Masters in Business Administration from Harvard Graduate School of Business
Administration.
JAMES C. EDDY, President, Pacific Northwest Region, is responsible for
overseeing the acquisition, development, and management activities of the
company's Pacific Northwest region. In this role, Mr. Eddy manages and leases
over 13,000,000 square feet of office and industrial properties in Washington
and Oregon.
6
<PAGE> 11
Prior to his current role, Mr. Eddy served as Regional Senior Vice President of
the Pacific Northwest region and was responsible for developing office and
industrial projects totaling over 3,500,000 square feet, and acquiring over
4,000,000 square feet of properties included in the company's current core
portfolio. He was one of the founding partners with our predecessor during its
formation in 1987 and began his career in real estate with the Trammell Crow
Company in 1979. Mr. Eddy received a Bachelor of Arts from Stanford University
and a Masters in Business Administration from the University of Santa Clara.
JOHN A. FOSTER, Co-Chief Executive Officer, is responsible for the
strategic direction of and long-term planning for the company. Mr. Foster also
oversees the management of the company's portfolio. Prior to his current role,
Mr. Foster served as Chief Investment Officer and was responsible for the
management and oversight of the company's acquisition, development and
divestment activities. Before becoming Chief Investment Officer, Mr. Foster
served as Regional Senior Vice President and was responsible for our operations
in the Silicon Valley area of Northern California, including new development,
acquisitions and property management. Mr. Foster joined our predecessor in 1985.
Mr. Foster is a current member and past president of NAIOP (National Association
of Industrial and Office Parks) -- Silicon Valley Chapter. Prior to joining
Spieker, 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, Vice Chairman, has served as a Director since August 1993.
Mr. French is responsible for leading the company's commitment to continuing
education as well as developing ways to improve corporate productivity. Prior to
his current role, Mr. French served as Chief Operating Officer and was
responsible for overseeing the leasing, marketing and management of 40,000,000
square feet of commercial property. He was one of the founding partners with our
predecessor during its formation in 1987 and began his career in real estate
with the Trammell Crow Company 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.
DAVID M. PETRONE has served as a Director 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.
STUART A. ROTHSTEIN, Chief Financial Officer, is responsible for the
management and control of the company's financial matters and capital market
activities. Since joining the company in 1994, Mr. Rothstein has been
responsible for raising over $4 billion of capital in various public and private
market transactions. He is also responsible for budgeting/financial analysis,
investor relations, corporate communications and purchasing. Prior to joining
the company, Mr. Rothstein was employed at Price Waterhouse. He received a
Bachelor of Science from Pennsylvania State University and a Masters in Business
Administration from Stanford University. Mr. Rothstein is a Certified Public
Accountant.
JOSEPH D. RUSSELL, JR., President, Silicon Valley Region, is responsible
for overseeing the acquisition, development, and management activities of the
company's Silicon Valley region. Prior to his current role, Mr. Russell served
as Regional Senior Vice President of the Silicon Valley region and was
responsible for developing office, industrial and R&D projects totaling
approximately 2,000,000 square feet, and acquiring over 3,500,000 square feet of
properties included in the company's current core portfolio. Prior to joining
our predecessor in 1990, Mr. Russell held various marketing positions at IBM
Corporation. He serves on the board of directors of NAIOP, Silicon Valley
Chapter. Mr. Russell received a Bachelor of Science in Business Administration
from the University of Southern California and a Masters in Business
Administration from Harvard Graduate School of Business Administration.
7
<PAGE> 12
PETER H. SCHNUGG, President, East Bay/Sacramento Region, is responsible for
overseeing the acquisition, development, and management activities of the
company's East Bay/Sacramento region, where the company owns, manages, and
leases over 10,000,000 square feet of office and industrial properties. Prior to
his current role, Mr. Schnugg served as Regional Senior Vice President of the
North East Bay, Sacramento and Peninsula region and was responsible for
developing office and industrial projects totaling over 3,000,000 square feet,
and acquiring over 7,000,000 square feet of properties included in the company's
current core portfolio. He was one of the founding partners with our predecessor
during its formation in 1987 and began his career in real estate with the
Trammell Crow Company in 1983. Mr. Schnugg received a Bachelor or Arts from the
University of California at Berkeley and a Masters in Business Administration
from Stanford University.
DENNIS E. SINGLETON, Vice Chairman, has served as a Director since August
1993. He is responsible for leading the company's efforts to build a brand
identity, as well as for increasing the value-added services we provide to our
tenants. Additionally, Mr. Singleton is involved with identifying and analyzing
strategic portfolio acquisition and operating opportunities. Prior to his
current role, Mr. Singleton served as Chief Financial Officer and Chief
Investment Officer. He was one of the founding partners with our predecessor
during its formation in 1987 and began his career in real estate with the
Trammell Crow Company 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.
ELKE E. STRUNKA, Vice President, serves as principal accounting officer of
the company and directs the company's accounting and tax functions. Her
responsibilities include implementing and monitoring accounting policies and
internal controls, preparing consolidated financial statements, ensuring REIT
compliance and addressing taxation issues related to an UPREIT structure. Ms.
Strunka joined our predecessor in 1984, serving as company controller. Ms.
Strunka received a Bachelor of Science from the University of Nebraska. She is a
Certified Public Accountant.
WILLIAM S. THOMPSON, JR. has served as a Director since December 1993. Mr.
Thompson is a Managing Director and Chief Executive Officer of Pacific
Investment Management Company. 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.
CRAIG G. VOUGHT, Co-Chief Executive Officer, is responsible for overseeing
the overall strategic direction of the company and the company's capital market
and investment activities. Previously, Mr. Vought served as the Chief Financial
Officer and Executive Vice President and was responsible for raising over $3
billion of capital in various public and private offering transactions. Mr.
Vought joined our predecessor in 1987 and, during that time, developed nearly
1,000,000 square feet of commercial property. He began his real estate career
with the Trammell Crow Company in 1986 and has also 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 1999, there were four meetings of the board of directors, one
conference of the board of directors conducted by telephone and one unanimous
written consent. Each director attended all of the meetings of the board
(whether in person or telephonically), except that Mr. Singleton did not attend
the September 8 meeting and Mr. Thompson did not attend the March 10 and July 14
meetings. Each director attended all of the meetings of committees of the Board
on which he served (whether in person or telephonically) during 1999.
8
<PAGE> 13
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 Secretary, at the address set forth
on the front cover.
The audit committee consists of Richard J. Bertero and David M. Petrone.
The audit committee recommends the appointment of the firm of certified public
accountants to audit the financial statements 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 financial and accounting organization and its system of
internal accounting controls. The audit committee met two times during 1999.
The compensation committee consists of Harold M. Messmer, Jr., Warren E.
Spieker, Jr. and William S. Thompson, Jr. The compensation committee establishes
and reviews annually the company's general compensation policies applicable to
executive officers, reviews and approves the level of compensation of the chief
executive officer and other executive officers, 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 three times during 1999.
The stock incentive plan committee consists of Harold M. Messmer, Jr. and
William S. Thompson, 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. During 1999 the
stock incentive plan committee met three times and acted by unanimous written
consent two times.
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
other employees 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 ten meetings by written consent during 1999.
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 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
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 compensation committee and stock incentive plan committee were each
formed in December 1993. No interlocking relationship existed in 1999 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
9
<PAGE> 14
committee of any other corporation. Significant transactions and relationships
between us and our 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 our directors or executive
officers.
PROPOSAL NO. 2
RATIFICATION OF RETENTION OF INDEPENDENT AUDITORS
Arthur Andersen LLP has served as our independent auditors since our
initial public offering in 1993 and has been appointed by our board to continue
as our independent auditors for the fiscal year ending December 31, 2000. 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 our board. 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, 2000.
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.
OUR BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE RETENTION OF ARTHUR
ANDERSEN LLP AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2000.
10
<PAGE> 15
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following tables set forth information concerning compensation of our
chief executive officer and each of the other executive officers of the company
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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL CASH COMPENSATION COMPENSATION
-------------------------------------- -----------------------
RESTRICTED ALL OTHER
STOCK STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) TOTAL($) AWARDS($) OPTIONS(#) ($)(5)
- --------------------------- ---- --------- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr. 1999 $225,000 -- $225,000 $500,000 -- $24,500
Chairman of the Board(1) 1998 225,000 -- 225,000 575,017 60,000 5,000
1997 225,000 -- 225,000 777,195 80,000 5,000
John A. Foster 1999 225,000 $525,000 750,000 400,010 50,000 24,500
Co-Chief Executive 1998 200,000 200,000 400,000 400,023 60,000 5,000
Officer(2) 1997 165,000 20,757 185,757 591,204 100,000 5,000
Craig G. Vought 1999 225,000 525,000 750,000 400,010 50,000 48,500
Co-Chief Executive 1998 225,000 175,000 400,000 400,023 60,000 5,000
Officer(3) 1997 200,000 225,000 425,000 414,515 45,000 5,000
Joseph D. Russell, Jr. 1999 170,000 532,228 702,283 200,005 30,000 15,500
President, Silicon Valley 1998 150,000 187,500 337,500 427,073 40,000 5,000
Region(4) 1997 130,000 241,560 371,560 293,432 25,000 5,000
John G. Davenport 1999 185,000 419,356 604,356 260,018 30,000 15,500
President, Southern 1998 175,000 218,750 393,750 517,432 50,000 5,000
California Region(4) 1997 150,000 108,819 258,819 308,747 100,000 5,000
Peter H. Schnugg 1999 180,000 421,058 601,508 -- 20,000 11,000
President, East Bay/ 1998 175,000 218,750 393,750 189,492 40,000 5,000
Sacramento Region(4) 1997 150,000 -- 150,000 507,905 75,000 5,000
James C. Eddy 1999 160,000 368,046 528,046 -- 25,000 11,000
President, Pacific 1998 150,000 187,500 337,500 86,063 40,000 5,000
Northwest Region(4) 1997 135,000 145,153 280,153 39,121 30,000 5,000
</TABLE>
- ---------------
(1) Mr. Spieker served as Chairman of the Board and Chief Executive Officer
until September 29, 1999 at which time he remained Chairman of the Board.
(2) Mr. Foster served as Executive Vice President and Chief Investment Officer
until September 29, 1999 at which time he was elected Co-Chief Executive
Officer.
(3) Mr. Vought served as Executive Vice President and Chief Financial Officer
until September 29, 1999 at which time he was elected Co-Chief Executive
Officer.
(4) Messrs. Russell, Davenport, Schnugg, and Eddy served as regional senior vice
presidents until September 29, 1999 at which time they were elected regional
presidents.
(5) Reflects contributions to the 401(k) Retirement Plan. In 1999, also reflects
the value of grants of a portion of the shares of common stock of Broadband
Office, Inc. received by us in connection with our formation of this
Company. These grants vest over four years.
Restricted stock awards generally reflect the fair market value of the
award on the date of grant based on the closing price on that date of the common
stock and may be granted under the Spieker Properties, Inc. Amended and Restated
1993 Stock Incentive Plan or directly by us. Restricted stock awards granted in
February 1, 2000 for 1999 performance reflect the fair market value of the award
on December 31, 1999. 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 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, 2000 and their fair market value based on
11
<PAGE> 16
the per share closing price of $36.4375 on December 31, 1999 were as follows.
The values do not reflect diminution of value attributable to the restrictions
on such stock.
RESTRICTED STOCK GRANTS
<TABLE>
<CAPTION>
SHARES OF RESTRICTED STOCK TOTAL UNVESTED
GRANTED/EARNED IN RESTRICTED SHARES
--------------------------- HELD AS OF TOTAL VALUE ON
NAME 1999(1) 1998 1997 JANUARY 1, 2000 JANUARY 1, 2000
---- ------- ------ ------ ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Warren E. Spieker, Jr. ........... 13,722 16,607 18,127 39,394 $1,435,419
John A. Foster.................... 10,978 11,553 14,493(2) 34,133 1,243,721
Craig G. Vought................... 10,978 11,553 9,668 24,477 891,881
Joseph D. Russell, Jr. ........... 5,489 12,151(3) 7,092 24,663 898,658
John G. Davenport................. 7,136 14,284(4) 7,528(5) 26,438 963,335
Peter H. Schnugg.................. -- 5,030(6) 12,518(7) 15,018 547,218
James C. Eddy..................... -- 2,466 1,520 3,585 130,628
</TABLE>
- ---------------
(1) Consists of restricted stock granted on February 1, 2000 for services
performed in 1999.
(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 972 shares of restricted stock granted on August 25, 1998 and
11,179 shares granted on February 1, 1999 for services performed in 1998.
(4) Consists of 6,123 shares of restricted stock granted on August 25, 1998 and
8,161 shares granted on February 1, 1999 for services performed in 1998.
(5) Consists of 1,302 shares of restricted stock granted on October 1, 1997 and
6,226 shares granted on March 1, 1998 for services performed in 1997.
(6) Consists of 4,513 shares of restricted stock granted on August 28, 1998 and
517 shares granted on February 1, 1999 for services performed in 1998.
(7) Consists of 4,793 shares of restricted stock granted on October 1, 1997 and
7,725 shares granted on March 1, 1998 for services performed in 1997.
12
<PAGE> 17
OPTION GRANTS FOR LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted during 1999 to each of our 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 $38.8125. 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. -- -- -- -- -- --
Chairman of the Board
John A. Foster 07/14/99 50,000 7.6% $38.8125 07/14/09 $275,187
Co-Chief Executive Officer
Craig G. Vought 07/14/99 50,000 7.6% $38.8125 07/14/09 $275,187
Co-Chief Executive Officer
Joseph D. Russell, Jr. 07/14/99 30,000 4.6% $38.8125 07/14/09 $165,112
President, Silicon Valley
Region
John G. Davenport 07/14/99 30,000 4.6% $38.8125 07/14/09 $165,112
President, Southern
California Region
Peter H. Schnugg 07/14/99 20,000 3.0% $38.125 07/14/09 $110,075
President, East
Bay/Sacramento Region
James C. Eddy 07/14/99 25,000 3.8% $38.125 07/14/09 $137,593
President, Pacific Northwest
Region
</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 5.72%; five-year
volatility of 0.1947; 6.08% dividend yield; exercise price of $38.8125;
closing price of common stock on date of grant of $38.8125; 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.
13
<PAGE> 18
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, 1999. The following table sets forth the number of
shares of common stock covered by the stock options held by our chief executive
officers and our other named executive officers as of December 31, 1999. The
value of unexercised in-the-money options is based on the closing price of the
common stock as reported on the New York Stock Exchange on December 31, 1999 of
$36.4375 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. ......................... 454,500 268,000 $3,889,764 $1,096,130
Chairman of the Board
Craig G. Vought................................. 264,500 228,000 $2,121,049 $ 605,245
Co-Chief Executive Officer
John A. Foster.................................. 137,700 166,800 $1,300,244 $ 138,100
Co-Chief Executive Officer
Joseph D. Russell, Jr. ......................... 20,400 81,800 $ 29,725 $ 53,213
President, Silicon Valley Region
John G. Davenport............................... 134,500 138,000 $1,291,619 $ 132,350
President, Southern California Region
Peter H. Schnugg................................ 73,549 105,000 $ 670,356 $ 113,638
President, East Bay/Sacramento Region
James C. Eddy................................... 92,100 81,400 $1,080,064 $ 68,455
President, Pacific Northwest Region
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of our 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 1999, executive compensation primarily consisted
of four key elements:
- Base salary,
- Bonuses,
- Grants of stock options under the Amended and Restated 1993 Stock
Incentive Plan, and
- Grants of restricted stock under the Amended and Restated 1993 Stock
Incentive Plan.
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 executive officers. The stock incentive plan committee has responsibility
for administering the 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 compensation program. The compensation consultant provides advice to the
Committees with respect to competitive practices and the reasonableness of
compensation paid to the executives. The Committees review surveys and other
data supplied by the consultant in the course of their deliberations relating to
compensation proposals. The Committees believe
14
<PAGE> 19
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 executive compensation program should be to provide
incentives to create value for 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 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 long-term growth,
financial success, and increasing stockholder value. For 1999, the Committees
placed 15% to 25% of the executive officers' total compensation on base salary
and 75% to 85% on the combination of short-term and long-term incentive
compensation awards.
The Committees believe that company performance should be measured on the
basis of both quantitative and qualitative assessments. Quantitative measures
include performance in areas such as growth in funds from operations (FFO), net
operating income growth, operating margins, return on invested capital, return
on investor equity, total return to shareholders, and portfolio occupancy rates.
Qualitative measures include performance in the areas such as asset quality,
asset management, risk management, tenant retention, financing strategy, market
strategy, management strength, special projects and teamwork. These quantitative
and qualitative measures are not formally weighted for purposes of determining
salaries or incentive 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, and on the basis of 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 the 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.
Short-Term Incentive Compensation Awards. All the 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 1999, a maximum of $2,000,000 was
reserved for the pool for executive officers, assuming stretch goals were
achieved. Approximately 75% of the pool maximum was actually paid out to
executive officers for 1999 performance.
15
<PAGE> 20
Annual incentive awards are paid after assessing company, region,
department, and individual performance. Payments for each individual are
weighted differently among company, region, department and individual
performance objectives, depending on the position. The chief executive officer's
weighting is 100% on company performance. The weighting for other senior
officers is 75% on company performance and 25% on region or department
performance.
Company performance is measured on the basis of achieving targeted FFO
objectives, which are reviewed and approved by the compensation committee.
Region performance is measured on stabilized contributions to FFO from new
acquisitions and developments and the performance of existing property portfolio
net operating 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 Committees may also make their decision based on criteria such as FFO growth
performance relative to the office/industrial/mixed-use REIT market segments,
asset quality, asset management, risk management, tenant retention, financing
strategy, market strategy, management strength and teamwork. 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 to subjectively evaluate each executive officer's
individual performance and contribution to the company's overall financial and
operational success. These subjective factors are not weighted.
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 chairman and
co-chief executive officers and approves the awards for other participants. The
chairman and the co-chief executive officers, 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 compensation committee approved the target
performance objectives and the pool. Bonus awards to executive officers for 1999
reflect performance results during the year. Actual 1999 FFO exceeded
preestablished target objectives due to market conditions and improved leasing
in the company's development and core portfolio. 1999 FFO growth represented the
85th percentile performance of other equity REITs and the 75th percentile for
the office/industrial/mixed-use sector equity REITs. The Committees also noted
the company's better-than-expected same-store net operating income growth,
operating margins and returns on new developments. In addition, the company was
able to maintain high portfolio occupancy rates of 96.3%, establish one of the
highest levels of pre-leasing among its office/industrial peers, and decrease
dependence on outside financing through capital recycling strategies.
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.
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,
16
<PAGE> 21
- 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.
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
1999 stock option grants reflect the compensation philosophy to place greater
emphasis on the variable components of the compensation program. The 1999 grants
of options vest ratably at 20% per year after one year from the date of grant.
Certain executive officers were also granted restricted stock during 1999 in
recognition of exceptional performance, 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. Mr. Warren E. Spieker, Jr. served as
chief executive officer until September, 1999 at which time he remained Chairman
of the Board. Messrs. Foster and Vought were appointed co-chief executive
officer in September 1999. Compensation for Messrs. Spieker, Foster and Vought
for fiscal 1999 was determined on the same general basis as discussed above for
the executive officers. Base salary and award levels under the Amended and
Restated 1993 Stock Incentive Plan and the short-term incentive plan are
reviewed annually for Messrs. Spieker, Foster and Vought. In 1999, Messrs.
Spieker, Foster and Vought each 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. Base salary for Mr. Spieker and Mr. Vought did not
increase between 1998 and 1999. Mr. Spieker's base salary will not change in
2000. In recognition of their new roles and responsibilities, the Committees
will increase the base salaries for Mr. Foster and Mr. Vought in 2000 to
$250,000 per year. Consistent with the company's compensation philosophy to
leverage incentive compensation, Mr. Foster's and Mr. Vought's base salary
levels will continue to be in the lowest quartile of competitive practices for
2000.
As he has in the past, Mr. Spieker chose to waive any short-term incentive
compensation for 1999. The Committees awarded Messrs. Foster and Vought a bonus
of $525,000 each on the basis of exceptional company performance. The company
exceeded its 1999 FFO objectives, significantly outperformed the
office/industrial/mixed-use REIT market segments in FFO growth, and delivered a
12.3% total return to shareholders which represented approximately the 90th to
95th percentiles of all equity REITs and the office/industrial/mixed-used equity
REIT segment, respectively. In addition, the company delivered better-
than-expected same-store net operating income growth, operating margins, and
returns on new developments. The company was also able to maintain high
portfolio occupancy rates of 96.3%, establish one of the highest levels of
pre-leasing among its office/industrial peers, and decrease dependence on
outside financing through capital recycling strategies.
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, Messrs. Spieker, Foster and Vought were
awarded 13,722, 10,978, and 10,978 shares of restricted stock, respectively, for
1999 performance. Mr. Foster and Mr. Vought were also each awarded options to
purchase 50,000 shares of common stock for 1999 performance. Mr. Spieker did not
receive stock options in 1999. Mr. Spieker's
17
<PAGE> 22
compensation in 1999 was leveraged 75% toward incentives directly tied to
shareholder value creation. Mr. Foster's and Mr. Vought's compensation in 1999
was leveraged 85% toward incentives. In 1999, the company contributed $5,000 to
the 401(k) accounts for Messrs. Spieker, Foster and Vought under the terms and
conditions of that plan and made no profit sharing contributions in accordance
with the provisions of that plan. The Chief Executive Officers also received
grants of restricted shares of common stock of Broadband Office, Inc. Messrs.
Spieker, Foster and Vought do not participate in or otherwise influence
deliberations of the Committees relating to their 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 $10,000 for the 1999 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, the company excludes officers from
participation in the profit sharing contribution. Beginning after twelve months
of service, the company's contributions on the employee's behalf vests at a rate
of 20% per year. For fiscal year 1999, we made contributions to the 401(k) Plan
of $35,000 to the chief executive officers and the other executive officers.
Broadband Office, Inc. In 1999, we helped form Broadband Office, Inc. Since
some of our executives participated in the formation and development of the
company, we granted shares of common stock to our executive officers that vest
over four years. For fiscal year 1999, the value of these grants to the chief
executive officers and the other officers totaled $115,500.
<TABLE>
<S> <C>
STOCK INCENTIVE PLAN COMMITTEE OF THE COMPENSATION COMMITTEE
BOARD OF DIRECTORS OF THE BOARD OF DIRECTORS
William S. Thompson, Jr. William S. Thompson, Jr.
Harold M. Messmer, Jr. Harold M. Messmer, Jr.
Warren E. Spieker, Jr.
</TABLE>
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL POLICY
We have no employment agreement with any of our executive officers and
directors. We have 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 we 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. We 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, Foster, Vought, Davenport, Russell, Schnugg and Eddy have been
designated as plan participants as well as other senior executives.
18
<PAGE> 23
STOCK PRICE PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on our
common stock from December 31, 1994 through December 31, 1999 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 our common stock was $100 at December 31, 1994 and that all
dividends were reinvested. The common stock's price on December 31, 1994 was
$20.375. 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.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
SPIEKER PROPERTIES, INC. S&P 500 NAREIT EQUITY INDEX
------------------------ ------- -------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 123.31 137.58 115.27
1996 176.69 169.17 155.92
1997 210.43 225.61 187.51
1998 169.94 290.09 154.69
1999 178.83 351.13 147.54
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We own 95% of the non-voting preferred stock of Spieker Northwest, Inc.,
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, 1999, Spieker Northwest had
revenues of $3,238,000 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, we entered into
land holding agreements with some of our executive officers with respect to
vacant land parcels in which these executive officers hold ownership interest.
The land holding agreements generally provide us 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.
In September 1999, we acquired shares of voting and non-voting common stock
of Broadband Office, Inc., which provides telecommunications services to some of
our tenants. The fees paid by Broadband Office
19
<PAGE> 24
to us are comparable to the fees paid to other real estate owners. Some of our
directors and executive officers own stock in, and Craig G. Vought serves as a
director of, Broadband Office.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act requires our directors, executive officers and
persons who beneficially own more than 10% of our common stock to file with the
Securities and Exchange Commission and New York Stock Exchange initial reports
of ownership and changes in ownership of common stock. These persons are
required by SEC regulations to furnish us with copies of all Section 16(a)
reports they file. To our knowledge, based solely on our review of the copies of
such reports received, we believe that during its fiscal year ended December 31,
1999, all reporting persons, with the exceptions of Messrs. Davenport, Eddy,
Rothstein, Russell and Schnugg, each of whom filed one Form 3 after the filing
period, complied with all applicable filing requirements.
Proxy Solicitation Costs. The solicitation of proxies will be conducted by
mail and we 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.
We will use the services of ADP, 51 Mercedes Way, Edgewood, New York 11717 to
assist in soliciting proxies and expect to pay approximately $10,000 for these
services. We may conduct further solicitation personally, telephonically or by
facsimile through our 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 our stockholders to be held in 2001, 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, 2000. All other stockholder proposals must be
received no later than April 10, 2001 and no earlier than March 10, 2001.
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
April 10, 2000
Menlo Park, California
20
<PAGE> 25
[SPIEKER PROPERTIES LOGO] VOTE BY PHONE - 800-690-6903 (in the US and
SPIEKER PROPERTIES, INC. Canada). Use a touch-tone telephone to vote
P.O. BOX 9079 your proxy 24 hours a day, 7 days a week.
FARMINGDALE, NY 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.
AUTO DATA PROCESSING VOTE BY INTERNET - www.proxyvote.com
INVESTOR COMM SERVICES Use the Internet to vote your proxy 24 hours a
ATTENTION: day, 7 days a week. Have your proxy card in hand
TEST PRINT when you access the web site. You will be
51 MERCEDES WAY prompted to enter your individual 12-digit
EDGEWOOD, NY Control Number that appears in the box below.
11717 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.
123,456,789,012.00000
CONTROL NUMBER 101010101010
ACCOUNT NUMBER 1234567890123456789
PAGE 1 OF 2
<TABLE>
<C> <S> <S>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X SPIEK3 KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ON
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SPIEKER PROPERTIES, INC.
04 1010101010 228170446013
For address changes and/or comments, please check [ ]
this box and write them on the back.
VOTE ON DIRECTORS For Withhold Exceptions To withhold authority to vote, mark
All All "Exceptions" and write the nominee's
number on the line below.
1. Election of Directors
Nominees: 01) Richard J. Bortero, [ ] [ ] [ ] _________________________________
02) Harold M. Messmer, Jr.
03) Warren E. Spieker, Jr.
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. To ratify the retention of Arthur Andersen LLP as the Company's [ ] [ ] [ ]
independent auditors for the fiscal year ending December 31, 2000.
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.
----------------------------------- -------- ----------------------------------- ------- 123,456,789,012
848497400
15
- ----------------------------------- -------- ----------------------------------- -------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 26
SPIEKER PROPERTIES, INC.
2180 Sand Hill Road
Menlo Park, CA 94026
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON JUNE 7, 2000.
Warren E. Spieker, Jr., Dennis E. Singleton and Sara R. Sleppe (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 7, 2000, 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, 2000. 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 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, 2000. 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 9079
FARMINGDALE, N.Y. 11734
(Continued and to be dated and signed on the reverse side.)
