<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CENTERPOINT PROPERTIES TRUST
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CENTERPOINT PROPERTIES TRUST
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1998
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
CenterPoint Properties Trust (the "Company") will be held at the Lower Level
Conference Center, 401 N. Michigan Avenue, Chicago, Illinois on Friday, May 15,
1998 at 11:00 a.m., Central Daylight Time, for the following purposes:
1. to elect eight trustees to serve until the next annual meeting of
shareholders or special meeting of shareholders held in place thereof and
until their respective successors are elected and have qualified;
2. to ratify the selection of Coopers & Lybrand as independent public
accountants of the Company for the year ending December 31, 1998;
3. to vote on the approval of the Fourth Amendment to the CenterPoint
Properties 1993 Stock Option Plan; and
4. to transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Trustees has fixed the close of business on March 25, 1998 as
the record date for the determination of common shareholders entitled to vote at
the meeting. Only those shareholders whose names appear on record on the books
of the Company at the close of business on such date are entitled to notice of,
and to vote at, the Annual Meeting or any adjournment or adjournments thereof.
You are cordially invited to attend the meeting in person. Whether or not
you expect to attend the meeting, please sign and date the enclosed proxy and
return it as promptly as possible in the enclosed self-addressed,
postage-prepaid envelope. If you attend the Annual Meeting of Shareholders and
wish to vote in person, your proxy will not be used.
By Order of the Board of Trustees
Paul S. Fisher
SECRETARY
March 31, 1998
Chicago, Illinois
<PAGE>
CENTERPOINT PROPERTIES TRUST
401 NORTH MICHIGAN AVENUE
SUITE 3000
CHICAGO, ILLINOIS 60611
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 1998
------------------------
This proxy statement is furnished to holders of the Common Shares of
Beneficial Interest, par value $.001 per share, of CENTERPOINT PROPERTIES TRUST
(hereinafter called the "Company") in connection with the solicitation of
proxies by the Board of Trustees of the Company to be used at the Annual Meeting
of Shareholders of the Company to be held at the Lower Level Conference Center,
401 N. Michigan Avenue, Chicago, Illinois on Friday, May 15, 1998 at 11:00 a.m.,
Central Daylight Time, and at any adjournment or adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
If the accompanying form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not yet been exercised.
The persons named in the accompanying form of proxy will vote such proxy for
election to the board of the nominees named below. It is anticipated that this
proxy statement and the enclosed proxy will be first mailed to record holders of
the Company's Common Shares on or about March 31, 1998.
The Board of Trustees has fixed the close of business on March 25, 1998 as
the record date for the determination of shareholders entitled to receive notice
of and vote at the Annual Meeting of Shareholders. As of March 25, 1998, the
Company had outstanding Common Shares of Beneficial Interest, par
value $.001 per share.
Each Common Share is entitled to one vote on each matter presented for
ratification. A shareholder who abstains from a vote on any matter by
registering an abstention will be deemed present at the meeting for quorum
purposes but will not be deemed to have voted on that matter. Similarly, in the
event a nominee holding shares for beneficial owners votes on certain matters
pursuant to discretionary authority or instruction from the beneficial owners,
but with respect to one or more other matters does not receive instructions from
the beneficial owners and does not exercise discretionary authority (a so-called
"non-vote"), the shares held by the nominee will be deemed present at the
meeting for quorum purposes but will not be deemed to have voted on such other
matters.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company for inclusion in
the proxy statement and form of proxy for that meeting no later than December 1,
1998.
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ELECTION OF TRUSTEES
(PROPOSAL 1)
At the meeting a Board of Trustees is to be elected, each trustee to hold
office until the next annual meeting of shareholders or special meeting of
shareholders held in place thereof, and until his successor is elected and
qualified. Trustees are elected by a plurality of the votes cast. The Board of
Trustees does not contemplate that any nominee will be unable to serve as a
trustee for any reason; however, if that should occur prior to the meeting, the
proxy holders will select another nominee to stand for election in his place and
stead.
Following is a summary of the name, age and principal occupation or
employment for the past five years of each nominee for election as a trustee and
each executive officer of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------
<S> <C> <C>
Martin Barber................. 53 Chairman of the Board
Robert L. Stovall............. 65 Vice Chairman of the Board
John S. Gates, Jr............. 44 President, Chief Executive Officer and Trustee
Michael M. Mullen............. 43 Executive Vice President and Chief Operating
Officer
Paul S. Fisher................ 42 Executive Vice President, Secretary, Chief
Financial Officer and General Counsel
Rockford O. Kottka............ 47 Senior Vice President and Treasurer
Paul T. Ahern................. 37 Senior Vice President of Investments
Nicholas C. Babson............ 51 Independent Trustee
Norman R. Bobins.............. 55 Independent Trustee
Alan D. Feld.................. 61 Independent Trustee
John J. Kinsella.............. 69 Independent Trustee
Thomas E. Robinson............ 50 Independent Trustee
</TABLE>
MARTIN BARBER. Mr. Barber has been the Chairman of the Board of Trustees of
the Company since its formation in 1984. He has been involved in commercial real
estate since 1969, when he acquired a substantial interest in Arrowcroft
Investments Limited, a commercial property development group, where he served as
Managing Director until 1972, when he sold his interest. At that time, he
founded Capital and Regional Holdings Limited. In 1978, he formed Capital and
Regional Properties plc (which became publicly-traded in the London stock market
in 1986) to engage in real estate and related activities in the United Kingdom,
and has served as its Chairman since that time. In 1984, together with Mr.
Gates, he formed the Company to engage in real estate activities in the United
States, and has also served as its Chairman since that time. Since 1984, Mr.
Barber has served as a Non-Executive Director, and currently is Chairman, of
Primesight, plc, a UK-based billboard company. In 1991, Mr. Barber was appointed
a Non-Executive Director of TransEuropean Properties (General Partner) Limited,
a co-mingled real estate fund comprised of European and U.S.-based pension funds
established to invest in European properties. In 1996, Mr. Barber was appointed
Non-Executive Director of PRICOA Property Investment Management Ltd., a British
real estate fund management company which is a wholly owned subsidiary of The
Prudential Insurance Company of America, and he is a board member of the
Association of foreign investors in U.S. Real Estate.
ROBERT L. STOVALL. Mr. Stovall has been a Trustee of the Company since
August, 1993 and was appointed Vice Chairman of the Board of Trustees in July,
1997. From August, 1993 to July, 1997, Mr. Stovall was an Executive Vice
President and the Chief Operating Officer of the Company. From 1975 until he
joined the Company, he served as President and Chief Executive Officer of FCLS
Investors
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Group, Inc. ("FCLS"), a Chicago-based owner and manager of warehouse/industrial
real estate which he co-founded in 1975 and the operations of which were
consolidated in 1993 with those of the Company. Mr. Stovall began his career as
a real estate salesman in 1957 for the Great Southwest Industrial District in
Arlington-Grand Prairie, Texas. He joined J.L. Williams and Co. Inc.
("Williams"), a Texas-based industrial developer, in 1961. In 1967, he opened
the Chicago branch office of Williams and became Executive Vice President of the
firm. In 1978, he formed Four Columns, Ltd. and purchased Williams' Chicago
operation and properties. In 1987, Four Columns, Ltd. was merged with Stava
Construction Company, another warehouse/industrial development company, and
FCLS/Stava Group was formed, where Mr. Stovall served as Chairman until he
joined the Company. Mr. Stovall is a 1955 honors graduate of Yale University
with a Bachelors of Arts degree in American Studies. Mr. Stovall is a member of
the National Association of Industrial and Office Parks. Mr. Stovall is the
father-in-law of Mr. Mullen.
JOHN S. GATES, JR. Mr. Gates has been the President, Chief Executive
Officer and a Trustee of the Company since its formation in 1984. From 1977 to
1981, he was a leasing agent and an investment property acquisition specialist
with CB Commercial, a real estate brokerage and acquisition firm. In 1981, he
founded the Chicago office of Jones Lang Wooton, which advised foreign and
domestic institutions on property investment throughout the Midwest. He received
his Bachelors degree in Economics from Trinity College (Hartford). Mr. Gates is
a member of the Young Presidents Organization, Urban Land Institute, National
Realty Committee, National Association of Real Estate Investment Trusts,
National Association of Industrial and Office Parks and has served on the Board
of Directors of the Institute for Community Empowerment since 1981. Mr. Gates is
a member of the Board of Trustees of The Chicago Dock and Canal Trust.
MICHAEL M. MULLEN. Mr. Mullen has been the Executive Vice President and
Chief Operating Officer of the Company since July, 1997 and, from August, 1993
to July, 1997, was the Executive Vice President-- Marketing and Acquisitions and
Chief Investment and Development Officer of the Company. He was a co-founder of
FCLS and served as its Vice President-Sales, with responsibility for leasing,
built-to-suit sales and acquisitions since 1987. Mr. Mullen graduated from
Loyola University in 1975, with a Bachelor's degree in Finance. He is the
son-in-law of Mr. Stovall.
PAUL S. FISHER. Mr. Fisher has been an Executive Vice President of the
Company since August 1993, and the Secretary, Chief Financial Officer and
General Counsel of the Company since 1991. Between 1988 and 1991, Mr. Fisher was
Vice President, Finance and Acquisitions of Miglin-Beitler, Inc., a
Chicago-based office developer. From 1986 to 1988, Mr. Fisher was Vice
President, Corporate Finance, at The First National Bank of Chicago. From 1982
through 1985, he was Vice President, Partnership Finance, at VMS Realty, a
Chicago-based real estate syndication company. Mr. Fisher graduated from the
University of Notre Dame, summa cum laude, with a Bachelor of Arts degree in
Economics and Philosophy in 1977. Mr. Fisher received his Juris Doctorate from
the University of Chicago School of Law in 1980. He serves on the board of the
Midwest Chapter of the Real Estate Investment Advisory Council.
ROCKFORD O. KOTTKA. Mr. Kottka has been the Senior Vice President and
Treasurer of the Company since 1989. From 1978 to 1989, Mr. Kottka served as the
Vice President and Controller of Globe Industries, Inc., a Chicago based
manufacturer of roofing and automotive acoustical materials. Mr. Kottka
graduated from St. Joseph's Calumet College in 1975 with a Bachelor of Science
degree in Accountancy. Mr. Kottka is a certified public accountant. He is a
member of the American Institute of Certified Public Accountants and the
Illinois CPA Society.
PAUL T. AHERN. Mr. Ahern has been Senior Vice President of Investments of
the Company since June 1984. Mr. Ahern started his career as an accountant for
Centex Homes Corporation. From June 1985 to June 1990, he was an investment
analyst, leasing agent and an investment property specialist with CB Commercial,
a real estate brokerage firm. From June 1990 to January 1993, he was an
investment property specialist for American Heritage Corporation, a real estate
investment firm. Mr. Ahern graduated from
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Indiana University in 1982 with a bachelor's degree in Accounting. Mr. Ahern is
a member of The Society of Industrial and Office Realtors and the National
Association of Real Estate Investment Trusts.
NICHOLAS C. BABSON. Mr. Babson has been an independent trustee of the
Company since December 1993, when he was appointed to fill one of four vacancies
existing as a result of an increase in the number of trustees from three to
seven. Mr. Babson also serves as Chairman and Chief Executive Officer of Babson
Brothers Co., a worldwide manufacturer and distributor of dairy equipment based
in Naperville, Illinois. Mr. Babson joined Babson Brothers in 1973, following
two years service in the United States Army. Mr. Babson also serves as a member
of the Board of Directors of Bradner Central Company, a privately-owned,
national distributor of paper products, a member of the Board of Directors and
Past Chairman of the Equipment Manufacturers Institute and a member of the Board
of Trustees of the Farm Foundation and has served as a member and Past Chairman
of the National FFA Foundation. Mr. Babson is also a member of the Board and
Past President of the Shakespeare Repertory, a Chicago-based theater company.
Mr. Babson graduated from the University of the South with a Bachelor of Arts
degree in Political Science (1968).
NORMAN R. BOBINS. Mr. Bobins has been an independent trustee of the
Company since March, 1998 when he was appointed to fill a vacancy created by
an increase in the number of trustees from seven to eight. Mr. Bobins is
president and chief executive officer of LaSalle National Bank and LaSalle
National Corporation. He is also chairman of LaSalle Bank N.A. and head of
Midwest Commercial Banking for ABN AMRO North America, Inc., the parent of
LaSalle Banks. In April 1981, Mr. Bobins joined The Exchange National Bank of
Chicago (which was acquired by LaSalle National Corporation in 1990), as a
senior executive vice president and chief lending officer. Prior to 1981, Mr.
Bobins was senior vice president and held various other commercial lending
positions at American National Bank and Trust Company over fourteen years.
Mr. Bobins holds directorships with the American-Israel Chamber of Commerce &
Industry and the Anti-Defamation League of the B'nai B'rith, which honored
him with its Distinguished Service Award in 1982. In June 1995, Mayor Richard
Daley named Mr. Bobins to Chicago's School Reform Board of Trustees. Mr.
Bobins also serves as a trustee of the Public School Teachers' Pension and
Retirement Fund of Chicago and The University of Chicago Hospitals. He is
chairman of the board of directors of the Chicago Clearing House Association
and a director of the Federal Home Loan Bank of Chicago, RREEF America REIT
II, Inc. and a member of numerous other boards. Mr. Bobins graduated from the
University of Wisconsin in 1964 with a bachelor of science degree and
received his M.B.A. from The University of Chicago in 1967.
ALAN D. FELD. Mr. Feld has been an independent trustee of the Company since
December 1993, when he was appointed to fill a vacancy on the Board of Trustees.
Since 1960, Mr. Feld has been associated with the law firm of Akin, Gump,
Straus, Hauer & Feld, L.P.P. in Dallas, Texas. He currently serves as a Senior
Executive Partner of the firm and sole shareholder of a professional corporation
that is a partner of the firm. Mr. Feld graduated from Southern Methodist
University with a bachelor of arts degree in 1957. Mr. Feld received his LL.B.
degree from the Southern Methodist University in 1960. He has been a member of
the Texas State Bar since 1960 and a member of the District of Columbia Bar
since 1971. He was a member of the Board of Trustees of Brandeis University from
1986 to 1996. He serves on the Board of Trustees of Clear Channel
Communications, Inc., a New York Stock Exchange listed company, and is a Trustee
of the AMR AAdvantage Funds (Mutual Funds).
JOHN J. KINSELLA. Mr. Kinsella has been an independent trustee of the
Company since December 1993, when he was appointed to fill a vacancy on the
Board of Directors. Since 1987, Mr. Kinsella has served as President of the
Kinsella Development Company, Inc., a real estate development company located on
the northwest side of Chicago. From 1951 until 1986, Mr. Kinsella was affiliated
with the advertising firm of Leo Burnett Company, Inc. as a member of its Board
of Directors. At the time of his retirement
4
<PAGE>
in 1986, Mr. Kinsella was President, Chief Executive Officer and Chairman of its
Board of Directors. Mr. Kinsella graduated from Notre Dame University in 1950.
He received his master's degree from De Paul University in Chicago in 1952. Mr.
Kinsella has served on the business and civic boards of a variety of
institutions, including the American Advertising Association, the Field Museum
and the Chicago Central Area Association.
THOMAS E. ROBINSON. Mr. Robinson has been an independent trustee of the
Company since December 1993, when he was appointed to fill a vacancy on the
Board of Directors. Mr. Robinson is currently a Managing Director of Legg
Mason Wood Walker, an investment banking firm headquartered in Baltimore
Maryland, which he joined in [June], 1997. Prior to joining that firm, he was
President of Storage USA, Inc., a REIT headquartered in Columbia, Maryland,
engaged in the business of owning and operating self-storage warehouses,
which he joined in August 1994. Between August 1993 and August 1994, Mr.
Robinson was a senior executive of Jerry J. Moore Investments, an owner and
operator of community and neighborhood shopping centers located in Texas.
Prior to joining Jerry J. Moore Investments, Mr. Robinson served as National
Trustee of REIT Advisory Services for the national accounting firm of Coopers
& Lybrand from 1989 to 1993. From 1981 to 1989, Mr. Robinson served as vice
president and general counsel for the National Association of Real Estate
Investment Trusts. Mr. Robinson received his Bachelor's degree from
Washington and Lee University, his Master's degree in taxation from
Georgetown University Law School, and his Juris Doctorate degree from Suffolk
University Law School.
BOARD OF TRUSTEES AND COMMITTEES
During fiscal year 1997, the Board of Trustees held 5 meetings. Each trustee
attended more than 75% of the aggregate of the meetings of the Board of Trustees
and the meetings held by Board committees on which he served.
The Board of Trustees of the Company has standing Asset Allocation, Audit,
Compensation and Nominating Committees.
ASSET ALLOCATION COMMITTEE. The Asset Allocation Committee is comprised of
three trustees, two of whom are independent trustees. The Asset Allocation
Committee is authorized to make investment decisions for investments under $10
million and to make recommendations to the Board of Trustees for other
investments. Messrs. Babson, Kinsella and Stovall are the members of the Asset
Allocation Committee. The Asset Allocation Committee held 4 meetings during
1997.
AUDIT COMMITTEE. The Audit Committee is comprised of two independent
trustees. The Audit Committee is authorized to make recommendations to the Board
of Trustees concerning the engagement of independent public accountants, review
with the independent public accountants the plans and results of their audits,
approve professional services provided by the independent public accountants,
consider audit and non-audit fees and review the adequacy of the Company's
internal accounting controls. Messrs. Kinsella and Robinson are the members of
the Audit Committee. The Audit Committee held 2 meetings during 1997.
COMPENSATION COMMITTEE. The Compensation Committee is comprised of three
trustees, two of whom are independent trustees. The Compensation Committee
exercises all powers of the Board of Trustees in connection with the
compensation of executive officers, including incentive compensation and
benefit plans. Messrs. Gates, Babson and Feld are the members of the
Compensation Committee. The independent trustees on the Compensation
Committee, Messrs. Babson and Feld, also serve as the Company's Stock Option
Committee and, as such, are empowered to grant stock options in accordance
with the Company's Stock Option Plan to the trustees and management of the
Company. The Compensation Committee held 3 meetings during 1997.
NOMINATING AND GOVERNANCE COMMITTEE. The Nominating and Governance
Committee is comprised of three independent trustees. The Nominating and
Governance Committee is authorized to make recommendations to the Board of
Trustees concerning nominees for election as trustees and governance
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procedures of the Company. Messrs. Martin, Feld and Robinson are the members of
the Nominating and Governance Committee. The Nominating and Governance Committee
did not hold any meetings during 1997.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's trustees and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange initial reports of ownership and reports
of changes in ownership of Common Shares and other equity securities of the
Company. Officers, trustees and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that, except as set forth below, all
Section 16(a) filing requirements applicable to its officers, trustees and
greater than ten-percent beneficial owners were complied with during the fiscal
year ended December 31, 1997.
Mr. Robert L. Stovall, a trustee of the Company, filed one Form 5, reporting
a grant of common shares under the Company's Restricted Stock Incentive Plan and
a grant of options under the Company's Stock Option Plan, and one Form 4,
reporting the exercise of options and the sale of common shares, after the date
prescribed under Section 16(a) of the Securities Exchange Act of 1934. Mr. John
Kinsella, a trustee of the Company, filed one Form 4, reporting the purchase of
common shares in three separate transactions, after the date prescribed under
Section 16(a) of the Securities Exchange Act of 1934.
RATIFICATION OF SELECTION OF ACCOUNTANTS
(PROPOSAL 2)
The Board of Trustees of the Company has selected Coopers & Lybrand as the
independent public accountants of the Company for the fiscal year ending
December 31, 1998. The appointment of auditors is approved annually by the Board
of Trustees and is subsequently submitted to the shareholders for ratification.
A representative of Coopers & Lybrand will be at the meeting to answer questions
concerning the Company's financial statements and will have an opportunity to
make a statement if he or she chooses to do so.
Unless specified to the contrary, unrevoked proxies will be voted to ratify
the selection of Coopers & Lybrand as the independent public accountants of the
Company.
6
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APPROVAL OF FOURTH AMENDMENT TO
CENTERPOINT PROPERTIES 1993 STOCK OPTION PLAN
(PROPOSAL 3)
SUMMARY OF AMENDMENT
The Company instituted the 1993 Stock Option Plan in December, 1993 (as
previously amended, the "Plan") to provide incentives to, and retain, trustees,
executive officers and key employees. The Board of Trustees has adopted an
amendment to the Plan, attached hereto as Exhibit A (the "Fourth Amendment"),
and is recommending the Fourth Amendment to the shareholders for approval. The
Fourth Amendment to the Plan would amend the Plan to, among other things,
increase the number of Common Shares available for issuance under the Plan by
providing an "evergreen" limitation on the number of Common Shares that can be
awarded under the Plan. The Fourth Amendment basically provides for a pool of
options available for issuance under the Plan equal to ten percent (10%) of the
Common Shares outstanding (including securities convertible into Common Shares)
to be available for issuance under the Plan. In addition, the Fourth Amendment
expands the group of employees eligible to participate under the Plan to include
all employees who perform substantial services; changes the limitation on option
grants to any individual in any calendar year; and provides the Board with
flexibility in determining the form of payment (e.g., cash, notes or surrender
of Common Shares already owned) required to be made upon the exercise of stock
options.
The Board has adopted the Fourth Amendment for the following reasons:
- Until this year, awards under the Company's long-term incentive plan
consisted of two-thirds stock options and one-third restricted stock
grants. A recent analysis of the long-term incentive plan by an
independent compensation consulting firm engaged by the Company indicated
that option grants provide greater long-term performance and retention
incentives than restricted stock grants. Based on this analysis, the
Board of Trustees has now decided to make stock option grants the sole
component of the long-term incentive plan. Elimination of the restricted
stock grant component of the long-term incentive plan will require the
availability of additional shares for option grants under the Plan.
- Also based on the independent consulting firm's analysis of the long-term
incentive plan, the Board of Trustees has directed the Compensation
Committee to set higher objective performance standards linked to the
creation of material shareholder value, coupled with greater rewards if
such standards are attained. The implementation of the higher performance
standards, coupled with greater potential awards, will also require the
availability of additional shares for option grants under the Plan.
- Implementation of the Company's Tenant Satisfaction Program has increased
the Company's awareness of the substantial contribution that employees at
all levels, not just persons previously designated executive or key
employees, make to the attainment of the Company's goals. Accordingly, the
Board believes it important to provide additional incentives in the form
of stock option grants to all employees who have been employed by the
Company for at least one year. Expanded employee participation will again
require the availability of additional shares for option grants under
the Plan.
- The Company, with the assistance of its independent compensation
consulting firm, has analyzed incentive programs that comparable REITS
offer to their employees. Based on that analysis, the Company has
determined that expanding opportunities for meaningful equity
participation in the Company (including flexibility in the form of payment
upon the exercise of options) will enable the Company to maintain overall
compensation levels at or above the industry median and thereby help the
Company to remain competitive in the retention and recruitment of
qualified employees.
- The Board believes the "evergreen" limitation will replenish the available
Common Shares under the Plan without the need for further amendments to
the Plan and will ensure that an adequate number of Common Shares will be
available under the Plan at all times to accomplish the foregoing
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objectives. The Board intends to continue the Company's existing policy of
subjecting option grants to multi-year vesting tied to continued
employment, which encourages long-term commitment to the Company.
ACCORDINGLY, THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE APPROVAL OF THE FOURTH AMENDMENT TO THE 1993 STOCK OPTION PLAN.
SUMMARY OF THE PLAN
The following summary of the material terms of the Plan, as amended by the
Fourth Amendment, is qualified in its entirety by reference to the provisions of
the Plan and the Fourth Amendment.
ADMINISTRATION. The Plan is administered by a committee ("Committee")
composed of two or more of the members of the Board of Trustees (the "Board")
who are not also officers or employees of the Company or any subsidiary of the
Company ("Independent Trustees"). The Committee members are appointed by the
Board. No person who received an award under the Plan at any time during the
previous year is eligible to be a member of the Committee (other than an
Independent Trustee who received a formula grant under the Plan).
The Committee has full authority to administer and interpret the provisions
of the Plan, including but not limited to the authority to make determinations
regarding awards under the Plan.
ELIGIBILITY TO PARTICIPATE. Every member of the Board, and every officer
or other employee of the Company or any subsidiary of the Company who has
been employed by the Company or any subsidiary for at least one year, as the
Committee in its sole discretion designates, is eligible to participate in
the Plan. The Committee may consider such factors as it deems pertinent in
selecting participants and in determining the amount of their Awards (as
defined below), including, without limitation: (i) the financial condition of
the Company or its subsidiaries; (ii) expected profits of the current or
future years; (iii) the contributions of an employee to the profitability and
success of the Company or its subsidiaries; and (iv) the adequacy of the
employee's other compensation.
AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan at any
time without obtaining approval from the Company's shareholders, except that the
Plan may not be amended without the approval of the Company's shareholders when
the amendment would (i) increase (other than pursuant to a stock split,
recapitalization or certain other changes in capitalization) the aggregate
number of shares that may be granted under the Plan; (ii) materially modify the
eligibility requirements for participation in the Plan; or (iii) materially
increase the benefits accruing to participants under the Plan.
The Plan will terminate on July 31, 2003, unless previously terminated by
the Board or dissolution of the Company.
AWARDS UNDER THE PLAN. The Committee has the authority, in its discretion,
to (i) determine the employees and trustees to whom options are granted, (ii)
determine, subject to limitations imposed by tax law, the time or times at which
Options are granted, (iii) determine whether options will be designated as
Incentive Stock Options ("Incentive Stock Options") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or will be non-qualified
stock options ("Non-Qualified Stock Options"), (iv) determine the price at which
options may be exercised, which in the case of Incentive Stock Options will not
be less than 110% of Fair Market Value, as defined below, of Common Shares
issuable upon exercise of Incentive Stock Options granted to a shareholder
holding 10% or more of the outstanding Common Shares and 100% of the Fair Market
Value of Common Shares issuable upon the exercise of Incentive Stock Options
granted to any other person, (v) determine the form in which the exercise price
of the Options may be paid (e.g., in the form of cash, promissory notes payable
to the Company, the surrender to the Company of Common Shares currently owned by
the optionee, cash-less exercise or any
8
<PAGE>
combination of the foregoing), (vi) determine the exercise period of the
options, not to exceed ten years (or five years with respect to Incentive Stock
options granted to stockholders holding 10% or more of the Company's Common
Shares), and (vii) determine the time or times when each option will become
exercisable and the duration of the exercise period.
Each Independent Trustee receives an option to acquire 3,000 shares at an
option price equal to the Fair Market Value at the time the option is granted
upon first being elected to the Board and upon each re-election to the Board.
Independent Trustees are not eligible to receive any other options under the
Plan.
"Fair Market Value" means the closing price of the Common Shares on the New
York Stock Exchange on date the option was granted.
SHARE AUTHORIZATION. The Plan currently limits the number of shares which
may be granted under the Plan to 1,500,000 and provides that no individual may
receive more than 500,000 shares in the aggregate under the Plan. As of March 1,
1998, options to purchase 955,364 Common Shares have been granted under the
Plan.
Upon approval of the Fourth Amendment by the shareholders, the number of
Common Shares issuable under the Plan will be limited as follows: With respect
to calendar year 1998, the maximum number of Common Shares that may be issued
pursuant to options granted under the Plan will be the total of (i) ten (10%)
percent of the number of Common Shares outstanding on May 1, 1998 (rounded
downward if necessary to eliminate fractional shares) minus (ii) the number of
Common Shares under options which were granted prior to May 1, 1998 plus (iii)
the number of Common Shares with respect to which previously granted options
have expired. Thereafter, the maximum number of Common Shares that may be issued
pursuant to options granted under the Plan will be the total of (i) ten (10%)
percent of the number of Common Shares outstanding on the last day of the
preceding calendar year (rounded downward if necessary to eliminate fractional
shares) minus (ii) the number of Common Shares under options which were granted
prior to the last day of the preceding calendar year plus (iii) the number of
Common Shares with respect to which previously granted options have expired. For
purposes of calculating the number of outstanding Common Shares, all classes of
securities that are convertible presently or in the future into Common Shares
are deemed to be outstanding Common Shares equal to the number of Common Shares
into which such securities are convertible, and no subsequent reduction in the
number of outstanding Common Shares (other than as a result of a reverse stock
split or similar recapitalization) will reduce the number of Common Shares
previously made available for option grants under the Plan. In no event may the
total number of options issued as Incentive Stock Options under the Plan plus
the total number of Common Shares issued upon the exercise of Incentive Stock
Options under the Plan exceed 3,000,000. The number of Common Shares which may
be issued to any one individual under the Plan may in no event exceed 250,000 in
any calendar year.
CHANGE OF CONTROL PROVISIONS. Upon the occurrence of a change of control,
all options theretofore granted under the Plan will become exercisable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal Federal income tax consequences
of option grants under the Plan. This summary is for general information only
and does not constitute tax advice. This summary does not describe all of the
Federal tax consequences under the Plan nor does it describe state or local tax
consequences.
INCENTIVE STOCK OPTIONS. No taxable income is realized by the optionee upon
the grant or exercise of an Incentive Stock Option. If shares issued to an
optionee pursuant to the exercise of an Incentive Stock Option are not sold or
transferred within two years from the date of grant or within one year after the
date of exercise, then (a) upon sale of such shares, any amount realized in
excess of the option price (the amount paid for the shares) will be taxed to the
optionee as long term capital gain and any loss sustained
9
<PAGE>
will be long-term capital loss and (b) there will be no deduction for the
Company for Federal income tax purposes. The exercise of an Incentive Stock
Option will give rise to an item of tax preference that may result in
alternative minimum tax liability for the optionee.
If the Common Shares acquired upon the exercise of an Incentive Stock Option
are disposed of prior to the expiration of either of the holding periods
described above (a "disqualifying disposition"), generally, (a) the optionee
will realize ordinary income in the year of the disposition in an amount equal
to the excess, if any, of the fair market value of the shares at exercise (or,
if less, the amount realized on a sale of such shares) over the option price
thereof, and (b) the Company will be entitled to deduct such amount. Special
rules will apply where all or a portion of the exercise price of the Incentive
Stock Option is paid by tendering Common Shares.
If an Incentive Stock Option is exercised at a time when it no longer
qualifies for the tax treatment described above, the option is treated as a
Non-Qualified Stock Option. Generally, except in the case of death, an Incentive
Stock Option will not be eligible for the tax treatment describe above if it is
exercised more than three months following termination of employment (or one
year in the case of termination of employment by reason of death or disability).
NON-QUALIFIED STOCK OPTIONS. Optionees who receive Non-Qualified Stock
Options granted under the Plan will realize no income at the time the option is
granted. Generally, (a) at exercise, ordinary income is realized by the optionee
in an amount equal to the difference between the option price and the fair
market value of the shares on the date of exercise, and the Company receives a
tax deduction for the same amount, and (b) at disposition, appreciation or
depreciation after the date of exercise is treated as either short-term or
long-term capital gain or loss depending on how long the shares have been held.
Special rules apply where all or a portion of the exercise price of the
Non-Qualified Option is paid by tendering Common Shares.
PAYMENTS IN RESPECT OF A CHANGE OF CONTROL. The Plan provides for
acceleration of the exercisablity of options granted under the Plan in the event
of a change of control. Such acceleration may cause the consideration involved
to be treated in whole or in part as "parachute payments" under the Code.
Acceleration of benefits under other Company stock and benefit plans and other
contracts with employees in the event of a change of control could be subject to
being combined with Plan accelerations for "parachute payment" purposes. Any
such "parachute payments" may be non-deductible to the Company in whole or in
part, and the recipient may be subject to a 20% excise tax on all or part of
such payments, in addition to other taxes ordinarily payable.
VOTE REQUIRED
The Fourth Amendment is being submitted to the shareholders pursuant to the
requirements of the Plan. Under the Company's By-laws, the affirmative vote of
the holders of a majority of the voting power present or represented at the
annual meeting is required for approval of the Fourth Amendment.
SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as of March 1, 1998 with respect
to the beneficial ownership of the Common Shares of the Company by (1) each
person who is known by the Company to own beneficially more than 5% of its
Shares, (2) each trustee of the Company, (3) the Company's Chief
10
<PAGE>
Executive Officer and four other executive officers and (4) the Company's
trustees and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------------------
AMOUNT AND NATURE OF
BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------------------- --------------------- ----------------
<S> <C> <C>
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017......................... 2,447,300(2) 14%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109...................... 1,382,538(3) 8%
Capital and Regional Properties plc
22 Grosvenor Gardens
London, England SW1W 0DH......................... 1,008,478 5.9%
Martin Barber
(Trustee and Chairman)
22 Grosvenor Gardens
London, England SW1W 0DH......................... 60,743(4) *
John S. Gates, Jr.
(Trustee, President and Chief Executive Officer)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611.......................... 506,386(5) 3%
Robert L. Stovall
(Trustee and Vice Chairman)
401 North Michigan Avenue
Suite 3000
Chicago, Illinois 60611.......................... 123,213 *
Nicholas C. Babson
(Trustee)
1880 Country Farm Drive
Naperville, Illinois 60563....................... 5,486(6) *
Alan D. Feld
(Trustee)
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201.............................. 6,486(7) *
John J. Kinsella
(Trustee)
1550 N. State Parkway
Chicago, Illinois 60610.......................... 6,007(7) *
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------------------
AMOUNT AND NATURE OF
BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------------------- --------------------- ----------------
<S> <C> <C>
Thomas E. Robinson
(Trustee)
Legg Mason Wood Walker
100 Light Street
34th Floor
Baltimore, Maryland 21202......................... 5,547(7) *
Michael M. Mullen
(Executive Vice President and
Chief Operating Officer)
401 North Michigan Avenue
Suite 3000
Chicago, Illinois 60611.......................... 111,715(8) *
Paul S. Fisher
(Executive Vice President, Secretary,
Chief Financial Officer
and General Counsel)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611.......................... 83,819(9) *
Rockford O. Kottka
(Senior Vice President and Treasurer)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611.......................... 39,847(10) *
Paul T. Ahern
(Senior Vice President of Investments)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611.......................... 3,522(11) *
All trustees and executive officers
as a group (11 persons).............. 952,771 5.6%
</TABLE>
- ------------------------
* Less than one percent
(1) Beneficial ownership is the direct ownership of Common Stock of the Company
including the right to control the vote or investment of or acquire such
Common Stock (for example, through the exercise of stock options or pursuant
to trust agreements) within the meaning of Rule 13d-3 under the Securities
and Exchange Act of 1934. The shares owned by each person or by the group
and the shares included in the total number of shares outstanding have been
adjusted in accordance with said Rule 13d-3.
(2) As reported on a Schedule 13G filed by Cohen & Steers Capital Management,
Inc. on February 13, 1998, Cohen & Steers Capital Management, Inc. has sole
voting power with respect to 2,170,900 Common Shares and has sole
dispositive power with respect to all of the 2,447,300 Common Shares.
(3) As reported on a Schedule 13G filed by FMR Corp. on February 9, 1998, FMR
Corp. has sole voting power with respect to 270,000 Common Shares and has
sole dispositive power with respect to all of the 1,382,538 Common Shares.
12
<PAGE>
(4) Includes options to purchase 58,600 Common Shares under the Company's Stock
Option Plan exercisable within 60 days. Excludes the shares owned by Capital
and Regional Properties plc, of which Mr. Barber is Chairman. Mr. Barber
disclaims beneficial ownership of such shares.
(5) Includes options to purchase 123,094 Common Shares under the Company's Stock
Option Plan exercisable within 60 days and 540 shares owned by an IRA for
the benefit of John S. Gates, Jr. Also includes 30,000 Common Shares owned
by the Gates Charitable Trust, under which Mr. Gates acts as trustee and
exercises voting power with respect to such Common Shares. Mr. Gates
disclaims beneficial ownership of 185 shares owned by an IRA for the benefit
of his wife.
(6) Includes options to purchase 3,600 Common Shares under the Company's Stock
Option Plan exercisable within 60 days.
(7) Includes options to purchase 4,200 Common Shares under the Company's Stock
Option Plan exercisable within 60 days.
(8) Includes options to purchase 62,512 Common Shares under the Company's Stock
Option Plan exercisable within 60 days and 2,000 shares owned by his wife.
(9) Includes options to purchase 62,512 Common Shares under the Company's Stock
Option Plan exercisable within 60 days.
(10) Includes options to purchase 22,410 Common Shares under the Company's Stock
Option Plan exercisable within 60 days.
(11) Includes options to purchase 3,522 Common Shares under the Company's Stock
Option Plan exercisable within 60 days.
13
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation awarded
to the Company's Chief Executive Officer and five other executive officers for
the years ended December 31, 1997, December 31, 1996 and December 31, 1995.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ----------------------------
OTHER ANNUAL RESTRICTED SECURITIES
SALARY COMPENSATION STOCK AWARD(S) UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS ($) ($)(2) ($)(3) OPTIONS (#) COMPENSATION ($)
- ------------------------------ ---- -------- ---------- ------------ -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
John S. Gates, Jr............... 1997 $228,160 $127,485 $ -0- $151,421(4) 52,878 $4,750(19)
Chief Executive Officer 1996 213,470 95,472 -0- 71,213(5) 34,817 5,086(18)(19)
1995 205,200 4,640 -0- 146,766(6) 35,692 3,312(18)(19)
Michael M. Mullen............... 1997 187,500 90,650 -0- 52,511(7) 14,778 4,750(19)
Executive Vice-President 1996 163,310 112,050 22,222 -0- 8,674 4,750(19)
and Chief Operating Officer 1995 133,530 48,251 -0- 39,500(8) 7,878 2,310(19)
Paul S. Fisher.................. 1997 187,500 86,275 -0- 52,511(9) 14,778 4,750(19)
Executive Vice-President 1996 163,310 68,400 -0- 45,000(10) 8,674 4,750(19)
Secretary, Chief Financial 1995 133,530 37,509 -0- 39,500(11) 7,878 2,310(19)
Officer and General Counsel
Rockford O. Kottka.............. 1997 120,000 51,627 -0- 21,987(12) 6,984 4,750(19)
Senior Vice-President 1996 105,270 38,000 -0- 16,875(13) 4,348 4,200(19)
and Treasurer 1995 90,136 17,016 -0- 6,893(14) 3,590 1,717(19)
Paul Ahern...................... 1997 107,500 20,250 -0- -0- 7,114 -0-
Senior Vice-President 1996 85,000 19,440 -0- -0- 2,287 -0-
of Investments 1995 67,500 6,584 -0- -0- 1,974 -0-
Robert L. Stovall............... 1997 178,567 88,204 -0- 113,558(15) 32,448 4,750(19)
Former Executive 1996 186,623 69,160 22,222 53,438(16) 17,804 4,750(19)
Vice-President and Chief 1995 179,375 3,542 -0- 110,990(17) 21,269 2,310(19)
Operating Officer(20)
</TABLE>
- ------------------------------
(1) Includes amounts deferred at the election of the named executive officer
under the Company's 401(k) Plan.
(2) Includes payments to certain executive officers to fund tax liabilities
arising from the sale of properties to the Company.
(3) Restricted shares awarded under the Company's Restricted Stock Incentive
Plan will vest eight years from the date of the grant; however, restricted
shares awarded under the plan may vest earlier as follows: (i) if total
shareholder return averaged over a consecutive sixty day trading period
commencing no earlier than two years from the date of the grant is greater
than a target established by the Compensation Committee at the time of the
respective award, all of the restricted shares awarded for such year will
vest; (ii) upon the death, disability or retirement of a participant, the
number of vested shares will be determined by dividing the number of months
which have elapsed from the date of such award by 96; or (iii) in the event
of a change of control of the Company, all of the restricted shares
previously awarded will vest.
(4) Represents 4,807 restricted Common Shares having a market value of $168,846
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(5) Represents 3,165 restricted Common Shares having a market value of $111,171
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(6) Represents 7,487 restricted Common Shares having a market value of $262,981
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. A total of
4,410 Common Shares, which were awarded pursuant to a separate restricted
stock grant agreement, were 100% vested as of January 1, 1995. In addition,
3,077 Common Shares vested as of February 23, 1997 as a result of
accelerated vesting upon the Company's attaining the target established by
the Compensation Committee. Dividends are paid on the restricted Common
Shares to the same extent as on any other Common Shares.
14
<PAGE>
(7) Represents 1,667 restricted Common Shares having a market value of $58,553
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(8) Represents 2,000 restricted Common Shares having a market value of $70,250
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. All 2,000
Common Shares vested as of February 23, 1997 as a result of accelerated
vesting upon the Company's attaining the target established by the
Compensation Committee. Dividends are paid on the restricted Common Shares
to the same extent as on any other Common Shares.
(9) Represents 1,667 restricted Common Shares having a market value of $58,553
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(10) Represents 2,000 restricted Common Shares having a market value of $70,250
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(11) Represents 2,000 shares of restricted Common Shares having a market value
of $70,250 based upon a closing price of $35 1/8 for the Company's Common
Shares as reported on the New York Stock Exchange on December 31, 1997. All
2,000 Common Shares vested as of February 23, 1997 as a result of
accelerated vesting upon the Company's attaining the target established by
the Compensation Committee. Dividends are paid on the restricted Common
Shares to the same extent as on any other Common Shares.
(12) Represents 698 restricted Common Shares having a market value of $24,517
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(13) Represents 750 restricted Common Shares having a market value of $26,344
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(14) Represents 349 restricted Common Shares having a market value of $12,259
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. All 349 Common
Shares vested as of February 23, 1997 as a result of accelerated vesting
upon the Company's attaining the target established by the Compensation
Committee. Dividends are paid on the restricted Common Shares to the same
extent as on any other Common Shares.
(15) Represents 3,605 restricted Common Shares having a market value of $126,626
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(16) Represents 2,375 restricted Common Shares having a market value of $83,422
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. Dividends are
paid on the restricted Common Shares to the same extent as on any other
Common Shares.
(17) Represents 5,663 restricted Common Shares having a market value of $198,913
based upon a closing price of $35 1/8 for the Company's Common Shares as
reported on the New York Stock Exchange on December 31, 1997. A total of
3,419 shares of such restricted Common Shares, which were awarded pursuant
to a separate restricted stock grant agreement, were 100% vested as of
January 1, 1995. In addition, 2,244 Common Shares vested as of February 23,
1997 as a result of accelerated vesting upon the Company's attaining the
target established by the Compensation Committee. Dividends are paid on the
restricted Common Shares to the same extent as on any other Common Shares.
(18) Represents insurance premiums paid by the Company for term life insurance
on Mr. Gates' life, the proceeds of which are payable to his designated
beneficiary.
(19) Represents Company's matching contribution to 401(k) Plan.
(20) In October, 1997, Mr. Stovall resigned his position as Executive Vice
President and Chief Operating Officer and Mr. Mullen was appointed by the
Board to replace him.
15
<PAGE>
OPTION TABLES
The following table sets forth, for the Company's Chief Executive Officer
and each of the other executive officers named in the Summary Compensation
Table, information with respect to option grants during the last fiscal year and
potential realizable values for such option grants for the term of the options.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
----------------------------------------------------- REALIZABLE
PERCENT OF VALUE AT
TOTAL ASSUMED
OPTIONS ANNUAL RATES OF
GRANTED TO STOCK PRICE
NUMBER OF EMPLOYEES IN APPRECIATION
SECURITIES THE YEAR FOR
UNDERLYING ENDED EXERCISE OF OPTION TERM
OPTIONS DECEMBER 31, BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) 1997 ($/SH) DATE 5% ($) 10% ($)
- --------------------------- ----------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John S. Gates, Jr.......... 52,878 22% $31.50 3/9/07 $1,047,513 $2,654,476
Michael M. Mullen.......... 14,778 6% 31.50 3/9/07 292,752 741,856
Paul S. Fisher............. 14,778 6% 31.50 3/9/07 292,752 741,856
Rockford O. Kottka......... 6,984 3% 31.50 3/9/07 138,353 350,597
Paul Ahern................. 7,114 3% 31.50 3/9/07 140,928 357,123
Robert L. Stovall.......... 32,448(1) 13% 31.50 3/9/07 0 0
</TABLE>
- ------------------------
(1) The stock options granted to Mr. Stovall in 1997 lapsed upon his retirement
as an executive officer.
16
<PAGE>
The following table sets forth, for the Company's Chief Executive Officer
and each of the other executive officers named in the Summary Compensation
Table, information with respect to option exercises during the last fiscal year
and option values at the end of the last fiscal year.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED DECEMBER 31, 1997
OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
FISCAL IN-THE-MONEY
YEAR END (2) (#) OPTIONS AT FISCAL
---------------- YEAR END (4)($)
SHARES VALUE EXERCISABLE/ --------------------
ACQUIRED ON REALIZED UNEXERCISABLE EXERCISABLE/
EXERCISE (#) (1)($) (3) UNEXERCISABLE (3)
------------ ------------ ---------------- --------------------
<S> <C> <C> <C> <C>
John S. Gates, Jr.......... None None 98,416 1,6$13,331
122,691 1,224,629
Michael M. Mullen.......... None None 56,246 937,838
39,284 431,709
Paul S. Fisher............. None None 56,246 937,838
39,284 431,709
Rockford O. Kottka......... None None 19,426 322,321
21,176 247,333
Paul Ahern................. None None 1,247 18,113
10,128 67,392
Robert L. Stovall.......... 116,113 1,$719,269 -0- -0-
-0- -0-
</TABLE>
- ------------------------
(1) Based on the difference between an exercise price of $18.25, $19.50 or
$22.50 per share, as the case may be, and the closing price of the Common
Shares as reported on the New York Stock Exchange on the date of exercise
(November 3, 1997) which was $33 15/16.
(2) All options are for Common Shares.
(3) The first number appearing in the column refers to exercisable options, and
the second number refers to unexercisable options. Options granted under the
1993 Stock Option Plan as amended become exercisable at the rate of 20% per
year and are fully exercisable five years after the date of the grant. Upon
a change of control, all unvested options become exercisable.
(4) Based on the difference between an exercise price of $18.25, $19.50, $22.50
or $31.50 per share, as the case may be, and the closing price of the Common
Shares on December 31, 1997 of $35 1/8 per share as reported on the New York
Stock Exchange.
17
<PAGE>
COMPENSATION OF TRUSTEES
The Company currently pays its trustees who are not employees of the Company
an annual fee of $20,000 ($33,333 for Mr. Barber as Chairman of the Board) plus
a fee of $1,000 for attendance at each meeting of the Board of Trustees.
Trustees who are employees of the Company are not paid any trustees' fees. In
addition, the Company will reimburse the trustees for travel expenses incurred
in connection with their activities on behalf of the Company. Under the 1995
Director Stock Plan, each trustee was awarded 339 Common Shares on May 15, 1997,
except Martin Barber who was awarded 565 Common Shares on May 15, 1997.
Trustees are eligible for the grant of options under the Company's Stock
Option Plan. As of December 31, 1997, trustees of the Company who are not
employees of the Company were granted the following options to purchase Common
Shares:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS EXERCISE EXPIRATION
NAME GRANTED(#) PRICE($) DATE(1)
- -------------------------------- ------------------- ---------- ----------
<S> <C> <C> <C>
Martin Barber................... 51,000 $ 18.25 12/10/2003
20,000 19.88 3/11/2004
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
3,000 29.625 5/15/2007
Nicholas C. Babson.............. 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
3,000 29.625 5/15/2007
Alan D. Feld.................... 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
3,000 29.625 5/15/2007
John J. Kinsella................ 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
3,000 29.625 5/15/2007
Thomas E. Robinson.............. 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
3,000 29.625 5/15/2007
</TABLE>
- ------------------------
(1) Options become exercisable at the rate of 20% per year and are fully
exercisable five years after the date of the grant. Upon a change of
control, all unvested options become exercisable.
EMPLOYMENT CONTRACTS
The Company's executive officers have entered into employment agreements
with the Company. Such agreements had an original term of five years (expiring
December 10, 1998), subject to earlier termination, with or without cause, by
the Company's Board of Trustees, subject, in the case of termination without
cause, to a severance payment equal to base salary for a specified number of
months. No severance payments are required upon early termination. The
agreements with the executive officers: (i) require that substantially all of
their time and effort be for the benefit of the Company (all such executive
officers are employed exclusively by the Company), (ii) set forth their annual
compensation level and (iii) provide for their participation in a discretionary
cash bonus plan. The agreements provide for annual base salaries
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which are subject to review and increase by the Board of Trustees: Effective
July 1, 1997, the Board of Trustees set the following base salaries: Mr.
Gates--$240,000; Mr. Mullen--$200,000; Mr. Fisher-- $200,000; Mr.
Kottka--$130,000; and Mr. Ahern--$150,000 (effective January 1, 1998).
In July, 1996, the Company entered into an Employment Separation Agreement
with Robert L. Stovall, then Executive Vice President, Chief Operating Officer
and a Trustee, under which (i) Mr. Stovall retired from the office of Executive
Vice President and Chief Operating Officer effective July 31, 1997, (ii) the
Company agreed to continue to nominate Mr. Stovall to serve on the Board of
Trustees through the year 2000 and, if he continues to be re-elected, to appoint
him as Vice Chairman of the Board of Trustees, for which he will be compensated
at the annual rate of $25,000 through the year 2000, (iii) the Company formed an
Asset Allocation Committee and the Board appointed Mr. Stovall as Chairman of
the Asset Allocation Committee, (iv) in the event the shareholders of the
Company do not re-elect Mr. Stovall to the Board through the year 2000, the
Company agreed to retain Mr. Stovall as a consultant at the annual rate of
$25,000 per year through the year 2000, (v) the Company accelerated, at Mr.
Stovall's retirement, the vesting of certain stock options granted to Mr.
Stovall under the 1993 Stock Option Plan and (vi) in consideration of the
foregoing, Mr. Stovall agreed not to compete with the Company through the year
2000 for which he will be paid at the annual rate of $100,000 from October 31,
1997 until December 31, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during fiscal year 1997
included Nicholas C. Babson, Alan D. Feld and John S. Gates, Jr. Mr. Gates is
employed by the Company as its President and Chief Executive Officer.
During fiscal 1997, no executive officer of the Company served on the board
of trustees or compensation committee (or other board committee performing
equivalent functions) of any other entity any of whose executive officers served
as a trustee of the Company or member of the Company's Compensation Committee.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
MISSION OF THE COMPENSATION COMMITTEE
The Board of Trustees has delegated to the Compensation Committee strategic
and administrative responsibility for the Company's management compensation
strategy and incentive compensation plan(s). The Committee's basic
responsibility is to assure that the Chief Executive Officer, other officers and
key management of the Company are compensated fairly and effectively in a manner
consistent with the Company's stated compensation strategy, competitive
practice, applicable regulatory requirements and performance results.
PAY-FOR-PERFORMANCE PLAN
In July 1994, based on the report of an independent consultant, Towers
Perrin Foster, and the recommendations of the Compensation Committee, the
Company's Board of Trustees approved a pay-for-performance compensation plan
(the "Plan"). The Plan is designed to provide competitive compensation levels
within the Company's industry and incentive pay that varies based on corporate,
departmental or profit center and individual performance. To achieve this
objective, the Plan contemplates that the Company generally will maintain base
salary levels for its employees at or about the median compensation level for
persons holding similar positions within the industry, based on information
drawn from compensation surveys and compensation consultants, but that employees
will have an opportunity to receive a total compensation package significantly
greater than the median based upon their contribution to the Company's
attainment of its growth objectives. For certain senior management employees,
the Plan contemplates that base salary levels will generally be somewhat below
the median, to further emphasize pay for
19
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performance through incentives. The Plan includes three elements: a salary
management system, an annual incentive plan and a long term incentive plan.
In October, 1997, the Board of Trustees engaged FPL Associates ("FPL"),
an affiliate of Ferguson Partners and a leading independent compensation
consulting firm in the real estate industry, to provide recommendations
regarding modifications to the Plan. The Board of Trustees adopted certain
the recommendations of FPL to modify the long-term incentive plan, as set
forth below.
SALARY MANAGEMENT SYSTEM. Under the Plan, the Company has established a
salary structure by individual position within a range of plus or minus 25% of
the median marketplace rate for that position. Annual salary rates for specific
individuals will vary within the range for such position based on such
individual's experience and qualifications. The Board of Trustees, based on the
recommendations of the Compensation Committee, establishes a budget for
aggregate merit increases each year based on marketplace practices, the
Company's ability to pay and the attainment of the Company's overall objectives.
Individual merit increases generally are expected to range from 0% to 10% of
salary, and merit increases in the aggregate generally are not expected to
exceed 5%. Annual merit increases are based on individual performance levels
gauged by performance appraisals conducted every six months.
Salary adjustments are made as of July 1 each year, effective for the
following 12 months. The average increase in executive salaries effective as
of July 1, 1997 was approximately 19.3%, including certain increases
attributable to promotions. Based on the compensation review performed by
FPL, executive salaries, after giving effect to these adjustments, remain
slightly below the industry median (91%).
ANNUAL INCENTIVE PLAN. The annual incentive plan is performance-driven,
provides cash awards based on the success of the Company in any fiscal year
and provides motivation to accomplish objectives that are critical to the
Company's success. No awards will be made for any fiscal year unless the
Company achieves a threshold level of funds from operations ("FFO") for that
year. The Company will annually establish threshold, target and maximum award
opportunities for each position, based on satisfaction of certain criteria.
The target award opportunities will generally be established consistent with
median rates for comparable positions. Cash awards are declared and paid
following completion of the Company's annual audit in the first quarter of
each year, based on performance during the prior year.
The criteria and the relative weights assigned to the criteria vary
depending on an employee's position. For the Company's Chief Executive
Officer, (i) a 60% weighting factor is assigned to the Company's overall
corporate performance determined by reference to FFO per share, variance of
the Company's operating performance from budget, as determined by the
Company's independent auditors and the overall results of a tenant
satisfaction survey conducted by CEL & Associates, a leading independent
surveyor of tenant satisfaction for the real estate industry, under the
supervision of the Compensation Committee, and (ii) a 40% weighting factor is
assigned to a non-formula assessment of individual performance as gauged by
performance appraisal results. For executive officers with departmental
functions, (i) a 50% weighting factor is assigned to the Company's overall
corporate performance determined by reference to the same measures as
described above, (ii) a 30% weighting factor is assigned to qualitative
departmental performance, and (iii) a 20% weighting factor is assigned to a
non-formula assessment of individual performance as gauged by performance
appraisal results. For executive employees in charge of property management
for particular regions, (i) a 40% weighting factor is assigned to overall
corporate performance based on the same measures as described above, (ii) a
40% weighting factor is assigned to regional performance, determined by
comparison of regional portfolio operating income to budget, regional days
outstanding in accounts receivable and the results of a regional tenant
satisfaction survey, and (iii) a 20% weighting factor is assigned to a
non-formula assessment of individual performance as gauged by performance
appraisal results. For each class of executive employee, points will be
assigned based on achievement of performance standards within each
performance category, and points will be used to determine eligibility for
threshold, target or maximum awards.
In March 1997, the Compensation Committee assigned each executive officer a
cash incentive award opportunity for 1997, expressed as a percentage of salary,
based on the attainment of threshold, target and maximum performance levels.
Depending on position, the low range was between 35% and 50% of salary, while
the high range was between 70% and 100% of salary. In March 1998, the
Compensation Committee
20
<PAGE>
determined that the performance of the executive officers entitled them to cash
incentive awards ranging from approximately 48.2% to 62.5% of salary.
LONG TERM INCENTIVE PLAN. Previously, the long-term incentive plan
consisted of two-thirds stock options under a stock option plan adopted by
the Company and approved by the Shareholders in 1993 (the "Stock Option
Plan") and one-third restricted stock grants under a Restricted Stock
Incentive Plan adopted by the Company and approved by the shareholders in
1995. The analysis of the Company's long-term incentive plan by FPL
determined that option grants provide greater long-term performance and
retention incentives than restricted stock grants. Based on that analysis,
the Board of Trustees decided in March 1998 to make stock option grants the
sole component of the long-term incentive plan. Also based upon the FPL
analysis of the long-term incentive plan, the Board of Trustees directed the
Compensation Committee to set higher performance standards which will be more
difficult to achieve, coupled with greater rewards if such standards are
attained. The foregoing decisions, coupled with a determination by the Board
to enlarge the class of employees eligible for stock options to all employees
with more than one year of service, has resulted in a need for more options
to be available for grant under the Stock Option Plan. The Board, therefore,
has unanimously adopted the Fourth Amendment to the Stock Option Plan which,
when approved by the shareholders, will, among other things, increase the
number of options available for grant under the Stock Option Plan.
The new performance standards adopted by the Compensation Committee for
the award of stock options replace the previous relatively subjective
standards with objective standards, applicable to all employees participating
in the Stock Option Plan, tied to material increases in shareholder value.
Under the new standards, employee performance will be measured based upon
rate of return goals established by the Company's independent trustees, with
a 40% weighting factor assigned to total shareholder return and a 60%
weighting factor assigned to FFO per share growth. For each of these factors,
the Compensation Committee will annually establish threshold, target and
maximum award opportunities for each employment position.
Like cash awards, stock options are awarded in the first quarter of each
year following completion of the annual audit, based on performance during
the prior year. The Board, therefore, decided to make implementation of the
new performance standards retroactive to 1997 and in March, 1998, made stock
option awards based upon attainment of the standards in 1997. Based on its
evaluation of employees' attainment of these standards in 1997, the
Compensation Committee awarded stock options under the Stock Option Plan for
a total of 298,760 shares. No awards were made under the Restrictive Stock
Plan.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During 1997, the Company's Chief Executive Officer was paid a salary at the
rate of $216,320 per annum for the first six months and at the rate of $240,000
per annum for the last six months pursuant to an employment contract entered
into in connection with the Company's initial public offering. The Compensation
Committee did not participate in the setting of Mr. Gates' initial salary under
the employment contract, but has approved subsequent annual increases, including
a 10.9% increase effective July 1, 1997. As part of its engagement in October,
1997, FPL conducted a survey of the salaries paid by the Company to executive
employees. Mr. Gates' current salary is approximately 91% of the median for the
Company's industry reported in the survey, which is within the Company's salary
objectives.
In March 1997, the Compensation Committee assigned to Mr. Gates an incentive
award opportunity for 1997, expressed as a percentage of salary, based on
corporate and individual performance meeting or exceeding threshold, target or
maximum levels. As indicated above, a 60% weighting factor was assigned to
corporate performance determined by reference to FFO per share, variance of
the Company's operating performance from budget, as determined by the
Company's independent trustees, and the overall results of an independent
tenant satisfaction survey conducted under the supervision of the
Compensation Committee. A 40% weighting factor was assigned to individual
performance, based on success in designing and implementing internal
processes, systems and organizational development initiatives designed to
maintain the highest levels of tenant satisfaction and the internal capacity
and controls necessary to sustain continuing high levels of growth.
21
<PAGE>
On the basis of points awarded in each of these categories, the Compensation
Committee in March 1998 awarded Mr. Gates a cash bonus of $150,000, or 63% of
base salary.
Also in March 1998, the Compensation Committee, applying the new
performance standards for long-term incentives as though they had been in
effect for 1997, approved an award of 81,480 stock options, representing an
award slightly below the target level for shareholder return and award at
slightly above the target level for growth in FFO per share.
Nicholas C. Babson, Chairman
Alan D. Feld
John S. Gates, Jr.
22
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
return on the Company's Common Stock for the period December 31, 1993 through
December 31, 1997 with the percentage change in (a) the Standard & Poor's 500
index ("S&P") for the same period and (b) the Total Return Index for Equity
REITs published by The National Association of Real Estate Investment Trusts
("NAREIT") for the same period. (The NAREIT index for Equity REITs, which is
published monthly, is an index of approximately 176 REITs which includes REITs
with 75% or more of their gross invested book value of assets invested directly
or indirectly in the ownership of real property.) Cumulative total return
includes reinvestment of dividends. The historical information set forth below
is not necessarily indicative of future performance.
CENTERPOINT PROPERTIES TRUST
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1997
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CenterPoint Properties Trust.................. $ 100.00 $ 112.83 $ 144.37 $ 221.17 $ 250.05
S&P 500 Index................................. 100.00 101.31 139.23 171.19 228.31
NAREIT Equity Total Return Index.............. 100.00 103.17 118.92 160.86 193.45
</TABLE>
CERTAIN TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In June, 1996, the Company, through a partnership of which the Company is
the general partner, acquired three properties from entities in which Robert
L. Stovall, a trustee of the Company, and Michael M. Mullen, an executive
officer, have an interest. The aggregate purchase price for the properties
was approximately $24.6 million, and the transactions satisfied the Company's
investment criteria and were approved by the Company's independent trustees.
In order to mitigate tax liabilities, Messrs. Stovall and Mullen continue to
own a minority interest in the partnership owning two of the purchased
properties.
Since the initial public offering in December, 1993, the Company has also
been managing three of the four option properties described in the preceding
paragraph and two additional properties owned by
23
<PAGE>
entities in which certain executive officers of the Company have an interest and
which are not deemed suitable for acquisition by the Company. For its management
services, the Company has been receiving an aggregate management fee equal to
approximately 3% of gross rents from the three option properties, and
approximately 2% and 1%, respectively, of gross rents from the other
properties.
In connection with the formation transactions of the Company prior to the
initial public offering in December, 1993, the Company entered into tax
reimbursement agreements with certain executive officers, Robert L. Stovall and
Michael M. Mullen, under which the Company agreed to reimburse such officers for
certain tax liabilities incurred in connection with the formation transactions.
To settle claimed tax liabilities under such reimbursement agreements and to
reimburse Messrs. Stovall and Mullen for tax liabilities related to the
Company's acquisition of certain properties owned by entities in which such
officers have an interest in transactions which are described above, the Company
agreed in July, 1996 to issue non-interest bearing promissory notes, each in the
amount of $100,000 and payable over eighteen months, to each of Messrs. Stovall
and Mullen in exchange for the release of any and all claims related such tax
reimbursement agreements and all other matters related in any manner to the
formation transactions and the recent property acquisitions.
In December 1997, the Company purchased a 95,220 square foot fully leased
building, located in Des Plaines, Illinois, from Sherwin Limited Partnership, in
which Michael Mullen, Chief Operating Officer of the Company, and Robert L.
Stovall, a trustee of the Company, were limited partners, for approximately $4.7
million. The transaction satisfied the Company's investment criteria and was
approved by the Company's independent trustees.
OTHER MATTERS
The Board of Trustees knows of no matters which will be presented for
consideration at the meeting other than the matters referred to in this
statement. Should any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote such proxy in
accordance with their best judgment.
The Company will bear the cost of this solicitation of proxies. In addition
to solicitation of proxies by mail, the Company may reimburse brokers and other
nominees for the expense of forwarding proxy materials to the beneficial owners
of stock held in their names. Trustees, officers and employees of the Company
may also solicit proxies on behalf of the Board of Trustees but will not receive
any additional compensation therefor. The Company has also retained a proxy
solicitor to assist the Company in soliciting proxies at an estimated cost of
$ , plus reimbursement of out-of-pocket expenses.
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1997 is being furnished to shareholders simultaneously with this
Proxy Statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Trustees,
Paul S. Fisher
SECRETARY
24
<PAGE>
EXHIBIT A
FOURTH AMENDMENT
CENTERPOINT PROPERTIES TRUST
1993 STOCK OPTION PLAN
The CenterPoint Properties 1993 Stock Option Plan (as amended, the "Plan")
is hereby amended as follows.
ARTICLE 1
Section 3.2 of the Plan is hereby amended in its entirety to henceforth read
as follows:
"3.2 POWERS. The Committee shall have the authority, in its
discretion, to: (i) determine the Employees to whom Options shall be
granted; (ii) determine the time or times at which Options shall be
granted; (iii) determine the Option Price, which price shall not be less
than the Minimum Option Price; (iv) determine whether Options shall be
Incentive Stock Options or Nonqualified Options; (v) determine the form
in which the Option Price may be paid (e.g., in the form of cash,
promissory notes payable to the Company, the surrender to the Company of
Common Shares currently owned by the Employee, cash-less exercise or any
combination of the foregoing); (vi) determine the Option Period (provided
that no Option Period may be longer than the Maximum Option Period);
(vii) determine (subject to Article 7) the time or times when each Option
shall become exercisable and the duration of the exercise period; and
(viii) interpret provisions of the Plan. All decisions made by the
Committee regarding the Plan are final and conclusive."
Section 4.1 of the Plan is hereby amended in its entirety to henceforth read
as follows:
"4.1 LIMITATION. With respect to calendar year 1998, the maximum
number of Common Shares that may be issued pursuant to Options granted
under the Plan will be the total of (i) ten (10%) percent of the number
of Common Shares outstanding on May 1, 1998 (rounded downward if
necessary to eliminate fractional shares) minus (ii) the number of Common
Shares under Options which were granted prior to May 1, 1998 plus (iii)
the number of Common Shares with respect to which previously granted
Options have expired. Thereafter, the maximum number of Common Shares
that may be issued pursuant to Options granted under the Plan will be the
total of (i) ten (10%) percent of the number of Common Shares outstanding
on the last day of the preceding calendar year (rounded downward if
necessary to eliminate fractional shares) minus (ii) the number of Common
Shares under Options which were granted prior to the last day of the
preceding calendar year plus (iii) the number of Common Shares with
respect to which previously granted Options have expired. For purposes of
calculating the number of outstanding Common Shares, all classes of
securities that are convertible presently or in the future into Common
Shares are deemed to be outstanding Common Shares equal to the number of
Common Shares into which such securities are convertible, and no
subsequent reduction in the number of outstanding Common Shares (other
than as a result of a reverse stock split or similar recapitalization)
will reduce the number of Common Shares previously made available for
option grants under the Plan. In no event may the total number of Options
issued as Incentive Stock Options under the Plan plus the total number of
Common Shares issued upon the exercise of Incentive Stock Options under
the Plan exceed 3,000,000. No more than 250,000 Common Shares may be
granted to any one individual in any calendar year. The maximum aggregate
number of shares that may be issued under this Plan shall be subject to
adjustment as provided in Section 8.1."
<PAGE>
ARTICLE 2
The first sentence of Section 5.1 of the Plan is hereby amended to
henceforth read as follows:
"Every member of Board, and every officer of the Company or any
Subsidiary or other employee of the Company or any Subsidiary who
has been employed by the Company or any subsidiary for at least one
year, as the Committee in its sole discretion designates, is eligible
to participate in the Plan."
ARTICLE 3
This amendment is effective as of the date adopted by the Board, subject to
approval by the shareholders of CenterPoint Properties Trust.
A-2
<PAGE>
P R O X Y
CENTERPOINT PROPERTIES TRUST
401 N. Michigan Avenue
Chicago, Illinois 60611
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF
CENTERPOINT PROPERTIES TRUST FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON MAY 15, 1998.
The undersigned hereby appoints Martin Barber, John S. Gates, Jr. and Paul S.
Fisher, or any of them, jointly and severally, as Proxies each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side, all of the Company's Common Shares held in the
undersigned's name and shares held by the agent in the Plan, hereafter
described, subject to the voting direction of the undersigned at the Annual
Meeting of Shareholders to be held at the Lower Level Conference Center, 401 N.
Michigan Avenue, Chicago, Illinois on Friday, May 15, 1998, or any adjournment
thereof and, in the Proxies' discretion, to vote upon such other business as may
properly come before the meeting, all as more fully set forth in the Proxy
Statement related to such meeting, receipt of which is hereby acknowledged.
Comments/Change of Address:
-----------------------------------------
-----------------------------------------
ALL COMMON SHARES TO BE VOTED HEREBY BY THE UNDERSIGNED INCLUDE SHARES, IF ANY,
HELD IN THE NAME OF THE AGENT, FOR THE BENEFIT OF THE UNDERSIGNED, IN THE
COMPANY'S DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN.
PLEASE SEE REVERSE SIDE
<PAGE>
/X/ PLEASE MARK YOUR 6231
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE ELECTION OF THE TRUSTEE
NOMINEES, FOR THE APPOINTMENT OF INDEPENDENT AUDITORS AND FOR THE APPROVAL OF
THE FOURTH AMENDMENT TO THE 1993 STOCK OPTION PLAN.
FOR WITHHELD Trustee Nominees:
A. Election of / / / / Nicholas C. Babson John J. Kinsella
Trustees Martin Barber Thomas E. Robinson
Norman R. Bobins Robert L. Stovall
Alan D. Feld
John S. Gates, Jr.
(INSTRUCTION: To withhold authority to vote for any individual
nominees, strike a line through that nominee's name.)
FOR AGAINST ABSTAIN
B. Appointment of Coopers & Lybrand as Auditors / / / / / /
C. Approval of the Fourth Amendment to the
1993 Stock Option Plan / / / / / /
SIGNATURE(S) ______________________________________________ DATE _____________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
