WALDEN RESIDENTIAL PROPERTIES, INC.
One Lincoln Centre
5400 LBJ Freeway
Suite 400
Dallas, Texas 75240
(972) 788-0510
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 5, 1997
To the Stockholders of
Walden Residential Properties, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Walden Residential Properties, Inc., a
Maryland corporation (the "Company"), will be held at the Dallas
Parkway Hilton, 4801 LBJ Freeway, Dallas, Texas on June 5, 1997, at
1:15 p.m. local time, for the following purposes:
1. To elect two directors to serve for a term of three years
each or until their respective successors are elected and
qualified or until their earlier resignation or removal;
2. To ratify Deloitte & Touche LLP as the Company's
independent auditors; and
3. To transact such other business as may properly come
before the Annual Meeting.
It is desirable that as large a proportion as possible of the
stockholders' interests be represented at the Annual Meeting.
Whether or not you plan to be present at the Annual Meeting, you
are requested to sign and return the enclosed proxy in the envelope
provided so that your stock will be represented. The giving of
such proxy will not affect your right to vote in person should you
later decide to attend the Annual Meeting. Please date and sign
the enclosed proxy and return it promptly in the enclosed envelope.
Copies of the Proxy Statement relating to the Annual Meeting and
the Annual Report outlining the Company's operations for the year
ended December 31, 1996 accompany this Notice of Annual Meeting of
Stockholders.
Only holders of record of the Common Stock of the Company at the
close of business on April 15, 1997 are entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof,
notwithstanding any transfer of the Common Stock on the books of
the Company after such record date.
By Order of the Board of Directors,
/s/ Edward H. Hatzenbuehler
-----------------------------------
EDWARD H. HATZENBUEHLER
Secretary
Dallas, Texas
April 24, 1997
<Page 1>
WALDEN RESIDENTIAL PROPERTIES, INC.
One Lincoln Centre
5400 LBJ Freeway
Suite 400
Dallas, Texas 75240
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 5, 1997
This Proxy Statement and the accompanying proxy card, Notice
of Annual Meeting of Stockholders and Annual Report for the year
ended December 31, 1996 are first being mailed to holders (the
"Stockholders") of the common stock, par value $.01 per share (the
"Common Stock"), of Walden Residential Properties, Inc., a Maryland
corporation (the "Company"), on or about April 24, 1997, in
connection with the solicitation of proxies on behalf of the Board
of Directors of the Company (the "Board of Directors") to be
exercised at the Annual Meeting of Stockholders (the "Meeting") to
be held at Dallas Parkway Hilton, 4801 LBJ Freeway, Dallas, Texas,
on Thursday, June 5, 1997, at 1:15 p.m.
At the Meeting, the Stockholders will be asked to consider and
vote on the following proposals (the "Proposals"):
(i) The election of two directors to hold office for terms
expiring at the 2000 annual meeting of stockholders;
(ii) The approval and ratification of the selection of
Deloitte & Touche LLP ("Deloitte & Touche") by the Board of
Directors as independent auditors for 1997, and
(iii) Such other business as may properly come before the
Meeting.
The Board of Directors does not know of any other matter that is to
come before the Meeting. If any other matters are properly
presented for consideration, however, the persons authorized by the
enclosed proxy will have discretion to vote on such matters in
accordance with their best judgment.
Only Stockholders of record as of the close of business on
April 15, 1997 (the "Record Date") are entitled to notice of and to
vote at the Meeting or any adjournments thereof. As of the close
of business on the Record Date, there were 17,401,486 shares of
Common Stock, issued and outstanding and entitled to vote. The
Common Stock constitutes the only class of capital stock of the
Company entitled to vote at the Annual Meeting. Each Stockholder
of record on the Record Date is entitled to one vote for each share
of Common Stock held. A majority of the outstanding shares of
Common Stock, represented in person or by proxy, will constitute a
quorum at the Meeting; however, if a quorum is not present or
represented at the Meeting, the Stockholders entitled to vote
thereat, present in person or represented by proxy, have the power
to adjourn the Meeting from time
<Page 2>
to time, without notice, other than by announcement at the Meeting,
until a quorum is present or represented. At any such adjourned
Meeting at which a quorum is present or represented, any business
may be transacted that might have been transacted at the original
Meeting.
Each share of Common Stock may be voted to elect up to two
individuals (the number of directors to be elected) as directors of
the Company. To be elected, each nominee for director must receive
a plurality of the votes cast by the shares of Common Stock
entitled to vote at a meeting at which a quorum is present. A
plurality means that the nominees with the largest number of votes
are elected as directors up to the maximum number of directors to
be chosen at the meeting. It is intended that, unless
authorization to vote for one or more nominees for director is
withheld, proxies will be voted FOR the election of all of the
nominees named in this Proxy Statement. Approval of a majority of
the shares of Common Stock represented and voting at the Meeting
will be necessary for the ratification of the Board of Directors'
selection of Deloitte & Touche as the Company's independent
auditors for the 1997 fiscal year.
Votes cast by proxy or in person will be counted by the
person(s) appointed by the Company to act as inspector(s) for the
Meeting. The election inspector(s) will treat shares represented
by proxies that reflect abstentions as shares that are present and
entitled to vote for the purpose of determining the presence of a
quorum. For purposes of the Proposals to elect directors and
ratify Deloitte & Touche, abstentions will not be counted as votes
cast and will have no effect on the result of the vote on such
Proposals.
Broker non-votes occur where a broker holding stock in street
name votes the shares on some matters but not others. Brokers are
permitted to vote on routine, non-controversial proposals in
instances where they have not received voting instructions from the
beneficial owner of the stock but are not permitted to vote on
non-routine matters. The missing votes on non-routine matters are
deemed to be "broker non-votes." The election inspector(s) will
treat broker non-votes as shares that are present and entitled to
vote for the purpose of determining the presence of a quorum.
However, for the purpose of determining the outcome of any matter
as to which the broker or nominee has indicated on the proxy that
it does not have discretionary authority to vote, those shares will
be treated as not present and not entitled to vote with respect to
that matter (even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other
matters), except as provided above.
Stockholders are urged to sign the accompanying form of proxy,
solicited on behalf of the Board of Directors, and, immediately
after reviewing the information contained in this Proxy Statement
and in the Annual Report outlining the Company's operations for the
fiscal year ended December 31, 1996, return it in the envelope
provided for that purpose. Valid proxies will be voted at the
Meeting and any adjournment or adjournments thereof in the manner
specified therein. If no directions are given but proxies are
executed in the manner set forth therein, such proxies will be
voted FOR the election of the nominees for director set forth in
this Proxy Statement and FOR the ratification of the selection of
Deloitte & Touche as the Company's independent auditors for the
1997 fiscal year. Any Stockholder returning the accompanying proxy
may revoke such proxy at any time
<Page 3>
prior to its exercise by giving written notice to the Secretary of
the Company of such revocation, voting in person at the Meeting or
executing and delivering to the Secretary of the Company a
later-dated proxy.
Each of the directors and executive officers of the Company
has informed the Company that he or she will vote all of his or her
shares of Common Stock in favor of all of the Proposals.
I. ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors
of the Company shall be as set forth in the Company's Articles of
Incorporation, as amended (the "Articles"), or as may be
established by the Board of Directors but may not be fewer than the
number required under the Maryland General Corporation Law nor more
than 15 members. The Board of Directors currently consists of nine
members. At the Meeting, two directors, Linda Walker Bynoe and
Don R. Daseke, to hold office until the annual meeting of
Stockholders held in the third year following the year of their
election and until their successors are elected and qualify, are to
be elected. Each of the nominees has consented to serve as a
director if elected. If either of the nominees shall become unable
or unwilling to stand for election as a director (an event not now
anticipated by the Board of Directors), proxies will be voted for
such substitute as shall be designated by the Board of Directors.
The following table sets forth for each nominee for election as a
director of the Company his or her age, principal occupation,
position with the Company, if any, and certain other information.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
<TABLE>
<CAPTION>
Name Age Principal Occupation Director Since
- ---- --- -------------------- --------------
<S> <C> <C> <C>
Linda Walker Bynoe 44 Ms. Bynoe has been a Director February 1994
of the Company since
February 1994. Ms. Bynoe is
the President and Chief
Operating Officer of Telemat,
Ltd., a private investment and
project management company
located in Chicago, Illinois.
She was previously with Morgan
Stanley from 1979 to 1989 where
she served as Vice President --
Capital Markets. Ms. Bynoe, a
Certified Public Accountant,
was on the audit staff of
Arthur Andersen & Co. from 1974
to 1976. She currently serves
on the Boards of Directors of
the American Odyssey Funds, Inc.
and The Executives' Club of
Chicago. Ms. Bynoe is also a
Trustee of The Museum of
Contemporary Art in Chicago and
a member of The Economic Club
of Chicago and The Financial
Research and Advisory Committee
of The Commercial Club. Ms.
Bynoe's term as a director of
the Company expires at the 1997
annual meeting of stockholders.
</TABLE>
<Page 4>
<TABLE>
<CAPTION>
Name Age Principal Occupation Director Since
- ---- --- -------------------- --------------
<S> <C> <C> <C>
Don R. Daseke 57 Mr. Daseke has been a Director October 1993
of the Company since its
formation in September 1993
and Chairman of the Board of
Directors and Chief Executive
Officer of the Company since
October 1993. Mr. Daseke
served as President of the
Company from its formation
until June 8, 1995. Mr.
Daseke is primarily
responsible for corporate
policy, property acquisitions,
executive personnel
development and corporate
financing. He has been the
Chairman of the Board of
Directors, President and Chief
Executive Officer of The
Walden Group, Inc. ("Walden
Group") and its predecessor
since 1974. Prior to the
formation of Walden Group,
Mr. Daseke was on the Arthur
Andersen & Co. audit staff
from 1962 to 1964 and in both
marketing and financial
management with IBM
Corporation from 1964 to 1972.
Mr. Daseke is a past director
of the Exchange National Bank
in Tulsa and was previously a
member of the Young Presidents'
Organization and a Vice
President of the DePauw
University Alumni Association.
Mr. Daseke is a Certified
Public Accountant and a
member of the American,
Connecticut and New York
Institutes of Certified
Public Accountants, a
member of the National
Association of Real Estate
Investment Trusts, a
Director of the National
Multi-Housing Council and
has served on the Board of
Trustees of DePauw
University since 1984.
</TABLE>
Meetings and Committees of the Board of Directors
- -------------------------------------------------
During the fiscal year ended December 31, 1996, the Board of
Directors held five regular meetings and two special meetings.
Each of the directors (other than Edward L. Hennessy, Jr.) attended
at least 75% of all meetings held by the Board of Directors and all
meetings of each committee of the Board of Directors on which such
director served during the fiscal year ended December 31, 1996.
The Board of Directors has an Audit Committee, an Executive
Committee, a Compensation Committee and a Nominating and Corporate
Governance Committee.
The Audit Committee is an advisory committee whose current
members are J. Otis Winters, Linda Walker Bynoe and Arch K.
Jacobson. The Audit Committee met four times during the fiscal
year ended December 31, 1996. The function of the Audit Committee
is to assist the Board of Directors in fulfilling its oversight
responsibilities by reviewing the financial information which will
be provided to the stockholders and others, the systems of internal
control which management and the Board of Directors have
established and the audit process.
<Page 5>
The Executive Committee currently consists of Don R. Daseke,
Francesco Galesi, Arch K. Jacobson and Louis G. Munin. The
Executive Committee has the authority to acquire, dispose of and
finance investments for the Company and execute contracts and
agreements, including those relating to the borrowing of money by
the Company, and generally exercises all other powers of the Board
of Directors except for those which require action by all directors
or the independent directors under the Articles or the Company's
bylaws or under applicable law. The Executive Committee met twice
during the fiscal year ended December 31, 1996.
The Compensation Committee currently consists of Ms. Bynoe,
Mr. Munin and Mr. Hennessy. The function of the Compensation
Committee is to oversee and approve the Company's policy regarding
overall compensation, management development, performance appraisal
and Chief Executive Officer succession The Compensation Committee
has the specific responsibility for the compensation of the key
executives and recommends to the Board of Directors compensation
for the Chief Executive Officer and the executives that report
directly to the Chief Executive Officer. The Compensation
Committee also administers the Walden Residential Properties, Inc.
1994 Stock Option Plan, as amended (the "Stock Option Plan"). The
Compensation Committee met twice during the fiscal year ended
December 31, 1996.
The Nominating and Corporate Governance Committee was
established on February 6, 1997 in place of the Nominating
Committee and currently consists of Messrs. Daseke, Galesi,
Jacobson and Munin. The function of the Nominating and Corporate
Governance Committee is to evaluate and make recommendations to the
Board of Directors concerning: (a) the Board's specific role and
responsibilities, (b) the nomination of persons for Board
membership and (c) the performance and effectiveness of the Board.
The Nominating and Corporate Governance Committee did not meet
during the fiscal year ended December 31, 1996.
Compensation of Directors
- -------------------------
Directors who are not employees of the Company are paid a
$14,000 annual retainer and receive an additional fee of $1,000 for
attending each meeting of the Board of Directors and an additional
fee of $750 for attending each committee meeting other than the
Executive Committee. Members of the Executive Committee who are
not employees of the Company receive an additional annual retainer
of $2,500. Directors who are employees of the Company are not paid
any director's fees. The Company may reimburse all directors for
their travel expenses incurred in connection with attending
meetings and their activities on behalf of the Company.
The Stock Option Plan provides each director who is not an
employee of the Company and who is serving as a director on such
date with automatic annual grants of options to purchase 5,000
shares of Common Stock, within five days following each annual
meeting of Stockholders. Each of Ms. Bynoe and Messrs. Hennessy,
Jacobson and Munin was granted an option to acquire 5,000 shares of
Common Stock upon his or her election to the Board of Directors
effective February 9, 1994, and each of the current directors was
granted options to acquire 5,000 shares of Common Stock in 1995 and
1996. Each such non-employee director option is exercisable on the
first anniversary of the date such option was granted. The
exercise price of each such non-employee director option is the
greater of the fair market value of the shares of Common Stock on
the date of
<Page 6>
the grant or the average of the closing prices of the
Common Stock on the 20 business days preceding the date of grant.
Each non-employee director option will expire on the tenth
anniversary of the date of the grant.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee consists of Ms. Bynoe and Messrs.
Hennessy and Munin, none of whom is a former or current officer or
employee of the Company or any of its subsidiaries. No executive
officer of the Company serves as an officer, director or member of
any entity, an executive officer or director of which is a member
of the Compensation Committee.
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers of the Company serve at the discretion
of the Board of Directors and are chosen annually by the Board of
Directors at its first meeting following the annual meeting of
Stockholders. The following table sets forth the names and ages of
the executive officers and directors of the Company and the
positions held with the Company by each individual.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Executive Officers
- ------------------
Don R. Daseke. . . . . . . . . . . . 57 Chairman of the Board of Directors and Chief
Executive Officer
Marshall B. Edwards. . . . . . . . . 52 President, Chief Acquisitions Officer and Director
Mark S. Dillinger. . . . . . . . . . 45 Executive Vice President, Chief Financial Officer
and Director
Steve T. Lamberti. . . . . . . . . . 41 Executive Vice President and Chief Operating Officer
Independent Directors
- ---------------------
Linda Walker Bynoe . . . . . . . . .44 Director
Francesco Galesi . . . . . . . . . .66 Director
Edward L. Hennessy, Jr. . . . . . . 69 Director (1)
Arch K. Jacobson . . . . . . . . . .69 Director
Louis G. Munin . . . . . . . . . . .63 Director
J. Otis Winters. . . . . . . . . . .64 Director
</TABLE>
___________________________
(1) Mr. Hennessy has chosen not to seek reelection to the Board of Directors.
Executive Officers
- ------------------
For a description of the business experience of Mr. Daseke,
see "Election of Directors" above.
Marshall B. Edwards has been a Director and has served as the
Chief Acquisitions Officer of the Company since October 1993 and
was elected President of the Company on June 8, 1995. Prior
thereto, Mr. Edwards served as President of Westglen Realty
Advisors, Inc. from 1992 to 1993. From 1988 to 1992, Mr. Edwards
was Executive Vice President of NHP Real Estate Corporation and
President of NHP Acquisition Corporation, both affiliates of NHP,
Inc., one of the largest owners
<Page 7>
and operators of multifamily rental housing in the United States.
His principal responsibilities at NHP included the acquisition,
financing, asset management and disposition of non-subsidized
rental apartments. Mr. Edwards was previously with Walden from
1983 to 1988 as Vice President of Acquisitions and later as
President of Walden's management subsidiary. Mr. Edwards' term
as a director of the Company expires at the 1999 annual meeting
of stockholders.
Mark S. Dillinger has been a Director, Executive Vice
President and Chief Financial Officer of the Company since October
1993. Mr. Dillinger is primarily responsible for financial
operations, data processing and financial planning. Mr. Dillinger
joined Walden Group in 1982 and has served as Executive Vice
President and the Chief Financial Officer of Walden Group since
1987. Mr. Dillinger was with Alexander Hamilton Life Insurance
Company from 1979 to 1982 where he served as Assistant Vice
President, Financial Planning and Analysis. He was also with
Deloitte, Haskins & Sells from 1974 to 1979 where he served as an
Audit Manager. Mr. Dillinger is a member of the American Institute
of Certified Public Accountants, the National Association of Real
Estate Investment Trusts and the National Multi-Housing Council.
Mr. Dillinger's term as a Director of the Company expires at the
1998 annual meeting of stockholders.
Steve T. Lamberti has been Executive Vice President and Chief
Operating Officer of the Company since October 1993. Mr. Lamberti
is primarily responsible for supervising the on-site property
management operations of the multifamily properties owned by the
Company. Mr. Lamberti joined Walden Group in 1983 and from 1987 to
February 1994 he was the Executive Vice President and Chief
Operating Officer of Walden Group. Mr. Lamberti was previously a
Property Manager with Murray Management Corporation in 1983 and a
Vice President of Poling Properties located in Dallas, Texas from
1980 to 1982. Mr. Lamberti is a Certified Property Manager and a
member of the Institute of Real Estate Management, the National
Apartment Association, the National Multi-Housing Council, the
National Association of Real Estate Investment Trusts and the Texas
Apartment Association and is the representative of the Company to
a number of other city and state apartment associations.
Independent Directors
- ---------------------
Set forth below is a description of the business experience of
each of the Independent Directors continuing in office after the
Annual Meeting. For a description of the business experience of
Ms. Bynoe, see "Election of Directors" above.
Francesco Galesi has been the Chairman of the Board and sole
equity holder of each entity constituting the Galesi Group since
1969. The Galesi Group consists of a group of privately owned
entities that invest in real estate, telecommunications and
manufacturing. These entities own and develop numerous townhome
developments and apartment complexes located in Florida, Texas,
Georgia and Colorado, office buildings in New York and Texas, and
10 million square feet of industrial parks. Mr. Galesi currently
serves on the Board of Directors of LDDS WORLDCOM, the fourth
largest long distance telephone company. In 1978, Mr. Galesi
received the Award of Achievement from President Carter for his
contribution to economic development in the United
<Page 8>
States. Mr. Galesi's term as a director of the Company expires
at the 1998 annual meeting of stockholders.
Arch K. Jacobson is currently President of Jacobson-Berger
Capital Group, Inc. Previously, Mr. Jacobson was Chairman and
Chief Executive Officer of Union Pacific Realty Corporation (a
subsidiary of Union Pacific Corporation) from 1986 to 1993. He was
with the Real Estate Department of The Prudential Insurance Company
from 1955 to 1980 and was President and Chief Executive Officer of
the Prudential Development Company (a subsidiary of the Prudential
Insurance Company) from 1982 to 1986. Mr. Jacobson is a member of
the Urban Land Institute, a director of Patriot American
Hospitality, Inc. and Chairman of the Board of Trustees of the
University of Mary Hardin Baylor. Mr. Jacobson's term as a
director of the Company expires at the 1999 annual meeting of
stockholders.
Louis G. Munin retired in 1989 as Executive Vice President and
Chief Financial Officer of Lafarge Corporation (North America's
largest cement manufacturer). Previously, he was with General
Portland Cement from 1966 until it was acquired by Lafarge in 1981
where he served as Senior Vice President and Chief Financial
Officer. Mr. Munin currently serves on the Boards of Directors of
Lafarge Canada, Inc., Chieftain International, Inc. and Catholic
Charities of Dallas and as a member of the Finance Council of the
Catholic Diocese of Dallas. He is a Certified Public Accountant
and a member of the American Institute of Certified Public
Accountants and the Financial Executives Institute. Mr. Munin's
term as a director of the Company expires at the 1999 annual
meeting of stockholders.
J. Otis Winters has been the Chairman of the Board of Pate,
Winters & Stone, Inc., a corporate consulting firm, since 1990. He
previously served as Executive Vice President and Director of The
Williams Companies and Executive Vice President and Director of the
First National Bank and Trust Co. of Tulsa, Oklahoma. Mr. Winters
currently serves on the Boards of Directors of AMX Corporation,
Liberty Bancorp, Inc. and NGC Corporation. He is a registered
professional engineer (Oklahoma). Mr. Winters' term as a director
of the Company expires at the 1998 annual meeting of stockholders.
EXECUTIVE COMPENSATION
The Company did not pay any cash compensation to its executive
officers prior to the Company's initial public offering which was
consummated on February 9, 1994. The following table sets forth
certain information with respect to annual and long-term
compensation for the periods ended December 31, 1996, 1995 and
1994, accrued with respect to each of the Company's executive
officers (the "Executive Officers").
<Page 9>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------
Annual Compensation Securities
Name and ------------------------- Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
- ------------------ ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Don R. Daseke. . . . . . . . . . 1996 $290,000 $150,000 -- 170,000 $ 26,149 (1)
Chairman of the Board and 1995 $239,885 $106,650 $13,000 (1) 90,000 $ 9,368 (1)
Chief Executive Officer 1994 $198,770 $ 40,000 -- 200,000 --
Marshall B. Edwards. . . . . . . 1996 $240,000 $110,000 -- 125,000 $ 7,220 (3)
President and Chief 1995 $186,808 $ 83,050 $ 188 (1) 70,000 $ 2,583 (3)
Acquisitions Officer 1994 $141,340 $ 40,000 -- 85,000 --
Mark S. Dillinger. . . . . . . . 1996 $165,000 $ 59,000 -- 75,000 $ 6,882 (3)
Executive Vice President 1995 $134,923 $ 60,000 $ 163 (1) 50,000 $ 2,319 (3)
and Chief Financial 1994 $116,148 $ 30,000 -- 50,000 --
Officer
Steve T. Lamberti. . . . . . . . 1996 $165,000 $ 25,000 -- 75,000 $ 7,293 (3)
Executive Vice President 1995 $134,923 $ 90,000 $ 163 (1) 15,000 $ 2,094 (3)
and Chief Operating 1994 $116,263 $ 15,000 -- 85,000 --
Officer
</TABLE>
___________________
(1) Represents the amount equal to the difference between the fair
market value of the Common Stock and the purchase price of the
Common Stock acquired by each of the Executive Officers
pursuant to loans made by one of the Company's affiliates in
December 1995. See "Certain Relationships and Related
Transactions -- WDN Management Loans."
(2) Amount includes 50% of the annual premium ($6,931 in 1995 and
$19,095 in 1996) on a $5,000,000 life insurance policy
insuring Mr. Daseke, with 50% of the death benefit being
payable to Mr. Daseke's estate and the other 50% payable to
the Company, and the Company's matching contribution ($2,437
in 1995 and $7,054 in 1996) under its 401(k) Plan.
(3) Represents the Company's matching contribution under its
401(k) Plan.
Option Grants
- -------------
The following table sets forth certain information with
respect to the issuance of options granted to the Executive
Officers during the fiscal year ended December 31, 1996 under the
Stock Option Plan.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Exercise Stock Price Appreciation for
Underlying Options Price Option Term (2)
Options Granted to per Expiration -----------------------------
Name Granted (1) Employees Share Date 5% 10%
- ---- ----------- ---------- -------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Don R. Daseke . . . . . . 135,000 30.2 $21.25 2/06 $1,804,000 $4,572,000
35,000 27.9 20.875 8/06 $ 481,000 $1,198,000
Marshall B. Edwards . . . 100,000 22.3 21.25 2/06 $1,336,000 $3,387,000
25,000 19.9 20.875 8/06 $ 343,000 $ 856,000
Mark S. Dillinger . . . . 60,000 13.4 21.25 2/06 $ 802,000 $2,032,000
15,000 12.0 20.875 8/06 $ 206,000 $ 514,000
Steve T. Lamberti . . . . .60,000 13.4 21.25 2/06 $ 802,000 $2,032,000
15,000 12.0 20.875 8/06 $ 206,000 $ 514,000
</TABLE>
__________________
<Page 10>
(1) The options were granted on February 7, 1996 and August 7,
1996, and vest in equal increments on each of the first four
anniversaries of their date of grant.
(2) "Potential Realizable Value" is disclosed in response to
Securities and Exchange Commission rules, which require such
disclosure for illustrative purposes only, and is based on the
difference between the potential market value of shares
issuable (based upon assumed appreciation rates) upon exercise
of such Options and the exercise price of such Options. The
values disclosed are not intended to be, and should not be
interpreted by investors as, representations or projections of
future value of the Company's stock or of the stock price.
Option Exercises and Year-End Option Values
- -------------------------------------------
The following table sets forth certain information concerning
the value of the unexercised options as of December 31, 1996 held
by the Executive Officers. No options were exercised by the
Executive Officers during the fiscal year ended December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised in-the-Money
Options/SARs at Fiscal Options/SARs at Fiscal
Year-End Year-End (1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Don R. Daseke 122,500 337,500 $689,063 $1,571,563
Marshall B. Edwards 60,000 220,000 $337,500 $ 996,875
Mark S. Dillinger 37,500 137,500 $210,938 $ 629,063
Steve T. Lamberti 46,250 128,750 $260,156 $ 579,844
</TABLE>
________________________
(1) The fair market value on December 31, 1996 of the Common Stock
underlying the options was $24.875 per share.
Employment Agreements
- ---------------------
Each of Messrs. Daseke, Edwards, Dillinger and Lamberti has
entered into an employment agreement (the "Employment Agreements")
with the Company, expiring on February 5, 2002. Pursuant to the
Employment Agreements, Mr. Daseke serves as Chairman of the Board
of Directors and Chief Executive Officer of the Company; Mr.
Edwards serves as President and Chief Acquisitions Officer of the
Company; Mr. Dillinger serves as Executive Vice President and Chief
Financial Officer of the Company; and Mr. Lamberti serves as
Executive Vice President and Chief Operating Officer of the
Company. The Employment Agreements provide for salary raises at
the discretion of the Board of Directors.
Under the terms of the respective Employment Agreements, if
the covered executive's employment with the Company is terminated
by the Company other than for "cause" (as defined in the Employment
Agreement) or by "constructive discharge" (as defined in the
Employment Agreement), the terminated executive will be entitled to
receive an amount equal to the highest annualized rate of salary
prior to the date of termination. The Employment Agreements also
<Page 11>
provide that the covered executive may terminate his employment for
any reason upon 30 days' prior written notice. In the event of
such a termination, the Company will be obligated to pay the
executive the compensation due him up to the effective date of
termination. The Employment Agreements also provide for the
payment of severance compensation in an amount equal to 2.99 times
the Executive Officer's compensation (which includes both salary
and any cash bonus) in the event the Executive Officer is
terminated without cause or by constructive discharge within three
years following a "change in control" (as defined in the Employment
Agreements). As a condition of his employment, Mr. Daseke has
agreed not to engage in the ownership, management, acquisition or
development of any multifamily property for the period of his
employment with the Company or any affiliates and during the period
in which he is receiving severance benefits thereunder.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE OFFICER COMPENSATION
The following report of the Compensation Committee of the
Company's Board of Directors (the "Committee") and the performance
graph that appears immediately after such report shall not be
deemed to be soliciting material or filed with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or incorporated by reference in any document so
filed.
Committee Responsibilities
- --------------------------
The Committee is responsible for establishing, overseeing and
approving the Company's policy regarding overall compensation,
management development and performance appraisal. The Committee,
composed entirely of independent, non-employee directors, has
specific responsibility for the compensation of the Executive
Officers and recommends, on an annual basis, to the Board of
Directors compensation for the Chief Executive Officer and the
other Executive Officers who report directly to him. The Committee
is also responsible for administering the Stock Option Plan.
The Committee serves pursuant to a charter adopted by the
Board of Directors which, among other things, directs the Committee
to assure the Board of Directors that the officers and key
management personnel are effectively compensated in terms of
salaries, supplemental compensation and benefits. This
responsibility includes a continuing evaluation to determine
whether the Company's overall compensation is internally equitable,
externally competitive and that such compensation provides
stockholder value.
<Page 12>
General Compensation Policies
- -----------------------------
The Committee's philosophy for compensating executive officers
is that an incentive based compensation system tied to the
Company's financial performance and stockholder return will best
align the interests of its executive officers with the objectives
of the Company and its stockholders. In accordance with this
philosophy, the Committee oversees the implementation of a
compensation system designed to meet the Company's financial
objectives by making a significant portion of an executive
officer's compensation dependent upon both the Company's and such
executive's performance. The Committee bases its compensation
program on the following principles:
* Compensation levels are evaluated using surveys and
analyses of the real estate investment trust ("REIT")
industry and of a selected group of similar companies.
* The Company's executive compensation program consists of
the following elements:
(i) a base salary which results from an assessment of
each executive's level of responsibility and
experience, individual performance and
contributions to the Company;
(ii) annual incentives that are directly related to the
performance of the executive's department and the
financial performance of the Company as a whole;
and
(iii) grants of stock options designed to motivate
individuals to enhance long-term profitability
of the Company and the value of the Common
Stock.
* Incentive compensation is designed to reinforce the
achievement of both short and long-term Company
objectives.
* The Company's executive compensation program provides
significant equity-based long-term incentives that
encourage the long-term ownership of Common Stock in
order to provide a mutuality of interests between the
executive officers and the Company's stockholders.
The process used by the Committee in evaluating executive
compensation is also based upon the Committee's subjective judgment
and takes into account both qualitative and quantitative factors in
determining an executive officer's compensation level. At the end
of each fiscal year, the Committee reviews annual salary and bonus
proposals made under the direction of the Chief Executive Officer
and then recommends, with any modifications it has deemed
appropriate, such proposals to the full Board of Directors for its
approval.
<Page 13>
Base Salary
- -----------
Each of the Executive Officers has entered into an employment
agreement with the Company, which employment agreements are
described under the caption "Employment Agreements" contained in
this Proxy Statement. Pursuant to the terms of such employment
agreements, the base salary levels of the Executive Officers are to
be reviewed and determined annually by the Committee.
Recommendations for compensation of the Executive Officers are
provided by the Chief Executive Officer after annual evaluations of
individual contributions to the business of the Company are held
with each Executive Officer. No formal performance ratings are
assigned as a result of this performance evaluation process. The
Committee generally believes that, in order to attract and retain
qualified executives, it is necessary to provide market competitive
compensation. Accordingly, the base salary of each Executive
Officer is determined from a market competitive and performance
based evaluation of the responsibilities of the position held and
the experience of that particular individual compared to other
companies of similar size and complexity in the same industry. To
assess market compensation levels, the Committee relies on REIT
industry analyses and reports.
Annual Incentives
- -----------------
Executives are also eligible for annual incentive awards,
designed to place a significant part of an executive's annual
compensation at risk. The Executive Officers participate in a
bonus incentive program under which the individual executives are
eligible for annual cash bonuses. Bonuses are determined on the
basis of a comparison of actual performance against pre-established
goals and are, in part, based on the discretion of the Committee.
For 1996 bonus awards, the Committee considered the following
performance measures: (i) achieving a specific level of funds from
operations (which industry analysts generally consider to be an
appropriate measure of the performance of an equity REIT);
(ii) strengthening the Company's capital structure (through
increased market capitalization and a reduction in floating rate
debt); and (iii) producing a total return (stock price change plus
dividends paid) to stockholders which exceeds that of certain of
Walden's peers (which for purposes of the Committee's analysis
consisted of AMLI Residential Properties Trust, Camden Property
Trust, Columbus Realty Trust, Equity Residential Properties Trust,
Mid-America Apartment Communities, Inc., Security Capital Pacific,
Inc., South West Property Trust, United Dominion Realty Trust and
Wellsford Residential Property Trust). The maximum amount
available for payment of annual incentive awards to all the
Executive Officers has been established at 50% of the executive
group's aggregate base compensation. Individual bonus awards can
vary from an Executive Officer receiving no bonus to up to 100% of
an Executive Officer's base salary. The bonuses accrued with
respect to Executive Officers during 1996 ranged from 15% to 52% of
the individual executive's base salary.
<Page 14>
Long-term Incentives
- --------------------
In keeping with the Committee's philosophy to provide
long-term incentives to executive officers and other key employees,
stock options are granted at the then existing fair market value to
executive officers and other key employees on a periodic basis.
The Committee establishes the number of options granted based upon
REIT industry data and upon each individual's base salary.
CEO Performance Evaluation
- --------------------------
The Committee recommends to the Board of Directors for its
approval the compensation for all executives, including the Chief
Executive Officer. In determining Mr. Daseke's salary for 1996,
the Committee compared Mr. Daseke's salary to that of the chief
executive officers of Walden's peers set forth above and set Mr.
Daseke's salary in the 75th percentile of such salaries. In
determining Mr. Daseke's bonus for 1996, the Committee considered
the Chief Executive Officer's leadership role in successfully
completing over $200 million in equity offerings in 1996 and
substantially improving the Company's balance sheet by reducing the
debt-to-total market capitalization ratio to approximately 30% at
the end of 1996 and his continuing efforts to strategically
position the Company to achieve its long-term goals.
Based on the Committee's recommendation, the Board of
Directors approved a 21% increase in the Chief Executive Officer's
base salary for 1996. In determining the Chief Executive Officer's
annual incentive bonus, the Committee evaluated Mr. Daseke's
performance based upon the same criteria it applied to the other
Executive Officers as described above. Based upon such review, Mr.
Daseke was awarded a bonus equal to 52% of his base salary.
Additionally, as a long-term incentive the Committee granted Mr.
Daseke options to acquire 170,000 shares of Common Stock in 1996
under the Stock Option Plan.
Tax Considerations
- ------------------
The Committee has reviewed the recent federal tax legislation
which made certain "non-performance based" compensation to certain
executive officers in excess of $1,000,000 non-deductible to the
Company. While none of the Executive Officers of the Company
currently receives performance-based compensation at or near the
$1,000,000 maximum, the Committee has carefully considered the
impact of this tax legislation and has taken steps which are
designed to minimize its future effect, if any.
Linda Walker Bynoe
Louis G. Munin
<Page 15>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total stockholder return on the
Common Stock, with the cumulative total return of the S&P 500 Index
and the Company's peer group (the "Walden Peer Group"), assuming
the investment of $100 on February 2, 1994 (the date the Common
Stock began trading) and the reinvestment of dividends. The
companies in the Walden Peer Group are as follows: Ambassador
Apartments, Inc., AMLI Residential Properties Trust, Apartment
Investment and Management Company, Berkshire Realty Company, Inc.,
Camden Property Trust, Columbus Realty Trust, Equity Residential
Properties Trust, Mid-America Apartment Communities, Inc., Security
Capital Pacific, Inc. and United Dominion Realty Trust.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX
AND WALDEN PEER GROUP
WALDEN RESIDENTIAL PROPERTIES, INC.
TOTAL RETURN PERFORMANCE
(LINE GRAPH)
<TABLE>
<CAPTION>
Index 2/2/94 12/31/94 6/30/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96
- ----- ------ -------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Walden Residential Properties, Inc. 100.00 98.03 105.57 126.02 134.88 128.39 136.08 163.46
S&P 500 100.00 97.88 117.66 134.66 141.88 148.24 152.82 165.44
Walden Peer Group 100.00 102.63 103.79 115.81 122.28 125.29 130.28 154.30
</TABLE>
<Page 16>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Loans to Officers
- -----------------
On July 19, 1994, the Company issued 183,000 shares of Common
Stock (the "Officers' Shares"), at the price of $20.875 per share
(the closing sales price of the Common Stock as reported on the New
York Stock Exchange, Inc. ("NYSE") for that date), to the Executive
Officers and six other officers of the Company. In approving this
transaction, the Board of Directors determined that it was in the
best interests of the Company and its stockholders that management
have a greater ownership interest in the Company to more closely
align management's interests with those of the stockholders of the
Company. Each officer acquiring stock paid 10% of the purchase
price in cash, with the remaining 90% of the purchase price being
loaned by the Company to each such officer. Each such loan is
evidenced by a note with a five-year term, bearing interest at a
fixed rate of 7.25% per annum, and is secured by a pledge of the
shares of Common Stock purchased by each officer pursuant to such
loans. Mr. Daseke is personally liable for the indebtedness
evidenced by his note, while the loans to each of the other
officers are nonrecourse. Mr. Daseke purchased 88,000 shares and
Messrs. Edwards, Dillinger and Lamberti each purchased 25,000
shares. Six other Company officers purchased the remaining 20,000
shares. At December 31, 1996, each of Messrs. Daseke, Edwards,
Dillinger and Lamberti had outstanding borrowings from the Company
of $1,653,300, $469,688, $469,688 and $469,688, respectively.
The Galesi Acquisition
- ----------------------
In June 1995, the Company acquired the controlling interest in
a partnership (the "Galesi Partnership") owning 11 multifamily
properties (the "Galesi Properties") containing 3,688 apartment
units for a purchase price consisting of approximately $54 million
in cash and the assumption, through the acquisition of the
controlling interest in the Galesi Partnership, of approximately
$73 million of indebtedness existing on the Galesi Properties. In
connection with the acquisition of the partnership interest, the
Company paid $1,450,000 to entities controlled by Mr. Galesi. On
the closing of the acquisition, the partners in the Galesi
Partnership, including the Company, amended the partnership
agreement pursuant to which the Galesi Partnership changed its name
to Walden Operating Partnership, L.P. and entities controlled by
Mr. Galesi converted their existing partnership interests into
partnership interests (the "Interests") exchangeable, at any time,
for 711,940 shares of Common Stock. Prior to the exchange of the
Interests for shares of Common Stock, the Interest holders shall be
entitled to receive quarterly distributions equal to the greater of
(i) an amount equal to the Company's quarterly distribution amount
per share on the closing date, $.455, or (ii) the Company's then
current quarterly distribution amount per share, in either case
multiplied by the number of shares of Common Stock for which the
outstanding Interests are then exchangeable. In connection with
the acquisition of the Galesi Properties, the Company also agreed
to use its best efforts to cause Mr. Galesi to be elected to serve
as a director of the Company.
<Page 17>
WDN Management Loans
- --------------------
On December 28, 1995 and January 18, 1996, respectively, the
Company issued an aggregate of 98,300 and 24,300 shares of Common
Stock at a purchase price of $19.375 per share (the closing sales
price of the Common Stock as reported on the NYSE for December 14,
1995, the date established by Boards of Directors of the Company
and WDN Management Company, a former affiliate of the Company ("WDN
Management"), for determining the issuance price), to the Executive
Officers and three other officers of the Company and each of Linda
Walker Bynoe, Arch K. Jacobson, Louis G. Munin and J. Otis Winters
(the "Directors"). In approving this transaction, the Board of
Directors determined that it was in the best interests of the
Company and its stockholders that the Directors and officers have
an increased ownership interest in the Company to more closely
align their interests with those of the stockholders of the
Company. Each officer of the Company, including the Executive
Officers, paid 20% of the purchase price in cash with the remaining
80% of the purchase price being loaned by WDN Management to each
such person. Each of the Directors paid 50% of the purchase price
of the stock acquired by him or her in cash, with the remaining 50%
of the purchase price being loaned by WDN Management to each such
Director. Each such loan is evidenced by a note (the "Notes") with
a five-year term, bearing interest at a fixed rate of 8.0% per
annum, and is secured by a pledge of the shares of Common Stock
purchased by each person pursuant to such loans. Each person is
personally liable for the indebtedness evidenced by his or her
note. Mr. Daseke purchased 104,000 shares, Mr. Edwards purchased
1,500 shares, Mr. Dillinger purchased 1,300 shares, Mr. Lamberti
purchased 1,300 shares, Ms. Bynoe purchased 1,000 shares, Mr.
Jacobson purchased 5,000 shares, Mr. Munin purchased 2,000 shares
and Mr. Winters purchased 5,000 shares. Three other officers of
the Company purchased the remaining 1,500 shares. At December 31,
1996, each of Ms. Bynoe and Messrs. Daseke, Edwards, Dillinger,
Lamberti, Jacobson, Munin and Winters had outstanding borrowings
from the Company of $9,688, $1,612,000, $23,250, $20,150, $20,150,
$48,438, $19,375 and $48,438, respectively. In July 1996, WDN
Management endorsed the Notes over to the Company, and in December
1996, WDN Management was merged into the Company.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
The following table and the notes thereto set forth certain
information with respect to the beneficial ownership of shares of
Common Stock, as of March 31, 1997 (except as noted in the
footnotes to such table), by each person or group within the
meaning of Section 13(d)(3) of the Exchange Act who is known to the
management of the Company to be the beneficial owner of more than
five percent of the outstanding Common Stock of the Company:
<Page 18>
<TABLE>
<CAPTION>
Number of
Shares
Name and Address Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ------------ --------
<S> <C> <C>
Don R. Daseke (1) . . . . . . . 1,250,868 (2) 7.1%
Merrill Lynch & Co., Inc. . . . 1,210,380 (3) 7.0%
World Financial Center
North Tower, 250 Vesey Street
New York, New York 10281
</TABLE>
- -----------------------
(1) The business address of such person is c/o Walden Residential
Properties, Inc., One Lincoln Centre, 5400 LBJ Freeway, Suite
400, Dallas, Texas 75240.
(2) Includes 609,966 shares of Common Stock owned of record by The
Walden Group, Inc., of which Mr. Daseke is the holder of 90%
of the common stock and the sole director, 228,750 shares of
Common Stock which Mr. Daseke has the right to acquire through
the exercise of options granted pursuant to the Stock Option
Plan and 30,000 shares of restricted Common Stock granted
under the Company's Long-Term Incentive Plan, which shares may
not be transferred until February 12, 2001, at which time the
transfer restrictions on 40% of such shares lapse and the
restriction on 10% of the remaining shares lapses each year
thereafter until February 12, 2007 (the "Officer Restricted
Shares").
(3) This information is provided in reliance on Amendment No. 4 to
Schedule 13G filed with the SEC on or about February 14, 1997,
by Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group,
Inc. ("ML Group"), Princeton Services, Inc. ("PSI"), Merrill
Lynch Asset Management, L.P. ("MLAM") and Merrill Lynch
Capital Fund, Inc. ("Fund") (collectively, the "Reporting
Persons"). ML&Co., ML Group and PSI are parent holding
companies, and MLAM is a registered investment adviser and the
Fund is a registered investment company. While the Reporting
Persons may be deemed to be the beneficial owners of these
shares under the SEC's rules, each of the Reporting Persons
disclaims beneficial ownership of the Common Stock described
in the Schedule 13G. The Fund, of which MLAM acts as
investment advisor, has an interest that relates to more than
5% of the Common Stock.
Security Ownership of Management
- --------------------------------
The following table and the notes thereto set forth certain
information with respect to the beneficial ownership of shares of
Common Stock of the Company, as of March 31, 1997, by each
director, each nominee for director, each Executive Officer and by
all Executive Officers and directors as a group:
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percent
Beneficial Owner (1) (2) Beneficially Owned of Class
- ------------------------ ------------------ --------
<S> <C> <C>
Don R. Daseke . . . . . . . . . 1,250,868 (3) 7.1%
Marshall B. Edwards . . . . . . 172,406 (4) (5)
Mark S. Dillinger . . . . . . . 121,909 (6) (5)
Steve T. Lamberti . . . . . . . 128,658 (7) (5)
Linda Walker Bynoe. . . . . . . 18,152 (8) (5)
Francesco Galesi. . . . . . . . 722,940 (9) 4.0%
Edward L. Hennessy, Jr. . . . . 18,300 (10) (5)
Arch K. Jacobson. . . . . . . . 21,600 (8) (5)
Louis G. Munin. . . . . . . . . 21,000 (8) (5)
<Page 19>
J. Otis Winters . . . . . . . . 11,000 (11) (5)
All Directors and Executive
Officers (10 persons) . . . . 2,491,833 13.3%
</TABLE>
_________________
(1) The business address of the persons named above is c/o Walden
Residential Properties, Inc., One Lincoln Centre, 5400 LBJ
Freeway, Suite 400, Dallas, Texas 75240.
(2) Except as otherwise indicated, (i) the persons named in this
table have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by
them, and (ii) none of the shares shown in this table or
referred to in the footnotes hereto are shares of which the
persons named in this table have the right to acquire benefi-
cial ownership as specified in Rule 13d-3(d)(1) promulgated
under the Exchange Act.
(3) Includes 609,966 shares of Common Stock owned of record by The
Walden Group, Inc., of which Mr. Daseke is the holder of 90%
the common stock and the sole director, 228,750 shares which
Mr. Daseke has the right to acquire through the exercise of
options granted pursuant to the Stock Option Plan and 30,000
Officer Restricted Shares.
(4) Includes 123,750 shares of Common Stock which Mr. Edwards has
the right to acquire through the exercise of options granted
pursuant to the Stock Option Plan and 20,000 Officer
Restricted Shares.
(5) Less than 1%.
(6) Includes 77,500 shares which Mr. Dillinger has the right to
acquire through the exercise of options granted pursuant to
the Stock Option Plan and 10,000 Officer Restricted Shares.
(7) Includes 86,250 shares which Mr. Lamberti has the right to
acquire through the exercise of options granted pursuant to
the Stock Option Plan and 10,000 Officer Restricted Shares.
(8) Includes 15,000 shares of Common Stock which such person has
the right to acquire through the exercise of options granted
pursuant to the Stock Option Plan and 1,000 shares of
restricted Common Stock granted under the Company's Long-Term
Incentive Plan, which shares may not be transferred until
February 12, 1998, at which time the transfer restriction on
one-third of such shares lapses and the restriction on
one-third of the remaining shares lapses each of the next two
years thereafter (the "Director Restricted Shares").
(9) Consists of 711,940 shares of Common Stock which entities
controlled by Mr. Galesi have the right to acquire pursuant to
the Interests held in Walden Operating Partnership, L.P., a
Georgia limited partnership and an affiliate of the Company
("Walden Operating Partnership"), 10,000 shares of Common
Stock which Mr. Galesi has the right to acquire through the
exercise of options granted pursuant to the Stock Option Plan
and 1,000 Director Restricted Shares. The Galesi entities
acquired such Interests in connection with the sale of
controlling interest in the predecessor to the Walden
Operating Partnership to the Company in June 1995. See
"Certain Relationships and Related Transactions -- The Galesi
Acquisition."
(10) Includes 5,000 shares of Common Stock which Mr. Hennessy has
the right to acquire through the exercise of options granted
pursuant to the Stock Option Plan.
(11) Includes 10,000 shares of Common Stock which Mr. Winters has
the right to acquire through the exercise of options granted
pursuant to the Stock Option Plan and 1,000 Director
Restricted Shares.
<Page 20>
II. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors selected Deloitte & Touche as the
Company's independent auditors for the year ending December 31,
1997. The Board of Directors, upon recommendation of its Audit
Committee, has appointed Deloitte & Touche as the Company's
independent auditors for the fiscal year ending December 31, 1997.
Deloitte & Touche has been serving as the independent auditors of
the Company (including its predecessors) since 1979.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that Company direc-
tors, executive officers and persons who own more than 10% of the
Common Stock file initial reports of ownership and reports of
changes in ownership of Common Stock with the SEC. Officers,
directors and stockholders who own more than 10% of the Common
Stock are required by the SEC to furnish the Company with copies of
all Section 16(a) reports they file.
To the Company's knowledge, based solely on the review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 1996, the Company's officers,
directors and 10% stockholders complied with all Section 16(a)
filing requirements applicable to them.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche served as the Company's independent
accountants for the fiscal year ended December 31, 1996. A
representative of Deloitte & Touche will be present at the Meeting
to answer any appropriate questions and to make a statement if that
person desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998
annual meeting of stockholders of the Company must be received by
the Secretary of the Company at the Company's principal executive
office no later than December 24, 1997, in order to be included in
the proxy statement and form of proxy for such meeting.
<Page 21>
EXPENSES OF SOLICITATION
The expense of the solicitation of proxies will be borne by
the Company. In addition to the solicitation of proxies by mail,
solicitation may be made by the directors, officers and employees
of the Company by other means, including telephone, telecopy or in
person. No special compensation will be paid to directors,
officers or employees for the solicitation of proxies. To solicit
proxies, the Company also will request the assistance of banks,
brokerage houses and other custodians, nominees or fiduciaries,
and, upon request, will reimburse such organizations or individuals
for their reasonable expenses in forwarding soliciting materials to
their principals and in obtaining authorization for the execution
of proxies. Corporate Investor Communications has been retained to
assist in the solicitation of proxies for a fee not to exceed
$2,000, plus reimbursement of out-of-pocket expenses. No officer
or director of the Company has an interest in, or is related to any
principal of, Corporate Investor Communications.
OTHER MATTERS
The management of the Company is not aware of any other
matters to be presented for action at the Meeting; however, if any
such matters are properly presented for action, it is the intention
of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matters.
By Order of the Board of Directors,
/s/ Edward H. Hatzenbuehler
-----------------------------------
EDWARD H. HATZENBUEHLER
Secretary
April 24, 1997
Dallas, Texas
STOCKHOLDERS ARE URGED, REGARDLESS OF THE NUMBER OF SHARES OF
COMMON STOCK OF THE COMPANY OWNED, TO DATE, SIGN AND RETURN THE
ENCLOSED PROXY. YOUR COOPERATION IN GIVING THESE MATTERS YOUR
IMMEDIATE ATTENTION AND IN RETURNING YOUR PROXY PROMPTLY IS
APPRECIATED.
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF WALDEN RESIDENTIAL PROPERTIES, INC.
The undersigned hereby appoint(s) Don R. Daseke and
Marshall B. Edwards, or either of them, with full power of
substitution and resubstitution, proxies of the undersigned, with
all of the powers that the undersigned would possess if personally
present, to cast all votes which the undersigned would be entitled
to cast at the Annual Meeting of Stockholders (the "Annual
Meeting") of Walden Residential Properties, Inc. (the "Company") to
be held on Thursday, June 5, 1997, at the Dallas Parkway Hilton,
4801 LBJ Freeway, Dallas, Texas, commencing at 1:15 p.m., local
time, and any and all adjournments thereof, including (without
limiting the generality of the foregoing) to vote and act as
follows:
1. Election of directors.
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to
(except as indicated to the vote for the nominees
contrary) listed below
Don R. Daseke Linda Walker Bynoe
Instruction: To withhold authority to vote for any individual
nominee(s), write the name(s) here:
___________________________________________________________________
___________________________________________________________________
2. Proposal to ratify the appointment of Deloitte & Touche
LLP as independent auditors for the Company for the fiscal year
ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting.
THIS PROXY WILL BE VOTED AT THE ANNUAL MEETING OR ANY ADJOURNMENT
THEREOF IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ABOVE OR, IN
THE EVENT NO INSTRUCTIONS ARE SET FORTH, THIS PROXY WILL BE VOTED
FOR EACH OF THE NOMINEES FOR DIRECTOR AND FOR PROPOSAL 2. This
proxy hereby revokes all prior proxies given with respect to the
shares of the undersigned.
<Page 2>
Your Board of Directors unanimously recommends that you vote
FOR each of the nominees for director and for Proposal 2.
Accordingly, please complete, sign, date and return envelope. No
postage is required for mailing in the United States.
Date: ___________________, 1997 _____________________________
Signature(s)
_____________________________
Signature(s)
IMPORTANT: Please date this proxy
and sign exactly as your name
appears to the left. If shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give title as such.
If a corporation, please sign in
full corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
