<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Walden Residential Properties, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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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:
-----------------------------------------------------------------------
(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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<PAGE> 2
WALDEN RESIDENTIAL PROPERTIES, INC.
5080 SPECTRUM DRIVE
SUITE 1000 EAST
DALLAS, TEXAS 75248
(972) 788-0510
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 1998
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 Hotel Inter-Continental, 15201 Dallas Parkway,
Dallas, Texas on June 4, 1998, at 10:00 a.m. local time, for the following
purposes:
1. The election of one director to hold office for a term
expiring at the 1999 annual meeting of stockholders, the
election of one director to hold office for a term expiring at
the 2000 annual meeting of stockholders and the election of
four directors to hold office for terms expiring at the 2001
annual meeting of stockholders,
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, 1997
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, 1998 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,
EDWARD H. HATZENBUEHLER
Secretary
Dallas, Texas
April 27, 1998
<PAGE> 3
WALDEN RESIDENTIAL PROPERTIES, INC.
5080 SPECTRUM DRIVE
SUITE 1000 EAST
DALLAS, TEXAS 75248
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 1998
This Proxy Statement and the accompanying proxy card, Notice of Annual
Meeting of Stockholders and letter to stockholders 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 27, 1998, 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 the Hotel Inter-Continental, 15201 Dallas
Parkway, Dallas, Texas, on Thursday, June 4, 1998, at 10:00 a.m.
At the Meeting, the Stockholders will be asked to consider and vote on
the following proposals (collectively, the "Proposals"):
(i) The election of one director to hold office for a term expiring
at the 1999 annual meeting of stockholders, the election of one
director to hold office for a term expiring at the 2000 annual meeting
of stockholders and the election of four directors to hold office for
terms expiring at the 2001 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 the fiscal year ending December 31, 1998 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,
1998 (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 18,628,562 shares of Common Stock, issued and outstanding and
entitled to vote. The Common Stock constitutes the only class of capital stock
of the Company issued and outstanding entitled to vote at the 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 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 six 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. 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 independent auditors for the fiscal year ending December 31, 1998.
<PAGE> 4
Votes cast by proxy or in person will be counted by one or more
persons appointed by the Company to act as inspectors for the Meeting. The
election inspectors 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 inspectors 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).
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, 1997,
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 fiscal year ending December 31, 1998. Any Stockholder
returning the accompanying proxy may revoke such proxy at any time 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 current Board of Directors
consists of eleven members. At the Meeting, four directors, Mark S. Dillinger,
Francesco Galesi, Michael E. Masterson and J. Otis Winters, are to be elected
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. In addition, two other directors, Robert L. Honstein and Maxwell B.
Drever, who were appointed as directors of the Company by the Board of
Directors in October 1997, are to be elected to hold office until the annual
meeting of stockholders held in the first and second years following their
election, respectively, and until their successors are elected and qualify.
Each of the nominees has consented to serve as a director if elected. If any
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.
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Mark S. Dillinger 46 Mr. Dillinger has been the Executive Vice President October 1993
and Chief Financial Officer of the Company since
October 1993. Mr. Dillinger joined The Walden
Group, Inc. ("Walden Group"), one of the Company's
predecessor entities, in 1982 and has served as
Executive Vice President and the Chief Financial
Officer of Walden Group since 1987. 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.
Maxwell B. Drever 57 Mr. Drever has been Chairman Emeritus and a October 1997
director of the Company since October 1997. From
1985 until October 1997, Mr. Drever was Chairman of
Drever Properties, Inc. ("Drever"), which along
with certain of its affiliates, was the general
partner of the partnerships from which the Company
acquired a 79 property portfolio consisting of
approximately 18,100 apartment units. In his
capacity as Chairman of Drever, he set company
policies and devised strategies relevant to the
acquisition, enhancement and management of Drever's
79 apartment properties in Texas, Georgia, Arizona
and California. From 1970 to 1985, Mr. Drever was
President of Drever, McIntosh, Inc., acquiring,
refurbishing and managing 60 projects in Seattle,
Memphis, Columbus, Tampa and other comparable
cities. Mr. Drever is a Director of the National
Multi Housing council and a Full Member of the
Urban Land Institute.
Francesco Galesi 67 Mr. Galesi has been the Chairman of the Board and June 1995
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
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 Director 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 States.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Robert L. Honstein 42 Mr. Honstein has been a director of the Company October 1997
since October 1997. Mr. Honstein has been a member
of Nassau Capital L.L.C., the investment manager
for private investments of Princeton University's
endowment, since 1995. Prior thereto, Mr. Honstein
was a Vice President at Princeton University
Investment Company where he focused on the real
estate investing nationwide for Princeton
University's endowment from 1991 to 1995. Before
Princeton, he was partner at Matrix Development
Group, a commercial and industrial real estate
development firm in New Jersey. Mr. Honstein
serves as a Director of Corporate Realty Investment
Company and Affordable Residential Communities.
Michael E. Masterson 55 Mr. Masterson has been Chairman of the Board and a October 1997
director of the Company since October 1997. Prior
thereto, Mr. Masterson was Executive Vice President
of Drever from 1989 to 1992 and President of Drever
from 1992 to October 1997. As President of Drever,
Mr. Masterson was responsible for the overall
administration of Drever and its subsidiaries, he
coordinated institutional financing and oversaw the
several joint ventures in which institutions are
investors. From 1986 to 1989, he was President of
Asset Development and Management, Inc. in San
Francisco, a company charged with the management of
a major portion of the commercial REO portfolio of
BA Properties I, a subsidiary of Bank of America.
Prior to that (1984-1988), Mr. Masterson held the
positions of Executive Vice President and
President, respectively, of The Innisfree Companies
and IMG Financial of Sausalito, major San Francisco
Bay Area real estate development and marketing
concerns. His projects have won numerous awards,
including the U.S. Department of Energy National
Energy Award, awards from the City and County of
Honolulu and the Pacific Coast Builders Choice
Grand Award.
J. Otis Winters 65 Mr. Winters has been the Chairman of the Board of June 1995
PWS Group, Inc. (formerly 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 and NGC Corporation. He is a
registered professional engineer (Oklahoma).
</TABLE>
4
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997, the Board of Directors held
four regular meetings, and four special meetings. Each of the directors
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, 1997.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance Committee.
The Executive Committee currently consists of Linda Walker Bynoe, Francesco
Galesi, Robert L. Honstein, Arch K. Jacobson, Louis G. Munin and J. Otis
Winters. The Executive Committee has all powers of the Board of Directors
except for those which require action by all directors under the Articles or
the Company's bylaws or under applicable law. The Executive Committee met
three times during the fiscal year ended December 31, 1997.
The Audit Committee is an advisory committee whose current members are
Messrs. Munin, Honstein and Jacobson. The Audit Committee met four times
during the fiscal year ended December 31, 1997. The function of the Audit
Committee is to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans
and results of the audit engagement, approve professional services provided by
the independent public accountants, review the independence of the independent
public accountants, consider the range of audit and nonaudit fees and review
the adequacy of the Company's internal accounting controls.
The Compensation Committee currently consists of Ms. Bynoe, Mr. Galesi and
Mr. Winters. The Compensation Committee recommends compensation for the
Company's executive officers to the Board of Directors and administers the
Company's Amended and Restated 1994 Stock Option Plan (the "Stock Option
Plan"). The Compensation Committee met four times during the fiscal year ended
December 31, 1997.
The Nominating and Corporate Governance Committee currently consists of Ms.
Bynoe and Messrs. Galesi, Honstein, Jacobson, Munin and Winters. The
Nominating and Corporate Governance Committee selects the candidates for
election as directors to be recommended to the Board of Directors for either
filling vacancies that arise from time to time on the Board or for presenting
to the stockholders at each annual meeting of stockholders. The committee also
assists the Board of Directors in carrying out its responsibilities by
reviewing corporate governance issues. The Nominating and Corporate Governance
Committee met three times during the fiscal year ended December 31, 1997.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid a $15,000 annual
retainer, with an additional $5,000 annual retainer being paid to each member
of the Executive Committee (which amount is payable in shares of restricted
stock) and an additional $5,000 annual retainer payable to each committee
chairperson. In addition, each non-employee director receives a fee of $1,500
for attending each meeting of the Board of Directors and an additional fee of
$1,000 for attending each committee meeting. 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 the current
non-employee directors was granted an option to acquire 5,000 shares of Common
Stock in 1997. 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
5
<PAGE> 8
option is the greater of the fair market value of the shares of Common Stock on
the date of 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. Galesi and
Winters, 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
- ------------------
Michael E. Masterson . . . . . . 55 Chairman of the Board of Directors
Marshall B. Edwards . . . . . . . 53 Chief Executive Officer, President, Chief Operating Officer and Director
Mark S. Dillinger . . . . . . . . 46 Executive Vice President, Chief Financial Officer and Director
Michael L. Collier . . . . . . . 55 Executive Vice President of Property Management
Don R. Daseke . . . . . . . . . . 58 Chairman Emeritus
Maxwell B. Drever . . . . . . . . 57 Chairman Emeritus
INDEPENDENT DIRECTORS
- ---------------------
Linda Walker Bynoe . . . . . . . 45 Director
Francesco Galesi . . . . . . . . 67 Director
Robert L. Honstein . . . . . . . 42 Director
Arch K. Jacobson . . . . . . . . 70 Director
Louis G. Munin . . . . . . . . . 64 Director
J. Otis Winters . . . . . . . . . 65 Director
</TABLE>
EXECUTIVE OFFICERS
For a description of the business experience of Messrs. Dillinger,
Drever and Masterson, see "Election of Directors" above.
Don R. Daseke has been a Director of the Company since its formation
in September 1993 and Chairman of the Board of Directors and Chief Executive
Officer of the Company from October 1993 to October 1997. In October 1997, Mr.
Daseke resigned as Chairman of the Board and Chief Executive Officer and was
elected as Chairman Emeritus of the Company. He has been the Chairman of the
Board of Directors, President and Chief Executive Officer of Walden Group and
its predecessor since 1974. Mr. Daseke is a Certified Public Accountant and a
member of the American, Connecticut and New York Institutes of Certified Public
Accountants, Chairman of the Board of Galapagos Studios, Inc., Chairman of the
Board of Netier Technologies, Inc., Chairman of the Board of U.S. Telephone
Holding, Inc., Director of Promise House and has served on the Board of
Trustees of DePauw University since 1984.
6
<PAGE> 9
Marshall B. Edwards has been a Director and the Chief Acquisitions
Officer of the Company since October 1993 and was elected President of the
Company on June 8, 1995. On October 20, 1997, Mr. Edwards was elected as Chief
Executive Officer of the Company. Prior to joining the Company, 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 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.
Michael L. Collier has been the Executive Vice President of Property
Management of the Company since October 1997. He has also been President of
Concierge Management Corporation, the management subsidiary of Drever since its
formation in 1987. He was founder of that company in 1987, together with Mr.
Drever. From 1983 to 1987, Mr. Collier was President of Midkiff Property
Development Company, a management and development concern. A member of the
National Multi Housing Council, Mr. Collier is also on the Board of Directors
of the Houston Apartment Association.
INDEPENDENT DIRECTORS
For a description of the business experience of Messrs. Galesi,
Honstein and Winters, see "Election of Directors" above.
Linda Walker Bynoe has been a Director 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 1978 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 2000 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 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. and Chieftain International, Inc. 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 expires at the 1999 annual meeting of stockholders.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
annual and long-term compensation for the periods ended December 31, 1997, 1996
and 1995, paid, or accrued with respect to, certain of the Company's executive
officers (the "Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
------------ ------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
------------------ ---- -------- -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Don R. Daseke(1) . . . . 1997 $304,500 $ -0- - 260,000 $ 4,750(2)
1996 $290,000 $150,000 - 170,000 $26,149(2)
1995 $239,885 $106,650 $13,000(4) 90,000 $ 9,368(2)
Marshall B. Edwards(3). . 1997 $260,900 $ -0- - 190,000 $ 4,750(5)
1996 $240,000 $110,000 - 125,000 $ 7,220(5)
1995 $186,808 $ 83,050 $ 188(4) 70,000 $ 2,583(5)
Mark S. Dillinger(6). . . 1997 $172,000 $ -0- - 125,000 $ 4,208(5)
1996 $165,000 $ 59,000 - 75,000 $ 6,882(5)
1995 $134,923 $ 60,000 $ 163(4) 50,000 $ 2,319(5)
</TABLE>
- --------------------
(1) Mr. Daseke was Chairman of the Board and Chief Executive Officer of the
Company during the years ended December 31, 1996 and 1995 and for the
period from January 1, 1997 to October 20, 1997.
(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 (the policy was cancelled July 1, 1997 and no
premium was paid for 1997), and the Company's matching contribution ($2,437
in 1995, $7,054 in 1996 and $4,750 in 1997) under its 401(k) Plan.
(3) Mr. Edwards was President (from June 8, 1995 to present) and Chief
Acquisitions Officer of the Company during the years ended December 31,
1995, 1996 and 1997. On October 20, 1997, Mr. Edwards was also elected as
Chief Executive Officer of the Company.
(4) 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 the Company in
December 1995. See "Certain Relationships and Related Transactions."
(5) Represents the Company's matching contribution under its 401(k) Plan.
(6) Mr. Dillinger was the Executive Vice President and Chief Financial Officer
of the Company for the years ended December 31, 1995, 1996 and 1997.
8
<PAGE> 11
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, 1997 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 (1)
OPTIONS GRANTED TO PER EXPIRATION -----------------------------
NAME GRANTED EMPLOYEES SHARE DATE 5% 10%
---- --------- --------- -------------- -------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Don R. Daseke(2). . . . . 60,000 25.1 $26.00 10/02 $ 431,000 $ 952,400
200,000 13.3 $25.25 10/02 $ 1,395,200 $ 3,083,100
Marshall B. Edwards(3). . 40,000 16.7 $26.00 2/07 $ 654,100 $ 1,657,500
150,000 10.0 $25.25 10/07 $ 2,381,900 $ 6,036,300
Mark S. Dillinger(3). . . 25,000 10.4 $26.00 2/07 $ 408,800 $ 1,035,900
100,000 6 .6 $25.25 10/07 $ 1,588,000 $ 4,024,200
</TABLE>
- ------------------
(1) "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.
(2) The options were granted on February 5, 1997 and October 1, 1997 and
became fully vested on October 20, 1997.
(3) The options were granted on February 5, 1997 and October 1, 1997 and
vest in equal increments on each of the first four anniversaries of
their date of grant.
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, 1997 held by the Executive
Officers. No options were exercised by the Executive Officers during the
fiscal year ended December 31, 1997.
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
Option/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 720,000 -0- $ 2,598,125 $ -0-
Marshall B. Edwards 130,000 340,000 $ 752,340 $ 794,530
Mark S. Dillinger 81,250 218,750 $ 471,720 $ 502,650
</TABLE>
- ------------------------
(1) The fair market value on December 31, 1997 of the Common Stock underlying
the options was $25.50 per share.
EMPLOYMENT AGREEMENTS
Each of Messrs. Edwards and Dillinger has entered into an employment
agreement with the Company that expires on October 20, 2002 and February 5,
2002, respectively, and each of Messrs. Masterson, Collier and Drever has
entered into an employment agreement with the Company that expires on October
1, 2002 (collectively, the "Employment Agreements"). The Employment Agreements
provide annual salaries for each of such executives, subject to increase at the
discretion of the Board of Directors. The Employment Agreements for Mr.
Masterson and
9
<PAGE> 12
Mr. Collier grant such executives the right, on the third and fourth
anniversaries of the date of execution (October 1, 1997), respectively, to
resign as an officer of the Company and to be engaged as a consultant for the
remainder of the term of the Employment Agreement. Pursuant to the terms of
the Settlement and Employment Agreement entered into between the Company and
Mr. Daseke in connection with his resignation as Chairman of the Board and
Chief Executive Officer of the Company, Mr. Daseke is to serve as Chairman
Emeritus of the Company until October 2000. Mr. Daseke's agreement does grant
him the option, exercisable for a sixty-day period commencing on January 1,
1999, to resign as an officer of the Company and to be engaged as a consultant
for the remainder of the term of the agreement.
Under the terms of the respective Employment Agreements (other than
Mr. Daseke's), 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 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).
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.
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
10
<PAGE> 13
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:
o Compensation levels are evaluated using surveys and analyses
of the real estate investment trust ("REIT") industry and of a
selected group of peer companies.
o 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.
o Incentive compensation is designed to reward the achievement
of both short and long-term Company objectives.
o 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.
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, as well as reports and analyses prepared by
independent third party consultants.
ANNUAL INCENTIVES
Executives are also eligible for annual incentive awards, designed to
make a significant part of an executive's annual compensation contingent upon
the achievement of certain performance targets. The Executive Officers
participate in a bonus incentive program under which the individual executives
are eligible for annual cash bonuses. Bonuses are determined primarily 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 1997 bonus
awards, the Committee considered the following performance measures: (i)
achieving a specific level of funds from operations (which industry analysts
11
<PAGE> 14
generally consider to be an appropriate measure of the performance of an equity
REIT); (ii) strengthening the Company's capital structure; 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 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). 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. No cash bonuses were paid
to the Executive Officers for 1997 because the performance measures were not
met. As a result of other significant contributions made to increase
stockholder value in 1997, the Committee in its discretion granted a special
bonus in the form of 3,000 shares of restricted Common Stock to Mr. Edwards and
1,000 shares of restricted Common Stock to Mr. Dillinger under the Company's
Long-Term Incentive Plan.
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 (the
"CEO"). In determining the CEO's salary for 1997, the Committee compared the
CEO's salary to that of the chief executive officers of Walden's peers set
forth above and set the CEO's salary at a rate competitive with other chief
executive officers with comparable duties. The CEO received no cash bonus for
1997.
TAX CONSIDERATIONS
The Committee has reviewed the federal tax legislation which makes
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
Francesco Galesi*
Louis G. Munin**
J. Otis Winters*
- --------------------
* Mr. Galesi and Mr. Winters were appointed to the Committee in June 1997.
** Mr. Munin served on the Committee until June 1997.
12
<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: AMLI Residential Properties
Trust, Apartment Investment and Management Company, Avalon Properties, Inc.,
Berkshire Realty Company, Camden Property Trust, Equity Residential Properties
Trust, Merry Land & Investment Company, Inc., Mid-America Apartment
Communities, Inc., Post Properties Inc., Security Capital Atlantic, Inc.,
Security Capital Pacific Trust 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 GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------------------------------------
INDEX 2/2/94 12/31/94 12/31/95 12/31/96 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walden Residential Properties, Inc. 100.00 98.03 126.02 163.46 181.03
S&P 500 100.00 97.88 134.66 165.44 220.65
Walden Peer Group 100.00 106.82 119.46 157.79 179.99
</TABLE>
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 2, 1998, the Company issued to Marshall B. Edwards, Michael
E. Masterson and Michael L. Collier, 45,000 shares, 20,202 shares and 15,000
shares, respectively, of Common Stock, at a purchase price of $24.75 per share
(the closing price on the New York Stock Exchange on such date). Additionally,
on such date Mr. Edwards and Mark S. Dillinger acquired an additional 5,000
shares and 5,175 shares, respectively, of Common Stock upon the exercise of
vested options at a price of $19.25 per share. Each officer acquiring such
shares (other than Mr. Dillinger) paid 10% of the purchase price in cash (5% in
the case of Mr. Dillinger) with the remaining 90% of the purchase price (95% in
the case of Mr. Dillinger) being evidenced by notes payable to the Company
bearing interest at 7% per annum, payable quarterly, and due in February 2003.
These notes are secured by the shares purchased and are recourse as to the
principal amount to each of such officers. At March 31, 1998, Messrs. Edwards,
Masterson, Dillinger and Collier had balances of $1,089,000, $450,000, $94,638
and $334,125, respectively, under these notes.
In addition, in connection with Mr. Daseke's resignation as Chairman
of the Board and Chief Executive Officer of the Company, the Company entered
into a Settlement and Employment Agreement with Mr. Daseke as of October 20,
1997, pursuant to which Mr. Daseke is employed as Chairman Emeritus of the
Company for a period ending on October 20, 2000, unless earlier terminated by
Mr. Daseke or the Company pursuant to the terms of such agreement (see
"Executive Compensation -- Employment Agreements"). Pursuant to the terms of
such agreement, the Company accelerated the vesting of all then unvested
options held by Mr. Daseke and, effective October 20, 2000, all restrictions on
the transfer of the 30,000 shares of restricted Common Stock previously issued
to Mr. Daseke under the Company's Long-Term Incentive Plan shall lapse.
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, 1998 (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:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
------------------- -------------- --------
<S> <C> <C>
Don R. Daseke(1) . . . . . . . . . . . . . . . . . 1,592,208 (2) 8.23%
Morgan Stanley, Dean Witter, Discover & Co. . . . 1,241,450 (3) 6.66%
1585 Broadway
New York, New York 10036
</TABLE>
- --------------------
(1) The business address of such person is 5430 LBJ Freeway, Suite 1600,
Dallas, Texas 75240.
(2) Includes 524,905 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, 720,000 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 issued under the Company's Long-Term
Investment Plan, which shares may not be transferred until October 20,
2000.
(3) This information is provided in reliance on a Schedule 13G filed with
the SEC on or about February 12, 1998 by Morgan Stanley, Dean Witter,
Discover & Co.
14
<PAGE> 17
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, 1998, by each director, each nominee for
director, each executive officer of the Company 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>
Marshall B. Edwards . . . . . . . . . . . . . . . . 300,686 (3) 1.60
Michael S. Masterson . . . . . . . . . . . . . . . 20,202 (4)
Mark S. Dillinger . . . . . . . . . . . . . . . . . 174,095 (5) (4)
Michael L. Collier . . . . . . . . . . . . . . . . 15,000 (4)
Maxwell B. Drever . . . . . . . . . . . . . . . . . 12,121 (4)
Don R. Daseke . . . . . . . . . . . . . . . . . . . 1,592,208 (6) 8.23
Linda Walker Bynoe . . . . . . . . . . . . . . . . 18,252 (7) (4)
Francesco Galesi . . . . . . . . . . . . . . . . . 722,940 (8) 3.88
Robert L. Honstein . . . . . . . . . . . . . . . . - -
Arch K. Jacobson . . . . . . . . . . . . . . . . . 21,600 (7) (4)
Louis G. Munin . . . . . . . . . . . . . . . . . . 21,000 (7) (4)
J. Otis Winters . . . . . . . . . . . . . . . . . . 16,000 (9) (4)
All Directors and Executive Officers (12 persons) . 2,914,104 14.77
</TABLE>
- --------------------
(1) The business address of the persons named above is c/o Walden Residential
Properties, Inc., 5080 Spectrum Drive, Suite 1000 East, Dallas, Texas
75248.
(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 beneficial
ownership as specified in Rule 13d-3(d)(1) promulgated under the Exchange
Act.
(3) Includes 198,750 shares of Common Stock which Mr. Edwards has the right to
acquire through the exercise of options granted pursuant to the Stock
Option Plan, 20,000 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") and 3,000 shares of restricted Common Stock granted
under the Company's Long-Term Incentive Plan, which shares may not be
transferred until February 4, 1999, at which time the transfer restriction
on one-third of such shares lapses and the restriction on half of the
remaining shares lapses in each of the two years thereafter (the "Bonus
Shares").
(4) Less than 1%.
(5) Includes 122,325 shares which Mr. Dillinger has the right to acquire
through the exercise of options granted pursuant to the Stock Option Plan,
10,000 Officer Restricted Shares and 1,000 Bonus Shares.
(6) Includes 524,905 shares of Common Stock owned of record by Walden Group,
of which Mr. Daseke is the holder of 90% the common stock and the sole
director, 720,000 shares 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 issued under the Company's
Long-Term Incentive Plan, which shares may not be transferred until
October 30, 2000.
(7) 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, one-third of which are currently
transferable and the transfer restrictions lapse on half of the remaining
shares on February 12, 1999 and the other half on February 12, 2000 (the
"Director Restricted Shares").
(8) Consists of 711,940 shares of Common Stock which entities controlled by
Mr. Galesi have the right to acquire pursuant to the conversion of
partnership 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 partnership interests in connection with the sale
of the controlling interest in the predecessor to the Walden Residential
Operating Partnership to the Company in June 1995. See "Certain
Relationships and Related Transactions -- The Galesi Acquisition."
(9) 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.
15
<PAGE> 18
II. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected, upon recommendation of its Audit
Committee, Deloitte & Touche as the Company's independent auditors for the
fiscal year ending December 31, 1998. Deloitte & Touche has served 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, 1998.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that Company directors,
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, 1997,
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, 1997. A representative of Deloitte & Touche
will be present at the Meeting to answer any appropriate questions and to make
a statement if he desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 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 28,
1998, in order to be included in the proxy statement and form of proxy for such
meeting.
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 $3,500, 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.
16
<PAGE> 19
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,
EDWARD H. HATZENBUEHLER
Secretary
April 27, 1998
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.
17
<PAGE> 20
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF WALDEN RESIDENTIAL PROPERTIES, INC.
The undersigned hereby appoint(s) Marshall B. Edwards and Mark S.
Dillinger, 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 4, 1998, at the Hotel Inter-Continental, 15201
Dallas Parkway, Dallas, Texas, commencing at 10:00 a.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 listed below
contrary)
Mark S. Dillinger Maxwell B. Drever Francesco Galesi
Robert L. Honstein Michael E. Masterson J. Otis Winters
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,
1998.
[ ] 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> 21
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 this proxy in the envelope provided for such purpose. No
postage is required for mailing in the United States.
Date: , 1998
------------- --------------------------------------
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.
