<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] 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
MALAN REALTY INVESTORS, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MALAN REALTY INVESTORS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD MAY 15, 1997
To the Shareholders of
Malan Realty Investors, Inc.
The Annual Meeting of Shareholders of MALAN REALTY INVESTORS, INC. (the
"Company") will be held on Thursday, May 15, 1997, at the Community House, 380
South Bates Street, Birmingham, Michigan at 10 o'clock in the forenoon, local
time, for the following purposes:
1. To elect five (5) directors to serve until the next annual meeting of
shareholders and until their successors are elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 21,
1997 as the record date for determining the shareholders that are entitled to
notice of, and to vote at, the annual meeting or any adjournments or
postponements thereof (the "Meeting").
By Order of the Board of Directors
ANTHONY S. GRAMER,
President
Birmingham, Michigan
March 28, 1997
SHAREHOLDERS WHO DO NOT INTEND TO BE PRESENT AT THE MEETING IN PERSON ARE
REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT IN THE
ACCOMPANYING ENVELOPE IN ORDER THAT THE NECESSARY QUORUM MAY BE ASSURED. ANY
PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE MEETING.
<PAGE> 3
MALAN REALTY INVESTORS, INC.
30200 TELEGRAPH ROAD
BIRMINGHAM, MICHIGAN 48025-4503
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 1997
This Proxy Statement is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of Malan Realty Investors,
Inc. (the "Company"), for use at the annual meeting of shareholders and at any
adjournments or postponements thereof (the "Meeting") to be held, for the
purposes set forth in the accompanying Notice of Annual Meeting, on Thursday,
May 15, 1997, at the Community House, 380 South Bates Street, Birmingham,
Michigan at 10 o'clock in the forenoon, local time. The Company expects to
mail this Proxy Statement on or about March 28, 1997.
Valid Proxies will be voted as specified thereon at the Meeting. Any
shareholder giving a Proxy in the accompanying form retains the power to revoke
the Proxy at any time prior to its exercise. Any person giving a Proxy may
revoke it by written notice to the Company at any time prior to its exercise.
In addition, attendance at the Meeting will not constitute a revocation of a
Proxy unless the shareholder affirmatively indicates at the Meeting that such
shareholder intends to vote the shares in person.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1996,
including financial statements audited by Deloitte & Touche LLP, independent
accountants, and their report thereon dated January 29, 1997 and a copy of the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, as
filed with the Securities and Exchange Commission, is being furnished with this
Proxy Statement.
VOTING SECURITIES
The holders of record of shares of Common Stock, par value $0.01 per
share (the "Common Stock"), of the Company at the close of business on March
21, 1997 are entitled to vote at the Meeting. At the close of business on March
21, 1997, there were outstanding 3,463,684 shares of Common Stock, each of
which is entitled to one vote.
Unless contrary instructions are indicated on the Proxy, all shares of
Common Stock represented by valid Proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees for directors named in the Proxy and FOR the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the year ending December 31, 1997. The disposition of all business that may
properly come before the Meeting, other than the appointment of independent
auditors, requires the affirmative vote of a majority of the votes cast at the
Meeting. The shares of Common Stock represented by a valid proxy which are not
voted by a broker on any matter or which abstain with respect to any matter
will not be counted as an affirmative vote in determining whether the matter is
approved but will be counted for purposes of determining the presence of a
quorum. Because shareholder approval is determined by a percentage of the votes
cast at the meeting, abstaining and nonvoting shares will not affect the
determination of whether a matter is approved.
The Company knows of no business other than that set forth above to be
transacted at the Meeting, but if other matters requiring a vote do arise, it
is the intention of the persons named in the Proxy to vote in accordance with
their judgment on such matters.
1
<PAGE> 4
ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting to serve until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. All of the nominees are presently members of the Board
of Directors. An affirmative vote of the holders of a majority of the votes
cast at the Meeting is required for the election of directors.
The shares of Common Stock represented by the enclosed Proxy, if given
and unless otherwise specified, will be voted by the persons named as proxies
for the election of the following individuals nominated by the Board of
Directors:
Year First Elected
Name a Director
---- ------------------
Anthony S. Gramer 1986
Robert D. Kemp, Jr. 1994
William McBride III 1994
William F. Pickard 1994
Richard T. Walsh 1994
It is not contemplated that any of the nominees will be unable or unwilling
to serve; however, if any nominee is unable or unwilling to serve, it is
intended that the shares represented by the Proxy, if given and unless
otherwise specified therein, will be voted for a substitute nominee or nominees
designated by the Board of Directors. Additional information regarding the
nominees is contained under the caption "Management."
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 17, 1997. The Company has
relied upon information supplied by its officers, directors, and certain
shareholders and upon information contained in filings with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
Directors,
Executive Officers No. of Percent of
and 5% Shareholders Shares Shares
------------------- ------ ----------
<S> <C> <C>
Anthony S. Gramer 247,470(1) 7.10%
30200 Telegraph Road
Birmingham, Michigan 48025
Michael K. Kaline 22,076(2) *
Elliott J. Broderick 17,096(3) *
Robert D. Kemp, Jr. 7,591(4) *
William McBride III 5,045(5) *
William F. Pickard 3,591(6) *
Richard T. Walsh 5,045(5) *
Directors and Executive Officers as a Group
(consisting of seven individuals named) 307,914(7) 8.75%
Credit Suisse First Boston 205,880 5.94%
Paradeplatz 8
8070 Zurich, Switzerland
Peter T. Kross 220,000 6.35%
248 Grosse Pointe Blvd.
Grosse Pointe Farms, MI 48236
Merrill Lynch Asset Management, L.P. 294,116(8) 7.83%
800 Scudders Mill Road
Plainsboro, New Jersey 08536
National Westminster Bank Plc 353,000(9) 9.25%
175 Water Street
New York, NY 10038
The Prudential Insurance Company of America 770,000(10) 19.93%
751 Broad Street
Newark, New Jersey 07102-3777
SAFECO Corporation 371,800 10.73%
SAFECO Plaza
Seattle, Washington 98185
Smith Barney, Inc. 588,235 16.98%
1345 Avenue of the Americas
New York, NY 10105
</TABLE>
- ---------------
*Less than 1%
(1) Includes 4,235 shares registered in Mr. Gramer's name as custodian for a
minor child and 19,660 shares subject to vested stock options held by Mr.
Gramer. Excludes 1,865 shares owned by Mr. Gramer's son, who shares his
household. See "Management--Stock Option Plan."
(2) Includes 16,610 shares subject to vested stock options. See
"Management--Stock Option Plan."
(3) Includes 12,330 shares subject to vested stock options. See
"Management--Stock Option Plan."
3
<PAGE> 6
(4) Includes 1,500 shares subject to vested stock options. See
"Management--Compensation of Directors."
(5) Includes 2,500 shares subject to vested stock options. See
"Management--Compensation ofDirectors."
(6) Includes 1,792 shares subject to vested stock options. See
"Management--Compensation of Directors."
(7) See Notes 1 through 6 above.
(8) Represents shares that may be acquired through conversion of convertible
debentures of the Company. Includes 279,411 shares (approximately 7.4% of
the Common Stock) beneficially owned by Merrill Lynch Global Allocation
Funds, Inc., for which Merrill Lynch Asset Management, L.P. acts as
investment adviser.
(9) Represents shares that may be acquired upon the exercise of warrants of the
Company held by National Westminster Bank Plc.
(10) Includes, pursuant to SEC rules, 400,000 shares that The Prudential
Insurance Company of America has the right to acquire through conversion of
convertible debentures of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities ("insiders"), to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Insiders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based on the Company's review of
the filings made by the Company's directors and executive officers, all
transactions in and beneficial ownership of the Company's equity securities
were reported in a timely manner.
4
<PAGE> 7
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of the Company consists of five members. Under the
Company's Articles of Incorporation, at least three of the Company's Directors
must be "Independent" (i.e. not affiliated with the Company). All Directors of
the Company serve for terms of one year or until the election of their
respective successors. Officers of the Company serve at the pleasure of the
Board.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Anthony S. Gramer 54 President, Chief Executive Officer and Director
Michael K. Kaline 34 Vice President
Elliott J. Broderick 39 Chief Accounting Officer
Robert D. Kemp, Jr.* 56 Director
William McBride III* 37 Director
William F. Pickard* 56 Director
Richard T. Walsh* 61 Director
</TABLE>
- ---------------
* "Independent" director
Set forth below is biographical information for the executive officers and
the members of the Board of Directors.
ANTHONY S. GRAMER is the President, Chief Executive Officer and a director
of the Company, as well as an associate real estate Broker of the Company. Mr.
Gramer joined the Company in 1981 and acquired the Company in 1986. From 1972
until 1981, Mr. Gramer served in various executive capacities at companies in
the real estate, banking and mortgage industries. Prior to 1972, Mr. Gramer was
a member of the audit staff of Touche Ross & Co. Mr. Gramer is a past chairman
of the legislative committee of the Mortgage Bankers Association of Michigan.
Mr. Gramer has been a director of the Company since 1986.
MICHAEL K. KALINE serves as Vice President for the Company. Since joining
the Company in 1984, Mr. Kaline has been responsible for overseeing the leasing
of the entire portfolio of the Company. In addition, Mr. Kaline is responsible
for acquisition, development, and property management and is an associate
Broker of the Company.
ELLIOTT J. BRODERICK is the Chief Accounting Officer of the Company and
oversees the accounting and reporting functions of the Company, as well as
regulatory and tax compliance, short-term investments, information systems and
fiscal planning and budgets. Prior to joining the Company in 1991, Mr.
Broderick was employed for seven years by Plante & Moran, Michigan's largest
regional CPA firm. Mr. Broderick is a certified public accountant and a
licensed real estate salesperson and is a member of the American Institute of
Certified Public Accountants and the Michigan Association of Certified Public
Accountants.
ROBERT D. KEMP, JR. is a co-founder of Wilson, Kemp and Associates, Inc.,
where he has served as the President, Chief Operating Officer and a director
since 1968. Wilson, Kemp & Associates, Inc. is a wholly-owned subsidiary of
Comerica, Inc. In addition, Mr. Kemp currently serves as a director of
Wholesale Auto Receivables Corporation, a wholly-owned subsidiary of General
Motors Acceptance Corporation. Mr. Kemp also serves as the Treasurer, a
director and a member of the Executive Committee of the Detroit and Wayne
County Tuberculosis Foundation. Mr. Kemp has been a director of the Company
since 1994.
5
<PAGE> 8
WILLIAM MCBRIDE III is co-founder, President, Chief Operating Officer and a
director of LTC Properties, Inc., a real estate investment trust (REIT). He has
been serving in this capacity since August 1992. In addition, he is one of the
founders and Chairman of the Board of Assisted Living Concepts, Inc. an AMEX
listed owner/operator of assisted living facilities based in Portland, Oregon.
Prior to joining LTC Properties, Mr. McBride was employed by Beverly
Enterprises, Inc., an owner/operator of long-term care facilities, retirement
living facilities and pharmacies, from April 1988 to July 1992, where he served
as Vice President, Controller and Chief Accounting Officer. Prior to that, he
was employed by Ernst & Young, an international accounting and consulting firm.
Mr McBride has been a director of the Company since 1994.
WILLIAM F. PICKARD has served as the Chairman and Chief Executive Officer
of Regal Plastics Company since 1985. Mr. Pickard currently serves as a
director of Michigan National Corporation (a bank holding company), WTVS (a
Detroit television station), National Association of Black Automotive Suppliers,
Detroit Economic Development Corporation, Michigan Cancer Foundation and Detroit
Science Center. Mr. Pickard is also a member of the U.S. Advisory Committee for
Trade Policy and Negotiations and the Executive Board of the National
Association for Advancement of Colored People. From 1983 until 1987, Mr. Pickard
was also Chairman of the Board of Directors of the African Development
Foundation. Mr. Pickard has been a director of the Company since 1994.
RICHARD T. WALSH is a business and personal investment consultant at RT
Enterprises, where he has been employed since 1992. Mr. Walsh served as the
President and Chief Executive Officer of Core Industries, Inc. from 1991 until
1992 and as President and Chief Operating Officer of Core Industries, Inc. from
1986 until 1991. From 1982 until 1992, Mr. Walsh also served as a director of
Core Industries, Inc. Mr. Walsh is a Trustee of Walsh College and a member of
the Financial Executives Institute. Mr. Walsh has been a director of the
Company since 1994.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held four regular meetings and one
special meeting during 1996. Each of the directors attended all of the meetings
of the Board of Directors and the committees on which he served. Directors
fulfill their responsibilities not only by attending board and committee
meetings, but also through communication with the Chief Executive Officer and
other members of management on matters that affect the Company.
The Board of Directors has established two standing committees: a
two-member Audit Committee consisting of William McBride III and Richard T.
Walsh and a two-member Compensation Committee consisting of Robert D. Kemp, Jr.
and William F. Pickard.
The Audit Committee is responsible for approving the scope of the audit and
the independent auditors and the range of fees with respect thereto, reviewing
with the independent public accountants the plans and results of the overall
audit engagement, and reviewing the adequacy of the Company's internal
accounting controls. In addition, the Audit Committee recommends to the Board
of Directors the appointment of the independent auditors, which appointment is
subject to ratification by the shareholders at the annual meeting. The Audit
Committee met four times during 1996.
The Compensation Committee is responsible for determining compensation for
the Company's executive officers and administering the Company's 1994 Stock
Option Plan. The Compensation Committee met four times during 1996.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
years ended December 31, 1994, 1995 and 1996 of those persons who were, during
1996, (i) the chief executive officer and (ii) the other executive officers of
the Company whose compensation is required to be disclosed pursuant to the
rules of the Securities and Exchange Commission (hereinafter, the "Named
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- ------------------------------
Awards Payouts
---------------------- -------
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Compensation Awards(2) Options(4) Payouts Compensation
Principal Position Year Salary Bonus ($) ($) (#) ($) ($)
- ------------------ ---- ------ ----- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony S. Gramer, 1996 $287,500 -- -- -- 19,500 -- --
President, Chief Executive 1995 $250,000 $60,000 -- -- 39,400 -- --
Officer and Director 1994 $214,233 $50,000 $32,253(1) -- 65,000 -- --
Michael K. Kaline, Vice 1996 $125,000 -- -- -- 15,250 -- --
President 1995 $115,000 $50,000 -- -- 33,900 -- --
1994 $ 85,830 $35,000 -- $72,522(3) 50,000 -- --
</TABLE>
(1) Includes $25,000 air travel allowance.
(2) See "Incentive Stock."
(3) The dollar value (determined as of the date of grant) of 4,266 shares of
restricted stock granted to Mr. Kaline on the date of the Company's initial
public offering.
(4) See "Stock Option Plan."
INCENTIVE STOCK
In connection with the initial public offering of the Company, Anthony S.
Gramer transferred, in the aggregate, 10% of his shares of Common Stock (the
"Incentive Shares") to the then other four executive officers of the Company
and certain other employees of the Company. The purpose of such transfers was
to further align the interests of the executive officers with those of
shareholders of the Company and to provide incentives to the executive officers
and other employees of the Company to remain in the employ of the Company and
to contribute to the future success of the Company through their continued
efforts.
The Incentive Shares were awarded subject to a risk of forfeiture for a
period of two years, which expired on June 17, 1996. In the event a holder of
Incentive Shares ceased to be employed by the Company prior to the expiration
of that two-year period (as was the case with two executive officers and three
other employees of the Company), for any reason other than death or disability,
his Incentive Shares would be immediately and automatically forfeited, and
ownership of such shares would revert to Mr. Gramer.
7
<PAGE> 10
STOCK OPTION PLAN
Prior to the initial public offering by the Company, the Company adopted
The Malan Realty Investors, Inc. 1994 Stock Option Plan (the "Stock Option
Plan" or "Plan") to enable employees of the Company to participate in the
ownership of the Company. The Stock Option Plan is designed to attract and
retain executive officers and other key employees of the Company, to encourage a
proprietary interest in the Company and to promote the success of the Company's
long-term business objectives.
Under the Stock Option Plan, executive officers and employees of the
Company may be granted options to acquire shares of Common Stock of the Company
("Options"). The Plan is administered by the Compensation Committee, which is
authorized to select the executive officers and other employees to whom Options
are to be granted. No member of the Compensation Committee is eligible to
participate in the Stock Option Plan.
The Compensation Committee, in its discretion, determines the number of
Options to be granted to an employee. However, in accordance with the
requirements of the Internal Revenue Code for performance-based compensation,
the provisions of the Plan limit the aggregate number of option shares that the
Compensation Committee may grant to an executive officer during any single year
to 100,000 shares.
The exercise price of each Option is equal to the aggregate fair market
value of the underlying shares on the date of grant. With the exception of
those Options granted on the date of the Company's initial public offering in
1994, Options vest over a five-year period at the rate of 20% per year,
beginning on the first anniversary of the date of grant. The Options granted on
the date of the Company's Initial Public Offering vest over a three-year
period, in one-third increments, with the initial one-third vesting on the
first anniversary of the date of grant. If an optionee's employment is
terminated within the first year of the date of grant for any reason other than
death, disability, or retirement, the right to exercise the Option is
forfeited. If the optionee's employment is terminated more than one year after
the date of grant for reasons other than death, disability, retirement, or
cause, the Option may be exercised to the extent it was exercisable at the time
of termination of employment. If the termination of employment is for cause,
the right to exercise the Option is forfeited. If the termination of employment
is because of death, disability, or retirement, the Option may be exercised in
full. No Option may be exercised after ten years from the date of grant.
Notwithstanding the foregoing paragraph, the Compensation Committee, in its
sole and absolute discretion, may accelerate the vesting of any Option that has
been held by an optionee for at least six months from the date of grant of the
Stock Option.
8
<PAGE> 11
OPTION GRANTS
The following table sets forth information on grants of Stock Options during
1996 to the Named Officers.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of
Underlying Granted to Exercise Stock Price
Options Employees Price Expiration Appreciation
Name Granted in 1996 ($ per share) Date for Option Term(1)
- ---- ---------- ---------- ------------- ---------- --------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Anthony S. Gramer 19,500 36.1% $14.375 3/18/06 $77,445 $446,746
Michael K. Kaline 15,250 28.2% $14.375 3/18/06 $60,573 $349,377
</TABLE>
- ---------------
(1) The actual value, if any, that may be realized by each individual will
depend on the fair market value of the Common Stock on the date on which the
options are exercised. The option term for these option grants is ten years.
The appreciation rates used in the table are provided to comply with Item
402(c) of Regulation S-K and do not necessarily reflect the views of management
as to the potential realizable value of options.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth information with respect to Stock Options
held by the Named Officers at December 31, 1996. The Named Officers did not
exercise any Stock Options during 1996.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year-End(#) Options at Year-End($)
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony S. Gramer 7,880 116,020 $22,655 $127,182
Michael K. Kaline 6,780 92,370 $19,942 $106,564
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
Compensation Philosophy. The Company's compensation philosophy has been to
pay its officers a competitive salary along with incentive-based compensation.
In keeping with this philosophy, in 1994 the Company increased its emphasis
on incentive-based compensation by establishing the 1994 Stock Option Plan for
employees (including executive officers) in connection with its initial public
offering (the "IPO"). In addition, on the IPO date, Anthony S. Gramer, the
President and Chief Executive Officer of the Company, contributed 10% of his
personally-owned shares of the Company as restricted stock awards to employees
of the Company.
Base Salaries. The 1996 base salaries for the executive officers were
established by the Compensation Committee based on a review of each executive
officer's salary for the previous year, his position and level of
responsibility in the Company, management's assessments of each individual's
expected future contribution to the Company, and salaries of named executives
of other similar real estate investment trusts. The Committee considers the
salaries of the Named Officers to be reasonable under these criteria.
9
<PAGE> 12
Bonuses. It is the policy of the Company that the maximum aggregate bonus
amount that may be paid to its executive officers and employees in respect of a
given year not exceed 50% of the increase in the Company's funds from
operations over the previous year. Once the aggregate maximum amount is
determined, the Compensation Committee has the discretion to award all or any
portion of that bonus pool based on the CEO's recommendation and the
Compensation Committee's evaluation of the Company's and each individual's
performance.
No bonus amounts were paid to the executive officers (including the CEO)
for 1996 based on the recommendation of the CEO and the fact that the
Company's 1996 funds from operations remained relatively constant, increasing 1%
over the Company's 1995 funds from operations on a per share basis. The decision
not to award bonuses for 1996 in no way reflects on the performance of the
executive officers during 1996. The Committee believes that the performance and
accomplishments of the executive officers in 1996 was outstanding. However, it
is anticipated that such accomplishments will not be reflected in the Company's
funds from operations for one to two years. Accordingly, the Committee adopted
the recommendations of the CEO that no bonus payments be made for 1996.
Stock Option Plan. In keeping with the Company's compensation philosophy of
emphasizing performance-based programs, the Company maintains The Malan Realty
Investors, Inc. 1994 Stock Option Plan (the "Plan") for employees of the
Company. The purposes of the Plan are to align the interests of management with
those of the shareholders of the Company, to provide employees with incentives
to continue in the employ of the Company and to attract new employees with
outstanding qualifications. During 1996, stock options were granted to each of
the named executive officers.
Corporate Tax Deduction in Excess of $1 Million a Year. Section 162(m) of
the Internal Revenue Code, enacted in 1993, generally limits the corporate tax
deduction for compensation paid to executive officers named in the Summary
Compensation Table in the Proxy Statement to $1 million. Certain
performance-based compensation, however, is specifically exempt from the
deduction limit. Although the Company does not have a policy that requires the
Compensation Committee to qualify compensation awarded to executive officers for
deductibility under Section 162(m), the Compensation Committee does consider the
cost to the Company in making all compensation decisions. The Company's 1994
Stock Option Plan described in this proxy statement complies with the
requirements for performance-based Compensation under Section 162(m).
Compensation of the CEO. The 1996 base salary of the CEO was determined by
the Compensation Committee based upon the Company's performance and the
CEO's salary for the previous year. Based on the CEO's recommendation to the
Compensation Committee, no discretionary bonus was awarded to the CEO for 1996
for the same reasons that the CEO recommended that no bonus amounts be paid the
other executive officers for 1996.
Going forward, the Compensation Committee will continue to (i) determine
the compensation to be paid by the Company to the CEO and the other Named
Officers; (ii) from time to time review the compensation and benefits programs,
policies and practices of the Company; and (iii) administer the Company's 1994
Stock Option Plan. The Committee is committed to maintaining competitive salary
levels for the CEO and other Named Officers of the Company and maintaining an
emphasis on performance-based compensation.
THE COMPENSATION COMMITTEE
Robert D. Kemp, Jr.
William F. Pickard
10
<PAGE> 13
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph sets forth a comparison of the percentage change
in the cumulative total shareholder return on the Company's Common Stock
compared to the cumulative total return of the S&P Composite--500 Stock Index
and the NAREIT Equity REIT Total Return Index (the "Equity REIT Index") for the
period June 17, 1994, the date on which trading of the Company's Common Stock
commenced, through December 31, 1996. The Company has selected the Equity REIT
Index because it believes the Equity REIT Index offers shareholders the most
meaningful basis for assessing total shareholder return on the Common Stock and
comparing it to the results of comparable Real Estate Investment Trusts
("REITs").
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
MALAN REALTY INVESTORS, INC., THE NAREIT EQUITY REIT TOTAL
RETURN INDEX AND THE S&P 500 INDEX
The following graph assumes that the value of the investment in Malan Realty
Investors, Inc. and each of the indices was $100 at the beginning of the
period.
[LINE CHART]
<TABLE>
<CAPTION>
6/17/94 12/31/94 12/31/95 12/31/96
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Malan Realty Investors, Inc. $ 100.00 $ 83.20 $ 86.89 $ 127.70
NAREIT Equity REIT Total Return Index $ 100.00 $ 97.97 $ 112.93 $ 152.75
S & P 500 Index $ 100.00 $ 104.90 $ 144.16 $ 177.26
</TABLE>
Please note: The stock price performance shown on the graph above is not
necessarily indicative of future price performance.
11
<PAGE> 14
CERTAIN EMPLOYMENT ARRANGEMENTS
In 1994, the Company entered into an employment agreement with Anthony S.
Gramer (the "Agreement") whereby Mr. Gramer agreed to remain in the employ of
the Company for a term extending until two years following the Company's
initial public offering. The Agreement provides for annual base compensation to
Mr. Gramer in the amount of $250,000, subject to an annual review and increase
by the Compensation Committee and an annual business travel stipend in the
amount of $50,000. (In 1995, the Company and Mr. Gramer agreed that, in lieu of
the business travel stipend, the Company would pay directly or reimburse Mr.
Gramer for the actual amount of any Company-related travel expenses.) In
addition, the Agreement includes provisions restricting Mr. Gramer from
competing directly or indirectly with the Company during the term of his
employment with the Company and for one year following termination of
employment. Following expiration of the initial term, the Agreement will
automatically renew for one-year terms unless either party gives the other 90
days' notice terminating such Agreement.
COMPENSATION OF DIRECTORS
The Company pays its directors who are not employees of the Company an
annual fee of $12,000 plus a fee of $1,000 for each quarterly meeting of the
Board of Directors attended, plus travel expenses. In 1996, the Company paid,
in the aggregate, $64,000 to Messrs. Kemp, McBride, Pickard and Walsh for
serving as directors of the Company and as members of a committee of the Board
of Directors and also paid $7,185 to Mr. McBride for travel expenses incurred.
Pursuant to the terms of the Malan Realty Investors, Inc. 1995 Stock Option
Plan for Non-Employee Directors (the "Directors Stock Option Plan"), each
non-employee director of the Company is automatically granted a non-qualified
stock option to purchase 1,000 shares of Common Stock of the Corporation
following the Annual Meeting of the Board of Directors. In the event a vacancy
arises on the Board following the Annual Meeting of Shareholders in any year
and a non-employee Director is nominated to fill such vacancy prior to December
31 of the same year, such non-employee Director would automatically be granted
an option to acquire 1,500 shares of Common Stock (in lieu of the normal 1,000
share grant) immediately following the next Annual Meeting of the Board of
Directors. Following each Annual Meeting of the Board of Directors thereafter,
the non-employee Director would receive the normal 1,000 share grant, assuming
he is reelected to the Board.
The aggregate number of shares of Common Stock issuable under the Directors
Stock Option Plan is 80,000, subject to certain adjustments. All options
granted must have an exercise price equal to the fair market value of the
underlying shares on the date of grant. Options vest upon grant but do not
become exercisable by the director until six months following the date of
grant. Options remain exercisable until the tenth anniversary of the date of
grant or, if earlier, until one year after the director ceases to be a member
of the Board for any reason.
Each of Messrs. Kemp, McBride, Pickard and Walsh were granted options on
May 21, 1996 to acquire 1,000 shares of Common Stock at an exercise price of
$14.375 per share.
Under the Company's 1995 Stock Compensation Plan for Non-Employee Directors
(the "Stock Compensation Plan"), non-employee directors may make an election
each year to receive all or a portion of their director's compensation for the
following calendar year in the form of Common Stock of the Company in lieu of
cash. Once made, the election is irrevocable for the following year's
compensation. The number of shares to be paid to a director in lieu of cash
compensation is determined based on the closing price of the Common Stock on
the New York Stock Exchange on
12
<PAGE> 15
the day before the compensation is earned by a Director (i.e., the closing
price on the day before a Board or committee meeting, as applicable). For 1996,
Messrs. Kemp and Pickard received 100% of their directors' compensation in the
form of Common Stock of the Company, and Messrs. McBride and Walsh received 50%
of their directors' compensation in the form of Common Stock of the Company.
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Company's Audit
Committee, has appointed Deloitte & Touche LLP as the Company's independent
auditors for 1997, subject to shareholder ratification. Deloitte & Touche LLP
served as the Company's independent auditors for the year ended December 31,
1996. The Board of Directors recommends that the shareholders vote FOR approval
of the appointment of Deloitte & Touche LLP as the Company's independent
auditors for 1997. Although shareholder approval of the appointment is not
required by law and is not binding on the Board of Directors, the Board will
take the appointment of Deloitte & Touche LLP under advisement if such
appointment is not approved by the affirmative vote of a majority of the votes
cast at the Meeting.
The Company expects that representatives of Deloitte & Touche LLP will be
present at the Meeting and will be afforded an opportunity to make a statement
if they desire to do so. The Company also expects that such representatives of
Deloitte & Touche LLP will be available at that time to respond to appropriate
questions addressed to the officer presiding at the Meeting.
PROPOSALS OF SECURITY HOLDERS
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 1998 must be received by the Company at 30200
Telegraph Road, Birmingham, Michigan 48025-4503 by the close of business on
November 28, 1997. If the date of such meeting is changed by more than 30 days
from the date such meeting is scheduled to be held, the proposal must be
received by the Company at a reasonable time before the solicitation of proxies
for such meeting is made. Proposals should be sent to the attention of the
President. A person may submit only one proposal for inclusion in the proxy
materials, and under certain circumstances enumerated in the Securities and
Exchange Commission's rules relating to the solicitation of proxies, the
Company may be entitled to omit the proposal and any statement in support
thereof (which in the aggregate may not exceed 500 words in length) from its
proxy statement and form of proxy.
COSTS OF PROXY SOLICITATION
The cost of preparing, assembling, and mailing the proxy material will be
borne by the Company. The Company will also request persons, firms, and
corporations holding shares in their names or in the names of their nominees,
which shares are beneficially owned by others, to send the proxy material to,
and to obtain Proxies from, such beneficial owners and will reimburse such
holders for their reasonable expenses in doing so.
Please complete the enclosed proxy card and mail it in the enclosed
postage-paid envelope as soon as possible.
By Order of the Board of Directors,
Anthony S. Gramer
President
March 28, 1997
13
<PAGE> 16
<TABLE>
<S><C>
[ ]
The Board of Directors recommends a vote FOR items 1, and 2.
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below [X] for all nominees listed below. [X] [X]
Nominees: Anthony S. Gramer, Robert D. Kemp, Jr., William McBride III, William F. Pickard and Richard T. Walsh
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED BELOW.)
*Exceptions _____________________________________________________________________________________________________________________
2. Ratification of Independent Auditors 3. In their discretion, the Proxies are authorized to vote upon
Ratification of Deloitte & Touche LLP as such other business as may properly come before the meeting.
independent auditors for 1997.
FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address or
Comments Mark Here [X]
Please sign exactly as name appears below. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full 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.
Dated: _______________________________________, 1997
____________________________________________________
Signature
____________________________________________________
Signature if held jointly
Votes must be indicated
(x) in Black or Blue ink. [X]
PLEASE MARK, SIGN DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE PAID ENVELOPE.
</TABLE>
MALAN REALTY INVESTORS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 15, 1997
The undersigned hereby appoints each of Anthony S. Gramer, Michael K.
Kaline and Elliott J. Broderick, with full power of substitution, to represent
the undersigned at the annual meeting of shareholders of Malan Realty Investors,
Inc. on Thursday, May 15, 1997, and at any adjournment thereof, and to vote
at such meeting the shares of Common Stock that the undersigned would be
entitled to vote if personally present in accordance with the following
instructions and to vote in their judgment upon all other matters which may
properly come before the meeting and any adjournment thereof. THE SHARES
REPRESENTED HEREBY WILL BE VOTED IN FAVOR OF ITEMS (1) AND (2) IF NO INSTRUCTION
IS PROVIDED.
If more than one of the above named Proxies shall be present in person or
by substitution at such meeting or at any adjournment thereof, the majority of
said Proxies so present and voting, either in person or by substitution, shall
exercise all of the powers hereby given. The undersigned hereby revokes any
proxy heretofore given to vote at such meeting.
(Continued and to be SIGNED and dated on the reverse side.)
MALAN REALTY INVESTORS, INC.
P.O. BOX 11086
NEW YORK, N.Y. 10203-0086
