<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:
[ ] 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 13, 1998
To the Shareholders of
Malan Realty Investors, Inc.
The Annual Meeting of Shareholders of MALAN REALTY INVESTORS, INC. (the
"Company") will be held on Wednesday, May 13, 1998, at the Community House, 380
South Bates Street, Birmingham, Michigan at 10:00 a.m., 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, 1998; and
3. To transact such other business as may properly come before the annual
meeting or any adjournment or postponement thereof (the "Meeting").
The Board of Directors has fixed the close of business on March 20, 1998 as
the record date for determining the shareholders that are entitled to notice of,
and to vote at, the annual meeting or any adjournment or postponement (the
"Meeting").
By Order of the Board of Directors
ANTHONY S. GRAMER,
President
Birmingham, Michigan
March 27, 1998
EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON, PLEASE SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE TO ENSURE THE
PRESENCE OF A QUORUM. 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 13, 1998
This Proxy Statement contains information regarding the annual meeting (the
"Meeting") of shareholders of Malan Realty Investors, Inc. (the "Company") to be
held at 10:00 a.m., local time, on Wednesday, May 13, 1998 at the Community
House, 380 South Bates Street, Birmingham, Michigan. The Company's Board of
Directors is soliciting Proxies for use at the annual meeting and at any
adjournment or postponement (the "Meeting"). The Company expects to mail this
Proxy Statement on or about March 27, 1998.
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 by providing written notice of
revocation to the Company at any time prior to its exercise or by submitting a
properly signed proxy that is dated later than the Proxy. If you attend the
Meeting, the proxies named in the enclosed Proxy will nevertheless have
authority to vote your shares in accordance with your instructions on the Proxy
unless you indicate at the Meeting that you intend to vote the shares yourself.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1997,
including financial statements audited by Deloitte & Touche LLP, independent
auditors, and their report dated January 30, 1998 is being furnished with this
Proxy Statement. In addition, a copy of the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, as filed with the Securities and Exchange
Commission, is being furnished with this Proxy Statement.
VOTING SECURITIES
Record holders of shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), at the close of business on March 20, 1998, are
entitled to vote at the Meeting. At the close of business on March 20, 1998,
3,808,285 shares of Common Stock were outstanding. Each share is entitled to one
vote.
Unless you give different instructions on the Proxy, the persons named in
the Proxy will vote in accordance with the recommendations of the Board of
Directors. The Board recommends a vote FOR the election of the nominated
directors and FOR ratification of Deloitte & Touche LLP as the Company's
independent auditors for 1998. 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 voted 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 as the Board of
Directors recommends or, if the Board gives no recommendation, to vote in
accordance with their judgment.
2
<PAGE> 4
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 20, 1998. 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 (the "SEC").
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Shares
------------------------------------ -------------------- -----------------
<S> <C> <C>
Anthony S. Gramer 322,995(1) 8.48%
30200 Telegraph Road
Birmingham, Michigan 48025
Michael K. Kaline 81,906(2) 2.15%
Elliott J. Broderick 49,786(3) 1.31%
Robert D. Kemp, Jr. 9,505(4) *
William McBride III 6,501(5) *
William F. Pickard 6,080(6) *
Richard T. Walsh 6,501(5) *
Directors and Executive Officers as a Group
(consisting of seven individuals named) 483,274(7) 12.69%
Credit Suisse First Boston 1,176,470(8) 30.89%
Paradeplatz 8
8070 Zurich, Switzerland
FMR Corp. 244,900(9) 6.43%
82 Devonshire Street
Boston, Massachusetts 02109
Peter T. Kross 220,000 5.78%
248 Grosse Pointe Blvd.
Grosse Pointe Farms, MI 48236
Merrill Lynch Asset Management, L.P. 294,116(10) 7.72%
800 Scudders Mill Road
Plainsboro, New Jersey 08536
National Westminster Bank Plc 353,000(11) 9.27%
175 Water Street
New York, NY 10038
Putnam Investments, Inc. 437,653 11.49%
One Post Office Square
Boston, Massachusetts 02109
The Prudential Insurance Company of America 770,000(12) 20.22%
751 Broad Street
Newark, New Jersey 07102-3777
SAFECO Corporation 371,800 9.76%
SAFECO Plaza
Seattle, Washington 98185
Smith Barney, Inc. 588,235 15.45%
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 his
son and 96,440 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 76,440 shares subject to vested stock options. See
"Management--Stock Option Plan."
3
<PAGE> 5
(3) Includes 44,620 shares subject to vested stock options. See
"Management--Stock Option Plan."
(4) Includes 2,500 shares subject to vested stock options. See
"Management--Compensation of Directors."
(5) Includes 3,500 shares subject to vested stock options. See
"Management--Compensation of Directors."
(6) Includes 2,713 shares subject to vested stock options. See
"Management--Compensation of Directors."
(7) See Notes 1 through 6 above.
(8) Represents shares that Credit Suisse First Boston has the right to acquire
through conversion of convertible debentures of the Company.
(9) Based on a group filing of a Schedule 13G made by FMR Corp., Edward C.
Johnson and Abigail P. Johnson. Through their ownership of common stock of
FMR Corp. and a shareholders' voting agreement, Mr. Johnson and Ms. Johnson
may also be deemed beneficial owners of the shares.
(10) Represents shares that may be acquired through conversion of convertible
debentures of the Company. Includes 279,411 shares (approximately 7% 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.
(11) Represents shares that may be acquired upon the exercise of warrants of the
Company held by National Westminster Bank Plc.
(12) Includes, 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 that the
Company's officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities ("insiders") file reports of
ownership and changes in ownership with the SEC. Insiders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms that
they file. Based on the Company's review of the filings made by the Company's
insiders, all transactions in and beneficial ownership of the Company's equity
securities were reported in a timely manner.
ITEM 1--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.
4
<PAGE> 6
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
If any nominee is unable or unwilling to serve, the Board may designate a
substitute nominee. In that case, the persons named as proxies in the
accompanying Proxy will vote for the Board's substitute nominee. Additional
information regarding the nominees is contained under the caption "Management."
MANAGEMENT
Directors and Executive Officers
The Board of Directors 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.
The directors and executive officers of the Company are as follows:
Name Age Title
---- --- -----
Anthony S. Gramer 55 President, Chief Executive Officer
and Director
Michael K. Kaline 35 Vice President
Elliott J. Broderick 40 Chief Accounting Officer
Robert D. Kemp, Jr.* 57 Director
William McBride III* 38 Director
William F. Pickard* 57 Director
Richard T. Walsh* 62 Director
- -----------
* "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 real
estate Broker of the Company.
5
<PAGE> 7
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 Incorporated. 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.
WILLIAM MCBRIDE III is Chairman of the Board, Chief Executive Officer and
one of the founders, of Assisted Living Concepts, Inc., an AMEX listed
owner/operator of assisted living facilities based in Portland, Oregon. He has
been serving as Chairman of the Board since August of 1994, and CEO since
October of 1997. He is also a member of the Board of Directors for Newcare
Health Corporation, a nursing home operating company listed on NASDAQ. Prior to
joining Assisted Living Concepts, Inc. in the full time position of CEO, Mr.
McBride co-founded LTC Properties, Inc., a REIT, where he was President, Chief
Operating Officer and Board member from August 1992 to October 1997. Prior to
co-founding LTC Properties, Mr. McBride served from April 1988 to July 1992 as
Vice President, Controller and Chief Accounting Officer at Beverly Enterprises,
Inc., an owner/operator of long-term care facilities, retirement living
facilities and pharmacies. Prior to that, Mr. McBride worked at 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. Dr. 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. Dr. 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, Dr. Pickard was also
Chairman of the Board of Directors of the African Development Foundation. Dr.
Pickard has been a director of the Company since 1994.
RICHARD T. WALSH is President of RT Enterprises, a private firm involved in
business consulting and investments, where he has served in that capacity since
1992. Since July 1994, Mr. Walsh served as Chairman of Pioneer Industries, Inc.,
a manufacturer of steel doors and frames. 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 and three special
meetings during 1997. The Board of Directors has two standing committees: a
two-member Audit Committee and a two-member Compensation Committee. During 1997,
all directors attended at least 75% of the aggregate meetings of the Board of
Directors and committees on which they 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.
6
<PAGE> 8
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 range of fees with respect thereto, reviewing with the independent auditors
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
1997.
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 1997.
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31, 1995, 1996
and 1997 information concerning the annual and long-term compensation for
services in all capacities to the Company of those persons who, during 1997
were, (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 (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 Options(1) Payouts Compensation
Principal Position Year Salary Bonus ($) ($) (#) ($) ($)
- ------------------ ---- ------ ----- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony S. Gramer, 1997 $287,500 -- -- -- -- -- $4,750(3)
President, Chief 1996 $287,500 -- -- -- 19,500 -- --
Executive Officer 1995 $250,000 $60,000 -- -- 39,400 -- --
and Director
Michael K. Kaline, 1997 $137,500 -- $6,910(2) -- -- -- $3,223(3)
Vice President 1996 $125,000 -- -- -- 15,250 -- --
1995 $115,000 $50,000 -- -- 33,900 -- --
</TABLE>
- -----------
(1) See "Stock Option Plan."
(2) Loan forgiveness by Company.
(3) Amount of employer's contribution to 401(k).
STOCK OPTION PLAN
Prior to the Company's initial public offering in June, 1994 (the "IPO"), 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 align the
interest of management with those of the shareholders, to provide employees with
incentives to continue in the employ of the Company, to attract new employees
with outstanding qualifications and to promote the success of the Company's
long-term business objectives.
7
<PAGE> 9
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 IPO 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. Options granted on the date of the IPO 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 ten years after 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.
In 1997, no options were granted under the Stock Option Plan.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table sets forth information with respect to Stock Options
held by the Named Officers at December 31, 1997. The Named Officers did not
exercise any Stock Options during 1997.
<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 84,660 39,240 $162,610 $170,790
Michael K. Kaline 66,610 32,540 $132,098 $142,365
</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, since the IPO, the Company increased its
emphasis on incentive-based compensation by establishing the 1994 Stock Option
Plan for employees (including executive officers). In addition, at the time of
the IPO, Anthony S. Gramer, the President and Chief Executive Officer (the
"CEO") of the Company, contributed 10% of his personally-owned shares of the
Company as restricted stock awards to employees of the Company.
8
<PAGE> 10
Base Salaries. The 1997 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.
Bonuses. It is the policy of the Company that the maximum aggregate bonus
amount that may be paid to its executive officers and employees with respect to
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 bonuses were paid to the executive officers (including the CEO) for 1997
based on the recommendation of the CEO and the compensation formula used by the
Committee. This result was primarily caused by taking certain properties off
line late in 1996. The decision not to award bonuses for 1997 in no way reflects
on the individual performance of the executive officers during 1997. The
Committee believes that the performance and accomplishments of the executive
officers in 1997 was outstanding. It is anticipated, however, that funds from
operations will increase significantly in 1998 due to the completion of the
redevelopment of those properties taken off line in 1996 and their return as
income producing properties and the opening of several new facilities.
Therefore, based upon the formula, a large bonus payment may occur in 1998. For
1997, however, the Committee adopted the recommendations of the CEO that no
bonus payments be made for 1997.
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 1997 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 1997
for the same reasons that the CEO recommended that no bonus amounts be paid to
the other executive officers for 1997.
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
9
<PAGE> 11
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, 1997. 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.
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.
[PEFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/17/94 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Malan Realty Investors, Inc. $ 100.00 $ 83.32 $ 86.89 $ 127.70 $ 156.79
Nareit Equity REIT Total Return Index $ 100.00 $ 97.97 $ 112.93 $ 152.75 $ 183.70
S&P 500 Index $ 100.00 $ 104.90 $ 114.15 $ 177.25 $ 236.40
</TABLE>
Please note: The stock price performance shown on the graph above is not
necessarily indicative of future price performance.
10
<PAGE> 12
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 IPO. 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. Beginning 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 thereafter. Following expiration of the initial term, the Agreement
automatically renews for one-year terms unless either party gives the other 90
days' notice terminating such Agreement.
The Company entered into Change-in-Control Agreements with Messrs. Gramer
(in the form of an amendment to his employment agreement) and Kaline. The
agreements provide that if a change in control of the Company occurs during the
person's employment, Messrs. Gramer and Kaline shall receive lump sum payments
of $1,000,000 and $500,000, respectively, and are each entitled to receive, at
the Company's expense, health insurance for their respective lifetimes.
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 1997, 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. No travel expenses were incurred in 1997 for the directors.
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.
Messrs. Kemp, McBride, Pickard and Walsh were each granted options on May
15, 1997, to acquire 1,000 shares of Common Stock at an exercise price of
$17.125 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
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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 the day before the compensation is
earned by a Director (i.e., the closing price on the day before a Board
meeting). For 1997, 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.
ITEM 2--RATIFICATION OF SELECTION OF 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 1998. Deloitte & Touche LLP served as the Company's independent
auditors for the year ended December 31, 1997. The Board of Directors recommends
that the shareholders vote FOR the appointment of Deloitte & Touche LLP as the
Company's independent auditors for 1998. 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 1999 must be received by the Company at 30200
Telegraph Road, Birmingham, Michigan 48025-4503 by the close of business on
November 27, 1998. 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 27, 1998
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<TABLE>
<S><C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, AND 2.
1. ELECTION OF DIRECTORS FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] EXCEPTIONS [X]
listed below. for all nominees listed below.
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 NOMINEES, 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 independent such other business as may properly come before the meeting.
auditors for 1998.
FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address or
Comments Mark Here [X]
Please sign exactly as your 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:_________________________________, 1998
_____________________________________________
Signature
_____________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED VOTES MUST BE INDICATED
POSTAGE PAID ENVELOPE. (x) IN BLACK OR BLUE INK. [ ]
</TABLE>
MALAN REALTY INVESTORS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 13, 1998
The undersigned 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 Wednesday, May 13, 1998, and at any adjournment, 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. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN FAVOR OF ITEMS (1) AND (2) IF NO INSTRUCTION IS PROVIDED.
If more than one of the above named individuals shall be present in person or
by substitution at such meeting or at any adjournment, the majority of said
individuals so present and voting, either in person or by substitution, shall
exercise all of the powers given by this proxy. The undersigned revokes any
proxy previously given to vote at the annual 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
