<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
LIBERTY PROPERTY TRUST
- -----------------------------------------------------------------------------
(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:
----------------------------------------------------------------------
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>
LIBERTY PROPERTY TRUST
65 Valley Stream Parkway
Malvern, Pennsylvania 19355
-------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 20, 1998
-------------------------------------
The 1998 ANNUAL MEETING of the shareholders of Liberty Property Trust, a
Maryland real estate investment trust (the "Trust"), will be held at the
Desmond Hotel, One Liberty Boulevard, Malvern, Pennsylvania, 19355 on
Wednesday, May 20, 1998 at 10:00 AM, local time, for the following purposes:
1. To elect three Class I trustees to hold office until the Annual Meeting
of Shareholders to be held in 2001 and until their successors are duly
elected and qualified; and
2. To transact such other business as may properly come before the meeting.
The Board of Trustees has fixed the close of business on March 16, 1998 as
the record date for the meeting. Only shareholders of record as of that date
are entitled to notice of and to vote at the meeting and any adjournment and
postponement thereof.
The accompanying form of proxy is solicited by the Board of Trustees of
the Trust. Reference is made to the attached Proxy Statement for further
information with respect to the business to be transacted at the meeting.
By Order of the Board of Trustees,
/s/ James J. Bowes
----------------------------------
James J. Bowes
Secretary
Malvern, Pennsylvania
April 16, 1998
PLEASE COMPLETE AND RETURN YOUR SIGNED PROXY CARD
Please complete and promptly return your proxy in the envelope provided.
This will not prevent you from voting in person at the meeting. It will,
however, help to assure a quorum and to avoid added proxy solicitation costs.
<PAGE>
LIBERTY PROPERTY TRUST
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 20, 1998
GENERAL INFORMATION
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Trustees of Liberty Property Trust, a
Maryland real estate investment trust (the "Trust"), for use at the Trust's
1998 Annual Meeting of Shareholders (the "Meeting") to be held at the Desmond
Hotel, One Liberty Boulevard, Malvern, Pennsylvania, 19355 on Wednesday, May
20, 1998 at 10:00 A.M., local time, and any adjournment or postponement
thereof, for the purposes set forth in the foregoing notice and more fully
discussed herein. This proxy statement, the foregoing notice and the enclosed
proxy are first being mailed to shareholders of the Trust on or about April 16,
1998. Only shareholders of record at the close of business on March 16, 1998
shall be entitled to notice of and to vote at the Meeting.
If the enclosed proxy is properly executed and received by the Trust prior
to voting at the Meeting, the common shares of beneficial interest, $0.001 par
value per share, of the Trust (the "common shares") represented thereby will be
voted in accordance with the instructions marked thereon. In the absence of
instructions, the common shares will be voted FOR the nominees of the Board of
Trustees in the election of trustees. Management does not intend to bring any
matter before the Meeting other than as indicated in the notice and does not
know of anyone else who intends to do so. If any other matters properly come
before the Meeting, however, the persons named in the enclosed proxy, or their
duly constituted substitutes acting at the Meeting, will be authorized to vote
or otherwise act thereon in accordance with their judgment on such matters.
Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary in writing prior to the time of the Meeting, by delivering a duly
executed proxy bearing a later date or by attending the Meeting and voting in
person.
On the record date, the Trust had 56,842,599 common shares outstanding and
entitled to vote at the Meeting. There must be present at the Meeting in person
or by proxy shareholders entitled to cast a majority of all the votes entitled
to be cast to constitute a quorum for the Meeting. Common shares represented at
the Meeting in person or by proxy but not voted will be included in determining
the presence of a quorum. Each holder of common shares is entitled to one vote
per share held of record by such holder on the record date. Assuming a quorum
is present at the Meeting, a plurality of all the votes cast at the Meeting
shall be sufficient to elect a trustee. There is no cumulative voting in the
election of trustees. A majority of all the votes cast at the Meeting shall be
sufficient to approve any other matter that may properly come before the
Meeting, unless more than a majority of the votes cast is required by statute
or by the Amended and Restated Declaration of Trust of the Trust (the
"Declaration of Trust").
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1998
(except as indicated below), regarding the beneficial ownership, as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of common shares by each trustee, each nominee for election as trustee,
each executive officer listed in the Summary Compensation Table appearing on
page seven, all trustees and executive officers as a group, and each person who
is known to the Trust to be the beneficial owner of more than five percent of
the outstanding common shares. Each person named in the table below has sole
voting and investment power with respect to the common shares listed opposite
such person's name, except as otherwise noted.
<TABLE>
<CAPTION>
Number of Shares Percent
Beneficial Owners Beneficially Owned of Class
- ----------------- ------------------ --------
<S> <C> <C>
Willard G. Rouse III ................................................ 685,115(1) 1.2%
Joseph P. Denny ..................................................... 419,863(2) *
George F. Congdon ................................................... 442,122(3) *
Robert E. Fenza ..................................................... 277,770(4) *
George J. Alburger, Jr. ............................................. 68,207(5) *
Frederick F. Buchholz ............................................... 9,500(6) *
J. Anthony Hayden ................................................... 58,500(6) *
M. Leanne Lachman ................................................... 9,500(6) *
David L. Lingerfelt ................................................. 35,161(7) *
John A. Miller ...................................................... 5,000(8) *
Stephen B. Siegel ................................................... 4,500(9) *
FMR Corp.
82 Devonshire Street, Boston, MA 02109 ............................. 4,654,900(10) 8.2%
All trustees and executive officers as a group (12 persons) ......... 2,015,928(11) 3.4%
</TABLE>
- ------------
* Represents less than one percent of class.
(1) Includes 165,435 common shares subject to options exercisable within 60
days of the record date for the Meeting, 4,000 common shares issuable upon
exchange of 8% Exchangeable Subordinated Debentures due 2001 (the
"Convertible Debentures") of Liberty Property Limited Partnership, a
Pennsylvania limited partnership (the "Operating Partnership" and,
together with the Trust, the "Company") (which, as of March 31, 1998, was
92.4% owned by the Trust), and 457,665 common shares issuable upon
exchange of units of limited partnership interest ("Units") of the
Operating Partnership.
(2) Includes 156,613 common shares subject to options exercisable within 60
days of the record date for the Meeting and 260,250 common shares issuable
upon exchange of Units.
(3) Includes 82,997 common shares subject to options exercisable within 60
days of the record date for the Meeting and 310,153 common shares issuable
upon exchange of Units. Includes 2,900 common shares held by Mr. Congdon
or his spouse as custodian for children and other relatives, as to which
Mr. Congdon disclaims beneficial ownership.
(4) Includes 82,027 common shares subject to options exercisable within 60
days of the record date for the Meeting and 195,043 common shares issuable
upon exchange of Units. Also includes 700 common shares, held by Mr. Fenza
as custodian for children, or owned directly by such children, as to which
Mr. Fenza disclaims beneficial ownership.
(5) Includes 59,050 common shares subject to options exercisable within 60
days of the record date for the Meeting.
(6) Includes 8,500 common shares subject to options exercisable within 60 days
of the record date for the Meeting.
2
<PAGE>
(7) Includes 3,500 common shares subject to options exercisable within 60 days
of the record date for the Meeting, and 30,674 common shares issuable upon
exchange of Units. Also includes 987 common shares held by trusts for the
benefit of Mr. Lingerfelt's children, as to which Mr. Lingerfelt disclaims
beneficial ownership.
(8) Includes 2,000 common shares subject to options exercisable within 60 days
of the record date for the Meeting.
(9) Includes 3,500 common shares subject to options exercisable within 60 days
of the record date for the Meeting.
(10) Includes 1,554,700 common shares issuable upon exchange of Convertible
Debentures. As of December 31, 1997 FMR Corp. had sole dispositive power
over 4,654,900 common shares, including 696,000 common shares over which
FMR Corp. had sole voting power. The information relating to FMR Corp. is
based solely on a review of a Schedule 13G filed by FMR Corp. with the
Securities and Exchange Commission (the "Commission").
(11) Includes 580,622 common shares subject to options exercisable within 60
days of the record date for the Meeting, 4,000 common shares issuable upon
exchange of Convertible Debentures, and 1,253,785 common shares issuable
upon exchange of Units.
3
<PAGE>
ELECTION OF TRUSTEES AND CONTINUING TRUSTEES
In accordance with the Declaration of Trust and By-laws, the Board of
Trustees has fixed the total number of trustees at nine. The Board is divided
into three classes serving staggered three-year terms, the term of one class of
trustees to expire in each successive year. Three Class I trustees will be
elected at the Meeting to serve until the Annual Meeting of Shareholders to be
held in 2001 and until their successors are duly elected and qualified. All of
the present nominees for election as trustees currently serve as trustees of
the Trust. A proxy signed in the enclosed form will be voted FOR the election
of the nominees named below, unless a contrary instruction is given.
Management believes that all of its nominees are willing and able to serve
the Trust as trustees. If any nominee at the time of election is unable or
unwilling to serve or is otherwise unavailable for election, and as a
consequence thereof other nominees are designated, the persons named in the
proxy or their substitutes will have the discretion and authority to vote or to
refrain from voting for other nominees in accordance with their judgment.
The following is a brief description of the nominees for election as
trustees and of the other trustees of Trust.
Nominees for Election as Class I Trustees with Terms to Expire in 2001
Willard G. Rouse III, age 55, has served as Chairman of the Board of
Trustees and Chief Executive Officer of the Trust since its inception. Mr.
Rouse had been a General Partner of Rouse & Associates, the Trust's
predecessor, since its founding in 1972. Mr. Rouse has served as Chairman of
each of the Pennsylvania Convention Center Authority, Foundation for
Architecture, We the People 2000 and the Philadelphia Children's Network and as
President of the Fellowship Commission. Mr. Rouse is currently Chair of the
Regional Performing Arts Center.
M. Leanne Lachman, age 55, has served as a trustee of the Trust since June
1994. Ms. Lachman is Managing Director of Schroder Real Estate Associates
("Schroder") which specializes in real estate management for institutional
investors, managing approximately one billion dollars invested in shopping
centers and office buildings across the country. Prior to joining Schroder, Ms.
Lachman was affiliated for 26 years with Real Estate Research Corporation, the
last eight serving as its President and Chief Executive Officer. Ms. Lachman is
a director of Lincoln National Corporation and Chicago Title & Trust Company,
and is an Executive Committee Member and Trustee of the Urban Land Institute
and Urban Land Foundation.
J. Anthony Hayden, age 54, has served as a trustee of the Trust since June
1994. Mr. Hayden is the President of Hayden Real Estate, Inc. Prior to forming
Hayden Real Estate, Mr. Hayden spent more than 21 years at Cushman & Wakefield
where he was a member of the Board of Directors. When he resigned as Executive
Vice President in 1996 he was responsible for 10 offices in the
Mid-Atlantic/Mid-West region. Mr. Hayden is also a member of the Society of
Industrial & Office Realtors, serving in 1982 as President of the Philadelphia
Chapter. He is also a member of the Philadelphia Board of Realtors and was
President in 1985. He is a director of Pierce Leahy Corp. and The Founders'
Bank.
Continuing Class II Trustees with Terms to Expire in 1999
George F. Congdon, age 55, has served as a trustee of the Trust since its
inception and as an Executive Vice President of the Trust since April 1995.
Previously, Mr. Congdon served as Treasurer and Chief Financial Officer of the
Trust. Mr. Congdon had been a General Partner of Rouse & Associates since its
founding in 1972. He is a member of the Board of Directors of the People's
Light and Theater Company and Historic Yellow Springs, Inc.
Frederick F. Buchholz, age 52, has served as a trustee of the Trust since
June 1994. Mr. Buchholz has been affiliated with ERE Yarmouth or its
predecessor since 1968. He was appointed Senior Vice President in December 1990
and Executive Vice President in 1992 of Equitable Real Estate, and is currently
the officer in charge of ERE Yarmouth's Philadelphia region, supervising new
business, asset management and
4
<PAGE>
restructuring/workout activities on behalf of a total mortgage and equity
portfolio which exceeds $2.5 billion. Mr. Buchholz is a member of the Appraisal
Institute, the Philadelphia Board of Realtors, Philadelphia Chamber of Commerce
and the Real Estate Advisory Committee of the University City Science Center.
Stephen B. Siegel, age 53, has served as a trustee of the Trust since May
1995. Mr. Siegel has been president of Insignia/Edward S. Gordon Co., Inc. and
its predecessor ("ESG"), the fourth largest commercial real estate company in
the United States, since March 1992. Prior to joining ESG, Mr. Siegel spent
more than 27 years at Cushman & Wakefield, ascending to Chief Executive
Officer. Mr. Siegel left Cushman & Wakefield in late 1988 and entered a joint
venture with the Chubb Corporation where he worked for several years to develop
and acquire investment-grade office buildings throughout the United States. Mr.
Siegel is the general chairman of the Association for the Help of Retarded
Children (AHRC) and a trustee of the National Jewish Center for Immunology and
Respiratory Medicine. In addition, he serves on the advisory board of the
Wharton Business School's Real Estate Center and New York University's Real
Estate Council and is active in the Urban Land Institute, the Real Estate Board
of New York and the Young Men's/Women's Real Estate Association.
Continuing Class III Trustees with Terms to Expire in 2000
Joseph P. Denny, age 51, has served as the President, Chief Operating
Officer and a trustee of the Trust since its inception. Mr. Denny joined Rouse
& Associates in 1979 and served as a Regional Managing General Partner and,
later, as President. In these capacities, he was responsible for developing
approximately one billion dollars of projects, primarily large urban projects.
Mr. Denny is a Vice Chairman of the Industrial and Office Park Council of the
Urban Land Institute and serves on the Advisory Board of the Wharton Business
School's Real Estate Center and the NAREIT Legislative Advisory Council.
David L. Lingerfelt, age 45, has served as a trustee of the Trust since
May 1995. Mr. Lingerfelt is an attorney in private practice specializing in
commercial transactions. Prior to re-entering private practice, Mr. Lingerfelt
was Director of Property Administration and Counsel for Best Products Co., Inc.
Mr. Lingerfelt has in the past been a partner in the Virginia law firms of
Coates & Davenport and, subsequently, the firm of Shewmake, Baronian and
Parkinson. Mr. Lingerfelt is a member of the American Bar Association, and its
Real Property Section and Business Law Section.
John A. Miller, CLU, age 70, has served as a trustee of the Trust since
May 1995. Mr. Miller is presently serving as Chairman of the Board of Guarantee
Reassurance Corp., and retired in July 1997 from the Board of Directors of the
Provident Mutual Life Insurance Company of Philadelphia after serving as
Director and Chairman of the Executive Committee. Mr. Miller served Provident
Mutual in many capacities over his 25 years there, including as its President,
Chief Operating Officer, Chief Executive Officer and Chairman of the Board. He
has been a member of various Board of Directors, including BetzDearborn, Bryn
Mawr Hospital, CoreStates Financial Corp. and CoreStates Bank N.A.
Committees of the Board of Trustees
The Board's Audit Committee makes recommendations concerning the
engagement of independent public accountants for the Trust, reviews with such
accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants and fees
therefor and reviews the adequacy of the Trust's internal accounting controls.
The Audit Committee consists of at least two independent trustees, with the
independent trustees constituting a majority of the Committee members. The
Audit Committee currently includes no officers or employees of the Trust or the
Operating Partnership. Members of the Audit Committee are Messrs. Buchholz
(Chair), Hayden, Lingerfelt and Siegel. The Committee met once during the last
fiscal year.
The Board's Compensation Committee is empowered to determine compensation
for the Trust's executive officers and to administer the Trust's Amended and
Restated Share Incentive Plan. Members of the Compensation Committee are
Messrs. Miller (Chair) and Buchholz and Ms. Lachman. See "Report of the
Compensation Committee on Executive Compensation." The Compensation Committee
met three times during the last fiscal year.
5
<PAGE>
The Board's Corporate Governance and Nominating Committee consists of Ms.
Lachman (Chair) and Messrs. Rouse, Hayden and Miller. The Corporate Governance
and Nominating Committee meets to address matters regarding corporate
governance and makes recommendations to the Board regarding nominees for
positions on the Board. The Corporate Governance and Nominating Committee will
consider candidates proposed by shareholders in accordance with the following
procedure. Such nominations should be sent to the attention of the Trust's
Secretary at its principal executive office, describe the candidate's
qualifications and be accompanied by the candidate's written statement of
willingness and affirmative desire to serve representing the interest of all
shareholders. Shareholders may also make nominations directly by following the
procedure specified in the Trust's Bylaws. The Corporate Governance and
Nomination Committee met three times during the last fiscal year.
Trustees' Attendance at Meetings
The Board of Trustees held 13 meetings during the last fiscal year. Each
trustee of the Trust attended at least 75% of the meetings of the Board of
Trustees and meetings held by all committees on which such trustee served, with
the exception of Mr. Congdon who due to illness attended approximately 70% of
the meetings of the Board of Trustees.
Trustees' Compensation
Each trustee who is not also an officer and full-time employee of the
Trust or the Operating Partnership receives an annual trustee fee in the amount
of $18,000 plus a fee of $1,000 for each Board meeting in which such Trustee
participated; however, trustees receive a fee of $500 for teleconference Board
meetings if such meetings address only routine matters. Additionally, trustees
receive a fee of $500 for each committee meeting they attend. Additionally, all
trustees are reimbursed for travel and lodging expenses associated with
attending Board and committee meetings. Trustees who are officers and full-time
employees of the Trust or the Operating Partnership receive no separate
compensation for service as a trustee or committee member. On June 23 of each
year, each non-employee trustee is entitled to receive a 10-year option to
purchase 5,000 common shares, exercisable at a price equal to the fair market
value on the date of the grant. Such options are exercisable with respect to
20% of the covered shares after the first anniversary of the grant date,
exercisable with respect to 50% of the covered shares after the second
anniversary of the grant date and fully exercisable after the third anniversary
of the grant date.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the years ended December 31, 1997, 1996 and
1995, the compensation paid or accrued by the Trust and its subsidiaries,
including the Operating Partnership, to the Trust's Chief Executive Officer and
to the four other most highly compensated executive officers, determined as of
December 31, 1997 (collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------------------
Annual Compensation Award Payouts
------------------------------------------- --------------------------- ----------
Other Securities All
Annual Restricted Underlying Other
Compensa- Stock Options LTPI Compen-
Name and Principal Positions Year Salary($) Bonus($) tion ($) (1) Awards ($) (2) SARs(#) Payouts($) sation ($)
- --------------------------------- ---- ----------- ---------- ------------- --------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Willard G. Rouse III ............ 1997 $229,320 $115,160 -- $137,592 114,660 -- --
Chairman and 1996 220,470 104,850 -- 60,000 77,175 -- --
Chief Executive Officer 1995 210,000 200,500 -- -- 100,000 -- --
Joseph P. Denny ................. 1997 $191,100 $162,935 -- -- 81,218 -- --
President and 1996 183,750 129,215 -- -- 64,313 -- --
Chief Operating Officer 1995 175,000 175,500 -- -- 87,500 -- --
George F. Congdon ............... 1997 $185,640 $ 500 -- $133,661 55,692 -- --
Executive Vice President 1996 178,500 500 -- 89,964 37,485 -- --
1995 170,000 51,500 -- 61,200 51,000 -- --
Robert E. Fenza ................. 1997 $180,180 $126,626 -- -- 63,063 -- --
Executive Vice President 1996 173,250 73,265 -- -- 36,383 -- --
1995 165,000 99,500 -- -- 49,500 -- --
George J. Alburger, Jr .......... 1997 $174,720 $ 500 -- $146,765 61,152 -- --
Chief Financial Officer 1996 168,000 500 -- 100,800 42,000 -- --
1995 104,849 375 -- 63,135 76,300 -- --
</TABLE>
- ------------
(1) Did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus for any Named Executive Officer.
(2) Consistent with a policy adopted by the Trust's Compensation Committee with
respect to employee bonus compensation, Messrs. Rouse, Congdon and
Alburger elected to receive common shares in lieu of cash for all or part
of their bonus compensation for 1997, at the rate of shares equal to 120%
of the cash value of such bonus or portion thereof (the "Bonus Value").
See "Report of the Compensation Committee on Executive Compensation." Each
executive received the number of common shares able to be purchased with
the dollar amount of the Bonus Value, less applicable withholding, based
on the closing price per share of the common shares on February 27, 1998.
The dollar amounts of Bonus Values are reflected under the Restricted
Stock Awards column. Pursuant to such elections, in March 1998, Messrs.
Rouse, Congdon and Alburger were awarded 3,392 common shares, 3,301 common
shares and 3,625 common shares, respectively. Dividends will be paid on
such common shares issued pursuant to such awards, and the restrictions
related to such awards will expire on February 27, 1999.
Share Option Grants, Exercises and Holdings
The following tables set forth certain information concerning options to
purchase common shares that were granted to the Named Executive Officers with
respect to the fiscal year ended December 31, 1997, options exercised by the
Named Executive Officers during such period and the number and value of options
held by such persons as of the end of such period. The Trust does not have any
outstanding stock appreciation rights.
7
<PAGE>
Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of Percent of Total Assumed Annual Rates of
Securities Options/SARs Share Price Appreciation
Underlying Granted to Exercise or for Option Term (3)
Options/SARs Employees in Base Price Expiration ----------------------------
Name Granted (#) (1) Fiscal Year ($ per Share) (2) Date 5% ($) 10% (%)
- ------------------------- ----------------- ------------------ ------------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Willard G. Rouse III 114,660 15.1% $25.44 3/13/08 $1,834,454 $4,648,868
Joseph P. Denny 81,218 10.7 25.44 3/13/08 1,299,413 3,292,968
George F. Congdon 55,692 7.4 25.44 3/13/08 891,021 2,258,021
Robert E. Fenza 63,063 8.3 25.44 3/13/08 1,008,950 2,556,877
George J. Alburger, Jr. 61,152 8.1 25.44 3/13/08 978,376 2,479,396
</TABLE>
- ------------
(1) Represents options granted on March 13, 1998 with respect to the fiscal
year ended December 31, 1997. Such options become exercisable up to 20%
after one year, 50% after two years, and 100% after three years.
(2) Exercise price is equal to the fair market value of the common shares on
the date of grant.
(3) Potential realizable value is reported net of option exercise price but
before taxes associated with exercise. These amounts represent assumed
rates of appreciation only. Actual gains, if any, on the options are
dependent upon the future performance of the common shares, and the
amounts reflected in the table will not necessarily be achieved.
Aggregated Option/SAR Exercises
and Fiscal Year-End Option/SAR Value Tables
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Acquired Value Fiscal Year-End (#) Fiscal Year-End ($) (1)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------- ----------------- -------------- --------------------------- --------------------------
<S> <C> <C> <C> <C>
Willard G. Rouse III -- -- 165,435/226,400 $1,289,872/ $921,728
Joseph P. Denny -- -- 156,613/176,418 1,233,833/ 739,663
George F. Congdon -- -- 82,997/111,180 648,222/ 457,180
Robert E. Fenza -- -- 82,027/116,919 641,746/ 471,843
George J. Alburger, Jr. -- -- 59,050/120,402 437,931/ 485,537
</TABLE>
- ------------
(1) Value is reported net of option exercise price, but before taxes associated
with exercise.
Severance Plan
The Compensation Committee of the Board of Trustees has approved the
adoption of a severance plan for a group of senior officers of the Trust,
including Messrs. Rouse, Denny, Fenza and Alburger. The severance plan will
provide that, in the event of the termination of the participant other than
"for cause" or if the participant voluntarily terminates his or her employment
for "good reason" within two years following a "change of control," the
participant would receive the following: (a) an amount equal to his or her
current annual base salary plus the largest performance bonus paid to him or
her over the previous five years, multiplied by 2.99; (b) a prorated amount of
unpaid performance bonus for the year in which termination occurs; (c)
immediate vesting of outstanding share options; (d) an amount equal to the
Trust's maximum contribution under the 401(k) plan for a period of three years;
(e) immediate vesting of contributions previously made by the Trust to the
individual's account under the 401(k) plan; and (f) continuation of employee
group benefits coverage for a period equal to three years. Any amount paid by
the Trust pursuant to the severance plan would be limited to the extent such
amounts would not be deductible as compensation expenses by the Trust or to the
extent they would cause the officer to become subject to an excise tax, each in
accordance with the rules and regulations of the Internal Revenue Service. The
Trust intends to execute definitive documentation regarding the severance plan
during the second quarter of 1998.
8
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act, the Trust's executive
officers and trustees, and persons beneficially owning more than 10% of the
common shares, are required to file with the Commission reports of their
initial ownership and changes in ownership of common shares. The Trust believes
that for 1997, its executive officers and trustees who were required to file
reports under Section 16(a) complied with such requirements in all material
respects, with the exception of the late filing of a Form 4 with respect to Mr.
Miller.
CERTAIN TRANSACTIONS
Executive officers of the Trust and their affiliates who were partners in
58 property-owning partnerships in existence prior to the formation of the
Trust in 1994 (the "Pre-Existing Partnerships") retained a minor portion of
their interest in the Pre-Existing Partnerships, in order to eliminate an
adverse tax consequence to the Trust in its formation. The Operating
Partnership acquired all of the other interests in the Pre-Existing
Partnerships in the formation. As part of the formation, these executive
officers and affiliates entered into an agreement with the Operating
Partnership under which such remaining interests would be exchanged, subject to
$23.9 million of indebtedness of the partners (Willard G. Rouse III, $592,054;
George F. Congdon, $10,282,027; David C. Hammers $10,105,520; affiliates
$2,939,848) due to the Trust (which will be assumed by the Operating
Partnership), for 120,117 additional Units. The exchange took place in December
1997, at which time the transferor partners were released from liability with
respect to such indebtedness. The indebtedness was created at the time of the
formation and the proceeds were used by the partners to make capital
contributions to the Pre-Existing Partnerships. Such capital contributions were
used to eliminate encumbrances on the partnerships' properties at the time of
the Trust's formation.
The founding partners of Rouse & Associates, the Company's predecessor,
also owned all of The Norwood Company ("Norwood"), a construction company that
performed much but not all of the construction for Rouse & Associates. In
January 1995, the owners of Norwood sold the company to certain of its
employees, none of whom is a Trust employee, taking back notes that are
non-recourse to the buyers. Amounts paid by the Trust to Norwood in 1997 were
$8.2 million.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Trustees, composed of
independent trustees of the Board of Trustees, reviews the performance of the
Trust's executive officers, fixes the base compensation of executive officers
and awards appropriate bonuses, grants shares and options and determines the
number of common shares to which such options should be subject. The
Compensation Committee has access to independent compensation data and is
authorized, if determined to be appropriate in any particular case, to engage
outside compensation consultants.
Executive Officer Compensation Policies. The objectives of the
Compensation Committee are to (a) support the achievement by the Trust of
desired performance, (b) provide compensation and benefits that will attract
and retain superior talent, (c) reward performance and (d) relate a portion of
compensation to the Trust's actual performance.
The executive compensation program is comprised generally of base salary,
performance bonuses and long-term incentives in the form of share options. The
compensation program may also include various benefits, such as health
insurance plans and pension, profit sharing and retirement plans in which
substantially all of the Trust's employees participate. At the present time,
the only plans in effect are health, life and disability insurance plans, a
cafeteria plan, a 401(k) plan and the severance plan for certain senior
officers of the Trust described under "Severance Plan."
Base salaries are set by the Compensation Committee and are designed to be
competitive with the salaries paid by publicly owned real estate investment
trusts that are considered to be comparable to the Trust
9
<PAGE>
(the "peer group"). Changes in individual base salaries are based on peer group
practices, the Trust's performance, the individual's performance, experience
and responsibility and increases in cost of living indices. Base salaries are
reviewed for adjustment annually.
The Named Executive Officers participate in a bonus program whereby such
officers are eligible for cash bonuses based on a percentage of their base
salary rate for the year. The bonus percentage is determined by competitive
analysis and the executive's ability to influence the overall performance of
the Trust. The bonus percentage to be awarded is allocated primarily to growth
in funds from operations, subject to adjustment by the Compensation Committee
in its discretion.
The Compensation Committee determines the bonuses for executive officers
other than the Named Executive Officers based upon attainment of certain
performance goals relating to each participant's duties to the Trust. Such
goals, which are established annually by the Trust's Chief Operating Officer,
may include growth in funds from operations.
Consistent with a policy adopted by the Compensation Committee for all
employees, an executive officer has the option of taking stock in lieu of a
cash bonus at the rate of shares equal to 120% of the cash value of the bonus.
The Compensation Committee believes that employee equity ownership
provides significant additional motivation to employees to maximize value for
the Trust's shareholders and, therefore, grants share options to certain of the
Trust's employees, including executive officers. It is anticipated that options
will be exercisable at the prevailing market price of the common shares at the
time of grant and, therefore, will have value only if the Trust's share price
increases over the exercise price after the option is granted. The Compensation
Committee believes that the grant of share options provides a long-term
incentive to the grantees to contribute to the growth of the Trust and
establishes a direct link between compensation and shareholder return.
The terms of options, including vesting, exercisability and term, are
determined by the Compensation Committee, subject to requirements imposed by
the Trust's Amended and Restated Share Incentive Plan (the "Plan") under which
such options may be granted. The options generally vest over a three-year
period beginning with the date of the grant. Options granted to executives in
1997 vest 20% after the first year, 30% after the second year and 50% after the
third year following the date of the grant. The terms set by the Compensation
Committee are based upon the relative position and responsibilities of each
employee, historical and expected contributions of each employee to the Trust,
previous grants to each employee under the Plan and a review of competitive
equity compensation for employees of similar rank in companies that are
comparable to the Trust's industry, geographic location and size. For
information regarding recent options granted to the Trust's Named Executive
Officers, reference is made to the tables set forth under "Compensation of
Executive Officers."
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a
limitation on the deductibility of nonperformance based compensation in excess
of $1 million paid to certain executive officers. The Compensation Committee's
policy with respect to Section 162(m) is to make every reasonable effort to
ensure that compensation is deductible to the extent permitted, while
simultaneously providing executives appropriate awards for their performance.
The Company's long-term incentive plans have been designed to comply with the
performance-based requirements of Section 162(m).
Chief Executive Officer Compensation. The base salary, performance bonus
and options awarded to the Trust's Chief Executive Officer, Mr. Rouse, are
determined substantially in conformity with the policies described above for
all other Named Executive Officers of the Trust. In 1997, Mr. Rouse was paid
$229,320 in base salary and $229,320 in performance bonus. Mr. Rouse was
granted 114,660 share options with respect to the fiscal year ended December
31, 1997.
Compensation Committee
John A. Miller (Chair)
Frederick F. Buchholz
M. Leanne Lachman
10
<PAGE>
SHARE PRICE PERFORMANCE GRAPH
The following table compares the cumulative total shareholder return on
the common shares for the period beginning June 30, 1994 and ending December
31, 1997 with the cumulative total return on the Standard & Poor's 500 Stock
Index ("S&P 500") and the NAREIT Equity REIT Total Return Index ("NAREIT
Index") over the same period. Total return values for the S&P 500, the NAREIT
Index and the common shares were calculated based on cumulative total return
assuming the investment of $100 in the NAREIT Index, the S&P 500 and the common
shares on June 30, 1994, and assuming reinvestment of dividends. The
shareholder return shown on the graph below is not necessarily indicative of
future performance.
Comparison of Cumulative Total Return
Liberty Property Trust Common Shares, NAREIT Equity REIT
Total Return Index and S&P 500 Index
[INSERT DETAILED GRAPH HERE
USING INFORMATION BELOW]
<TABLE>
<CAPTION>
1994 1995
-------------------------------------- ---------------------------------------------------
June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C> <C> <C> <C>
Liberty Property Trust 100.00 99.38 100.52 101.19 104.61 115.52 115.12
NAREIT Index (1) 100.00 97.95 97.97 97.80 103.56 108.43 112.93
S&P 500 100.00 104.92 104.90 115.11 126.03 136.05 144.16
</TABLE>
<TABLE>
<CAPTION>
1996 1997
------------------------------------------------ ------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Liberty Property Trust 114.42 112.40 125.48 151.37 146.32 151.08 166.16 178.82
NAREIT Index (1) 115.50 120.63 128.53 152.75 153.83 161.48 180.57 183.73
S&P 500 151.90 158.71 163.62 177.26 182.01 213.79 229.81 236.41
</TABLE>
- ------------
(1) The NAREIT Index (consisting of 176 real estate investment trusts with a
total market capitalization of $127.8 billion at December 31, 1997) is
maintained by the National Association of Real Estate Investment Trusts,
Inc., is published monthly, and is based on the last closing prices of the
preceding month.
11
<PAGE>
PROPOSALS OF SECURITY HOLDERS
All proposals of any shareholder of the Trust that such holder wishes to
be presented at the next Annual Meeting of Shareholders and included in the
proxy statement and form of proxy prepared for that meeting must be received by
the Trust at its principal executive offices no later than December 17, 1998.
All such proposals must be submitted in writing to the Secretary of the Trust
at the address appearing on the notice accompanying this proxy statement.
INDEPENDENT AUDITORS
Ernst & Young LLP performed the customary auditing services for the fiscal
year ended December 31, 1997. The Trust has selected Ernst & Young LLP as its
independent auditors to perform these services for the next fiscal year. A
representative of Ernst & Young LLP is expected to be present at the Meeting.
Such representative will be available to respond to questions from the floor
and will be afforded an opportunity to make any statement which he or she may
deem appropriate.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be borne by the Trust. In
addition to the use of the mails, solicitations may be made by telephone and
personal interviews by officers, directors and regularly engaged employees of
the Trust. The Trust has engaged Corporate Investor Communications, Inc.
("CIC") to distribute the Trust's shareholder materials and solicit proxies.
The Trust has agreed to pay CIC a fee of approximately $5,500 and reimburse CIC
for all reasonable disbursements. Brokerage houses, custodians, nominees and
fiduciaries will be requested to forward this proxy statement to the beneficial
owners of the stock held of record by such persons, and the Trust will
reimburse them for their charges and expenses in this connection.
ANNUAL REPORT ON FORM 10-K
The Trust will provide without charge to each person solicited by this
Proxy Statement, at the written request of any such person, a copy of the
Trust's Annual Report on Form 10-K (including the financial statements and the
schedules thereto) as filed with the Securities and Exchange Commission for its
most recent fiscal year. Such written requests should be directed to the
Director of Investor Relations at the address of the Trust appearing on the
first page of this Proxy Statement.
12
<PAGE>
APPENDIX
P
R LIBERTY PROPERTY TRUST
O 65 VALLEY STREAM PARKWAY
X MALVERN, PENNSYLVANIA 19355
Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of LIBERTY PROPERTY TRUST (the "Trust") hereby
appoints Willard G. Rouse III and Joseph P. Denny, and each of them acting
individually, as the attorney and proxy of the undersigned, with the powers
the undersigned would possess if personally present, and with full power of
substitution, to vote all shares of beneficial interest of the Trust which the
undersigned would be entitled to vote if personally present at the annual
meeting of shareholders of the Trust to be held on Wednesday, May 20, 1998 at
10:00 a.m., local time, at the Desmond Hotel, 1 Liberty Boulevard, Malvern,
Pennsylvania 19355, and any adjournment or postponement thereof, upon all
subjects that may properly come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES OF THE
BOARD OF TRUSTEES IN THE ELECTION OF TRUSTEES.
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, this proxy will be
voted "FOR" all of the nominees of the Board of Trustees in the election of
trustees. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH
RESPECT TO ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
1. Proposal to elect three Class I trustees to hold office until 2001.
Nominees:
Willard G. Rouse III,
M. Leanne Lachman and FOR WITHHOLD
J. Anthony Hayden [ ] [ ]
- -------------------------------------------------
FOR ALL NOMINEES, EXCEPT WITHHOLD FOR THOSE
WHOSE NAMES ARE HAND WRITTEN IN THE SPACES ABOVE.
The undersigned hereby acknowledges receipt of the notice of annual meeting, the
proxy statement furnished in connection therewith and the annual report to
shareholders and hereby ratifies all that the said attorneys and proxies may do
by virtue hereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |B|
NOTE: Please mark, date and sign this proxy card and return it in the enclosed
envelope. Please sign as your name appears hereon. If shares are registered in
more than one name, all owners should sign. If signing in a fiduciary or
representative capacity, please give full title and attach evidence of
authority. Corporations please sign will full corporate name by a duly
authorized officer and affix corporate seal.
Signature:__________________________ Date:____________
Signature:__________________________ Date:____________
36
