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
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
|X| Definitive proxy statement Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Glenborough Realty Trust Incorporated
(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 transactions 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>
GLENBOROUGH REALTY TRUST
INCORPORATED
Notice Of Annual Meeting Of Stockholders
To Be Held May 7, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Glenborough Realty Trust Incorporated (the "Company") will be
held on Friday, May 7, 1999, at 10:00 a.m. local time, at the Westin Hotel,
One Old Bayshore Highway, Millbrae, California, to consider and vote upon the
following matters:
1. To elect two Class I Directors for terms ending in 2002.
2. To approve (i) the grant to Robert Batinovich, the Company's Chairman
and Chief Executive Officer, of an option to acquire 700,000 shares of the
Company's Common Stock and (ii) the grant to Andrew Batinovich, the Company's
President and Chief Operating Officer, of an option to acquire 300,000 shares
of the Company's Common Stock. Each of these options was granted, subject to
stockholder approval, with exercise prices significantly higher than $21.625
per share, the market price of the Common Stock on the date of grant.
One-third of such options have an exercise price of $27.03 per share, one-third
of such options have an exercise price of $32.44 per share and one-third of
such options have an exercise price of $37.84 per share. On March 15, 1999,
the last reported sales price of the Company's Common Stock on the New York
Stock Exchange was $17.625 per share.
3. To ratify the retention of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999.
4. To transact such other business as may properly come before the Annual
Meeting and at any postponements or adjournments thereof. The foregoing items
of business, including the nominees for directors, are more fully described in
the proxy statement which is attached and made part of this Notice. The Board
of Directors has fixed the close of business on March 15, 1999 as the record
date for determining the stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof.
All stockholders, whether or not they expect to attend the Annual Meeting
in person, are requested to complete, date and sign the enclosed form of Proxy
and return it promptly in the postage paid, return-addressed envelope provided
for that purpose. By returning your Proxy promptly you can help the Company
avoid the expense of follow-up mailings to ensure a quorum so that the Annual
Meeting can be held. Stockholders who attend the Annual Meeting may revoke a
prior proxy and vote in person as set forth in the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
ROBERT BATINOVICH
Robert Batinovich,
Chairman and Chief Executive Officer
San Mateo, California
April 5, 1999
<PAGE>
Mailed to Stockholders on or about April 5, 1999
GLENBOROUGH REALTY TRUST
INCORPORATED
400 South El Camino Real, 11th Floor
San Mateo, California 94402-1708
____________________________________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1999
____________________________________________
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board of Directors") of the Company of proxies to
be voted at the Annual Meeting of Stockholders (the "Annual Meeting") of the
Company to be held at the Westin Hotel, One Old Bayshore Highway, Millbrae,
California, on May 7, 1999, at 10:00 a.m. local time and at any and all
postponements or adjournments thereof.
Revocability of Proxies
Any Proxy may be revoked at any time prior to the exercise thereof by
submitting another Proxy bearing a later date or by giving written notice of
revocation to the Company at the Company's address indicated above (to the
attention of Frank E. Austin) or by voting in person at the Annual Meeting. Any
notice of revocation sent to the Company must include the stockholder's name and
must be received prior to the Annual Meeting to be effective.
Solicitation and Voting of Proxies
The solicitation of proxies will be conducted by mail and the Company will
bear all attendant costs. These costs will include the expense of preparing and
mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. The Company may conduct further solicitation personally,
telephonically or by facsimile through its officers, directors and regular
employees, none of whom will receive additional compensation for assisting with
the solicitation.
The presence at the Annual Meeting, either in person or by proxy, of
stockholders entitled to cast a majority of all the votes entitled to be
cast at the Annual Meeting will constitute a quorum for the transaction of
business at the Annual Meeting. Holders of the Company's Common Stock, par
value $0.001 per share (the "Common Stock"), are entitled to vote at the
Annual Meeting. The close of business on March 15, 1999 has been fixed as
the record date (the "Record Date") for determining the stockholders
entitled to notice of and to vote at the Annual Meeting. Each share of
Common Stock outstanding on the Record Date is entitled to one vote on all
matters to be voted upon at the Annual Meeting. As of the Record Date,
there were 31,734,539 shares of Common Stock outstanding.
Stockholder votes will be tabulated by the person or persons appointed
by the Board to act as inspector of election for the Annual Meeting. The New
York Stock Exchange permits member organizations to give proxies, whether
or not instructions have been received from beneficial owners, to vote as
to the election of directors and also on matters of the type contained in
Proposals Nos. 2 and 3. Shares represented by a properly executed and
delivered proxy will be voted at the Annual Meeting and, when instructions
have been given by the holder, will be voted in accordance with those
instructions. If no instructions are given, the shares will be voted FOR the
election of each of the two nominees for Class I director named below and FOR
Proposals Nos. 2 and 3.
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information known to the Company
regarding beneficial ownership of shares of Common Stock as of the
Record Date by (i) each director and each of the executive officers
named in the Executive Compensation table below, (ii) all directors
and executive officers as a group, and (iii) each person known by the
Company to beneficially own more than 5% of the Company's Common
Stock.
<TABLE>
<CAPTION>
Percentage of Shares
Amount and of Common Stock
Nature of Percentage of Outstanding and
Name and Business Address of Beneficial Shares Operating Partnership
Beneficial Owner Ownership(1) Outstanding(2) Units(3)
<S> <C> <C> <C>
Robert Batinovich (4)(5) 1,685,290 5.2% 4.6%
Andrew Batinovich (4)(6) 513,345 1.6% 1.4%
Sandra L. Boyle (4)(7) 38,247 * *
Stephen R. Saul (4)(8) 11,357 * *
Frank E. Austin (4)(9) 17,716 * *
Terri Garnick (4) 13,502 * *
Steven Hallsey(4) 0 * *
Patrick Foley (10) 43,063 * *
Richard A. Magnuson(10) 30,000 * *
Laura Wallace (10) 26,200 * *
Richard C. Blum (11) 13,000 * *
All directors and executive officers 2,391,720 7.3% 6.5%
as a group (11 persons) (12)
Franklin Resources, Inc.
and affiliates (13) 5,529,147 17.4% 15.4%
FMR Corp. (14) 4,018,918 12.6% 11.2%
The Equitable Companies Incorporated (15) 3,361,700 10.6% 9.4%
Lazard Freres & Co. LLC (16) 1,930,014 6.1% 5.3%
- ----------------------
* less than 1.0%
</TABLE>
(1) Certain of the officers hold or control limited partnership
interests in Glenborough Partners, a California limited partnership
("Partners"), which holds an interest in Glenborough Properties, L.P.,
a California limited partnership (the "Operating Partnership"), in
which the Company holds an interest both as general partner and as
limited partner. Such officers, through their interest in Partners,
share indirectly, with the Company, in the net income or loss and any
distributions of the Operating Partnership. In addition, certain of
the officers beneficially own a portion of the equity securities (in
the form of common stock) of Glenborough Corporation ("GC"), in which
the Company also holds an equity interest (in the form of non-voting
preferred stock); GC holds a small interest in the Operating
Partnership. Pursuant to the partnership agreement of the Operating
Partnership, Partners and GC hold certain redemption rights under
which their respective interests in the Operating Partnership could at
some point be redeemed in exchange for shares of the Company's Common
Stock.
(2) Assumes that all Operating Partnership Units and the
Company's Series A Convertible Preferred Stock beneficially owned by
the person, directly or indirectly, are exchanged for or converted
into shares of the Company's Common Stock, that none of the Operating
Partnership Units or Series A Convertible Preferred Stock held by
other persons are so exchanged or converted, that all stock options
exercisable within 60 days of the Record Date are exercised and that
no stock options held by other persons are exercised.
(3) Assumes the exchange of all outstanding Operating Partnership
Units for shares of Common Stock. Assumes that none of the shares of
Series A Convertible Preferred Stock held by other persons are
converted into shares of Common Stock, and assumes that none of the
options held by other persons are exercised.
(4) The business address of such person is 400 South El Camino
Real, Suite 1100, San Mateo, California 94402-1708.
<PAGE>
(5) Includes 69,166 shares of the Company's Common Stock that may
be issued upon redemption of Robert Batinovich's interest in the
Operating Partnership. Includes 143,419 shares of the Company's Common
Stock that may be issued upon the redemption of Partners' interest in
the Operating Partnership, which represents Robert Batinovich's
portion of all shares of the Company's Common Stock that may be issued
to Partners upon such redemption. Includes 27,051 shares of the
Company's Common Stock which represents Robert Batinovich's portion of
all shares of the Company's Common Stock that is owned by Partners.
Includes 4,735 shares of the Company's Common Stock which represents
Robert Batinovich's portion of all shares of the Company's Common
Stock that would be acquired by Partners upon conversion of 30,000
shares of the Company's Series A Convertible Preferred Stock that is
owned by Partners. Excludes 111,857 shares of the Company's Common
Stock held by S.S. Rainbow, a California limited partnership ("S.S.
Rainbow") in which Robert Batinovich's adult son, Andrew Batinovich,
is general partner, and his daughter, Angela Batinovich, is a limited
partner. Also excludes (i) 2,657 shares of the Company's Common Stock
that may be issued upon the redemption of Partners' interest in the
Operating Partnership, which represents Angela Batinovich's portion of
all shares of the Company's Common Stock that may be issued to
Partners upon such redemption, (ii) 501 shares of the Company's Common
Stock which represents Angela Batinovich's portion of all shares of
the Company's Common Stock that is owned by Partners, (iii) 88 shares
of the Company's Common Stock that would be acquired by a trust as to
which Angela Batinovich is sole beneficiary and an independent third
party is trustee, which represents such trust's portion of all shares
of the Company's Common Stock that would be acquired by Partners upon
conversion of 30,000 shares of the Company's Series A Convertible
Preferred Stock that is owned by Partners, and (iv) 1,094 shares of
the Company's Common Stock which represents such trust's portion of
all shares of the Company's Common Stock that would be acquired by
such trust upon conversion of 1,437 shares of the Companies Series A
Convertible Preferred Stock that is owned by such trust. Includes
350,000 shares of Common Stock issuable pursuant to options
exercisable with 60 days of the Record Date.
(6) Includes 5,954 shares of the Company's Common Stock that may
be issued upon the redemption of Partners' interest in the Operating
Partnership, which represents Andrew Batinovich's portion of all
shares of the Company's Common Stock that may be issued to Partners
upon such redemption. Includes 1,123 shares of the Company's Common
Stock which represents Andrew Batinovich's portion of all shares of
the Company's Common Stock that is owned by Partners. Includes 197
shares of the Company's Common Stock which represents Andrew
Batinovich's portion of all shares of the Company's Common Stock that
would be acquired by Partners upon conversion of 30,000 shares of the
Company's Series A Convertible Preferred Stock that is owned by
Partners. Also includes 111,857 shares of the Company's Common Stock
held by S.S. Rainbow in which Andrew Batinovich is sole general
partner and his sister, Angela Batinovich, is a limited partner. Of
the total shares held by S.S. Rainbow, Andrew Batinovich's pro rata
portion is 56,488 shares and Angela Batinovich's pro rata portion is
55,369. Angela Batinovich's 55,369 shares (beneficially owned through
her interest in S.S. Rainbow) are not attributed to Robert Batinovich
(her father), but only to Andrew Batinovich (the general partner of
S.S. Rainbow) for purposes of this table. Includes 199,550 shares of
Common Stock issuable pursuant to options exercisable with 60 days of
the Record Date.
(7) Includes 356 shares of the Company's Common Stock that may be
issued upon the redemption of Partners' interest in the Operating
Partnership, which represents Sandra Boyle's portion of all shares of
the Company's Common Stock that may be issued to Partners upon such
redemption. Includes 67 shares of the Company's Common Stock which
represents Sandra Boyle's portion of all shares of the Company's
Common Stock that is owned by Partners. Includes 12 shares of the
Company's Common Stock which represents Sandra Boyle's portion of all
shares of the Company's Common Stock that would be acquired by
Partners upon conversion of 30,000 shares of the Company's Series A
Convertible Preferred Stock that is owned by Partners. Also includes
601 shares of the Company's Common Stock that may be issued upon the
redemption of GC's interest in the Operating Partnership, which
represents Sandra Boyle's portion of all shares of the Company's
Common Stock that may be issued to GC upon such redemption. Includes
32,207 shares of Common Stock issuable pursuant to options exercisable
with 60 days of the Record Date.
(8) Includes 7,207 shares of Common Stock issuable pursuant to
options exercisable with 60 days of the Record Date.
<PAGE>
(9) Includes 838 shares of the Company's Common Stock which
represents the number of shares of the Company's Common Stock that
would be acquired by Frank Austin upon conversion of 1,100 shares of
the Company's Series A Convertible Preferred Stock that are owned by
Frank Austin. Includes 494 shares of the Company's Common Stock that
may be issued upon the redemption of Partners' interest in the
Operating Partnership, which represents Frank Austin's portion of all
shares of the Company's Common Stock that may be issued to Partners
upon such redemption. Includes 93 shares of the Company's Common Stock
which represents Frank Austin's portion of all shares of the Company's
Common Stock that is owned by Partners. Includes 16 shares of the
Company's Common Stock which represents Frank Austin's portion of all
shares of the Company's Common Stock that would be acquired by
Partners upon conversion of 30,000 shares of the Company's Series A
Convertible Preferred Stock that is owned by Partners. Also includes
601 shares of the Company's Common Stock that may be issued upon the
redemption of GC's interest in the Operating Partnership, which
represents Frank Austin's portion of all shares of the Company's
Common Stock that may be issued to GC upon such redemption. Includes
7,207 shares of Common Stock issuable pursuant to options exercisable
with 60 days of the Record Date.
(10) Includes 18,000 shares of Common Stock issuable pursuant to
options exercisable within 60 days of the Record Date.
(11) Includes 11,000 shares of Common Stock issuable pursuant to
options exercisable within 60 days of the Record Date.
(12) Includes 220,591 shares of the Company's Common Stock that
may be issued upon the redemption of Mr. Batinovich's, Partners' and
GC's respective interests in the Operating Partnership, which includes
all officers' and directors' aggregate portion of all shares of the
Company's Common Stock that may be issued to Partners upon such
redemption; 838 shares of the Company's Common Stock that may be
issued upon conversion of 1,100 shares of Series A Preferred Stock;
4,960 shares of the Compan's Common Stock which represents all
officers' and directors' aggregate portion of all shares of the
Company's Common Stock that would be acquired by Partners upon
conversion of 30,000 shares of the Company's Series A Convertible
Preferred Stock that are owned by Partners, and 661,171 shares of the
Company's Common Stock issuable pursuant to options exercisable by the
named officers and directors within 60 days of the Record Date.
(13) Share amount as reported on Schedule 13G filed with the
Securities and Exchange Commission ("SEC") and dated January 8, 1999,
which is the basis for the following information. The persons filing
such Schedule 13G are Franklin Resources, Inc. ("FRI"), 777 Mariners
Island Boulevard, P. O. Box 7777, San Mateo, CA 94403-7777; Charles B.
Johnson; Rupert H. Johnson, Jr.; and Franklin Advisers, Inc. The
securities reported on such Schedule 13G are beneficially owned by one
or more open or closed-end investment companies or other managed
accounts which are advised by direct and indirect investment advisor
subsidiaries (the "Adviser Subsidiaries") of FRI. Such advisory
contracts grant to such Adviser Subsidiaries all investment and/or
voting power over the securities owned by such advisory clients.
Therefore, such Adviser Subsidiaries may be deemed to be the
beneficial owner of these securities. Charles B. Johnson and Rupert H.
Johnson (the "Principal Shareholders") each own in excess of 10% of
the outstanding Common Stock of FRI and are the principal shareholders
of FRI. FRI and the Principal Shareholders may be deemed to be the
beneficial owner of securities held by persons and entities advised by
FRI subsidiaries. FRI, the Principal Shareholders and each of the
Adviser Subsidiaries disclaim any economic interest or beneficial
ownership in any of the securities covered by such Schedule 13G.
Franklin Advisers, Inc. has sole power to vote or to direct the vote,
as well as sole power to dispose or to direct the disposition, of
5,478,371 shares. Franklin Management, Inc. has sole power to dispose
or to direct the disposition, of 50,776 shares.
(14) Share amount as reported on Schedule 13G filed with the SEC
and dated February 12, 1999. Fidelity Management & Research Company
("Fidelity"), 82 Devonshire Street, Boston, Massachusetts 02109, a
wholly-owned subsidiary of FMR Corp. ("FMR") and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940
(the "Investment Act"), is the beneficial owner of 2,846,078 shares of
such Common Stock as a result of acting as investment adviser to
various investment companies. Edward C. Johnson 3d, FMR, through its
control of Fidelity, and the Funds each has sole power to dispose of
the 2,846,078 shares owned by the Funds. Neither FMR nor Edward C.
Johnson 3d, Chairman of FMR, has the sole power to vote or direct the
voting of the shares owned directly by the Fidelity Funds, which power
resides with the Funds' Boards of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by the
Funds' Boards of Trustees. Fidelity Management Trust Company
("Fidelity Trust"), 82 Devonshire Street, Boston, Massachusetts 02109,
a wholly-owned subsidiary of FMR and a bank as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, is the beneficial
owner of 1,172,840 shares of such Common Stock as a result of its
serving as investment manager of the institutional account(s). Edward
C. Johnson 3d and FMR, through its control of Fidelity Trust, each has
sole voting and dispositive power over 1,172,840 shares of Common
Stock owned by the institutional account(s) as reported above.
<PAGE>
(15) Share amount as reported on Schedule 13G filed with the SEC
and dated February 16, 1999, which is the basis for the following
information. The persons filing such 13G are (i) AXA Conseil Vie
Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, and AXA Courtage Assurance Mutuelle, as a group
(collectively, the "Mutuelles AXA") and (ii) The Equitable Companies
Incorporated. Each of the Mutuelles AXA entities disclaim beneficial
ownership of the shares of the Company's Common Stock, and none of
these entities has sole or shared voting power, or sole or shared
dispositive power with respect to such shares. Alliance Capital
Management L.P., a subsidiary of The Equitable Companies Incorporated
has sole power to direct the voting of 1,087,300 shares, shared power
to direct the voting of 2,241,000 shares and sole power to dispose of
3,361,700 shares. The address of The Equitable Companies Incorporated
is 1290 Avenue of the Americas, New York, New York 10104.
(16) Share amount as report on Schedule 13G filed with the SEC
and dated February 16, 1999. Lazard Freres & Co. LLC, 30 Rockefeller
Plaza, New York, New York 10020, has sole power to direct the voting
of 1,650,610 shares of Common Stock and sole power to dispose of
1,930,014 shares.
<PAGE>
PROPOSAL NO. 1
ELECTION OF CLASS I DIRECTORS
The Company's bylaws provide for a staggered Board of Directors.
The Bylaws divide the Company's Board of Directors into three classes,
each of which contains one-third of the whole number of the members of
the Board. The members of each class are elected for a term of three
years and until their successors are elected and qualified, with one
class being elected by stockholder vote annually. At each Annual
Meeting, the class of directors whose term is then expiring is filled
with directors elected to three year terms.
The Company's Board of Directors currently consists of six
directors. The Board of Directors of the Company has nominated, and
recommends for election as Class I directors, Richard C. Blum and
Richard A. Magnuson, each of whom is currently serving as a Class I
director of the Company, each to hold office for a term of three years
ending in the year 2002. Unless authority is withheld or either
nominee is unwilling or unable to serve, which the Board does not
expect, the persons named in the enclosed proxy will vote such proxy
for the election of such nominees. The Board of Directors has no
reason to believe that either nominee will be unable to serve. The
affirmative vote of a plurality of the shares of Common Stock present
or represented to vote at the Annual Meeting is necessary to elect
each Class I director nominee. For purposes of the election of
directors, abstentions and broker non-votes will not be counted as
votes cast and will have no effect on the result of the vote.
Information Regarding Class I Director Nominees
Certain information about each of the Class I director nominees is furnished
below:
Richard C. Blum was first elected a director of the Company in
January 1998. Mr. Blum is chairman and president of Richard C. Blum &
Associates, Inc., which is the general partner of Richard C. Blum &
Associates, L.P., a merchant banking firm which acts as general
partner for various investment partnerships. Mr. Blum also serves as a
director of URS Corporation (architectural and engineering services),
CB Richard Ellis (formerly Coldwell Banker, a holding company for
various real estate enterprises), and Playtex Products, Inc. (consumer
products). Mr. Blum also has served as a director of Northwestern
Airlines Corporation since 1989.
Richard A. Magnuson has served as director of the Company since
January 11, 1996. He is also Managing Director at Nomura
International, plc., the London-based merchant banking division of the
international investment bank, Nomura Securities. Mr. Magnuson joined
Nomura Securities in March 1994, serving as director in its United
States division. Before joining Nomura Securities, Mr Magnuson was a
director in Real Estate Investment Banking at Merrill Lynch & Co. for
five years. Mr. Magnuson is a former member of the Urban Land
Institute, the National Association of Real Estate Investment Trusts,
and the International Council of Shopping Centers.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR THE ELECTION
OF EACH NOMINEE NAMED ABOVE
<PAGE>
Directors and Executive Officers
The following table sets forth certain information as of the
Record Date with respect to the directors and the executive officers,
including their ages.
<TABLE>
<CAPTION>
Term
Name Age Expires Principal Position
<S> <C> <C> <C>
Robert Batinovich 62 2000 Chairman and Chief Executive Officer
Andrew Batinovich 40 2001 Director, President and Chief Operating Officer
Sandra L. Boyle 50 -- Executive Vice President
Stephen R. Saul 45 -- Executive Vice President and Chief Financial Officer
Frank E. Austin 51 -- Senior Vice President, General Counsel and Secretary
Terri Garnick 38 -- Senior Vice President, Chief Accounting Officer and Treasurer
Steven F. Hallsey 47 -- Senior Vice President, Commercial Property Management
Richard C. Blum 63 1999 Director
Patrick Foley 67 2000 Director
Richard A. Magnuson 41 1999 Director
Laura Wallace 45 2001 Director
</TABLE>
Biographical information concerning the director nominees is set
forth above under the caption "Proposal No. 1, Election of Directors."
Biographical information concerning the other directors and the
executive officers is set forth below.
Robert Batinovich has served as the Company's Chairman and Chief
Executive Officer since the Company began operations on December 31,
1995. Mr. Batinovich also served as President of the Company since the
Company began Operations through September 1998. He also was the
founder of Glenborough Corporation and certain of its affiliates, and
has been engaged in real estate investment and management, and
corporate finance, since 1970. He served as President, Chief Executive
Officer and Chairman of Glenborough Corporation from its formation in
1978 until its consolidation and merger with the Company (the
"Consolidation") on December 31, 1995. Mr. Batinovich served as a
member of the California Public Utilities Commission from 1975 to
1979, serving as its President the last three years. He is a member of
the Board of Directors of the Farr Company, a publicly held company
that manufactures industrial filters. Mr. Batinovich's business
background includes seven years as an executive with Norris
Industries, and managing and/or owning manufacturing, vending and
service companies and a national bank, and providing investment
consulting to businesses and individuals. He has served on a number of
governmental commissions and participated in a variety of policy
research efforts sponsored by government bodies and universities.
Andrew Batinovich has served as director, Executive Vice
President, Chief Operating Officer and Chief Financial Officer of the
Company since the Company began operations on December 31, 1995 until
September 1998 when he became President and Chief Operating Officer of
the Company. He also served as a director of Glenborough Corporation
prior to the Consolidation, was employed by Glenborough Corporation
from 1983 until the Consolidation and functioned as its Chief
Operating Officer and Chief Financial Officer since 1987. Mr
Batinovich holds a California real estate broker s license and is a
Member of the National Advisory Council of Building Owners and
Managers Association ("BOMA") International. Prior to joining
Glenborough, Mr. Batinovich was a lending officer with the
International Banking Group and the Corporate Real Estate Division of
Security Pacific National Bank. Mr. Batinovich has a B.A. in
International Finance from the American University of Paris.
Patrick Foley has served as director of the Company since January
11, 1996. He is also Chairman and Chief Executive Officer of DHL
Corporation. Inc., and its major subsidiary, DHL Airways, positions he
has held since 1988. Prior to joining DHL, Mr. Foley was associated
with the Hyatt Hotels Corporation ("Hyatt") for 26 years: in a variety
of capacities, from 1962 to 1972; as Executive Vice President for
Operations, from 1972 to 1978; as President, from 1978 to 1984; as
Chairman from 1984 to 1988; as Vice Chairman and later Chief Executive
Officer of Braniff Airlines, a Hyatt subsidiary, from 1984 to 1988.
Mr. Foley currently is a member of the boards of directors of
Continental Airlines, Inc.; Foundation Health Systems, Inc.; Del Monte
Foods, Inc. and Flextronics International Ltd.
<PAGE>
Laura Wallace has served as director of the Company since January
11, 1996. She is also Chief Investment Officer of the Public Employees
Retirement System of Nevada (the "System"), a position she has held
since 1985 and to which she was promoted after serving four years as
Investment Analyst. The System comprises 80,000 active members, 40,000
inactive members, and 20,000 benefit recipients, with an investment
portfolio of $11.8 billion. Prior to joining the System, Ms. Wallace
served from 1977 to 1980 as Manager of the Beaverton, Oregon office of
Safeco Title Insurance Company, and from 1975 to 1977 as Senior
Assistant Manager of the Beaverton office of Household Finance
Corporation. Ms. Wallace is a member of the National Association of
State Investment Officers, of which she is past chairman; a member of
the executive board of the National Conference of Public Employee
Retirement Systems; a director of the Retired Senior Volunteer
Program; past member of the Editorial Board of the Institutional Real
Estate Letter; and serves as guest lecturer at the University of
Nevada.
Sandra L. Boyle has served as Executive Vice President of the
Company since September 1998, prior to which she served as Senior Vice
President of the Company since it began operations on Decembe 31,
1995. Ms. Boyle has been associated with Glenborough Corporation or
its affiliated entities since 1984. She was originally responsible for
residential marketing. Her responsibilities were gradually expanded to
include residential leasing and management in 1985, and commercial
leasing and management in 1987. She was elected Vice President of
Glenborough Corporation in 1989. She currently supervises asset
management, property management and management information services
for the Company. Ms. Boyle holds a California real estate broker's
license and a CPM designation, is a past President of BOMA San
Francisco, and is a member of the National Advisory and Finance
Committee of BOMA International, and the Board of Directors of BOMA
San Francisco and BOMA California.
Stephen R. Saul has served as Vice President of the Company since
May 1996 and became the Company's Executive Vice President and Chief
Financial Officer in September 1998. He has served as Manager of Real
Estate Finance since joining Glenborough Corporation in April 1995.
Prior to joining Glenborough Corporation, Mr. Saul served for four
years as President of KSA Financial Corporation, a company which was
based in Sacramento, California and which originated equity and debt
financing for real estate projects in Northern California; he also
served five years with Security Pacific National Bank and five years
with the development company of Harrington and Kulakoff. Mr. Saul has
a B.A. in Architecture and Urban Studies from Stanford University and
an M.B.A. from Harvard University.
Frank E. Austin has served as Senior Vice President, General
Counsel and Secretary of the Company since the Company began
operations on December 31, 1995. Mr. Austin also served as a Vice
President of Glenborough Corporation from 1985 until the completion of
the Consolidation. He is a member of the State Bar of California.
Prior to joining Glenborough, Mr. Austin served for three years as
committee counsel in the California State Senate, three years with the
law firm of Neumiller & Beardslee, and four years at State Savings and
Loan Association and American Savings and Loan Association.
Terri Garnick has served as Senior Vice President, Chief
Accounting Officer and Treasurer of the Company since the Company
began operations on December 31, 1995. Ms. Garnick joined Glenborough
Corporation in 1989, and between that time and the completion of the
Consolidation was responsible for property management, accounting,
financial statements, audits, SEC reports, and tax returns for
partnerships under management of Glenborough Corporation and its
affiliates. Prior to joining Glenborough Corporation in 1989, Ms.
Garnick was a controller at August Financial Corporation from 1986 to
1989 and was a Senior Accountant at Deloitte Haskins & Sells from 1983
to 1986.
Steven F. Hallsey joined the Company on January 12, 1998, as
Senior Vice President of Commercial Property Management. Prior to
joining the Company, Mr. Hallsey served for three years as President
and Chief Operating Officer of Western National Group, a national
property management firm based in Irvine, California; and for two
years as President of the Harbor Group of Norfolk, Virginia, which
owned and operated a regional portfolio of commercial and multifamily
properties. He also served four years as a Senior Vice President of
Balcor Property Management and six years as Senior Executive Vice
President of Clark Financial Corporation, a regional property
management firm based in Salt Lake City, Utah. Mr. Hallsey serves on
the boards of directors of the National Multi Housing Counsel and the
California Apartment Association, and is the founder of the South
Coast Apartment Association.
<PAGE>
Board Meetings, Committees and Compensation
During the fiscal year ended December 31, 1998, the Board of
Directors held five meetings. All directors attended at least 75% of
the aggregate number of meetings of the Board of Directors and of the
committees of the Board of Directors on which they serve. The Board of
Directors has two standing committees: the Audit Committee and the
Compensation Committee. The Audit Committee and the Compensation
Committee, and their respective membership, were established in
January 1996. The Board of Directors does not presently have a
separate nominating committee, the function of which is handled by the
Board of Directors as a whole.
The Audit Committee. The Audit Committee consists of Laura
Wallace and Richard A. Magnuson. During the fiscal year ended December
31, 1998, the Audit Committee met twice. The Audit Committee reviews
with the Company's independent accountants the annual reports received
from such auditors; reviews with the independent auditors the scope of
the succeeding annual audit; nominates the independent auditors to be
selected each year by the Board of Directors; reviews consulting
services rendered by the Company's independent auditors and evaluates
the possible effect on the auditors' independence of performing such
services; ascertains the existence of adequate internal accounting and
control systems; and reviews with management and the Company's
independent auditors current and emerging accounting and financial
reporting requirements and practices affecting the Company.
The Compensation Committee. The Compensation Committee consists
of Patrick Foley, Laura Wallace and Richard C. Blum. During the fiscal
year ended December 31, 1998, the Compensation Committee met twice.
The Compensation Committee reviews the Company's compensation
philosophy and programs and determines compensation for the Company's
executive officers. The Compensation Committee administers the
Company's 1996 Stock Incentive Plan. The Compensation Committee also
takes all independent action required under the federal securities
laws and the Internal Revenue Code on all matters pertaining to
compensation programs and policies (including employee incentive and
benefits programs), and reports to the Board of Directors concerning
its actions.
Compensation. The Company pays an annual retainer fee of $20,000
to its non-employee directors ("Independent Directors"). The Company
also reimburses Independent Directors for travel expenses incurred in
connection with their activities on behalf of the Company. In
addition, each Independent Director receives $500 for each committee
meeting the director attends, with the chairman of the respective
committee receiving $1,000 for each committee meeting.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1998, Messrs. Foley and
Blum and Ms. Wallace, each of whom is an Independent Director, served
on the Compensation Committee of the Board of Directors. No
interlocking relationship presently exists between any member of the
Compensation Committee and any member of the board of directors or
compensation committee of any other corporation.
Relationships Among Directors or Executive Officers
Robert Batinovich, the Company's Chairman and Chief Executive
Officer, is the father of the Company's director, President and Chief
Operating Officer. There are no other family relationships among any
directors and executive officers of the Company.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the
compensation of the Chief Executive Officer of the Company and the
four other most highly compensated executive officers of the Company
(the "Named Executive Officers") during the fiscal year ended December
31, 1998.
<TABLE>
<CAPTION>
Restricted Securities
Name And Principal Position Stock Underlying All Other
Year Salary ($) Bonus ($) Award(s)($) Options/SARs(#) Compensation ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert Batinovich 1998 480,000 480,000 - 100,000(1) 25,401(2)
Chairman and 1997 250,000 150,000 - 450,000(3) 16,354(4)
Chief Executive Officer 1996 250,000 150,000 - 15,265(4)
Andrew Batinovich 1998 300,000 300,000 - 80,000(1) 12,705(5)
Director, President and 1997 200,000 50,000 - 80,000(3) 4,330(4)
Chief Operating Officer 1996 200,000 50,000 - 250,000(6) 3,923(4)
Sandra L. Boyle 1998 220,000 104,500 - 35,000(1) 14,201(7)
Executive Vice 1997 190,000 76,000 - 59,400(8) 15,195(9)
President 1996 185,000 0 69,375(10) 75,000(6) 7,077(11)
Steven F. Hallsey 1998 170,406 60,000 - 65,000(12) 10,930(13)
Senior Vice President
of Commercial Property
Management
Daniel Levin 1998 157,000 71,250 - 85,000(14) 60,405(15)
Vice President
</TABLE>
(1) Represents nonqualified stock options granted in October 1998
at an exercise price of $21.625.
(2) Includes $17,401 for health and life insurance policies whose
premiums are paid by the Company and contributions to the
Company's 401(k) Retirement Plan of $8,000.
(3) Represents nonqualified stock options granted in October 1997
at an exercise price of $27.50.
(4) Represents amounts for health and life insurance policies
whose premiums are paid by the Company for the benefit of the
executive officers indicated.
(5) Includes $4,705 for health and life insurance policies whose premiums
are paid by the Company and
contributions to the Company's 401(k) Retirement Plan of $8,000.
(6) Comprises the following grants to Andrew Batinovich: 57,657
incentive stock options granted in August 1996, and 192,343
nonqualified stock options granted in August 1996 and November 1996,
all at an exercise price of $15.00; and 75,000 incentive stock options
granted to Sandra Boyle in August 1996 and November 1996, all at an
exercise price of $15.00.
(7) Includes an automobile allowance of $1,056, $5,145 for health
and life insurance policies whose premiums are paid by the Company and
contributions to the Company's 401(k) Retirement Plan of $8,000.
(8) Comprises nonqualified stock options as follows: 15,000
options granted in September 1997 at an exercise price of $30.00,
15,000 options granted in September 1997 at an exercise price of
$26.00, and 29,400 options granted in October 1997 at an exercise
price of $27.50.
(9) Includes an automobile allowance of $2,400, $4,739 for health
and life insurance policies whose premiums are paid by the Company and
contributions to the Company's 401(k) Retirement Plan of $8,056.
(10) Represents the fair market value of 5,000 shares of
restricted stock on the date of grant (August 2, 1996), based upon the
closing price of the Company's Common Stock of $13.875. As of the
Record Date, the fair market value of the 5,000 shares of restricted
stock was $88,125, based upon the closing price of the Company's
Common Stock of $17.625 per share. Twenty percent of restricted stock
vests one year after grant and an additional twenty percent vests each
year thereafter.
(11) Includes $4,302 for health and life insurance policies whose
premiums are paid by the Company and contributions to the Company's
Supplemental Retirement Plan of $2,775.
(12) Comprises (i) 27,946 incentive stock options granted in
February 1998 at an exercise price of $30.00, of which 7,946 were
re-priced at $21.625 in October 1998, and (ii) nonqualified stock
options as follows: 7,054 options granted in February 1998 at an
exercise price of $30.00, all of which were re-priced at $21.625 in
October 1998, and 30,000 options granted in October 1998 at an
exercise price of $21.625.
<PAGE>
(13) Includes $4,114 for health and life insurance policies whose
premiums are paid by the Company and contributions to the Company's
401(k) Retirement Plan of $6,816.
(14) Comprises (i) 28,000 incentive stock options granted in
March 1998 at an exercise price of $28.375, and (ii) 57,000
nonqualified stock options as follows: 47,000 options granted in March
1998 at an exercise price of $28.375, of which 15,000 were re-priced
at $21.625 in October 1998, and 10,000 options granted in October 1998
at an exercise price of $21.625.
(15) Includes $2,405 for health and life insurance policies whose
premiums are paid by the Company, contributions to the Company's
401(k) Retirement Plan of $8,000, and a relocation allowance of
$50,000.
OPTION GRANTS FOR LAST FISCAL YEAR
The following table provides certain information with respect to
stock options granted to the Named Executive Officers during the year
ended December 31, 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Options Grants For Option Term(1)
_____________________________________________________________________ ______________________
Number of % of Total
Securities Options/SAR
Underlying s Granted to Exercise
Options/SAR Employees Price per
Grant s Granted in Fiscal Share Expiration
Name Date (#)(2) Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Batinovich 10/23/98 100,000(3) 8.0% $21.625 10/23/08 1,359,985 3,446,468
Andrew Batinovich 10/23/98 80,000(3) 6.4% 21.625 10/23/08 1,087,988 2,757,174
Sandra L. Boyle 10/23/98 35,000 2.8% 21.625 10/23/08 475,995 1,206,264
Steven Hallsey 02/25/98 15,000 1.2% 21.625 02/25/08 375,032 789,313
02/25/98 20,000 1.6% 30.000 02/25/08 332,542 884,918
10/23/98 30,000 2.4% 21.625 10/23/08 407,995 1,033,940
Daniel Levin 3/18/98 60,000 4.8% 28.375 3/18/08 1,070,693 2,713,347
3/18/98 15,000 1.2% 21.625 3/18/08 368,923 779,587
10/23/98 10,000 0.8% 21.625 10/23/08 135,998 344,647
______________
</TABLE>
(1) Potential realizable value is determined by applying an
amount equal to the fair market value on the date of grant to the
stated annual appreciation rate compounded annually for the remaining
term of the option, subtracting the exercise price at the end of the
period and multiplying the remaining number by the number of shares
subject to the option. Actual gains, if any, on stock option exercise
and Common Stock holdings are dependent upon a number of factors,
including the future performance of the Common Stock, overall stock
market conditions, and the timing of option exercises, if any. There
can be no assurance that the amounts reflected in this table will be
achieved.
(2) Reflects options that have a ten year term.
(3) Excluding options conditionally granted subject to
stockholder approval under Proposal No. 2 described in this Proxy
Statement.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
During the year ended December 31, 1998, the Named Executive
Officers did not exercise any of their stock options. The following
table sets forth the number of shares of Common Stock covered by the
stock options held by the Named Executive Officers as of December 31,
1998.
<PAGE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year-End (#) Options at Year-End ($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Robert Batinovich 350,000 200,000 0 0
Andrew Batinovich 199,550 210,450 1,072,581 271,169
Sandra L. Boyle 32,207 137,193 173,113 230,012
Steven F. Hallsey 0 65,000 0 0
Daniel Levin 0 85,000 0 0
- ----------------------
</TABLE>
(1) Based on the closing price of the Companys Common Stock as
reported on the New York Stock Exchange on December31, 1998 of $20.375
per share, minus the applicable exercise prices per share, multiplied
by the number of shares underlying the options.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that
might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the Performance Graph which
follows shall not be deemed to be incorporated by reference into any
such filings.
In January 1996, the Board of Directors established the
Compensation Committee of the Board of Directors (the "Compensation
Committee"). The Compensation Committee has responsibility for
developing, administering and monitoring the compensation policies
applicable to the Company's executive officers, including
administering the Company's 1996 Stock Incentive Plan (the "Stock
Incentive Plan"), under which option grants and restricted stock
grants may be made to executive officers and other key employees.
Executive Compensation Philosophy
The Compensation Committee believes that the primary goal of the
Company's executive compensation program should be related to creating
stockholder value. The executive compensation policies of the
Compensation Committee are designed to provide incentives to create
stockholder value by attracting, retaining and motivating executive
talent that contributes to the Company's long-term success, by
rewarding the achievement of the Company's short-term and long-term
strategic goals, by linking executive officer compensation and
stockholder interests through grants of awards under the Stock
Incentive Plan and by recognizing individual contributions to Company
performance. The Committee evaluates the performance of the Company
and compares it to REITs and real estate companies of similar size
engaged in activities similar to those of the Company. The
compensation of the Company's Named Executive Officers in 1998
consisted of base salaries, bonuses, stock options and certain
benefits.
The Compensation Committee reviews the available competitive
data, evaluates the particular needs of the Company, and evaluates
each executive's performance to arrive at a decision regarding
compensation programs. The Compensation Committee has retained the
services of an independent compensation consultant (the "Compensation
Consultant") to assist the Compensation Committee in its evaluation of
the key elements of the Company's compensation program. The
Compensation Consultant provides advice to the Compensation Committee
with respect to competitive compensation in the market in which the
Company competes for executive talent and the reasonableness of the
current and proposed compensation levels.
1998 Executive Compensation
For services performed in 1998, executive compensation consisted
of base salary, bonuses and grants of stock options under the Stock
Incentive Plan. The stock options vest over time.
Base Salary and Bonuses. Base salaries and bonuses for the
Company's executive officers (other than the Chief Executive Officer
and the President and Chief Operating Officer) are determined
primarily on the basis of the executive officer's responsibility,
qualification and experience, as well as the general salary practices
of peer companies among which the Company competes for executive
talent. The Committee reviews the base salaries of these executive
officers annually in accordance with certain criteria determined
primarily on the basis of growth in revenues and funds from operations
per share of Common Stock and on the basis of certain other factors
which include (i) individual performance, (ii) the functions performed
by the executive officer and (iii) changes in the compensation peer
group in which the Company competes for executive talent. The weight
that the Compensation Committee places on such factors may vary from
individual to individual and necessarily involves subjective
determinations of individual performance.
Employment Agreements. The base salaries for Robert Batinovich,
the Company's Chief Executive Officer, and for Andrew Batinovich, the
Company's President and Chief Operating Officer, were established by
previously negotiated employment agreements with the Company. Pursuant
to the terms of their respective employment agreements, Robert
Batinovich and Andrew Batinovich receive an aggregate annual base
salary of $480,000 and $300,000, respectively, and each is eligible to
<PAGE>
participate in the Company's employee benefit plans and executive
compensation programs. Also, under the employment agreements, each of
Robert Batinovich and Andrew Batinovich is entitled to annual
contingent bonuses based on the attainment of certain criteria tied to
the Company's performance. Each agreement terminates on December 31,
2002, and thereafter may be extended in one year increments. The
employment agreements also provide for certain payments of base
salary, compensation and benefits upon termination without cause and
upon a change of control of the Company.
Long-Term Incentive Compensation Awards. The Stock Incentive Plan
provides for grants to key executives and employees of the Company of
(i) shares of Common Stock of the Company, (ii) options or stock
appreciation rights ("SARs") or similar rights, or (iii) any other
security with the value derived from the value of the Common Stock of
the Company or other securities issued by a related entity. The
Compensation Committee may make grants under the Stock Incentive Plan
based on a number of factors, including (a) the executive officer's or
key employee's position in the Company, (b) his or her performance and
responsibilities, (c) the extent to which he or she already holds an
equity stake in the Company, and (d) contributions and anticipated
contributions to the success of the Company's financial performance.
In addition, the size, frequency, and type of long-term incentive
grants are generally determined on the basis of past granting
practices, fair market value of the Company's stock, tax consequences
of the grant to the individual and the Company, accounting impact, and
the number of shares available for issuance. However, the plan does
not provide any formulaic method for weighing these factors, and a
decision to grant an award is based primarily upon the Compensation
Committee's evaluation of the past as well as the future anticipated
performance and responsibilities of each individual. The Compensation
Committee may also consult with the Compensation Consultant with
respect to long-term incentives and other compensation awards.
Deductibility of Compensation
Sectio 162(m) of the Internal Revenue Code denies a deduction for
compensation in excess of $1 million paid to certain executive
officers, unless certain performance, disclosure, and stockholder
approval requirements are met. Option grants under the Company's Stock
Incentive Plan are intended to qualify as "performance-based"
compensation not subject to the Section 162(m) deduction limitation.
In addition, the Committee believes that a substantial portion of the
compensation program would be exempted from the $1 million deduction
limitation.
Chief Executive Officer Compensation
Salary, Insurance and Bonus. The compensation of Robert
Batinovich, the Company's Chief Executive Officer, for fiscal 1998 was
determined pursuant to the terms of a previously negotiated employment
agreement with the Company. In 1998, Mr. Batinovich received an annual
base salary of $480,000 and an aggregate of approximately $17,401 in
health insurance and other benefits. Mr. Batinovich also received a
bonus of $480,000, which was contingent upon the attainment of certain
performance thresholds set forth in the employment agreements.
Consistent with the Compensation Committee's policy with respect to
long-term incentive compensation awards described above, Mr.
Batinovich was granted options to purchase 100,000 shares of Common
Stock.
In addition, on October 23, 1998, the Compensation Committee
approved, subject to stockholder approval (approval of which is being
sought hereby, see "Proposal No. 2"), the grant to Mr. Batinovich of
an option to purchase 700,000 shares of Common Stock, 233,333 shares
of which have an exercise price of $27.03 per share (representing a
25% premium above the then current per share market price of the
Common Stock), 233,333 shares of which have an exercise price of
$32.44 per share (representing a 50% premium above the then current
per share market price of Common Stock), and 233,334 shares of which
have an exercise price of $37.84 per share (representing a 75% premium
above the then current per share market price of Common Stock). On
March 15, 1999, the last reported sales price of the Common Stock on
the New York Stock Exchange was $17.625 per share.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Patrick Foley
Laura Wallace
Richard C. Blum
<PAGE>
COMMON STOCK PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return
on the Company's Common Stock from Januar 1, 1996 through December 31,
1998 to: (i) the cumulative total return on the Standard and Poor's
500 Stock Index ("S&P 500"), (ii) the following eight other REITs used
by the Company as its peer group in the Company s Proxy Statement for
its 1998 Annual Meeting of Stockholders (the "1997 Peer Group"):
Colonial Properties Trust, Cousins Properties Incorporated, EastGroup
Properties, MGI Properties, Pennsylvania Real Estate Investment Trust,
Washington Real Estate Investment Trust, Regency Realty Corporation
and Value Property Trust; (iii) the cumulative total return on the
Russell 2000 Index ("Russell 2000"), and (iv) the following five other
REITs selected by the Company which the Company believes are
comparable in size and engaged in activities similar to those of the
Company (the "1998 Peer Group"): Colonial Properties Trust, Cousins
Properties Incorporated, Vornado Realty Trust, Highwoods Properties,
Inc. and Brandywine Realty Trust. The graph assumes that the value of
the investment in the Company s Common Stock was $100 at January 1,
1996 and that all dividends were reinvested.
Beginning with the annual meeting proxy statement relating to the
2000 Annual Meeting of Stockholders, the Company will discontinue
using the S&P 500 and the 1997 Peer Group as comparable indices for
stock price performance, and will use only the Russell 2000 and the
1998 Peer Group. The Company believes that the Russell 2000 is a
better comparison measure than the S&P 500, because the Companys
market capitalization is comparable to the average market
capitalization of the Russell 2000, and is materially smaller than the
average market capitalization of the S&P 500. The 1998 Peer Group
includes two of the same companies as the 1997 Peer Group; the
remaining companies in the 1997 Peer Group are either in liquidation
(MGI Properties and Value Property Trust), or have a smaller market
capitalization or a limited regional or product focus (EastGroup
Properties, Washington Real Estate Investment Trust, Pennsylvania Real
Estate Investment Trust and Regency Realty Corporation).
TOTAL STOCKHOLDER RETURN SHOWN ON THE FOLLOWING GRAPH IS NOT
NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. TOTAL RETURN ASSUMES
REINVESTMENT OF DIVIDENDS BEFORE CONSIDERATION OF INCOME TAXES.
TOTAL RETURN PERFORMANCE
[GRAPHIC OMITTED]
(Graphic of line chart showing Glenborough Realty Trust Incorporated,
S&P 500, SNL Custom Peer Group, Russell 2000, Company Peer Group)
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Related Parties
The Company acquired from Glenborough Partners, a California
limited partnership ("Partners"), an option (the "Option") to acquire
all of Partners' rights under a Lease with Option to Purchase
Agreement (the "Lease/Option"), to lease and acquire certain
undeveloped real property located in Burlingame, California (the
"Property"). The Company paid approximately $533,000 for such
acquisition, with the intention of using the option period to evaluate
the desirability of developing the Property as a Company investment.
Upon expiration of the option period in 1999, the independent members
of the Company's Board of Directors concluded that proceeding with the
development of the Property would have required that the Company incur
substantial debt, and accordingly elected (Robert Batinovich and
Andrew Batinovich abstaining) not to proceed with the development and
not to exercise the Option, in return for Partner' Agreement to (i)
reimburse the Company for the $533,000 payment, as well as
approximately $1.5 million of predevelopment costs incurred by the
Company relating to the Property, 20% of such reimbursement to take
the form cash, with the balance in a promissory note bearing interest
at an annual rate of 10% and maturing in three years, and (ii) grant
to the Company a participation in profits realized by Partners from
the development and sale of the Property. Robert Batinovich and Andrew
Batinovich own, in aggregate, approximately 22% of the partnership
interests in Partners.
PROPOSAL NO. 2
APPROVAL OF GRANT OF STOCK OPTIONS
TO ROBERT BATINOVICH AND ANDREW BATINOVICH
On October 23, 1998, the Compensation Committee approved, subject
to stockholder approval, the granting (i) to Robert Batinovich, the
Company's Chairman and Chief Executive Officer, of an option to
purchase 700,000 shares of the Company's Common Stock, and (ii) to
Andrew Batinovich, the Company's President and Chief Operating
Officer, of an option to purchase 300,000 shares of the Company's
Common Stock. Both grants become exercisable in full on the third
anniversary of the grant date, and will expire on the tenth
anniversary of the grant date.
As to each grant, the exercise prices are set at premiums over
the closing price of the Company's Common Stock on the date of grant,
which was $21.625. The following table sets forth the number of shares
subject to the proposed options and the respective exercise price and
percentage premium of the exercise price over the closing price of the
Company's Common Stock on the date of grant:
<TABLE>
<CAPTION>
Number of Shares Underlying Options Exercise Price Premium Above $21.625,
Robert Batinovich Andrew Batinovich Exercise Price the Market Price on Date of Grant
<S> <C> <C> <C>
233,333 100,000 $27.03 25%
233,333 100,000 $32.44 50%
233,334 100,000 $37.84 75%
</TABLE>
On March 15, 1999, the last reported sales price of the Common
Stock on the New York Stock Exchange was $17.625 per share.
Approval of these grants requires the affirmative vote of the
holders of a majority of the votes cast at the Annual Meeting with
respect to such proposal. Stockholder approval of these grants is
required in order for these options to qualify as performance based
compensation under Section 162(m) of the Internal Revenue Code. In
addition, stockholder approval of these grants is required by the
rules of the New York Stock Exchange.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF THE GRANT OF STOCK OPTIONS TO
ROBERT BATINOVICH AND ANDREW BATINOVICH
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Arthur Andersen LLP to serve as
independent auditors of the Company for the fiscal year ending
December 31, 1999. A representative of Arthur Andersen LLP is expected
to be present at the Annual Meeting and will have the opportunity to
make a statement if the representative desires to do so and will be
available to respond to appropriate questions from stockholders.
Although it is not required to do so, the Board is submitting its
selection of the Company's independent auditors for ratification by
the stockholders at the Meeting in order to ascertain the views of
stockholders regarding such selection. A majority of the votes cast at
the Annual Meeting, if a quorum is present, will be sufficient to
ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999.
Whether the proposal is approved or defeated, the Board may reconsider
its selection at any time during the year if the Board determines that
such a change would be in the best interests of the Company and its
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 1999
OTHER MATTERS
Annual Report. The Company has included in the mailing of this
Proxy Statement a copy of its Annual Report for the year ended
December 31, 1998. The Exhibits to that report will also be provided
upon request and payment of the costs of reproduction. Requests should
be addressed to Investor Relations, 400 South El Camino Real, 11th
Floor, San Mateo, California 94402-1708.
Section 16(a) Beneficial Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act")
requires the Company's directors and executive officers and persons
who own more than 10% of a registered class of the Company's equity
securities ("Reporting Persons") to file with the Securities and
Exchange Commission (the "Commission") reports of ownership and
changes in ownership of equity securities of the Company and to
furnish the Company with copies of all such Section 16(a) forms they
file. The Exchange Act also requires that the Company disclose
delinquencies in filing such forms by Reporting Persons during and
with respect to its most recent fiscal year. Based solely on its
review of the copies of such reports received or written
representations from certain Reporting Persons, the Company believes
that during the fiscal year ended December 31, 1998, all Reporting
Persons complied with all applicable filing requirements.
Requirements for Stockholder Proposals to be Brought Before an
Annual Meeting. For stockholder proposals to be considered properly
brought before an annual meeting by a stockholder, the stockholder
must have given timely notice of such proposal in writing to the
Secretary of the Company. To be timely for the Company's 2000 Annual
Meeting of Stockholders, a stockholder's notice must be received by
Frank E. Austin at the principal executive offices of the Company, no
earlier than February 7, 2000 and no later than March 8, 2000. In the
event that the date of the 2000 Annual Meeting is advanced to a date
before April 7, 2000 or delayed to a date after July 7, 2000, to be
timely, notice by the stockholder must be so delivered not earlier
than the 90th day prior to the 2000 Annual Meeting and not later than
the close of business on the later of the 60th day prior to the 2000
Annual Meeting or the tenth day following the day on which public
announcement of the date of the 2000 Annual Meeting is first made. A
stockholder's notice must set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors, or
is otherwise required, in each case pursuant to Regulation 14A under
the Exchange Act (including such person's written consent to being
named in the proxy statement as a nominee and to serving as a director
if elected); (ii) as to any other business that the stockholder
<PAGE>
proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in
such business of such stockholder and of the beneficial owner, if any,
on whose behalf the proposal is made; and (iii) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made, (x) the name and address of such
stockholder, as they appear on the Company's books and of such
beneficial owner and (y) the number of shares of each class of stock
of the Company which are owned beneficially and of record by such
stockholder and such beneficial owner
Requirements for Stockholder Proposals to be Considered for
Inclusion in the Company's Proxy Materials. Stockholder proposals
submitted pursuant to Rule 14a-8 under the Exchange Act and intended
to be presented at the Company's 2000 Annual Meeting of Stockholders
must be received by the Company not later than December 6, 1999 in
order to be considered for inclusion in the Company's proxy materials
for that meeting.
Other Business. The Company is not aware of any business to be
presented for consideration at the Meeting other than that specified
in the Notice of Annual Meeting. If any other matters are properly
presented at the Meeting, it is the intention of the persons named in
the enclosed Proxy to vote in accordance with their best judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. BY
RETURNING YOUR PROXY PROMPTLY YOU CAN HELP THE COMPANY AVOID THE
EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO THAT THE MEETING
CAN BE HELD. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE A PRIOR
PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY
STATEMENT.
By Order of the Board of Directors
ROBERT BATINOVICH
Robert Batinovich,
Chairman and Chief Executive Officer
San Mateo, California
April 5, 1999
