<PAGE>
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
PRICE ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(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>
PRICE ENTERPRISES, INC
4649 MORENA BOULEVARD
SAN DIEGO, CALIFORNIA 92117
---------------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
To The Stockholders of
Price Enterprises, Inc.
Notice is hereby given that the Annual Meeting of the Stockholders (the
"Meeting") of PRICE ENTERPRISES, INC. (the "Company") will be held at the San
Diego Hilton Beach and Tennis Resort, 1775 E. Mission Bay Drive, San Diego,
California 92109, on Tuesday, January 14, 1997, at 10:00 a.m., for the following
purposes:
1. To elect Directors for the ensuing year to serve until the next
Annual Meeting of Stockholders and until their successors are elected and
have qualified. The present Board of Directors of the Company has nominated
and recommends for election as Directors the following six persons:
<TABLE>
<S> <C>
William P. Dickey Leon C. Janks
Murray L. Galinson Paul A. Peterson
Katherine L. Hensley Robert E. Price
</TABLE>
2. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on November 18, 1996
as the record date for this solicitation.
Accompanying this Notice is a Proxy. WHETHER OR NOT YOU EXPECT TO BE AT THE
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel T. Carter, SECRETARY
San Diego, California
November 27, 1996
<PAGE>
PRICE ENTERPRISES, INC.
4649 MORENA BOULEVARD
SAN DIEGO, CALIFORNIA 92117
------------------------
PROXY STATEMENT
The Board of Directors of Price Enterprises, Inc. (the "Company") is
soliciting the enclosed Proxy for use at the Annual Meeting of Stockholders of
the Company (the "Meeting") to be held at 10:00 a.m. on Tuesday, January 14,
1997, at the San Diego Hilton Beach and Tennis Resort, 1775 E. Mission Bay
Drive, San Diego, California 92109. This Proxy Statement was first mailed to
stockholders on or about November 27, 1996.
All stockholders who find it convenient to do so are cordially urged to
attend the Meeting in person. In any event, please sign, date and return the
Proxy in the enclosed envelope.
A Proxy may be revoked by written notice to the Secretary of the Company at
any time prior to the voting of the Proxy, or by executing a later Proxy or by
attending the Meeting and voting in person. Unrevoked Proxies will be voted in
accordance with the instructions therein indicated, or if there are no such
instructions, such Proxies will be voted for the election of the Board's
nominees for Directors.
The close of business on November 18, 1996 is the record date with respect
to this solicitation. As of that date, 23,301,294 shares of Common Stock, $.0001
par value ("Common Stock"), of the Company were outstanding. Each share of
Common Stock is entitled to one vote. A majority of the outstanding shares of
the Company, represented in person or by Proxy at the Meeting, constitutes a
quorum. All shares represented by Proxies that reflect abstentions or include
"broker non-votes" will be treated as shares that are present and entitled to
vote for purposes of determining the presence of quorum. Abstentions or "broker
non-votes" do not constitute a vote "for" or "against" any matter and thus will
be disregarded in the calculation of "votes cast."
A plurality of the votes cast at the Meeting is required to elect Directors.
The affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote at the Meeting is required for
approval of all other matters presented at the Meeting.
The cost of preparing, assembling and mailing the Notice, Proxy Statement
and Proxy will be borne by the Company.
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of shares of the Company's Common Stock as of November 18, 1996 by (i)
the Company's Named Executive Officers (as hereinafter defined) and Directors,
(ii) all of the Company's executive officers and Directors as a group and (iii)
all other stockholders known by the Company to own beneficially more than five
percent of the Common Stock.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF BENEFICIALLY
NAME AND ADDRESS (1) BENEFICIAL OWNERSHIP OWNED
- -------------------------------------------------- -------------------- ------------
<S> <C> <C>
Robert E. Price................................... 2,627,628(2) 11.3%
Paul A. Peterson.................................. 237,279(3) 1.0%
Nancy Y. Bekavac.................................. 4,200(4) *
William P. Dickey................................. 2,000(5) *
Murray L. Galinson................................ 7,000(6) *
Katherine L. Hensley.............................. 4,665(7) *
Leon C. Janks..................................... 2,000(8) *
Daniel T. Carter.................................. 30,000(9) *
Robert M. Gans.................................... 20,000(10) *
Joseph J. Tebo.................................... 40,100(11) *
Theodore Wallace.................................. 71,291(12) *
Sol Price......................................... 8,479,910(13) 36.4%
Jeffrey S. Halis.................................. 1,229,700(14) 5.3%
All Executive Officers and Directors as a group
(12 persons)..................................... 3,048,663 13.0%
</TABLE>
- ------------------------
* Less than 1% beneficially owned.
(1) The address for all persons listed, other than Sol Price and Jeffrey S.
Halis, is c/o the Company, 4649 Morena Boulevard, San Diego, California
92117. The address for Sol Price is c/o The Price Entities, 7979 Ivanhoe
Avenue, Suite 520, La Jolla, California 92037. The address for Jeffrey S.
Halis is 500 Park Avenue, Fifth Floor, New York, New York 10022.
(2) 2,627,128 shares are beneficially owned by Robert E. Price. Of such
2,627,128 shares, 95,382 shares are held through trusts of which Mr. Price
is a trustee. Mr. Price disclaims beneficial ownership of 500 shares which
are held by a foundation of which Mr. Price is a Director.
(3) Includes 10,000 shares subject to non-qualified stock options which are
presently exercisable and 10,000 shares subject to non-qualified stock
options which are exercisable after December 21, 1996. All such options have
an exercise price of $14.00 and expire on December 21, 2000. Excludes 30,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $14.00 and expire on
December 21, 2000.
(4) Includes 2,000 shares subject to non-qualified stock options which are
presently exercisable and 2,000 shares subject to non-qualified stock
options which are exercisable after December 21, 1996. All such options have
an exercise price of $14.00 and expire on December 21, 2000. Excludes 6,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $14.00 and expire on
December 21, 2000.
(5) Includes 2,000 shares subject to non-qualified stock options which are
exercisable after January 16, 1997. All such options have an exercise price
of $15.63 and expire on January 16, 2002. Excludes 8,000 shares subject to
non-qualified stock options which are not presently exercisable, and which
have an exercise price of $15.63 and expire on January 16, 2002.
2
<PAGE>
(6) Includes 2,000 shares subject to non-qualified stock options which are
presently exercisable and 2,000 shares subject to non-qualified stock
options which are exercisable after December 21, 1996. All such options have
an exercise price of $14.00 and expire on December 21, 2000. Also includes
1,500 shares held by a partnership for the benefit of Mr. Galinson's adult
children, over which Mr. Galinson exercises sole investment power. Mr.
Galinson disclaims beneficial ownership over such 1,500 shares. Excludes
6,000 shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $14.00 and expire on
December 21, 2000.
(7) Includes 2,000 shares subject to non-qualified stock options which are
presently exercisable and 2,000 shares subject to non-qualified stock
options which are exercisable after December 21, 1996. All such options have
an exercise price of $14.00 and expire on December 21, 2000. Excludes 6,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $14.00 and expire on
December 21, 2000.
(8) Includes 2,000 shares subject to non-qualified stock options which are
presently exercisable. All such options have an exercise price of $12.00 and
expire on March 24, 2001. Excludes 8,000 shares subject to non-qualified
stock options which are not presently exercisable, and which have an
exercise price of $12.00 and expire on March 24, 2001.
(9) Includes 15,000 shares subject to non-qualified stock options which are
presently exercisable and 15,000 shares subject to non-qualified stock
options which are exercisable after January 11, 1997. All such options have
an exercise price of $11.25 and expire on January 12, 2001. Excludes 45,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $11.25 and expire on
January 12, 2001.
(10) Includes 5,000 shares subject to non-qualified stock options which are
presently exercisable and 15,000 shares subject to non-qualified stock
options which are exercisable after January 11, 1997. All such options have
an exercise price of $11.25 and expire on January 12, 2001. Excludes 45,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $11.25 and expire on
January 12, 2001.
(11) Includes 20,000 shares subject to non-qualified stock options which are
presently exercisable and 20,000 shares subject to non-qualified stock
options which are exercisable after January 11, 1997. All such options have
an exercise price of $11.25 and expire on January 12, 2001. Excludes 60,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $11.25 and expire on
January 12, 2001.
(12) Includes 20,000 shares subject to non-qualified stock options which are
presently exercisable and 20,000 shares subject to non-qualified stock
options which are exercisable after January 11, 1997. All such options have
an exercise price of $11.25 and expire on January 12, 2001. Excludes 60,000
shares subject to non-qualified stock options which are not presently
exercisable, and which have an exercise price of $11.25 and expire on
January 12, 2001.
(13) 8,285,160 shares are beneficially owned by Sol Price and are held through
trusts of which Mr. Price is a trustee. Mr. Price disclaims beneficial
ownership of 500 shares which are held by a foundation of which Mr. Price is
a Director. Mr. Price also disclaims beneficial ownership of 194,250 shares
which are held by certain trusts of which Mr. Price is a co-trustee.
(14) 1,229,700 shares are owned by Tyndall Partners, L.P., a Delaware limited
partnership. 90,200 shares are owned by Madison Avenue Partners, L.P., a
Delaware limited partnership. Pursuant to the Agreement of Limited
Partnership of each of Tyndall Partners, L.P. and Madison Avenue Partners,
L.P., Jeffrey S. Halis possesses sole voting and investment control over all
securities owned by Tyndall Partners, L.P. and Madison Avenue Partners,
L.P., respectively. All information concerning Mr. Halis, Tyndall Partners,
L.P. and Madison Avenue Partners, L.P. is based upon information provided by
Mr. Halis.
3
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company has nominated and recommends for
election as Directors the following six persons to serve until the next Annual
Meeting of Stockholders and until their respective successors shall have been
duly elected and shall qualify. All of the nominees are presently Directors of
the Company, and following the Meeting, there will be no vacancies on the Board.
The enclosed Proxy will be voted in favor of the persons nominated unless
otherwise indicated. If any of the nominees should be unable to serve or should
decline to do so, the discretionary authority provided in the Proxy will be
exercised by the present Board of Directors to vote for a substitute or
substitutes to be designated by the Board of Directors. The Board of Directors
does not believe at this time that any substitute nominee or nominees will be
required. In the event that a nominee for Director is proposed at the Meeting,
the enclosed proxy may be voted in favor of or against such nominee or any other
nominee proposed by the Board of Directors.
The table below indicates the name, position with the Company and age of
each nominee for Director.
<TABLE>
<CAPTION>
NAME POSITION WITH PRICE ENTERPRISES AGE
- ---------------------------------------- --------------------------------- ---
<S> <C> <C>
Robert E. Price Chairman of the Board, President 54
and Chief Executive Officer
Paul A. Peterson Vice Chairman of the Board 68
William P. Dickey Director 53
Murray L. Galinson Director 59
Katherine L. Hensley Director 59
Leon C. Janks Director 47
</TABLE>
Robert E. Price has been Chairman of the Board, President and Chief
Executive Officer of Price Enterprises since July 28, 1994. Mr. Price was
Chairman of the Board of Price/Costco, Inc. from October 1993 to December 1994.
From 1976 to October 1993, he was Chief Executive Officer and a Director of The
Price Company. Mr. Price served as Chairman of the Board of The Price Company
from January 1989 to October 1993, and as its President from 1976 until December
1990. In addition to his role in Price Enterprises, Mr. Price serves as (i)
President and Chief Executive Officer of Price Real Estate, Inc., and Price
Global Trading, L.L.C., (ii) Chief Executive Officer of Price Quest, L.L.C.,
PQI, Inc., and PGT, Inc. and (iii) a Director of Price Real Estate, Inc., PGT,
Inc., PQI, Inc., and Price Ventures, Inc.
Paul A. Peterson is a lawyer and is a senior member of the law firm of
Peterson & Price in San Diego. He was a Director of Price/Costco, Inc. from
October 1993 until December 1994. From 1976 to October 1993, he was Secretary
and, except for a period of eleven months in 1982, a Director of The Price
Company. Mr. Peterson served as Vice Chairman of the Board of The Price Company
from November 1991 to October 1993. Mr. Peterson also serves as a Director of
Price Real Estate, Inc., PGT, Inc., PQI, Inc., and Price Ventures, Inc.
Katherine L. Hensley is a lawyer and a retired partner of the law firm of
O'Melveny & Myers in Los Angeles, California. Ms. Hensley joined O'Melveny &
Myers in 1978 and was a partner from 1986 to February 1992. Ms. Hensley is a
Trustee of Security First Trust, an open-end investment management company
registered under the Investment Company Act of 1940.
Murray L. Galinson has been Chairman of the Board of San Diego National Bank
and SDNB Financial Corp. since May 1996, Chief Executive Officer of both
entities since September 1984 and a Director of both entities since their
inception in 1981. Mr. Galinson served as President of both entities from
September 1984 until May 1996.
4
<PAGE>
Leon C. Janks has been a Partner in the accounting firm of Alder, Green &
Hasson in Los Angeles, California since 1980. Mr. Janks has extensive experience
in domestic and international business serving a wide variety of clients in
diverse businesses.
William P. Dickey has been the owner and President of The Dermot Company,
Inc., a California real estate investment and advisory firm, since October 1991.
From February 1986 to November 1990, he was a Managing Director at The First
Boston Corporation, an investment banking firm (now known as CS First Boston).
Prior to joining First Boston, Mr. Dickey was a Partner with the law firm of
Cravath, Swaine & Moore from May 1980 to February 1986. Mr. Dickey is a Trustee
of The Retail Property Trust, an institutionally-owned REIT with investments in
regional shopping centers, a Director of HGI Realty, Inc., a publicly-traded
REIT which owns factory outlet shopping centers, and a Director of Mezzanine
Capital Property Investors, a privately-held REIT with an investment focus on
office properties.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES THEREOF
The Board of Directors held four meetings during fiscal 1996. Each person
who was a Director during fiscal 1996 attended more than 75% of the total number
of meetings of the Board and the Committees of the Board on which he or she
served (except that Ms. Bekavac attended fewer than 75% of the total number of
such meetings).
COMMITTEES OF PRICE ENTERPRISES
AUDIT COMMITTEE. The Audit Committee, which consists of Ms. Bekavac and
Messrs. Janks and Peterson, held five meetings during fiscal 1996. The Audit
Committee reviews the annual audits of Price Enterprises' independent public
accountants, Ernst & Young, LLP; reviews and evaluates internal accounting
controls; recommends the selection of the Company's independent public
accountants; reviews and passes upon (or ratifies) related party transactions;
and conducts such reviews and examinations as it deems necessary with respect to
the practices and policies of, and the relationship between, Price Enterprises
and its independent public accountants.
COMPENSATION COMMITTEE. The Compensation Committee, which consists of Ms.
Bekavac, Mr. Galinson and Ms. Hensley, held five meetings during fiscal 1996.
The Compensation Committee reviews salaries, bonuses and stock options of senior
officers of Price Enterprises, and administers Price Enterprises' executive
compensation policies and stock option plans.
NOMINATING COMMITTEE. The Nominating Committee, which consists of Ms.
Hensley and Messrs. Peterson and Price, held two meetings in fiscal 1996. The
Nominating Committee recommends candidates to fill vacancies on the Board of
Directors or any committee thereof, which vacancies may be created by the
departure of any Directors, or the expansion of the number of members of the
board. The Nominating Committee will give appropriate consideration to qualified
persons recommended by stockholders for nomination as Directors provided that
such recommendations are accompanied by information sufficient to enable the
Nominating Committee to evaluate the qualifications of the nominee.
REAL ESTATE COMMITTEE. The Real Estate Committee, which consists of Messrs.
Peterson and Price, held 18 meetings in fiscal 1996. The Real Estate Committee
reviews and approves (i) sales (including sale-leasebacks), leases, conveyances,
transfers or other dispositions of real property, and (ii) purchases, leases or
other acquisitions of real property, except, in each case for any such
transactions entered into in the ordinary course of business of Price
Enterprises.
EXECUTIVE COMMITTEE. The Executive Committee, which consists of Messrs.
Galinson, Price and Peterson, held no formal meetings during fiscal 1996. The
Executive Committee has been established with all powers and rights necessary to
exercise the full authorities of the Board of Directors in the management of the
business and affairs of Price Enterprises, except as provided in the Delaware
General Corporation Law or the Bylaws of Price Enterprises.
5
<PAGE>
FINANCE COMMITTEE. The Finance Committee, which consists of Messrs. Price,
Dickey, Galinson and Janks, held six meetings in fiscal 1996. The Finance
Committee reviews and makes recommendations with respect to (i) annual budgets,
(ii) investments, (iii) financing arrangements and (iv) the creation,
incurrence, assumption or guaranty by Price Enterprises of any indebtedness,
obligation or liability, except, in each case, for any such transactions entered
into in the ordinary course of business of Price Enterprises.
COMPENSATION OF THE BOARD OF DIRECTORS
Each outside Director of Price Enterprises (other than Mr. Peterson)
receives $20,000 per year for serving on the Board of Directors and an
additional $5,000 per year for serving as chairman of any committee of the
Board. Mr. Peterson receives $100,000 per year for his services as Vice Chairman
of the Board and as a chairman or member of any committee of the Board. In
addition, outside Directors (other than Mr. Peterson) who serve on committees of
the Board (in a capacity other than chairman of a committee) receive $500 for
each meeting attended. The chairman or vice chairman of any Committee may
receive additional compensation to be fixed by the Board. Each non-employee
Director is eligible to receive stock grants and stock options pursuant to The
Price Enterprises Directors' 1995 Stock Option Plan. Employee Directors are
eligible to receive stock grants and stock options pursuant to The Price
Enterprises 1995 Combined Stock Grant and Stock Option Plan.
Directors also receive reimbursement for travel expenses incurred in
connection with their duties as Directors.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table shows, for fiscal years 1994, 1995 and 1996, the
compensation earned by the Chief Executive Officer and the four most highly
compensated executive officers of the Company and its subsidiaries (the "Named
Executive Officers") at the end of fiscal 1996. Amounts shown for fiscal year
1994 represent monies paid and stock options granted by Price/Costco, Inc. to
such employees prior to the formation of Price Enterprises, Inc. as of the
beginning of fiscal 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
------------------------------------------- UNDERLYING
SALARY OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION(S) YEAR ($) BONUS ($) COMPENSATION ($)(1) SARS (#) COMPENSATION ($)(2)
- ------------------------------- --------- --------- ----------- ------------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Price, 1996 225,000 -0- -0- -0- 4,422
President and Chief 1995 243,340 -0- -0- -0- 9,500
Executive Officer 1994 295,385 -0- -0- 34,100 16,759
Theodore Wallace, 1996 200,000 -0- -0- -0- 3,960
Executive Vice-President 1995 215,191 -0- 100,000(3) 100,000 9,500
1994 259,584 36,000 70,528(4) 20,000 16,759
Daniel T. Carter, 1996 175,000 35,000 -0- -0- 5,598
Executive Vice-President, 1995 179,361 35,000 -0- 75,000 9,280
CFO and Secretary 1994 147,692 27,000 -0- 15,000 10,588
Robert M. Gans, 1996 150,000 35,000 -0- -0- 250
Executive Vice-President 1995 132,693 25,000 -0- 75,000 -0-
and General Counsel 1994 N/A N/A N/A N/A N/A
Joseph J. Tebo 1996 159,808 -0- -0- -0- -0-
President of Price 1995 162,176 -0- -0- 100,000 -0-
Ventures, Inc. 1994 N/A N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) Except as otherwise indicated, perquisites to each officer did not exceed
the lesser of $50,000 or 10% of the total salary and bonus for such officer.
(2) The amounts shown for fiscal 1996 constitute contributions to The Price
Enterprises Profit Sharing and 401(k) Plan for the period of September 4,
1995 through December 31, 1995, and the Company's 401(k) matching
contribution of $250 for fiscal 1996 on behalf of each Named Executive
Officer. During fiscal 1996, the "plan year" for The Price Enterprises
Profit Sharing and 401(k) Plan was converted to a calendar year from a
fiscal year. All future profit sharing contributions by the Company to The
Price Enterprises Profit Sharing and 401(k) Plan will be made in January for
the previous calendar year.
(3) Amount constitutes a retention bonus paid to Mr. Wallace for agreeing to
transfer employment from Price/Costco, Inc. to the Company in fiscal 1995.
(4) Represents $52,190 paid to reimburse Mr. Wallace for a decline in the market
value of his home which was sold in connection with his relocation at the
request of Price/Costco, Inc. (net of a mortgage prepayment penalty which
was paid by Mr. Wallace) and $18,338 paid to reimburse Mr. Wallace for
income taxes related to such payments.
7
<PAGE>
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal 1996 and
unexercised options held as of September 1, 1996.
OPTION EXERCISES IN FISCAL 1996
AND SEPTEMBER 1, 1996 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SEPTEMBER 1, SEPTEMBER 1, 1996
1996 (#) ($) (1)
NUMBER OF ---------------- ------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------ ----------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Robert E. Price N/A N/A N/A N/A
Theodore Wallace -0- -0- 20,000/80,000 95,000/380,000
Daniel T. Carter -0- -0- 15,000/60,000 71,250/285,000
Robert M. Gans -0- -0- 15,000/60,000 71,250/285,000
Joseph J. Tebo -0- -0- 20,000/80,000 95,000/380,000
</TABLE>
- ------------------------
(1) Based on a price of $16.00 per share, the last reported sales price of the
Company's Common Stock on August 30, 1996, as quoted by The Nasdaq Stock
Market National Market.
PROFIT SHARING AND 401(K) PLAN
From August 29, 1994 until January 1, 1995, employees of Price/Costco, Inc.,
who were leased to Price Enterprises and its subsidiaries, generally received
benefits under The Price Company Retirement Plan or under The Price Company
401(k) Plan. Subsequent to January 1, 1995, the Board of Directors of Price
Enterprises adopted The Price Enterprises Inc. Profit Sharing and 401(k) Plan
(the "Plan"), which includes terms and conditions substantially similar to The
Price Company Retirement Plan and The Price Company 401(k) Plan.
The Plan is a profit-sharing plan designed to be a "qualified" plan under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), covering all non-union employees who have completed one year of
service, as that term is defined in the Plan. Under the Plan, the Company may,
in its discretion, make annual contributions which shall not exceed for each
participant the lesser of: (a) 25% of the participant's compensation for such
year, or (b) the greater of (i) 25% of the defined benefit dollar limitation
then in effect under section 415(b)(1) of the Code or (ii) $30,000. In addition,
participants may make voluntary contributions. The Plan also permits employees
to defer (in accordance with section 401(k) of the Code) a portion of their
salary and contribute those deferrals to the Plan.
All participants in the Plan are fully vested in their voluntary
contributions and earnings thereon. Vesting in the remainder of a participant's
account is based upon his or her years of service with the Company. A
participant initially is 20% vested after the completion of two years of service
with the Company, an additional 20% vested after the completion of three years
of service, and an additional 20% vested after the completion of each of his or
her next three years of service, so that the participant is 100% vested after
the completion of six years of service.
A participant becomes fully vested in his or her entire account upon
retirement due to permanent disability, attainment of age 65 or death. In
addition, the Plan provides that the Board of Directors of the Company may at
any time declare the Plan partially or completely terminated, in which event the
account of each participant with respect to whom the Plan is terminated will
become fully vested.
8
<PAGE>
The Board of Directors also has the right at any time to discontinue
contributions to the Plan. If the Company fails to make one or more substantial
contributions to the Plan for any period of three consecutive years in each year
of which the Company realized substantial current earnings, such failure will
automatically be deemed a complete discontinuance of contributions. In the event
of such a complete discontinuance of contributions, the account of each
participant will become fully vested.
During fiscal 1996, the "plan year" for The Price Enterprises Profit Sharing
and 401(k) Plan was converted to a calendar year basis from a fiscal year basis.
All future profit sharing contributions by the Company to the Plan will be made
in January for the previous calendar year.
EMPLOYMENT CONTRACTS
Robert M. Gans is the only one of the Named Executive Officers that
presently has an employment agreement with the Company. Mr. Gans entered into an
employment agreement with Price Enterprises for a term of three years commencing
October 17, 1994. Pursuant to this agreement Mr. Gans received a base annual
salary of $150,000 through fiscal year 1996. This base salary was increased by
the Company's Compensation Committee to $175,000 beginning fiscal year 1997. Mr.
Gans may not engage in any activities, with or without compensation, that would
interfere with the performance of his duties or that would be adverse to Price
Enterprises' interests, without the prior written consent of Price Enterprises.
The agreement provides that Mr. Gans will be eligible to participate in the
Company's bonus plan and receive all other benefits offered to officers under
Price Enterprises' standard company benefits practices and plans. Mr. Gans may
terminate the agreement at any time on 90 days' prior written notice. Price
Enterprises may terminate the agreement for cause upon immediate notice thereof,
or upon the death or disability of Mr. Gans. In the event that Price Enterprises
terminates the agreement for any reason other than cause, Mr. Gans shall be
entitled for the remainder of the term of the agreement to the continuation of
his base salary payable in conformity with Price Enterprises' normal payroll
period, and to inclusion in the stock option plan, profit sharing and 401(k)
plan and medical plans of Price Enterprises for the remainder of the term of the
agreement. The foregoing severance benefits are the exclusive benefits that
would be payable to Mr. Gans by reason of his termination, and Price Enterprises
is not obligated to segregate any assets or procure any investment in order to
fund such severance benefits. The agreement also contains confidentiality
provisions and other terms and conditions customary to executive employment
agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Company's Compensation Committee consisted of Ms.
Bekavac, Mr. Galinson and Ms. Hensley. There were no insider participations nor
compensation committee interlocks among the members of the Company's
Compensation Committee during fiscal 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Chief Executive Officer and other senior officers of
the Company (which are the Chief Financial Officer and Executive Vice Presidents
of the Company) is reviewed by the Compensation Committee (the "Committee") of
the Board of Directors. The Committee is composed of three independent
non-employee Directors: Ms. Bekavac, Mr. Galinson and Ms. Hensley. The Committee
is responsible for reviewing salaries, bonuses and stock options of the
Company's executive officers and administering the Company's compensation plans
for senior officers and the Company's stock option plan, including the granting
of options and awards of stock thereunder.
GENERAL COMPENSATION PHILOSOPHY
The Company's executive compensation policies are designed with the
following objectives: (i) to attract and retain talented executives; (ii) to
reward appropriately individual achievement; and (iii) to enhance the financial
performance of the Company, and thus stockholder value, by significantly
aligning the financial interests of the Company's executives with those of its
stockholders. To accomplish these objectives the Company's executive
compensation program consists of: (i) annual base salaries; (ii) cash bonuses;
and (iii) stock option grants.
9
<PAGE>
Executive officers also participate in other benefit plans available to
employees generally, including the Company's Profit Sharing and 401(k) Plan and
a medical plan.
The Committee has reviewed the compensation of all executive officers of the
Company for fiscal year 1996, and has considered management's recommendations
for executive compensation for fiscal year 1997.
ANNUAL BASE SALARIES AND BONUSES
Base salaries are determined by considering the recommendations of the Chief
Executive Officer, together with such factors as job complexity, level of
responsibility, how the position relates to the Company's long-term strategic
goals, and the particular individual's skills, experience, background and
performance. While there are no pre-established weightings given to these
factors, particular importance is placed on attracting and retaining quality
individuals in order to establish and secure an effective executive team for the
Company. During the past year the Committee approved the base salaries of a new
executive officer (George Apostol) and two new senior officers (John Visconsi
and Geoffrey Weir). Additionally, the Committee approved increases in base
salaries (effective fiscal year 1997) for Daniel Carter and Robert Gans.
The Company's discretionary annual bonus program is designed to reward the
Company's executive officers for individual achievement in supporting the
fulfillment of corporate objectives. During the past year the Committee awarded
bonuses to Daniel Carter and Robert Gans.
STOCK OPTIONS
The long-term incentive aspect of the Company's executive compensation
program is realized by the granting of stock options. Stock option awards are
viewed as a particularly effective tool to attract experienced and talented
employees, and to encourage their long-term quality performance with the
Company. Stock options are granted by the Committee at a price equal to the fair
market value on the date of grant. Stock options are generally exercisable at
the rate of 20% per year, thereby providing an incentive for the grantee to
remain with the Company. Since the value of the stock option is dependent upon
stock performance, the stock option program directly aligns employee
compensation with the interests of the Company's stockholders. Stock options are
granted by the Committee based upon the recommendations of senior management. In
making option grants, the Committee considers the anticipated future performance
of the employee and that individual's ability to impact positively the
achievement of the Company's objectives. During the past year the Committee
approved stock option grants to Messrs. Apostol, Visconsi and Weir.
CHIEF EXECUTIVE OFFICER COMPENSATION
Robert Price is the Chairman, Chief Executive Officer and President of the
Company. Mr. Price's significant expertise and potential for guiding the
development of the Company in its formative year were considered by the
Committee in its approval in fiscal year 1995 of his annual base salary of
$225,000. The Committee recognized the continuing value of Mr. Price's expertise
during the transitional fiscal year 1996, and took note of the Company's
operating performance and of Mr. Price's request not to be considered for a
salary increase in determining to leave Mr. Price's compensation at current
levels during the coming fiscal year. No independent surveys have been
commissioned to determine competitive compensation since the Committee considers
Mr. Price's annual base salary to be modest, in view of his position and
responsibilities with the Company. Additionally, Mr. Price declined to be
considered for receipt of either a cash bonus or stock option grant for the
fiscal 1996 period. Mr. Price nonetheless maintains a personal economic interest
in the performance of the Company, in view of Mr. Price's ownership of
approximately 11.3% of the Company's outstanding Common Stock.
10
<PAGE>
OMNIBUS BUDGET RECONCILIATION ACT IMPLICATIONS FOR EXECUTIVE COMPENSATION
It is the responsibility of the Board (or the Compensation Committee) to
address the issues raised by the tax laws which make certain
non-performance-based compensation to executives of public companies in excess
of $1,000,000 non-deductible to the Company. In this regard, a determination
must be made as to whether any actions with respect to this limit should be
taken by the Company. At this time, it is not anticipated that any executive
officer will receive compensation in excess of this limit. Therefore, no action
was taken to comply with the limit. Appropriate action will be taken if it is
warranted in the future.
SUMMARY
It is believed that the above-described cash compensation program and
long-term incentives in the form of stock option awards provided to the
Company's executive officers function effectively, so as to link employee
performance with performance of the Company and increasing stockholder value.
Nancy Bekavac
Murray Galinson
Katherine Hensley
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
shares of the Company's Common Stock during fiscal year 1995 (commencing on
December 21, 1994, the date on which the Company became a publicly-held
corporation) and fiscal year 1996 with the cumulative total return of The Nasdaq
Stock Market Index (US)(1) and a peer group comprised of certain other real
estate operators and lessors(2) over the same period (assuming the investment of
$100 in the Common Stock, stocks comprising The Nasdaq Stock Market Index (US)
and stocks comprising the peer group on December 21, 1994 and the reinvestment
of all dividends).
COMPARISON OF CUMULATIVE TOTAL RETURNS SINCE DECEMBER 21, 1994(3)
AMONG PRICE ENTERPRISES, INC., THE NASDAQ STOCK MARKET INDEX (US)
AND A PEER GROUP OF CERTAIN REAL ESTATE OPERATORS AND LESSORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY INDEX MARKET INDEX PEER INDEX
<S> <C> <C> <C>
12/21/94 100.000 100.000 100.000
12/30/94 91.964 102.061 101.301
1/31/95 78.571 102.633 98.807
2/28/95 88.839 108.061 102.838
3/31/95 83.929 111.263 104.563
4/28/95 83.036 114.765 103.509
5/31/95 84.821 117.725 106.651
6/30/95 98.214 127.265 112.760
7/31/95 103.571 136.620 120.656
8/31/95 104.117 139.388 123.643
9/29/95 114.887 142.594 126.486
10/31/95 104.117 141.777 121.784
11/30/95 110.175 145.106 124.099
12/29/95 110.399 144.337 129.937
1/31/96 109.502 145.048 129.780
2/29/96 111.297 150.576 131.575
3/29/96 113.092 151.077 132.217
4/30/96 115.785 163.611 134.268
5/31/96 112.195 171.124 136.552
6/28/96 109.502 163.424 139.054
7/31/96 105.912 148.895 133.230
8/30/96 114.887 157.199 140.655
</TABLE>
- ------------------------
(1) The Nasdaq Stock Market Index (US) was prepared by the Center for Research
in Security Prices and includes all U.S. Nasdaq Stock Market companies.
11
<PAGE>
(2) The peer group index was prepared by the Center for Research in Security
Prices and includes certain U.S.-based securities traded on the NYSE, AMEX
and NASDAQ with standard industrial codes (SIC) of 6510-6519, generally
comprising Real Estate Operators (except Developers) and Lessors. The peer
group companies include 99 Cents Only Stores, Ambassador Apartments, Inc.,
American Industrial Properties, REIT, Atlantic Realty Trust, Inc., Cardinal
Realty Services, Inc., Centerpoint Properties Corp., Crocker Realty
Investors, Inc., EB Inc., Equus Gaming Co., L.P., FAC Realty, Inc., Felcor
Suite Hotels, Inc., First Washington Realty Trust, Inc., Great Northern Iron
Ore Properties, Gyrodyne Company America, Inc., Home Holdings, Inc.,
Hospitality Franchise Systems, Inc., Independence Holding Co., Insignia
Financial Group, Inc., Intergroup Corp., Irvine Apartment Communities, Inc.,
Just Like Home, Inc., LNH REIT, Inc, J. W. Mays, Inc., Midwest Real Estate
Shopping Center, L.P., Monmouth Capital Corp., NHP Incorporated, National
Capital Management Corp., Pamida Holdings Corp., Presidential Realty Corp.,
The Price REIT, Prime Residential, Inc., Realco, Inc., Resurgence
Properties, Inc., Retirement Care Associates, Inc., Rouse Company, Saks
Holdings, Inc., Shopco Laurel Center, L.P., Shopco Stores, Inc., Simon
Debartolo Group, Inc., Simon Property Group, Inc., Sizeler Property
Investors, Inc., United Dominion Realty Trust, Inc., United Mobile Homes,
Inc., Urban Shopping Centers, Inc. and Weingarten Realty Investors. Peer
return is weighted by market capitalization.
(3) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns. The lines on the graph represent
monthly index levels derived from compounded daily returns including all
dividends. The indices are reweighted daily, using market capitalization on
the previous trading day.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH THE PRICE REIT
The Company has engaged in certain transactions which indirectly benefit The
Price REIT, a publicly-held real estate investment trust. Sol Price, who
beneficially owns approximately 36.4% of the Company's outstanding Common Stock,
is the father of Robert Price, the Chairman of the Board, President and Chief
Executive Officer of the Company. Sol Price also has beneficial ownership
through various family and charitable trusts of approximately 9% of the Class B
Common Stock of The Price REIT. The Price REIT owns all of the outstanding
preferred stock and is entitled to receive 90% of the cash flow of K&F
Development Company.
On August 29, 1994, the Company entered into a development agreement with
K&F Development Company for the development of four properties. Under this
agreement, K&F Development Company will receive development fees of 6% of the
aggregate construction costs expended with respect to such properties. This
agreement was terminated on January 15, 1996. The amount earned by K&F
Development Company under this agreement in fiscal year 1996 was $73,000.
K&F Development Company and The Price Company, a subsidiary of PriceCostco,
previously entered into a development agreement dated December 16, 1993, in
connection with the development (except for the development of the Price Club
located on such property) of the Company's property located in Pentagon City,
Virginia (the "Pentagon City Property"). In connection with the Exchange Offer
transaction, PriceCostco assigned this development agreement to the Company.
Pursuant to this agreement (i) K&F Development Company received a development
fee equal to 3% of the aggregate construction costs expended with respect to
such property; (ii) all operating cash flows generated from the Pentagon City
Property (other than the Price Club located on such property) were allocated to
the Company until the property generated a return on "invested capital" of 9%
("invested capital" means all costs associated with the development of the
property, plus 4% of such costs, compounded annually); and (iii) all operating
cash flows in excess of the amount allocated to the Company (as described in the
previous clause) were allocated 75% to the Company and 25% to K&F Development
Company. In addition, upon any sale of the Pentagon City Property by the Company
in which the return on invested capital exceeds 9%, K&F Development Company was
entitled to receive 25% of the net sale proceeds in excess of the Company's
invested capital and its return on such invested capital of 9%. On October 1,
1995 the Company and K&F terminated the Pentagon City development agreement.
Prior to termination the Company paid to K&F $846,000, and under the terms of
the termination agreement, the Company paid K&F Development Company an
additional $850,000 in full and final settlement of any and all remaining
amounts due to K&F under the Pentagon City Property development agreement.
On August 29, 1994, the Company entered into a Consulting Agreement with K&F
Development Company pursuant to which K&F would provide strategic and consulting
services for the next two years to the Company. K&F Development Company was to
receive $500,000 annually as payment for such services. During fiscal year 1995,
K&F Development Company received $500,000 under the Consulting Agreement. The
Consulting Agreement was terminated by mutual agreement on September 3, 1995.
The Company and K&F entered in a new Consulting Agreement as of September 4,
1995 which expired on February 28, 1996. K&F received $90,000 as payment for
services performed under the new Consulting Agreement.
On March 7, 1995, the Company entered into three separate Brokerage
Agreements with K&F Development Company to sell and/or lease 16 of the Company's
properties. Under the terms of these Brokerage Agreements, K&F will earn a
brokerage fee of up to 5.0% of ten times the fixed annual rent for new tenants
introduced by K&F. In addition, K&F can earn up to a maximum of 5.0% of the
gross proceeds received by the Company upon the sales of these properties, if
sold to purchasers introduced by K&F. K&F received aggregate payments of
$163,000 under these agreements, which expired on September 7, 1995.
13
<PAGE>
On September 29, 1995, the Company entered into a Brokerage and Consulting
Agreement with K&F Development Company for the development of property located
in Dallas, Texas. Pursuant to this agreement, K&F receives (i) development fees
of $100,000, and (ii) an incentive bonus equal to (A) 25% of all profits (as
defined therein) earned by the Company in excess of $1,550,000, less (B) the
development fees earned by K&F. In addition, K&F will act as the exclusive
broker for this project. As the exclusive broker, K&F will earn a brokerage fee
equal to 3.0% of ten times the fixed annual rent paid by tenants of the project,
subject to a cap of $850,000. In fiscal year 1996 K&F was paid $80,000 in
development fees and $744,000 in brokerage fees.
In addition, The Price REIT performs property management services for
certain of the properties owned by the Company. In fiscal year 1996 the Company
paid $816,000 in fees to The Price REIT for such management services.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company's financial statements for the year ended September 1, 1996 have
been examined by Ernst & Young, LLP. A representative of Ernst & Young, LLP is
expected to be available at the Meeting to respond to appropriate questions and
to make a statement if he desires to do so. The Company's Audit Committee will
select independent auditors for the current year sometime after the Meeting.
On December 21, 1994, the Company and Price/Costco, Inc. ("PriceCostco")
consummated an exchange offer transaction by which PriceCostco, the Company's
former corporate parent, implemented a spin-off reorganization that resulted in
the Company becoming a separate, publicly-held corporation. Following the
consummation of such transaction, the Company determined to change its principal
independent accountant from Arthur Andersen LLP, the principal independent
accountant of PriceCostco, to Ernst & Young LLP. The Board of Directors of the
Company approved the change of principal independent accountant to Ernst & Young
LLP on January 18, 1995. Arthur Andersen LLP was dismissed as the Company's
principal independent accountant as of January 24, 1995, and Ernst & Young LLP
was engaged as of the same date.
The report of Arthur Andersen LLP on the financial statements for the
Company's fiscal year 1994 (which was the only year in which Arthur Andersen LLP
performed an audit for the Company) did not contain any adverse opinion or
disclaimer of opinion, nor was it qualified as to uncertainty, audit scope or
accounting principles. In addition, during fiscal year 1995, there were no
disagreements with Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Arthur Andersen LLP, would
have caused Arthur Andersen LLP to make a reference to the subject matter of the
disagreement in connection with its reports.
SECTION 16(A) REPORTING
Under Section 16(a) of the Exchange Act, directors, executive officers and
beneficial owners of 10% or more of the Common Stock ("Reporting Persons") are
required to report to the Securities and Exchange Commission on a timely basis
the initiation of their status as a Reporting Person and any changes with
respect to their beneficial ownership of the Common Stock. Based solely on its
review of such forms received by it, the Company believes that all filing
requirements applicable to its directors, executive officers and beneficial
owners of 10% or more of the Common Stock were complied with during fiscal 1996.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder of the Company intended to be presented at the
next Annual Meeting of Stockholders of the Company must be received by the
Secretary of the Company not later than July 31, 1997 to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
14
<PAGE>
OTHER MATTERS
The Company does not know of any business other than that described herein
which will be presented for consideration or action by the stockholders at the
Annual Meeting. If, however, any other business shall properly come before the
Annual Meeting, shares represented by Proxies will be voted in accordance with
the best judgment of the persons named therein or their substitutes.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders is being mailed with this Proxy
Statement to stockholders on or about November 27, 1996. Upon request the
Company will furnish the Annual Report to any stockholder.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel T. Carter, SECRETARY
San Diego, California
November 27, 1996
15
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
PROXY
PRICE ENTERPRISES, INC.
4649 MORENA BOULEVARD
SAN DIEGO, CALIFORNIA 92117
The undersigned Stockholder(s) of PRICE ENTERPRISES, INC. (the "Company")
hereby constitutes and appoints Robert E. Price and Daniel T. Carter, and each
of them, attorneys and proxies of the undersigned, each with power of
substitution, to attend, vote and act for the undersigned at the Annual Meeting
of Stockholders of the Company to be held on January 14, 1997, and at any
adjournment or postponement thereof, according to the number of shares of
Common Stock of the Company which the undersigned may be entitled to vote, and
with all the powers which the undersigned would possess if personally present,
as follows:
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted for election of the Board's nominees for directors.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE>
Please mark your votes as indicated in this example /x/
FOR ALL NOMINEES LISTED BELOW (except as marked to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
1. ELECTION OF DIRECTORS
William P. Dickey Leon C. Janks
Murray L. Galinson Paul A. Peterson
Katherine L. Hensley Robert E. Price
WITHHELD FOR: (To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
_______________________________________________________________________________
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO TRANSACT SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
I plan to attend the meeting / /
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
Signature(s)____________________________________________ Dated________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
