<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 Section240.14a-11(c) or
Section240.14a-12
RECKSON ASSOCIATES REALTY CORP.
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
------------------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of Reckson Associates Realty Corp. (the "Company") will be
held on Thursday, May 20, 1999 at 9:30 a.m. at the Omni, 333 Earl Ovington
Boulevard, Mitchel Field, New York, for the following purposes:
1. To elect four Class I directors of the Company to serve until the 2002
Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified;
2. To ratify the selection of Ernst & Young LLP as the independent auditors
of the Company for the fiscal year ending December 31, 1999; and
3. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned or to which the Annual Meeting
may be postponed.
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 at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, $.01 par value per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
BY ORDER OF THE BOARD OF DIRECTORS
[LOGO]
GREGG M. RECHLER
SECRETARY
Melville, New York
March 31, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
------------------------
PROXY STATEMENT
------------------
FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Reckson Associates Realty Corp. (the
"Company") for use at the 1999 Annual Meeting of Stockholders of the Company to
be held on May 20, 1999, and at any adjournments or postponements thereof (the
"Annual Meeting"). At the Annual Meeting, stockholders will be asked to vote
upon (1) the election of four Class I directors of the Company, (2) to ratify
the selection of Ernst & Young LLP as the independent auditors of the Company
for the fiscal year ending December 31, 1999, and (3) to act upon any other
matters that may properly be brought before the Annual Meeting and at any
adjournments or postponements thereof.
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are first being sent to stockholders on or about April 6, 1999. The Board
of Directors has fixed the close of business on March 15, 1999 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting (the "Record Date"). Only stockholders of record of the
Company's common stock, par value $.01 per share (the "Common Stock"), at the
close of business on the Record Date will be entitled to notice of and to vote
at the Annual Meeting. As of the Record Date, there were 40,053,358 shares of
Common Stock outstanding and entitled to vote at the Annual Meeting. Holders of
Common Stock outstanding as of the close of business on the Record Date will be
entitled to one vote for each share held by them on the Record Date.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of a plurality of the shares of
Common Stock cast on the matter at the Annual Meeting (assuming a quorum is
present) is required for the election of Class I directors, and the affirmative
vote of the Holders of a majority of the shares of Common Stock cast on the
matter at the Annual Meeting (assuming a quorum is present) is required for each
of the ratification of the Company's auditors, and the approval of any other
matters properly presented at the Annual Meeting for stockholder approval. Under
Maryland law, abstentions and broker "non-votes", or proxies from brokers or
nominees indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote such shares on a particular
matter with respect to which the broker or nominee does not have discretionary
voting power, will not be counted as votes cast and will have no effect on the
results of the votes.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE FOUR
NOMINEES FOR CLASS I DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, AND
FOR RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF ERNST & YOUNG LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN THE PROXY
STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS ARE
PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in
<PAGE>
person whether or not a proxy has been previously given, but the presence
(without further action) of a stockholder at the Annual Meeting will not
constitute revocation of a previously given proxy.
The Company's 1998 Annual Report, including financial statements for the
fiscal year ended December 31, 1998, accompanies the proxy solicitation
materials. The Annual Report, however, is not part of the proxy solicitation
material.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company consists of ten members and is divided
into three classes, with the directors in each class serving for a term of three
years and until their successors are duly elected and qualified. The term of one
class expires at each annual meeting of stockholders.
At the Annual Meeting, four directors will be elected to serve until the
2002 Annual Meeting and until their successors are duly elected and qualified.
The Board of Directors has nominated Mr. Scott H. Rechler, Mr. Herve A.
Kevenides, Mr. Conrad D. Stephenson and Mr. Lewis S. Ranieri to serve as Class I
directors (the "Nominees"). Each of the Nominees is currently serving as a Class
I director of the Company. The Board of Directors anticipates that each of the
Nominees will serve, if elected, as a director. However, if any person nominated
by the Board of Directors is unable to accept election, the proxies will be
voted for the election of such other person or persons as the Board of Directors
may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table and biographical descriptions set forth certain
information with respect to the four Nominees for election as Class I directors
at the Annual Meeting, the continuing directors whose terms expire at the annual
meetings of stockholders in 2000 and 2001 and the executive officers who are not
directors, based upon information furnished to the Company by each director and
executive officer.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
DIRECTOR OF OWNERSHIP(L) OF
NAME AGE SINCE COMMON STOCK CLASS(2)
- ------------------------------------------------------------------ --- ----------- ------------------ ---------
<S> <C> <C> <C> <C>
CLASS I NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING (TERM TO
EXPIRE IN 2002)
Scott H. Rechler.................................................. 31 1994 995,109(3) 2.06%
Herve A. Kevenides................................................ 60 1995 21,000(4) *
Conrad D. Stephenson.............................................. 71 1995 21,000(4) *
Lewis S. Ranieri.................................................. 52 1997 15,000(5) *
CLASS II CONTINUING DIRECTORS (TERM EXPIRES IN 2000)
Donald J. Rechler................................................. 64 1994 1,952,893(6) 4.04%
Mitchell D. Rechler............................................... 39 1994 977,564(7) 2.02%
Leonard Feinstein................................................. 61 1995 55,400(8) *
CLASS III CONTINUING DIRECTORS (TERM EXPIRES IN 2001)
Roger Rechler..................................................... 57 1994 1,818,445(9) 3.77%
Harvey Blau....................................................... 63 1995 21,000(4) *
John V.N. Klein................................................... 67 1995 23,800(4) *
</TABLE>
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* Less than one percent.
(1) All information has been determined as of March 10, 1999. For purposes of
this table a person is deemed to have "beneficial ownership" of the number
of shares of Common Stock that a person has the right to acquire pursuant to
the exercise of stock options exercisable within sixty days or the
redemption of units (the "Units") of limited partnership interest in Reckson
Operating Partnership,
2
<PAGE>
L.P., a Delaware limited partnership (the "Operating Partnership") (assuming
the Company elects to issue Common Stock rather than pay cash upon such
redemption). Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, dated as of June 2, 1995,
and as amended, the Operating Partnership is obligated to redeem Units for
cash, or, at the option of the Company, shares of Common Stock. See
"Executive Compensation" for a discussion of the vesting of stock options
granted to directors and officers.
(2) For purposes of computing the percentage of outstanding shares of Common
Stock held by each person, any shares of Common Stock which such person has
the right to acquire pursuant to the exercise of a stock option exercisable
within 60 days is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percent ownership of any other
person.
(3) Includes (a) 75,867 shares of Common Stock, including 2,367 shares owned in
trust for Mr. Scott H. Rechler's child, (b) 526,500 exercisable options and
(c) 392,742 Units, including 194,352 Units owned directly, 70,913 Units
owned through a trust and 127,477 Units owned through corporations and
partnerships.
(4) Includes options to purchase 21,000 shares of Common Stock.
(5) Includes options to purchase 15,000 shares of Common Stock.
(6) Includes (a) 424,767 shares of Common Stock owned directly, (b) 517,500
exercisable options and (c) 1,010,626 Units, including 45,826 Units owned
directly and 964,800 Units owned through corporations and partnerships.
(7) Includes (a) 77,710 shares of Common Stock, including 4,710 shares owned in
trust for Mr. Mitchell D. Rechler's children, (b) 501,500 exercisable
options and (c) 398,354 Units, including 202,576 Units owned directly,
70,913 Units owned through a trust and 124,865 Units owned through
corporations and partnerships.
(8) Includes (a) 21,000 shares of Common Stock owned directly, (b) options to
purchase 21,000 shares of Common Stock and (b) 13,400 shares of Common Stock
owned indirectly through a partnership.
(9) Includes (a) 396,611 shares of Common Stock, including 389,767 shares owned
directly and 6,844 shares owned by Mr. Roger Rechler's wife, (b) 417,500
exercisable options, and (c) 1,004,334 Units, including 40,576 Units owned
directly and 963,758 Units owned through corporations and partnerships.
CLASS I NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING--TERM TO EXPIRE IN 2002
SCOTT H. RECHLER has served as Chief Operating Officer and a director of the
Company since its formation and has served as President of the Company since
February 1997. In addition, until February 1997, Mr. Rechler served as Executive
Vice President of the Company since its formation. Mr. Rechler also serves as
President, Chief Executive Officer and a director of Reckson Service Industries,
Inc. ("RSI"). Mr. Rechler has been employed at Reckson since 1989. Prior to the
Company's initial public offering of its Common Stock in June 1995 (the "IPO"),
Mr. Rechler directed the financing of approximately $200 million of mortgage
debt and the acquisition of property having a value in excess of $100 million
for Reckson Associates, a predecessor to the Company ("Reckson"). He is a member
of the Board of Directors of the Long Island Children's Museum. Mr. Rechler is a
graduate of Clark University and received a Master's Degree in Finance with a
specialization in real estate from New York University. He is the son of Roger
Rechler and the brother of Gregg M. Rechler.
HERVE A. KEVENIDES has served as a director of the Company since 1995. Since
1997, Mr. Kevenides has served as the Managing Director, Research Group for
Landauer Associates, a real estate consulting and valuation firm. Mr. Kevenides
served from 1995 to 1996 as the director of the Real Estate Products Group
3
<PAGE>
for Ceres Financial Concepts, N.A. Mr. Kevenides is the president and director
of research of Metropolitan Analysis & Forecasting Corporation, an international
real estate economics and market research firm. Mr. Kevenides has served in this
position since 1988. Mr. Kevenides has served as an Adjunct Associate Professor
of the Masters in Real Estate Program of New York University since 1989 and was
promoted to full professor in 1998. Mr. Kevenides was a vice president and
director of real estate economics and market research for Chemical Bank from
1981 to 1988, and a vice president and manager of real estate market research
for The Chase Manhattan Bank from 1972 to 1981. Mr. Kevenides holds a Masters of
Business Administration from New York University.
CONRAD D. STEPHENSON has served as a director of the Company since 1995. Mr.
Stephenson served as the chief executive officer of Pan Am Equities Inc., a
property ownership and management company from 1993 to 1997, and currently
serves as a consultant thereto. Mr. Stephenson was employed by The Comras
Company, a real estate company, from 1990 to 1993, and served as the vice
president in the tri-state and northeast real estate lending division of the
First National Bank of Chicago from 1987 to 1990. Mr. Stephenson was the vice
president in charge of all commercial real estate lending activities of The
Bowery Savings Bank from 1985 to 1987, and was a vice president of The Chase
Manhattan Bank from 1975 to 1985. Mr. Stephenson has served as a governor, vice
president and a member of the executive committee of the Real Estate Board of
New York. Mr. Stephenson holds a bachelor's degree from Fordham University and a
Masters of Business Administration from New York University. Mr. Stephenson is a
retired colonel of the U.S. Army Reserves, with which he served for 35 years.
LEWIS S. RANIERI has served as a director of the Company since 1997. Mr.
Ranieri is the chairman of Bank United Corp., a position he has held since 1988.
He is also the chairman and chief executive officer of Ranieri & Co., Inc.,
positions he has held since founding Ranieri & Co. in 1988. Mr. Ranieri is the
founder of Hyperion Partners L.P. and Hyperion Partners II L.P. He is also
Chairman of Hyperion Capital Management, Inc. and The Hyperion Total Return
Fund, Inc. He is director of Transworld HealthCare, Inc., the Hyperion 1999 Term
Trust, Inc., the Hyperion 2002 Term Trust, Inc. and Hyperion 2005 Investment
Grade Opportunity Trust, Inc. Mr. Ranieri is also chairman and president of
various other indirect subsidiaries of Hyperion. He is a director of Delphi
Financial Group, Inc. and Delphi International Ltd. Prior to forming Hyperion,
Mr. Ranieri had been vice chairman of Salomon Brothers Inc. Mr. Ranieri helped
develop the capital markets as a source of funds for housing and commercial real
estate, established Salomon's leadership position in the mortgage-backed
securities area, and also led the effort to obtain Federal legislation to
support and build the market. Mr. Ranieri has served on the National Association
of Home Builders Mortgage Roundtable continuously since 1986. He was inducted
into the National Housing Hall of Fame in 1997. Mr. Ranieri also acts as a
trustee or director of various environmental and religious institutions such as
the Environmental Defense Fund and Shrine of Elizabeth Ann Seton/Our Lady of the
Rosary Church.
CLASS II CONTINUING DIRECTORS--TERM EXPIRES IN 2000
DONALD J. RECHLER has served as Chairman of the Board, Chief Executive
Officer and a director of the Company since its formation. Mr. Rechler also
served as President of the Company from its formation until February 1997. Mr.
Rechler also serves as Chairman of the Board and a director of RSI. Prior to the
Company's IPO, Mr. Rechler was a co-founder and general partner of Reckson
Associates. He is a founder and former President and Chairman of the Association
For A Better Long Island, a founder of the Long Island Commercial & Industrial
Development Association, a member of the Board of Directors of the Development
Division of North Shore Hospital, a member of the Board of Directors of the Long
Island Philharmonic and a member of the Council of Overseers of Long Island
University, C.W. Post College. Mr. Rechler is a graduate of the University of
Miami. Mr. Rechler is the father of Mitchell D. Rechler and the brother of Roger
Rechler.
MITCHELL D. RECHLER has served as Executive Vice President and a director of
the Company since its formation. Mitchell D. Rechler also serves as the
President of Reckson Management Group, Inc. (the
4
<PAGE>
"Management Company"). From 1981 to 1985, he was employed by Reckson in various
non-supervisory roles including positions in property management, construction,
acquisitions and leasing. Mr. Rechler also serves as Secretary, a member of the
Management Advisory Committee and a director of RSI. Since 1986, Mr. Rechler has
served as an executive vice president of Reckson, responsible for all leasing
activities including the coordination of leasing and marketing strategies and
overseeing tenant relations. Mr. Rechler has served as President of the
Management Company since its organization in 1991. Mr. Rechler serves on the
executive committee of the Children's Medical Fund of Schneider Children's
Hospital of Long Island Jewish Medical Center and as a member of the board of
directors of the Long Island Friends of the Arts. He is a graduate of Emory
University. He is the son of Donald J. Rechler.
LEONARD FEINSTEIN has served as a director of the Company since 1995. Mr.
Feinstein is the co-founder and the president and co-chief executive officer of
Bed Bath & Beyond Inc., a New York Stock Exchange listed company. Mr. Feinstein
has served in such capacity since 1992. Mr. Feinstein served as co-chief
executive officer, treasurer and secretary of Bed Bath & Beyond Inc. from 1971
to 1992.
CLASS III CONTINUING DIRECTORS--TERM EXPIRES IN 2001
ROGER RECHLER has served as Vice Chairman of the Board and a director of the
Company since its formation and as an Executive Vice President of Development
since February 1997. Mr. Rechler also serves as a member of the Management
Advisory Committee and a director of RSI. Prior to the Companys' IPO, Mr.
Rechler was a co-founder and general partner of Reckson Associates. Mr. Rechler
is responsible for the supervision of property development and construction,
architectural and design-services, interior construction and property
management. Mr. Rechler attended the University of Miami. Mr. Rechler is the
father of Scott H. Rechler and Gregg M. Rechler and the brother of Donald J.
Rechler.
HARVEY BLAU has served as a director of the Company since 1995. Mr. Blau is
a senior partner of the law firm of Blau, Kramer, Wachtler & Lieberman, P.C. and
has been associated with such firm (including its predecessors) since 1966. Mr.
Blau has served as the Chairman of the Board of Aeroflex, Incorporated since
1991, the Chairman of the Board of the Griffon Corporation and a Director of Nu
Horizons Electronics Corp. since 1984. Mr. Blau serves as a Trustee of Benjamin
N. Cardozo School of Law and as a Trustee of the Incorporated Village of Old
Westbury, New York. Mr. Blau holds a bachelor's degree from New York University,
a law degree from Columbia University School of Law and an advanced law degree
from New York University Graduate School of Law.
JOHN V.N. KLEIN has served as a director of the Company since 1995. Mr.
Klein was the Managing Attorney of the law firm of Meyer, Suozzi, English &
Klein, P.C. between 1984 and 1997. Mr. Klein served as a Director of Fleet Bank
from 1980 to 1994. Mr. Klein has also been a member of the advisory board of St.
Joseph's College, Patchogue, New York since 1980. For more than five years Mr.
Klein has served as Director of Pocono Hotels Corporation, a hotel owner and
operator. Mr. Klein has served in various government positions on Long Island,
including County Executive of Suffolk County, New York from 1972 to 1979. Mr.
Klein holds a bachelor's degree and a law degree from the University of
Virginia.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
MICHAEL MATURO has served as an Executive Vice President, Chief Financial
Officer and Treasurer of the Company since 1995. Mr. Maturo also serves as
Executive Vice President, Chief Financial Officer, Treasurer and director of
RSI. Prior to joining the Company, Mr. Maturo was a senior manager at E&Y
Kenneth Leventhal Real Estate Group (formerly Kenneth Leventhal & Company), a
public accounting and consulting firm. He specialized in diverse phases of real
estate finance including corporate and property debt financings and
recapitalization transactions. Mr. Maturo is a graduate of Seton Hall University
with a degree in accounting and finance and is a certified public accountant.
Mr. Maturo is 37 years old.
5
<PAGE>
GREGG M. RECHLER has served as an Executive Vice President and Secretary of
the Company since its formation. Mr. Rechler also serves as President of Reckson
Construction Group, Inc. Mr. Rechler also serves as a member of the Management
Advisory Committee and a director of RSI. From 1985 to 1988, Mr. Rechler held
non-supervisory roles at Reckson in the construction and property management
areas. Beginning in 1989, as an executive vice president of Reckson, he served
as the person responsible for the construction of the Omni (a 575,000 square
foot office building) and supervised all construction aspects of this project.
Mr. Rechler is a member of the Board of Directors of the Long Island chapter of
the Building Owners and Managers Association. Mr. Rechler attended the New York
Institute of Technology. He is the son of Roger Rechler and the brother of Scott
H. Rechler. Mr. Rechler is 32 years old.
CHAIRMAN OF THE BOARD EMERITUS
WALTER GROSS has served as Chairman of the Board Emeritus of the Company
since its formation. For over 40 years, Mr. Gross has been actively involved in
the development and operation of industrial and office properties on Long
Island. Together with the late William Rechler, Mr. Gross conceived of and
developed Vanderbilt Industrial Park, the first planned industrial park built on
Long Island. He also owned and operated Walter J. Gross Construction Corp., a
general contracting firm, that has constructed in excess of 3,000,000 square
feet on behalf of clients including B.F. Goodrich, Sears and The Prudential
since 1970.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company is managed by a ten member Board of Directors, a majority of
whom are independent of the Company's management. The Board of Directors held
fourteen meetings during fiscal year 1998. Each of the directors attended at
least 75% of the total number of meetings of the Board of Directors and of the
committees of the Company of which he was a member during 1998, except for John
V.N. Klein, Leonard Feinstein and Lewis S. Ranieri.
AUDIT COMMITTEE. The Audit Committee, which consists of Messrs. Feinstein
and Klein, makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagements, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
held one meeting during fiscal year 1998.
EXECUTIVE COMMITTEE. Subject to the supervision and oversight of the Board
of Directors, the Executive Committee, which consists of Donald J. Rechler,
Scott H. Rechler, Herve A. Kevenides, and Conrad D. Stephenson, has the
authority to approve the acquisition, financing and disposition of investments
by the Company and to authorize the execution of certain contracts and
agreements, including those relating to the borrowing of money by the Company
and to exercise generally all other powers of the Board of Directors, except for
those which require action by all Directors or the Independent Directors under
the Articles of Incorporation or By-Laws of the Company or under applicable law.
The Executive Committee held eight meetings during fiscal year 1998.
COMPENSATION COMMITTEE. The Compensation Committee, which consists of
Harvey Blau and Leonard Feinstein, makes recommendations and exercises all
powers of the Board of Directors in connection with compensation matters,
including incentive compensation and benefit plans. The Compensation Committee
also has authority to grant awards under the Company's stock option plans. The
Compensation Committee held two meetings during fiscal year 1998.
The Board of Directors does not have a standing nominating committee. The
full Board of Directors performs the functions of such a committee.
6
<PAGE>
DIRECTOR COMPENSATION
Each of the non-employee directors of the Company receives an annual
director's fee of $15,000. Each non-employee director also receives $500 for
each regular quarterly meeting of the Board of Directors attended, $500 for each
special meeting of the Board of Directors attended, $250 for each special
telephonic meeting of the Board of Directors participated in and $500 for each
committee meeting attended. Each non-employee director appointed or elected for
the first time receives an initial option to purchase 6,000 shares of Common
Stock at the market price of the Common Stock on the date of grant. In addition,
following each annual meeting of stockholders each of the Company's non-employee
directors will receive an option to purchase 2,000 shares of Common Stock at the
market price of the Common Stock on the date of grant. All options granted to
non-employee directors vest on the date of grant. On May 29, 1998, each
non-employee director was granted an option to purchase 2,000 shares of Common
Stock at $24.791 per share. Also, on August 6, 1998, each non-employee director
was granted an option to purchase 10,000 shares of Common Stock at $21.563 per
share.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has selected the accounting firm of Ernst & Young LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1999, subject to ratification of this appointment by the stockholders of the
Company. Ernst & Young LLP has served as the Company's independent auditors
since the Company's formation in September 1994 and is considered by management
of the Company to be well qualified. The Company has been advised by that firm
that neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. A
representative of Ernst & Young LLP will be present at the Annual Meeting, will
be given the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF THE INDEPENDENT AUDITORS.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the base compensation
awarded for the past three fiscal years to each of the five most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers") whose base salary, on an annualized basis, exceeded
$100,000 during the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SALARY(1) BONUSES LONG TERM ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(3) ($) OPTIONS(2) ($)
- ---------------------------------------------------------- --------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Donald J. Rechler......................................... 1998 $ 500,000 $ 500,000 122,500 --
Chief Executive Officer 1997 $ 325,000 $ 390,000 375,000 --
1996 $ 200,000 $ 200,000 -- --
Scott H. Rechler.......................................... 1998 $ 400,000 $ 400,000 122,500 --
President and Chief Operating Officer 1997 $ 250,000 $ 300,000 300,000 --
1996 $ 150,000 $ 150,000 -- --
Michael Maturo............................................ 1998 $ 300,000(4) $ 300,000 122,500 --
Executive Vice President, Chief Financial Officer and 1997 $ 200,000(4) $ 240,000 275,000 --
Treasurer 1996 $ 162,500(4) $ 162,500 -- --
Mitchell D. Rechler....................................... 1998 $ 300,000 $ 300,000 122,500 --
Executive Vice President and President of Reckson 1997 $ 200,000 $ 240,000 275,000 --
Management Group, Inc. 1996 $ 150,000 $ 150,000 -- --
Gregg M. Rechler.......................................... 1998 $ 300,000 $ 300,000 122,500 --
Executive Vice President and Secretary and President of 1997 $ 200,000 $ 240,000 275,000 --
Reckson Construction Group, Inc. 1996 $ 150,000 $ 150,000 -- --
</TABLE>
- ------------------------
(1) The base salaries of Donald J. Rechler, Scott H. Rechler, Michael Maturo and
Mitchell D. Rechler are paid by the Management Company and the base salary
of Gregg M. Rechler is paid by the Construction Company. The Company and the
Operating Partnership reimburse the appropriate subsidiary corporation for
time spent by the Named Executive Officer on the business of the Company or
the Operating Partnership, respectively.
(2) As of March 10, 1999, options to purchase 2,524,500 shares of Common Stock
have been granted to the Named Executive Officers.
(3) Excludes loan forgiveness pursuant to the terms of the 1997 Stock Loans and
related tax payments in the following amounts: Donald J. Rechler--$314,100,
Scott H. Rechler--$235,600, Michael Maturo-- $184,400, Mitchell D.
Rechler--$184,400 and Gregg M. Rechler--$193,900.
(4) Excludes loan forgiveness in the amount of $100,000 pursuant to the terms of
Mr. Maturo's 1995 employment and noncompetition agreement with the Company.
8
<PAGE>
OPTION GRANTS FOR FISCAL YEAR 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
OPTIONS EXERCISE COMMON STOCK PRICE
GRANTED TO PRICE APPRECIATION FOR
EMPLOYEES PER SHARE OF OPTION TERM(1)
OPTIONS FOR COMMON --------------------------
NAME GRANTED(2) FISCAL YEAR STOCK(3) EXPIRATION DATE 5%(4) 10%(5)
- ------------------------------ ----------- ------------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Donald J. Rechler............. 122,500 11.21% $ 21.875 Aug. 11, 2008 $ 1,685,233/ $ 4,270,718
Scott H. Rechler.............. 122,500 11.21% $ 21.875 Aug. 11, 2008 $ 1,685,233/ $ 4,270,718
Michael Maturo................ 122,500 11.21% $ 21.875 Aug. 11, 2008 $ 1,685,233/ $ 4,270,718
Mitchell D. Rechler........... 122,500 11.21% $ 21.875 Aug. 11, 2008 $ 1,685,233/ $ 4,270,718
Gregg M. Rechler.............. 122,500 11.21% $ 21.875 Aug. 11, 2008 $ 1,685,233/ $ 4,270,718
</TABLE>
- ------------------------
(1) In accordance with the rules of the Securities and Exchange Commission
("SEC"), these amounts are the hypothetical gains of "option spreads" that
would exist for the respective options based on assumed rates of annual
compound share price appreciation of 5% and 10% from the date the options
were granted over the full option term. No gain to the optionee is possible
without an increase in the price of Common Stock, which would benefit all
shareholders.
(2) All options are granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant and have a term of not more
than ten years from the date of grant. The options granted for fiscal year
1998 were vested on the date of grant.
(3) Based on the fair market value of the Common Stock, $21.875, on August 11,
1998, the date of grant.
(4) An annual compound share price appreciation of 5% from $21.875, the fair
market value of the Common Stock on August 11, 1998, yields a price of
$35.632 per share of Common Stock.
(5) An annual compound share price appreciation of 10% from $21.875, the fair
market value of the Common Stock on August 11, 1998, yields a price of
$56.738 per share of Common Stock.
No options were exercised by the Named Executive Officers in 1998. The
following table sets forth the value of options at the end of 1998 by the
Company's Named Executive Officers.
AGGREGATED FISCAL YEAR-END 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END(#) YEAR-END($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Donald J. Rechler.............................................. 517,500/0 $ 184,961/$0
Scott H. Rechler............................................... 526,500/0 $ 1,037,267/$0
Michael Maturo................................................. 477,500/0 $ 850,001/$0
Mitchell D. Rechler............................................ 501,500/0 $ 1,037,267/$0
Gregg M. Rechler............................................... 501,500/0 $ 1,037,267/$0
</TABLE>
- ------------------------
(1) The value of unexercised in-the-money options at fiscal year-end based on
the fair market value of Common Stock of $22.1875 per share, as of December
31, 1998.
9
<PAGE>
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
Each of the Named Executive Officers has entered into an employment and
noncompetition agreement and a severance agreement with the Company.
The employment and noncompetition agreements with each of Donald J. Rechler,
Scott H. Rechler, Michael Maturo, Mitchell D. Rechler and Gregg Rechler were
renewed, and an employment and noncompetition agreement for Roger Rechler was
executed, on June 1, 1998 for 5 year terms, unless in each case otherwise
extended. The term of each of the severance agreements is identical to the Named
Executive Officer's employment agreement, including any extension thereof.
However, in the event of a "Change in Control" (as such term is defined in the
applicable agreement), each severance agreement automatically extends the term
of the corresponding employment agreement until the later of (i) the date on
which the employment and noncompetition agreement otherwise would have expired
and (ii) the date which is 36 months after the end of the calendar year in which
such Change in Control occurs. Each agreement provides for certain benefits in
the event of termination of the Named Executive Officer by the Company without
"Good Reason" (as such term is defined in the applicable agreement), resignation
by the Named Executive Officer upon a material breach of the agreement by the
Company or a Change in Control of the Company. These benefits include the
continued payment of the Named Executive Officer's base salary during the
remaining term of the agreement, immediate vesting of all equity awards as well
as continued entitlement to receive other benefits conferred under the
applicable agreement for such remaining term. Under the agreements, each Named
Executive Officer is also entitled to certain specified benefits in the event of
his death or disability.
In addition, such employment and noncompetition agreements, subject to
certain exceptions, prohibit each such Named Executive Officer from engaging,
directly or indirectly, during the term of his employment, in any business
(other than RSI and its affiliates) which engages or attempts to engage in,
directly or indirectly, the acquisition, development, construction, operation,
management or leasing of any industrial office real estate property anywhere
within the Tri-State metropolitan area ("Competitive Activities"). These
employment and noncompetition agreements also prohibit such persons from
engaging, directly or indirectly, during a specified Noncompetition Period in
any Competitive Activities, subject to certain limited exceptions. The
Noncompetition Period for each such employee is the period beginning on the date
of the termination of employment and ending on the latest of (i) the first
anniversary of the termination of his employment with the Company and (ii) the
third anniversary of the effective date of the employee's employment and
noncompetition agreement.
Pursuant to the original employment and noncompetition agreement with Mr.
Maturo, upon execution of such agreement, the Company loaned to Mr. Maturo the
amount of $399,980 (the "Loan") in order to finance his purchase of an equity
interest in the Company. In that regard, Mr. Maturo has purchased and currently
owns 32,988 Units, as adjusted for the Company's 2-for-1 stock dividend payable
to stockholders of record on April 4, 1997 (the "Restricted Units") (effectively
purchased at a price per Unit of $12.125, the closing price per share of Common
Stock on the New York Stock Exchange on the date the original employment and
noncompetition agreement was executed). The Loan matures on the fourth
anniversary of its issuance and accrues interest at the rate of 8 1/2%. Subject
to the limitations set forth below, on each of the first four anniversaries of
the Loan, $100,000 of the outstanding principal amount is forgiven by the
Company and the Company loans to Mr. Maturo a cash amount equivalent to his
resulting tax liability (a "Tax Loan"), which in turn is forgiven (together with
accrued interest thereon and on the Loan) over the fifth through eighth
anniversaries of the date the Loan was made. Both the Loan and the Tax Loans are
recourse solely to the Restricted Units. During 1998, Tax Loans in the amount of
$78,000 were made to Mr. Maturo. If Mr. Maturo is terminated by the Company for
Good Reason or Mr. Maturo voluntarily terminates his employment for reasons
other than those expressly permitted under the terms of the Loan, the maturity
date of the Loan will accelerate to the date of termination.
10
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The following is a report by the Company's Compensation Committee regarding
the Company's executive compensation objectives, executive compensation program
and the compensation of the Company's chief executive officer:
EXECUTIVE COMPENSATION OBJECTIVES. The objective of the Company's executive
compensation program is to attract, retain and motivate talented executives who
will maximize stockholder value. In order to achieve this objective, in addition
to annual base salaries, the executive compensation program utilizes a
combination of long-term incentives through equity-based compensation and annual
incentives through cash bonuses. The program is intended to align the interests
of executives with those of the Company's stockholders by linking a portion of
executive compensation directly to increases in stockholder value. The Company
seeks to provide total compensation to its executive officers which is
competitive with total compensation paid by REITs similar to the Company.
PROCEEDINGS OF THE COMPENSATION COMMITTEE. The Compensation Committee
determines compensation for the Company's executive officers and is comprised of
two nonemployee directors, Mr. Blau and Mr. Feinstein. Final compensation
determinations for each fiscal year will generally be made after the end of the
fiscal year. At that time, base salaries for the following fiscal year will be
set, cash bonuses, if any, will be determined for the past year's performance,
and option grants, if any, will generally be made. At a meeting in March 1999,
the Compensation Committee fixed the base salaries for the Named Executive
Officers for the fiscal year ending December 31, 1999 and determined incentive
compensation awards for such officers in respect of the fiscal year ended
December 31, 1998.
The Compensation Committee engaged FPL Associates to advise the Compensation
Committee regarding executive officer compensation matters, including annual
base salary, annual incentives and long-term incentives. FPL Associates is a
consultant specializing in compensation matters in the real estate industry and
is not affiliated with the Company. The Compensation Committee considered FPL's
analysis in determining base salaries and incentives.
In determining compensation for the Named Executive Officers, the
Compensation Committee noted several factors, including the Company's strong
operating performance for the 1998 fiscal year, in terms of growth in Funds From
Operations per share of 18%. The Compensation Committee also considered the
efforts of the Named Executive Officers in the acquisition of 46 properties
aggregating 6.8 million square feet during 1998, as well as leasing activity at
the Company's properties. In addition, the Compensation Committee considered the
performance of its Common Stock relative to other real estate companies as well
as the market in general.
The Compensation Committee exercises independent discretion in respect of
executive compensation matters. With respect to the compensation of the Named
Executive Officers other than Donald J. Rechler, the Compensation Committee
reviews the recommendations of Donald J. Rechler.
The following is a discussion of each element of the Company's executive
compensation:
ANNUAL BASE SALARY. Base salaries for each of the Named Executive Officers
are the subject of the employment and noncompetition agreements between the
Company and each such executive as indicated above. Each such agreement provides
that the base salary provided for under the respective agreement will be
reviewed no less frequently than annually. For 1998, base salaries for the Named
Executive Officers were determined by the Compensation Committee based upon a
review of the performance of each Named Executive Officer and the report
prepared by FPL for the fiscal year ended December 31, 1998.
ANNUAL INCENTIVES. Annual incentives are provided in the form of cash
bonuses to be paid if certain performance objectives are achieved. Cash bonuses
will also be subject to adjustment based upon the Compensation Committee's
evaluation of an executive's personal performance.
11
<PAGE>
The Compensation Committee awarded the following cash bonuses to the
following Named Executive Officers in March 1999 in respect of the fiscal year
ended December 31, 1998: Scott Rechler--$400,000, Michael Maturo--$300,000,
Mitchell Rechler--$300,000 and Gregg Rechler--$300,000. The cash bonus award to
Donald J. Rechler is discussed separately below. In determining incentive
compensation for 1998, the Compensation Committee considered the factors
described above regarding annual base salaries.
LONG-TERM INCENTIVES. Long-term incentives may be provided through a
variety of means, including the grant of stock options, restricted stock awards
and stock loans. These awards are intended to align the executive's long-term
objectives with those of the Company's stockholders. The grant of stock options,
restricted stock awards and stock loans are made under the Company's stock
option plans which are administered by the Compensation Committee. The
Compensation Committee has the discretion to determine those individuals to whom
awards are made and the terms and conditions of the awards.
In March 1999, the Compensation Committee awarded each of the Named
Executive Officers loans from the Company to purchase shares of Common Stock of
the Company in respect of the fiscal year ended December 31, 1998 (the "1998
Stock Loans"). The aggregate principal amount of the 1998 Stock Loans is
$771,094 in the case of Scott Rechler; and $514,063 in the case of each of
Mitchell Rechler, Gregg Rechler and Michael Maturo. Each 1998 Stock Loan has a
term of seven years, accrues interest at the mid-term "Applicable Federal Rate"
("AFR") as in effect from time to time, is secured by the Common Stock purchased
and is otherwise non-recourse. Each Named Executive Officer's 1998 Stock Loan
(together with accrued interest on the 1998 Stock Loan) will be forgiven ratably
each year during the seven year term of the 1998 Stock Loan, provided that the
Named Executive Officer is then employed by the Company. The Company will also
loan to the Named Executive Officer an amount equal to his aggregate tax
liability resulting from such forgiveness (the "1998 Tax Loans"). The 1998 Tax
Loans will have a one year maturity, bear interest at the AFR and be forgiven
upon maturity (together with the interest thereon), provided that the officer is
then employed by the Company. Under the terms of the 1998 Tax Loans, the Named
Executive Officers will also receive tax payments in respect of the forgiveness
of the 1998 Tax Loans. In the event of a Change of Control of the Company, a
Named Executive Officer's death or permanent disability, termination of his
employment by the Company without cause or a reduction in the nature or scope of
such Named Executive Officer's duties, the outstanding principal amounts of the
applicable 1998 Stock Loan and 1998 Tax Loan will be forgiven in full and such
Named Executive Officer will receive a tax payment in respect of such
forgiveness. In the event a Named Executive Officer leaves the employ of the
Company or is terminated with cause, the outstanding amount of the applicable
loans will be immediately due and payable. In approving these loans the
Compensation Committee considered the same factors it considered in determining
the annual incentives, including the retention of the Named Executive Officers.
In 1997, as a long-term incentive award, each of the Company's Named
Executive Officers received loans from the Company to purchase shares of Common
Stock of the Company (the "1997 Stock Loans"). Pursuant to the terms of the 1997
Stock Loans, in 1998 ten percent of the 1997 Stock Loans of each Named Executive
Officer was forgiven and the Company paid to each Named Executive Officer the
following amounts, representing tax payments: Scott Rechler--$109,068, Michael
Maturo--$85,358, Mitchell Rechler--$85,358 and Gregg Rechler--$94,889.
1998 CHIEF EXECUTIVE OFFICER COMPENSATION. Donald J. Rechler's base salary
for the fiscal year ended December 31, 1998 was $500,000, as determined by the
Compensation Committee.
For the fiscal year ended December 31, 1998, the Compensation Committee
awarded to Donald J. Rechler a cash bonus of $500,000. The amount of this bonus
was determined by the Compensation Committee substantially in accordance with
the policies described above relating to all Named Executive Officers of the
Company. In making such determination, the Compensation Committee noted several
factors, including the Company's achievement of an 18% increase in Funds From
Operations per share in 1998 over levels achieved in 1997. The Compensation
Committee also considered the efforts of the Named
12
<PAGE>
Executive Officers in the acquisition of 46 properties aggregating 6.8 million
square feet during 1998, as well as leasing activity at the Company's
properties. In addition, the Compensation Committee considered the performance
of its Common Stock relative to other real estate companies as well as the
market in general.
As a long-term incentive, the Compensation Committee awarded Donald J.
Rechler a 1998 Stock Loan in the amount of $771,094 in accordance with the terms
described above relating to the other Named Executive Officers of the Company,
including the related tax loan and tax payments. The terms of the 1998 Stock
Loan and the related tax loan and tax payments are described above under "--Long
Term Incentives." In addition, Donald J. Rechler received a tax payment from the
Company in the amount of $145,430, relating to the forgiveness of 10% of his
1997 Stock Loans.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), limits the deductibility on the
Company's tax return of compensation over $1 million to any of the Named
Executive Officers of the Company unless, in general, the compensation is paid
pursuant to a plan which is performance-related, non-discretionary and has been
approved by the Company's stockholders. The Compensation Committee's policy with
respect to section 162(m) is to make every reasonable effort to ensure that
compensation is deductible to the extent permitted while simultaneously
providing Company executives with appropriate compensation for their
performance. The Company did not pay any compensation during 1998 that would be
subject to the limitations set forth in section 162(m).
Submitted by the Compensation
Committee
of the Board of Directors:
Harvey Blau
Leonard Feinstein
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return on the Common Stock for the period from May 26, 1995 (the
date upon which the Company's Common Stock commenced trading on the New York
Stock Exchange) to December 31, 1998 with the cumulative total return on the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") and the NAREIT
Equity REIT Total Return Index. Total return values were calculated based on
cumulative total return assuming (i) the investment of $100 in the Common Stock
on May 26, 1995 and in the S&P 500 and the NAREIT Equity REIT Total Return Index
on May 31, 1995 and (ii) reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RECKSON ASSOCIATES REALTY
CORP. S&P 500 NAREIT EQUITY REIT TOTAL RETURN INDEX
<S> <C> <C> <C>
5/1/95 100 100 100
6/30/95 100 104 102
9/30/95 110 112 106
12/31/95 127 118 111
3/31/96 133 123 113
6/30/96 146 128 118
9/30/96 167 131 126
12/31/96 193 141 150
3/31/97 214 145 151
6/30/97 216 169 158
9/30/97 253 181 177
12/31/97 247 185 180
3/31/98 257 210 179
6/30/98 233 217 171
9/30/98 235 194 153
12/31/98 225 235 149
</TABLE>
14
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock for
(i) each stockholder of the Company holding more than a 5% beneficial interest
in the Company, (ii) each executive officer of the Company who is not a director
of the Company and (iii) the directors and executive officers of the Company as
a group. Stock ownership of the Directors of the Company appears under the
heading "Information Regarding Nominees and Directors" in this Proxy Statement.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK AND UNITS
BENEFICIALLY OWNED
AS OF MARCH 10, 1999(1)
-----------------------------
<S> <C> <C>
PERCENT OF
NAME OF BENEFICIAL OWNERS NUMBER TOTAL(2)
- ------------------------------------------------------------------------------- ---------- -----------------
Michael Maturo................................................................. 563,488(3) 1.17%
Gregg M. Rechler............................................................... 958,360(4) 1.98%
Cohen & Steers Capital Management Inc.(5)...................................... 5,489,900 14.54%
LaSalle Advisors Capital Management, Inc.(6)................................... 3,798,677 9.50%
Fidelity Management & Research Corp.(7)........................................ 3,555,700 8.88%
European Investors Inc.(8)..................................................... 2,560,640 6.40%
T. Rowe Price Associates, Inc.(9).............................................. 2,326,785 5.70%
All directors and executive officers as a group (12 persons)................... 7,402,059 14.55%
</TABLE>
- ------------------------
(1) All information has been determined as of March 10, 1999. For purposes of
this table a person is deemed to have "beneficial ownership" of the number
of shares of Common Stock that person has the right to acquire pursuant to
the exercise of stock options within 60 days or upon the redemption of Units
(assuming the Company elects to issue Common Stock rather than pay cash upon
such redemption). Units are exchangeable for cash or, at the option of the
Company, on a one-for-one basis for shares of common stock, subject to
certain limitations. See "Executive Compensation" for a discussion of the
vesting of stock options granted to directors and officers.
(2) For purposes of computing the percentage of outstanding shares of Common
Stock held by each person, any shares of Common Stock which such person has
the right to acquire pursuant to the exercise of a stock option exercisable
within 60 days is deemed to be outstanding, but is not deemed to be
outstanding for the purposes of computing the percent ownership of any other
person.
(3) Represents (a) 40,988 Units, (b) 45,000 shares of Common Stock, and (c)
477,500 exercisable options.
(4) Includes (a) 65,159 shares of Common Stock, including 4,159 shares held in
trust for the child of Gregg M. Rechler, (b) 391,701 Units, including
194,352 Units owned directly, 70,913 Units owned through a trust and 126,436
Units owned through corporations and partnerships, and (c) 501,500
exercisable options.
(5) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of Cohen & Steers Capital Management
Inc. is 757 Third Avenue, New York, New York 10019.
(6) This information is based upon information reported by the stockholder in
filings made with the SEC. LaSalle Advisors Capital Management, Inc.
("LaSalle") owns 1,406,130 shares of Common Stock of the Company (3.5% of
total shares of Common Stock outstanding) and ABKB/LaSalle Securities
Limited Partnership ("ABKB"), a subsidiary of LaSalle, owns 2,392,547 shares
of Common Stock of the Company (6.0% of total shares of Common Stock
outstanding). The address of both LaSalle and ABKB is 200 East Randolph
Drive, Chicago, Illinois 60601.
(7) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of Fidelity Management & Research
Corp. is 82 Devonshire Street, Boston, MA 02109.
15
<PAGE>
(8) This information is based upon information reported by the stockholder in
filings made with the SEC. European Investors Inc. ("European") owns
1,908,600 shares of Common Stock of the Company (4.77% of total shares of
Common Stock outstanding) and EII Realty Securities ("EII"), a wholly-owned
subsidiary of European, owns 652,040 shares of Common Stock of the Company
(1.63% of the total shares of Common Stock outstanding). The address of both
European and EII is 667 Madison Avenue, New York, New York 10021.
(9) This information is based upon information reported by the stockholder in
filings made with the SEC. T. Rowe Price Associates, Inc. owns 2,326,785
shares of Common Stock of the Company (5.7% of total shares of Common Stock
outstanding). The address of T. Rowe Price Associates, Inc. is 100 East
Pratt Street, Baltimore, Maryland 21202.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities ("10% Holders"), to file reports of ownership and changes in
ownership with the SEC and the New York Stock Exchange. Officers, directors and
10% Holders are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms that they file. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company, all Section
16(a) filing requirements applicable to its executive officers, directors and
10% Holders were satisfied during 1998, except that a partnership controlled by
Leonard Feinstein, an independent director of the Company, purchased 13,400
shares of Common Stock of the Company on January 15, 1998 and did not file such
a report until June 15, 1998, and Roger Rechler, a director of the Company,
purchased 38,000 shares of Common Stock of the Company on March 31, 1998 and did
not file a report until June 8, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LEASE OF CORPORATE OFFICES
The Company leases approximately 35,000 square feet of office space at its
corporate offices located at 225 Broadhollow Road, at an annual base rent of
approximately $895,000, from a partnership in which Donald Rechler, Roger
Rechler, Mitchell Rechler and trusts established for Rechler family members
maintain an equity interest.
RECKSON SERVICE INDUSTRIES, INC.
During 1998, the Company completed the spin-off distribution of the shares
of Reckson Service Industries, Inc. ("RSI"). RSI was formed as an operating
company that generally provides commercial services to properties owned by the
Company and its tenants and third parties. Reckson Strategic Venture Partners,
LLC ("RSVP"), a subsidiary of RSI, was formed as a "research and development"
vehicle for the Company to invest in alternative real estate sectors. RSVP
invests primarily in real estate and real estate related operating companies
generally outside of the Company's core office and industrial focus. The
Operating Partnership and RSI have entered into an intercompany agreement to
formalize their relationship and to limit conflicts of interest.
Donald J. Rechler, Scott H. Rechler, Michael Maturo, Gregg Rechler, Mitchell
D. Rechler and Roger Rechler, each of whom serves as a director and/or officer
of the Company, serves as a director and, in certain cases, an officer, of RSI
and collectively own approximately 36% of RSI's outstanding common stock
(assuming the exercise of vested stock options).
In June 1998, the Operating Partnership established a credit facility with
RSI (the "RSI Facility") in the amount of $100 million for RSI's service sector
operations and other general corporate purposes. As of December 31, 1998,
borrowings under the RSI Facility aggregated $33.7 million.
In addition, during 1998 the Operating Partnership approved the funding of
investments of up to $100 million with or in RSVP (the "RSVP Commitment"),
through RSVP-controlled joint venture
16
<PAGE>
REIT-qualified investments or advances made to RSI under a credit facility with
terms similar to the RSI Facility. In July 1998, the Operating Partnership made
a joint venture investment with RSVP in Dominion Group LLC ("Dominion").
Dominion owns and develops correctional facilities and government office
buildings. The total capital commitment made to Dominion by the joint venture
with RSVP aggregated $100 million, of which the Company committed $25 million.
As of December 31, 1998, the Company had invested approximately $10.1 million
into such joint venture under the RSVP Commitment. In addition to the joint
venture investment in Dominion, as of December 31, 1998, the Operating
Partnership had made advances under the RSVP Facility aggregating approximately
$7.2 million.
RSI reimburses the Operating Partnership for certain general and
administrative expenses (including payroll expenses and office space) incurred
by the Operating Partnership for RSI's benefit. During 1998, RSI reimbursed the
Operating Partnership approximately $400,000 for such expenses.
RECKSON MANAGEMENT GROUP, INC.
During 1998, the Company made investments in and advances to the Management
Company of approximately $29.5 million. Such investments and advances were used
by the Management Company in connection with the Management Company's
acquisition of an approximate 64% ownership interest in an executive office
suite business. Concurrently with the Management Company's investment, RSI
received an option to purchase the Management Company's interest at cost plus
8%. The Management Company is owned 97% by the Company and 3% by an entity owned
by certain officers of the Company. On November 9, 1998, RSI exercised its
option to acquire the executive office suites business and, as a result, the
Management Company earned income during the period of ownership of approximately
$707,000. In addition, RSI assumed the outstanding debt plus accrued interest
owing to the Company.
MISCELLANEOUS
The Company leases space in a building located in Farmingdale, New York, at
an annual base rent of $485,023, to a company affiliated with Leonard Feinstein,
a director of the Company. The Company also leases space in a building located
in Mitchel Field, New York, at an annual base rent of $376,299, to a company
affiliated with Lewis S. Ranieri, a director of the Company.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be presented to an annual meeting, other
than a stockholder proposal included in the Company's proxy statement pursuant
to Rule 14a-8 of the Exchange Act ("Rule 14a-8"), the Secretary of the Company
must receive written notice thereof on or before the date specified in the
Company's Bylaws, and the proponent or a representative of the proponent must
attend the annual meeting. In addition, pursuant to Rule 14a-4 of the Exchange
Act, if a stockholder failed to notify the Company at least 45 days before the
date on which the Company first mailed its proxy materials for the prior year's
annual meeting, management proxies are allowed to use their discretionary voting
authority when the proposal is raised at the annual meeting, without any
discussion of the matter in the proxy statement.
17
<PAGE>
For a proposal of a stockholder to be presented at the Company's 2000 annual
meeting of stockholders, other than a stockholder proposal included in the
Company's proxy statement pursuant to Rule 14a-8, it must be received at the
principal executive offices of the Company after November 20, 1999 and on or
before February 25, 2000, unless the 2000 annual meeting of stockholders is
scheduled to take place before May 20, 2000. The Company's Bylaws provide that
any stockholder wishing to nominate a director or have a stockholder proposal,
other than a stockholder proposal included in the Company's proxy statement
pursuant to Rule 14a-8, considered at an annual meeting must provide written
notice of such nomination or proposal and appropriate supporting documentation,
as set forth in the Bylaws, to the Company at its principal executive offices
not less than 75 days nor more than 180 days prior to the anniversary of the
immediately preceding annual meeting of stockholders (the "Anniversary Date");
provided, however, that in the event that the annual meeting is scheduled to be
held more than seven calendar days prior, or more than 60 days subsequent, to
the Anniversary Date, such nominations or proposals must be delivered to the
Company not earlier than the 180th day prior to such meeting and not later than
the later of the 75th day prior to such annual meeting or the twentieth day
following the earlier of the day on which public announcement of the meeting is
first made or notice of the meeting is mailed to stockholders. Any such proposal
should be mailed to: Reckson Associates Realty Corp., 225 Broadhollow Road,
Melville, New York 11747, Attn: Gregg M. Rechler, Secretary.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
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<PAGE>
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Donald Rechler and John
V.N. Klein, and either of them, as Proxies of the undersigned, with full power
of substitution, to vote all shares of Common Stock of Reckson Associates Realty
Corp. (the "Company") held of record by the undersigned as of the close of
business on March 15, 1999, on behalf of the undersigned at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Omni, 333 Earl Ovington
Boulevard, Mitchel Field, New York, 9:30 a.m., local time, on Thursday, May 20,
1999, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned stockholder(s). If no direction is given, this proxy
will be voted FOR the four nominees of the Board of Directors listed in Proposal
1 and FOR Proposal 2. In their discretion, the Proxies are each authorized to
vote upon such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof. A stockholder wishing to vote in
accordance with the Board of Directors' recommendations need only sign and date
this proxy and return it in the enclosed envelope.
-----------------------
Please vote and sign on other side and SEE REVERSE
return promptly in the enclosed envelope. SIDE
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<PAGE>
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/X/ Please mark your votes as in this example.
1. To elect four Class I Directors of the Company to serve until the 2002
Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified.
Nominees: Scott H. Rechler, Herve A. Kevenides,
Conrad D. Stephenson and Lewis S. Ranieri
FOR WITHHELD
/_/ /_/
/_/____________________________________ MARK HERE |_|
For all nominees except as noted above FOR ADDRESS
CHANGE AND
NOTE BELOW
FOR AGAINST ABSTAIN
2. To ratify the selection of /_/ /_/ /_/
Ernst & Young LLP as the
independent auditors of
the Company for the fiscal
year ending December 31, 1999.
3. To consider and act upon any other matters that
may properly be brought before the Annual Meeting
and at any adjournments or postponements thereof.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Company's Annual Report to Stockholders and hereby revoke(s) any
proxy or proxies heretofore given. This proxy may be revoked at any time before
it is exercised.
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Signature: Date:
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Signature: Date:
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If Held Jointly
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